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The coffee sector in El Salvador is the most affected by the coffee rust shock in Central America

  • Remote Monitoring Report
  • Latin America and the Caribbean
  • March 2014
The coffee sector in El Salvador is the most affected by the coffee rust shock in Central America

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  • Key Messages
  • Crop Production
  • Market Behavior
  • Coffee Sector
  • Projected regional outlook through June 2014
  • Key Messages
    • During the 2013/2014 coffee production season, El Salvador recorded losses of 93,053 jobs, which is 58 percent fewer jobs than the 2012/2013 season, representing the largest percentage loss in Central America.
    • Prices in the international coffee market have continued rising, currently reaching 43 percent higher than the average price in November 2013 (the lowest for the period). If this trend persists, producers that still have coffee stocks (gold or dry beans) will benefit, yet while income losses for small producers and day laborers are irreversible for the current season.
    • Due to 2013 Primera crop losses and reduced income from coffee day labor, poor households in coffee-growing areas of the southern and western areas of Honduras are classified with Stressed (IPC Phase 2) acute food insecurity until September when the Primera harvest begins. In Nicaragua and El Salvador, food security outcomes are Minimal (IPC Phase 1).
    • According to NOAA, there is a 50 percent probability that El Niño conditions will begin in July in all three countries. From September on, this may cause Primera and Postrera crop loss of staple grains, worsening the food insecurity situation of day laborers and small coffee producers previously affected by multiple shocks over the past two years as of September.
    ZONECURRENT ANOMALIESPROJECTED ANOMALIES
    REGIONAL
    • Programs designed to combat the coffee rust outbreak have significantly reduced the size of productive coffee-growing areas for the 2013/2014 season.
    • Twenty percent of Central America’s coffee-growing area will be unproductive during the 2014/2015 growing season (PROMECAFE/CAC).
    • Production capacity in affected areas is expected to take three or four years to recover.
    El SALVADOR
    • The 2013/2014 coffee harvest produced 723,000 quintals of coffee, 59 percent less than the previous season.
    • The 2013/2014 season generated 67,480 jobs, 59 percent fewer than the 2012/2013 season and 72 percent fewer than the 2010/2011 season.
    • Based on the impact of the damage caused by the coffee rust, job losses will continue into next season.
    HONDURAS
    • Red bean prices in February 2014 were up by 30 to 69 percent from February of last year because of the reduced area planted based on lack of interest by traders and lower yields from Primera and Postrera Tardía crops as a result of soil moisture deficits.
    • Reduced trade flow with neighboring countries as a result of the production shortfalls from the Apante season could accelerate the pace of price increases.
    NICARAGUA
    • Red bean prices jumped by as much as 37 percent in the last two months.
    • If there is an increase in exports of red beans to neighboring countries, prices will likely continue rising.

     


    Crop Production

    Forecasts for the rainy season are predicting neutral conditions through the end of June. There is a fairly high probability of a shift to El Niño conditions beginning in July, which could adversely affect Postrera maize and bean crops, and the optimal development of coffee beans.

    Maize and black bean production in Nicaragua for the 2013/2014 season surpassed production levels from the 2012/2013 season. Current maize production is up by 17 percent, at approximately 12 million quintals, and black bean production by 571 percent, to approximately 806,756 quintals, due to increased interest in exports. Red bean production for the same period is down by four percent, at 4.9 million quintals. Market supplies of these crops should keep poor households food secure through the month of June.

    Bean production areas that have been planted for the Postrera Tardía season include the riverine areas of Guayape, the Comayagua, Gualaco, and Guata irrigation districts, and the Atlantic Coast and Ocotepeque areas. Harvests are already in progress in the Guayape area and should get underway sometime in April in the other areas. This seasonally typical behavior should provide conditions for normal harvests, stable trade and market flows over the short-term.

    Bean production in El Salvador, where harvests are already completed, met production targets for 2013/2014. Markets are beginning to draw on their supplies from warehouse inventories, controlling the flow of crops to match market demand.


    Market Behavior

    Wholesale prices for red beans in Nicaragua in February were up by 37 percent from the previous month and by 62 percent from the same time last year due reduced area planted. Prices are expected to stabilize with the arrival of the Apante harvest beginning in March.

    Wholesale and retail prices for red beans in Honduras were up from the previous month by 19 and 21 percent, respectively, and by 30 to 69 percent from February 2013. This is due to Postrera crop reserves being exhausted and lower annual yields as a result of the dry conditions affecting Primera crops and the reduced area planted.

    Wholesale prices for red beans in El Salvador have been steadily rising. This seasonal pattern shows waning trade in production areas typical for this time of year, while other areas stockpile crops in certain bean-producing areas in anticipation of better prices in the future.


    Coffee Sector

    There have been sharp rises in international coffee prices (the ICO daily composite indicator price) since February of this year. As of March 11, prices were up by 75 percent from November of last year in reaction to the drought in the coffee-producing areas of Brazil.

    According to the Salvadoran Coffee Council, production for the 2013/2014 season is estimated at 723,000 quintals of green coffee, which is 58 percent below the 2012/2013 harvest and 72 percent below the 2010/2011 season (before the coffee rust outbreak). Production shortfalls for the 2013/2014 season mean a loss of 93,053 jobs since last season.

    The field assessment by WFP identified a total of 47,409 households dependent on day labor from coffee-growing activities, of which approximately 13,200 are moderately food-insecure due to their low income, limited resources, and few alternative livelihood options.


    Projected regional outlook through June 2014

    In spite of the damage to coffee-producing areas and staple grain crops losses from the (2013/2014) Primera growing season, poor households in Nicaragua and El Salvador will be able to meet their needs until the upcoming harvest (in September of this year) given their grain reserves, alternative sources of income, and grain supply from Apante season crops. Thus, food insecurity in both countries is Minimal (IPC Phase 1). However, there are exceptions, such as certain communities in coffee-growing municipalities of El Salvador and the Nicaraguan municipalities of Cusmapa (Madriz), Macuelizo (Nueva Segovia), and Estelí (San Juan de Lima). In these areas, rainfall anomalies affected the planting of Primera crops, while the impact of the coffee crisis affected household income. These communities could face Stressed food security outcomes (IPC Phase 2) throughout the first half of the year.

    Poor households in southern and western Honduras depend on income from the coffee harvest (day laborers and small producers). Households in the southern part of the country were also affected by the rainfall deficit during the planting of Primera crops (for the 2013/2014 season). Thus, food security outcomes in both parts of Honduras will be Stressed (IPC Phase 2) through the first half of the year and beyond, until the beginning of the harvest of Primera crops in August.

    Figures Seasonal calendar for a typical year

    Figure 1

    Seasonal calendar for a typical year

    Source: FEWS NET

    Figure 2

    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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