Agricultural Price Policy and Parallel Markets

Abstract

Agricultural price policy was one of the most important instruments of market intervention in Nicaragua under Sandinista rule. This chapter analyses its effect on agricultural producers and urban consumers, focusing on the development of the domestic grain market ruled by a two-tier price system during most of the 1980s. When the Nicaraguan economy suffered greatly from shortages as a result of being under siege, after the initial years of relative peace, the fragmentation of the food market was exacerbated and by the middle of the decade the whole food system was in severe crisis. It is argued here that agricultural price policy, together with the management and sectoral impact of key macro-prices, was of crucial importance in this process.