Coffee is more than just a beverage; it's a global industry that impacts millions of lives, particularly in developing countries. However, there is a pervasive issue within the coffee industry: the unequal distribution of profits. In this article, we will delve into the challenges faced by coffee-producing nations, like Rwanda, and explore the innovative solutions that are helping local farmers reclaim a fair share of the coffee market.
The Coffee Conundrum
At present, approximately 90% of the total value of coffee goes to a select few multinational corporations, often referred to as "Big Coffee." These conglomerates control much of the coffee production, distribution, and pricing. Consequently, only a meagre 10% of the coffee's value remains within the country of origin. This is a global issue that impacts not only Rwanda but many other coffee-producing nations across Africa and beyond.
The Export Dilemma
In Africa, where our focus lies, coffee is predominantly exported in its raw green form. Countries like Uganda, Rwanda, Kenya, Ethiopia, Zimbabwe, Angola, Ghana, Cameroon, and emerging coffee regions bear the brunt of this challenge. In addition to African nations, coffee-growing regions in Brazil, Puerto Rico, Cuba, Mexico, Honduras, Ecuador, Colombia, Peru, Vietnam, Indonesia, India, and more face similar circumstances.
The issue arises when we consider where the value addition occurs. Roasting, a critical step in the coffee production chain, primarily takes place in fully developed nations such as Central America, Canada, Central European countries, the United Kingdom, and Scandinavian countries. These developed nations have also wielded significant influence over global coffee market prices and taxation policies, making it nearly impossible for developing countries to ascend the value chain by focusing on roasted coffee exports.
The Taxation Challenge
One major obstacle to the growth of the coffee industry in developing countries is the discrepancy in taxes applied to green coffee versus roasted coffee. While the tax burden on green coffee is relatively lower , roasted coffee bears a disproportionately higher tax rate upon import. This disparity not only hinders economic growth but also discourages local producers from investing in value-added activities.
A Solution: Roasting and Packaging in Rwanda
In recent years, innovative companies like Schiffkorb have taken the initiative to address these issues head-on. By roasting and packaging coffee within the country of origin, they are transforming the traditional coffee supply chain into a more equitable partnership. In the case of Rwanda, this means that 50% of the coffee's value stays within the country – a significant improvement compared to the typical 10% retained by many coffee-producing nations.
This shift not only empowers Rwandan coffee farmers but also fosters economic development and job creation within the country. By capturing a more significant portion of the value chain, Rwanda can invest in infrastructure, education, and technology, ultimately leading to a more sustainable coffee industry.
The plight of coffee-producing nations, like Rwanda, is a global issue that requires collective action. As consumers, we have the power to support fair and sustainable practices within the coffee industry. By choosing coffee brands that prioritize roasting and packaging in the country of origin, we can contribute to a more equitable distribution of profits and help these nations break free from the cycle of dependency.
It's time to recognize that the coffee in our cups represents more than just a morning pick-me-up; it symbolizes the livelihoods of millions of farmers who deserve a fair share of the coffee industry's prosperity. Let us raise our cups to Rwandan coffee farmers and their counterparts across the developing world, as they work tirelessly to redefine the future of the coffee industry.