Why is the coffee industry in El Salvador struggling?

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Why is the coffee industry in El Salvador struggling?

In addition to the industrial recession caused by the national economic structure, there are also some other industries themselves. We focus on the following key factors.

1. Fragile national policy

Historically, El Salvador has lacked strong public policies for the economic, social and environmental development of rural areas. Even after the end of the civil war, its economic model still excluded agriculture from the drivers of growth and development.

The current government has taken a series of measures to support the coffee industry, such as donation of insect-resistant seedlings, technical assistance, pest control and so on. And these reforms, while popular, are not enough to revive the industry.

two。 climate change

Unstable weather patterns and phenomena such as "El Nino" pose a great threat to agricultural production. They have changed the agricultural production cycle, reduced crop yields and led to new mutated diseases such as coffee rust. Farmers are still learning how to adapt to reduce the harm caused by climate change.

3. A high degree of insecurity

The widespread violence in El Salvador has also affected farmers. In 2015 alone, nearly 6500 people died in murder.

Regardless of size, countless businesses have been blackmailed for seizing the chassis. This happens even in some rural areas, such as coffee farms. Some estates were abandoned as a result.

Coffee flowers give off a jasmine-like aroma when they bloom.

4. Fractured land ownership

El Salvador implemented an imperfect land reform in the 1980s, which was intended to avoid civil war, reduce social pressure and promote economic equality, but unfortunately, the reform failed.

Today, according to the 2008 government agricultural census, 52 per cent of the 16995 coffee growers surveyed own less than 2.1ha of arable land. Although different agricultural cooperatives have different sizes, the highly fragmented land ownership structure makes it unable to form an effective economic scale and difficult to implement policies on it.

5. The way to raise funds is narrow.

For lenders, investing in coffee production is a big risk. Because of this, personal commercial banks (which make up 90% of El Salvador's banking system) no longer lend to coffee growers. Similarly, only a few public banks are willing to do it, and if they are willing to do so, the terms are very harsh.

In any case, farmers with long-term debt will make it difficult for them to make progress.

6. Limited business understanding

Many farmers are still struggling to increase production and make profits. Some do not have strict business plans for their estates, so their estates either fail to put resources and income into production or are ineffective.

7. Older coffee plants and older coffee growers

Some farmers are unable to upgrade their estates, leaving a large number of low-yield fruit trees: as of 2014, more than half of El Salvador's coffee plants were at least 20 years old, and more than 90% of them were more than 11 years old or more. You can't ask for too much from an old tree.

In addition, the farmers themselves are usually at least 50 years old. Because the younger generation has found opportunities in other areas of business, or a job that is much less risky than growing coffee.

8. Live in the past

The tragic history of El Salvador has played an important role in its lack of modernization. Many farmers also use the old methods of hard farming, which makes it difficult for them to compete with producers in other coffee origin countries, as they may benefit from permanent culture or bioengineering technology.

Pickers at a manor on Apaneca-Ilamatepec Hill are sorting beans.

9. Broken leadership

Once upon a time, the coffee union was a solid force. Their opinions are important, and their decisions have a major influence on public policy. But now, all kinds of producers, mills and export groups, and many more, are fragmented and infighting. When will there be a new leadership?

10. Labor migration

Farm workers are mainly driven by the coffee value chain-even landlords. When job opportunities disappear, they are forced to migrate to other jobs in urban areas, or illegally to other countries (mainly the United States). This has led to a significant reduction in the availability of labour on large estates and increased overall poverty levels.

How Salvadoran Coffee will save itself

So the coffee industry in El Salvador is going to die, along with the tens of millions of people who depend on it? To put it simply, this is not the case. Coffee has the ability to drive environmental, economic and social stability in El Salvador. In any case, if the above results are to be achieved in the long run, there must be a series of reforms aimed at the underlying structure.

Many Salvadorans depend on the coffee industry for survival, and they will lose a lot as a result. This is why public policy needs to focus on improving coffee production, and design different development strategies for producers to revitalize niche markets (pointing to certain segments or niche markets that are ignored by market rulers or companies with absolute advantages)-that is, boutique coffee is the top priority.

At the same time, better jobs should be created to reduce labor migration and improve the working conditions of workers.

Some positive changes can now be seen, but other forward-looking actions are needed to address the effects of climate change, including controlling the spread of coffee rust, improving variety genes and achieving direct trade.

But not everyone in the Salvadoran coffee industry chain can get these positive changes, and growers and grinders need to improve in terms of finance, education and expertise. Of course, they are a small number of people and do not represent the coffee industry as a whole.

More can be done, which requires time, human and financial resources, but it all depends on the stakeholders in the industry.

Coffee in El Salvador will not only survive, but also thrive. We have to believe that.