Coffee industry grapples with low farm incomes

On average, the price of coffee at international market is between $2 and $5 depending on quality, but, farmers get only about a third of a dollar for a kilogramme of their coffee cherries.
Clare Akamanzi, the chief executive of Rwanda Development Board, with Innocent Lugha Bashungwa, Deputy Minister of Agriculture of Tanzania, and other officials visit a coffee-sorting machine during the African Fine Coffee Conference and Exhibition in Kigali last week. Industry experts believe farmers are still getting far less for their effort compared to other players up the coffee production chain. Emmanuel Kwizera.

Coffee farmers are not as happy as other players along the value chain because they are getting a modest share of revenues, experts in the industry have agreed.

This, they say, only spells negative consequences to the sector, if it remains unchecked.

“As we are here, traders, roasters and exporters, we have smiles on our faces. I would love to see similar smiles on the faces of the farmers. And that can only happen if the farmer gets the right price for his or her coffee,” said Ishak Lukenge, Chairman of Board at African Fine Coffees Association (AFCA).

Lukenge – who has experience in coffee farming, roasting and exporting – together with other experts, were speaking during the just-concluded African Fine Coffee Conference & Exhibition held in Kigali last week.

Considered Africa’s largest coffee trade platform, the event attracted about 1,500 participants from 32 countries, including coffee producers, exporters, roasters, policymakers and buyers from around Africa, the Americas, Europe, among other parts of the world.

Millions of farmers in Africa are behind the continent’s annual coffee production, which the International Coffee Organization (ICO) estimated at around 17 million bags with 60 kilogrammes each, or over a million tonnes.

On average, the price of coffee at international market is between $2 and $5 depending on quality, but, farmers get only about a third of a dollar for a kilogramme of their coffee cherries, according to market estimates.

Lukenge said that the purpose of conferences like that “is to make sure that we discuss and find solutions and to look for tools and means of addressing the issue affecting the whole value chain.”

Farmers’ efforts, he said, should be rewarded accordingly, such as when they produce the best coffee or organic coffee.

“These concepts should not just be slogans or hashtags; these concepts should translate into changing the lives of the farmers who actually are in control over our destiny,” Lukenge observed. 

In every country, he said, the production costs vary, and, one of the ways to come up with favorable prices for farmers is that they are trying to find out those diverse costs of production, and what will be the minimum or the adequate price for each and every country.

Celestin Gatarayiha, Coffee Division Manager at National Agricultural Export Development Board (NAEB), said that the minimum prices for farmers in Rwanda are set based on the prices on the international market.

Estimates suggest that a farmer in Rwanda spends about Rw177 to produce a kilogramme of coffee cherries, Gatarayiha said, pointing out that the farm gate price has been over Rwf200 a kilogramme of cherries.

The minimum price a farmer was getting ranged from Rwf240 to Rwf260 a kilogramme of coffee depending on quality, but about a week ago, it was reduced to Rwf215, according to Theopiste Nyiramahoro, the chairperson of Rwanda Coffee Cooperatives’ Federation (RCCF).

Coffee farmers in Nyaruguru  District. Emmanuel Kwizera.

Nyiramahoro told The New Times that given that a kilogramme of finished coffee (roast and ground) sells at Rwf7,000 (about $ 8) on average, a farmer’s revenue share from the crop is too small, which calls for an approach for even redistribution.

“Taking into consideration the investments that a farmer makes to get a kilogramme of coffee cherries, Rwf300 a kilogramme would be fair, that can motivate farmers to grow more coffee,” she said.

Gatarayiha said that strategies in place include increasing the quality and quantity of coffee yield, and setting prices based on what the farmer invested so that they get profits from their produce,” Gatarayiha said.

Innocent Lugha Bashungwa, Deputy Minister of Agriculture in Tanzania, called for attractive prices for farmers, urging the conference to see how countries can drive these prices from the quality point of view.

“If we work together in standardising the quality of our coffee here in East Africa and on the African continent, then, if the quality is a driving force for prices, we are likely to have a sustainable mechanism for assuring that our farmers are going to get an attractive price,” he said.

José Dauster Sette, the Executive Director of ICO, said that “we have a very healthy industry if you look at the sales to consumers especially, but the people at the other end of the value chain – the producers – are not doing so well.”

“So, we have to explore ways to work together to find ways in which producers can get prices,” Sette said.

“And this is not an easy task, there is no one silver bullet, one magical solution, but we are exploring ways, especially trying to create a dialogue with the roasting industry to find a way in which farmers can be better remunerated,” he observed.

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