Nicaragua: agriculture in a Liberalization context

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. 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). Land Tenure Nicaraguan Land Distribution according to the National Census 2001 % 70.0 60.9 56.5

60.0 50.0 34.5 40.0 30.3 30.0 20.0 9.1 8.8 10.0 0.0 less than 14 ha

14.01 to 70 ha Range Area Families More than 70 ha Land Tenure Lorenz Curve of Land Concentration in Nicaragua 2001 120.00 100.00 % of Land 80.00 60.00

40.00 20.00 0.00 0.0 10.0 20.0 30.0 40.0 50.0 60.0 % of Families

70.0 80.0 90.0 100.0 110.0 Land uses Land uses in Nicaragua 2001 Total area: 6,277,745 has 4% 11% 14% 5% Annual Crops

Perennial Crops Land in rest 19% 15% Natural pastures Grass Woods No agricultural land 32% 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. External Balance: Nicaragua: External balance on goods and services (% of GDP) 0 1990

1991 1992 1993 1994 1995 1996 1997 -10 % of GDP -20

-30 -40 -50 -60 -70 years 1998 1999 2000 2001

2002 2003 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 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 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 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 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: 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 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 Thanks, this is Nicaragua

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