FILE COpy WORLD BANK (IBRD) INTER-&~ERICAN DEVELOP~ffi~T B~~K (IDE) UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPI1ENT (AID) WORKING PAPERS - :,":-' REPORT NO. 971-HO '" ; HONDURAS AGRICULTURAL/RURP.L SECTOR SURVEY (In Four Volumes) Volume IV Annexes 8 - 15 2.n-:: Statistical Annex January 1978 Document of: World Bank Latin American and The Caribbean Regional Office Projects Departmen~ (Agriculture) 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 the authorization of the World Bank, IDB, AID. or the Government of Honduras. Conversion Rates Currency Unit Lempira (L) uS$($) 0.50 L 1.00 $l.00 = L.2.00 Ton (t) = metric ton (miless otherwise specified) Quintal (qq) 100 pounds (lb) Hanzana (mz) = a.? hectare (ha) approximately Hectare (ha) = 2.47 acres TABLE OF CONTENTS Page No. PREFACE I. THE NEED FOR CH.A:tiGE ................................... 1 Sector Performance and Characteristics ••••••••••• 2 Foreign Trade •••••••••••••••••••••••••••••••••••• 3 Rural Population and Living Levels ••••••••••••••• 7 Public Expenditures •••••••••••••••••••••••••••••• 10 " alance of Payments Outlook •••••••••••••••••••••• B 10 Conclusions •••••••••••••••••••••••••••••••••••••• 12 II. OPPORTUNITIES FOR CHANGE •••••••••••••••••••••••••••••• 13 The Natural Resource Base •••••••••••••••••••••••• 13 Land Use and Yields •••••••••••••••••••••••••••••• 14 Conclusions •••••••••••••••••••••••••••••••••••••• 16 III. CONSTRAINTS ON CHANGE ••••••••••••••••••••••••••••••••• )7 The Public Administration •••••••••••••••••••••••• 17 Trained Manpower ••••••••••••••••••••••••••••••••• 20 Roads •••••••••••••••••••••••••••••••••••••••••••• 22 Research and Extension ••••••••••••••••••••••••••• 23 Improved Seed and Modern Inputs •••••••••••••••••• 24 Credit ••••••••••••••••••••••••••••••••••••••••••• 25 Marketing and Pricing •••••••••••••••••••••••••••• 2~ Conclusions •••••••••••••••••••••••••••••••••••••• 28 IV. THE PROSPECTS FOR CHANGE .............................. 29 Land Redistribution and Forest Management •••••••• 29 Finance for Rural Development •••••••••••••••••••• 29 Conclusions •••••••••••••••••••••••••••••••••••••• 31 V. JUDGEMENTS AND SUGGESTIONS •••••••••••••••••••••••••••• 32 Point One: The Landless and the Small Farmers •• 32 Point Two: Forestry Development •••••••••••••••• 34 Point Three: The Commercial Farm Subsector ••••••• 35 Point Four: Rural Roads •••••• -••••••••••••••••••• 36 Point Administrative Reform and Five: Personnel Development ••••••••••••• 36 Point Six: Research, Extension arid Improved Seed ••••••••••••••••••••• 39 TABLE OF CONTENTS (Continued) Page No. ·V. JUDGEr1ENTS AND SUGGESTIONS (Continued) Point Seven: A Rice Project •••••••••••••••••• 42 Point Eight: Irrigation, Drainage and Flood Control ••••••••••••••••• 42 Point' Nine: Agro-Industry ••••••••••••••••••• 43 Point Ten:· Fisheries ••.:.:.":..: ... ~ ••.•..•.•••• 43 Point Eleven: Product Demand Estimates •••••••• 43 Point Twelve: Credit and the BANAFOM •••••••••• 44 Point Thirteen: Grain Storage Facilities •••••••• 44 VI. FOREIGN SUPPORT FOR THE RURAL SECTOR •••••••••••••••••• 45 • Project Possibilities •••••••••••••••••••••••••••• 45 The Management of Foreign Support •••••••••••••••• 50 No. 11146 Relief and Transportation No. 11147 Rainfall, Watersheds, Irrigation and Electrification No. 11148 Land Use Potential No. ,11149 Forests and Forest Industlies No. 111.50 Agrarian Reform Sites, Farm Credit Offices, Grain Storage Facilities, and Proposed Research-Extension Activities ANNEXES 1 The Natural Resource Base for Agriculture 2 The Demand Outlook for Farm Products 3 Regional and International Trade Trends in Honduran Agricultural Commodities 4 Land Tenure and Agrarian Reform 5 Expansion Possibilities in Forestry 6 Fisheries . 7 Agricultural Credit '" ,; " 8 Irrigation ~ 9 Roads and Other Rural Infrastructure " 10 Expanding Agro-Industry (and Handicrafts) , , 11 12 Education and Training in Agriculture Agricultural Product Marketing and Pricing '. 13 Public Finance for Rural Development 14 Technical Assistance for Rural Devel~pment 15 The Organization and Administration of the Public Services to Agriculture STATISTICAL ANNEX PREFACE This document reproduces for purposes pf convenient reference the working papers prepared by a joint AID/IDB/IBRD agricultural/rural sector survey mission which visited Honduras in 1974. These papers were discussed with Government officials in May of 1976, and a follow-up discussion took place in March of 1977. Representatives of CIDA (Canada), UNDP, CABEI, IICA/OAS and other interested agencies took part in the latter discussion. -: -:. -' , The document is in four volumes: Vol. I - The General (Summary) Report (English); Vol. II - The General (Summary) Report (Spanish); Vo~. III - Annexes 1-7 (English); and Vol. IV - Annexes 8-15 (English). The purpose of the mission was to assist the Government in studying its strategy, policies, programs, and prpjects for increasing agricultural production and improving rural living levels. The study was intended to provide a basis for a continuing dialogue between the Government and foreign assistance agencies concerning the develop ment of the rural sector of the Honduran economy. The papers are selective in ccverage and judgmental in nature. ~he ben~ra~ KepOrt out~~nes tne'broad background and reasoning leading to the principal observations and major findings and suggestions. Statistical data and more detailed comment are presented in the Annexes. The mission is grateful for the support received from the Government and the private sector in preparing the papers, and for the highly constructive response of the Government to the mission proposals. r January 1978 • nmICE PREFACIO P~rrafo I. l:ECESIDAD DE CAMBIO Desemper.o y caracteristicas del sector 1 .2 Poblacion rural y nivel de vida 1 .24 Gasto spublico s 1 .34 Perspectivas de la balanza de pagos 1 .37. Conclusiones - :~'-"" 1.42 II. oPORTUNIDADES DE CAMBIO Base de recursos naturales 2.2 Usos y rendimiento de las tierras 2.8 Conclusiones 2.' 2 • III. RESTRICCIONES QUE SE OPONEN AL CAMBro La Administracion publica 3.2 Personal calificado 3. 1 7 Carreteras y caminos 3.27 Investigacion y extension 3.30 Semi11as mejoradas e insumos modernos 3.43 Credito 3.48 Comercializacion y precios 3.56 Conclusiones 3.63 . IV; JoI ER.::>1' ~ljT .L vAS lJ~ ljAJl'llj.LU • Redistribucion de las tierras y manejo de los bosques 4.2 Financiacion del desarrollo rural 4.4 Conclusiones 4.13 V.. JUICIOS Y SUGERENCIAS Punto 1: Campesinos sin tierras y pequenos 5:3" agricultores Punto 2: Desarrollo forestal 5.15 Punto 3: El subsector de la agricu1tura comercial 5.18 Punto 4: Caminos rurales 5.23 Punto 5: Reforma administrativa y capacitacion . . del personal . 5.25 Punto 6: Investigacion, 'servicios de extension y sem1l1as mejoradas 5.39 Punto 7: Un proyecto arrocero 5.46 Punto P: Riego, drenaje y proteccion contra inundaciones 5.48 funto 9: Agroindustrias 5.51 Punto 10: Pesca 5.52 Punto 11: Cllculo de la demanda de productos 5.5'3 Punto 12: El credito y e1 BANAFOM 5.54 Punto 13: Instalaciones de almacenamiento para granos 5.56 - ii VI. . ASISTENCIA.EXTERNA AI.. SECTOR RURAL Fosibles proyectos 6.2 Administracion de la asistencia externa 6.2? AT El!D ICE 1 Una 10.1 ternativa F ara La. Estrategia.. del Desarrollo .Agricola/Rural y E1 Programa de Asistetle±a ·Externa MAPAS 1!0. 11146 Relieve y Transportes No. 11147 Frecipitacion fluvial, Cuencas Hidrograficas,Riego y Electrificacion No. 11148 Uso Fotencial de la Tierra No" 11149 Bosques e Industrias Forestales No. 11150 Lugares de Reforma Agraria, Oficinas de Credito Agricola, e Instalaciones de Almacenamiento para Granos ANEXOS Los Recur'sos-}Taturales como Base para la Agricultura 2. Froyecciones de la Demanda de P roductos Agropecuarios 3 Tendencias del Comercio R~gional e Internacional de Productos Agricol_as en Honduras. 4 Tene}'~c~a _de la Tierra y la Reforma' Agraria 5 Fosibilidades de Expansion Forestal 6 Pesoa 7 Credito Agricola P Riego 9 Caminos e Infraestructura Rural 10 Expansion de la Agro-Indus~ria (y Artesanias) 11 Frlucacion y Capacitacion en Agricultura 12 Mercadeo y Precios de los Froductos Agricolas 13 Financiamiento Fublico para el Desarrollo Rural 14 Asistencia Tecnica para el Desarrollo Rural 15 La Organizacion y Administracion de los Servicios publicos para la Agricultura Anexo Estadistico PREFACIO Este informe reproduce, con el proposito de proporcionar una fuente conveniente de referencia, los informes de trabajo preparados por una mision conjunta prganizada por el BIRF, el BID y la AID para el reconocimiento del sector agropecuario/rural, la que visitS Honduras en 1974. Los diferentes trabajos que contiene fueron discutidos con funcionarios del Gobierno en mayo de 1976, y en una reunion adiciona1 que tuvo 1ugar en marzo de 1977. En esta ultima discusion tomaron parte representantes de CIDA (Canada), PNUD, BCAIE, IICA/OEA Y otras agencias interesadas en e1 tema. .....' : ~ -~: f E1 documento se divide en cuatro vo1umenes: Vo1umen I E1 Informe General (Resumen) (En ingles); Vo1umen II E1 Informe General (Resumen) (En espano1); .. Vo1umen III Anexos 1-7 (En ing1es); y Vo1umen IV Anexos 8-15 (En ingles). " E1 objetivo del estudio fue e1 de asistir a1 Gobierno en el examen de 1a estrategia, politicas, programas y proyectos para el incremento de 1a produccion agricola y e1 mejoramiento del nive1 de vida rural. E1 informe tiene la intencion de suministrar una base para un dialogo continuo entre e1 Gobierno y las agencias extranjeras de asistencia respecto a1 desarrollo del sector rural en la economia hondurena. Los trabajos presentados son selectivos en cuanto a su cobertura y en su natura1eza representan juicios basaoos en observaciones y datos :: :::.:::'c!:s po:: :.:: ;;:..!:..;;.or.. ::::: :;:.:.~orw.e G.::UC.l.d:i. ut::scl..i..be a grandes rasgos los antecedentes generales del sector y los criterios que condujeron a las observaciones mas importantes y a los principa1es hal1azgos y sugerencias. Los datos estadisticos y un comentario mas detallado sobre los divers os aspectos del estudio se presentan en los Anexos. La mision agradece el apoyo recibido del Gobierno y del sector privado en 1a preparacion de estos documentos, asi como por la respuesta a1tamente constructiva del Gobierno a las propuestas presentadas por la mision. Enero de 1978 ANNEX 8 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY IRRIGATION Table of Contents Paragraoh No. Present Position 2 3 Rainfall Distribution 4 - 5 Water Supply for Irrigation 6 - 11 Ongoing Government Projects 12 - 26 Comayagua Valley 13 - 22 San Juan de Flores 23 - 26 Project Studies 27 - 77 Agua Caliente 28 - 30 Alto Aguan 31 - 35 Choluteca 36 - 41 Cuyamapa 42 - 47 Florida-La Entrada 48 - 52 Guayape - Juticalpa Sector 53 - 56 Otoro 57 - 58 Quimistan 59 - 63 Siria 64 - 68 Talanga 69 - 72 Nacaome 73 - 77 The Sula Valley 78 - 87 Judgments and Recommendations 88 - 107 San Juan de Flores and Comayagua 91 - 95 Other Project Proposals 96 - 102 Organization and Inter-Agency Cooperation 103 - 105 Water Law 106 Private. I~rigation_.. 107 Appendix 1 Indicative Moisture Deficiency Estimates 2 Surface Water Data 3 A Note on Salinity in the Comayagua Valley Project Area 4 Sula Valley Flood Control 5 Principles of Irrigation and Drainage ANNEX 8 Page 1 IRRIGATION 1. Honduras has a substantial water resource available for use in expanding irrigated agriculture. The lengthy dry periods which occur ea~h year in most parts of the nation and the rapidly shrinking land/man ratio suggest that increasing emphasis should be placed on irrigation studies and development over the medium term. PRESENT POSITION • 2. An estimated 28,600 ha were in irrigation schemes in the early 1970s. Of these, about 10,000 ha were in Government projects; about one third of the commanded area of some 10,000 ha were actually irrigated. The private systems include the large schemes of the banana plantations in the Sula and Aguan valleys, the sugarcane enterprises in the Sula and Choluteca areas, and many small installations diverting water by gravity or pumping from streams or wells (as in the Comayagua Valley, where 11 private schemes irrigating 1,400 ha were reported in 1970). The National Agrarian Insti tute (INA) has developed several schemes, including a 480 ha system using groundwater in the Choluteca Valley, and a 61 ha project which pumps from the Choluteca River to serve a 20-member sugarcane cooperative. The municipios operate a number of small systems; typically, these have been taken over from communities or cooperatives to assure their continued operation. For example, in 1970 there were four municipal schemes in the Comayagua Valley; these totalled 1,076 ha, of which 700 ha were irrigated. The small systems usually use temporary rock dam diversions (replaced each year) and short, unlined canals. (The only storage dam in use for irrigation is the EI Coyolar on the Rio San Jose at the south end of the Comayagua Valley.) 3. In recent years some of the large-scale farmers have been develop ing groundwater for irrigation in the Sula Valley and in,Choluteca. However, most of the irrigation today is by diversion of the natural flow of streams into unlined canal systems. RAINFALL DISTRIBUTION 4. The available evidence on the amount and monthly distribution of rainfall indicates that irrigation could greatly increase the intensity of land use in much of the country. A recent study (Appendix 1) defined five zones on the basis of the rainfall pattern, arid found that the number of months per year in which there was a 25% probability of getting less than 100 mm and less than 50 mID of rainfall was: ANNEX 8 Page 2 Less than 100 mm 50 mm No. of Months Zone (north coast east to Brus Laguna) 4.6 2.9 Zone 2 (Gracias a Dios east of Rio Patuca) 3.0 2.0 Zone 3 (east~est 20-40 km strip south of Zone 1, including Lake Yojoa and most of Olancho) 8.4 5.2 Zone 5 (southern portion east of El Salvador) 7.5 6.5 Zone 4 (remainder of country) 8.3 6.4 5. These data suggest that a shortage of moisture is a constraint on agricultural production in certain seasons over much of Honduras, even in the better rainfall zones such as the north coast. However, the judgment becomes much more striking when adjustments are made for evapotranspiration. The available evidence (Appendix 1) indicates that even a month with a 75% prob ability of 100 rom of rainfall can be considered dry because this amount of rainfall would be equivalent to only about 50% of potential evapotranspiration. For the same reason, a figure of 50 rom can be labelled as very dry. WATER SUPPLY FOR IRRIGATION 6. It is reasonable to hypothesize for perspective planning purposes that the flows in most of the streams and rivers of Honduras is sufficient to provide an adequate water supply for all of the land suitable for irriga tion, provided that they were regulated by storage and made available when required. (As noted above, only one storage dam for irrigation purposes has been constructed.) However, stream flow data records typically cover only short periods and they are not available for all river systems. Pro ject feasibility studies have had to extrapolate the records on the basis of correlations with rainfall. The results have not always been satisfac tory (Appendix 2). 7. Information on groundwater potential is also limited. Halcrow investigated the groundwater resources of the Comayagua Valley, but did not find any high yielding acquifers. 1/ The yields of the wells drilled were disappointing, but it was recommended that additional wells be drilled at specified locations in the Valley, including the area just south of Villa de San Antonio and about 2 km to the north, on the south side of Quebrada Olancia, near Las Liconas. 11 Sir William Halcrow and Partners, Comayagua Valley Development Project, Feasibility Study, UKODA, 1972. ANNEX 8 Page 3 8. TAHAL has studied groundwater in the Monjaras-Buena Vista-ala area; several wells were drilled and tested. 1/ Five of the wells had specific yields of 42 to 113 m3/hour/m of drawdown (12 to 31 l/s/m). As of 1970, 17 wells had been drilled in this area to service a 460 ha irrigation project. (TAHAL cautioned against overdevelopment of groundwater in the area because of possible sea water intrusion.) 9. Some groundwater development is underway in the Sula Valley. Evi . dence from drilling for purposes other than irrigation suggests that wellS" of 30 to 60 m (100 to 200 feet), with discharges up to 1,200 to 1,500 gallons per minute (60 to 100 l/s), can be developed at reasonable cost. 1/ 10. Feasibility studies of groundwater development in the Siria and Talanga valleys are being undertaken by the Direccion General de Irrigacion (DGI) of the Ministry of Natural Resources. 11. In general, there appear to be opportunities for groundwater devel opment for irrigation. However, more investigation and experience with wells are needed to define th~possibilities. ONGOING GOVERNNENT PROJECTS 12. The DGI now operates two schemes, Comayagua and San Juan de Flores. Comayagua Valley Project 13. The project area covers the whole of the alluvial floor of the Comayagua Valley, some 38,000 ha. The dam was begun in 1955 and completed in 1965. The spillway was reconstructed in 1971. The schemes presently in operation are estimated to have cost about L 1,500 per ha. Until 1965 the farmers were left to manage the scheme to the best of their ability. Since 1965 the Direccion General de Irrigacion (OGI) of the Ministry of Natural Resources has administered the system. A study of the project was completed in 1972; this suggested ways of solving the many problems encountered by the project and designed a development plan. 1/ • 1/ TAHAL, Estudio Hidrogeologico en el Area de Monjaras-Buena Vista-ala, 1969. 11 Values for the drawdown required for these discharges are not known. Therefore the specific yield cannot be calculated. (Specific yield is the discharge, on a continuous basis,'that can be obtained from the well per unit of drawdown. The drawdown is the difference in the static water level and the pumping water level.) 11 Halcrow, op. cit. ANNEX 8 Page 4 14. The water supply is primarily from Rio San Jose, with storage at El Coyolar Dam for the Flores districts, and from the natural flow of the Selguapa River for the Selguapa and DESAGRO districts. The areas commanded by the canal systems and irrigated in 1970 were: Commanded (a) Irrigated Ha Ha % of (a) Flores I 1,100 300 27 Flores II 1,333 225 17 Selguapa 1,525 600 39 La Paz Extension l.l 1,000 DESAGRO !.1. 800 350 44 Total 5,758 1,475 26 11 Not in operation in 1970. 12 DESAGRO, the research-extension unit of the M~nistry of Natural Resources, operates a farm in the irrigated zone. 15. The comparable data for 1973, a3 estimated in the draft national development plan are: Commanded (a) Irrigated Ha Ha % of ~al Selguapa l.l 2,525 773 31 FI~res I 1,100 694 63 Flores II 1,333 400 30 DESAGRO l.l 1 ,200 1,000 83 Total 6,158 2,867 46 l.l The areas irrigated in these districts are limited by the low flow of the Selguapa River in April and May, the cap actiy of the principal canal (1.5 m3/second), and by the high seepage losses in the canal system during the remainder of the year. These losses may average about 50% of diver sions. 16. In 1970 some 54% of the land in farms was in units of more than 70 ha. The data are: ANNEX 8 Page 5 Relative to Total Size of Farm Land Owners Ha % % Cumulative % % Cumulative Less than 3.5 6.1 6.1 56.0 56.0 3.5 - 6.3 5.6 11.7 17.2 73.2 6.3 - 14 7.9 19.6 11.8 85.0 14 - 35 13.8 33.4 9.1 94.1 35 - 70 12.5 45.9 3.7 97.8 More than 70 54.0 100.0 2.2 100.0 17. The irrigation system consists of: (a) the E1 Coyo1ar Dam which serves Flores I and II Districts; (b) a concrete diversion dam and headgate on the Rio Se1guapa which serves the Se1guapa District (including the La Paz extension and the DESAGRO farm); and (c) canal systems, consisting mostly of unlined principal and secondary canals with necessary structures and roadways. 18. The DGI sells water to the individual users. The s~~ller distri bution ditches are owned and maintained by the farmers. Water is charged for on the basis of L 4 for an irrigation stream for 12 hours (the customary charge by municipal systems is L 1). This is presumably sufficient water to irrigate one hp.ctare. Irrigating is generally practiced by wild flooding. Furrows. are used for some row crops. The border strip and basin methods are used to only a limited extent. Irrigation efficiencies are low. Water is generally not used at night and on holidays and Sundays when much of the di verted water is discharged back into the natural channels. The principal irrigated crops are: maize, tomatoes, pasture, onions, tobacco, chili peppers, and melon. Small areas of orchards, sorghum, beans, rice, coffee and vegetables are also irrigated. 19. Difficulties are encountered in seeing that water is used only by rightful owners. Maintenance of distribution ditches is poor. Seepage losses are high in the canals and smaller ditches. In 1970, receipts from water sales were L 10,750; costs of operation and maintenance were L 107,000. 20. Drainage is inadequate in the lower part of the Se1guapa District on about 300 ha. Some of the soil has become saline and sodic. Appendix 3 describes the problem in some detail. Drains should be excavated to relieve .. this problem . 21. In summary, the principal problems confronting the project are: (a) The low percentage of commanded area which is irrigated; (b) Insufficient water supply in Se1guapa and DESAGRO Districts due to: (i) the low flow in Rio Selguapa during driest months; (11) limited canal capacity (1.5 m 3/sec); (iii) heavy seepage losses in canals and smaller ditches; ANNEX 8 Page 6 (c) The high percentage of land commanded by canals which is not suitable for irrigation (about 15% in Selguapa, and 30% in Flores); (d) The high percentage of land belonging to cattlemen who irrigate only a small part of their pastures; (e) Seepage and stability problems at E1 Coyo1ar Dam 11; (f) Inability to collect revenues sufficient to cover operation and maintenance costs. Revenues amounted to only 10% of operation and maintenance costs in 1970; (g) Drainage and salinity problems in Se1guapa; (h) Poor land preparation for irrigation and inefficient irrigation practices, such as wild flooding, failure to irrigate at night and on Sundays and holidays (furrow irrigation and the border strip method are used to only a limited extent); and (i) Misuse of available water. 22. Ha1crow suggested an 11-year development program, totalling some L 23.5 million, with the specific investment pattern to be determined on the basis of pilot projects and a continuing evaluation. It was suggested that the Government should: (a) Construct a pilot project at Las Canas (this is being carried out). This is a masonry dam 56 meters in height, with a usable storage capacity of 12.5 million m3 (10,000 acre-feet), or .about 14% of the mean annual inflow of the river. It was constructed in two phases, the first between 1954 and 19S6 and the second, 1964-65. There is appreciable leakage through the dam and abutments. Erosion below the spillway required. that it be reconstructed. Sedimentation in the reservoir is a matter of concern ,(although it is not considered ex cessive when compared with other reservoirs in Central America), as well as the safety of the dam. Investigations have indicated that the stability of th~ dam does not meet generally accepted standards of safety with respect to possibility of overturning and sliding. It would appear, however, that there would be no possibility of the dam sliding or overturning unless there was -a mass failure of one or both abutments; this is a question of geology rather than dam stability. (Efforts to decrease leakage by grouting, and the reconstruction of the spillway, have probably raised the total outlay to date for the dam to a figure which is high by world standards in terms of usable storage capacity.) ANNEX 8 Page 7 (b) Implement five guided development ~chemes at La A1godonera, DESAGRO, Pa1mero1a I and II, and Flores to cover about 1,660 ha and provide settlement of 830 families. (c) Line the Se1guapa canal to reduce seepage losses. (d) Provide overnight storage at appropriate places to reduce waste of water. (e) Construct a concrete-lined extension of Flores II principal canal to Pa1mero1a area. (f) Construct a storage dam on Rio Se1guapa. (g) Provide adequate drainage for part of Se1guapa district and reclaim saline soil. (h) Construct a permanent diversion dam on Rio San Jose for Flores and Palmero1a districts. (i) Improve land preparation for irrigation. (j) Provide help to farmers to improve irrigation practices and water management. San Juan de Flores 23. The second ongoing DGI project is the San Juan de Flores. located about 30 km northeast of Tegucigalpa in the upper Choluteca Valley in Francisco Morazan. The DGI reports that the project area covers about 1,500 ha, of which some 1.000 ha are irrigated (from the natural flow of the Choluteca River, with maize, beans, sugarcane, sorghum, and pasture being the principal crops). 1/ Some 240 families are located in the project area, and about 60% of the irrigated area is in the hand~ of 10% of the farm proprietors. 24. The construction on the principal canal and basic structures, including one intake structure with a capacity of 1.5 m3 /s, was begun in 1957. The work was interrupted in 1959 after an expenditure of L 250,000. In 1969 the construction work was resumed, and in 1970 the principal canal (16 km), a sedimentation basin, and a siphon across the Rio Cho1uteca (150. m long and 76 cm in diameter) were completed. The total cost of works con structed to date (including the concrete lining of 1.5 km of the principal canal in 1973) is about L 1.44 million, equivalent to about L 960 per ha based on commanded area and to L 1,444 per ha based "on an irrigated area of 1,000 ha. 1/ The draft 1974-78 national development plan lists the irrigated area as 300 ha in 1972. ANNEX 8 Page 8 25. The water charge is L 4 per ha per irrigation, or about L 0.0025 per m3 , the equivalent of L 25 per hectare meter, which is the same as for the Comayagua Project. No serious drainage problems have been reported, and estimates of the return to a drainage network have been made. 26. The following additional construction work has been proposed: (a) The completion of the canal lining for the total 16 km of the principal canal; (b) The construction of a concrete diversion dam on the river at a cost of L 390,600; (c) The construction of a pilot project to include land grading (leveling) and improvement in irrigation practices; (d) Enlargement of.the project area to irrigate 2,500 to 3,000 ha through the construction of a storage dam in conjunction with a related lower Choluteca Project (enlargement of the area without storage is not pOSSible, as the low flow of the Choluteca is less than 500 lIs). PROJECT STUDIES 27. A considerable number of preliminary studies of irrigation project possibilities have been made. An outline review of the more important studies follows. Agua Caliente 28. This project, studied by CLASS, is located in the valley of the Rio Grande de Agua Caliente in the Department of Comayagua at an altitude of about 540 m and north of Agua Caliente. 11 The valley area is approxi mately 2,300 ha, and the project area is 1,300 ha. The water supply would be from the natural flow of the Rio Chiquita with a concrete diversion structure 20 m long by 1.2 m high, and by pumping from the Rio Grande. All of the project area is on Class 1 soil, except for 150 ha which has Class 3 soil. 29. The irrigation system would consist of: (a) diversion dam on Rio Chiquito. Length 20 m, height 1.2 m, spillway 100 m3/s; (b) pumping plant on Rio Grande de Agua Caliente. Capacity 300 lIs, head 13 m. 90 horsep~~er; (c) principal canals: From Rio Chiquito -- left 6 km, Q maximum 700 lIs; 1/ Consultores Latino Americanos Asociadas (CLASS), Lima, Estudios de Prefactibilidad de Irrigacion, 1972, for DGI of the Ministry of Natural Resources. ANNEX 8 Page 9 right 7.5 km, Q maximum 66 l/s. Concrete lined, 25 structures, concrete; (d) lateral canals, 11 km. Q medium, 200 l/s. 1/ Unlined; (f) roads, 36 km. Gravel surface. The cropping pattern would be: Crop % of Area Crop % of Area Pasture 20 Coffee 20 Maize 10 Bananas 20 Beans 10 Sorghum 20 Rice 40 Total' 140 lJ. L1 Assumes some double cropping. 30. Costs were estimated at L 1.9 million for the irrigation system and L 0.715 million for land preparation, for a total cost of slightly more than L 2,000 per ha. Excluding land preparation, the benefit-cost ratio was estimated at 1.9 with a 9% annual interest rate. Alto Aguan 31. Two projects were considered in the upper valley of the Rio Aguan: 2/ Project A, no storage; Project B, with a storage reservoir of 105 million m3 • The area to be irrigated in Project A lies to the north of the Rio Aguan becween Sabana Larga and El Nance. The Project B area is also on the north side of the river, but extends from Sabana Larga to Olanchito. Project A would command 6,350 ha, and Project B 19,400 ha. Both projects would take water from the Aguan River. Project A would use only the natural flow of the river, which has an estimated mean flow during the dry periods as follows: February 4.3 March 3.1 April 2.3 May 2.3 June 4.0 Measurements are available, however, only for three years, 1957-1959, and may not be representative of long time flows. Additional supplies totaling about 900 l/s are available during April, the driest month, from 10 small streams. The estimated total available flow would not provide a full water supply for 6,350 ha. The study does not "mention other possible diversions, although some may be possible. 11 Q maximum indicates the maximum flow capacity at the upper end of the canal. Q medium indicates average capacity for the lateral canals. ~ See CLASS, op. cit. ANNEX 8 Page 10 32. MOst of the soils in the project area are in Class 1, with some in Classes 2 and 4. The tenure position is indicated by data for the municipio of Olanchito, which show that 59% of the area is in.farms of more than 70 ha and is held by 8.3% of the farmers. About 46% of the land is in private ownership and 31% is national. The project area is presently in pasture (71%); 12% fallow; 7% bananas; and 7% maize; and the remainder in other annual crops, coffee and plantain. 33. The cropping pattern is: Proposed Project A Project B Present , ----% of Irrigated Area--- ---%-- Pastures 20 15 71 Bananas 20 40 7 Plantain 10 10 2 Maize-Beans lJ.. 20 5 7 Rice 15 10 lJ.. Sorghum 15 Yucca 10 Coffee 5 2 Other 5 Pallo~" 11 11 Double cropped. 34. The irrigation system for Project A, the 6,350 ha scheme, would consist of: (a) diversion dam on Rio Aguan near Sabana Larga. Length 100 m. height 3 m, Q = 6 m3/s. Spillway for 1,200 m3 /s; (b) principal canal. Length 38 km, Q variable 6.0 m3/s to 1.9 m3 /s. Approximately 60 concrete structures; (c) canal laterals. Total length 32 km. Q medium 600 lIs. 90 concrete structures; Cd) sub-laterals. Length 76.5 km. Q medium appro ximately 200 lIs. Approximately 300 concrete structures; (e) roads, appro ximately 58 km. Gravelled. The estimated cost of Project A, exclusive of land preparation, is: irrigation system, L 6,917,000; land preparation, L 3,810,000; for a cost per ha (6,360 ha) of L 1,689. 35. The Project B system ~ould include: (a) storage dam. 58 m high, 920 m long at crest. Storage capacity 105 million m3 ; (b) principal canal. 67 km. Q maximum 20 m3 /s to Q minimum 2 m3 /s. Concrete lined. Approximately 100 structures; (c) lateral canals. 120 km. Q 600 lIs. Concrete lined. Approximately 360 structures; (d) sub-laterals. 230 km. Q 200 lIs; (e) roads. 230 km. Gravelled. The estimated cost is L 11.5 million for land preparation and L 65 million for other than land preparation, for a total cost per ha (19,400 ha) of L 3,950. The estimated benefit-cost ratio without land pre paration, at a 9% interest rate, is 2.1. ANNEX 8 Page 11 Choluteca 36. This project area is on the coastal plain of the Rio Choluteca, mostly to the southwest of the city of Choluteca. and the proposal is to irrigate 18,000 ha from water stored in a power-irrigation reservoir on the Rio Choluteca about 23 km ~~ of Tegucigalpa, 6 km east of the highway bridge over the river on the road to Juticalpa. The proposed dam (San Fernando) would store 500 million m 3 • The estimated cost of the project at the time of the study was about L 62 million; of this, about 28% was allocated to power and the remainder to irrigation. 1/ The benefit-cost ratio was estimated as 1.0, with interest at 9.6%. 37. An alternative proposal by DGI would divert water by gravity to provide a full irrigation supply for 5,000 ha and a supplemental supply for an additional 10,000 ha. 2/ This alternative does not store water. A second alternative studied by DGI would irrigate 4,300 ha in the Honjaras-Buena Vista areas, including 400 ha for'the Ingenio Los Mangos sugar plantation. 38. A FAO/IBRD mission was unable to support the IECO scheme because (a) investment per ha would exceed L 4,000; (b) more than half of the area is in farms of 300 ha or more in size, mainly used for raising cattle; (c) more than half of the area would have to be devoted to high-value crops such as tropical fruits, vegetables and off-season melons for export; and (d) it would be difficult to market the anticipated volume of produce. lV 39. The same mission considered that the first alternative proposed by DGI was not feasible because: (a) the available water supply was less than assumed, considering present uses alona the river, and in fact would not be sufficient for more than 1,000 ha of perennial crops. or 3,000 ha of annual crops for the season October to January; and (b) benefits from supplemental irrigation would not justify the cost. 40. The FAO/IBRD mission further concluded that the second DGI alter native was not justified because approximately 500 ha of this area is being developed by pumping groundwater from 17 wells, and the rngenio Los Mangos sugar plantation has developed its own irrigation scheme. 11 International Engineering Company, Inc. (IECO, San Francisco, California). Choluteca Project Feasibility Report Supplement. 1968, for Ministry of Natural Resources. 2/ DGI. Estudio de Factibil1dad del Projecto de Irrigac10n "Choluteca l l , December 1968. lV FAO/IBRD, Report of the Honduras Irrigation Identification }lission, August 1970; and Supplement, March 1973. ANNEX 8 Page 12 41. New irrigation developments have recently been undertaken in this area by INA; these include the El Palinque project now under construction. This project is on national land, and is for about 67 ha for $ugarcane. The cost is about L 800 per ha excluding the cost of clearing the forested land, a small part of the total area. The water is pumped directly from the Rio Choluteca with a pump having a rated capacity of 1,800 gallons per minute (60 lIs). The pumping head is about 5 m. The project is organized as a cooperative with 20 members. It has received a 5-year loan from the Banco Nacional de Fomento to pay construction costs. (The project is facing a legal problem in trying to install drainage for surface water. The proposed drainage canal is 1,600 m long and crosses adjacent private properties. The first section of 800 m has been constructed, but the owner of the adjoining property refuses permission for the drain to cross his property.) Cuyamapa 42. This project is located in the municipios of El Negrito and Morazan in the Department of Yoro. The elevation ranges from 90 to 250 m. The pro ject area is in two tracts, one in the valley of Cataguana, mostly to the south of Morazan, and the other in the valley of Oloman, south of El Negrito. The soils for most of the area in both valleys are listed as Class 1, with small zones of Class 2, 3 and 4 soils. 43. CLASS studied four alternatives, each using water from the Rio Cuyamapa and tributaries: ~I Alternative A: A storage reservoir on the Cuyamapa River, with a capacity of 46 million m3 , to irrigate 4,400 ha in the Oloman Valley and 5,500 ha in the Cataguana Valley. Alternative B: Without storage, to irrigate 4,400 ha in Oloman Valley only. There would be little or no deficiency in flow during the dries t month. Alternative C: Without storage, to irrigate 5;500 ha in the Cataguana Valley. There would be a deficiency in available water supply. Alternative D: l·ath storage for Oloman Valley only, using a reservoir at elevation 25 m, with a capacity of 28 million m3 , and crest length of 188 m, about 9,400 ha (some 500 ha in the Cataguana Valley would be taken up by the reservoir). 44. For alternative A, the storage dam would be 57 m high, with crest length of 394 m, and a spillway capacity of 700 m3 /s. For the Cataguana Valley sector, the principal works would be: (a) diversion dam Chililenga at eleva tion 230 m, length 30 m, height 2.5 m, with a spillway for 240 m3/s; (b) prin cipal canals. Right bank of Rio Cuyamapa, 30 km. Q max 2.5 m3/s. Concrete II See CLASS, op. cit. ANNEX 8 Page 13 lined. Left bank, 25 km. Q max 3 m3 /s. Concrete lined. Several structures; (c) lateral canals. Length 42.5 km. Q med 400 l/s. Concr.ete lined; (d) sub laterals. 130 km. Q med 200 lIs, with turnouts for each 20 ha; (e) roads. 97.5 km. Gravelled. For the Oloman Valley, the principal works would be: (a) diversion dam on Rio Cuyamapa. Length of 100 m with spillway for 100 m3/s; (b) principal canal on right bank. Length 28 km. Q max 3 m3 /s; (c) lateral canal on left bank. Length 11.5 km. Q med 1.5 m3 /s. Concrete lined; (d) drains. Length 18 km. Q med 300 lIs; (e) sub-laterals. Length approximately 100 km. Q med 200 lIs, with turnouts for each 20 ha; (f) roads. 58 km. Gravelled. 45. The estimated cost of Alternative A is: L Thousand Storage dam, 46 million m3 7,260 Cataguana Valley construction 5,322.5 Oloman Valley construction 3,473 Contingencies (15%) 2,l!10 Engineering and administration 2,724.7 Interest during construction 3,300 Land preparation (L 50o/ha) 2,750 Total cost 27,250 fo-r a total cost per ha (9,900 ha) of L 2,753. 46. The estimated cost for Alternative B, including land preparation, is about L 8.1 million, equivalent to about L 1,831 per ha on a 4,400 ha assumption. For Alternative C, the estimated cost is L 10.35 million, or L 1,882 per ha, including land preparation. 47. The cost of a project with one storage dam at elevation 25 m with capacity of 28 million m3 to serve the Oloman Valley (Alternative D) is estimated at about L 23 million, or L 2,442 including land preparation. Florida-La Entrada 48. This 4,800 ha project is located in the municipios of La Jigua and Nueva Arcadia, Department of Copan, near the western highway. The project area is in two tracts: the Florida tract extends from the village of Florida NNE for a distance of about 15 km; the La Entrada tract extends from the village of La Entrada NE for a distance of about 18 km. Part of the area receives its water supply directly from Rio Chamelecon and partly from a tri butary, the Rio Chinamito. The 75% probability flow of the Rio Chamelecon is as follows for the dry months: 11 Y 11 CLASS, op. cit. Y These values were based on measurements at Florida for 1966-1971. The drainage area above this point is 240 km 2 • No measurements are avail able on the Chinamito River, but the drainage area above the diversion dam is 136 km 2 which would indicate that the flow might be about 56% of that for the Chamelecon. ANNEX 8 Page 14 January 2.35 February 1.84 March 1.43 April 1.00 May 1.28 June 2.00 49. The soils in the Florida tract are mainly Class 1, with small amounts of Classes 3 and 4. The Entrada area also contains mostly Class 1 soil, but it has relatively more area in Classes 2 and 3. The farm size distribution is: La Jigua Nueva Arcadia Farm Size Area Farms Area Farms ha % - -% % % Less than 3.5 8.5 56.8 8.5 68.8 3.5 to 14 18.5 29.9 11.8 21.6 14 to 70 29.4 11.6 20.0 7.6 70 to 350 11.5 1.3 11.8 1.0 Over 350 32.1 0.4 47.8 1.0 100 100 100 100 50. The cropping pattern used for the stuqy was: Existing Proposed % '% Pasture 56.2 0 Fallow 11.8 0 Maize 18.5 3.2 Beans 6.8 1.7 Rice 0.6 1.7 Tobacco 1.7 1.2 Banana 0.2 28.8 Plantain 0 28.2 Guineo a 26.8 Other 4.2 8.4 100 100 51. The proposed irrigation system wou19 include: (a) diversion dam on Rio Chamelecon. Length 30 m, height 3.8 m. Spillway for 150 m3 /s; (b) diversion dam on Rio Chinamito. Length 20 m, height 2.5 m. Spillway ~or 60 m3/s; (c) principal canals. The canals for diversion on Rio Chamelecon are: Left side. Length 7 km. Q max 1 m3 /s. Concrete lined; Right side. Length 15 km. Q max 3 m3/s. Concrete lined; Tunnell. Length 400 m; Tunnel 2. Length 800 m; (d) principal canals. From the diversion Rio Chinamito ANNEX 8 Page 15 are: Left side. Length 8 km; Right side. Length 13 km. Q max 0.4 m3 /s; (e) lateral canals. Total length 19 km. Q approximately 400 lIs; (f) sub laterals. Total length about 57 km. Q approximately 200 l/si and (g) roads. Total length of roads, about 90 km. 52. The system is estimated to cost L 6 million, plus L 2.4 million for land preparation, for a cost per ha (4,800 ha) of L 1,750. The benefit-cost ratio, excluding land preparation, was estimated to be 1.2 with interest at 9%. Guayape-Jutica1pa Sector 53. The 5,000 ha area to be irrigated is on the north side of the Rio Guayape to the southeast of Juticalpa in the 01ancho Department at an elevation of about 600 m. The valley area is approximately 32,800 ha. The soils to be irrigated are nearly all Class 1. The farm size distribution in the municipio of Jutica1pa is: Farm Size Area Farms Ha ---r % o- 3.5 1.3 21.4 3.5 - 14 9.0 45.1 14 - 70 21.8 26.3 70 - 140 7.7 3.0 140 - 350 11.4 1.9 350 - 1,750 42.2 2.2 3,880 (one farm) 6.6 0.08 54. The study reports actual and proposed cropping patterns as follows: j/ Actual Proposed % % Pasture 56.9 20 Maize 10.6 10 Beans 2.6 15 Coffee 1.2 10 Cotton 1.2 10 .. Yucca 0.1 20 Rice 0.8 20 Tobacco 0.1 15 Banana 0.2 15 Plantain 0.3 0 Fallow 26.0 0 100.0 135 11 CLASS, op. cit. ANNEX 8 Page 16 55. The proposed water supply is from two sources: the Rio Guayape, with a diversion dam about 20 km west of Juticalpa; and the Rio Juticalpa, with a diversion dam about 2 km SE of Juticalpa. No storage is contemplated. (From the available topographic evidence, it appears that additional areas could be irrigated from the Rio Jalan and the Rio Telica.) There would be about 34 km of principal canals. The canal laterals would total 38 km and the sub-laterals 58 km. Approximately 130 km of roadways are included. The principal canal and most of the lateral canals would be concrete lined. The cost, including contingencies, engineering and administration, and interest during construction at 7.5%, is estimated at L 7,500,000. Land preparation is estimated at L 450 per ha, making a total cost of L 1,950 per ha. The benefit-cost ratio is estimated at 2.06, with interest at 9%. 56. An FAO/IDB study of 1973 suggested that several small-scale irri gation projects of a pilot nature merited consideration in the context of a 60,000 ha integrated rural development project for the Guayape Valley. Otoro 57. This 525 ha project is located in the municipio of Jesus de Otoro in the Department of Intibuca some 35 km west of Comayagua and to the east of Rio Grande del Otoro, at an approximate elevation of 550 m. The s01ls are Class 3. Some 79% of the municipio area is made up of farms of more than 14 ha, and this group accounts for about 15% of all farms. The present and proposed cropping pattern is: lA Actual Proposed ~ % Pasture 53 20 Maize 16 0 Maize and beans 0 15 Coffee 7 15 Rice 0 20 Bananas 0 20 Sorghum 0 10 Miscellaneous 24 0 100 100 58. Water would be taken from the Rio Grande de Otoro by a diversion about 6 km south of Jesus de Otoro. The estimated flow of the river during the dry months is in excess of 2.4 m3/s 75% of the time, according to measure ments for 1954-1958 and 1965-1966. The irrigation system would include a headgate structure, but no diversion dam. The principal canal would be 20 km long, Q max 1.0 m3/s with 17 structures; canal laterals total 4.8 km, Q med 200 1/s, with 15 structures; sub-laterals total 6.3 km, Q med 200 1/s; roads, 25 km, gravelled. The estimated cost of the project, including contingencies, engineering and administration, and interest during construction at 8% is L 870,000, plus land preparation at L 600 per ha, making a total cost of L 2,257 per ha. ANNEX 8 Page 17 Quimistan 59. The project area of 3,080 ha is in three tracts, one lying to the south of the Rio Chamelecon and two to the north, in the municipio of Macquelizo in the Department of Santa Barbara. The western highway passes through the project area. The distance to San Pedro Sula is about 70 km. 60. The soils are mostly Class 1. Some 20% of the farms probably account for about 87% of the area. The cropping pattern is: Present ProEosed , % % Pasture 61 20 Maize and fallow 29 0 Beans 4 0 Maize and beans 0 10 Coffee 4 20 Tobacco 0.8 0 Bananas 0.1 20 Rice 0.1 20 Vegetables a1.1J melons 0.0 10 Other 0.3 0 61. The water supply is to be diverted from three tributaries of the Rio Chamelecon, the Rio Blanco, the Rio Chiquila and Rio Culupa. The esti mated flow for these three rivers, 75% of the time during each of the dry months, is as follows: Rio Blanco Rio Culupa Rio Chiquila ------------------m 3/s------------------ February 1.50 1.10 3.00 March 0.81 0.59 1.62 April 0.60 0.44 1 .15 May 0.47 0.34 0.99 June 1.05 0.77 2.10 These flows should be sufficient for the cropping pattern proposed which would have 25% of the area in maize, beans and melons, which would not be irrigated in March, April and May. 62. The irrigation system would consist of: (a) diversion dam on Rio Blanco. Length 20 m, height 1.5 m. Spillway for 160 m3 /s; (b) diversion dam on Rio Chiquila. Length 30 m, height 1.5 m. Spillway for 300 m 3 /s; (c) diversion dam on Rio Culupa. Length 30 m, height 1.2 m. Spillway for 200 m3 /s; (d) principal canals. Four with total length of 31 km. Design capacities, Q varies from 1.3 m3/s to 0.6 m3/s; (e) lateral canals. Total length 24 km. Q for 200 1/s and 400 1/s; (f) sub-laterals. Total length 37 km. Q for 200 1/s; (g) roads. Total length 55 km. Gravelled. ANNEX 8 Page 18 63. CLASS estimated the project cost at 1972 prices at L 3.2 million, plus L 1.7 million for land preparation. The cost per ha was L 1,589.1/ Siria 64. The Siria Project is located about 60 km northeast of Comayagua on the north side of the Rio Playas, a tributary of the Rio Agua Caliente, in the municipio of E1 Porvenir in the Department of Francisco Morazan. The area to be served is 5,100 ha upstream from El Porvenir. The soils are Class 2 and 3, with slopes of 2% to 3% predominating. CLASS found that the natural flow of the river drops to about 0.2 m3 /s during a dry year, and would not be suf ficient for a project without storage. 1/ 65. Water supply would be from the Rio Playas with a reservoir just below the junction with the tributary, Rio San Jose. This reservoir "Siria" would have a usable capacity of 25 million m3 , or about 20,000 acre-feet. This volume of storage is expected to provide a full water supp~y for the project. There is sufficient flow in the river to fill a larger reservoir. 66. The farm size distribution in the municipio is as follows: Farm Size Area Farms Ha % % Under 3.5 12.1 58.4 3.5 - 14.0 28.1 33.8 14.0 - 70.0 20.5 6.6 Over 70.0 39.3 1.2 67. The actual and proposed cropping patterns are: Present With IrriEljation "t 10 % Pasture 41.3 20 Maize 21.4 0 Beans 25.0 0 Maize-beans 0 20 Bananas 0.1 20 Fallow 2.3 0 Coffee 4.6 10 Rice 0.5 10 Sorghum 0 10 Vegetables 0 10 Other 4.8 10 11 CLASS, op. cit. Y Ibid. ANNEX 8 Page 19 68. The cost of the scheme, particularly for storage, is high. The es tima. tes are: L Thousand Storage dam Siria, 25 million m3 5,303 Principal canal and structure, 32 km 2,098 Laterals and structure, 47 km 1,288 Sub-laterals, etc. 504 Roads, 80 km 200 Subtotal 9.483 Contingencies, 15% 1 .417 Engineering and administration 1,600 Total for construction 12,500 Interest during construction 1,900 Total, excluding land preparation 14,400 Talanga 69. This proposal, studied in 1973, would irrigate some 6,000 ha in the upper (eastern) part of the Talanga Valley in the Department of Francisco Morazan. The project is north of the village of Talanga, which is about 40 km from Tegucigalpa on the Tegucigalpa-Juticalpa road. Some 2,700 ha of the project area has Class 2 soils, with slopes up to 2%; some 3,300 have Class 3 soils, with slopes of 3% to 7%. The municipio farm size distribution is: 1/ Area Fams '% % Under 3.5 ha 11.8 60.7 3.5 - 14.0 22.2 30.1 14.0 - 70.0 22.7 7.9 70.0 - 350.0 14.4 1.1 Over 350.0 29.9 0.2 70. Crops now grown, and proposed to be grmm with irrigation are: Present With Irrigation % % Pasture 49.6 20 Maize 27.2 Beans 13.5 Maize-beans 20 Yucca O. 1 10 Bananas 0.2 20 Coffee 0.8 10 Rice 10 Other 9.6 10 ANNEX 8 Page 20 71. The water supply would be from the Rio Tanquita, using a storage dam about 12 km west of Talanga. The reservoir capacity would be 30 million m3 with an earth dam 39 m high. There appears to be sufficient water to fill this reservoir in a dry year. There would not be sufficient flow in the river without storage during the dry months to justify a project. 72. The project is estimated to cost about L 18 million, including land preparation, for a total of slightly more than L 3,000 per ha. Nacaome 73. A recent study considered three development possibilities: 1/ (a) storage with a project for 5,000 ha: (b) storage with a project for 6,100 ha; (c) groundwater. The third alternative was rejected because of the small amount of water that could be developed (about 2 million m3 per year). Cost estimates for the storage projects are: Project 5,000 ha 6,100 ha -----------L----------- Capital Cost per Ha 7,828 7,414 Annual Operation and Haintenance Cost 36 35 It is unlikely that the main crops considered in the study (primarily rice, cotton, ma1z~ and pasture) could carry these high costs. 74. The FAO/IBRD investigation considered two possible projects. 2/ The first (A), a pumping project (also called river diversion project) would irrigate about 1,500 ha on the left (east) bank of the Rio Nacaome (called Rio Grande on LAGS maps). The area is in the vicinity of the village of El Tular. Project B would involve a storage reservoir and gravity diversion, and would command 3,800 ha on the left bank and 1,400 ha'on the right bank. The cropped area under irrigation would be 4,500 ha. 75. The water supply would be from the Rio Nacaome. For the pumping project (A), the river flow would be adequate during the months of November through January, but very 11 ttle water would be available for the peri.od February through April, considering downstream water rights. For the storage project (B), a reservoir with a capacity of 55 million m 3 could supply an average of 1.2 m depth over an area of 4,500 ha. The flow of the river is such that the reservoir should fill every year. Jj Motor-Columbus Ingenieros Consultores S.A., Proyecto de Desarrollo Integral de Nacaome e Investigacion de Aguas Subterraneas de Alianza, Estudios de Factibilidada, May 1974. y FAO/IBRD, op. cit. ANNEX 8 Page 21 76. Some 11% of the area is in holdings of less than nine ha, while 46% of the area is in holdings of more than 50 ha. To benefit small farmers would require subdivision of the larger holdings. Because of _the water shor tage during the critical dry months, the traditional crops such as maize, sorghum, and cotton would be grown during the rainy season, with beans and vegetables irrigated during the early part of the dry season, November through January. 77. The estimated capital cost of the pumping project (including engi neering, administration and land preparation) was L 3.1 million, or L 2,080 per ha on a 1,500 ha basis. Annual operation and maintenance costs were estimated at L 40 per ha. The storage project capital cost was estimated at L 12.7 million (L 2,S13 per ha), with an annual operating cost at L 21 per ha, and the project was not recommended for further study. THESULAVALLEY 7S. Some 100,000 ha of good Sula Valley land with an impressive poten tial produce little today because they are subject to floods from the Ulua and Chamelecon rivers, and because of lack of drainage. 79. A recent study of the available data sho~vs that in the 1935-72 period there were 10 floods which did appreciable damage. 1/ Of these, damages were estimated to exceed $1 million in only three years. The data are: Years of Flood Estimated Damages $ Million 1935 14.8 1954 16.6 1969 9.S The other 7 years in total 2.4 Total 43.6 SO. These estimates indicate that the average annual flood damage for the 3S-year period (1935-72) was about $1.15 million. If the period were extended to include the number of pre-1935 years in which there was no significant flood damage, average damages' per year would probably not exceed $1 million. This suggests that direct gains from flood protection would not be large, and that the primary effect would be to induce invest ment in productive activities which would otherwise not occur. On the other hand, the flood chronology is such that it may make economic sense to provide only a limited protection. 11 John P. Davis, A Study of Flood Control Measures for the Lower Area of the Ulua River Basin, Honduras, 1973. ANNEX 8 Page 22 81. The study reviewed six alternative flood control plans, as follows: Plan 1. Three reservoirs: EI Cajon on the Comayagua River,_Filigrana on the Ulua River, and Chamelecon on the alamelecon River. Plan 2. Additional diversion channels to operate in conjunction with the existing diversion channel-floodway scheme, and utilizing the exis ting levees. Plan 3. Levee for Copan-La ~~ntanuela Area. Three sections, with a total length of 35 km. Plan 4. Levees for San ~~nuel and Santiago. Some 2.5 km of levees would provide protection for the villages of San }Ianuel and Santiago. Plan 5. Combined Levees and Diversion Channels. Includes the levees of Plans 3 and 4 and reconstruction of most of the present levees of the fruit companies to higher standards, and with some realign ment. It incorporates and enlarges the present floodway-diversion channels for a design flood at Km 34 (Tela Railroad) of 1,795 m3/s. Plan 6. Realignment and Enlargement of River Channel. Some two-thirds of the channel between the coast and Pimienta would be realigned. 82. The study finds that Plan 6 would destroy much valuable land-without compensating advantages. Plan 5 is reco~~ended for further study, and Plan 4 (which with some 2.5 km of levees would protect the villages of San Hanuel and Santiago) is incorporated into it (Appendix 4). Additional'investigation of Plan 3 is recommended. 83. Concerning the EI Cajon proposal (Plan 1), the present dam design aims at optimization from the point of view of power, and, as such, it has been concluded that "the effect of the EI Cajon reservoir on the flooding of the Sula Valley is of minor importance." 1/ Alternative feasible designs would probably not change this conclusion-significantly, 84. If Plan 5 is implemented, a large area of land will become available for development. Much of this land will require drainage. In addition, a significant acreage of irrigation would probably be economically feasible. 85. Even under present flood conditions, there are some areas which could probably be put under rice and other crops if drainage were provided. One such area is a 7,000 ha block northeast of Choloma. Exploitation systems least vulnerable to monetary losses through floods could be installed. (To illustrate: large areas in the floodway channels in the Sacramento Valley of California are planted to annual crops after the danger of flooding has passed. These areas are usually irrigated.) l/ ~tor-Columbus, Project EI Cajon, 9 volumes, 1973. ANNEX 8 Page 23 86. The Government has asked IDB to finance a feasibility study of flood control in the Sula Valley. The Direccion General de Obras Civiles y Edificios Publicos, Secretaria de Comunicaciones, Obras Publi~s y Transportes would be the executing agency. The proposed technical assistance would cover the "Study and Final Design" stage and would be made by a team of individual consultants or a consulting firm over a period of about two years. The study would involve the following activities: (a) installation of hydrometric stations and the collection and processing of hydrological information; I (b) mapping of areas of project coverage; (c) soils analysis and classification; (d) agricultural development study including a cadastral survey; (e) alternatives for immediate utilization including evaluation procedures and control systems. 87. The cost of the study is estimated at almost $1 million, of which IDB would provide some $750,000. JUDGMENTS k'W RECOMHENDATIONS 88. Emphasis for the years just ahead should be placed on improving on-going projects to enable them to produce a return; on studies and pilot projects which will provide the basis for an expanded investment in irri gation in the medium term; and on increasing Government capability to prepare, design, appraise, implement and manage projects. Personnel training needs to be stressed. 89. The most urgent need is to strengthen the DGI.· As the principal Government agency concerned with water resources for irrigation, its task is to: (a) collect and publish hydrological and climatological data; (b) study, plan, and design irrigation projects, and supervise their con struction, operation, and maintenance; and (c) administer the water laws. It is understaffed and underfinanced and it is unable to properly perform its assigned duties. The complexity of its task appears not to be fully understood at the deciSion-making level of Government (Appendix 5). 90. A preview of the problems which DGI will face on developing any irrigation project can be drawn from the Comayagua experience. Although not all of the shortfalls in the Government performance in this case can be charged to DGI, it is useful to look at DGI and its future work in this light. Among the problems which remain unsolved in Comayagua are: water charges and col lections; inducing farmers to use water, and in optimum amounts; narrowing the gap between commanded and irrigated area; assuring that land is properly prepared for irrigation; efficient use of water, including measures such as ANNEX 8 Page 24 night irrigation; seepage losses in canals, and other structural defects; farmer participation in project planning and management; salinity and inade quate drainage; product marketing; the provision of technical and farm manage ment guidance to farmers; and the redistribution of large farms on grounds of both production expansion and income distribution. This list makes clear the positive necessity of strengthening the DGI. San Juan de Flores and Comayagua 91. Although the enlargement of the San Juan de Flores project area is not considered feasible (para 23), the construction of the proposed concrete' diversion dam and a pilot project to level land and improve irrigation prac tices merit consideration. The concrete lining of the entire canal should be done only if it can be shown that seepage is appreciable. 92. Concerning the Comayagua project, there is not sufficient evidence at hand to indicate that large-scale investment will yield an acceptable return.. The careful development approach recommended by Halcrow and the FAO/IBRD study should be followed. Specifically, it is suggested that the Government should: (a) Complete the canal lining now underway, but delay additional linings until evaluation can be made of the effect of lining. For exampte, how much has this lining increased the capacity of this section of canal? To what extent has it reduced the seepage loss? (Halcrow's cost estimate in 1972 for lining the entire canal was L 1,150,000.) (b) Complete the pilot projects that are underway and assure that farmers get the needed inputs. Evaluate the benefits in relation to costs. (c) Construct the permanent diversion weir on the Rio San Jose for the Flores districts. (The cost estimate by Halcrow was' L 71,000.) (d) Construct one or two overnight storage facilities and evaluate the performance. Halcrow recommended an investment of L 300,000 in such facilities. (e) Construct the drainage facilities for the 300 ha in the lower part of the Selguapa project and proceed with a leaching pro gram to reclaim the saline soil. The growing of paddy rice in this area after improving the drainage may be a desirable way to help reclaim the soil. Halcrow includes this item with other improvements and recommends an investment of L 1,080,000 spread over a period of five years to accomplish the needed improvements. The cost of drainage work would need to be es timated after a definite plan for drainage has been made. The work could be spread over a period of several years so that the effectiveness of the drainage could be evaluated as the work progresses. A rough cost estimate would be of the order of L 200,000. ANNEX 8 Page 25 (f) Develop several of the seven guided development ~chemes recom mended by Halcrow and evaluate their performance. Halcrow es timated that the cost of these schemes would vary from L 67,000 to L 610,000, for a total of L 2,048,000. The success of the initial schemes should be evaluated before proceeding with the others. An outlay of some L 300,000 for the several initial schemes is suggested. (g) Investigate the safety of El Coyolar Dam and prepare a cost estimate of the remedial measures, if needed. A permanent concrete ~~asuring weir should be constructed a short distance downstrea~ from the dam and a continuous record should be kept of the total seepage along with water levels in the reservoir. This measuring structure would need to be a substantial con crete structure anchored into the bedrock of the canyon. It should be designed to measure the small seepage flows and to withstand (but not measure) the flood flows OVer the spillway. An increase in the total seepage for any given water level would be a matter of concern, but if this seepage decreases, as it may because of the sediment in the water, there would appear to be no special concern for the safety of the structure. An allowance of L 100,000 for the inVestigation and construction of the measuring structure is suggested. 93. Other outlays for the Comayagua Project should be delayed until at least a preliminary evaluation of the return to the above-mentioned ex pendi tures can be made. The imp.rovements, as proposed by Halcrow, \vhich should be postponed are: (a) The construction of the Flores II - Palmerola lined canal. Halcrow's estimated cost was L 468,000. This appears to be a costly item, and the increase in irrigated area may have an adverse effect on the water supply available to recent devel opments such as the Las Canas Pilot Project and. the tomato industry. (b) The additional canal lining on the Selguapa canal, including the La Paz extension. There should be an evaluation of the effectiveness of the lining now being placed, and a comparison of the costs with previous estimates, before additional canal lining is undertaken. The total investment for lining this canal was estimated to be L 1,150,000. 94. Most of the other outlays proposed by Halcrow were to be undertaken in the later years of the development program; and are not affected by the judgment that construction should be delayed until more evidence is assembled on the probable yield. An example is the storage reservoir on the Selguapa. This was estimated to cost L 5.4 million and was scheduled for the tenth year of the program. ANNEX 8 Page 26 95. These specific recommendations reflect the view that the Government should move ahead with irrigation training and demonstration facilities, pilot projects and guided development schemes, and, on the basis of the outcome, make the decisions on additional major construction. The alternative course, that is, heavy investment in the immediate future, should be rejected • .Other Project Proposals 96. Because of the relatively high costs of the Nacaome projects (para 70), and the shortage of water during the critical dry months, the proposals do not appear feasible. However, a small project to irrigate not more than 500 ha near the river, by pumping from the river, deserves consideration. Such a project would provide valuable information on the economy of irrigation in this area. The small project would probably cost about the same as the larger diversion project which was studied, that is, some L 2,100 per ha. (A small project of 150 ha is under development.) 97. For the Otoro project (para 57), an alternative to the gravity diversion proposal should be studied. The principal canal of about 14 km in length, the main cost item in the project, could be eliminated by pumping from the river at a point directly west of Jesus de Otoro. This would require a pipeline of about 1 km in length or a flume to discharge the water into the canal. The project is small (525 ha), and would serve as a pilot project for the zone. The available information makes it difficult to determine the pumping head and to estimate costs, but a planning figure of some L 1.2 million might be used. As with other projects, the large farms would have to be redistributed, the cropping plan and the market outlook fully studied, and adequate arrangements made for water use and payment. 98. IDB is providing technical assistance to prepare the Quimistan project. 11 The project area totals about 3,000 ha, and it is planned to investigate alternative project designs, soils, land distribution, on-farm development problems, roads, and product marketing. (As a second component of this assistance, the Government asked that IDB help the DGI on matters of organization, administration, accounting and management •. The requested assistance totals $350,000.) 99. Both the Cuyamapa (para 42) and the Agua Caliente merit more de tailed study. For the latter, the no-storage Oloman Valley proposal has the most appeal; either dam could be added at a later date, and the project ex panded in line with Alternatives A or D. The proposed projects for the Alto Aguan (para 31) do not appear to merit priority attention. However, the possibility of less costly groundwater development should be studied, and consideration might be given to a 1,000 ha pilot project for which the water supply would be adequate. The soils are excellent. 100. The three diversion schemes proposed for the Choluteca (para 36) do not appear feasible. Projects of the El Palinque type appear to be the most feasible way of using the available river flow during the dry period. The soils along the river appear to be excellent for agricultural crops, but may present some problems for surface irrigation because of their possible high infiltration rates. Sprinkler irrigation, and crops best adapted to 11 This work will be coordinated with the IDB-supported Sula study mentioned below. ANNEX 8 Page 27 sprinkling, should be considered. Additional projects for which water would be pumped from the river should be developed slowly as experience indicates that an adequate water supply is available. The area was visited in late May 1974, at a time when the river flow would be at a near minimum, and there appeared to be sufficient water in this lower section of the river for a considerable expansion of irrigation. Experience during the next few years should either verify or disprove this assumption. 101. For the Sula Valley, in addition to the studies outlined by Davis (see above), an investigation is needed to determine areas, if any, which could be made economically productive for some crops without additional flood protection, if some drainage facilities were provided; a rice project in the Choloma zone is an example. The cost of such drainage would be low in com parison with an inclusive flood protection plan. These studies would require aerial photography to prepare topographic maps in some detail, with contour intervals not exceeding 50 cm, and preferably 20 cm. 102. The available evidence suggests that the Guayape project (para 53) and the Florida-La Entrada (para 48) merit further study. The Siria project requires high-cost storage, and both the soils and tenure position in the Talanga area present difficult problems; neither is recommended for further work at this time. Organization and Inter-Agency Cooperation 103. At the present time there is insufficient coordination between the several Government agencies concerned with irrigation: the Direccion General de Irrigacion (DGI), the Instituto Nacional Agraria (INA), and the ~tlnistry of Public Works. The first two are concerned with the development of land for irrigation. The t1inistry is concerned with flood control and surface drainage for highways; this affects irrigation projects, especially drainage. INA's small projects are investigated and constructed under the supervision of this agency without assistance from DGI. Both agencies use private con sulting firms for most of the feasibility studies and de~igns, since neither agency has the needed technical manpower. Such studies, however, should be supervised by an agency that does have technical capability. It would be desirable to concentrate this capability in the best qualified agency. DGI should have responsibility for the investigation, design and construction of irrigation schemes, and the development of the land for irrigation. 104. An associated problem concerns responsibility for agricultural soil surveys and land capability studies. This should be assigned to a Single agency, probably INA. This would assure that a uniform set of standards is used for all projects, and it would make the best use of the available techni cal staff. This work must be closely coordinated with the Forest Corporation, COHDEFOR, which has been assigned land capability work for the forest sector (Annex 5). The ~nistry of Public Works should have the main responsibility for major flood control projects, such as the Sula Valley. However, since flood control activities greatly affect the agricultural sector, a continuing coordination with the ~nistry of Agriculture is essential. It is particu larly important that highway construction plans be reviewed by the ~nistry ANNEX 8 Page 28 of Agriculture. This would help avoid such highway construction measures as the building of levees along river banks, which often ruin the best agricul tural soils of the area; construction methods which leave large borrow areas undrained, thereby adding to subsoil drainage problems in adjacent areas; and the use of culverts for surface drainage only, with no provision being made for subsurface drainage of adjacent lands. 105. It is proposed in the General Report that the DGI be made an auto nomous agency. This is part of a larger reorganization proposal for the agri cultural sector and needs to be seen in that context. (As noted above, the IDB, in connection with the Quimistan project, is assisting the Ministry of Natural Resources to determine the future role of DGI in water resource de velopment, and to improve its organization.) ~.Jater Law 106. There is urgent need for an adequate water law, along with effective arrangements made for its implementation. (It would be desirable to write into this law the lessons to be drawn from the experience of other countries. 1/) The Government fully recognizes that adequate legislation is essential for water resource development, and proposes to issue a neW law in the near future. Under existing arrangements, the DGI is not able to settle water disputes, and project studies have given little consideration to existing water rights where project supplies are to be taken from the natural flow of streams. Project investigators have based their recommendations on stream flow records, with measurements often being upstream from all existing diversions and water rights; conflicts of interest serious enough to destroy proj ects would likely arise if construction were undertaken without a thorough investigation of water rights and a legal basis for judging their validity. Private Irrigation 107. The Government should encourage farmers to install private irriga tion systems; these already account for much the greater.part of the nation's irrigated area. Of course, rights to divert water should be granted only where such a diversion would not jeopardize existing rights and interfere with public projects likely to be undertaken in the near future. Adequate credit and technical guidance should be made available for irrigation develop ment in areas where an economic surface or groundwater supply is available. 1/ An illustrative source document is the recently published work of Daines and Falconi entitled "Digest and Comparative Study of Water Laws in the Andean Pact Countries", Login, Utah, February 1974. ANNEX 8 Appendix Page 1 INDICATIVE MOISTURE DEFICIENCY ESTIMATES 1. This Appendix summarizes the available information on rainfall patterns in relation to moisture deficiencies for crops. 2. The source information is the climatic and hydrologic data pub • lished by the Direccion General de Irrigacion (OGI) of the Ministry of Natural Resources. The latest publication is Boletin No.6; this covers the period 1954-1966 (excluding 1960 to sometime in 1964 when the climatic and hydrologic stations were not in operation). Data for 1970 and 1971 have been published as annuals in cooperation with the World Meteorological Orga nization. 1/ Dependable Precipitation 3. The rainfall that occurs on a 75% probability (three years out of four years) is considered to be a reasonable estimate of dependable preci pitation. The difference ·be~Neen this P75 value and the estimated potential evapotranspiration (see below) is a fairly reliable index of the moisture deficiency and the technical need for irrigation. With this in mind, Carias analyzed most of .the available data to determine monthly precipitation pro babilities.!1 His five climatic zones are: Zone 1: includes the north coast as far east as Brus Laguna; Zone 2: includes the Department of Gracias a Dios east of the Rio Patuca; Zone 3: includes a strip across the country south of Zone 1 from 20 to 40 km in width, but extending south to include Lago de Yojoa and most of the Department of Olancho; Zone 4: includes most of the remainder of the country with the exception of Zone 5; Zone 5: covers the most southern portion east of El Salvador. 1/ Organizacion Meteorologica Mundial, UNDP~ Anuario Meteorologico, Anos -1970 and 1971, Proyecto de Ampliacion y Mejoramiento de los Servicios Hidrometeorologicos y Hidrologicos en el Istmo Centroamericano, Republica de Honduras, June 1971. 1.1 Fabio A. Carias, Evaluacion Climatologica en Zonas Cafeteleras de Honduras, Instituto Hondureno del Cafe, unpublished. The study was done in 1972 at the Utah State University with Christiansen and Hargreaves. ANNEX 8 Appendix Page 2 4. These zones were delineated primarily on the basis of total annual rainfall, but consideration was also given to the monthly distribution. For Zone 1, the low rainfall period is the shortest and extends from March through June. For Zones 2, 3, and 4 the period of lowest rainfall is from December through April. In Zone 5 the dry period usually pegins iii November and extends through April. The monthly rainfall data are shown graphically in Figure 1, and the survey data are presented in Tables 1 and 2. 5. The precipitation analysis made by Carias, using the gamma and normal distribution is summarized in Table 3; this gives the mean annual precipitation, PM, and 75% probable annual precipitation, P75. together with the average number of months with the P75 precipitation less than 100 rom and less than 50 rom. Potential Evapotranspiration 6. As noted above, these data need to be interpreted in relation to potential evapotranspiration (the water transpired by a short crop such as grass, which completely covers and shades the soil, when soil moisture is readily available). Evapotranspiration can be estimated fairly well from climatic data. Using the data from Boletin No.6 for the period through 1966, and the Christiansen-Hargreaves formula, Carias estimated the monthly evapotranspiration (ETCH). The data are in Table 4. Moisture Deficiency Estimates 7. The data on precipitation and evapotranspiration are brought to gether in Table 5. This table presents the monthly values of maximum pre cipitation, PMAX; the minimum precipitation. PMIN; the mean precipitation, PMEAN; the 75% probable precipitation, P75; the estimated evapotranspiration, ETCH; the moisture deficiency, ETDF; 1/ and the moistura availability index, MAl, ~/ for the 12 stations for which-climatic data through 1966 are available. Conclusions 8. Table 5 indicates that the physical response of crops to additional moisture is likely to be substantial at many points in Honduras. For example, a month with P75 of 100 rom can be considered dry because this is only about 1/ 'The difference between the monthly potential evapotranspiration and the 75% precipitation figure is an index of moisture deficiency or excess, ETDF. Positive values of ETDF are rough estimates of monthly irrigation requiremen ts. ~/ MAl is P75/ETCH. ANNEX 8 Appendix Page 3 50% of potential evapotranspiration. A P75 of 50 mm can be considered very dry. Even in Zones 1 and 2, the moisture deficiency period is of sufficient length to affect output and product quality of perennial crops such as bananas and citrus.- In other zones, the dry period is longer, and the impact of moisture shortfalls on cropping potential is still more marked. ,. ANNEX 8 Figure 1 Appendix 1 Page 4 400 11 400 D MEAN ~ 21 P75 300 ~ ~ ..J ..J oct ~ z ~ 200 CC > ..J J: I Z 0 ~ 100 .J F M A M J J A SON D J F M A M J J A SON D 31 ZONE 1 - (8 STATIONS) ZONE 5 (6 STATIONS) 200 200 ~ ~ I ..J ..J ..J ..J oct oct ~ ~ Z Z ~ 100 ~ 100 CC CC > > ..J ..J ~ J: ;: I Z Z o o ~ ~ J F MAM J J A SON 0 J F M A M J J A SON 0 ZONE 3 (10 STATIONS) ZONE 4 (34 STATIONS) FIGURE 1: RAINFALL DISTRIBunON IN ZONES 1, 3,4 AND 5. !-' Average precipitation for period of record. 21 Precipitation 75% of time, i.e., 3 out of 4 years. !f Zones are defined in the accompanying text. Note: Zone 2 is the Gracias a Dios Department. It has one station (Puerto Lempira). The amount and distrjbution of rainfall is similar to Zone 1. Source: Ministry OT Natural Resources, Boletin 6, Climatological and Hydrological Data, 1954·66,supplemented by unpublished data for 1967·71. Analysis by Ing. Fabio A. Carias. World Bank-8891 . -,--- . - (Page 1 of 2) Table 1: HEAH MOIiTlILY PRECIPITA'flOll FOR PERIOD OF RECORD TO 1971 Yef&t'd of ~ Station Department Long. .!.l!.:!.. RSS Ilr,1 l.!!h ~ !!lli ~.I!.l!.I J"n.!l, l!!1l .@&. ~ Q£L ~ ~ ~ o o • m No. (..U Hllletera per month) ZONE 1 6 /Juanaja rslas de la Bahia 16 28 84 54 2 21 222 106 64 10 18 123 231 156 131 512 421 358 2504 8 J... Cdba At1allt1da IS 41 86 50 5 11 432 229 170 72 92 153 154 138 193 414 443 368 2860 12 Tela Atlantida , 15 46 87 29 3 11 305 196 139 114 116 150 205 209 252 416 468 391 2967 41 Pe"" IIlanea Cortez 14 56 88 03 648 10 148 99 63 54 190 439 531 439 503 345 211 171 3224 48 l'\Jerto CarteE Cortez U 48 81 56 1 16 215 175 110 98 89 172 190 185 250 445 432 358 2784 54 Trujillo Colon 15 55 85 59 29 13 316 222 163 81 no 124 128 110 161 457 495 401 2773 60 Sica Coloa 15 52 85 04 20 7 286 103 124 120 169 266 444 262 156 278 311 486 3011 75 El Jaral Corte~ 14 56 88 01 650 1 129 74 82 120 194 513 514 526 539 330 264.1 325 3610 Avenae: 170 264 151 119 92 130 242 307 253 273 400 390 358 2982 Monthly Per Cant: 8.9 5.1 4.0 3.1 4.4 8.1 10.3 8.5 9.2 13.4 ' 13.1 12.0 100 ZONE 2 7 l'\Jerto Lempira Crada. 15 15 83 47 12 7 192 106 63 80 215 359 350 262 312 370 383 220 2920 Monthly Per Cent: 6.6 3.7 2.2 2.7 7.4 12.3 12.0 9.0 10.7 12.7 13.1 7.5 100 Wl:l!l...2 4 Chumbasua Santa Barbara 15 15 88 28 304 20 49 30 32 36 98 272 207 166 211 166 94 82 1447 1 La Mesa Cortez 15 21 87 56 26 9 64 54 36 13 89 163 101 86 148 137 166 120 1160 10 Sallta Rosa Copan 14 48 88 48 1019 27 41 26 28 46 136- 301 257 202 314 168 86 66 1626 11 Cat4Cilmaa Olancha 14 54 85 56 442 21 39 33 19 31 120 252 253 181 244 215 92 85 1569 32 Coyo1n Yoro 15 29 86 41 305 11 52 26 24 16 78 130 101 70 97 118 99 65 880 34 in Maddto Santa Barbara 14 50 88 06 633 26 56 38 32 41 151 352 388 362 426 279 106 71 2302 39 Jutl.eapa Olaneho 14 42 86 15 600 15 49 30 15 24 117 208 199 130 198 189 98 42 1303 51 Sail Pedro Su1a Cortez 15 25 88 09 16 22 68 48 45 52 66 161 148 114 156 161 131 111 1279 64 Santa lIarbara Santa Barbara 14 55 69 14 274 10 25 13 7 28 71 165 207 209 226 III 64 46 1178 69 Planes Colon 15 37 86 24 200 11 147 67 77 24 108 159 134 106 193 235 215 172 1635 Average: 394 59 36 32 31 103 216 200 10.3 221 178 us 87 1445 Konth1y Per Cent: 4.1 2.5 2.2 2.2 7.1 15.0 13.9 11.3 15.3 12.4 8.0 6.0 100 1 .....pala Valle 13 17 87 39 8 22 1 2 12 43 2&0 350 197 214 464 301 41 4 1905 ) Cho1uteca Choluteca 13 18 87 18 46 21 o o 5 43 269 391 180 256 392 324 49 3 1918 50 San Lorenzo Valle 13 26 86 28 8 9 1 2 16 29 189 242 157 144 392 200 12 I 1381 77 Finea America Choluteca 13 10 87 05 500 e o I 22 11 97 141 94 152 331 401 35 o 1291 i(~ ft 83 Pespire Cholutec. 13 34 81 20 60 1l 1 3 9 15 296 271 123 2)6 349 253 54 I 1615 Fine. El Rub! Choluteca 13 14 87 03 600 26 I 3 6 44 287 387 201 258 488 4/,4 86 4 2215 Average: 204 12 31 233 297 159 210 404 322 47 4 1721 Monthly Per Cent: 0.1 0.1 0.7 1.8 13.5 17.3 9.2 12.2 23.5 18.7 2.7 0.2 100 \.n.~CD I-' '.---~. 'N Table 1 - continu~d (Page 2 of 2) Years of ll.!!!! ~ Department Long. ~. Record o h!l..!lli~AIl!:.....H!x.:!l!!l!L1.!!!IAl!&.t.~Q£.t..l!.2L.~ Ann... 1 o 'III --.;:- (millimeter. per month) kONI! 4 2 Comayagua Comayagua 14 25 67 34 579 26 9 10 13 Jl 109 171 125 159 197 136 36 14 1018 S Zamorano Fr. Horazan 14 00 8702 793 20 12 6 9 36 147 222 132 141 175 140 50 13 1092 11 Te&uc 19a1pa Fr. Horazan 14 02 87 11 1007 28 9 3 6 34 159 162 87 89 206 134 34 12 942 15 Coyolar Comayasua 14 16 67 33 900 7 2 6 14 45 155 209 88 114 222 143 32 15 1052 18 Flores Comayagua 14 50 67 34 620 10 4 3 12 24 155 183 108 167 205 115 26 5 1035 19 Cuayahtlla. Olancha 14 36 86 17 300 10 68 29 30 i7 197 220 246 170 161 229 85 63 1542 21 La Gloria InUbuca 14 17 87 58 600 8 9 3 6 32 139 206 163 173 226 116 29 IS 1125 22 La Venta Fr. Morazan 11. 19 87 10 690 11 20 13 21 33 151 161 132 89 183 151 54 19 1052 29 ZaI:lbrano fr .. Horazan 14 16 87 25 1370 7 12 7 4 26 231 237 129 106 182 161 40 24 1188 30 Agua Caltente Fr ... ' Horazan 14 40 67 18 555 18 28 22 28 41 155 202 174 151 199 174 62 36 1276 , J3 35 36 IlU 1ce de Cop." £1 Picacho £1 Sauce Copan Fr. Hora:tan Fr. 110ra..... 14 50 14 02 13 55 88 51 67 02 87 13 1100 1373 1318 16 12 16 47 29 11 24 3 4 25 10 10 39 20 30 126 134 181 245 155 247 190 64 107 170 94 111 263 145 265 137 125 152 76 70 42 59 26 8 1409 698 1174 37 HIlA £1 Jaral Copan 14 52 89 04 700 16 45 24 26 43 130 338 251 256 316 172 108 57 1769 40 La [speranza lntibuca 14 18 88 10 1630 6 19 7 16 39 211 337 238 250 400 179 54 35 1790 41 La Labor Oeotopeque 14 29 8155 933 17 4 10 13 38 135 139 214 172 252 158 38 28 1286 42 La Hanl Comayagua 14 09 67 37 12. 15 7 9 7 41 154 251 156 168 266 166 41 5 1317 43 La raz L. Paz 14 21 87 39 667 12 3 4 1 25 120 188 153 118 206 124 29 5 961 44 Marcali L. P•• 14 09 88 00 1400 9 6 2 6 41 161 289 293 243 402 199 17 10 1672 45 Nueva Oeotopeque Oeotopeque 14 26 89 11 793 17 1 4 8 45 146 261 231 225 291 136 33 4 1394 46 Nuevo lloa.rio Fr. Horazan 14 13 8705 1171 16 51 33 20 42 199 228 217 134 196 198 65 58 1467 49 Sabana Grande Fr. Morazan 13 49 67 16 1020 17 4 4 10 46 216 276 89 150 320 209 47 1 1377 52 Talonga Fr. Mor...n 14 23 67 06 806 13 26 14 23 67 180 145 110 89 152 141 78 45 1077 55 Vera Cruz Copan 14 54 88 47 914 17 42 22 24 33 136 313 239 201 313 190 90 72 1679 56 loro Yoro 14 10 87 01 660 6 36 41 15 32 156 128 106 144 162 156 126 42 1150 I 58 Yuscaran £1 Partso 13 51 86 51 950 13 14 14 13 24 D6 296 157 161 271 243 32 20 1387 59 Zacapa Santa Barbara 14 42 ,88 07 457 11 46 33 32 11 127 263 213 255 326 231 101 64 1188 , 60 San Marcos de Colon Cholut<!ca 13 25 86 49 1020 11 1 .7 25 41 201 211 79 63 187 224 32 4 1079 62 Ruinas de Copan Copan 14 52 89 09 562 9 29 9 21 32 96 320 210 187 266 150 39 34 1419 63 Cracias Lempira 14 35 86 31 793 9 30 7 15 33 121 260 159 161 223 144 47 23 1227 65 Moroceli El Parho 14 08 86 56 616 15 2 1 2 8 75 136 67 97 95 92 25 1 607 66 HIlA San Isidro El Parlao 13 52 86 34 750 13 26 9 14 36 104 215 164 135 158 165 64 27 1122 67 HilA Loa Canad.a El Mor•• an 14 09 8702 1325 13 34 21 9 44 ·161 208 165 154 193 181 88 26 1288 74 DanH El Pariso 14 02 86 32 701 11 57 22 6 25 147 209 243 119 255 U8 100 37 1363 Average: 682 22 13 15 34 152 22,4 164 154 234 163 56 27 1258 ~! Ho'nthly P"r C.. nt, 1.7 1.0 1.2 2.7 12.0 17.8 13.0 12.2 16.6 13.0 4.5 2.2 100 Source: Carl.s, op. cit. . Table 2: MEAN MONTHLY PRECIPITATION, BY ZONES Stations ~ Feb. ~ Apr. May ~ July Aug. Sept. Qs.b.. ~ ~ Annual No. Zone 1 mm 8 264 151 119 92 130 242 307 253 273 400 390 358 2,982 % 8.9 5.1 4.0 3.1 4.4 8.1 10.3 8.. 5 9.2 13.4 13.1 12.0 100 Zone 2 mm 1 192 108 63 80' 215 359 350 262 312 370 385 220 2,920 % 6.6 3.7 2.2 2...7 7.4 12.3 12.0 9.0 10.7 12.7 13.1 7.5 100 Zone 3 mm 10 59 36 32 31 103 216 200 163 221 178 115 87 1,445 % 4.1 2.5 2.2 2.2 7.1 15.0 13.9 11.3 15.3 12.4 8.0 6.0 100 Zone !! mm 34 22 13 15 34 152 224 164 154 234 163 56 27 1,190 % 1.7 1.0 1.2 2.7 12.0 1'7.8 13.0 12.2 18.6 12.9 4.5 2.2 100 Zone .2 mm 6 1 2 12 13 233 297 159 210 404 322 47 4 1,721 % 0.1 0.1 0.7 1.8 13.5 17.3 9.2 12.2 23 .. 5 18.7 2.7 0.2 100 All Zones Weighted Average (mm) 59 62 36 32 40 150 235 192 176 256 217 125 86 1~607 % 3.8 2.2 2.0 2.5 9.3 14.6 ll.9 11.0 15.9 13.5 7.8 5.4 100 Source: Table 1. ~I~ Table 1: SUMMARY OF PRECIPITATION DATA Mean .Annual Precipitation Months with Years Mean .Annual 75% Probabi P75 less than Zone Stations of Data PreciEitatlon 1itZ ~P12~ 100 rom 50 rom No. No. No. llll1l. rom No. 1 8!1 96 2,982 2,628 4.6 2.9 2 1 7 2,920 2,636 3.0 2.0 3 10 172 1,445 1,232 8.4 5.2 4 34 459 1,266 1,057 8.3 6.4 5 6 97 1,721 1,287 7.5 6.5 Weighted Average 59 831 1,603 1,305 7.6 5.7 !I Includes 2 high precipitation stations near Lake Yojoa. Source: Table 1. ?I>i co ~ ,co I-' Table 4: ESTIMATED MONTHLY IUTENTIAL EVAIUTRANSPIRATION,BY STATIONS OF RECORD . !I I Station Jan. Feb. l~ !:£!..: 11:~;'L June .July ~ Sept. Oct. Nov. ~ Annu:?l ----------------------------------Millimeters per Month--------------------------------------------- Amp1a 173 176 221 220 216 189 210 209 183 172 1 168 2,304 Comayagua ''- Z28 2,322 1 00 217 2Ju 209 214 220 183 154 150 Cho1uteca 1 ?4 195 2~1 21~0 23~ 195 22'": 217 193 186 174 185 2,485 Chumbagua 147 151 1 2';L! 228 203 208 208 188 167 131 2,111 Zambrano 145 1 196 207 210 178 1 190 180 164 140 136 2,018 Guanaja 114 121 151 173 158 167 1 7l~ 162 141 118 11 7 1,152 La Mesa 116 126 165 1 B5 198 182 182 189 176 120 116 1,906 La Ceiba 132 139 175 192 206 196 202 203 186 159 131 125 2,048 Pto. Lempira 130 137 179 189 193 176 177 170 153 128 122 1,929 Santa Rosa 128 139 200 208 195 185 187 174 156 130 121 ·2,009 Tegucigalpa 1 40 158 198 209 209 180 185 193 178 135 131 2,011 Tela 122 127 173 190 185 186 182 174 153 124 114 1,899 Average. 141 1 191 202 208 H17 193 196 180 162 138 136 , 2,081 Average: mm/day'. 4.S5 5.32 6.15 6.73 6.7i 6.23 6.22 6.32 6.00 ·5. 4.60 4.39 . . 5.10 ."'d~1 . ~ . ___ .~.~~~~~_~ w. ______~. 73 _.w:_~ _~~_~~_._9~~._~:_._8 !I 6 Using Christiansen-Hargreaves formula. _____~~_2_7 __ • ~~_4_2____ ,_~.:~_._._~_8.~.__ .~6. ~_. __. 6 :~4__.__ 1~_~~_.~: ~ c» (1) m . Source: Carias, op. cit. (Page l, of 4) Table 5: SUMl1ARY PRECIPITATION AND EVAPOTRANSPIRATION DATA, BY STATION OF RECORD ~. ~. ~. Apr. May - June 1.1!1l Au"'. -~ ~. - Oct. Nov. Dec. Annual Station Ampa1a' Lat. 1)0 17 I , Long. 87 0 39', Klev .. 5, Zone 5 pMAX 18 31 81 1l~5 554 629 402 359 931 681 22h. 28 2,761 PMIN 0 0 0 0 92 168 64 61 236 80 0'" 0 1,222 PME.AN 2 3 12 45 263 368 198 191 476 • 305 4h 5 1,910 P75 0 0 0 4 165 257 122 11 8 350 192 4 0 1,613 El'CH 178 176 221 220 216 189 21 (I 209 183 172 162 168 2,304 ETDF 178 176 221 216 L9 -68 88 91 -1m -20 158 168 691 MAl O.co 0.00 0.00 0.02 0.77 1.]6 0.58 0.56 1 .92 • 1.11 0.02 0.00 0.7 Station Comayegl.lu Lat. 140 25 I , Long. 87° 34' J Elev. 579, Zone 4 PMAX 75 65 70 124 2110 555 534 565 424 31 e 100 58 2,246 PMIN 0 '0 0 0 27 12 0 38 67 0 4 0 424 'I PME.AN 12 12 1h 31 11h 176 130 159 201 132 32 13 1,026 P75 0 0 0 2 68 86 27 81 128 32 13 0 761 El'CH 149 166 217 228 236 2013 21L 220 196 HI) 151+ 150 . 2,322 ETDF 149 166 217 226 168 1211 187 139 68 151 141 150 1,561 MAl O.CO 0.00 0.00 0~O1 - 0.29 o.Li 0.13 0.~7 0.65 0·17 0.09 0.00 0.3 Statton Cho1utoca Lat. 13 0 H\I , Long. 87 0 12', Elev. l.i S, Zone 5 PMAX 1 15 20 124 70L 651 . 317 465 550 763 203 25 2,324 !'MIN ·0 0 0 0 4 206 23 67 229 3h 0 0 1,277 PMEAN 0 1 .3 38 262 ' 40?, 179 239 376 308 41 4 1,854 P75 0 0 0 2 113 3"13 111 160 3Vt 166 2 0 1,656 lJ ETCH 194 195 251 2l,0 235 195 221 217 19':\ 106 17tt 185 2,485 r ETDF 194 195 2 .)1 - 238 0n 1 '-<- -1'12 110 5'1 -114 20 172 185 829 o.C)O O.QO O.CO 0.0-; '0 1.61 0.51 O.'i'it 1 .60 ~ MAl 0·90 0.01 O.Co 0.1 Note: See text for symbols. ,~ , j..J~ CD . . ,0>1 .' '" I I-' ' Table 5 - continued (Page 2 of 4) ~ Feb. -Mar. Apr. May ~ JulY . !\.l.&.:.. Sept. Oct. ~ ~.L Al:lwal Stat.ion Chumbagua Lat. 150 15'" Long. 880 28 1 , Klev. JQ4 Zone 3 PMAI le[) 75 152 179 h36 320 37t: 49: 331 175 ~ 195 1,853 PMIN 1e 0 4 0 28 11(; r', ,;). ' 1 7e 21 j 2('· 1,091 PMEAN 46 23 32 41 92 266 2~ I" 0 162 21 17:; 98 86 1,457 P75 33 9 16 8 63 211 162 108 1t2 116 62 44 1,316 ETCH 1.L7 151 184 214 228 203 200 208 1CO 167 137 141 2,117 ETDF 114 . 142 168 208 165 -8 36 100 46 51 75 97 861 MAl 0.22 0.06 0.07 0.04 0.28 1.0l! 0.78 p.52 0.76 0 .. 69 0.45 0.]1 . 0.6 Stat.ion Zamorano Lat. 14 0 GOt, Long. 87° 02 1 , Elev. 793, Zone 4 PMAX 43 26 18 167 344 424 192 211 270 202 118 3h 1,597 PMIN 0 '0 0 7 13 140 10 56 -Q j/ 42 4 0 700 PMEAN '13· 9 4 41 133 2hl 130 130 161 135 9 1,061 P75 1 0 0 14 56 187 75 93 114 94 29 0 905 ETCH 145 ; 154 196 207 210 17B 179 .'190 180 164 140 136 2,078 ETDF 144 154 196 193 154 -11 10h 97 66 70 111 136 1,173 MAl 0.00 0.00 0.00 0 •.07 0.27 1.06 0.42 0.49 G.e.] 0.57 0.20 0.00' 0.4 fifjnt:i.on Guanaja La t • 1 fO 28 I , Long. 8Lo 5h I, Elev. 2, Zone 1 PMA.X 495 399 265 419 157 301 425 278 22C, 965 982 851 3,180 PMIN 0 0 0 0 13 11 124 68 26 201~ 130 141i 2,139 PMEAN 226 111 72 82 7L! 130 236 167 1 551 ).116 403 2,594 P75 1+6 ' 19 12 6 44 71 H;j ',2;: 02 40} 2/\ U4 207 2,394 El'CH 111. 121 151 1C,1 173 1513 167 174 1 141 ne. 112 1,752 ETDF 102 1..)" "'Q 1;' J 129 87 -1 C 49 -262 -1 L!6 -17) -642 I' H.A.I o.Lo 0.16 0.08 0.c5 0.25 o .)~S 0.09 0.72 0.51 i) ,:.00 f""\r 2.24 2.5(i( ~ ~~~ 1.4 t:: f3: X Q) I-' Table 5 - continued (Page 3 of 4) Jan. !2!L. ~. Apr. May -June July .!!!K.. SeEt. Qs.!L. - Nov. Dec. Annual .' Station La Mesa Lat. 15 0 27 I , Long. 87 0 361, Elev. 26 Zone 3 Pl1A.X 51 173 78 48 62 329 126 ,.,,., .... 146 lUi 318 129. t:..) ( 1,451 PHIN u9 18 8 16 49 306 88 49 6h 143 1°7 <-. 1 81 1,390 PHi.;AN 50 95 43 32 55 317 107 99 105 230 128 159 1,421 P75 50 29 1 20 4Q /' J07 94 60 74 165 127 1,392 ETCH 116 126 1 185 198 182 182 1 i76 151 120 116 1,906 gTDF 66 97 1 1(.5 149 -125 88 129 102 -1 !, -7 17 514 MAl 0.43 0.23 0.01 0.11 O. 1.69 0.51 0.32 0.42 1.09 1.06 o. 0.1 Station La Coiba. La t • 1.s-o WI, Long. 86° 50 1, Elev. 8 Zone 1 Pl-LAX 757 602 424 306 253 3h2 307 .263 40) 630 1167 ,21 3,598 PNIN 122 10 7 4 19 44 94 49 89 103 135 205 3,232 PI·mAN 432' 229 170 72 92 153 154 138 193 414 443 368 2,860 P75 265 65 45 14 50 86 118 97 132 244 274 307 2,579 E.'TCH 132 139 176 192 206 1 20L: 186 p'c ,.,!/ 13~ 1 2,048 ETDF -133 74 131 178 156 110 84 106 5h -85 -1L3 -182 -531 i MA! 2.01 0.47 0.26 0.C7 0.24 0.44 0.59 0.48 0.71 1.54 2.09 2.46 ! 1.2 ~tntion Puerto Lempira Lat. 1 ~o 1:: I , Long. a3° 47' ~ Eiev. 12, Zone 2 PH-AX 281 208 780 2ho 4'( 1,. 730, 588 425 hJJ 645 694 ,369 3,955 PI-lIN 136 40 11 11•1.., 53 217 237 104 197 286 1]8 qr; , ' 2,390 20h 126 162 97 211 402 361 2lt9 3.3"1 392 3!J8 223 3,107 P75 164 81 . 2'( 110 2f:ij 1 2}8 320 c,6J 2,756 ETCH 130 137 179 1 19.3 176 1,'h 1T1 1"(' I .. 1~ 1.) <-L r) 1,929 ETDF q, - J!~ )6 152 1 G., -108 -109 1 "I -i (1) -1(;7 -9~ -38 -830 MA! 1• 0·59 o •.1·? J 0.19 () . ~:7 1• 1.63 0.94 '1.6h 2.09 1 •'14 1.32llr (\)~~ 1.4 ~ I-' ! I\) ff. l>< C» I-' Table (Page - continued l of 4) Q.£t. Nov. Jan. Feb. Mar. Apr. Nal June July Aug. Sept. - Dec. Annual StaLion Santa Rosa Lat. 14° 48', Long. 88° 48 I , Elov. 1'019 Zone 3 PHAX 11 C '80 7f: 313 41L 432 408 439 564 . 971 178~ 181 3,223 PNIN 8 0 0 0 32 143 1 90 130 24 0 1,184 PN.EA1~ 42 2h ,., 31 59 11.1h 305 202 299 214 88 65 1,729 P1S 22 :> 5 6 84 2!ll 1!~ 1 217 1 56 18 1,448 ETCH 12B 139 185 200 208 175 187 174 156 130 121 2,009 ETDF 106 134 180 194 12L -46 46 -43 51 'lh 103 562 P"illl 0.17 0.04 O.OJ 0.03 0.40 1.24 1.02 0.75 1.25 0.67 0.L3 0.15 0.7 Station Tegucigalpa Lat. 140 02' , Long. 87° 11 1, Elev.l007, Zone 4 PH.\x 11 49 142 308 355 301 294 333 486 178 59 I 1,637 PfIIN 0 '0 0 1 56 3 • 30 35 77 29 0 0 695 Pl-lliAN 10 3 6 35 160 165 87 191 lL7 43 15 960 P75 1 0 0 8 11 C 82 53 150 74 10 2 824 ETCH 140 152 1913 209 209 -1 1 193 178 159 135 131 2,011 ETDF 139 . 152 198 201 99 131 140 85 125 1 1,247 MAl 0.01 0.00 0.00 . o.olf 0.52 o.ho 0.29 0.28 0.84 0.47 0.07 0.02 0.7 Stntion Tela Lat. 15° k)', Lone;. B7° :2 f(' , Eiev. e: /' Zone 1 Pl'Lt\X 621 557 226 515 396 4h6 414 692 nO 773 3,602 82 29 2 2 46 JEl 6h 87 110 ["-, /-' 197 200 1,916 299 221 131 1'31 112 1.., .~ I. 1'1,')(':; £~ c.. I.. 2n 425 475 391+ I 3,024 p t5 169 1;L( 2,684 r 79 39 31 69 140 1 207 315 ETCH 79 91 1'18 130 135 po 127 13C 122 91 77 1,298 ETDF -9C' 12 7') 99 _7 , - iO -117 -1,382 n. 1 .0:; MAl 1.08 1• '~l §2.1 2. 'I J O.OE: 0 0.2!. • r, I.:... 2.28 4-~! 2 h.2S (D(I)txJ Source: Carias, op. cit. . t:S ~ t::t:Q) ?< t-J ANNEX 8 Appendix 2 Page 1 SURFACE WATER DATA 1. Stream flaw data are incomplete and cover only short periods. The records through 1966 have been published by the Direccion General de Irriga cion (DGI) in its Bulletin No.6. As of that year, some measurements had been made at 92 stations; 28 of these were on the Rio Ulua and tributaries, 25 on the Rio Choluteca and tributaries, 10 on the Rio Nacaome and tribu taries. and seven on the Rio Chamelecon and tributaries. The remaining 22 stations were on the nine other rivers. Some of these stations had been in operation for less than a year and very few measurements were made prior to 1954. In most instances, measurements were not made during the period between 1959 and 1966. Summary data are shawn in Table 1. 2. Comparable data for the period 1967-71 have been collected by the DGI, and will be published. 3. Analysts of irrigation and power project proposals have tried to overcome data difficulties by extrapolating the flow records to periods of 20 years or more, based on correlations with rainfall. Such estimates are not entirely ~eliable, especially when based on the short periods of record available for some rivers.- For example, one engineering firm estimated the flow of the Ri0 Choluteca that would be available 80% of the time to be in 3 excess of 7.7 m Is for each month (Line A below); an analysis of daily flows for five years of record during the period 1957-68 indicated that the actual flows available 80% of the time each month for this period were much lower for the driest months (Line B); another report 11 (Line C) gave values that agreed quite well with this latter analysis. The data are: December J anuan: February March April (A) Es timated, m3 22.7 15.6 10.8 8.8 7.7 Is 3 5.5 3.6 2.8 3.0 (B) Measured. m Is 7.0 3 (C) Reported. m Is 6.6 6.5 4.3 3.5 2.8 4. These differences are large enough to make suspect any judgment on surface water availability. 11 FAO/IBRD, Report of the Honduras Irrigation Identification Mission, August 1970. ANNExa Appendix 2 Page 2 5. A similar study indicated that the minimum 80% probable flow of the Rio Humaya at Las Higueras may not be adequate to provide an extended Comayagua Project with a full water supply, considering the downstream diversions by pumping that have taken place. (The water rights for these downstream diversions probably would be superior to later upstream diver sions. Conflicts in water rights between upstream and downstream users might therefore occur.) 6. These comments on the Choluteca and Humaya merely underline the need to continue and expand the present effort to collect water resource data on an uninterrupted basis. Without such data, project analYSis is impossible and misinvestment highly probable. ANNEX a Appendix 2 Table 1: MAJOR RIVERS AND TRIBUTARIES FOR WHICH FLOW MEASUREMENTS ARE AVAILABLE Page J Rio Aguan 400 1959 10.3 27.9 2.3 10,S46 Rio Chame1econ Florida 480 1966 5.0 8.7 2.2 4,159 Las Canas 170 1958 17.S 31.6 11.0 Pt. Chame1econ 50 1966 54.S 100.8 17.4 Rio Blanco Rio Blanco 260 1966 17.3 Rio Cho1uteca Hernando Lopez 800 1966 11.8 31.1 1.7 7,035 Paso La Ceiha 640 1966 19.6 62.3 2.4 Pt. Ojo de Agua 600 1966 30.7 77.7 3.6 Los Encuentros 100 1966 55.4 156.4 3.4 Rio O-Cocuina Poza Crand~ 120 1959 1.3 2.2 0.4 Rio Lempa San Higuel! to 1958 20.5 54.0 2.2 Rio Hocoron Sirsirtara 1958 61.6 172.0 8.9 Rio Nacaome 2,531 Rio Grande de Pespire E1 !laso 60 1959 12.7 61.6 0.7 Poza Redonda 60 1959 36.1 229.2 0.9 Las Mercedes 35 '1966 34.1 107.8· 0.5 Rio Chi qui to El Puente 60 1959 1.2 11.4 0.01 Rio Guacirope El Zambito 30 1965 7.6 26.7 0.01 llio Patuca Cayetano 1966 213.5 510.6 31.5 24,686 llio Ja1an El Delirio 375 1966 32.1 75.7 8.5 Rio Jutica1pa E1 Torito 410 1966 3.5 11.5 0.9 llio Guayape Guayabil1as 370 1966 29.3 71.8 8.6 Rio Talgua Talgua 440 1959 2.9 4.8 0.7 llio Telica Telica 380 1966 U.3 52.6 1.4 lio Sico Barranco Blanco 4S0 1958 32.0 76.5 10.8 7,238 Rio La Orilla La Arada 900 1958 0.7 1.2 0.2 Rio Capulin La Encenada 700 1958 0.3 1.0 0.05 Rio Chiquita Rio Chiquita 1000 1958 0.7 1.1 0.3 Rio Alao Higuera1es 700 1958 4.6 Rio Charrascas El Limana1 500 1958 0.4 0.8 0.1 Rio La Lima. La Lima. 850 1958 0.7 1.4 0.2 Rio Matadero Paso ~.a tadera 900 1958 3.0 5.5 1.2 Rio San Martin E1 Paraiso SOO 1958 2.2 4.2 1.0 Queb. Las Piegras Las Piedras SOO 1958 0.5 1.0 0.2 Rio Tonjagua Tonjajua 500 1958 5.2 11.9 1.0 Rio U1ua La Isla uo 1959 152.9 366.6 33.9 25,564 Pt. Co1gante 1958 75.9 172.2 23.S Chinda 100 1966 224.3 423.0 57.4 Pt. Pimienta 35 1966 350.4 1153.6 54.5 Rio Cataguana Cuyamapa 170 1959 0.2 0.5 0.07 Rio 010man La Pimienta 250 1959 0.6 1.6 0.16 Rio San Juan Nueva Esperanza 210 1959 0.9 1.8 0.2 Rio Pijo1 Pijo1 215 1959 1.2 2.8 0.3 Rio Cuyamapa Pijo1 1966 7.5 14.2 1.3 Chili1enga 230 1959 4.1 7.6 1.3 E1 Naranjo 122 1959 7.1 13.1 1.8 Rio San Jose E1 Coyo1ar 900 1959 1.4 5.9 0.6 Rio Humuya Las H1gueras 550 1966 6.6 19.1 0.5 La Encantada 525 1966 18.3 54.9 3.0 11 Caj.on 100 1966 14S.4 292.6 30.3 Rio Grande de Otoro La Gloria 590 1965 11.3 33.8 2.6 Rio J1catuyo Queeoa 1966. 86.9 200.1 19.2 1/ Last year of record in Boletin No.6. 1/ Fioo;.; at measuring st.:l.tion for year given. Average fl(JW's for short period of re~ord not determined. li Tot~l are~ of drainage basin. Area above measuring station not given. Source: DGI, Bo1etin No.6, discussed in te~t. ANNEX 8 Appendix 3 Pqe 1 A NOTE ON SALINITY IN THE COMAYAGUA VALLEY PROJECT AREA ·1. Some 300 ha in the lower part of the Se1guapa district have severe drainage and salinity problems. 2. The Halcrow study reports that between December 1970 and March 1971 a number of auger holes were put down to a depth of two meters. 1/ The only ones with water were below the 600 m contour and north of an east-west line passing through Las Liconas. Some 14 holes in this area of about 300 ha contained water, the depth of which fluctuated during the 15-month period of observation in response to irrigation and rainfall. 3. A salinity investigation of this 300-ha area was made and soil samples were collected at 71 locations. At most locations, the samples were taken at depths of 0-15, 50 and 150 cm. The depth of water in the holes was observed and recorded at 24 locations. 4. The salinity was reported as the electrical conductance (EC) of 1:2.5 soil-water extracts. Equipment was not available to prepare satura tion extracts. The conductance values for these extracts ranged from less than 0.10 to a maximum of 8.1 mi11imhos per centimeter at 25 o C (mmhos). 5. A summary of the findings and interpretation is given below: Samples EC Estimated Crop Response No. mmhos 139 0.05 - 0.5 Salinity effect negligible 27 0.5 - 1.0 Yield of sensitive crops affected 16 1.0 - 2.0 Yield of many crops affected 14 2.0 - 4.0 Yield of tolerant crops affected 6 Over 4.0 Few crops yield satisfactorily 6. Most of the locations where the water table was below 150 em had low conductance values, but there were exceptions indicating that a high water table may have been present at some time in the past. 1/ Halcrow, Ope cit. ANNEX 8 Appendix 3 Page 2 --------------------- 7. Complete chemical analyses of the ground'vater were made on five samples from the area. These ana~yses included determination of pH; EC; total alkalinity as HC03-; the following ions in milliequivalents per liter (me/1): Na+, Ca+, Mg+, K+, C1-; and S04-; and the SAR value. The following tabulation gives the EC, total cations, Na+, Na percent and SAR values: Sample Number 2 3 4 5 EC, mmhos 0.64 14.0 15.0 54.0 13.0 Total Cations, me/1 8.87 125.3 127.8 371.8 116.2 + Na , me/1 1.85 90.0 98.9 317.4 76.9 + Na , % of Cations 20.8 71.8 77 .4 85.4 66.2 SAR 1.0 21.9 26.9 65.0 17.7 The SAR (sodium absorption ratio) is expressed by the equation: SAR = Na+;fyl Ca+ ; Mg+ SAR is used in the classification of waters for irrigation as an indicator of the sodium hazard. Samples 2,3, 4, and 5 would be much too saline for use as irrigation water. The SAR would also be too high. 8. Mechanical and chemical analyses were also made on 15 soil samples taken from horizons 1 and 3 at eight locations. The mechanical analyses by the Bouyoucos method gave the percentage of sand, silt and clay and textural classification (clay or clay loam) for 13 of the samples and silt loam for the other two. The pH values ranged from 7.0 to 8.3 for 14 samples and 9.2 for one sample. The EC of 1:2 soil-water extracts ranged from 0.36 to 1.40 mmhos for 10 of the samples, from 7.4 to 19.0 for four samples, and 65.0 for one surface sample. The SAR values ranged from 0.08 to 1.47 for the 10 samples and 2.81 to 19.4 for the four samples, and 28.0 for the highly saline sample. 9. These analyses indicate a phenomenon that is always found in-soils that become salinized by lack of drainage and the concentration of salts through the evaporation process. All of the "sodium salts are highly soluble whereas most of the calcium and magnesium salts are much less soluble. As -t:h-ewater-evaporat-es, the salts concentrate, and the Ca and Mg bicarbonates precipitate as CaC03 and MgC03. When the concentration of CaS04 reaches its solubility limit of about 30 me/1, it also precipitates. This process increases the percentage of Na in the soil solution and the value of SAR. As this process proceeds it increases the difficulty of reclaiming the soil. ANNEX 8 Appendix 4 Page 1 RECOMMENDATIONS OF THE DAVIS REPORT ON SULA VALLEY FLOOD CONTROL 11 J:./ "102. Most Suitable Plan of Improvement. Plan 5, as described in the foregoing paragraphs is recommended for adoption as the most suitable plan for flood protection of the Sula Valley. This plan should be developed in segments or units with all units comprising the overall comprehensive plan. With this arrangement orderly planning and financing can be accomplished and phased construction can proceed on individual units. "103. Immediate Construction. The small levees of Plan 4 are recommended for immediate construction as units in Plan 5. "104. Immediate Study. The levee of Plan 3 is recommended for immediate planning studies so that design work can be accomplished as soon as possible. The Plan 3 levee would become another unit of Plan 5 and con struction should be started as soon as field surveys and design work can be completed. "105. Detailed Studies for Comprehensive Plan. Preparation work to either establish an organization or secure consultant services should be started as soon as possible to pursue all of the detailed studies necessary to develop Plan 5. It is recommended that action be started on this con current with the work of paragraph 104. "106. Field Surveys. As noted earlier, considerable field survey work will have to be accomplished. It is recommended that: a. A first order level net be established from the River's mouth to Potrerillo. b. Mapping be accomplished from Santa Rita to the mouth covering the channel and banks and the areas extending across the valley from El Progreso Floodway to Campin Floodway, including border'areas on the landward sides. Spot elevations, cross sections, and topographic fea tures should be obtained and contour intervals should be no greater than 1 meter. 11 John P. Davis, A Study of Flood Control Measures for the Lower Area of the Ulua River Basin, Honduras, 1973. !I The Plans referred to in this text are briefly described in the Annex. ANNEX 8 Appendix 4 Page 2 "107. Stream gaging. It is recommended that permanent stream gaging stations be established at: a. Pimiento RR bridge b. Chamelecon RR bridge c. La Lima highway bridge d. Santiago Pump Station e. El Progreso highway bridge f. Santa Rita g. Guanacostal RR bridge The above stations should have recording gages and be designed to enable measurements of discharge to be made at any river stage. 11108. Stream gaging Program. It is recommended that sufficient personnel be trained and assigned to secure measurements of flow at all of the stations in paragraph 107 so that accurate and well defined rating curves and peak flood flows can be obtained." ANNEX 8 Appendix 5 Page 1 PRINCIPLES OF IRRIGATION AND DRAI}TAGE 1. So far Honduras has not been able to make effective use of its water resources. Part of the reason may be that some of the administrators at the decision-making levels of Government do not fully understand the basic principles of irrigation and drainage. The result is a reluctance to provide technical staff with the resources they need to handle the complex task of water development and the training of farmers in efficient water use. With this in mind, this Appendix outlines some of the important principles of irrigation and drainage. Water Requirements 2. The water requirements for optimum production depend to a large extent on the rate at which various crops extract water from the soil, called evapotranspiration or consumptive use, because it includes, in addition to actual transpiration from the leaves, the evaporation that takes place from the soil. This consumptive use is a function of the climate. the crop grown, especially the percentage of crop cover (percentage of soil area shaded by the crop). and the soil moisture conditions. Irrigation research has shown that maximum production can be attained only where the soil moisture is main tained above an appropriate level, and the plants are not allvwed to wilt or shO\, signs of moisture stress. Haxirnum benefits from irrigation can be obtained only when the fertility level of the soil is high. With irrigation, larger amounts of fertilizer can be applied. Yields may be limited by either the soil fertility or the moisture supply and best results are obtained when both are adequate. The optimum farm management practices for a given set of conditions can be determined only by research and experience. 3. Potential Evapotranspiration. This is the water transpired by a short crop such as grass which completely covers and shades the soil and when soil moisture is readily available. It can be estimated fairly well from climatic data (many formulas and procedures for estin~ting potential evapotranspiration are available). rae difference between the monthly poten tial evapotranspiration. designated ETCH, and the 75% probable precipitation, P75, is considered an index of moisture deficiency or excess, ETDF. The ratio of the P75 value to the ETCH (P75/ETQI) is called the moisture availability index, HAl. Plant and Water Relations 4. Actual evapotranspiration, or consumptive use, depends on several additional factors such as the percentage of crop cover, the height and leaf surface of the crop, and the soil moisture availability. When the soil moisture becomes a limiting factor, the evapotranspiration decreases. Since soil moisture is not extracted uniformly from the soil to the depth of rooting, ANNEX 8 Appendix 5 Page 2 but is removed from the upper part of the root zone first, the evapotranspira tion decreases gradually as the moisture is extracted. When the soil moisture in most of the root zone reaches a level known as the wilting percentage, or wilting point, the plants wilt and do not recover until the soil is wetted by precipitation or irrigation. When this conditionor:Wilt:1.ng is prolonged, the vegetation may dry up, as grass does during long dry periods, or the plants may drop their leaves. Deep rooted vegetation, such as trees, may survive long dry periods without showing visible signs of wilting because they can draw on stored moisture to great depth. Often the roots of such vegetation draw upon the ground-water below the water table which moves upward into the unsaturated soil by capillarity as it is removed from the capillary fringe. 5. Irrigation research has demonstrated that most crops will produce a maximum yield when the soil moisture in the upper part of the root zone. is maintained at a level above a point about midway between field capacity and wilting point. The field capacity is the moisture percentage of a soil after thoroughly wetting it and allowing it to drain for a period of about two days. It is considered to be the upper limit of available soil moisture. The storage capacity of a soil available for plant use is thus limited by the field capa city, the wilting point and depth of the root zone. 6. Both the field capacity and wilting point are dependent primarily upon the soil texture, being highest for clays and lowest for sands.. In general, the wilting point is about half the value of the field capacity. For example, a silt loam soil may have a field capacity of about 25% and a wilting point of 12%. Soil moisture percentages are conventionally expressed on the dry weight of the soil. A normal soil has a dry weight density of 1.2 to 1.5 and is higher for sandy loams than for clays. Assuming a density of 1.3, a square meter of soil to a depth of 1 meter (one cubic meter) would weigh 1.3 metric tons'- (i ~360kg)-=--:At field capacity (assumed to be 25%) it ~~wouJdhold325kgof water. or an equivalent depth of 325 mm over an area of 1 m. At wilting point (12%) it would still retain 120 kg, or an ~quivalent depth of 120 mm. The available moisture holding capacity of one m of soil would then be 205 kg, or an equivalent depth of 205 mm. The available storage capacity of soils may vary from about 50 to 250 mm depending on the soil tex ture and depth of rooting of the crop. 7. Assuming that maximum production can be obtained when the soil is irrigated when only 100 mm of water has been used, and that the evapotran spiration is 7 mm per day, it follows that 100 mm of water should be applied every 14 days, when no rainfall occurs, to maintain the soil moisture within the desirable range. 8. .Irrigation Efficiency. Because water cannot be applied uniformly over the surface and since water may be lost by surface runoff, somewhat more water is actually applied. An irrigation efficiency of 70% is considered good, ANNEX 8 Appendix 5 Page 3 and often it is as low as 40, to 60%. This means that from 150 to 200 mm of water may be required to insure that all of the soil is adequately moistened. The excess water will either run off the surface or pass below the root zone and become part of the ground water in the saturated zone. Excessive deep percolation losses contribute to drainage problems. 9. Actual Evapotranspiration (ET) or Consumptive Use. The actual con sumptive use of water by annual crops depends on the stage of growth of the crop. Before emergence, the only loss of water from the soil is by direct evaporation, EV. When the surface is moist, the rate of evaporation may approximate the potential evapotranspiration, ETP, but as the surface dries, the rate of evaporation from a bare soil may decrease to about 20% of ETP within a few days. After emergence of the crop, the ET will gradually in crease and may exceed the ETP when the crop completely shades the soil. For many annual crops, the actual ET may be much less than ETP for most of the grOWing period, but may exceed it for the period of maximum demand. It may be assumed that a water supply equivalent to the ETP for the total area will be adequate for most annual crops considering normal irrigation efficiencies, the actual ET of the crops, storage capacity in the soil and percentage of land actually in crop. Thus, for some conditions and certain months of the year, th~water requirements may be much less than the estimated ETP. The ratios of actual ET to'ETP for specific crops for designated periods of growth are often called crop coefficients. For detailed analysis of water require ments for an ar.ea with many crops, consideration is given to the area, the planting dates, and the available water holding capacity of the soil for each crop. 10. Effective Rainfall. This is that part of the precipitation that enters the root zone of the crop. It excludes the amount that runs off the surface (runoff) and that part which percolates below the root zone. Effec tive rainfall, therefore, depends to a large extent upon the intensity of the rainfall, the infiltration rate for the soil, and available storage capaci ty wi thin the root zone. For these reasons, the percentage of the rainfall that is effective in supplying moisture for crops is difficult to estimate without detailed studies for specific areas where the crops are to be grown, rainfall intensities, and soil conditions. Various methods have been used for estimating effective rainfall. 11. Dependable Precipitation. -This is that part of the total preci pitation that, on a probability basis, occurs a given percentage of the time. For irrigation purposes, it is generally ass~ed that the precipitation that occurs 75% of the time (three years out of four years, P75) for each month, is a reasonable monthly value to use in estimating irrigation requirements. Thus, for practical purposes, the moisture deficiency may be assumed to be the estimated potential evapotranspiration less the dependable preCipita tion (ETP-P75). ANNEX 8 Appendix 5 Page 4 Irrigation Methods 12. There are several methods by which water can be applied to the soil. These methods fall under the general headings of surface irrigation, subsur face methods, sprinkling and drip irrigation. 13. . Surface Irrigation Methods. This includes all methods in which the soil is the water carrying medium. Since percolation into the soil takes place as the water is being conducted to all parts of the area, there is a practical limit to the uniformity of application which can be obtained. 14. Subsurface Methods. This includes, in most instances, a manipula tion of the water table by raising it temporarily to moisten the root zone and then lowering it again to provide the soil aeration required. It is practical only under conditions of a relatively high water table and highly permeable soils, or subsoils, that can adequately distribute the water from ditches or other means. Its application is very limited and one of the principal disadvantages is that it provides no means of removing salt from the soil, and is therefore practical only where annual rainfall is suffi ciently high to provide the necessary leaching during the rainy period. 15. Sprinkler Irrigation. This method distributes water from pipe lines by discharging it through sprinklers. It provides a means of distri buting the water to all parts of the field without involving the soil as a carrying medium. There are many kinds of sprinkler systems for discharging the water to the atmosphere under pressure as low as 15 to as high as 100 lb per square inch (pressure heads of 10 to 70 meters). Individual sprinklers may have discharges as low as three gallons per minute to as high as 500 gpm (0.2 1/s to 231/sL. There are also all degrees of mechanization available from portable pipe systems moved by hand to stationary systems with automatic controls to turn water on and off as required. Best results usually are ob tained when the application rate is low, and the required amount is applied in an 11 to 12 hour period so that portable systems can be moved twice a day. 16. Drip Irrigation. A relatively new development in irrigation is the drip method, whereby the water is distributed through small diameter flexible plastic pipes equipped with drippers spaced about one meter apart. These drippers wet only a small area so the direct evaporation from the soil is reduced. This method provides good control of the water and a high efficiency; but is relatively expensive and feasible only on a limited number of crops where returns are high •. The method was developed in Israel to save losses by evaporation and to permit the use of fairly saline water that could not be used with sprinkler systems. ANNEX 8 Appendix 5 Page 5 Surface Irrigation Methods 11. The surface methods are most extensively used. They include the use of furrows, border strips, or basins; or simply the distribution of the water by means of field ditches and wild flooding. 18. Furrow Irrigation. This method is suitable for all row crops. The land should be graded so that there are slopes which permit water to spill over from one furrow to another. Land is often graded to have a uniform slope in the direction of the furrow, but this is not entirely necessary. In fact, better uniformity of application can be achieved where the surface is concave, with the maximum slope at the upper end of the furrow, and a slope of approximately zero at the lower end. This configuration may not be desir able where surface drainage after heavy rain is essential, and hence where some minimum slope should be carried to .the lower end of the furrow. The slope or gradient at the upper end of the furrow is limited by the size of the furrow stream .so that it will not be erosive. Generally, the slope is less than 0.5%, often not more than 0.2%. 19. The length of the furrow and furrow stream size are dependent on the infiltration function of the soil. Ideally, the total amount of water applied to a furrow should be such that the desired average depth is applied in the time required for that amount of water to enter the soil at the upper end of the furrow. If there was no runoff at the lower end of the furrow and the correct amount is applied, the average amount applied will also be correct. The amount applied at all places along the furrow should then also be near the desired amount. This should be that amount required to wet the soil to the depth of rooting of the crop grown, with a minimum loss by deep percola tion. 20. Low efficiencies result when the stream size is too low for the furrow length and soil permeability, and excessive deep percolation takes place. Runoff at the lower end also reduces the application efficiency. When the furrow stream flow is too high for other conditions, the stream will reach the lower end much too soon to obtain the desired penetration, and the amount of water applied is then too low. If the water was allowed to run a sufficient time to achieve the desired penetration there would be appreciable runoff which would lower the efficiency. 21. To obtain reasonably good irrigation application efficiencies, the irrigator must understand the relationship be~een these variables. 22. Border Strip Method. This is a method of flooding between low levees. The width of the strip between borders should be a function of stream size, infiltration rate for the soil, lengthlof strip, and the cross slope which should not exceed two or three centimeters for the distance between borders. The same principles as stated for furrows apply. High efficiencies are obtained when a fairly uniform amount of water of the de sired amount can be applied to all parts of the strip without waste by runoff. '£he border strip method is extensively used for forage crops and pastures •. ANNEX 8 Appendix 5 Page 6 23. Basin Irrigation. This includes all methods where the water is actually impounded and given time to infiltrate into the soil. Basins may be small, for example, a separate basin for each tree in orchards, or very large where the land is very level and well graded. It is best adapted to silt and clay loam soils haviBg fairly low infiltration rates so that the basin can be filled in a small fraction of the time required for the water to infiltrate into the soil. 24. Basins may be of any desired shape; square. rectangular or formed by levees following contours with the cross levees spaced appropriately to give the approximate desired area for each basin. Basins formed by contour levees are often called contour checks. Paddy rice on an extensiye scale is flooded with contour levees in which the water flows from the upper basin p~ogressively to the lower basin through small structures 1n the contour levees • 25. Basins may be filled directly from ditches, or by running the water from one basin to another. Where there is appreciable slope, 0.2% or more, small basins in orchards are filled by running the water down a strip of basins through openings along the longitudinal borders which are made after the cross borders are made. The lower basin is filled first, and then progressively each basin is filled, moving toward the upper end of the strip by closing the openings along the longitudinal borders. 26. Borders are constructed usually with special disc machines having two or three discs on each side throwing the soil toward the center. 27. Wild Flooding. This is a term applied to flooding by means of temporary field ditches in whlc'hopenings through the banks are made at appropriate spacings to permit the flooding of an area which has no borders to control the direction of the flow. Experienced irrigators can sometimes achieve reasonably good application efficiencies with this method when they understand the time required to obtain the desired depth of penetration. The method is often used with a minimum of land grading, but for good re sults it requires considerable labor. The secret is to locate the temporary field di tches so that they carry the water to all of the small knolls and ridges. 28. This method probably best describes the irrigation practices in Honduras, except where the water is confined to furrows. Drainage of Irrigated Land 29. Adequate drainage is essential in irrigated areas. As used here, the term adequate drainage simply means that the water table, or freatic level in the soil, should be such that there is an aerated root zone for the crops to be grown. When one considers that soils are saturated for a ANNExa Appendix 5 Page 7 distance of 20 to 50 cm above the water table. depending on the soil texture, and that many crops do best with an aerated root zone of from 1 to 1.5 meters, it follows that the water table should preferably be maintained at a depth of from 1.5 to 2.0 meters below the surface. This is especially true where ,, salinity is or may be a problem. 30. Adequate drainage may occur naturally without any man-made works, and for most irrigated areas, the higher lands often have adequate natural drainage. But there are very few large irrigated areas where natural drain age is adequate for all of the area. The lower parts of most irrigated areas require some means of drainage to maintain the water table at a suit able depth. 31. In irrigated areas, good surface drainage is especially important to the maintenance of the water table at an appropriate depth. Water that is retained in depressions, that do not drain following rainstorms or irri gations, will gradually percolate through the soil and raise the water table. This is sometimes an important contribution to the groundwater. 32. Seepage from canals and ditches is also sometimes an important contribution to groundwater. Lining of canals to reduce seepage losses is an important means of eliminating drainage problems. Salinity 33. Since all irrigation waters contain some salt, successful irri gation requires that there be a means for the salt to escape from the soil. The salt will otherwise accumulate and create a saline or saline-sodic soil. The higher the salt content of the irrigation water the more rapid this increase in salinity will be in the,absence of adequate drainage. 34. When water is transpired by crops or escapes into the'atmosphere by direct evaporation from the soil surface, most of the soluble minerals tend to accumulate in the soil, mainly in the upper layer or on the soil surface. When the water table is within a half meter of the surface there is an appreciable movement of moisture upward from the saturated zone and rapid accumulation of salt on and near the surface. When the water table is maintained at an adequate depth, this upward movement of the water is much less pronounced and can be counterbalanced by a downward movement of moisture and salt following every rainstorm and irrigat1on~-' 35. The water table can be maintained at an adequate depth only where there is opportunity for the groundwater to escape from the area by gravity. This groundwater will move toward deep channels, such as natural stream drainage channels. Where drainage must be provided, these channels or tile drains must be sufficiently close and deep so that the water table ANNEX 8 Appendix 5 Page 8 can be kept at an appropriate depth. Usually the water table midway be tween drains will be about a half meter above the water level in the drains. This means that the drains should be this much deeper than the desired level of the water table. In areas where there is relatively high annual rainfall, water table depths of 1 meter or more may be satisfactory for ~ most crops. 36. Serious drainage and salinity problems usually develop in large flat areas such as the bottom lands in large valleys and in coastal, plains. Where slopes are in excess of 1%, high water tables ordinarily develop only at the lower parts of the area, but under some stratified soil conditions, high water tables can occur on relatively steep slopes, 5% or more. 37. Reclamation of Sodic Soil. The result of this process of salini zation is that most soils subjected to soil solutions containing high con centrations of sodium tend to disperse when leached with waters of low salt concentration. This dispersion of the soil aggregates may greatly reduce the permeability of the soil. Sometimes it makes the soil almost imperme able to movement of water. The result is that such sodic soils become very difficult to reclaim and to irriga~e satisfactorily. Therefore, it is im portant to recognize areas where drainage and salinity may become problems, and to take steps to provide drainage before salinity conditions become acute. This is seldom done, however, and drainage is often neglected until salinity becomes a serious problem, and the reclamation of the soil becomes difficult and expensive. The only practical means of reclaiming saline and sodic soils is first to provide, drainage, then leach the salts from the soil with applications of irrigation water together with the precipitation. Hhere drainage is adequate, the normal annual rainfall in Honduras should be suffi cient to remove the salt added in the irrigation water, and no consideration need be given to the leaching requirement. In arid areas, where irrigation waters often contain appreciable amounts of salt, excess water, called the leaching requirement, must be applied. The river waters in Honduras are of excellent quality for irrigation. ANNEX 9 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY ROADS AND OTHER RURAL INFRASTRUCTURE Table of Contents Paragraph No. The Present Transportation Position 2 - 12 Ports and Airports 3 - 4 Railways and Waterways 5 Roads 6 - 12 Road Plans and Problems 13 - 23 Other Rural Infrastructure 24 -'37 Rural Water Supply and Sewerage 25 - 29 Rural Health and Education Facilities 30 - 31 Electricity 32 - 37 Judgments and Proposals 38 - 54 A Proposed Project 43 - 54 Table 1 Indicative Cost Estimates for Rural Roads and Structures, 1974 Appendix Organization Chart - Ministry of Communications, Public Works and Transport (SECOPT) Appendix 2 Location of Existing SECOPT Facilities Appendix 3 A Note on Terms of Reference for Consulting Engineer Appendix 4 Proposed Organization Chart for Directorate of Rural Roads and Rural Infrastructure (DGVOR) Headquarters Staff Requirements District Staff Requirements District Plant Requirements Indicative Project Time Schedule Indicative Estimates of Probable'Cost of Five-Year Project ANNEX 9 Page 1 ROADS AND OTHER RURAL INFRASTRUCTURE Y 1. Honduran farmers are handicapped by a lack of roads and reasonably priced transportation facilities. Substantial progress has been made in recent years in developing a trunk road network, but a great deal remains to be done to ease the transportation constraint on rural progress. THE PRESENT TRANSPORTATION POSITION 2. About 90% of foreign trade is handled by the ports, although air freight is increasing. By far the greatest volume of internal freight and passenger traffic is carried on the roads although railways, scheduled air services and charter aircraft all play an important role in the transportation system. Ports and Airports 3. Most of the international trade passes through Puerto Cortes on the north coast. There are also two specialized ports at Tela and La Ceiba which handle bananas and a fourth north coast outlet at Puerto Castilla. The last named is well located to serve the Aguan Valley but is currently little used. 21 Amapala, on the island of El Tigre, and El Huerto are the only anchorages on the south coast which are accessible to ocean going ships. Both are lighterage ports serving San Lorenzo on the mainland by barges. Current IBRD lending (767-HO, 1971) includes funds for improvements now being carried out at Puerto Cortes and for the preliminary design and con struction for a deep-water port at Henecan on the south coast, the first phase construction of which is likely to be undertaken from an allocation of $6 million in FY 1975. II This Annex includes comment on rural water supplies, education, public health, and e1ectrification--but only with the intention of providing a background against which to judge the mission proposal on how to im prove effiCiency in the construction and maintenance of these facilities. This question arose because in the mission view a Directorate for rural roads should be set up and economies of scarce personnel and other resources appear possible if it is assigned certain functions in addi tion to rural roads. The mission was not in a position to judge appro priate future rates of non-road rural infrastructure construction. A certain amount of such construction will be undertaken in the years just ahead, however, and how to do it efficiently is the question of concern here. !I The Government is said to be preparing preliminary proposals for the redevelopment of this port. ANNEX 9 Page 2 4. The four airports with paved runways are located at San Pedro Sula~ Tegucigalpa~ La Ceiba and Tela; the former two accept jet aircraft. There are some 80 airstrips dotted around the country, about 30 of which are capable of receiving passenger aircraft of the DC-3 type; the remainder are used by light aircraft owned by small charter companies or individuals. The total air traffic~ especially for passengers on the triangular route Tegucigalpa-San Pedro Sula-La Ceiba, has been steadily increasing but, as the road network grows, domestic air services tend to be withdrawn. Railways and Waterways 5. For topographical reasons, railways have only been adopted on a limited scale and these are confined to the northern coastal strip. Three lines are in use, said to total about 1,200 km in length~ but only some 160 km of this total is owned' by the National Railway which runs from Puerto Cortes southwards through San Pedro Sula to Potrerillos. Both the other lines are owned and operated by private companies and are used primarily for the export of bananas from the coastal strip, although one of these lines does penetrate into the Aguan Valley at Isleta. Outside the Department of Gracias a Dios, inland waterways do not playa significant role in the transportation system; it seems unlikely that this situation will change, except perhaps to meet specific local needs such as logging. Roads 6. The total land area of Honduras is 115,200 km2 but of this only some 16,500 km2 is estimated to have a gradient not exceeding 20%. The remainder of the country is mountainous and most of this is still covered in forest, more often than not extending to the knife edge ridges. Side slopes tend to be very steep and rivers and streams are numerous. Rainfall in many areas is heavy and seasonal (Annex 8). These facts underline the physical and economic proble~s to be overcome in providing vehicular access, and help explain why very little has yet been achieved on rural roads. 7. The existing road systems are mainly concentrated in the western half of the country where the population is relatively dense (Map 11146). The five principal highways are all paved and generally provide adequate connections between the major centers of population and commerce. These are: (a) The Inter-American Highway (CAl) 11 - 148 km linking the El Salvador and Nicaraguan borders along the southern coastal strip; (b) The Southern Highway (CAS) - 97 km running southward from Tegucigalpa to join the CAl near Nacaome; 11 Central American Route Number. ANNEX 9 Page 3 (c) The Northern Highway (CAS) - 306 km running northwards from Tegucigalpa, through San Pedro Sula to the country's principal port at Puerto Cortes; (d) The North Coast Highway (CA13) - 194 km linking San Pedro Sula with the banana ports of Tela and La Ceiba; (e) The Western Highway (CA4) - 280 km running southwest from San Pedro Sula to Ocotepeque where it divides to link with the Guatemala road network to the west and E1 Salvador to the south. 8. All these highways have been built to good engineering standards, appropriate to the topography of the areas through which they pass. 1/ In the most mountainous sections curvature is sharp and gradients steep,-but substantial improvement would require large capital expenditure, generally much more than can be economically justified at this time. Of course, there are specific cases in which worthwhile improvements to safety and journey time could be achieved at moderate costs. But in general, these highways are adequate, and in many sections more than adequate, for the country's foreseeable needs provided that: (a) drastic improvements are made in the standard of maintenance; y (b) plans to control vehicle weights are effectively imp 1 emen ted; 1/ (c) a program is introduced to provide road markings, safety and directional signs and, where necessary, guard rails; this is being discussed with CABEI; (d) a program of minor improvements to vertical and horizontal alignments is undertaken in the most mountainous areas; (e) that steps are taken to reduce traffic bottlenecks in some of the built-up areas, particularly in Tegucigalpa and San Pedro Sula. The term "highway" is used to include only bituminous paved trunk roads; "all-weather road" is used to describe any gravel surface engineered road which is serviceable almost all of the time; the term "feeder road" is applied only to any local road giving access to highways or al1 weather roads (no distinction is drawn b~tween "feeder" and "penetration ll roads); unengineered roads are referred to as "tracks ll or 'itrails". 2/ A roads maintenance program is scheduled to begin in 1975, with finance from IDB, the Export-Import Bank, and the !BRO. This point is important. Part of the over-loading problem is a result of financing truck purchases with short-term credit. ANNEX 9 Page 4 9. The SECOPT (Secretaria de Estado de Comunicaciones, Obras Publicas y Transporte) reports a national road network of almost 6,000 kID at end 1913, up 358 km on 1911. and made up as follows: KID Paved highways 1,228 All-weather roads 3,229 Dry-weather roads 1,490 Total 5,947 Apart from the five highways discussed above the balance of some 200 km of paved roads shown in the tabulation are located in the Puerto Cortes, San Pedro Sula, Tegucigalpa, Choluteca and Danli areas. 10. The most significant addition which will be made to the network in the near term is the Tegucigalpa-Talanga road. Construction and paving of this road is about to begin, and its completion in 1916 will open up a large area in the eastern half of the country. It will also provide a local benefit in that from Tegucigalpa it will follow a route to the northwest of the Choluteca River, thus opening new territory. (The old route lies on the other side of the river.) The next section of this road (Talanga Juticalpa) traverses better terrain; its upgrading is included in the IBRD lending program for FY77, so that by 1978-79 a good highway between Tegucigalpa and the fertile Guayape Valley should be complete. In the meantime, completion to Talanga in 1976 will provide a reasonable access to the area. 11. In spite of the term, all-weather roads should be regarded as only being passable for most of the time. Their usability during wet weather depends on the adequacy of maintenance; as with paved roads, this is far short of minimum requirements. Moreover, river crossings are inadequate or non-existent. Standards of all-weather roads vary from very good to very bad but, for the most part, where these roads exist, they are probably adequate for present needs. 12. Only two areas in the eastern half of the country ar'e linked to the west by all-weather roads, namely the Danli-Santa Maria arid the Juticalpa Dulce Nombre de Culmi areas. The only other eastern area to be served by any form of all-weather road network is the Aguan Valley, but this network is still isolated from the rest of the country during wet weather. Contact is, however, maintained by rail from Isleta to La Ceiba and by coastwide shipping from Puerto Castilla. ANNEX 9 Page 5 ROAD PLANS AND PROBLEMS 13. A feasibility study on a road link between La Ceiba and Elixir in the Aguan Valley (Route A) is now being done by consultants. A similar study was done on a route that would link Corocito in the Aguan Valley with the Juticalpa network via San Esteban and San Francisco de la Paz (Route B). Both these routes would be beneficial to the development of this area, but a comparative study of the two proposals should be made in order to determine which should be given priority. Route A, which is by far the shorter of the two, would give access to the North Coast while B would provide the shortest link with Tegucigalpa and the south. The location of the principal markets for the produce of the valley would therefore be a key factor in determining the relative priorities. In the short term, use of the existing rail link to La Ceiba would probably provide adequate access to the valley. 14. The draft 1974-78 national development plan provides for the construction of the La Ceiba-Elixir road, including an extension to Olanchito (L 8 million in 1976/78), and for the construction of the San Francisco Corocito road (L 2 million in 1975/76), but in neither case has a source of funds for the construction been established. The United Kingdom Overseas Dev~lopment Administration (UKODA) is considering offering consultants to do a feasibility study of another route linking Dulce Nombre de Culmi with Corocito via Iriona (Route C). Although this route is longer than the San Esteban proposal, two-thirds of its length follows an old railway formation, and it would open up a considerable area of abandoned banana plantations in the Paulaya Valley and along the north coast. Taking account of the fact that Route C utilizes the abandoned railway formation, and assuming that otherwise the terrain is similar and that the number of river crossings per kilometer is fairly constant, the three proposals compare as follows: Route A Route B Route C Approximate Length (km) 42 152 215 Length Ratio 1 3.6 5.1 Probable Cost Ratio 3.6 2.9 Linking Aguan Valley to the North the South the South and West and Southwest and Southwest New Areas Opened up The small Rio Grande Some 100 km of Papaloteca Valley the north coast Valley Ll east of Corocito and the Paulaya Valley /1 Already served by railway. ·ANNEX 9 Page 6 15. The draft plan allots about L 137 million (77% of its roads re source) to the main road network. The remaining 23% is alloca~ed as follows: Access roads, L 19.7 million; Improvements, L 14 million; Bridges and Approaches, L 5 million; Corps of Military Engineers, L 2.25 million. These figures show that the Government is aware of the need to provide new feeder roads and to improve the existing ones. But even more requires to be done to make good the backlog, as feeder roads serving the existing main roads are conspicuous by their absence in most areas. 16. The differences in standards of construction and maintenance between feeder roads in areas developed by the fruit companies and in the rest of the country are very marked, and Government would do well to follow the example of private enterprise in this respect. The fact that the terrain in the large scale fruit growing areas tends to be much easier for road construction in no way alters this lesson even if it does affect the cost of implementation. 17. Trails are far more numerous than are shown on any map. As seen from the air, it would appear that many, though'by no means all, could be improved to carry light vehicular traffic at relatively low cost. This possibility should not be overlooked in the preparation of development projects. 18. In addition to support for the main highway program, current lBRD lending includes funds for the construction of some 80 kID of secondary roads (mostly in the Comayagua area) and studies for about 230 km of feeder roads to serve the Talanga-Catacamas road. IDB is financing the ongoing construc tion of about 120 kID of feeder roads to serve the Corocito-Sava road in the Aguan Valley, and AID proposes to finance 350 km (one-half new, one-half reconstruction) of feeder roads to serve four groups of asentamientos in the San Pedro Sula, La Ceiba, Juticalpa and Choluteca areas. 19. Labor intensive methods of feeder road construction are now being tried. This is a step in the right direction, but there are lessons to be learned from the experience gained so far. The more important of these are: (a) It is generally a mistake to attempt to construct any section of road by exclusively labor-intensive methods; (b) Good engineering is just as vital to a successful feeder road project as it is to a major highway construction, and the only difference is the degree of sophistication in engineering which can be economically justified. The balance is a delicate one and therefore requires careful consideration for each project; (c) While river and stream crossings must be Simple, proper engineering and construction of the road drainage system represents the most important single success factor; ANNEX 9 Page 7 (d) The need for adequate maintenance must not be overlpoked. This goes hand in hand with self-help programs, because without these it is unlikely that local roads will ever receive all the maintenance they need. Arrangements must be made in advance to ensure that each new section of road is taken over for maintenance purposes by a responsible authority immediately after it is completed. Advance provision must also be made to ensure that the annual allotment of funds is sufficient to cover the ever-increas ing maintenance needs. (e) Labor intensive methods are much slower than mechanized. 20. SECOPT is responsible for the construction and maintenance of all trunk routes, and for all other non-urban roads. The organization of this Ministry is shown in Appendix 1. 11 Road construction and maintenance are undertaken by t~o separate Directorates working under one of the two Sub Secretariats. The first, Directorate of Roads (DGC) has the construction task; it is subdivided into two districts with headquarters in Tegucigalpa· and San Pedro Sula. The second, Directorate of Maintenance (DGM) , has the maintenance job; it has seven distrcits (Map 11146 and Appendix 2). 21. Studies are undertaken and new construction is designed and super vised by DGC, or by consultants, depending on the magnitude of the project and on the work load within the Directorate at any given time. DGC is a relatively efficient organization of modest size; its greatest problem is recruiting and retaining good engineers, partly because its salary scales are low. 1/ It will be noted in this Appendix that the IGN (Instituto Geografico Nacional), responsible for mapping, is a part of SECOPT. Maps published by the Institute include a Single sheet map to a scale of 1/500,000 showing departmental boundaries and most of the villages, but uncontoured, and without any indication of the road network; a single sheet map to a scale of 1/1,000,000 which shows some contours and the road network updated to April 1974; a set of 1/50,000 maps covering most of the country, i.e., excluding the southeastern area south of latitude 15°20' and between longitudes 84°15' and 86°30'. All these maps are based on aerial photo graphy dating from 1951/58. An important new addition is a contoured geological map of Honduras to a scale of 1/500,000, published on four sheets in June 1974. IGN also has sets of stereo photographs to a scale of 1/60,000 covering most of the country, except the Department of Gracias a Dios but these also date from the same period. Satellite photography undertaken at regular intervals and published by the National Aeronautics and Space Administration (NASA) would be of great value in updating exist ing material for any specific development project. ANNEX 9 Page 8 22. DGM has the same basic problem. In addition, it is faced with a task which few countries do well. Maintenance the world over tends to be neglected. The results are all too obvious but are now reaching a critical state because, unless the present standard of maintenance can be greatly improved, many millions of dollars of road investment will fail to yield the expected benefits. 1/ 23. Local authorities are responsible for the urban roads, other than trunk roads, and in some cases (e.g., Choluteca) seem to get involved in the construction of rural feeder roads. It is not clear exactly how the responsibilities are divided. as DGC claims to be responsible for all rural roads. As is to be expected, technical ability and standards of efficiency vary considerably from one local authority to another. OTHER RURAL INFRASTRUCTURE 24. Reasonable access is not enough to create an adequate way of life for farmers in remote areas. In addition to rural roads the basic human needs of potable water, rudimentary health services, and primary education are all essential and the Government plans to expand them as rapidly as possible. As pointed out in the footnote on page 1, there are good possibilities of' econ omizing on scarce personnel and other resources if the construction and main tenance aspects of the non-road expansion are tied in closely with the effort on rural roads. With this in mind, the following paragraphs comment briefly on several of the non-road infrastructural programs. This comment is not" intended to be an appraisal of these programs, but rather an indication of the amount of construction which can be foreseen, in terms of need. Rural Water Supply and Sewerage 25. Although there is little knowledge about the extent or distribution of underground water resources. it is probable that the supply is adequate for domestic purposes throughout the country. (For agricultural or industrial use, each specific case requires investigation.) 26. Water and sewerage services in rural areas are virtually non existent, with only about 5% of the rural population being served with water and 0.1% with any sewerage service. £/ Such services as exist are inadequate 1/ Current IDB lending includes consultancy and equipment for road maintenance. 1/ The validity of available figures for existing services are in some doubt. For example, there are at least two townships which are known to have old but serviceable piped water supplies but which were not included in the list of such services prepared by SANAA (see below) for 1970. It is probable that the coverage claimed to exist is made by largely of these small towns and villages, but this is not made clear. ANNEX 9 Page 9 in both quantity and quality and the incidence of water-borne diseases is said to be high. 27. Servicio Autonomo Nacional de Acueductos y Alcantarillados (SANAA) was established in 1961 with national responsibility for water supply and sewerage, but so far its efforts have been chiefly directed towards urban needs. A start was made in 1971 to tackle the rural problems with a joint SANAA-CARE program to construct community water supply systems and to encourage latrine construction. Progress on water distribution has been encouraging. Thirty systems serving about 20,000 people were completed in the first two years, and some 20 further systems through mid-1974. Latrine construction has been rather limited. The water program is to be continued at a planned rate of 30 water systems per annum for the next five years. If the annual growth rate in the rural population is 2.5%, this program should provide a water supply to about 9% of that population by 1979. 28. This rate of progress falls far short of the 11% to 28% coverage stated as the objective for rural water supplies in the draft national de velopment plan. This plan also aims at 9% to 25% coverage of the rural population with its latrine construction program. Using 2.5% and 6.2% re spectively for growth rates in rural and urban populations, the rural sector will still represent some 66% of the total in 1978. The allocation of funds made for rural water supply and sewerage in the draft plan is 7.4% of the national program. 29. The principal lending agencies in this field have been AID and IDB. A joint IBRD/WHO/PARO sanitation sector mission covering the five Central American states visited Honduras in May of 1974 to evaluate assistance possibilities. Rural Health and Education Facilities 30. Very little in the way of rural health and educational services exists. The needs are so great that it will take a long time to provide anything like adequate coverage. The principal targets of ongoing programs up to 1979 are (a) to train 35 auxiliary nurses and 12 technicians annually; (b) to vaccinate 15,000 children annually; (c) through education, to encourage better health care and sanitation in the home; (d) to provide high protein foods to expectant mothers and children, hopefully to reach 350,000 persons; and (e) to construct 2,000 primary school classrooms together with latrines and teachers· quarters. 31. The draft 1974-78 national development plan, which includes the CARE input, aims to provide 500 rural health denters and 14 cottage hospitals (25 to 30 beds) by 1978, and to extend minimal health service coverage to some 70% of the population. The plan allots 9% of health expenditures to rural areas, and 11% of educational outlays to rural primary education. ANNEX 9 Page 10 Electricity 32. Empresa Nacional de Energia Electrica (ENEE) is the principal ~ authority responsible for electric power supplies. A number of township authorities run their own diesel plants and in some towns individuals own small generating sets, selling power to their neighbors. 33. ENEE's existing national grid system links Tegucigalpa with San Pedro Sula (a 138 kv line following roughly the same route as the North Highway) and San Pedro Sula with Puerto Cortes (a 69 kv line which is now being duplicated). nvo major extensions to the 138 kv line are under con struction, one running from the Rio Lindo hydrostation to Tela and La Ceiba (now almost complete) and one from Tegucigalpa to the Nicaraguan border via Nacaome and Choluteca (due for completion in 1976). A further extension from La Ceiba to Coyoles in the Aguan Valley is covered by current foreign loans, but its construction will not be authorized until a sufficient com mercial demand for power in the valley is assured. This grid is supplie~ from two hydro stations using water from Lake Yojoa and four thermal stations (two diesel and two gas turbine) with a total installed capacity of about 140 mw. 34. ENEE also operates 14 isolated diesel generating stations, with a total installed capacity of about 6 mw, serving some of the larger towns outside the area of the grid system. One of the three major privately owned power supply companies has already been acquired by ENEE, and it is anticipated that, by the end of 1974, this authority will be responsible for almost all of the nation's electricity supplies. 35. The provision of rural distribution networks (34.5 kv) has been commenced, one such system in the Comayagua Valley is almost complete and the follOWing lines are now under construction: Approximate. Location Length km Tegucigalpa-EI Zamerano 24 Finca Blanca-Santa Rita-Guanchias 18 Puerto Cortes-Omoa 13 Nacaome-Langue 22 Langue-Goascoran 11 Choluteca-Marcovia 12 Choluteca-Yusguare 9 Yusguare-EI Corpus 8 Choluteca-Namasigue 12 Namasigue-EI Triunfo 21 150 ANNEX 9 Page 11 36. The Bank Group has been helping on power since 1959 and has pro vided the bulk of the financing for its expansion. This lending is planned to continue, with the emphasis being on hydroelectric generation in order to minimize demands for imported fuels. 37. The 1974-78 draft national development plan assigns a total of L 157.4 million to power development; of this, L 4.2 million, or about 3%, are allocated to specific rural projects although, in the long term, rural areas will derive considerably greater benefits than are implied by this figure. JUDGMENTS AND PROPOSALS 38. It is clear from the above that a considerable amount of rural infrastructure is foreseen by Government. Efficient construction and maintenance will be of vital importance. 39. With respect to roads, attention is drawn to the following points: (a) The 1971 traffic c.ensus and inventory of roads should be updated to provide the data needed for road system construction and maintenance planning. 11 (b) Greatly increased emphasis should be placed on road maintenance. (c) An effective system for controlling the all-up weights of trucks is urgently needed. (Road damage is estimated to be proportional to the axle load to the power of about 4.5. Thus a 16 ton axle load causes 23 times the damage of an 8 ton load. A current IBRD loan provides for installation of the first weigh bridges.) (d) Subject to the comments made above, a greater use of 1abor intensive methods for rural road construction seems feasible. ~ (e) It is essential that all roads be engineered, thereby assuring that resources are not wasted. 11 Brown and Root, S.A., Ca1ificacion de Suficiencia de las Carreteras de Honduras, and Volumenes de Transito en las Carreteras de Honduras, 1971. 21 Generating local participation in the upkeep of roads is essential; for best results close cooperation should be maintained between DGVOR (See below; cooperatives and other associations through INA (Instituto Nacional Agraria) and forest units through COHDEFOR (Corporation for Forestry Development).) &~EX 9 Page 12 (f) Road cost estimates being used for planning and budgeting are much too low. Field inspection and typical outlay levels in other countries suggest that cost estimates should be adjusted sharply upward (Table 1). (g) In terms of rural development, the most important road project which is not already financed is an all-weather road connection for the Aguan Valley. A study of the three proposed alternative routes, discussed above, should be made, if, as is understood, the route decision is still pending. The possibilities for a road running south and east from Juticalpa to open up the Rio Patuca Valley also needs study. (h) Outlays for feeder road construction should be increased sharply ~uring the years just ahead, subject only to the constraint of effective implementation capacity. (i) Although the range of soil types is wide and variable, thus requiring careful slection, sources of satisfactory and accessible road making materials appear to be plentiful in most parts of the country. 40. With respect to the general problem of constructing and maintaining all types of rural infrastructure, the most pressing problems are: (a) the apparent inability to disburse the available funds within the planned time schedules; (b) a chronic shortage of good technical and executive staff; (c) ensuring that funds are used solely for the purposes for which they have been provided; (d) arriving at a more productive distribution of available funds as between urban and rural needs; (e) better coordination of agencies active in rural development. 41. It will take time to solve these problems, as many of the solutions depend on an improved salary structure which will attract the right men and keep them in Government service, and on more and better in-service training at all levels. The rate of progress in thses areas depends on across-the board improvements in the public administration. These should be made at the most rapid feasible rate. Meanwhile, the role of rural roads in stimulating agricultural expansion is so vital that emergency steps should be taken to expedite construction and maintenance. Remedial measures should center on increaSing the quality and effectiveness of use of scarce engineering and administrative talent; and on better utilization of the available resources through improved coordination of all relevant Government agencies and local authorities, and of international and bilateral lenders, at both the planning and implementation stages. 42. One way to attack these problems is through a specific projet. Designed for speedy implementation to help solve the most urgent problems, it also should provide a pilot scheme to test the most effective way of tackling the countryts long-term rural infrastructural development program. The pilot ANNEX 9 Page 13 nature of the project is stressed. It is realized that the scheme would not provide a final solution to the obstacles which stand in the way of effective infra-structural work--such as the lack of trained personnel, the salary level, funds disbursement, the rural-urban distribution of funds for roads, organizational overhead costs, and the distribution of responsibility among directorates for the various types of roads. However, the project would bring these problems to the fore, and produce empirical evidence as to the bes t way to solve them. A Proposed Project 43. The project would establish a new directorate in SECOPT with res ponsibility for the design, construction, supervision and maintenance of rural roads, together with like tasks (but excluding design) for all the other building and civil engineering works for rural infrastructure. This directo rate, which might be called DGVOR (Direccion General de Vias y Obras Rura1es), would take over its functions on a phased ba~is; for example initially, it might be responsible for only the maintenance'of existing roads and the super vision of new construction. The project would provide for: (a) a comprehensive study by a consultant working in collaboration with Government to determine the specific nature o~ the proposed DGVORj (b) upon completion of the study, creation of the headquarter nucleus of DGVOR, which would then work with the consultant on the next stage of the project; (c) completion of the organizational framework. at both headquarter and district levels. including the preparation of a handbook of procedures and standards and an in-service training program; (d) provision of the technical assistance which (a) and (c) establish as being essential to the successful outcome of the project; (e) identification of the first three districts to be declared as priority areas (Designated Areas) and finalization of the detailed requirements in manpower, plant, equipment and accommodation for these three districts; (f) the procurement of the plant and equipment necessary to establish the first three districts as viable operational units; (g) the provision of such office and workshop accommodation, radio links, compounds and staff hOUSing as may be necessary in these three districts. ~~X9 Page 14 44. The first vital step necessary to launch the project is the appoint ment of a Consultant; this should be done at the earliest possible date. (Proposed terms of reference are given in Appendix 3.) His services would be required until the DGVOR is well established and is working efficiently in at least three districts. The number of districts adopted for the project will obviously depend on the national economic situation and on Government's ability to provide counterpart funds. The minimum number of three proposed is considered to be the most efficient from both the operational and pilot project evaluation points of view. If however, circumstances prevailing at the time of implementation dictate a reduction in the scale of the project, the number of districts should be reduced to two; any attempt to reduce costs by cutting down the proposed levels of district staff and equipment would destroy the fundamental objectives of the project. 45. Indicative judgments on the organization of the DGVOR are presented in Appendix 4, along with headquarters and district staff requirements, district plant needs, a project time schedule and project costs. The latter, including allowance for cost escalation on a May 1974 base, approximate $16.4 million, of which some 75% might need foreign financing. 46. The new Directorate should report to the appropriate sub- secretariat in SECOPT; it should be separately budgeted, and its takeover of duties should be time-phased and include the following: (a) the design, supervision and construction of all new feeder roads and their associated drainage systems and structures to be built within those areas of the country which may, from time to time, be allocated to DGVOR as Designated Areas by the ~linister of Works; (b) the proper maintenance of all existing feeder roads and associated drainage systems and structures within such Designated Areas as are determined by the Minister. as well as the maintenance of all new works of this type to be built within such areas; (c) the supervision, construction and maintenance of all public rural buildings, water supply systems, sewerage works and other works of a building or civil engineering character situated within the Designated Areas and which may, from time to time, be made the responsibility of DGVOR for these specific purposes by the Minister; J! J! Obviously excluding major works such as highways and power stations. ANNEX 9 Page 15 (d) liaison with other directorates within SECOPT and with the appropriate officers in other ministries and authorities (such as Ministries of Health and Education, INA, SANAA, etc.) to ensure that proper coordination of interests and priorities is maintained between all concerned ~ith infra structural development in the Designated Areas; (e) ensuring that optimum use of all the resources allocated to DGVOR (particularly manpower and plant) is maintained at all times and that these resources are used solely for infrastructural requirements in Designated Areas. 47. The DGVOR would be at the same organizational level as the DGC and the DGM (shown in Appendix 1), and the duties of these two Directorates would be redesigned to center on trunk roads. Wherever possible, the DGVOR should be installed in the existing compounds of DGM. Plant and staff requirements would be considerable, as is noted in Appendix 4. The manpower requirements at district and sub-district levels would vary from area to area and from time to time within the same area. This problem is common to all types of construction activities and would be overcome by acquiring a perman ent staff able to meet the minimal needs of each area and augmenting this with short-term staff as the need arises .. 48. To minimize fluctuations in staff levels and, even more important, to avoid the need to hold large fleets of plant which could not be kept fully employed, the DGVOR should make the maximum Rossible use of contractors for the construction of the larger schemes, and of local community labor for the smaller ones. None of the envisaged schemes are likely to attract international contractors, but there are good local contractors operating in Honduras. It is in the country's interests to foster the growth of a national construction industry and, so long as individual contracts are kept small, it is realistic to anticipate good results from competitive local bidding. As the industry grows, so will the size of contracts which it can successfully undertake. 49. Each district office of DGVOR would be run by a professionally qualified District Engineer (DE) who would be responsible to the Director for the efficient administration and technical control of all the work under taken by his office. The DE would be supported by technical, supervisory and clerical staff appropriate to the needs of his district. In the early stages, the local staff should be supported by foreign assistance. This could take the form of (a) salary supplements or special allowances where it can be shown that suitably qualified and experienced local staff are available if the remuneration is adequate; or (b) expatriate staff when the conditions of (a) cannot be met. ANNEX 9 Page 16 50. A personnel training scheme is recommended, covering both headquar ters and district levels. If suitable candidates in substantial numbers are available, short courses undertaken by the candidates prior to taking up their appointments, followed by in-service training in the field, would be the best method. Otherwise longer pre-appointment courses would be necessary and the in-service training, while still very important, would not need to be so intensive. In either event, careful planning of comprehensive training programs would be essential, and involvement in training activities would form an essential part of the duties of all expatriate staff. 51. As much as possible of the preliminary and design work should be done in the district offices. This method may require the temporary posting of design staff to serve in district offices for specific projects. However unpopular such moves may be among junior engineers, they provide an invaluable link between the design process and the hard realities of construction. It would of course be necessary to pass all designs, whether undertaken in dis trict offices or at headquarters, through the same approval procedure in order to maintain adequacy in design and consistency in standards. 52. Even as today, a continuing problem would be to assure close collaboration and coordination with SECOPT and between Government departments and local authorities concerned with rural development. Close liaison between those responsible for roads and irrigation is particularly important (Annex 8). It is proposed that a Coordination Committee should be set up in each of the Designated Areas. The senior officer of each interested organization resident in the area concerned should be a member; 11 the chairmanship of the Committee might rotate among agencies. Meetings at monthly, or at most two-monthly intervals, should be held. Minutes of these meetings should be submitted to a Similarly constituted executive committee at the headquarters directorate level so that local problems can be solved without delay. 53. It should be stressed that the principal objective of this project is to establish efficient construction and maintenance units with the capability to handle all the basic elements of rural infrastructure. The project is not geared to any specific development proposal, but the intent is that DGVOR become capable and flexible enough to handle all rural infra structure construction and maintenance needs in any part of the country, whether the development be large or small, and, whether the circumstances be normal or of an emergency sort (as after Hurricane Fifi). The DGVOR would not itself determine project and area priorities, but rather implement the decisions of the relevant public bodies operating in a coordinated manner. In the case o'f agriculture, a basic source of information for the rural roads program is the ongoing multi-purpose cadaster.(Annex 4). 11 If no officer of a relevant agency resides in the area, an officer from headquarters who is directly involved with development in the area should be appointed to the committee. ~~X9 Page 17 54. As stated above, the services of the Consultant to the project would be required until the DGVOR is working satisfactorily. -When this stage has been reached, a study should be done on the nationwide unification of all rural building and civil engineering public works agencies. The project consultant, who by then would be closely familiar with the entire problem, should be assigned a major role in the study. . ANNEX ~ Page 1 11 Table 1: INDICATIVE COST ESTIMATES FOR RURAL ROADS AND STRUCTURES, 1974 Fe~er Roadlii Flat Terrain 45,000 30,000 Undulating 53,000 36,000 Mountainous 61,000 42,000 Reinforced Concrete Bridge L 4,000/m run. . (American Association of . State .Highway Officials ~I (AASHO) loading HS.20-44.).:::.l Timber Bridge L 2,OOO/m run. (AASHO loading H. 20-44) Bll; J dinES Concrete posts, beams a~d floors, b7ick walls, steel roof trusses, asbestos roofing and ceilings, aluminum glazed windows, hard wood doors, tiled floors, plastered walls, electrical and plumbing services, including design and supervision but excluding land: average cost, L 200/m2 • EI ' Concrete floor and block walls, hardwood doors and glazed windows, asbestos roofing on timber trusses, including design and super vision but excluding land: average cost, L 901m 2 • 11 1I Based on analysis of cost figures obtained in Honduras for work being executed in May 1974. 21 For 5 m carriageway of 15 cm selected materials on 6.5 m earth for mation, generally to standards between "Vecinales" and IfPenet:racion" of the Central American specifications but subject to local relaxa tions where deemed necessary; including right of way, fenCing, an allowance for culverts and minor stream crossings, design and supervision. JI Machinery based construction. YI With a consequent longer construction period. ;u Standard American Loan Classification for 20 ton truck. 21 Based on current AID school program contract rates. 11 Assuming local community participation. -"""""",-. • ... ORGANIZATION CHART MINISTRY OF COMMUNICATIONS, PUBLIC IDRKS AND TRANSRJRT (SECOn) ~---"-"~':--l SECRETARI~ I Sub-secretariat for Sub-secretariat for Communications and Public Works :crmJ?:RQ.rL___ i_ _-:T.. ..... ..,------, , Directorate of Directorate of Directorate of Mainteance of J I ~at~~L Roads Transport Roads & Airports Directorate of '.i)i;ect.orlte of Urban Affairs Civil Works and Geographic --·-T------------- .......-.--- _~:uQJi.(:L.~u.:IJ..dJ,p.K-S Institute Directorate of Directorate·- Of---~· Directorate of Civil Aeronautics [ Telecommunication Post Office ----- . . -, ....--- ~~ --" --.. ------- --- -~- Source: SECOPT !I~ .... _._ . ......... _--- ANNEX 9 A;gI,1MdiA , Page 1 LOCATION OF EXISTDiG SECOPT FACILITIES Headquarters Comayaguela, DoC. !2Q£. Headquarters Comayaguela, D.Co District Office San Pedro Sula m!i Headquarters Comayaguela, DoCo District Office No. 1 ComayagUela, DoC~ District Office No.2 Galeras, Olancho Department District Office No.3 Choluteca, Choluteca Department District Office No. 4 Comayagua, Comayagua Department District Office No. 5 San Pedro Sula, Yoro Department District Office No. 6 La Ceiba, Atlantida Department District Office No. 7 Santa Rosa, Copan Department Pripci;gal Mecbanical WorkshoI,1s an~ Plant Depots Comayaguela San Pedro Sula ANNEX 9 Appendix 3 Page 1 A NOTE ON TERMS OF REFERENCE FOR CONSULTING ENGINEER 1• SECOPT would appoint a Consulting Engineer acceptable to interested foreign lending agencies (hereafter referred to as "The Engineer") to work in close collaboration with Ministry staff in undertaking the following tasks: (a) A detailed study of the existing organization and adminis tration of DGC and DGM, with special reference to the creation of a new directorate to undertake constructions and mainte nance of feeder roads and other building and civil engineering works in rural areas; (b) To make firm recommendations for the creation of the new directorate (DGVOR); (c) To assist and advise SECOPT on the implementation of these recommendations after they have been accepted by SECOPT and approved by the interested lending agencies; (d) To continue with item (c) until DGVOR is well established and has become operational in at least three districts, with special reference to any modifications to his original recom mendations (b) in the light of experience gained during the first stage of development of DGVOR. 2. The Engineer would have had appropriate experience in. the construc tion and maintenance of roads, structures, buildings and services in tropical conditions, using both mechanized and labor-intensive methods, and in the executive, technical and financial operation of a public "works. department. The Engineer would be required to cooperate and collaborate closely with Ministry staff at all levels and would spend most of his time in Honduras each year throughout the duration of the appointment. 3. The Engineer should be given the following specific functions to perform as part of his assignment: (a) Preparation of"a program and budget for the Directorate and the updating of these at regular intervals throughout the assignment; (b) Making recommendations with regard to required legislation; (c) Establishing inter-agency coordinating committees and participating in their work; ANNEX 9 Appendix 3 Page 2 (d) }~king recommendations on the appointment of staff to DGVOR, particularly to the key posts; (e) Making recommendations on the selection of the first Designated Areas; (f) Liaising with other departments (e.g., Ministry of Health, SANAA, etc.) on all matters related to construction of rural structures with which they may be concerned; (g) Participating in and guiding the development of DGVOR at both headquarters and district levels; (h) Designing monitoring procedures, and a system for taking prompt remedial action. 4. The Engineer's brief should also require that he study and make recommendations on: (a) Ways of improving the organization and procedures of DGC and DGM; (b) Criteria for DGVOR to consider in seeking the best possible balance between the use of contractors, community labor and directly employed labor for, construction projects; (c) The use of labor intensive methods for feeder road construc tion; the advantages of designing roadworks at district level; design approval procedures; staff transfer arrangements; job costing and programming procedures; manpower, plant, equipment and accommodation requirements; the location of district and sub-district offices; technical assistance needs; training programs and standards to be adopted for the design and con struction of building and civil engineering works; (d) Preparation of a handbook, for the guidance of DGVOR, con taining all the agreed procedures, standards, etc., and par ticularly, staff job specifications and the functions and responsibilities of each post; (e) Liaison with other interested agencies on matters concerning the national road network, such as traffic census. 5. Many aspects requiring study and advice will only emerge as work proceeds, and the Engineer would be expected to identify these, to comment upon them and to take the necessary follow-up action. AI."mEX 9 Appendix 3 Page 3 6. In collaboration with DGC, DGM, and DGVOR, the Engineer would be required to establish design and construction standards for rural roads. It would be~rong to lay down hard and fast rules at the outset, but the Engineer should recognize and apply the following basic guidelines: (a) the cost of subsequent maintenance must be balanced against savings anticipated from lowering standards; (b) a certain degree of flexibility should be built into whatever standards are set so as to enable the engineer to make the most economic use of the physical conditions he encounters in the field; (c) standards adopted for feeder roads should take into account possible future upgrading by ensuring that works undertaken in the early stages of development make a substantial contri bution to subsequent improvements; (d) good engineering is just as important for feeder roads as it is for higliways and the demands made on the engineer may be even greater for the former; (e) adequate drainage constitutes the most important single element in road construction and any attempt to make savings on this item is liable to result in greater overall cost in the end; (f) subject to the flexibility criterion, (b) above, road widths should generally not be less than 5.0 m and shoulders not less than 0.75 m giving a minimum formation width of 6.5 m. The running surface of selected material should not be less than 15 cm in depth. 'PROFOSED ORGANIZATION CHART FOR DIRECTORATE OF RURAL ROADS AND RURAL INFRAS'fRUCTURE '-----------------'--J [---"-.--"-----iI,--,---- Director r""~"=~ - ,---~,= _=~_--_-_-_=-_-_c==~= -"'-~ __.__ IP"ianning and] ~_aisln i [ __ ~<!J!Ii?.!s.t:ration ,_ 1 II ,I II --.J- Districts 4, 5, 6 t }t No. 1 I [Di~~riI~~: J .2_ . District NO.3l and 1 to be added as need ~., . . -.~ ~ -! r-- I Sub-Dist .. -L I Sub-Dis t. I Sub-Dis t .1 '-S-Ub--'-"--D1-s-t-.j ! 10Ub-Dist. II -j SUb-Distel No. 1.:1; No. 1.2 No. 2.1 No. 2.2 ; I 1'10. ).1 No. ).2 I -------' 1 I Notes: Executive control indicated by Technical control indicated by See Appendix 1 for SECOPT organization chart. District numbers are to coincide with existing DaM district numbers: the first three DaVOR districts l~~ to be established on the basis of the consultant-assisted stuQy. Sub-Districts may, or may no~ be required. (1)~~ .... I-'~ X ANNEX 9 . APpendix 4 Page 2 HEADgUARTERS STAFF REQUIREl1ENTSli Post Ref. Designation 1.1 Director General'v 1.2 Personal Assistant 1.3 Secretary 2.1 Chief Executive Engineer (also Deputy to 1.1) 2.2 Personal Asistant 2.3 Secretary 2.4 Chief Clerk 2.5 Staff Clerk 2.6 Accounts Clerk 2.7 Plant Clerk 2.8 Stores Clerk 2.9 Records Clerk 3.1 Chief Planning Engineer 3.2 Secretary 3.3 Planning Engineer 3.4 Transport EConomist 4.1 Chief Works Engineer 4.2 Secretary 4.3 Highways Ehgineer (Roads and Bridges) 4.3.1 Roads Inspector 4.3.2 Bridges Inspector 4.4 Plant Engineer 4.4.1 Plant Inspector 4..5 Works Engineer (Structures, Water and Drainage)' 4.5.1 ~uilding Inspector 4..5.2 Water and Drainage Inspector 11 Only the principal posts are listed at this stage in order to give an indication of the type of organization envisaged. '£! The Director General should be a professional engineer. ANNEX 2 Apriendix4 Page 3 DISTRICT STAFF REQUIREMENTsli Post Fef. Designation D.I. District Engineer D.2. Personal Assistant D.S. Assistant District Engineer D.4. Secretary D.5. District Surveyor D.6. District Draftsman D.7. District Chief Clerk D.B. District Staff Clerk D.9. District Accounts Clerk D.IO. District Plant Clerk D.II. District Stores Clerk D.12. District Records Clerk D.13. District Roads Supervisor D.14. District Bridges Supervisor D.I.?'. District Plant Supervisor D.16. District Building Supervisor D.17. District Water and Drainage Supervisor SJ(;illE[9 Categories al ~vorks Foremen l1echanics Carpenters/Joiners Plant cperators Mas ons/Bricklayers/Concretors Drivers Plumbers Blacksmiths El. ectricians Welders . 2/ Categories of Semi-skilled and Unskilled Labor- Banksmen Timekeepers Steelfixe rs Storekeepers Chargehands Chainmen Laborers ].f.essengers Watchmen 11 Onlythe principal posts are listed at this stage in order to give an indication of the type of organization envisaged. Y Minimum. establishment should normally be not lesl:! than two in each category. ANNEX 9 Appendix 4 Page 4 DISTRICT PLANT REQUIREMENTSli No. of Units Description of Units :3 Motorgraders, 125 hp. 4 :c6c tractors, 140 hp, complete with hydraulically opera ted angle doze2''' :3 shank ripper and control unit for towed scraper.=.! :3 Matched towed scrapers for :c6C tractors. J1 2 Pneumajic tired hydraulically operated frocl1oaders of 1.5 yd capacity. 12 Dump trucks of 6 yd:3 capacity. 1 Fully equipped mobile workshop on six-ton chassis. 2 Grease trucks on six-ton chassis. 2 Flat-bed trucks of 16-ton capacity. 5 Pick-ups, four-wheel drive. 5 Small four-wheel drive vehicles. Appropriate stock of spare parts for each item. \vorkshop tools and equipment to augment DGM existing. V Actual requirements will depend on district size and work load; this schedule lists only the likely minimum for a balanced fleet in each district. £( The largest tractor considered feasible for road transportability in Honduras at present. ;; Mayor may not be required,depending on terrain. ANNEX 2 APPendix 4 Page 5 INDICATIVE PROJECT TIME SCHEDULE 1I Item Consultant Headquarters Supply at DGVOR District DGVOR District rd DGVOR District' Training Program t Operation 1I Assuming study started in the final quarter of Year One. ... • ANNEX 9 Appen)iix 4 Page 6 - --.--. RWlCATIYE ESTIMATES OF PROBABLE COST OF FJ:Yi-XEAR PROJECT -- -, Estimated. Total Cost at- Allowance -~ Mav l2:ZL!. Pr1Q~UI tor Escalation 1 t (a) (b) Consulting Engineer Support to Formation ot oom 25 306,000 l .. 1,187,625 1/4 ot 36.50% 9.13% (c) Technical Assistanoe and Training Program 1,193,813 J (d) Plant Supply 25 2,670,qao 1/4 ot 41. 36% :a 10.34% (e) Plant Operation 50 5,287,500 1/2 ot 69.98% '" 34.99% Total: loa! 10 1644 2938 54.46~ - s~y ___ !!!O.1642 z000 say $5,782,000 -m;--- ---- ------ --- ----- _.- -. ---- sRsr§ements Scbid~e -~. . .- ...... ------,---~ .-.~---.--.-~ ~. _.-.--- - -- .-- - .. It::a.t !.Um. 2D4. ll&. Thre§ ~ lW. - , (a) , (b) and (0) 19,080 336,271 778,941 1,1.37,329 1,397,242 (d) 1,168,570 1,255,790 1,350,130 (e) 8h4,825 2,839:388 51 299,250 Total: 19,080 336,271 2,792,336 21232 S07 8,046,622 tor a total o t ilg.LL2g.alg. eq $lg I lIz:z :11J 1Qll. Ngtes: {1} Estimated road oonstruction capability tor the later years ot the projeot: -at -least 100 len per District per azmum.. (2) Foreign loans requirement might approximate 75% ot total cost. (.)} D1.sbursement - schedule includes aJ.lowanoe tor cost escalation based on IBRD Projects Memo ot March 29, 1974. Source: Mission ANNEX 10 Page i HONDURAS AGlUCULTO'RAL/RUlW. SECTOR. SURVEY EXPANDING AGllO-INOOSTRY (AND lWi"DICRAFrS) Tabla of Contents Paragraph No. Development Obj ec.tives and Agendes 3 - 22 Objectives 4 - 5 Ins titutions and Agendes 6 - 22 Recent Subsector Position and Trends 23 - 49 Livestock Slaughter,. Meat Preparation and Conservation 25 - 28 Sugar Milling 29 - 30 Tobacco Curing and Cigar Making 31 - 33 Oils and Fats Processing 34 - 38 Grain Milling 39 - 40 Milk and Dairy Products 41 - 43 Fruit and Vegetable Processing 44 - 49 Small-scale Industries and Artesanias 50 - 56 Quantific.ation 51 - 52 Review 53 - 56 Selected Input Industries 57 - 72 For Agriculture 58 - 65 For Agro-Industry 66 - 72 N_ Projects 73 - 75 --:.S~· ~. Problems 76 - 84 Raw Materials 77 - 79 Goverament Procedures 80 Public Sector Resources 81 M.anagement PersOD.tl8l 82 The Development Targets 83 - 84 .Jv.t:iPeAta and Proposals 85 -1(;0 Agricultural Production 87 CDNADI 88 - 95 Small Indus tries and Artesaaias 96 Outlets for Foreign Assis tance 97 -100 ---.--.---~---------..,.. '-----------------,..------>'--- ANNEX. 10 Page ii Table of Contents (continued) Table 1 Gross Value of Production - Principal Manufacturing Groupings Based on Agriculture, 1965-72 Table 2 Employment in Manufacturing Industries, By Size, Selected Years Table 3 Capital Investment in Manufacturing Industries, 1969-72 Table 4 Value Added by Principal Manufacturing Groups Based on Agriculture, Selected Years, 1960-72 Table 5 Applications for Investments in Agro-Industry, 1973-74 Table 6 Percentage Distribution by Product Group of Principal Imports and Exports of Agro-Industry Related Products, 1970-72 Table 7 A Resume of Artisanal Activities, 1973 Table 8 The Small-Scale Industry Position in 1973, and Projected for 1978 Table 9 New Agro-Industrial Projects in Advanced Planning State, 1974 Table 10 Industrial Product Groups Proposed for Expansion in Draft National Development Plan, 1974-1978 Table 11 Specific Agro-Industrial Projects under Consideration by Government Planners and Private Sector, 1974 Appendix 1 Decree-Law 135 (CONADI) ANNEX 10 Page 1 EXPANDING AGRO-nmUSTRY (AND HANDICRAFTS) 1. For this Annex, agro-industry is defined to include food, drinks, tobacco, textiles (natural fibers), leather, and leather footwear (forest products are discussed in Annex 5). In 1972, food and drinks together accounted for about 80% of the gross value of production for the six groups (Table 1). In the period 1965-72, the gross output value of food and drink doubled. The six groups accounted for 63% of the gross output of all manufac turing activity in 1965, and for 72% in 1972. Including wooden furniture and accessories, and a few smaller activities, it is estimated that total agro-industrial production value currently accounts for some 85% of all manufacturing production value. 2. Agro-industry is thus seen to constitute the major portion of the industrial economy. If well-based, further expansion can contribute significantly, inter alia, to raising incomes and promoting development in rural areas, improving nutrition, substituting for imports and fostering rewarding export business. DEVELOPMENT OBJECTIVES AND AGENCIES 3. The draft 1974-78 national development plan and the 1974 Plan of Operations include the following background data. 11 (a) 13.9% of the gross internal product was contributed by the sector in 1972. Corresponding average figures for Latin American and Central American countries for the same year were 18.2% and 17.5%, respectively. (b) Between 1960 and 1972, industrial production almost doubled and its contribution towards meeting the total demand for manufactured goods rose from 56.3% to 65.9%. (c) In 1970, industrial production (manufactures from. artesanias are excluded) was: 9% from small industry, represented by more than one-half of the total industrial establishments; 33% from. medium industry, comprising about one-third of all industrial establishments j and 58% from. larger industries com prising only one-tenth of all industrial establishments. 11 Agro-industry is not distinguished as such in these documents. ANNEX 10 Page 2 (d) According to investigations made for 1968, some 49.3% of all available productive capacity was then non-utilized, and there was ample room for technological progress. (e) Manufacturing activity is virtually confined to the areas of L tegucigalpa and San. Pedro Sula (some 81% by value of the total industrial production in 1968). , . 13 (f) Fixed investment per person occupied in industry was L 5.4 thousand and L 9.1 thousand in 1962 and 1972, respectively. In the latter year, total manufacturing (including artesanias) employment was some 71,000 persons (about 9.3% of the nation's total employment), made up of about 29,000 in in -dus trial anci- 42 ,OOO-il:iaras-anar-acti Vit,y-.--ihes e-data-hlih~-- Ugh t the fact that the expansion of manufacturing over the decade failed to generate significant direct employment. , , Objectives 4. Key Government objectives for industry, as presented in the two plans (para. 3), are: (a) to raise the level of industrialization so that manufactur '-". ing activities contribute 16 .4~ of the gross 'internal product wi thin five years. ;;. : " (b) to diversify production so as to reduce dependence on i~ ) ported raw materials, semi-manufactured goods, containers '. , , and other intermediate products. (c) oro achieve an average growth in manufacturing of 10.9% per year in the gross value of production over the. ensuing five years, as agains t a demand growth of 9.7% per year. (d) Preferentially to develop those manufacturing activities i -; utilizing indigenous raw materials and labor, wi th emphasis ~1 - ,1 on export markets. (e) to secUre improved utilization of productiva capacity. (f) To estabUsh industrial undertakings in those areas lacking manufacturing activities but which possess appropriate re sources. Small industries transforiaing agricultural raw materials are expected to make a major contribution. (g) to improve the extent of industrial complementarity and integration.. Small industry is again expected to play a J'3 I major role. s ANNEX 10 Page 3 (h) To facilitate the procurement of material inputs, particu larly for small and medium sized industry, by means of organized groupings--such as associations and/or coopera tives. Similarly, organized groupings are envisioned for the commercialization of the processed products. 5. Spokesmen for Government ins'ti tutions summarize national aims for agro-industry endeavors as follows: to substantially reduce imports; to help improve nutrition throughout the nation; progressively to develop, exports; and to increase employment opportunities. Institutions and Agencies 6. There are many Government and private bodies whose work is direct ly concerned with agro-industry. An important one is the Comite Coordinador del Desarrollo Agropecuario (COCO). Hembership includes the Secretary of Consejo Superior de Planficacion Nacional (CONSUPLAN); the ~Iinister of Natural Resources; the Director of the Insti tuto Nacional Agrado (INA); and the president of the Banco Nacional de Fomento (BNF). The Committee is charged with the overall coordination and improvement of the national agri cultural and livestock development effort. 7. The CONSUPLAN is responsible for the national development plan and for the coordination of the programs and projects carried out by Govern ment institutions and the autonomous and semi-autonomous organizations. CONSUPLAN has an Office of Industrial Programming, which embraces all agro industrial activities. 8. The Direccion General de Industdas (Minis try of Economy) includes in its duties the formulation of indus trial policies and incentives; admin istration of industrial development legislation; preparation of measures to safeguard national industries; coordination of the activities of the four 1/ semi-autonomous bodies answerable to the Ministry of Economy; processing and evaluating applications for industrial incentives and benefits; processing applications for new and/or expanded industrial activities; helping the pri vate sector in appraising industrial opportunities; collaboration in organ izing industrI81 fairs and exhibitions; maintaining an industrial registEar and basic statistics; and coordination of public and private industrial interests so as to achieve coherent implementation of industrial policy and programs • 9. Direccion General de Integracion Economica (Minis try of Economy). This office deals with all policy matters involving industry and the Central American economic integration program. 1/ Instituto Hondureno del Cafe; Empresa Nacional Portuaria; Direccion de Fomento Cooperativo; and Centro Cooperativo Tecnico Industrial. ANNEX. 10 Page 4 10. Direccion General de Comercio Interior (~anistry of-Economy). This office is responsible for all matters which affect the commercializa tion of products for national consumption, with emphasis on the basic con sumer items such as food and clothing. 11. Direccion General de Comercio Exterior (Minsitry of Economy). This office is concerned with foreign trade, export promotion and measures to achieve the desired balance between imports and exports. 12. Minis try of Natural Resources. The Minis try is responsib Ie for formulating Government policy on agricultural, livestock, fisheries and mineral development. (Until very recently, forestry development was also included.) As a depe~dency of this l>tinistry, the Directorate of Renewable Resources and Ecology is being organized specifically to cover fisheries, fish processing, wildlife and ecology. . 13. Banco Nacional de Fomento (BNF). This decentralized institution is entrusted with fostering all national production, with emphasis on agriculture and livestock. Some of its functions are to: provide secured short- and medium- and long-term credits; participate, in whole or in part, in capitalizing private, mixed and public undertakings and to purchase and/or guarantee bonds issued by such undertakings; direct and operate projects and other development activities on behalf of the State or other interests; operate as a coordinating organism in furthering the State's economic de velopment policies; and act as the Government's agent in processing external loans for economic aid and development. Additionally, the draft national development plan makes BNF responsible for agricultural credit, commercial ization, raw material supply and industrial promotion based on the agricul tural sector. The Bank's Industrial Development Division promotes the organization of agro-industrial undertakings, and industries supplying inputs for agriculture. 14. Banco Central de Honduras. In addition to normal central banking functions, the Banco Central carries out two activities specifically related to industry (usually agro-based). These are: (a) Through its Department of Industrial Investigation, the Bank carries out comprehensive industrial sector surveys to identify needs for new and expanded industrial activities. Examples of its studies are: "Ineentivos Fiscales al . Desarrollo Industrial. Evaluacion de Su Aplicacion"; "La Industria de la }Iadera"; liLa In~ustria de la Confeccion de Ropa"; and "Indus tria del Calzado." Currently, the Department is working on a food indus try study. A study of maritime resources is being planned, jointiy with the Direccion General de Recursos Renovables y Ecologia of the Minis try of Natural Resources. (b) Since 1972, the Bank has operated a guarantee fund for loans (made by BNF and/or commercial banks) to small industry (including artesanias). ANNEX 10 Page 5 15. Instituto Nacional Agrario (INA). Set up in 1962, INA, an autono mous State agency, is engaged in a range of agrarian reform activities; some relate to agro-industry. 16. COrporacion Nacional de Inversiones (CONADI). This corporation was set up by Decree-Law No. 135 of July 1974 and is expected to begin operation in 1975 (Annex 1). It is charged with the promoti~ of new in dustrial undertakings and the expansion/consolidation/rehabilitation of existing industrial activities. It will establish a stock and bond market for national industries. The Corporation is funded by Government, the private sector, and the commercial banks, and can participate in projects which require as little as L 750,000 of equity funds. 17. Centro Cooperativo Tecnico Industrial (CCTI). In conformity with the draft natio.nal deve.'!()PDlentpl.a.~, the Center. (founded in 1960 and, until recently, extensively supported by AID) is to become a "centralized organization" answerable to the Ministry of Economy (Direccion General de Industrias). Specifically concerned with artesanias and small industries (limit of L 100,000 in plant and equipment) the Center's main functions comprise: provision of practical technical assistance; the promotion and investigation of projects, in coordination with BNF; the general improve ment of productivity and up-grading of technology; and the provision of assistance in organizing associations and cooperatives for supply, pro duction and commercialization. The center is currently being helped by one "Small Industry Advisor" (under the UNDP/UNIDO program) and Technoserve Inc., a U.S. non-profit organization specializing in rural development work. 18. Instituto Hondureno del Cafe (INCAFE). This Institute recommends and implements public policy on coffee, and gives techncial assistance to producers, processors and coffee exproters. 19. International and Bilateral Agencies. Important sources of help for agro-industrial activity and small industry are AID, UNIDO, FAO, and Technoserve, Inc. (CONSUPLAN is responsible for channelling and coordinat ing all foreign technical assistance.) 20. National Non-Official Organizations. These include Asociacion Nacional de Industriales (ANDI); Asociacion Nacional de Pequenos Industriales (ANPI - recently organzied); Camara de Comercio e Industrias (the unit in Cortes is particularly important); and Consejo Hondureno de la Empresa Privada (COHEP), which has representatives from the foregoing organizations, and is the accredited bo4y for the private sector's submissions to, and negotiations with, Government institutions. 21. Other Financial Institutions. In addition to BNF and the Central Bank, others that are noteworthy in the context of agro-induatry and small scale industries are Banco Financ1era Hondurena, S.A.; Banco Atlantida S .A.; Banco de Honduras; Bank of London and Montreal Ltd; Banco Municipal Autonomo; Latin American Agribusiness Development Corporation S.A.; and Fomento , Internacional S.A. 1 , 1 I , ANNEX 10 Page 6 2 I :) i I 6 ! 22. Regional Institutions. These include the Banco Centroamericana .., 'Ide Integracion Economica (CABEI) with headquarters in Tegucigalpa; the ; 8 Central American Industrial.Research Institute (ICAITI); Secretaria de I 9 Integracion Economica de Centro America (SIECA); and Promocion de Exportacionks 10 ide Centro America (PROMECA). The last three are based in Guatemala City and i ~~ II !their activities in relation to Honduras are channelled through the Ministry i ; ') 12 lof Economy. The Central American Business Administration Institute (INCAE), : 1. .. ; 1 13 I located in Nicaragua, enjoys close association with Harvard University and 1.~ , I 1 I l.L+ !provides two-year M.S. courses in business administration; in the second 1."'; lS i year , agro-industry and marketing are two of eight areas available for :spec1alization. RECENT SUBSECTOR POSITION AND TRENDS 11 23. According to a CONSUPLAN digest, about 374 agro-industrial estab ':'.J lishments were operational in 1972. Forty-six percent occupied less than ! . :). .+ 20 persons and only 23% occupied more than 50 persons; total employment was some 15,600 persons (Table 2). CONSUPLAN estimates that the net fixed 2S assets in agro-industry were about L 66 million and L 157 million in 1962 ;and 1972, respectively (Table 3). The value added by the specified agro 'industrial I activities rose from L 53 million in 1960 to L 215 million in 29 i 1972 (Table 4). 30 31 i 24 • Agro-industrial establishments, in terms of output value, are 32 I, located as follows: 32 ') <) 33 < J-, 34 % of Total 34 j) 35 Location Output Value j 36 37 San Pedro Sul/Cortes 58 Tegucigalpa/Comayaguela 25 38 La Ceiba 5 All other areas 12 100 For the 17 months from January 1973 to May 197.4, the Ministry of Economy lists the total new investment in agro-industry as L 7.4 million (Table 5). 44 45 Livestock Slaughter, Meat 46 Preparation and Conservation 47 I 43 125. Nineteen establishments, occupying 1,300 persons and having a 49 !total output value of about L 47 million, were operational in 1971. ~ 50 I (These figures are for industrial establishments and exclude the many, 51 52 '11_11 This section includes comment based on visits to plants and on discus 53 sions with management. 54 54 55 JJ ~ Figures obtained from BNF. . 55 56 57 57 1 ANNEX 10 ') Page 7 ") nusually very rudimentary, small slaughterhouses in the rural ,areas.) A noteworthy feature is the presence of some seven meat slaughtering and :3 packing plants, exporting boneless meat to the U.S. (Regulations oblige 9 packers to divert at least 10% w/w, warm weight, of the carcass for national lJ consumption.) Recorded exports of unprocessed meat in 1972 totalled about LL • L 32 million (Table 6). , - 1 ; __ ..i... L_ I i 26. These plants are generally modern (though small), suitably equipped', " ~and, of necessity, in compliance with U.S. requirements as to hygiene, I veterinary supervision, and the like. Non-edible by-products are elaborated! , at some plants; others are not yet operating at levels to justify the invest ment entailed. Indic,ations are that, notwithstanding the individually small , slaughtering capacity (the largest plant processes 100 cattle per eight 'hours), processing for export has generally been profitable. However, plant ,managers stress the scarcity of raw material, with the consequence that many of the plants are not working even one full shift per day. 22 27. Five poultry packing operations are recorded in the industrial directory. ' One (the largest and most efficient) is currently (May 1974) i selling in the domestic market about 50,000 lb per week dressed poultry, for ; which the consumer pays L 1.05 to L 1.20 per lb, according to retailers' : markup. Demand is strong. 28. The other establishments in this grouping elaborate cooked meats, sausages, hams, and such. These operations are generally small, with rudi jimentary facilities and using much hand labor. The product is of reasonable, though variable, quality. Raw material is SCarce, making it difficult to 3 vork even a regular single shift. According to the owner of one plant, it 32 "1Ould be vholly imprudent to go into this type of business unless the pro 3 prietor were to raise his own livestock. : Sugar Milling 3; j i 29. There are four mills, three in the San Pedro Sula/ Cortes areas ; and the other in the southern zone. Three mills are within one company structure. The largest mill reports the following output trend: '. '] Sucrose Mill Sugar 43 , Year Cane }filled In Cane Recovered Loss Milling Time Produced Tons % % % Hours qq i 1967 221,093 11.520 8.187 3.333 3,284 381,503 : 1970 287,536 10.856 8.375 2,.481 2,348 485,890 I,' -: 0 ;1972 323,438 11.494 8.760 2.734 2,585 572 ,286 49 I 1973 225,371 /1 11.735 9.166 2.569 1,614 415,346 SO 51 52 /1 In 1973, it appears that available cane was preferentially diverted to 51 53 another mill operated by the same company. 53 5-4 )J 56 57 57 ANNEX 10 Page 8 30. The present total intake of the industry is about 8,000 tons of cane per day (TCD). The facilities are not highly sophisticated; in gen eral, the plant is old (one mill was said to be using equipment manufactured over 40 years ago). Mill efficiency is regarded as fair. About 40% of the cane intake comes from plantations owned and controlled by the mills; the balance is from small growers ("colonos"), sometimes organized in producers r cooperatives. Payment is about L 12 per ton cane delivered mill, with premium/ penalty according to its sugar content. The cane yield averages around 60 tons per manzana. (Some varieties can yield up to double this figure, given s~tiable conditions.) The cane harvest averages 120 days per year. Sucrose content in ca~e averages 11.5%; mill sugar corresponds to an average effective recovery of 8.8% of sucrose in cane. Processing costs are said to average L 240 per ton of mill sugar output. No refining is carried out. Plant man agers point to the following problems: low worker productivity, equally applicable to cane growing, mill labor and supervisory staff, especially technical personnel; labor relations (one manager commented that his labor force was far more cognizant of its legal rights and benefits than the legal experts themselves!); uncertainties (and sometimes actual loss of land) engendered by mooted agrarian reform measures and the lIinvasiones" (the occupation of privately owned land by peasant groups); small growers and their.producer associations are not amenable to discipline and often fail to provide the expected cane deliveries; inadequate attention by State institu tions to research and extension work, so that whatever is done must be by the sugar milling industry; and long procedural delays in securing credit. Tobacco Curing and Cigar Making 31. Cigar quality is good, demand is strong and sales abroad could readily be increased sharply. Suitable land is available for expansion. However, there are two major constraints: (a) cigar making involves holding high inventories of raw material, work-in-progress and finished goods over long periods; thus the cost of working capital (at present interest rates) obliges the industry preferentially to finance grolll'th out of profits and hence slowly; (b) the industry's success depends on minuscule attention to quality, requiring full time supervision at every point during both growing and pro cessing operations, and there is a scarcity of personnel really expert at dealing with these matters. 32. One cigar-making plant, which started up about eight years ago, employs 127 workers; production is almost exclusively for export; quality appears to be equal (if not superior) to Cuban standard; the company buys its kiln dried leaf principally from growers in the Olancho and Danl! dis tricts. 1974 purchases are estimated to be about 1,300 qq of kiln dried leaf at about L 60 per qq delivered. Yield is said to be 12 qq of kiln dried leaf per acre. About 400 agricultural workers are required to produce the quantity required by the company. Total production cost (to grower) is stated as L 400 per acre. 1 ANNEX 10 Page 9 6 33. Little or no in-depth investigational work and extension assistance 7 have been forthcoming from state institutions in regard to the agricultural side; thus the company is forced to provide grower supervision and guidance. ; 9 10 I Oils and Fats Processing i ; 34. CONSUPLAN data show that, in 1971, four establishments operated, 13 ; occupying 822 persons, and having a total production value of about L 20 million. The principal raw materials, produced nationally, are: cottonseed; African palm oil (about 18 million pounds of oil were extracted in 1973); 'sesame; and corozo. Groundnuts are not an important raw material. , '::: 35. One company runs two processing establishments, one of which was L visited. 1/ Little has changed since 1959--it uses conventional extraction I - ' ;techniques (ldth commercially satisfactory yields) and refining methods. 2/ jThe oil hardening process (for elaborating cooking fats and margarine), to gether with'the eiect::rolytic -generation of hydrogen,are noWlocatedln the other establishment set up in the southern region, ostensibly to utilize 'on-the-spot seed ginned from cotton production. However, 'as a coil'sequence 25 of the war with El Salvador and other factors, cotton growing has very con , 'siderably declined with the result that the plant is working at some 15% ;-~ -< ' .of capacity and, even then, it 1s obliged to secure some of its intake from : Nicaragua. " 36. Imports of edible fats and oils are significantly high (in 1972, : imports were some L 3.6 million (Table 6). 31 ') ) I ..J 137. The recent steep rise in oilseed prices, plus Government price jL. I control measures, have eroded processors' margins. Thus, for 1973, one 'company affirmed that, for the first time in its history, it incurred a net j ; trading loss. This situation has been relieved by a recently approved 15% ) ~ ~ ,', / increase in product prices. J 39 38. The principal non-edible fat processed (by some slaughterhouses J . . , .; and meat packing plants) is tallow, a major ingredient in soap. It is esti , 1 ;], ma ted that upward s of one-half of the country's tallow needs are currently -......:.. 2 imported. 42 43 ~~ Grain Milling 45 .5 39. CONSUPLAN data for 1971 show 13 grain milling establishments, occupying 306 persons, with a total production value of about L 19 million. , -7 i Rice, maize and wheat are the principal raw materials. One industry (inspected),j ':'9 'elaborates flour (various grades), starch, gluten, oil and glucose from maize:. '~9 50 Set up in the 19608 to serve the Central American market (80% of sales outsid~ ):) 5: __,_'_____ .___,_, __ ,[--51 52 , ~2 The same plant was inspected in 1959 by the writer. I ~3 I ~4 53 y There is no solvent extraction plant in Honduras. l 55 56 56 j e"'1 57 ~------------------------------------------------------------------------~ ~I , 1. 1 ANNEX 10 .2 ') ,J Page 10 i 4 .5 6 Honduras was envisioned) the $2.5 million plant closed down in 1970 due to l I 5 ! , developments within the Central American Common Market; high processing costs:; 7 indifferent management; and shortcomings in production facilities. In 1973, i 9 the assets were purchased by an international group and the plant was re habilitated. Pilot production commenced early in 1974 and commercial opera 10 tion began in March, with a maize intake of 40 tons per day (capacity 50 tons per day). Thanks to the expertise of the group and the competence of the ; plant's general manager, production operations are now proceeding smoothly 13 despite the low installed capacity. However, -Ehe- problem of-rawmateiiat " shortage persists. In May 1974, the plant was purchasing a large proportion : of its maize from "intermediarios"; producer cooperatives were unable to 7 ; provide adequate supplies. 1 ..l. 40. Comments voiced by the general manager touched on (a) the confusion • arising because of the diversity of weights and measures in general use i throughout Honduras; (b) the low level of labor productivity and the diffi- ) , 22 I culty of motivating workers and supervisors alike; and (c) the delays experi~ ! enced in obtaining short-term working capital to finance stocks. 25 'Milk and Dairy Products :26 ! 41. For 1971, 15 industrial establishments are listed within this group- i ing, with a total production value of about L 10 million. 1/ Currently, only i three establishments process milk for sale as such, as well as producing . .~: ,J i butter and cheese. The others produce only the latter items and ice cream. I Two of the three plants are owned by BNF; one plant pasteurizes and the other, -:. sterilizes (and also produces powdered milk). Both plants are modern and ' ') appear to be well-maintained. ! 42. Set up in 1971, the pasteurizing plant has a capacity of 40,000 ! liters per day, but, dur to chronic raw material shortage, throughput cu!."rent- ,', '. i ly averages some 6,000 liters per day. The general manager commented that, ' 37 even with the year-round price paid for raw milk, recently raised to L 0.36 per liter delivered, no supply improvement had been noted. Since breakeven is said to occur at 12,000 liters per day, operations continue at a loss. 40 41 It is therefore not surprising that BNF's a1m of encouraging milk producers '? 4_ to take over the plant has met with no success. The general manager also 42 referred to the competition from raw (untreated and frequently adulterated) 44 milk, which, despite its price being slightly higher, appears to enjoy ready sale; however, he affirmed that "no difficulty" would occur in selling upwards 45 46 of 22,000 liters of pasteurized milk per day in the region of Tegucigalpa/ ; 47 ! Comayaguela. It was noted that the plant is moving over to bottles due to 47 :.8 ! the now higher cost of plastic containers. . 48 ;.,9 i 49 SO II43. In the south there are some "cottage lt type establishments (not 50 31 classed as "industries") making cheese. (In 1971, BNF had planned to ship 52 I milk from this region to the pasteurizing plant in Tegucigalpa; however, .5 3 1 ________________________ 53 54 I 54 55 ! 11 Figures provided by BNF, Division de Desarrollo Industrial. :)0 56 37 57 1 2 ANNEX 10 ! Page 11 1::; . ! !although j "I 1-] I a collection center was installed, it has not become operational.) i lOne "cottage" establishment (said to be the largest) was inspected. While' Ifacilities were extremely rudimentary, product flavor was judged to be !remarkably good. The owner claimed to be able to process some 3,000 lb per ~ iday and 7,000 lb per day of milk to cheese in the dry and wet seasons, !respectively. On average, the yield is about four parts by weight of raw ~: 'milk for one part by weight of "wet" cheese. L 0.30 and L 0.15 per "bottle" ~- ! (L 0.75 per liter) were allegedly paid for raw milk, with selling prices for !~3 ~cheese being L 1.28 and L 0.70 per lb, in the dry and wet seasons, respectively _ .' :Fruit and Vegetable Processing ! i I I ;44. According to CONSUPLAN figures for 1971, this activity accounted ;for L 6.5 million in production value, consequently ranking fruit and vege ,table processing as the least important component of agro-industry in terms 'of production value. Since that date, two modern industries (both inspected) I· !have been established. One is concerned solely withiprocessing (externally 22 :blemished) bananas into puree in bulk packs for export. The production I ifacilities appeared to be wholly satisfactory as to their nature, maintenance:; land operation. The product is stated to enjoy ready demand. Thus, this in- I :dustry affords an excellent example of how market research/promotion plus :appropriate investigation and technology may combine to provide rewarding "business for what would otherwise be virtually reject raw material. 45. The other industry (now setting up another facility in the Depart ment of Comayagua) comprises a multi-purpose plant for elaborating tomato " -"- ) sauce, puree and paste; jams; nectars and juices of pineapple, mango, grape 3' fruit and tomato; and conned fruits and vegetables. Capacity is of the order of 10 tons per hour raw material intake, though this figure varies, dependent jS Ion type(s) of end product(s). The management's competence and ingenuity are 'demonstrated by the way in which all factory space has been productively 37 used--a telling indication of the rapid growth since the industry's startup in 1971. Product quality was adjudged as being generally good. However, due J to considerable variation in raw produce standard and quality, really con J sistent standardization is difficult. The use of diluted glacial acetic 41 acid was detected in the tomato sauce (giving a harsh "bite"); but this was explained as being due to the lack of nationally produced vinegar and the cost of importing vinegar. Market outlets are principally in Honduras where 4~ distribution is made through an affiliate group having its own sales force; '::'5 other Central American countries, accounting for about 15% of total turnover; 46 and U.S., about 20% of turnover, all represented by tomato paste. 40 47 47 48 46. This company has been unable to get enough raw material from inde- 48 49 pendent growers. It faces a shortage of raw fruits and vegetables (appropriate 49 SO for processing in terms of variety, quality, quantity, price and certainty of' 50 51 j:SUPPlY to meet.production sc~edules), hence the remarks of -the company's pre-: 51 52 sident: "We al.med to establl.sh and operate as processors; however, to keep I: 52 53 Ithe industry running at a profit, we've been compelled to become farmers as " 53 3:'; Iwell!" In fact, the company now raises crops on its own 2,000 acres and. by S4 55 56 56 57 57 I r 1 I II ANNEX 10 Page 12 3 6 ! 1975, will cultivate about 3,600 acres. Another problem is ~hat the company 7 ! has to do its own horticultural investigational and developmental work, e.g., 7 'I to select tomato varieties and cultivation practices to improve both yields , 9 and solids' content, to establish orange varieties suitable for juice process~ ,, i ing (present varieties are unsuitable, though fully acceptable in fresh form)'.~:J .1.1. : Still another is the lack of nationally produced inputs (e.g., cans, bottles,! 1 ' labe~~_ and vinegar) which places the industry at a disadvantage relative to i 1 ') I,. 13 I those located in other Central American countries--notably Guatemala and I Costa Rica. I Excluding bananas, fruit for export is selected, washed, graded L: and packed by three packing stations in the north coastal region. These -'- i handle citrus (mainly grapefruit) and pineapple (from a 2,600-acre plantation), 1':' all destined for export to U.S. and Europe. Samples, said to be similar to ,-, '1 those exported, had marked blemishes on the skin; if caused by virus disease ,1 the problem warrants investigation and urgent corrective action. 22 .48. Packing fresh vegetables for export to U.S. in the off season has 24 I been tried on a very modest scale. It was mentioned that the ocean route, 24 25 ! north coast to U.S. Gulf 'ports, for bulk lots under refrigeration, would 2:· • cost no more than $0.03 per lb, including on and off loading. Here again, 2~~ : a great dela has yet to be done to ensure the requisite availability of -, such produce as to time, quantity and quality .• ·49. Table 6 indicates that, in 1972, exports of all fruits (fresh and ; processed, but excluding bananas) were worth L 4.6 million, or about 1.2% 32 . of value of all exports in that year. 32 33 33 J :, 34 SMALL-SCALE nmUSTRIES AND ARTESANIAS 37 36 i 50. Small-scale industries (in 1972 comprising more than one-half of the total manufacturing establishments) are defined as effecting proces~ transformation, using powered machinery and equipment, with a ceiling investi . ment of L 100,000 and usually occupying between five and 19 persons. ! 41 I Artesanias (usually, though not completely, translated as "craft" activities j ! or endeavors, or even "cottage industries") are defined as accupying no more! !, ! -T--!' I than four persons, pre-eminently engaging in manual operations, and not in- ! jvolving any delegation of duties/functions on the part of the person nominal~y 45 46 I carrying out the activity_ In practice, these definitions (particularly when 47 I groups of artesanias become organized in associations/cooperatives) prove -+, 48 i difficult to apply, with the result that an extremely blurred demarcation , 49 50 ! accurs between small industry and artesanias. One consequence is to render I statistical characterization and analysis for the two components--industrial I I 49 50 51 and artisanal--of the manufacturing sector at best very imprecise and, at . 51 -~ ~- worst, incorporating errors of considerable magnitude. 52 53 S3 54 55 jD 56 57 57 1 1 ANNEX 10 3 1 Page 13 3 I I I b 7 I quantification .., I 8 51. With the help of CCTI, some quantification of craft activities and 9 small-scale industry was made for 1973 (Tables 7 and 8). Of the 262 small 10 industry establishments said to be operating in that year, 53% utilized 11 I produce from agriculture, forests and fisheries as major inputs and so may be considered as comprising agro-activities •. For the same year, estimated 13 employment for all small industry approximates to some 20,000 persons in the • agro:"componeni--an<fibo-ut -9;5-00- for those establishments using other materIals~ ,'-; : as main inputs. Some 42,000 persons are estimated to be occupied with, and I , partly dependent for their livelihood on, artesanias, virtually all of lv-hich are based on raw materials derived from land and water resources. 1 ,1 52. i The lvide difference between the foregoing quantifications of ! occupation and the figures of Table 2 underscores the inadequacy of the data : I ,and suggests that (a) some of the small industries (probably the traditional,! i primitive kind) entered in the quantifications, based on CCTI figures, are I elsewhere classified as craft activities; and (b) the numbers believed to be ; I ) , , occupied in craft activities are extremely global and possibly significantly; ~ understated. I ::: 'J , Review 53. The impression (no detailed figures could be obtained) is that, to il-i , an extent far more marked than elsewhere in Central America, the output from i ; artesanias still enjoys a ready and considerable demand. Although products : are, of course, purchased by tourists and visitors and also some items (e.g., . leather crafts) are shipped for sale abroad, it appears that by far the ! greater part of output is sold in the national market. The craft activities : are thus carrying on the folkloric heritage as well as providing useful goods, j,5 ; particularly for people of limited means. i ; 54. Among the more utilitarian craft goods are hammocks, nets, baskets, j i lassos (plant and vegetable fibers); cottage furniture (crude but robust), J I implements (including plows), and canoes (all from wood); scabbards (for ;-- 4:J j machetes and such), saddlery, bridles, and footwear (all from leather); pots I 41 I and utensils (from clay and gourds); and clothing (handwoven from natural I ~2 ! fibers). These goods are, in general, quite crudely contrived, but rela- ! 43 tively modest assistance could significantly improve product design, pro 'I' ' ~ ~5 I ductivity, and product quality and permit utilization of other • indigenous ~,5 :. i) i materials. ' 40 47 I 47 ':'3 I 55. Included within craft activities (Table 7) are 300 work establish 49 I'ments (occupying some 1,800 persons, which probably includes family members 50 too) concerned with the elaboration of panela, a crude sugar (in reality, 50 __ I this is a small industry, rather than a craft activity). Marketed in the form 51 51 53 I of traditional "atados" or blocks, demand is strong. Simple upgrading of th~ time-honored procedures could result in improved yields and increase the re-l 52 53 5 I; 'turn to the "paneleros." I 54 i 55 56 JI ~--------------------------------------------------------________________--2 I 56 57 , ..L 1 ANNEX 10 /. ! Page 14 i 1 I 56. Some examples of small industry operating in the rural areas are ' furniture making, often to high standard and apparently enjoying good demand 7 ,:j 9 I and tiles; metal working and in the two main urban zones; building bricks I I products; and small tailoring businesses, also producing ready-made clothing,; 10 trousers, shirts. and the like. I ' 1 r: .V 11 11 12 13 SELECTED INPUT INDUSTRIES 1" .i....J 1 . -) 57. This section discusses selected inputs for both agriculture and L;.; : agro-industries. .C I For A8!iculture : 19 i . 20 . ~ ., 58. Other than the most rudimentary items (fabricated in workshops and ') 'J by artesanias), all tools and implements are imported. Estimates 1/ suggest that total 1974 imports of these goods (excluding tractors and sophisticated - ~ agricultural equipment) may be around L 15 million • .:.. .23 2S 59. All fertilizers are imported, principally from Europe and U.S., although minor quantities have been brought in from Central America. The higher cost and irregularity of supply from the latter area, however, make ~.~ .~ this source unattractive. Nitrogen-based fertilizers account for some 80% by value of imports. Taking into account the recent price rises, figures H suggest an actual decline in the quantities imported and hence a reduction in jl " 32 national usage may be underway. 32 33 33 Fertilizer Imports 2/ L Hillion 34 ., J:) -l C ...;0 1966 4.69 37 1970 4.01 3" ~ 1972 5.83 39 1973 7.42 40 L.l BNF officials confirmed the correctness of this inference. 42 43 60. Pesticides and veterinary products are imported. Total 1974 im 44 ports are estimated at around L 9 million. ~ 45 46 61. Of the five reported animal feed plants, it seems that two plants 47 only, operated by one company, produce for regular sale (the other plants 48 are run by large cattle operators to supply their own needs). The industry ~9 was set up by BNF about 20 years ago and, shortly thereafter, it was taken 50 51 52 -, JL. 53 11 Specially made by CONSUPLAN. 53 5 '; :];/ Compiled from verbal communications from BNF and CONSUPLAN. - )-i ! 55 55 S6 56 57 57 1 1 ANNEX 10 3 Page 15 3 , I -+ -+ ) over by the private sector. A well-known U.S. concern is now shareholder 6 7 and provides expertise on all phases of the operations. Both plants were 7 8 inspected. ~Umagement appears to be eminently competent and operations are 3 !reasonably efficient, despite the fact that one plant uses old equipment. Together, the plants now run at about 35% of capacity and have an output of 10 13 I i about 600,000 qq per year, comprising some 30 formulations, mainly for poultry and cattle (the same company runs the largest poultry operation under affiliate structure). ]2 1..4 ! 62. As of April 1974 the main ingredients in use and their prices 1 -; Delivered Price L per qq National Origin 22 Maize, yellow and white 9.50 22 Meat meal 20.00 24 Animal fat 40.00 23 Cottonseed cake 13.50 25 ") Blood meal 20.00 )" '- I Wheat bran 5.00 Corozo cake 6.50 Palm cake 4.00 Molasses 20.00 (per 55 gallons) Imported ") I ....;·t Maize 1/ 11.00 Urea (fertilizer grade) 25.00 Soybean cake 30.00 37 Alfalfa flour 18.00 33 and Minerals; Vitamins; Antibiotics 3 39 3 40 Over the last 12 months, ingredient prices have risen by an average of 45%. 41 In July 1973, the company made a net profit of about L 0.20 per qq; this 41 42 has been eroded, and now, for the first time in its history, a trading loss ~J is being sustained. This situation of higher costs and prices has caused 44 a reduction in product demand and a significant lay-off of workers over re 43 cent months. 47 I 63. Two establishments make barbed wire and netting. One (inspected) 42 I has a fixed investment in plant and equipment of about L 4 million and is 49 I controlled by overseas interests specializing in these manufactures. The 49 50 I plant is well managed and operates at high efficiency. For 1974, steel SC .5l I input is estimated at 8,000 tons and is expected to double over the next one. 52 I to two years. Despite 100% price increases in the last two years, demand ', 52 53 I is strong and the company's profit performance satisfactory. 33 54 '----------------------------------- I I 54 ~J I' 11 Due to drought and a shortage of national maize, substantial imports . 50 took place in 1973. 57 57 1 J.. 1 ANNEX 10 2 3 Page 16 3 6 64. The Direccion General de Desarrollo Agropecuario (DESAGRO) 1/ runs 7 two seed processing operations to supply rice, sorghum, beans and maize to 7 :3 farmers. Industrially, a good technical standard appears to be ma~ntained. 9 lHowever, at present, demand cannot be met for maize and rice. Other seeds 10 I are imported and marketed by the commercial sector, but high mark-ups are 11 I said to occur, and in some instances varieties are unsuited to local I conditions. 12 1 ,> 13 I .LJ 1 ' 1 65 • Primarily to assist the small farmer, BNF has set up a network of 1 ~ ;stores (puestos) which sell inputs to farmers. Said to pay normal taxes, BNF runs these puestos without subsidy and reportedly often sells at prices I below those of private merchants. : For Agro-Industrl 2t,j 166. Power tariffs for Tegucigalpa and San Pedro Sula are L 1,000 for minimum monthly quota of 20,000 kw/hr; L 0.04 per kw/hr from 20,000 to !a 120,000 kw/hr per month; and L 0.03 per kw/hr above that monthly figure. These tariffs are about to be raised. Elsewhere, rates vary with locality; in some areas frequent supply interruptions are reported. I. , L:) 67. As of May 1974, bulk supplies of diesel and bunker were quoted at 0.76 per gallon and L 0.68 per gallon, respectively; no shortage was iL reported. 1. 68. In many areas, the mains' water supply is unavailable or in short ~~ supply. Many processors rely on bore holes. 3:: ,> " 33 69. "Open toplt ("sanitary") cans for food packing are not yet produced '34 and supplies are imported from plants in Costa Rica, Guatemala and U.S. J3 Because of their bulky nature, transport charges for empty cans (in cartons), plus damage in transit, are of significance in the cost structure and thus 37 react unfavorably on competiveness. 33 >', ,'> .Jj ~0 70. Glass containers are not fabricated locally; they are imported 41 mainly from Guatemala. This may be a cost disadvantage for the export of products packed in glass. 43 43 , I 4~ 71. Although printers do turn out lab_e!EJt their quality as to art -+~ L;5 work, color, definition and finish, is poor. Hence, processors wishing to ~S 40 secure maximum appeal/impact are importing label supplies from Guatemala at 47 twice (or more) the price of the nationally ~roduced item. 49 72. Three carton manufacturers operate; however, two produce exclu 49 so sively for their own group's captive market. The third manufacturer is 50 5: stated to be experiencing difficulty in obtaining inputs; customers are - ') SZ therefore obliged to place orders well in advance and to carry heavy in ::l_ 53 ventories. Carton quality appears to be satisfactory. 53 54 35 1/ Part of Ministerio de Recursos Naturales. 56 56 57 57 1 ANNEX 10 3 Page 17 NEW PROJECTS -, 7 j I 173. Based on information obtained directly from principals, Table 9 9 isummarizes what are believed to be the major new projects for which firm iplans exist. This summary, jo;i.ntly with the information in Table 5, reveals 1 ') ithat emphasis is on sugar processing; edible oil extraction; grain milling; ibakery products; fruit and vegetable processing; meat packing; and textile 13 Imanufactures (principally cotton based). These listed projects constitute a !total investment in the probable order of L 80 million, of which roughly :L 35 million relates to two State projects. :74. Other possible p.rojects are listed in the draft 1974-78 national Idevelopment plan (Table 10). Other documents 1/ schedule executio'n of these 1 i:; l'r 'projects on a yearly basis and assign responsibility for their realization. ,Thus, Banco Central de Honduras will do specified industrial studies and . -, ') iinvestigations; CCTI will develop projects for small industries and artesania~ 22 (included in Table 8); and BNF ~~ll realize virtually all the agro-industrial. and related activities. (Although it was understood that Instituto Nacional 24 iAgrario has responsibility for the African palm processing project in Bajo 25 Aguan, no reference thereto is made in the documents in question.) 75. In addition ot the various projects to be developed by the State's institutions, it was gathered in the course of discussion with industrialists' .~ . that they too have projects under preliminary examination. Table 11, al- 3 ; though not pretending to be comprehensive, is presented to serve as a check- 31 list for the major projects "under consideration" at mid-year 1974. SONE KEY PROBLEHS 37 I 176. This capsulized overview of the present position and expansion iintentions I of the agro-industrial and related sectors suggests that there I are many positive factors at work. There are also a goodly number of !problems; some of these are fairly easy to solve; others will persist. 42 I Raw }1aterials 63 44 ~5 77. Virtually all agro-indu5try faces a chronic shortage of raw 45 4.) material, including oilseeds, maize, milk, cattle, pigs, poultry, fruits L6 47 and vegetables, and cotton. In consequence, operations are generally at a 47 ~0 small fraction (one-third on average) of realizable capacity. 48 49 50 51 52 11 Such as the Plan Operativo, Sector Industrial 1974, by CONSUPLAN. 52 53 53 - )., j 54 55 56 56 57 1 2 ANNEX 10 2 ') J Page 18 3 f 5 1 6 178. A related problem is that recent increases in the prices of raw 7 materials for processing, along with controlled processed product prices, are 7 8 tending to erode margins and discourage both interest in new investment 'and 9 10 I ', the capacity to undertake it. 10 11 I 179. Too, some of the available raw materials are not of the variety , 1 " ior quality suitable for processing, thereby raising costs and lowering the .L 13 !saleability of the final product. 13 i ,Government Procedures .L -f 2.5 80. Industrialists claim that very complex and time-consuming pro l7 1 .:" cedures have to be followed in obtaining official sanction to initiate in dustrial activities (127 different " tramites" were mentioned). Three changes lof a major nature are stated to have occurred in industrial legislation and ' .) 1 !the labor codes over the last four years. There is uncertainty over the ') ') :precise position to be taken with respect to the Central American Common 22 iMarket. There is uncertainty concerning land reform, an important point be !cause agro-industrialists expect to have to continue to produce a part of ltheir raw material needs. There is uncertainty about the State's expanding role in setting up and operating agro-industries. There is continuing concern ~ .about the supply of risk capital; one result is the diversion to this use of ,funds obtained from commercial banks for working capital. In overall, these luncertainties, however intangible and subjective, effect entrepreneurial and I linvestor attitudes unfavorably. 32 ,Public Sector Resources 32 33 34 j81. The Government is short of manpower experienced in agro-industry. , 34 35 ;Certain agencies (such as the three directorates of the Ministry of Economy--; 35 'industry, foreign trade, internal trade) are relatively well-staffed and j oriented. Others are unduly bureaucratic in approach and procedure, and not 3 3 \fully in touch with industrial realities. There is some overlapping of I 39 ifunctions among agencies, and the overall budget constraint limits investiga-! 3 40 !tion. The programs of CCT! are greatly handicapped by a shortage of funds. 41 I . 41 I. ") '""' IManagement Personnel 42. 43 182. Agro-industry faces a shortage of competent managers and senior i Iadministrators. The supply of technical know-how is relatively more abundant~ 46 46 47 The Development Targets 47 43 48 49 83. Although carefully studied, and praiseworthy in objective, it is 49 5:] 51 52 unlikely that many of the specific agro-industrial targets set out in the draft national development plan, as reviewed above, can be efficiently realized. Government officials point out that few detailed investigations I Sl50 ,.. ') J_ 53 of the proposals have been made or are underway, and in many cases staff and 53 54 funds for the needed studies have yet to be found. 54 ::n 55 56 56 57 57 j 1 I 'j ANNEX 10 J Page 19 I I,84. Several illustrations of the point can be drawn from Table 9. One 6 7 is the BNF sugar mill. Have the problems which may arise from a complete 3 I dependence on small growers (even if brought together in a cooperative) been 8 9 fully considered? If operations are to begin in 1976, as scheduled, should 10 \ not greater emphasis be placed on readying the land for cane growing. I ? The 11 I INA oil processing plant is another case. If the pilot project is to be ex- 11 -: } 1) jpanded in 1976, the placing of orders for the required facilities must get 1', ! iImnediate attention. Thirdly, the frozen vegetable plant: have vegetable ~ ..~ t variety trials been conducted to a point which assures that varieties suit -l--+ ; able for freezing will be available before the plant is committed to commercial";'') 1 scale operations? 1 1 '7 I l7 , JUD~mNTS AND PROPOSALS .:".j 85. While agro-industry needs recognition as a growth sector and 22 stronger Government encouragement, unrealistic expectations and indiscrim ':'3 inate promotion should be avoided. 11 For example, if equipment and main 2~ tenance involve heavy imports, the gains from value added may be more than 25 offset by adverse effects on the balance of payments. If significant pro i tection against foreign products is required, agro-industrial development imay become a barrier to long-term national economic growth partly-because it helps induce an inflow of foreign capital for other than high-productivity ... 1, outlets • 31 32 86. There are two priority areas for Government attention if the agro 33 industry development objectives are to be realized. 33 3~ 3S I Agricultural Production 36 I 37 38 187. i The first is to develop agricultural productiQn. Once having ,activated general production expansion programs, steps to help farmers 37 3 39 !meet the specific needs of agro-industry should be taken. In many cases 30 40 lagrO-industry cannot meet market requirements unless it has access to raw .+1 I, materials of a speCific sort--usually markedly different from the ratV' 42 material destined for the fresh market. This means that a great deal of 42 43 44 I I practical field research is often necessary to determine suitable varieties, methods of cultivation/husbandry/irrigation/pest control, and the like. 43 45 Without this, shortcomings in yields or organoleptic requirements or some 45 46 ,other essential link in the chain are to be expected. The question is al 46 47 ways "Can the raw material be produced to the requiSite quality standard, in 47 43 a quantity, for delivery according to a given time schedule and-.ita price 48 49 rewarding to the grower and economic to the processor1l"r-Agro-industiy re 49 quires special agricultural production programs; it cannot be built on the SO Sl I basis of taking up the produce which is surplus to the needs of conventional: 51 Central.b.;i~a~lntegr;-tion, 52 HI 55 I :tle::: FAD, Agro-Industrial Development and 1972. ! 53 5f~ ;).) I 36 i 36 57 '~-------------------------------- __________________________________________ ~ 57 1 1 ANNEX 10 2 Page 20 5 CONAD! I) 7 Q 88. The second priority task of the Government is to assure an effec u tive organization, management, financing, and modus operandi of CONAD!. If 9 management is placed in the hands of a non-political staff which has sound lC lL experience in finance and industry, the entrepreneurial community is likely L.1 , ') to react favorably. It should then be possible to develop a productive re J.._ lationship between Government and the private sector in promoting, develop 13 ing, financing and managing viable agro-industria1 enterprises. The creation '5 of. CONAD! was a big step forward; the job no~., is to make it work. ! 15 89. The next step in organizational improvement should be to turn over to CONAD! the BNF promotional and financing functions in the large and medium .C'. ' scale agro-industry field. The BNF investigative work on small industries . • and artesanias should be taken over by the CCTI, and its agro-industry feas- : i ibility study work by CONSUPLAN. These shifts in responsibilities would · permit the BNF to concentrate on supporting agricultural output expansion, 22 i a high priority need for both general and agro-industrial growth. .:..3 2:i i 90. As CONAD! tools up to promote industrial growth, several valuable :25 · lessons from the experience of other countries should be kept in mind. The : first concerns the probable impact of industrial investment inventives. These now comprise a series of fiscal relief measures (related to type of · industry, the nature of the raw materials to be used, the amount of value 2 .i added, ,and such) which may be granted to individual applicants after full investigation. 1/ The legislation can be used to encourage industry to lo " 1 :..,; .!. cate in designated priority areas. 91. Experience elsel.here indicates that such incentives alone have 34 , had little influence on entrepreneuria~ decisions. In practice, these de " : cisions are made primarily in terms of the outlook forthe raw material 1 3 ; supply, communications, the labor code, freedom from Goveriimeiit~iitervention,! 37 : and the consistency of public industrial policy. Fiscal incentives can be J i costly in relation to their impact. 39 40 92. A second lesson from expeirence concerns the extent to which 4~ labor-intensive organization should be promoted. The draft industrial 42 development plan proposes that industries serving the local market are to 43 be preferentially labor-intensive. Admittedly, this is only a general 45 guideline. But for most agro-industries, the principal determinant of the .5 , -+ degree of industry sophistication must be the absolute need to assure end 47 products of consistently acceptable quality. In most cases, this requires a considerable mechanization. C; 9 49 5U so - 1 ::;1 J-'. _n.. 11 Inventivos a La Produccion Industrial, Decreta-Ley No. 49, June 1974, 52 -1 .)~ and Reglamento No. 287. 53 53 34 S4 55 55 56 56 57 57 1 1 ANNEX 10 3 Page 21 93. The plan also notes that export-oriented industries are to be preferentially capital-intensive. But, in fact, many countries are com 8 petitive in export markets precisely because of the high content of labor in the product. 94. In the case of both export and domestic-oriented agro-industry, the labor requirements are typically minor in relation to the amount of labor needed to produce the raw material. In other words, the contribu 14 tion of the industry to the demand for labor must be seen in this larger context. A maximum use of labor in agro-industry is a desirable objective, .. 5 but only if realistically interpreted in practice. 95. A third lesson from experience concerns the role of the public ,sector in agro-industry development. The draft national development plan 1 says, "Should the private sector evidence neither interest nor the cap :ability, the State through its institutions will take on the responsibility : for realizing, directing and operating those projects deemed to be basic, ,. I strategic or essential for national development." The fact is that neither 2:' --+ , the BNF nor any other non-private agency is equipped to take on these tasks. !Even if the outcome were not in itself disastrous, the indirect result would 25 'be to divert public institutions from tasks which only they can do. The costs associated with this diversion are higher than the economy can support .. I at present. 'Small Industries and Artesanias I J' i ; 96. Artesanias and, to a lesser extent, small industries are import- 32 I ant activities in many rural areas, in terms of employment, and in less 33 I tangible ways which affect such areas as community development potential. I This importance will probably continue for years to come, even though evolu I tion in the life style and customs of the rural population will reduce the '. -, -' ~ 37 I demand for the utilitatian goods produced by craft endeavors and by the less -, 38 I sophisticated rural industries. For this reason, these enterprises need 3 J:1 lmore support. The CCTI, charged with providing this assistance, works with I :an annual budget of only L 250,000. This is its primary constraint. Staffing 40 j problems are relatively easy to solve, as technically specialized talent is i :+2_ ! less necessary that the capacity to motivate and collaborate with workmen. t· ) '- IThe CCTI should be provided with more funds, enabling it to carefully plan a~ L) /implement an expanded program. I {+S , 40 47 C Outlets for Foreign Assistance ! j 46 47 ~8 !97. The more prominent of the agro-industry project proposals under ! 48 ;~ Idiscussion by Governme~t include: 49 50 51' (a) Cassava industrialization in the northern coastal area r) 52 to produce animal feed, and starch and glucose products. J_ 53 Study and investment requirements are estimated at $1.5 53 million. 54 55 55 56 56 57 57 ANNEX 10 Page 22 5 (b) Fruit processing on a small scale (probably in the-Aguan) ~ I ;3 to complement varietal/cultivation investigations and to explore export possibilities. Including agricultural production research, total cost is estimated at $1 million • . ~.L (c) With the same intent and costs, vegetable processing in the Comayagua area. (d) A fertilizer mixing plant in Puerto Cortes to enable custom formulations, continuity of supply, and possibly more competitive pricing. Total cost, including some 17 pre-investment work at the port, is estimated at$5.2S ___ 0 million. 19 20 .~ 1 (e) Leather footwear production to substitute for imports, 21 .:..1.. and get higher value added from the domestic leather out 22 put. Total cost, $1.1 million. 23 24 98. In addition, high priority is given to African palm processing as a necessary complement to the ongoing Aguan plantation development being assisted by FAO and IDB. (~resent plans call for a plant which is probably ..:, ltoo small to interest foreign lenders.) A considerable amount of pre- j investment 'vork is said to have been completed. The investment estimate is :$7.5 million. 199. Nunicipal slaughterhouse improvement is also given priority by iofficials. Present plans for the La Ceiba and San Pedro Sula facilities leall for an expenditure of $1.5 million (excluding studies), using funds )from the IBRD livestock loan. i100. The mission was not able to investigate these proposals'in detail, 3! inor others identified in the above-mentioned draft national development 3 plan. 1/ 2/ It is likely that many of the proposals will be found uneconomic ias .fea~fbiHty- sttiales-proceed.---However~-ihetneieexis-tence of-a-W1de ) ,ranging set of project prop~s~~,_a~~ll~t.T!:_t~_the ~~].ization -ihat--deflnitive . .;.1 levaluations are essential, is constructive. Add to this the recent creation 42 'of CONADI, and the basic impressions which ean be drawn from an overview of 43 lthe sector (as presented above), and it appears that support for CONADI .,.~ I,' ShOUld become feasible within a year or two. This is on the assumption that 45 45 I CONADI is able to develop a rational approach to agro-industrialization and Ito achieve a closer working relationship between Government and the private I ---------- -f I !.8 I 49 49 11/ The one exception is the tortilla flour project, which appears viable .J\J 1 5 on present evidence. .J .L ! 31 /2/ The ongoing IDB industrial sector survey, which will report in mid :: '} ~~ 1 1975, will produce recommendations on specific project possibilities and industrial development policy. 53 54 I ~ , 55 55 56 56 57 57 ANNEX 10 Page 23 sector. If progress is made in these areas, some $20 million could be made available to CONADI within the next decade for uses other than forest product industries. To this might be added some $3 million to assist.CONSUPLAN with feasibility study work. A final element in this foreign support package might be support on the order of $1 million, at least partly on a grant basis, to assist CCTI in expanding programs for artesania and small industry, keeping in mind that investment funds are officially stated to be available for CeTI activities through the Central Bank's Small Industry Guarantee Fund described above. Common Market developments may open additional support opportunities for foreign lenders within the decade. Table 1: GROSS VALUE OF PRODUCTION - PRINCIPAL MANUFACTURJNG GROUPDlGS BASED ON AGRICULTURE, 1965-72 Group 12.Qi 1268 12ZQ. ~1m. -------------L Million--------------- Foods 104.0 137.2 178.2 216.5 Drinks 38.6 43.5 54.9 73.1 Tobacco 11.9 13.8 13 .0 14.3 Textiles (natural fibers) 19.7 22.6 24.3 30.3 Leather 4.2 4.7 3.6 3.6 Footwear (leather) -16.0 ..1l:l ~ 14.9 TOTALS (a) 194.4 235., 288.5 352.7 Total for all manufac turing activities (b) 307.8 404.8 493.8 491.4 %(a)/(b) 63 58 58 72 Source: CONSUPLAN I. ANNEX 10 Page 25 Tp.b1e 2: EMPLOYMENT IN MANUFACTURING nmUSTRIES, BY SIZE, SELECTED YEARS 11 1260 ~ !21Q. J:m. Total Employment (nu..'Uber) Agro-Industry 7,385 7,809 11,194 15,628 All Industry 14,882 19,429 25,477 28,618 Total Establishments (number) Agro-Industry 374 All Industry 203 Total Agro-Industry Establishments by Size 173 5-19 Emp10yees 173 20-49 Enp1o'yees 116 50 or more Employees 85 11 Excludes artesanias. Source: Based on CONSUPLAN data. Table 3: 11 CAPITAL INVESTMENT IN MANUFACTURING INDUSTRIES - , 1969-72 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 -----------------·---------------------------------L Thousand of 1966-------------------------- _______________________________ Net Assets Beginning of the Year 76,851.0 83,118.8 92,594.3 103,149.7 114,908.8 128,276.5 155,214.6 187,632.6 209,022.8 233,656.·9 247,266.6 Investment During the the Year 13,963.9 18,356.4 20,571.7 23,053.2 26,122.8 41,361.9 48,709.0 39,951.4 45,869.0 38,283.8 41,.895.9 GrOSB Fixed Assets 90,814.9 101,475.2 113,166.0 126,202.9 141,031.6 169,638.4 . 203,923.6 227,584.0 254,891.8 271,940.7 289,162.5 Depreciations and Withdrawals 7,696.1 8,880.9 10,016.3 11,294.1 12,755.1 14,423.8 16,291.0 18,561.2 21,234.9 24,674.1 27,012.2 21 21 Net Fixed Assets 83;118.8 92,594.3 103,149.7 114,908.8 128,276.5 155,214.6 187,632.6 209,022.8 233,656.9 247,266.& 262,150.:1 11 Artesanias are exc1,uded. :"" . ~I Personnel of Industrial Programming Sector Section, CONSUPLAN' , estimlt~d that, for 1962 and 1972, at least 80% and about 60%, respectively. of the net fixed assets relate to agro:industry. • Source: Based on CONSUPLAN data. ?I~ l><l NIl-' 0\0 Table 4: VALUE ADDED BY PRINCIPAL MANUFACTURING GROUPS BASED ON AGRICULTURE, SELECTED YEARS, 1960-72 1960 1965 1970 1972 Indus- Arte Indus- Arte Indus- Arte Indus- Arte Indus- Arte Indus- Arte Indus- Arte Indus- Arte trial sanal trial sanal trial sanal trial sana1 trial sanal trial slinal !!!.!L sanal sanal 'L Thousa.tiifT7 ~-%---::-:::. ---L Thousand--- .... - .... ---%-=== .... ---L Thousand--- ===--%-.:::::-• ---L Thousnad--- ------1.:.----- Foods . 21,105 24,440 39.6 80.2 29,262 26.850 34.8 79.9 95.249 29,360 58.8 80.0 125,671 29,736 58.5 80.0 Drinks 19,409 320 36.5 1.1 27,308 300 32.5 0.9 38,320 360 23.7 1.0 56,048 417 26.1 1.1 Toba.cco 7,529 100 14.2 0.3 8,174 200 9.7 0.6 8,998 190 5.6 0.5 9,121 147 4.2 0.4 Textiles 3,191 100 6.0 0.3 16,069 100 19.1 0.3 17,770 90 11.0 0.2 22,744 96 10.5 0.3 (natural fibers) Leather 935 750 1.8 2.5 1,451 800 1.7 2.4 973 820 0.6 2.2 836 768 0.5 2.1 Footwear 1,000 4 J 760 ...h! 15.6 1,846 5.340 2.2 15.9 550 5,900 -!:l 16.1' 533 5,984 0.2 16,1 (leather) TOTAL 53,170 30,470 100 100 84,112 33,590 100 100 161,862 36,720 100 100 214',956 37,148 100 100 Value added· by all above groups - and artesana1 - 41 41 40 42 as 1. of all manufacturing activities Source: CONSUPLAN ?I~ 1\)11-' -..JO ANNEX 10 Page 28 Table $: APPLICATIONS FUR INVESTMENTS IN AGRO-INDUSTRY, 1973-74U ~ 1974 (Jan-.-May) -------L Thousand------- Livestock slaughter, preparation U and preservation of meat n2 Milk and dair.r products 175 Fruit and vegetable canning and preservation 812 Edible fats and oils manufacture 880 Grain milling and products 1,531 Bakery products 1,019 Miscellaneous food products 310 To-bacco manufactures 182 Textile manufactures 1,281 Leather and products 107 , Footwear (leather) 165 . -"--"- --~-- Furniture and accessories Tot~-(~r - -------------- (wood) .- ----- - - - - - - - - - - - -- ~ 6,890 - - h2L Iotal investmst all indstun- (b l 45,262 7,563 ____ ~%_~~I.(b) - - ~----- - - --" 15.2 6.5 - _._ .-~- 11 As recored b.r Direccion de Industrias to which all applications in respect of new and expanded industrial activity must be sumbitted. Actual disbursement is not necessarily made in the same period. Y No recorded investment applications. Source: MiIlistr,r of EconoIQ" ANNEX 10 Page 29. Table 6: PERCENTAGE DISTRIBUTION BY PRODUCT GROUP OF PRINCIPAL IMPORTS AND EXPORTS OF AGRO-INDUSTRY RELATED PRODUCTS J 1970-72 l21Q. !2.ll. ~ ImIlorts Machinery and transportation 28.91 29.1 26.18 Manufactured goods (not specified below) 28.36 28.6 28.93 Chemicals 12.96 15.3 16.07 Partially processed goods 10.52 6.9 6.49 Foods 9.59 8.1 9.03 Oils (non-edible) and lubricants 6.67 9.0 9.94 Edible fats and oils 1.30 1.1 0.94 Drinks and tobacco 0.74 0.4 0.38 Raw materials (inedible) 0.73 1.0 1.71 Live animals (not for food) 0.20 ..ihi 0.33 TOTAL 100 Y 100 ?:I 100 J/ Exoorts Bananas 42.01 50.26 43.23 Coffee 15.22 12.61 13.84 Lumber 9.55 10.49 13.56 Meat (not processed) 5.73 6.86 8.25 Minerals and metals 5.63 ~.33 5.53 Petroleum products 3.69 1.61 1.76 Tobacco 1.33 1.13 1.14 Soaps and detergents 1.44 0.02 0.06 Fruits (fresh and processed) 1.27 1.27 1.19 Clothing 1.44 0.29 0.09 Fish (not processed) 0.62 1.80 0.01 Beans 0.96 1.32 1.04 Chemical ingredients l.ll Sugar 1.06 Others (not specified) 10.91 2:.22. ~ TOTAL 100 !II 100 21 100 If Value, L 441 million. !tIValue J L 340 million. ~ Value, L 387 million. 21 Value, L 366 million. l( L 385 million. §! L 387 million. Source: Ministry of Economy ANNEX 10 Page 30 Table 7: A RESUME OF ARTISANAL ACTIVITIES, 1973 -- Activities to which CCTIl! is providing technical assistance Principal Separate Work Zone of Persons, Estimated a w Materii;l. Establishments ?:.I °Eerations Occu:eied JI Incs;!me ~ No. No. L Thousand 1100d ,a San Pedro Sula 348 638 Wood 7, Tegucigalpa . 600 ,,2 Leather 40 Tegucigalpa 180 432 Leather 35 San Pedro Sula 200 480 Leather 18 Danli 72 77 Leather 13 Choluteca 6, 94 Henequen 1 Valle 15 3 Clay 15 Valle 60 43 Clay 1 Tegucigalpa .12 16 Sugarcane (Fanela. 300 Siguatepeque 1.800 --.ill. production) Totals 556 3,352 2,,10 Activities not yet assisted by CCTI Separate Work Estimated Zone of' Operations Establishll1ents Occupied 'JI Estimated Income No. No. L million -Thl'Oughou t- the thknown - 39,000 --- a- -- 10 rural areas 11 Centro Cooperativo Taeniao Industrial. y UsuallJ" in or around the domestic dwelJjng. V Includes part time occupation. g,t Comprises wages and receipts .from sales--as appropriate. Incane is also, derived from sales by supply cooperatives,of' which I!laDY' artesan workers in question are members. Source: Computed frail sa:mple investigations and estimates by CCTI. ANNEX 10 Page 31 Table 8: THE SMALL-SCALE INDUSTRY POSITION IN 1974, AND PROJECTED FOR 1974 (A) Situation in 1973 Principal Raw Total Materials Establishments ~l0Z!!!ent Jlal:u.e IJ.:od1.l.~:t1Wl No. No. L Thousand Direct produce a1I from agricultur 140 20,100 15,600 Other 122 9,530 10,300 TOTAL 262 29,630 25,900 (B) Projected Situation in 1978 Principal Raw Total Materials Es tablishments Enployment , Value Production No. No. L Thousand Direct produce I from agricultu~ 186 21,000 37,500 Other 150 10,000 21,500 TOTAL 336Y 31,000 59,00OJ/ ~ ncludes forestry and fishery produce. I £( The 74 new projects (336-262) are envisaged for establishment in the Departments of Comayagua, Choluteca, Francisco Morazan, Atlantida, Valle, El Paraiso, 01ancho, Intibuca., Yoro, and Santa. Barbara.. 21 The production value (L 33 million) envisaged from the 74 new projects is high because the projects are designed to qualjf y for the newly established higher limit of L 100,000 in plant and equipment. Source: CCTI Table 9: IIEW AGllO-IIiDUSTRIAL PRO JEerS III ADVANCED PLANNING STAGE. 1974 Ref, Activity Location Developer Principal Inputs Envisioned Market Investment Pre sent Status !h!..:.. Material Quantity National External 'MUlton L Observations 11 1. Sugar milling, expan San Pedro Sula/ Present owners Cane 2,000 TeD!/ v ND- Operation scheduled for Cortes (private sector) (addi Honal) V"" aion of two existing 1975/76 planta 2. Sugar milling, new San Pedro Sula/ Present owner Cane 3,300 Teo v v" 110 Operations scheduled for 3. plant Sugar milling, new Cortes San Pedro SuI .. (private sector) Growera l Cooperative (effectively State, Cane 3,400 TCD v v 20 Includes L 6 1975/76 . Precise siting,being de- plant mi 11 ion for: land termined; operations via BIIF) development 8cheduled for 1976/77 4 •. Edible oil process Eventual acreage Privste sector Palm 1.5 tonsl v v Initial operation scheduled ing and extraction 3,500 in Santa Ana, fruit hr (initial) for 1975 (African palm), new Pagusles, San 9 0 tonsl v 7 Includes invest plant Francisco. Hasica h' (eventual) v _nt in agri culture 5. Edible oil extractioQ Eventual acreage State (INA) Pal.. NO v f./ 15 Includes invest BNF advised project may (African palm), new believed about frult ment in agri be revj~ed in light of plant 5,000, Bajo Aguan culture recent FAD studv. No orders yet plac~d for equipment. Earliest operation appears to be 1976. 6. Fruit and vegetable Comayagua Private sector. Tomatoes Nil v V NO Operation to cOlllltence processing. new plant The &ompany already (principally) June 1974 including open top operates similar can manufacture industry 7. Food snacks and fro San Pedro Sula Private sector Okra II) v v NO Initial operaUon scheduled zen vegetables Others NO (principally) 1974 lID - information not forthcoming. l' Tona cane per day. Source: Personal discussions with the principals and/or their representatives; in some inatacne•• unwilling/unable to furnish full information. ~! ~ Ill00silUJ. n.0!IIXlr _ . n.oroSIIll POl EXUIt.lOII 1. MAn _10lu.~ DrYnOPMElft 'lAlI, 1914-1t7. 'oulln R.t!on;1l\ erol J ~ .lu. Skilled and Va.t./Sderle./ ero.. ',lUI lroit>u.1 !.!li.!! hch",nce Mon~y Toht Op~r.ttnn.l or Jtr'~£!J.!.!! Iru! .!.!.!.!2!l!l IJftponed 'I.2!!!! Sot'tDt"'"k!11d MOII<+.ktlhd aoetal C"ntributhntl !!:!!!!. ~ N•• • .......-_................ - ............--............ - ..............................1. ThQur.~nd ....... ~- ............ "!'......... ~ .. _ ................._ ..."' .... _ .. _ - ......... • ............. -Number ....• ...... • ................. .. .. _-_ ...................L thQlU ••nd .......................... '.1, 74,' ,~. . &m ill 17.147 4~, 736 !!...!.U 61.19) 15.354 ~L'l! !2...ill 14,324 !...ill. l...ill 2.444 ll..!U. l.?.2!2 )7,466 'fndlttont.l buh.tt.....a 19. ,~, 70S 28,050 10. ~~4 39, \36 lhm D~~ ..!!..lli' 78. S9S ~ 14,048 ',540 1 808 "". 1I!,718 24,432 foodt 3. 29.912 19.294 " 6,408 %S,702 4,flO 42. >76 25.837 2l,735 a,602 1,952 1.140 812 4,731 5,700 12.1:14 Drink. 2 707 272 101 )73 3:l4 I, '72 1,270 546 724 84 47 37 2.6 127 449 tohlt'co ·1 3,IU 410 255 665 1,400 S. 40 2,476 2,4)0 46 69 36 J3 152 920 1,015 Tc_ItU •• 5 4,3)8 2,548 )50 2,198 1.440 42, .48 39,493 39,231 262 446 211 231 8S9 1,133 1,314 Wrmoll'!nt. (u;ee,t foonw.....' 3 665 106 169 377 266 2, 20 1.258 1,214 44 194 150 44 422 218 611 Luth.r ant PrO!Svcta 1 738 192 137 429 )09 I, 00 1,014 1.040 l4 74 \7 if 160 III 54) FootVto4r 1 707 5U 2 524 183 I, oQO 29. 243 53 SB 26 40 145 300 491 lW1\bu ind1Jttct.aa 14 8,300 4, )96 1.995 6,)81 1,999 H,47 10,290 9 ••02 688 1,329 773 S5. 1.789 1,864 5,123 f\,lrni tu~r • •nd aCC"'OI'1« 1 658 174 240 SI4 144 I, .10 945 909 38 62 )9 U 186 410 650 hi..,t tnl Oth~r b4ultdi. - 1 1 11.480 75 460 14 7)6 n 1,236 35 144 40 1.,80 :50 454 161 145 454 16 4, 19 41 12 • 1 ISO 40 719 2. 973 n l1tUr-edhta Tndu.trt••• .~ II 22,251 14,866 ~ 19,5)0 Lll.! I)','l) Llli. ~ 4,gB9 1,161 ill 440 !.ill ' .,W.91 ....p.r and troducU 373 238 145 l8l 190 I, 78 816 8) • 73) 45 29 16 1)5 'l1a )05 '. C:b.,.lc: at ."bU.nc• • •4 ;:,l .. tics 16,737 11,39,\ 3,408 14,802 1,93S II, 36 ',942 2,29S 3,647 810 '09 301 2,U2 l,nO 7.400 tub!>« t ,cuduc: ta 1 IlS 66 49 115 20 SO sa ,17 41 12 9 3 lS 27 72 teeamie., Ibll .an4 ..... IN'taUh producu' 4,806 3,170 1,060 4,230 )76 • oS,' 49 913 445 468 300 130 120 773 9'16 2,U,!. Mltch.ole.t Haul Ind"uda. lIQa"MUllle .lner.! product. 13 ..4,111 f,U' 941 3,229 981 ',lU 4,790 314 4,476 588 392 .196_ , 1,920 941 3,09) !! Tb4 ...,tul/.,lp,..,Dt ... 1atlcmlht, predteat•• tacbnoloJ;lc. pN'cbUy bbor.. ta.UMtV& and tMi& _{null De expe04tturl oa c4plc.l Iq\llpctent. '-," Sour"r COIISL'PI.AJ( ANNEX 10 Table II s SPECIFIC AG!lO-IHllUSTRIAL l:'IlO.mG'IS llNIlER CONSI.DERATION sr Page 34 OOVEmKENT PLANNERS AND PRIVATE SECTOR, 1974 10. ot Act1.v1t:r Projects Characteristics Apparent Status· .flaring 1.t! IndUstrial Plan and related docu.",e.'ltation (A) 1. Nitrogen .tertUizer manu!acture 1 ADIon.1a/urea tacllit:n fiDd invest No st~ could be located. _ t L ;;6.8 million. 2. Manufacture of agricultural. 1 Flxed investment L 22.4 million. l!fo st~ could be located. lllach1nery and i~lel:!ents Food processing 39 Some examples are: glucose produc Envisioned .tor operation tion; dehydrated sOUPSj tish meal and 1974/78; only one compre oil; cassava derivativesj'soluble hensive stu<\T could be cofteej truits and vegetables, etc. located-this vu on pro All are stated to ganerate L 12.1 du.ction ot tortill.a fiour. million added value per :rear. 11.. TextUe lIIIIJlUtactures s Stated to generate L 2.3 lIlillion added value per :rear. Envisioned .tor Operation 1974/78; no studies could be located. S. Tobacco ~ufactures 1 Stated to generate L 1.0 million Envisioned tor operation added value per year. 1974/78; no stud,7 could be located. 6. Beverage 1.t!dustries Stated to generate L 0.4, lII1llion Envisioned tor operation added value per year. 1974/78; no stud,7 could be located. 7. Leather industry 1 Stated to generate L 0.54 lId.llion Envisioned .tor operation added value per :rear. ' 1974/78; no study could be located. 8. Footwear industry 1 ~c"ted to generate L 0.49 million Ehvisioned tor operation. added value per 'ftJar 1974/78; no atudy could 9. F\I.m1 ture indus tries 2 Stated to generate L 0.6, mill.ion Envisioned tor operation added value per year 1974/78; no stud,7 could be located. 10. . Fertilizer 1llixI.ng (plus 1 Not yet determined Current.1:y under prelirninar,r bulk handling facUities ItUdy by BNF. (Central at Puerto Cortes) America's Bank tor Econornic Integration plus UN!!)) plan five months regional stud,7 on TOTAL tertilizers tor 1974.) ~U£!d from personal contacts with private sector (B) 1. Not specified Several The director ot a private development organization affirmed that ·several" projects had been studied and potential entT'Elpreneurs "l1.t!ed up"; however, pending resolution ot current "uncertainties", realiza tion was in abeyance. -. Sugar milling 2 The 1nsta1l.ations would have about One mill haa been purcllased 9.600 TCD cap ad ty• bllt. will not be delivered until uncertainties on cane lands bave been resolved. The would-be operators ot the other mill are sEI9king "under takiIlgs" trom Goverrunent. ). Pineapple proceuing . 1 If ot :ret claterm:1ned. Hight be established "later on" to co~19l:!9nt a tresh fruit operation. 11.. Industrial production of oma 1 Alrea<\T in operation on a pilot scale; subject to resolving tech _tal plants and shrubs nical problems and to satiSfying U.S.A. regulations, the project has good prospect ot early progressive expansion. s. Fresh vegetables, .tor export lli:\- Assem)lly, select.ion, grading, Very limited trials are said stated packing. shipment. to have been made j supply and quality problems are to be oTtrcome. 6. P'loWQrs, .tor export Un- Assembly, seiect1on, grading Very preliminary investiga atatad packing, shipment. tions .tated to be in progress. Sources M stated in (A) and (:8). AL"lliEX 10 Appendix 1 Page 1 DECREE-LAW 135 (CONADI) 1/ WHEREAS it is the function of the State to accelerate the process of public investment and encourage both private and mixed investment in the industrial sector and in tourism; AND HHEREAS in order to achieve these objectives it is necessary to modernize, rationalize and broaden certain productive activities already in existence, to develop new productive activities, and to take added advantage of current market opportunities through the promotion and implementation of specific projects: AND WHEREAS it is a matter of urgent necessity to create a money and securities market.i5le to--stimulate public and prIVate saving within Honduras, channeling it towards productive activit'i,es; AL'iD HHEREAS it is necessary to hasten the execution of investment projects provided for in the National Development Plan by taking advantage of such modern means as are most consonant with national requirements; NOW THEREFORE, by virture of the powers invested in him, THE HEAD OF STATE, IN COUNCIL OF NINISTERS, HEREBY PROHULGATES the following: NATIONAL INVESTMENT CORPORATION LAH CHAPTER ..r CREATION, OBJECTIVES, REGISTERED OFFICE AND DlJRATION ARTICLE 1. The National Investment Corporation (CONADI) is hereby created as an autonomous institution and body corporate having its own assets, and which shall be subject to this Law, its Implementing Regulations, and such provisions of law as may be applicable to the operations in which it shall engage. ARTICLE 2. The purpose of the Corporation shall be to contribute to the economic development of Honduras by promoting new industrial enterprises or by expanding or consolidating those already in existence, and by organizing and stimulating the domestic money and securities market. 1/ Thisis an unofficial translation of the decree as published in La Gaceta, No. 21,346, July 29, 1974. .ANNEX 10 Appendix 1 Page 2 ARTICLE 3. The corporation shall have its registered office in the capital of the Republic and shall operate both throughout the-national territory and abroad, and shall set up such representatives' offices, agencies or branches as it may deem fit. ARTICLE 4. The duration of the Corporation shall be indefinite, and in the event of liquidation all its obligations shall be totally guaranteed by the State. CHAPTER II FUNCTIONS AND OPERATIONS ARTICLE 5. It shall be within the powers and functions of the Corporation: (a) To promote the organization, expansion or consolidation of industrial undertakings contributing to the economic develop ment of Honduras; and (b) To facilitate access by the greater possible number of Hondurans to participation in the ownership of such undertakings by means of the establishment and operation of a money and securities market. ARTICLE 6. In carrying out its functions, the Corporation, in addition to the operations specified in this Law. shall be empowered to enter into all other such operations, compatible with corporate purposes, as shall be necessary to ensure the achievement of its objectives. Therefore, the Corporation shall: (a) Promote, organize, merge or transform industrial undertakings, whether they be manufacturing, forestry, mining, tourist, service or building concerns; (b) Underwrite, buy, negotiate or invest in stocks, shares or bonds of Honduran undertakings, acting as broker for third parties or as investor on its own account; (c) Operate as trustee; (d) Guarantee loans granted to industrial undertakings; (e) Rediscount paper classified as eligible by the Central Bank of Honduras; (f) Issue all types of bonds in order to obtain resources in domestic or foreign currency; ANNEX 10 Appendix Page 3 (g) Raise direct loans in domestic or foreign currency; (h) Grant short and long-term loans, ensuring that documents are in the form of negotiable instruments; (i) Grant loans of working capital to existing undertakings in cases where such action is warranted; (j) Organize or encourage the organization of industrial securities investment funds; (k) Promote or participate in financial syndicates for the place ment of securities or the granting of loans; (1) Enter into industrial leasing agreements; and (m) Make temporary investments in liquid assets. The Board of Executive Directors of the Corporation shall lay down the rules and procedures governing the operations referred to in this Article •. ARTICLE 7. Bonds issued by the Corporation and external debts contracted by it shall conform to the rules laid down by the Central Bank of Honduras and to the relevant provisions of law. Corporation bonds shall be considered eligible for the Securities Fund of the Central Bank should the latter decide to consider them as cash balances. ARTICLE 8. Interest accruing from securities issued by the Corpor ation shall be exempt from payment of income tax. ARTICLE 9. The Corporation shall make investments in or grant loans to industrial undertakings fifty-one percent at least of whose capital is and continues during the course of their relationship wi~h the Corporation to be subscribed by Honduran nationals or companies in which a majority of stock is held by Honduran nationals. In assessing the percentage participation of Hondurans or Honduran companies~ account shall be taken of the stock held by the Corporation itself. The Corporation shall also be empowered to invest in multinational undertakings should the Board of Executive Directors so decide. ARTICLE 10. When the Head of State in Council of Ministers~ on the proposal of the Technical Secretariat of the Higher Council of Economic Planning, shall declare any sector of industry crucial to the national develop ment process, the Corporation shall have right of preference in taking over or acquiring participations or stock in enterprises in that sector when their proprietors desire to sell same to individuals or bodies corporate of foreign nationality or to Honduran companies controlled by foreign nationals. ANNEX 10 Appendix 1 Page 4 The right of preference established in the foregoing paragraph may be exercised by the Corporation acting alone or in conjunction with other individuals or entities, provided that control of the undertakings remains in Honduran hands. The price payable by the Corporation upon acquisition of such under takings of stock or participations in them shall be the market value at the time of such acquisition. If for any reason the parties were not to accept market value, then the price payable shall be assessed by duly skilled experts. So that the Corporation may exercise the right to preference conferred by this Article, as soon as the Head of State of Council of Ministers shall have declared certain sectors of industry to be crucial, the Corporation , shall give public notice to the effect that interested parties must give written advice of their intention to sell their enterprises, stock or participations to· foreign nationals. The Corporation shall take the necessary decisions within thirty business days following receipt of such written advice. Any contravention of the provisions of this Article shall render null and void such acts as may be carried out. ARTICLE 11. The Corporation may participate only in such projects as require investment of at least seven hundred and fifty thousand lempiras between capital and loans. Capital participations taken out by the Corporation in the under takings in which it invests may be offered for sale to Honduran nationals or to companies set up in Honduras and in which the majority of stock is held by Honduran nationals, in accordance with such policies and procedures as may be laid down to that effect by the Board of Executive Directors. ARTICLE 12. The Corporation's policies, programs and projects shall be consistent with the National Development Plan. CHAPTER III ASSETS AND RESOURCES ARTICLE 13. The Corporation's assets and resources shall be made up of: (a) Contributions from the State; (b) Contributions from private banks, branches of foreign banks, insurance institutions, branches of foreign insurance companies, and private financial institutions; ANNEX 10 Appendix Page 5 (c) Contributions from industrial undertakings enjoying fiscal exemptions under the Industrial Promotion Law, the Central American Agreement on Fiscal Incentives for Industrial Development and its Protocal, or Decree-Law No. 49 of June 21, 1973; (d) Investments by members of the public evidenced by Certificates of Participation; (e) Profits accruing from operations; (f) Legacies, bequests and donations accepted by the Corporation; (g) Internal and external loans obtained by the Corporation for furtherance of its corporate purposes; and (h) All other securities, assets and resources which may be assigned to the Corporation or which it may acquire in whatsoever manner· or for whatsoever purpose. ARTICLE 14. The banks and other bodies corporate referred to in section (b) of A~tiCle 13 above shall contribute to the Corporation a sum equal to ten percent of the capital and capital reserves with which they operate in Honduras, as shown by their Balance Sheets at December 31,1973. Their contributions shall be adjusted according to such changes as may arise in their capital and capital reserves. Contributions shall be evidenced by Certificates of Participation bearing interest at the rate of six percent per annum which shall be exempt from payment of income tax. ARTICLE 15. Industrial undertakings referred to in section (c) of Article 13 above shall contribute to the Corporation a sum equal to ten percent of the total of any customs tariffs and income tax from which the State shall have exempted them. Percentage of customs tariffs shall be calculated by taking as a basis the customs duties in force on the date of acceptance of the corresponding import permit (poliza de importacion), and payment of the percentage shall be made to the Central Bank at the time when the invoice price of the imported goods is paid. In this respect no account shall be taken of taxes on which refunds or exemptions are granted under the drawback system. Percentage of income tax shall be declared and paid in the manner and at the time stipulated in the relevant legislation. Revenues thus collected shall be credited to the Corporation by the Central Bank, and the former, at the end of each quarter, shall issue non negotiable Certificates of Participation in the name of each contributing enterprise. These Certificates shall be amortized over a twenty-year period, starting three years after issue, in annual installments equal to six percent of face value. with exemption from income tax. At the end of the period mentioned, the validity of such Certificates of Participation shall expire. ANNEX 10 Appendix 1 Page 6 ARTICLE 16. The bonds referred to in section (d) of Article 13 above shall be issued according to the conditions laid down by the Central Bank of Honduras and the pertinant legislation. Interest on these shall be except from income tax. ARTICLE 17. The Corporation shall be exempt from payment of all classes of State or Municipal taxes. CHAPTER IV THE BOARD OF EXECUTIVE DIRECTORS ARTISLE 18. The highest executive organ of the Corporation shall be a Board of Executive Directors made up as follows: four representatives of the Government; b~o representatives of banking, financial and insurance institutions; and one representative of the contributing industrial undertakings. Each member of the Executive Board shall have an alternate, who, in the case of the representatives of the Government, shall be a high official of the corresponding Government agency. The regular members of the Board representing the Government shall be the Minister of Economy, the Minister of the Treasury and Public Credit, the Executive Secretary of the Superior Council for Economic Planning, and the President of the National Development Bank. ARTICLE 19. Nomination of the Representatives of banking, financial and insurance institutions and of contributing industrial enterprises shall be initiated by the Executive Board; the Board, by means of separate invitations sent at least two weeks in advance to the different sectors concerned, and by means of public notice, shall announce a special meeting at which designation of representatives shall take place in the following manner: (a) The banking, financial and insurance institutions shall prove their right by showing they are inscribed in the register maintained by the Corporation. Each institution shall be entitled to one vote; (b) Contributing industrial enterprises shall prove their right by presenting their Certificates of Participation' at least twenty four hours prior to the meeting, whereupon the Corporation shall issue them with an authorization to attend the meeting and shall indicate the number of votes to which they are entitled. Each contributor shall have one vote for every hundred lempiras; (c) Nominations shall result from a simple majority of votes. Upon termination of the meeting, Minutes shall be drawn up and submitted to the Controller General of the Republic, who shall ascertain whether the persons nominated as representatives meet the conditions stipulated by this Law. , --~-.--.-- ...... - .... -~---------------.~---~- ..-.. -----..----~.--, ""--'~-'-'-'-' .~ ANNEX 10 Appendix Page 7 ARTICLE 20. To be a member of the Board of Executive Directors, a person must be of Honduran nationality, in full possession of his civil and political rights, over twenty-five years of age and of good repute and recognized capacity. Representatives of banks and other institutions referred to in section (b) of Article 13 above shall, in addition, be either presidents or senior executives of same. ARTICLE 21. The following persons shall be disqualified from acting as either full or alternate members of the Board: (a) Those who are related to within the forth degree of consanguinity or the second of affinity to the President of the Republic or to the Executive President or Vice President of the Corporation; (b) In the case of the Executive Directors referred to in Article 19 above, those who belong to the same enterprise or are members of the executive body of the same enterprise; (c) Those who are insolvent or bankrupt or against whom bankruptcy proceedings are pending; (d) Officials and employees of the Corporation; (e) Civil servants and employees of public agencies or of any autonomous institutions, except those referred to in Article 18 of this Law; (f) Those holding public office by free election and those who are members of the executive organ of any political party; and (g) Those who for any reason whatever lack the legal capacity to carry out such functions. The impediment specified in section (a) above shall be considered not to exist should it arise between a person already duly incorporated as a member of the Board and a representative of the Govenment. ARTICLE 22. The representatives referred to in Article 19 above shall hold office for a period of two years and their term of office may be renewed for no more than one additional period. A former member of the Board shall be eligible for reappointment once two years have elapsed since the termination of his last term of office. shouid a regular member of the Board be temporarily absent. his alternate shall take his place. If the vacancy is permanent, a new member shall be appointed to the Board for the duration of the remaining term of office within thirty days of the occurrence of such vacancy. However, when a permanent vacancy occurs in the second half of a term of office, the alternate shall complete the term in the regular member's place. ANNEX 10 Appendix Page 8 ARTICLE 23. Should there arise one of the impediments to capacity envisaged by this Law, the appointment of the member of the Board concerned shall cease to ve valid and the necessary steps shall be taken to replace him. It shall fall to the Office of the Controller General of the Republic to qualify and declare the cessation of validity of any appointment. Such acts or contracts as may have been authorized by a member of the Baord prior to the declaration of his incapacity shall not, in spite of such declaration, be considered null or void. ARTICLE 24. The Board of Executive Directors shall exercise its functions with absolute independence and on its own exclusive responsibility within the provisions of this Law and its Implementing Regulations. Respon sibility vis-a-vis the Corporation, the Government or third parties for any act, resolution or omission of the Executive Board which "contravenes the laws or regulations or is prejudicial to the institution shall fall jointly and severally upon those Directors present at the Board meeting at which the matter was decided on, except for those who shall have caused their disagree ment to be recorded in the Minutes of that session. Those members who divulge any information whatever of a confidential nature on matters discussed at meetings of the Board, and those who take advantage of any information for their own personal ends or with prejudice to the Government, the Corporation, or third parties, shall also be held individually responsible for their acts. ARTICLE 25. The Chairman of the Board of Executive Directors shall be the Minister of Economy, or in his absence the Minister of the Treasury and Public Credit, the Executive Secretary of the Superior Council for Economic Planning, and the President of the National Development Bank, in that order. The Board shall meet regularly once a month, and special meetings may be convened by the Chairman or upon petition of the majority of, the members. For each full session of the Board, members shall receive a fee for attendance not exceeding fifty lempiras. No Director shall be entitled to receive fees for attendance exceeding one hundred lempiras in anyone month. ARTICLE 26. A quorum shall exist when at least four members of the Executive Bo~rd are present, and resolutions shall be passed upon four favor able votes being received from members in attendance. In the case of a tie, the Chairman of the Board shall have the casting vote. ARTICLE 27. No Executive Director shall remain present at a Board meeting when 70nsideration is being given to any matter in which he himself has a personal interest or which is of interest to his relatives to within the fourth degree of consanguinity or the second of affinity, or to any enter prise to which he may belong as partner, employee or official. Through the Office of the Superintendent of Banks, the Board of Executive Directors shall submit for the approval of the Board of Directors of the Central Bank a Statement of Regulations affecting the operations which ANNEX 10 Appendix 1 Page 9 members of the Board of Executive Directors and the chief executive officers of the Corporation may carry out with that institution. At all avents, any credit operation involving action by a member of the Board of_Executive Directors or the enterprise to which he belongs shall require the unanimous vote of the other members of the Board as well as the consent of that enter prise. ARTICLE 28. In addition to the powers and functions specifically conferred upon it elsewhere in this Law, the Board of Executive Directors shall perform the following functions: (a) Represent the Corporation at law. Such faculty shall be vested in the Executive President and may, in special cases, be delegated to another official; (b) Issue regulations and provisions relative to the administrative and financial organization of the Corporation; (c) Approve the Corporation's operations manuals and guidelines, in accordance with corporate purposes and pO'tl1ers as defined by this Law; (d) Approve such contracts and agreements the approval of which, because of their nature or the sums involved, it expressly reserves to itself; (e) Approve, on an annual basis, the Corporation's work program and objectives; (f) Authorize the issue of credit instruments; (g) Decide all matters relative to the Corporation's portfolio and other assets; (h) Examine, appraise and approve the Executive President's Annual Report, the General Balance Sheet, the Statement of Profit and Loss and the execution of the various program budgets; (i) Delegate functions to the Executive President, to administrative committees or to commissions made up of its own members, specifying in each case the functions to be carried out; (j) Propose to the Executive Branch, through the Ministry of the Economy, the appointment, suspension or removal of the Executive President, and Executive Vice Presi~entt and, on the advice of the Executive President, make Similar proposals regarding the Manager or Managers; (k) Order, on the advice of the Executive President, the establishment of offices, branches or agencies within the national territory and abroad; and (1) Exercise all other powers and functions assigned to it by virtue of the laws and regulations. ANNEX 10 Appendix 1 Page 10 CHAPTER V THE EXECurIVE PRESIDENT, MANAGERS AND AUDITORS ARTICLE 29. Management of the Corporation shall be in the hands of an Executive President and an Executive Vice President, who shall be appointed by the Executive Branch through the Ministry of Economy acting on the advice of the Board of Executive Directors. Both officers shall be appointed for a term of six years and shall devote themselves full time and exclusively to their Corporation duties; during their term of office they shall not accept any other post, either salaried or honorary, except for such commissions as are inherent in their appointment. In the absence of the Executive President the Executive Vice President shall act as his alternate. The Vice President shall ordinarily carry out such functions as are assigned to him by the Executive President. ARTICLE 30. The Executive President and the Exec~tive Vice President shall be of Honduran nationality, over twenty-five years of age, and s1'>;:::1l be persons of good repute and recognized capacity in economic and financial fields. ARTICLE ll. The follmV'ing persons shall be disqualified from appoint ment to the positions of Executive President or Executive Vice President of the Corporation: (a) Those related to within the fourth degree of consanguinity or the second of affinity to one another 'or ~1:0~anymember~ot'Ehe Executive Board; (b) Those who are insolvent or bankrupt or against whom bankruptcy proceedings are pending or who have accounts outstanding with the State; (c) Those holding public office by free election and those who are members of the executive organ of any political party; and (d) Those who for any reason whatsoever lack legal capacity to carry out the functions above mentioned. The impediment specified in section (a) above shall be considered not to exist should it arise between an Executive President or Executive Vice President already appointed and a member of the Executive Board appointed subsequently as a representative of the Government. ANNEX 10 Appendix 1 Page 11 ARTICLE 32. The following shall be the functions and powers of the Executive Pre;ident: (a) To attend the sessions of the Board of Executive Directors with the right to be heard but without vote; (b) To make proposals to the Executive Board concerning the organiza tion of the Corporation and to execute such resolutions as shall be adopted by the Board; (c) To administer Corporation assets and business; (d) To submit to the Executive Board such legal, technical and financial reports as may be necessary to the adoption of decisions regarding the acts and operations of the Corporation; (e) To authorize with his signature, together with that of the Chairman of the Executive Board, such bonds as may be issued by the Corporation; (f) To represent the Corporation at law and otherwise in accordance with whatever powers of attorney may be vested in him by the Executive ·Board; . (g) To submit annually for the approval of the Executive Board the General Balance Sheet of the Corporation, the Statement of Profit and Loss, the draft program budget and briefings on how same should be executed, together with a report on activities carried out during the previous fiscal year; (h) At each session of the Executive Board, to provide information on the more important matters arising out of Corporation business, and to make proposals to the Board regarding the appointment or formation of comm.issions from among its own members for purposes of studying special problems; (i) To take, within the limits of the powers and functions attributed to him, all such steps as may be indispensable in achieving Corporation goals, and to exercise the final authority in deciding questions not within the exclusive province of the Board of Executive Directors; and (j) To exercise all other powers and functions conferred upon him by virtue of the Law, the regulations and the resolutions of the Board of Executive Directors. ARTICLE 33. The Manager or Managers shall deal with Corporation operations and shall be answerable to the Executive President and the Board of Executive Directors for the proper and efficient handling of the tasks entrusted to them. ANNEX 10 Appendix 1 Page 12 ARTICLE 34. Only those persons may be managers who are over twenty five years of age and who meet the conditions stipulated in Article 30 above. No one may be appointed to a mangership who suffers any of the impediments specified in Article 31 above or who is related to within the fourth degree of consanguinity or the second of affinity to the Executive President or Executive Vice President of the Corporation. ARTICLE 35. The manager or managers shall carry out such functions as are assigned t~ them by the Board of Executive Directors and the Executive President. A!~ICLE 36. The Corporation shall have an Internal Auditor, who shall be appointed by the Board of Executive Directors. The Internal Auditor shall be answerable solely to the Board of Executive Directors and shall report promptly to the Board and the Executive President concerning the current situation of the Corporation. Without prejudice to the foregoing, the Board of Executive Directors may retain the services of a firm of auditors of high professional repute to certify the Corporation's financial statements. ART1CLE 37. The Corporationts Internal Auditor and such firm of auditors as may be retained by it shall be responsible for the monitoring and supervision of all the operations and general accounting procedures of the Corporation and of its agencies and branches. It shall also ensure strict compliance with the resolutions of the Board of Executive Directors and shall have access to all the data it requires in order to perform its functions. CHAPTER VI FINAL PROVISIONS ARTICLE 38. In order to form the first Board of Executive Directors, the Minister of Economy shall, within the first ·-two ~weekS"···after this Law -- - - - comes into force, separately invite the banking, insurance and financial institutions operating within Honduras, and the official representatives of the enterprises referred to in section (c) of Article 13 of this Law, to proceed to the nomination of their respect~ve representatives. Nomination shall be by simple majority of votes, each banking, financial or insurance institution or industrial enterprise having the right to one vote. ANNEX 10 Appendix Page 13 Once the nominations have been made, the procedures stipulated in the last paragraph of Article 19 of this Law shall be followed. If for any reason the nomination of one or both of the representatives shall not have been made within the period specified, the Executive Branch, acting through the Ministry of EconoMY, shall itself make such nominations. ARTICLE 39. The first Board of Executive Directors shall take whatever steps may be necessary to ensure that the Corporation begins opera tions by November 1, 1974, at the latest. ARTICLE 40. The first Government contribution shall be in the amount of four million lempiras, which shall be available to the Board of Executive Directors to cover costs of organization and of initiating normal Corporation operations. Subsequent Government contributions shall be allocated annually in the Republic's General Budget of Revenues and Expenditures. ARTICLE 41. The first Board of Executive Directors shall draw up a schedule for payment of the initial contributions by banking, financial and insurance institutions, which shall not exceed a period of twenty-four months. The adjustments in contributions referred to in Article 14 above shall be payable within ninety days of the end of the fiscal year. Obligatory contributions from industrial undertakings shall be payable on or after August 16, 1974. ARTICLE 42. Owing to the special nature of the Workers' Bank, it is hereby exempted from such obligations as are specified in Article 14. ARTICLE 43. This Law revokes all statutory provisions which may be contrary to it. It shall be published in the Official Journal La Gaceta and shall come into force on the date of its publication therein. OSWALDO LOPEZ ARELLANO Head of State et..:.. a1. Ai."iNEX 11 Page 1 HONDtrRAS AGB.ICltLTUBAL/IWlW. SEem!. SURVEY EDUCATION AND TRAINING IN AGRICULtuRE Tabl. of Contents ParaEaph No. PT1mary and. Sec:oudary Schools 2 - 4 Agricultural Education s- 15 UlWI (Agriculture) 6 Panamericm School of Agriculture (UP) 7 - 8 lfatioDal Agricultural School (INA) 9 - 10 Jolm F. 1taJmedy School of Agriculture 11 n Sembrad.or School 12 NatioDal School of Forestry Sciences 13 - 14 !Unistry of Education 1S Agricultural Trairli.n.g 16 - 41 The Natioaal Agrarian IDstitute (INA) 17 - 23 Nad.oaa1 Development Bank (BNF) 24 - 26 DESAGIO Aaricul.tural ixteuior& Service 21 The D1rectoraee of Cooperative Developuumt (DFC) 28 - 30 IDad.tuto lfac1oaal. de FormaciOD Profeaioual. (INFOP) 31 - 32 IDteraaer1.cm IDatituCa of Agricultural Science (CAS/IlCA) 33 EJlIJClEDlTO 34 - 36 BoDcluran Forestry Corporat1oa. (COBDEFOB.) 31 CoIusejo de Coord:1:Daciou para e.l_ Desarrollo (CONCOB.DE) 38 Tra:1D:1ng Program for Members of Amed Forces 39 !fecban1 zed Farm1:D.g Teclm.ology for Small ami Hediua Farmers 40 Problems and Plana 41 - 52 Sugestiou 53 - 6S ANNEX 11 Page ii Table of. Contents (continued) Table 1 Projected. mnna) Production of Graduates in . Agriculture aDd. Forestry, 1974-78 2 Distribution by Specialization of Activity of Techntcal Agricultural Staff Available to Goverament aDd Private Sector, 1972 3 Eat1:llated Persol111tll Deficit of the Agricultural Eztenaion Service, 1972 'llla !AP aDd. Expansion Possibil1 ties ANNEX 11 Page 1 EDUCATION AND TlAINING IN AGlUCOLnntE . "', 1• Tha H1nist:y of Education is respoasible for all· public education aa.d. trainiDg, with the exception of higher (university) education. The latter is the respouibillty of tINAB (the National Autonomous University of Honduras), and of 0118 private mel three pubUc iDstitutiou (which caDllOt, however, grant w:d.versity degrees without UHAll approval). Practically all non-formal educat10n aa.d. trai.D.i.Dg, includiDg techDical and speciali%ed training for both agriculture and 1.Dduat:y, is carried out UDder the control of the Kiuist:y of Labor, the H1nisuy of Natural Jlesources (MNR), or semi-autonomous agencies such as the lDstituto Nad.onal de i'omacion Profesional (INFOP) and the Center for Technical IDduaUial Cooperation (CC'rI). nTMARY AlfD SECOBDAIlY SCHOOL 2. Tha ed.ucad.cm 8'1st_ prO'1idu' siz years of primary education followed by a secoa.d.ary level of three years in a common general cycle and a two to three year upper cycle. the upper cycle offers both general and occupational courses leading to the ''bachillerato lt or high school diploma c:ard.ficate. About 65% of the secondary schools are private, 8~ public and 21% saad.-public; the better oues are located in the toWIlS and cities. 3. h 1972, total _tricul.at:f.on (public and private) for secondary ec:tw::at.ion . . about 51,500, of vb:Lch 55% were boys. In the upper cycle, matriculation cb:op. c:mrr 50% fraaa. that of the lower secondary cyele, and. of 8,.258 bclya 121 the lattar 170 01:' 2% . .ra 1D agricultural schools in 1972. About so: of those who -=ll. 1D agrl.c:r<ural. ec!ucatiou at the upper secoD.Ciary l.erel reca1.ve their hiSh school di.;tl.caa. 4. In 1972, aD asdmaUcl 412,000 of the S12,000 sevs-to-thirtes age group _re reg1sterec1 in pr1maJ:y schools. The drapow: raee beeween lase aracle primary aDd first grade secondaJ:Y 18 V8J:Y heavy; the figure for 1972 is . .d.mated at 40%. s. formal education at sub-professional and profeasioual. levels in agriculture and. for_try 18 provided by four public and. two private :f.D.stitu t1ona. Of theae, two (Olle privata and ODe public) ad.mit studeuta UpOD COIIPletiOll of prtmary school and. graduate "peritos agr0l1D1ll08" (see below). At the bigh .chool level there are three "nomal" schools, one public school spec1al1.ziDg in agricultural eclucat10n (Catacamas), aDd a two-year high school coarse at: the Rational School for forestry (Siguatapeque). OperatiDg at ANNEX 11 Page 2 university level are tlNAB.' s Faculty of Agronomy, which offers a five-year course ailci graduates professionals iD agriculture and forestry - and the Escuela Agricola Panamerica (UP) offering a three year course at university level and graduating professional agremom:Lsts. In add.1tiou, an advanced three-year course at the Siguatepeque Forestry School graduates "dasonomos lf or professional level forestry teclmicians. Rural, nomal and. primary schools also teach agriculture, 1I&iDly in the context of cOIIIIDUDity development. llNAH (Agriculture) 6. The agriculture faculty of the National University is located at La Ce1ba. the school is publicly financed, and bas about 1,150 acres of laDd.. It gracluated its first class of about 25 agronomy and forestry engineers iD 1975. mrAIl offers a five-year course of 10 semesters, one year being devoted to basic studies and. four to professional subjects. Work is 70% academic; requirements 1nclwie a thesis, and 158 hours of laboratory and. field work. The school has a m.aximum capacity of 350 students and. a faculty of 20 professors. Its anm'a] budget is about L 700,000 (US$350,OOO). For an operation th.1.s large and. complex a:ad. giv.en its importance for the future grawch of the IJaduran econom:y, the school is sharply u:a.d.er-f1nanced. In reclI11t years, operation has been severely handicapped. by political turmoil, strikes a:ad closures. Panamed.:C8.11 School of Agriculture (EAP) 7. lAP 141 a private reaident1a.l 1natitutlon located. iD the Zamorano Vall.ay em aboUt 2,200 ha of l..md, over half of which is iD timber. It procluces as%'011Olld.sta 1D a three-year college career course. SiDee 1946, th1a iDtarnatiaaal school has gracluated some 1,3.50 students, more thaD. 23% Boaduraaa. the course is broken iDta Dine trimasters, w:l.th the prograa. dividecl equally between academic and laboratory-field work in four depa.rtmel1ts: hDrd.culture, agronaay, livestock, and engineering sciences. The school bas a nrcdllUIIl capacity of 204 students and. 24 full-time professors. 1/ It has an a:c.allea.t library aDd an anmJal budget of over L 1,400,000 ($7007000). 11 Ezpasi011 and. improvement were gaining III01IIe:D.tum as of late 1974. Through plac1.ng three rather than two stude.a.ts iD a donritory roOlll, an extra 35 places have been prov1cled. for the class of 1977 which enrolled. iD .January 1975. 'the class of 1977 is 113, as compared to a normal enrollllleD.t of 80 to 8.5. Venezuelan stuc1ents will take U'p a part, perhaps 20, of the 1D.cre . .tal posts, u:a.d.er full fiDa11cing by the Government of Venezuela. The Baaeo Atlantida has approvecl a loan of $30,000 to finance the construction of 11nea which will CODDeCt the School w:l.th the national power grid. There is a possib1l1ty that a private seed. compa:ay may be formed, w:l.th Central America and. U.S. partners, and. that this will locate near the School. If this happeJIS, the school hopes to receive a 5,000 sq ft shade howIe froa the company for training purposes, and is arranging to draw u'POU the company's specialized staff to U'pgracle its trul1i11g iD aeeel procluctiOll and related fielela INch as plant bTeed1ng and pathology. It is also hoped that the company might clraw upon its foreign connections for f1nanc1al contributions to the School. ANNEX 11 Page 3 8. Although it does DDt offer a college degree, the EAP is widely reprded.. as oue of the finest agricultural colleges in. Latin American. Its grad.uatea occupy responsible positions in both private industry and govern ment ageDcies throughout Lat:f.n America. However, as its enrollment and the Baaclurau quota are small, it caD make oaly a Umited contribution to lloDdurau supower needs. National Agricultural School (DA) 9. ENA, operated by the Hinistry of Natural Resources, is located in Catacamas and. has about 450 acres of land. It produced 434 peritos agronomos frOlll 1952 to 1966 and over 200 Bach1lleros from 1968 to 1973. The former receive three years training after sixth grade, while the latter complete high school level. The three-year program of six semes ters includes academic and laboratory field work 1u. equal parts. there are three departments: hortic:.ulttu:e, asr01lOJllY, and. Uvestock. The school has a capacity of 100 reld.dent studats and 10 full-time professors, plus administrative staff. Its anmlal budget :1s L 300,000 (US$150,OOO). In 1973, the first-year enroll ment was 60, the secoDA-year 48, the th1:d-year 45, and 44 students were graduated. 10. the school has had a tumultous career in which years of relatively e£ficiaut operation have been interspersed with political turmoil, student strikes, student-te&cher confrontations, and closures. John .,. Kennedy School of Agriculture 11. Located in SaIl Francisco, AtlaDt1da, with about 150 acres of laDd, tba school pracf.uc:a peritos agricolaa (about a ninth grad.e equivala.ce level). SiDce ita cOllVer.ion trOll a Im:al lfor.mal School to an Agricultural. School in 1968, 80IIIewhat faw.r thaD 150 stud.eats have been rrad.uated. The thrae-year post-pr.l.mary course is adJl'fnistered by the H1u:Lstry of PubUc Education. S11ahtly laaa thaD one-th1J:cl of the couraea related. closely to qriculture. These iD.c:.1ud.e tbaozy and. praettce in hort~ture, crops" and Uvestock. the school. has a s1:Ud.ent capacity of 156 and. eaqtloys 11 £ull-dme professors, five of wbich teach tectm:Lcal courses. With an anuual budget of about $108,000, fiD.aD.ces are 1Dauff:Lc1ent to improve the deteriorated physical plant aDd prov1de an adequate Ubrary aDd other basic £ac1l1ties. n Sembracior School 12. The purpose of th:Ls school 18 to provide a home and reUgioua instruction for hoIIleless orphau and to teach them a practical agricultural trade. the school operated as a rural primary school from 1954 to 1971, at which time it ... authorized by the H1n1atry of Education to function as a vocatioual era'bing center to produce pentos agricolas. The three-year post-pr'1llary cou.rse 18 adm:f.n:J.stered by .. protestant religious order and the 13 s1:Ud8llts receive .. wealth of practical. experience on the 3,OOO-acre fara. The school fara has 900 bead of cattle, 18 mechau1zed and. produces rice, corn, ad prin crops. It 108.D8 SOlll8 of its farm equipment to the nearby Catacamas Aaricultural School for student training purposes. ANNEX 11 Page 4 Natioual School of Forestry Sciences 13. 'tocatad near Siguatapaqua on 22,000 acres of t::1mber land, the school is a dapeDdea.cy of the Ministry of Natural llasources. It produces Forest Rauaers (Guardaa Forestales) and Forestry Tecbnicians (DasoD.OllOs). 'three years of high school ara required for admission to the two-year Forast Ranger course, which f.D.cludas 13 subj acts and. 86 credits; about 59% of the time is spent in field and laboratory work. A high school. diploma is required for admission to the threa-year- Fores try Teclmiciau college course. 'this includes 22 subjects, 139 credits, w::lth 53% of the time being spent in field-laboratory work. For admission to either course, one year of secondary vocational education is required f.D. addition to those already mentioned. The school ..,10Y8 20 teachers, 10 Haa.duran and 10 foreign, for a maximum of 135 seud.ents (only 83 are now attea.diDg). Students are on scholarships and reside at the school. !be ammal budget is currently about L 1,140,000, w::lth slightly less than half beiDg provided by GovermlleDt and the remainder by the United Nations Development Fund through the Food and Agriculture Organization (FAO). FAO cedmici.aD.s and. Peace Corp Volunteers ~ up IDOst of the foreign staff. 14. !be outlook for the school depends almost entirely on the develop 1I8Ilt of the forestry iDd.ustr,-. With rapid and profitable expansion, the rather weighty financial requirements of the school can be met by such devices as aD eanaarked payroll tax, an export tax., a transfer from COBDE!'OB.., the Stata-owned forest coporatiou, or other industry-related f.D.come sources. H1D1stry of Education 15. In addition to managing the above-mentioned John F. lCeunedy School, the H1D1stry of Education through three. of ita departments is involved to some degree in providiDg agricultural education and traiDing: Ca) Its ''Direccion. de EducaciOl1 Primera" operates 36 Esc:uelas Primarlas llurales Hlotos which, in addition to their regular pr.l:m.ary curriculum., offer classes in a variety of agricultural subjects - swine and poultry, garde1ng. apiaries, and cooperatives. Forty teachers and d1rectors fram these schools recently UDderwant oue mouth of intensive traiDiDg at the UP. 'l'b.a course provided 10 bours of instruction each weekday and five hours on Saturday J and was designed to g1ve teachers and priDc1pals a practical knowledge of agriculture sufficient for their teachiDg tasks. (b) Its Direc:cion de Educacion Media y Normal is 1n charge of the rural normal schools. These have been reorganized to provide special training in any ODe of five areas elected by the students. One of those areas is agriculture aDd livestock; this is designed to prepare taac:hers to teach agricultural subjects in the primary school. ANNEX 11 Page 5 (c) Its Dtrece10n de Alfabe~izacion y Educacionpara Adultos diree~s a fUD.C~ional literaey program for adults. 16. 'there are more thaD. 20 eove%'1:Ulll!n~ aDd. priva~e agendas 1D.volved in various ad hoc eampesiDo cra1n1ng progra:aaa in theagricultural-fores try sector. Hally of these activities are s1milar in nature mel share a common purpose, but they are indepeDd.ently budgeted a1ld. admiDistrat1vely autonomous. This lack of COord.1na~1OD in the pl.am1ing and. execution of the programs leads to projecu redUDd.aD.cies and high overall cos~s. To illustrate this point, it is qui te possible tba~ four progrBIIS now operating UDder the INA umbrella, would benefit fra. coasolidat1oa with all adm1nistrative responsibility being ...i8l1ed. 1:0 lBA's Depa.rtmeat of Cred.1ts mel CampesinC» Training. Such an actioD m::tgbt, amaq other things, enable the number of program adm1D1stra~ors 1:0 be reduced. fro. the presea.t total of 10. The lfation.al mariaD Institute (INA) 17. IlIA, the agrar1a:n refom age:a.cy, baa four separate training programs. 18. 'the firs~ 18 the Proyecto de Capac1 tacion Campesina (pBOCc.ARA). liDaDeed. by the I1Dited. Nations Developlll8llt Program ('O'S$76,000) mel the eovermaent of Boad.uraa (tJS$863,2S0), the Project is ad.m1Dis~ered by a Botlduran Di1'ecto1:' mel Sub-Director t a lood and Agriculture Orga12.i%ation (lAO) C0 Director, &ad two expcu 1zl am:al .AdtJdDistration - one Honduran aDd. one p~ed by l.ID. three Six other experts (three BaDd.uraD. an.d lAO) t two each 1zl P1='ocluct1oa., cra1 DiDI, aru:i plamdDI, rouad ou~ the central office team. A. Pmject Coo1:d1Dad.cn1 Ccmait~ee (more or less iuctive) 18 supposed to oversee the 1mpleatnltation and evaluat:1aG of the activit:y • Tra1Di ng to J'aa.uary 1974, ccma1aced. of: Irpe of Course Courses Participants No. No. Izpuillumtal Laboratory 1D. AaentaDd.entos 8 339 Campesi:a.os Special Courses 3 232 Campesinoa, social workers aJ1d. INA agro DOIIlists Course for ''Promotores Social.." of IlIA (data nC»t available) ANNEX 11 Page 6 The proj ect is designed to provide training for a broad. range of participants including "campesinos" in the asentamientos, members of campesino unious (ANACll, tlNC), officers aDd members of cooperatives and cooperative federations such as FECOIAH, field workers of the National Development Bank (BANAFOK) , field workers of the Kinist:y of Natural Resources, and persounel of DRAa, the National Social Welfare Office, CONCORD! (see below) aDd INA. (P'ROCCARA activities may soon b. l1:m.ited to the tra1n1ng of INA persormel.) 19. the second INA program is concerned with the Aguan Valley Resettle- IJleIlt Project. Totally financed with funds from the IDB (Loan No. 210), the program 18 administered by a Coordinator and an Assistant Coordinator, and advised by two technicians contracted by IDB, one a lawyer and the other an agr01201D1st. Concerned exclusively with couuselling campesinos in the newly formed uenta.m1entos on forming and operating cooperatives, there are 16 "promotores de cooperativas" in the field - six accountants and 10 primary school teachers - who have been trained as cooperative advisors. These "promotores It are supervised by aD ex-school teacher who has received training in Cooperatives Organization and Management in Israel, Chile .and the United States. As of Kay 1974, five active (legally coustituted) cooperatives were being advised by this program and 11 other groups were then being formed. Sixteen asentamientos had been established as of mid-1974 in the Valley. As of that time, the project management had. not assembled firm data on the number of people receiving assistance, and no formal courses had been orgaD1.zed. 20. thirdly, INA's Depart:amea.to de Creclitos y Promocion Campesina, a permanent um. of the INA organization, carries on two types of training activities. the first., the "Credit.s" sect.ion, has a staff of 13 (one Lawyer and 12. "peritos 'lllU'caDd.les"). Two work. in the San Pedro Sula Region, four 1D the Tegucigalpa office aDd the remainder 1n the field in the southern rep.on. 'rbIa _jar purpoae ~ the "Q:ed.j.tos" group is to teach c:ampes1nos tba fuDdamental.s of loaD financ:f:ag and how to procure credit from BANAFOH. 21 • In the Promocion Campes:f...Da. section of this department, there are 40 "promotores sociales" working throughout the c:ountry to help with BANAlOH projects, and espec1.al.ly with the sett:lement act:ivities in the asentamientos.· these social worlc:ars ofteD. refer campesinos to DESAGBO when they are in need of tech:nical assistance. 'J:here is tID fixed requirement, either of type or level of education, for these COWlSeUors. the "promotores soc::l.ales" of th:l.s Department are separate and distinct from those of PROCCARA and those of the Aguan Valley Project, discus.ed above. The activities of Creditos and Promocion Cam:pes1na are financed excluaively by the GovermD8nt. 2.2.. Fourth, the Technical Departm.ent of INA, with the help of 108 ~jaras-BueDa Vist.a project), employs four technical supervisors and a st.aff of 24 field worlc:ars to serve as counsellors and advisors to 46 agric:ul. tural cooperat.ives that were organized prior to the Decreto Ley No.8 (which created the aaent.am1ento movement). ANNEX 11 Page 7 23. A. summary of INA training personnel follows: ;. Adm1D.istrative Field Personnel Technicians Workers PltOCCARA(DtA/UBDP/FAD) S 6 7 A.pan Valley (DtA/mB) 3 2 16 INA-tech. Dept (INA/mB) 2 4 24 nu.-Credit.s aDd. Campes:l.no P'r'olllOtioll Dept. (INA) 2 6 41 National Development Bank (BNF) 24. the BNP' provides in....rv:l.ce tra:l.n:l.na for its staff t including training of new employees, but the amount varies considerably between divisioDS. In the Depart:lleJ1t of Creci:l.t.s aDd. Operations (the executive Depart:ment), the Divinon of Aa......llta aDd F:I.eld. tnspect:l.ou (tasaciones) provides the most training for its aployees, wh:I.le in the Department of Development ('1omento), the Divisioll of Basic Grains is most concerned. with training. 2S. the activities of Tasaciones 1ll.ustrate the nature of BliP internaL t:::a:I.n:f.ng prog::8IIII: !twIber of Trainees 11. Horth leSioll South Region Type of traiu:l.ng 1910 2S 2S Laud. values aDd. as••881IlBI1ta, 1911 28 28 ag::ic:ultural credit, crop 1912 30 30 prociuc:tion costa, land. use, 1973 45 45 g::apb:1c representation, depre ciation &lid income taz classi fication of soU.s, ~ !aDd ....uremeuta. 1.1 'the Horth lesion is headquaread at San Pedro Su.l.a; the SouCh B.ea:l.oD in Tepc:l.gal.pa. 26. S1x-day courses are offered. twice each year by specialists provided by mB t BHP', AID, a:ad FAD. All. field. persODDel repeat the courses at each offerlrlg. so that the maaber of trainees l.:1.ated. ill the above table are not emml.ative. In addition to these short courses t the field pers01U1el receive coa.tinuoua oll-the-job tra:l.n:l.1'1g by s:l.x supervisors (three ill each region). ANNEX 11 Page 8 OESAGRO Agricultural Extension Service 21. ''rlie OESAGB.O agricultural ext: ension service plans to reach a total. of a.l.most 68,000 persOllS in its 1974 program. 1/ Training will caver the major farm. enterprises and a broad. range of subjects, fram. use of farm machinery to procurement and use of agricultural credit. 'I'he service has had. to face severe resource problems, and many of its staff are the first to point to its shortcom.1Dgs and general ineffectiveness. 'I'he Directorate of Cooperative Development (OFC) 28. 'I'he Direccian de Fomenta Cooperativo (OFC) trains the leaders and supervises the organization of cooperatives. and arranges for the subsequent technical trainiDg of the membership of those cooperatives which are Dot "assoc1ates lf of a federation. Federatian associates are supervised and trained by their respective central federation offices. Most teclm.ical agricultural training for cooperatives is proVided by DESAGRO, or by agencies such as FAD ar IICA, wor1d.Dg through DESAGRO or the DFC. 29. Since 1952 some 466 cooperatives have been organized in accord with legal requirements. 2/ In?!. 1952-1960 1961-1966 1967-1973 Total Aaricultural 19 19 97 135 Savings and Loan 20 92 82 194 ConsuDUIr 9 8 6 23 School 3 2 5 IDdu.str:f.al Bousing 8 2 2 8 ° 5 2 15 12 'tra.DSport:a.d.on 4 6 21 31 HDld.ple Services 1 9 9 19 Health 1 1 2 Fishing Elac1:rification 1 ° 1 ° 1 3 2 4 Coffee Federations ° ° 1 0 --1 17 3 --L 17 Total 69 151 246 466 Of the total, 116 agricultural and two fishing cooperatives are in operation, with a reported capitalization of about $500,000 (probably understated). 11 Through 15,843 fam visits; 1,640 demonstrations; 1,557 group meetings; 915 eclucational trips; aad 327 short courSd. 2/ Baaed on data through December 1973 fram the fUes of Direccion de Fomenta Cooperativo and the Federacion de Cooperativas Agropecuarias. ANNEX 11 Page 9 30. The recent rapid growth of aseutamientos under the agrarian reform program has. greatly increased the demands upon OESAGRO and OFC for organiza tional and: teclmical assistance service (Annex 4). 'the communal nature of of the asentamientos is ideally suited to the cooperative farm of finance and production, a fact that accounts for the unpreced81lted numbsr of requests now being made for assistance in organi%ation. As of May 1974 the Oireccion de 'omenta Cooperativo bad in hand aver 70 requests for assistance in organizing agricultural cooperatives, but neither the staff DOl' budget is sufficient to handle this heavy workload. The same is true for OESAGRO. Instituto Nacional de Formacion Profesional (INFOP) 31. INFOP is a new agency whose task is to help alleviate the trained manpower shortage. It began operations in 1973 with Government funds ($213,000) and is seeldng foreign support to tide it over until thareturns fram. a 1% payroU deduction tax. to be levied on industrial enterprises, enables full self-financing. 32. As of mid.-1974 INFOP had. five agricultural techD.icians, two of whom (au agronomist and an animal husbandry specl..aUst) were developing training 1II&Dnals, while the other three (two in agronomy aDd one in farm mechanics) served as instJ:UCtors, one each in Choluteca, Jamastran and. Comayagua. Eleven other INFOP employees were in training at t.ha Servicio Nacional de Aprendizaj e (smA) in Colambia, where they are receiving special instruc'tion in Agronomy, vthnal husbandry, and farm management. Three of the 11 'training manuals in preparatic?n deal with agriculture (in Mc:ha:a1zed farming; Mchanics; and geueral agricultu%'a). A stud.y is being made of forestry manpower needs, and. training actirities will be developed when the stud.y is completed. Interamerican Institute of Agricultural Science (OAS/IlCA.) 33. With finaueial and. techDic:al support fram. national and. interDa'tional institutions, IlCA. is UDdertald.Dg. a proj ect to improve the tec:bDic:a.l. slc:1.lls of the sta.ff of the aat:1onal agr:1cul.t:uz'al. iDs til:Ut ions • 11 BGt:h tta:f..niD.g aDd research ue 1D.clw:led in the project; INA, BANAFOH aDd OESA.Gl.W will provide .,st of the tra:1D.ees. A wide varaty of subj act areas will receive at'teD.tion; including credit, cooperatives, c:ampesiDo orgauizad.011, p1'OdUCti.OIl cost analysis, agricultural marketing, and., very importantly, ad.mi:nistrative c:oord:1Dation of development activities in the sector. 11 Plazmed participmts are IlCA., $100,800; AID, $59,767; IDB, $60,000; Hinistry of Nat.ural Basourees, $26,900; BANAlOK, $19,417; INA, $19,714; Banco Central, $19,417 (CABEI was to be . .sessed $19,714, bu't decUned to participate as this 18 DOt a regicmal project). ANNEX 11 Page 10 EDUCUDITO 34. --: EDUCJEDI'M is an autonomous institution which provides loans to stwients who wish to prepare for a technical or professional career. In 1972 and 1973, some 100 students received loaDS for agricultural studies, and since its founding, in 1968, it has made 941 loans for a total of some 2$ mil lion, about 13.5% of which went to student8 of agriculture. Two hundred fourty-four stwient8 already have paid for their loans and 401 others have cOllllllellced their payments. To date, collections are. reported to have been good to excellent. Tentative plans call for 5,000 scholarship loans to be made through 1982, with 959 loans to be made to students studying agriculture, foreaery and related fields. Additional capital is needed to keep the plan on trac:k. The EDUCREDITO staff est:!.:mates that if outs tanding loans were to reach $5 million, the interest income would be sufficient to make the operation independent of outside support for its management costs. Unt11 that level is achieved, the 6% interest charged students will be insufficient to cover all administrative costs. 35. Eligibility for loans is based upon a rather rigid screening process. The record to date clearly shows that students from. families with l±mited financial resources receive priority. 36. EDUCREDlTO is a member of the Panamerican Association of Educational -credit Institutions (.APlCE), which has its headquarters in Bogota. Loans can be made for stwiy at both the secondary aDd. higher educational levels for a 1NIX:f:rmpn period of five years; repayments begin six months after graduation. Honduran Forestry Corporation (COBDEP'Oll) 37. This recently organized public sector forestry corporation is sufferiDs aD acute sho1!'1:ase of profeaaioua.1, teclmica~, and. ski~ad manpower. This problell w:Ul become still more severe if and when it takes over the "mini suative and budgetary respOllSibilities of the Forestry School in Sigaatepeque. COHDEJ'Oll already has several non-formal training programs. Its forestry extension service, under the direction of a professional forester, has savea. forestry teclmicians at work in its seven forestry distrtcts; their· task is to help organize forest service cooperatives and train prospective -..bers. Sec.ondly, three Honduran professional foresters, four FAO forestry experts and several tec:lmicians conduct sem:fnara, shorty courses, and other in-eervice training programs at the research forest in Juticalpa. Thirdly, three COHDEPOll foresters are now studying remote sensing techniques and photo interpretation in Panama. (When they return to Honduras, COHDEP'Oll hopes to tie into the ERrS satellite remote sensing program.) Consejo de Coordinacion para el Desorrollo (CONCORDE) 38. CONCOBDE is a privately fiuanced organization which functions as the federation head for several educational, informational and development centered institutions which serve the under-privileged. It is estimated. that lIOre than 70% of those benefiting from CONCORDE programs are rural workers and ANNEX 11 Page 11 campesinos. Each participat::l.ng agency has its own· budget, but CONCORDE and other agenc;ies with::l.n the "family" of institutions generally co-sponsor fuud-raising activities for the components of the group. Summary data are showa. in Table 1. . Train::l.ng Program for Members of Armed Forces 39. lor recruits and temporary members of the Armed :Forces who plan to retu:&:'11 to their rural homes when their tours of duty are completed, a tra::l.ning program baa been established to offer 66 five-day courses in various aspects of agriculture to 1,980 participants in 1974. Mechan1.zed :Farming Technology for Small and Medium :Farmers 40. At a coat of about $150,000, this two-year Goverl'lment-FAO 'Filot project uses training centers at La Esperanza, Comayagua, and Catac.amas to instruct small farmers in the use of light mec:ha.nized farm eq uipmen t, improved seed::l.ng ami fert1l..iz::l.ng practices t the techniques of small-scale irrigation, the construction of small ponds, uses of manure and other organic fertilizers, aDd. gra::l.n harvesting and clean1ng techniques. PROBLEMS AND PLANS 41. The plann:fng of agricultural and. forestry education and. tra::l.n::l.ng has bean a sort of "free laDce" operation conducted by a large llUDlber of public and private agencies, with each teDd.1Dg to seek solutious to its specific prob~... of tha moment. lev aaenciu g1ve more than to ken attention to the IllU'ket, aDd user &gea.c1u aeldoa partid.pate 1D programming. The development plaDDera are DOW try::lDg to improve this approach. But the adm:fnisttation. of both formal ami DOn-formal education. ami tra::l.n1Dg programs cont::l.nues to be divided. into spheres of influence. Each Govermnen.t m1nistry, department or division, aDd. each aut01.1OlliOWl iust:1tute or agency .e:1~~ eends to make its OWIl:..plans and. run its own prognua without lINCh attention to whae others are doing. 42. This UDcoord1Dated approach e.x1sts within, as well as between, 1:nstitut1on.s t and. can be observed in the operation of the four above-m.entioa.ed. campesino tra:fn:fng programs of the National Agrarian Institute (IRA), and. the four rural education programs of the H1n1stry of Education (MINED). Through its educational reform program, the MINED is attempting to resolve this problem, but INA has so far made litttle progress. 43. 'the aclministration of the highly centralized Ministry of Education has long been recognized. as a weak point in the educational system, and policy aDd. personnel changes, not always free of political overtones, have produced discontinuities which largely negate attempts at greater cooperation between the Ministry and other agencies active in educa tion. and tra::l.n::l.ng. This is particularly true in the case of those agencies whoae job is to produce tec:hD1cal aDd support personnel for agriculture and industry. ANNEX 11 Page 12 44. The lack of cooperation is most evident in curriculum planning and career de.velopment. The irrelevance and impractic:ability of course work, pareiculariy in the secondary education cycle, probably explains a great deal of the hign dropout rate, and even those students who do graduate from High School are poorly equipped to take up technical studies. Partly because of over centralization, the system emphasizes education in the urban areas. The result is a lack of educational opportunities in the rural areas, where interest in agricultural careers most frequently occurs. Although perhaps to a lesser degreee., the same. applies to social studies and preparation for teacher training, since opportunities for study in these fields is centered in urban areas; a by-product is that graduates are reluctant to work in rural areas where their services are most urgently needed. 45. A 1971 study of the educational system concluded that expansion during the 1960s was overly rapid; this gave rise to a wide range of ineffi ciencies, particularly in primary and secondary education. 1/ The study called attention to: (a) ~ck of adequate staffing; (b) a large number of schools (70% of the total) with construction incomplete; (c) unqualified teachers in 40% of the cases at primary and 88% at secondary level; and (d) inadequate supervision and administration. For these and related reasons, of every 100 students matriculating in first grade only three graduate at high school diploma level and of these only one goes to uni versi ty • 46. Detailed studies show that the deficiencies in the .system are particularly noteworthy in the rural sector. For example, of the school age group, rural enrollment is 62%, as compared to the national average of 82%; some 99% of the incomplete primary schools are in the rural areas; and 70% of the teachers in the rural areas are unqualified. 41 • UDder these circumstances, it is nat surprising that rural students, the group whose backgroUDli fits them for the agrj,cultural professj,ons, are nnl1kely to be interested in the field, nor properly qualified to undertake tha a.ee4ed tra1niDg. 48. The problem for agriculture does not end at this poat. The Consejo Superior de Planificacion Economico (CONStlPUN) has noted that: nVarious efforts have been made to establish professional agricultural training centers in the country, but sooner or later, in greater or lesser degreee, all of these have been failures after only a few years of operation due to internal deterioration frClll a diversity of causes". this deterioration is said to be a result of: inadequate planning; shortage of qualified teachers; failure to maintain well-organized and properly disciplined work habits; inadequate budget; and absence of a coordinating organ to reconcile the interests of the students with the demands of the agricultural sector. To this list might be added the persistent political difficulties which confront the agricultural forestry program in the National University and which often reduce the program to a makeshift operation of dubious value. JJ UNESCO, Bonduru, Education in Development, Report EFK/ 43 No.1, Volumes I and II, Paris, December 1971. ANNEX 11 Page 13 Current- Plans 49. GOverma.ent officials and prominent citizens are fully aware of the shortcomings in the education and training system. and imp;ovement measures are underway or pla.mled. 'n1a draft 1974-78 national. development plan proposes to: (a) 1mprove the quality aDd. relevance of primary and secondary education; (b) increase the supply of qualified teachers; (c) increase training opportunities for Dl1ddl.e level agric:u1tural matlpower and industrial workers; and (d) establish rural training centers to provide. more educ:ational oppor tunities for rural people. and. to correct the urban-rural imbalance. The plan incorporates IDB and IBID support for new facilities for the existing training college for secondary teachers; for two vocational training centers and one 1ndustrial train:f.11& deve1apmeut center; for expansion and improvement of the National Agricultural School and creation of three agricultural training centers; and for technical asaistat:lCe. as wall as fellowships for training abroad. Th1s support 1.s specifically ciesignecr to s trea.gthen the weakest l1nks of the systeID, as disc:uased above. And. it is 011 this basis that much of the projected production of agricultural persouae! for the plan period is built. SO. ProjectioDS call for an output of 80S sub-professionals. 195 nan- degree profassiaaals. and 325 professionals in the 1974-78 period (Table 1). This would represent an impressive addition to the present staff. As of 1972, it waa est:1mated that the supply of trained agricultural persannel available to Govermaeut and the private aector approld.1llated. 829. of which 412 were sup profesaionals t 167 were profassiouals (DG11-d.egree), and 250 ware degree profesaicmals (the diatributiou by specialization is shown in Table 2). 51. Attaiswenc of the projected output leve! would solve a large part of the persotmel problea for rural d.evelopment. 'I'hare would st111 be roOlll for arpmeuc as to overall. perSO'lmlll requ1remeuta aDd. opt:Lm.1:aa scaffing patter"DII for the var1oa.s agr1c:ul.t1IZ'al ciaftl.apmeat activities. 1/ Too, acCual operaciou.s would COIICinue to be baDdic:appeci by the 1nesperieD.ca of a significant portian of the staff, as _11 as the 1naciequacies of the crainiDg which many had. rece:1.ved. But, iD general. the persom:tal resource base for imtIlemet:u:ation of 1:'CU:'al cleve.lc:rpment: programs a few years beuce would exist. 11 The Dd.ssion was DDt able to s1:'Wiy requ1remeuts in detail, bU: at least: a doubl.1r&g of the Governmea.t staff 111 agriculture, &1011& with a sub stantial upgrading, is belleved to be necessary if significant programs are to be undertakeD.. Que illustration of the probleID is the CONStlPI.AN estimate of personuel required in agricultural extension. The extensiou service had. 70 people in the field in 1972; requiremeut:s for a compre heuaive coverage were estimated. at 1,232 (Table 3). ANNEX l' Page 14 52. What, then, is the problem? It is simply that there is widespread doubt as·. to the likelihood of reaching the pl.a.nned output of persoDDel in the years just ahead. Reservations on the feasibility of the persoDDel output targets rest on the historic performance of the system. With this in mind, it would. be desirable to take steps now to improve the system over the interm1 d1ate term and. to shore up its key weaknesses wi thout delay. SUGGESTIONS 53. The first needed step is to improve the outlook for the UNAH program in agriculture and. forestry. The draft plan makes no provision for improving or expanding the UNAB program, an unfortunate omission. Although UNAH enrollment continues to ao up rapidly (some 26% a year), more than half of its students are 1n law aDd economics. With its special agricultural and forestry fac1l.1ties at La Ce1ba abandoned, the future appears to be less than bright for university work 1n these fields. Yet without the trnAll output (projected at over 200 in the 1975-78 period - Table 1), the implementation of agricultural development plans will be difficult. 54. Many of the problems faced·by the university program in agriculture and. forestry are political in nature. A. central issue is the appropriate rate of income redistribution aDd the degree of social orientation of public pollcy. Differing views cluster around two positions, that of the adminis tration and that of the students, and through the years each position has ac:cu:aaa1ated a good.ly number of irrelevancies. It caD be hoped that ever larger areas of agreement between tile two groups wiU emerge as the agrarian reform aDd other Goverraent measures to promote agricultural production and 1DIprove the lot of the UDt1erprivUeged became effective. S1m.1larly t and with a lesser delay t 1t should be possible to reach a consensus Within the admini seration on matters which are vital for policy continuity. aDd for the maintenance of student performance staDlards and a meaningful discipline. In canvassing all possible solutions. it may DOt be too far-fetc:bed to consider contracting the operation of the La Ce.1ba university facillty to a foreign Latin AaericaD university of high intemational standing; under this arra'Q3e IlfIDt, students could be given an opportunity to do part of their wark at the latter institution. 55. While all possible maaaures should be taken to improve the tJNAH performance in ag3:'ic:u.lture aDd forestry, a second s tap to help expand the supply of professional personnel should be explored, i. e., expauion of the Escuela Agricola PaD_erian at Zamorauo. As noted above, this is a private 1nsd.tution whose students are drawn from. a muaber of Central and South American countries. Honduran graduates average 16.4 in the 1968-72 period, out of a graduating class of 54. If it were possible to expand this facility, quite sharp percentage increases in the number of highly quallfied Honduran graduates could be expected within a decade. Mareover, Honduras could b1d for 0.8 services of the 1ncreased number of non-Bunduran graduates which ANNEX 11 Page 15 would result from the expansion. The costs of exp.anding this excellent fac1litywould be relatively small (Appendix t), and it is probable that tavescmentfunds could be readily obtained from foreign sources if the Board of Regents were to view expansion favorably. Provision for additional operating funds would also have to be m.ad.e, of course. 56. Thirdly, steps should be taken to improve the administration of sub-professional education programs in agriculture.and forestry. Endemic political pressures upon the Ministry of Education" traditionally have sought to expand rather than to improve the educational sys tea. As all admirlis trations , sooner or later, have tended to yield to these pressures, quality has been sacrlficed for quantity, and technical education programs of the Education M:1Discry have deteriorated. But past experience notwithstanding, current plans continue to assign sub-professional agricultural and forestry programs to the M:Ln1stry of Education for impl....tad.on. 57. Alternative arrangements should be studied. One possibility is to consider transferring responsibility for a part of all of these programs to the H1:nistry of Natural Resources and to COHDElOll. Although it is obvious that this would DOt zu,arantee success, these latter agencies have major responsi bilities for acd.vating agriculture anA forestry uuder the draft development plaD. therefore they have a very strong interest in designing and implementing a set of education and trainin& programs tailored. to their requirements and to those of other related agencies - and., through the Agricultural Coordi nating Committee (COCO) diacussed in the General Report, to assure appropriate f:f.nance and. 1mproved. 1IUID88ement for the schools. 58. A fourth needed. step is to install and staff machinery which will make available to rural development plamlers realistic current a:nd projected. data on perscnmel availability. '!hi.s merely reflects the fact that the d1scl'eet planDer should vcn:k 011 the uSUlllption that the qriculture-forestry education progr_ is U11] ikely to be rejuvenated. overnight, and that a rapid iDcrease in both quality and. quantity of output may DOt be forthcomirlg. If this ttarrLs out to be the case, a cond.Puous reappraisal of project and program pd.orit1es within the sector will be aecessa:ry, along with a periodic red.iscributi011 .-aug agellcies of available personnal. 59. The !f:1n1stry of Natural lasourc:es (or its suecesaor) should assemble and. keep c:urrenC an inventory of tra1ned agricultural pers011'D81 in both the public: aad. private sectors a:ad. agricultural maDpower requiremeucs estimate keyed to the rural development plans. It should design an agricultural educa.Cion and. training program which will expand output at the maximum practicable rate. It should propose to CONSUPLAN at appropriate intervals those ad.jus1:Dlents in the national rural development plan whic:h will assure that it is eonsisteDt with the realistic: outlook for the sapply of Honduran trained manpower and with reasonable expec:tations c:onc:erniPg the direc:t hire by GoverDllle11t of foreign staff as well as the outlook for foreign technical as.istance through grants and loans. ANNEX 11 Page 16 60. AD important part of the task. is to inves tigate the future supply of stud~t~ qualified for sub-professional aud. professional training in agriculture~ the plazmed output data suggest that 150 additional entrants per year will be needed for agricultural college programs in. the years just ahead. K:1uistry of Eclucati= data shaw that only 14% of the secoD.ciary school age group (14-19 years) were in school; of those in school, about 28,200 were boys. Those entering first grade numbered about 10,000, and those reaching the t.hird grade of the lawer cycle numbered about 4, 100. In the third grade of the upper cycle, only 2,400 were registered; how many of these actually graduated 1s not known. It would appear, hawever, that roughly a 5% increment in the numbers of graduates would be necessary to provide an acceptable supply of candidates for entry to university level training. In later years, the output of the new secondary school (to be financed under the IBRD/IDA loan), which will have 420 student places, will increase the supply of candidates. Por the 1mIIlediate future, however, it may be necessary to consider setting up a special course to upgrade selected candidates who fail to meet entrance requirements because of deficiencies in the quality of secondary level instruction made available to them. 62. The student supply problem is compounded by another unfortunate fact-the lack. of iDducements for secondary school graduates to accept agriculture as a career. As already noted, it has proven difficult to keep the Universi~ programs in agriculture and forestry on course. In the light of this history aad the above-mentione.d failure of the draf t plan to tackle th1a problem, it' is u11l1kely that potential students will find the outlook for professional agricultural education appealing. It 1s against this background that the !DUCBEDlTO program becomes specially important, as noted below. 63. 'rha supply. of qualified candidates for secondary and vocational studies (i.e. t up to high school. diploma level.) is u'OHkely to be a severe problem in tha intermediate tem. This judgment assumes that the emerging effort to provid.e more educational opportunities for rural people, aad a more relevant curriculum, will be carried out. 64. IJ:u::reasing the supply of qualified perscnmel in agriculture 1s a baa1.c first step in activad.Dg the sector, aud. supply-demand estimates are the taka-off point for the needed manpower production programs. For this reason, there is a stroua case for seeJd.D.g teclm.ical assistance for au inclusive survey of agric:ul.tural education and. training; this should be arranged after a complete set of inventory data has been assembled, after revised projeetio'ClS of requiremeuts have been made, and. after indicative judgments ou the quality of the output have been de'1eloped. 65. In addition to thase measures t the Govermnent should. seek graut assistance alorsg with a soft loan to help the Student Loau Fund (EDUCltEDITO) expand activities aDd meet administrative costs until its loan amortizatiou payments can provid.e sufficient funds to make the operation self-financing. ANNEX 11 Page 17 65. It is also suggested that the Govermnent. seek technical assista.nce to help clevelop INFOP as a major supplier of short-term· voca.tional and professioruiJ. training for agriculture and forestry. TablB 11 PROJICTID ~L PRODUCTION 01' GRADUlTlS IN J.GRICULTURI .AND JORESTRI. 1914-18 !21lL !27i !219. !21l. ill! I2!:!! --~-----~---------------Number-~----------------------- Sub-frofessionA! El Selllbrador School 20 22 25 28 )0 125 John F. Kenned;y School 50 45 50 45 50 240 National School of Forestr,r . 15 20 25 )0 30 120 National Agrioultural School (ENJ.) 55 60 65 10 10 )20 Total 140 141 165 113 180 805 Profegsional (~on-pegree) 2 to J Years UDiver,itl National School of Forestr,y 10 15 20 25 30 100 Panaaerican Agricultural School (m) 16 16 18 20 25 95 Total 26 31 )8 45 55 195 Professional Oniversitl Degree Faculty of Agronomy (UHAH) 25 40 So 55 &J 230 Returning frollt Scholarships J.broad 15 10 10 25 )5 95 Total . 40 50 &J 80 95 )25 Total - 206 i£!! ill.. £2!i m 1.125 Source. CONSUPLAN !! Table 2. DIstRIBUTION BY SPECIALIZATION OR ACTIVITY OF TECHNICAL AGRICULTURAL STAFF AVAlIA ~I£ ro OOVERNHEBT AlID PlUVATJ SECTOR, 1912 11 Y J1 hi ~ 91 11 !!I 21-Total ------------------~------~--------Number------------------------------------- AgronolV and Research b 8 S4 37 26 129 Forestr,y 1 3 30 6 .:.. 52 92 : Cooperatives 1 5 3 y Agricultural Education 1 2 4 10 17 .Agricultural Economcs 13 b 17 ihtomology 2 1 2 5 .Agricultural Extension 2 4 26 68 102 Plant Pathology 3 2 1 6 Genetics 1 3 1 5 Ibrticulture 1 1 5 6 1 20 Agricultural Engineering 2 ..,. 3 5 Animal Nutrition 3 1 4 Dairy 2 b 6 Soils 2 2 1 2 2 9 Plant Sanitation 2 2S 27 Aniaal Sanitation 1 16 19 Credit 23 96 119 Veterinar;r 36 38 .&n1aal. Hslsbandr;y 1 ..,. 26 15 45 93 Other !!JI 3 4 5 3S 60 107 g Total - !h. ~ - - 1 h.l - llO JQ. - - 161 J9Q. ' lli 11 Ph.D. i l l but one (nov in training) work tor the banana companies. M.S. ! M.S. in Forestr.r. Includes one in training. Veterinarian. B.S. in Agriculture. ~ !! B.S. in Forestry. Includes 10 troll international missions. Non-ciegree professionals in agriculture. Bachilleres agricolas and peritos agr.1colas. Includes 14 bachilleros forestales, 7 peritos forestales, and 31 guardas forestales. I! Estimated. Note I Items 11 through Y include foreign technicians, and personnel on temporary contract. Source I »t.uipo de Ana11aia del Sootor Agricola, u.sing prlmar,r data ohd a review of available evidmoe. ANNEX 1.1 Page 20 Table J: ESTIMATED PERSONNEL DEFICIT OF THE AGRICULTURAL EXTENSION -SERVICE, 1912 J:I . Requirements Number Extension Workers 1,186 J:I Supervisors 116 y On Board Exteasion Workers 62 1/ Superv:Lsors 8 Def'icit Extension Workers 1,J.24 Supervisors lOa that each extension worker covers 150 small f'arms; },/ Aa8Wll8S area to cover-2.4 million ha; number of' f'arms-118,OOO. U Assumes one supervisor f'or 10 extension workers. ~ n JanU&1'7 1914 number was I 8a. Source: Estimates by OONSUP'LAN, Grupo de Analisis del. Sector Agricola, using thesis prepared. by M.A. Caceres of' IlCA, titled "Regionalizac1on Agricola de Hcmduras", 1972. ANNEX 11 Appendix Page 1 tHE UP AND !Xl'ANSION POSSUILITIES 1. The EAP is now equipped to handle a total enrollment of 204 students. 11 The student position approximates the following: Student Source Freshman Class Graduating Class ~ - - - - - - - Number - - - - - - - - - Honduras 20 16 ather Central America 3S 24 South America 15 10 Others 2. 4 ToeaJ. 7S 54 2. Based on aD average enrollmant of 180 throughout the year the non capital cost per student for the three-year post-high school agronomy course approximated $4,250 in 1972 and $4,168 in 1973. Projections for 1974 are slightly lower. Cost of E!Pansion 3. 'the capital outlays needed to increase the total eurol.lmeut capacity by 200 (to 404 students) can be indicatively estimated at $326,000 (Table 1)., The uaoc1ated. ."m&al operating costs would increase by some $484, 000. The comparable figures for costs to increase total en:ollmeut capacity by 200 (to 404) are: capieaJ., $326,000, aDDUal. operating, $484,000. 4. The 20a-studeDt a:pa.ns1.on woulci result in a student pOSition some what as followa, assuming a slight increase in Honduras stuc::lea.t places relative to the total: Stlxient Source lreshman Class Graduating Class , --------NUU~----------- Bouduras 30 25 ather Central America - 40 32 South America 20 13 Other - 8 ..1 ToeaJ. 98 7S 5. This would lift to 25 from the present 16 the number of Houduran graduates per year. This increase of 14 is not large in absolute terms, but, wh_ the bigh quality of the product is considered, the prospect is bighly Jj Th.1a figure does not take account of the recent expansion, discussed. in the AnDex. ANNEX 11 Appendix Page 2 appealing. The point is still 1IlOre apparent when the negligible cost of getting this increase is coaaidered. 6. Several aspects of the proposal need investigation. First, the cost estimates may not fully reflect recent inflationary trends. Second, the supply of Ik:m.d.uran high .school graduates may be insufficient to support the ezpaaaiol1, particularly in the early years (at present, about 80 Hondurans normally apply, and about 22 are accepted, sometimes including a few whose preparation may be marginally deficient). However, it is to be hoped that ongoing plans to improve primary and secondary education, as well as the Catac!upas school, will bear fruit. If, as a result, it became possible to accept even five per year of the probable 70 or so graduating at the high school lavel from Catacama.s, the supply problem would not be severe. 7. Third, the success of the school is largely based on the fact that it is a completely autoD.alllOUS institution which operates as a private entity (incorporated in the State of Delaware, U.S.A.) under an agreement with the Honduras Governmtmt. The Board of Regents zealously (and properly) rejects any assistance which tdgb t lead to intervention in any aspect of poliey or -.uagement. If followa that the provisi-on of finance for expal'lSion would need to be worked out carefully to meet the Boards's standards and to assure that the ezcellent reputation of the school is m.aintainted. 8. Fourth, because of its 10catiol1, the cost of providing utilities and 1Dfraatructure may be soaewhat higher than elaewilere. Staff emoluments must also recogn.1:e this location factor i f high quality expatriate staff are to be .-played on a PenaD811t basis. 9. the UZ'geD.t need for 1II01:'e and better trained agriculturalists in IfoDduras, along with the u:DIIXCeUed record of performance of the !AP and the difficulties standing in the way of alternative solutions to the high level persODDel problem, suggest that the GoVert'IIIl8I1t should thoroughly explore the BAP expansion possibility aDd the assistance role which international laad.ing ageac1es might play. Although there are advantages to a gradual growth aDd capacity. the unit cost of a SO-student expansion is relatively high. . For this r ....OI1, and because of the need for a large increase in output, the 200-stuc1eat. propoaal should be strongly favored.. 10. The Government investigation should give full weight to a highly important by-product of the EAP J that is, its role in training through short COIZrses. lor 1974, the !AP .1anuary-August Short Course schedule was: ANNEX 11 AE!E!endix 1 Page 3 Course Sponsor Duration Student days .!2:.. Seed Carti"fication University of Mississippi 24 20 Teaching Methods IICA 15 24 Meat CuttiDg MiDistry of Agriculture 15 20 Pastures & lorage Craps INFOP 8 20 General Agriculture lJ'SAID, M1nistry of Education 30 40 Basic Agriculeure Hinistry of Education 30 39 Slaughter House Administration M:1nistry of Government 20 -20 183 ANNEX 11 Appendix 1 Page 4 Table 1: INDICAXIVE COST ESTIMATES FOR A 50 STUDENT and 200-STUDENT UP EXPANSION 11 C.apital 50-Student 200-Student .._$ 'thousand Domitorles 60 220 Dom:1tory Furnishmgs 5 16 Farm Equipment 30 60 Cont:1Dgencie8 15 30 Total 110 326 ADDual Operatinl Costs Professors and Administrators L! 24 116 S tudeu. t Maintenance Food 50 210 Clothing and Bedd1l1g 4 16 !fed:f.cal and Den tal Semce 3 14 Dcn:mitory and ClaSS'rOOllUl J:l 1 5 Keplacement aDd. Ha1:Dteu.ance l.!t. 48 70 COIld.Dgeuci8S 10 53 Total 140 484 1! Data ezclude electricity and potable water supplies. Updating is required to reflect the receut;1l.flat.~~_ .1.l At tlS$12,OOO per year each 1l. KaiDtenance and supplies l!i Farm and laboratory equipment Source: His.iOll. ANNEX 11 Appendix 1 . Page 5 Table 2: S'l'UDENT OUTPUT OF mE PANAMElUCAN AGRICULTURAL SCHOOL (EAP). 1940-72 - - - - - - - - Graduates - - ------ Studene Source Averase Per Year Toeal Toea! No. No. % Honduras 11 11.1 312 23 Other Central/fUrica Couutries - 22.8 637 48 South America 9.5 266 20 Ot:hars 11. 4.4 123 9 Total 47.8 1,338 100 1.1 In the 1968-72 period, the annual average was 16.4. 11:. Guatemala, Costa Ilica, 11 Salvador, Nicaragua, and Panama. 1l. !fai.co, Belize, Dom.:1D.:1can RepubUc: and Cuba. Sow:ce: lAP ANNEX 12 Page 1. RONDUBAS AGRICULmRAL/RURAL SECTOR SURVEY AGRICULTURAL PRODUer MARKETING AND PRICING Table of Contents Paragraph No. Marketing Systems 3 - 1 Betail and Wholesale Markets 8 - 12 Trausport Cos ts 13 - 14 BlG' Acd.city in Basic Grains 15 - 22 Pric1ng Policy 25 Decree 91 26 - 31 Grains 32 - 41 Meat 43 - 46 H.Uk 47 Sugar 48 - 49 Vegetable 011 50 'Ihe Special Program (BANASUPRO) 51 - S4 Judgmeuts and Recommendations 5.5 Basic GraiDs 56 - 65 Retail. cd Wbclesale Public Markets 66 - 67 'l'Ule 1 ",ioaa] D1st::::1hut1on of Prodw:d.on aDd ConsUlllPtion of . luic GraiDs, 1913 2. 'l'ec:im1cal Coefficients for Est1mat:1ng Potetu:ial Jas:Lozaal. Demand f07: Bas::Lc Grains 3 Growdl :I.D. Oucput: of Basic Gra::Lna, BNF planning Projectious 4 lfarkacad 8at:paC of Basic Gra:1ns, by Region, 1911-12 5 A.verage AmlDal Prices, Basic Gra:LllS, 1966-13 6 Ara:r.nal Hates of Change 1D Prices of Basic Gra:1ns, 1966-73 7 iata1l-Wholuale Price Harg:1ns, Basic Gra:1ns, 1966-73 8 Basic Gra:f.Da, Wholesale Prices, Monthly High-Low Ratios, 1968-73 9 Wholesale Prices, Basic Grains, Amlual Bigh, Amlual Low, .ad Anaua1 A.verage, 1967-13 10 tru~DI Charges, 1962, 1912, 1913, 1914 11 BNl' Grain Storage Capacity, Current and Plazmed 12 BNF Grain Sales Prices, Wholesale aDd Retail, May 1914 ANNEX 12 Page U Figure 1 Livestock. and Meat Marketing Structure· '.2 Basic. GraiD. Market Structure 3 IkrIIlesd.c. Vegetabla and Fruit Marketing Structure Append1x 1 - ProdUC.d.oD, Omsumption and Pric.e Patterns for Major Fam Produc.ts ANNEX 12 Page 1 AGRlCULTU1.tAL PRODUCT H'AlUCETING AND PRICING' 1. Fam products are marketed almost entirely through private chaDllels., both for export aDd. domestic consumption. Govermnent activities in pricing and marketing are increasing. However, little evidence concerning their impact has been accumulated so far. 2. Background information on production., consumption levels, and price patterns for selected farm products is given in Appendix 1. These data suggest the rr.acure aDd. scale of the marketing problem. 3. !:port products, ma:1nly banaDas, beef, coffee, aDd. cotton., have well organized and rl[!latively efficien.t marketing systems. Bananas are handled by the fruit companies, coffee and cotton by the producer cooperatives., and beef 'by the pack1ng plants lice:DSed for export sales. Producers have at hand. a couiderable IIIlOUtlt of domestic and internatioaal. price infO'nUltiou and, on oCcaaiOD, crops have 'been sold forward (cotton, to Japan, for a:am.ple) or held off the ezport market in ancicipacion of higher prices (as with coffee). 4. J'igure 1 shan the marketing cha:Dllels for cactle (beef). A silllilar presentation for cotton, sugar. aDd. coffee would 1llusttace a correspondingly small mIIlber of intumed.:1ar1es :I.:D. ass...,ly t procesa:I.:D.g and distributi.aa.. Although there may be a large 11UIIlber of producers, the central processing fac1l.it1etl and CfZl'IOrt &rraDgaents contribute to _rketing efficiency, and profit opportua.1t.1es help attract the needed capital and. management. s. In c:ontraat, basic grains and. other maj or food products which move· -.1.nly in the dDmest.1c market go through 1IUU1y channels, and. a large (but a:a:ak1:u:ml) nsher of agents participate :I.:D. assembly and wholesale distr1DUtiOD. The itinerant trucker 18 the principal l1nk betweeD the farmer or local buyer. the aiD arba. cons~tiOD caters and their retail. markets, and. the grain buy:iDs stat10Ds of the National Development Bank (BNP - see below). The trucker may operate iDdepeudenCly or act as agent for a wholesaler. The producer typically sells to either a t:z:ucker-buyer who purchases at the farm or a nearby road, or to a wholesaler :I.:D. the nearest town. Only a few producers s.u grain directly to BRF or directly in the local l'II&rket. 6. The stages in assembly of basic grail:ls is shown :I.:D. Figure 2. The DUlllber of stages and ownership tr&1lSfers :I.:D.' the movement may be large, particularly for those area. remote £rOIl the principal buying statio1ls of the BlrF or the maiD C01l8UDlptio1l caters of Tegucigalpa and Sa. Pedro Sula. Grains are stored at lIllY of the fi'ft to six different points showa., including the faraa -------------------------------------.~--------~------------------ ANNEX 12 Page 2 level, WhOlesalers and othe buyers, and retailers. Producers may DOt have adequate price i.nformatiOl1, and there is a lack of uniform' grades and. standards, weights and meaau.res. these conditions create the possibility that truckers ad. 1rilolesalers caD tIIlderprice farm products within isolated regions and vis-a-vis small producers. 7. A. th1.rd type of marketing structure, somewhat distinct from the export system and the \m:processed domestic product system, is Ulustrated by vegetables and fruits, and particularly by tomatoes in the Comayagua region. In this system (P'igure 3), a part of the output is ehaDl1eled directly to the consumer or through :f.ntem.ed.iaries without further processing. The remaining portion 18 sold for agricultural processing, for example, tomato paste, sauce, atc. '!'hese two outlets differ in many respects, 1l1cluding the need for product unifOrmity and the t1:m.1D.a of sales. In the case of processed tomatoes t the processor requires a relatively uniform product as to size and quality, etc., and a carefully phased flaw. The fresh market accepts a less standardized product, as can be seen :f.n the markets of Tegucigalpa and San Pedro Sula where a great variety of sizes and qualities are offered. 8. !fuII.ic1pa.l markets are mportant in the final stages of food distri bution. A. recent AID-financed survey of the natiOl1' s 280 municipalities showed that: 2S% have public markets. The au.n1cipal1t1es construct, own, and administer these . .ruts. . '---- -- 9. San Pedro ba8 £0111:' pubUc markec.s, two of wb1.ch are 1IIOciel:1l, appa:r:eucly well adprfnistered, aDd each nth soma 400 stalls. They are well located, nth intermediaries purchasing in large lots from. truckers and selling to retailers. Bafrigeration fac1lities are available. Plans for a central wholesale market are being discussed, but DO detailed study has yet been done. 10. the maiD pubUc market in Tegucigalpa, !l. San Isidro, nth a 700 stall capacity is scljacent to a VJ:ivata market, Las Americas, which serves both wholesalers aDd reta:tlers. the intemediaries in Las Americas liDk the small retailers and street vendors and the truckers who unload there. 'lbe L.iI.I! Americas - !l. San Isidro complu is in a d_ely populated area, aDd a wholesale market aorth of the city, with capacity for 180 trucks is being planned. Uke San Pedro Sula, there is ao exclusively wholesale market in Tegucigalpa. The San Isidro market rents cold storage space to retailers. 11. In scldition to the major public markets, Tegucigalpa and. San Pedro Sula are served by 8111&11 corner stores, medium-sized outlets including super u.rkata, aDd. small Ileighborhood pubUc markets covering DO more than aile-half block aDd. with some .50 retail stal.ls. these neighborhood markets have cold stozoage in each of the _at vendag stalls. -I ~ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ ANNEX 12 Page 3 12. The San Isidro market has not been able to collect rental fees. The market's retailers complain of the unfair competition from the numerous street vendors who operate iD. the vicinity. A decentralization of public retail markets iuTagucigalpa is being planned, and this may help solve the fee coUectious problem. TlWlSPORT COSTS 13. Racent ::Improvements in the road network have helped reduce trans port c:osts (lumex 9). The cost of transpotting grain from San Pedro sua to Tegucigalpa fell from L 0.14 to L 0.09 per ton/lan in the 1962-72 period; the camparable figures for Tegucigalpa-Comayagua were L 0.17 to L 0.13 per ton/km; aDd for Teguciga!pa-cboluteca, L 0.18 to L 0.09 per ton/lan. 1/ 2/ In the period 1962-71, the aumber of registered trucks increased from 47000 to 14,900, an avarase annual increase of about 15%. 14. The BNF estimates that: producers or intermediaries transpott maize by pack. animal. an average distance of 32 kin; by cart, 5 kJD; and by truck. 50 km. This suggests the magnitude of the need for feeder roads to help lower marketing costs and increase the number of buyers in production zones. BHi' ACTIVITr IN BASIC GRAINS 15. The principal public institution *ich markets fam products and iDpuu a the BNJ', an autonClllOu agency. I:.a. addition to its cradit acd.vi ti88 (Amex 7), the BNF sells Urput. and buys basic grains (maize, rice, beaDII ad soqh_>. The I:.a.put Sales Section suppl1es iDputs to aU types of famer., particularly those receiving agricultural credit frOll1 the BNF, cd has been operat.iD.g sace the 19508. The Cereals Division is responsi ble for the grain buy1.Dg, storage and sales programs, as established by the Basic GrailUl Commi 5siOl1. 16. The Basic GrailUl Comm:f5sion is raade up of the President of the :am', the M1D:Lster of Ec:anomy t the Minis tel' of Natural Resources, and two representatives of the privace sector. 'the Commission receives techm.cal advice fram. the Cantral Bank, the Nad.aa.al Agrarian Reform IDStitute and the Superior CoUDd.l of Ec:aa.ald.c Planning, as well as the Federacion Naciaa.al de Agricultores y Ganaderos de Bic:mduras t an organization of famars and caC tlemen. jJ BNF. La Comerciali:ac1oll de GraDO. Basicos t May 1973. 11 In 1973-74 transporta1:1on charges went up because of higher fuel costs. The BNP races were increased by 15% to 25% ill Kay 1974. ANNEX 12 Page 4 17. The Commission directs the implementation of the price stabiliza tion program. for basic grains. It sets the minimum prices to be paid at the buying stations of the BNF, the maximum selling price of BNF sales to wholesalers and. retailers, and the BNP' transportation charges. the Commis sion has the final' sayan the imports and exports of basic grains through its approval of export requests made by private traders. . 18. Until December 1971 the BNF storage capacity was very small com pared to the marketed tonnage of basic grains. At that time two new grain handling and silo facilities were completed, one in Tegucigalpa and one in San Pedro Sula. Each of these silos has a capacity of 314,000 ewt (14,472 tons). They have modern drying and. cleaning equipment, and are designed to facilitate later expansion. the installations were financed by AID and BNF at a total cost of US$4.6 million, about US$1.2 million in excess of the original cost estimates. the BNF contributed US$1.5 million (of which tJS$0.3 m:Ul1on was originally planned as the national contribution), an amount roughly equivalent to equipment costs. The new silos brought the total BNlI' capacity up to about 45,000 tons, including the warehouses for rice and bean storage in sacks (Map No. 11150). 19. The system has not been fully used so far. The tu;:nover 'rate (grain handled divided by storage capacity) has not been greater than one, at least since 1968. This compares with an estimated figure of over two for the private sector in. a typical year. 11 In their first year of opera t1011, the turnover rates for the new silos at Tegucigalpa and San Pedro Sula were 0.9 and 1.2, respectively. Higher rates are expected in the future as technical problems in drying, cleaning and. fUJlligation cycles are solved. AID baa provided. an expert to assist in improving handl.ing. 20. Outside of Tegucigalpa and. San Pedro Sula, the BNP' has 14 buying statioDS with a total storage capaci ty of 150,000 cwt (6,818 tons), roughly 15% of the BNF total. Plana are underway to add a total of 270,000 cwt (12,430 tons) in Jutica1pa, Danli, and. Tocoa (Aguan Valley), with support frma the Central American Bank for Economic Integration (CABEl); 2/ to in crease the total BN1!' capacity to 1,259,200 cwt (57,385 tons) or .n incre ment of 27%; and. raise the buying station capacity to 420,000 cwt or 33% of the total. The total cost of the expansion is est:tmated at about US$2 mU lion. 11 Althoqh the exact amount is _~~L.th~ _private sector ~~ signi~ican;__ storage capacity. A.~~~arch firm can store about 6,000 toDS, whi.~_._ represents about one-half to one-third of its aanual output. An animal feed c:ampaDy can store 2,000 toDS, and is coDSidering an expansion to about 5,000 tons. A rice milling plant in San Pedro Sula has storage facilities for about 4,000 tODS, and is currerr.tly adding 1,000 tons of capacity; in 1973 this plant purchased about one-half of the national ~. production. SOllIe site preparation work has been done in Juticalpa and Dan11, and it 18 hoped that the new capacity will be available for use in late 1975. ANNEX 12 Page 5 21. BNF is planning to move the rice m.i~ling plant from Cortes to San Pedro Sula. Both the Quimistan and the El Triunfo stations are to be closed, and the "-storage fac:ilities moved to Cholutec:a and La Entrada. The two sta tions to' be closed. are small. and like the Cuyamd facility t have not been used in recent years because of shifts 1n production and trade patterns. In contrast, four other statiODS - Juti~pa, Catacamas, Danli and Puerto Cort.es - bave had turnover rates 1n excess of one (Juticalpa, 2; Danli, 1.5). 22. The Cho~uteca station illustrates how changing production patter affect the use of storage facilities. In the late 1950s and ear~y 1960s, maize and sorghum were the principal crops of the region. Cotton and sugar became :1mport.ant. crops in the 1Iid.-1960s, great~y reducing the a:II:I)unts of grain recaived by the station. Current~y, sorghum, beans t rice and ma:1ze are purchased at the station. Sesame production has recently expanded and purchases have been made by the BNF. 23. Some of the stations need maintenance and minor investment outlays to be ab~e to function at full capacity. Far example, the Choluteca station has a grain d:yer which was tranaferredfrom Tegucigalpa at the time the new si~o fac:il1ties were constructed in 1971. The d:yer is not properly baused and is 11Ot. operative. A small antiquated dryer is used, but it would DDt be adequate 1.£ a greater vo~ume of grain ware recaived. Rice received :b Cholut8ca is shipped to Tegucigalpa for drying. 24. Grain losses to insects, hesting, and other problems in storage and hancUing appear to be relativdy hiSh. In srut part this is due to the low quality of the grain received by the BNi'. In the past, purchases have been by grade. with most being c:1ass :8. Jj (llecently BN.F eUDth,ated the pZ'ice d1scoua.t for 1Dferiar gracies; however, it does 110t accept grain which fa:Us to meet certain ,,",1mJII st.mdards.) At l.eaat a part. of tbi.s loss problem Will be solved as managaunt aper:f.ence is ga:l.neci., and through a caa.t:imsing prog121D of fac:f.lity maintenance. PRICING POLIer 2S. In add1t:ion to the Basic Grains Commission, the Goverumel1t inter venes in pncins through the Directorate of Int:eraal Commerce of the M1:n1stry of Econaary. this office was set up by Decree 91 of November 1973, and is cr:mc:erned with eusur.f.ng thac: pnces of basic foods do not rise as a result of excessive market inflwmce (monopoly power) or speculative hoarding. The Directorate has a lim1ted number of inspectors who check on the pnces of a feW' basic c:ommod.ities. 11 For uize, defined as 12% to 14% humidity; 3% to 5% foreign matter; and 5% to 10% damaged. gra:.tn. ANNEX 12 Page 6 Decree 91 26. Although the list of items subject to Decree 91.had not been for mally established as of mid-1974, an earlier Decree, No. 55, which froze prices prevailing as of Jauuary 31, 1973 for the period June 28-September 3D, 1973, covered fresh vegetables, fruits, meats. wheat flour products, sugar, coffee, salt, soaps, matches, and other less important products. In the case of Decree 55. the municipal governments,. including the Central District of Tegucigalpa, were charged with enforcing the prices. Violators were subject to fines from L 10 to L 1,000. 27. Decree 91 gave the BNF interim authority to make direct sales, through existing retail outlets II of basic consumption items, including grains. The Decree requires utional distributors to sell to the BNF, at mutually agreed prices and in sufficient quantities to ensure adequate domes tic. supplies. The Decree also permits the Government to fix the amount (as a percent of sales) of export commodities which must be reserved for the national market. 28. Following the Decree, a Commission was established to consider the ne~ for and the appropriate form of an agency to specialize in the market ing of basic products widely consumed by the low income population. The outcome was the creation 1n July 1974 of BANA.SlJPRO, discussed below. 29. The maiD reason for Decree 91 was the inflation which began to develop during 1972. and thereafter accelerated. The Central Bank index of urbaa. food prices was up 11.8% iD the first four months of 1974, in compari son to the average 1973 level. The overall price index showed an increase of 8.2% for the_s~e period. From April 1973 to April 1974, the price in . --- crease was 15.1% for food, and 11.4% for all consumption items • . 3~. Decree 91, ille Decree 53, authorizes the Ministry of Economy to temporarily exonerate from import duties those products in short supply. This was done iD December 1973 for a list of items which included powdered m:U.k, cottonseed, and vegetable oil for rec0118titut1ng milk. 31 • The clear purpose of these measures is to ma1ncain prices at a level acceptable to the C0118UDler. Although mention is made in Decree 91 of maintaining prices which will provide sufficient incentive to producers, it is apparent that the concern is wi th the consumer. Grains 32. The objective of basic grains price policy is intra-year stabil ization, and in the interests of both producer and consumer. As noted above, it was DDt antil the 1974-73 growing season that the BNF had sufficient storage capacity and working capital to implement a significant price sta bilization progra. In 1969-70 and 1970-71 growing seasons, less than 3,000 ANNEX 12 Page 7 tons of maize and less than 2,000 tons of beans were purchased. During this period,-· the BNF had 110 more than 12,000 tons of storage capacity. Price fluctuations (measured by the ratio of high to low prices) increased slight ly both for maize and beans, at both the wholesale and retaU levels, in the 1911-13 period. 11 33. For several years prior to 1914 support prices for maize were es tablished at L 6 per cwt. The effective price was 5% to 10% less when dis counted for humidity, broken grain and foreign matter. In addition, the announced prices were for Tegucigalpa and San Pedro SuIa, and the prices in main producing areas were almost L 1 less because of transport costs. The effective support price for class B maize was thus on the order of L 4 to L 4.50, compared to average national prices of L 5.45, L 6.94 and L 5.19 respectively in 1969, 1910 and 1911. J:! 34. The BNl basic grain survey of 1911-12 indicated that only a small percentage of farmers sold to the UNF or were aware of the support prices. Producers obtained price infomation on a casual word-of-mouth basis. Less than 5% made direct sales to a BNli buying station. Most UNF purchases were made from truckers and others who purchased grain from producers. 35. The policies adopted by the BNF for the 1914-15 growing season should help improve the stabilization program. The support prices were announced. at planting time so that farmers, aware of these prices, could plant 011 the basis of assured min:.I.:m:wD. prices of L 9 per ewt for maize, L 21 per ewt for red. beans, L 19 per cwt for black. beans, and. L 15.5 per c:wt for 1:OugD rice.11 The basis of payment has also been changed. Whereas in for.=er years discounts were made from the official price for lower grades, the n_ prices are the same for all grains above minimum quality sta1ld.ard.s. Therefore, grains accepted w1ll receive the basic amlOUllced support price. 36. The buying station price for maize (outside Tegucigalpa and San Pedro Sula) of L 8 per ewt is higher thaD the 1973 Jd:iiiiiiUiii wholesale price of L 6. 13 per cwt, but lower than recent top wholesale prices (L 9. 17 per cwt in April 1913, and L 9.53 per cwt in April 1974). In terms of operating costs, BNJ' breaks even with a mark-up of becweeu 15% and 20%; this means ° a BN1i re-sale price around. L 10.35 to L 1 .80 per c:wt. 11 Th1:Ough import adjustments, it has been possible to maintain a relative ly stable rice price. 2/ In these and. later years, the national price level has beeu affected significantly by foreign trade. In 1969, 1970 and 1911, yearly maue exports were about 13,000 tOl18, and in 1972 almost 20,000 tons. Maize imports exceeded exports in 1973 because of the lower domestic outtum. Al1l1ga} bean a:ports approximated. the 15,000-20,000 ton level before 1969, and. 8,000 t011S to 9,000 tons in the period. 1910-12. In 1913 bean sports were negligible. lice imports declined to small amounts in 1972 and. 1913. 1.1 All prices on Tegucigalpa and San Pedro Sula basis. The prices for other bu.y1D& stations are L 1 per ewt less than maize and beans, and. L 0.15 per ewe less for rice. ANNEX 12 Page 8 37. The current support prices were set on· the' basis of cost-of-pro ductioD; est::f.mates and are intended to stimulate' production. A survey in 30 municipios led to tentative cost est::f.mates per qq of L.5 for maize~ L 13.20 for beans~ and L 11.60 for rice. (The analysis of the 600 farm records was not complete as of May 1.974.) 38. The amount of grain which farmers will offer at the support prices, and hence the stabilization impact; is difficult to predict. A related question is worki1:1g capital requirements. Total resources available for workina capital are from three sources - BNF ~ a Central Bank line of credit, and an AID loan. The BNF is c:omm.itting L 3.85 million, of which L 3.4 mil lion is for grain inventories; L 0.4 million for upgrading rural grain buy ing stations; and L 0.05 million for technical assistance. The AID finance totals L 4 miiiiouof which L 3.8 -million· wiiibe-Used fo-r grain pu£chases and L 0.2 million for technical assistance. The Central Bank is providing a loan of L 1 milllon for grain purchases. The total working capital fund is projected to increase from L 7.6 million in the first year, to L 7.8 million in the second, L 8 million in the third ~ and L 8. 2 million in the fourth. 39. The au:a.ounced purchase price for beans of about L 20 per ewt is lower than the March 1974 price, which was L 26.32 at wholesale. The 1973 average wholesale price was L 26.05 per c:wt and the low was L 21.62 per ewt. At a mark-up of 15% to 20%, the BNF would have to sell beans between L 23 and L 24 per c:wt wholesale. 40. The rice support price of L 15.50 is low in comparison to the re cent wholesale price of L 23.43 per ewt (1973 average), L 22.33 per ewt (1973 low), and the April 1974 price of L 28.76 per ewt. With a 15% to 20% mark-up, the BNP' would have an :lmpl1ed sales price for rice of around L 18 wholesale .. 41. ' At current support prices, and with a total worldng capital of say, L 8 million, and 1£ purchase tonnages are distributed among corn, beans and rice on a 70:20:10 basis, then a total of 31,500 tons of maize, beans, . and rice could be purchased. Max:Lmum holdings of 1Ia1.ze would be 22,050 tons; beans, 6,300 tons; and rice, 3, 150 toIlS. Based upon production figures for 1973-74, these totals would represent 7% of marketed maize out put, 12% of marketed bem output and 19% of marketed rice production, if one assumes that 32%, 52% and 60% respectively of maize, bean and rice pro duction enters market challnels. 11 42. The build-up in working capital requirements through the years is illustrated by the CONSUPLAN projections of output and stab1l1zation pur chases for 1978. These are: 11 In fact, larger percentages of total output may enter market channels. The above figures are from a BNF survey for 1971-72, a poor crop year. ------_.-- _._----- ----- ------._------'-.-------._-- ANNEX 12 Page 9 Production Purchases Thousand Tons Maize 470 37.6 56 5.3 Rice 36 4.3 At current support prices.. this purchase level would require an outlay of about L 10.7 million. - Maat 43. In response to growing foreign demand. exports of frozen meat (beef) increased from 12 AOO tons in 1970 to 17.600 tons in 1973. The value of exports increased from L 19.4 1Ili11ion in 1970 to L 38.8 million in 1973. The unit export price increased from L 1.56 per leg in 1970 to L 2.20 per kg in 1973. Domestic prices increased much less over the same period. j Average 1:ieef-prices in Tegucigalpa rose from L 1 ~_~2 per lb in _1971 to L 1.30 1 per lb in 1973. The domestic price of pork behaved in about the same maDD_. " increasing frO. L 1.1"4 tor;-l-;)Oper lh 1ii TeauCig&lpa ttom-1911to1973. 44. Heat was included 1A the list of items subject to a price freeze U1I.der Dacree 55. In addit1oD, Decree 91 authorized measures to assure the beef SU'PP1y for the domas d.c market. AccordiXIgly, 10% of all beef processed 'by licensed ezporters must be resened for domestic consumption. Since the quota is 1D terms of weight, the lower value items are usually set aside for domestic C01lSUlllPtion. 45. Direct price controls on beef are widely beli~ved to have had little affect on prices. 46. Poultry and pork are on the item list of Decrees S5 aad. 91, but prices are not new controlled. 'the price of poultry has not increased sig nificantly since 1970. The industry baa been 1Ategrating. output baa been growing. and the price of chicken relative to pork and beef has tended to fall. '!'he price of chicken increased from L 1.02 per 1b in 1971 to L 1.10 per lb 1A 1974 in Tegucigalpa. !:Y:£ 47. The price of processed fluid milk is regulated by the Ministry of Economy. lrcnIl the early 1960s into 1974 producers received L 0.10 per liter and the consumer paid L 0.40 per liter. This discouraged milk produc tion and led to increasing milk imports. In 1974 the producer price was in creased to L 0.30 per liter and the consumer price to L 0.60 per liter. Raw (unprocessed) milk continues to account for much the larger part of J total fluid milk consumption. ANNEX 12 Page 10 Sugar 48. The price of milled sugar is controlled by the Ministry of Economy .and is en.fo~e<L~';1.!C)~_t. great difficulty in urban centers- 'because_ ~.~t sligar (80% to 90%) comes from one large miller in San Pedro Sula. The wholesale ~- price of L O. 10 per lh and the· conSumer - price of 1. 0.20 per lb has meant relatively low producer prices. Cane producers receive from L 10.50 to L 12.S0 per ton, depending on the sugar yield. 49. In 1973, when sugar was being imported, prices were temporarily increased to L 20.50 cwt wholesale and L 0.23 per lb retail. These prices were maintained from September 1, 1973~ through December 15, 1973, at which time the national harvest began and prices were reduced to their previous levels. All the stocks of the sugar companies as of August 1973 were re sened for national consumption. during the September-December 1973 period. The BNl managed the distribution. of national and imported sugar during this period, and established and approved wholesale outlets. Accordingly, during 1973 the price of sugar reached a maximum level of L 0.25 per lb in Tegucigalpa and L 0.27 per lb in San Pedro Sula, compared to the average 1973 price of L 0.21 per lb. Vegetable 011 SO.. In May 1974 the authorized retail price of vegetable oil was L 0.90 per Ib; this was putting pressure on processors because of the upward price trends of tzported raw materials, especially cottonseed. The Spec1alProgram (BANASOPRO) Sl. As aoted, Decree 91 set up a COlIIDlission to make specific proposals for a public 1D.stitutian to be made resp011Sible for the marketing of basic cammodities. Two proposals were considered by the commission. The first was to strengthen the BNF and its recent activities, which have included the distribution. of milk, vegetable oils, sugar, and grains through selected retail outlets in tegucigalpa and San Pedro Sula. The second was to estab- . !ish an independent mark.et1ng corporation, CONAP (Corporacion Nacion.a1 de Ahastec1m.1ento Popular), and to transfer to it the price stabilization ac tivities of the BNF, including the basic grains. In the event, the Suatiu istradora de Productos (BANAStJPRO) was established as a Special Program attached to the BN'I'. This new program, set up in July 1974, will be respon sible for all basic consumer necessities and will act as public intermediary between the producer and the consumer. BANAStJPRO can. set retail prices of COIIIIlOdities and can distribute goods through its 0W11 outlets, or through affiliates; these latter may include labor uniOns, consumer cooperatives, c:ampesiao organizations or any other group willing to operate under BANASUPRO regulations. Policy will be set by an Administrative Commission composed of the President of the l3NF, the Executive Secretary of CONSlJPLA.a.'t and the Min isters of Finance, Economy. and Natural Resources (who are also Directors of the Basic Grains Ccmmission). A...'mEX 12 Page 11 52. ". BANASUPRO has its awn administrative structure consisting of gen eral adrDiwtrator. warehouse chief and the administrators of the distribu tion centers. It will hire its own personnel independent. of the BNF. It will have ita own accounting and records system which will be audited by the BNF. The principal link between the :&"iF and BA..'JASUPRO is through the Manager of the DevelopDlent Department of the BNF who acts as Technical Sec retary to the Administrative Commission. 53. The main objectives of the program are to ensure adequate supplies of basic necessities to consumers s to establish a distribution system that c:ompetes with private suppliers. and to stabilize consumer prices. Its initial financial resources are L 3 millions and it is authorized to borrow from private or public sources s internal and external. (The relationship between BANASUPRO and the Direcc10n de Comercio Interior of the Ministry of ECODOmy is un~~ear. )._ 54. Placing BANAStJPRO in the BNP' fold has certain advantages s includ ing the possibility of drawing on BNF experience. For example, as a credit institution, BNF is concerned with assuring farmers aD incentive price level, rather than solely with consumer prices. And the price stabilization pro gram, when short of working capitals has had to rely on transfers from the Credit Department of the BNF. This may not be necessary in the futures but the prograa arrangements will facilitate such transfers if needed. However, the relationship with BNF will not solve the problems of administration and personnel supply. These are likely to become severe :if a serious effort to improve the grain buying and distribution progrm is undertaken, along with aD extensive prograa of 1IIarketing of such itams as sugar, meat. vegetable oils. 5S. Neither the grain price stabilization progrm nor the effort to constrain price increases of consumer staples through public intervention in the market has a sufficient history to permit appraisal of their effects on farmers. The grain progrm has been handicapped by lack of storage capa city and working capital, aDd has not yet become fully operational. On the consumer price side, intervention has been of an emergency nature, and BANASlJPRO has not yet bad d:me to formulate ita specific obj ectives and operating procedures s nor to work out how its activities Will relate to those of the Ministry of Ec::otlO1IlY. There is widespread recognition of the dangers of public intervention in retail marketing and pricing, including a possible drain on the Treasury t a slowdown in the growth of eff iciency in the private distribution system, and disincentives for farm production. As domestic and international supply conditions improve and the effects of the September 1974 lmrricane are overcome, it is probable that public in tervention in retall pricing and marketing will not be seen as necessary. ANNEX 12 Page 12 Basic Grains 56. Two steps are necessary now to tmprove the basic grains stabil ization program. First. the management of the present facilities should be improved. to assure their affective use. Adequate working capital should be provided. along with sufficient fUDds for operation and maintenance of the fac:1lities. Eac::h of these problems is being worked on. Second, the objec tives of the program need to be clarified, and the costs and returns to alternative development measures need to be analyzed. This is a complex task. and one which might possibly be undertaken by the CIDA (Canadian International Development Association) team now working with CONSUPLAN on farm product marketing problems. 57. The investigation should be comprehensive. and inclucie the study of export facilities proposed in the draft 1974-78 national development plan. Concerning price stabilization objectives, it should produce recom mendations on the degree of stability to be sought, and the time period of interest (intra-year vs inter-year). On the tmplementation side, a basic question is the role to be assigned to the private sector, including farmer cooperatiVes, and the steps to be taken to assure that the private sector has both the financial capacity and the willingness to do the assigned job. Another important question is whether or not the public system is to be self-supporting. and, if DOt, to what extent and on what economic grounds is it to be subsidized, meanwhile assuring that the public and private ac d.v1ties are mutually supporting. 58. Although the available evidence is limited, it is probable that significant economic gains can be picked up through improved storage. The Btent of physical losses between harvest and end use is DOt known, but guesses run as high as 2S% for maize. The price fluctuations discussed in Appendix 1 suggest that the margins over any period of several years may be sufficient to return the going rate to capital for a considerable additional volume of storage. And there appear to be possibilities to pass on some of the gains to the l.aw-income farmers, although the tmpact of the "pocket mon opolies" on these groups is not known (the cost of providing marketing sar- vices in isolated areas is admitted to be high, even by those who allege that the gains of the truckers and others who assemble grains are excessive). 59. Nevertheless, the effort to pick up these possible gains needs to be carefully pl.u:m.ed. Programs of this sort can founder in many ways. One is the support price level. If set too high, the support agency is bound to incur heavy lanes which can destroy the program. Effective supply- de III8IId forecasting machine.ry is essential, along with indicators of the pro duction response to prices. This latter brings up the question of inter COIIIIDOdity relationships in production, and the fact that the pricing of any particular commodity must take into account the impact of that price on the output of other products which compete for land and other resources. On the ANNEX 12 Page 13 other hand, support prices which are too low provide. little incentive to pro ducers, .:~, unless the stabilization agency is permitted to buy at going prices rather than the lower pre-announced prices, make it impossible for the agency to acquire the stocks with which to reinforce private action in dampening price iDcreases in the post-harvest season. 60. In considering these questions, several points need to be recog nized in all concerned agencies of the Government. First, the collection and processing of small lots of grain of widely varying qualities from highly scattered points, many scarcely accessible, is costly, and quite be yond the power of a price stabilization program to do much about. Major change must await the transformation of the production structure and modern ization of the transport system. A related point is that unstable prices are not necessarUy uneconomic in the context of unstable supply; in turn, the latter reflects costs which are seasonally correlated, and farming sys tems which are probably incClllle-max1mi zing in terms of the available technol ogies and price uncertainties. Second, collection and storage cost money, aDd there is a danger of over-estimating the probability of gains when risk is given proper weight. The odds on get:ting one's money back by buying grain at the beginning of aDy season and selling at the end are not known. Third, physical losses in the storage and marketing chain are typically guessed, aDd little fim. evidence is avaUable; it follows that the contri bution of loss reduction to the economic gain from improved storage may be less thaD widely assumed. Fourth, the current approach seems to be that the public storage facility must be fully used each year. In fact, the op t1muIa use rate, and. hence the needed amount of working capi tal, is a complex function of supply and demand insofar as price stabilization is concerned. 61. The proposed study should investigate several basic questions. The first is the proposition that public purchase, storage, and marketing programs should operate on a ao-gain no-loss target, with capital service charges being included as costs. Losses on the trading account are to be expeeted. in some years, when price expeetations go tIftIr1 because of weather and other tmforeseeable conditions. But pricing should be designed to re ccrt"er these losses in other years, and over aDy period of several years the activity should be in a no-los. no-gain position. If, with good management, a positive essential, the public system is unable to operate without contri butions from the Treasury, it should be tem.inated, if only because its con t1Duance is bound to discourage private activities in storage and hence re sult in aD ever-groring need for subsidization. 62. This suggests thac the objective must be to stabilize prices rather than to raise the level of prices. An effort to raise the price level will eventually result in heavy stock accumulations and financ1a.l losses. 63. A. second propOSition for study is that adequate finaDce should be made avaUable for the expansion of private storage aDd collection facili ties, including working capital. (This may be aD interesting field for the ANNEX 12 Pqe 14 new Indus trial Devalopment Corporation, as well as for the BNP, both in helping expand off-fam large-scale facilities and on-fam capacity, and the &Cd-vities of intemediaries such as truckers),. A related question is bow to get- more fle:ld.bili ty into the marketing sys tem, such as through the usa of negotiable warehouse certificates, thereby enabling producers annd the trade to expandr.f.sk-taking activity. 64. A third proposition, closely related to the second, is that it is mainly through private sector expansion that some of the gains from price stabilization can be passed on to small famers. Although it is expected that the agrarian refbm program (Amlex 4) will fully finance investment and. operating funds for the new settlements (asentamientos) for grain stor ase and marketing, this program will not reach the independent small farmers. Promating private sector servicing of this latter (and very large) group is the way to draw small famer supplies into the market at least cost and with m.&:2dmum gaiD to famers - even though those who favor a public mono lith:l.c structure see this course as merely contributing to a further atom ization of privats grain marketing. 65. A fourth proposition is that the staff work for determining sup port. prices should be done in the proposed Economic ADalysis and. Statistics Directorate of the Hiuistl:y of Natural Resources (or its successor). It is this body which will have at hand the necessa1:)' information to best judge the appropriate support prices in the context of producer responses, inter commodity relationships, agricultural output obj ectives, and the statistical probabil.ity of a good or bad crop year(s)· coa:Lna up. Of course, other consid erations need attention in setting support prices, and. for these the views of other as8llCies should be sought. In so broadeDing the pricing issue, the 1DOSt important CODSideration is the intermediate-term effect. on produc tion and resource use of t%ying to bald the prices of such products as sugar, m:Uk, fata and oils, and basic grains below those of neighboring cou:a.trl.u world levels. Althouah this issue C!a.1UIat be handled by suppor: pric:1Da aloua, it needs COtISideratioa. in support price decisioa. Betail and Wholesale Public Uark.ets 66. Retail markats are relatively well developed in San Pedro Sula. 'I'b.e:y are clistributed. throughout the d.ty aDd the expansion of recent years baa created a capacity suffid.el1t to meet foreseeable needs. There is a need for a wholesale market to reduce assembly and distribution cases, im prove pmduct gradiDg and band.liDg, refine the price-maJd.ng process, and pmduce better price information for famers and the trade. Municipal authorities est:f.mate the cost of a wholesale market. at. about L 2 million. 67. Tegucigalpa also needs a wholesale market. The facility DeW used by wholesalers is located in a congas ted urban area, and cannot be readily expanded. The Sm Isidm retail market fad.l1ty 1s also operating near cap ad.ty, and needs improved management and permanent space for street vendors DQW associated with it. Subsidia1:)' markets in other parts of the d.ty may be the bee t way to bandle this prob!em. , Tabl. 11 RBlIDHlL DISTRIBJTION OF PROJlJC'l'Iotf AND OONSUMPTION OF BASIO GRAINS, 1973 MAIZE B E AN S Deficit or Deficit or Production!! % ConsUDIPtioul/% Surplu. !!Production!l % consumptioJ.!X Surplus !I Total 272,8 100.0 381.2 100.0 (l08.s) 41.9 100.0 47.5 100.0 (5.6) ; AtUintida 20.1 7.6 17.8 4.1 2.9 + .5 1.3 2.1 4.5 (1.1) Colon 3.2 1.2 8.4 . 2.2 (5.2)- .3 0.8 .1 2.1 (.1)- Comayagua 6.2 2.3 17.3 4.5 (11.1)- 2.9 6.9 2.6 5.4 .3 + Copan 28.4 10.4 24.3 6.4 4.1 + 4.8 11.S 3.2 6.8 1.6+ Cortes 12.3 4.5 47.5 12.5 (35.2)- 2.5 6.0 5.0 10.6 (2.5)- Choluteca 16.2 5.9 28.4 7.5 (12.2)- 1.0 2.4 3.6 1.6 (2.6) El Paraiso 13.0 4.7 19.2 5.0 (6.2)± 5.6 13.4 3.0 6.2 2.6 + Francisco Korazan 17.1 6.5 65.7 17.2 (48.0)- 5.0 11.8 8.0 16.8 (3.0)- Gracias aDios .4 0.1 2.2 0.6 (1.8)- .2 0.6 .3 . 0.6 (.0)+ Intibuca 4.9 1.8 12.6 3.3 (7.7)- .5 1.1 1.6 3.3 (1.1)= Islas de la Bahia .0 0.0 1.1 0.3 (1.1)- .2 . 0.3 (.2) La Paz 13.2 4.8 10.5 2.1 2.7 +. .8 1.9 1.2 2.6 (.4) Lempira 15.5 5.7 20.9 5.5 (5.4)+ 1.8 4.3 2.5 . 5.2 (.1)+ Ocotepeque 8.0 2.9 8.6 2.2 (.6)+ .5 1.1 1.1 2.3 (.6)= Olancho 61.6 22.6 27.9 . 7.3. 33.6 + 9.1 23.3 3.6 1.6 6.1 + Santa Barbara 23.2 8.5 29.9 7.8 (6.6)+ 3.2 7.7 3.9 8.3 (.1)+ Valle 13.3 4.9 15.5 4.1 (2.2)+ .5 1.3 1.7 3.6 (1.2)- Yoro 15.0 5.5 23.3 6.1 (8.3)= 2.0 4.7 2.9 6.1 (.9) .. Page 1 of 2 (continued ... ) ,!~ r Table' 1 . Page '2 of 2 • B. ICE SORGHUM Deficit of' !! Deficit or; / Production!! I consumption!!' Surplus~Production % Consumption U Surplus 'lotal 12.8. 100.0 26.3 100.0 (13.5) 41.2 100.0 52.6 100.0 (5.4) Atlantida 1.7 13.2 1.6 6.0 .1 + 0.0 1.0 1.9 (1.0) Colon .8 6.1 .7 2.a .1 + 0.0 .9 1.7 (.9) - Comsyagua .8 5.9 1.4 5.4 (.1)+ 2.3 5.1 3.1 7.1 ' (1.4) - Copan .6 4.9 1.7 6.3 (1.0)+ 0.0 1.1 3.1 (1. 7) - Cortes 1.6 12.2 3.0 11.3 (1.4)+ 0.0 1.8 3.5 (1.8) - Choluteca .9 6.9 2.1 8.1 (1.2)=- 11.0 22.9 6.1 12.7 4.3 + El Para{so .3 2.1 1.4 5.2 (1.1)- 5.2 11.1 4.2 8.0 1.0 + Francisco Morazan .2 1.9 4.0 15.3 (3.8)- 6.7 14.1 10.2 19.5 (3.6) ..: Gracias aDios 1.1 8.3 .5 1.8 .6 + 0.0' .2 0.4 (.2) - Intibuca .4 . 3.0 .4 1.7 (.1)+ 5.1 12.1 3.4 6,.5 2.3 + Islas de la Bah{a O.Q ' .1 0.3 (.1)= 0.0 .1 0.1 (.1) La Paz .1 1.1 .7 2,6 (.5)- 2.3 5.1 2.0 3.8 .4 + Lempira .9 6.9 1.5 5.8 (.6)- 8.1 17 .2 5.2 9.9 3.0 + Ocotepeque .4 3.0 .7 2.5 (.3)+ .5 1.0 1.5 2.8 (1.0) - Olancho 1.3 10.2 1.6 6.3 (.3)+ 0.0 2.2 4.2 (2.2) Santa Barbara .6 4.8 2.1 8.3 (1.5)- 0.0 2.2 4.2 (2.2) - Vslle .3 2.2 1.0 3.8 (.7)- 5.2 11.1 3.5 6.7 1.7 + Yoro .9 7.2 1.1 6.6 (.8)+ 0.0 2.0 3.8 (2.0) Notes I + surplus region Source: Banco Naclonol de Fomento, ta Com.,! jfi + current deficit projected surplus region cializad·§11 ,l~~ Granos Basicos y I'~ - deficit region Proyecl::o Cm~~:,1: t'uccion Silos Ruraies l ,I-' I-' 1/ Thousand Tons Jloudura,. 1973 )0'> N ! • ANNEX 12 Page 17 -, Tabl.e 2: TECHNICAL COEFFICIENTS FOR ESTIMA~ING POTENTIAL REGIONAL DEMAND FOR BASIC GRAINS JJ Per Capita Seed Ruman Consumption Requirements Losses and 1973 {Jaste Kg/Annum Kg/ha % of output Maize 86.84 22~7 13% Beaus 14.90 50.0 5% Hice 8.32 250.0 10% Sorghum 7.30 11.4 12% JJ the . . per capita. b.uma.tL_ consumption. figures aJ;e generally 10'%. -greater -than those used by CONSl1PLAN. Source: BNF ANNEX 12 Page 18 Table 4: GBCW'l'B. If OO'l'Ptrr OF BASIC GRAms, BR'F PLAltNDIG PROJECrIClNS Year Maize Beans Rice Sorghum 1973-77 15.7 13.4 29.0 8.0 1977-82 3.5 4.5 14.9 6.3 t'973-82 7.9 8.4 21.0 7.1 . Sourt:e.: :em'. _ . . ._-- . .. &nmx 12 Page 19 Table 4: MA..RKJi.T!D OU'l'PUT OF BABIC GRAIN'S, BY' RmION, 1971-72 . 1/ 1/ Ma.ze Beans - Rice Sorghum Regiou 1st 2nd 1st 2nd . ;C of Total Prodnct.ion West 32 32 75 71 78 u.a. South 22 22 17 18 26 29 Northeast 49 33 48 60 72 15 Central 20 u.a. 38 34 37 14 Notthwest. 34 64 70 80 86 D.. a.. So121"Ce: BNF r T~ble Sa AVERAGE ANNUAL PRICES. BASIC GRAINS. 1966-1913 H a i z e Be a n s Ric e . • White Yellow Red Black Long Medium Year A I A I A B A B A Ii ,f A B • 1966 5.54 0.01 5.54 0.08 14.56 0.18 13.16 0.18 23.85 0.28 21.51 0.25 1961 1.86 0.09 1.86 0.09 16.62 0.21 12.14 0.11 22.93 0.28 19.87 0.24 ! , , 1968 1.32 0.09 6.68 0.08 J6.62 0.20 13.10 ' 0.16 21.45 0.26 17.11 0.21 i. I I 1969 6.00 0.08 5.41 0.01 15.32 0.19 12.06 0.14 20.80 0.26 17.23 0.22 1910 1.43 0.09 1.41 0.09 19.81 0.24', 17 .46 0.20 21.79 0.26 19.88 0.23 1971 6.18 0.01 6.00 0.01 14.53 0.18 14.43 0.11 21.83 0.33 24.97 0.30 1912 6.11 0.08 16.61 0.20 28.71 0.35 1913 1.18 0.10 26.89 0.32 26.49-,· 0.31 AI Wholesale, L/cvt. II Retaih Cents (L/lb) Source: DESAGRO l~ ~I~ Table 71 RETJIL-WIIlLJ!'S.&LI PRIOE MARGINS, BASIO GRAINS.. 1966-13 , Maize Beans Rice Yea r White Yellow Red Black "LOllS t1e4ium .% ot Wholesale Price 1966 14 2S 17 28 14 12 1967 11 11 19 24 18 17 1968 22 13 IS 19 19 19 1969 2S 29 21 14 19 23 1970 22 22 17 IS IS 13 1971 14 14 17 18 IS 17 1972 13 IS 11 1973 20 16 16 Source 1 DESAORO i~ N Nt-' t\l . AUNEX 12 Page 23 Tse 8: BASIC GRADlS, WHOLESALE PRICES. MONTHLY HIGH-WW RATIOS,. 1968-73 Year Maize Beaus Rice High/Low Ratio 1968 1.6 1.4 1.3 1969 1.3 1.4 1.3 1970 2.7 2.2 1.2 1971 1.3 1.3 1.5 1972 1.4 1.6 1.2 1973 1.5 1.5 .1.2 Source: BHF , Table 91 WHOLESALE PRICES. BASIC GRAINS, ANNUAL HIGH, ANNUAL LOW, AND ANNUAL AVERAGE,1961-73 • KAIZE BEANS RIC E HiSh Low Average High Low Average High Low Average • I • " L per cwt ' 1967 10.09 (AuS) 5.86 (Jan) 7.27 23.99 (Jan) 14.55 (I?ec) 17.16 23.80 (Apr) 18.70 (Nov) 21.34 1968 8.25 (Apr) 5.04 (Dec) 6.82 20.12 (Jan) 14.13 (Jan) 16.96 22.51 (Jun) 16.95 (Dec) 19.10 1969 5.97 (Apr) 4.45 (Nov) 5.45 17.02 (May) 12.02 (Sep) 15.18 18.38 (Sep) 14.58 (Jan) 11.49 1970 12.47 (AuS) 4.59 (Nov) 6.94 30.68 (J~1) 13.98 (Dec) 18.42 21.64 (Dec) 18.18 (Jan) 20.50 1971 6.79 (AuS) 5.03 (Jan) 5.79 16.02 (~y) 11.85 (Oct) 13.55 32.31 (Jun) 22.01 (Jan) 21.31 • 1912 8.34 (Aug) 5.14 (Jan) 6.52 21.08 (Dec) 12.~8 (Jan) 16.40 21.84 (Apr) 22.34 (Dec) 25.35 1973 9.17 (Apr) 6.08 (Jan) 7.64 32.17 (May) . 20.97 (Jan) 26.03 26.33, (Jlln) 22.33 (Feb) 23.43 Source: BNF .,, ANNEX 12 Page 25 Table 10: TRUCKING CHARGES, 1962,1972, 1973, 1974 Distance V 1972U U 2 From To 1962 1972 1962 1973 19?u~;/ e .... ~ KillS Cents (1) per ton/Km s. Pedro Sul.a Tegucigalpa 284 246 lU 9 7 8 Puerto Cortes 57 57 29 10 10 11 La Entrada 124 124 n.a n.a 13 15 ~amel lOla. 104 n.a n.a 16 18 Tegucigal;a. Cho1uteca 143 135 19 8 11 12 Dm:U.:1 109 108 20 13 13 15 Comqagua 102· . 82 17 13 13 16 Juticalpa 195 195 17 10 10 14 Catacamas 272 272 n.a n.a 8 II ."JiI BNF, La Comerc1al.1zacion de Granos Basicos. Y BNF, Cereals Division. Table 11 a BNF GRAIN STORAGE CAPACITY. CUB.RENT AND PLANNED Actual tons ., . Average Turnover 1968-1972 Planned ,!Xpansion -or Reduction tons Actual rlus planned. tons Teg:ucigalpa Cerro de Hule 2.. 273 0.8 2,21) Terminal Kennedy 14,)00 0.9 14,300 Miraflores 4,.$45 n.a. 4,545 Choluteca 714 0.6 300 1,014 Comayagua 1,164 1.0 1,164 Juticalpa 473 2.7 4,140 . 4,61) Catacamas 250 1.3 250 Danlr 664 1.3 4,140 4,B04 El Porvenir )00 n.a. )00 r San Pedro Sula Silo 14,300 1.21/ 14,300 Warehouse 2,721 1.0 2,721 Puerto CortEs 682 1.3 682 Tela 623 0.1 i\ 62) La Entrada )00 0.3 )00 600 Quimistin El Negrito )00 )00 0.0 0.3 -'00 00 )00 Olanchito 47) 0.5 1 1.1) j Cuyamel 211 0.0 211 ! I El Triunfo 300 0.0 -)00 00 Tocoa en Valle del Aguin 4,140 lt~llill ~ TOTAL 4lt~965 12,,420 51,)85 ____ ==D===~~=_~=~ ••R••••••• ======g========a===~=~===========a=============;========;=====_ v· 1972 Source: BNF ll~ 1\)11-' 0'>1\) ANNEX 12 Page 21 fable '12: BBP Gra1D. Salas Prices, lriholesale ud.'BetaiJ., !:fa7 1974 Price to: Product WhoJ.esaler Retail.er Consumer II/e".it o equ:ivalent cwt Ma:lze 9.$0 9.68 il.OO Red Beans 28.00 .30.80 .35.00 Black Beans 23.00 24.64 28.00 Rice .30.00 - 3,.00 .30.80 - .3,.20 35.00 - lJ.O .00 Source: BNF , ANNEX 12 Figure. 1: Livestock and }feat Marketing St:ncture '. '- '. PRODUCER MEAT PROCESSORS - EXPORT , -' '" \ ,........_...&.oio ------r t 'ltmLIC ~OB:rs HABKETS I I,. ANNEX 12 Figure Z: Basic Grains Marketing Structure PRODUCERS ~------------------~~ ; ~------------------~ f--_ _ _ _~I , i-----.....;li~--- WHOLESALER ". '-. . ! i LOCAL i .. \ 1· INTEBHEDIARY 1.\ r I 1 MERCHANT .. . t I - I I V' J. " ,., .~ I I I I EXPORT HABlE': I i II N F . .' . ~ , l . -PUBLIC !WUCU : ~ RE"J:AII.ERS I I .. - ., -. -- ' . .. .. ... . . - . ,If . CONSUMERS .. (:: I ANNEX 12 Figure 3: . Domestic Vegetable and Fruit Marketing Structure PRODUCERS • I I '. ! I WBOLESALEltS FOOD AND LOCAL HERCHAN'tS I PROCESSORS It • I ; . t __________,;-.__ i~-----.-~ "'. . \1 I PUBLIC MA.IUCET ARD' RlttAILERS I , I ! I I I : . . I I . • • I . . ·1 , I . I J '!t . I ; J -j CONstnntRS • , I } - ...--' . ANNEX 12 Appendix Page 1 PRODUCTION? CONSUMPTION AND PRICE PArrEBNS FOR MAJOR FARM PRODUCTS 1. This Appendix provides background data on recent price patterns and production and consumption trends for important farm products. Basic Grains 2. Basic grains are the main products of low income farmers, and their principal food. They account for the largest part of agricul ture r S marketed output, aDd are basic in the urban diet. Government pricing and marketing programs for these crops are therefore important. 3. The production of maize, rice, beans and sorghum varies consider ably from year 1:0 year. Fram 1969 to 1971, production increased for maize and rice but beans gradually declined.. ··The year 1972 was one of drought, and in 1971-72, maue production fell by 20%, rice output by 28%, beans by 9% and sorghum by 27%. Substantially higher prices for basic grains re sulted. . 4~ --. The production of maize and beans is widely dis tributed. 11 A substaDtia! part of both maize and bean production (23%) comes from-the Depa.rta:aaanto de Olanc.ho. Other important production areas for maize include the acrthern areas of Atlantida (8%), the acrthwestern areas of Santa. Barbara (8%), ad Copan (10%). Areas sboving significant amounts of bean production illclucie Copan (12%), ~es (6%), n Parai.so (13%), and Francisco Marazan (12%) II the latter two 1D. the Cetra! region. S. The regional distribution of co11SUlll'ption of basic grains in 1973 is ahowa. 1D. a table at the aDd. of this Annex. Estimates of a:aima] con sumpt1.on are 67,800 'COD8 Y fot:' 1IIa:1:e a:ad. ZS, 500 COlIS of soqh1.Dll for 1973, wb.i.ch are 18% ad 48% of the total dema:ad. for the same period. 6. tice is produced ill the lforchen1 Coast and North Central Areas in Atla.ntida (13% of national output) II Colon (6%), Cortes (12%) II and Yoro (7%) II ad thet:'e is impor1:ant production in Olancho (10%). HDDduras has a overall deficit in rice and usually 1mports to cover requirements. 11 The regional data in this and the following paragraphs are drawn mainly from a fam sample survey done in 1971-72 by the BN!' to determine the f1n8Dcial ad storage requirements of a price stabU1%ation program. for basic graiDS. As DOted II weather coDditions were abnormal in this period, and the results of the survey, which is about the only source of informa tion on the grains market1:ag system, have to be interpreted with care. 1:1 The figure of 67,800 tons 1IU!-y be high. ANNEX 12 Apperrd.ix 1 Page 2 7. . ... SoqhUlll (maicillo) is produced in the South, South West and Central regions which include as the major areas Choluteca (23%), Francisco Marazan (14%), Intibuca (12%), Valle (11%), and Lempira (17%). . 8. The total estimated requirements (human, animal, industrial and seed, plus the est:fmated losses and waste) suggest that Honduras may ex perlence oecasional shortages in basic grains. Any shortfall in output will lead to fairly immediate shortages, and affect diets and real income through higher prices. An annual growth in output of maize, beans and rice sub stantially higher than in recent years will be necessary if the estimated requirements in the mid-1980s are to be met from domestic sources. 9. There is a c:cmsiderable flow of basic grains among regions. The only Departments which are clearly surplus regions are Atlantida on the Nor1:hern Coast, Copan in the North West region, La paz of the central west ern region and Olanc:ho of the Central Eastern area. The regions in the North channel their supplies to San Pedro Sula in Cortes or Tegucigalpa in Franc::1sco Marazan. During periods of shortage, the general movement is from San Pedro Sula toward Tegucigalpa. In the case of beans, Olancho pro Vides s sign1ficant surplus, along with El Paraiso and Copan. Rice is pro duced in su:plus relative to regional consumption on the Northern Coast in Atlantida and Colon. (Yoro could be a surplus region in the future due to its favorable resource position.) Cortes produces significant amounts, as IIDted above, but lIIIlc:h' of this is consumed within the region. 10. The marketed proportion of production varies considerably by crop and region. For the Dation as a whole, approximately 32% of the maize and soqh\1lll, 52% of the beans, and 60% of the rice was marketed in the 1971-72 crop year. 101' small produeera, the comparable figures are much lower. For those farmers who produced. less than 50 cwt 111 t:he year, t:he amount: of maize marketed was about 10% for the first: harvest: and no greater than 20% in the second. For those whose production was in excess of 100 c:wt per year, the proportion of output: which was market:ed was in the 50% to 60% range. In the case of beans II the proport:ion marketed by small producers increased substantially with output. Farmers produeing more than 50 c:wt of beans marketed close to 90%; the same is true for rice. 11. As expeeted, in regions where the production of small farmers is important II the proportion of production which is marketed tends to fall. The South, Central and West regions have the lowest ratios for maize. The South and Central regions are also low for beans, and relatively low for maize. 12. A dominant feature of grain produetion is the annual variation in production; this contributes to the variation in producer, wholesale and retail prices. The available data show that the average annual wholesale ANNEX 12 Appendix Page 3 and. retail prices of maize t beans and rice have varied greatly since 1967. 1/ Seveml..periods of price increases have occurred since 1966. In 1966-67 the price ot maize increased by 42%; then declined in 1967-68 and 1968-69 by 7% and 18% respect1.vely. Prices rose again from. 1969 to 197Q by 24%, and increased in 1971-72 and 1972-73, follcwing a reduction of' 17% f t'01Il 1970 and 1971. 13. the price treD.cis for beaus have follcwed the maize pattern, al though the variatious have been even greater. For example, in relation to the previous year, price increases of 14% (1966-67), 30% (1969-70) t 15% (1971-72) and 61 % (1972-73) have occurred. Preliminary WOUlation indicates that the price of maize through mid-1974 increased by about 10% in comparison to the 1973 average, and that the price of beans declined slightly at the wholesale level relative to the 1973 average. 14. The price of rice has not followed the maize-beatlS pattern. Wholesale ancl retail prices of rice were relat1.vely stable from 1966 through 1970. In this period. the increase in prices, both wholesale and retail, was no greater than 15%, ancl in three of those years prices did not c:h.ange. Only in the period. 1970 to 1971 did wholesale and retail prices increase substaDt1.ally, 28% and. 27%, respectively. These increases reflected a gen eral scarcity of rice due to drought conditions in Central America and par d.cularly Nicaragua, which baa become an important supplier of rice to llDuduras, as well as higher prices prevaillns in international markets. Foll.ow1ng the h:l.gh wholesale rice prices in 1971, declines occurred in 1972 and. 1973; in early 1974 prices increased. 15. 'rba margin becweu. retail and. wholesale prices in recent years bu varied CODSiderahly. For maize, the margin has ranged. from. 11% to 2S%, baaed. upo1l DESAGBD data. If the data caD be taken at face value, in those periods in which prices :mse rapidly, aargins increased.. Between 1969 ancl 1971. in which per1ad prices increased rather substant1ally, the margin was 20% or greater. ih_ ~ol_ale prices fell,retailer margins were reduced, . . in lace 1971 when lIlargims for mai..:e fell to about 14% in compar.i.son to the earlier average m.argin of 22%. 16. '!ba1:'e 18 substantially less infozmation ava:Uable on producer prices, and. hence on price margims for wholesalers. The BNF grains study for 1971-72 shows margins of 11% for maize, 5% for rice and 11% for beaDS. -----" 11 Information on basic grains prices is limited, and. ouly wholesale and ret.a1l prices are collected in any systematic way. Farm gate prices are baaed upon spotty infonuation obtained from occasional surveys or, more recently, from the DESAGRO Office of the Ministry of Natural Resources, which has asked its extension agents to periodically report prices re ceived by producers. ANNEX 12 AppeDCi1x 1 Page 4 Recent JlESAGllO data obtained in the northern departments in 1974 suggest margins in the order of 18% for maize, 10% to 11 % for beans, and 18% to 25% for rice. 17. !he gross marketing margins for each of the basic grains, while variable between years and within years, appear to range becween 25% to 35%. The 1971-72 sample survey shows margins of 25% to 30% for maize and beans, slightly above 30% for sorghUlll, and 16% for rice. The DESAGRO price information for 1974 inclicates maize and bean margins of 25% to 30%, and 20% to 25% for rice. 18. The general view among Government marketing officials is that the margins are fairly wide. In any c:.ase, it is clear that the margins change over time. And, of course, the yearly average prices and marketing margins do not show the significant price changes which occur wi thin the year. !he monthly high price in the year averages about 1.5 times the monthly low price for maize and beans, and about 1.2 for rice, according to BNF data. 1/ It is this seasonal variation which the price stabilization program is de- signed to reduce. 19. The high (wholesale) maize price usually occurs in August and the low in December or January. The high (wholesale) price for beans occurs in May, June or July and. the low in Decembel:' or January. The high for rice has occ:.urrecl in several months due to the effect of imported I:'ice supplies, but the low usually is in December or January and. the overall seasonal variation has not been very great. There has been no apparent change in recent years in the seasonal variabiUty in priCes of basic grains; the seasonality has c:.ontimled to be substantial. Fruits and Vegetables 20. With the sception of bananas, the per capi ta consumption of fruits and vasetables is very low. (The per capita consumption of bananas is in excess of 100 kg per year.) The consumption of tomatoes and onions was less than 1 kg perpersou per year in the period 1970 to 1972. Cabbage is c:.onsUllled. at a rate of about 2 kg pel:' yeal:', and avocados about the same. Approx:1:mately 6 kg of oranges are consumed, according to estimates of _alNSUPI.AN. 2/ 21. The consumption of fruits and vegetables is highest in Tegucigalpa and. San Pedro Sula, where per capita income are the highest. The amount of industrial processing is a significant 75% of the total output of tomatoes (1970-72); there is one firm. in processing; it is now expanding, and is es tablishing a major p1:Oduction-p1:Ocessing center in the Comayagua Valley. JJ DESAGIO data show roughly the same variation. Y lAO estimates an annual average consumption of 15 kg per capita for 1964-66. ANNEX 12 Appendix 1 Page 5 22. :'. The quality of fruits and vegetables marketed in urban centers is low, showing visible deterioration due to handling and transport.ing. Toma toes are a good illustration. There are llumerous varieties, sizes and qual ities of tomatoes present in the public markets. They are sold in small lots and the street vendor is an important part of the marketing scructure. Tomatoes move through four basic channels - wholesalers, truckers, retail ers and a processing company. Previous to the establishment of the main processing fim in 1971, producers conducted roughly 25% of their transac tions with wholesalers, truckers and retailers; 60%, 93%, and 50%, respec tively, occurred at the farm gate, with the balance being sold in local markets. The area distribution is roughly 70% for Tegucigalpa, 20% for San Pedro Sula, and the remainder for local consumpcion and the smaller towns. 23. Tomato prices vary a great deal during the year. The average minimum price received by the farmer for the period 1971-72 was L 1.50 per box at the farm and L 1.56 per box in the market. The average maximum price for the same period was L 2. 15 at the farm and L 2.92 aC markec. Prices at the farm ranged fram L 0.50 per box to L 7.00. (Correspondingly, reca1l prices are relatively volacile. The average aunual recail price per pound of tomatoes for 1971, 1972 and 1973 for Tegucigalpa has been, respec tively, L 0.31,. L 0.50 and. L 0.24. The ngh monthly retail price has been as much as 2.5 t:imes the low monthly price.) 24. 01:Wn1 producers, mainly in the Comayagua Valley, sell roughly one-half of their output at the farm and the remainder at the urban markets. Of the latter transactions, about 70% are with wholesalers and che remainder with retailers. When transactions take place at the farm, 40% is with wholesalers, 19% with truckers and. 40% with reca1lers. The latcer are im po1:1:ant direct buyers because of the proximity of the production region and. the consumpCion centers, and. the relatively adequate road syscem. 25. the greatest proportion of onion production (65%) is marketed in Teguc1galpa, wich a part: being re-sbipped Co other cities, partic:u.larly to the South and West. In 1971-12, on the average, wholesale prices ranged fram roughly L 30 per carga (1 carga • 300 manos • 200 lbs) to about L 90 per carga (these are equivalent to L 0.015 and L 0.45 per lb). Wholesale prices in March 1974 in the Northem region were around L 100 to L 110 per carga. 26. Other vegetables and fruits, such as cabbage and -liiID.ioes-, are of some impo1:1:ance. Quality is generally higher and mare uniform than for products such as tomatoes, which need careful handling. The marketing sys tem for these products is similar to that for tomatoes and onions, al chough DO systematic study has been made. ANNEX 12 ApPeDdix 1 Page 6 27. '" The Goverrmtent baa not beeD active in improving vegetable and fruit marketing. Through varietal selection~ better handling. more price information, and marginal shifts in planting dates, it appears possible to reduce physical losses, price seasonal1ties~ and marketing margins, and in crease demand. Beef, Pork, PoultIYz and M1lk 28. The per capita consumption of beef, pork, and poultry, is rela tively law. It appears that annual beef consumption diminished in the 1964-72 period (from 7 to 5.6 kg per capita); pork fell from 5.6 to 3.9 kg. jJ Per capita poultry consumption increased from 1.6 to 2.4 kg in the same period. jJ 29. Beef is marketed through two channels, as noted above. The first is export-oriented, with IDOst of the meat being processed, primarily for the U.S. market. The second channel includes the large number of small slaughtering facilities widely scattered. throughout the country; the beef is distributed by numerous inte%'1llediaries to the local public 1Il1lrkets and reta1.l outlets. 30. The export-oriented. flow has grown steadily in recent years, and 1D 1969 lIIOre thaD 50% of the cattle slaughter was for foreigD. markets. 21 By 1974. apprax.imately 65% of the cattle slaughter (in terms of head) was in a:port plants; of this, the law requires that 10% of product weight must be offered for local collSUl:ll:ption. (These data exclude slaughter outside the legal channels, estimated by the Central Bank to 1Il1lke up about 10% or DIOre of cattle 1lUIIlbers slaughtered for domestic consumption.) 31. The exporters market domestically through their own retaU outlets or public markets in the pr1nc:!.pal urban centers. To meet the 10% quota, the exporters are sa:!.d to allocate the low quality cUts as well as offals. 32. In tums of product weight, the proportion of total beef produc d.on destined. for export is slightly h:!.gher than the comparable head. figure, as the sl.mghter weight for export cattle 18 h:!.gher than' for cattle destined for the local market. 33. The domestic prices of beef are determined. primarily by eX1:ernal demand; 1D com:pariaon with neighboring countries, the prices are not excess. ive1y hi3h. In 1971, the average price of beef in Tegucigalpa was L 1.12 per pound, with the high month registering L 1.19 and the low L 1.04. In 1973, the average price of beef in Tegucigalpa was L 1.30 per pound, with a 11 PAO data for 1964-66, and COHSUPLAN data for 1970-72. 2/ Secretaria de Economia, Anuario Eatadistico, 1972. ANNEX 12 Appendix 1 Page 7 low of tl.23 and a high of L 1.38. In May 1974 in Tegucigalpa, loin re tailed at L 1.07 per pound, a rib cut at L 1.10, stewing .meat at L 1.00, and soup bone at L 0.40. 34. Pork is pYOduced solely for domestic consumption, mainly by small farmers who market through municipal or private slaughter houses. Approx 1mately one-half of the pig carcass weight is fat; this is used as lard, which is preferred to vegetable oils. Pork is not a preferred meat, al though its price was about the same or slightly lower than the average price of beef over the period 1971-73. In Tegucigalpa, the price of pork in 1971 was L 1.14 per pound; in 1972, L 1.17, and in 1973, L 1.30. Ex cluding fa1:, pork output is usually about one-third to one-half of the amount of beef reaching the domestic market. 3S. Pork produc1:iO'l1 has not increased. at a significant rate in recent years, but pork has gone up as a proportion of total meat consumption; this reflects the trend in the flow of beef into export markets. 36. The per capita annual consumption of pOUltry increased in the period 1964-66 to 1970-72 from. 1.6 kg to 2.4 kg. Poultry is favorably priced in comparison to pork and beef. In Tegucigalpa, the price of chicken per pound. was 91% of t:he price of beef in 1971; it feU to 8S% in 1973. In 1973 aDd early 1974 the price of frozen chickens remained. constant at L 1.10 per pouuci, primarily due to the increase in out:put of larse poultry pro ducers in the San Pedro Sul.a Region. Poultry marketing is developing along the lines desc:r1bed. above for expor"ted. beef. Integrat:ed. productiO'l1 and marke1:ing firms are expanding in a way which should expand the market, jointly with supply. Meanwhile 1nd.1v1dual producers and intermediaries, including st:reet vendors, sell dressed poultry 1.11 small amounts or 0'11 a live weight basis in public markets in the traditional fashion. 37. Althau.gh beef, pork and poult:Ty are inc.lwied in the Ust of items tha1: in the past have been subject 1:0 general price cou1:rols, these controls are 120t believed to have been effective. . 38. Governmen1: plays a major role in 1:he processing and marke1:1ng of mlk. The two processing plants, one in San Pedro Sula and one in Tegucigalpa, are curren1:ly owned, all or in part, by the BNF. Fluid milk consump1:ion is low; in Tegucigalpa it is estimated at about 20,000 liters per clay. Non pasteurized. milk accounts for a major part of total consumptiO'l1, although the aDlOun1: is 120t k:a.own. As already noted, milk prices are controlled, and. from the early 1960s to 1973 were maintained at L 0.10 per liter to farmers, with the consumer paying L 0.40 per liter. In 1973, prices were raised to L 0.30 per li1:er to the producer and to L 0.60 to the consumer. 39. Milk imports have increased. Significantly in the last decade. In the period 1960-62, the aml'ual average import of milk (powdered) was valued. at about L 1.8 mUion (in constant 1966 prices). In the period 1970-72, ANNEX 12 ~pendiX 1 age 8 the annual value of milk imports averaged almost L 4 million. Because of the la~k·of incentive to producers, and the increase in world prices of milk which occurred in 1973 and 1974, maintenance of the price .of L 0.40 per Uter to the consumer would have involved an increasing subsidy and losses by the public sector and the lIlilk procel!sing plants; hence the price adjust ment noted. in the preceding paragraph. Vsetable Oils 40. Per capita annual cons1JDll)tion of edible vegetable oils is esti mated at 4.4 kg for 1970-72, and is expected to increase to 5 kg by 1980. The domestic production of oil crops has been inadequate to satisfy the de mand. Domestic processing capacity is adequate volume-wise. In recent years, due to the shortage of domestic cottonseed, Honduras has imported cottonseed or cottonseed oil from Nicaragua and the United States~ The United States export statistics show that in 1971 and in 1912 approximately 1,000 short tons of cottonseed oil were exported to Honduras. The value of vegetable oil imports has increased substantially over the last decade. At 1966 prices, the annual value of imports of oils increased from L 83, 000 in 1960-62 to more than L 800,000 in the period 1970-12, according to CONStJPLAN. 41 • Prices of fats and ails have been controlled recently, and. the processors allege operating losses because of the higher prices being paid for 1mparted raw materials. The problem of vegetable oil and raw materials pricing will be brought to a head by the African palm enterprise being de veloped by the Govermaent in the Aguan valley, a major settlement area under the qrariaD rUODl program.. Sugar 42. The annual per capita CODSumption of sugar increased from. 15 kg in 1964-66 to over.18 kg in 1972, and a continuing uptrend is projected for the 1970.. This, along with the proj ected rapid rate of increase in population, meaDS that output will have to be expanded sharply if consumption is to be met from. local production. 43. Sugar prices appear to have been effectively controlled. In 1970-72, retail. prices were aroUDd. L 0.20 per pound, and into m:Ld-1974 they had not changed mw:h. lUlls received around L 0.8 per pound in May 1974, sharply less than the price being offered in international markets. 44. Producers are paid according to the sugar yield of the cane. For cane yielding 160 pounds of sugar per ton, the producer is paid L 10.5 per ton. At 180 pounda per tan yield, the price is L 12.5 per ton, and for each pound of yield above 180 the producer receives a premium of L 0.10. lor a yield of 190 pounds per ton, the producer thus receives a gross price per tan of cane of L 13.5. In 1973, the major cane producer had a yield of about 180 pounds sugar per ton of cane. ANNEX 12 ~Pendiz 1 age 9 4S. In 1972, Honduras consumed 54,000 tons of sugar, equivalent to about 7S% of production. About 12,000 tons were exported to the United States, and about 1,000 tons to other markets. The remaining 6.5 thousand tons were retained in stocks. ANNEX 13 HONDURAS AGlUCDLTtJ'RAL/lWltAL SECTOR SURVEY PUlSUC FINANCE FOR lWl.W. DEVELOPMENT Table of Conceuts Paragraph No. Public F1naDce Trends 3-8 Public Expenciicures 1D Agric.ulcure 9-19 FuCure Development F1naDc.e for AgricvJ.c:ure 20-29 Judgments 30-32 Table 1 cancral GoverDmaut: Operations, 1965 aDd 1969-74 2 Operat.ioDs of INA, 1965 aa4 1970-72 3 BudsaCed. !xpeDd.icures of the Central GovernmenC aDd of the !UDisC1:'y of Nacur&! Resources by Icoaca:1c Classification, 1965-66 and 1972-74 4 Actual' Public Sector Invat:meD.c as a Percenc - " , of Plaanad I:gestmeDC, 1965-70 Budgec Cap1c:al EzpeaclituJ:es by Ha:1D Subseccor aad Source of FtaaDce p '1972 744 0 6 A Capcr:isoD. of H1D1atty of Agri.cUlture Izpeadic:ures 1zt. the Budsec a:a.d. the Plau, 1974 7 Plaanad lzpeacl1c:ures 1zt. ASricu1 tll:r.~ by So~~~,. _ .. _ of F:lnaDc.,. Total aDd Agrariaa. RefOftl, 1974-7JL 8 Public Sec.cor Ac.couacs ProjecCiODS, 1974478 9 Ix'ternal LeDdi:Dg CO the Agricultural Sector, 1966-1974 Apper&d.1x 1 Scru.ec:ure of 'lazes Affectlns- the Aaricultural Seccor 2 x... of Agri.cvJ.cural IDcu.civea 3 Valu.. of Imporc:s, Import' Dud.es c:aUecced and Ducies as Percentage of Value, 1971 ANNEX 13 Page 1 PUBLIC FINANCE FOB. RURAL DEVELOPMENT 1. the publ.1c sector in Honduras consists of the General Govarmnent c:carprising the Central Govar:ament, 1Dt1Dic:ipalities and autonmous irLstitutions aDd. seven public enterprises. WithiD the General Government the operations of the Central Govamment are by far the mos t important: thus in 1912 the current revenues and expenditures of the Central Gover:ament accounted for about So-85% of the total. Mimic:ipal revenues account for only about 7% of the consolidated revenues of the General Gover:ament; municipalities finance their c:ur't'et1t expenditures from their own revenues, and receive very small capital grants f:z:om the Central Government. Several of the autonomous institutions depend heavily on transfers, mostly fro1ll the Central Gover:ament. Public enterprises finance their current expenditures fr01l1 their ow revenues; occasionally, some receive small capital grants fro1ll the Central Govermnent. 2. 'the lIlost important public sector agencies dealing with agriculture are the Ministry of Agriculture (UINAG) 1/ at the Central Govarnment level, and the National Agrarian Institute (INA), an autonomous institution which depends 1ILBiDly on trans fars £rem the Cea.tral Gover:ament. Furthermore, the newest of the public enterprises, the Eba.dur.m Forest Corporation (COBDEFOB.), created. in January 1914 to ma:aage forest resource development, is ezpected tD make large transfers in the future tD the General Govar=ent as well as to the Gcmn:nment-owne.d National De:velop1!18nt Bank (BANAFOH) for agricultural and other basic developtnea.t purposes. In addition, the Central Bank and BANAlOH both provide credit to the agric.ultural sector a:a.d. lWiAlOH is reapon s1ble for price stabilization of basic grains. PtJ'BLIC p'mARCE 'I'lt!NDS 3. The :i:mpOrtmce of the public sector in the Eba.duran economy bas grown c:onsidarably oftr the lut few years, but at a very uneven and fluctua ting pace with 1969 and 1910 as peak upansion yeam. Current account trans actions ezpauded most rapidly ciur:fJ:2.g those two ye&m; c:apit:.al expenditures mare thaD. douJiled. during 1969-70 buc decl1ned sharply aftezwards. Between 1965 a:a.d. the present thee was c:oasiderable variation in the public finandal picture, gea.rally a reflection of developments at the Central Gover:ament level. Only in 1969-70 was the overall defidt siga1ficmtly influencaci by the defidt of the public enterprises and the latter was fina:a.ced 1l1OStly by external sources • . 11 Up CD the present 1c::town as Ministry of Natural aesources t 'but 'being reorgaaized aad renamed. ANNEX 13 Page 2 4. Untll 1968, currant savings of the Central Govermnent financed a substantial part of capital expenditures and the deficit, which was small, was genel:ally f1naDced by exte:ual sources. Central GOvernment finances dated.orated sharply start1n8 in 1969, i:aitially because of the conflict with ! l Salvador at: a t1me whan dGm.estic counterpart requi'ramants for foreign f1:IaDced davelDpment projects increased substantially, and later because the lIDzmal growth of current expenditures outstripped the current revenues. Between 1969 and 1972 Centr.a1 Govermnant saviDgs financed on the average only 20% of capital expenditures (Table 1). The deficit was extremaly la%ge in 1970 cd, together with a simultaneous sharp inCrease in private expendi tures during that year, led to rapid import growth and severe bal.ance of payments problems. Subsequea.tly, the Govermnant embarked upon a stabiliza tion program a:1med pr:1mar.Uy at reducing the overall budget deficit and improving the nat intenatic:n::aal. reserve position. Both a:1ms were achieved. Net internatianal reserves recovered quickly from an amount of about two weeks of imports at the and of 1970 to about 6-7 weeks of imports by December 1972. the growth of curreat GpaDditures of the Central Government, however, exceeded currant revenue growch during 1971 and 1972 and the reduction 1rL the budget deficit was the result of a sharp drop in capital expenditures. s. there have bee recct cbaDges in the public financial situation. The ua.ification of the legislative and executive branches in the new adm:fnis trat10D lad the effect of al.1:m1nating certain budgetary expaDdituras while otbel:' cw:'reDt expend:1tu.re.s were kept under control; cun:'8SI.C expaad:1tun8 aceuall.y declined in 1973. Boaa1123 aport growth, a general aconemic recovery mel better taz administration produced a 14% growth in current revenues and Central. Gove:rDllant cu.rrenc SIIV1ngs quadrupled over 1972. On the other band, wh:U. f1zad capital. f01:lDation grew fa:idy n.pid.ly dur.iDg 1973 it was still less thaD ill 1970-71. D1sbursemea.ts em fore:1gn loans dacllned for the third CDDSecutive year mel fall. fu below expected. levels. 'rhe cont1n.wad lGw lavel of Central Govat:mUDt illvestZll8l1t was clea.rly DOt the ruu1t of a lack of funds bue rather of a lack of uev proj ects and of slow uacut10n of existing programs •. 6. The ralad.vely healthy f1nmc1al situation of the Central GCMn:DD,ent cond.:D.ued through 1974. Cw:ren.t revenues increased by about 11%: incCllle t:az ravaa.ues alone grew by 35% over the preceding year due CD cond.n:uad improve mats in taz .dm1ni st%ation cd h:i.gh income growth 1rL 1973 (income tax 18 lIrt1ed OIl the prl.or year's incaae); other tax revenues grew by ODly 4.1%. Cun'eIlt expenditures grew at a slightly mrs mpid mte thaD rs~nues cd savings remained high. Hast aigaificctly, a sizeable incr. .e in Cantral GoVU'l:llUDt capital upenci1turas was ind1cat:iva of an improvemat in the GovaJ:Dllent's capacity CD exe.c:ut:e its investment programs. 7. 1974 also marked. the initiation of the Govermn&nt's 1974-78 Development Plan, md new tax measures were being considered to prov.:Lde the Decuaary financing. The present inelasticity of the tax system.. orl.ginat1ng IN'NEI 13 Page 3 in the large proportion of specific taxes, does not permit the generation of sufficient resources for implementation of the Plan•. The apparent s01.Dld fiscal ~.i~atioD of the Central Government during the las t couple of years . is a raUll: DOt only of the improvements in tax administration and collections but also of the inadequate growth of current expenditures. (a long overaue salary increase for public employees is a vital element for the successful implementation of the Pl.aD.) and of the delays in capital expenditures. One important DeW tax measure introduced in 1IIid-1974 is the banana export tax of $0.2.5 per boz, to be raised in subsequent years by $0.05 per year until $0.50 per box is reached. The J!l8W tax vas ezpected to yield about L10 m:Ullon in 1974 and about L30 million in 1975. 8. Hurricane lifi, which on September 19-20, 1974 inflicted severe damage to cro-ps and infrastructure along the DOrth coast of Hcnduras, had a l1m1ted effect on Govermnent finances in 1974: current revenues were slightly below expected levels (actual revenues from. the new banaaa tax ware admated at L 7.5 mUlion versus the expected L 10 million). and addi t1onal. capital (reconsttuction) expenditures estimated at about L 12 milllon - took place. Bawever, during 1975-76 especially, the impact of the hurricane on the fiscal situation will be severe;. revenues will be down considerably especially as a rault of the losses in banana prodUCti011 and ezports and of a lower level of ecoDOlllic activity generally, while substantial reconstruction upend:Ltures w:f.ll be added ta the pla.n:ned development expenditures. Whereas t:kn:uluras has 1ILIID8ged ta mobilize substantial am.a1.Dlts of aciditional foreign assistance, the country I s inteut ta coutinue the exeCuti011 of the bulk of its .oripnal Development Plan (which was revised and ext:ended to 1979) will make the adGption of DeW revenue measures even IIX)re urgent. 9. It is difficult to detemi:ae past levels of expenditures in agri culture because of conflicting information, even from the same institution, mel the data presented below on actual expenditures are J!l8cessarily rough estimates. Both the H:l.Distry of Agriculture and INA engage in current and iDv'_t::rII8Dt ezpend1tures (the bulk of INA's dmaestic sources of revenue are tn:aafen from. the H:l.nistry); (BA'tlA.iOH has made large ilX'Iutllent u:pend:Lturea for silos, with USAID assistance; agricultural ilX'Iest:ment or currant expendi tures by other gOVU"DllleDt ageDCies «l)NS1lPl.AN, 11 Central. Bank) have be. aall in the past and, given the poor qualit:y of the data, will be 19nored. Apart from. these, traaafers for the capitalization of BANAFOM are a major public cpenditura for agriculture.: damatic: funds used for this purpose amounted to about L 4 million per year during the las t few years but are pl8Dl2ed ta increase dramatically in the near futura, as will be seen below. 11 COSSOPr.&R 1a the Natio'Dlll PlanniDg Office. , ANNEX 13 Page 4 10. Current expenditures by th~ Ministry of Agriculture amounted to .aDout L 8 million per y~C!~ during 1970-72; inaddit1on, L 3 million per year are transferred to INA; which is roughly equal to the latter's current expenditures (Table 2). Thus, public current expenditures in agriculture can be es t1mated at about L 11 million per year, which amounted to 5.3% of the total current expenditures (L. 207.2 million) of the General Government in 1972. Public investment expenditures in agriculture fluctuated considerably during the last few years reaching a peak in 1970-71, when the BANAFOM silos were being constructed. Expenditures on the s110s (total cost estimated at about L 9 million) are equally distributed between 1970 and 1971. INA's investment expenditures are shown in Table 2: L 1.9 million in each of 1970 and 1971 and L 0.2 million in 1972. Investment expenditures by the Ministry of Agriculture were es~ted by CONSUPLAN at L 3.3 and L 5.0 ~illion for 1970 and 1971 respectively; budget implementation data show an expenditure of L 0.3 mUlion in 1972. Thus, estimated public investment expenditures J total and agriculture (including BANAFOM) t for recent years are (from CONSUPLAN and mission es timates ) : Total Asriculture Asriculture L million-- --- % 1962 33.0 0.4 1.2 1965 23.9 1.9 8.0 1968 50.3 0.8 1.6 1970 93.8 9.7 10.3 1971 76.4 11.4 14.9 1972 59.4 0.5 0.8 11. The low level of public current expenditures in agriculture has existed throughout the last several years. Agriculture's share of total public current expenditures has tended to decline in the recent past, a trend which was continued in the 1974 bud&et for the Ministry of Agriculture (para 13). The erratic nature of investment expenditures may be attributed to the lumpiness of seae of the outlays, such as sUo coastruction, the lack of continuity in project prepara1:ion, and problems in execution of existing programs. The low level of funds allocated to agr1culture and the implemen tation problems associated w1th new iuves tment proj ecu are maj or bottlenecks' to agr1cultural development. 12. Wh11e the implementation record of public investment projects is generally poor, it is especially so in agriculture. A comparison of Table 1 (actual expenditures); and Table 3 (bud&eted expenditures) provides some insight concerning the execution record for the whole of the Central Govern ment for 1965, 1972 and 1973. (Data for 1974 are not strictly cOlll.parable because the actual expenditures during that year include a sizeable amount of emergency reconstruction outlays.) Actual current expenditures are slightly above the budgeted amounts; capital expenditures, however, have generally fallen short by a coasiderable margin. Fixed capital fomation alone was about 70% of planned levels on the average for those three years. AIINEX 13 Page 5 CONSUPLAN es timates that for the public sector as a whole and for the period 1965-70, actual investment expenditures ware 62.2% of plamled levels, with the agricultural sector showing the worst record at barely 35% (Table 4). 13. Although the total budget for the Ministry of Agrtculture almost doubled between 1972 and 1974 and agriculture's share in total Central Government budget expenditures rose fram 6.5% to 9.9% in that period, the apparent increased commitment of public resources to agriculture must be qualified in several ways. The 1972 budget for agriculture was extremely low and, when compared with the mid-1960s (Table 3), it is seen that the percentage of Central Government resources allocated to agriculture in 1974 did not increase much. Mare importantly, current expenditures budgeted for agriculture (for which the execution record is probably close to 100%) have declined strongly as a percentage of total current expenditures. The increase in the budget has taken place exclusively in the category of capital expendi tures where the past record of implementation has been very poor. Also, the 1974 budget is not strictly comparable to earlier years, as planned disburse ments on foreign loans for INA projects L 6,098,000) have for the first time been included as a capital transfer. Finally, almost 40% of the 1974 budget expenditures for agriculture were to be fiaanced with foreign funds; the share of domestic resources allocated to agriculture has varied little between 1972 and 1974. 14. The poor record of implementation of investment programs of both the Ministry of Agriculture and of INA can be illustrated by a brief review of the few major foreign financed programs. As can be seen in Table 5, apart from the annual transfer of L 3 1111111011 to INA, the transfer to BANA!'OH, and the "othern investment expenditures (mos tly some equipment and expendi tures related to forest programs), the Ministry of Agriculture programs for 1973 and 1974 contain a substantial foreign financial component. The 8D1:nmts disbursed as of December 31, 1974, together with other informadon on the loans illustrate the progress made in the execution of the investment program. 15. In irrigation, the only foreign-financed expenditure included in 1973 is the Nacaaae feasibility study financed by the Central Ameri.can Bank for Econaaic Integration (CABEI). This made good progress. About half of the L 900,000 was actually disbursed during 1973 and the remainder is included in the t-562,000 shown in the 1974 budget, which also includes some 8.DI)UD.ts from the Inter-American Development Bank (IDB) for other irrigation feasi bility studies. Information on actual disbursements during 1974 is not yet available. 16. In extension only one project is included in 1973, i.e., the largely foreign-financed (IDB) project for the development of experiment stations and extension services. In 1973, about L 560,000 was disbursed, or about 23% of the amount shown in the Budget. In 1974, several new projects in extension were included, mostly locally financed except for one with tJNDP assistance: no 1nfo'Illlation is available yet on the actual execution. As far as the IDB-financed proj ect is co~cerned about 65% of the amount shown ANNEX 13 Page 6 in the 1974 Budget was disbursed. Progress made in executing the IDB-financed proj ect has been extremely slow. The loan was originally signed in December 1971; the expiration date of January 2, 1975 was recently extended to January 2~ 1976. By December 31, 1974, only about 33% of the loan had been disbursed. One of the main obstacles appears to be the difficulty in getting consultants for the project, partly because of the low salaries being offered by the Government. 17. In animal health, no disbursements were made for the project during 1974, as the loan was signed only in December 1974. 18. The bulk of INA's fixed investment program during the last few years has been financed largely by a loan from IDB for the development of the Aguan Valley, Monja:ras-Buena Vista, and a few smaller projects. While the implemen tation period of the loan covers aU years, by the end of 1974 only about 50% of the loan had been disbursed while about 85% of the implementation period had passed. Disbursements during 1974 were about 43% of the amount shown in the budget. A major bottleneck appears to have been the difficulty of find ing qualified local technical personnel for the project. 19. Clearly, the execution of agricultural inves tmant programs has proven to be ~remely difficult. This is partly because of the shortage of teChnically trained people in the country aDd the low salaries offered by the Govenm:ent. While the 1974 Budget expressed the intention of the Govern ment to devote more resources to agricultural investment, problems of imple mentation made it impossible to reach this goal. Further1lX1re, the relative decline in funds being allocated to current expenditures in agriculture creates concern about the Gcrvermnent's ability to perform its functions effectively in the sector. FO'T1JRE DEVELOPMENT FINANCE FOR AGRICULnJRE 20. Followil1g lhu:l:icaue fif:i, the draft 1974-78 national development plan was replaced by a 1975-79 Development and Reconstruction Program to take into account the new situation nth respect to public finances, balance of payments and growth prospects. Much of the detail dealing rith agriculture was left out of the 1975-79 document, as the basic elements of the develop ment strategy for the sector remained unchanged. 21. The 1974-18 draft plan gives top priority to agricultural develop ment. The share of public current expenditures allocated to agriculture is projected at 9.5% on the average for the period, as opposed to 5.3% in 1972. Public investment expenditures in agriculture are projected at 8.1% of the total. Also, planned public sector transfers to BANAFOK are substantially larger than in the past. The draft plan data for agriculture are: ANNEX 13 Page 7 Current Investment Transfers to Expenditure Expenditure BANAFOH L million 1974 22.0 13.1 13.3 1975 26.0 13.9 19.1 1976 29.5 13.4 19.1 1977 32.1 14.5 16.3 1978 35.8 15.0 15.4 22. 'nle plan is essentially a general statement of medium-tem objectives. 'nle quantitative infomation presented, however, is not fully integrated in the budget preparation: thus, for example, several planned expenditures for agriculture for the initial year of the plan were tlDt incorporated in the 1974 budget. The financing of agr.f.cultural development, particularly agra r.f.an refo1:lll, has been made to depend almost exclusively on the surplus to be generated by COHDEFOR, the magnitude of which is still very uncertain. Also, the projected overall trends in public revenues and expenditures are generally unrealistic•. Finally, the major problems of project preparation and execution, encountered in the recent past, are 11Otdea1t with explicitly. 23. The compar.f.son of budget data with the draft plan data for agri culture for 1974 reveals some important differences in classification and definition as well as in content of expenditures. "Development II expenditures in the plan are also called "current" expenditures and as such are entered in the consolidated public sector accounts; thus, for example, over 90% of expenditures associated with the !DB-financed project to build experiment stations and expand the extension service are defined as development or current expenditures. At the same t:1me, proj ect data show that mare than 50% of the total is fixed capital fomation; furthermore, the budget defines all these expenditures as capital expenditures. In terms of differences in content between the budget and the plan, all current expenditure items in the budget (the ongoing operations of the Minist1:Y of Agriculture) appear to have been eliminated in the plan. while none of the plan's expenditures for agrarian refom. have been entered in the budget. S1m1lar.f.ties and differences between the budget and the plan are shown in Table 6. 24. The increased emphasis in the draft plan on agricultural develop ment is essentially in the fom of expenditures for agrar.f.an reform. As shCJWl1 in Table 7,1 mainly domestic finance is to be used for the refo1:lll, with this cQl.ing entirely from COHDEFOR.. This is also true of funds for the capitalization of BANAFOK, which is to provide credit to the agrar.f.an refom settlements. It is unclear at the present time whether COHDEFOR. will in fact be able to generate as large a surplus as projected in the plan. In any case, a much firmer commitment of financial resources to agriculture is required i f the prior.f.ty assigned to the sector is to become a reality. ANNEX 13 Page 8 25. The draft plan projections of the public sector accounts generally are unrealistic (Table 8). Current revenue estimates· for 1974 included a surplus ·for COHDEFOR equivalent to about 1.8% of GDP. Initial difficulties in marketing and a depressed market for lumber combined to make COHDEFOR's first year of operation considerably less profitable than expected. Prelim inary estimates indicate that COBDEFOR's net revenues in 1974 may not exceed the export taxes that would have been collected under the pre-COHDEFOR situation. On the other hand, the projected growth in overall tax revenues of the public sector between 1974 and 1978 amounts to additional revenues of about 1.5% of GDP by 1978. The tax system is fairly inelastic and alter native revenue projections suggest that the ratio of revenues to GDP between the present and 1978 may remain roughly constant, even if continued improve ments in tax administration take place. 1/ Moreover, the latter projections included estimates for woad export tax collections and assumed a considerably lower rate of inflation than is now anticipated, which will, given the large share of specific taxes in the system, tend to lead to a declining ratio of tax revenue to GDP. In other words, current revenue proj ections in the plan may overestimate revenues by at least 1 .5% of GDP by 1978 and possibly by up to 3.5% of GDP, unless COHDEFOR actually generates a surplus of about 2% of GDP as foreseen in the plan. 26. The draft plan projects a slight decline in current expenditures over time as a percentage of GDP. Historically, current expendi tures have grown considerably faster than GDP and a projected growth at a rate lower than the GDP growth rate appears incompatible with the development objectives of the Government. Thus, for example, current expenditures for education, a major budget item, is projected to grow at a lower rate than GOP, in contrast to the considerably faster rate implied in the education strategy presented in the appraisal of the URD education project for Honduras. 2/ Probably cunent expenditures, in tems of GDP, may be expected to be at least one percentage point larger by 1978 than predicted in the draft plan, even assum ing a minimal growth consistent with the development programs to be carried out. '!hus, more realistic revenue and expenditure projections for 1978 would estimate public current savings in relation to GDP at about 4.5 percentage points less than shown in Table a, or, in effect, almost no savings, excluding the potential surplus to be generated by COHDEFOR. 27. This suggests that more revenue will be needed if the objectives of the development plan are to be met. There appears to be a considerable scope for raising additional revenues without affecting private savings severely. The ratio of Central Government revenue to GDP is qui te low in comparison with other cowtries at a similar state of development. The sales tax, now at 3%, could be raised. Revaluation of properties and raising the current 11 IBRD, The Economic Position and Prospects of Boa.duras, April 1974. 2/ IBRD, Appraisal of an Education Project in Honduras, December 1973. ANNEX 13 Page 9 low tax rates in the larger urban areas could produce substantial revenue quickly. Famers do not now pay taxes on petroleum products used in agricul ture; this exemption might be eliminated. Indeed; the entire structure of taxes and subsidies in agriculture are in need of review, both from the point of view of raising revenue and also creating pressures for better resource use and production expansion. . 28. The tax burden on agriculture is not high (Appendices 1 and 2). For all practical purposes, there is no agricultural land tax (the progressive tax on uncultivated or idle land yielded L 11,700 in 1972). A tax on all fam land could yield substantial revenues, using a self-assessment system and a reasonable tax rate pending the completion of the ongoing cadastral and titling work (Annex 4). The Agricultural Incentives Law (Appendix 2) provides liberally for duty-free importation of capital goods; this might be reviewed. 29. The record of the present Government to date suggests a capacity and willingness to tap appropriate sources of additional revenue to finance the development plan. Decree 102 of June 1974 created a tax registration system for all persons who earn income; automobile duties were increased recently; and other measures are being considered, such as increases in real estate and consumption taxes, and the elimination of tax exemptions on divi dends. The recently introduced banana tax is another case in point. 11 30. The increased expenditures for agriculture contemplated in the draft plan (para 21) are well within the potential financial capacity of the public sector to meet. Hawever, these expenditures need not and should not be made a function of the financial perfomance of COHDEFOR. As noted above. COHDEFOR earnings are likely to fluctuate, as are its requirements for invest ment and operating funds. To eamark its surplus for specific purposes is not consistent with effective programming for forestry and rural development, or with sound budgeting practices. 11 The potential future contribution of this tax is difficult to forecast. Ecuador, a major banana producer, does not tax bananas. This, along with the probability of a continuing heavy supply of bananas on the world market, means that relatively low banana prices may be expected (A:a.aex 2). The result could be a reduction in the market share of BDnduras. and declining tax revenues, or, al ternatively, a fall in the return to independent producers to a point which would require that banana tax revenues be used at least in part, as subsidies to sustain production levels. ANNEX 13 Page 10 31 • For the medium term, addi tional revenues will be needed to finance development. This is partly because the Government recognizes that it will have to allot a larger share of its resources to the rural sector than in the past if its declared emphasis on agriculture is to become a reality. However, other sectors will continue to require resources, and a larger total public financial capacity will become necessary to meet these needs along with those of the rural community. Another reason for an expanding revenue requirement in the medium term is that the rate of increase in public expenditures for agriculture cannot be large in the year or two ahead because project and program preparation and implementation capability is now extremely limited. jJ It is hoped, however, that this capability can be rapidly improved; if and when this occurs, the desirable level of public outlays for rural development will increase sharply. This will generate a need for more Government revenue. 32. Long-term planning to meet the growing needs for revenue should be intensified. As of now, the-incremental requirements appear to be quite manageable, both in terms of the scope for tax adjustments and the apparent willingness to take the required steps. The agricultural sector itself should be called upon to make a substantial additional contribution. ------~-------------- 11 Tb:Ls point is discussed in the main report. Several illustradollS of th.. p'EOblem are of interest in the context of this Annex. First, the BANAP'OM has extreme difficulty in holding its -"loan delinquency -rate~'-- - reasoa.able-ievels.--AS~of -ia-ie-'f914 -8bout-ath1.rd orIts portfOll,,---- was either delinquent or had been rescheduled. Althou.gh Hurricane Fifi explains a part of the delinquency, the problem has been a persistent one. Second. the post-hurricane emergency programs in agriculture encountered severe administrative difficulties. Third, a perlod of 10.6 years will be required to disburse the existing agrlcultural loans of AID. IDB. aDd IBRD if the average disbursement rate of the last three years continues; this estimate (Table 9) includes the agrlcultural portion of the recently authorized AID reconstruction loan. but excludes the AID eadaster loan. ------------- ANNEX 13 Page II Table 1: CEIITRAL GOVERNMENT OPERATIUNS, 1965 and 1969-74 1965 1969 1970 1971 12E 1973 197L.!/ ----------~-------L million cur.rant-----------~--~--~ Current revenue 110.4 155.9 177 .8 181.0 191.5 218.1 2L.2 .7 "Tax revenue 98.2 141.8 m:4 I'b'I:3 IOE:I 194.4 ~ Taxes on inc orne and property 18.5 44.3 44.5 44.0 42.6 49.1 ' 67.4 Taxes on foreign trade 46.3 44.8 50.9 54.4 57.7 67.6 72.2 . (Import duties) (41.0 ) (39.2) (45.1). (48.1) (51.7) (56.2) (64.8 ) (Export taxes) ( 5.3) ( 5.6) ( 5.8) ( 6.3) ( 6.0) (11.4) ( 7.4) Taxes on domestic transactions 33.4 52.7 64.0 62.9 67.8 77 .1 78.9 ~on-tax revenue and transfers 12.2 14.1 18.4 19.7 23.4 23.7 24.2 • Current exoendi ture 93.6 154.3 157.0 163.5 182.0 179-3 202.L. Wages, salaries, goods & services '7'3.4 124.5 126.9 133.0 146.3 I4r:3 158.5 Interest 3.6 5.4 6.9 9.7 12.6 14.2 16.0 Transfers 16.6 24.4 23.2 20.8 23.1 23.8 27.9 Current account surplus 16.8 1.6 20.8 17.5 --2.:.2. - 38.8 40.3 Carita! e!Eenditure ixea capital formation ll.t.1 12.7 ~ 3 • 86.6 49.7 62.6 46.2 ~8.2 37.0 ~8.0 43.4 ~/ 7.7 Financial investment 0.1 0.2 0.4 0.2 0.5 0.2 Transfers 4.5 11.8 36.5 16.2 ·10.7 14.4 27·3 Overall Deficit -0.5 -49.0 -65.8 4r.[ -45.1 -38.7 -19.2 -5~.~ External finanCing, net 4:6 23.7 "'"'2773 23.3 -rr:4 3 • Disbursement 8.1 27.6 50.4 33.2 29.2 22.4 49.8 Amortization 3.5 3,9 4.6 5.9 5.9 9.0 11.0 Domestic financing, net -h.l 25.3 20.0 17.8 15.4 5.8 16.0 1/ Preliminary. Does not include about L·7.5 million of income from the new banana export tax. These revenues are extra budgetar.y and have been kept in a separate account in the Central Bank. . 2/ Includes about L12 million of reconstruction expenditures. Source: Ministry of Finance and mission estimates. ANNEX 13 Page12 Table 2: OPERATIONS OF INA, 1965 and 1970-72 196':; 1970 1971 1972 -----------L Million current ---------------- Current Revenue 1.5 3.2 4.9 4.4 (transfers from Central Government) (1.4) (3.0) (4.5) (3.8) . Current exper.diture 1.0 2.0 3.9 2.9 Current savings 0.5 1~2 1.0 1.5 Capital receipts 0.) Fixed investment - 0.5 1.9 1.9 0.2 Overall surplus or deficit -0.7 -0 ..9 1.6 ExtemaJ. financing, net -0.4 1.5 2.2 0.6 (DJ.sburseJ:1ent) (0.1.. ) . (1.5) (2.2) (0.6) :""" ." ~;, (Amortizatd.on) (0.5) ( -) ( -) ( -) Dcmestic financing, net 0.4 -0.8 -1.J -2.2 Sou:a:e: IBRD, The Economic Positi.on and Prospects of Iionduras, April 1974 Table 31 BUDGETED EXPENDITURES OF THE CENTIW.. GOVERNMENT AND OF THE MINISTRY OF NA.TURAL RESOURCES, BY ECONOMIC CLASSIFICA.TION, 1965-66 AND 1912-74 1965 1966 1972 1973 1974 ------------------------L Thousand-------------~~------------ I. £entra1 Government 117,56b 131,038 ill...L~~ 242,623 295,208 Current expenditur~ tg,o~ ,93 ~lJ~~~ , il~,339 , '959 17S,lb1 13 (, 205 202,29ff I5'(, 4'78 Wages, salaries, goods and services Interest 4,189 b,621 12,982 15,242 16,035 Transfers. 16,885 18,327 20,398 22,720 28,785 Capital expenditE~ 1/ Fixed capital i'ormation ~555 22,1,'8"9 g 3 ,50) 2 ,379 ~h87 40,097 67.,2456 ~,Do 92,910 72,5lIT Transfers 4,866 7,124 19,390 8,320 20,329 II. Ministry of Natural Resources 11,342 10,540 ~~ 17,095 29,330 Current expenditures 6 443 S, ~4 8,552 8 055 8:I40 Wages, salaries, goods and services 4,N 3, 2 7,911 7: 396 7;481~ Transfers 2,105 1,992 644 659 656 Capital expenditures 1/ 4 1 M9 415~~ 1,171 tJ~40 212190 Fixed capital formation 2, 9 2,0 g/ ~ , 40 10,892 Transfers 2,450 2,539 6,010 4,200 10,295 III. lIAs a Percent of I 9.6 8.0 6.5 7.0 9.9 "'" Current expenditures 1.2 6.1 4.9 . 4.6 4.0 Wages, salaries, goods and services 6.3 5.3 5.5 5.4 4.5 Capital expenditures 11.8 13.7 10.6 13.4 22.8 Fixed capital formation 10.8 7.8 0.8 8.2 15.0 IV. Memorandum Items: Domestic funds budgeted for a) Central Government 104,528 llb,691 2/ 211,603 206,230 241,704 b) Ministry of Natural Resources 9,193 9,740- 15,728 13,791 18,361 c) b as a percent of a 8.8 8.5 7.b 6.7 7.6 ----_._-_._--------------- 1/ Includes Financial Investment. 2/ A L2 million transfer to BNF, which during 1966 appeared under the Ministry of Economy budget, has been added. Source: Government Budgets. Debt Amortization has been excluded. !II wE ANNEX 23 Page it> Table 4: ACTUAL PtrBLIC SECTCR INVEST14ENT AS A PERCENT OF PLANNED INVESTMENT (1965-70) Sector Percent Transport 62.0 Energy 80.0 Communications 80.0 Agricul. ture 35.0 Edncation 62.0 Health 52.0 Housing 70.0 Others 64.0 TOTAL Public Sector 62.2 • Source: Consejo SUperior de PlanU1cacion Econom:1ca, -DDagen de la Estructura Economica-Social '7 Ezplotacion de los Recursos Naturales", December 1973, p. 121. ANNEX 13 Page 15 'rab1e 5: BUOOET CAPITAL ElPENDITTlRES BY MAIN StIBSECTOR AND SOURCE OF FINANCE, 1912-74 1912 1973 1914 0:' wfiJ.cfi 0.1 w!llch OJ:. wrlJ.cn Total Foreign Total Foreign Total Foreign Finance Finance Finance -----------------------------L Thousand--------------------------· Total 7 ,173 9,040 3,305 21,190 10 z969 - Investment and develoEment eXE. 363 4,840 3 z305 10 z892 4,871 Irrigation 1,610 900 1,106 562 Extension 2,805 2,405 6,021 2,309 Animal Health 2,105 2,000 Other 363 425 1,660 Transfers 6,810 4,200 10 z 298 6,098 INA 3,000 3,000 9,098 6,098 BNF 3,700 1,200 1,200 other 110 --. Source: Government Budgets ANNEX 13 Paie 16 Table 6: A COMPARISON OF MmISTRY OF ACE.ICTJLTURE EXPENDITURES IN TEE BUDGET AND TEE PLAN, 1974 aMg.t 11 !liA,1 --------L Tbousand- .• _ - - - - -.. Total Investment Developme~ii Irrigation San Juan de nores 1,106 100 878 100 878 i'OO - Sta.dies 228 StuciT Nacaam.e 400 400 400 Stu~ Guqape 300 JOO 300 S~ Qld mi alan 30 30 30 Sta.~ Florida - La. Entrada 48 48 4B -- Extension 610~5 6,296 ;,926 Programmi ng Mara:a.on 108 108 108 IDS-financed projects 3,265 3,26; 370 2,895 Mechan:f..zat10n 23 179 179 Integral. d.ev., South 679 823 823 Basic Gra:1ns 1,250 1,2;0 1,2;0 90 90 Soy.a. Wheat Potatoes 270 311 90 270 311 - 270 311 Animal Health 2,105 2,105 1,u;1 In Plan, not in Bttdget 10:0112 6,328 Agra.rian re.torm 6qn-j pment 3,114 Campeai:a.o tra i Di DC Ac:rarim retorra tac1micaJ. 1,731 . 1,731 assistance 1, tiS 1 ;715 Corn, beans, cd.t:ru.s, etc. 2,882 2,882 In- Budget I not in Plan Current expenciitures 6,;00 - TOTAL-' 12-t732' ,;616 13, 70~' .-- -- 11 trans:f'ers to m~ and Bl(F, as well-as forestry re lated expenditures, aU of wh:Lch are treated separatel;r in the plan, have been deducted. g/ trom Clra.t't National Development PIan, 1974-78. Source: Government Budget and CONSUPLAN. ANNEX 13 Page 17 Table 7: PLANNED EXPENDITURES IN AGRICULTURE BY S~1fRCE uF FINk'lCE, TCTAL AND AGRARIAN REFORM, 1974-78 1974 MINAG INA OTHER AGENCIES TOTAL - - - , - -...-------L ~on...-.-...---------- Souroe ot Finanoe in ~culture COHDEFOR 2.8 1.0 7.8 other domestic 2~3 2.5 10.1 Domestio hl 3.5 17.9 External S'79 2:2 18.1 Total li.O ~ 36.0 in Agrarian Retorm 2.8 COEDEFOR Other domestic .9 1.0 . 7.8 Domestio la1. l.I.C. 1J3. External Total 2 3.9 -- 1.0 2.JI.. 1Qd 1975 MINAG INA OTHER AGENCIES TOTAL . -, - - ..-----------L M1J.l1,on------.........-~---- Source ot Finance in Agrioulture COHDEFOR 8.7 3.4 1.2 13.3 Other domestic 6.0 5.5 3.3 14.8 ~ Domestic 14.7 8.9 28.1 ~ Extemal T.r 2:[ 1. Total 23.5 li.3 6.3 --4. - in Agrarian Retorm COHDEFOR S.7 3.4 1.2 13.3 Other domestic -1.4 1.4 Domestic 7.3 4..8 hl 13.3 External Total 272 ~ B .3 .;, 1.2 2.7 16.0 HlP: 1 at 3 (ccmt 1:aDed) Table 7 (cont1Dued) ANNEX 13 P8dIe 2 ot3 -Page 15 1976 MINAG rnA OTHER AGENCIES TOTAL ~----~-----------~----~-L Mill1on----------------------- Source of Ftnance in Agriculture COHDEFOR 11;7 3.6 1.;5 16;8 Other domestic 10.. 5 1;8 2.;1 14.;4 Domestic 22.2 2.:1! 3,,6 31.2 External iL2 0.;3 1.7 13.2 Total 33.L: g hl li4.L: in Agrarian Reform COHDEFOR 11.7 3.6 1.5 16.8 other domestic -1.7 1.7 .- . Domestic 10.0 hl 1.5 16.8 External Total. 2.'2 12.2 ±t -- 2.5 l.S.. 1:2:..1 1977 MINAG OTHER AGENCIES TOTAL ---.-....~ . . -- --~----L 'M1l.lion----------------------.:I- Source ot Finance in Agriculture .. COHDEFOR 13:9 3.2 1.;8 -18.;9 other domestic 11;1 1.;;9 2.;1 15;1 Domestic 2$·R hl. M 34.0 External.· Total 12. 37.L: g: 2:0 ~ 14Ji 48.4 in Agrarian Reform - - COHDEFOR 13.9 3.2 Other domestic -1;9 1;9 Domestic 12.0 $.1 External Total "l:':'b U.6 - hl - 1.8 A.N'NE.X 13 Page 19 Table I (~) Page 3 ot 3 1978 OTHER KIlfAG INA. AGmCIES TOTAL • L M1ll1ou· --- .. , --. Source of Finance In ~riculture COHDEFOR 16.0 3.1 2.0 21.1 Other domestic 14;0 2.0 1.. 8 17.8 Ibmestic 30:0 501 ~ 38.9 External 12.7 g - ...l.e.l. 11.e Q Total Ii2.7 ~ .!:l ' $f.9 In ~an Reto:J.'!ll COBIlDtJa 16;0 3.1 2.0 21..1 otber domestic -2.0 2.0 '" '" Ibmestic lU.O 5.1 2.0 21.1 External Total l.i'b' ~ - ..s:;I - - 2.0 1:0 - 2'l':f 11 Includes Current and Investment Expenditures. "Other Agenciet."and "Total" incl.ude agrarian reform expenditures tor IfA.d:ul.t Education ft wh:1ch in the Plan 8.1"I!t DOt shown under "Agr.LC11lture" but under the M1nistr;T of Education as well as under "Agrarian Betom" 0 Source: CON'SUPLAN ANNEX 1~ Page 20 Table 8: PUBLIC SECTOR ACCOUNTS PROJECTIONS, 1974-78 1974 - --------.-,----------L 1975 1976 1977 M1lllon-------------- 1978 GDP 2,044.3 2,281.6 2,516.7 2,837.8 3,144.2 Current Revenues 316.6 368.1 413.7 471.6 531.9 Current Expenditures 246.3 274.2 307.4 337.7 370.1 Current Savings 70.3 93.9 106.3 133.9 161.8 (of which:COHDEFOR) (35.9) (42.5) (45.7) (50.2) (62.4) capital Expenditures 178.9 --- - -~. 175.9 189.6 258.5 315.1 Deficit 108.6 82.0 83.3 124.6 153.3 Net external finance 84.8 70.9 74.2 116.9 146.7 Net domestic finance 23.8 11.1 9.1 7.7 6.6 - - - - - - - - 3S a percent of GDP - - - - ----- GDP 100.0 100.0 100.0 100.0 100.0 Current Revenues 15.49 16.13 16.44 16.62 16.92 Current Expenditures 12.05 12.02 12.21 11.90 11.77 Current Savings 3.l&4 4.11 4.22 4.72 5.15 (0 f which: COHDEFOR) (1.76) (1.86 ) (1.82 ) (1.77) (1.99) Capital Expenditures 8.75 7.71 7.53 9.11 10.02 Deficit 5.31 3.60 3.31 4.39 4.87 Net external finance 4.15 3.11 2.95 4.12 4.66 Net domestic finance 1.16 0.49 0.36 0.27 0.21 Source: CONSUPLAN• Table 9: EX::TERNAL LENDING TO THE AGRICULTURAL SECTuU, 1966-1974, Part A (In thousands of US$) Debt Repayable i~ ~Q~al Om~rency Debt Repayab~e ~nJoreign CurrEn cy BANAFON GOVERNMENT!' BANAFOH GOVERNMENT!I Comm. Disb. Undisb. COIllll1. msb. Undisb. Comm. Disb. Undisb. Comm. DLsb. Undisb. Bal. 12/31 Bal. 12/31 Bal. 12/31 Bal. 12/31 --------------------------------------------------$ Thousand---------------------------------------------- 1966 1,000 2SO 7,214 1,163 1967 1;789 S,424 1968 2,515 2,910 1969 1,51S 1,395 7,700 7,700 9,500 9,500 1970 1,)27 68 771 6,929 2,600 5,293 6,907 1971 28 40Y2 2,.800 1,1l5' 8,614 1,212 5,595 1972 )66 8,248 2,)94 ),201 1973 3/ 9,200 920 8,280 729 7,519 2,000 2,000 6,600 1,529 8,272 1974 :..J 1,739 6,541 1,899 5,620 1,500 500 2,360 5,912 !/Several of the loans to the Government Incluae sizeable credit components to De:charmeled through BNF and Central Bank. i/ Cancelled. )/ See Part B. "" Notes: includes; to Banafom - IDB - IDB No. No. 2 SO Signed 1962 Signed 196:3 $2,500,000 $' 350,000 - IDB No. 115-1 Signed 1966 $4,)00,000 - IDB No. 115-2 Signed 1966 $2,700,000 - 100 to Government- IDB No. No. 349 210 Signed 197) Signed 1969 $9,200,000 $7,700,000 - IDB No. )10 Signed 1971 $2,800,000 Debt ReEBlsble in Forailn Ourrencl includes: to Banafom -100 No. 20 Signed 1962 $6,000,000 -AID No. L-021 Signed 1973 $2,000,000 to Government- AID No. L-018 -IDA No. 179 Signed 1969 Signed 1970 $9,500,000 $2,600,000 i~ -IDA No. 4)4 Signed 197) $6,600,000 N:><: ..... 1-' w Not included are some small loans from CABEl, EXIMBANK and a $3 million loan from wells Fargo Bank to Banafom, Committed and Disbursed in 1972. Table 9: EXTERNAL LENDING TO THE AGRICULTUHAL SECTOR, 1966-1974, Part B TOTAL DEBT PIPELINE Comitm8nts .. DisDursem.ents Undisbursed Balance December 31 -------------------------------------------------$ TbQusand--------------------------------------------- 1966 1,000 1,413 7,214 Including AID No. '1'-026, on December 31, 1974 a pipeline of $41.5 million 1967 1,189 ,,42, was available for spending in agri culture. 1968 2,,15 2,910 1969 11,200 1,51, 18,,9, On the basis of average disbursements during the last three years, the pipe 1970 2,600 1,391 13,804 line is equal to 10.6 years. 1971 2,800 2,355 14,24# 1912 2,160 11,449 1973 17,800 3,178 26,071 1974 Y 1,498 18,,13 11 Of whichl 40 was cancelled. 'Y Dl.ring 1914 additional funds were canm.itted by the International Agencies, in the following amounts: (a) IDB No. 395 - $4.4 million ($1.3 million repayable in local $3.1 million repayable in foreign currency) Loan to Governm.ent. (b) AID No. T-025 - $12.0 million (repayable in foreign cur~ency). Loan to Government, of which $6 million for Banafom.. (c) Also, as part of a $15 million reconstruction loan, AID authorized in 1974 $12.5 million for farm credit and grain marketing to Banafom. (~ID No. T-026) i~ (1)~ N NI-' ANNEX 13 Appendix Page 1 STRUCTURE OF TAXES AFFECTING THE AGRICUL'!URAL SECTOR I. Income and Property Taxes a) Income Tax 1. Income taxes are levied on income derived from capital, labor or a combination of both. Special legislation applies to the banana companies. The tax liability of the Honduran banana subsidiaries is determined by the U.S. aterna1 Revenue Service in accordance with a 1950 agreement between the two Governments. 2. Under the law of Agricultural Incentives, individuals or legal entities which for the first time engage in agricultural activities, will be exempted from income taxes for a period of five years from the date they start their activities. These individuals or entities are also exempted from production or property taxes during the five-year period. 3. The income tax rates for resident taxpayers are as follows: Brackets of Taxable acome Marginal Rates (%) L to L 5,000 3% ° 5,000 to 10,000 S% 10,000 to 20,000 9% 20,000 to 50,000 12% 50,000 to 100,000 14% 100,000 to 200,000 21% 200,000 to 500,000 27% 500,000 to 1,000,000 34% 1,000,000 on 40% b) Taxes on properEY 1. Tax on Real Estate Transfers A tax based on the value of real estate being transferred. The rate in rural areas is 1.5%. 2. Real Estate Tax A single rate of 1.5 per thousand of the assessed value of land and buildings. , 3. Tax on Uncultivated or Idle Land A tax based on the declared value of the uncultivated land, in accordance with the following rates, which increase as the 11U1Dber of idle years iucreases: ANNEX 13 Appendix 1 Page 2 Years Rate (%) 1st 3% 2nd 8% 3rd 15% 4th 25% 5th and above 40% II. Domestic Transaction Taxes a) Tax on the Production and Consumption of Sugar Levied on the production and imports of sugar and paid by producers and importers, at a rate of L 1.50 for every 100 pounds. b) Sales Tax A 3% single stage sales tax on most products and some services. Basic foodstuffs and several other agricultural and livestock products are exempt. c.) Other There is an annual tax on forestry products based on sawmill production. UI. Taxes on Foreign Trade a) Import Duties Both specific and ad-valorem duties exist. Most food products are subject to specific duties. The Law of Agricultural Incentives exempts capital goods, seeds, raw mater1al.s, fuel and lubricants destined to agricultural enterprises. b) Export Taxes 1. Coffee L 10.00 for each 60 kg bag. ExeDlpt are instant coffee, coffee essences, and other products containing c.offee. 2. Wood Currently, COHDEFOR. handles all wood exports and export taxes no longer apply. ANNEX 13 Appendix 1 Page 3 3. Livestock There exists a specific tax on exports of live animals. 4. Fresh Products There is an ad valorem tax of 10% plus specific taxes according to the type of product. 5. Bananas a) Specific rates per bunch (one bunch equals 1.6 boxes of 40 pounds): L 0.02 for exports by Tela Railroad Co. L 0.03 for exports by Standard Fruit. b) In mid-1974, an additional tax per box of 40 pounds was introduced,· to be raised over time as follows: L 0.50 1974 L 0.60 1975 L 0.70 1976 L 0.80 1977 L 0.90 1978 L 1.00 1979 ANNEX 13 Appendix 1 Page 4 tAXES PAID BY AGRICULTURAL SECTOR,. 1972 1 Income Tax on Agricultural Production 4,392,304.05 Individual 511,368.00 Enterprise 380,936.05· Banana Companies 3,500,000.00 Tax on U ncultivated Land /1 11 ,680.51 Taxes on Forestry ProductS 112,593.95 Taxes on Sugar Production 2,157,695.94 Expor t D uties Paid by Agriculture 5,668,053.64 Bananas 674,625.17 Coffee 3,587,143.60 Wood 1,363,735.55 Livestock 12,374.00 Sea Products 30,175.32 TOTAL AGRICULTURAL SECTOR 12,342,328.09 Total Agricultural Sector as Percentage of Total Taxes 7.4% 11. No data are available on income from real estate taxes or real estate tr8D8fer taxes in rural areas. Total (urban and rural) income from these taxes, however, is quite small. Source: Ministry of Finance. ANNEX 13 Appendix 2 LAW OF AGRICULTURAL mCENTIVES 1. The Law of Agricultural Incentives (Decree No. 69-, December 1910) is designed to promote agricultural production ~ diversification; to help raise agricultural productivity and marketing efficiency; and to increase employment and income in the agricultural sector. 2. The major incentives include the following: (a) Individuals and firms who for the first time engage in agricultural activities are exempt from income, production and property taxes for a period of five years. (b) All individual and firms in agricultural activities are exempt from all import duties, surcharges and consular fees for a great variety of machinery and intermediate product imports. Furthermore, they may request income tax deductions for accelerated depreCiation purposes and for 25% of the purchase price of selected new fixed investments and capital goods. (c) Special credit programs and preferential interest rates are to be established for agricultural production purposes. 3. The Law also defined the role and functions of the Ministry of Natural Resources in order to assist the development of the sector and created a National Agricultural Committee, composed of representatives of public agricultural sector institutions as well as the private sector, in order to advise on aDd coordinate national agricultural policies. .L\NNEX 13 Appendix 3 -- -.- - - Page 1 VM.tm (R moms. IMPORt IIJ'l'rss COLLEC'l'ED AJm . lJI7rIES AS PEaCENTACiE OF VALUE, 1971 Part A: Total Imports and Major Agricultural Product.:!, Inputs and Capital Goods for Agriculture Va.lu.e of Imporb CIF Dt1ties Collected. Ibti.es CoJ.lect.ed, as percentage L Thousand L 'I'llousand of value 'l'OTAL I!!PORTS 386,781.5 40,374.0 10.43 AGRICD'LTURAL SECTOR 61~ 7S1.3 8,977.4 13.2$ Finished Products - Conswm:l'tion 33 z785.0 8,259.) 2L..h5 Food products 31 ,188.3 6,169.1 Beverages 1,Oh6.0 1,966.1 Tobacco manuf'actu:res 62.6 56.h Vegetable oils 1,488.1 67.7 Intermedia.te Products (Raw Haterial:s,.etc.) 17zW.1 P.aw Tobacco, inc:lud..ing ret'ase Cotton seeds 530.3 440.4 268.9 103.9 .2.0 1.5~ Crude fertilizers .36.2 0.1 Ined:i.ble eggs 307.8 .15.5 Crude vegeta.1:WJ products, 1:aedible 63$.8 9.3.1 Ammal oil and la.rds~ (main17 tor 1zI.d.u.s1:.rid u:s e ) 2,;2.3.6 0.8 Chemical products for insecticides 9$.2 6.9 ·ntrogenated. CompOUllds tor tertil1zsrs 118•.3 Ma.nu.£a.ctured .t'ertilizers ;,254.4 46.6 Insecticides, tnng1 c:1.d.es, di.:siDtect.a:D.t3 7,504.1 -' Caoital Goods f'or .ero.culture Hoes, shovels •••band tools f'or 16,$20.2 LU,§.2 - 2.72 agriculture 1,355.0 45.2 Hachine17 and meebanical tools tor agr,icuiLture 4,838.8 59.3 tractors, except steam 9,.383.4 J06..S J.~ers for agr::Lcultun aad f'jze ext:i.J1ction 610.0 19.8 Carts, vagCll:tS •••veld.c:l.es for l.oad1 ttg ~ without motors 249.0 18.4 Airships tor f't:md.ga.tion serr.Lce 84.0 - ( Con til'lued ) • ANNEX 13 Appendix .3 Page 2 PART B: DETAD..S VaJ.ne at Imports CIF tuties ~ollected Du.t:ies C::Jlleet.ed, L Thousand L Thousarl.d. as percentage NAUCA. of value TOTAL mom's 386: 181 .5 40,37U..O 10.h3 o FOOD PROllrC'l'S 31 7188.3 6',169.1 19.18 00 Uve animals z mainlI desianated . 001-01-01 for lood bovine cattle (pure-breed) 1,175.7 647.4 - 001-04-01 daRestic fowl (pure-breed) 514.5 01 Heat and ll.eat Prod.c.cts 832.3 360.4 43.30 01 3-02 Meat and iieat Prodncts, her- metica.J.J,y packed . 267.1 108.1 4O.h1 013-02-0.3 (at whieh: poultz:y and all other meats, ca.mIeQ. or prepared in U!3' form, nth or nthout vegeta.bJ.es, hermetica.ll.7 packed) (209.6) . (76.5) (36.49) 01 3-09 .EZ.tracts and other meat products 483.2 201.4 41.68 013-09-02-1 (at which: liquid soups and broths) (269.6) (119.$) (~.J2) 02 Lacteous Products: EllS'S and Honey 6,629.6 1,294.2 19.52 022-02-01-1 whole milk .3,650.1 1,009.5 21.65 029-09-00-1 medicinal. preparations fo:: i:afmt feed:i.ng 1,164.7 49.4 4.24 03 Fish, Crwstaceans z Molusks and their Products 531.4 3.32.1 62.49 032-01-01 sardines 316.2 226.7 72 •.32 04 Cereals and Cereal Products 12,826.2 1,68$.1 14.69 041-01-00 vileat and spelt""",heat, not grindad 7,444.1 725•.3 9.74 042-02-00 peel.ed ri.ce, includ~ ng 'poli3hed aad broken rice 1,013.6 23-5 2.32 048 cereal. products (1ncludi:z:1.g fiour prodD.cts and. .f'ra.it and vegetable .' starch products) .3,446.6 , ,0$2.0 30.52 0, Fraits and Vegetables , 2,2)1.1 1,100.0 49.30 051-01-00 fresh fra:i. ts .331.1 294.1 88.82 0,3 cazmed fru:1t and f:ruit prodncts 340.4 214 •.3 62.95 054 fresh and. dried vegetables (except deb;yd.rated), roots and tubi...~ 473.9 74.2 15.65 0$5 cazmed. vegetables and vegetab le products 9Ob.4 409.5 45.18 . 055-02-04-51 (at lih1ch: tcma.to paste) (680.1 ) (215.$) (31.68) ., (Continued) AUNEX l3 Appendix 3 Page 3 Value ~ Imports CIF Duties Colleoted. DIlties C::;llected, as percentage N'AUCA L Thousand L Thousand ot value 06 S1l5ar and. Spgar Products 750.0 412.1 54.94 061 sugar 217.3 23.1 8.33 062-01-01 *~gum 370.7 298.0 80.38 07 Coffee. Tp.a z Cacao: Soices and their Products 61b.J.. 309.1 50.31 075 spices 316.8 18b..o 48.83 08 P!'Oducts for~:fm~l Feeding ~ex:eetlt un unci cereals 1,858.4 23.4 1.26 081-03-00 cakes a.nci flours from oil7 seeds and other vegetable oil. residues 9.39.2 6.3 0.67 081-09 foed re!'use and prepared. food for axdmaJs, u.e.p. 512.1 16.2 2..83 09 Diverse Food Prod.ucts ),1~7.3 452.6 12.11 099-09-03 ,.east a.Ild. all ferments, i:a. a::q tcr.a, except for pl:1a.r.u.ceut1:::al ue 408.1 139.9 34.28 099-09-04 all ld.nds of sauces and. s1 mi 1 ar seasoI1il:1g 401.1 229.1 57.11 099-o9-C5 syrtlp5 a.r:t.d. conceutrates' for the prepara:tiou of I'IQu-aJ.chollc beverages 2,842.1 24.9 0.81 1 BEVERAGES AND TOBACCO 1.638 .8 2.126,4 129.75 11 Beverages 1,046.0 1,966.1 187.96 112 ilco.llollc bewragH 1,0b2.7 1,96b..8 188.4.3 112-04 (of vh1ch: d:1.st1lled alcoholic beverages) (921.9) (1 J 796.8) (194.90) 12 'l'obacco and its manufactures 592.8 160.) 27.04 121-01-00 raw tobacco, 1nclnding rafase 5.30.3 10).9 19.59 2 RAW Ml'lERIlIS, INEDIBIE, EICZPT Ft1BL ~II26.7 20).) 5•.3$ 221 OUl seeds I nuts and alMonds z melud:tn! those crushed and . " . cindadz ed:ibl.e or no t hU.6.b. 4.8 1.01 221-06-00 cottc:l1 seeds 440.4 2.0 0.23 271 Crade Fer'"..iJ.i:!!:§ 36.2 0.1 0.28 291 Crude Arlinl Products z Inedible .307.9 lS.s 5.0) 291-09-12 Inedible egp (fish eggs for l"ffP1'Oductian, etc.) .307.8 15.5 5.0) ( Continued) ANNEX 13 Appendix 3 Page 4 Value o£ L"!pOrta C17 Duties Collected J:\lties Collected., as percentage L Thousand L 'l."housmid. nmA or value 292 Crade Vegetable Products. Ined1ble 635.8 93.1 14.64 292-05-00 seeds for plan ting, bulbs, tubers, and rhizomes o£ !lawer or tollage-producing plants, grafting twip, live trees and other plants 233.8 0.03 0.01 3 MINERAL FUEL A~ LUBRICA..~TS ..L~ CONNECTED PRODUCTS ~hz89h.3 508.7 . 1.46 4. A.N'I.MAL oa 17EGETAELE OIL AND LA...~ Qz18:2.1 81.2 2.08 411 An:i:mal oil and lard ~mainll tor industrial use l 2,523.6 0.8 0.03 except pork Iard. 2,493., 0.8 0.03 h12 412-03-00 VeS,!table oils cotton seed aU 1,488.1 80,.0 67.7 8.6 h." 1.07 412-19 aU ext.-acted trom seeds, nuts, and almcmds 364.9 5.1 1.56 5 CHEMICAL PaODiJ'CTS $9.0$6.2 37453.6 5.85 512....Q9-o3-3 . DDT and otl"..er chlDr±i:ed products tor prepar.i.ng :insecticides 95.2 6.9 7.25 512-09-10-1 Orgcic nitrogenated compounds tor tert:Lli.:ers 118.3 . 56 Manu:tactured Fertilizers 6,847.0 75.8 1.10 $61-01-00 ni trogenatad £ertil:i:ars (except natum) 5, 25h.4 46.6 0.89 599-02-00 Insectic:ides, f'Iln gicides, d:1.s ani_,. :1n!'ectants (including those for products) and otcsr s:iml1ar 7,504.1 .' 6 '10,712.3 14,793.2 13.36 HANUFJ.C'l'URED GOoDS - t. 699-12-01 Hoes:z shovels: 'l')icks•••and other hand tools used in amculture z nortieulture or 1"orest::zz Vi ttl or Without handles 1,355.0 h5.2 3.3.3 699-12-01-01 1I'l&C.b.e tes, vith or 111tho'llt bazldJes ~ 897.5 hh.8 h.99 (Continued) ANNEX: 13 Appendi."<: 3 Page , Value o£ Imports CIF Duties Collected Duties fAllected as percen tage llAU=A L Thousand L Thousand of value 7 ~.ACR1lIE?..Y A..'lD TRANSPORT MA.'mRllL 112,622.4 3,172 .1 2.82 712 }!achiner.r and mechanical tools for azriculture 4,838.8 $9.3 1.22 712-01 machiner.1 and mec.han.icaJ. tools to prepare and cultiTate the land 612.7 3.0 0.49 712-01-01 (plows) (187.6) (0.4) (0.21 ) 712-01-03 (harrows) (111.8) (1.3) (1.16) 712-02 ¥..achinerr and mechnical tools to harvest: tl"'..rash z and se'Carate 3,77$.8 43.9 1.16 712-02-01 (tor the ::ecollectioll o£ agnew.tu..'"'2.l produc ts ) (2,92$.2) (10.0) (0.311) 712-02-02 thrashers cd. shellers (80.3.1 ) (31.9) (.3.97) 713 Tractors: ex'!ent steam 9,383.4 )06.5 3.26 71 .3-01-00-1 tractors, except steam 4,835.3 159.$ 3.30 713-01-00-2 Sp&..""8 parta for tractors 4,548.0 147.0 .3.23 716-1.)-0,-1 Atom::i%ers for agriculture and for tire extinction 610.0 ,19.B 3.2h 73.3-09-03 Carta, wagons, and a1Mil&r vehJ. clea tar loadi."1g.. v1tl::out MOtors 2h9.0 .18.4 7 •.39 7Jh-01-OO-1 Airships for !'tzm1gatioll serriee 8h.o . B DIVERSE !'.ANTlFAC'!tmED GOODS 26 z816.0 6 7 339., 23.6u 9 LIVE .AN:i:2'.A!S Mm DrmtSE GOODS 1 .873.3 - 1.B - 0.09 .' I:ource: Secretaria de 3:anomia.. AAuario ! stadistico 191" Tomo n, Vol.. II, m. (Tegacigalpa, June 12, 1972) ANNEX 14 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY TECHNICAL ASSISTANCE FOR AGRICL~TURAL/RURAL DEVELOPMENT Table of Contents Paragraph No. Technical Assistance Grants 3 - 21 Agency for International Development (AID) 4 - 7 United Nations Development Programme (UNDP) 8 - 11 World Health Organization/PanamericanHealth Organization (WHO/PABO) 11 - 13 Inter-American Development Bank (IDB) 14 - 16 Organization of American States (OAS) 17 - 18 Canadian International Development Agency (CIDA) 19 Other UN Agencies 20 Other Bilateral Assistance 21 Technical Assis tance Loans 22 29 AID 23 - 24 IDB 25 - 26 IBRD/IDA 27 - 29 An Indicative Evaluation 30 - 37 The Need for Data and Coordination 31 - 33 Absorptive capacity 34 - 35 The Lack of Continuity 36 - 37 Conclusions and Recommendat1ons . 38 - 42 Table 1 Estimated Technical Assistance Disbursements to Honduras from Foreign NOn-Private Sources, 1972 2 AID - Technical Assistance Grants to Honduras, Commitments and Disbursements, 1970-1973 3 UNDP-Technical Ass is tance to Honduras, Country Programs for 1972-1976 4 WHO/PABO - Technical Assistance to Honduras, Commitments 1970-1974 5 IDB - Technical Assistance Grants to Honduras, 1969-1973 6 OAS - Technical Assistance to Honduras Disbursed 1969-73, and Recommended 1973-74 ANNEX 14 Page 1 TECHNICAL ASSISTANCE FOR AGRICULTURAL/RURAL DEVELOPMENT 1. Comprehensive and detailed data on technical assistance received by Honduras from abroad are not available. The National Planning Council (CONSUPLAN) has only recently begun to attempt to collect this type of in formation. However, the available evidence suggests that ways should be found without delay to improve the effectiveness of technical assistance. 2. Honduras receives an average of between US$8.0 and US$10.0 million in technical assistance per year, about equally divided between multilateral and bilateral donors. Between 30% and 40% of this amount is for agriculture and rural related sectors (about US$3.0 million per year). Of the 1972 total of some US$9.7 million, about 80% (US$7.9 million) was in the form of grants (Table 1). Repayable technical assistance in that year accounted for US$1.8 million, and was incorporated into World Bank (IBRD), Agency for International Development (AID), and Inter-American Development Bank (IDB) loans. TECHNICAL ASSISTANCE GRANTS 3. Technical assistance grants have been received from AID, United Nations Development Programme (UNDP), World Health Organization/Panamerican Health Organizaton (WHO/PARO), IDB, Organization of American States (OAS), Canadian International Development Agency (CIDA), and from other United Nations agencies and bilateral donors. The following outline of these programs centers on rural sector activities. Agency for International Development (AID) 4. AID is the largest contributor of technical assistance. During the period 1970-73, of US$13.5 million committed in grants, US$12.6 million were disbursed (Table 2), or an average of US$3.15 million per year. The rural sector receives the highest priority, and accounted for about a quarter of the total disbursements during the period. At the close of FY 1972, there were 28 U.S. technicians in Honduras and during that year 149 Hondurans participated in training programs; the corresponding numbers for FY 1973 were 150 and 135 respectively. 5. With respect to agriculture and rural related activities, AID has been involved in agricultural institution building, forestry, and rural health and development. An agricultural productivity project was begun in 1974 to assist the Government in improving core institutions in the agricultural sector (BANAFOM, INA, MRN, CONSUPLAN) 1/, and is expected to be completed by 1976. 11 National Development Bank; Agrarian Reform Institute, Ministry of Natural Resources and the above mentioned National Planning Council. ANNEX 14 Page 2 One of its purposes is to increase institutional capabilities to plan and implement a sector program involving grain price stabilization, rural credit, the introduction of new crops and production techniques, and a pilot multi purpose cadaster. The project's total cost has been estimated at US$4.2 million, of which US$2.5 million was disbursed through FY 1973. 6. In rural health, a porject for malaria eradication was completed in 1972, with cumulative disbursements of US$l.O million. At present, a health program is being undertaken, to assist the Ministry of Health in providing maternal/child health care, including family planning services. It has expanded to 35 clinics throughout the country, to which 80% of the total population has access. The total disbursements through FY 1973 were US$2.2 million, of which it is estimated that about 50% benefitted the rural popu lation. AID has also been concerned with community de~elopment and social welfare. About half of the financing of this project can be allocated to the rural sector for civic development and agrarian reform (leadership training). The total cost of this project was US$887,000. About US$435,000 were committed in 1971 for the Disast~r Relief of Borger Areas. AID began support for forest management in 1965. This project, with a total cost of US$775,000 was completed in 1974, and at present no technical assistance is being given to forestry by AID. 7. A project for cooperative develgpment, with a total cost of US$2.0 million, assisted in the development of savings and loan cooperatives as well as in the creation of a federation of housing cooperatives. Limited assistance was also provided to an agricultural cooperative federation (FECOAGROH). Two years of drought plus an adverse change in national basic grains export policy help eXplain why FECOAGROH was unable to develop into an organization capable of channeling credit and technical assistance to its affiliates, and why AID suspended its support. A separate project for Agricultural Cooperatives has been proposed for FY 1975. United Nations DeveloEment Programme (UN~P) 8. UNDP is the second largest contributor of technical assistance. It has approved an indicative planning fiture (IPF) of US$5.0 million for technical assistance for the period 1972-1976 (Table 3), or an average of US$1.0 million per year. A tentative IPF of US$9.0 million has been given for the period 1977-1981. The highest priorities are given to agriculture and forestry, which comprise more than half of the total funds for the 1972-76 period. Presently, UNDP is financing nine rural-related projects, dealing with institution building; agricultual production, diversification and extension; rural development; and forestry. 9. A project in aaricultural ssatistics, which began in 1968, was extended to July 1976, as technical assistance was needed to the preparation, execution and analysis of a farm and livestock census (1973-74). Moreover, the Government plans to establish permanent machinery for an agricultural statistics service. FAO is executing this project, with a US$96,OOO budget ANNEX 14 Page 3 for the planning period. This project involves the services of one expert at the Direccion General de Estadistica y Censos. Assistance was given to INA for a rarian reform trainin and develo ment (FAO), for a total of US$476,OOO. The project involves 108 m (manmonths) of experts' time and 72 m/m of fellowships, as well as equipment, for the reorganization of INA in order to speed up the process of agrarian reform. It includes training for INA tech nicians and peasant leaders. Another US$103,000 have been allocated for the strengthening of CONSUPLAN in the area of asricultural planning (FAO) in order to improve sectoral policy-making. A study to develop a national land survey system is to be done under this project. Three man/years of experts and 24 m/m of scholarships are included. UNDP is also financing projects in cro£ development and diversification, agricultural meshanization, rural development planning and integrated agricultural development. 10. Two projects, fora total of US$1.3 million, are related to forestry: a project in forestry development, planning and administration (US$728,000 to the Honduran Forestry Corporation, COHDEFOR) is for the establishment of a national forest service and forestry policy; and for training in the utiliza tion of forest resources and in forestry development planning. This project includes 217 m/m of experts and 66 m/m of fellowships. The national forestry school, in Siguatepeque, Comayagua, will receive about US$584,000 for the training of forestry technicians (middle level) and related staff. This project includes 380 m/m of experts as well as 180 m/m of training. World Health OraanizationLPanamerican Health Organization (WHO/PARO) 11. WHO/PARO committed a total of US$4.8 million to Honduras in country and intercountry projects during the period 1970-1974 (Table 4). Of these amounts, approximately 45% are related to rural health. For each project, PARO has contributed consultants, equipment and scholarships for local personnel. The staff of the local office of the agencies provides advisory services and specialists in various fields. 12. A yearly average of US$417,OOO is committed to Honduras in country projects. Of these, about one-third are related to the rural sector, and have included campaigns for malaria eradication (1969-74) and the eradication of aedes aegrpti (1968-74). There was an emergen£! rehabilitation program to build health infrastructure for the frontier region with El Salvador (1970-73). For the period 1971-75, there is a program to improve the environmental sanita tion through helping with planning and programs on basic sanitation, water supply, and waste disposal in urban and rural areas. The project emphasizes the urban sector, but one o·f its main objectives is to provide 50% of the rural population with latrines. In 1972, a project for the development of health services and health protection in rural areas was started. Annually, during a five year period, it expects to construct ten aqueducts and 500 home sani tation improvements. Al.1NEX 14 Page 4 13. The Intercountry Projects fund totals USS2.7 million for 1970-74, of which US$1.5 million can be considered rural-related. 1/ These are regional or subregional projects mainly in disease eradication programs (malaria, chagas, aedes aegypti) or in financing research institutions on subjects like nutrition or zoonosis. INCAP (the Central American Nutrition Institute in Guatemala) is the most important recipient of these funds, and uses them in research, direct technical assistance and training. InterAmerican D~velopment Bank (IDBl 14. Between 1969 and 1973, IDB signed commitments for a total of US$1.7 million in technical assistance grants to Honduras. Approximately one-fifth of the commitments, or US$310,0.00 .. are directly related to agriculture or the rural sector (Table 5). As of February 1974, 28% of the rural related grants (US$85.000) had been disbursed. In March, 1974. there were seven resident staff of the IDB in Honduras and 25 consultants, contracted under technical assistance financing (six in CONSUPLAN, 15 in the Ministry of Communications, Public Works and Transport. three in INA and one in UNAH, the National University). 15. Technical assistance grants to the rural sector in Honduras have been directed mainly to the strengthening of institutions '(INA, BANAFOM) and to project preparation and studies. In 1969, a grant of US$39,OOO was given to INA, in order to reorganize and strengthen its administrative and accounting procedures. This grant was fully disbursed. In 1972, US$52,000 was committed as a grant to review the organizational and administrative structure of BANAFOM, to revise its operational manual, design a program and create an cffice of "methods and organization". However, there have been no disbursements, partly because the low salaries paid by the Government has made it difficult to contract consultants. _ 16. tUth regard to project preparation there have been two studies of the Guayape Valley; one in animal health; and one study in fishing and agro forestry development. A grant of US$17,OOO was given to MRN for animal health project preparation. This consisted of the preparation of a project for a campaign against tuberculosis and brucellosis in livestock as well as preparing a request for financial assistance from international agencies. US$15,400 were· disbursed, and the resulting loan request to IDB in 1973 for US$4.4 million was approved. As noted, studies on the development of the Guayape Valley have been undertaken. The first, for US$13,000 (FAO-BID) in 1972, and the second, in 1973, for US$18,400 to CONSUPLAN, each was totally disbursed. These studies described the region and its potential, and discussed potential lenders and executing agencies. The consultants have produced a report, and a loan for about US$3.7 million has been proposed. In 1973, a grant for US$170,OOO (FAO-BID) was approved, to finance a study of agro-forestry development in the Olancho area and identify projects in the fishing sector. 1/ The total cost of these programs is apportioned to each of the countries which benefit from it. Therefore, these figures are those allocated to Honduras by PARO. ANNEX 14 Page 5 Organization of American States (OAS) 17. -OAS contributes an average of US$276,000 per year of technical assistance to Honduras, with agriculture and rural related .activities getting about 10% (Table 6). From 1969 to 1974 a total of US$134,000 was related to the rural sector, of which US$107,500 was in the form of experts and US$27,200 in training. For 1974/1975, 154 m/m of experts and 219 m/m of scholarships have'been requested. Of these, 6 m/m of experts and 14 m/m of scholarships are related to the rural sector (Forestry). 18. The OAS has been involved both in forestry and in rural development. However, in the last PNCT (Programa Nacional de Cooperacion Tecnica, 1974-1976) presented by CONSUPLAN, the only project directly relevant to the rural sector refers to forestry. Participation of the OAS in Forestry Planning began in 1973. One expert was assigned to CONSUPLAN to help prepare and implement the forestry development program and specific forestry projects for the national development plan. He was also to assist in the coordination of CONSUPLAN and other institutions dealing with forestry. The project included the training of local counterparts (two scholarships). For 1974-76, Honduras has requested an expert to advise CONSUPLAN and to help COHDEFOR with the evaluation of projects. One scholarship for forestry economics and policy and a two-month course in forestry projects are included. Canadian International Development Agency (CIDA) 19. CIDA has a program of US$2.3 million for 1971-76. This includes four projects, of which two (US$1.3 million or 55%) are programmed for agri culture and forestry. CIDA's technical assistance to Honduras has been steadily increasing, and is at present giving special importance to the rural sector (Table 7). A project for agricultural marketing, which began in 1973, provides for Canadian experts, services, training and equipment to assist the Government in identifying the main problems in commercialization-and dis tribution of agricultural products for internal consumption and for exports. US$575,000 was committed for a two-year period, of which US$58,800 was disbursed during the first year. In 1973, the forest marketing project was started. It" will provide an analysis of the potential output production and market outlets for forest products. The project will eventually involve sixteen Canadian experts, assigned for periods of up to eighteen months to CONSUPLAN, to assist in the planning of the development of hardwood forests. US$678,600 has been committed for a two-year period, of which US$107,300 was disbursed during the first year. Other UN Agencies 20. Other United Nations Agencies (UNICEF, WFP, etc.) contribute approx imately US$0.5 million per year in education, health and rural development. Other Bilateral Assistance 21. Several countries including France, Spain, Israel, Germany and England provide sch9larships, experts, supplies and equipment for education, ANNEX 14 Page 6 project preparation, roads, and other fields. The Technical Secretariat of CONSUPLAN estimated their contribution at US$1.4 million for 1972. TECHNICAL ASSISTANCE LOANS 22. Technical assistance incorporated in loans accounts for about 20% of the total technical assistance. All the technical assistance given by the World Bank is repayable, and amounts to about US$650,000 per year (1971 73). The IDB and AID, besides giving technical as~istance grants, have also included technical assistance components in their loans. AID 23. The first AID loan to the rural sector with a technical assistance component was signed in 1968 for US$9.5 million; it has been almost totally disbursed. Technical assistance was provided to BANAFOM for credit, market ing and storage; formal and in-service training programs for BANAFOM, DESARRURAL (now DESAGRO), livestock producer associations, cooperatives, and others. The loan included US$100,000 in repayable technical assistance to pay for advisors in the fields of storage and marketing, and US$788,000 from grants (for participant training programs, advisory services on livestock credit, cooperatives and credit administration and supervision, as well as 30 Peace Corps volunteers, working as extension agents). The second loan, for US$2.0 million, was signed in 1973, to strengthen BANAFOM's role in price stabilization and marketing. The total technical assistance contribution (US$100,000) was for training and advisors to support the administration of the project, and for the ~mprovement in the accounting and budgetary systems of the grain division of BANAFOM. There had been no disbursements as of May, 1974. 24. The AID agricultural sector loan for US$12.0 million to MRN, BANAFOM, INA, CONSUPLAN and the Ministry of Communications, was signed on December 31, 1974, and is scheduled for implementation in 1975. Its main purposes are to support the agrarian reform effort and to improve the capacity of Honduran institutions to reach increasing numbers of small farmers. The loan includes US$2.5 million for technical assistance, part of which will be grant-funded. It is composed of US$1.5 million for training and US$1.0 million for advisory services, to be disbursed in a four-year period. IDB 25. In the IDB loans signed between 1969 and 1973, US$2.2 million in repayable technical assistance was included (Table 8). This represents about 56% of the total technical assistance (US$4.0 million in grants and loans) committed by IDB during the period. Repayable technical assistance to the rural sector amounted to US$815,0000 during the period. ANNEX 14 Page 7 26. A loan for U5$7.7 million was made to INA in 1969. This included U5$543,000 in repayable technical assistance, for institution building and project preparation. Although disbursement on the plan has been slow, the technical assistance components have been disbursed satisfactorily. DE5ARRURAL (DE5AGRO) received a loan for US$2.8 million in 1972 for agricultural exten sion. However, the program was not initiated until mid-1973; to date there have been no disbursements in technical assistance since consultants have not yet been found. IN 1973 BANAFOM received a loan for U5$9.2 million, which included U5$53,000 in technical assistance. This was to engage consultants (which are already under contract) to advise BANAFOM on improving its struc ture, methods and procedures, especially with regard to extending credit. During the next few months an animal health loan for US$4.4 million to MRN will be implemented. Technical assistance components for US$240,000 are included to help strengthen the institution and for training. A contract has been signed with PARO for the consulting and advisory services. IBRD/IDA 27. The World Bank made seven loans/credits to Honduras from 1970 to mid-1974, for a total of U5$63.3 million. All of these include technical assistance components, all repayable, amounting to a total of U5$5.2 million (Table 9). The main elements in technical assistance are surveys and studies (47% of total commitments and 75% of total disbursements); training accounts for about 20% of the total commitments, but only for 3% of actual total disbursements. 28. There have been two operations (a credit and a loan) for livestock, and the education loan also has some technical assistance components related to the rural sector. The technical assistance components of these three loans accounc for abouC 15% (U5$750,000) of the total technical assistance committed to Honduras by IBRD/IDA (Table 10). The first livestock project (credit), for US$2.6 million, to help finance medium and long-term loans to farmers for the development of beef and dairy enterprises, has been almost totally disbursed, as well as the U5$150,000 for technical assistance. (These funds were used to finance the Project Director who was responsible for the execution of the project, the supervision of ranch development plans). He is also an advisor and coordinator for the Central Bank and participating banks. The second livestock operation, for U5$6.6 million allots U5$300,000 to technical assist ance. This is to pay for the training of project staff (U5$30,000); four livestock advisors 1/, along with the livestock technicians employed by the participating banks: Disbursements have not yet begun. 29. The educaton loan, for U5$6.0 million allots U5$900,000 to technical assistance. Of this, US$300,000 relates to the rural sector. This figure represents 10 man-years of fellowships in agricultural education and 8 man years of experts in rural education, agricultural education and animal hus bandry. There were no disbursements as of May 1974. 11 In the fields of farm management, pig husbandry, pasture management and cattle husbandry. ANNEX 14 Page 8 AN INDICATIVE EVALUATION 30. Little or no evaluation of the effectiveness of technical assistance programs, with few exceptions such as the USAID, is being done. In any case, the evaluation of one or several programs, unless in the national context, can be of only limited use to planners. It is indeed difficult to judge a technical assistance program in a low priority area, however successful it may be in a narrow context. Not until a global technical assistance policy and program is developed as an integral part of a manpower plan will evaluation become fully useful. In the interim, however, te~hnical assistance can be . improved through better organization and more information. Three major problem areas are discussed in the folloWing paragraphs. The Need for Data and Coordination 31. The National Planning Council (CONSUPLAN) has been charged (Acuerdo No. 48, April 1973) with the planning, evaluation and coordination of all technical assistance requests; this is an essential part of its overall responsibility for preparing the development strategy and plans for the country. However, the staff assigned to the technical assistance office in CONSUP~~ consists of only two employees: most technical assistance contracts are arranged between the donors and the recipient local institutions, with CONSUPLAN involvement consisting mainly, with a few notable exceptions, of an ex post approval. EVen the latter does not occur in a large number of cases. As a result there is little or no coordination between technical assistance programs and the national priorities. Technical assistance programs and areas of concentration are determined by the recipient institution directly or, more frequently, by the donor institution on the basis of its assessment of the priority needs of Honduras. The major donors try to coordinate their programs, but the task is difficult and the effort generally leaves out the large number of relatively small donors. 32. The small staff in CONSUPLAN has barely started the task of collecting data on the total flow of resources from the different donors, and little is known thus far on the nature of many of the programs. While it may be some time before precise criteria for the allocation of technical assistance can be developed, at least wasted effort and duplication might be reduced if more information were available. An indication of the potential gain can be seen in the forestry case, where a great variety of investigations are under way or planned; these are outlined in the draft 1974-78 national development plan (see also Table 11). Similarly, it would appear that a fuller coordina tion of the large number of fellowship programs offered to Honduras might increase their contribution to development; at the very least, this might concentrate training in high-priority areas. 33. It is not uncommon for receiving countries to look upon technical assistance as a free good. But there are very real costs in fact, even leaving aside the question of counterpart monies which may have to be provided by ANNEX 14 Page 9 the recipient. For example, technical assistance programs may enable foreign training; but if too many go abroad the normal workings of Government are hampered by a lack of personnel; this is a real cost, i f only for the short run. Similarly, foreign personnel require important servic.es from the Govern ment; this is a cost, and often a significant one if key local personnel are involved. Absorptive Capacity 34. There is ample evidence that absorptive capacity for technical assistance is very limited. There are numerous cases in the past of technical assistance missions being unable to establish counterpart relationships (for example, the IDB grant to DESAGRO for agricultural extension). This problem is now especially severe in the forestry sector. Disbursements on loans are held up because of the inabUity to find local manpower. Low salaries may explain part of the problem in the agricultural sector. But the shortage of trained manpower is not limited to agriculture, and exists in the other sectors. It is often difficult to disburse training funds for lack of candidates (for example, the two IBRD Power Loans alloted a total of US$565,000 for training; US$68,000 had been disbursed as of June 30, 1974. In comparison, of a total of US$2.1 million for surveys and studies, US$1.6 million were disbursed during the same period, as shown in Table 9). 35. As presently managed, technical assistance places too heavy a burden on the Honduran manpower supply: experts are underused, reports are not read, fellowship offers are not taken up. Busy Government officials devote a good deal of time to briefing every technical assistance mission; this is seldom productive, because the follow-through is minimal. MOre and better planning and evaluation of the technical assistance program, in function of the nation's absorptive capacity, are clearly essential. The Lack of Continuity 36. Technical assistance supplements the country's skilled manpower and helps train people and build institutions to increase the local supply of skills and the effectiveness of use. The second, long-run function is clearly the more important of the two, but it must be combined with the first, short-run func tion, if the latter is to be meaningful. Honduras has had several technical assistance programs which were successful as long as the foreign experts were present; but these collapsed when the foreigners left. The draft 1974-78 national development plan provides a number of illustrations of this phenom enon --- one is the forest fire control program developed with German technical assistance in the Guaimaca region between 1963 and 1970; this was abandoned when the technical assistance was terminated. ANNEX 14 Page 10 37. There are several reasons for the lack of follow-up of technical assistance programs. No provision may have been made for the training of local manpower to assume responsibility when the foreign assistance comes to an end. The Government may have accepted the assistance as long as it was "free", but did not see fit to provide funds for its continuance after the technical assistance is terminated. The low salaries paid to local manpower which has been trained through technical assistance may result in resignations and a very low yield on such training. CONCLUSIONS AND RECOMMENDATIONS 38. The actual and potential supply of technical assistance is large and of sufficient importance to the rural economy to warrant a full scale effort to plan and coordinate its use. The priority outlets for assistance must be determined. This means that the existing and potential supply of local personnel in each field must be known, including the status of indi viduals studying abroad, and their areas of specialization. These data can then be compared with the estimated needs in each area, both immediate and projected (in the light of the development plan), and a technical assistance program can be designed to cover the personnel gaps on a priority basis, along with the necessary budgetary support and the provision of counterparts. The next and final step is to coordinate fully with the technical assistance donors and the aid receiving Government officers, and to install a performance monitoring system which produces suggestions for improvement and assures that ineffective programs are closed out without delay. 39. The existing small Technical Assistance Office in CONSUPLAN should be expanded to fulfill this function. This will take time and may itself require technical assistance. Currently a modest start is being made by IDB in providing the latter. This involves a grant for US$30,OOO to provide advisory services for preinvestment studies and for the coordination of technical assistance and preinvestment activities in the context of the national development plan, as well as for the creation of a technical assis tance data bank. 40. The Technical Assistance Office can do a great deal in a short time to get an overall view of technical assistance, and to eliminate the more obvious cases of duplication, waste, and low-priority activity. Its long run objective must be to increase the supply of local skills, and to assure the continuity of programs set up with technical assistance. When in-service training is not sufficient, scholarships must be provided for. In particular, the widespread notion that the shortage of qualified Honduran manpower makes it possible to use technical assistance in all areas should be restudied. There are definite limits to absorptive capacity and any proposals for a substantial technical assistance effort in the rural sector must be studied very carefully from this point of view. If too large, a program may not only ANNEX 14 Page 11 be a waste of technical assistance, but it may also have an overall negative effect. The success of technical assistance must be measured by the rate of development of local institutions, the growth of the local stock of trained personnel, and the capacity to carryon programs after technical assistance is terminated --- and not by the size and coverage of the assistance programs. 41. The Technical Assistance Office of CONSUPLAN must be in charge of determining overall priorities for future technical assistance, as this must be done in the light of the national development plan for which CONSUPLAN is responsible. However, this task should be carried out in strict consultation with ministries. When the priority to be given to the various sectors has been determined, the responsible ministries are in the best position to decide on the specific technical assistance needs and programs. In the case of the rural sector, COCO (the Coordinating Committee for Agricultural Development) should be called on to participate n both the design and monitoring of technical assistance programs. 42. A loan-grant mix is the preferable method of financing technical assistance, with grants being used most liberally for long-gestation activities. Loan-financed assistance helps assure careful selection of personnel and effective monitoring of performance. ANNEX 14 Page 12 'rable 1: ESTTIlATED TECHNICAL ASSISTAifCE DISEUP..3E:·ZHT3 '1.'0 HO~ml;"R.\s FROH FOREIGN NON PRIVATE SOlJRCES, 1972 . \ Agencies Grants. Loans Total. 1/ ---------------------$ Thousands------------------_ mmp 1,160 1,160 2/ w1!O/?AE0 776 776 ;! OTHER mI 500 500 h/ IDB 300 500 5/ . Ok:(· 319 319 fJl In.:-:1) 1,2h5 1,245 7/ AID 3,065 42 3,107 8/ CIDA 396 396 9/ OTHER. :aILA7ZR<tL 1.uOO 1.LoO 10/ 7~916 9,'703 TO'!'AL . ----....------------------------------------------------------------ 1/ Source: P::-';D IlRevision ....-------------------- , del Presupuesto de Proyectos 31 Julio 1973 and rrJ.ssion ll r esti!1'.ates. 2/ Source; ?&qO and mission estir~tes. Figure incluees cottntI7 projects ($207,000) ~~d Intercountry Projects ($569,000). 3/ So1..tI'ce: CmlSlITJ:.A;.~ - Programasde Asistencia' Tecnica solici tada PO!' e1 Gobierno de Honduras al PNUD 1972-76, .Annex VIII, sd !l".ission estir:-.ates. 4/ Source. : Cooperacion Tecnica, Estado de les Fresupuestos de Proyec+.,os (ID:9, .Feb. 28, 1974); BIt, FEpresentacion en Honduras. G~a Infornativa (1974), ~"d '!:lission es"t.i."!lates of the ~'"early disbu.rserr:.ents. S/ So~ce: OAS, Subsecretaria de Cooperacion Tecnica, and mission est~~at8s~ (1972-73) y Sol.!rce: IB.:ID and miDsion esd.Inates. The 1972 figure is 1.:.nusually Ls.rge The 0 a~erage yearly disburse~€nts for 1971-1973 h&7e been about $650,000. 7/ So'-lrce: AID, Congressional Pr-:sentations, a!'.d :nission esti::-...ates. T!::e fig'J.re !"or loans is ~~ a7~ra~e esti~ated for the r~ral sector only. 1'\ I ~-,.." ( ..... 'C'... , '-'I '" ~8·.l~~~e : It.ll) ..' i. • ..l.7:'--j ) 9,/ - ~~ :>~.t!"C? : S-.::cr·etaria 7ec:li~a. - C':'::S1JPL;~;, and r;.ission ~sti~..3.tes. 1.0/ :~~~.:;io::..:..l ?r(.;E:,,~-usJ Stich as :~C~~\? .s....'1.j 0~ r:a"tte not D:::en. cc~sije~ed. ANNEX 14 Page 13 Table 2: AID - TECHNICAL ASSISTk'ICE (111.lL'I'.i'S TO namUHAS, C()MMITMENTS AND ~ISBORSEMENTS, 1970-tJ other Total fiscal Years J..~icu1t'..l::"ea..,d Ru..:-a1 ?ela:'~d Disburse- Cor;;:nit- Co:n.m t- Disburse ::len":;s:1ents ~nts I:le!1ts COr.1l1"itments - - - 1,103 Disbur:;;ements --- -- - -$ thousands - - - - --- - - - -- . 1970 1,069 2,099 ' . ·. 2 1,o~ 3,~O2 2,721 1971 762 794 2,418 2,387 3,180 3,151 1972 625 603 2,950 2,462 3,533 3,C65 1973 - 598 560 2,976 3,091 ),574 "l -' ,65' ... Total ),088 3,026 10,451 9,592 1),539 12,610 Source: AID Reports (W-253) and. USAlD estimates. . . ANNEX 14 Page 14 Tab18 3: Dimp - TECHHICALASSISTANCE TO HONDURAS, COT...:-:rTRY PROG.W,!S FOR 1912-1976 Ye?:1s Agricu1turz a.."1d Other Total -- . ~'lra.l ~e1~t.ed -- ---- $ thousands --- - - -- 1972 640.5 519.4 1,1,9.9 1973 653.9 734.9 1,388.3 1974 838.2 623.8 1,i!o2.0 1975 477.2 ,. 177.4 654.6 ~976 16l!.d 9S.h 260.2 ""71, 2 J' .. ,...... 0 2,150.9 4,925.5 Source: L~iDP - Re;~si6n d~l Presupuestc de Proyectos, 31 Julie 1973, and Inissicn estir~ates. Table 4. WlI)/PAlI) - TECHNICAL ASSISTANCE TO IDNDURAS, COMMITMENTS 1970-74 Country Projects .' IntercoWltrz Pro,Jeets Total Commitments 3ara ' lb.m9.1 Related Other Total Rural Related Other Total ' Rural Related - Other ~ -, - - - - ~ ,. - - - - - - - - - - - ~ ~ - - - ~ -$ thousahds - - - - - - - ~ ~ - - - _- - - - - - - - - _ _ _ _ _ _ 970 163.6 124.4 288.0 238.0 188.3 426.3 401.6 312.7 714.3 71 106.3 124.4 230.7 283.0 251.5 534.5 389.3 375.9 "765.2 72 109.2 97.9 207.1 293.0 276.0 569.0 L02.2 I 373.9 776.1 73 160.4 162.3 322.7 334.0 258'.0 592.0 494.4 420.3 914.7 74 139.0 897.0 1,036.0. 356.0 242.0 598.0 495.0 1,139.0 1,634.0 -- tal 678.5 1,406.0 2,084.5 1,504.0 1,215.6 2,719.6 2,182.5 2,621.6 4,604.3 ureel PAll) and mission estimates. ~~~ (J)l:rj >cI -' ~ . Ai.~NEX 14 Page Ib Table 5: IDE - TECHNICAL ASSISTANCE G?_~JTS TO HO?:m,MS, 1969-73.11 Year of Agriculture and Signature Related Sectors Other Total $ thousands -- - -- -- - - - -~ 1969 39.0 46.2 tl5'.2 1970 1l~7 .0 147.0 1971 17.0 120.0 137.0 1972 13.0 351.5 364.5 1973 240.9 759.0 999.9 309.9 1,423.7 1,733.6 21 Eased on year of signature. 30urces: Cooperacion Tecnica, Estado de los Presupuestos de Proyectos (IDE, Febrero 28, 1974); IDE, Representacion en Honduras, Guia Informativa, 1974. Table 6: OAS - TECHNICAL A3SIS'fANCE '1'0 HONDURAS... DISBURSED 1969... 73,AND RECOHHENDED 1973-74 Agriculture and Related Sectors Other Sectors Total ~, -- Years Experts - Trnining Total Training Total EXEcrts - - - - - - - - - - - - - -'- - $ thousand - - Exports Training - -- - - - - - - - - - -101.6 Total 1969/70 5.0 5.0 90.) 96.6 . . 186.9 90.3 191.9 19'10/71 6.1 2.1 6.2 93.) 125.0 218.3 99.4 127.1 226.5 1971/72 17.7 6.2 25.9 135.h. 118.5 253.9 153~ 1 126.7 279.8 1972/73 26.3 Y 9.6 37.9 103.4 172 .3 280.7 136.;7 161.9 318.6 J • 31 41 1913/74!1 55.4- 2.3 57.7 248.7 57.6 )06.3 JOlt .1 59.9 364.0- Total 107.5 27.2 134.7 676.1 510.0 1,246.1 783.6 597.2 1,360.6 11 Recommended. In OAS experience often the actual expenditures are gr8ater~ y. Includes Technical Assistance to forestr.y • .v Includes support to a regional ICAITI project in food, J:)aper, pulp and v:~ ~eta.ble oil. l'otal OAS contr:j..bution has been apportioned batt-leen Central American countries. Includes forestr.y expert. W Includes projects which will be financed from funds not included in PNCT. Source: OAS, Subsecretaria de Cooperacion Tecnica and mission estimates. 1~ (l)tzJ ...... 1>< -.J ..... J:'"' . · Table 7: CIDA - TECHNICAL ASSI'T'/d';Sg TO HmmL'RAS, COMMITMEN~TS AND DISBURSEi·3:JTS FOR 1971-19'16 Agriculture Forestry Other Tot.:::,1 Years Commit- Dlsburse- Corron! t- Di,sburse- COTrll''li t- Disburse- Commit- Disburse ments ments menta menta r;;(mts ment::; rnents mcnt.s - - - - - - - - - - - - - - -$ thousand8 - - - - - - - - - - - - 71/72 150 93.2 150 93.2 72/73 300 395.6 300 395.6 73/74 135 58.8 240 107.3 356 317.2 731 4tJ3.3 74/75 440 438.6 130 1,008.6 75/76 --- _.- 70 575 58.8 678.6 107.3 1,006 806 2,259.6 972.1 Source: CInA ~ O'QZ ~ CD txJ I-'x .... ~ ANNEX 14 Page 19 Table 8: IDB - TECHNICAL ASSISTANCE LOANS TO HONDURAS, TOTALS COMMITTED ON IEAROF LOAN SIGNATURE, 1969-73 Year of Agriculture and Signature Related Sectors Other Total - -. - - - $ thousands - - 1969 543.0 543.0 1970 1971 219.0 920.0 1,139.0 1972 520.0 520.0 1973 .53.0 53.0 815.0 1,440.0 2,255.0 Sources: Cooperacion T6cnica, Estado de los Presupuestos de Proyectos (IDB, Febrero 28, 1974); BID, Representanoion en Honduras, Guia Informativa (1974), and mission estimates. , , Table 9: IBRD/IDA - TECHNICAL ASSISTANCE TO lDNDURAS, ACTUAL COMMITMENTS AND DISBURSEMENTS AS OF JUNE )0, 1974, BY PROJECT AND CATEGORY Commitmen ts Disbursements ~- I!Jcperts !I Surv~ys Experts Surveys and ~roject Total !!:l!ining Con '1U1t,,:nts Studies Total Training Consultants Studies - - -- - - $ Thousands - 116 - Li VI1~1 tock I 150 150 116 Power IV 9'20 Y 265 655 611 68 543 Port II 566 566 346 346 PmIeI' V 1,700 )00 1,400 1,087 0 1,081 Highway VI 650 150 100 400 0 0 00 00 IJiv0~3tock II 300 .30 270 0 Q. 00 Education 900 270 6)0 0 Q 00 'I'otal 5~186 1,015 1,716 2,455 2,.160 68 462 1,6)0 1/ SI.:pcrvision of construction carried out by fore:tgn contractoro is not con:3ide;"'~d ~'~l Technical Assistance. 2/ 0rlginal Technical Assistance commitment in year of loan s;J.gnature was uS$600, 000 , and allocation was increased to US$920,OOO on January )1, 1973. i~ ro t<1 >< N-, o~ Source: IBRD ," ~ -------- ANNEX 14 Page '21 - Table 10: - IBRD/IDA - TECHNICAL ASSISTA1~CE TO HONDtJrt..AJ3, 1971-1974 Agriculture and Year Related Secto ra Other Total Commit- Diaburse- Commit- Disburse- Commitments Disburse ments ments ments ments menta menta _____________ $ thousands ____________ _ 1971 30 29 150 165 160 194 1972 30 34 693 1,211 723 1,245 1973 )0 27 857 482 887 509 - 1974.11 205 26 1.z006 186 1,211 212 Total 295 116 2,706 2,044 3,001 2,160 Table 11: PRINCIPAL TECHNICAL ASSISTANCE TO PORESTRY, ACTUAL THROUGH 1973 A}ID PLANNED 1974-76 Recipient A~encx Institution fY.rnose Amount $ Thousand. AID r'ores t managernen t 775 (1965-74) (COHDEFOR ( fuve1opment, PlanninG & Administration 728 (1972-76) UN DP/FAO ( ( (Nat'l Forestry School ( Training 1,224 (1969-76) Studies (Agro-Forestry Deve1op~ent) 1'70 (1973) (OONSUPLAN ( Plannine OAS ( ( 80 (1973-76) (CCHDEFOR ( Project Evaluation CIDA CONSUPLAN Mark'.:;ting arid Development 678 (1973-75) Carps National Forestry School Re fornsta tion & Re::h)nrch n.a. Cermany 1 Ex:pert n.a. Lherlands 1 Expert n.a. Source: Mission ru~i';. O'QZ (\) t:<.l ;.< ~ .c= ANNEX 15 HONDURAS AGRICULTURAL SECTOR SURVEY , THE ORGANIZATION AND ADMINISTRATION OF RURAL DEVELOPMENT· SERVICES Table of Contents '. Paragraph No. A Possible Administrative Reform Project J Personnel 5 Budget and Finance 6 Data Processing and Reporting 7 Organization'and l1ethods 8 Project M0nitoring 9-10 Post-Reform or Associated Measures 11 ANNEX 15 Page 1 THE ORGAJUZATION Al'-JD ADMINISTRATION OF RURAL DEVELOPMENT SERIVCES 1. ;,. 3ecause I)f its importance, the question of the orga.'1ization and administration of the Dublic services to agric~lture is discussed at 11 length in the General Report. This Annex does not review this discussion, but rather offers comnlementary observations which should be evaluated jointly with those presented in the General Report.) 2. The folll)wing pages enlarge on the suggestions of Sections V and VI of the General ReDort concerning a nroject to assist with a ref0rm of administrative pr0cedures. Secondly, ste'1S which might aDDroDriately follow (or be associated with) such a reform are discussed. A POSSIBLE ADMINISTRATIVE REFORM PROJECT 3. The proposed aaministrative reform should be comnrehensive and designed to modernize the management nrocess in all agencies whose work is of vital significance for rural develonment. In undertaking this task, consideration might be given to a technical assistance nroject which would finance a specialized team from abroad. (Many of the specific talents needed for the job can be found within government ranks, but most Dersons possessing such skills cannot be freed from their regular duties.) The project would be designed with the following considerations in mind: 11 Section ITr outlines the present organization and some of the seeming shortcomings. Section V discusses nossible imnrovement measures which may merit Government study. These include a greater use of autonomous agencies, a strengthening of the central decision-making and coordinating mechanism for o'1erations, and a cnmnrehensive ref'Jrm I)f administrative '1rocedures. It stressed that there are many alternative a1')Dr')aches to organizati0nal and administrative im'1rovement, that the Governnent is fully "u.,rare jf the 'Jroble!'1, and ~,hat certain remedial measur8S are 1mder'rray and Jthers are in disc~ss ANNEX 15 Page 2 (a) the objective is to strengthen the public administration through changes which are readily sustainable over the longer term; (b) improvements must be installed, tested, and debugged as a part of the nroject. In other words, the p~oject should include the presentation of alternative courses of action to resnonsible officials for decision, formulation of detailed plans and methods, nreparation of official instructions and manuals, and assistance in making the changes operative; (c)'the nroject should nrovide for the assignment of counterpart staff to "learn by doing" in order to tailor results to local needs, and to capitalize on the training opnortunities that will arise. In summary, the overall task is to design and imnlement management systems for rural development nrograms, to institutionalize these 5,Ystems, and to nrovide tr~~g in modern administrative practices. 4. The technical assistance should include the necessary range of disciplines and be designed for a four-year neriod. The project should be broken into five activities: personnel, budget and financial administration, data processing and management reporting, organization and methods, and project monitoring. 5. Personnel Sub-project. This sub-project would develop and install a 5,Ystem of personnel administration, as follows: (a) Analyze in detail the existing laws affecting personnel administration and prepare drafts of desirable amendments; (b) Compile information on duties and responsibilities of all positions; compile professional and service data of all emnloyees to be brought within the 5,Ystem; (c) Verif.r and amnlif,r written information about job duties and responsibilities, through desk audits; ANNEX 15 Page 3 (d) Develop a classification structure and prepare soecifi cations for all classifications, using existing class specifications, whenever possible; (e) Assign all positions to aopropriate classes on the basis of current duties and responsibilities; (f) Review the classification structure and the assignments of positions to classes with executive officials in each agency; notifY empLoyees of the orooosed classification of their jobs; and review and consider comments from both sources; (g) Develop a system of personnel records; (h) Develop personnel rules and regulations to amnlify the legal provisions; (i) Design procedures and forms for reporting, recording, and controlling personnel transactions; (j) Compile pay and related information, and analyze this infor mation in relation to the skills and experience required for each class of work; examine the salary and remuneration policies of the Government; and formulate a comprehensive pay plan; (k) Present and explain classification and pay plans to lJfficials, and draft necessary legislation to effectuate the plans; (1) Install the plans; (m) Design and install a system of perso~~el recruitment and selection; and (n) Design and install a training ~rogram for public a~~inis- tratiJn. ANNEX 15 Page 4 6. Budgeta~ and Financial Administration. This sub-project would review the existing systems for budget ~reryaration and execution, accounting, and firiancial management, and design and test measures which would enable management to imnrove the monitoring and evaluation of agency performance and program executio~as follows: (a) Survey and appraise the legal requirements and policies of the Government which affect its fiscal operations and management; (b) Analyze existing accounting and budgetary classifications; develop program, functional, and activity classifications and plan necessary revisions in present revenue and expenditure classifications; (c) Analyze present procedures for formulating, present~g, and examining budget requests; develop improved procedures for budget requests, and their review and presentation; (d) Analyze current practices in financial analysis and reporting, and develop procedures to nrovide prompt and comprehensive renorts for managers and for financial and economic planning; (e) Review accounting and pre-aUditing procedures and design desirable revisions; and (f) Develop budgeting, accounting, and reporting manuals for the use of operating agencies. 7. Data Processing and Management Reporting. This sub-project would install a system of data processing to improve reporting to management. It would review present data handling systems, determine the hardware and staffing requirements, and design an organiZation and management structure to ANNEX 15 Page 5 handle data processing services. It would also design, test, and install financial and statistical reporting sy5 tems. The principal steDs in this work are: (a) Analyze current data handling systems, both manual and automated; document the data flow, volume, frequency, and schedule for each organizational component; (b) Determine present and potential systems apDlications; identify principal systems requirements for various recommended applications and determine where modifications or improvements to existing systems are needed; (c) Evaluate current and future requirements for additional or expanded information and renorts; determine the avail ability and reliability of data to sunport such reports; (d) Determine the needed equipment and manpower; and (e) SUDervise the installation of revised systems and conduct training in the o,eration of the new systems. 8. Organization and Methods Improvements. This sub-proj ect would develoD and install improved organizational structures, management Dractices, and systems. The following steps should be included: (a) Study laws affecting operations and organization, staffing work practices, and physical facilities of each organiza tional unit in the functional area; develoD overall organiza tional plans for the functional field; (b) Examine the processes and general adequacy of caDital Jrograming and financial planning for operating expenses, ANNEX 15 Page 6 and deve10u appropriate revisions; (c) Study and apryraise the reliability and pertinence of information available for programing and administratio~ develop plans and procedures to provide a better factual basis for these activities, including improved reporting standards and procedures; (d) Elcamine current operations; analyze delays and obstacles to prompt and effective attainment of program objectives; formulate detailed organizational and procedural changes which will he1~ overcome operational difficulties within the general limitations of the staff and physical resources available; (e) Elcamine how and by whom decisions are made; develop patterns of organization, delegation, and administrative reporting to facilitate administrative action without loss of necessary control and responsibility; and (f) Review the organization and procedures of the supporting services of personnel, suuply, and physical facility use and maintenanc e. 9. Project Monitoring. Thds sub-project would be designed to overcome a major weakness in the public administration, that is, the lack of a project monitoring system. Project monitoring is essential if domestic and foreign resources are to be used effectively. It permits the early identification of problems which must be solved if ongoing projects and programs are to be ANNEX 15 Page 7 successful, and it is a tool for imnrovin;~ the design of future nr0jects and development TJlans. 10. This sub-nroject would build monitoring into an integrated budgeting, and accounting 5.1~em. Such a 5.1stem requires a comprehensive annual development plan, including quantified targets for the programs and nrojects, and a ~recise listing of the innut requirements of each program and nroject. Through a ~roject (or program) budget, these requirements are costed and critical cost centers are identified. An accountinE 5.1stem is then designed to control, record, and renort on expenditures by cost center for each program and project. The technical assistance project discussed in the General Renort provides the exnertise needed for the design and installation of a nro,ject monitoring system of this tyne. POST-REFORM OR ASSOCIATED MEASURES 11. The administrative reform will require several years to reach full effectiveness. When comoleted, it will onen up new possibilities for the distribution of Dowers and responsibilities among rural develonment agencies. The basic question which will arise at that time is whether the l'tinistry of Natural Resources (that is, i-tl.nistry of Agriculture) should absorb most or all of the functions being carried out by autonomous agencies workin;::; in agriculture and rural development 11--- or should the Ministry function only as a planning, programming, coordinating and monitoring unit. 1/ Including the existing agencies and those which might be created in the interim to activate the work in such fields as irrigation, research and extension, Lrnproved planting materials, and the Aguan valley. ANNEX 15 Page 8 12. It is neither possible nor necessary to answer this question at this stage. If the decentralized agencies and the coordination mechanism are functioning well upon completion of the administrative reform, the Government would probably wish to continue with the ongoing system. If organizational difficulties have persisted, however, the administrative reform will have made it feasible to consider a restructuring which concentrates all functions in the Ministry of Agriculture, including implementation activities. (As already noted, such a course is not now feasible because the comprehen sive task is quite beyond the capacity of the Hinistry to handle.) 13. In summary, then, the nroposal is that a comprehensive reform of administrative procedures be undertaken without delay; that simultaneously with the reform, such decentralization and coordination measures as are deemed desirable be taken on an interim or emergency basis; and that upon completion of the reform, the performance under the emergency measures be reviewed and that a definitive structure and process for rural development be installed. '4. Regardless of the eventual decision on the organization of the public services for rural development, there will be needed a strong Ministry- level body which is in close touch with action units and which has the capability to plan, program, and budget development work, coordinate and monitor operations, and make and enforce decisions. This body might be organized as follows: (a) Directorate of Plann:ing and Management: (i) Plans and Programs Division, to review and coordinate the work of the operating units, prepare overall sector plans, and analyze performance in relation to objectives; ANNEX 15 Page 9 (ii) Budget Division,to review the budget requests of the operating units, and be resnonsible for their negotia tion with the anpropriate central authorities; and to review and adjust operational plans, in connection with this budget process; (iii) Investment Project Division, to assist operating units in identifYing, prenaring, and a~praising nrojects, and monitor nroject execution. (This is a very important task, and this Division should have first call on staff.); (iv) Administrative Analysis Division, to make organiZation and methods surveys of the operating units, develop management information and related systems, and ?rovide coordination and support for administrative improvement measures; (b) Economic Analysis and Statistics Directorate: (i) Marketing Division, to study demand trends, investigate domestic and foreign markets for agricultural products, and make detailed studies and recommendations for improvement of marketing and distribution practices and institutions; (ii) Economic Survey Division, to conduct policy and program- oriented studies on me rural income and asset distribution, product and innut prices, taxation, farm management, emryloyment, and on the effects of public programs; (iii) Statistics Division, to collect, process and publish agricultural statistical infornation, and maintain fuis~n and coordination ;dth the Direcci0n General de Estadisticas y Gensos C·linistryJf Ec :mcny) . ANNEX 15 Page 10 (c) Legal Department, to advise operating units an legal matters and ensure uniformity of interpretations and criteria; (d) Information Department, to be responsible for informing the public on agricultural and rural development matters; and .(e) Administrative Department, to be responsible for personnel management, training, records, su~plies, transport and the like. STATISTICAL ANNEX Page i tDNDURAS AGRICULTURAL/RURAL SECTOR SURVEY STATISTICAL ANNEX Table of Contents Table 1 Swnmary of Balance of Pqments, 1969-75 2 Gross Domestic Product by Sector, 1969-74 J Gross Domestic Product by Sector, 1969-74 4 Exports of Agricultural Products, Main Items, Tonnage, 1965-711 5 Exports of Agricultural Products, Main Items, Value, 1965-74 6 Exports of AgricUltural Products by Specific Item, Volume and Value, 1970-7h 7 Merchandise Imports by Major Crops, Value, C.I .. F ".,1965-711 8 Imports of Agricultural Origin, Major Items, Volume and Value, 1910-13 9 Trade with Central Ame.rican CollUllon Market Countries (CACM), 1960-711 10 Exports and Imports by Commodity Group, Central America and Others, 1969-74 11 Estimated Production, Main Crops, Selected Years, 1952-69 12 Estimated Production, Main Crops, 1969-74 13 Annual Average Area, Yield and Production of Main Crops, 1970-72 14 Estimated Harvested Area, Main Crops, Selected Years, 1952-69 15 Estimated Acreage, Main Crops, 1969-73 . 16 Departmental Distribution of Acreage of Major Crops, 1965 17 Percentage Distribution of Acreages of Major Crop Groups, by Department, 1965 16 Estimated Output, Value, Main Crops, 1969-72 19 FBtimated Livestock and Poultry Production, Value and Inventory, 1969-72 20 Output of Livestock Products, Annual Average, 1910-12 21 Distribution by Department of Exportable Coffee Production, 1972-73 22 Selected Price Indices, 1965-74 23 Price Indices by Commodity Groups, 1970-74 24 Public Investment by Sector, 1970-74 25 Estimated Distribution of Farms by Size, an~ of Farmed Areas by Size of Farm, 1910 26 Estimated Land Use and Potential STATISTICAL ANNEX Page 1 Table 1: SUMKARY OF BALANCE OF PAYMENTS, 1969-75 ~ ~ 1971 ~ ~ ill!:. 1972: Jj --------------$ Mi!jJLon--------------------------------- Exports of goods and n.f.s. 186.9 196.5 218.0 236.4 294.3 327.5 300.0 Merchandise, f.o.b. 170.9 178.2 197.0 213.5 268.2 297.5 264.9 Services 16.0 18.3 21.0 22.9 26.1 30.0 35.1 Imports of goods and n.f.s. 206.2 244.3 224.3 228.0 303.8 455.5 420.0 Merchandise, f.o.b. 169.7 203.4 177.6 176.5 243.6 384.0 344.4 Services 36.5 40.9 46.7 51.5 50.2 71.5 75.6 Resource gap -19.3 -47.8 -6.3 . -8.4 -9.7 -128.0 -120.0 Factor income, net -18.6 -22.6 -24.7 27.5 -33.2 -13.4 -37.1 Transfers, net 7.3 6.6 6.8 6.6 7.0 32.5 15.0 Current account balance -30.6 -63.8 -24.2 -12.5 -35.9 -108.9 -142.1 Direct investment 8.8 8.4 7.3 3.1 6.6 -1.2 19.0 Public medium- a:o.d long-term loans, net 11 22.3 32.1 16.6 17.9 13.9 26.6 61.3 Disbursement 24.9 35.2 20.3 21.3 18.4 31.3 67.1 Amortization 2.6 3.1 3.6 3.9 4.5 4.7 6.8 Capital transactions n.e.i. ZI -3.8 9.3 5.9 - 0.5 18.8 85.4!:1 64.6 21 Change in reserves, net (-increase) 3.3 14.0 -5.6 -11.8 -3.4 -1.9 -2.8 11 Includes loans to Central Bank and Development Institutions. 2./ Includes errors and omissions. JI Preliminary estimate • 1:( Inalu~s 58.7 m in or1vate t'&nital inf'lows and 20.2 m in trens&t'ijions ~rl.th international orgaDl.zatLons. 21 Int'ludes 64.3 m in private ~apital inflows. Sour~e: IBRD Debt Reporting System and Honduras Central Bank. STATISTICAL ANNEX Page 2 Table 2: GROSS DOMESTIC PRODUCT BY SECTOR, 1969-74 ~ ;wQ.. l.21l.. l2ll. llllll 1974 1/ ------------Million Lempiras of 1966------------------·-- - Agriculture ?I 430.9 429.5 456.1 470.0 489.5 475.7 Crops 278.2 278.5 290.1 293.2 1/ Forestry 50.7 56.4 58.2 63.0 r/ Livestock 76.8 80.6 83.8 84.0 r; Poultry 19.5 20.1 20.8 21.2 r/ Other JI 5.7 8.3 8~6 9.3 r/ Mining 24.6 25.0 24.2 26.0 - 33.0 39.7 11anuf'acturing 159.0 156.0 160.4 172.9 186.9 186.2 Construction 62.7 59.0 50.2 45.5 52.0 60.5 Electricity, water, and sanitar,r services 14.1 14.4 13.2 14.6 15.2 16.2 Transport 79.4 76.2 74.9 78.8 83.4 83.7 Commerce 158.1 . 156.7 158.4 160.2 162.9 158.4 Banking 23.9 26.6 29.6 32.2 34.0 36.,1 Housing 89.6 89.9 95.4 101.2 103.7 106.3 Public Administration 34.1 42.2 35.1 37.6 39.2 39.6 Services 97.4 109.2 liO.3 . li5.9 li7.5 li5.7 GOP at Factor Cost 1 a1ZJ·8 1 a184·Z 1,207.8 1,254.9 1,317.3 1,318.1 Indirect Taxes net of subsidies 109.7 129.7 125.2 127.6 135.7 lh2.4 GOP at Harket Prices 1z28~·2 l z314.4 1 z333.0 1 z382.5 l z453.0 l z46O.. 5 11 Preliminary. U Host recent official estimate is shovm. Because sub-sectors have not been re-esti.ma.ted, the subsector data may not add to the indicated total for agriculture • .lI Includes agriculture, hunting and fishing. Source: Central Bank, In£orme EConom:Leo, 1974. >. _Table 3: ___GROSS DOMESTIC PRODUCT BY SEQTOR, 1969-74 .' ~ l21Q. l21l. lm.. l.2ll1.l 1974 !I ------------Millions of Current Lempiras---------------==== Agriculture and related sectors 432.0 446.4 474.0 515.5 555.5 564.0 Mining 28.1 29.1 27.7 30.4 44.2 61.2 Manufacturing 159.5 179.3 197.5 218.4 243.5 261.6 Construction 66.2 63.3 61.7 60.2 73.0 91.3 Electricity, Water and Sanitary Services 15.3 17.7 19.8 23.1 24.9 27.3 Transport 79.8 82.7 92.8 101.3 113.2 125.1 Commerce 166.3 171.1 175.4 183.8 196.7 207.5 Banking 30.0 37.3 40.8 46.6 51.5 59.1 Housing 95.8 98.4 106.7 ll5.7 125.4 135.8 Public Administration 37.4 46.8 49.7 53.2 56.8 61.1 Services 106.0 117.3 127.0 135.3 144.3 154.4 GDP at factor cost 1,2J.Q.11 1.,89,11 l z378.1 1,4~3.§ 1 2 630.0 l a148.1 Indirect Taxes, net of su~sidies 113.7 141.1 142.4 1 O. 168.0 lS8,2 ~DP at market prices J II :BQ.J J 1lli.3Q.S 1,515.. 5 1,634.; ).,798.0 1,936.6 ·---lr Preliminary Source: Central Bank ~~ t-OICil (\) ~ H WCIl t-3 H ~ ~ 'lable 41 EXPORTS OF AGRICULTURAL PRODUCTS,MAIN ITEr-1S, TOrmAGE, 1965-74 1')65 1')66 19M 1969 1970 1971 1972 1973 1971+ ------------:---------- -- -------------Thousand Tons --- -- ------- ---------------- ------~.---.---- Bananas 575 776 654 906 1136 73'"3 970.11 847.7 1125.6 616.6 Coffee 25 23 17 26 25 ?6 25 32.7 39.9 30.n Cotton 11.2 11.2 10.3 6.3 6.0 2.7 0.9 2.0 3.1 1+.5 Heat 5.4 6.3 6.6 6.9 11.6 12. it 15.3 lA.l 19.11 13.1 l'lood 1I 2Al 301 327 395 3Ao 356 462 491 591 )17}) .B 3 1I 100 m • Source: Central Bank. ~I~ u:ia ~ H ~ I STATISTICAL ANNEX Page 5 Table 5: EXPORTS OF AGRICULTURAL PRODUCTS, MAIN ITEMS, VALUE 11)65-1" ilii 1966 !221 1968 !2§2. 1910 .. 1971 1972 1913 197~ ---------------- .---- -------------;::; - -1-1iIIIOn --------------------------------- Bananas. 52.9 69.6 78.5 19.7 14.1 15.3 '6.7 90.1 91~ .0 76.5 Coffee 22.1 19.9 14.0 20.8 18.5 25.9 23.3 21.3 4A.5 43.9 Cotton 6.1 5.8 5.2 3.8 3.4 1.1 0.5 0.1 1.5 3.2 Other Crops !L.!. 1u.? 1),0 16,1 11.8 1.4 13.6 9.5 5.3 13.9 Subtotal (a) 98.2 109.5 110.7 120.4 107.8 109.7 l?!L 1 120.2 149. J 131.5 Meat 3.2 3.9 4.3 4.7 9.0 9.1 12.5 16.1 21.9 16.8 Wood 8.1 -2.,6 11.4 13.. 5 15.2 16.2 1'J.? 21.1 3'1.1 40.1 Total AbOve (b) 110,1 123.0 126.4 138.6 132.0 135.6 15'1.n 111.11 210.3 195.0 All Exports (c) 128.2 144.4 155.9 181.0 170.9 113.f1 111).1 205.') 261.1 286.5 Percent (~) of (c) 11 16 n 67 63 63 11 62 51 LR, Percent (b) of (c) 86 85 81' 77 77 1A n9 A3 Al 6R Source; Central Bank STATISTICAL ANNEX Page 6 Table 6: EXPORTS OF AGRICULTURAL PRODUCTS BY SPECIFIC ITEM, VOLUME AND VALUE, 1970-74 Vg1ume l21Q. J.2ll. ~ l..2ll 197h~/ ~ ------------------Thousand---------------- Banana Box 40,6CO 53,401 ub,629 1.;5,413 33,917 Plantain Bunch 507 946 1,lG9 ,1,128 1,040 Coffee Tons 26 26 35 40 30. B Cotton Kg 2,722 922 2,045 3,121 4,466 Cottonseed Kg 48 579 3,312 Tobacco Kg 2,181 955 970 1,374 2,366 Sugar Kg 9,757 9,975 12,130 100 7,545 Beans Kg 9,268 12,388 10,842 989 6,332 Corn Kg 15,013 13,252 8,294 2,096 213 Shri111p and 10 bster Kg 1,211 2,200 2,511 2,306 1,605 Meat Kg 12,408 15,346 18,136 19,028 13,103 Cattle Head 10 5 9 0.1 Animal and Kg Vegetable Oils Kg 3,064 9 441 1,555 614 Canned Fruit 11,146 12,788 12,5 8 11,394 ·9,,((8 Wood ~~ 356 402 491 591 479 Va1ue Yell. --------------1-1i11ion $----------------- Banana BoX 75.3 95.7 90.7 94.0 16.5 Plantain Bunch 0.8 1.4 2.4 1.5 1.2 Coffee Tons 25.9 23.2 27.2 48.3 43.9 Cotton Kg 1.1 0.5 0.1 1.4 3.2 Cottonseed Kg 0.1 G .LL I Tobacco Kg 2.2 2.0 2.2 2.9 4.3 Sugar Kg 1.2 1.6 2.1 h.5 Beans Kg 1.6 2.4 2.0 0.1 3.2 Corn Kg 1.0 0.9 0.7 0.1 Shrimp and Lobster Kg 1.5 3.3 1.6 2.0 4.1 Meat Kg 9.1 12.5 16.1 21.9 16.8 Cattle Head 0.6 0.3 0.9 0.3 Animal and Vegetable Oils Kg 1.1 2.0 C.9 [.4 Canned Fruit ~, 2.2. 2.3 2.3 1.9 1.9 Wood 16.1 19.2 21.1 39.0 hO.7 1I Preliminary Source: Central Bank Table 1: H.i!alc.;HANm~~ .ll:LP(JUTS BY MAJOR CATEGORY, VALU~, (;.l.F • .l.56S-14 J.2.6!i. 1.266. l26:Z. l.26.8. ~ l..21D.' l21.l. J.m l2ll 1974 Y ------------------------------------Hillion ~-----------------------------------------~- Consumer Goods Non-durable 24.3 JO.3 32.6 38.1 36.6 4,.9 28.4 )2.1 39.8 48.9 Durable ~ J.L..J.. l6...i J.IL.2. JJl...2. lla.2. 2fL.S. ll& 24.6 27.9 Total 36.8 44.7 49.1 ,7.0 ,4.8 67.8 48.9 49.9 'bIi":4 7O:lJ Haw Materials. Agriculture Industry and mining ,.8 39.5 5.7 ,.' 4'( .9 6.3 6.8 49.~ 8.6 8.2 56.u 6.9 so.6 7.9 63.1 8.7 63.1 9.7 62.4 11.9 tiO.O 15.2 124.9 Construction 7.8 ii.2 11..4 7.9 7.5 Ih.o lii.3 'fatal 51.0 '59:1 b4.O 12.8 b5.7 B2:"4 79.1 79.b 105.9 I58.4 Lubricants and Fuels . - 6.7 1.6 8.0 12.2 12.7 14.7 11.4 19.2 25.5 63.5 Capital Goods Agriculture 4.5 ,.4 6.0 6.0 8.1 8.4 8.4 6.2 tl.7 11.1 Industry 14., 21.9 2,.5 24.5 29.8 32.) 25.9 29.1 h2.5 46.2 Transport ..L:J.. -1Ll. .lQd. lL..l ~ !1u.2. l£.sl. .Jh1. 14.5 32.4 Total 26.9 )6.0 42.2 41.8 50.2 47.0 44.0 ~ w.7 ".3 Unclassifed Imports and Balance of Payments Adjustments z.Ji .w. '" .L.l. "'-l U z.....5. .1..L iJ.L. 8.1 13.0 Total 124.2 151.) 161.0 186.1 186.0 222·1 196·1 12 8•0 269.6 h21.4 - J./ Preliminary. OjourL:~: Cen tral Bank ~~ (J~ --J~ (") I~ a STATISTICAL ANNEX Page 8 Table 8 TIfllORTS OF AGRICULTURAL ORIGIN, MAJOR ITEMS, VOLUl-1E AND VALUE, 1970-73 Volume l.2lQ. l21l.. l212. J.21.1 ------------------Tcns---------------- Animal and Vegetable Oils 9,464 7,016 Tobacco 660 145 Live Animals 174 226 Meats 500 297 Powdered Milk 3,874 3,644 Other Dairy Products 1,573 701 Fish, Shrimps 681 522 Wheat 43,808 46,843 Rice 10,299 2,705 Flour 2,776 1,720 Processed Cereals 7,716 6,212 Fruits 1,065 391 Canned Fruits 3,293 322 Vegetables (fresh) 3,836 888 Vegetables (processed) 2,576 946 Value l2.7.Q l.2ZJ.. l21Z J..2ll ---------------Thousand $------------- Animal and Vegetable Oils 2,862 2,092 Tobacco 2,403 296 Live Animals 465 588 Meats 670 416 Powdered Milk 2,612 2,491 Other Dairy Products 1,275 82.4 Fish, Shrimps 468 266 Wehat 3,244 3,722 Rice 1,458 516 Flour 415 269 Processed Cereals 2,807 1,733 Fruits 259 206 Canned Fruits 738 170 Vegetables (fresh) 408 237 Vegetables (processed) 1,272 453 Source: DGEC Anuario Estadistico, 1970, 1971. Table 9: TRADE WITH CENTRAL AMERICAN COl~ON MARKET COUNTRIES (CACl.f), 1960-74 l22Q. l.26l. ~ 12U l2.6lL l2.6i ~ ~ ll2!i l222. l21.Q. l21l. ill-'. l2ll 1974 ---------------------------------------Million $--------------------------------------------------:::: Exports, f.o.b. -fl...J.. ~ kal. l6...h. Z!h5. ~ l.2....5. llJL JQJ. z.w.. l!!...J.. ..5..ah. -.5.a.2. J.Q....l. 21.7 CvstA Rica. 0.3 0.1 0.1 1.0 1.4 1.8 3.0 5.3 5.1 7.1 1.3 1.2 2.1 '""t:9 l!:1 Salvador 6.4 6.2 9.0 11.4 14.2 13.0 10.1 11.4 13.1 1.0 GU(l temala 1.6 2.1 3.0 3.1 4.5 5.1 4.7 6.4 1.1 6.1 6.9 2.4 1.6 2.6 6.9 NicRragua 0.1 0.6 0.8 1.0 2.3 2.6 4.2 3.3 4.1 1. 7 3.1 5.4 ~,; .9 Imports, c.Lt. ...5.a.l ..6.Ji. .JL.2. l.l..1 JJLQ ~ JlL&. WlJL WL1. I.W.& .5h.a.2. J.9..J.1. 22...5. Jg.JJ. 42.0 Cos tfl Ri CfI 0.1 0.1 0.1 0.3 1.7 3.0 5.0 5.4 6.6 7.4 12.4 5.0 5.2 6.9 I0.'4 El Salvador 4.1 4.1 5.1 1.9 9.0 1~.3 16.3 19.8 23.2 1~.4 Guatemala 1.1 1.6 3.0 4.6 5.8 8.1 9.8 11.8 14.2 17.8 28.5 8.1 9.4 16.2 21.3 Nicflragua 0.1 0.5 1.5 2.1 2.9 3.8 4.1 6.4 14.0 3.3 7.9 9.3 10.3 Regioni'll Trade 2.0 2.2 -5.0 -lh.5 -11.1. -It:1.l~ BalAnce 3.2 - 3.1 - 2.5 - ---- - -21.9 -36.8 -11.0 -16.6 -22.3 -lb.3 --- ---------------------------(CACM Relative to Total Trade) (%)-----~---------------------------- Exports, f.o.b. 12.6 11.6 13.8 19.4 21.6 16.0 13.5 15.0 16.7 1~.9 10.2 2.8 2.8 3.9 b.3 Imports, c. i. f. 1.2 8.7 11.0 13.7 11.6 -20.5 22.5 24.4 26.2 23.7 24.7 8.3 11.5 12.1t lC. 7 ll~ ,; /' Source: Central Bank, ,nd Direccion General de Estadistic8S y Censos. (I)~ H \OCIl i~ ~ Table 10. I1I'<i!1'S 4IID llII'OOTS Ul COHHOOlrI GII0UP, CDlTlUL AMI!JlICA 4IID OTIIEIIS, 1%9-'14 1"9 1910 1911 n72 I'll Y 1974!1 ..,~,..r- "C.-.. ...l-- C.nlral Caatul C.atu I C.alrd Central ~ !!£!!!!. • • • • • • • • • • • • • • • • • _. _ l!!!.!! •• _ ~ • • • • __ • • • • , Other ~ • • • • • • ' · 0 _. _________ - ~ ·11111100~ ___ • • _ Toul lAo..,!r••• ~ -. _•.••••.•••• ~ , .• _•• _••.••• _••••••• ~ I!!!.!l _•• !ill!!!. __ • - •••• ____ ••••• __Tot.! ._ ~ ~ 00 . - - - - __________________ • ~ or. ___ hporu 11 Food levera••• and Tobaceo 14.2 0.6 21S.0 4.4 221).2 S.U 10.1 0.4 2)S.9 4 •• 246.0 5.2 6.3 0.1 2Il10.6 4.1 290.9 4.9 S.O 0.1 288.5 S.6 291.5 S.l ".4 0.2 1"S.1 1.7 J~9.s 1.9 12.6 0.) 30.9 U.S )140$ 11.8 In.dlble aav Haurlala ..I 5S.1 S1.1 1.1 53.6 54.7 O.S 59.6 60.1 O.S 80.2 80.1 C..1 121.2 Hl.9 1.11 159,s 161.) fuel. aDd Lubricant. O.S 9.1 9.6 0.1 12.4 12.S 0.2 5.8 6.0 O.S 6::; 6.8 0.) b.O 8.} 0.1 28.9 29.0 Anl..al and Ve,etabl. 011• •,,4 Lar4 1.1 0.1 1.2 0.2 0.0 0.2 0.4 0.0 0.4 0.4 0.1 O.S 0.0 0.0 0.0 a.} 0.) Chemical Product. 9.7 0.1 10.0 9.1 0.1 9•• 1.9 1.4 1>.3 2.9 1.4 4.3 S." 2.) 1.1 11.6 S.o 16.6 Manuf.ct.....a.s Product. 6.9 2.6 9.S 1.1 3.3 10.4 0.9 3.1 4.0 1.3 5.0 6.1 7.1 9.9 11.6, 19.1 1".8 )).9 Kachlner), and TrlnaportlttOD. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Olver•• Manuf.ctured Artlcl•• Di ..... r.e Tran••etlon. 9.4 0.1 0.6 0.0 10.0 u.1 11.0 0.0 0.9 0.0 8.9 -..!W! O.S 0.0 1.4 0.1 1.1) 0.1 0 •• 0.2 1.8 0.0 2.6 0.2 1.4 0.0 1.9 0.0 }.) 0.0 1.6 0;0 }.8 0.0 S." 0.0 Total 40 281.4 no IT.I 'ill'::l 341.1 'io:i 362.1 113.' 'iD 388.9 4'0il.i To:r W2:I 522.2 ""Ii1.S ~ m:r 'IO,or" 11 roo<! Iii •• 16.S lS.l 22.4 19.9 42.3 S.S 2S.1 11.2 0.0 26.9 34.9 ""oS 62.) Bevera,.. and Tobacco ~.O 0.4 2.4 2.1 0.6 3.3 O.S 1.2 1.7 0.3 1.2 I.S 1.9' 2.9 huedlble Raw Hateri.l. 1.0 1.8 2.8 0.6 2.6 3.2 0.7 2.9 3.6 2.4 4.2 6.6 S.I; 11.2 Fua1. end Lubricant. Anl..al .nd Vasaubl. 011 • •nd L..4 3.6 2.1 n.' 2.3 lS.S 4.4 O.S 2.0 2'.0 3.1 2'.S 5.1 0.1 34.8 4.2 34.9 4.2 0.4 37.9 3.6 38.3 1.6 S2.1 ~.) 126.9 9.) Che.mleal Producta Kanuf.cturtd Produ.cta ll.6 26 •• 36.7 14.4 48.3 101.2 16.2 15.9 41.1 89.2 S1.3 125.1 n.3 8.9 49.1 101.6 60.4 llel.S 12.6 15.2 49.4 96.4 62.0 lU:6 7'-" lSO.9 111.9 209.) Kaehlnary and TrauaportaUoD 3.4 108.S 111.1 S.2 122.4 127.6 3.0 109.6 112.6 3.9 97.1 101.0 1S1.5 2~.6 (>tvera. Manufactur.d Art ic I •• 11.1 16.9 3S.0 24.2 22.2 46.4 2.4 24.4 26.8 2.1 23.0 2S.1 )2.6' )8.1 Dl.".er•• 'Tran.actioft. Total aH HH 1.8 m:l 109.1 nH 0.9 l;'1;l.S 1"2.4 M 1 . 1.9 387 •• 44.l" 1.3 j{i:1i 1.3 m:J I ~ 2. . ~ 1 • 11 cta .. ltled a«ordlol to tb. TutU NoII&oclatura of Cantu 1 ""'rlca, ~I Pre I iain.ry. Sour<e: Centr.1 Bank , I Table ~1 , ESTIMATED PRODUCTION, MAIN CROPS, SELECTED YEARS, 1952-69 1952-53 l255-5Q 19';;9-60 1962-63 l2Q5-QQ l2Qt2-QZ l2t2Z-t2a l2t26-t22 -------------------------------------Thousand Tons---------------------------------- Maize 185.8 181.5 247.1 280.4 333.8 315.9 335.4 353.0 Beans 21.2 23.0 36.0 44.8 42.8 50.1 56.9 62.8 Sorghwn 45.4 49.1 47.8 50.2 53.4 47.9 43.6 46.4 Rice 15.8 15.0 13.4 12.3 10.5 5.3 8.2 7.2 Wheat 0.8 0.7 0.7 0.8 0.5 0.5 0.5 0.6 Sesame 0.3 0.4 0.5 0.5 0.2 0.7 1.0 1.3 Potato 2.0 2.3 2.3 1.8 2.5 5.1 2.7 3.5 Yucca 12.3 14.5 19.0 22.8 27.4 29.1 31.2 33.0 Sweet Potato 0.7 0.7 0.8 0.8 0.8 0.9 0.9 0.9 Tomato 1.6 1.7 1.9 2.1 0.8 2.6 3.0 3.1 Cabbage 3.0 2.9 3.3 3.6 3.9 4.1 . 4.3 4.5 Oranges 7.6 8.2 10.0 12.2 17.9 18.7 16.7 17.4 Pineapple 1.8 1.0 2.2 2.4 2.7 2.8 2.8 2.9 Banana 507.4 349.6 557.8 629.0 922.0 1,080.2 1,280.7 1,351.0 Plantain 58.7 62.5 74.1 81.0 90.1 93.4 97.7 106.5 Coffee 15.0 17.5 22.0 28.0 35.5 28.5 40.3 31.2 Sugarcane 627.4 612.3 672.3 703.1 714.2 806.2 884.4 993.1 Cotton 0.5 0.9 1.6 4.8 11.4 10.0 8.4 7.7 Coconut 8.8 10.6 10.0 9.6 11.0 9.1 11.5 13.1 African Palm 3.9 13.1 17.4 17.3 23.6 26.2 29.1 32.3 (/) Cacao 0.1 0.1 0.2 0.1 0.2 0.2 0.3 0.3 1~ (I) ~ H ~ ~ Source: ArlUario Fstadistico I~ B Table 12, ESTIMATED PRDDUGftON, MAIN CROPS, 1969-74 ~ ~!I. l!ilQ!I J..W..!I 1972!1 l212. Y 197~ l2l.l Y 1914Y ---------------------------------------- Thousand Tbns ----------------------------------------~- Maize 339.2 3116.3 353.6 261.6 362.7 331.6 359.9 359.2 nice, with shell 6.5 13.2 15.0 10.6 19.1 16.4 22.5 22.0 SorghWll 47.9 47.2 46.5 33.9 61.0 53.2 6.1.0 63.1 Beans 54.7 39.3 35.0 31.8 49.9 54.5 42.0 47.4 . Yucca 35.0 37.2 39.5 39.9 n.a.!!! 44.7 n.a. n.a. Plantain 116.6 125.9 133.5 137.8 94.6 157.1 102.5 95.8 lianana (for export) 1,280.4 1,441. 7 1,546.4 1,408.6 1,366.0 1,455.4 1,364.0 1,161.0 Banana (other) 67.9 70.3 70.3 72.1 79.6 Oranges 16.3 19.3 20.3 25.1 n.a. 42.0 n.a. n.a. African Palm )0.2 32.6 35.1 37.9 47.4 47.4 51.0 4];.1 Cacao 14.5 15.3 16.2 17.2 n.a. 16.2 n.a. n.a. Coffee 32.5 35.6 36.5 42.2 42.0 51.6 Sl.l 49.2 Sugarcane 1,126.6 1,217.9 1,316.5 1,089.6 1,299.0 1,249.1 1,218.0 1,432.0 Tobacco 5.4 5.6 5.9 6.2 n.a. 7.0 n.a. n.a. Cotton 3.2 2.1 2.6 4.4 6.$ 4.3 12.2 Ih.9 Wheat 0.7 0.7 0.7 0.7 n.a. 0.7 n.a. n.a. Sweet Potato 1.0 1.0 1.0 1.1 n.a. 1.1 R.a. lll.a. Tomato 3.4 3.6 6.3 6.7 n.a. 16.3 n.a. n.a. Onions 1.2 1.2 1.2 1.5 n.a. 1.6 n.a. n.a. Garlic 0.2 0.2 0.2 0.3 n.s.. 0.3 n.a. n.a. Cabbage 4.7 4.9 5.1 5.5 n.a. 5.6 n.a. n.a. Potatoes 3.9 4.4 4.9 6.5 n.a. 10.3 n.a. n.a. Watermelon 2.0 2.1 L.2 1.6 n.a. 2.4 n.a. n.a. Cantaloupe 0.5 0.6 0.6 1.1 n.a. 400 n.a. n.a. Avocado 4.7 4.9 5.1 6.7 n.a. 5.6 n.a. n.a. SesalQe 0.7 0.9 0.9 0.8 n.a. 1.6 n.a. n.a. Groundnuts 0.02 0.02 0.02 0.02 n.a. 0.1 n.a. n.a. Cottonseed 5.1 J.J 4.7 6.6 n.a. 7.1 n.a. n.a. Coconut. 12.7 13.,8 13.3 11 CONSUPLAN 2/ Central Bank 3/ Preliminary, GONSUPLAN 4"/ Not available Ik>uroe: CONSUPLAN and Central Bank STATISTICAL ANNEX Page 1.3 Table 1.3: ANNUAL AVERAGE AREA, YIELD AND PRODUCTION OF MAIN CROPS, 1910-12 Area Yield Production Thousand Ha Kg per Ha Thousand Tons Cereals Maize 269.h 1,215 .321.2 Rice (Rough) U.5 991 u.h Sorghum .31.0 . 1;.311 42.5 Wheat 0.8 900 0.1 Pulses Beans 1.3.6 591 4.3.5 Starches Yucca 5.0 1,180 .38.9 Sweet Potato uO.O 2,4.39 1.0 Plantain 1.1 11,195 1.32.4 Vegetables Tomato 1.5 4,1.3.3 6.2 Onion 0.2.3h 5,556 1 • .3 Garlic 0.019 .3,025 0.2.39 ~abbage 0.611 1,681 5.2 Potato 0.8.38 1,OU 5.9 Fruits Banana 5h• .3 26,971 1,h65.6 Watermelon 0.60h .3,.3U 2.0 Cantaloupe 0.219 .3,.3.38 0.1.31 Other plantain and banana 1.0 10,lLL.3 71.0 Avocado 1.0 4,600 4.6 Oranges 4.2 5,ID 21.,6 OUseeds Sesame 1.1 183 0.861 Groundnut 0.02 1,100 0.022 Atrican Palm .3.6 9,111 .35.2 Coconut 2.9 5,586 16.2 Cottonseed. 4.9 1,000 h.9 Coffee 105.1 .369 38.9 Tobacco U.8 500 5.9 Cotton h.9 633 3.1 Sugarcane 3;.1 3h,U6 1,208.0 Source: CONSUPLAN T~ble 14: ESTIMATED HARVESTED AREA, MAIN CROPS, SELECTED YEARS, 1952-1969 1952-53 12S~-56 1252-60 1262-6J 1265-66 1266 - 61 1967-68 1268-62 ----------------,---------------------------Ha---------------------------------------- Maize 240.0 211.6 254.9 266.4 293.6 271.2 281.3 289.4 Sorghum 53.7 51.7 43.9 42.0 41.1 35.9 31.8 33.0 Beans 46.6 45.2 62.4 71.2 62.7 71.6 79.3 85.4 !lice 9.8 9.9 9.7 9.6 8.9 4.5 6.9 6.1 Wheat 1.4 1.1 1.0 0.9 0.6 0.6 0.6 0.6 Sesame 0.5 0.6 0.6 0.6 0.3 0.9 1.4 1.S Potato 0.9 0.8 0.6 0.4 0.4 0.9 0.5 0.6 Yucca 3.4 3.4 3.7 4.0 4.3 4.4 4.6 4.7 Sweet Potato 0.4 0.9 0.4 0.3 0.3 0.3 0.3 0.4 Tomato 0.6 0.6 0.7 0.7 0.3 0.9 1.0 1.1 Cabbage 0.4 0.4 0.5 0.5 0.6 0.6 0.6 0.6 Oranges 2.3 2.5 3.0 3.7 4.1 4.1 3.8 4.0 Pineapple 0.6 0.7 0.8 0.9 1.0 1.0 1.0 1.0 Banana 25.1 16.4 21.4 19.7 23.8 32.0 34.3 36.3 Plantain 6.8 5.7 5.4 5.0 4.9 5.1 5.4 5.8 Coffee 51. 7 60.3 71.8 80.4 89.0 91.9 ~4.8 97.6 Sugarcane 29.0 28.0 29.0 29.3 28.3 29.2 30.4 32.2 Cotton 1.6 2.3 2.0 6.7 14.3 13.9 11.2 10.1 Coconut 1.6 1.9 1.8 1.8 2.0 1.7 2.1 2.4 African Palm Cacao 2.7 0.1 2.0 0.1 2.1 0.2 ;!.O 0.2 2.1 0.3 ;!.3 0.3 2.6 0.4 2.8 0.3 "'I'" !J ~ (1)1-:3 H til 1-:3 H C'l Source: Anuario Estadistico f:; S; ~ STATISTICAL ANNEX Page 15 Table 1$ : ESTIMATED ACREAGE, MAlll CROPS, 1969-73 ~ ~ l.21Q. l2ll. l.m.. J:ll.3..1I ----------------------Thousand Ha---------------------- Maize 271.8 271.8 271.8 226.5 282.8 Rice, with shell 5.5 9.6 12.0 13.0 9.5 Sorghum 33.2 32.9 32.6 27.4 81.7 Beans 72.7 75.6 72.6 66.0 74.1 Yucca 4.8 4.9 5.0 5.2 5.3 Plantain 6.5 6.8 7.1 9.1 8.8 Banana ~for e~ort) 34.7 38.4 65.2 59.4 hO.2 Banana other) 6.8 1.1 7.1 6.7 5.9 Oranges 4.0 4.0 4.0 4.7 4.7 African Palm 3.1 3.3 3.6 3.9 4.2 Cacao 2.7 2.8 3.0 3.1 3.3 Coffee 100.8 104.0· 107.3 104.0 98.8 Sugarcane 34.7 35.8 36.9 32.7 34.4 Tobacco 10·.9 11.3 11.7 12.3 12.6 Cotton 4.0 3.3 3.8 7.7 13.9 Wheat 0.8 0.8 0.8 0.8 0.8 Sweet Potatoes 0.4 0.4 0.4 0.4 0.4 Tomato 1.2 1.3 0.4 1.9 1.7 Onions 0.2 0.2 0.2 0.2 0.8 Garlic 0.07 0.07 0.07 0.1 0.1 Cabbage 0.7 0.7 0.7 0.6 0.8 Potatoes 0.7 0.8 0.8 0.9 1.0 Watermelon 0.6 0.6 0.6 0.6 0.6 Cantaloupe 0.1 0.1 0.1 0.4 0.2 Avocado 0.9 0.9 1.0 1.0 1.0 Sesame 0.9 1.0 1.1 1.2 2.0 Groundnuts 0.02 0.02 0.02 0.02 0.02 Cottonseed 4.0 3.3 3.8 7.7 13;9 1I Preliminary Source: CONSUPLAN ST.111~CM. ANNEX Page 1 Table 16: DEPARTMENTAL DISTRIBUTION OF ACREAGE OF MAJOR CROPS, 1965 DeE!artment CroE! Atlantida Colon Comaxa!5ua Copan ~ Cholut:eca ----------------~-------------Thousand Ha-------------------------------- Corn (first crop) 6.7 4.2 16.0 19.6 10.4 13.3 Corn (second crop) 4.0 2.0 3.0 2.5 5.3 9.2 Sorghum 0.01 G.Ol 2.8 0.03 0.02 13.0 Wheat 0.007 0.01 0.004 0.004 0.009 0.004 Rice 0.8 1.3 0.5 0.4 0.8 0.2 Total 1/ Beans (first crop) u.s 7:5 ~ 2'2.5 "i6."6 '3"5.""7 0.4 0.5 2.8 2.9 0.8 1.1 Beans (second crop) 0.4 0.2 4.0· 3.5 0.4 2.5 TotalII o:s o:s 6:7 6.4 1.3 3.6 Tomato 0.002 0.004 0.1 0.02 0.03 0.005 Onion 0.002 0.08 0.02 0.007 0.004 Garlic 0.001 0.007 0.007 0.007 0.002 Cabbage 0.004 0.001 0.01 0.006 0.01 Cantaloupe 0.001 0.01 0.005 0.01 Watermelon 0.006 0.03 0.1 0.001 0.01 0.02 Total 1/ Q.Oi"'" o:D4 ~ 0.06 0.07 o:os Potato 0.02 0.009 0.04 0.02 0.004 0.002 Sweet Potato 0.01 0.1 0.009 0.009 0.01 0.01 Yucca 0.4 1.3 0.6 0.01 0.2 0.4 Total 1/ 0.4 ~ Q."6 0.04 . D:'3" ~ Sesame 0.2 Groundnuts 0.002 0.002 0.002 Cotton 0.003 0.1 0.01 10.2 Tobacco 0.01 0.09 2.0 0.002 0.01 Coffee 1.4 0.5 13.0 7.3 6.5 3.8 Cacao 0.2 0.04 0.02 0.2 0.001 Sugarcane 0.6 1.0 2.2 2.1 4.9 1.0 Coconut 1.8 2.2 0.05 0.01 0.2 0.01 Total 1/ 4.0 3.'8 l~ 11.4 ll.T'" ~ Oranges 0.2 0.2 0.4 0.3 1.0 0.4 Grapefruit 0.03 0.02 0.02 0.01 0.04 0.01 Other Citrus 0.02 0.01 0.03 0.04 0.03 0.02 Mango 0.08 0.06 0.2 0.08 0.09 0.2 Avocado 0.09 0.05 0.1 0.1 0.1 0.08 Pineapple 0.4 0.5 0.3 0.4 0.5 0.6 Total 1/ 0":"'9 o:s T:O T:O "f':'8 TT Bananas 1.4 4.1 0.6 0.5 7.5 0.1 Plantain 0.6 1.0 0.1 0.1 1.2 0.07 Other 0.1 0.9 0.2 0.2 0.05 ~ Total 1/ 2.2 &:0 1."0 o.a '8.'8 0.9 Total above 1/ 20.0 20.3 47.6 42.2 40.7 57.1 Total Cultivated Area ~/ 34.5 28.8 49.0 54.6 52.7 61.9 Total .s Percentage of Cultivated Are. 57 71 97 77 79 92 (Page 1 of 3 - continued) SUTISTIg,AL ANNEX Page 17 Table 16 (continued) Department Francisco Ialaa de El Paratao Morazau. Intibuca 1a Bahia 1!..X!! Lapira ---------------------------------Thouaand Ha--------------------------------- Corn (first crop) 11.5 23.9 15.2 0.07 9.4 20.4 Corn (second crop) 1.2 2.5 1.0 0.002 0.4 2.0 Sorghum 5.7 8.6 7.8 3.2 10.9 Wheat 0.005 0.01 0.1 0.006 0.1 Rice 0.2 ...Qd. 0.3 ..2.:.L 0.7 Total 1( '2'4."7 35.1 24.S 13.1 34.0 Beans (first crop) 2.5 4.7 1.6 0.002 0.6 2.7 Beans (second crop) 7.2 ..!.& ...Q....2. ..Jl....l ...l....l Total 1/ 9.8 13.6 2.1 0:002 1.0 4.2 Tomato 0.003 0.02 0.002 0.001 0.003 Onions 0.004 0.007 0.002 0.002 Garlic 0.01 0.003 Cabbage 0.004 0.09 0.06 0.002 0.001 . Cantaloupe 0.002 0.007 Watermelon 0.008 0.05 0.009 0.02 0.004 Total 1/ G.'3 o:r- 0':'8 D.O'3 0.001 O':'l"" 0.009 Potato 0.05 0.1 0.02 Sweet Potato 0.003 0.03 0.007 0.007 0.001 0.002 Yucca 0.08 0.1 0.07 0.01 0.01 0.03 Total 1/ O':'l"" o:r :o:-r- 0:02 o:or o:os Sesame 0.004 0.01 0.002 Grounduuts 0.004 0.002 Cotton 0.3 0.006 0.001 Tobacco 0.08 0.009 0.002 0.03 Coffee 8.2 5.0 3.0 3.7 6.6 Cacao 0.003 0.002 0.006 Sugarcane 0.9 2.9 0.8 0.005 0.7 1.4 Coconut 0.001 0.002 0.005 0.7 0.003 Total 1( 9.6 a:o 3':'8 Q.'7 4.'5 8':'0 Oranges 0.3 0.7 0.2 0.1 0.2 Grapefruit 0.009 0.01 0.005 0.003 0.01 Other Citrus 0.01 0.04 0.03 0.002 0.01 0.04 Mango 0.09 0.2 0.1 0.01 0.08 0.2 AVtX:ado 0.07 0.2 0.1 0.01 0.06 0.2 Pineapple 0.09 .Q.:!t 0.7 .Q.:.2.L 5L.L .2.:..!.. Total 1/ 0.6 1.6 I:3 0.04 0,4 1,4 Banana 0.4 0.5 0.5 0.1 0.5 0.4 Plantain 0.2 0.2 0,05 0.07 0:06 Otber Total 1/ 0.6 1.1 0.9 l.6 0.7 1.2 - o.r 0.2 o:s Q.&.. 1.0 Total above 11 45.9 60.4 33.2 1.0 19.8 48.7 Total Cultivated Area 11 46.4 62.1 . .. 33.S 1.4 26.2 45.4 Total a8 Percentage of Cultivated Area 99 97 99 72 76 107 (Page 2 of 3 - continued) Table 16 (continued) Department .; Ocot.veque Olancha Santa Barbara ~ ~ -----------------------------Ihouaand Ha-·---------------------- Corn (first crop) 7.4 16.1 22.5 8.7 lS.2 229.7 Corn (second crop) 0.1 1.0 8.2 2.3 4.4 49.2 Sorghum 0.5 0.02 0.03 7.4 0.07 60.1 Wheat 0.3 0.002 0.009 0.004 0.6 Rice 0.2 0.8 0.04 0.2 0.4 7.S Total 1/ 8.6 I8."O rr.r 1!71 n:r- ~ Beans (first crop) 1.1 2.4 3.0 0.2 1.6 29.0 Beans (second crop) 0.3 3.3 2.0 0.4 1.0 36.6 Total 1/ 1.4 D 5.0 0::4 2.6 65":'6 Tomato 0.008 0.002 0.01 0.01 0.3 Onion 0.04 0.01 0.01 O.OOS 0.2 Garlic 0.03 0,004 0.004 0.001 0.07 Cabbage 0.006 0,002 0.02 0.007 0.2 Cantaloupe 0.02 0.03 0.002 0.1 Watermelon 0.008 0.002 0.07 0.07 0.01 0.5 Total 1/ ~ ~ ~ 'O":l Q.1i4 I:'4 " Potato 0.03 0.01 0.02 0.01 0.4 Swe.et Potato 0.001 0.01 0.01 0.02 0.004 0.3 Yucca 0.01 0.3 0.07 0.004 0.08 3.8 Total 1/ o:os 0.4 'O":l o:or I:'O 4.6 Sesame 0.06 0.2 Groundnuts 0.002 0.001 0.02 Cotton 1.0 0.003 2.5 14.3 Tobacco 0.4 0.03 0.4 0.01 3.1 Coffee 2.5 10.2 26.1 0.01 10.5 108.3 Cacao 0.08 0.001 0.05 0.6 Sugarcane 1.0 2.5 3.4 0.03 1.7 27.2 Coconut 0.002 0.002 0.02 0.01 0.02 5.2 Total 11 4.0 TI":"8 30.0 2."7 12.3 1'5'8.'9 Oranges 0.1 0.1 0.4 0.05 0.3 5.1 Grapefruit 0.004 0.006 0.02 0.001 0.03 OJ3 Other Citrus 0.02 0,05 0.07 0.006 0.02 0.7 Mango 0.03 0.05 0.2 0.07 0.1 1.9 Avocado 0.06 0,05 0.2 0.01 0.1 1.8 Pineapple. o.i 0.07 0.4 0.03 0.2 5.S Total 1/ Banana 0,4 0.2 Q.3 0.4 rr 1.4 ~ 0.02 OT 6.S 15.3 25.3 Plantain 0,03 0.4 0,2 0.05 1.6 6.2 Other .lU.. 0.5 0.2 0.2 0.1 6.4 Total 0.6 1.3 l.7 o:r 8.'2 37.8 Total above J:.I 15.2 39,S 69,6 22.5 47.2 631,0 Total Cultivated Area 16.7 63.0 85.4 26.6 67.4 755.6 Total as Percentage" of Cultivated Area 91 63 S2 84 70 84 1/ Figures may not add to total becau.. of rounding, 1/ Annual and perennial crops, plus temporarily unused area. Source: UNDP/YAO, Honduras: Anal1sia d. la Situacion Tecnico - Economica Actual d. la Agricultura en Honduras, 1972, (Page 3 of 3) Table 11: PERCENTAGE DISTRIBUTION OF ACR¥GES OF MAJOR CROP GROUPS, BY DEPARTMENT, 1965 -_. . " .... , .... ~ ~" . . .. - .... Bananl;l Roots and Industrial Plantain Cereals Lerumes Ve~etables Tubers Products 21 Fruits Other llit&l Atlantida 3.3 1.3 1.3 10.0 2.5 5.6 5.8 3.2 Colon 11 2.2 1.1 3.0 31.2 2.4 5.4 15.9 3.2 Comayagua 6.4 10.3 25.9 13.8 9.7 7.1 2.7 7.5 Copan 6.5 9.8 5.0 1.1 7.2 6.6 2.0 6.7 Cortes 4.8 2.0 5.5 6.1 7.4 12.0 23.4 6.4 Choluteca 10.3 5.5 4.0 8.7 9.6 7.3 2.3 9.0 El Paraiso 7.1 14.9 2.3 3.2 6.0 3.7 3.0 7.3 Francisco Morazan 10.1 20.1 12.4 7.0 5.0 10.5 4.2 9.6 Intibuca 7.0 3.3 5.9 2.4 2.4 8.4 3.3 5.3 Islas de la Bahia 0.0 0.0 0.6 0.6 0.5 0.3 0.4 0.2 La Paz 3.8 1.6 2.5 0.3 2.8 2.8 2.0 3.1 Lempira 9.8 6.4 0.9 1.1 5.0 9.5 2.7 7.7 Ocotepeque 2.5 2.2 6.9 1.1 2.5 2.4 1.7 2.4 Olancha 5.1 8.7 1.7 8.0 8.7 2.3 3.4 6.3 Santa Barbara 9.0 7.5 11.5 2.6 18.9 9.6 4.6 11.0 Valle 5.4 0.7 7.7 0.6 1.7 1.3 0.8 3.6 Yoro ' _6.1 L.O ~.O 2.2 7.7 _1).2 21.8 7.1) Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Number (Thousand Ha) 347.4 65.6 1.4 '4.6 158.9 15.3 37.9 631.0 til 1~ ~ (J) J-I \0 ~ H 11 Includes Gracias a Dios Department. 0 ~ zj Sesame, ootton, coconuts, sugarcane, tobacco, coffee, cocoa, peanuts. Source: UNDP/FAO, Honduras: Honduras, 1972. Analisis de la Situacion Tecnico - Economica Actual de la Agricultura en I~ STATISTICAL ANNEX Page 20 Table J.8: ESTllfATED' OUTPUT, VALUE, MAIN CROPS, 1969-72 1969 12ZQ. l.2ll. J..2lZ. ---------L Million at 1966 Prices-------- Principal Products Corn 46.6 47.6 48.6 33.7 Rice (with shell) 1.3 2.6 2.0 2.1 Sorghum 6.1 6.0 5.9 4.3 Beans 18.7 13.4 11.9 10.8 Yucca 5.5 5.8 6.2 6.3 Plantain 7.8 8.3 8.8 9.1 Banana 184.1 183.1 c:.27.5 203.2 Banana (other) 3.8 3.9 3.9 4.0 Oranges 2.2 2.3 2.5 3.0 African Palm 21.8 23.6 25.4 27.4 Coconut 2.0 2.1 2.2 2.3 Coffee 45.0 49.3 53.4 58.5 Sugarcane 6.9 7.5 8.1 6.7 Other Products Tobacco 5.8 6.0 6.3 6.6 Cotton 3.5 2.3 3.1 4.8 Wheat 0.1 0.1 0.1 0.1 Sweet Potato 0.1 0.1 0.1 0.2 Tomato 1.1 1.2 2.1 'C.. 9 Onion 0.7 0.7 0.7 0.9 Garlic 0.2 0.2 0.2 0.2 Cabbage 1.3 1.3 1.4 1.5 Potato 1.3 1.4 1.6 2.7 Watermelon 0.6 0.6 0.6 0.4 Cantaloupe 0.1 0.2 0.2 0.3 Avocado 1.0 1.1 1.1 0.8 Sesame 0.3 0.3 0.3 0.3 Groundnuts Cottonseed 0.7 0.4 0.6 0.9 Source: OONSUPLAN STATISTICAL ANNEX Page 21 Table 19: FSTIMATED LIVESTOCK AND roULTRY PRODUCTION, VALUE AND INVENTORY, 1969-72 Inventory (Thousand Head) Cattle 1,543 1,568 1,594 1,620 Hogs 699 710 721 733 Poultry 6,116 6,310 6,630 6,794 Slauihter (Thousand Head) Cattle 201.9 207.8 263.9 262.7 Hogs 306.8 320.0 324.5 340.4 Poultry 5,021.8 4,758.1 5,193.8 6,761.6 Slaughter (Tons Dressed) Cattle 28,948 29,963 37,973 38,110 Hogs 9,818 10,240 10,383 10,891 Poultry 5,609 5,364 5,835 7,414 Value of P;toduction J.I Cattle 26.2 27.2 34.4 341'5 Hogs 12.4 13.0 13.1 13.8 Poultry Total ...2.:.J. 47.9 ~ 49.1 ..2.:.S. 57.1 - 12.2 60.5 J.I Million L at 1966 prices. Source: CONSUH..AN STATISTICAL ANNEX Page 22 Table 20 OUTPUT OF LIVESTOCK PRODUCTS, ANNUAL AVERAGE, 1970-72 Slaughter Yield Production Head Kg/Head Thousand Tons Cattle 244,800 144 37.3 Pork 328,)00 32 10.5 Poultry 5,572,822 0.5 6.2 Eggs 3,551,843 4.0 13.4 Milk 169,405 11 958.6 162.4 Honey 5,000 y 44.0 J.I 0.22 11 Number of milking cows. y Number of boxes. J! Kg per box. Source: CONSUPLAN STATISTICAL ANNEX Page 23 Table 21: DISTRIBUTION BY DEPARTMENT OF EIroRTABLE COFFEE PRODUCTION, 1972-73 Department ProductiOll Distr\9ution Thousand qq At1antida 4.2 0.5 Colon 0.1 0.01 Comayagua 105.2 13.0 Copan 67.1 9.0 Cortes 65.5 8.0 Cho1uteca 10.3 1.0 EJ.. Paraiso 99.4 13.0 Francisco Morazan 17.0 2.0 Intibuca 6.0 0.75 La Paz 51.1 7.0 Lempira 36.7 5.0 Ocotepeque 28.0 4.0 01ancho 37.5 5.0 Santa Barbara 188.0 24.0 Yoro 65.0 8.0 Source: IHCAF'E (Honduran Coffee Institute) . . Table 22& SELECTED PRICE INDICES, 1965-74 J.26S. l.266. 1261. l2!& J.26.2. l2lQ. l2ll. l2tt l2ll. JDh. Consumer Price Index (1966 • 100) 29.1 100.0 102.1 104.0 10,.) 108.5 111.6 115.4 :120.7 136.2 GDP Deflator (1966 = 100) 97.5 100.0 10).2 105.0 107.5 111.0 11).7 118.2 12).7 132.6 Export Prioe Index (1967 -69 .. 100) 101.1 99.8 99.0 102.3 98,.6 98.4 102.0 102., 127.2 12li.4 Import Price Index (1967-69 .. 100) 96.6 95.7 99.4 98.3 102.3 109.2 11).1 114.9 127.7 135.1 Terms of Trade (1961-69 • 100) 105.1 104.3 99.5 104.1 96.4 90.1 90.2 89.2 99.6 _95.0 Source: Central Bank and mission estimates. .. .~ STATISTICAL ANNEX Page 25 Table 23 : PRICE INDICES BY COMMODITY GROUPS, 1970-74 l.2lQ. l2ll. 1972 l.2ll !21l:. -------------------1966 = 100------------------ Food 110.4 113.7 ll9..1 l25.3 146.8 Housing 105.2 109.3 111.7 116.5 131.1 Clothing 109.6 111.5 115.0 1;::4.7 134.4 Healtb. Care 106.9 115.0 115.6 116.0 ll8.1 Personal. Care 111.2 116.7 122.2 126.6 1:9.7 Beverages and Tobacco 112.7 112.8 116.3 119.3 123.0 ~liscellaneous 104·5 l~12 105·8 lQg.~ 117.4 Total lQ8.5 1I lll.6 115.4 120.7 136.2 Note: As of mid-1974, the Central Bank estimated the 1974 increase on 1973 at 18%. 11 The comparable figure for 1969 was 105.3. Source: Central Bank • STATISTICAL ANNEX Page 26 Table 24: PUBLIC INVESTMENT BY SECTOR, 1970-74 l.2.m '1/ l2ll. 1/ l21Z. 1/ ll:U. Y E:l7l# ----------:.----.HiU:Lon Lempiras--------..,-==- Ecgngml.s; Transport 48.2 47.6 35.0 27.0 47.4 Communication 1.9 3.0 2.0 6.9 5.2 • Ecergy 23.1 10.7 22.0 19.5 16.2 Agriculture and Forestry ..ii..l. lJJ...2. ...5.....1 ....6...2.. 6.0 Subtotal 79.9 76.2 64.3 62.3 Th.'8" Sgcial Education 3.4 2.7 3.4 5.8 7.4 Health 4.6 3.5 3.4 6.7 16.8 Housing 2.1 1.6 0.7 1.6 4.6 Other' ....la.l .J....Q. 4.0 -S...l. 5.7 Subtotal 13.8 11.8 11.5 19.2 3Ii3 Total 109.3 1/ Data provided by CSPE, August 1973. 2.1 CSPE, Analisis de la Situas;ion Econgmica y Financiera y Orienta cignes Generales en la A§i~acl.gn de los Res;ursg§ Re§upue§tarig~ para 1974, June 1973. 11 CSPE, Situacion Actual Revision de las Proyecciones l1acroeconomic::!s 1976-7 , October 197 • STATISTICAL ANNEX Page 27 Table 25: ESTIMATED DISTRIBUTION OF FARMS BY SIZE, AND OF FARMED AREAS BY SIZE OF FARM, 1970 Farms or Families Distribution Thousand % Farms of: Less than 0.7 ha 30.1 10.2 0.7 - 4 70.9 23.9 4 - 7 34.9 1l.7 7 - 35 53.2 17.9 35 - 350 11.5 3.9 MOre than 350 0.8 0.3 Landless 92.4 31.2 Managers 2.6 0,9 Total 296.4 100.0 Tptal Area Distributipp Thousand He. % Farms of: Less than 0.7 ha 19 0.8 0.7 ... 4 135 5.5 4 - 7 150 6.1 7 - 35 674 27.4 35 - 350 806 32.7 More than 350 678 27,$ Total 2,462 loo.Q Source: GAFICA STATISTICAL ANNEX Page 28 Table 26: ESrnu.TED LAND USE AND POTENTIAL E 31;ima.ted (197Q) Area. Distr~but:iQP Thousand Ha ;0 In Farms 2,462 22 Not on Farms 3.711 ' ..ltl Total n,173 100 Pgtentia.l Intensive Use 872 7.8 Extensive Use 1,026 9.2 Forestry 6,155 55.1 Forestry and Agriculture 102 0.9 Ver:r Extensive ).108 27.Q Total 11,173 100.0 Source: GAFICA
Группа Всемирного банка · Other Agricultural Study
Honduras - Agricultural/rural sector survey (Vol. 4 of 4) : Annexes eight - fifteen and statistical annex
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