VZCZCXYZ0003
RR RUEHWEB

DE RUEHMU #0270/01 0342340
ZNR UUUUU ZZH
R 032340Z FEB 06
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 5136
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS MANAGUA 000270 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CEN 
 
E.O. 12958: N/A 
TAGS: ECON ELAB EAGR PGOV SOCI NU
SUBJECT: NICARAGUA: COFFEE IS CAPRICIOUS KING IN JINOTEGA 
 
REF: A. MANAGUA 0124 
     ¶B. 04 MANAGUA 3534 
     ¶C. 04 MANAGUA 3065 
 
¶1. (U) Summary: The economy of the northern Nicaragua 
department of Jinotega is almost entirely dependent on one 
crop: coffee.  The international price of coffee drives the 
fortunes of the region, and a poor transportation 
infrastructure inhibits the development of other industries. 
The shaky economy is plagued by considerable unemployment, 
which in turn has driven emigration to Costa Rica and the 
U.S.  Without considerable support from the central 
government to improve road conditions, Jinotega will continue 
to face limited development potential.  End Summary. 
 
¶2. (U) Poloff and Political Assistant traveled to Jinotega 
department (pop. 170,000) on January 11 and 12 to discuss 
politics and the economy with local religious, business, and 
political leaders (reftel).  We experienced first hand the 
bumpy, slow, slightly nauseating ride from Sebaco (reached 
from Managua on the relatively pristine Pan American Highway) 
to the highlands of Matagalpa -- then we endured the even 
bumpier, slower, definitively nauseating ride to Jinotega on 
a winding mountain road cratered like the surface of the 
moon.  This narrow, crumbling highway is the main artery to 
and from the capital city and the route taken by coffee 
traders, farmers, ranchers, and a few intrepid tourists. 
Aside from coffee, the engine of the Jinotegan economy, the 
department exports hydroelectric power (though a lack of 
rural electrification is a major impediment to development), 
beef, grains, milk, and some vegetable products.  The 
temperate, unspoiled highland climate and scenery beckon 
tourists, but this industry remains largely undeveloped aside 
from a few small hotels and guest houses. 
 
LOCAL ECONOMY DEPENDENT ON COFFEE 
- - - - - - - - - - - - - - - - - 
 
¶3. (U) Everyone we spoke with stated unequivocally that 
coffee dominates the economy of the department, and the price 
of coffee determines whether the area suffers economic 
depression or enjoys a relative boom.  Even in boom times, 
however, most coffee producers still struggle with debt and 
uncertainty.  The members of the Jinotega Coffee Growers 
Association explained that Nicaragua produces 
800,000-1,000,000 quintales (1 quintal = 100 pounds) of 
coffee every year, 75 percent from Jinotega.  Of the 17,000 
coffee producers in the department, 80 percent are considered 
small growers, with only 1-10 manzanas (1 manzana = 2.3 
acres) of land under cultivation.  15 percent are medium 
producers with 10-50 manzanas, and only 5 percent are 
medium-large or large producers with over 50 manzanas of 
land.  Association member Andres Altamirano opined that a 
coffee producer needs at least 20 manzanas to earn a "decent 
living" in a good year, obviously a small percentage of the 
total grower population.  Association president Eduardo Rizo 
Lopez noted that international coffee prices had increased 
considerably in 2005, and Jinotegan growers earned 
approximately US$600 in profit for each manzana harvested. 
 
¶4. (SBU) Despite the high prices in 2005, Rizo Lopez 
explained that many producers are still living on the edge 
and endure perennial problems that complicate harvesting 
coffee and getting the product to market.  He complained that 
the local banks will only lend to growers at "usurious" rates 
of 14 percent or higher, making it impossible for most 
producers to obtain financing to upgrade, modernize or expand 
their plantations.  Others struggle with debt when prices 
fall.  Transportation presents another challenge -- as bad as 
the highway to Matagalpa is, the roads connecting Jinotega 
city to outlying areas are even worse, or nonexistent. 
Coffee producer and local APRE coordinator Jairo Fajardo told 
us that the price to transport coffee from Jinotega to nearby 
Matagalpa is the same cost as moving the coffee from 
Matagalpa to the distant Pacific port of Corinto for export. 
 
¶5. (SBU) Rizo Lopez also mentioned the lack of laborers 
during harvest time.  He claimed that growers offer salaries 
50 percent higher than the minimum wage, plus meals, health 
care and "better treatment" than they can expect from a Costa 
Rican employer.  However, the Costa Ricans are able to offer 
ten months of employment harvesting a variety of crops, 
versus only three months harvesting coffee in Jinotega. 
(Note: Major Jinotegan coffee producer Mario Lopez Rizo later 
informed us that he had "found enough" workers for the 
harvest by offering "fair pay."  End Note.) 
 
GROWTH OF OTHER INDUSTRIES STRANGLED BY POOR INFRASTRUCTURE 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

¶6. (SBU) Jinotegans told us that growth in industries other 
than coffee is inhibited by a lack of suitable transportation 
infrastructure and a lack of support from the national 
government.  Jairo Fajardo explained that Jinotega's climate 
offers the possibility for considerable agricultural 
development, and he has discussed with other coffee growers 
setting up a coffee tour.  Jinotega Chamber of Commerce board 
member Evangelina Gutierrez reported that the Jinotega 
Development Council had submitted a number of tourism 
proposals to the Tourism Ministry, but never received any 
support.  (Note: Five of the six members of the Jinotega 
Chamber of Commerce board of directors are women -- notable 
in a rural area known for machismo.  End Note.) 
 
¶7. (SBU) Reverend Mario Rayo, the pastor of a local Assembly 
of God church, told us that some international investors once 
planned to construct a maquila in Jinotega, but canceled 
their plans because of the bad roads.  The Catholic bishop of 
Jinotega, Carlos Enrique Herrera, explained that the 
development of tourism and other industries is stunted by a 
lack of infrastructure -- the roads are terrible and the only 
landing area is a helicopter pad at a military base on the 
outskirts of the city.  Herrera mentioned that Lake Apanas, a 
mountain lake 15 minutes from Jinotega surrounded by verdant 
hills and stocked with game fish, had been declared a 
protected area. 
 
¶8. (SBU) After hearing about the lost potential of Lake 
Apanas from Monsignor Herrera, Poloff noticed a brochure for 
a development called "Apanas Lake Estates" in his hotel room. 
 The developer, a U.S. citizen with other projects in 
different departments of Nicaragua, was not available, but 
Chamber of Commerce member Ligia Ruiz, a partner in the 
project, agreed to take Emboffs to the location.  The site is 
completely undeveloped except for a ranch house, but affords 
beautiful views of Lake Apanas and the surrounding hills. 
Ruiz was unaware of the protected status of the area, or any 
other impediments to development. 
 
UNEMPLOYMENT FEEDS MIGRATION 
- - - - - - - - - - - - - - - 
 
¶9. (U) The lack of economic diversification in Jinotega has 
resulted in considerable seasonal and permanent unemployment. 
 Both Bishop Herrera and Reverend Rayo noted significant 
migration to Costa Rica, the United States, and elsewhere to 
escape unemployment and poverty.  Rayo said that over 15 
families from his congregation alone had left permanently for 
the U.S. and Costa Rica in recent years.  He explained that 
remittances from emigrants "cover the essentials" for many 
impoverished families in Jinotega. 
 
COMMENT 
- - - - 
 
¶10. (SBU) Jinotega's development potential remains largely 
untapped due to insufficient transportation infrastructure. 
Without greater accessibility, Jinotega simply cannot compete 
with other departments for agriculture, maquila, and tourist 
income.  The lack of attention from the central government 
has generated considerable resentment in the population, 
especially against native son politicians who they hoped 
would support the department (reftel).  Frustrated coffee 
growers and others initiated a road block in Sebaco last year 
to protest the poor conditions of the highways and carried 
petitions to the National Assembly in Managua (they were not 
received).  Without some kind of response, politicians in 
Managua can expect more of the same from angry Jinotegans. 
 
TRIVELLI