Q COSTA RICA — The Government of Costa Rica responded by filing a complaint with the Public Prosecutor’s Office and introducing a bill that would create a mechanism to stop the entry of products at prices lower than those of local growers.
The government complaint with the Public Prosecutor’s Office is against an onion importer, who allegedly reported that he purchased the product at lower prices than he had to pay in Costa Rica, where it was produced.
This is called under-invoicing.
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Through this action, by nationalizing the imported product onions, the importer manages to pay a lower amount of tariffs, which causes damage to tax revenue, and also sells to consumers at a lower price.
The Minister of Agriculture and Livestock (MAG), Víctor Carvajal, reported that the complaint was filed through the General Directorate of Customs of the Ministry of Finance. In the reported case, the damage to public finances is estimated to be greater than US$10,000, the threshold required to file a complaint.
Carvajal explained to the Legislative Assembly faction leaders that this not only generates negative consequences in terms of tax revenue, but it also creates “unfair competition.”
For example, in the case in question, onion imports were found with a reported cost of ¢179 and ¢161 per kilo, while the local product costs much more.
The Minister explained that a price below ¢300 per kilo is ruinous, at least for domestic production, as that is the minimum cost of producing a kilo in Costa Rica.
So, a huge amount of onions are coming in from abroad because of the high cost in Costa Rica and a weak exchange rate. If this keeps up, by 2026, half the onions consumed in Costa Rica could be imported. Currently, the figure is approximately 15%.
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In other words, imported onions are replacing domestic production.
“There is a very significant amount of domestic produce that is being lost and will not be able to be sold,” the minister explained to the legislators last Thursday (June 19). “There is an increase in the number of imports due to these situations,” he added.
The MAG Minister explained that onions and potatoes are the products most affected by this phenomenon, but it can affect any vegetable. Four other cases are under investigation.
How can this be corrected, that is, consumers not having access to lower prices?
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The government introduced Bill 25.025, which seeks to reform the General Customs Law, allowing customs officials to detain products with irregularities in their reported data before entering the country. In this way, they never reach the domestic market.
Currently, the process for nationalizing agricultural merchandise consists of:
- The importer submits information that allows Customs authorities to estimate the duties to be paid based on the invoice provided by the imporer. This data is sometimes altered.
- The next step is to conduct technical inspections, such as phytosanitary (disease) inspections.
- Other duties payable are calculated, and if they are paid, the product enters the country.
- Subsequently, Customs technical teams investigate whether the price reported by the importer is irregular, but by then, the product has already reached the market, that is sold.
The Reform
The reform proposed by the Executive Branch (Government) would create a formula that, upon entering the data provided by the importer in step 1, would generate an alert if irregular prices are found. According to Carvajal, there is sufficient information from international markets to accomplish this task. If this is the case, the product will be detained and prevented from entering the country.
In short, the change consists of verification being done prior to the product’s entry, rather than afterward, as is currently the case.
When presenting the bill to the legislators, the MAG Minister explained that the largest number of imports of this type coincides with domestic harvests. This means that when massive imports arrive, the domestic supply is also high, making it very difficult for domestic producers to compete. The price cuts they ultimately make to sell their harvest could lead to financial ruin.
The next period of abundant domestic harvest is scheduled for October and November 2025. The minister believes changes must be made before then to prevent the phenomenon from impacting that period again and also to curb this type of behavior.
“A lot of assets are at risk,” Carvajal said, referring to farms, loans, and domestic production that could remain unsold due to the high imported supply.
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