GCR linkedin Logo

Honduran health report

From the August 2018 issue.

Despite hefty production and export numbers, Honduras struggles to command the attention it deserves – but maybe not for much longer. Relief work, promotional efforts, and a focus on quality are giving it a much-needed boost.

In the municipality of San Juan, Intibucá, in western Honduras, three communities are participating in a pilot program that child labour relief workers hope will become a replicable prototype for coffee industries around the world. Funded by the Honduran Association of Coffee Exporters (ADECAFEH) and implemented by humanitarian organisation World Vision, the program has built childcare centres in three communities in San Juan, with the goal of eradicating and preventing child labour in the coffee sector through access to education, especially during harvest season, efforts to raise awareness, and involvement from local communities.

San Juan is near Opalaca, one of six prime coffee-growing regions identified by the Honduran Coffee Institute (IHCAFE). “San Juan is one of the most important coffee producing regions of the country, with 1,175 coffee farmers producing approximately 134,000 bags of coffee on 3,772 hectares of land,” says ADECAFEH Executive Director Miguel Pon. 

Considering 20 per cent of Honduran children work and 60 per cent of those are concentrated in the agriculture sector, according to World Vision Project Director Jorge Valladares, San Juan is a prime location for a program like this.

“The fight against child labour is something that requires participation from all the actors involved in the coffee supply chain, so as an export industry we decided not to overlook such a multidimensional problem,” Pon adds. “Child labour is considered a culturally accepted practice by many coffee producers, where children accompany their parents in the maintenance and harvesting of the farms. The labour migration among the different coffee regions and the large number of small producers who work their farms with their family makes it a complex issue.”

That’s where raising awareness and involving the local communities plays an important role. ADECAFEH and World Vision had to, first, help parents, community leaders, coffee producers, and entire communities shift their mindset and understand the consequences of child labour. From there, they could identify advocates and teachers and establish community committees to further efforts in raising awareness.

“The result of this is an alliance between farm owners and workers, parents, and community leaders in favour of care and prevention of child labour,” Valladares tells Global Coffee Report. “So far, more than 200 children have benefited. They’ve been provided with better life opportunities, and protected and cared for at the childcare centres, while their parents are working [in the coffee farms].”

As of going to print, ADECAFEH had approved funding for two more childcare centres in the region that are expected to open in October 2018. Meanwhile, Valladares says the project is being observed as a model to be replicated by other coffee regions and productive sectors as a good practice and a coordinated effort for the prevention and elimination of child labour.

Prices and reputation
While child labour is an issue among coffee-growing regions, farmers are also up against a shrinking workforce as the younger generations opt for more profitable work in urban centres. With the current low prices of coffee on the international market, some farmers can’t afford to pay workers anyway.
Honduran coffee farmers struggle with low prices for green coffee, says Andrew Gaertner, a board member for nonprofit Farmer to Farmer, who has been working with small producers in Honduras since the mid-1990s.

“The prices that they’re getting on the open market are very low, while the cost to grow coffee keeps going up,” he says. Gaertner adds prices have generally stayed the same for the past 15 to 20 years and that even neighbouring Guatemala gets better prices for its green coffee.

Low prices have characterised the Honduran coffee industry for decades, with production and exports starting to slow in line with lower prices back in 1999, according to the US Department of Agriculture’s Foreign Agricultural Service annual GAIN Report. During the harvest years from 2000 to 2004, prices dropped to a record low of 51 US cents per pound. Due to this crisis, the government provided loans and economic support to coffee producers. Most of the loans had a payment period of 20 years, so many Honduran coffee producers are still paying them off.

More recently, initial production estimates for the 2016/17 harvest were based on the effect that low coffee prices had on producers in the 2015/16 harvest season. Following that harvest, farmers didn’t earn the profits needed to meet loan payments.

Honduras’ smallholder farmers can barely cover production costs, says Pon, let alone pay off long-term loans.

“Part of the struggle is that if you’re not getting a high price, then you don’t have a lot of incentive to harvest for quality. And if you’re not harvesting for quality, then you’re harvesting for quantity. And when you’re harvesting for quantity, you’re not going to get a high price,” Gaertner tells GCR of the vicious cycle farmers find themselves in. “It’s sort of a self-fulfilling prophecy.”

Farmer to Farmer prides itself in paying farmers the same high prices every year, regardless of commodity price fluctuations. These prices are limited, of course, to the small co-op that it works with in the Comayagua region of Honduras – another one of IHCAFE’s six prime coffee-growing regions.

Gaertner and other Honduran industry experts attribute those low prices to the country’s near nonexistent reputation on the world market. Although Honduras is Central America’s largest coffee producer, Latin America’s third-largest producer, and the global industry’s fifth-largest producer, the small country struggles to make a name for itself. Honduras is a major exporter of Arabica beans, but Gaertner says they are often used in blends.

Fortunately, thanks to collaborative efforts between industry organisations, producers, cooperatives, and exporters, both production of value-added coffee and exports of specialty coffee have been increasing. Formally established in 2000 as an advocate for the Honduran coffee industry, IHCAFE has launched several initiatives focused on improving coffee quality and helping build a reputation for the country. One such effort was identifying and promoting the six distinct coffee-growing regions.

Another initiative is the Cup of Excellence competition, hosted in partnership with the Alliance for Coffee Excellence (ACE), now in its 15th year in Honduras. The competition brings together a country’s best coffees, awards the top scorers, and then sells them at auction, often for record prices. Honduras broke global competition records for the past two years. In 2017, the top two coffees earned cupping scores of 91.81 and 91.62 and per-pound prices of US$124.50 and US$122.90, respectively – the highest prices ever paid across all countries in the competition’s history. The previous record of US$120.00 was also to a Honduran farmer.

According to a 2015 impact report for ACE, the competition had thus far generated auction sales totalling US$4.4 million and contributed US$25 million through direct auction sales and increased direct and specialty trade for Honduras.

IHCAFE has invested in other regional fairs and promotional efforts. A collection of organisations has also been working to improve local infrastructure and train farmers on best practices , and ADECAFEH started hosting a biennial “Honduran Coffee Dinner” event for major coffee buyers from around the world.
As a result of efforts like these, Honduras has an improving reputation as a source for specialty coffee, according to the ACE impact report. It says Honduras has long had “a reputation as a ‘commodity’ producer [but since 2005 it] has seen faster specialty market growth than the global average”.
Pon also points to Honduras’ notable increases in differentiated and certified coffees compared to conventional coffees, “from 20 per cent of total crop in the 2015/16 harvest year to 33 per cent of total crop in 2016/17”, he says. “As an export industry we have made great efforts and investments with our producers in order to achieve that growth.”

Global warming and Pests
On top of low prices and a lacking reputation, coffee farmers are also battling the effects of global warming. Where possible, a limited number are also moving higher up the mountain in an effort to flee the pests and higher temperatures at lower elevations.

“Higher elevation coffee used to have fewer issues,” Gaertner says, but that’s no longer the case. He points to coffee leaf rust and the coffee borer beetle reaching even the highest elevations in recent years, as well as hotter temperatures, from both global warming and microclimate changes as farmers attempt to mitigate pests by cutting shade trees.

Additionally, last year IHCAFE deemed one of three rust-resistant varieties as no longer resistant,.Rust was present on three per cent of Lempira variety plants. If the rust reaches 15 per cent, coffee production could drop by 20 per cent, according to IHCAFE.

To protect future harvests, IHCAFE and other coffee institutions have short-, medium- and long-term strategies to fight coffee leaf rust. According to the GAIN Report, IHCAFE has established preventative controls and continually provides training and technical assistance to farmers, many of whom are renovating their farms with resistant varieties. Meanwhile, its research & development centre continues to evaluate and work towards developing new varieties.

These initiatives are in addition to the Early Warning System for Coffee Production IHCAFE established during a rust outbreak in 2012. The system monitors and alerts to plant disease threat levels, helping mitigate disease spread and damage.

According to IHCAFE, production slowed drastically during the epidemic years, with nearly 80,000 hectares of coffee farms affected. However, the aforementioned efforts helped the industry bounce back and production has been increasing steadily since. Despite drought conditions in 2016 and consistently low prices, last harvest’s volume actually came in higher than initial estimates.

In the 2016 GAIN Report, the 2016/17 harvest was forecast at 6.1 million 60-kilogram bags, a modest 4 per cent increase from the previous harvest. However, the 2017 report recorded total production at about 6.3 million bags, representing a 7.9 per cent increase. As such, Honduras overtook Ethiopia as the fifth-largest coffee producer and third-largest producer of Arabica.

For the 2017/18 harvest season, production is forecast to expand to 6.5 million bags as coffee trees planted after the rust epidemic reach maturity. “In the past four years, the total area with coffee plantations has increased 22 per cent to approximately 305,000 hectares,” Pon says.

While Honduran coffee production has been increasing, so has domestic consumption, though it still makes up less than 6 per cent of total production. With an expanding population, consumption has been increasing in line with global popularity of specialty coffee drinks and high-end coffee among younger demographics.

“We see a new generation with new consumption habits oriented toward quality,” Pon tells GCR. “This has resulted in [a greater number] of coffee shops in the main cities of Honduras.”

According to the GAIN Report, coffee bars that provide free Wi-Fi are attracting high school and university students, while international companies are selling soluble coffee in vending machines in metro retail and office buildings.

With production, exports and consumption on the rise and the country already commanding leading positions in global production, Honduras has the potential for a strong reputation. With help from industry promotion, improving quality, and greater recognition at the specialty coffee level, the Honduran coffee industry may become stronger and can then command higher prices – setting in motion a healthy cycle of investment and quality.

© Copyright 2019 Prime Creative Media Pty Ltd. All rights reserved.

ABN: 51 127 239 212

X