State Power, Entrepreneurship, and Coffee: The Rwandan Experience
In Rwanda, the coffee industry has played a particularly important role in the country's development. For many years, coffee was Rwanda's top export and chief source of foreign exchange income. In the twenty-first century the industry remains important: it provides a livelihood for some 500,000 Rwandan families, many of whom work in cooperatives and grow coffee on small plots on the country's hillsides.
In the past two decades, this important sector of the Rwandan economy has been transformed from a highly controlled, politicized industry to a liberalized sector that is quickly developing a prized niche product: specialty coffee. While the industry is benefiting from increased entrepreneurship and freer trade, the people who work in the coffee industry are also benefiting. They are developing wider trading relations, improving skills, increasing their standard of living and, most importantly, finding a path towards reconciliation--all thanks to increased opportunities to sell their product. Freeing the coffee industry from excessive government regulation and control is directly helping to free the people of this country from poverty and conflict.
The rise of the specialty coffee market in Rwanda presents an exciting research opportunity, for this market developed in the aftermath of the Rwandan genocide. It is providing the means for individuals, whose lives were devastated by conflict, to improve conditions for themselves, their families, and their communities. Rwandan coffee growers are competing with other coffee producers to improve their product, expand their knowledge of the worldwide coffee market, and increase demand for their goods.
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The farmers who transport their coffee to the GAC offices in Kasese on bicycles and pick up trucks before the long process commences get paid Ush3, 500 ($1.94) per kilogramme, translating into 30% to 40% above the market price
Available statistics indicate that a kilogramme of Arabica on the international market costs about $2.70 (Ush4, 860), while GAC fetches $2.88 (Ush5, 184) a kilogramme. One kilogramme of the beans produces 330 grammes of instant coffee and 800 grammes of roast and ground coffee. In 2006, GAC bought over 460 tonnes of washed Arabica coffee, which experts say, is among the best quality in the region.
This quantity, Rugasira told Business Week is anticipated to hit the 1,000 tonne mark worth Ush3.5 billion ($1.94 million) at the end of 2007. 110 tonnes were bought in 2004 with 2005 registering an improvement at 190 tonnes of washed coffee. An acre on average produces about 300 kilogrammes of coffee beans per season.
The optimistic Rugasira anticipates that GAC will attract a higher premium when German based firm, BSC Oko-Garantie GmbH certifies it as organic. He also hopes that his company will list on the Uganda bourse within the next five years with priority for shares going to the farmers.
Before GAC came into the equation, farmers were using the obsolete dry processing method of removing the outer skin of the bean, which while producing a reasonable Arabica cup, does not come close to matching the quality of the wet processed Arabica beans.
The UK's Observer Food Monthly (OFM) in its November 2005 editorial written by respected food and beverage critic Nigel Slater said of Rugasira; "Both a business leader and father figure, he has helped thousands of farmers to give themselves a steady income and provide them with the knowledge that they are at last being given a fair price for their coffee,"
Companies today cannot survive the stiff and dynamic business environment without a pro- active corporate social responsibility programme; GAC is involved in six community projects centred on education, environment, charity and micro finance.
Sipping on the last bits of my rich coffee like a Bohemian, I looked around at the excited farmers, hugging, congratulating and smiling at each other. In all this action, I could see the unlimited opportunities unveiled by the raw beans these farmers at the primary end of the value chain toil with, all year round.
Africa will never be transformed by handouts, we must solve our own problems and that is what we are doing
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