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Costa Rica: Opening the Trade Door
By Charles R. Bertsch
It's nearby, and its citizens love U.S.A.-made products! Costa
Rica is teeming with established and potential customers who are
already familiar with U.S. food items thanks to cable TV. 
With built-in advantages like these, it's no wonder the United States enjoys a 60-percent-and-growing market share of Costa Rica's agricultural imports. Sales of $223 million in 1996 were up 30 percent from 1995.
But there's more upbeat news. Following accession to the World Trade Organization (WTO) in 1995, the country has propped open its doors for even more imports. U.S. exporters, searching for new markets, need only look south.
Like other Central American countries, Costa Rica is emerging from an economic recession. Normally one of the first sectors to fall prey to poor economic conditions, consumer-oriented agricultural export sales to the country nevertheless remained surprisingly strong in 1996--export sales of $29.4 million were only $100,000 less than the year before.
Though bulk commodities traditionally have dominated Costa Rican imports from the United States ($174 million in 1996), consumer-oriented foods are increasingly important and offer expanding growth opportunities.
The recovering economy accompanied by higher disposable incomes-- and a trend toward buying more convenience foods--fuel demand for U.S. fresh fruit (mainly apples, grapes, peaches and pears), processed fruits and vegetables (canned fruits) and snack foods (including chips, cookies and candies).
Canada, Chile Pursue Trade Agreements
With 40 percent of the consumer-oriented food sector in hand, the United States still faces competition from Mexico, Chile, Argentina, Spain, Italy and other Central American countries. On our side: Pro-U.S. preferences and lower transportation costs. On the other side, some peculiarities of the market.
Costa Rican consumers do not distinguish between products from the United States and Canada. By virtue of this blurring of product origin, Canadian goods enjoy the same favorable reputation for quality as their U.S. competitors. This circumstance favors Canada, which has had particular success with pink salmon, mineral water, ginseng, french fries, apples, onions and black beans.
Chile, another strong competitor, has products similarly priced to U.S. products though transportation costs are higher. Chile dominates the Costa Rican wine market; it also exports canned fruits and vegetables, chocolates, cookies and candies, and it supplies fruit during the U.S. off-season.
The Government of Costa Rica is striving to reach free-trade agreements with Chile and Canada. Successful negotiations could pose a threat to some U.S. consumer-oriented food products.
Other important suppliers for Costa Rica: Panama for dairy products, sauces and condiments; Guatemala for breakfast cereals and soups; other Central American countries for canned and other processed foods; and Mexico for fruit juices and canned vegetables.
What's Hot Now?
Both private firms and individuals import consumer foods. Several wholesalers, dedicated to the food import business, distribute products to supermarkets, as well as to medium and small grocery stores. Some large supermarket chains import directly.
Distribution channels are similar for all products, although some, like fresh fruit, require special handling. While importers and distributors usually have the technical knowledge and resources required for produce management, the end seller often does not, and this can result in reduced quality.
Consumer-oriented food exporters can relish a recently established food service sector--one that buys mostly from U.S. brokers. A word to those who focus on hotels, restaurants and industry cafeterias: Demand is high for spices, canned vegetables and fruits, meats, salmon, olives and desserts.
The author is the agricultural attache at the U.S. Embassy in San Jose, Costa Rica. Tel.: (9-011-506) 231-6483; Fax: (9-011-506) 232-7709; E-mail: fassjcr@sol.racsa.co.cr
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