Why is Honduran arabica coffee output falling so sharply?

Honduras, the largest producer and exporter of washed arabica coffee in Central America, is facing a steep industry decline. Foreign exchange earnings in the first four months of this year fell by nearly 100 million USD, and the annual loss could reach about 300 million USD. Coffee cultivation income for 2023/24 dropped roughly 27 percent from the previous season, to about 1.05 to 1.1 billion USD.

The decline traces back to lower production, which the USDA expects to fall 24 percent to 5.5 million bags in 2023/24. Weather changes, widespread coffee leaf rust and persistent labor shortages are the main causes. El Niño brought record heat and drought, with highs of 38 to 40°C, before heavy June rains caused severe flooding across the central american coffee growing areas.

Honduras, as the largest producer and exporter of washed Arabica coffee in Central America, is facing a severe industry crisis. Affected by factors such as weather changes, high incidence of leaf rust, and labor shortages, the country's coffee production and exports have both declined. In the first four months of this year, foreign exchange earnings have already decreased by nearly 100 million US dollars, and it is estimated that the annual loss could be about 300 million US dollars. Income from coffee cultivation in the 2023/24 season fell by about 27% compared to the previous season. The president of the Honduran National Coffee Commission warned that if urgent measures are not taken, the harvest will continue to decline, causing far-reaching impacts on producers and the entire country. Front Street Coffee continues to follow developments in Honduran coffee-producing regions, bringing the latest information to coffee enthusiasts.

Honduras is the largest producer and exporter of washed Arabica coffee in Central America, but recently, the president of the Honduran National Coffee Commission stated that the Honduran coffee industry is currently in trouble, mainly reflected in coffee production and exports.

Due to low coffee export volumes, foreign exchange earnings in the first four months of this year decreased by nearly 100 million US dollars. If this trend continues, according to forecasts, foreign exchange earnings this year may decrease by about 300 million US dollars. According to statistics, income from coffee cultivation in 2022/23 was 1.45 billion US dollars, but in 2023/24 it was about 1.05 to 1.1 billion US dollars, a decrease of 27% by comparison.

The decline in coffee exports is mainly due to reduced coffee production. Earlier, the US Department of Agriculture released a report on Honduras' coffee industry, pointing out that due to weather changes, high incidence of coffee leaf rust, and persistent labor shortages, Honduras' coffee production in 2023/24 is expected to decline by 24% to 5.5 million bags.

In terms of weather, earlier affected by El Niño, Honduras' temperatures hit record highs, experiencing its hottest and driest year since 1992, with maximum temperatures reaching 38-40°C. Then in June, Honduras entered the rainy season, but experienced severe flooding caused by heavy rains.

According to the Honduran Secretariat of National Risk and Emergency Management, heavy rains triggered floods and mudslides, leading to road damage and rivers overflowing, requiring emergency actions to respond to the floods and mudslides caused by the heavy rains.

Moreover, earlier reports indicated that a threshold of 5-20% for coffee leaf rust represents a moderate incidence rate, and in several coffee-producing areas of Honduras, the average incidence rate of leaf rust is 5.8%. However, coffee rust spores spread through rain and wind, which may further increase the incidence rate and ultimately continue to affect production in the new season.

In addition, as Brazilian coffee production recovers, international Arabica prices have begun to decline. For Honduras, price declines and strong competitiveness from other coffee-producing countries have long threatened Honduras' coffee industry.

However, according to an ICO report, since the beginning of this year, coffee exports from several Central American coffee-producing countries have declined, with coffee export volumes falling 12.6% in May to 1.66 million bags. Some industry insiders believe this is mainly because it is currently the off-season, and local farmers intentionally hold back inventory, hoping to sell only after coffee prices rise further, thus negatively affecting exports.

To this end, the president of the Honduran National Coffee Commission warned that it is necessary to review the variables affecting producers' income. If urgent measures are not taken to increase coffee production, the harvest will continue to decline, affecting producers and the entire country. He also called on the government, coffee institutions, and producers to fulfill their respective responsibilities and work together to address the crisis.

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