Coffee Cultivation and Economic Development in the Castañer Region

Coffee Cultivation and Economic Development in the Castañer Region

Published on May 30, 2012

Sergio portrait
Policy Director
Foto: CAT International Center for Tropical Agriculture via Flickr.

Executive Summary

Coffee has been grown in Puerto Rico for over 275 years. Between 1855 and 1898, for a relatively brief moment, all the necessary conditions to sustain a vigorous coffee industry were satisfied in Puerto Rico: cheap land; an abundant, dependent, and low-paid labor force; credit and financing by merchant firms; favorable access to international markets; relatively high market prices; and the agricultural know-how to take advantage of it all. Today, however, the coffee industry is on the verge of disappearing from the island. It has been the victim of wars and international political decisions, hurricanes and floods, intense international competition, relatively low prices, structural economic change, and an economic development policy with a strong urban and manufacturing bias.

At a fundamental level, the problem is that coffee cultivation traditionally has been an unsteady business. International coffee prices, like that for many other agricultural and mineral commodities, are subject to unpredictable fluctuations due to international politics, market speculation, wars, hurricanes, floods, famines, droughts and other assorted natural and man-made disasters. In Puerto Rico, coffee cultivation and processing historically has also been adversely affected by a general scarcity of workers, poor access to export markets, and a severe shortage of capital.

In spite of all this hardship and difficulty, however, coffee has been grown and consumed in the Western world for more than five hundred years and for much longer in the East. Today it is one of the world’s most valuable trading commodities, second only to oil, and the demand for good quality coffee seems to increase every year. Similarly, in spite of all the fluctuations, high quality coffee has been cultivated in Puerto Rico at least since the 18th century. The morning cup of coffee has become a staple of the Puerto Rican diet and getting together for coffee with friends or business partners is a quotidian ritual in modern day Puerto Rico.

Yet, despite the existing demand for high quality coffee, the coffee industry in Puerto Rico today is in dire straits. Land and farms dedicated to coffee cultivation have declined significantly. Income, employment, and value added by the industry are not statistically significant. Policy measures to protect and regulate the industry have not generated the expected results. In short, the coffee industry in Puerto Rico is on the verge of disappearing after 275 years. In order to reverse this trend Puerto Rican policymakers have to completely rethink their approach to agriculture and recognize that the agricultural sector can play an important part in economic development.

In our view, if coffee production is to become the anchor of economic development in the Castañer region, then, in addition to the production of high-quality premium-grade coffee, the following elements have to be in place: (1) the institutional structure to promote and facilitate the organization and cooperation of the area’s coffee producers; (2) legislation establishing “Denomination of Origin” rules and regulations for coffee grown in the Castañer region; (3) the establishment of a self-monitoring mechanism to discipline and police wayward producers; (4) a steady supply of field workers to pick and process the coffee; (5) financial credit on an affordable basis; (6) access to markets and adequate financial resources for advertising and marketing; (7) sufficient crop insurance coverage to hedge against potential losses caused by hurricanes and other weather phenomena; and (8) the implementation of a broad economic diversification strategy to avoid the pitfalls associated with monoculture.