The money that Puerto Rico could stop importing

A study by the University of Puerto Rico finds that local farmers can already compete on price with imports for dozens of products. The real challenge appears to be scaling up that production and connecting farmers with consumers.

Puerto Rico imports more than 75% of the food it consumes. In 2022, food imports reached approximately $4.6 billion .

But new research raises a question that changes the conversation: what if some of those foods could be produced competitively here?

Economist José Caraballo-Cueto, from the University of Puerto Rico in Río Piedras, analyzed 74 agricultural products that can be grown in Puerto Rico and compared the prices of local producers with the costs of imported products at different points in the supply chain.

The result: in 30 of the 74 products studied, Puerto Rican farmers could compete directly with the cost of imports.

The list includes everyday products such as bananas, plantains, peppers, eggplant, pumpkin, tomato, grapefruit and yautía, among others.

And the picture changes even more when the product moves towards the consumer.

At the supermarket level, local farmers could compete on 52 of the 74 products analyzed. In restaurants and cafes, they were competitive on 22. And through direct sales, they could compete on price on virtually all the products studied, with the exception of two.

The problem doesn't seem to be just the price.

Here is one of the most interesting findings of the study.

On average, farmers' prices were higher than import costs. But that difference was considerably reduced for highly perishable and medium-to-high perishability products.

Because?

Because transporting, storing, and refrigerating perishable goods from abroad can significantly increase their cost. In Puerto Rico, moreover, many farmers are physically much closer to the consumer than produce arriving by sea.

This means that there are products for which producing locally is not just a matter of identity or food security: it can make economic sense.

Five products could move $118 million

The study found five products that combined two important conditions: local farmers could compete with the import price and, at the same time, Puerto Rico imported significant quantities of those products.

Replacing those imports with local production would have generated an estimated economic impact of approximately $118 million in 2023 , including direct and indirect effects on the economy.

Of that amount, approximately $73.6 million would correspond to the direct economic impact, while the remainder would reflect the indirect or multiplier effects of that activity within the local economy. The study also indicates that this would not necessarily be a one-year impact: the activity could be repeated in subsequent years.

The potential is there. Scale is the challenge.

And here perhaps comes the most important part of the investigation.

Puerto Rico does not need to start from scratch.

In some products, we are already close to self-sufficiency. The study identifies, for example, relatively high levels of local production in products such as eggplant, plantain, banana, banana, and green herbs.

In other cases, however, local production remains small compared to consumption. In 2017, pepper production accounted for approximately 19.8% of consumption; grapefruit, 14.8%; and taro, 15.8%. In the case of corn, local production represented virtually 0% of consumption.

The contrast is important: having the ability to compete does not automatically mean having the ability to supply the market.

From farmer to consumer

The study also points to another problem: the distribution chain.

Supermarkets can represent important opportunities for local producers, but their requirements for volume, quality, delivery, packaging, and other conditions can become barriers for small farmers.

Meanwhile, direct sales are emerging as an alternative where producers can achieve better results.

In fact, the farmers studied had, on average, prices 51.8% lower than the direct sale prices used as a reference , an even greater difference between highly perishable products.

The question, then, ceases to be simply:

“Can we produce it here?”

And it begins to be:

"Can we produce it here, distribute it efficiently, and get it to the consumer on a scale that transforms that advantage into economic activity?"

An opportunity that goes beyond agriculture

Puerto Rico has built an economy highly dependent on food imports for decades. The study notes that this dependence increased significantly after industrialization and that, by 2022, imports accounted for more than 75% of food consumption.

Reducing that dependence does not necessarily mean producing everything we consume.

It means identifying where a competitive advantage already exists and asking ourselves what is needed to turn it into local production, jobs, and income.

Because every food item that can be competitively produced in Puerto Rico represents more than just a harvest.

It represents an opportunity for some of the money that currently leaves the island to remain circulating within it.

And perhaps that is the true financial takeaway from this study:

Puerto Rico doesn't necessarily have to produce everything. But it could start by producing more of what we already know we can produce competitively.