Due to the high geographic concentration of global production, Central America has increased its imports, but at the same time has become more vulnerable to crop losses, rising international prices and possible disruptions in supply chains.
The importance of the market for this type of food is that rice, wheat, corn, beans and soybeans are basic foods on which the world's population largely depends, since it is estimated that almost half of the calories consumed by people come from these foods.
Taking into account the projected demand, it is expected that in the 2016/17 cycle the region will have sufficient but below average maize supplies and a slightly above average surplus of beans.
From the report "Regional Supply And Market Outlook Central America", by the Famine Early Warnings Systems Network:
This report summarizes the supply and market outlook for white maize grain, dry beans, and rice in the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua for the 2016/17 marketing year. Production and marketing in Mexico, an important source of dry beans and maize, are also discussed. Regional production for the 2016/17 marketing year (through July 2017) is expected to be average (Figure 1). Taking projected demand into account, the region is expected to have belowaverage, but sufficient maize supplies and a slightly above-average bean surplus. The region will maintain deficit in rice (Figure 2).
Except for cereals, in August prices rose for all commodities covered by the FAO food price index, led by dairy, oils and sugar.
From a statement issued by the Food and Agriculture Organization:
The FAO Food Price Index* (FFPI) averaged 165.6 points in August 2016, up 3 points (1.9 percent) from July and almost 7 percent above the corresponding period last year.
Behavior and price trends in production of white corn, black and red beans, wheat and rice in Mesoamerica and the Caribbean in June 2016.
From the Regional report on the Basic Grains Market in June 2016:
In Mesoamerica and the Caribbean in May 2016 white maize prices showed stable trends compared to April 2016, despite declining regional supply due to the completion of harvests and reduced inventories from 2015, but these were offset by world imports.In beans, stable prices were observed, not greatly affected by the losses in Apante and with a slight reduction in prices in Costa Rica and Mexico.In general, black bean prices have been favored by imports, and the use of substitute products as in the case in Haiti. Rice prices have remained stable in most countries, except Haiti where there was an increase due to the depreciation of Haitian local currency.
The Colombian government has reduced tariffs to 0 on imports of lentils, beans and garlic, and suspended the price band for crude and refined oils.
From a statement issued by the President of Colombia:
The National Government has approved a reduction to 0% on tariffs on the import of lentils, beans and garlic, and has temporarily suspended the price band for crude and refined oils, which will ease the cost of the food basket for Colombians during the first half of 2016.
Producers in Costa Rica must further improve their productivity if they want to compete with the low prices offered for the same product internationally.
Currently a quintal of the grain sells in Costa Rica for around $40, whereas inside the Costa Rican market producers are trying to sell their harvest for $60, arguing that industrialists are offering them at lower prices in order to buy their production.
The drought that affected in 2014 has worsened this year, threatening shortages of basic foodstuffs.
An article on Nacion.com reports that the director of Agricultural Extension of the Ministry of Agriculture of Costa Rica, Felipe Arguedas said "... We are very concerned because two years of drought are joined together; we believe that 2015 will be worse than 1997, which was the driest year recorded so far."
Costa Rica and Honduras are the countries with the highest rates as of July 27th, 2014 for red beans, costing $2,133 and $1,695 a metric ton, respectively.
The shortage of beans has raised prices across the region and all countries have been forced to authorize emergency imports in order to supply markets.
After Costa Rica and Honduras, as reported by the Agricultural Council (CAC) "...Guatemala is in third place, with $1,615 a metric ton (MT) and then Nicaragua with $1,609.35. The lowest prices were quoted in late May in El Salvador, with U.S. $1413.04 MT.
In Nicaragua, the largest producer in Central America, the price of a metric ton increased from $602 in May 2013 to $1676 in May this year.
Of the 'seda' variety of red beans, the countries with the largest price increases are El Salvador and Nicaragua, with increases of 80% and 178%, respectively. Guatemala reports a 130% increase in the 'rojo tinto' variety of red beans, according to the Agricultural Council (CAC).
In order to meet internal demand the country needs to purchase 200 thousand tons of black beans, therefore it has temporarily removed import taxes on the grain.
According to the Minister of Agriculture of Brazil, Antonio Andrade, the Government has decided to temporarily remove tariffs applied on the import of the grain, with the goal of guaranteeing supply without pushing prices higher.
It is estimated that domestic production will not cover domestic demand due to drought forecast for this cycle, so the government will increase the import quota of the grain by 50,000 tons.
Official counts estimate that domestic production will be insufficient to meet domestic demand, given the drought forecasts for the next cycle, so the Ministry of Economy of Mexico has decided to increase import quotas for beans.
The Mexican Ministry of Economy has announced the extension of the validity of the import quota of 100,000 tons of beans during the year 2012.
A press release from the Ministry of Economy reads:
This decision is due to the availability of beans being affected by drought in the north and will contribute to stabilizing the price of this product, which has been experiencing increases in recent weeks, according to information from the National Market Information System (SNIIM in Spanish).
Damages to crops caused by recent rains will force the region to import beans again this year, just as in 2009 and 2010.
Nicaragua, Central America's main red bean exporter has stated that it will struggle to export beans to the rest of the region due to the climatic conditions that have affected its crops. Approximately 560,000 'manzanas' (40,000 hectares) have been lost.
The country has already seen 180,000 hundredweight of beans arrive on its shores this year, 40% more than in the same period in 2010, which has stabilized prices.
On April 20, 75% of the 90,000 hundred weight bean shipment will arrive, which have been purchased from China, according to Guillermo López Suárez, head of El Salvador's Agriculture and Farming Ministry (MAG in Spanish). The rest is due at the end of the month or the beginning of May.