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Rwanda: Small but mighty

From the August 2019 issue.

Rwanda may be a small country and minor contributor to global coffee production, but its move towards specialty coffee is making waves around the world.

Nearly 60 years ago, Rwanda was under Belgian rule and home to a high-volume, low-quality coffee industry.

Three decades ago, Rwanda was experiencing a prolonged economic crisis due to mounting political instability and falling green coffee prices.

Just 25 years ago, Rwanda was in the midst of civil war and genocide against the Tutsi population that killed nearly one million people and displaced two million more.

These events rocked the country and nearly levelled the coffee industry. But thanks to strong involvement by the Rwandan government and support from external non-governmental organisations and private parties, Rwanda has managed to come back as a stronger, safer, more stable country. After plummeting 50 per cent in 1994, the year of the genocide,

Rwanda’s gross domestic product (GDP) jumped 35 per cent in 1995 (from the low base) and then increased about 13 per cent in 1996 and 14 per cent in 1997, according to World Bank. GDP has continued growing a strong 7.2 per cent per year on average for the past decade.

Similarly, the coffee industry returned with a vengeance, after losing a significant share of its labourers and production volumes plummeted 95 per cent to only 22,000 60-kilogram bags in the 1994 harvest season, according to the International Coffee Organisation (ICO). In the following harvest season, production was already back up to 329,000 60-kilogram bags and has been steady since.

“Coffee plays a major role in the economy of the country, contributing significantly to foreign exchange earnings and to the monetisation of the rural economy,” explains George Kayonga, CEO of the National Agricultural Export Development Board (NAEB). “Coffee is among the top four sources of the country’s export revenue, which makes the sector one of the backbones of the economy.”

Rwanda hosts farms across the central, southern, and western regions of the country, with its mountainous topography positioning most farms above 1200 metres. More than 97 per cent of coffee grown is Arabica, and about 95 per cent of that is one of several bourbon varieties, a move by the government to protect the country’s market. The combination of these factors produces a coffee profile with strong body, sweetness, and high acidity.

Despite the strong conditions for growing coffee, the small landlocked country struggles to compete on quantity. In fact, Rwanda barely makes it into the top 30 global producers, according to the ICO, contributing less than 1 per cent to total global coffee production. This is largely due to the country’s small size and the small scale of each farm. According to NAEB, about 335,000 farmers produce the majority of Rwanda’s coffee, and each of these farmers owns less than 0.25 hectares of land. The country has no large coffee estates. As such, yield per farm is generally low, exacerbated by old trees on most plots.

This challenge begins a cycle whereby the little income farmers are making, especially with current record-low prices, goes towards meeting basic needs, explains Banjamin Nkurunziza, Sales and Marketing Manager at local processor and exporter Rwanda Farmers Coffee Company (RFCC). “Because income is limited, the farmer doesn’t have enough money to invest in coffee farming to apply good agricultural practices. So it’s always a challenge of getting money to invest back into coffee farming.” When farmers are unable to invest in better practices and inputs or upgrade their trees, they continue to turn out low yields and low quality and, thus, the cycle continues.

While investment and initiatives since the civil war have focused on improving production, there is limited land for expansion. As such, NAEB and others have been working to improve productivity of existing farms and trees, while shifting the local industry’s historical focus on commodity-grade markets towards high-quality markets.

“The Government of Rwanda chose to focus on specialty coffee because our competitive advantage rises with the specialty coffee as opposed to volumes of coffees,” Kayonga tells Global Coffee Report. “So our visibility is mainly [due to] the quality of volumes that we do export.”

Largely through NAEB, the government has been providing technical assistance and planting materials to farmers, supporting domestic coffee processing and value-add, and promoting the steadily increasing quality, both domestically and abroad.

In 2017, NAEB launched a three-year technical program, Coffee Upgrade & Promotion Rwanda (CUP Rwanda), with the Japan International Cooperation Agency (JICA). The project has established two model coffee farms in the western province to teach appropriate farm layouts and agricultural practices.

“The project supports the entire value chain but focuses on two areas: good cultivation practices and quality improvement in downstream activities,” explains Pascal Furaha, head of agriculture at JICA Rwanda. “The project has also been tirelessly working to improve coordination of the sector by organising a functional coffee platform to facilitate smooth discussion among actors along the value chain and better information exchange.”

Another recent project under NAEB’s purview is a five-year partnership with RFCC and US-based Global Food. The partnership is focused on value addition, which is a priority within Rwanda’s greater economic development strategy. As one of Rwanda’s few roasters, RFCC, through its brand Gorilla’s Coffee, is demonstrating the value that processing can provide to upstream suppliers, while Global Food is providing access to the US market through its extensive logistics and distribution network.

Roasted coffee beans can command prices double those of green coffee, according to RFCC, which translates into greater earnings and improved livelihoods to producers. The partnership, which commenced in 2018, is estimated to benefit nearly 5500 farmers in six coffee cooperatives.

“Of course the main goal is to promote the livelihoods of Rwandan farmers,” Nkurunziza tells GCR. “When we export the coffee, we are adding value to it first. So then we are contributing not only to the improvement of farmers’ livelihoods, but also to the economy of the country.”

Up the value chain from roasting, NAEB has led the charge in expanding the number of washing stations, with initial help from the US Agency for International Development and many cooperatives establishing washing stations themselves. Previously, farmers would sell their unprocessed coffee to middlemen for the lowest prices, and the majority was exported in this unprocessed form. But today there are more than 300 coffee washing stations across the country – up from two in 2000 – which has increased the share of fully washed coffee to more than 65 per cent – up from 10 per cent in 2000. Access to this vast number of washing stations allows farmer groups and co-ops to process the cherries themselves and sell the green coffee for higher prices, while significantly boosting the share of high-quality Rwandan coffee across total production.

Despite necessary support, resources and infrastructure from the government, “agribusiness practitioners and the private sector were encouraged to invest in coffee processing to add value to the ordinary coffee we used to export,” says Kayonga of the extensive work over the years. “Coffee washing stations were created, as well as dry mills and roasting factories, all to promote our smallholder farmers and earn more profit from our exports. The more coffee exported of high quality, the more revenue beneficiaries will receive.”

According to the coffee strategy NAEB set out in 2002, “Rwanda will continue to produce both fully washed and ordinary coffee, [with the] majority fully washed. The benefits of continuing to produce both types of coffee are: that it provides competition for cherries, which ensures farmers receive the highest possible prices for their cherries, and that it ensures Rwanda is not solely reliant on the specialty coffee market.”

While NAEB targets farm-level projects and expansion of processing capacity, the African Fine Coffees Association (AFCA) is working on the other end of the value chain in hopes of boosting consumption of Rwandan coffee domestically and abroad.

“We see big potential in the development of the domestic market in countries across Africa,” says AFCA Executive Director Samuel Kamau, pointing out that Rwanda exports 99 per cent of its coffee. It’s also the densest country in the African mainland, so AFCA sees massive potential in converting some of its 12.2 million consumers into coffee drinkers, not to mention the entire continent’s potential.

“Domestic consumption is quite low, so that offers an opportunity,” he says. “We’re looking at how to develop this market over the next three years and how to create more effective marketing.”

The project with JICA also has a component focused on boosting local consumption, including organising barista trainings, coffee competitions and tourism activities, “in order to sharpen their skills as well as motivate them,” Furaha tells GCR. “The project encourages domestic consumption of coffee in order to stimulate the quality awareness of their own coffee, which is very important to understand global market demands.”

Rwanda held its first official Cup of Excellence competition in 2008 (and annually since) and capitol city Kigali hosted AFCA’s annual conference and exhibition this year. “After consistent increases in specialty production, it was high time to showcase the achievements of this important origin,” says Kamau on AFCA’s decision to host the annual conference in Rwanda, which welcomed 1200 attendees.

The annual conference “allows the cooperatives and exporters to meet and negotiate price with specialty buyers directly”, says Kamau. But this year, “one of the key aspects that came out of the Rwanda conference was the participation of women and youth. Working with the International Women’s Coffee Alliance chapter here, we were able to really bring together a lot of women in coffee, and working with Sustainable Growers, we were then able to showcase the work they have been doing in the farmland.”

Meanwhile, Rwandan coffee has been receiving accolades abroad. Last year, Rwanda earned “Best of the Best” and “Coffee Lover’s Choice” in illycaffé’s annual Ernesto Illy International Coffee Award. Based on criteria including complexity, balance, and strength, coffee grown by the Ngororero Coffee Washing Station in western Rwanda was selected after rounds of blind tastings by an independent jury. Ngororero was chosen from among the world’s top lots from the 2017/2018 harvests in nine countries.

Recognition and efforts on the international stage, combined with extensive work at the farm level, have helped the Rwandan coffee sector rebuild and grow following its rocky past. Although production has averaged below volumes seen before the civil war, it has remained steady overall and increased 10 per cent in the 2018/19 harvest season. NAEB hopes to expand cultivated land from 37,700 hectares currently to 39,500 hectares by 2023, and increase specialty coffee volumes to 80 per cent by 2020. While these may seem like ambitious targets on the surface, Rwanda has proven capable of great feats.

“With great integration of cooperatives into exporting and with shortening the value chain from farmers to the international market, I see a very bright future for the Rwandan coffee industry,” estimates Kamau. “And with the continued support of the government, I expect even better results in the future.”

Images: RWACOF Exports

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