* Deadly plant fungus has rapidly spread across region
* Big production losses feared amid lower prices
* Emergency forum has yet to outline regional strategy
By Nelson Renteria and David Alire Garcia
SAN SALVADOR/MEXICO CITY, Jan 17 (Reuters) - Central American farmers who produce some of the world’s most sought-after coffee beans are grappling with the re-emergence of a merciless old foe: a tree-killing fungus spread by the wind.
Aggressive outbreaks of the blight known as roya have hit Central America’s major coffee-producing nations and Mexico, which are home to more than a fifth of the world’s arabica coffee production. The pandemic risks decimating yields, threatening hundreds of thousands of livelihoods and export revenues in some of Latin America’s poorest countries.
Making matters worse, coffee prices have fallen by about half since a mid-2011 peak, leaving farmers to face a double-whammy of shrinking incomes on top of depressed output.
The current arabica crop in Central America may survive the brunt of the growing fungal outbreak. But the region’s nervous governments fear sharply reduced output in future seasons.
Roya is known as leaf rust due to the powdery orange spores that appear on the underside of infected leaves. They eventually turn black and fall off, killing or severely weakening the tree.
In El Salvador, as much as half of the country’s coffee plants have been infected by roya.
“Some of the trees have practically no leaves,” said Jose Abrego, an agronomist who works at a coffee farm in Juayua, 74 kilometers (45 miles) west of San Salvador.
In neighboring Guatemala, 40 percent of roughly 274,000 hectares (677,000 acres) have been hit by roya. Output is projected to drop by 14 percent this season. Guatemalan officials say they expect to see production dip another 40 percent during 2013/2014.
In Honduras, the region’s top coffee producer, officials say they already expect to produce 306,000 fewer 60-kg bags in the current season due to roya, or 5 percent of projected exports, and at least a tenth of the planted crop has been blighted.
Fighting the outbreaks will be made harder given the sharp decline in market prices since the rally of 2011.
The price of the most-active arabica futures contract on ICE Futures U.S. has plunged by roughly 50 percent since peaking above $3 per pound in May 2011.
In response to the outbreaks, fungicide use has already accelerated, as has pruning, fertilizing and even writing off large tracts of plantation completely.
Three of the region’s major producing countries still forecast growth in output this season compared to last. But all of them see dark clouds on the horizon.
“Beans from these sick plants are being harvested this year, but next season many will be totally denuded of leaves and they won’t produce,” said Dagoberto Suazo, a top official with the Honduran national coffee institute IHCAFE.
Last week, officials from Central American countries, Mexico and the Dominican Republic staged a closed-door, emergency forum in San Salvador to discuss the outbreak.
A formal regional strategy is not expected for another month, but already the broad outlines are clear.
“In the short term, fungicides will be used. In the long term, it’s switching to (plant) varieties with more resistance,” said Francisco Anzueto, an official with Guatemala’s national coffee association Anacafe who attended the meetings.
According to Carlos Urias, a plant expert who took part in the forum, the regional strategy will recommend fungicides for coffee trees 12-years-old or younger, and call for older trees to be replaced with roya-resistant strains in future.
“This may be a 10- or 15-year program, but we need to start now,” he said.
Some countries have already announced their own plans.
In Honduras, 35,000 hectares of coffee have been declared lost by authorities, or about 13 percent of total cultivated land. Another 35,000 affected hectares have been designated for intensive pruning, fertilizer and fungicide treatments.
The country’s national coffee institute is also requesting about $44 million for a two-year program to combat roya, though government finances are already stretched.
In Guatemala, Central America’s second biggest coffee producer, coffee officials are asking for $40 million to fight roya, an idea President Otto Perez recently touted. The fund would provide farmers with low-interest 10-year loans.
Meanwhile, Costa Rica’s agriculture ministry said this week an emergency order calling for stronger disease control will be signed in the next few days, but provided no further details.
Already, roya has spread to about 30 percent of the country’s 90,000 hectares of coffee production, otherwise known for supplying some of the world’s most popular coffee. That includes the Geisha beans used in Starbucks’ $7 cups sold last year, the U.S. chain’s most expensive brew ever.
Plant pathologists say wetter weather patterns have created ideal breeding grounds for roya. They add that millions of essentially cloned coffee plants with little or no genetic diversity offer an irresistible bonanza to a pathogen like roya.
“This is a typical problem that’s repeated over and over in monoculture agriculture,” said Randy Ploetz, a tropical plant disease researcher at the University of Florida.
He points to the lasting impact of history’s most infamous roya outbreak, in British Ceylon, present-day Sri Lanka.
“This disease is why the British drink tea,” Ploetz said.
Virtually all of Ceylon’s coffee production was wiped out in the late 1880s, after nearly three centuries of successful production. The colony’s farmers began growing tea instead.
Ploetz noted that fungicides that were then unavailable can be effective today - albeit with a hefty price tag.
Juan Luis Barrios, a coffee farmer in Guatemala, where gross national income per capita is about $250 per month, says he spends about $50 per hectare on each application of Amistar Xtra, a fungicide he may need to apply several times.
Wind-borne spores are another problem. “If only you do it and your neighbors don‘t, it isn’t going to work,” he said.
But none of the solutions are perfect, according to Ric Rhinehart, executive director of the Specialty Coffee Association of America. Rust-resistant coffee varieties, he notes, are frequently criticized for poor taste.
Rhinehart says the region’s arabica coffee farmers face the steepest of challenges in the months ahead.
“The cost of production is going up and the price is going down. This is the worst-case scenario for farmers,” he said.
He warns that the pressures on farmers could ultimately push the market away from the highest-quality coffee, as farmers turn away from arabica and opt instead for heartier but more bitter robusta beans, and roasters adjust their blends accordingly.
”The general reaction of consumers is not to complain about the quality of coffee,“ he said, ”but simply drink less of it.