The Tico Times / March 7, 1997
By Larry Luxner
MANAGUA -- The recent election of pro-business politician Arnoldo Aleman as president has given the Nicaraguan private sector -- including most fruit and vegetable exporters -- renewed hope that Central America's poorest country will finally begin digging itself out of poverty by attracting serious foreign investment.
Aleman, sworn into office in January, has assured Nicaraguans he'll continue the free-market policies adopted by outgoing President Violeta Chamorro and reject once and for all the Soviet-style approach that former Sandinista President Daniel Ortega had embraced when he ran the country from 1979 to 1990.
"We basically hope there will be an opening in the sense of foreign capital coming in, and that there'll be an improvement over before," says Traugott Horsch, owner of Horsch Frutas y Vegetales and one of the country's largest melon exporters. "The Chamorro government made it possible to export. What we are hoping is that there'll be more foreign investment. But I don't see any big changes immediately."
Gerry Lamberty, an advisor to Nicaragua's Association of Producers of Non-Traditional Exports (known by the Spanish acronym APENN), says Aleman has promised to create 100,000 jobs during his first year in office, in three sectors: agribusiness, tourism and free-trade zones. In early December, the president-elect announced his selection of conservative politician Emilio Alvarez Montalvan to head the Ministry of Foreign Affairs, and former Central Bank chief Francisco Laines to head the Ministry of Economy.
"In agriculture, they haven't been all that specific, but they'll certainly promote non-traditional exports," said Lamberty. "Aleman says he's going to give the land back to the people, and will compensate the former owners in some way. The problem with agriculture is the residue left over from the Sandinista period, where a lot of people became accustomed to not repaying loans. In Nicaragua, you still have a lack of confidence."
Nicaragua, whose population has more than tripled in the last quarter-century, now has 4.35 million people, yet remains the most sparsely populated country in Central America after Belize. It is also the poorest, with a per-capita income of under $500. And except for a few hotels and shopping malls going up in the suburbs, Managua still hasn't recovered from the 1972 earthquake that devastated this once-bustling city.
According to official statistics, agribusiness accounts for about 30% of Nicaragua's $1.8 billion gross domestic product. In 1996, the top agricultural exports -- in descending order -- were coffee, beef, sugar, seafood and bananas.
In early 1996, Dole subsidiary Standard Fruit Co. said it would invest $15 million in Nicaraguan banana production. Standard Fruit pulled out of Nicaragua in 1982 after the Sandinistas nationalized banana exports. Del Monte is said to be considering some limited investments in the country as well.
In addition, the Export-Import Bank of the United States announced it would start funding development projects in Nicaragua, and the World Bank has included Nicaragua among a list of 41 heavily indebted poor countries that will benefit from a newly established trust fund to be managed by the bank's International Development Association.
Even so, Lamberty, who works on contract for the U.S. Agency for International Development, observes that Nicaragua has yet to reach the level of exports achieved in 1977, two years before the Sandinistas overthrew the right-wing Somoza dynasty.
"It's a general assessment that 10 to 12 years of sandinismo put the country back to 50% of what they had before in terms of per-capita income," he said, adding that exports such as peanuts, tropical flowers and ornamental plants might be easier to get into for Nicaragua than fresh produce. "Central Americans are now occupying practically the whole window that's available. They are limited to that window, and it's getting harder and harder to survive in a much more competitive world."
He notes that banana exports account for three times all other tropical fruits combined, but that Nicaraguan growers -- aided by tax and customs incentives -- are overcoming obstacles and beginning to invest in sweet onions, mangoes, melons and other crops.
Likewise, Nicaragua's tropical climate and rich soils offer ideal growing conditions for melons, a crop dominated by three companies: Horsch Frutas y Vegetales, Frutex and Agropecuaria Santa Lastenia. The three have a combined area of 280 hectares under cultivation, exporting close to one million boxes a year.
Horsch, who employs 250 to 300 workers in season and markets his melons through Chestnut Hill Farms of Miami, says that from an agribusiness point of view, Nicaragua has the best conditions in Central America for melon cultivation.
"Our big problem, though, is the inland cost," says the German-born Horsch, who came to Nicaragua in 1984 as a Sandinista sympathizer but quickly became disillusioned with leftist politics. "Shipping costs have risen 20% this year. This represents an additional $70,000 to $100,000 a year in expenses."
Since Nicaragua doesn't have an adequate port on the Atlantic, the only possibilities for fruit exporters like Horsch are to ship out of the Pacific port of Corinto to Long Beach, or to truck the fruit over bad roads to Honduras and ship out of Puerto Cortes.
"We are still negotiating with principal shipping lines," said Horsch, who didn't make a profit last year. "For us in the melon business, it's a question of being in or out."
