El Salvador Soldiers On

by

By Bethany Haye

There are many businesses and a few countries of which it can be said, “They were just beginning to take off or just recovering from some disaster when Covid hit.” El Salvador’s coffee sector had been through two centuries of ups and mainly downs when the global pandemic, a 7.4 magnitude earthquake, and tropical storm Amanda hit in quick succession — not to mention the ongoing coffee leaf rust devastation and the international price crisis. As coffee has played a huge role in its past, El Salvador looks to the world’s favorite drink to help save its future.

El Salvador shares a border with Guatemala and Honduras and benefits from the same high altitudes and volcanic soil as its better-known coffee-producing neighbors. The main varieties cultivated are Bourbon and El Salvador-originated Paca and Pacamara, cultivated across six mountain ranges:  Alotepec Metapan, El Balsamo Quezaltepec, Apaneca Ilamatepec, Chichontepec, Tecapa Chinameca, and the Cacahuatique.

Though coffee once totaled a huge majority of its exports, El Salvador has only recently started developing outstanding coffees. Today, real attention is being paid to specialty coffee, particularly the exceptional Paca and Pacamara varieties, which have shone at recent Cup of Excellence competitions, breaking the world record in 2006 with 94 points.

Salvadoran coffees are classified by three standards:

Central standard: mild, clean aroma; smooth cup with good flavor, texture thin, no acidity and little body

High grown: fine, pleasant aroma; cup has good flavor and even texture, uniform acidity and good body

Strictly high grown: pleasant, penetrating aroma; cup is flavorsome with good texture, plenty of acidity, and body

El Salvador’s coffee production was on a slow climb from the mid-2000s to 2010s. But in 2014, it lost 60% of its coffee crop to leaf rust. By marketing year (MY) 2017-18, it had gotten back up to 640,000 sixty-kg bags, approximately 5% above the previous cycle, and 675,000 sixty-kg bags in MY 2018/19. But it reached a historic low of 505,000 sixty-kg bags in MY 2019-20, and the MY 2020-21 crop is forecast to decline even further to 475,000 bags, as the Covid-19 quarantine is making it hard for the sector to carry out the necessary post-harvest processes.

The United States continues to be the main export destination for Salvadoran coffee, accounting for almost 43 % of MY 2018-19 exports, with Germany second, followed by Belgium, Japan, Italy, and England.

In 1989, the Salvadoran Coffee Council (CSC) was founded, tasked with aiding the sector technologically and financially. Its current mission is strategic promotion, marketing and positioning based on identifying specific qualities for each of the coffee-growing mountain ranges.

It has started to promote domestic consumption of high-quality locally grown coffee, both in-home and out-of-home. A long history of emphasizing exports led El Salvador to increasing soluble coffee imports, mainly from Mexico, Brazil, and Nicaragua. But in the last five years or so, the domestic retail market is growing with an increasing trend toward modern new coffee shops in major commercial areas, offering premium local Bourbon and Pacamara brews.

CSC’s board is chaired by the Minister of Agriculture and includes representatives from the Ministries of Tourism, the Environment and Natural Resources, and the Central Reserve Bank, plus four board members from the private sector representing farmers’ associations, the cooperatives, business associations, processors and exporters. CSC provides quality control facilities, including cupping laboratories for producers or processors who do not have them as part of their quality control system. By law CSC is responsible for verifying the quality of coffee for export.

The science side of government involvement is embodied by CENTA-CAFÉ, which is part of CENTA, the agronomy-based institution, which has five highly specialized laboratories dedicated to biotechnology, parasitology, agricultural chemicals, soil optimization, and food technology. CENTA-CAFÉ alone has 23 offices and more than 80 extension workers in the 6 coffee-growing mountain ranges. It also runs 128 farmers’ field schools. Other important projects include development of fungicides and rust-resistant varietals in collaboration with PROMECAFE and the Central American Programme for Integrated Coffee Leaf Rust Management (PROCAGICA)

A cluster of organizations in El Salvador represent one or more links in the coffee value chain, notably:

-The  Asociación Cafetalera de El Salvador (represents producers)

-The Asociación de Cooperativas Productoras, Beneficiadoras y Exportadoras de R.L., which  represents collective cooperative associations of producers, processors, and exporters,

-Foro del Café Producers’, representing processors’ and exporters’ associations and cooperative companies

- Asociación de Beneficiadores y Exportadores de Café S.A. de C.V. representing processors and exporters

-Unión de Cooperativas Cafetaleras de El Salvador de R.L. representing processors and exporters

-Confederación de Cooperativas de la Reforma Agraria de R.L., representing producers’ cooperative associations.

End of an Oligarchy

El Salvador’s coffee sector began in the late 17th century. A few trees from the Caribbean were planted in the western provinces and forgotten about until coffee became a craze in Europe. To capitalize on this, the government enacted liberal reforms of 1881 and 1882, decreeing that “access to common lands is no longer a right” and that “private title to such lands can be granted to those who cultivate specified crops.” Since indigenous people farmed communal territory and held no written title to their land, the decrees essentially threw nearly half of El Salvador’s population off ancestral land and turned it over to those with the means to cultivate cash crops, especially coffee. By tacking on a decree criminalizing “vagrancy,” the government instantly created a mass of landless peasants with no other option but to work on the plantations. Intense coffee cultivation pushed up GDP – in the 1920s and 1930s, coffee accounted for 90% of the country’s exports – and provided resources for significant national infrastructure development. But it also crowded out most other crops, making the country dependent on food imports. Successive governments legislated increasing concentration of the country’s land ownership to the point that the expression “the fourteen” is known to all Salvadorans to mean the fourteen families that constitute the “coffee oligarchy.”

By 1931, the coffee export price had dropped by 54 %. Destitute jobless peasants rebelled in January 1932 and were crushed by the army with 30,000 of them shot in one mass execution alone. The chaos allowed Maximiliano Hernández to mount a successful coup and install a military dictatorship that lasted until 1944. High coffee prices in the 1950s and 1960s allowed the sector to be renovated with new cultivars, especially Bourbon, now the mainstay of Salvadoran production, and better agronomic practices.

The mid-70s saw El Salvador profit from the frost that killed Brazil’s exports, leading to even higher output, with a record 3.8 million 60kg bags produced in 1974-75 making tiny El Salvador the world’s third-largest coffee producer. Approximately 50% of the nation’s GDP stemmed from the coffee industry during the 1980s. The agro-export oligarchy was the backbone of the Salvadoran economy and the main source of hard currency and profit until a leftist coup toppled the government in 1979. The dissolution of the ICO export quota system in 1980 was a near-fatal blow.  Instability, violence, and guerilla warfare continued, undermining coffee production. The 1992 peace treaty led to some semblance of stability, but at the expense of the agricultural sector.

Today, instead of 14 agricultural, largely coffee-producing families holding power, there are 8 families; rather than the old agri-export model, they are involved in finance and industry. Having broken the feudal stranglehold on wealth, the new oligarchs own or control the nation’s main banks and financial institutions, both public and private. Corruption is rampant and visible, with recent presidents’ families obtaining direct or indirect ownership of much of the country’s capital. 

Part of this dismantling of the coffee oligarchy, a small elite that owned 80% of farmland, was a program to transfer the land to former combatants on both sides of the civil war. But progress in implementing the reforms and rebuilding the economy is slow. Many commentators and historians, including York University (Canada) professor Carlos Velásquez Carrillo, contend that the SAFTA free-trade agreement with the US has not been beneficial to the broader population. Extreme poverty (El Salvador has one of the highest levels of poverty in the world) has led to decades of gang violence, a major problem as extortion by gangs afflicts the coffee sector.

In this context, it is not surprising that coffee production levels in the 21st century have faltered as plantations are not renewed or maintained, leaving them vulnerable to the 2014 rust outbreak, which hammered production down to just over half a million bags in that year. Although there was a slight improvement in the subsequent two years, over last six years, coffee-sector jobs have dropped from 86,500 in 2012 to an estimated 44,600 for the 2018-19 crop, according to USAID. Salvadorans have been abandoning the plantations, migrating north en masse in search of economic opportunity. As one analyst put it, “In El Salvador, less coffee means more migrants.” One-fifth of the country’s population now lives in the United States, and remittances are the country’s third source of hard currency.  At current prices, coffee exports in 2019/20 are only expected to generate US$85 million in foreign exchange.

Those who have stayed persevere. Salvadoran smallholders have realized the potential of value-added production such as gourmet, specialty, and fair-trade coffees. These are providing additional revenue to a growing number of coffee producers as the Salvadoran brand begins to come into its own. Helped by direct trade specialty retailers in the United States, Europe, and Asia, more farmers are now focusing on micro (5-100 bags) and nano (fewer than 5 bags) coffee-lot sales.

CSC is also sponsoring promotion events, such as the El Salvador Expocafe, started in 2018 and running the Coffee School for barista training and other themes. CSC beamed its 17th Cup of Excellence virtually in May this year, and added a new category — Café Presidencial — for those achieving 90 points or more. One of the 10 finalists made it into that category, with 90.3, a natural an aerobic processed Pacamara from Finca Divina Providencia. The others all garnered over 88.5 points, the second and third place runners-up being washed Pacamaras from Finca La Bonita (89.9) and Mileydi (89.5), respectively.

2025. specialty coffee made up about 65% of coffee exports, and CSC expects this to rise to 80% by 2025, Specialty beans can fetch around $3.50 per lb, a premium of more than $2 over the current “C” price.

In-home consumption, though still dominated by imported solubles, is reacting positively to a host of new local brands at the retail level, with roasted and ground domestic consumption reaching 40,000 bags GBE (green bean equivalent) in the same period.

Even if, as one commentator wrote, El Salvador cannot pin its hopes on coffee coming back to previous levels, its contribution to the economy is growing, not as a mass export commodity, but as a high-value specialty product appreciated domestically and internationally.