CoffeeNetwork (New York) – The latest USDA attache report has forecast that Guatemala’s 2023-2024 coffee crop will shrink to 3.43 million 60-Kg bags, three percent less than MY2021/2022 production (3.54 million 60-Kg bags) and one percent down from MY2022/2023 estimate (3.48 million 60-Kg bags), which was also negatively impacted by excessive rain during the flowering season, especially in Huehuetenango.
Reduced production was due to a combination of fewer fertilizer applications and lower quality due to the need to harvest all coffee beans at once with available labor, which led to coffee being harvested before reaching maturity. Labor costs increased 52 percent, contributing to production costs increases of almost 60 percent. Efforts to hire labor included coffee cooperatives coordinating transportation, housing, food, and internet for harvesters available in one region to harvest in another, such as the case of a coffee cooperative in Huehuetenango, which was able to hire labor from cardamom areas in Quiche as cardamom was affected by low international prices. Labor for agricultural practices is now costing $25/day or $90/100 pound of cherry (Q7.8 for $1 exchange rate).
In general, fertilizers and agrochemicals experienced interannual increase of up to 57 percent in 2022, following annual increases of 25-53 percent by the end of 2021, being urea the most expensive fertilizer, basically duplicating its price in the years following the pandemic, as reflected in Table 1. As a result, the average cost per pound of coffee in MY 2022/2023 is estimated in $1.33.
Farmers are worried about the prohibition for the use of certain pesticides and fungicides. The main pesticide used to combat the coffee berry borer (Hypothenemus hampei) has been endosulfan as the active ingredient, very toxic indeed, but very effective. The coffee berry borer pressure increased during MY 2022/2023 due to the fallen fruits that couldn’t be harvested because of the lack of labor, which will affect MY 2023/2024 harvest. Triazole fungicides which have been key in rust control are no longer approved for their use in next year’s harvest, posing additional challenges in coffee production. Farmers are also worried about the lack of rule enforcement in Guatemala with prohibited molecules, which may affect both certifications and exports.
When the coffee berry borer affects the production, the relation from cherry to parchment reduces drastically from 5 (cherry):1 (parchment) to 7:1, significantly affecting yield. Though natural chemical traps that release alcohol-based coffee odor for cherry borer control are applied at the beginning of the fruiting phase, large infestations cannot be controlled just with traps. Rust can be controlled with parasitoids and other biological controls, but the technologies are expensive and not readily accessible for the small farmers. Though average national rust incidence for the past three years has been relatively low compared to the pandemic year, despite three years of consecutive La Niña phenomenon in Guatemala areas with excessive precipitation like Huehuetenango reported significant losses due to rust.
Crop insurance for coffee is now available in Guatemala, thanks to the pilot project supported by Nespresso through the Columbian insurance company ASSA. The crop insurance is based on weather historical GPS data for the past 20 years, recognizing 2,500 mm of rainfall as the threshold to produce at least 23 60-Kg bags/Ha. The insurance recognizes three different production stages: flowering, bean filling, and harvesting, activating below or above the precipitation threshold. The insurance to its clients is automatic and doesn’t require verification of the damage; many farmer clients were surprised when they received the insurance money without submitting a claim.
Crop Area: Guatemala’s coffee planted area for Marketing Year (MY) 2023/2024 remains steady at 305,000 Ha, with bearing trees reaching 1.22 billion. Renovation is not scaling up as expected due to post-pandemic production cost increases limiting farmer ability to invest in improved genetics. Roughly 1.7 million plants per year are renewed through a Starbucks, Counterpart International/USDA, and TECHNOSERVE/USDA projects. There is little domestic public investment in coffee renovation. Huehuetenango, Santa Rosa, San Marcos, and Jalapa continue producing half the country’s total coffee harvest.
Harvested area In MY 2023/2024 is forecast to reduce to 250,000 Ha, two percent below the MY 2022/2023 estimate (255,000 Ha), and four percent less than MY 2021/2022 (260,000 Ha). Migration and remittances have contributed to lower labor availability, particularly in the agricultural sector where labor is particularly strenuous, and some planted areas have been abandoned, especially in Huehuetenango and Alta Verapaz. An ongoing trend for diversification of coffee with crops like banana, plantain, and cacao in lowland areas may also reduce coffee production. The National Coffee Association (ANACAFE) is considering the introduction of high-quality Robusta varieties for such areas. In addition, more profitable crops like avocado are starting to displace coffee in the Sololá department around Lake Atitlan. These cash crops often subsidize the coffee crop at the household level.
Yields: Coffee yields are variable, depending on many factors, including the farmer’s capacity to provide adequate nutrition and labor availability. Adequate nutrition means applying three fertilizations during the production cycle. Some farmers have cut fertilizations down to two applications or one, which normally affects the present harvest and has a much larger impact on the following year, as the next cycle starts with more severe nutrient depletion. This is especially true for the more than 100,000 small farmers producing in less than 2 Ha in Guatemala. Though many farmers are shifting to organic compost, yields continue dropping.
Farmers are seeking low-cost technologies that may support pruning, harvesting, and milling. Varieties are critical in terms of yields and production. The Marsellesa variety, for example, a Sarchimor line, is planted with a density of 3,300 plants/Ha, and under optimal conditions may produce 46 60-Kg bags/Ha and can start producing as of the second year of planting in contrast to other varieties that begin production in year three. But without proper fertilization and inputs, yields may drop down by half. Validation of the World Coffee Research varieties or hybrids has been limited due to the associated evaluations costs, which cannot be financed by the small farmers.
According to ANACAFE, average yield in MY 2021/2022 was 7.7 60-Kg bags/Ha, with a density of plants of 86 percent, with 9 productive branches per axis, 4 productive knots per branch and 7 fruits per knots. The above contrasts with higher reported yields of 46.0 60-Kg bags/Ha, 100 percent density, 40 productive branches per axis, 9 knots per branch, and 25 fruits per knot in farms investing in inputs, labor, and technology. To scale up the technology transfer required to obtain higher yields, given the lack of extension services in coffee, ANACAFE implements the Sustainable Profitable Model, which consists of model farms where farmers can receive training, with the commitment to train others in the community through the establishment of replicas. Through such methodology, ANACAFE has scaled training capabilities for farmers, starting from 62 model productive farms up to 426 productive farms in the past harvest established in total 844 Ha.
Consumption: Consumption in MY 2022/2023 is forecast to remain steady at 625,000 60-Kg bags. The in-house increased consumption of coffee after the pandemic had a permanent positive effect in consumption in Guatemala. Consumption of soluble coffee is still higher than roasted ground, though there is a trend to increase roasted ground as coffee shops expand in the urban areas of Guatemala.
Stocks: Guatemala doesn´t manage government held coffee stocks; coffee stocks are managed privately by coffee mills at big farms, associations, or cooperatives. Stocks for MY 2023/2024 are forecast at 13,000 60-Kg bags, 38 percent less than the stocks in MY 2021/2022, but slightly above MY 2022/2023.
Trade: Guatemala was the 9th largest coffee exporter in the world in MY2021/2022, with coffee making up 25 percent of the agro-industrial exports of Guatemala, and the third most important export product of the country. Total exports in MY 2021/2022 fell 10 percent. Table 3 shows the export matrix for MY 2020/2021 and MY 2022/2022. The United States continues to be the major single country export destination importing almost 1.5 million 60-Kg bags, 16 percent above the previous year. Overall, North America buys 52 percent of the Guatemalan exports, followed by 22 percent imports from Europe, and 22 percent imports from Asia.
Though bean exports continue to be the most important type of Guatemalan exports, roasted and soluble coffee is also exported, mainly to the United States, El Salvador, and the rest of the countries in Central America. Guatemalan coffee exports in MY 2021/2022, which closed at 3.35 million 60-Kg bags mostly consisted of arabic strictly hard bean in 82 percent, followed by semi hard in nine percent, prime (three percent), one percent of robusta and five percent of others. The strictly hard bean exports decreased six percent as a result of the lesser quality harvest impacted by high fertilizer costs and lack of labor.
Exports in MY 2023/2024 are forecast at 3.17 million 60-Kg bags, 2 percent down from exports in MY 2020/2021 (3.22 million 60-Kg bags). Imports in MY 2023/2024 are forecast to slightly raise 3 percent, mostly soluble ones. Soluble imports are mainly sourced from Mexico and Colombia.
