Feed the Future Democratic Republic of the Congo Political Economy Analysis: Coffee, Dried Bean, and Soybean Value Chains

Between September-November 2017, J.E. Austin Associates, Inc. (JAA) deployed a three-person team to undertake a political economy analysis (PEA) of the coffee, soybean, and dried bean value chains in South Kivu, with a focus on the Territoires of Kabare, Kalehe, and Walungu. This report summarizes the key findings, conclusions, and implementation recommendations of the PEA team.

OBJECTIVES AND INTENDED USE The information and findings from this PEA are intended to guide the implementation of the USAID funded Feed the Future DRC Strengthening Value Chains (SVC) Activity. The PEA will support implementation strategies, inform proposed entry points, and identify appropriate points of contact and collaborative actions to improve implementation. The SVC team will also use the PEA to build relationships with key actors in the dried bean, soybean, and coffee value chains, including influential public and private-sector representatives, and key stakeholders in South Kivu.

CONCLUSIONS Conclusions of the PEA team include:

• Farmers in South Kivu have low agronomic skills, even in comparison to their neighbors in North Kivu. They are reticent to invest capital into their farming systems, resulting in low productivity in comparison to regional standards across all three target value chains.

• Access to finance is a constraint to investment resources for all three target value chains, including coffee, which is dependent on buyer finance.

• The Congolese coffee sector is experiencing a revival, spurred to a degree by the rise of specialty market interest in Kivu-origin coffees, which are perceived as having preserved a unique heirloom (Bourbon) quality. In response, many coffee farmers are planting new coffee trees, and a number of coffee cooperatives have been renovated, and new ones established, since 2014. On the other hand, the majority of coffee farmers still market their crop through intermediaries, who resell to exporters. Furthermore, most coffee cootree architecture and management (pruning and rejuvenation through replacing old trees) is a prevailing critical constraint to productivity, and is an activity that would result in significant productivity gains.

• Wet mills are gradually expanding, though as in neighboring Rwanda, many are funded through donor development projects, as opposed to investment capital.

• South Kivu is dependent on three dry mills, at least one of which is in very poor condition (Kabamba), forcing most producers to export their parchment to Goma for processing. In addition, a significant portion of coffee produced in South Kivu is exported illicitly to neighboring Rwanda. These trade flows deprive the Office National du Café (ONC) in South Kivu of revenue that could be invested into the South Kivu coffee sector.

• Soybean is mostly commercialized to vendors and processors in local markets, where prices are competitively set. Consumption is somewhat constrained by perceptions of soybean as a treatment for malnutrition, although there is also an emerging local market for soy products to combat urban health issues such as high blood pressure and cardiac disease. Opportunities exist for linkages with industrial buyers in Bukavu and Rwanda to add value to soy products.

• Unit prices are slightly lower for soybean versus beans. However, greater comparative productivity sensitivity to improvements in agronomic practices and inputs and higher improvements in return on investment (ROI) vis-à-vis beans means that soybean may offer an attractive alternative to beans for farmers that are willing to invest in their farming systems. The preponderance of bean production makes this a key crop in terms of increasing household incomes and access to nutrient-rich food products.

• A number of historical factors have resulted in decreasing access to land - including ballooning population density and the historical existence of large concessions formerly owned by colonial farmers and state agencies. However, a growing number of commercially and socially-minded concessionaires are launching initiatives to improve tenant smallholder production and commercialization. This trend presents a promising opportunity to introduce capital inputs, such as improved seeds and fertilizers, as well as processing machinery and possibly finance, into smallholder farming systems.

• Most relations between smallholders and formal institutions that govern the three target value chains are voluntary (with the exception of ONC), but can be expected to expand as smallholders improve their production and marketing systems.

• Despite the negative reputation of many formal institutions, several producers met regard these institutions as reasonable and straightforward to navigate. They also regard the imposition and costs of fees and taxes as generally predictable.

• Despite the liberalization of the coffee sector, ONC retains sufficient authority and wields significant influence on the sector through the issuance of export licenses, certificates of origin, and other fees. Overall, the agency’s mission has yet to fully evolve into export promotion, and its operations continue to reflect certain aspects of its former role as a parastatal marketing entity. Many coffee farmers seem to hold ONC in high regard.

• Recently expanded state funding to the Institut National pour l'Etude et la Recherche Agronomiques (INERA) has yet to produce increased continuity of research products and services for farmers, and sporadic donor-funded projects are their common source for agronomic technology and inputs. Most producers receive technical assistance (TA) through project initiatives, with which they are eager to engage.

• In contrast to formal institutions, farmers regard most informal institutions as capricious and predatory, as well as a potential barrier to the viability of production and sales.

• Despite the prevalence of sexual violence, gender roles have evolved significantly in South Kivu, with women taking on a much greater role in production and marketing related to all three target value chains, though to a lesser degree with coffee than with soybean and beans.