Coffee processors cry out, making losses

As the country is aiming at improving the quality, quantity and amount of revenue collected from coffee, trader seems to meet challenges.

As the country is aiming at improving the quality, quantity and amount of revenue collected from coffee, trader seems to meet challenges.

The traders are now saying they are making losses, with some failing to clear bank loans.

Faustin Mbundu, of Caferwa, a company that processes and exports coffee believes some of the losses the processors are incurring are partly caused by poor planning.

He squarely blames banks, government, private sector and Rwanda Coffee Development Authority (RCDA), Ocir café for the financial woes that have hit the sector.

The country was not fully prepared for the multi-million francs washing station venture.

For starters, the government strategy after the fall in coffee prices in 2003 was to introduce specialty coffee with zero defects to address the problem of price fluctuation on the international market.

The private sector rushed to throw investments in acquiring washing stations, which have grown from 13 in 2003 to 130 this year. Most of the washing stations were constructed from bank loans.

Mbundu says that a number of issues needed to be addressed in order to achieve the zero defect coffee.

They include, applying fertilisers in time, pruning and mulching in time, applying pesticides in time and replanting good varieties.

Challenges

Regarding seeds for replanting, Mbundu says that Ocir café did not supply the seedlings in time. And, even when they did, the seeds were untested resulting into poor yields.

With respect to pruning and mulching, Ocir café is accused of not to have done enough.

Mbundu said fertilisers were not delivered in time leading to delays in their application.

He added that farmers also used to smuggle these fertilisers into the neighboring countries like Burundi and Democratic Republic of Congo (DRC) while pesticides were not provided in time.

The other challenges underlying this sector according to Mbundu, are traced in uncontrolled drying, uncontrolled fermenting and careless washing.

All these issues were not planned for by the stakeholders in the coffee industry.

"When all this is done, you get a good cup" he added.

Cupping is a method of systematically evaluating the aroma and taste of coffee beans.

It is often used by growers, buyers and roasters to assess the quality of a particular coffee sample.

Woes of washing station owners Mbundu said that people who face these challenges are those with washing stations because they are selective on the cherries to wash, dry, ferment and process.

This leads to rejecting of some cherries by the machines yet the traders have paid for them.

Mbundu says that there are some defects that can not easily be detected hence pass unnoticed, leading to poor cups in the end.

Due to challenges of failure to meet conditions of achieving specialty coffee, washing stations are not supplied with quality coffee cherries.

They (traders) invest heavily but they don’t get the desired final products and since they use the bank funds, it leads to low profitability. This causes losses which leads to difficulties in loan repayments.

Whereas the cooperatives which are engaged in this business are bailed through the Development Bank of Rwanda (BRD), the exporting companies are left to suffer with bank loans.

Liberalising coffee sector

Between 1994 and 1996 there was a boom of unwashed coffee both locally and on international level. Then there came a collapse after 1996 leading to the fall in prices.

The government then liberalised the coffee sector, allowing private players in the coffee business.

"Liberalisation broke the monopoly of Rwandex which could fix prices for coffee farmers," Mbundu said.

He added that, "It changed the tax structure, price fixing and how to recover money for inputs."

He also said that a lot of things happened and government introduced the fully washed coffee which was like value addition and could cater for price fluctuations and other challenges in the international market.

The move by government targeted at producing specialty coffee with zero defects

Govt to spend Frw31 billion

However OCIR-Café has mapped out an ambitious programme to improve the coffee sector, with government expecting to spend nearly $58 million Frw31 billion and private investment projected at $23 million by 2010. This investment is expected to generate $580 million (Frw314 billion) in increased coffee sales by 2010.

Aroma irresistible

Rwanda fully washed coffee though small in quantity, has won cupping contests in coffee competitions around the world.

 

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