HONDURAS

GROWTH AND OUTLOOK

Sintercafe

Intro Macros coffee in Honduras

Honduras GDP
Honduras Ag GDP
Coffee as a Percentage of Ag GDP
Number of producers
Employment
Employement in relation to employable
population

Introduction
Honduras Export Volume (20 YEARS)

7.0
6.0

5.8

5.6
5.0

5.0

4.4
4.0

4.0
3.0

3.0

3.0
Millions
of 60KG
BAGS
2.5

2.1

3.0

3.0

3.2

3.4

3.2

4.2

3.2

2.4

2.0
1.0
-

15 Year Growth : 2.5 myn bags 6.3% growth

rate
5 Year growth:
1.8 myn bags 9.3% growth rate

Introduction
Export volume has doubled in the past 15 years.
15 year growth rate 6.3%, 5 year growth rate
9.3%
Recovery from the Roya has been relatively quick.
Quality has also been improving
But why?
What can we expect from Honduras in the coming
years?

HONDURAS GROWTH AND OUTLOOK

WHY DOES HONDURAS KEEP GROWING?

Growth drivers analized

Profits:
Prices
Cost of production

Productivity
Planted Area

Growth drivers - Cost of production

140.00

120.00

100.00

80.00

24.25
9.05
6.70
5.34
22.04

60.00

24.25
9.05
3.59
5.34
22.04

24.25
8.74
3.47
5.34

20.00

0.00

HIGHEST COST

4.24
1.68
5.34
26.45

19.11

23.21

24.25

26.45

35.66
40.00

FARM TO FOB

16.23

23.21

19.30

AVG SMALL

AVG LARGE

7.64
19.30

LOWEST COST

INTEREST
ADMIN
WET MILLING / DRYING
PICKING
LABOR
INPUTS

Growth drivers - Cost and selling price

Graph of cost and Sell Price (10 YEARS)
USD / 46KG
250.0
200.0
150.0
100.0

COST
PRICE

50.0
0.0

The average cost of production is $106 FOB with a 2%

annual variation through ten years.
Average composite selling price is $150.00

Growth drivers - PROFITABILITY

AVERAGE PROFITS
160.0
140.0
120.0
100.0
80.0
USD PER 46KG

60.0
40.0
20.0
0.0

The weighted average profitability has been $51.1 per

46kg for the last 10 years.
That translates to about $3600 USD PER YEAR PER
PRODUCER
COFFEE HAS BEEN A PROFITABLE PRODUCT FOR
HONDURAS PRODUCER

Growth drivers - Productivity

PRODUCTION AND YIELD
2000 - 2015
6.0

25.0
20.0

5.0

18.8
16.5

4.0
3.0

12.9

12.2
11.0

10.2

10.0

13.7

13.1

11.8

5.6
5.0
4.0

2.5

15.0

12.6

2.0
1.0

16.5

14.9

12.0

3.0

3.0

3.0
2.1

20.0

3.2

3.4

3.2

4.4

10.0

60kg/HA

4.2

3.2

5.0

2.4

0.0

PRODUC C IN

PRODUC TIVIDAD

Yield has increased from 10 bags/HA to 18.8 bags/HA

Accounts for 88% of the growth in production

Growth drivers - Reasons for improved

Productivity
IMPROVED TECHNOLOGY TRANSFER
Sustainability programs
AID programs
Planting density
Fertilizer quality

Growth drivers - planted area

ROYA
300

250

200

150

HA
(000)

100

50

0
2009-10

2010-11

2011-12

2012-13

2013-14

Planted area is 274,000 Hectares

2014-15

Growth drivers - New plantings

30.0

25.0

NOT IN PRODUCTION

20.0

HA 15.0
(000)

ROYA

10.0

5.0

0.0
2010-11

2011-12

2012-13

2013-14

2014-15

A TOTAL OF 72,000 HA PLANTED IN THE LAST

5 YEARS
36,000 HA LOST TO ROYA, 36,000 NET NEW
PLANTINGS

HONDURAS GROWTH AND OUTLOOK

WHY WAS THE ROYA RECOVERY SO FAST?

Current trend vs No Roya Trend

7.0

13%

6.0

18%

5.0

25%

4.0
3.0
2.0

5.6
3.2

4.0

4.4

4.2

2012-2013

2013-2014

5.0

5.8

1.0
2009-2010

2010-2011

2011-2012

2014-2015

2015-2016

No Roya trend line 15% growth rate.

1.4 myn bags 60kg lost in 2013-14 vs
trend
25% of projected volume in 2013-14 year
after Roya

NEW
CROP

Distribution of Resistant versus non resistant varienties

100% Chart

100%

45

90%

32

80%
70%
60%
50%

55

40%

68

30%
20%
10%
0%
Pre- Roya

Post - Roya

At time of Roya 45% non resistant vs 55%

Resistant plants
29% loss of Non resistant plants. 13% Overall

What is the story behind the Roya recovery?

Volume was growing very fast 15% before Roya.

Significant amount of new plantings were not
affected.
The perfect storm
Record 2011-12 crop left plants tired,
Lower prices caused lower inputs
Hot and humid weather created perfect conditions
Long term complacency on part of producer
Large amount of Roya resistant plantings.
Some farms recovered on their own
Producers attitude
we had not been taking care of the farms
we have planted double what we lost in the Roya

HONDURAS GROWTH AND OUTLOOK

HOW MUCH CAN HONDURAS GROW?

Resource Analysis
Age of Plantations
Land use
Water / Rains
Labor
Processing capacity

Age of Plantations

1 YR
1-2 YRS
3-5 YRS
6-9 YRS
9-15 YRS
16-25 YRS

65% of plantations are less than 10 years

old.
9% of Plantations are 16-25 years
Plantations have been renewed and will not

Resource Analysis - Land

total area
freeland
coffee use

Land availability:
33,000 square kilometers available for coffee planting???
(Restricciones: 1000m arriba, no rio/lago, no centro poblacin, no
otros usos).
2700 currently in use.
No major conflicts with population centers
Proyeccion de uso de tierra en 2030

Resource Analysis - Rains

3000

2602

2500

2224

2000

1767

1827

Rains have been low this year

1500
Mm / year
1000
529

500
0
Y2011

Y2012

Y2013

Y2014

Y2015

Coffee labor demand

pickers
700
600
500
400
300
200
100
0
1

10

300,000 pickers currently employed

Production not constrained by labor
But displacing an increasing amount of people seems challenging

Coffee labor demand vs location

Are the people located where we need them??

Other Labor Issues

Birth rate

Emmigration
URBAN: Significant growth in urban centers, San Pedro
Sula and Tegucigalpa, draw labor from the interior.
FOREIGN: Hiring restrictions in the US have slowed
emmigration.

Competition
TEXTILES: Was a big competitor y the 2000s but now
growth has slowed significantly
AGRICULTURAL: Not a big development in agriculture.

LO IDEAL SERIA PRESENTAR ALGUNAS CIFRAS DE

ESTO.

Resource Analysis - Processing capacity

7
6
5
4
3
60KG BAGSMILLIONS

PRODUCERS
EXPORTERS

1
0

Production capabilities are constrained by wet milling capacity.

Potential for growth

Key limiting factor is:

Potential for growth is:

Threats to growth (comentarios)

Climate change
Deforestation
Water / rains availability

HONDURAS GROWTH AND OUTLOOK

WHO IS THE PRODUCER AND WHY DOES HE

KEEP PLANTING?

Socioeconomic Factors
Farm size distribution
Average Age
Health
Cost of Living
Education / Alternative Opportunites
Diversification
Attitude
Spending vs investment

Farm Size Distribution

100%
90%
80%

7+ HA

7+ HA

5%

2-7
25% HA

30%

70%

2-7 HA

60%

36%

50%
40%
30%

0-2HA
70%

0-2HA

20%

34%

10%
0%
PRODUCERS

VOLUME

1/3 production in hands of 70% producers,

another 1/3 in hands of 25% and 1/3 In hands of
5%.
All very small holders.

Age and Gender of Producers

16

28

20
27

18-30
31-40
41-50
51-60
61+

male
female

64% OF THE POPULATION LESS THAN 50

AVERGE AGE IS 46
ONLY 9% IN THE 18-30 RANGE
87% MALE

Socioeconomic factors
Cost of living low in rural Honduras: xxxxx USD /
YEAR
Can proudcer survive producing coffee???

Availability of health care very limited among the

majority of the producers.
Education mostly available among bigger
producers.
Availability of credit has helped to not outspend
his earning.
Can Do Attitude
Producer views coffee production as a an
investment. When he has cash left over he
plants
Technology transfer very difficult for

Socioeconomic factors - Conclusions

Not enough young people are entering in coffee
production

CHALLENGES

Challenges
Wet milling capacity is limited.
Technology transfer is difficult with the very
small producer.

The cost of getting to the producer is very

high
The potential of the smalllest producer is low.

Variety replacement signal reduction in

premium coffees.
Road network still limited up country

Big cost and limited access to market for

producer