The sub-sector context

The traditional export crops sub-sector

Coffee and tea constitute by far the principal export crops of the country, representing 71% of the total value of Rwanda exports. The share of the other crops (pyrethrum, quinquina, cut flowers, fresh fruits) remains marginal.

The main source of foreign currencies for many years, coffee has been surpassed by tea since 2000, when tea exports amounted to USD 25.9 million against USD 22.3 million of coffee export. The main reasons for the change are the fall of international coffee prices and the sharp decline in both quantity and quality of Rwanda coffee production. On the other hand, production of tea is increasing and prices on the international market are still rewarding for good quality tea such as that produced in Rwanda. The rehabilitation by the EU of the tea factories severely damaged during the war has been a major factor contributing to the performance of the tea sector.

Coffee. Despite the current difficulties, coffee still plays a major role in the economy of the country, contributing significantly to foreign exchange earnings and to the monetisation of the rural economy. Coffee-trees were first planted by German missionaries in the south western part of the country, in Mibirizi, the present province of Cyangugu, at the beginning of the 20th century. Thereafter, the colonial authorities pushed the crop in many parts of the country, and made it compulsory in 1927. After independence in 1962, the growing of coffee remained obligatory for as long as 30 years. The Ministry of Agriculture established a parastatal agency, OCIR-Café, with monopolistic powers to organize the smallholder planters, purchase their crops in the form of café parche, contract with private factories the processing of the parche into green coffee (café marchand), and sell the final product on the international market. With the liberalization policy introduced in the early 1990s, but actually implemented only after the war, the mandate of OCIR-Café has changed. OCIR-Café is expected to become a promotion regulation and monitoring agency in the sub-sector. Private traders are now allowed to purchase café parche from the smallholder growers, and to sell it to the hulling companies. Exports are increasingly carried out by private enterprises, acting as agents or paying a fee to OCIR-Café. Currently exporters pay a fee of Frw 3/kg.

The coercive planting policy secured a large increase in the number of growers and in production, spread widely the advantages of monetisation, but did not meet the consensus of all farmers. As a result of the liberalization policy, and of the drastic price fall in the late 1990s, farmers started to neglect coffee in favor of more profitable production of food crops. At present, about 400 000 smallholder coffee growers tend a total of approximately 60 million coffee trees, on average 150 plants per grower. The total area planted is estimated at 27 000 ha, approximately 3% of the total arable land. In 2001, exports were a little more than 16 000 tons, about 97% of the total production. Rwanda exports represent a negligible share of the total world market, which is estimated at 4.8 million tons. Nevertheless, the share of coffee in the export earnings of the country remains highly significant, despite the drastic drop in its relative importance. In 1990, coffee provided 64% of total export earnings, compared with 40% in 1998 and 34% in 2000. A reduction in area under coffee cultivation of 30 % is expected, which should not decrease current production if adequate measures are taken to improve yields.

Coffee is grown in most provinces, in areas with altitude ranging between 1 400 and 1 900 m, with good annual rainfall (1 500 to 1 600 mm), average temperature ranging between 18°C and 22°C, and on fairly acid soils (pH between 4.5 and 6). By far the largest share of the crop originates in very small plots, to the extent that smallholders coffee holdings are not measured in hectares, but in number of coffee bushes planted. The average plot has about 150 bushes, many HHs have up to 200-250 bushes in the best producing areas, but a large number of poor coffee growers have between 50 and 100 bushes. Planting was originally done at a rate equivalent to 2 222 bushes per hectare, but many plots have now a lower intensity. A substantial percentage of the existing bushes are well over 30 years old. Holdings of 1 ha or more of coffee trees are very rare, and there is no large-scale coffee plantation. The smallholder coffee plot occupies at best 7-10% of the total land available to a family, less than that if the total area cropped during the year is taken into account, since double cropping of seasonal food crops is generally practiced in the coffee growing areas. As a result, the area planted to coffee has little impact on the potential food production of the households, although its contribution to the cash earnings was important and contributed to overall pad security of the HHs until the international market price dropped in the latter part of the 1990s.

The best coffee growing areas in Rwanda are in the provinces of Kibuye, Cyangugu, and Gisenyi on the volcanic soils of the hill slopes overcoming the shores of Lake Kivu. In this area, yields are the best of the county with 1 100-1 600 kg/ha of coffee parche. The eastern part of the Gikongoro province follows, with yields currently about 900 to 1 000 kg/ha, and the districts of the Kigali-Ngali and Kibungo with yields about 800 kg/ha.

OCIR-Café did not promote the development of a modern processing industry. With very few notable exceptions, Rwanda coffee is first processed by smallholder planters using manual methods to de-pulp the cherries, or by groups of planters that operate hand-powered machines to produce “café parche”. Both processes are labor intensive, demand much effort and time, and produce pollution waste that cannot be properly treated. Unlike the fresh cherries, which tend to ferment very rapidly and must be de-pulped within hours of picking, café-parche is a product that can be stored for later further processing. Café-parche is processed by a few hulling units of relatively large size located in Kigali, which turn it into café marchand, the “green coffee” traded in the national and international market.

Under the current processing system, little quality control is possible or actually done in Rwanda. As a result, the quality of coffee is poor. During the 1980s, about one fifth of the production was of “standard” quality, the rest was below standard quality. Today, 100% of the export is “ordinary” coffee, which commands a very low price, in many cases below cost of production, processing and marketing. Under the current extremely low international market prices for low quality coffee, OCIR-Café has not been able to keep farmers’ prices at the officially recommended level of Frw 300/kg parche. Prices paid by private traders are now less than Frw 200/kg, which is inadequate to pay for the cost of correct management of the bushes, let alone for the rehabilitation of bushes long disregarded after the damages of the war.

The modern technology in other countries consists of mechanically de-pulping and wash the fresh cherries in coffee washing stations which are located within walking distance of the coffee producing farms, so that delivery occurs within a few hours of harvesting. This process includes a first screening of the fresh cherries, rejecting those of sub-standard quality. After de-pulping and washing, the café parche is subjected to a second screen for quality. It is then mechanically hulled (de-parched) and packed in a plant usually located away from the sites of the washing stations, where sufficient parche can be collected to exploit the economies of scale of the hulling equipment. Economically viable washing stations and hulling and packing factories can be rather small factories. The parche is first screened on arrival at the factory, and the green coffee produced is again screened, and graded before packing. Finally, export lots are tested for a variety of characteristics which determine the quality and the price on the international market.

Maintaining a high standard of quality means that a certain proportion of the produce is rejected. This proportion depends on several factors, including the picking of the fruits at the right stage of maturity. Coffee grains punctured by insects (possibly the source of the “potato taste” which heavily penalizes Rwanda and Burundi coffees) can be eliminated by flotation, but this reduces the green coffee to cherries ratio, and is not done. Neglecting to remove insect damaged grains is a self defeating habit because the loss in weight is a small fraction of the loss in price due lower quality of the products. Unlike in nearby Burundi, which has made a successful effort to modernize its coffee sector during the 1990s , there are only two coffee washing stations in Rwanda. With the opening up of the sub-sector to private initiatives, some entrepreneurs have begun to invest in processing the fresh crop, and several small projects aimed at producing Fully Washed coffee are under way.

Rwanda must establish a reputation for quality supplies, and has a contrary reputation to offset. Improving the quality of Rwanda coffee to the standard that would command remunerative prices is a major task. Cropping practices must be significantly improved, insect control exercised closely over an entire producing location rather than only on the plots of farmers that wish to improve the quality of their crop, correct harvesting and fast delivery to the washing stations is essential, and rigorous screening of the quality of throughput at all stages of the processing cycle must be exercised. In Burundi, the construction of about 80 washing stations has not been enough to reach quality standards commensurate to the potential of the growing areas, due to lack of rigorous quality control.

Tea. Tea growing in Rwanda started in 1952. Since its introduction, tea production has increased steadily, from 60 tons of black tea in 1958, to 12 900 tons in 1990, to 14 500 tons in 2000, reaching a peak of 17 800 tons in 2001. Over 90% of the production is exported, but represents only a small share of the total volume traded in the international market, which is about 1.4 million tons.

Rwanda tea is planted on hillsides at high altitude (between 1 900 and 2 200 m), and on well drained marshes at an altitude of between 1 550 and 1 800 m. A total area of approximately 11 400 ha is planted in the provinces of Byumba, Cyangugu, Gikongoro, Gisenyi and Kibuye. Tea plantations must be located near a tea factory because the harvest must be processed within a few hours of picking. There are three forms of tea plantations: (a) the industrial blocks (a total of 4 027 ha in the country); (b) the tea grower co-operatives (1 903 ha); and, (c) the smallholder (thé villageois) tea plots (5 469 ha). Industrial estates are large plantations, sized between 300 and 500 ha. One of the industrial estates, the Nshili plantation in southern Gikongoro, is almost 1 000 ha. The industrial estates employ wage labor. The cooperative plantations are also blocks of large size, with each cooperative member having 0.7 ha of tea. They use a mixture of family and wage labor. The planters of smallholder tea (thè villageois) have 0.2 - 0.25 ha of tea plots in their family holdings, and essentially use family labor. Yields are low by comparison with other producing countries in Asia and also in nearby African countries. Public sector plantations produce on average the equivalent of 1 400 kg/ha and smallholder plots about 1 200 kg/ha. Private sector managed plantations and cooperative blocks, by contrast, have recently recorded as much as 3 500 and 2 600 kg/ha, respectively, essentially due to applying adequate doses of chemical fertilizers.

The green leaves of the tea bushes are harvested all through the year but production peaks during the rains and is less during the dry seasons. This provides a smallholder tea planter with a regular cash income. Smallholder tea is generally picked by women, who receive payment in small amounts every two weeks.

OCIR-Thé is a State agency in charge of the tea sector. It was originally set up as a parastatal directly responsible for the production processing and marketing of Rwanda tea. Since the war, Government policy has changed and a new role is now envisaged for OCIR-Thé as a promotion regulation and monitoring agency. OCIR-Thé factories and industrial estates are in the process of privatization. However, the implementation of this policy has been extremely slow.

Tea is processed in 11 factories, each with capacity between 1 200 and 1 800 tons of CTC black tea each. Despite the announcement of privatization policy early in the 1990s, 10 of these factories are still owned by OCIR-Thé, one belongs to the private company SORWATHE. Processing capacity is a constraint, and many factories had considerable difficulties in handling the 2001 bumper tea crop. There is no factory near the OCIR-Thé estate established since 1988 in southern Gikongoro (Nshili district) with African Development Bank funding. The failure to build a factory at Nshili means that Nshili green leaves have to be transported to the nearest factory at Mata over a distance of 50 to 80 km on poor roads. This seriously reduces the quality of the tea. Due to the time required to evacuate the crop to Mata, the harvesting time at the plantation is reduced to no more than four hours a day, which also limits the production from the Nshili plantation. In addition, large quantities of tea leaves that arrive in Mata too late in the day for processing and are actually thrown away.

The quality of the Rwanda green tea leaves is among the best in the world, although a difference is noted between tea grown on the hillside and that grown in the marais. This excellent reputation is still acknowledged by the international market, despite the deterioration of the processed products which occurred after 1994. The state of uncertainty among the staff of OCIR-Thé regarding the privatization programme is partly responsible for the deterioration.

Sub-optimal delivery of fertilizers for both the OCIR-Thè industrial estates and the smallholder growers affect both quantity and quality of the green leaves produced. OCIR-Thé uniform green leaves price nation-wide is no incentive to increase production and ensure quality. Low prices for the green leaves have a negative impact on the way smallholder growers handle the pruning and harvesting of their tea bushes.