VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #0396/01 0431946
ZNR UUUUU ZZH
R 121946Z FEB 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 9070
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS MANAGUA 000396 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CEN, EB/TPA 
STATE PLEASE PASS TO USTR 
USDA/FAS/OCRA/WHA/CMARSTON 
USDA/FAS/ONA/MED/LCOONROD 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ETRD ECON SENV PINR NU
SUBJECT: NICARAGUA: AMBASSADOR CALLS ON MINISTER OF 
AGRICULTURE AND FORESTRY 
 
¶1. (SBU) Summary.  The Ambassador called on the new Minister 
for Agriculture and Forestry Ariel Bucardo Rocha to introduce 
himself and discuss bilateral cooperation and growing 
bilateral trade.  Existing bilateral cooperation centers upon 
U.S. Department of Agriculture animal and plant health 
programs, and the Millennium Challenge Corporation program in 
the Departments of Leon and Chinandega.  The Ambassador also 
described U.S. in advancing biofuels in Nicaragua.  Bucardo 
told the Ambassador that, from his perspective, the country 
needed a rural development bank focused on serving rural 
agriculture.  A bank and/or some type of small farmers 
agricultural extension service could assist in helping small 
farmers move into new product markets and acquire new 
technology.  Bucardo discussed efforts to normalize the 
timber industry in the wake of the June 2006 moratorium on 
exports; he opined that a new law is needed to stop illegal 
logging.  Bucardo reported that rainy weather was primarily 
responsible for this year's poor coffee harvest.  End Summary. 
 
Introduction 
------------ 
 
¶2. (SBU) On January 30, the Ambassador met with new Minister 
of Agriculture and Forestry Ariel Bucardo Rocha.  Joining the 
Minister was Vice Minister Benjamin Dixon.  Also attending 
was the Mission,s Animal and Plant Health Inspection Service 
(APHIS) Attache' and Econoff. 
 
Areas of Cooperation 
-------------------- 
 
¶3. (SBU) The Ambassador opened the meeting by saying that the 
United States wanted to work with the Ministry of Agriculture 
and Forestry (MAGFOR) to achieve success in areas important 
to the ministry.  He explained that his priority was to 
support the U.S.-Central American Free Trade Agreement 
(CAFTA).  Though CAFTA was still young, bilateral trade is 
increasing and agriculture is an important element in the 
Nicaraguan export picture.  The Ambassador observed that 
while traditional agriculture in Nicaragua focuses on corn 
and beans, there has been a shift toward crops that return 
higher value, such as organic coffee and greenhouse-grown 
peppers.  Bucardo noted that there is also a growing market 
for some traditional products, such as beans to the Central 
American region.  (Note: USAID provided support for a black 
bean packing plant for Horti Frutti, a Walmart company that 
recently came on-line.  Horti Frutti is now exporting beans 
to Costa Rica.) 
 
¶4. (SBU) The Ambassador stated that meeting international 
standards is crucial to the export of agricultural products. 
The United States wants to help Nicaragua expand disease-free 
areas and agricultural production.  The United States 
Department of Agriculture (USDA) is helping Nicaragua declare 
areas free of the Mediterranean fruit fly and meet health 
safety standards for poultry production.  APHIS Attache' 
mentioned other programs that APHIS has with MAGFOR, in 
particular animal health programs through PROVESA (MAGFOR's 
animal health surveillance program) and PROVISAVE (MAGFOR's 
plant health surveillance program).  Bucardo expressed his 
appreciation for APHIS' screwworm eradication program and 
mentioned his hope that some day Nicaragua would also be free 
of classical swine fever.  APHIS Attache' will follow up with 
the Minister on bovine brucellosis, bovine tuberculosis, and 
New Castle disease.  The eradication of New Castle disease 
and a fruit fly free area would greatly improve the potential 
for Nicaragua to export agricultural products to the global 
market. 
 
¶5. (SBU) The Ambassador mentioned that the Millennium 
Challenge Corporation (MCC) is working with cooperatives in 
the Departments of Leon and Chinandega to improve the quality 
of milk processing in the region and to facilitate regional 
trade.  Bucardo is from Leon, and appeared well-versed on the 
Millennium Challenge Account in Nicaragua.  Noting that he 
would attend an MCC board meeting that afternoon as an 
observer, Bucardo wanted to know whether the MCC would 
maintain the pace of its current program.  The Ambassador 
assured him that it would, and discussed the makeup of the 
board of directors, which includes representatives from 
involved ministries.  (Note: Bucardo participates on the MCC 
board as an observer.)  Bucardo thought that the MCC model 
could be replicated in other regions and/or for certain 
sectors.  The advantage, he explained, is that projects 
operate off budget, and so are not subject to earmarks and 
IMF conditions.  In addition, the model provides a way to 
directly involve the private and social sectors. 
 
¶6. (SBU) Another area of interest for the United States, said 
the Ambassador, is the potential for biofuel production in 
Nicaragua and other Central American countries.  Bucardo felt 
that biofuels must be approached with some caution, since 
biofuel production overlaps with food production.  If corn 
prices go up, Bucardo pointed out, then so does the price of 
chicken.  At the end of the day, we are all consumers of food 
(and fuel), he said. 
 
Microfinance 
------------ 
 
¶7. (SBU) Bucardo explained that while there were as many as 
200 microfinance institutions operating in Nicaragua, the 
majority served urban, not rural areas.  This focus is partly 
due to the higher risk and the high cost of doing business in 
rural areas, e.g., small farmers do not have access to the 
telephone, much less the Internet.  Bucardo believes that it 
is important for Nicaragua to have a financial institution 
specializing in serving the needs of rural agriculture.  He 
pointed to the Grameen Bank as a successful microfinance 
institution. 
 
¶8. (SBU) Noting that the country's last development bank had 
failed, the Ambassador suggested that perhaps microfinance 
institutions could be encouraged to serve existing rural 
markets through better regulation.  Bucardo replied that from 
the state's point of view, any development bank would have to 
use financial resources efficiently to avoid management 
failure.  Such a bank would have to be regulated by the 
Banking Superintendent.  Bucardo added that, from a political 
perspective, microfinance institutions are not viewed 
favorably.  Their interest rates are high ) often ranging 
between 20% and 30% -- and they do not offer medium- to 
long-term financing. 
 
¶9. (SBU) While from the small farmer perspective there will 
always be a shortage of capital, Bucardo pointed out that 
there is much more to improving agricultural performance than 
credit.  There is a great need for education and training, 
perhaps through a "Small Business Administration" for 
agriculture.  Such an entity (or bank) could assist in 
helping small farmers move into new product markets and 
access new technology.  The Ambassador agreed that small 
farmers should invest in better technology, since much 
traditional production is inefficient; better technology 
would raise productivity and would help Nicaragua benefits 
from CAFTA.  Dixon added that small farmers also have to 
raise the quality of their products and look to fill niche 
markets (i.e., specialty crops and organic products).  In 
addition, Dixon said that small farmers needed to operate 
within a stable environment (i.e., stable prices). 
 
Forestry 
-------- 
 
¶10. (SBU) The Ambassador raised the ongoing crisis for the 
lumber industry caused by the government's moratorium on 
exports beginning June 2006.  In principle, Bucardo said that 
the decree establishing the moratorium was correct.  There 
had been massive illegal logging and the situation was out of 
control.  Despite the decree, however, he said that illegal 
logging had continued.  "Someone obtains permission to cut 
down one tree species," he said, "and then cuts them all 
down."  There had to be a formal system of regulating the 
industry that worked; a new law was required to normalize the 
process.  Having once worked for the U.S. Forest Service, the 
Ambassador noted how difficult it is for inspectors to 
enforce the law in remote areas.  However, he expressed faith 
that there is a way to bring sustainability to the industry. 
Bucardo mentioned that the National Forestry Council 
(CONAFOR) had recently met with industry, workers, and other 
interested parties to try to resolve the impasse. 
 
¶11. (SBU) The Ambassador posited that perhaps Nicaragua could 
earn carbon credits under the Kyoto Protocol, the way Costa 
Rica did.  Bucardo agreed, explaining that he personally 
owned property with a stand of virgin timber.  Given the 
value of the timber, he paid more in property taxes than it 
cost him to maintain the property.  The Ambassador suggested 
that perhaps the Rainforest Alliance, or another entity, 
could analyze how Nicaragua could benefit from international 
protocols.  Bucardo added that there is also an opportunity 
for Nicaragua to profit from conservation through the 
development of ecotourism. 
 
Bananas 
------- 
 
¶12. (SBU) The Ambassador asked Bucardo if Nicaragua intended 
to join Ecuador's request for WTO consultations on the 
implementation of the European Union's import regime for 
bananas.  Bucardo expressed interest, noting that plantain 
and banana production offered great potential for Nicaragua, 
but did not know the answer to the question. 
 
Bad Coffee Harvest 
------------------ 
 
¶13. (SBU) Bucardo acknowledged the difficult year that 
Nicaragua had with coffee production, one of the country's 
most important exports.  Production volumes were 50% below 
those of last year, largely because of rainy weather. 
November is usually the beginning of the dry season and the 
time when coffee beans mature.  However, heavy rains this 
year affected the maturation rate, resulting in lower yield. 
Additional contributing factors were the poor condition of 
secondary roads and workforce migration to Costa Rica.  Dixon 
added that to improve yield, Nicaraguan coffee growers have 
to move beyond traditional coffee technology. 
 
Biography: Ariel Bucardo Rocha 
------------------------------ 
 
¶14. (SBU) Ariel Bucardo is said to have extensive experience 
in the production and marketing of basic grains.  He has an 
undergraduate degree in business administration and social 
sciences, and a postgraduate degree in sustainable 
development.  In the 1980s, he played an integral role in 
organizing peasants into cooperatives and achieving the 
political objectives of the Sandinistas in rural areas. 
Bucardo co-founded the 35,000-member (down from 125,000 in 
1984) National Farmers and Ranchers' Union (UNAG), which he 
served most as vice president.  UNAG's website states 
categorically that UNAG has been shut out of government for 
fifteen years, during which poverty has only worsened. 
However, President Bolanos appointed Bucardo (as a 
representative of UNAG) a member of the National Council for 
Economic and Social Planning (CONPRES) in 2002 and again in 
¶2006.  Bucardo also helped found the Association of Farm 
Workers (ATC) and the Nicaraguan Federation of Agricultural 
Cooperatives (FENACOOP).  He is from the town of El Sauce in 
the Department of Leon, reportedly married, and in his 50s. 
 
¶15. (SBU) Before becoming minister, Bucardo spent much of his 
time working as President of the National Rural Fund 
(CARUNA), a savings and credit cooperative.  This may explain 
his advocacy for the creation of an agricultural development 
bank.  At an anti-CAFTA demonstration with Ortega in 2005, 
Bucardo demanded that the government resolve the country's 
poverty problem through property redistribution and the 
establishment of a "Promotion and Development Bank."  More 
recently, he suggested using the Venezuelan development bank 
(BANDES) loans to seed such a bank, which he noted could 
finance the purchase of Venezuelan urea and/or the 
construction or renovation of grain storage silos at Jalapa, 
El Corozo, Quilali, and Ocotal ) as part of a grain reserve 
system that would stabilize basic grain prices.  In December 
2006 and before his appointment to MAGFOR, Bucardo announced 
a $10-30 million line of credit from the Government of 
Venezuela to CARUNA, making CARUNA the premier agricultural 
credit cooperative in the country. 
 
¶16. (SBU) In his capacity as a UNAG official, Bucardo appears 
to have been a constant critic of CAFTA, and may well be the 
source of information for President Ortega in this regard. 
In contrast, in his public statements Bucardo has stressed 
the value of recent trade and cooperation agreements with 
Venezuela and Iran.  He explained that the Bolivarian 
Alternative for the Americas (ALBA) was "about achieving fair 
trade on the continent" and countering unequal relations with 
other countries -) "where there are big monopolies taking 
over the means of production, thus turning other counties 
into consumers."  He added that he thought trade and 
integration should be based on social as well as commercial 
considerations. 
 
¶17. (SBU) In a December 2006 meeting with outgoing Minister 
Mario Salvo, Bucardo promised to keep in place certain 
government programs designed to support small and medium 
 
producers, such as the "Libra por Libra" (Pound for Pound) 
and the ProRural programs, although he would have to make "a 
few corrections" to increase their effectiveness.  ProRural 
includes the creation of a national plan for biofuel 
prosecution )- including biodiesel from African palm. 
 
¶18. (U) The Ministry of Agriculture and Forestry was unable 
to provide an official biography in time for this meeting. 
TRIVELLI