The fluctuating price of coffee on the international market has created a crisis for Rwanda’s exporters, who have defied advice from financial institutions and the National Agricultural Export Board (NAEB) to sell old coffee stock at the current rates for fear of making massive losses.

Lenders now fear that the exporters, who have piled up at least 211.2 tonnes or in excess of 11 containers of coffee purchased last year, may default and send banks into huge losses.

Buoyed by high prices on the international market in 2011 and last year, the exporters purchased the coffee from farmers at Rwf155 ( $0.25) per kilogramme.

At the time, the price of a kilogramme of coffee was hovering between Rwf2,480 ($4) and Rwf 3099 ($5). Earlier in 2011, the price went as high as Rwf4,339 ($7) a kilogramme.

However, the prices have since fallen to Rwf1,549 ( $2.5), forcing the exporters to cling on to their stock.

“The season does not seem to have gone well for our clients. Some exporters have containers full of coffee and have not sold them while others have sold and have not been paid,” said Emmanuel Karuranga, a risk manager at Rwanda Development Bank.

The situation has put pressure on lenders to restructure the exporters’ debt.

The banks say exporters were too speculative and purchased coffee expensively.

Some coffee dealers are believed to have hoarded stock after world markets declined sharply while others are bitter with the export board, which they accuse of failing to market the country’s coffee in the face of the challenging market conditions.

Rwanda coffee is among the best in the world due to its aroma, thanks to the volcanic soils and favourable climate.

But Robinah Uwera, the director of marketing at NAEB, said the agency had not relented in its marketing. “The problem is the current state of the international market.

At the beginning of every season, we convene a meeting of coffee dealers and advise them on how the market is likely to behave,” she added.

With the current crisis, which is affecting banks and co-operative societies, Rwanda Development Bank, which is the biggest coffee financier, said repayments by exporters have been slow.

Most farmers, who tend to be grouped in co-operatives, are yet to receive payment for their supplies.

Herman Musahara, professor of economics at the National University of Rwanda, said: “Coffee farmers are few in number and have other produce on the farm, so in case they are disappointed they uproot coffee trees and plant, say tomatoes.”

The National Agricultural Export Board says that coffee output in the first three months of this year grew to 1.22 million kilogrammes, up from 1.06 million kilogrammes in the same period last year.

The developments have also raised fears that Rwanda’s coffee revenues could dwindle further over the coming years.

Official statistics show that the coffee industry, once the country’s top foreign exchange revenue earner, fetched $74.6 million in 2011 before declining to $60.9 million in 2012.

Rwanda hopes to improve the value of coffee by focusing on fully washed coffee to realise its export targets.

This year, the country is targeting $99 million. Persistent declines in international prices will undermine this target.

The crisis comes in the wake of closure of a coffee house outlet that has played a key role in marketing Rwanda Coffee in Europe.

Bourbon Coffee Shop that has played a key role in marketing of Rwanda coffee abroad recently closed its United Kingdom outlet over known reasons.

However, the government said Rwanda coffee exports do not go through Bourbon Coffee shops, and what they buy from the sector is not more than 20 tonnes the whole year.

The company opened coffee shops in London and Washington under the brand name Bourbon Coffee to tap into the lucrative coffee market.