Honduras

Honduras

Honduras is a major regional producer with significant R&R need due to old trees and a recent La Roya outbreak

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R&R Need

70% of total land is in need of R&R

SHF land in R&R need

‘000 hectares

97,000 ha No need
186,000 ha R&R need

Need is primarily driven by old trees and exposure to disease (La Roya affected ~25% of coffee growing areas). Climate change also has the potential to negatively affect Honduras –especially in the central region.

Current SHF yield & potential uplift

Tons per hectare

0.65
0.94
Current yield
Target yield

Uplift potential

+45%

Some potential for SHFs, but less impact on total supply

Potential increase in supply

~5-20%

Total national supply could increase ~5-25% if R&R and GAP is implemented on all SHF land in need of R&R2


Notes:
(1) The current yield is calculated on the basis of SHF production divided by SHF land area, the potential yield uplift comes from the GCP study on Honduras: GCP, Honduras: GCP: Economic Viability of Coffee farming, 2017.
(2) Rounded to the nearest 5%, estimate assumes that R&R and GAP increase yields with 45%, and the range reflects a 25-100% R&R success rate Sources Sources: Source: FAO Statistics database; ICO statistics; GCP and Technoserve, Economic Viability of Coffee Farming, 2017; Root Capital, Learning Report: the CFIR, 2016; USDA, Annual Coffee Report, 2017; IHCAFE, Programa de Asistencia al Pequeno Productor, 2017; IHCAFE, El sector café de Honduras: avances, institucionalidades and desafios, 2017; Dalberg Interview

Other Viability Considerations

  • Farmer share of the export price is around 75%, with local intermediaries playing a significant role in the value chain.
  • Honduras is a growing player in the field of specialty coffee. Honduras could meet part of the high quality Arabica coffee demand, especially for the US market.
  • Labor cost is on average USD 845/ha, about half the labor cost in Colombia.

Farmer Segmentation

Most SHFs are in tight and loose value chains

  1. Large & medium farmers
  2. Commercial farmers in tight value chains
  3. Commercial farmers in loose value chains
  4. Disconnected farmers

Majority of national production comes fromSHFs, though less so than other countries

The majority of SHFs are either in tight or loosevalue chains. IHCAFE reaches most of the SHF.

# SHFs

‘000

96

(includes SHFs <7hectares – 2% of global SHFs1)

# SHF land

‘000 hectares

265

(~90% of national land) – farm size typically <3 hectares

# SHF production

‘000 hectares

181

(65% of national production)

Assessment of SHF orgs.

All coops are registered by IHCAFE1~40% of SHFsare linked to coops. Coops have low capacity todeliver TA.

Links to market

SHFs are registered by IHCAFE.


Notes:
(1) Insitituo Hondunero del Café;
(2) The collection mechanism of the coffee producer savings fund is through a tax of USD 13.25/quintal exported. Of this sum, USD 9 is used for the Coffee Trust Fund (Fondo Cafetero Nacional, FNC) to repay the loans helps by banks and used by producers, and to pay IHCAFE for inputs sold to producers. Source: FAO Statistics database; ICO statistics; GCP and Technoserve, Economic Viability of Coffee Farming, 2017; Root Capital, Learning Report: the CFIR, 2016; USDA, Annual Coffee Report, 2017; IHCAFE, Programa de Asistencia al Pequeno Productor, 2017; IHCAFE, El sector café de Honduras: avances, institucionalidades and desafios, 2017; Dalberg Interview

Enabling Environment for R&R

  • Coffee share of GDP: 3.7% (2012).
  • Well organized sector since 2000: privatization of IHCAFE and creation of the regulatory authority (National Council of Coffee, NCC).
  • In 2004, a producer savings trust fund was established to help improve farm productivity. The funds are partly used to finance R&R2
  • IHCAFE produces seeds, but does not have capacity to produce at commercial volumes.
  • Many farmers produce their own seeds that are typically of low quality.
  • Seeds may be imported from Nicaragua, but the certification process is slow.
  • Low access to commercial bank loans for SHFs.
  • Several R&R programs enable SHFs to access grants or long-term finance at concessional rates.
  • Coffee institutions provide extension services at national, regional, and district level. However, these public extension services do not currently meet the demand and need of SHFs.
  • Some cooperatives provide TA, though many do not.

Examples of R&R programs

Past R&R programs have focused on providing access to long-term concessional finance for renovation

IHCAFE – Programa de Apoyo al Pequeno Productor andPrograma de Emergencia al Pequeno Productor
since 2007

HCAFE and the government provided highly concessional loans, technical assistance, and inputs to the least productive SHFs affected by La Roya to renovate their lands.

Root Capital – Coffee Farmer Resilience Initiative
since 2013

Root Capital lent USD 1.5 million to farmer organizations in Honduras and trained them to deliver loans to their members

Grupo Caldega - Programa de Produccion sostenible de Café
2015-2020

The purpose of the program is to renovate 1 million trees and to provide TA to 50,000 SHFs

Learn more and get involved

There is a lot of work to be done to ensure the long-term supply of coffee from countries where the crop has long shaped the social and economic fabric. Learning to extend the life of their trees and improve yields helps farmers stabilize annual production and in turn, income, while the rest of the world benefits from a steady supply of quality coffee. Continue on to learn more about the immediate attention and action that is required to make this a reality.