Most of the country’s economic activities experienced a slowdown in the third quarter of this year, according to data from the Central Bank of Costa Rica (BCCR).
However, the BCCR confirms in its last Monetary Policy Report (IPM) for October 2024 that this behavior was more accentuated in agricultural production and in hotels and restaurants.
According to the monetary institution, the growth in agricultural activity in the third quarter of 2024 was only 0.5%, although in the same period last year it was 3.2%.
What is the reason for the sharp setback in agricultural production?
This slowdown is mainly explained by the lower production of coffee in beans and rice, partly offset by the increase in the production of exportable goods such as pineapple, roots, tubers and bananas, in conjunction with domestic demand for beef and eggs, the Central Bank acknowledges in its report, the results of which were released the previous Thursday.
With regard to coffee cultivation, the BCCR assures that the prevailing weather conditions, such as excess rain, since the second part of 2023 had a negative impact on the production of this grain, after causing the fall and damage to the fruit.
In the case of rice, the entity maintains that the reduction of the production of this grain is mainly related to the fall in the number of hectares planted.
Although the BCCR does not mention it, this decrease in grain cultivation has occurred after two years of application of the Rice Route, a policy implemented by President Rodrigo Chaves that favored rice imports through a sharp tariff reduction.
Even the Central Bank refers to information from the National Arrocera Corporation (Conarroz) to July of this year, according to which in the period 2023-2024 the amount of rice planting planned was lower at 10,498 (43%) than in the period 2022/2023.
With this, the downward behavior observed the previous year in this variable would be maintained, the BCCR foresees.
Negative results
The monetary institution also cites the Annual Statistical Report 2021/2022 and the 2022/2023 Statistical Annual Report of Conarroz, which states that in the biennium 2022/2023 rice production decreased 33% from the period 2022-2021, which is related to the fall in the hectares planted in the same period (31.3%) and, to a lesser extent, with the reduction in yield, from 59 sacks (from 73.6 kg) per hectare to 57.7.
In addition, the report mentions that imports of this product increased by 40.6 per cent in 2022/2023.
Fernando Araya, executive director of Conarroz, said that with regard to the report of the Central Bank, which explains the reasons for the slowdown in the agricultural sector in which the reduction of the area planted with rice influences, the decrease should be considered to have been greater.
Since the current cut produced a reduction from 33,317 hectares to 13,734 and the bank uses 24,258 for the period that is actually referring to. This has had a very significant impact in all rural areas where Costa Rican rice is produced and the economy was dynamized with 40 billion. Currently, it is generated in this primary sector of 15 billion, due to the consequences of the Rice Route. This generates incredible socio-economic deterioration in all these rural areas, he said.
In various previous reports, such as the Monthly Index of Economic Activity (IMAE), the Central Bank has also described negative results in agricultural production in recent months.
In July of this year, for example, it showed an annual fall of 0.6%. Of the 15 economic activities included in this indicator, only agriculture recorded a negative rate and a negative percentage contribution (-0.7%) to the result of the IMAE, which registered an annual growth of 4.2% in the same month.
This was the third consecutive month in which the production of agricultural activity showed a decrease, according to the Monthly Index of Agricultural Activity (Imagro).
In June, the decrease was 1.7 per cent and a month earlier the fall was 2.4 per cent, according to central bank data.
Hard hit
The most up-to-date data from Conarroz point to a severe blow caused by the Rice Route to this productive sector that is an important part of national agricultural production.
In just over two years, after the launch of this policy, grain cultivation fell by 61 per cent. It decreased from 33,317 hectares, before the decree of Chaves that established the Rout of Rice, to 13,734 hectares planted nationally.
This drastic decrease has had an impact on the number of metric tons produced in the country, according to Conarroz’s data at the close of the 2023-2024 harvest.
Production fell from 154,173 metric tons to 64,639 metric tons. The drop was 58%.
Meanwhile, the number of producers engaged in rice growing has also decreased. It went from 534 to 240 (-55%) in a matter of two years.
And far from decreasing, as Chaves promised, the price of rice to the consumer rose by 9.82% in the last twelve months, according to certified data from the National Institute of Statistics and Censuses (INEC).
This article has been translated to english after originally appearing in crhoy.com