CHALLENGES FOR THE COFFEE SECTOR IN CENTRAL AMERICA POST COVID-19
Coffee is more than just a beverage, it's a way of life for many Central Americans. With over 1.2 million people relying on the industry for their livelihoods in countries like Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica, it's no wonder that coffee is such a vital part of the local economy. While export revenues from coffee trade can have a positive impact on these countries' GDP, many coffee farmers still struggle to make ends meet. The COVID-19 pandemic has only added to the challenges they face, including fluctuations in international coffee prices, low productivity, and the effects of climate change. Despite these obstacles, these farmers remain dedicated to growing the highest quality beans, and their passion for coffee is evident in every cup.
For many coffee farmers in Central America, their livelihood relies on a single annual paycheck from their crops. But with market prices constantly fluctuating, it can be a struggle to make ends meet. When international coffee prices drop below what it costs to produce, it can be devastating. Just take 2018, when the average price dropped a staggering 30% below the average, leaving many farmers struggling to make ends meet. But despite these challenges, the love and passion for coffee runs deep in these farmers.
Despite the challenges facing coffee farmers, the world's love for coffee continues to grow stronger by the day. According to the International Coffee Organization, global coffee consumption has risen by a steady 2% each year since 1990. While coffee consumption is on the rise in places like Europe, North and South America, and Asia, it remains steady in Central America and has even decreased in Africa. In industrialized countries, the way we enjoy coffee has changed dramatically as well, with a diverse array of flavors, origins, and forms now available thanks to the booming coffee shop culture. So, whether you're sipping on a classic black coffee or indulging in a specialty latte, one thing is for sure: the world's love for this beloved beverage is here to stay.
As coffee lovers, we're willing to pay a little extra for that perfect cup of joe. But did you know that the price we pay for a cup of coffee doesn't always make its way back to the farmers who grew it? Despite the fact that coffee prices have risen since 1990, many coffee farmers have struggled to make ends meet. From the coffee crisis of 2001 to more recent fluctuations in international coffee prices, it's been a tough road for those who grow the beans we love so much. And with climate change making farming even more difficult, it's more important than ever that we make sure the farmers who grow our coffee are able to make a sustainable living.
The COVID-19 pandemic has certainly caused some disruptions in the coffee industry. According to data from the International Coffee Organization, exports dropped by 5.8% in the first quarter of 2020, with Arabica coffee exports taking the biggest hit at a 10.1% decrease. Global production also fell by 0.9%. Despite this, consumption was still projected to be high, but fell short by 0.63 million bags for the 2019/2020 coffee year. Central American exports were particularly affected, with a 4.9% decline.
The coffee industry in Central America has certainly been through a tough time thanks to both the COVID-19 pandemic and the devastation caused by Hurricanes Eta and Iota. According to data from the International Coffee Organization, the impact of the pandemic was relatively short-lived, as home consumption of coffee increased and helped to offset the drop in demand from closed coffee shops and restaurants. And while the hurricanes caused some severe losses, the industry would have likely had a good harvest in the 2020/2021 season if not for their impact.
The 2020 Atlantic hurricane season was one for the history books. Within just two weeks, two powerful hurricanes (categories 4 and 5) swept through Central America, leaving a trail of destruction in their wake. The coffee industry was hit particularly hard, with Honduras, Guatemala, and Nicaragua experiencing severe flooding and landslides. Unfortunately, the storms struck just before the coffee picking season was set to begin, resulting in a significant loss of coffee cherries.
Building resilience in the coffee industry involves implementing a variety of strategies and actions throughout the entire value chain. One way to do this is by exploring new business and trade models, such as direct trade. This approach focuses on building strong relationships between farmers and buyers, which can help to strengthen the resilience of farmers. Additionally, farmers who sell certified coffee through cooperatives may be able to maintain a premium price for their beans. These initiatives can also help farmers to improve their farming practices and promote sustainable agriculture.
The recent hurricanes in Central America were truly devastating for the coffee industry, but there are ways to build resilience for the future. One key strategy is to ensure that farmers are receiving fair prices for their coffee. Additionally, financial support such as agricultural insurance, low-interest loans, and recovery subsidies can help small-scale farmers bounce back from these challenges. Another important consideration is to focus on growing local consumption of coffee, which could open up new opportunities for value-added coffee within the region. By implementing these strategies, we can make sure that the coffee industry in Central America is better prepared for whatever challenges come its way.