In Costa Rica, sugar producers are asking the government to raise tariffs or entry taxes on imports, and importers are opposing, as this would raise the final price to the consumer.
In July 2019, the Sugar Cane Industrial Agricultural League (LAICA) asked the Ministry of Economy, Industry and Commerce (MEIC) to launch an investigation with the aim of imposing additional tariffs on imported sugar, arguing that purchases from abroad would damage local production.
If the international prices of bananas, coffee, sugar and palm oil do not improve, and if combined with a global economic recession, Guatemala, Honduras and El Salvador could stop exporting as much as $2.268 million altogether in 2021.
According to the report "Proceso de integración Centroamericana del Triángulo Norte: Escenarios de riesgo en la matriz de exportación" (Central American Integration Process of the Northern Triangle: Risk Scenarios in the Export Matrix), prepared by the Asociación de Investigación de Estudios Sociales (Asíes), garment making is another activity that could be affected in the coming years.
Costa Rican businessmen complain that because of export subsidies granted to sugar producers in India, there has been an artificial increase in production, causing prices to fall below costs.
Édgar Herrera, executive director of the Industrial Agricultural League of Sugarcane (Laica), explained to Elobservador.cr that "...
By signing the Association Agreement with the European country, Central America achieved an export quota of 56 thousand metric tons of sugar free of tariffs.
Days ago it was reported that the association agreement signed guarantees Central American countries that with the departure of the United Kingdom from the European Union, there will not be a legal vacuum that interrupts trade relations with that country, while maintaining tariff preferences and legal guarantees for companies exporting to the United Kingdom.
Last year, the main regional crop sold abroad was coffee, with $2.671 million, followed by banana, with $2.594 million, pineapple, with $1.097 million and sugar, with $722 million.
Data from the Trade Intelligence Unit at CentralamericaData:
The main coffee export destinations were the U.S., Germany, Belgium, Italy, Japan and Canada, which together represent 70% of the volume exported by the region, equivalent to approximately $2,050 million. [GRAFICA caption="Click to interact with the graphic"]
Arguing that local production must be protected, Costa Rican sugar manufacturers demand that, in addition to the 45% common levy already charged on imported sugar, an additional tariff must be imposed.
Although exports have tripled in the last three years, mainly because of increased sales of medical equipment, sugar, ethyl alcohol and meat, the business sector's expectations are not as optimistic.
Data from the Foreign Trade Promoter (Procomer) specify that in 2016 Costa Rican exports to China totaled $46 million, in 2017 registered $111 million, and in 2018 rose to $200 million.
During the first nine months of 2018, the main regional crop exported was coffee, with $2,493 million, followed by banana, with $1,939 million, pineapple, with $825 million and sugar, with $645 million.
Figures from the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]
Because of the decline in the international price of sugar in recent years, agricultural businessmen in Guatemala have decided to migrate to more profitable crops, such as bananas and African palm.
Last year, Guatemalan banana exports totaled $815 million, 4% more than the $782 million reported in 2017, a rise that is partly caused by the increase in the cultivated area in the country.
The fall in international grain prices in recent years has increasingly affected producers in the region, who at current prices do not even reach the production costs.
Since years ago, international sugar prices have reported a clear downward trend, and in the last twelve months the quintal price registered a fall of 23%.
In September, the FAO food price index decreased 7% compared to the same month in 2017, because of lower prices for meat, dairy products, cereals, vegetable oils and sugar.
From FAO's monthly report:
» The FAO Food Price Index* (FFPI) averaged 163.5 points in October 2018, down 1.4 points (0.9 percent) from September and some 13 points (7.4 percent) below its level in the corresponding period last year. The October decline in the FFPI was the result of falling dairy, meat and oils prices, which more than offset a surge in sugar prices and a more moderate increase in the prices of cereals. The October FFPI is at its lowest level since last May.
The downward trend in international prices and the climate impact are part of the challenges facing producers in the region for the next harvest.
According to data from CentralAmericaData, the average price per kilo of sugar exported by countries in the region fell 38% between May 2012 and June 2017, from $1.13 to $0.70.
In September, the FAO food price index decreased 7% compared to the same month in 2017, explained by the decline in prices of meat, dairy products, cereals and vegetable oils.
of the monthly report FAO:
» The FAO Food Price Index* (FFPI) averaged 165.4 points in September 2018, down 2.3 points (1.4 Percent) from August and some 13 points (7.4 percent) below its level in the corresponding period last year. Only the sugar price index firmed in September, whereas the values of the other sub-indices, led by cereals, dropped from the previous month.
Because of the drought that is affecting several areas in Central America, in El Salvador, agricultural producers estimate that at least 6.3 million hundredweight of corn, valued at $39 million, have been lost.
Representatives from the Salvadoran Chamber of Small and Medium Agricultural Producers (Campo) said that due to the drought, which lasted up to 40 days in some areas of the country, they have lost more than 6 million hundredweight of corn, valued at $38.6 million.
The FAO food price index registered an interannual decrease of close to 1%, due to weakening in most markets, as a result of tensions in international trade relations.
From the monthly FAO report:
The FAO Food Price Index* (FFPI) averaged 173.7 points in June 2018, down 2.4 points (1.3 percent) from its level in May, representing the first month-on month decline since the beginning of this year. Most markets have generally taken-on a weaker tone recently largely because of rising tensions in international trade relations.
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