Trade, Standards and Vertical Coordination: Evidence from The Rwandan Coffee Sector

Abstract

This paper explores the impact on small farmers of several recent investments in the Rwandan coffee supply chain. The purpose of the investments was to modernize the coffee value chain and to promote the production of speciality coffee. A research team surveyed 254 small farmers and 16 washing stations to measure the level of participation of farmers in the modern speciality coffee supply chain and with exporters companies. We found that farmers participating in the speciality coffee value chain received a higher price for their coffee beans compared to those who produce in the value chain of standard quality. Additionally, we demonstrated that farmers’ membership of a cooperative positively affected the probability of his/her participation in the speciality coffee value chain. Contrary to other studies, no a significant effect of other farm and household characteristics on the farmers’ involvement in the modern supply chain.