Incentivizing Farmer Investments for Sustainable Growth in Rwanda’s Coffee Sector

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November 5, 2016 - Daniel C. Clay, Aniseh S. Bro, Ruth Ann Church, Alfred Bizoza, David L. Ortega

Daniel C. Clay, Aniseh S. Bro, Ruth Ann Church, Alfred Bizoza, David L. Ortega. 2016. Incentivizing Farmer Investments for Sustainable Growth in Rwanda’s Coffee Sector. Feed the Future Innovation Lab for Food Security Policy Research Brief 23. East Lansing: Michigan State University

KEY MESSAGES

  • Since 2001, Rwanda’s coffee value chain has enjoyed a “specialty coffee” renaissance, yet coffee producers have not been recognized as full partners in this exciting transformation toward high quality, world class coffee.
  • Coffee producers in Rwanda receive an average of 24% below the revenues of their counterparts elsewhere in the region, resulting in neglect and disinvestment in coffee by many producers, particularly largeholder producers.
  • The true cost of production in Rwanda, including household and wage labor, inputs and equipment, totals 177 RWF/Kg of cherry. It is recommended that this cost of production figure be incorporated into the formula for setting cherry floor prices.
  • Largeholder coffee farmers (>1,000 trees) invest the least of all in their trees. Despite their high productive capacity, they do not invest in their coffee when prices are low. They are commercially oriented and keep an eye on profit margins. Incentivizing this group to produce coffee at a rate on par with the lowest capacity group (2.17 KG/tree) will increase production in Rwanda by 46%.
  • Now is the time for Rwanda to bring coffee back to center stage in its strategic thinking about the country’s agronomic and economic future. One of Rwanda’s greatest comparative advantages lies in producing coffee for the specialty market. Coffee also has powerfully protective environmental attributes and success on steep hillsides, which other priority crops do not. Actions are needed to address its vulnerabilities, starting by incentivizing farmers to invest in improved agronomic practices that will enable them to maximize their returns.

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