Benefits, justifications and risks

Project beneficiaries and project benefits

General. It is expected that between 15 000 and 20 000 poor smallholder farmers will participate in the project coffee diversification component, including a significant number of women head of households. The tea programme will concern about 9 600 HHs. In the Nshili District, the number of smallholder beneficiary HHs would be about 4 800, at least one third of which should be women head of household. In Mushubi similar numbers will be targeted. In total, the project support to the traditional export crop sub-sector would benefit some 125-150 thousand people.

Coffee. The survey of smallholder coffee farmers’ opinion conducted by the project formulation mission record and among the poor growers’ issues: (i) the need for stable and better prices, (ii) delays in payment by traders, (iii) lack of resources to rehabilitate their coffee bushes, (iv) absence of equipment to de-pulp the cherries, (vi) the painstaking dirty and time consuming work to de-pulp manually, and (vii) the non-availability of inputs, tools, and spraying equipment.

The benefits of the project for the farmers willing to accept the project partnership conditions would vary over time. Over the years during which the primary societies purchase their ownership of the industrial facilities through the dividends paid by the processing companies, the major benefits would be:

• free planting material and initial inputs for rehabilitation and expansion of their coffee plots;
• a stable price higher than what they could get otherwise;
• no delay in payments;
• the purchase of the fresh cherry they produce, rather than the parche; and
• access to credit through advance payments guaranteed by the delivery of coffee crops for processing.

When the cooperatives are fully in control of the processing companies, the smallholder participants will be in a position to further raise the fresh crop price.

The price for the farmers to obtain such benefits is based on the rigorous application of the technical requirements for producing the quality of fresh cherries that the processing companies will accept to market the final products at a profit, having paid growers the prices announced for the quality of cherries that they must deliver.

The average growers price assumed for the financial projections of the processing and marketing companies is USD 0.11/kg (FRW 50 at the May 2002 rate of exchange) for the fresh cherries, equivalent to Frw 250 per kg of café parche. This is higher than the price actually paid currently by local traders, which is less than Frw 200/kg of parche. A stable price of USD 0.11/kg and a ready outlet for the fresh cherries, is a very good incentive for the growers. The impact on the HH budget would vary with location and size of the coffee plot relative to the rest of the farm holdings.

By way of example, the income model of a “poor” coffee grower HH in Kibuye (see table 4 of Chapter VI), shows a total net HH income of USD 348, of which no more than USD 20-30 from coffee, and a gap to the threshold of poverty of USD 77. As a result of the project, that HH can improve and marginally increase its coffee plot from 150 to 250 plants (0.11 ha), and obtain a net income form coffee of USD 80-90, through better prices, increased production, and some higher yields. The increase in net cash income of USD 50-60 per annum on account of coffee, will represent a significant improvement, getting the HH near to, although not quite over, the threshold of poverty. Coffee benefits would be larger when the cooperatives, finally in control of the factories, are in a position to increase the price of the fresh cherries. The financial projection a typical CPMCC shows that such increase can be of the order of 30%.

These results can be obtained with a marginal increase in the cropping intensity of seasonal crops, such as to keep the total farm production of calories per HH member at the pre-project level, which cover the minimum requirement for food security. The farm model analysis also shows that the returns to the day of family labour applied to coffee would be in the range of the other most remunerative crop (banana), and almost three times the current daily wage for casual work. The following table summarises the with-and-without project situation of a HH improving the coffee plot to 250 plants under the project. Details of the farm models are given in Working Paper 4.

A similar model is presented in Working Paper 4 for a woman headed HH with 0.6 ha of land and 100 plants on 0.05 ha coffee plot. This HH could increase the number of plants on the coffee plot to 150, without jeopardising food crop production. The net income from coffee would be half of the previous case, and the overall nutritional value of the farm produce per HH member, would also be about half. The coffee income could in principle supply 20-25% of the food deficit of the HHs. In this case also the model shows that this very poor and incomplete HH has no shortage of labour to handle food and cash crop production from the limited amount of land they control.

Table 19: Expected benefits to smallholder coffee planter HH

A coffee grower participating in the project would also benefit from the guaranteed credit scheme. In the case of the HH shown in the table above, the HH would be in a position to borrow each year up to USD 30 against its coffee delivery, which would permit them to buy some fertilisers on credit not only for coffee, but also for food crops, and so increase the ceiling intake produced of the farm, or to provide for other urgent necessities, or to purchase a goat, for example, at a price of USD 20.

Tea. The current situation of a poor HH selling labour to the OCIR plantation at Nshili is compared in the following table to the “with project” situation estimated in Table 5 of Chapter VI. The green leaf price assumed is Frw 45/kg, which is slightly higher than currently paid (Frw 43/kg). As a result of the project, the income of the beneficiaries of the plantation distribution is expected to increase from well below to just above the threshold of poverty. However, when the primary societies are in a position to acquire the full control of the factory, the price of the green leave can double, increasing the net income of the HHs by about USD 130, bringing the total income well above the threshold of poverty. At Frw 45/kg of green leaves, the remuneration of a day of work by the HH members in tea growing (Frw 900) will be well above the current daily wage for casual labour, and lower only to that of growing peas. However, when the price of the green leave doubles, tea growing will be by far the most remunerative crop for the farmers.

Table 20: Expected benefits of Nshili project on a poor HH beneficiary of the distribution of the OCIR-Thé plantation

The figure presented in Table 20 assume that, after organising their tea plot the beneficiaries of the distribution use their cash income to purchase fertilisers also for their food production, which exploring the very large increase in the motion value of their farm production.

Availability of family labour for tea and coffee growing. The mission has investigated the question of whether poor smallholders in the project area have sufficient labour to handle a new approach to coffee and tea growing. The farm models presented in Working Paper 4 are based on a poor HH farming 1.1 ha with 0.1 ha coffee plot. This HH would have a labour force equivalent to 2.5 adult persons per day available during peak demand for agricultural work on the family farm, that is, net of the labour required to perform mandatory HH maintenance tasks that cannot be postponed during such periods of the year. Such labour force is well in excess of what is required to handle all the cropping tasks during the two growing seasons, which is estimated at a total of no more than 250 work days per annum, with a peak of 64 work days per month during the month of May. A coffee grower with 250 bushes does not need to apply more than 50 workdays to this crop, out of the total of 250 days. The most labour intensive activities (mulching and harvesting) are actually spread over a harvest season of 2-4 months. Coffee cherries do not all mature at the same time, so that only a small input of family labour is required on a weekly basis to harvest 250 plants over several weeks. Similar considerations apply to a very poor HHs with only 1.5 labour units in the family that would handle half the farm holding size, and a coffee plot with between 50 and 150 plants. A tea planter with 1.1 ha of land, and 0.25 ha of tea, has a heavier workload a little more than 300 days, but more evenly spread throughout the year. Picking is done twice a month, but is not done at the same time across a plot of 0.25 ha. Normally, the plot is split into three or four sections, so that harvesting takes one person 3 to 4 working days twice a month. Some time is required for pruning, however, there is no need for mulching, and little weeding is required once a good tea bush canopy is established to protect the soil.