Deterioration of food security after prolonged impact of COVID-19

• The extension of government measures to curb the spread of COVID-19 continues to impact on the operational capacity of businesses and stores, which have been forced to cut employee numbers. The effect of international trade on domestic industry is also apparent in a fall in purchases of some export products, and the tourism sector is practically paralyzed since it depends on open borders and demand from international visitors.

• At the national level, the most affected households have a partial income while others have completely lost their source of income. As a result, they have been using negative coping strategies to meet their minimum food requirements. From June through September, these households will receive government support. This will improve access to food and place them in a situation of Minimal (IPC Phase 1!) food insecurity.  However, the prolongation of the crisis will lead to a situation of Stressed (IPC Phase 2) food insecurity from October through January of next year.

• At the height of the lean season, rural households, particularly in the dry corridor, are experiencing greater difficulty in food access as a result of restrictions on movement and reduced demand for local labor. Assistance from government and other institutions, from June through September, will avoid the need for households to use crisis strategies to meet their food requirements. They will thus be classified as Stressed (IPC Phase 2!).

• October to January is the main period of seasonal employment. However, a lack of resources among small and medium-sized coffee growers, the fall in international demand for various products and possible cross-border restrictions will lead to reduced employment in the coffee sector in particular, but also in sectors such as vegetable production and tourism. These households will have to use coping strategies and face Crisis (IPC Phase 3) food insecurity marked by high basic grain prices and a maize and bean harvest that will not meet household needs.

Current Situation

The country has been experiencing the effects of the COVID-19 pandemic since mid-March. June has seen the largest increase in cases with a steady growth curve. By June 29, a total of 16,930 cases and 13,049 active cases had been recorded. The restrictions implemented by the government since March to prevent the spread of COVID-19 have led to the disruption of almost all socioeconomic activities in the country: the permanent and partial closure of companies and businesses and the suspension of public transport have affected the entire country.

Rainy season and crops. Basic grain planting took place throughout the country during May, although in the Western Altiplano this began in February. Recent rains have helped plantings and the development of crops that are already growing. In some areas, storms Amanda and Cristóbal in early June caused localized flooding although without any major impact on crops.

Food availability and access to markets. The supply of food products in the country's markets and supermarkets remains stable. Despite additional health controls at the country’s borders, freight transport is permitted and there is a constant flow. However, restricted public transport and market operating hours make accessing markets difficult and are hindering the normal flow to local markets. As a result, rural households far from municipal capitals are having to buy basic foodstuffs from stores within the community, often at higher prices.

Income sources: Restrictions to curb the spread of COVID-19 have impacted household income sources at both the urban and rural level. Restrictions on movement have prevented poor rural households who rely on daily agricultural work from traveling between communities, municipalities and departments in search of employment. Similarly, the low demand for labor from middle- and upper-income households hit by a reduction in income – whether from employment, trade or remittances – has also affected the already scarce opportunities to earn a day’s wage. Urban areas dependent on formal and informal employment, trade and services, immediately suffered under the impact of restrictions: the lack of transport, the imposition of restricted hours for movement and the operation of sectors, the closure of small businesses and falling demand for non-essential goods and services impacted first on workers in the informal sector, who represent 70 percent of the employed population. These workers lack employment protection and their low daily income makes saving difficult. Unemployment subsequently affected employees in the formal sector, particularly those in services such as restaurants, hotels, tourism, personal care and retail. The fall in demand and sales affected a large number of companies and, following three months of inactivity, they have reduced operations and cut payrolls, through layoffs, part-time working, and suspensions. The decline in income has thus continued since mid-March. According to the third survey on the impact of coronavirus on businesses conducted by the Comité Coordinador de Asociaciones Agrícolas, Comerciales, Industriales y Financieras [Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations – CACIF], with more than half of the participants linked to trade, industry and services, 46 percent of companies have suspended contracts, and 36 percent of those have done so entirely. In one month, the number of companies that resorted to suspension doubled and a quarter of companies lost half of their sales, demonstrating the impact of the prolongation of restrictive measures on companies’ ability to stay afloat. Similarly, in its third survey on the impact of COVID on the sector, the Guatemalan Chamber of Agriculture reports that rubber, coffee, fruit and vegetables have suffered the biggest drop in sales due to lower demand, which is the biggest problem for 35 percent of respondents. The tourism sector is virtually paralyzed: according to data published in the second survey on the economic impact on the tourism sector conducted by the Asociación de Investigación y Estudios Sociales [Association of Social Research and Studies – ASIES], 44 percent of companies report a complete cessation of activity and 33 percent an impact of over 80 percent, with restaurants, tour operators and hotels reporting temporary to permanent closure; in May, an average of 27 percent of workers had been dismissed from tourism-related jobs. The income of workers in the informal economy has fallen between 50 and 75 percent, while domestic workers and gardeners employed in private homes and offices have suffered a 100 percent drop in income. With the decline in economic activities and opportunities to earn income, poorer households have resorted to asking for food on the streets by waving a white flag. Although there are no official figures or studies that document this phenomenon, it shows the level of need in households.

Income from remittances. About 6 million Guatemalans are beneficiaries of remittances from the United States and in some livelihood zones these are an important component. This income is used directly for family consumption, investment in small businesses, construction and to purchase inputs for planting. They indirectly benefit third parties through the purchase of products and employment in construction or agricultural day labor. At the national level, remittances have been steadily increasing for ten years, accounting for 13.8 percent of GDP in 2019. This trend was interrupted in March, when the effects of COVID-19 hit the US economy, impacting the sectors that are key sources of employment for immigrants: from February to April remittances dropped 14.5 percent. Figures for April 2020 showed a 20 percent reduction on April 2019. By May, there was a 21 percent recovery in the total amount compared to the previous month, however this was still 14 percent lower than in May 2019. The Bank of Guatemala forecasts a 9 percent reduction in remittances for 2020.

Food prices. The price of basic grains shot up in March as a result of panic buying and stockpiling. While prices fell within a few days, they have remained above the five-year average, and prices recorded for last year: white maize has increased in price by 10 percent and 19 percent respectively, while beans have increased by 53 percent and 36 percent respectively. The price behavior of beans is atypical due to stockpiling by intermediaries and the rise in demand. The cost of the basic food basket has been increasing since March, from GTQ 3,543.13 in February to GTQ 3,624.61 in May. The Consumer Price Index also registered an increase, with expenditure on communications, food and health showing the highest percentage changes, rising by 8.42, 4.83 and 2.01 percent, respectively. Among the basic food costs with the highest year-on-year positive impact on the CPI are potato, chayote, products for tortillas, eggs and maize.

Government assistance programs. The government has launched several aid programs through the Economic Rescue Act for Families Affected by COVID-19 (Legislative Decree 13-2020), aimed at mitigating and compensating for the economic crisis caused by the pandemic. One of the most significant in terms of value and coverage is the Bono Familia (Family Bonus), which will pay three monthly contributions of GTQ 1,000 per family to a total of two million households. One of the key prioritization criteria is electricity consumption of less than 200 kWh during February, however, a maximum of 10 percent of the total fund is also earmarked for households without electricity (200,000 households). Launched on 18 May, this program had reached approximately 1.5 million households by mid-June. The other two cash-transfer programs are the municipality managed Apoyo al Comercio Popular (Support for Informal Trade) for workers in the informal economy, which aims to make a single payment of GTQ 1,000 to 200,000 people, of which 51,500 from 104 benefiting municipalities had been reached by mid-June; and the Fondo de Protección de Empleo (Employment Protection Fund) aimed at suspended workers, who will receive GTQ 75 per day for three months; by June 112,000 people were registered for the fund, of which 44,000 are already receiving aid. The other major assistance program is the Programa de Apoyo Alimentario or Bolsa Rural (Food Support Program or Rural Parcel), aimed at rural populations who do not have access to electricity and who will receive food worth GTQ 590 to meet the caloric requirements of a family of five for one month, including a hygiene kit with soap and masks. This program began in mid-June.

Nutrition. At the national level, epidemiological week 24 (7–13 June) falls within the months of the year in which the Ministry of Health identifies more cases of acute malnutrition, coinciding with the lean season. During this week, the Ministry’s Department of Epidemiology reported a cumulative total of 15,998 cases (rate of 69.2) of acute malnutrition in children aged under five years, more than twice the figure for the same epidemiological week in 2019 (7,542 cases, rate of 32.6). The three areas of concern analyzed in this report contain nine of the twelve health areas with the highest risk of acute malnutrition and six of the ten health areas with the highest risk of severe acute malnutrition. The health area with the highest rate is Escuintla with 236.8, which is three times the figure for the same week in 2019. The Ministry of Health intends to initiate an active case search for acute malnutrition and other nutrition-related actions in the context of the COVID-19 emergency, with support from cooperation agencies. Protocols include the identification, treatment and timely follow-up of cases.

Stages of reopening. In early June, the Government published the national strategy to control the COVID-19 epidemic and the basis for the conditional easing of lockdown (Ministerial Agreement 146-2020). Phase 0 of the strategy addresses preparation for the de-escalation process and will begin once certain criteria have been met, including a decrease in new cases over a 14-day period, and will allow increased movement of the population. The plan may then move to Phase I, the beginning of the de-escalation period, following a further 14 days of a decrease in new cases, positive test results and suspected cases; it provides for the partial reopening of economic activities and places of work such as stores, restaurants, sports activities and tourist accommodation, apart from common spaces. Phase II of reopening could begin after 14 days of a decrease in new cases, suspected cases and positive test results, and would allow for the partial reopening of those activities that did not open under Phase I. One of the options announced by the Government is opening up by geographic area, provided that there is a steady decline in cases. However, by mid-June, the government had already authorized the opening of certain non-essential shops and services which are not located in shopping malls and which follow the distancing and maximum capacity regulations issued for their operation, although public transport restrictions and restricted hours of movement remain in force.

National Assumptions

Evolution of COVID-19 and restrictions. According to the report issued on June 16 by the Ministry of Health, cases are expected to continue to increase until the end of August. This projection may mark the peak by that date and the possible start of stabilization at the beginning of September. Based on this projection and the planned reopening stages according to the evolution of the disease, lockdown measures are likely to be gradually eased by September. The progressive lifting of restrictions would mean an improvement in people’s movement and income-earning opportunities. However, the epidemic will continue to have negative effects throughout the projection period, and this will be particularly prolonged in rural areas due to limited employment options in these regions.

Climate. According to the forecasted El Niño–Southern Oscillation (ENSO) neutral conditions, rainfall behavior will be average to above-average during the first rainy season, with a canícula [hottest, driest period] of average duration and intensity expected in July. For the second rainy season, forecasts show average to above-average rain; however, they also indicate slightly above-average temperatures that would favor evapotranspiration. An above-normal hurricane season is predicted for the region.

Basic grain production. At the national level, rainfall accumulations are expected to allow the normal development of both Primera and Postrera crops and an average harvest. The exception would be poor households that have not invested as usual in agricultural inputs due to COVID-19, and the production of these households would be slightly below average.

Markets and basic grain prices. Both the country’s food production and the supply chain and delivery in all markets and supermarkets will remain stable. The Primera maize harvests from the eastern, northern and southern coastal regions of the country, as well as formal and informal flows from Mexico, will keep the market supplied. However, prices will remain above average during the entire period covered by this outlook.

Reopening of economic activities. According to the National Reopening Strategy and the projected evolution of the pandemic in the country, a partial reopening with restrictions on economic activities and public transport is expected in September.

Income. In addition to food- and health-related businesses that were already operating, in June the government authorized the opening of certain non-essential shops and services, which, despite limited operating hours, will continue to provide employment. In some areas, restrictions on movement between municipalities and departments began to be eased in mid-June. It is expected that this will continue and be gradually extended to other regions if there is no new spike in the disease. Public transport could partially resume in September/October once the infection peak has been reached. However, the imposition of distancing measures and reduced passenger capacity may cause irregularities in the service throughout the year. It is expected that various economic activities in the formal and informal sector linked to trade, transport and storage, food and personal services, construction and manufacturing industries – which account for a large proportion of the working population – will begin to resume operation between September and October. Many will do so slowly and partially, however, meaning that there will be no immediate improvement in income for some households. Other activities associated with international demand for specific products and tourism services would take longer to reactivate and may not fully resume until next year. In rural areas, the primary source of income is agricultural day labor, whose behavior depends on the economic capacity of middle- and upper-income households, labor demand for commercial crops (coffee, sugar, vegetables, etc.), and the ability to move freely between municipalities and even neighboring countries such as Honduras and Mexico. Cross-border movement restrictions are expected to be maintained. In addition, reduced resources due to the decline in remittances, trade and formal employment will affect the hiring of local day labor throughout the year. For coffee, the demand for labor for fertilization and harvest could be lower than usual due to reduced grain purchases on the international market as a result of the pandemic, and the required biosecurity and distancing measures on farms. Income from this source, especially during the months of high labor demand (October-January/February), would thus be partial.

Income from remittances. The decline in remittances will continue to affect middle- and upper-income households, since the income-generating potential of migrants in the United States is dependent on the possibility of re-employment. However, the United States is undergoing a critical period of unemployment, with the sectors that employ migrants the most affected.

Government assistance programs in response to COVID. The Family Bonus program began in mid-May and the first cash transfer was made between the end of May and the end of June. The next two instalments will be paid in July and August, covering 2 million families. It is also expected that the employment protection fund will be used in full and that it will cover suspended employees. The food support program will cover needs in rural areas for at least one month between July and August.

Most Likely Food Security Outcomes

Government measures to halt the spread of COVID-19 have had a critical impact on access to food due to a combination of factors including reduced income up to total loss of income, rising prices of basic foodstuffs, suspension of public transport and restrictions on movement. The livelihoods of those who work in the informal sector, accounting for 70 percent of the population, were immediately affected, with daily income reduced by more than half; this sector includes those employed in agricultural activities whose income was also affected by lower recruitment due to the drop in employers’ incomes and the impossibility of traveling to places of work. Employees in the formal sector have suffered from suspensions, dismissals and the closures of stores and businesses that, after three months of inactivity, lack the resources to survive. This situation is exacerbated by the increase in the price of maize and beans; of the basic food basket, which increased 2.3 percent from March to May; and of the Consumer Price Index, which also recorded an increase of 4.83 percent in the food category, with tortilla products one of the items showing the greatest upward change.

In urban areas at the national level, workers in the informal economy – who were first to be affected and who lack the protection networks that might enable them to survive the decline in their daily income – are modifying the quality and quantity of food in their diet and using coping strategies to meet their basic food needs. Formal sector employees have also had to resort to credit, loans, assistance, and non-traditional employment-generating activities to meet household needs. Government assistance programs will provide these households with income that will enable them to improve the quality and quantity of their food and avoid the strategies previously used to meet minimum dietary requirements. They will therefore be classified in Minimal food insecurity (Phase 1!) from June to September. From October to January, the resumption of transport and the lifting of restrictions will mark the re-start of operations for various economic activities in the formal and informal sector related to trade, transport and storage, catering and personal services, construction and manufacturing industries that employ a large proportion of the working population. However, commercial and financial recovery will be slow for many of these companies, and reinstatement of the workforce will thus be gradual and partial. In addition, other activities related to international demand for specific products and tourism services will take longer to recover due to the severity of the impact. Continuing travel restrictions in several countries has led to an almost total cessation of tourism. Since government assistance programs will last until August/September when incomes will only just have begun to recover and will not have reached pre-pandemic levels, from October onwards households in both the metropolitan area and municipal capitals will be in Stressed food insecurity (IPC Phase 2), with pockets of the population that will have difficulty in meeting their food requirements without assistance, forcing them to use negative coping strategies that would place them in Crisis (IPC Phase 3).

The primary source of income for households in rural areas is agricultural day labor, whose behavior depends on the economic capacity of middle- and upper-income households, labor demand for commercial crops (coffee, sugar, vegetables, etc.), and the ability to move freely between municipalities and even neighboring countries such as Honduras and Mexico. In March, the emergence of COVID-19 in the country and the subsequent restrictions affected recruitment of agricultural day laborers and the ability to travel to find employment and to visit markets to stock up. These factors hampered access to food and led to the use of negative coping strategies to ensure the basic family food intake. Poor households located in the dry corridor were already experiencing difficulties in accessing food due to prolonged reliance on food purchases, rising prices of basic grains and premature use of income earned during the 2019 high labor demand season. Households had already begun to make adjustments in the quality and quantity of food in their diet to make sure they could feed themselves, and were using crisis coping strategies. From June to August, many rural households will receive the Family Bonus from the government, improving access to food. In addition, they will receive government food support during these months, while in some eastern and western municipalities cooperation organizations will provide food assistance. These assistance programs will enable rural households to improve the quality and quantity of food in their diet, improving food security outcomes to Minimal (IPC Phase 1!) and Stressed (IPC Phase 2!), particularly in the dry corridor.

The second period of the outlook (October–January) coincides with the season of high labor demand. However, employment opportunities are expected to be lower than usual as a result of reduced income due to job suspensions, declining trade and remittances in the middle- and upper-income households that usually hire local day laborers for agricultural activities, particularly those related to coffee and construction. Opportunities for employment in coffee harvesting may be reduced by the distancing and biosecurity measures imposed on farms and the fall in international sales, while controls on the borders with Honduras and Mexico may hinder the movement of those who usually migrate for employment during coffee-harvesting months. Added to this is the decline in tourist activity, which generated small-business income for portions of the population in tourist locations in different parts of the country. Between October and January/December, basic grain harvests should improve food availability for some months. However, due to lack of resources, poor households have reduced planting areas and/or stopped using inputs, which will result in partial yields and below-average reserves. It is expected that the COVID-19 emergency programs implemented by government and international cooperation will have ended by this time, placing households in a Crisis situation of food insecurity (IPC Phase 3) as a result of the continued use of negative strategies to meet minimum household food requirements, or in a Stressed situation (IPC Phase 2) in other rural areas hit by the decline in income, predominantly derived from tourism and informal trade. 

Events that Might Change the Outlook

Possible events over the next eight months that could change the most-likely scenario.