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Growing Nicaragua

Despite Dictators, Revolution, War and, Last Fall, Hurricane Mitch, Tobacco Men in Nicaragua Keep Planting and Rolling
Alejandro Benes
From the Print Edition:
Orlando Hernandez, Mar/Apr 99

(continued from page 4)

With a population of about 100,000, Estelí now has four auto dealerships, which sell mostly four-wheel-drive vehicles, a dozen private banks and seven new hotels. Unemployment in Nicaragua has fallen significantly in the Estelí valley and other tobacco regions, and that heartens Mario de Franco, Nicaragua's minister of agriculture.

"Tobacco is what makes a city like Estelí, a city like Ocotal," he says. "This represents the life of all these zones through all the indirect implications which it has. Estelí is one of the most prosperous cities in Nicaragua because of the tobacco industry. It represents the modernization of the city."

De Franco calculates that for each job in the cigar industry--in the growing and processing of cigar tobacco, plus the making of cigars--three jobs in other sectors are created. He notes that the cigar-industry worker makes a higher salary than many Nicaraguan doctors, accountants and teachers.

"A teacher in Nicaragua, and it's ridiculous, earns about $60 a month," de Franco says. "In the tobacco industry, the salaries are around $180 a month." (Martinez at Tabacos Puros de Nicaragua disagrees, saying that the disparity only occurred during the boom and has since leveled off.) De Franco asserts that Nicaragua has 14 cigar companies and that the industry is responsible for the equivalent of 15,000 permanent jobs. Despite the official weight of the figures, there are doubters.

Martinez believes that statistics about the tobacco industry in Nicaragua are highly unreliable. "Nobody tells the truth," he says over lunch at the Hotel Moderno in Estelí. Jose and Jorge Padrón are listening and laughing. "This is a sector--I've been in coffee, in sugar, in oil--where the producers all try to fool one another. I don't know why. I don't understand the psychology of the industry. They never tell the truth. 'No, I'm producing a hundred, four hundred' they'll say, even though they're going broke. [Jose] Padrón is the exception." Padrón laughs.

Back at the factory offices, Martinez continues. "We launched a campaign from here to try to gather all of us fibbers to see if we would stop lying" with respect to the size of the industry's workforce. "We finally calculated that during the boom there were between 10,000 and 12,000 workers in field and factory. Today, we figure between 5,000 and 7,000." He's using a calculator as he concludes that the number of permanent, full-time workers is roughly 4,000, which he says is nearly 1 percent of the nation's full-time labor force.

This is Cuba!" Nestor Plasencia exclaims as he savors a cigar wrapped with this year's Habana 2000 leaf, which has begun to develop strong notes of flavor since the first tests began. "Everybody wants it. In two years this will be it." Plasencia has 400 workers at his Estelí factory; he also has factories over the border in Honduras. He divides his time between the two countries.

The Estelí factory, Segovia Cigars, produces 20,000 cigars a day. The factory resembles a Spanish-style manse, complete with a fountain in the courtyard and stained-glass windows, and is referred to as "The Cathedral of Cigars" by other manufacturers. Finished in 1997 as a joint venture with Danneman, the Swiss tobacco company that was starting to make handmade cigars, the factory is intended as a showcase where Danneman can take distributors and buyers and demonstrate a seriousness and long-term commitment to premium cigar making. The "cathedral" is a copy of the Danneman factory in Sao Felix, Brazil.

Plasencia, who has been marketing his own label for 15 years, has made it big in the cigar business principally as a manufacturer of other companies' brands. Plasencia still does a significant amount of that kind of business, but not like he did in 1997, when his factories produced approximately 50 million cigars.

"Comes the boom in 1994, and in 1996 and 1997 the boom really goes crazy," Plasencia says. "We really thought that was something that could not continue. For example, Estelí used to be visited daily by a ton of people who wanted to buy cigars. Not wanting to buy a box of cigars; [they wanted to buy] 100,000, 200,000 cigars. There was a large proliferation of factories--20 factories opened here--some put up by people who had been involved in tobacco, but many by people who had no experience. People would buy cigars at whatever price, no matter the price. It was something we had never seen before.

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