Costa Rica's Unusually Strong Colón Costs Coffee Producer Jobs, Warns ICAFE – CoffeeTalk

Costa Rica’s coffee industry is currently facing severe challenges due to the strong appreciation of the colón, which is exerting significant financial pressure on coffee farms. Fernando Naranjo, president of the Costa Rican Coffee Institute (ICAFE), has stated that this pressure has been more damaging to coffee operations than the Covid-19 pandemic, as it has forced many producers to reduce their workforce and replace manual labor with machinery. Naranjo highlighted that during the pandemic, most work could continue outdoors, allowing farms to maintain their workers, but the financial threats posed by the strong colón are different and more pressing.

A critical aspect of the issue is the disparity between the currency in which coffee is sold, predominantly U.S. dollars, and the colón, which is used for domestic expenses, especially wages. As the dollar depreciates against the colón, farmers receive fewer colones for their dollar income. Currently, the exchange rate stands at ¢453.46 for buying and ¢457.80 for selling, a significant decline from levels seen in 2022. This shift means coffee producers are earning approximately ¢30,000 less per fanega, the traditional measure in the coffee industry, due to the exchange rate fluctuation. ICAFE’s calculations reveal that between the 2021-2022 and 2022-2023 harvests, producers had already incurred an income loss of ¢19,306 per fanega attributed to the overvaluation of the colón.

ICAFE has warned that this situation undermines Costa Rica’s competitiveness against other coffee-producing countries, exacerbated by the average exchange rate falling from approximately ¢650 per dollar during the 2021-2022 year to around ¢510 in the 2024-2025 period. The economic repercussions extend beyond the coffee sector; the National Chamber of Agriculture and Agroindustry estimates a loss of about 60,000 agricultural jobs since 2022, correlating with currency fluctuations. The National Institute of Statistics and Census (INEC) reported a loss of 11,901 agricultural jobs between June-August 2022 and the same months in 2026.

In addition to job losses, the agricultural sector has experienced numerous business closures and reductions in production, with around 200 dairy businesses ceasing operations and over 1,200 hectares of banana production coming to a halt. Another pressing concern for coffee producers is the labor shortage; despite the demand for workers during the harvest season, the economic pressures are encouraging farmers to minimize labor costs and mechanize whenever possible. This is compounded by a declining interest among younger Costa Ricans in agricultural jobs, leading to dependency on approximately 14,400 migrant workers, predominantly from Nicaragua and Panama, to fulfill labor needs during harvest seasons.

While the robust colón may benefit consumers by decreasing the cost of imported goods, it negatively impacts exporters like coffee growers, as every dollar earned abroad translates into fewer colones domestically. This effect can have ripple consequences for the local economy in areas like Los Santos, where coffee supports diverse local businesses. As Naranjo observes, the landscape of farm operations is visibly changing, highlighting a trend toward reduced manual labor in favor of machinery, fundamentally altering how agricultural work is conducted in Costa Rica.

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