How to Facilitate Central American Agricultural Exports
February 7, 2013
A customer walks along the aisles of a large supermarket in the United States and notices that pineapples are on sale in the produce aisle. The pineapples, still pricey, despite the discount, come from Central America. But what the buyer can’t imagine is what has happened from the time those pineapples were harvested in Costa Rica to now.
Costa Rica is the world’s largest pineapple exporter, with more than 1.74 million tons sold in 2011. From field to supermarket shelf, those pineapples have traveled hundreds of kilometers of unpaved roads, been kept in containers at the harbor awaiting approval from sanitary and export control, before finally being shipped to their various destinations.
Nicaraguan beef, Guatemalan green beans and Honduran organic coffee face the same fate. They are perishable products, where an extra day, or even hour, can mean the loss of an entire shipment. Even when transported within Central America itself, as with tomatoes traveling from Costa Rica to Nicaragua.
A recent World Bank study analyzed the supply chain for Central American agricultural products and the main bottlenecks they face when exporting regionally or to other markets such as the United States or Europe.
The success of agricultural trade, particularly that of perishables, depends on the efficiency of related logistical systems and the capacity to connect the global supply chain in an effective and reliable manner
So Close, Yet So Far
Overcoming these obstacles would have a direct and positive impact on the volume of Central American agricultural exports, which in recent years have hovered between US$9.3 billion and US$9.8 billion, with Guatemala and Costa Rica being the main exporters.
According to the report, the three main bottlenecks facing producers, especially small-scale farmers, include:
“Bottlenecks in logistical chains have a clear and measurable impact on the volume and quality of the perishable agricultural products that are finally delivered,” states the report, titled “Agro-logistics in Central America.”
For example, the logistical costs for a big tomato producer exporting from Costa Rica to Nicaragua — including road transportation via unpaved rural roads, driving costs and custom duties — reach US$0.15 per kg. However, the waiting time at the Peñas Blancas border post doubles those costs, adding US$0.14 per kg to a product whose freshness period is extremely short, some 120 hours or five days.
Honduras presents additional challenges, given that crossing the border into El Salvador can take up to two days due to congestion, with lines of trucks awaiting their turn to begin procedures with customs authorities from both countries. A Honduran dairy producer revealed during the investigation that every time a refrigerated dairy container destined for El Salvador goes through a dual inspection, logistics costs increase by up to US$900.
“The success of agricultural trade, particularly that of perishables, depends on the efficiency of related logistical systems and the capacity to connect the global supply chain in an effective and reliable manner,” the report indicates.
What are the recommendations to unblock these bottlenecks and facilitate trade in Central America?
The authors of the report propose several solutions, namely:
Build secondary roads using sustainable alternatives to asphalt.
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