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.
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