- July 18, 2018
- Posted by: saenicsa
- Category: Investments
Have you considered investing in agriculture? The different types of agriculture related investments vary greatly and do not necessarily require for an investor to purchase and be tied to farmland, per se. In fact, in Nicaragua agriculture investments are varied and can take many different forms. Additionally, due to the fact that the country has rich soil, favorable climate and excellent tax incentives to promote agricultural investments, Nicaragua is the ideal country to consider investing in this sector.
In fact, historically the country of Nicaragua has been considered the “breadbasket” of Central America. For Nicaragua agriculture and agricultural investment is a cornerstone for our economy. With this in mind we implore you to consider the benefits of investing in this sector.
Continuous improvements in its infrastructure and business climate have positioned Nicaragua as one of the most attractive destinations for foreign direct investment. Renowned companies, such as Ball Horticultural Company, Kraft Foods, Parmalat, Cargill, Pantaleon Group, AJEGROUP, Nestlé, Walmart, Precious Woods, Futuro Forestal, Ritter Sport, SuKarne and Numar, have established operations in Nicaragua.
Why invest in Agriculture?
Nicaragua has the ideal weather conditions and amount of water resources for a variety of crops. These advantages, along with duty exemptions obtained under the Free Trade Agreement between the Dominican Republic, Central America and the United States (DRCAFTA) and other agreements, offer a wide range of opportunities for the establishment of agro-export operations.
Livestock, Dairy and Meat Products
Nicaragua has the largest cattle-raising industry in Central America, with an annual growth rate of 10 percent in recent years. Estimated milk production in 2012 was 216 million gallons, out of which only 61 percent is collected and 8.6 industrialized, leaving a wide availability of raw material supply for the processing of several dairy products.
With an extensive pasture fed livestock, production costs in Nicaragua are among the most competitive of Central America. In general, Nicaragua is an ideal place to invest in the dairy industry considering the availability of raw material, the cattle raising tradition, and the conditions met under different trade agreements the country has signed for products such as meat, cheese, ice-cream, milk and fluid creams.
Nicaragua’s strategic location in the heart of the Central American market with a population of over 42 million people, its proximity to the Caribbean, North and South America, and its human resources cost and quality advantages make Nicaragua an ideal place to develo p a competitive food industry.
Important companies such as Kraft Foods and Nestlé already have operations in Managua, the country’s capital, which supply the regional market and the Caribbean.
In the food export sector meat, fish and fruits processing, food supply production, such as cookies, instant coffee and rum stand out among other export-oriented processes that can make the most of the availability of local raw material and generous tax incentives.
There are currently more than 3.5 million hectares with forestry potential in the country. It is estimated that Nicaragua has over 19,000 km² of natural forests that are economically valuable and suitable for sustainable management projects. Most of them are located in the Atlantic Region. Also, the country has more than 3 million hectares suitable for timber forestry with commercial value. Among the species suitable in Nicaragua are real cedar, mahogany, pochote, teak, eucalyptus and melina, among others.
There are successful bio-fuel projects in Nicaragua. In the case of ethanol, the pioneer is the San Antonio sugar mill, property of Nicaragua Sugar States Ltd., followed by the Monte Rosa sugar mill, property of Pantaleón Group of Guatemala.
Specialized Incentives for Agribusiness
Current tax legislation emphatically exonerates the sale of agricultural products within the country from VAT (Value Added Tax), which is an indirect consumption tax – lowering the cost to the final consumer.
Additionally, when purchasing or buying equipment, accessories, repair parts, raw materials and so on the VAT tax can also be exonerated, permitting the investor(s) to lower costs and increase profit margins.
When exporting products outside of the country, exporters benefit from tax credits that reduce dollar to dollar their tax obligations, this applies for the agricultural industry as well.