Coffee: Export Tax Remains Solid

The Ortega administration rejected the request of Nicaraguan coffee growers, who requested that the tax of one dollar per quintal exported be waived for the 2020-2021 harvest.

Thursday, October 17, 2019

The decision to start charging from next year was published by the Ministry of Development, Industry and Commerce (Mific) in the October 15, 2019 edition of La Gaceta.

The funds collected from the producers will be managed by the National Commission for the Transformation and Development of Coffee Culture (Conatradec), as stipulated in the Law for the Transformation and Development of Coffee Culture, which was amended in August 2019.

You may be interested in "Crops in Central America: Main Figures in 2018"

Aura Lila Sevilla Kuan, president of the National Alliance of Coffee Growers of Nicaragua, told that for Arabica coffee "... the taxable base with the new reform was 100 dollars per quintal and this calculation is made with the three positions of the last cycle, and the ancestor was handled well, then in the end we are stuck with a dollar tax; but our position is not to pay any tax for the situation we are in."

Regarding the destination of the funds collected, the article adds that "... Producers point out that up to date it is unknown in which the Government has invested the millionaire fund contributed by producers, given that since December 2013, when they began to withhold that contribution, has not provided a detailed report on the objectives achieved."

According to specific figures, from January to September 2019 the country has exported 152 thousand tons of coffee, of which 149 thousand are of the variety gold or Arabic, representing 98% of the total sold.

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The Renovation of Coffee Plantations That Never Happened

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More than two years after the adoption of the law to transform coffee production in Nicaragua, producers claim that bureaucracy has prevented the much awaited renovations from materializing.

A law passed in December 2013 created the National Commission for Transformation and Development of Coffee Production (Conatradec), which was to be responsible for executing a plan for the renovation of plantations after the rust crisis in 2012, aiming to raise the sector's average performance "... from 11.1 to 20 hundredweight per acre."

Coffee Exporters Reject Production Tax

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The tax promoted by the government of Nicaragua on coffee producers has also been rejected by exporters of the grain.

The bill promoted by the government to charge producers between $1 and $5 per quintal of coffee in order to finance the National Development and Transformation of Coffee Plantations will not directly affect the export sector as it is only producers who have to pay the tax, however, they believe that this is not the time to establish such fees.