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Nicaragua INDUSTRY
Historically, Nicaragua's small industrial sector has
consisted primarily of food processing. Except for one
cement
plant and one petroleum refinery, agro-processing
industries
(slaughterhouses, meat packing plants, food processing
plants,
cooking oil plants, and dairy facilities) and the
manufacture of
animal by-products (candles, soap, and leather) have been
the
backbone of Nicaragua's urban industry. The 1960s was a
period of
rapid growth of the industrial sector, as new external
tariffs
established by the CACM allowed the growth of
import-substitution
plants in Nicaragua. Formation of new import-substitution
plants
slowed in the 1970s, however, and the percentage of GDP
derived
from industry dropped to only 23 percent in 1978.
Political and economic problems caused the industrial
sector
to shrink in the years after 1978. The civil war caused
manufacturing output to decrease by one-quarter in 1979
alone. In
the agro-industries, which represented 75 percent of the
total
industrial putout, idle capacity became a serious problem
after
the Sandinista victory in 1979. In the early 1980s, food
processing plants were operating at only 50 percent
capacity;
sugar mills, 49 percent capacity; animal feed processing
plants,
70 percent capacity; fruit canning plants, 94 percent
capacity;
and vegetable oil refineries, 42 percent capacity. The
Sandinista
government maintained a monopoly on beef processing
facilities,
but here, too, idle capacity rose from 30 percent in the
period
between 1977 and 1979 to 85 percent by 1981. Idle capacity
in
this industry averaged 60 percent in subsequent years.
This
phenomenon resulted mainly from clandestine slaughter
houses, an
illegal network of beef distributors, and the withholding
of food
products by producers.
Although the government-controlled distribution system
created shortages, a black market thrived for milk,
cheese,
chicken, and eggs, as well as livestock by-products such
as soap
and shoes. In the mid-1980s, Black-market prices soared,
and
essentials became next to impossible to obtain through
legitimate
channels. As basic grains and other food became scarcer,
beef
consumption in Nicaragua rose to the highest level in
Central
America. Unable to buy corn, Nicaraguans ate beef.
Immediately
before the imposition of the United States trade embargo
in 1985,
many ranchers instituted the wholesale slaughter of beef
and
dairy cows that they were unable to shift across the
borders to
Costa Rica or Honduras.
The industrial sector, which had grown only
sporadically in
the early 1980s, declined in the mid- to late 1980s as the
Contra
war escalated and United States markets dried up.
Industrial
production dropped an average of 5 percent each year from
1984 to
1989. By 1989 the industrial sector contributed only 19
percent
to the nation's GDP and construction accounted for only 4
percent.
By President Chamorro's inauguration in 1990, only
about 10
percent of the pre-Sandinista era work force was still
employed
in the skeletal industrial sector. A few larger-scale
industries,
including a cement production plant, a chemical plant, a
metals
processing plant, and a petroleum refinery, were geared
toward
domestic consumption. Even these suffered badly from
shortages of
essential imports and the lack of skilled labor, however.
Data as of December 1993
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