Archive for the ‘coffee’ Category

Today I was at Rwandex, as I am from time to time, when one of the Rwandan quality controllers saw me watching a couple dozen women sorting coffee by hand.

“Do you know how much they pay those women?” He asked me.

“No, how much?”

“I think it’s about 1.3 dollars for one 60-kilo bag.”

“Would you work for that much?”

“No way.”

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In times troglodytic, folks had to barter to get what they wanted. This form of economy was more efficient than doing it all yourself, but it was still considerably constrained by the coincidence of wants. That problem was solved by using money as a medium of exchange, which made transactions far more efficient by freeing them from the need to match up wants. Money also loosed exchange from the bonds of time: those with extra money today lend to those with too little, with interest as the compensation until the principal is repaid.

This last component came to mind often in several meetings I attended last week. Rwandan coffee output is lower this season partly because growers are having difficulty securing loans. The growers incur large costs at the start of the season, but can only afford to pay the costs at the end of the season when they’ve sold their harvest. Bridge financing would solve this mismatch between expense and revenue, but because the exchange in this case must be limited in time, the coffee grows unsold.

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