Rwanda reduces rice prices to protect processing factories

RWANDA – The government of Rwanda through the Ministry of Trade and Industry has reduced rice farm-gate prices down to Rwf270 (US$0.3) for short grain rice and Rwf290 (US$ O.32) for long grain rice per kilogram in a bid to protect processing factories, repots New Times Rwanda.

Cassien Karangwa, the Director of Domestic Trade at the Ministry of Trade and Industry, said that was triggered by complains from processing factories saying that they had witnessed high supply from farmers despite having stock from last season.

However, farmers will now get Rwf18 less for a kilogramme of short grain rice and Rwf8 less for long grain rice compared to the previous season.

Apollinaire Gahiza, the president of Rice Farmers’ Federation (FUCORIRWA), said that the new  prices imply farmer will get about 20% profits compared to the investment they made, which reflects a reduction of five percentage points.

According to the ministry, as at first week January, rice processing firms across the country had an estimated stock of 5,000 tonnes of short grain rice and 1,600 tonnes of long grain rice carried forward from the previous season.

According to the ministry, the reduction in rice farmgate prices was also caused by changing consumer behaviours, with more and more people resorting to other staple foods such as cassava, bananas and corn.

In 2018, Rwanda produced 113,880 tonnes of rice, an increase from 83,338 tonnes in 2017 compared to more than 1.12 million tonnes of cassava in 2018 and 759,696 tonnes of banana yields recorded in the period under review.

On the other hand, production of Irish potato increased to 835,576 tonnes in 2018, from 776,722 tonnes in 2017 while maize yields increased to 424,204 tonnes from 357,665 tonnes.

“The Government sets minimum rice price to protect farmers’ interests so that they do not incur losses that might be caused by their weak bargaining power.

Also, putting in place minimum prices helps farmers have contracts with agro processing factories as well as banks as it helps to make reliable estimates of finance based on projected production,” said Cassien.

However, while government intervenes in setting farm-gate prices, it does not have control over commodity prices in the retail market, leaving it to be determined by market forces.

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