Market and Trade Data
Urban Costa Ricans
Enjoying Convenience of Frozen Food Products
September
2007
Printable version
By Luis Solera
See also …
FAS Report CS7004
Working
women, with limited time and more disposable income, are
making a difference in the sales of frozen foods and
other convenience products in Costa Rica. The presence
of a microwave in half of Costa Rican homes stimulates
the demand for these convenience foods.
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CAFTA-DR To
Eliminate Many Tariffs |
|
Once implemented in Costa Rica, CAFTA-DR
(the Dominican Republic-Central
America-United States Free Trade Agreement)
is expected to benefit U.S. food exports in
general. The agreement will create new
market access for all products (except fresh
potatoes and onions) immediately. This will
be accomplished through tariff reductions,
tariff-rate quota expansion, and
combinations of these and other approaches.
These provisions will create greater
opportunities for a variety of U.S. frozen
foods. Because Costa Ricans favor U.S.
products, market shares for certain foods
are expected to greatly benefit. Costa
Rica has scheduled a referendum on
ratification of the accord for October 2007. |
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Costa Rica has a fairly open economy. As a
member of the World Trade Organization, it
adheres to its international trade
commitments, including the use of
science-based sanitary and phytosanitary
measures. |
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The country’s foreign trade policy is geared
to establishing free trade agreements with
key partners, including the United States.
Costa Rica already has agreements that lower
duties for many products competing directly
with U.S. exports in effect with Chile,
Canada, Mexico, and other Central American
countries. Conversely, over 99 percent of
the agricultural products from Costa Rica
enter the United States duty-free.
|
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A detailed discussion of negotiated
advantages under CAFTA-DR can be found at:
http://www.fas.usda.gov/info/factsheets/CAFTA/overall021105a.html
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While
frozen foods represent only 4 percent of supermarket
sales in Costa Rica, this category is growing faster
than any other, at an annual average rate of 9.5 percent
from 2001 to 2005, with imports accounting for $13.8
million worth. Similar growth is expected over the next
couple of years in Costa Rica’s urbanized Central
Valley, where two-income families and young
professionals are likely to live.
Rising
tourism is also supporting demand for frozen food
products as new hotels and restaurants open to
accommodate visitors. The tourism industry has enjoyed
double-digit growth in recent years, with 1.6 million
visitors in 2005. Supermarkets near areas heavily
trafficked by tourists also have improved sales of
frozen foods.
Market
Access
Importers commonly act as distributors for smaller
stores and food service, while most supermarkets import
directly from U.S. brokers. Due to the small size of the
market, importers often ask for consolidated shipments
and cold chain breaks are still a problem.
Costa
Rica has two major ports – Caldera on the Pacific and
Limon on the Atlantic—with bulk imports coming mostly
through Caldera and containerized shipments through
Limon. Because the country exports large volumes of
fresh products to the United States, U.S. products can
be shipped with savings by using containers returning to
Costa Rica. However, transportation within Costa Rica
can be expensive.
The Ins and
Outs of the Costa Rican Market
for U.S. Frozen Food Products |
|
Advantages |
Disadvantages |
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Perception of high quality |
Market still small; importers risk averse to
new products |
|
Familiarity with U.S. products |
Cold chain problems — handling, limited
storage, and scarcity of shelving |
|
Quality and attractiveness of U.S. products
popular with importers |
High tariffs on popular products;
competition from other countries with free
trade agreements with Costa Rica |
|
Proximity |
Local competition from fresh products |
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Importers familiar with logistics of
importing from United States; consolidated
shipping a plus on small orders |
Inexperienced chefs |
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U.S. exporters flexible on helping importers
with packaging, promotions, and regulations |
Relative high cost of some U.S. products |
Though
most imports average a 15-percent tariff, protected
products, such as chicken meat and other processed
poultry, frozen potato fries, and ice cream, have
tariffs ranging from 41 to 151 percent.
Import
Regulations Have Improved
Though they can still be prolonged, import procedures
have improved since 2005’s inauguration of a new
electronic customs system. Costa Rica generally requires
only invoices, bills of lading, and airway bills to
import goods. Imports of bulk and horticultural products
require plant health certificates. Most processed foods
do not require plant health or animal health
certificates. USDA’s Food Safety and Inspection Service
export certificates are needed for fresh and frozen
meats.
Under
current regulations, the Costa Rican Ministry of
Agriculture must approve foreign meat and poultry plants
before they can export to Costa Rica. However, the Costa
Rican Ministry of Agriculture has approved U.S. beef
plant products under the Export Verification Program of
USDA’s Agricultural Marketing Service. Once CAFTA-DR
enters into effect, Costa Rica is expected to undertake
an equivalency determination for all establishments
inspected by USDA’s Food Safety Inspection Service.
A food
import must be registered prior to importation with the
Ministry of Health at a cost of $100 per item; this
registration is valid for 5 years.
Labels
must be in Spanish (stick-ons are allowed) and include:
-
product name
- net
content and drained weight in metric
-
artificial color and flavors
-
ingredients in decreasing order by weight
-
importer’s name and address
- lot
number and expiration date
-
country of origin
-
preservation and use instructions
Best
Prospects
Frozen products with market potential in Costa Rica
include: potato fries, beef, seafood, and ice cream.
Although negligible now, imports of frozen vegetables
and processed beef and poultry products are expected to
have good potential.
Luis
Solera is a private consultant who prepared this report
on contract with the FAS Office of Agricultural Affairs
in San José, Costa Rica. E-mail:
agsanjose@usda.gov
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