Traffic jams that caused the shortage of water in the Panama Canal would have delayed shipments of sugar abroad in January and this in turn caused the volume and value of exports to fall
In the midst of the official propaganda that continues to sell the Free Trade Agreement (FTA) with China, such as the magical solution to all the country’s problems, exports of Nicaraguan products started 2024 with a 52 percent drop in volume, which generated an 11 percent reduction in the sector’s income. This setback was caused mainly by the collapse of the sales volume of oil refinery products. But the decline in revenue hit the fall in sales of sugar, livestock, ceramics, wheat flour and branch tobacco.
The decline in shipments of some of these products, including sugar, is attributed to the delays caused by the lack of water in the Panama Canal in the first months of the year.
And while regime officials welcome the entry into force of the Free Trade Agreement (FTA) with China on 1 January this year, it is already boosting trade, because slaughterhouses have already made the first shipments of meat, official statistics deny that achievement. According to foreign trade reports, from 2021 slaughterhouses began sending small volumes of meat to China and also in 2022.
In addition, as is traditionally the case, in the first month of 2024 the Asian market has remained the least Nicaraguan products purchased.
According to the foreign trade report of the Central Bank of Nicaragua (BCN), in January 2024 Nicaragua exported only 120,629 tons of products under the general regime, that is, a little less than half in relation to the 252,126 tons placed on the international market in January last year. This caused the export sector to generate only $320.44 million in revenue in the first month of the year, which is $41 million, compared to $361.59 million in January 2023.
This fall was caused mainly by the decline of about 90,000 tons of sugar. In January last year 110,622 tonnes of sugar were sent abroad and January this year only 20,124 tonnes. This reduction impacted revenue, as in January of this year the sector only contributed $14.02 million, on the other hand, in January last year the contribution was $5.59 billion.
Leaders of the export sector attribute this decrease to the problems faced by the sugar industry to get ships to make the shipments. These problems arose because many ships were stuck when the Panama Canal reduced its operations and waiting times to cross from ocean to another extended for several weeks. However, they say that between February and March exports from the sugar sector normalized.
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Oil refinery exports fall
Other products that contributed to the reduction in the volume of exports were those sold under the oil refinery product classification. In January of this year only 997 tons were exported, a volume that represents a 94 per cent drop from the 17,891 tonnes that were sold in January 2023.
However, in this case the problems of the Panama Canal would not be the cause of the decline, since it is that country that did not buy. Last year Panama was the main buyer of these products, in January 2023 it billed 16,670 tons, but in January of this year it did not buy a single ton and that caused the almost total drop in sales of these products.
But the value of oil refinery products is not very high, so the impact on revenue is not strong; in January 2023 its sales contributed $8.19 million and in the first month of this year only $1.21 million.
Other products compensated for fall
During the first month of the year, the good export performance was also the decliners in the income of other products, including standing livestock that only generated $125,200, less than the 631,700 obtained in January last year. As well as the ceramic products that in January 2023 produced 206,200 dollars and in the first month of this year only 59,300 dollars; the wheat flour that in the first month of last year contributed to export revenues 208,100 dollars and in that month of this year reported 55,300 dollars; and the branch tobacco that of contributing 578,300 dollars at the beginning of last year fell to 37,300 dollars in January of this year.
These decreases were offset in part by the improvement in sales of lobsters, shrimp, cheese, beans, fresh fish, instant coffee and drinks.
Meanwhile, official propaganda continues to present the FTA with China as the great solution to producers’ problems and reinforces the idea that the opening of that market will trigger exports.
Mific says meat has already been sent to China
During a recent virtual meeting with authorities, politicians and businessmen from the Chinese city of Tianjin, Maricruz Prieto, director general of foreign trade at the Ministry of Industry and Trade Development (Mific), announced that the FTA with China is already boosting Nicaraguan exports.
According to the official, between January and March 2024 the value of shipments to the Asian giant amounted to $25.6 million, an increase of more than $14 million over the same period last year. According to official media reports, the official said that in the aforementioned period 16 new products were sent to China, including cuts of meat, textiles, seafood, among others.
In addition, in a recent interview given to an official channel Prieto confirmed that this is the first time meat has been sent to China.
In order to export beef, which we were already starting to do this year, in February the first exports of beef were left, a health protocol had to be negotiated so that Nicaragua could export. All the documentation was sent, the necessary inspection was carried out, the IPSA says: these are the slaughterhouses that meet the sanitary requirements required by the Chinese market. There are three slaughterhouses that are already certified to export, and the first export has already been gone, said the official in the interview with the official media.
However, the NCB’s foreign trade reports indicate that the meat industry began making small shipments in 2021 and 2022, which means that slaughterhouses already had the necessary certification to export their products to that market. By 2022, these shipments generated $135,300 and in 2021 generated $266,600.
Exports to China
Last year the Chinese market did not buy Nicaraguan meat, but lobsters, shrimp, sugar, fresh fish, cigars and substitutes and coffee did. In fact, the best year for Nicaraguan products in China was 2018 when that country bought $65,9 million, including coffee, sugar and drinks. However, the main buyer on that continent that year was Japan with $117.1 million.
In the last decade that purchase of 2018 was the largest, however, every year that market appears in reports with small purchases, mostly of sea products, sugar and coffee. This implies that Nicaraguan exporters have been exploring for years that very few products have managed to consolidate so far, something that Prieto recognizes is not easy.
In the interview she admitted that exporting doesn’t mean producing and sending… no. Export means producing with quality, producing with safety, producing with the rules required by the destination market of our exports, he said and insisted that the Chinese market is very demanding.
He also made it clear that each exporter must establish contacts with private buyers, something that the business organizations that ceased to exist helped because the regime cancelled the legal personality. And he admitted that entering and conquering a market is much easier in organized groups than individually, however, after the closure of thousands of NGOs the support that small and medium-sized producers can receive to get these contacts is practically zero.
This article has been translated from the original which first appeared in La Prensa NI