Caribbean & Central America - November 2011 (ISSN 1741-4458)

Bumper coffee harvest. El Salvador’s coffee exports for the 2010-2011 coffee harvest totalled US$458.2m. It was the best harvest for 11 years, according to the Consejo Salvadoreño del Café (CSC), and the industry was able to cash in as prices on the international market were also high. Total earnings from the coffee year, which extended from 1 October 2010 to 30 September 2011, were up 139.3% on the same period a year earlier. Total exports by volume amounted to 2.26m quintals (1 quintal = 46 kilos), up by 74% on the previous year. The average price per quintal was also up, from US$147.3 to US$202.7 over this period.

The main importers of Salvadorean coffee are the US (36.1%); Germany (29%); Japan (9.1%); and Canada (6.8%).

The remittance drug. El Salvador is becoming “addicted to remittances”, according to the deputy minister for Salvadoreans abroad, Juan José García. Remittances account for nearly 17% of El Salvador’s GDP, rising to as much as 70% of GDP in some areas, such as the Bahía de Jiquilisco on the Pacific coast, García pointed out at a recent event organised by the US thinktank the Brookings Institute and the Central American Bank for Economic Integration (Cabei).      

García claimed that the situation was unsustainable, and that the government of President Mauricio Funes was endeavouring to persuade Salvadorean businessmen living abroad to invest in infrastructure projects in the country instead. Like any drug, it will be difficult to break El Salvador’s dependence on remittances, which almost cover the country’s trade deficit, unless the government can encourage expatriates to return. This, however, would require an improvement in public security and economic growth prospects, neither of which looks imminent.

El Salvador received US$2.71bn of remittances in the first 10 months of 2011, up 5.3% on the same period last year, the central bank reported. This despite the high unemployment rate in the US where the majority of El Salvador’s 2.8m expatriates live. In 2010, remittances amounted to US$3.43bn, equivalent to 16.3% of GDP or 79.1% of total exports.