Invest in Nicaragua's agribusiness industry
Historically known as the “breadbasket of Central America”, Nicaragua is recognized for its fertile soils. Agro-exports remain the major driver of economic dynamism in Nicaragua and consumer-oriented products in higher value categories such as cereals, snacks and biscuits, fruit juices and vegetables, among others, which constitute constitute a lucrative market with many business opportunities.
Nicaragua’s agricultural product exports represent a dynamic economic driver in the country. Between 2003 and 2011, the value of the country’s total exports experienced a compound annual growth rate (CAGR) of 18 percent. In 2012, the agribusiness sector was of great socio-economic importance for Nicaragua, contributing over 60 percent of total exports value, excluding free zones.
Continuous improvements in its infrastructure and business climate have positioned Nicaragua as one of the most attractive destinations for foreign direct investment. Renowned companies, such as Ball Horticultural Company, Kraft Foods, Parmalat, Cargill, Pantaleon Group, AJEGROUP, Nestlé, Walmart, Precious Woods, Futuro Forestal, Ritter Sport, SuKarne and Numar, have established operations in Nicaragua.
Investment Opportunites in Nicaragua's Agribusiness Industry
1. Agro-Export Products
Nicaragua has the ideal weather conditions and amount of water resources for a variety of crops. These advantages, along with duty exemptions obtained under the Free Trade Agreement between the Dominican Republic, Central America and the United States (DRCAFTA) nd other agreements, offer a wide range of opportunities for the establishment of agro-export operations.
2. Livestock, Dairy and Meat Products
Nicaragua has the largest cattle-raising industry in Central America, with an annual growth rate of 10 percent in recent years. Estimated milk production in 2012 was 216 million gallons, out of which only 61 percent is collected and 8.6 industrialized, leaving a wide availability of raw material supply for the processing of several dairy products.
With an extensive pasture fed livestock, production costs in Nicaragua are among the most competitive of Central America. In general, Nicaragua is an ideal place to invest in the dairy industry considering the availability of raw material, the cattle raising tradition, and the conditions met under different trade agreements the country has signed for products such as meat, cheese, ice-cream, milk and fluid creams.
3. Food Industry
Nicaragua’s strategic location in the heart of the Central American market with a population of over 42 million people, its proximity to the Caribbean, North and South America, and its human resources cost and quality advantages make Nicaragua an ideal place to develop a competitive food industry. Important companies such as Kraft Foods and Nestlé already have operations in Managua, the country’s capital, which supply the regional market and the Caribbean.
In the food export sector meat, fish and fruits processing, food supply production, such as cookies, instant coffee and rum stand out among other export-oriented processes that can make the most of the availability of local raw material and generous tax incentives.
4. Agro-Forestry Plantations
There are currently more than 3.5 million hectares with forestry potential in the country. It is estimated that Nicaragua has over 19,000 km² of natural forests that are economically valuable and suitable for sustainable management projects. Most of them are located in the Atlantic Region. Also, the country has more than 3 million hectares suitable for timber forestry with commercial value. Among the species suitable in Nicaragua are real cedar, mahogany, pochote, teak, eucalyptus and melina, among others.
There are successful bio-fuel projects in Nicaragua. In the case of ethanol, the pioneer is the San Antonio sugar mill, property of Nicaragua Sugar States Lmtd., followed by the Monte Rosa sugar mill, property of Pantaleón Group of Guatemala.