Coffee Crisis Hits Hard in Central America; Farmers Growing Eco-Friendly Beans May Survive the Disaster

Consumers in the United States and Europe may be blithely paying boutique prices for a cup of cappuccino, but tens of thousands of coffee farmers in Central America are facing bankruptcy. A glut of beans on the global market has caused the price farmers receive to hit rock-bottom, which is not only deepening poverty in nations like Honduras and Guatemala, but also may have serious environmental consequences, as farmers replace forested coffee farms with pasture or other monocultures that offer no shelter for wildlife. Nonprofit groups in the region are doing what they can to help small farmers weather the crisis.

Illustration by Allan Núñez ('Nano')Agronomist José Alfredo Torres directs a regional office of the Institute for Cooperation and Self-development, or ICADE, in its Spanish acronym. He works with small coffee farmers in the hills east of Tegucigalpa. Throughout the country, he says, coffee farmers are suffering. “Many farmers are losing their land, since they can’t pay bank loans,” he explains. “The only option many have is to rip up their coffee plants and replace their farms with pasture, which means deforestation, since nearly all the farms here are shaded plantations. Or they replace coffee with crops that require toxic agrochemicals. That’s a problem here in the mountains, because the heavy rains wash those chemicals into rivers, which are sources of drinking water.”

The market is so bad that many farmers aren’t even bothering to harvest their crops. Torres notes that a recent ICADE study shows an average loss of about $175 per 1.75 acres. No harvests mean that coffee pickers are jobless, forcing most to migrate to the cities of San Pedro Sula and Tegucigalpa. After a June 28 emergency meeting among coffee growers, the president of the Honduran Coffee Bank told local media that it’s likely that most of the country’s 105,000 coffee farmers will be forced out of business, since the coffee crisis will last at least another two years. He added that the situation is causing a massive migration of young people to the United States.

The global coffee market has always been volatile — the last drastic price drop occurred in the 1990s — but is particularly acute now, with prices at a 30-year low. When the market was strong, a quintal of coffee, or 100 pounds, was worth about $120. Today, a quintal fetches about $50. The causes of the current bean glut are complicated, but according to a study done by Oxfam, an international aid agency, the main culprits are new technologies that result in higher-yielding coffee plants, and greater output by countries like Viet Nam, where production increased by almost 400 percent over the past decade.

On traditional farms, coffee is grown under the shade of rainforest trees. The new, higher-yielding plants require full sun and more chemicals, so although farmers can harvest more beans per acre, the environmental costs are much greater than on forested farms. The trees on shaded farms not only guard against erosion and flooding, they also provide habitat for wildlife, particularly birds and insects. While global economists haven’t figure out how to put a dollar value on these benefits, Torres thinks that coffee grown sustainably — with little impact on the environment — can indeed increase profits to farmers during these hard times.

“ICADE is working with a cooperative of 300 farmers who are going to try the environmental market,” he reports. “We are talking with buyers in Taiwan who say they are willing to give a better price for environmental coffee.” The eco-friendly beans are produced on shade farms, using organic fertilizers, little or no pesticides, and with careful management of waste and controls against water pollution.

Torres also notes that profits would increase if farmers can sell directly to overseas buyers, thus eliminating the middlemen.

In the southwest highlands of Guatemala, a nonprofit group called Manos Campesinas, or “Farmer’s Hands” is also trying to give small coffee producers direct access to overseas markets, while training them in organic farming techniques. Project director Jerónimo Bollen says that although larger producers in the country are abandoning their farms, the approximately 1000 small farmers with whom he works have to harvest their beans, “since it’s their only source of income.”

Nor do the farmers have the economic resources to switch to more profitable crops. A goal of the nonprofit Manos Campesinas is to encourage farmers to diversify their farms, so they won’t be so hard hit by price fluctuations in any one product. Right now “it’s easier to find a market niche for organic coffee than non-organic,” Bollen says, “even if the quality is the same.” Even so, convincing farmers to go organic is not always easy, he admits, since the conversion requires extra work, at least at first. Manos Campesinas tries to make clear all the advantages of organic farming, including better health for farmers and their families, since they no longer have to handle agrochemicals.

Guatemala’s total coffee exports are nearly one-half of what they were just two years ago; coffee has been the country’s leading export for decades. About 700,000 families, or 20 percent of the population, have coffee-related jobs. Thousands of coffee pickers are now unemployed, and many have migrated to Mexico in search of work. Guatemala’s National Association of Coffee estimates that the country has lost some $300 million in revenues so far, and that number will likely increase.

Coffee industry organizations in Central America are calling for a retention to drive up prices, just as OPEC nations hold back supplies of oil until prices rise. But ICADE’s Torres doubts this would have much impact over the long term. And as Bollen notes, the small farmers in Guatemala have no choice but to put their beans on the market — it’s all they have to sell.

Contacts:

ICADE
Apdo 4079
Tegucigalpa, Honduras
Tel: 504/222-3435
Fax: 504/238-7080
Email: icade@sdnhon.org.hn

Manos Campesinas
14 Av. 5-26
Zona 3
Quetzaltenango, Guatemala
Tel: 502/767-2040
Fax: 502/767-2044
Email: mancamp@intelnet.net.gt

Guatemalan National Coffee Association
Tel: 502/366-4583
Fax: 502/353-3158
promotion@guatemalancoffees.com

Read more about Manos Campesinas in the Eco-Index.

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