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Nicaragua: agriculture in a Liberalization context. Early stages of integration to global networks. Context. Nicaragua is the largest country in Central America, with a 130, 000 km2 and 5.4 million people, half of them live in rural areas.

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nicaragua agriculture in a liberalization context

Nicaragua: agriculture in a Liberalization context

Early stages of integration to global networks.

context
Context
  • Nicaragua is the largest country in Central America, with a 130, 000 km2 and 5.4 million people, half of them live in rural areas.
  • Nicaragua rates in the position 112 according to the Human Development Index, 48 % of the total population live under the poverty line, and 70 % of them live in rural areas
  • Agriculture represents 28 % of GDP.
  • Main agricultural exports are: coffee, beef, sugar, dairy products and fruits. Agricultural production represents 42 % of total exports. Food production include grains such as: maize, beans, rice, poultry and pork
  • There are 200,000 farms and 6.27 million has, (1963: 3,8 million has).
liberalization and commercial balance
Liberalization and commercial balance
  • After 1990, there has been a rapid liberalization process
  • Key agricultural products have been protected: maize, rice, bean, dairy products and sugar
  • Agricultural exports have increased modestly (5 % annual)
  • Agricultural imports have increased slowly. There is a positive balance in the agricultural trade. This may change with DR-CAFTA and Central American Integration process.
  • Nicaragua has a negative trade balance due to industrial and oil imports.
trends in the nicaraguan agriculture
Trends in the Nicaraguan Agriculture
  • First, a small segment of farmers linked with global distribution networks, such as quality markets for gourmet coffee, dairy products, sugar, peanuts, and plantains.
  • Second, traditional agro-export chains integrate a significant number of cattle ranchers and coffee growers
  • Third, the majority of rural households that produce food products with low quality and are linked with local distribution networks
trends in the nicaraguan agriculture11
Trends in the Nicaraguan Agriculture
  • In general, rural workers and female-head household are the most vulnerable population across regions.
  • The dry tropical region and the agricultural frontier have very few links with dynamic agricultural markets.
  • Farmers from the Pacific plains and the old agricultural frontier have strong links with the traditional agro-export chains but only a small segment of agricultural producers have links with global distribution networks
  • Businesses integration processes are in the early stages of development. Initial investment from Walmart, Cargil, Starrbucks, Yoplait and Parmalat.
vulnerable households livelihood strategies
Vulnerable households Livelihood strategies
  • Export Production Zones (Textile maquilas)
  • Migrations to Costa Rica are related to jobs in the agricultural and services sector (300 to 500 thousands).
  • Migrants to USA mainly work in the construction industry and the services sector (300 thousands approximately).
  • There are limited migrations between rural regions
  • Migration approximately represents 25 to 30 % of the active economic population
public and private transfers
Public and private transfers:
  • Public transfers through projects for poverty reduction and public infrastructure are estimated at 250 million per year.
  • Public and private transfers represent about 44 percent of agricultural GDP.
  • Public transfers tend to support relatively wealthy segments.
  • Private remittances shore up incomes of rural poor household
structural blockades
Structural Blockades
  • Available land is now a scarce resource; thus internal migration are limited.
  • There are growing restrictions for Nicaraguan migrants in both Costa and the USA.
  • Public transfers are highly dependent on foreign aid, which is declining.
challenges
Challenges:
  • Intensification of the agricultural production, increase land and labor productivity.
  • Increase competitiveness of sensible products in the next 15 years in order to compete in a free trade context (Chile, Mexico, USA, Taiwan and EU).
  • Reduce fragmentation and concentration of rural financial markets.
  • Resolve rural property issues and design public policies in order to reduce land concentration.
  • Integrate small and medium farmers to productive clusters and distribution networks
challenges17
Challenges:
  • Attraction of FDI with higher level of technology, which will demand skilled labor force and pay higher salaries.
  • Compensation policies for most affected families, investment in human capital in order to integrate them to other markets (labor and services)
  • Public policies to facilitate/stimulate investment of remittances in productive activities
  • A coherent public intervention in rural issues; currently, Nicaragua has several institutions, strategies and rural development interventions