Costa Rica will Invest to Protect Country from Global Food Crisis.

In an effort to counter the global food crisis, the Costa Rican government announced it will invest close to $15 million (¢7 billion) to boost local production of grains. The investment will go towards reactivating the rice, beans and white corn agricultural sectors. A separate support package will offer solutions to assist the poorest and hardest hit families in Costa Rica during the current food crisis. These plans were officially announced this past Thursday during Dr. Oscar Arias’ May 1st speech to the nation as he celebrated two years of his Presidency.

According to Javier Flores Galarza, the Minister of Agriculture and Livestock (MAG), the resources aim to increase the local rice production by almost 50%. Currently, Costa Rica produces only 48% of the rice consumed by its population. The plan aims to produce 80% of the rice needed locally within the next two years. Furthermore, the local bean and white corn production will go from meeting 25% of the local needs to 70% within the next three years. As we know, a high percentage of Costa Rica food is made with one of these three basic grains (rice, beans and white corn for tortillas).

Although the national productivity for those three grains is relatively low compared to other countries, the funds will also include investments in new technologies, new varieties and seeds that are more resistant to disease and offer higher production yields. It is noteworthy that the emergency investment plan does not include yellow corn which is a key ingredient for the production of milk, chicken, eggs, pork and beef. The reason this important grain is not included in the plan is that the local climate is not ideal for growing it. In Costa Rica, less than 2 tons of yellow corn are produced per hectare while in the United States, the yield is over 8 tons per hectare so it’s just not financially feasible.

According to the executive director of Conarroz, Gerardo Alvarado, the increasing global price of rice will not affect the local market as the rice that will be consumed this year has already been purchased.

What’s causing the food crisis

A recent study published by the Food and Agriculture Organization of the United Nations (FAO) indicated that as grain production has remained the same or slightly decreased in some cases, their demand for industrial use has increased. Ethanol and other biofuel production is the main culprit of this industrial demand. In many countries, farmers have switched from producing food grains to producing grains destined for biofuel as they can get higher profits for these in the global market.

Due to the food shortage, export restrictions on rice were recently imposed by Thailand, Vietnam and India to protect their domestic needs. These countries are among the top exporters of rice in the world so their decision adds to the shortage crisis.

The increase in food prices is also blamed on other factors such as the rising transportation costs due to higher fuel costs, climate change, a decline in food reserves and increasing demand from China and India. According to the World Trade Organization (WTO), another factor that has caused the crisis is that “agricultural subsidies in rich countries have destroyed the agricultural industry of poor countries and a more open system will suffer less distortion.”

According to the FAO the price for grains, especially wheat, has increased 130%; rice 74%, soy 87% and corn has increased 53%. A UN spokesperson also blamed speculation and consumer panic as a factor in the food increases - this speculation could account for up to 30% of the food price increases.

As usual, these types of problems affect the poor and developing nations more dramatically so the Costa Rican government’s move is a positive one. The significant investment should have short and long-term effects and will hopefully minimize the impact of the food crisis at a local and global level. We need a global strategy to meet industrial and consumer needs and this will only be achieved by involving organizations like the UN, the IMF, the world’s nations and the general public.

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Filed under: Costa Rica News on May 5th, 2008