San José, Costa Rica, since 1956

Proposed Agricultural Reforms Criticized

With propaganda and rhetoric flying as the nation prepares to vote on the controversial Central American Free-Trade Agreement with the United States (CAFTA), the nation’s farmers are taking up a less-publicized debate over what will become of Costa Rica’s agricultural sector.

Rice growers, for instance, have said national rice production will disappear in a matter of years if CAFTA is passed. The industry is just one of many that fear being swept away in an economic transition that some say will only create more poverty – at least among those in the agricultural sector (TT, Aug. 25, 2006).

To address these concerns, help diversify the economy and push much-needed reforms in the agricultural industry, the administration of pro-CAFTA President Oscar Arias came into power last year with a stack of proposals up its sleeve.

But the reforms – which include a whirlwind restructuring and reshuffling of public institutions, proposed closures and the creation of a development bank to finance small farmers – are coming under fire from industry leaders and labor unions who claim the administration is detached from the reality of the industry.

Members of the National Agricultural Producers Union (UPANACIONAL) and others this week said the development bank proposal will actually make it harder for small farmers to get loans, and chided the government for what they called poorly construed reforms as well as for keeping costs high for small producers by not allowing more generic, less expensive agrochemicals into the market.

“The government doesn’t have an agriculture policy – especially this administration,” said UPANACIONAL Secretary General Guido Vargas at a press conference Tuesday.

Farm industry leaders gathered at the conference also said they found it strange that the Arias administration is pushing wide-ranging reforms in a sector in which it has little expertise.

“There’s a total lack of knowledge,” said

Román Macaya, president of the National Chamber of Generic Agrochemical Producers. The administration’s only minister with agricultural experience, Production Minister Alfredo Volio, recently resigned to head a pro-CAFTA campaign leading up to the Sept. 23 referendum.

Marco Vargas, former Minister of Inter-Institutional Coordination, replaced Volio May 6 as head of the ministries of Agriculture and Livestock (MAG) and Economy, Industry and Commerce (MEIC). Vargas told The Tico Times Wednesday that the administration’s plans are on track.

He also defended his position as temporary Production Minister even though he has no experience in agriculture.

“You don’t need a specialist to direct a Ministry; it’s a political post,” he said.

Like many planned reforms that need the stamp of approval from the Legislative Assembly, the agricultural reforms have been sidelined by the debate over CAFTA and its accompanying implementation agenda.

Tired of waiting, Álvaro Sáenz, the president of the National Chamber of Agriculture (CNAA), this week requested that Arias publish his agricultural development agenda with specific dates and timelines. If not, he threatened, the chamber might pull its support for CAFTA.

Macaya agreed.

“The assembly is complicated and busy.

In the meantime, there are many things this government could be doing. But it has all its eggs in the CAFTA basket,” he said.

Reaffirming the government’s CAFTA fixation, the Ministry of Economy, Industry and Commerce released a statement Tuesday that said a new study it conducted shows 5,000 farmers in the eastern province of Cartago will be without jobs if CAFTA is voted down.

“Contrary to what certain social sectors have stated, our farmers will be among the most affected if CAFTA is not passed,” the MEIC statement said.

Cartago’s vegetable farmers export 74% of their product to the United States. If CAFTA is not approved, these products will have to pay 17% import tariffs to get into the U.S. market, according to the statement.

These high tariffs “would practically leave us outside the market, which would prevent growth in the sector, and even worse, would impede us from maintaining the current level. It would definitely spell ruin for the economy and development of our country,” Vice-Minister of Economy Jorge Woodbridge said in the statement.

The statement concluded with the promise that if CAFTA is approved, the agroindustrial sector would have the capacity to grow by 20% annually, which would generate employment for approximately 500 Costa Ricans in the first two years under the U.S. trade pact.

Reforms Proposed

Soon after he was elected,Arias created the position of Production Minister to oversee his proposed Production Ministry (MIPRO). If the Legislative Assembly approves it, the new ministry would combine the Agriculture Ministry, MEIC and parts of several other agricultural sector institutions under one streamlined, umbrella organization.

Vargas said he’s working to convince legislators to approve the proposal, though it hasn’t yet been submitted to Congress.

The administration also has promised to overhaul two major problem-plagued agricultural institutions that are also major employers: the National Production Council (CNP), which uses state liquor sales to finance small farmers, and the Agricultural Development Institute (IDA), which provides land to subsistence farmers.

The government announced plans to overhaul IDA in March in the wake of Comptroller General reports that the institute was rife with problems and should be shut down or reformed (TT, March 23).

The institute, whose primary job is to provide land to subsistence farmers with bargain financing, had, for example, allegedly allowed land intended to go to farmers to be used for gas stations or put in the hands of institute officials’ family members.

Volio, Production Minister at the time, promised that the institute wouldn’t be closed, and reassured the institute’s 513 workers that their jobs are safe. IDA’s president and entire board of directors stepped down, saying their resignations were to give the government complete leeway in restructuring the organization.

The administration has since offered up a proposal that would roll IDA’s responsibilities into its proposed Rural Development Institute (INDER). The reform would continue to provide land to subsistence farmers but would also include incentives for farmers to better develop, preserve, reforest and use land for rural tourism.

“Currently, land is just given to poor people and they wait and see what happens,” said Marcos Ramírez, president of the National Campesino Front, a group of hundreds of farmers who have been allocated IDA lands.

Though Ramírez said the Front would support new incentives to better develop rural land as part of the proposal, he said he doesn’t like another part of the proposal that would require that loans rural farmers take out to pay for their lands be regulated by financial agencies in San José.

He said bringing in urban financial institutions would complicate matters for rural farmers. His group is pushing for a reformed IDA to be decentralized to better serve remote communities, he explained. The reforms are expected to be discussed further next week at a meeting between the Front and IDA representatives.

Soon after he was appointed last year, Production Minister Volio announced plans to restructure the outmoded and inefficient National Production Council. However, the administration has faced staunch opposition from union members that administration officials say are afraid of losing their jobs (TT,May 4).

Further complicating matters, CNP president Francisco Oreamuno recently stepped down as he is investigated for an alleged undeclared conflict of interest in awarding a hefty sponsorship that benefited his former business partner (TT, May 18). Oreamuno stepped down while he was in the process of a controversial restructuring that involved sending CNP employees to other government institutions in need such as the Environment and Energy Ministry (MINAE).

Mounting Debt

The development bank proposal apparently hasn’t met much applause, either.

UPANACIONAL president Oscar Méndez said subsistence farmers won’t be able to get loans they need with the new development bank, which will also make loans to the industrial sector.

He said that a law was passed in 2001 to give farmers low-interest, bargain loans called fideicomisos, but that many farmers have since defaulted on their loans, weren’t able to get bankruptcy and have gone further into debt.

“Our debts have doubled and tripled. We can’t get access to credit… When an indebted farmer and an industrialist arrive at the bank, who are they going to give the loan to?” asked Méndez, an organic coffee producer.

But Vargas countered that concerns that farmers won’t be able to get loans is irrelevant because the development bank is being designed for the very purpose of giving highrisk loans to subsistence farmers.

Tico Times reporter Peter Krupa contributed to this report.


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