The Effect of Nicaragua’s Political Unrest on the Tobacco Industry

The Effect of Nicaragua’s Political Unrest on the Tobacco Industry

It is important to the tobacco industry that they continue to provide their beautiful leaf and fantastic cigars to the world, despite the political unrest.

There has been political unrest in Nicaragua, which has led to violence, a work strike, and a blockade of major thoroughfares including the Pan-American Highway. Almost 8,000 asylum claims by Nicaraguans have been registered in Costa Rica since April 2018 (as reported by the UN's refugee agency).

Nicaragua was ranked as the No. 1 cigar maker for the U.S. market in 2017 (according to the Cigar Association of America), producing more than 148 million premium cigars versus the Dominican Republic with more than 118 million.

The bulk of Nicaraguan cigars come from Estelí. So, it is important to the tobacco industry that they continue to provide their beautiful leaf to the world.

The good news is that in spite of all the difficulties, the farms are still producing and delivering their product. As of June, factory workers are back to work. Companies, including J.C. Newman, A.J. Fernandez, and Plasencia Cigars have all stated that cigar production has resumed.

John Oliva Jr. of Oliva Tobacco Company, along with other family members, owns a tobacco processing facility in Nicaragua called Procenicsa, which supplies much of the premium industry with raw leaf.

“Our operations are in Estelí and we have not experienced any violence,” Oliva said. “There have been some adverse effects in regards to the transportation situation in the country due to roadblocks,” Olivia continues. “Though things are tenuous in the country right now we’re obviously hopeful for a peaceful resolution.”

Juan Martinez, president of Joya de Nicaragua, was quick to point out how it is affecting the workers. “But on the human side, workers have had families affected. [And] it is hard for workers to get to and from work. There have been shortages of fuel and access to food. Overall, the biggest effect is moral and emotional; there is a high degree of stress, worry, and uncertainty about the future.”

Martinez gave the last word, for the time being, “We don’t foresee factories closing operations. On the contrary, many companies are increasing inventory and their supply to the United States. Our biggest concern is the safety, security, and well-being of our workers and their families.”

According to Rocky Patel, the situation in Nicaragua and Estelí is bad. He says, “We are having problems getting product out. I just paid a lot more for a container so that we could get them out of Honduras. We are literally taking them out at 3 in the morning and driving them from Nicaragua to Honduras to get them out. That’s what we’ve been doing.”

So even though the cigar industry has been handling the situation in Nicaragua, the rest of the country has not. This, of course, has a negative impact on the overall stability of Nicaragua.

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