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Origin Report - Central America

December’s holiday celebrations are met with the harvest picking up throughout all of the countries and regions in Central America, and practically all of our producing partners have reported starting the harvest in December. It’s a common saying that every harvest is different from the last, and that could not be more true this year. November battered the region with two major hurricanes that left thousands of people displaced, and many countries across the world are still in the midst of the ongoing COVID-19 pandemic. These disasters, both viral and environmental, will certainly have a lasting impact on well-being, infrastructure, and economy. This origin report will take a look at different countries in Central America—including Costa Rica, Nicaragua, Honduras, El Salvador, and Guatemala—and discuss their current state, as well as what we can expect from our partners there in 2021.


The World Market

C-Market Analysis

C Market Candlestick Chart, Nov-Dec 2020
Source: Tradingview

In the month of December, the coffee futures market traded in the range of $1.16 and $1.28 per pound, gaining 8.27% in the month. The year overall saw significant volatility, at times making double digit jumps in a matter of days. The lowest price market saw in 2020 was $0.945, and the highest at $1.355.

Global Coffee Industry Statistics and Analysis

Below are the production, export, and consumption data as of December 2020 published monthly by the ICO. Moreover, the graph below shows the composite index of prices paid for coffee shipment including robusta coffee. This graph can be interpreted as the ‘real’ price paid for coffee globally.

The ICO composite indicator in December increased by 4.6% to 114.74 US cents/lb as prices for Arabica group indicators increased. The largest increase occurred for Brazilian Naturals, which grew by 8% to 114.96 US cents/lb, which is the highest monthly average since December 2019 when they reached 126.36 US cents/lb. Colombian Milds rose by 5.7% to 170.44 US cents/lb and Other Milds by 4.7% to 157.81 US cents/lb, which are both higher than their average in December 2019. However, prices for Robusta fell by 0.5% to 72.04 US cents/lb. In the first two months of coffee year 2020/21, total exports were 6.5% higher at 20.2 million bags compared to the same period last year as shipments for all groups declined except Brazilian Naturals, which rose by 23.1% to 8.31 million bags. Likely due to the impact of the covid-19 pandemic, imports by ICO importing Members and the United States decreased by 4.5% to 129.98 million bags in coffee year 2019/20. While both green and roasted imports declined in coffee year 2019/20, imports of soluble coffee increased by 1% to 14.4 million bags. In coffee year 2019/20, re-exports by ICO importing Members and the United States rose by 0.4% to 46.93 million bags.

ICO Composite Indicator Graph, Dec '18-Dec '20
Source: International Coffee Organization


Costa Rica

A scenic view of Aquiares Estate
Aquiares Estate in Turrialba, Costa Rica

Harvest in Numbers and Statistics

Despite the many troubles in 2020, Costa Rica is expected to produce the largest crop in recent years at an estimated 1.4 million 69 kg bags. This is an 8.83% increase over last year. 25% of this year's crop has been harvested already, and the majority is expected to be picked in January and February. About half of the expected harvest has already been sold, leaving the other half yet to be allocated. 
Source: ICAFE Costa Rica

Coronavirus Impact

 The Coronavirus has maintained a very steady presence in Costa Rica since it ramped up domestically in June. There has not been an exponential increase in cases however, and the healthcare system has been able to handle the influx of patients very well. On December 24th, Costa Rica was one of the first ten countries globally and the second country in Latin America to start the vaccination program. The program is expected to inoculate all citizens 18 years and older by the end of 2021.

Although most economic restrictions have been lifted, the restrictions on industry and agriculture remain. The coffee sector is affected as every farm, regardless of size, must implement strict protocols to guarantee the safety of pickers, and almost all coffee farmers have had to make significant investments in facilities to better accommodate seasonal workers. On a national scale this will improve living and working conditions for farm workers, which is definitely a win. However, the additional cost might be an economic hit not all farmers and micromills will be able to bear.

Finally, the lack of migrant workers due to border closures has been of great concern. Despite campaigns from ICAFE (Instituto del Café de Costa Rica,) there will likely be a shortage of pickers available. This will lead farmers to be less strict in picking and to do fewer harvest rounds per plot, which can cause a general decrease in quality.

Future Outlook for Ally Coffee in Costa Rica

This upcoming harvest will most definitely prove to be a challenge for our producing partners in Costa Rica. Our buyer in Central America, Bram de Hoog, has been planning carefully with the farmers to make projections and look for solutions to any potential problems. In order to maintain the high quality expected from Costa Rica we will double down on our intensive cupping protocol, cupping each day´s harvest before carefully blending them into export-ready microlots.


Nicaragua

Fresh red coffee cherries in a bucket
Freshly harvested cherries at Santa Teresa de Mogoton in Nueva Segovia, Nicaragua

Harvest in Numbers and Statistics

 Nicaragua’s harvest is well under way with more than 50% of coffee harvested in most regions. Harvest in Nueva Segovia tends to run later than in other regions of the country. Unfortunately, no official data is available on exact production, export, or price from Nicaragua.

Coronavirus Impact

 According to Nicaragua’s official reports, as of this writing, only 6,097 cases of COVID-19 have been confirmed. However, local sources estimate that the real number of cases is significantly higher as government reporting has been inconsistent. Few official measures are in place to prevent the spread of the virus, but most of the population wears masks and practices social distancing. Nicaragua will receive a vaccine through the COVAX program, but it is not expected until the second trimester of 2021 and will only cover 20% of the population.

Future Outlook for Ally Coffee in Nicaragua

In 2021 we will continue to strive towards improving our local supply chains in Nicaragua as we welcome new producer partners. Most of our partners here have suffered damages to their farms and infrastructure because of the hurricanes, but we do not foresee any issues for the quality of the coffee or expected export timeframes this year.


Honduras

Pedro Sagastume and Benjamin Paz at the drying beds at Pedro's farm
Don Pedro Sagastume, head of the Sagastume family, and Benjamin Paz, owner of Exportadora San Vicente, at Pedro's farm in Santa Barbara, Honduras

Harvest in Numbers and Statistics

 Honduras is expected to rebound 700,000 bags from last year to 6.1 million bags harvested this year. This is in part thanks to favorable growing conditions coupled with increased application of fertilizers to boost yield. Despite being hit hard by both hurricanes, most of the coffee harvest was not affected as the coffee was still unripe. Nevertheless, the impact on the economy and people will be long lasting.

Coronavirus Impact

 Honduras has 127,945 confirmed cases of COVID-19, maintaining a relatively steady curve without exponential increases. Most of the initial lockdown measures have been lifted and the economy is open without many restrictions. The country has approved the purchase of vaccines but has not yet announced when the campaign will begin.

Future Outlook for Ally Coffee in Honduras

This harvest season started off with two major difficulties by means of consecutive hurricanes battering the country. We are glad all our partners made it through without the loss of life or severe damage to their farms and businesses. We expect that the growth with all producing partners will continue, as well as facilitating the alignment of shipment times and exporting warehouses to further improve the efficiency of that process.


El Salvador

Coffee cherries on the tree at Loma La Glora in El Bálsamo Quetzaltepec, El Salvador
Coffee cherries ripening at Loma La Glora in El Bálsamo Quetzaltepec, El Salvador

Harvest in Numbers and Statistics

 In El Salvador the production and export of coffee continues on a steady decline, with just over 400,000 bags exported in the 2019/2020 crop at an average price of US $1.55/lb. No preliminary data has been made available yet for the 2020/21 crop.

Coronavirus Impact

 Currently, El Salvador has 48,255 confirmed cases of COVID-19 which is relatively few on a global scale. Luckily, the country has not experienced any exponential increases since the start of the pandemic. Most of the economic activity in El Salvador has reopened with mask guidelines and social distancing in place. The country has also approved the AstraZeneca vaccine and will start its vaccination campaign in the first trimester of 2021.

Future Outlook for Ally Coffee in El Salvador

We are excited to bring many different El Salvadoran coffees to the USA as well as the United Arab Emirates in the coming year. Our partners have experienced difficulties because of the hurricanes but are now harvesting and processing coffee with a lot of excitement for what seems like it could prove to be a successful season.


Guatemala

Rows of young coffee plants in La Libertad, Guatemala
Young coffee plants in La Libertad, Guatemala

Harvest in Numbers and Statistics

 Luisa Fernanda Correa, General Manager of Anacafé (Asociación Nacional del Café,) commented in a report that the international coffee price was slightly better than the previous year for the harvest of 2019-2020. This slightly-improved price offsets the decrease in the volume of exported coffee with a better income from foreign exchange.

$657.03 million in exports were generated during the 2019-2020 harvest, 0.99% below the previous year. The coffee year saw 3.19 million bags of 60 kg exported, registering a decrease of 10% compared to the previous harvest. The average price of exportable green coffee was US $1.57/lb. For the harvest of 2020-2021, there is an estimated national production of 3.3 million bags of 60 kg of exportable green coffee.
Source: ANACAFÉ, Guatemala

Coronavirus Impact

 Guatemala has reported a total of 141,074 cases of COVID-19 with a linear increase in cases overtime. Initially the country imposed very strict lockdowns that have helped to contain the spread. The country is currently in the process of acquiring a vaccine, and the government has approved funds for a vaccine to be purchased for 50% of the population.

Anacafé’s General Manager explains that the Technical Assistance department are working on the implementation of indicators that allow them to measure, improve, and increase the coverage, support, and services that they provide to Guatemalan producers. This implementation is made to minimize the possible impact of the pandemic on the 2020-21 harvest, maintaining awareness that people's well-being is the most important priority.

In May 2020, the fourth current provision issued by the Presidency of the Republic allows and obliges companies and institutions related to the Food Industry and Agricultural Production, including the coffee sector, to continue providing their services and activities.

All sectors must comply with the mandatory standards of health, hygiene, and occupational safety, ensuring due diligence to safeguard people's health. These standards are necessary in order to comply with the Plan for the Prevention, Containment, and Response to Coronavirus cases in Guatemala, issued by the Ministry of Public Health and Social Assistance. At all times, we must comply with social distancing of 1.5 meters between each person, mandatory and adequate use of a mask, constant hand washing or sanitizing with alcohol gel, and other recommended health and prevention measures.

Future Outlook for Ally Coffee in Guatemala

We’re excited to be offering a new single farm coffee this year from Los Arroyos in La Libertad, Huehuetenango. Ally Coffee has partnered with the farm for many years now as a contributor to our Ceiba Core Coffee, but this year marks a small change in relationship that we’re looking forward to greatly.

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