A U.S. trade mission that visited Nicaragua last week wants to start exporting more than $3 million worth of nontraditional fruits and vegetables from 20 local producers, according to the Nicaraguan Association of Producers and Exporters (APEN).
The U.S. trade mission—the first of its kind to visit the country in more than a year— was reportedly impressed with the passion of Nicaraguan farmers, the quality of their products and the beauty of the countryside. But they were less dazzled by Nicaragua’s inchoate infrastructure and high shipping costs.
Still, the six U.S. buyers—Walmart, Bagley Produce, Farm Fresh Market, Origene Seeds, Anthony Marano Company, Total Quality Logistics and Cardenas & Stephens—think Nicaragua is a place where they can do business, hopefully starting next year.
The U.S. buyers were especially interested in okra, watermelon, long squash, broccoli, Asian vegetables, malanga, yucca (cassava), and chive flowers, according to APEN. Of the $3.08 million in intended purchases, 64% is in fresh fruits and 36% is in vegetables.
“There are many possibilities for doing business with Nicaraguan producers,” said John Graves, representative of Anthony Marano Company, a Chicago-based company that is one of the largest suppliers of fresh fruit and vegetables in the Midwest. “This is like a marriage, first you get to know one another, and then you look for the best way forward so that both sides are happy.”
Graves, however, sees potential “marital issues” developing over the cost of shipping, the poor conditions of Nicaragua’s rural-access roads, and lack of a decent Atlantic-side port.
Buyers interested in shipping agricultural product to U.S. by boat are usually looking at an average of 30-plus kilometers of distance on secondary roads from the processing plant to the Inter-American Highway, and then another 500 kilometers plus an international border crossing to arrive at Honduras’ Puerto Cortes or Costa Rica’s Puerto Limón.
Additional transportation is costly and damaging to product, Graves says.
“Products are not damaged on the farm or in the packaging, they are damaged during transportation along bad roads,” he said.
As a result of Nicaragua’s deficient port, road and refrigeration-storage infrastructure, most fresh fruit and okra will be exported by air, using APEN’s refrigeration units at Managua’s Augusto Sandino International Airport.
Now comes the negotiation
In order to turn the U.S. companies’ intention to buy into purchase orders, Nicaraguan producers need to negotiate contracts with the U.S. buyers in 2013, according to APEN’s General Manager Azucena Castillo.
But even before that happens, the participating Nicaraguan producers need to be “coached” on how to negotiate a contract with the U.S. buyers and how to make sure all their production practices meet U.S. certification requirements for export.
“We have an intention-to-buy agreement with Walmart, but we need to work hard in the first semester of 2013 to get our global certification and to finalize the negotiation for the sale of malanga coco (Taro),” said Mario Perez, of the Association of People in Community Action, a group of nearly 2,000 producers. “We are getting coaching from APEN on how to negotiate the deal.”
Perez’s company has all the motivation in the world to follow through, considering Walmart told them they’d buy $1.2 million in annual product once everything is arranged and finalized next year.
APEN is currently working with 35 Nicaraguan producers toward U.S. certification, and hopes to add an additional 20 or 30 more to the certification process next year.
The idea, says APEN’s president Enrique Zamora, is to “awaken” Nicaragua’s agricultural sector, diversify products for export, and generate a greater trade demand that will necessitate improvements in infrastructure, more ships and lower transportation costs.
“Right now the shipping costs are high, but that doesn’t depend on us. The more ships that come due to increasing trade volume, the more shipping costs will go down,” Zamora told The Nicaragua Dispatch. “This increase in demand will obligate us to be more efficient. Nicaragua is opening to the world. Once we increase demand there will be more investment in infrastructure and in a chain of refrigeration facilities across the country.”
So far, Nicaragua is on the right track. Exports in 2012 are up 13% from last year and are expected to reach a record-setting $2.5 billion for the year. With coffee leading the charge, Nicaragua’s exports hit $2.4 billion in November, already $100 million higher than 2011’s record-setting year.