The End to Coffee Zoning in Rwanda. What Happens Now?

In June last year, the Rwandan Ministry for Agriculture and Animal Resources announced the end of the coffee zoning policy it had introduced in 2016.

The zoning policy was first introduced to strengthen relationships between producers and coffee washing stations. It dictated that coffee producers could only sell their coffee cherries to the designated washing station in their ‘zone’.

There are currently around 300 coffee washing stations in Rwanda that purchase cherries from smallholder producers, to process the country's annual export of  20,000 metric tonnes of coffee. These washing stations are owned and operated by a mixture of co-operatives, individuals and larger trading companies, such as Muraho Trading Co, our export partner in Rwanda.

The zoning policy intended to protect the smaller washing station operators in what had become a fiercely competitive cherry market, and ensure that producers would deliver to the same station throughout the season. This security of supply allowed washing station operators to offer harvest finance, agricultural inputs, training, and other support to coffee producers ahead of each season.

Coffee being sorted by density, Rugali, Nyamasheke

The repeal of this policy is part of a move by the National Agricultural Export Development Board (NAEB) to increase the volume and quality of Rwanda’s coffee exports.  In theory, this free market model should drive demand to the larger washing station owners who can then produce more coffee, more efficiently, and to a higher quality.

In practice, there are concerns that the new policy could lead to a reduction in cherry quality. Producers may choose to wait on a better price or seek a more distant buyer offering a higher price. Regions with intense competition between buyers (such as Nyamasheke - home to 60 washing stations) will naturally pay a higher price for cherry than less well served regions, and so the motivation to transport cherries to different markets will surely be high.

Honey processing, Kilimbi, Nyamasheke

The 2024 harvest season is just beginning. and already, the influence of cherry suppliers or aggregators is growing. These suppliers (often the largest coffee producers in an area) will purchase cherry from multiple producers then deliver and sell them to the washing stations. This has long been common practice for logistical reasons, now the opportunity to sell these cherries anywhere, for the highest price is changing the dynamic.

It remains to be seen how this new policy will affect the nation's 400,000 smallholder coffee producers. A free market approach should mean an increase in price; indeed the average cherry price this year is expected to be 30-40% higher than the stated minimum price payable of 480RWF/kg.

Washing parchment, Kilimbi, Nyamasheke

However, under the previous zoning system the prices paid by quality focused washing stations were already consistently around this level. Such high prices were necessary to ensure the quality of cherry delivered, and to protect against producers seeking illicit sales to other washing stations. The loss of security for washing station operators without zoning may lead to a reduction in support services offered to producers. The potential for consolidation of larger washing station operations could in time also lead to a degree of market and price control, and negatively impact smaller and co-operative owned washing stations.

For operators like Muraho, who have built and maintained close relationships with the producers that supply their washing stations, consistently paid market leading prices for cherry and offered significant financial, and agricultural support to producers, the impact of this change in policy should not be too dramatic. On a macro level for coffee production, particularly production of specialty coffee in Rwanda, the effects may be more far reaching.

The banks of Lake Kivu, and Kilimbi, Nyamasheke