PALMARES, COSTA RICA
FOUR years ago, Ricardo Vargas dared to grow something besides coffee.Standing between rows of ornamental plants, the young farmer recalls the bitter feud with his father over breaking 30 years of family tradition. "He didn't want to give up the land nor cosign a loan for some crazy idea," says Mr. Vargas, plucking a grub off a leaf. But profits Vargas makes exporting yucca and other decorative plants made his father a believer. "I figure the return on a 1,500 square meter nursery [less than half an acre] is equal to 10 hectares [24.7 acres] of coffee," he says. Vargas is part of Costa Rica's boom in "nontraditional" agricultural exports. This tiny Central American nation is at the vanguard of a shift away from relying on the age-old tropical agricultural products of coffee, bananas, sugar, and beef. Since the mid-1980s, Costa Rica has sought to diversify into niche markets that bring premium prices. And the effort is paying off. For the last two years, Costa Rica has been the biggest overseas supplier to the US of leather ferns and decorative plant seedlings and cuttings. It vacillates between the top spot and second place in the European market, according to the Costa Rican Coalition for Development Initiatives, known by the acronym CINDE. When it is winter in the US, producers here jump into the strawberry market gap left by California and Florida producers. Export sales of pineapples, melons, cut flowers, and broccoli are on the rise. "We look for off-season market holes because transportation costs are often too high for us to compete regularly with local producers," says Jilma Ramirez Umana, director of agricultural programs for CINDE. Costa Rica's program is praised by international finance institutions as a model for developing nations. Ms. Ramirez says the competition in the ornamental plant market in Europe is from Sri Lanka, Kenya, and Guatemala. In the US market, rivals are Honduras, Guatemala, and the Dominican Republic. Since 1984, sales of nontraditional crops grew at an average 25 percent per year. Last year, the pace of growth slowed to a 10 percent clip due to over-saturation of some markets, the US recession, and talk of reducing financial incentives to exporters, say economists. Costa Rica's success can be explained by a passel of government policies that have encouraged the development of not only "luxury" crops but also nontraditional industries like apparel and electronics. Another factor encouraging nontraditional exports has been marketing, financial, and technical assistance by the US Agency for International Development. Still, Costa Rican officials worry the free-trade pact being negotiated by Canada, Mexico, and the US will create a strong, new competitor. Costa Rica hopes also to secure a free-trade deal with the US. "We're convinced we can't continue our growth rate by relying on our domestic or the Central American market," says Central Bank economist Ligia Maria Castro. "We're always looking for new customers," says William Vasquez, manager of Coope India, a cooperative that handles packing, shipping, and marketing for Vargas and other farmers in the Palmares area. "It's very competitive. And we've had trouble getting good, honest brokers to handle deliveries [in client countries]."