22 January 2013

Rwanda: Coffee Export Revenues Drop

Kigali — Rwanda's export earnings in 2012 reportedly increased despite a bad year for coffee, the country's main agricultural export alongside tea.

Available data obtained from the National Agricultural Exports Board (NAEB) and those of the Rwanda Development Board (RDB) indicate between January and October 2012, coffee receipts amounted to US$44,723,043Million compared to US$61,339,958 million for the same period in 2011.

It's unlikely the earnings from the two months of November and December could have bridged the deficit in a year where the crop's prices on the international market were highly volatile due to high supply from major producers such as Indonesia although Central American producers are experienced adverse weather.

Nonetheless, figures indicate that Rwanda managed to register a general increase in exports earnings in the first months of 2012 with a total receipt haul of US$385 million compared to US $315 million from January to October in 2011 representing a 22% increase.

The fall in coffee export revenues is attributed to an acute fall in prices of the product on the international market, according to NAEB international marketing officials.

Yet 2012 was supposed to be the bumper season where high volumes are expected.

However, it also meant the high volumes supplied pushed the price down wards.

The earnings in the first ten months are hardly even a half of what NAEB had anticipated to earn from coffee in 2012.

According to Rwanda coffee Strategy for the period 2009 to 2012, the target for production was expected to be 33,000 tons of coffee with 19,000 tons of this fully washed. This volume was expected to generate export receipts of $115 million. 2012.

Coffee alongside tea have traditionally been Rwanda's most important exports and for coffee alone, one of the most important cash crops for close to half a million coffee growing families but heavy reliance on the weather and other natural factors means its status on the international market is always unpredictable and government here continues to work on alternative exports with Tourism now taking centre stage.

In fact, the first ten months of 2012 are telling enough as statistics indicate that the traditional sector comprising of coffee and tea accounted for a combined total of just US$ 100 million (US$44.7million from coffee and 54.89million from tea) with the non-tradition, other export and re-export hauling in a combined total of US$ 285 million receipts.

On the New York futures market, which reflects the situation of Arabica coffee, the average market price fell by 27% from 5.56 U$D/kg (252.01 US cents/lb) in 2011 to 4.05 U$D/kg (183.81 US cents/lb) in 2012, states a coffee market report obtained from NAEB.

"Coffee prices have fallen sharply in 2012 as a result of increased production.

The ICO now forecasts global production to total 132.7 million bags for the 2011/2012 season also recent data from the ICO has shown that coffee consumption last year grew by 0.5 percent to 137.9 million bags, which was below the 10-year average of 2.3 percent.

Coffee demand in producing nations grew by 3.3 percent while demand in emerging markets fell by 2 percent according ICO data," explains the report.

Normally, washed coffee fetches more receipts that ordinary coffee but 2012 didn't spare that category either despite Rwanda putting in an effort to wash more coffee to earn more.

According to NAEB's coffee market report, fully washed (FW) coffee prices also went downwards where the weighted average price went from 7.5 U$D/kg January to 4.51 U$D/kg in December making a 39% decrease in prices of specialty coffees.

The year 2013 is expected to be of low yields as the case is always after a bumper harvest, that means lower volumes of the crop and depending on how much of the crop the bigger producers turn in, could mean slightly higher prices this year based on lower supply against demand forces.

But no one is certain about that either.

It's due to this level of uncertainty that Rwanda is putting in more efforts in other sectors especially tourism whose earnings for the country in the first nine months of 2012 more than doubled the combined performance of both coffee and tea receipts in ten months.

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