Executive Summary
Introduction
Why Butterfly Farming?
The History of Butterflies and Butterfly Farming
The Business of Butterfly Farming
Butterflies
A Day in the Life of a Butterfly Farmer
Country Analysis: Costa Rica
The Land
The People
Plant and Animal Life
Business Culture
The Economy
Table 1
Graphs 1, 2
Greetings and Courtesies
Finance
Table 2
Government
Education
Health and Welfare
Resources
Agriculture
14
16
17
18
9
10
11
13
5
6
8
1
2
2
4
20
21
21
18
19
19
20

Industry
Trade
Transportation
Butterfly Beauties, Inc. Operations
Equipment and Supplies
Employees
Marketing Butterflies
Exportation/Shipping
Conclusion
Works Cited
Butterfly Beauties brochure
22
22
23
Appendix
32
33
25
27
28
31

Study Group 5, Page 1
Executive Summary
While the name may seem somewhat "flighty," butterfly farming is a serious business opportunity. The demand for butterflies is increasing, and new butterfly houses and farms are opening worldwide. The marketing possibilities are exciting.
For our venture, Butterfly Beauties, Inc., we have chosen to locate our butterfly farms in the beautiful
Central American country of Costa Rica. The climate and plant life are perfect for raising butterflies, and the country has a stable economy in which to operate. We will show the richness of the land and its people, and introduce you to their heritage and culture.
Butterfly farming is labor-intensive and rewarding. We will let the reader experience a day in the life of a butterfly farmer, and explain the unique characteristics of the butterfly. We will also show how butterflies enhance the lives of many and can be used in unique ways anywhere groups of people gather, whether organizations, or family and friends.
Butterfly Beauties, Inc. will be exporting butterflies from Costa Rica to countries in Europe, to Canada, and the United States, as well as others. There are setup costs and exporting procedures to consider. We will take you through those steps, and show the marketing possibilities as well.
We will begin by answering the question, "Why Butterfly Farming?"

Study Group 5, Page 2
Introduction
One of the most enjoyable industries to be involved with is the raising of butterflies. Newspapers and magazines are constantly running stories about the newest Butterfly Houses that have just opened. New York has six new ones; Texas, Ohio, California, Florida and many other states, plus Canada, Costa Rica, Mexico and other countries are rapidly adding more. Butterfly Conservatories are drawing tourists from around the world. As a group of investors interested in broadening our horizons into the international market, seeking to invest in a nontraditional export business, and always interested in the unusual, we have found what we believe to be an enjoyable and profitable export business: the business of butterflies. Butterfly Beauties, Inc. is a butterfly farming and exporting business, with the farms located in beautiful Costa Rica.
We chose Costa Rica because of its ideal climate and plant life, and because it is a stable country in which to do business. We will look more closely at Costa Rica later, but now we will explain why we chose butterfly farming.
Why Butterfly Farming?
As we enter the twenty-first century, we are constantly reminded of the greenhouse effect, the growing pollution rates, and a general lackluster attitude toward upkeep or improvement of our environment. One of the challenges of our day is to discover and develop industries, economies and even living patterns that minimize the effects of our presence on Earth. Butterfly farming is a fun, creative, profitable, and eco-friendly business.
We have chosen Costa Rica as the home for our butterfly farm for several reasons. First and foremost, it is a warm, sunny, perfect climate for raising butterflies. There are over 900 identified species of the butterfly in Costa
Rica. Dense undergrowth of appropriate vegetation is present and easily transplanted as needed to serve the needs of our many captive species. Furthermore, our location on the Alajuela Province is strategically located outside
San Jose, the country's capital. We are within minutes of two regional airports and several shipping ports.
Different from the traditional farming methods found in Costa Rica, butterfly farming is reliant upon native vegetation. A successful butterfly farmer strives to maintain areas of land (sometimes quite large) intact with natural vegetation. Native plants act as a constant supply of food for the larvae.

Study Group 5, Page 3
The technology behind butterfly farming is quite simple. This simplicity minimizes the strain on a dollarstarved economy to establish a butterfly-breeding program. This further eliminates the dependence of the butterfly farmer on the availability of scarce imported materials and the technical expertise to maintain equipment. Butterfly greenhouses represent an important economic activity for many residents of rural communities. In addition to serving as living museums, most of the farms export butterfly pupae for exhibit in the United States, Canada, and
Europe. Screened gardens are wonderful chances to learn about butterfly ecology and observe the winged creatures up close. Guided tours of our farms will help visitors understand the stages in a butterfly’s life.
Though many people are unfamiliar with the life cycle of a butterfly, the concept can be readily understood with a modicum of explanation. The metamorphosis of a larva into a pupa and hence into an adult butterfly need be demonstrated but once for most people to grasp.
The History of Butterflies and Butterfly Farming (Butterfly Farming)
The rearing of butterflies and moths is not a new commercial activity. The Chinese silk industry has been in existence for thousands of years. The breeding of butterflies for public viewing in butterfly gardens has been a serious commercial activity since 1977.
Butterflies have been the subjects of great interest for thousands of biologists and amateur enthusiasts.
Butterflies have been discussed in countless research projects ranging from genetics to population dynamics. In addition, butterfly collecting remains a popular hobby. Some collectors are serious about their pastime, properly identifying and preserving the specimens they have caught themselves.
In 1977, a man living on the island of Guernsey in the English Channel was concerned about sagging tourism (Butterfly, 5). At the same time the tomato industry on Guernsey had become bankrupt and, consequently, acres of idle green houses covered the countryside. It was this individual's idea to acquire a vacant greenhouse and fill it with tropical plants to recreate the essence of a tropical jungle. To add interest, color and movement, he decided to import some live butterflies acquired from Asia through a member of the hobbyist's association. The resulting enclosure, complete with waterfall and meandering brook was publicized as a butterfly exhibition and opened to the public.

Study Group 5, Page 4
To many people's amazement, this butterfly exhibit was a commercial success. From about 1980 until
1988 the live butterfly exhibit industry exploded in the United Kingdom. In recent years the butterfly exhibit industry has flourished in North America, fueling the bulk of the industry's growth.
Butterfly farming is by no means an easy endeavor. In the wild, butterflies may expect to enjoy a 2% survival rate between ova and adult (Butterfly, 2). The 98% that perish along the way may be devoured by prey, succumb to virus or diseases or not be able subsist if the climatic conditions (drought, wind, temperatures, etc.) are not right. A successful farmer, by isolating the butterflies from Mother Nature's biological controls, may with luck raise the survival rate from 2% to as high as 90%. We are looking to be very successful at Butterfly Beauties!
The Business
Butterflies
Butterflies are insects, and because of this share the essential characteristics which all insects share: six legs and three body segments. They pass through four stages of development throughout their life cycle: egg, larvae, pupa, and adult.
The two stages of the butterfly in which they are visibly active and feeding, the larvae and the adult, are functionally very different from each other. The "job" of the larvae is to eat and grow, while the "job" of the adult is to mate and reproduce.
Butterflies in the wild have an incredibly high mortality rate – 98 percent. This is because they are primary consumers and are eaten by a very large number of predators. With this in mind, we can say that most of the unusual characteristics, colors, and structures on butterflies have some reason for existing in order to protect the butterfly from its predators. These are called defense mechanisms. Therefore, most questions on characteristics beginning with "why" can be answered with this in mind.
Like all other living organisms that are classified as "wildlife", butterflies are very dependent on certain types of plants and habitats in order to survive, but in the case of butterflies this relationship is often incredibly specific. Since butterflies have very specific relationships with their host plants, the protecting of plants and natural habitats in the wild is essential for their survival. In order to conserve butterflies, we must conserve their habitat,

Study Group 5, Page 5 and in order to raise butterflies, we must transplant and recreate their habitat very carefully. The process is labor intensive, but very rewarding.
A Day in the Life of a Butterfly Farmer (Butterfly, 1)
The daily operation of an established butterfly farm has many components. The primary responsibilities entail breeding the butterflies, the horticultural duties of propagating the appropriate food plants and flowers, and inevitably the accounting and other paperwork necessary as with any business. We will concentrate on the breeding process here. Although there are many methodologies in breeding butterflies, the following is one example of a typical procedure in Costa Rica.
An ideal habitat should be created by planting flowers and food plants in abundance on the farm and in the vicinity. With the development of these plants, the farm should become a butterfly sanctuary of sorts by providing food and nectar in abundance.
Female butterflies, caught from the wild or purchased from captive-bred stock, are released to fly freely within large enclosed structures that house the required host plants. As each butterfly species requires a specific host plant for its survival, the farmer must anticipate the species that he or she intends to breed by planting the necessary plants well in anticipation. A typical flight area measures about 25 square meters by 3 meters high. A fresh female can typically lay upwards of a hundred eggs. Some species will lay their eggs singly over many days; others lay gregariously in a few sittings.
The ova are removed daily from the flight areas and placed in a secure location where predators (ants, spiders, wasps, parasitic wasps, lizards, etc.) cannot get to them. In most cases, the ova are placed in small (parasite and predator proof) plastic boxes.
Of course the daily search for hundreds of butterfly eggs in a large enclosure full of foliage would seem quite daunting. With a little knowledge, this task can be performed quite easily. The females of all species will lay only on their respective host plant. Each species has a preference as to where the females lay their eggs. One species may lay on the underside of old and dried leaves, another only on the tendrils of the freshest new growth.
Again, armed with knowledge and some experience, a person will quickly discover the best places to look and make quick work of collecting the ova.

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The collected ovae must be checked daily. The first instar larvae should be removed with care and place on potted food plants, which in turn are placed inside cages. An instar is the stage in the life of an insect's larva or nymph interposed between 2 moults. During the larvae's first two weeks, the first three instars, the caterpillars eat very little. After their third instar, the larvae become voracious. It is imperative that the farmer has planted with months of anticipation sufficient food plants to feed the larvae in their latter stages. Because of the increased volume of food plant that each larva consumes, it becomes impractical to feed the larvae on potted plants. Rather, they must be fed on cuttings. Generally, a fistful or two of the food plant will be cut for each cage. The stems will be placed in a jar of water to preserve the foliage's freshness for twenty-four hours. The larvae are then placed on the cutting to feed as they wish.
The cages must be cleaned daily. This entails removing the stems of the devoured food plants from the previous day; removing the excrement from the floor of the cages; inserting new, freshly cut host plant; and returning the larvae on to their plants. The importance of cleanliness and diligence cannot be overly stressed.
Failing this, even for one day, the larvae are likely to die from an assortment of diseases, viruses, or starvation.
Whether rearing a few or thousands of larvae, cleanliness and attention to details are key factors for success. Once they have completed their fifth and final instar, the larvae pupate. They may attach themselves as pupae on the ceiling of the cages or on the food plants. Care must be exercised by the staff while cleaning the cages lest they inadvertently discard pupae. Someone must check the cages and remove the pupae daily. As the pupae are usually of such short duration, only by collecting the pupae daily can a farmer be sure of the age of the pupae. In Costa
Rica, a pupa should not be more than three days old before it is shipped.
Country Analysis: Costa Rica
We know it as Costa Rica, but officially the country is called The Republic of Coast Rica. Located in
Central America, it covers an area of 19,730 square miles (51,100 square kilometers) (CIA, 2). To give a reference point, it is slightly smaller than the state of West Virginia. Extending from northwest to southeast, Costa Rica is bounded on the north by Nicaragua, along its 630-mile southwestern coastline by the Pacific Ocean, on the southeast by Panama, and along its 185-mile northeastern coastline by the Caribbean Sea. At the narrowest point, the distance between the Pacific and the Caribbean is only 74 miles. The capital is San José. Of the federation of

Study Group 5, Page 7
Central American states, Costa Rica is the most Spanish in character and is generally regarded as having the most stable government and economy (Costa Rica, 1).
The Land
Two mountain chains together run almost the entire length of the country of Costa Rica (Costa Rica, 1). In the north is the Cordillera Volcánica, noted, as implied by its name, for its volcanic activity, and, in the south is the
Cordillera de Talamanca. Two of the highest peaks in the Cordillera Volcánica have paved roads reaching to the rims of their active craters. These volcanoes overlook the densely populated upland basin called the Meseta
Central, and they pose a serious natural hazard, as do earthquakes for most parts of the country.
Costa Rica has developed the largest national park system of any Latin American country, relative to its size (Costa Rica, 2). Over 20 percent of the country is now parkland or belongs to animal and forest preserves
(Business, 2). These parks include a bewildering range of tropical ecosystems, such as tropical rain forest, cloud forest, dry forest, and elfin forest. Other parks include active volcanoes, turtle nesting sites, and coral reefs. The national parks are a major attraction for Costa Ricans, who flock to them on weekends and major holidays such as
Easter Week, Independence Day (September 15), and the week between Christmas and New Year's Day.
International tourists are also attracted by these parks, some of which are noted worldwide for their vegetation and wildlife. Our butterfly farms will likewise attract these tourists.
The Pacific coast experiences abundant rains in the wet season, generally May to October in the north and
April to December in the south. Northeasterly trade winds on the Caribbean provide ample year-round precipitation. The higher mountain ranges have warm temperate climates, the Pacific slopes having alternating wet and dry seasons, while the Caribbean side has year-round rainfall. San José's weather records report monthly averages of rainfall from less than 1 inch in February to more than 12 inches in September, with a yearly average of more than 70 inches.
Temperatures vary with altitude, San José at 3,760 feet reporting a mean of 69° F, a nearby station at 7,665 feet reporting a mean of 59° F, and another at 682 feet reporting a mean of 80° F. These weather patterns help maintain the perfect conditions for raising butterflies.

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Plant and Animal Life
Dense broad-leaved evergreen forest, which includes mahogany and tropical cedar trees, covers about onethird of the landscape. On the Talamanca range grow numerous evergreen oaks and, above the timberline, mountain scrub and grasses. The northwest, with the longest dry season, contains open deciduous forest. Palm trees are common on the Caribbean coastline, and mangroves grow on the shallow, protected shores of the Nicoya and Dulce gulfs along the Pacific.
Mammalian life is both abundant and varied and has major ties to South and North American populations.
The South American species include monkeys, anteaters, and sloths; the North American, deer, wildcats, weasels, otters, coyotes, and foxes. There is a wide variety of tropical birds in the lowlands. Reptiles, such as snakes, iguanas, and frogs are common. We have already mentioned the many butterflies in Costa Rica.
The People
The population in Costa Rica (July 2002 est.) is 3,834,934, or roughly 3.8 million. This gives the country an overall population density of 75 persons per square kilometer. Of the population, 30.8 percent are of the ages 0-
14 years, 63.9% are from 15-64 years, and 5.3% are 65 years and older. Life expectancy (76.2 years) is substantially longer than for most other Central American nations. The fertility rate is 2.42 children born per woman (2002 est.) (CIA, 3-4).
The average income per person is $2,640 (US dollars), which is 8.5 percent of the average United States citizen (24-7, 1). That number averages out to be $1.27 (US dollars) per hour. Poverty level for Latin American countries is considered to be less than $1 per day, and in 2001 only 6.9 percent of Costa Rica’s population was below poverty level (CR at a Glance, 1). Costa Rica as a nation reported 20 percent of the population as being below their national poverty level. Our research did not reveal that income amount.
Almost 60 percent live in urban areas, with San Jose the largest urban area. Mobile phone owners numbered 5.2 percent in 2000, 15 percent owned computers, and there were 250,000 Internet users (3). Over 80 percent owned radios that year, and over 20 percent owned televisions (3).
Costa Rica is noted for having the largest percentage of Spanish population in Central America. The
Meseta Central, with more than half the nation's population, is the most predominantly Spanish region in both its

Study Group 5, Page 9 manner of living and its ancestry (Costa Rica, 2). Spanish is their primary and official language and is spoken with distinctive national accents and usages. Some English is spoken in the business community and tourist destinations, with French and German increasing. We expected to find that the country was predominantly
Hispanic, but our research from several sources did not support that. The country's ethnic groups actually break down as follows: 94% white (including mestizo), 3% black, 1% Amerindian, 1% Chinese, and 1% other (CIA, 4).
The population of Guanacaste province, which makes up about 8 percent of the country's total, is a blend of colonial Spanish, Indian, and African peoples; their spoken Spanish is more like that of Nicaragua than that of the
Meseta Central (Costa Rica, 2). People of African ancestry live mostly in the Caribbean lowland province of
Limón, which contains overall about 7 percent of Costa Rica's population. Descendants of workers brought from the West Indies to build railroads and raise bananas, most speak both Spanish and a Jamaican style of English, the majority being descended from people who came from that island. There are also a substantial number of Chinese, many who are also the descendants of imported laborers (Costa Rica, 3).
Actually, less than 1 percent of Costa Rica's population is Amerindian. The most numerous peoples are the
Bribrí and Cabécar who inhabit valleys in the Cordillera de Talamanca. The Boruca and Térraba groups live in the hills around the Valle del General. There are also a few hundred Guatuso peoples living on the northern plains in
Alajuela province, where our butterfly farms are located. Most of Costa Rica's Indians are rapidly becoming assimilated, but those on the Caribbean side in the southern Talamanca region maintain their separate ways, including their animistic religions. Although Costa Rica's Amerindian groups are legally assigned to protected reserves, the land is infertile, and the Amerindians, most who survive through subsistence agriculture, are among the country's poorest people (Costa Rica, 3).
About 76.6 percent of Costa Ricans are Roman Catholics (CIA, 4). Roman Catholicism is the official religion, and it is supported with a small part of the national budget. Most of the remaining population is
Evangelical and Protestant, the majority of whom live in Limón province. A small Jewish congregation resides in
San José. Jehovah's Witnesses comprise 1.3% of the population, and 3.2% claim no religion at all (7).
European immigration and customs have molded Costa Rican history and influenced its character.
However, in the 1980s, immigration of largely mestizo refugees from Nicaragua and other Central American

Study Group 5, Page 10 countries and from Cuba became important, representing a growing influence on the character of the country.
Costa Rica has also become a mecca for retirees from the United States, tens of thousands of whom now live there
(Costa Rica, 3).
Greetings and Courtesies
Customarily, men and women shake hands on meeting and when departing; some women pat each other's left arms (Business, 1). Unlike in other Latin American countries, men do not put their arms around each other and give hugs. Titles are abundant and important, with many usually being addressed by their title and last name. For foreigners conducting business in Costa Rica, business cards in both their native language and Spanish are useful, and translations into Spanish of any literature are appreciated as a courtesy.
Costa Ricans commonly refer to themselves as Ticos, a nickname given by their Spanish-speaking neighbors because Costa Ricans add the diminutive term -tico to the end of a word instead of the more common tito (Business, 2). An example is the use of chiquitico for "tiny one" instead of chiquitito . Technically, men are
Ticos and women Ticas. A mixed group of Costa Ricans is called Ticos.
Business Culture
Costa Rican businesspeople believe that peace in politics and business is a worthy goal (Business, 2). One line in their national anthem is "let work and peace always live,” and they try to live by that belief. Schools teach everyone how to solve problems without resorting to violence, and this attitude pervades the country's business ethic. Aggressive, brusque, and confrontational behavior is shunned.
Somewhat untraditional when compared to other Latin American countries, Costa Ricans do not necessarily make decisions from the top. They may prefer to have a group consensus before deciding how to proceed. A personal relationship must be established before any agreement can be reached.
Without a mutual business acquaintance to make an introduction, foreign businesspeople wanting to conduct business in Costa Rica would need to consult their own embassies for referrals. When a meeting is scheduled it is recommended that one be punctual, as Costa Ricans are known as the most punctual people in Latin
America, except perhaps when paying bills (Business, 2). One should also expect considerable discussion of nonbusiness topics.

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A limited amount of time is allocated for the midday break; punctuality is necessary to make the most of the time allotted when a business lunch has been scheduled (Business, 3). Most business entertaining revolves around dinners, to which spouses are always welcome. Unlike the rest of Latin America, politics is a safe topic of conversation. As it will often be brought up by the Costa Rican host, it is wise to have knowledge of current events.
Business entertaining is most often in a restaurant rather than a private home. An invitation to come to dinner or to spend a few days in a Costa Rican home is most often a gesture of goodwill, and should be politely declined (Business, 3). If the invitation is sincere, the Tico will issue the invitation again with assurance it is an honest invitation.
The custom is to bring a small gift to the host and to make the presentation during the time for socializing and cocktails before the meal begins. Flowers, boxed chocolates, scotch, or wine are appropriate, but one should not bring lilies -- they are only used for funerals (Business, 3). At the meal, it is polite to taste everything served, but unlike other Latin American countries, one is not expected to clean the plate. Coffee, dessert, and conversation will follow the meal. When serving as host, it is wise to let the restaurant give advice as to what dishes should be prepared and served.
Women are accepted in business in Costa Rica more readily than in any other Latin American country.
Indeed, women have been elected vice president of Costa Rica. A foreign businesswoman should experience few problems. Although women can feel comfortable traveling alone, they should nonetheless take care to behave and dress conservatively.
Costa Rica is more formal in style than other Latin American countries, and a businessman should wear a dark, conservative suit and should expect to wear a jacket during a meeting. For a foreign businesswoman, it is appropriate to wear a dark-colored, conservatively cut and tailored suit or dress.
Costa Ricans have a strong work ethic. They value independent thought and actions, especially when the activity enhances the interests of the society at large. Environmental consciousness is very high, and Costa Ricans are very, and justifiably, proud of their country's efforts to protect its unique biodiversity (Business, 2).

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Underlying all personal and business ventures is the belief the God controls most aspects of life (Business,
2). Costa Ricans often attribute their personal and business success to "God's favor" but are fully aware that their actions help shape events. Above all, Costa Rican businesspeople are hospitable and will go out of their way to make others feel welcome.
The Economy
Costa Rica has a basically stable economy that depends on tourism, agriculture, and electronics exports
(CIA, 6). Though its name implies it (“Rich Coast”), Costa Rica is not rich. Neither is it as poor as many of its neighbors. The country's wealth is better distributed among all social classes than in other areas of Central
America, with 20.6% of the population below the poverty line (1999 est.) (3). Foreign investors continue to be attracted by the country's political stability and high education levels (7).
The government controls key utilities, including electricity, water, telephone, and port and rail facilities, and the entire population is eligible for free medical care, but private enterprise is still strong and influential in policy-making (Costa Rica, 3). Repeated efforts to diversify the economy have failed to reduce the traditional dependence on agriculture, but there has been some success at diminishing Costa Rica's reliance on the two traditional export crops, coffee and bananas. Low coffee prices and an overabundance of bananas have hurt the agricultural sector (CIA, 7).
Despite stringent efforts to reduce spending, the Costa Rican government operates at a deficit, a condition that increases the country's already large international debt and high rate of inflation (CIA, 7). It also continues to grapple with the need to modernize the state-owned electricity and telecommunications sector. Table 1 lists economic information that helps explain the economic condition of Costa Rica.
Table 1
Key Economic Ratios and Long-Term Trends
GDP (US$ billions)
Gross domestic investment/GDP
Exports of goods and services/GDP
Gross domestic savings/GDP
Gross national savings/GDP
Current account balance/GDP
1981
2.6
29.0
43.3
24.1
14.3
-14.8
1991
7.2
17.9
33.6
14.4
11.6
-3.3
2000
15.9
16.6
48.1
18.9
11.6
-4.8
2001
16.1
18.2
42.7
16.0
14.4
-4.7

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Interest payments/GDP
Total debt/GDP
Total debt service/exports
(average annual growth)
GDP
GDP per capita
Exports of goods and services
1981-91
3.7
0.7
7.2
5.2
126.0
27.0
2.3
51.0
16.2
1.3
19.8
7.4
1991-01 2000 2001
5.1
2.8
10.2
2.2
0.1
-1.6
0.9
-1
-6.4
1.4
20.1
10.0
2001-05
4.1
2.5
7.4
As shown below in Graph 1, economic growth has grown from a low of -0.9 percent in 1996 to 7 percent in
1999.
Graph 1
8
6
4
2
0
-2
1996
-0.9
1997
4
Year
1998
6
1999
7
1996
1997
1998
1999
Inflation rose to 22.5 percent in 1995, dropped to 11.1 percent in 1997, 12 percent in 1998, and 11 percent in 1999, and has remained close to 11 percent through 2001. These changes are reflected in Graph 2 below:
Graph 2
25
20
15
10
5
0
22.5
1995
11.1
1997
12
11
1998
Year
1999
11
2000
11.3
2001
1995
1997
1998
1999
2000
2001

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Finance
Costa Rica has both state-owned and private banks; and a national federation of savings and loan cooperatives supervises an extensive network of local agencies. There is a small national stock exchange (Costa
Rica, 3). The currency is the Costa Rican col Ó n, with one col Ó n equaling 100 centimos. The exchange rate as of
December 16, 2002 for one U.S. dollar is .002674 col
Ó n, or an easier to understand comparison is that one col Ó n is equal to just less than $344 US dollars (Exchange, 1). The per capita national debt is among the largest in Central
America. Table 2 shows the external debt for the past two decades (CR at a Glance , 2).
Table 2
External Debt
(US$ millions)
Total debt outstanding and disbursed
Gross national savings/GDP
Total debt service
1981
3,305
14.3
331
1991
3,653
11.6
374
2000
3,151
11.6
591
2001
3,243
14.4
709
As you can see, the national debt has remained somewhat steady over the last two decades, but the debt service has increased dramatically; it has more than doubled.
Insurance is a state monopoly controlled by the National Insurance Institute. Costa Rica is generally favorable toward foreign investment, and foreign-owned companies control a large segment of both agricultural and industrial production.
Government
Costa Rica is governed by its constitution of November 1949, the 10th in its history. A president, two vice presidents, and a unicameral Legislative Assembly are elected at one time for a term of four years, the assembly by proportional representation. The president is not eligible for reelection. Magistrates of the Supreme Court are chosen by the assembly for eight-year terms, and are then automatically continued in office unless removed by a two-thirds vote. An independent Supreme Electoral Tribunal oversees the election process.
Costa Rica has a stable democratic government. The fairness of national elections has been indicated by the fact that almost every four-year period since the mid-20th century has seen a change in the party winning the

Study Group 5, Page 15 presidency. Two parties dominate: the National Liberation Party (Partido de Liberación Nacional; PLN) and the
Social Christian Unity Party (Partido Unidad Social Cristiana; PUSC).
In the Costa Rican system of justice, cases may be decided by a single judge or by a panel of judges; the jury system is not used, but the courts are generally noted for their fairness. Capital punishment is banned, and sentences to the penitentiary must be for a stated number of years. The highest court is the Supreme Court of
Justice. Costa Rica has no army, only a nonconscripted civil guard that has police duties. They also have district police.
Education
The constitution provides for free and compulsory education. The government oversees school attendance, curricula, and other educational matters. About one-fourth of the nation's budget is allocated to education, and the literacy rate for those age 15 and over exceeds 95%. Males and females are equally literate (CIA 4). School attendance is relatively high, with almost 90 percent of children aged 6 to 11 enrolled in primary schools and nearly
40 percent of students aged 12 to 16 enrolled in secondary schools.
Health and Welfare
Costa Rica has greatly reduced the incidence of diseases associated with tropical climates. Malaria has been virtually eliminated except in the border areas with Nicaragua; waterborne diseases are rare, and mortality rates are low. The incidence of cancer and heart disease has risen.
Though the break between the wealthy and the manual worker is less distinct in Costa Rica than in other
Central American nations, there is still a large number of agricultural and industrial workers who earn very small wages. The poorest areas are the province of Limón, the Cordillera de Talamanca, the northern lowlands, and isolated parts of the Pacific coast. The San José metropolitan area stands out as the area of greatest affluence.
Resources
Costa Rica's agricultural land and climate are its most important natural resources, and what attracted us to locate our butterfly farms there. According to the World Bank Group data, 98 percent of the population has access to an improved water source, but the country has few mineral resources (CR at a Glance , 1). Geologic conditions

Study Group 5, Page 16 are promising for petroleum in the southern Caribbean coast, but exploration has proved disappointing (Costa Rica,
9). Much of Costa Rica's timber reserves were wastefully cleared to make way for pasture or cropland. The best remaining stands of tropical hardwoods are in protected parks and forest reserves. Hydroelectric power has the potential to supply domestic needs with enough surplus for export.
Agriculture
More than one-fourth of Costa Rica's economically active people work in agriculture, which contributes about one-fifth of the national product. Coffee, from the highlands, and bananas, produced mainly in the Caribbean lowlands, are the most important crops, accounting for nearly half the total value of all exports. Beef, chiefly from the Pacific Northwest, is the third largest export, but is declining in importance. Nontraditional exports of growing importance include ornamental plants and cut flowers and pineapple. Palm oil for domestic consumption is an important product from the southern Pacific lowlands.
Costa Rica has the capacity to feed itself but dedicates a large share of its land to production of export crops. As a result, the country imports staples such as corn (maize) and beans, which it could produce, along with products such as wheat, for which the Costa Rican climate is not suitable.
Industry
Manufacturing contributes more than one-fifth of the gross national product and employs approximately one-sixth of the economically active population. Food and beverage processing and textile, shoe, and furniture making are domestically important. The main items manufactured for export are clothing and cloth, medicines, medical equipment, thread, and electronic components.
A substantially larger number of Costa Ricans are employed in the service industries than in manufacturing. Commerce, finance and real estate, public administration, transport, construction, and utilities are other important branches of economic activity. Tourism has considerable potential and is developing and growing.
Trade
From 1995 through 1998, Costa Rica experienced a trade surplus, since then the country has had a trade deficit. In 2001, total exports equaled 4.9 million US dollars, while imports equaled 6.6 million US dollars, leaving a $1.7 million (US dollars) trade deficit (CR at a Glance , 2).

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Costa Rica imports wheat from the United States and corn and beans from its neighbors. Nonfood imports include insecticides and other chemicals, machinery, crude oil and petroleum products, and paper products. More than 50 percent of imports, by value, comes from the United States, with most of the rest originating in the
European Union (10.3%), Venezuela (5.3%), and Central America (4.9%) (CIA, 8).
Coffee is shipped in great quantity to the United States, western and central Europe, and Saudi Arabia.
Bananas are exported chiefly to the United States, Italy, Germany, and Belgium. Other exports of importance are beef, textiles, fish and shrimp, sugar, pineapple, and cut flowers. Over 50 percent of exports, by value, go to the
United States; other countries receiving Costa Rican exports include Germany, Panama, the United Kingdom,
Mexico, and Puerto Rico.
Transportation
The hub of Costa Rican transportation is the Meseta Central (CR at a Glance, 12). A four-lane highway extends west from San José to beyond San Ramón. Another highway, completed in 1987, has greatly reduced distance and travel time between San José and the Caribbean lowlands. Elsewhere in the Meseta Central are narrow, often tortuous, paved routes, with few interconnections, that reach the many valley and mountain communities in the immediate area. National railroad lines link San José with Puntarenas and Limón. The Inter-
American Highway (the Central American part of the Pan-American Highway) connects Costa Rica with the rest of
Central America and beyond.
Limón and Puntarenas have new port facilities constructed at nearby Moín and Caldera, respectively.
These modern facilities have rail access and are equipped to handle containerized cargo and, in the case of Moín, petroleum shipments. The southern Pacific port of Golfito, once an important banana-shipping center, handles little trade since the decline of banana production there. Limón is the busiest of the three ports. Juan Santamaría, near
San José, is the only international airport used by commercial jet planes. Tobías Bolaños Airport at Pavas, a suburb of San José, has a paved runway used by small aircraft. Paved runways at Limón, Golfito, and Liberia and gravel strips at a few other airports offer local service.
Country Risks
American International Group, Inc. has listed the following as economic risks for Costa Rica (AIG, 1):

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Short Term Risk Event: A double-dip recession in the US would sharply reduce Costa Rican export earnings, widening the current-account deficit and negatively affecting growth and employment.

Political Risk: Lacking a majority in Congress, the government will have to forge alliances to pass legislation, a difficult prospect as the legislature is divided into three main blocs. Policy making could be even slower than under previous administrations.

Economic Outlook: In light of the disappointing first-quarter result and the decline in global prospects in 2002, the Economist Intelligence Unit has revised down its growth forecasts for 2002-03. Weaker than expected US growth will reduce import demand, depressing Costa Rican output, which relies on external demand for growth.
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Debt Outlook: In line with its schedule of debt issuance, the government will release a further US$450m bond in 2003, which is set to finance the amortization of a Eurobond falling due that year. External debt ratios will remain low by regional standards and the government is expected to have little difficulty in meeting its external obligations; however, the internal debt is a problem. Increased servicing costs account for most of the widening of the central government deficit so far in 2002, constraining the sovereign's creditworthiness.
This review was as of 2001, and the economic outlook for the United States has improved somewhat over the last few months. If the US is able to avoid the double-dip recession, and it looks very promising at this point, it will favorably affect the situation in Costa Rica. Despite the risks involved, because of the reasons we have stated before, we have confidence in our decision to base our business in Costa Rica.
Butterfly Beauties, Inc. Operations
Equipment and Supplies
Of course starting a butterfly business requires a great deal of research and in the case of the location in
Costa Rica, a small investment. In researching our business venture we have determined the following items are essential for our success:

Good (or corrected) eyesight (eggs and newborn caterpillars are TINY!) Priceless

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Caterpillar Rearing Space: A spare room or garage or shed type space with shelving will do for caterpillar rearing boxes. Room must be heated or cooled to between 75°-85°F, and to be able to control the humidity.
Cost $85.00

Cold Storage/Sanitation: A spare refrigerator and a sink in the caterpillar room are ideal. One-quarter to onehalf of a normal refrigerator is routinely needed to store supplies. Also necessary is a deep sink as well as large countertop space to clean and dry caterpillar boxes. Cost $60.00. (A dishwasher may also be used, which would raise the cost to $360.00).
 Butterfly Holding Space: A temperature (65°-75°F) and light-controlled enclosure is needed to hold the butterflies until they are ready to be sold. We have chosen a 10X10-foot space. The Caterpillar Rearing Space and the Butterfly Holding Space cannot be in the same room! Caterpillars need warm temps to grow properly and quickly. Butterflies need cool temps to have a decent shelf life. Contractors price of $350 including cooling units.
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Butterfly Breeding Space: We have opted to maintain five 8'x8'x8' screenhouse enclosures in a sunny place filled with nectar plants and a few host plants to encourage breeding butterflies to mate and lay eggs. Certain species can be raised using smaller breeding cages, but they will not be nearly as productive at laying eggs. A contractor has quoted a completion price of $525.00
.
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Screenhouse: A green thumb and knowledge of native plants is necessary to start and raise caterpillar host food plants. Since our farm is located in a natively warm part of the country, we will utilize screenhouses rather than a greenhouses. As colder weather sets in, we will attach plastic sheeting over the screens to ensure the temperate climate of the screenhouses. To begin, we have chosen to construct four 16'x96' screenhouses. We predict that we will be able to build these structures for around $250 each ($1000).
This of course includes electrical, plumbing and telephone inclusion.
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Land: As an initial investment, we have purchased 15 acres of land to begin our farm. Three acres will encompass the sheds, caterpillar, butterfly rooms, breeding enclosures, screenhouses and our tourism/business complex. Eight acres will be maintained to raise native and host plants. The remaining acreage will be

Study Group 5, Page 20 maintained for growth and crop rotation methodology. We have been able to purchase the land necessary for
$178.00 an acre. ($2640.00)
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Basic supplies: In the business complex, we will have a small laboratory and packing area containing microscopes and assorted other rearing supplies such as rearing containers, shelves, disinfectants and spray bottles; packing boxes, cotton batting, and shipping supplies; marketing materials, etc. The price for set up and supplies for this particular area will be approximately $1,500.
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Office equipment and supplies will include computers, printers, and Internet access. Additionally, we have purchased a plain paper fax/copy machine. Additional equipment will include cellular phones for all personnel as well as the traditional multi-line phone system.
Employees
In addition to the aforementioned supplies, a well-trained staff is a necessity. Butterfly farming requires a lot of patience and attention to detail. It is a very labor-intensive business. Feeding and sanitation of caterpillars and butterflies is a 7 (yes-seven!) day a week job, in season. The ability to handle multiple tasks, just as in any small business, will be necessary. This will include advertising and marketing, sales (a lot of talking to brides!), bookkeeping and accounting, stockkeeping/inventory/ordering of supplies, packaging and shipping, plus the
"alternative agriculture" end of the farm business: breeding insects, dealing with disease prevention, and growing food plants.
We have been fortunate enough to hire a staff of that includes a financial manager, marketing manager, export manager, packing supervisor, two secretaries, and eight farm hands (three of whom also serve as tour guides). We also have two maintenance workers and six part time workers to help during the seasonal fluctuations and to allow the rest of us a day or two of rest. With Costa Ricans earning an average of $1.27 per hour, our payroll expenses are not significantly large as we would experience in the United States. Uniquely, we are able to offer our employees a wage of $3.00 per hour. We believe this wage will compensate the employees well, as well as provide a method of retaining the employees once we have spent the time and money to train them.
Marketing Butterflies

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More than a dozen major exhibits are operating today and several more are planned or under construction.
North America's largest butterfly exposition, The Niagara Parks Commission's (Ontario) Butterfly Garden, is a 15 million-dollar facility and was opened in December 1996. During one weekend in January it received 20,000 visitors.
An exciting and growing market for butterflies is for butterfly releases. Increasingly, customers are purchasing large numbers of butterflies for release at weddings and other special occasions. In Costa Rica, members of the country's legislature recently took part in a butterfly release as part of a fund raising event for street children. As each legislator released a butterfly, he would call out aloud the name of a child. The butterfly he released represented the life and aspirations of that child. One could perceive the collective hearts of all who were present fly up with each passing butterfly (Costa Rica Tours, 3).
The biggest trend in weddings today is the release of butterflies after the ceremony. It is more ecologically sound than throwing rice or birdseed; releasing balloons kills endangered turtles and other sea life. What could be more appropriate at a wedding than making a wish on the wings of a butterfly? Imagine watching as the wish is taken to heaven to be granted! An American Indian legend states, "To have a wish come true you must capture a butterfly. Whisper your wish to it and set it free. The winged messenger will then take your message to the Great
Spirit and it will be granted." The sentiment is as beautiful now as it was then.
From the Ozarks to New Delhi wedding ceremonies are rich with butterfly involvement. The Sanskrit weddings of India make constant reference to butterflies. Even in Appalachia, for a new bride to see a butterfly on her wedding day means only the best of luck.
The number of butterflies to be released varies as much as the manner in which it is done. One or one hundred, they are all very beautiful and extremely spectacular. Whatever number is chosen, they are received individually packaged in color coordinated envelopes. With large numbers of butterflies, everyone lines the sidewalk. As the newlyweds emerge after the service and head for the limousine, everyone opens their envelopes.
The butterflies fly up to congregate and the bride and groom proceed under a canopy of live butterflies.
When a smaller number is used, only the wedding party is supplied. After the ceremony they gather outside where the "Wish Legend" is read aloud. Wishes are made and the butterflies are then set free. Other past

Study Group 5, Page 22 techniques include being concealed under handbells, or in boxes. At the moment the couple says, "I do" the butterflies are released in a wonderful flurry of multi-colored wings to announce the joyous news. While in an induced sleeping state, they may also be hidden directly in the floral arrangements. During the ceremony they wake up and emerge from the flowers.
Other events suitable for a butterfly release are birthdays, christenings, business openings, corporate functions, and any other event where family and friends are gathered. Butterflies released at funerals can be a very beautiful and therapeutic addition to the service and helpful in the mourning process.
Availability of butterflies, of course, is governed by weather and timing. The health and well being of the butterflies is the foremost concern. They are sold only in the warmer months, late May through early October. Our brochure explains the pricing packages as well as the care for the butterflies before their release. (Appendix)
Few places in the world offer visitors a more in-depth view and appreciation of butterflies as our farms in
Costa Rica. At Butterfly Beauties, all guests receive a two-hour guided tour. Inside an enclosed tropical garden, hundreds of Costa Rican butterflies flutter around flowers as trained guides explain about the life cycle and natural history of these fascinating creatures. Early morning tours may have the extra treat of watching butterflies emerging from their chrysalides. On export days, visitors may watch thousands of pupae being packed for export.
In addition to our visiting our farm, as with many of today’s industries, our products can be found online at www.butterflybeauties.com. Many of our products for exhibits are sold through brokers or distributors in London,
Ontario Canada, and California.
As our business continues to grow, we will constantly strive to invent new ways in which to share the joy, pride, and beauty found in our hand-raised butterflies. Our butterflies at all life stages are available (at a discounted rate) to educational institutions, research programs, and charitable organizations and discounted rates for butterflies used for various educational institutions
To ensure customer satisfaction, our company guarantees the quality of its pupae against biological defects through two methods.
1.
The value of any pupae that fails to arrive in satisfactory condition (emerged in transit, deformed, evident virus, no cremaster, etc.) will be reimbursed to the client in a subsequent shipment.

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2.
To compensate for pupae that are accepted upon arrival, but ultimately don't emerge or emerge properly, we will reduce all prices stated on the above price list by 10% automatically (i.e. species that are listed at $2.25 will be invoiced for $2.03, etc.).
Exportation/Shipping
As previously mentioned, butterflies are prepared for shipment via water channels and air carrier. As with almost anything, permits are often required for international shipments, many intercontinental, and between certain regions or states. Depending upon the stage request, butterflies will be hand fed, packed, and shipped immediately to the location. For weddings, butterflies can be packaged individually in personalized or color-coded envelopes available for release by wedding party members. The choice is the customer's.
Clients in the United States must provide a faxed copy of their US Department of Agriculture import permit. Similarly, Canadian clients must send us by fax or post a copy of their Agriculture and Agri-Food Canada import license .
Based on the availability, pupae can be purchased for displays, releases of educational instruction between
$2.00 -$4.50 per specimen. Expedited shipping charges can be added if needed. Typically we request an order of
4-6 weeks prior to the need of the specimen. Payment methods include traditional mail (payment must be received before shipment is made), credit card transactions, and bank wire transfers or courier services. Invoicing is available for established clientele and for orders of $150.00 (shipping not included) or greater.
Conclusion
As you can see, butterfly farming promises to be a wonderful experience and a profitable business. The
Costa Rican location is perfect in so many ways, and we look forward to building relationships with the people of that country. Our marketing possibilities continue to expand. Butterfly farming is a unique business opportunity, and one we anticipate will be very successful.

Works Cited
"Business Culture." The Global Warrior. 11 Dec 2002. <http:// www.globalroadwarrior.com/country/costarica/13grw.html>.
"Butterfly Farming." The Butterfly Website. 9 Dec 2002. <http://www.mgfx.com/ butterfly/>.
“Costa Rica” Britannica. 10 Dec 2002. <http://www.britannica.com/eb/ article?eu=118705>.
“Costa Rica” CIA - The World Factbook 2002 -- Costa Rica. 10 Dec 2002.
<http://www.odci.gov/cia/publications/factbook/geos/cs.html>.
“Costa Rica at a Glance.” World Bank Group. 10 Dec 2002. <http://www.org/data/ countrydata/aag/cri_aag.pdf>.
"Costa Rica Tours." Costa Rica Tours. 10 Dec 2002. <http:// www.costaricatours.com>.
“Exchange Rate.” Exchange Rate. 16 Dec 2002. <http://www.exchangerate.com/ html>.
"Money & Banking." The Global Warrior. 11 Dec 2002. <http:// www.globalroadwarrior.com/country/costarica/03grw.html>.
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