Before 2009, the once mighty Rwandex was exporting between 5,000 to 7,000 tonnes of ordinary coffee fetching between $9 million and $10 million annually.
But financial problems hit the company hard and it soon folded.
The troubled company, which had two branches; Rwandex Gikondo and Rwandex Gisenyi had to go into liquidation as a consequence of its failure to clear a Rwf3 billion debt it owed several banks.
Then the Rwandex liquidation committee was set up to sell the defunct coffee export company.
Rwandex Gikondo – which was then located in the old industrial park, went for Rwf912 million and was bought by Rwanda Trading Company (RTC), a subsidiary of an American based company, Westrock Group LLC.
Fast forward, barely 10 years later, Rwanda Trading Company has not only relocated to a modern facility in the Special Economic Zone but the company has grown in numbers in terms of staff, revenues and consequently becoming the biggest exporter of Rwandan coffee to the United States, Europe and Asia among other global markets.
In an interview with The New Times at the new factory in Special Economic Zone, Scott T. Ford, the CEO and Member at Westrock Group LLC spoke about the journey to transform the business which he said “almost killed him” but in the end made him and Rwandan coffee farmers stronger and better.
Through perseverance and innovation, he says, Rwanda Trading Company has made Rwandan coffee a household brand on the international market.
“Honestly it’s been a thrilling lifetime experience; we just saw a need, moved in and we have had some success despite some obstacles,” Ford said, speaking about the company’s journey so far.
He said that that from the onset, their philosophy was to focus on how much they could pay the farmer and also retain some profit for the company instead of looking at how little they could pay the farmer to make a profit margin.
To him, a motivated farmer was the cornerstone for everything in the business.
When Ford first ventured into the coffee business, a Rwanda average farmer was being paid about 45¢ per pound of coffee. But with market research, he realized that it was exploitative and he changed the narrative.
“Now every coffee that is traded in the world is traded on what we call the New York c-price. With that we thought that we could buy coffee at about 90¢ and still make a 10 percent return on equity. So we started paying up to 90¢ and everybody in the market matched us because that how the market works.
“By so doing, we got every farmer in the country a 100 percent rise on what they were getting and interested them in upping their output.” Ford said.
Westrock Coffee’s business approach has always been to use direct trade to cultivate long-term relationships with the farmers who grow and supply them with coffee beans.
And there’s no better place to describe that relations than Rwanda; they train farmers on best agronomy practices and turn them into best coffee producers with a long-term target of increasing output.
“In Gikomero sector (Gasabo District) for instance, we started with 1,800 farmers producing coffee that traded at the New York City price +17 but this year that coffee traded at +45 and that has tripled because of good quality. Now most of these farmers have been able to pay school fees for their kids, buy motorcycles and build better houses.
Now we work with 85,000 farmers across the country and the story is literally the same and we plan to double that in the next five years.” Ford explains.
When Rwanda Trading Company started in 2009 they were shipping 10 containers a year; with 380 bags of coffee – each bag weighing 60kgs. But now they export about 300 containers of Rwandan coffee a year.
The company moved from exporting entirely ordinary coffee to fully washed coffee business, “because the policy of the government and the policy of President Kagame was to see added value in coffee business and other processing factories – which is a good policy.
“So we started doing washed coffee business, we were not good at that and so we lost money but we picked some lessons and we figured it out and we bought more machinery. And now we have about 16 washing machines.
In doing that, we were able to move from ordinary coffee to fully washed coffee. So if you go to an International market, a fully washed Rwandan coffee is competitive with a nice Brazilian, a nice Colombian, and a nice Costa Rica, which will make a nice espresso.
It took nine years to get every part of this business to make money. It almost killed me but it made me stronger and made the Rwandan farmer make a lot more money that they did before.”
The Company has also bought and rebuilt the roasting business in the United States for the Rwandan coffee which is about three times bigger than the factory in Kigali to get into the finished manufactured coffee to compete with the best in the world.
“We make a little money each year or we lose a little money but it depends on a host of factors. But we make some money that keeps us going and make us better every other year.”
When asked how Rwandan coffee is fairing on the global market, Ford noted that “Today Rwandan coffee is recognized as one of the top coffee in the United States.
We have built a brand which is good for the Rwandan brand in general and which is very important to me.”
Rwanda Trading Company’s headquarters and dry mill in Kigali has 200 full-time employees with about 50 per cent of them are former farmers.
In 2012, the facility started the fully washed coffee business and the plan is that by end of this year, about 45 percent of the Rwandan coffee will come to this plant making them the largest fully washed coffee producers in the country.
Currently RTC process and exports 40% of Rwanda’s yearly coffee production, they own and operate 16 wet milling stations and work directly with farmers throughout Rwanda – buying, milling, processing and marketing their coffees.
“We service roaster clients throughout the United States, Europe, Australia and Asia. By the end of this year we will be doing 100 percent of fully washed coffee’” Ford says.
About doing business in Rwanda
“I will be very honest with you; it is like doing business in America. It is not perfect because no one is perfect but the main pillars of building a free market system are all in place in Rwanda.
The rule of law and taxation regulation is fairly adjudicated. Sometimes it takes a long time but the underpinning is that Rwanda gets the rule of law right.
In Rwanda, there’s zero tolerance for corruption. You get these things right then you get everything moving. Taxes will keep moving everywhere, sometimes in the direction we appreciate as businesses or sometimes they are against us but it is everywhere.
There’s no special treatment for anyone in Rwanda, which makes it fair and free for businesses. As a foreigner, I have always felt welcome but never felt specially treated and it would be unfortunate if anyone expected that. In the Special Economic Zone, we have reliable water, electricity and workforce, which any big business would need to thrive,” Ford says.
With the Rwandan coffee making it big on the global market and the RTC entering critical takeoff stage, Ford’s hope is to see more coffee beans output from the farmers to serve the ever-growing coffee market.
We can keep up with the production but we can always do more. We got much bigger volumes coming in the next years because of the relationship we have built with the farmers. Thanks to the training in handling we give to our farmers.
I would love to do 500 containers every year in five years. I think we can double our current production.