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Coffee rust and the falling global coffee price continue to affect day laborers and small coffee producers

  • Remote Monitoring Report
  • Latin America and the Caribbean
  • February 2014
Coffee rust and the falling global coffee price continue to affect day laborers and small coffee producers

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  • Key Messages
  • Crop Production
  • Market Behavior
  • Coffee Sector
  • Nutritional Status
  • Projected Regional Outlook through June 2014
  • Key Messages
    • Reduction in area planted and localized red bean production losses from Apante in Nicaragua and in northern Honduras has increased wholesale costs by 13 and 4 percent respectively. This rise gets passed on to the consumer, reducing their purchasing power. El Salvador will also be affected by the rise, as it imports some of its grain from Nicaragua.
    • Despite improvements in international coffee prices in January, day labor and small producers' households will not see an increase in income given that the 2013/2014 harvest is coming to a close. Reduced incomes will cause strain purchase power during the next lean season, as households will be more dependent on markets during this time.
    • A possible shift towards El Niño-like conditions beginning in the second quarter could potentially result in rainfall anomalies that would then reduce crop yields for the Primera season, particularly in the dry corridor of all three countries. This would mean reduced grain availability for affected households.
    • Due to seasonal Primera losses and reduced income for those dependent on the coffee sector, poor households in the south of Honduras will be classified with Stressed (IPC Phase 2) food insecurity outcomes through July. Households in the rest of the subregion will experience Minimal acute food insecurity (IPC Phase 1) due to recent average harvests and seasonal employment.
    ZONACURRENT ANOMALIESPROJECTED ANOMALIES
    REGIONAL• The previous downward trend in international coffee prices changed course in January, resulting in current prices 10 percent above the lowest recorded price in the last four months.• With the harvest reaching its end, last month’s increase in coffee prices occurred too late for migrant coffee harvest workers and small coffee growers to recoup their lost income.
    El SALVADOR• Coffee production estimates for the 2013/2014 season have been modified, now to only 65 percent (equivalent to 717,391 quintals) of the original projections from last November.• El Salvador, with 50 percent, has the highest prevalence of coffee rust in Central America, which will reduce yields during the 2014/2015 harvest.
    HONDURAS• The above-normal January rains affected bean production in riverine and lowland areas, mainly in the Atlántida and Cortés departments.• This could affect bean production for the Postrera Tardía season in these areas which, combined with the drought-induced losses of Primera crops, could cause prices to rise sooner than usual.
    NICARAGUA• The January rains caused crop damage, particularly to Apante bean crops, affecting an estimated area of 1,300 manzanas (1 manzana = 0.7 hectares) representing one percent of total Apante crop production.• The crop damage and reduced area planted for the Apante harvest will affect prices at harvest-time (in March) and beyond. The extent of production losses or shortfalls will influence market flows.

     


    Crop Production

    Nicaragua is the region’s largest red bean producer, with most of its production coming from the Apante harvest (between January and March), the main source of supply for the domestic market, with any surpluses exported to El Salvador and Honduras. The current growing season is expected to produce a harvest of approximately 1.8 million quintals (1 quintal = 46 kg or 100 lbs), which is slightly smaller than last year’s harvest. The crop damage caused by the above-normal January rains will likely lead to production shortfalls for the Apante harvest in Nueva Segovia, Matagalpa, Boaco, Jinotega, and the RAAN.

    The harvest of Postrera Tardía crops in the Valle del Aguán area of Honduras (in Yoro and Colón departments), which is a surplus producing area, is already in progress and should be completed by the end of March. There are reports of damage to staple grain crops in only localized riverine areas and in water-retention (lowland) areas from the above-normal seasonal rains in this part of the country. Satellite rainfall imagery for the period from December 1, 2013 through February 12, 2014 shows the geographic areas of both countries with rainfall totals between 100 and 200 percent above-normal rainfall (Figure 1).

    Preliminary figures for maize and bean production (for the 2013/2014 season) in El Salvador appear to meet the production targets of 2.5 to 2.8 million quintals of beans and 18.5 to 22 million quintals of maize; this increased both bean and maize production from last season by an estimated 21 percent and 11 percent, respectively. 

    One of the components of the Family Farming Plan (PAF) / Agricultural Innovation Program in El Salvador is the release of a new improved red bean variety (the CENTA Costeño 2) which can be grown at altitudes between 30 and 1,200 meters above sea level, with yields of up to 35 quintals per manzana (or 49.6 quintals/hectare). This could increase yield for the next harvest.


    Market Behavior

    Wholesale maize prices across the subregion have been stable or declining, as a result of the good harvests and steady flow from the Primera and Postrera crops reaching markets.

    Wholesale bean prices in all three countries have risen by as much as 15.9 percent, except in eastern El Salvador where they are down by up to three percent, possibly due to informal trade with Nicaragua. The reasons for the rise in bean prices are different in each country. In El Salvador, it is due to procurements by the food company ALBA Alimentos. In Honduras, it is a result of the failure of Primera crops and above-normal rainfall. In the case of Nicaragua, it is attributable to reduced area planted for the expansion of black bean production for export to Venezuela, as well as localized losses from above-normal rainfall. The performance of Apante crops in Nicaragua also affects markets in Honduras and El Salvador, where supplies of these crops help meet market demand in the second quarter of the year.


    Coffee Sector

    Renewed expectations were created with respect to the long-term sustainability of the recent rise in international coffee prices (the ICO composite indicator price) in January when prices stabilized at US$110.75/pound, 10 percent above the lowest recorded price for the last four months. A more in-depth analysis of the situation in this region can be found in the special report Coffee producer and laborer income to decline for a second consecutive year.

    Crop yields from the 2014/2015 harvest will depend on the ability of coffee growers to invest in inputs designed to control the spread of the coffee rust. The combined effects of these added maintenance costs and falling international coffee prices are significantly reducing the profits for coffee plantation owners, particularly small and medium-sized coffee producers.

    An estimated 70 percent of all unskilled labor in the coffee sector is employed during the harvest season (October to February). Seasonal income from work in the coffee harvest during this period is an important source of revenue for poor households in these countries. This generates seasonal labor migration flows within coffee-producing countries and in coffee-producing border areas of neighboring countries, affording employment opportunities or offering better wage rates for day laborers.

    Small coffee producers in all four coffee-producing countries (including Guatemala) are another population group significantly affected by the coffee rust outbreak and decline in coffee prices. These coffee growers need to invest in inputs designed to control the spread of the rust, but have been unable to do so due to last year’s low coffee prices. The result is the abandonment or replacement of coffee plantations by more economically viable crops.

    According to the Nicaraguan National Alliance of Coffee Growers (ANCN), approximately 80 percent of the national coffee harvest had been completed by the middle of February. The coffee rust problem in Nicaragua prompted the government to launch a phytosanitary campaign early last year to manage the coffee rust outbreak. To date, the government has not felt it necessary to declare a phytosanitary emergency as in neighboring countries.
    The 2012/2013 end-of-harvest report by the Honduran Coffee Institute (ICAFE) reported the volume of exports to be 5,660,894 quintals, 21 percent below the 2011/2012 season. However, production forecasts for the 2013/2014 season are predicting an 11 percent improvement over last season with the additional output from new coffee plants from the current season.
    Preliminary figures for coffee production for the 2013/2014 season in El Salvador are approximately 717,391 quintals, 65 percent below projections from last November (1.1 million quintals). This estimate is 42 percent below the production figure for last season and suggests that conditions in El Salvador’s coffee sector will have the greatest impact on the resulting production shortfalls in Central America.


    Nutritional Status

    Nicaragua’s Ministry of Education (MINED) initiated the first distribution of food supplies for the National School Feeding Program, serving a million preschoolers and primary school children in Nicaraguan public schools supported by the World Food Program (WFP). Some 5,823 metric tons of rice, beans, maize, flour, vegetable oil, and fortified cereals are being distributed to meet needs for February, March, and April in 153 municipalities across the country, including municipalities affected by the coffee rust crisis in Matagalpa and Jinotega.


    Projected Regional Outlook through June 2014

    According to current forecasts, the rainy season in Central America could begin sometime in April of this year, affecting conditions in crop-producing areas of the Pacific coast of El Salvador in particular. A possible El Niño phenomenon during the transition period into the first rainy season (in May/June) could produce an uneven (temporal or spatial) distribution of rainfall. This would, in turn, affect the progress of crops during the different stages of their growth cycle. As the potential El Niño phenomenon evolves in the second half of the year, FEWS NET will closely monitor it in order to anticipate its effects on crop growth and development.

    Poor households in El Salvador, Honduras, and Nicaragua are currently experiencing Minimal acute food insecurity (IPC Phase 1) due to the above-average Primera (August through September) and Postrera (November through December) harvests of staple grains for the 2013/2014 season. Food prices are relatively low as a result of these good harvests. However, certain populations in Nicaragua in the municipalities of Cusmapa (Madriz), Macuelizo (Nueva Segovia), and Estelí (San Juan de Limay), where grain reserves are being exhausted and limited employment opportunities exist within the coffee sector, will experience Stressed food insecurity outcomes (IPC Phase 2).

    Poor households in southern Honduras (day laborers and small coffee producers) affected by rainfall deficits during the 2013/2014 Primera crop planting period and those with reduced incomes from coffee production and reduced coffee labor demand will face Stressed food security outcomes (IPC Phase 2) throughout the first half of 2014 until the beginning of the Primera harvest in August.

    Figures Seasonal Calendar for a Typical Year

    Figure 1

    Seasonal Calendar for a Typical Year

    Source: FEWS NET

    Figure 2

    Figura 1. TRMM Lluvia total (mm), 1 de diciembre, 2013 a 12 de febrero, 2014

    Source: NOAA

    Figure 3

    Source:

    In remote monitoring, a coordinator typically works from a nearby regional office. Relying on partners for data, the coordinator uses scenario development to conduct analysis and produce monthly reports. As less data may be available, remote monitoring reports may have less detail than those from countries with FEWS NET offices. Learn more about our work here.

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