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Country profile - Nicaragua

nicaragua

Poverty in Nicaragua has decreased slightly in the past ten years, but the country is still the second poorest in Latin America. Nicaragua is continuing to recover from a decade of civil war (1980-1990), which devastated the economy: exports declined by 50 per cent, GDP dropped by two-thirds and external debt soared to more than six-times the country's GDP. However, ongoing disputes over land ownership, price fluctuations of vital export commodities such as coffee, and natural disasters are all continuing to hinder the agriculture sector and, in particular, the smallscale farmers who depend on it.

Overview

Forty five per cent of Nicaragua's population live in rural areas and over half live on less than US$1 a day. The poorest families are often landless and headed by women, and about 1.5 million Nicaraguans are estimated to be undernourished. Many have migrated to Costa Rica, El Salvador and the US in search of employment, and with US$823 million sent back in 2010, remittances have become an important source of income.

Beans are an important staple crop (© Neil Palmer (CIAT))
Beans are an important staple crop
© Neil Palmer (CIAT)

Four-fifths of rural inhabitants depend solely on agriculture for a livelihood and overwhelmingly on a few crops - sorghum and maize in the lowlands and beans and vegetables in the highlands. With fertile soil, the Pacific coast is the main area for growing oilseed, fruit and tubers. Shrimp processing is also concentrated in this area, while provinces surrounding the capital host most of the agri-food and commodity trading activities. With high annual rainfall, the Atlantic coast has large areas of forestry, including African palm, and cocoa plantations, while coffee production is concentrated in the north of the country where temperatures are lowest.

Coffee, beef, peanuts, banana, lobsters, sugar, dairy products, beans and sesame are the main export crops, accounting for 67 per cent of Nicaragua's export earnings. These leading exports have seen significant growth since Nicaragua joined the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) with the US in 2006, helping the country attract investment and promote economic development. About half of all agricultural exports are produced by small and medium farmers, who are also responsible for producing 90 per cent of the staple foods consumed.

Despite protective legislation and programmes aimed at creating alternative livelihoods, shrimp cultivation and artisanal fishing have destroyed coastal mangroves. Most of the shrimp caught is exported, yet extremely low incomes and poor access to credit have continued to constrain the development of the fishery sector. Cattle are a significant source of hides, meat and dairy products in the west and east of the country. Goats, pigs and sheep are also kept in small numbers.

Hurricane Mitch caused enormous damage to the agriculture sector (© FAO/L.Dematteis)
Hurricane Mitch caused enormous damage to the agriculture sector
© FAO/L.Dematteis

Drought, poor soils and water scarcity, as well as recurrent natural disasters such hurricanes, landslides, earthquakes and volcanic eruptions, add up to a challenging environment for Nicaragua's farmers. Two million people were affected when Hurricane Mitch hit Nicaragua in 1998. The resulting heavy rains and landslides not only destroyed vital infrastructure including roads and bridges, but also caused US$250 million in damage to the agriculture sector through the destruction of crops and death of livestock and fish. Hurricane Felix also caused extensive damage in 2007.

In addition, the deforestation rate now tops 40,000 hectares a year as land is cleared through illegal logging operations and for ranching and farming, leaving hillsides vulnerable to landslides. But, despite substantial deforestation, Nicaragua's forests still cover more than a third of the country and contain valuable cedar, mahogany and pine trees.

Roughly 20,000 people are involved in small-scale gold digging. The intensive use of mercury and cyanide to process the gold is a source of concern for the authorities, because of the impact on the environment and health of the gold diggers. Deposits of silver, zinc, copper, iron ore, lead and gypsum are also present.

Future outlook

The government has committed itself to promoting export crops (© FAO/Saul Palma)
The government has committed itself to promoting export crops
© FAO/Saul Palma

With low levels of agricultural productivity, Nicaragua's population has been hit hard by rising food prices. Under the National Human Development Plan, the government has committed itself to promoting export crops, regulating land tenure, implementing sustainable water resources management, including the use of irrigation systems, improving access to credit and designing ways to deal with climate change and natural disasters. In August 2011, the government held a national congress to discuss, share and analyse information and success stories about sustainable agriculture and climate change in order to formulate national policies.

In an effort to improve agricultural yields, the European Union and the UN's Food and Agriculture Organization (FAO) are currently providing quality seeds, storage infrastructure and technical support. USAID has also been working to increase the incomes of smallholders by expanding and strengthening value chains, adding value through processing and helping them to access international and regional markets. USAID is also targeting disaster preparedness by improving early warning systems and supporting measures such as drought resistant crops. Other interventions include World Bank projects tackling rural water supply, agroforestry and land administration, and support from the Inter-American Development Bank to implement an agricultural consensus.

While agriculture has been identified by the government as the sector with the greatest potential for growth, the combined impacts of recurrent natural disasters and climate change, as well as unresolved land tenure issues and access to credit are still major challenges.

Statistical information
  • Country: Republic of Nicaragua
  • Capital: Managua
  • Area: 130,370 sq km
  • Population: 5,666,301 (July 2011 est.)
  • Population growth rate: 1.1% (2011 est.)
  • Life expectancy: 72 (2011 est.)
  • Ethnic groups: mestizo (mixed Amerindian and white) 69%, white 17%, black 9%, Amerindian 5%
  • Languages: Spanish (official), Miskito
  • Inflation: 4.7% (2010 est.)
  • GDP purchasing power parity: US$17.7 billion (2010 est.)
  • GDP per capita: US$3,000 (2010 est.)
  • GDP composition by sector: agriculture: 17.5%; industry: 26.5%; services: 56% (2010 est.)
  • Land use: arable land: 14.81%; permanent crops: 1.82%; other: 83.37% (2005)
  • Major industries: food processing, chemicals, machinery and metal products, knit and woven apparel, petroleum refining and distribution, beverages, footwear, wood
  • Agricultural products: coffee, bananas, sugarcane, cotton, rice, maize, tobacco, sesame, soya, beans; beef, veal, pork, poultry, dairy products; shrimp, lobsters
  • Natural resources: gold, silver, copper, tungsten, lead, zinc, timber, fish
  • Export commodities: coffee, beef, shrimp and lobster, tobacco, sugar, gold, peanuts; textiles and apparel
  • Export partners: : US 32.4%, El Salvador 14.3%, Venezuela 8.6%, Honduras 7.2%, Costa Rica 6.2%, Guatemala 4.4%, Mexico 4.1% (2009)

Written by: Vanya Walker-Leigh

Date published: August 2011

 

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This article is very informative, thank you! Am trying to se... (posted by: Liz)

After a visit to Nicaragua this past winter I found that the... (posted by: Dan Seidel)

 

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