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Agricultural plan has its ups and downs

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Agricultural plan has its ups and downs
By Dennis Rogers
For The CAFTA Report


The spike in global food  and petroleum prices in 2007 and 2008 along with a general world trend to convert food resources to biofuels worried Costa Rican authorities enough to result in the Plan Nacional de Alimentos, a blueprint for self-sufficiency in basic foods. In some respects it was a success, with rice production near short-term targets.

The plan was meant to last to the end of the Oscar Arias Sánchez administration and is under review by the new president. Complaints to the World Trade Organization by other rice producing countries including the United States, Canada, Australia, Pakistan, Thailand, and the European Union are influencing the plans of president Laura Chinchilla and her agriculture ministry.

Even though prices have fallen somewhat from 2008 highs, the overall concern about self-sufficiency remains. Rice on international markets is still twice as expensive as at the start of the decade, and black beans remain high. Research on improving local yields continues.

The highest priorities of the plan were a short-term reduction in the dependence on imports that characterized the period just before the price jolts. At that point, the country was producing about 50 percent of its rice consumption, 23 percent of white corn, and 22 percent of beans.

Also on the agenda is to find some sort of substitute for yellow corn and sorghum imports used in animal feed. Presently, 100 percent of those products are imported.

Targets for 2010 were 80 percent of consumption for rice, and 70 percent of consumption for beans and corn. The rice numbers were actually for a two-year plan. Both production and domestic consumption numbers in the plan were very low. Anticipated consumption was 223,000 tons, and for the 2010-2011 season, production should be about 270,000 tons which is still under 80 percent of consumption. That is according to figures from the Corporación Nacional Arrocera. Dry bean consumption is calculated at 44,000 tons.

White corn of the sort used for tortillas wasn’t much affected by the program. Tortillas aren’t nearly the important cultural item as further north in Central America. Consumption was anticipated at 70,000 tons.

For the staple grains, a variety of subsidized loans, insurance, free- and reduced-price seed and long-term research made up the plan. The long-standing policy by the ministry of commerce of setting rice prices at cost plus a margin was held over, eventually running up against World Trade Organization limits on that type of subsidy.

In contrast to the orderly success in meeting rice targets, 2010 has seen near chaos in the bean market. Increases in production were at high cost, making Costa Rican beans uncompetitive. Authorities used bogus sanitary standards to reduce bean imports from Nicaragua which resulted in that country also closing its border. Losses of perishables headed north from Costa Rica to other Central American countries were substantial.

Free seed given away as part of the plan resulted in high production in traditional areas in the southern zone especially. By April extra production the result of the agricultural plan was languishing in warehouses because the growers demanded the 35,000 colons per quintal (a 46-kilo sack) the Consejo Nacional de Producción had put as a reference price when imports only cost 25,000, according to news reports at the time.

Eventually a decree by the executive branch attempted to force local packers to buy the domestic production in order to participate in imports, but this was not functional as it only made red beans less competitive versus black beans from China. The free trade agreement with Nicaragua makes no provision for quotas or import substitution either.

In the end, disruption of Nicaraguan production caused by heavy rains resulted in that country without supply also, and everyone in the isthmus has been forced to seek supplies elsewhere.

Especially in the case of the extra rice, the plan anticipated processing capacity would be inadequate, and recommended the rehabilitation of silos and dryers owned by the Consejo. Some of this infrastructure was 60 years old, and as typical of that agency, was not available when needed. This provoked a serious bottleneck of drying capacity when the rice harvest in the middle of 2010 was above and beyond what the plan said it should be.

Sales of the trademark Cacique cane liquor which comes from the Consejo’s monopoly distillery have fallen recently, and salaries now make up 90 percent of the agency’s budget. This leaves no money for investments. The plan includes other anti-poverty efforts that have been articulated elsewhere, primarily payments to families who keep children and adolescents in school.

Contact us here: Editor@TheCaftaReport.com




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