Scaling Smallholders based Premium Coffee Production in Rwanda and the Democratic Republic of the Congo

Project Description

CFC funded a project in Rwanda and the Democratic Republic of the Congo (DRC), with finance from OPEC Fund for International Development (OFID), to expand the production and export of high-quality coffee. The loan will be used to construct five washing stations in the DRC and to provide working capital to source coffee from farmers in the DRC and Rwanda. The CFC is also supporting the training of Congolese farmers in best organic agricultural practices and their efforts to certify the produced coffee according to organic, Fairtrade and Rainforest Alliance standards. The funding has been extended to COOPAC Holding Ltd (COOPAC).

The loan will be used to construct five washing stations in the DRC and to provide working capital to source coffee from farmers in the DRC and Rwanda. The CFC is also supporting the training of Congolese farmers in best organic agricultural practices and their efforts to certify the produced coffee according to international market standards.

COOPAC Holding Ltd (COOPAC) is an enterprise engaged in the production, processing and export of premium coffee from Rwanda and the Democratic Republic of the Congo (DRC). Founded in 2001 in cooperation with 110 Rwandan coffee farmers to revive the coffee sector, COOPAC is currently working with over 6,000 farmers supplying Organic, Fairtrade and Rainforest Alliance certified coffee to the European market.

The CFC supports COOPAC to expand production and export of high-quality coffee.

COOPAC’s Arabica coffee is grown by small, rural farmers at high altitudes between 1,200 and 2,000 meters. All member farmers will receive shade tree seedlings and agroforestry trainings. The trainings are focused on organic plant nutrition, but also on more complex nutrient balance practices for the coffee fields. Organic and Fairtrade practices will enable farmers to increase their incomes, with a pricing premium of between 25-40% on top of the minimum market price.

With a goal to scale and impact up to 17,000 farmers by 2024, of which 3,400 farmers in Congo, COOPAC intends to create a path to improve smallholders’ yield and net income by up to 2.6 times. Additionally, the upscaling of activities is expected to result in a doubling of permanent staff from 63 to 130 and seasonal staff from 1,000 to 2,090 in 2021.

Current status

The project commenced in May 2017. In the first year, the CFC’s funds were used to construct 2 washing stations in Congo and to provide working capital for the sourcing of coffee from farmers in Congo and Rwanda. The construction of the 3rd coffee washing station was completed in 2018. Two Congolese coffee washing stations were not operational in 2019 due to the fragile and unstable situation in Eastern Congo. The spread of Ebola in Eastern Congo has also caused considerable disruptions in 2019. As a result, Congolese smallholders had limited access to the coffee washing stations. This required COOPAC to instead buy inferior quality pre-washed green coffee from larger farms or other cooperatives to meet contractual sales obligations.

Rwandan coffee volumes dropped in 2019 due to delays in available funding from working capital lenders to purchase the coffee from the farmers. The drop in international coffee prices continued into 2019 but eventually reversed by the end of the year. Despite the difficult market circumstances, COOPAC has managed to maintain a positive profit margin and make repayments to lenders.

The company sourced coffee beans from around 6,400 smallholder farmers. Farmers continued to benefit from a higher income for Organic and Fairtrade practices. The majority of COOPAC´s certified coffee was sold to high end buyers in the USA, Asia, Europe, and Africa. The project has created 10 new permanent jobs, but seasonal jobs reduced during 2019 due to lower sourcing volumes. About 53% of employees are female

The owners of COOPAC have established a company in Belgium selling roasted Rwandan and Congolese coffee to European buyers under the Virunga brand. The coffee is currently sold in 6 stores of a larger supermarket chain in Belgium and plans to expand to other distributors in the region. One of the encouraging by products of this project Is presenting a precedence of a successful project towards greater connectivity in the region.

During 2019, the project achieved the following: • Beneficiaries covered: 6,417 • Gender of the beneficiaries: 30% women • Additional net income of the beneficiaries p.a.: n/a • Additional Net hectares: 252 • Additional jobs created: 10 from existing number of 115 • Net income per job created: USD 3,081 • Total coffee produced: 1,009 metric tons