El Niño to continue causing reduced food availability and access in poor households

• Most households in the region will experience Stressed food insecurity (IPC Phase 2) due to a seasonal improvement of food availability from the staple grain harvests, the consequent seasonal drop in prices, and the seasonal increase in labor demand for the harvest of cash crops up through January 2024. This is despite weather conditions that will cause a slight reduction in yields and in the income of day laborers. Some pockets of households that experienced total agricultural losses continue to experience Crisis (IPC Phase 3) outcomes.
• In the period from March to May 2024, there will be a seasonal deterioration in the food status of households, which will be exacerbated by the impact of the drought on the agricultural industry. As a result of an early start to the annual lean season and the persistence of high food prices, the poorest households located in the north and the Dry Corridor of Honduras will show Crisis (IPC Phase 3) outcomes. There will also be pockets of households in this classification in the Dry Corridor of El Salvador and Nicaragua. The rest of the poor urban and rural households in the region will remain in Stressed (IPC Phase 2).
• Due to ongoing dry conditions, accompanied by atypically high temperatures, a one-month delay in the Postrera harvest is expected at the end of the year, with a decrease of at least 25 percent in the yields of subsistence production households, in addition to a slight drop in commercial production. Due to the evolution of the El Niño phenomenon, these conditions will persist until May 2024, negatively impacting the development of the Late Postrera/Apante crops in Honduras and Nicaragua and eventually causing a delay in the start of Primera 2024. 
• The purchasing power of poor households in the region will be varied, as employees in the manufacturing, agriculture and construction industries will not see an increase compared to the previous year due to a depression in their activity and the impact of El Niño. At the same time, households in the tourism industry will see an improvement due to a recovery in the flow of tourists, especially during the end-of-year and Easter celebrations. Meanwhile, prices for food and services such as water and energy will remain above those reported in 2022 and the five-year average, given the existing climate difficulties. 

The annual food shortage season usually ends in September, when households see an increase in the availability of their staple grain reserves with the start of the Primera harvest. However, due to losses during this cycle and a delayed harvest this year, households relied on purchases for an extra month, extending the lean season. Nevertheless, maize prices remained stable and red bean prices decreased from the previous month. By October, those who did manage to harvest are expected to have reserves for at least one or two months, depending on the magnitude of the losses. For those who suffered total damage, there is a reduction in food availability, so they will still have to depend on buying, which puts pressure on their purchasing power.

The persistence of dry conditions caused by the El Niño phenomenon (above-average temperatures and deficient and irregular rainfall) delayed the usual start of the Postrera season in October. Subsistence producers chose between delaying planting in anticipation of better moisture conditions, reducing their production area, or not planting during this cycle. As a result, the harvest will be delayed by about a month and year-end production will fall. Since the Postrera season is mostly engaged in bean production, which is mainly used for consumption and sale, affected households will prioritize the availability of reserves, thereby reducing their income. A similar situation is expected for the Late Postrera/Apante period, only in the corresponding areas of Honduras and Nicaragua, where there will also be a decrease of at least 25 percent in production among subsistence households. 

Low water availability will also mean a limitation of this resource for human consumption, which will have several implications. Less access to water makes it more expensive for poor households to buy. In terms of health, there is an increase in gastrointestinal and vector-borne diseases, such as dengue fever. By the end of August, according to the Pan American Health Organization, there was a significant increase in the number of dengue cases compared to 2022, with Nicaragua leading the Central American countries and Mexico, recording an increase of 83 percent compared to 2022. Although cases are expected to decrease seasonally, as the cold season progresses at the end of the year and until February, they will remain above those reported in the previous year due to positive anomalies in temperature and inadequate water storage. From March to May 2024 cases will remain abnormally high.

Headline inflation in September showed stability with respect to the previous month in El Salvador and Nicaragua, but a downward trend is noticeable when compared to the value reported one year ago. This is a consequence of a reduction in several items, including food. Despite this trend, food inflation continues to show high values with respect to the previous year in El Salvador and Nicaragua. In Honduras, on the other hand, does show an upward trend with respect to previous months, influenced by an increase in the prices of most items, as fuels, production costs and the prices of imported products reported an increase. 

During the analysis period, inflation is expected to range between 5 and 10 percent, influenced by a higher cost of food. Nicaragua is expected to be the country with the highest inflation, given the persistence of food inflation over the last year, which is not expected to decrease significantly this year, due to the continuation of other structural and political factors in the country. In October, roadblocks in Guatemala affected the region due to the temporary interruption of trade flows, especially to El Salvador, given its high dependence on the import of vegetables from Guatemala. As a result, supplies to Salvadoran markets dropped with atypical increases in the prices of some vegetables and other products coming from Guatemala, which began to ease at the end of the month, once the passage was eased. Meanwhile, an increase in food prices is expected due to higher production costs because of mitigation measures to address unfavorable climate conditions. Likewise, a greater demand for staple grains due to a fall in subsistence production will have implications on the formation of these prices. Although imports may compensate for any drop in supply from markets, speculation will also play a role in building consumer prices. Furthermore, some increases in vegetables are expected to be reported at the end of the year, in line with seasonal trends.

Income as a measure of the economic growth of the three countries analyzed remains low, following the distress of previous years and international macroeconomic dynamics. Industries such as construction and manufacturing have failed to recover from the impact of the COVID-19 pandemic. Therefore, income in households who are dependent on these industries will be below pre-pandemic figures and similar to the previous year. The agricultural industry has been affected by climate events in recent years, and this year is no exception, with the decrease in crop yields due to dry conditions. Even with the seasonal increase in labor demand for staple grain crops and some cash crops, such as coffee and sugarcane, between October and February 2024 and which favors the poor households involved, demand and — consequently — income will be lower than average due to the unfavorable weather conditions expected for the season. In contrast, the tourism industry has recorded growth after the sharp fall of 2020. Therefore, households directly related to tourism-focused services, retail, transportation, and food will see a slight increase in their income compared to 2022, especially during the end-of-year celebrations and Easter in March 2024. 

The late start of the Primera harvest in October will improve the availability of food reserves for producer households. Likewise, income options will increase due to the start of the season of high labor demand. The seasonal decrease in prices will improve access to food compared to previous months and, consequently, in the food security conditions of poor households up to January/February 2024. Urban households will also experience a decrease in food insecurity levels from October 2023 to January 2024 due to the increase in trade and tourism options during the end-of-year holidays, as well as the inflow of remittances that boost the local economy. Therefore, most poor households in the three countries will be facing Stressed (IPC Phase 2) conditions. However, given the agricultural losses in areas of the Dry Corridor and northern Honduras, there will be households facing Crisis (IPC Phase 3) outcomes. 

As March/April approaches, the season of high labor demand declines, and most poor households will start to draw on food reserves when the annual lean season begins. Due to reported losses in 2023, this period is expected to start one month earlier this year for households located in northern Honduras and the regional Dry Corridor. Households will be dependent on purchasing, as they have depleted their reserves during a time of seasonally rising food prices, which are expected to remain higher than average, and income-generating options will diminish, limiting their purchasing power. Households most affected by losses in the Dry Corridor and northern Honduras are expected to have no reserves, so they are expected to remain in Crisis (IPC Phase 3) for these four months, as will some pockets of the population in the Dry Corridor of El Salvador and Nicaragua. In March, households related to retail and tourism are again expected to see a seasonal improvement due to the Easter holidays. In this period, most poor households in the three countries will be facing Stressed (IPC Phase 2) conditions.