Government has reduced rice farmgate prices in a move that has raised the prospects of a dip in revenues for farmers.
Last week, the Ministry of Trade and Industry set new farmgate prices for short gain rice at Rwf270 and Rwf290 for long grain rice.
This means that farmers will now get Rwf18 less for a kilogramme of short grain rice and Rwf8 less for long grain rice compared to the previous season.
Apollinaire Gahiza, the president of Rice Farmers’ Federation (FUCORIRWA), told The New Times that the new prices imply that, overall, a farmer will get about 20 per cent in profits compared to the investment they made, which reflects a reduction of five percentage points.
Cassien Karangwa, the Director of Domestic Trade at the Ministry of Trade and Industry, said that was triggered by complains from processing factories saying that they had witnessed high supply from framers yet they still had stock from last season.
According to the ministry, as at January 8, 2019 rice processing firms across the country had an estimated stock of 5,000 tonnes of short grain rice and 1,600 tonnes of long grain rice carried forward from the previous season.
The ministry and analysts say the reduction in rice farmgate prices was also caused by changing consumer behaviours, with more and more people resorting to other staple foods such as cassava, bananas and corn.
Last year, Rwanda produced 113,880 tonnes of rice, up from 83,338 tonnes in 2017, according to information from the Ministry of Agriculture and Animal Resources.
Yet the country produces more than 1.12 million tonnes of cassava in 2018 from 1.04 million in 2017 as banana yields rose from 724,544 tonnes to 759,696 tonnes in the period under review.
Production of Irish potato increased to 835,576 tonnes in 2018, from 776,722 tonnes in 2017 while maize yields increased to 424,204 tonnes from 357,665 tonnes.
Now with the rise in the output of other staples, consumers prefer more affordable commodities.
“The Government sets minimum rice price to protect farmers’ interests so that they do not incur losses that might be caused by their weak bargaining power. Also, putting in place minimum prices helps farmers have contracts with agro processing factories as well as banks as it helps to make reliable estimates of finance based on projected production,” he said.
While government intervenes in setting farmgate prices, it does not have control over commodity prices in the retail market, leaving it to be determined by market forces.
Peter Uwamahoro, the Vice Chairman of Rwanda Forum of Rice Millers, told The New Times that while the prices that were set last year were favourable for farmers, they did not cater for the interests of rice millers whose business expenses were high.
“We were expecting to sell a 25 kilogramme sack of short grain rice at between Rwf14,500 and Rwf15,000, but we ended up selling it at Rwf12,500,” Uwamahoro said.
He added that the factory price for a sack of 25 kilogramme for short grain rice is Rwf16,000, some Rwf1, 000 lower than it was projected.
Short grain rice—locally known as Kigori—is the one which is attracting low demand from milling firms, a situation that is partly blamed on quality.
Gahiza said that only between 30 and 40 per cent of the rice the farmers grow is long grain.
“Long grain rice does not develop well in cold areas. So, we are telling farmers who have farmland suitable for such a variety to grow it based on the factories’ demand. We want to have 70 per cent of rice production occupied by long grain variety,” he said.