A change of minister in Costa Rica will aid in increasing the cost of sugar via an import tariff hike, harming consumers and the food industry, and increasing protection for the powerful sugar lobby.
The decision taken by the new chief of the Ministry of Economy reflects a clear interest in meddling in a process that should be resolved at a technical and non-political level.The decision to declare whether or not dumping occured in a particular market and what measures should be taken in response, corresponds to the office of Trade Defense, and should be free from any possible political bias.
The Ministry of Economy has decided to impose a new tax of almost 7% on sugar imported from Brazil, in response to a lawsuit brought by the union of local producers.
With this new protectionist measure the government is trying to put an end to a conflict that arose in 2015 between the Agricultural Cane League (Laica) and the importer Maquila Lama, when this company denounced a proposal to amend the regulation on sugar fortification claiming it attempted to restrict trade of imported grain.
The union of producers has estimated crop production for 2016/17 at 12 million hundredweight, slightly above the results seen in the previous season.
Of the total that the Association of Sugar Producers of Honduras (APAH) estimates will be produced, 70% will go to the local market, and the remaining 30% will be for export, from which it is expected that $100 million will be earned.
A study requested by the union will determine how sugar profits should be divided between producers and industrialists, providing information for a law reform.
The information derived from the study, which according to the Salvadoran Sugar Industry Council, is being undertaken by the FAO, could solve part of the conflict over the distribution of profits between manufacturers and producers.
In October 2017 production limits and the "out of -quota" production concept will eliminate for the manufacture of biofuel and industrial non-food products.
The current production quota for sugar according to the European Common Agricultural Policy (CAP), which applies to the 28 countries in the bloc, is 13.5 million tons per year.The production capacity of sugar producers in the European bloc is higher than the quota, therefore eliminating production limits will lead to a lowering of prices due to excess supply, similar to what has already happened in the milk market following the elimination of production quotas.