The avocado market in Nicaragua experienced significant developments from 2017 to 2021. The market was shaped by a complex interplay of economic growth, political instability, and environmental challenges.
Nicaraguan Avocado Market Size
The avocado market in Nicaragua increased at a compound annual growth rate (CAGR) of 3.25%. As a result, it reached 2.09 million USD in 2021.
The consumption per capita of avocados in Nicaragua showed an overall increase in the period 2017-2021. Until 2021, it grew at a CAGR of 1.97% to reach 0.320 USD per capita.
Imports and Exports of Avocados in Nicaragua
The imports of avocados to Nicaragua in the period 2017-2021 decreased at a CAGR of -10.52% to reach 50 thousand USD.
The exports of avocado from Nicaragua in the period 2017-2021 grew at a CAGR of 23.98% to reach 267 thousand USD.
As a result, the trade balance of avocado in Nicaragua was positive and recorded an overall increase during the analyzed period. Until 2021, the trade balance increased at a CAGR of 57.80% to reach 217 thousand USD.
Key Trends in the Avocado Market in Nicaragua
For nearly two decades leading up to 2018, Nicaragua enjoyed robust economic growth fueled by domestic consumption, investment in manufacturing, and increased agricultural production. This period of prosperity led to a significant reduction in poverty, with the middle class and youth driving higher consumption of fresh fruits and vegetables, including avocados.
However, the onset of political instability in April 2018 marked a turning point for the country. Protests against government reforms led to widespread unrest, disrupting the economy and causing severe revenue losses for many avocado producers. Exports were particularly affected as logistical difficulties led to unsold produce and financial losses. The instability, compounded by ongoing poverty and food insecurity, continues to pose challenges for the avocado market in Nicaragua.
Agriculture remains the backbone of Nicaragua's economy, with over half the population engaged in farming. However, climate change poses a significant threat to the sector. The increasing frequency of extreme weather events, such as droughts and hurricanes, severely impacts crop yields and agricultural productivity.
In response, many farmers turned to agroforestry practices, integrating fruit trees like avocados into their farms to enhance climate resilience. The shift is particularly evident in the Dry Corridor region, where organizations like FECODESA and SeedChange promote the cultivation of diverse tree crops to reduce climate vulnerability. The adoption of such practices has the potential to mitigate some of the adverse effects of climate change on the avocado market in Nicaragua.
Despite the challenges, the avocado market in Nicaragua has ample opportunities for growth through exports. The Coopranic Cooperative, representing over 70 avocado growers, successfully opened doors to international markets, with Costa Rica emerging as a key export destination. The popularity of the Hass avocado variety, known for its high export value, drives this expansion, particularly in the Carazo region.
The establishment of an avocado processing plant in Carazo further illustrates the market's growth potential. This facility processes avocados for export in various forms, including guacamole and avocado oil, providing employment opportunities and stimulating the local economy. As demand for avocados continues to rise globally, Nicaragua's efforts to align its agricultural practices with international standards will open up new markets and drive further expansion.
The rising prevalence of non-communicable diseases (NCDs) in Nicaragua, such as diabetes and heart disease significantly influence consumer behavior. Avocados, rich in vitamins, minerals, and healthy fats, are increasingly recognized for their health benefits. Thus, the growing awareness drives demand for avocados, particularly as more consumers seek foods that support a healthy lifestyle.
Restraints in the Nicaraguan Avocado Market
The avocado market in Nicaragua faces several significant restraints. The COVID-19 pandemic and the Russian invasion of Ukraine disrupted global supply chains, affecting the availability and cost of agricultural inputs like fertilizers. These disruptions, coupled with rising energy and transportation costs, continue to strain the profitability of avocado production in Nicaragua.
Climate change remains a critical concern, with the hot and dry conditions in Nicaragua threatening crop yields and increasing the costs associated with maintaining avocado plantations. Additionally, the country's vulnerability to natural disasters, such as hurricanes and earthquakes, poses ongoing risks to agricultural productivity and market stability.
Yet, one of the most significant challenges facing avocado production in Nicaragua is water scarcity. Providing sufficient water for the "ever-thirsty" avocado trees is essential for their survival and the production of high-quality edible fruit.
According to the Water Footprint Network, it takes around 70 liters (18 US gallons) of water to grow a single avocado, not including rainfall and natural soil moisture. The substantial water requirement places a significant strain on water resources, particularly in areas already facing water scarcity.
The high water usage associated with avocado farming (approximately three times that of apples and nearly twenty times that of tomatoes) can lead to environmental and socio-economic conflicts. These conflicts may include illegal deforestation, water disputes, and heightened competition for limited water resources.
Moreover, the scarcity of safe and high-quality water in Nicaragua further complicates the situation. Avocado trees irrigated with lower quality water require more efficient management practices to mitigate the negative impacts on tree health, fruit yield, and overall quality.
These challenges often result in higher production costs as farmers invest in water treatment or seek out better water sources to maintain crop yields. If the quality and availability of water do not improve in the coming years, Nicaraguan avocado farmers will continue to face significant obstacles in sustaining their production levels and meeting market demands.
Forecast for the Nicaraguan Avocado Market
Under the base forecast scenario, the Nicaraguan economy is expected to show steady growth in the medium term. As a result, the Nicaraguan avocado market is expected to reach 2.65 million EUR by 2027.
If the Nicaraguan economy does not reach expectations, it will show declining rates in the medium term. In this case, the avocado market in Nicaragua will fall to 1.85 million EUR by 2027.
If the Nicaraguan economy exceeds expectations, the avocado market in Nicaragua is forecast to reach 3.23 million EUR by 2027.
