2023-10-18 10:54:48
While in Costa Rica the lowest loan interest rates are held by public banks, with an average of 8.07%, and financial institutions have the highest, with rates of 23.93%, in Panama there are loans for the sector. at zero rate, in Chile at 1%, in the United States at 3.25% and Spain at 4%
On October 16, farmers around the country commemorated World Food Day, despite suffering an accelerated deterioration in their working conditions in increasingly unequal competition with imported products from countries that subsidize their farmers or make them cheaper. their costs by exploiting their workforce.
The lack of access to credit and agricultural insurance is one of the most important problems that farmers in Costa Rica must face. Being a highly risky activity and, as they only have the possibility of obtaining credit through mortgages, people who dedicate themselves to farming frequently lose their homes and land to the banks.
Within the framework of the celebration, economist Welmer Ramos—invited to give a presentation by the National Horticultural Corporation—explained that interest rates on loans to the agricultural sector in Costa Rica are up to 24 times higher than in countries like Panama and Chile. , which frequently paralyzes the activity of farmers and prevents them from being competitive.
The economist and former congressman pointed out that in Costa Rica the lowest average interest rate is that of public banks, with 8.07%; followed by private banks, with 10.25%; cooperatives, with 10.92%; and financial entities (for example, microloans), with 23.93%.
This means that, if the entire credit portfolio in 2023 (₡608 billion) were financed by financial companies, farmers would pay 100 billion more than if it were financed by public banks.
The interest rates contrast even more when compared to those paid for loans in countries where there are agricultural financing policies, such as Panama, where there are zero-rate credits in amounts less than 100 thousand dollars and 3 .50% in those who are superior.
Even the lowest average rates in Costa Rica are far from reaching 1% for loans less than $100 thousand in Chile (1.35% for larger amounts), 3.25% in the United States (5.25% for larger amounts ) or 4% in Spain.
Agricultural insurance The economist and former representative Welmer Ramos was invited by the National Horticultural Corporation to present a presentation on financial challenges in the agricultural sector.
During several administrations, the agricultural sector has warned of the urgency of giving the sector access to soft loans. UNIVERSIDAD has reported that rural agricultural cantons, such as those in the upper area of Cartago, expensive loans among farmers have seriously affected their mental health and sometimes pushes them to take their own lives.
In Costa Rica, delinquency in the agricultural credit portfolio has been increasing since 2016 and, in December 2021, it broke a record with an agricultural balance at risk exceeding ₡68,920 million, which represented 14.3% of the total agricultural portfolio and an increase of 3.9% compared to the previous year, according to data from the Executive Secretariat of Agricultural Sector Planning (Sepsa). “It is an issue to which special attention must be paid,” says the Sepsa report.
Faced with this reality, which collides with important climatic and geopolitical risks that affect the agricultural sector and its survival, Ramos maintains that it is necessary to promote agricultural insurance that is generalized so that the “premium is low and security is great.”
“When you have insurance, loans become cheaper because there is less risk and interest rates are established according to the risk. Nowadays, in Costa Rica, if there is a hurricane, farmers are completely unprotected.
Ramos also believes that Costa Rican banks have a “mortgage obsession” that limits access to credit to people who work the land on a rented basis. These conditions, the economist maintains, force farmers to accept very high interest rates on inadequate loans that make them “work for whoever lends them the money.”
Less intermediaries
The long marketing chains of national agricultural products also harm the financing of producers, who leave little behind, while charging consumers dearly.
While farmers contribute 70% of the value in the marketing chain, they only leave between 10 and 30% of the profits of the final price, while intermediaries who are in charge of logistics and marketing contribute 5% and They leave up to 50% of the profits to inflate the final price.
This was demonstrated in an investigation by the dean of the Faculty of Agri-Food Sciences, Enrique Montenegro, who presented his results to the farmers gathered in Cartago.
Ramos agreed with the need to shorten these chains so that farmers improve their income:
“If 66% of the value they generate for society is taken from the farmer, those who live well will be the extractors of value and not the creators of wealth. These perversities of inefficient markets must be urgently corrected,” he commented.
Despite the sector’s resistance to the difficult conditions in which farmers work, decades of neglect by the political class has decreased the amount of land that is cultivated, as well as the people who dedicate themselves to this activity.
However, farmers and agricultural economics specialists maintain that its relevance for the country remains great, particularly in rural areas where there is increasingly less employment and where agriculture represents 34% of work.
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