More than 500 layoffs have been reported in Costa Rica's banana sector. The depreciation of the dollar and the loss of competitiveness in the markets are strongly affecting the industry.

To get a more global view and understand what is happening in the Central American country, FreshfruitPortal.com spoke exclusively with Oscar Arias Moreira, president of the National Chamber of Agriculture and Agribusiness (CNAA). This institution comprises 24 organizations from the country's agricultural sector, representing 80% of Costa Rica's agricultural activity.

Moreira commented, "In the last 20 months we have been suffering from a deterioration in the exchange rate, which is seriously affecting the entire sector, not only the agro-export sector, but also local markets. Because with a devalued dollar, many imported products are entering, which are competing with our producers."

He explained that the devaluation of the exchange rate is approximately 29%, “which is devastating for any exporter because we cannot raise prices in the international market for bananas, pineapples, cassava or tubers that we export.”

It is difficult to visualize the situation that Costa Rican farmers are going through from the other side of the border. In this sense, the president of the CNAA was clear in saying that “this is leading to the closure of many companies or to the reduction of the number of employees, and as a consequence, many people are becoming unemployed. This is something that is progressively happening and if it is not reversed, we see devastating consequences in the national productive sector and particularly in the agro-export sector.”

Unemployment

The layoffs that mainly affect the banana industry are one of the most visible consequences of the serious crisis that Costa Rica is currently experiencing. The president of the CNAA explained that Costa Rica has the highest salaries in the rural sector in Latin America.

Given the productive and labor costs, the entity points out that farmers began to reduce planting areas, adjusting to what the budget allows, and in some cases going into debt in the hope that better times will come. “But these times have not yet come and we hope the government will heed our request.”

Another of the complexities that the sector must face is related to government support. In this respect, Oscar Arias Moreira said: "One of the vice presidents of the Republic has said that if the agricultural activity does not work, then we should change the activity, thinking about changing the country's productive model."

The CNAA leader commented that about half a million people work directly or indirectly in the agricultural sector, representing about 85% of employment in rural areas.

 "The issue is that the people who live and work in rural areas are those who have had the least educational opportunities, so making a change of activity as (the government) suggests to us almost in a derogatory way by saying 'These desserts helped us a lot to develop the country, referring to fruits, but today they are obsolete,' is an offense to any agricultural producer, who knows how much it costs to make a change of crop."

Productive leap

Oscar Arias Moreira looks at the country's challenge of changing the productive model with a positive outlook. “The government authorities want a change of model-oriented precisely to the high technology service, especially in the production of microchips."

In his opinion, the change cannot be made overnight, “so we have discussed in the Chamber of Agriculture that that this technological level in agriculture is not incompatible. For this, we have to provide more technology, more innovation and more training.”

Therefore, he explains that the sector should not abandon the "desserts," referring to bananas and pineapples: "What we have to do is export fruit with the designation of origin, high quality and added value, to remain competitive in the market and generate high-quality employees, who are well paid, to improve living standards."

Consequences

Agricultural leaders in Costa Rica agree that when a farmer does not have enough to maintain the crop, he stops protecting it because he begins to remove some fertilizer and make fewer applications of fungicides and insecticides, and all this will affect the quality and safety of the products.

Arias said: “This is a snowball that grows, so the fruit obtained is smaller and does not meet the quality standards and in some cases may arrive with bugs to the international market, because there was not enough money to provide protection. And then it becomes very difficult to reverse when the cash flow of a producer or an agricultural company is in crisis.”

Actions

Both agricultural leaders were very emphatic in saying they have knocked on every door, having met at different times with the President of the Republic and the Central Bank and the Minister of Agriculture and Foreign Trade. Unfortunately, they have not received a positive reception or concrete solutions.

The CNAA leader said that they are still clamoring to be heard and to be able to have a dialogue to analyze the problems, “where the Central Bank recognizes the magnitude of the problem that is coming to this country, from the point of view of employment and social character. Because pineapple and bananas are the two main exports of this country, which together with coffee represent more than 5,000 million dollars a year.”

Guido Vargas Artavia said, “We are not only extremely concerned, but we are busy, looking for a way out, an answer. Because here there have been layoffs because it has become unsustainable to continue developing some agricultural activities.”