The Guatemalan union of the sector announced that the reactivation plan they are preparing is based on the renovation of coffee plantations within a period of five years.
The National Coffee Association (Anacafé), is working in conjunction with the ministries of Public Finance, Agriculture, Livestock and Food and the Inter-American Development Bank, on a plan for economic reactivation of the sector, which could be ready in the coming weeks.
During the first half of the 2012-13 cycle, Honduran coffee exports generated $420 million in foreign exchange.
According to Victor Hugo Molina, manager of the Honduran Coffee Institute (Ihcafé), the volume of exports achieved was 2.9 million quintals, which represents 50% of what it expects to sell during 2013.
"The foreign exchange earned makes the coffee the country's main export," said Molina.
$300 million will be required for pest control alone, and more than $1 billion to renovate the plantations that have been affected.
The figures which have been gathered unofficially indicated that in excess of 1.7 million quintals of coffee have been destroyed by the fungus known as rust in Honduras, Nicaragua and El Salvador.
The president of the Coffee Exporters Association of Honduras (Adecafeh), Omar Acosta says that the loss in Honduras could reach two million quintals, "The Ihcafé says that no damage has been done, butwe do not understand why they are lying. They should have a plan for the country because it is a serious problem, we all know that there is a strong impact from rust and we believe there is a damage of between 25% and 30% of the crop, which amounts to two million quintals. "
The entry into force on 19 October of the FTA with Chile will expand opportunities for Nicaraguan products.
Over 97% of the supply of Nicaragua’s exportable products now enters the Chilean market duty free. According to the manager of the Export and Investment Center (CEI in Spanish), Roberto Brenes, in the next few years, exports may be duplicated.
In April 2011 a quintal was quoted on the Intercontinantal Exchange at $300. A month ago it was $182, and now the price per quintal is $157.
The steady fall in coffee prices is causing concern amongs Central American coffee growers. By last Friday, the contract for delivery was $ 157 per quintal, $3 less than the previous day.
An article in Elperiodico.com.gt states that "grain prices closed this week down $10 per quintal.
In the past 5 months, Salvadoran farmers produced 288,000 quintals less compared to the same period in the previous cycle.
Salvadoran coffee exports have fallen by 34.8% during this harvest (October 2011 to September 2012), while the profits from the sale of the grain are down $19 million, reported Laprensagrafica.com.
As of February (the fifth month of the coffee cycle), El Salvador had exported 542,365 quintals of coffee, a decrease of 288,995 quintals as compared to the same period of 2010-2011, which recorded sales of 831,360 quintals. This represents a decrease of 34.8%, according to data from the Salvadoran Coffee Council (CSC), and results in a decrease of $19.41 million of revenue in the sector.
The price of a quintal has fallen below $200 due to a Brazilian "superharvest", with industry leaders recommending caution.
On Tuesday March 6th a quintal of coffee traded at $192.95 on the New York Stock Exchange, down 4.24%, lower again than at the beginning of the week when it was recorded at $201.5.
A report by the National Coffee Association (Anacafe) of Guatemala said, "This fall began in London, due to liquidation by speculators and domestic sales."
They are now grinding their own grains and connecting directly with specialty roasters who pay high prices for the product.
Seeking protection from the historical ups and downs in the price of coffee, there are several producers who are trying to transform the drink into an exclusive product, as with fine wines. They want to establish a premium brand and market it directly to roasters worldwide.
Widespread purchases by investors hit the markets influenced by a weak dollar and rising oil prices.
The report by the National Coffee Association of Guatemala said that bean prices for "C" type contracts continue to rise, reaching 1997 levels.
"Coffee prices in "C" contracts set a 13 year high. Investors hit the markets influenced by a weak dollar and rising oil prices, in addition to limited deliveries of March contracts, set up a scenario where certified inventories remain low. The Robusta coffee market also went on the rise, due to political instability in Côte d'Ivoire which still does not find a short term solution, causing distortions to supply in Robusta coffee and cocoa. Weather reports indicate that widespread rains caused some flooding in major coffee areas of Sao Paulo and Minas Gerais, which are favorable to alleviate dry conditions experienced during the month of February. Coffee for delivery in March 2012 is supported at 263.00 and resistance at 285.00."
While coffee price continues to rise, Guatemalan coffee growers are confident they can cover shortages in other countries of Central America.
The president of the National Coffee Association, Ricardo Villanueva, said that demand from other countries suffering shortages like Costa Rica, El Salvador and Nicaragua, could be met without problems by Guatemala, where there is an estimated existence of 100.000 quintals of high quality coffee."
It hopes to collect 5 million quintals, at a time when the price of coffee futures is above $ 200.
The recovery of road infrastructure in bean producing regions will be vital to the success of the harvest, the volume positions Honduras as the largest Central American producer and third in America.
At the opening of 43rd Coffee Congress taking place in San Pedro Sula, Asterio Reyes, president of the Honduran Coffee Institute, IHCAFE said that Honduras, "according to statistics from the International Coffee Organization, is the only country which has always had rise in production, unlike other countries like Colombia, which has cut its production by around five or six million bags, Vietnam and others.”
According Anacafé, international grain buyers are delaying their purchases, waiting for prices to fall.
The international price of coffee is at record levels above $ 210 per bag. Directors of the National Coffee Association (Anacafe) explained that international buyers are expecting prices to fall and added that producers are finding it difficult to sell the product at these prices in the global market.
The Association Agreement between Central America and the European Union is “historical”, stated José Adán Aguerri, president of COSEP, the Superior Council of the Private Enterprise.
According to him, Nicaragua gets many benefits from the agreement, including assuring some key beneficial tariff conditions when exporting to Europe, which include zero tariffs for all its agricultural goods and 99% of the country’s industrial production.
When you see your neighbor in trouble, make previsions and be prepared.
In 2009, Colombia’s coffee production was 32% lower than in 2008. Measured by sacks, production fell to 7.8 million from an average of 11.5 million, a reduction of $224 million in sales.
Maybe even worse than losing potential income, Colombia’s image before international buyers was hurt, as they had to turn to other markets to cover the lack of Colombian supply.