The Costa Rican Coffee Institute (ICAFE) revealed that the country’s coffee industry has lost millions of colones due to the exchange rate and urged the government to take action. According to ICAFE, approximately ¢41,533 million (about $81,590) has been lost during the last two harvests. This amount includes the reported impact on the 2022-2023 and 2023-2024 crops.
The institute’s calculations also indicate that although coffee sales abroad grew by 2.66% ($388.45 million), this was not reflected in income. Due to the depreciation of the dollar, the real value of such exports was reduced by 12.75%.
ICAFE’s forecasts indicate that by February 16, 2024, the liquidation price per bushel of coffee was ¢81,796, similar to the price reported five harvests ago. For example, for the 2018-2019 harvest, the average value of each bushel reached ¢82,496.
Due to these negative effects of the exchange rate, ICAFE sent an official letter to the Board of Directors of the Central Bank of Costa Rica (BCCR) requesting a series of actions to avoid even greater damage to the productive sector.
“It is clear that the exchange rate policy adopted by the country in recent years risks the productiveness of the coffee sector and its competitiveness,” they stated.
Costa Rica’s coffee growers join the group of industries that are calling on the Central Bank to apply a series of changes to stabilize the dollar exchange rate and improve the country’s conditions for the generation of employment.
“This rampant phenomenon of the revaluation of our currency is accelerating the social and economic deterioration of coffee growing in the country, which is concentrated in thousands of small producers,” ICAFE added.
In Costa Rica, coffee production generates 85,000 direct and occasional jobs in the agricultural, industrial, and commercial sectors. 85% of production is destined for international markets, so the vast majority is impacted by the behavior of the exchange rate.
The strong appreciation of the colon not only generates direct and linear decreases in income but also leads to a loss of competitiveness with respect to coffee from other countries where the exchange rate is stable.
However, the Costa Rican government hasn’t responded to the private sector’s requests and advised industries to acquire foreign exchange insurance to protect against abrupt changes in the value of the dollar.
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