Highlights
– Nicaraguan citizens greatly affected by food shortage and rising inflation
– Nicaraguan President Daniel Ortega leads Latin American summit on food crisis
– Leaders propose various strategies to combat escalating problem
– Nicaragua may experience minor decreases of oil and wheat prices, however, globally costs of the items will likely remain inflated in the mid to long-term
Food shortages and rising inflation is occurring globally, and while most Latin American countries have been affected, Nicaragua has been one of the most significantly impacted countries. Nicaragua has experienced rising inflation of oil prices, rice and many other staple foods leaving many citizens hungry. Nicaraguan President Daniel Ortega, along with several other Latin American senior level officials convened at a conference on May 7, 2008 to discuss the escalating prices and food shortage emergency throughout Latin America.
The summit concluded with a formal statement signed by participants. The leaders of the countries signed a document, which identifies several strategies to help combat the regional food crisis. The agreement may help relieve residents of higher prices in the short term, however it is likely prices will remain inflated in the mid to long term.
Nicaragua Faces Increasing Prices
Nicaragua has been significantly impacted by the recent increase of grain and oil prices as the country imports 40 percent of its rice and all of its oil. Media sources report that 80 percent of the nation’s electricity is generated using oil, and gas prices have reached US$4.70 per gallon in the capital, Managua. Two years ago the country average was US$2.54. In addition to skyrocketing oil prices, in the past year, the price of rice and wheat have increased 70 and 130 percent respectively. Families are reportedly spending an estimated 75 percent of their income on food and more than 25 percent of the population is undernourished, the majority of which are children. According to a 2000 study by the “Witness for Peace” organization, the average per capita income in Nicaragua was approximately US$430 per year and 50 percent of the population lived on less than US$1 per day.
Government Response
President Ortega blames global capitalism, and more specifically the United States, for current worldwide food crisis. He stated “America’s thirst for ethanol has driven up international prices for corn and other grains, while US trade policy has discouraged food production in developing countries by flooding them with subsidized farm commodities.” Other leaders joined Ortega by blaming the food crisis on the neo-liberal policies of the United States and other European nations.
To lower oil prices, Ortega and Venezuelan president Hugo Chavez agreed to a deal allowing Nicaragua to purchase oil on “favorable financing terms.” However, to find a more widespread and permanent resolution, Ortega, along with several other Latin American leaders, convened at a conference in Nicaragua to discuss solutions to the ongoing problem.
Details of the Summit
President Ortega headed the “Food for Life” summit in Managua while leaders from Costa Rica, Ecuador, Bolivia, Haiti, El Salvador, Guatemala, Mexico, Venezuela, Belize, Panama, Dominica, St. Vincent and the Grenadines, the Dominican Republic and Cuba all attended. The meeting adjourned with several proposals in one final document. It called for increased investment in agriculture by all Latin American and Caribbean governments. Additionally, it suggested private banks invest up to 10 percent of their assets in agricultural development. Furthermore, a draft plan of action was created to augment local food production within 30 days and establish a method of fair trade among Latin American countries that would result in fair prices for producers and consumers. Finally, all countries agreed the crisis should be declared a ”regional food emergency” and urged the next United Nations (UN) General Assembly to address the issue when it meets in September 2008.
Looking Forward
Through the strategic alliance, Latin American leaders hope to produce more food locally at lower prices. Though all Latin American countries hope to benefit from the pact, Nicaragua and Haiti need the most assistance. In April 2008, Haiti experienced deadly riots due to inflated prices (Previous Report).
While the alliance will likely improve living conditions slightly for many Nicaraguans, many residents will continue to struggle to afford food for their family. It is probable most prices on wheat and oil will remain elevated worldwide in the mid to long-term forcing Latin American countries to work together in order to keep inflation to a minimum. Additionally, it is likely Latin American countries opposed to US policies will continue to strengthen ties amongst themselves while attempting to weaken relations with the US.