Caribbean & Central America - August 2020

On 2 July Guatemala announced that it had started the process of leaving the International Coffee Organisation (ICO), the London-based body that drives cooperation between almost 50 coffee-producing countries, amid concern for regional agriculture.

In a statement, the Guatemalan government led by President Alejandro Giammattei said that it would withdraw from the ICO’s International Coffee Agreement, and therefore end its membership of the organisation. The decision was taken following discussions between the local coffee policy council (CPC) and the national coffee association (Anacafé) according to officials, who cited years of low income under the agreement. They also accused the ICO of not doing enough to deal with the crisis facing the coffee sector, such as falling prices and inequities in the supply chain. 

“The prices paid to producers do not reflect the real value of the product and in many cases do not cover production costs, generating losses which have severely affected living conditions for coffee producing families in every producer country,” the statement says. Guatemala will not be part of the agreement from the next ‘coffee year’, which starts in October, and will now look for other forms of regional and multilateral support, continued the statement. In response, the ICO said that it is not a market regulator and urged Guatemala to remain a member. ICO figures reveal that coffee prices fell 5.2% in June, the third consecutive month of decrease.

Some 125,000 Guatemalan families depend on coffee cultivation to earn a living, according to the government statement, and 97% of those families work small plots. The same statement notes that coffee provides almost half a million jobs in Guatemala, underlining the crop’s importance to the economy.

Guatemala exported 463m kilograms of coffee in 2018-2019, bringing in US$663.62m. As a reference the country exported US$9.98bn of goods in 2018, according to figures from the World Bank. This means that coffee exports 2018-2019 represented 6.65% of total goods exported.

In an interview with Forbes published on 6 July, Ricardo Arenas, who represents the government in discussions with Anacafé, said that the ICO no longer has a reason to exist. “The organisation has been inefficient, unproductive, and indifferent towards producer countries,” he said. Arenas believes that the ICO has failed to adapt to a new coffee market in which consumers are more concerned with transparency in supply chains and criticised the organisation’s reaction to coffee leaf rust (CLR), a disease caused by the Hemileia Vastatrix fungus which decimates coffee plantations. 

In fact, Guatemala has already joined a new regional effort to solve the problems of the coffee sector. On 3 February 2019, the Costa Rica-based Inter-American Institute for Agricultural Cooperation (IICA) announced that its new Central American CLR management programme (Procagica), involving the countries of the Central American Integration System (Sica): Belize, Costa Rica, the Dominican Republic (DR), El Salvador, Guatemala, Honduras, Nicaragua, and Panama.

The Procagica aims to address challenges such as low international market prices, climate change, aging plants, lack of access to investment, lack of labour resources, and the recent intensification of disease outbreaks, and the organisation announced the implementation of a regional CLR early warning system (Sirat).

IICA is also addressing the impact of the coronavirus (Covid-19) pandemic on the coffee sector, particularly its effects on food security for small producers. On 3 July it announced that it was working with the European Union to mitigate these effects and recommended the creation of a regional agri-food system to foster the modernisation of agriculture, generate value added, take advantage of technology and increase trade between countries. This would help to protect those living in rural areas, including coffee farmers, from nutritional risks, which have been worsened by the pandemic. “The post-pandemic agricultural model must work to protect those responsible for production, increase the private sector’s involvement in sustainable development strategies, and foster greater and equitable participation by women and youth,” IICA says.

Another important part of Central America’s agricultural sector is also under threat. Costa Rica is concerned about the possible entrance of a banana plague called Fusarium Tropical race 4 (TR4) and declared a phytosanitary emergency on 1 July to release emergency funds to combat it.

The plague is a soil-borne fungus that poses a serious threat to global banana production. Fusarium TR4 has already affected plantations in Asia, Mozambique, Australia and the Middle East, according to the government statement, and in August 2019 it was detected in Colombia. This is worryingly close for Costa Rica and other banana-producing nations in Central America where exports of the fruit make significant contributions to GDP.

Costa Rica exports around US$1bn worth of bananas per year, according to the national banana Corporation (Corbana) and the sector generates 140,000 direct and indirect jobs. Around 45,000 hectares are planted with bananas, equal to 1% of national territory, said Corbana.

Announcing the state of emergency, which will remain in force for an initial one-year period, Costa Rica’s President Carlos Alvarado said that the decree “reflects the government’s effort and commitment to protect our agribusiness sector and the thousands of people who work in it”. Resources will be spent on monitoring banana plantations, as well as training and awareness programmes designed to prevent Fusarium TR4 from entering the country.

Costa Rica’s phytosanitary service (SFE) has also implemented tougher controls on imported organic materials, as well as carrying out more checks on incoming passengers to make sure that they aren’t bringing in the fungus. Even objects made from vegetable fibres can be a risk as Fusarium TR4 spores can survive in infected material even if it’s dry and they can live in soil for up to 30 years. There are currently no banana varieties that are resistant to Fusarium TR4.

Fusarium TR4 is not the only plague currently causing concern in the region. On 11 July the international regional agricultural health organisation (OIRSA), based in El Salvador, issued an alert warning about swarms of Central American locusts, which feed on basic grains and more than 400 species of plants. OIRSA called on regional governments to “step up phytosanitary measures to detect outbreaks and implement timely controls” against the locusts. The organisation warned that there is a high risk of outbreaks that could continue until 2022, and a swarm with a density of 80m locusts per square kilometre can eat around 100 tonnes of living material per day. Central America has suffered huge economic losses from past outbreaks, and a new outbreak could have devastating effects on regional agriculture, warned OIRSA.