Coffee price risk management for Rwandan SMEs and cooperatives

The price of coffee fluctuates significantly on international markets, resulting in unpredictable income levels and vulnerability for value chain actors. While this price risk can be mitigated with hedging strategies, smaller value chain actors lack the necessary skills to do so.  

In 2022, an eight-month project by Oikocredit addressed this knowledge gap with tailored price risk management training for Rwandan smallholder coffee aggregators (producer cooperatives and SMEs). The training enabled smallholder aggregators to understand coffee contracts on international stock markets, comply with their conditions and close them at the right price to avoid losing money. 

Benefits for smallholders, aggregators and investors 

In total, representatives from two SMEs and nine cooperatives were trained. These organisations work with over 10,000 farmers whose resilience will be strengthened due to the more stable returns they can now expect for their coffee cherries and beans. The new risk management capacities also make these organisations more attractive for investors.  

In addition to providing greater price security for farmers and aggregators, the project also brought benefits for investors in the form of shared knowledge on how to evaluate the risk management capacities of SMEs. These investors are members of the Council on Smallholder Agricultural Finance (CSAF), of which SSNUP is a field building partner.  

Going forward, the SMEs and cooperatives will benefit from more advanced training modules which complement the basic price risk management training they already received. The trainer will continue to coach them to increase their internal risk management capacities and to build their confidence to operate independently in future harvest cycles.