Nicaragua: Dire Political Stability & Coffee Prices

Nicaragua: Dire Political Stability & Coffee Prices

Though previously riddled with strife in the 70-80s, Nicaragua has up until incredibly recently become somewhat of a model for Central American tourism and stability. That is until April 2018. It’s been a year, and matters have continued to degrade — like with many of nation neighbours — alarmingly, to a point of outright crisis.


Right now Nicaragua is in the midst of its bloodiest civil conflict in the 40 years since the end of the Nicaraguan Revolution.


To Provide Some Background

Protests were initially sparked by university students against Nicaraguan President Daniel Ortega’s administration — who eerily mirrors the very Somoza dictatorship that he and other Sandinista’s themselves worked to topple in the late 70s — subsequent to a harsh social security reform law that sought to increase tax contributions from workers and decrease pensions and benefits.

Though the law was essentially scrapped by Ortega within days, unrest persists amid allegations of excessive force by the government. But that’s an understatement — words cannot describe the remaining and endlessly continuing state of utter terror for Nicaraguans from the hands of the government, military, paramilitaries and the police.


Violent clashes between activists and police have now led to the huge numbers of deaths and injuries by innocent civilians in the last 12months.


Following strict censorship laws in Nicaragua, international outsiders have been lending voice to the struggle.


The Ideal Location, But An Impossible Situation

Nicaragua has the ideal climate, soil, altitude and potential for the highest quality of coffee production. Indeed, coffee is the single most important crop in Nicaragua in terms of its economic, social and environmental impact -- and employs 15% of the total country's population. To illustrate this: 1992 marked the first year where more land was planted for coffee cultivation than for any other crop grown domestically. Suffice to say, Nicaragua's social turmoil has had marked effects on the coffee industry, and is in turn having a massive flow-on effect into the socio-economic well-being of its people.


The Importance of Coffee to Nicaragua 

According to the USDA’s Foreign Agricultural Service, prior to the recent political unrest, coffee production for this dependent nation was booming. Year after year harvests increased by over 7% annually, 2015/16 1.9 million 60 kg bags accounting for $400 million in value, and 2016/17 yet another record crop with an estimated production of 2.3 million 60 kg bags.


2017/2018 had similar forecasted production numbers and growth as previous years, assuming good weather conditions. However, this has plummeted, and coffee buyers are noticing the drop in coffee farmers.


The export of coffee will continue to become increasingly impeded, or in some cases completely halted by roadblocks or protests throughout the country. Though non-urban mountain communities where coffee is grown had been relatively spared (with most major violence occurring in the larger cities) these communities are still affected by the difficulty in transporting food and other goods. Scarcity of resources has led to localised violence in more rural areas as people struggle for access to food and other basic necessities, and rural working class, too, have been making their way to the cities to join the struggles in the urban streets.


“Without a doubt, this situation is affecting everybody,” William Ortiz of Caravela Coffee tells Daily Coffee News. “We are not able to export any coffee right now, as roads are blocked and there’s too much uncertainty. Therefore, we are not receiving income needed to pay producers.”


“this political turmoil has changed the socio-economic landscape of the country, heavily affecting the availability of credit for coffee growers and businesses alike. We continue to believe in Nicaraguan coffee and have not stopped investing in our operations there, with the hope that through paying better prices and establishing long-term relationships we can help alleviate the challenges faced, with the expectation that in the medium term the political situation will greatly improve” — Alejandro Cadena R. CEO of Caravela coffee, in the 2018 Impact Report


To paint a parallel, Costa Rica — though not immune to such factors as climate change, or poor industry practices — is still politically and economically more stable than some of its neighbours in the Coffee Belt region of Central America. As such here we notice less fluctuation in prices per Ib of raw coffee. So it comes as no surprise that there have been reports of large net migration of Nicaraguans fleeing to Costa Rica for a better life.


Bonaverde's Coffee Scout has reported to us that many of these refugees-termed-migrants are found now working in coffee farms in Costa Rica. With a record net migration of people out of Nicaragua, time will only tell what the long-term results of a brain-drain, containing vital coffee producing know-how means for a country so dependent on this crop. It is more than likely to eclipse the impacts of the natural disasters and political unrest witness from the 70-80s though, which themselves still took the country decades to recover from.


Bonaverde wish to communicate to our readers, and our coffee changer community the plight of Nicaragua. We hope that If you love coffee, then the turmoil of Nicaragua and the whole Central American region speaks to you!


Bonaverde has a history with contributing farmers hailing from Nicaragua: ranging from some of our first partners -- Henry Hüeck, Juan Carlos and Luis Alberto to name some -- all the way to our most recent green coffee supplier, José Armando Pastrana Maradiaga of Finca San Vicente. Whilst the matter has implications for Bonaverde and many international coffee buyers who support a sustainable supply chain with significantly above industry-standard pay — but for Nicaraguan farmers, the political unrest has much more real repercussions to their livelihoods, with many simply being unable to return to their plots, or prepare for any future harvests. 


In the meantime, Bonaverde is supporting Asociación de Cafés Especiales de Nicaragua (ACEN) 11-14th April at the World Specialty Coffee Expo in Boston, an industry body in dire straits having lost much government funding, and is presently carried on the backs by a few strong individual farmers.