USDA ATTACHE: Guatemala’s Coffee Production Increasing 10% in 2021-2022

USDA ATTACHE: Guatemala’s Coffee Production Increasing 10% in 2021-2022

Coffee Network (Bogota)-Coffee production from Guatemala is estimated at 3.47 million 60- Kg bags in the coffee year 2021-2022, a 10% increase compared to 3.15 million 60-Kg bags estimated for the 2020/2021 harvest, hit by hurricanes Eta and Iota at the beginning of the harvest, while exports in 2021-2022 are forecast at 3.2 million 60-Kg bags, the US Department of Agriculture, said.

Guatemala’s coffee planted area forecast for 2021/2022 is 305,000 hectares (Ha), just as in the past three years, but harvested area is forecast to increase to 270,000 Ha as bearing trees increase to 1.2 billion. This represents a slight increase of 2% in harvested area. Harvested area for 2020/2021 is estimated at 260,000 Ha with 1.15 billion bearing trees. This area is 2% below 2019/2020 but is not related to the number of bearing trees but to the reduction in hand labor resulting from the COVID-19 pandemic that impacted total harvested area, especially in northern Huehuetenango in the western highlands and eastern Jalapa. These departments were affected by the pandemic and many pickers were afraid of traveling in the country.

 In addition, at the peak of the pandemic (March-July), the government of Guatemala established some mobilization restrictions. Even more important factor that reduced the 2020/2021 harvest was the impact of hurricanes Eta and Iota, which hit Guatemala at the beginning of the coffee harvest season in November of 2020, affecting roughly 10,500 Ha in 21 municipalities located in the departments of Alta Verapaz, Chiquimula, Huehuetenango, Izabal, Jutiapa, Quiche, Santa Rosa, and Zacapa.

According to ANACAFE estimates, 945 Ha were destroyed due to landslides, flooding, and felled trees. The effects of Eta and Iota will also impact the 2021/2022 harvest.

EXPORTS

Guatemalan exports in 2021/2022 are forecast to increase 8% to 3.16 million 60-Kg bags, slightly recovering from exports estimated to drop to 2.89 million 60-Kg bags in MY2020/2021. Exports in MY2019/2020 closed with 3.22 million 60-Kg bags. By far, the United States is Guatemala´s main export market, with 37% of the market share, followed by Japan (14%), and Canada (11%) for MY2019/2020.

These three countries represent almost two thirds of the Guatemalan coffee exports.

 Guatemala expects to soon enter into the Central America-South Korea Free Trade Agreement, which was signed in 2018, ratified in 2019 and entered in effect for most of the Central American countries between 2019 and 2020, with the latest addition of Panama on March 1, 2021. Guatemala is the only country still pending approval and ratification of the agreement. South Korea may become an important export market once the agreement is in place for Guatemala, as the rest of the Central American countries got immediate access for coffee; at present Guatemalan coffee exports are affected by an 8 percent tariff on roasted coffee and 2 percent on green coffee.

Organic coffee only represents 4 percent of total exports, Guatemalan organic coffee exports continue their upswing, already reaching 154,000 60-Kg bags in MY2019/2020, with a 15 percent increase for the second consecutive year.

Coffee continues to be one of the main agricultural export products and though export values reached above $1 billion in MY2010/2011, with a major drop in MY2012/2013, export values have kept on the $650-$750 million for the past eight years. Export value in MY2019/2020 was $657 million, with 82 percent strictly hard beans, 9.7 percent hard, 3.5 percent prime and extra prime, 1.3 percent Robusta and 3.5 percent of others.

CONSUMPTION PLUMMETED

Consumption is estimated to drop 38% compared to 2019/2020, which closed with 678,000 60-Kg bags. The significant reduction in the estimate for 2020/2021 is directly related to the COVID pandemic and the closing of hotels, restaurants, and coffee shops during close to six months in 2020. The consumption trend went from drinking at coffee shops to drinking at home, both domestically as internationally. The roasted coffee exports found new buyers in El Salvador, Belize, Costa Rica, Panama, the United Sates, and Canada. But overall, the 38% drop in local consumption brought down per capita consumption in Guatemala from 2.4 Kg to 1.73 Kg. Consumption of roasted-ground coffee in MYY2021/2022 is forecast to increase to 343,000 60-Kg bags, a 23% increase compared to the 2020/2021 estimate of 264,000 60-Kg bags. This is an expected trend considering that Guatemala’s COVID vaccination plan is significantly delayed, with less than 1 percent of the population vaccinated as of May 2021, which will maintain limited attendance to coffee shops, restaurants, and hotels. In addition, consumption at home will maintain as telework measures are kept in place and schools and universities don´t have permanent physical attendance.  Consumption in 2021/2022 will slightly recover as hotels, restaurants, and coffee shops open, but continue with limitations due to less than 1 percent of the Guatemalans being COVID vaccinated as of May 202

AREA

Guatemala coffee planted area in 2021/2022 is forecast to remain steady at 305,000 Ha, but harvested area will increase 2% as planted trees mature.  At least 93% of the coffee in Guatemala continues to be grown under shade, much of it on steep mountain ranges in the primary water sources areas, which creates an agroforestry system that protects watersheds, reduces soil erosion, and allows for nutrient recycling. Coffee forests represent 7 percent of the national forest cover.

To support coffee farmers in areas with increased rust incidence, ANACAFE is promoting substitution with Coffea canephora var. Robusta (FRT clones). These clones were introduced in 2017 and are already in production, providing increased yields at lower costs, and are a feasible option for affected coffee farmers, some of whom had planned to drop coffee cultivation altogether. Guatemala has made progress on renovating its coffee plantations. During 2019/2020, roughly 65,900 Ha of coffee were renovated, with 47,697 Ha coming from tissue cultured plants and 18,215 Ha from rust resistant varieties planted underneath 1,200 meters above sea level. Above 1,400 meters above sea level, substitution continues with traditional varieties such as Caturra, Catuai, Burbon, Geisha, and Pacamara.

ANACAFE

The Guatemala’s coffee association ANACAFE has divided Guatemala into seven productive regions. These regions have different characteristics which are closely monitored to determine weather conditions, pest and disease incidence, productivity, quality, and technical services required. This is done with the aid of ANACAFE´s more than 100 weather stations combined with information from the Vulcanology and Meteorology National Institute (INSIVUMEH), through its Geographical Information System (GIS) portal. In addition, ANACAFE recently launched its Better Soil – Better Coffee platform, which based on the soil chemical analysis, suggests a nutrition program. ANACAFE also provides technical support to coffee farmers on genetics, plant density, plant renovation, soil conservation, shade management, fertilization and corrections, integrated pest and disease management, effective administration of the plantation, quality throughout the production cycle, harvest, and post-harvest, sustainable practices, and quality management.

 The U.S. Government supports Guatemalan coffee production through USDA´s Food for Progress Programs in the Guatemalan western highlands and USAID´s coffee value chain program. USDA´s Food for Progress programs are implemented by Counterpart International through the PROCAMPO project and TechnoServe through the MOCCA regional project. USDA´s PROCAMPO is supporting ANACAFE to increase effective service coverage to provide integrated technical assistance to farmers through capacity building, organizational strengthening of producer groups and market access. This project has supported close to 1,700 coffee farmers from region II at Sololá, who have increased their yields in 890 Ha. PROCAMPO and ANACAFE have increased the competitiveness of 56 coffee organizations around the basin of Lake Atitlan, one of the most beautiful volcanic lakes in the world. These organizations have been directly connected to local and export markets, receiving up to $164 per 100-pound bag of coffee in green bean equivalence (GBE).

Policy

On October 30, 2013, Guatemala published Legislative Decree 12-2013 to extend the national coffee trust fund originally established through Legislative Decree 31-2001, published on August 1, 2001. Decree 12-2013 extends the trust fund until October 23, 2026. The trust fund is administered by Banrural Bank and is to be funded by the government of Guatemala up to $100 million. The decree assigns the Ministry of Agriculture of Guatemala as the responsible entity to secure the adequate use of the trust fund, which can be used to buy agricultural inputs, mainly fungicides to combat coffee rust, and fertilizers. In addition, credits for farmers are offered with a 2% annual interest rate for small and medium-sized coffee farmers, while big producers get a 3% annual interest rate.

Meanwhile, On October 1 of 2020, Guatemala retreated from the International Coffee Organization, recognizing the lack of effective support to improve the final prices paid to coffee farmers in developing countries.

By Diana Delgado