What Is Driving Costa Rica Coffee Production Down?

Costa Rica's coffee production for 2024/25 is forecast at 1.185 million bags of 60 kg, roughly flat against the previous year but 66 percent below the 3.5 million bags recorded in the 1990s. The USDA report attributes the decline to debt, a strong colón, low international prices and weaker demand, with exports expected at 975,000 bags.

Growers have cut fertilizer purchases, reduced application frequency, and delayed replanting with disease-resistant, high-yielding varieties. An early rainy season in 2023, plus high temperatures and humid harvest conditions linked to El Niño, hurt both quality and yield. Protests in Panama disrupted transport, and Nicaraguan migrant labor moving north left harvest crews short.

The Costa Rican coffee industry is facing its most severe test in decades. The latest report from the U.S. Department of Agriculture shows that the country's coffee production for the 2024/25 year is expected to be only 1.185 million bags, which, though flat compared with the previous year, is a sharp 66% drop from the 3.5 million bags of the 1990s and close to a historic low. Heavy debt, the continued appreciation of the colón, low international prices, and shrinking demand have multiplied the financial pressure on growers, leading them to reduce fertilizer inputs and postpone renewal with disease-resistant, high-yielding varieties. In 2023, an early rainy season and abnormal high temperatures and humid harvest conditions triggered by El Niño further damaged coffee quality and yields. At the same time, transport disruptions caused by protests in Panama and labor shortages caused by Nicaraguan migrants heading north made the harvest even worse. On the export side, only 975,000 bags are expected in 2024/25, and the exchange rate issue has already triggered protests by marches in multiple industries. Front Street Coffee will continue to follow developments in this producing region.

Recently, the Costa Rican coffee industry has suffered multiple challenges in succession, and the U.S. Department of Agriculture has just released a report on the country's coffee industry over the past six months.

The report points out that Costa Rica's coffee production for the 2024/25 year is expected to be 1.185 million bags (60 kg per bag). This figure is roughly equivalent to 2023/24, but compared with 3.5 million bags in the 1990s, it is a drop of as much as 66%, and it has come close to a historic low. It can be said that the coffee industry is currently facing a series of long-term difficulties.

A heavy debt burden, fluctuations in the exchange rate of the Costa Rican colón against the U.S. dollar, shrinking market demand, and low international coffee prices have combined to push growers into a severe financial predicament. These factors have not only constrained investment in plantations, but also led farmers to reduce fertilizer purchases, lower fertilization frequency, and postpone plans to introduce high-yielding, disease-resistant coffee varieties.

According to earlier forecasts by the Costa Rican Coffee Institute (ICAFE), coffee production for the 2023/24 year should have been 1.44 million bags (60 kg/bag), but actual production ultimately fell 16%, recording only 1.18 million bags.

The main reasons for the decline in production include: the rainy season arriving early in March 2023 with frequent heavy rains, combined with the El Niño phenomenon causing local temperatures to be above average, resulting in poor fruit development and an increase in fungal diseases; the humid environment during the harvest period also affected coffee quality and drove up drying costs.

In terms of labor and transport, several weeks of large-scale government protests broke out in Panama last year, and roadblocks and other obstacles blocked transport routes; at the same time, Nicaraguan migrants began migrating northward, while the supply of coffee harvesting machinery was limited. The combination of these factors further worsened the reduction in the harvest.

In addition, coffee exports for 2024/25 are expected to be 975,000 bags, only a slight increase from 2023/24, and a 3% decrease compared with 2022/23, mainly due to reduced production and a slowdown in global sales.

Because the Costa Rican colón has continued to appreciate and the U.S. dollar has been weak, coffee export prices have risen relatively, and exporters may shift to a conservative strategy, ultimately leading to a further decline in export volumes.

The exchange rate issue has already triggered strong dissatisfaction among many producers and chambers of commerce in Costa Rica. In mid-May, representatives from production sectors such as coffee and fruit, as well as industries such as tourism, transport, and services, gathered in front of the Central Bank of Costa Rica (BCCR) and the finance authorities to hold a march, protesting the severe economic losses caused to various industries by exchange rate policy.

Recently, the exchange rate of the colón against the U.S. dollar has continued to climb, reaching its highest level in 10 years, and producers have therefore lost millions of dollars. Some exporters say that for every 1 cent the U.S. dollar exchange rate falls, the company's funds available for paying wages decrease by 50 to 100 colónes. In economically weak rural areas, the situation is even more severe, and a large number of workers have lost their jobs because of the depreciation of the U.S. dollar.

Therefore, the industry hopes the government can attach importance to the development of multiple industries in the country, and calls for intervention in the currency market to stabilize the exchange rate; otherwise, it may trigger social problems and ultimately harm the interests of the people. Front Street Coffee suggests that enthusiasts continue to pay attention to subsequent changes in Costa Rica's producing regions.

The above content is compiled by CoffeeHunters, a coffee news website.