December 17, 2024
Colombia-based commodity trader Janet Sedan on Central American markets, Argentinian beans into Mexico, and why everyone loses from a hike in US import tax
Well, I have around 32 years experience in the commodity world, mostly specialising in rice and sugar. I've also worked with white corn and all types of lentils and beans.
Most of my work has been with North American and European companies, having started in Puerto Rico then moved over to the US. In the US I began work for a company called Peace International and stayed with them freelance for around 30 years, focusing on Central America, South America, and all the islands of the Caribbean.
Nicaragua has always been the largest producer of small red beans – it's a small bean particular to the country and very hard to get hold of elsewhere. I would say their production is more or less 25-30% of the total production of beans among the Central American nations, doing much of the exports to surrounding countries like El Salvador and Honduras.
There are three harvests in Nicaragua and they typically consume most of their small red beans, but the little black bean they harvest is usually exported.
Honduras also produces small red beans, but they occasionally need to top up their stocks with imports from Nicaragua – El Salvador does the same thing.
The region tends to produce between 450-500 KMT of beans in total – we're talking about countries that eat beans for breakfast, lunch, and dinner, so consumption is always high. Of the total production, Nicaragua makes up about 38%, after that you have Guatemala at 18-20%, then El Salvador and Honduras – between them they probably produce around 17%. Costa Rica produces a very small amount – no more than 5%.
El Salvador buys Nicaraguan beans over the border where the product is pulled in Salvadoran plants then exported – though not in huge quantities – over to the US where the majority of expat Salvadorans can be found. The majority live in Texas and California. Guatemala doesn't export and consumes everything it produces and everything it imports. Of the Central American countries, only Nicaragua is really self-sufficient.
Yes, those numbers seem correct. For example, in 2022, Nicaragua produced 217 KMT, so that should be about right.
In the end it is very difficult to get correct numbers, as these countries simply don't have the logistics to put the accurate numbers together quickly. As a trader you get an idea of how much the country has produced by speaking to someone within the country.
Nicaragua, Honduras and El Salvador eat mostly red beans, whereas people from Guatemala and Costa Rica tend to eat more black beans. Both Guatemala and Costa Rica have a production/consumption deficit and usually need to import from the US. Sometimes, depending on import taxes, they buy from Argentina and Canada. Costa Rica is the only country I’m aware of that has imported its black beans from Ethiopia.
My experience in Nicaragua is that the population will not eat any type of pulse other than the one they produce – the ones they are used to. For example, I remember that the Italian Embassy once donated 1200 MT of lentils to Nicaragua and nobody ate them!
The large majority of the population is poor in these countries, and while you might find small portions of the population who will eat a kidney bean instead of the small red beans they are used to, this will be because they have travelled and tried new things abroad. The majority of the population simply won't eat the black or red beans that they aren't used to.
When you're exporting or importing, you always need to be thinking about currency exchange. Prices need to be in dollars, but for the farmworkers, everything needs to be done in local currency. Unless their country is dollarized, like in Panama or El Salvador, the bank is never going to give them dollars.
We are currently selling black beans from Argentina into Mexico and, to avoid the problems in the Argentinian economy, many companies prefer to start satellite companies in the US, as the economic situation in Argentina makes things too complicated. Having offices in the US allows them to organise the transfers directly.
If you go to Guatemala City, Managua, San Salvador or Panama, even here in Colombia, you will see how American culture has influenced the food chains here and changed bean consumption as a result. There was a time when you had more of a chance of an alien coming to eat with you than finding a North American food chain in Colombia, but there was a moment when things changed. Now you'll see Burger King, Chilis – all the North American chains are well-established in Central American countries now.
I think it is highly unlikely we will see the high import taxes in the US being suggested at the moment, as it wouldn't be logical to impose them. I understand that the new government wants to improve the situation at the US/Mexico border, but both countries trade with one another.
For example, if Mexico sells its chickpeas into the US, that would no longer be possible under such a high import tax. Likewise, the US is a big provider of rice for Mexico, so if Mexico retaliates against the import taxes by imposing its own and no longer buying America's rice, who buys that rice? Nobody! For Mexico it would be better to import from Brazil, Uruguay, Paraguay – any other regional producers.
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Janet Sedan / Central America / red beans / black beans / Nicaragua / Guatemala / USA / El Salvador / Honduras / Costa Rica
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