Agricultural Policy Monitoring and Evaluation 2024

10. Costa Rica

Main findings

Support to agriculture

Agricultural support for producers (Producer Support Estimate, PSE) in Costa Rica amounted to 3.7% of gross farm receipts in 2021-23, well below the OECD average and down from 8% in 2000-02. On average, 86% of producer support is in the form of market price support (MPS), potentially one of the most trade- and production-distorting forms of support. MPS is mainly generated through border measures (tariffs) and, until 2022, domestic reference prices. Products with market price support notably include rice, poultry meat, pig meat, and sugar. On average, border protection and price interventions raised producer prices by 3% relative to international prices in 2021-23.

Budgetary support to producers represented 0.5% of the 2021-23 gross farm receipts, mainly in the form of credit at preferential rates for the agricultural sector and subsidies for fixed capital formation directed mainly to small-scale farmers. This type of support is also provided for on-farm services, payments for environmental services and support to organic production.

General services spending (General Services Support Estimate, GSSE) was equivalent to 1.3% of the value of agricultural production in 2021-23, a small increase from 0.9% in 2000-02. Nevertheless, its share remains well below the OECD average. In 2021-23, GSSE expenditure was mainly allocated to the agricultural knowledge and innovation system (particularly extension services), inspection and control, and development and maintenance of irrigation and rural road infrastructure.

Total support to the sector (Total Support Estimate, TSE) relative to Gross Domestic Product (GDP) has declined over time, from 1.2% in 2000-02 to 0.4% in 2021-23, below the OECD average of 0.6%.

Key recent policy changes

The National System of Individual Identification and Traceability of Cattle was launched in January 2024. This system requires each animal to be registered and identified through ear tags and electronic transponders. Its purpose is to improve the health management of the bovine livestock herd and the safety of the food derived from it. The system will also help ensure that Costa Rica’s beef and beef products meet the requirements of export markets.

The legal framework for the use of drone technology in agriculture was established in September 2023, and a programme to promote its use by providing small and medium-sized producer associations with drones and training on their use was subsequently started.

Two relevant trade developments took place in April 2024 when Costa Rica signed a Comprehensive Economic Partnership Agreement on Trade and Investment with the United Arab Emirates, and the Trade Association Agreement with Ecuador (signed in March 2023) passed the first step of legislative approval. Once these agreements enter into force, they will add to the network of regional trade agreements under which Costa Rica conducts most of its agro-food trade.

Assessment and recommendations

• Agricultural Total Factor Productivity (TFP) in Costa Rica has declined over the last decade. Performance in some agri-environmental indicators is also below average. The new Public Policy for the Agricultural Sector 2023-32 updates the country’s approach to sustainable productivity growth. It presents an opportunity to address the current challenges, including through streamlining the sector’s institutional governance and addressing infrastructure gaps. A first prioritisation of policy actions took place in 2023. Monitoring their implementation to review what worked well and where course corrections are needed will be key to ensure that the policy achieves its objectives.

• Innovation and knowledge transfer can help improve agricultural productivity and reduce the sector’s environmental footprint. Recent efforts, such as the development of more resistant seed varieties and the improvement of INTA’s laboratory facilities and technical capabilities to promote mitigation actions are welcome, but achieving an overall improvement in productivity and sustainability will require a sector-wide effort to enhance the agricultural innovation system.

• Following the 2022 reform that eliminated the minimum reference price for rice and lowered its import tariff, the government must ensure the implementation of other measures included in the Rice Path policy reform package to promote a transition to more sustainable and resilient rice production and protect the livelihoods of small-scale farmers, including technical assistance and actions to use water more efficiently and reduce the use of agrochemicals.

• Support to general services, including investments in the innovation system, continues to be below the OECD average. It is essential to strengthen public investment and create incentives for private investment in innovation and knowledge transfer. Promoting foreign investment in agricultural research, development and innovation − including through linkages with actors already established in the country − and incentivising collaboration amongst foreign and local companies, research institutions and farmers, could help fill the existing gaps.

• The contribution of agriculture to Costa Rica’s GHG emissions is almost twice the OECD average. This and other agri-environmental challenges should be addressed with more urgency. The agricultural Nationally Appropriate Mitigation Actions (NAMAs) currently in place have achieved some emission reductions in the coffee and livestock sectors. At the same time, the implementation of new measures for other sectors is often contingent on the availability of international funding. The government should prepare a plan that considers alternatives to implement these actions in case external funds are not available or sufficient. Advancing in the implementation of NAMAs for other important agricultural activities could further mitigate GHG emissions and promote the adoption of good agricultural practices.

Development of support to agriculture

Figure 10.1. Costa Rica: Development of support to agriculture

Table 10.1. Costa Rica: Estimates of support to agriculture

Million USD

.	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	2 209	5 907	5 402	5 585	6 733
of which: share of MPS commodities (%)	79.20	81.70	83.85	84.72	76.52
Total value of consumption (at farm gate)	1 114	2 625	2 340	2 505	3 030
Producer Support Estimate (PSE)	175	220	224	142	293
Support based on commodity output	164	188	196	117	252
Market price support¹	164	188	196	117	252
Positive market price support	164	188	196	117	252
Negative market price support	0	0	0	0	0
Payments based on output	0	0	0	0	0
Payments based on input use	10	30	27	24	39
Based on variable input use	4	13	10	9	20
with input constraints	1	13	10	9	20
Based on fixed capital formation	1	7	7	6	8
with input constraints	0	1	1	1	1
Based on on-farm services	5	10	10	9	11
with input constraints	3	0	0	0	0
Payments based on current A/An/R/I, production required	0	0	0	0	0
Based on Receipts / Income	0	0	0	0	0
Based on Area planted / Animal numbers	0	0	0	0	0
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0
With variable payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
With fixed payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	1	2	2	1	2
Based on long-term resource retirement	0	2	2	1	2
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	1	0	0	0	0
Miscellaneous payments	0	0	0	0	0
Percentage PSE (%)	7.90	3.66	4.13	2.54	4.32
Producer NPC (coeff.)	1.08	1.03	1.04	1.02	1.04
Producer NAC (coeff.)	1.09	1.04	1.04	1.03	1.05
General Services Support Estimate (GSSE)	20	74	74	66	82
Agricultural knowledge and innovation system	10	27	27	25	28
Inspection and control	3	24	23	22	26
Development and maintenance of infrastructure	7	22	23	18	26
Marketing and promotion	0	1	1	1	1
Cost of public stockholding	0	0	0	0	0
Miscellaneous	0	0	0	0	0
Percentage GSSE (% of TSE)	10.47	25.42	24.79	31.74	21.81
Consumer Support Estimate (CSE)	-189	-235	-248	-177	-280
Transfers to producers from consumers	-156	-173	-183	-104	-232
Other transfers from consumers	-34	-62	-65	-74	-48
Transfers to consumers from taxpayers	0	0	0	0	0
Excess feed cost	0	0	0	0	0
Percentage CSE (%)	-16.93	-8.92	-10.62	-7.08	-9.24
Consumer NPC (coeff.)	1.20	1.10	1.12	1.08	1.10
Consumer NAC (coeff.)	1.20	1.10	1.12	1.08	1.10
Total Support Estimate (TSE)	195	294	298	208	374
Transfers from consumers	189	235	248	177	280
Transfers from taxpayers	40	121	115	105	142
Budget revenues	-34	-62	-65	-74	-48
Percentage TSE (% of GDP)	1.23	0.40	0.46	0.30	0.43
Total Budgetary Support Estimate (TBSE)	32	105	103	91	123
Percentage TBSE (% of GDP)	0.20	0.14	0.16	0.13	0.14
GDP deflator (2000-02 = 100)	100	377	362	385	384
Exchange rate (national currency per USD)	331.77	602.57	621.35	644.77	541.61

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Costa Rica are: rice, sugar, milk, beef and veal, pig meat, poultry, bananas, coffee, palm oil and pineapple.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

General policy direction

The main guidance for agricultural policy in Costa Rica was updated in January 2023 through the adoption of the Public Policy for the Agricultural Sector 2023-32. The policy includes actions oriented to increase the sector’s productivity, sustainability, resilience, and adaptation to climate change, to improve the international competitiveness of Costa Rican products, create employment and improve living conditions in rural areas (Ministerio de Agricultura y Ganadería, 2023[1]). It has four major action areas:

• Modernising and strengthening the public institutions governing the sector and improving their co-ordination, using technology to simplify procedures and improve regulations.

• Improving competitiveness through the availability of information for producers and decision-makers, better infrastructure and plant and animal health services, and improved access to financing and insurance.

• Improving productivity and sustainability through the promotion of good agricultural practices and technologies that optimise resource use, the development of economic incentives for producers who implement actions that contribute to the decarbonisation goals, the implementation of the National Adaptation Plan for agriculture, and the promotion of research and knowledge transfer.

• Improving value added and marketing channels through the promotion of value addition and production linkages, identifying new market niches, and developing physical and virtual marketing channels. This area includes a food and nutritional security component seeking to promote access and availability of balanced foods for the population, and actions for waste management and use.

The National Seed Policy for 2017-30 is implemented by the National Seed Office with the participation of stakeholders from the seed production sector. Its strategic actions include developing seed varieties adapted to local conditions, ensuring the availability of quality seeds, promoting knowledge transfer through extension services, promoting the local production and export of seeds, and ensuring security in the supply of seeds.

Market and trade policies

Costa Rica uses border measures, including tariffs and sanitary and phytosanitary (SPS) measures, on imports of agricultural goods. The average applied most-favoured-nation (MFN) tariff on agricultural imports in 2023 was 11.5%, above the 4.6% faced by non-agricultural products. Certain sectors face significantly higher MFN average rates, such as dairy (45.6%), animal products (20.8%) and sugars (18.9%) (World Trade Organization, 2024[2]). Relevant reforms took place in 2022 with the elimination of the reference price and the reduction of import tariffs for rice.

Costa Rica has entered into 16 regional trade agreements (RTAs) with 52 trading partners1 across the world. Two additional trade agreements have been concluded but are not yet in force. Most of Costa Rica’s trade is conducted under these agreements, with RTA partners particularly important for agro-food trade. In 2020-22, 95% of agro-food exports and 90% of imports were with RTA partners, compared with 94% of exports and 86% of imports for all goods (WITS, 2024[3]).

An important programme to promote agricultural exports is DESCUBRE, operated through a public-private partnership led by the Ministries of Agriculture and Foreign Trade and the export promotion agency PROCOMER. DESCUBRE links farmers to export markets and value chains and promotes investments in rural and coastal areas. Its activities include providing seed capital and technical assistance to help small producers become providers of exporting companies in selected agro-food value chains.

Budgetary and financial instruments

Budgetary policy instruments predominantly focus on providing general services to agriculture, including extension services, research and development (R&D), and plant and animal health services, with a significant emphasis on environmental protection. Farmers receive a number of specific payments and subsidies, including implicit subsidies through credit at preferential interest rates, and some subsidies for fixed capital formation mostly directed to small-scale farmers.

The National Institute for Innovation and Transfer of Agricultural Technology (INTA) manages agricultural research, development and innovation. Together with the MAG’s National Directorate of Agricultural Extension, INTA also operates technology transfer and extension services to farmers. The National Animal and Health Service (SENASA) and the National Phytosanitary Service (SFE) are in charge of animal and plant health services.

Agri-environmental policies

The Payment for Environmental Services Programme provides financial compensation to small and medium-sized agricultural or livestock producers who plant trees interspersed with crops or pastures. This programme seeks to maintain, recover, and develop forest ecosystems, increase carbon sequestration, improve the rural landscape and the environmental conditions of cattle farms, and generate additional economic resources through the sale of wood from the trees planted.

The Recognition of Benefits for Good Agricultural and Livestock Practices programme grants a monetary incentive to agricultural producers, covering 20% to 30% of investments with a positive environmental effect, such as hedgerows, fodder banks, biodigesters, or organic waste-treatment systems. The Recognition of Organic Environmental Benefits programme provides direct payments to producers that are certified organic or in transition, provided as a base amount per year for a maximum of three years. These programmes are managed by the Ministry of Agriculture.

Irrigation policies are managed by the National Groundwater, Irrigation and Drainage Service (SENARA), which builds and manages irrigation infrastructure. This agency carries out construction works for drainage and flood control in the regions with the highest levels of rainfall, manages groundwater resources, generates information on the availability, quantity, quality, and vulnerability of water in Costa Rica’s aquifers, and provides training and assistance to producers for the proper use of water resources.

The Ecological Blue Flag (Bandera Azul) for the agricultural sector is a voluntary programme that recognises farmers who implement practices in areas such as water management, soil conservation, consumption of agricultural inputs, fossil fuels and electricity, and actions to improve climate adaptation and resilience.

Climate change mitigation and adaptation

Costa Rica has committed to a decarbonised economy with net-zero emissions in 2050 and established a goal for reducing greenhouse gas (GHG) emissions. The overall goal has two sub-targets: (1) maximum 9.11 MtCO₂eq net emissions by 2030; and (2) maximum net emissions budget of 106.53 MtCO₂eq in the period 2021-30.2 While agriculture contributes almost 21% to overall GHG emissions, almost twice the OECD average, the country does not have an agriculture-specific target.

Nationally Appropriate Mitigation Actions (NAMAs) for agriculture have been developed in collaboration with public institutions, producer organisations, the private sector and academia, supported by international co-operation funds. Currently, two agricultural NAMAs are active for coffee and livestock. Costa Rica is developing additional NAMAs for other sectors such as sugarcane, bananas, and rice. However, their implementation is dependent on the availability of international co-operation funding.

Low-emission production of coffee under the NAMA has led to an aggregate reduction of 175 484 tCO₂eq between 2015 and 2022. The sector’s baseline was updated in 2020 to 181 170 tCO₂eq. The average annual reduction in 2021-22 with respect to the baseline was of 28.6%. In the case of livestock, the cumulative mitigation3 achieved between 2020 and 2023 was 246 000 tCO₂eq, with an average annual mitigation of 1.8% with respect to the sector’s 2017 baseline (2.1 MtCO₂eq).

The National Climate Change Adaptation Plan 2022-26 was presented in April 2022. Most actions for the agricultural sector are under its Axis 5, “Adapted and eco-competitive production systems”. Some examples include: developing a strategy for rainwater-harvesting and irrigation technologies in productive agricultural systems; developing a programme for training and technology transfer in practices that strengthen resilience and promote ecosystem-based adaptation; and establishing a seed bank with crop varieties from different Costa Rican regions. Many of the actions are contingent on external funds.

Adaptation actions are implemented through the existing institutions and programmes, including those managed by the National Seed Office and the National Groundwater, Irrigation and Drainage Service (SENARA). Relevant investments and practices by farmers are incentivised through the Recognition of Benefits for Good Agricultural and Livestock Practices programme (see above). The NAMAs for the coffee and livestock sectors also include adaptation actions (OECD, 2022[4]).

Innovation for sustainable productivity growth

Costa Rica faces challenges related to the productivity and sustainability performance of its agriculture. The share of GHG emissions from the sector has decreased in the last decade but remains over twice the OECD average. The nitrogen and phosphorus balances are also above average. The sector experienced negative average productivity growth over 2012-21 (see the Policy context section below).

The approach to sustainable productivity growth is outlined in Axis 3 (Productivity and sustainability) of the 2023-32 Public Policy for the Agricultural Sector (Ministerio de Agricultura y Ganadería, 2023[1]). This axis focuses on five strategic lines: efficiency in the use of natural resources; availability and use of seeds and genetic material; sustainable production and risk management; harnessing technological development; and research and transference of agricultural technology. For the first five years, prioritised interventions cover seeds and genetic material, water management, climate adaptation and mitigation, good agricultural practices, organic production, animal health, and food safety. These interventions will target:

• availability and use of improved seed varieties and certified seeds

• developing an early warning system to ensure seed availability

• formulating a strategy for the conservation and sustainable use of plant genetic resources

• developing irrigation infrastructure in areas with low rainfall, and drainage and flood prevention infrastructure in areas with high rainfall

• updating the hydrogeological studies for managing underground water resources

• researching and disseminating climate change mitigation and adaptation technologies for producers

• increasing the number of producers that develop National Appropriate Mitigation Actions (NAMAs) or actions to comply with the National Adaptation Plan

• promoting production systems that use good agricultural practices and organic production

• improving the traceability system for the bovine livestock sector.

Recent policy developments

Domestic policy developments in 2023-24

Regulatory and sector management developments

The National System of Individual Identification and Traceability of Cattle was launched in January 2024. It aims to improve the health management of the bovine livestock herd and the safety of the food derived from it, also ensuring that products from Costa Rica meet the requirements of export markets. The system will be managed by the National Animal Health Service (SENASA). It requires each animal to be registered and identified through visual and electronic means (ear tags and electronic transponders). An associated digital platform (Trazar-Agro) has been developed with support from OIRSA, a regional organisation focussing on animal health and food safety.

The legal framework for the use of drone technology in agricultural activities was established in September 2023. This development is expected to facilitate the use of drones by institutions in the agricultural sector for research, technical assistance and technology transfer work, and by producers to perform aerial mapping, crop monitoring, input application and related tasks.

The Recognition of Organic Environmental Benefits programme was reformed in August 2023 to simplify its requirements. Producers are no longer required to sign an agreement with the Ministry of Agriculture before receiving the payment. This development is expected to expedite processes, reduce administrative costs, and facilitate the development of organic agriculture.

Procedures for the registration of imports of hemp and psychoactive cannabis4 seed were approved in 2023 with support of the National Seed Office and the National Phytosanitary Service (SFE). This follows the 2022 establishment of the legal framework for the cultivation and commercialisation of cannabis for medicinal and therapeutic use and of hemp for food and industrial use. In August 2023, the Ministry of Agriculture issued a first authorisation for seed import, cultivation and related activities to a public university that will research the properties of hemp components.

The Ministry of Agriculture made investments to strengthen the public agricultural extension service in 2023. In particular, 129 new staff members were appointed at the 80 regional extension offices, and investments of CRC 610 million (USD 1.1 million) were made to renew the institutional vehicle fleet and the offices’ computer equipment (Ministerio de Agricultura y Ganadería, 2023[5]).

Support to producers

A programme to promote the use of drones in farming was announced in January 2024. Seventeen organisations of small and medium-sized producers will receive drones, and 40 members of these organisations will receive training on their use between January and June 2024. The programme involves a public investment of CRC 557 million (USD 1 million) to be co-financed by the Rural Development Institute (INDER), which will purchase the drones, and the Ministry of Agriculture, which will provide technical assistance to beneficiaries (Ministerio de Agricultura y Ganadería, 2024[6]).

Some measures were applied to assist producers affected by adverse climate and market situations. For example, in March 2023 small bean producers from the South Pacific region who lost their harvest due to delayed rains linked to the El Niño phenomenon received certified seed from the Ministry of Agriculture. In addition, a special fund of CRC 5 billion (USD 9 million) through the Development Banking System (SBD) was opened in January 2024 to provide credit to coffee producers affected by climate variability, a historical decrease in national production, and lower international prices.

Policies to mitigate emissions from agriculture

In 2023 the National Institute of Innovation and Transfer in Agricultural Technology (INTA) improved its laboratory facilities and technical capabilities to promote the development of Nationally Appropriate Mitigation Actions (NAMAs). INTA is working on the development of metrics of greenhouse gases (GHG) at the farm level, taking samples to measure the soil organic carbon content with different uses of plant coverage, and determining the soil’s organic carbon contribution on different crops and its effect on carbon removal from production systems.

In the framework of the NAMA for the coffee sector, 21 projects were financed with USD 300 000 of support of international co-operation funds to implement technologies for GHG reduction, increase the sector’s resilience and sustainability, and scale up NAMA good practices in production. For its part, the NAMA-livestock has implemented measures and provided technical support to 2 700 farms until the end of 2023.

In September 2023, a new NAMA for the sugarcane sector was submitted for recognition to the United Nations Framework Convention on Climate Change (UNFCCC). The NAMA is in a pre-pilot phase with financial support from the Inter-American Development Bank.

Policies to facilitate climate change adaptation in agriculture

In March 2023, the INTA introduced a new variety of red bean named Urán, developed in collaboration with the University of Costa Rica. The Urán variety is more resistant to drought and high temperatures, shows higher average yields than other widely cultivated bean varieties, and is resistant to the bean golden mosaic virus, a common disease affecting the crop. The research project (which started in 2016) benefitted from financial support from the Korea-Latin America Food and Agriculture Cooperation Initiative (KoLFACI), among other partners (Universidad de Costa Rica, 2023[7]).

In 2023, the National Seed Office implemented a project for the conservation and sustainable use of plant genetic resources and for strengthening the National Seed System. As part of its activities, rice producers received native seeds that require less agricultural inputs and have a better adaptability to climate variations. In addition, a digital system was developed to gather information about seeds and plant genetic resources.

A hydrogeological study was carried out in 2023 to monitor water status in an important aquifer (Barranca-Jesús María). Infrastructure projects for flood prevention and control were also implemented, including the construction of flood control canals for the Limoncito river in the Caribbean region.

Trade policy developments in 2023-24

A Comprehensive Economic Partnership Agreement on Trade and Investment between Costa Rica and the United Arab Emirates was signed in April 2024 following the launch of negotiations in March 2023.

Also in April 2024, the Trade Association Agreement between Costa Rica and Ecuador, signed in March 2023, was approved in first reading by the Costa Rican Legislative Assembly. As the agreement was approved by the Ecuadorian Parliament in February 2024, final legislative approval in Costa Rica (following a second reading) will allow for its entry into force.

Costa Rica authorised an import quota of 3 455 tonnes of fresh potatoes for processing, subject to a tariff of 15% (compared to the normally applicable MFN rate of 46%) in response to a shortage of raw materials for food processors. To avoid affecting domestic producers, in-quota imports were authorised during specific time windows outside of local harvest periods throughout 2023.

Policy context

Key economic and agricultural statistics

Costa Rica is a small country with a population of 5.2 million. Its long democratic tradition and political stability have underpinned its economic progress and the development of its agricultural sector. Agriculture still plays a relatively important role in the economy, contributing 10% to employment. While the share of agriculture in GDP is slightly above the average of all countries covered in this report (“all countries”), it has more than halved since 2000, reflecting the diversification of the economy. Costa Rica’s GDP per capita more than tripled between 2000 and 2022 and is close to the average across all countries (Table 10.2).

After a marked recovery in 2021 from the economic contraction associated with the COVID-19 pandemic, real GDP growth has returned to rates closer to the pre-pandemic period (around 5%). Unemployment has declined since peaking in 2020 and, at 9% in 2023, is now at pre-COVID-19 levels. While inflation had an important increase in 2022, reaching 8%, in 2023 it returned to the lower trend of previous years (Figure 10.4). Drivers of this rapid fall in inflation include a strong appreciation of the exchange rate to the US dollar, a reduction in imported commodity prices and modest domestic inflationary pressures (OECD, 2023[8]).

Table 10.2. Costa Rica: Contextual indicators

	Costa Rica		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	32	129	0.08%	0.09%
Population (million)	4	5	0.09%	0.10%
Land area (thousand km2)	51	51	0.10%	0.10%
Agricultural area (AA) (thousand ha)	1 840	1 811	0.10%	0.10%
			All countries1
Population density (inhabitants/km2)	78	101	52	64
GDP per capita (USD in PPPs)	7 796	24 923	9 363	25 965
Trade as % of GDP	38.2	26.0	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	10.2	4.5	2.9	3.8
Agriculture share in employment (%)	16.2	10.1	-	-
Agro-food exports (% of total exports)	31.0	35.9	6.4	8.0
Agro-food imports (% of total imports)	7.6	12.4	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	76	74	-	-
Livestock in total agricultural production (%)	24	26	-	-
Share of arable land in AA (%)	11	13	32	34

Notes: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Costa Rica is a net exporter of agro-food products, which accounted for 36% of the 2022 value of its goods exports. Forty-two per cent of Costa Rica’s agricultural exports are primary crops for final consumption, such as bananas and pineapples, while 35% of exports are processed products for final consumption. Agro-food imports are almost equally distributed between products for final consumption and products for industry use (Figure 10.5).

Costa Rica’s estimated Total Factor Productivity (TFP) decreased by 1.6% per year during 2012‑21. The output growth of 0.6% p.a. between 2012 and 2022 resulted from the increasing use of primary factors (capital, labour and land) and, to a lesser extent, variable inputs (Figure 10.6). The factors contributing to this TFP decline include area expansion into less productive land, ongoing farm fragmentation, and limited financial and physical infrastructure.

In the last two decades, there have been improvements in some of Costa Rica’s agri-environmental indicators such as the sector’s share in total energy use and its contribution to GHG emissions (Table 10.3). However, agricultural emissions still account for 20% of the country’s total GHG emissions, over twice the OECD average. Moreover, the balances of nitrogen and phosphorus in agricultural land have increased since 2000 and are considerably above average. Agriculture is the main user of water resources, accounting for almost two-thirds of total freshwater abstractions.

Table 10.3. Costa Rica: Productivity and environmental indicators

	Costa Rica		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	1.1%	-1.6%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	36.0	48.0	32.1	28.2
Phosphorus balance, kg/ha	12.1	14.8	3.3	2.3
Agriculture share of total energy use (%)	6.6	2.0	1.7	2.0
Agriculture share of GHG emissions (%)	29.2	20.5	8.7	10.1
Share of irrigated land in AA (%)	5.6	8.9	-	-
Share of agriculture in water abstractions (%)	32.5	63.2	47.0	49.5
Water stress indicator	..	3.7	8.7	..

Notes: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Costa Rica’s agricultural policy has developed in three phases (Table 10.4). Up to the 1980s, the country pursued import substitution, supported by government market interventions and capitalising on its natural comparative advantages through the export of traditional products such as coffee, bananas, sugar, and bovine meat.

Between the mid-1980s and the mid-2000s, Costa Rica followed an outward-oriented growth strategy, which influenced the development of agricultural support policies. Market intervention decreased significantly, combined with continued domestic reforms and trade liberalisation, marked by Costa Rica’s accession to the General Agreement on Tariffs and Trade (GATT) in 1990 and, subsequently, to the World Trade Organization (WTO) in 1995. Price controls were eliminated (except in the case of rice), export taxes removed and import tariffs lowered. Costa Rica entered into free trade agreements that granted duty-free treatment for imports from many trading partners, although tariffs still apply to some agricultural products.

The food price crisis of 2007-08 fuelled food security concerns, leading to the establishment of programmes seeking to increase productivity of staple foods, particularly through extension services targeting small-scale farmers. The administered price for rice that had been maintained for decades was reformed in 2015 and converted to a minimum reference price, which was eliminated in 2022 as part of a policy reform package that also included tariff reductions on rice imports. Costa Rica’s policies continue to emphasise export-oriented agriculture, which has resulted in some asymmetries between exporters and producers for the local market. At the same time, greater policy focus is now directed at promoting sustainable productivity with an emphasis on small-scale farmers.

Table 10.4. Costa Rica: Agricultural policy trends

Period	Framework	Changes in agricultural policies
Prior to 1980s	Closed economy	Import substitution approach; price interventions on agricultural products, particular emphasis on guaranteed price for rice; high tariffs on agricultural imports Creation of the National Production Council (CNP) in the 1940s to promote agricultural and industrial production, control agricultural prices and own public infrastructure for the collection, storage, transport and distribution of grains
1980s-2007/08	Gradual shifts to open the economy	Dismantling price interventions (but minimum price for rice continued) Reduction of trade barriers (import and export tariffs) Reforms to CNP end most functions, keeping only the Institutional Supply Programme (PAI), which purchases food from small and medium farms for consumption in public institutions Strengthening agricultural exports via product diversification and development of destination markets; several FTAs signed; incentives (including in agriculture) to domestic and foreign companies to attract FDI, such as the Free Trade Zone Regime (FTZ) providing tax benefits and preferential port rates Creation of agricultural institutions for animal health (SENASA), plant health (SFE), agricultural innovation (INTA) Creation of the Rural Development Institute (IDA/INDER)
Since 2008	Open economy with a focus on sustainability and small-scale farmers	Emphasis on extension services for small-scale farms; promotion of good agricultural practices Small and limited payments to farmers for environmental services Import tariffs persist for some agricultural products Major rice policy reforms in 2022: elimination of the reference price and lower tariffs

Producer support has fluctuated between 2% and 11% of gross farm receipts since 1995. This volatility can be partly explained by fluctuations in export and import unit values or in the international reference prices for some MPS commodities. Around 90% of Costa Rica’s PSE consists of market price support (MPS), which has traditionally concentrated on rice, poultry, pig meat and sugar. In contrast, budgetary support to producers is limited and has changed little over time (Figure 10.7). Around 75% of total budgetary allocations are in the form of general services to the sector. Agricultural research and development (R&D), extension services, inspection and control, and rural infrastructure account for most of these expenditures. Costa Rica does not provide budgetary transfers to consumers.

References

[6] Ministerio de Agricultura y Ganadería (2024), Drones de última tecnología beneficiarán a 3 mil productores de todo el país (press release), https://prensamag.blogspot.com/2024/01/drones-de-ultima-tecnologia.html (accessed on 12 March 2024).

[5] Ministerio de Agricultura y Ganadería (2023), MAG invierte para fortalecer asistencia técnica a productores (press release), https://prensamag.blogspot.com/2023/11/mag-invierte-para-fortalecer-asistencia.html (accessed on 15 March 2024).

[1] Ministerio de Agricultura y Ganadería (2023), Política pública para el sector agropecuario costarricense, http://www.mag.go.cr/bibliotecavirtual/E14-11132.pdf.

[8] OECD (2023), OECD Economic Outlook, Volume 2023 Issue 2, OECD Publishing, Paris, https://doi.org/10.1787/7a5f73ce-en.

[4] OECD (2022), Agricultural Policy Monitoring and Evaluation 2022: Reforming Agricultural Policies for Climate Change Mitigation, OECD Publishing, Paris, https://doi.org/10.1787/7f4542bf-en.

[7] Universidad de Costa Rica (2023), Nueva variedad de frijol rojo Urán ya está disponible para los agricultores, https://www.ucr.ac.cr/noticias/2023/3/03/nueva-variedad-de-frijol-rojo-uran-ya-esta-disponible-para-los-agricultores.html (accessed on 11 March 2024).

[3] WITS (2024), UN Comtrade by country period [database].

[2] World Trade Organization (2024), World Tariff Profiles 2024: Costa Rica, https://www.wto.org/english/res_e/statis_e/daily_update_e/tariff_profiles/CR_E.pdf.

Notes

← 1.  Members of the trading blocs that have entered into RTAs with Costa Rica − the European Union, the European Free Trade Area (EFTA), and the Caribbean Community (CARICOM) − are considered individually. The number includes only the five CARICOM member states for which the trade agreement is in force.

← 2.  Costa Rica's contribution does not consider a comparative benchmark. Therefore, the target is not relative to a starting or reference year.

← 3.  In the case of the livestock sector, mitigation includes emission reduction and carbon sequestration by pastures and trees (such as hedgerows).

← 4.  The law defines “psychoactive cannabis” as any plant of the genus cannabis (and parts thereof) with a content of tetrahydrocannabinol (THC) equal to or greater than 1% in dry weight. Non-psychoactive cannabis or hemp refers to plants with THC content below that threshold.