Coffee farmers could witness lower margins next year as high production from Brazil is set to weigh down coffee prices on the international market, a senior coffee analyst said.
The forecast is set to send a signal to local coffee farmers and dealers to always monitor the international market in order to diversify their source of income.
“Coffee prices on the international market are determined by forces of demand and supply and Brazil’s supply is expected to be high next year which will push the prices down,” Keith Flury, a Senior Commodity Analyst on coffee said last week during a coffee dinner organised by Banque Populaire du Rwanda (BPR).
The dinner was attended by stakeholders in the coffee sector.
Flury advised local farmers to closely watch trends in the world’s top coffee producers, Brazil and Colombia.
The Minister of Trade and Industry, Francois Kanimba, noted that coffee prices on the international market are always fluctuating so more focus should be put on the sector.
“We import more than we export and among the exports is coffee so we should be giving additional value to compete well on the international market,” Kanimba noted.
Kanimba further said that more finances should be allocated to the sector and farmers should roast coffee before exporting in order to add value to the product.
At the export level, Rwanda’s SW coffee has attracted a price of US$5 (Rwf2,990) per kilogram this year compared to US$3.88 (Rwf2,320) last year.
Coffee is expected to fetch US$99.2m (Rwf59.3b) next year.
However, experts say this is a very ambitious target especially at this time when local farmers are grappling with old coffee trees, which could hamper productivity and possibly scale down exports.
According to the National Agriculture Export Board (NAEB), 24 per cent of the total coffee trees in the country are old, which calls for a national strategy to replace the old and low-yielding coffee trees with new ones.
NAEB says it will sensitise farmers to increase coffee production through good management of existing coffee plantations and increase extension services.
The coffee industry is one of Rwanda’s top foreign exchange revenue earners alongside tea, tourism and mining.