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DIALOGUE
In this section:
Mission of the Month: Nicaragua
Notes from Natsios
Mission of the Month: Nicaragua
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Starbuck’s representative Stephane Erard (left)
and Vicente Colindres, first-place winner in Cup of
Excellence, taste local coffees, a process called “cupping
coffee” by industry experts and aficionados.
Jan Howard |
Challenge
Nicaragua is Latin America’s second poorest country,
with 48 percent of its population living below the poverty
line. Agriculture is the main livelihood of nearly half of
Nicaraguans, most of whom farm low-value crops such as beans,
corn, or sorghum in regions that are highly vulnerable to
droughts and floods. Even with high-value export crops such
as coffee, poor quality control and global price fluctuations
keep Nicaragua’s small producers at subsistence levels.
Free trade agreements offer Nicaragua a chance to break
out of poverty. But to do so, the country will have to better
compete in the marketplace at home and abroad.
Innovative USAID Response
For years, the Agency aided small-scale farmers by introducing
them to better farming methods, improved seeds, and access
to credit. Now USAID has shifted its approach to focusing
on farmers who demonstrate potential for promoting change
in the agribusiness sector.
“We have learned that it is not enough to just improve
farming methods. A farmer might be doing everything right,
like using environmentally sound practices or better seeds,
but if there is no market for the product or very low sales
value, that farmer remains poor,” said Enrique Urbina
of USAID/Nicaragua’s Food Security Office.
While environmentally safe farming methods and better techniques
are still part of all USAID agricultural projects, these practices
are linked to growing a wider variety of higher-value crops
and meeting the quantity and quality demands of the market.
Farmers are learning business savvy in supply and demand,
what it takes to meet international quality standards, and
the importance of establishing long-term relationships with
buyers.
USAID’s trade and agribusiness program, which works
with more than 13,000 small farmers, is concentrating on helping
producers enter specialty niche markets by exporting products
that are not grown in the United States—including plantains
and other tropical fruits—and certain dairy products,
specialty coffee, and organic meats. The program is also helping
farmers take advantage of the winter market by exporting onions,
squash, and okra during the months when U.S. farmers cannot
fill the demand.
The program is also helping small-scale farmers gain a foothold
in supplying domestic supermarkets with fresh fruits and vegetables.
Central America’s supermarket sales have doubled in less
than a decade. Nicaragua now has 43 supermarkets, up from
five in 1994. Three supermarket chains are expected to build
another 17 stores over the next two years.
Results
Sales of fruits and vegetables have totaled more than $10
million since the agribusiness project began less than a year
ago, and some 19,000 new jobs have been generated. Two years
ago, 10 percent of Nicaraguan supermarket produce was supplied
by local farmers. Now local farmers are supplying more than
70 percent of the produce.
“For the first time, I have a steady monthly income
for my family,” said Calixta Herrera, a farmer in the
Tomatoya community. USAID financed drip-irrigation systems
to grow vegetables here all year long, enabling the farmers
to supply a major supermarket chain year round.
Specialty coffee farmers are also seeing benefits. In a
partnership with the Cooperative League of the United States
of America, USAID financed 21 mini-labs for quality control
that have been highly praised by international buyers for
helping Nicaraguan coffee become recognized as among the world’s
best.
Specialty coffee exports from USAID-assisted farmers have
increased by 1,500 tons since 2003. Through a USAID coffee
program with faith-based organizations, Starbucks has become
a major purchaser and a provider of technical assistance to
the farmers.
Every year, many of these farmers are among top winners
in the annual International Cup of Excellence, which was first
held in Nicaragua four years ago.
This year’s first-place winner, Vicente Colindres,
lost his 2-acre farm to Hurricane Mitch in 1998 but rebuilt
it through USAID’s Food for Work program. He now uses
one of the mini-labs to help him understand and control the
quality of his coffee. Colindres sold his coffee at 69 cents
a pound last year. After his win this year, he sold his coffee
at an internet auction for $8.05 a pound. His profits have
helped replace the dirt floor in his home with cement. He
also invested in a mill on his farm and sent his daughter
to college.
“This is what USAID is really all about,” said
USAID/Nicaragua Mission Director Alex Dickie. “When farmers
and entrepreneurs become successful and no longer need our
help, we know we have done our job.”
Jan Howard contributed to this article.
Notes from Natsios
Foreign Aid Must Spur Economic Growth
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Andrew Natsios
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In September 2000, the United States and 188 other nations
adopted the Millennium Declaration to fight poverty, illiteracy,
hunger, lack of education, gender inequality, health disparities,
and disease in poor countries. Five years later, many of those
leaders reconvened at the United Nations General Assembly
(UNGA) to measure the early results.
And while the accomplishments thus far and the challenges
that yet remain will continue to be debated, the mere fact
that these issues are attracting a wave of high-level attention
and action is a success.
The UNGA meeting, which kicked off Sept. 14, is only the
latest event. In August, $200 million was pledged to spur
trade in African countries during the African Growth and Opportunity
Act conference in Senegal. June brought word that the Group
of Eight would call for debt relief to 18 poor countries.
And that followed the announcement that the United States
would top off the $1.4 billion it had already committed to
humanitarian emergencies in Africa with another $674 million.
The common denominator in these efforts is something USAID
has emphasized for more than 40 years: economic growth. As
the first-ever bilateral development agency—and still
the largest—USAID can speak with authority about what
works and what does not.
Without economic growth, there will be no increase in tax
revenues. Without revenues, social services are not sustainable.
Unless foreign aid contributes to economic growth, it fails
to achieve its primary mission. Humanitarian assistance is
part of the package, too. The failure to respond to food emergencies
can only lead to further instability and eradicate the development
gains already made.
Dollars help. But achieving the goals of the Millennium
Declaration is far too important to reduce to a check-writing
exercise. While foreign aid funding is important, good governance
and sound policies are more important.
The Agency is helping countries put in place the institutions
and practices needed to make them eligible for Millennium
Challenge Corporation funding, which goes to countries that
rule justly, invest in their people, and encourage economic
freedom.
USAID uses a unique authority granted by Congress to provide
partial credit guarantees on local currency lending in developing
countries. The Development Credit Authority allows USAID to
provide the full faith and credit of the U.S. Treasury to
share credit risk with private financial organizations. Over
$1.2 billion in local currency lending has been made available
to entrepreneurs through the use of this authority.
And in Africa, USAID is supporting New Partnership for Africa’s
Development, a strategy initiated by five African heads of
state that links poverty eradication to policies that promote
sustainable growth, trade, good governance, and anticorruption.
Ending poverty and all that comes with it is a serious challenge
even with commitments from leaders across the globe. Building
effective and equitable economic institutions takes time,
persistence, and reform. The good news is that many countries
are constructing a new future for themselves, and that USAID
has joined an international consensus to improve aid effectiveness
and support countries that invest in their people, govern
democratically, and have sound economic policies.
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