Costa Rica’s Coffee Sector Faces a New Crisis: Declining Production and Rising Costs
Costa Rica’s coffee industry is bracing for a challenging season in 2025/26, with production projected to fall by 10% year-over-year to 1.17 million 60-kg bags, according to the latest USDA report from FAS/San José. The anticipated decline follows a strong harvest in 2024/25, which benefited from favorable weather patterns and increased yields, but now enters the lower phase of the country’s biennial production cycle.
While higher global coffee prices may offer some relief, the report highlights deeper structural issues threatening Costa Rica’s position as a premium arabica producer. Chief among them: a strengthening Costa Rican Colón, labor shortages, volatile weather, and long-term shifts in the composition of the grower base.
Strong Currency Undermines Export Earnings
Despite Costa Rican arabica commanding a premium in international markets, the appreciation of the Colón against the U.S. dollar has slashed growers’ earnings by nearly 20% since 2022/23. Given that the vast majority of Costa Rica’s coffee is exported and contracts are priced in dollars, this currency imbalance remains a major pain point for producers.
“Even with elevated international prices, local growers are struggling,” notes the report. “Years of low profitability, high debt levels, and input costs have compounded the pressure, especially for smallholders.”
Labor Shortages and Compressed Harvests
The ongoing labor shortage is another critical concern. The 2024/25 harvest saw significant losses—estimated at 150,000 bags—due to persistent rain and a reduced pool of available workers. Unlike previous years when Nicaraguan migrants formed the core workforce, labor now relies heavily on the Ngäbe-Buglé indigenous group from Panama. However, shifting rainfall patterns have caused fruit to ripen simultaneously across multiple regions, straining the reduced labor force.
Long-Term Area and Farmer Decline
According to the Costa Rican Coffee Institute (ICAFE), the number of coffee farmers fell to 25,549 in 2023/24—a nearly 50% decline compared to a decade ago. Eighty-five percent of these farmers cultivate less than 10 hectares and produce under 100 bags per year. A 2022 survey also confirmed that the total area planted dropped by 11.9%, with some regions—like Guanacaste and Turrialba—experiencing reductions of 30–45%.
2024/25: A Strong But Uneven Year
The 2024/25 marketing year was more productive than expected, with output reaching 1.298 million bags—a 12% increase from the previous season. Early flowering due to La Niña weather conditions and favorable rainfall in the first half of the year helped push development forward by nearly a month. Yet excessive rain later in the year led to fungal diseases such as Anthracnose and “ojo de gallo” in key regions, underscoring the unpredictable impact of climate volatility.
Consumption Stalls Amid High Prices
Domestic consumption remains flat at 305,000 bags for both 2024/25 and 2025/26. High retail prices—nearly 40% above pre-2022 levels—have slowed sales. ICAFE reported a 25% drop in locally consumed Costa Rican coffee in 2023/24, falling to just 156,807 bags, as consumers turned to more affordable alternatives, including imported blends.
Exports Shift Toward the EU as U.S. Share Shrinks
Costa Rican coffee exports for 2025/26 are projected to decline to 1.06 million bags, following a higher forecast of 1.15 million in 2024/25. Export prices surged 52% year-over-year to $465.65 per bag, driven by tight global supply and premium market positioning. However, the premium traditionally earned by Costa Rican coffee appears to be narrowing.
While the U.S. has long been the leading market, its share dropped to 38% in 2023/24. In contrast, the European Union surpassed the U.S., accounting for 41.5% of total exports. Belgium, Germany, and Italy emerged as key destinations, as international buyers increasingly favor Costa Rica’s traceable, environmentally sustainable, and socially responsible beans.
Compliance with EU Green Deal in Focus
Costa Rica is proactively aligning its coffee sector with the EU’s deforestation-free regulations. In March 2024, it exported its first verified “deforestation and degradation-free” shipment to Italy, involving 69 growers in a pilot program supported by ICAFE and the UNDP. However, scaling compliance across the country’s thousands of small farms remains a significant hurdle.
Conclusion
Costa Rica’s coffee sector stands at a crossroads. While still highly regarded for quality and ethics, external economic pressures and internal structural weaknesses could undermine its future competitiveness. The shift in export destinations, changing weather conditions, and new regulatory frameworks will require innovative solutions—and policy support—if the country is to preserve its global reputation in specialty coffee.
