Organic coffee loses appeal for Nicaragua growers

Rodriguez says he will keep planting organic coffee, which boomed in Nicaragua in the 1990s, even though it doesn't offer the high premiums it did a few years back when prices for regular beans slumped.

But coffee officials in this region say farmers like Rodriguez may become scarce, as a drop in the premiums roasters pay for organic over regular coffee has made the lower yields of chemical-free beans harder to sustain.

"There is no marked difference in the market price for organic and non-organic coffee, and that is why the producers feel unmotivated to produce (organic)," Martha Stella Gutierrez, the executive director of Cafenica, a group of cooperatives that says it produces 90 percent of the country's organic coffees, told Reuters.

"It is something we are noticing and it worries us because we know that the production costs (of organic) are higher."

Nicaragua was one of the first countries to begin mass exports of organic coffee when the niche went mainstream in the 1990s, in part because many impoverished farmers -- suffering from an economic crisis after a decade of conflict under the left-wing Sandinista government of the 1980s -- were unable to afford farm chemicals.

But organic farms usually have per-acre yields about half that of farms under traditional cultivation, and nonchemical farming requires a greater quantity of manual labor to fertilize and rid fields of bugs and weeds.

NOT WORTH THE EFFORT

It takes several years for a farm to become certified chemical-free, itself an expensive process. Advocates say organic farming provides environmental and health benefits for both consumers and growers.

Although there is no precise data on the amount of organic coffee produced in the country, estimates from several industry sources suggest it makes up about 10 percent of the country's annual coffee exports, or about 95,000 60-kg bags.

During the slump in world coffee prices at the start of this decade, growers were paid a premium that was high enough to compensate the reduced output and made it worthwhile to produce organically.

Prices for traditional coffee have since recovered to a profitable average of around $1.00 a pound. Meanwhile, increasing quantities of organic beans on the world market have caused prices to stagnate, with some growers saying they receive as little as $1.05 per pound. They say the 5-cent difference is not worth the effort to grow organic coffee.

During the crisis, farmers in other producing countries, especially in Mexico and Peru, rushed to the organic market, causing prices to flatten and premiums to drop, Gutierrez said.

"Many people are quitting organic because it is not economically viable" said Frank Lanzas, president of the Matagalpa Coffee Growers' Association, the largest grouping of farmers in the heart of the country's northern coffee highlands.

Even so, organic convert Rodriguez, heading into his sixth year as an organic producer, is staying the course. He decided to switch to organic production after raw chemicals he sprayed in his field found their way into his food, sending him to the hospital with severe poisoning.

"I am not doing this for economic reasons but because organic methods are good for my health," he said, adding he sold his 2005/06 crop of coffee at $1.30 per pound. "That mountain of poison I used to use I no longer need."

Reuters.com