The brunt of the severe crisis plaguing the coffee industry in Central America is being borne by El Salvador, where the 2000-2001 harvest was 65% down from the previous season.
Small- and medium-sized coffee growers in El Salvador cannot even afford to weed their fields and prune their coffee bushes, because the banks are refusing to provide the loans that are normally granted for that purpose, complaining that the risk of default is too high.
"Activity has practically been brought to a halt," the executive director of the Salvadoran Coffee Council, Ricardo Espitia, told IPS.
Small producers have stopped maintenance work in their fields, leaving them "to God's will," and are harvesting the bare minimum, while seeking seasonal work in agribusiness establishments or surviving on subsistence food crops.
Prices are below $50 for a 46-kg quintal - the lowest price seen in half a century - while production costs in Central America amount to around $90 a quintal.
Coffee production in El Salvador dropped from 3.6 million quintals in 1999-2000 to 2.4 million in 2000-2001, and is expected to continue falling this year, said Espitia.
The slump in output between the two last harvests led to a sharp contraction in coffee export revenues, which plunged from $311 million in 2000 to just $130 million last year.
According to the forecasts of the Salvadoran Coffee Council, coffee export earnings will amount to just $100 million this year.
Up to 1997, when international coffee prices began to collapse, there were 20,000 growers in this impoverished Central American country, who provided direct jobs to 150,000 people and indirect employment to around 750,000, said Espitia.
But last year, only 96,000 workers were directly employed by the coffee industry, and that total is expected to shrink to 80,000 this year, he added.
"Growers here are caught up in total desperation, because last year, all of the sector's debts to the banks were restructured, and they have to begin paying them off in September. They are starting to fear they will not be able to do so," said Espitia.
The debts of small- and medium-sized growers amount to around $330 million, consisting mainly of loans that have been refinanced and are payable up to 20 years.
An Economic Commission for Latin America and the Caribbean (ECLAC) report released in March stated that Central America's coffee sector was facing an unprecedented crisis, due to the debacle of international prices triggered by global production that exceeds consumption levels.
ECLAC said that global output has outstripped consumption by 10 million 60-kg sacks in the past four years, while global exports have climbed to a record high of 88.7 million sacks.
The stocks of coffee-importing countries have ballooned to a combined total of 25.5 million sacks, nearly three times more than the level needed for obtaining a decent price, said the UN regional agency.
Experts say that the reason small-scale coffee production has not disappeared in the region is that peasant farmers are bound to tradition, and find it hard to dedicate themselves to other cash crops due to a lack of know-how and a lack of contacts for marketing new crops.
The large coffee stocks of importing countries will stand in the way of any significant rallying of prices for at least three years, ECLAC warned.
The UN agency added that last year, coffee export revenues in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua were $713 million down from the average earnings of the second half of the 1980s.
The coffee exports of those five countries accounted for 16.4% of the average annual earnings from exports of goods in the five-year period cited, compared to a mere 7.2% in 2001, said the study.
Coffee represents 1.3% of Gross Domestic Product (GDP) in Costa Rica, 2.5% in El Salvador, 4.2% in Guatemala, 7.2% in Nicaragua and 8.2% in Honduras, ECLAC reported.
The profound global coffee crisis makes it necessary to find other agricultural options for 200,000 micro-producers, 50,000 small growers, 33,000 medium-sized producers and around 7,000 large plantations in Central America, according to ECLAC.:
