2.3.4Marketing of coffee in
Rwanda
In many developing countries, governments are heavilyinvolved
in the agriculture sector, and that certainly holdstrue in Rwanda, where coffee
has been a major export fordecades. The Belgian government as well as the two
independent,pre-genocide governments controlled importantaspects of the coffee
trade for their political and financialgain. Through compulsory production,
export taxes, and amonophony export control agency, these regimes capturedthe
profits of mostly poor coffee farmers, and used thefunds to help maintain
political power (Bates 1981). Producershad little incentive to invest in the
production ofhigh-quality coffee, and so for decades Rwandans produced a small
volume of low-quality coffee.Significant government involvement in Rwanda's
coffeesector began in the 1930s, when the Belgian colonial governmentlaunched a
series of «coffee campaigns.» Governmentauthorities built nurseries
and supplied seeds, butthey also required Rwandan farmers to plant coffee
trees(Dorsey 1983). The government also introduced pricerestrictions, imposed
mandatory quality guidelines, andissued special licenses that allowed only some
firms to purchasecoffee. Export taxes were imposed on coffee sales,
andindividual income taxes were imposed on producers, which helped support
them and the colonialgovernment.
Following Rwanda's independence, from 1962-1973, the
government retained most of these policies becauseit had limited alternatives
for raising revenue. A governmentMarketing board (OCIR, subsequently
OCIR-Café),together with a monophony export company, Rwandex,purchased,
and then sold on world markets, the vast majorityof coffee grown in Rwanda. The
farm gate price was set bythe government.3 Middlemen bought beans from
farmersand sold them to Rwandex, which in turn sold them toforeign buyers. The
locations where smallholders broughttheir beans for purchase acted as «the
economic arm of theGitarama (Verwimp 2003).Heavy government involvement in the
coffee sector continued from 1973 to 1994.Duringthe 1970s and 1980s, as world
coffee prices rose, coffeeexports provided between 60 and 80 percent of
Rwanda'sexport revenue (Berlage, Capéau, and Verwimp 2004).The
government ensured control of these importantrents by appointing relatives and
political supporters.
Today, the Rwandan government is less directly involved inthe
coffee sector. Farmers have more choice about what togrow, to whom to sell
their beans, and how to market theirproduct. Private sector investment in the
sector is rising. Thisincreased openness is part of a larger government effort
toimprove economic growth in the country. Rwanda's Vision2020 is a strategic
plan for economic change. This plan has,since 2003, provided a guideline for
sectoral policy settingwith Rwanda's ministries (MINECOFIN, 2007).
The goals created by Vision 2020, together with
Rwanda'sPoverty Reduction Strategy Paper (PRSP) and the subsequentEconomic
Development and Poverty Reduction Strategy (EDPRS), include improving the
institutional environmentto allow for increased private sector developmentand
infrastructure improvements, focusing on good governance(including
democratization, national reconciliation,political stability, and security),
improving agriculturalproductivity, improving human capital through
investmentsin health and education, creating a service-basedeconomy with a
focus on ICT (information and communicationtechnology), reducing external
support, relying more export and promoting regional integration (MINECOFIN,
2007).
Some progress has been made toward achieving the Vision2020
goals. Real GDP growth has been strong for more thana decade: 10.8 percent over
1996-2000 and 6.4 percent over2000-06 (MINECOFIN, 2007), reaching a high of
11.2 percent in 2009 (althoughit was estimated to fall to under 5 percent for
2010). With an emphasis on private-sector-ledgrowth and improvements in the
environment for doingbusiness, the economy is diversifying, merchandise trade
levels are rising, and the service sector is expanding. Particularlyfor rural
Rwandans, reform in the coffee sector isplaying an important part in helping
thousands of farmersincrease their incomes, by creating jobs and
providingopportunities for new skills training. The reform measuresare also
strengthening human and social capital and, in theprocess, may also be
generating valuable social benefits.
Commercialization contribute to the improvement of socio
conditions because from the harvest of coffee cherries of farmers to the world
market ,it passes to many categories of traders who gain from it and improve
their socio life conditions
| 
