Economic recovery and positive seasonal events insufficient to improve food insecurity

• The gradual economic revival and the lifting of measures restricting the movement of the population will allow the slow recovery of the labor market, with greater income options. However, for the period under review, figures are not expected to approach pre-pandemic levels.

• In rural areas, the lean season came to an end with the onset of the Primera harvest, increasing reserves in producer households and reducing market prices. However, non-producer households will still have difficulty accessing food. The season of peak demand for labor, which begins in October, will allow for a limited improvement in the incomes of the poorest households.

• The forecast for the Postrera and Apante/late Postrera harvests remains within, or slightly below, the average due to government support measures and a favorable rainy season. This will improve the availability of basic grains in markets and prevent price increases, in contrast to the behavior seen in previous months. However, red bean prices will remain above average.

• From August 2020 through January 2021, the combination of increased reserves in rural households, lower prices and a gradual increase in employment options in rural and, to a lesser extent, urban areas mean that rural and urban households in the region are expected to remain Stressed (IPC Phase 2). However, very poor urban households and the poorest rural households in the Salvadorian coffee growing region and the Honduran dry corridor will remain in Crisis (IPC Phase 3), since seasonal improvements will be insufficient for their economic recovery following several previous negative events.

With an average to above-average Primera harvest, producer households will have greater grain availability. At the same time, the market will react by reducing prices, which will partially improve access to food for urban households and, to a lesser extent, for rural households who depend on purchasing. In addition, government support and climate outlooks will make average or slightly below average Postrera, Apante crops in Nicaragua and late Postrera crops in Honduras possible. This agricultural perspective will mean that the availability of beans, in particular, will increase in producer households and on the market. This will prevent upward fluctuations such as those observed in the preceding months. The positive influence of all crop cycles on prices will continue throughout the period under review (Figure 1).

However, the impact on prices will be less than in previous years. This is due to the population’s low purchasing power as a result of the economic implications of COVID-19 and above-average red bean prices.

Although the COVID-19 infection rate is not yet under control, and its behavior is mixed even within each country, governments have considered it necessary to open up spaces with reduced restrictions to allow commercial and industrial activities to resume (Figure 2). There are various phases to be implemented over the coming weeks with the aim of increasing work capacity in the case of Honduras, and the gradual opening up of various sectors in El Salvador. There has been a trend toward greater resumption of commerce in Nicaragua in recent weeks and, in the absence of government guidelines, the population is expected to start gradually increasing economic activities. All these measures will enable increased production of non-essential items, more facilities for domestic sales, and continuity in the border flow of goods. However, household finances and financial access to food will not significantly improve, due to global problems and the projected slow recovery of the labor market. Households that are highly dependent on daily wages as a source of income are one example of this. Those who find work locally will face a scenario of increased availability of labor due to the population’s pressing need for income. In addition, employment options will be partially reduced due to the sanitation measures required to avoid infection, even during the annual peak season for labor demand. Those who need to travel farther afield will have difficulty in doing so if national and, above all, international restrictions on movement remain in place, in addition to the supply and demand factors already described above. In both cases, income is expected to be lower than usual.

The outlook for Nicaraguan day laborers who usually migrate to Costa Rica is still uncertain. While Costa Rica has implemented an identification system issued by the Costa Rica Coffee Institute to help reduce the impact of COVID-19-related measures, the borders officially remain closed for migration, and the Nicaraguan government requires negative COVID-19 test results to enter and leave the country. These tests must be paid for in dollars to the Ministry of Health, significantly limiting migration options. In the case of other day laborers, restrictions on movement will be lower than in other countries, but the economic impact of the pre-pandemic socioeconomic crisis and its effect on trade and industry will also reduce employment and wages.

Although remittances have increased since May, this recovery is not expected to continue, since the economic situation of the main countries from which remittances are sent (United States, Spain and Italy) remains very precarious. Since these flows are important for the economies of recipient countries and their households, the fall in remittances will have repercussions on economic recovery into 2021.

Expected food security outcomes From August through September 2020, among urban and rural households in the region food availability and access is expected to improve compared with the previous months due to the onset of Primera harvests. However, the majority of poor and very poor households will continue to face economic hardship due to the slow recovery in trade and industry, and the health protocols required for agricultural and non-agricultural activities. Of particular concern are the very poor households of the Honduras dry corridor and the coffee growing region of El Salvador, due to the progressive deterioration of their livelihoods in recent years, and very poor urban households that depend on the informal sector. These households are expected to remain in Crisis (IPC Phase 3). In Nicaragua, the absence of government restrictions for trade and social distancing means that the poorest households are expected to be Stressed (IPC Phase 2), although some pockets remain in Crisis (IPC Phase 3).

October 2020 through January 2021 sees the annual peak season for labor demand for export crops, which will allow incomes to improve on previous months. However, measures intended to reduce the incidence of COVID-19 and their impact on the economic situation will result in lower incomes compared to a normal season. Increased availability of labor, restrictions on movement and a demand that will be limited by mandatory health protocols will prevent incomes from being high enough to achieve improved access to food in the period under review. A specific case is that of coffee day laborers in El Salvador, since harvest forecasts are lower than the already low harvest of the previous year. In urban areas, employment will gradually increase, but since this does not follow a seasonal pattern and is linked more closely to heavily affected non-agricultural sectors, it will experience a slower recovery. As a result, a large number of urban and rural households in the three countries that are already facing underlying food insecurity will remain or improve to Stressed (IPC Phase 2). The exception is extremely poor rural households that depend on daily wages, located in the Honduras dry corridor and the El Salvador coffee growing region, and very poor urban households that depend heavily on informal employment, who will be in Crisis (IPC Phase 3). In addition, the prices of basic grains are projected to remain above average, meaning that households that are highly dependent on purchasing will have less access to food. This will lead to a food consumption deficit unless negative coping strategies are employed. During the period under review, provision of food assistance is not expected to be sufficient to reverse these food security outcomes.

The continued forecast of higher activity than normal in the Caribbean for the current hurricane season, which ends in November, means that this remains a factor that could change the scenario described above.