The lean season begins in a context of high food and fertilizer prices
IPC v3.0 Acute Food Insecurity Phase
IPC v3.0 Acute Food Insecurity Phase
IPC v3.0 Acute Food Insecurity Phase
current or programmed humanitarian assistance
IPC v3.0 Acute Food Insecurity Phase
countries:
current or programmed humanitarian assistance
CURRENT SITUATION
Urban and rural households have been facing heavy transportation costs for two years now. In 2020, passenger capacity on buses was reduced to mitigate the impacts of the pandemic, resulting in higher transportation costs. This was followed in 2021 by significant increases in fuel prices; in keeping with the international trend, these increases have continued during 2022. According to data from the Ministry of Energy and Mines, in March 2022, the price of diesel increased 24 percent compared to the previous month, 68 percent compared to March 2021, and 82 percent compared to the five-year average. Similarly, in March the price of regular gasoline increased 14 percent compared to the previous month, 41 percent compared to March 2021, and 56 percent compared to the five-year average. On April 5, the fuel subsidy law came into force, granting a subsidy of 2.50 GTQ (0.32 USD) on regular gasoline and 5.00 GTQ (0.65 USD) on diesel for two months. However, even with this subsidy, prices remain above the five-year average.
The high price of fuel is reflected in the current cost of food, which has absorbed the transportation costs. Moreover, because of the increased price of public transport, households are traveling less frequently to the markets, where products are cheaper, instead buying in local shops, where prices are higher. The cost of transportation has also impacted the availability of resources for buying food: as the cost of journeys (using private or public transportation) has increased, households have been less able to travel to work, thereby losing daily wages. Moreover, the prices of firewood and propane gas, the two fuels most widely used by households for food preparation, have risen in recent months. Propane gas was subsidized during December 2021 and January and February 2022. The subsidy was suspended in March 2022, but on 1 April an additional grant of 0.80 GTQ/lb (approximately 0.10 USD/lb) was approved for three months. However, the current price is 142 GTQ (18.17 USD), while in January and February it was 122 GTQ (15.61 USD), showing that the subsidy has not had any significant effect.
Although Guatemala is not a direct importer of wheat, maize, or sunflower oil from Ukraine and/or Russia, the suspension of trade affecting these two major producers has begun to impact the global and national market. In March, the price of products included in the basic food basket increased. For example, the price of edible oil increased 3 percent compared to the previous month and 27 percent compared to last year. Affecting urban households in particular, French bread and sweet bread saw price rises of 6 percent and 5 percent respectively, compared to the previous month, and both breads experienced a year-on-year increase of 11 percent. Rural households' staple foods were also affected, with the price of maize- and soy-based nutritional supplements rising by 1 and 9 percent, respectively, year on year, while sugar rose by 9 percent during the same period. Oil, sugar, and maize are staple foods of rural households, while flour-based products such as bread and pasta are consumed more frequently in urban areas. Current prices mean that both rural and urban households are having to spend more on food.
The markets are supplied with corn and beans from previous harvests, as well as from recent harvests in northern Guatemala. Maize is also entering the markets from Mexico, where the April to July maize harvest is expected to be in normal ranges. In March 2022, the price of 100 kg of white maize in the La Terminal wholesale market was 13.4 percent higher than the previous month, 33.4 percent higher than in March 2021, and 49 percent higher than the five-year average. In the same market, the price of 100 kg of beans was stable compared to the previous month, but 11.7 percent higher than last year, and 32.3 percent higher than the five-year average.
Economic activities continue to recover: the new, more-flexible alert system, which increases venue capacity and reduces social distancing measures, has benefited the services and trade sector in particular. One of the sectors most affected by the COVID-19-related restrictions at the national and international levels was tourism, which stopped almost all activity in 2020 and failed to recover in 2021. In March 2022, the Guatemalan government updated the national guidelines for the prevention of COVID-19 in international travel to Guatemala, reducing entry requirements and thus facilitating international arrivals. Although the COVID-19 vaccination campaign has progressed slowly in Guatemala, the level of immunization in other countries has allowed tourism to pick up again. The Easter period is one of the key times of year for the Guatemalan tourism industry. In 2020 and 2021, the sector saw limited activity over the Easter period, but in April 2022 there are already signs of recovery, with an increase in visitors wanting accommodation, food, transportation, and retail services.
In the upper parts of the western Altiplano, the main season for the production of staple grains has begun and farmers have already finished planting. In the other regions of the country, farmers have begun preparing their land, waiting for the first rainy season to start before planting. According to the Guatemalan National Institute for Seismology, Vulcanology, Meteorology and Hydrology (INSIVUMEH), rains are likely to arrive on time, starting in mid-April in the Boca Costa and southwestern regions of Guatemala. From May onward, they should reach the other regions, with the exception of the Caribbean and the north of the country, where they are expected to start in late May and early June.
Due to high fertilizer costs, many farmers say they intend to reduce the use of these inputs, dilute fertilizers to be able to cover their cropped area, buy low quality alternatives, and/or reduce the cropped area. Any of these actions would reduce the usual harvest volumes. Subsistence farmers, whose cropped area is already small, are likely to be disproportionally impacted by this reduction. Fertilizer prices have been rising since the end of 2021 due to various factors, including declining production of the raw materials in exporting countries, interruptions to international freight transportation, and high fuel costs. Then, in February 2022, global prices soared because of the war in Ukraine. In March, according to the Ministry of Agriculture, Livestock and Food, the price of urea rose by 130 percent compared to January 2022 and 149 percent compared to March 2021. Until December 2021, Guatemala was importing over 80 percent of its nitrogen fertilizers (ammonium and urea, which are those most frequently used in the country) from Russia, China, Estonia, and Finland.
For rural households dependent on daily agricultural wages, these months are the hardest because there are seasonal reductions in employment opportunities. Moreover, this year there is less chance than usual of finding a few days' work weeding and planting in the primera cycle. Opportunities are fewer as the households that typically hire workers have high levels of debt, while the high price of inputs is reducing cropped areas and/or the use of fertilizer, with a knock-on effect on the hiring of labor.
As at the twelfth week of the year (March 20–26) the Ministry of Health reported a cumulative total of 6,497 cases of acute malnutrition in children under five years of age. This is an increase of 7.4 percent compared to the previous year. At the national level, the severe acute malnutrition rate is 8.0 per 10,000 inhabitants, an increase of 34.3 percent compared to last year. The five health areas with the highest severe acute malnutrition rates are Escuintla (26.1), Izabal (13.8), Suchitepéquez (13.1), San Marcos (11.8), and Chiquimula (11.1). The five areas with the highest number of severe acute malnutrition cases are Escuintla (239), San Marcos (191), Alta Verapaz (167), Huehuetenango (165), and Suchitepéquez (112).
UPDATED ASSUMPTIONS
The assumptions used by FEWS NET to develop the most likely food security scenario for the period February to September 2022 have been amended as follows:
• The prices of wheat, oils, fuels, and fertilizers will continue to rise, given the impact of the war in Ukraine on international markets.
• Prices for white maize and beans are likely to remain around 40 and 30 percent higher, respectively, than the five-year average.
• In rural areas, despite low vaccination rates and the continuing prevalence of COVID-19 infection, activity is increasing in the services and trade sectors, both formal and informal, as well as in foreign tourism.
• Until June, the subsidies on propane gas, super gasoline, and diesel may limit the impact of high prices.
PROJECTED OUTLOOK THROUGH SEPTEMBER 2022
High food, fuel, and transportation prices will continue to limit the purchasing capacity of poor households. The economic impacts of the war in Ukraine could intensify in the coming months. Guatemala is not a direct importer of foodstuffs. However, it is likely that the pressure of demand from countries that have lost their main suppliers of grain and oil, coupled with the rise in fuel and fertilizer prices — both due to the war in Ukraine — will result in high prices of staple grains (including maize, beans, rice) and raw materials such as flours and oils.
Revenue from activity in the service sector will continue to recover, as the relaxation of restrictions has led to increased business for shops, restaurants, personal services, and entertainment, among others. In addition, subsidies on fuel, propane gas — which is the main energy source for cooking — and electricity in households with low food consumption will help limit the negative impacts of high prices, although the cost of fuel subsidies is transferred to transportation and all goods and food. Thanks to this economic upturn and the subsidies, most areas will manage to remain in Minimal (IPC Phase 1) throughout this outlook period, although pockets of the population are likely to experience more critical phases.
During the first period covered by this outlook, rural households will still have some savings, accumulated during the period of peak demand for labor, to buy food and pay off debts. However, with lower incomes, atypical debts, and high food, transportation, and fertilizer costs, they will need to make adjustments to the quality and quantity of food in their daily diet. To meet their food needs, they will use coping strategies, including incurring debt, purchasing on credit, and reducing education and health expenses, and will therefore face Stressed (IPC Phase 2) outcomes.
As the lean season progresses and households make more food purchases in the market, at prices much higher than usual, they will have to further reduce the quality and quantity of foods in their diet and employ more severe coping strategies (such as atypical migration and the sale of productive assets), to ensure a minimal diet. In addition, the various strategies used to cope with the high prices of fertilizers, including reducing the cropped areas, are likely to result in a decline in maize and bean production in the primera harvest. From the peak of the lean season in June until September, poor rural households are expected to experience Crisis (IPC Phase 3) outcomes.
Poor households in the eastern and western Dry Corridor — as well as those in the north of the country affected by hurricanes Eta and Iota — have lost their crops or seen them reduced during 2021 and have had to compromise their livelihoods in various periods of the year to feed themselves. Moreover, these households are also facing atypical debts, high food prices, low incomes, and lower staple grain production this year because of the high price of agricultural inputs. They have entered the lean season earlier than usual, and are resorting to the use of Crisis coping strategies to feed themselves. To cover their basic food needs, they will continue to incur debt, reduce their consumption of staple foods, and sell productive assets, putting their livelihoods at risk. They will therefore experience Crisis (IPC Phase 3) outcomes throughout this outlook period.
About this Update
This monthly report covers current conditions as well as changes to the projected outlook for food insecurity in this country. It updates FEWS NET’s quarterly Food Security Outlook. Learn more about our work here.
Region Contact Information
Email: guatemala@fews.net