Climate-related extreme weather is making coffee growing increasingly risky in Central America. Moreover, a range of factors including volatile international coffee markets and widespread inefficient management mean that farmers are not able to reap increased rewards for taking on this risk. This creates pressure for farmers to diversify away from coffee production, although there is evidence that relatively simple changes to growing practices can be quite effective in countering coffee rust disease, which has decimated production in the region in recent years.
At the recent annual Sintercafé coffee trade conference there was a widespread view that climate change is already affecting coffee production in the region. Indeed, the seven Central American countries suffer disproportionately from flooding, hurricanes and other natural disasters. For example, Costa Rica, Honduras and Guatemala declared states of emergency earlier this year after drought had severely affected agriculture. Climate scientists believe that Central America is likely to experience warmer and drier conditions in future, meaning that more severe droughts are likely.
Coffee rust disease
Climate change has been blamed for the outbreak of coffee rust disease (hemileia vastrix or roya as it is known locally), which has been destroying plantations throughout Central America over the past three years. Rust fungus has been prevalent at low altitudes in the region since the 1970s, and farmers have learned to live with it. However, it has spread to higher altitudes where the main plantations are located, as warmer weather and greater humidity have helped it to grow.
According to the UN Food and Agriculture Organisation (FAO), the disease has affected at least 505,000 ha of plantations, which is around 55% of the total area. As a result, coffee exports from Central America have dropped, from US$3.63bn in 2011-12 to US$2.4bn in 2012-13. In Guatemala 70% of coffee crops were destroyed last year, leading the government to declare a national state of emergency. In El Salvador, the infection rate was 74%, while in Costa Rica it was 64%, while Nicaragua and Honduras had lower rates of 37% and 25% respectively, according to International Coffee Organisation (ICO) data. The fungus has also hit coffee production in southern Mexico, particularly the state of Chiapas. In addition, there have been outbreaks in Colombia and Peru, but on a much smaller scale than in Central America.
In Central America, ageing coffee plants have exacerbated damage to the region's economy. For example, in El Salvador many coffee trees are 40-50 years old. In contrast, in Colombia, whose coffee sector has performed particularly strongly in recent years, some 65% of coffee trees are under five years old.
Coffee rust disease initially had a dramatic effect on coffee prices. The ICO annual average composite coffee price rose from US$1.47/lb in 2011 to US$2.10/lb in 2012 as the widespread nature of the outbreak became apparent. However, by the following year this had dropped back to US$1.56/lb, although prices remained higher for superior quality arabica varieties of coffee, which tend to be grown in Central America. The relatively brief spike in prices reflects a range of factors, including the volatility that typically characterises international coffee markets; production in South America, particularly Colombia and Brazil, replacing that from crops destroyed in Central America; and pressure from major purchasers of coffee which absorbed the rise in prices, rather than passing it on to customers.
Coffee price volatility has also meant that Central American producers cannot be sure of being rewarded for the increased risk involved in growing coffee. Moreover, widespread inefficient management, as well as ageing crops, have eroded many of the potential financial gains that could have been enjoyed as a result of rising coffee prices. This has led to widespread diversification, both into other forms of agriculture such as maize and beans, small livestock, and fruit and vegetables, as well as illicit crops. Diversification is likely to continue, with many farmers in the region potentially moving out of coffee production altogether. Indeed, while most US coffee imports come from Asia, there is concern in the US that displaced coffee workers could either attempt to migrate illegally to that country, join organised criminal gangs or grow illicit crops instead of coffee.
As base temperatures in the region continue to rise, coffee rust disease and similar problems are likely to become even more serious. The FAO has already begun a programme to install an early warning system in every country in Central America; this will use mobile phones and the Internet to track the spread of the fungus in real time. In addition, the EU has pledged EUR750,000 (US$1m) to help those most affected, while the US government has offered to help to fund research into rust-resistant varieties of coffee.
However, Costa Rica offers evidence that attempts to mitigate the effects of disease can be relatively effective. Although the country has been badly affected, it has sought to make coffee production more sustainable and less vulnerable to climate-related disruption. For example, Nationally Appropriate Mitigation Actions (NAMA, or measures used to control greenhouse gas emissions) have led to a reduction in coffee's carbon footprint. The government has also funded environmental services that incentivise sustainable farming practices. Although coffee production fell by 26.7% between 2012 and 2013, the Instituto del Café de Costa Rica (the Costa Rican coffee institute) estimates that the harvest will grow by 4.5% in the 2014-15 season.
Nonetheless, farmers throughout the region need financial and technical assistance to enable them either to control the disease using chemicals or switch to producing other viable crops. There are also potentially sustainable ways to control the disease using inexpensive non-chemical techniques, such as pruning coffee plants and controlling the amount of shade that they receive. Indeed, major purchasers of coffee have been instrumental in working with key producers to ensure more sustainable production practices. These methods, if more widespread, could help to sustain the industry in the face of greater risks.