(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

penetrate these markets are extensively discussed in numerous reports, such as World Bank (2008;2011a; 2011c) and USAID (2008). Most recent donor-funded projects targeting the coffee sector haveprovided support and capacity building to actors involved in specialty coffee market segment. Furthersupport that focuses on the development of sustainable production methods, certification, marketing andpromotion of direct sales, etc. can be expected in the coming years to continue (see Annex 3). ARFIC,InterCafé and the CNAC/producer associations need to coordinate these activities. Additional lessonscan be drawn from the successful experience of other countries (Box 3.2).Box 3.2: selected countries’ experiences with coffee sector reformSeveral countries in East Africa and elsewhere have preceded Burundi in reforming their coffee sector,with varying degrees of success. Rwanda and Ethiopia have successfully implemented coffee reformsthat facilitated entry on specialty markets.In Rwanda, as in Burundi, coffee is a major export product. The State has historically been heavilyinvolved in the coffee sector, and elites have extracted large amounts of rents from coffee growers. Aftera decade of rapidly declining quantitative and qualitative performance, reforms supported at the highestpolitical level were initiated in 1998, and led to a rapid transformation of the sector. The governmentliberalized coffee processing, marketing and exports, and improved incentives for farmers and theprivate sector to invest in coffee production. In addition to opening to private sector competition, astrong emphasis was put on improving the coffee value chain and producing specialty coffee (in 2000,90 percent of Rwandan coffee was classified as low-quality ordinary coffee, notably due to the lowincentives to produce quality coffee and the absence of CWSs in the country). This objective, supportedby donors such as the USAID’s PEARL project, led to the strengthening of producer cooperatives, theconstruction of numerous CWSs (mostly by private investors, but also by coffee growers), theimprovement of quality control throughout the industry, and successful image building. This sponsoredinitiative met with success and inspired the private sector to produce and market specialty coffee.As a result, Rwanda has made a remarked entry on specialty markets in the 2000s: the total value ofspecialty coffee exported increased from $ 0.1 million in 2002 to $ 11.6 million in 2009. The country hasorganized Cup of Excellence competitions since 2008, and the winners received prices as high as $20 perpound during the 2011 edition. While these prices remain exceptional, the average income of farmersproducing higher quality coffee has also significantly increased since 2003. However, the quantitativeand qualitative targets initially set for the sector have not been met so far, suggesting that more effortsare needed to consolidate these gains. Challenge remains to increase the production of specialty coffee,including: insufficient production of high quality cherries, calling for better price incentives for farmersand enhanced production techniques; limited efficiency and profitability of CWSs; weak managerialcapacity of producer cooperatives; concerns with Rwanda’s land law; and high transport costs and poorrural transport infrastructure.Ethiopia is believed to be the birthplace of Arabica and is by far the largest coffee producer in Africa(but as opposed to Burundi, half of the production is consumed domestically). While the coffee sectorused to be under tight public control during the Derg military regime, the government started toprogressively liberalize the sector from 1991 onwards. Although reforms were partial and strict controlshave remained in place, these reforms led to an increased participation of private actors along the valuechain, a rise in the share of the export price received by growers, and a positive impact in terms of coffeeproduction and exports. One major progress in 2001 was the authorization given to producercooperatives to sell directly to international buyers, outside the government auction system which wasuntil then mandatory.These cooperatives, organized in unions and supported by donors and NGOs for capacity building, havesince then played a critical role in the development of the value chain, with a focus on quality. Theyenabled Ethiopian coffee grown by small farmers to acquire a significant position on internationalspecialty markets (e.g. high quality, certified or relationship coffee). Between 2001 and 2005, direct64 / 153