Agriculture

A Watershed Moment

Agricultural turnaround?

With 50% of Panama's land used for agriculture, it is little wonder the sector is essential to the country's economy. However, in recent years, Panama's farmers have witnessed reduced output and exports of agriculture products. Whether the country can turn its agricultural fate around depends on the state's management of resources and regulations.

When president Ricardo Martinelli was in power from 2009 to 2014, he implemented a USD15-billion plan to boost Panama’s various sectors, including financial services, agriculture, logistics, tourism, and infrastructure. This scheme was in addition to the USD5.5 billion Panama Canal expansion project, the backbone to the country’s growth strategy.

As a result of these efforts, Panama’s Ministry of Economy and Finance expects a 2017 economic growth rate of 5.8%, the highest rate among all Latin American countries. While overall growth is being seen across the country, particularly in construction, mining, finance, and public services, Panama’s agricultural sector continues to lose its footing.

Approximately 50% of Panama’s land is used for agriculture, but the sector has been weakened by climate variability, extreme weather conditions, land degradation, and poor management of public resources. It is also threatened by competition brought on by increased imports.

GEOGRAPHY, CLIMATE & LAND

Located in Central America between Costa Rica and Colombia, Panama borders the Caribbean Sea and north Pacific Ocean. Nearly 500 rivers run through Panama’s landscape, which encompasses a terrain that mostly consists of steep, rugged mountains, and upland plains, with coastal areas largely dominated by plains and rolling hills. Panama has a tropical climate with little seasonal variation. The rainy season lasts from April to December, with much heaver rain on the Caribbean side of the continental divide.
Subsistence farming—mostly of corn, beans, and tubers—is commonly practiced from the northeastern jungles to the southwestern grasslands. Banana plantations occupy deltas near Costa Rica. Mangrove swamps span large parts of both coasts.

The Panama Canal Watershed is a hydrologically complex, ecologically diverse water resource system comprised of sub-basins, rivers, and dammed lakes stretching across an area of nearly 3,000sqkm on both sides of the Panama Canal. In the 19th century, forests were cleared for railroads and other infrastructure projects to support the Panama Canal, virtually degrading the Panama Canal Watershed. Between 1904 and 1914, deforestation continued as the canal was partially opened. When Panama regained control of the canal from the US in 1979, deforestation continued in stride.

In the 1980s, the government introduced laws that prohibited deforestation. In 2011, the Panama Canal Authority jumpstarted a reforestation program to protect dry season water flows needed for the daily operation of the canal and to ensure drinking water for 1.3 million people, or two-thirds of the country’s population. The watershed is now a source of fresh water and electricity generation.

AGRICULTURE OUT OF FOCUS

An industrial revolution in Panama has put agriculture on the backburner. Over the past few decades, the contribution of agriculture to Panama’s GDP has declined substantially. In 1989, agriculture comprised more than 9% of GDP. As of 2015, this figure fell to barely 3%, despite accounting for 16% of total employment in the country.

Between 2004 and 2014, Panama has doubled its income per capita, making it one of the fastest-growing economies in the world. Such growth has spawned the demand for construction, a sector that expects a 14% increase in 2017, compared to the 7% increase documented in 2015. Labor-intensive and relying mostly on non-skilled workers, the construction sector and its current boom has surely helped to reduced poverty and inequality in the country. However, such growth has come at a cost

Javier A. Montemayor, business representative of Stockton Group, tells TBY, “Panama is a country dedicated to services. The new generation does not study or focus on agriculture. The young people of Panama see their future working in services, logistics, industry, the canal, banks, and other service-related activities. The previous governments did not invest in agriculture and agriculture education, and the country lacks good laws and programs for its development.

Agricultural exports have mirrored this contraction, going from just above USD503 million in 2012 to USD277 million 2015. In 2016, exports decreased by 8%, largely due to low exports of tropical fruits, which has dropped by 45% since 2009. In 2016, melon exports fell by 18%, pineapple exports by 36%, and banana exports by 4%. According to the Central American Economic Integration Secretariat, Panama ranks last in Central America agricultural exports with USD144.8 million. A poor logistics sector, few incentives, and increased competition with imports have also fed into the sector’s production decline. David Proenza, CEO of Urban Vertical Farms, told TBY of another important factor: climate change. “In 2009 we saw the first signs of climate change in Panama. We lost 50% of our field production due to the weather that year. It happened again in 2010 […] Exports dropped across the board.”

Without more support from Panama state agencies, it seems there is little motivation to increase production in the agricultural sector, particularly in light of logistical and climate-related challenges.

RICE IN COMPETITION

Rice farmers are experiencing the threat of increased importation first hand. Unable to compete with international prices, domestic rice producers are abandoning their crops, with some 20,000ha at stake.
In 2015, rice imports reached 1.4 million quintals, causing domestic prices to fall. Instead of selling paddies for USD24-25, rice growers sold them for USD21-22. In response to the hike in rice imports, the government pledged USD18 million in subsidies to rice growers, buying 500 million hundredweight and renting agro-industrial infrastructure to store crops in Panama East, Darién, and the central provinces.

BANANAS AT RISK

Banana has long played an important role in Panama’s economy. In 1985, bananas were the leading export item in Panama, comprising 23%—USD 78 million—of total exports. By 2015, banana exports increased to USD 97.9 million and accounted for 4% of all the country’s exports. In the first eight months of 2015, Panama was the fourth-largest exporter of bananas in Central America, following Guatemala, Costa Rica, and Honduras, exporting a total of 135,625 metric tons.

In April 2017, Panama’s parliament approved a 20-year contract between Banapiña de Panama and Del Monte Foods, a US-based food production and distribution company, which will invest more than USD100 million to revive banana production in Panama. The investment will develop approximately 5,804ha of land and will involve constructing buildings and facilities to complement the project’s operations. The project will result in the production of 2,725 boxes of bananas per hectare per year.

However, banana manufacturers are bracing themselves for a potentially fatal storm: the Panama Disease. In the 1960s, the fungal plant disease that attacks the roots of banana plants wiped out the commercially-popular Gros Michel, or Big Mike, bananas in Central and South America, costing farmers USD2.3 billion worth of product. Today, a new strain of the Panama Disease is threatening to return to Latin America. Since the 1990s, the deadly fungus has affected up to 247,000 acres of bananas around the world, eradicating the Cavendish banana industry in Taiwan and causing strain on banana farmers in China, other parts of Asia, Australia, and Africa. And while a study in late 2015 confirmed that the new strain had not yet reached Latin American soil, manufacturers remain cautious. Del Monte and Dole Food Co. are working to develop a disease-resistant banana that could one day replace the Cavendish. Meanwhile, Del Monte is going out of its way to prevent the entry of contaminated material to its farms, container yards, and other facilities.

COFFEE AT THE CENTRE

Panama’s climate is ideal for coffee production. High elevation, volcanic soil, and the proper balance of moisture and sun in a tropical highland climate all join forces to make Panama the coffee power that it is. In 2016 Panama produced 115,000 60kg-bags of coffee, a 6% increase from 2015. In 2016/17, Panama exported 18,000 60kg-bags, a 23% decrease from the 2015/16 period.

Although the country is ranked 35th among the top coffee producing countries in the world, it is not its output that makes it a coffee hotspot—it is its quality of output. Today, most of Panama’s coffee is cultivated in the Highlands of Chiriquí, in the towns of Boquete and Volcán at elevations ranging from 1,000 to 6,000m. Panama is home to the infamous Geisha varietal, which has been dubbed the most expensive coffee bean in the world. Originally from Ethiopia and brought to Panama via Costa Rica in 1963, Geisha coffee beans are coveted for their light body, jasmine aroma, and citrusy taste. In 2013, Panama’s Geisha coffee was bought for a record USD350 per pound by Japanese company Saza Coffee and Taiwanese company Haaya Gourmet Coffee. Other Panamanian varieties include the Typica, Caturra, Catuai, Bourbon, San Ramon, Pache, and Mundo Novo coffee beans, which are typically harvested from December to March.

FISHING WITH A BAN

Between 2008 and 2016, fish exports decreased substantially, from USD419 million to USD128 million, mostly due to the 2010 ban on industrial longline fishing. Because of this loss, the government and fishing sector officials are now contemplating lifting the ban, which was introduced by former president Ricardo Martinelli as a way to preserve marine life, particularly that of sharks, turtles, and billfish that were caught as a byproduct of the technique.

Some fishers are attesting to the ban’s incompetency, revealing that the regulation has affected exports of migratory species tuna and dorado, which neighboring countries are now catching. Even so, Panama remains the second-largest exporter of fish in Central America, with 28,000 tons, but will lose its foothold if the fishing sector fails to revive itself. The current government is hoping to overturn the ban whilst finding a way to monitor longline fishing activities.

CONTROLLED FARMING

At the mercy of extreme elements and falling production levels, traditional farming may one day take a backseat to controlled environment agriculture in Panama. The country is host to the International Congress on Controlled Environment Agriculture 2017, and for good reason. Panama’s agriculture sector is directly affected by climate change and is turning to unique technologies—vertical farming, greenhouse vegetable production, and indoor agriculture—to reverse the sector’s downward spiral.

The Ministry of Agricultural Development and the Foundation for Development in Controlled Environment Agriculture founded the Research Center or Controlled Environment Agriculture Production in Panama, which works with experts to improve agriculture technology and research.

You may also be interested in...

Berlin,,Germany-,September,6.,2017.,,Samsung,Exhibition,Pavilion

Telecoms & IT

Streamlining Work and Home Life

The Role of Automation and Smart Solutions

View More
Ho,Chi,Minh,City,,Vietnam,-,June,4,,2023:,White

Telecoms & IT

The Rise of Artificial Intelligence

Transforming Samsung's Technological Landscape

View More
Landscape,From,Bird,View,Of,Cargo,Ships,Entering,One,Of

Transport

Maritime Chokepoints in 2022

Global shipping limits

View More

Finance

Fintech in Panama 2020

Growth of Financial Inclusion

View More

Energy & Mining

Not Easy Being Green

Renewable Energy in Panama

View More
Beautiful,Lonely,Beach,In,Caribbean,San,Blas,Island,,Kuna,Yala,

Tourism

Holiday Fund

International Tourism Promotion Fund

View More
Darien,Province,,Panama.,07-18-2019.,Indigenous,Female,Adolescents,With,School,Uniform

Health & Education

Building a Foundation

National Pact for Education

View More
View All Articles