The government has announced preparations for the purchase of food abroad to minimize the impact that drought has had on grain crops and their prices in the local market.
The Ministry of Agriculture, Livestock and Food (MAGA) has announced that reserves established by the authorities will be sufficient to meet demand in September, but in October imports will be necessary.
Industrialists say prices will keep rising due to shortages caused by the impairment of entry of shipments of red beans from Nicaragua and China.
The shortage of grain in the region and phytosanitary controls which have blocked the entry of shipments of Nicaraguan beans which have traces of soil on them is affecting prices in the domestic market, which have already risen about a dollar per kilo since the first import was stopped in February.
Due to a reduction of local production because of drought, the government has authorized, for the second half of the year, an increase in tax-free imports of red beans, rice and corn.
In the case of red beans, an additional 10,000 tons has been approved on top of the 20,000 authorized in June, while for rice the quantities will be defined in the coming days.
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.
The government plans to create, using the 2014/2015 harvest, a strategic reserve of beans to try to influence the market during the season of high prices.
The proposal which emerged under the Funes administration but never came to fruition could be implemented in the next season, as announced by the Ministry of Agriculture.
"The ministry does not need a law to establish a strategic reserve of beans.
Industrialist point out that the declaration of shortage of grain by the government has failed to solve the problem in the local market, where the price of a kilo has increased by $1.
The National Association of Manufacturers of Beans in Costa Rica (Anifri) argues that the change in the verification of phytosanitary measures by the Ministry of Agriculture is the cause of the grain shortages and price increases in the country.
The government has authorized the purchase of 9000 tons of red beans without tariffs until 31 October.
The permission granted by the Council of Ministers for Economic Integration (COMIECO) to the government of El Salvador will be valid until 31 October for the acquisition of up to 9000 tons of red beans from countries such as Colombia and Mexico.
Fourteen companies have been authorized by the government to acquire 11,264 tons of duty free beans from abroad.
Four of the fourteen companies will be allowed to buy up to 68.7% of the total, the equivalent of 7,739 tons. The declaration of a shortage by the government establishes that grain can be imported from anywhere in the world without paying entry tax of 30% for black beans and 20% for red beans.
The government will control 95% of the 20 tons of red beans that have been authorized for duty-free purchase from any country which is a member of the World Trade Organization.
The remaining 5% will be distributed "... on a first come, first serve basis, until the available volume of each quota runs out," says ministerial agreement 025-2014 as reported by Laprensa.com.ni .
The Costa Rican agribusiness sector has indicated that a phytosanitary law is being interpreted without technical or medical reasons to support the rejection of the entry of 100 containers of Nicaraguan beans.
The National Association of Bean Manufacturers (Anifri) insists that the Ministry of Agriculture should review the Phytosanitary Act and reconsider the way in which they are exercising controls on grain containers entering from Nicaragua, a country from which most of the beans consumed in the country are imported.
The Government is analysing whether to declare a shortage of beans and authorize the entry, of zero tariff grain from countries outside of Central America.
A study which quantifies purchase inventories that industrialists have made to local producers, will be used as a basis for the National Production Council (CNP) to determine the amount and type of grain to be imported and recommend to the institutions responsible whether they should declare a shortage. Once the declaration has been made and in accordance with the Act 8763, there would be no tariffs applied on the import of beans from countries outside of Central America with countries which have international treaties that are in force.
In order to ensure supply for the domestic market, the government has announced that it is negotiating grain imports from Colombia and Ethiopia.
Given the reduction in the harvest in the months of December 2013 and January 2014, the Government of Honduras has announced that it will resort to importing beans as part of a strategic plan to ensure supplies in the coming months.
Businessmen are complaining about a shortage of the grain in the market due to stricter phytosanitary measures designed to prevent the entry of beans with soil residues on them.
The National Chamber of Industrial Crops (CANINGRA) and the National Association of Bean Industrialists (ANIFRI) have separately warned that there could be supply shortages in the short term if the measure preventing the entry of products with soil residues coming into the country remains. In February and May the entry about 2,000 tons of red beans from Nicaragua was prevented for having breached this rule.
The rise in price in a market with short supply is the reason for the suspension of three months of the granting of export health certificates for the 'seda" variety of red bean.
From a statement issued by the Ministry of Economy (MINEC):
Joint Action Plan to counter rising prices in beans.
In the framework of its powers and the joint action of the National Consumer Protection, the Ministry of Agriculture and Livestock (MAG), the Ministry of Economy (MINEC) and the Consumer Advocate, have activated a joint action plan which will be effective from Thursday May 15, containing dissuasive and contingent measures against the rising price of beans which has been seen in some markets in the country.
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).