Costa Rica is the one of the best examples of what happens when obstacles like the coming and going between state paternalism and trade affect the social and economic development.
While receiving an award from the National Association for Economic Development for Freedom (ANFE) 2014, Juan Carlos Hidalgo gave a stark analysis of the Costa Rican situation, which highlights the apparent contradictions between sustained economic growth and the painful reality of growing poverty.
Increased competition and rising production costs are causing firms in the sector to revive their production processes with new plants, equipment and electrical systems.
The three companies which dominate 92% of the market for chicken meat and its derivatives are making significant investments to modernize their production processes in an increasingly competitive world where consumption has maintained a steady upward trend.
At least ten companies are competing in a market where the amount of tons sold between 2008 and 2013 grew by 24%.
In Costa Rica, the market for sausages is fought over by at least 10 companies, where Corporación Pipasa, a subsidiary of Cargill International, is the largest participant. Whereas in 2008 20.2 tonnes of sausages sold in, 2013, 25 tons were sold in the country.
The transnational sees business opportunities in the country beyond the poultry sector.
The owner of Pipasa in Costa Rica will spend $15 million on vehicular fleet renewal and modernization of processes at its industrial plants.
According to Xavier Vargas, executive director of the company in Central America, more areas of the U.S. company are attractive for starting operations in the country.
Pollo Rey invested $20 million in moving its processing plants while Cargill is spending $25 million in a new distribution center.
The poultry division of Corporación Multiinversiones (Dipcmi), maker of Pollo Rey, moved its processing plant from San Carlos to its central headquarters in Coyol de Alajuela.
“Additionally, the company reported that for the second half of 2013 they will move another processing plant, also located in San Carlos, to a 1.000 m2 space in Barranca de Puntarenas”, reported Elfinancierocr.com.
The purchase of Pipasa in mid-2011 gave Cargill 55 to 60% of the chicken market in Costa Rica, and it is now announcing new investments to reinforce its hegemony.
Many of the other competitors are also advertising their own strategies for a trade war that goes beyond the borders of Costa Rica and includes the whole of the isthmus as a battle theater.
In order to comply with a condition imposed by Procompetencia for the purchase of Costa Rican Pipasa, Cargill is selling its Pollo Real brand at a base price of $580 thousand dollars.
Alfredo Velez, corporate vice president of Tip Top Industria, Cargill Meats Central America, told La Prensa that from today, 16 September 2011, an international tender will be opened, with a base price of $580 thousand, for the Pollo Real brand.
The entry of the U.S. firm has brought new investment by competitors.
Since announcing the purchase of Pipasa by Cargill, the Costa Rican poultry market has not stopped moving.
Investment in new plants and rethinking strategies, among others, are some of the actions that companies are beginning to take to cope with expected changes in the market.
The U.S. company and owner in Costa Rica of Cinta Azul has completed the purchase of Corporación Pipasa.
Bruce Burdett, president of Cargill Meats Central America, said in consultation with the newspaper La Nación, "We had plans to expand in the region and Pipasa has been one of our most saught after targets."
"The purchase of Pipasa has been rumored since 2008, when the weekly El Financiero became aware of attempts by Cargill to incorporate the national poultry products company into their portfolio."
The challenge seeks to reverse authorization given for the US company Cargill to take over Pipasa.
Nicaragua's institute for protecting consumer rights presented the challenge, arguing that if the merger goes ahead, the resulting company will control 61% of the Nicaraguan poultry market, enabling it to undercut its competitors and force them out of the market, after which nothing would stop it from increasing prices at will.
The request submitted by Cargill for "authorization of a merger through the acquisition of Pipasa" has been approved.
Luis Humberto Guzmán, president of Nicaragua's National Institute for the Promotion of Competition (Procompetencia in Spanish), confirmed the decision in an email to the Costa Rican newspaper, La Nación.
For his part, Gerardo Matamoros, corporate director of Grupo Sama (Pipasa partner) indicated that, "Cargill has been exploring its business options in Central America. There have been no negotiations, no sale or merger between Pipasa Nicaragua and Cargill. There is no "for sale" sign. But if a company makes an offer it makes sense to listen to it," reports La Nación in its web portal.
Eleven companies from different sectors will visit Cuba on the first week of November.
5 of these companies will participate in La Habana International Fair (Fihnav), from November 2 to 7. These are Corporación Pipasa, Plásticos Puente, Leogar, CVG Alunasa and Maluquer.
"These companies (with the exception of Maluquer) will also take part of the first trade mission to Cuba organized by Procomer, the exports promotion authority.
Major companies in Costa Rica reported being willing to switch insurers when new competitors arrive.
Wal-Mart Costa Rica, Florida Ice & Farm and Pipasa Corporation, among others, admitted their interest to El Financiero in studying the products that other insurers might provide when they arrive to the country.
The article stated that: "It's not that the INS [National Insurance Institute of Costa Rica] treated them badly.
The Costa Rican company has agreed for the Stock Exchange Commission to revoke its registration, resolving an accusation of financial fraud.
In the elNuevoHerald.com it is reported that "Rica Foods, a poultry processor and feed producer based in Miami, and its former executive director resolved the case of financial fraud presented by the Stock Exchange Commission (SEC).
The Costa Rican company Pipasa, owned by Rica Foods, has signed a non-binding letter of intent to buy Industrias Avícolas Integradas S.A. (Indavinsa) of Nicaragua.
Indavinsa is a producer of poultry products and poultry feed concentrates. It has 17 farms and nine distribution centers.
The two companies already have trade relations, since Pipasa has been the main provider of day-old chicks to Indavinsa.