The closure of the plant of the Central American Company of Lacte Products S.A. (Prolacsa), which has been operating in Matagalpa for 55 years, implies, for the livestock sector, the closure of a second large market in less than two months. However, the decision of the Swiss multinational Nestlé, owner of Prolacsa, will also impact the country’s income from its exports. In 2022, the shipment abroad of processed products at its Matagalpa plant amounted to $4.45 billion to the total amount generated by exports, and as of September 2023 it had contributed $32.83 million.
In addition, the 2023 export report reflects that the investment of $11 million that Nestlé made between 2018 and 2023 did not produce the expected results, as the export of processed cheeses was only carried out in 2021 and 2022 and that of soluble coffee fell. But among the livestock guild they do not rule out that there are other reasons behind the closure. So far the company has only said it obeys the global dynamics.
PRENSA is still waiting for the company to respond to some queries related to the future of the company and the relationship with producers; as it has limited itself to reporting that it will maintain its commercial operation and distribution center.
However, the decision to close this plant after 55 years of operation contrasts with the expansion of investments that Nestlé is making in El Salvador and Guatemala. In addition, it joins the departure from the country of the Mexican Lala that in October 2023, announced that it had sold all its shares to a Honduran consortium, which until now has not explained whether it will maintain the scheme and the volume of collection that the Mexican one had.
In 2020, Nestlé announced the investment of another $5 million in the automation of coffee lines and the strengthening of the production of processed cheeses and Forti Crece Nest milk. The following year he began exporting to Guatemala, El Salvador and Costa Rica, sliced and packed cheeses, of American varieties, line and mozzarella.
According to the reports of the Nicaraguan Unique Foreign Trade Window (VUCEN), formerly the Export Processing Center (Cetrex), 567 tons (12.474 quintals) of processed cheeses were sent abroad in 2021, amounting to 3.14 million dollars. The sale would have been made by Nestle, as when announcing the opening of this production line they confirmed that no one else was doing so in the country.
Coffee Soluble and its relationship with Nestlé
In 2022 the export volume of processed cheese fell to 458 tonnes (10,076 quintals), for which $2.89 million was obtained. But in 2023, these shipments to the external market were reduced to zero, which could involve the closure of the processed cheese production line.
Meanwhile, the processing (soluble) coffee placement dropped. A report on the historical exports published by VUCEN, details that between 2006 and 2015, 23,557 tons (518.254 quintals) of processed coffee were exported and the country received 230.22 million dollars; that is to say at an average of 2,357 tons (51.825 quintals) per year that generated about 23 million dollars per year.
This period coincides with the start of operations under the administration of Nestlé of the coffee processing plant, of the company Café Soluble S.A. (CSSA), owned by José Antonio Baltodano. An entrepreneur who until June last year was a majority shareholder of the Mercon Group that operated twelve companies in nine countries. In December, the Group took advantage of the U.S. Bankruptcy Law and at the end of the same month, the State of Nicaragua, alleging a debt of $30 million in taxes, seized the two subsidiaries Mercon in Nicaragua, Cisa Exportadora and Mercapital.
Export of soluble coffee down
On the website of the company CSSA it says: We are a Nicaraguan private equity company. We produce and market nutritious powdered drinks, cereals, soy-based products, roasted coffee and ground. We have a modern product distribution chain, which we also offer as a service throughout Nicaragua and since 2006 we have managed an instant coffee plant for Nestlé. However, it is not known whether this relationship is maintained.
The case is that in recent years, exports of this soluble coffee processing plant did not maintain the average of 2,357 tons (51,825 quintals) of exported coffee that they recorded between 2006 and 2015, but decreased, however, the product remained on the list of the twenty largest of the export basket. Between 2021 and September 2023, the volume of processed coffee exports ranged from 1,400 to 1,790 tonnes (30,800 to 39,380 quintals) per year. As during the above-mentioned time, the price has remained between $9,000 and $10,000 per ton, these shipments abroad generated between $13 million and $20 million.
Something similar happened with milk powder. The VUCEN historical report details that between 2006 and 2015 83,892 tons of milk powder were exported, producing revenues of 380.83 million dollars. That is, at an average of 8,389 tons per year and $38 million in revenue.
Who’s gonna buy the milk that Prolacsa processed?
But between 2016 and 2020, milk powder disappeared from the list of exported products. That implies that it was not exported or that the volume was so small that it was included in the segment others. It was until 2021, following the announcement of Nestlé’s investments that he again placed himself back on the list of the twenty most important exported products.
In 2021, 3,379 tons of milk powder were sent abroad, paying $16.75 million; in 2022 3,636 tons of milk powder were placed on the external market and received $22.07 million for them; and between January and September 2023 (most recent of VUCEN) 2,116 tons were sent, generating $14.66 million in revenue.
So far Nestlé does not explain what will happen to the producers who delivered their milk to Prolacsa. And in the face of the situation of terror in which a large part of the leaders of the business sector are plunged, since the closure, in March 2023, of the Superior Council of the Private Company (Cosep) and all the chambers that integrated it, no livestock leader dares to calculate the impact that will cause the closure of this market for milk producers in the area of Matagalpa.
This damage is in addition to the uncertainty generated at the end of last year by Nicaragua’s departure from the Mexican Lala Group, which, after eight years of operation, sold the three plants it managed: Lala San Benito, La Perfecta and Eskimo to the Lacthosa Group, which presides over Honduran Schucry Kafie.
This article has been translated from the original which first appeared in La Prensa Grafica