Nicaragua

Ways Out of the Rural Crisis: Reforest, Educate and Don’t Steal

Alvaro Fiallos, vice-president of the National Farmers and Ranchers Union (UNAG), gave a talk at envío about Nicaragua’s agricultural crisis. The following are some of his thoughts on the issue.

Alvaro Fiallos

Almost two years ago, having analyzed my economic situation as a producer, I decided to give up agriculture. I was deeply in debt and couldn’t find a profitable alternative crop to grow. I finally decided I’d had enough and turned over all of my goods to pay off the bank. I had a farm on the highway between León and Poneloya, which my family was very fond of because it had been passed down by my mother; but economic reality finally imposed itself over our sentiments. I had grown cotton on that farm for 25 years and we had some very good years, but with the crisis in international cotton prices and nature repaying us for our poor environmental administration with insecticide-resistant pests, production costs rose sharply and the debts kept growing.

In 1992, Violeta Chamorro’s government offered us cotton growers a helping hand by restructuring our debts. But right before the 1995 harvest, just when the cotton balls were starting to open, nature hit us again through the eruption of the Cerro Negro volcano. Since my farm was within the cone of ashes spewed out by the volcano, the damages were enormous. I gave up cotton that year and started growing peanuts instead. In 1998, the last year I grew anything, the business that bought my peanut crop paid me a year late, with all of the losses that this implied in bank interests and currency depreciation. I decided to give up farming for good, since as an agricultural engineer I had other alternative sources of income and have never totally depended on agriculture. But most of my colleagues aren’t in the same position and despite their losses they have no choice but to continue farming if they want to eat. My case as a bankrupt farmer is just a small reflection of the crisis affecting Nicaraguan agriculture.

Production in Nicaragua’s rural sector has been totally left to its fate. The structural adjustment policies imposed on us by international organizations in these times of globalization categorically specify that the government cannot subsidize the rural sector and agricultural production. In Nicaragua this has been interpreted even more strictly to mean that the rural sector should not receive any kind of support at all.
The current Liberal government has no publicly defined economic policy for rural sector development. Instead, it has a policy that it manages ad hoc, involving no commitments because it is not public. To make matters worse, the government changed its minister of agriculture three times last year. How can anyone negotiate if each minister annuls everything that the previous minister did and decides to start from scratch?
The lack of any defined policy in the rural sector has favored agrarian counter-reform. In the 1980s, the Sandinista agrarian reform turned over about 6 million acres of land to the rural sector, some 1.7 million of which were managed by state companies and the rest by cooperatives and individual peasant farmers. The new economic policy initiated in 1990 involved increasingly turning the screw on the rural sector. This applied to everybody, not just agrarian reform beneficiaries, because an amount similar to that provided by the reform was in the hands of small producers neither affected nor benefited by the agrarian reform.

This new economic policy left all these small producers without any support in the form of technical assistance, credits or production logistics. To make matters worse, it came at a time when all producers had developed bad habits due to the economic policy of the Sandinista government, in which I participated. In the eighties, we got used to having our debts written off and to receiving very cheap credit and lost the habit of analyzing the cost-benefit ratio of our production. We set off on a producing adventure during those years knowing that the government, with all its paternalism, would be on our side come what may.

The subsidies were enormous. In cotton production 45% of costs consist of imported agrochemical inputs such as fertilizers, herbicides and insecticides. In the 1980s, these products were imported at the official exchange rate. In 1986 and 1987, before the 1988 change in economic policy, that rate was 80 córdobas to the dollar, although it stood at 5 million córdobas on the streets. As the bank lent us money at that illusory official rate, I could pay the bank back for all those costly inputs with the value of just one hundred-pound bale of cotton!
This kind of paternalistic policy encouraged anti-ecological attitudes: if we saw any kind of little worm on the ground, we’d send a plane to fumigate! We undermined a lot of what we had already achieved, because León’s National Autonomous University had set up an integral pest management program in the 1970s that the World Food Program highlighted as an example for the region. It had enabled us to reduce airborne insecticide fumigations to just 16 per cotton season. By contrast, from 1986 to 1990, we were fumigating 35 times between planting in July and harvesting in December. With such uncontrolled, extravagant use of insecticides, the insects ended up resistant and reproduced as though we were showering them with vitamins!
The same was true for all crops, not just cotton. We stopped analyzing how much the fumigation cost and how much we got back so we lost our ability to establish a cost-benefit ratio. We also got used to receiving open, easy, virtually give-away credits. During those years we even sent a helicopter out to the remote areas of the Atlantic Coast and gave out credit from there! We didn’t even have to worry about marketing because we sold everything to the state, at prices it established. So we also forgot—the youngest never even learned—what it meant to go haggle over prices in the market. In 1990 when all of these bad paternalistic habits came to a halt, we had to relearn to fight for better prices when selling and buying. They also cut our credit supplies and raised interest rates, and these were the very years in which international prices for our export products fell. It all combined to produce a totally unfavorable economic situation for the rural sector.

The new economic policy invited us to compete in the world market; but how could we? The cooperatives and small producers, whether benefited by the agrarian reform or not, were left without credit, were starting to run up debts, began to make losses on their harvests and had to endure three years of drought between 1991 and 1993—followed by flooding. Small producers started to sell their lands, particularly a number of the agrarian reform beneficiaries who had previously been laborers on other people’s farms and thus had little experience running one themselves.

That began the agrarian counter-reform. By 2000, we at UNAG estimated that 60% of the land distributed during the agrarian reform had been sold, largely to people who began returning to Nicaragua in 1990—some of whom bought the very farms that had been confiscated from them. It also got into the hands of former Sandinista and Chamorro government officials, and officials of the current government—with President Alemán far in the lead. They took advantage of their public positions and the situation of the sellers to buy up the land at derisory prices. During the Chamorro government, which I also participated in, I knew cases in which land was sold at the córdoba equivalent of $8.50 an acre! In recent years, many people have bought land to speculate, not to produce. The reality is that the land has been concentrated back into the hands of a few, as it was in the 1970s. Before the revolution, 80% of the land was managed in properties of 500 acres and over, whereas the agrarian reform turned that land distribution on its head, with 80% of the land being managed in holdings of under 85 acres. We’re not yet clear about today; the government has just done an agricultural census to find out the exact proportions but the data’s accuracy will be viewed skeptically given the distrust of small farmers—and probably many large ones as well—about informing the government what they actually own.

Right now, given the large-scale land speculation and the long-term financial incapacity of small-scale producers—and more recently of large-scale producers too, since we’re all in the same boat—there is an enormous amount of idle land in the country. In UNAG, we estimate that well over a million and half acres of pastureland have no cattle on them! You can see enormous extensions of idle pastureland between Chontales and Río San Juan and between Chontales and Nueva Guinea with just two or three cattle grazing there. Lands in the west of the country are also noticeably idle. León and Chinandega between them have 765,000 acres of grade-A agricultural land, among the best in Central America, but only about 200,000 are currently being cultivated.

A country cannot develop if it has a farming area of over 15 million acres in which up to 2 million acres of pastureland have no cattle on them and only 1.7 million of the over 4 million acres with good soil are being planted. Nicaragua cannot accumulate wealth if it allows so much productive land to remain idle.
On top of all this idle land, even what is used remains idle for much of the year. All the crops we grow on the Pacific side of the country—sorghum, sesame, peanuts, soy, red beans—take more or less 120 days from sowing to harvest, plus another 30 to prepare the land. The rest of the year there is no rain, so nothing is done. How can we expect to live twelve months on five months’ worth of productive work? The solution to spending half of the year sitting around doing nothing is irrigation, intensive land exploitation, alternative crops and more advanced technology for our traditional crops. But all this requires slow learning processes—and it requires support.

One acre is capable of producing 136 hundredweight of sorghum, but Nicaragua’s average yield is about 50 hundredweight. It should be possible to produce 85-100 hundredweight of peanuts per acre, but the national level is under 65. Our yields are low and the time spent producing very short. In addition we are overwhelmed by constantly more and greater taxes and have the most expensive electricity and fuel prices in Central America, two factors that help push up production costs.

No bank credit is available right now, despite the fact that we are just entering the rainy season, but the situation is even worse when credit is available because you cannot make a profit on maize, sorghum or sesame when you have to pay 18% interest on a loan in dollars. Few crops can support such interest rates and remain profitable. Coffee was one of those few in the past, but no longer. The crisis in international coffee prices has made it totally unprofitable right now. The price on the international market has traditionally swung between US$120 and US$160 per hundredweight. Today it stands at $58, and it is a safe bet that it will not rise in the next two years because extensive new frost-free coffee producing areas have emerged in Vietnam, India and new areas of Brazil, the country that used to most strongly influence world prices. These areas produce the equivalent of Brazil’s whole production, and have been harvesting coffee since 2000.

Unlike ours, the coffee coming out of Vietnam and India is not of a very high quality. It is a poor-quality African variety that sells well because, generally speaking, the world consumes low quality coffee. Our coffee is gourmet and therefore more expensive with a more limited market. Furthermore, the African variety has lower production costs than ours because pests and blights affect it less and the technology levels employed in the new growing areas allow enormous productivity. All of this has played a part in the Nicaraguan coffee crisis.

Nicaragua’s average productivity is 13-20 hundredweight of coffee per acre during good years. In Brazil, however, they obtain 68 hundredweight per acre, while in neighboring Costa Rica they produce over 76 hundredweight with production costs that are a little lower than ours. In Nicaragua we have tried to obtain a large production volume investing too much money in expensive imported inputs. We use 17-25 hundredweight of fertilizers per acre when we could use alternative methods. Nicaraguan coffee producers who have access to advanced technology and manage to produce 68 hundredweight per acre have production costs of between $120 and $130 per hundredweight, which is very high. As a hundredweight of coffee currently sells for $58, of which $23 cover export, processing and loading costs, you don’t have to be a mathematical genius to work out how incredibly unprofitable their coffee production is right now. Small producers who use traditional methods have production costs of around $45, but they only produce 5-10 hundredweight per acre. They don’t make a loss, but they earn very little and their production levels are very low.

The coffee crisis is further complicated, particularly for small-scale producers, by the fact that CONSAGRO—the company belonging to the Centeno brothers, who were linked to the bankruptcy of Interbank in August 2000—offered the largest amount of credits and tied them to futures sales of the coffee crop. Following the financial crisis, many small-scale producers were left in limbo, with nowhere to sell their production. Although this political-financial scandal was never satisfactorily explained, it is understood that the Centenos are being given the chance to pay off their debts and are doing so. Meanwhile, though, many indebted small-scale producers linked to CONSAGRO are having their properties attached.

Coffee growers currently faced with such low international prices, with no credit and threatened with foreclosure on their property don’t invest anything in their coffee plantations. Thus the coffee is left on the bushes, meaning that rust and broca—the two main pests that affect coffee—are running amok in the country’s coffee plantations. Without weeding, without fertilizers, without any care at all, coffee production this year is going to be 20% lower than traditional levels.

We have to learn from all of this. Today we are living in the world, not in a country, and it is a world in which the market is a king that responds to the interests of money, not to those of human beings. This king only adds and subtracts; if the bottom line is in the black it’s valid and if it’s in the red it isn’t. There is no support for human development in the kingdom of money, which is also the kingdom of inequity. The governments of the great economic powers—the United States, the European Union countries and Japan—forbid our governments from granting subsidies but offer enormous ones to their own farmers. And they defend this subsidy policy to the hilt because they are interested in seeing their own farmers survive.

The result of this inequitable policy is that rice from Vietnam, bought by the United States and then exported from there to Nicaragua, is cheaper here than nationally produced rice. It is cheaper for us to buy powdered milk and butter from New Zealand than the milk and butter we produce here. We compete in this "free" market like a tethered donkey against a roaming tiger, in which the most we can hope to achieve is three or four defensive kicks into thin air. And when we add our own politicians’ arbitrary decisions and corruption to this unequal situation, it is obvious that we should seriously reflect on which direction to take if we are to push ahead.

First, we should aim to recover our environment, which has been so seriously damaged by the misery we’re living in and by our own actions. The level of human awareness is inversely proportional to how full or empty one’s stomach is. If it’s full, awareness increases; but if it’s empty and you see a tree, you will invariably decide to make firewood out of it to sell it and buy something to eat, no matter what all the environmentalists in the world might have to say about the matter.

Such misery and the atrocities we have perpetrated against nature have left us with an incredibly fragile environment, such that in Nicaragua one rain shower produces a pool of water and the next one an eroding current. With so much land left uncovered, any rainfall produces floods and landslides and any drought is devastating because our soils no longer have sufficient reserves. Hurricane Mitch hit us at our most vulnerable, with fewer trees than ever after an eight-month drought and dozens of uncontrollable forest fires that left our soils completely exposed.

We have to act against this fragility immediately. The first task for any agricultural policy should be a far-reaching plan to improve the balance of nature, recovering the vital infrastructure, which does not consist of highways, houses or equipment, but soils, waters and trees, three inseparable and irreplaceable elements of life. Nobody and nothing has a chance without this vital infrastructure. We have to find a way of recovering our soils, waters and trees, of reforesting the country, but not by adopting ten trees each and planting them, because such methods just don’t work.

Despite the destruction we have caused in Nicaragua, we still have reserves and could reverse the situation. Five years of natural reforestation would regenerate forestland that we could subsequently continue to develop. Such a project involves determining where this regeneration is to take place, where farmers will not grow anything or even touch a tree. It also involves figuring out how to turn these producers into forest rangers who earn a fixed fee for guaranteeing that the woodland on their farms is not cut down or burnt until it has regenerated naturally.

How could such a project be financed? Through taxes, but not ones charged nationally. It could be an international tax paid by the rich countries that have historically plundered our wealth and now want to establish a lung to clean up the planet’s atmosphere, because they need it. They can pay for that forestland lung and we can guarantee it for them by "selling oxygen." Oxygen emission and carbon fixing are the two names currently being given to this commercial transaction. Through the regeneration of our forests, we can set up a carbon-fixing and oxygen-producing factory in Nicaragua. The Costa Ricans are already doing it to good effect. Such a project is only possible with international backing.
Meanwhile, nature is passing us the bill in a number of ways. A plague of boll weevils—caused by the extravagant use of fumigation that made them immune to all insecticides—effectively signed the death warrant for our cotton production; we now have a grub that is finishing off our pine trees. Nueva Segovia’s pine forests—part of our country’s natural wealth—have been sentenced to death. Poor environmental management has altered the biological balance in our lands, and we can only hope that we are not helping permanently destroy our coffee plantations through rust and broca, that coffee will not go the way of cotton. Unless we become aware of the environmental destruction we have caused, the future will be even darker than it appears right now.

We have to reeducate our consciousness. The "green revolution" taught us a simplistic recipe: a certain amount of insecticide per acre according to the pest. Later we realized things weren’t like that and we had to begin to relearn, to interpret the behavior of the pests and blights.

We should remember that there was a time when we were accused of witchcraft because we planted according to the moon’s phases. We knew that this was scientific, because most butterflies have a life cycle governed by the moon so they reproduce during a full moon and by the next are full-grown caterpillars. To produce organically we have to know nature’s cycles and have territorial plans because merely individual ones make no difference at all.

Given the damaged state of our environment, it is currently impossible in Nicaragua to produce organically in extensive areas, because the existing biological equilibrium does not permit it. We will only be able to do so by advancing a little at a time. We are currently producing organic coffee, with three or four UNAG cooperatives producing 50,000 hundredweight a year, which has a premium price on the international market to make it profitable to produce. With appropriate technology and no chemicals, these cooperatives produce 50-70 hundredweight per acre. They could not do this with larger areas. In 2000, an attempt was made to produce organic cotton and about 700 acres were sown in León and Chinandega, but in the end, pests and blights have almost won out and they have had to turn to chemicals. This demonstrates that it is impossible right now to dedicate large expanses of land to an organic crop. Until we recover the biological equilibrium, the pests and blights will beat us. We can only produce organically with a long-term perspective and new learning. These are slow processes and thus require state support in terms of technology, access to equipment, knowledge and management. They also require an educational process.

Reversing the environmental crisis and overcoming the rural crisis involves an educational program in the broadest sense of the term, including training, technical assistance and accompaniment. In the Nicaraguan countryside, 70% of the population is illiterate. How can modern technology be taught to someone who doesn’t know how to read and who is also starving to death?
International cooperation has channeled billions of dollars into Nicaragua through the government, organizations like UNAG and NGOs, a large amount of which has been earmarked for technical assistance. I can safely say that during the last ten years $5 billion has been invested in Nicaragua for technical assistance and training and appears to have achieved almost nothing. This is surely because it has been dedicated to theoretical training events that were disconnected from practice and reality. Education here necessarily involves training around a concrete objective, a productive objective. Instead of spending $100,000 on ethereal training—as tends to be the case—we should invest, for example, in setting up a little pasteurizing plant and train people how to use it. The effects would be more visible. International cooperation should orient itself to what is really useful and effective.

We need a broadly conceived educational program. We Nicaraguan producers should learn to think not only about the planting-harvesting production cycle, as we are used to doing. In these times of globalization, we should also think of a broader cycle that covers the whole food chain until we get as close as possible to the end of that chain represented by the consumers. Modern agriculture should meet three essential objectives: producing food to feed the world; satisfying the consumer in terms of quantity, quality and prices; and sustainably producing in the most environmentally friendly way possible. When we start thinking this way, certain things will start to change.

In-depth education guarantees improved health. If we can reverse the deterioration of Nicaragua’s environmental infrastructure and achieve a good education level in the rural area, it will imply good production that will in turn imply a good food supply, which will significantly reduce most of our health problems.

But even if we reverse the environmental destruction and educate the rural sector, something else is needed to guarantee Nicaragua’s development: that all politicians firmly commit themselves to change their ways and never steal again. Even allowing for this miracle, what could the next government do for the rural sector given current conditions? The first thing that should be pointed out is that none of the three political parties participating in the elections have put forward candidates with any farming awareness or who really come from the rural sector. None of the candidates in last year’s municipal elections or this year’s presidential tickets and so far none of the announced candidates on the National Assembly slates are farmers; all are from the city.

So what could a new government do? If the Liberals win, nothing will change. The mega-salaries and the bribes will continue to block the investment that could help the country’s development. I personally know of three big companies that wanted to invest in Nicaragua. One was going to build the Copalar dam on the Río Grande de Matagalpa, which would have provided electricity to virtually all of northern Nicaragua, but it decided not to invest here because the government conditioned its green light on a $5 million bribe. If the Conservatives win, I believe that the "innocence" characterizing their oligarchic top leadership would prevent them from realizing what was going on below. And if the Sandinistas win they would be bound by the external conditions of the structural adjustment and would have very little room for maneuver. Even so, they could help cushion the social crisis to some extent because they have greater social awareness, have learned from the mistakes and successes of their time in government during the 1980s and appear to be planning greater support for the agricultural sector. The real question is what role they would assign the state in linking the macro-economy to the micro-economy. For example, the government could restructure rural debts for long-term repayment instead of writing them off. It could stimulate rural production through fiscal incentives rather than subsidize it. And it could set about creating a work culture. The main challenge for an FSLN government would be to guarantee the country’s political stability, and in the rural sector this would imply guaranteeing private property and not allowing the invasion or occupation of farms.

Whatever happens, development will only come about though society’s real participation and through the Nicaraguan people becoming aware of the critical reality that we have reached and the fact that nobody is going to come and sort out problems that we can’t sort out for ourselves. Nicaragua will have a future only through participation and the creation of an awareness that can get beyond so much myopic thinking and finally aim for the long term.

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