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354. Coffee rust: What’s below the surface?

During the opening session of last week’s Coffee Rust Summit in Guatemala, the director of Central America’s coffee institute suggested that coffee rust is a symptom of underlying problems in the region’s coffee sector.  More specifically, he noted that the coffeelands in Central America are filled with aging plantations that are poorly managed.  What he didn’t say was that the weakness of the region’s coffee programs has contributed to the current state of its coffee fields.

If the coffee rust epidemic is a symptom of underlying agronomic and institutional failures, then its economic and social impacts on farmers are symptoms of the underlying economic vulnerability of coffee-growing households.

Even before the coffee rust epidemic, coffee farmers — particularly the smallholder farmers CRS works with — were facing extraordinary financial pressures due to production risk on the farm and price risk in the marketplace.

On the farm.

  • Small farms are getting smaller.  In many cases, small coffee farms are getting even smaller over time through inheritance, subdivision and the occasional sale of land to meet acute cash needs.  In order for farmers to squeeze the same amount of coffee income out of farms that are getting smaller, they need to achieve greater efficiencies and higher yields in smaller areas. Unfortunately, many smallholder farms are moving in the opposite direction.
  • Productivity is lagging.  Thanks to the issues cited above — aging plantations and poor farm management — productivity is lagging throughout Mesoamerica, and the region’s coffee institutes have had limited success in helping farmers reverse the slide.
  • Pathways for pests and pathogens.  Under these conditions, pests and diseases thrive.  A plant’s natural defenses wane over time.  Only effective pest and disease management can compensate for a plant’s age.  Aging plants coupled with poor farming practices paves the way for pests and pathogens.  Add climate change to the mix, and we have a perfect storm for plagues and epidemics.  As climate change accelerates, the threats to coffee production will only multiply.
  • Coffee is king.  Coffee growers have not diversified their production or their income streams enough to be resilient in the face of crises like the coffee rust outbreak.  CRS is conducing a survey of the impacts of coffee rust on smallholder farmers in Central America.  So far we have interviewed leaders from 13 cooperatives with more than 6,800 members.  The data show that an average of only 23 percent of their members had access to income-generating activities besides coffee farming.  But many coop leaders told us that the overwhelming majority of their members — 90-95 percent — are entirely dependent on coffee for their incomes, and therefore highly vulnerable to shocks to production.  Smallholder farmers’ exposure to risk is hardly lower in the marketplace.

In the marketplace.

  • Rising costs of inputs.  The costs of agricultural inputs are on the rise.
  • Multiplier effect.  Rising costs of inputs create a multiplier effect on costs of production when combined with falling productivity.  Farmers face a number of fixed costs in producing coffee — costs that don’t change regardless of how much coffee they produce.  So when farmers bring less coffee to the market thanks to falling production or epidemics of diseases like coffee rust, it costs them more to produce each unit.  In order to remain profitable, farmers need to cover rising costs of production with increases in the prices they earn at market.  In recent years, it has been hard to count on the market to deliver steadily rising returns.
  • Extreme market volatility.  For factors unrelated to the amount of money it costs a farmer to produce one, the price of a pound of coffee has fluctuated wildly in recent years, increasing the risk to farmers who need high prices to break even.

The economics of the small-scale family coffee farm were already highly precarious before the coffee rust crisis.  Some coffee growers may choose to throw in the towel in the face of the current crisis.  Those who don’t will be more resilient if they can diversify some of their production out of coffee to hedge their risk, diversify their new coffee plantations between susceptible and disease-resistant varieties as a further hedge against risk, and manage their farms toward the higher yields they need to achieve and sustain profitability.  Building stronger coffee programs throughout Central America will be critically important in helping them achieve these goals.

 

6 Comments

  • Don Jansen says:

    Dear Michael
    I fully underwrite your conclusion that the institutional failure with weak (if at all functioning) coffee programs are the main cause for the current misery. Colombia faced the same problems regarding leaf rust already several years ago, and the FNC actively worked on renovation as the way to reverse the resulting reduction in production. Strangely, only now did the Central American countries realize that the Coffee Leaf Rust could also harm their coffee industry…..Vision, Planning, Monitoring: seems these are not present in the coffee organisations. And neither good trainings of farmers. No, in several countries, organizing a cupping event is far more important than working on productivity.
    You wrote that so far you have interviewed leaders of 13 cooperatives (with 6800 members); I hope you will not forget to interview also some of the leading private exporters, as several of them have projects with farmers. You may want to have a look at the project the DE Foundation (related to D.E Masterblenders 1753, formerly known as Sara Lee International) has with Sogimex (the Ecom subsidiary in Honduras). Here we have been working at proper crop management (fertilization, rejuvenation, replanting), and the results in the field are very good (50% higher productivity than average; much less effect of CLR due to the resistant varieties that were planted). Here there is vision, planning and monitoring…..(some info on the project can be found at: http://www.defoundation.org/honduras/ and http://www.defoundation.org/pre-financing-fertilizers-in-honduras-2/
    Friendly greetings

    • Michael Sheridan says:

      Don:

      Thank you for your comment and for the reminder that where publicly funded research and extension has fallen short, many private-sector actors have filled the gap with impressive research and training programs of their own. I continue to believe — stubbornly and anachronistically, perhaps — that robust public institutions generating public goods through effective research and offering universal access to extension programs is the ideal and achievable.

      To be fair, Central America did respond quickly to coffee rust during the 1970s and 1980s when coffee leaf rust first appeared there. I continue to work my way through the impressive body of work that was generated through PROMECAFE initiatives during this period. When the nightmare scenario everyone expected never materialized, it seems that farmers and coffee programs alike settled into a kind of stable-state coexistence with coffee rust for many years — coffee rust was present but rates of incidence and severity were low.

      But you are right that Central America could have seen this coming even in the absence of an early warning system for rust and other pathogens. Colombia’s coffee rust outbreak was a clarion call. And as Dr. Peter Baker pointed out during the Coffee Rust Summit in Guatemala, there were warnings about increased rates of coffee rust incidence in Central America as early as 2010. I myself recall references to rust at higher elevations in Central America at annual SCAA events in 2011 and 2012.

      The ideal scenario in Central America may be a kind of dynamic interplay between public and private institutions all committed to pushing the frontiers of knowledge in agricultural sciences and to making that learning accessible through robust farmer extension programs.

      Michael

      • Jan von Enden says:

        Dear Michael and Don,

        one aspect of the crisis you did not take into account sufficiently from my point of view: even with robust coffee institutions and well executed research and a roaring private sector, the underlying structure of the Central American coffee industry is presently too weak to cope with crisis: 80% independent farmers, 20% more or less organized in coops and the likes.

        Even if the money and research would be available to tackle the rust tragedy, it would not get to the majority (80%) of the farmers as the largest number of farmers is not organized and hence, simply not reachable. This calls for a clear bottom up action plan for technical assistance in the future – let us put more focus on supporting farmers to establish transparent, service orientated farmer organizations which can channel finance, provide tech assistance and provide whatever other content to farmer level!

        If then on top of that a well working institution, research and political representation of coffee farmers comes to work, we are even better off. FNC for example has shown quick response to the rust by providing credits to farmers within no time. If the renovation strategy with pure stand castillo is ideal remains questionable, but the response time was impressive.

        One more aspect… Youth! We need to think about an integrated approach for the future of rural areas (not only coffee!) and help to generate alternatives for the new generation. Not all will stay in coffee… and is not a motivating factor for youngsters to stay in coffee nor in the rural areas… There is so much potential in rural areas of which coffee is only one. The vision for future rural areas should be developed together with the youth to help them as well as the coffee sector to transit into a safe future. Transition is taking place already (see Colombia), agriculture will be less important, labor costs will be rising putting more pressure on agriculture, etc. Lets be part of that process and help to make the transitions less painful for the coming generations.

        Saying all that… All this is what we are trying to do in Central America with the Hanns R. Neumann Foundation: field assistance, organizational building and youth work / job coaching in the communities. Always looking for partners to develop a vision for coffee growing regions…

        And this brings me to me next point: Shouldn’t we as CRS, HRNS and DEF be the first to align our ideas and push for changes with one voice? We are commenting now on a blog instead of sitting together, creating a joint strategy, lobby for funding, … (actually I very much like your Logframe, Michael, on the latest blog, and I see that PROMECAFE is also pushing for coordination). TNS is also active in Honduras coordinating with us in Olancho/Paraiso, there is USAID, etc. etc.

        How can we coordinate and integrate our work better to increase real impact, who should be the leading entity? I can just say, we as HRNS would be strongly supporting such effort. What do you say? Best wishes from Hamburg, Jan

        • Michael Sheridan says:

          Jan:

          Hello from Quito and many thanks for your excellent comment from Hamburg. My initial response is…yes.

          Yes on the need to help farmers organize more effectively for the marketplace. The cooperative sector on which the Fair Trade market is built is exemplary but limited in its reach. That’s why we are working through coffee value-chain projects to improve farmer organization and pilot new approaches to farmer organization.

          Yes on the FNC response to rust. The FNC is not without its challenges–the Castillo-only policy has raised some eyebrows and objections, and there have been calls for reform within the institution–but the institutional response was impressive. We have written about it at length here.

          Yes on the challenges of “relevo generacional”—finding creative approaches to making coffee farming attractive to young people is a perennial challenge. I have seen some successful initiatives focused on specialized roles for young people—cupping, managing business processes, etc.—but a robust solution remains elusive, in part due to the fact that the underlying economics of the smallholder farm remain in many cases precarious.

          And yes on more collaboration. The conversation here on the blog is only one among many we are involved in with a broad range of actors. There are a number of other conversations happening at national and regional levels across Central America—stay tuned, I think my colleagues will reach out to yours in Guatemala soon—but so far none of them are all-inclusive. We would like to find a way to make the conversation more inclusive.

          Michael

  • Vera Espindola says:

    Hey Michael, I was looking again for the Promecafe strategy plan, but i am unable to find it. Would be great if you can help me with this.

    Saludos
    Vera

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