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Costa Ricans pay 50% more for sugar and its by-products than on the international market, according to a new study published by the Commission for the Promotion of Competition (COPROCOM). The study was conducted by Fernanda Viecens, a consultant at the Inter-American Development Bank (IDB), as part of the reforms that Costa Rica must implement after joining the Organization for Economic Cooperation and Development (OECD).
The study highlights that Costa Rica’s current sugar production structure is completely controlled by the Sugarcane Agro-Industrial Union (CAG).secular) is the main reason for the increase in sugar prices. The Costa Rican Sugar Regulatory Agency (LAICA) is a non-state public entity responsible for regulating the entire sugar production, distribution and commercialization chain in Costa Rica.
“Since there are no competitors and entry is limited by barriers, the power to resist LAICA’s actions is almost zero. In addition, competitors do not have access to input sources (canes) outside the LAICA program,” the study noted.
The findings show that the structure of LAICA will inevitably lead to higher prices for consumers of sugar and all sugarcane products. The study also mentioned that LAICA Sugar production This technique is unique to Costa Rica and cannot be found in other countries.
LAICA sets “quotas” for mills, which determine how much each mill can process. They also set the price of sugar based on international market conditions.
In addition, Costa Rican sugarcane producers and all sugar mills are required to join LAICA. Sugar imports from other countries are severely restricted due to the high tariffs that the General Assembly has historically approved, meaning all products must go through LAICA, which the study describes as a “sugar cartel.”
“Costa Rica’s entire sugarcane ecosystem is effectively heavily regulated by the state, either through dedicated legislation or through state monopolies,” the report states.
The report also points out that sugar prices in Costa Rica are too high compared to international market prices, which particularly affects low-income families. The poorest families consume sugar at a price 18 times higher than richer families.
This situation also exacerbates poverty and inequality, as rising prices for processed foods containing sugar further burden low-income households. In addition to high prices, the Costa Rican sugar market is facing a decline in the area planted and the number of producers, the study found.
“If we make it more expensive for the poorest people, then they will become poorer and this will increase the gap between the rich and the poor,” said economist Ricardo Monge, who was invited as a guest commentator at the release of the results.
In response to the study’s findings, LAIC said it would “review the results shared to provide our perspective on the information.”
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