Identifier
Created
Classification
Origin
06MANAGUA270
2006-02-03 23:40:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Managua
Cable title:  

NICARAGUA: COFFEE IS CAPRICIOUS KING IN JINOTEGA

Tags:  ECON ELAB EAGR PGOV SOCI NU 
pdf how-to read a cable
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DE RUEHMU #0270/01 0342340
ZNR UUUUU ZZH
R 032340Z FEB 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 5136
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
UNCLAS MANAGUA 000270 

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR WHA/CEN

E.O. 12958: N/A
TAGS: ECON ELAB EAGR PGOV SOCI NU
SUBJECT: NICARAGUA: COFFEE IS CAPRICIOUS KING IN JINOTEGA

REF: A. MANAGUA 0124

B. 04 MANAGUA 3534

C. 04 MANAGUA 3065

UNCLAS MANAGUA 000270

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR WHA/CEN

E.O. 12958: N/A
TAGS: ECON ELAB EAGR PGOV SOCI NU
SUBJECT: NICARAGUA: COFFEE IS CAPRICIOUS KING IN JINOTEGA

REF: A. MANAGUA 0124

B. 04 MANAGUA 3534

C. 04 MANAGUA 3065


1. (U) Summary: The economy of the northern Nicaragua
department of Jinotega is almost entirely dependent on one
crop: coffee. The international price of coffee drives the
fortunes of the region, and a poor transportation
infrastructure inhibits the development of other industries.
The shaky economy is plagued by considerable unemployment,
which in turn has driven emigration to Costa Rica and the
U.S. Without considerable support from the central
government to improve road conditions, Jinotega will continue
to face limited development potential. End Summary.


2. (U) Poloff and Political Assistant traveled to Jinotega
department (pop. 170,000) on January 11 and 12 to discuss
politics and the economy with local religious, business, and
political leaders (reftel). We experienced first hand the
bumpy, slow, slightly nauseating ride from Sebaco (reached
from Managua on the relatively pristine Pan American Highway)
to the highlands of Matagalpa -- then we endured the even
bumpier, slower, definitively nauseating ride to Jinotega on
a winding mountain road cratered like the surface of the
moon. This narrow, crumbling highway is the main artery to
and from the capital city and the route taken by coffee
traders, farmers, ranchers, and a few intrepid tourists.
Aside from coffee, the engine of the Jinotegan economy, the
department exports hydroelectric power (though a lack of
rural electrification is a major impediment to development),
beef, grains, milk, and some vegetable products. The
temperate, unspoiled highland climate and scenery beckon
tourists, but this industry remains largely undeveloped aside
from a few small hotels and guest houses.

LOCAL ECONOMY DEPENDENT ON COFFEE
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3. (U) Everyone we spoke with stated unequivocally that
coffee dominates the economy of the department, and the price
of coffee determines whether the area suffers economic
depression or enjoys a relative boom. Even in boom times,

however, most coffee producers still struggle with debt and
uncertainty. The members of the Jinotega Coffee Growers
Association explained that Nicaragua produces
800,000-1,000,000 quintales (1 quintal = 100 pounds) of
coffee every year, 75 percent from Jinotega. Of the 17,000
coffee producers in the department, 80 percent are considered
small growers, with only 1-10 manzanas (1 manzana = 2.3
acres) of land under cultivation. 15 percent are medium
producers with 10-50 manzanas, and only 5 percent are
medium-large or large producers with over 50 manzanas of
land. Association member Andres Altamirano opined that a
coffee producer needs at least 20 manzanas to earn a "decent
living" in a good year, obviously a small percentage of the
total grower population. Association president Eduardo Rizo
Lopez noted that international coffee prices had increased
considerably in 2005, and Jinotegan growers earned
approximately US$600 in profit for each manzana harvested.


4. (SBU) Despite the high prices in 2005, Rizo Lopez
explained that many producers are still living on the edge
and endure perennial problems that complicate harvesting
coffee and getting the product to market. He complained that
the local banks will only lend to growers at "usurious" rates
of 14 percent or higher, making it impossible for most
producers to obtain financing to upgrade, modernize or expand
their plantations. Others struggle with debt when prices
fall. Transportation presents another challenge -- as bad as
the highway to Matagalpa is, the roads connecting Jinotega
city to outlying areas are even worse, or nonexistent.
Coffee producer and local APRE coordinator Jairo Fajardo told
us that the price to transport coffee from Jinotega to nearby
Matagalpa is the same cost as moving the coffee from
Matagalpa to the distant Pacific port of Corinto for export.


5. (SBU) Rizo Lopez also mentioned the lack of laborers
during harvest time. He claimed that growers offer salaries
50 percent higher than the minimum wage, plus meals, health
care and "better treatment" than they can expect from a Costa
Rican employer. However, the Costa Ricans are able to offer
ten months of employment harvesting a variety of crops,
versus only three months harvesting coffee in Jinotega.
(Note: Major Jinotegan coffee producer Mario Lopez Rizo later
informed us that he had "found enough" workers for the
harvest by offering "fair pay." End Note.)

GROWTH OF OTHER INDUSTRIES STRANGLED BY POOR INFRASTRUCTURE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -


6. (SBU) Jinotegans told us that growth in industries other
than coffee is inhibited by a lack of suitable transportation
infrastructure and a lack of support from the national
government. Jairo Fajardo explained that Jinotega's climate
offers the possibility for considerable agricultural
development, and he has discussed with other coffee growers
setting up a coffee tour. Jinotega Chamber of Commerce board
member Evangelina Gutierrez reported that the Jinotega
Development Council had submitted a number of tourism
proposals to the Tourism Ministry, but never received any
support. (Note: Five of the six members of the Jinotega
Chamber of Commerce board of directors are women -- notable
in a rural area known for machismo. End Note.)


7. (SBU) Reverend Mario Rayo, the pastor of a local Assembly
of God church, told us that some international investors once
planned to construct a maquila in Jinotega, but canceled
their plans because of the bad roads. The Catholic bishop of
Jinotega, Carlos Enrique Herrera, explained that the
development of tourism and other industries is stunted by a
lack of infrastructure -- the roads are terrible and the only
landing area is a helicopter pad at a military base on the
outskirts of the city. Herrera mentioned that Lake Apanas, a
mountain lake 15 minutes from Jinotega surrounded by verdant
hills and stocked with game fish, had been declared a
protected area.


8. (SBU) After hearing about the lost potential of Lake
Apanas from Monsignor Herrera, Poloff noticed a brochure for
a development called "Apanas Lake Estates" in his hotel room.
The developer, a U.S. citizen with other projects in
different departments of Nicaragua, was not available, but
Chamber of Commerce member Ligia Ruiz, a partner in the
project, agreed to take Emboffs to the location. The site is
completely undeveloped except for a ranch house, but affords
beautiful views of Lake Apanas and the surrounding hills.
Ruiz was unaware of the protected status of the area, or any
other impediments to development.

UNEMPLOYMENT FEEDS MIGRATION
- - - - - - - - - - - - - - -


9. (U) The lack of economic diversification in Jinotega has
resulted in considerable seasonal and permanent unemployment.
Both Bishop Herrera and Reverend Rayo noted significant
migration to Costa Rica, the United States, and elsewhere to
escape unemployment and poverty. Rayo said that over 15
families from his congregation alone had left permanently for
the U.S. and Costa Rica in recent years. He explained that
remittances from emigrants "cover the essentials" for many
impoverished families in Jinotega.

COMMENT
- - - -


10. (SBU) Jinotega's development potential remains largely
untapped due to insufficient transportation infrastructure.
Without greater accessibility, Jinotega simply cannot compete
with other departments for agriculture, maquila, and tourist
income. The lack of attention from the central government
has generated considerable resentment in the population,
especially against native son politicians who they hoped
would support the department (reftel). Frustrated coffee
growers and others initiated a road block in Sebaco last year
to protest the poor conditions of the highways and carried
petitions to the National Assembly in Managua (they were not
received). Without some kind of response, politicians in
Managua can expect more of the same from angry Jinotegans.

TRIVELLI