Nicaragua was the world’s 18th biggest exporter of coffee in 2020 and in 2023/24 is set to produce 2.7 million 60-kg bags, about the same as the year before. Almost all is arabica. The origin’s fine coffees are in high demand, and specialty producers are stepping up quality and variety.
But in recent years the overall industry has struggled with challenges that have kept it from reaching its full potential. The biggest problem lately has been political and economic turmoil, which has hindered farmers’ access to the credit needed to finance improvement in yields and quality. Climate change, hurricanes, labor shortfalls, pests, coffee diseases, and rising costs increase the need to invest in farm renewal and upgrades. The Covid-19 pandemic took a toll on the sector, reducing incomes and pushing up debts.
As for potential, this lies in Nicaragua’s long coffee history, rich volcanic soil, and excellent climate, which features many different microclimates that can produce a variety of taste profiles. In general, Nicaraguan coffee is consistent in quality, well regarded for its sweeter chocolate and nut flavors, as well as floral notes, and a clean, bright citric acidity. More than 95% of production is arabica, most of it shade-grown, mostly by smallholders. Some 85% of the arabica plantations are in North Central Nicaragua, at elevations of 365 to 1,500 meters above sea level.
Caturra is the most prevalent variety, at 72% of the arabica area, according to the latest report on the origin by the United States Department of Agriculture (USDA). Other varieties include Bourbons, Paca, Catuai, Catimore, Maragogype, and Pacamara. Two of Nicaragua’s longtime classic varieties are Javanica and Maracaturra. The coffee marketing year starts in October and ends in September.
Some 140,000 hectares of land are planted in coffee, grown by 45,000 farmers. Agricultural census data from 2011, the most recent available, say that 71% of farms are small holders, having less than 15 hectares; 22% are medium size, ranging from 15 to 17 hectares; and 7% are large farms at 70 to 350 hectares. Employment throughout the coffee value chain is more than 330,000 people, according to the USDA.
Specialty sector rising
Demand in international markets is high. One institution helping elevate the origin is the Nicaraguan Specialty Coffee Association (ACEN), founded in 1995. ACEN is spreading the word that Nicaraguan beans are high quality, says Manfred Günkel, the group’s vice president. This has been helping farmers get higher prices and become less vulnerable to the price fluctuations driven by commodity markets.
ACEN attends international trade shows and supports Nicaragua’s edition of the Cup of Excellence, begun in 2002. Günkel also plays an industry role as CEO of Sajonia Estate Coffee, a mill, roaster, and exporter.
Savvy mills like Sajonia Estate have doubled down on specialty coffee during the past five years, and many now service microlots. Farmers are supplying fine beans.
“You see many new and experienced producers experimenting with, and successfully replicating, new post-harvest types of fermentations and drying techniques,” says Erwin Mierisch III, a fifth-generation coffee producer, and head of Fincas Mierisch, a group of farms. “Gone are the days of just three types of post-harvest processing. You’re also seeing more new varieties being planted by producers, such as Sidra, SL-28, and Geisha.”
“Nicaraguans are very curious people, and we’re always eager to keep learning, implementing, and experimenting with new methods in search of better quality,” says Mierisch, great-great grandson of Bruno Mierisch, a German immigrant who began the family’s farm in 1908 in Matagalpa.
“It’s a difficult time to be a coffee producer in Nicaragua, or most producing countries really, but we’re very resilient and hard-working people. Some might say we’re stubborn. We see problems as obstacles waiting to be overcome,” Mierisch says.
Rough ride
“The past decade has been a rollercoaster in coffee production, with many up and downs. But the downs seem to be overtaking the ups in frequency,” Mierisch states.
When political turmoil struck in 2018, it soon affected coffee producers. “With the crisis in 2018, banks did not give loans for quite some time,” says Günkel of ACEN. “They feared the system would collapse, not only the government but also the economy.”
Even after loans were approved, banks did not pay funds through to farmers, who then lacked money to pay workers and buy inputs. Pests and plant diseases hit many farms. Productivity declined, and many farms closed.
In 2019 came a tax reform that imposed a tariff on all production goods, further hindering the sector. Then Covid-19 struck. Logistics and shipping stumbled. Costs for freight and inputs rose by about 200%, according to Günkel. After Covid retreated, Russia’s invaded Ukraine, which created a new problem because Nicaragua depends on Russian fertilizers. This input became difficult to source and expensive again.
One consequence of turmoil has been low investment in farm productivity. According to the USDA, only 14% of total coffee planting area has been replanted since 2014, considered far too low because old bushes yield less fruit.
Nicaraguan farms have endured instability before. The civil war that struck the country in the 1980s had a big impact on coffee production. Farms, mills, and exporters were taken over by the government.
But in 1990 they were privatized, and in the decade that followed coffee cooperatives gradually took over. In recent years, small and medium-size exporters have gained traction. These include Sajonia Coffee Estate and Fincas Mierisch.
Now, however, big players are moving in. “The competition among large exporters, such as Olam [now Ofi] and Caravela, for example, which took over local companies like Cisa and Atlantic, along with the cooperatives in the last decade, has affected us medium and also smaller exporters, because it is hard to compete with them,” Mierisch says.
Yet competition among buyers helps producers by supporting prices. And international traders are helping drive the focus on specialty coffee, a segment that has benefitted from steady demand and good prices even in tough times.
Steady high prices are needed to keep Nicaraguans farming coffee. With all the difficulties in recent years, many are discouraged and opt for other crops, says Günkel. Many young Nicas have been leaving the country to seek brighter futures in the United States or elsewhere.
Coffee is the nation’s third-largest export by value, after gold and tee shirts, and the government aids the sector. In 2020, Nicaragua adopted a three-year national coffee strategy focused on improving farm management, farmer incomes, and response to climate change. The plan supports enhancing coffee genetics and exploration of new and different varieties.
Another development effort is a push to plant robusta, which has long accounted for less than 5% of production. Some farms are working to cultivate premium robusta. Others use the hardy species to cope with extreme conditions. Finca Mierisch, for example, grafts a Geisha variety on top of sturdy and resilient robusta roots and stems, which helps the plant to withstand frequent strong winds.
Plantations have expanded into new areas since 2013, when the government allowed coffee to be grown outside traditional coffee zones. The new farms are in the Pacific and Atlantic coastal areas, which have lower altitudes. They mostly produce commodity-grade beans for domestic consumption.
EU Green Deal
Specialty coffee is getting digital help. Farmer associations, cooperatives, and dry mills have recently begun investing in software that tracks the coffees they process. In the past, farmers had to combine their lots with other farms and varieties, losing their coffee’s status as a single-estate lot, due to the large minimum lot size required by dry mills.
By enabling single-farm or single-lot traceability from farmer to exporter, this technology has helped producers secure better prices. It could also help future-proof Nicaraguan coffee for compliance with a new regulation under the European Union’s Green Deal. Announced in December last year, the new law imposes a strict mandate on traceability to ensure that coffee imported into the EU has not been grown on land deforested since 2020.
“I don’t believe traceability will be a big issue for us, nor specialty coffee producers in general, because traceability is the norm,” Mierisch says.
But only 5% of producers have certifications, according to the USDA, and the share has declined in recent years because fewer producers can cope with the cost and rising benchmarks. The 5% figure could be taken as a proxy for the size of specialty sector.
That leaves lots of other producers, especially growers of commercial-grade beans. For them, and makers of blends, traceability will be difficult and expensive. “We are hesitant as to whether this is the right solution to this problem. Deforestation is an issue in Nicaragua, but it comes more from the timber and cattle industry than coffee,” Mierisch says.
But lower quality beans stay in the country and go through different production steps, usually becoming ground coffee blends or soluble coffee for domestic consumption. What’s available in supermarkets and the small local shops known as pulperias are small packs of strong, dark-roasted coffee, a blend of arabica and robusta with caramelized sugar added. The Nicas like their coffee bold and sweet.
Local consumers are very receptive and open to various processing methods and roasting styles. But the majority still prefer medium or dark roasts of washed beans.
Coffee first arrived in Nicaragua from Haiti in the late 18th century, during Spanish colonial days. Commercial cultivation took root in the 1850s after a bag of parchment coffee found its way from Costa Rica to the area around Jinotepe, south of the capital, Managua. By the 1870s, coffee became Nicaragua’s number 1 export, which it remained until the turbulent 1980s.
