Need for additional assistance in 2015 despite normal Postrera harvests

• National production from the Postrera harvest is expected to be normal. Poor households will have more income between October and February on account of this year’s improved coffee harvest as compared with last year. As a result, an improvement in food security conditions is expected in the next six months in most parts of the country, with the exception of areas in the east and in the Western Highlands, where there will be persistent food insecurity throughout this period.  

• The income earned by day laborers in temperate areas of the Western Highlands will partially compensate for crop losses of over 70 percent from the extended canícula (the break in the rainy season), improving food security for poor households, who will be Stressed (IPC Phase 2) through December. The depletion of food reserves and decline in household income will drive a deterioration to Crisis (IPC Phase 3) from January to March 2015.

•  In the east, the expected normal Postrera growing season will improve food availability. With increased income from the coffee sector and food assistance, poor households are expected to be in Minimal (IPC Phase 1!) food insecurity through December. From January through March, poor households will become Stressed (IPC Phase 2) with the end of the coffee harvest and the early depletion of maize reserves in the wake of the losses to Primera crops.

Current situation

As of October, households had finished harvesting their staple grain crops for the Primera season, which is devoted primarily to maize production, and were in the middle of the Postrera season, which generally involves bean production. However, this year’s unusually long canícula (break in the rainy season) significantly affected Primera crop production by subsistence farming households in a large part of the country, except in surplus crop-producing areas. Affected households reported losses from 75 to 100 percent of their maize crops. Due to these losses, the lean season did not end in August/September as is generally the case. The situation of these households will start to improve as of the beginning of October with the beginning of the high-demand period for unskilled labor. Increased income will help improve purchasing power, enabling households to compensate for lack of reserves through market purchases.

Primera season harvests (which account for 60 percent of annual maize production and 40 percent of bean production at the national level) are boosting domestic market supplies, triggering a seasonal decline in prices. National production was not significantly affected by the drought, as yields in surplus crop-producing areas were above-average. In addition, the supply of maize and black beans from Mexico has been greater than usual this year due to overproduction in that country, which has helped bring down the price of maize. The wholesale price of maize on the La Terminal market in Guatemala City was reportedly Q 140/quintal, 8.4 percent lower than the previous month. A similar drop in retail prices was reported in the Huehuetenango market. Although there has been no significant decline in bean prices, the influx of beans from Mexico has prevented prices from rising by offsetting the drop in supply due to losses of Primera crops in the east.

Assumptions

• Climate: Rainfall forecasting models show slightly below-average levels of cumulative rainfall in the northern part of the country between December and the first quarter of 2015, where there is no defined annual rainy season. A normal cold front season is expected, beginning in November and extending through March. According to forecasts by the National Oceanic and Atmospheric Administration (NOAA) and the International Research Institute for Climate and Society (IRI), there is a 66 percent likelihood of the development of El Niño conditions in the three-month period between November and January, which are expected to last until sometime around the middle of 2015. The hurricane season officially ends on November 30^th, with forecasts still calling for less hurricane activity in the Atlantic and a more active season in the Pacific. 
• Postrera and Northern staple grain production cycles: In view of the favorable performance of the rainy season during part of August, September, and October, and the fact that it did not end in the first half of October as originally predicted, the Postrera season is expected to end with an average harvest in November/December, including in the Dry Corridor. This growing cycle accounts for approximately 60 percent of annual bean production. The crop production cycle in the North (the Northern Transversal Strip and Petén) runs from November until February/March. Forecasting models for the last few months of the year predict slightly below-average levels of rainfall. However, since this part of the country normally gets large amounts of cumulative rainfall, this lower rainfall should not affect crop growth and development. So far, the greatest threat to this production cycle is the potential for strong end-of-season winds.
• Staple grain prices: With the harvest of Postrera crops and the harvest in the Northern part of the country in early 2015, plus the unusually large influx of beans from Mexico, movements in bean prices should come down in line with normal seasonal trends in spite of the anomalies in red bean supplies in other parts of the Central American region. Maize prices are expected to remain stable with the influx of Mexican maize on domestic markets. There will be a seasonal rise in price at the end of the year, just before the harvest in the Northern Transversal Strip, which will help bring prices back down.  
• Unskilled labor: Sources of labor demand remain stable (sugar cane, vegetables, melon, watermelon, construction, weaving, and domestic service). The outlook for the 2014/15 coffee harvest indicates an improvement over last year. According to calculations by ANACAFE, the harvest will reach 4.7 million quintals, including coffee that will be sold on the domestic market. This represents an increase of approximately seven percent over the closing figure of 4.4 million quintals for last season. However, production has still not fully recovered from the effects of the coffee rust outbreak compared with the figure of 4.85 million quintals for the 2011/12 harvest before the rust infestation. This improvement will create a higher demand for labor as compared to the employment rates for the 2013/14 harvest. In addition, as of September selling prices for coffee on the international market were up by 61.14 percent from October 2013. While this same percentage increase will not carry over to wage rates for day labor, they are expected to increase slightly from last year. 
• Remittances: In accordance with the trend over the past year, continued stability in remittance flows is anticipated. These remittances help stimulate the construction sector in major receiving areas, which is a source of job creation for many bricklayers. Most of the income generated by these activities is used to buy food.

Most likely food security outcomes

 Beginning in October, there will be an improvement in the food security situation for poor households in most parts of the country. In general at this time of year, households have food reserves from the harvest of Primera crops, making them less dependent on market purchase for their food supplies. Additionally, October marks the beginning of the seasonal decline in staple grain prices which, combined with a larger availability of income from day labor, helps strengthen household purchasing power. This year’s period of peak labor demand should be near-average, except in the coffee sector which, though recovering, will still be affected by the crisis triggered by the rust outbreak during the past two years. Thus, the lean season for most households across the country will be over by October, with the exception of households in eastern and western areas of the country affected by the extended canícula, whose situation is discussed at greater length in the following section.

The final quarter of the year will be marked by an improvement in food availability and food access for most poor households across the country. In addition to the factors referred to above, an average harvest of Postrera crops is expected in November/December. Between January and March, these Postrera crops will help households replenish their food reserves and generate income from the sale of part of their harvest. Availability of day labor will be seasonally high, followed by a seasonal decline in income from this source towards the end of the quarter. Thus, households in most areas of the country will experience Minimal (IPC Phase 1) acute food insecurity during this period. However, given the dependence on income from the coffee sector and recurrent crop losses during the past two years, particularly during this year’s Primera season, some areas of the west and east will be Stressed (IPC Phase 2) or in Crisis (IPC Phase 3), particularly at the end of the first quarter of next year.

Temperate highlands areas of livelihood zone 5 (subsistence agriculture)[1]

Current situation

The extended canícula affected the sole annual harvest in the temperate western highlands, including areas of Quiché, Totonicapán, Huehuetenango, Sololá, Quetzaltenango, and Chimaltenango. Reported crop losses involved both maize and bean crops, but maize crops suffered the heaviest losses, at over 75 percent.

According to the latest government reports, published by the Ministry of Agriculture, Livestock, and Food (MAGA) on September 8^th as part of its Action Plan for Households Affected by the Extended Canícula, a total of approximately 60,000 households in communities within the Dry Corridor affected by the extended canícula will be targeted for the delivery of food assistance between October 2014 and March 2015. This assistance will be distributed on a monthly basis. So far, the government has confirmed the availability of funding to cover the cost of food assistance for the period from October through December. However, additional funding is required for the plan’s continued implementation between January and March 2015. The coverage area in the west will include the municipalities of Quiché, Huehuetenango, San Marcos, Quetzaltenango, and all of Sololá and Totonicapán. The food rations will consist of 100 lbs. of maize, 30 lbs. of beans, and 17.6 lbs. of fortified flour which, according to calculations, is designed to meet 87 percent of the caloric needs of a five-person household.

Markets are currently supplied with maize from Primera harvests in surplus-producing areas in the northern and southern parts of the country and a larger than usual volume of imports from Mexico, where prices are very low due to the overproduction in that country. Current supply has driven down prices on the Huehuetenango market by 8.8 percent from last month and 14.6 percent from September 2013. There is also an atypical influx of beans from Mexico this year, for the same reasons as those behind the larger supply of maize. As established by the monitoring activities in Huehuetenango, these beans have helped stabilize prices by making up for crop losses due to the extended canícula.  

The beginning of the period of peak labor demand in October marked the end of the lean season, though the harvest will be in November/December. Households are currently dependent on market purchase and income from day labor for access to food. Food prices will be lower than they have been in the last few months, which will strengthen purchasing power. However, households dependent on the coffee sector, which were also affected by this year’s drought and the previous droughts in the last two years, will need to make up part of their losses from previous years and pay off their outstanding debts, which will reduce their incomes by approximately 75 percent, leaving a smaller share of cash income for purchasing food. These reductions in income and production shortfalls due to crop losses from the extended canícula will reduce food access by approximately 51 percent. On the other hand, food assistance will help improve food availability for recipients, even as it will not fully meet the needs of an average household. Thus, households in this area that are affected by the prolonged canícula, the problems in the coffee sector, or both shocks are currently Stressed (IPC Phase 2).  

Assumptions

The outlook for this area is based on the following assumptions in addition to the national assumptions outlined elsewhere in this report:

• Staple grain prices will remain stable through the end of the year owing to market inventories from the good harvest of Primera crops in surplus crop-producing areas. In western areas, a normal flow of maize is expected from the southern coast, Petén, and the Northern Transversal Strip, which will improve its availability on local markets, bringing down its price. Average to above-average import volumes of Mexican maize are also expected.
• The expected seven percent boost in coffee production over last year should increase work time and daily wages. Wage rates could approach the average rate of pay in 2011/2012 (approximately Q.50.00/qq), with laborers hired for approximately 90 days of work, compared with last year’s reported figure of 30 days.
• INSIVUMEH (National Seismology, Vulcanology, Meteorology, and Hydrology Institute) is expecting a slightly below-average cold front season. Minimum temperatures will not be that extreme, but frost conditions could still affect vegetables in areas of the Western Highlands. These crops are an important source of labor demand in certain municipalities in these areas. In addition, strong winds could affect maize crops still in the field.

There are three groups of households for analysis in livelihood zone 5. These include: (1) households affected by crop losses due to the extended canícula and lower incomes due to the problems in the coffee sector created by the rust outbreak and the low price of coffee; (2) other households affected only by losses of staple grain crops due to the canícula; and (3) households affected by neither phenomenon.

This report will focus on the first two groups of households and, more particularly, on the first group, which is more vulnerable to food insecurity and whose total incomes are expected to be reduced by at least 25 percent as result of the problems in the coffee sector and crop losses from the extended canícula in the middle of the year. These losses will prevent households from selling part of their harvest as a way to generate income, as they will devote what little they produce to household consumption. These shortfalls in crop production and income will span the entire outlook period. While some of these households will have a supply of beans by October, the main source of food will continue to be market purchase until November/December, when the annual harvest is brought in. Given the large crop losses this year, the food reserves of both groups of households will last for one month at most, which means that they will once again be reliant on market purchase by January. Their reduced incomes will also limit their food access through market purchase. However, unlike the case in previous months, there will be a larger availability of income from day labor in harvesting vegetables, sugar cane, and coffee, as well as other trades such as construction and domestic work. This seasonal improvement in their purchasing power will enable households to purchase larger supplies of food.

Residents of communities in the Dry Corridor affected by the extended canícula will receive food assistance between October and December. This assistance is calculated to meet only 87 percent of the daily needs of a five-person household. Since the average household in this area has at least eight members, these rations will actually meet only 54 percent of household needs. Thus, it will serve only as a supplement to cover food consumption gaps of affected households.

Thus, expected food consumption deficits will expose households affected by the drought and the problems in the coffee sector to Stressed (IPC Phase 2) levels of food insecurity through December. Without necessary funding for the purchasing and distribution of food assistance in the first quarter of 2015, households will be facing a food consumption gap of approximately 50 percent, even with a boost in their income from the improvement in wage rates for day laborers in coffee-growing activities. These households will again be in Crisis (IPC Phase 3) between January and March, with an erosion in dietary quality and reduced number of meals.

Coffee-dependent day laborers in livelihood zone 7 (agro-industry, timber, mining, and coffee), zone 8 (staple grains, Honduras-El Salvador border area), and zone 9 (staple grains and labor) [2]

Current situation

The harvest of Primera staple grain crops in the eastern Dry Corridor, involving mostly maize, was affected by the extended canícula, resulting in the loss of 80 to 100 percent of maize and bean crops in the most affected areas. The shortage of rainfall occurred at critical stages of crop growth and development, when the satisfaction of water requirements was crucial for optimal development of the grain. These losses affected subsistence farmers who, at most, will have one month of reserves. There are very few surplus-producing farmers in these areas, who have irrigation systems and were not affected. Postrera bean crops were planted at the end of September. These planting activities were spread out to some extent on account of rainfall anomalies. Thus far, crops are developing normally with the regular rainfall activity in these areas through October. Most crops are in the flowering or seed-setting stage, when crop development requires a larger availability of water.

According to government estimates, there are 150,000 affected households in the eastern part of the country, located in all municipalities in Chiquimula, Zacapa, Jutiapa, Santa Rosa, El Progreso, and Baja Verapaz departments. The size of the food ration scheduled for distribution in these areas is the same as that for the western part of the country (100 lbs. of maize, 30 lbs. of beans, and 17.6 lbs. of fortified flour). Moreover, as discussed earlier, there is still no funding to cover needs for the first quarter of next year (January through March).

Markets in this part of the country have adequate stocks of maize from recent harvests in the Northern Transversal Strip and southern Petén. This year, there are even reports of an influx of Mexican maize, which normally does not reach this region. This is due to the surplus in that country and the price differential, making sale in Guatemala especially appealing. All this has helped stabilize retail prices reported in September on the market monitored in Chiquimula. Local harvests of Primera bean crops, which were slightly delayed due to the effects of the canícula, brought down bean prices from the previous month. However, September prices on this market were up from last year by 10.9 percent due to the pressure from the regional market on black bean supplies as a substitute for red beans, whose prices have reportedly jumped by as much as 300 percent.

Assumptions

The outlook for this area is based on the following assumptions in addition to the national assumptions outlined elsewhere in this report:

• Supplies from an above-average harvest of Primera crops in surplus crop-producing areas will help stabilize staple grain prices through the end of the year. As far as black beans are concerned, with the high price of red beans in neighboring countries, where the population is beginning to eat black beans (which is unusual in these countries), and given the proximity of this area to El Salvador and Honduras, demand for black beans is expected to rise over the next few months, which could drive prices up slightly at the beginning of 2015.
• The expected seven percent boost in coffee production over last year should increase work time and daily wages. Wage rates could approach the average rate of pay in 2011/2012 (approximately Q.50.00/qq), with laborers hired for approximately 90 days of work, compared with last year’s figure of 30 days.

The situation in livelihood zones 7, 8, and 9 is different from that in livelihood zone 5, as the former areas have a second (Postrera) crop production cycle between August and November, which gives local households other sources of beans for sale and household consumption in addition to those available in zone 5. With the normalization of rainfall conditions as of the end of August and this year’s expected average bean harvest, households will be able to replenish their reserves and use their income from the sale of these crops to replace part of their lost crops and even pay off debts incurred during the first production cycle. However, maize reserves will be absent or well below-average, as this was the crop suffering the greatest losses during the Primera growing season.

The period of peak labor demand beginning in October is expected to wind down between February and March. With the better hiring prospects in the coffee sector, there should be an improvement in income-generation and cash availability compared with the last two years. Approximately 15 to 20 percent of the population in this zone are day laborers in the coffee sector. Even with these improvements, very poor households will still have 25 to 30 percent lower incomes throughout the outlook period, particularly as of February with the end of the coffee harvest. Other sources of labor demand are local melon production, which employs two percent of the population, and the sugar cane harvest on the southern coast, which employs less than one percent of the population. However, since both these crops require highly skilled labor, there is very little turnover in the workforce. Thus, they are not alternative sources of employment for the generation of extra income to cover existing shortfalls.

The households analyzed will resort to coping strategies such as looking for other sources of work in areas such as construction and domestic labor, and migrating to urban areas in the early part of 2015. The sale of fire wood and small animals is another possible coping strategy that may be used as March nears.

The government plans to distribute the same food assistance rations as in livelihood zone 5 between October and December. In addition, the World Food Program will match the government’s proposed ration with funding from USAID and other donors, providing 30,000 households in Zacapa, El Progreso, and Jalapa with the equivalent in food vouchers or cash transfers for the same three-month period. Additional funding is required to cover the remaining three months of the proposed six-month commitment period per the government plan. The percentage of energy needs met by these rations is similar to that of the ration mentioned above for the western part of the country.

Food consumption among very poor households will improve beginning in October, when income generation from day labor will allow for the purchasing of maize to temporarily offset crop losses. These households will also have a supply of beans from the harvest of Postrera crops in November/December for consumption and sale. The food assistance received by these households will cover part of their food consumption gaps. As a result, they will experience Minimal (IPC Phase 1!) food insecurity between October and December. However, they will become Stressed (IPC Phase 2) towards the end of the first quarter of next year (January through March) with the completion of the coffee harvest and seasonal reductions in other sources of income. Household food reserves will be depleted and market prices for staple grains will start to rise in line with seasonal trends. The current lack of funding for continued food assistance over the period from January through March will also affect food availability for these households.

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