EcoLogic Finance

"A Healing Brew: Community-based Commerce Helps Mend the Broken Nation of Rwanda"
The Miami Herald - November 29, 2004
by William F. Foote

GINKONGORO, Rwanda - Surrounded by Hutu and Tutsi farmers in the verdant hills of southern Rwanda, Lindsey Bolger of Green Mountain Coffee Roasters slurps and assesses freshly brewed coffee at the Karaba Cooperative.

Not very long ago, the Hutus and Tutsis were killing each other. But these days an innovative business and social development program is bringing these warring people together, creating hope for the future and returning normalcy to life.

"Sure hope she likes our coffee," said Angelique Karekezi, Karaba's general manager, looking nervously at her fellow farmers and neighbors as traditional drums beat out a welcome for the Vermont-based coffee buyer.

''Some of us once hated each other,'' Karekezi confided later in the day. "And now we're working side by side. That's been crucial for the healing process."

As president of EcoLogic Finance, a nonprofit that provides low-interest loans in environmentally sensitive rural areas of Africa and Latin America, I have traveled through the most remote parts of a dozen countries in order to assess the viability of small, indigenous enterprises and watched backwater businesses evolve.

What Rwanda has in common with places such as Nicaragua and El Salvador is that some of its poorest people -- often coffee farmers, in some cases former combatants -- have seen the light of commerce ignited by trade.

Before 1994, Rwanda was an obscure nation known -- if at all -- for its endangered mountain gorillas. After the 1994 genocide, in which 800,000 people lost their lives, this country of 7.8 million became an internationally recognized symbol of bloodshed and civil strife.

NICHE MARKET

The last decade has been hard on Rwanda, but the coffee bean may help lead the country back to something resembling peace and normalcy. The steep slopes here are blanketed with lush, well-tended coffee plants, a testament to the successful efforts of small-scale coffee growers who have found a niche in the international marketplace.

Such small growers produce more than 50 percent of the world's coffee.

Not content to rely on importers, specialty buyers such as Bolger prowl the globe to find a supplier as unique as the Karaba Cooperative near the border with Burundi.

The increasing sophistication of the American coffee drinker drives the quest for quality that has swept across the world coffee market. The specialty buyers work directly with growers to get better results, and then pay double, even triple, the conventional price.

LOW ON LIST

Rwanda ranks 158th out of 175 nations on the United Nations' Human Development Index, used to measure development based on life expectancy, literacy and GDP per capita.

Landlocked, with few natural resources and minimal industry, Rwanda is Africa's most densely populated nation. Agriculture dominates the economy, and coffee and tea make up 80 to 90 percent of exports. Of its rural work force, nearly half a million are small-holder coffee growers.

The coffee bean has become a tool for reconciliation in several formerly war-torn nations -- an experiment that began in Nicaragua, a favorite of specialty coffee buyers, and which has now spread to East Timor and Rwanda.

For a growing number of coffee importers and roasters in North America, partnering with some of the world's poorest people lies at the heart of their companies' profit-making strategies.

It's not about philanthropy. An ability to persuade wealthy shoppers to pay more for richer flavors improves margins and provides upward mobility in the countryside.

ARABICA BEANS

Despite a severely oversupplied global coffee market, there is a shortage of specialty arabica beans, grown at high altitudes in rich volcanic soil, which are brewed and served by upscale retailers such as Starbucks and Peets Coffee.

To secure a reliable supply, companies such as Green Mountain Coffee Roasters have started buying directly from rural co-ops in distant lands. "We never got into this as nation-builders," said Bolger, who cupped or assessed coffee in the Colombian rain forests last year during a temporary cease-fire between nearby paramilitary forces and guerrilla soldiers.

With more than $116 million in revenue last year, Green Mountain Coffee Roasters now sells more than 20 percent of its coffee with the "Fair Trade certified"' label, which guarantees to consumers that small farmers receive fair compensation for their harvests. By linking directly with export markets, farmers in Fair Trade cooperatives are able to earn three to five times more than they would receive by selling their coffee through conventional mechanisms.

But is that enough to garner both profits and peace in the developing world? While Fair Trade accounts for only 5 percent or 6 percent of the $1.7 billion U.S. specialty coffee industry, U.S. Fair Trade-certified coffee imports jumped from 2 million pounds in 1999 to a projected 27 million to 30 million pounds in 2004.

AVOIDING DESPAIR

For struggling farmers like the Hutus and Tutsis, this rising demand helps avoid the despair affecting millions of downtrodden coffee growers who cannot otherwise provide for their families.

That lessens the allure of violent alternatives -- especially in the poorest countries recovering from dictatorship and civil war.

Not long ago, U.S. consumers and lucrative specialty-food markets seemed far beyond the reach of farmers in Rwanda. Combined with the language barriers, the chronic market inefficiencies typical of the African countryside had impoverished rural producers. With plantations deserted and basic infrastructure ruined in the years after the genocide, coffee prospects looked dim. Production collapsed across the country, from 40,000 tons per year of arabica coffee in the late 1980s to 20,000 tons by 2000.

Western governments stepped in to help reconstruct Rwanda's coffee industry. In 2001, the U.S. Agency for International Development funded the construction of village-based coffee-washing stations, which extract two exportable green beans from coffee cherries and then wash them to avoid unpleasant tastes from fermented fruit and natural defects.

NEW PRODUCT

Rwanda had never before exported fully washed arabica coffee, and specialty buyers immediately took notice.

Tim Schilling, director of the USAID project in Rwanda, said the processing plants have translated directly into drastically improved incomes for 30,000 coffee producers. "We never expected such an impact on the livelihoods of entire communities of people,'' said Schilling. "I've personally seen hundreds of rags-to-riches stories."

Back at the Karaba washing station, Bolger had finished her cupping session. When she returned to Vermont, Green Mountain Coffee Roasters sent an order for 37,500 pounds of coffee at $1.34 per pound -- far higher than the going world price.

The first Karaba shipment arrived last week, and Green Mountain was pleased with the quality of the new and developing specialty coffee.

Having come together for economic reasons, the Hutu and Tutsi farmers have found something priceless: peace.

"It's not just about the money," concluded Karekezi of Karaba Coop. "The coffee facilities have become meeting and healing places for us. We sit around and talk, share experiences as we sort cherries or taste coffees. That's very important."