Price Fixing by Law is Unbeneficial

With the intention of benefiting producers and consumers, and achieving better crop yields, in Costa Rica the price of rice is fixed by law.

Tuesday, April 9, 2013

According to an article in Nacion.com "a study by the Institute for Research in Economics (ICSI), at the University of Costa Rica, which was requested by the Ministry of Economy, Industry and Commerce (MEIC)." states that "the law fixing the price of rice will not benefit either the consumer or the producer, as intended by the measure, nor will it promote better returns."

The study notes that in recent years, only 33% of farmers managed to get better prices by increasing the quality of rice. By contrast, 67% of rice growers obtained prices below the official price as punishment for poor quality grain.

"... Another goal was to encourage producers to achieve better growth performance. However, there was a drop from the average of 3.79 tons per hectare in 2000-2001 to 3.39 tons per hectare in the rice growing season 2011-2012. This objective, the researchers concluded, was also not fulfilled as intended. ... Overall, the study established that there are no benefits which justify maintaining pricing fixing for this food. "



More on this topic

Costa Rica Will Not Fix Price of Rice

July 2013

The Government is standing firm in its position to eliminate state fixing of the price of rice and aims to organize the cooperative sector.

According to Mayi Antillon, chief of Economy, Industry and Trade from March 2014 the price of rice will be unfixed in order to benefit small farmers and reduce the price for consumers.

Changes to Rice Price System in Costa Rica

April 2013

The National Rice Corporation and the Government have agreed to move towards an alternative to the price fixing scheme.

"It was also decided to establish a process of transition to manage the market and increase productivity in the sector, which should be ready this week," reported Elfinancierocr.com.

Costa Rica: Government Reaches Purchase Agreement with Rice Producers

November 2011

The signing of the agreement between the government, representatives of the rice sector and growers puts an end to the conflict caused by administrative price-fixing.

The new agreement guarantees that 100% of the 2011 harvest (53,000 hectares) will be purchased from rice growers by the industrial sector.

Excess Rice in Costa Rica

October 2011

A decree fixing prices has distorted normal market functioning, and caused overproduction of 19,000 tonnes.

The productive sector, together with representatives from the government agreed that the excess production will be acquired by various distributors.

Leticia Vindas writes on the website of El Financiero "...

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