Located at the heart of Africa’s great lakes region just south of the equator, Rwanda has some of the world’s most ideal growing conditions for coffee. In fact, coffee production has been at the core of family farm livelihoods for generations.
Today, coffee is the source of income for more than 350,000 households across the African country. The industry has seen an improvement in the quality of its wash processing system since 2001, which strengthened Rwanda’s position as one of the best specialty coffee markets around the globe.
The dry mills and export companies, both domestic and international, have similarly emerged during this period. Though the added value from this transformation has benefited Rwanda’s economy, those at the base — coffee growers — have benefited little.
In fact, farmers are moving away from growing coffee. A study conducted by the Feed the Future Innovation Lab for Food Security Policy (FSP) at Michigan State University examined the causes for decreasing numbers of coffee farmers in Rwanda.
The results show that failing to include the farmers as full business partners has been the main reason for this decline over the past decades. Compensation for coffee growers is on average 24 percent below the revenues of other farmers in the region.
FSP findings show that the true cost of coffee production in Rwanda, including household and wage labor, inputs and equipment, is 177 RWF (22 cents) per kilogram, a figure well above the old reference used for establishing cherry floor prices of 80 RWF (10 cents) per kilogram.
As a result, a large proportion of growers has unsustainably low margins or may even incur net losses, as was the case for over one-third of growers in 2015. The study reveals that farmers would make more by working as agricultural wage laborers on other, more productive farms.
Though taking good care of trees by pruning and weeding can increase yields, farmers have been neglecting and disinvesting in coffee trees because of poor compensation. This is particularly true of large-holder growers who can more easily change crops.
End-of-year premium payments provide some incentive to improve production, but only just over a quarter of coffee producers receive cash premiums. These are typically being paid by buyers for higher quality coffee and average about 8 percent.
Even with such a small incentive, farms that receive premiums have an estimated 26 percent higher productivity than those that do not receive premiums.
These findings demonstrate how sensitive farmers are to even small changes in remuneration and suggest possible policy changes to improve the equality of coffee growers.