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Households dependent on the coffee sector are in Crisis

  • Food Security Outlook
  • Guatemala
  • April - September 2014
Households dependent on the coffee sector are in Crisis

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  • Key Messages
  • National Overview
  • Areas of Interest
  • Events that could change the Outlook
  • Key Messages
    • From April to June, at least 20 percent of very poor households in some municipalities in the east and in the highlands that are highly dependent on income from the coffee sector will struggle to meet their minimum food needs, placing them in Stressed (IPC Phase 2) acute food security. From July to September these households will shift to Crisis (IPC Phase 3) and will resort to using negative coping strategies to offset their food consumption gap.
    • In all other municipalities in the areas mentioned, the very poor households will have difficulty meeting their food needs due to reduced revenues, and will be Stressed (IPC Phase 2) throughout the scenario period. Within these municipalities, however, there are localized populations that are in Crisis, but they do not exceed 20 percent of the area required in order to classify them in this phase.
    • A slightly below-average Primera harvest is expected in the dry corridor of Guatemala based on forecasts of below-average rainfall starting in June. As El Niño conditions continue to develop, continued low precipitation totals during the second part of the rainy season would also jeopardize the Postrera harvest (from August/September to November/December).

    National Overview
    Current situation

    The depletion of food reserves in the poorest households marked the onset of the annual lean season, which this year will begin two months earlier than usual, i.e., in February. As a result, households currently find themselves completely dependent on purchases as their primary source of food. The bean harvest in Petén has almost concluded, with yields coming in between average and slightly above average, while the maize harvest in Petén and the northern region has now commenced, with projections calling for higher than average yields. Prices currently reflect seasonal behavior, with an increase in the case of beans and a decrease in the case of maize. Given the positive results recorded for the most recent harvests, the prices of both crops have been lower than those reported last year and also lower than the average price for the last five years.

    The period of high demand for unskilled labor has concluded, with behavior close to normal for activities involving the harvest of the primary agricultural crops, with the exception of coffee. The availability of employment for day laborers shows a seasonal decrease.

    According to a Ministry of Health report dated April 5, the accumulated national rate of total acute malnutrition was 18 percent lower than the rate observed for the same period last year. It should be noted, however, that 2013 was a year reflecting an atypical increase in cases of acute malnutrition and that in addition there currently exists a significant degree of underreporting at the national level, as a result of which it is reasonable to assume that the incidence of acute malnutrition this year could be greater than the rate reported by the MOH.

    Assumptions

    • Climate: The Central American Climate Outlook Forum estimates that accumulated rainfall for the period from May through July will be within normal ranges in most regions of the country. In the southwestern region, however, rainfall is expected to be above normal, while in the dry corridor the forecast calls for lower than normal rainfall (Figure 1). This latter area includes the departments of the Eastern region, Baja Verapaz, southern Quiché, Guatemala, and portions of Chimaltenango. The canícula is expected to take place in the month of July, between the 10th and the 20th; [however,] owing to current weather conditions the possibility that this phenomenon might extend for an additional 15-20 days in the central and northeastern regions of the country cannot be ruled out.
    • El Niño phenomenon: According to forecasts made public by the United States Oceanic and Atmospheric Administration (NOAA) and the International Research Institute for Climate and Society (IRI), there is a greater than 60 percent probability that the El Niño phenomenon will occur during the second half of the year. However, weather predictions developed by the Climate Outlook Forum will be in effect regardless of whether this phenomenon is ultimately declared officially, with lower than normal rainfall expected for the second rainy season. In view of current oceanic-atmospheric conditions, a less-active-than-average hurricane season has been predicted for the Atlantic ocean and the Caribbean, although a season more active than average has been projected for the Pacific. The potential for either direct or indirect effects on the country caused by at least one tropical cyclone cannot be ruled out.
    • Primera cycle for basic grains: The onset of the rainy season occurred, as forecast, between April 10-20 in the southwestern and bocacosta areas, and rain is projected for the rest of the country during the second half of May. As a result, sowing of Primera cycle crops is expected to occur within normal parameters. In view of the potential for lower than normal levels of rainfall, basic grain crops are expected to suffer both damage and loss, although the extent of the latter will depend on the total area affected by the shortage of rainfall. As regards agricultural input availability, the Ministry of Agriculture has already begun delivering subsidized fertilizer, with this activity expected to continue on into May.
    • Basic grain prices: Bean prices are expected to continue to trend upward until the harvesting of the Primera crops in August, while maize prices will decrease until May, at which time they will begin their seasonal increase until the harvest is underway. This behavior is seasonally consistent and within normal parameters.

    Most Likely Food Security Outcomes

    The food security situation begins to deteriorate seasonally in the poorest households in most areas of the country. Following the complete depletion of their food reserves, households resort to purchases as their primary source of food, which in turn means that they are dependent on the amount of cash they have on hand. Although in recent months basic grain prices in the national market have been lower than those reported for the preceding year and lower also than the average for the past five years, thereby facilitating access to food for poor households, both employment opportunities for unskilled labor and income generation are reduced considerably with the conclusion of the sugarcane and coffee harvests, as well as the harvest of other crops requiring large numbers of unskilled day laborers. Many households resort to the use of cash generated during the season of high demand for unskilled labor as well as to other less substantial income generated during the period covered by this outlook.

    In the particular case of coffee sector employees, income was significantly lower than in normal years, due to reduced production and lower wages resulting from the decrease in coffee prices. Despite the low prices for basic grains currently reported, these prices fail to compensate for the decrease in purchasing power of this particular population group.

    The lean season will conclude in August-September when the harvesting of Primera crops has concluded. Although as described above impacts attributable to both insufficient and excessive rainfall have been projected for certain areas of the country, no total losses are expected, and this will accordingly allow households to consume their own food production for at least one month.

    Despite finding themselves in the lean season, households in most of the regions of the country will experience Minimum acute food insecurity (Phase 1, IPC 2.0) during the period from April through September 2014. The exceptions to this classification involve the western temperate altiplano and the Eastern region, where food insecurity outcomes will be Stressed (Phase 2, IPC 2.0), with an increasing trend toward a Crisis classification (Phase 3, IPC 2.0) in some areas for the July-September quarter, resulting from coffee production problems combined with the impact caused by deficit rainfall during the past two years.


    Areas of Interest

    Coffee-dependent day laborers in livelihood zone 5 (subsistence farming), livelihood zone 8 (basic grains, Honduras-El Salvador border area) and livelihood zone 9 (basic grains and labor) 

    Current situation

    As in other areas of the country, households in these zones have already consumed food reserves generated by their own production activities. This phenomenon occurred two months earlier than usual as a result of the losses suffered during the 2013 Primera cycle, following an irregular rainfall pattern. In addition, prices have been lower than those reported last year and also below the average for the last five years, exhibiting seasonally consistent behavior. Price decreases of about 10 per cent have been recorded in the departmental markets monitored for reference purposes (Huehuetenango and Chiquimula) in the western and eastern regions.

    In addition, the season of high demand for labor has now concluded, thereby considerably decreasing employment opportunities until October. This season of high labor demand enables households to generate income for food purchases for subsequent months. For the subject population group, however, the problems resulting from the coffee rust infestation and the decrease in coffee prices led to a reduction as much as 80% of total income received. Heads of household are seeking other sources of employment in nearby villages and in some cases are migrating to other regions of the country, but even these strategies have not been sufficient to enable them to satisfy their non-food-related needs. Consequently, the acute food security level of the extremely poor households in these areas is classified as Stressed (Phase 2, IPC 2.0).

    Nutritional status. Ministry of Health reports indicate that, as of March 22, Quetzaltenango and Chimaltenango report total acute malnutrition rates of 7 and 12 per cent respectively, greater than the national rate, while rates for the remaining departments of the region are lower than the national rate. As regards the Eastern region, as in prior years, it is the departments of this region that reflect some of the country’s highest rates of acute malnutrition, particularly in Chiquimula, where the rate in question is currently 120 per cent above the national average.

    Assumptions

    The outlook for this region is based on the following assumptions, which are in addition to the national assumptions outlined elsewhere in this report:

    • It is expected that the flow of remittances will continue to reflect close-to-normal behavior, as observed during the past two years. Although the group of extremely poor households does not receive remittances, the flow of remittances directly affects the dynamic of the construction sector, which is a source of income for this group. Fewer remittances lead to a slowdown in this sector and fewer employment opportunities for bricklayers, particularly in the departments of Western Guatemala.
    • A normal flow of staple grains is expected through April from areas with surplus production (Petén, the Northern Transverse Strip, the eastern region and the southern coast) toward deficit production areas in the Eastern and Western regions. After April, trade in these products will involve inventories stockpiled by private merchants in each zone.

    Most likely food security outcomes

    Livelihood zone 5 reflects a reduction of between 35 and 40 per cent in the total income of the households analyzed, the result of problems affecting the coffee sector. This phenomenon is applicable to the entire period covered by this outlook. Inasmuch as purchases constitute the primary source of food during subsequent months, access to food will be reduced by as much as 50 per cent as a result of the loss of purchasing power accumulated over preceding months.

    Response measures adopted by households with small barnyard animals could include the sale of eggs and other products; other households, however, will have to intensify their search for sources of work at the local level or even extending out to the departmental seat and the city, in activities such as those available in the construction, security and farm sectors (particularly in the months at the beginning of the planting season for Primera crops, i.e., April-May. In addition, the World Food Programme (WFP) has scheduled the distribution of both cash and food aid to 61,000 households previously identified by the Secretariat of Food and Nutritional Security (Secretaría de Seguridad Alimentaria – SESAN) as affected by food insecurity (includes those affected by coffee rust, drought, and other factors). Resources have currently been allocated to support 16,000 households through the distribution of food/cash for inputs in six departments. Of these six departments, four are located in the Western region, where beneficiary households will be given a ration covering 50 per cent of their energy requirements for a period of 180 days, from May through October. A request in the amount of US$7 million to provide support to 15,000 additional families in the departments of Baja Verapaz, Quiché and Huehuetenango has been scheduled for submission to the United Nations Emergency Response Fund.

    Food conditions have already begun to deteriorate seasonally with the depletion of food reserves. For the April-June quarter, a deficit in food consumption of approximately 30 per cent has been projected, which translates into a reduction in the number of meals consumed in each household, in addition to the loss of at least one food group consumed, a situation that justifies classifying these households as Stressed (Phase 2, IPC 2.0). This behavior has been verified by FEWS NET by means of observation visits to the field.

    During the July-September quarter, the situation will worsen, given the decreased ability of the poorest households to resist future shocks as a result of the strategies that they have been forced to implement over the past two years (for example, the sale of barnyard animals and the taking on of debt) in order to respond to their losses of crops and income, particularly income deriving from activities related to coffee production. In addition, the number of months affected by income and food deficits will increase, thereby in all likelihood further reducing food consumption. According to FEWS NET estimates based on field surveys conducted, there are areas within this zone that meet the criteria that at least 20% of the population analyzed will resort to atypical response strategies as a result of the accelerated depletion of assets during the July-September quarter, and these areas thereby classified at the Crisis level (Phase 3, IPC 2.0). The remaining areas will remain at the Stress level, although there will be pockets of population classified at the Crisis level. Given the current availability of funds and the support provided by the WFP, current scheduled assistance will help satisfy food needs, but will be insufficient to cover the whole of the affected population.

    In livelihood zones 7, 8 and 9, the situation is similar to that described above, although these zones have a second crop cycle (Postrera), running from August to November, that provides households in these areas with a number of options involving grain for both sale and family consumption that are not available to households in zone 5. During this period, families depend on income received in previous months to buy food. Families working in the harvesting of coffee saw other income reduced by some 80 per cent and, given that there is little availability of credit and since sources of income during this period are marginal, it is projected that these households will experience a food deficit of approximately 45 per cent.

    The households analyzed will be resorting to response strategies that will include the search for other sources of employment, such as bricklaying and domestic services, the sale of firewood and barnyard animals, and migration to urban areas and to the United States, for the entire period covered by this outlook. In addition, reports are being received of the implementation of a number of asset depletion strategies, such as the consumption of grain set aside for seed, although instances of this strategy have been isolated. Nothing is known regarding the existence of any food assistance plans programmed and funded for this region.

    The decrease in income affects the ability to purchase food, as a result of which households will find it difficult to satisfy their food requirements. From April through June, they will resort to a reduction in the number of meals consumed and to the elimination of at least one food group, which will place them at the Stressed level of food security (Phase 2, IPC 2.0). Beginning in July, the deficit will intensify, since prices increase seasonally, as will the number of months characterized by food deficits; consequently, there will be areas in which more than 20 per cent of households will be implementing negative strategies.This will place them at the Crisis level of food insecurity (Phase 3, IPC 2.0) for the July-September quarter, despite the fact that this situation should begin to improve once the harvesting of Primera crops begins in the final month of the quarter. Even though damage and losses may occur during that period, it is projected that they will total less than 75%, which will at least enable these households to satisfy their food needs for the month of September.

    Small coffee producer households also find themselves in a precarious situation, since they have been doubly affected – on the one hand by the coffee rust infestation and, on the other, by the low prices at which they sold their production in late 2013, which generated both indebtedness and losses for them. These households likewise have no solution available for resolving short-term problems, as a result of which they will be forced to choose between continuing to produce coffee or changing to another crop – or even completely redefining their livelihood.

    In the event that the El Niño phenomenon were to materialize, harvesting of the Postrera crops in November-December would be at risk, owing to the persistent rainfall deficit in effect since June. However, the consequences of these losses will not be apparent until early 2015.


    Events that could change the Outlook

    Table 1. Possible events in the following six months that could change the most likely scenario

    AreaEventimpact on food security outcomes
    Eastern and westernIncrease in the humanitarian assistance distributedThis would make it possible to improve access to food by the poorest households, which would lead to a reclassification of benefiting areas to a more favorable IPC phase.
    The entire country (with the exception of the bocacosta and the southwestern region)Delay in the onset of the rainy seasonThis would lead to a delay in the planting of Primera crops, which could in turn lead to poor crop development, thereby reducing future food reserves in the poorest households.
    Entire countryTropical cycloneSince it is not possible to rule out the formation of at least one or two cyclones in the Central American area of influence during this initial part of the rainy season, the scenario projected for the country would vary in the event of either a direct or indirect impact. Effects would depend on the magnitude and location of the event.

     

    Figures Seasonal calendar for a typical year

    Figure 1

    Seasonal calendar for a typical year

    Source: FEWS NET

    Figure 1. Forecast for rainfall for the period May-July 2014

    Figure 2

    Figure 1. Forecast for rainfall for the period May-July 2014

    Source: Regional Climate Outlook Forum for Central America

    Figure 3

    Source:

    To project food security outcomes, FEWS NET develops a set of assumptions about likely events, their effects, and the probable responses of various actors. FEWS NET analyzes these assumptions in the context of current conditions and local livelihoods to arrive at a most likely scenario for the coming eight months. Learn more here.

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