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Increasing costs of coffee production relative to coffee prices has led to concern across the industry of lack of profitability of coffee production especially for smallholders who comprise a large majority of producers. This study compares coffee production costs and income over a decadal interval of versus for coffee farmers in some of the main coffee growing regions of Costa Rica and Guatemala. Costs and income were collected by farmer recall using a standard questionnaire with trained research surveyors. Gross income was stable in Guatemala but increased in Costa Rica due to receiving significantly higher prices for their coffee in compared to , while in Guatemala prices declined. Nevertheless, the response was not uniform between farms in Costa Rica while high and medium productivity groupings of farms had higher EBITDA, low and very low productivity farms experienced a decline similar to Guatemala. The difference in performance of farm groups in Costa Rica was due to a decline in production per hectare of the lower productivity group; while the difference between Guatemala and Costa Rica was firstly due to price differences, and secondarily due to lower productivity of some farm groups. The investment of Costa Rican farmers was undoubtedly supported by the substantially increased price received by farmers as compared to Guatemala , reflected in the increase in export price of coffee from Costa Rica relative to Guatemala. This shows the importance of farmers receiving higher prices for their produce in enabling them to cover increasing production costs, invest in increasing productivity and maintain profitability. Coffee production is estimated to provide livelihoods for between Coffee producers were struggling to cover their operating costs during the period of —, due to rising input, compliance and transaction costs ICO, Rising costs and falling prices have resulted in up to half of coffee producing smallholders living below the extreme poverty line in some countries ICO While coffee prices have recovered somewhat over the — period, price volatility is inherent and systemic in coffee production, with farmers facing prices below production costs a few years in every decade. Over longer time frames — there is no significant trend of prices increasing nor decreasing ICO, , but costs of production have increased sharply since thus reducing profits for producers Sachs et al. Cordes et al. The main drivers of poor economic performance appeared to vary between countries, while in Colombia and Guatemala high production costs were important and in general for Latin America , in Uganda low farmgate prices and small farm size, and Ethiopia low coffee productivity were key factors. Guatemala is the eighth largest coffee producer globally and fourth largest producer of Arabica coffee. Both Guatemala and Costa Rica have a reputation for producing very high quality and specialty coffees. The countries share some macro variables that make the comparative analysis relevant, such as inflation rates, tax burden, being in the same region, and open market economies. Moreover, both countries are exposed to changes in commodity and input prices and are dependent on importing fertilizers and other inputs and exporting their production. Agroclimatic conditions for production are similar in the two countries and coffee production systems are similar derived from traditional shaded agroforestry systems with varying degrees of intensification, but not high input, irrigated monocultures as in Vietnam or parts of Brazil. Nevertheless, socioeconomic conditions in the two countries are distinct with Guatemala having one of the highest poverty and inequality rates in Latin America The World Bank, a , the highest poverty level in Central America while Costa Rica has higher levels of overall income, a relatively equitable distribution of wealth and high levels of education and social welfare The World Bank, b. Thus, the two countries have similar conditions for coffee production but within distinct economic and social conditions. Since the dissolution of the International Coffee Agreement in that buffered price fluctuations, there have been price crashes between —, — Bacon, , and substantial fluctuations subsequently. Addressing the financial instability among coffee producers remains an on-going challenge with many different industry and development programs attempting to address the issue. Changes in costs of production summarized by Sachs et al. Is it stated that both increases in labor costs and inputs costs were drivers of reduced profitability. It might be expected that higher wage economies such as Costa Rica would be at a disadvantage to lower wage economies such as Guatemala. Nevertheless, clear data on changes in production costs over time appear to be lacking. Overall, past studies lack comparable data at farm level across time to ascertain the main causes and responses to the perceived decline in profitability of coffee production in countries whose primary producers are smallholders. In this study we aim to determine the changes in the on-farm economics of coffee production over a decadal period between and under the distinct socioeconomic conditions of Guatemala and Costa Rica to understand the factors that may be contributing to falling profitability or enabling farmers to maintain their incomes. The study applied the Committee for Sustainability Assessment COSA method for multi-criteria assessment of sustainability in coffee Giovannucci and Potts, to characterize farms and evaluate coffee production costs and income from coffee on farms across Guatemala and Costa Rica. This is a method that can be implemented in between half to one day per farm; while this limits the depth of evaluation it also permits larger sample sizes to be undertaken. Certified farms were selected from lists provided by certification bodies and traders in-country, and non-certified farms were identified from the same communities with similar characteristics. In Guatemala, farms were located in: West departments of Quetzaltenango, Retalhuleu, and San Marcos low-high altitude, high rainfall, commercial grade coffee; Mid department of Solola high altitude, medium rainfall, high quality coffee; and East departments of Guatemala, Sacatepequez and Chimaltenango high altitude, low rainfall, and very high coffee quality. Where these farms were not available or interested in participating they were replaced by nearby farms of similar characteristics 56 in total. Ethical standards of prior consent and confidentiality were followed as appropriate for socioeconomic surveys and farmers were at complete liberty to decline to participate as a few did. Two surveyors experienced in farm verification processes conducted the farmer questionnaires, but different surveyors were used for the two evaluation periods. Surveyors received training, conducted trial interviews, and interview responses were reviewed periodically to ensure quality with feedback provided. All variables were quality checked in order to identify values out of acceptable or standardized ranges. All the values identified as outliers were reviewed or corrected with the producer in a second visit or phone call. In both surveys we used the COSA questionnaires to register all coffee agronomic practices and estimate the costs of those practices during the previous year, and as well as the amount of coffee produced, harvest costs and value of sales for the harvest prior to and after the period evaluated for its agronomic costs i. The actual timing of the survey varied as the agronomic year and start and end of harvest varied across the different regions with some completing harvest in November and others until April. The COSA format is designed to facilitate the reconstruction of costs from farmer recall by working through the practices for the farming year; this is supported by the registers of activities and use of records farmers are required to maintain when they are certified, but are less common for non-certified farmers. Moreover, for each survey the data for production and price was averaged between two adjoining harvests given the known tendency for biennial production, i. This avoids excessive fluctuations. Price and production of cherry coffee was used for all farms. When a farm sold coffee in another presentation, standard conversions were used to transform back to cherry. Expressing the equation with a normalization by plantation size facilitates comparability between farms, and allows for a simple conversion to totals profits, income and cost by multiplying by area. Moreover, consider that. Costs can be analyzed in different ways to obtain a better picture of underlying dynamics. An initial and relatively simple way is to decompose costs among input costs and labor costs, with. For input costs, the materials e. For labor costs, the number of person-days and cost per day were registered for all activities. All person-days were considered as a cost, regardless if they generated a monetary payment or if they were family work. Another way to decompose costs is between activities, with. These costs contain input and labor costs, with all person-days considered as a cost as specified above. Costs of labor for the harvest and processing were calculated including picking, wet processing, and drying based on a cost per volume of harvest as this is how these services are usually paid. The amount and price of materials, tools and equipment used in harvest and processing were registered; in the case of minor equipment that lasts more than a year, total cost was divided by life-span as an estimate. Additional costs were registered including, fuel used for machinery , transport costs, and administration costs. Fixed costs such as equipment depreciation, maintenance and administrative costs were considered yet played a relatively small part in overall costs. Farms where costs were incomplete or substantially deviated from the normal range of values were eliminated from the analysis. Based on the dataset a coffee plantation typology of production strategies was formed for each country using multivariate cluster analysis based on the shade LAI and coffee yield as indicators of sustainability and productivity outcomes of the management strategy of the plantation Haggar et al. The resulting clusters represent the coffee plantation production strategies that reflects the strategy in terms of intensification and sustainability. Four production strategies were differentiated for each country representing high, medium, low and very low productivity plantations, with varying shade levels Appendix Table A1. Production strategies significantly differed in the levels of agronomic investment, coffee yield, and shade levels, amongst other factors Haggar et al. Agronomic production costs were very similar to that for the LPHS system. The subset of data that only includes farms for which there is data for both dates were compared using paired t-tests. Paired t-tests were also used to compare the differences in the components of economic costs and income between and OLS with robust standard errors are used to regress each of these variables on altitude, farm area, producer age, certification of coffee dummy , participation in a producer association dummy , and survey year dummy. The absolute value of EBIDTA from coffee production in and , and the differences between them were very similar whether calculated using all data from the two surveys, only from farms in the same regions, or only farms in common between the two surveys Table 1. In Costa Rica the comparison of farms in and using all data gave a weakly significant increase in EBIDTA which might have been influenced by the data covering a wider geographic area than the data. The values for farms in the same regions and farms in common gave similar absolute values but the slight increase in EBIDTA was no longer significant. For further exploration of the factors that contribute to this difference we have used the comparison between the same farms to ensure changes between the time periods are not influenced by differences between the farms included. This limits the sample size to 69 farms for Costa Rica for each year, and 38 for Guatemala. Table 1. EBIDTA - earnings before interest, taxes, depreciation and amortization - USD per hectare from coffee production averaged for all farms surveyed in each country in each year, those farms found in the regions in common between the two survey years, and those farms in common between the two surveys. Figure 1. Costs rose in both countries by similar amounts in absolute and relative terms, which were statistically significant Figure 1C. Although not significantly, gross income from coffee sales rose in Costa Rica but fell in Guatemala due to changes in coffee prices Figure 1E , while productivity remained unchanged in both countries. Guatemala experienced a statistically significant drop in price of Both agronomic costs per ha and unit costs per kg of coffee increased in both countries with statistical significance and by similar amounts Figures 1C , F. What is different between countries is that Guatemala also experienced an increase in variability of unit and agronomic costs suggesting differing responses among farmers in the country. A deeper understanding of this variability can be found exploring the main components of the total agronomic cost per hectare as presented in Figure 2. Figure 2. Moreover, the variability in Guatemala increased sharply, indicating that the increased investment in inputs was not uniform across farms. Further insights can be found exploring the components of the total cost per hectare as presented in Figure 3. Figure 3. Statistically significant increases in mean costs are found for both countries in the establishment of new plantations, the use of fertilization, and the use of pesticides. These increases in means are accompanied by a notable increase in variability, especially in Guatemala. This may in part be due to a larger percentage increase in production per hectare in Guatemala than Costa Rica, although overall production costs per hectare was higher in Costa Rica than Guatemala Figure 1D. Lastly, in Costa Rica there was a notable increase in manual weed control costs, which while not statistically significant explains the larger increase in labor costs in Costa Rica Figure 3C. Multiple regression models showed the same differences between survey years in production per hectare, unit cost of production, price, and resulting EBITDA as indicated above Table 2. Production per hectare was significantly and positively associated with altitude in both countries and with certification in Guatemala but was negatively associated with farmers being part of an association in Guatemala Table 2A. Coffee price was positively associated with altitude and farm size in Costa Rica, and with certification in Guatemala Table 2B. Costs of production of a kilogram of coffee were negatively associated with altitude in Costa. There was a weakly significant negative effect of association on EBIDTA in Guatemala which is likely an effect of the low production per hectare of associated farmers, but it is not possible to determine whether this is because low productivity farmers tend to be members of associations, or being a member of an association somehow leads to lower productivity. Table 2. Influence of farm characteristics on A EBITDA and coffee productivity, and B coffee price and unit costs of production based on all farms in regions present in both surveys. The EBIDTA of farms in different typology groups representing different production strategies were significantly different in both countries Table 3A , and thus indicate that the responses described above were not uniform across all farm types. Differences in EBIDTA between typology groups were closely related to productivity as productivity was the main factor the groups were based upon. Unit costs of producing a kilogram of coffee were significantly higher for very low productivity groups in both countries compared to high and medium productivity groups. Table 3. Economic performance of coffee farms by typology grouping for A all farms in and B change between and for those farms in both surveys. There were no statistically significant differences between typology groups in Guatemala probably due to the small sample size for paired farms. The changes in EBIDTA were again partially related to changes in productivity with high and medium productivity groups in both countries experiencing increases in productivity compared to declines for Low and very low productivity groups although not statistically significant for medium productivity from those with reduced productivity in Guatemala. All groups in Costa Rica except the very low productivity group had significant increases in price received for coffee, while all the groups in Guatemala experienced declines in price received. As claimed by other studies e. However, these differences integrate both increased unit costs and increased investment in production. The decrease in unit costs of fertilizer but increase in total fertilizer costs indicates that in both countries farmers increased the rate of fertilization. Although production per hectare on average remained the same in both countries there was high and medium productivity farms increased their productivity while on low and very low productivity farms productivity declined. This may represent two different responses by farmers to increasing costs, one to reduce investment in production and the other to increase investment, especially in fertilizer, to boost production and thus increase income. Analysis by Lalani et al. Both countries were investing considerably more in establishment of coffee plantations in than , possibly due to impacts of the coffee rust outbreak in Furthermore, Guatemalan farms are investing relatively more than their Costa Rican counterparts. This indicates that Guatemalan farms have a larger area of new as yet unproductive coffee, which would reduce farm-level production per hectare of coffee plantation. As this probably only affects a proportion of farms it probably also contributes to the high variability in cost per kilogram produced due to the additional costs from establishment of new plantings being included in some cases. The positive economic impact of Costa Rican farmers intensifying production appears to contradict conclusions from the systematic review of Jezeer et al. The economic performance of the production strategies from the typology were analyzed by Lalani et al. In contrast low-input highly shaded coffee had lower returns under the labor and input cost variations tested but generated the lowest losses if coffee prices crashed. Other factors that appear to support reducing production costs and increasing EBIDTA are higher altitude and larger farm size both in Costa Rica , and certification in Guatemala. Haggar et al. Unfortunately, altitude and farm size are not factors farmers can easily change, and certification requires investment and close alliance with private traders or trading farmer cooperatives. Nevertheless, Wollni and Zeller found that farmers in Costa Rica do benefit from price differentials associated with specialty markets and that cooperative association was an important means for them to access those markets. USD 1. Unfortunately no comparable data are available for It should be noted that these prices have not been adjusted for inflation, unlike the prices shown in Figure 3 , if a similar adjustment is made to these prices it would also show a lower inflation-adjusted price in of USD 2. Thus the farm-gate prices reported to us by farmers correspond to and are likely a result of differences in export prices. Thus, both countries had managed to improve export prices compared to market trends, though Costa Rica managed to increase its export price differential substantially more during this period. Nevertheless, production and export of coffee in Costa Rica has declined from over 2. This may have increased prices internally in Costa Rica as exporters competed for coffee to meet their contracts with buyers. The Specialty Coffee Transaction Guide: www. It has been noted that Costa Rican producers have invested in many micro-mills to process and sell high quality micro-lots at substantially higher prices, but also maintaining a reputation for environmental and social standards as well as product quality USDA, Thus, Costa Rican farmers and their organizations have taken the next step from simply accessing markets that provide specialty prices as reported by Wollni and Zeller, to now adding further value through micro-processing for direct sales to specialist roasters. As Jacobi et al. Without doubt increased production costs, and above all labor costs have affected the economics of coffee production in the two countries studied. However, it is notable that while labor costs in Costa Rica are about double that in Guatemala, Costa Rican farmers have been able to maintain their profitability better than Guatemalan farmers. In part this seems to be due to some groups of Costa Rican farmers having achieved higher productivity through higher investment, indeed only high and medium productivity farms had increased EBITDA. However, this investment has been substantially supported by increases in prices received by most Costa Rican farmers, while prices received in Guatemala declined. Indeed, high productivity Guatemalan farmers who invested in increasing productivity did not benefit economically due to the lower price they received for their coffee. Higher prices in Costa Rica have been supported by a reduction in the volume of coffee offered by Costa Rica, but also by higher social and environmental standards, and increases in direct sales and sales of processed coffee. This demonstrates the role of buyers and consumers paying prices that appropriately compensate the costs of production and provide a living income to farmers. Ultimately the higher prices received by Costa Rican farmers is probably what has enabled them to maintain or even increase coffee productivity while paying substantially higher wages compared to other countries in the region such as Guatemala. The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation. The study was led by Gabriela Soto and Eduardo Corrales. The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest. All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher. Bacon, C. Bacon, V. Mendez, S. Gliessman, and J. Google Scholar. Castro, F. CEPAL How many coffee farmers are there? Global coffee farm study. Giovannucci, D. Seeking sustainability: COSA preliminary analysis of sustainability initiatives in the coffee sector. Haggar, J. Shade and agronomic intensification in coffee agroforestry systems: trade-off or synergy? Food Syst. Crossref Full Text Google Scholar. Environmental-economic trade-offs and benefits of sustainably certified coffee farms. Hedebrand, C, and Laborde, D High fertilizer prices contribute to rising global food security concerns. Coffee development report growing for prosperity — economic viability as the catalyst for a sustainable coffee sector. Jacobi, J. World Dev. Jezeer, R. Shaded coffee and cocoa — double dividend for biodiversity and small-scale farmers. Lalani, B. Shade versus intensification: trade-off or synergy for profitability in coffee agroforestry systems? Ensuring economic viability and sustainability of coffee production. Columbia Center Sustain. Soto, G. Environmental and socioeconomic impact of organic coffee certification in Central America as compared with other certification seals. Volume 1 - Organic Crop Production. The World Bank. The World Bank in Guatemala: overview. The World Bank in Costa Rica: overview. Costa Rica: coffee annual. Wollni, M. Do farmers benefit from participating in specialty markets and cooperatives? The case of coffee marketing in Costa Rica. Table A1. The use, distribution or reproduction in other forums is permitted, provided the original author s and the copyright owner s are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms. Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher. Top bar navigation. About us About us. Sections Sections. About journal About journal. Article types Author guidelines Editor guidelines Publishing fees Submission checklist Contact editorial office. Changes in the economics of coffee production between and a tale of two Central American countries. Staver , Independent researcher, Xalapa, Mexico.

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Chimaltenango buying weed

As Christmas wound down and the hours of our vacation days began to drag on again, Hilary and I decided we would give our travelling legs another chance to run, so we packed up our bags again and set to the Pan-American Highway, this time heading north. We decided that our mistakes last time were 1 Packing too big of a bag, and 2 Leaving too late in the day, so we downsized our cargo and walked away from our bedroom door at AM on a cold Saturday morning. Close to thirty seconds after we left the lookout point, the motorcycle began to make terrible noises. When pushing it hard in fifth gear, it just seemed too loud. When coming off the acceleration a little, it transformed into a moving bubble-maker. As is a common experience for us in Guatemala, we felt very silly. The very friendly gas station attendant gave our vehicle a once-over and kindly pointed out that there was a gaping space where an important pipe should be, and a large hole in the engine was now exposed the outside world instead of being properly rerouted to the muffler. He also told us that aside from sounding a bit undignified, we should make it just fine to Solola, where a moto-shop could help us out with a new part. Half an hour after our appointment with El Shaday, and a full kilometer lower in altitude, we arrived at our hotel in Panajachel, Lake Atitlan. Well-known as an old hippie town set beside crystal waters in a volcanic crater, we were ready for a few days of rest and tranquility. Instead, we found a dirty, overrun drug mecca with few redeeming qualities. Most of the corners were converted into homes for coked-up troubadours on bad trips that were overconfident in their harmonica skills. Over-ambitious Guatemalans set up their artisan shops along the streets or just simply carried racks full of goods down the sidewalks. Under-ambitious Guatemalans that had immigrated to Panajachel pestered tourists to buy them a beer or share a toke in the spirit of unity. Hilary and I were in the mood for none of it, so we swatted the noise of the town away best we could as we searched for a decent taco. I always imagined a town full of hippies would be a peaceful place, blissfully nostalgic for many from an older generation. As I was reflecting on that in the streets of Pana, a neo-hippie wearing rolled up red chino khakis, a white linen shirt, no shoes, and a homemade guitar, assaulted a man on a bike for the hell of it. On a serene Saturday afternoon, he just had the urge to scare someone. Who were these terrorist hippies, and why had so many gathered in one such beautiful place? I worked on my theories and tried to put our hostile environment behind me as I planned the next day of our trip. Hilary and I woke up early on Sunday to avoid the crowds. We planned to catch a boat across the lake where the terrorists are scant and the kayaks are cheaper. We asked for a boat at 8. The boat drivers said they would leave at 9. We grabbed a cup of coffee to pass the time and returned to the dock. The boat left at The drivers overfill the passenger novelties with 25 nervous tourists. Then they drive as fast as they can for 45 minutes across the immense body of water. They hit each wake full speed, tempting the lake to break through the boat floor and welcome visitors into its frigid, daunting embrace. We finally pulled into the shanty dock in San Pedro, wet with mist and at ease to be so far from hippie terrorism. San Pedro is good and full of hippies too, but the aura must affect their Chi in a different way, because it was over an hour before we were hassled for anything. After we finished our coffee, we took to the streets to explore the charming city that invited us in with its more passive nature. The strength of fate must be strong in Atitlan, because after ten minutes of loitering in the streets, we ran upon a bearded friend from Pittsburgh we had met only a week earlier, about eight hours away on a Monterrico beach. He happened to be living in a hostel and looking for Spanish lessons in San Pedro, and somehow the chaos of the Universe brought us to the same spot on the same Volcano lake at the same time. Busy, busy, busy. Then again, the whole encounter could have been a hallucinogenic vision set on by the aforementioned contact high. As we were talking, another guy from the hostel walked out to the street and introduced himself. He came in on the part of the conversation where we told our friend about our unfortunate moto part, which really got him riled up. I looked at Hil and my friend from Monterrico. We laughed nervously. Spirit Child laughed too. He offered us some weed breadloaf and we declined. Then he got distracted by something down the street and told us not to move because he would come back within an hour. We all looked at each other, a bit confused but a little less nervous. Maybe we answered his question and he had gone in search of the moto part, or maybe he just saw something shiny. Whichever it was, we said goodbye again to our friend from Monterrico and set off looking for the kayaks. I pondered a little on my theories of hippie terrorism, but mostly I thanked God for my gorgeous wife and His gift of beautiful, incomprehensible nature. Then I prayed he would give Spirit Child whatever answer he had been searching for. Here is our engine without the pipe, exposing a large hole to the outside world. Here is our engine with a pipe newly installed. The sturdy craft that transported us across the lake to San Pedro rests against the dock, closest to the volcano. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. I said where. Leave a Reply Cancel reply Your email address will not be published.

Chimaltenango buying weed

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Chimaltenango buying weed