Cisa crisis reduces shipments of coffee abroad, government hides crop reports 

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By Juan Francisco García

The crisis facing the multinational Mercon Coffee Group over the seizure of its subsidiaries in Nicaragua, Cisa Exportadora and Mercapital, is impacting on coffee exports, one of the three star products of the export basket, which in the previous harvest generated $619.38 million. To hide the reality, since December when Mercon took advantage of Chapter 11 of the U.S. Bankruptcy Law, Nicaragua’s Unique Foreign Trade Window (Vucen), formerly Cetrex, does not publish the monthly export reports of the 2023-2024 harvest that began in October.

For its part, the Central Bank of Nicaragua (BCN) recently updated the monthly reports of exports of the main products Nicaragua sends to the international market, including the so-called gold grain, but its numbers differ considerably from the last ones published by the Vucen.

It has been explained that the figures of the Vucen are sales intentions, which are not always realized, so the tendency is that those of the NCB are smaller because it is the shipments made, but in the November data, the Bank’s figures exceed those of Vucen said.

In the midst of this confusion of figures, some companies linked to the coffee production chain, make efforts to store the 2023-2024 harvest, which began on 1 October 2023 and ends on 30 September 2024; that is, it has already advanced six months. Cisa Exportadora marketed about half of the harvest, which in recent years has been around 3 million quintals.

Figures from Vucen and the NCB do not fit

According to industry-linked sources, some companies are storing much of that 1.5 million quintals of coffee that Cisa cannot send abroad to comply with the signed contracts. The company has been paralyzed and taken by the police since last December, when the regime took advantage of the crisis to collect an alleged debt of $30 million in taxes; and then, justify the seizure of the assets of Cisa and Mercapital, both Mercon subsidiaries.

This coffee, for which Cisa had already advanced part of the payment, through the mechanism known as the crop rating, which included technical assistance for the management of plantations and resources for the payment of permanent workers and cutters, could remain stored for several months and sent to the external market until next year, when Mercon’s situation has been defined in a federal court in the United States and the mechanisms for exporting it are established.

One of the companies that is collecting and saving this part of the harvest is the bank Lafise Bancentro, which also offers financing, drying and grain storage.

Since last December, through its website he announced to producers that – in view of the situation that the coffee export sector is experiencing in the country, it offers small, medium and large producers solutions that are adapted to their financing, drying and storage needs. We invite you to approach any of our branches throughout the national territory,” says the announcement of the entity.

They store coffee that cannot be exported

In addition, Lafise is Mercon Coffee Group’s main creditor in the country. Through its subsidiaries Cisa Exportadora and Mercapital received an unsecured line of credit of $26 million and at the time of the bankruptcy declaration they maintained a balance in unpaid capital, accrued and unpaid interest, commissions and other outstanding expenses, totalling $19.49 million.

According to the producers consulted, another part of the harvest that was delivered committed to Cisa Exportadora, has been bought by other exporting companies that have committed to processing the coffee to prevent it from being damaged.

Meanwhile, the Vucen suspended the publication of the monthly export reports of this harvest. In addition, it removed from its website the report of the previous cycle, 2022-2023 which ended on 30 September. Until the close of this note, the Vucen had only published the October and November reports, that is before the announcement of Mercon’s bankruptcy, published the reports of the first two months of the cycle that already entered the seventh month.

They hide reports of coffee export

According to the Vucen in October, the first month of the 2023-2024 cycle, 95.821 quintals of coffee were sent abroad and 57,467 quintals were sent abroad in November. However, in the most recent update of the export of the country’s main products, the Central Bank of Nicaragua (NCB) says that 90,900 quintals of grain were sent abroad in October and 73,700 in November. In addition, unlike Vucen, the NCB is less behind in its publications, and says that in December 58,400 quintals of the so-called gold grain were sent abroad and in January 167,800 quintals, the highest figure since the harvest began in October.

As a sign of the effect of Mercon’s crisis on exports, the 54,800 quintals that the NCB says were sent abroad in December represent the lowest volume recorded in December of the last six harvests. The same applies to 167,800 quintals, which the NCB reports that they were placed on the external market in January.

Although this is the largest volume of the current cycle, it is the lowest sale recorded in January in the last six production cycles; in the previous five harvests, the country sent abroad between 199,100 and 329,300 quintals. (See Infographic below).

In fact, January is one of the months in which the highest volumes of coffee export are recorded in each cycle and therefore the month that receives the most income. (See infographic above).

Where is the government?

And although more than three months have passed since the bankruptcy of Cis Exportadora was known, so far the government has not announced any concrete plans to ensure the exit of the current coffee harvest abroad, this despite the fact that China can be an alternative to placing the grain.

This is despite the fact that coffee provides more than $500 million to export earnings each year, one of the engines of economic growth.

The last time the regime ruled on this crisis was on 6 December last year, when it reacted to the bankruptcy of Mercon, owner of Cisa Exportadora and stated that it would enforce all its cummises and guarantee the sale of the current harvest. In the brief statement he said: “With the institutions that serve the coffee sector, we will be facilitating the marketing and export of coffee that results from production and coffee crops. We will also take steps with those countries interested in purchasing our quality coffee now that we have opened new international commercial spaces.

As a responsible state we are already doing everything that, in accordance with the Constitution and the Laws, we are responsible for the company CISA Exportadora to fulfill its commercial and financial commitments, he said. However, all it has done so far is take the assets of Cisa, hindering the legal process, which will allow the company to sell its assets to another international company, which would support the reactivation of the business.

This article has been translated from the original which first appeared in La Prensa NI