Coffee rust disease and El Niño will affect income and harvest prospects

• Harvests of Postrera grain crops across the region are completed. Expected below-normal levels of red bean production will create a region-wide deficit. The steady rise in red bean prices is accelerating and job losses in the coffee sector are expected to continue.
• Approximately 110,000 very poor households in Honduras and El Salvador are classified as Stressed (IPC Phase 2), most of whom are subsistence grain farmers who began planting crops in May. These households will be dependent on market purchases until the September harvest.
• ENSO model forecasts as of the middle of May show a 59 percent likelihood of the development of El Niño conditions between June and August and predict damage to Primera and Postrera staple grain crops from the resulting erratic, below-normal rainfall during this period.
• Even with the reduction in their cash income from coffee and the depletion of their food stocks (which are normally depleted by March/April), households of day laborers and small farmers in coffee-growing mountain areas of El Salvador receiving assistance from the World Food Program (WFP) between April and June are experiencing Minimal food insecurity (IPC Phase 1(!)). However, without continuing food assistance, these households will be Stressed between July and September.
• With their loss of income from wage labor or the sale of coffee and the depletion of their food reserves, households of day laborers and poor farmers in western and southern Honduras will be Stressed until the harvest of Primera crops (in September). Households in Nicaragua with grain reserves, alternative sources of income, and supplies of Apante crops will experience Minimal food insecurity.

The increase in red bean production in El Salvador over the last two growing seasons from 2,371,835 quintals (2012/2013) to 2,870,237 quintals (estimate for 2013/2014) caused producer prices to fall and discouraged farmers from planting bean crops for this past Apante season (2013/2014), which is helping to drive the current rise in prices. Price increases could accelerate and continue through the upcoming harvest.

The main (Apante) bean harvest in Nicaragua is completed, but has not reduced domestic prices for red beans as expected due to the smaller area planted in these crops with the expansion in the area planted in black beans in order to fulfill trade commitments. In addition, there is a steadily growing flow of exports to markets in neighboring countries (Costa Rica, Honduras, and El Salvador). Up until this point, this trade has been conducted by local traders without any regulation.

There is a free flow of trade between Nicaragua, the largest regional supplier of beans, and neighboring countries, in spite of the steady rise in domestic prices, which are up from last year and above the five-year average. The government is implementing its Frijol Solidario program with a sales and distribution network selling beans at subsidized prices below market prices in local neighborhoods.

Wholesale prices for red beans in Honduras are steadily climbing. Current price levels are up from last year and above the five-year average. In an attempt to stabilize domestic prices, the government is continuing and expanding its distributions of red bean supplies from its strategic reserves through BANASUPRO, the National Staple Grain Supply Company.

Red bean prices in El Salvador are steadily rising. Current prices are up from last year but below the five-year average.

Honduran coffee producers have replaced a large percentage of their coffee plants with rust-resistant varieties. Some of these plantations will begin producing coffee this season but will not reach maximum production until the 2015/2016 season. The Early Warning System for Coffee Rust Disease calculated the national incidence of coffee rust at 12.23 percent based on field sampling over the period from April 22nd through April 25th and recommended making the first preventive application for controlling the rust fungus during the interval between April 30th and May 10th, initially targeting coffee-producing areas of Francisco Morazán, Intibucá, La Paz, and Olancho departments.

The Coffee Sector Reform and Development Act passed by Nicaragua’s National Assembly in December 2013 provides for the creation of a Coffee Sector Reform and Development Fund (FTCD) with proceeds from coffee exports. Mandated contributions to the Fund were set at a minimum of $1.00 per quintal exported at an international reference price of $140.00 or under and a maximum of $4.00 per quintal exported at an international price of US$ 185.00 or over. A corresponding Commission is being set up, which will craft a relevant plan and set of operating regulations.

The ENSO climate forecasting model as of the middle of May shows a 59 percent likelihood of the development of El Niño conditions between June and August, suggesting damage to staple grain crops, mainly to Primera and Postrera crops in the Dry Corridor, and with an unknown effect on the spread of the coffee rust fungus in regional countries.

Poor Nicaraguan households are expected to be able to meet their needs until the upcoming (September) harvest from their grain reserves, alternative sources of income, and supplies of Apante crops and, thus, will experience Minimal food insecurity (Phase 1, IPC 2.0). Communities in Madriz, Nueva Segovia, and Estelí departments, which lost last year’s Primera crops and whose sources of employment were undermined by the rust outbreak, will face

Stressed food security outcomes (Phase 2, IPC 2.0) throughout the first half of the year and beyond, until the harvest of Primera crops.
Poor households in western and southern Honduras dependent on income from the coffee harvest and households in coffee-growing mountain areas of El Salvador (day laborers and small coffee growers) will also face Stressed food security outcomes (Phase 2, IPC 2.0) throughout the first half of the year and beyond, until the September harvest of Primera crops.