Caribbean & Central America - January 2022

Despite surging coffee prices on international markets, farmers in the region are increasingly migrating northwards due to falling profits and longstanding structural issues in the sector.

After facing losses for years, coffee farmers suffered one of the worst years in recent memory in 2021 despite prices reaching 10-year highs of US$1.95 per pound in November, according to the London-based International Coffee Organisation (ICO). Production costs went up due to increased prices of fertilisers and transport, as did labour costs as potential workers emigrated. Plus uncertainty caused by unpredictable weather and supply chain issues due to measures taken in response to the coronavirus (Covid-19) pandemic meant that maintaining supply was difficult, according to an ICO report published in October 2021.

Other issues include higher levels of coffee leaf rust (CLR), a disease caused by the Hemileia Vastatrix fungus which decimates coffee plantations, due to increased humidity following hurricanes Eta and Iota in November 2020. The fungus is a longstanding problem, but it was revived after the hurricanes flooded the region. According to a Reuters report published on 8 December, prevalence of the disease increased from low single digit percentages in 2019-20 to 15%-25% in 2020-21. Reuters spoke to around a dozen coffee farmers and found that migration to the US is surging in coffee growing communities. “When coffee is not doing well, that's when you see big migrations from Honduras, El Salvador, Guatemala, Nicaragua,” said René León-Gómez, executive secretary of PROMECAFE, a regional research network formed by the national coffee institutes of Central America, told Reuters.

Although prices are forecast to continue increasing until 2023, the negative factors affecting the sector are also set to last, according to the Honduran coffee exporters’ association (Adecafeh). Honduran coffee shipments have been delayed due to a lack of available containers, and transport prices have increased, said Adecafeh on 15 December, which predicts the situation will remain the same until late 2022 or 2023. Farmers are also struggling with losses accumulated in recent years, which have left many with no safety net.

In recent years international institutions have demonstrated a growing awareness of the importance of the coffee sector in the region by implementing a number of projects. One programme that worked to support farmers is the Central American Programme for Integrated Management of Coffee Leaf Rust (Procagica), which is jointly funded by the European Union (EU) and the Inter-American Institute for Cooperation on Agriculture (IICA). On 2 December the Costa Rica-based IICA published a report on the results of the five-year initiative, trumpeting the fact that direct support was given to 7,334 farmers; production income was increased by at least 24% and 10,402 hectares of coffee were turned over to sustainable production models. 

While this particular project will not be renewed, farmers in the region can expect support as part of US Vice President Kamala Harris’s call to action for private sector investment, which is “part of her role addressing the root causes of migration from Central America,” according to a statement from the White House published 13 December (see sidebar). But these investments will not fix the structural problems in the coffee sector: low profits for producers, problems with CLR, changing weather patterns due to climate change, and increasing labour shortages due to emigration, among others, which will likely see farmers continue to leave their plots behind in search of a better life in the US. Any assistance programmed which don’t address these issues are consequently likely to fail.

• Private sector investment

Among the investments announced in the White House statement for Central America are US$10m from Guatemalan food and beverage company Grupo Mariposa to create 500 new jobs and support more than 400 coffee producers “to increase productivity and earnings potential”. Other commitments include a 40% increase in financial support for smallholder farmers from Netherlands-headquartered coffee and tea company JDE Peet’s, to a total US$2.7m over the next four years, as well as a minimum US$150m investment from Switzerland’s Nespresso on coffee purchases, price premiums, and technical assistance by 2025.