How a government program is revitalising the Salvadoran coffee industry


The Salvadoran coffee industry has recently seen some tough times and dramatic drops in coffee crop yields, but a new government program, backed in part by the International Development Bank, is hoping to turn the country’s fortunes around.

Economically, coffee is the backbone of the Salvadoran economy, making it the single most important agricultural product in the Central American country.

Therefore, any hits that the coffee industry takes are not just a loss to the coffee producers and local farmers, they have negative economic and social consequences.

In terms of coffee exports, there has been a significant reduction in recent years.

Back in 2000, the country once exported about 330,000 tonne (3.3 million quintals) according to the Ministry of Agriculture and Livestock, in 2018 coffee exports fell to about 74800 tonne (748,000 quintals).

In the 2017/18 crop year, the sector generated 45,000 jobs per year but, compared to the 2000 crop, approximately 62 per cent of jobs have been lost in the coffee sector.

“We have been hit by climate change, no doubt about it,” says Ricardo Esmahan of the Association of Beneficiaries and Exporters of Coffee in El Salvador (ABECAFE). “The sharp drop to 748,000 quintals (about 74,800 tonnes) was because we had an explosion of fungus (coffee rust or la roya in Spanish). It was a perfect storm: we had a tropical storm just before the crop, then we have a hot climate made worse by climate change and that’s a hot soup for fungus to grow. That is one of the reasons that production went down but it has never recovered.”

Esmahan says that poor prices in the past have also resulted in a lot of debt in the sector and that, while coffee prices have recovered, the industry needs to look to the future.

“Bourbon and Pacas, some of the El Salvador’s trademark coffee varieties, are weaker and are not able to stand up to this type of disease, we need to explore a renovation of the industry.”

This includes deploying improved varieties for farmers while also attending to larger issues that help sustain coffee production over the long-term, such as forest ecosystem health, smallholder food security, and marketing support for producers.

“But one of the reasons we are having difficulty doing this is the debt problem that the smallholder producers have,” Esmahan adds.

In response to the declining coffee crops, the Salvadoran government has started the wide-ranging program to Strengthen Climate Resilience of El Salvador’s Coffee Forests, which began in November 2021.

Inspired by Colombia’s Castillo renovation program in the mid-2000s and Honduras’ Lempira program in the early 2010s, it is hoped that a conscious transformation of the coffee industry would not only halt the decline but build a sustainable industry into the future.

The total projected cost of the coffee renewal plan is US$377 million. The International Development Bank (IDB) is providing a loan for US$45 million, of which US$25.5 million is for the renewal of coffee plantations, US$6 million is for marketing, US$10 million is for the modernisation of the coffee sector, and US$4.5 million is for program administration.

A series of nurseries have been testing suitable varieties to help restore El Salvador’s coffee producing industry.

Overhauling the coffee industry

Otho Ludwing Argueta Recinos is the coordinator of the modernisation, innovation and extension of the El Salvador coffee sector for the Ministry of Agriculture, the person responsible for overseeing the bold coffee renovation project.

Argueta says the program aims to roll out 24 million rust-resistant plants in the next five years. A series of nurseries have been testing the plants and they settled on 14 varieties that would be suitable. Then, the government whittled those varieties down to just seven types of coffee plants: Cuscatleco, Marsellesa, Parainema, Catisic, Anacafe 14, San Pacho, Pacamara, Borbón and Tekisic.

With the support of the IDB, a study called the Design and Structuring of a System for Traceability of Vegetative Material of Coffee in El Salvador was carried out by World Coffee Research. The project is the first coffee renewal program to use the single nucleotide polymorphism (SNP)-based genetic testing to assure that the plants are distributed are the correct variety.

“Finding the best coffee variety is the critical first step,” Argueta says. “However, it is also crucial to ensure that when growers buy seeds or seedlings, they are getting what they paid for; healthy plants that are the correct genetic type.”

Argueta says it is not uncommon for a coffee farmer to purchase plants that turn out not to be the variety he thought they were. This can have serious consequences, if for example the producer thought he was buying a coffee variety resistant to rust and it turned out not to be.

“The genetic purity of a variety is one way to reduce a grower’s risk. Some plants may look healthy at a young age, but have problems, such as segregation of phenotypic traits such as plant height, leaf type, or colour. Or, there are also damages such as bent roots, which prevent their optimal development and useful life,” he says.

Argueta says that, while this level of detail can seem obsessive, the aim is to avoid the pitfalls of other coffee renovation programs. He says they are trying to avoid the traps of other programs that often mass produce new plants with little thought for quality, and the result is a high mortality rate or low yield, meaning the plan is a huge waste of time and money. Taking care at the beginning to get the genetic testing right is a way to protect farmers against such losses in the future and not waste a large investment of government funds.

But Argueta stresses that plants are just one part of the renovation. The project will look at all aspects of reviving the coffee industry in El Salvador.

“The program has two general objectives: the first one is to maintain the ecosystem services provided by the coffee forest,” he says. “And the second one is to improve the food security of small coffee producers and their families.

“The adoption of climate-smart agricultural technologies is providing some coffee plants and services to improve the agricultural ecosystems and help promote the renovation of 7000-hectare coffee plantations.”

This includes the adoption of coffee under shade in agroforestry systems in association with fruit, timber and service trees, giving producers increase income and maintaining ecosystem services of coffee forest. The goal is to benefit 7500 producers.

Argueta says the other objective is promotion of incentives for business and marketing. “We are supporting 40 co-operatives and 70 youth entrepreneurships, and also looking at the modernisation of the governance of the coffee sector,” he says.

This holistic approach is also taking into account the various roles that gender and youth play in the country’s coffee industry and working to incentivise women and young people to re-enter the industry and help stop the loss of jobs seen over the past few years.

The plan involves the partial financing of business plans (80 per cent of the cost) for a maximum amount of US$30,000, training in management and marketing at the association level, financing of youth entrepreneurships in the coffee chain (for a maximum amount of US$15,000), training for women in all links of the coffee chain, and the design and implementation of a marketing plan to promote Salvadoran coffee at the national and international levels.

There are also plans to look at planting different types of crops that can act as shade trees for the coffee forest and bring in extra income for farmers.

There is a key understanding that for a thriving industry, it is necessary to look not only at the plants but the business success of those that grow them. Since 2016, El Salvador has begun a process of renewing coffee crop. To date, approximately 20,000 hectares have been renewed. This process is complemented by the IDB Climate Resilience program that began at the end of 2021.

Overcoming the obstacles

Featured is Emilia Umana at a coffee nursery in Guatemala. El Salvador producers hope single nucleotide polymorphism-based genetic testing will assure that plants distributed are the correct variety.

This renovation is not without its challenges, even if the genetic testing turns out to be worth the initial investment. Argueta says that one of the simple problems in rolling out the program is one of safety for the workers who have to head out into some of the riskier areas of regional El Salvador.

“We have serious problems because we have different high level of delinquency and very high-risk areas that limit our operations and we need security systems that support us to get out and assist the producers and the families in the rural coffee industry,” he says.

Ricardo Esmahan of ABECAFE has his reservations but they are more focussed on the funding of the project in an industry that has yet to recover from the past few years of downturn. The government may have the loan from the IDB but it is up to them to raise the rest of the money and he is not sure that there would be enough funding to cover the large-scale aims.

“We do have our doubts about the take-up because many producers have stopped growing coffee altogether because they went broke from the years of low international prices. They went broke because of climate change and now they cannot afford the costs of fertilisers because they are going through the roof,” Esmahan says.

He adds that the coffee industry has been presented with documentation from the El Salvador Government about the investment required for the renovation of 50,000 manzanas (about 34,900 hectares) of coffee plants, ratified by the Salvadoran Congress and is optimistic about the future.

“The coffee sector used to be the backbone of the Salvadoran economy. [It’s] not anymore, but we could be again hopefully,” he says.

This article was first published in the July/August 2022 edition of Global Coffee Report. Read more HERE.

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