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Nicaragua struggles to rescue war-ravaged coffee industry.

Nicaragua struggles to rescue war-ravaged coffee industry

With the contra war relegated to history and the Sandinistas out of power Nicaragua's coffee growers can finally turn their attention to rebuilding the country's shattered coffee industry.

As much as 40% of Nicaragua's foreign-exchange earnings come from coffee, making it by far the country's most important agricultural commodity. Some 160,000 of the Central American nation's 3.6 million inhabitants depend directly on the coffee industry for their livelihood.

Yet according to a study prepared by the U.S. Embassy here, the value of Nicaraguan coffee exports has fallen dramatically, from $199.6 million in 1970 to less than $90 million in 1989.

"Growers are producing only about a third of their potential," the report states. "Most coffee growers had made little investment in their farms during the 10 years of Sandinista rule, because of fears of confiscation and uncertainty related to currency exchange controls."

In the 1989-90 season, Nicaraguan coffee production came to 47,500 metric tons, up slightly from 1987 levels but down from a peak of 78,429 tons in 1982-83.

Ramiro Guardian, president of UPANIC, an umbrella organization that represents the coffee, sugar, banana, cotton and cattle industries, says he has no doubt things will improve with Violeta Chamorro as president of Nicaragua. (Chamarro defeated Sandinista incumbent Daniel Ortega in closely monitored elections Feb. 25 and was inagurated three months later.)

"The war had a big effect on the coffee industry, but what hurt the country more than anything else was the economic system under the Sandinistas. They told us what to buy and what to produce, and they were the only ones who could buy our products. They killed the people's initiative."

A report prepared by the Comision Nacional de Cafe, a non-governmental advisory body, claims that "the economic measures which took effect on Feb. 14, 1988 in order to reduce inflation and increase exports, were designed and implemented without the participation of the producers. In addition, continual variations in policy created uncertainty and fear. Many of these measures rapidly turned technologically advanced coffee growers into semi-advanced ones, and many semi-advanced farmers returned to traditional ways."

Guardian, interviewed during a visit to Managua, said the Marxist-oriented Sandinista government made decisions on ideological rather than practical grounds, and that coffee farmers suffered from it.

Roberto D'Andrea was one of those farmers. A member of the board of directors of the nationwide Union Nacional de Cafeteleros de Nicaragua (UNCAFENIC), he says growers were forced to sell their production to the state agency Encafe, whether they wanted to or not.

"It was a closed system," he said. "If you sold to anyone else, they would confiscate your property and put you in jail."

According to D'Andrea and other growers, "the price established by the government was too low. They paid us $13 per quintal (a measure commonly used throughout Latin America and equivalent to 46 kilograms), but we needed to get $60 per quintal just to survive. At the $13 price, it was enough only for our own subsistence. I lost my plantation because I didn't have money to maintain it, and production dropped."

Besided paying low prices for coffee, says D'Andrea, the government charged outrageous prices for fertilizer and other necessities.

In the absence of competition, he explained, the Sandinistas could get away with charging coffee growers $8 per quintal of fertilizer when it cost them only $2. Nobody knows what happened with the $6 differential, since under the Sandinistas, the budget was a state secret.

Said David Robleto, president of the Comision Nacional de Cafe: "All information on the budget, even details such as the area of coffee under cultivation, was kept secret. They tried to make the numbers better to disguise how the country really was."

If the situation of coffee growers in Nicaragua appears grim, it's even worse for the peasants who actually pick the beans. Workers at the privately owned Hacienda Los Angeles outside Managua earn 149,836 cordobas a day for their work, or just over a million cordobas per six-day workweek. It may sound like a lot, but at present exchange rates, that works out to less than $5 a week.

The new Chamorro government, promised a $300 million emergency aid package now pending in Congress, wants to put an end to the nation's hyperinflation. Chamorro has already planned for the introduction of a new currency, the gold cordoba - on par with the U.S. dollar - to replace the current worthless cordoba sometime in July. It is also encouraging the gradual dismantling of state enterprises such as Encafe and the revitalization of the coffee industry, in cooperation with groups like Robleto's.

In its May 1990 report, the commission warned that the coffee infrastructure "is seriously deteriorated and in regrettable condition. Vehicles have an average 15 to 20 years use and we can't guarantee they'll be able to transport next year's crop."

"Likewise," the report continued, "the absence of a program to control plant diseases and the lack of efficient technology transfer threatens to put an end to the coffee industry in a few years."

Interestingly, one thing that didn't hurt the industry much was the U.S. trade embargo imposed in 1985 by President Reagan and lifted by Bush a few months ago. Even before the embargo, most Nicaraguan coffee production was going to West Germany, with the U.S. accounting for only a small percentage of exports.

Nevertheless, says Robleto, the lifting of the blockade against Nicaragua will allow that country's coffee growers to purchase American-made tractors and farm equipment once again. Robleto says he expects Nicaragua to be producing 850,000 quintales of coffee by the 1990-91 season, with a value of $44.2 million, and 1.6 million quintales by the 1994-95 season, with a value of more than $100 million.

That's in keeping with the National Coffee Commission's three main objectives: reversing the drop in production, contributing to a reduction in the country's inflation rate and recovering historic levels of production achieved in 1982-83 with less area than before.

Whether Nicaragua can overcome its current difficulties, no one knows, though Gurdian remains hopeful. "We learned from the mistakes of the Cubans," he said. "We know things will improve because the Chamorro government wants free enterprise."

Not all of Nicaragua's coffee growers, it should be pointed out, agree with Gurdian and his free-enterprise ideas. Oscar Borge, production director at a state-owned coffee plantation at El Crucero, some 24 kilometers outside Managua, says he doesn't want major changes.

"We hope the state keeps control of the coffee business. We think it would be less advantageous to privatize," he said. The company Borge works for, Empresa Agropecuria Adolfo Garcia Barberenae, controls 19 separate holdings.

Larry Luxner is a freelance journalist based in San Juan, Puerto Rico.

PHOTO : Coffee pickers who earn $5/week get at least one fringe benefit - free lunch.

PHOTO : Oscar Borge, production director at El Crucero.
COPYRIGHT 1990 Lockwood Trade Journal Co., Inc.
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Author:Luxner, Larry
Publication:Tea & Coffee Trade Journal
Date:Jul 1, 1990
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