Origin

The Nicaragua coffee industry’s remarkable resilience

Nicaragua

The past couple years have been challenging for the Nicaraguan coffee industry and its players, but with the transfer of knowledge, renewed energy and quality in sight, many see hope.

On 14 May, Abner Samuel Zavala and his family celebrated as the Alliance for Coffee Excellence’s 17th annual Cup of Excellence (CoE) competition announced results, placing his honey-processed Maracaturra in second position at 90.75 points. Although he’s been managing four small family farms in the Nueva Segovia region of Nicaragua since his dad passed away three years ago, his family has participated in the annual competition and auction for more than a decade.

“I have been among the winners in the past three CoE events,” Zavala says. “Although it’s challenging, my family strives to be in the competition year after year. As a result, we have already achieved 13 CoE Nicaragua awards since 2005.”

While the Zavalas are no stranger to the competition – as well as placing among the winners – this is far from the norm for the average producer in Nicaragua, a country long challenged by political strife, civil war, widespread poverty, climate change, coffee disease, natural disasters, plummeting commodity prices, and a global pandemic. Those challenges still exist for farmers today, the Zavalas included.

FINANCIAL STRUGGLES FOR FARMERS
Coffee first arrived in Nicaragua in the late 1700s, and by 1870 it was the largest export crop. Today, Nicaragua is the 11th-largest coffee exporter in the world, according to the International Coffee Organization (ICO) , yet it is the second-poorest country in the Western Hemisphere, largely due to an ongoing sociopolitical crisis. This has had a ripple effect on the local coffee industry, exacerbated by low coffee prices at the farm level.

Jesus Mountain Coffee Company won first place in this year’s Cup of Excellence with a score of 90.96.

Most Nicaraguan farmers have little to no access to credit as many banks and other creditors, often representing foreign capital, have pulled their lending programs from the country as tensions have mounted since the start of political protests in early 2018. The severe lack of funding and support has made it difficult for farmers to simply maintain their plantations, let alone invest in them to improve yield or quality.

Compounding the challenging financial environment are increasing production costs. In 2019, for example, agrochemical costs increased 10 to 20 per cent due to government tax reform.

Alexis Vallejos has seen the gap between production costs and coffee sales expanding over his 30 years in the industry. He grew up helping on his father’s farm near Matagalpa, and now owns a coffee roasting company, Brilla Coffee, in Massachusetts with his wife. “Thirty years ago, the cost to produce green coffee was US$60 to 70 per bag, but today it’s around US$140 to 150,” he explains. “Yet, the cost to sell the coffee has truly not changed in 30 years, so it leaves very little to no profit for most coffee farmers.”

This fact is the main impetus behind his roasting business’s direct trade model. For the majority of the coffees Brilla Coffee sources, Vallejos tries to use one key trader who works directly with the producers in country to minimise intermediaries and get more money to the producers. “We have our mission of direct trade and community to provide them a sustainable supply chain,” he says. “I saw my dad struggle, so am very sensitive to that and don’t just buy the cheapest coffee.”

COMPOUNDED BY 2020’S CHALLENGES
Although world coffee prices reached a two-year high in December 2020, they plummeted 30 per cent in February 2021 as major buyers halted operations and coffee shops were shuttered amid the COVID-19 outbreak. While most of Nicaragua’s coffee had been picked before the pandemic truly hit Central America due to the harvest season ending by April, a new low in prices dealt a blow to farmers who still had to offload cherries and green coffee. Some farmers had to temporarily close operations and implement greater health and safety measures before being able to resume work.

“At the beginning of the pandemic it was very difficult for us, because we had to close the farm for a few weeks, many people were unemployed, and there was uncertainty around whether our coffee would be commercialised and sold to our roaster clients,” Zavala recalls.

Coffee supplies stacked up at origin or elsewhere along the supply chain as travel and trade halted to reduce the spread of the virus. “There were a lot of delays exporting the coffee because most countries were trying to navigate the COVID-19 impact and borders were closed,” says Vallejos. “In the end, coffee was able to be exported, but it took longer than expected.”

Nicaragua produced nearly 2.9 million 60-kilogram bags of Arabica coffee in the 2019/20 harvest season.

Throughout the coffee value chain operations resumed and coffee shops opened back up. Like the rest of the world, producers and other coffee actors got used to the new normal of COVID-19 protocol as the pandemic dragged on over the summer.

But then in November, Nicaragua’s coffee industry was dealt another blow: back-to-back hurricanes pummelled the country’s Atlantic Coast. On 3 and 16 November, Hurricanes Eta and Iota, respectively, struck land as category 4 storms just 25 kilometres apart.

“This [is all] unfolding in the context of the COVID-19 pandemic,” noted a report from humanitarian nonprofit Church World Service. “Families are living in makeshift shelters with little distancing and few hygiene protections. The risk of virus transmission is high among displaced families and humanitarian workers alike.”

The coffee-growing areas most affected by the storms were the departments of Jinotega, Matagalpa, Boaco, Estelí, Madriz, and Nueva Segovia, spanning 23,000 square kilometres, according to early reports from the ICO. Heavy rainfall, landslides, and flooding damaged more than 3400 hectares of coffee farms and related infrastructure. “Despite this, small-scale coffee farmers in the affected areas, thousands of whom have lost or had their homes damaged, have joined the country’s efforts to rescue their crops and clear roads of debris, demonstrating remarkable resilience,” ICO reported.

For both COVID-19 and the double hurricanes, numerous humanitarian organisations stepped in to help. The Inter-American Foundation, contributed US$45,232 to help address issues related to the pandemic, including providing aid packages with personal protective equipment and food to coffee farming families to support their immediate needs during quarantine and reduce the pressure to leave their communities in search of work. The funds were in addition to a substantial grant the nonprofit had issued major Nicaraguan cooperative CAFENICA back in 2015 to support farmer training and technical assistance.

The Seeds for Progress Foundation and Mercon Coffee Group joined efforts to mitigate the effects of COVID-19 in the most vulnerable coffee-growing regions of Nicaragua during the 2020-2021 harvest, aided by a US$117,000 relief fund from the Dutch Development Bank. Seeds for Progress and Mercon also raised more than $178,000 for coffee land relief efforts following the hurricanes, specifically repairing and rebuilding roads and transportation infrastructure.

A SHIFT TOWARD QUALITY
Placed near the centre of the coffee belt and along the Pacific Ring of Fire, Nicaragua is characterised by high altitudes, rich volcanic soil, and humid tropical climates.

High altitude, rich volcanic soil, and favourable climate are largely responsible for Nicaragua’s high-quality coffee.

“Our coffee is produced at average heights of 1200 metres above sea level and temperatures from 18 to 22°C,” explains Germán Odorico Cortéz, a producer from the Jinotega region who placed among the CoE winners this year and last. “The climate is one of the fundamental parameters in the quality of the coffee and contributes to a better maturation and denser grains with more flavours.”

Nicaragua has the foundation for exceptional coffee, so not unlike other coffee-growing countries around the world, some producers have been increasingly focusing on their quality and even venturing into specialty coffee. For small farmers in particular, this shift has been made possible by organisations like the Alliance for Coffee Excellence and its local CoE partner the Nicaraguan National Coffee Commission, as well as the Nicaraguan Specialty Coffee Association (ACEN) and export-oriented cooperatives that have formed in the past 25 years, like CAFENICA. ACEN formed in 1995 with the very mission of improving quality and establishing a specialty market in Nicaragua in order to generate higher earnings at the farm level.

The quality programs out of organisations like these have “come to create an expectation about quality,” says 2020 CoE first-place winner Luís Alberto Balladarez Moncada, “and that has motivated many producers to study on the subject of specialty coffees more in depth.”

Historically, Nicaragua has produced coffee with a focus on quantity over quality, which has helped it become the 12th-largest coffee producer in the world. According to the ICO, Nicaragua produced nearly 2.9 million 60-kilogram bags of Arabica coffee in the 2019/20 harvest season. In 2013, the government even permitted the cultivation of Robusta in non-traditional coffee regions along the coast, but its total production is negligible and very little is exported.

Though volumes of specialty coffee out of Nicaragua are also small, they are increasing. They’re also achieving higher earnings as hoped, particularly for farmers engaged in direct trade, like those working with Brilla Coffee and CoE buyers.

An estimated 95 per cent of Nicaragua’s coffee farmers are micro and small-scale producers.

The 2020 Nicaragua CoE auction set a record-high average price for the country at US$12.08 per pound. Balladarez Moncada’s coffee, a natural-processed Maracaturra from the Nueva Segovia region, scored a 91.2 and received the third-highest Nicaragua CoE competition price ever paid. A handful of global roasters paid US$36.90 per pound for half of the lot, and Takamura Coffee Roasters in Japan paid US$30.30 per pound for the other half.

“The quality of each Nicaraguan producer’s coffee is becoming known around the world through increased coffee in coffee shops, organisation of producers in cooperatives, [support from] public and private organisations, creation of brands and added value to coffee,” says Cortéz.

Balladarez Moncada recalls that 30 years ago specialty coffee didn’t yet exist, “but the industry has matured in such a way that today we see small producers, some of them very young with a lot of knowledge of the subject, with a lot of energy to investigate and produce better quality coffee,” he explains. “Obtaining new differentiated markets for coffee has been a reality for many. Nicaragua has begun to appear on the map of high-quality coffee-producing countries and that is very positive.”

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