VZCZCXYZ0001
RR RUEHWEB

DE RUEHMU #1164/01 3171704
ZNR UUUUU ZZH
R 131703Z NOV 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 0129
INFO WHA CENTRAL AMERICAN COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHCV/AMEMBASSY CARACAS 0001
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC

UNCLAS MANAGUA 001164 
 
SENSITIVE 
SIPDIS 
STATE PASS MCC, USAID AND USTR 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR NU VE
SUBJECT: The "Visible" Hand: Nicaraguan Exports to Venezuela 
 
¶1. (SBU) Summary.  Since Nicaragua joined the Bolivarian Alliance 
for the Americas (ALBA), exports to Venezuela have increased from 
$2 million for all of 2006 to $102 million for just the first ten 
months of 2009.  Among the leading exports are live cattle and beef 
cuts, dairy products, and black beans.  Farmers and ranchers report 
that only those cooperatives vetted by a Citizen Power Council 
(CPC) are allowed to sell to Venezuela; they often receive 
concessional financing as well.  Venezuela does offer some 
opportunities for the export of Nicaraguan agricultural products, 
but government incentives and partisan politics have played an 
important role in making sure that "fair trade" produces results. 
End summary. 
 
 
 
¶2. (U) Since Nicaragua joined ALBA in January 2007, exports to 
Venezuela have increased sharply.  In 2006, Nicaraguan exports to 
Venezuela totaled only $2 million for the year, according to data 
compiled by the Center for Export Transactions (CETREX).  In 2008, 
exports reached $32.7 million. During the first ten months of 2009, 
CETREX reports that they have already exceeded $102 million, making 
Venezuela the third largest market for Nicaraguan exports after the 
United States and El Salvador.  On November 5, Elias Jaua, 
Venezuelan Minister of Agriculture and Venezuelan Lands, announced 
during a visit to Nicaragua that "Nicaragua has become a reliable 
source for meat, milk, and black beans, which are the foundation of 
the Venezuelan diet." 
 
 
 
¶3. (U) Among the leading exports are live cattle and chilled/frozen 
beef cuts. During the first seven months of 2009, Nicaragua shipped 
$4.3 million worth of live cattle to Venezuela.  During the same 
period, exports of chilled/frozen beef cuts totaled $35.5 million. 
Pedro Haslam, Executive Director of the government's Nicaraguan 
Institute for Cooperative Development (INFOCOOP), estimates that in 
2009, cattle exports will reach $12 million and beef exports, $64 
million. 
 
 
 
¶4. (SBU) Privately-owned slaughter houses currently process beef 
for export to Venezuela.  However, Rafael Paniagua, General Manager 
of ALBA de Nicaragua S.A. (ALBANISA), the Venezuelan - Nicaraguan 
joint venture that manages the proceeds of Venezuelan oil sales, 
announced on October 23 that the conglomerate would construct two 
facilities in Nicaragua for beef processing.  Ranchers have told 
Emboffs that Venezuelan buyers periodically travel through the 
countryside offering to buy live cattle for top dollar.  They 
report that only those who belong to a Citizen Power Committee 
(CPC) - a partisan mechanism for local governance controlled by 
First Lady Rosario Murillo - are offered financing to replenish 
their herds and continue selling to Venezuela. 
 
 
 
¶5. (U) Milk, both fresh and ultra pasteurized, is Nicaragua's 
second leading export to Venezuela.  Exports totaled $3 million in 
2008 according to CETREX.  During the first seven months of 2009, 
milk exports reached $5.8 million, and INFOCOOP's Haslam estimates 
they will reach $14 million by year end.  Black beans, the 
third-leading export, totaled $4.1 million in 2008, but are only 
$1.1 million so far this year.  Haslam forecasts black bean exports 
of $5.5 million for the year.  He also forecasts exports of rice, a 
grain of which Nicaragua is an importer ($92 million worth in 
2008), to total $7 million this year. 
 
 
 
¶6. (U) Roger Ali Romero, an ALBANISA official who handles grains 
trading, announced in October that the company is providing 10,000 
small famers with concessional financing through ALBA-CARUNA 
(ALBA's microfinance institution) for the planting of black beans 
for export to Venezuela.  A grains trader recently told Emboffs 
that ALBA-CARUNA financing for the most recent agricultural cycle 
was contingent on an agreement to sell the harvest to Venezuela. 
Other farmers have explained that the financing is not in fact 
offered to farmers directly, but instead to the managers of 
cooperatives with close ties to CPCs. 
 
¶7. (SBU) In response to CPC efforts such as this one-intended to 
direct the benefits of trade with Venezuela to Ortega loyalists-the 
Nicaraguan Federation of Business Associations (COSEP) has asked 
the government to initiate trade negotiations with Venezuela. 
COSEP President Jose Adan Aguirre recently told Emboff that the 
government has rebuffed this overture to "level the playing field." 
 
 
 
¶8. (SBU) Meanwhile, famers in Matagalpa, an area fertile for bean 
cultivation, have told Emboffs that the government has offered to 
provide them clean title for their properties so long as they agree 
to grow crops for export to Venezuela.  Recent press reports claim 
that, in an effort to coerce black bean sales to Venezuela, the 
Ministry of Agriculture has expedited sanitary permits for crops 
headed to Venezuela while delaying them for other destinations. 
Dairy and grains processing are currently handled by private 
companies, but on October 23, Paniagua announced that ALBANISA 
would build two dairy plants and a grain processing plant. 
 
 
 
¶9. (SBU) Comment: While exports have dramatically increased, there 
are clearly more than market forces at work here.  To date, it 
appears that farmers are receiving better-than-market prices for 
their sales to Venezuela, but offers of concessional financing and 
property titles, as well as CPC vetting, suggest that government 
incentives and partisan politics have played a role in the increase 
of Nicaraguan exports to Venezuela.  While the government goes to 
extraordinary lengths to make sure that "fair trade" with Venezuela 
is a success, Nicaragua's unprecedented access to the U.S. market 
through CAFTA-DR is an afterthought at best. 
CALLAHAN