Community-based forest enterprises

Nicaragua: assistance for the preparation of a conversion and diversification programme for coffee production in Rancho Grande and El Tuma-La Dalia municipalities

Nicaragua is mainly an agricultural country and 45 per cent of its 5,1 million inhabitants live in rural areas. According to the Unsatisfied Basic needs (UBN) indicator, poverty affects 73 per cent of the population and 45 percent of the people live in extreme poverty.

In a coffee dependent agricultural economy like that of Nicaragua -between 1995 and 2000, coffee accounted for 50 per cent of the hard currency generated from exports and 31.5 per cent of the employment in the agricultural sector- the social costs provoked by the steady decrease of international coffee prices had a deep impact in the economy, mainly through the decrease of income generation and employment, thus affecting the income flow of thousands of families in the rural areas.

In this context, the Government of Nicaragua prepared a Strategic plan for the competitive conversion of Nicaraguan coffee production and launched a complementary Coffee Diversification and conversion programme in the areas where coffee production has few market possibilities. Successively, the Nicaraguan government requested FAO´s assistance in order to formulate a coffee diversification and conversion programme.

FAO assistance was provided from the beginning of 2004 until 2005 with the purpose of gathering information to elaborate a proposal of a future investment programme aimed to promote: product diversification in coffee production areas with few market perspectives and their conversion to other agriculture, agroforestry forestry activities appropriate from the agricultural, ecological, social and commercial points of view. The programme also aimed at generating diversified income sources for small coffee producers.

The proposal adopted the Market Analysis and Development (MA&D) approach developed by FAO. The MA&D framework, adequately adjusted and adapted to the local programme conditions and objectives, was considered the appropriate tool to promote the product diversification process and the income generation activities for small and middle coffee producers in Nicaragua.

Such a methodology would special attention to the protection of the natural resource base throughout the product identification and market development processes. This aspect will be extremely important for the productive diversification in that area, precisely because coffee growing areas have so far provided environmental services, such as tree planting, soil conservation etc..

The project objectives formulated and their expected outcomes are:

• that coffee producers with few market perspectives produce other crops and economic activities, either as complement or as a substitute to coffee growing;
• that producers practice sustainable use and management of natural resources to hamper those new productive activities from degrading the natural resource base;
• to propose institutional mechanisms for the successful implementation of the Programme and for the coordination of institutional actions between different direct stakeholders and with other official programmes or private sector initiatives;
• to provide technical assistance, training, advice and follow up to organized groups of small and middle coffee producers, in order for them to assess their own conditions, context, assets, constraints and objectives and therefore identify sustainable enterprise activities and develop and implement their respective business plans in accordance with the market opportunities either in local, regional, national and international markets.
• to avoid the traditional practice carried out by some diversification projects which adopt ¿winner products¿ that are extensively promoted in the area of influence of the project through technical assistance, input and financing.

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