Rwanda ends price controls to let farmers negotiate freely

RWANDA – Rwanda has ended government-set prices for farm produce, marking a major change in how the country’s agricultural market works.

Farmers and buyers will now negotiate prices directly based on supply and demand.

The Ministry of Trade and Industry says the decision, in effect since last year, has started to ease tensions between producers and buyers that often led to stalled sales.

“In the past, we had cases of buyers refusing to purchase produce when fixed prices were high, and sellers refusing to sell when the prices were lower than their expectations, for example, in the case of rice,” said Trade and Industry Minister Prudence Sebahizi. “Since last year, when the government stopped fixing prices, we have observed two agricultural seasons without such issues. Today, prices are determined by market forces—supply and demand.”

From control to competition

The previous system allowed the government to announce indicative prices for crops like maize, beans, and Irish potatoes at the start of every season. The goal was to protect farmers from exploitation and keep food affordable for consumers. But over time, it created friction. When the set prices were higher than what the market could bear, buyers avoided formal channels. When prices were too low, farmers withheld their produce or turned to neighboring markets for better returns.

Officials say the shift gives the agriculture sector more room to grow and attract private investors. Farmers can now make pricing decisions based on market conditions rather than government directives.

According to the ministry, liberalization removes interference in price setting, letting the market balance itself. It also makes Rwanda’s produce more competitive under regional trade agreements such as the African Continental Free Trade Area (AfCFTA).

Balancing opportunity and risk

Alfred Bizoza, an agricultural economist, agrees that market-based pricing could improve efficiency but warns of possible downsides. “Small-scale farmers are particularly vulnerable. Unlike large commercial producers, they lack bargaining power, storage infrastructure, and information on prevailing market rates. This asymmetry can lead to exploitative pricing by intermediaries who dominate rural market chains,” he said.

To address this, the government plans to strengthen cooperatives and expand warehouse receipt systems. Farmers could then store their produce, use it as collateral for loans, and sell later when prices rise. “These tools will help farmers avoid distress sales and improve their earnings,” Minister Sebahizi explained.

For consumers, prices will now move more directly with supply and demand. During bumper harvests, prices may drop, but during poor seasons, they could rise. The Rwanda Inspectorate, Competition and Consumer Protection Authority (RICA) will monitor markets to prevent collusion and unfair trade practices.

Lessons from the region

Other East African countries offer mixed lessons. Kenya and Tanzania both saw investment growth after similar reforms but also faced price instability when oversight was weak. Uganda’s coffee sector, however, benefited from liberalization combined with better training and quality control, which led to higher farmgate prices and stronger exports.

For Rwanda, Bizoza said, the task ahead is to “balance efficiency with fairness—ensuring that open markets benefit both producers and consumers.”

He added that success will depend on transparent pricing, competition enforcement, and steady investment in post-harvest facilities like warehouses and cold storage to cut losses and protect farmer incomes.

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