With the entry into force of the tax reform, banana production costs in Nicaragua have increased between 30% and 35%, because of the rise in the price of agrochemicals.
According to the producers, before the Tax Concentration Law approved at the end of February of this year was reformed, agricultural inputs were exempt from 15% of the Value Added Tax. However, with the changes, costs have increased considerably.
Alfredo Centeno Argüello, president of the Rivas Banana Growers Association (Aplari), explained that “… These increases have had a negative impact on our production costs because the rise arises properly when there is no financing available for producers and as more investment is required some have opted to reduce their banana crops.”
The producer Miguel Pérez Romero said that “… before the increase in agricultural inputs occurred, he invested $2,500 to produce one block of bananas, ‘but now the expense exceeds US$3,300, because fertilizers and insecticides are more expensive’.”
The demand in the local market and the purchases made by three plants that collect fruit and then sell it to Honduras, Costa Rica and El Salvador, have been decisive for the business to stay afloat in this scenario of rising costs, explain the producers.
CentralAmericaData reports state that last year Central American companies sold abroad US$2,594 million in bananas, equivalent to 6 million tons. In recent years the average export price of the fruit has shown a slight upward trend, going from US$0.37 per kilo in 2012 to US$0.45 per kilo in 2018.