QCOSTARICA – The government of Luis Guillermo Solís says it will restrict cheaper rice from entering the country by increasing the tax on the import of milled grain (shelled), from 35% to 62.06%.
The Ministerio de Economía, Industria y Comercio (MEIC) holds that the purchase of cheaper grain from abroad threatens the national rice production.
The measure (higher tax) will be in place for the next four years and during this period the current administration will focus on increasing national productivity, which has higher costs than foreign producers and, therefore, the grain is more expensive in the country.
The expectation, with the reduced imports, national productivity will increase and drive local prices downward, reaching the levels of the imports, said minister, Welmer Ramos.
Producers are confident his will happen, but not so much by the consumer associations.
“It’s part of a process, we need many things, we have to try to lower costs,” said Eliécer Araya, president of the Corporación Arrocera Nacional (National Rice Corporation).
Erick Ulate, head of Consumidores Costa Rica (Costa Rican Consumers Association), considers the price protection is not a real incentive to lower costs.
The Ministerio de Economía, announced a decree to reduce the local consumer price by 4%. With the price drop, the retail cost of two kilograms of 80% whole grain will drop from the current ¢1.314 colones to ¢1.262.
In Costa Rica, the price of rice on the store shelf is set by law.
Ramos also said that the Ministry will issue a decree to replace that of the previous administration that liberalized grain prices, starting on May 1.
Why does the price drop if the tariffs increase?
The minister explained that the Ministerio de Economia has the potential to lower the price because the “pilado” which will see the higher taxes is imported from countries other than the United States.
Costa Rica can import U.S. grain without tariffs under the Free Trade Agreement (FTA), but only by industrials that buy from local producers, based on their quota, and use it in the “price mix” to set the value to local consumers.
The country consumes some 360.000 tons of rice, of which 60.000 is imported.
The Asociación de Consumidores Libres, Consumidores de Costa Rica and importer Juan Carlos Sandoval, general manager of Maquila Lama, told La Nacion, they will be challenging the government decision.