Issues: Health

II. COFFEE: A KEY INGREDIENT TO ECONOMIES IN NORTHERN LATIN AMERICA

This report focuses on the countries of northern Latin America, which make up a region of extraordinary biological richness. The countries of concern include Mexico, Colombia, much of Central America, and many of the Caribbean nations. Since the latter half of the 19th century, coffee has been an important export for many countries throughout the region. Favorable climatic and processing conditions, ready access to labor, and government programs dedicated to protecting the interests of the coffee sector have enabled these countries to play a central role in supplying the world with quality coffee. In terms of quality,^[4] Colombia and Central America figure strongly in world production, historically having enjoyed a five to ten percent premium above international prices for the "mild" (washed) coffees they produce.^[5] The premium-quality arabica coffees produced in northern Latin America can sometimes command prices 30 percent above the lower quality robustas or unwashed arabicas,^[6] coffees produced for mass consumption.

The portion of foreign exchange it has generated, the area of agricultural land it has occupied, and the number of people it has employed place coffee in a distinctive role in these societies. In Central America, no other crop in history approaches the importance of coffee, with the possible exception of indigo (a plant used as a dye) during Spanish colonial times. Concentration upon coffee production in the 1800s, a time of growing demand spurred by unprecedented global economic growth, provided firm footing for the economies of northern Latin America. Demand soared again during the boom economy that followed World War II. Since World War II, the countries of northern Latin America have provided anywhere from one-quarter to one-third of the world's coffee (see Table 2).^[7]

Today, coffee still forms the economic backbone of many of these countries. Coffee exports from Guatemala, for instance, generated $450 million in 1994/95 season. For the current season, exports are expected to bring in even more revenues. In El Salvador, even amid that country's civil war during the 1980s, coffee exports accounted for 44 percent of the value added (constant prices) to the national economy in 1989.^[8] In Costa Rica, coffee exports accounted for anywhere between 20 percent and 30 percent of total exports from 1970 to 1989.^[9] Colombia's reliance upon coffee is similar, although on a larger scale than the Central American countries. In 1994, Colombia's coffee exports were valued at over $1.4 billion.^[10]

Coffee obviously generates tremendous labor demands on these countries' societies, a situation that has contoured the rural population for more than 150 years in some nations. Comparatively, other traditional crops produced in northern Latin America rely on less labor. Whereas in Guatemala coffee demands 73 person-days per hectare during its production cycle, food crops like corn and beans require 58 and 61 person-days per hectare, respectively.^[11] On small farms, the chores involved in coffee cultivation keep entire families busy, with women and children playing crucial roles. Not only are workers needed to harvest the coffee, but tasks anticipating and preparing for the harvest, such as fertilizer application, weed and pest control, ground maintenance around trees, shade regulation and maintenance of roads and fences, keep permanent work forces occupied all year on many farms. In Colombia, a country with 42 percent of its 33.3 million citizens designated as "rural," nearly 23 percent of the agricultural labor force is involved in coffee.^[12]

The prevalence of coffee upon the physical and social landscapes of northern Latin America is considerable. Its national importance to the region becomes clear by expressing coffee area as a percentage of the "permanent cropland," which refers to that agricultural land devoted to perennial crops and excluding pasture lands for livestock. For the region as a whole, 44 percent of the permanent cropland is covered by coffee (see Table 3).^[13]

Coffee is a major source of export income for countries throughout northern Latin America (see Table 4). For several decades, agriculture's share of total exports has declined steadily in countries like Colombia or Mexico, due to increasing reliance upon exports from manufacturing and non-agricultural extractive industries. Yet, while the overall agricultural share has shrunk, coffee's proportional contribution to the sector's earnings has remained unchanged.^[14] Wide fluctuations in international coffee prices have nevertheless caused major swings in all Latin American countries' total export revenues from coffee. Prices and export receipts took a sharp downturn for a four-year period following the 1990 collapse of the International Coffee Agreement, but have climbed over the past year and a half following major frost damage to the Brazilian coffee crop.

The structure of these countries' coffee industries is generally skewed toward large numbers of small producers, who often exist at or below the poverty level. Northern Latin America is home to more than 700,000 small coffee producers. They account for the lion's share of coffee farms (see Table 5), while larger producers usually control the bulk of coffee area.^[15] Moreover, large producers tend to hold disproportionate amounts of the better quality agricutural land. Throughout Central America in the early 1980s, some 239,000 farmers participated in coffee production. The United States Agency for International Development (USAID) estimated that 86 percent of these could be classified as "small farmers,"^[16] the majority of whom grow and harvest coffee with the sole help of their families.

Coffee farms often produce more than coffee. It is common among small farms for the household to extract useful products like firewood, construction materials, fence posts, and fruits from the holding, in addition to the coffee harvested each year. The source of these items is the shade tree cover associated with many coffee farms. As peasant producers living precarious livelihoods year to year, such "non-coffee" products provide the family with items that can be used directly or traded locally for other cash or other needed products.

Notes

4. Coffee quality derives from its origin, its species and the way it is processed (whether washed or dried in the sun). There are three species commercially traded on the world market: Coffea arabica, C. canephora (sometimes referred to by its former name, C. robusta), and C. liberica. The arabicas are more highly prized than the other two, demanding a higher price. Processing using the wet (washed) method produces a "mild" coffee, the most expensive being Colombian milds (from Colombia, Tanzania and Kenya). The "other milds" come from Central America, Mexico, a few other Latin American countries, and some African nations. Brazil produces an "unwashed arabica". Robustas come principally from Africa and Asia (Pelupessy and van Tilburg, n.d.).

5. Robert G. Williams, 1994 States and Social Evolution: Coffee and the Rise of National Governments in Central America (UNC Press: Chapel Hill, NC).

6. Wim Pelupessy and Elisabeth van Tilburg 1994 El mercado solidario de café y el pequeño productor en centroamérica In Mario Samper (ed) Crisis y Perspectivas del Café Latinoamericano (Convenio ICAFE-UNA) p. 244.

7. Production data up to 1992 are available, but due to the production responses that always accompany international price fluctuations, the 1992 data portray substantially lower production levels. While the figures indeed reflect the actual production, they also incorporate a distinct "backing off" from optimal production resulting from reduced inputs, labor and other investments that would be costs of production. The 1990 data, then, present a more accurate profile of the production potential.

8. Wim Pelupessy, 1993 El Mercado Mundial del Café: El Caso de El Salvador (Editorial DEI: San José, Costa Rica) p. 173.

9. James K. Boyce, Alvaro Fernández González, Edgar Fürst, and Olman Segura Bonilla, 1994 Café y Desarrollo Sostenible: Del cultivo Agroquímico al la Producciñn orgánica en Costa Rica (Editorial Fundaciñn UNA: Heredia, Costa Rica) p.90.

10. Federaciñn Nacional de Cafeteros de Colombia, 1994 LIII Congreso Nacional de Cafeteros, Informe del Gerente General (FEDERACAFE: Bogotá).

11. Jesus Alvarado, Director of the Small Farmer Program at Asociaciñn Nacional de Cafetaleros (ANACAFE) in Guatemala, personal communication, March 5, 1996; Lori Ann Thrupp, Bittersweet Harvests for Global Supermarkets: Challenges in Latin America's Agricultural Export Boom (World Resources Institute: Washington, DC) 1995. It should also be noted that person-day requirements of coffee vary considerably, depending upon the production technology. In El Salvador alone, ranges from 145 to 174 person-days have been measured (Pelupessy, 1993, p. 111).

12. Colombian Coffee Federation, 1995.

13. FAO Production Yearbook (1991).

14. For instance, in Colombia, where coffee historically dominated the national economy, agricultural exports in 1993 accounted for 28% of all exports. Coffee, however, brought in 56% of all agricultural export revenues. (Nicolas Lloreda, Colombian Trade Bureau, Washington, DC, personal communication, December 10, 1995.).

15. Data from Colombia's national coffee growers association (FEDERACAFE), for instance, indicate that growers with farms less than 8 hectares in size represent 64 percent of the total farms, 26 percent of the total coffee area on those farms, and 12.3 percent of the total farm area (coffee and other non-specified uses). By contrast, those coffee growers with farms greater than 50 hectares in size account for 5.6 percent of all coffee farms, 27 percent of the total coffee area, and 49 percent of the total farm area.

16. ROCAP, 1981 Project Paper: Regional coffee Pest Control (USAID Regional Office on Central America and Panama: Washington, DC).