The National Agriculture Export Development Board (NAEB) is confident the country’s coffee quality will cushion farmers, processors and exporters against the current decline in prices on the international market.
According to Dr Celestin Gatarayiha, the head of coffee division at NAEB, Rwanda might also not be affected because it sells its coffee through contract buyers.
“Rwanda sells coffee through negotiated contracts with international stakeholders… we do not sell at the Mombasa auction,” explained Gatarayiha.
He added that Rwanda exports a sizeable amount of specialty coffee, which is not likely to be hit by price decline. The expert, however, noted that they are also looking to improve quality and increase volumes in order reduce the impact of international coffee price declines.
“Buyers like quality coffee, and will pay handsomely regardless of whether there is an increase is supply,” said, noting that some of the coffees on the world market do not match Rwanda coffee quality.
He, however, said ordinary coffee was likely to be affected by the drop in global coffee prices.
Gatarayiha was responding to recent big declines in coffee prices at the Mombasa auction and at the world’s largest auction in New York, where prices have dropped by over 22 per cent.
The decline has been attributed to increase supply of coffee on the world market, especially from Brazil and Colombia, the major growers, and poor quality beans in some coffee exporting countries.
By mid-March, a 50-kilogramme bag of coffee had dropped from a high of $279 last month (202,275) to $228 (Rwf165,300) at the Mombasa auction.
A pound of coffee was 134 US cents down from the 168 US cents at New York Coffee Exchange.
Gatarayiha said the development was unlikely to affect Rwanda’s earnings from coffee exports, arguing that increased productivity will fill any gaps created by decline in prices.
The minimum price for unprocessed coffee is still at Rwf170 per kilo. However, due to better contracts with exporters, some farmers are paid Rwf250 per kilogramme, especially for specialty coffees.
Rwanda exported a total of 15,970 tonnes of coffee worth $59.68 million last year, up from $54.9 million in 2013, when 19,990 tonnes of coffee was exported.
Exporters, processors speak out
Local experts say they do not ship out coffee around this time of the year.
They however expressed concern; saying if prices continue the down-ward trend at the world market, they could lose “considering the price we are paying farmers presently”, said Jeremie Iyakaremye from Unguka Muhinzi Company in Kirehe District, which sells to American customers.
Iyakaremye also said they sign contracts around this period and start exporting from May to August. He was confident that since they sell high-quality specialty coffee (fully-washed green coffee), they would most likely not be affected by the current drop in prices.
“When you sign an export contract, price declines do not affect you,” Iyakaremye said. He added that the only worry would be if their buyers offer low prices “under the pretext that international coffee prices have dropped.
Iyakaremye said last season’s minimum contract price was $4.3 (Rwf3117.5) per kilogramme.
Some exporters told Business Times that the decline could affect those that have not yet signed price contracts.
However, Jean Nepo Habyarimana from Muhondo coffee Company in Gakenke District said the decline might not affect them, arguing they sell quality of Arabica green coffee.
“Last season, we sold a kilo of specialty coffee at $5.5 (Rwf3987.5) to buyers from the UK and America, who sell on the international market. We pay farmers Rwf230 per kilo of unprocessed coffee,” he said.
Immy Kamalade from Dallas Investment Company in Nyarugenge said they will know their fate in the coming months. His firm quoted a kilo of fully-washed at $5 last year.
Therese Nyirangwabije from Gakenke District said they sell at different prices, depending on clients.
Arabica coffee represents more than 98 per cent of all the coffees produced in Rwanda, while Robusta represents less than two per cent. Processed coffee (roasted and packaged) accounts for about 2% of the total coffee produced.