” Obviously, the coffee Pact was a political act”
Borgonovo, President of ABECAFE, believes that give plants and fungicides, without a comprehensive plan, will not have any impact on the crisis in the coffee sector.
The country’s agricultural sector has fallen in syncope often throughout history, official and unofficial. Despite being a country with an area relatively small, agro Salvadoran makes an important contribution to generating employment and own wealth. Carlos Borgonovo, President of the coffee Millers Association (ABECAFE), can tell in detail why the profound deterioration in the coffee sector was not originated by the rust, but it became more evident with this disease of coffee.
Borgonovo has worked in the coffee business for 17 years. The Guild who presides over is involved in 80% of the country’s exports. In addition, since the company Borgonovo Pohl, they have 50 years of experience in the sector.Borgonovo considers that projects for the coffee must be free from politicking, short-termism and assistance: in the end, is an investment to 40 years. Here is his analysis of how the private sector will have to come out of this emergency practically on its own strengths.
How does qualify the advance of this harvest?
We come from a vintage 2013 / 2014 very bad and this year estimates from the Government were 1,200,000 (CWT). We as ABECAFE always argued that it would be less than 1 million and we are now confirming that the harvest will not be more than 900,000 quintals. It is a mild recovery of the 2013 / 2014, but our perspective is a very poor harvest, again.
Would they be two cycles followed with a production exceeding 1 million, then?
And our forecast, as we see it, is a reduction to the next, the 2015 / 2016.
And in comparison to the lower harvest, believes that it will be the same?
I am seeing areas that have reached a level of impairment that was not observed in 2012. Las Cruces is an example. They are properties that already seem to complete chiriviscos and are all over the country. I do not think that we upload of the quintalaje we produce this year. Unique farms perhaps will be hold are those that have been renewed and intensive working his farm.We argue that it is not sufficient one or two applications of fungicide with the varieties we have planted but there are cases in which has had to implement a six and even seven times to sustain the attack of rust.
How much do so many applications on the same area?
Very expensive. They are $30 per block, each application. Or that the cost of fighting the rust can walk between $100 and $200. It depends on the severity. Only for rust. In our case, the farms, the investment to combat rust was $150 by Apple.
What has led to this infestation is worse than the previous one?
We were already a deterioration since the last attack. The coffee Park was already very hit from 2012. Last year there were problems of anthracnose and the attack is now over a population much smaller (of coffee), compared to what was there before. As I say, an outbreak on a damaged Park further complicated the crisis. We need long-term measures, because we cannot continue to think in a fungicide application is going to solve the problems. We have to think in renovating the Park.
Rust also attacked in Guatemala and Honduras, but these countries have achieved two-digit growth in its production and export. Do you that makes the difference?
Honduras has been renewed over the last decade. It has also increased the coffee Park and has been increased with resistant varieties. They have a new, high productivity, resistant varieties with coffee. Why is that they come up. I don’t want to return to the past, but for all the reasons we all know, here not they could renew. We continue with our varieties of 40 and 50 years ago.The renovation we did, at one point, was with bales which, ultimately, is a mutation of bourbon.It is also susceptible to rust. While others such as Guatemala, Honduras and Nicaragua have been renewing with genetic material of avant-garde, with higher productivity and rust-resistant, we we have remained static. We are now paying for that.
What are these Honduran varieties?
Catimor, sarchimor (such as cuscatleco), in Guatemala are you are planting varieties cloned on a greater scale. They are very productive, have an excellent quality of Cup and are rust resistant.There are some who are seeding it but on a much smaller scale.
Who are “some”?
It is the variety called Central America (are the studying in PROCAFE). There are labs that are developing their own hybrids. I.e., there is technology from other countries that is coming to the country and although it is on a very small scale, at least already begun. That’s one of the keys to the future: see how to form alliances with institutions and private companies in Central America and the world dedicated to research, development of new varieties and techniques. We need to import that technology to move forward.
The Central American variety is in development and generated it with the PROCAFE counterparts in the region. Do you think that El Salvador fails to catch up with their peers?
It is the lack of institutions that ails us. Rather than consolidate and provide strength to the institutions, what is observed is a decline. Just as with the coffee Park. We already know what happens to PROCAFE, not given a dime, when the contribution of cafes for sale growers ($0.50) was for PROCAFE investigations. Unfortunately, the mechanism that was used for many years leaves some authority Council (Salvadoreño del Café, CSC). The Government picks up the contribution and going to a special account of the State Treasury. Earlier, the Council hired to PROCAFE, but now that the Government is controlled by the Council, are not already engaged them. Then, this institution dedicated to research and technology transfer was without funds and with very little scope for action. At this point, I return to the institutions. The Council has passed nearly without trading during the past two years. They have already met several times and not call us, because we are alternate, as ABECAFE. Our partners exported 70% of the national production and not call us. In Guatemala, they have a strong institution, which is ANACAFE. Also, Costa Rica has various entities, not just the ICAFE: universities there as the Earth, CATIE, to have gotten to the development of varieties and technology for agriculture. But here what we had already practically does not exist. Operates with few funds and has not been replaced by any institution.
And CENTA coffee?
Coffee CENTA… I don’t know what he is doing. I do not know the plans. We don’t have information of what is the strategy to follow. As the Covenant. I don’t know what it is, if it is an institution or another thing. When not reporting on his plans that void is created and there is great mistrust of what is happening. Before the entire sector was involved. We reported to us, and then we translate the message to our members. Hence they talked with customers. This is a supply chain that works. Now, we are with our plans and we are going forward, we are doing research and development at the private level. We bring seed and technology from other countries. We have done our own nurseries and we have our own research. For example, exporters of ABECAFE have 3 million plants in the nursery. They are the Millers by nurseries for the production chain. That is not counting the seedlings that our customers are developing on their own initiative. There is a significant effort that is being made from the private sector and are looking for how to triple that effort, how to catalyze it, how to create the multiplier effect that private efforts that we do, with limited funds, reach more people. It is the challenge that we have.
What alternatives have to access resources?
They are own funds that we get from the same business. There are those who have sought alternative sources of companies abroad. Also with the National Bank. Funding is limited, but there is. That also conditions the effort that can be made.
Since you mentioned the National Pact for the coffee, you participate as a Guild?
No, we are not involved and do not know what is going on. I don’t want to criticize: If there is something I want to do, is to recommend. It has been said that there will be 6 million plants.But that makes me ask several questions: who have bought plants? is the seed certified? are you a good genetic material? who are doing the nursery? Is there a protocol for the development of nurseries? Who’s going to review that nurseries, once developed, are healthy?When going to distribute them, who will be the beneficiaries? How to make the beneficiaries to grow this plant? To renew an Apple $4,000 is needed only the first year. If you were to renew with 3,000 plants per acre, with a tree that costs between $0.30 and $0.40, then the saplings that will distribute are $900 of the $4,000. To develop these seedlings and reaching its maximum production capacity, only the first year has to invest her $3,100 to this Apple. So when one hears the message “we are going to give 6 million seedlings”, one concludes that again is political propaganda, because we do not know the project, which should be comprehensive. Because if I get 3,000 plants to renew an Apple, how will I get financing for remains, to buy the fertilizer and fertilize, to hire people who do three or four “peinas” (weed cutting) in the year to buy agrochemicals and combat pests? All these tasks are the other 3,100 $ required to renew.
Is little impact to give the plant?
The cost of the seedlings is between $900 and $1,000. Then, if you don’t have a comprehensive plan, ordered, it will not serve anything. Because you will get the plants, are going to grow and a year later will have to leave them that they lost because they have no money to work with them. Without a comprehensive plan, this is throwing money away. It was the same thing that happened with the seedlings that gave a year ago, more or less. When she was not paid to the nurseries, you remember? These plants were mixed. Variety were was not distinguished. They were in bad condition, with nematodes (initial stages of pests of coffee). I know farmers who received and not planted them. Then, the ad is beautiful: “Let’s give away. Let us help”. But sometimes the gift is more expensive. Because we don’t know if an evil to coffee we were making until an evil, we did not know from where came the seed, or which variety was, or if it was a genetic material suitable for our coffee. Some plants were in such poor state, I think that it is rather threw money away. I would like to believe that the Government gives follow-up to what gave him the producer, because it is very likely that these plants that were no longer exist, that they were killed before the development. What I’m going is that the fact of giving plants does not solve the problem. There must be a device and a well coordinated plan so that those plants are translated, in three years, in a large production.
Are you seeing signs that there is a plan?
If there is, I don’t know it. It should already have a plan in a black and white who will deliver them, which technical assistance will receive… But if that exists, we have not seen it. And while we don’t see it, or you have, to me this is another ad more that will give seedlings and to know who will be the beneficiaries. All that information vacuum that creates is that distrust.
Let me insist. Why would ABECAFE not be signer of the Covenant?
Because the Pact was a political situation and everything what is increasingly politicized goes wrong. This Pact was in the middle of the elections. It was a hug that were all there on the farm of José Antonio Salaverría and within a political context. We as a Union do not pay us. Our vision is as follows: we have plans that will require 15 to 20 years to run. The investments we make are to reap in five, 10, 15 and 20 years. Changing governments every five years, and our philosophy is that the Government must accompany our long-term plans. Meanwhile, we help them with their five-year plans. But if we are going to be with these changes in five years, and will destroy the long-term visions, because thus it is scrubbed. We can not we pay for campaign, as a Union, because people with different political ideologies within the same Guild. We represent partners with the Government and are the link, but we are not an institution that is in campaign and giving accolades to one or other political party. What interests us is to develop the coffee sector and curb the deterioration. We want to restore profitability to the sector. Then, as it was at this juncture, we said “we are not involved” in the Covenant. Obviously, it was a political act.
But rarely has been a Guild together for a reason, as that project.
Projects are executed, are not announced. I can announce a lot of things and do them. This week, they were United to build the “grand bargain” in days of campaign. That is not “United project”, but United to make an announcement.
Do you think that greater cohesion between coffee guilds need?
We get along well with partners. Look, the Governments always put an excuse that employers are not United. One has to understand that guilds are to represent members of this Guild. The projects are implemented with the supply chain. We are United producers, exporters and buyers.If the Government wants a successful project, you should consider the entire production chain.Why is that when a draft is politicized, it starts badly. The Government, okay: that will help in any way possible. But cannot sell (the message) that giving away 6 million plants is the salvation of the coffee sector. Because it is not. Nor can sell (the message) that will give a fungicide application in the year, and with that will save to coffee. No.
Do you think that the production of 1.2 million quintals in the medium term recovery?
A realistic effort between everyone, private enterprises and institutions is needed. The Government as a facilitator: provide security, good roads, return VAT in time, reduce the formalities in customs, provide incentives – such as the tax-, pay from national banking as it is already doing. Only with that can go to sleep quiet at the farm and know that we can come out to supervise the quiet work the next day. There are farms where trucks can not enter to the area to pick up coffee. Other coffee growers had to negotiate with extortionists. The Rural Police is making a great effort, despite the fact that they do not have sufficient resources. To what I have is that there are far more important things for renovation which give fungicide application in the year, or 5 million plants in poor condition, it is not known how to take care of. Here it’s take out the policy of the business action and design a project in which we are all in the same tune.The Government facilitating but not giving away, announcing or making propaganda. That it will lead to an environment where the private sector work in a renewal to scale.
He said that he didn’t want to talk about the past, but what will it mean when he says that it was not possible to renew before? What happened?
There were several reasons. The agrarian reform was one. Then, all the taxes that we were put to the war. The export tax and the rate of Exchange (value of the Colón against the dollar). That meant millions and millions of dollars to the coffee sector. Then came the war, when people could not go to work the farms. It was like a “stand-by” (long pause) 77 here, in El Salvador when it could do nothing. While in Honduras and Costa Rica, they invested in renovation with new varieties and we, we are left with our bourbones. Then now we enter into that process. Of course, we are in a complex situation, but you can. If there are no such conditions and everything is politics, then no one dares. They are only ads and nothing happens.
Speaking of what can the Government do, guilds speak of access to financing.
A fine financial architecture is required. The challenge is how the growing sector recovers the confidence of the financial sector so that we pay in the long run. Because the majority of loans are now a year, avio. All credit helps, but to renew credits are required for seven years or more.They are solvents growers that can initiate a project, those who can invest equity and receive a part as I support and there are others who are so indebted that they have to sell the farm. The point is that we can not keep thinking about atarrayazos, because that’s where all projects are born dead. What is the pass the debt to 25 years if later there is no funding to renew on the farm. That became the FICAFE. Debts were passed to 25 years but there is access to finance. It was then that he began falling domestic production. Only the fact to refinance debts is not sufficient because it does not solve the root problem.