Exporters can find a small but growing market in Nicaragua

"It's a small, poor country, how much can they eat?" might be the expected reply when you talk about Nicaragua as an export market. But the answer is, more than most exporters would think. Total U.S. agricultural exports to Nicaragua have increased sharply over the past three years--from zero in 1989 to $22.9 million in 1990 (the year the U.S. trade embargo was lifted) and to $42.3 million in 1991.

During the first eight months of 1992,* U.S. exports totaled $31.1 million, up 18 percent from the same period in 1991.

Leading Nicaraguan agricultural imports from the United States in 1991 included soybean oil, wheat, rice, tallow, poultry meat, soybean meal, processed fruits and vegetables and beer. Imports of soybean oil, wheat, tallow and soybean meal are almost entirely from U.S. donations. (Nicaragua received $25 million in agricultural donations in fiscal 1992 under USDA's Food for Progress Program.)

Small but Growing Market

While neither a large nor a wealthy market, at just under 4 million inhabitants and a per capita income of $400, Nicaragua does offer a niche market opportunity for some U.S consumer-ready foods.

U.S. sales to Nicaragua in this category totaled $11.5 million in 1991, led by chicken meat, miscellaneous food preparations, processed fruit and vegetables, wine and beer, eggs and egg products and fresh fruits.

And the upward trend in sales continues. Exports of U.S. consumer-oriented products to Nicaragua during the first eight months of 1992 totaled $8.5 million, up 85 percent from the same period in 1991. Exports of beer and chicken meat led the growth.

U.S. Filling Unmet Demand

Many Nicaraguans developed a taste for U.S. products while in exile in Miami or other cities in the United States. In addition, after five years of the U.S. trade embargo, there remains a large unmet demand for U.S. consumer goods in Nicaragua, mainly among those with higher incomes.

High-value product market opportunities exist for frozen chicken (whole birds at present), canned fruits and vegetables, beer, miscellaneous food preparations (sauces, condiments), fresh fruits (apples and grapes) and dairy products. Nicaragua produces few processed foods.

There is also potential for sales of animal genetics such as hatching eggs, bovine semen and breeding cattle. For bulk products, commercial opportunities exist for products such as milled rice, corn (for feed), soybean meal, some vegetable oils and barley malt (under the Export Enhancement Program). Commercial export opportunities also exist for tallow and wheat, depending on the availability of agricultural donations

Chicken, Beer, Fruits Are Big Winners

Imports of frozen chicken meat (parts and whole chickens) grew rapidly in 1991. Domestic chicken production cannot meet growing demand and U.S. prices are very competitive. Most poultry imports are from the United States. U.S. exports of poultry meat to this market totaled $4 million in 1991.

Nicaragua officially prohibited imports of chicken parts in September 1991. Although imports continued into 1992 (illegally), the government has since tightened its control, basically eliminating all imports of chicken parts (whole chicken imports are allowed).

The United States was scheduled to hold consultations with Nicaragua in November 1992 and is considering action in the General Agreement on Tariffs and Trade unless restrictions are eased.

Imports of Nicaraguan-label beer (made in the United States) are on the rise. "Cerveceria Victoria," the major beer producer in Nicaragua, made plans to import U.S.-made beer totaling 900,000 cases for 1992 and 1.2 million cases for 1993. U.S. beer imports reached $1.3 million in 1991 and could reach $4 million and $5 million in 1992 and 1993, respectively.

Consumption of high-value products reaches its peak during November and December because of the Christmas holidays. As in other Central American countries, it is becoming a tradition in Nicaragua to eat apples and grapes during the Christmas holidays. Consumption of meats, beer and wheat products also increases during the holiday season.

The author is the U.S. agricultural attache in San Jose, Costa Rica. He also covers Nicaragua.

* Latest available data.

COPYRIGHT 1993 U.S. Department of Agriculture
COPYRIGHT 2004 Gale Group