Food insecurity persists despite seasonal improvement in access to food

• Though in limited capacity, as of October, all economic activities are operational. While agricultural activity has remained steady and remittances have recovered, other activities linked to personal services, trade, and restaurants requiring a large staff, as well as tourism, have been the most affected. Recovering these sources of employment will be a slow process, as will be completely recovering collective public transport, which has not yet been formally reactivated.

• Rainfall was favorable for basic grain crops from the primera cycle. The arrival of the fresh grains at the markets, starting at the end of August, made it possible to start the seasonal decrease in the prices of corn and beans. This trend will continue with the postrera harvests, keeping the prices stable. Black beans will, however, remain above average. The cost of transport has doubled or tripled, putting pressure on the limited income of the households that depend on it.

• Most households throughout the country have been faced with a decrease in their income. Some of the strategies used to maintain an appropriate diet include adjusting the typical diet, using savings, and resorting to loans. Government assistance programs facilitated access to food for a few months. As long as their income sources are still below pre-pandemic levels, the households will continue to turn to different options to guarantee their food and other basic expenses, so they will be in Stressed (IPC Phase 2) food insecurity.

• Since October, the season of high demand for agricultural labor has led to an increase in the income of rural households. Less hiring for agricultural activities at the local level or outside the area, due to capacity restrictions, border controls, and transport difficulties, could affect the usual sum of daily wages. That income will be used to pay debts, decreasing their ability to purchase food and save for the coming months. Rural households, particularly in the Dry Corridor, will increase their use of negative coping strategies, marking the premature start of the season of scarcity, so they will experience food insecurity in Crisis (IPC Phase 3).

Current situation

Once the State of Emergency and the curfew were concluded, starting October 1, new provisions came into effect governing the operation of different economic activities in accordance with the system of health alerts for the COVID-19 pandemic. The alert report page will be updated every fifteen days indicating the level of risk and restrictions. As of October 16, 97 municipalities were recorded to be in yellow alert, 121 in orange, and 122 in red. All economic activities have been authorized to reopen, including entertainment, sports, and cultural activities that were closed until the start of October.

The corn and bean harvests of the primera cycle were completed this month in most of the country with average outcomes, thanks to the adequate rainfall pattern during the growing period. In the second half of August the second rainy season began. The precipitation from it has been average, which has favored the sowing and development of the postrera crops. At the end of September, the maize crops were in stages of fruiting and harvest in the west and harvest and bending over in the north, while the postrera beans in the east were fruiting, as reported by the Crop Monitoring System of the Ministry of Agriculture.

The markets have a stable supply of food products. The income from the national harvests of basic grains from the east, the southern coast and the north has had a significant impact on the prices that started to decrease at the end of August. Since the COVID-19 restrictions were implemented in March, the prices of basic grains underwent drastic and atypical increases, which in the case of beans is above the five-year average. According to the Planning Department of the Ministry of Agriculture, Livestock and Food, in September, the average price of corn was 135.00 GTQ/100 lb, a decrease of 7 percent compared to August 2020, while that of beans was 471.00 GTQ/100 lb, similar to the previous month, but 23 percent and 37 percent above the five-year average and that of 2019, respectively. However, the stabilization of the prices and slight downward variations now show the start of the seasonal trend. The basic food basket, after increasing each month and reaching 3,675.16 GTQ in July, decreased in September to 3,612.49 GTQ. Likewise, the Consumer Price Index shows stabilization compared to the previous month. The largest percentage increases recorded were in extra-urban and urban bus service expenses. This information is in agreement with that provided by key sources from different areas of the country, where the lack of transport and the announcement of restricted capacity caused the doubling or tripling of the ticket prices of both collective transport and motorcycle taxis (tuk-tuks), and an increase in the use of private taxis, which is a new expense since the households did not resort to that kind of transport prior to the pandemic.

Despite the gradual reactivation of different sectors of the economy, the restrictions set on the government COVID-reporting page continue to impact the creation of income for a large number of people, in both cities and rural areas. Recently, in October, the opening of the different economic activities was completed, making it possible to create employment, at least partially, since the capacity limitations do not allow for the normal functioning of places of business, services and restaurants that employ the most people in the urban areas. In accordance with the Banco de Guatemala (BANGUAT), the Monthly Index of Economic Activity (MIEA) has been recovering over the last few months, but it continues to have a rate of change of -1.8 percent compared to the previous year. Lodging and food, personal services, transport, sports activities, and recreation are the activities that have suffered the most due to the restrictions imposed and they continue to operate to a limited extent. On the other hand, activities linked to agriculture have shown good performance, which is also observed in the export numbers of coffee, cardamom, bananas, fruit, vegetables, and flowers, the values of which are higher than the year before, mainly due to better international prices in the case of coffee and cardamom.  The season of high demand for labor to harvest several of these traditional crops for export starts in October. For many poor households, this is the main source of employment for the year. The low demand for tourism services led to the near total paralyzation of the sector. According to the Third Survey on the Tourism Sector published in October by the Association of Research and Social Studies, the companies had a decrease in turnover of 84 percent. With the easing of the restrictions, mainly on travel between departments, the end of the curfew, and the opening of the airport, this sector has started to operate partially and slowly: according to the same survey, in September a slight recovery was seen, with 51 percent of companies now operating, but at a third of their capacity. The sector is still being impacted, with only half the turnover it had in 2019.

Income from remittances is continuing to recover (since June). As of September, the same upward trend is still being seen, even greater than in 2019. According to the 2016 survey by the International Organization for Migration (IOM),, Guatemala City, San Marcos, Huehuetenango, and Quetzaltenango are the departments with the highest percentage of the population benefiting from remittances. Meanwhile, Totonicapán (71.7 percent), Chiquimula (71.7 percent), and Quiché (68.5 percent) are the departments that receive the most. Fifty percent say they use them for investments and savings, and 35 percent use them for purchases.  

Regarding the government assistance programs, the bono familia (family bonus), originally planned to be three payments of 1,000 GTQ in June, July, and August, was delayed. In the last weeks of August and in September the second payment of 1,000 GTQ was made to all the beneficiaries. Currently, the Ministry of Social Development has already identified 100,000 households without electric power that would benefit from three payments of the bono familia and it is expected that 50,000 more will be identified. This bonus should be paid by December at the latest, due to budget matters. The Programa de Apoyo Alimentario (Food Support Program), with a food basket that nearly covers the total calorie needs of a family of five for one month, is making progress with its single delivery in both urban areas, through the Ministry of Social Development, and rural areas, through the Ministry of Agriculture. It is expected to be completed between November and December. The Fondo de Protección de Empleo (Employment Protection Fund) for workers is being paid out to a little more than 160,000 workers. There are still delays and the payment of six bimonthly installments has not been made to all the workers.

Nationally, the data reviewed by the Ministry of Health and presented at epidemiological week 35 at the end of August shows a nationwide acute malnutrition rate of 90.9 per 10,000 children under age five. This figure is substantially greater than the one found for the same epidemiological week in 2019, which was 51.7, representing an increase of 76 percent. However, due to the methodological changes in the recording and quality control of the information before it is entered, the Ministry of Health recommends not comparing the data from this year to previous years. Given this increase and the concern about the pandemic, the government of Guatemala, through the Ministry of Public Health and Social Assistance, with support from the Secretariat of Food and Nutrition Security and different international cooperation actors have undertaken an active search process to identify children with acute malnutrition using average arm circumference. Preliminary data indicate that the prevalence is close to that found in the latest maternal-child health survey, under 2 percent. Boys and girls with acute malnutrition are receiving treatment. A proportion of boys and girls with acute malnutrition that had not yet been identified by the Ministry of Health with the regular procedures are being identified, which will guarantee that they receive care.

National assumptions

COVID-19 development and restrictions. COVID-19 cases are expected to continue at figures similar to the current ones, but it is considered very unlikely that the economic reopening will be reversed. It has made it possible, though with capacity limitations, for all economic activities to be in operation. The restrictions will likely remain in place without any changes throughout the period covered by this outlook. 

Climate. Given the conditions from the La Niña phenomenon, rainfall is expected to be above average until the start of the first rainy season of 2021.

Production of basic grains. The basic grains harvests from the postrera and postrera tardía cycles are expected to be within average ranges. The sowing of the primera cycle could benefit from the forecast of above average rainfall and the forecast of temperatures close to average, which would benefit the permanence of the residual humidity.

Markets, food, and transport prices. As of October/November and until February/March, markets will remain stocked with corn and beans from the national harvests, which will lead to a decrease in prices and their stabilization. Starting in March, as the supply of the fresh grains decreases, the prices will begin to undergo their seasonal increase. In accordance with the projections made, the prices of white maize are expected to remain close to average. However, bean performance could be different and stay at above-average values, but lower than those of 2020. Starting in March, the markets will be kept stocked with stored basic grains and the constant imports from Mexico. Public transport will still not be completely operational, and even if it resumes, it would be at a limited capacity, so it will continue to have high prices.

Income. In general, commercial activities and services will continue to operate partially, given the capacity restrictions. The reopening of recreation and sports centers, cultural activities, and outdoor activities could result in the recovery of a percentage of jobs, particularly in urban areas, as is shown by the survey called Employment Expectations from ManpowerGroup (September 2020), where 21 percent of employers expect hiring to return to pre-COVID levels in the next four to nine months. The same survey reports an overall slight improvement compared to last quarter, which could be due to the gradual resuming of operations of the economic sectors.  This same tendency is shown in the Economic Activity Confidence Index published by the Banco de Guatemala (Banguat), which has shown a recovery since August. For September, it shows improvement compared to the month before. The opening of borders, parks, and other entertainment centers would lead to greater demand for tourism products and services, though far below what was normal for this sector, which will currently depend mainly on national tourism given the low international demand. In rural areas, the season for harvesting commercial crops for export such as coffee, sugarcane, cardamom, fruits, and vegetables begins in October. The demand for labor is expected to be close to normal for most of these products, though distancing measures during the harvest, transport, and lodging could affect the number of workers hired. For those who travel to farms in neighboring countries, the travel restrictions at the border of Honduras and the controls at the borders with Mexico could result in lower income. Many of the small and medium producers of coffee (according to ANACAFÉ [the National Coffee Association] of Guatemala, there are 121,000 small producers) have complementary income from wages, sales, or remittances. These sources were affected in past months, which could lead to less hiring of day laborers. Public transport may still not be completely operational, and its costs would remain two or three times higher than before the pandemic due to the decrease in passenger capacity, impacting the income of the local workers who would prefer to decrease the trips to their workplaces since it would be very expensive and disadvantageous for them to travel every day.

Income from remittances. Remittances will continue to recover and reach levels higher than those of 2019.  However, they may be used for debts and loans, food purchases, or savings instead or prioritizing investment, given the uncertainty of the evolution of the illness in the United States.

COVID response Government Assistance Programs. The Food Support Program will continue to deliver food rations. There are assistance programs led by international groups that would reach a significant number of poor households. The third disbursement of the bono familia would not be for 1,000 GTQ, but it would be paid to 100 percent of the beneficiaries, along with the three disbursements for the 150,000 families that do not have electric power.

Nutrition. Though the peak in the increase of cases of acute malnutrition was found in the previous period, the effects of the restrictions and the economic impact of the pandemic will continue. However, the numbers will remain within the margins considered acceptable in a normal population.

Most likely food-security outcomes

For the outlook period, it is expected that the government COVID-19 report page will continue to guide the operation of economic activities and that the restrictions will continue to be similar to the current ones, given the evolution of the illness. The reopening has allowed for the gradual operation of economic activities, but some sectors will continue to be affected by the capacity restrictions making it possible for them to only generate partial income, and therefore offer less employment than normal, particularly in personal care services, food, transport, entertainment, sports, and trade. Likewise, people who depend on the informal economy have still not recovered their traditional form of employment, since in general it depends on the stability of the jobs in the formal sector. Food prices have been going down and stabilizing as the recent harvests of basic grains and the vegetables in season have been arriving at the markets. Public transport will continue to operate at partial capacity and at prices that are high for the households. At the national level, the decrease in income has caused the use of coping strategies by a large part of the households in the country, pushing them to use their savings, take out loans, reduce non-essential expenses, and adjust their traditional diet. The government food assistance programs that made improved food access possible in previous months ended in October, so many households will be classified as being in Stressed (IPC Phase 2) food insecurity until May. As the economic activities recover, employment sources may start being generated again, but they are not expected to reach pre-pandemic levels due to the intensity and prolonged nature of the impact on some economic activities, particularly among small- and medium-sized businesses.

In October in rural areas, the season of high demand for labor starts, which is particularly important for rural households whose annual income comes mainly from this period of three to five months of different export crop harvests. Starting in March, the restrictions imposed because of COVID affected the mobility of rural households by increasing the costs of transport and food and affecting access to the main markets. Without basic grain reserves and after an extended period of dependence on purchases, rural families have turned to the use of coping strategies that have been growing as the months have gone by. The agricultural sector has been the least affected by the pandemic, and the exports of traditional crops have been encouraging. However, the distancing and biosecurity measures required for their operation, the irregularity and high price of transport, and the controls for migrant day laborers on the borders of Mexico and Honduras could limit the generation of income. Though remittances and trade are beginning to recover, the loss of wages, the decrease in trade, and the decrease in remittances have affected the economic capacity of average households, resulting in a lower demand for local agricultural and non-agricultural labor. For rural households that depend on tourism and those located in areas of the Dry Corridor that have gone through consecutive years of difficulties in terms of the availability and access to food, the impact of COVID has forced them for several months now to adjust the quality and quantity of foods included in their diets, take out loans, and sell assets to ensure basic nutrition. Given the debt owed on loans taken out throughout the entire year, the households will be forced to use their earnings immediately, which will restrict their ability to build up savings for the next few months. These households will continue to decrease the foods included in their diet and to use negative response strategies such as atypical immigration, the decrease of health and education spending, and an increase in the sale of backyard animals. During the first part covered by this outlook, some of these rural households may temporarily improve their access to food and be classified as Stressed (IPC Phase 2), but later they would fall into Crisis (IPC Phase 3).  However, most of them will experience food insecurity in Crisis (IPC Phase 3) throughout the entire period covered by this outlook, which will be marked by the premature start of the scarcity season.

Events that may change the national outlook

Possible events in the next eight months that may change the most likely scenario.