In December 2018, it was reported that the international price of a pound of coffee fell to $1, which is equivalent to a 12% drop compared to the same month in 2017.
Data from the International Coffee Organization (ICO) detail that in the last two months of last year also reported a decline in the price of the pound of coffee globally, in this case was 8% as it declined from $1.09 to $1.
Without specifying how or where the resources were obtained, the new government plan aims to invest $150 million in debt restructuring and $150 million in renovating coffee plantations.
The "coffee table", consisting of representatives of the Sanchez Ceren administration and members of the opposition party ARENA, presented a new plan that aims to designate $300 million to debt restructuring and renewing plantations. Although for most producers the deal sends a positive message, since it is the first time a consensus has been reached between the two main political forces, the government did not detail where or how the resources to execute the plan will be obtained.
The growing debt now exceeds $180 million and a lack of funds to invest in research and renovation of the park is increasingly reducing the possibility of the industry improving.
For companies in the coffee sector, with each passing year the situation is getting worse.Not only are the effects of weather on plantations hurting their performance, but so is lack of investment in research and funding necessary for an activity that is becoming less competitive compared to other producers and exporting countries.
The Guild of coffee producers has highlighted a need to provide certification of origin for national seeds, not only imported ones, in order to improve the sector's performance.
Currently the specialized division CENTA-Café is the body responsible for certifying seeds, however, the company argues that it only verifies if available seeds meet the required characteristics. Therefore, the Coffee Association is calling for certification of 14 million rust resistant seeds "... which became plants and can be planted this year."
The Executive is proposing to reform the scope of the law and charge a "registration for coffee production fee" of $0.50 per hundredweight.
Despite the outbreak of coffee rust, the debt of $200 million and the funding crisis facing the coffee sector, the Salvadoran government intends to collect more taxes. Currently the bill raised by the Executive Branch is being analyzed by the agricultural legislative committee.
The fungus has propagated in more than 70% of plantations, similar to the level seen in 2012, when the outbreak of coffee rust first emerged in the region.
Of the 14 departments 13 have already reported infestation on coffee farms especially in medium and large sized shrubs.
The unification of all entities involved in coffee trading could provide a way out of the financial crisis facing the sector.
In El Salvador internal division in the sector is evident. Currently there are 4 institutions dedicate to coffee: the Centa, Procafé, the Salvadoran Coffee Council and the Coffee Association. Union representatives say that there should be one institution in order to more effectively address financial and technical problems.
Salvadoran coffee growers are decrying the fact that in order to qualify for a loan they must meet up to 17 requirements with financial institutions.
Among other things, the banks are asking coffee producers for 'the balance sheet and income statement at the end of last year, with ruling and notes, a trial balance which is not less than three months older than the date of application for the loan. They must also submit a projected cash flow, financial statements of related customers and records of the volume of delivery of coffee processors in the past four harvests."
The 2010/11 crop has already sold 824.000 bushels at an average price of $ 165.45.
41.20% of the crop has been sold at very good prices, although below this year´s maximum price of $200.50 at the NYSE.
The president of the Salvadoran Coffee Council (CSC), Ana Elena Escalante told Elsalvador.com, "... on the 31st of August, 677,470 bushels had been sold at an average price of $ 163.57, as of September 30th 53.278 units more were sold at $ 189.19 and by October 21st, another 93.622 at $ 165.50."
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