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El Niño puts primera crops at risk for subsistence farmers

  • Remote Monitoring Report
  • El Salvador, Honduras, and Nicaragua
  • April 2023
El Niño puts primera crops at risk for subsistence farmers

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  • Key Messages
  • Current and Projected Anomalies
  • Seasonal Calendar for a Typical Year
  • Projected Regional Outlook through September 2023
  • Key Messages
    • By May, with the annual lean season underway, most poor households in the region are expected to experience Stressed (IPC Phase 2) outcomes and engage in sustainable coping strategies that will reduce food consumption gaps. Between June and August, food security for poor households will deteriorate, especially in rural areas, given the unfavorable agroclimatic forecasts. Households in the Dry Corridor will experience primera crop losses, which, coupled with previous shocks in Honduras and El Salvador, will drive Crisis (IPC Phase 3) conditions in localized areas of these two countries.

    • As El Niño conditions establish, below-average rainfall accumulations and high temperatures are expected throughout the region, especially in the Dry Corridor. These conditions, along with a reduction in production areas and investment by subsistence farmers, will result in below-average harvests and food availability at levels below 2022. However, national yields will remain close to average thanks to irrigation in commercial crop production.

    • Inflation levels and fuel prices have seen slight improvements compared to the previous month, while wholesale prices of white maize in the region stabilized, and the price of red beans saw a slight drop in the markets in Managua, Nicaragua. These conditions are enabling food access; however, atypically above-average prices and inflation levels will continue, hindering household purchasing power during the analysis period.


    Current and Projected Anomalies
    AreaCurrent AnomaliesProjected Anomalies
    Regional
    • In March 2023, both headline and annual food inflation showed a clear trend of deceleration, with headline inflation at 6.1, 9.1, and 10.4 percent for El Salvador, Honduras, and Nicaragua, respectively, while annual food inflation still reported double-digit percentages: 11.6, 15.8, and 13.9 percent, respectively.
    • After several months of increases, red beans and white maize wholesale prices were stable compared to February thanks to the flow of apante/postrera tardía crops into the market. However, only red bean prices in Nicaragua demonstrated the typical post-harvest downward trend, reporting an 11.6 percent decline from February. Yet, prices were well above those reported in March 2022 and the five-year average, especially in the case of red bean prices across the region, which saw increases of 54.9 and 87.4 percent, respectively.
    • Fuel prices are fixed in Nicaragua, but in Honduras and El Salvador, they showed a downward trend in March compared to the previous month. Although all three countries reported stability when compared to the previous year, they still show increases in the region of up to 39.9 percent above the five-year average.
    • Although remittances are above average in the region, they have increased even more in Nicaragua, with a 61.3 percent increase in the first quarter of 2023 compared to the same period in 2022.
    • Erratic rainfall is reported throughout the region, along with increasing temperatures. For the majority of crop producing areas, these conditions are not suitable for a normal start to the primera season.
    • According to climate forecasts, rainfall deficits will continue throughout the region during the analysis period, while temperatures will be above average, interfering with the proper development of subsistence crops, especially in the Dry Corridor.
    • Prices of staple grains will follow a seasonal trend, however, tempered by current macroeconomic factors. Therefore, they will continue to be above the five-year average throughout the region.
    • Headline and food inflation will ease from the high values reported in recent months but will remain elevated, partly influenced by fuel prices remaining high. However, headline inflation is expected to show a greater deceleration than food inflation.
    • A slight improvement in tourism-related income, as well as a slight increase in daily wages, is expected, given the decline in the availability of labor.
    • Remittances are expected to be above the five-year average, yet with a trend towards a deceleration compared to last year's pace. Nicaragua, however, will continue to show an upward trend.
    • Subsistence production of staple grains will see a reduction of at least 20 percent compared to typical levels due to high farm input prices, reduced production areas, and below average rainfall forecasts. This will reduce producer household stocks by approximately one month. Domestic production, on the other hand, is expected to be within average parameters in all three countries thanks to irrigation in commercial production.

    Seasonal Calendar for a Typical Year
    CA Regional Calendar

    Source: FEWS NET


    Projected Regional Outlook through September 2023

    April marks the annual lean season for most poor households in the region, with its peak in early August. This period is characterized by a seasonal decline in income options as harvests of cash crops, such as coffee, sugarcane, and others, have ended. This, coupled with the seasonal increase in the prices of staple grains, compromises the purchasing power of these households, who depend mostly on purchases, given that their stocks from the harvests have already ended. They are also burdened with atypical debts and are still experiencing the economic impacts of COVID-19, especially in Honduras and El Salvador. The increase in inflation this year is an additional burden.

    Headline and food inflation for March still reported high figures but with a downward trend. Fuel prices, which have played an important role in the increase in inflation, also show a downward trend in Honduras and El Salvador, while in Nicaragua, they remain fixed by government regulations.

    This dynamic in the economy, and the end of an average postrera tardía/apante harvest in Honduras and Nicaragua, have allowed the prices of staple grains in recent months to reverse the continuous upward trend. Wholesale prices of white maize were stable compared to February, despite reporting high values compared to the previous year (between 19.4 and 22.5 percent, respectively) and the five-year average (between 51.2 and 64.6, respectively). Red bean prices were also stable in Honduras and El Salvador, with a month-on-month decrease of 11.6 percent in Nicaragua thanks to the recent harvest. However, they are still 54.9 percent above March 2022 and 87.4 percent above the five-year average due to the sharp price increases experienced since 2020, along with rising production costs reflected in current prices.

    The rainy season usually begins in May. This year, given the forecast for the development of El Niño conditions, the rainy season is expected to begin in the second half of May in the three countries, with some areas showing start of season delays of up to 10 days, such as eastern El Salvador. Irregular rainfall will also mean a delay in the start of planting for the primera agricultural cycle, especially in the Dry Corridor in the three countries. According to satellite models, Nicaragua has better soil moisture conditions and plant health in productive areas, which could mitigate the impacts of the current irregular rainfall (Figure 1). For the remainder of the season, which ends in August/September, below-average rainfall accompanied by above-average temperatures is expected, which will produce soil moisture deficits.

    Figure 1

    Percentage of the Normalized Difference Vegetation Index in Central America in relation to the historical average 2012–2021 for the period from April 11 to 20, 2023
    Se observan tonalidades verde y azul en partes de Nicaragua mientras que areas de Honduras y El Salvador muestran tonalidades amarillas y narajas

    Source: USGS/FEWS NET

    These adverse weather conditions are compounded by production costs, which have forced small farmers to reduce cropped area. The prices of agricultural inputs, such as fertilizers, continue to be high even though they are below last year’s peak values. In all three countries, governments have delivered agricultural packages to support planting, yet they will be insufficient to cover all subsistence farmers: the target number of farmers in El Salvador is half a million for the whole year, while in Honduras, it is 165,000 for the primera cycle and an additional 135,000 for the postrera cycle. In Nicaragua, the government has not given exact figures regarding the delivery of inputs. These adverse factors to subsistence production of staple grains will result in primera crops with below-average yields, and likely even slightly lower than last year. The cost of labor has also increased, while its availability has decreased, partly as a consequence of the migratory dynamics present in the region. This will further compound challenges for medium and large producers as wages improve. Despite these factors, production at the national level in the three countries is expected to be close to the average since they have improved technology, such as irrigation, and greater capacity to mitigate the expected risks.

    Prices during the analysis period tend to show seasonal increases, but given the current macroeconomic context, inflation is expected to remain above average, although lower than in 2022. The rate of growth of headline inflation will tend to slow, while food inflation will also decelerate but not as quickly. This is partly due to the prices of staple grains maintaining atypically high values in recent years, well above the five-year average. Beans, in particular, are expected to report price increases of up to 88 percent. Other foods, such as vegetable oil, eggs, and chicken, will continue to show high prices, although lower than last year. Rice will also show a slight continual upward trend.

    During the primera cycle, the poorest households in rural areas will have no stocks, relying entirely on purchases for food. Income during this period tends to seasonally decline, with some increases reported during the planting season in May and the staple grain harvest in late August, and also in activities related to vegetable production. This year’s slightly above-average wages will increase household income and will be insufficient to compensate for expected higher prices.

    Similarly, poor households in urban areas only have markets as a source of food because they do not have their own production. This makes them more vulnerable to high prices; however, their income does not tend to show seasonal fluctuations as in rural areas. Although inflation is expected to remain high and other macroeconomic factors will continue to slow the post-pandemic economic recovery, income sources are expected to remain stable. Given the persistence of the atypical upward trend in prices, access to food will be negatively affected, although to a lesser extent than for rural households.

    Households in both rural and urban areas receive remittances. They do not usually belong to the poorest wealth group, but they tend to stimulate local economies where recipient households have informal employment. For the analysis period, the value of remittances is expected to be above the five-year average but less than last year in El Salvador and Honduras. On the other hand, in Nicaragua, the increase in migration is causing a clear upward trend in remittances. This difference will mean an economic advantage for Nicaraguan households over Salvadoran and Honduran households.

    Despite the above, as of May, poor urban and rural households are expected to show Stressed (IPC Phase 2) food security outcomes. They will attain minimally adequate food consumption due to the implementation of coping strategies such as through the reduction in quality and diversity of food. Food security for households affected by crop failures from excess rainfall in 2022, especially in El Salvador and Honduras, will deteriorate, increasing the proportion of households with Crisis (IPC Phase 3) outcomes. However, this proportion will not represent a change in area classification.

    From June to September, it is expected that households with subsistence farming in the Dry Corridor, which are most at risk of crop loss from rainfall deficits, will need to resort to negative coping strategies because of projected losses for the primera cycle and from a reduction in local employment opportunities. Those particularly affected are located in the departments of Choluteca, Valle, La Paz, southern Francisco Morazán, and El Paraíso in Honduras and San Miguel and La Unión in El Salvador. However, Nicaragua experienced more favorable conditions, such as improved agricultural performance during the 2022/23 and 2021/22 cycles, quicker recovery after the pandemic, and higher remittances. In all three countries, although the proportion of households experiencing Crisis (IPC Phase 3) outcomes will increase as the lean season progresses, only some of the above areas are expected to reach the minimum percentage (20 percent area-level concentration) to be classified as Crisis (IPC Phase 3). For this reason, most of the region will have a higher proportion of Stressed (IPC Phase 2) food security outcomes, with pockets of the population in Crisis (IPC Phase 3). In these areas, most households will face seasonal peaks in staple grain prices until August, exacerbated by the atypical price increases in recent years, while income decreases. However, they will have sufficient sustainable coping strategies to avoid food consumption gaps. With the harvest at the end of August and September, the food situation will improve. As fresh product flows cause prices to fall and producer households replenish their supplies of staple grains, households can rely on income from day labor and employment options during the harvest.

    Recommended citation: FEWS NET. El Salvador, Honduras, and Nicaragua Remote Monitoring Update, April 2023: El Niño puts primera crops at risk for subsistence farmers, 2023.


     

    In remote monitoring, a coordinator typically works from a nearby regional office. Relying on partners for data, the coordinator uses scenario development to conduct analysis and produce monthly reports. As less data may be available, remote monitoring reports may have less detail than those from countries with FEWS NET offices. Learn more about our work here.

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