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A story of 3 businesses: how socio-political crisis affects food security and food sovereignty

In April 2018 something changed in Nicaragua. Protests began against the government. There were road-blocks, violence and destruction; political polarization, deaths and mass migration. While I wish to convey a full respect for the gravity of this situation and acknowledge the deep wounds that have not healed, it is not my aim here to go into the causes, or detail, of these events. I invite the reader to conduct their own thorough research and considered analysis.

My aim here is to invite reflection on the impacts of an economic crisis on food security and food sovereignty. To do this, I invite you to stroll with me into the imagination. Let me introduce you to three different food businesses, of very different scales. These businesses are fictional. While I have based their stories on lived experiences during the period between April - July 2018, they are not intended to correspond to any particular entity in the real world. Fictional though they are, these stories will help us get an idea of the real effects that socio-political unrest has on local people and businesses, and what that means for food security and soveriegnty.

* * *

Meet our three protagonists:

JAIRO’S WATERMELONS: Jairo has a small business selling watermelons in the Mayoreo wholesale market in the capital city of Managua. He buys the watermelons from a farm not too far from Managua, and brings them to the city to sell. His main clients are individuals doing their grocery shopping in the market.

The Mayoreo market contains small and medium size businesses.

ROSALIA: Another family business, Rosalia's Fruits and Vegetables has established itself on a national scale over the last few decades. The business sells fresh produce wholesale to business; supplying supermarkets and other businesses, as well as individuals who pass through the market. As well as selling products grown in the country like onions and potatoes, they also import “higher-end” produce from Europe and the US; such as apples and grapes that don’t grow so readily in Nicaragua’s tropical climate. Such products require refrigeration to survive the heat and humidity and are therefore more expensive.

MALL-MART: A household name and multinational brand, Mall-Mart operates major supermarket chains across Nicaragua as well as internationally. They buy from fresh produce suppliers within Nicaragua as well as importing a large variety of fresh and manufactured products (bread, canned goods, sweets, etc).

How do these three businesses cope with the effects of the socio-political unrest on the local economy?

The socio-political unrest kicks of with turbulent months of violent clashes, protests and roadblocks. As a result peoples' movements change. There is an informal curfew. People stop or reduce their movements around the city. With lack of movement, business starts to recede. Tourism, construction and commerce are affected [1]. Some international businesses withdraw operations from the country, judging the climate too unstable - and some local businesses go under. Both contribute to a rapid spike in unemployment [2]. There is a wave of migration en masse as people decide to leave the country [3]. This feeds into businesses. When people leave they stop contributing to the local economy, those that become unemployed buy much less and those who are employed also limit their spending to weather the storm. Overall there is less purchasing power in the system to drive the remaining businesses - which leads to more businesses struggling and more unemployment - and thereby less purchasing power.

Within three months, there is a 70% drop in sales at Rosalia’s Fruits and Vegetables. [4]

Rosalia’s is forced let go of staff to avoid closing the business. The people they let go join the by now 347,000-strong group who have recently been made unemployed [5]. More fuel for the vicious cycle: those without work lack purchasing power and this in turn contributes to reduced demand for produce.

Jairo’s watermelon business is unable to withstand this kind of shock. Normally, Jairo buys the next load of watermelons with what he has earned from sales of the last batch. When sales are down, Jairo is spending more than he is earning on getting the products to market. This is not possible for a long time. He had already suffered losses rom the days when he was unable to bring products to the market due to road blocks. So Jairo is forced to put his business on hold[6]. The farmers he buys from are worried; without this income, how will they be able to invest in the next harvest?

Overall, sales are down in Mall-Mart as well. There are a few days of binge-buying, when those that have enough disposable income to buy in bulk stock up on long-life goods in anticipation of days without access to food; emptying supermarket shelves of essentials like rice and beans. On other days however its shelves are emptied in a more violent way. Stores are ransacked and left as shells [7].

Nevertheless, Mall-Mart can weather the storm. As a multinational company, it is able to withstand the financial losses, and keep most of its staff. Although much of its supply of fresh produce is from within the country, it also imports goods (including fruits and vegetables). It does not depend on the success of local farmers for its continued existence.

* * *

What does this mean for food security?

The picture that emerges from these stories has major implications on food security. We saw that rising unemployment levels and struggling businesses feed in to a reduction of purchasing power. Estimates suggest that 143,000 people may have fallen into poverty following the prolonged unrest [8].

One of the pillars of food security is having economic access to food. Since the minimum wage earned by two people (U$364) is not enough to cover the basic costs of supporting a family (U$430) [9] [10], the effects of economic crisis on those that are already living on or below minimum wage are felt most harshly and have immediate consequences for food security.

How does it affect food sovereignty?

When we think about food sovereignty, we need to ask: how does the situation impacts the balance of power involved in the food system? Does the situation supports ecologically sound and sustainable methods of production?

The stories outlined above show that the socio-political crisis has a negative impact on the smaller busineesses; in particular on small-scale agriculture and food retail. Small food retailers like Jairo's watermelons are important for maintaining local food traditions and supplying the city with local produce. Small-scale farming, which makes up 85.2% of the agricultural production units in Nicaragua [11], is a pillar for the country's ability to produce its own food supply and nutritional variety. Small farms tend to use more sustainable and ecologically friendly practises than industrial scale farming.

While all the business outlined above were negatively impacted, the situation disproportionately affected small-scale food production and retail. It also increased dependence on large multinationals, which are not recognised for suporting excellent sustainable and ecological agriculture. So food sovereignty is reduced.

* * *

The journey continues

Our visit to three imaginary businesses during times of unrest has showed us that the most vulnerable sectors of the population are affected most gravely by times of crisis. It also showed us how small-scale businesses and agriculture can also be vulnerable. Not a remarkable conclusion, perhaps.

But it can give us a valuable insight. Whatever it is that comes out of the difficult times for Nicaragua, it is important to analyse it through the lens of the small-scale farmer, the micro-business, the informal worker. Who does it help and who does it hinder? What will the long term result be? ...A food system that is dependent on external companies and production? Or a food system that is resilient to socio-political, economic, or environmental crises, and ensures that every member of the poplation has stable, suitable access to food?



[1] FUNIDES, June 2018

[2] FUNIDES, Sept 2018

[3] UNHCR, Aug 2018

[4] Newspaper "Hoy", Sept 2018

[5] FUNIDES, Sept 2018

[6] Newspaper "Nuevo Diario", July 2018

[7a] "El 19 Digital", April 2018

[7b] "El Nuevo Diario", April 2018

[8] FUNIDES, Sept 2018

[9] Ministry of Work, "El 19 Digital", 2018

[10] National Institute of Development Information, 2018

[11] World Bank, 2015

Nicaraguan Central Bank (BCN) Annual Report 2018

Further Reading

Food Security and Food Sovereignty, FAO, 2013

Law 693 on Food Security and Sovereignty (Nicaragua)

Food System map

Collcted writings about the socio-political crisis

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