Despite seasonal decreases, above-average prices continue to limit food access

• Until January 2024, a seasonal improvement in the inventory of staple grains in the market from Primera and Postrera harvests will temporarily lower prices. Simultaneously, the increase in rural households’ subsistence food stocks post-harvest will reduce the need to purchase food at the market. Also, household purchasing power will increase due to the commercial agricultural and tourism sectors, as well as remittances, which seasonally reduce pressures on purchasing power during these months. However, inflation continues to be a limiting factor to ensuring food security for many poor households in the region. Areas in a majority of the region will remain classified as Stressed (IPC Phase 2) through January. However, there are areas in the Dry Corridor and in northern Honduras where households suffered total agricultural losses during both agricultural production cycles in 2023 and therefore will be classified as Crisis (IPC Phase 3) through January.
• From February to May 2024, many of the rural poor households in the region will remain in Stressed (IPC Phase 2) due to seasonal constraints in access to food exacerbated by persistent inflation and increased market dependence due to reduced agricultural yields. The urban poor will see a slight improvement in purchasing power given the prospect of lower inflation. In contrast, areas in the north and the Dry Corridor of Honduras will be classified as Crisis (IPC Phase 3) due to significant losses suffered during 2023 agricultural cycles and the erosion of livelihoods from consecutive shocks over the last few years. To meet food needs, these households will be forced to employ unsustainable coping strategies, such as modifying the amount of food consumed.
• The passage of tropical storm Pilar in late October improved production conditions for the Postrera cycle in Nicaragua, a key regional bean producer. This will positively impact the regional availability and prices of beans through the departure of the Apante harvest in February 2024, and will contribute to producer household ability to accumulate bean reserves. In contrast, the last agricultural cycle in Honduras and El Salvador will see a slight reduction in yields compared to the average, due to the persistence of deficient and irregular rainfall and high temperatures caused by El Niño. These unfavorable conditions will continue until May 2024, which will slightly affect the production of Apante/Postrera Tardía in the region. 
• Due to the compounding effects on agricultural production this year, producer households will see a reduction in food availability, putting pressure on household purchasing power and forcing them to prematurely resort to food purchases at the market. Overall, incomes have not improved, beyond some seasonal increases, so the purchasing power of poor urban and rural households will remain limited due to persistent inflation and high food prices. Despite an overall improvement compared to 2022, constraints to food access remain.

The Postrera cycle concludes in November/December, so the harvest is currently flowing to the markets, and producer households are contributing to their reserves, particularly of beans. The passage of tropical storm Pilar between October 30 and November 1 caused a considerable and sharp increase in rainfall accumulations triggering landslides and flood damage in Honduras and El Salvador. This reduced bean crop yields, are bean crops are particularly susceptible to high humidity levels. In contrast, in Nicaragua, it had favorable effects on production, increasing moisture availability, considerably improving crop development conditions. The Nicaraguan government forecasts a five percent increase in national bean production, which will keep the regional supply stable, given the country’s importance to regional supply.

The climate outlook for the coming months follows the pattern observed last year. El Niño will reach its peak around the beginning of the year and then begin to weaken, persisting until May 2024. Thus, abnormally high temperatures and irregular and deficit rainfall will continue throughout the analysis period. The Apante cycle in Nicaragua, and Postrera Tardía in areas of northern Honduras started in November/December and will conclude in February/March. Lower rainfall accumulations are predicted to cause a slight drop in yields (Figure 1). In addition, soil conditions are expected to be unsuitable for planting by the beginning of the Primera 2024 cycle, forcing farmers to delay planting until conditions improve. 

In November, a five to 25 percent drop in the wholesale prices of white maize in the region, with Nicaragua showing the largest variation, demonstrated the typical seasonal trend of lower prices from Primera's staple grains. The significant difference in Nicaragua is due to governmental price monitoring, which has limited speculation and hoarding practices. The price of red beans in all three countries stabilized after atypical increases in recent months. The availability of red beans from the Primera harvest and the proximity of the Postrera harvest at the beginning of December influenced traders to lower prices. However, the prices of staple grains continue to be well above the average compared to the last five years, with ranges up to 62 percent in the case of maize and 71 percent for beans. These increases are due to residual impacts from weather anomalies over the last few years and the continuation of high production costs. The price of agricultural inputs have decreased slightly, but have yet to reach pre-pandemic values. The increases in the price of day labor over the last year have limited substantial recovery in production costs.

From November through February 2024, coffee producers' income will seasonally increase as harvest brings profits for producers and increased labor opportunities for day laborers. However, this year the sales prices of coffee beans has decreased with respect to 2023, in line trends observed on the international market. At the same time, production costs remain high due to climate irregularities that increase the difficulty for agronomic maintenance and access to profits and sales markets. This has limited the positive effect that the harvest usually has, especially for small producer households. The labor market for day laborers has changed due to increased migration, resulting in a drop in the supply for harvesting. Despite an increase in the daily wage since 2022, erratic weather conditions have negatively impacted plant productivity, directly impacting laborer income, as they are paid per weight harvested per day. Households that depend on commerce and tourism will see an improvement in their income during the end of year holidays, and later in March/April, during Easter. The construction and manufacturing industry will have no significant change in income expected during the analysis period.

Overall, inflation has shown signs of slowing as global fuel prices have declined; however, it remains well above pre-pandemic levels. Consequently, the purchasing power of poor households in the region remains under pressure, especially as food prices remain high and income gains tend to be seasonal. 

From December until the onset of the annual lean season in late March, subsistence farming households typically reduce their dependence on the market as they replenish their household reserves with harvests. This year, harvest periods are expected to be shorter than normal, given the decrease in yields from the water deficit experienced during the Primera cycle, and the erratic rains during the Postrera and Apante cycles. Overall, seasonal improvements in food availability and access will allow most rural households in the region to meet their food requirements, but only through the use of unsustainable coping strategies such as dietary quality modifications, classifying these areas as Stressed (IPC Phase 2) until January 2024. Meanwhile, the areas of the Dry Corridor and northern Honduras where households had significant agricultural losses will be classified as Crisis (IPC Phase 3). Urban households will experience an overall increase in food security thanks to seasonal increases in trade and tourism during year-end holidays and remittances that boost the local economy.

This year, the lean season is expected to start one month early, in February/March. The timing of the lean season is typically characterized by the conclusion of the time of high demand for day labor, the exhaustion of household staple grain reserves, and the increase in staple grain prices as the harvest season draws to a close. These conditions exacerbate food insecurity for the region's poor rural population, classifying them as Stressed (IPC Phase 2) for the remainder of the outlook period. The lean season typically lasts until the end of the harvest at the end of August. However, households located in the north and the Dry Corridor of Honduras, who were most affected by agricultural losses this year in addition to cumulative effects from shocks reported in the last few years will produce Crisis (IPC Phase 3) conditions from February through at least May. The urban poor who work in trade and tourism will see a slight increase in income during March, due to Easter Week income generation opportunities classifying them in Stressed (IPC Phase 2) for the duration of the outlook period.