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How to Facilitate Central American Agricultural Exports

February 7, 2013

Workers loading a truck to send their products to the markets

STORY HIGHLIGHTS
  • A World Bank study analyzes the obstacles and suggests solutions to make exports within the Isthmus and abroad more efficient
  • In recent years, Central America has exported between US$9.3 billion and US$9.8 billion in agricultural produce. Guatemala and Costa Rica are the main exporters
  • Low quality rural roads, aging infrastructure, slow customs procedures and duplicated sanitary processes are the main obstacles

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.

Open Quotes

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 Close Quotes

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:

  • Low -quality rural roads
  • Aging infrastructure and slow customs procedures
  • Sanitary and phytosanitary processes that are sometimes repeated when crossing the border.

“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.

  • Develop a real-time platform, requesting countries to publish their preventive customs inspections in advance, for example in case of agricultural risks such as epidemics in neighboring countries.
  • Explore the possibility of mobile platforms to improve access to information and the price of transportation, logistics and security for agricultural producers.
  • Modernize and harmonize regional customs systems, connecting them to the sanitary inspection and quarantine process in each country.