Have coffee reforms and coffee supply chains affected farmers' income? The case of coffee growers in Rwanda
Low prices in the international coffee markets have worsened the economic well-being among coffee farmers. In the face of this situation, the Government of Rwanda has introduced coffee sector reforms that aimed to transform the sector in a way that targets the high quality market and moves away from the bulk coffee market. The high quality coffee market has shown consistent growth over time and exhibits price premiums in international market. If these high prices are passed on to farmers who take advantage of the benefits of the new high quality market by selling coffee cherries, access to this new market could help alleviate poverty brought on by low prices in the conventional sector. However, the majority of coffee farmers in Rwanda rely on the conventional market by selling parchment coffee. The present study analyzes the effects of coffee sector reforms in terms of household expenditures, a proxy of income, on farmers selling coffee to two supply chains: parchment coffee channel and coffee cherry channel. Results from the random effects model on the two year panel data indicate that farmers benefited from coffee reforms by increasing their consumption over time. Farmers selling coffee cherries have gained from the coffee sector reforms in comparison to farmers selling parchment coffee. Based on these results, it seems that efforts to promote the production of high quality coffee would improve food security and the overall consumption expenditures of coffee growers.
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- L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
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