Dealing with the Coffee Crisis in Central America : Impacts and Strategies

Current coffee prices are at record lows and below the cost of production for many producers in Central America. Moreover, the coffee crisis is structural, and changes in supply and demand do not indicate a quick recovery of prices. So, coffee producers in Central America are facing new challenges-as are coffee laborers, coffee exporters, and others linked to the coffee sector. Coffee plays a major economic role in Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The coffee crisis is actually part of a broader rural crisis caused by weather shocks (such as Hurricane Mitch and droughts), low international agricultural commodity prices, and the global recession. These challenges call for new strategies for Central American countries aimed at broad-based sustainable development of their rural economies. The authors deal with the impact of the coffee crisis and strategies to deal with it. They include an analysis of the international coffee situation and country-specific analyses. The authors explore options and constraints for increased competitiveness and diversification, and discuss social, environmental, and institutional dimensions of the crisis. The authors conclude that there are specific solutions that can be pursued for the coffee sector. Some are already being applied, but more can be done in a more systematic way. Also, there is a need for safety nets to deal with the short-term impact of the crisis. Longer-term solutions are to be found in increased competitiveness and diversification in the context of broad-based sustainable rural economic development.

Bibliographic Details

Main Authors:	Varangis, Panos, Siegel, Paul, Giovannucci, Daniele, Lewin, Bryan
Language:	English en_US
Published:	World Bank, Washington, DC 2003-03
Subjects:	COFFEE INDUSTRY & TRADE, COFFEE PRICES, PRODUCTION COSTS, FINANCIAL CRISES, PRICE STABILIZATION, COFFEE PLANTATIONS, LABORERS, EXPORTS, ECONOMIC CONSTRAINTS, RURAL CONDITIONS, WEATHER DISASTERS, COMMODITIES, COMMODITY FUTURES PRICES, ECONOMIC RECESSION, RURAL ECONOMIC DEVELOPMENT, COMPETITIVENESS, DIVERSIFICATION, INSTITUTIONAL FRAMEWORK, SOCIAL CONDITIONS, ENVIRONMENTAL ASPECTS OF AGRICULTURAL DEVELOPMENT, SAFETY NET POLICIES AGGREGATE DEMAND, AGRICULTURAL PRODUCTION, AUCTIONS, AVERAGE YIELDS, BALANCE OF PAYMENTS, BEANS, CHERRIES, CLIMATIC CONDITIONS, COFFEE, COFFEE CRISIS, COFFEE EXPORTS, COFFEE FARMERS, COFFEE PLANTS, COFFEE PRODUCERS, COFFEE PRODUCTION, COFFEE SECTOR, COFFEE YIELDS, COMMODITY, CROP, CROPS, DEBT, DOMESTIC MARKET, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC PROBLEMS, ECONOMIC SECTORS, ECOSYSTEMS, EMPLOYMENT, ENVIRONMENTAL IMPACTS, ENVIRONMENTAL ISSUES, ENVIRONMENTAL PROBLEMS, EXPENDITURES, EXTERNALITIES, FAIR TRADE, FARM, FARMER, FARMERS, FARMS, FINANCIAL SECTOR, GDP, HARVESTING, INCOME, INCOME EFFECTS, INFLATION, INTEREST RATES, INTERNATIONAL MARKETS, INVENTORIES, LABOR FORCE, MARKET INFORMATION, MARKET ORIENTATION, MARKET SEGMENTS, MARKET SHARE, MARKETING, NATIONAL ECONOMIES, NICHE MARKETS, PRICE PREMIUM, PRICE PROJECTIONS, PRICE RISK, PRICE SUPPORT, PRICE VOLATILITY, PRODUCT DIFFERENTIATION, PRODUCTIVITY, QUALITY COFFEE, REPLANTING, RETAIL, SAFETY NETS, SHADE-GROWN COFFEE, SMALL FARMERS, SMALL PRODUCERS, SOILS, SPECIALTY COFFEE, SPECIALTY COFFEE MARKETS, SPREAD, STOCKS, STRUCTURAL CHANGE, SUPPLIERS, SURPLUS, SUSTAINABLE DEVELOPMENT, TIMBER, TREE DENSITY, UNEMPLOYMENT, VALUE ADDED, WAGES, WORLD MARKETS, SAFETY NET POLICIES, AGGREGATE DEMAND,
Online Access:	http://documents.worldbank.org/curated/en/2003/03/2191889/dealing-coffee-crisis-central-america-impacts-strategies https://hdl.handle.net/10986/18273
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