| Panama | Oct 30, 2018
Agriculture represents a significant part of the economy in Panama. Not only do agricultural products represent some of the country’s main exports, but since such a great number of Panamanians […]
Agriculture represents a significant part of the economy in Panama. Not only do agricultural products represent some of the country’s main exports, but since such a great number of Panamanians are engaged in subsistence farming, the sector represents one of the biggest employers. Agricultural production in Panama is primarily composed of fruits, vegetables, and basic grains. These include pineapples, oranges, rice, maize, onions, and potatoes, among others. The country has also developed a strong coffee industry and offers some of the highest-quality beans available on the market globally.
Panama’s agricultural production is highly dependent on weather conditions, making it a relatively volatile sector. One of the most significant crops for the country has been the banana; in the 1980s, the fruit accounted for an average of 67% of Panama’s total exports. Production of the crop has declined in recent times. In 2000, Panama’s banana production was worth over USD30 million, but by 2014 the volume had declined by over half to USD14.7 million. A virus that affects banana plants, known as the Panama Disease, has played a major role in diminishing Panama’s banana production.
Panama’s parliament passed legislation in April 2017 that aims to restore the banana industry’s importance in the country. The law allows Banapiña, a subsidiary of Singapore-based Del Monte Foods, to invest over USD100 million in banana production capabilities. The project will see 900ha developed per annum up to 5,804ha. Initial projections suggest that annual productivity per hectare will yield 2,725 boxes of bananas; when all 5,804ha are developed, annual output is projected to reach almost 2.5 billion boxes of bananas per year. The project is poised not only to revamp the agricultural sector, but also generate thousands of direct and indirect jobs.
Rice represents another significant agricultural product in the country. Panamanians eat more rice than the global average, and it is produced in nearly every region in the country, though the greatest amount is produced in Chiriquí. Rice production in Panama is almost entirely dependent on rainfall. Reliance on rain is becoming increasingly difficult due to climate change. Moreover, high import competition has forced local producers to lower prices, making the profit margin negligible.
The new champion of Panama’s agricultural sector has proven to be coffee. Like everything else, the bean is primarily grown in Chiriquí, the high elevation, ideal moisture, and volcanic soil of which makes it an ideal place for agriculture. Panama produces several varieties of high-quality beans, and its reputation is known around the world; one of the country’s varieties, known as the Geisha bean, is one of the most expensive globally.
Despite the country’s strong annual GDP growth of almost 5%, the agricultural sector has seen a number of challenges over the past two decades. At the start of 2000, the sector constituted 8% of GDP; by 2016, agriculture’s share in the economy had significantly declined, representing only 2.7% of GDP. Much of the country’s agricultural production, some 80%, is confined to the highland region of Chiriquí, near the southern end of Panama’s border with Costa Rica. So much of the production is concentrated because there are few techniques throughout the country that are related to fluctuating climate conditions, namely periods of significant rainfall and those of drought.
Another major problem is logistics. There are no highly developed means of transporting agricultural products to the country’s capital, and these poor conditions translate to significant percentage of post-harvest loss, ranging from 40-60% of the country’s combined output. Furthermore, there is a high rate of fragmentation between farmers, which results in considerably stunted national efficiency. The country’s problems are further worsened due to the fact that farmers are generally very slow to adopt new technology. These problems have led to the stagnation of the sector in recent years and has made necessary big increases in agricultural imports.