The income that coffee farmers earn from the produce is set to reduce after the farmgate price for a kilogram of coffee cherries dropped from Rwf267 in 2018 to Rwf190 this season.
The new price was announced last week by the National Agricultural Export Development Board (NAEB).
Theopiste Nyiramahoro, the President of Rwanda Coffee Cooperatives’ Federation (RCCF), toldThe New Timesthat the farmers have no other option, but to accept what the market offers them, hence appealing for measures to contain market volatilities.
Picking coffee, Hingakawa Women’s Coop. Net Photo.
Some farmers started harvesting their produce this month while others will harvest from March through June 2019.
“The price is not good, but because there is no other alternative, we accept that as we don’t have anywhere to sell it,” she said, adding that the new price will reduce farmers’ profits.
Celestin Gatarayiha, the Coffee Division Manager at NAEB, said that the price on the international market had dropped from $3.3 per kilogram in 2018 to $2.2 per kilogram in 2019.
“The farmgate price may change if there is change on the international market,” he said.
He added: “Again when we fix the farmgate price we also consider the cost of production at the different levels of the coffee value chain. For example, for a farmer to produce one kilogram of cherries they need to invest Rwf177. If they get Rwf190, they make a small profit.”
Nyiramahoro says that NAEB should diversify the country’s coffee market.
“If our coffee was consumed domestically, even if there was a financial crisis [at the international market], we would be cushioned against the shocks by the domestic market consumption,” she said.
Max Veglio, the Managing Director of Rwacof Exports Limited, a Rwandan based coffee processing and exporting company, toldThe New Timesthat international coffee prices had been falling over the last three years.
“It’s very difficult to sell Rwandan coffee in large volumes using the old minimum price because other countries become extremely competitive,” he said, citing Colombia and Ethiopia.
He said that reducing the price on the local market was a tactic to make Rwandan coffee competitive on the international market.
Veglio said coffee supply on the international market outstrips demand.
Rwanda exported 23,000 tonnes of coffee in the financial year 2017/2018, generating $67 million. It produced 24,500 tonnes in 2018/2019 which are expected to generate $75 million, according to figures from NAEB.
José Dauster Sette, the Executive Director of the International Coffee Organisation (ICO), said that: “We are seeing record exports from producing countries, stocks in the world are increasing, and with all these factors put together, that means there is a lot of coffee on the market and it is difficult to predict that prices will rise significantly.”
Sette, who was talking to journalists at a recent news conference in Kigali, said that the annual coffee produced in the world is estimated at 162 million bags of 60 kilograms each, and Africa represents between 11 and 12per cent of that global supply.