Betting on the latest technology projects, agriculture 4.0 and seeking alternative products derived from sugarcane so as not to depend on international prices, are some of the lines of action on which the Guatemalan sugar sector will focus in the coming years.
Although sugar prices in the international market have improved between October 2020 and April 2021, in previous years there was a downward trend that pressured mills to explore new market opportunities for sugarcane-derived products.
On April 26, Brazil will reactivate again on the agenda of the World Trade Organization, the complaint against Costa Rica for the imposition of a safeguard to increase the tariff on sugar.
Based on the willingness of Costa Rican authorities to raise the tariff on imported sugar from 45% to 73%, Brazil decided to raise the entry taxes on four animal products from Costa Rica.
Months ago, the private sector has been warning of the possibility that the country's trading partners would apply reciprocal measures because of Costa Rica's unilateral decision to raise entry taxes on importedsugar.
Following in Brazil's footsteps, Canada warned the WTO about the possibility of imposing compensation against the Costa Rican authorities' policy of raising the tariff on imported sugar from 45% to 73%.
After the Costa Rican authorities raised the tariff on imported sugar from 45% to 73%, the South American country decided to raise before the World Trade Organization, a process to exercise the right of suspension.
In June of this year, the Alvarado administration decided to increase to 79% and for the term of three years, the tariff on sugar entering the country. This increase was based on the argument that the unusual growth of imports was harming local production.
Following an appeal filed by the importing company La Maquila Lama with the Costa Rican authorities, the government decided to reduce the additional tax on sugar purchased abroad from 34.27% to 27.68%.
With the reduction decreed by the Ministry of Economy, Industry and Commerce (MEIC), a decision that was published on August 18 in The Gazette, the total tax applied to imported sugar will be 72.68% (45% original plus 27.68% of the safeguard), which is slightly less than the 79.27% (45% original plus 34.27%), which was in force until before the enacted amendment.
Arguing that the unusual growth in sugar imports is harming local production, the Alvarado administration decided to raise the tariff on products entering Costa Rica from 45% to 73% for a three-year period.
The Ministry of Economy, Industry and Commerce (MEIC) concluded the investigation requested by the Agricultural Industrial League of Sugar Cane (LAICA) and 4 mills, on the safeguard measure against imports of solid state, granulated sugar, known as white sugar, used for domestic and industrial consumption, justifying a deterioration in the main economic indicators of the National Production Branch (RPN), details an official statement dated June 15.
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"]
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