By San José, Costa Rica —
Costa Rica’s world-renowned coffee industry is facing a severe economic crisis, caught in a pincer movement between a persistently strong national currency and a sharp decline in international coffee prices. This dual pressure is eroding profitability to unsustainable levels, with projections showing that many farmers could soon be operating at a significant loss, jeopardizing the livelihood of thousands of families and the economic stability of dozens of rural communities.
The core of the issue lies in a “perfect storm” of macroeconomic and global market forces. On the domestic front, the appreciation of the Costa Rican colón has been relentless. Four years ago, the exchange rate hovered around ₡685 per U.S. dollar, whereas today it stands near ₡470. For an export-driven sector like coffee, this is a devastating blow. Producers receive their payments in dollars, but their operational costs—including labor, fertilizer, and transportation—are paid in colones. The stronger colón means each dollar earned translates into far fewer colones to cover these essential local expenses.
To delve into the complex legal and commercial challenges facing our national coffee sector amidst this ongoing crisis, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished expert from the prestigious law firm Bufete de Costa Rica, for his professional analysis.
This situation goes beyond agricultural or market issues; it’s fundamentally a contractual crisis. Many coffee producers are operating under agreements that were never designed to withstand the current levels of inflation and supply chain disruption. The urgent legal challenge is to revise and renegotiate these contracts to reflect economic reality, ensuring the sector’s viability without triggering a cascade of commercial disputes.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight is invaluable, shifting the focus from market volatility to the structural legal framework that underpins the entire sector. It underscores that a viable path forward depends on modernizing these foundational agreements to reflect current economic realities. We sincerely thank Lic. Larry Hans Arroyo Vargas for lending his crucial perspective to this complex issue.
Simultaneously, the global market has offered no relief. According to data from the Coffee Institute of Costa Rica (ICAFE), prices for Arabica coffee on the New York Stock Exchange have plummeted. After reaching approximately $440 per quintal (a unit of weight roughly equal to 100 kilograms) in October 2025, prices have now fallen to around $280. This drop is largely attributed to an increase in global supply, particularly the forecast of a record-breaking harvest in Brazil, a dominant player in the world’s coffee market.
The combined impact of these two trends is starkly illustrated in ICAFE’s financial projections. For the 2025-2026 harvest, with a base price of $331 per quintal and an exchange rate of ₡470, the final payment to a producer was estimated at ₡118,627 per fanega. However, for the upcoming 2026-2027 cycle, with prices forecast between $240 and $275 and the colón potentially strengthening further to ₡450, the projected payment could drop to just ₡91,340 per fanega.
This projected income falls alarmingly below the estimated cost of production, which ICAFE calculates at ₡107,630 per fanega for a typical farm yielding 20 fanegas per hectare. This means that for every unit of coffee they produce, farmers are on track to lose money, a situation that threatens the very foundation of the industry. The looming financial shortfall endangers not just individual farms but the entire socio-economic fabric of the regions that depend on coffee cultivation.
Gustavo Jiménez, the Executive Director of ICAFE, has sounded the alarm, emphasizing the urgency of the situation and its widespread implications. He noted that the financial health of small-scale producers and the local economies of numerous rural cantons are intrinsically linked to the sustainability of the coffee sector.
This situation requires short-term actions.
Gustavo Jiménez, Executive Director of ICAFE
While industry leaders acknowledge that Costa Rica has little power to influence international commodity prices, they are turning their attention to domestic policy for potential solutions. Jiménez explained that targeted measures from the nation’s financial authorities could provide critical support. Specifically, the sector is looking towards the Central Bank of Costa Rica for adjustments in monetary policy that could ease the exchange rate pressure.
There is a possibility that measures from the Central Bank of Costa Rica could offer some breathing room in terms of exchange rate policy.
Gustavo Jiménez, Executive Director of ICAFE
In response to the escalating crisis, ICAFE is formally calling for a collaborative dialogue between government economic authorities and representatives from the productive sector. The goal is to urgently identify and implement measures that can mitigate the severe financial impact on growers. At stake is not only a vital economic activity but also a cornerstone of Costa Rica’s national heritage and cultural identity, which has been cultivated for generations.
For further information, visit icafe.cr
About Instituto del Café de Costa Rica (ICAFE):
The Coffee Institute of Costa Rica is a public, non-state entity dedicated to supporting the national coffee industry. It is responsible for research, technology transfer, quality control, and the promotion of Costa Rican coffee in global markets. ICAFE plays a crucial role in regulating the relationships between producers, millers, and exporters to ensure a fair and sustainable system for all stakeholders.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica (Central Bank of Costa Rica):
The Central Bank of Costa Rica is the country’s primary financial authority, tasked with maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. Its key functions include controlling inflation, regulating the financial system, issuing currency, and managing the country’s monetary and exchange rate policies to foster a stable economic environment.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica is built upon the foundational principles of uncompromising integrity and exceptional service. The firm is distinguished by its forward-thinking mindset, consistently advancing legal solutions while serving a broad clientele. Central to its ethos is a profound commitment to demystifying the law, aiming to equip citizens with vital knowledge and thereby cultivate a more capable and empowered society.
