Alternative Dimensions of Aid for Trade in Central America
Article 3: Development of Golden Pineapple Exports in Costa Rica Pineapple production is one of the most important economic activities in Costa Rica 15 due to the number of producers involved and to its position within the country’s agricultural exports, in the second place after banana exports. At present, over 1,500 small and medium producers grow this fruit, and this county is the world’s largest exporter of fresh pineapple, climbing from zero exports in early 1980’s to US$26 million in 1996, and reaching US$326 million in 2005, more than other traditional exporters such as Ivory Coast and Ghana. The process that led Costa Rica to be the one of the world’s largest exporters of pineapple started in the 1970’s, with the trials on varieties that could adapt to the country’s agro-ecological conditions performed by Pineapple Development Corporation (PINDECO), a division of Fresh del Monte Corporation. This company made a significant investment in the development of those varieties, taking into account that Costa Rica offered more favorable conditions and lower prices than those of Hawaii (land and particularly labor) for the development of this activity. The results were satisfactory and the company made large profits. This successful result, however, brought the attention of other manufacturers who immediately followed the steps of PINDECO. The cost of engaging in the production of pineapple by other producers was relatively lower as compared to the cost incurred by the pioneer company to place the first shipment in the foreign market. The technology package used to produce and harvest pineapple was not known in Costa Rica when this activity started to be developed. PINDECO had to import technicians specialized in the production of pineapple. However, when PINDECO found out the quality of local labor, PINDECO sent its workers to be trained in Hawaii. 16 Then, however, the company decided to change that practice and to train its workers at the “Instituto Nacional de Aprendizaje” (Learning National Institute), responsible for technical education in the country PINDECO took advantage of the infrastructure and experience used in connection with the marketing of bananas and transferred them to the pineapple field. With that, they could guarantee a regular distribution, what is required by any retailer of perishable goods to source his customers. Opening up the international distribution channels was not a difficult task then. Del Monte already had a set of distributors in the United States and Europe, who were used to purchasing banana on a weekly basis. The matter was to convince retailers to include pineapple together with their purchase of bananas. While the pineapple industry showed poor expansion at the international level during the 1980’s, once the variety developed by Del Monte was known and recognized by European and American supermarkets, world imports soared more than 9% per year. The companies that distribute fruits, with experience in the marketing of banana, incorporated pineapple in their portfolio since it implied the same know-how and marketing channels. Small and medium producers could enter the business thanks to PINDECO’s initial effort, which developed the product and marketing channels. When it was established that it was impossible to guarantee market exclusivity, PINDECO negotiated with independent producers the marketing of their product. It transferred production technologies and processes and facilitated product distribution in international markets.
One solution for information asymmetries and market failures as the ones referred to before, has to do with the mobilization of resources (aid for trade) to reduce the impact of these externalities. For example, the discovery rate may be positively affected by a reduction in the costs incurred by the entrepreneurial companies to obtain new export products or by a higher appropriation of the social benefit derived from a new discovery. Such objective may result from transfer of resources by means of specific allowances or subsidies or from tax exemptions for limited periods of time to encourage the private sector to invest more funds in new products (whether patentable or non-patentable), what would enable the private sector to share the risk of failure in exchange for a controlled entrance of competing companies into the newly developed industry. On the other hand, the costs incurred by an economy and its entrepreneurial companies could be reduced by means of organizations that perform market research, analyze marketing channels 15
See Statistics Appendix At present, the operations performed by Del Monte in Hawaii, the Philippines and Brazil are managed by Costa Rican technicians trained by PINDECO over the last 25 years. 16
Published on Sep 14, 2007
this report was prepared by the integration and trade sector (int) as a contribution to the regional meeting on mobilizing aid for trade: la...