Sunday, September 25, 2022

107. Variation in coffee cherry prices paid in Rwanda

Artisan tracks cherry prices in Rwanda carefully and has implemented a number of innovative contracting and pricing practices. Recently, we have been excited by new developments that seem to be a mix of market forces and new government pricing philosophy. Together they are playing a positive role to improve incentives for  farmers to invest in coffee.

Evidence shows that micro-markets developed in 2021, and cherry price disparities of as much as 180 Rwf (US$ 0.18) existed at any given point in time, (author’s data, see Table 1 below). This finding is based on Artisan’s convenience sample of 14 farmer interviews conducted in four districts post-season 2021. For example, Artisan interviewed four Ejo Heza farmers in the south of Rutsiro district and documented prices of 250–360 Rwf/kg cherry, (a difference of ~ US$ 0.11 per kg cherry), which is surprising considering these farmers belong to the same co-operative. Through interviews with female farmers in other districts of Rwanda, prices were found to average 310 Rwf in one area (Karongi), 340 Rwf in another area (Rusizi), 400 Rwf in central Rutsiro, and peaked at 430 Rwf in Gakenke, (see Table 1). The difference between the highest (430 Rwf) and the lowest (250 Rwf) is 180 Rwf (US$ 0.18).

Table 1: Anecdotal evidence: variability in cherry prices across micro-markets for female farmers, 2021 season, Rwanda

We highlight these intra-country price variations to demonstrate that micro-markets exist in Rwanda and offer anecdotal evidence of markets at work in Rwanda’s coffee sector. A government floor price, such as Rwanda's farmgate price, plays a welcome role in protecting farmers against predatory prices. Price variability above a farmgate or floor price is welcome in that it shows how markets are regulating supply and demand across Rwanda’s micro-markets. Micro-markets are defined by different land ownership patterns and variances in soil fertility, elevation, competition (density of washing stations), etc. The variables impacting price are many, and market-based prices are good at adjusting to fluctuations in these forces in ways that reward producers.

Ideally, NAEB officials will leverage the buoyant price environment and continue to allow variable prices among Rwanda's micro-markets. We hope they can entrench polices and activities which align farmer motivation with national production and global product differentiation goals.


[1] 2021 average RWF USD exchange rate of 1001.

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