Imports of husked rice grew by almost 200% between the periods 2011-2012 and 2015-2016, and even when paying a tariff of more than 35%, imports easily compete with the subsidized local product.
The competitiveness of imported rice is such that"... it is estimated that for the current period (1 July 2016 to 30 June 2017), purchases will reach 54,000 tons.That is almost three months consumption, in that presentation alone."
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).
In 2016 scheduled tariff reductions for rice imports begin as part of the DR-CAFTA, posing a threat to local producers.
Nicaraguan rice producers have pointed to the efforts made by the sector to achieve self-sufficiency in supplying the local market, and report that the main competitor unleashed by this tariff reduction is the US which they point out subsidizes rice production.
The subsidy of $190 million paid by consumers "will not primarily go to producers but to large industrial companies which process domestic crops and who are, at the same time, importers."
In his blog on Elfinancierocr.com, Juan Carlos Hidalgo discusses the singular phenomenon that occurs in Costa Rica, where the rice policy initially intended to protect small rice producers, has become an unjust wealth transfer mechanism between sectors of society.
The state has reduced insurance premiums for crop insurance for rainfed rice to $224, $197 and $149 per hectare for areas of high, medium and low risk, respectively.
Although the premium reduction is partly due to the request made by the rice sector, the reduction is not enough according to producers.
Carlos Chaves, president of Conarroz, told Nacion.com: "...
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. "
Denouncements have been made over distortions in the rice market where a supermarket chain and four other major players are on the receiving end of benefits from a perverse price fixing system.
An article in Nacion.com reports that former President of National Assembly of Rice Producers notes that these market actors, whose interests would be seriously affected by the liberalization of grain prices, "...
The next Minister of Agriculture talks about subsidies to "the others" and "unfair competition", but not about the dramatic differences in productivity between Costa Rican rice producers and those "others".
The appointed Minister of Agriculture, Luis Felipe Arauz, has announced that he will review - in order to extend- the deadline set by the outgoing government to liberalize the price of rice.
A request by the National Rice Corporation for a protectionist trade measure is being analyzed by the government.
The Costa Rican government is discussing the possible application of a safeguard measure on imports of rice from Argentina and Uruguay. The measure was requested by the National Rice Corporation (Conarroz).
"The review process has been started and now we will wait and see.
The Costa Rican government has informed the WTO that from March next year it will cease the pricing system by which domestic rice producers are subsidized.
From 1st March 2014 rice subsidies will be removed, which could end the dispute with the U.S. and other WTO members on account of aid given to rice farmers.
In a statement that the Government of Costa Rica sent to the World Trade Organization (WTO), the country said it will eliminate aid for rice farmers through a decree approved last month.
In the past four years, the number of farmers engaged in rice production increased from 743 to 1,200, drawn by a fixed price system which in 2011 was covered by a subsidy amounting to $104 million.
The recent judgment by the Administrative Court annulling a presidential decree and ordering an increase in the price of a 73 kilo bag of rice to almost $49, confirms the wisdom of farmers who switched to growing the grain, confident that the subsidy levels would continue at astonishing levels, despite protests from other countries, the opinion of the World Trade Organization (WTO), and consumers of a product based on the local food basket, who pay one of the highest prices in the world for rice.
In Costa Rica, the current mechanism mainly benefits 30 large producers, who received $80 million in subsidies in 2011.
Despite warnings from the WTO, Costa Rica continues to subsidize rice production, a benefit which actually goes to about 30 large companies, rather than groups of small producers, and is "an unnecessary risk" according to the former Foreign Trade Minister Alberto Trejos, who added that "it is like going to the Country Club in Escazú to hand out Family Allowance resources."
In the last 5 years the pricing system in force has transferred more than $390 million from the pockets of consumers to rice producers.
A statement of the Ministry of Commerce reads:
Rice sector subsidies in excess of $100 million for the second year
San Jose, May 8th, 2012. Today Costa Rica reported to the Committee on Agriculture of the World Trade Organization (WTO) that subsidies on rice in 2011 reached $104 million, which exceeds by more than 650% the annual amount permitted under the WTO’s Agreement on Agriculture.
The Government of Costa Rica admits that the rice growers will continue to receive support much higher than that allowed by the World Trade Organization.
Costa Rica does not have a defined end date for the high subsidies for rice and reducing them to the level allowed by the WTO, reported Nacion.com.
A WTO spokesman told the EFE news agency in Geneva that the Central American country continues to exceed the agreed ceiling of domestic support (AMS, or aggregate measure of support) with trade distorting effects. In 2010, the entire Costa Rican AMS was for rice, with $109.7 million allocated, despite the commitment of San Jose to set a limit for the support of $15.95 million.
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