Acton Institute Powerblog

Rwandan Coffee Competes and Wins

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Unlike the flooded market for conventional coffee products, the specialty coffee market enjoys increasing demand along with limited supply. This means that the potential exists for developing countries to increase the quality and quantity of their coffee production to meet the demand.

Rwanda is a case in point, and shows how market pressures help to effectively and efficiently signal which and in what quantity such commodities should be produced. As Laura Fraser writes in The New York Times, “From the late 1960’s until the genocide, most of Rwanda’s coffee was sold to Rwandex, a virtual monopoly controlled by the postcolonial government, for whatever price the company would offer, so farmers had no incentive to pick out the bad cherries.”

The government monopoly stifled any incentives to innovate and improve quality, since there was no potential for increased profits. More recently, however, under the administration of President Paul Kagame, the coffee industry has been liberalized and Rwandan growers are now enjoying the increased ability to compete freely with other specialty growers around the globe.

Over the last decade, “Worldwide, overproduction of high-yielding varieties caused conventional coffee prices to bottom out, but specialty coffee prices remained relatively strong. President Kagame liberalized coffee trade, sold the government’s interest in Rwandex and began working with A.I.D. to develop specialty coffee.”

According to the International Coffee Organization, Rwanda’s production of coffee has remained relatively steady between the years 2000-2005. But with the increased competitive incentives and profit motivations, the quality of Rwandan coffee has blossomed.

Writes Fraser, “Partly because of abundant labor, which allows farmers to pick through and hand-sort cherries, the coffee that goes to market is exceptionally clean, or free of imperfect beans.”

“Geoff Watts, who oversees coffee buying for Intelligentsia Coffee and Tea Inc., a premium roaster based in Chicago, said, ‘Rwanda’s gone from zero to sixty, from a complete unknown in the specialty coffee industry to becoming the source of some of the cleanest coffees in East Africa.'”

“Five years ago, all Rwandan coffee sold at the C-grade, or lowest-quality, price. Now, demand for fully washed Rwandan coffee (about 7 percent of the crop) far exceeds supply.”

The liberalization and opening the Rwandan market to freely compete has allowed the specialty coffee industry to thrive, without artificial incentives of “fair trade.” The incentives of the market are helping reward an area that has natural resources well-fit for the production of quality coffee. Coffee exports now account for about thirty percent of Rwanda’s exports, or about $35 million.

Jordan J. Ballor Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty, where he also serves as executive editor the Journal of Markets & Morality. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary. He has authored articles in academic publications such as The Journal of Religion, Scottish Journal of Theology, Reformation & Renaissance Review, and Journal of Scholarly Publishing, and has written popular pieces for newspapers including the Detroit News, Orange County Register, and The Atlanta Journal-Constitution. In 2006, Jordan was profiled in the book, The Relevant Nation: 50 Activists, Artists And Innovators Who Are Changing The World Through Faith. Jordan's scholarly interests include Reformation studies, church-state relations, theological anthropology, social ethics, theology and economics, and research methodology. Jordan is a member of the Christian Reformed Church in North America (CRCNA), and he resides in Jenison, Michigan with his wife and three children.

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