Understanding and Improving the Price-Quality Relationship in Rwanda's Coffee Sector
September 7, 2018 - Author: Ruth Ann Church
Ruth Ann Church, 2018. Understanding and Improving the Price-Quality Relationship in Rwanda's Coffee Sector, Feed the Future Innovation Lab for Food Security Policy Research Paper 111. East Lansing: Michigan State University
At 15 years old, specialty coffee is a relatively new sub-sector of Rwanda’s long-standing coffee industry. As such, structures and policies to maximize coffee quality are still evolving and have room for improvement. The problem examined in this report includes the obstacles preventing the sector from reaching the Government of Rwanda’s (GOR’s) stated goal of 80 percent high quality coffee coffee instead of only 55 percent, (the status quo in 2017).
The approach used by the author is to demonstrate and quantify the effects of not reaching the quality targets from three perspectives: that of the producer, the exporter, and the GOR. The models indicate that producers lost 125 RWF/kg cherry sold in the time period considered, exporters had 43 percent lower profits than might have been possible, and the country missed an estimated $2.6 million in foreign exchange, just in 2016. The damage from potato taste defect is estimated at $.30 - $2.00 per pound FOB for exported green coffee, depending on the quality level.* These estimated, unrealized gains provide the impetus to examine possible solutions. Five case studies of exemplary East African coffee organizations give concrete examples of how some cooperatives and private companies have invested to improve cherry purchasing practices and improve quality. At the end, marketing and policy recommendations are offered to support further increases in the value of Rwanda’s coffee.
* Potato taste defect is a taste defect occurring in coffee in Rwanda’s region. It creates a musty, vegetal taste, like a raw potato, in the brewed coffee.