Study done in 2007 by CIAT (International Center for Tropical Agriculture) on coffee farmer welfare in Nicaragua, Mexico and Guatemala. Study reveals widespread food insecurity throughout these regions during "los meses flacos" or "the thin months".

1. Coffee farmer welfare in Nicaragua, Mexico, and Guatemala
Draft, 30 Nov 2007, Sam Fujisaka
Green Mountain Coffee Roasters (GMCR) wanted to develop a set of indicators that
would help determine whether the livelihoods of coffee producing farmers were
sustainable and that would help target GMCR actions to positively benefit the livelihoods
of producers and producer communities.
A preliminary study using participatory open-ended queries was conducted in 2006.
Some of the questions dealt with differences between good and bad years, defined in
terms of coffee production and prices received for outputs. In good years, coffee was
more important (than in bad years) to family livelihoods; family members had less need
to work off-farm and could invest more in the coffee enterprise (including the hiring-in of
needed labor); families relied proportionately less on remittances; diet and food intake
improved; investments in housing were possible; and people could better care for health
needs. A characterization of “good years” is useful in that any positive contributions or
impacts of price premiums and/or programs reflecting social corporate responsibility
would ideally increase the number of “good” years (so characterized) over the number of
“bad” years.
Several indicators were developed from the 2006 study. These included the ability to
stay on farm (rather than out-migrate for work); the ability to invest sufficiently in the
coffee enterprise; proportionately lower reliance on remittances; and adequate access to
and use of health care, education, and food.
This paper reports on a follow-up study conducted in selected coffee growing areas in
Nicaragua, Mexico, and Guatemala and led by researchers from the Centro
Internacional de Agricultura Tropical (CIAT) in 2007.
Methods. Coffee growers were interviewed. Included were 33 persons (14 women and
19 men) in Nicaragua; 74 respondents in Mexico (12 women and 62 men); and 72
persons in Guatemala (46 women and 26 men). Interviews dealt with family composition,
gender, age, education; livelihood sources; agricultural production systems; coffee
production; marketing and prices received; perceptions regarding prices paid for
premium coffees; perceptions regarding investment levels in the coffee enterprise; and
credit access and cost.
Results. The following results are presented:
 Income and livelihood sources;
 Coffee yield, price received, gross returns relative to coffee type (i.e., conventional,
fair trade organic, low input, high quality, and organic);
 Perceptions regarding price received for non-conventional coffees;
 Perceptions regarding investments in the coffee enterprise vs. desired levels of
investment;
 Sources and costs of credit;
 Education of family members by age and gender;
 Health problems and solutions; and
 Number of months of food scarcity.

2. Income and livelihood sources. All of those interviewed produced coffee. In Nicaragua,
half (51%) of those interviewed relied on coffee for more than 80% of their livelihoods; a
quarter relied on coffee for 51-80% of their livelihoods; and a quarter of the respondents
relied on coffee to supply up to half of their livelihoods. For those interviewed in Mexico,
two-fifths (42%) obtained more that 80% of their livelihoods from coffee; 14% obtained
51-80% of their livelihoods from coffee; and 16% depended on coffee for up to half of
their livelihoods. In Guatemala, a quarter of those interviewed gained more than 80% of
their livelihoods from coffee; 38% obtained 51-80% from coffee; and 38% relied on
coffee to provide up to half of their livelihoods (Table 1).
Other income and livelihood sources included bananas (grown as a cash crop by 27% of
those interviewed in Nicaragua) and cardamom (grown by 21% of those interviewed in
Guatemala). The staples of maize and beans were grown by some of the Nicaraguan
coffee producers; a bit of fruit and produce were grown in Nicaragua and Guatemala, as
were chickens, pigs, and some cattle in the same two countries (Table 1).
There was little reported dependence on remittances: 5% in Nicaragua, 15% in Mexico,
and 6% of respondents in Mexico received some support from family members working
in other countries. Almost half of the Mexican respondents had some family member
working outside of the country. For respondents in Nicaragua and Guatemala, 77% and
65% respectively had no one working outside of their countries. Significant numbers of
respondents have wanted to or have discussed the possibility of temporary out-migration
to earn money, with the constraint of so doing being the cost of such travel--including
transaction costs (Table 1).
Hiring out as wage laborers differed greatly by country: 5% of Nicaraguan families, 21%
of Mexican families; and 57% of Guatemalan interviewed families. Reasons for such
high differences were not determined (Table 1).
Coffee yield, price paid, gross returns, production costs. Farmers obtained highly
variable returns given yield and price paid differences.
For Nicaragua, high gross returns were obtained via Fair Trade Organic ($881/ha) with
moderate yields (434 kg/ha pergamino) but high prices ($2.03/kg) paid; and by Low
Input ($837/ha) with highest yields (900 kg/ha) but the lowest price paid ($0.93/kg).
Conventional coffee provided intermediate gross returns ($521/ha) from intermediate
yields (493 kg/ha) and intermediate price ($1.05/kg). Organic coffee provided the lowest
gross returns ($392/ha) due to lowest yield (344 kg/ha) and a price received only slightly
more than that paid for conventional ($1.14/kg vs. $1.05/kg, Table 2).
For Mexico, gross returns were similar for Conventional ($1113/ha) and for Organic
($1161/ha) given similar yields (484 and 427 kg/ha) and similar prices received ($2.30
and $2.72/kg). As will be discussed further, net returns would provide a different picture
given the substantially higher cost of producing organic coffee. Fair Trade Organic
provided lower gross returns ($843/ha) due to lower yields (300 kg/ha), albeit higher
price received ($2.81/kg, Table 2).
Returns were comparatively extremely low in Guatemala, due largely to low reported
yields. Gross returns were best for High Quality ($242/ha) and worst for Fair Trade
Organic ($30/ha) due to almost negligible yields (13-21 kg/ha). Although half of reported
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3. sales were of Conventional coffee, returns were a low $152/ha due to the low price paid
($0.87/kg, Table 2).
Perceptions of prices paid to producers for non-conventional coffees. Farmers appeared
to recognize that prices paid in Mexico were substantially higher than in Nicaragua and
Guatemala: 30% of respondents in Mexico saw prices as “good” as opposed to 10% in
each of the other two countries. Prices were seen as “regular” by 20% in Nicaragua and
Guatemala; and by 10% in Guatemala. Prices were classified as “not enough” by 40% in
Nicaragua and by 30% in both Mexico and Guatemala: farmers explained that the extra
investment costs of producing organic coffees were not worth the returns. Perceptions of
“bad” or “low” and of “very bad” and “very low” reflected prices paid: 20% in Mexico, 30%
in Nicaragua, and 50% in Guatemala (Table 3).
Invested vs. desired investment in coffee enterprises. Farmers were asked to what
extent were they able to cover desired investment costs in their coffee enterprises in the
last season. Investments included those for weeding, pruning, pruning of shade trees,
fertilization, and timely harvesting. Oddly given their low yields, 70% of Guatemalan
respondents reported meeting 100% of their investment goals; while a third in Mexico
and a third in Nicaragua felt that they had met all investment needs. Some 23% in
Nicaragua, 14% in Mexico, but no one in Guatemala thought that they had not been able
to invest any of what was needed (Table 4).
The availability and cost of credit. In terms of credit for production, most producers in
Mexico were either: a) able to take advantage of virtually free credit from buyer
cooperatives, or b) were unknowingly being charged for credit within the prices paid for
coffee. Most loans in Nicaragua averaged 16% interest; although specific coops charged
between 2 and 25%. Although interest rates were relatively low, little credit appeared to
be available in Guatemala (Table 5).
Education of family members by age and gender. It appears that most of the sons and
daughters of the interviewed coffee growers are being educated through primary school,
with no apparent gender bias. Family members in Mexico compared to Nicaragua and
Guatemala were receiving substantially better educations in terms of any secondary and
any university or technical training; again without apparent gender bias (Table 6).
Health problems and solutions. Although respondents reported a wide range of mostly
minor health problems--respiratory illnesses, intestinal problems, and kidney problems
were the most widely reported. People in Nicaragua relied largely on local health posts
for medical treatment. Mexican and Guatemalan respondents relied on both doctors and
local clinics for consultation, treatment, and care (Table 7).
Number of months of food shortages. A quarter of Nicaraguan, a fifth of Mexican, and
5% of Guatemalan respondents said that they had no months of food shortages. On the
other hand, 44% of Nicaraguan, 31% of Mexican, and a high 61% of Guatemalan
respondents reported suffering from food shortages for three to four months of each year.
A fifth of Mexican respondents felt that food was lacking for five to six months (Table 8).
Tentative conclusions and discussion.
 Although a substantial proportion of coffee farmers rely on coffee alone for their
livelihoods, an equally substantial proportion (and most so in Guatemala) rely on
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4.  Prices paid to farmers in Mexico were substantially higher than in Nicaragua and
Guatemala. Differences among prices paid in Mexico for different types of coffee,
however, were not great. Prices paid for organic and Fair Trade Organic in
Nicaragua and Guatemala were substantially higher than what was paid for
conventional. Data supports that in spite of such price premiums most farmers
continue with conventional coffee production due to the high price of organic
production (although production costs were not elicited in the present study).
 Farmer perceptions regarding the premiums paid for non-conventional coffees
appeared accurate. The frequently expressed idea that prices received were “not
enough” was in respect to the cost of production of organic coffee.
 Most farmers achieved what they wanted to in terms of investments in coffee
production. The 23% in Nicaragua and the 14% in Mexico who reported not being
able to invest anything (0%) and the 70% saying that they had met all investment
needs in Guatemala may require further examination (the latter especially given the
low yields in Guatemala).
 Credit availability and cost did not appear to be a constraint. It is uncertain if the low
interest rates reported in Mexico and Guatemala were actually the case; or whether
rates were “hidden” in the price farmers’ received for their coffees.
 Educational opportunities for the sons and daughters of coffee growers in the studied
areas appear to be fairly robust.
 Health care in the areas visited appears to be adequate.
 A substantial proportion of those interviewed suffer from seasonal food shortages.
Such shortages most commonly last for three to four months.
Indicator interpretation. Selected indicators can be used to monitor local changes over
time if larger samples of informants are used. Simple changes in mean values combined
with less variability (in part from the larger samples) would provide a way to monitor and
evaluate and future pilot projects conducted by GMCR/Social Advocacy and Coffee
Community Outreach. From the results of the present study, indicators and directions of
desired changes would include:
1. Diversity of livelihood sources: Diversity is a desirable factor in the face of production
and price risk. Decreased livelihood source diversity could be expected from stable
and reasonably high prices combined with reduced production risks. Reduced
reliance on off-farm wage labor and on seasonal migration could be seen as a
positive or desirable impact.
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5. 2. Prices paid for coffee. Any increases in rice premiums paid for specialty coffees
relative to prices paid for conventional coffees are desirable. Farmers’ perceptions
regarding the differentials can be monitored.
3. Increasing the proportion of farmers able to invest what they think that they should
invest in their coffee enterprise is a desirable and easily monitored goal.
4. Further investigation into the cost of credit is needed. Monitoring the real costs of
credit to coffee farmers and the structures of indebtedness would be useful.
5. Months of food scarcity comprise an indicator in which any decrease is desirable.
Selection of informants. Further consideration of local stratification is needed.
Communities can be stratified by producers of conventional and producers of certified
organic, or by inclusion of a greater set of producer types. Monitoring of at least 20
families of each type in each community would be desirable.
Data analysis. Simple descriptive statistics will serve for most analyses. Once larger sets
of informants are interviewed per site, correlations among variable values can be
examined.
Recording and aggregating data. To date data has been entered into Excel
spreadsheets. GMCR personnel indicated an interest in developing and maintaining a
system of data management.
Training local GMCR partners. The utility of further monitoring and evaluation work will
depend on consistent and reliable data. As such, a few simple, straightforward indicators
have been selected. Some training of local partners will be desirable, as will be training
of a group of partners from across the region at the same time and place.
Towards further GMCR investment in local coffee communities. From our November
meeting in Vermont, it would appear that GMCR is committed to addressing the months
of food scarcity in coffee growing communities. Some of the specific means to such an
end might include:
 Targeted technical assistance in integrated soil nutrient management, especially for
organic producers.
 Careful targeted and timely credit to address both months of food scarcity and
indebtedness that can contribute to very unfavorable management of family financial
resources.
 Specific, targeted capacity building for individuals and communities.
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6. Table 1. Sources of income and livelihood
Source Nicaragua Mexico Guatemala
Coffee 100 22% of people 100 16% depend on 100 38% of people
depend on coffee up coffee up to 50% of depend on coffee
to 50% of livelihood; livelihood; 14%: 51- up to 50% of
24%: 51-80% and 80% and 42%: >80% livelihood; 38%:
51%: >80% 51-80% and
25%: >80%
Banana 27 Major cash crop in 0 0
Matagalpa
Maize 16 A consumption staple 0 0
Livestock 16 Chickens, pigs, cattle 0 7 Chickens
Beans 15 A consumption staple 0 0
Fruit/produce 8 Tomato, avocado, 0 7 Banana,
others vegetables
Cacao 5 0 0
Remittances 5 77% have no family 15 46% have one or 6 65% have no
away from home: 40% more family members family away from
have talked away: 23% talked home: 29%
about/want to work about/want to work talked
outside outside. 58% get no about/want to
(underreported?) remittances; 23% work outside
gain 1-25% of
livelihoods; 11% gain
26-49%; 14% gain
50% or more
Wage labor 5 Under-reported? 21 57 Highest
proportion
Gov. aid 0 10 0
Cardamom 0 0 21 Major crop
Table 2. Coffee yield, price paid (pergamino), gross return, production cost magnitude
Nicaragua Mexico Guatemala
Yiel Rang Pric Gros Yiel Rang Pric Gros Yiel Rang Pric Gros Pro
Coffee type d e e s$ d e e s$ d e e s$ d
kg/h kg/ha $/kg kg/h kg/ha $/kg kg/h kg/ha $/kg cos
a a a t
Convention 496 29 – 1.05 521 484 184 – 2.30 1113 174 12 - 0.87 152 ++
al (n = ) (19) 1824 (5) 918 (21) 478
Fair Trade 434 326 - 2.03 881 300 39 - 2.81 843 18 13 - 1.64 30 +++
organic (3) 587 (19) 689 (3) 21
Low input 900 391 - 0.93 837 - - - - 195 80 - 1.24 242 +
(N) or high (5) 1629 (5) 318
quality (G)
Organic 344 65 - 1.14 392 427 33 - 2.72 1161 114 17 - 1.81 207 +++
(9) 814 (21) 826 (5) 318
Table 3. Perception of prices paid for premium coffees (% of respondents)
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7. Nicaragua Mexico Guatemala
Very good 0 0 0
Good 10 30 10
“Regular” 20 20 10
“Not enough” 40 30 30
Bad/low 20 10 20
Very bad/very low 10 10 30
Table 4. Invested vs. desired investment in coffee enterprise
% invested as part of % respondents % respondents in % respondents
desired investment in Nicaragua Mexico in Guatemala
100 32 32 70
80 – 99 19 12 3
60 – 79 6 13 12
40 –59 19 19 6
20 –39 0 10 6
1 - 19 0 2 3
0 23 14 0
Table 5. The cost of credit
Nicaragua (Cordobas) Mexico (Pesos) Guatemala (Quetzales)
Source Loans Interest Source Loans x Interest Source Loan Interest
x 1000 % 1000 % sx %
1000
Various 230 16 Cesmach 353 1 ACT (ngo) 1 3
Comanur 62 25 La Union 36 1 Mercy Corps 5 8
Cecocafen 54 18 Particular 31 10 NGO - 1
UCA 35 19 Asesmach 15 12 ADP Fundea - 6
Coop (?) 25 13 Coyote 12 8 Buyer 10 6
Esperanza 10 18 Caja de ahorro 3.5 5 FT 4 0
Fedensar 5 2 Familiar 1 0 Various 9 17
Table 6. Education of family members by age and gender
Nicaragua Mexico Guatemala
5-10 11-17 18+ 5-10 11-17 18+ 5-10 11-17 18+
yrs yrs yrs yrs yrs yrs yrs yrs yrs
M F M F M F M F M F M F M F M F M F
None 3 1 0 1 14 12 3 2 0 0 16 14 3 3 0 0 21 46
1 - 2 primary 6 16 10 9 12 14 7 8 4 1 21 18 5 4 3 1 11 5
3 - 6 primary 3 1 18 21 29 34 9 11 10 8 47 60 2 1 13 8 13 16
Any - - 4 4 8 3 - - 12 14 25 15 - - 0 1 2 2
secondary
Univ/technical - - 0 0 1 1 - - 2 3 11 11 - - 0 0 0 0
Table 7. Health problems and solutions
Nicaragua Mexico Guatemala
Respiratory 11 Health 12 Respiratory 10 Doctor 11 Fever, 11 Clinic 12
post headache
Kidney 3 Bear it 2 Intestinal 7 Clinic 9 Intestinal 10 Doctor 12
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8. Hypertension 2 Clinic 2 Diabetes 3 Visit 5 Respiratory 9 Pharmacy 8
city
Miscellaneous 8 Panadol 2 Kidney 2 Home 1 Miscellaneous 15 Medicinals 4
med
Doctor 1 Miscellaneous 15 Free 1 Hospital 2
meds
Table 8. Number of months of food shortage
% respondents % respondents % respondents
Nicaragua Mexico Guatemala
None 26 21 5
1-2 18 25 7
3- 4 44 31 61
5-6 12 21 16
7-8 0 2 11
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