Will coffee prices rise after back-to-back hurricanes hit Central America?

Central America is bracing for yet another potential hurricane less than two weeks after Hurricane Eta devastated the region. And the latest threat could impact a cash crop that is grown and exported around the globe.

Eta struck Nicaragua on Tuesday, Nov. 3, 2020, as a 5 on the AccuWeather RealImpact™ Scale for Hurricanes, the highest rating on the scale, which takes into account factors including wind speed, flooding rain, storm surge and economic damage and loss. The deadly storm will have a long-lasting impact on the region after displacing more than a million people and leaving infrastructure in shambles.

"Central America is facing a real humanitarian crisis," said Dr. Joel N. Myers, Founder and Chief Executive Officer of AccuWeather. "Hurricane Eta dealt a devastating blow with Guatemala, Honduras and Nicaragua, the hardest hit by the storm. As many as 150 people have been killed as a result of Eta, and the number is presumed to rise as the full scope of the damage is tallied in the coming days and weeks."

On top of that, Myers said, "Thousands of refugees are seeking shelter in temporary accommodations where the potential spread of COVID-19 is further threatening their health and safety over and above the threat posed by Iota."

Now the region is facing another tropical threat as Iota is tracking toward across the Caribbean Sea and is forecast to be a hurricane before it hits Central America almost directly where Eta made landfall. The back-to-back hurricanes will take an economic toll on a valuable crop: coffee.

A Nicaraguan boy picks ripe coffee beans on a plantation on the slopes of the Poas Volcano northwest of the capital of San Jose, Friday, Nov. 16, 2007. (AP Photo/Kent Gilbert)

Honduras is the biggest grower of coffee in the region, followed by Nicaragua and Guatemala. Combined, these three countries account for around 8% of the world's coffee output. In Honduras alone, coffee is a $1 billion industry that generates 1 million jobs and accounts for 30% of the country's Gross Domestic Agricultural Product, according to the Honduran Coffee Institute, a leading trade group in the country's coffee industry.

AccuWeather estimates that during Eta, there was a 10% loss of Central American coffee, mainly because of roads being washed out and coffee not making it to the market, AccuWeather Senior Meteorologist Dave Samuhel, who works on the company's commodities forecasting team, said.

This could be compounded by the strike predicted early next week from Iota.

AccuWeather estimates that additional impacts from Iota could be as much as another 10% to perhaps 25% loss as the region could be more susceptible to damage in the wake of Eta, Samuhel said.

Even if the coffee plants are unharmed after both storms, the significant rain could cause the coffee to mature too quickly and affect its quality, said Lila Sevilla, president of the National Alliance of Nicaraguan Coffee Producers told The Associated Press. The damage to the roads across the countries could also slow the harvest of the quickly ripening plants, The Associated Press reported.

The loss of coffee crop in Honduras, Nicaragua and Guatemala could result in higher prices for wholesale coffee buyers but may not be enough to have a substantial impact on prices for everyday coffee drinkers.

"Brazil is the number one coffee producer, accounting for 38% of the wold's coffee," Samuhel said. "Vietnam is second, providing 17% of the global supply."

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The one-two punch of tropical systems in Nicaragua is very rare, but not completely unheard of. The last time that two hurricanes hit Nicaragua in the same season occurred nearly 50 years ago.

"In 1971, Nicaragua was hit by Hurricane Edith, a Category 5 storm, Hurricane Irene, a Category 1 storm, and Tropical Depression Olivia," AccuWeather Meteorologist Jesse Ferrell said. Ferrell also added that only three hurricanes have ever made landfall in Nicaragua in November: an unnamed hurricane in 1887, another unnamed hurricane in 1890 and Hurricane Ida in 2009.

Even if Iota makes landfall in Nicaragua, the heaviest rains are forecast to focus on Honduras, bringing an elevated risk of major flooding, landslides and more damage to coffee crops.

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