Monday, September 5, 2011

Honduran Coffee Break

It may be time to buy Honduran coffee. But cautiously.

I myself prefer tea. But when I began doing research in Central America, I learned to drink coffee. Tea bags were imported and very expensive, especially unaffordable the summer I was given $10 a week as a stipend.

Cafe El Indio ads saturated billboards and radio. The coffee that I remember most fondly was prepared on visits to the campo, prepared from whole beans roasted one batch at a time. Back in La Lima, though, coffee came from little brown paper bags with the logo of a Plains Indian in war bonnet printed in red, where the coffee tasted a lot like the bag.

Coffee is big business in Honduras. Costa Rican and Guatemalan coffee may have more brand-visibility, but Honduras actually produces more coffee than Costa Rica, and depending on the source you consult, close to or more than Guatemala. The Honduran government has just announced projections of production for the current season that would make the country the second largest producer of washed arabica beans (the variety that is desirable for fine coffee drinking), remaining only behind Colombia.

Coffee cultivation is ubiquitous in Honduras: a USDA overview this April reports that coffee was being grown in 213 of the 298 Honduran municipios, distributed in 15 of the 18 departments that comprise the country. According to the same source, 30% of the Honduran population was employed in the coffee industry. Domestic consumption has been rising, fueled by urban coffee shops that are in demand for internet access, up 56% from 2008 to 2009. But still, most of the crop (90%) is exported.

Not all of this production comes into world markets labeled as Honduran.

Substantial amounts of Honduran beans used to end up purchased in Guatemala and mixed with Guatemalan beans, since, as a 2010 USDA report put it, "Guatemalan coffee is often sold at a premium in the international market, while Honduran coffee is typically sold at a discount". One year later, that statement had been changed to reflect a new reality; now importers are "more aware of the quality coffee that it is being produced in Honduras which has increased demand within the formal market".

Consequently, one of the reasons Honduras is expected to move into second place as a world coffee producer is "a sharp drop in smuggling Honduran beans to Guatemala" leading the year's projection to be increased from 3.8 million bags to 4.29 million. In 2010, the estimate was that between 400,000 and 650,000 bags of Honduran coffee made their way across the Guatemalan and Nicaraguan borders without being registered, to be consumed under the names of these more established premium coffees. But as Dow Jones notes, "so far this season, Honduran coffee has been fetching higher prices than Guatemalan coffee, averaging $2.46 per pound through Aug. 3, as Honduran coffee gains quality recognition". This year, only 260,000 bags of Honduran origin are expected to trickle across the borders as contraband.

Not coincidentally, Honduran media are also reporting new funding of 11 million lempiras (about $560,000) invested in businesses of coffee producers in Sensenti, in the western Honduran state of Ocotepeque. The funds come from a public-private initiative supported by the World Bank and the Honduran government. About 4 million lempiras ($203,000) of the funding is in the form of loans from private and commercial sources.

A key goal is to increase the export of fine and "special" coffees in the international market. Already in 2005, the USDA report tells us, Honduras established a "Denomination of Protected Origin" for coffee from Marcala. In April 2010, the USDA reported that less than 8% of Honduran coffee produced in 2008-2009 was "specialty coffee", the kind that ends up being labeled by origin at trendy coffee shops. By April of this year, the proportion had risen to about 14%.

One of the two groups receiving funding is committed to increasing the production of "eco-friendly" coffee by 40%, which their business plan reportedly says should increase net earnings by 50% (due to the premium price that would be received for the more select coffee).

Coffee exports continuing to increase are critical if Honduras is to decrease its trade deficit on commodities. Earlier this year, the Banco Central de Honduras projected a deficit of about $6.3 million. At that point the year-to-year comparison showed the deficit larger than in the comparable period in 2010. Coffee exports were specifically singled out as promising to keep the deficit lower than would otherwise be projected. Coffee made up over 48% of commodity export income at the time of that article, with bananas far behind at just over 8%, and African palm oil, gold, melons, shrimp, sugar, silver and zinc following.

But is this all good news?

Concerns have been raised about the ecological impacts of increased coffee cultivation.

Indiana University anthropologist Catherine Tucker notes that
coffee plantations are making incursions into important watersheds and high biodiversity forests. These processes occur in a context of climate change that is disrupting traditional expectations of weather patterns.

As long ago as 1999 a writer for Honduras This Week noted the negative ecological effects of the introduction of sun coffee, which eliminates the need for shade, and thus the incentive to maintain a more mixed vegetation that Tucker argues maintains a similar biodiversity to forests. The Honduran Coffee Institute IHCAFE in 2008 claimed that shade-grown coffee constituted 98% of that grown in the country. Ellen Mickle, who studied Honduran coffee growing for her 2009 BA Honors thesis in Environmental Studies at the University of Nebraska, placed the proportion of shade coffee in Honduras at between 65% and 98% in a 2010 article for Roast magazine.

The amounts paid most coffee workers do not constitute a living wage. US Embassy sources note that even low-wage vegetable farms paying 150 lempiras a day ($8) offered better pay than coffee picking, which paid only 80 lempiras (about $4.25). Progressive media have also questioned the use of child labor in coffee cultivation.

And then there is the question of the social impacts of coffee production, where the most valued lands are located precisely where the people with the most vulnerable economic and social positions live, including many indigenous communities. The research results are actually reasonably promising, although not due in the end to government policy so much as grass roots Honduran initiative.

Anthropologist Tucker's paper for the 2008 conference of the International Association for the Study of Commons describes strategies used by the Lenca community of La Campa, located in a coffee-producing area of western Honduras, to maintain control of land. Here, even as coffee production increased
the community has retained common property woodlots and grazing areas, and created a protected watershed in a cloud forest...forest cover expanded between 1987 and 2000, and protections of communal forests increased even as privatization proceeded in areas suitable for coffee production.

These positive findings were tempered by observations of increased inequality, especially in land access. As Tucker notes, in a pattern unique in Central America, Honduras did not redistribute land to large coffee plantations in the 19th century, one of the factors delaying the expansion of the coffee industry there. She argues that government policy then aimed to encourage expansion of agricultural production fostered a decision to grant land titles to communities, not just individuals. Among those communities were indigenous pueblos that were able to maintain control of land as a result. Coffee production was split among more small producers, rather than concentrated in the hands of a few large landowners.

Indeed, even today the USDA report pointedly underlines this distinction:
Honduras differs from other coffee-growing countries in the region because of the prevalence of small producers. 85,000 producers who annually produce less than 77 bags of 60 kg. of coffee constitute more than 90 percent of all production in Honduras and contribute to 50 percent of total exports.

This situation came under pressure in the 1980s, with a move to replace land titles that were communal or simply traditional (and thus undocumented) with individual titles, on the model of individual landholding familiar in the US, and favored by US-fostered Honduran governments. In parallel, new efforts went into expanding coffee cultivation, with new roads built to formerly remote locations, again with US support. While La Campa managed to control land, the circumstances involved show that this depended largely on the efforts of the local community, and in particular, on the choice made by many to seek communal, rather than individual, land titles.

In another study of the social relations of coffee production, anthropologist Erin Smith examined one cooperative marketing to the Fair Trade sector. She concluded that the Fair Trade movement was "a key contributor to sustainable income generating strategies and socio-economic stability among rural, small-scale farmers" in this cooperative, an outcome she credits to the local farmers' own ability to organize and to international NGO support.

At the same time, she cites the cost and difficulty of being certified and maintaining standards as barriers that the cooperative members had to overcome, and notes that some individual farmers were discouraged by these factors. It took time-- five to six years-- for the cooperative to see the full benefits from the Fair Trade relationship. Participants had to be willing and able to invest efforts for years to see the benefits.

The thread that runs through both of these studies is that local actions by organized groups made the difference. As the value of coffee exports increases we can expect incentives for larger landowners to seek control of more of the coffee sector to put new pressures on smallholders and communities holding land traditionally, or organized as cooperatives.

So by all means buy that new Marcala, Copan, or La Campa single-source cup in your local coffee shop. But keep an eye out for news that might indicate that you are drinking an unhealthy brew.

1 comment:

John (Juan) Donaghy said...

Thanks for a great overview of the situation.
There is another dynamic happening in at least one municipality which might presage a different way of assisting small coffee farmers. UniĆ³n MicrFinanza, a group of mostly University of Michigan grads, has begun an interesting process of providing small loans, helping find technical assistance, and direct marketing to the US. They have a website: http://www.unionmicrofinanza.com/umf/
This, of course, needs a lot of capital and people on ground to help int he process. I'd love to find a way to use their process in the rural parish where I help, since a great number of people have small fincas, coffee fields.