Success stories
How MAFAP helped to fix fairer prices for Irish potato farmers in Rwanda
© FAO/Fredrik Lerneryd
04/03/2024
Background to the problem
Rwanda – a small country in Central Africa – is a big producer and consumer of Irish potatoes. So much so that it is one of the top 10 producers across Africa, with around 300 000 smallholder Irish potato farmers producing an estimated production in 2022 of over 900 000 metric tonnes. The Irish potato comes second only to cassava in terms of the most important source of calorie intake in the country and is a regular food staple in traditional Rwandan cuisine.
Yet, although production has been increasing lately – at a rate of +9% in 2021 – greater consumer demand for Irish potatoes coupled with an increase in inflation have knock-on effects on market prices. And, as prices affect production, farmers need to feel incentivized to produce in order to turn a profit.
What did MAFAP do?
As part of a series of measures to ensure that producers get fairer prices for their Irish potatoes, the Government of Rwanda tasked the Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme to carry out an analysis of the current price-setting mechanism that has been used since 2018 to calculate the price that farmers can expect to fetch at their point of sale – the “farm-gate” price.
The MAFAP team looked at the costs and benefits associated with the existing price-setting mechanism, gathered quantitative data from the Ministries of Agriculture and Animal Resources and of Trade and Industry to study production costs and historical data on pricing, and analyse market trends and dynamics.
Based on their findings, MAFAP’s economists and policy analysts proposed a new, alternative formula to set farm-gate prices for Irish potatoes. This new formula would account for both wholesale and retail prices, and include more up-to-date production costs (such as inputs) and marketing expenses. As prices for potatoes go up and down throughout the year, the team also recommended updating these prices twice a year (instead of once) – at the start of each potato season (February and September).
Impact
The proposed price-setting formula for Irish potatoes would allow farmers to receive at least a 7% gross margin per kilo, fetching RWF 399 per kg, up from the current RWF 200 per kg, effectively doubling farmers’ farm-gate prices at minimum rates. Wholesalers and retailers would also benefit too – going from RWF 245 to RWF 447 per kg and RWF 250 to RWF 456 per kg, respectively, and giving them both a 2% gross margin.
With a much more up-to-date costing of production and marketing costs, which also factors in wholesale and retail prices, and should be revised at the start of each season, the proposed price-setting formula for Irish potatoes would be expected to lead to fairer prices for farmers, which in turn, would incentivize and boost domestic production of one of Rwanda’s key foods.
In April 2023, the Ministry of Trade and Industry announced new farm-gate and retail prices for the Kinigi variety of Irish potatoes. The prices were almost identical to those recommended by MAFAP.