Corona is hitting the coffee supply chain in places where we can't see it. We report on the situation in northern Nicaragua and what consequences threaten. In short: it's looking bleak.
Normally, our coffee from Finca Santa Rita would be milled, sorted by size, and freed from defects right now. Our team would bag it and truck it to the port of Corinto on Nicaragua's west coast.
But right now, everything looks different: the coffee is still unsorted in the warehouse in Ocotal, unshelled and unpacked. The warehouse is operating at minimal capacity, with only the lab tasting coffees. Tim Willems, our farm manager in Nicaragua and founder of BridAzul, the Dry Mill, told me:
We had to send almost all employees home. I can't say yet whether it was a good decision, but it felt right.
Tim Willems
"Social distancing in coffee is hardly feasible," Tim says. Lifting heavy bags, sorting coffee in groups, bagging—all of this is unrealistic without physical contact or maintaining two meters distance. For him, the health of the employees ultimately took priority and he didn't want to offer any work that would put employees in danger. Many families live in cramped quarters across multiple generations. The infection risk in rural areas is very high within families.
Additionally, the health system in Nicaragua is very weak, and Corona is hitting Nicaragua too, even though the government only reports 10 infected and 2 deaths. Those who don't test don't find cases. Meanwhile, cases of pneumonia are rising dramatically, many with fatal outcomes.
In Nicaragua, grim theories are circulating on social media again, and everyone is accusing the government of a cover-up: pneumonia just happens, Corona could be prevented. If Corona is the cause of deaths, then the problem is homemade. If it's pneumonia, then it just happens from time to time.
Day laborers don't work from home
The decision by our partners to temporarily send their employees home was difficult. They knew their employees had to earn money and many would be looking for odd jobs. Still, our partners wanted to protect their employees and send them home. A difficult decision. They are now trying to provide support through food aid.
Wage advances are barely possible right now because the coffee hasn't been sold yet and the last few months consumed a lot of capital. Emergency cushions like those being quickly and unbureaucratically distributed to businesses in Switzerland, Germany, or Austria right now don't exist everywhere. Not in Nicaragua either. We as partners are now more in demand than ever.
Corona doesn't just expose differences in how the crisis is handled, but also structural and social inequalities. Day laborers can't continue working from home. The government in Nicaragua is tapping into the vocabulary of class struggle and loudly exclaiming: "Only the rich stay home!" It even reportedly said before Easter week that people should recover from this Corona discourse and take a vacation at the beach. The government also invites people to demonstrations for health and against Corona—people are taking to the streets in masses.
The farm as a refuge
Tim oversees two farms on site with his team: Finca Santa Rita and Finca el Arbol. Most employees would be back in their villages, but a skeleton crew would stay on the farm to keep it running. At the end of the day, a coffee farm is a farm—there's always something to do.
On the farm, things are quiet and you don't hear much of anything. However, work is falling due right now that a small team can barely manage to complete on time.
Difficult harvest 2019/20
Last year's harvest, which was actually supposed to be shipped soon, was difficult. A long dry period in much of Central America shortly after flowering caused the cherries to grow unevenly. The seeds in the cherry—the future coffee beans—developed only partially or not at all in some cases.
From southern Mexico, through Guatemala, Honduras, to Nicaragua and Costa Rica and Panama, yields fell between 10 and 40% due to drought. That's massive. Various dealers have reported to us that even average qualities from Honduras sold for a price that would normally be achieved for a microlot.
Santa Rita status
At Santa Rita, we've experienced a loss of export-quality coffee of about 35% compared to the previous year. The reasons are on the one hand the drought mentioned, and on the other our renovation program.
Since 2017 we've been renovating the farm piece by piece. We thin out the plantation, and very old trees we first cut back—if they don't produce stronger growth the following year, we remove them as well and thin the stock to about 1,100 trees per hectare. Now some of the old trees didn't respond to this cutback and were removed. Because if the input (fertilizer and labor) for a plant is greater than its output, then it has to go.
Next year there will be even less yield at Santa Rita because we've just thinned out the tree stock again. In return, we're expecting the first harvest from 1,000 Variedades, which should yield about 10 bags.
No access to fertilizer and pesticides
Since political unrest began in Nicaragua two years ago, the local currency has lost significant value and imports became suddenly more expensive. Nitrogen, for example, which synthetic fertilizers are based on, became 30 to 40% more expensive.
Most fertilizers in northern Nicaragua are imported from Honduras, but now Corona comes into play: the border with Honduras is closed. Anyone who needs fertilizer or pesticides now faces a huge problem. The shortage has driven prices up dramatically again. But if fertilizer isn't applied now, the next harvest will be smaller again. A vicious cycle.
Those who have focused on organic farming methods are somewhat less affected in this regard, provided the input can be produced on the farm itself. However, this requires a lot of know-how that exists only in isolated pockets, and contact with experts who aren't traveling around right now.
A bit of luck
In January, our team planted Canavalia on a large scale, also known as jack bean. The vine species has large leaves and spreads like a lattice over the ground. The reasons for planting were:
- Large leaves cover the ground =
- less irritation from UV light
- less water loss
- less erosion
- drastically reduced weed growth that could compete with plants for nutrient uptake
Now Canavalias are also strong nitrogen fixers. They store it and slowly release it back into the soil. Especially in times when it's difficult to get nitrogen-based fertilizers, Canavalias and other nitrogen fixers help in a pinch.
What now?
It's difficult to make a forecast for the coffee situation. Information is spotty and communication from the government is virtually non-existent.
But what we do know is the following:
- the export of our coffees is still not foreseeable—we're conservatively estimating the arrival of the coffees in October
- many producers can't invest in the farm because they
- produced less coffee
- and couldn't sell less of it
- which will lead to a smaller harvest next year
- the import of fertilizer and pesticides is severely limited
A few months ago, we sharpened our future direction for Finca Santa Rita. We want to produce organic coffee and become as independent as possible from external inputs. The current situation confirms this for us, shows the urgency, and motivates us—even though and because we know that the coming months in Nicaragua will be very difficult.
We'll discuss what Corona means for the coffee supply chain on Sunday at this webinar: Coffee & Corona. Challenges, Chances, Change.
