Agrifood market in Costa Rica

Costa Rica is Canada's second largest trading partner in Central America. In 2023, bilateral trade of goods between both countries amounted to CAD $1.04 billion, with Canada exporting CAD $320 million and importing CAD $720.6 million.

The Canada-Costa Rica Free Trade Agreement (CCRFTA), signed in 2002, granted duty free treatment for 94% of Canadian agriculture and agri-food and boosted exports for cereals, preserved food, mucilage, preserved potatoes, pork meat, pulses, grains, oilseeds, pet food, and more.

Products with restrictions: Some products are excluded from CCRFTA and subject to high tariffs. These include dairy, poultry, onions, potatoes, beef, and beans. Pork meat and flour have a limited duty-free quota. Sugar, salt, rice, milk, and flour are subject to specific "vitamin enrichment" processes which discourage foreign suppliers and could be considered non-tariff trade barriers.

Products with opportunity: The local appetite for imported goods is strong, driven by a higher Gross Domestic Product (GDP) per capita than the rest of the region. This provides opportunities for companies interested in exporting food preparations, wheat, bread and baked goods, soybeans, beans, jams, fruit jellies, marmalades, vegetable oil, pasta, beef, fruits, sausages, and gluten free products.

Costa Rica´s agriculture and agrifood sector remains strong. The country exports numerous products, mostly tropical fruits, coffee, and processed goods. However, it is not self-dependent on basic agriculture goods. Agriculture accounts for nearly 10% of Costa Rica's GDP (4.5% agriculture and 5.1% agrifood industry), employs 10% of Costa Rican workforce and covers 35.5% of the territory. Of this territory, 69% corresponds to agricultural activities, 21% to livestock activities and the remaining 10% is support activities (6%), forestry and wood extraction (3%) and fishing and aquaculture (1%).

Key opportunities in Agrifood Sector for Canadian companies in Costa Rica

Food processing sector

Includes processed fruit and vegetables, bakery goods, cereals and pasta, dairy, chocolate and cocoa products, nuts, condiments and sauces, and pet food.

Pet food

Includes farm animals and pets. It is a growing market. 60% of Costa Ricans have a pet and take proper care of them, with specialized food and frequent vet visits being common.

Baked products

The sector is rapidly growing. Importers typically request toppings, prepared mixes, and decorations. Most demand comes from food service distributors supplying hotels and restaurants.

Frozen products

The most demanded frozen products include pork meat, seafood, and bakery-related items (desserts).

Nutritional food

Middle-class and upper-class consumers are interested in low-calorie, healthy foods. These consumers are willing to pay a premium for such products, which are sold in supermarkets and specialized stores, which are on the rise.

Products for celiac, lactose intolerant, and diabetic consumers (gluten and sugar-free products)

This sector is rapidly growing as more people are diagnosed with intolerances or diabetes. The category grows in sales at a rate of 12% annually.

Processed food

There is increasing demand for ready-to-eat processed food, driven by a predominantly young workforce and more women working outside their homes.

Notable challenges for Canadian agrifood companies in Costa Rica

Sanitary and phytosanitary requirements: Strict import controls and approval processes are required for some products, particularly "raw products" like meats, cereals, pulses, seafood, vegetables, and fruits. Plant inspections and approvals are necessary for some products, such as poultry.

Registration process: All processed foods must be registered with the Ministry of Health they can be commercially sold. This process must be handled by an importer or a representative with a physical address in Costa Rica, though it is often slow when dealing with government entities.

Transportation options from Canada are limited and costs can be rather expensive, but more cargo flights are opening. The quality of local transportation infrastructure is limited as well.

Competition can be fierce: US-Central America-Dominican Republic FTA (DR-CAFTA), provides larger quotas to US exporters than CCRFTA to Canadians. The FTA with Chile which has a similar supply as Canada represents strong competition.

Social issues: Despite foreign investment growth, income inequality and social tension continues to grow. Violence is on the increase in recent years.

Costa Rica business landscape

Costa Rica is a small country; it has a territory with a total area of 51,179 km and a population of about 5 million. It is the only Latin American country in the list of the world's 22 older democracies. The country stands out for its long democratic tradition, its political stability, for having no army and for being a leader in international business and tourism in the region, as well as a successful country in attracting investment.

Costa Rica is considered an upper middle-income country, with a GDP per capita of US $22,200 with a 3.0% yearly GDP growth, and a popular tourist destination, reaching about 2.47 million visitors, 70% of them were American or Canadian, who are familiar with Canadian products. The Costa Rican agrifood market is growing faster than US and European Union. (Already mature markets). The economic outlook in Costa Rica is promising; economic growth is steady and a solid base of middle to upper-class consumers is expanding in the country.

The CCRFTA offers Canadian exporters beneficial access to the market. Canadian products are seen as similar in reasonable price, and highly consistent in quality value and appeal as USA products. Fast food restaurant visits among lower to middle class are also increasing. Costa Ricans spend about 31% of their income on food. 22% on food and beverages at home and 9% on food consumed outside. Consumers receptive to imported foods and shows a trend to buying more convenience foods.

Costa Rica has a developed hotel, restaurant and institutional (HRI) sector, and tourism ranks as one of the main economic drivers. The strong tourism sector provides an opportunity to increase hotel/restaurant/ institutional (HRI) sector sales. At the same time, the number of tourists, expats, retired residents, and a growing number of millennials in better paying jobs sets the demand for a larger and more diverse number of international and ethnic food restaurants, which in turn demand value added products such as wines, and fine meats and cheeses.

As for Franchising, there are 361 registered franchises of which 54 are national. The sector has grown 65 percent over the last ten years, with food being the fastest growing one, followed by specialized services (accommodation, veterinary and other arrangements), and then commerce, fashion and beauty. The Chamber of Commerce states that there are more than 3,000 franchise-type establishments in the country employing over 26,000 people.

The food service sector includes quick-service restaurants, full-service restaurants, caterers, and drinking establishments, representing 70 percent of total food service sales. Part of the food service sector includes the tourism industry, health care facilities, universities, and schools, as well as grocery retailers offering hot prepared foods for dine-in or to-go. The food retail market composed by supermarkets, traditional grocery stores and convenience stores is growing. Supermarkets, almost 700 in total, belong to 6 different chains and have in-house procurement departments to source local producers, although they also purchase from major importers and in some cases import directly. Convenience stores and traditional stores procure from distributors.

As retail supermarkets expand their reach and consumer base, they present an excellent opportunity for exporters of food, beverages, and agricultural products. Market analysts inform that about 55% of all food products sold in supermarkets are imported from abroad.

Upcoming sectoral events and activities

• Exphore
• Expo-Vino

For more resources and information on the Agrifood market in Costa Rica, please contact alexander.leon@international.gc.ca