Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

Daniel C. Clay and Alfred Bizoza, 2018. The Challenge to Sustainable Growth in Rwanda’s Coffee Sector. Feed the Future Innovation Lab for Food Security Policy Research Paper 100. East Lansing: Michigan State University.

INTRODUCTION AND SUMMARY
Recent in-depth analysis of current trends in Rwanda’s coffee sector, together with research findings from the Africa Great Lakes Coffee Support Program (AGLC) have revealed that low and stagnating production has placed Rwanda’s coffee sector in a vulnerable state (AGLC, 2016). Perennially low coffee prices (24 percent below others in the region) have resulted in low, often negative profits to farmers, discouraging them from investing in their plantations. Simply put, farmers have been left out of Rwanda’s “coffee renaissance” over the past 15 years and the consequences are now more apparent than ever.

Many farmers report that losses in coffee have driven them to abandon their coffee trees and increasingly to uproot them in favor of other, more profitable crops. AGLC research shows that these trends are particularly acute among largeholder coffee farmers (those with 1000+ trees). These are farmers who are more highly commercialized, are highly responsive to cherry prices, and have other farming and off-farm options. They also own the majority (57 percent) of coffee trees in Rwanda (AGLC, 2016). Equally disconcerting is the finding that young farmers are choosing not to enter into coffee at all, often for the same reasons. They see clearly how their parents struggle to make a living in coffee and opt to produce other crops instead.

The main position of this research paper is that to restore sustainable growth to Rwanda’s coffee sector, two closely connected changes will be required:

• First, there must be a commitment from all stakeholders in the value chain to ensure that producers are compensated fairly, with cherry prices commensurate with those paid for similar quality coffees elsewhere in East Africa. Producer prices in Rwanda lag behind others in the region by an average of 24 percent (ICO and NAEB figures). Due to the perishability of coffee cherry which requires farmers to deliver their coffee to the washing station the same day as harvest, as well as the exigencies of the newly implemented zoning policy (requiring sales to a designated CWS, usually the closest), competition for coffee cherry is very limited. With a few regionally localized exceptions, producers have only one designated buyer. For these reasons setting cherry prices must be executed in a fair and balanced way so that farmers, too, can make a reasonable profit from their cultivation of coffee and be incentivized to invest further in their coffee plantations.
• Second, the coffee sector must once again become a high priority for strategic thinking and support in Rwanda. Full consideration should be given to restoring coffee as a pillar of rural economic growth. Why? Because global specialty coffee markets continue to grow; Rwanda has remarkable comparative advantage in high quality specialty coffee, an advantage not shared by any other high priority crops such as maize, bean, rice, wheat, and cassava; and because coffee grows well on steep hillsides, protecting them against devastating soil erosion and eliminating the need for high-cost terrace construction and maintenance otherwise required to make those fragile slopes stable and productive.

Until these two changes are successfully addressed, the ever-ambitious national targets for coffee sector performance in production, productivity, percentage of coffee in the fully-washed channel, and total coffee sales and revenues, are likely to remain well out of reach.