22 December 2017

Rwanda: Farmers in Dilemma As Potato Prices Drop

A bumper harvest of Irish potatoes has pushed the prices of potatoes low, with dealers scrambling to come up with mechanisms to stabilise the prices and avoid losses to farmers.

In Kigali, at the beginning of the last quarter, the retail price of potatoes had peaked at Rwf300 per kilogramme and is currently selling at an average of Rwf150 per kg.

To reduce losses, authorities set the minimum retail price at Rwf170 per kg and Rwf215 per kilogramme, depending on the quality of the potatoes.

Implementation, however, remains a challenge as the market is flooded with the product.

The Irish potatoes are a delicacy in Rwanda served at almost every meal.

To control the supply of potatoes to Kigali city, the farmers are trying to control the quantity of produce allowed to be transported to markets.

According to the Federation of Irish Potato farmers' cooperatives, the decision to limit the supply of Irish potatoes to Kigali is in a bid to control falling prices which affect farmers' profits.

Vincent Havugimana, the president of the federation told The New Times that the resolution was reached after realizing that unregulated supply of Irish potatoes to Kigali had driven down prices to farmers' disadvantage.

In Burera, one of the potato-producing districts the prices went down from over Rwf200 per kg in September and early October 2017 to as low as Rwf65 per kg in December.

Havugimana said that the cooperative has started enforcing the decision which affects the supply of Irish potatoes to Kigali from four main potatoes producing districts.

Under the regulation, Rubavu (the biggest producer) is restricted to supply only 200 tonnes per day, Nyabihu 180 tonnes, Musanze 50 tonnes, and Burera 50 tonnes, making 480 tonnes per day combined.

The supply quantities were based on the size of acreage and amount of produce available in each district, Havugimana said.

"If we supply 1,000 tonnes of Irish potatoes to Kigali, the market will be oversupplied, driving down the prices," he said.

Farmers, however, are not happy with the regulation and are going ahead and selling their produce. This has put them at great risk of making losses as they agree to prices that do not make business sense because they do not want the potatoes to rot.

The New Times understands that Government officials including the Ministers for Trade and Industry, Agriculture and Local Government met over the pricing issue.

The meeting with representatives of Irish potato farmers as well as other stakeholders in the potatoes bussiness took place in Musanze District on December 6, 2017.

It resolved to put Irish potato collection centres under the management of farmers' cooperatives instead of private entrepreneurs (Middlemen) for better price regulation.

There are about 121 collection centers countrywide, according to Havugimana, who added that more centers will be created as more cooperatives are being formed.

Following the meeting, the Minister for Trade and Industry, Vincent Munyeshaka set Rwf140 per kg for farmers at the centers.

But reports indicate that the set price ceiling has been ignored by the farmers.

Munyeshyaka warned that whoever violates the price ceiling would be fined between Rwf20,000 and Rwf2 million based on laws governing internal trade.

The institutions requested to monitor the price ceiling are ministries of Local government, Trade, Agriculture and security organs as well as the districts' leadership.

Experts argue that price ceilings are a short-term solution and stakeholders will have to expedite plans to add value to the potatoes and implement the potatoes export strategy.

This year, the government signed a multimillion-dollar deal with a Nigerian investor to revamp and develop the country's potato industry and help make Rwanda a key exporter of potato products.

Under the deal signed in August with BlackPace Africa Group, the firm will also set up two potato processing plants and boost production activities.

The five-year project worth $120 million (Rwf102 billion) involves the building of two potato factories; one in the Kigali Special Economic Zone for frozen French fries and another in Nyabihu District to produce potato products for the export market.

The firm targets production capacity of 10 million tonnes of potato by the fifth year of the project.

When it starts operations, it will process 80,000 to 100,000 tonnes of potatoes making frozen French fries (at the Kigali Special Industrial Zone-based plant), and potato flakes and crisps (Nyabihu plant) targeting export markets in Africa and the Middle East, according to Olusegun Paul Andrew, the chairman of BlackPace Africa Group.


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