Police Seize Cisa Exportadora Assets

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By LatAm Reports Editor

A month after Mercon Coffee Group took advantage of the U.S. Bankruptcy Act, uncertainty grows among its representative’s customers in Nicaragua, Cisa Exportadora, who sold about half of each coffee crop abroad. In the absence of information on the future of the business, it was added that several days ago police officers took the offices and profits of the company. It is not known whether the takeover is part of an intervention process requested by Lafise Bancentro as a creditor, or whether the State did, under the pretext of fulfilling the company’s commitments.

Faced with the closure of the collections of Cisa Exportadora in the productive areas, small producers are selling their harvest to other intermediaries who traditionally buy the grain in grapes or parchment and then resell it. On the other hand, the medium and large ones who had contracts with Cisa, to avoid damage to the quality of their harvest, hired the drying service and classified in other benefits.

However, the big problem that both intermediaries and medium and large producers face is to get buyers abroad, as coffee is exported through future contracts that prior to the start of this crisis were already signed.

Cisa executives don’t respond

The benefit, in early December, chapter 11 of the US Bankruptcy Act Mercon Coffee Group, was supposed to continue operating normally in the nine countries where it has operations. Even in Nicaragua they asked their employees to stay in their posts. However, the representatives of the group did not face, then, between 4,000 and 6,000 producers, of the more than forty thousand who are registered in Nicaragua, were exposed to intermediaries who take advantage of the situation to impose lower prices and even unforgetful conditions on them.

But in the face of the absolute silence of the executives of Cisa Exportadora and the fear that the harvest will be damaged, in most cases they have no choice but to accept how little the intermediaries offer them. For several days, THE PRENSA has tried to obtain information about the company’s situation and its future plans, but the company’s representatives do not answer our queries.

Entrepreneurs linked to grain production and export, who for fear of reprisals request anonymity, say that the cessation of operations of Cisa’s profits affects their customers, however, the most serious problem is not that, since in productive areas there is sufficient installed capacity to process the grain. They even comment that the stage of the process that demands the most infrastructure is the drying and Cisa does not own all the yards that it used for that process, but rented them for each season to the neighbors of their benefits.

Will they get shoppers for the coffee?

They say that the really serious problem at the moment, when much of the harvest has already been cut and processed, is to get buyers on the international market. The only way to get them in contact with the coffee-pursed houses that are mainly in the United States, it will be necessary to see if the exporters have those contacts or if they were kept only by Cisa, says one of the exporters consulted.

Another producer explains that in the absence of Cisa Exportadora, intermediaries are buying more coffee from small producers. But with medium and large producers the situation is more complicated.

At the beginning of this crisis the benefits were refused to receive the coffee that was contracted with Cisa. They considered that the company had paid for this production in advance, as the company delivered what they call empowerment, that is, technical assistance and resources for the agricultural work carried out during the year in the plantations and that financing was paid with the harvest. But seeing that no executive or owner of that company once again gave their face, they began to receive it, as they did not dry and process coffee in the established times it has a negative impact on the quality of the grain.

Intermediaries are at risk with this coffee

Now, in exchange for the payment of the fee they charge their customers, several benefits receive the coffee agreed with Cisa. They dry it, process it and in other cases they classify it as well. However, because they are new customers they hardly get these profits to help them export the grain, so they themselves are looking for buyers.

So the great uncertainty is, who will be sold to coffee by intermediaries and producers who are looking for market for that part of the harvest that can represent up to half of all production. That is up to 1.50 million quintals, as in recent production cycles exports have exceeded three million quintals.

What happens is that in this coffee business contracts are signed well in advance, so the question is what these people are doing to get buyers. This situation forces them to accept the prices imposed on them by intermediaries and even other buyers, because the important thing is not to lose the harvest, says one of the producers consulted.

Police take Cisa facilities

In addition, the producer explains that even internationally the price is around $200 per quintal who buy this coffee have to pay less because they are at great risk. What’s going to happen if they don’t get buyers? If they can’t sell it, they’re going to lose a lot of money, because if they get contracts to sell it the other year, that coffee will remain remnant for the next harvest and they will have to pay wineries to keep it for many months and when they sell it they could even pay lower prices for being remnant of a previous harvest, he points out.

While the producers make multiple efforts to reduce the damage caused by the cessation of operations of Cisa Exportadora, police officers keep profits and offices of the company taken without knowing so far whether the police presence is part of an intervention process that could be the result of an embargo that several weeks ago promoted Lafise Bancentro, a bank that at the local level is Mercon’s main creditor.

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