Honduras ranks first in Central America, third in Latin America, and seventh globally in coffee exports by volume.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: HO1103
Robert Hoff, Agricultural Counselor
Ana Gomez, Agricultural Specialist
Honduras ranks first in Central America, third in Latin America, and seventh globally in coffee exports
by volume. Honduran coffee production in 2011/2012 is forecast at 3.9 million 60 kilograms (kg) bags.
Coffee exports for 2011/2012 are forecast at 3.5 million 60 kg. bags. Production for 2010/2011 is
estimated at 3.9 million 60 kg. bags. Exports for 2010/2011 are forecast to reach 3.5 million 60 kg.
bags. Production for 2009/2010 was 3.6 million 60 kg. bags. The historical increase in production and
sales stems from the high international price of coffee, increased plantings in recent years, and good
growing conditions this year. Exports for 2009/2010 was 3.2 million 60 kg. bags. More than
433,000 60 kg. bags of specialty coffee were produced. For the eight consecutive year, Honduras is
participating in the "Cup of Excellence" competition.
Sixty-one percent of Honduran coffee production is grown in the mountains between 2,700 and 3,600
feet above sea level, 23 percent in areas from 3,600 to 4,800 feet above sea level, and 16 percent in
areas 1,500 to 2,700 feet above sea level. Coffee is grown in 15 of the 18 states and in 213 out of the
298 municipalities of Honduras. Honduras differs from other coffee-growing countries in the region
because of the prevalence of small producers. 85,000 producers who annually produce less than 77
bags of 60 kg. of coffee constitute more than 90 percent of all production in Honduras and contribute to
50 percent of total exports.
The coffee sector provides employment to 30 percent of the population and generates much needed
foreign exchange. Two million people directly participate in the coffee harvest. They are paid about
US$71 million, distributed nationwide over a period of four months. Besides picking the beans, there
are other activities such as fertilizer application, shade control, cleaning, drying, commercialization, and
transport which provide other employment. The importance of coffee's influence on the national
economy extends beyond just farm owners. According to the Honduran Coffee Institute?s (IHCAFE),
approximately 1.2 million people are involved in the coffee sector. There is steady demand for roughly
700,000 on-farm employees annually. This on-farm employment has an average of two workers per
?manzana? (1 manzana equals 0.71 of a hectare). Seasonal labor demand is 500,000 workers per year,
which is mainly during the harvest season. For the large producers, employed workers provide the
labor, while small producers tend to rely more on family members to plant, grow, and harvest
coffee. According IHCAFE?s latest data, coffee accounts for 32 percent of total Honduran exports and
the 2010-2011 sales should equal about 7 percent of the country's gross domestic product.
Coffee production and exports for the coming years are estimated to increase by the IHCAFE. The
2011/2012 harvest is forecast at 3.9 million 60 kilogram (kg) bags. The production estimate for
2010/2011 increased to 3.9 million 60 kg. bags. Production in 2009/2010 was higher, compared to the
record production of the previous year. The forecast export in 2011/2012 is 3.5 million 60 kg. bags.
Exports in 2010/2011 are estimated at 3.5 million 60 kg. Exports in 2009/2010 were 3.2 million 60 kg.
bags. IHCAFE's estimates of increase in production and exports are due to
the upward international prices of coffee that are motivating producers to use more inputs and improve
their work to increase yields. In addition, higher prices are motivating landholders with other crops or
in other professions to convert larger portions of their lands to coffee growing.
Export value for the 2009/2010 harvest reached US$606 million, which was 31 percent higher than the
earnings from the 2008/2009 harvest. The average New York Coffee Stock Exchange price for the
2009/2010 harvest was US$147 per 46 kg. bag compared to the average price of US$118 in 2008/2009.
During 2009/2010 exports of specialty, certified, and organic coffee were more than 433,000 60 kg.
bags. This is 14 percent of total coffee exports. Roughly 260,000, 60 kg. bags were not registered as
exports through official channels, with much of the coffee being exported through contraband channels
to Guatemala and Nicaragua. For eight consecutive years Honduran producers have participated in
regional coffee quality competitions to be in the international ?Cup of Excellence? auction.
The new data from IHCAFE suggests that the 2011/2012 harvest is expected to reach 3.9 million 60
kg. bags. Production for the 2010/2011 harvest is estimated at 3.9 million 60 kg. bags, two percent
higher than the 3.8 million 60 kg bags estimated in the previous report.
Production for the 2009/2010 harvest was 3.6 million 60 kg. bags, three percent higher than estimated.
The historical increase in production was due to Honduran producers being more motivated by the high
international price of coffee. Producers used more inputs such as the application of the fertilizer, the
provision of new seeds, the improvement of planting density, and soil conservation in an attempt to
increase yields and production levels. In addition, higher prices are motivating landholders in other
crops or professions to convert larger proportions of their land holdings to coffee production. An
estimated 10,000 new coffee producers have entered the market in 2010/2011 resulting in a total of
about 101,000 coffee farm operators in the country. This is equivalent to a 10 percent increase in the
number of coffee producers.
Honduras differs from other coffee-growing countries in the region because of the prevalence of small
producers. 85,000 producers?who annually produce less than 77 60 kg. bags of coffee?constitute
more than 90 percent of all production in Honduras and contribute to 50 percent of total exports.
IHCAFE maintains a trust fund to buy fertilizers and sells them at a discount and on credit with
payment not due for one year. The trust fund also provides financial assistance for maintenance and
renewal of coffee farms. About 87,000 coffee producers participate in this program.
Coffee producers have expanded and renew the planted area with the price incentive. There is an
estimate of five percent rise in planted area. The bearing and non-bearing trees remain steady. This is
due to the cycle that a coffee plant takes to become productive.
Production of "value-added" coffee is also increasing. More than 433,000 60 kg. bags of specialty,
certified, and organic coffee were produced in 2009/2010. This is a 92 percent increase in production
from the previous year. The production was under programs such as Utz Kapeh Certified, Organic/Fair
Trade, Rain Forest Alliance, Fairtrade, Cafe Practices and others. Honduras established in 2005
the Denomination of Protected Origin (DOP) Marcala in order to guarantee and preserve the quality of
the coffee produced in the Marcala region.
According to new data from IHCAFE, domestic consumption is generally ten percent of total
production. Consumption per capita in 2009 was 3.77 kg per person. This is a 56 percent increase
from the previous year (2.41 kg. per person). The increase in consumption can be tied to the growing
presence of coffee bars located in shopping malls, main business streets, supermarkets, and hospitals. A
wide range of the Honduran population is young and these Hondurans are consuming more and different
types of coffee, e.g., "frozen" coffee drinks. Particularly, these coffee bars specialize in providing
customers with free wireless internet service, which especially attracts high school and university
students. In addition, Honduran coffee roasters have more aggressively purchased domestic beans
because of their availability, high international market prices, and the fervor to export.
Coffee exports for 2011/2012 are forecast at 3.5 million 60 kg. bags. Exports for 2010/2011 are
estimated at 3.5 million 60 kg. bags as well. IHCAFE estimates the price incentive will continue to
support an increase in exports. Coffee exports were 3.2 million 60 kg. bags in 2009/2010. It should be
noted that this data does not include coffee exports that are not registered through official channels.
The amount is about 260,000 60 kg. bags that are exported to Guatemala and Nicaragua. The coffee
sent to Guatemala is quality coffee, while the coffee sent to Nicaragua is coffee of lower quality but
obtains attractive prices nonetheless .
Export value for 2009/2010 reached US$ 606 million. This was 31 percent higher than the earnings
from the 2008/2009 harvest with record production. Exports to Germany, Belgium, the United States
(U.S.), Italy, France, South Korea, Japan, Sweden, and Holland represented 88 percent of total
shipments. The greatest volume (32 percent) was exported to Germany, and the U.S. was the number
three destination accounting for 15 percent of total exports. Honduras exported coffee to 37 countries.
The average export price in the 2009/2010 harvest was US$147 per 46 kg. bag compared to the average
price of US$118 in 2008/2009.
According to data from the Honduran Central Bank, imports of roasted and soluble coffee for domestic
consumption came mainly from the United States. Other coffee exporters to Honduras are Mexico,
Guatemala and Nicaragua. Post expects that competition to U.S. supplied coffee will be greater as
Mexican and Central American companies sell their soluble coffee in machines located at commercial
centers and office buildings.
For the eighth year running, IHCAFE is organizing the "Cup of Excellence" competition. This
promotional event brings together the best Honduran coffees which are sold worldwide via electronic
auction. Through this competition, Honduras finds niche markets for its coffee. In 2009/2010 more
than 433,000 60 kg. bags were produced under the programs of Utz Kapeh Certified, Organic/Fair
Trade, Rain Forest Alliance, Fairtrade, Cafe Practices, and DOP "Marcala".
The flow of contraband coffee going to Guatemala and Nicaragua is estimated at 260,000 60 kg. bags.
This unregistered flow is stimulated by the need of some growers to receive cash rapidly for their
unprocessed product. Intermediaries help in the commercialization by taking the harvest out to the
road. Some intermediaries live in the same area of production and provide funds to the producers for
personal expenses or for basic needs such as food.
Another reason for this unregistered trade is the existence of an alternate market. Honduran coffee
sellers obtain a higher price if they do not sell it in the formal market: If producers sell their coffee
through the formal market, according to law, they face a deduction of US$9.00 per quintal (100
pounds). However, the volume sold within the alternate market notably declined by roughly 60 percent
during the 2010/2011 harvest. The decrease was due, in part, to importers being more aware of the
quality coffee that it is being produced in Honduras which has increased demand within the formal
Export Trade Matrix
Commodity Coffee, Green
Time Period MY Units: 60 Kg. Bags
Exports for: 2010 2011
U.S. 436,652 U.S. 436,652
Germany 914,064 914,064
Belgium 468,246 468,246
Italy 182,541 182,541
S. Korea 159,148 159,148
France 126,996 126,996
England 85,497 85,497
Sweden 69,868 69,868
Japan 60,013 60,013
Total for Others 2,066,373 2,066,373
Others not Listed 1,022,975 1,022,975
Grand Total 3,526,000 3,526,000
Stocks during 2009/2010 decreased from the estimated amount in light of the increase in exports.
Coffee beans stored by the roasters are only toasted upon request. Roasters keep the remaining beans
for domestic consumption. The coffee might also be sold to other Central American countries
throughout the year.
The Honduran Government (GOH) privatized IHCAFE in 2000. The privatization was done in order to
rationalize the coffee sector. At the same time, the National Council of Coffee was created. IHCAFE is
the specialized institution in Honduras that works with all aspects of coffee production, harvesting, and
exporting. IHCAFE provides guidelines and implements projects to increase production and to improve
the quality of Honduran coffee. It also establishes commercialization procedures and controls coffee
production and exports. As part of those controls, exporters must register with IHCAFE the coffee
which they buy from growers and the coffee which they export. Subsequently, IHCAFE issues
exporters the export permits. The Board of Directors of IHCAFE includes coffee growers, coffee
roasters, exporters, and representatives from the Ministry of Agriculture and Ministry of Industry and
During the years of the coffee crisis, due to low international prices, the GOH obtained a loan for
US$20 million to be paid over 20 years. Through the loan, funds supported all coffee producers in
2002. Due to the high level of indebtedness of many growers, the GOH created the Law of Financial
Reactivation of the Coffee Sector in 2003. This law facilitated the creation of the coffee trust fund in
2004, which receives the financial contribution of coffee growers.
The grower's contribution is obtained through the deductions that the exporter or intermediary makes
when they buy the grower's coffee. One of the deductions is for US$9.00 per quintal (100 pounds).
This deduction is transferred to IHCAFE, which in turn transfers it to the trustee banks. This deduction
is returned to the producer in 60 days. The US$9.00 contribution is assigned to pay off the US$20
million loan over the next 15 years.
The other mechanism to obtain funds is through an exporter deduction of US$3.25 per purchased
quintal. Out of the US$3.25, approximately US$0.50 is applied to the repayment of the US$20 million
loan, and the balance is distributed with 36 percent going to the operation of IHCAFE and 64 percent to
the Coffee Fund. The Coffee Fund uses those resources to build and fix roads in coffee production
areas, and to buy equipment for coffee producers.
To exemplify some of the benefits of the trust fund, IHCAFE used part of the trust fund to increase
productivity and to lessen the impact of fertilizer prices on coffee producers. IHCAFE bought fertilizer
used by producers and sold it to them at a lower-than-market price. The fertilizer was sold to coffee
producers for cash or on credit with payment due in a year. This program supports an increase in
production and also helps hold down the overall commercial price of fertilizer. The trust fund also
provides financial assistance to purchase equipment and seeds, as well as offers technical assistance
through education programs on crop diversification and irrigation methods.
In addition to its fertilization program, IHCAFE has implemented the Innovative Coffee Producer
Project, the Coffee Regionalization project, the Coffee Rehabilitation Project, the Productive
Diversification Project, and the Agro Forestry and the Community Forestry Programs. In addition,
IHCAFE has created the National Center of Quality and the Superior School of Coffee.
Through these projects and programs, IHCAFE is introducing new ways to add value, to develop
specialty coffee, and to find niche markets. Coffee producers are also provided technical assistance to
diversify their farm production by growing precious woods, and including food products such as
avocado, fruits, fish, poultry or bees.
Production, Supply and Demand Data Statistics:
H 2009/2010 2010/2011 2011/2012 onduras
Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct
2009 2010 2011
USDA New USDA New USDA New
Official Post Official Post Official Post
Area Planted 243 270 0 283 297
Area Harvested 230 256 0 269 282
Bearing Trees 1,049 1,049 0 1,049 1,049
Non-Bearing Trees 141 141 0 141 141
Total Tree Population 1,190 1,190 0 1,190 1,190
Beginning Stocks 43 43 33 74 46
Arabica Production 3,350 3,565 3,500 3,910 3,910
Robusta Production 0 0 0 0 0
Other Production 0 0 0 0 0
Total Production 3,350 3,565 3,500 3,910 3,910
Bean Imports 0 0 0 0 0
Roast & Ground Imports 8 8 8 8 8
Soluble Imports 7 7 5 7 7
Total Imports 15 15 13 15 15
Total Supply 3,408 3,623 3,546 3,999 3,971
Bean Exports 3,175 3,160 3,300 3,526 3,526
Rst-Grnd Exp. 0 35 0 35 35
Soluble Exports 0 0 0 0 0
Total Exports 3,175 3,195 3,300 3,561 3,561
Rst,Ground Dom. Consum 200 345 200 383 383
Soluble Dom. Cons. 0 9 0 9 9
Domestic Use 200 354 200 392 392
Ending Stocks 33 74 46 46 18
Total Distribution 3,408 3,623 3,546 3,999 3,971
Exportable Production 3,150 3,211 3,300 3,518 3,518
TS=TD 0 0 0