toulouse’school’of’economics’ · regula’ng)the)market:)) the)costa)rican)case)!)...
TRANSCRIPT
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Regula'ng the Market: the Costa Rican Case
Pepita Miquel-‐Florensa Toulouse School of Economics
IGC – NAEB Coffee Conference February 9th, 2015
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Costa Rica Coffee Sector
• Costa Rica: a small LaEn American country with a well run state and Coffee Board (ICAFE)
• Coffee mostly grown by smallholders
• A success story: – EssenEally all coffee is exported as washed – Approx. 80% as specialty coffee
• Many aspects contributed to the country success: – RegulaEon of varieEes, quality, water-‐management – Drive towards cerEficaEon and environmental sustainability – … – Regula'on of marke'ng
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Costa Rica Coffee Sector: Regula'on
• ICAFE represents interest of farmers, processors and exporters.
• Ley N° 2762: Ley sobre el Régimen de Relaciones entre Productores, Beneficiadores y Exportadores de Café
• Ar;culo 1°-‐ Esta ley Cene por finalidad determinar un régimen equitaCvo de relaciones entre productores, beneficiadores y exportadores de café, que garanCce una parCcipación racional y cierta a cada sector en el negocio cafetalero, y por objeto, todas las transacciones con café producido en el territorio nacional.
• This law has as its objecEve to achieve an equitable system of relaEonships between producers, processors and exporters of coffee that guarantees a raEonal and secure parEcipaEon of each stage in the coffee business and, consequently, for all transac'ons of coffee produced in the naEonal territory
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Costa Rica: Proceso De Liquidacion Final
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FARMERS (Small holders/
estates)
COFFEE WASHING STATION
COOPERATIVE
COFFEE WASHING STATION PRIVATE
Costa Rica Coffee Sector: Regula'on
Step 1: Farmers sell cherries to the staEon
à StaEons report bi-‐weekly to ICAFE about purchases of all types of coffee.
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FARMERS (Small holders/
estates)
COFFEE WASHING STATION
COOPERATIVE
COFFEE WASHING STATION PRIVATE
Costa Rica Coffee Sector: Regula'on
Step 2: StaEons make advance payments at delivery (approx. 30%) a. Farmers receive a receipt (Law ensure its value as a contract) b. StaEons report to ICAFE advances
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FARMERS (Small holders/
estates)
Costa Rica Coffee Sector: Regula'on
Step 3: StaEons write contracts with exporters a. All contracts must be registered and approved by ICAFE b. Contracts specify delivery date, quanEty, price, quality c. ICAFE can refuse a contract if price (relaEve to NYC) is too low.
FARMERS (Small holders/
estates)
COFFEE WASHING STATION
COOPERATIVE
COFFEE WASHING STATION PRIVATE
EXPORTER bulking & sales
EXPORTER bulking & sales
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FARMERS (Small holders/
estates)
Costa Rica Coffee Sector: Regula'on
Step 4: StaEons must pay every trimester depending on the advances
FARMERS (Small holders/
estates)
COFFEE WASHING STATION
COOPERATIVE
COFFEE WASHING STATION PRIVATE
EXPORTER bulking & sales
EXPORTER bulking & sales
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FARMERS (Small holders/
estates)
Costa Rica Coffee Sector: Regula'on
Step 5: Final Liquida'on • At the end of harvest season staEons must pay farmers final
liquidaEon + contribuEon to stabilizaEon fund
FL = Sales – Advances – Cost – Profit – Fund
FARMERS (Small holders/
estates)
COFFEE WASHING STATION
COOPERATIVE
COFFEE WASHING STATION PRIVATE
EXPORTER bulking & sales
EXPORTER bulking & sales
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Costa Rica Coffee Sector: Benefits
• Fair and Equitable System: – Farmer is guaranteed a certain share of FOB price – RegulaEon prevents transfer pricing within integrated chains
• Farmer exposed to less risk – Payment depends on price condiEons prevailing over enEre harvest season
• Transparent – Final LiquidaEon payments are published in NaEonal Newspaper
• Bejer cash flow management and lower working capital needs – Farmers do not get all their money at harvest Eme – StaEons have lower working capital requirements
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Costa Rica Coffee Sector: Downsides ?
• Enforcing contracts between farmers and staEons system strengthen relaEonships and reduces staEons working capital needs
• At the same Eme, the system preserves staEons compeEEon for cherries
• System does not directly address side-‐selling problem: farmer receives inputs from staEon A but sells to staEon B. – But farmers will think twice reneging on financially solid staEons
• Implementa'on: – Small holders in Costa Rica are larger (and wealthier) than in Rwanda – Systems requires technical capacity in the board
• Though technology helps – System requires poliEcal support
• Other countries have failed due to vested interests
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Costa Rica Coffee Sector: Prac'cal Aspects
• Receipts? – On paper (with legal character). – A document that guarantees an iniCal payment and a right to a final price declared by
ICAFE. – 3 copies (available to ICAFE) – Lean dispute resoluCon and sancCons for cheaCng staCons
• Reports from StaEons? – every 15 days (within 5 days) – Common template, online a server – Legal declaraCon → only random checks on individual receipts
• Payments? – Everything happens with banks
• Advantage of semng up a system now: – Cheaper IT services – Coordinate with CENSUS to issue farmers cards