Report Highlights:
El Salvador's coffee production continues to decline and in MY 2003/04 is expected to reach 1.25 million 60 Kg. bags green bean equivalent (GBE). Some efforts to promote Specialty and Gourmet coffee are being spearheaded by the U.S. Agency for International Development (USAID) in conjunction with the Salvadoran Coffee Council (CSC). However, El Salvador still lacks a national program to market its coffee abroad. Imports of mainly soluble low quality coffee have gained control of local consumption. Coffee exports in 2004/05 are expected to only generate approximately $100 million in foreign exchange.
Executive Summary
El Salvador’s 2003/2004 coffee harvest is expected to be approximately 4 percent lower than previously reported.New data provided by the Salvadoran Coffee Council (CSC) reveals that the 2003/04 harvest is expected to reach 1.25 million bags.Reduced investment due to low international prices continues to be the main cause for the extended production down slide.Favorable conditions are expected to positively impact production for the 2004/05 crop, returning yields to more normal levels.Final output for the 2004/05 crop will ultimately depend on the availability of funds to cover fertilizer investment and adequate production techniques.
Coffee exports in 2003/04 are expected to reach 1.24 million bags.Expected higher production in 2004/05 will increase export numbers in 2004/05.Local financial institutions continue to require farmers to have a planned coffee-sales program in order to have access to loans.This requirement is forcing farmers to forward contract their coffee and avoid speculation.The U.S. is the main export destination for Salvadoran coffee accounting for 36.6 percent of MY2003/04 exports through April 2004.In MY 2003, exports to the U.S. are expected to reach 456,400 sixty kg. bags.Other important markets are Germany, England, Belgium, France, Sweden, Canada and Japan.
The closing of a Nestle processing plant in 2003 caused domestic consumption to shift from mostly ground coffee to mostly soluble coffee.This has led to a sharp increase in soluble imports.
The CSC continues to monitor exports through the use of export registrations permits.The GOES has guaranteed through the Multi-Sectoral Investment Bank (BMI) a loan of $ 25.00 per hundredweight (cwt) to cover for routine maintenance and harvesting during the 2004/05 crop.Coffee is still the most important source of employment in rural areas, with coffee harvest alone providing approximately 130,000 jobs.Coffee is no longer the major source of export revenues in El Salvador.In 2003, coffee only accounted for 4 percent of total export earnings.The maquila industry (cut and sew operations) is the major source of export revenues.Family remittances from Salvadorans residing in the U.S. in the excess of
$2 billion in 2003 are also helping the country’s economy remain afloat. Coffee exports in 2004/05 are expected to generate approximately $100 million in foreign exchange.
Even though the GOES has not dictated a national policy to promote Salvadoran coffee, some efforts are being focused mainly on Specialty and Gourmet qualities (See Trade).A new GOES administration takes office on June 2004 and the coffee sector as well as other agricultural sectors are waiting for campaign promises to be fulfilled.