Slaughterhouses have declared that they are unable to pay higher prices to beef ranchers, who demanded them.
They cite two reasons: a reduction in U.S. demand, the second largest export market for beef, and the position of Venezuela of not raise the price of a ton of meat by 10% (Venezuela is the main export market).
The Federation of Livestock Associations of Nicaragua (FAGANIC) gave a week's notice for the industrial plants to provide a "satisfactory answer" regarding the price, or the cattle ranchers will not deliver their animals. Enrique Moncada, director of the board of Nuevo Carnic, recognizes that if farmers keep the cattle as leverage, meat exports would cease.
Moncada said the "investments in the millions" in the expansion of the plants have not been offset because of declining markets, not having established a good margin with Venezuela, and the "brutal" increase in operating costs related to electricity, reported Elnuevodiario.com.ni.
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In order to renew a trade agreement that expires at the end of September, Nicaraguan farmers are asking for a 20% increase in the price of meat exported to Venezuela.
The price of beef exported by Nicaragua to Venezuela under the current agreement is $4,300 a tonne, a figure that farmers want raised to $5,160, a 20% increase.
The Cattle Commission of Nicaragua is demanding that its government petition Costa Rica and Honduras for compensation.
The livestock farmers of Nicaragua, represented by the National Commission of Cattle Raisers of Nicaragua, are exhorting their government to call for compensation regarding the obstacles to beef exportation.
An initial capital injection of $4 million by cattle farming associations is hoped to be enough to enable work to begin immediately.
Nicaraguan businesses are seriously considering investing in the project that will be capable of receiving 450 beef carcasses every day, to reduce pressure on existing slaughter houses.
The cattle farming union of Nicaragua is to issue shares of a corporation that will build a slaughterhouse and has customers in Taiwan, Canada and the United States.
The slaughterhouse, whose construction is valued at about $15 million, will have the capacity to process about 500 cattle per shift per day, in an area of about twenty hectares.