|Nicaragua Table of Contents
Ironies abound in Nicaragua's historically dominant agriculture sector. The country's relatively low population density and its wealth of land resources have both held the promise of solutions to poverty and been a major cause of it. The importance of one or two crops has meant that the country's entire economy has undergone boom-or-bust cycles determined primarily by worldwide prices for agriculture exports.
Coffee became the country's principal crop in the 1870s, a position it still held in 1992 despite the growing importance of other crops. Cotton gained importance in the late 1940s, and in 1992 was the second biggest export earner. In the early 1900s, Nicaraguan governments were reluctant to give concessions to the large United States banana companies, and bananas never attained the level of prominence in Nicaragua that they reached in Nicaragua's Central American neighbors; bananas were grown in the country, however, and were generally the third largest export earner in the post-World War II period. Beef and animal byproducts , the most important agricultural export for the three centuries before the coffee boom of the late 1800s, were still important commodities in 1992.
From the end of World War II to the early 1960s, the growth and diversification of the agricultural sector drove the nation's economic expansion. From the early 1960s until the increased fighting in 1977 caused by the Sandinista revolution, agriculture remained a robust and significant part of the economy, although its growth slowed somewhat in comparison with the previous postwar decades. Statistics for the next fifteen years, however, show stagnation and then a drop in agricultural production.
The agricultural sector declined precipitously in the 1980s. Until the late 1970s, Nicaragua's agricultural export system generated 40 percent of the country's GDP, 60 percent of national employment, and 80 percent of foreign exchange earnings. Throughout the 1980s, the Contras destroyed or disrupted coffee harvests as well as other key income-generating crops. Private industry stopped investing in agriculture because of uncertain returns. Land was taken out of production of export crops to expand plantings of basic grain. Many coffee plants succumbed to disease.
In 1989, the fifth successive year of decline, farm production declined by roughly 7 percent in comparison with the previous year. Production of basic grains fell as a result of Hurricane Joan in 1988 and a drought in 1989. By 1990 agricultural exports had declined to less than half the level of 1978. The only bright spot was the production of nontraditional export crops such as sesame, tobacco, and African palm oil.
In 1979 the new Sandinista administration quickly identified food as a national priority in order that the country's chronically malnourished rural population could be fed. The government planned to increase production to attain selfsufficiency in grains by 1990. Self-sufficiency in other dietary necessities was planned for the year 2000. For a variety of reasons, however, including the private sector's retention of 60 percent of arable land, the Sandinista government continued to import food and grow cash crops. In 1993 the goal of selfsufficiency in food production was still far from being achieved.
To generate essential foreign exchange, the Ortega administration continued to support an upscale, high-tech agroexport sector, but returns on its investment diminished. By 1990 only one-quarter of the pre-1979 hectarage planted in cotton, one of the leading foreign exchange earners in the 1970s, was still under cultivation. Despite an established priority for food production, food imports to Nicaragua grew enormously from the mid-1970s to the mid-1980s.
In general, the Sandinistas made little progress in reducing economic dependence on traditional export crops. To the contrary, faced with the need for food selfsufficiency versus the need for essential foreign exchange earnings, the Ortega administration, demonstrating scant economic expertise, continued to prop up the country's traditional agroindustrial export system. They did so despite expensive foreign imports, diminished export markets, and a powerful opposing private sector. However, revenues from traditional export crops continued their rapid decline throughout the 1980s. Despite this drop, agriculture accounted for 29 percent of the GDP in 1989 and an estimated 24 percent in 1991. Agriculture still employed about 45 percent of the work force in 1991.
Source: U.S. Library of Congress