Small coffee growers will benefit from Irish plan to double support for fair trading initiatives in Central America, writes Barry O'Halloran, in Managua

A decade and a half ago, Nicaragua was just emerging from a bitter civil war between the left-wing Sandinista government and the ideologically-opposed and US-backed Contras.

These days it has a comparatively stable, liberal government, led by President Enrique Bolanos, and for the time being at least, the Sandinistas have been consigned to the opposition.

But the problems of poverty and inequality that dogged the country during the strife of the 1980s are still there today. Nicaragua is one of the poorest countries in the western world. Its average annual wage is around €600, a week's pay to many Irish people. At around $1 billion (€853 million), its government's budget is one fifth of the Republic's projected infrastructure spend for this year. The country is also short on natural resources, but one thing the Nicaraguans are good at is growing coffee.

The country supports 28,000 small coffee growers, many of whom have less than two hectares of land. They produce 82 per cent of its annual crop of 830 million kilograms. Only about 2,000 producers fall into the "big" category, which is 400 hectares or more.

Nicaragua is set to be one of the beneficiaries of an Irish Government plan to double support for fair and ethical trading initiatives in Central America. Conor Lenihan, minister of state for development and human rights, outlined details of the project this week during a visit to the country. It means aid will increase to at least $6 million over the next three years. The money will be distributed by Development Co-operation Ireland (DCI), a division of the Department of Foreign Affairs.

While in Nicaragua, Mr Lenihan attended the co-operative-owned Del Campo sesame seed processing plant, to which the Republic, through DCI, contributed $116,220, slightly more than 20 per cent of the development cost.

One of the operations that could benefit from the Government's new initiative is a co-op of 650 small growers, Soppexcca in Jinotega, a mountainous region in northern Nicaragua. About 40 per cent of Soppexcca production comes from women, many of them in the less than two hectares bracket.

Soppexcca is supported by Fairtrade, an organisation dedicated to aiding small producers of coffee and other crops in the developing world. Fairtrade guarantees growers a premium to market prices, and supports them in producing high-quality crops, managing their holdings in an environmentally sound and sustainable fashion and reinvesting surpluses in either their businesses, or in services such as medical care.

Through the Fairtrade system, Soppexcca growers, Flora Montenegro and Teresa Diaz, get close to $800 each for their yearly crop, which otherwise would fetch them $600, assuming that prices for their coffee beans held up.

Ms Montenegro explains that the guarantee is important in another way as well. "Without it we would be selling into the black market, and the price is much lower," she says. The price is lower because that market is operated by middle men, who try to depress prices to ensure that they can maximise their profits.

There is another justification for the premium paid to Soppexcca growers: the quality of their coffee is guaranteed. According to Bewley's managing director, Jim Corbett, who buys some of the co-op's product, "there is always a market for quality coffee".

Irishman Kieran Durnien, who is responsible for the Fairtrade support project for certified producers in Central America, says growers have to meet tough commercial criteria to compete. He says DCI's aid has played a key role in helping them to do that. But he is keen to stress that the support is bringing them to the point where they are close to becoming commercially viable on their own.

Soppexcca grew out of the ashes of a previous co-op that went to the wall when the bottom fell out of the coffee market in the 1990s. The original organisation left behind a $750,000 debt and Soppexcca took it on with a commitment to pay it off over 20 years. It has done better than that - some of the proceeds from the crop that the co-op's members are just beginning to harvest will be used to make the final payment.

That achievement can also be turned to its advantage. Raising capital in Nicaragua is difficult, but because it is an organisation that can guarantee future prices and because it has demonstrated its ability to manage and pay down debt, this is at least one problem that Soppexcca can overcome.