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Honduras coffee production is now expected to reach 5.5 million 60-kilogram bags in market year 2023/24, a remarkable 24% decrease from the previous year.
The drop is attributed to high incidence of coffee rust and an ongoing labor shortage domestically, as well the continued slight downward trend in international coffee prices due to an expected production recovery in Brazil.
These and other issues are outlined in the new USDA Foreign Agriculture Service annual report on the Honduras coffee sector.
[Note: This is part of a series of stories that will explore USDA FAS annual coffee reports. The information agency typically delivers more than a dozen country-level reports on the coffee sector, each coming from different authors and field offices.]
Production and Prices
Estimated coffee production in Honduras for market year 2023/24 has been revised to 5.5 million 60-kilo bags, a 24% decrease from the previous year, due to a high incidence of coffee leaf rust, labor shortages and economic factors, according to the report.
Weather conditions are expected to increase coffee rust incidence starting in May, with an average incidence of 5.8%, affecting various departments such as La Paz, Francisco Morazán, and Comayagua. An April survey from the Honduran national coffee institute IHCAFE showed that nearly two-thirds of coffee farms nationwide have at least low-level leaf rust presence.
Domestic Consumption
The FAS post notes that world coffee consumption for the 2023/24 year is projected to grow by 2.2% to 177 million bags, driven by a global economic growth rate above 3%, with non-producing countries contributing significantly.
In Honduras, per capita coffee consumption is estimated at 4-5 kilograms annually, similar to rates in Panama, Mexico and Guatemala, according to International Coffee Organization estimates.
Rising domestic consumption is being driven by coffee bars and young consumers embracing new trends like Keurig coffee pods and machines, which are available in more supermarkets, according to the report.
Exports
FAS Honduras forecasts 2023/24 coffee exports at 5 million bags, a 19% decrease from the previous year‘s 6.2 million bags.
The average international export price for 2023/24 is $253.85 per 60-kilo bag, a 3% decrease from the previous year, according to sources in the report.
Regional exports from Mexico and Central America in January 2024 were down 7.7% year-on-year, with Honduras seeing a significant drop of 34.3% due to farmers withholding stocks in hopes of higher prices amidst high inflation and increased production costs, according to the FAS analysis.
Policy
The National Congress of Honduras in January ratified Executive Decree 352-2022, exempting coffee from the 12% sales tax and expanding the tax-exempt list to over 270 essential products.
The Central Bank of Honduras is regularly reviewing its credit policies in response to inflationary pressures, increased input costs and a global economic slowdown, which may impact coffee production and consumption within the coming year, according to the analysis.
The report additionally details a range of policy- and program-related initiatives being led by organizations such as IHCAFE and USAID in the Honduras coffee sector.
Specialty Coffee Market
The segment of certified and specialty coffees in Honduras has grown significantly, accounting for 58% of total export value in the 2022-2023 harvest, with a 7.4% increase from the previous year, according to the report.
National-level registration of differentiated coffees, which launched in 2009/10, comprised 3 million 60-kilo bags sold in 2022/23, with top certifications from third parties such as UTZ, USDA Organic, Fairtrade/Organic, 4C and Rainforest Alliance.
Honduras has organized its coffee production into six regions based on microclimates and soil composition. The country has promoted quality through initiatives like the Cup of Excellence and a Geographical Indicator for the “Honduran Western Coffees” brand.
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