Arguing that there are justified reasons to increase the price of pile of rice, in Costa Rica the Alvarado administration authorized a 1.9% increase in the final price to the consumer.
With the increase decreed by the Ministry of Economy, Industry and Commerce (MEIC), the price per kilo will rise from $1.06 to $1.08, for the variety with 20% broken grain, also known as 80/20.
As a pressure measure for the government to decree a 1.9% increase in consumer value, in Costa Rica industrialists have decided to suspend from December 2 the receipt of national grain.
According to businessmen, the price increase is pending since June 2019 and they hope that with this pressure measure, the authorities will publish the decree, in which the value of the kilo is increased from $1.06 to $1.08 for the variety with 20% broken grain, also known as 80/20.
Between January 2015 and December 2016, the average price per kilo of rice imported by Central American countries fell from $0.46 to $0.35.
Figures from the information system on the the Rice Market in Central America, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption="Clic para interactuar con la gráfica"]
The gap gets bigger and industrialists have once again brought the subject up for discussion by asking for a repeal of the decree which since June 2015 has fixed grain prices in the country.
Despite the fact that since 2009 the international price has been consistently below the local price, in Costa Rica the government insists on protecting producers, who are opposed to the request made by industrialists to eliminate the decree which has kept prices fixed since June 2015. The formal request for derogation was submitted in November 2015 by the National Association of Manufacturers in the Rice Sector (Aninsa).
The subsidy given to producers of $7.50 per hundredweight of rice which expired on December 31, 2014 has been extended by the government until June 30, 2015.
From a statement issued by the Institute of Agricultural Marketing:
The Ministry of Agricultural Development (MIDA), through Resolution No. DAL-298-ADM-2014, resolved on 15 September 2014 to give support to rice producers and representatives from mills, with the goal of levelling out sales prices and purchases in this basic category of mass consumption by the population. Industry sources indicated that the government has been asked to provide financial backing to match the sale price of $24.50 per hundredweight of grain, against the purchase price of $17 offered by the representatives from the mills, on the basis of the provisions of the resolution of 15 September 2014.
Instead of liberalizing the price of grain from 2015, the government is considering implementing a gradual deregulation scheme.
In order for the local price of rice to approach the international price, the Costa Rican authorities will substitute, in the first weeks of next year, the decree liberalizing the price of rice and look for "... Another decree which contains a process that allows the price of rice to reach similar (international) levels . "
Estimates are that the poor performance of planted acres and preference for other more profitable crops will generate a sustained increase in rice imports in Central America.
According to figures from the French Agricultural Research Center for International Development (CIRAD) in the last 20 years, "... rice consumption has doubled in the region, while production only reported a growth of 40% and yields per hectare are very low. "
Private banks in Nicaragua will be granting loans to the agricultural sector in order to address the consequences of the drought across Central America.
$383 million in will be awarded loans. Juan Carlos Argüello, president of the Association of Private Banks of Nicaragua (Asobanp) stated that the agreement was made during a meeting with officials from the Central Bank to assess the impact that the lack of rain will have on production and the country's food supply.
The government has announced that it will curb imports of milled rice and will pay a subsidy of 8 cents on the price of 46 cents price at which millers sell a pound of the grain.
The Minister of Agricultural Development, Jorge Arango, said in an article on Prensa.com that as well as buying all local production surplus, they pledge to "... suspend imports of milled rice and retake agreements with the agrifood chain of rice.
Rice producers fear not being able to sell their rice harvest because of the entry of rice from countries such as Argentina, Brazil and Uruguay at much lower prices than local ones.
"At great risk are 60,000 hectares of rice, for which there is no known market for this production because Costa Rica is being invaded by milled rice imports from southern countries (Argentina and Uruguay)," said the new President of the National Assembly of Rice Producers, Domingo González. "
The center-right presidential candidate in Costa Rica says he would mantain the extension on the liberation of rice prices.
The presidential candidate of the Citizen Action Party, Luis Guillermo Solis said that a new government would keep the six month extension that has been ordered on the liberation of the price of rice.
"... The Executive deferred the measure until 1 March 2015 after talking with the sector.
The extension of the deadline for the implementation of the decree that eliminates the rice price fixing mechanism, represents a transfer of $75 million from the pockets of consumers towards the rice sector.
For years other countries have criticized the pricing of rice in Costa Rica considering it a subsidy and violation of defined limits.
" ... The maximum allowance agreed for the sector is $15.94 million per year but for 2013 it has been estimated at $75 million. Violation of the agreement is grounds for a complaint, which could attract sanctions against Costa Rican exports from some partners."
The National Rice Corporation is calling for the system of price regulation that protects domestic production while keeping consumer prices high.
Representatives of the National Rice Corporation (Conarroz) asked the Government to repeal the provision that any regulatory system to determine the price of rice will be eliminated this year as established by a decree issued in May.
Producers and manufacturers have agreed to set the price at $21 per quintal of rice for 2012.
Following negotiations between producers and millers, the parties agreed to a price of 400 lempiras ($21) per quintal of rice which will run until next year. This price represents an adjustment of 50 lempiras ($2.62) compared to the price paid in 2011 (350 lempiras- $18.37).
Consensus between producers, industrialists and government officials is paving the way towards ending the legally fixed price of rice in Costa Rica.
Rice liberalization will take place over the coming months, by means of an executive decree. The first step will be to release the value that the miller pays producers and after a few months (in which the stock bought at higher prices will be consumed), consumer prices will be released.
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