USDA sees ongoing export potential for feed grains to Nicaragua amid political uncertainty

By Jane Byrne

- Last updated on GMT

© GettyImages/Lightguard
© GettyImages/Lightguard

Related tags Nicaragua Soybean meal Corn

Despite deteriorating political and economic conditions, US food and agricultural exports to Nicaragua through the first nine months of 2021 exceeded $300m – shattering previous annual records – driven by strong commodity prices and demand for US feed grains, finds a USDA report.

“Through September 2021, imports of agricultural goods from the US were up 84%t to more than $330, the highest level in at least 50 years.

“Higher prices for feed grains and continued expansion of the Nicaraguan livestock sector along with risk averse behavior amid deteriorating political conditions throughout 2021 helped drive growth.”

However, continued export success in 2022 is not certain, cautioned the authors of that US Department of Agriculture (USDA) Foreign Agriculture Service (FSA) publication.

Looming economic sanctions

Mired in political crisis since April 2018, political conditions in Nicaragua worsened throughout 2021.

us exports to nicaragua 2021

Independent analysis anticipates economic stagnation in Nicaragua in 2022 following the presidential election there in November 2021, widely regarded as lacking democratic legitimacy, reads the FAS outlook.

“With the prospect of international economic sanctions and a lack of support from international financial institutions, Nicaragua’s overall economic outlook is expected to remain in doubt until political conditions improve. Agriculture, however, has been a consistent performer, accounting for 15% of Nicaragua’s GDP and roughly two-thirds of national employment.”

As a net importer of food, Nicaragua, will continue to offer opportunities for US food and agricultural exports, predicted the authors.

The country imports large quantities of primary products, including rice to supplement local production and feed grains for livestock, and a wide range of processed products, mostly from regional suppliers.

Export prospects for US feed grains

Nearly all US products have duty free access to Nicaragua under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).

“Among the best prospects for export growth are feed grains and soybean meal as well as rice, chicken meat, pork, and snack foods, but deteriorating economic conditions or terms of trade could diminish prospects,” ​wrote the market specialists.

Bulk commodities, like corn and soybean meal, comprise the vast majority of US exports to the country and they have been significantly less affected by global logistical challenges during the pandemic than containerized shipments of consumer-oriented goods.

With a gross domestic product (GDP) of $12.6bn and a per capita income of $1,905 in 2020, Nicaragua is the second-poorest country in the Western Hemisphere. More than 40% of Nicaraguans live in poverty, noted the USDA report.

Protein consumption trends

The main sources of animal protein in the Central American country are eggs, chicken, and pork meat, with eggs the lowest cost source of protein for Nicaraguan consumers.

“In spite of its higher price, pork meat is still widely popular in local markets. Even though Nicaragua produces large volumes of beef, consumption lags chicken and pork considerably due to the higher price. Hotels, restaurants, and wealthier consumers generate a small but growing demand for premium quality imported beef cuts,”​  said the analysts. 

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