With the loss of protective import tariffs, most Central American farmers have no chance of competing with the US government-subsidized agricultural sector. For example, economist and CAFTA specialist Adolfo Acevedo explains that farmers in the Sébaco Valley of Nicaragua can produce rice for about $8.45 per 100 pounds, while US farmers produce the same amount for $9.40. According to Acevedo, this should imply a comparative advantage for Nicaraguan farmers. However, due to government subsidies, US rice enters the Nicaraguan market at the artificially low price of $7.65 and beats out domestic producers. Rice and corn, two of the most heavily subsidized U.S. crops, have flooded into Central American markets as a result of DR-CAFTA. Between 2006 and 2007, rice exports to the region rose 31 percent, while corn exports rose by 36 percent, according to the US Department of Agriculture.

Nevertheless, DR-CAFTA enthusiasts argue that Central American farmers can gain through the production of “specialty products” – fruits, nuts, and other goods not produced in the United States – for which the region would have a comparative advantage. However, the vast majority of Central American farmers do not have the capacity to trade these products on the international market. Small to medium-scale producers, a category that includes about 80 percent of farmers in countries like Nicaragua, are unable to produce such product lines on a large enough scale to compete in the export market or to comply with strict sanitary standards imposed by U.S. regulations. According to Matilde Rocha, a Nicaraguan activist, “the producers of specialty products are [often] too small to export individually and they lack knowledge about the rules of the market and trade regulations.” Thus, most of these farmers are forced to either sell their products to intermediary export companies (which skim off most of the profits) or to sell their land to large-scale agro-businesses.

This has led to the concentration of the food export industry into a very limited number of hands. In Nicaragua, 70 percent of the country’s export earnings go to a mere fifty businesses that possess the facilities and capital to take advantage of trade with the US. To cite an example, only one dairy processing plant in the entire country has the capacity to pasteurize milk according to USDA standards, and that plant is owned by a foreign dairy conglomerate, Parmalat. Thus, while Central American economies may have experienced a moderate amount of growth over the past few years, the benefits of U.S. trade are being reaped by only a select few, causing economic inequality to sharpen throughout the region.