Thursday 25 February 2021

Costa Rica’s Banana and Pineapple Producers Thinking of Leaving

Costa Rica’s banana and pineapple producers are exploring leaving the country for cheaper production destinations such as Colombia, says the Camara de Exportadores –  the Chamber of Exporters – (Cadexco).

The companies, all internationals, feel Costa Rica has become too expensive relative to other economies.

“We just want then to let us work,” said Laura Bonilla, president of Cadexco, who says the Central Bank (BCCR) does not speak the language of exporters.

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Bonilla, following holding a forum on the subject, added the Cadexco does not believe the employment numbers by the Central Bank, in fact feels they are much lower than what we are being told.

Cadexco forum. Photo from Facebook
Cadexco forum. Photo from Facebook

Bonilla said that in the case of Colombia, for example, the South American country is promoting a policy of attracting investment and subsidized interest rates for companies, in particular the agricultural sector.

Gerardo Corrales, economist and speaker at the Cadexo forum, said the dollar exchange is one of the main problems at this time.

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“Colombia, Brazil, Mexico and Peru have devalued their currencies, as such Costa Rica’s export sector cannot compete. In my view, the exchange rate policy (of Costa Rica) has been very managed to control inflation when in rural areas the unemployment rate is 30%. These are people who are not bilingual, nor are they in global digitization, they are not people to work in shared service centres,” said Corrales.

According to Corrales, production costs in those countries, as in Costa Rica, may increase, but the difference is their income will increase relatively, reaching 50% or more, while in Costa Rica it is between 2% and 5%.

The main conclusion is that Costa Rica has become an expensive country to produce and exporters have lost competitiveness due to the exchange rate policies of the Central Bank.

According to Corrales, the difference in rates in dollars and colones and government funding with foreign debt causes the exchange rate to remain lower, but the main question is why the Central Bank influences that there is no upward movement.

Corrales said that, according to data from the Central Bank itself, exporters have lost 30% of competitiveness and all that is required is that the BCCR stop meddling to prevent the trend to continue.

In the past two weeks the dollar exchange rate at banks has increased ¢14 colones, the sell rate posted this morning (July 2) being ¢554 colones to one US dollar.

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We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

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