Local coffee farmers are holding their stock due to falling international prices.

However, the industry regulator — National Agricultural Export Development Board (NAEB) — has warned that the farmers must ensure coffee stock produced in 2018 is sold before the end of the year.

Officials at NAEB said the falling coffee prices are still within the range, and cannot affect the farmers’ income.

However, several exporters say with a price of kilogram of fully washed dropping from Rwf1, 589.1 to Rwf1, 248.6 in the recent months is enough to force NAEB to revise the reference price, which is set at Rwf, 240 per kilogram of cherries.

A reference price is the price set by the government as the minimum price at a farm gate.

“Reference price is the minimum price at the farm gate. When setting it we consider production costs and other attendant costs. We are guided by prices at New York Commodities Market,” Alain Ntwari, a coffee production officer told to Rwanda Today.

“They exporters can hold on their coffee. However, should the current stocks extend into 2019, they will be treated as old crop, which fetches very low prices,” Mr Ntwari.

An official at RWACOF, the largest coffee exporter told Rwanda Today on condition he is not named that “prices have been dropping but as we talk things have worsened.”

Losses

Jean Bosco Seminega, managing director of Dormans Coffee said the fall in prices is translate into losses to farmer because most of the coffee being held was bought at Rwf 300 per kilogram.

“There is a lot of competition on the Rwandan market. As of now, farmers are not affected, but it could be a matter of time,” another industry player said.

However, officials at NAEB insisted that they have consulted with industry players to arrive at an appropriate response.

NAEB warned that the current situation is likely to affect those negotiating new contracts because whatever the changes, obligations under existing contracts will be maintained.

However, officials at NAEB did not disclose how much coffee has piled up in their stores as a result of the fall in prices.

Rwanda’s coffee is mainly Arabica, and fully washed coffee constituted 58 per cent of total exports as of 2017.

Mitigate losses

To mitigate losses caused by fluctuations in prices at international markets, the government is encouraging production of top quality coffee for special markets.

“This kind of coffee must be traceable, its taste must be distinct. And it’s not hard to achieve this because our farmers deliver coffee to respective washing stations and records are capture. We can tell this coffee was produced from this particular area at this altitude,” Mr Ntwari says.

In July, NAEB said in this year Rwanda was expected to export 24,500 tonnes of coffee.they will achieve.

Coffee earns the country an average of $58 million and is an incomer earner for some 400,000 farmers in addition to people employed along the production up to export chain.