Rice farmers have said that they are set to witness a decline in their fortunes after the government announced a reduction in farm gate prices.

A kilogramme of unprocessed short-grain rice was reduced from Rwf270 to Rwf259 while that of long grain rice was reduced from Rwf290 Rwf279, according to new prices announced by the Ministry of Trade and Industry on June 24.

The new prices will affect the harvest from agriculture season B, which started in March and ends June 30, this year.

Short grain rice is a relatively low-quality variety, which attracts low demand from milling firms, while the long-grain variety is preferred due to its good quality attribute.

The new prices were arrived at after a virtual meeting held on June 17 made an assessment of the investments made by rice farmers and rice millers.

The meeting involved representatives of all the stakeholders in the rice industry, including rice millers and farmers.

Apollinaire Gahiza, the president of Rice Farmers’ Federation, said that the new prices imply a reduction in the profits margins for farmers.

However, some experts have argued that with locally produced rice struggling to compete with imported rice, which is cheaper and has relatively better quality price cuts are necessary to drive competition.

Gahiza says there’s need for studies on long-grain rice which adapts to the Rwandan climate.

Also, he added, fertilisers suitable to different types of soil in the country to respond to crop nutrient needs should be considered for increased farm productivity.

Why the decline in prices?

Peter Uwamahoro, the Vice Chairman of Rwanda Forum of Rice Millers told The New Times that regulation of prices is needed to ensure that farmers get profit, but also rice processors make sales and have a return on their investment.

He also said that Tanzanian rice has dominated the domestic rice market partly thanks to its aroma and "affordability”.

Making the case for price reduction on locally produced rice, Uwamahoro said that rice millers in Rwanda have an unsold stock of 10,000 tonnes carried forward from the previous season (season A which started in September 2020 and ended in February 2021).

Because domestically produced rice faces fierce competition from the Tanzanian rice, he said that local rice millers were forced to sell at lower prices to buyers.

"Short grain rice that was priced at Rwf17,000 and Rwf17,500 a sack of 25 kilogrammes is now at Rwf13,000; while the long grain rice which was priced at Rwf18,000 and Rwf18,500, now goes for between Rwf14,000 and Rwf14,500,” he said.

He said that rice from the East African Community is exempted from import duty in line with promoting regional integration, meaning they can sell at affordable prices.

"We should understand that made in Rwanda products cannot be competitive when they are expensive than imported ones,” he said.

Demand for rice in Rwanda is estimated at 145,000 tonnes per year, while national supply accounts for about 40 per cent, leading to a 60 per cent gap that is addressed through imports.

In 2020, Rwanda imported more than 120,270 tonnes of rice on which it spent over $61.5 million (about Rwf60 billion). In the previous year (2019), $55.1 million had been spent on importing 112,290 tonnes of rice.

In 2020, much of the rice was imported from Tanzania, which accounted for 63,311 tonnes worth $38.2 million (about Rwf38 billion), or more than half Rwanda’s rice import bill, the data from the Ministry indicate.

Pakistan was Rwanda’s second major rice import partner in 2020 as Rwanda bought 47,355 tonnes of rice from the Asian country at a cost of over $18.8 million (about Rwf18 billion).