Workers prepare premium coffee at Muhondo coffee washing station in Gakenke district
Tea and Coffee farmers in Rwanda could soon start acquiring loans and present their harvest as collaterals.
The East Africa Commodities Exchange (EAX) has announced plans to add coffee and tea to their list of traded commodities.
Currently, the commodities exchange trades Soya, Maize and Sorghum on its platform that connects farmers and brokers, using a NASDAQ application.
The application facilitates it to monitor, communicate and trade with its partners at convenient prices which allow Rwandan farmers to sell at relatively higher prices.
For so long, local farmers have struggled with price fluctuations and losses due to several factors.
For the past four years, EAX has enabled soya, maize and Sorghum farmers from 500 cooperatives to secure bank loans worth $4.7million (Rwf4.1billion) from using their harvest stock in warehouses as a collateral.
Farmers’ loans have been offered at about 50% of their harvest stocked and traded from 11 warehouses across the country, compared to 10% loan offer on their produce which is not stored on the platform.
With successful results, Clement Kayitakire – EAX trading manager told KT Press that coffee and tea will also be added to the trading platform.
“By the end of this year or start of next year we shall have embarked on tea electronic trading. We are already discussing with the agriculture and export board (NAEB) to have what is needed to start this trading,” he said.
Coffee and Tea are Rwanda’s main export earners. Tea is grown on 26,897ha by 42,840 farmers located in 12 districts of mainly Northern, Western and Southern parts of the country.
Coffee washing at Muhondo company, Gakenke district
Rwanda earned $8.6 million from tea exports as of June this year representing 39.4% increase in export revenue compared to $6.1 million that was recorded during the same period in 2016.
The increase, according to NAEB, was largely attributed to the good price on the international market averaging $3.38 (Rwf2, 873/kg) compared to $2.43/kg in the same period last year.
According to National Agriculture Export Board (NAEB) annual coffee export revenues increased to $64.1 million (about Rwf55.3 billion) in 2017 compared to $58.5 million earned in 2016.
The previous report from NAEB also indicated that, the global market price of coffee was averaged at $3.7 per kilo between November and December in 2017.
This means the listing of coffee and tea to EAX trading platforms is a big boost to local farmers.
Kayitakire told KT Press that currently, a feasibility study is being conducted to put in place the right infrastructure for the products to be listed.
Also in the feasibility study, he said, EAX plans to have a bigger catalogue of products including Wheat, rice, minerals and energy.
East Africa Commodities Exchange (EAX) is a regional commodity exchange established in 2014 to link smallholder farmers to agricultural and financial markets, secure competitive prices for products, and facilitate access to financing opportunities.
The EAX platform was formed after a recommendation from the World Economic Forum in Davos in 2013 to close the gap in agro produce lost during the post-harvest stage.
The Commodities Exchange is a subsidiary of Africa Exchange Holdings, Ltd. (AFEX), comprised of Heirs Holdings, Berggruen Holdings, and 50 Ventures, and is financially supported through private investment from AFEX and Ngali Holdings, a local investment company in Rwanda.
