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Abstract
Low prices in the international coffee markets have worsened the economic well-being
among coffee farmers. In the face of this situation, the Government of Rwanda has
introduced coffee sector reforms that aimed to transform the sector in a way that targets
the high quality market and moves away from the bulk coffee market. The high quality
coffee market has shown consistent growth over time and exhibits price premiums in
international market. If these high prices are passed on to farmers who take advantage of
the benefits of the new high quality market by selling coffee cherries, access to this new
market could help alleviate poverty brought on by low prices in the conventional sector.
However, the majority of coffee farmers in Rwanda rely on the conventional market by
selling parchment coffee. The present study analyzes the effects of coffee sector reforms
in terms of household expenditures, a proxy of income, on farmers selling coffee to two
supply chains: parchment coffee channel and coffee cherry channel. Results from the
random effects model on the two year panel data indicate that farmers benefited from
coffee reforms by increasing their consumption over time. Farmers selling coffee cherries
have gained from the coffee sector reforms in comparison to farmers selling parchment
coffee. Based on these results, it seems that efforts to promote the production of high
quality coffee would improve food security and the overall consumption expenditures of
coffee growers.