Variable 3. Precio
5.8 Mediciones de eficiencia en Tiempo, Calidad y Costo en los procesos de operación
Pyrethrum is a natural flower-based pesticide, used as an alternative to synthetic chemical pesticides to control a wide range of insects. It was introduced in Rwanda in 1936. In 1963, the Kayibanda government expanded the pyrethrum industry. The Kayibanda government granted two hectares of land to each individual farmer in the Virunga region, located in northwest Rwanda. The rich volcanic soil in the Northwest and the high altitudes suited the production of pyrethrum. Rwanda is one of the few countries (including Kenya, Ecuador, Tanzania and Australia) that produces significant quantities of pyrethrum. In the 1970s, the government merged a
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“planters association” with an industrial facility, creating OPYRWA – a company that processed the flowers to export raw pyrethrum extract. The Habyarimana government increased production until the global market suffered in the late 1980s.
The RPF government had three specific goals in the pyrethrum sector. Firstly, it aimed at ensuring farmers and wage workers were organised to cultivate pyrethrum (and they received necessary inputs) so consistent quantities of pyrethrum would be supplied to the factory. Second, owners of the factory would invest in the necessary technological innovations to better the quality of pyrethrum extracts produced in the factory. Third, value-addition would be prioritised in terms of improving the quality of pyrethrum produced and manufacturing pesticides using that pyrethrum. The government managed its ‘three constituencies’ by initially privatising the factory (embracing market-led reforms) before buying the factory and placing it under Horizon’s control (thereby centralising rents) and promising benefits would be distributed among ‘small farmers’ through ‘cooperatives’. Organising production in this way was coercive but it also ensured better distribution of agricultural inputs (Huggins 2014). Though these constituencies were managed, reduced international prices and shifts in higher nodes of the global pyrethrum chain have impeded growth in the sector. Interviews and statistics indicate that the government has chosen not to force continued pyrethrum cultivation.412 This is a significant difference between the current government and the Habyarimana government, which forced cash crop cultivation despite a fall in global prices in 1980s.
Before Horizon’s takeover
Until 2001, domestic pyrethrum production remained at low levels because of conflict in Northwestern Rwanda. Then Finance Minister Donald Kaberuka opted for privatisation as the solution to revitalising production in the sector. OPYRWA was among the 31 public companies privatised between 1997 and 2003. It was sold to four businessmen, including Paul Muvunyi who served as Chairman and Managing Director. Kaberuka urged Muvunyi and other owners to invest in production and quality increases (Engineering News Online 2002).413
412 Interview, Bill Kayonga – NAEB, January 2015.
413 Kaberuka was Finance Minister from 1997 to 2005. He was then elected AfDB President.
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OPYRWA was renamed SOPYRWA by private investors. Even though international prices for pyrethrum increased, domestic production of pyrethrum flowers steadily decreased between 2004 and 2008 (Figures 5.6-5.8). While SOPYRWA was under private ownership, price per unit of the product remained low, as did total revenues (Figure 5.7). Exports increased in 2006 and 2007 because regional production was being sent to Rwanda after a fire in Kenya’s pyrethrum processing factory.414 While SOPYRWA was in ‘private’ hands, production declined from 1350 metric tonnes (mt) of dried flowers in 2004 to 209 mt in 2008. Pyrethrum farmers switched to growing potatoes because they were not paid.415 The company was accused of “financial mismanagement leading to cash shortages in the refinery, buyers not being supplied and SOPYRWA’s failure to invest in new seed stocks, extension services and maintenance of the factory.”416 Foreign buyers, including Valent BioSciences, Whitmeyer and SC Johnson, did not receive the pyrethrum promised in contracts with SOPYRWA. The company then filed for bankruptcy.
Source: MINECOFIN and Huggins (2013a)
414 Interview, Eugene Haguma, May 2013. Kenya began sending Rwanda its pyrethrum production in 2004 (Masibo 2004).
415 Internal MINAGRI document.
416 Ibid.
0 200 400 600 800 1000 1200 1400
0 10000 20000 30000 40000 50000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Figure 5.6: Exports of Processed Pyrethrum (kg) and Pyrethrum Flowers harvested (tonnes)
Pyrethrum Exports (kg) Pyrethrum Flowers Harvested (tons)
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Source: MINECOFIN
Source: MINECOFIN Post-Horizon takeover
Private investors were unable to incentivise farmers to produce pyrethrum in the region. Muvunyi claimed that farmers received increased prices after the factory was rebuilt in 2007, with Horizon’s additional investments (Namara 2007). Horizon established full control over the company and invested in the revitalisation of the processing plant. The government facilitated Horizon’s accumulation strategies by encouraging farmers to join cooperatives. Horizon used these cooperatives to organise labour to pyrethrum production (Huggins 2014). Consequently, domestic production of pyrethrum increased. SOPYRWA claims to have the best quality pyrethrum extract in the world and produces five per cent of global production.
0 50 100 150 200 250 300
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Figure 5.7: Pyrethrum Exports (unit price - USD/kg)
0 2000000 4000000 6000000 8000000 10000000 12000000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Figure 5.8: Total Pyrethrum Export Revenues (USD)
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Those involved in the sector claimed that global supply currently only meets half (or even a quarter) of global demand (Namata 2009; USAID 2010a).417
At first, Horizon bought 70 per cent of the plant. Karisimbi Business Partners – a Kigali-based consultancy that was involved in SOPYRWA’s turnaround – cited the change in ownership as crucial to revitalising the sector (Kalan 2012). Horizon invested in upgrading the processing plant and worked with the government to ensure farmers in the region dedicated 40 per cent of their land to growing
pyrethrum. The rise in unit price and total revenues from pyrethrum was dramatic (Figures 5.7-5.8). Exports did not reach the heights of 2006 but have shown steady improvement (Figure 5.6). Horizon made investments in upgrading equipment and refurbishing the factory. Managers travelled to other countries (e.g. Australia and Kenya) to learn from best practices around the world. In 2012, the government asked SOPYRWA to treble its revenues over the following three years. Additional land was also allocated to growing pyrethrum. Horizon was effective in organising labour to the production of pyrethrum and attracting better prices for Rwandan pyrethrum. In 2011, Horizon established a joint venture with UK-based Agropharm Ld., named Agropharm Africa Ltd. This joint venture was established to refurbish the pyrethrum refining plant and collaborate with Horizon in the production of end-use pesticides.
Value-addition attempts have been successful, with Agropharm producing a variety of products, including end-use pesticides. These pesticides have been used in the domestic agriculture sector over the past two years.
Horizon appealed publicly to farmers to grow pyrethrum in public meetings and in newspaper articles (Gasore 2013). To address the concerns of farmers, Horizon worked with USAID to organise farmers into 24 cooperatives and savings and credit cooperatives. USAID (2010b) reported that farmers were being paid at least 20-40 per cent more than in 2008. This ‘organisation of labour’ was legitimised by donor choices to support the empowerment of cooperatives. The choice to
empower cooperatives was a way for the state to speed up processes of rural
differentiation and facilitate accumulation strategies. The Ministry of Agriculture and
417 Interview, Gabriel Bizimungu, MD-Horizon SOPYRWA, November 2011.
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Animal Husbandry (MINAGRI) works closely with Horizon to organise labour in service of Horizon’s accumulation strategies (e.g. providing access to inputs).418
Critical commentators such as Huggins (2014) argue that predatory elites dominate most cooperatives in the agriculture sector since they are administered from top-down rather than from bottom-up. Huggins (2014) describes one
cooperative in Musanze where farmers preferred to sell their land to the cooperative at below-market rates rather than join and risk confrontation with the powerful cooperative president. He claims similar trends have developed in the pyrethrum sector and argued that farmers are coerced into growing pyrethrum (Huggins 2014, 376). He finds evidence that a ‘control grab’ took place where transfer of control over the mechanics of land use and agricultural production was taken away from the smallholder farm households by state agencies.
Though Horizon’s investments were initially effective, progress has hit roadblocks recently. Between 2012 and 2014, international pyrethrum prices fell by more than 20 per cent. In the same period, unit prices decreased by more than 32 per cent and the volume of pyrethrum exports fell by 73.6 per cent from 35.9 tonnes to 9.46 tonnes (BNR 2014). The farmgate price for producers (1,080 RwF) was not reduced (Nkurunziza 2014). Poor weather conditions and difficulty in accessing the market had a detrimental effect. Pyrethrum exports more than halved between 2012 and 2013 (reaching $3.98 million in 2013 and $1.83 million in 2014). Farmers began to publicly criticise Horizon for forcing them to grow pyrethrum despite low returns (despite the government officially encouraging farmers to intercrop with potatoes).
One farmer complained: “We should not be stopped from cultivating food crops on the land… if we grow potatoes, we get enough food and money to send our children to school” (Habimana 2013). Bizimungu and NAEB officials argued that ‘farmers needed to change their mindset’ and that farmers were offered services, which would bring the value of one kilo of pyrethrum flowers to nearly 3000 RwF (Habimana 2013). Government officials complained that farmers’ yields remained low despite the provision of free organic manure and improved seeds (Nkurunziza 2014).
Government interventions facilitated Horizon’s investments and contributed to capitalist accumulation. Strategies in the sector were geared to achieving
418 Interview, Raphael Rurangwa – MINAGRI, February 2012.
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addition and increasing productivity in line with achieving ideological goals of self-reliance. Reduced global prices hampered growth in productivity and quality.
However, the government has not reduced the farmgate price. Statistics of reduced production indicate that the government has not forced farmers to grow pyrethrum or that farmers have successfully resisted such coercion (if it was applied). This shows that the government and Horizon have been forced to react to the international environment and the demands of labour while organising capitalist accumulation.
5.6 Concluding Remarks
This chapter has detailed the values that are expected of RPF cadres in line with Economic Nationalism. It has shown how Agaciro has reflected ways in which the government has been forced to navigate the demands of three constituencies.
Investment groups are symbols of RPF ideology. They have been used to respond to difficulties in dealing with demands from three constituencies. The continued
prominence of investment groups reflects the government’s difficulties in developing partnerships with loyal investors. Though the use of these investment groups has often been marked with increased productivity and progress in line with strategic goals, the RPF ideological project and its narratives mask that success depends on the exploitation of workers. This is the case with Horizon SOPYRWA, where
‘success’ has been projected through empowering cooperatives, increasing the quality and quantities of pyrethrum production. Through organising ‘small farmers’
into ‘cooperatives’, accumulation strategies were facilitated and legitimised by donors (as USAID and the IFC gave funds to these policies). Capitalist accumulation expanded in the sector until adverse international prices inhibited growth.
Being perceived to represent the values of Economic Nationalism helps Kagame retain a hold on power. Investment groups are used to centralise control over rents in the pursuit of self-reliance, while reducing the opportunity for rivals to develop independent control over rents. However, these groups are also easy targets for critics who equate close state-business relations with corruption. The government has strategically managed such perceptions by avoiding publicising the work of these companies, hiding some of them and demonstrating that it disciplines individuals
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who are accused of mismanagement or corruption.419 For example, two Horizon officials were accused of embezzling funds in 2010 (Ndikubwayezu 2009). Paul Semana and John Zigira were later retired during an episode of mass retirements in 2013. This incident shows that while these companies are not free from becoming avenues for personal corruption, the government disciplines those who are accused of such activities. Conversely, it could also be argued that charges of corruption are used by ruling elites to legitimise choices to oust certain officers (since both Zigira and Semana were rumoured to have been close to Nyamwasa, who fled the country in 2010). The centralisation of rents and authority is threatened, either when there is a possibility that certain individuals may become rivals or through individual acts of corruption. However, the dominant coalition is sensitive to such threats and works to consolidate control over rents.
Rwanda’s economic strategy is a product of the international environment, which demands it conducts development in certain ways. However, the RPF
government (as with other East Asian developmental states) finds way to intervene in markets to prioritise achieving strategic goals. Interactions with foreign actors and global markets contribute to determining the trajectory of economic policymaking.
Equally, domestic pressures (from rival elites and the population) determine the space within which the government can enforce capitalist accumulation.
419 Ngali, despite its size and mandate, is not ‘known’. Donors said that they had never heard of the company (Interviews, Donors, October 2011-May 2012).
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