Caribbean & Central America - May 2021

Coffee prices have been rising in the last five months to March, according to the London-based International Coffee Organisation (ICO), reaching their highest monthly average since the 2017/2018 harvest. But Central American growers are facing long-term issues which have left them on the verge of a crisis.

On 28 April the Costa Rica-based Inter-American Institute for Agricultural Cooperation (IICA) released a progress report for its Central American coffee management programme (Procagica), which was set up in February 2019. Procagica members include the countries of the Central American integration system (Sica): Belize, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. The organisation aims to address challenges such as low international market prices; climate change; aging plants; lack of access to investment; lack of labour resources; the intensification of disease outbreaks; and the implementation of a regional early warning system for coffee leaf rust (CLR), a disease caused by the Hemileia Vastatrix fungus which decimates coffee plantations.

The IICA trumpeted Procagica’s record in helping over 7,000 farmers rejuvenate coffee plantations; diversify the crops they plant to improve food security; and to use early warning systems and scientific research to improve plant resilience. The organisation said its work has helped to improve Central America’s capacity to deal with CLR by developing models that predict the growth of the fungus and how it will affect plantations, as well as through the development of a platform called ‘Pergamino’, which collates information from coffee farmers throughout the region. IICA also said it is working to help growers adapt to climate change, for example by developing new hybrid coffee beans that are resistant to pests and plagues, as well as developing best practices for water capture and irrigation.

These kinds of long-term efforts will be key in building a sustainable future for Central American coffee growers, but farmers have been pushing for more immediate support. In Honduras and Nicaragua hurricanes ‘Eta’ and ‘Iota’, which hit Central America in November 2020, destroyed more than 10,000 hectares (ha) of coffee farmland. Meanwhile El Salvador’s coffee association (Acafesal) estimates that farmers lost 150,000 quintals (46kg bags) of coffee due to the storms. This means there is a chance that the country could record its smallest harvest in 100 years, according to Acafesal’s president, Omar Flores. Flores has been pushing for financial support from the Salvadoran government, and hailed productive meetings with agriculture minister, David Martínez, who confirmed that the government’s ‘coffee rescue plan’ would include a US$637m fund to provide loans to farmers and restructure their existing debts. This is in addition to a US$45m loan from the Inter-American Development Bank (IDB) designed to strengthen the coffee sector which was announced in January.

In Honduras, coffee farmers will be able to transfer existing debts with commercial banks to the Honduran bank for production and housing (Banhprovi), deputy minister for agriculture & livestock, Rubén Espinoza, said on 22 April. At a regional level, the Central American development bank (BCIE) committed US$15m to a fund which aims to raise US$150m to transform the coffee industry in the region. The idea is to improve the use of technology and increase environmentally sustainable practices with the aim of producing premium coffee that will sell for higher prices. According to BCIE executive president, Dante Mossi, coffee represents 11.2% of Central America’s agricultural GDP. This income is spread across a wide social base, because 90% of producers are small farmers and the bank hopes to benefit the 400,000 families connected to coffee farming by creating extra value.

• Price rises

The president of El Salvador’s coffee association (Acafesal), Omar Flores, predicts that international prices will continue to rise because coffee reserves in the US are low, and Brazil’s coffee harvest could fall by around a third this year. However, a short-term boost in income could only serve to distract from structural problems facing the industry, not least deteriorating growing conditions due to climate change.