Thursday, 12 July 2012

Rwanda : Rwanda Trading – promoting thousand hills coffee

Rwanda Trading Rwanda : Rwanda Trading – promoting thousand hills coffee
Rwanda Trading Company is a US-based company which came into Rwanda coffee processing business three years ago as a major competitor that actually broke the monopoly of Rwanda Export (Rwandex) – the largest coffee processor which existed in the country.

The coffee processing factory was opened in 2010 and deals in coffee processing and exportation and a little bit of roasting and selling locally.  The factory is located in Gikondo industrial area in the former Rwandex factory.
The company exports Rwanda coffee to major buyers in the US and Europe and it operates with Coffee roasting giant Westrock Coffee who purchase massive quantities of dry Rwandan coffee to be shipped to the US state of Arkansas for roasting.
The decision of Westrock Coffee to start importing Rwanda dry coffee for roasting follows the acquisition of a new larger roasting facility in Arkansas
As a competitor, Rwanda Trading managed to ‘throw’ Rwandex out of competition since the company was already facing internal administration problems and eventually redeemed bankrupt due to major losses in the sector and failing to pay off the debts owed to the farmers.
Rwanda Trading Company bought loss-making Rwandex at US$2.3million and has since pumped in $7million for expansion. The company was exporting about 6,000 tonnes of ordinary – with revenues of up to $10 million annually.
Today Rwanda Trading is considered as the best coffee processing plant in Rwanda alongside others competitors like Rwacof and CBC– who have improved the export of coffee to foreign markets and bringing more income to the 400.000 local coffee farmers.
The company has an annual export capacity of 4000tons and possesses a range of special machinery for hauling, drying, grading (by size, weight and color) and other loading machinery used. The company also employs over 85 permanent staff and over 250 casual laborers  who are recruited during the off season.
Rwanda trading works with farmers through agents who buy the coffee from the farmers, this coffee is either sold directly or bought and processed. With the coming of coffee washing plants, farmers can actually sell the coffee directly to Rwanda trading- who however have to process the coffee so that it is ready for export.
The Managing Director of Rwanda Trading Company, Matt Smith, say that company was motivated to enter the market because there was not a lot of industries processing coffee in Rwanda, so they decided to enter the market to compete with the existing companies, not to reduce the prices but to raise incomes of farmers and subsequently make a good profit for business.
Smith says that the greatest impact made by Rwanda Trading, in the coffee sector, is that there has been a favorably competition which has apparently increased the percentage of export value that stays with the farmers,  as opposed to going to the exporter in terms of incomes for the local farmers in Rwanda, unlike in the past.
“The world market prices go up and down, but the difference is the impact we have made- that is- our profit margin is below 15 percent every year, as compared to 25 percent in the past- which means the 10% remains with the farmers instead of exporter” Smith says “we have no problem surviving with the 15 percent margin instead of a bigger margin which goes to our competitors”
The prices of a kilo of coffee on the world market keep fluctuating between $3 to 6 dollars US dollars and on average the farmer makes to Rwf294 per kilo of coffee cherry(as per 2010, thus the farmers margin is estimated at 350% because they invest about Rwf80 per kilo, Smith explains.
The production and export for Rwanda trading company has been changing slightly and steadily and exports have been increasing every two years with a little margin. However, Smith says that Rwanda could double its exports in two years by farmers not planting more trees but taking care on the trees and just work on the trees.
He notes that the coffee sector can earn more than 100million US dollars in extra income, and this can reach 200million dollars target and beat the Rwanda tourism sector(which is the highest foreign earner), if only the farmers could be trained on simple farming practices such as mulching and pruning.
“This is not an easy task to train all the 4000 farmers but it is worthy trying and a lot of focus put in agronomy training that would help Rwanda’s exports out a lot. I mean in two years we could be reaching tourism up in two years if we double the coffee by maintaining the trees” Smith says.
Apparently Smith says that the company is doing well as a foreign group in the sector and after three years the company has grown quickly because of honest business in Rwanda. However, the company has to be relocated among the factories to be moved to the new industrial area in Gasabo district (Kigali Special Economic Zone -KSEZ).
The only problem is that his company still is being referred to as Rwandex- a name that has stuck in the minds of the local residents since the factory is located at a bus stop commonly known by the former company-Rwandex.
Meanwhile, coffee has always been one of Rwanda’s all time cash crops and Rwanda Trading Company seems to know this pretty well. The company has developed coffee production and trade right from the grassroots. They believe in helping farmers realize their dreams through earning what’s worth of their production. Rwanda trading company delves into help, right from washing farm to coffee washing stations and even export. The company has ventured miles and miles to the furthest areas of Rwanda just to ensure that the coffee plant is given its due worth.
When its  coffee time, there is no such thing like a break, for Rwanda Trading company. Not even a few challenges can stop them from promoting coffee to where it should be. The company has a great deal of plans in regard to promoting coffee.


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