Dairy producers in Nicaragua are facing a scenario of falling prices, a situation resulting from the oversupply of this type of food reported in the local market.
Executives of the National Livestock Commission of Nicaragua (Conagan) report that with the onset of winter, the country's trading partners are reducing dairy purchases to protect local production.
In terms of volume traded, dairy sales to Guatemala have gained ground and are currently the second most important market for Nicaraguan companies.
During the first quarter of 2021 Nicaragua exported 17.14 million kilograms of dairy products, of the total volume 12 million kilograms were purchased by Salvadoran companies, 2.61 million kilograms were placed in the Guatemalan market and 2.04 million kilograms were traded in the United States.
From January to June 2020, trade in milk and dairy products between Central American countries totaled $183 million, 19% more than what was recorded in the same period of 2019.
Figures from the Trade Intelligence Unit of CentralAmericaData: [GRAFICA caption="Click to interact with the graph"]
In Nicaragua, from January to July of this year, exports of livestock products totaled $449 million, 16% more than reported for the same period in 2019, mainly due to increased sales of beef.
Figures from the Export Processing Center (Cetrex) indicate that between January and July 2019 and the same period this year, foreign sales of livestock products increased from $388 million to $449 million.
After a quarantine was decreed in El Salvador because of the spread of covid-19, there is uncertainty among Nicaraguan producers because the borders may be closed for their products.
Since March 11, Salvadoran President Nayib Bukele has decreed a nationwide quarantine, arguing that there is a risk of spreading the coronavirus to neighboring countries, where there are already several confirmed cases.
Arguing that quality and health standards are not being met, Salvadoran farmers are asking for greater controls on milk products entering from Nicaragua and Honduras.
CentralAmericaData reports that from January to September 2019 El Salvador was the main buyer of milk and dairy products from the other Central American countries, importing $106 million, of which $78 million was bought from Nicaragua, $14 million from Costa Rica and another $13 million from Honduras.
From January to September 2019, trade in milk and dairy products among the countries of the region reached $245 million, 2% more than in the same period in 2018.
Figures from the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphics"]
Although the economic and political crisis has hit several productive activities in Nicaragua, the dairy sector plans to close 2019 with a 5% increase in sales abroad.
In addition to the crisis that has affected Nicaragua since April 2018, businessmen in the sector identify as obstacles to the growth of their income the commercial obstacles that persist in Honduras and El Salvador, the entry into force of the tax reform and the constant increases in electricity tariffs.
The Central American dairy sector is currently facing the problem of marketing imitations and substitutes for its products, despite the fact that the region has a Technical Regulation in this area.
According to the Inter-American Institute for Cooperation on Agriculture (IICA), a study conducted in 2016 by Canadean Wisdom estimated a 1.6% increase in animal milk consumption in Latin America and a 2.8% increase in the consumption of substitutes, hence the importance of regulating and ensuring the correct use of dairy terms in the region.
From January to March of this year, trade in milk and dairy products between the countries of the region totaled $78 million, 2% more than in the same period in 2018.
Figures from the Trade Intelligence Unit of CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]
For businessmen in the sector the decline in dairy sales to May this year is mostly because of the rise in tax obligations in the country, directly impacting on export competitiveness.
Data from the Center for Export Procedures (Cetrex), say that between January and May 2018, and the same period in 2019, foreign sales of dairy fell from $53 million to $45 million, equivalent to a fall of 16%.
Between 2017 and 2018, exports of milk and milk products fell 8%, and producers expect the downward trend to continue this year, because of the negative impact of the tax reform.
Figures from the Central Bank of Nicaragua show that between 2017 and 2018 exports of milk and milk products fell from $184 million to $167 million, and the volume traded fell from 85 million kilograms to 63 million kilograms.
Between January and September of last year, trade in milk and dairy products between the countries of the region totaled $240 million, and more than 75% was bought by companies in El Salvador and Guatemala.
Figures from the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]