Arabfields, Naïla Mokhtari, Special Economic Correspondent, São Paulo, Brazil —  Coffee producers across Costa Rica find themselves confronting a severe economic threat as the United States dollar continues its sharp decline against the Costa Rican colón, with the exchange rate now hovering below 480 colones per dollar and recently settling near 471 colones. This currency shift has created conditions that many farmers describe as unsustainable, placing entire rural communities at risk of widespread financial collapse. The situation stems from a combination of domestic monetary dynamics and international market pressures that together erode the profitability of what has long been one of the nation’s most vital agricultural exports. Four years ago the exchange rate exceeded 685 colones per dollar, yet today the colón stands approximately 31 percent stronger, meaning each dollar earned from coffee sales converts into substantially fewer local currency units to cover everyday operational expenses such as labor, fertilizers, and equipment maintenance.

The recent acceleration in this trend has been particularly alarming. Between the beginning of the year and early March, the dollar lost nearly 22 colones in value, representing a 4.3 percent decline over just the first three months of 2026, a drop far steeper than the modest 0.8 percent recorded during the same period the previous year. Such volatility directly undermines the livelihoods of producers who sell their harvests on global markets priced in dollars but must convert those revenues into colones to meet all local obligations. The result is a shrinking margin that no improvements in farming efficiency or crop quality can fully offset, as the dual forces of currency appreciation and falling commodity prices compound one another in what industry observers term a perfect storm.

Global coffee prices have followed a dramatic trajectory in recent times. After three consecutive years of worldwide supply shortages that sustained elevated values through much of 2025, the market has reversed course. Arabica benchmarks on major exchanges fell from around 440 dollars per quintal in October 2025 to approximately 280 dollars in the current period. Expectations of abundant future supplies, particularly from Brazil, the world’s leading producer, project a record harvest ranging between 61 million and 76 million 60-kilogram bags for the 2026-2027 season. This influx is anticipated to drive prices even lower, potentially settling in the range of 240 to 275 dollars per quintal. For Costa Rican growers, who rely heavily on premium arabica varieties, these developments translate into reduced revenue streams at precisely the moment when local currency strength diminishes the purchasing power of whatever dollars are received.

Detailed financial projections illustrate the severity of the squeeze. In the ongoing 2025-2026 harvest, with roughly 70 percent of the crop already committed at a base international price of 331 dollars per quintal and an exchange rate around 470 colones, the estimated settlement paid to producers reaches 118,627 colones per fanega. Yet forecasts for the 2026-2027 cycle paint a far bleaker picture. Assuming the anticipated price range of 240 to 275 dollars per quintal and a further strengthening of the colón to approximately 450 colones per dollar, the corresponding settlement is expected to drop to only 91,340 colones per fanega. These forthcoming figures sit noticeably below average production costs, which amount to 107,630 colones per fanega on representative farms achieving yields of 20 fanegas per hectare. The resulting shortfall leaves many operations facing outright losses, with little room for profit after covering essential inputs and wages.

National coffee production for the 2025-2026 market year is estimated at 1.17 million 60-kilogram bags, reflecting a modest contraction from prior periods amid ongoing challenges. This output nevertheless supports a broad economic footprint, sustaining more than 100,000 direct jobs throughout the year and an additional 35,000 positions during intensive harvest seasons. Coffee cultivation spans 47 rural cantons, where it forms the backbone of local economies and provides critical income for thousands of smallholder families. Should the current exchange rate trajectory and suppressed global prices persist without intervention, projections indicate that up to 15,000 of these employment opportunities could disappear over the coming four years, accelerating rural depopulation and straining community infrastructures already vulnerable to such shifts.

The underlying mechanics of the crisis highlight a structural vulnerability inherent to export-oriented agriculture in Costa Rica. Producers negotiate contracts and receive payments denominated in dollars on international exchanges, yet every aspect of cultivation, from planting through processing, incurs costs fixed in colones. When the dollar weakens, the converted income fails to keep pace with inflation-adjusted expenses or even basic operational needs. This imbalance has grown more pronounced over time, transforming what once represented stable earnings into a precarious financial position. In earlier periods, when exchange rates hovered well above 650 colones per dollar, equivalent market conditions would have generated settlements exceeding 162,000 colones per fanega, affording comfortable margins even during moderate price fluctuations. The contrast with today’s realities underscores how rapidly circumstances have deteriorated.

Beyond immediate income reductions, the broader implications extend to investment decisions and long-term sector viability. Farmers report hesitation to purchase new equipment or invest in sustainable practices, given the uncertainty surrounding future returns. Labor shortages may intensify as wages fail to compete with alternative opportunities, while input suppliers face their own cash flow disruptions from delayed payments. The cumulative effect threatens to diminish Costa Rica’s standing in the premium coffee segment, where its reputation for quality and environmental stewardship has historically commanded higher premiums. If production volumes contract further in response to unprofitable conditions, the nation’s overall export earnings from coffee, which reached 422 million dollars in 2024, could see sustained downward pressure in subsequent years.

Looking toward the remainder of 2026 and into 2027, the outlook hinges on several interconnected variables. Continued appreciation of the colón, potentially reaching or falling below 450 colones per dollar under prevailing monetary policies, would amplify the conversion losses already evident. At the same time, the projected expansion of global supply, led by Brazil’s anticipated bumper crop, is likely to maintain downward pressure on arabica prices throughout the period. Combined, these factors could result in national production stabilizing near or slightly below the current 1.17 million bags, with export values declining proportionally if prices and exchange rates align with current forecasts. Rural cantons dependent on coffee may experience reduced economic activity, prompting calls for policy adjustments to stabilize the currency environment and support affected producers.

Despite these headwinds, the sector retains underlying strengths rooted in Costa Rica’s favorable climate, skilled workforce, and commitment to high-quality cultivation. The challenges of 2026 serve as a reminder of the delicate balance required between global market participation and domestic economic stability. Without measures to address the currency mismatch and buffer against volatile commodity cycles, the risk of widespread farm abandonments and job losses will intensify. Producers emphasize that the current convergence of a historically strong colón and subdued international prices represents more than a temporary setback, it signals a structural inflection point that demands coordinated responses to preserve one of the country’s most emblematic industries for future generations. As the 2026-2027 harvest approaches, the industry stands at a crossroads where timely adaptations could mitigate the projected losses and restore pathways to sustainable profitability.