Rwanda's five-year strategic plan for the promotion of coffee exports will not be reviewed despite the sector suffering one of its sharpest declines in over five years and widening the country’s trade deficit.
The decline is indicated by a fall of about 5.17 per cent in the value of coffee exports, represented by a collection of $60.7 million (Rwf47.8 billion) in 2015/16 against $64 million (Rwf50.4 billion) collected the previous year.
This is despite a significant increase in the volume of coffee exports, to 19.6 metric tonnes from 16.5 metric tonnes in the same period.
The situation of more-fetching-less is due to Rwanda exporting most of its coffee without much value-addition.
A strategy unveiled in May 2015 by the National Agriculture Export Board seeks to boost agriculture exports such as coffee and tea by significant margins.
For coffee exports, the strategy aims for a growth rate of 29 per cent annually, which translates into revenue collections of about $104.3 million (Rwf82 billion) by 2018.
But a persistent — almost annual— price fluctuation for raw coffee has cast doubts among sector players that this target might be a bit too unrealistic considering that 2018 is around the corner.
Minister of Trade and Industry, Francois Kanimba, addressed this challenge, saying that government will push forward with its ambitious target despite the unfavourable international prices for coffee.
“I don’t think we can change the strategy right now. The decline remains within the normal trend that we have observed in the past years. This price fluctuation is a cycle that the coffee industry is now used to. One year the prices go up, the next they go down,” he said.
“However the fluctuation has sometimes been sudden and hurt coffee traders, particularly those who exploit coffee washing stations; when they buy cherries at a high price and are eventually forced to sell at a lower price.”
In order to add value to coffee exports, Rwanda invested Rwf3 billion in a modern coffee roasting plant, which exporters can utilise to roast their coffee and fetch higher prices on the international market.
This strategy has paid off for some coffee exporters, such as Rwanda Westhills Coffee — a company that has managed to break into markets in the US, Sweden and Slovakia with its roasted coffee.
“We decided to venture into exporting of roasted coffee and we are glad that is paying off because we have a list of dedicated clients in Europe and America. Roasted coffee fetches a higher price and is less susceptible to price fluctuations unlike raw coffee,” Simeon Ngendahayo, representative of Rwanda Westhills Coffee, said in an interview.
However, a number of other companies are still struggling to get the quality and quantity of their roasted coffee accepted in international markets, a phenomenon that Mr Kanimba said.
“We have been working with coffee traders to boost exportation of roasted coffee but we realised that the impact is very small. Some of them can only sell small quantities — and this has a small impact on the revenue collections. And besides, coffee does not have a long shelf life, which means you need a dedicated clientele every year,” said Mr Kanimba.
Rwanda aims to increase coffee productivity from 2.6kg coffee cherries per tree to 3.65 cherries per tree by 2018, and expand farm production area by 5,000 hectares annually, in order to achieve an average coffee production growth of 29 per cent per year.
Coffee is Rwanda’s second largest export earner after minerals and it employs about 400,000 farmers.