Production is close to an all-time low! Costa Rica's coffee industry crisis

In recent times, the development of the Costa Rican coffee industry has been encountering difficulties and encountered many problems. Recently, the U.S. Department of Agriculture released the status of the Costa Rican coffee industry in the past six months.

Currently, according to the report, Costa Rican coffee production in 2024/25 will reach 1.185 million bags (60 kilograms/bag). Although this production is similar in 2023/24, it is down 66% from 3.5 million bags in the 1990s., close to the lowest point in history, it can be said that the current coffee industry has many persistent challenges and problems.

High debt, the exchange rate of the Costa Rican Cologne against the U.S. dollar, falling demand and falling international prices have all put coffee growers in dire financial conditions. It also limits growers 'investment in their plantations, reduces the purchase of fertilizer, reduces fertilization rates, and delays the purchase of high-yield and disease-resistant coffee varieties.

According to the National Coffee Institute of Costa Rica (ICAFE) initially estimated that coffee production in 2023/24 would be 1.44 million bags (60 kg/bag), but actual production dropped by 16%, to only 1.18 million bags.

The main reasons for the reduction in production are the advance of the rainy season and heavy rains in March 2023, as well as the impact of El Niño on local temperatures above average, resulting in increased fruit development, mycosis, and humid harvesting conditions, which affects the quality of coffee and increases the cost of drying.

In terms of human labor and transportation, due to weeks of large-scale government protests that broke out in Panama last year, the roadblocks caused by the activities affected transportation problems. In addition, Nicaragua immigrants began to migrate to the north, and the limited supply of coffee picking machines ultimately exacerbated the decline in harvests.

In addition, coffee exports in 2024/25 are expected to be 975,000 bags, the smallest increase compared with 2023/24 and a decrease of 3% compared with 2022/23, due to reduced production and slowing global sales.

Moreover, due to the continuous appreciation of the Costa Rican colone and the weakening of the US dollar, the price of coffee exports has risen relatively. Exporters may adopt conservative strategies, which will eventually lead to a decline in export volume.

The exchange rate issue has caused dissatisfaction among many producers and chambers of commerce in Costa Rica. In mid-May, representatives from coffee, fruit and other production fields, as well as tourism, transportation, services and other industries gathered at the gate of the Central Bank (BCCR) and the Ministry of Finance to march, reflecting the serious economic losses caused by exchange rate policies to their industries.

Recently, colon has continued to appreciate against the US dollar, reaching its highest level in 10 years, causing producers to lose millions of dollars. Some exporters said that for every 1 cent decline in the US dollar exchange rate, the company's funds to pay wages will be reduced by 50-100 colones. The situation is even more serious in economically weak rural areas, where a large number of workers will be laid off due to the depreciation of the US dollar.

Therefore, it is hoped that the government can attach importance to the development of many industries in the country and intervene in the money market to stabilize the exchange rate. Otherwise, social problems will be caused and people's interests will ultimately be harmed.