Government plans protective tariff for rice growers and distributors

The economics ministry did an about face Thursday and said it would impose an additional 27.06 percent import duty on milled rice.

The decision is in contrast to that of the Laura Chinchilla administration that was trying to subject local rice growers to the pressures of the international free market.

The government said that the action is trying to avoid grave damage to the national rice industry and the investments that have been made there.

The government also said it was issuing a decree that would reduce by about 4 percent the price of some rice for consumers.

Rice, a staple for many Costa Ricans, is controlled by a complex government bureaucracy that includes the Corporación Arrocera Nacional. There are about 1,400 producers in the country, and many have inefficient operations.

The announcement by the Ministerio de Economía, Industria y Comercio said that rice farmers would embark on a four-year readjustment plan to make them more competitive.

The plan calls for greater productivity per hectare, more efficiency in the distribution chain of rice and a transfer of the savings to the end consumer with a slowly decreasing price of rice that would bring national producers in line with world prices.

The government insisted that the changes would not affect the consumer. The reduction in the price of rice would be about 50 colons or nine U.S. cents per two-kilo bag of 20 percent broken grain, the lowest retail quality.

Under the Central American Free Trade Treaty, Costa Rica has agreed to reduce import duties on rice produced in the United States over 19 to 20 years so that there would be no duty in 2029. The effect on U.S. imports was not defined. Costa Rica imports about 40 percent of its rice each year.

The new import duty that raises the total to 62.06 percent will be submitted to the General Agreement on Tariffs and Trade.

The claim that imports would damage local production meets one of the agreement’s requirements for an exclusionary tariff.

The Chinchilla administration argued that consumers were subsidizing the country’s rice producers.

Rice producers and the rice industry are potent political forces. Growers have protested for years the import by private companies of rice from Argentina and Uruguay.

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