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Guatemala Coffee Report: Labor Shortages and Higher Costs Slow Production

Rising farm costs and seasonal labor shortages are driving an estimated reduction in total coffee production, exports and planted area in the country of Guatemala, the world’s ninth largest coffee producer by volume.

These estimates are detailed in the most recent USDA Foreign Agriculture Service (FAS) report on the Guatemalan coffee sector, which like many national-level coffee sectors in Latin America, is dealing with labor shortages while simultaneously facing higher-than-normal prices for fertilizers and other variable costs.

[Note: This is part of a series of DCN stories exploring the FAS coffee annual reports. The U.S. information agency is currently scheduled to deliver 16 annual country-level reports on the coffee sector. Each of those reports come from different authors and field offices.]

According to the Guatemala FAS post, other more profitable crops are elbowing out coffee in some key growing areas.

“An ongoing trend for diversification of coffee with crops like banana, plantain, and cacao in lowland areas may also reduce coffee production. The National Coffee Association (ANACAFE) is considering the introduction of high-quality Robusta varieties for such areas,” the post wrote. “In addition, more profitable crops like avocado are starting to displace coffee in the Sololá department around Lake Atitlan. These cash crops often subsidize the coffee crop at the household level.”

The agency now estimates that Guatemalan coffee production in 2023/24 will drop to 3.43 million 60-kilo bags, which is 1% down from revised estimates for 2022/23 and 3% down from the 2021/22 year. Exports are estimated to drop at an even faster rate, down 6% in 2023/24.

The report repeatedly states that production and even quality are being negatively impacted by two concurrent forces: higher production costs; and fewer available workers.

“Migration and remittances have contributed to lower labor availability, particularly in the agricultural sector where labor is particularly strenuous, and some planted areas have been abandoned, especially in Huehuetenango and Alta Verapaz,” the report states. “Production costs increased 60 percent and few farmers can afford specialized labor to identify and harvest only red mature cherries, reducing overall quality.”

Despite these challenges, the report notes work being done by the Guatemalan national coffee association (Anacafe), as well as by international NGOs, large private-sector buyers and others in revitalizing the Guatemalan coffee sector through new plantings, variety diversification, labor initiatives, crop insurance and other beneficial activities.

The United States continues to be by far the leading export destination for Guatemalan coffees, bringing in approximately 1.5 million bags in 2022/23, a 16% increase from the previous year.

According to the FAS report, “Guatemala was the ninth largest coffee exporter in the world in MY2021/2022, with coffee making up 25 percent of the agro-industrial exports of Guatemala, and the third most important export product of the country.”

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