Soaring Food Prices Alarm Consumers

October 26, 2007

“These are 15 córdobas a pound, amor,” Angela Mercado tells a prospective customer, running her hands through a sack of dry beans.

The customer, María Flores, a mother of four, grimaces. At $0.80 pound, that’s close to twice what she would have paid a few weeks ago.

“That one’s 17 córdobas,” Mercado says, pointing to another heaping burlap sack. Flores shrugs and pays for two pounds of the cheaper.

“It’s expensive, but it’s expensive everywhere,” she explains.

The recent hike in the price of beans has caught many consumers off guard. In the last month, the going rate for the basic staple has nearly doubled because of fears of a larger-scale food and seed shortage in the future.

Mercado, who has been selling beans out of her crowded stall in Granada’s marketplace for 20 years, says that the price increases came on suddenly.

“Yesterday, I was selling beans for two córdobas less. Already, today, it’s more expensive,” she said.

The price of rice is also on the rise and the cost of bread doubled this week.

The spike in the prices of basic food items is being blamed on high demand following the agricultural losses inflicted last month by Hurricane Felix, as well as a drought that caused a smaller-than-average harvest earlier this year.

Exacerbating the problem has been more situation is limited by the country’s economic reality.

“This is a serious situation for a fragile economy and a fragile budget that has already been allocated,” Ortega said.

The President then called on the National Assembly and the banking sector to allow the government to renegotiate payment on the internal debt to redirect funds to storm relief efforts.

Nicaragua this year is scheduled to dole out between $235 million and $250 million to pay for a monstrous internal debt incurred from a banking-bailout scandal from inflated Negotiable Investment Certificates (CENIs) sold to cover the collapse of the financial system in 2000.

Ortega has long opposed paying for the CENIs, but eventually capitulated for the sake of macroeconomic stability and to prevent potential investor panic caused by the government defaulting on its debts.

However, the damage caused by the last six weeks of rain has presented him with an opportunity to again make his case.

Ortega this week called on the banking sector to “renegotiate (the internal debt) to liberate resources for this catastrophe.”

Ortega, without naming names, also blamed opposition political leader and former presidential candidate Eduardo Montealegre for the CENIs scandal, accusing him and other bankers of “restructuring the interest rate to benefit themselves.”

Other elements of the government’s emergency response and reconstruction plans are also carrying a clear political tone.

Ortega has made it very clear that reconstruction will come under the banner of ALBA, the alternative trade and development accord between Nicaragua, Venezuela and Cuba. Ortega has even dubbed the reconstruction plan as the “Sandino-Bolivar-Martí Plan,” named after the revolutionary liberators of those three countries.

“We will be victorious, always, as Ché said,” Ortega told Chávez on the phone after the Venezuelan President made his offer to help.

But before victory can be won, the rains have to stop. And with tropical storms number 37 and 38 approaching the country this week, meteorologist Alejandro Rodríguez said he predicted “a continued unstable climate for the coming week.”

The hurricane season – as they say – officially ends Nov. 30, si Dios quiere.

 

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