Honduras - An inquiry into rural population, small farmers and agrarian reform

Report No. 3963-HO RLE LOP Honduras An Inquiry into Rural Population, Small Farners and Agraian Reform January 14, 19B3 Country Programs Department I Latin America and the Caribbean FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1.00 = 2.00 Lempiras (L) Fiscal year L 1.00 = US$0.50 January 1 to December 31 GLOSSARY OF ABBREVIATIONS ACADEH Campesino Association for Diversified Agricultural Development ANACH National Association of Honduran Peasants ATAC American Technical Assistance Corporation BANADESA, BANAFOM National Agricultural Development Bank BANASUPRO National Development Bank Food Marketing Agency BNF National Development Bank CABEI Central American Bank for Economic Integration CACM Central American Common Market CELADE Latin American Demographic Center COHBANA Honduran Banana Corporation COHDEFOR National Forestry Corporation CONADI National Investment Corporation CORFINO Olancho Industrial Forestry Corporation CONSUPLANE, CSPE National Planning Council DIMA Municipal Water Divison of San Pedro Sula EACI Isletas Cooperative of Banana Growers ENEE National Electric Power Company ENP National Port Authority FAO U.N. Food and Agricultural Organization FECORAH Federation of Agrarian Reform Cooperatives FENACH National Federation of Honduran Campesinos FIAFSA Agua Fria Industrial Forestry Corporation FINAVI National Housing Financiera FNP National Railway Company FONDEI National Industrial Development Fund HONDUTEL Honduran Telecommunications Corporation IDB Inter-American Development Bank IHCAFE Honduran Coffee Institute IHDER Honduran Rural Development Institute IHMA Honduran Agricultural Marketing Institute IHSS Social Security Institute IJPM National Retirement Fund for Teachers INA National Agrarian Institute INFOP Vocational Training Institute INVA National Housing Institute INVEST Investment and Economic Studies JNBS National Social Welfare Board JUPEMP National Retirement Fund for Public Employees LNB National Lottery MNR Ministry of Natural Resources PANI National Child Welfare Institute PROCCARA Training Department of INA PRODERO Western Rural Development Project SANAA National Water and Sewerage Service UNAH National University UNC National Union of Peasants USAID U.S. Agency for International Development  FOR OFFICIAL USE ONLY SYNOPSIS The report analyzes the performance of the Honduran agrarian reform program to assess its achievements, the impact on the campesinos and the problems confronted in carrying out the program. It also analyzes expected population growth and the resulting pressures on natural resour- ces, rural migration and employment, and number of landless peasants. The report arrives at proposals for policy action to improve the situation of small farmers and agrarian reform beneficiaries. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   AN INQUIRY INTO RURAL POPULATION, SMALLFARMER AND AGRARIAN REFORM TABLE OF CONTENTS Page No. COUNTRY DATA SUMMARY AND CONCLUSIONS ...................... .. i - vi I. INTRODUCTION ........................................ .......1 II. POPULATION PRESSURES .................................... 1 A. Rural Population ......................... 1 B. Migration and Spatial Distribution of Population ..... 2 a) Internal Migration and Agricultural Regions ....... 2 b) Characteristics of the Migrants ................... 4 c) Rural-Urban Migration . ... .*... .. ...... ........ . . . . . . 5 d) Growth Poles .................................... .............. 6 C. Rural Working Force ..... ..................* * ........ 6 D. Rural Population and Labor Force Projections ......... 7 E. The Costs of Population Growth ....................... 8 F. Summary Conclusions .................................. 9 III. THE SMALL FARMER 10.................... ............. 10 A. Land Intensity, Crop Mix, and Incomes ..... . 10 B. Labor Force in Small Farms ....................... 14 C>. Education ........0. *.....0.... .. 16 D. The Small Farm Access to Credit and Technical Assistance and Other Inputs 16 E. Landless Peasants .17 F. Rural Manufacturing . ............ 17 G. Summary and Conclusions ....... ...... .......... 18 IV. THE AGRARIAN REFORM .......... .. ...................... ... .. ........ 18 A. Brief History ....... ........ ............................... 19 B. The Agrarian Reform Institute ........................ 20 C. The Importance of the Agrarian Reform ................ 21 ao Families Settled ................................................ 21 b. Agricultural Production and Marketing in the Reform Sector .... .......... .......... .. ... 23 D. Types of Settlements ........... o ..................... 24 E. Land Acquisition and Titling ........... .............. 25 F. Abandonment of the Settlements ...................... 26 G. Uncultivated Land in the Settlements ..... 27 H. The Institutional Capacity of the Agrarian Reform Institute ....................................... ............. 28 a. INA's Budget and Personnel .................... . 28 b. INA's Field Assistance and Training ............. 29 c. Technical Assistance to the Reform Settlements 31 I. Training Needs of the Reform Settlements .... ......... 32 J. Credit for the Reform Settlements ............... 32 K. Summary and Conclusions . ....... 33  TABLE OF CONTENTS Page No. ANNEX 1 - The Lower Aguan Valley Settlements ................... 36 ANNEX 2 - The Isletas Banana Enterprise (EACI) ................. 42 ANNEX 3 - Agrarian Reform Settlements in the Southern Region ... 46 STATISTICAL APPENDIX ...... ....................... 49 MAPS IBRD 15677 - Power System TransportatiQn Network _IBRD 16294 - Agrarian Reform Settlements IBRD 16295 - Lower A:,uan Valley IBRD 14337R - Rainfall IBRD 14338R - Land Use Potential IBRD 14339 - Forests IBRD 14362R - Relief IBRD 15651 - Watersheds This report is based on the findings of an economic mission to Honduras in January 1980, comprised of Juan Giral (Chief) and Eric Shaerer (Consultant). A draft report was discussed with the authorities in October 1982.  Page 1 of 2 pages COUNTRY DATA - HONDURAS AREA POPULATION DENSITY 112,100 km2 3. 7 million (mid-1980) 32 per km Rate of Growth: 3.11/ (from 1961 to 1979) 124 per km of arable land POPULATION CHARACTERISTICS (1975-80) bMEALTH (1979) Crude Birth Rate (per 1,000) 47.0 Population per physician 3,416 Crude Death Rate (per 1,000) 12.0 Population per hospital bed 7.3 Infant Mortality (per 1,000 live births) 118.0 ACCESS TO PIPED WATER (1978) DISTRIBUTION OF LAND OWNERSHIP (1974) 2/ % of population - Total 52.0 % owned by top 12% of owners 73.1 % owned by smallest 10% of owners 0.5 NUTRITION (1969-71) ACCESS TO ELECTRICITY (1979) Calorie intake as % of requirements 94.0 % of population - urban 25.0 Per capita protein intake 56.0 - rural EDUCATION (1979) Adult literacy rate % 57.0 Primary school enrollment % 89.0 (adjusted) GNP PER CAPITA IN 19803/: US$560 GROSS NATIONAL PRODUCT -IN 1981 ANNUAL RATE OF GROWTH (%, constant prices) US$ Mln. % 1965-73 1973-79 1980 1981 GNP at Market Prices 2,714 100.0 4.1 4.4 2.2 1.6 Gross Domestic Investment 604 22.3 5.3 11.0 1.1 -13.2 Gross National Saving 301 11.1 4.7 -3.0 -15.0 -2.2 Current Account Balance4/ -303 11.2 Exports of Goods, NFS 885 32.6 5.3 4.1 4.4 -10.5 Imports of Goods, NFS 1,062 39.1 4.8 9.9 8.1 -12.2 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1979 Value Added Labor Force5/ V.A. Per Worker US$NMln. % Mln. % US$ % Agriculture 599 27.7 .625 59.9 958 46.2 Industry 488 22.5 .175 16.8 2,789 134.4 Services 813 37.5 .244 23.3 3,331 160.5 Unallocated6i 266 12.3 Total/Average 2,166 100.0 1.044 100.0 2,075 100.0 GOVERNMENT FINANCE General Covernment Central Government (US$ Mln.) % of GDP (US$ Mln.) X of GDP 1979 1979 1977-79 1979 1979 1977-79 Current Receipts 388 17.9 18.7 316 14.6 15.1 Current Expenditure 330 15.3 15.9 288 13.3 13.9 Current Surplus 58 2.6 2.8 28 1.3 1.2 Capital Expenditures 135 6.2 7.0 126 5.8 6.0 External Assistance (net) 66 3.0 3.5 67 3.1 3.5 (p) = Preliminary 1/ Population growth rate is lower than the rate of natural increase, because of net emigration. 2/ The 1974 Census does not reflect land redistribution efforts. In 1980, land redistributed accounted for about 10 percent of total farm land. 3/ GNP per capita estimate at market prices, calculated by same conversion method as World Bank Atlas. 4/ Includes transfers. 5/ Total labor force: unemployed are allocated to sector of their normal occupation. 6/ Indirect taxes. Not available Not applicable  Page 2 of 2 pages COUNTRY DATA - HONDURAS MONEY, CREDIT AND PRICES 1975 1976 1977 1978 1979 1980 1981 (Million US$ outstanding end period) Money and Quasi Money 299 380 467 570 635 682 748 Bank Credit to Public Sector 41 40 55 77 99 155 205 Bank Credit to Private Sector 349 419 518 600 678 739 794 (Percentages or Index Numbers) Money and Quasi Money as % of GDP 27.0 29.5 30.2 31.3 29.3 27.4 27.9 General Price Indes (196 = 100) 147.4 154.7 167.9 177.5 193.1 229.4 251.0 Annual percentage changes in: General Price Index 8.1 5.0 8.5 5.7 8.8 18.8 9.4 Bank Credit to Public Sector -4.7 -2.5 37.5 4O.0 28.6 56.6 32.3 Bank Credit to Private Sector 19.9 20.0 23.6 15.8 13.0 9.0 7.4 BALANCE OF PAYMENTS MERCHANDISE EXPORTS (1981) 1975 1979 1980 1981 US$ Mln. % (Millions US$) Bananas 213.3 27.2 Exports of Goods, NFS 343.5 821.9 928.7 885.3 Coffee 172.8 22.0 Imports of Goods, NFS 452.4 917.6 1126.4 1062.3 Beef 46.5 5.9 Resource Gap, (deficit = -)-108.9 -95.7 -197.7 -177.0 Lumber 43.1 5.5 Interest Payments (MLT) -10.1 -45.9 -$9.1 -77.4 All other commodities 308.1 39.4 Workers' Remittances *- *- Total 783.8 100.0 Other Factor Payments (net) -18.2 -60.0 -88.9 -75.9 Net Transfers 17.7 18.5 21.5 27.5 Balance on Current Account -119.6 -183.1 -324.2 -302.8 EXTERNAL DEBT, DECEMBER 31, 1981 Direct Foreign Investment 10.4 10.0 .5.8 -3.6 US$ Nln. Net MLT Borrowing 92.8 162.0 222.5 216.4 Disbursement (99.2) (224.6) (261.8) (254.0) Public Debt, incl. guaranteed 1223.7 Amortization (6.4) (62.6) (39.3) (37.6) Non-Guaranteed Private Debt Subtotal 103.2 172.0 228.3 212.8 Total outstanding & Disbursed Capital Grants .. Other Capital (net) -29.1 1.7 -3.0 -0.4 Other items n.e.i. 28.6 -7.4 45.1 18.0 DEBT SERVICE RATIO FOR 198111 Increase in Reserves (+) -16.9 -16.8 -53.8 -72.4 % Gross Reserves (end year) 108.3 230.0 172.8 133.3 Public Debt, incl. guaranteed 12.7 Net Reserves (end year) 28.2 116.9 63.1 - 9.3 Non-Guaranteed Private Debt .. Total outstanding & Disbursed RATE OF EXCHANGE IBRD/1IDA LENDING, Nov. 30, 1982 (Million US$): Through - 1971 IBRD IDA US$ 1.00 = L 2.00 L 1.00 = US$ 0.50 Outstanding & Disbursed 213.9 79.2 Undisbursed 179.7 3.8 Since - 1971 Outstanding incl. Undisbursed 393.6 83.0 US$ 1.00 = L 2.00 L 1.00 = US$ 0.50 1/ Ratio of Debt Service to Exports of Goods and Non-Factor Services. 2/ Includes a prepayment of about US$24 million. Excluding this prepayment, the debt service ratio is 10.2%. Not available Not applicable July 14, 1981 LACI  SUMMARY AND CONCLUSIONS i. This study analyzes the Honduran agrarian reform program examin- ing its achievements, problems confronted and impact 6n the campesinos. This is an important issue because expected population growth and resulting pressures on natural resources, rural labor growth, and consequently peasant families will lead to further pressures for land redistribution in the years ahead. The Honduran population is expected to reach 7 million by the year 2000 as a result of a 60 percent decline in mortality rates and a one-third decline in the total fertility rate. Rural fertility is very high (about 8.7 children 1/), and poor western and southern rural areas with high fertility rates are a significant source of internal migration, both to more dynamic agricultural areas and to small towns in neighboring departments. Afterwards, they move to main population centers. Population pressures originating in rural areas will continue to dominate Honduras' population dynamics. This means mounting pressures on natural resources, particularly farmland, and thus on the carrying capacity of different qual- ities of land. This will also mean additional pressures for more land redistribution. Agrarian Reform Achievements ii. Land reform legislation was first introduced in Honduras in 1962. The Agrarian Reform Institute (INA) was put in charge of the agrarian reform. The first significant legislation, however, was not enacted until December 1972 in response to rural unrest. As a result, the Government was overthrown and an aggressive land reform program was launched. The 1972 legislation was expanded and strengthened in January 1975 when a comprehen- sive Agrarian Reform Law was issued aiming at improved land utilization through the transfer of unused or poorly used land from large landowners to landless rural families. During 1973-76, significant land distribution took place, but it slowed down thereafter. iii. About 210,000 hectares had been transferred by 1980; about 80 percent was cultivable (8 percent of the total farmland). This is a remarkable achievement. Public land represents about 59 percent of the land redistributed, banana companies' land ceded to the Government about 28 percent, private land purchased or expropriated 15 percent, and other sources the remainder. Although land had been distributed to over 48,000 families, only about 36,000 remained on the land at the end of 1980. Some families abandoned the settlements because they did not receive enough pro- ductive land and support services; others because they could not adapt to hard living conditions. iv. The significance of the agrarian reform for agricultural produc- tion and its future potential is indicated by its present estimated 10 per- cent share of value-added in agricultural production and its employment of about 8 percent of the rural labor force. For some crops, such as African palm, bananas and rice, the share of production is already significant and expected to grow as the Lower Aguan settlements make further advances. Production of basic grains--corn, rice and beans--in the reform settlements 1/ Number of children an average woman would have if her childbearing behavior corresponded to that of the general female populated.  - ii - is also significant although subject to wide variations because of weather conditions and flooding. Performance of different groups of campesinos varies. Those under the Federation of Agrarian Reform Cooperatives (FECORAH), sponsored by INA, show the highest share of permanent and semi- permanent crops--bananas, sugarcane, and African palm--while those under separate campesino organizations 2/ concentrate heavily in basic grains, mostly for self-sufficiency. v. There is now a growing awareness that all reform groups must participate in the higher earnings afforded by cash crops, if they are to be viable in the longer run. INA's current production policy is to encour- age contracts for cash crops with reputable firms which may provide technical support, inputs, and markets. Marketing organizations, however, are still weak. In addition, although cattle husbandry is now considered suitable for agrarian reform campesinos, implementation of these programs is slow because of credit shortages and lack of mortgage guarantees. Agrarian Reform Challenges vi. Although initial uncertainties have been significantly reduced, there is still considerable mistrust about the Agrarian Reform Law, partic- ularly with respect to the application of Article 38, which exempts from expropriation land under cultivation in 1975 with bananas, plantains, sugarcane, African palm, coffee, pineapple, citrus fruits, and tobacco. New plantings of these or new export crops, however, are not covered by this guarantee. This raises considerable fears of land invasions among non-reform farmers. vii. Although the Government has provided INA with substantial resources to carry out its mandate, its performance has significant weak- nesses. First, although current operating expenditures (largely for personnel) mostly have met their budget targets, actual investment expendi- tures have been much below budgeted levels. Second, INA's staffing has been rather generous--nearly 2,000 employees, or 17.5 settlers per employee--but serious deficiencies have been identified in the services provided by this staff, particularly, by the promotors. Third, about one-fourth of the beneficiaries have abandoned the settlements; a survey in the Lower Aguan project indicated that this situation could have been avoided through more careful selection and more thoughtful social and economic planning of resettlement conditions. Fourth, land titling has proceeded at a slow pace. Fifth, field assistance, technical assistance and training have suffered from excessive internal reorganizations and from weaker than anticipated support from international experts. Promotors, in particular, have high turnover rates, are not sufficiently trained or qualified, and do not have a clear perception of their task. Training courses appear to be mostly orientation or motivation talks, and campesino indifference to the courses is growing. Groups close to main roads are saturated with courses while, other, more remote, groups received no cour- ses; no evaluation or follow-up is made of the courses. 2/ National Association of Honduran Campesinos (ANACH) and National Union of Campesinos (UNC).  - iii - viii. By 1980, titles were still pending for about 85 percent of the groups and 70 percent of the land. INA's cadastral office has very limited personnel; it has not worked systematically with the national cadaster nor utilized its aerial photographs for the delineation of property plots. The cumbersome and time-consuming process followed to determine legal ownership and the fact that the banks still do not accept agrarian bonds for payment of outstanding debts of the former owners, as provided by law, have pre- vented INA from taking legal title to most of the expropriated properties. A quick resolution of these problems will be necessary if the fruits of the agrarian reform are to be harvested. ix. Abandonment of the settlements is frequently singled out together with "uncultivated" reform land to show that the agrarian reform has been a failure. Both phenomena are related. Abandonment has been heaviest in the south and southeast but because the average cultivable land allocated per family was only two hectares in either a droughty or a hilly area. Abandonment among the Lower Aguan cooperatives is explained by inadequate training and motivation for self-management of the beneficiaries, lack of support services and social infrastructure, failure to adapt to harder living conditions as well as by faulty methods for selection, preparation and settlement of the new agrarian reform recruits. Resolution of these problems will take more time; what is needed, of course, is a better process and stronger institutions. The Unattended Groups of Campesinos x. Limited financial capacity and lack of trained human resources have prevented the Government from providing the needed service levels to all agrarian reform settlements. These constraints, together with major policy changes, led to a change in the emphasis of the program in 1978. The Government is concentrating its efforts in the potentially most productive areas (intensive rural development projects with 38 percent of the families) and consolidating other settlements with high production potential (9 percent of the families), which receive only credit and technical assistance. The remainder (about 53 percent of the families) receive only marginal support. xi. While the Government is concentrating its agrarian reform efforts on a few farmers, an increasingly large group of farmers and peasants receive little official attention; these groups could well use it. A large proportion of the small farmers, an undetermined number of landless peasants, and most of the agrarian reform beneficiaries outside intensive development projects remain in poverty. Two-thirds of Honduran farmers are small farmers with less than 5 hectares; they cultivate about one-tenth of the country' s farmland but own only 40 to 65 percent of the land they cultivate. Small farms concentrate on annual crops, basically corn. The most important permanent crop for the small farmer is coffee, which repre- sents on the average 10 percent of the cultivated land in farms below 2 hectares. Small farms significantly underutilize their available man- power; structural and seasonal unemployment are common. Small farmers usually supplement their meager incomes by selling their surplus labor to larger farms.  I.V - xii. In addition, there is an undetermined number of peasants without any land. Although 1974 estimates ranged up to 120,000 families and increasing by about 4,000 families per year, this overestimated the magni- tude of the problem because it included rural workers engaged in non- agricultural occupations, and workers in banana, sugar, and other cash crop plantations with better incomes than agrarian reform beneficiaries. Furthermore, the agrarian reform experience indicates that not all landless peasants, if provided with land, would remain in the settlements. Therefore, the actual number of landless peasants to be settled will depend not only on the non-reform related employment opportunities, and situation of the poor but also on the Government's desire and capacity to settle and provide support services to agrarian reform families. Land is not a con- straint; it appears that there is enough prime arable land with adequate resource base now being made accessible by new roads which could be used for settling over 100,000 farming families in new reform projects. Suggestions for Improving Rural Conditions xiii. Honduras' potential for solving many of its present rural problems is significant, but a large gap exists between this potential and the degree to which it has been tapped. Although only one-fourth of the country is arable, about one million hectares suitable for crops are being used as grazing land or lie idle 3/. This land is located mostly in the Aguan and Olancho-Guayape valleys, and the Northern coastal plains, and is either in the public domain or privately owned in large parcels that could be acquired under present agrarian reform legislation. New sources of agricultural, export-oriented growth, which will take advantage of the large public investments now underway, could be developed. Dynamic private sector participation would also be essential to the development of commer- cial cash crops. Agrarian reform campesinos could also participate by strengthening INA's current policy, which encourages contracts for cash crops with reputable private firms that provide technical assistance and inputs. xiv. Nevertheless, an attack on rural poverty will have to address the problems of all poor campesinos, including the small farmer, although the level of support undoubtedly will vary with the nature of the group. To improve living conditions of small, poor independent farmers, it is neces- sary to improve production and marketing systems. Since these farmers may have a low priority for benefits under the agrarian reform program, the solution wili have to be found through broad specific programs to support the smallholder. The ultimate aim of both the campesino organizations and the Government ought to be to eliminate the largely artificial differences between agrarian reform and traditional small farmers and focus their entire effort on how to service them best. 3/ IBRD, A Review of Selected Sub-Sectors of the Agricultural Economy, 1981.  -v - xv. A broad program to improve the situation of the small farmer should aim at providing an integrated service package comprising at least some of the following: short- and medium-term credit, technical assistance, modern inputs, machinery service, and better marketing facilities. In ad- dition, more infrastructure on farm access roads and storage and drying facilities are needed. The constraints to this approach are both adminis- trative and financial. Government agricultural agencies expanded consider- ably in the last few years, reflecting Honduras' commitment to improve rural conditions, but are inadequately staffed to provide all these servi- ces. In addition, the country may not have enough specialized, qualified technicians to expand them, even if the serious Central Government finan- cial constraints that presently preclude their expansion were removed. Clearly, efforts are needed to improve organization and administration in the agricultural public sector to make it work more effectively. Under these circumstances, support to the small farmer will have to be implemented on a more limited scale, preferably by concentrating resources in the development of specific project areas, as is being done with the PRODERO and Guayape projects. A marketing component is considered essential in most new projects. A nationwide approach will not work in the short run because serious technical, administrative, and financial difficulties would hamper a more intense Government effort. Progress towards nationwide coverage would depend on the experience with regional projects now underway, the availability of qualified technicians, and improvements in the constrained fiscal situation of the Government. 4/ xvi. Agrarian reform beneficiaries can be separated in three groups according to the level of support they receive from INA, intensive develop- ment settlements, consolidation settlements, and the rest. Those benefi- ciaries in intensive development projects already receive most of INA's resources, but there is substantial room for qualitative improvements in their use. Crucial needs of intensive development projects are better training in organization and management, accounting and controls, planning and use of services and resources. Campesinos in consolidation and other agrarian reform settlements have problems which are similar to those of the small farmer. Measures to improve their situation accordingly should aim at providing an integrated service package, farm access roads, and storage and drying facilities. The Government is supporting now consolidation settlements with second-tier regional cooperatives to provide improved access to technical assistance and credit and to improve management. Administrative, personnel, and financial constraints, however, will continue limiting the support to the agrarian reform beneficiaries. xvii. In this connection, an important issue concerning agrarian reform settlements is the appropriate land quality and man/land ratio in each set- tlement and region. Inappropriate land parcels, by size or quality, will not be viable. Spontaneous adjustments have already taken place, but this needs to be accelerated and rationalized by INA with the support of campe- sino associations and expert technical advice to validate the income- producing potential of a given land. On this basis, a decision can be reached for each group as to whether (i) the settlement should be abandoned for a new land allotment elsewhere; (ii) the number of members 4/ See IBRD 3312-HO, Current Economic Memorandum on Honduras, July 1981.  - vi - should be reduced; or (iii) additional members are required. In this process, it will be very useful to take account of the experience of the migration program for the Lower Aguan in order to avoid repeating the same mistakes. xviii. Much of the future success of the reform effort will depend on the stability and technical capacity of the personnel responsible for its implementation, particularly at the field agent level. In the past, INA's field assistance and training has been deficient. Many promoters have not been effective in strengthening management and accounting practices of the reform groups because they lack training and have no clear idea of their tasks. INA's training is not only poor; there is no follow up system. A careful selection of well-trained personnel; an intensive, much better focused, and effective training program; and a minimum assignment period to one area of field personnel should improve field level performance. Furthermore, planning and implementation of projects, as well as selection of campesinos for a particular settlement should avoid a repetition of past practices on beneficiary selection. Many deserted in the past because of inadequate training and motivation for self-management, lack of support services and social infrastructure, failure to adapt to the new environ- ment, as well as because of faulty methods for recruitment, selection, pre- paration and settlement. xix. Some commercial farmers are reluctant to plant new crops, particu- larly on land under cultivation with "protected crops", since it could make them eligible for expropriation. To remove this uncertainty,it will be necessary to expand the protection against invasions and occupations to all efficiently cultivated land regardless of the particular crop. Land redis- tribution could be undertaken within the expropriation criteria established in the law, which establish maximum limits to private farms depending on soil quality, region of the country, intensity of cultivation, etc. 5/ xx. One of the most important needs of the agrarian reform settlements is better marketing. There are good markets in the medium run for a large number of export products, through mixed public/private initiative (African palm, melon, cotton, vegetables, citrus fruit); however, substan- tial efforts are needed to produce unblemished fruits. For other products, some with a considerable market potential (sesame, cashews), more marketing efforts will be required. In the case of basic grains, however, the domes- tic market if not functioning well; support prices set by the Government marketing agency (IHMA) are significantly below wholesale prices, and this agency is not an important market force even though it owns a fairly wide- spread network of country storage facilities. In this respect, more analy- sis is needed about Honduras' potential for increasing basic grains produc- tion at internationally competitive prices. The information available indicates that import prices are significantly below Honduran wholesale prices for maize and rice, and that bean wholesale prices are at a level almost equal to the import price. It may well be that the grain marketing operations in Honduras are far more inefficient than the producers of these grains. 5/ Agrarian Reform Law, Chapter II, Articles 23 to 36, 1975.  HONDURAS: AN INQUIRY INTO RURAL POPULATION, SMALL FARMER AND AGRARIAN REFORM I. INTRODUCTION 1. Honduras is a poor country; per capita income was about US$560 in 1980, 1/ the second lowest in the Western Hemisphere. It is also a land of small farmers. About 55 percent of the labor force is rural, 30 percent of GDP originates in agriculture, and four-fifths of total exports are raw and processed agricultural products. The rural population is predominantly poor with about 55 percent below absolute poverty levels. Three-quarters of the rural population are without safewater, and about ninety percent without electricity or any form of sanitary waste disposal. 2. Given the large rural population, the predominance of agriculture, and the level of rural poverty, this study focuses on rural population pressures, rural development, and agrarian reform, seeking a development strategy to improve the lot of the Honduran peasant. In particular, the study concentrates on the small farmers (less than 5 hectares) and the agrarian reform program. II. POPULATION PRESSURES A. Rural Population 3. The 1981 country's population is about 3.8 million and is growing rapidly at 3.4 percent a year. While both fertility and death rates are declining, the population growth rate has not yet begun to decline. Honduras' fertility rates are high by Latin American standards. Even though rural population growth at 2.3 percent a year is much below the national average--because of migration to urban centers and higher rural death rates--the main population growth factors are rural. Crude birth and fertil- ity rates are very high in rural areas (see table below). Little variation in fertility and birth rates between regions and socio-economic status is noticeable, except in the vicinity of San Pedro Sula and Tegucigalpa. Mortality rates, on the other hand, are very responsive to socio-economic status. 1/ World Bank Atlas methodology.  -2- Table 1: FERTILITY, BIRTH AND DEATH RATES Regions Total Urban Rural Urban Northeast West South Centers Crude Birth Rate 49.2 38.3 54.2 n.a. n.a. n.a. n.a. (per '000 population) Total Fertility Rate a/ 7.5 5.3 8.7 4.7 8.4 8.4 8.2 Death Rates 14.2 9.0 16.6 8.2 15.2 19.7 12.4 (per '000 population) a/ Number of children an average woman would have if her childbearing behavior corresponded to that of the general female population. Source: Direccion General de Estadistica y Censos, Encuesta Nacional Demografica de Honduras, CELADE, Serie A, No. 129 (1975). 4. These trends mean that population pressures originating in rural areas will continue to dominate the country's population dynamics. Govern- ment efforts to alter rural demographic patterns through family planning and health services, if stepped up, might attenuate this pressure. Otherwise, high fertility rates and a high dependency burden will continue to lower gains in per capita income and savings, and force the Government to allocate an increasingly higher proportion of its resources for basic services to its population. Therefore, reducing rural fertility rates should be an important target of public policy since it can ultimately make an enormous difference in improving living conditions and incomes of the Hondurans. B. Migration and Spatial Distribution of Population a. Internal Migration and Agricultural Regions 5. Honduras is divided roughly into three areas: a flat, coastal plain extending from Guatemala to the Mosquitia; a rugged, mountainous mid-section with small valleys and higher than 20 percent gradients flanked by lower terrain to the East and West, in the Patuca-Guayape, Comayagua-Ulua, and Chamelecon watersheds; and the southern, Pacific coastal plain. Most of the crop land is in the Atlantic and Pacific plains. Areas with slopes below 20 percent include the Sula and Aguan valleys, the Nacaome-Choluteca valleys, the Guayape, Patuca and Sico valleys, and the Comayagua valley.  -3- 6. Based on natural and ecological characteristics, the country has been further divided into eight agricultural regions, 2/ which are: West, South Central, and South, bordering El Salvador, and partly Guatemala and Nicaragua; Northwest, North, and East in the northern coastal plains; and North Central and South East in the mid-section of the country bordering Nicaragua to the East. Population density is low in the East and South Central regions medium, in the North, North-Central and West regions, and high on the South, Central and Northwest regions. However, population density per arable land is a more significant indicator given the limited arable land in some regions. Using valley land, 3/ population density changes dramatically with the West, Central, and North Central regions being the most densely populated (see Table 1.8, Statistical Appendix). 7. Superimpossed upon these agricultural zones, there are seventeen administrative departments. 4/ Between 1940 and 1974, only five departments in the northern littoral and central section of the country (Atlantida, --Cortes, -Colon, Francisco Morazan, and Yoro) show a much higher population growth rate than the national average, partly associated with the major popu- lation centers; two (Comayagua and Santa Barbara) in the Central and Western areas show rates close to the national average; and the rest in the South and West are below. 5/ The population behavior in the North-eastern area is an exception because until the late 1950's it was in dispute with Nicaragua; after Honduras sovereignty was clearly established, this area showed a remarkable population growth rate. Similarly, population trends in the Department of Colon were reversed in 1961-74 from the original downward trend owing to the agrarian reform projects in the lower Aguan Valley. In brief, population shifts between regions and departments reflect mostly the availability of arable land and the attraction of the cities of Tegucigalpa and San Pedro Sula. 8. An analysis of the residency statistics between 1969 and 1974 6/ confirms that few departments (Atlantida, Cortes, Colon, and Francisco Morazan) experienced net in-migration and are the same previously identified as rapid growth departments. Thus, both on the basis of natural increases and shifts of residency, internal migration shows very similar patterns. 9. An outstanding conclusion of the analysis is the low growth of the departments in the Western and Southern highlands, in border areas with El 2/ Caceres, Manuel A., Regionalizacion Agricola de Honduras, Instituto Interamericano de Ciencias Agricolas. 3/ Soils with less than 20 percent gradient. 4/ The country's eighteenth department is the Bay Isles. 5/ Based on the 1961 and 1974 Census. 6/ Based on a 10 percent sample of the 1974 census.  - 4 - Salvador, and partly also with Guatemala and Nicaragua. 7/ The topography and soil conditions are unfavorable, and population pressures (in spite of its lower population growth rate) result in the prevalence of minifundia (30 to 50 percent of the farms have less than 2 hectares; 60 to 70 percent below 5 hectares). Agricultural technology is traditional and rudimentary. The farmers in these areas are mostly corn producers with yields below the national average; soils are not adequate for intensive use in annual crops. However, population density has reached a level that is forcing an intensifi- cation of production through terracing and other agricultural techniques. Some coffee, fruits, and vegetables are also produced in the region. Furthermore, transportation is limited by the rough terrain and government services also are inadequate. In brief, these departments are poor and a significant source of out-migration. 10. Rural population movements explain to a large degree the population migration between departments. They could be direct or in steps (people moving from rural to small urban centers in the same or neighboring depart- ments or to more promising agricultural areas before moving to the main areas of migrant's attraction). This is evidenced by the extremely low growth rates of rural population in some of the population-losing departments, which also show significant urban population growth. On the other hand, most of the population-pulling departments show high urban and rural population growth rates with the exception of Francisco Morazan, where Tegucigalpa is located (see Table 1.7, Statistical Appendix). 11. The importance of in-migration from neighboring countries in the demographic trends of Honduras is shown by the migration matrix by depart- ments. About one-third of the 1974 migrant population identified in the in- migration departments was born outside Honduras. b. Characteristics of the Migrants 12. The migrants are young and mostly of working-age (two-thirds are below 24 years of age) seeking better employment opportunities either in rural areas with more favorable conditions or in the most prosperous towns (about two-thirds). They have a higher participation rate in the labor force and a higher proportion of salaried workers. Four-fifths of the migrants moving to other rural areas (mostly in the Northern coast) are in agricul- tural jobs while migrants moving to the towns become domestics, artisans, small merchants and laborers. Female migrants are in high proportion domestics and residing in the most urbanized zones. The masculinity index of the migrants is lower in highly urbanized areas (San Pedro and Tegucigalpa) than that of the native population while the reverse is true in coastal departments (Colon, Atlantida) with dynamic agricultural activities. 13. The rural working migrants have a higher educational level than the rural working population; urban migrants are about the same (see table below). Female migrants have also a higher education level than male migrants. 7/ La Paz, Intibuca, Lempira, Ocotepeque, Copan, and Valle.  - 5 - Table 2: EDUCATION OF THE WORKING MIGRANT POPULATION (in percentages) Years of Working Migrants Total Work Force Education Total Urban Rural Total Urban Rural 0-3 58.0 40.7 77.5 69.5 42.8 82.8 4-6 27.1 35.4 17.8 21.9 35.1 15.3 Over 7 13.4 22.1 3.5 8.1 21.4 1.6 Unknown 1.5 1.8 1.2 0.5 0.7 0.3 Source: CONSUPLANE, Plan Nacional de Desarrollo, 1979-83, Desarrollo y Aprovechamiento de los Recursos Humanos. c. Rural-Urban Migration 14. During 1961-81, the urban population of Honduras grew at a rate of about 5.6 percent, more than double the rural population growth rate, in spite of much lower fertility rates in urban areas. As a result, the urban population increased from less than one-fourth in 1961 to about 37 percent of the country's population in 1981. Honduras, however, continues to be one of the least urbanized countries in Latin America. 15. Honduras is expected to continue its rapid urbanization trend of the last few years as large numbers of people will be moving from rural areas to towns in the coming decades. Between 1975 and 1985, its thirteen main population centers are expected to increase their share of total population from 24 percent to 31 percent, with most of the increase concentrated in Tegucigalpa and San Pedro Sula. 16. Reflecting the rural characteristics of Honduras, the country had only 13 cities with more than 10,000 people and only two above 100,000 (Tegucigalpa and San Pedro) in the 1974 Census. Population growth and thus the attraction for migrants have been unequal in these urban centers. Rapid growth took place in six cities along the North-South highway that links Tegucigalpa, San Pedro and the nearby coastal areas. However, growth in towns, such as Tela, La Ceiba, and Santa Barbara--centers near the bulk of banana and coffee production areas--has not been as dynamic in spite of a tripling of banana production between 1960 and 1980. Furthermore, urban life and employment does not explain the attraction of the frontier Departments of Colon and Gracias a Dios; low population, significant natural resources, and Government programs for the Aguan Valley are attracting people to settle in these Departments.  -6- d. Growth Poles 17. Honduran population and regional development prospects indicate that, apart from the present population poles in the North-South corridor (centered on Tegucigalpa and San Pedro Sula) and the Atlantic littoral (around Tela and La Ceiba), new poles are likely to develop in the Aguan Valley, the Olancho-Corocito-Puerto Castilla area, and the Southern Olancho region, as a result of large public investments underway in highways and productive facilities to support the agrarian reform program, the rational exploitation of forest resources, and the incorporation of new productive zones. This is a healthy development that would permit a more even distribu- tion of urban population and delay some of the most serious repercussions of rapid urban growth concentrated in Tegucigalpa and San Pedro Sula. C. Rural Working Force 18. The 1981 rural working force (690 thousand) is basically male; official 1974 Census data seem to show that women participation in the work- ing force and activity rates 8/ are low at all working ages. The bulk of female economic activities are related to family garden plots and animal care; these chores need frequent but short periods of daily attention. 9/ On the other hand, child labor (ages 10-14) makes an important contribution since it represents about one-tenth of the rural working force. 19. As expected, the rural labor market is dominated by agricultural occupations. In the 1974 Census, about four-fifths of the employed rural labor force was in agriculture; 7 percent in rural industries and artisanry, and 2 percent in commerce. Only one-fourth of the rural labor force were paid farm laborers while over two-thirds were self-employed or family workers without remuneration (see Table 1.6, Statistical Appendix). 20. Underemployment rather than open unemployment characterizes the Honduran countryside. Open unemployment is low but underutilization of rural labor is common. The underemployed and inadequately employed represent a large proportion of the rural labor force. Family workers without monetary remuneration are about one-fifth of the rural labor force, and self-employed labor in farms below 20 hectares is significantly in excess of the needed man-days per cultivated hectare. CONSUPLANE estimates the subemployed 8/ Ratio of economically active population to total population in the same age group. 9/ In addition, rural women spend a substantial amount of time preparing food, gathering firewood, carrying water for household needs, and in laundry activities. Three hours may be spent grinding corn for tortillas; two to four for laundry activities depending on the distance to the stream. Lunch will be delivered to her mate at the milpa (small land plot planted with corn) often distant. For details see USAID, Agriculture Sector Assessment for Honduras, Annex M, The Role of Women in the Agricultural Sector in Honduras.  -7- equivalent of excess labor (including non-remunerated laborers) at about 32 percent of the economically active population. Although this figure may be on the high side because of the definitions involved, there is no question that a substantial labor surplus exists in rural areas. This surplus labor is explained by poverty, low agricultural production and its seasonality, the land tenure structure, and the technology mix. D. Rural Population and Labor Force Projections 21. The Planning Office and the Latin American Demographic Center (CELADE) have prepared population projections under four different assump- tions about fertility rates. The first projection assumes a constant fertil- ity rate of 7.38 children for an average woman in her childbearing years (the 1970-75 level) until the year 2000; the other three projections assume fertility declines of 17 percent, 32 percent, and 44 percent. The preferred population for the year 2000 is 7 million based on a one-third decline in fertility rates and implies a reduction in the crude birth rate from 48.6 per thousand to 38.0 per thousand in 1995-2000. Crude death rates are also halved from 13.8 to 6.3 per thousand population; this means a steady improve- ment in life-expectancy from 57 years in 1975-80 to 68 years in 1995-2000. 22. These population trends will result in a rapid increase of urban population, with about one million concentrated in Tegucigalpa and over three-quarters of a million in San Pedro Sula by the year 2000. This urbani- zation trend reflects, on one hand, lower, mortality rates and, on the other hand, the high rural fertility rates combined with the resulting increase in population density (over 230 people per square kilometer of arable land by the year 2000) and related impact on internal migration. Large numbers of people would migrate from the poor Southern and Western highlands to the main growth poles in the Tegucigalpa-San Pedro Sula axis, the Atlantic littoral, the Aguan Valley, and the Olancho area. The speed and direction of this internal migration will likely depend on the creation of jobs and other opportunities in the towns and in promising new agricultural areas, the advances of the land reform program, and the access of the rural population to social services, including family planning. 23. A longer-term view of this development process reveals some related issues. Rapid rural population growth means mounting pressures on natural resources, such as forests and arable land; increasing numbers of landless peasants and pressures for more land redistribution; and a rapidly growing labor force because lower fertility rates will have little impact in decreas- ing the labor supply in the late 1980s and early 1990s. It is evident that agriculture must grow rapidly to absorb productively the new entrants to the rural labor force, and to slow down a likely acceleration of rural-urban migration. 24. Even if progress is made in the rural areas, rationalizing urban development has a high priority. Honduras is already experiencing the short- comings of the present unregulated physical development of its towns and low service levels. Rapid population growth means increasing pressures for these services, while the financial capacity of the municipalities and water agencies is weak, limiting their ability to meet these needs.  25. Expected population growth makes evident the need for a longer-term development strategy for Honduras geared towards accelerating economic growth as well as improving social conditions. While the medium-term prospects are fairly well established (barring unpredictable natural disasters), beyond 1985 the prospects are less certain. New sources of growth, which will take advantage of the larger public investments now underway and scheduled for completion towards 1985, need to be developed. These new sources of growth most likely would be agricultural, export-oriented activities. Dynamic private sector participation would be essential to the success of these activities. E. The Costs of Rural Population Growth 26. The costs of high rural fertility rates are many. A rapidly grow- ing population increases the pressure on fixed land resources, particularly farmland per capita. Food requirements of a growing population exert a direct pressure on farmland and the carrying capacity of different qualities of land. As noted earlier, some areas have a low carrying capacity and have already a heavy population load. A doubling of the Honduran population between the years 1980 and 2000 would mean, at least, a doubling of food needs 10/ and would put a heavy pressure to increase land use intensity on existing farmland as well as lead to the expansion of farming on marginal or previously unutilized land, which may significantly affect the large forest resources of the country. Otherwise, the country will have to increasingly rely on food imports to feed its population. This has happened in the last few years when production of corn and beans, the staple food of the poor, stagnated. Corn production grew 0.6 percent a year, and bean production declined one percent a year during 1970-79. 27. Ongoing studies based on physical and ecological factors and, to a lesser extent, on agronomic data, indicate that about 43 percent of the crop land is now being used for annual and perennial crops. This suggests that a great deal remains to be done to achieve a pattern of land use broadly in accord with its long-term capability for crops, pasture, and forests which will result in satisfactory rates of growth of agricultural output. 11/ 28. The Government is aware of this potential problem, particularly in view of the large imports of corn in 1980, and has launched a plan of action to increase production of basic grains. However, political changes in 1980 have weakened the implementation capacity of the Ministry of Agriculture and other agricultural public agencies. 29. High rural fertility will have an adverse impact on the savings capacity of the economy and thus on future per capita income. First, high fertility means larger families and higher consumption per family, depressing 10/ Without taking into account the need to provide an adequate nutritional diet. 11/ IBRD, A Review of Selected Sub-Sectors of the Agricultural Economy, 1981.  -9- savings and ultimately investment, preventing rural families, in particular, from increasing their productivity and incomes. Second, public savings will be also adversely affected because the Government would need to allocate an even greater proportion of its limited resources to public education and health, and perhaps, even housing and feeding programs for the poor migrants to the cities. On the other hand, slowing down rural population growth would mean that a lower proportion of public expenditures would be needed to supply each person with an average quotient of basic services, and that increased coverage of these services for a larger proportion of the rural population would be easier to provide for. 30. Although important advances have been made in education during the last ten years, UNESCO estimates that the present allocation of one-fourth of the current budget to education may need to increase to 33 and 38 percent in 1985 and 1990, respectively, in order to accommodate the fast growing popula- tion. Recent primary education coverage is less adequate in rural areas. Similarly, health services in rural areas have expanded rapidly but still need vast improvements, which would impose serious strains in the budget. F. Summary Conclusions 31. The poor Western and Southern highlands, bordering with El Salvador and partly with Guatemala and Nicaragua, are a significant source of internal migration. Migrants move from these areas, first, to more promising agricul- tural areas or to small urban centers in neighboring departments before proceeding to the main population centers. The migrants are usually of work- ing age. Male migrants tend to go to areas with dynamic agricultural activ- ities while female migrants usually become domestics in the most urbanized areas. 32. As a result of rural-urban migration, the urban population growth rate is about double the rural rate and the country's urban population increased from one-fourth in 1961 to close to 40 percent in 1981. This is still a low proportion by Latin American standards. However, the rapid urbanization trend is expected to continue in the coming decades. 33. Honduras' traditional growth poles are centered in the North-South corridor (including Tegucigalpa and San Pedro Sula) and the Atlantic Littoral. However, the Olancho-Bonito Oriental-Puerto Castilla area and the Southern Olancho region are expected to become important, new growth poles as a result of large infrastructure and productive investments. This will permit a more even distribution of urban population and will delay in some degree serious urbanization problems in Tegucigalpa and San Pedro Sula, which are expected to have a million people early in the XXI century. 34. A longer term view of population growth reveals that Honduras will face mounting pressures on natural resources (forest, arable land); pressures for more land redistribution; and a rapidly growing labor force. This makes evident the need for a long-term development strategy.  - 10 - 35. Population pressures originating in rural areas will continue to be dominant in explaining the population dynamics. This suggests the need to step up efforts to reduce fertility rates. Rural fertility declines would permit the country to increase more rapidly per capita income and satisfy demands for minimal basic coverage in education, health, and other social services because the costs of providing these services are dramatically reduced by lower fertility rates. III. THE SMALL FARMER 36. Rural poverty is evident from a variety of indicators. Most rural housing is sub-standard. Plate cane and dried mud (bahareque) and mud (adobe) walls and roofs of palm leaves or straw are widespread. Four-fifths of rural homes have dirt floors. Few have potable water service (21 percent) and.waste disposal (10 percent). Water is carried to the household from wells or streams; clothes are washed at streams. Gastrointestinal and other waterborne diseases are common. Infant mortality is high and malnutrition is serious, particularly among landless peasants. Illiteracy is high. One of the major obstacles to effective training of the agrarian reform settlers was the high degree of illiteracy found among them, averaging 60 percent but rising to 80 percent in some areas. 37. Rural poor households spend large amounts of time performing simple household tasks and toiling the soil to provide for basic needs, such as water and fuelwood. Men work in the fields; women provide mostly for house- hold needs, and take care of some animals and the family fruit and vegetable garden. Bad weather can have disastrous consequences for farm production, which, in subsistence farms, is dominated by corn. In these farms, it is essential to cover minimum household needs. Hard work and difficult living conditions are not uncommon. 38. The rural poor consist mostly of landless peasants, small farmers (below 5 hectares), and agrarian reform beneficiaries with inadequate land and support. This report concentrates on the small farmers and the agrarian reform program because the solution to the problems of an undetermined number of landless peasants depends on the progress of the agrarian reform. The next sections deal with the small farmers, how they work and earn their living, what crops they grow, and what support they receive. For this purpose, an inquiry will be made of small farms (less than 5 hectares) comparing them with farms in the 5-20 hectare groups. 12/ A. Land Intensity, Crop Mix, and Incomes 39. Small farmers with holdings below 5 hectares represent 64 percent of the total number of farms in Honduras but only about 9 percent of the 12/ ATAC Expanded Survey and John C. Kelley, Socio-economic Profile of Small Farms provided background materials for the preparation of this section.  - 11 - farmland. Small farmers own a low proportion of the land they cultivate with the proportion increasing with farm size (see table below). The poorest areas (Western and Southern highlands) show the lowest proportion of land exploited under tenancy farms other than ownership, sharecropping, or rent- ing; the Western region has the highest proportion of rented land (over one- third) and the lowest of owned land (55 percent). The proportion is highest in the Eastern, North, and South Central areas, which have more uncultivated land and thus are more suitable for slash and burn agriculture. Table 3: LAND TENURE BY FARM SIZE (percentages) Rented Private (share- Rented Farm Size Property cropping) (cash) Other Less than 1 hectare 25 14 33 28 1-2 hectares 40 8 30 22 2-3 hectares 50 5 15 30 3-5 hectares 65 3 10 22 5-20 hectares 85 1 5 9 20-35 hectares 98 - - 2 Source: Ministry of Natural Resources, CONSUPLANE, and USAID, Compilacion de los Estudios Basicos del Diagnostico del Sector Agricola, 1978. 40. Small farms use more intensively their land than larger farms and tend to concentrate in the production of annual crops, mostly basic grains. However, there are significant variations by regions; small farms in the North and Littoral regions, for example, are more involved in the producion of export crops while those in the Western and Southern highlands have a higher share of basic grains. Small farms' intensity of cultivation is about two to three times the national average and about 1.4 to 1.7 times above the national average share of annual crops. The proportion of fallow land in small farms is negligible and farms below one hectare have virtually no fallow land. However, averages are perhaps deceiving because detailed community studies indicate that poor farmers in the Western areas follow traditional practices of slashing and burning, followed by cultivation for  - 12 - 2-3 years and then they leave the plot uncultivated for some time (barbecho)- to restore soil nutrients before using it again. Land in the area is transferred by inheritance or sale. 13/ 41. Crop seasonality is unavoidable and explains significant monthly variations in agricultural labor requirements. Labor availability, farm size, and the use of a labor-intensive technology mix are closely related. Small farms use labor-intensive technologies; available labor, however, exceeds their needs. Larger farms use more mechanized techniques and hire labor from nearby areas. In 1974, farms below 20 hectares (90 percent of the total number of farms under individual owners) had 55 percent of the rural agricultural labor force but only one-fourth of the arable land. 42. Subsistence agriculture is widespread among small farmers who market a low share of their production, particularly in the Western and Central areas; about two-thirds of their crops are for household consump- tion. Production in small farms is highly concentrated in basic grains. A sample of small farms 14/ shows that basic grains crops account for over two-thirds of agricultural production in the 0-2, 2-3, and 3-5 hectares groups. This share is slightly reduced for farms in the 5-10 and 10-20 hectares groups. Corn always is predominant among basic grains crops in small farms--about half of their agricultural production. Similar results are recorded in the 1974 Census with basic grains representing about three- quarters of agricultural production in the 2-3 hectare farms. 43. On a national level, the share of permanent crops in agricultural production although low (5-10 percent) for farms below 5 hectares, steadily increases as farm size increases. The most important of the permanent crops for the small farms is coffee, which shows a dramatic increase as farm size increases. Coffee's share of agricultural production ranges from 10 percent for farms with less than 2 hectares to 23 percent for low to medium-sized farms with 10-20 hectares. In the Northwest (Santa Barbara and Copan with 36 percent of Honduras' coffee production and about 11,000 growers), coffee farms range from 0.4 hectares to 140 hectares but the average farm has 14 hectares. About 50 percent of the coffee growers in the area have less than 5 hectares. Average yields are low at 8.3 quintals per manzana. 15/ Coffee is a higher income crop and it is to the advantage of the small farmer to step up its production; however, the level of subsistence farming associated with low incomes and savings prevent the farmers from undertaking the longer run investments required by a permanent crop, such as coffee. In the 13/ Waterbury, Ronald, Los Campesinos de Quebrada Honda, Compilacion de los Estudios Basicos del Diagnostico del Sector Agricola, Ministerio de Recursos Naturales, CONSUPLANE and USAID, June 1978. 14/ ATAC Survey. 15/ IHCAFE, Estadisticas Descriptivas de la Zona Cafetalera Nor-Occidental (Santa Barbara y Copan), October 1980.  - 13 - Northwest, about 44 percent of the coffee producers use fertilizers and 7 percent pesticides but 70 percent planted new coffee trees in the last three years. Lack of credit contributes to this situation; about 55 percent of the coffee growers receive credit. Marketing is another problem area; about two-thirds of the coffee is sold to intermediaries at the farm or nearest town and about one-fourth by cooperatives. 44. Small farmers utilize a higher proportion of their land, so that land productivity--measured by the value of output per hectare--is highest among them. However, the situation is sharply different with respect to the acreage under cultivation. 45. About one quarter to one-third of the net income of farmers below 20 hectares, comes from imputed labor in the farm, one-fourth to two-thirds from net farm surplus 16/--the larger the farm the higher its relative share of total income--and the rest from outside income, which is more important the smaller the farm. Table 4 shows the relative importance of these income sources for farms below 20 hectares. Table 4: FARM INCOME BY SOURCES (in US dollars and percentages) Farm Size Total Net Family Labor Farm Surplus Outside Income (in hectares) Income Amount % Amount % Amount % 0-2 448 110 25 105 23 233 52 2-3 600 163 27 189 32 248 41 3-5 642 210 33 198 31 234 37 5-10 1,081 277 26 521 48 283 26 10-20 1,192 294 25 687 58 211 18 Source: USAID, INVEST, ATAC Expanded Survey of the Rural Poor in Honduras. Net incomes of farmers with less than 5 hectares are 60 to 70 percent derived from crops; cattle and forestry products account for the remainder. As expected, net income increases with farm size; a sharp increase occurring once the farm is over 5 hectares (see table below). 46. The small farmer's situation varies between regions. Farmers with less than two hectares in the North and Atlantic littoral regions have a much higher share of outside income (55 percent and 72 percent, respectively) than in the West Central region where a much lower share of their gross incomes (18 percent) is generated outside the farm. There are also large differences 16/ Net farm surplus after deducting actual and imputed labor costs.  - 14 - in net farm incomes by regions. This reflects the relative importance of cash crops by regions and by farm size. Farmers with less than 2 hectares have meager incomes from cultivating their land; the Atlantic littoral region is the only exception. Furthermore, only about two-fifths of production is marketed as an average for farms below 35 hectares. Furthermore, farmers with less than 2 hectares market less than one-sixth of their production on the average. Table 5: RELATIVE LEVELS OF INCOME, 1976 (indices) 1/ Less than 2-3 3-5 Region 2 Hectares Hectares Hectares Atlantic Littoral 2/ 100 100 100 North 45 68 79 West Central 32 67 71 Northeast 32 69 61 South 32 102 104 West 22 77 88 East Central 20 67 72 1/ Atlantic littoral income equals 100. 2/ Farmers in the Atlantic littoral region in the 2-3, 3-5 hectares group earn only about 49 percent and 55 percent of the income of the farmers with less than 2 hectares because of non-farm incomes. Source: ATAC Survey (revised)/INVEST. B. Labor Force in Small Farms 47. A large proportion of the Honduran population lives and works in rural areas, in small farms. These farms have significant surplus labor. The number of family members is about 6 to 7 for all farms below 35 hec- tares. Small farms support a much larger number of people and working men per hectare than medium and large farms. 48. About two-thirds of the rural labor supply living in farms with 20 hectares or less is from farms below 5 hectares; of this, about two-thirds are from farms below 2 hectares and one-fourth from farms with 2 to 3 hectares. On-farm work on farms below 5 hectares provides productive  -15 - employment for only one-fourth of their available manpower. 17/ The working of the labor market in rural areas is closely related to this. Surplus labor from small farms is hired by larger farms; the larger the farm, the higher the likelihood of it hiring laborers. In spite of this and the fact that production methods in small farms are labor intensive,underemployment-- measured by the number of unutilized man-days per year--18! is prevalent in the small farms. 49. Underutilization of rural labor is large. About 60 percent of the available man-days in small and medium farms are not utilized. The rate of underutilization is about 63 percent in small farms (0-5 hectares) and diminishes to about 55 percent in farms in the 10-20 hectare group. Season- ality of agricultural production is partially behind the employment problem and its importance increases with farm size. For the small farm, basic grains are the main source of on-the-farm employment and because of its seasonality is the main reason for seasonal unemployment; however, under- utilization of labor is more of a structural problem at the level of the small farms with too much labor and not enough land, thus the small farmer is forced to work as hired labor in larger farms. 50. Seasonality of employment and labor oversupply are still problems in the small medium-sized farms (5-20 hectares); these farmers also seek employment in larger farms. However, they have a much lower level of under- utilization per farmer (see Table 6). 17/ However, this type of standard statistical estimate has to be quali- fied. Farm labor spends significant amounts of time building fences, providing lumber and firewood; trading animals, produce and grains, run- ning errands, and travelling back and forth to the family plot. This is not properly accounted for in this statistical indicator. 18/ The standard used in this study is about 230 man-days per year (see Table 6). Surplus labor, however, may be less than estimated. Unless significant changes take place in the way small farmers live and work in order to ease or free them from some of the difficulties they encounter in performing even simple tasks, a large amount of time will continue to be used for household and production-related tasks.  - 16 - Table 6: LABOR UTILIZATION PER FARM SIZE (in man-days per farmer per year) Work Work % % Farm Size in Farm outside Farm Total Outside of Available (hectares) Farm Man-days 1/ 0-2 73 85 158 54 69 2-3 109 66 175 38 76 3-5 140 46 186 25 81 5-10 185 32 217 15 94 10-20 196 27 223 12 97 20-35 222 5 227 2 99 1/ Assuming that available man-days are about 230 per year. This is a lower number than the usual norm of 260 man-days per year which assumes a five-day week over the whole year considered typical for a more urbanized labor force. Estimates of excess labor will depend signifi- cantly on the standard applied, which must be reasonable for the special characteristics of agricultural production. Source: ATAC Survey (Revised), INVEST. C. Education 51. Farmers in farms with less than one hectare have an illiteracy rate of 55 percent while those in the 20-35 hectare group have only a 34 percent rate. Nevertheless, these rates are high and indicate the illiteracy problem in rural Honduras. Furthermore, only about 6 percent of the campesinos surveyed have 6 years of primary education with some improvement--to 9 years--for those in farms in the 20-35 hectare category. The low rural educational level has been identified as a serious obstacle to the perfor- mance of the agrarian reform sector. D. The Small Farm Access to Credit, Technical Assistance, and Other Inputs 52. Over two-thirds of the small farmers have no access to institu- tional credit. The situation is even more serious for farmers with less than 2 hectares of land. In a survey, banks and credit unions provided about two-fifths of the credit received by small farmers; the rest came from rela- tives and friends, merchants, and moneylenders. The Government Agricultural Development Bank was the principal source of institutional credit for small farmers. Furthermore, according to a 1978 AID/MNR/CSPE report, only 6.6 percent of the farms with less than one hectare received technical assistance as opposed to 22 percent for the 20-35 hectare group. Small farms use little fertilizer and improved seeds compared to medium and large farms; fungicides,  - 17 - herbicides, and insecticides are sparingly used. In the Western and North-Eastern areas, access to agricultural inputs is even lower because of poor communications. 19/ Private distributors tend to concentrate in areas of higher campesino concentration. E. Landless Peasants 53. Apart from the excess labor in rural areas, an undetermined number of peasants have no land. Estimates ranged up to 120,000 families in 1974. However, this figure overestimates significantly the magnitude of the problem. Some landless peasants move to the little populated North-east areas clearing new land but even more important is the fact that not all landless rural families are peasants seeking a plot to cultivate. About 17 percent of rural workers (about 50,000 families) are engaged in non- agricultural occupations while about 30-40,000 workers are working in banana and sugar plantations as well as in small sawmills. This reduces signifi- cantly the present number of actual landless families that the agrarian reform program has to reach. This is the main program to take care of this problem and will be analyzed in following sections. F. Rural Manufacturing 54. A survey of rural manufacturing and handicrafts carried out by CDI and USAID shows that the most important activities are: garment industries (tailors and seamstresses), bakeries, carpentry, pottery and brick-making. About 7 percent of rural employment is provided by manufacturing activities. However, minimal employment is generated on a per firm basis; the average number of workers ranges from 1.0 for textiles to 2.6 for brick-making. Family members represent over two-thirds of the employed labor force in these enterprises. 55. Male labor is predominant in metal, construction, and repairs, while female labor is prevalent in textiles and ceramics. However, three- fifths of the enterprises are female-owned. Capital and thus machines per worker are low. The capital invested per worker is low (carpentry US$147 in fixed capital per worker, blacksmithing US$90, and brick-making US$58). The number of machines per worker is thus low and most of them are simple, such as sewing machines and ovens. 56. Rural industry sells its products directly (56 percent) or to retailers (36 percent); only a minority (5 percent) works to fulfill a contract. Capital for these enterprises comes primarily from savings, three-quarters of all rural enterprises surveyed were capitalized with their owners savings. 19/ USAID, Agriculture Sector Assessment for Honduras, 1978.  - 18 - G. Summary and Conclusions 57. Small farmers work about two-thirds of the total number of farms in Honduras but only 9 percent of the farmland. They have low incomes and only own 40 to 65 percent of the land they cultivate. In order to supplement their low farm income, small farmers work outside their farms. 58. Underutilization of rural labor in small farms is large; their landholdings are not adequate to productively employ all the labor force they generate. In addition, seasonality of production, mostly from basic grains, compounds the employment problem. Surplus labor characterizes the rural labor market. Larger farms hire labor from small farms, particularly at harvest time. 59. Basic grains account for over two-thirds of agricultural production in the 0-5 hectare. Corn is predominant among small farms--about half of their agricultural production. Permanent crops do not represent, on the average, a large share of small farms' production. However, the most impor- tant permanent crop is coffee, which ranges from 10 percent of agricultural production in farms with less than 2 hectares, to 20 percent in farms with 10-20 hectares. 60. The rural poor also comprises an undetermined number of landless peasants families (most likely a smaller number than available estimates indicate), which seek employment as laborers in the larger farms or migrate to the cities looking for work. 61. Rural manufacturing, commerce, and other non-agricultural activ- ities employs over one-sixth of the rural labor force; rural manufacturing creates employment for about 7 percent of the rural labor force. Capital per worker is low. Main activities are garment industries, bakeries, carpentry, pottery, and brick-making. IV. THE AGRARIAN REFORM 62. As noted earlier, rural migration to better agricultural areas or to the cities provides an opportunity for excess labor in the small farms and for landless peasants to improve their lives. The other alternative is to enter into the Government-supported agrarian reform program. In spite of many shortcomings, the agrarian reform program has settled a large number of campesino families and is providing significant support to the agricultural development of areas previously underutilized, such as the Aguan Valley. Furthermore, this together with other developments taking place in nearby areas (Puerto Castilla, Bonito Oriental, Olancho) are creating a significant new growth pole that will attract large numbers of people in coming decades.  - 19 - 63. The following sections will examine briefly the history of the agrarian reform, its role in settling campesino families and in increasing production, and the efficiency and shortcomings of the agrarian reform insti- tutions. A. Brief History 64. A significant step towards labor organization in Honduras took place in May-June, 1954 with the strike against the banana companies; neither the companies nor the Government attempted to suppress the strike. The unions that originated from this strike were the core of both future labor and campesino movements. With the decline in banana production, the banana companies laid off 19,000 workers out of 35,000 in the six years after the strike. This led to the creation of the campesino movement. However, it was not until the early 1960s that the former banana workers established the National Federation of Honduran Campesinos (FENACH). After the 1963 military coup, violent repression led to the demise of this organization. The National Association of Honduran Campesinos (ANACH) was established in 1962 with the backing of the US labor movement and the Honduran Government, and is still active. Later on, other campesino organizations joined ANACH in the fight for land: the National Union of Campesinos (UNC) organized in 1972 out of the socio-Christian oriented Peasants Leagues, and the Federation of Agrarian Reform Cooperatives (FECORAH), composed exclusively of reform settlers and sponsored by the Agrarian Reform Institute (INA). 65. The first agrarian reform law (D.L. No. 2 of 1962) was a response to reformist trends of the Alliance for Progress, but also to the pressures from the "campesino" organizations. This law contemplated the redistribution of publicly owned lands to individual settlers, not to collectives and created the Agrarian Reform Institute (INA). It also introduced the concept of the social function of land property and the Government right to tax or expropriate idle land. 66. The results of D.L. No. 2 were very limited. About 500 families were settled on 6,000 hectares of land in the Departments of Choluteca and Cortes, and INA mediated in the transfer of land from the Tela Railroad Co. (subsidiary of United Fruit)to the Guanchias cooperative. INA was also in charge of earlier groups established in land ceded by the banana companies in the 1950s. The 1969 war with El Salvador slowed down land reform activ- ities. One of the causes of the conflict was the growing competition for land between Salvadorian squatters and Honduran campesinos attracted by INA's settlement programs. 67. The first significant land reform legislation was Decree Law No. 8 of December 1972. An aggressive program was launched in order to create more stable political conditions and avoid a repetition of the 1972 events when the Government was overthrown. This had been preceded by considerable rural unrest and land invasions by organized campesino groups. About 24,000 families were settled on over 70,000 hectares under D.L. No. 8.  - 20 - 68. The temporary Land Reform Law of 1972 was followed by a comprehen- sive Agrarian Reform Law issued in January 1975 (D.L. 170) aimed at improving land utilization through the transfer of unused or poorly used land from large landowners to landless rural families. The basic objective was to modernize the traditional campesino sector through the establishment of collective settlements composed of formerly landless and land-poor campesinos while, at the same time, strengthening the modern entrepreneurial sector in agriculture. 69. The 1975 legislation established the social function of land according to farm size and land capabilities; specified the expropriation and compensation mechanisms; and gave priority to associative enterprises (empresas asociativas) and cooperatives. The law exempted from expropriation fully utilized farms of less than 50 hectares, as well as land planted with bananas, plantains, sugarcane, African palm, coffee, pineapple, citrus, and tobacco. Banana or agro-industrial companies whose land exceeded the maximum limit (ranging from 100 hectares in public irrigation districts to 2,000 hectares in the eastern areas) had three years to conform with the law. Properties not efficiently cultivated as well as those worked by renters, sub-renters, sharecroppers, colonos or other arrangements were subject to expropriation even if they were below the maximum limit. The provisions of the 1975 legislation still remain in force. B. The Agrarian Reform Institute 70. By law, INA is principally responsible for official institutional support of the agrarian reform. INA deals with land acquisition and distrib- ution, organization and management, training and technical support of the settler groups, and with guarantees for farm credit issued by the official agricultural bank (BANADESA). 71. INA is organized into management, which includes the regional offices, land acquisition and administration, and three technical depart- ments for promotion and training (PROCCARA), concentration projects, and con- solidation programs. The creation of these departments reflects a program decision incorporated in INA's operational plan for 1977, which recognized that INA's resources were being stretched too thin to make a tangible impact on all campesinos. As a result, the bulk of the agency's resources have been allocated since 1978 to the potentially most productive areas (intensive rural development projects). Certain other settlements (consolidation) with a relatively high productive potential--comprising about 9 percent of the settlers--have received only "complete" credit and technical assistance services. The rest of the reform settlements--about one-half of the total number of families--have been provided at best with marginal organizational support and "supervised" credit. 72. The 1978 budget allocated three-fourths of INA's resources to nine intensive rural development projects which comprised about one-third of the land reform population; of this, 90 percent was allocated to the IDB- supported Lower Aguan project. In fact, the 100 percent increase in the authorized budget between 1977 and 1978 reflected almost entirely external financing for the Lower Aguan.  - 21 - 73. Intensive rural development projects represented in 1977 about two-fifths of the families in settlements, about half of the productive area, and one-third of the area in basic grains. Table 7 shows the breakdown of population and land area among the three classes of reform settlements in 1977. Table 7: REFORM SETTLEMENTS, 1977 Intensive Rural Rest of Development Consolidation Settlements -----------------(Percent)---------------- Families settled 1/ 38 9 53 Total area 55 12 23 Productive area 47 19 34 Area in basic grains 34 20 46 ---------------(Hectares)------------- Total area per family 2/ 4.9 5.0 2.9 1/ Original number. 2/ Number as of 1976. Source: INA C. The Importance of the Agrarian Reform 74. The agrarian reform impact is significant both in the number of families settled and in the level of production. The latter will become more important as production in the Aguan Valley reaches programmed targets towards 1985. a. Families Settled 75. Over 48,000 families (12 percent of rural families) had benefitted from the agrarian reform program and about 8 percent of total farmland had been distributed through 1980. Table 31, Statistical Appendix, shows the number of families that received land grants from the agrarian reform program by campesino organization. Total landless peasants as well as membership by campesino organizations is larger, but impossible to determine because there is no reliable record of the undetermined number of landless peasants waiting for their turn to receive a parcel of land. Undoubtedly, rapid population  - 22 - growth will add significant numbers of new, landless peasants to the roster in the next few years. 76. About 36,000 families of the 48,000 benefitted by the program remain on the land. Some families abandoned the settlements because they did not receive enough productive land and support services; others because they could not adapt to hard living conditions in the settlements of the Aguan Valley. Limited absorptive capacity and lack of financial and trained human resources contributed to this situation. Land granted per member of the settlements was unequal between regions. It was highest in the Atlantic Littoral and East Central regions where land is more abundant and lowest in the Western and Northern regions. 77. About one-third of the members that remain in the settlements and half of the arable land of the agrarian reform program are in concentration projects. The five most important of these projects, Lower Aguan, San Bernardo, La Masica, Guaymas, and San Manuel, cover about 90 percent of the cultivable area in intensive development projects. The Lower Aguan project is the most important, with 38 percent of the members and about 60 percent of the land in concentration projects. Lower Aguan has been chosen by the Government for massive resettlement of landless campesinos with substantial foreign financing from IDB. 78. The beneficiaries of the agrarian reform are organized in coopera- tives., enterprises of associated campesinos, sub-sections of ANACH, peasants leagues, and traditional groups. Table 8 illustrates the relative importance of each group. Table 8: ORGANIZATION OF THE REFORMED SECTOR, 1980 Number of Members Land (Hectares) Groups Initial In 1980 Distributed Arable Cooperatives 298 12,275 9,075 82,416 75,695 Enterprise of Associated Campesinos 30 1,935 2,185 6,989 6,374 Sub-section (ANACH) 484 18,475 13,033 58,210 38,567 Peasants' Leagues 341 11,107 7,842 40,903 24,685 Traditional Groups 144 4,444 3,575 21,565 14,460 Total 1,297 48,236 35,710 210,083 159,781 Source: INA  - 23 - b. Agricultural Production and Marketing in the Reform Sector 79. Rough estimates indicate that agricultural value-added in the reform sector is about 10 percent of the country's agricultural value-added originating in crop production. This is an important development. The reform sector's share of value-added varies by crops, ranging from a very high share for African palm to a negligible proportion for tobacco. Basic grains production is still dominant in the reform sector although significant progress is taking place with the production of African palm, bananas, rice, and other commercial crops. 80. INA's 1980 Operating Plan shows programmed targets for the main crops cultivated in the agrarian reform settlements. Although these programming figures are subject to significant margins of errors, they illustrate the most recent production thrust of the agrarian reform program (see Table 3.7, Statistical Appendix). 81. ANACH and UNC settlements, as well as the independents, have the least diversified crop mix, concentrating heavily on corn, rice, and beans. FECORAH settlements show the highest level of diversification with two-fifths of the area under cultivation planted with permanent and semi-permanent cash crops, mostly bananas, sugarcane, and African palm. 82. As a result, there is growing awareness that all reform groups must participate in the higher earnings afforded by cash crops. INA's current policy is to encourage contracts for cash crops, with reputable private firms that provide technical guidance and inputs in addition to markets. Another traditional misconception is being abandoned; cattle husbandry is now a suitable occupation for agrarian reform campesinos. Earlier opposition based on the economies of scale of cattle ranching, ignored several facts: (i) the bulk of the cattle in Central America and the Caribbean are in the hands of small and medium-sized producers; (ii) most small cattlemen practice a dual-purpose milk-meat husbandry; (iii) most campesinos of these regions know how to handle the traditional dual-purpose cattle; (iv) the great majority of Honduran reform settlements are run collectively, which means that they are in a position to benefit from some economies of scale, mostly fencing and watering facilities. Implementation is slow, partly because of the acute shortage of credit and partly because banks insist on mortage guarantees for loans for cattle development (as distinct from fattening), while most reform settlements can only offer a formal INA guarantee in addition to the cattle. 83. Marketing is a serious problem for the reform settlements with the exception of those producing bananas and sugarcane under contract with the banana exporting companies and the sugar mills, or those growing African palm and grapefruit in the Lower Aguan and cantaloupe melons in the South. Grape- fruits have already found an adequate market in West Germany if harvested at the right time, i.e., before the Mediterranean crop becomes available. Cantaloupe melons are grown under contract with a United Brands subsidiary (PATSA), which buys the unblemished export sizes for shipment to the United States; the surplus fruit is sold to local intermediaries. 84. A case in the South (Choluteca) illustrates the difficulties of undertaking new crops in the reform settlements. Peasants planted about 3,500 hectares of sesame in 1980, expecting a price of around L 60 per quintal of seed in the shell as in the previous year. However, at harvest  - 24 - time, buyers offered about one half the 1979 price (L 30-35), which allegedly did not cover production costs. This happened because US import prices dropped sharply in 1980 and because a new sheller, the only one in the country, was still not fully operational. Pressing needs forced the producers to sell at prices ranging from L 33 to L 40. 85. Campesino organizations ought to find ways of improving their marketing organization and involving the buyers more closely with the producer groups. This will become more important in the near future as new crops develop. For example, about 2,500 hectares of cashew trees planted by INA will begin to bear fruit soon, and a Miami-based firm in partnership with a local firm reportedly are installing a cashew cracking machine in their plant. This provides an opportunity for fruitful collaboration. 86. The poor performance of basic grains, in general and among the reform settlements, is partly related to prices and marketing. The minimum prices set by Honduran Agricultural Marketing Institute (IRMA) for the last crop years have been consistently below the average wholesale market prices for rice and beans. Support prices have also been substantially lower than the CIF import price of beans. The inadequacy of IHMA's floor prices is underlined by reports in several areas that country buyers (coyotes) were regularly offering more than IHMA, especially considering that their humidity and foreign matter standards are less strict than those of IHMA. While many of IHMA's small country elevators were reportedly under- or non-utilized, the solution that has been proposed to the problem appeared to be building more storage facilities. Undoubtedly, a more comprehensive marketing and pricing approach is needed. D. Types of Settlements 87. Although D. L. 8 of 1972 introduced the concept of collective settlements and D. L. 170 of 1975 provided for both individual and collective settlements, the socio-political origins of most of the settlements, i.e., the kinship and/or friendship bonds and the common struggle for the land and the previous status of the members as organized plantation workers or as day laborers, favored the collective tenure solution. A majority of the reform groups work their land partially or wholly collectively. Joint operation of the land is not only favored by campesinos but also by policy makers because of internal and external economies of scale, including public services, particularly credit. 88. Group solidarity is closely related to whether the members of the groups were smallholders or renters, part-time subsistence farmers with occa- sional off-farm work experience, or full-time laborers in large enterprises. Part-time subsistence farmers, who make up the bulk of agrarian reform bene- ficiaries, have the greatest difficulty in organizing themselves successfully because of their lack of commercial agricultural experience. Similarly, former small cultivators have great problems in forming a collective enter- prise and tend to let dominant leaders become entrenched. As a result, in the western region, which was found to have many groups composed of members with such background, 70 percent of the groups studied had a desertion rate of more than 50 percent. In contrast, the experience of collective enter- prises in the northern valleys (despite their many problems) indicates that the former plantation workers appear to represent the best human material for collective farming groups.  - 25 - 89. Systematic physical and social planning of the settlements is not a characteristic of the Honduran process. Rather, it has responded to very specific socio-political pressures at the local level. With few exceptions, all campesino settlements originated as more or less site-specific applica- tions for land parcels by groups of landless peasants or farm workers. The site-specificity means that, in many cases, the groups themselves identified parcels of land falling within the purview of the reform law and requested that it be allotted to them. Exceptions to this rule are the Lower Aguan project and the land released by the banana companies. E. Land Acquisition and Titling 90. INA redistributes land by allocating unoccupied public land-- national or municipal (ejidal), by recovering public land from occupants that do not meet the conditions specified by the agrarian reform law, and by nego- tiated purchase or expropriation with compensation of privately owned land. Through 1980, INA acquired, under the latter two methods, a total of 59,500 hectares, of which 55 percent was expropriated and the rest seized for the public domain. These figures do not include land that has been voluntarily turned over by the banana companies since 1975. A tentative reconstruction of data on land acquisition by the government, designed to match the 211,000 hectares included in official INA settlements, would look as follows: (in thousand ha) (a) Privately occupied land recovered for public domain (D.L. 170) 27.4 (b) Private land purchased or expropriated (D.L. 170) 32.1 (c) Additional land in Lower Aguan, minimum (45,500 less 7,000 under (a)) 38.5 (d) Banana company grants 59.0 Total known acquisitions 157.0 Assumed unoccupied public land allocated 26.0 Other in Lower Aguan 28.0 Total allocated by INA 211.0 91. Ninety-one percent of the 59,500 hectares acquired by INA are in five of the country's fourteen departments, and 72 percent in the three northern departments of Colon, Olancho and Yoro. An examination of some 700 transactions shows that only 57 covered private properties or claims that exceeded 100 hectares, and of these only six measured over 1,000 hectares. Surprisingly, an exceedingly large number of small parcels were repossessed for the public domain, some of them even measuring even less than one hectare.  - 26 - 92. The financial cost of the 59,500 hectares was comparatively modest. Compensation averaged only 253 lempiras per hectare, and the only actual financial outlay to date was 1.4 million lempiras in cash payments, or an average of less than 24 lempiras per hectare. The amortization of the bonds is unlikely also to represent a financial burden for the central government since 60 percent have a 25-year maturity and pay only 2 percent interest. 93. During 1975-80, issuance of titles has been slow. Titles were issued to 186 settlement groups, covering 61,458 hectares. This still left about 85 percent of the groups and 70 percent of the land, without title. The cumbersome and time-consuming process of determining legal ownership, and the fact that the banks (including the official ones) do not accept the land bonds as payment for outstanding debts of the former owners as provided for by law have prevented INA from taking legal title to all but 15 to 20 expro- priated properties so far. It seems that a political decision is required to break this impasse; for example, accepting the bonds as payment for tax liabilities. Furthermore, INA's cadastral office has a limited capacity with only a dozen employees and field brigades were recently increased from four to seven. 94. To further complicate matters, INA has never worked systematically with the national cadaster which has much of the needed information on file. Also INA has not utilized the cadaster's aerial photographs for the delimin- ation of property plots even though it is legally permissible. F. Abandonment of the Settlements 95. Two phenomena are usually singled out in Honduras to show that the agrarian reform has been a failure: the high rate of turnover and abandon- ment of the settlements, and the low rate of economic utilization of the land allocated to the settlements. The two are, of course, related. Moreover, the proportion of allegedly "uncultivated" reform land reflects many physical, institutional and human constraints ranging from unsuitable soil and climate to lack of capital and/or technical know-how. 96. The average cultivable land per member in the intensive development sector is substantially greater than that of other reform groups. In 1979, the ratio was 2.1:1. This and the higher quality of the land are major reasons for a lower attrition rate (16 percent) in the concentration projects compared to other areas (32 percent). The attrition rate shows that, for settlements established during 1972-78, the 1979 population was 75 percent or less of the original number settled each year. For 1976-78 settlements, the attrition rate at about the historical average (25 percent). 97. The heaviest rate of desertion took place in the South, where only 56 percent of the number of original settlers remained at the end of 1978. This is not surprising inasmuch as the average cultivable land assigned per family was little more than two hectares and this is a very droughty area. Similarly, in the hilly areas of the Southeast (department of Paraiso) fewer than half the 1,804 families originally settled remained in 1978.  - 27 - 98. A high rate of abandonment of the settlements indicates a serious prima facie problem with the implementation of the reform. It may also indi- cate that the situation, from which the reform was rescuing the benefi- ciaries, may not have been so desperate, at least in the rather numerous cases where the members returned to their place of origin. Although an over- all study of the abandonment phenomenon is not available, a survey made recently in the Lower Aguan project shed some light on the reasons that induced members of a colonization project to leave their settlement within one year, and showed where the "deserters" tended to go. The survey indi- cated that this situation could have been avoided through more careful selec- tion of the settlers and more thoughtful social and economic planning of resettlement conditions. 20/ G. Uncultivated Land in the Settlements 99. The proportion of reform land that is not cultivated, aside from being generally exaggerated, has not been studied on a systematic, nationwide basis. Available data and field observations, however, indicate that the problem is not dramatic. Campesino groups estimate that 160,000 hectares--or 76 percent--of their land are cultivable. 21/ of this, a total of about 140,000 hectares are available to be planted with perennial and annual crops, almost equally divided between concentrated development projects and the remaining settlements. Of this area, at most 60,000 hectares (two-fifths) of land potentially cultivable may be idle either as fallow land or unutil- ized. This indicates that the problem of uncultivated land is not as severe as the critics point out. Furthermore, the criteria for appraising a given piece of land as cultivable tend to be quite subjective (sometimes "cultiv- able" is confused with "usable"), and thus a wide range of "uncultivated" proportions can be claimed. 20/ For details see Annex 1, para. 19. 21/ Of the sample of supervisors and promotors interviewed by PROCCARA researchers in 1979, 41 percent of the former, and 19 percent of the latter stated that, with the exception of the Lower Aguan, the land allocated to the majority of the groups was qualitatively and quantita- tively inadequate, and that it tended to be marginal in the consolida- tion sector.  - 28 - Table 9: CULTIVABLE LAND IN THE SETTLEMENTS Area (in hectares) Total cultivable land 160,000 Intensive development projects 86,000 Tree crops 16,000 Other 70,000 Remaining settlements 74,000 Cashew 2,000 Other 72,000 Land not in permanent crops 142,000 Cash crops 10,000 Under cultivation with other crops 71,000 of which: with BANADESA credit (40,000) Unknown, uncultivated or fallow land a/ 61,000 a/ Undoubtedly not all the area in this category is idle land. Source: Mission estimates based on partial information from several sources. 100. This conclusion is supported by some field research. A sample of 34 reform settlements in the drought-stricken southern region shows that, despite environmental and financial constraints, only 15 percent of the cultivable area was not under cultivation in 1980. The low quality of the land allocated to these groups is underlined by the fact that only 46 percent of the total area is considered cultivable. H. The Institutional Capacity of the Agrarian Reform Institute a. INA's Budget and Personnel 101. INA's budget totaled L 45.3 million in 1979 and L 52.4 million in 1980, or about 5 percent of the Central Government budget. However, actual expenditures have been below budgeted levels. INA's 1980 budget was covered by a Central Government transfer of L 130 million and by IDB loans for L 21 million. In 1979, of the budget only L 28.5 million (63 percent) were actually spent,. including L 6.4 million from IDB resources. Actual operating expenses were 77 percent of the budgeted level ex post but capital expendi- tures reached only 43 percent of the budgeted level. Partial results for  - 29 - 1980 show a similar situation, with capital expenditures lagging signifi- cantly. Among functional expenditures "management and general administra- tion" showed the highest expenditure ratio,while "concentrated rural develop- ment" projects lagged the most. Nearly two-thirds of the authorizations for concentration projects (which absorbed 57 percent of total expenditures) were for the Lower Aguan. Only 10 percent was spent for "consolidation" of all other settlements, and 7 percent for land acquisition. 102. INA's 1981 budget was L 26 million from central government transfers and L 21 million from external funds (IDB). Since actual 1980 expenditures from national budget funds were L 31 million, slightly above the L 30 million budgeted level, the 1981 budget level represented a reduction. Because of this, INA sought actively to transfer certain functions to other agencies, mainly, to the Extension Service of the Ministry of Natural Resources (MNR) and to the Directorate General of Cooperative Promotion (DIFOCOOP). However, these agencies had their own budget limitations so that the transfers were unlikely to be fully implemented in 1981. 103. The 1981 budget cuts had a negative impact on the efficiency and effectiveness of field personnel. Since the bulk of the 1981 budget financed out of central government transfers is used for current expenditures, mostly staff salaries, the reduction was disproportionately reflected in operating expenditures, such as fuel and maintenance for vehicles and per diem for field travel, to avoid personnel lay-offs. This sharply reduced the mobility of field personnel to assist the reform sector. This merits careful consid- eration; the trade-off between personnel lay-offs and the efficiency of INA's services to the campesinos has to be decided in favor of the latter, particu- larly taking into account that in relation to the existing number of land reform settlers, INA's staffing in early 1981 was rather generous--nearly 2,000 employees or only 17.5 settlers per employee. Otherwise, INA's main purpose of servicing the campesinos would not be served. b. INA's Field Assistance and Training 104. Next to acquisition and redistribution of land, INA's other key functions have been to assist the campesino groups to become established, to obtain essential services and resources for these groups, and to train the members of the settlements in the fundamentals of cooperative organization and management. The success of these activities depends on the field agents (promotors) in daily contact with the settlers. Despite the undeniable success of some in special situations, most analysts agree that the promotors have been far from effective. This is particularly true for "consolidation" settlements and the remaining part of the reform sector where contact is at best marginal. Even in the high priority concentration projects, the promotors' main responsibility for strengthening the groups' management and accounting practices has not been successfully performed although some progress has been made. Successive changes in policies and personnel in the last few years have hampered the process. A 1979 study of 21 northern and  - 30 - western settlements (with a mean age of 4.8 years) 22/ concluded that "INA's promotion ... has not been effective in developing and consolidating the cooperatives and empresas comunitarias because visits to the groups were sporadic, promotors had no clear methods or even idea of their tasks and their preparation is not adequate for helping the groups with their manage- rial problems." In addition, personnel instability was a major problem. In a sample of 29 campesino groups, the leaders identified a total of 122 promo- tor who had passed through during 1977-1979. 105. A 1979 INA survey of 31 promotors highlighted a number of critical aspects of the training activity. One-third of the promotors had been in the agency less than 12 months and only 13 percent more than two years. Only one-fifth perceived their primary task as one of training. The majority could not adequately define the meaning of "campesino promotion" and "group entrepreneurial consolidation." Although there were no written guidelines for promotors engaged in training, 95 percent of the promotors interviewed had given "courses" in "organization," "cooperation" and 'agrarian reform," which most likely were information talks on motivation, promotion or orienta- tion. Some supervisors and promotors felt growing resistance to such "courses" by the campesinos, who considered them useless and thus failed to attend. INA field personnel also noted indifference to the "courses" among regional campesino organization leaders. 106. INA's training department (PROCCARA) was created with the assistance of UNDP in 1973 when FAO fielded a team of experts and initiated a massive training program for campesino groups and association leaders, as well as for INA promotors, executives and technicians. INA's training programs have had problems, such as lack of interaction and occasional conflicts with the peasant organizations, which are somewhat related to the politicized nature of the first phase of the project. This phase of the project ended in 1976 amid a great deal of political controversy. This was supposedly overcome in the second phase by the creation of a coordinating commission for promotion and training with representatives of the three major peasant organizations. However, the committee is said to be relatively ineffectual. 107. In recent years, INA's training program has suffered from excessive internal reorganizations. International support has also been weaker than expected because of recruitment delays and differences in backgrounds and initiatives of the various experts. A special 1978 study identified the main problems of INA's training as lack of capacity for systematic analysis or organization and management problems of campesino groups; lack of inter- institutional coordination of training activities; lack of a strategy for a coherent organizational framework for campesino groups; and lack of a follow-up system. 22/ IHDER, "84 Meses de Reforma Agraria del Gobierno de las Fuerzas Armadas de Honduras", May 1980.  - 31 - 108. The appraisal of INA's training efforts indicates that there is little or no evaluation or specific follow-up. Also groups close to main roads were saturated with courses while other, more remote, groups received none. In addition, some technical courses had no relation to the groups' actual or future production pattern, and training in administration and accounting did not result on any tangible improvements in group management or record keeping. c. Technical Assistance to the Reform Settlements 109. A case study 23/ showed that fewer than two-thirds of the campe- sino groups had received any technical assistance from 9 different public and non-governmental agencies, not all of which were adequately specialized for this kind of service. In accordance with INA's policies noted earlier, con- centration projects were using two-thirds of the available agricultural technicians, while more than 800 "consolidation" groups shared a total of 9 technicians. INA's policies and qualified technical personnel distribution imply that "consolidation" is essentially a holding pattern with little support in terms of technical expertise. Even though 42 percent of other middle level personnel were assigned to consolidation settlements, this personnel is not particularly qualified (i.e., promotors, with non-specific background). 110. The MNR's Extension Service had a total of about 300 professional employees in 1981, of whom 238 were working in the 92 field agencies. Of the latter, 149 were middle-level agricultural technicians, the rest were youth promoters and home economists. About 20 percent of the agricultural field technicians were graduates of the Zamorano agricultural school; their services are reportedly in such high demand that they tend to be placed into higher-level jobs. A number of university graduates are also in charge of specific commodity programs, such as soybeans, horticulture, potatoes, cotton, beekeeping, citrus and henequen. Extension service agents of the MNR have been working with 8 of the regional reform cooperatives since 1978 and plans exist for servicing the remaining 6. In 1981, 20 to 28 MNR's field agents were working exclusively with agrarian reform groups. MNR's extension agents tend to devote about three-fourths of their time to reform settlements although they have difficulties in obtaining cooperation from INA field agents. This raises concerns about the concentration of MNR's extension services in agrarian reform groups to the virtual exclusion of other small producers. In 1979, for example, MNR Extension Service provided assistance in 11 municipalities in the north to only 453 non-reform groups. Independent small farmers are serviced through a Campesino Association for the Diversified Agricultural Development of Honduras (ACADEH), comprising 38,000 producers. 23/ IHDER, op. cit.  - 32 - I. Training Needs of the Reform Settlements 111. Technological training for basic grains is most needed in the settlements. Basic grains technology is particularly deficient, as reflected by low yields and frequent crop failures. Technological needs are taken care efficiently in the case of specialized cash crops, where the buyers (banana company, PATSA for melons, tobacco companies, cotton cooperative, sugar mills, etc.) provide it. Furthermore, for bananas, the experience of the former plantation workers is an important factor. Thus, in these cases only occasional assistance from official (INA and/or MNR) technicians is needed. A similar situation exists when the project is for an entirely new crop and external sources provide for the technical assistance (e.g., African palm in the Lower Aguan, where technical assistance was both required and provided with IDB funds). 112. The most crucial training needs identified in the cooperative settlements are in the field of management: planning and establishing prior- ities for land and labor use; organizing the work force and assigning tasks and responsibilities; establishing controls and maintaining accounts; design- ing and implementing credit schemes, including assurance of timely repay- ments, and allocation and distribution of annual surpluses. 113. The size and highly organized nature of the reform sector in Honduran agriculture make adequate training of the production managers a high priority activity. Most of the training is the responsibility of INA's training department (PROCCARA) and its expatriate advisers, the Institute for Professional Training (INFOP), and the Directorate for Cooperative Promotion (DIFOCOOP). 114. The most important agency is INFOP, which allocates 60 percent of its resources to agricultural training, mostly in the reform sector as required by law. In 1980, INFOP had 8 mobile centers and completed an impor- tant regional training center at La Ceiba. INFOP's budgetary allocation from the Honduran Government was L 950,000 in 1981; however, its budget totals about L 14 million, including the proceeds of a one percent payroll tax paid by private business. In addition, INFOP receives various kinds of support from bilateral assistance programs and the International Labor Office. J. Credit to the Reform Settlements 115. The Agricultural Development Bank 24/ provides credit to the agrarian reform settlements. About 40 percent of its new agricultural lending and 46 percent of its crop loans went to the reform sector in 1979, mainly for African palm plantations in the IDB-funded Lower Aguan project, maize, and cotton. The 1979 year-end portfolio of the Government's agricul- tural development bank represented 13 percent of the banking system's total portfolio; however, only 55 percent of outstanding loans were current. Even 24/ In 1980, the Agricultural Development Bank was reorganized and its name was changed from BANAFOM to BANADESA.  - 33 - though two-thirds of the overdue loans were in crop financing and maize was the largest single crop among the overdue loans, agrarian reform benefi- ciaries owed only about one-third of overdue loans (not including arrears from Decree No. 8 and IDB Lower Aguan II stage). 25/ An analysis of the overdue loans in 1977 26/ showed that, of the overdue reform sector loans, 22 percent was due to total or partial crop loss. 116. Honduran legislation does not seem to provide for any kind of mora- torium on bad debts. As a result, new members of settlements who replace others that have abandoned the group have to assume the debts of the predecessor. The original debtor often cannot be located. This creates a difficult condition for the new arrivals to the settlements. K. Summary and Conclusions 117. Land reform legislation was first enacted in Honduras in 1962 but progress was slow until new legislation was issued in 1972, launching an aggressive program in response to strong campesino pressures. It was significantly strengthened and expanded with the 1975 agrarian reform law, which aimed at greatly improving land utilization as well as increasing incomes and employment opportunities of poor peasants. 118. The important role performed by the agrarian reform is illustrated by the number of agrarian reform beneficiaries and by the share of agricul- tural value-added. The agrarian reform has settled 48,000 peasant families (12 percent of rural families) on about 210,000 hectares. About 36,000 remain in the settlements and about 12,000 families have abandoned them because they did not receive enough productive land or support services or could not adapt to hard living conditions in some areas, like the lower Aguan. Agricultural value-added in the reform sector is about 10 percent of the country's crop value-added. Proportions vary by crops. Basic grains is the dominant crops in the settlements although significant progress has been made in expanding commercial crops, such as bananas, African palm, sugar cane, rice, and grapefruits. 119. The Agrarian Reform Institute (INA) is mostly responsible for the agrarian reform. INA has received significant resources from Central Govern- ment transfers and foreign loans to carry out its mandate. For example, its 1980 budget was about L52 million (US$26 million). However, investment expenditures have fallen significantly behind budgetary allocations because of delays in implementing projects. In spite of this, operating expenditures have been much closer to budgeted levels. 25/ BANAFOM, Evaluacion de las Actividades del BANAFOM, 1979 (Preliminar). March, 1980. 26/ BANAFOM, Evaluacion de las Operaciones Crediticias y Financieras, April 1977.  - 34 - 120. Since 1978, INA has concentrated its resources on the potentially most productive areas (concentrated rural development projects with 38 per- cent of the families), which comprise nine important projects, including the Lower Aguan. Other settlements with high productive potential (consolidation settlements with 9 percent of the families) are supported by the Government with only credit and technical assistance. The remainder (over one-half of the families) qualify to receive marginal support and "supervised" credit. However, most of them are not creditworthy. 121. With the exception of concentration projects, physical and social planning of the settlements has been inadequate. In addition, land invasions create uncertainty among non-reform farmers and affect non-reformed agricul- tural production. 122. INA's titling has been very slow. About 85 percent of the groups and 70 percent of the distributed land have not been titled, mainly for two reasons: the cumbersome process of determining legal ownership, and the banks unwillingness to accept the land bonds in payment for outstanding debts of the former owners. A political decision is needed so that the bonds can be used for certain purposes, such as paying tax obligations. 123. INA's capacity to perform other functions than acquisition and redistribution of land, i.e. assist the campesino groups to become estab- lished and to obtain essential services and resources, and to train them in organization and management, is limited in spite of generous staffing. The promoters are essential to this process but they have been mostly ineffec- tive, even in the high priority concentration projects. Promotors turnover is high and many are not adequately traLned to discharge their responsibil- ities. Serious efforts are needed to remedy this situation and raise the quality of INA's services to the settlements. 124. INA's training programs have suffered from lack of capacity for systematic analysis of organization and management problems of the campesi- nos, lack of coordination of training activities, and lack of follow-up or evaluation. Furthermore, campesinos groups close to main highways are saturated with courses while more remote groups receive no attention. This is another area of INA's functions that requires a serious evaluation followed by remedial action. 125. The problem of uncultivated land in the settlements is not as severe as the critics of the agrarian reform point out. Since the criteria of cultivable land is subjective, a wide range of uncultivated proportions can be claimed. As far as can be determined, over one-third of the "cultiv- able" land is not being cultivated or its use cannot be determined from available information and studies. However, partial field research shows much lower ratios (i.e., 15 percent) of uncultivated land indicating that the percentage of unused land most likely is below one-third. 126. Marketing is a serious problem for the reform settlements with the exception of those producing cash crops under special arrangements with marketing intermediaries. The poor performance of basic grains in reform and  - 35 - non-reform farms is partly related to prices and marketing and partly to flooding and other weather conditions which severely affect production in the reform settlements of the Lower Aguan. 127. IHMA's support prices also have not provided enough incentive to the producer in the case of beans; wholesale prices, however, are closer to the import price (.9 of import price). For corn and rice, although import prices are below wholesale domestic prices, support prices are about the same as import prices. This raises significant questions about price support and marketing of corn and rice. The issue is whether to increase production by providing additional incentives to inefficient, low productivity small farmers (reform and non-reform sectors) for non-entirely economic reasons versus supplying the domestic market with larger-scale, more efficient farms or cheaper imports. Clearly, this has occurred in the past as small farmers shifted production to higher value export crops with intensive development agrarian reform filling the gap. 128. The Agrarian Reform Law exempted from expropriation all farms of less than 50 hectares fully utilized, as well as land planted with bananas, plantains, sugar cane, African palm, coffee, pineapple, citrus, and tobacco, but it failed to protect new crops. This is a special problem for the devel- opment of new export crops not exempted from occupation by the legislation and raises considerable uncertainty about land occupations in farms planted with new crops notwithstanding their efficiency. All efficiently cultivated land, regardless of the particular crop for which it is used, should be protected by legislation from invasions. Land redistribution should be undertaken solely within the expropriation criteria established in the agrarian reform legislation, which establish specific maximum limits to private firms depending on soil quality, region of the country, intensity of cultivation, etc. 27/ 27/ 1975 Agrarian Reform Law, Article 38.  -36 - ANNEX 1 THE LOWER AGUAN VALLEY SETTLEMENTS The Settlements 1. The lower Aguan Valley was chosen by the government of Honduras in the late 1960s as a priority area for massive resettlements of landless campesinos from more densely populated areas. This project is managed by INA. The valley is the lower end of the huge Aguan watershed that comprises one entire northern department and parts of two others. The first five settlements were created in 1970/71 under the authority of the 1962 agrarian law and over the considerable protest of the landowners of the region. 2. The government obtained financial support for the lower Aguan project from IDB. An initial loan of US$7.7 million supported plantations of African palm and citrus, with a total cost of US$12.8 million. A second IDB loan of US$40 million, for an additional total project cost of US$51.5 million, was approved in 1977, following the establishment of 53 cooperative settlements in 1974 and 1975. 3. In 1975, the Standard Fruit Company abandoned more than 2,000 hectares of Aguan Valley banana plantations that had been destroyed by hurricane Fifi in 1974. The government created a large Empresa Asociativa (the Isletas cooperative) on this land, composed of 1,300 former banana company workers, and placed it under the tutelage of a newly created banana corporation, COHBANA, for purposes of technical services, marketing and financing. 4. In view of different institutional management arrangements between the two projects, they are analyzed separately, even though they are located in a geographic and ecological continuum. The lower Aguan Valley has a high exposure to flooding, which takes place almost every year to some extent and sometimes assumes disastrous proportions. (This explains why the United Fruit Company, which had vast holdings in the valley since early in the century, pulled out in the 1950's.) Floods make annual crops very risky in substantial areas of the valley. UNDP has been studying the entire Aguan watershed and reached a preliminary conclusion that, in view of the topography and progressive deforestation of its upper reaches, the only effective, but costly, flood control system would be the construction of a series of barrage dams across the river. Otherwise, the only realistic alternative would be to adapt the land management system to the flood pattern. 5. INA's Lower Aguan Project is the largest of its agrarian reform projects. It has a total area of 45,551 hectares. About 28,000 hectares had been allotted collectively to 83 cooperatives in September 1980. The cooperatives initially comprised about 4,400 members but, by September 1980, their number declined to about 3,200 for an apparent net attrition rate of 27 percent (this hides a much higher actual turnover). As a result, the number of families settled in the two stages of the project have been about half of the project's initial target.  - 37 - ANNEX 1 African Palm Production 6. Of the project's 28,000 hectares, about 11,300 hectares were in tree crops and the remainder supposedly in annual crops. The 53 IDB-financed cooperatives had planted about 10,000 hectares of African palm by 1980; fruit production was only about 7,500 tons in 1979 (or about 4.5 percent of the 1985 target of about 100,000 tons of fruit); this is normally explained by the plant producing fruit cycle. Oil production reached only 4 percent of the 1985 production target of 30,000 tons for the same reasons. 7. Flood damage to palm plantations has turned out to be minor as the water ran off quickly from most of the palm areas. Yet, it became clear that tertiary drains--not contemplated under the 1977 plans--were needed; thus, savings in other investments were reprogrammed for this purpose in 1979. 8. Payment of member and family labor during the growing period of the palms, at the rate of three lempiras per day for at least five days a week, is included in project financing. While some cooperatives and members are said to be quite conscious of the need to economize on this item in order not to overburden their indebtedness, there have been some complaints about the L 3 per day wage limit at a time when the minimum wage was L 5.8 and was expected to increase up to L 8. 9. The palm plantations reportedly do not produce any net returns until the eighth year, although the cash flow begins to be positive in year seven. The amortization plan provides a grace period of four years. This creates an amortization problem in the fifth year. INA has been discussing this problem with IDB. 10. Palm fruits are processed into crude oil in two small plants (6 mt/hour) that belong to the associated cooperatives and the crude is sold to commercial refiner/manufacturers (mostly Standard Fruit). The palm kernels are sold as such. Two large, modern plants (15 mt/hour) are under construction and a third one is planned with a capacity of 20 mt/hour, for a total capacity of 62 mt/hour. This is designed to handle an input of 24 tons of fruit per hectare from 2,200 hectares in year eight. It will also process the kernels. The cooperatives are working on plans to install their own refining and manufacturing equipment. Aside from the supervising engineer, the entire labor force of the oil plants is composed of cooperative members and their families.  - 38 - ANNEX 1 Citrus Production 11. Grapefruit plantations in the Lower Aguan Valley have proceeded at a slower pace because the off-season market for fresh grapefruit is still being tested. Problems have also emerged with production and transportation costs as well as with fruit quality. About 2,000 hectares are producing about 27,000 tons of fruit. INA has made arrangements with Standard Fruit to process the surplus and below-standard fruit. Basic Grains Production 12. The production of basic grains have had only limited success because of lack of credit, commercial facilities, and, particularly, frequent floods. Production is well below initial targets. Perhaps the biggest problem that afflicts the project--related to the broader problem of flood control--is the situation of 30 reform groups that have no tree crops. They have concentrated on growing basic grains, but low yields (because of unsatisfactory technology), low prices, marketing and transportation problems, lack of storage, 1/ and periodic floods have reportedly left most of these groups with little net income and large bank debts. A partial solu- tion is limiting basic grain planting to the spring cycle when the risk of floods is greatly reduced; this means only one crop a year where the produc- tive capacity of the soil, temperature, and rainfall permit growing at least two crops per year. Cattle Production 13. So far, agrarian reform settlements mostly have not engaged in cattle production. However, a proposal is to reconvert part of the land used for basic grains to pasture--a state in which much of it was before the land redistribution--and raise cattle for milk and meat. Swiss and EEC aid are backing pilot projects with purebred dairy cattle. Now, INA plans that each cooperative will eventually have a small cattle project consisting at the outset of 50 milk cows and 100 beef animals, which will be funded through the IBRD/Central Bank credit project. Moreover, there is a large-scale cattle development project in one area (section 3) of the valley, on the river's left bank. A total of 12,000 hectares of pasture could apparently be established there for 40 cooperatives. Titling 14. Virtually all the Aguan cooperatives have been issued title to their land by INA. Membership in the groups does not carry with it a share in the value of the land or improvements. Settlers pay L 200 for the land over 20 years without interest, i.e., a nominal charge equivalent to US$5 per hectare per year. Neither retiring members nor those who abandon the project receive any compensation. The remaining members are sometimes reluctant to 1/ INA's plan for the construction of grain storage facilities has not been implemented.  - 39 - ANNEX 1 accept replacements for the departees, partly for social reasons and partly to improve their economic position in the cooperative. Moreover, proposals for increasing the number of members in cooperatives that-could provide an acceptable income for a larger number of members are often resisted, even though the standard 500-hectare allotment per cooperative of 80 to 100 members is too large for efficient management without considerable mechanization or hiring of wage labor. Lack of Social Services 15. The heavy emphasis on economic results is reflected in the low level of social services. Even the most prosperous coops at present have no access to potable water because shallow wells are not potable, and there has not been an adequate deep-drilling program. UNICEF reportedly brought large numbers of water tanks into the area but they are not being utilized for lack of wells. On the other hand, the USAID-supported rural electrification program is said to be moving along at a satisfactory pace. Electrification of the valley may well be the basis for further economic diversification. Expenditures 16. Total expenditures since 1974, excluding public works, is estimated at about 70 million at current prices, i.e., an average of about L 21,000 per family of remaining project settlers in early 1981. Most of the investments was made on tree crops. 17. Representatives of ANACH complain that investments have been made without consulting the cooperatives, notably in the purchase of excessive numbers of tractors during the first phase of the project. Indeed, in 1971, INA assigned one tractor to every 100 hectares, whether or not the groups needed them or were prepared to use and maintain them -- which most were not. In the project's second stage, in 1977, INA was in charge of an equipment pool and INFOP was responsible for organizing courses in machinery operation, maintenance and repair. Another source of complaint was the recent purchase of about 5,000 tons of fertilizer, the appropriateness and quality of which had been questioned, apparently with some justification. The matter became a subject of public debate. Technical Support 18. In 1978, there were seven MRN extension agencies, as well as programs for animal health and production, mechanization and crop production and protection. INFOP established a mobile training unit with 12 instructors. The budget cuts in 1981 were beginning to hurt project management. Funds for spare parts for vehicles and equipment were threatening to be a special problem. The national budget strictures were reportedly aggravated by the slowness of disbursements of IDB funds through the government channels; contract payments were said to be delayed as much as six months.  40 X 1 Desertion 19. A common phenomenon in the Lower Aguan is the reportedly high rate of "desertion" by originally recruited settlers. A recent study provides reasons for this phenomenon which is not unique to the Lower Aguan. First, since 1977, recruitment has been nominally handled by the Program for Induced Migrations within INA. Initially, one central and four regional "coordinators" were assigned to this program; one regional coordinator was in charge of reception, installation and follow-up of the new settlers in the Aguan project, while the other three were responsible for recruitement, orientation and transporting of new settlers. By 1980, only the national coordinator remained on board and budgetary allocations were small. Second, of 674 heads of household and single settlers which were moved onto 25 cooperatives in the project area during 1977/78, nearly two-thirds had abandoned the project by late 1980. Most of them returned to their home community in the Northern departments and in Comayagua; the rest stayed on in private employment in the Aguan Valley. Third, a survey of 18 cooperatives in the Lower Aguan that received new migrants in 1979/80, showed that most of the recruits were campesinos who were totally landless or who had only a minuscule parcel. Nearly all were illiterate agricultural day laborers and did not belong to any unions or organizations. A few had abandoned reform settlements in other parts of the country. Except when the new migrants were relatives or former acquaintances, the reception by the host cooperative was typically unenthusiastic, even though these cooperatives had requested new members. The new arrivals also showed little enthusiasm for their new surroundings and complained about lack of housing, water, fruit, and stores as well as about insects and inadequate facilities for food preparation and/or feeding, especially in the case of single workers. Homesickness was also a factor. Fourth, in some settlements, the established members refused to incorporate the new arrivals as full members; they were discriminated and asked to do the hardest jobs. Notable exceptions are those instances where the new migrants were in the majority and where they were thus able to assert themselves. 20. The eighteen cooperatives that had received migrants all had experienced some abandonment by the original members; overall, 78 percent of the original members had abandoned their settlements at some point during the average five years or so of its existence. The rate of abandonment ranged from 36 percent to 100 percent (for two settlements), but one-half of the settlements had experienced abandonment rates exceeding 80 percent and only one had less than 50 percent. Of the 186 migrants who did leave their settlements during the first year, 71 percent returned to their place of origin, 10 percent remained in the area but sought employment outside the project; and 19 percent joined another cooperative in the project. 21. Some progress is reported in reducing the overall abandonment rate. A 28 percent rate in 1979/80 was lower than the 62 percent rate of two years earlier. This is explained mainly by the fact that there was no major flood in 1979/80 and that 15 of the 18 cooperatives surveyed were beginning to have regular earnings from palm plantations and could thus provide regular  - 41 - ANNEX 1 employment and "wages" to the new members. Moreover, the northern origin of two-thirds of the 1979/80 migrants made for better adaptation; in 1977/78, the majority came from other regions of the country. More than half of the 1979/80 deserters" were under 25 years of age. The major stated cause of abandonment (35 percent) was "failure to adapt." 22. In brief, many of the problems that caused the abandonment in this project are rooted in the basic defects of the project per se: inadequate training and motivation for self-management; INA's inability to provide essential support and service, especially social infrastructure; failure to tackle the environmental problems, etc. But many of these problems have to do with faulty methods of recruitment, selection and preparation and settlement of the migrants. These are common to "directed colonization" projects. Policymakers and administrators often are primarily concerned with the short-run filling of quotas rather than with the long-run achievement of economic and social objectives.  - 42 - ANNEX II THE ISLETAS BANANA ENTERPRISE (EACI) 1. Isletas is perhaps the most famous agrarian reform "project" in Honduras, both because of its economic dimensions and the socio-political turnmoil in which it has found itself. The 1975 project has 5,000 acres (2,024 hectares) of prime land in the lower Aguan valley, which was abandoned by the Standard Fruit Company after hurricane Fifi. 1/ The land and fixed installations were turned over to INA. INA recruited 1,300 former plantations workers and created one huge enterprise even though the plantation was easily divisible into its traditional production sections. At the same time, the government created a public banana corporation (COHBANA); its principal function to date seems to have been that of intermediary between EACI and the Standard Fruit Co., which continues to market the bananas in the U.S. through its facilities in La Ceiba. 2/ COHBANA provides technical assistance and financing to EACI and takes responsibility for road and bridge rehabilitation. Campesino representatives feel that these services can be furnished more efficiently and for a smaller overhead and that COHBANA does not drive a hard enough bargain with Standard Fruit. 2. According to COHBANA, EACI's output of bananas is now greater than it was under Standard Fruit management. Annual sales to Standard Fruit are over five million boxes. According to COHBANA's EACI office, Standard Fruit pays COHBANA a negotiated, nominal price of L 7.32 per box of 40 lbs., from which the export tax (L 1.00) and the box cost (L 1.40) are deducted. COHBANA then credits EACI with a nominal gross price of L 4.60 per box, from which deductions are made for payments to Standard Fruit for railroad transport to La Ceiba (L 0.53 per box) 3/ and ship loading (L 0.32 per box), as well as COHBANA's overhead charge of L 0.39 per box 4/ This leaves a net price of about L 3.63 per box for EACI. After servicing its debts, EACI retains L 2.81 per box. 3. Data from the local COHBANA office for the standard four-week accounting period corresponding to December, 1980, shows the following: 1/ Another 2,000 acres of bananas belonging to independent entrepreneurial growers were also destroyed. This land was also acquired by INA but is still lying fallow. 2/ COHBANA also manages two banana plantations with a total of 1,424 acres. 3/ EACI pays a total of about 2.5 million lempiras in transport charges per year; the government also pays Standard Fruit an annual rental of one million lempiras for the use of the rail line. 4/ About L 2 million a year.  - 43 - ANNEX II Thousand Lempiras Lempiras Percent per Box 1/ Gross nominal price to COHBANA 2,753 100 7.32 Less deductions by Standard Fruit: Export tax 376 13.7 1.00 Irrigation 20 0.7 0.05 Transport to La Ceiba 201 7.3 0.53 Loading 120 4.4 0.32 Cartons 2/ 526 19.1 1.40 Total -1,243 45.2 3.30 Gross receipts by COHBANA 1,570 54.8 4.02 Standard COHBANA deduction 147 5.3 0.39 Gross sales receipts of EACI 1,363 49.5 3.63 Financial deductions by COHBANA: Loan Amortization 189 Interest on Loans 120 Total 309 11.2 0.82 Net income of EACI 1,054 38.3 2.81 1/ Calculated on 376,000 boxes on basis of export tax receipts. 2/ An additional amount of L 506,000 was deducted for other "materials and supplies," reported to be mostly for plantation inputs which are part of EACI's cost of production. COHBANA deducted L 518,000 for advances to EACI for wages of member workers, and L 372,000 for other advances, for a total of L 890,000. Since Standard Fruit deducted L 506,000 for materials and supplies, there was a negative cash balance for EACI at the end of the accounting period of L 342,000, equivalent to L 0.91 per box. This negative cash balance was converted into new indebtedness to COHBANA. 4. Consolidated accounts for 1980 were not available at the time of the mission, but EACI's cumulative operating loss for the year was estimated at about five million Lempiras. The accumulation of such losses over the last few years had produced a debt of about 12 million Lempiras to COHBANA. Amortization and interest on COHBANA's loans amounts to 11 percent of the FOB price. COHBANA borrows on the private international market and passes the interest charge on to EACI.  - 44 - ANNEX II 5. Wage receipts of EACI's members are about 6.8 million lempiras per year, which provide each family with about 5,200 lempiras. COHBANA's accounts indicate that these wages are being paid at the cost of increasing indebtedness. 6. The unsustainable deficit situation is clearly at the root of the underlying malaise and sporadic outbreaks of violence in Isletas. The membership, and even some of the leaders, vent their frustration often simultaneously on COHBANA, INA, and Government and the Standard Fruit Company, all of whom evidently take a bite out of the final value of the product. But the major complaint is related to graft and corruption in this multimillion dollar semi-public enterprise. Corruption is almost guaranteed by the impossibility for a group of largely untrained--and partly illiterate-banana workers to manage an organization of this size efficiently. 7. In the opinion of experts, the empresa asociativa system that was chosen to administer this complex was not appropriate. They agree that it is not easy to control either supplies or the payroll. Thus, maladministration of funds and corruption have obviously been responsible for the present debt level, thereby increasing the level of frustration because part of the problem is internal. 8. In an election held in October, 1980 among the members of EACI, the so-called linea larga won by a large majority. When the elected majority called for an independent audit and inventory, they were replaced. In response to this, they declared a general strike, which lasted for about a month until the end of February. No bananas were cut and the losses to the empresa members, COHBANA, Standard Fruit and the government were substantial. In an attempt to break the impasse, the Executive Director of INA declared the ousted board of directors of the empresa, dissolved, and appointed an "interventor" to take over temporary management, get production going again, take stock of the financial situation and prepare the ground for a new elected management. At the same time, the Constituent Assembly appointed a commission of three, including a campesino leader, to investigate the situation and make recommendations for permanently defusing the situation in Isletas. In its report of January 28, the commission recommended a training program for empresa members designed to make them better aware of their rights and duties; prompt election of a new board of directors under INA supervision; joint civilian/military guarantees that the new board will be able to serve out its full term; an audit of EACI's books by the Controller General, and application of the legal requirement that EACI's general manager be bonded for the amount of L 100,000. 9. In February, INA's interventor agreed with representatives of EACI that the empresa would be divided into two, with separate administrations for the two groups in dispute with members freely transferring their residence- and work areas in accordance with their respective sympathies. However, by mid-February, the Constituent Assembly expanded the special Isletas commission and the campesinos unions threatened a nationwide strike. Another transitory solution was chosen with the EACI membership reluctantly agreeing to resume work under the interventor management for three months but without dividing the enterprise.  - 45 - ANNEX II 10. In brief, with proper accountability, the financial outlook for EACI can be improved, although a "final solution" package should probably include forgiveness of part of EACI's indebtedness. The operation should be reorganized into about a dozen independent production enterprises, with the packing plant and other central services and installations managed by a second enterprise, composed of the presidents of the production units, ex-officio membership of COHBANA and/or INA and a permanent external controller/auditor appointed by the Controller General. A long term program for literacy and training in cooperative organization, accounting, and management is essential for all members and their families. For this purpose, a systematic internal information and accounting system would be helpful.  - 46 - ANNEX III AGRARIAN REFORM SETTLEMENTS IN THE SOUTHERN REGION 1. A sample survey of 15 percent of the 222 agrarian reform groups located in the Southern Region, i.e., departments of Choluteca and Valle and one municipality in the department of La Paz I/ shows that the average gross land allotment of seven hectares per member of a settlement exceeds the statutory minimum of five hectares, but that "cultivable" area averaged slightly under five hectares per member. Thus, a large proportion of the land allocated to reform settlers is in use. Indeed, if double cropping of maize and sorghum is counted, and cashew plantings and pasture are added, the utilized area turns out to be equivalent to 60 percent of the total land are allotted to the groups and 131 percent of the assumed "cultivable" area. 2. Several significant phenomena appear in the preliminary analysis of the cropping pattern. Only one settlement does not grow either maize or sorghum, or both; this group had 21 members who received only 26 hectares, apparently of good quality cropland that was planted to rice and beans in 1980. Next, the average area per group of each of the basic grains appears remarkably uniform (around 25 hectares). However, this may be a coincidence given the variability of the average number of members per groups. The average area in basic grains per member ranges between one and five hectares for 79 percent of the groups. Five groups (15 percent) depended entirely on basic grains; the others grew one or more "cash" crops and/or raised cattle. Furthermore, one group had a cattle hide tannery and another planted 2,000 fruit trees. Planting of cashew trees was apparently not generally associated with serious limitations for growing other crops; the eight groups with cashew trees ranged from 0.8 hectares to 11 hectares planted with basic grains per member. Ten groups owned cattle averaging 67 head per group. Oddly, the land use data for only one of the ten cattle-raising settlements showed any pasture, while one group that owned no cattle had 160 hectares of pasture. 3. Six of the settlements grew 111 hectares of sugar cane under contract with a nearby partly Government-owned sugar mill. The mill controls directly 5,000 hectares of cane in the area, compared with 3,500 for the agrarian reform settlements and 1,500 for the private independent growers. The campesino groups complain of the mill's highhandedness in dealing with them. At harvest time, the mill arrives with its own equipment and cane cutters (it employs about 3,000 cane cutters). According to local informants, the mill management does not allow settlement members or their families to participate in the cutting, probably because it creates administrative complications. Moreover, the mill often does not meet the contractual two-week notice for cane burning in preparation for cutting; them, it refuses to accept the cane when the burning could not be done on time. Finally, the campesinos feel that cane prices and deductions for harvesting and transport are set too unilaterally and that they are not adequately represented at the factory's weighing station. Representatives of 1/ The survey covered 613 members, representing a population of 3,478 in 34 groups, through direct interviews. Indirect information was gathered on an additional eight groups. Field work has begun in July, 1980 and terminated about the end of the year.  - 47 ANNEX III campesinos organizations are reluctant to make common cause with the independent entrepreneurial cane growers for fear of being dominated by them. 4. About 40 percent of the household members were over 40 years old. This means that they presumably had one or more adult children who could be potential candidates for full membership; another 25 percent will be in that position within a few more years. 5. The survey shows that virtually no social or economic infrastructure exists outside the city of Choluteca. The road system was mostly in poor condition. Storage facilities for farm produce were completedly absent. Furthermore, there were no rural health centers. Infant mortality was high as a result of lack of safe water. In addition, anapheles mosquitos have become resistant to insecticides, and 60 percent of the rural population are estimated to be infected with malaria. The poor social infrastructure observed in the reform settlements contrasts somewhat with the relatively satisfactory situation--at least as regards schools and health centers--found in some of the nearby communities. 6. Visits to two of the groups that had been included in the survey illustrated some of the problems and development potential as well as the substantial differences in social and physical conditions between groups that make certain types of generalizations rather meaningless. Both groups were composed of former day laborers earning L 0.75 per day, who had migrated from a nearby hill community in search of work or land; in both cases the privately occupied land was recovered by INA for the public domain. Familias Unidas was composed of 20 member families (out of the initial 28) that had been assigned 98 hectares of dry, sandy land near a beach in 1977, of which 86 percent is considered tractorcultivable. Carmen de los Mapachines, on the other hand, consisted of only eight members who had been granted 150 hectares in 1975, of which 27 percent is considered cultivable (20 percent by machine). The soil is poor and rainfall is unreliable. 7. The families in both groups were living, at the time of the visit, in extremely primitive huts and had no potable water supply. Also, both groups had similar poor experiences with maize growing: one good crop in five years and one in seven years, respectively. Familias lost L 6,000 in the 1980 maize crop, but they were still receiving gifts of maize from the German COHAAT aid program. Yet, even though Los Mapachines had a two-year headstart on Familias Unidas, the latter were far more advanced in many respects. In both cases, INA and other institutions have begun to take an active interest in assisting development. 8. Despite the difference in size, both groups had planted similar acreages in maize, sorghum and sesame in 1980. However, Familias Unidas in addition had about one hectare of watermelons and two hectares of cassava and assorted vegetables, as well as 92 head of cattle. Los Mapachines has no other visible source of income. No one in either group was interest in wage work off the farm. 9. Familias Unidas members asserted that their surplus in 1980/81 amounted to the equivalent of L12,000 of which L 8,000 has been distributed at the rate of L 400 per family. This appeared to be the total family cash  - 48 - ANNEX III earnings because this group does not pay itself any daily labor advance. The housing institute--INVA--was providing technical assistance, skilled labor and L 6,000 per family (15 years at 6 percent) for new housing in accordance with the member's own design; the concrete and brick houses were nearing completion at the time of the visit. The educational level was surprisingly high; perhaps this is a clue to their relative success. The literacy rate was 73 percent. Of the 48 people over 10 years of age, 11 had finished 6th or 7th grade. One-third of the population of 100 was in school. 10. Los Mapachines tried to grow rainfed rice in 1975 and 1976 with credit from BANAFOM. The first year, the rice combine promised by the official machinery service did not arrive. They were able to harvest 2.5 hectares by hand; the remaining 17.5 hectares were lost. The next year there was not enough rain; the rice had hardly germinated before it 'died. By this time, they owed L 12,000 to the official agricultural bank. The group has received a L7,500 credit (10 years, no interest) from the Junta de Bienestar Social for buying nine heifers and one bull and building a milking shed for the dual-purpose cows. For this purpose, cement and lumber had arrived but the group had neither tools nor skills for using them. Though the Ministry of Natural Resources was advising on the construction, neither they nor other programs were able to fund the purchase of tools.  - 49 - STATISTICAL APPENDIX Table Number 1.1 Population Projection 1975-2000 1.2 Population Projections for Main Population Centers, 1975-85 1.3 Economically Active Population by Sex and Age, 1970-85 1.4 Rural Population Projections by Age, 1970-85 1.5 Projected Rural Population and Labor Force, 1975-2000 1.6 Rural Working Force, 1974 1.7 Annual Population Growth Rates by Departments, 1961-74 1.8 Population and Agricultural Regions, 1970 2.1 Land Use Intensity and Annual Crops Share by Farm Size, 1974 2.2 Crop Disposition by Farm Size, 1976 2.3 Crop Disposition by Region, 1976 2.4 Small and Medium Size Farm Income by Sources, 1976 2.5 Net Farm Income by Farm Size, 1976 2.6 Sources of Farm Income, 1976 2.7 Small Farms Relative Levels of Income by Regions, 1976 2.8 Small Farms Relative Levels of Farm Income, 1976 2.9 Labor Utilization by Farm Size, 1976 2.10 Technical Assistance by Farm Size, 1976 2.11 Educational Level of Farmers by Region, 1976 2.12 Educational Level of Farmers by Farm Size, 1976 3.1 Land Redistribution by Peasant Organization 3.2 Agrarian Reform Concentration Projects, Dec. 1978 3.3 Lower Aguan Valley Development 3.4 Agrarian Reform Priority Valleys, 1978 3.5 Area and Production Targets for Specific Crops in Reform Sector, 1980 3.6 Crop Targets for the Reform Sector, 1980 3.7 Relationship of Land Area to Crops Seeded, 1980 3.8 Selected Indicators of 34 Agrarian Reform Settlements Surveyed in the Southern Region 3.9 Personnel of the Agrarian Reform Institute, 1981 3.10 Official Support, Average Annual Wholesale and CIF Import Prices of Basic Grains, 1973/74 to 1979/80  Table 1.1: HONDURAS - POPULATION PROJECTIONS 1975-1985 Departments 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Total 3,093,299 3,202,324 3,318,040 3,439,017 3,563,823 3,691,027 3,820,951 3,955,116 4,092,175 4,231,567 4,372,487 Atlantida 173,332 181,219 189,039 197,080 205,464 214,102 223,023 232,325 241,934 251,814 261,972 Col6n 91,555 95,821 100,136 104,567 109,154 113,864 118,674 123,661 128,785 134,023 139,369- Comayagua 159,118 164,997 171,140 177,626 184,309 191,111 198,044 205,180 212,456 219,830 227,299 Copan 175,152 179,906 184,933 190,279 195,718 201,172 206,653 212,213 217,770 223,309 228,828 Cort6s 436,118 454,356 475,450 496,940 519,384 542,693 566.937 592,209 618,463 645,798 673,535 Choluteca 224,165 231,517 239,241 247,465 255,878 264,328 272,888 281,636 290t46O 299,341 308,215 El Paraiso 162,966 167,900 172,990 178,3123 183,766 189,265 194,840 2ob,564 20'6,383 212,214 218,058 Francisco Morazan 531,879 554,998 578,970 604,o46 629,914 656,269 683,138 710,844 739,180 767,784 796,772 Gracias a Dios 24,513 25,760 27,026 28,333 29,688 31,084 32,519 34,oo4 35,531 37,088 38,683 Intibuca. 93,822 95,838 97,950 100,203 102,476 104,728 106,963 109,223 111,468 113,677 115,836 Islas de la Bania 15.271 15,708 16,139 16,564 17,004 17,452 17,910 18,382 18,862 19,352 19,845 La Paz 75,494 76,885 78,288 79,814 81,338 82,836 84,308 85,767 87,203 88,598 89,929 Lampira 146,648 149,874 153,259 156,840 160,478 164,087 167,690 171,363 175,025 178,671 182,282 Ocotepeque 58,021 58,749 59,553 60,442 61,321 62,153 62,943 63,720 64,454 65,135 65,764 Olancho 175,761 181,546 187,511 193,753 200,189 206,775 213,525 220,613 227,309 235,139 242,593 Santa Barbara 216,325 224,031 232,321 241,319 250,524 259,769 269,054 278,543 283,061 297,613 307,109 Valle 105,441 107,733 110,138 112,713 115,317 117,909 120,498 123,136 125,769 128,382 130,963 Yoro 227,217 235,486 243,956 252,721 261,901 271,430. 281,344 291,733 302,562 313,799 325,435 Source: CONSUPLANE.  Table 1.2: POPULATION PROJECTIONS FOR MAIN POPULATION CENTERS, 1975-85 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 -OTAL 750,649 798,106 848,627 902,414 958,847 1,017,787 1,080,498 1,146,324 1,215,242 1,286,857 1,361,17,6 egucigalpa 326,534 347,495 369,831 393,633 418,633 444,749 472,610 501,861 532,519 564,416 597,512 ian Pedro Sula 187,450 202,687 219,132 236,865 255,763 275,864 297,310 320,191 344,497 370,152 397,201 .a Ceiba 45,355 47,184 49,085 51,041 53,005 54,955 57,050 59,150 61,248 63,313 65,371 Yuerto Cortes 30,420 31,557 32,740 33,949 35,151 36,376 37,645 38,952 40,249 41,514 42,682 Mholuteca 31,875 34,111 36,474 39,002 41,672 44,480 47,434 50,553 53,835 57,265 60,782 ' -,iiudad Progreso 33,875 35,867 38,002 40,266 42,630 45,128 47,628 50,278 53,033 55,875 58,798 rela 22,216 22,874 23,524 24,167 24,777 25,328 26,040 26,709 27,343 27,925 28,476 Dan1! 12,853 13,424 14,036 14,673 15,322 15,958 16,640 17,309 17,986 18,659 19,362 Zmayagua 19,122 20,128 21,165 22,254 23,377 24,522 25,694 26,893 28,121 29,366 30,693 Oopan 14,353 14,973 15,547 16,134 16,722 17,286 17,893 18,479 19,055 19,612 20,211 Juticalpa 11,582 11,908 12,254 12,598 12,925 13,193 13,549 13,848 14,121 14,361 14,509 figuatepeque 15,014 15,898 16,837 17,832 18,870 19,948 21,005 22,101 23,235 24,399 25,579 ,FUENTE: CONSUPLANE  Page 1 of 3 Table 1.3: I4DURAS - ECONOMICALLY ACTIVE POPULATION SY SEX MND AGE 1970-1985 1970 1971 1972 1973 1974 1975 Total Nenl 1Woana Total Hen Uonen Total gbWomen Total men Women Total Men Women Total Men Women TOTAL 777,916 666,314 111,602 800,234 683,906 116,329 823,240 702,508 120,732 848,053 722,387 125,666 874.845 743,854 130,991 904,742 767,875 136,867 10- 14 52,974 48,820 4,154. 54,498 50.179 4,319 56,164 51,667 4,497 57,931 53,244 4,687 59,772 54,884 4,888 61,761 56,630 5,131 1S- 19 120,414 102,013 18,401 123,949 105,205 18,744 128,000 105,376 19,624 132.222 111,652 20,570 136,770 115,183 21,587 141,888 119,153 22,735 20- 24 116,566 96,320 20,246 120,846 99,591 21.235 125,942 103,521 22,421 131,614 107,885 23,729 137.584 112,461 25,123 144,150 117,563 26,587 25- 29 102,957 85,937 17,020 104,976 87,433 17,543 106,940 88,865 18,075 109,193 90,514 18,679 112,060 92,669 19,391 115,889 95,617 20,272 30- 34 88,164 74,407 13,757 89,880 75,713 14,167 91,582 76,994 14.588 93,396 78,349 15,047 95,427 79,881 15,546 97,794 81,689 16,105 35- 39 73,404 63,193 10,211 75,912 64,449 11.463 77,562 65,749 11,813 79,309 67,117 12,192 81,169 68,575 12,594 83,171 70,148 13,023 40 - 44 61,549 53,146 8,403 63,025 54,275 8,750 64,335 55,424 8,911 65.816 56,624 9,192 67,395 57.906 9,489 69,1iO 59,304 9,806 45- 49 50,261 43,727 6,534 51,574 44,835 6,739 52,941 45,985 6,956 54,369 47,180 7,189 55,845 48,413 7,432 57,376 49,692 7,684 50- 54 39,457 34,580 4,877 40,631 35,594 5,037 41,857 36,651 5,206 43,134 37,748 5,386 44,458 38.882 5,576 45,827 40,052 5,775 55- 59 29,750 26,154 3,596 30,756 27,033 3,723 31,820 27,965 3,855 32,939 28,942 3,997 34,098 29,953 4,145 35,293 30,993 4,300 60- 64 20,121 17,892 2,229 20,875 18.557 2,318 21,685 19,273 2,412 22,541 20,029 2,512 23,437 20,821 2,616 24,366 21,641 2,725 65- 69 12,451 11,218 1,233 12,968 11,683 1,285 13,528 12,188 1,340 14,125 12,725 1,400 14,751 13.288 1,463 15,397 13,870 1,527 70- 74 6,446 5,825 621 6,749 6,100 649 7,078 6,400 678 7,428 6,719 709 7,799 7,056 743 8,183 7,406 777 75 and more 3,402 3,082 320 3.595 3.258 337 3,806 3,450 356 4,036 3,659 377 4,280 3,882 398 4,537 4,117 420 15- 64 YEARS 702,643 597,369 105,274 722,424 61 8a5 109,739 742,664 628,803 113,861 764,533 646,040 118.493 788.243 664,744 123,499 814,864 685,852 129,012  Page 2 of 3 Tabl,e 1.3: UONDImAS - ECONOMICALLY ACTIVE POPULATION BY SEX AND AGE 1970-1985 1976 1977 1978 1979 1980 Total Men Women Total Man Women Total Men Women Total Men Women Total Men W TOTAL 936,505 793,248 143,257 970.508 820,415 150,093 1.006,761 849.391 157,370 1.044,433 879,353 165,080 1.083,520 910,303 173,217 10 - 14 63,804 58,443 5,361 65,969 60,365 5,604 68,458 62,602 5,856 70,560 64,446 6,114 72.597 66,221 6,376 15 - 19 147,435 123,491 23,944 153,457 128.179 25,278 159.825 133,111 26.714 166.407 138,178 28,229 173,071 143,270 29,R801 20 - 24 150,102 122,012 28,090 156,137 126,473 29,664 162,389 131,065 31.324 169.004 135.922 33,082 176,116 141,162 34.954 25 - 29 120,949 99,568 21,381 127,004 104,338 22,666 133,671 109,596 24,075 140,569 115,014 25,555 147,315 120,265 27,050 W 30 - 34 100,362 83,657 16.705 103,053 85,721 17,332 106,073 88,049 18,024 109,631 90.812 18,819 113,936 94,180 19,756 35 - 39 85,361 71,824 13,537 87.613 73,590 14,023 89,966 75.459 14,507 92,463 77,447 15,016 95,146 79,569 15,577 40- 44 70,988 60,839 10,149 73,002 62,488 10,514 75,118 64,220 10,898 77,299 66,002 11,297 79,505 67,798 11,707 45 - 49 58,955 51,009 7,946 60,583 52.363 8,220 62,266 53,762 8,504 64,032 55.232 8,800 65,834 56,725 9,109 50 - 54 47,249 41,265 5,984 48,731 42,525 6,206 50,250 43,816 6,434 51,825 45,154 6,671 53,361 46,448 6,913 5S - 59 36,501 32,037 4.464 37.741 33,107 4,634 39.016 34.203 4.813 40.326 35.328 4,998 41,674 36,485 5,189 60 - 64 25,334 22,496 2,838 26,345 23,391 2,954 27,389 24,314 3,075 23,454 25,253 3,201 29,528 26,196 3,332 65 - 69 16,069 14,474 1,S95 16,767 15,102 1,665 17,493 15,754 1,739 18.243 16,428 1,815 19.016 17,123 1.893 70 - 74 8,585 7.770 815 9,005 8,150 855 9,442 8,545 897 .9,896 8,955 941 10.364 9,378 986 75 and more * 4,811 4.363 448 5.10 4,623 478 5,405 4,895 510 5.724 5,182 542 6,057 5,483 574 15 - 64 YEARS 843,236 708.198 135,03d 873.66 732,175 141.491 905,963 757.595 148,368 940,010 784,342 155,668 975,486 812,098 163,388  Page 3 of 3 Table 1.3: HONDURAS - ECONOMICALLY ACTIVE POPULATION BY SEX AND AGE 1970-1985 1981 1982 1983 1984 1985 Total Men Women Total Men Women Total Men; Women Total Men Women Total Men Women TOTAL 1.124,216 942,467 181,749 1.166.506 975,830 190,676 1.210,510 1.010,455 200,005 1.256,349 1.046,415 209,934 1.304,137 1.083,776 220,361 10 - 14 74,683 68,043 6,640 76,720 69,815 6,905 78,755 71,577 7,178 80,835 73,375 7.460 83.003 75,249 7,754 15 - 19 179,866 148,427 31,439 186,876 153,721 33,155 194.034 159.094 34.940 201,271 164,487 36.784 208,515 169.843 38.672 20 - 24 183,771 146,837 36,934 191,162 152.868 39,014 200,371 159,171 41,200 209,158 165,662 43,496 218,162 172,257 45,905 25 - 29 153,786 125,246 28,540 160,235 130,176 30,059 166,852 135,209 31,643 173,820 140,495 33,325 181,327 146,188 35,139 30 - 34 119,188 98,326 20,862 125,250 103,138 22,112 131,818 108,354 23,464 138,595 113,715 24,880 145,278 118,960 26,318 35 - 39 97,838 81.679 16,159 100,514 83.771 16.743 103.436 86,059 17,377 106.864 88,758 18,106 111,063 92,086 18,977 40 - 44 81,697 69,574 12.123 83,901 71,356 12,545 86,176 73,191 12,985 88,582 75,132 13,450 91,182 77,230 13,952 - 45 - 49 67,734 58,302 9,432 69,711 59,943 9,768 71,750 61,633 10,117 73,842 63,366 10,476 75,979 65,130 10.849 50 - 54 54,919 47,761 7,158 56,485 49,077 7,408 58,079 50,415 7,664 59,732 51,800 7,932 61.464 53,252 8,212 55 - 59 43.068 37.682 5,386 44.506 38,916 5,590 45,977 40.177 5.800 47,467 41,451 6,016 48.965 42,727 6,238 60 - 64 30,604 27,137 3,467 31,690 28,082 3,608 32,795 29,042 3,753 33,932 30,028 3,904 35,107 31,048 4,059 65 - 69 19,814 17,840 1,974 20,636 18,580 2,056 21,482 19,340 2,142 22,348 20,117 2,231 23,231 20,908 2,323 70 - 74 10,846 9,814 1,032 11.343 10,262 1,081 11,857 10,725 1,132 12,386 11,203 1,183 12,935 11,698 1,237 75 and more 6,402 5,799 603 6.757 6.125 632 7.128 6,468 660 7.517 6,826 691 7,926 7,200 726 15- 64 YFtAS 1.012,471 840.971 171,500 1.051_230 811,048 180,182 1.091,288 902.345 188,943 1.133,263 934,894 198,369 1.177,042 968,721 208,321 So.ree: CONSUPLANE  - 55 - Table 1.4: RURAL POPULATION PROJECTIONS BY AGE, 1970-85 1970 1975 1980'- 1985 TOTAL 1,879,195 2,097,211 2,367,280 2,635,212 0 - 4 389,034 437,012 493,124 533,150 5- 9 301,651 346,374 391,494 439,801 10 - 14 236,350 269,313 308,450 343,206 15 - 19 181,237 201,269 228,014 252,566 20 - 24 139,906 158,407 177,082 199,077 25 - 29 122,009 128,497 151,154 171,284 30 - 34 106,668 111,364 121,277 143,263 35 - 39 91,881 97,333 104,871 114,593 40 - 44 78,085 83,769 91,564 99,383 45 - 49 64,793 70,991 77,955 85,752 50 - 54 52,429 58,286 64,961 71,468 55 - 59 40,960 46,388 52,542 58,754 60 - 64 30,101 34,755 40,016 45,445 65 - 69 20,624 24,379 28,709 33,346 70 - 74 12,905 15,618 18,916 22,538 75 - 79 7,104 8,942 11,114 13,696 80 y mas 3,458 4,544 6,037 7,890  - 56 - Table 1.5: PROJECTED RURAL POPULATION=,1l975-2000 ( in thousands) ACTUAL ESTIMATE PROJECTED 1975 1980 1985 19950 2000 Rural Population by Sex 2,097 2,367 2,635 2,893 3,124 Male 1,072 1,212 1,352 1,488 1,616 Female 1,025 1,155 1,283 1,405 1,508 Percentage of Total Population 67.8 64.1 60.3 56.6 44.8 Rural Population Age Structure 0-9 783 884 973 10-14 269 308 343 15-64 461 1,110 1,242 Over 64 53' 65 77 Rural Labor Force 597 673 756 840 930 10-14 54 61 68 15-64 522 586 657 Over 64 21 26 31 Rural Labor Force Population (%) 28.5 28.4 28.7 29.3 29.7 I! Based on a one-third decline of the total fertility rate. Source: CONSUPLANE and Bank estimates  -57 - Table 1.6: RURAL WORKING FORCE, 1974 (in thousands) Occupation Agriculture Blue Cattle Artisans Collar Other Total Forestry Workers Employers 35 2 - 2 39 Self-employed 189 20 - 8 217 of which: 1/ Farmers less than 3 has 101 - - 101 Farmers 3 to 4 has 24 - - 24 Farmers 5 to 20 has 48 - - 48 Farmers 20 to 50 has 15 - - 15 Wage earners 134 12 9 26 181 Non-renumerated family workers 103 3 - 1 107 Other - - - 5 5 TOTAL 461 37 9 42 549 1/ May include some employers Source: 1974 Population and Agircultural Censuses, Anuario Estadistico, 1975.  - 58 - Table l j: ANNUAL POPULATION GROWTH RATES BY DEPARTMENTS 1961 - 74 ( in percentages) Departments Total Urban Rural In-Migration . Gracias a Dios 4.89 - 4.89 Cortes 4.65 5.72 3.52 Colon 4.56 5.20 4.48 Atlantida 3.54 3.04 3.88 Francisco Morazan 3.50 5.11 1.15 Yoro 3.04 4.64 2.58 Out-migration Ocotepeque 0.20 1.15 0.38 La Paz 0.58 2.79 0.26 Intibuca 0.85 2.34 0.70 Valle 0.90 4.36 0.24 Lempira 1.02 2.52 1.00 Copin 1.39 3.64 0.96 Santa Barbara 1.77 0.47 1.91 Choluteca 1.94 4.85 1.41 El Paraiso 2.11 3.39 1.90 Equilibrium Islas de la Bahia 2.96 2.39 3.21 Comayagua 2.59 3.62 2.25 Olancho 2.41 3.63 2.19 Country 2.61 4.58 1.85 Source: CONSUPLANE, Taller de Poblacion, 1980  -59 - Table 1.8: PoDulation and Agricultural Regions- (1974) Area Actual Valley Population Population Population per Region (%) Farm Land Land!! (%) Density Valley Land (%) (%) (per km2) (per 2 West 16 35 3 23 35 2,030 Central 13 18 11 24 45 341 North-Central 13 5 4 7 13 148 South 4 10 8 9 50 179 Northwest 9 18 18 22 61 177 South-Central 19 8 15 6 7 58 North 8 5 16 8 24 65 East 18 1 25 1 1 5 Total 100 100 100 100 1/ Although the figures are somewhat older, they illustrate the interrelations of population, area, and farm land. 2/ Less than 20 percent gradient. Source: Caceres, Manuel A. Regionalizaci6n Agricola de Honduras, IICA, 1970.  Table 2.1: HONDURAS: LAND USE INTENSITY AND ANNUAL CROPS SHARE BY FARM SIZE, 1974 (in percentages) Farmr Size 1/ 2/ Cultivated In Pastures- Cultivated- Area in Annual Crops Less than 1 hectare 1.5 97.4 88.0 1 to less than 2 hectares 4.2 91.2 82.5 2 to less than 5 hectares 14.2 72.8 67.6 5 to less than 10 hectares 26.9 52.4 53.3 10 to less than 20 hectares 36.8 39.6 46.4 20 to less than 50 hectares 49.0 27.4 41.1 50 to less than 100 hectares 60.9 19.4 40.8 100 to less than 1,000 hectares 70.5 12.8 40.9 1,000 to less than 2,500 hectares 69.8 0.9 24.0 Over 2,500 hectares 43.3 . 0.9 9.8 Total 51.3 27.3 51.0 0 C_ 1/ Natural, improved and cultivated pastures. 2/ Crops and fallow land. Source: Agricultural Census, 1974.  - 61 - Table 2.2 HONDURAS: CROP DISPOSITION BY FARM SIZE, 1976 (Percentages) Farm size Marketed Farm Family Rent (hectares) r ete Consuniption Consumption Payment 0.6 - 1 14.0 11.3 73.4 1.3 1 - 2 18.6 9.4 70.7 1.3 2 - 3 36.1 8.4 54.5 1.0 3 - 5 43.7 7.5 48.2 .4 5 - 20 49.5 7.9 42.4 .2 20 - 35 42.1 8.4 49.5 .0 TOTAL 38.9 8.4 52.1 .6 Source: USAID, Agricultural Sector Assessment of Honduras, Annex K Table 2.3: HONDURAS: CROP DISPOSITION BY REGION, 1976 (Percentages) R n Marketed Farm Family Rent Total Regi.on Marketed Consumption Consumption Payment Sur 42.8 10.5 46.4 .3 100.0 Oriente 57.8 3.8 37.9 .5 100.0 Norte 50.2 8.5 41.2 .1 100.0 Centro Oriental 24.6 8.2 66.1 1.1 100.0 Cen. Occidental 28.5 10.9 60.4 .2 100.0 Occidente 22.9 9.1 66.6 1.4 100.0 Total 38.9 8.4 52.1 .6 100.0 Source: USAID, Agricultural Sector Assessment of Honduras, Annex K.  - 62 - Tahle 2.4: SMALL AND MEDIUM SIZE FARM INCOME BY SnURCRPS, 1976 (in lempiras and percentages) Farm size Total net Family labor Farm surplus Outside income (in hectares) income Amount % Amount % Amount % 0-2 896 219 25 209 23 468 52 2-3 1,199 326 27 378 32 495 41 3-5 1,284 419 33 396 31 468 37 5-10 2,161 554 26 1,041 48 566 26 10-20 2,384 587 25 1,375 58 "422 18 Source: USAID. INVEST, ATAC Expanded Survey of the Rural Poor in Honduras.  - 63 - Table 2.5. HONDURAS: NET FARM INCOME BY FARM SIZE, 1976 Farm Size Farm 1/ Origin of Income (X) (hectares) Surplus (US$) Crops Livestock Forestry and Other 0-2 105 73 25 2 2-3 189 67 28 5 3-5 198 58 31 11 5-10 521 69 30 1 10-20 687 56 40 4 1/ Excluding family labor income. Source: ATAC Survey (Revised)/INVEST. Table 2.6: HONDURAS: SOURCES OF FARM INCOME, 1976 (in percentages) Total Farm Size Farm Income Outside Income Total Net Income 1/ (in hectares) (US$) 0-2 61.5 38.5 100.0 448 2-3 72.4 27.6 100.0 600 3-5 76.3 23.7 100.0 642 5-10 84.9 15.1 100.0 1,081 10-20 90.4 9.6 100.0 1,192 1/ Including family labor imported income. Source: ATAC Survey (Revised)/INVEST.  - 64 - TIal 2.?l: HONDURAS: SMALL FARMS RELATIVE LEVELS OF INCOME BY REGION, 1976 (indices) 1/ Less than 2-3 3-5 Region 2 Hectares Hectares Hectares Atlantic Littoral 2/ 100 100 100 North 45 68 79 West Central 32 67 71 Northeast 32 69 61 South 32 102 104 West 22 77 88 East Central 20 67 72 1/ Atlantic littoral income equals 100. 2/ Farmers in the Atlantic littoral region in the 2-3, 3-5 hectares group earn only about 49 percent and 55 percent of the income of the farmers with less than 2 hectares because of non-farm incomes. Source: ATAC Survey (revised)/INVEST. Table 2.8: HONDURAS: SMALL FARMS RELATIVE LEVELS OF FARM INCOME, 1976 (indices) 1! Less than Region 2 ha 2-3 ha 3-5 ha Atlantic Littoral 100 100 100 North 29 78 120 West Central 61 99 80 Northeast 34 86 89 South 36 108 120 West 31 107 120 East Central 27 74 91 1/ Atlantic Littoral income equals 100. Source: ATAC Survey (revised)/INVEST.  - 65 - Table 2.9: HONDURAS: LABOR UTILIZATION BY FARM SIZE, 1976 (in man-days per farmer per year) Work Work Z X Farm Siize in Farm outside Farm Total Outside of Available (hectares) Farm Man-days 1/ 0-2 73 85 158 54 69 2-3 109 66 175 38 76 3-5 140 46 186 25 81 5-t) 185 32 217 15 94 10-20 196 27 223 12 97 20-35 222 5 227 2 99 1/ Assuming that available man-days are about 230 per year. This is a lower number than the usual norm of 260 man-days per year which assumes a five-day week over the whole year considered typical for a more urbanized labor force. Estimatep of excess labor will depend significantly on the standard applied, which must be reasonable for the spiecial characteristics of agricultural production. Source: ATAC Survey (Revised), INVEST. Table 2.10: HONDURAS: TECHNICAL ASSISTANCE BY FARM SIZE, 1976 (Percentages) Farm Size Technical No Technical Unreported Total Fha tresi Assistance Assistance (hectares) Received 0.6 - 1 6.6 91.7 1.7 100.0 1 -2 6.5 93.5 0.0 100.0 2 - 3 11.0 88.1 .9 100.0 3 - 5 9.5 89.2 1.3 100.0 5 - 20 11.7 87.1 1.2 100.0 20 A35 , 22.4 76.1 1.5 100.0 Source: USAID, Agricultural Sector Assessment of Honduras$ Annex K  - 66 - Table 2.11: HONDURAS: EDUCATIONAL LEVEL OF FARMERS BY REGION, 1976 (Percentages) Primary Region Secondary (6 years) Literate Illiterate Total South 1.9 3.0 50.5 44.6 100.0 East 1.6 7.9 45.3 45.3 100.0 North 0.9 8.4 50.3 50.3 100.0 East Central 0.3 2.3 39.0 58.4 100.0 West Central 3.3 11.7 59.2 25.8 100.0 West 0.6 6.1 47.4 45.9 100.0 TOTAL 1.4 6.4 48.3 43.8 100.0 Source: Agricultural Sector Assessment of Honduras, Annex K T-able 2.12: HONDURAS: EDUCATIONAL LEVEL OF FARMERS BY FARM SIZE, 1976 (Percentages) Farm size Secondary Primary Literate Illiterate Total (hectares) (6 years) 0.6 - 1 0 5.8 38.8 55.4 100.0 1 - 2 1.8 3.5 40.5 54.3 100.0 2 - 3 0.9 6.9 47.2 45.1 100.0 3 - 5 1.1 6.1 51.5 41.4 100.0 5 - 20 1.9 7.3 51.4 39.3 100.0 20 - 35 0.0 9.0 56.7 34.3 100.0 TOTAL 1.4 6.4 48.4 43.8 100.0 Source: Agricultural Sector Assessment of Honduras, Annex K  Table 3,1: HONDURAS LAND REDISTRIBUTION BY PEASANT ORGANIZATION ANACH UNC FECORAH INDEPENDENTS TOTALL Land Granted Land Land Land Land Land Per Agrarian Reform Camp. Granted Camp. Granted Camp. Granted Camp. Granted Camp. Granted Member Regions Groups Members Has. Groups Members Has. Groups Members Has. Groups Members Has. Groups Members Has. Has. Atlantic Litoral 98 2,259 17,867 12 186 1,089 57 2,538 32,741 41 2,253 13,244 208 7,236 64,941 9.0 Northern 189 6,043 23,475 116 3,135 13,844 36 1,582 9,876 69 1,987 9,408 410 12,747 56,603 4.5 ~ Western 68 2,324 8,913 46 953 1,663 4 119 610 20 568 1,802 138 3,964 12,988 3.3 Central (Comayagua) 47 1,253 6,049 44 1,151 10,725 1 42 319 14 517 3,307 106 2,963 20,400 6.9 South 66 1,259 6,663 74 1,808 9,277 51 987 7,039 31 780 3,578 222 4,834 26,557 5.5 East Central 50 1,156 7,407 9 165 921 4 129 1,153 45 1,016 10,501 108 2,466 19,982 8.1 Olancho 42 634 2,786 49 657 4,374 5 87 381 9 122 1,071 105 1,500 8,612 5.7 TOTAL 560 14,928 73,160 350 8,055 41,893 158 5,484 52,119 229 7,243 42,911 1,297 35,710 210,083 5.9 Source: Instituto Nacional Agrario. Annual Operating Plan, 1980  Table 3.2 : HONDURAS - AGRARIAN REFORM "CONCENTRATION"PROJECTS, DECEMBER 1978 Name of Project Department Number of Number of Land Allotment Cult, per Proportion Groups Members Total Cultivable a! Member Cultivable ----------- Hectares ------------- percent-- Bajo Aguan Atlantida 81 4,762 47,485 47,485 10.0 100 La Masica Atlantida 61 1,080 7,266 6,475 6.0 89 Puerto Arturo Atlantida 28 526 4,223 3,459 6.6 82 Tabaco Cortes 19 667 2,214 1,580 2.4 71 Guaymas Cortes 53 1,546 6,523 5,746 3.7 88 1 San Manuel Cortes 31 938 5,705 5,379 5.7 94 x San Bernardo Choluteca 82 2,222 11,830 8,769 4.0 74 Ola-Monjaras Choluteca 27 508 2,736 2,396 4.7 88 Jamastran El Paraiso 9 181 1,943 1,598 8.8 82 TOTALS 391 12,430 89,925 82,887 6.7 92 a/ According to group's appraisal. Source: INA"Resumen de Datos Generales del Sector Reformado, December 1978." No breakdown available of 1979 total of 12,652 members in 403 groups on 92,838 has.  Table 3.3: LOWER AGUAN VALLEY DEVELOPMENT (as of June 1, 1980) TARGETS ACTUAL RESULTS % REALIZED CATEGORIES Stage II l/S.I+II Stage II S.I+II Stage II S.I+II Land (Ha) Cultivated With: African Palm 6,000 10,500 7,305 9,820 121.0 96.7 Citrus Fruits 1,870 2,000 1,674 1,804 89.5 89.9 Basic Grains2/ 25,200 13,605 53.9 Land Cleared 7,200 13,522 41,049 187.8 Of which: cultivable (32,944) cultivated (15,094) Number of Cooperatives 70 69 98.6 Number of Families 3,000 6,000 557 2,761 18.4 46.0 1/ Stage I is from 1975 to mid-1977 Stage II is from mid-1977 to mid-1982 2/ These figures are the sum of the cultivated area for each year. The actual number of hectares cultivated with basic grains is 2,375. Source: IDB  - 70 - Table 3.4:HONDURAS - AGRARIAN REFORM PRIORITY VALLEYS, 1978 VALLEY DEPARTMENT AREA (Hectares) Sula Cortes and Yoro 230,500 Aguan: Upper Yoro 30,500 Middle Yoro 45,700 Lower Colon 138,700 Total 214,450 Atlantic Coast and Atlantida, Colon Lean Valley Yoro 107,400 Guayape Olancho 99,200 Choluteca Choluteca 120,000 Agalta Olancho 56,700 Comayagua Comayagua and La Paz 49,500 Nacaome and Amates Coast Valle 36,400 JamastrSn El Paraiso 17,940 QuimaistSn Santa Barbara 28,200 Paulaya and Sico Colon 27,750 Talanga Fco. Moarazan 26,800 Siria Fco. Moarazan 20,200 Patuca Olancho 17,600 La Entrada Copan 16,200 Cuyamel Cortes 15,300 Naco Sta. Barbara and Cortes 12,900 Sensenti Ocotepeque 5,000 Nueva Ocotepeque Ocotepeque 6,000 El Negrito Yoro 9,400 Morazan Yoro 7,300 Zamorano Fco. Morazan 4,300 San Juan de Flores Fco. Morazan 2,000 Moroceli El Paraiso 12,000 Lepaguare Olancho .13,200 Azacualpa-Guayambre Olancho 15,400 Gualaco Olancho 6,300 Guarabuqu; Fco. Morazan 2,075 Yoro Yoro 30,400 Jalan El Paraiso 2,250 Villa San Francisco Fco. Morazan 5,100 Jesus de Otoro and Masaguara Intibucg 14,400 Salvadoran border area La Paz 7,600 TOTAL 1,239,765 Source: Programa del Catastro Nacional, unpublished data.  - 71 - Table 3.5: HONDURAS - AREA AND PRODUCTION TARGETS FOR SPECIFIC CROPS IN REFORM SECTOR, 1980 Reform Sector Percent of Total Sector Crop Area Production Area Production (1000 has) (1000 M.T.) % % Maize 47.3 81.2 15 30 Rice 4.0 10.9 24 41 Beans 4.5 5.3 7 12 Sorghum 1.0 1.4 2 3 All basic grains 56.8 98.8 12 20 Sesame 1.9 1.5 n.a. n.a. Cotton 3.3 5.3 27 21 Yuca and Potatoes 0.5 2.8 n.a. 4 Tobacco 0.3 0.7 5 8 Sugar cane 1.3 87.5 2.6 30.3 Banan&l/ 2.0 95.0 10 7 Plantain 1.0 855.0 n.a. 1 Citrus 1.4 2.8 n.a. 5 African Palm 2.9 29.6 39 46 Cashew 2.5 - 100 Coffee and Cacao 1.1 1 Total Crops 75.0 1/ Including Isletas production. Sources: INA Plan Operativo y Presupuesto 1980, Table 3, and Central Bank.  TABLE 3.6: CROP TARGETS FOR THE REFORM SECTOR, 1980 IMPROVED TECHNOLOGY TRADITIONAL TECHNOLOGY TOTAL Area Production Area Production Area Production (Has.) (Metric Tons) (Has.) (Metric Tons) (Has.) (Metric Tons) Basic Grains 26,165.0 - 30,666.0 - 56,831 - Corn 21,178.0 42,402 26,120.0 38,755 47,298 81,157 Rice 2,846.0 8,130 1,178.0 2,806 4,024 10,936 Beans 1,419.0 1,179 3,049.0 4,079 4,468 5,258 Sorghum 722.0 1,162 319.0 211 1,041 1,373 Annual Crops 6,821.0 - 328.0 - 7.149 - Yuca 66.0 1,197 4,256 368 5,453 Potatoes 128.0 1,741 - 128 1,741 Chile 166.0 1,073 - 166 1,073 Vegetables 245.0 - 7.0 520 252 520 Soya 84.0 125 - - 84 125 Watermelon 363.0 726,000 14.0 28,000 377 754,000 Melon 300.0 192,771 - - 300 192,771 Pineapple 21.0 693 5.0 50 26 743 Sesame 1,850.0 1,480 - - 1,850 1,480 Tobacco 294.0 705 - 5 294 710 Cotton 3,304.0 5,349 - 3,304 5,349 Semi Permanent Crops 1,530.0 - 872.0 - 2,402 - Plantains 225.0 259,349 810.0 595,750 1,035 855,099 Bananas 48.0 874 - - 48 874 Sugar Cane 1,257.0 84,755 62.0 2,732 1,319 87,487 Permanent Crops 7,650.0 - 269.0 - 7,919 - Coffee 292.0 - 172.0 - 464 - Cacao 560.0 - 93.0 - 653 - Citrus 1,373.0 2,793 4.0 - 1,377 2,793 Cashew 2,501.0 - - - 2,501 - African Palm 2,900.0 29,579 - - 2,900 29,579 Tropical Fruits 24.0 - - - 24 - TOTAL 42,166.0 - 32,135 - 74,301 - Source: INA, Plan Operativo Anual y Presupuesto, 1980  - 73 - Table '3.7: RELATIONSHIP OF LAND AREA TO CROPS SEEDED BY REFORM GROUP, 1980 Affiliation ANACH FECORAH UNC INDE. TOTAL (in percentages of total area) A. ANNUAL CROPS 1. Corn 64.0 37.7 53.0 64.2 53.5 2. Sorghum 3.3 0.6 12.3 3.7 4.2 3. Beans 5.1 1.0 2.0 1.7 2.5 4. Rice 14.5 4.4 9.9 14.1 10.3 5. Sesame 0.1 - 0.6 0.1 0.1 6. Cotton 2.9 13.3 5.1 10.1 8.1 7. Yucca 0.2 0.1 0.2 0.2 0.3 8. Watermelon 0.4 0.1 0.1 0.3 0.1 9. Melon 0.1 - 0.1 0.3 0.2 10. Others 0.5 0.4 0.2 0.3 0.3 TOTAL A 91.1 57.6 83.5 95.0 79.6 B. PERMANENT CROPS 1. Banana 1.7 10.6 0.1 - 4.- 2. Plantain 2.5 6.5 0.3 0.7 3.0 3. Coffee 0.5 - 0.2 0.2 0.1 4. Sugar Cane 0.7 10.8 0.2 2.8 4.3 5. African Palm - 12.0 - - 3.9 6. Cashew 0.6 0.6 1.6 1.2 0.8 7. Pineapple - - 0.1 - 0.2 8. Citrus 0.3 0.9 - - 0.4 9. Others 2.6 1.0 14.0 0.1 3.7 TOTAL B 8.9 42.4 16.5 5.0 20.4 TOTAL 100.0 100.0 100.0 100.0 100.0 Source:INA  Table 3.8: HONDURAS - SELECTED INDICATORS OF 34 AGRARIAN REFORM SETTLEMENTS SURVEYED IN THE SOUTHERN REGION TOTAL NUMBER OF MEMBERS 613 LAND USE AVERAGE PER SETTLEMENT 18.3 AGGREGATE AVERAGE PER MEMBER AGE DISTRIBUTION (%) TOTAL LAND ALLOTMENT, HAS 4,370 7.1 Less than 20 years 8.8 21 - 25 " 14.7 CULTIVABLE, HAS 2,011 4.7 26 - 30 " 11.8 % 46 31 - 40 " 25.0 1/ 41 - 50 " 17.5 CULTIVATED,- HAS 1,720 2.8 51 years and older 22.2 % of cultivable area 85 AVERAGE PER Total 100.0 CROPPING PATTERN HAS X NO. OF GROUPS GROUP (Has) TOTAL POPULATION 3,478 Maize 2/ 717 31.1 29 24.7 AVERAGE PER MEMBER Sorghum 2/ 509 22.1 21 24.2 AVERAGEHOLD 5ER MEMRice 147 6.4 6 24.5 HOUSEHOLD 5,7 Beans 130 5.9 5 26.0 Sesame 151 6.6 13 11.6 Sugar Cane 111 4.8 6 18.5 Watermelon 8 0.4 3 2.7 Melon 50 2.2 5 10.0 Cashew Trees 235 10.2 8 29.4 Pasture 237' 10.3 2 118.5 TOTAL 2,295 100.0 Cattle, No. 669 10 67 1/ Annual crops and sugarcane, physical area . 2/ Approximately 345members double-cropped. Source: Computed from preliminary tabulations of INA Sample SurveTy' of 1980.  - 75- TABLE 3.9: HONDURAS: PERSONNEL OF THt AGRARIAN REFORM INSTITUTE, 1981 AREA OF ASSIGNMENT SPEC IALTY Land Acqui- Concen- SE L sition and Settlements tration Management- Administration "Consolidation" Projects Total Lawyers 46 11 2 59 Public Administrators 10 3 13 Economists 26 3 29 Auditors 5 1 6 Ingen. Agron. 9 2 2 62 75 Agronomos 3 36 7 66 112 Veterinarians 1 1 Architects and Engineers 1 15 3 19 Journalists 2 2 Nutritionists, nurses, teachers 5 5 "Other middle level" 85 68 255-Z 196-&/ 604 Sub-total 187 132 264 342 925 Other personnel 1,036 Total 1,961 1/ Includes regional headquarters staff. 2/ Presumably mostly field promotores. Source: INA, unpublished data.  Table 3.10: HONDURAS: OFFICIAL SUPPORT, AVERAGE ANNUAL WHOLESALE, AND CIF IMPORT PRICES OF BASIC GRAINS, 1973/74 TO 1979/80 (Lempiras per quintal) M a i z e B e a n s R i c e Y e a r Support Wholesale Import-1 Support Wholesale Import- Support 2/Wholesale Import/ 1973/74 6.75 8.11 30 15.00 24.65 -- 18.64 28.00 45 1974/75 8.00 12.52 14 20.00 24.75 23 22.31 38.59 36 1975/76 14.00 11.67 37 20.00 25.87 -- 26.15 40.42 42 1976/77 10.00 16.20 11 24.00 30.81 45 24.62 43.38 22 1977/78 11.25 16.44 11 24.00 43.79 -- 29.23 50.75 28 1978/79 12.50 13.63 15 28.00 29.71 68 32.31 55.82 23 1979/80 13.75 17.94 14 38.00 64.17 73 35.38 62.68 36 1/ Calendar year 1974, etc. Quantity imported divided by value imported, rounded to nearest Lempira. 2/ Price for paddy rice Source: IHMA, unpublished data and DGEC, Comercio Exterior.  IBRD 15577 PG SS~~~~~~~~~~~8 87r aS6RA MARCH AL8' B ELI ZE ,/ ; ss r-ps-- i J _ O r | ; JC HONDURAS >~~~~~~~~~~~~~~~~ ~R~IL - U AHGNAJRAS ,,.' E M A L A .--'ca q > / S g 9 . / ' ,_ L 5EAAROGJ4 - ITo - A JLsMW - tPlrrne - u ELsUnono - --~SR'' tba COP PE I5*A-555 C 1 J R A I S \ t o n J r o m 1 , 8 2 6 4 4 W _ u 5 A l - - / Sa n F4c ' C S T A \ t~~~~~~~~~~~~~~~C Ri1 Y, Jor 84 \ ' ' ' 9 _ rmsel f/-~' ~~~~~~~~~~~~~~~~~~- 1 tU6E' A,ses / C' -ra t / -K A -- I / <HNDUASP G U A TA' E M A L A 7 E C -- T , ' L . D ~ ~ ~ /Facc C*MCEjZ!|~R \ kPnAtmdrrnNS_- GAE/AT UFCDOD N Ko,,. CmNTw Mor o I) /L Q _ WlkhABank,Slldff ~ ~ C,opsoelocosst0 -1 ZQp l-;050/ ?' *K USAIN * NTRAINLBUDRE y a d o m e w o n z h e r eCgs c s G o o o o o '/ ,_ ,, 5 s , s i 7lu l s EoI I 13 ~ ~ ~ ~ P 67' 5 d8 ' "/.AR Mo/s _oto vcses 86 5 4 DC GA E REQ DE Asoc PA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~CAOD Es,Sq - ASssssQss/oAsGRA A TEGCIAL EMAA H N URA A~~ A 29~~~~1 Am sossPo Vf~ ~~~L " 'A1' EcC CEP'' Moo sop oA- S,PWR YTMTRNPRAIO EWR N,,I,, ~ ~ ~ Ass~ecsoA_ A '__ ADR 550 A Noosossse 0 -. GA KS s-iJUT''A MAINf PORTS,, 1' ''S4t~~~i YA0 U P'IIAR s,- IVR ofssssdsso' - ~ PoE JSoo .. \ 051AARTATOEER- NTENATONA---NDA-E 5,5555205' CD >7. C/DC ~~~~~~~~s - EsHO DMUCRAS -14'S E ..Cssosssss/Vooo S SL'A   8985 8'o 4a-oo a8 If4 t6'00' 85 as^co' 84 IBRD-16294 oc -RI,`~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'8 982 Oocoo ,dHONDURAS ,/and AGRARIAN REFORM SETTLEMENTS C A RI / 6 6 A NV 5 f A Agricultural Regions L 'r941 R<I/ s/and :\ -J 89,00 0< -0 6 ? P40 48-:90444 o~ ~~ ~~~~~~~~ 5< 9v'' ''