Farmers have hope as coffee price increases
Coffee price fluctuation at the international market is caused by many factors that include geopolitical reasons, climatic conditions, global demand outlook, and is one of disadvantages of economies that rely on coffee. Actually, coffee is the second-most traded commodity with oil being the first. For Rwanda, it is among the first sectors that generate more revenues. Additionally, 355000 households depend on coffee.
In Rwanda the price of cherries at farmer level (the farm gate price is a minimum price) is fixed by NAEB in collaboration with the coffee stakeholders including the Association of Coffee Processors and Exporters of Rwanda (CEPAR), other exporters, coffee washing stations’ owners, representatives of the cooperatives and farmers, and representatives of financial institutions.
In the model which was used, the farm gate price is computed based on the international coffee price (New York ‘C’ Market), which is expressed in cents per pound (=0.01USD/0.020246 kg of green coffee), the exchange rate, the cost of processing and other export charges. Fertilizer and pesticide fees are also included in the model. This year the farm gate formula was revised and considered as well the cost of production of one kg of cherries.
The farm gate price is always fixed at the beginning of the picking season and can be revised every time when there is a variation of 10 cents per pound (c/Ib) on the international market price as agreed with the stakeholders
In the coffee season 2017 the farm gate price is fixed at FRW 264 per kg of ripe cherries; from FRW 150 in the 2016 season. This increase was appreciated by farmers and processors because they would invest more in coffee production with insufficient return, but currently, they rip big from their produce and focus on improving their agricultural practices in farms.
Published on 8th March, 2017
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