Seasonal improvements in food availability and access are insufficient to prevent acute food insecurity

• Despite the country’s favorable economic outlook, the slow pace of vaccinations and rise in COVID-19 cases will not facilitate full a full economic recovery and, consequently, the recovery of family income lost during the pandemic. The tourism sector will continue to be one of the most affected sectors, given that it is linked to international demand and restrictions to prevent the virus from spreading. 

• Food prices remain high, particularly for staple grains. In accordance with seasonal trends, prices will tend to increase until the next primera harvest. The arrival of fresh corn and beans on the market will improve availability and cause prices to slightly drop, although they will most likely remain above the five-year average. Urban and peri-urban public transportation services have yet to resume a normal schedule and still have capacity restrictions and high fees, which continue to impede household movement.

• Corn and bean crops are developing favorably across the country and the primera harvest — the only harvest in the Altiplano — and the postrera harvest are expected to be average. However, irregular rainfall during the first rainy season caused planting to be postponed in some eastern areas. In localized western areas, strong winds and hail could affect crop yields.

• Countrywide, poor households are expected to continue to have difficulties purchasing their minimum food needs and will likely resort to stressed coping  strategies, such as reducing health and education expenses, using up their savings, and consuming lower quality food in their diet to meet their nutritional needs. These households will likely experience Stressed (IPC Phase 2) outcomes throughout the scenario period, although the situation is expected to improve for some households by the start of 2022.  

• The poorest rural households will likely experience Crisis (IPC Phase 3) outcomes during the lean season until September, and many will likely resort to crisis strategies to obtain their food. Beginning in October, however, they will rely on corn and beans from their harvest and income generated during the season of peak demand for labor. Increased income will allow them to improve their food consumption, and an improvement to Stressed (IPC Phase 2) outcomes is expected. Among households in the Dry Corridor and areas affected by hurricanes Eta and Iota, however, the rise in income is not expected to prevent food consumption gaps or prevent the use of crisis strategies, sustaining Crisis (IPC Phase 3) outcomes. 

Current Situation

Restrictions put in place to prevent the virus from spreading have not changed since the beginning of the year, guided by the Alert Board — for which the Ministry of Health is responsible — which classifies municipalities according to the incidence of confirmed COVID-19 cases per 100,000 inhabitants. The classification by colors, ranging from green (new normal), yellow (moderate), orange (high), to red (maximum), refers to capacity restrictions, social distancing and use of face masks. All economic activities are underway and recovering. Some schools have already been authorized for in-person classes in the hybrid learning system, and the business hours of shopping malls, markets, supermarkets, neighborhood stores and restaurants have normalized. Public transportation has not yet gone back to normal. By June 26, 217 municipalities were in red alert (4.4-fold than the figures recorded in February), 64 in orange alert, and 59 in yellow alert. Cases have been steadily rising since the second half of February 2021. By June 28, 7.2 percent of the population had received one dose of the vaccine, and 1.5 percent was fully vaccinated. The country has received 1.28 million vaccine doses, immunizing a maximum daily number of 31,517 people.

Sowings for the primera productive cycle have germinated countrywide and crops are developing normally through the different phenological stages. In some areas, however, heavy rainfall caused flooding and landslides and crops were damaged by the rain and the wind, particularly in localized areas of Sololá and Totonicapán. On June 24, the National Coordinator for Disaster Reduction (CONRED) reported 219 incidents during the rainy season so far, which affected 1,398 people and destroyed homes and infrastructure.

Nationally, markets are operating normally, supplied with stored grain from the Northern Transversal Strip, Petén, and the eastern part of the country, as well as formal and informal corn imports from Mexico. White corn and black bean prices are following seasonal trends but are above the recent five-year average by 9 percent (Q143.88/QQ) and 16 percent (Q457.70/QQ), respectively. These prices are partly driven by the rise in the cost of fuel and, consequently, transportation, as well as the rise in international yellow corn prices.

Economic activity is picking up faster in urban areas, resulting in income opportunities for the informal sector and in the partial recovery of jobs lost during the pandemic. According to a report issued by Banco de Guatemala (BANGUAT), the export outlook for April 2021 shows a year-on-year change of 14.8 percent. Clothing items, cardamom, coffee, banana, and sugar were the most important products. Cardamom was the most exported product in terms of foreign currency, with a 26 percent rise between January and March 2021 compared to the same period in 2020. The Monthly Economic Activity Index (IMAE published by BANGUAT) has shown positive changes since the final months of last year and this year so far as well. It has also shown favorable figures for the main agricultural export products, including sugar, coffee, oil, fruits, and vegetables. As a result, the availability of jobs in these sectors has improved for day laborers. However, activities related to local domestic tourism remain below normal despite some slight signs of recovery, which is mainly driven by the internal movement of people. According to INGUAT, 41 percent fewer non-residents visited the country in March 2021 compared to March 2020, both by land and air. Meanwhile, domestic and regional sources of income in neighboring countries, such as Honduras or Mexico, are seasonally low for rural households. In addition, high transportation costs limit household movement to search for jobs.

The volume of remittance inflows to Guatemala reached record-high levels by the end of 2020, despite the impact that the pandemic had on the global economy and the economy of the United States, which is the main country receiving Guatemalan migrants. The first five months of 2021 show steady growth in the flow of remittances, with a 43-percent increase compared to the first five months of 2020 and a 38-percent increase compared to the same period in 2019 (data from BANGUAT). The departments that received the highest volume of remittances are Guatemala, Huehuetenango, San Marcos, Quetzaltenango, and Petén. In terms of the number of families that received remittances, the highest volume was recorded in the first four departments mentioned above, followed by Quiché (CABI).

Monthly inflation in Guatemala has been close to 6 percent since February 2021. The categories that are driving this rise include transportation, housing, and restaurants. According to the consumer price index in May 2021, basic expenses that recorded the highest year-on-year change were peri-urban bus services (59.9 percent), regular gasoline (59.4 percent), premium gasoline (54.6 percent), and urban bus services (40.5 percent). Other expenses with major increases are vegetables (güisquil, mint, cabbage, hot chili, and corn). Urban and peri-urban public transportation services have not yet returned to normal, costs remain high, and buses have limited capacity restrictions, thus making it hard to commute to jobs or places to buy food at a better price and reducing resources that can be allocated to food. According to WFP monitoring data as of June 7, 42.9 percent of households reported difficulties in accessing markets. Of these households, 18.4 percent said they could not access the market due to a lack of money, 5.9 percent said the market was too far, and 4.5 percent said they were avoiding the market due to COVID-19.

The Epidemiological Situation of Acute Malnutrition report for the epidemiological week 22 (May 30 to June 5) shows levels that are quite similar to the same week in 2020. The comparison of 2020 and 2021 accounts for methodological adjustments (a change in the automatic data transfer system from the healthcare area). Nationally, the acute malnutrition rate is 60.3 per 10,000, which is similar to the rate of 58.1 per 10,000 in week 22 of 2020.

Projects funded by USAID to combat the effects of the pandemic and hurricanes Eta and Iota – which are implemented through Catholic Relief Services (CRS), Save the Children, and Project Concern International (PCI) – are currently ending. These programs offered cash transfers for food and the replacement of productive assets affected by the storms. Throughout June, TROCAIRE and OXFAM are providing cash assistance and in-kind food aid in the municipalities of Quiché, Huehuetenango, Alta Verapaz, Chiquimula, and Izabal.

Current Food Security Outcomes. Economic activity continues to improve, even though COVID-19 cases have risen and the vaccination rollout is slow. In rural areas, poor households are currently in the lean season, which began early due to a drop in income and the constant use of coping strategies, such as using up savings or resorting to loans. The demand for agricultural labor is seasonally low. Although there are limited and sporadic agricultural production labor opportunities, transportation costs make it difficult to commute to other areas within and outside their area of residence or outside the country. Together with the lack of household food stocks and high food costs, these factors have caused households to have difficulty maintaining their minimum kilocalorie diet earlier than usual.

Poor urban households are gradually recovering their sources of income but have been forced to bear the high cost of transportation, food, and other essential needs for over a year, which is why they are facing Stressed (IPC Phase 2) outcomes. In addition, the poorest households in the Dry Corridor and the north of the country, which was affected by hurricanes Eta and Iota, are facing significant difficulty obtaining their minimum food needs. They are therefore intensifying their use of crisis coping strategies by further reducing their food consumption, using up their savings, increasing their level of debt, or resorting to atypical migration for the time and their location, as well as selling their productive assets. These strategies compromise the sustainability of their livelihoods, which is why this group faces Crisis (IPC Phase 3) outcomes.

National Assumptions

COVID-19 Development and Restrictions. The persistent rise in COVID-19 infections, together with the weak pace of vaccinations, may entail the reinforcement of current restrictions, although these restrictions would be temporary, as took place last May when cases first rose. These restrictions are not expected to affect the progress of restarting the economy. At present, there are currently no specific plans in place to acquire or receive the next vaccine batches, which would consequently hinder the continuity of immunization. This may affect some economic sectors that still have a low level of activity, such as tourism, education, and a few personal services. Public transportation is expected to continue to be scarce, operating with restrictions, irregularly, and at high costs.

Weather and Crop Development. According to the Guatemalan Institute for Seismology, Vulcanology, Meteorology, and Hydrology (INSIVUMEH), average rainfall and a normal canícula period between July and August are favoring the growth of 

crops and driving average staple grain yield prospects for the primera crop production season. For the second rainy season, which begins in late August, the NOAA Climate Prediction Center (CPC) forecast indicates the likelihood of average to above-average rainfall across the country, allowing for the establishment and development of postrera cycle sowings and expected average harvests. However, rainfall irregularity and intensity could cause crop losses in localized areas.

Markets, Food, and Transportation Prices. The country’s markets and supermarkets will most likely remain normally stocked with both national and imported food. The corn and bean supply is expected to remain stable, supplemented by corn from Mexico. The staple grain harvest from the primera cycle is expected to start in August. The arrival of fresh grain to markets is expected to cause a seasonal drop in prices. However, external factors such as the rise in international corn prices and a subsequent rise in demand for domestic grain, as well as high transportation costs, are likely to prevent a considerable drop in prices this year. Similarly, below-normal corn production in Mexico could put pressure on domestic demand and cause local market prices to rise. Therefore, prices are expected to remain above the five-year average and remain close to the figures recorded in 2020. Overall, food prices will remain high, influenced by rising transportation costs. Public bus services will remain scarce and expensive due to capacity restrictions, and, given the lack of collective public transportation, households will likely continue to rely on private transportation.

Income. The Business Confidence Index, published by BANGUAT, measures public perception on the economic situation. It has displayed a positive trend since December, where most of those interviewees believe the economy is better off than it was a year ago, and they expect it to continue to pick up in the coming months (77.8 and 89.5 percent, respectively). This would indicate that economic activities are likely to continue to pick up, albeit slowly given capacity restrictions and social distancing.

The demand for main agricultural export products (coffee, bananas, sugar, fruits, and vegetables) is expected to remain stable and may increase thanks to the opening of business activity and services in foreign countries, which are easing restrictions as vaccination progresses. According to USDA projections, national coffee production for the 2021-2022 cycle could rise 10 percent compared to the 2020-2021 season and exports could rise 8 percent. Likewise, coffee consumption should recover, showing a 13 percent rise compared to last year when, due to the COVID-19 pandemic, consumption dropped because hotels, restaurants, and cafes closed for several months. Although job offers are expected to continue improving in urban areas throughout the period, this will not be the case for rural areas until October, when the high agricultural labor demand season begins, particularly for cash crops. Until then, households may improve their income by harvesting coffee, cardamom, sugar, African palm, bananas, fruits, and vegetables, whose production will remain similar to last year’s, improving employment volume and wages as well. However, border-crossing restrictions demanding COVID-19 tests or vaccines and high transportation costs could harm household income generation.

The tourism sector will continue to be affected: based on factors such as the lifting of restrictions, successful vaccination programs, and the introduction of standardized protocols, the World Tourism Organization (UNWTO) expects two possible tourism activity recovery scenarios, one for July and the other for September, but they are both below pre-pandemic figures. According to the survey conducted by Manpower, the expectation of employment continues to rise for the third consecutive quarter, after a final semester of 2020 with negative values. Large companies have the best expectation for a rise in employment for the July to September quarter and all manufacturing, commerce, communications and transportation, services, agriculture, fishing, mining and extraction, and construction sectors show a positive trend.

Income from Remittances. In the first five months of 2021, the flow of remittances has remained above the five-year average and the trend is expected to continue. Recipient households are expected to use this money mainly for consumption and to recover savings, gradually using them for agricultural and non-agricultural labor.

Nutrition. For this period, whose first months coincide with the lean season, cases of acute malnutrition are likely to increase following a trend similar to the one in 2021 until the seasonal peak in August. 

Food Assistance. Besides the social programs already established above, no new assistance programs are expected from the government. International cooperation has several food-assistance projects, including cash transfers for families in 82 municipalities located in Quiché, Huehuetenango, Sololá, Alta Verapaz, Chiquimula, Jalapa, Jutiapa, Zacapa, El Progreso, Retalhuleu, Totonicapán, and Santa Rosa. Using funds from USAID, the World Food Program (WFP), Catholic Relief Services (CRS), Acción contra el Hambre (ACH), Plan Internacional, Visión Mundial, and Save the Children will serve over 31,000 families in 69 municipalities of those departments. TROCAIRE will cover 1,357 families in 7 municipalities of Quiché in June and July, Oxfam will serve 938 families from Izabal, Chiquimula, Huehuetenango, and Alta Verapaz, until August, and COOPI will serve 417 families from 3 municipalities in Huehuetenango from July to November.

Most likely food security outcomes

Although the economic recovery outlook is favorable, the slow pace of vaccinations and the rising rate of COVID-19 infections will most likely not allow the complete lifting of restrictions in the period covered by this outlook. Capacity restrictions in services, factories, shops, and offices are expected to continue to affect economic activities and the possibility of new investments, preventing households from fully recovering their sources of income. Food prices remain high, especially staple grain prices, which have not followed seasonal trends and or pre-pandemic values due to the impact caused by COVID-19 restrictions. Prices are expected to remain above average and similar to 2020 during this report’s projection period. Public transportation will remain irregular and expensive, which will be reflected in higher expenses for households using either public buses or private cars. In rural areas, households will experience the lean season during the first period covered by this outlook until October, when demand for agricultural labor begins. Countrywide, poor households are expected to continue to have difficulties in accessing food and will likely continue to use stressed coping strategies, such as reducing health and education expenses, using up their savings, and consuming lower quality food in their diet to meet their nutritional needs throughout the entire period covered by this outlook. As a result, Stressed (IPC Phase 2) outcomes are likely, though the situation of some households is expected to improve at the start of the following year. 

In rural areas, during the first period covered by this outlook, the poorest households will face Crisis (IPC Phase 3) outcomes. They will be going through the lean season, marked by dependence on market food purchases and the continuous use of crisis coping strategies, such as resorting to loans, selling assets, and reducing both the quality and quantity of food to cover their basic diet. This follows the impact of COVID-19 restrictions that reduced their income from multiple sources – such as agricultural labor, commercial and tourist activities, and informal trade – and caused an increase in family spending on food and transportation. The second period covered by this report expects average yields for staple grain crops that would allow households to reduce market purchases and improve their levels of food consumption for several months. This period also coincides with the period of high demand for labor, when households that depend on agricultural labor have enhanced job opportunities. However, although cash crop production is expected to be average, transportation difficulties and high transportation costs could cause some households to work fewer days since transportation expenses would reduce earnings such that labor efforts would not be justified. Nevertheless, for most poor households, the increase in income will likely allow them to pay off debts and use their income to buy food. Finally, the availability of corn and beans from their own harvest and higher income to buy food is expected to allow households to improve both the variety and quantity of food in their family diet. These factors are expected to result in Stressed (IPC Phase 2) outcomes. However, the poorest households are likely to continue to face Crisis (IPC Phase 3) outcomes in parts of the Dry Corridor and areas affected by hurricanes Eta and Iota, including those households that rely on income related to tourism. Among these households, food and income from new staple grain crops and income from labor will not be adequate to prevent the use of coping strategies to buy food. Many of these households will likely use some income from crop sales to pay off debts at the expense of their nutrition.

Events that may change the outlook