What is happening at Sisa Exportadora, why have the police taken over its facilities?

A month after Mercon Coffee Group filed for bankruptcy protection in the United States, uncertainty is growing among customers of Sisa Exportadora, its representative in Nicaragua, which sold about half of each coffee crop abroad. In addition to the lack of information about the future of the business, police officers occupied the company’s offices and benefits several days earlier. It is unknown whether the seizure is part of the intervention process requested by Lafice Bancentro as a creditor, or if it was carried out by the State under the pretext of meeting the company’s commitments.

Due to the depletion of lead exportadora reserves in producing areas, small producers are selling their crops to other middlemen who traditionally buy the grain in grapes or in barns and then resell it. On the other hand, the medium and large companies that contracted with SISA contracted the drying and classification service for other benefits to prevent damage to the quality of their crops.

However, the major problem facing both middlemen and medium and large producers is finding buyers abroad, as coffee is exported through future contracts that were already signed before the beginning of this crisis.

Other related topics: “It mainly affects small producers.” Concern in coffee producing areas due to closure of Sisa Exportadora

CISA officials do not respond

By filing for Chapter 11 of the United States bankruptcy law in early December, Mercon Coffee Group was to continue operating normally in the nine countries where it has operations. Even in Nicaragua he asked his employees to remain in their jobs. However, the group’s representatives again did not show their faces, so four thousand to six thousand of the more than forty thousand producers registered in Nicaragua came into contact with middlemen, who took advantage of the situation to charge lower prices or even lower prices. Are. Advantageous conditions.

But due to the complete silence of the Sisa Exportadora officials and the fear of crop failure, in most cases they had no option but to accept the meager offers made by the middlemen. LA PRENSA tried for several days to obtain information about the company’s situation and its future plans, but company representatives did not respond to our questions.

Businessmen involved in grain production and export, who requested anonymity for fear of reprisals, say the cessation of operations for CISA benefits their customers, however, this is not the most serious problem, because in the producing areas Adequate installed capacity to process grain. They even comment that the step of the process that requires the most infrastructure is drying and that the lead does not own all the patios used for this process, but rather owns them during each season. Rents out to neighbors for profit.

Also read: What is Chapter 11 that Mercon filed for and what happens after it is declared bankrupt?

Will they find buyers for the coffee?

They assure that the really serious problem at the moment, when a large part of the crop has already been harvested and processed, is to find buyers in the international market. One of them says, “The only way to get them is to get in touch with the coffee buying houses which are mainly in the United States, we have to see if the exporters have those contacts or do they just need to lead Was maintained by.” Exporters were consulted.

Another grower points out that in the absence of the lead exportadora, middlemen are buying more coffee from small producers. But the situation with medium and large producers is more complicated.

At the beginning of this crisis, Profit refused to receive coffee laced with lead. They assumed that the company had paid for this production in advance, because the company had provided what they called authority, technical assistance and resources for the agricultural work done during the year on the plantation and this financing was repaid with the harvest. I went. But when they noticed that no executive or owner of that company showed their face again, they started to get it, because not drying and processing the coffee within the established time has a negative impact on the quality of the grains.

You can also read: Four national banks among Mercon’s creditors that declared bankruptcy

Middlemen are in danger from this coffee

Now, in exchange for paying the fee they charge their customers, coffees that agree with Seesa get a number of benefits. They dry it, process it and also classify it in other cases. However, because they are new customers, it is difficult for them to get these benefits to help them export grains, so they are looking for buyers themselves.

So the big uncertainty is who the middlemen and growers who are looking for a market for that part of the crop that could account for half of the entire production are going to sell the coffee to. That is, up to 1.50 million quintals, as exports have exceeded three million quintals in the last production cycle.

“What happens is that in this coffee business the contracts are already signed, so the question is what are these people doing to find buyers. This situation forces them to accept the prices charged by middlemen and even other buyers, because the important thing is not to lose the crop,” counseled one of the growers.

You can also read: He proposes that creditors of Sisa Exportadora intervene in the company and restart operations to avoid a coffee crisis

Police take over lead facilities

Furthermore, the producer explains that “although the international price is around $200 per quintal, people who buy this coffee have to pay less because they take a bigger risk. What if they don’t find buyers? If they don’t manage to sell it, they will lose a lot of money, because if they get a contract to sell it next year, that coffee will be left over for the next harvest and they will have to pay the warehouses to keep it. Stored for several months and they can even pay them when they sell it. Low price because it is the remains of the previous crop,” he explains.

While the manufacturer makes several efforts to mitigate the damage caused by the cessation of operations of Sisa Exportadora, police officers continue to occupy the company’s profits and offices, it is not yet known whether the police presence constitutes an intervention. Part of the process. That may be the result of a ban that was promoted several weeks ago by Lafice Bancentro, a banking unit that is Mercon’s main lender locally.

There are also fears that interference has been promoted by the Nicaraguan state under the pretext of guaranteeing compliance with the company’s obligations to its local and international customers. However, there has been no official statement on the action even four days after the seizure.

You can also read: From the bankruptcy of Sisa to the freezing of Cordoba today. These are the events of 2023 that will blow away 2024

debt that led to bankruptcy

The inability to repay $363.34 million in debt led to the financial disaster, according to Mercon Coffee Group’s filing in early December in a New York federal court for Chapter 11 of the bankruptcy law.

The group’s largest creditor is the Dutch Rabobank facility, which owes Mercon $202.25 million, part of a $500 million revolving credit line. Most affected locally is Banco Lafice, which owes $26 million.

The list of local creditors also includes BAC Nicaragua and the Bank of Finance (BDF), which are each owed $2 million, and state-owned Banco de Fomento de la Producion or Proproductomos, which is owed $4.5 million. . Which are secured by active fixed funds according to official documents.

You can also read: The Ortega regime has reacted to the bankruptcy of Sisa Exportadora and said it will bring it into compliance with its commercial and financial commitments