High cargo costs subject exporters to losses abroad

Tuesday December 22 2020

RwandAir is said to have adjusted its charges upwards after Covid-19 lockdowm, which makes local products uncompetitive when they hit international markets. PHOTO | CYRIL NDEGEYA


Farmers and exporters of horticultural products are staring at losses after the high cost of transport rendered their goods uncompetitive at the export market, with their regular buyers now opting for cheaper goods from other markets.

Exporters of a wide-range of horticultural products, including chilli, French beans, avocadoes, among others, are currently in a bind as many no longer get orders from their buyers, while those who export are selling very low prices and taking small quantities.

Before the first Covid-19 lockdown, exporters used to pay $1.4 for every Kilogramme transported by Rwandair, but since March the prices shot up to $1.8, and was never revised down even after the airline started operating normally.

“Along the value chain, the biggest player is the airline as any change on transport rates greatly impacts our pricing, right now we are uncompetitive on the market compared to our neighbours..

 Exporters in Kenya, Uganda pay far less for their cargo, we appeal to the government to reduce cargo charges because they greatly influences our pricing,” said Rukundo Robert, president of horticulture exporters association.

In a statement released by the association, exporters are calling for a review of other charges, for instance pack-house charges as well as other processing costs, which they say are killing them.


“We understand these are tough times for everyone, including the airline, but everyone needs to adjust and strike a balance such that others survive as well,” he said. He also suggested a waiver of VAT on the boxes, as one of the measures that can help lessen the burden on exporters.

It the height of the pandemic’s disruption a few months ago, the government listed the horticulture as one of the sectors to be supported in the Covid-19 economic recovery framework.

The economic recovery plan document indicated that at $1.8 per Kg, the cost of airfreight is high compared with the original price of $1.4, and that a reduction should be worked upon to facilitate horticulture exports, but this is yet to be done.

The government was also advised to secure more weekly flights to Europe at a subsidized airfreight rate, pointing out that consistent ability of exporters to commit volumes to export weekly is the factor in attracting affordable cargo rates.

Hot pepper buyers for instance in European markets, have pivoted to buying chili from Morocco, Egypt and Uganda, thanks to their competitive prices.

The fall in international chili prices led to a significant plunge in farm gate prices from Rwf1500 a month ago to between Rwf400 and Rwf600.

Most of the chili farmers planted during the dry season, enduring the painstaking irrigation costs, with a target of harvesting in December since it is the season that fetches the most money.

The farm gate prices of chili normally spikes to Rwf2000 in December, since the supply is usually low,  and the winter season in the west favours chili from Africa.