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State-owned tea estates are being sold to private investors.

More than 90 percent of Rwanda’s population of 8 million makes their living from working the land, the vast majority as subsistence farmers. Agriculture accounts for about 70 percent of Rwanda’s exports, but needs to be developed and diversified as there is huge potential for investment.

The government’s strategy is to maximize production and processing, shifting the emphasis from subsistence farming to market-based activities. The result should be a more viable agricultural sector, higher export revenues, an increase in rural incomes, and improved self-sufficiency in food.

When it comes to exports, tea and coffee are Rwanda’s star performers, accounting for 60 percent of their total exports. Higher international coffee prices were partly responsible for the economy achieving a growth of 6 percent in 2004-05.

Ideal climate and soil conditions enable Rwanda to produce some of the best quality tea and coffee in the world all year round, while investment in more factories would enable Rwanda to export a greater variety and earn more.

Several tea estates have been privatized, including the Sorwathe plantation, which is now American-owned. The privatization program is continuing to provide opportunities for foreign investors as other state-owned estates are auctioned off.

The leading tea producer and exporter is the Rwandan tea authority, Ocir-The, which manages plantations and factories and works with farmers to increase productivity.

Smallholders are being encouraged to form cooperatives

“We are looking for joint ventures in value-added operations with investors, both internationally and locally,” says Ocir-The’s Director, Alex Kanyankole. “We want to set up four or five factories in the next five years.”

Almost all the tea that Ocir-The produces is sold at auctions in Mombasa, Kenya, and is subsequently blended with other inferior teas. Now Ocir-The has plans to blend the tea within Rwanda and sell it as a national brand.

“We are looking at giving our tea a brand name, so that when it is exported it is called Rwandan tea,” explains Mr. Kanyankole. “It is already high quality, and we are aiming to blend it and package it ourselves.”

Apart from tea, coffee, and its other principal cash crops, namely pyrethrum and flowers, Rwanda produces around 400 tons of fresh fruits and vegetables. Here, too, there is considerable scope for processing, both for local and international markets.

Rice production is another area the government is eager to expand. Rwanda is currently a net importer of rice; however, with increased production, it could fulfill not only its own local needs, but export to its neighbors. The same situation applies to the nation’s corn crops. Consideration is also being given to growing vanilla, patchouli, and geranium on a commercial scale for the cosmetics industry.

Substantial potential exists in the livestock sector. Rwanda produces around 110 tons of milk annually, but is currently able to process only 30,000 tons of it. Processing could give the milk a longer shelf life or be used to produce cheese, yogurt and other products with market potential.

The government policy aims to stimulate an entrepreneurial culture, and small farmers are being encouraged to organize themselves into cooperatives and work more closely with the private sector, giving them access to wider markets.
Private sector investors and donor agencies such as USAID, the EU, and the International Fund for International Development (IFAD) are involved in training programs, and new government agencies have been set up to boost production and quality control.