Here is a little perspective on the skewed cost of living here that might be of interest to you economy buffs. Yesterday we bought a dozen large limes for 5 Cordobas. We also bought a reliable fan (which hopefully won’t break in four days like our other fan) for 800 cords. In other words, in Nicaragua a fan is 160 times the cost of a dozen organic limes. Imagine how many limes a Nicaraguan family would have to sell to buy a fan. In the U.S., I imagine that a large, organic lime is about $0.50, so a dozen would cost $6 and a decent fan is about $40. That means that a fan in the U.S. is less than 7 times that of a dozen limes. So why is it that a Nicaraguan lime farmer might be interested in leaving his country to work in the United States? 
Perhaps to buy his family an imported U.S. manufactured fan in the same market where he used to sell his limes so that they can sleep through 85-degree heat at night... in the winter. Instead of leaving his family and country, why wouldn’t the lime farmer just sell his limes for more? Then he could earn more money for his family and buy lots of fans, thus putting more money into the Nicaraguan economy? Because right around the corner is a store called La Union. The lime farmer has to compete with the lime prices at La Union and it just so happens that La Union is owned by Walmart. La Union has the option to sell local produce, or to sell produce from the U.S. which has been subsidized and shipped away in order to keep the lime prices high in U.S. Walmarts (of course they choose which ever is cheaper at the moment). I should mention that this is theoretical; a conclusion we have drawn from our lime and fan purchase yesterday and the fact that limes currently cost 6 Cordobas a bag at La Union. *The exchange rate is approximately 20 Cordobas to 1 dollar
2 comments:
Interesting, but don't you think limes are cheap because every other family has a lime tree in their yard? Also, limes are more expensive in the US because they can only be grown seasonally in part of the country which leads to high transportation costs. I'd have to check, but I would imagine that the US is a net lime importer.
I hate it that you guys turn me into a supply-side economist. I swear I'm not normally like that.
There's some truth in that, I suppose. But in spite of the great supply, limes wouldn't be as cheap if predatory Wal-Mart wasn't invading Nicaragua.
Garrett
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