Coffee Closes 2011 On High, Faces Tough Times in 2012

Last year was good for coffee sector with the country earning US$ 61 million between January and October. This is expected to hit US$ 70million when November and December receipts are added.

This represents a US$ 17million increase from US$ 44million earned during the same period in 2010. Now Rwanda's National Agricultural Export Development Board (NAEB) is plotting to rake in even more earnings worth of coffee exports in the year 2012. This is despite chronic problems like pests and diseases that have ensured production remains low in recent years.

"Harvests have been poor here as most of my coffee plants are either sick or just can't seem to yield as much as I expect," says Damascene Mukulira a farmer in Rutsiro district.

Rwanda has about 90 million coffee trees with over 400,000 coffee farmers operating on an estimated area of about 35,000 hectares. However, the productivity from the sector has been so low in recent years despite the staggering number of coffee trees NAEB statistics claim.

This either means the 90 million trees are a myth or they are just too old to produce. For example, a coffee tree, according to NAEB can yield at least 3-4kgs. And whereas in 2010, the country's coffee trees only managed to supply 14,658 tons this quantity reduced further to 13,740 in 2011 and may fall further this year if NAEB does not address the causant factors.

This however is not a problem for Rwanda alone, but most coffee producing countries. As a result, coffee prices on the world market are surging due to limited supplies with a pound going for US$ 3 attaining a 34-year high in months after May 2011.

"This explains why despite our low coffee output we managed to earn more than USUS$ 60 million between January and October 2011 as compared to only USUS$ 44 million, for the same period 2010 where we had more productions," said Dr Ndambe Magnifique, NAEB's Deputy Director General in charge of export Operation & Market Development.

However, prices are forecast to fall in 2012 due to the large harvests expected in Brazil and Vietnam. "But diminished stocks will keep risks skewed to the upside... we anticipate the 2011-12 coffee season will be characterized by razor-thin stocks and high risks. But in our view this is a turning point in a decade-long trend of shrinking supply," says Rabobank, an international financial service provider.

Dr Celestin M. Gatarahya, NAEB's Head of Coffee Production Division says they are targeting a total production of 24,000 tons this year and US$ 99 million worth of revenue returns.

"Washed coffee fetches more money than ordinary coffee so we intend to wash at least 8,000 tons of our total productions and have at least 16,000 tons of ordinary coffee in 2012 these should be able to rake in more receipts than 2011," said Dr. Gatarahya.

In 2011, fully washed coffee was 4,175 tons as compared to 3,466 tons in 2010.

Currently, the country has 199 washing stations but Gatarahya says they should be able to increase these to 224 this year.

And in order to empower coffee farmers in the country, Dr. Gatarahya says they want to develop more cooperatives which currently stand at 207.

There are several hurdles Dr. Gatarahya and his team will have to go over if they hope for a better 2012, these include: processing and value addition, difficulties in finance accessibility, management issues in coffee washing stations especially those owned by cooperatives in addition to costly and demanding transportation of coffee cherries leading to high operating costs.

The other challenges are production-related such prevalence of pests and diseases, low levels of cherry production which has led to low profitability of coffee washing stations whose business is to wash coffee seeds and low levels of coffee production which have remained stagnant.

There are also marketing related challenges such as the obvious fluctuating prices on the world market, low capacity of local exporters and exports dominated by foreign based companies.

"Despite these challenges, there are also opportunities which we hope to exploit to the maximum in order to archive our target goals," says Dr. Gatarahya.

Some of the opportunities he refers to include the plan to expand coffee production on 9000 ha program which will offer an increase production.

"If coffee cherry prices on the market remain attractive as they were last year then that too should be a source of motivation to farmers in 2012," Gatarahya.

The question has always been whether the talk can be walked considering that at US$ 99million projected coffee receipts for 2012, it's still a long shot for NAEB whose long term plan seeks to see the country's top export rake in US$ 157million worth of revenue in 2017.

From: allafrica.com