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With Noriega out, exporters see hope for Panama's coffee industry.

With Noriega out, exporters see hope for Panama's coffee industry

At the height of tensions between Panamanian dictator Manuel A. Noriega and opponents seeking to overthrow him, one of Panama's most important coffee producers was forced into hiding for a month.

Ricardo Duran, president of Cafe Duran S.A., fled to Miami after one of the seven radio stations he owned had broadcast anti-Noriega sentiments and was later taken off the air. He returned to Panama only after U.S. troops expelled Noriega and helped establish democracy in the Central American country for the first time in 21 years.

"Noriega was just beginning to get into the coffee industry," Duran said in an interview here last month. "He had Dignity Battalions in the coffee-grown area, supposedly anti-guerilla groups who guarded the frontier with Costa Rica. But his was an occupation army, not a defensive army."

Duran said that with the disgraced Noriega out of Panama and awaiting a June

24 trial in Miami on drug trafficking and money laundering charges, Panama - which lost hundreds of civilians in the invasion - must now turn its attention to rebuilding its devastated economy.

Among other things, that means pumping life into Panama's coffee industry, currently among the least developed in Central America.

Last year, according to the country's Instituto de Mercadeo Agropecuario, Panamanian coffee production came to around 270,000 sixty-kg sacks. Of that total, only 111,712 sacks were exported, with a total value of $10.88 million. Thanks to lower world prices, that was less than half the amount generated by coffee exports in the 1988-89 season.

Jose E. Sitton, president of Cafe Sitton S.A. and one of Duran's biggest rivals, blames low production on two unrelated factors: corruption by the Noriega regime and the Omar Torrijos dictatorship before that, and high labor costs which make Panamanian coffee more expensive than coffees from elsewhere in the region.

"We have better land for coffee than Costa Rica, but agriculture hasn't been developed here," Sitton said in an interview at his office on the outskirts of Panama City. "We've been held down. We had a government here for 21 years, and we didn't know what was happening from one day to the next."

Sitton employs 210 people at his company's distribution center in Panama City and at farms throughout Panama's coffee-growing region known as Boquete, in Chiriqui province near the border with Costa Rica.

Some 15,000 Panamanian families depend on coffee for a livelihood, most of them Guaymi Indians living in the border area. Because Panama sees the U.S. dollar as its official currency, minimum wages are considerably higher here than in neighboring Central American nations.

"We can't compete with Costa Rica," he complained. "To produce a quintal (100 pounds) of coffee in Costa Rica costs $55, and in Panama, over $70. It's true we have a very good product, but people don't want to pay the price. In Puerto Rico, the government subsidizes the production of coffee. But we don't get any subsidies."

Costa Rica produces 3.4 million sacks a year, more than 10 times Panama's production. It also exports a much higher percentage of its coffee than does Panama.

Costa Rica has also been a democracy since 1948 - a far cry from the corruption and intimidation that went on right up until Noriega was driven out of Panama by invading U.S. troops in Operation Just Cause.

"Noriega's Minister of Agriculture closed my place for three days. I didn't belong to his party. Everybody was afraid." Sitton added that "with the quota agreement, you had to have influence to export, authorization from the Panamanian government."

Such authorization, according to Duran, came at a price.

"Under Noriega, quotas were tight, so export licenses were given to Noriega cronies. They in turn would sell it to producers." He added that even before Noriega, under Gen. Omar Torrijos, "the Panamanian government never did anything to help the coffee industry. That's why we have the smallest coffee industry in the region."

Now, with the new administration of president Guillermo Endara, things seem to be improving, albeit slowly. The Panamanian economy is still more than 80% dependent on service industries such as international offshore banking, the Colon Free Zone, the Panama Canal and ship registries, though the Endara administraton is trying to develop manufacturing and agriculture as well.

"The government is really beginning to push export agricultural products. It's one of the ways to cover the deficit of imported products," said Duran. However, he added, "they're not going to subsidize anybody. We're going into a free market."

According to Duran - whose grandfather came to Panama from Spain in 1907 and stayed to work on the Panama Canal - some 80% of Panama's highland coffee is exported, while almost all of its lowland Arabica goes for domestic consumption.

Fifteen years ago, the company began planting its own coffee to keep pace with demand. Today, it owns a 225-hectare coffee plantation, and is negotiating for land that would add another 300 hectares to its holdings.

Cafe Duran employs 800 workers and claims 62% of the local market. Duran said he exports green coffee to the U.S. through brokers, while pre-packaged ground and roasted coffee is sold to Italy, Bulgaria and Czechoslovakia, among others.

Cafe Sitton, on the other hand, buys coffee from other producers and sells almost all its production to Cargill. "We never have any problem selling our coffee, and we process it very carefully because we don't have much of it," quipped Sitton.

PHOTO : Ricardo Duran-president of Cafe Duran

PHOTO : Jose Sitton, president of Cafe Sitton S.A., with one of his delivery trucks.

PHOTO : Sign outside Cafe Sitton S.A.
COPYRIGHT 1991 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Manuel Antonio Noriega
Author:Luxner, Larry
Publication:Tea & Coffee Trade Journal
Date:Mar 1, 1991
Words:948
Previous Article:Caffeine safety.
Next Article:Group studies Caribbean-Pacific link as one alternative to Panama Canal.
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