As the CAFTA (Central American Free-Trade Agreement) referendum draws ever nearer, now only a little over 2 weeks away, we take a look at how this referendum could affect that of the agriculture industry.

The opposition to CAFTA state that if the referendum is passed this coming October then current markets in Costa Rica will be flooded with US produce, such as rice and milk, forcing many farmers here to go out of business and making many farmers and their employees jobless.

On the other side, those who are backing the referendum, say that the agreement will help current producers enter the US markets and will be able to make more money contributing to Costa Rica’s Gross Domestic Product. Some producers, such as Del Oro who produce many types of fruit juices, already trade with US and parts of Europe. A spokesman from Del Oro said that currently they benefit from the Caribbean Basin Initiative which sees produce from the Caribbean go to America free of trade taxes. They make a lot more profit on this than they do compared to exporting to Europe or China, where high Trade taxes still exist, reducing profits by approximately 50%. They fear that if CAFTA is not voted in, they will lose this benefit, significantly damaging company profits.

The National Agriculture and Agro-Industry chamber think that if CAFTA was voted in, then some industries such as the rice and milk industries would need some government funding to help them get a foot hold into the new markets available. They state that currently these businesses just don’t have the same equipment or technology as the Americans do, so will need help from the government to be able to compete more effectively with the new competition.

However some small farmers reckon that CAFTA won’t affect them too much whether it is passed through or not. They say that they only sell to their local markets and the consumers there will always go to them as relationships are strong ad manage to produce and sell enough to get by comfortably.

For the majority though, CAFTA is going to have big impact on the agriculture industry. Whether it will be increased competition and market places, or continued trade taxes and produce kept to local farmers. Despite the referendum going ahead this October 7th, if passed, it still needs government approval which may not be granted until February if at all.

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