Analysis of rural food distribution in Costa Rica

A COUNTY GOVERNMENT DEVELOPMENT UNIT -- INSTITUTO DE FOMENTO Y ASESORIA MUNICIPAL (IFAM) -- WAS ESTABLISHED TO PROVIDE LONG-TERM CREDIT AND TECHNICAL ASSISTANCE TO LOCAL GOVERNMENT UNITS. PROJECTS PROPOSED FOR CONSIDERATION BY THE IFAM INCLUDED SEVERAL FOR REMODELING PUBLICLY OWNED FOOD MARKETS IN RURAL TOWNS. FUNDS BORROWED BY IFAM AT 8% INTEREST WOULD BE SUPPLIED TO THE CITIES, WHICH WOULD REMODEL THEIR PUBLIC MARKET BUILDINGS AND REPAY IFAM WITH INCOME GENERATED FROM RENTAL OF MARKET STALLS TO PRIVATE MERCHANTS. TO ASSESS THOSE PROPOSED PROJECTS, THE AUTHOR CONDUCTED A STUDY OF THE MARKET STRUCTURE AND FOOD DISTRIBUTION SYSTEM IN TWO OF THE COUNTIES. THE FINDINGS SHOWED THAT EVEN REMODELED PUBLIC MARKETS IN THE CITIES WILL NOT COMPETE WELL IN PRICES AND SERVICES WITH RETAILER-WHOLESALERS IN CITIES AND SMALL-SCALE GROCERY OUTLETS IN RURAL AREAS IN THE FUTURE. THUS THE REMODELING PROJECTS WOULD BE UNECONOMIC, THE RENTERS OF STALLS WOULD COMBINE TO MAINTAIN LOW RENTAL FEES, AND THE LONG-TERM RETURN ON THE PROJECT LOANS WOULD BE LESS THAN HALF THE COST OF THE LOANS. IN EFFECT, THE IFAM WOULD MERELY BE SUBSIDIZING THE MERCHANTS USING STALLS IN THE PUBLIC MARKETS OF THE CITIES.