Burundi bits

Finishing up day one.

It's very hazy and dusty.  Apparently that's because it's the end of the dry season, and it's always like that.  The rains will arrive suddenly in mid-September, which means we'll miss them, which is probably okay.

There are a lot of mosquitos here.

Elite Burundians are very French.  They should be very Belgian, yes, but that's not how it seems to work.

Two notes on Burundi's economy.  One, coffee is the main cash and export crop, accounting for over 70% of export income.  But there are no coffee plantations like in Colombia or Kenya. Burundi is a nation of small farmers.  There are, in this country of nine million people, over seven hundred thousand coffee producers.  Since each of these is a family farm with an average of six or seven people on it, that means about half the country is growing coffee.  Almost all of it is grown on farms with between 100 and 2000 coffee bushes.  2000 sounds like a lot but coffee bushes aren't that big; we could grow a hundred in our back yard, no problem. 

This system has problems.  One of our team hopes to talk to some Starbucks people who are in town this week.  Starbucks buys coffee in three neighboring countries, Kenya, Tanzania and Rwanda, but not in Burundi.  Why not?  Watch this space.

Second note is more of an anecdote.  Like most Africans, Burundians get most of their starch from rice and plantains and potatoes and such.  But like most Francophone colonies, they also retain a taste for good bread.  Bread needs flour and wheat doesn't grow in Burundi.  Today, one of our team went to the single flour mill in the country. 

Turns out they import their wheat from Canada.  It used to come to the port of Dar Es Salaam in Tanzania, then travel overland by truck.  That's getting very expensive, so now they're trying a slower route down the river from Zambia.  The cost of wheat has soared in the last year, and so of course has the cost of transportation, but the mill is doing okay.  Reason: it just got a monopoly.  There used to be two mills, but those soaring costs forced the competitor to close.  So, if I have a roll with breakfast, that's where it's coming from.

Okay, one last macro note.  Burundi has very high interest rates, but its currency is sagging.  And its currency is sagging, but imports are still high while exports have not begun to rise.  Why?  I don't know. 

The next two days are hellish, solid meetings from 8 am to 7 pm, so probably nothing for the next little while.

Comments

[Andrew]

This would seem to put them extremely vulnerable to the price of coffee, right?

How to seven hundred thousand producers of coffee collect their produce into quantities that importers are willing to deal with? Are there two or three wholesalers who buy from the individual farmers in Burundi or something else?

[The New York City Math Teacher]

Customary or poor market making in the coffee export business? We are coming off a boom in commodities that hasn't really touched coffee that closely (+40% over five years?) and coffee is still trading way below its inflation adjusted high in the late 90s. And Burundi's coffee has a negative adjustment (-100 basis points) for arabica-commodity grade traded at the ny board of trade.

And if Burundi is so concentrated on coffee - they need the imports!