Market factors are forcing Central American nations to seek other sources of export earnings than basic food crops. Over the past two years, surpluses of the region’s three main cash crops (bananas, coffee, and sugar), have seriously depressed the price of all three. For example, the international price of coffee is roughly 27% percent lower than the production cost in Costa Rica. Costa Rica became the first nation in the region to reduce its dependence on food crops thanks to the arrival of a major computer components plant operated by Intel.
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Costa Rica is still the world’s second leading producer of bananas after Ecuador, but the volume and value of exports remain well below levels achieved through the latter half of the 90s. The nation’s banana producers believe that the EC’s “first come first served” banana importation policy will work against them. Hopefully industrial expansion in 2001 will create jobs for at least some of the hundreds of banana production workers who were laid off during the past 12 months.
Several Central American nations have suffered from the declining international price for cane sugar. The world’s cane sugar production now exceeds demand by approximately 25% and the situation is likely to get worse in 2001 and 2002, thus further depressing prices.
Fortunately for Central America, the US recently announced the Caribbean Basin Initiative which will give trade preference to assembly industries in the region. Strong growth in the apparel industry should provide an alternative source of income for many families that are no longer able to make a living in the food processing and agriculture sectors.
By Steve Lewis, just-food.com correspondent
