Caribbean & Central America - June 2011 (ISSN 1741-4458)

In the first five months of 2011 Nicaragua’s exports were up by a third (year-on-year) at US$1.07bn. The main reason for this was higher prices: export volumes were up by only 1.2%.

Coffee is the country’s biggest single export, bringing in US$173m in the first quarter of 2011. In the whole of calendar 2010, coffee exports came to US$342m. The country’s coffee crop is a bit bigger than last year’s. In the first seven months of the coffee year, which began on 1 October 2010, exports were up 7.5% at1.28m quintales (100lb bags). Export revenues in this period are up by 59% at US$274m from US$172m.  The average export price for a bag of coffee in the current coffee year is US$213 up from US$140 a year ago.

The US is by far the biggest buyer of Nicaraguan coffee: in the first seven months it paid US$120m for 562.7m bags. The country’s next biggest markets for its coffee are Germany and Venezuela which bought US$23m and US$22m respectively.

In the past coffee year (October 2009 to September 2010) the country exported 2.1m quintales, worth US$321m, up from US$242m in the previous coffee year.

Ariel Bucardo, the agriculture and forestry minister, expects agricultural exports this year to come to about US$1.5bn and to account for about 75% of the country’s total export revenues. The country’s agricultural year runs from June to May. The government expects agricultural production this year to be 9.8% up on the 2009/10 agricultural year. The country has 951,438 hectares under cultivation, of which 219,681 are given over to the principal crops of coffee, sesame, sugar, peanuts, soya, tobacco and bananas.

The government is playing up its effort to increase production of cotton which used to be a major cash crop between 1950 and 1980. The country now has a textile industry, based in freezones, which imports the fibre it uses. Nicaragua is drawing on Brazilian technical advisers for its pilot cotton project, covering about 2,000 hectares. Under the Cafta-DR treaty, (which establishes free trade between Central America, the Dominican Republic and the US) from 2015 Nicaragua’s textile industry will lose preferential access to the US market for clothes that do not use cotton sourced from either the US, Central America or the Dominican Republic. Under the preferential access (known as the Trade Preference Level), Nicaraguan-made clothes currently pay zero tariffs to get into the US.

Employment: The Instituto Nicaragüense de Seguridad Social reported that there were 572,500 people paying into the social security fund at the end of April 2011, up from 530,700 at the end of April 2010. The government and its supporters argue that this increase proves that the growth in the economy is generating proper jobs.  The government’s critics retort that this is wrong and cite figures from Paul Oquist, the presidential adviser on public policy, who claimed that the country has created 325,000 new jobs between 1 January 2010 and the end of March 2011. Oquist says that the economy has 2.7m economically active people out of a population of 5.7m. The government’s critics say that 51% of the people working are self employed and only 28% are wages earners (as opposed to subsistence farmers). Around 30% of all people of working age work in agriculture, mostly as subsistence farmers who also double as day labourers when commercial farmers need extra labour.

• Food security

The UN Food and Agriculture Organization (FAO), which has earmarked US$28m for food security projects in Nicaragua for 2011, recently hailed Ortega’s efforts to make the country self-sufficient. It noted that Nicaragua was now capable of supplying domestic demand for corn and beans and had cut the gap between demand and production for rice – the other key staple. According to the national union of farmers and cattle ranchers (Unag), production was 1m quintales short of the 6m needed to satisfy domestic demand.