For Burundi, failure to improve coffee production is not an option
Amid an unstable economy, Burundi is working to improve productivity in its coffee sector by strengthening its value chain and implementing better practices. By Gordon Feller
Despite having 600,000 coffee growers, Burundi is a small player in international coffee markets and is operating in an environment of aggressive competitors. The improving productivity and competitiveness are not going to happen merely because of a production increase, and the local leaders know this. What’s really needed in this small African nation, is quality improvement along the value chain and a focus on the lucrative specialty coffee markets. Such efforts will allow the country’s products to be differentiated. It will also provide a better buffer for the inevitable periods of low prices.
Local leaders have come to a consensus, amongst themselves about the business principal which can drive improvements: quality starts at the farm level, and it can only be maintained through proper processing and storage.
Coffee production in Burundi is mostly smallholder-based, with approximately 122 million coffee trees and a production area of 70,000 hectares. Arabica is the species which is mainly grown, though some Robusta is also planted. The average production of coffee cherries is estimated at about 164,800 tonnes and around 20,000 tonnes of green coffee, of which about 70-80 percent are fully washed. Average coffee cherry production per tree is about one kilogram, which is far below the yields of 2.5 to 3.0kg observed in other coffee-growing areas, for instance in Asia and Latin America. Registered production of green coffee in Burundi in 1990-91 was 33,912 tonnes while observed figures in 2011-12 were about 15,000 tonnes. For coffee year 2017-18, that number dropped to 13,517 tonnes, according to Autorité De Regulation De La Filière Café Du Burundi (ARFIC).
According to the World Bank’s World Integrated Trade Solution (WITS) report of 2015, the current Burundian economy is predominantly based on agriculture. That one sector accounts for 40 percent of GDP and employs more than 90 percent of the population. Coffee and tea are Burundi’s largest exports, and coffee accounts for about one third of the country’s total export income.
The country’s highest pick was registered in 1994-95 with 40,985 tonnes. The cyclical swing of seasons sometimes leaves the country with limited quantities to export. Of course, there are many practical factors which have made consistent production a tricky matter, not the least of which were both a long civil war and devastating floods, which come and go. For instance, the floods of April 2018 were, according to organizations like ReliefWeb, some of the region’s most horrific.
Improving Declining Productivity
Despite the current low and declining productivity level of the coffee sector in Burundi, it continues to play a vital role in the country’s economy and represents the main industry and export product – accounting for up to 80 percent of foreign currency earnings. During the harvest of raw and green coffee, the sector plays also a key role in stimulating the rural economy.
The associated industry (de-pulping and washing stations) and traders inject an important sum of cash into rural areas, which in turn increases spending in purchase of goods for rural households, manufactured products, payment of social expenses, and reimbursement of credit.
The construction of washing stations in rural areas led to a modest first stage of industrialization, off-farm jobs for local labour during the coffee campaign and, most importantly, the development of rural access roads to the washing stations which are also used for other purposes.
The coffee industry was one of the priority sectors targeted for deregulation reforms and privatization in the structural adjustment program (initiated in 1986) that aimed to limit the state’s involvement in the productive sector. Due to the civil war and subsequent recovery challenges, coffee sector reform and privatization of state entities experienced some delays.
However, it subsequently led to two positive developments: the establishment of both a new Regulatory Authority of Burundi Coffee Sector (known by its French language acronym, ARFIC) and an inter-professional association (aka Intercafe); and an effective deregulation of de-pulping and export through the construction of new washing stations by private investors and by the Burundian food growers associations, which are all known in the French language as Solutions Gestion Alimentaire (Sogestal).
Today, the government is eager to push forward with the long-term privatization process. The current focus is on some 77 washing stations and a mill – although different actors of the value chain have different ideas about how this should be carried out. For instance, coffee farmer associations are determined to take part in the privatization. Naturally, the emergence of such associations adds a political dimension to the on-going reform and privatization process.
Even if some of the competing interest groups are small, their diverse backgrounds (from differing political, regional and ethnic groupings) have made coffee reform into a central peace-building focus for post-civil war Burundi.
While several steps have been taken toward improving the performance of Burundi’s coffee sector, the whole economy is experiencing serious instability and declines which cannot be explained by chance, nor by climatic conditions alone.
Among the causes behind this situation are the following:
- The persistence of structural deficiencies, such as inefficiencies in the governance of the value chain. The institutions and the actors involved in the value chain are facing several constraints (incomplete reform and privatization process, lack of technical and managerial capacity for emerging farmers’ association, non-transparent pricing mechanisms, etc) that hamper their operations and, consequently, limit the development of the coffee sector in Burundi.
- A low state of productivity, due to insufficient technical and financial support to farmers. Lack of investments in productivity enhancing technologies following the liberalization of the market resulted in low and highly fluctuating productions, poor maintenance and degradation of the orchards, low input application as well as pest and disease problems, etc.
- Limited competitiveness of the firms involved. This helps to explain a decrease in both quantity and quality of product, as caused by the ageing of orchards at the farm level (28 percent are more than 30 years old and 62 percent are between nine and 30 years), limited technical know-how moving downstream to support quality improvements (milling, tasting, etc), and inefficient marketing structures for promoting the Burundi brand.
- Primary production has also not kept pace with the expansion of processing capacity, leading to a situation in which all raw materials are competitively sought with little price differentiation. Many washing stations have experienced low profitability due to high operational costs (partly related to capacity underutilization) and management limitations.
Under such circumstances it will be extremely difficult for Burundian coffee producers to be able to compete with the world coffee industry (or even maintain their competitiveness at the regional level). The resulting economic and social consequences are quite severe for Burundi.
Positive Factors Exist
Despite these weaknesses, Burundi’s coffee value chain is not entirely without its strengths. These positive factors are helping the World Bank and others to justify new (and potentially transformative) investments that aim to reverse current trends. Among the moves which are being made in new Burundi-focused World Bank programs, the emphasis is on adapting to climate change. Burundi’s climate is shifting rather quickly.
Much of this new international development assistance funding is aimed at achieving multiple outcomes: helping farmers to shift their altitudes in order to produce specialty Arabica coffee, which attracts premium world market prices; opening the sector to private investors; finding more local agri-producers who are interested and experienced in growing coffee; supporting emerging farmer associations; supporting the development of advanced processing infrastructure, especially washing stations and dry milling capacity to support increased production of high quality coffee.
The over-arching goal of the international development organizations is to increase worldwide consumption of coffee. During the last 50 years the average annual growth rate has been 1.9 percent. International experts at the World Bank and elsewhere are expecting a continued rise in demand for specialty coffee growing and processed in the markets of the “Global South.” These developing economies, which are poor as measured in per capita income, will certainly benefit from such a boost.
As the data clearly shows, Burundi is so heavily dependent upon coffee export proceeds that some advocates for change have taken to saying that “failure is not an option.” Since coffee is a perennial, and since the land is already tied to it for the lifecycle of the tree, it is not easy to convert and diversify the production base. Thus, they have no choice but to invest in all of the various options – in better practices, easier finance, smoother logistics – which, taken together, can help ensure Burundi’s rising coffee production.
For those readers seeking to investigate the situation further, there are two outstanding sources which are well worth reviewing if one must choose from among the many useful documents/websites: “Trading Economics” (2018), and “Doing Business Project: Measuring Business Regulations” (2018).
Gordon Feller is a freelance writer based in California who travels the world reporting about innovations that can change our economies and strengthen small enterprises. He can be reached at [email protected]
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