Study of the coffee crisis and successful strategies by small producers in Central America: Ingenuity in the face of adversity

Mario Castejón, Commercialization and International Commerce Specialist FAO/RUTA, Costa Rica

With the goal of offering formulas, criteria and effective strategies to improve competitiveness of small Central American coffee producers in the face of the coffee price crisis, RUTA, with the help of DFID and FAO, carried out a regional study titled, “Adversity and change: price crisis and successful strategies of small coffee producers in Central America.”

The study systematized the conditions, factors and critical strategies that have allowed small Central American coffee producers to successfully develop their business activities related to this crop, despite the precarious situation of the prices, as well as other negative aspects of their environment and condition.

The goal of the study is to provide guidelines to orient small coffee producers’ decisions and actions, and for it to serve as input for producers associations, trade associations, non governmental organizations, international aid agencies and public agencies responsible for policy making and support programs for the coffee sector, primarily those geared toward small producers.

The main conclusions of the study highlight the importance of organizational strengthening and business administration among producer groups, access to technical assistance and training appropriate to “new” activities, marketing innovations, and access to the necessary financing for investment and to defray the costs of implementing new strategies.

Since 1995, international coffee prices have shown a downward trend.  According to experts, this tendency was due to a structural phenomenon, the effects of which will continue at least into the medium term. The cost to Central America was enormous, as this is a region that largely depends on the coffee sector for income generation and rural employment, and where two of every three people in rural areas live below the poverty line.  The human cost of the coffee price crash has been high, due to the negative effect on employment, and therefore on the income of thousands of rural families.

Nevertheless, despite the magnitude of the crisis, Central America has a competitive advantage in the international coffee market, given that agro-ecological conditions are conducive to producing very high quality coffee, allowing successful competition under the new market conditions. 

In light of this panorama, governments of the region, international aid agencies, and non-governmental organizations have carried out, and continue to carry out efforts to analyze the situation in depth and define strategies to respond to the situation. One strategic proposal is to support areas with agro-climatic conditions appropriate for producing high quality coffee to effectively generate, conserve and extend this quality, develop greater added value and seek effective promotion and commercialization. The other proposal is to support coffee growers in regions that do not have the potential for producing high quality coffee, and cannot compete with the production costs of other coffee regions that compete for the same international market share, so that they may diversify their economic activities and sources of income.

The study “Adversity and change: price crisis and successful strategies of small Central American coffee producers,” is available at www.ruta.org  and at the RUTA National Technical Units in the Ministries of Agriculture