El Salvador’s Coffee Sector Grapples with Structural Challenges Amid Modest Growth in Production and Exports
El Salvador’s coffee industry is showing signs of modest recovery, with production projected to increase in the 2025/26 marketing year. However, systemic obstacles including climate vulnerability, aging coffee trees, labor shortages, and insufficient financial support continue to hinder the sector’s full resurgence. According to the USDA’s latest Coffee Annual Report (May 2025), coffee production in El Salvador is expected to rise from 561,000 sixty-kilogram bags in 2024/25 to 597,000 bags in 2025/26 — a 6.4% increase largely attributed to anticipated favorable weather conditions.
Despite this marginal growth, yields remain critically low at an average of 4.75 bags per hectare, well below regional benchmarks. The underlying issue lies in the lack of a comprehensive national strategy to revitalize the sector, compounded by limited access to credit, particularly for medium and large-scale producers who are responsible for 85% of the country’s coffee cultivation.
Coffee Area and Producer Shifts
El Salvador’s total coffee area has stagnated at 118,000 hectares, a figure unchanged since 2023/24 and forecast to remain flat in 2025/26. The country’s banking sector remains hesitant to finance coffee operations due to perceived risks, pushing many farmers to shift toward alternative crops like cocoa and white corn or even exit farming altogether.
Smallholders, who operate on less than 3.5 hectares and receive most government support, represent just 15% of the total coffee-growing area. Although the government continues to distribute seedlings and fungicides to these farmers, many seedlings go unplanted due to lack of resources and support infrastructure.
Climate Impacts and Input Challenges
The December 2024 torrential rains — over 400 mm in 24 hours — devastated yields, causing widespread berry drop and negatively impacting bean quality. While the upcoming season anticipates better climatic conditions, the sector remains highly vulnerable to extreme weather events, including droughts and floods, which exacerbate pest and disease outbreaks like coffee leaf rust and the coffee berry borer.
Input availability is another constraint. Most farmers lack access to fertilizers, pest control, and biofertilizers, and the state’s distribution programs only reach a fraction of those in need. Labor shortages — driven by rural-to-urban migration and construction job demand — further restrict essential farm work such as pruning, fertilization, and harvesting.
Specialty Coffee: A Silver Lining
El Salvador continues to bolster its presence in the specialty coffee market. Sales of micro-lots (5–100 bags) and nano-lots (under 5 bags) are gaining traction among international buyers from the U.S., Europe, and Asia. The 2024 Cup of Excellence showcased exceptional Geisha and Pacamara varieties scoring in the 90-point range.
Prominent cafes like Viva Espresso and The Coffee Cup are gaining ground locally, while global brands such as Starbucks, McCafé, and Juan Valdez are expanding their footprint. In a notable achievement, café Alquimia placed 14th in the 2025 World Coffee Bar competition, highlighting the international recognition of El Salvador’s specialty coffee scene.
Domestic Consumption and Import Trends
Domestic coffee consumption is projected to grow by 2% to reach 316,000 sixty-kilogram bags in 2025/26, driven by increased tourism and growing café culture. However, soluble coffee — mostly imported from Mexico, Brazil, and Colombia — still dominates the market, accounting for around 262,000 bags.
While local brands like Coscafe and D’Cafe compete in the roasted segment, affordability and convenience keep instant coffee in high demand. The Salvadoran Coffee Institute (SCI) is working to shift this trend through marketing campaigns and quality awareness programs.
Exports and Market Diversification
Coffee exports in 2024/25 are estimated at 578,000 bags — a 25% increase from the previous season — and are projected to climb to 583,000 bags in 2025/26. The U.S. remains the top export destination, importing 47% of El Salvador’s coffee, followed by Belgium (12%), Italy (7%), Germany (4%), and Saudi Arabia (4%). New markets like the UK and Australia are gradually increasing their share.
Premium specialty coffees continue to command attractive prices, often $100 to $300 per hundredweight above standard market rates. Electronic auctions organized by SCI, including the Cup of Excellence, help connect Salvadoran growers with international buyers seeking high-quality beans.
Certification initiatives also strengthen El Salvador’s export appeal. Over 230 farms and 34 mills now carry Rainforest Alliance certification, with growing adoption of programs like Starbucks Café Practices, Fair Trade, and Geographical Indications (GIs). These certifications support higher incomes for farmers and bolster the country’s sustainability credentials.
Policy Landscape: Fragmented and Underfunded
Despite multiple government programs, the coffee sector lacks a unified, long-term development policy. Current support is heavily skewed toward smallholders, while medium and large producers — who drive the bulk of national production — are left behind.
Past proposals like the Café-Proyecto País and the 2021 Coffee Rescue Program aimed to address structural issues such as debt, replanting, and research. However, most initiatives have stalled due to fiscal constraints and the lingering effects of the COVID-19 pandemic.
The Salvadoran Coffee Association estimates that 30 million high-quality, rust-resistant seedlings need to be planted annually for the next decade to rejuvenate the industry. Many existing coffee trees are over 25 years old, well beyond their productive lifespan.
Meanwhile, processing costs remain high, at approximately $80 per hundredweight. Combined with increasing imports of cheap soluble coffee, this further squeezes profit margins for domestic producers.
Economic and Environmental Implications
The decline in coffee production has led to a sharp drop in rural employment. For every 100,000-quintal decline in production, approximately 10,000 jobs are lost. This not only fuels migration to urban centers but also threatens environmental sustainability, as abandoned farms are converted to low-density agriculture or sold for development, reducing forest cover and water retention.
Coffee stocks are expected to drop to 17,000 bags in 2025/26 as farmers take advantage of high prices. However, without systemic reform and broader access to credit, the sector risks a continued decline in competitiveness and relevance.
A Path Forward
El Salvador’s coffee industry stands at a crossroads. Incremental gains in production and export volumes are encouraging but insufficient. A robust, inclusive recovery plan that addresses credit access, replanting, labor shortages, and climate resilience is essential. Public-private collaboration, donor engagement, and international partnerships — such as the MOCCA project with USDA and TechnoServe — offer hope. But sustained political will and funding are required to turn potential into lasting recovery.
