With two weeks to go, Scott and I are working hard to organize our information, clarify our conclusions and pull our final presentation together.

Yesterday we had one of our final meetings, in this case with PROCAFE. PROCAFE serves a vital function in El Salvador’s coffee sector. It is chiefly responsible for leading genetic research on new plant varietals that can better balance quality coffee production, high yields per plant and resistance to key maladies, like leaf rust.

Unfortunately, PROCAFE’s funding and staffing have been materially cut in recent years. This is yet another example of how domestic politics continues to negatively interfere with the sector…which ultimately only hurts its own people.

El Salvador’s coffee sector now finds itself in a vicious cycle. Decades of poor political decisions and persistent lack of investment have resulted in a highly fragmented industry with plants that are on average simply too old and weak – roughly double their ideal productive age. So the sector needs several hundred million dollars of investment both to erase existing (and long overdue) debts and fund large scale replanting.

But banks are reluctant to enter the sector, even with government guarantees backing the credit since the government has eroded its own credibility. The sector is truly at an impasse.

Bottom-line, we see no easy fixes. While a “grand reform” of the sector would be ideal, it is highly improbable given heterogeneous interests and political involvement. As such, we are likely to emphasize targeted bottom-up strategies that can simultaneously help the nation’s production levels while also helping to alleviate poverty-like conditions for many thousands of farmers.

The Volunteer

John Cavalieri

Executive Vice President, Product Manager

Latest Insights

Macro Perspectives

New Paradigm?

Secular forces in the global economy suggest we aren’t likely to see a new paradigm of stronger growth, higher inflation and higher interest rates under the Trump administration.