4.2.5.- Nicaragua

Nicaragua can be characterized as the country with ‘the endless opportunities which will always remain to be opportunities’. Many consider Nicaragua to be the perfect country for the production of various crops. Basically two factors have contributed to the fact that the mentioned characterization is still valid until present day.

First of all, the Nicaraguan political situation. After a promising revival in the early nineties, corruption has dominated politics and faith of the people in politicians has dropped considerably. Many have fled the country, mainly to neighbouring country Costa Rica. Mentioned right wing politics have put Nicaragua in the position of the second poorest of all American countries and have fed the believe of mainly the poor in a new sandinist revival. This believe became reality in January 2007, when elected President Ortega regained power. In his first months in charge, the government has put a lot of effort in new commercial ties with countries like Venezuela, Iran, and Libya. This policy has scared of many foreign investors and recent problems with companies like Esso, Fenosa and also with the written press (La Prensa) have created even more uncertainty.
Besides all these negative recent signals, no public takeovers of private companies have taken place so far. It is hard to predict if such scenarios will start taking place in coming months or years. Much will depend on the international support which is still present for Nicaragua. The country is unable to rely on its financial system and it is unlikely that above mentioned new allies are able (and willing) to support Nicaragua’s economy.

 

Figure 4.7 Business Ideavelopment Chart Nicaragua

The second reason for the ‘everlasting opportunities’, is the lack of good international connections by means of an international port. This issue has been discussed for many decades but no clear signs indicate that such a port will be realized on the middle long term.
Although products can be exported from ports like Puerto Cortez in Honduras and Puerto Limon / Moín in Costa Rica, costs are considerably higher per container load. A logical option for a country like Nicaragua, taking all its benefits into consideration, would be the production of labour intensive high value crops which justify the additional transport costs. Produce creating higher value per container load is less sensitive to costs of (sea) freight but generally requires more knowledge and higher risks.

Assuming that Nicaragua manages to create political stability and decides to, supported with international support, to construct an international port on the Caribbean Sea, prosperity is likely to start flourishing for Nicaragua as a country and for agriculture in particular.

4.2.5.1.- Pineapple, banana, cut flowers, young plants and pre-finished pot plans

For all above mentioned products, limited opportunities can be found in Nicaragua. Existing production (for export purposes) is absent or very small and the actual political climate is too instable to justify investment in product diversification; new products for new markets. The risks are considered to be too big. Nevertheless, the political situation is a factor which can change on the short or middle long term putting opportunities in a completely different perspective. Banana could possible become more interesting if infrastructure improves. Pineapple is a crop which shows rather high potential taking all aspects into consideration but there is a lack of available risk capital to develop this market in Nicaragua.

4.2.5.2.- Pineapple

 Pine apple is a crops that certainly shows perspectives in Nicaragua due to the favourable climate and labour costs. Most probably, land is fertile enough for pine apple produce but this has not been verified. Due to rapidly increasing costs of land and labour in Costa Rica, Nicaragua could become on interesting alternative for pine apple production.

Opportunities

4.2.5.3.- Vegetables

Nicaragua produces mainly vegetables for export like red beans and onions. In greenhouses, the only significant crop in this group is sweet pepper. Onions can be considered as promising for Dutch seed companies.
Vegetable production in greenhouses can be considered to be an opportunity taking into account the fact that it is labour intensive and it has high value. Although the existing project is located at a height of around 500 meters, it is recommendable to set up future projects on locations with a higher altitude like the region Matagalpa – Jinotega where the climate is more temperate. Connections to the international airport are good and from Jinotega about to be good (road is under construction). The main challenge for Nicaragua regarding vegetable production is that it will have to prove its competitiveness to countries like Guatemala, El Salvador and most of all Honduras. For possible investors / strategic partners, PSOM and PESP programs are available for Nicaragua.

 Opportunities

4.2.5.4.- Mango

Mango is one of the main fruits being exported due to the efforts of mainly one company. Mango is not a crop showing big opportunities for Dutch exporters of services and products. For Dutch importers, Mango and other fruits can become interesting products to be obtained in Nicaragua. Collaboration between a Dutch importer and a local producer could be an interesting future scenario on the longer term.  

Opportunities

4.2.5.5.- Watermelon and melon

Water melon has gone up significantly in the year 2006 and was responsible for 6% of total Central American exports of this crop. Melon has decreased in that same year to virtually no exports. The value of water melon per container load is limited and therefore, transport costs put pressure on the profitability of produce. Melon is a little bit less sensitive to this fact. Nevertheless, increasing costs in Costa Rica (labour, land) make production in Nicaragua more interesting. But it is not just Nicaragua which is in the race to takeover part of Costa Rican produce. Competition is apparent from other countries such as Panama and Guatemala. Water melon is a typical product which would be produced in Nicaragua in large quantities if a harbour would be constructed and if politics were to be considered stable.
Opportunities can be identified for investors having access to risk capital and who consider Costa Rica, as a producer of (water) melon, to be declining. In case of further expansion in Nicaragua, opportunities for Dutch seed companies, certification consultants, importers and market consultants can be detected.   

Opportunities

4.2.5.6.- Foliage

Foliage in Nicaragua is still a rather new crop which needs to be developed. The only production region is situated between Matagalpa and Jinotega. New sites are being set up north of Jinotega. Land and water are available and the climate is suitable for leather leaf production. On top of that, the agricultural sector in and around Jinotega is actively searching for alternatives for their coffee and vegetable production (for the local market).
New projects, to be financed with once again risk capital can succeed as long as the set up of the projects is professional using cooling facilities and when output (quality of the product) is excellent. Nicaragua has no fame as an ornamental exporter and market confidence can only be created based on quality.  

Opportunities

4.2.5.7.- Processed fruits and potencial crops

Fruits
A crop that can be mentioned as potential for is papaya. Production exists and the first exports have been done. Processed and prepared fruits and vegetables do have potential in Nicaragua although there is limited supply (unless imported) and a lack of (foreign) capital. Most fruits and vegetables being produced in Nicaragua right now, are processed in Costa Rica.

Opportunities