For most of the past decade, rust disease has been among the most damaging crop pests in the world’s Arabica growing regions. It’s for this reason that alarm raised about the current attacks in Central America is one to be taken seriously. Across the region, governments have declared national emergencies. Coffee officials, producers and traders are openly talking about the “rust disaster” rapidly turning into a social crisis. Some are even saying the current situation could prove more dire for farmers than when coffee prices collapsed just over a decade ago. “The rust outbreak, combined with low prices in the market, has turned into a disaster and the social impact will be severe because we are not only talking about the loss of harvest, but a massive loss of jobs too,” Nils Leporowski, President of the National Coffee Association of Guatemala, Anacafe, tells Global Coffee Review. “We have lost 100,000 direct jobs already and this will affect millions of people.” Figures released to date show job losses in Central America already surpassed 300,000. With the number of cherries to pick diminishing rapidly, that figure could surge to half a million before the end of the year. The latest wave of rust was first reported across Central America and the Caribbean in late 2011. Rust is caused by a fungus that first attacks the leafs and stems of coffee trees and results in trees losing foliage and becoming too weak to sustain any fruit at all. “We saw the first outbreaks in December 2011 in the Dominican Republic, but at that time it did not appear to be anything out of the normal,” says Maria Isabel Balbuena of Fedecares, a group of cooperatives with 7600 producer members. “Then, in only six to seven months, the rust was everywhere. In the current crop we are not going to have more than 300,000 bags.” Production in the Dominican Republic, which shares the Hispaniola Island with Haiti, has seen output slump to around half of the 1 million bags it produced up until the late 1990s. The Caribbean used to produce over 2 million bags, however the past 10 years of relentless hurricanes has cut its production in half. “In the next 2013-14 harvest we won’t have any coffee at all and the last report we received was that rust is now also all over Haiti,” says Balbuena. “This could be the end of coffee production here.” Preliminary estimates for losses from the current 2012-13 harvest in Central America and Mexico are for production to drop a minimum of 20 – 30 per cent. This could result in a drop to between 13 – 15 million bags, from a region that accounts for 25 per cent of the world’s Arabica exports. Initial forecasts for the region were looking for a harvest of 18.5 million bags. “In Central America, outbreaks of coffee leaf rust have now been reported in all major coffee producing countries. This outbreak could have serious long-term implications for the production of Washed Arabicas in Central America,” International Coffee Organisation (ICO)’s Executive Director Roberio Silva said in his last market report. The report stated that the region stands to lose 2.5 to 3 million bags. Private analysts have been quick to not only agree with the ICO about the extent of the situation, but to say these official production loss estimates appear conservative. “We are going a step further than the ICO,” Albert Scalla, Senior Vice President of Miami-based INTL Hencorp Futures L.C. told the IWCA convention in Guatemala in February. “We have a serious problem at a regional level in Central America and the rust situation will clearly have an impact on production.” Scalla described the visible devastation of the current rust attack in farms covering more than half of Central America’s coffee acreage of around 1 million hectares. He went on to compare the situation to the major frost in Brazil in 1994, which saw the world’s largest coffee producer lose half its crop. “The first thing that came to mind, when I saw the pictures of farms, was that this rust attack we are seeing now is to Central America what the frost in 1994 was to Brazil,” said Scalla. According to Hencorp, a conservative forecast suggests that if damage is limited to 20 per cent of production in Central America and Mexico, the 2012-13 crop for the six-country region will drop by 3.7 million bags, to a total 14.8 million bags. But if damage is more severe, at 30 per cent, the world would lose 5.5 million bags of coffee, with regional production dropping to 12.95 million bags, Scalla said. “There is a lot of ignorance about the real impact of the situation,” Henry Hueck, the owner of Nicaragua’s Ramacafe estate group, tells the Global Coffee Review. Local producer groups in Nicaragua say that an average 35 per cent of Nicaragua’s coffee area has been hit. Hueck describes Ramacafe as among “the lucky farms” in the country. “We don’t have more than 20 per cent affected, but it could get worst. Today it rained twice and then we had lots of sun, which is the perfect condition for rust,” he explains. “As people are picking coffee, if they come from a plantation with the same clothing, they will carry the pest over to the next farm they go to work at.” Rust disease has been especially damaging in tiny El Salvador, adding to producers’ decade-long battle with hurricanes, volcano eruptions, earthquakes and more. Official numbers show that 98 per cent of the entire coffee acreage of 152,000 hectares is cultivated with varieties that are extremely vulnerable to plagues such as rust. The Salvadoran Agriculture Ministry has reported that 40 per cent of the tree population is infested. “The problem we have is that 98 per cent of our entire coffee tree population is planted with varieties like bourbon that are highly susceptible to rust. We have 2 per cent planted with varieties that are resistant to rust disease,” says Juan Quijano, a Scientist with the Salvadoran Coffee Research Institute, Procafe. Procafe has said that at least US$400 million would be needed to renovate the 75 per cent of coffee land considered in “urgent need” of renovation. El Salvador remains one of the coffee countries with the most heavily indebted industry, with current debts standing at around US$88 million. The Arabica price hikes of 2010 and 2011 weren’t enough to help them pay off these debts. The government of El Salvador has set aside US$3 million in emergency funding toward fumigation, but growers groups say this is only enough to cover only one application in half of the area affected. Fumigation is a costly affair, at around US$80 – $90 per hectare to apply the three rounds needed, according to producers in the region. Even with fumigation, this would only provide a short-term solution by curbing the spread of the plague. It will take trees at least two to three years to recover cherry production. “The problem with fumigation is that even if you fumigate, if your neighbours don’t, then it won’t work. The rust will come back,” says Guatemalan grower Juan Luis Barrios, who is also a member of the Board of Directors at Guatemala’s Anacafe. Information and figures available suggest Guatemala has been the most severely hit, with Anacafe reporting 70 per cent of the country’s 270,000 hectares of coffee infested. Of the area hit with rust disease, farms are reporting minimum infestation rates of 20 – 30 per cent, with a big percentage reporting infestation rates between 40 – 50 per cent. “In order to bring the outbreak under control in Central America, we need US$300 million and this won’t bring production back next year, only stop further spread of the rust,” says Anacafe’s Leporowski. “And if we want to renovate the entire area that has been hit, we are talking about four to five times that figure.” Honduras and Costa Rica declared national emergencies over coffee rust in January. The region’s smallest growers in Panama say the fungus has affected around 60 per cent of the new crop. Honduras, which surprised markets in the last crop year by producing an unexpected record harvest of 5.5 million bags, had early expectations for a new record crop. However, those hopes have been slashed by losses in the first week of February reported at between 10 – 15 per cent of the crop. Victor Molina, General Manager of the official Honduran Coffee Institute, Ihcafe, said at a local press conference in February that 25 per cent of the country’s 280,000 hectares in production has been infested with rust, and that production losses are expected to reach 15 per cent of the harvest, in addition to losing 100,000 jobs. Some exporters believe the final losses may turn out to be even higher. “The port here normally works in three shifts 24 hours a day at this time of the year when the harvest is at its peak. But, in the last month activity has slowed down to 10 hours a day because there is just not any coffee coming out of the region,” says one large exporter in the Honduran coffee town of San Pedro Sula. In addition to concerns over this year’s crop, the nature of rust disease means that outlook for the 2013-14 harvest is likely to be even more severe. “If we don’t take the needed measures, in 2013-2014 our production could drop by 40 per cent,” said Guatemala’s President Otto Molina Perez, as the third country in the region to declare a state of emergency in early February. Hencorp’s Scalla puts a “conservative estimate” of losses in the next 2013-14 crop cycle at 30 per cent. This will translate into additional losses of 3.44 million bags, for a total crop of 10.36 million bags. Even more worrying, he said, is the very real possibility of losing 40 per cent of the crop. This would see 5.92 million bags drop off the planet in the next crop cycle, with regional total production cut in half to a mere 8.88 million bags. “The problem really will be in the next 2013-14 harvest, and we could see the crop end with close to half of the original production forecast for this year with only 10 million bags, or less, for the Mexico-Central America region as a whole,” he said. The long-term consequences of rust outbreak are evident in Colombia’s production figures. After several years of erratic weather patterns, rust disease broke out in the first quarter of 2010 in the southern coffee producing belt of Narino, Huila and Cauca. By March 2010, producers reported that between 25 – 50 per cent of all coffee was affected. Infestation rates were said to be reaching as high as 70 – 80 per cent in the most severely affected regions. Colombia’s southern regions previously accounted for up to 40 per cent of the country’s total national output. Three years after the initial outbreak of rust disease, the country is still struggling to get production back on track with most analysts pegging the 2012-13 crop to reach around 8 million bags. The Colombian Coffee Growers Federation (FNC) has invested heavily to fight the disease, largely via tree renewal. It will take another three to four years to have 90 per cent of all trees rust resistant. In 2011, the FNC helped finance US$400 million to assist farmers in the renovation process, and provided another $25 million for fertiliser and fungus control. Financial aid will be needed in Central America to replant and prune infected areas. From the moment coffee plantations are fumigated and trees are either pruned or replanted, the natural cycle of recovery takes at least two to three years. This means the earliest hope for recovery is unlikely to emerge until the 2015-16 crop cycle. Until then, the market might be lucky to get anything above 10 million bags from Mexico and the five Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. “The situation is critical and we are alarmed as to what will happen. The impact on the harvest and farms is a disaster, but what are all the people who are losing their jobs going to live on?” says Ana Teresa Beltran, a producer from El Salvador. “In this region many people see the only alternative in the illegal drugs trade.”
Market Reports
Coffee leaf rust attacks in Central America
