Commodities Buzz: Guatemala Coffee Production To Decline 2% On Higher Temperature

Coffee production for MY2019 is forecast at 3.3 million bags. MY2018 coffee production is estimated at 3.3 million bags, down two percent from the previous estimate, due to reduced moisture of the coffee bean resulting from higher temperatures at the drying patios and warehouses. Production for MY2017 closed at 3.3 million bags, down six percent from the previous estimate, due to a drought during the harvest season. Guatemalan coffee production is recovering from the rust epidemic of 2012, when 20 percent of the coffee production was lost to the disease, but the recovery and growth of the sector has been slow. In MY2017, the area planted increased after 5 years of decreases, and is revised 9 percent up to 305,000 hectares.

This is mainly due to new areas being planted with more rust tolerant plants. Coffee production represents two percent of GDP (down from a high of 5 percent), with 300,000 families depending on coffee as a livelihood (down from 600,000 in year 2000). Coffee is the major economic catalyst for economic growth in rural areas, as 20 out of the 22 departments produce coffee. Coffee rust is not the only culprit for Guatemalas lack of competitiveness in coffee: low international prices, a relatively strong quetzal compared to the dollar, and salary minimum wage that is high for the region are important variables affecting coffee production prices. In the following table, the structure of coffee costs is provided, depending on the farmers size. The small farmers represent 97 percent of the producers and 47 percent of the total coffee production. The medium farmers produce 31 percent of the total production and the big farmers produce 22 percent, representing both 3 percent of the total coffee producers in Guatemala.

Guatemala is forecast to export 3.1 million bags in MY2019, the same as previous year. Exports for MY2018 are estimated unchanged at 3.1 million bags.