Food Supply: Nicaragua’s Daily Challenge
“There isn´t any.” “It´s all out.” “We don´t have any.” These are the replies heard often in the markets of Managua and in stores throughout the country. At times there are no eggs or no bread or no milk. Other times there is no soap or chicken or cheese.
"Sorry, we're all out," is a phrase one often hears these days in Managua and throughout Nicaragua. Some days it's eggs, or bread, or milk; at other times it's laundry soap, or chicken, or cheese. In July there were lines to buy meat and bread. By August these shortages had been dealt with, but corn was lacking. Rumors circulate about shortages; they are sometimes true, sometimes not, but it is always difficult to disprove a rumor.
Food supply is a daily challenge for the new Nicaragua, a challenge which is reflected in both the successes and the failures of the planned reconstruction process.
The complexity and scope of the problem has obliged us to limit this article to basic food products and laundry soap, as these most affect the majority of the population.
Hoarding, Lines, FearsIn addition to the acute food supply problem provoked by either temporary or partial shortages, the situation is aggravated by hoarding. Hoarding takes place at all levels, from the wholesalers and small merchants, who hoard to increase their profit or to destabilize the government, to individual families, who are simply responding to the real fear of not being able to buy enough food for one's self or for one's family.
This psychological factor of fear cannot be separated from the context of the difficult situation in Nicaragua today. one need only remember the CIA-sponsored maneuvers in Chile during the Allende government, which created artificial food shortages and hence widespread panic, to realize that the CIA could use food shortages in Nicaragua as part of its "covert" war.
In addition, sectors of the international press never tire of offering specific examples of shortages in Nicaragua in order to suggest that living conditions under the "planned economy" of the Sandinistas are worse than during the Somoza regime.
The May 1983 issue of the German magazine, Stern, for example, carries a photo of shoppers lined up in front of a Managua supermarket. The magazine failed to mention that the picture was taken before the store opened in the morning. A New York Times article of August 16 mentioned lines to buy beans, yet in fact there is no bean shortage.
Certainly, there have been lines but recently these have diminished. One of the contributing factors is the system of rationing for sugar, rice, oil and laundry soap. Problems still exist and the lines have not disappeared completely, particularly in Managua where the situation is worse because of the city's unstructured and overpopulated situation. It is also true that Managuans were always first and best served for years and hence developed eating habits not seen in the rest of the country.
Lines are not a phenomenon outside of Managua, but shortages do exist. People in El Limon and San Juan de Limay have told us, "Day after day, we only eat rice and beans."
The repercussions of the food supply problems are serious. These problems call into question the capacity of the revolutionary government to assure supplies for the entire population within the context of a mixed economy. Shortages have led to increased governmental controls on the market, in order to insure a supply of basic products for the whole population. These controls meet strong resistance from truck drivers, wholesalers, retailers and small vendors, whose only worry under the previous regime was their own profit margin. Out of this confrontation arises the nearly uncontrollable problem of the black market. This is both a political and social problem which results from the economic structure of a poor country which is only just beginning to consolidate its new economic structure.
THE FOOD SUPPLY PROBLEMShortages result when demand exceeds supply. Yet, in general, in Nicaragua's domestic market the imbalances do not arise from a reduction in domestic production. With the exception of certain products such as corn, beef, milk and cottonseed (the raw material used in making cooking oil), the production of all other basic products is higher than before the revolution.
The Center for Research on the Agrarian Reform (CIERA) notes that:
"The phenomenon of shortages is related to two distinct problems. On the one hand, there is the question of the efficiency of the food production system and of the flow of inputs and products throughout the food production chain. Several problems converge here which prevent food from reaching consumers on a regular basis, or in sufficient quantity and at prices that are within their reach. On the other hand, shortages must be understood as a symptom of the revolutionary transformation of income and consumption structures. The development of more equitable structures generates a higher level of demand and consumption, which places pressure upon supplies and creates conditions tending towards shortages."
In the First Seminar on Food Strategy, held in Managua in January 1983, the inefficiency of the present system was recognized in the areas of collecting, transporting and distributing food supplies because these are divided between various ministries. It was suggested that the National Food Program (PAN) be strengthened in order to fulfill its coordinating function.
But the problem of the increase in demand cannot be solved so easily. Demand has increased along with the population (there are 200,000 more Nicaraguans now than three years ago) and because of the reorganization a of the domestic market, which now gives the majority of the population greater access to basic goods. Various factors have contributed to an increase in the purchasing power of those Nicaraguans who were formally isolated by distance or class. These shortages revolve around the redistribution of income which has been affected by actual increases in income or by fixed price controls. The end result is that the standard of living of the poor has increased. Diet, particularly in the rural areas, is also much better now. For example, the consumption of eggs, bread, chicken, pasteurized milk, sugar and cooking oil is much higher than four years ago.
THE PRINCIPAL CAUSES OF SHORTAGESA Dependent Economy and the Lack of Foreign Exchange
The food system depends almost totally on imported inputs, equipment and machinery. The shortage of foreign exchange caused by both a balance of trade deficit and the inherited debt prevents the purchase of capital goods necessary to increase productive capacity (such as irrigation or threshing equipment). This also affects the purchase of spare parts for processing machinery, of vehicles for transporting food, and even of bottles for milk and oil. In general, the lack of foreign exchange creates bottlenecks throughout the food system. The same foreign exchange shortage also implies drastic reductions in food imports, so that there is not a sufficient supply of powdered milk, vegetable oil, wheat, corn or vegetables.
The dependent economy has been deeply affected by the U.S. economic blockade, including the areas of food imports and exports. The canceling of the wheat credit in March 1981, Standard Fruit's cancellation of its banana marketing contract in September 1982, and the 90% reduction in the sugar quota in May 1983 are but a few examples of a chain of destabilizing economic aggressions. These, combined with U.S. pressure upon international financial organizations such as the World Bank, have also limited Nicaragua's access to foreign credit.
Problems of ControlAfter the triumph, the government created the Ministry of Interior Commerce (MICOIN) to guarantee the population's access to basic goods. But direct control over supplies is difficult in a mixed economy in which state and private interests compete. Currently through ENABAS (Nicaraguan Basic Foods Company) MICOIN controls 50% of the distribution of beans, 30% of the corn, 80% of the rice, 90% of the sorghum, and 100% of the oil, laundry soap, salt and sugar. With control over 40% of the total volume of basic goods distribution, ENABAS has established an important position in the domestic market, especially by developing secure distribution channels: 2,647 popular stores, 11 supermarkets, and employees' stores in more than 500 work places. But the other 60% of distribution is still dominated by a traditional network of some 37,000 retailers located mostly in the cities.
The co existence of the two networks has created a type of double market which lends itself to the various forms of speculation. This speculation inhibits an equitable policy of pricing or distribution to protect the majority of Nicaraguans. The supermarkets located in the middle class neighborhoods are better supplied than the ENABAS stores in the poorer neighborhoods. Up until August of this year, the supermarkets were able to buy directly from wholesalers or from the factories. The supermarkets were also guilty of selling the rationed products only on the condition that the shopper buy other goods.
Managua's Eastern Market with its 8,000 vendors is considered the weakest point in the price control policy, although abuses also exist in the newer markets. For example, small merchants take advantage of the state's subsidized sales in order to resell these basic products at a higher price. These speculative maneuvers affect the social structure of consumption by raising the prices of goods to the detriment of the poorer classes who do not have the means to buy at the higher prices. But these same people united in mass organization have kept the problem of speculation from becoming more serious than it already is.
The Problem of Capturing ProductionThe problems of price control begin with ENABAS' inability to capture a sufficient proportion of the agricultural production. ENABAS buys up 45.7% of basic grain production, but does not exercise effective control over products such as beef, pork, chicken, eggs, milk and vegetables. Here we will examine two products which illustrate the complexity of planning and capturing the production. Corn is the product in shortest supply at the moment, and laundry soap is the only industrial product controlled by MICOIN.
CORNThe most pressing food supply problem at the moment is that of corn. The last two harvests have not met production goals, and recovery on a short term basis is not possible. As a result, nearly all the corn consumed in Nicaragua from now until the next harvest in early 1984 will have to be imported. For the months of August to December, 70,000 tons of corn imports are planned.
One has to take into account the importance of corn in the Nicaraguan diet to understand the impact of this shortage. For the average Nicaraguan, a day without tortillas is like a day without bread for a European, or a day without rice for an Asian. The Nicaraguan diet has many corn based meals and drinks: different types of tortillas, tamales and chichas, which are "cottage industry" products, made in the home to be sold from house to house. Thus, many small intermediaries earn their "daily tortilla" from corn. MICOIN has no other alternative but to import in order to maintain the supply level. But this is a stopgap measure which emphasizes the urgent need to restructure the whole production cycle of this basic grain.
Domestic corn production is largely in the hands of small and medium producers. Owing to past difficulties in meeting their own consumption needs and to the prices offered by ENABAS, these producers prefer to keep the grain for their own needs or to sell it on the black market. State producers of corn cannot make up for the amount of private corn production which is not captured by ENABAS. In addition, the lands traditionally used for corn cultivation have reached the limits of their fertility, and there are often unforeseen problems with climate, such as last year's floods which destroyed a large part of the irrigation equipment. Another factor is that any agrarian reform implies short term reductions in output, until the new owners of the redistributed land gain the necessary experience and an adequate infrastructure is created for a more rational system of production and distribution.
At the present time ENABAS captures only 17.9% of the corn harvest. The price offered by ENABAS encourages both private and state producers to sell their production as corn on the cob on the black market instead of selling it to ENABAS as grain.
Laundry SoapThe problems of laundry soap supply are similar to those of cooking oil, insofar as both products depend upon the some ingredient: cottonseed. Cottonseed production is slowly returning to pre revolution levels. For example 117,000 tons of cottonseed were produced in 1982 83, which was only 53% of 1977 78 production. This drop in production is clearly visible in the 1982 imports of cooking oil, which were 18 times greater than the 1978 level.
Laundry soap production however has increased rapidly, rising from 30.8 million pounds in 1976 to 62.5 million pounds in 1982, and is expected to reach 72.6 million pounds in 1984. But laundry soap production is highly dependent upon imports, which are in turn highly dependent upon foreign exchange. The shortage of foreign exchange challenges the government to reduce imports yet improve production and distribution.
In early 1983, ENABAS took control of soap distribution in order to compensate for the reduction in imports. With the rationing of laundry soap, each person receives four bars a month. This has led to concern, as some people felt the ration to be inadequate. To aggravate the picture, laundry detergent disappeared from the markets for a period of time. The INIZA company in Granada, which produces detergent, is privately owned, and this hindered MICOIN's task of dealing with hoarding.
In order to import all the needed soap inputs, suet, perfume, and coconut oil (which, since the burning of the coconut processing plant in Bluefields last year, must also be imported), an extra $4 million will be needed for next year, according to MICOIN. Thus the government must decide whether it will spend the money to continue soap production at full capacity, or whether it will act to restrain the excessive use of laundry soap. Nicaragua has the highest per capita usage of laundry soap in Central America.
Among the measures taken to confront the problem is the construction of warehouses, which at the moment do not exist. But there are external problems as well. Recently, the arrival of a boat carrying raw materials for soap was delayed for 80 hours because the boat had to navigate around the U.S. war fleet. The delay brought soap production to a standstill, but the problem was not publicly announced, to avoid hoarding of soap. The problems created by short-term delays have been overcome by the ration system and a small reserve supply.
HoardingHoarding takes place at all stages of marketing, and above all with those products that can easily be stored, such as rice, corn, cooking oil, sugar and powdered milk. At the consumer level, hoarding can also be a psychological response, and this reaction can be one of the most potent weapons in the hands of the opponents of the revolution. According to the MICOIN vice minister in charge of supply, one week of shortages for a given product implies eight weeks of work to rebuild consumer confidence and thus be able to reestablish a sufficient supply. Just one rumor can start a vicious circle for any given product, since the rumor of an impending shortage can lead many, especially those who are better off, to buy more than they normally need, leading to shortages which make the rumor a self fulfilling prophecy.
But if hoarding only took place at the consumer level, it would not cause major supply problems. The serious problems caused by hoarding occur at the production and distribution stages.
With respect to distribution, intermediaries and distributors at all levels, both private and public, engage in hoarding. Other problems are caused when certain products do not reach the secure channels established by ENABAS, but are concentrated in the hands of wholesalers and merchants who then raise their prices.
Bottlenecks and TransportationA bottleneck is defined as the incapacity of one stage of the production and distribution system to handle all the output of the previous link in the chain. Bottlenecks arise from a lack of infrastructure and an adequate marketing system. They also reflect the lack of an efficient investment policy. Up until now, state investment has been concentrated at the level of primary production. While basic grains production will double by 1990, investments to increase storage capacity are only increasing by 50%. Thus investments must guarantee the capacity of each step in the post production process, i.e., processing, storage transportation, etc., to keep pace with increased production.
This problem is exacerbated by the irrational ebbs and flows of an uncoordinated and extremely diversified transportation network. Around 30% of basic grain losses suffered by ENABAS are due to this problem. The transportation bottleneck is tightened by the U.S. economic blockade, especially in terms of spare parts necessary to repair the trucks. The lack of a secure transportation network is one of the principal supply problems for remote areas. Another factor is the lack of refrigerated trucks needed to carry milk, chicken, eggs and fish over long distances.
Problems of institutional organizationThe Seminar on Food Strategy addressed the lack of unified planning and strategy, the lack of inter institutional coordination, and the inconsistencies found in policy criteria and in the agro industrial development method. Also discussed were the planning problems caused by imprecise data and the lack of resources, both personnel and technical, in the field of statistics.
Examples of these problems abound. There have been mistakes made in calculating harvest shortfalls as well as in estimating importation deficits. There have also been cases in which imported raw materials or food arrived late, provoking problems in the domestic market. There have also been bureaucratic problems in the system of assigning foreign exchange and/or authorizing imports.
SOLUTIONS TO THE FOOD SHORTAGE PROBLEMWhat can be done? Julio Lopez, Vice Minister of MICOIN, suggests that food supply problems are like a window through which everyone can glimpse the most obvious weaknesses of the economic system. To use another metaphor, food shortages are like the tip of an iceberg: the real problems in trying to restructure the economic system are seen in the one area that affects the most people. Solutions to such a multifaceted problem are difficult to find and made harder still given the present situation of threats and blockades.
Short-term SolutionsOn the short-term level, there are no real solutions. As the lack of foreign exchange is the major limitation, it is difficult to foresee a period in the near future when Nicaragua will be able to resolve completely the food shortage problem. Nicaragua can no longer make up for shortages by imparting as easily as before, so the country depends to some degree upon donations and favorable credit lines to buy food and agro industrial machinery.
On the other hand, some of the symptoms of the food supply problem can be ad¬dressed by improving the marketing and distribution of food. The government sub¬sidizes the cost of six basic products in order keep prices within the reach of the majority. These subsidies cost the government 673.6 million cordobas in 1982. The government also controls the price of other basic goods. These price controls are not entirely effective, however, as producers will sell to merchants who give them the best price. As a result, these products are found only in the private markets, rather than in the government controlled markets.
As a short-term action designed to address the problem of lines and to create a more equitable distribution, ration cards were introduced to regulate the purchases of sugar (since January 1982), rice (January 1983), cooking oil and laundry soap (April 1983). With these cards, each person can buy 5 lbs. per month of sugar, 4 lbs. of rice, 1 liter of cooking oil, and 4 bars of laundry soap. There have been instances in which the cards have created problems of favoritism, and these are almost impossible for the state organizations to control.
To make all these measures widely understood, various institutions have published educational material: leaflets, studies, special newspaper articles, etc. The theme of food supply is also frequently discussed in the weekly Meet the People program, in which government ministers and popular organization leaders meet with and answer questions from the people in different neighborhoods. There is also discussion at the barrio level in the block committees. While all this contributes to a clear understanding of the problem, it does not resolve the food shortages.
Currently, many efforts are being made to improve the organization and coordi¬nation of the different state institutions involved, the commercial sector, and the consumers themselves, in order to increase control from below. But all this takes time.
It is important to note that the capacity for control "from above" (i.e., the state), as well as for popular mobilization, is quite limited. A small ministry such as MICOIN, which has some thirty inspectors for all of Managua, cannot hope to monitor the 30,000 merchants or the 11,000 vendors in the capital. There is also a lack of qualified persons to undertake the task of explaining the dimensions of the food supply problem to people at the grassroots level. Thus, on the short-term level, not much change can be expected.
Medium and Long Term SolutionsAs we have seen, the problem of food supply begins at the level of production and is amplified by the irrationalities of the marketing and distribution systems. Thus medium- and long term solutions must be sought in all those spheres.
ProductionThe general lines of the government's food policy are guided by a philosophy of agricultural and food development based on the goals of food self sufficiency and security, independent development and a mixed economy.
The point of departure for the government strategy is the priority given to basic consumption and to the goal of reaching as quickly as possible the levels of consumption recommended by international health organizations. These nutritional requirements should be met by national production to avoid the vulnerability which comes from food dependency.
Some concrete means of realizing this overall goal are;
a- The application of advanced technology to the process of basic food production that has hitherto been reserved for the agro export sector;
b- The reordering of land use so that a part of basic food production can take place in the rich Pacific coast land which, since the 1950s, have been used almost exclusively for agro export production;
c- The provision of foreign exchange to purchase irrigation equipment for large tracts of land;
d- A better use of land, to be encouraged by providing incentives for multiple annual harvests and for crop rotation.
The active participation of campesinos in the development of food strategy at the level of production must be increased by:
a) Facilitating the distribution of financial, human and material resources;
b) Promoting the formation of cooperatives among small and medium producers.
In order to address the problems related to Nicaragua's food dependency, it is necessary to continue with the series of programs and projects being implemented by the government, such as:
a) Promoting the agro industrialization of natural. resources, in order to process domestically produced raw materials and save foreign exchange on imports;
b) Seeking new financial and commercial relations with countries which offer favorable credit lines without conditions;
c) Seeking commercial agreements that provide guaranteed markets for exports.
Marketing and DistributionAll those involved in the question agree that this sensitive and unproductive sector must be reorganized. But the concrete means of achieving this goal are not clear. To suggest the path that policies in this area are going to take, we present here some of the suggestions made by representatives of the mass organizations and the state institutions in the Seminar on Food Strategy:
a)Capturing production: The state and private producers who are cooperating with the process should be assigned a larger share of corn and bean production, since ENABAS is not receiving sufficient quantities of these products. This would neutralize the tendency of campesinos to sell their harvest in private channels where prices are higher;
b)Wholesale marketing: The large quantities of basic foods held by private wholesalers should be limited, since this practice fosters speculation. There should be marketing control policies to control the profit margins of the large wholesalers, or these activities should be turned over to state agencies.
c)Retail marketing: The number of small ENABAS stores should be increased and the "general stores" should be organized in associations. The state should probably have some participation in the sector in order to guarantee that price controls are met.
d)Transportation: The scarce transportation resources should be redistributed to serve not only agro export needs but also domestic consumption needs.
CONCLUSIONS The problem of food shortages in Nicaragua will not disappear overnight. Nicaragua is an underdeveloped country with all the current problems inherent in underdevelopment, as well as those inherited from a forty five year dictatorship. In addition, the country suffers from the effects of the counterrevolutionary forces, both inside and outside the country, and of the natural disasters like last year's floods followed by a drought.
Despite these real problems and the current food shortages, visitors to Nicaragua are impressed by the physical condition of the people. One sees few cases of malnutrition, although this condition does exist, for the most part in the countryside, where the lack of education often compounds the food supply problem.
This is not to say that the Nicaraguan diet is good. The diet of the majority of the population is characterized by nutritional imbalances. For example, an enormous quantity of cooking oil and sugar is consumed, and, in general, the diet is based upon carbohydrates, with insufficient levels of proteins and vitamins. There is a need for grassroots education on proper nutrition, outlining the foods that must be eaten daily to preserve good health. But the eating habits and tastes of a country's population have deep roots in the nation's history and culture, and new habits take years to teach.
The picture we have drawn is not very encouraging, but tremendous efforts are being made to improve the situation. The government is working to end the temporary food shortages and is committed to developing food security for the future. But the problems are enormous and the limitations are real. All the best food programs and projects in the world are not enough to eliminate shortages if the initiative comes only from above. Food supply is a problem which concerns everyone and the help of everyone is needed to resolve it.