By Dennis Rogers
For The CAFTA Report
(Sept.23, 2010) Rice is a staple of the Costa Rican diet and is a sensitive subject in
trade talks. Potentially, production could be high enough for national
self-sufficiency, but at a substantial cost to either the national
budget for subsidies, or the pocketbooks of the poorest citizens, if
exports are excluded.
The business of rice in Costa Rica is complicated by price controls at
wholesale and retail level; price supports, subsidized loans and, in
some cases water, for growers, import duties and quotas and
infrastructure limitations. A well-organized growers’ bloc defends its
interests with a pliant regulator.
Most rice in Costa Rica is dry-land production, with some paddy rice in
Guanacaste and the northern zone. Production is scattered around the
rest of the lowlands, with concentrations around Matina near Limon and
the area near the Panamá border on the Pacific side of the
country.
Rice and the potential impact of subsidized imports from the U.S. was a
major point in negotiations for the Central Aemrican FreeTradeTreaty.
For opponents of free trade in general, the sentimental defense of
Costa Rica’s small growers against competition from international
agro-business was a approach with great appeal to the electorate. Pro
free-trade elements hardly attempted to get beyond this myth and push
the benefits of cheap imported rice to the poor.
Rice is totally excluded from Costa Rica’s free-trade agreement with China.
Given the proportion of the population that subsists mainly on rice and
beans, the price of those staples has important social implications.
EAch Costa Rican each year eats on average more than 50 kilograms,
accounting for 22 percent of total calories, according to the U. N.
Food and Agriculture Organization. In the Americas, only Surinam,
Haiti, and Panamá get significantly more calories per capita
from rice.
Reaction to price spikes related to the economic crisis of 2008 lead
the central government to embark on a program to increase
self-sufficiency in the production of basic grains. The Plan Nacional
de Alimentos was the result. The plan’s goal is to increase national
production to 80 percent of consumption.
Recent years have seen national rice production down to 50 percent of
consumption with the remainder made up by imports, according to figures
from the Corporación Arrocera Nacional.
Conarroz describes itself as a “public, non-governmental agency.”
As recently as 2007 production was at 155,000 tons, down from 266,000
in 2001. The 2006 crop was affected by El Niño weather
conditions with drought in Guanacaste. Low international prices at that
time also affected local production.
Government price supports and favorable interest rates have lately
resulted in considerable land converted from cattle ranching to rice,
according to Minor Barboza, chief of operations for Conarroz. Climatic
conditions have also been good.
Depending on the area planted during the second cycle that runs from
January to June, the harvest should be about 270,000 tons for the year
that runs from July 2010 to June 2011, Barboza said.
The 270,000-ton figure for 2010-2011 will be nearly the 80 percent of
consumption sought by the government plan. At present there is a 35
percent duty on imported rice until the local supply is exhausted, when
it drops.
The national plan for rice foresaw that processing capacity was
inadequate for the 80 percent level, and recommended the rehabilitation
of old driers and silos belonging to the Consejo Nacional de
Producción. This did not happen in time for the quick increase
in production, with private investment also inadequate. Most processing
capacity in the country is in private hands.
The bottleneck has been with drying the grain not storage. Barboza said
Conarroz and the industry have been taking measures to avoid heating
and spoilage. To some extent rice can be aerated still in the truck,
while waiting at the processing plant. Spoiled grain will end up as
animal feed.
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