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Enhancing Coffee Quality in Rwanda: A Cost Benefit Analysis of Government Policies

Author

Listed:
  • Glenn P. Jenkins

    (Department of Economics, Queen’s University, Kingston, ON K7L 3N6, Canada)

  • Ludovic Mbakop

    (Department of Economics, Eastern Mediterranean University Famagusta, North Cyprus via Mersin 10, Famagusta 99628, Turkey)

  • Mikhail Miklyaev

    (Department of Economics, Queen’s University, Kingston, ON K7L 3N6, Canada
    Cambridge Resources International Inc., Cambridge, MA 02140, USA)

Abstract

Over the past two decades, Rwanda has positioned itself as a leading producer of specialty coffee. The strategic move from ordinary to specialty coffee has overall been economically beneficial to the country. However, the multitude of incentives provided by both the Government and international donors spawned a rush to build a large number of coffee washing stations (CWS) throughout Rwanda. This trend gave rise to an oversupply of these plants, with most operating below their processing capacity. Our study uses cost benefit analysis to estimate the economic welfare loss that Rwanda has suffered owing to the combined effect of the oversupply of CWS, the coffee zoning policy, and the government regulated cherry coffee prices. Our results reveal that, if the coffee industry were rendered more competitive by dint of a reduction in the number of CWS, then the annual savings to Rwanda would be substantial. Furthermore, farmers could potentially receive prices that are 150% higher than the mandated fixed prices they are currently been paid. Our analysis could potentially be beneficial to Rwandese policy makers in devising fairer incentives to keep farmers interested in coffee farming, thus ensuring the sustainability of the coffee value chain in the long term.

Suggested Citation

  • Glenn P. Jenkins & Ludovic Mbakop & Mikhail Miklyaev, 2023. "Enhancing Coffee Quality in Rwanda: A Cost Benefit Analysis of Government Policies," Sustainability, MDPI, vol. 15(23), pages 1-27, December.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:23:p:16513-:d:1293160
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    References listed on IDEAS

    as
    1. Mikhail Miklyaev & Glenn Jenkins & David Shobowale, 2020. "Sustainability of Agricultural Crop Policies in Rwanda: An Integrated Cost–Benefit Analysis," Sustainability, MDPI, vol. 13(1), pages 1-21, December.
    2. Rocco Macchiavello & Ameet Morjaria, 2021. "Competition and Relational Contracts in the Rwanda Coffee Chain," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(2), pages 1089-1143.
    3. Ludovic Mbakop & Glenn P. Jenkins & Leonard Leung & Kamil Sertoglu, 2023. "Traceability, Value, and Trust in the Coffee Market: A Natural Experiment in Ethiopia," Agriculture, MDPI, vol. 13(2), pages 1-15, February.
    4. Church, Ruth Ann, 2018. "Understanding and Improving the Price-Quality Relationship in Rwanda's Coffee Sector," Feed the Future Innovation Lab for Food Security Policy Research Papers 279858, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    5. Murekezi, Abdoul Karim, 2003. "Profitability Analysis And Strategic Planning Of Coffee Processing And Marketing In Rwanda: A Case Study Of A Coffee Growers' Association," Graduate Research Master's Degree Plan B Papers 11195, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. Clay, Daniel C. & Bizoza, Alfred, 2018. "The Challenge To Sustainable Growth In Rwanda’S Coffee Sector," Feed the Future Innovation Lab for Food Security Policy Research Papers 275678, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    Full references (including those not matched with items on IDEAS)

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