... 145554/061

The War of Hunger: CAFTA Threatens to Eliminate Nicaragua's Small Farms
By Sean Donahue,

Posted on Sun Jul 24th, 2005 at 02:55:54 PM EST
Since the early 1990's, Nicaragua's campesinos have been struggling to hold onto their land as credit has dried up and prices for their crops have plummeted. The Central American Free Trade Agreement (CAFTA) threatens to deal the final blow to the economies of many communities by flooding the marked with cheap U.S. corn and grain. But Nicaragua's campesinos aren't ready to go down without a fight.

All his life, Augusto has worked the land in the lush green fields of El Regadio, a small village in the mountains just outside the city of Esteli. His family has survived two wars -- the first to overthrow the dictatorship of Anastasio Somoza and win the right to own the land his father had worked, the second to defend the village from the U.S. backed Contra rebels -- and managed to hold onto their farm through the lean years of the 1990's when produce prices fell and credit dried up and hundreds of people had to leave El Regadio in search of work in the cities, in Costa Rica, and the U.S. At times that struggle has been just as hard as the armed struggle. Augusto says "When you are fighting with guns at least you heave something to eat. The economic war is a war of hunger."

Now, he fears that the Central American Free Trade Agreement (CAFTA,) just passed by the U.S. Senate, and currently being considered by both the U.S. House of Representatives and the Nicaraguan National Assembly, might deal the final blow that will force him off his small farm. He says "With the free trade agreement, we are like a donkey tied to a post, and someone has let loose a tiger."

Half of all Nicaraguans live on farms, most of them, like Augusto, are small farmers growing basic grains and a few vegetables on a couple acres of land. Under CAFTA, Nicaragua would drop its tariffs on most products, leading to an influx of cheap wheat and cheap corn from the U.S., and a dramatic drop in prices. The National Association of Ranchers and Farmers (UNAG) estimates that as many as 170,000 farms could be driven out of business by the agreement, with a loss of 420,000 jobs. The Nicaraguan government counters that the agreement will bring more textile factories to Nicaragua, but the government's most optimistic estimates promise only 70,000 new jobs, and small farmers are reluctant to give up their way of life for a marginal existence in the city.


When Augusto was young, all the land in El Regadio was owned by five families, and most of the town worked on sugar plantations under harsh conditions for meager wages. Following the victory of the Sandinista revolution in 1979, the land was divided among the residents of the town, who formed groups of small producers and began growing food crops. The new government provided loans and technical assistance to these cooperatives and bought most of each harvest at relatively high prices.

But ten years of civil war weakened the Sandinista government, and in 1990 it was replaced by the U.S.-backed government of Violetta Chamorro. The new government cut off assistance and stopped making loans to small farmers.

Private credit is hard for Nicaraguan farmers to obtain. Many don't hold clear title to their land because of ownership disputes dating back to the agrarian reforms of the revolution. Those who do have clear land titles have to put up their land as collateral and pay exorbitant interest rates

As a result, according to UNAG, most small farms haven't seen any significant capital investment in fifteen years. Most of the newest tractors in Nicaragua were bought around 1990. There is one tractor for every thousand farms in Nicaragua, while the average U.S. farm has four pieces of agricultural machinery.

As a result of their technological advantage, not to mention the subsidies they receive from the federal government, U.S. farmers are able to produce 200- 250 hundredweight bags of corn per acre. The average Nicaraguan farmer struggles to produce 42 hundredweight bags of corn per acre. Even with the protection of tariffs, Nicaraguan farmers are fighting an uphill battle to break even each year. Without tariff protection most small and medium sized farms will fail, causing a mass migration to the cities.


El Regadio is a poor community by any standard, with most families earning about $30 a month. But conditions are worse in the cities. Augusto says "With our little piece of land we can at least feed ourselves." Miriam, a retired teacher who live sup the road adds "Here you have your land, you can get your own water without paying, the cost of electricity is lower. So I have no idea how the U.S. can think that this is pulling a country out of poverty when all they are doing is heaping more poverty upon us."

Jobs in textile factories do pay about twice what a farmer can earn each month, but much of a worker's paycheck is eaten up by transportation costs, food costs, and higher utility bills. With the government too bankrupt to fund the enforcement of its labor laws, abuses abound in the factories -- workers are forced to work up to 80 hours a week during peak production periods and are often subjected to physical and psychological abuse and to arbitrary firings. At one U.S. owned factory dozens of workers were recently fired when they went on strike to protest pay delays and the alleged embezzlement of the money they had paid for social security and health care. Union organizers are frequently blacklisted.

The textile sector is a volatile one, and jobs can disappear as quickly as they materialize. Most textile factories are set up to be able to move within 48 hours if political or economic conditions shift. None of the profits made by the textile producers stay within the country, and the companies are exempted from most taxes and tariffs. Nicaraguan factories currently pay the lowest wages in Central America, but wages are even lower in many Asian countries.

Even under the most optimistic forecasts, the influx of textile factories won't be able to produce enough jobs to make up for the loss of agricultural jobs projected under CAFTA. Many people will be forced to leave the country and look for work in Costa Rica or the U.S., often leaving their families behind. Single parents will be left alone with their children in an urban environment isolated not only from their partners but from their extended families. Without the revenue from tariffs, the government will be hard pressed to fund programs to mitigate the social impacts of the collapse of tens of thousands of families.

Augusto warns that "Illiteracy is rising and is going to rise more because under such a hard situation parents will need their children to work and won't be able to send them to school." Cuts in education spending and the rising cost each family has to pay to send a child to school have already contributed to a doubling of the illiteracy rate in the last fifteen years. Rising illiteracy rates will limit the options the country has for future economic development by leaving the nation with a workforce only suited for fairly unskilled labor. As sociologist Cirilo Otero points out, "A population that is illiterate is a population that cannot benefit from investment."


Nicaragua is a nation rich in water with vast forests and tremendous biodiversity. Small farmers have served as stewards of the land, and as a result, the country has been able to develop a small but growing eco-tourism industry catering mainly to European backpackers. Farmers have also branched out into growing medicinal herbs and shade-grown organic coffee. The collapse of the agricultural sector would threaten these emerging industries.

Augusto says

"In Nicragua we have the cheapest labor that there is in all of Central America. It's crazy that the government would see this as a route to development to build more textile factories without supporting the farmers. What's going to happen if they follow that model is that the land and all the resources will be left to die. The wealth of Nicaragua isn't in the factories, its in the countryside."

He points out the ecological changes in his own community in recent decades. His father recalled tremendous rains that came without fail every summer. But with the growth of the sugar plantations in the late twentieth century, forest land was cleared, the rainfall diminished, and there was dramatic soil erosion. Since the revolution, the forests have begun to grow back, and in the past few years the rains have returned, though the abundant wildlife his father described has yet to come back.

Augusto fears that the collapse of the small farms, large scale industrial agriculture will return, and the forests will be cleared again. When campesinos lose their land to the banks, companies and large landowners will come in and buy up large tracts of land, parcel by parcel, reintroducing the plantaiton system to regions where local economies have been struggling to hold on.


A lifetime of struggle has bred a fierce devotion to the community and the land among the people of El Regadio. Augusto's wife, Gloria, who also fought in the revolution and the Contra War says "Our indigenous hearts are full of love and peace. But sometimes it's a very rebellious heart."

Inspired by the example of popular movements in Ecuador and Bolivia, Nicaraguan farmers, workers, and small business owners have threatened to blockade the nation's highways if the National Assembly doesn't meet their deadline for rejecting CAFTA. In a country highly dependent on the Pan-American Highway, these blockades could completely cripple trade and commerce. And with the military still largely under Sandinista control, there is a strong possibility that troops might refuse to break the blockades.

Augusto puts it plainly and starkly "We campesinos are not going to allow any companies to come in from outside and take our land or our resources. If we had a war to oust Somoza, we can have a war to oust the transnationals."