Honduras - Agricultural/rural sector survey (Vol. 3 of 4) : Annexes one - seven

WORLD SA~i!c (IBRD) INTER-AH.ERICA,,N DI::VELOP!'!E~:T 3.'0iK (IDS) I."NITED STATES. AG2:iCY FOR n:TERlf:\.:nO:;.;L DE\"'ELOP~'lE};T (AID) FILE COpy WORKING PAPERS REPORT ~O.971-hO . 'HONDURAS AGRICu~Tt~~;L/RUP~ SECTOR SUR~I (In Four Volumes) Volume re, Annexes 1 - 7 Jant<aI."'Y 1978 Do cun:.en t 0 f : World Bank Latin American and !he Caribbean Regional Office Projec:.s Departr::.ent (Agric .... lture) This document has a restricted distributioI! :md "!lay be used by reciyient,:; only in c~e perfcr:r.a!'.ce of c.::-.eir ofiicial cL.lcias. Its ccntencs r.l3.y not ot~erwise be disclosed without the au:hcrization of the World Bank, IDB, AID, or the Govern~ent of Honduras.  Conversion Rates Currency U'ni t = Lempira (L) US$($) 0.50 ::: L 1.00 $1.00 ::: L.2.oo Ton (t) ::: metric ton (unless other~se specified) Quintal (qq) ::: 100 pounds (lb) Manza..'"1a (mz) ::: 0.7 hectare (ha) approximately Hectare (ha) ::: 2.47 acres  TABLE OF CONTENTS Page No. PREFACE ....;,;. .. :~'-:'. t I. THE NEED FOR CHMtGE ................................... 1 Sector Performance and Characteristics ••••••••••• 2 Foreign Trade •••••••••••••••••••••••••••••••••••• 3 Rural Population and Living Levels ••••••••••••••• 7 Public Expenditures •••••••••••••••••••••••••••••• 10 '" Balance of Payments Outlook •••••••••••••••••••••• 10 Conclusions •••••••••••••••••••••••••••••••••••••• 12 II. OPPORTUNITIES FOR CHANGE •••••••••••••••••••••••••••••• 13 The Natural Resource Base •••••••••••••••••••••••• 13 Land Use and Yields •••••••••••••••••••••••••••••• 14 Conclusions •••••••••••••••••••••••••••••••••••••• 16 III. CONSTRAINTS ON CHANGE ••••••••••••••••••••••••••••••••• 17 The Public Administration •••••••••••••••••••••••• 17 Trained Manpower ••••••••••••••••••••••••••••••••• 20 Roads •••••••••••••••••••••••••••••••••••••••••••• 22 Research and Extension ••••••••••••••••••••••••••• 23 Improved Seed and Modern Inputs •••••••••••••••••• 24 Credit ••••••••••••••••••••••••••••••••••••••••••• 25 Marketing and Pricing •••••••••••••••••••••••••••• 26 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 The Commercial Farm Subsector ••••••• Three: 35 Point Four: Rural Roads ••••••••••••••••••••••••• 36 Point Administrative Reform and Five: Personnel Development Point Six: Research, Extension and ............. 36 Improved Seed ••••••••••••••••••••• 39 TABLE OF CONTENTS (Continued) Page No. : V. JUDGEUENTS AND SUGGESTIONS (Continued) Point Seven: A Rice Project •••••••••••••••••• 42 Point Eight: Irrigation, Drainage and Flood Control ••••••••••••••••• 42 Point Nine: Agro-Industry ••.••••••••••••••••• 43 r 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 MAPS No. 11146 Relief and Transportation No. 11147 Rainfall, Watersheds, Irrigation and Electrification No. 11148 Land Use Potential No. 11149 Forests and Forest IndusL~ies No. 11150 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 9 Irrigation Roads and Other Rural Infrastructure , 10 Expanding Agro-Industry (and Handicrafts) 11 Education and Training in Agriculture 12 Agricultural Product Marketing and Pricing 13 Public Finance for Rural Development 14 Technical Assistance for Rural Development 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, lICA/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) ; VoJ... 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 pr9jects 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 c~verage and jud~ental in natu~a. The ueneraL keport outlines the broad baCKground and reason1ng 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. f January 1978 .. .' ,  D!'DICE fREFACIO Parrafo I. t:'ECESIDAD DE CAMBIO DesempeFo y caracteristicas del sector 1 .2 Foblacion rural y nivel de vida 1.24 Gastos publicos 1.34 Ferspectivas de la balanza de pagos .",,' :-t..._ .... , 1 .37 . Conclusiones 1 .42 II. nPORTU}!IDAD3S DE CAMBIO Base de recursos naturales 2.2 Usos y rendimiento de Iss tierras 2.8 Conclusiones . 2.12 " III. RESTRICCIONES QUE SE OPONEN AL CAUBIO La Administracion publica 3·.2 Personal calificado 3.17 Carreteras y caminos 3.27 Investigacion y extension 3.30 Semillas mejoradas e insumos modernos 3.43 Credito 3.48 Comercializacion y precios 3.56 Conclusiones 3.63 . 1" ,MQi'l!N'n VA':; DE (iAMBIO IV; 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.' 5 Funto 3: El subsector de la agrict..ltura comercial 5.18 punto 4: Caminos rurales 5.23 Punto 5: Reforma administrativa y capacitacion . . del personal . 5.25 Funto 6: Investigacion, servicios de extension y semillas mej oradas 5.39 Punto 7: Un proyecto arrocero 5.46 Funto ~: Riego, drenaje y proteccion contra inundaciones 5.48 Funto 9: Agroindustrias 5.51 . Funto 10: Pesoa 5.52 Punto 11: Calcu10 de la demanda de productos 5.5"3 Punto 12: E1 credito yel BA1'iAFOM 5.54 Punto 13: Instalaciones de almaceramiento para granos 5.56  - ii ­ VI. ASISTENCIA.EXTERNA AL SECTOR RURAL fosibles proyectos 6.2 Admir.istracion de la asistencia externa 6.22 AFEtmICE 1 Una .f..lternativa Fara La Estrategia.. del Desarrollo Agricola/Rural y El Programa de .Asistene±a ·Externa ...­ MAPAS No. 11146 Relieve y Transportes }lo. 11147 Precipitacion fluvial, Cuencas HidrograIicas,'Riego y Electrificacion No. 1114P. Uso Potencial de la Tierra . No. 11149 Bosques e Industrias Forestales No. 11150 Lugares de Reiorma Agraria, Qiicinas de Credito Agricola, e Instalaciones de Almacenamiento para Granos ANEXOS 1 Los Recursos"~raturales como Base para la Agricultura 2. Proyecciones de la Demanda de productos Agropecuarios 3 Tendencias del Comercio R~gional e Internacional de . F'roductos Agricolas en Honduras. 4 Ten~:r,!c~a _de la Tierra y la Reiorma- Agraria 5 Fosibilidades de Expansion Forestal 6 Pesca 7 Credito Agricola fl Riego 9 Caminos e Infraestructura Rural 10 Expansion de la Agro-Indus~ria (y Artesanias) 11 Educacion y Capacitacion en Agricultura " 12 Mercadeo y Precios de los Productos Agricolas 13 Financiamiento Publico 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 visito Honduras en 1974. Los diferentes trabajos que contiene fueron discutidos con funcionarios del Gobierno en mayo de 1976, y en una reunion adicional que tuvo lugar en marzo de 1977. En esta ultima discusion tomaron parte representantes de CIDA (Canada), PNUD, BCAIE, IICA/OEA Y otras agencias interesadas en el tema. ..... ... .. .. ~- El documento se divide en cuatro volGmenes: Volumen I El Informe General (Resumen) (En ingles); Volumen II El Informe General (Resumen) (En espanol); Volumen III Anexos 1-7 (En ingles); y Volumen . IV Anexos 8-15 (En ingles). El objetivo del estudio fue el de asistir al Gobierno en el examen de la estrategia, politicas, programas y proyectos para el incremento de la produccion agricola y el mejoramiento del nivel de vida rural. El informe tiene la intencion de suministrar una base para un dialogo continuo entre el Gobierno y las agencias extranjeras de asistencia respecto al desarrollo del sector rural en la economia hondurena. Los trabajos presentados son selectivos en cuanto a su cobert~ra y en su naturaleza representan juicios basedos en observaciones y datos ::: ::c::.!cc.:::: -;.::::= :.::. ::.:!.... .:.Zi.1.. :::1 :h!"::':C1.1lC ~uC::J.d,l uC::I::IC.L.i..u~ a granaes rasgos los antecedentes generales del sector y los criterios que condujeron a las observaciones mas importantes y a los principales hallazgos y sugerencias. Los datos estadisticos y un comentario mas detallado sobre los diversos aspectos del estudio se presentan en los Anexos. La mision agradece el apoyo recibido del Gobierno y del sector privado en la preparacion de estos documentos, asi como por la respuesta altamente constructiva del Gobierno a las propuestas presentadas por la mision. ." Enero de 1978 ..  • ANNEX 1 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY THE NATURAL RESOURCE BASE FOR AGRICULTURE Table of Contents Paragraph No. Topography, Rainfall and Temperature 2 - 5 Soils and Natural Vegetation 6 - 9 Land Use Potential 10 - 15 Potential versus Actual Land Use 16 - 17 Judgments 18 - 20 Table 1 Areas of Some Maj or Valleys 2 Land Use Potentials 3 Actual Land Use in Relation to Potential •  ANNEX 1 Page 1 THE NATURAL RESOURCE BASE FOR AGRICULTURE 1. Honduras has a total area of some 115,208 km 2 (44,482 square miles). It is the largest of the Central American countries, except Nicaragua. It borders on Nicaragua, El Salvador and Guatemala. The northern coastline on the Atlantic (Caribbean Sea) from Guatemala to Nicaragua is approximately 640 km (400 miles) and the shorter coastline on the Pacific (Gulf of Fonseca) be­ tween El Salvador and Nicaragua is about 75 km (47 miles). TOPOGRAPHY , RAINFALL AND TEMPERATURE 2. Central and western Honduras has a rugged mountainous terrain, with ridges and peaks ranging in altitude from 2,435 m in the north to about 3,000 m in the west CMap 11146). The lower, flatter areas with slopes under 20% include the Sula Valley and the Aguan Valley on the north coast, the Nacaome-Choluteca plain on the south (Pacific) coast, the Guayape Valley in the central part of the country, and the Mosquitia region in the east (prin­ cipally the Departments of Gracias a Dios and eastern Olancho). There are many other small river valleys, as shown in Table 1. The predominance of steep, rugged terrain limits the agricultural potential. 3. The major rivers and tributaries and watershed areas are listed in Annex 8. The larger river systems include the Rio Ulua, Rio Aguan, Rio Sico (also called Negro or Tinto) and Rio Chamelecon which flow into the Atlantic on the north, the Rio Patuca which drains much of the interior and flows to the east (Atlantic) and the Rio Choluteca and Rio Nacaome which flow to the South (Pacific). 4. The climate is characterized by distinct dry and rainy seasons. These seasons are less distinct along the north coast where there is more precipitation, averaging approximately 3,000 mm per year (Map 11147), with an average of about 100 mm per month for March, April and May, the driest months, and with 250 to 400 mm per month for June through January. Here the climate can be described as tropical and humid. The eastern part, Department of Gracias a Dios, is similar to the north coast, except that the rainfall for the period December through May is somewhat lower. Most of the interior of the country, except the area around Lake Yojoa which is similar to the north coast, has an annual rainfall ranging from about 900 to 1,800 mm with relatively little rain (0 to 50 mm) during the period December through April. May is a transition month with an average rainfall of about 150 mm. The humidity is somewhat lower and the temperature, which depends primarily on elevation, is also lower. The south coast has a slightly higher average annual rainfall, about 1,700 mm, and the dry period is longer, beginning in November. 11 Temperatures average approximately 11 Rainfall is further discussed (in the context of stream flow and irrigation) in Annex 8.  ANNEX 1 Page 2 o 3 C higher than on the Atlantic coast, and the humidity is slightly higher than in the interior. !I 5. Average mean temperatures in the tropical coastal zones (up to some 600 m) are around 26 0 C. In the temperate zones, from 600 m to 2,100 m, mean temperatures range from about 16°C to 24°C. The zones above 2,100 mare reported to have temperatures which average less than 16 0 C. Isotherms have not been drawn (nor have isoyets). There are no official climatic recording stations at altitudes above 1,100 m. .. SOILS AND NATURAL VEGETATION 6. The best and most recent study (1968) of soils contains descriptions of the major types and areas. 1/ However, little, if any, profile analysis has been done; and even the post-1968 work, not yet released, has been based mainly on visual observation. The best agricultural soils are found on the north and south coasts and in the inland river valleys such as the Guayape, Comayagua, Siria, and Jamastran. In total, there are some 18,000 km 2 of valleys. The valley soils are alluvial, with the sands near the river giving way to clays away from the rivers, and probably nitrogen deficient. Aside from the valleys, soils are reported to be generally shallow, apparently deficient in nitrogen and phosphorus. (Fertilizer response data are now being assembled and analyzed with AID assistance; however, the error coeffi­ cients are typically large, and firm findings may be difficult to establish.) A large portion of the Mosquitia region is said to be poor for agriculture, with soils having very thin AO horizons. 3/ The soils of the mountainous areas are seldom suitable for agriculture~ although parts of the southern coastal mountain region have potential for perennial crops and pastures. 7. Because of soil and climatic conditions, the dominant natural vegetation is forest. About 83% of the land area is considered best suited for forest or other extensive uses. The area actually covered by forest is estimated at around 60% of total area (Map No. 11149). Of the forested area, about 60% contains tropical broadleaved species and 40% pine (Annex 5). Relative humidity data are collected at only a few stations. The available It evidence indicates that the mintmum monthly relative humidity at Tegucigalpa varies from less than 40% during March, April, and May to about 65% for October and November. LikeWise, the maximum values vary from less than 85% in April to more than 90% for the period July to December. At Santa Rosa de Copan the minimum monthly values are below 55% in April and above 75% during the period October to December. Maximum values are about 95% throughout the year. The available data from other stations fall between the above values. 1/ V. Castellanos and C.S. Simmons, Mapa General de Suelos, Ministry of Natural Resources, 1968. See also M.A. Caceres Pineda, Regionalizacion Agricola de Honduras, IICA, 1970. 3/ Personal discussions with Mr. Castellanos.  ANNEX 1 Page 3 8. There are substantial areas of savanna with grasses and some herbaceous species. 1/ Many of these areas were converted to savanna through repeated burning and destruction of the pine regeneration. A dominant feature of the ecology is wildfire which annually sweeps over from 25% to 50% of the pine forests. The result is destruction of regeneration and creation of even-aged, park-like stands of almost pure pine, with occasional understory of broad leaved species, but generally with an understory of grasses and herbaceous plants. If the mature pine is removed, savanna results • ... 9. The pine is generally not considered the climax vegetation for much of the area presently classified as pine forest. If the areas were protected from fires, hardwoods would come back in on many of these areas. Continued existence of the valuable pine forests will in many cases depend on continued influence of man. Ironically, if wildfires are controlled, then some form of controlled burning (as a management tool) may become necessary to perpetuate the pine. LAND USE POTENTIAL 10. Plath has estimated land use potential, drawing upon the available data on soils, rainfall, and temperature. 2/ The analysis assumed a "modern" technology, defined as including animal-dr;wn plows, moderate use of chemical and organic fertilizers, improved seed, insecticides, crop rotations, and simple conservation practices. 11. Four basic land classes were defined: (a) suitable for intensive cropping, labelled I; (b) suitable for extensive cropping, labelled II; (c) suitable for forestry, labelled III; and (d) not responsive to intensive production practices, and suitable only for very extensive use in livestock or forestry and as watershed protection, labelled IV. Classes I and II were broken down by climatic indicators. For the latter, three temperature distinctions were made. mainly on the basis of the temperature~elevation relationship, along with two rainfall categories, as follows: Temperature C - hot, tropical, less than 400-600 m elevation T - temperate, sub-tropical, from 400-600 m to 1,600-1,800 m (coffee zone) F - cold, above 1,600-1,800 m 11 C.L. Johannessen, Savannas of Interior Honduras, University of California Press, 1963. 1/ C.V. Plath, Mapa de Uso Potencial de la Tierra, FAD, 1964; and Uso Potencial de la Tierra de Honduras, Evaluacion Basada en los Recursos Fisicos, FAD (UNDP Report AT2234), 1967.  ANNEX 1 Page 4 Rainfall (Length of Dry Season) 1/ S - dry (dry season is long and severe, with 5 or more months having less than 50 mm per month) H - humid (with less pronounced dry season). 12. The tabulation shows that the subtropical zone was defined primarily as the coffee zone; the tropical zone as areas below 400 m; and the temperate zone as areas above the coffee zone. In general, the temperate zone is considered suitable for enterprises such as potatoes, fruit, and dairy cattle; the tropical zone for cotton, selected fruits, and rice; and the subtropical zone for coffee, citrus and tobacco. Maize and beans can be grown in all zones. 13. The resulting distribution of acreage in terms of use potential is as follows: % of Total Area I Intensive Use Annual Crops 8,726 7.8 II Extensive Use Annual Crops 1,495 1.3 Perennial Crops 8,670 7.8 III Forest 61,627 55.2 II and III Extensive Use, jointly with forestry 1,037 0.9 IV Very Extensive Use 30,173 . 27.0 TOTAL 111 ,728 100 14. These data (detailed in Table 2 and Map 11148) suggest that the area available for intensive annual cropping is probably around 8% of the nation's total area. An additional 9% of the land area is considered suitable for extensive cultivation of annual and perennial crops, mainly the latter. 15. These data are considered the best estimates of land use potential presently available. However, they are necessarily based on limited infor­ mation. For example, areas were classified in terms of the dominant 1/ Caceres (cited above) used three rainfall categories in his regionali­ zation scheme. These are based on the length of the dry season in relation to the number of crops which can be grown in a year.  ANNEX 1 Page 5 potential (over 50% of the total area), using minimum blocks of 2,000 hat In some cases, this can mean that areas designated as having potential for intensive annual cropping may in fact include land (up to some 40%) suitable for only a lower use. And areas labelled as forest land may contain size­ able blocks that are suitable for agriculture or grazing. For example, the draft 1974-78 national development plan estimates that there may be as much as 500,000 ha of land now in forests which is suitable for intensive and extensive agriculture. CMost of this potential agricultural land is in Agalteca, Paulaya, and Gracias a Dios.) It is clear, therefore, that much work remains to be done to bring information on land use potential up to a level which is useful for operational planning. It is also clear that < homogeneous land use regions are difficult to delineate in any broad sense. POTENTIAL VERSUS ACTUAL LAND USE 16. A comparison of these data on potential with the available evidence on actual land use suggests that only 28% of the nation's land which is suitable for annual crops is now used for this purpose. The comparable figure for perennial crops is 18% (Table 3). The comparison needs careful interpretation, of course. The limitations of the potential use data were illustrated above. The shortcomings in the actual use data are of the same sort; for example, it is generally known that some of the land now used for annual and perennial crops is suitable only for forestry or other extensive uses. Moreover, actual land use has undoubtedly changed since the mid-1960s when the data were collected. 17. A recent study by Strauss 1/ supports the view that opportunities exist in substantial scale for upgrading land use. Using a set of assumptions concerning such factors as land use potential, technology, manpower requirements for different crops and income needs, it was concluded that rural areas would absorb some 900,000 people over and above the 1965 actual population level. The data are: 11 E. Strauss, Metologia de Evaluacion de los Recursos Naturales, ILPES, Chile, 1969.  ANNEX 1 Page 6 Area Rural Population Thousand KmZ 1965 (a) Feasible (b) (b) - (a) -------------------Thousand----------------­ Pacific 7.7 277 139 -138 Central 58.0 818 1,250 432 Atlantic 45.8 366 991 625 Total 111.5.!.! 1,461 2,380 919 These data obscure within-region differences. For example, the western parts of the central region is already said to be nearing the limit of carrying capacity, although the region as a whole is not. Similarly, the La Paz-Valle zone in the Pacific region is heavily populated in comparison with Choluteca. JUDGMENTS 18. There are ample opportunities to improve land use through bringing areas of good potential, such as the Aguan, more fully into the agricultural economy and through shifting land already in use to higher value enterprises. Regardless of public policy, these opportunities will probably be exploited at an increasing rate as population pressures on land grow; this normal tendency will be reinforced if the rural roads system1s improved and if steps are taken to make it costly to hold land in underuse. In the foreseeable and not distant future, however, the land supply will constrain agricultural growth. For this reason alone, it is essential now to reinforce measures already underway to strengthen the national capability to develop water resources, higher-yielding technologies, and lower-cost accessibility to rural areas. Meanwhile, the dangers in broad generalizations concerning optimum land use should be recognized: final determination of _the best use for any given ecological situation must be determined by specific socio­ economic considerations. For example, many believe that Class I land should be in crops; this view may need modification in specific cases; dairy cattle in the Choluteca area is a possible illustration of the point. Similarly, the economics of reforestation for production forestry need to be considered before reforestation is undertaken in any of the many Class III land use areas which are now without forest cover. And development planning for all of the micro-zones in Classes I, II and III will have to give weight to soil and watershed protection. 19. The unfavorable outlook for the man-land ratio suggests that the current emphasis on agricultural development in areas which already have .!I Differs marginally from the data of paragraph 1.  ANNEX 1 Page 7 a relatively advanced infrastructure will have to be supplemented by infra­ structural development in all areas which have a significant agricultural potential. This implies that public outlays for agriculture must go up, and that people must be encouraged to migrate. 20. It is unlikely that significant progress can be made along any of these lines, including forest protection and management, unless an effective land redistribution and agrarian reform program is carried out • .  ANNEX 1 Page 8 Table 1: AREAS OF SOME MAJOR VALLEYS Valley Area KniT Danli-El Paraiso 214 .. Jamastran 261 Yoro 271 Nacaome 322 Talanga 329 Siria 364 La Masica, Eate 388 Comayagua 534 Paulaya 582 Agalteca 605 Choluteca 973 Guayape 1,155 Sula 1,841 Aguan 2,288 Note: Includes areas with slopes less than 20%; see V. Castellanos, and V. Simmons, OPe cit. Source: MoA. Caceres Pineda, Ope cit., Original Source: CSPE, Urban and Regional Planning Department, Planimetry Measurements for OAS, Mission 105.  ANNEX l Page 9 Table 2: LAND USE POTENTIALS Ciil.t~lig;c: kea .. ------Km2------ -----%----­ I Intensive use, annual crops, high yields 8,726 7.8 CH - Hot Humid 6,040 5.4 \. cs - Hot Dry 1,785 1.6 TH - Temperate Humid 342 0.3 TS - Temperate Dry 569 0.5 Intensive use, perennial crops II Extensive use, annual crops, lower yields 1,495 1.3 CH - Hot Humid 196 CS - Hot Dry 609 TS - Temperate Dry 689 Extensive use, perennial crops 8,670 7.8 CH - Hot Humid 1,221 1.1 CS - Hot Dry 625 0.6 TH - Temperate Humid 95 0.1 TS - Temperate Dry 4,734 4.2 F1I - Cold Humid 1,995 1.8 III Forest Tropical hardwoods 31,895 28.6 Mangrove 1,450 1.3 Pines 28,282 25.3 II and III Combination 1.I 1,037 0.9 IV Very extensive use 30,11:3 21.Jl TOTAL 111,728 100 1.I Extensive use, perennial crops, hot humid; and forest (tropical hardwoods). Source: Plath, Ope cit.  ANNEX l Page 10 Table J: ACTUAL LAND USE IN RELATION TO POTENTIAL Relative U§e Categ;o~ Pg~~~lal U§~ 11 Ac~~l Us~ ~Q Pg:ts:n:t1al Km % Km 2 21 % % I AnnUal Crops 10,221 9.1 2,829.1 16.1 27.7 II Perennial Crops 8,670 7.8 1,575 9.0 18.2 III Forest 62,664 L.I 56.1 3,806 J/ 21.7 6.1 IV Very Extensive 30.173 27.0 9,3'20 $3.2 ..1lJl TOTAL 111,728 100.0 17,561 100.0 15.7 1I From Table 2. 21 From Segundo Censo Nacional Agropecuario, 1965-66. J/ This includes only that part of forest land which is considered to be "managed" (apparently on a sustained yield basis). L.I Includes 1,037 km2 of land shown in Table 2 as II and III combination.  ANNEX 2 Page i HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY THE DEMAND OUTLOOK FOR FARM PRODUCTS Table of Contents Paragraph No. Export Products 2 - 44 Bananas 3 - 9 Coffee 10 Tobacco 11- 12 Sugar 13 - 17 Beef 18 - 19 Cotton 20 - 27 Forestry Products 28 - 35 Shrimp 36 - 39 Sesame 40 - 43 Other Products 44 Domestic Demand 45 - 57 Appendix 1 Methodology for Internal Demand Projections Table 1 Exports of Main Agricultural Products, 1978, CONSUPLAN Projections 2 Commodity Price Forecasts, 1975-85 3 Bananas: Estimated Export Unit Values, Selected Years 1961-72 4 Bananas: Import Prices, Current and Deflated, Selected Years 1956-72 5 Forecast of Export Avat'labilities of Bananas in 1977 6 Projection of Import Demand of Bananas in 1977 7 Coffee Prices, 1960-73 8 Coffee: World Exportable Production, Exports and Stocks, Historic and Projected 9 World Tobacco Exports - Selected Years 10 Sugar - International Market Prices, 1960-73 11 World Production, Consumption and Stocks of Sugar (Raw Value) between 1964/65 and 1972/73  ANNEX 2 Page i i Table of Contents (Cont'd) Table 12 Beef: Desired Imports, Available Exports. Trade Balances and Price Changes, 1972 through 1980 13 International Beef Prices. 1960-72 14 Cotton: World Production, Consumption and Exports, Historic and Projected 15 Cotton Prices, Mexican SMI-1/16", CIF Liverpool 16 Honduran Forestry Product Export Projections 1974-84 17 u.s. Sawtimber Consumption by Species Group and Major Product, 1952. 1962. 1970 with Projections of Demand Under Alternative Price Assumptions to 2000 18 Sawtimber Consumption. Exports, Imports and Production from U.S. Forests, 1952, 1962, and 1970 with Projections Under Alternative Price Assumptions to 2000 19 World Shrimp and Prawn Landings by Country, 1950-70 20 World Shrimp and Prawn Consumption by Country, 1950-70 21 Sesame Seed Price, Sudanese, Yearly Average, 1960-73 22 Honduras: Projected Human Consumption Per Capita, Main Food Products, 1980 23 Projected Human Consumption of Selected Agricultural Pro­ ducts in 1980, Given GDP Annual Growth Rate of 2% 24 Projected Human Consumption of Selected Agricultural Products in 1980, Given GDP Annual Growth Rate Per Capita of 3.5% . 25 Consumption of Selected Agricultural Products in 1970-72 and Projections for 1978, Official Estimates Appendix 1 Methodology for Internal Demand Projections  ANNEX 2 Page 1 THE DEMAND OUTLOOK FOR FARM PRODUCTS 1. The first part of this Annex comments on the export projections for , major agricultural export items, as set forth by the National Planning Council (CONSUPLAN) in the draft 1974-78 national development plan. The point of interest is the strength of foreign demand which can be expected, and its implications for Honduran agricultural deVelopment plans and programs. The .. second part of the Annex deals with domestic demand for basic products under varying assumptions on population and income growth. EXPORT PRODUCTS 2. The CONSUPLAN projections for the main agricultural products are shown in Table 1. Bananas 3. An export of close to 1.5 million tons of bananas is expected in the year 1978, compared to a 924,000 ton annual average for the 1970-72 period. In view of the outlook for competitive supply and a slow growth in demand, a more realistic figure for the projection is between 1 and 1.1 million tons. This is a reasonable interpretation of the available evidence. Prices may ease somewhat from present levels (in terms of constant 1974 dollars), as shown in Table 2. 4. The world banana economy has experienced sustained growth since the late 1940s, and from 1950 through 1970 world trade expanded at a rate of 4% to 5% annually. Exports stagnated in the early 1960s but from 1964-66 increased at a rate of 10% per annum, due to technological advances, mainly the advent of new disease resistant varieties and box-packaging (the latter enabled fruit to reach the consumer in better condition and facilitated more' widespread distribution). From 1966 to 1970, however, world trade expanded at a rate of only 2% per annum, with the increase being almost entirely confined to exports to Japan. By contrast, trade in 1971 rose by about 8% to a record of 6.4 million tons but under the pressure of such heavy supplies prices declined by a broadly equivalent percentage. Trade has since risen only marginally. 5. Export unit values in current terms generally rose during the mid­ 1960s. This WdS associated mainly with the change-over from bunches to cartons (which also represented a significant additional cost). But prices have levelled out in recent years, and in real or deflated terms have actually the same time, costs of production have been rising faster than prices in current have not risen in the last 10 years in the United States and have fallen in the Federal Republic of Germany (where the 1972 carton price was lower than the 1960 price for bunch fruit) and Japan. In France, import prices in current terms have risen, but a large part of the increase is due to the incremental cost of cartons. In the United Kingdom  ANNEX 2 Page 2 prices have risen more noticeably, at least in the past two to three years. However, the United Kingdom is a special case, because its supply of bananas originates in the Caribbean, an area which suffered a prolonged drought and as a result the market was consistently undersupp1ied since 1970. In real terms the price trend has been persistently downward, both at import and retail levels, and prices are not now significantly above the level of 10-15 years ago. T 6. For the years just ahead, the FAO sponsored Intergovernmental Group on Bananas has pointed out the possibility that export supplies will rise faster than import demand at present prices. In July 1973, the Sub-Group on . Statistics forecast that quantities which exporting countries expected to be able to market in 1976 would amount to about 9 million tons, compared with a forecast of 1976 import requirements at current prices of 7 million tons. It should be emphasized that this estimate assumed an uptrend in imports by the centrally planned economy countries, and on the supply side, rather drastic cuts in forecasts for some Latin American exporting countries. 7. 8. The supply-demand outlook has led to a measure of cooperation among banana exporting countries. Seven countries (Colombia, Costa Rica, Honduras, Panama, Ecuador, Guatemala and Nicaragua) held a conference at the ministerial level in Panama in March 1974. It was agreed that the principal objective should be to secure remunerative export prices and to coordinate production and export policies. The Panama Agreement provided for simultaneous increases in export prices ranging from $0.40 to $1.00 per 40 1b box. In September 1974 five of the seven countries created a Union of Banana Exporting Countries (UBEC) to coordinate policies and promote increased export earnings. 8. It has proven difficult to implement the measures advocated by UBEC. There are inter-country differences in production and marketing conditions. Leaving aside the potential effects on total demand, mandatory price increases through additional export taxes can be effected without changing market shares only if all countries cooperate effectively. This has not happened so far, espe­ Cially as Ecuador, the biggest exporter, has been unwilling to raise prices or impose new export taxes. At present, the tax situation in those countries where measures have been taken, was as follows: Colombia has increased the minimum export price by $0.40 per box; Costa Rica levies a tax of $1.00 per box, with $0.25 per box being payable at the time of exportation and the balance later (a portion of the tax returns, yet to be determined, is to be allocated to the producers); Honduras levies $0.25 per box; this is to be ., raised by $0.05 per box per year, beginning in 1975, until $0.50 per box is reached; Panama at present levies $1.00 per box, but is considering a reduction to about $0.50 per box. 9. Given world market conditions, it would appear that eventual success in levying export taxes will depend on whether the remaining countries effectively join UBEC and cooperate with Colombia, Costa Rica, Honduras and Panama is not only raising prices but also in reducing supply. A projection for Honduran annual exports of about one million tons appears realistic as soon as the damages wrought by the Hurricane Fifi are overcome.  ANNEX 2 Page 3 Coffee 10. The market outlook for coffee depends principally on supply trends. Demand grows generally at a rate of some 2% per annum and the difference in demand forecasts are usually marginal compared to the different viewpoints on probable supply trends. World coffee inventories have been declining since the mid-1960s and reached a level of some 40-45 million bags in 1973. Since ... then, world stocks have increased somewhat. Demand is expected to increase at a steady annual rate of 2%. During the next few years the world coffee supply situation will probably--remain tight, and prices are expected to be firm during the rest of the 1970s. Against this background, the CONSUPLAN projection of a 50% increase in exports between 1970-72 and 1978 is realistic, if national production permits and if, in the event of a new international coffee agreement, Honduras receives a quota which approximates the export target. Tobacco 11. CONSUPLAN projects an increase in tobacco exports, mainly of cigar type, from 1.4 thousand tons in 1970-72 to 4.1 thousand tons in 1978, with most of the increase probably going to the North American markets. Since the projected quantity is small in relation to that market, it would not greatly affect total supply or prices. 12. In the U.S., cigars account for 10% of tobacco consumption. Large Cigar consumption has slipped considerably in the past two years, particularly in the lower price categories. Per capita use of Cigars last year was the lowest since 1950 and may go lower, according to industry experts. Sugar 13. On the demand side, there is ample opportunity for expanded sugar exports. These normally go to the U.S. market, in which Honduras had a quota of 16,800 short tons. During 1970-72 Honduras either barely fulfilled its quota or fell short of it. The current world shortage is likely to continue through the present decade. This suggests that the quantity projected for export by CONSUPL&~ for 1978 is likely to find a ready market 'at remunerative prices. 14. World sugar prices were very low for a number of years during the 1960's as compared to prices in the preferential markets and to the export unit values obtained by the developing countries. 11 Prices recovered in the late 1960s when equilibrium between demand and supply was restored. For five consecutive years sugar prj.~~f; _in the ~~~d market have increa_l!~d_~_n<:Lt:h~. 11 The "world price" applies to trade on the so-called I1free market" which, since January 1969 and until 1974, was regulated by the International Sugar Agreement. In recent years net exports to that market amounted to about half of world net exports. Prices of sugar moving under the U.S. Sugar Act, the Commonwealth Agreement and from Cuba to centrally planned countries, are subject to special arrangement. (The International Sugar Agreement expired at the end of 1973, and the U.S. Sugar Act and the Commonwealth Agreement at the end of 1974. The result is that the free market includes virtually all trade in sugar, except that between the centrally planned economies.) \  ANNEX 2 Page 4 average price in 1973 was about five times higher than in 1968. At the same time, prices in the preferential markets of the United States and the United Kingdom were also going up, but not as fast as in the free market. In November 1974. prices reached an all time high of 65 U.S. cents per pound (f.o.b. Carib­ bean. raw value). Since then they have been steadily declining in response to consumer resistance, a greater use of sugar substitutes. and expected supply uptrends. 15. The price surge was the result of a variety of factors, including lagging production. Since 1964-65 world consumption has increased by more than 19.5 million tons. while production went up by only 10.5 million tons. Stocks as a proportion of consumption declined since 1970. indicating a tigh­ tening supply situation. The unique aspect of the shortage of the past three years 1s its longevity. Periods of high sugar prices in the past have tended to be of short duration. For example, the high prices of sugar in 1963 ave­ _raging about B.7 cents per pound) were followed by a sharp expansion in produc­ tion in porduction the following two years (7.5 and 5 million tons respectively). 16. Both structural and temporary factors are behind the sluggish increase in output despite the increasing sugar prices of the past three years. Beet sugar is mainly grown in highly developed or centrally planned countries where land costs and alternative used for land are important. Sugar is only one of several commodities in high demand and therefore competes for existing cultivated areas. In developing countries which produce sugar. mainly from cane. suitable land is also relatively scarce; but the more important constraints are high risks, low yields and the widespread resistance to private (and particularly foreign) ownership. These have tended to put the responsi­ bility for investment in the sugar industry on the public sector; but lack of funds and increasing costs of establishing new factories have hampered public sector expansion. Problems of organization and management, notably the choice between "plantation-type I! operations and smallholder cane growing, have contributed to the limited supply response to high prices. 17. Total world sugar consumption and production are forecast to expand by almost 20% between 1974 and 19BO. Still. taking into accou~t the increasing costs, the real price is expected to remain high compared to the pre-1971 level. The average world sugar prices for 1969-71 (in terms of 1974 prices) were 4.1 cents per pound, while 19BO prices are projected to be 12 cents per pound. Beef lB. The CONSUPLAN prOjection of 42.600 tons of beef exports in 1978 is a realistic one from the point of view of the international market's absorptive capacity. The available evidence suggests that aggregate import demand will increase faster than aggregate export supply, thereby leading to an increased deficit in the international beef market through the 19705.  ANNEX 2 Page 5 19. Prices of internationally traded beef have been increasing since the early 1960s. This trend is attributed mainly to (a) rapid growth of demand in the major consuming countries and (b) natural limitations on the rate of supply expansion (as in the U.S.) and policy-related limitations (as in the EEC). International beef prices fluctuated around a rising trend during the 1960s and early 1970s. One important cause of fluctuations is the cyclical pattern of production which occurs in varying degrees in all major producing countries. The decline in slaughter cycle during 1972-73, accentuated by the producers' decision to expand herds in expectation of further price increases, pushed the number of cattle on farms to a record high, foreshadowing a larger beef supply in 1974-75. Fluctuation in the supply will continue to be a pervasive phenomenon. Cotton 20. The CONSUPLAN puts cotton exports in 1978 at more than three times the 1970-72 level, with earnings increasing by a factor of 12. The earnings projection is highly optimistic. If the quantity of exports increases according to CONSUPLAN projections, it would still be unrealistic to expect earnings to go up to more than about 7 or 8 times the 1970-72 figure, given the price outlook of today. In constant 1974 prices~ export earnings can be expected to increase at a rate about proportional to the export supply. In terms of quantity, the Honduran projection is reasonable, leaving domestic production considerations aside, and no difficulty on the world demand side is foreseen. 21. World cotton consumption increased at an annual rate of 1.7% over the 15-year period 1958-59 to 1972-73. The global growth rate in cotton use slowed to 0.6% per year from 1966-67 to 1970-71, but recovered to 2% or more in the last three seasons when economic growth was relatively high. The recent increase in cotton consumption reflected expanded cotton textile activity in the developed countries. The recent rate of increase in cotton use in the centrally planned countries has declined marginally in relation to the long term rate. 22. The rising energy costs of late are increasing the costs of textile manufacturing and depressing the demand for cotton end-products. Conversely, the energy crisis is likely to have an even greater impact on both the costs of production and the short-term availability of man-made fibers than on cotton. Therefore, the demand for cotton should continue to be strong while the output of competitive fibers is restrained. Over the longer run, announced expansion plans by fiber producers indicate that cotton will continue to face severe competition, although the cross elasticity of demand for cotton with respect to the man-made fibers has not been satisfactorily quantified and does not permit a more specific analysis of the prospects for competition. 23. The evidence suggests that cotton consumption may continue to increase at around the long-term rate of 1.7% per year to 1980 and 1985. Demand will be sustained in the near term by less intense competition from the synthetics and in the late 1970s and in the 1980s by rising incomes and increasing population.  ANNEX 2 Page 6 24. World cotton production increased at an annual rate of 1.6% over the 15-year period 1958-59 to 1972-73. Although the long-term production growth rate is similar to the increase in consumption, short-term changes in production are more pronounced. The annual rate of increase in production in the latest three seasons was 4.6%, compared to 1.9% in consumption. To match the projected level of consumption in 1980, and provide for "normal" carryover stocks equivalent to five months consumption, cotton production would have to increase at an annual rate of 1.3% between 1973-74 and 1980-81. The demand forces operating in 1973-74 set in train supply factors which portend an increase in output of around 4% in 1974-75, despite higher costs of inputs and keen competition for land from food, pulse, and oil crops. 25. The long-term growth rate for cotton production has been greater in the developing countries than in other countries. This situation appears likely to continue in the late 1970s, as farmers make more use of existing production technology, and develop new cotton growing areas. In the short run, however, the need for food crops, and national tax policies which dilute incentives generated by international price levels, will limit the response of growers to changes in market prices for cotton. Accordingly, the supply elasticity of cotton with respect to price is estimated at 0.7 in the developing countries compared to 1.7 in the United States. 26. Cotton prices reached near record levels in January 1974, having risen sharply over the previous year. A major downward adjustment in prices is expected over the next three years as production is likely to exceed consumption requirements. However, it is unlikely that cotton prices will be driven down to the levels of the late 1960s, given the sizeable increases in production input costs, particularly during the last year. If this correction in the supply/demand balance is completed by 1977, as is probable, cotton prices in real terms should stabilize; but in current terms they are projected to rise from 1977 onwards for some years due to the influence of inflation. The extent of this increase in the late 19708 and early 1980s depends on the elasticity of cotton prices with respect to the general inflation rate in the industrialized countries. During the present surge in general inflation, cotton prices are expected to rise comparably with the index of international prices. By 1980, however, adjustments should have been made and cotton prices may again rise more slowly than the rate of general inflation. It is assumed that the elasticity of cotton prices with respect to the index of international prices between 1980 and 1985 will be 0.75. Furthermore, it is possible that increased productivity in cotton growing could permit a slight decline in cotton prices in real terms in the early 1980s. 27. In 1974 constant terms projected cotton prices are likely to be stable from 1977 to 1980 at around 52 U.S. cents per pound. This projection assumes that productivity gains in cotton growing will continue to offset increases in the real cost of inputs.  ANNEX 2 Page 7 Forestry Products 28. The CONSUPLAN projections for exports of forestry products are primarily for sawnwood and from 1976 on also for plywood. The major markets are in North America. Generally, the demand prospects are good. The quantities projected are relatively small in comparison to total U.S. imports. U.S. consumption of sawtimber in the past two decades rose slowly during the 1950s, and fairly rapidly in the 1960s and early 1970s. At 1970 relative prices, the USDA projects a rise in demand for softwood timber from 112.3 million m3 in 1970 to 171.3 million m3 in 2000 - an increase of 53%. 1/ Projected demand for hardwood timber also moves up from 29.0 million m 3 in 1970 to 57.3 million 3 m by 2000, an increase of almost 100%. 29. Since most sawtimber is used for lumber and plywood, the demand for which is relatively responsive to price changes, projected demand under higher price assumptions is materially lower than with 1970 price assumptions. 30. Net U.S. imports of products derived from sawtimber increased from about 4.7 million m3 in the early 1950s to over 9.4 million m3 in the early 1970s, mainly because of the sharp rise in imports of softwood lumber and hardwood plywood. The projected import demand will grow Significantly, par­ ticularly if rising relative prices are assumed, as is reasonable. 31. In the European markets sawnwood consumption increasel in recent years at a rate of 2.1% annually. The growth rate was faster during the 1950s and the first half of the 1960s but declined from then on. Cinsumption of sawnwood, particularly of sawn softwood, is dependent on development in the construction sector--an activity which tends to fluctuate more widely than development in the overall economy. Thus the sharp slow-down in building activities after the 1964 boom was mirrored in the downturn in demand for sawnwood in 1966 and 1967 and in the latter year apparent consumption of sawnwood fell to approximately 85.5 million m3 as compared to 85.9 million m3 in 1965. 32. Sawn softwood is the main component of the sawnwood total, accounting for approximately 77-78% of Europe's total sawnwood consumption in the 1950s and 1960s. According to UN estimates, it may still account for over 76% of the total in 1980. Apparent consumption of sawn softwood continued to expand in all the European regions except in Eastern Europe. With regard to future trends, according to UN estimates, European consumption of sawn softwood is expected to continue to increase until 1980s, but at a decelerating rate, reaching about 73.5 million m3 • If the same trend continues by the year 1 2000 total European consumption will be about 84.5 million mJ • 34. Production of sawn softwood in Europe has lagged behind consumption since the mid-1950s. Net imports of sawn softwood accounted for approximately 14% of total consumption in 1970 and according to UN estimates, its share will increase to about 16% in 1980. It is estimated, however, that the share of imports will not continue to grow drastically. 1/ "The Outlook for Timber in the U.S.," U.S. Department of Agriculture, :FRR-20, October 1973.  ANNEX 2 Page 8 34. Consumption of sawn hardwood in Europe rose at a faster rate than sawn softwood; from about 10.28 million m3 in 1950 to about 19.0 million m3 in 1970. A sharp increase in consumption took place during the first half of the 1960s. This was due to an acceleration of expansion in the EEC countries. According to UN estimates, consumption of sawn hardwood in Europe is expected to continue to increase at a rate somewhat higher than that of total sawnwood. As in the case of sawn softwood, however, the rate of growth is anticipated to slow down gradually and may reach a level of 21.3 million m3 in 1980. If the historic rate of growth were to preva!l, however, then in the year 2000 consumption would be about 27 million m • 35. There are substantial hardwood reserves in Europe, but harvesting cost may continue to limit the extent to which they can be exploited. As a result, the share of imported sawn hardwood has increased. However, so far as can be judged from incomplete statistics, it appears that consumption of tropical hardwood in Europe as a whole has increased at roughly the same rate as total sawn hardwood consumption. In view of Europe's relatively favorable domestic supply position, it could be assumed that this trend will continue, in which case consumption of tropical sawn hardwood in 1980 would approach 2.5 million m3 , and in 2000, it could reach 3.6 million m3• Shrimp 36. CONSUPLAN projects shrimp exports at 10,135 tons in 1978, mainly to the U.S., compared with 2,140 tons in 1972. Leaving aside the question of Honduran production potential, the projection appears optimistic in view of the recent weakening of world demand, altered economic conditions generally, and finite resources. A projection of some 5,000 tons would be more realistic. 37. World shrimp consumption has grown rapidly in the past two decades, although shrimp is expensive relative to other seafoods. The U.S. is the largest catcher and consumer of shrimp, taking in recent years more than 30% (around 225-230 thousand tons) of the world catch. Per capita consumption rose from 1.47 pounds in 1950 to 2.22 pounds in 1960, and in recent years has fluctuated around 3 pounds. Japan is the second largest consumer, with annual consumption fluctuating around 110-115 thousand tons. 38. World catch of shrimp increased by more than 33% between 1950 and 1958, and by more than 85% between 1960 and 1970, reaching a level of approx­ imately 930 thousand tons. U.S. import prices increased from U.S. 47 cents per pound.in 1950 to U.S. 50 cent per pound in 1960 and $1.03 per pound in 1971. In spite of the growing catch in the major consuming countries, namely the U.S. and Japan, consumption has been increasing faster and as a result the share of imports in total consumption has been increasing. 39. Within the major producing and consuming countries, income elasticities are estimated to be greater than unity in the U.S., Mexico, Pakistan and Thailand, and about .14 in Japan. This suggests that a rapid increase in total consumption can be expected to occur in the highly income-elastic demand countries, but not in Japan. Prices are expected to increase at an annual rate of around 6%, though they are subject to cyclical fluctuations. However, the rate of increase in price may be even greater, since the world catch may be approaching the maximum biological sustainable level.  ANNEX 2 Page 9 Sesame 40. The Government projects an increase in sesame exports from the annual average of 700 tons in 1970-72 to 5,800 tons in 1978. This, latter export volume would constitute a relatively small percentage of world trade, probably in the order of 2% to 5%. 41. Sesame accounts for less than 2% of world output of major oilseeds. Among the important producers are India, Peoples Republic of China, Sudan, Mexico and Ethiopia. Some 90% of the output is consumed in the producing countries themselves. World exports are estimated at 171,000 tons on annual average in 1961-63 and 203,000 tons in 1969-71. The main exporting countries are Sudan and Ethiopia, roughly accounting for two-fifths and one-fifth of world exports, respectively. The rest of the exports are shared by about a dozen countries. The principal importing countries are Italy, Japan and the United States. 42. Sudan and Ethiopia, the two main exporters, encouraged by the high prices of recent years, are expected to continue their substantial rate of growth in production and exports. Because of domestic demand growth, it is unlikely that any of the other major producers will become significant exporters in the next several years. 43. It is expected that a decreasing proportion of sesame production will be used for crushing. Sesame oil is more expensive 1/ than most fats and oils, and both the oil and cake must compete with other oil crops. In the United States sesame seed is already used almost entirely for direct food consumption in baking and confectionary products, and seems to be preferred over such products as groundnuts, copra and sunflower seed. This trend toward direct food usage will probably persist, partly because the expected increases in output of oils and fats, particularly soybean oil and palm oil, will tend to weaken sesame oil prices, and hence the demand for seed for crushing. Because of this competitive supply, the past secular uptrend in prices of sesame is unlikely to continue, and the evidence suggests that around 1980 the price may be on the order of some L 110 a ton, c.i.f. Europe. Other Products 44. The other products discussed by CONSUPLAN include beans, plantain, and melons. Bean exports are projected to go up slightly by 1978, a reasonable expectation on the demand side. The projection for plantain involves a large expansion; there is little evidence available on this product, nor on melons, essentially an experimental crop in terms of the capacity to meet the require­ ments of the U.S. market when neither domestic nor Mexican supply is available. !! No regular quotations of international prices of sesame seed oil are available, the obvious reason being the absence, for all practical purposes, of internaitonal trade in this oil.  ANNEX 2 Page 10 DOMESTIC DEMAND 45. The methodology used in estimating demand for the main agricultural products in the domestic market is shown in Appendix 1. 46. Two population estimates for the end year of the period of concern, 1980, were used. These are: (a) 3,538,000, which assumes a continuation of the annual growth rate of the 1960s (almost 3.5%) and a 1972 population figure of 2,698,000; (b) 3,653,000, which assumes a moderate fertility decline for the 1971-80 period, and a figure of 2,854,000 for 1970. 1:../ 47. Only one set of elasticities was used. That is, it was assumed that tastes do not change during the forecast period. It is recognized that tastes may change, particularly as urbanization progresses, and that this can have an important impact on demand. However, the data on rural and urban food intake per capita are limited, and it was not possible to take changes in taste into account. It is recognized also that a change in income will probably result in a different impact on consumption in cash income group; however, because of lack of information on income groups and on the particular income elasticities of each group, and because the changes projected in income redis­ tribution are not recally quantifiable, it was necessary to use an aggregate elasticity figure for the country as a whole. The following income elasticities of demand were assumed (as estimated by FAO, and accepted by CONSUPLAN): ~/ Maize .1 Vegetables .6 Sugar .6 Rice .6 Potatoes .5 Beef and Fish .8 Sorghum .9 Oranges .6 Pork .5 Wheat .7 Other Fruit 0 Milk and Eggs LO Beans .4 Oilseeds .4 Honey 0 Cassava, Sweet Potato Coffee .7 Chicken .1 and Plantain .2 Tobacco 1.4 48. Calculations were made for two rates of growth in per capita GDP: 2% and 3.5%. The annual GDP growth rate ranged between 6.0% and 2.1% between 1965 and 1972. Taking population growth into account, the per capita GDP growth per annum fluctuated between 3.8% and -1.3% during the period. (CONSUPLAN used a 3.2% figure in its demand projections.) . 49. The results of the calculations are presented in Tables 22-24. The Government estimates, including outlets other than direct human consumption, are shown in Table 25 for 1978. For major commodities, the two sets of figures for selected agricultural commodities for direct human consumption in 1980, along with the estimated 1970-72 average direct intake, are as follows: l! IBRD, Population prOjections for Bank Member Countries, 1970-2000. Unpublished. 2/ The estimates for honey, chicken, and other fruit may need further investigation.  ANNEX 2 Page 11 Thousand tons !.l /2 !2 Maize 277 267 202 Beans 40 37 26 Rice 29 27 18 Sorghum 27 25 16 , Wheat 72 66 44 Vegetable Oils 18 18 12 Sugar 77 71 48 Beef 25 23 15 Pork 16 15 10 Milk 326 298 186 !.l Table 24. Assumes 3.5% annual growth rate in GDP per capita and a population in 1980 of 3,538,000. L! Table 25. Government projections for 1978. Assumes 3.2% annual growth rate in GDP per capita, and a 3.5% annual population growth rate on the 1970-72 average figure. !2 Table 25. Government estimates for 1970-72 annual average. 50. It is clear from these data that substantial increases in production of each of the listed major farm products will be necessary to assure price stability and forestall a demand for imports. The need for expansion in maize becomes still more apparent if industrial uses are considered. CONSUPLAN foresees an industrial demand of some 70,000 tons in 1978, as compared to estimated industrial use of 22,000 tons on annual average for the 1970-72 period. 51. Of course, the demand projections vary a good deal between the case of high population and income growth and the case of the most conservative assumptions. The differences in the 1980 demand projections for these two cases are: for corn, 6%; rice, 23%; sorghum, 32%; wheat, 22%; beans, 16%; plantain, 10%; coffee, 26%; sugar, 23%; and meat, 36%. 52. Maize is an important food commodity. In Central America, only Guatemala has a higher per capita consumption. Because corn is an important staple, its income elasticity is low and as a consequence the income effect has a relatively small impact on its consumption. Nonetheless, the foreseeable domestic demand creates a significant production challenge when seen in the light of the historic performance.  ANNEX 2 Page",.12 53. Rice consumption in Honduras is well below that of Panama, Costa Rica and Nicaragua. Its relatively high income elasticity could result in significant increases in demand if the economy grows rapidly. The same is true for wheat; Honduras has the lowest per capita consumption of wheat among the Central American countries. In contrast, sorghum is principally an animal feed, with only about 38% of the output being used for human consumption. As incomes rise, it will become less important as food. 54. Beans are an important staple of the diet in Central America and the per capita consumption varies only slightly among countries. This will continue at foreseeable income levels. Plantain is a common food in the subsistence sector. There are several difficulties in making reliable estimates of consumption of plantain. First, only a small portion of this commodity enters into trade. Second, the degree of waste may be relatively high, although this is hard to determine. According to official estimates, about 21% of this product is consumed in other forms, such as animal feed, rather than through direct human consumption. However, the proportion may in fact be greatly underestimated. There are similar difficulties in estimating banana consumption, which is believed to be sharply higher in Honduras than in other Central American countries. 55. Honduras, with El Salvador, has the lowest consumption per capita of vegetables among the Central American countries. However, much of the difficulty in estimating plantain consumption applies to vegetables as well. Vegetables can be raised easily in backyards, and many families can meet their need without going to the market place. As urbanization occurs, there will be more dependence on the market as a source of supply. For that reason income elasticity of demand for this commodity may be higher than generally assumed. 56. Sugar is consumed in refined and unrefined (panela) forms. The projection on sugar consumption relates only to refined sugar; however, a very significant quantity of sugar, probably between 20% and 30% of the total, is consumed as panela. The substitution between the two forms makes it difficult to project refined sugar demand. 57. If the experience of other developing countries is followed in Honduras, there will be rapid increases in demand for meat, particularly beef, as income increases. However, since current and projected income distribution • information is scarce, it is difficult to estimate the demand for meat for the decade ahead.  " Table 1: EXPORTS OF HAIN AGHIGUVl'URAL HlODUCTS, 1978, CONSUPIJAN PROJECTIONS COllU'ltoditiea Quant.iti~:~ 1 ---ix~p(;,l·t. ,_ ·.. ·-·.~·~·i Qt;1l7;t[t~e£l )5'0:1' -·~·E·~-poit '->-'Ci~;;;g;- .Ch~ge- _______.ExpOl:i~~10·:1~.-I_~id:~1!Y~§.,L~9..yQ:.{.?::- .._..~-~1;~t~ !.J51JL__ .!~!:{!:}.},g:i1._:L~1!L . .!a..rg!~~_ ___~~.~n!:~~t.y._~ 'aDO t L l1illion '000 t L I·lillion :t p Beans 10.8 13.7 11. 7 4.0 8 8 Plantains 16.2 1.1 61.1. 4.1 379 373 Bananas 924.2 175.9 1,h93.8 28h.3 62 62 Melons .3 .1 12.0 3.4 Sesame Seeds .7 .3 5.fl 2.2 Coffoe 27.5 3£1.1 hl .1 57.0 So So Tobacco 1 .1, 1.5 h.1 4.4 293 293 Sugar 10.6 7.1 22.0 10.0 208 141 Beef 21.6 19.6 h2.6 38.6 97 97 Cotton 9.5 2.0 34.3 24.9 361 1,245 -- --------...----~~... -""-'- ....... -.~- y Annual average. Source: CONSUPLAN ,.~~ ~ D :.~ Ill. '''1 ('; p" ~..., 1-' \", I'D  Table 2: COMMODITY PlUCE FOREcAS'rS, 1975-85 Unit 1974 1915 1976 1977 1918 1919 1980 1985 1n Currf!nt Dollars Bananas 11 ¢/lb. 15.0 16.0 16.8 11.8 18.9 20.0 21.4 31.9 CoffeeY ¢/lb. 12.3 8).0 95.0 96.0 96.0 96.0 103.0 138.0 TobaccoV $/m.t. ',035.0 1153.0 1250.0 1310.0 1493.0 1625.0 1165.0 2310.0 Sugar!t/ . (World) ¢/lb. 21.0 15.0 12.0 12.0 11.5 12.4 13.5 18.0 Beef2! ¢/kg. 352.0 400.0 423.0 446.0 495.0 550.0 600.0 892.0 Cotton§! ¢/lb. 70.0 61.0 66.0 61.0 72.0 77 .0 83.0 1~.0 In Constant 1274 Dollars Bananasll ¢/lb. 15.0 14.4 14.1 13.9 13.7 13.5 13.5 15.0 CoffeaY ¢/lb. 12.0 75.0 80.0 12.0 10.0 65.0 65.0 65.0 TobaccoV $/m. t. 1,035.0 l,040.0 1,050.0 1,070.0 1,085.0 1,100.0 1,100.0 1,115.0 Sugar!t/ (World) ¢/lb. 21.0 . 13.5 10.1 9.4 8.4 8.4 8.5 9.0 BeefV ¢/kg. 352.0 )61.0 354.0 350.0 359.0 368.0 3'1':.0 419.0 Cotton§! ¢/lb. 70.0 60.0 55.0 52.0 52.0 52.0 52.0 52.0 !I Ecuadorian c.i.f. Hamburg. y Guatemalan, prime washed, spot New York. -" 'J.I India export unit value of flue cured. W ISA daily price, f.o.b. Caribbean. 21 Argentine, chilled rump boneless, wholesale price, London. §! Merlcan SMI-1/6", c.L.f Liverpool. ~ 0 *'U ~ (l) Source: Commodities and Exports Projections, !BRO. ~N .j(  ANN:&.".{ 2 Page 15 Ta!:ile J: EA!{A;IAS : Es'Ci.."ta'ted E.:cpo!"':' ~':~t '7·;a:'ue~ , Se!.acted :::-ears, ::;':::'-"'2 12:il .1..2.2J. J.2?5 1m ..ill.!. 1,.,..., ...:...::.J..:: ----------------------- $/ten ---- ________________ CUrrant ?'!"iC8S EU:'"O;-e 5pai., (C~nar;r Islands) 100 lei.:. 106 107 106 106 Cect::'2l ,"",<,rica L!. 65 95 108 100 95 99 soc:t.il .A.r..l!rica 12 60 60 78 8S 85 85 C.ri..bb-3an C~a~loupe/¥A='L1i~~ ·135 140 l4i 144 148 Ja."la!.ca 13 135 33 89 104 . "3 116 ll!r;.iard Is lancb /4 82 76 76 8S' 85 125 .!,..,1.l Chir~ 1l.4 140 160 145 124 10J i'bilippines 110 110 110 Cnc;. Ivory Coast 15 93 1(;$ 110 150 155 161 sor.:.alla. 150 150 153 10J 132 l:e!13ted~ IS l.'l:l.ro?S spa:!n (Canar;r Islancb) 101 104 103 91 85 79 CS!lt.!':ll !.;:::!lrica 65 95 1C5 85 77 74 SO"I:.tn ..',r"rica 60 60 76 73 69 6] Canboaan Gu.ldtllollpe/Hartinique 135 136 121 116 110 J.QlJ'IIaica 5:) 8) 86 89 91 87 W':trmard I:ll:mda 82 76 76 73 69 - 93 .illia China 145 140 155 124 100 77 pb.illpp!..":es 9.4 89 82 Urica I7'O=7 coast 93 105 107 128 125 120 Som...li.a 151 150 148 88 1c6 ~ Bunche:s up to 1962, thercai.'t:er cartoo.:s j additional cost of cartons estimated .t uS$25-JO/ton. 12 ~,che3 up to 1964, therea.!"'..el' cartons; additional cost or cartcns estimated at t'3; 25-30/ton. /3 Bunches up to 1967, thereafter cartoo.s; additional cost ot cartons esti.."lla ted at US$2$-JO/toa. /4 Euncllzs up to 19'71, therea.rt~r cartons; ad.d!tioc.al cost or cartons est1n:ated at uS$25-JO/ton. /5 Bunches~? to 1965, tnereatter cartons; additional cost or cartons esticatad at U5$25-Jo/ton. /6 Deflated by the UN Index of Export Unit Value of Kanutactured Goods, 1963,,100. SOUl'l:'!Il FAO, CCPI.E.Vcons 74/3. lI'ebrull17 197.4  A}JNEX 2 Page 16 Table h: BANANAS: BlURT PRICES, CTj"FL'tEIIT A..'ID DEFLATED §j SELECTED YEJ_qs, 1956-72 1956 ~ 1963 1965 V 1970 1971 1972 a a a a/b~b b ----------------------~/ton-------------------------- Current Prices United states Y 167 140 168 Y 159 168 140 162 Ger.r..an:r, Fed.. Rep. f.o.r. H~~urg} Ecuador ,-66 134 148 157 156 161 156 France, f.o. r. French poris, Xartinic;.ue 297 202 2"" <:;0 247 226 247 2C:::~ -,0 United Kingdom hi 210 175 172 194 229 207 Japan, c.i.f. price 153 155 145 170 171 142 139 Deflated Prices 2! United statas 174 139 168 156 1l.ili 116 . i 29 Ge r:rr:.any J Fed. Rep. 174 1)8 152 146 144 135 France 386 214 226 237 181 '191 197 Umt.ed F..ingdor.:. 224 175 164 154 166 148 Japan 157 145 168 151 125 124 a "= bunches b '" cartons 11 United States and Ger::lany, Fed. Rep. - cartons; Japan - baskets; France 2..'1d United Kingdon- bunches; additional cost of cartons estimated at US$25-30 per ton. Y Green first class tropical pack, hO-lb box, Central and South America. J.I Cartons. hi Green market price, Ja."7\aica. ~ Deflated by Wholesale Price Indices, 1963 = 100. §) Exchange rate calculated from U1l" - International Financial Statistics. Source: FAO, CPP:BA./cons 74, 3 February 1974.  ANNEX 2 Page 17 Eu:ope . h40 Portugal (Madeira) /2 15" Spain (Canarl !si.) 12 425 Centrol A.w.n"l.ca )607 British Honduras ~ Costa Hiea '147 Domi:l:!..can R£p. 100 0ua~1.a 250 :a::mt1-.lras H)$O Mexico 210 Nicaragua 120 Panama 66S S01:.th Al':;e rica 2410 .20\1 .Bra:3il ColCll"lbia 400 Ecu.adcr 1750 13 SUrinam 60 Carubean 721 Jrur..a1ca "f55' W...zNar.:i I:;l. 1M Frallc.~ Overseas Dept. !3. Guadeloupe 170 Kartwq-;l.e 220 Asia 1135 India JO Is:roel 10 Malaysin 30 Phi1.i;>1'i..'"':.03 750 China 315 AfrlC:l 655 ~rocn 'tOO Ivory COaJi!'.!; 175 !';/.dagascar 25 I Portugal: Ove::saas ?roT. '15 Somal.:ia 240 Oeeania 23 Cook Is13r.d:s J fiji 5 Tonga 5 Western Sa.:loa 10 All Other Cau.'ltrl"s 14 80 '~orld Total /1 J,!l:rllss:::e::ts or quantities ·"hicll illdi~dual cC"".J.::rt.rles e:<?~-ct W be able t.c ;-.:?:"i:~';,. This represents the SUb-Grcrup's esticate at the qIlB.l:ltities which Ecuador is expected to be able to lUrk:ct. l{ow-rer, it was unst'.:i::1oll.dy accepted that actual q~tities of exportable fruit could Do in excess or 2 million tOilS. 14 Bolivia, Vene%1.1ela, Lebanon, Jar.:ian, Equatorial OuL~ea, Etr~opia, Zaire, Guinea, Sudan, E~JPt J.rab Rep •• Pakist.ln, Thailand, Viet-tianl, DeM.Rep. SOIU"e.: lAO, CCPIEA/S'l'1 Ma71974.  ANNEX 2 Page 18 ':able 6: ?ROJECTIO:I OF DUDR! DEY..A.1::D 0: :lA1:AliAS r~r 1977 L.'1ous.and Tons Weetern Eurooe -jf24' EEC Original members mr T7j';' Belgium-Luxe:nb ourg --roo France 520 Germany, Fed. Rep. 620 Ital:; 365 Netherlands 130 New member countries 436 Detllllark Ii7 Ireland 29 United Kingdom 360 Austria 76 Finland 38 Greece 20 HONBY 44 Portugal /1 1)0 Spain /1 390 Sweden ­ 85' Switzerland 70 lUgoelavia 100 Eastern Europe and USSR 306 Biiliaria -m Csech08lovald.a 70 Germany, Dem. Rep. 120 Etmgar,r 16 Poland 40 Romania 10 tlSSR 40 North .AlDerica 1887 Canada 1'5{ Dnited states 1700 South .America 25'0 Argentina T» Chil.e 75 Uruguay 20 Asia ·1224 Bong Kong 29 Japan 1 11 0 Emrait 25 S&ud1. Arabia 50 Syria 10 .Africa 87 --:AIge'ria ~ Libya 32 Morocco 35 Oceania New Zealand k5 All other Countries /2 121 World Total 7044 /1 Ilomestic .shipments 1"rOlil oversea-a provinces. 12 Iceland, .Halta, Iraq, other Arabian states, Singapore, Mali, Southern Rhode~ia, Senegal, South Urica, Runisia, Upper Volta. Source s FAO I CCPIBA/ST, May 1974  ANNEX 2 Page 19 Table 7: COFFEE PRICES, 1960-73 MAMS U Guatemalan Y Santos.J&. :J! Angolan !V ------------------US¢/lb - Spot New York----------------­ 1960 44.9 41.3 30.6 25.3 1961 43.6 37.5 36.0 19.9 1962 40.8 35.8 34.0 21.6 1963 39.6 35.4 34.1 28.7 1964 48.8 47.2 46.7 36.4 1965 48.5 45.5 44.7 31.6 1966 47.4 42.2 40.8 34.0 1967 41.9 39.2 37.8 33.8 1968 42.6 39.4 37.4 34.3 1969 45.0 40.1 40.8 33.6 1970 56.4 51.9 54.6 42.0 1971 49.3 45.5 44.8 42.8 1972 56.7 50.0 51.0 44.9 1973 Jan.-June 72.6 62.1 63.3 49.1 - . 11 Colombian coffees from Manizales, Armenia and Medellin. Y Prime washed. U Brazilian. V Ambriz 2AA (Robusta). Source: IBRD  A1'NEX2 Page 20 Table 8: COFFEE: WORLD EXPORTABLE PRODUCTION, EXPORTS AND STOCKS, HISTORIC AND PROJECTED Exportable Production. :§?cport~ End-of-year TotAl Brazil Other Stocks 2/ --~-------------~llion~ of 60 kilogram bagJ---------~ 1962/6.3 5.3.8 22.7 .31.1 46.0 71. 7 196.3/64 50.8 17.2 3.3.6 51.2 71.3 196h/65 39.8 8.2 .31.6 41.4 69.7 1965/66 61.6 .32.1 .35S 47S 88.8 .1966/67 4.3S 10.4 3.3.1 47.7 82.8 1967/68 50.3 13•.3 37.0 54.1 78.8 1968/69 44.8 8.7 36.1 52.9 69.1 1969/70 Wi.1 5.9 .38.8 54.0 59.1 1970/71 40.2 1S 38.7 50.2 48.2 1971/72 54.8 17.1 31.7 57.6 45.0 1912/1.3 57.9 11.1 40.8 58S l.th.2 191.3/11. 48.0 1.6 1.0.4 54.5 37.7 1980/81 66.0 11.0 49.0 66.0 25-35 1985/86 74.0 17.0 57.0 73.0 30-40 Q!.'O'lfth Ratss 'if 196]/64-12/73 1.2 -1.6 2.4 2.3 -5.6 1772/73-80/31 2.6 +2.5 2.7 1.9 -4.2 1980/81-85/86 . 2.3 3.0 2.0 .3.0 11 The coffee year runs from October 1 through September JO. y Due to reporting errors and changes in the reporting system, figures can differ from their theoretical values. JI Growth rates in percent per annum based on three year moving averages. Source: International Coffee Organization (actual data). Economic Analysis and Projections Department, IBRD (forecasts).  ANNEX 2 Page 21 Table 9: IDRLD TOBACCO EXroRTS, SELECTED YEARS 1961-65 1966-70 1970 1971 1972 Change average average _ _ _ 1971 to 1212 ---------------------Thousand Tons------------------ EXPORrsli WORLD TOTAL 918 948 949 1,003 1,166 + 16 Main Producers and Exporters 795 761 734 787 940 + 19 Cigarette Leaf (Other Than 1.l31 386 369 374 472 + 26 Oriental) Oriental Leaf 229 239 214 227 277 + 22 Cigar Leaf 135 136 151 186 191 ,. 3 Others 123 187 215 216 22~ + 5 Developed Countries 363 412 392 378 469 + 24 Developing Countries 440 411 441 497 577 + 16 Centrally Planned Countries 115 125 116 128 120 - 6 ------------------us~ !1illion------------------­ VALUE OF EXroRTS WORLD TOTAL 1,097 1,209 1,232 1,264 1,SCo + 23 Developed Countries 598 747 737 704 918 +30 Developing Countries 387 327 364 413 507 + 23 Centrl-lll:- Pl.anned Countries 112 135 132 147 135 - 8 11 Dry weight. Source: Commodities & Export Projections Division, IBRD.  ANNEX 2 Page 22 Table 10: SUGAR - INTERNATIONAL MARKET PRICES 1/, 1960-73 Export Unit . Value - IIWorld u U.S.A. Commonlolealth Developing (ISA daily) Preferential 2/ Sugar Agreement 21 Countries 4/ ---------------U.So cents per Ib of raw sugar----~------~---- 1960 3.14 5.35 ·5Ji1 n.a. 1961 2.70 5.34 5.52 4.75 1962 2.78 5.56 5.61 4.95 1963 8.29 7.28 5.64 6.45 1964 5.77 5.98 5.64 6.55 1965 2.08 5.80 5.82 4.71 1966 1.81 6.04 5.94 4.88 1967 1.92 6.32 5.94 5.10 1968 1.90 6.54 5.10 5.20 1969 3.20 6.75 5.10 5.67 1970 3.68 6~94 5.10 5.81 1971 4.50 7.40 5.10 6.11 1972 7.27 7.99 6.602! 6.96 1973 9.49 8.9' 5.56 6/ n.a. n.a. • not available. 1/ F.a.s. or f.o.b. Caribbean or Brazilian ports. 2/ Price for export under U.S. Sugar Act. 3/ Starting in 1965 the figures include the special payments to developing countries introduced in that year. The decline in 1968 reflects the devaluation of the pound in 1967. l:! Excluding Cuba. 5/ Weighted average of contract prices received by deve;Loping countries, members of the Commonwealth SUbar Agreement; exchange rate used: 1-iJ .. $2.502. (Baeed on 00' conversion factor.) §J Exchange rate used: 1il· $2.452. (Based 00. IXF conversion factor.) Source: International Sugar Organization, Sugar Year Book and Statistical Bulletin (various issues); U.S. Department of Agriculture, Sugar Reports (various issues); FAD, Trade Yearbook, 1972.  ANNEX 2 Page 23 Table 11: WJRLD PRODUCTION, CONSUHPTION AND STOCKS OF SUGAR (RAW VALUE) BETWEEN 1964/65 AND 1972/73 Gap between World SUgar Stocks stoCY~ aa World Sugar World Sugar Produotion and at the end of the %of ~ Jj Consumption Production Consu::a:ption Sea.son (8/3 1 ) Conf:ft!;;rption ~-------------------------mi11ion tons----------------------------------­ 66.8 +7.5 18.9 3i.~ 1964/1965 59.) 30.6 1965/1966 62.8 63.1 +0.3 19.2 1966/1967 65.5 65.6 +0.1 19.3 29.5 1967/1968 65.6 66.4 +0.8 20.1 30.6 1968/1969 68.2 67.8 -0.4 19.7 28.9 72.2 74.) +2.1 21.8 )0.2 1969/1970 26.0 1970/1971 74.6 72 .. 8 -1.8 20.0 1971/1972 76.2 73.2 -3.0 '7.0 22·3 1972/197.3 78.8 77.3 -1.$ 15.5 19.7 11 Sugar year is September to September. Source: F.0. Licht, International Sugar Report, various issues.  ANNEX 2 Page 24 Table 12: BEEF: DESIRED D1FORTS (-), AVAILABLE EXPORTS (+), TRADE BALANCES AND PRICE CHANGES 1972 THROUGH 1980 1974 1975 1976 1977 1978 1979 1980 ~---thou.sand metriC tonsC;;-cass equivalent weight--~. I:I.PORTERS TOTAL -3,222 -3,46h -3,484 -3-:S0h -3,832 -u,135 -4,352 us -1,249 -1,489 -1 ,444 -1,h22 -1,702 -1,979 -2,004 EB:-6 -1 ,oL.4 -1.038 -1,031 -1,023 -1.014 -1,004 -1,011 UK -504 -473 -4hl -4<:6 -369 -329 -292 SPAIN -75 -62 -88 -83 -96 -121 -119 GREECE -66 -69 -72 -77 -90 -85 -90 ISrtlEL -17 -17 -17 -17 -17 -17 -17 JAPk'f -162 ·-168 -199 -235 -250 -2h9 -261 USSR -105 -148 -192 -241 -294 -351 -588 ~ORTERS TOTAL +3,001 +3)04 +3,191 +3.326 +3,554 +3.580 +3.700 ARGENTDIA +847 +956 +1.072 +1,195 +1,325 +1.463 +1,608 BRAZIL +43 -73 -189 -268 -239 -429 -592 Tlli.UGUAY +202 +245 +252 +223 +191 +194 +226 MEtICO +146 +116 +101 +117 +11h +78 +57 CAN AD: -20 -34 -48 -63 -80 -97 -109 AUSTRALIA +957 1.01h +1,072 +1,135 +1,199 +1,266 +l,34h N~'W ZEALAND +316 +327 +338 +350 +362 +374 +388 IRELAND +300 +325 +351 +373 +407 ... 439 +470 DENMARK +112 +125 +138 +151 +16h +178 +191 YUGOSLAVIA +98 +101 +lOh +108 +111 +114 +117 TRADE BAL ANC E -221 -360 -293 -178 -278 -682 TRADE BALANCE * -121 -260 -193 -78 -178 -582 * Assuming 100 thousand metric tons is available annusl1y from rest of world .. PRICE CHA..\lGE OVER 1973. +3% +6% +4% +2% +5% +9% +11% ANNUAL PRICE CHANGE +3% +3% ~2% -2i +3% +4% -2% Assuming Import price elasticity of demand = -1.25% Source: IBRD.  ANNEX 2 Page 25 Table 13: INTERNATIONAL BEEF PRICES, 1960-72 hi II 21 Ji Unit Value LDC ­ Argentine Chilled - US Frozen - Argentine 3 Fresh Chilled and Rumo Boneless Boneless Beef Frozen Beef Frozen Beef {f.o.b.) -------------------------------$/ton-------------------------------­ 1960 1,500.8 n.a. 531.2 453.2 1961 1,411.2 n.a. 453.5 434.1 1962 1,472.8 847.9 441.4 387.7 1963 1,366.4 8.34.9 449.8 407.4 1964 1,736.0 839.7 647.5 535.8 1965 1,853.6 881.6 682.5 654.5 1966 1,730.4 1,027.8 612.5 626.1 1967 1,677.5 1,041.0 550.0 576.8 1968 no quotation 1,085.1 530.0 620.7 1969 1,550.4 1,222.9 565.6 618.4 1970 1,867.6 1,304.3 717.7 710.5 1971 2,234.4 1,345.7 1,063.7 956.6 1972 2.. 497.0 1,480.2 1,299.5 1,013..6 Argentina: Chilled Rump Boneless Wholesale, Smithfield Market, London. Usually quoted in UK pence per pound. Prior to 1969 quotations were for frozen quarters. Rump price prior to 1969 is estimated from frozen quarter price. 1969 price quote is for December only. United States: Imported Boneless !.fanufacturing Beef, frozen, 90 percent visible ban, average import price cif any port of entrJ. Usua111 quoted in US cents per pound. Argentine Frozen Beef cif Hamburg. Usually quoted in US$ per 100 pounds. Prior to 1971 the price above is for frozen quarters. Calculated from FAD Trade Year Books for Central and South America and LDC Africa. Source: IBRD.  Table 14: COTTON: WORLU PRODUCTION, CONSUMPTION AND EXPORTS, HISTORIC AND PROJEC'l'ED 15-yr growth rate 3-yr growth rate 1967/69 1970/71 1971/72 1972/73 1973/74 1974/75 1980 1958/59-1972/73 1970/71-1973/74 averase ----estimated--:.:..:: ___ ---------------percent--------------- ---------------------------------1,000 bales 1/-------------------------- Besinnins Stocks 24,759 21,798 19,785 20,245 22,576 24,100 27,000 Month's supply ~/ 5.5 4.8 4.2 4.2 4.7 5.9 5.0 Production Developed Countries -1.0 7.5 12,296 13,071 13,700 17 ,381 16,225 17,800 Developing Countries +3.0 6.2 22,603 20,674 24,555 24,348 24,775 25,500 Centrally Planned +2.4 1.0 17,060 18,715 18,705 17,915 19,100 19,300 World +1.6 4.6 51,959 52,460 56,960 59,644 60,000 62,600 65,000 Consumption Developed Countries -0.3 -0.1 20,089 19,321 19,509 19,513 19,000 19,000 Developing Countries +3.7 4.8 14,988 15,879 16,462 17,345 18,000 18,500 Centrally Planned +2.4 2.3 18,923 19,637 20,070 20,310 21,000 21,500 World +1.7 1.9 54,000 54,837 56,041 57,168 58,500 59,000 65,000 Exports Developed Countries -0.1 11.3 4,599 5,183 5,051 7,051 7,155 7,000 7,700 Developing Countries +2.1 0.1 10,055 9,698 10,338 10,659 9,745 10,300 11,250 Centrally Planned +3.6 6.1 2,393 2,600 3,000 3,000 3,100 3,200 3,500 World +1.5 4.6 17,047 17,481 18,389 20,710 20,000 20,500 22,450 11 478 Ib net. ~/ At current consumption rate. :~ Source: Commodities and Export Projects Division, IBRD. f:.l "'II>­ (1) tv "'N  ANNEX 2 Page 27 Table 1,7: COTTON PRICES, 1-1EnCAN SllI-l/1611 , -C.:f~F. LIVERPOOL Year Current Terms 1974 Terms ----:-----U.8. cents' per pO'Wld-------­ 1960 27.3 51.8 1961 27.4 51.4 1962 29.5 54.8 1963 29.1 53.6 1964 29.5 53.6 1965 28.8 51.9 1966 28.2 49.9 1967 30.7 53.9 1968 31.1 55.3 1969 28.4 48.9 1970 30.7 49.5 1971 35.5 53.7 1972 37.5 51.5 1973 62.2 . 70.9 Source: Commodities" Export Projections Division. IBRD.  ANNEX 2 Page 28 Table 16: HONDURAN FORESTRY PRODUCT EXPORT PROJECTIONS, 1974-78 Sawwood Plywood Year '000 m3 . '000 sheets 1973 718 1974 718 1975 744 1976 799 150 1977 876 300 1918 966 450 1919 1,009 600 1980 1,068 100 1981 1,111 800 1982 1,182 900 1983 1,258 1,000 1984 1,338 1,100 Source: CONSUPLAN  ANNEX 2 Page 29 Table 17: US SAWTnmER CONSUMP't!ON BY SPECIES CROUP A~:D :1AJOR PRODUCT, 1952, 1962, 1970 "'"IT:! PROJECTIONS or DEMA.'m UNDER ALTElUIATIVE: PRICE ASSL,}Il'TIO~S TO 2000 f.1:. ProjectioM ;970 rela~iTe prices rising rel:lr.!.v'! relative p~ices ~hov~ oric:es ~2 1970 '3.V~!:,,!:;e5 n Seec:!.es QI"'.)UO and !"rod-Jet 1952 1962 1970 1980 ~ 19901980 ~ 2000 1260 1.2.::] ~ ····--·--------bllllon boar.! Ceet., lI'Itl'mations.l I/t.-inehlog rultl------------------­ Softwoods Saw log, 31.8 30.8 31.6 38.5 1.r.2.2 L.3.9 )J·3 .3.3.1 31.L. 31.S 3S. t 37.1 'leneer logs 1.9 4.9 6.8 10.0 11.5 1).0 8.9 9.8 10.0 8.1 9.4 1;) .t' Pulpwood 4.3 S.o . 8.0 9.2 11 .6 lL.S 8.2 10.1 12.6 8.0 10.2 1).1 l.!:. . Miscellaneous products r'J" lwood , 1.2 .6 .9 .1 1.0 .1 1.0 .1 1.0 .1 1.0 •t .9 .1 .9 .1 .8 .1 .9 .1 ., .9 .9 .1 Total Li. )9.9 41.7 41.6 $8.9 66.5 72.6 51.5 54.1 55.0 4d.7 55.0 61.9 '!!ardwoods Sa'lr logs 1.1 6.S 1.3 8.9 10.6 11.8 1.7 8.L. 8.6 1.L. 9.0 10.1 Veneer 'logs 1.1 1.6 1.8 2.S J.1 J.S 2'.2 2.S 2.6 2. t 2..$ 2.7 Pulpwood .4 2.2 2.2 3.8 S.S 7.9 30S . 4.8 6.9 3.4 1t.8 7.2 Uiscella.."\eou' products .!!:. 1.2 .6 .7 .1 .7 .1 .7 .6 .6 .1 .7 .7 Puelwo.;!d 1. . ) Total Li. 11. 21.1 All SEecies Saw logs 39.0 41.4 S2.8 SS.7 41.0 40.0 38.9 44.1 h7.2 Veneer legs .3.0 12..$ 14.6 16'; 11 .1 12.A 10.2 11 .9 13.; Pulpwood 4.1 13.0 11.1 22.4 11 .7 '19.S 11.4 1S.0 2Q.3 Miscellaneous products /4 2.4 1.1 1.1 1.7 1.6 1.4 1.6 1.6 1.6 Fuelwood -- 2. .11 .4 .4 .It .h .It .h .h Total jj. 7).2 0).0 11 Based on the medium projections of growth in population and economic activity. II Relative prices rising from 1970 trend levels an Eol1~s: lumber - 1.5~ per year; plywood, miscellaneous products and fuelwood - l.~ per year; paper and board· 0.51. per year. ' Ll Relative prfces of lumber and plywood - 301.; miscellaneous products and fuelwood -,lS"; and paper a~d board - 101., above the 1970 averages. L! Includes cooperage logs, poles, piling, fence posts, heva ties, round mine timbers, box bolts, excelsior bolts, chemical wood, shingle bolts, and other miscellaneous items. L1 Includes imported logs not sh~ln by major product usc. Source: USDA, The Outlook for ricber tn the United S~a~es! FRS-20. October 1973.  Tabl. 11: s.urrnmu COIISllMPl'IOH. J::UalTll. IHP<IlTll AIiID' P1tODUC1'lOlf FltOlol US FOREST'S, 1952. 1962. AJIl) 1910 II'lni ftOJ!CTIClICS IJ'II'DR ALT!JUiAtIVE PIllC! ASSUMl"TIOKS TO 2000 .1.1::. 1lSi ~ ltI2 ,,80 !.!2!l ~ '2 80 l22Q 2000 '2110 19?O ~ --------------------o11110n bd tt, lnterrAtlonal l/U-inch log rule---------------------­ US cOfta_ption ,S.9 66., 1'l.6 510S 51..1 . 55.0 55.8 Ixpot'U 5.6 5.6 5.6 5.6 5.6 5.5 ,.6 lapot't! 6.6 6.5 6.4 8.9 10.8 11.4 10.8 Production from US forests l!!. 57.9 65.6 71.8 118.2 li8.9 49.1 ,0.6 us cO"""""PtiOQ 11.6- n.7 12.3 16.) 20., 24., 11£., 16.7 19.1 14.0 2.1 .1 bports .2· .2 .2 .2 .2 .2 .2 .2 .2 .2 .2 Imports Production fro. US .) 1.0 1.) 2.0 2.0 2.0 2.0 2., 2.7 2.4 2.1, fot'uu /4 11.5 11.2 22.5 lli.6 ' 16.6 11.8 18.9 All Sp!cies us conau.mpc.1on S1.6 s;}., TS.2 6t'.0 70.8 71&.1 62.7 73.2 8).0 'Exports .7 1.1& s.e $.8 S.8 S.7 5.1\ 5.8 5.5 Iarporta Production from US 2.1 ,.6 8.6 10.9 13.1 14.1 12.0 13.2 13.1 forut. l!!. 1&9.1 72.4 60.9 65.7 6,.8 75.6 11 ' •• ed 00 th•. "OiUM projections of growth in population and econosic activity. /2 Relative prices ri,ing fro. 1910 trend level aa follov.: t~.r - t.51 per ye.r; plywood, shcenaneouG prod...cts, and r... elwood - t.01 per year; paper and board. 0.51 per yesr. Ll Relative pricas of lumber and plywood· lat; ai.callanaaus produces and fualwoad - t'l; and paper .lad bon'd - tat, above the 1970 averagas. l!!. Tha data for 1952, 1962 and 1970 are estimaces of actual barvests and are not directly comparable with the trend lavel e.tisate. of avpply. Source: USDA, The Outlook fo~ T1Mbe~ in the Unit~d Stace~, PaR-20 t October 1973.  Table 19: WRLD SlllUMP AIm PRAWN I...IiNDINGS DY OOUNTRY. 1950-70 China West Year !!!:!!!!. (Taiwan) !ill!!!. Japan t4alaysia ~ Pakistan Thailand ~ Germany Other ~ -------------------------------------------------141111on Pounds ---------------------------------------------------------­ 1960 46 12 156 133 11 Ib7 40 32 249 53 235 1.105 1961 55 12 138 162 35 159 43 36 175 61 396 1.232 1962 77 14 18) 175 46 156 42 44 191 55 382 1.365 1963 64 20 180 191 42 159 41 51 240 93 398 1.479 1964 62 22 209 172 43 152 46 65 212 63 475 1,521 1965 67 31 170 147 46 130 49 78 2h4 62 499 1,543 1966 76 36 200 151 54 145 49 100 239 84 475 1,609 1967 711 43 202 134 71 154 55 136 308 54 529 1,764 1966 67 56 220 146 73 129 52 165 299 73 530 1,630 1969 81 76 237 129 87 121 57 170 319 61 558 1,896 1970 81 86 254 120 104 121 65 184 357 84 59h 2,050 note: round weight. !I Not available. Source: Original data from FAD Yearbook of Fishery Statist1cs ani Nat10nal Marine Fisheries Service. l~ IX <11 ~I\)  Table 20: WORLD SHRIMP AND PRAWN CONSUMPTION BY COUNTRY, 1950-70 Year Mexico India Japan Pakistan Thailand United States Other ' Total --------------------------------------------mi11ion pounds--------------------------------~~~----- 1960 30.8 151.0 129.0 " 38.1 31.9 399.4 324.8 1,105.0 1961 33.6 133.3 168.7 40.3 36.3 392.1 427.7 1,232.0 1962 30.5 173.8 171.B 36.8 43.8 396.1 512.2 1,365.0 1963 24.8 150.5 204.1 33.9 49.9 444.2 571.6 1,479.0 1964 26.0 165.4 196.B 48.3 63.9 460.3 560.3 1,521.0 1965 43.1 115.3 171.2 27.6 75.8 500.2 609.8 1,543.0 1966 30.1 141.9 173 .1 19.2 95.6 498.5 650.6 1,609.0 1967 36.4 126.5 177.7 42.5 129.0 544.3 707.6 1,764.0 1968 25.7 143.6 192.1 34.8 160.4 581.9 691.5 1,830.0 1969 30.8 130.8 201.5 33.1 165.1 574.3 ,760.4 ' 1,896.0 1970 21.0 184.2 178.1 37.6 177 .3 672.1 779.7 2,050.0 Note: round-weight Note: Factors used to convert from product weight to round weight were: Shell on xl. 59 Canned x3.21 Peeled raw x2.04 Peeled cooked x3. er-' / Dried x7.69 Breaded x1.00 Other x1.74 Source; Original data from FAO Yearbook of Fishery Statistics, Fishery Statistics of the United States, various years, and Shellfish Situation and Outlook, Market Research and Services Division, National Marine Fisheries Service. ~~ QQ~ I'D t<:I LV :>< NN  ANNEX 2 Page 33 Table 21: SESAME SEED PRICE, SUDANESE, YEARLY AVERAGE, 1960-1973 Year L Sterling/ton 1/ - 1960 65.75 1961 74.00 1962 81 .75 1963 75.80 1964 67.60 1965 74.50 1966 87.30 1967 97.20 1968 93.80 1969 96.10 1970 117.80 1971 118.52 1972 120.70 1973 (Harch) Y 134.84 11 y c.i.f. Europe. o.i.f. Japan. Source: From 1960 to 1962, Vegetables, Oils and Oil Seeds, Commomrealth Secretariat. From 1963-72, USDA.  -~----",. - "'-~-"'-" "\>' M~~'_."", __ J___'__ _ _ _ -. ~~,--~.--' .- ____ ... _~. ··_·d .... _",_ . ~....:-: ---- .. -- . .. ANNEX 2 Page ,34 .. Ta.ble 22: PROJECTED. HUMAN CONSUMPTION PER CAPITA, HAIN FOOD PRODUCTS, 1980 1970-72 GDP CONSUPLAN Per Capita Elasti- Growth Rate Estir..at.es Consumption city oer Caoita for 1978 2% 3.5% ----Kg--- ------Kg-------­ ----Kg--­ I. Cereals 1. Maize' .18.86 ..1 77.23 78.25 78.25 2. Rice 6.89 .6 7.56 8.19 7.67 3. Sorghum 6.04 .9 7.02 7.7$ 7.35 4. Wheat 16.,6 .7 18.65 20.21 19.34 II. Pulses 5. Beans 9.95 .4 10.67 11.20 10.92 III. Starches 6. Cassava (Yuca) 13.74 .2 14.23 14.61 14.46 7. Sweet Potatoes (earn.ote) .37 .2 .38 .39 .36 8. Plantain 36.21 .2 37.57 38.49 38.13 .~ , ~. , I IV. Vegetables . 'oj 9. Tomatoes .21 .6 .23 .25 .23 " 10. Onions .,1 .6 .57 ' .61 .59 li. Garlic .09 .6 .10 .ll .12 12. Wh.i te Cabbagt; 1.84 .6 2.04 2.19 2.11 13. Potatoes r. 1.89 .5 2.06 2.19 2.11 V. Fruits 14. • 117.39 Bananas 0 ll1.39 117.39 118.55 15. Watermelons .62 0 .62 .62 .62 16. Malons .14 0 .14 .14 .15 17. Sweet Bananas 22.69 0 22.69 22.69 22.91 18. Avocados 1"5 0 1.55 1.55 1.55 19. Oranges 5.93 .6 6.57 7.05 6.79 VI. Oil Seeds 20. Sesame Seeds .04 .4 .043 .045 .06 21. Peanuts .017 .4 .018 .019 .013 22. Vegetable Oils 4.44 .4 4.76 5.00 5.24 VII. Bev•• Tobacco Bl'ld Sugar 23. Coffee 4.25 .7 4.79 5.19 4.95 . 24. Tobacco 1.63 1.4 2.04 2.35 2.18 25. Sugar 18.20 .6 20.17 21.64 20.81 VIII. Meat . , ; ; 2r.--Bee.f 5.56 .8 6.36 6.96 6.64 27. Pork 3.89 .5 4.24 4.50 4.36 ~ 28. Chickens 2.35 .1 2.39 2.42 2.43 ." ~ -.' .~'. J j IX• DairY Products 29. Milk 70.08 1.0 82.69 92.16 87.06 ~ " ':AI I. PoulttI Products ,: ;30. Eggs 5.06 1.0 5.97, 6.65 6.29 . ',., n. Other ' .:. ~ " ::; 3l.HOney 0.0071 0 .0071 .0071 .0087 -, .' . .j ·m. Fish 3~Fish .4 .8 .46 .5 .47 t· ... ,.j '.:'" , . "'~~ ".".; ., ... Source: Mission , • I  ANNEX 2 Page 35 Table 23: FROJEC'l'ZD !{!S~i.AN CONSUMmO!i OF SEtEC7ED Ao.=':IC:.rtT'J'R.AL PRODUCTS :m 19:3-;), _ GIVEN GDP AiniUAL ~?'oilI'li EtA!':: OF 2% Produet9 P1oulation 3,358.000 ).0,3,000 ----------------Thousand tons-­ --------------- C~reals ,. ~l.:11ze 273.2 282.1 2. Rictl 27.0 27.9 3. Sorghw;1. 2.4.8 25.6 4. 'Wheat 66.0 68.1 Pulse!'! r.-Be'ans 11.7 39.0 Starches 6. Casava 50.4 52.0 7. Sweet Pot~toes 1.11. 1.4 8• Pla.ntain 1.32.7 137·0 Vegetabl~s 9. 'l'amatoe:1 .82 .85 ]0. OrdOlU' 2.0 2.1 11. Garlic .35 •.36 12. Cabbag\ 1.2 7.4 1). Pot~tot s 7.3 7.5 Fruit:; 14. &nanaa 415.3 428.8 15. Water:melon3 2.2 2.3 16. Melons .5 .51 17. Sweet Bananas 80.,3 82.9 18. Avocadoes 5.5 5.7 19. Orl'mges 73.2 24.0 ­ Oil Se!"l.is 20. S~sa.me Seeds .15 .16 21. Peanuts .06 .ar 22. Veeetaole Oils 16.8 17.4 Be..,." Tob., &. Sugar 17.5 23. Corree 16.9 24. Tobacco 7.2 7.5 ­ 7j~7 .. ­ ,25. S~ar 71.3 Heat ·~Bee.f." 22.5 ·23.2"""""' 27. Pork 15.0 15.5 4:0.. OUcken S.5 S.7 flllt r;t Prorluets .:.9. Milk 292.6 )02.1 fc'llu. t;-: :'1-.. :i'lcts JC. J::ggs 21.1 21.8 other ~Hone)" .02$ .026 lo'1:!1h j2;""" FUh 1.6 1.7 Souree: Hission  ANNEX 2 Page 36 Table 24: PROJECTED Ht,I1-!AN CONSUHPTIOtJ OF SELECTED AGRICULTUR..AL PBODUCTS I~T 1980, GIVEU GDP A..."lNUAL GROVlTH RATE PER CAPITA OF 3.5% Population ),358.000 3,653.,JOO ----------------T~~us~~d tons-- .--------------­ Cereals 1. .l-la.ize 276.8 28.$.8 2.' Rice 29.0 29.9 3. SorghUIn 27.4 28.3 4. Wheat 71..$ . 13.8 Pulses S. Besns 39.6 40.9 Starches 6. Casava .$1.7 .$3.4 7. Sweet Potatoes 1.4 1.4 8. Plantain 1.36.2 140.6 V"petables 9. Tomatoes .88 .91 10. Onions 2.1 2.2 11. Garlic .38 .39 12. Cabbage 7.7 8.0 1'3. Potatoes 7.7 8.0 Fruits 14. Bananas 41.$.3 4?B.B 15. Watermelons 2.2 2.3 16. l'-'.elons ..$ .51 17. Sweet Banana3 80.3 82.9 18. Avocadoes 5.5 .$.7 19. Oranges 24.9 25.8 Oil Seeds 20. Sesame Seeds .16 .17 21. Peanuts. .07 .07 22. Vegetable Oils 17.7 lB.3 Bev. z Tab. I &. Su~ar 23. Coffee 18.4 18.9 24. Tobacco 8.3 8.6 25. Sugar 76.6 79. , Meat ~Beef 24.6 .25.11 27. Fork 15.9 16.4 28. Chi.cken 8.6 B.9 Dair, :>rod>,lcts 29. MiLle )26.0 336.6 f'o'.ll t!:C Products 30. Eggs 23.5 24.3 Ot.!'-er ~Honey .025 .026 Fish r. Fish 1.8 1.B Source: ¥.ission  Table 251 CONSUMPTION OF SELEL'TED AGItJCUL'WltAL 1')tOI)UC'rS IN 1970-12 rum I'IlOJ~C'l'IOtfS FOil 1918, OFlo'ICIAL FS'rUtATES !ifrIlCt !fw.Ian Indiil'Jtrhf 191o-n Othcr &rlornal Total . Direr-t KUI'..n lndulitrIal 1976 Other alec""l T=tal COf1.O;\lIIIotloQ CotWUI'Iption Ulies Toto 1 IlI:!mnJ lX"'I-,nd Consll.'"\pUon Cor.oUJ'lpt10n U~eB Total Il'.l!llam lX...,anJ .-------------------- -----------:------ ---- -- -- - -- -'fhou!llUld tOIl:!----- ------- ----------- -- --- - ----- --- --. -- .------, Cereals ~ 201.8 21.1 91.6 )15.) lB.2 J2'1':' 267.1. 10.0 134.) 411.1 411.7 1I1e. la.) 2.2 20" 20.5 26.9 ).1 )0.0 )0.0 Sorgh1.ull 16.1 oS l!5.B 1t?.4 .) 42.1 25.1 1.~ 2!/.6 55.9 55.9 Wheat. 44.0 .•OS 44.05 411005 66.1 .OS 66.15 66.15 Beans 26.5 ' 6.2 )2.1 10.8 11M )1.) 7.2 hI,,5 11.7 56.2 St!!T~hes Casava (Iva) J6S . 2.4 )R.9 )6.9 49." 6S.0 ).2 11".6 111.6 S~~et. Potatoes (camote) 1.0 1.0 1.1 1.1 I.) 1.1 1.) Plantain 96.) 19.9 116.2 16.2 1)2.b 1)0.) 16.6 146. 61.4 210.) '''fetables fOl'latoes .6 4.8 1.0 6.4 6.11 .8 42.9 1.1 51.4 51.4 Onion I.) .1 1.4 1.4 2.0 ' .1 2.1 2.1 Garlic .2 .02 .22 .22 .22 .4 .02 .42 White Cabbagll 4.9 .4 5.) 5.) 7.2 .6 1.8 1.6 Potatolls 5.0 .J 2.0 7.) 1.) 1.2 9.9 4.6 21.1 21.7 full t,s &r.ana's )12.2 24.0 2OS.2 5ltl.1! 942.2 1465.6 4OS.1 $)03 )28.4 166.6 149).6 2,260.6 Watenllelonll 1.7 .) 2.0 2.0 2.1 .4 2.$ 2.$ Helens .) .1 .4 .) .1 S .1 .6 12.0 12.6 Swee t ba.nmas 60.4 10.6 11.0 71.0 76.) 11.2 89.5 A9S Avocadoell 4.1 .s 4.6 4.6 5.) .6 5.9 5.9 Or8llges 15.8 2.1 ).2 21.1 .s 21.6 2).2 45.9 12.8 85S 8SS 011 Seeds S'es~...e Seede .1 .01 .11 .7 .81 .2 .02 .22 5.6 6.02 Peanut:! .Ob .~ .Ob .06 .06 .06 Veillllablll 011s 11.8 11.6 ,11.8 17.9 17.9 11.9 Cotfe'll 11.) 11.) 21.S )8.8 16.9 16.9 41.1 $8.0 Tobacco 4.) .) 4.6 1.4 6.0 7S .4 7.9 4.1 12.0 Sugar 48.4 6.0 5h.1i 10.0 64.4 71.1 6.6 19.1 22.0 101.7 Heat Beet lL.8 14.6 21.6 )6.4 22.1 22.1 42.6 65.) l'ork 10.4 10,4 10.L 14.9 1L.9 lL.9 Chicken 6.2 6.2 6.2 8.) 8.) 8.) Eggs 1).5 1).$ l)S 21.5 21.5 ,21.5 IUlk 166.L 186.4 186.4 29705 297.5 291.5 Honey .02 .02 .2 .22 .1)) .0) .J .)) I '"t! .t (1) Source, CONSUPLAN. \..J -J N  ANNEX 2 Appendix 1 METIIODOLOGY FOR INTERNAL DE."1AND PROJECTIONS 1. Theoretically, the aggregate demand for a product at any given time depends upon its price, the price of substitute and complementary products, and the per capita level of income. It has been assumed that real food prices will not change in the period 1970-72 to 1980; this leaves only the income effect to be considered. Accordingly, demand was projected as the product of: and where i Cso i ­ total consumption of product i in 19S0 cso = per capita consumption of product i in 19S0 7T= population in 19S0 i cb . per capita consumption of product i in the base year (1970-72) t = number of years between the base year and 19S0 ,.. income demand elasticity for product i '1i !::.y - per capita growth rate of GDP per annum.  ANNEX 3 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY REGIONAL AND INTERNATIONAL TRADE TRENDS IN HONDURA~ AGRICULTURAL CONHODITIES Table of Contents Paragraph No. Sector Trade Patterns 2 - 7 Commodity Composition 8 - 14 Regional Trade Patterns 15 - 27 Trade with Central America 28 - 30 Table 1 Honduras Commodity Trade under Bilateral Agreements, 1973 2 Honduran Exports and Imports of Basic Grains, 1964-72  ANNEX 3 Page 1 REGIONAL AND INTERNATIONAL TRADE TRENDS IN HONDURAN AGRICULTURAL COMMODITIES 1. This Annex summarizes recent trends in the commodity and geographi­ cal distribution of Honduran foreign trade in agricultural products, and the governing agreements with the Central American countries. Sector Trade Patterns 2. Agricultural commodities, unprocessed and processed, make up a substantial proportion of the total exports of Honduras. Three items, bananas, coffee and meat were (in 1973) 38%, 28%, and 8%, respectively, of the total value of commodity exports. If wood products are added, involv­ ing 16% of the value of exports, a total of 82% of exports is accounted for by agriculture, or approximately $200 million out of a total of $245. Other agricultural products, such as cotton, sugar, tobacco, and fresh and canned fruit each contributed no more than 1% of total exports in recent years. Basic grains--kidney beans and maize--have declined as a percent of agricultural exports and their value has declined in absolute terms. From 1965 to 1969 the average annual exports of maize and beans were $6.1 million and from 1970 to 1973 the average declined to $2.2 million or only 1% of the average value of commodity exports (1970-1973). 3. Commodity exports grew rapidly in the last eight years (1965­ 1973). The annual average increase in the value of exports for each key commodity has been as follows: bananas, 7.4%; coffee, 10.3%; wood and lumber products, 18.5%; and meat, 25%. The value of meat exports has grown steadily from about $10 million in 1970 to $20 million in 1973. This in­ crease can be attributed to increases in unit export prices from $1.56 per kg in 1970 to $2.20 per kg in 1973, and an equivalent increase in the volume of exports from 12,400 tons to 17,600 tons over the same period. The growth in the value of wood and lumber exports has expanded rapidly since 1970--from $19.2 million (1970) to $39.3 million (1973). The volume of exports has generally increased more rapidly than the unit export value. The value of coffee exports has fluctuated since 1965, and the largest in­ crease took place from 1972 to 1973, when exports increased from $27.3 mil­ lion to $48.3 million. This came about as a result of a 54% increase in unit export prices and a 14% increase in the export volume. Banana exports have increased gradually during the late 1960s, and abruptly increased from 1970 to 1971 when the volume of exports increased by 27% and the unit export price remained constant. 4. Minor agricultural exports, such as cotton, sugar, tobacco, kidney beans and maize, have not made more than small and indirect contributions to export earnings. Cotton was exported during the late 1960s but at a diminishing rate, and from 1970 to 1973 the exports were averaging only  ANNEX 3 Page 2 about $1.0 million per annum. Sugar has never been an important export item and in 1973 net imports were made. Tobacco exports have risen, but, primarily, due to an increase in the export price and a change in their composition to high priced products, such as quality cigars. Since 1965 there has been a definite downward trend in export earnings from bean and maize exports. This occurred because, following the 1969 conflict with EI Salvador, exports of maize and beans were stopped in line with the gen­ eral cessation of trade. In 1969, EI Salvador imported about 28,000 tons of maize and 15,400 tons of kidney beans from Central American countries, mainly from Honduras. In the same year, Honduras exported 37,500 tons of maize and 16,800 tons of kidney beans. Roughly then, EI Salvador purchased about 75% of Honduran maize exports and about 90% of its kidney bean ex­ ports. 11 5. Imports of food and related products have grown rather steadily in recent years. Food products imports cost $21.2 million in 1970, de­ clined to $15.6 million in 1971 and rose to $22.3 million in 1973. Major items imported are milk and related products, cereals, canned fruits and vegetables, and syrups for beverages. In 1970, $3.9 million of milk pro­ ducts were imported, of which $2.6 million was evaporated and canned milk. Of cereal imports of $8.2 million, wheat represented $3.3 million and rice $1.5 million. $1.5 million of canned fruit and $2.5 million of canned vegetables were imported. In addition to the category of food products, $2.9 million of animal and vegetable oils were imported. Cottonseed oil made up one-third of the total; and animal fats about one-half of the total. 6. On balance, agriculture is a net contributor to foreign exchange earnings. The margin for substituting imports seems positive for several commodities that are currently imported. These include particularly milk, rice, and processed fruits "and vegetables. Vegetable oils are subject to substitution under current plans to expand the production of oil palm. Domestic cottonseed supplies will be limited in the years just ahead be­ cause of reduced cotton acreage. 7. The importance of Central American trade has diminished as a per­ centage of total Honduran exports. From 1965 to 1969, the Central American Common Market (CACM) accounted for about 15% of total exports and 23% of total imports. From 1970 to 1973, exports to Central America were an aver­ age of 4.9% of total exports, and 14.4% of the imports originated from Central America. From 1965 to 1973, the net trade balance of Honduras with the rest of Central America (excluding EI Salvador after 1970) has been negative. The net balance rose to a negative $36.8 million in 1970, de­ clined sharply in 1971 to a negative $11.0 million and rose to a negative $23.8 million in 1973. The balance is expected to be an unfavorable $34.3 million in 1974, according to Central Bank projections. 11 Source: SIECA.  ANNEX 3 Page 3 Commodity Composition 8. The foreign trade in grains has undergone substantial changes in the past 15 years. Maize and kidney beans have been exported in highly variable amounts. From 1964 to 1969, maize exports averaged roughly 38,000 tons per annum. From 1970 to 1972 the exports averaged about 15,000 tons following the closing of trade with El Salvador. The magnitude of the change was significant: from 1964 to 1969 exports averaged 11% of the domestic volume of production, and in the period 1970-1972, exports dimin­ ished to only 5% of domestic production. In 1973, Honduras was a net im­ porter of maize, according to data from the Ministry of Economy. The ex­ ports of kidney beans averaged 18,000 tons from 1964 to 1969 and diminished to an average of 8,800 tons in 1970-1972. The export volume declined as a proportion of domestic production from an average 33% (1964-69) to 23% (1970-72). Kidney bean exports for 1973 declined to less than 1,000 tons. Honduras has traditionally been a net importer of rice and most of these imports have originated in Central America. From 1966 to 1969, rice imports averaged 8,000 tons yearly. This compares to an average annual national production of approximately 7,000 tons. In recent years, less than 2,000 tons have been imported. Domestic production averaged about 13,500 tons from 1970 to 1973 and imports have been correspondingly reduced. In 1973, less than 500 tons were imported. These values are consistent with the estimates of average anqual domestic consumption of 18,300 tons for 1970­ 1972. 9. Bananas. Banana exports have recently made up about 40% to 45% of the value of commodity exports. In exceptional periods, e.g., 1971, these exports were as much as 50% of export earnings because of a sharp increase in export volume. TIle Central Bank projected earnings of $114 million in 1974 or 40% of projected exports. Detailed analysis of trends in world prices is presented in Annex 2. 10. Coffee. Coffee is another principal source of foreign exchange earnings. Over the period 1965-1969 the average value of annual exports was $19.0 million. From 1970 to 1973, these earnings grew rapidly from $25.9 million to $48.3 million, as a result of a 20% increase in the unit value of exports and a 54% increase in volume. In 1970, coffee exports totalled 26,000 tons, and this had risen to 40,000 tons by 1973. Prelimin­ ary Central Bank projections show an export volume of 44,000'tons and a total value of exports of $43.0 million in 1974. 11. Cotton. Cotton exports have declined in absolute terms in the last decade. From 1965 to 1969 the value of cotton axports gradually de­ clined from $6.1 million to $3.4 million. A major shift occurred in 1970, when cotton exports amounted to only $1.1 million, about the same as in 1971 and 1972. In 1973, the figure was about $1.5 million. Domestic pro­ duction of cotton declined substantially from 7,700 tons to 3,200 tons in 1969, and correspondingly, the volume of exports diminished from 6,000 tons to 2,700 tons in the same year. Since 1970, production has risen to 4,400  ANNEX 3 Page 4 tons in 1972 and 2,300 tons in 1973. Current domestic consumption (produc­ tion plus imports less exports) is running at an annual level of 2,000 tons. 12. Sugar. Honduras has not been an important exporter of sugar. Since 1965 the value of exports has not exceeded $2.0 million annually and has averaged less than $1.0 million. In 1973, the domestic harvest was poor. Under the U.S. quota system, Honduras has a quota of 16,800 short tons, which it has not always been able to fill. 13. Beef. The exportation of beef (boneless, frozen) has become an activity contributing significantly to foreign exchange earnings. The total value of these exports rose from $3.2 million in 1965, to $9.7 million in 1970, and to $19.4 million in 1973. This growth came about from 1965 to 1973 as a result of an average annual growth in the unit export value of 8.1% and an annual growth in volume of 15.9%. In 1973, beef exports were 8% of the total value of exports. There was a sudden increase in these exports between 1968 and 1969 as a result of limitations placed on the weight of beef cattle that could be exported live (especially to Guatemala). In 1968, about 30,000 head were exported live and by 1973 the total had de­ clined to 3,000 head of beef cattle. 14. Agricultural Inputs. Recent information is not available on the volume and value of inputs for agriculture. 1/ In 1971, 18% of total imports or $34 million were agriculture-related. Of-these imports, about one-half represented intermediate and capital goods used in agriculture. About $3.0 million of fertilizer and $3.9 million of insecticides, fungicides, and herb­ icides were imported. The total value of capital goods imports were valued at $8.3 million, of which $4.7 million were tractors, $2.4 million other machinery, and $0.7 million hand tools. Regional Trade Patterns 15. In December 1960, the General Treaty on Economic Integration was signed by the Central American countries. 2/ On April 27, 1962, Honduras ratified the treaty. The General Treaty (the Treaty of Managua) set out procedures by which the Central American Common Market was to take shape. A common external tariff schedule was agreed to and, concomitantly, a period of five years was established, over which the common tariffs would be made uniform under specific schedules agreed to at the time of the signing. At the same time, in December 1960, the Governments of El Salvador, Guatemala, Honduras, and Nicaragua agreed to set up the Central American Bank for Economic Integration (CABEI). 1/ As of May 1974, detailed import figures for 1972 had not been published by the Ministry of Economy. 1/ Except Costa Rica. It was not until late 1962 that Costa Rica accepted the Treaty of Managua and other related legal instruments.  ANNEX 3 Page 5 16. The Treaty of Managua specified certain exceptions to free trade, among which there were several agricultural products that would be subject to special multilateral agreements. The exceptions were treated in dif­ ferent ways, which included the requirement to establish import agreements (protocolos), quotas, import duties, and special agreements on exports. The basic grains (rice, kidney beans, maize, and sorghum) were included as re­ quiring a special protocol. Subsequently, the Limon protocol was signed on October 28, 1965. The protocol established that the five governments would coordinate trade in basic grains regulated through their domestic priCing and marketing agencies and the Comision Coordinadora de Mercadeo y Estabil­ izacion de Precios para Centro America (CCMYEP). The CCMYEP would estab­ lish each year the volume of those grains that would be imported from out­ side of the CACM. In addition, the imports could not take place at a price lower than the national support prices. 1/ The Limon Protocol established the principle of consultation among the countries in import and price poli­ cies. 17. The Treaty of Managua and subsequent agreements also established that certain export commodities, particularly sugar, coffee, cotton and cot­ tonseed, milk and milk products, and live cattle would be subjected to either export control by the countries (live cattle, cotton and cottonseed), or import controls (milk and milk products, sugar), or import duties (cof­ fee and coffee derivatives), and with certain products requiring special agreements (wheat and wheat flour, sugar, live cattle, milk and milk pro­ ducts). None of the special agreements were subsequently made, with the exception of the Limon Protocol affecting basic grains. 18. In effect, free trade was established, in principle, for agricul­ tural products, but subject to either import controls, domestic export con­ trols or special agreements for those commodities which had either important consequences for domestic consumption and price and which were regularly imported (e.g., basic grains, milk, wheat and wheat flour, cottonseed), or which affected export earnings (e.g., coffee, cotton, sugar, live cattle). 19. Up to 1969, Honduras had been a major exporter within the region of maize and kidney beans and an importer of rice. It exported (outside of the region) cotton, sugar (to a minor extent), and live cattle. Along with the other CACM countries, it was an importer of milk (powdered and evaporated), and wheat and wheat flour. It was, following Costa Rica, the least self-sufficient in vegetable oils and margarines. 20. Bilateral Trade Agreements. Following the conflict between Honduras and El Salvador in 1969, interregional trade was subsequently al­ tered. Trade between Honduras and El Salvador ceased completely and the remaining governments continued to trade on the basis of the CACM agreements. 1/ A duty would be levied equal to the difference between the c.i.f. price and the domestic support price if the former were less than the latter.  ANNEX 3 Page 6 Honduras removed itself from these agreements as of January 1, 1971, and reestablished trade restrictions with Guatemala, Nicaragua and Costa Rica. Subsequently, a series of bilateral trade agreements were made, which con­ tained differential tariff levels for detailed commodity lists with each of the three countries. The dates of each of the bilateral agreements are as follows: Guatemala-Honduras, February 1973; Nicaragua-Honduras, April 1972; and Costa Rica-Honduras, May 1973. These bilateral agreements cover a ttro­ year period and are subject to renegotiation. 21. The bilateral trade agreements established that Honduran goods will be imported without duty to Guatemala, Costa Rica and Nicaragua, sub­ ject to a list of exceptions and special regulations. In all of the agree­ ments, basic grains are given free trade status, subject to regulation by the national pricing and marketing agency. In effect, trade can be suspended, exports regulated or imports not permitted by the marketing agency, when national producers or consumers are affected. Manufactured products are subjected to tariffs (ad valorem) between 1% and 25%, based upon agreed lists. For those commodities which are not specifically listed, the CACM treatment which prevailed in December 1970 (before Honduras suspended its CACM participation) would continue to prevail. At no time would the new ad valorem tariffs exceed 50% of those prevailing in December 1970, nor be greater than the reestablished tariffs under the December 1970 levels of Honduras. 22. The bilateral trade agreement with Guatemala gives special treat­ ment to beef cattle and hogs (except breeding stock), which are subject to internal regulations of each country, and potatoes, which must be subject to certification for seed purposes only. 11 Thus, this agreement continues the Honduras policy of limiting ~~ports of live cattle to Guatemala. Among agricultural and related commodities, which are subject to free trade, a selected list includes: livestock (ordinary and for breeding with the ex­ ception stated), processed beef and pork, basic grains (subject to internal regulations), fresh fruits, nuts, forages, tobacco, oil palm, charcoal, lumber and wood products, fertilizers, insecticides, and machetes. Products which are subject to a 5% ad valorem tariff if imported to Honduras from Guatemala include: evaporated and condensed milk, skim milk, dehydrated milk, cream, corn flour, dried fruit, /oilseed cakes and related derivatives, and paper products. A 10% ad valorem tariff is charged by Honduras for pork, bacon and ham, and butter. Important products charged 15% ad valorem in­ clude fruit juices, tomato juice and paste, and sugar and syrups. The 20% category includes soups and crackers of all classes. 23. The bilateral trade agreement with Nicaragua contains provisions similar to those of the Guatemala agreement. In addition, products subject to internal regulations (including export and import quotas) are live cattle 11 Other exceptions for manufactured goods, which are covered in the bilat­ eral agreements, are not discussed here.  ANNEX 3 Page 7 and hogs, fresh milk, cheese, eggs, potatoes, lentils, vegetables, garlic and cottonseed. The list of agricultural commodities which draw the 5% to 25% ad valorem tariffs is very similar to the Guatemala case. 24. As a protection device, several agricultural commodities were ex­ cluded from importation to Honduras from Costa Rica. These include live­ stock, fresh milk, cream, cheese curd, eggs, wheat and wheat flour, pota­ toes (seed), vegetables, processed fruits, sugar and syrups, coffee, fats and oils, cotton and a wide variety of manufactured goods. Fertilizers are permitted free importation to Honduras in the agreement. Many of the re­ maining provisions are similar to those established with Guatemala and Nicaragua. Goods receiving special treatment include oils for human con­ sumption and margarines, both of which are subject to quotas. 25. Bilateral Trade: 1973. The total value of trade in 1973 under all three bilateral agreements is shown in Table 1. Honduras was a net importer with each of the individual countries. Trade in agricultural or related products (inputs and processed) was an important part of the flow. Honduras exported to Nicaragua such items as vegetable fats, L 1.5 million; cotton fabrics (80-400 gr weight), L 2.3 million; fresh fruit, L 0.4 mil­ lion; oi1seeds, L 0.2 million; maize, L 0.11 million; fruit juices, L 0.1 million; and barbed wire, L 0.8 million. At the same time, Honduras imported a variety of manufactured and agriculture-related products, which include powdered milk, L 1.4 million; jute and henequen fabric, L 0.9 million; cot­ ton fabrics, L 1.2 million; leathers, L 0.3 million; leaf tobacco, L 0.25 million; wire to make barbed wire, L 0.23 million; and milled rice, L 0.13 million. 26. The value of agricultural and related exports to Guatemala make up a small portion of the exports affected under the bilateral trade agree­ ments. Important categories included fruit juices, L 0.2 million; kidney beans, L 0.13 million; and barbed wire, L 0.6 million. Imports affected from Guatemala include mainly manufactured products, but also include fruit juices, L 0.5 million; syrups, L 0.3 million; tomato paste, L 0.27 million; insecticides, L 0.12 million; and machetes, L 0.26 million. A major cate­ gory of imports from Guatemala is containers (all types), valued at L 2.6 million. 27. Trade with Costa Rica included exports of maize, L 0.4 million; kidney beans, L 0.25 million; salt, L 0.09 million; and cottonseed, L 0.05 million. With the exception of some fertilizers, there were no food or agricultural imports of significance. Trade with Central America 28. The Honduras net balance of merchandise trade within the CACM has been negative from 1965 to the present. From 1960 to 1964, the balance was positive but relatively small and was due principally to a favorable trade balance with El Salvador, which also steadily deteriorated in the period  ANNEX 3 Page 8 1965-1969. Following 1965, the year in which the CAQ! completed its tran-2 itional phase, the imports of Honduras originating in the CAQ1 rose rapidly, partly due to imports of CACM origin increasing as a proportion of total merchandise imports. 29. Basic Grains. Of the exports of Honduras to the CACM region, maize and kidney beans were an important component. From 1965 to 1969, the two products made up 27% of total exports to the CACM. Likewise, of total CACM trade in maize and kidney beans, Honduras was a major participant. As shown in Table 2, from 1964 to 1969, maize exports of Honduras were as much as 97% of total CACM exports and no less than 60% of exports. In terms of total CACM imports of maize, the participation of Honduras gradually fell from 1965 to 1971. In 1965, Honduras supplied 72% of all maize imports (originating inside and outside the CACM) and by 1971 this participation had declined to 26%. From 1964 to 1969, Honduras provided about 70% of total CACM exports of kidney beans and an equivalent proportion of total CACM im­ ports. Folowing 1969, the exports declined to about 40% of CA~1 exports and it originate approximately 40% of all CA~l imports. Honduras was a net importer of rice and generally imported one-fifth of all CACM imports. In recent years, a significant amount of Honduras rice imports originated in Central America. 30. Other Products. In addition to basic grains, other agricultural products have played a role in exports to the CACM. Some selected commodi­ ties, agricultural and nonagricultural, that have been exported include soap, canned fruits, lingerie, cement, vegetable fats, petroleum derivatives and plantains. Since 1970, most of these have been less than 10% of the value of exports in 1973. Imports of Honduras primarily consist of processed goods. Food products, beverages and tabacco, and vegetable fats and oils were together 21% of total imports from the CACM. Manufactured articles were 44% and chemical products 24% of imports originating in the CACM.  ANNEX 3 Page 9 • Table 1: HONDURAS COMMODITY TRADE UNDER BILATERAL AGREEMENTS, 1973 Countrz Exports to tmP0rts from -------------Thousand L-------------­ Nicaragua 10,329 14,442 Guatemala 4,557 19,355 Costa Rica 3,642 $,170 Total 18,528 38,967 Y Does_not cover all regional trade in 19730 Source: Ministry of Economy"  Tabla 2: HONDURAN EXPORTS AND IMPORTS OF BASIC GRAINS, 1964-72 MA I Z E Exports Honduras Imports Honduras;' • EXEorts ImEorts as % of as % of C.A. Honduras - C.A. Honduras Central America Central America ----------------tons-----------------­ .. 1964 - Total 49,911 47,108 74,937 668 94.4 1.2 C. A. Common Market 49,910 47,108 49,909 582 Other areas 1 25,028 286 1965 - Total 64,169 62,253 85,993 1,920 97.0 2.2 C. A. Common t-tarket 64,165 62,253 64,165 81 Other areas 4 21,828 1,839 ~ 1966 - Total 56,582 48,742 75,130 1.lQ5 86.2 1.5 C. A. Common Market 56,568 48,742 56,568 402 Other areas 14 18,562 703 1967 - Total 34,061 20,149, 45,838 3,436 59.2 7.5 C. A. Con~on Market 34,022 20.149 34,023 3,405 Other areas 39 11,81,5 31 1968 - Total 42,467 37,498 91,776 1,969 88.3 2·.2 C. A. Common Market 42,413 31,497 42,413 319 Other -areas 54 1 49,363 1,650 1969 - Total 29,690 12,716 35,607 223 42.8 0.6 C. A. Common Market 29,650 12,716 29,651 173 Other areas 40 5,956 50 1970 - Total '36,206 13,287 52,228 449 36.7 0.9 C. A. Common Market 36.,096 13,287 36,096 48 Other areas 110 16,132 401 'l1 1971 - Total C. A. Common Market Other areas 60,143 32,788 27,355 13,382 13,373 9 51,689 32,790 18,899 495 64 431 22.3 1.0 .m (l) ...... a I \,.oJ 1972 - Total 28,733 19,413 32,693 67.6 C. A. Common Market 21,651 19,413 27,651 '1 I Other areas 1,082 5,042 Page 1 of ] '(continued ... )  Table 2 (cont •.• ) ; BEANS Exports Honduras Imports Honduras. , Ex~orts Im~orts as % of as % of C. A. Honduras C. A. Honduras Central America Central America -------~---------tonH----------------- • 1964 - Total 20,441 15,919 20,608 101 77.9 0.5 C. A. Common Market 20,377 15,858 20,377 96 Other areas 64 61 231 5 1965 - Total 24,209 21,042 24,381 139 86.9 0.6 C. A. Common Market 24,208 21,042 24,209 99 Other areas 1 172 40 1966 - Total 22,201 15,996 22,018 731 72.0 3.3 C. A. Common Market 22,001 15,996 22,001 727 Other areas 200 17 4 1967 - Total 24,821 17,173 25,359 109 69.2 0.4 C. A. Common Harket 24,631 17,173 24,631 101 Other areas 190 728 8. 1968 - Total 27,754 20,974 32,670 61 75.6 0.2 C. A. Common Market 27,754 20,974 27,754 53 Other areas 4,916 8 1969 - Total 23,171 16,749 2.3,226 48 72.3 0.2 C. A. Common Market 23,164 16,749 23,163 44 Other areas 7 63 4 1970 - Total 18,437 8,658 26,856 4 47.0 0.0 C. A. Common Market 18,437 8,658 18,437 1 ~ Other areas '"d 8,419 3 <ffl (D~ 1971 - Total 23,807 8,251 22,996 5 34.7 0.0 C. A. Common Market 20,277 4,770 20,278 ~w Other areas 3,530 3,481 2,718 5 1972 - Total 20,721 9,308 16,189 4' 44.9 0.0 C. A. Corrunon Harket 16,138 4,751 16,138 ~ Other areas 4,583 4,557 51 4 Page 2 of 3 (continued .. J) Table 2 (cant ••• ) RICE (hulled) Exports Honduras Imports Honduras ... EXEorts ImEorts as % of as % of C. A,. Honduras C. A. Honduras Central America Central America -----------------tons----------------­ 1964 - Total 2,950 35 11,785 2,160 1.2 18.3 C. A. Common Market 2,946 35 2,946 2,149 Other areas 4 8,839 11 1965 - Total 5,548 734 16,822 1,488 13.2 8.8 C. A. Common Market 5,548 734 5,548 1,470 Other areas 11,274 18 1966 - Total 8,489 75 37,411 7,829 0.9 21.0 C. A. Common Market 8,477 75 8,477 4,216 Other areas 12 28,934 3,613 1967 - Total 16,949 159 26,367 6,011 0.9 22.8 C. A. Common Market 16,937 159 16,936 5,988 Other areas 12 9,431 23 1968 - Total 30,348 1,936 29,536 7,210 6.4 24.4 C. A. Common Market 28,255 1,936 28,257 7,180 Other areas . 2,093 .1,279 30 1969 - Total 21,820 15 10,524 9,116 0.1 86.6 C. A. Common Market 10,314 15 10,313 9,086 Other areas 11,506 211 30 1970 - Total 24,057 79 19,644 10,145 0.3 51.6 C. A. Common Market 19,292 79 19,292 10,113 Other areas 4,765 352 32 1971 - Total 10,132 6 24,261 2,659 0.1 11.0 C. A. Common Market 9,599 6 9,599 575 Other areas 533 14,662 2,084 1972 - Total 3,223 3,472 !~ C. A. Conmlon Market 3,223 3,223 Other areas 249 Source: SIECA Page 3 of 3  ANNEX 4 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY LAND TENURE AND AGRARIAN REFORM Table of Contents Paragraph No. Background Data 2 - 6 The Decree 8 Program 7 - 25 INA 10 BANAFOM 11- 13 DESAGRO 14 Other Agencies 15 - 16 Procedures for Land Procurement 17 - 19 Technical and Financial Assistance 20 The Results 21 - 25 Decree Law No. 170 26 - 37 The Multi-Purpose Cadaster 28 - 42 Problems and Prospects 43 Program Administration 44 - 59 Finance 60 - 63 Foreign Assistance 64 - 65 Table 1 Land Colonization and Parcelization Prior to the Agrarian Reform Law of 1962 Appendix 1 Agrarian Reform before Decree 8 2 A Study of the Decree 8 Settlements (Asentamientos)  ANNEX 4 Page 1 LAND TENURE AND AGRARIAN REFORM 1. Making land and technical and social services available to the rural poor is a fundamental plank in the Government's approach to national economic and social development. The first really meaningful step in this direction was taken in December 1972 with the promulgation of Decree 8. 1/ From that date through April 1974, some 45,495 ha of land were made avail­ able to 16,614 campesino families under an associative form of management in 398 settlements (asentami~ntos). A considerable additional number have been settled since that date. BACKGROUND DATA 2. Decree 8, which was superseded by Decree Law 170 in January 1975, arose out of widespread rural unrest characterized by seizures of land by campesinos and spasmodic outbreaks of violence. This unrest reflected ex­ tremely low living levels and a rapidly growing population, as discussed in the General Report, and difficulties in getting access to land. 3. Latest data on land distribution by size of farm are for 1965-66. There has probably been little change since that time. The data, from the agricultural census, are: Farm Size Area Number of Farms Ha 1,000 Ha % Thousands % Less than 7 299 12.4 120.4 67.5 7 to 35 633 27.5 47.1 26.4 35 to 350 789 32.6 10.1 5.7 Over 350 666 27.5 0.7 0.4 Total 2,417 100 178.3 100 Some 67% of the farms occupied only slightly more than 12% of the land in farms. The large farms (350 ha and above) accounted for some 27% of the land, and made up less than 1% of the total number of farms. 4. There are three types of tenure. National lands belong to the state, although a goodly portion of the land so classified is held by private individuals including de facto occupiers, lessees, and concessionaires. Ejidal lands belong to the municipalities, and arise from the long-established practice of the central government of granting land to new towns for the use 1/ The history of the agrarian reform effort is outlined in Appendix 1.  ANNEX 4 Page 2 of the town residents. As with national lands, the ejida1 lands are now held mainly by private individuals under de facto or lease arrangements. This cat­ egory includes much of the nation's most valuable agricultural land. The third class is private lands. Hmvever, property registration practices and agrarian legislation have not produced a clear definition of private property. Probably much is held under disputable deeds of ownership. (The status and amount of land abandoned by E1 Salvador farmers at the time of the 1969 con­ flict are not clear.) There is no precise information available on the amounts of national, ejida1 or private lands. The former is the larger, but a considerable portion is not readily accessible and is in areas which have unfavorable climatic conditions. 5. In some cases, land deeds go back to the Spanish Crown. Supplemen­ tary deeds which replace the lost original deeds are not uncommon. And some land was distrib~ted through State grants under a 1924-26 code, but the failure to complete formalities leaves in doubt the ownership status. Concessionaires, mainly companies such as the banana firms, hold land under individual contracts with the State. Private individuals also hold national and ejidal lands under concession, including lots of 25 ha or less distributed under legislation of 1936. Indigenous communities, now largely assimilated, also received land concessions, often poorly defined. 6. The sub-leasing of national and ejidal lands is a common practice. Lessees and sub-lessees pay a fee for the use of the land, or, instead of paying a fee, are allowed to take a subsistence crop in return for clearing, after which the area is sown to pasture. 1/ Squatters occupy private, national, or ejida1 lands without legal right. Som; 30,000 families are probably under this precarious tenancy form, mainly on national lands. It is estimated that rather more than 50% of the land in agricultural use is under some type of absentee management. The latter may involve sharecropping; the owner may or may not provide seed or other inputs. Similar practices are corretaje, co10nato and quintero, with payment for the use of the land often being largely in the form of labor. THE DECREE 8 PROGRAM 7. Published in the Official Gazette No. 20870 of January 3, 1973, Decree 8 came into force on January 15, 1973. The emergency nature of the measure reflected the widespread unrest in the rural community because of (a) the poverty of the rural masses, which was becoming steadily more acute; (b) the increasing awareness of the citizenry of the need to change the agrarian structure; (c) the lack of a clear agrarian policy, in spite of long-standing legislation; and (d) the growing strength of;-ura1 organizations. (It is Significant that such organizations as ANACH (Asociacion Nacional de Campesinos de Honduras) and UNC (Union Naciona1 de Campesinos) supported a 1/ It is reported that annual rents have dropped to arround L 40 per manzana (0.7 ha) from a range of L 80 to L 120 per manzana, as a result of Decree 8.  ANNEX 4 Page 3 series of land seizures.) The situation led to outbreaks of violence and a general tension among farmers, workers, students and the urban middle class. The Decree alleviated tension and provided time in which to develop a longer-term agrarian reform program within the context of the national development plan which was then being prepared. 8. The Decree declared that "the rural community was to be intergrated into the national development process" and promised "to ensure true justice for agricultural workers." Article 7 said that "agricultural workers, whether they are organized or not, shall not occupy State, common or privately-owned land except upon such terms and conditions as are fixed by INA." 11 Article 6 sought to give the landowners a measure of confidence by stating that "private owners of land which is being worked efficiently and in such a manner as to fulfill its social function shall be protected by the State." To reinforce these dispositions, Article 11 directed that "the civil and military authori­ ties shall give INA such help and assistance as may be needed in putting into effect the provisions of this Decree." 9. The Decree sought to: (a) make public cultivable land available to campesinos for a two-year period; (b) to make private land available on a two­ year lease, if not being properly worked, with the rent not exceeding 1% of the value declared for purposes of the property tax; (d) through the National Development Bank (BANAFOM), extend credit to rural workers settled on such land, and provide funds for that purpose amounting to L 8 million, half to be drawn from Agricultural and Industrial Development Fund held at the Central Bank, and the other half from the resources of BANAFOM itself; and (e) ensure that the beneficiaries of the reform had access to marketing, extension and research services. INA 10. Article 2 said that "supervision of agrarian reform policy shall be the responsibility of the Head of State, acting on the advice of the National Agrarian Council. The Head of State shall approve the National Agrarian Re­ form Plan, which shall be executed by INA in collaboration with the other State agencies. The Director of INA shall answer directly to the Head of State." Article 3 said that "INA shall take whatever steps may be required to ensure that rural workers have possession of the land needed to carry out their agri­ cultural activities during the next two years •••• " Furthermore, INA was to decide all questions relating to the distribution and tenure of land, and to exercise the rights and powers pertaining to the State in all cases. Article 13 empowered INA to issue ordinances regulating the Decree application; these must be approved by the Executive through the Ministry of National Resources. As a result, in a Resolution promulgated on February 22, 1973, 11 INA is the National Agrarian Institute, set up in March 1961 by Decree No. 69 as an autonomous agency with juridical status and owned capital assets, to administer agrarian reform matters.  ANNEX 4 Page 4 "Regulations Pursuant to Decree-Law No.8" were issued; these were expanded by Resolution No. 147 of April 11, 1973. INA also issued a '~orking Plan for Decree-Law No.8 and Regulations", and set up: (a) an Office for General Coordination, located in Tegucigalpa, and made up of a General Coordinator, two assistants, and a supervisor; (b) a Central Office and five Regional Agrarian Offices; (c) a Reception Group, comprising the deputies assigned to each of the regional offices, to review applications for land; (d) an Appraisal and Inspection Group to inspect land; and (e) a Settlement Group to hand over land to the rural workers. BANAFOM 11. Article 8 said that lithe State shall provide rural workers with the financial means to carry out their work. II L 4 million was allocated from the Agricultural and Industrial Development Fund, created in 1970, to be used by INA for financial assistance to rural workers and distributed through the National Development Bank (BANAFOM), which was to allocate at least an equi­ valent amount for the same purpose. Loans were to be granted on the basis of an investment plan drawn up by the campesinos with the help of INA and exten­ sion staff. Crops production loans were secured by the expected crop. Other loans to cover implements, animals, establishing permanent plantations, and the like were secured by the items acquired through the credit. All loans were guaranteed by INA. 12. In April 1973, BANAFOM issued its Regulations. These provided that BANAFOM would act in close association with INA, and that individuals granted loans must be clients of INA •. DESAGRO, the extension unit of the Ministry of Natural Resources, was also required to collaborate, particularly in making farm investment plans. These plans, which were required to get a loan, must be drawn up by the borrower and BANAFOM or DESAGRO personnel. Loan applica­ tions were received and handled by the BANAFOM agencies located in each of the regional agrarian offices. Loan supervision was the responsibility of BANAFOM, which made regular inspections. Borrowers were not permitted to dispose of their crops without BANAFOM approval. The farmer could sell his crop to BANAFOM at the prices fixed by Government, or store it; in which case he was to get credit from the storage warehouse. B~~AFOM was expected to report each six months to INA and the Central Bank on borrowers' accounts. 13. Loans were made at an interest rate of 9% per annum. Repayments of principal on loans made from INA funds were to be reinvested in the same pro­ gram; two-thirds of the interest payments were to be retained by BANAFOM to cover administrative costs, with the rest being reinvested. BANAFOM assumed no liability for loan monies that could not be recovered owing to acts of God.  ANNEX 4 Page 5 DESAGRO 14. The Decree required that DESAGRO, the research-extension arm of the Ministry of Natural Resources, give particular attention to reform beneficia­ ries, and that this activity be coordinated with INA and BANAFOM. The Regu­ lations on credit provided that DESAGRO shall "give technical assistance to borrowers from the beginning of their operations up to the time of harvesting and marketing of their crops." Although it had many technical and organiza­ tional limitations, DESAGRO operated in all INA areas. Other Agencies 15. Virtually the whole of the public administration was called upon to collaborate with INA in carrying out the policies embodied in Decree Law No.8, including the civil and military authorities. The Regulations provided that smallholder applications "shall preferably be formulated by the rural organizations ••• ", and provision was made for representatives of such rural workers' organizations as ANACH, UNC and FECORAH (Federation of Agricultural Cooperatives of Honduras) to form part of the Regional Committees (discussed below) so that these organizations in their turn became responsible for the application of the Decree. The Honduran Development Foundation, a non-profit institution linked with international foundations of the same kind, could give technical and credit assistance coordinating its activity with that of INA and the other concerned agencies. With the same idea in mind, it was required that the agricultural machinery pool of the Government give priority to land preparation work in smallholder settlements. Likewise, the Southern Agricultural and Cotton Cooperative (Cooperativa Agropecuaria Algodonera del Sur) was to supply inputs, technical assistance and marketing facilities to those settlements growing cotton. State welfare agencies and institutions were required to attend to s~ch settlement needs as housing, irrigation, access roads, education and medical care. 16. To achieve closer coordination in the implementation of the Decree, a high-level meeting in }~y 1973 discussed the distribution of .functions and responsibilities among the different agencies concerned, and suggested that several committees be set up. These included an Inter-institutional Committee, to handle technical and operational problems; a Coordinating Committee for technical assistance; and Regional Committees for field level coordination. In most cases, representatives of the Honduran Development Foundation, ANACH, UNC and FECORAH, were included. Procedures for Land Procurement 17. Groups of at least 12 rural workers, directly or through one of the rural organizations, were authorized to apply to INA for idle or abandoned arable land. The request identified the applicants, the area of interest, and certified that the applicants did not own or occupy arable land. The head  ~~X4 Page 6 of the INA Regional Office then accepted the application if correctly formu­ lated, and appointed specialists from the Appraisal and Research Group (made up of technicians from INA, DESAGRO and B~AFOM) to do an on-site inspection. At the same time, in the case of private property, the presumed owner of the land was notified. 18. The specialists determined if in fact there existed assignable arable land and recorded the objections put forward by the owner, if any. If the inspection report was favorable, INA issued an order granting tempo­ rary use of the land. INA's Temporary Settlement Office then turned over the land. The entire process was scheduled for completion within a few weeks. (If the requested area was not available, INA looked for other land where the applicants could most advantageously be settled.) Upon approval of the area, the Articles of Settlement were signed by INA and each of the rural workers comprising the group of beneficiaries, and the latter took possession of the land as lessees under agreed rental terms. 19. In the case of suitable private land, INA requested that it be placed at the Institute's disposal voluntarily, free of charge and on a tempo­ rary basis. If this was not forthcoming, and if INA accepted the application of rural workers for the use of private land, the owner was asked to prove his title and defend his case. If the land was granted to the petitioners, the landowner had the right to appeal. INA re-inspected and made a final decision, and, if necessary, requested the support of the Armed Forces for enforcement--both of approved and non-approved petitions. The only appeal against orders issued in such circumstances by INA lies with the Supreme Court of Justice, which was required to act promptly. Before writing con­ tracts for lease of private land, INA required the landowner to give proof of his title and of payment of real estate taxes. A refusal on the part of proprietors or occupiers to demonstrate their title to property or possession was not allowed to delay the assignment of land to rural workers. Contracts for lease of land stipulated that the termination date be not later than January 15, 1975 (the expiration date of Decree 8), and that, provided pay­ ment had been made for improvements, INA was obliged to hand over occupancy of the leased land to the owner within 30 days after the contract period ended. Technical and Financial Assistance 20. The Articles of Settlement were sent to DESAGRO, B~~AFOM and the Rural Development Board (Departmento de Promocion Campesina) at INA, where the group of rural workers was constituted as a body corporate and accepted as able to receive loans, technical assistance and other benefits. DESAGRO then helped the Board draw up a working plan. BANAFOM then used this plan to process its loans, which were guaranteed by INA. The execution of the plan was supervised in the field by DESAGRO, INA, and BANAFOM. BANAFOM required  ANNEX 4 Page 7 certification that group members had given their representative powers to negotiate, enter into contracts, encumber group assets and receive loan monies. The Results 21. The Regulations for Decree 8 were issued in February 1973, and ex­ panded in April. The first settlements occurred in late March. The first output summary was made in April 1974; as of that date, 398 settlements had been established, benefiting 16,614 rural families, on 64,993 blocks equiva­ lent to 45,495 ha. The actual number of settlements exceeded the planned number, although targets on acreage and families were not met. The actual average of 42 families per settlement was less than half the planned average of 100 families. The average area occupied per family was 2.7 ha, instead of the planned 5.7 ha. Consequently, the average area per settlement was approximately 114 ha, sharply lower than planned. 22. Partly because of the limited managerial skills of the participants, probably nothing was lost in failing to meet the family targets per settle­ ment or production unit. In fact, an average of 100 partners (or families) per managerial unit would mean in practice that about half such production units would have more than 100 partners. This would make organization and total worker participation in management more difficult. However, the short­ fallon acreage was disturbing. Even the target figure was low, except where conditions permitted high value crops. 23. Firm BANAFOM data on credit were not available to the mission. It appears that as of end April 1974 BANAFOM had distributed more than L 3 million from the L 4 million allocated by INA. The L 4 million allocated to the agrarian reform by BANAFOM had not been used. 24. Data on technical services provided the settlers are not available. The volume of service undoubtedly increased from historic levels, however. This is indicated both by observation and the credit data (credit and tech­ nical assistance were closely linked, as noted above). 25. It is generally agreed that the Decree program eased rural unrest, and that a considerable number of agricultural workers were benefited. 1/ S,ome previously under-used land has been brought into production, albeit at low yield levels, and the groundwork has been laid for a larger program. Techniques for inter-agency cooperation have been developed, including, importantly, private institutions. The critical need to refine and expand smallholder service systems has been fully demonstrated, as have the substantial credit requirements and the glaring need for more technical staff. Lastly, 1/ INA studied the Decree 8 settlements as of December 1973. The preliminary results of that study are summarized in Appendix 2.  ANNEX 4 Page 8 the Decree program made clear the need for permanent reform legislation which equivocally defined the terms under which large and medium-sized farms might be held and operated. DECREE LA~'; NO. 170 26. The difficult task of finalizing legislation which would enable the agrarian reform to continue after the expiration of Decree 8 required nearly two years. All proposals for reform accepted the principle that land to be taken over for redistribution should exclude private farms of reasonable size which were being efficiently exploited, and that compensation should be made for expropriated land. However, it was difficult to translate these views into specific measures which would enlist the broad public support needed for program implementation. In the event, Decree Law No. 170, which became effec­ tive on January 14, 1975, deals with the entire array of issues in an effec­ tive way and provides an adequate legal basis for making land available to the rural poor as well as activating the on-going commercial farm sector. Legal procedures and rules for the implementation of the Law are being developed. 27. Title I sets forth the objectives and basic principles of the Lat... Title II defines the lands which are subject to intervention, and the obli­ gations of farm owners. Title III specifies the expropriation and valuation process and forms of payment. Title IV defines how land will be made avail­ able to beneficiaries, including those in associations. Title V deals with technical assistance and other services for beneficiaries. Title VI is con­ cerned with the organization, powers, and responsibilities of INA, finance, juridical.matters, and the cadaster and land register. Title VII deals with a variety of matters, including taxes, penalties, water resources, and the reform role of government agencies other than INA. 28. The Law states that agrarian reform is an integral part of the national development strategy, and that it is intended to promote social justice and increase production and productivity. Allowable maximums on farm size range from 100 ha in irrigation districts to 2,000 ha in the Department of Gracias a Dios. No person (individually or as a shareholder in a corporation) may hold in one or more farms, a total of more than the indicated maximums. Areas less than the indicated maximums are subject to expropriation (a) if within 6 months of the date of the Law the land is not operated directly by the owner; (b) if within three years (January, 1978) the farm is not efficiently exploited; or (c) if the land is in excessively fragmented units. Lands which are totally unexploited are subject to immed­ iate expropriation. At the end of three years, owners of partially or in­ efficiently exploited lands may retain at least 50 ha, or double the amount of the efficiently exploited area, whichever is largest, up to a maximum imposed for each region. Land carrying two heads of cattle per ha is con­ sidered to be effectively worked in the better regions; the criterion for the poorer regions is one head per 1.5 ha. If in permanent crops, 90% of  ANNEX 4 Page 9 the cultivable area must be used. If in annual crops, one crop a year must be produced if long cycle, two crops a year if short cycle. 29. Small farms (less than 5 ha) can also be taken over for redistri­ bution in larger units. Land in asentamientos under Decree 8 are automati­ cally expropriated. Land in bananas, sugarcane, African palm, coffee, pine­ apple, citrus and tobacco are not expropriable as long as efficient exploit­ ation is maintained. With Government approval, land in excess of the above- , mentioned maximums can be held if needed to support a specific production unit requiring investment of at least L 750,000. All State and municipal lands are subject to immediate expropriation, with the exception that persons having worked such land for at 10 ten years in accord with the outlined intensity standards may retain up to 200 ha. Persons in this category may not own other land. 30. The Law makes INA responsible for carrying out the reform, and it gives the Director of INA Cabinet status. Areas with the better infrastructure will receive priority attention. Expropriated land will be priced at the average value declared by the owner for real estate tax purposes during the three years just prior to the expropriation. The value of improve­ ments will be determined by INA. Payment will be in cash and transferable bonds. Class A bonds, amortizable over 15 years, will carry a 6% interest rate; Class B bonds, 20 years, 4%, Class C, 25 years, 2%. Improvements will be paid for in cash (up to 10% of its value, with a maximum of L 10,000), and the remainder in Class B bonds. Land not in full production will be paid for with Class C bonds. Bonds may be used by the recipients to finance up to 50% of approved industrial projects. 31. Persons working land under any form of rental, and the landless, have priority in land distribution programs. Provisional titles will be given; these will create eligibility for public credit. Payment for the land will be made over a 20-year period, including two years of grace. Definitive titles will be given on completion of payment. Provision is made for distri­ bution in both family units and associative forms. although the. latter is given priority. Distinction is made between cooperative and associative farm organizations. Family units of not less than 5 ha or more than 10 ha are authorized, if irrigated; equivalent areas (presumably in an income-earning sense) are authorized for non-irrigated areas; rental or subdivision of these units is prohibited. Sales are permitted, after getting INA approval. The Law gives responsibility to INA for the formation and promotion of campesino associative enterprises (Empresas Asociativas de Campesinos, E.A.C.). Each enterprise must have a minimum of five members, and is required to utilize mainly family labor. A statute (Estatuto de las Empresas Asociativas de Campesinos) governing this new legal form of agricultural enterprise is to be prepared. INA will have extensive participation in planning, organizing, and auditing these new cooperatives. In addition to the E.A.C., cooperatives governed by existing cooperative laws may also be beneficiaries of land transfers.  ANNEX 4 Page 10 32. Among the organizations required to support the reform are the Ministry of Natural Resources, the National Development Bank, the National Institute for Professional Training, the National Investment Corporation, the Directorate of Cooperative Development, the National Institute of Housing, and the armed forces. 33. INA is required to implement the reform in accord with the national development plan. A National Agrarian Council is set up to advise the Chief of State. The Council is made up of three lawyers, two representatives of the commercial farmer organizations, two representatives of the campesino organizations and a professional agronomist; none may be public employees or key members of political parties. The President and Secretary of the Council are appointed by the Government. INA will be managed by an Executive Director, named after consultation with the Minister of Natural Resources. The Executive Director is not a member of the National Agrarian Council, but may attend by invitation. In addition to advising INA, the Council will receive and rule on complaints which grow out of INA resolutions; it will work in accord with the Code of Administrative Procedures. The judgments of the Council may be appealed to the Supreme Court, which is required to give priority attention to such cases. Pending the Court ruling, the Council decision will stand. 34. INA will maintain a legal staff (Procuradores Agrarios) to assist campesinos in meeting the requirements for participation in the reform program. 35. The Law does not make provision for financing INA. It provides for bond issues in the necessary amount, subject to the control of the Ministry of Finance, and requires that the national budget include funds (to be handled by the Central Bank) sufficient to service the bonds. 36. The Law does not mention colonization explicitly. It gives INA a substantial control over public and private water resources in cases relevant to implementation of the agrarian reform. In accord with Decree No. 103 (January 10, 1973) which established the Honduran Forestry Corporation (COHDEFOR), forestry lands continue under the jurisdiction of the corporation. Parks, national forests and reserves, reforestation zones and protected areas are excluded from the land eligible for reform activity. In case of exprop­ riation of planted forests, the value will be determined and paid by COHDEFOR. 37. It is important to note that the Law does not cast INA in a mono­ lithic form. Instead, it calls upon the relevant agencies, such as the Minis­ try of Natural Resources and others mentioned above, to support INA in carrying out its responsibilities. In this, and in general, the Law reflects the basic technical, economic, social, and political realities of Honduras. It is intended to promote a change in land tenure which will result in expanded agricultural production and higher incomes for the rural poor and promote new forms of rural cooperatives. If backed up by a firm determination on the part of Government and the citizenry to move forward with effective im­ plementation, through adequate finance, personnel training, and good adminis­ tration, the legal basis for progress in agrarian reform appears adequate.  ANNEX 4 Page 11 THE MULTI-PURPOSE CADASTER 38. A related development of immense importance in impoving land tenure and promoting a productive and equitable rural society is the recent decision to undertake a multi-purpose cadaster in virtually the entire country. This will build upon ongoing pilot work, which has already demonstrated both the feasibility and the potential productivity of an expanded effort. 39. Using AID grant funds, a multi-purpose cadaster project was begun in late 1972 on a demonstration basis in the Departments of Choluteca and Valle. As of mid-l974 it was proceeding on schedule, and was about 50% complete. Aerial photography had been finished as of that date, and satis­ factory progress was being made in examining title claims to private lands and leasehold claims to national and ejidal lands, and in the registration and cross-indexing by owner, leaseholder, and location of private property and leasehold claims. The project includes a natural resource inventory; after a slow start, this work is now well advanced. Central computerized systems of property registration and tax/user fee calculations have been designed, and draft laws on property registration and tax administration have been prepared. 40. As a result of this demonstration project, the Government sought additional assistance and at end 1974 signed a $6 million loan with AID for a national cadaster. This project has three components. The first sets up a property registry system, including property mapping (the resolution of conflicting claims will be resolved by the courts or other bodies such as INA). The second component establishes a property tax administrative system, including property valuation and provision for keeping it current, centralized billing, and improvement of the municipal tax collection procedures. The third component is an inventory of agricultural resources in terms of soils, water, vegetation, land use, and land capability. This will provide a basis for rural land valuation, and, jointly with the associated socio-economic data to be collected through sampling, will greatly expand the information base for national planning and for agricultural project preparation and implemen­ tation. The resource inventory will be based on 1:20,000 scale photos, followed by field checks of varying intensity, depending on the agricultural potential of the area. 41. The project is scheduled for completion in four years and is bud­ geted as follows: Government AID Total ------------- $ Thousand -----------­ Personnel 1,568.6 1,376.2 2,944.8 Operations 142.5 1,370.7 1,513.2 Equipment and materials 894.4 894.4 Consultant services 1,798.7 1,798.7  ANNEX 4 Page 12 Training 39.2 39.2 Construction 188.9 56.1 245.0 Computer services 300.0 300.0 Contingencies 464.7 464.7 Total 2,200.0 6,000.0 8,200.0 The activity breakdown of the proj ect expenditure is: Government AID Total ------------­ $ Thousand -­--­------­ Support 592 2,024 2,616 Registry 790 1,688 2,478 Tax Administration 450 1,216 1,666 Resources 368 1,072 1,440 Total 2,200 6,000 8,220 42. The project will cover 10 Departments, about 64% of the nation's area, 71% of the rural population, and 123,000 rural properties. Priority will be given to the Departments with the greatest development potential. (The project task includes aerial photography and property registry inven­ tories for all the Departments. This, along with the fact that the needed personnel will have been trained, makes it possible to complete the work in the non-project Departments within two years after the 10-Department project is completed if the Government allots the necessary funds.) 43. The cadaster project and Law 170 are highly important steps toward a meaningful agrarian reform. However, additional measures are necessary to assure successful implementation. Program Administration 44. The outcome of the reform effort will depend a great deal on the administrative performance of INA. Set up in 1961, INA in its early years was assigned a wide range of duties and responsibilities which 'would have required a superministry to carry out. But it was not given the technical and financial resources needed to handle its primary task, let alone the rest of its duties. The result was a complex organizational structure which became less and less effective through the years in response to changes in Government and management, and to the suggestions of international agencies. 45. The draft national development plan recognizes this problem, and its organizational guidelines assign to INA the specific task of "directing the establishment and consolidation of the process of agrarian reform with  ANNEX 4 Page 13 particular emphasis on "procuring and distributing land ll and tlorganizing the associative groups in the settlements. II Under this arrangement, BANAFOM becomes responsible for farm credit and for silos for grain storage, and the Ministry of Natural Resources for technical assistance to beneficiaries. In reform areas these agencies will handle the assigned functions under program­ ming initiated by and agreed with INA. Similarly, the Ministry of Communica­ tions and Public Works will handle all matters relating to roads; the Minis­ try of Natural Resources, irrigation and drainage works; the Ministry of Public Health, the construction and operation of health centers, and the Minis­ try of Education, the construction and operation of schools. Housing and power will be handled in the same inter-agency manner. 46. The draft development plan recognizes that problems of organization and coordination may arise in bringing together these and other agencies for an integrated reform program. l.J'ith this in mind, the plan says that "owing to the importance of the process of Agrarian Reform and the special nature of financial assistance to the sector created by the Agrarian Reform, BANAFOM shall set up a special department to meet the needs of the beneficiaries under that Reform which shall form part of the network of Bank agencies in the areas in which reform is carried into effect. At a later date a specialized insti­ tution may be set up to meet the needs of beneficiaries under the Reform, should the situation so merit." The plan also says that tlIn order to achieve greater effectiveness in the granting of credit, this shall be linked with technical assistance and the supply of inputs, especially in the case of the Agrarian Reform, in which connection INA, BANAFOM, and the Ministry of Agri­ culture (}anistry of Natural Resources) shall coordinate their activities." 47. Technical assistance to farmers is likely to be one of the weakest links in the reform effort. The draft plan notes that "There can be no doubt that one of the bottlenecks in developing countries is the lack of technical staff. In the case of Honduras the main problems connected with technical assistance are for the most part due to a lack of planning for the purpose of directing that assistance in accordance with the policy laid down, and for guiding it in terms of the needs established by analysis. The said technical staff are in short supply for a large number of very obvious re·asons." To better use the available technical assistance resource, the intention is to tie it in closely with credit activities, as noted above, and to concentrate on the INA asentamientos. 48. In overall, it appears that the organizational arrangements for the agrarian reform are well conceived. Given good will on the part of the parti­ Cipating agencies, and building on the experiences gained from the Decree 8 operations it would seem that effective coordination can be achieved, particu­ larly if the agricultural coordinating committee (COCO, discussed in the General Report) and the comparable local bodies (COQUITOS) do a good job. However, few if any of the cooperating agencies are operationally efficient, and improved management procedures should be sought along the lines proposed in the General Report. Unless this is done, internal weaknesses in the responsible agencies will severely handicap the agrarian reform program, regardless of how effective  ~~X4 Page 14 the coordinating mechanism may be. 49. Consideration might also be given to assigning the Aguan Valley development task to a new agency, thereby freeing INA to concentrate its re­ form efforts in other areas. The Aguan Valley, located in the tropical humid northeast, covers a total area of about 100,000 ha of which roughly 80,000 ha are suitable for land settlement. The development of the lower valley was initiated with an IDB loan (approved in 1969) to support the settlement of about 3,000 families in individual family tracts on some 40,000 ha. An AID loan was used to help finance the trunk road along the main axis of the valley. INA is responsible for executing the project in coordination with other public agencies, the latter providing the social and economic infrastructure, techni­ cal assistance and other essential services. 11 50. As of end of 1974, about 1,600 families had been settled on 16,000 ha. A 65 km trunk road had been completed under the AID loan (the original plan called for 95 km). The construction of 63 km of feeder roads was under­ way (a total of 242 km are planned), along with repair work made necessary by the 1974 hurricane. Marketing infrastructure, including a planned BNF grain storage facility of 4,140 ton capacity at Tocoa has not yet been com­ pleted. A small storage facility of 657 tons currently exists in the valley. The BANAFOM is operating a credit office through which all project credit is supplied. 51. The original development program included African palm and citrus plantations, along with rubber, cocoa, basic grains and livestock development. The African palm plantations have become a main activity and it is currently expected that at least 4,000 ha will be planted by mid-1976; by end of 1974, 2,000 ha had been planted to the crop. 11 11 Some 250 ha were under citrus, mainly grapefruit, as of that date. 52. The initial plan called for family plots of three sizes: 2,300 units of 10 ha ~ach, 470 units of 15 ha each, and 288 units of 15 ha each. The first ewo farm types were for grains, African palm and rice; the third was designed for livestock production. Following Decree 8, however, emphasis was placed upon joint land settlement and cooperative production units. 11 The cooperating institutions,\:which are members of a project coordinating committee, include. the Ministries of Health, Education, Public Works, Natural Resources, and the National Development Bank, the National Elec­ tricity Company (ENNE) , and the National Water and Sewage 3ervice (SANAA). ~I It is estimated that about 10% of this area was affected by the hurricane of September 1974. 11 Future oil palm development will attempt to concentrate production in contiguous areas to reduce costs of harvesting, collection, transportation and processing. A pilot oil extraction plant sufficient for the first 600 to 1,000 ha is to be established in 1976.  ANNEX 4 Page 15 53. The IDB is considering a second stage project; formulation and study are now in the initial phase. It is estimated that this second stage would involve an outlay in excess of $20 million. Continued expansion of African palm is being considered, along with support for cooperative production arrangements for the new settlers. The second stage project would include a feasibility study of an extraction plant with capacity adequate for 4,000 ha. 54. One of the important aspects of the second stage project proposal concerns INA's implementation capacity. As the size and complexity of the valley development effort increases, the technical and managerial capacity of INA may fall somewhat short of that required to ensure the prompt and efficient execution of such diverse programs as marketing, credit, livestock and agro-industry. In the years just ahead, INA technicians will be under increasing pressure to implement on a country-wide basis the new Law No. 170, and to move forward rapidly with the asentamiento program being undertaken with the help of the AID sector loan of December 1974. With this in mind, along with the fact that over 50% of the INA 1974 budget was earmarked for the Aguan, it would be desirable to consider assigning the Aguan development task to a new agency, sayan Aguan Valley Development Corporation (CORDA). If set up, such an agency should have separate funding and management, and it should be authorized to receive national and external funds for all phases of the valley development (roads, on-farm development, marketing, agro-industry), and to contract for needed services (technical, construction, credit, etc.) from public or private institutions. The Corporation should locate a large proportion of its staff in the valley, using salary incentives as necessary, and it should develop an effective liaison with COHDEFOR in the event that the Olancho forestry projects use the valley as a main road outlet. 55. The basic argument for creating CORDA is to activate the Aguan pro­ gram by freeing it from current administrative constraints. At such time as a complete revamping of the management procedures for the entire set of public agencies operating in agriculture becomes possible, say within several years, the CORDA might be eliminated in a general streamlining of agricultural agencies. 56. If carried out at the planned rate, the agrarian reform will require a considerable expansion of staff, particularly for INA, DESAGRO, and BANAFOM. In early 1974, INA staff totalled about 486; of these, 59% were in the execu­ tive and technical grades and 41% in administration and services. DESAGRO had some 83 people in its field offices, mainly in extension work. Of these, eight were professionals. The BANAFOM had some 700 employees in the central office and the 19 branches, with about 9% being university graduates, 41% of intermediate level, and the remaining half in administrative and service categories.  ANNEX 4 Page 16 51. There are no hard and fast rules on which to base estimates of per­ sonnel requirements for the reform program. However, a minimum of about 156 would appear to be needed in the first year of the program to handle promo­ tional and organizational work for the target output of some 200 new asenta­ mientos per year. In the fifth year of the program, some 300 would be re­ quired. For DESAGRO, a technical field staff of at least 96 are required for the first year, building up to a total of 340 in the fifth year. For BANAFOM, the first year requirement is about 100, with some 350 being needed in the fifth year. 58. These indicative estimates of field staff requirements are based on the following judgments (for year one); (a) INA - for the lead positions in the field offices, six university- level officials, preferably with a training in law, along with six legal assistants or law students and 12 sub-profes­ sionals in administration and economics; to deal with requests for the organization of asentamientos, at least 12 lawyers, and 12 legal assistants; for the inspection and evaluation of proposed asentamientos, 12 agronomists, 24 topographers or surveyors, and 12 de­ signers or draftsmen; to promote and service the asentamientos, 24 social promoters, at least half of whom should be university level; to work with DESAGRO and BANAFOM in preparing and suoervising operating and investment plans, six agronomists and six agricultural economists specialized in farm management; to work with DESAGRO in developing production and managerial skills, some 24 economists, administrators, ac~ountants, and bookkeepers. for maintaining the records needed for supervision, control, and program revision, about 12 medium-level staff with a competence in statistics and administration. (b) DESAGRO - for inspection and evaluation of proposed asentamientos, 24 agricultural specialists; for preparation and supervision of asentamiento development plans, some 40 to 50 extension workers and supervisors (at least one extension worker should be available for each six settlements, and one professional supervisor for each five extension workers); for assistance in developing farm management skills, some 24 agronomists.  ANNEX 4 Page 17 (c) BANAFOM - 20 farm credit specialists, plus an equal number of assistants to keep the records; 12 agricultural technicians to collaborate in the inspection ~d appraisal of asentamientos;. 24 credit supervisors and inspectors to work with the opera­ tin and investment plans of asentamientos, preferably with backgrounds in agronomy, farm management, and credit adminis­ tration; 12 credit analysts of professional level, assisted by 12 sub-professionals, along with a supporting staff of book­ keepers; for credit for rural housing, six civil engineers or archi­ tects, and perhaps 12 sub-professionals in these fields. 59. On this staffing pattern, the maximum staff requirement at one time during a five-year -implementation period would total to some 412 university level and about 608 secondary level. The former group includes 74 professional agronomists, and 124 professionals in economics and farm management. The latter group includes over 400 sub-professional technicians in agriculture. These requirements are large in relation to current staffing and the output possibilities of the ongoing educational and training programs (Annex 11). Finance 60. The draft national development plan calls for an agrarian reform outlay of L 163 million over the five-year period, to benefit 100,000 land­ less families in some 1,000 new settlements under an associative form of operation. Of the total amount, about L 89 million is for operating costs and the remainder of L 74 million for credit. (These data exclude the cost of land purchases.) The credit fund is alloted as follows: production, 63%; investment. 15%; construction and improvement of rural housing, 22%-­ for an average of L 384 per family and L 131 per ha. This is a realistic increase over the figures recorded under the Decree 8 program, which through December 1913 approximated L 119 per family and L 83 per ha. . 61. The non-credit outlays for the five-year plan period are foreseen as follows: L Million Responsible Agency Personnel 47.8 INA and DESAGRO Adult Education 7.5 Ministry of Education Farmer Training 2.9 INA Machinery and Equipment 11.8 Ministry of Natural Resources Vehicles 4.6 Ministry of Natural Resources Contingencies 14.1 INA Total 88.7  ANNEX 4 Page 18 62. This expenditure level for INA is somewhat higher than has been possible so far. Partly because it was difficult to make full use of avail­ able external funds, INA outlays averaged only L 6.5 million per year in the 1971-73 period. The data are: 1971 1972 1973 -------L Million---------­ Budgeted Internal Sources 3.9 4.3 7.0 External Sources 6.2 2.7 4.3 Total 10.1 7.0 11.3 Spent Internal Sources 5.9 5.2 4.7 External Sources 1.8 0.5 1.5 11 Total 7.7 5.7 6.2 63. Local finance needs reconsideration. Of the planned total five- year outlay, about 90% is to be financed from local resources, according to the plan. This is to come mainly from the anticipated operating surplus of COHDEFOR. However, this surplus may not be forthcoming in the expected amounts, at least in the earlier years of the program. COHDEFOR has had to face a weak lumber market and a series of start-up difficulties, and through 1974 its transfers to the ~linistry of Finance were sharply lower than planned (Annex 13). Foreign Assistance 64. The problems of finance, administration and personnel are closely related and need to be attacked as such. This is recognized in the AID agricultural sector loan of $12 million, signed in December of 1974, which assigns a considerable sum to improving reform implementation capacity. The loan, to be disbursed in four years, and the associated Government contribu­ tion are distributed as follows: Government AID Total ----------$ Thousand------­ Farm Credit 4,945 6,265 11,210 Agriculture Services 2,281 1,584 3,865 Agricultural Education 299 1,464 1,763 Access Roads 662 1,866 2,528 Coordination, Managemen t Planning and Evaluation 520 821 1,341 Total 8,707 12,000 20,707 11 Estimated.  ~~X4 Page 19 65. The Government does not expect to need additional foreign support for agrarian reform during the current five-year plan period. However, it would be desirable to keep this expectation under review during the early years of the program. If program output is satisfactory, it might be useful to make plans for additional borrowing abroad for year five and thereafter, particularly for asentamiento investment credit and related infrastructure.  ANNEX 4 Appendix 1 Page 1 AGRARIAN REFORM BEFORE DECREE 8 1. As in the rest of Latin America, the juridical institutions of land tenure date back to the colonial period. The first agrarian reform law follOWing the independence of Central America was enacted in 1829, providing for the "realengas" or sales of unoccupied lands of up to 20 cuadras 1/ per person. This area was increased five years later to 100 cuadras. In 1835-36, the Land Regulation Law was enacted. This law, which had no major social purpose, regulated sales and rentals of state lands as well as ejido-type concessions to new towns, and set up limitations on the awarding of titles and the corresponding Verifications of boundaries, re­ cords and surveying of real estate, (these latter were retained for more than a century, when it was announced "that the Government will cause to be established a class in surveying as soon as it is expedient to obtain a teacher and the persons examined and approved would be free to exercise the profession of surveyor"). 2. One of the first agrarian development laws was the Agriculture Law enacted in 1877; it granted a number of privileges to farmers and to agricultural activity, such as exemption from military service and from. payment of taxes on the importation of equipment and inputs. It also called for the establishment of an agricultural mortgage bank. This law, which was amended in 1895, actually remained in effect for about 90 years with some modifications, until the Agricultural Development Law of December 1970 was enacted. 3. The Decree of 1888 on "regulation of lands lt , which granted pro­ tection to those possessing land, established the legal principle, in Hon­ duran agrarian legislation, of the imprescriptability of unoccupied or national lands, i.e., lands could only be acquired through a title legally issued by the state and not through acquisitive prescription of ownership. Exceptions were made for lands held for more than 10 years, provided that titles had not been awarded because some requirement had not be~n met. New provisions also were issued on units of measurement and the rates to be charged by surveyors. In this regard, note should be made of the succession of changes in the system of measurement throughout the history of Honduras, which undoubtedly has contributed to the complication and continuation up to the present of the problem of awarding of titles, and of the measurement and registration of rural property. Measurements ranged from "cuadras of 200 merchant's varas" mentioned in the Agrarian Law of 1829; to "caballerias", with an area of 22 cordadas of 50 Spanish varas 36-1/2 long and a full half of that amount wide,1t of the 1835 law; to the "Spanish square varas" men­ tioned in the 1888 land regulations; and finally the modern manzanas and hectares. 1/ One cuadra = 83.5 square meters.  ANNEX 4 Appendix 1 Page 2 4. The 1898 Agrarian Law defined the concept of "baldio" (unoccupied or uncultivated land) as any property not having a legitimate owner and therefore belonging to the state; the state also retained as its property both ejido lands and those of the religious orders which had been legally secularized. Among other provisions, it included a prohibition upon acqui­ sition of nationally-owned lands up to 8 km from seacoasts and from Lakes Caratasca and Brwers, from keys and islands, and from sites of ruins of former settlements. 5. The 1924 Agrarian Law established, with a social purpose, the awarding of 20-ha family lots, stipulating a number of requirements for regular awarding of titles: to have worked at least 50% of the land, one­ fourth of it with permanent crops; to have built a house and to have exer­ cised possession for 10 consecutive years. This law also established the principle of the State's power to impose limitations on private ownership of land and water on the grounds of public benefit, subject to the applicable compensation. It also established, in the former Institute of Social Reform, the Office of Settlement and Immigration, for the purpose of populating the national territory, and fostering the entry of foreign immigrants. 6. As a supplement to the above-mentioned law, the Code of Agrarian Procedures was enacted two years later (1926) in connection with the sale and rental of national lands, awarding of family plots, recovery of excess lands and other provisions on procedures and demarcation of lands. 7. The first Agrarian Reform Law with a definite social purpose was Decree No.2 of September 29, 1962; with a series of amendments and changes, this remained in force through December 1974. Although this Law was intended to better orient the agrarian social structure, it did not establish a we11­ defined agrarian reform mechanism, and proved to be ambiguous and contradic­ tory in many respects. The 1a'-1 was extremely moderate and brought no signi­ ficant changes in the agrarian structure. It left vast holdings untouched. Although it included a number of quite radical principles, these had very limited results, and, in fact, discredited the reform process by causing insecurity in the productive sector of agriculture. 8. A few of the many examples of confusion and contradiction in the 1962 law are: (a) the 1atifundio was declared to be of public benefit, after defining it as any holding in excess of the limit fixed by law, which was not stated; (b) a progressive tax on unworked lands was set up, but evasion was made easy; (c) vast powers were granted to the executing agency, the National Agrarian Institute (Instituto Naciona1 Agrario - INA) not only in the reform field but also in rural development in  ANNEX 4 Appendix 1 Page 3 general. In addition to taking part in the attachment and distribution of property, and settlement, the INA was made a regulator of agricultural prices, a grantor of credit not only to the beneficiaries of agrarian reform but to the agricultural sector in general, a supplier of all extension and technical research services, a monopolist in the marketing of agricultural products, a fixer of service charges, and so on; (d) in spite of the multiplicity of functions and responsibilities assigned to it, INA was not given the financial and technical resources essential for these purposes. 9. Beyond these inherent limitations of the law, there was no clear- cut political decision or widespread desire to undertake the reform of the agrarian structure. In spite of its imperfections, the use of the positive part of the decree might well have permitted the launching of a program that would have become irreversible, facilitating evolutionary change and the needed adjustments in the legal provisions. 10. In fact, INA had virtually open-ended power to interpret and apply the law, and to establish a highly flexible administrative procedure for expropriation. But far from taking advantage of this positive part of the law, scarcely eight months after its enactment the National Congress amended it by Decree No. 127 of June 6, 1963, which provided, among other things, that land expropriations must follow the ordinary judicial process. This meant that every claim related to land matters was left in the hands of the "civil courts of first instance" to be decided through burdensome and slow procedures. 11. Prior to the 1962 Agrarian Reform Law, some attempts were made to aid low-income farmers through the awarding of family plots in land distribution and settlement projects (Table 1), carried out by the former General Office of Land Review of the Ministry of Natural Resources. Basically, the goal was to keep the campesinos in the countryside, checking the flight to urban areas which was being encouraged by rural poverty and the lack of employment opportunities in rural areas. 12. Most of these distributions and settlements took place in a dis­ organized fashion and yielded rather negative results. When the National Agrarian Institute (INA) was established, it took several of the listed projects (Table 1) under its supervision, attempting to organize them and to provide the beneficiaries with some guidance and assistance. In some cases it obtained positive results (e.g., Monjaras, Buenavista, Ola and Catacamas). But in general, the effort proved rather unproductive. This effort was discontinued in 1967 because of the high cost and the fact that it was reaching only a small number of families, and because a more effective  AmffiX4 Appendix 1 Page 4 means of dealing with the dissatisfaction of rural dwellers was needed. 13. At that time INA began to follow a different line, mainly through cooperatives. The year 1969 saw the appearance of organizations that have had good results up to the present, such as the cooperatives of Guanchias, Buenos Amigos and Agua Blanca, among others. In the settlement project on the right bank of the lower Aguan, which was begun with IDB financing in 1969, this new cooperative approach also took root, even though in the ori­ ginal conception of the project the traditional family plot was the model. In this project (the largest undertaken by INA), as well as in smaller ones such as those of San Bernardo and Santa Rosa in the Department of Cho1uteca (which have also received IDB financial support) the traditional individual holding has been eliminated, and the new associative form of working land has been adopted. 14. The 1962 Law raised the expectations of the campesino and tended to dampen rural unrest for awhile. However, it became increasingly clear that the will to implement was lacking, and that an accelerated program to improve the agrarian structure was not to be expected. It was then that the frustration of the rural citizenry began to be expressed through farmers' organizations. As a logical consequence of this reaction, there began inva­ sions of lands which had been abandoned or were operated only marginally, not only in national or ejido areas, but of private property as well. 11 The situation was aggravated by the slowness of judicial proceedings to solve land disputes. The land problem became more and more apparent to political leaders and even the urban sector, and Decree 8 resulted. 11 Although invasions were widespread, there were no reports of properly worked production lands being taken over. In the few cases of inadequately worked lands that were taken over by INA to meet the campesino demands, generous compensation was made to the affected landowners.  ANNEX 4 Appendix 2 Page 1 A STUDY OF THE DECREE 8 SETTLEMENTS (ASENTAMIENTOS) 1. INA surveyed the Decree 8 settlements as of end 1973. The study was intended to point up ways of improving performance, and recognized that a firm evaluation could not be made at this early stage of the program. The survey covered 288 settlements. Date Discrepancies 2. It was found that there were errors in INA data concerning trans­ actions. This was because of initial mistakes or later changes in boundaries, and the handling of applications not later completed. 3. In 60% of the settlements the area had not been delimited or there were boundary disputes. This problem was greatest in the sourthern zone of Choluteca, northwest of San Pedro Sula, and in the Juticalpa area. Forty percent of the settlements with boundary problems had fewer than 100 manzanas (70 ha). 4. The finding was not unexpected, because the INA teams entrusted with these tasks worked under heavy pressure, and stressed getting people on the land quickly, rather than waiting to properly mark boundaries, especially in small settlements. Size 5. The size distribution of the settlements was: Number Averase Area Ha 30 45 78 105 40 185 11 252 ~ Over 280 About 72% of the settlements had an average area of less than 105 ha. Most of the small settlements were located south of Choluteca, and northwest of San Pedro Sula; these areas contain the largest number of settlements. Location of Housing 6. On 44% of the settlements, the houses of the members were less than 1 km distant from the farmed area; 23% from 1 to 2 km; and 33% more than 2 km. The first settlements took place close to population centers, or villages,  ANNEX 4 Appendix 2 Page 2 with few people having to move. This '''as due in part to the nature of the settlement, which was based on "temporary use of the land", and because the building of houses on settlements on private property was not permitted. Labor 7. The 288 settlements existing at the date of the survey gave perma­ nent employment to about 10,035 persons, an average of 35 per settlement. The average number of associates per settlement was 52 persons. On this basis, some 23% of the participants were still dependent on activities out­ side the settlement. This is explained by the conditional (temporary) nature of the settlement, and its nearness. There had not been a sufficient certainty of employment or a sufficient time period for participants to sever all links with their former activities. Selection of Beneficiaries 8. About 3,800 rejections or withdrawals of initial applicants were recorded, and 1,776 new associates were added to the first applicants accepted. These figures were considered to be encouraging, since they imply a self­ selection process likely to result in better teamwork and associative pro­ duction management. This selection by the participant individuals and groups complements the INA selection process, which took into account only the re­ quirements laid down by the Decree and the Regulations. Potential Use of Land 9. Seventy percent of the settlement land was deemed suitable for agriculture, 25% for livestock and 5% for forestry. If true, this means that acceptable areas had been chosen, contrary to the fairly widespread view that much of the chosen land was marginal and not suitable for farming. Land Use 10. Approximately 20,000 of the alloted 46,000 manzanas was being farmed, that is, about 43%. This is partly because many settlements were still in the phase of initial organization and had not been able to plant. Two-thirds of the planted area was in maize, 13% in beans, and 9% in rice. Other crops were cotton, sesame and sorghum. These were crops familiar to the campesinos, and there had not been sufficient time to promote new lines of production. Financing 11. BANAFOM credit was used for 60% to 70% of the 20,000 manzanas under cultivation. Credit recovery at December 31, 1973 was estimated at 40%. This recovery rate was considered fair, as the settlements were hastily set  ANNEX 4 Appendix 2 Page 3 up, and technical assistance was limited. It was noted that a portion of the credit should not be regarded as recoverable in the banking sense, but rather as an investment in reform promotion and consolidation. 12. The recovery rates followed crop profitability levels: maize, 24%; beans, 32%; cotton, 39~; and rice, 47%. It was noted that this type of data over several crop years would help improve investment plans and help channel technical assistance and credit toward the most profitable products, thereby improving recoveries. Production 13. The estimated gross value of the total production was L 3.6 million (US$1.8 million), equivalent to more than triple the value of the BANAFOM credit. A very significant part of production (45%) was used for home consumption by the farmers; this may suggest that participants were able to eat more and better than before. 14. The production of maize was estimated at about 350,000 qq; beans, 35,000 qq; and cotton, nearly 5,000 qq. The average prices obtained for the marketed products were: maize, L 6.8 per qq; beans, L 24 per qq; and sorghum, L 6 per qq. Better marketing would have brought higher prices and income, and greater credit repayment capacity. Capital Investments 15. No major capital investments could be expected in the new produc­ tive units, owing to their newness and the circumstances under which they had to operate and because most of the settlements were made on private lands. The following investments were recorded: 43 buildings, 8 tractors, 12 sets of irrigation equipment, 4 vehicles, 8 harrows and other equipment totalling about L 260,000. Mechanization 16. The lack of sufficient farm machinery in the mechanization unit of the Ministry of Natural Resources, and the fact that the little equipment available was committed in advance, made it impossible for this unit to give much support to the new settlements. This, along with the limited invest­ ment in equipment by the settlements themselves, made it necessary to rent machinery (tractors, harrows, seeders, plows, etc.) for an amount of about L 250,000. Rental of tractors for something over 1,000 days accounted for 64% of the outlay. It was noted that future operating and investment plans should be analyzed to balance maximization of income with optimum use of the labor supply. Connection with Rural Non-Government Organizations 17. It was estimated that 51% of the new productive units were connected with ANACH; 23% with UNC; 24%, independent; and the rest were in the precoop­ erative or owners' association stage. (The relationship to FECORAH is not  ANNEX 4 Appendix 2 Page 4 clear; though it promotes cooperatives, it leaves its members free to elect the form of organization they wish to adopt; if they become precooperatives or cooperatives, they become part of FECORAH.) 18. ANACH played a major role in the settlements in the Departments of Choluteca, Cortes, Yoro and Atlantida. UNC had a larger number of affiliates in Choluteca and Olancho. The greatest concentration of independent groups was in Choluteca and Atlantida. In overall, rural non-government agencies were very active in the Decree reform program. Occupations and Income 19. Most of the members of the settlements (89%) were genuine farmers; 2.5% workmen; 0.5% merchants; and about 8% had some craft skill. 20. About 61% of the settlers had to work as hired hands on neighbor­ ing estates. On the other hand, some 387 farmers, i.e., 2% to 3% of the farmers active in the settlements, had some cattle of their own, and some 157 owned small non-settlement lots of not more than 5 ha; 20 owned small food stores or general stores, and 6 had small craft shops. 21. About 194 members had access to public and six to private credits. Administration 22. Only 6% of the settlements kept complete accounts. However, 47% recorded operations, 50% had payrolls, 43% were accustomed to giving receipts, and 42% billed movements of funds and goods. This spotty record in accounting was virtually inevitable in the early settlement period. INA gave priority attention to this problem, and made plans to introduce an accounting system. General Comment 11 23. Many of the problems documented by the study were unavoidable. The program was new and was undertaken with a real sense of urgency, the land allotments were provisional, and the general reaction of landowners was less than enthusiastic. One of the basic contributions of the program was to define and test a form of settlement organization. The rural settlements have basically the organization envisaged in the National Agrarian Reform Plan, i.e., an associative community-type form whereby producers with scant resources agree to use their labor and equipment in common for the purpose of working a rural property and processing and marketing the product. The participants share the profits or losses in proportion to their contributions. However, if operations so require and if the settlement members agree, neces­ sary services may be hired. 11 Based on the above data, and field observations by the mission.  ANNEX 4 Appendix 2 Page 5 24. The basic criteria of organization governing the settlements are: democratic organization with collective management based on voting and pre­ ferential right for the enterprise to purchase the interests held by those concerned in the case of death or withdrawal of members. The regulations to be designed will lay down the necessary provisions about control bodies, in­ dividual liability of members, admission, withdrawal and replacement of associates, etc. It is also expected that the settlements will enjoy the tax exemptions and prerogatives accorded to cooperatives. 25. Considering the difficulties inherent in any program of this sort, the limited time available for activity planning, and the financial, technical and organizational limitations of INA and of the other collaborating institu­ tions. the agrarian reform effort under Decree 8 was effective and significant.  ANNEX L. Appendix 2 Table 1: LAND COLONIZATION AND PARCELIZATION PRIOR TO Page 6 THE AGRARIAN REFORM LAW OF 1962 Year Project Department Lots Extension Noo Ha 1951 Colonia Agricola Nacional de Catacamas Olancho 126 4,027 1954 Colonia Agricola del Valle del Aguan !I Colon 52 500 1954 Parcelacion del Valle de Leon gj Atlantida 366 12,256 1958 Parcelacion de Puerto Cortes de Huampusirpi Gracias aDios 1958 Colonia de Guaymas Yoro y Atlantida 191 6,017 1958 Colonia 51 tio de La Ola Choluteca 324 6,480 1959 Parcelacion de Monjaras Choluteca 171 1,687 1959 Parcelacion de Jilamo Atlantida 104 2,080 1959 Colonia de Orica Francisco Morazan 1959 Colonia de Ulua-Chamelecon Cortes 1959 Colonia Agricola de Mico Quemado Cortes 1960 Colonia Agricola de Tata- Bicoche Olancho 56 1,120 1960 Parcelacion de Guaymitas Yoro 54 1,110 1960 Parcelacion de San Juan Buenavista Cortes 80 798 1961 Parcelacion de Buenavista Choluteca 152 1,700 y Resettlement of campesinos. affected by floods. y On land released by the Tela Railroad Coo" Source: INA  ANNEX 5 Page i HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY EXPANSION POSSIBILITIES IN FORESTRY 1/ Table of Contents Paragraph No. Present Position and Recent Trends 2 - 39 Forest Utilization 8 - 15 Forest Industries 16 - 19 Foreign Trade 20 - 21 Domestic Consumption 22 Output Trends 23 - 24 Foreign Exchange Earnings 25 - 26 Forest Fires and Protection 27 - 29 Law 103 and COHDEFOR 30 - 39 Education, Research and Foreign Assistance 40 - 45 Education 41 - 42 Research 43 Foreign Assistance 44 - 45 Development Objectives 46 - 47 Judgments and Suggestions 48 - 80 Institutional Development of COHDEFOR 59 - 64 Management Information 65 - 69 Industrial Projects Development 70 - 72 The Campesino in Forestry 73 - 77 Roads and Forest Management 78 - 80 Possible Projects for Foreign Agencies 81 - 107 The 01ancho Project A Project to Strengthen COHDEFOR 81 89 - 91 88 Las Lajas Project 92 - 95 Forestry Cooperative Project Long Range Planning for La Mosquitia 96 100 - - 104 99 Other Project Potentials Funding Requirements and Timing 105 107 - 106 The Critical Development Decision 108 - 116 1/ This report is based on field visits in mid-1974 and mid-1976.  ANNEX 5 Page ii Table of Contents (cont.,,) Figure 1 Organization of COHDEFOR, 1976 2 Organization of Directorate of Renewable Natural Resources (Ministry of Natural Resources), May 1974 Table 1 Distribution of Forest and Wood Volumes by Forest Districts 2 Distribution of Sawmills by Capacity, 1973-1975 3A Major Forest Products Imports 3B Imports of Wood Derived Products, CIF, 1969-73 4A Major Forest Products Exports 4B Exports of Processed and Non-Processed Wood Products, 1969-73 5 Recent Prices of Pine Export Lumber 6 Domestic Consumption of Forest Products, Total and Per Capita, Selected Years, Honduras and Central America 7 Output of Primary Forest Products by Value, Selected Years 8 COHDEFOR Operating Budget Proposal, 1976; and Performance, 1975 9 ESNACIFOR Output, 1969-75, and Enrollment in 1976 10 Forestry and Forest Industry Personnel, Additional Numbers Required, 1976-1985 llA Future Sawnwood Export Value, Employment, and Investment Requirements under the Snggested Development Alternative A (40-Year Planning Period) liB Future Sawnwood Export Value, Employment, and Investment Requirements under the Suggested Development Alternative B (Even-Flow Sustained Yield Policy) Appendix 1 COHDEFOR and Honduran Forest-Based Sector Development: Problem Analysis and Suggested Strategy for Sector Development 2 Total Estimated Investment in Forest Industries, 1977-80 Summary of Programmed Investments by Project, 1977-80 3 Summary Information on Olancho Reserve 4 Las Lajas Project  ANNEX 5 Page 1 EXPANSION POSSIBILITIES IN FORESTRY 1. Far-reaching changes in public policy for the forest-based sector were announced in early 1974. The Government hopes that they will promote the rational exploitation of the forests, a major natural resource, and enable the forestry sector to greatly increase its contribution to economic and social progress in the years just ahead. Significant progress has been noted since 1974. PRESENT POSITION AND RECENT TRENDS 2. Recent sector trends and the present position suggest that the outlook for sustainable growth is favorable, if certain persistent problems are overcome. The Forest Resource 3. The present forest resource situation is as follows: 1/ Million Ha Forest land (land best suited for forest) 7.4 Forested 5.2 Forest land denuded or without forest for various reasons 2.2 4. Forest land (or land best suited for forest) 2/ represents some 66% of the total land area of Honduras. These lands are scattered throughout the country (IBRD Map 11149), although the greatest concentration is in the north central and eastern parts of the country (Table 1). Of the total forested land, less than 2 million ha are in stocked coniferous forest (land area more than 20% covered with pine), and about 3.2 million ha in broad­ leaved forest. Most of the 2.2 million ha of denuded forest land is being used for marginal agriculture, but some has been abandoned and in some cases this land is going back to forest. 5. The coniferous forest is the main resource with immediate poten­ tia1 for economic development. About 75% of this forest contains almost p~e stands of Pinus oocarpa, and density is, in general, not very high, with an estimated average of 62 m3 (cubic meters) per ha. The conifer As presented in the National Development Plan for 1974-78. Based on soils, climate and slope. See Annex 1, and C.V. Plath, Usa Potencial de la Tierra de Honduras, report prepared for the UNDP/FAO, Rome, 1967.  ANNEX 5 Page 2 resource is being rapidly depleted by indiscriminate cutting and repeated burning, which prevent regeneration from becoming established. With proper fire protection and management, natural regeneration is excellent. Most of the oocarpa forest is located in the central part of the country. About 11% of the coniferous forest contains pure or almost pure stands of Pinus caribea (mainly in the eastern part of the country). Another 8% of the coniferous forest area--mainly at higher elevations--contains Pinus psedostrobus and some 6% contains mixtures of conifers and broadleaved species. In the past, more than 90% of the wood utilized for commercial purposes came from the coniferous forests (i.e., excluding wood used for fuel and other non-market purposes). The total inventory of commercial pine growing stock is estimated to be around 100 million m3, with 25-30 million of this being in the Olancho forest reserve (see Table 1). 6. Broadleaved forests (mainly mixed tropical hardwoods) cover some 3.2 million ha and they have been utilized very little in the past. Located mainly in the eastern and northern parts of the country, very little has been known about these forests until recently. They are fairly inaccessible in the east, and in the north they have been selectively cut for a few valuable species such as Swietenia macrophylla (caoba) and Cedrela mexicana (cedro), for export. These forests are predominantly located in the tropical humid climate and they are difficult to manage and utilize. As is the case for most forests found in this bio-climatic region, their composition is extremely heterogenous (well over 100 species per hal, with low volumes per hectare of commercially known species ( maybe 5% or so of the total volume). Extraction costs are high if only the few commercially known species are taken, and when they are logged, the remaining forest is, for the most part, worthless for further immediate exploitation since the valuable species do not regenerate on the exploited areas without special silvicultural management. The Canadian International Development Agency (eIDA) completed a study of tropical hardwood availability and utilization in Honduras. A future CIDA project will focus on one specific area identified by the initial project personnel. 7. There are some 250,000 to 300,000 ha of mangrove and swamp forests, located mainly in the Departments of Choluteca, Cortes, Atlantida and Gracias a Dios along the coast. These forests have Various uses, the production of tannin being foremost. Forest Utilization 8. An estimated 2.9 million m3 (r) are harvested annually (excluding fuelwood). About 95% of this volume is conifers. The wood industries consume some 2.2 million m3 (r) per year of pine and of hardwoods, while the remainder is used in round form. The main sources are the Departments of Francisco Morazan, Comayagua, Yoro, Olancho and El Paraiso. The standard stumpage fee is L 6 per m3 (r) for pine and variable but low fees for hardwoods. 9. The harvest is extremely wasteful in terms of the losses that occur in the forest: in many cases only one log is taken out of a felled tree; widespread use of the axe in logging causes great waste in felling and bucking  ANNEX 5 Page 3 logs; due to high transport cost.s, good wood in smaller logs is often left to rot in the forest; and young trees are destroyed in the harvesting of larger ones. From an average harvest area, only an estimated 70% of the usable wood harvested reaches the mills. 10. The average volume per ha in the pine forests is estimated at about 62 m3, but, when harvested, only about 30 to 40% finally ends up in product. Various estimates have been made of the economic losses due to this wasteful utilization, with the draft national development plan suggesting about L 54 million per year. This estimate may be high, as it is based on the total volume left in the forest times the average value (on the stump) of pine wood. 1/ 11. Estimates of the annual volume of broadleaved trees harvested for processing and export range from about 100,000 to 200,000 m3. Valuable spe­ cies (e.g, Sweitenia macrophylla, Cedrela mexicana, virola sp.) are cut for export, but export volumes are low. 12. Other forest products include tannins, chicle, liquidambar, and pine resin (for turpentine and other uses) which is particularly important. Despite generally ~steful practices, substantial volumes and values are produced annually, and production is growing steadily. Some 38,000 barrels of resin were collected in 1975, at an average price of L 75 per barrel at the distilla­ tion plant. 1/ Pine resin collecting activities are labor intensive and there are several successful cooperative operations. Some pine seeds, mainly Pinus caribea, are also collected from the forests and exported. (Volume was 3,292 lbs in 1975 and value of sales was L 83,000.) 13. Other uses of the forest include watershed and soil protection. However, there has been no systematic program for designating protection forests or practices. With the establishment of the Honduran Forestry Devel­ opment Corporation (COHDEFOR) and the development of a land classification system, these uses will likely become a more central part of the overall forestry and agricultural program. The need is urgent. 14. The Directorate of Renewable Natural Resources and Ecology of the Ministry of Natural Resources is responsible for national parks and wildlife. No land has been set aside as yet for national parks and wildlife preserves and no hunting and wildlife protection laws have been enacted. A national park (Cusoco) was established by Decree No. 53 of February 1969, but no funds have been made available for management staff or setting boundaries. Wildlife preserve zones have been considered for El Picacho and San Juancito in Francisco Morazan; Lake Yojoa in the Departments of Comayagua, Jj The volume left is generally of lower value than that taken, and actual markets for the additional volume were not assessed. 11 COHDEFOR (see para 30) got L 8.86 per barrel in 1975. Export value amounted to about L 4.6 million.  ANNEX 5 Page 4 Santa Barbara and Cortes; Montana del Rio Patuca in Olancho Mountains of Warunta in Gracias a Dios; Rio Tinto and Rio Platano mountains in Colon; El Chile Mountain in El Paraiso; and the mountain range of Opalaca in Intibuca. But so far all of these are merely ideas. 15. The predominant use of wood in Honduras is for fuel, with an estimated 80% of the wood consumed locally going for this purpose. With few exceptions, it is taken freely from the forest (and is not recorded), making it difficult to estimate volumes. 1/ Its value is obviously increasing in line with the recent higher costs of fuels. COHDEFOR presently sells fuel wood at L 0.25 per carga (100 kg). Some 95,000 cargas were sold in Opt. F. Morazan alone in 1975. (This is the only Department for which figures are available.) Forest Industries 16. The forest industry is made up mainly of sawmills, although there are also two plywood companies and various companies producing minor forest products, such as distilled resin. There are 146 sawmills, and, as is typical of most developing countries, 12 (9% of the total number) produce about 50% of the output and a greater percentage of the export volume. The 28 largest mills produce about 90% of the export volume (see Table 2). 17. Most of the sawmills use circular head saws which are inefficient in terms of lumber recovery. The low efficiency of all but the largest (generally band saw) mills results in a loss to the economy which the Govern­ ment estimates at about L 5 million per year. The sawmill industry contributes about 1.5% of the national GOP and employs about 4,000 persons, mostly working at quite low wage levels. There is very little further processing of lumber (e.g., into moulding, furniture parts, and such). While most of the lumber is exported, there is a supply of lower grade, non-exportable sawnwood which is difficult to sell internally because of low demand. Some of it is sold in Central America. Current production is about 1 million m3 (s). 18. There are two plywood companies, Tropical Plywood and Tela Industries Madereros S.A. (TIMSA). Tropical Plywood has two mills, one in Dulce Nombre de Culmi, which produces veneers, and the main mill in Tegucigalpa, which produces primarily pine plywood, although also some tropical hardwood plywood. TIMSA produces primarily plywood. Total production of the two mills was around 6,100 tons in 1975 (480,000 sheets). The industry is generously pro­ tected against other than Central America Common Market (CACM) supplies--20% ~ valorem duty plus L 0.30 per kg. The main competition is with plywood from Nicaragua, which is preferred by many because of higher quality. Even Honduran distributors and retail outlets find that the quality of the local 1/ The draft national development plan shows an estimate of L 24 million for the annual value of fuelwood in 1960-62; this was some 54% of the total net output 9f the forest-based sector. The estimated annual value increased to some L 28.5 million in 1970-72; the comparable percentage figure was about 48%.  ANNEX 5 Page 5 product is unsatisfactory. 1/ Exports. however. increased markedly in 1973-75, suggesting that a trend to improvement and more general market acceptance may be underway. Production rose from about 335,000 sheets in 1972. 19. There are three naval stores (resin) distillation plants and some factories producing wooden furniture and other wood items. Foreign Trade 20. The two outstanding features in the foreign trade picture are the large and growing export of pine lumber and the large and still more rapidly growing import of pulp and paper products. Imports and exports of other forest products are insignificant in relative terms. Imports of paper prod­ ucts amounted to some $26 million in 1974 and consist of container-board for banana packaging, newsprint, and printing and writing paper, and miscel­ laneous products (Tables 3A and 3B). Exports consist mainly of lumber, about 95% of which is pine (Tables 4A and 4B). totaling, with other minor products, some $41 million in 1974. The lumber market has been buoyant in the past few years, with increases in both prices (Table 5) and volume for Honduran products. Lumber exports in 1975 were 193 million BF and the value was L 77 million, or some $38 million. 21. A study done for the Goverment a few years ago shows that actual exports from Honduras in years prior to COHDEFOR and Law 103 were consider­ ably in excess of those officially declared, mainly because of poor export controls. Some major exporters were allegedly underreporting both prices received and volumes shipped. However, since the study looked at only a sample of the importers (through checking import statistics). it is not possible to satisfactorily revise the official export figures for earlier years. Domestic Consumption 22. Honduras consumes only small amounts of wood products (Table 6). The exception is paper and paperboard, all of which is imported, with most being re-exported as banana packaging. Per capita consumption of lumber and plywood is considerably below levels in other countries of Central America. Annual lumber consumption is about 47 m3 per 1,000 people, or some 128,000 m3 in total, while the consumption of plywood, including domestic output and imports from Nicaragua, is only some 7,400 m3 per year. Using past growth trends and expected adjustments in consumption as a rough guide to future domestic requirements, the following estimat~for 1980 and 1990 result: 1/ J. Aguero, J. Baker, M. Jerezano, "Informe Sobre Los Problemas de Mercado de Plywood en Honduras", April 1974.  ANNEX 5 Page 6 1973 1980 1990 Sawnwood ('000 m3) 128 170 250 Plywood ('000 m3) 7.4 13 25 Paper and Paper Products ('000 m3) 105 180 Output Trends 23. Primary forest products (including logs; resins and other wood used in the round such as fuelwood) contributed an annual average of some L 59.8 million to the GOP in 1970-72 (Table 7), equivalent to 4.6% of the total. 1/ This compares with L 44.3 million in 1960-62, or an average of 5.9% of the GDP for those years. 2/ In the period 1960-62 to 1970-72; the primary forest products sector grew at an annual rate of 3.1%. The comparable figure for the economy as a whole was 5.6%. No more recent estimates are available. 24. COHDEFOR estimates its 1975 gross income from sales at some L 84 million, with about L 6.7 million coming from stumpage sales and the rest being accounted for by exports of sawnwood and miscellaneous products (Table 8). (These figures do not include returns to private and ejidal forest owners for wood sales nor the value of locally produced and sold lumber, plywood, and other products not controlled by COHDEFOR.) The net return to COHDEFOR (after subtracting all costs) is estimated at some L 12 million in 1975. Foreign Exchange Earnings 25. The foreign exchange earnings of the forest sector were officially estimated at about L 42.3 million annually in 1970-72. Imports of forest products averaged L 34.2 million in 1970-72. As long as pulp and paper im­ ports increase at the current rate, net foreign exchange earnings of the sector will grow more slowly than export earnings. 26. For many years forest products (logs and lumber) were the third most important export of Honduras (after coffee and bananas). As of 1972, they took over second place. Gross exchange earnings from forest products are officially estimated at about L 77 million for 1975. 1/ 1L As indicated above, fuelwood accounts for about 48% of the contribution, with sawlogs adding another 36%. 1/ The IDB/FAO (Cliff) Olancho Mission estimates that the actual contribu­ tion of the forestry sector is between 10 and 15%. 1/ Exports for the first half of 1976 were considerably above the comparable period of 1975.  ANNEX 5 Page 7 Forest Fires and Protection 27. One of the most prominent features of the current Honduran forest scenario is the massive destruction by fire. An FAO study in 1965 indicated that at least 650,000 m3 of wood (almost entirely pine) were destroyed annually by fire. An estimated 50% of the fires kill the overstory; natural regeneration is almost always destroyed in nearly all burned areas. Since the same areas are frequently reburned, regeneration does not become estab­ lished (the pine forests would regenerate naturally if properly protected and managed). 28. The fires are an integral part of the shifting agriculture system generally practiced by the campesino. Other than as a source of fuelwood, the forest has no value to him, it being, in fact, an obstacle in his search for a livelihood. Therefore, until the campesino can obtain an adequate eco­ nomic benefit from the forest, only slight progress can be made in stopping this widespread burning. 11 There has been marked progress in fire protection over the past two years. Out of some 2 million ha under protection, an esti­ mated 34,000 ha burned in 1975. This is about 1.7% of the protected area. The average size of fire was 40 ha. In contrast, the preliminary official figures for the 1976 fire season are 0.5% of the protected area burned and an average of 10 ha per fire. It should be noted that weather conditions were extremely favorable in 1976 and this was a major factor in the low area burned in 1976. Whatever the reason, there is a general feeling in Honduras that the protection system is improving, that rural populations are becoming much more aware of the need for and benefits from fire protection, and that continuing improvement is possible if the rural inhabitants can continue to share the benefits from forest output. 29. Related to the fire problem is the loss of forest land to agricul­ ture;and this threat is magnified as roads are pushed into the forest areas. If the lost forest were replaced by productive agriculture, there might be social and economic reasons for supporting shifts from forest to agriculture, but, in most cases, the lands thus taken over are marginal for agriculture. Generally, the campesino gets only one or two harvests before he moves on to other lands. Fire follows the nomadic cultivator, regeneration is not estab­ lished and the land becomes idle and useless. (As indicated above, there are 11 A forest fire expert has suggested, in agreement with the mission forestry consultant, that eventual widespread introduction of con­ trolled and planned burning will be a necessary part of COHDEFOR's forest management program aimed at getting campesino cooperation.  ANNEX 5 Page 8 some 2.2 million ha of lands that are best suited for forest but which are denuded and, in many areas, idle.) 11 LAW 103 AND COHDEFOR 30. The unsatisfactory performance of the forest sector (wasteful exploitation practices, widespread burning, alleged corruption, and other aspects discussed above) led to issuance of Law 103 and the creation of COHDEFOR. Signed on January 10, 1974, Law 103 is so farreaching that it makes obsolete nearly all previous forest policies. Under its provisions,· the forestry agency of the Ministry of Natural Resources was disbanded and COHDEFOR (Honduran Corporation for Forestry Development) was set up to take its place. This semi-autonomous institution is charged with generating funds for the economic and social development of the nation through forest exploitation and export of forest products. It is responsible for forest policy and its implementation and it controls all forest resources, public and private. 31. The enabling legislation (Law 103) aims essentially at national control of all basic forestry and forest industry activities. Logging, sawing and impregnation of wood, and extraction and distillation of resins will be done by the Corporation directly, or through authorized enterprises of mixed or private capital formed by Hondurans (including peasant associations or cooperatives). All foreigners engaged in sawing wood or distilling resins transferred their interest in such enterprises to the Corporation or to Hondurans. In the case of pulp and paper, pulpwood, fur­ niture. wood sheets. or other similar intermediate or final wood products, foreigners can only own 49% or less of such operations, if COHDEFOR, in each individual case, considers it in the national interest. 32. The Corporation is the only agency authorized to sell lumber abroad and to wholesale internally. It has complete responsibility for the management, protection, and utilization of all forests and for lands con­ sidered best for forest use but which are presently denuded. In essence, it has the power to determine, in consultation with other agencies, the use to which land is put. 11 It should be noted in this context that the pine forest is always in danger of major insect infestations, such as the one that occurred in 1963-65, when the dendrotonous beetle (Dendrotonus sp.) destroyed an estimated 20% of the pine volume. The dentrotonus is a natural part of the ecology of the pine forest, and unless measures are taken to prevent another outbreak, the potential exists for serious destruction at any time. Overmature forests are most likely to be affected. Good forest management, including harvest and sanitation cuts, can reduce the danger substantially.  ANNEX 5 Page 9 33. COHDEFOR has a Directive Council, composed of the nation's Chief of State, Minister of Defense and Public Security. Minister of Finance and Public Credit, and the Executive Secretary of the National Planning Council. and is administered by a General Manager (Figure 1). Under him is a deputy manager and four operational division-level managers (forest, industries, finances, and commercialization). In addition, there are seven districts, each administered by a district forester. 34. The capitalization of the Corporation was initially set at L 3 million. This can be increased through the profits from wood and product sales which may be assigned by the Executive Branch on recommendation of the Directive Council;by monies, securities and possessions transferred to it by the State; by profits on investments made by the Corporation; by loans which it arranges for the attainment of its goals; and by the monies collected in fines it imposes within the context of Law 103 and the valid portions of the Decree 85 of February 1972. The Corporation is exempt from all state and municipal taxes and it is required to deposit in the Central Bank all funds from sales or other activities. Its tentative budget for 1976 is shown in Table 8. 35. COHDEFOR is also required to organize what is called the Social Forest System, including forest worker associations (AFTs) composed of peasants who form cooperatives or other organizations to utilize and protect those forest areas assigned to them. In return, the peasant group will share in the benefits from their activities in a manner determined by COHDEFOR. 36. In mid-1976 there were some 100 cooperatives benefiting about 15,000 individuals directly or indirectly (that is. about _2.000 families). __ These cooperatives provide supplemental income to the rural poor and have, reportedly, been a major factor in the success of the protection program. There are mixed reports on the success of the AFTs, but most persons in COHDEFOR feel that on balance the program has been successful and should be expanded. 37. All large-scale concessions of public forest land are being cancelled, and holders of such concessions will be paid for investments if they have been operating within the law. Others will receive no compensation. Agreements with private owners for cutting rights on private lands will also be cancelled (at a date to be determined by the Directive Council). COHDEFOR does not en­ vision the use of large-scale private timber concessions in the future, al­ though it has management-utilization contracts with two companies now. 38. A key justification for Law 103 was the finding mentioned earlier that many wood exporters were apparently drastically under-reporting both volumes and prices of wood products. Since COHDEFOR is directly responsible for lumber exports, it has taken over export contracts, paying those exporters it found to be working legally and stopping other exporters from filling orders. In some cases COHDEFOR is contracting with exporters to carry out the actual exporting activities, but all such exports are in the name of COHDEFOR. The way it has worked so far is as follows: saw-millers deliver  ANNEX 5 Page 10 their product to one of the concentration yards (either owned or contracted by COHDEFOR)and COHDEFOR pays them for the wood, based on its product standards. COHDEFOR then hires exporters to phYSically handle the transac­ tion. Since the export is in the name of the state, there is no export tax. 39. This review makes it clear that Law 103 is a drastic measure and COHDEFOR plans to carry it out to the letter, although fully cognizant of the problems ahead. It also plans to deal the same way with articles of the Forest Law of February 10,1972 (Decree No. 85) that were not superseded by Law 103 and which govern important details of forestry policy and practice, including conservation. In the latter area, however, the Directorate of Renewable Natural Resources and Ecology of the Ministry of National Resources has responsibility for certain functions which relate closely to forestry, mainly wildlife and national parks. As shown in Figure 2, the Directorate has a Department of Ecology and although its functions are not yet clearly defined, it is likely that it will eventually handle environmental and conservation matters related in certain aspects to forestry protection. Legislation on wildlife and national parks remains to be developed. "(The draft national development plan includes comment on wildlife and national parks.) Watershed management still remains a function of COHDEFOR. EDUCATION, RESEARCH AND FOREIGN ASSISTANCE 40. Both education and research in forestry need more emphasis. Education 41. In recent years the National University at La Ceiba (UNAH) has been offering a course for professionals. Foresters in Honduras do not in general favor relying upon the University for training, preferring instead to use foreign universities, at least for some years to come. This is a valid judgment. A considerable number of scholarships for professional training abroad are likely to be available, in addition to those already awarded by Germany, AID, OAS, and FAO. 42. In contrast to the unsatisfactory university level program, Honduras has an outstanding technical level training facility and program--the National School for Forestry Science at Siguatepeque. This institution has been func­ tioning in conjunction with an FAO project and it has been receiving addi­ tional support from AID in the form of scholarships for prospective and existing faculty to obtain B.S. degrees from Stephen F. Austin University in Texas. (These fellowships have also supported education for many of the professional foresters now staffing COHDEFOR.) In addition, the U.S. Peace Corps has been providing instructors. There.were 148 students enrolled in the Siguatepeque school in 1976, including those from other Central American countries (Table 9). The school hopes to attract more foreign students to help reduce the cost per student, which is now rather high. Capacity is under-used~  ANNEX 5 Page 11 Research 43. Honduras is not doing any significant research on its forest problems. This is partly because of a lack of qualified researchers, and partly because those qualified have been needed more urgently in other areas (administration, management, and teaching at Siguatepeque). As noted below, an applied research program is urgently needed. Plans exist for development of applied research at Siguatepeque. Foreign Assistance 44. Honduras has a great deal of foreign assistance in the forestry sector, including in recent years: UNDP/FAO (in education and forestry planning) CIDA (in forestry planning, with particular emphasis on hardwood development) IDB/FAO (Olancho agro-forestry study - Cliff mission) OAS (forestry advisor to CONSUPLAN) u.s. Peace Corps (18 foresters, plans for more) IDB (Olancho project-planning) IDB (Agalteca charcoal production feasibility study) AID (scholarship aid) 45. In addition to these longer term assistance projects, there have been a number of short-term missions to provide specific advice on various issues (e.g. organization and administration of COHDEFOR; forest protection; and charcoal production for a proposed steel mill). DEVELOPMENT OBJECTIVES 46. The 1974-78 national development plans lists the following general obj ectives for the forest sector: (a) improve the utilization, industrialization and commercialization of forest products to optimize the returns from the forest for the benefit of Honduras;  ANNEX 5 Page 12 (b) increase the contribution of the forest-based sector to the welfare of the people through the direct participation of more persons (mainly campesinos) in the productive and protective activities associated with development of the sector and by using returns from the sector for programs of national development; and (c) protect the soil. water. wildlife and scenic resources associated with the forest. 47. These objectives are sound and appropriately inclusive. covering as they do nearly all relevant aspects of forestry development in the context of the existing resource situation in Honduras. The problem ahead is how to design and carry out effective action programs. JUDGMENTS AND SUGGESTIONS 48. A problem analysis and suggested strategy for forest-based develop­ ment is presented in overview tabular form in Appendix 1. This overview brings together in package form the observations on strategy which are presented.in the following pages. It is consistent with the Government approach to forestry development as set forth in Law 103 and various administrative direc­ tives. COHDEFOR's approach is based on the concept of state control. guidance. and management of forest resources, logging, processing, and commerce of wood products. Much of the impetus for Law 103 came from the need to overcome: (a) apparent substantial under-reporting by exporting companies (mainly foreign owned); (b) lack of definition of forest land ownership, with resulting bottlenecks in wood supply for local industry and in planning for future expansion of the forest industry; (c) lack of progress in the sector for a variety of reasons, including misuse or lack of use of large concessions. inefficiency and alleged corruption in the forest service, and processing inefficiency; and (d) lack of direct control over resource exploitation and process­ ing and marketing activity, with resulting low national rev­ enues from the sector. 49. There would have been ways other than COHDEFOR to overcome most of these bottlenecks, but all would have involved substantial changes in the forest-based sector. Systems of control and taxes could have been introduced, but the basic organization for their administration was lacking. Further, it is probable that more technical manpower would be needed to administer the  ANNEX 5 Page 13 essential controls and taxes than is likely to be the case if COHDEFOR does the job. The COHDEFOR device also avoids the delays inherent in trying to define land ownership, so as to eliminate the wood supply bottleneck. 50. Even though the mechanics for a successful operation have been provided, COHDEFOR's effective performance, if not survival, depends on solving certain existing or potential problems, such as the following: (a) If its technical capacity is not increased rapidly, there could be a slowdown in the sector, thereby inducing lack of public and Government confidence and support. Without support and cooperation (both private and public) it cannot carry out its functions. (b) If COHDEFOR does not spend a great deal of continuing effort developing its export markets, and if it does not attempt to get industry input into its decisions regarding product standards, prices, and marketing, it is liable to find itself faced with a decline in production, productivity, and invest­ ment in new capacity, and there will be little it can do about it, at least in the next five to ten years. (c) If the Government diverts much of the operating profit of the Corporation to non-forest uses, the development of the Corpo­ ration and of the country's forestry program would be severely handicapped. It is well recognized that the political pressures ___f_o_r-. div~rs!~~ _are s tro.!l&.-_. Q'~r ..~xaIl1pl,,~, .the draf tl9 74~ Z8 .. national development plan assigned to COHDEFOR a major burden in financing agrarian reform_and~griculturaJ..dev~lopment .• t. (d) Unrest and uneasiness already exist among private companies and labor organizations in the sector, particularly concerning (i) future wood supply and its cost for private industry, (ii) COHDEFOR industrialization policy and plans, and (iii) the ability of COHDEFOR to handle the commercialization of wood products. Part of the unrest would appear to be a natural reaction from an industry that has in the past been favored by a lack of control on its activities, and which has had almost a free hand in obtaining its wood supply at effective prices far below what it should have been paying. 1/ Also, The present situation is similar to that of 1968-69, when the COPINO ·pro:fect~s·eeb-eiOw)tookshape. At that ·time, the newspapers were full of indignant complaints, demands and threats from the local industry, particularly that strong elemen.t located in the Olancho regIon. Then, as now, the industry saw a threat to its autonomy and its free hand.in depleting the resource base of the country.  ANNEX 5 Page 14 as mentioned earlier, powerful interests in the sector were in the past allegedly receiving export revenues not reported to the Government. which. meant windfall profits for the co~ panies and a lower return to the country. Under these circumstances. an unfavorable reaction to COHDEFORbysome individuals could be anticipated. However, part of the uneasi­ ness is certainly also due to legitimate concerns about the inexperience and bureaucratic traits of COHDEFOR in the context of its all-powerful role in the sector. (e) A key problem faced by Honduras is the bias against utilization of small-sized roundwood coupled with ineffi­ ciency in conversion and an inadequate stumpage pricing system. Further problems exist because of weight limita­ tionson certain critical forest access roads. (Low weight limits mean higher log transport costs.) Partly for these reasons, sawmills in many parts of the country are facing severe wood shortages. . _....... 51. Although the problems ahead are difficult, COHDEFOR and its current program appear to represent a rational approach to forest development and probably the most practical one, given the overall circumstances. Thus, the following judgments regarding an appropriate strategy for the sector are based on the assumption that COHDEFOR should and can be strengthened to overcome the above-mentioned weaknesses and to enable it to survive the mounting pressures against it. 52. In total, the elements of the strategy needed to overcome the pro­ blems add up to a program with emphasis on: (a) increasing protection of existing forest resources and expanding the forest resource base through an intensified management program; (b) increasing the efficiency of existing industry in converting roundwood into products; (c) developing capacity to increase secondary and tertiary processing of forest products; and (d) improving the export marketing system to insure outlets for the nation's forest products. The results of such a program will be increased income, domestic value added, employment, foreign exchange earnings and resource conservation.  ANNEX 5 Page 15 53. The broad lines of strategy for Honduran forestry development should consider the following breakdown in forest areas/types: (a) the Olancho Reserve; (b) the rest of the unexploited Olancho, Colon and Mosquitia forests (including hardwood forests); (c) the remainder of the forest area (mainly exploited) which can be broken down into two categories: (i) those areas of remaining forest which are large enough to support an efficient industry on a more or less suatainable basis, and (ii) the other remaining scattered forest areas that cannot support sustained yield operations for efficient size industries. 54. For the Olancho Reserve, the strategy has pretty well been estab­ lished: develop access and a management program and an integrated industry complex. 55. For the rest of the unexploited portion of Olancho, Colon and Mosquitia (Gracias a Dios) , the urgent task is to assemble the information needed to determine the best program of exploitation/management and infrastruc.ture dev­ elopment, and progressively undertake a program of protection and development. 56. For the scattered forest areas of sufficient size to support sus­ tained yield operations for an efficient sized industry, harvest should be controlled, and industries should be established/retained which can make optimum use of the resource and manage it properly. Studies should be carried out to determine permissible harvests, best uses of harvest and appropriate management regimes. Increased efforts should be devoted to study of second growth management. 57. Finally, for the remaining scattered smaller forest areas, the appropriate schedule of liquidation should be determined together with the appropriate schedule for phasing out existing industry relying on wood from these areas. For these areas the main concentration should be on orderly phasing out of the industry with emphasis on avoiding disruption and finding substitute sources of employment. 58. In all cases, development measures should emphasize technical efficiency, along with a type of environmental management which will benefit the local populace. In the first three cases, improvement of equipment, development of incentives as well as regulations, and possible development of major satellite resawing units linked to smaller suppliers of cants or rough lumber should be considered.  ANNEX 5 Page 16 Institutional Development of COHDEFOR 1/ 59. Although the Corporation is quite well developed on paper, its technical/administrative capacity to deal with its responsibilities is far from adequate. There are not enough professionals in Honduras who have had experience with the various aspects of the forest-based sector. Notable is the lack of expertise in project and micro-economics (project design and evaluation), forest industry technology and administration, and wood products commercialization. Most other areas (including field management and adminis­ tration) are also understaffed. Available professionals hired by COHDEFOR from a variety of other agencies can barely keep up with day-to-day duties. 60. The first needed step is to close the gap between agency respons­ ibilities and personnel availability. Since COHDEFOR is a new institution and represents a new concept in forest-based sector management and adminis­ tration, it is difficult to define requirements for manpower. (A recent estimate for total professional and technical manpower needs 1976-1985 is presented in Table 10.) It is critical that Honduras obtain help to expand its professional capacity through scholarships and training programs. 61. Two points are important here. First, AID has discontinued its fellowship programs for foresters. Additional sources of scholarships need to be found, both internally and abroad. Second, certain staff requirements of COHDEFOR cannot be met adequately by university level training. Some form of training should therefore be developed to provide people with the needed practical experience in processing and marketing forest products. One answer is to hire foreign technical personnel to serve in the relevant departments of COHDEFOR. These people should be recruited from consulting firms or other groups (such as the U.S. Senior Executive Corps) that have individuals with a wealth of practical experience in forest industry and marketing. (It should be remembered that COHDEFOR is a corporation actually involved with production and sale of products; it is not just another forest service charged with ad­ ministration of a forest resource.) 62. Some of the technical and professional staff needed by COHDEFOR can be hired from the pool of economists, engineers, and other non-forestry pro­ fessionals available in Honduras. The General Manager of COHDEFOR is hiring non-foresters for some key positions and more should be engaged at least until qualified specialists with forestry experience and/or training become available. Similarly, COHDEFOR should hire experienced foreign professionals, both foresters and others. A group of key consultants hired directly by COHDEFOR could become an integral, albeit temporary, part of the organization until local professionals can gain the necessary experience. (Meanwhile, the assistance being provided by CIDA, UNDP/FAO and other groups should be continued.) 1/ Arthur Young and Co. is presently carrying out a thorough study of institutional reform for COHDEFOR. A phased approach to development of COHDEFOR is envisioned.  ANNEX 5 Page 17 63. One specific area which concerns COHDEFOR is forest industry development, and there is interest in obtaining additional high-level, well respected experts in that field who could advise on industrial expansion opportunities. International lending agencies could properly express in­ terest in filling this gap since the task involves providing assistance on how to prepare projects which meet international standards for financing, as well as the economic considerations which must underlie the choice of the best path for industrial development. (A project proposal of this sort is discussed below.) 64. On the technical forest management side, COHDEFOR has set up a program with the U.S. Peace Corps to provide professional foresters as counter­ parts to each Honduran professional in the seven forestry districts. This is a desirable step and should be continued. (In early 1976, there were 18 professionals assigned to the districts.) Management Information 65. COHDEFOR management urgently needs more and better information to help improve its planning and administration and its design of product stand­ ards and pricing systems. The Manager of the Forest Department needs a re­ source information system, the chief of marketing needs a market information system, and technical people need the services of an applied research unit (the latter is now attached to the training center at Siguatepeque) to provide data for district forest management schemes, industrial development planning, and export promotion programs, three areas which need immediate attention. The problem here is a lack of qualified people rather than money. If asked, IBRD, IDB and AID should jointly help solve this in a way which complements and adds flexibility to the support being received from CIDA and UNDP/FAO. An urgent need is research to aid in developing a stumpage pricing system. 66. A prime objective of the management information program is to generate the data for a residual stumpage pricing system for roundwood; 1/ a method of determining payments to producers for export products, and priCing and inventory control of export products. Since COHDEFOR has the power to set prices (subject only to world market price levels), there is no effective market system to establish prices. This means that detailed cost information is needed, including costs of each step from management through harvest, pro­ cessing and transport. 1/ While direct COHDEFOR involvement at all levels 1/ Starting with final product price, costs of transport, processing, and such are subtracted; this leaves a residual which is divided between profit for producer and stumpage. 1/ A preliminary assessment of industry cost structure has been made. See COHDEFOR, UNDP/FAO, Industrias Forestales Diagnosis, Aproximacion de Costos y Recommendaciones, FAO Project 511, Documento de Trabajo C-9 1973. Other work is in progress.  ANNEX 5 Page 18 will generate some information, there are substantial variations in costs, depending upon size of operation, location, product types, and other factors. Such variations need to be considered in a pricing system if private enter­ prise is to be maintained in the sector--as it must be. 67. Production standards are needed before developing a pr1c1ng system for forest products and for roundwood on the stump. Present product standards and grading rules have not yet been properly developed with the market in mind. 68. The "best use of roundwood" is a related question. Proper pr1c1ng of .wood on the stump takes into account the best use of the roundwood as well as access to the wood. At present, the current low stumpage rates (L 6 per m3 for pine) encourage irrational exploitation--both in terms of the destination of the wood harvested and the use to which the wood is put. With low relative roundwood prices, the processor is not encouraged to use maximum efficiency in conversion or processing; instead, he ships longer distances to processing centers than would otherwise be the case, and the wood does not necessarily go into its best use. If stumpage is properly priced, the wood tends to be used at the most efficient location and in the most efficient manner. (As an example, wood coming 150 km or so to Tegucigalpa is often converted into lumber with highly inefficient circular saws with wide kerfs. The waste provides only a minimal return to the company or the country, aside from providing fuel for local inhabitants.) 69. A well-organized flow of management information is also needed to set up controls for a decentralized decision-making system. Decentralization is essential to successfuly operate a complex corporation--which eOHDEFOR is. If a decentralized system is to be effective--and accountable centrally, as it should be--checks and controls on the decisions of the decentralized units must be based on a rapid feedback of information on the results of the deci­ sions of decentralized units. Thus improvement in communications with the districts is badly needed. Industrial Projects Development 70. eOHDEFOR lacks staff with experience in project analysis and the technical ability to develop and carry out project studies. erDA carried out a survey study of project possibilities for hardwood utilization, and the UNDP/FAO project is scheduled to give some advice on project development, but apparently mainly at the planning level. eOHDEFOR recognizes the urgent need to develop its project analysis capacity and to produce a flow of bankable projects and will be hiring persons experienced in project prepara­ tion and evaluation. In the short run, the best, and perhaps only, approach is to hire expertise from outside the country and set up a program for devel­ oping this capacity as part of a general institution-building program, such as suggested above. Because of its resource and market position, Honduras has ample opportunities for expansion of the forest sector so steps to improve project planning capacity should be a top priority. A list of ideas exists (see Appendix 2), but adequate feasibility studies for the suggested projects are not available.  ANNEX 5 Page 19 71. One specific proj ect package which merits special attention is the Olancho forestry and forest industry project (paras 76 to 89). For political as well as economic reasons, the country and COHDEFOR are focusing on this area for the major expansion of forest-based activity. 72. Project planning should consider opportunities for diversification of products; for utilization of small sized roundwood and woodwaste from mills and from the forest; and for utilization of hardwoods, particularly the so­ called secondary species. The entire project development exercise should in­ clude as an objective the improvement of the local technical and administrative capacity. This means that project analysis work must be coordinated with the COHDEFOR training and research programs and be closely tied in with the general planning unit. The Campesino in Forestry 73. One of the most critical problems facing the forest-based sector is how to make the campesino a part of forestry programs. This must be done because: (a) protection of the forest will be impossible without campesino participation and cooperation; (b) Government plans call for an increasing contribution from the forest sector to rural income and well-being; and (c) if forest industry is to be expanded markedly, workers will be needed and the logical source of labor is the underprivileged people already living in the forest regions. 1/ While there is general agreement on the need to involve the rural population, there is no such agreement on the best way to do so. However, Law 103 speci­ fies one major approach which is the "Sistema Social Forestal" (Social Forest System, or SFS). COHDEFOR is proceeding with this program by establishing agro-forestry cooperatives. 74. Under the SFS, campesinos are organized in cooperatives or other associations. These have the job of protecting the forest, under the tech­ nical direction of a COHDEFOR forest officer. In return, the campesinos in such groups will share in the benefits derived from the forest. The initial emphasis is on naval stores (pine resin), partly because of the quick return and partly because naval stores cooperatives have already been successful in some cases (see para 36). 1/ FAO has estimated that if the pine forests of Honduras were properly managed, they could support direct employment of some 70,000 persons (in woods and processing activities). See FAO/UNDP, Survey of Pine Forests--Honduras, Report FAO/SF:260HonSO, Rome, 1968. This figure seems high, but no information is available on which to base a re­ vised estimate.  A...'JNEX 5 Page 20 75. A critical feature of the system will be the way in which COHDEFOR defines agricultural potential of lands within a given forest area assigned to an association. The law provides that COHDEFOR, in consultation with the Agrarian Reform Institute (INA), will determine agricultural areas for farming and intensive cattle grazing within forest zones. Such lands will then be given to the associations for their use for food production. Credit, technical and social services and infrastructure will also be provided to help establish viable communities. 76. Whether the SFS will work on a larger scale remains to be seen. One point is clear: it is essential that the income which members receive from the forest be large enough to make the alternatives to forestry, such as extensive grazing and shifting cultivation, unappealing. Otherwise, the participants will not protect the forest. In addition, COHDEFOR will need to include widespread use of planned, controlled burning in its management program. This will: (a) improve agricultural potentials on areas designated for this use; (b) reduce the danger of major unintentional fire damage, by reducing fuel accumulations; and (c) improve natural regeneration of the pine, in certain areas. 77. The draft national development plan indicates that there may be some 500.000 ha of land now in forest that are suitable for agriculture. This land should be positively identified and shifted into agricultural uses. On the other hand, there are large areas of land best suited for forest pro­ duction that are presently being farmed, albeit on an extensive, marginal basis. This land should be returned to forest uses, with the campesinos or farmers who now occupy such lands being given better areas for farming or alternative employment opportunities in the forest. The Social Forest System envisions that lands within the system will be rationally utilized. which means, among other things, that denuded forest lands will be replanted to forest. Roads and Forest Management 78. The SFS is critical from still another point of view. Honduras must get its forests under technical management as rapidly as possible if the resource is to contribute at the maximum sustainable rate to national progress. This is not possible without more access roads. However, if road construction precedes the installation of a forest management system, the forest will be rapidly depleted by settlers who follow (or move ahead of) the road building. This means that improved access to the forest regions (e.g., the Olancho reserve) must be closely coordinated with, and probably preceded by, the planning of forest management and utilization. In turn, the latter should be preceded by an intensive effort to readjust campesino mentality concerning the forest and its protection., This involves a complex  ANNEX 5 Page 21 program of getting the campesino in forest areas involved with forestry'so that he can get an income from such activity. Thus, infrastructure develop­ ment relates closely to the success of the Social Forest System. 79. It is clearly impossible to develop a technical forest manage­ ment system for the country's forests without having adequate access, both for harvest and for management and protection. The major remaining forest areas of Honduras are not accessible (indeed, this is one of the reasons why such areas still are forested), If a major forest management and utilization program 1s to be developed, as the basis for permanent forest industries, it is necessary that major access roads be provided--and these should be jus­ tified on the basis of regional development over time, and not merely on the basis of immediate returns from forest exploitation. 80. External sources of capital and expertise will undoubtedly be called upon to provide a considerable amount of assistance for the forestry sector during the years ahead. The following paragraphs outline possible projects through which this assistance could be provided. POSSIBLE PROJECTS FOR FOREIGN AGENCIES The Olancha Project 81. A maj or issue in the forestry field today is how to firm up and implement a project for the Olancho reserve. This is a very complex problem; at stake are proj ect expenditures of several hundreds of millions of dollars and public decisions which will impact on the Honduran economy for generations to come. 82. The Department of Olancho contains the largest remaining reserve of pine in Hondurasooand in Central" America. A forest reserve has been created, including over 660,000 ha of pine and an est::l.mated 330,000 ha of nardwoods, and the Government has singled this area out for intensive development. The ultimate a::l.m is to establ1sh a large industrial comp~ex, producing a wide variety of forest products. mainly for export. 83. There are, however, sizeable obstacles in the way of Olancho devel­ opment. These include problems of forest protection; lack of access; difficult and costly logging conditions due to topography; resistance by existing saw­ millers and landowners to outside involvement in what they consider their territory; lack of information on growth and yield of the pine under various forms of management; and a shortage of local managerial talent for large-scale projects. The major positive feature is the large reserve of mature pine (mainly P. oocarpa~-an est::l.mated 25 to 30 million m3. Another bright spot is the conSiderable amount of information available on the Olancho reserve and its potential. 1/ A 1974 study by the IDB/FAD mission (the Cliff mission mentioned 1/ In addition to the studies mentioned above, useful documents are G. Penalba, Proyecto de Pulpa y Papel de Honduras (Resumen Historico) , COHDEFOR, 1974, and J. Easton, Report to the IBRD on the FAD/IBRD Mission to Central America on Potential Forest Industries Development, 1973. The International Finance Corporation (IFC) has one of the few complete files on the area.  AJ.'l'NEX 5 22 above) includes a review of population pressures on the resource; protection problems; current logging and processing activity; rate of depletion of the resource; infrastructure requirements; forest management possibilities and the best form of local organization and control to carry out such management; wood volumes presently available; and agro-forestry potentials. Results indicate th~t the rate of depletion of the resource is high and that imme­ diate action is needed to prevent further destruction of the forest. Initial emphasis on sawnwood production is suggested. 84. Following Cliff's work, a Canadian consulting firm, H.A. Simons, studied industrialization options for the Olancho, and concluded that: 1/ (a) the Reserve could support a forest products complex utilizing some 1,186,000 m3/annum of pine with some hardwood; (b) markets exist for the output; (c) the complex should consist of a linerboard mill (203,000 TPA) and three sawmills (468,000 m3/annum); (d) rates of return on the complex would be satisfactory (above 20% real rate of return); and (e) direct employment would be 3,000 persons. Partial and in­ direct employment could reach an additional 20,000 persons. 85. In Harch of 1976, the Honduran Government formed a committee for promotion of the project and took steps to initiate the project along the following lines: (a) establish an integrated sawmill at Corocito with 213,600 m3 saw-nwood and 113,600 m3 chip capacity, wi th the planned da te . of startup being October 1979; (b) establish two satellite sawmills as follows: Pueblo Viejo: 127,400 m3 (s) with startup in May 1980; La Union: 127,400 m3 (s) with startup in January 1981; (c) establish a kraft pulp and linerboard mill in Corocito with 203,000 mt capacity and an option for 28,000 mt of corrugating medium, with startup sometime between August 1982 and February 1983. l/ H.A. Simons: Industrialization of the Olancho Forest Reserve (2 vol.) September 1975.  ANNEX 5 Page 23 86. On May 15, 1976, the President of the IDB signed a IIMemorandum of Understanding" with officials of the Governments of Venezuela and Honduras, establishing the bases for financing the Olancho program. An investment of approximately $415 million is envisaged. U5$338 million would be for the sawmills and pulp and paper mill; the remainder would be used to finance infrastructure. 11 87. This project has gone through many stages since its origins in 1954-56, when FAO carried out a study of pulp and paper prospects in Central America. Past attempts to establish a viable industrial complex based on the Olancho Reserve have failed for a variety of reasons. The present project still faces some serious obstacles, but most of the previous bottlenecks have been removed. It appears that finally a viable development for the area is in prospect. 88. The project concept is correct--initial emphasis on sawnwood pro­ duction, using the available high grade old growth timber, with pulp and paper being phased in when access and forest management have been improved-­ as was suggested and fully supported by the tripartite Sector Survey Mission in 1974 •. Support for the project concept and the development of the project as outl:Lnea--above-rs- rec-ommende-d. . (Se-e Appendix 3-for sununary lnfoiination on the Olancho Reserve.) A Project to Strengthen COHDEFOR 89. As discussed above, COHDEFOR has complete responsibility for manage­ ment of forests, sale of wood. organization of forest industries, and foreign marketing. Although significant progress has been made since COHDEFOR was established, the Manager and his staff recognize the need for additional support to develop management guidelines, applied research, project level prefeasibility and feasibility studies, and an education and research program. 90. The proposed project to strengthen COHDEFOR would complement the existing and planned foreign assistance proj ects discussed above ,. and would be fully coordinated with them. It would: (a) provide specialists and finance for a project preparation evalution unit. including a high-level, experienced adviser; (b) provide specialists and finance for a management information system, including a design for a continuing flow of data on resource availability, use and sales; 11 IDB participation is expected to amount to $103 million, starting in 1977, and using resources from the Venezuelan Trust Fund, established in 1975.  k~NEX 5 Page (c) provide specialists and finance for an applied education and research program to help solve urgent technical pro­ blems (e.g., protection, regeneration, harvest systems, marketing, etc.). 91. This is an institution-building project. It is stressed that it would have to be closely coordinated with ongoing assistance activities and would require careful preparation. Project cost would approximate $1.2 million, largely in foreign exchange. COHDEFOR has the capacity to absorb such assistance. Las Lajas Project 92. This project would essentially involve: (a) setting up a general management plan for some 351,000 ha; (b) developing an intensive management program for some 74,000 ha in the area of Las Lajas; (c) developing a program for utilization of the wood production in this area l/; and (d) developing some concepts on land-use planning and second growth management which can be transferred to similar types of areas in Honduras. 93. In contrast with projects for utilization of mature pine this proj­ ect is mainly oriented toward management of young stands/regeneration (see Table 1, Appendix 4). The idea is to start with the best potential lands and to gradually extend management over the whole area. 94. The activities which would be included in this project are as follows: (a) carry out forest inventory, soils, and utilization studies; (b) elaborate alternative development programs (projects); and (c) (after choosing the desirable alternative) establish manage­ ment activities and utilization activities. l/ Among" other things, fiberboard production may be a possibility, based on thinnings.  ANNEX 5 Page 25 95. Technical support and later, financial support for utilization activities are envisioned. This project could be included as a sub-project in a larger general rural development project for the north­ western part of Honduras. Forestry Cooperative Project 96. Under Law 103, COHDEFOR is required to build up a "Social Forest System" which basically means forestry cooperatives with resin production, some timber production, and forest production as main activities. 97. As discussed above, there are some 100 cooperatives in existence, ben~J:iting so~e15,OOO peop~e ~irect1y or_ indirectly. ~Actual_ families involved in cooperatives are about 2,000.) COHDEFOR would like to expand considerably the forestry cooperative movement, which benefits directly the poorest rural families. These cooperatives are viewed as providing supplemen­ tary income for the rural inhabitants. It should be stressed that the philo­ sophy is that such cooperatives should not be viewed as the sole activity, but rather as supplementary to agricultural activities or other employment in the cooperative areas.) 98. There is no adequate assessment available of the experience to date in the cooperatives. Such a study is a first step in considering further expansion of the program, which could well reach 150,000 persons eventually. However, piecing together impressions of those who have worked with co­ operatives, the following judgments emerge: (a) rural incomes can be significantly increased (relative to initial levels); (b) the cooperatives have been an important element in gaining support for the forest protection program in the areas where the cooperatives exist: (the members for the first time see the value of protecting their forests against fire); and (c) there is considerable room for expansion of the forestry coopera­ tive movement-, if adequate financing and techttical support can be made available (DIFICOOP, a unit of the Ministry of Economy, is now helping with cooperative organization under a contract with COHDEFOR, but adequate technical assistance/extension is not available). 99. It would appear that this is an area where international institutions could provide a very useful input. Thus it is recommended that the following steps be considered: (a) provide technical support to assess the initial success of the cooperatives and analyze the problems that have arisen in implementing this program;  ANNEX 5 Page 26 (b) if this assessment indicates favorable potentials for expan­ sion of the program, based on market outlook, organizational potential, and rural inhabitant interest, determine the likely magnitude and timing of a forestry cooperative pro­ gram that could be included in a general rural development loan/project; and (c) send a project preparation team(including an experienced specialist in rural organization) to design a project. 1/ Long Range Planning for La Mosquitia 100. COHDEFOR is interested in developing a longer term development pro­ gram for La Mosquitia (mainly the sparsely settled Department of Gracias a Dios) • 101. The project background can be outlined as follows: (a) some 192,000 ha (3 million m3 (r) standing volume) of pine exists in the area; (b) Nicaragua is developing a seemingly successful project in the Nicaraguan part of Mosquitia which could provide insights for a Honduran scheme; and (c) The region presently has a stagnant economy and little forestry activity is taking place. 102. The idea of the project would be to start now with soils and forest inventory work, then develop utilization and forest management plans, followed by introduction of appropriate utilization activities (lumber and resin envi­ sioned initially). 103. Preliminary information for the pine forests of La Mosquitia indicate the following: l/ 1/ As a final point on the SFS. it is noteworthy that Guatemala recently sent a group of foresters to Honduras to study the forestry cooperatives and resin production activities with the objective of developing recom­ mendations for a similar program in Guatemala. 2/ "Informe sobre el inventario forestal practicado en Los Pinares de la Hosquitia". COHDEFOR files.  ANNEX 5 Page 27 (a) Forest area virgin-low density (44,000 ha) virgin-medium density (57,000 ha) virgin-high density (6,500 ha) exploited-low density (11,000 ha) exploited-high density (23,500 ha) (plus an additional 50.000 ha of pine lands for which no information is available); (b) Standing pine volume 3 million m3 (in trees 30 em in diameter without bark) low volumes per ha high resin potential. 104. This program will require financing for more detailed inventory work, infrastructure developments, and eventual utilization activities. It should be stressed that COHDEFOR views this as a longer term project. Other Project Potentials 105. There are a number of other forest project possibilities which may merit external support at some later date. A list of project ideas presented by COHDEFOR is shown in Appendix 2. Only a few of these projects are advanced enough to be considered for anything other than pre-investment support. They include a fiberboard mill and prefabricated housing studied by Jaakko Poyry and Co. 1/ Also included are projects in resination and distillation, one of which-is reportedly in the investment stage, as is the sawmill at Agua Fria (Yoro). 106. The mission recommends that any additional action on these projects await specific requests from the Government. 1/ Jaakko Poyry and Co. "Project Identification Study on the Manufacture of Fibreboard and on the Export of Wood Chips" and flShort Summary of Reports concerning Construction of Prefabricated Houses and Glued Laminated Structures" (July 5, 1976).  A.J.~NEX 5 Page 28 Funding Reguirements and Timing 107. COHDEFOR had only been operating a few months at the time of the mission's field visit in 1974. The funding suggested by the mission for forest-based development, as shown in the General Report, was based on condi­ tions and uncertainties existing at that time. Since then, COHDEFOR has developed rapidly and is likely to become an effective vehicle for implement­ ing forestry programs and projects. 1/ Thus, the initial mission estimates were probably conservative. An expanded investment in forest-based develop­ ment in the next five years could be justified and is recommended. THE CRITICAL DEVELOPHENT DECISION 108. Honduras today faces critical decisions concerning the rate of development and use of its pine resources over the next decade. At the present rate of harvest, the estimated pine sawtimber resource will have been totally depleted 20-30 years from now. It takes some 40 years to pro­ duce commercial sawtimber (except for minor amounts available in years 35 to 40). Thus, assuming no growth in the rate of harvest, there would be a gap of at least 10 years between the point in time when the remaining old-growth sawtimber is used up and when sawtimber from regenerated and protected lands becomes available. However, over the past five years or so, the total annual harvest of pine has been increasing by some 5% per year. If this rate of increase continues, even for 10 years, then the estimated current inventory of sawtimber will be depleted in less than 20 years, leaving a wide gap and, consequently, a serious disruption of the industry, unemployment, loss of export markets, and lack of sawnwood for the domestic market. Already local wood shortages are noted. 101. One alternative which has been suggested to the present path of expansion would be a physical, even-flow, sustained yield policy. This would imply a major reduction in current harvest levels--to about 2 million m3 per year, or a reduction of 500,000 m3. (The reduction would in fact have to be greater, except for the assumption that Honduras can within a very few years develop an effective management/protection program.) 1/ This conclusion is based mainly on the results of a second visit to Honduras by the mission forestry consultant in mid-1976.  ANNEX 5 Page 29 110. The unfavorable outlook for the Honduran balance of payments and employment makes it difficult to defend a strict even-flow policy. In this context, an alternative, more favorable policy would be to continue with approximately the present rate of harvest for the next 7 to 10 years, after which the situation should be re-evaluated. Assuming that the present esti­ mates of remaining sawtimber and net ingrowth are reasonably correct, after the 7-10 year period it would be desirable to gradually reduce the annual harvest until the newly established and protected stands reach sawtimber size (i.e., approximately 40 years from now). The aim might be to reduce the rate of liquidation of the old growth sawtimber from year 10 to year 40 so that in the final year (before the new stands are available) the volume harvested would be about equal to domestic requirements. The major quantitative aspects of this policy are presented in Table lLA. For the even-flow sustained yield policy, comparable data are presented in Table llB.-l1 111. The assumptions for each of the calculations are: (a) establishment of an effective management protection system in the immediate future; (b) a gradual increase in efficiency of roundwood conversion from an estimated 30% today to some 60% by year 11; (c) no major upgrading of production in terms of further elabo­ ration of sawnwood and no expansion of plywood; and (d) start-up of pulp production in year 10 with expansion in year 25, based mainly on residues and thinnings. 112. The major difference between the two alternatives can be seen in terms of employment, new investment requirements, and present values of sawnwood export earnings. (It is assumed in both cases that pulp production is the same, and that domestic consumption is the same and will be met from domestic production. Thus the two alternatives provide the same results in terms of domestic consumption and pulp production.) 113. In the case of the favored policy (Table lLA), employment increases fairly rapidly over the first 10 to 15 years, after which it starts to decline gradually to a level in year 40 of approximately half of the year 15 level. (If there were a gradual increase in further processing activities associated with sawnwood, the employment decline could be partially offset, since such activities tend to be relatively labor intensive in terms of number employed 11 The more extreme alternative of continuing with the present rate of increase in the liquidation of the old growth timber is not presented, since the resulting resource depletion would soon lead to a very serious economic problem for the entire economy.  ANNEX 5 Page 30 per unit of raw material. Of course, this same possibility exists under the even-flow approach.) In the case of the even-flow policy (Table lIB) employ­ ment increases gradually to year 15, after which employment stays at the same level until year 40. In other words, the even-flow policy provides a more stable outlet for labor, but the total employment provided during the first 20 years is considerably below that of the suggested policy. Given the imme­ diate need for employment opportunities and foreign exchange, it can be argued that the advantages of the greater employment and exchange earnings in earlier years outweighs the disadvantages of the downturns in the latter years. In fact, the downturns need not be disruptive, as they could be partially offset by increased secondary processing and further elaboration of sawnwood products, along the lines suggested above. 114. Although investment occurs earlier, the suggested policy implies only a slightly higher investment level ($1 million more) than the even­ flow policy. (The investment requirements in both cases include only that required for new capacity during the planning period. Capital would also be required for replacement and upgrading of existing capacity.) 115. The calculations of present values of foreign exchange earnings assume a real discount rate of 10% (which is probably conservative). The even-flow policy produces a present value of $943 million, while the sug­ gested policy produces $1,112 million. Thus the difference amounts to some $169 million in favor of the suggested policy. 11 A higher discount rate would increase the difference between the two alternatives in favor of the suggested policy. 116. The calculations are based on very rough orders of magnitude and limited information. Much more detailed analysis is necessary before a firm judgment can be made. 11 Professional foresters are likely to favor a conservative sustained yield policy over a period of 40 years or more; economists will argue for a shorter liquidaton period, say 30 years or so, in recognition of the high relevant discount rate and resulting differences in opportunity costs. In any case, technical as well as economic consid­ erations must be weighed, along with the possible alternative opportunities for capital and labor during the later years of the old-growth sawtimber exploitation period. The suggested policy and alternatives should be care­ fully studied in this context. Meanwhile, one thing is certain: if Honduras does not embark immediately on a massive program of forest management (in­ cluding protection) and forest industry improvement (along the lines suggested above), not many years will pass before the country will have to face a major disruption of one of its most important economic activities. 11 Since pulp and paper developments in the two options were assumed to be the same, as noted above, this would not affect the difference between the two alternatives. The same is true for sawnwood production for domestic consumption. 11 For example, it is likely that detailed analysis would indicate dif­ ferent policies for different parts of the country.  Figure 1: ORGANIZATION OF COHDEFOR. 1976 --------­ " ;---'-­ f ---'----r Legal . Training fPUIP ~ Paper ····1 L_Prolect [ Finan4!e [ ¥ores!~___=] J T~ Fores try District --r- t: - .. -~- ~~ II I Collection p?rofeC=-1 tion r­ --' 1-( neering Engi- _ I Accounts L~rojects Supply f Budge t Il'sociar-L For. S~1- COllectfon-} /S.-uper':'-­ Cent~_ I Y!~ i,-=:o""n=--_-' utomatic Inst. Dev. (IDB-suppt I f'i'ec'hnicalL ,FA()"/ -.§!!~Q.rL-' -~r~1 CI"[)A~ I I?~~j~L,_.J -: I ata Proc. [~X~~t.lfi ~~~ I ~ [ FAD Project Source: COHDEFOR ?i w >4 I-' VI  AJ.'rnEX S Page 32 Fis:rure 2: ORGANIZATION OF DIRECTORATE OF RENE'IiABLE NATUR.A.L RESOURCES (HINISTRY OF NATURAL RESOURCES), !-1AY 1974 1--------11 Admi!1istration -i CHIEF Technical Assist~,cei I :----) Department of Fisheriesl l :Marine Biology (D,iV'.SiOn)­ L i Harine Fisheries: I : Inland Fisheries I I ! I ! I Control and Inspection: I 1 Depertmentof 1 - - _.... Wildlife I , ~ Development and Protection (Division) [---I National Parks, Y Control -and Inspection I 1---11 Department of Ecology H I Protec~ion (Division) _ ~ Education [ Source: Hinistry of Natural Resources  ANNEX 5 Page 33 Table 1: DISTRIBUTION OF FOREST AND WOOD VOLUMES BY FOREST DISTRICTS A. Conifers Area Commercial Volume Ha m3 roundwood basis Francisco Morazan 429,448 12,185,249 E1 Paral:so 127,570 4,132,625 Yoro 304,523 11,035,518 Comayagua 558,940 17,607,278 01ancho (South) 11 204,540 2,469,460 Occidenta1-North-21 166,945 7,512,500 Copan ­ 247,800 11,151,450 La Mosquitia 11 158,400 5,544,000 Total 2,198,166 71,638,073 B. Broad1eaved Species Area 'iQii'r Occidental-North 13,900 La Mosquitia 6,800 01ancho 14,540 Yoro 2,300 Total 37,540 Excludes 27,418,303 m3 in the area reserved for the Pulp and Paper 1/ project. 3 21 Average of 45 m fha, based on E1 Paraiso District data. 31 From Proyecto de Inventario Forestal, 1975. Source: COHDEFOR, Plan Operativo, 1976.  ANNEX 5 Page 34 Table 2: DISTRIBUTION OF SAWMILLS BY CAPACITY, 1973-1975 Capacity Relative Number of Mills Annual OutEut CaEacitz Sawmills to Total Relative to Total Million BF };./ No. % % Less than 2 86 19.4 65 2 to 3 20 16.3 15 3 to 5 14 16.5 11 5 to 10 6 15.4 5 10 to 15 3 12.3 2 15 to 30 20.1 2 TQTAL 132 100 100 === === === . 1:./ Board feet Note: The largest mill had a production of some 26 million BF in 1973. Estimates for 1975-76 indicate 146 mills, with the following distribution: Capacity/Year No. of Mills Less than 2 million BF 93 2-5 million BF 37 more than 5 million BF 16 146 Sources: COHDEFOR, Gerente de Industrias, and Plan Operativo, 1976.  ANNEX 5 Page 35 Table 3A: MAJOR FOREST PRODUCTS IMPORTS 1968 1970 1972 1974 ====-----------$ Thousanci===--------==== Wood-based panels 374 655 233 207 Paper and Paper board 14,922 13,272 15,067 25,960 Total ];/ 15,312 13,927 15,302 26,167 1/ Includes minor products. Source: FAO, Yearbook of Forest Products, Rome, 1976, and SIECA trade statistics for 1974.  "_"".~,~ ___ '''~ _ _ _ _ _ _ _ _ _ _ ' _ ...-_,' ...." ... _~_,,_ '_P', , __ • ~~_i..i.- Table 313: lMroRTS OF r.oGD DEHlVED PRODUCTS, elF, 1969-73 12{,2 19'(0 1211 1212 121J 11 Type:> ~ Valuo Aplolmt Vltlue ~ Value Amount Value Amount Value '000 ke L'OOO '000 kg L'ooO '000 k!~ L'OOO '000 kg 1'000 '000 kg L'OOO Charcoal und firewood - 12 12 1 1 Rough logs and squared logs 27 4 50 6 77 9 32 4 43 6 Hews 797 197 22 7 4 1 8 Barks and other wastes . 1 3 1 3 3 2 5 Pulp and paper wastes 33 1 l 1 3 1 8 3 Vegetable fiber 291 497 28) 536 399 636 293 744 838 979 Veneer 2,079 1,171 2,655 1,3il2 233 158 655 468 483 334 Plywood 1,742 1,028 2,273 1,198 141 95 577 402 364 244 Other wood products 337 143 383 1£J4 92 63 78 66 119 90 Munufactured wood products 148 190 401 438 93 123 280 309 147 234 !1anufactured cork products 66 104 109 166 108 156 76 li7 15 32 Paper (mostly liner board) 40,172 13,248 45,855 16,865 60,787 20,164 44,847 15,968 55,911 24,072 Carton material (mostly corrugatin,: lnedium) 43,443 10,776 313,253 9,5213 44,212 15,425 47,888 13,951 34,031 12,319 Cardboard 229 135 208 150 3112 259 297 214 31)0 289 Packing paper and boxes 3,255 2,l~92 2,648 2,215 837 1,034 576 848 478 678 Writingpuper, stationary, etc. 151 160 46 76 32 66 48 9h 94 ISS Accounting paper and writing pads 98 273 100 JI10 81 277 9h 314 330 758 Cardboard articles 3,319 3,377 2,785 3,336 1,h09 2,486 2,137 2,998 1,799 3,013 Furniture and accessories 217 298 ~71 11297 22 100 28 111 26 l~l! Total 9h,326 33,226 93,80) 36,357 108,6h7 40,897 97 ,292 36,209 94,,44 43,022 . 11 Preliminary. Source: Central Dank of Honduras, 1974 and IDB/FAD Cliff Report, l~n'. III OQ '"d f1) ~'" ::;J t;.:l H , . LV ~ , I ~ ',. .- .; ,. ~  ANNEX 5 Page- 37 Table 4A: MAJOR FOREST PRODUCTS EXPORTS 1968 1970 1972 1974 ~----------$ Thousand------------~ Sawnwood 12,943 16,211 27,108 40,299 Plywood 85 181 4 1,104 Paper and paperboard 1 4 27,148 41,439 Total 13,029 16,396 27,148 41,439 Source: COHDEFOR, Plan Operativo, 1976 for sawnwood and plywood. Paper and paperboard from SIECA trade statistics.  Tab1e ~B: EXPOR'rS OF' PROCESSED AIID NON-PHOCESSED WJD PHOlJUGTS, 1969-7) (in 14) and L million) Code 1262 1 9 7 0 197 1 191 2 191 3 Quantity Value Quantity Vo.11lc Quantity Value Quantity Value Quant.ity Value Notl PROCESSED WOOD Cedar rll.~ material for lumber plywood and ve~eer. 242-02-oo-A 235 58,611i 82 22,816 381 93,093 101, 18,336 11/ 30,45? "Pinus oocarpa" (logs) 242-02-00-8 111,673 l,li71,191 10,483 1,067,300 7,1'95 773,223 8,132 96 1',524 13,622 2,091 ., ::>1.6 other conifers (logs) 242-02-00:'C 10 6,538 69 5,059 Mahogany, ebony and Walnut 21i2-03-00-A 21,8 61,225 1,501 271,523 1,339 223,118 1,6611 30",191 581 ]21,::>90 Granadl110, palo rosns and ~ sangre 21i2-03-00-B 788 26(:(768 1,01,8 pli9,781 1i50 183,2114 31 15 121,239 363 13'7,340 Other non conifer 21'2-03-00-C 1,8 4,719 15 1,251 1 31 It!,191 Sub 'total Non Processed Wodd 16,002 1,871,256 13,135 1,612,613 9,665 1,213,335 10,01 '5 1,41'/,291 14,Tl13 ?,413,349 rnOCESSEJ) WOOD Miscellaneous poles 21i2-09-oo 33 3,614 811 6,330 50 3,526 6]2 9/3,713 503 50,61 ,,, Sleepers 21i3-01-00 4,903 339,189 1,35':> 510,268 2,636 lI3lJ,Bo7 2,11911 166,651 Cedar (includes macho trablljado) 243-02-00-A Ii 38 62,351 ,1, 11 3 ,253 52 10,093 433 ':)'1,117 lJ5 6,8]1 " Pinus oocarpa. "parquet" nnd IlIlwn 2113-02-oo-B 357,1,85 27,359,512 350,323 29,1101 1,393 31'l,566 35, ll2 i " 066 471! '792 60,D66,297 570,?c6 73,9'{:>,063 other conifer y 243-02-00-C 3'76 39, il'{9 '>2 ",n'14 f/.a!l0Guny, ebony and ~11l1nut !.I 21i3-03-o0-A Ii, 7'70 '/11,950 5,233 835,31,n 5,266 1,O)'!,713 6,(361 l,5'(0,lIl2 5,;>('6 1,66,', rJ} 1 (Ol'll.flnc11110, pnl0 rosa and pll.lo 81l111j1'C y 2If3-03-00-B 5 2,0111,' 202 11 ',51 10 "2 3,526 0.02 ~3 le6 ~i~', JlO OthOI' non conifer y 2113-03-00-C 1,330 111 1,826 26 5,9~O 3't 11,1313 1,200 /15 13/)? 3 flut· ~ 'j'oto.l pr(H~~.9!led Honrl 362.3110 211,6:,1" 1'"62 363J ]01 3011)) II nn ill~. GI,() :fl l 0'1') /;69 1121\ 1C)'t~IOo.2B ~'iG, In '/5 t '1'6 ~~, ~o'> GH.AND TOTAL 38 5,342 30, ~01,,221 376,499 32,1123,611 395,311 , ]fl, 369, 00'1 '193,0]'( 54, %'1 ';';0, ')11 'lU, l'{6, ))'1 11 Sawn, planed, "parquet", etc. Source: Central Bnnk of Honduras, 1974 and IDD/FAG Cliff study. ~~ IU M I)Q N (l) l..U ;:') 00  ANNEX 5 Page 39 Table 5: RECENT PRICES OF PINE EXPORT L1JMBER Lumber Grade 1/ 1976 April 1974 If .12.Zl 4/ ====-------$ per thousand BF cif----------- ~-~---~ Genoa prime ) 480 265 ) Amended Genoa prime ) 295-330) 220 ) ) 380 Clear saps ) ) 200 Rough and planed - Caribbean 190 Rough - South America 250 250 "Commons" 1/ 170-185 135 1/ Even within grades, prices vary considerably by market destination, with Europe generally paying the highest prices and the Caribbean paying the lowest. Note that definitions and standards can vary for some grades, making prices difficult to compare. 1/ Probably compares with "rough and planed - Caribbean" and "Rough ­ South America." 1/ COHDEFOR, Informe Semanal, April 30, 1974. i/ Copino Report (cited in text). 5/ Estimated minimum prices, COHDEFOR Draft Budget, 1976, and information from recent export figures.  ANNEX 5 Page 40 Table 6: OOHESTIC CONSUHPrION OF FDREST PRODUCTS, TOTAL .A.ND PER CAPITA, SELECTED YEARS, HONDURAS AND CENTRAL ftl-IERICA Per Thousand Per Thousand Population Population Central Ar:lerica P;r.::QQ.ugt Unit TQtal nonduras Year l270 ~L Thousand Units Units Units Sa:-nmood 1·13 123 11 L.7.L. 11 76.') ",",3 y Y nY:·lood 1'1 7. L. 2.7 L..O Paper and paperboard H.T. 93.1 JI 3L..5 JI 23.2 of which: Ne'dsprint II 2.1 0.3 2.L. II. Printirlg and t-Triting 2.6 1.0 Packaging " 39.0 lL..L. Other II L.9.L. 18.3 11 From National Development Plan, unpublished draft, Decenber, 1973. Data are for 1973. 2J Year 1972. From J. Aguero, J. Baker, and H. Jerezano, Infor:n.e Sobre Los Problema.s del Hercado de PlY-,lOod en Honduras, April, 197L.. Conversion factors of 78 sheets per metric ton and 0.65 metric ton per cubic meter. JI Year 1972. Based on import statistics (sirlce donestic production and exports are insignificant relative to imports). Host of the paper and paperboard is used to package bananas. lJI Based on F. Wads',lorth, Forestry Potential and Its Development in Central America, 1971, and ECLA/FAO;mrIDO, Regional Consultation on The Develop~ent of the Forest and Pulp and Paper Industries, Hay, 1970.  ANNEX 5 .'Page.4L Table Z;: OUTPUT OF PRIMARY FOREST PRODUCTS BY VALUE, SELECTED YEARS II 1960-62 1970-72 Change in Product AnnuiJ. AV!il;tal.l:~ Annui!J. Av~;t5!.I.l:~ P~;r;:i,!!;1 ------------L thousand------------- % Export logs 3,139 1,032 -67 Conifer (2,.%3) (522) -80 Broadleaf {S76) (510) .-11 Wood used in the round 1,877 2,874 53 Sleepers 492 441 -10 Fuel wood 23,984 28,528 19 Saw logs 10,450 21,549 106 Industrial use (9,825) (20,714) :111: Rural use (625) (835) 34 Veneer logs 86 141 64 Other forest products y 4.23$ 5.273 iZl I Total 44.263 $9,838 ;.li 1I Excludes processed wood products. ZJ Includes Liquidambar, resins, and such. Source: Banco Central, and Technical Secretariat of CONSUPLAN, as presented in National Development Plan, unpublished draft, December, 1973.  ANNEX 5 Page 42 Table 8: COHDEFOR OPERATING BUDGET PROPOSAL, 1976; ru~D PERFO&~CE, 1975 1975 Actual Budget }j ------------L Thousand----------­ Income of sawnwood 77 ,507 :!) 92 ,000 101,400 Sale of products from forest 6,731 7,300 8,418 Other operating income (600) 600 Total 84,838 99,900 110,957 Cost of Sales Sawnwood 57,118 71,000 72,300 Other products from forest 995 2,800 1,900 Total 58,113 73,800 74,200 Gross Operating Income 26,725 26,100 36,757 Operating Costs (14,000) 14,000 17,400 Profit after Costs 12,725 12,100 19,357 Draft budget, 1976-77. L 79,220,000 sales less L 1,712,000 for freight and promotion. Source: COHDEFOR.  ANNEX 5 Page 43 Table 9: ESNACIFOR OUTPUT, 1969-75, AND ENROLLMENT IN 1976 A. Number Elf Graduates by Year and Level Technician Technician Technician Technician Year I 1/ II 2/ III 3/ IV 4/ Total 1969 5 5 1970 15 15 1971 7 13 20 1972 2 14 (2) 16 (2) 1973 11 17 28 1974 2 13 (1) 9 (2) 24 (3) 1975 17 (5) 13 (1) 30 (6) Total 29 40 (2) 47 (6) 22 ( 3) 138 (11) B. Number of Enrolled Students by Course in 1976 5/ Course Technician III Technician IV Total I 35 (3) 35 (3) 71 II 28 (6) 21 (2) 49 III 20 (4) 20 Total 64 (9) 76 (9) 140 1/ Guardas Foresta1es. 2/ Bachilleres Forestales. 3/ Peritos Foresta1es. 4/ Desanomos. 1/ Distribution of 1976 foreign enrollment by nationality by levels is: Technician III -­ Nicaragua, two students in I. Dominican Republic, one student in I. Panama, two students in II. Guatemala, three students in II. Costa Rica, one student in II. Technician IV -­ Dominican Republic, one student in I. Nicaragua, two students in I and one in III. Costa Rica, one student in II and one in III. Panama, one student in II and one in III. Guatemala, one student in III. Source: ESNACIFOR, National Forestry School.  ANNEX 5 Page 44 Table 10: FORESTRY &~D FOREST INDUSTRY PERSO~~EL, ADDITIONAL NUMBERS REQUIRED, 1976-1985 Production Adminis- Year Management Logging Sa'tvmill Other tration Total P ];./ T 2/ P T P T P T P T P T 1976 39 256 36 250 9 44 9 9 103 559 1977 95 445 39 273 10 48 14 14 158 780 1978 20 8 43 301 10 52 7 7 80 440 1979 3/ 25 100 43 302 10 52 8 8 86 462 1980 15 60 47 333 11 57 6 6 79 456 1981 7 28 50 349 12 60 7 7 76 444 1982 29 135 . 57 399 12 63 9 9 107 606 1983 !J./ 14 56 60 464 13 66 22 44 10 10 119 640 1984 35 207 63 482 14 69 22 44 13 13 147 815 1985 67 572 15 74 22 44 10 10 114 700 1/ Professional 2/ Technical, on basis of one technician per 3,000 to 4,000 ha managed. 3/ Year of start-up of new sawmills. ~/ Year of start-up of pulp and paper plant. Source: Jose Flores R. and J.R. Bucarey B., op. cit, March 1976.  Table llAl FUTURE SAWNWOD EXPORT VALUE, EMPLOYMENT, AND INVESTMENT Rl!XlUIREMENTS UNDER THE SUGGESTED DEVELOPMENT ALTERNATIVE A (40-YEAR PLANNING PERIOD)!! Pine New Sawtimber Sawnwood Domestic Value Employment Investment Harvest Cumulative during Period !.W:. ('000 IIJ(r» ::~~~::~~---(~U:):}~~----!::::: ( '000) (US$ mi11ion~ 1 2,$40 787 110 677 67.7 19,230 12.3 $ 2,$40 1,067 132 93$ 97.2 13,870 14.2 10 2,440 1,391 169 1,222 133.2 18,080 0.6 1$ 2,340 1,404 21$ 1,189 13$.5 18,250 0.0 20 2,210 1,326 274 1,052 125.2 17,240 25 1,89$ 1,131 3$0 787 97.6 14,780 3D 1,670 1,002 447 55$ 71.6 13,020 3$ 1,44$ 867 $70 297 39.8 11,270 40 1.2~0 1Jg _1~_7_ i 0.7 9.520 \!I Total 81,1$0 .- PV @ 10% $1.,112 million 27.1 11 See text for explanation and assumptions. ! "'tI PI OQ C1) Source I Mission. :>4 "" I.n VI  Table llB: FUTURE SAWNWOOD EXroRT VALUE, EMPLOYMENT, AND INVESTI1ENT REX;lUIREl1ENTS UNDER THE SUGGESTED DEVELOPMENT ALTERNATIVE B (EVEN-FLOW SUSTAINED YIELD roLICY) !I Pine Ne\-l Sawt:i.mber Sawnwood Domestic Value Employment Investment ~ ::~~~~~:~~_('og~n:~)::~~ ____ ~~:: Harvest of ExPort Cumulative during Period ( '000 m3 (r) ( US$ million) ( '000) (US$ million) 1 2,037 631 110 521 52.1 8,200 9.9 5 855 132 723 75.2 11,110 13.5 10 1,161 169 992 10S.1 15,090 2.7 15 1,222 215 1,007- 11408 15,890 O~O 20 274 9h.8 112.8 15,890 25 350 B72 10B.l 15,890 30 447 775 100.0 15,890 652 87.4 15,590 1 35 570 40 V ..JJL -1±22. 68.8 Total 81,500 PV @ 10% 26.1 :~9LJ million !I See text for explanation and assumptions. '" ~ III OQ ~ Source: Mission. (\) tTl ~ -r:-­ Q\ VI  ANNEX 5 Appendix 1 Page 1 COHDEFOR and Honduran Forest-Based Sector Development: Problem Analysis and Suggested Strategy for Sector Development OBJECTIVES 1. Assure land protection 2. Expand output and 3. Expand foreign and efficiency in wood diversity of wood exchange supply; adequate wood products, optimi- earnings and for present and new uses; zing use of forest export op­ and increased participa­ resource, employment portunities. tion of rural sector in creation, value added return from forest zones. from use of the forest, and the like. STRATEGY Problem I Proposed Solution Administrative/management capacity of COHDEFOR is inadequate to cope with all responsibilities. This is a result of: (a) lack of enough trained and (a) Increase training programs. experienced professionals and Hire foreign professionals the technicians for field directly. administration, planning, and project development work, applied research, management information system development, commercialization, and other duties within COHDEFOR; (b) lack of sufficiently clear (b) Hire consultants and/or administrative procedures, foreign professionals to little delegation of complement local personnel responsibilities, and and assist with training insufficient controls on programs. Consider Peace decentralized decision­ Corps volunteers with field making; foresters.  A,.~NEX 5 Appendix 1 Page 2 (c) lack of planning in COHDEFOR for (c) Develop detailed administrative new programs and coordination of procedures, including perfor­ existing programs with new ones. mance checks and controls. Use UNDP/FAO project consultants as well as other consultants for advice on system and specific design. Activate central planning unit to coordinate development in sector, set up project criteria, and develop financing program and priority research program. Establish central projects unit to develop project analysis and evaluation and to coordinate inputs of technical division managers in project proposals. Use outside advisors or exper­ ienced project analysts. Problem II Proposed Solution Inadequate technical development of management system for forests, such as protection, utilization, and Social Forest System to encourage rural parti­ cipation in protection and management/ harvest. These weaknesses stem from: ( a) poor information on forest areas (a) Hire consultants or undertake such as volumes of growing stock, a technical assistance project growth potentials and logging/ to a low-cost information transport costs and no system for system that would provide data generating, collating and analyzing on resource status/potentials it. This includes data on forestry­ by area, wood availabilityl agriculture interface and land-use sales, harvest and destination; planning; (b) lack of stumpage and log prlclng (b) Develop pricing system, in­ system based on "best-use residual­ cluding cost information for value" approach; operating units. Guard against prices that drive private pro­ ducers out. Tryout various systems before selecting one.  ANNEX 5 Appendix 1 Page 3 (c) inadequate transport infrastruc­ (c) Develop transport plan related ture for managing forests. to plans for expansion of forest management and utiliza­ tion. Permanent roads should be geared to regional develop­ ment as well as forestry. Dis­ courage temporary roads where mor~ permanent ones would serve general development purposes as well as forest utilization. Problem III Proposed Solution Inadequate expansion of processing capacity to use resource potentials, meet market requirements, and con­ tribute to employment, income and foreign exchange. Existing plans have not improved efficiency. Major constraints are: (a) lack of studies on bankable (a) Proceed with prefeasibility and projects for significant ex­ feasibility work for known new pansion of output. These investment potentials and obtain studies are essential to outside help to meet interna­ securing outside financing tional standards for financial and encouraging internal assistance. Start to develop investment programs; administrative capabilities for pr!,j ects~ Recollsider .prio;-it.ies for investment, including the taking over of private sec~9r ()perating units. (b) lack of enough technical per­ (b) Develop project planning unit sonnel to develop stream of in COHDEFOR responsible for pre­ bankable proj ectsj paring stream of projects that meet international financing criteria. This would involve obtaining an advisor from World Bank/IDB or longer term tech­ nical help and training of local personnel.  fu~NEX 5 Appendix 1 Page 4 (c) difficulty in maintaining and (c) Develop grading and product improving private initiative standards that are accepted in and incentives to invest. specific export markets and that are clear and acceptable to local producers. Develop pricing system that will main­ tain private initiative and obtain maximum return for country as well as ensure effi­ cient roundwood use. Specific bargaining on prices w~th pro­ ducers can be used on interim basis. but it is undesirable in the longer run. Problem IV Proposed Solution Inadequate capacity to increase efficiency in commercialization of forest products and bring export sales up to full potential. mainly because: (a) existing quality and size (a) Develop product standards to standards and controls do not meet international requirements. encourage maximum efficiency Standards should reflect wood and sales. There is also a quality and sizes available in problem in marketing lower Honduras. Engage expert exper­ quality material, which is a ienced in wood product marketing. natural joint product with Develop local market for non­ higher quality output; export grades. Consider CACM market. with appropriate price policies. (b) marketing information system is (b) Develop market information in inadequate for large-scale a systematic way to aid COHDEFOR marketing activity and sales in carrying out its export expansion; marketing function. Feedback from export yards should provide current data on stocks and in­ ventory for use in making con­ tracts and in timing shipments. Prices and shifts in product demand must be constantly updated.  ANNEX 5 Appendix 1 Page 5 (c) logistics of certain export (c) Consider closing down some export marketing operations are in­ concentration yards in Puerto efficient, including organiza­ Cortez area and opening one in tion of export concentration south to serve Ampala and one in yards and up-grading facilities; the central region. This would help avoid inefficiency in organizing large shipments and provide further processing and treatment facilities near sources of production and rough products. (d) information on hardwoods and (d) Undertake a comprehensive program their potentials in world for development of hardwood markets is inadequate. export market, including techni­ cal information on species market trends, and research to develop new uses of known species and introduce new species to world market. Engage outside assist­ ance to operate program and in­ clude experienced marketing and processing personnel.  TOTAL ESTIMATED INVESTHENT IN FOREST INDUSTRIES, 1977-80 Total Investment ected Year Scale of Mill Location Market Required $ million (1977) 60,000,000 M2 /year Pimienta, Cortes Central America and 30 Fiberboard Caribbean Chips for export (1978) 300,000 tons/year Puerto Cortes Japan and Venezuela 22 Two central resaw mills (1977) 40,000,000 board ft. Comayagua, Europe, South America 20 per mill Northern Zone and Caribbean Integrated industrial complex (1977) Yoro, Yoro Central America and 10 Overseas Laminated structural elements (1977) Potrerillos, Central America and 1 Cortes Caribbean and Venezuela Resin production from stumps (1977) Central Zone Central America and 1 Overseas Tanning compounds (1977) San Lorenzo, Valle Central America 1 Boxes, containers and pallets (1977) Northern Zone Central America and 1 Overseas Wood prefabricated houses (1977) 5,000 houses Potreri11os, Central America and 1 Cortes Caribbean Sliced veneer (1978) Northern Zone Overseas 2 Mouldings (1978) -Northern Zone Overseas 1 Source: COHDEFOR 'l::l~ ~ 1ll'"O Z iJQ'"O Z (D (D [t1 ::I X t-'Q. 1-'- l.n 0>: H\ N N  SUMMARY OF PROGRAMMED INVESTMENTS BY PROJECT, 1977-80 Project 1977 1978 1979 1980 TOTAL $ million Fiberboard 30 25 35 25 115 Two resaw mills 20 20 Aqua Fria Industrial Complex (Phase 1) 10 10 Laminated structural elements 1 1 Resin production from stumps 1 1 Tanning compounds 1 1 Boxes, crates, pallets 1 1 Wood prefabricated houses 1 1 TOTAL 65 25 35 25 150 Source: COHDEFOR I'-.) I'-.)  Al"lNEX 5 Appendix 3 Page 1 Summary Information on Olancho Reserve !/ Area in Olancho Forest Reserve South of the North of the Total in Juticalpa road Juticalpa road Reserve ---------------­ ('000 Ha) ----------------­ Pine 163 548 711 Hardwoods 73 307 380 Not forested 87 247 330 Total 323 1 Timber Potentials in the Reserve Pine - 30 million m3 (with average density of 62 m3/ha) Hardwoods - 110-149 million m3 Minimum estimated growth - 1.2 milion m3(s) per year Average possible growth - 2.1 million m3(s) per year, or over 3 m3/ha/year (Note: An estimated 20% or so of the pine volume is not accessible economically under present technological and other conditions) Population and Income Estimates (1961) for Reserve Area 53,000 persons 31,000 economically active of which 24,000 in agriculture and forestry (with some 1,414 working in forest industries, mainly sawmills) Average income per family - L 300 per year !/ Sources: IDB/FAO (Cliff) Mission Report; FAO Project 511, P1anificacion de 1a Utilizacion de los Recursos Forestales - Antecedentes Basicos, Working Paper No. C-5, June 1973; FAO Project 511, Proyecto de Desarrollo Forestal en Olancho, Working Paper No. C-4, June 1973; COPINO, Honduras Pulp and Paper Project, 1971.  ANNEX 5 Appendix 3 Page 2 Land Use Potentials for Olancha Department Mountains - 2.1 million ha Valleys - 0.3 million ha Agricultural potential is mainly in the valleys of Rio Patuca, Sica, and Aguan (on north border of Reserve) In Olancha there are some 2,500 km2 of valley land, distributed as follows: Guayape 931 km2 Sica 696 km2 Telica 242 km2 Alto Patuca 170 km2 Culmi 90 km2 Others 371 km2  A;."l~EX 5 Appendix 4 Page 1 Las Lajas Project 1/ A. Objectives Long Term: Develop intensively the forest and forest industry potential of the Region (defined below), starting with the most favorable areas, mainly the management unit of Las Lajas. Short and medium term: Carry out detailed inventory of the forests of the project area and a study of land use potentials based on soils and other factors. Based on these studies, and economic studies of market potentials and economic feasibility of various utilization alternatives, develop a plan for intensive management of the forests of the Las Lajas region and a plan for utilization/processing of the output from the region. B. Background The areas considered for this project (for extensive as well as intensive management) include the management units of Meambar, Minas de Oro and Comayagua, with a total area of some 351,000 ha. Within this area some 74,400 ha have been identified as the "intensive'management" zone. This area, in and around the "llano de Las Lajas", includes zones with high forestry potential (see Table 1). The intensive management zone includes some 58,000 ha of pine forest, which has been exploited at varying levels of intensity over the past 15-20 years. In the more or less flat areas (approx. 12,000 ha) the exploitation has been intensive, and part of this area is presently be utilized for agriculture. However, the major portion of the area is covered with dense stands of young pine critically in need of thinning and other management treatment. In the areas with steeper slopes, exploitation has been less intensive and commercial stands of pine are still encountered. The areas with the highest forest potential include the following: Sub-management Unit (ha) Las Laj as 14,000 Las Cruces, southern part 1,100 Agua Blanca, flat part 1,700 Valle Grande, flat part 2,600 Total 19,400 1/ Based on notes from COHDEFOR and FAO project personnel.  ANNEX 5 Appendix 4 Page 2 In addition, there are other areas with good potential. It is esti­ mated that somewhere between 25,000 and 30,000 ha of pine forest land is ac­ cessible and has good immediate potential for intensive management. To obtain the maximum possible benefit from these lands, the fol­ lowing steps will probably be needed: (1) harvest and utilize most of the remaining mature timber; (2) thin the young and dense stands; (3) reforest the areas without forest; (4) develop an effective protection system. On the more inaccessible, steeper areas, where virgin forest still remains, it is proposed that extensive management be applied utilizing the fol­ lowing: (1) controlled harvest; (2) establishment of protection. -- Table 1: CURRt:;NT USE m' TilE 111.l.\<:IISIVEMAIIAG~~lliN.!·UNfTOFI.ASI.AJAS AND SUIIllDlllilllllt;S --­ (haaed on .erta1 photo.) Las LajaB Centrd ~and" AII"a Blanca "'lure Las Cruct!:j ~ Strata rd~lltlficatton Area Total (ha) 17,900 13,600 11,100 D,900 11,900 74,400 '%. 24.0 18.3 14.9 18.7 24.0 10.0 Flat Area (ha) 5,100 1,100 1,700 1,100 2,600 ll,6()0 t 28.5 8.1 15.3 7.9 14.5 15.b Sloped Area (ha) 12,800 12,500 9,400 12,800 15,300 6l,BOO '%. 71.5 91.9 84.7 92.1 85.5 M.4 rine Total (ha) 14,133.8 10,393.1 9,492.7 10,119.2 14,248.4 58,387.2 % 79.0 76.4 85.5 72.3 82.6 78.5 f;,)n~titaunder n!gcnt:rulion; Ie!.:; Lilan 25 tl'cl~8/ha. Mainly fO£l!lHS thut have been Pine I (ha) 5,631.3 3,892.3 3,754.0 4,962.3 5,B89.1 24,129.0 C2<llloitcd .. % 31.5 28.6 33.8 35.7 36.0 32.4 Pine UI (Ila) 2,434.4 2,788.0 1.143.3 1,593.1 7,95B.6 Young forest with or without i:lccd lr'ct!::i. 'L 13.6 20.5 10.3 6.9 10.7 rine IV (ha) 6,068.1 3,712.8 4,595.4 5,156.9 6,766.2 26,299.4 Malure or OVC£m.':tture fo["c:iL with 1Ilort: than t 33.9 27.3 41.4 37.1 37.8 3:>.3 25 tr""./ha. Broad1ed {hal 608.6 2,162.4 1,195.4 _393.8 4,360.2 % 3.4 15.9 8.6 2.2 5.9 Agriculture (ha) 2.434.4 612.0 377 .4 403.1 1,593.0 5,420.9 l 13.6 4.5 3.4 2.9 8.9 7.2 "Matorra1" (ha) 72).2 432.5 1,229.9 1,390.0 1,109.8 4,885.4 % 4.0 3.2 11.1 10.0 6.2 6.6 Non-productive (ha) 792.3 792.3 '1. 5.7 1.1 - Source: COUIlEFOR/FAO. l» "'I""" (j ..... ': ~ ~ ::J X w"­ " ..... '" .­  Ai'TEXQ 5 P4g. i HONDURAS REC QJ:TCQIMI;N'T'Q PEL SECTCR AGRTe CLA/RU?AL PCSIBILIDADES PE EXPANSION FCR;STAL 11 Contenido P4rrafo No. Posici~n Actual y Tendencias Recientes 2 - 39 Utilizaci6n Forestal 8 - 1.5 Industrias Foresta1es 16 - 19 Comercio Exterior 20 - 21 Consumo Interno 22 Tendencias de.Producci6n 2) - 24 Entrada de Divisas 2.5 - 26 Protecci6n e Incendios Forestales 27 - 29 Ley 103 y COHDEFOR 30 - 39 EducacitSn. Investigaci~n y Asistencia Extranjera 40 - 45 EducacitSn 41 - 42 InvestigacitSn 43 Asistencia Extranjera 44 - 45 Objetivos de Desarrollo 46 - 47 Juicios y Recomendaciones 48 - 80 Desarrollo Institucional de COHDEFOR 59 - 64 Informaci6n de Manejo 65 - 69 Desarrollo de Proyectos Industriales 70 - 72 El Campesino en.la Actividad Forestal 73 - 77 Caminos y Manejo Forestal 78 - 80 Posibles Proyectos para Agencias Internacionales 81 - 107 El Proyecto Olancho 81 - 88 Un Proyecto para Fortalecer a COHDEFOR 69 - 91 Proyecto Las Lajas 92 _.. 95 Proyecto Forestal Cooperativo 96 - 99 PlanificacitSn a Largo Plazo para La Mosquitia 100 - 104 Potenciales para Otros Proyectos 105 106 Necesidades de Financiamiento y Coordinaci6n 107 La De Gisi6n Cr!tica de Desarrollo 108 - 116 11 Informe basado en visitas a terreno a mediados de 1974 y mediados de 1976.  ANEXO 5 Plig. i i Sontenido (cant ••• ) Figura 1 Organizaci6n de COHDEFCR, 1976 2 Organizaci6n del Directorio de Recursos Naturales Renovab1es (rinisterio de Recursos Naturales), biayo 1974 Cuadro 1 Distribuci6n de Basques y Vo1~menes OCadereras por Distritos Forestales 2 Distribuci6n de Aserraderos par Capacidad, 1973-75 3A Principales Praductas ?orestales de ~mpcrtaci~n ":1­ ...i~ Importaciones de ?roductos Derivados de 1a Madera, 1969-73 4A Principales Productos ?orestales de Expcrtaci6n 43 Exportaciones de Productos Fcrestales Prccesados y en Bruto. 1969-73 5 Precios Recientes de Pino de Exnortaci6n 6 Consumo Interno de Productos Forestales, Total y Per C~pita, Afios Selectos, Honduras y Centro­ Am~rica 7 Producci6n de Product os Forestales Primarios per Valer, A~os Selectos 8 Propesici6n de Presupuesto Cperacional para • COhuEFOR. 1976: y Desempe~et 1975 9 ESNACIPOR: Egresados, 1969-75, y Matr!eula en 1976 10 Personal Forestal y de la Industria Forestal, Requerimientos Adiciana1es, 1976-85 llA Valor de Exportaeiones Futuras de Madera Aserrada. Necesidades de Empleo e Inversi~n bajo la Alter­ nativa Propuesta de Desarrollo A (PerIodo de P1anificaciOn de 40 A~os) l2B Valor de Exportaciones Futuras de Madera Aserrada. Necesidades de Empleo e Inversi~n bajo la Al­ ternativa Prouuesta de Desarrollo B (Polltica de Flujo Uniforme y Rendimiento Sostenido) Ap~ndice 1 CCHDEFOR y e1 Desarrollo del Sector Forestal Hondure~o: An41isis del Problema y Estrategia Propuesta para el Desarrollo del Sector 2 Inversi6n Total Estimada en las Industrial Fores­ tales, 1977-80 Resumen de Inversiones Programadas por Proyeeto, 1977-80 3 Resumen Informative sobre 1a Reserva Olaneho 4 Proyecto Las Lajas  AlSEXO 5 ?~g. 1 PQSIBI~IDADES D~ EXPANSION FORESTAL 1. A comienzos de 1974 se anunciaron cambios de gran alcance en la pol!tica p~blica referente al sector forestal. El Gobierno espera que se fomente la explotaci6n racional de los bosques, re­ curso natural de primera importancia, y que permita al sector fores­ tal aumentar en gran medida su contribuci6n a1 progreso econOmico y social en el futuro cercano. Un progreso significativo se ha notado ya desde 1974. POSICION ACTUAL Y TENDENCIAS RECIENTES 2. Las tendencias recientes del sector y su posiciOn actual sugieren que las perspectivas de crecimiento sostenible son favo­ rabIes siempre que ciertos problemas persistentes sean resueltos. El Recurso Forestal 3. La situaci6n actual del recurso forestal es como siguel 1/ Millones de HI!. Terreno de aptitud forestal Cubierto con bosques Terreno forestal denudado por razones diversas 4. Los ~errenos de aptitud preferentemente forestal 1I re­ presentan alrededor del 66% de la superficie total de Honduras. Estos terrenos est~n dlstribu!dos por todo el pats (Mapa IBRD 11149), aunque lamayor concentraci6n se encuentra en la porciC5n nor-central y oriental de la naci6n (Cuadro 1). Del ~rea total con cobertura forestal menos de 2 millones de hect4reas son de coniferas (superficies con cobertura de pinos de un mInima de 20%), y unos 3.2 millones de h4s de latifoliadas. La mayor parte de los terrenos forestales denudados reclben un uso agrIcola marginal, otros han sido abandonados y en algunos casos estos terrenos han sido devueltos al bosque. 5. ' El bosque de con!feras es el m4s importante recurso con potencial de desarrollo econ6mico inmediato. Aproximadamente un 75% de este bosque est4 compuesto por rodales casl puros de Pinus oocarpa, 1a densidad. por 10 general no es muy alta, estim4ndose 11 Plan de Desarrollo Nacional para 1974-78. ZI Basado en suelos, cllma y pendiente. Ver Anexo 1, y c.v. Plath, Uso 70tenc1al de la Tierra de HondurAs, informe preparado para UNDP FAO, Roma, 1967.  ANEXO 5 pag. 2 un promedio de 62 mJ (metros cubicos) por hect~rea. El recurso en cuesti6n est~ siendo r~pidamente disminufdo a causa de las cortas indiscriminadas y las repetidas quemas, que impiden el establecimiento de la regeneraci6n. Con medidas de protecci6n contra incendios y manejo, la regeneraci6n es sobresaliente. La mayor parte de los bosques de oocarpa se encuentran en la regi6n central del pafs. Alrededor de un 11% del bosque de conI­ feras est~ compuesto por rodales puros 0 casi puros de Pinus caribea (principalmente en la parte oriental del pais). Otro 8% de la superficie cu~ierta por coniferas--principalmente a mayores altitudes--contiene Pinus psedostrobus yaproximadamente un 6% est~ compuesto de mezclas de especies confferas y latifo­ liadas. En tiempos pasados, mas del 90% de la madera utilizada con fines comerciales nrocedfa de los bosaues de coniferas (ex­ cluyendo lefta y otros ~roductos de produc~i6n y consumo dom~s­ tico). El in~entario total de coniferas se estima en unos 100 millones de m , 25-JO millones de los cuales se encuentran en la Reserva Forestal de Olancho (ver Cuadro 1). 6. Los bosques de latifoliadas (principalmente mezclas tropicales) cubren unos J.2 millones de h~. habiendo sido poco cotizados en el pasado. Situados de preferencia en el oriente y en el norte del pais, se ha conocido muy poco sobre estos bos­ ques hasta tiempos muy recientes. Son de diffcil acceso en el este, en el norte han sido victimas de cortas selectivas, habi~n­ dose talado las especies mas valiosas como Swietenia macrophylla (caoba) y Cedrela mexicana (cedro), para los mercados de exporta­ ci6n. Estos bosques se encuentran principalmente en los climas h~medos tropicales y son de diffcil manejo y utilizaci6n. Al igual que la mayorfa de los bosques situados en esta regi6n bio­ clim~tica, su composici6n es extremadamente heterogenea (mas de 100 especies por h~.) con bajos vol~menes por hectarea de especies conocidas comercialmente (probablemente 5% del volumen total). Los costos de extracci6n son elevados si s610 las pocas especies comercialmente conocidas son cosechadas, y cuando ~sto ha suce­ dido la masa restante es de tan escaso valor, la mayor parte de las veces, que no es susceptible de mayor explotaci6n dado que las especies de valor no se regeneran en las ~reas explotadas sino con medidas silv!colas especiales. La Agencia Canadiense de Desarrollo rnternacional (CrDA) ha completado un estudio sobre disponibilidad y utilizaci6n de latifoliadas tropicales en Honduras. Un futuro proyecto de CrDA se concentrar~ en un ~rea especifica identificada por el personal del proyecto inicial. 7. Existen unas 250,000 a JOO,OOO hect~reas de bosques de mangle y pantanos, ubicados principalmente en los Departamentos de Choluteca, Cort~s, Atl~ntida y Gracias a Di6s a 10 largo de la costa. Estos bosques tienen varios usos, el principal siendo la producci6n de taninos.  ANEXO 5 P4g. J Uti1izaci6n Fo~esta1 8. Se estima que 2.9 mi110nes de m3 (r) son cosechados anua1­ mente (exc1uyendo 1e~a). Aproximadamente e1 95% de este va lumen corresponde a con;feras. Las industrias foresta1es consumen unos 2.2 mi110nes de m (r) por ano de pine y de 1atifo1iadas, e1 vo1u­ men restante se uti1iza en forma ro11iza. Las fuentes principa1es son los Departamentos de Francisco Moraz4n, Comayagua, Yors. 01ancho y El ParaIso. E1 derecho est4ndar es de L 6 por m (r) de madera en pie en el caso de conIferasy derechos bajos pero variables en el caso de las latifo1iadas. 9. Durante 1a cosecha ocurren grandes p~rdidas de madera en el bosque: a menudo sOlo se aprovecha una troza de un 4rbo1 ente­ rOI e1 uso indiscriminado del hacha produce grandes p~rdidas en 1a corta y trozado de los 4rbo1es; a causa de los e1evados costos de transporte es com~n que maderas de ca1idad pero de dimensiones m4s pequeftas sean abandonadas en e1 bosque. por dltimo, los 4rbo1es m4s peque~os son destruIdos durante la tala de los de mayores di4metros. Se estima que s(510 el 10% de~la madera utilizable cosechada en un sitio promedio 10gra 11egar a1 aserradero. 10. El vo1umen promedio por h4. en bosques de conIferas se estima en unos 62 m3 , pero a1 eer cosechado. sOlo e1 30 a 40% ter­ mina convertido en a1gdn producto. Se han rea1izado varios c41cu­ los de las p~rdidas econOmicas producto del bajo Indice de utiliza­ ciOn. Entre ~stos est4 1a cifra propuesta en e1 plan de desarro­ llo naciona1 (borrador) de a1rededor de L 54 mi110nes por afto. Este c41cu10 puede ser un poco e1evado ya que se basa en e1 vo1u­ men total abandonado en e1 bosque multiplicado por el precio medio (en pie) del pino. 11 11. Los c41culos de vo1umen anua1 cosechado para pro,esa­ miento y exportaciOn varIan entre los 100,000 y 200,000 m. Las especies va1iosas (por ejemplo, ~wletenia miQrophy1la, Cedrela mexic3n§. virola AR') son taladas para exportaci6n, pero los volQmenes de exportaciOn son bajos. 12. Entre los otros productos foresta1es se inc1uyen tani­ nos. chicle, liquid4mbar y particularmente importantes son las resinas (para trementina y otros usos). A pesar de las pr4cti­ cas derrochadoras, se producen importantes vol~menes anua1mente y 1a producciOn aumento constantemente. En 1915 se recolectaron aproximadamente 38.000 barriles de resina a un ~recio de L 75 por unidad puesta en 1a planta de destilado. ~ Las faenas de 11 En general el volumen abandonado es de mendr valor que aqu41 extra!do, por otra parte, tampoco se estudiaron posibles mer­ cados para este volumen adicional. . ~ COHDEFOR (ver p4rrafo 30) obtuvo L 8.86 por barril en 1975. El valor de exportaciOn fu~ de unos L 4.6 millones.  ANEXC 5 pa:g. 4 recolecci6n de resina son intensivas en mana de o~ra, existen varias operaciones coaperativas exitosas. Algunos tipos de semi­ lIas, principalmente Pinus ~aribea. son recolectadas en e1 bosque y exportadas. (En 1975 se 10gr6 un volumen de ),292 libras por un valor de L 8),000.) 13. Otros usos del bosque incluyen protecc16n de cuencas y su~los. Sin embargo, no ha habido un programa sistema:tico ni en la designaci6n de bosques pratectores ni en medidas de protecci6n. Con el establecimiento de 1a Corporaci6n rtondurena de Desarrollo F~restal (CC~~EFOR) y el desarrollo un sistema de clasi~icaci6n de tierras estos usos probablemente constituir~n una parte i~por­ tante dentro del programa agrIcola y forestal global. ~s una necesidad urgente. 14. El Directorio de Recursos Naturales Renovables y Ecolog!a del Ministerio de Recursos Naturales es el organismo responsable de los parques nacionales y vida silvestre. No se han destinado artn, terrenos para parques naciona1es y reservas de vida silvestre, ni tampoco se han promulgado leyes referentes a caza y protecci6n de 1a vida silvestre. En ?ebrero de 1969, por medio del Decreto No.5), se estableci6 el Parque Nacional Cusoco, pero no se han dispuesto fondos para personal administrativo ni para 1a fijaci6n de linderos. Se han considerado reductos de vida silvestre en El Picacho y San Juancito en Francisco MorazSn~ el Lago Yojoa en los Departamentos de Comayagua, Santa B~rbara y Cort~s; r.;cntaffa del RIo Patuca en los Montes Warunta de Olancho en Gracias a Di6s; en los montes de Rio Tinto y RIo Plltano en Co16n; Monte El Chile en El Para!so; y en la Cordillera de Opalaca en Intibuca. Pero hasta el momento son 5610 ideas. 15. El usc predominante de la madera en Honduras es en forma de le~a, estimSndose que el 80% de la madera consumida interna­ mente se destina a este uso. Con pocas excepciones, se ext rae 1ibremente del bosque (sin registro). siendo muy difIci~ por 10 tanto. estimar volt1menes • .J.I Su valor est!!, sin duda, aumentando a la par con los mayores costos de combustibles registrados re­ cientemente. Actualmente CCHDEFOR comercializa la le~a a L .25 por carga (100 kg.). En el Departamento de Francisco MorazAn solamente, se vendieron unas 95,000 cargas en 1975. (Este es e1 ~nico Departamento para el cual se han obtenido cifras.) 11 El pre plan de desarrollo nacional estima en L 24 millcnes el valor anual de lena en 1960-62: esta cifra constituye un 54% de la producci6n total neta del sector forestal. Estima­ ciones para el per!odo 1970-72 muestran un aumento a unos L 28.5 millones: la cifra porcentual es de 48%.  ANEXQ 5 P!g. 5 Industrias Foresta1es 16. La industria forestal est! compuesta principalmente de aserraderos, aunque existen adem!s dos compa~!as productoras de tableros contrachapados y varias compa~Ias fabricantes,de productos forestales menores, tales como resina destilada. Existen 146 aserraderos y, como es tIpico de muchos paises en desarrollo, 12 de ~stos (9% del total) producen alrededor del 50% de la pro­ ducci6n y un porcentaje mayor del volumen de exportaciOn (ver Cuadro 12). 17. La mayor!a de los aserraderos usan sierras circulares, ineficientes en cuanto se obtienen bajos factores de conversi6n. El bajo rendimiento de los aserraderos, a excepci6n de los m!s grandes (generalmente de sierra huincha), resulta en una p!rdida a la economIa, estimada por el Gobierno en aproximadamente L 5 millonee por a~o. La industria del aserrIo contribuye un 1.5%, aproximadamente, al producto geogr!fico bruto del paIs y emplea unas 4,000 personas, la mayor parte de las cuales son empleadas a niveles salariales bastante bajos. Existe muy poco procesamiento adicional de la madera aserrada (por ejemplo, moldurae, muebles, etc.). Mientras se exporta la mayor parte del producto'aserrado, existe una oferta de madera aserrada de menor calidad, no expor­ table, y de difIcil venta interna a causa de la reducida demanda. Una porciOn es vendida en Centro Am,rica. La producciOn actual es de aproximadamente 1 MillOn de m (a). 18. Existen dos manufacturas de contrachapados, Tropical Plywood y Tela Industries Madereros S.A. (TIMSA). Tropical Ply­ wood posee dos plantas, una en Dulce Nombre de Culmi, productora de chapas y la planta principal en Tegucigalpa que produce prin­ cipalmente terciados de pino aunque tambi'n cierta proporciOn de terciados de latifoliadas tropicales. TIMEA produce principal­ mente tableros contrachapados. La producciOn total de estas dos industrias fuA de aproximadamente 6,100 toneladas en 1975 (480,000 planchas). La industria de contrachapados se encuentra generosa­ mente protegida a exc.pci~n de otros abastecedores pertenecientes al Mercado Comdn Centro Americano (MCC)--derechos aduaneros de un 20% mfs L 0.)0 por kg. La mayor competencia es con los contra­ chapados Nicaraguenses. preferidos por muchos por su mejor calidad. Incluso los distribuidores y vended ores Hondure~os encuentran que la calidad del producto nacional es insatisractoria. 11 Las expor­ taciones, sin embargo, aumentaron nat:orlamente en 1973-75. sugi­ riendo que podrIa existir una tendencia hacia una mayor acepta­ ci6n por parte del mercado general. La produccien en 1972 fu' de 11 J. AgUero, J. J. Baker, M. Jerezano, -Informe Sobre los Pro- ' blemas de Mercado de Plywood en Hond,uras". Abril 1974.  ANEXQ 5 P4g. 6 335.000 planchas, mostr~ndose, al presente, un aumento en la producci~n. 19. Existen tres plantas destiladoras de productos resinosos y algunas f~bricas de muebles y otros artIculos de madera. Camercto Exterior 20. Los dos rasgos sobresalientes en el cuadro del camercio exterior son la gran y creciente exportaci6n de pine y la gran y adn m~s rlpidamente creciente importac~6n de pulpa y pa9~~' La importaciOn y exportaci6n d9 ot~os productJs :crestales es in­ significante en terminos relatives. :a impertaci~n de productos de papel alcanz6 unos u.s.$26 millones in 1974 consistiendo en cart6n para envases bananeros, papal de peri6dicos, papeles de imprenta y manuscrito y product os varias (:uadros JA y 3 E). Las exportaciones oonsisten principalmente de madera aserrada, 95% de la cual corresponde a pino (Cuadros 4A y 4B), totalizando, can otros productos menores, unos U.S.e41 millones en 1974. El mercado maderero ha sido cambiante en los dltimos a~os, con aurnen­ tos tanto en precios (Cuadro 5) como en vol~menes para los produc­ tos Hondure~os. Las exportaciones madereras en 1975 fueron de 193 millones de pies madereros con un valor de L 77 millones 0 unos U.S.$38 millones. 21. Un estudio realizado hace algunos aftos para e1 Gobierno muestra que las exportaciones rea1es desde Honduras, en anos anteriores a COHDEFOR y la Ley 103. eran considerablemente mayores que los declarados oficialmente a causa de las deficientes medidas de control. Algunos exportadores m~s importantes. se dice, sub­ declaraban tanto los precios como los voldmenes embarcados. Sin embargo, dado que el estudio fij6 1a atenci~n s610 en una muestra de los import adores (por medio de revisi6n de estadtsticas de importaci~n). no es posible revisar satisfactoriamente los datos de exportaci6n de a~os anteriores. Consumo In+',rno 22. El consumo de productos madereros en Honduras es redu­ cido (Cuadro 6). La excepci6n es e1 papel y el carten, importa­ dos en su tota1idad. y la mayor parte r~-exportada en forma de envases bananeros. El consumo per c~pita de madera y madera terciada es considerab1emente m~s bajo que el nivel de otros paises de Sentro Am~rica. El consumo anual alcan;a aproximada­ mente 47 m por 1000 habitantes, 0 unos 128.000 m en total; el consumo de madera terciada, incluyendo la produccien nacional Y3 las importaciones provenientes de Nicaragua, es de s~lo 7,400 m por affo. Por media de las tendencias de crecimiento pasadas y  ANEXQ 5 pag. 7 los ajustes esperados en el consumo se han hecho las siguientes proyecciones de las necesidades dom~sticas para 1980 y 1990. .l.22.1 ill.Q l2.2Q Madera Aserrada ('000 m J) 128 170 250 Tableros sontrachapados 7.4 1J 25 ("000 m ) Papel y P50ductos de Papel 105 180 ('000 m ) TendeDci~s de Producci6n 2). Los productos forestales primarios (incluy~ndose rollizos, resinas y otros productos de la madera no procesados as! como la lena) contribuyeron un promedio anual de unos L 59.8 millones al producto geogr4fico bruto entre 1970-72 (Cuadro 7), equivalentes a un 4.6% del total. 11 Entre 1960-62 la contribuciOn fu~ de L 44.3 millones, 0 un uromedio de 5.9% del producto geogr4fico bruto de esos aftos. ~ En el per!odo 1960-62 a 1970-72, el sec­ tor de productos forestales primarios creciO a una tasa anual de 3.1%. La cifra equivalente para la econom!a en general fuA de 5.6%. No se dispone de c4lculos ma~ recientes. 24. COHDEFOR estima que sus ingresos brutos p~r ventas para 1975 alcanzaron unos L 84 millones. unos L 6.7 millones proce­ dieron de exportaciones de madera aserrada y product os varios (Cuadro 8). (Estas cifras no incluyen ingresos por ventas de particulares y comunidades forestales ni el valor de maderas, contrachapados, y otros productos, producidos y comercializados localmente, no controlados por COHDEFOR.) Los ingresos netos de COHDEFOR (descontadas la totalidad de los costos) se estiman en unos L 12 millones para 1975. Entruga de Diyisas 25. Los ingresos de divisas del sector forestal se estima­ ron oficialmente en unos L 42.3 millones anualmente en 1970-72. Las importaciones de productos forestales alcanzaron. en pro­ medio, L 34.2 millones en el mismo per!odo. Mientras las importa­ ciones de pulpa y papel sigan aumentando en la medida que 10 hacen actualmente, los ingresos netos de'divisas del sector seguir4n creciendo m4s lentamente que los ingresos por exportaciones. 11 Tal como se indica m4s arriba, la le~a comprende un 48% de la contribuci6n. los rollizos agregan otro 36%. ~ La Misi6n BID/FAO (Cliff) Olancho estima que la contribuci6n real del sector forestal es del orden de un 10 a 15%.  ANEXO ~ P~g. 8 26. Durante muchos a~os los Droductos forastales Crollizos y madera aserrada) fueron el tercer rubro m~s importante de ex­ portaciones (despu~s del caf~ y las bananas). Desde 1972, ocupan el segundo lugar. los ingresos brutos par concepto de product os forestales fueron oficialmente calculados en unos L 77 millones para 1975· 11 Protecci6n e Incendios Ro;estales 27. Uno de los rasgos m~s sobresalientes de la escena fores­ tal actual de Honduras 10 constituye la enorme destrucci6n par el fuego. Un estudio de FAG en 1965, indicaba que anualmente se des­ truIan por 10 menos 650,000 m' de ma~~ra (casi todo pino) par causa del fuego. Aproximadamente un 50% de los incendios destruye el dosel superior; la regeneraci6n natural es eliminada en la casi totalidad de las ~reas quemadas. Dado que frecuentemente las ~reas quemadas sufren una requema, la regeneraci6n no logra es­ tablecerse (los bosques de con!feras se regenerarIan en forma natural de ser adecuadamente protegidos y manejados). 28. Los incendios son parte integral del sistema agrIcola n6made (shifting cultivation) practicado generalmente par el cam­ pesina. Fuera de constituir una fuente de le~a, el bosque carece de valor para ~l, siendo. m~s bien, un obst~cula para su super­ vivencia. Por este motivo, hasta que el campesino pueda obtener alg~n beneficio econ6mico del bosque s6lo se lograr~ un progreso leve en la lucha contra las pr~cticas incendiarias. 21 En los ~ltimos dos a~as ha habido un marcado' progreso en la protecci6n contra incendios. De una superficie de 2 millones de hect~reas bajo protecci6n se estima que unas 34,000 hect~reas se quemaron en 1975. Esto constituye aproximadamente un 1.7~ del !rea pro­ tegida. La magnitud del incendio promedio fu~ de 40 hect~reas. En cantraposici6n, las cifras oficiales preliminares para la temporada de incendios 1976 indican un 0.5% del ~rea protegida y un tama~o media de 10 hect~reas por incendio. Debe recordarse que las condiciones clim~ticas de 1976 fueron muy favorables, constituyendo uno de los factores m~s importantes en la explicaci6n de la reducci6n del ~rea quemada en ese a~o. Cualquiera sea la raz6n, existe en Honduras la sensaci6n de que el sistema de pro­ tecci6n est~ en mej~rIa, que la poblaci6n rural est~ adquiriendo ccnciencia de la necesidad y los beneficios de la protecciGn con­ tra incendios y que es posible una contInua mejora siempre que la 11 Las exportaciones para el primer semestre de 1976 superaron considerablemente las del perIodo equivalente de 1975. 21 Un experto en incendios forestales ha sugerido, en concordancia con el experto forestal de la misi6n, que una eventual intro­ ducci6n rnasiva de quernas pragramadas y controladas deber~ ser una parte necesaria del programa de manejo forestal de COHDEFOR orientada a obtener la cooperaci6n del carnpesinado.  ANEXO 5 P~g. 9 poblaci6n rural pueda continuar compartiendo los beneficios de la producciOn forestal. 29. La p~rdida de terrenos forestales a la agricultura tiene cercana relaciOn con el problema de incendios: a medida que se desarrollan caminos de acceso a las ~reas forestales la amenaza aumenta. 8i la p.rdida de bosques fuera reemplazada por una acti­ vidad agrIcola produetiva, podrIan existir razones econ6micas y sociales para apoyar tales carnbios, pero. en la mayor!a de los casos, los terrenos en que esto sucede resultan agr!colamente marginales. Generalmente. el campesino obtiene sOlo una 0 dos coaeehaa antes de trasladarse a nuevos terrenos. El fuego le 8i­ gue, de tal manera que no se establece la regeneraciOn y en con­ secuencia la tierra queda sin uso e inutilizable. (Existen unos 2.2 millones de hect4reas de terrenos, como antes indicado, de aptitud forestal que se encuentran desnudas y en muchos easos sin uso.) 11 LA LEY 103 "t COHDEFOR 30. El desempeffo insatisfactorio del sector forestal (pr~c- tieas de explotaciOn derrochadoras, grandes incendios, supuesta eorrupci6n y otros faetores antes meneionados) condujo a la pro­ mulgaci6n de la Ley 103 y a la ereaciOn de COHDEFOR. Firmada e1 16:'de=.. Em.eroeder:19"4-·~~la~~Ley 103 es de tal alcance que hace obso­ letas casi todas~las pol!ticas forestales previas. Bajo sus dis­ posiciones fu~ disuelta la ageneia forestal del Ministerio de Recursos Naturales y creada COHDEFOR (Corporaci6n Hondure~a de Desarrollo Forestal) en su lugar. Esta instituciOn semiaut6noma est4 encargada de generar fondos para el desarrollo econOmico y social de la naei6n a trav~s de la explotaci6n forestal y la ex­ portaciOn de productos forestales. Es responsable de la politica forestal y su implementaci6n adem~s controla todos los recursos forestales, pdblicos y privados. 31. Esta legislaciOn habi1itadora (Ley 10) est4 esencial­ mente dirigida al control nacional de todas las actividades fo­ restales, b4sicas e industriales. La Corporaei6n se encargar4 11 Debe notarse. en este contexto, que e1 bosque de pine se en­ cuentra en constante peligro de ataques de insectos. tales como el ocurrido en 196)-65 en que e1 escarabajo dendrotonus (Dendrotonus ~.) destruy6 alrededor de un 20% del volumen con!fero. Este esearabajo es parte natural de la ecolog!a del bosque de pino, y a menos que se tomen medidas para evitar una nueva epidemia, existe e1 peligro potencial de graves danos en cualquier momento. Los bosques sobremaduros son probablemente los m4s susceptib1es. Buenas pr~cticas de manejo forestal, in­ cluyendo cortas finales y sanitarias, pueden reducir el peligro considerablemente.  ANEXQ 5 P~g. 10 directamente de 1a extracci6n, aserr!o e impregnaciOn de 1a madera y 1a extracci6n y desti1ado de resinas. 0 en au efecto, a trav~s de empresas autorizadas. de capitales mixtos 0 privados. formadas por Hondureffos (incluy~ndose asociaciones y cooperativas campesinas). En el caso de la pulpa y el papel. madera para pulpa,muebles. plan­ chas de madera. u otros product os similares. finales 0 intermedios. los extranjeros podr4n poseer hasta un 49% de dichas operaciones. siempre que CO~~EFOR, y en cada caso particular, 10 estima del in­ ter~s nacional. 3~. La Corporaci6n es la ~nica agencia autorizada Dara comer­ cializar maderas en el exterior. y al por mayor internamente. Tiane completa responsabilidad en cuanto al manejo. protecc~6n y utilizaci6n de todo bosque y terrenos considerados de aptltud pre­ ferentemente forestal pero actualmente desprovistos de bcsque. En esencia, posee el poder para determinar. en consulta con otras agencias, el destin~ final de la tierra. 33. COHDEFOR tiene un Consejo Directivo, compuesto por el Jefe de Estado de la naci6n, e1 Ministro de Defensa y Seguridad P~bliea, el ~inistro de Finanzas y Cr~dito P~blico, y el Secre­ tario Ejecutivo del Consejo de Planifieaci6n Nacional y es admi­ nistrado por un Gerente General (Figura 1). Bajo §l hay un Direc­ tor Ejecutivo y cuatro Directores divisionales (bosques. industrias. finanzas y ccmereializaciOn). Ademas. existen siete distritos. cada uno manejado por un jefe de distrito. 34. La capitalizaei6nde la CorporaciOn se fij6 inicialmen­ te en 1 3 millones. Esta cifra puede ser aumentada a trav~s de las uti1idades recibidas por'la venta de maderas y productos, que pueden ser asignadas por la Rama Ejecutiva sobre recomendaei6n del Consejo Direetivo: por dineros. scciones y posesiones transferidos a ella por el Estado; por utilidades provenientes de inversiones realizadas por la CorporaciOn; por pr§stamos que pueda contraer con el fin de alcanzar sus objetivos; y por dineros provenientes de mu1tas que pueda imponer dentro del contexte de 1a Ley 103 y los artfeu10s vigentes del Decreto 8; de Feorero de 1972. La Corporaci6n se encuentra exenta de impuestos tanto estata1es como municipales y se le exige depositar todos los fondos por ventas u otras actividades en e1 Banco Central. Su presupuesto tenta­ tivo para 1976 aparece en el Cuadro 8. 35. A COHDEFOR se le exige adem4s organizar el llamado Sistema Social Forestal, inc1uyendo asociaciones de trabajadores forestales compuestas por campesinos que forman eooperativas u otras organizaciones con e1 fin de utilizar y proteger aquellas «reas boscosas asignadas a ellos. En recompensa. el grupo cam­ pesina podr4 compartir los benefieios de sus actividades de la manera dispuesta por COHDEFOR.  ANEXQ 5 P4g. 11 36. A mediados de 1976 exist!an alrededor de 100 cooperativas beneficiando unas 15,000 personas directa 0 indirectamente (alrede­ dor de 2,000 familias). Estas cooperativas prove en ingresos sup1e­ mentarios a los grupos rurales mas despose!dos y han sido, segrtn se .dice, un factor importante en el ~xito del programa de protec­ ci~n. Existen distintas opiniones sobre el ~xito de las asociacio­ nes de trabajadores forestales, pero la mayor!a de las personas en COHDEFOR creen que al fin de cuentas el programa ha sido exitoso y que debe ser expandido. 37. Toas las concesiones de terrenos forestales de mayor escala est4n siendo terminadas, los poseedores de tales concesio­ nes recibiran compensaci6n por sus inversiones siempre que sus operaciones hayan sido legales. Otros no 1a recibir4n. Tambi~n se cancelar'n los acuerdos con propietarios particulares, en 10 que a derechos de corta en dichos terrenos se refiere (la fecha deber« ser fijada por el Consejo Directivo). COHDEFOR no vislum­ bra el uso de concesiones madereras particulares de gran escala en el futuro, adn cuando actualmente tiene contratos de manejo y utilizaci~n con dos compaftIas. 38.. Una justificaci6n clave para la Ley 103 fue el conocer, como se mencion6 anteriormente, que muchos exportadores de maderas estaban. aparent·emente, sub-declarando dr4sticamente tanto 10$ vol~menes como los precios de productos madereros. Dado que COHDEFOR es directamente responsable de las exportaciones de ma­ dera, ha tomado los contratos de exportaci.6n, pagando a aquellos exportadores que ha encontrado trabajando legalmente y deteniendo las operaciones de los . restantes. En algunos casos COHDEFOR est4 sub-contratando exportadores con el fin de que ellos desarrollen las actividades mismas de exportaci~n, pero todas estas exporta­ ciones se efect~an en nombre de COHDEFOR. La forma en que ha fun­ cionado hasta ahora es como sigues los aserraderos entregan su produeei~n a uno de los patios de eoneentraei~n (de propiedad de o contratado por COHDEFOR) y COHDEFOR les paga por la madera, ba­ sado en sus normas de calidad. COHDEFOR luego contrata exporta­ dores con el fin de que ellos, f!sicamente, manejen la transac­ ci~n. Ya que la exportaci~n se hace en nombre del estado, no se aplican impuestos de exportaci6n. 39. Esta. exposici6n aelara el heeho de que la Ley 103 es una medida dr'stica y que COHDEFOR proyecta seguirla al pie de la le­ tra, a~n plenamente conciente de los problemas que tiene por de­ lante. Lo mismo con respecto a los art!culos de la Ley Forestal del 10 de Febrero de 1972 (Decreto No. 85) a~n vigentes y que gobiernan detalles importantes en 10 relacionado a pol!ticas y pr4cticas forestales, incluyendo la conservaci~n. En el 'rea reci~n nombrada, sin embargo, el Directorio de Recursos Naturales Renovables y Ecolog!a del Ministerio de Recursos Naturales tiene  ANEXQ 5 P4g. 12 la responsabilidad de ciertas funciones !ntimarnente relacionadas con e1 campo forestal, principalmente la vida silvestre y los parques nacionales. El Directorio tiene un Departamento de Eco­ log!a, como se observa en la Figura 2, y. aun cuando sus funciones no se encuentran todav!a claramente definidas, es probable que eventualmente maneje los asuntos ambientales y de conservaci6n relacionados en ciertos aspectos can la protecci6n forestal. A~n resta por desarrollar la legislaci~n referente a vida sil­ vestre y parques nacionales. (El borrador del plan de desarro­ llo nacional incluye comentarios acerca de la vida silvestre y los parques nacionales.) El manejo de cuencas per~anece como funci6n de COHDE~OR. EDUCACION. INVESTIGACION Y AYUDA EXTRANJERA 40. Tanto la educaci6n como la investigaci~n en 10 forestal requieren mayor ~nfasis. EduQaciOn 41. En a~os recientes la Universidad Nacional en La Ceiba (UNAH) ha estado ofreciendo un curso para profesionales. Los forestales de Honduras, por 10 general, prefieren no depender de la Universidad en su formaciGn. favoreciendo el uso de univer­ sidades extranjeras. Es un juicio v!lido t ya que es probable que encuentren un numero considerable de becas de formaci6n profesio­ nal disponibles, adem4s de las ya establecidas con Alemania, AID. OEA Y FAO. 42. En contraposici6n al nivel insatis!actorio del programa universitario t Honduras posee un establecimiento y un programa sobresaliente en el nivel t~cnico--la Escuela Nacional de Ciencias Forestales en Siguatepeque. Esta instituci6n ha estado funcio­ nando en conjunto con un proyecto FAC y ha recibido apoyo adicional por parte de AID en forma de becas para que futuros y actuales miembros acad~micos obtengan sus t!tulos de B.S. en la Stephen P. Austin University en Texas. (Estas becas han apoyado t adem4s, la educaci6n de muchos de los profesionales actualmente ocupando cargos en COh~EFOR.) Adem~st el Cuerpo de Paz de los EE.U~ ha estado proporcionando instructores. En 1976 habIan 148 estudiantes matriculados en la escuela de Siguatepeaue, incluyendo aquellos de otros paises Centroamericanos (Cuadro 95. La escuela espera atraer mayores n~meros de estudiantes extranjeros de modo de ayu­ dar a reducir el costo por estudiante t que actualmente es relati­ vamente alto. La capacidad de la escuela est~ siendo' sub­ utilizada.  ANEXQ 5 P4g. 1) Inyestigaci6n 4J. Actualmente, Honduras no est! desarrollando una investi­ gaci6n de significancia de sus problemas forestales. Las razones son en parte debidas a la ausencia de investigadores calificados y en parte al hecho de que aquellos con las calificaciones nece­ sarias han sido requeridos con mas urgencia en otras 4reas (ad­ ministraci6n, manejo, y docencia en Siguatepeque). Como se men­ ciona m!s abajo, la necesidad de un programa de investigaci6n aplicada es urgente. Existen planes para el desarrollo de esta investigaci6n en Siguatepeque. Ayyda Extranjera 44. Honduras cuenta con bastante ayuda extranjera en el sector forestal. incluyendo en a~os recientes: PNUD/FAO (en educaci6n y planificaci6n forestal) eIDA (en planificaci6n forestal, con particular ~nfasis en desarrollo de latifoliadas) BID/FAO (estudio agro-forestal de Olancho - misiOn Cliff) ORA (asesor forestal de CONSUPLAN) Cuerpo de Paz de los EE.UU. (18 forestales, proyectan m4s) BID (planificaci6n del Proyecto Olancho) BID (estudio de factibilidad de producci6n de carbOn vegetal en Agalteca) AID (becas) 45. Adem«s de estos proyectos de asistencia de m4s largo plazo, ha habido una gran cantidad de misiones de corto plazo con el fin de aconsejar espec!ficamente sobre varios asuntos (por ejemplo, organizaciOn y administraciOn de COHDEFOR; protecci6n forestal; y producciOn de carbOn vegetal para una planta de acero propuesta). OBJECTIVOS DE DESARROLLO 46. El plan de desarrollo nacional 1974-78 enumera los si­ guientes objetivos para el sector forestal. (a) mejorar la utilizaci6n, industrializaciOn y comercia­ lizaci6n de productos forestales para optimizar los retornos del bosque en beneficio de Honduras,  ANEXQ 5 pa.g. 14 (b) aumentar la ccntribuci5n del sector forestal al bienestar del-pueblo a trav~s de la participaci6n directa de ma.s personas (principalmente campesinos) en las actividades productivas y protectoras asociadas con el desarrollo del sector y utilizando los retornos del sector en pro­ gramas de desarrollo nacional: y (c) proteger el suelo, agua, vida silvestre y recursos esc~- nicos asociados con el bosque. 47. Estos objetivos son sanos y apropiadamente amplios, cu­ briendo casi todos los aspectos de releva~cia de desarrollo fores­ tal en el contexto de la situaci6n actual del recurso en Hondu:-as. El problema por delante es c6mo disefiar e implementar programas de acci6n efectivos. JUICIOS Y RECOMENDACIONES 48. En el ap~ndice 1 se presenta esquema.ticamente un ana.lisis de problemas y estrategias sugeridas para el desarrollo forestal. Este resumen presenta y forma concentrada las observaciones refe­ rentes a las estrategias presentadas en las siguientes p4ginas. Es consecuente con el enfoque del Gobierno en materia de desarro­ llo forestal, seg~n 10 dispuesto en la Ley 10) y los varios direc­ tivos administrativos. El enfoque de COHDEFOR se basa en el con­ cepto de control, direcci6n y manejo estatal de los recursos fo­ restales, as! como de la explotaci~n, procesado y comercializaci6n de los productos de la madera. En gran parte, la inspiraci6n de la Ley 10) se debiO a la necesidad de sobrellevarl (a) la aparentemente significativa sub-declaraci6n por parte de las compa!'Has exportadoras (principalmente de pose­ si6n extranjera); (b) la falta de definici6n referente al dominio de terrenos forestales, con el resultante cuello de botella en el abastecimiento de la industria local y en la planifica­ ci6n de una futura expansi6n de la industria forestal; (c) la ausencia de progreso en el sector, debido a una va­ riedad de motivos, inclu!dos el mal usa 0 desuso de grandes cancesiones, ineficiencia y supuesta corrupci6n en el servicio forestal e ineficiencia en el procesa­ miento J y (d) falta de control directo sobre las actividades de explo­ taci6n, procesamiento y comercializaciOn del recurso, resultando en bajos ingresos nacionales por parte del sector.  ANEXO 5 P4g. 15 49. Podr!an haber habido otras alternativas a la creaci~n de COHDEFOR para sobrellevar est os problemas, pero todas habr!an involucrado cambios sustanciales en el sector forestal. Se po­ dr!an haber introducido sistemas de control e impuestos, pero 1a organizaci6n b4sica para su administraciOn no estaba presentee Adn mAs, es probable que los requerimientos de man~ de obra t~cnico-profesional hubieran sido mayores que de hacer el trabajo COHDEFOR. La estratagema COHDEFOR, ademAs, evita las demoras inherentes en la definici6n de 1a propiedad de la tierra, elimi­ nand 0 , de tal manera, el cuello de botel1a en el abastecimiento de materia prima. 50. A~n cuando la mec4nica de una operaciOn exitosa est4 dada, el efectivo desempe~o de COHDEFOR, si no su sobrevivencia, depende de la soluciOn de ciertos problemas existentes y pot en­ ciales, tales como: (a) Si au capacidad t~cnica no se aumenta r4pidamente, es posible un retraso en el sector, induciendo, por 10 tanto, una falta de confianza y apoyo por parte del p'dblico y del Gobierno. Sin apoyo y cooperaci6.n (t,anto privado como pdblico) no podr!a desarro11ar sus funcio­ nes. (b) Si COHDEFOR no hace un gran y continuado esfuerzo por desarrollar sus mercados de exportaci~n, y si no procura la participaci6n de la industria en sus decisiones refe­ rentes a normas de productoa, precios, y comercializa­ ci6n, corre el peligro de encontrarse frente a una baja en la producciOn, en la productividad, y en la inver­ si6n en nueva capacidad, y habr4 poco que pueda hacer por mejorarlo, al menos en los prOximos cinco a diez afloa. (c) Si el Gobierno distrae demasiadas de las utilidades de operaci6n de la CorporaciOn a usos no forestales. su desarrollo y ~l del programa forestal nacional queda­ r!an seriamente impedidos. Es por todos reconocidos que las presiones pol!ticas, en cuanto a esta diver­ si6n de utilidades, son fuertes. (Por ejemplo, el bo­ rrador del plan nacional de desarrollo 1974-78 asignaba a COHDEFOR 1a gran carga del financiamiento de la refor­ ma agraria y el desarrollo agrIcola.) (d) Ya existe inquietud e intranquilidad entre las compa­ ft!as particulares y entre las organizaciones labora1es, particularmente con respecto a (i( abastecimiento futuro de madera y su costo a la industria privada, (ii) po1!­ ticas y planes de COHDEFOR con respecto a industrializa­ ciOn, y (iii) la habilidad de COHDEFOR en el manejo de  ANExa 5 P~g. 16 la comercia1izaci6n de productos de la madera. En parte la intranquilidad pareciera ser una reacci6n natural de una industria que en e1 pasado ha sido favorecida por la fa1ta de control sobre sus actividades y que ha tenido casi mano libre en la obtenciOn de sus materias prirnas a precios efectivos muy por debajo de 10 que debiera haber estado pagando. l/ Adem~s, como se ha mencionado anteriormente. en e1 pasado poderosos intereses en e1 sector estuvieron recibiendo uti1idades de exportaci6n no reportadas al Gobierno, 10 que significaba ganancias exageradas para las compan!as y un retorno m!s bajo para el pars. Bajo estas circunstancias •. una reacci6n des­ favorable por parte de ciertos individuos era de esperar­ see Sin embargo. parte de la intranqui1idad ciertamente se debe a una inquietud leg!tima por 1a inexperiencia y caracter!sticas burocr~ticas de COHDEFOR en e1 contexto de su enorme poder en e1 sector. (e) Un problema clave enfrentado par Honduras es 1a propen­ siOn en contra de la uti1izaci~n de rol1izos de peque~o di!metro acop1ado con la ineficiencia en 1a conversi6n e inadecuado sistema de fijaci6n de precios de madera en pie. Existen problemas adicionales por las limita­ ciones de tone1aje en ciertos caminos forestales de acceso cr!ticos. (Los reducidos l!mites de tonelaje implican mayores costos de transporte de ro1lizos.) Par estas razones, en parte, los aserraderos en muchos lugares del pais se enfrentan a una severa escasez de madera. 51. A~n cuando los problemas por delante son dif!ciles, COHDEFOR y su programa actual parecen ser un camino racional hacia el desarrollo forestal, y probablemente el mas pr!ctico, dadas las circunstancias generales. Par 10 tanto, los siguientes juicios con respecto a estrategias apropiadas para el sector se basan ~n e1 supuesto que COHDEFOR debe y puede ser forta1ecido para solucionar las debi1idades antes indicadas y para permitir1e sobrevivir las crecientes presiones que tiene en contra. 52. En resumen, los elementos de la estrategia necesaria para solucionar los problemas se suman en un programa con ~nfa­ sis en: 11 La situaei6n actual es similar a aquella de 1968-69, cuando se form6 e1 proyecto COPINO. En ese entonces, los peri6dicos es­ taban llenos de quejas indignadas, exigencias y amenazas de la industria local. particu1armente aquel elemento fuerte de 1a Regi6n de Olancho. Entonces, como ahora, la industria sent!a amenazada su autonom!a y su 1ibertad. de agotar la base de re­ cursos del pais.  ANEXQ 5 P4g. 17 (a) aumentar la protecciOn de los recursos forestales actuales y la expansiOn de la base forestal a trav!s de un programa de manejo intensivo; (b) aumentar la eficiencia de la industriaexistente en la conversi~n de madera rolliza a productos; (c) desarrollar 1a capacidad para el aumento del procesamiento secundario y terciario de-,.productos forestales; y (d) mejorar el sistema de comercio exterior para~gurar la salida de los productos forestales de la naci6n. Los resultados de tal programa serin mayores ingresos, valor agre­ gadq dom~stico, empleo, entrada de divisas y conservaciOn del re­ curso. ;3. Las l!neas gruesas de estrategia en el desarrollo fores­ tal Hondurefto deben considerar la siguiente divisiOn de 4reas/ tipos forestalest (a) la Reserva de Olancho; .. (b) el resto inexplotado de los bosques de O~ancho, ColOn y Mosquitia (incluyendo los bosques de latifoliadas); (c) el resto del 4rea forestal (casi todo explotado) que puede dividirse en dos categor!asl (i) aquellas areas con bosque suficientemente grande para soportar una in­ dustria eficiente sobre una base m4s 0 menoa sostenida y (ii) el restodde las 4reas forestales diseminadas que no son capaces de soportar operaciones de rendimiento sostenido de industrias de tama~o eficiente. 54. Para la Reserva de Olancho, la estrategia ha sido bas­ tante bien definidas desarrollar el acceso y un program a de ma­ nejo y un complejo industrial integrado. 55. Para el resto de la poreiOn inexplotada de Olancho, Co16n y Mosquitia (Gracias a Di6s), la tarea urgente es la de reunir la informaci~n necesari-a J'ara determinar el mejor programa de desa­ rrollo de explotaciOn/manejo e infraestructura y emprender pro­ gresivamente un programa de protecciOn y desarrollo. 56. Para ~as 4reas forestales dispersas, de tama~o sufi­ eiente para soportar operaciones de rendimiento sostenido de una industria de tamafto eficiente se deber4n controlar las cortas, y las industrias que puedan hacer un usc Optima del recurso y mane­ jarlo adeeuadamente deber!n ser establecidas 0 conservadas. Se  ANEXQ 5 P~g. 18 deber~n desarrollar estudios que determinen las posibilidades de corta. los mejores us as de la cosecha y los regImenes de manejo m~s apro~iados. Un mayor esfuerzo debe ser dedicado al estudio del manejo de los bosques secundarios 0 renovales. ' 57. Finalmente. para el resto de las ~reas diseminadas. se debe determinar el programa m~s adecuado de liquidaci6n junto con el programa m~s apropiado de cierre de la industria dependiente de la madera de esas ~reas. Para estas ~reas, la mayor preocu­ paci6n debe ser el cierre paulatino y ordenado de la industria, can ~nfasis en evitar trastornos y encontrar fuentes alternativas de empleo. 58. En todos los casos, las medidas de desarrollo deben re­ calcar la eficiencia t~cnica, junto con una moda1idad de manejo amqienta1 que beneficie 1a pob1aci6n local. En los tres primeros casos, deben considerarse mejoras en los equipos y maquinarias, desarrollo de incentivos ademas de reglamentaciones, y e1 posible desarrollo de unidades de reaserrIo sat~lites mayores. conectados con abastecedores m~s pequefios de cuartones 0 maderaaserrada en bruto • • Desarrollo Instltucional de CQHOEFQR 11 59. A pesar de que la Corporaci6n est~ bastante bien desarro­ 11ada en el papel. su capacidad t~cnico/administrativa para en­ frentar sus responsabilidades est! lejos de 10 deseab1e. No exis­ ten en Honduras suficientes profesionales que hayan tenido expe­ riencia en los variados aspectos del sector forestal. Es notable la falta de experiencia en proyectos y microeconom!a (disefio y evaluaci6n de proyectos), tecnolog!a y administraci6n de la indus­ tria forestal, y productos de la madera y comercia1izaci6n. La mayorIa de las otras ~reas (incluyendo el manejo y la administra­ ci6n en terreno) est~n tambi~n casi desiertas. Los profesionales disponibles. contratados por COHDEFCR de varias otras agencias, a penas logran mantenerse al d!a en las labores cotidianas. 60. El primer paso necesario es e1 de cerrar el vacIo entre las responsabilidades de la agencia y la disponibilidad de perso­ nal. Dado que COHDEFOR es una instituci6n nueva y representa un nuevo concepto en manejo y administraci6n. es difIcil definir los requerimientos de personal especializado. (Un c!lculo reciente de necesidades totales de personal t~cnico y profesional para 1976*1985 se presenta en el Cuadro 10.) Es indispensable que Honduras obtenga ayuda con el objeto de expandir su capacidad pro­ fesional por medio de becas y programas de perfeccionamiento. 11 Actualmente Arthur Young and Co. est~ desarrollando un estudio detallado de reforma institucional para COHDEFOR. Se contempla para COHDEFOR un desarrollo por estapas.  AHEAO 5 page 19 61. Dos puntos son importantes aqu!. En primer lugar, AID ha suspendido sus programas de becas para forestales. Se deben encontrar fuentes adicionales para las becas, tanto en el pals como en el extranjero. En segundo lugar, existen ciertos cargos en COHDEFOR que no pueden ser llenados adecuadamente por personas con educaci~n de nivel universitario. Alguna forma de capacita­ cien debe, por 10 tanto, desarrollarse con el fin de proporcionar personas con experiencia pr4ctica en el procesamiento y la comer­ cializacien de los productos forestales. Una alternativa es la de contratar personal t8cnico extranjero para servir en aquellos departamentos de COHDEFOR. Este personal debe ser reclutado en las empresas consultoras u otros grupos (tales como el Cuerpo de Ejecutivos en Retiro de los EE.UU.) que cuentan con indiv!duos de gran experiencia pr«ctica en las industrias forestales y la comercializaci~n. (Debe recordarse que CO~~EFOR es una corpora­ cien de hecho comprometida con la produccien y la venta de pro­ ductos; no es 8610 otro servicio forestal encargado de la admi­ nistraci6n de un recurso forestal.) 62. Parte del personal t8cnico y profesional requerido por COHDEFOR puede ser contratado del fondo de economistas, ingenieros, y otros profesionales no forestales disponibles en Honduras. E~ Gerente General de COHDEFOR .st« contratando profesionales no forestales para algunos cargos claves y se deber« continuar con esta pr4ctica al menos hasta que hayan especialistas con experien­ cia ylo entrenamiento disponibles. De la misma manera, COHDEFOR deber!a contratar profesionales extranjeros experimentados, tanto forestales como otros. Un grupo de consultores claves contrata­ dos directamente por COHDEFOR podr!a formar parte integral. aun­ que temporal, de la organ1zaci6n hasta que los profesionales lo­ cales obtengan la experiencia necesaria. (Mientras tanto, la cooperaci6n provista por CIDA. PNUD/FAO y otros grupos debe ser continuada.) 6). Un 4rea especffica que concierna a COHDEFOR as el desa­ rrollo de la industria forestal. y existe interEs en obtener ex­ pertos de alto nivel y renombre en ese campo que podr!an aconse­ jar sobre las oportunidades de expansi6n industrial. Alguna agencia financiera internacional bien podrla mostrar inter's en llenar este vac!o, ya que la tarea implica proporcionar ayuda en como preparar proyectos que cumplan con las normas internaciona­ les para el financiamiento ademas de las consideraciones econe­ micas que yacen bajo la elecci~n del mejor camino para el desa­ rrollo industrial. (Se examina mfs adelante una proposici6n de proyecto de esta naturaleza.) 64. En el aspecto t6cnico del manejo forestal. COHDEPOR ha establecido un programa con 81 Cuerpo de Paz de los EE.UU. mediante el cual se proporcionaran profesionales forestales en  ANJ;;XO 5 pa:g. 20 forma de contraparte a cada profesional Hondureno en los siete distritos. Es un paso deseable y debe ser continuado. (A prin­ cipios de 1976. 18 profesionales fueron asignados a los distri­ tos.) Informacit5n de Manejo 65. El manejo de COHDEFOR necesita urgentemente de mds y mejor informaci6n para ayudar a mejorar su planificaci6n y admi­ nistraci6n y su dise~o de normas para los productos y sistemas de fijaci6n de precios. El Gerente del Departamento Forestal requiere de un sistema de informaci6n de recursos, el jefe de comercializaci6n necesita de un sistema de informaci6n de merca­ dos y el personal t~cnico require de los servicios de una unidad de investigaci6n aplicada (esta ~ltima est4. actualmente, ligada al centro de capacitaci6n en Siguatepeque) con el oojeto de pra­ porcionar datos para planes de manejo forestal distritales, la planificaci6n del desarrollo industrial y los programas de pro­ moci6n de exportaciones, tres dreas que merecen atenci6n inme­ diata. E1 problema en eate caso es de la carencia de personal calificado m~s.que de dinero. En e1 caso de solicitar ayuda a IBRD. BID Y AID, ~stas deberran cooperar conjuntamente para re­ solver el problema con e1 fin de complementar y agregar flexi­ bilidad a 1a asistencia recibida de parte de CIDA y PNUD/?AO. Una necesidad urgente es. 1a de la investigaci6n para cooperar en e1 desarrollo de un sistema de precios de madera en pie. 66. Un objetivo principal del sistema de informaci6n de manejo es el de generar datos para un sistema de fijaci6n de precios residuales de madera en pie para la producci6n de rol1i­ zos, 1I un m~todo para determinar los pagos a los productores por productos de exportaci6n, y valoraci6n y control de invent a­ rio de los productos de exportaci6n. Dado que COHDEFOR est~ autorizado para fijar precios (sujeto s610 a los niveles de preeios del Mercado internacional), no existe un sistema efectivo de Mercado que estab1ezca precios. Esto significa que se requiere informaci6n detallada respecto a costos, incluyendo los costos de cada paso del manejo. de explotaciOn, procesamiento y transporte. ZI Aunque 1a participaciOn de COHDEFOR en todos los niveles generar~ a1guna informaci6n, ex~en considerables variaciones en los cos­ tos, segl1n el tamafio de 1a operaci6n, su ubicaci6n, los tipos de productos, y otros factores. Tales variaciones deben considerarse en un sistema de precios si 1a empresa privada ha de permanecer en e1 sector--como debe sera 11 Comenzando por e1 precio del producto final, se restan los costos de transporte, procesado y afinesJ esto resu1ta en un residuo que se divide .entre uti1idad del product or y madera en . pie. ~ Se ha rea1izado una tasaci6n preliminar de la estructura de costos. Ver CO~TIEFOR, PNUD/FAO, Industrias Forestales Diagnosis, AproximaciOn de Costos y Recomendaciones, Proyecto FAO 511, Documento de Trabajo C-9 1973. Otros trabajos se encuentran en desarrollo.  ANEXQ 5 P~g. 21 67. Antes de desarrollar un sistema de precios se requiere de est~ndares de producciOn para productos forestales y madera redonda en pie. Las actuales normas para productos y reglas de clasificaci6n no han sido a~n adecuadamente desarrolladas con el mercado en mente. 68. El "uso 6ptimo de la madera rolliza" es un aspecto rela­ cionado. Una valoraci6n adecuada de. la madera en pie toma en cuenta el mejoruso de la madera ad~m~s del acceso a ella. Actual­ mente. los bajos precios (L 6 por m para pino) fomentan la explo­ taci6n irracional--tanto en t~rrninos del destin~ de la madera co­ sechada como del uso que se hace de ella. Con bajos precios re­ lativos para la madera rolliza, no se fomenta en el procesador su uso de m4xima eficiencia en la conversiOn 0 procesado; al contra­ rio, la transporta mayores distancias a los centros de procesa­ miento de 10 que hubiera hecho a mayores precios, y la madera no encuentra necesariamente su usa 6ptimo. Si la madera en pie se precia adecuadamente, la madera tiende a eer utlizada en el centro de m«s eficiente ubicaci6n y de la manera mas eficiente. (A modo de ejemplo, la madera proveniente de unos 150 kms. a Tegucigalpa es, a menudo, convertida a madera aserrada mediante cierras circu­ lares in~ficientes con grandes desperdicios. Los desperdicios rinden un retorno mInima a la compa~Ia 0 al paIs, aparte de pro­ porcionar combustible a los habitantes locales.) 69. Un flujo bien organizado de informaci6n es necesario, ad~m's, para montar controles en un sistema descentralizado de toma de decisiones. La descentralizaci6n es esencial para la operaci6n exitosa de una corporaci6n compleja--como es eOHDEFOR. Si un sistema descentralizado ha de ser efectivo--y responsable centralmente, como debe ser--los chequeos y controles de las decisiones de las unidades descentralizadas deben basarse en una r4pida retroalimentaci6n de inforrnaci6n de los resultados de dichas deeisiones en las unidades deseentralizadas. En estes t~rminos, una mejora de las eomunieciones con los distritos es de urgencia. Desarrollo de Proyectos Industriales 70. COHDEFOR carece de personal con experiencia en an4lisie de proyectos y la habilidad t'cnica para desarrollar y llevar a cabo estudios de proyectos. eIDA ha llevado a cabo un estudio de reconocimiento de posibilidades de utilizaci6n de latifoliadas, y est! programado que el proyecto PNUD/PAO aconseje respecto al desarrollo de proyectos, aunque aparentemente ser« al nivel de planificaci6n, principalmente. eOHDEFOR reconoce la necesidad urgente de desarrollar su capacidad de an~lisis de proyectos y de producir un flujo de proyectos financiables, por este motivo contratarf personas experimentadas en su preparaci6n y evaluaci6n. En el corto plazo, el mejor, y quiz«s ~nico" camino es el de  ANEXC 5 P4g. 22 contratar expertos for~neos y montar un programa para desarrollar esta capacidad como parte de un programa general de fortalecimien­ to institucional, de la forma arriba'recomendada. Por su posi­ ci~n con respecto a recursos y mercados. honduras tiene amplias oportunidades de expansi~n de su sector forestal, de tal manera que mejorar su capacidad de planificaci6n debe ser de prioridad absoluta. Existe una lista de ideas (ver ap~ndice 2). pero no hay estudios de factibilldad adecuados. 71. Un conjunto espec!fico de proyectos que merece especial atenci6n es el proyecto forestal yde industria forestal en Olancho (p~rrafos 76 a 89). Por razones pol!ticas yecon6micas, el pars y COHDE?OR est~n concentrando su atenci6n en esta ~rea con miras a una expansi6n mayor en el rubro forestal. 72. La planificaci~n de proyectos debe considerar las opor­ tunidades para la diversificaci~n de product OS I la utilizaci6n de madera rolliza de peque~os di~metros y de los desperdicios de las plantas industriales y del bosque; y la utilizaci6n de maderas de latifoliadas, particularmente de las llamadas especies secun­ darias. La totalidad del ejercicio de desarrollo de proyectos debe incluir en forma de objetivo e1 mejoramiento de la capaci­ dad t~cnica y administrativa local. Esto significa que el tra­ bajo de an~lisis de proyectos debe estar coordinado con los programas de capacitaci~n e investigaci6n de COHDEFOR. e !ntima­ mente ligado con la unidad de planificaci6n general. El Camnesino en la Ac~ividad Forestal 73. Uno de los problemas cr!ticos que enfrenta el sector forestal es e1 de 1a integraei6n del eampesino a los programas forestales. Esto debe lograrse porquel (a) la protecci6n del recurso bosque serd imposible sin la participaci6n y cooperaci~n del campesinador (b) los planes gubernamentales exigen una creciente contri­ buci6n del sector forestal al bienestar y los ingresos rurales; y (c) si la industria forestal ha de ser expandida significa­ tlvamente, se necesitarfn trabajadores y la fuente l~gi­ ca es el grupo de personas sub-privilegiadas que ya viven en las regiones forestales. 11 11 FAO ha estimado que en el caso de ser adecuadamente manejados, los bosques de Honduras podrIan proveer emp1eo directo a unas 70,000 personas (en el bosque y actividades de procesamiento). Ver FA07PNUD, Survey of Pine Forests--Honduras, Informe FAO/SF, 26OHon50, Roma, 1968. Esta cifra parece alta, pero no existe informaci6n disponible sobre la cual basar un nuevo cdlculo.  ANEXO 5 P4g. 23 Mientras existe concenso unfnime sobre la necesidad de integrar a la poblaci~n rural no sucede 10 mismo en cuanto a la mejor forma de~lograrla. Sin embargo, la Ley 103 especifica una forma a trav~s del "Sistema Social Forestal (SSP). COHDEPOR est4 si­ giliendo adelante con este programa mediante el establecimiento de cooperativas agro-forestales. 74. Bajo el SSP, los campesinos est4n organizados en coopera­ tivas u otras organizaciones similares. Estas est4n encargadas de proteger el bosque, bajo la direcci6n t4cnica de un oficial forestal de COHDEFOR. En compensaci6n, las personas en tales grupos recibir4n parte de los beneficios derivados del bosque. El ~nfasis inicial est4 en los productos resinosos (resina de pino) , en parte por las r4pidas utilidades y en parte por el ~xito obtenido hasta ahora por algunas cooperativas (ver p4rrafo 36) • 75. Un aspecto cr!tico del sistema serA la forma en que COHDEFOR defina el potencial agrIcola de terrenos de un 4rea forestal dada asignada a una asociaci6n. La ley dispone que COHDEFOR, en consulta con el Instituto de Reforma Agraria (INA) determinarA las freas agr!colas y ganaderas dentro de las zonas forestales. Tales terrenos ser4n traspasados a las asociaciones para su uso en la producci6n de alimentos. Se proporcionar4n cr~ditos. servicios t'cnicos y sociales y una infraestructura para ayudar a establecer comunidades viables. 76. Queda por verse 8i el SSP funcionarA en una escala mayor. Un punto es claro I es esencial que el ingreso del bosque que re­ ciban los miembros sea 10 suficientemente grande como para des­ incentivar actividades alternativas como la ganader!a extensiva y la agricultura n6made. De no sar as!, los participantes no proteger4n el bosque. Adem4s. COHDEPOR deber4 incluir una apli­ caci6n ampliada de quemas controladas planeadas en su programa de manejo. Esto ' (a) mejorar4 los potenciales agr!colas en 4reas designadas a este USC-l (b) reducir4 el peligro de incendios no intencionales vIa reducciones en la acumulaci6n de material combustible, y (c) mejorar4 1. regeneraci6n natural del pino, en ciertos sectores. 77. El pre-plan de desarrollo nacional indica la probable existencia de unas 500,000 hect4reas, actualmente soportando bosque, susceptibles de uso agrIcola- Estos terrenos deben ser. en cualquier instancia. identificados ydedicados a la producci6n agrIcola. Por otra parte, existen grandee superficies de tierras  ANEta 5 page 24 mejor capacitadas para la producci6n forestal que actua1mente se dedican a 1a agricultura, no obstante en forma extensiva y margi­ nal. Estos terrenos deben ser reintegrados a usos forest ales y los agricultores campesinos que actualmente los ocupan deben re­ cibir mejores tierras para cultivar u oportunidades alternativas de empleo en e1 bosque. El Sistema Social Forestal contempla el uso racional de la tierra dentro del sistema, 10 que implica, entre otras cosas, que los terrenos forestales denudados ser~n reforestados. Caminos v Maneio Forestal 78. El papel de SSP es cr!tico desde otro punto de vista tambi~n. Honduras debe establecer una administraci6n t~cnica para sus bosques 10 m~s pronto posible si el recurso ha de con­ tribuir al progreso de la naci6n con la tasa m~xirna posible. Esto es imposible sin rn4s caminos de acceso. Sin embargo, si la construcci6n de los caminos precede a la instalaci6n de un sistema de administraci6n, el bosque ser~ reducido por los colo­ nos que siguen (0 se adelantan) a la construcci6n de las vIas. Bsto significa que un mejor acceso a las regiones forestales .(por ejemplo la Reserva de Olancho) debe estar coordinada con y probablemente precedida por, la planificaci6n del manejo y la utilizaci6n de los recursos. De la misrna manera, este ~ltimo debe ir precedido por un esfuerzo por reacondicionar la mentali­ dad del campesino con respecto al bosque y a su protecci6n. Esto implica un programa complejo destinado a involucrar al cam­ pesino en 10 forestal de tal manera que logre obtener un ingreso en'esa actividad. Es as! como el desarrollo de la infraestruc­ tura est! Intimarnente relacionado con el ~xito del Sistema Social Forestal. 79. Es claramente imposible desarrollar un sistema t~cnico de administraci6n sin contar con las vIas de aoceeo adecuadas, tanto para las operaciones de explotaci6n como para el manejo y la protecci6n. Las 4reas forest ales mas importantesque adn quedan en Honduras no son accesibles (esta es una de las razones por las cualesa~n se encuentran forestadas). Si ha de desarro­ llarse un programa mayor de manejo y utilizaci6n forestal, como base de industrias forestales permanentes, es necesaria la construcci6n de vIas de acceso--~stas deben justificarse sobre la base del desarrollo regional a trav~s del tiempo, y no 80la­ mente sobre la base de las utilidades inmediatas de la explota­ ci6n forestal. 80. Sin duda se solicitar~ una considerable asistencia a las fuentes extranjeras de capital y experiencia para el sector forestal en los a~os venideros. Los p~rrafos siguientes esbosan posibles proyectos. mediante los cuales podrIa canalizarse esta asistencia.  ANEXO 5 Pltg. 25 POSlBLES PROYECTOS PARA AGENClAS EXTRANJERAS El Proyecto Olancno 81. Hoy en d!a, un aspecto importante en e1 campo forestal 10 constituye la forma de afirmar e implementar un proyecto para la reserva de Olancho. Es un problema de gran complejidad; hay varios cientos de millones de d6lares para el proyecto actual­ mente comprometidos y decisiones p~blicas que tendr4n gran impac­ to sobre la econom!a Hondure~a durante futur~generaciones. 82. El Departamento de Olancho contiene la,;mlts grande reser­ va de con!feras de Honduras y del resto de Centroam~rica. Se ha creado una reserva forestal que abarca mlts de 660,000 hectltreas de pino y unas 330,000 hectltreas de latifoliadas, aproximadamente; el Gobierno la ha seleccionado para su desarrollo intensivo. La meta final es el establecimiento de un gran complejo industrial, produciendo una gran variedad de productos forestales principal­ mente para la exportaci6n. 83. Existen, sin embargo, enormes obst4culos para el desa­ rrollo de Olancho. Entre estos se incluyen los problemas de pro­ tecci6nl la falta de acceso; las condiciones dif!ciles y de alto casto para las operaciones de madereo debido a la topograf!a del terreno, la resistencia de los aserradoeros existentes frente a 10 que ellos consideran una intromisi6n en sus territorios; la faJ. ta de informaci6n sobre el crecimiento y el rendititiento del pino bajo distintas clases de manejo; y la escasez de talento di­ rectivo para los proyectos en gran escala. El aspecto positivo mlts importantelo constituye la existencia de una gran reserva Madura d~ pinos (principalmente P. 90carpa)--unos 25 a )0 millo­ nes de m. Otro aspecto positiv~ es la considerable cantidad de informaci6n disponible acerca de la reserva de Olancho y su poten­ cial. 1I Un estudio realizado por la misiOn BID/FAO (la misiOn Cliff antes mencionada) incluye una revisi6n de las presiones poblacionales sobre el recurso, la tasa de agotamiento del recur­ so; las necesidades de infraestructuras; las posibilidades de manejo forestal y la mejor forma de organizaci6n y control local para realizar tal manejoJ los vol~menes madereros actualmente dis­ poniblesf y el potencial agro-forestal. Los resultados indican que la tasa de agotamiento es alta y que se require de una acci6n inmediata para impedir que se siga destruyendo el bosque. Se sugiere un;~mayor ~nfasis inicial en la producci~n de madera aserrada. 11 Adem4s de los estudios arriba mencionados, son documentos ~tiles: G. Pefialba, Proyecto de Pulpa y Papel de Honduras (Resumen HistOrico), COHDEFOR, 1974. Y J. Easton, Report to the lERD on the FAO/lBRD Mission to Central America on Potential Forest Industries Development, 197). La Corpora­ ciOn Internacional de Financiamiento (ClF) posee uno de los pocos archivos completos del 4rea.  ANEXQ 5 P~g. 26. 84. A continuaci6n del trabajo de Cliff, una firma consul­ tora canadiense, H. A. Simons, rea1iz6 u~ estudio de las opciones de industrializaci6n para Olancho. Se lleg6 a las siguientes con­ clusionesl 11 (a) la Reserva podrIa sopo;tar un complejo maderero utili­ zando unos 1,186,000 m /a~o de pino y algo de latifo­ liadas; (b) existen mercados para la producci6n; (c) e1 compleio d~ber!a comprender una planta de linerboard (3°),000 toneladas por a~o) y tres aserraderos (468,000 m /aPio); (d) las tasas de retorno del complejo ser!an satisfacto­ rias (tasa real de retorno sobre 20%); y (e) el empleo directo de ),000 personas. E1 empleo parcial e indirecto pod rIa alcanzar un total de 20,000 personas adicionales. 85. En Marzo de 1976, e1 Gobierno Hondurefio form6 un comit~ para 1a promoci6n del proyecto y di6 los pasos necesarios hacia su iniciaci6n a trav~s de las siguientes l!neast (a) estab1ecer un aserrade;o integrado en Corocito con una capacidad de 21J,600 m de madera aserrada y 11),600 m J de chips, con fecha proyectada de entrada en producci6n para Cctubre de 1979: (0) estao1ecer dos aserraderos satelites de 1a siguiente manera. Pueblo Viejo: 127,400 mJ aserrados. entrada en pro­ ducci9n, Mayo de 1980; La Uni6nl 127,400 m aserrados, entrada en produc­ ci6n, Enero de 1981; (c) estab1ecer una p1anta de pu1pa kraft y 1inerboard con una capacidad de 20J,000~tone1adas y 1a opci6n de 28,000 tone1adas de medic corrugado, 1a entrada en pro­ ducci6n seria entre Agosto de 1982 y Febrero de 198). 86. E1 15 de Mayo de 1976, e1 Presidente del BID firm6 un "Memorandum de Entendimiento" con personeros de los Gobit~rnos de Venezuela y HondUras estableciendo las bases de financiamiento del programa 01ancho. Se contemp1a una inversi6n de aproximada­ 11 H. A. Simons, Industria1izati6n of the 01ancho Forest Reserve (2 vol.) Septiembre de 1975.  ANEXO 5 pa:g. 27 mente US$415 millones. US$JJ8 millones serran para los aserrade­ ros y la planta de pulpa y yapel; 10 restante serra para finan­ ciar la infraestructura. 11 87. Este1'proyecto ha pasado por numerosas estapas desde su iniciaci6n en 1954-56, 'poca en que FAO realiz6 un estudio de las perspectivas para la producci6n de pulpa y papel en Centroam~rica. Los intentos pasados de establecer un complejo industriaL viable basado en la Reserva de Olancho han fracasado por una variedad de motivos. El presente proyecto at1n encara serios obst4culos, pero la mayor parte de los cuellos de botella pasados han sido elimi­ nados. Parece que al fin existe un desarrollo factible para el eirea. 88. El concepto del proyecto es acertado--un ~nfasis ini­ cial en la producci6n de madera aserrada, utilizando el bosque maduro de alta calidad que se encuentra disponible, con. una paulatina incorporaci6n de la producci6n de pulpa y papel a me­ dida que se mejoren los accesos y el manejo foreatal--siguiendo la recomendaci6n de la Misi6n Tripartita de Estudio del Sector en 1974. Se recomienda apoyar el proyecto en su concepci6n y desarrollarlo tal como se esboza m4s arriba. (Ver Ap'ndice ], un resumen informativo de la Reserva de Olancho.) Un Proyecto para Reforzar.: a COHDEFOR 89. COHDEFOR tiene la completa responsabilidad, como se ha dicho anteriormente, del manejo de bosques, la venta de madera, laorganizaci6n de las industrias forestales, y la comercializa­ ci6n en el exterior. At1n cuando se ha logrado un progreso sig­ nificativo desde el establecimiento de COHDEFOR, el Gerente y su personal reconocen la necesidad de un apoyo adicional para el desarrollo de pautas de manejo, investigaci6n aplicada, estudios de prefaetibilidad y de factibilidad a nivel de proyecto, y un programa de educaci6n e investigaci6n. 90. El proyecto propuesto para el fortalecimiento de COHDEFOR complementar!a los proyectos de cooperaci6n extranjera planeados y en existencia discutidos anteriormente, y estar!a totalmente coordinado con ellos. Proporcionar!al (a) especialistas y financiamiento para un sistema de in­ formaci6n, incluyendo un disefto para un flujo continuado de datos referente a 1a disponibilidad de recursos, usos y ventas; 11 La participaci6n del BID se espera totalizar4 US$103 millones, comenzando en 1977, y uti1izando recursos del Venezuelan Trust Fund, establecido en 1975.  ANEXO 5 pa:g. 28 (b) especialistas y financiamiento para una unidad de pre­ paraci6n y evaluaci6n de proyectos, incl~yendo un con­ sejero experimentado, de alto nivel; (c) especialistas y financiamiento para un programa aplicado de educaciOn e investigaei6n para cooperar en la solu­ ciOn de problemas t~enicos urgentes (por ejernplo, la proteceiOn, la regeneraci6n, los sistemas de explotaei6n, la comercializaci6n, etc.). 91. Es un proyecto de formaci6n institucional. Se recalca el hecho de que tendr!a que estar !ntimamente coordinado con las aetuales aetividades asisteneiales y que requerir!a de una pre­ paraei6n cuidadosa. El costo del proyecto aproximar!a los US$1.2 millones, principalmente en moneda extranjera. CDHDEFOR dispone de la capaeidad para absorber tal cooperaciOn. Proyecto Las Lajas 92. Este proyecto implicar!a en esencia: (a) montar'un plan general de manejo para unas 351,000 heeta:reas; . (b) desarrollar un programa de manejo intensivo para unas 74.000 hect!reas en el ~rea de Las Lajas; (c) desarrollar un programa para la utilizaciOn de la pro­ ducei6n maderera del a:rea 1/; y (d) desarrollar algunos eoneeptos referentes a la planifi­ caciOn del uso de la tierra y el manejo de renovales que pueden ser transplantados a a:reas simi lares en Honduras. 93. En eontraste con los proyectos de utilizaciOn de pino maduro, este proyecto est4 orientado principalmente hacia el manejo de rodales j6venes y regeneraei6n (ver Cuadro 1, Ap'n­ dice 4). La idea es eomenzar con las mejores tierras pot en­ ciales y extenderse paulatinamente al manejo de toda el !rea. 94. Las actividades a incluirse en este proyecto son como siguel (a) realizar un inventario forestal, estudios de suelo y de utilizaciOn; 1/ Entre otras casas. la producci6n de tableros de fibra puede ser una posibilidad, basada en raleos.  ANEXO 5 P~g. 29 (b) elaborar programas (proyectos) alternativos para e1 desarrollo; y (c) (tras haber seleccionado la alternativa m4s adecuada) estable¢er actividades de manejo y utilizaci6n. 95. Se contempla apoyo t§cnico y m!s adelante apoyo finan­ ciero para las actividades de utilizaci6n. Este proyecto podr!a incluirse en forma de sub-proyecto dentro de un proyecto m4s am­ plio de desarrollo rural para la parte nor-occidental de nonduras. Proyecto Forestal Cooperatiyo 96. Bajo la Ley 103, se le exige a COHDEFOR crear un "Sistema Social Forestal", 10 que b!sicamente significa cooperativas fores­ tales con las actividades principa1es de producci6n resinIfera, algo de producci~n maderera y producci6n forestal. 97. Como se ha mencionado arriba, existen unas 100 coopera­ tivas beneficiando a unas 15,000 personas directa 0 indirecta­ mente. (El n~mero de familias involucradas en cooperativas es de aproximadamente 2,000.) COHDEFOR quisiera aumentar considerable­ mente el movimiento cooperativo forestal, que beneficia directa­ mente a las familias rurales mfs desposeIdas. Estas cooperativas aportan ingresos suplementarios a los habitantes rurales. Debe recalcarse que la filosof!a es tal que las cooperativas no deben considerarse como actividad ~nica, sino m4s bien como suplementa­ rias a las actividades agrIcolas u otros tipos de empleo en las 4reas eooperativas. 98. No se dispone de una adecuada evaluaci~n de la experiencia hasta ahora de las cooperativas. Tal estudio es el primer paso en la consideraci6n de una mayor expansiOn del programa. que eventual­ mente, bien podr!a llegar a unas 150,000 personas. Sin embargo, juntando las impresiones de aquellos que han trabajado con las cooperativas surgen los siguientes juiciosl (a) los ingresos rurales pueden elevarse considerablemente (en relaci6n a los niveles iniciales)t (b) las cooperativas.han sido un elemen~o importante en ganar el apoyo para el programa de protecci~n en las 4reas en que ellasoexisten (los socios por primera vez ven el valor de la protecci6n de sus bosques del fuego); y (c) existeespacio considerable para 1a expansiOn del movi­ miento forestal cooperativo, siempre que se disponga de un adecuado apoyo tEcnico y financiero (DIFICOOP, una unidad del Ministerio de Econom!a, est4 ayudando con la organizaci6n de las cooperativas, bajo un contrato con  ANEXO 5 P~g. 30 COHDEFOR, pero no se dispone de una adecuada asistencia t~cnica/extensi6n). 99. Pareciera ser que ~sta es una ~~ea en que las institu­ ciones internacionales pueden prestar valiosa ayuda. Por este motivo se recomienda que se consideren los siguientes pasos: (a) proporcionar apoyo t~cnico para evaluar el ~xito inicial de las cooperativas y analizar los problemas que han sur­ gido en la implementaci6n de este programa; (b) en el caso de que la evaluaci6n indique potenciales favorables de expansi6n del programa, determinar la probable magnitud y coordinaci6n temporal de un programa forestal cooperativo que podrIa ser incluIao en un pro­ yecto/pr~stamo general de desarrollo rural, bas~ndose en las perspectivas comerciales, el potencial organizativo y el inter§s de la poblacion rural; y (c) encomendar a un equipo de planificaci6n (que incluya un especialista experimentado en organizaci6n rural) el dise~o de un proyecto. 11 Planificaci~n a Largo Plazo para La MosQuitia 100. COHDEFOR tiene inter~s en desarrollar un programa de desarrollo de m~s largo plazo para La Mosquitia (principalmente el Departamento de Gracias a Di6s, de menor densidad poblacional). 101. La escencia del programa puede resumirse como sigue: (a) en el~~rea ex;sten unas 192,000 hect~reas de pino (J millones de m en pie)~ (b) Nicaragua est! desarrollando un proyecto, al parecer exitoso, en el sector NicaragCense de La Mosquitla, que podr!a tener interesantes perspectivas para un modelo Hondure~o; y (c) actualmente la regi6n tiene una econom!a estancada y se est4 desarrollando ~uy poca actividad forestal. 102. La idea del proyecto ser!a comenzar en este momento con estudios de suelos e inventarios forestales, luego desarrollar planes de manejo y utilizaci6n forestal, seguido por la 11 Como ~ltimo punto referente a la 55F, cabe notar Que hace poco tiempo Guatemala envi6 un grupo de forestales a Honduras a estudiar las cooperativas forestales y actividades de pro­ dueei6n resin!fera con el objeto de desarrollar recomenda­ ciones para un programa similar en Guatemala.  ANEXO 5 P4g. :31 introducci6n de actividades de utilizaci6n apropiadas (se contem­ plan maderas y resinas inicialmente). 103. La informaciOn preliminar sobre los bosques con!feros de La Mosquitia indica 10 siguientel 1I (a) Superficie forestal virgen-de baja desnidad (44,000 hectdreas) virgen-de densidad media (57,000 hect4reas) virgen-de alta densidad ( 6.500 hect4reas) explotado-baja densidad (11,000 hect4reas) explotado-alta de'nsidad (23,5°0 hect4reas) (adem~s de 50,000 hect4reas de rodales de pino sobre los cuales no se dispone de informaci6n); (b) voldmen dt pino en pi~ 3 millones de m3 (en 4rboles de 30 cm. de di4metro sin corteza) - bajos voldmenes por hect4rea - alto potencial resin!fero. 104. Este programa requiere dOe financiamiento para un trabajo de inventario m4s detallado, desarrollo de la infraestructura, y las eventuales actividades de utilizaci6n. Debe recalcarse que COHDEFOR considera este como un proyecto de m4s largo plazo. Potencial~s para Otros Pr0yectos 105. Existe una variedad de posibilidades de proyectos fores­ tales que pueden tener m'ritos para el apoyo exterior en alguna fecha futura. Una nOmina de posibles proyectos presentada por COHDEFOR se expone en el Ap'ndice 2. S610 algun~sde estos pro­ yectos est4n 10 suficientemente avanzados para ser considerados para un apoyo de pre-inversiOn. Se incluye una planta de table­ ros de fibras y casas prefabricadas realizado por Jaakko Poyry and Co. ~ Tambi~n se incluyen proyectos de resinaci6n y desti­ lado, uno de los cuales, segdn se informa, est~ en etapa de fi­ nanciamiento as! como 10 est' el aserradero, de Agua FrIa (Yoro). 11 "Informe sobre el inventario forestal practicado en Los Pinares de La Mosquitla". Archivos de COHDEFOR. ~ Jaakko Poyry and Co. "Project Identification S~udy on the Manufacture of Fibreboard and on the Export of Wood Chips" y "Short Summary of Reports Concerning Construction of Pre­ fabricated Houses and Glued Laminated Structures· (July 5, 1976) • ...  ANEXO 5 P~g. 32 106. La misi~n recomienda que cualquier acci6n adicional en estos proyectos espere los pedidos del Gobierno. Necesidades de Financiamiento y Coordinaci6n 107. Cuando se realiz6 la visita de la misi~n en 1974, COHDEFOR habra estado funcionando s6lo algunos meses. El financiamiento su­ gerido por la misi6n para el desarrollo forestal, como se muestra en el Informe General, estaba basado en las condiciones e incerti­ dumbres prevalecientes en ese momento. Desde entonces COHDEFOR se ha desarrollado r«pidamente y es probable que se convierta en un vehrculo efectivo para la implementaci6n de programas y proyectos forestales. 1/ Por este motivo. los c!lculos iniciales de la misi6n probablemente fueron conservadores. Una mayor inversi6n en el desarrollo con base forestal en los pr6ximos cinco a~os puede justificar y es recomendada. LA DECISION CRITICA PARA EL DESARROLLO 108. Honduras enfrenta, hoy en dra, decisiones crrticas con respecto a la tasa de desarrollo y el usa de sus recursos conrferas en los pr6ximos diez afios. A la tasa actual de explotaci6n, la madera con!fera para aserr!o se agotarra totalmente en 20-30 a~os m«s. La producci6n de madera para el aserrro demora unos 40 a~os (a excepci6n de pequenas cantidades entre los aeos 35 y 40). De esta manera, suponiendo que no haya un aumento en la tasa de explotaci6n, habr!a un intervalo de 10 anos entre el momento de agotamiento de los bosques conrferos maduros y el momento en que se disponga de los terrenos regenerados y protegidos para la producci6n de madera aserrada. Sin embargo. durante los 6ltimos cinco anos m~s 0 menos, la tasa anual total de explotaci6n del pirio ha aumentado en aproximadamente 5% por a~o. De seguir aumen­ tando a este ritmo, inc1uso por s610 diez a~os, el inventario actual de madera aserrable serra agotado en menos de 20 aftos, dejando un gran vacro y en consecuencia un serio trastorno a 1a industria, desemp1eo, la p~rdida de mercados de exportaci6n y la escasez de madera aserrada en el Mercado dom~stico. Ya se nota una escasez de madera a nive1 local. 109. Como alternativa al presente camino de expansi6n, se ha sugerido una polrtica de rendimiento sostenido, f1ujo uni­ forme. Esto implicar!a una importante reducci6~ en los nive1es actuales de explotaci6~--a unos 2 mil10nes de m por afto, 0 una reducci~n de 500,000 m. (La reducci~n, en rea1idad, tendr!a que ser mayor, a no ser que se cumpla el supuesto de que Honduras es capaz, dentro de muy pocos a~os, de desarro11ar un programa efectivo de manejo/protecci6n.) 1/ Esta conclusi6n se basa principalmente en los resultados de una segunda visita del consultor forestal de 1a misi6n a mediados de 1976.  ANEXQ 5 P4g. JJ 110. Las perspectivas desfavorables de la balanza de pagos y. empleo de Honduras dificultan la defensa de una estricta pol!tica de flujo uniforme. En este contexto, una pol!tica alternativa, m4s favorable, serra la de continuar con aproximadamen~e la misma tasa actual de explotaci~n en los pr~ximos 7 a 10 a~os, despu~s de los cuales la situaci6n debiera sar re-evaluada. Suponiendo que los c4lculos actuales de existencias y ·crecimiento de madera aserrable son medianamente acertados, serra deseable, despu~s del per!odo de 7-10 a~os. reducir paulatinamente la explotaci6n anual hasta que. los nuevas rodales alcancen tama~os maderables (unos 40 aftos a partir del presente). El objetivo podr!a ser el redu­ cir la tasa de liquidaci~n del a~o 10 al a~o 40 de tal manera que en el ~ltimo afto (antes.de que los nuevos rodales est~n disponi­ bles) el volumen explotado sea aproximadamente equivalente a las necesidades dom~sticas. Los aspectos cuantitativos de esta pol!­ tica se presentan en el Cuadro llA. En el Cuadra llB se presentan datos comparables para la pol!tica de rendimiento sostenido y flujo uniforme. 11 Ill. Los supuestos de cada c!lculo sone (a) el establecimiento de un sistema efectivo de manejo y protecciOn en el futuro inmediatoJ (b) un gradual aumento en la eficiencia de conversiOn de latifoliadas de aproximadamente un 30% actual al orden de 60% en el a~o 11; (c) ning~n aumento de producci6n en t~rminos de elaboraci~n adicional de madera aserrada ni expansiOn de tableros contrachapados; y (d) entrada en producciOn de pulpa en el a~o 10 con expan­ si~n en el afto 25, basada primordialmente en residuos y raleos. 112. La mayor diferencia entre las alternativas puede obaer­ varae en t~rminos de empleo, nuevas necesidades de inversiOn y valores presentes de las utilidades de la exportaciOn de madera aserrada. (Se supone en ambos casos una misma producciOn de pul­ pa, y que el consumo domlstico permanezca constante y que ser! satisfecho con producciOn nacional. De esta manera, las dos alternativas entregan los mismos resultados en t§rminos de con­ sumo dom~stico y producciOn de pulpa.) 113. En el caso de la pol!tica favorecida (Cudro llA). e1 empleo aumenta en forma bastante r4pida en los primeros 10 a 15 11 No se presenta la alternativa de continuar con la presente tasa de aumento de liquidaciOn del bosque maduro, dado que la reduc­ ciOn del recurso pronto conducir!a a un grave problema econ6mi­ co de consecuencias naeionales.  ANE~Q 5 P4g. )4 a~os, despu~s de los cua1es comienza a dec1inar gradualmente hasta nivelarse en el a~o 40 a un nive1 de aproximadamente 1a mitad del nivel del ano 15. (Si existiera un aumento gradual en las activi­ dades de procesamiento adicional asociadas con la madera aserrada, la declinaci6n del empleo podrIa ser parcia1mente compensada, ya que tales actividades tienden a ser re1ativamente intensivas en obra de mano en terminos del n~mero de personas emp1eadas por uni­ dad de materia prima. Por supuesto que tambien existe esta posi­ bi1idad bajo la pol!tica de f1ujo uniforme.) En e1 caso de 1a po1itica de flujo uniforme (Cuadro lIB) el empleo aumenta gradual­ mente hasta el ano 15, despues del cual se mantiene al mismo nivel hasta el a~o 40. En otras palabras, 1a po1!tica de flujo constante proporciona una salida m4s estable para la mano de obra, pero e1 empleo total proporcionado durante los primeros 20 a~os es consi­ derablemente menor que bajo la po1itica recomendada. Dada 1a nece­ sidad inmediata de proporcionar oportunidades de empleo y de divi­ sas, se puede discutir que las ventajas de mayor empleo y mayores ingresos de divisas en los primeros a~os sobrepasan las desventajas de las disminuciones en los anos siguientes. En verdad. las decli­ naciones no tienen porqu~ ser quebrantadoras, ya que pueden ser com­ pensadas parcialmente por aumentos en la producci6n secundaria y por la elaboraci6n adicional de productos de madera aserrada de aeuerdo a las pautas arriba recomendadas. • 114. Aunque la inversi6n toma 1ugar antes, la pol!tica recomen­ dada imp1ica una inversi6n s6lo levemente mayor (US$ 1 mil16n m~s) que la pol!tica de flujo constante. (Las necesidades de inversi6n incluyen, en ambos casos, s610 aquella necesaria para nueva capa­ cidad durante el per!odo de planificaci6n. Tambi!n se necesitaria capital para el reemplazo y mejorarniento de 1a capaeidad existente.) 115. Los c4lculos de valores presentes de ingresos en divisas extranjeras suponen una tasa real de descuento de 10% (probable­ mente conservadora). La polttica de flujo constante produce un valor presente de US$ 94) millones, rnientras que la pol!tica re­ cornendada produce US$ 1,112 rnillones. De esta manera, 1a diferencia surna unos US$ 169 millones a favor de la politica recomendada. 11 Una tasa m~s alta de descuento aumentar!a la diferencia entre las alternativas en favor de la pol!tica recomendada. 116. Los c4lcu10s se basan en 6rdenes muy groseros de magnitude Se requiere de un an~lisis mucho m~s detallado antes de poder emi­ tir un juicio firme. ZI Es probable que los profesionales foresta­ 1es favorezcan una pol!tica conservadora de rendimiento sostenido 11 Ya que los acontecimientos en el campo de la pulpa y papel se supusieron iguales bajo las dos alternativas, esto no afectar!a la difereneia entre ellas. 10 mismo es v4lido con respecto a la producci6n de madera aserrada para consumo dom!stico. ZI Por ejemplo, es probable que un an!lisis m4s detallado indique pol!ticas distintas para distintos puntos del pats.  ANEXO 1 P~g. 35 a trav~s de un per!odo de 40 a~os, 0 m~s; los economistas favore­ cer!an un per!odo menor de liquidaci6n, 30 afios mfs 0 menos, en reeonocimiento de la alta tasa relevante de descuento y las resul­ tantes diferencias en costos de oportunidad. En cualquier caso, deben pesarse las consideraciones tanto t~cnicas como econ6micas, junto con las posibles oportunidades alternativas para el capital y mano de obra en los ~ltimos aftos de explotaci6n maderera de los bosques viejos. La pol!tica recomendada y sus alternativas deben ser cuidadosamente estudiadas en este contexto. Mientras tanto, una cosa es segura: si Honduras no emprende de inmediato un pro­ gram a de manejo forestal (incluyendo protecci6n) y de mejoramiento de la industria forestal (de acuerdo a las pautas recomendadas anteriormente). no pasar«n muchos afios hasta que el pats se en­ frente a un importante quiebre en una de sus m~s importantes actividades econ6micas.  Figura I. ORGANIZACION DE COHDEFOR, 1976 "--.~-~~~ti~~ . "\ [---L~---- -,,-··---[-";~'dit~';i';- 'j - ... ­ -[g:~:~!!--L-- [-----------..! C >---____ - _____.1 [~~~;I~'~~S'-l Planifioaci6n ~~ I capadt,:~}~J I~~-~_-~~ -G~=h~L-I--~i~~e~t~~-:_-!:..-] _ BO~qU-~ -----;;;:~~~~I--[~I-::~;~-iCal_ Adminis-j I ,! ra ci -'l_ 6 Adminis- 1; rae i 6 ~ -f Anali-siSlI ere d i t i cl 0 [Distritos F 0 r e-" t.".1.~.". rManejo e I __-:T ~ .".d u. tE_1."-.rl~ en t a "..1 @on-;'-;;j~~~-s-U [l'_~.':.ni e?s --J I I ~ .__ (lenera__ _ ___.._____ Capaci taj .J -:1 It :I ] Embar- r------- '---J T_~~~f~~_ tlr.~_~~~J I~_obranza~ t!..r~~_~~_:!~!1_ng~~~~~~~_ ~_~~"~_,...____:.._ ~~.~~~ct~~_j I rXil'a'st'eci:"l miento I Pre;up;;;;'t-J --------~ BUSist~m~-s~L cia1 For." P~~i~~~o 'g~~~~~~r~:1 Olancha ci6n' 't'supervIsi6nfJ -.--.,-.--..----..-- I c .._ ..." . . ..... ...J I .......".....-_____ ........ "" .... __ ~ ".-.. --_.._ .._---__...._ _1 ~Desarr01fOl I roce'sa.mlen. tol, de InforIE~~t~!.!...J nst! tucia~;lll (Ap'gYQ..~IPJ__ Apoyo-,.. _I _!proyecto I T~n.tc.~d T ____._EAO._J f proyeeto ,__crnA_l - 1_, -:;:-::"1 I I =?~~_~. ~~all I!~te~~_~_~.~~ - - -.... -- .. ~ [~r~~:;_c~oJ1ill~ . I fc~:i~~!~~~e _____1?,,,,-,,,__ .. -___I ~!~ o,k Fuentef COHDEFOR  ANEXO 5 Pdg. 37 Figura 2: ORGANIZAClm; DEL DIREGTCRIO DE RECURSCS KATURALES REI'WYAELES (MINISTERIO DE REGURSOS NATURALES). Mayo 1974 Administraci6n i JEFE I S-----II l....-_-..-_ _ Asesor!a T~cni ca I r--~l Departamento de Pesquer!as 1 H BioloJ;!a Marina (DivisiOn) I ~ Pesouer!as Marinas I ---! Pesquer!as del Interiorl I ~ Control e InspecciOn I 1-------11 Departamento de Vida Silvestre I ~ Desarrollo y Protecci6n (Divisi6n)I Parques Nacionales i --1 Control e Inspecci6n I ~-~I Departamento de Ecolog!a I ~Protecci6n (Divisi~~ Fu~nte: Ministerio de Recursos Naturales  ANEXO 5 Pllg. 38 .c..uadro 1: DISTRIBUCICN IJE BOSQGES Y VCLUYiENES fi:.tJ)EREROS POR DISTRITOS FCRESTALES A. Con!feras Superficie Volumen Comerclal Ha m3 madera rol1iza Francisco Moraz~n 429,448 12,185,249 E1 Para!so 127.570 4,132.625 Yoro 304,523 11,035,518 Comayagua 558,940 17.607.278 Olancho (Sur) 11 204,540 2,469,JJ.60 Nor~Occ±denta1 zI 166,945 7.512.5 0 0 Cop~n 247,800 11.151,450 La~Mosquitia J./ 158.b.OO 5.544,000 Total 2,198.166 71.638.073 B. Especies Latifo1ia~as Superfi9ie km2 Nor-Occidental 13,900 La Mosquitia 6,800 Olancho 14,540 Yoro 2.100 Total 37.540 11 No incluye 27.418,)03 mJ en el#area reservada para e1 Proyecto de Pulpa y Papel. ~ Promedio de 45 mJ/ha, basado en datos del Distrito El Para!so. J./ D el Proyecto de Inventario Naciona1. 1975. Fuentes COHDEFOR, Plan Operativo, 1976.  ANEXQ 5 P~g. 39 CUadro 2: DISTRIBUCION DE ASERRADERCS POR CA?ACIDAD, 1973-75 Capaeidad de Produeei~n Capaeidad Rela­ N'dmero de Planta.$ ADl.U~,l Aa§:c:ag~toll1 :t~:la al ~otal E~la~l:l~ al ~Q~al Millones de PM 17 No. % % Menos de 2 86 19·4 65 2 a 3 20 16·3 15 3 a .5 14 16·5 11 5 a 10 6 15·4 5 10 a 15 3 12·3 2 15 a 30 ---1 20.1 ---'. TOTAL .lJ.Z. 100 1.00 11 Pies Madereros Notal La planta m4s grande obtuvo una produeei~n de 26 mil10nes de PM en 1973. Los e4leulos para 1975-76 indican 146 aserrade­ ros eon la siguiente distribuci~nl Capacidad/Ano No. de Plantas Menos de 2 millones de PM 93 2-5 mi1lones de PM 37 Mfs de 5 millones de PM ...lQ. 146 Fuentes. COHDEFOR, Gerente de Industrias, y Plan Operativo, 1976.  ANEXQ S P1g. 40 Cuadra JAI PRINCIPALES PROr:;UCTOS FORESTALES DE IMPORTACION 1968 1970 1ill. ~ ------------- US $ Miles --------------- Tableros 374 655 2JJ 207 Papeles y Cartones 14.922' 13,272 1'1,067 25.960 Total 11 15.312 13,927 15,302 26,167 11 lnc1uye productos menores. Puente: FAO. Anuario de Productos Forestales, Roma, 1976, y estad!sticas de comercio SlECA para 1974.  ~uadr~1 IMPORTACIONES DE PRODUCTOS DERrVADOS DE LA MADERA, CIF. 1969-13 1222 122 0 1221 12Z~ .lqZ) ~ ~~ Valor Q.ru!.L. 1Jl.l..Qr. ~ ~ ~ Ya.l..Qr. !llUlL.. Y1lli!.r. '000 kg L'OOO '000 kg L'OOO '000 kg L'OOO '000 kg L'OOO '000 kg L'OOO Carb6n vegetal y 1efta 12 12 1 1 Ro111zos y cuartones 27 4 50 6 71 9 32 4 43 6 Mad~ra desbastada 0 slmp1e­ mente trabajada 797 191 22 7 4 1 8 Coreho en bruto y desperdlelos 1 3 1 3 3 .5 5 Pu1pa y desperdiclos de pape1 33 1 1 1 3 1 8 3 Productos vegetales en bruto. no comestibles n.e.p. 291 497 285 536 399 636 293 144 838 979 Chapas y maderas tercladas. p1anchas, etc. 2,079 1.111 2.656 1.382 233 158 655 468 483 334 Contrachapados (plywood) 1.742 1,028 2,273 1,198 141 95 577 402 364 244 Otras maderas 337 143 383 134 92 63 78 66 119 90 Manufacturas de madera n.e.p. 148 190 401 438 93 123 280 309 147 234 ~anufacturas de corcho 66 104 109 166 108 156 76 117 15 32 Panel 40,172 13,248 45.855 16.86.5 60.787 20,164 44.841 15,968 .55.911 24.072 Car"t6n 43.443 10.776 38.253 9.528 44.212 1.5.425 47,888 13.951 34.031 12.319 Cartulina 229 135 208 150 349 259 297 214 31+0 289 Balsas de pape1, cajas de cartOn, etc. 3.255 2,492 2.648 2.215 831 1,034 576 848 478 678 Papel de escrib!r, sobres. cartas posta1es, tarjetas postales. etc. 151 160 46 76 32 66 48 94 m 94 155 Cuadernos. 1ibros de contabl­ 1idad. 11bros en blanco. etc_ 98 273 100 31.0 81 277 94 314 330 758 Artrculos de pu1pa de pape1 y eart6n n.c.p. 3.319 3.377 2.185 3.3,6 1,409 2.486 2.137 2.998 1.799 3,013 Mueb1es de madera y accesorlos 212 5212 321 1,221 25 100 58 122 26 144 Total 94.326 33.226 93.8 03 36.'.57 108,647 40.897 97.292 36,209 94,544 43.022 ~~ "'"Z Qtlt9 • >< .(':" 0 II Prellmlnar. I-' Fuentes Banco Central de Honduras, 1974 y BID/FAO Informe Cliff, 1975.  ANEXO 5 pa,g. 42 Cuadro 4AI PRINCIPALES PRODUCTOS FORESTALES DE EXPORTACION 1968 l2.7.Q ~ l.2.Z9:. -------------­ US$ Miles --------------- Madera Aserrada 12,943 16,211 27,108 40,299 Contrachapados 85 181 4 1,104 Pape1 y CartOn 1 4 36 36 Total 13.029 16.396 27,148 41,439 Fuentes COHDEFOR, Plan Operativo, 1976 (madera aserrada y contra­ chapados). Pape1es y cartones de estadIsticas de comercio SIECA.  Cuadro 4B '- EXPORTACIONES DE PRODUCT OS FORESTALES ELABORADOS Y EN BRUTO. 1969-7) (en millones de M) y L) Cl.5digo 1222 122 0 1221 12Z~ 1971 Cant. Valor Cant. Valor Cant. Valor Cant. Valor cant. Valor MAD£:BA J::N llBUXQ Rollizos de cedro y tro­ zas para aserrar y para chapas 242-02-00-A 235 58.814 82 22,816 )81 93,093 104 18,336 j 112 30.452 Rollizos de "Pinus oocarpa" 242-02-00-B 14.673 1.471,191 10.48) 1.067,)00 7.495 773.223 8.732 964.524 13.622 2.094.216 Rollizos de otras contferas 242-02-00-C 10 6.538 69 5.859 Caoba. ~bano. y nogal en rol1izos y trozas 242-0)-00-A 248 61.225 1.50 7 271.523 1.3)9 223.778 1.664 )07.191 581 127.290 Granadl110. palo de ro­ sas y palo de sangre 242-0)-00-B 788 268.768 1.048 249.781 45 0 183.244 )45 1,27.239 )6) 1)7,340 Otras maderas no cont­ feras 242-03-0 0-C 48 4,719 15 1.254 )1 18,191 Sub Total Madera No E]aborada 16,002 1.871.256 13.135 1,612,673 9.665 1.273.335 10,845 1,417.291 14,778 2.41).)49 MADESAELABORAOA Postes varios tipos 242-09-00 33 3,614 84 6.330 50 3.526 612 98.713 50 3 50.644 Durrnientes 243-01-00 4.903 339.189 7.352 510.268 2.636 184,807 2.494 166,651 Cedro (incluye macho trabajado) 243-02-00-A 438 62,351 144 34.253 52 10.893 433 97.177 45 6.831 Pinus oocarpa "parquetM y aserrado 243-02-00-B 357.485 2(.359.512 350.32329.404.393 377.566 3~24.066 471.792 6O~66,297 570,206 73.972.06) Otras contferas 11 24)-02-00-C 376 39,479 - - 22 4,844 Caaba. ~bano y nogal 11 24)-03- 00-A 4.770 711.950 5.233 835.348 5.266 ~057.713 6,861 1.570.182 5,206 1,662,9)1 Granadill0. palo rosa y palo sangre 11 243-03-00-B 5 2.044 202 14.548 42 ),526 c..ez 106 106 52.)70 Otras no contferas 11 24)-03-00-c 1.)30 114,826 26 5,998 37 11,138 1,200 45 1).52) Sub ·Total Madera Jlaborada 169.140 $.612.965 161.164 10,811,118 185.64917.095.662 9-28.191 5~.271 576.111 75,761.20L­ TOTAL GENERAL 385.342 JJ.504.221 376.49932,423.811 395.31438.369.004 493.0)754.217.564 590,911 78,176.554 11 Aserrada. cepil1adas, amachimbradas, etc. ,~ Fuente. Banco Central de Honduras. 1974 y BID/FAD estudio Cliff. :~. . -C:' , o ""  ANEXQ 5 P4g. 44 Cuadro 51 PRECIOS RECIENTES DE PINO DE EXPORTACION !2ategorta 11 l..2.2§. Ab r i 1 1974 .lI .l2.7.Z. !tI ------------ us $ por mil EM cif ----------- Genoa prime } 480 265 ) Amended Geona prime ) 295-330 ) ) } 380 220 Clear Saps ) ) 200 Rough and planed - Caribbean 190 Rough - South America 250 250 "Commons" 2.1 170-185 135 11 Incluso dentro de las categor!as, los precios var!an considerable­ mente segdn el mercado de destino, Europa, generalmente paga los mejores precios y el Caribe los m4s bajos. Debe notarse que las definiciones y est4ndares pueden varias en ciertas categortas, haciendo dif!ciles las comparaciones de precios. ZI Se compara, probablemente con "rough and planed - Caribbean" y "Rough - South America" • .lI COHDEFOR, Informe Semanal, 30 de Abril, 1974. !tI Informe Copino (citado en el texto). 5/ Precios m!nimos estimados, COHDEFOR Draft Budget, 1976, e informa­ ci6n de cifras recientes de exportaci6n.  ANEl);O 5 P4g. 45 Cuadro 6. CONSUMO INTERNO DE PRODUCTOS FORESTALES, TOTAL Y PER CAPITA, HONDURAS Y CENTRO­ AMERICA Oentroam~rica por Honduras, por Mil Habitantes Producto Unidad !o:t~l Mll IiaQi::tan:t!Ui Aao 1970 4/ Miles de Unidades Unidades Unidades Madera Aserrada M3 128 .l/ 47.4 11 Contrachapados M3 7.6 2.1 2·7 Y Papel y CartOn Ton.M 93.1 J/ 34.5 J/ de los cualesl Papel PerH~dico " 2.1 0.8 Imprenta y Manuscrito " 2.6 1.0 Envases " 39.0 14.4 Otros " 49·4 18·3 .l/ Plan de Desarrollo Nacional, borrador in~dito,Diciembre 1973. La informaci~n se refiere a 1973. y Afto 1972. J. Agttero, J. Baker, y M. Jerezano, Informe sobre los Problemas del Mercado de Plywood en Honduras, Abril, 1974. Factores de conversi~n ~e 78 planchas por tonelada m~trica y 0.65 toneladas m~tricas por m • J/ A~o 1972. Basado en estad!sticas de importaci~n (Ya que la produc­ ci~n y exportaci6n dom~stica es insignificantes en relaci~n a las importaciones). La mayor parte del papel y cart6n se utiliza para envasar bananas. ~ Basado en F. Wadsworth, Forestry Potential and Its Development in Central America, 1971, y CEPAL/FAO/UNIDO, Regional Consultation on the Development of theFForest and Pulp and Paper Industries, May, 1970.  ANEXO 5 PGtg. 46 Cuadro 7: PRODUCCION DE PRODUCTOS FORESTALES PRIMARIOS POR VALOR, ANOS SELECTOS .lI 1960-62 1970-72 Cambio en Producto f:t:0M!i!!;U 0 Anual f:t: om !i!dlo Anyal !i!l P~:t:!odo ---------­ miles de L ---------­ % Trozas de exportaci6n 3,139 1,032 -67 ConIferas (2.563) (522) -80 Latifoliadas (576) (5l0) -11 Madera redonda utilizada 1,877 2,874 53 Durmientes 492 441 -10 Lefia 23,984 28,528 19 Trozas de Aserrado 10,450 21,549 106 Uso industrial (9,825) (20,714) 111 Uso ;rural (625) (835) 34 Trozas paracchapas 86 141 64 otros productos fores­ tales 21 4.235 5.273 ...ll Total 44.261 59.838 -15. .lI No incluye productos forestales procesados. ZI Incluye Liquidambar, resinas y similareso Fuente: Banco Central, y Secretar!a T~cnica de CONSUPLAN, de la forma presentada en el Plan Nacinnal de Desarrollo, borra­ dor in~dito, Diciembre, 1973.  ANEXO 5 P4g. 47 Cuadro 8. PROPOSICION DE PRESUPUESTO OPERACIONAL PARA COHDEFOR, 1976; Y DESEMPE~O, 1975 1975 1976 ~ Presupuesto Presupuesto ---------------~- L Miles ----------------­ Ingresol:a Venta de Madera Aserrada 77,507 2.1 92,000 101,400 Venta de productos del bosque 6,731 7,300 8,418 Otros ingresos operaciona1es (600) 600 1.139 Total 84,838 99,900 110,957 Costos de Ventas Madera aserrada 57,118 71,000 72,300 Otros productos del bosque 995 2.800 1.900 Total 58,113 73,800 74,200 Ingreso Operacional Bruto 26,725 26,100 36,757 Costos de Operaci6n (14,000) 14,000 17,400 Uti1idades despu~s de Costos 12,725 12,100 19,357 11 Borrador del Presupuesto, 1976-77. 2.1 L 79,220,000 por ventas menos L 1,712,000 por transporte y Promoci~n. Fuente. COHDEFOR.  ANEXQ 5 P~g. 48 Cuadro 91 ESNACIFORs EGRESADOS, 1969-75 Y MATRICULA EN 1976 A. N~mero de Egresados por A~o y Niv~l T~cnico T~cnico T~cnico T~cnico A50 I 11 II 21 III 3/ IV 41 Total 1969 5 5 1970 15 15 1971 7 13 20 1972 2 14 ( 2) 16 (2) 1973 11 17 28 1974 2 1J (1) 9 (2) 24 (J) 1975 17 (5) 1J (1) JO (6) Total 29 40 ( 2) 47 (6) 22 (J) 138 (11) B. N-4mrro de Estlldiantes Matricu1gdos por Curso en 1976 51 CUrso ~~cnico III ~~cni~o IV ~o:tgl I J5 (3) J5 (J) 71 II 28 (6) 21 ( 2) 49 III 20 (4) 20 Total 64 (9) 76 (9) 140 1I Guardas Foresta1es. ~ Bachi11eres Foresta1es. j j Peritos Foresta1es. y Das6nomos 3/ La distribuci6n de matr!cula extranjera por nacionalidad y por nive1 para 1976 ess t6cnico III Nicaragua, dos estudiantes en I. Rep~b1ica Dominicana, un estudiante en I. Panam~, dos estudiantes en II. Guatemala, tres estudiantes en II. Costa Rica, un estudiantes en II. TEcnico IV Republica Dominicana, un estudiante en I. Nicaragua, dos estudiantes en I y uno en III. Costa Rica, un estudiante en II y uno en III. Panam~, un estudiante en II y uno en III. Guatemala, un estudiante en III. Fuentes ESNACIFOR, Escue1a Nacional Forestal.  ANEXO 5 P4g. 49 Cuadro 10: PERSONAL FORESTAL Y DE LA INDUSTRIAL FORESTAL, REQUERIMIENTOS ADICIONALES, 1976-85 P;tsu;1ycc1 60 Adminis- Ano Manejo Exp1otaci6n Ase;t;tade;ta Oja:o~ t;t~~16D :ro:t~l ltliTY P T ? j' P T P T P T 1976 39 256 36 25 0 9 44 9 9 103 559 1977 95 445 39 273 10 48 14 14 158 780 1978 20 8 43 301 10 52 7 7 80 440 1979 J/ 25 100 43 302 10 52 8 8 86 462 1980 15 60 47 333 11 57 6 6 79 456 1981 7 28 50 349 12 60 7 7 76 444, 1982 29 135 57 399 12 63 9 9 107 606 1983 !V 14 56 60 464 13 66 22 44 10 10 119 640 1984 35 207 63 482 14 69 22 44 13 13 147 815 1985 67 572 15 74 22 44 10 10 114 700 11 Profesiona1. ~ T~cnico, sobre 1a base de un t~cnico por cada 3,000 a 4,000 ha bajo manejo. 11 Afto de entrada en producci6n de los nuevos aserraderos. ~ Afio de entrada en producci6n de 1a planta de pulpa y pape1. Fuentes JOs~ Flores R. y J. R. Buearey B., ope. eit, Marzo 1976.  Cuadro llAI VALOR DE LAS EXPORTACIONES FUTURAS DE MADERA ASERRADA, NECESIDADES DE EMPLEO E INVERSION BAJO LA ALTERNATIVA PROPUESTA DE DESARROLLO A (PERIODO DE PLANIF'ICACION DE 40 ANOS) 1.1 Explotaci6n Producci6n de Madera de Madera Consumo Exporta- Valor de la Empleo Nueva Inversi6n Afto As~~raga g~ PJ~Q Aserraga Interno c16n EX~QrtaQi6n Acumu1~tiyo en e1 Per!odQ { '000 m3 ( r ------------('OOOm3s)------------(US$ millones) (No.) (US$ millones) 1 2,540 787 110 677 67.7 10,230 12·3 5 2.540 1,067 132 935 97·2 13,870 14.2 10 2,440 1,391 169 1,222 133·2 18,080 0.6 15 2,340 1,404 215 1,189 135·.5 18,250 0.0 20 2,210 1,326 274 1,052 125·2 17,240 25 1,895 1,137 350 787 97·6 14,780 30 1,67 0 1,002 447 555 71.6 13,020 35 1,445 867 570 297 39.8 11,270 40 .220 732 12:l 5 --~ . 2.520 Total 81,150 YP @ 10% 27·1 $1,112 mil10nes 1.1 Exp1icaci6n y supuestos en e1 texto. Fuente I Misi6n. !~  Cuadro lla. VALOR DE LAS EXPORTACIONES FUTURAS DE MADERA ASERRADA, NECESIDADES DE EMPLEO E INVERSION BAJO LA ALTERNATIVA PROPUESTA DE DESARROLLO B (POLITICA DE FLUJO UNIFORME Y RENDIMIENTO SOSTENIDO) 11 ExplotaciOn Producci6n de Madera de Madera C~onsumo Exporta- Valor de la E;mpleo Nueva InversiOn AftQ Ase~~ida ~~ fl~o Aserrada Interno ciOn Exportaci6n AcumulatiYo en el Perlodo ( • 000 m3 (r ------------('000m3s)------------{US$ millones) (No.) (US$ millones) 1 2.037 631 110 521 52.1 8,200 9·9 5 855 132 723 75·2 11,110 13·5 10 1,161 169 992 108.1 15,090 2·7 15 1,222 215 1.007 114.8 15.890 0.0 20 274 948 112.8 15,890 25 350 872 108.1 15,890 30 447 775 100.0 15,890 35 570 652 87.4 15,890 40 J.Zl .Ji2.5. 6B~8 15.890 Total 81,500 VP @ 10% 26.1 $943 millones 11 ExplicaciOn en el texto. Fuentes MisiOn. :"t1~ ~  AHEXO 5 Ap~ndice 1 P4g. 1 COHDEFOR Y el Desarrollo del Sector Forestal Hondure~o, An4lisis del Problema y Estrategia Propuesta para el Desarrollo del Sector OBJETIVQS Asegurar la protecci6n Aumentar la producci6n J. Aumentar los de la tierra y la efi­ y diversidad de pro­ ingresos en ciencia en el abaste­ ductos madereros, op­ divisas ex­ cimiento de madera; timizando el uso del tranjeras y madera adecuada para recurso forestal, las oportuni~ usos actuales y nuevos; creaci~n de empleo, dades de ex­ mayor participaci6n del valor agregado por el portaci6n. sector rural en los re­ uso del bosque, y 0­ tornos de las zonas tros por el estilo. forestales. ESTRATEGIA Problema I Soluci6n Propuesta Inadecuada capacidad administra­ .. tiva/manejo de COHDEFOR para en­ frentar todas las responsabili­ dades. Esto es producto de las (a) falta de suficientes pro­ (a) Aumentar los programas de fesionales y tfcnicos capa­ capactiaci6n. Contratar citados y experimentados profesionales extranjeros para la administraci6n, en forma directa. planificaci6n y trabajos de desarrollo de proyectos, investigaci~n aplieada, de­ sarrollo de sistemas de in­ formaci6n de manejo, comer­ cializaci6n y otras funcio­ nes en COHDEFOR; (b) falta de procedimientos ad­ (b) Contratar consultores y/o ministrativos 10 suficiente­ profesionales extranjeros mente clarost poca delegaci6n que complementen al perso­ de responsabilidad y controles nal local y colaboren en insuficientes sobre la toma de los programas de capacita­ decisiones descentralizadas; ci6n. Considerar a los voluntarios del Cuerpo de Paz con los forestales de campo.  ANEXQ 5 ip~ndice 1 P~g. 2 (c) falta de planificaci6n en (c) Desarrollar procedimientos COHDEFOR con respecto a administrativos detallados, nuevos programas y coordi­ incluyendo chequeos y con­ naci6n de programas exis­ troles de rendimiento. Uti­ tentes con los nuevos. lizar los consultores del proyecto PNUD/FAO .asI como otros consultores para acon­ sejar sobre dise~o de siste­ mas y especIficos. Poner en acci6n la unidad de planificaci6n central para coordinar el desarrollo del sector, fijar normas para proyectos y desarrollar un programa de financiamiento y programa de investigaci6n prioritario. Establecer una unidad central de .proyectos que realice el an41isis y evaluaci6n de pro­ yectos y que coordipe los insumos de los jefes t~cnicos divisionales en las proposi­ ciones de proyectos. Utili­ zar consejeros 0 analistas de proyectos extranjeros y experimentados. Problema II SolyciOn propyesta Desarrollo t'cnico inadecuado del sistema de manejo de bosques, tales como protecci6n, utilizaci6n y Sis­ tema Social Forestal que incentive la participaci6n rural en la pro­ tecci6n y manejo/explotaci6n. Estas debilidades surgen det (a) escasa informaci6n sobre las (a) Contratar consultores 0 em­ !reas forestales, tales como prender un proyecto de ase­ vol~menes, potenciales de cre­ sor!a t~cnica para el dise~o cimiento, costos de maderas/ de un sistema de informaci6n transporte y ningun sistema de bajo costo que proporcio­ que la genere, clasifique y nar!a informaci6n sobre status/ analice. Esto incluye infor­ potenciales del recurso per maci6n sobre interacci6n ~rea, disponibilidad/ventas, agr!cola-forestal y planifica­ explotaci6n y destine de la ci6n del uso de la tierra; madera,  ANEXQ 5 Ap~ndice 1 P!g. ) (b) falta de un sistema de pre­ (b) Desarrollar un sistema de cios de madera en pie basado precios, incluyendo informa­ en e1 m§todo residual del ci6n de costos de las unida­ mejor uso, des de operaci6n. Guardar contra precios que eliminen a los productores privados. Probar varios sistemas antes de seleccionar uno. (c) infraestructura de transporte (c) Desarrollar un plan d~ trans­ inadecuado para el manejo del porte relacionado a los pla­ bosque. nes de expansi6n de manejo y utilizaci6n forestal. Los caminos permanentes deben te­ ner en cuenta el desarrollo regional adem4s de los fines forestales. Preferir los caminos permanentes que sir­ van los prop6sitos de desa­ rrollo general adem4s de los de utlizaci6n forestal, sobre los caminos temporales. Problema III Soluci6n Propuesta Inadecuada expansi6n de la capacidad de procesamiento para:ut±lizar los recursos a su potencial, cumplir las exigencias del Mercado y contribuir al empleo, ingresos y divisas. Los planes existentes no han mejorado la eficiencia. Las prinoipales limitan­ tes sonl (a) falta de proyectos financiab1es (a) Proceder con e1 trabajo de para una significativa expansi6n prefactibilidad y de factibi­ de la producci6n. Estos estu­ lidad para los nuevos pot en­ dios son esenoiales para asegu­ ciales de inversi6n y obte­ rar el financiamiento externo e ner ayuda externa para ayudar incentivar los programas inter­ a lograr las normas interna­ nos de inversi6n; cionales de asistencia finan­ ciera. Comenzar a desarrollar las capacidades administrati­ vas en materia de proyectos. Reconsiderar las prioridades de inversi6n, incluyendo la expropiaci6n de las unidades privadas de operaci6n.  ANEXO 5 Ap~ndice 1 P4g. 4 (b) falta de suficiente personal (b) Desarrollar una unidad de pla­ t~cnico nara desarrollar un nificaciOn en COHDEFOR respon­ flujo de-proyectos financia­ sable de la preparaci6n de un bles; flujo de proyectos que cumplan los criterios internacionales de financiamiento. Esto im­ plicar!a la obtenci6n de un . consejero del 3anco Mundlal/ BID 0 asesor!a t~cnica de mAs largo plazo con capacitaci6n del personal local. (c) dificultad en la mantenci6n y (c) Desarrollar normas y clasifi­ mejoramiento de la iniciativa caciones de productos que nrivada e incentivos de inver­ sean aceptadas en mercados de ;i6n. . exportaciOn especrficos y que sean claros y aceptables para los productores·locales. Desarrollar un sistema de precios que mantenga la ini­ ciativa privada y logre un m4ximo retorno para el pars, as! como al mismo tiempo ase­ gurar el usa eficiente de la materia prima. Puede usarse temporalmente la negociaciOn de precios con los productores, pero es indeseable en el m4s largo plazo. Problema IV Soluci6n Propuesta Inadecuada capacidad para aumentar la eficiencia en la comercializaciOn de productos forestales y aumentar las ventas a su potencial m~ximo, principalmente porI (a) las normas y controles de cali­ (a) Desarrolar normas para pro­ dad y dimensiones existentes no ductos que est~n de acuerdo favorecen la m4xima eficiencia con los requerimientos inter-' y ventas. Existe tambien un nacionales. Las normas deben problema en la comercializaciOn reflejar calidades y tama~os _ de productos de menor calidad de maderas existentes en que se producen naturalmente Honduras. Contratar expertos con los de m~s alta calidad; en comercializaciOn de pro­ ductos madereros. Desarrollar mercados internos para las calidades no exportables. Considerar el MCC, con ade­ cuadas polrticas de pr&cios.  ANEXQ 5 Ap~ndice 1 P!g. 5 (b) el sistema de informaci6n de (b) Desarrollar informaci6n de mercados es inadecuado para la Mercado en forma sistem4tica. actividad mercantil a gran es­ que ayude a COHDEFOR en el cala y para la expansi6n de desarrollo de sus funciones ventas; de comercio exterior. La retroalimentaci6n de los patios de exportaci6n debiera proporcionar informaci6n vi­ gente sobre reservas e inven­ tarios para su uso en contra­ tos y coordinaci6n de embar­ ques. Los precios y cambios en demanda por productos deben ser constantemente reactuali­ zados. (c) la log!stica de ciertas opera­ (c) Considerar el cierre de algunos ciones de comercio exterior es patios de concentraci6n en el ineficiente. incluyendo la or­ 4rea de Puerto Cortez y la ganizaci6n de patios de concen­ creaci6n de uno en el sur que traci6n de productos de exporta­ sirva a Ampala y uno en la ci6n e instalaciones de reclasi­ regi6n central. Esto ayudar!a ficaci6n; . a evitar la ineficiencia en la organizaci6n de grandes embar= ques y proporcionar facilidades de procesamiento adicional y tratamiento cerca de las fuente~ de producci6n y de los produc­ tos en bruto. (d) la informaci6n sobre latifolia­ (d) Comenzar un programa compren­ das y sus potenciales en los sivo de desarrollo del Mercado mercados mundiales es inadecua­ de exportaci6n de las latifo' da. liadas. incluyendo informacion sobre tendencias del Mercado por especie, e investigaci6n para desarrollar nuevos usos para especies conocidas e in­ troducir nuevas especies en los mercados mundiales. Con~ seguir asesor!a externa para operar el programa e incluir ­ personal experimentado en co­ mercializaci6n y procesamiento.  PALCULO TOTAL DE LA INVERSION EN INDUSTRIAS FORESTALES, 1977-80 Inversi6n Total Alio Proyectado ~sca1a de Producci6n pbicaci6n Mercado Necesaria en . US$_millones 60,000,000 M2/afto Tableros de fibra (1977) Pimienta, Cort~s Centroam~rica )0 y Caribe Chips para exportaci6n (1978) )00,000 ton/a~o Puerto Cort~s Jap6n y 22 Venezuela Dos plantas centra1es (1977) 40,000,000 pies made­ Comayagua, Europa, Sud­ 20 de reaserrro reros por Zona Norte Am~rica y p1anta Caribe Complejo industrial (1977) Yoro, Yoro Centroam~rica 10 integrado y elft-exterior Elementos estructura- (1977) Potreril1os, Centroam~rica, 1 1es laminados Cort~s Caribe y Vene­ zuela Producci6n resinrfera (1977) Zona Central Centroam~rica de tocones y el exterior 1 Compuestos t~nicos (1977) San Lorenzo, Centroam~rica 1 Valle Cajones, envases y (1977) Zona Norte Centroam~rica 1 paletas y el exterior Casas prefabricadas (1977) 5,000 casas Potreri11os, Centroam~rica 1 de madera Cort~s y Caribe Chapas rebanadas (1978) Zona Norte El exterior 2 Mo1duras (1978) Zona Norte El exterior 1 ~>~ I»\'d O1:Jro. • ::I Fuente. COHDEFOR ~~ (I) N  RESUMEN DE INVERSIONES PROGRAMADAS POR PROYECTO, 1977-80 Proyecto 1977 1978 1979 1980 TOTAL ---------------­ US $ mi110nes -----------------­ Tab1eros de fibra 30 25 35 25 115 Dos plantas de reaserr!o 20 20 Complejo Industrial de Agua 10 10 Frta (Fase 1) Elementos estruoturales 1 1 1aminados Produoci6n resinlfera de 1 1 tocones Compuestos t4nicos 1 1 Cajones, jabas, paletas 1 1 Casas prefabricadas de madera 1 1 TOTAL 65 25 35 25 150 Fuente a COHDEFOR '"d>~ ~'"d Otlt'IA • :::I N~ CD N  ANEXO 5 Ap~ndice 3 Pl1g. 1 Resumen Informativo de la Reserva de Olancha 11 Area de la Reserva For§stal de 01ancho A1 Sur del A1 Norte Total en camino a del camino la !l!J.:tiQal:t;l~ a !l!J.j;iQal:t;ls:!; B§§H~:x::va -------------- ( • 000 Ha) ----------- Pino 163 548 711 Latifoliadas 73 307 380 No forestado ....a2 ill ill :in 1.0J8 l.!l:2l Potenciales Made:x::e:x::os en la Reserva Pino - 30 millones m 3 (con u~a densidad media de 62m 3/ha) Latifoliadas - 110-149 millones de m Crecimiento mInimo estimado - 1.2 millones ms(s) por a~o Crecimiento medio posible 2.1 millones m (s) por a~o. 0 m4s de 3m 3/ha/ario (Nota: Aproximadamente un 20% del volumen de pino no es eco­ n~micamente accesible bajo las actuales condiciones tecnol~gicas, entre otras) C4lcu1os de Poblaci6n e Ing:x::§sos (196l) pa:x::a §l Area de la Bese:x::va 53,000 personas 31,000 personas econOmicamente activas de las cuales 24,000 est4n en actividades agr!colas y fores­ tales (con unas 1,414 trabajando en industrias forestales, principa1mente aserraderos) Ingreso media por familia - L 300 por afto 11 FuentesI BID/FAO (Cliff) Informe de la Misi~nl Proyecto FAa 511, P1anificaci6n de los Recursos Forestales - Antecedentes Bl1sicos, Working Paper No. C-5, Junio 1973. ProyectoFAO 511, Proyecto de Desarrollo Forestal en Olancho, Working raper No. C-4, Junio 1973; COPINO, Proyecto de Pulpa y Papel de Honduras, 1971.  ANEXQ 5 Apt1ndice 3 P!g. 2 Potenciales d~ Uso de la Tierra para el Departamento de Olancho Montaffas - 2.1 millones de ha Valles - 0.3 millones de ha El potencial agricola se encuentra principalmente en los valles del RIo Patuca, Sico y Aguan (en el lImite norte de la Reserva) En Olancho existen unos 2,500 km 2 de valles. distribu!dos de la siguiente maneras Guayape - 931 2 km 2 Sico - 696 km Telica - 242 km~ Alto Patuca - 170 km2 Culmi 90 km 2 Otros - 371 km  ANEXO 5 Ap~ndice 4 P~g. 1 Provecto Las Lajas 11 A. Objetivos Largo Plazol Desarrollar el potencial forestal y de la industria forestal de la Regi6n (definida mas abajo) intensiva­ mente, comenzando con las ~reas m~s favorables, principalmente la unidad de manejo de Las Lajas. Corto y mediano plazol Efectuar un detallado inventario de los bosques del area y un estudio de los potenciales de uso de la tierra, basado en suelos y otros factores. Bas~ndose en estos estudios, adem~s de estudios econ6micos de los potenciales de mer­ cado y factibilidad econ6mica de varias alternativas de utiliza­ ciGn, desarrollar un plan de manejo intensive para los bosques de la regi6n de Las Lajas y un plan de utilizaci6n/procesamiento de la producci6n de la regi6n. B. Informaci6n de Fondo Las ~reas consideradas para este proyecto (para manejo tanto extensivo como intensivo) incluyen las unidades de manejo de Meambar, Minas de Oro y Comayagua, con una superficie total de unas )51,000 hat Dentro de esta area unas 74,400 ha han sido identificadas como zona de "manejo intensivo." Esta zona, dentro y alrededor del "llano de Las Lajas," abarca zonas de alto poten­ cial forestal (ver Cuadro 1). La zona de manejo intensive incluye unas 5a,ooO ha de bosques de pino, que ha sido explotado en distintas intensidades en los ~ltimos 15-20 a~os. En las 4reas m!s planas (aprox. 12,000 ha) la explotaci6n ha sido intensiva, parte de esta ~rea actualmente est! siendo utilizada en agricultura. Sin embargo, la mayor parte del !rea est! cubierta por densos rodales de pino joven en cr!tica necesidad de raleos y otras pr!cticas de manejo. En los sectores de mayor pendiente, la explotaci6n ha sido menos intensive y a~n se encuentran rodales comerciales de pino. Las 4rees de mayor potencial forestal incluyen las si­ guientesl Sub-unidad de Manejo Superficie (ha) Las Lajas 14,000 Las Cruces, parte sur 1,100 Agua Blanca, parte plana 1.700 Villa Grande, parte plana 2.600 Total 19,400 1I Basado en apuntes de personal de COHDEFOR y proyecto FAO.  ANEXO 5 Ap~ndice 4 P4g. 2 Ademlls, existen otras 4reas de buen potencial. Se estima que entre 25,000 y )0,000 hect4reas de pine son accesibles y de buen potencial inmediato para manejo intensivo. Para obtener el m4ximo beneficio posible de estos terrenos, es probable que deban darse los siguientes pasosl (1) explotar y utilizar la mayor parte del recurso maduro que al1n queda, (2) ralear los rodales j6venes mils densos; () reforestar las 4reas sin bosque, (4) desarrollar un sistema efectivo de protecci6n. En las 4reas m4s inaccesibles, de mayor pendiente, donde a~n queda bosque virgen, se propone la aplicaci6n de un manejo extensivo, utilizando las siguientes medidasl (1) explotaci6n controlada; .. (2) establecimiento de protecci6n. '" " CuadrQ_.l' USO ACTUAL DE LA UNIDAD DE b:At\EJO rriTENSlVO DE LAS LAJAS 'f'ALREDEDO~ES (besado en fotog,af!d8 lGreas) Lac Lajas Central Vall, Gran::! !I Agua Blanca ..---Y.~ la3 Cruces l:.JUAl SU~9rricla Total (h~) 17.900 1).600 11.100 1).900 17,900 74.400 % 24.0 18.) 111.9 18.7 24.0 10.0 ~uperficie Plana (h.) 5.100 1.100 1.700 1.100 2.600 11.600 % 28., 8.1 15'::1 7·9 14·5 15·6 Con Pendienta (he.) 12.800 12.500 9.400 12.800 1,.)00 62.800 71·5 91·9 84.7 92.1 85·5 84.4 Totel Plno " (ha) ~ 14,1)).8 79.0 10.)9)·1 76.4 9.492·7 85·5 10.110.2 72.; 14.246.4 82.6 58.)87.2 76·5 Bosques en regenerac16nl menos de 25 l!.rboles/ha. Prir.cipal!oentl" bcsques Pino I (ha) S.6)1.) ).692.) ).754.0 4.962.) 5.889.1 24.129.0 que tar. sido exp1otado~. % )1·5 26.6 )).8 35·7 ;6.0 )2. 11 Pino In (hal 2,4)4.4 2.786.0 1.14).) 1.59)·1 7.958.8 Bcsque joven con 0 sin ~rboles se~i- 'f. 1).6 20·5 10.) 8·9 10.7 11eros. Pino IV (hal 6.068.1 ).712.8 4.595·4 5.156.4 6.766.2 26.299.4 Bosque maduro 0 sobremaduro con m4s % ))·9 27·) 41.4 )7·1 )7·8 ).5.) de 25 itrboles/ha. Lat1 foUndas (ha) 608.6 2,162.4 1,195·4 39).8 4.)60.2 % ).4 15·9 6.6 2.2 5·9 At:riculturll (ha) 2.4)4.!t. 612.0 )77.4 40).1 1.59}.0 5.420·9 % 1).6 4·5 ).4 2·9 8·9 7·2 ff.atorral (ha) '72).2 4)2·5 1.229·9 1.)90.0 1,109.8 4.885·4 I~.O ).2 11.1 10.0 6.2 6.6 1'10 Pr""'Jctivo " (hal 792.) 792·) ..,,>~ t:\'d Z ell C't'o • :"1 -.; ~} ,: 5·7 1.1 " .... . \.) ' n no Fuentel COMDE1"OA!F'AO. +"  ANNEX 6 HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY FISHERIES Table of Contents Paragraph No. Zones and Species 2 - 5 Artisanal Fisheries 6 - 8 Commercial Activities 9 - 14 Output and Export Trends 15 - 21 Government Support 22 - 28 Major Problems 29 - 31 Expansion Possibilities 32 - 36 Projects under Consideration 33 - 35 Priorities 36 Judgments 37 - 41 Table 1 Registered Private Commercial Fishery Enterprises, 1974 2 Recorded Fish Catch, Tonnage and Value, 1960-72 3 Recorded Fish Exports, Tonnage and Value, 1960-72 4 Fisheries Projects under Consideration, May 1974  Al.'lliEX 6 Page 1 FISHERIES 1. The commercial and artisanal fisheries occupy only a few people and contribute little to the GDP. Not enough is known about the resource base, and the outlook for expansion is uncertain. Per capita consumption of fish is less than 1 kg per year; this compares with about 2 kg on average for other Central American countries. ZONES AND SPECIES 2. The Atlantic and Pacific coastal waters are fished, with the former producing shrimps and lobster mainly for export. --- - . 3. The northern (Atlantic) coast is about 630 kIn long; there are various small islands (Los Cayos, Islas de la Bahia) at a distance of up to some 70 km. There are four main fishing areas: (a) from Cabo de Gracias a Dios (the boundary with Nicaragua) to La Bahia de Trujillo; (b) the region of Los Cayos; (c) Islas de la Bahia; (d) from La Bahia de Trujillo to Bahia de Omoa (the boundary with Guatemala). The commercial operations in these areas are primarily for shriop and lobster. The artisan catch is mainly for local consumption; exploitation is almost exclusively lobster, macarela (mackerel), trucha (sea trout), and pargo (snapper). However, other species appropriate for commercial exploitation occur, including corvina (croaker); robalo; mero (angler fish); juvel (horse mackerel); ostion (oyster); bagre (catfish); barracuda; almeja (clam); ostras (large oyster); and caracol (top shell). 4. The south (Pacific) coast is about 125 km in extent. The principal fishing centers are San Bernardo, Bahia de Chismayo, Arnapala, and San Lorenzo. The seaboard bounding the Golfo de Fonseca includes many estuaries which may be sui.table for shrimp and oyster farming. All operations on the Pacific are artisanal. The catches comprise corbina, pargo, mero, robalo, 'small lobsters, crabs, curiles, ostiones, and, to a minor degree, bagre, picuda, chopa, and shrimp'. 5. Apart from Lago de Yojoa (some 65 kID south of San Pedro Sula) , catches in lakes and rivers are quantitatively insignificant. Principal species are tilapia, carp, bass, and guapote. ARTISANAL FISHERIES 6. All fishing in the Pacific and inland ~.,aters is artisanal. In the Atlantic coastal zone both commercial and artisanal operations occur. The commercial activity centers on shrimp and lobster, and the greater part of  AllliEX 6. Page 2 the recorded fin fish catches (virtually all of which are destined for the national market) are derived from artisanal activity. The total fin fish catch has probably not been in excess, of some 1,200 tons per year during re­ cent years, including unrecorded catches. No reliable figures on employment in artisan fisheries are available. A recent Government estimate, based on a small sample, indicates that upwards of 1,000 individuals devote time to fishing as their principal activity. Possibly as many, or more, undertake fishing activities at odd times and for short periods. 7. The greatest fishing activity in the Pacific coastal zone centers on San Lorenzo. There are about 200 regular fishermen in the area; many others carry outf!sh-inion a seasonal basis. Generally three or four indi­ viduals jointly own a boat and gear and fIsh as a team. Equipment is uniform­ ly primitive. Artisanal carving out of canoes and the fabrication of nets is carried out locally. Fishing tends to be quite near to the coast within national territory. Total landings at San Lorenzo for April 1974, as recorded by the Ministry of Natural Resources, were estimated 1/ at about 30 tons-­ considered about normal for that month. (Landings for the south coastal zone as a whole are believed to be declining; whether this is because of a scarcity of resource and/or reduced fishing effort is unknown.) The value of total monthly landings at San Lorenzo is said to vary from L 14,000 to L 10,000, depending on quantities landed and the seasonal fluctuation in prices. Except that portion consumed by fishermen and their families, catches are sold, on the basis of negotiated prices, to fish traders of which some 15 are said to operate in the San Lorenzo area. The traders truck the produce to villages and urban centers, in particular to Tegucigalpa. Some simple salting and sun drying of fish is carried out, mainly for use during religious festivals. The regular preference is for fresh fish. 8. The Cooperative (Cooperativa de Pescadores de San Lorenzo Ltda. , set up in 1963, has recently been reorganized and has about 26 members who fish in the San Lorenzo area plus three affiliate groups, each with about 30 members, based on other areas of the zone. The Cooperative operates a small cold storage unit at the quay and sells either directly to outlets, using its own truck for deliveries, or to traders. COMHERCIAL ACTIVITIES I 9. As of 1971, five industrial enterprises were recorded by the National Planning Office (CONSUPLAN) as then engaging in fisheries activities, all in the Atlantic coastal zone, occupying 287 persons, presumably on the land based facilities. As of 1973, the Ministry of Natural Resources reported that industrial fishing comprised 147 boats, on average able to load up to 35 1/ Estimated because some catches are recorded in units other than weight.  ANNEX 6 Page 3 tons including ice. About 100 boats were nationally owned; the others were said to have been of U.S. ownership. As of April 1974, nine commercial coastal fishery enterprises were registered with the Government (Table 1). Of these, seven were active. All obtained catches from the Atlantic coastal zone and six operated land based facilities in the Bay Islands. The catches, either from boats owned by the enterprises or purchased from independent boat oper­ ators, were: shrimp and lobster, almost all of which are exported (mainly to the U.S., with some also going to Puerto Rico and Japan); and fin fish, mostly sold for domestic consumption. 10. The available information, summarized in Table 1, indicates generally satisfactory operations. However, raw material supply difficulties are mentioned in one case (see Reference No.1 in the Table). 1/ And References No. 1 and No. 2 show that two enterprises (involving substantial investment) have closed down. 11. It is surprising that no fish reduction plant, however simple, exists. The preparation of shrimp and lobster, prior to freezing and packing, results in high rejection of non-edible material. Some types of fish are caught which are unsuitable for marketing. At times, fish catches may be surplus to market requirements. 12. Two foreign companies set up a pond culture enterprise for catfish in 1968 in the Lima area of the Department of Cortes. The enterprise changed hands in 1969; the transaction was financed with Honduran and foreign private capital, along with funds from the !DB and a foreign bank. This company markets for two other firms, set up in 1971. The three concerns plan to bring some 600 acres under exploitation. The product is marketed through the parent company, mainly in the U.S., using air transport. Output in 1973 approximated 180,000 pounds; raw product prices at plant were around $0.30 per pound, roughly a third of the c.i.f. price paid by brokers in the U.S. for the processed product. Aside from management and technical staff, the enterprises employ some 20 persons. 13. As the operating companies do not own the land used for ponds, they have had difficulty to provide a guarantee which will enable them to get finance. Imports of needed equipment and supplies are eligible for exemption from customs duties. 14. A U.S. company, set up in 1969, is experimenting with the pond culture of shrimps. 1/ In this connection, the draft national development plan notes that the lobster catch is decreasing, "because existing areas are becoming exhausted and no new grounds have been discovered".  ANNEX 6 Page 4 OUTPUT AND EXPORT TRENDS 15. The recorded shrimp catch doubled to over 2,000 tons in the 1967-72 period (Table 2). Shrimp accounted for some 59% by weight of the overall catch in 1972 (and around 90% by value). Aside from shrimp and lobster, the annual catch of fish over the 1960-72 period has been fairly constant. 16. Including a liberal allowance for unrecorded catches by isolated artisanal fishermen, the total present catch of fish (excluding shrimp and lobster) probably does not exceed about 1,200 tons per year, with a value approximating some L 0.4 million at 1966 prices. 17. As shown in Table 3, shrimp accounted for almost 95% by value of the sector's total exports for 1972. Summary export data are: Annual Averase (Thousand L at 1966 Prices) 1960-62 1970-72 Shrimp 207 2,494 Lobster 23 306 Other 8 27 Total 238 2,827 18. In emphasizing the urgent need to institute and enforce various control measures, Government officials state that catches (in particular for shrimp and lobster), and hence the value of the exports, are under­ reported in the statistical records. This 1s because some operators transfer a portion (or all) of their catches to boats which unload at foreign ports. 19. The value added by the fisheries sector is estimated as follows: Annual Average (at 1966 Prices) 1960-62 1970-72 1960-62 1970-72 --­ Thousand L --­ -------­ % -------­ Shrimp 248 3,095 30 71 Lobster 102 997 12 18 Other 483 612 58 11 Total 833 4,704 100 100  ANNEX 6 Page 5 20. Despite the notable growth in fisheries, its contribution to the total GDP remains very small; some 0.43% on annual average in 1970-72. 21. As imports of fish are minor, the sector produces a favorable direct trade balance; this approximated L 2.7 million per year in the 1970-72 period. GOVERNMENT SUPPORT 22. In May 1974 a Directorate of Renewable Resources and Ecology was created in the Ministry of Natural Resources to control and develop fisheries (as well as wildlife and related matters). This office is taking over the functions of the Ministry's old Fisheries Department. The latter was responsible for licensing, registering and controlling fishing and process­ ing; studies; statistics; and for the two installations which produce finger­ lings for stocking rivers and ponds. 1/ 23. The Central Bank operates a guarantee fund for loans (made by Banco Nacional de Fomento and/or any other financial institutions) to small industry and artisanals. It is said to be planning to carry out a study on maritime resources and their effective exploitation. It is understood that this work, if carried out, would be in close conjunction with the Directorate of Renewable Resources. 24. The Directorate of Cooperative Development operates a semi- autonomous organization answerable to the Ministry of Economy. Its functions are to promote, organize, orient, control and supervise cooperatives of whatever type and nature. 25. The Technical-Industrial Cooperative Center (CCTI) is to become a "centralized organization" answerable to the Hinistry of Economy (Direc­ torate of Industry). (The Center was founded in 1960 and, until recently. supported by AID and its precursor organizations.) The Center services artisanals and small industries (limit of L 100,000 in plant and equipment); it provides practical technical assistance; investigates projects, jointly with the National Development Bank (BNF); promotes productivity and up­ grading of technology; helps organize associations and cooperatives for supply, production and commercialization. The Center is currently being helped by a Small Industry Advisor, under the UNDP/UNIDO program, and by Technoserve Inc., a U.S. non-profit organization specializing in rural development work. 26. The BNF, the nation's development bank, made its first fisheries loan in 1968. Through 1972, total fisheries loans approximated L 70,000, 1/ The installations are: Estanques de El Picacho, Tegucigalpa; and Lagunas Artificiales Jesus de Otoro.  ANNEX 6 Page 6 all to artisanal operators and cooperatives. 1/ (During 1970-72 private banks lent about L 16.6 million to finance boats, nets, installations and working capital for industrial fisheries enterprises.) ~/ For loans to small in­ dustry and artisanals, the BNF operates in concert with CCTI. 27. The National Investment Corporation (CONADI) was being set up in mid-1974 to promote and finance new industrial undertakings and expansion through loans and/or equity participation. The Corporation will be espe­ cially concerned with agro-industrial fisheries expansion. 28. The Government has requested and is receiving a considerable amount of technical assistance in fisheries from FAO. MAJOR PROBLEMS 29. Among the major problems facing the fisheries industry are a lack of knowledge of the basic resource, inadequate legislation, a shortage of trained personnel, and internal marketing facilities. Although considerable research was done in the 1967-71 period, Government personnel stress the urgent need for more quantitative information and judgments on the resource within the territoral waters and the sustainable rate of exploitation. For this reason they feel it unwis~ to promote any significant intensification of commercial catching effort, particularly for shrimp and lobster. No marine research is being done now. The Fisheries Laboratory at La Ceiba has been closed. 30. The existing fisheries legislation is inadequate, and there is a shortage of personnel for its enforcement. Staff with a sound background and experience in either technological or scientific aspects of fisheries are extremely limited. The Government hires one consultant from abroad to help solve this problem. 31. Much of the fish marketed locally varies widely in quality; hygiene needs improvement. Price mark-ups are substantial, probably higher than necessary if more efficient marketing practices could be insta.lled. These deficiencies are reflected in the very low per capita consumption; in view of the need for higher protein intake and the upward trend in meat prices, stimulation of fish consumption merits purposeful official action. EXPANSION POSSIBILITIES 32. The draft national development plan for 1974-78 outlines a program which would: 1/ Verbal communication from BNF official. 1/ Figure from Central Bank.  ANNEX 6 Page 7 (a) develop artisanal fishing through training, formation of cooperatives and associations, provision of credit, infra­ structural L~provements, better marketing, and promotional campaigns directed to the consumer; (b) control industrial fisheries so that they contribute more to the national economy; (c) promote Government participation in production and marketing; (d) expand production and productivity through extending terri­ torial waters, basic resource studies, training of personnel, and the artificial culture of selected species; (e) develop fisheries legislation and personnel, and a competent Government service able to promote effective exploitation .. on a sustained basis. Projects under Consideration 33. The Directorate of Renewable Resources has nine projects in mind for the years just ahead. These are described in Table 4. In summary, the project emphasis is: Reference Emehasis Number Production Cooeeratives Harketing Controls Culture Research 11 1:/ 1 * * 2 * 3 * * 4 * 5 * * * 6 * * 7 * * 8 * * 9 * 1/ Ar tis anal 1:/ Commercial 34. (The tenth project possibility shown in Table 4 was added by the mission. If investigation indicates that the project merits investment, it could be made a part of the project shown under Reference No.4.)  ANNEX 6 Page 8 35. Project preparation and evaluation is in the very early stage, and the available data are not adequate to enable judgments on the technical and economic feasibility of the proposals. Nonetheless, several comments are in order. First, the overwhelming emphasis is on the development of artisan fisheries under cooperative organization. Each project needs to be precisely defined if overlap is to be avoided. Second, the project list does not ex­ plicitly include an assessment of resources (types, locations, regenerative capacities, etc.) which are currently (or could become) the subject of exploit­ ation. Some or all of this inventory intelligence may be found in the existing documentation; but even if this is true, all such information should be collated and assessed, and provision made for a continuing inflow of data. Third, the financial considerations and the lack of experienced manpower suggest that some of the projects should be deferred. State resources should be concentrated on activities of fundamental importance. Fourth, it may be feasible to expand the pond culture industry, and detailed investigations should be made with this in mind. 1/ Credit and marketing constraints need particular attention. Fellowships and training opportunities should be arranged to help develop local expertise in fish and shrimp culture; a part of this can be done through joint venture agreements which would develop not only production but also national technical and management personnel. Priorities 36. The priority requirement is basic resource information. This should be stressed, along with work on the culture of selected species (e.g., shrimp). Also needing urgent attention is the design and L~plementation of legislation which will enable the resource to be exploited at a sustainable level and in the national interest. For this, personnel must be trained. This development course will assure that commercial fisheries continue to operate successfully and contribute to national growth. And it will provide the evidence needed to design fisheries outlays in terms of the potential additional catch and its value. Until more information on potential is at hand, the question will per­ sist as to whether the investment levels now under discussion are justified (for example, just one of the artisanal developments shown in Table 4 is estimated to cost L 10 million, a very large sum in the light of the present size of the domestic-oriented fishing industry and the alternative outlets availaole for Government funds.) 1/ An AID grant was made in late 1974 to help with this work.  A.."lliEX 6 Page 9 JUDGMENTS 37. More information on the resource base is needed to assure that the shrimp and lobster industry, which has grown rapidly in recent years, is not over-exploiting the resource--and to provide the basis for designing an efficient development program for the artisana1 fisheries. The limited data suggest that the fish resource may not be large enough to support much expan­ sion of the fisheries sector. 11 38. Appropriate fisheries legislation and resources for enforcement are urgently needed. 39. The technical assistance project (Table 4, Reference No.3) to pro­ vide an expert to design improved fisheries control systems and to train person­ nel is a high priority project. The expert should also be asked to summarize the present state of knowledge of the marine resources, their value, and potential incremental contribution to national growth. These tasks require at least eight months. 40. The technical assistance project (Table 4, Reference No.2) merits a high priority. The FAD Regional Fisheries Advisor should be asked to help formulate the needed job descriptions. (The project should be designed to produce recommendations on the re-opening of the La Ceiba fisheries laboratory.) 41. It is easy to overstress the domestic demand constraint, and to draw questionable conclusions from the fact that domestic consumption has been stable at not more than 1,200 tons per annum over the past decade or so. If supply is available, a significant rate of growth in domestic demand would appear quite feasible through promotion campaigns, improved marketing and product quality, and reduced trading margins made possible by higher volumes and efficiencies. 1/ See FAD, Proyecto Regional de Desarrollo Pesquero en Centroamerica, Informe Sobre Los Resultados del Proyecto, Final Report, September 1972.  ~: HONDURAS: REGISTERED PRIVATE COMMERCIAL FISHERY ENTERPRISES. 1974 !I Ref. Base snd Principal No. Registered Name Area of Opers(ions Activit!. ~ Observations 1 Alimentos Marinos Hondureneos Barra de Caratasca, Shrimp and fish catching in own boats: U.S.A. The enterprise is experiencing low catches despite its area of o~era­ Gracias aDios freezing and packing tions being considered as good fishing grounds. Hay set up fish reduction plant by 1980. ' 2 Empacadora del Norte Puerto Castila to Shrimp, lobster and fish catching in U.S.A. Considered to operate well: total fixed capital said to be I. 1.7 Cabo de Gracias s own boats: also buys from independent million Dios fishermen: freezing and packing J Mariscos Hybur French Harbor, Shrimp and lobster purchased from inde­ U.S.A. Considered. to be outstandingly successful: total fixed capital said Roatan. Islas de pendent fishermen: freezing and to be L 0.8 million la Bahia packing 4 Caribbean Products Guanaja. Isla. de Shrimp. lobster, fish and squid pur­ U.S.A. Satisfactory operations reported: total fixed capital said to be la Bahia chased from independent fishermen; L 0.2 million freezing and packing 5 Industria de Armadores y Guanaja. Islas de Shrimp and lobster purchased from U.S.A. and Was estsblished two years ago: operations are very satisfactory Pesqueros Guanajenos la Bahia independent fishermen: freezing and National packing 6 Mariscoe del Caribe Gu.naja. Islas de Shrimp and lobster purchased from U.S.A. Recently suffered financial difficulty resulting in ownership change Is Bahia independent fishermen: freezing and packing 7 Marisco8 de Honduras Roatan. Islas de Is Shrimp and lobster: freezing and U.S.A. Operations were closed down in September 1972 for reasons unknown. 11 la Bahia packing (formerly) Total fixed investment said to have been L 0.48 million 8 Mariscos de Centro America Cayos Vivorillos Shrimp: freezing and packing U.S.A. All operations have ceased: the facilities are up for sale by Centrsl (formerly) American Bank for Economic Integration. Total investment said to have been L 2.0 million. ­ 9 Cooperativa de Pescadores Tela. Atlantida Fish catching National The cooperative compris~s fishermen from five settlements, nearby to the de Tela port of Tela. !f As of April 1974 'on the regieter maintained by Direcdon General dp. a_cursos Rl!novables y Ecologia. Source: Direccion 'General de Recursos Renovablea y Ecologia iii', bOo.  --ANNKl 6 Page II Table 2: HONDURAS: RECORDED FISH CATCH, TONNAGE AND VALUE, 1960-72 ~ Sl:U::11.!1I2 Lg12s;te;.: llih. Tgtal 11 Tg:tial Valll.~ --------------------tons------------------- Thousand L 21 1960 121 35 994 1,262 892 1965 527 30 831 1,684 1,641 1966 986 31 1,079 2,183 2,718 1967 1,030 38 1,434 2,742 2,969 1968 1,562 54 1,124 2,991 4,063 1969 1,847 76 1,335 3,385 ' 4,810 1970 1,838 409 915 3,297 5,908 1971 1,988 296 852 3,398 5,765 1972 2,140 101 1,085 3,620 5,413 Note: Government officials advised that recorded catches, especially of shrimp and lobster, are understated. This is because some operators offload to other boats whilst at sea and these other boats proceed directly to foreign ports. 11 In addition to shrimp, lobster and fish, the total includes very "small quantities of other items such as crab, turtle, eggs, squid, etc. 21 At 1966 prices. Source: CONSUPLAN  · ANNEr6 . Page 12 Table J: HONDURAS: RECORDED FISH EIroRTS, TONNAGE AND VALUE, 1962-72 Uiu:. §hr.1~ LQb~;t~n: Fi~h TQIcil lL 21 TgIcal ValJJ.e ---------------------tons 1I------------------ --Thousand L l/-­ 1960 186 12 14 213 291 1965 567 161 14 742 1,037 1966 1,169 95 31 1,336 1,867 1967 402 20 16 440 610 ,1968 422 35 17 496 694 1969 548 19 31 600 828 1970 895 315 6 1,220 1,713 1971 1,977 222 11 2,217 3,105 1972 2,406 110 37 2,560 3,574 Note: Government officials advised that recorded exports, especially of shrimp and lobster, are understated. This is because some operators offload to other boats whilst at sea and these other boats proceed directly to foreign ports. 1I The basis of the weight listed is not known (raw material 'as caught, or the prepared material as packed for export). 2J In addition to shrimp, lobster, and fish, the total includes very small quantities of other items such as crab, turtle eggs, squid, etc. II At 1966 prices. Source: CONSUPLAN  TaM." 4: HONDURAS: FISHERlIW pnOJE~rS UNDER CONSIDERAtION, HAY 1914 Ref. No. ProJect Title Purpose Promotor Financial Requirements Ststus Development of Artisanal Upgrading and expansion: (i) to raise income; State .L 10.63 million Report dated April 1974 by Activities (ii) to improve dietary level; (iii) possibly (Project originated from the FAO/IUB, under examination to deve lop exports • UNOr/FAO regional program 1966/11. ) 2 Technical Assistance for Support of above project: Two consultants Slllte L 124,0.0.0 of which U8$50,o.o.o. Betng studied Fishery Development each for a year to cover fisheries develop­ i.e envh ioned from IDB funds ment and promoting development of coopera­ tives, respectively. 3 Technical Assistance (i) To recOOlIN!nd fisheries control systoms State L 23,000 Priority being assessed and measures; (ii) To give instruction to inspectors. (Dne expert for three months.) 4 Development of Artisanal Fishery Stllge 1) o.rganization of fishermen in coopera­ State Stsge 1) L 70,00.0 Being studied Activities (in GuU uf Fonseca) tive" to fllcilit4t"'provhJon of credit for: upgrading equipment and methode. co~"ercia1i­ znUon of catches; Stage 2) Eatabl1shment of Stage 2) Not determined artisan:l1 fleet; Stoge 3) Establishment of " fish reduction plant. 5 Shrimp Culture (In Gulf of To 8~t up and operate shrimp cultural grounda State Unknown Being studied Fonseca) along estuaries. /) Upgrading of Fish Culture To select improved species; To expand opera­ State Unknown Being studied tions for restocking of lakes and rivers. oi lakes and river •• Rehabilitation of fisheries To undertake applied investigational work .,Btate Unknown Being studied Ln"nratnry (1.a Cetba) 8 Cia del Atlantico S.A. (Laguna Stage 1) Applied inveliUg8tions to assess State and Stage 1) L 100,00.0 per year Stage 1) Being negotiated de Guaimoreto, Colon) prospects for commercial exploitation; Private Sector for a three-y.",r period; 8tage 2) Implementation (if indicated). Stage 2) L 3 million Stage 2) Awaits results of (estimated) investigations 9 Rolfe Tatum Merren (Gulf of To exploit commerCially shrimp, crawfish Private Unknown Application being studied FonaeclI) and fish. 10. Cooperlltiva de Pesclldores de Slin Integrated development program comprising: The Cooperative Cooperlltive officials esti­ Credit. application being Lorenzo shrimp culture; new boats and equipment; mate L 0.5 million formulated cold store; transportation; retail outlet in Teguc igalpa • '.Sources: (a) Ref. Nos. 1 to 9, Direccion General de RecursoB Renovable8 y Eco10gi~. (b) Ref. Nos. 10., mission discussIons with cooperative members. !Ift "''''  ANNEX 7 Page i HONDURAS AGRICULTURAL/RURAL SECTOR SURVEY AGRICULTURAL CREDIT Table of Contents Paragraph No. Credit Institutions and Recent Trends 2 - 4 Banco Central de Honduras (Central Bank) 5 - 8 Banco Nacional de Fomento (BNF) 9 - 22 Lending Procedures for Agricultural Loans 13 Loan Supervision 14 Financial Position 15 Interest Rates and Revenues 16 - 19 Private Commercial Banks and Specialized Institutions 20 - 22 Cooperative Credit for Agriculture 23 - 43 Public and Semi-Public Institutions 24 - 28 Private Institutions 29 - 42 Honey Lenders 43 Judgments and Conclusions 44 - 69 The Existing Situation and Its Consequences 45 - 54 Suggestions for Improvement 55 - 63 The Role of International Donors 64 - 69 Table 1 New Loans Disbursed by the Banking System, '1960-75 2 New Loans Disbursed by the Banking System, by Sector . 3 and Subsector, 1969-75 Loan Portfolio of the Banking Sy~~~_Qy .. ~ector and Subsector, End Year Position, 1969:75 4 Demand, Savings and Time Deposits of the Banking System, End Year Position, '1969-75 5 New Loans Disbursed by the Banking System, by Type of Institution and Sector, ,1969-75 6 Loan Portfolio of the Banking System, by Type of Institu tion and Sector, End Year Position, 1969- I5 7 BNF - Loan Portfolio by Sector, End of Year L 1969-75 8 BNF - Disbursed New Loans by Sector, i, 1969-75 9 B'N'F - Subscribed New Loans by Sector, ~1969-75 10 BNF - Subscribed New Loans by Type of Security, \ 1969=75­  ANNEX 7 Page i i Table of Contents (cont.) Table 11 BNF - Loan Portfolio by Period of Loans, End Year Position, 12 BNF - Subscribed New Loans by Size, 1969-75 13 Con:unercial Bank Agricultural Loan Portfolio, End:1974 14 FACACH - Disbursed New Loans, Loan Portfolio and DepoS1£S, 1969-74 15 IDB, USAID and IBRD Agricultural Loans with On-lending Credit Components, 1962-73 Appendix 1 List of Financial Institutions, 1974  ANNEX 7 Page 1 AGRICULTURAL CREDIT 1. Agricultural credit is provided by the private banks, ~Jhich serve mainly agro-industry and the large farmers; the National Development Bank, which serves the entire spectrum of the agricultural sector; and the credit cooperatives, designed to serve the Honduran smallholder. Overall, Honduras has a well-established set of credit institutions and programs for the agri­ cultural sector. However, to implement the agrarian reform (Annex 4) and support rapid farm output expansion will require both more credit and improved delivery and management systems. CREDIT L~STITUTIONS AND RECENT TRENDS 2. The banking system of Honduras is composed of the Central Bank, two development banks, 10 commercial banks and five savings and loan associations (Appendix 1). Of the two development banks, only the National Development Bank (BNF) is active within the agricultural sector. The other, the Municipal Bank (BMA) , may assume an active role in the near future but this remains to be seen. All of the above institutions are representeci in varying degrees throughou t the country, the BNF having 27 branch offices and the savings and loan associations having 143 branch locations. The commercial banks generally have branch offices only in larger cities. The BNA has only three active branch offices. Supervisory responsibilities rest primarily with the Central Bank with the exception of the savings and loan associations which are supervised by the Office of Cooperative Development (Direccion de Fomento Cooperativo). 3. From 1960 to 1973 the proportion of agriculture-related loans has steadily increased from 18% to 30% of total institutional loans for all pur­ poses (Table 1). During the same period annual disbursements for newagri­ cultural loans extended by the BNF have increased at 15% per year; for the banking system as a whole annual increases have been at the rate of 23%. This is indicative that the private sector, both banks and cooperatives, are assum­ ing a more significant role in the extension of agricultural credit. As shown in Table 1, total lending for crop production increased by 9% annually over the past five years, compared to 27% for livestock lending, and 15% for total agriculture for the banking system as a whole (see Table 2 for bre<:l<.down of loans by sector and subsector and Table 3 for breakdown by loan portfolio) • As shown in Table 2, almost half of the crop production credit was used for coffee, the second most important ~~port. Cotton and basic grains came next in order although cotton declined rapidly after the conflict with EI Salvador in 1969. 4. Table 4 shows the demand, savings, and time deposits of the banking system. All b?lnks but the Banco Hunicipal Autonomo increased their deposits substantially over the last five years. On December 31, 1973 the total amount  ANNEX 7 Page 2 of deposits in the banking system was L 354 million and the average annual growth rate over the last five years was 14%. About 92% of the deposits in December 1973 were held by the commercial banks. BANCO CENTRAL DE HONDURAS (CENTRAL BANK) 5. The Central Bank is an autonomous Government institution that governs the banking system (except for cooperative lending). It allocates credit in a very general way through regulations which.limit consumption and commercial lending to a maximum of 30% of private bank's portfolio. The remaining 70% can be distributed at will among productive enterprise in agriculture, industry, marketing of agricultural commodities. mining, forestry and such. The bank is headquartered in Tegucigalpa and is represented in nine other major cities by branch offices. It is governed by a Board of Directors composed of the President of the bank, appointed by the Chief of State; the Ninister of Finance and Public Credit; the President of BNF; a representative from the private commercial banks; and a representative from the private sector. Each member has an alternate. 6. The President of the Bank, appointed for a seven-year term, pro­ poses policy and operational procedures to the Board, provides overall super­ vision and represents the Board in relations with the banking system. public authorities and other institutions that involve fiscal policies of the Govern­ ment. The bank president is assisted by such support personnel as a ~fanager, a Superintendent of Banks, Departmental l1anagers, and the like. 7. The Central Bank (CB) acts as banker, fiscal agent and economic and financial adviser to the Government and all commercial banks. Primarily, its purpose is to promote monetary, credit and exchange conditions favorable to the development of the national economy. Credit expansion is limited by controls which require minimum legal reserves and which set limits on the level of re-discount provided the banking system. The present level ($19.6 million) is subject to change as required to use money supply adjustments as an instrument to fight inflation. Of this amount, each commercial bank earns a quota according to the historical level of lending for productive enter- . prise. CB may grant advances and re-discount at 100% on cred1.tinstruments not exceeding 360 days for financing theinitial stages of agricultural and in­ dustrial development. For such advances it charges interest at 4% per annum, while for other types of paper it charges 6%. On February 27, 1974, CB established a special rediscount fund of $7 million (L 14 million) in an attempt to induce the commercial banks to expand their lending to medium and small farm operators and to small industry. Loans must not exceed L 15,000 ($7,500) and must be granted after Narch 15, 1974. This policy shows the CB's intent to provide credit for small farmer clients. CB may borrow from inter­ national institutions and act as fiscal/administrative agency, a role it has successfully played for the first and second IBRO Livestock Development loans. In addition, an agreement is pending whereby the CB will administer a small farmer loan guarantee program under the auspices of the U.S. Overseas Private Investment Corporation (OPIC), with tile support of AID and other agencies, in  ANNEX 7 Page 3 order to continue and expand a pilot program which has been operating with a few private lending institutions during the past two years. Under the agree­ ment, commercial banks may request a guarantee for small farmer loans up to $7,500. The guarantee will cover up to 75% of each loan and up to 50% of the total small farmer portfolio of the participating bank. 8. Permissible annual interest rates for the commercial banking system vary from 6% to 9% on loans for production; to 10% to 11% for home mortgage lending; to 12% to 14% on small personal loans; to a maximum in any case of 18%. Commercial banks are permitted to charge commissions in a limited number of cases for inspection and monitoring services not to exceed 2% for one time on the loan amount. Regarding deposits, banks are not permitted to pay more than 4% for passbook savings accounts or 7% on longer term certificates of deposits. BANCO NACIONAL DE FOHENTO (BNF) 9. The BNF was established in 1950 and has grown to be the largest lender in the agricultural sector. It is a semi-autonomous Government bank, governed by a Board of Directors composed of a President (appointed by the Chief of State), four r~verTh~ent ministers, a representative of the CB, a representative of the private banking sector, and three representatives from the private non-banking sector. By the end of 1973, 27 branch offices had been opened to serve mainly the more progressive agricultural areas. The bank has approximately 90 loan supervisors, most of tv-hom are agricultural graduates from secondary schools (high school level), that are assigned to the branch offices. The bank has t'lO Departments: Credit and Operations and Development (Fomento). From a relative standpoint, it is well staffed since salary levels are well above those paid by Government }unistries. Professionals include a large percentage of university graduates composed of economists, agricultur­ ists (in both plant and animal sciences), public accountants, business managers, legal personnel, and such. 10. (The comments in this and the follmving OvO paragraphs are based on Tables 5 to 12.) Agricultural credit operations are the responsibility of the Credit and Operations Department, while the Development Department deals with such activities as storage and price stabilization for basic grains, agro-industrial promotion and management assistance, the purchase and sale of agricultural supplies, and it has a Technical Division that assists with policy decisions, economic and feasibility studies and limited research assign­ ments. Since this annex is primarily concerned with agricultural credit, tl}e Development pepartmentwill np~~~_~j,_s.~~ss.e4 further. The BNF also operates as a commercial bank insofar as it solicits deposits--about L 23 ntil1ion ($-'1.5 million) in 1973--from private and public institutions. It also makes commercial loans. 11. The BNF is the major agricultural bank of the country. By the end of 1973, its loan portfolio consisted of 80% agricultural loans, 12%  ANNEX 7 Page 4 industrial loans and 8% loans for other purposes. It is estimated that in 1974 the BNF lending level to the agriculture sector will total more than $31 million. This represents an increase of approximately 15% over 1973. Commercial banks also provide a considerable percentage of total lending to the agricultural sector (Table 13); however, most commercial bank lending is to larger operators, and especially for the production and marketing of industrialized crops and livestock. The BNF is estimated to provide over 90% of all lending to small farmers, 1/ either directly or through cooper­ atives and other group organizations.- Of approximately 17,000 loans made to small farmers in 1971 by the institutional system, an estimated 1,000 were from commercial banks, about 10,000 from the BNF directly, and approximately 6,000 from cooperatives and other groups. These 17,000 small farmers re­ present about 12% of the total number of small farmers in Honduras. For crop production loans that are mostly for working capital, loans are usually made for 12 months, with a maximum of 18 months. Investment loans (including funds to purchase livestock) may be made for periods not to exceed seven years. Permanent improvement loans such as land purchase and home construc­ tion may be granted for periods not to exceed 25 years. 12. BNF's loan portfolio by period (term) of loans shows that short- term loans (up to 18 months) have decreased from 52% to 22% of the total portfolio from 1961 to 1973. Simultaneously, medium (18 months to five years) and long-term loans (more than five years) have increased from 48% to 78% over the same period. This has caused some liquidity problems. Lending Procedures for Agricultural Loans 13. The credit delivery system of the BNF varies somewhat depending on the recipient, i.e., (a) individual loans, (b) loans to chartered co­ operatives, or (c) loans to land reform asentamientos (settlements). These will be discussed separately. (a) Individual Loans. Loan applications are received by any branch office of the BNF. In most cases, bank personnel asstst the applicant with the preparation of the appropriate forms, especially in the farm plan. In cases of mortgageable property, an inspection must be carried out by BNF personnel. All documentation is turned over to the office of loan processing. Some branch offices have the authority to approve loans up to L 80,000. Others are limited to much smaller amounts, some as low as L 4,000. Loans for more than the authorized maximum for each branch office must be approved by the Central Office. Once documents are completed, the loan is registered and, in the case of livestock loans, a chattel inspection is made. All applications then pass through the Credit Analysis Section 1/ Following USAID/Honduras practice, a small farmer is defined as one with: - no more than $10,000 in capital stock; - average gross annual income of not more than $15,000; and - farm size not more than 15 ha.  ANNEX 7 Page 5 for a financial and risk review. If everything is in order, the loan is formally approved and turned over to the Loan Implementation Section. Normally, the BNF requires collateral in the form of real estate or chattel. In the case of small borrowers, however, it makes exceptions and accepts a lien on the standing crop or crop to be planted. Such loans may or may not be guaranteed by a co-signer. (b) Cooperatives. Legally chartered cooperatives may also borrow from the BNF. In the case of individual cooperatives, the procedure is similar to that of private individuals as described above. The major difference is that all members of the cooperative are jointly and severally liable. This is true even in cases where cooperative property is pledged as collateral. In recent years, especially since 1972, co­ operative lending by the BNF has greatly increased. They not only loan to individual cooperatives but also make wholesale loans to Cooperative Federations, which, in turn, ~~annel the funds to their member cooperatives. In most cases, co­ operative lending relieves the Bank of time consuming and costly administrative and supervisory responsibilities that e are required for individual loans. The BNF is most interested in expanding cooperative credit and, in view of increased activity, is in the process of establishing a Cooperative Division within the Credit and Operations Department. Since only token staffing has been provided for this office, precise functional responsibilities have not been firmly established. (c) Land Reform Asentamientos. In December 1972, the Government approved a Decree La~y that set up a special fund of L 4 million to be used to provide credit for settlers involved in the agrarian reform program under Decree Law No.8. Approximately 400 settlements had been established by July 1974 (since December 1972), but very fe~v of these settlements are legal entities to date, although plans are that they be chartered at a later date. Nonetheless, the asentamientos are required to form themselves to joint and several liabilities for any loan they may receive. Loans are limited to pEiasants who have been provided with land by the National Agrarian Institute (INA), either from public lands or through temporary possession of private lands granted under special rules. The amount and purpose of the loan is based exclusively on an investment plan developed by the borrower, with the assistance of B~W and DESAGRO (the Government Extension Service) personnel. Loans may be for production or invest­ ment; however, in case of the latter, the recipient must have a long-term tenure arrangement. Security for such loans is normally based on the potential for repayment and capacity to produce, in addition to a mortgage on standing crops and  ANNEX 7 Page 6 other farm produce. Loans extended under Dec~ee No. 8 are guaranteed by the INA and, although the BNF \",ill make normal efforts to collect, any resulting losses will be absorbed by the special fund and will not be charged to the BNF. Loan applications are reviewed and approved by the branch offices. The primary requirement for approval is the endorsement of the DESAGRO agent and the local ~A representative. Once approved, disbursements are permitted only after a BNF loan supervisor or a duly appointed representative of the n~A and/or DESAGRO certifies that funds are needed in the pro­ duction activities. Government policy calls for close supervision of the financed activity, but, in practice, very little supervision has been possible in most cases. Of the total fund of L 4 million, approximately L 2.5 million was disbursed as of July 1, 1974. Loan Supervision 14. In the case of small farmer credit, the BNF for the past few years has attempted to provide adequate supervision through a number of arrange­ ments. Over the past four years, the number of BNF loans supervisors has been increased from approximately 40 to 90 as of July 1974. Both the IDB and AID, in connection with loans extended to the BNF, have required the BNF to arrange for credit supervision. In order to comply ~vith these re­ quirements, the BNF, in addition to increasing its o~m field staff, has entered into agreements with DESAGRO whereby the latter agreed to supervise loans financed with IDB and AID funds. These agreements, however, have been perhaps 30% effective, even though all parties have acted in good faith. The fact is that DESAGRO became so overly extended with other assign­ ments (especially the land reform program) that it could not possibly comply with the terms of the agreement. Therefore, a shortage of competent super­ vision has probably been a contributing factor to a high delinquency rate. Financial Position 15. As of December 31, 1972, the BNF's consolidated balance sheet showed total assets of L 128 million. Its main liabilities were sub­ scribed capital of L 35.4 million, long-term loans (primarily from IDB and USAID) of L 30 million, rediscounts from CB of L 16.8 million, time deposits and short-term borrowings of L 13.6 million, and demand deposits of L 7.8 million. Its main assets were loans due after 18 months, L 65.6 million; loans due within 18 months, L 14.4 million; fixed assets, L 10.4 million; investments in various enterprises, L 6.6 million; and cash and holdings in CB, L 4.1 million. Interest Rates and Repayments 16. Interest rates of the BNF are governed by the Central Bank and they presently vary from 6% to 9%. In those cases where the BNF lends funds to an intermediate organization such as a cooperative federation  ANNEX 7 Page 7 (for relending to member cooperatives), the interest rate charged ranges from 6% to 9% per annum. If the loan is made directly to a cooperative for its own use, the rate is 9%. In the case of land reform programs, the interest rate is set at 6% per annum for the asentamientos. Once the special fund for agrarian reform program is fully disbursed, the interest rate will probably be raised to 9% per annum. 17. The BNF has operated at.. a loss since its inception. During the four years 1969~72, annual losses have varied between L 0.6 million and L 2.4 million and have totaled L 6.0 million. Losses occurred primarily because of problem loans and high administrative costs of many non-revenue producing projects, especially in the Development Division. A recent study on repayments indicate that about 25% of the total portfolio as of December 1971 was in default and a further 11% had been refinanced. More than half of the defaults were overdue for more than one year. By the end of Harch 1974, the default situation was only slightly better than in December 1971. On the latter date, about 18~~ of the portfolio ~V'as in default and a further 15% had been refinanced. About~ 40% of the defaults were overdue for more than one year. It is often mentioned that the recent drought in Honduras (calendar years 1972 and 1973, with the latter being the most severe) caused the bad repayment record, but the fact is that the problem existed ~yell before the drought. There are a variety of reasons for BNF' s high rate of delinquent loans, including the following: (a) poor credit control \yithin BNF; (b) inadequate legal procedures for loan collection; (c) pressure by Government for BNF to engage in marginal enterprise and high risk loans; (d) lack of flexibility in loan repayment schedule; (e) inadequate technical supervision of agricultural loans; and (f) lack of penalty interest rate for loans in arrears. 18. The administration of the agrarian reform credit program, as mentioned earlier, has placed additional strain on BNF's meager resources. The emergency conditions under which credit for the "asentamientos" has been disbursed could not be expected to shOtY favorable results. Since the due date for most loans extended under this program was April 30, 1974, it was not possible to get precise data on delinquent loans. Nonetheless, speculation was that the delinquency rate ~vould run well above 50%. 19. An outside management firm is presently making a comprehensive review of BNF's operation and \l1'ill make detailed recommendations in order to improve effectiveness and efficiency. From the above, it is evident that the BNF has had and continues to have many problems. Nevertheless, it is providing an essential function that the commercial banking system is not prepared to cope with at this time.  ANNEX 7 Page 8 PRIVATE COMMERCIAL BANKS AND SPECIALIZED INSTITUTIONS 20. As shown in Figure 1~ there are 10 private commercial banks and five savings and loan associations, which had together 143 head offices, regional offices and local agencies allover the country at the beginning of 1974. While the commercial banks lend a substantial amount to all the sectors in the economy, the savings and loan associations are more or less specialized in the financing of the housing sector. Their agricultural lending is so little that we deal in the following paragraphs only with the commercial banks. 21. With 46 branches by far the largest is the Banco Atlantida which holds about 30% of total resources and 44% of total deposits in the commercial banking system in 1972. In recent years, three locally owned banks (Bancahsa~ Ahorro, and Occidente) have come under joint control and have expanded their share of the banking system to the extent that by the end of 1972 their com­ bined deposits and loans almost equalled those of Banco Atlantida. 22. The commercial banks have increased their agricultural lending over the past five years in terms of disbursed new loans by an average annual rate of almost 16% which is substantially higher than the 14% of the development banks (Table 5). In 1973 the commercial banks disbursed an amount of L 109 million of new loans for the agricultural sector ~"hich is almost two-and-a-half times the amount of the development banks (L 44 million). The distribution of the loan portfolio, however, shows an outstanding agricultural loan balance of L 80 million for the development banks and only L 71 million for the com­ mercial banks (Table 6). In other words, the commercial banks have (compared to the substantial amount of disbursed new loans for the agricultural sector) a relatively low amount of agricultural loans in their loan portfolio by the end of each calendar year (Tables 5 and 6). This means, that the commercial banks issue a higher percentage of short term loans than the development banks. These loans are to a large extent lent and repaid in the same calendar year, so that they do not appear in the December balance of the bank's loan portfolio. Another reason for the relatively low amount of agricultural loans in the commercial bank loan portfolio is--compared to the development banks--their low per,centage of overdues. COOPERATIVE CREDIT FOR AGRICULTURE 23. In addition to the BNF, a number of institutions, both public and private, are concerned with credit for agricultural cooperatives. Public and Semi-Public Institutions 24. The Direccion de Fomento Cooperativo does not extend credit, but rather is the official regulatory office for all cooperatives. Fomento Co­ operativo views itself as "autonomous" but in fact it is a dependency of the  ANNEX 7 Page 9 Ministry of Economy and Industry. Its functions include, among others: (a) the formation, chartering, and registration of all cooperative associations; (b) inspection and audit of cooperatives; and (c) promotion, education and technical assistance for cooperatives. 25. The current operating budget of Fomento Cooperativo is L 410,000. The staff consists of nine auditors and 11 extension agents for more than 300 chartered cooperatives scattered over the country. It has regional offices in San Pedro Sula and Choluteca. In addition to the above listed responsibil­ ities, Fomento Cooperativo is providing managerial assistance to what remains of the Federation of Agricultural Cooperatives (FECOAGROH). Needles to say, Fomento Cooperativo is over-extended and it has been severely criticized for the undue length of time (a year or more) necessary for the legal chartering precedures. Furthermore, with its limited staff, it cannot hope to fulfill the necessary promotional and educational needs of the various and diverse cooperative groups. 26. The second agency of interest in the cooperative credit context is the Federacion de Cooperativas Agropecuarias de Honduras (FECORAH). This is a federation of agrarian reform cooperatives. FECORAH is chartered as a private cooperative but due to its close association with the INA, it functions as a semi-public entity. It consists of approximately 80-member cooperatives that were organized by the INA. Total individual membership is approximately 2,300, with holdings of roughly 26,000 ha, about 70% of which is being farmed. A number (perhaps 40%) of the FECORAH cooperatives are among the strongest in the country. These are largely involved with the production of such commercial crops as bananas and cotton which have been operating for a number of years. 27. It is the intent of the INA to eventually transform all of the land reform asentamientos into agricultural cooperatives. Once legally chartered, the asentamiento cooperatives would be eligible to joint FECORAH. This could result in a large affiliation of cooperatives with FECORAH at such time as the asentamientos become firmly established and viable. FECORAH was founded in 1970 but was not legally chartered until early in 1974, and it is still in the formative stage. 28. With few exceptions, the FECORAH cooperatives, like the asentamientos that have not yet been chartered, carry out most of their farming operations in common. This is to say that land parcels are not individually owned; individual members contribute labor and are severely liable for borrowed funds (capital); the returns from farm production are divided on a labor input basis. To date, FECORAH has not operated as an intermediate credit supplier for member cooperatives. It hopes to do this in the near future, however, along with certain agricultural supply and marketing functions. Private Institutions 29. A number of private cooperatives and other similar entities are involved, in one way or another, with the provision of agricultural credit for cooperatives and pre-cooperatives.  ANNEX 7 Page 10 30. One is the Federation of Savings and Loan Associations (Federacion de Asociaciones de Ahorro y Credito de Honduras (FACACH». FACACH was chartered in 1966 with 45 member coops and some 6,400 individual members. By 1974 it had grown to 120 cooperatives with approximately 29,000 members. FACACH classes 60 of the 120 cooperatives as rural, meaning they are not located in the larger cities and towns. It estimates that 28% of the individual cooper­ ative members are engaged in agricultural production in one way or another. The remainder of the members are engaged in various professions such as small industry and business. 31. FACACH has been the recipient of both grants and loans from foreign sources, including AID and the Latin American Confederation of Credit Unions (COLAC). It also has internal funding in the form of subscribed shares and paid-in capital and a line of credit with the BNF. In 1973, it extended loans totalling L 2,695,900 (Table 14), of which L 1,436,000 was lent to credit unions; L 79,000 to agricultural (basic grain cooperatives; L 602,800 to coffee cooperatives; and L 578,100 for various uses. From 1966 through 1973, FACACH committed a total of L 10,905,475 in loans, mostly for produc­ tion purposes. From 1970 until 1973, FACACH, through a special agreement, channelled funds from an AID loan to the Federation of Honduran Agricultural Cooperatives (FECOAGROH). 1/ A total of approximately L 800,000 was loaned by FACACH to FECOAGROH, but for a number of reasons (such as two successive drought years and poor management), FECOAGROH was not able to fully repay FACACH and approximately L 278,000 are still outstanding. Except for this amount, which it is making all efforts to collect, FACACH's delinquency rate is about 7%--much better than that of the BNF--and comparable to some of the commercial banks. 32. FACACH projects its credit demand for 1974-76 as follows: 1974­ L 3,245,000; 1975 - L 3,702,000; and 1976 - L 4,527,000. Its source and application of funds statement for 1974 shows a need to amplify the BNF line of credit from L 200,000 to 500,000 and the mobilization of L 300,000 from other sources (COLAC, Inter-American Foundation and such). This is in addi­ tion to a revolving AID loan of L 2,500,000, COLAC funds of L 360,000 and FACACH funds of L 268,000. No indication was given as to how much of the above would be used for agricultural credit. It seems very likely, however, that tRe 1973 use pattern will change very little, i.e., approximately 25% for agriculture, most of which was loaned for coffee marketing activities. 33. General terms and conditions of FACACH lending are as follows: Short-term loans are generally made for a period of 12 months with a single disbursement and repayment. Medium-term loans are normally for 18 to 24­ month periods. Longer term lending is for periods of 24 to 36 months and partial disbursements and repayments are usually arranged. Maximum terms are for five years. Collateral requirements include the production financed, share capital of the cooperative and, in some cases, a mortgage on the pro­ perty of the individual members of the cooperative. With respect to high­ risk loans, FACACH has a guarantee arrangement with OPIC for up to L 500,000. 1/ Discussed below.  ANNEX 7 Page 11 FACACH normally lends to its member cooperatives at 9% interest with 1% administrative charge (2% for non-members). Of each loan, 10% is capitalized and placed in the share account of the borrowing cooperative as the loan is amortized. Four percent interest is paid on the share capital which is credited to the same account of the borrower. In the case of non-members, borrowers, are required to deposit of the amountof the loan in-fixed tiiIledeposit certifIcates on which 4% is paid. By utilizing this system, FACACH has capitalized approximately L 370,000. 34. FACACH is managed by a general manager who is appointed by the Board of Directors (Consejo de Administracion). The Manager is assisted by an assistant manager and departmental heads. The total staff is about 25. A General Assembly is held once a year. FACACH is affiliated with the Honduran Coordinating Council for Development (Consejo de Coordinacion para el Desarrollo) (CONCORDE) as are a number of other private institutions including (a) the Honduran Development Foundation (FUIlliDESA), (b) the Honduran Program for Cultural Action, (c) Nacional Caritas, and (d) the Honduran Chapter for International Volunteers and Technical Asistance (VITA). CONCORDE is a coordinating group; it has no paid staff. Meetings are held bimonthly. Activities include training, technical aSSistance, non-formal education, cooperative promotion (consumer and credit), motivation and general community development. 35. A second private agency working in cooperative credit is the Honduran Development Foundation (Fundacion Hondurena de Desarrollo - FUNHDESA). FUNHDESA was founded in 1970 as an aftermath of the rehabilitation of com­ munities near the El Salvador border. It began operations with a donation of $100,000 from the OAS. Since that time it has managed to acquire funds (both grants and loans) from a number of sources including the OPIC, the Pan American Development Foundation (PADF), the Inter-American Foundation (IAF) , local commercial banks, private foundations and the business community (both local and foreign). FUNHDESA is chartered as a non-profit, civil association with legal status and its own governing body. The G_eneral Assembly is composed of all affiliated members and is headquartered in Tegucigalpa. It meets at least once a year to approve the budget, appoint members, review policy guidelines and present an annual report. The assembly also appoints the Board of Directors which approves projects and loans and appoints the Executive Secretary who acts as Manager. FUNHDESA is also affiliated with CONCORDE. 36. FUNHDESA lends and/or guarantees loans for such purposes as community development (water, electricity, and sanitation), consumer coops, farm pro­ duction (to groups) and small business enterprises. They have developed a program for training community and farm leaders to work with rural groups. They work closely with community and farm leaders to work with rural groups. They work closely with a major campesino group, the Union Nacional de Campesinos (UNC) to promote the organization of groups with good internal cohesiveness and responsibility. In 1973 FUNHDESA extended new loans amounting to L 1.4 million, of which about 25% were for small farmers. They have two levels of  ANNEX 7 Page 12 interest charges for loans: production loans are charged an interest rate of 12% per annum while social loans are charged 8% to 10%. All loans are charged a flat 2% fee to offset administrative costs. FUNHDESA has plans, and funds are pending to rapidly expand its program and provide a package approach (campesino training, credit and marketing services for the Depart­ ment of Olancho). Supervision and technical assitance for small groups of farmers will be carried out by eight agricultural instructors who will work with 20 to 25 agricultural groups each and will supervise loans made to these groups from a special production loan fund. Volunteers from the local groups will also be trained for a month to act as resident volunteer advisors to their respective groups. 37. The 1974 credit needs of FUNHDESA are estimated at $819,000. It is negotiating with the BNF for $500,000, and the remainder will be borrowed from local banks and/or raised from foreign sources. During 1974 FU~~ESA will concentrate in the Department of Olancho and the southern region (the Departments of Choluteca and Valle). FUNHDESA's paid staff is very small, usually fewer than 20 persons, composed of the Executive Secretary, account­ ants, loan officers, field agronomists, and clerical staff. In 1973 agri­ cultural credit and technical assistance were provided to 180 farmer groups, averaging about 15 families per group for a total of approximately 2,000 farm families. Although no official report of credit delinquencies is available, loan recoveries were reported to be above 90%. 38. A third agency in cooperative credit is the National Association of Honduran Campesinos (ANACH). ANACH was founded in 1962 primarily to act as a pressure group to accelerate the agrarian reform law that was enacted the same year. It is affiliated with the labor unions which operate in the fruit industry. It was not until 1968 that policy decisions were put into the hands of the campesino leaders. The Land Reform Decree No. 8 of January 1971 provided considerable impetus to ANACH's efforts and correspondingly reduced tension between certain anti-land reform groups and ANACH. The National Association is estimated to have from 60,000 to 80,000 members, although those actively participating in the organization are probably in the range of 18,000. Since they are affiliated with the labor unions, their numbers are concentrated in the northern departments of Cortes, Yoro and Atlantida. During the past two years, they have also been actively engaged in the east central Department of Olancho. 39. The highest authority of ANACH is the national convention, which meets once a year and elects representatives to the National Council. The National Council serves as the Board of Governors and meets twice a year. The elected officers of the Executive Committee have management authority. These include such persons as the President, Vice President, and Secretary General. The campesino groups affiliated with ANACH are well organized and receive assistance from a small but effective technical group composed of two agronomists, one accountant, and six promoters. These, in addition to the management officers mentioned above, are the paid staff. Forty-one of the associations (some are legally chartered and some are not) have recently  ANNEX 7 Page 13 formed a federation, EI Plan Cooperativa Nacional (CONACAL), to facilitate technical assistance, credit, the purchase of supplies, and the like and make up the bulk of those that are actively involved in agricultural pursuits. 40. Most of the ANACH associations and cooperatives have been awarded land by the INA. Parcels average about three manzanas per family. Most farming is on a communal basis, but some still prefer to farm individual plots. Inputs are usualy purchased jointly and some marketing operations are also conducted jointly. Major crops in the past have been basic grains but they are trying to diversify to crops and/or other activities (honey bees for example) that will produce higher returns. ANACH has been operating its credit program tvith a L 500,000 loan from the BNF. This is supplemented by approximately L 50,000 of ANACH's own funds that 'tv-ere mostly provided by the labor unions. Another loan for L 500,000 was recently approved for a honey production project to be carried out by member coops. fu~ACH does not act as an intermediate credit agent, but more as a broker. Under the terms of these loans, credit is extended at 9% interest of which 6% goes to the BNF and 3% remains tv-ith ANACH. ANACH also guarantees repayment but is really not sufficiently affluent to cover delinquencies. -If--!oss'es'--occiir they revert to the BNF. The present delinquency rate of the fu~ACH affiliates is reported to be in the range of 20%, and many of these delinquent loans will be refinanced by the BNF. The present delinquency rate appears to be unacceptable, but it must be remembered that the program is in its infancy and that the end beneficiaries are among the poorestcamp-esi:n-os in Honduras. 41. Fourthly, the Honduran Federation for Agricultural Cooperatives (FECOAGROH) was originally conceived and legally chartered (1970) as a federation of a number of small and generally weak, small-farmer cooperatives. By 1972, 28 member cooperatives were affiliated, involving approximately 4,000 individual members. The original intent was that FECOAGROH would act as an intermediate credit agency (borrowing from FACACH and sub-lending to the member coops) in addition to performing supply and marketing functions. A series of problems were inherent in the FECOAGROH program from the begin­ ing, including but not limited to: (a) weak management within FECOAGROH and even weaker at the cooperative level; (b) poor relationships between FECOAGROH and the principal supplier of credit (FACACH); (c) poor communications between FECOAGROH and member cooperatives; (d) lack of interest and cooperative member cooperation; (e) two successive drought years; and (f) unfavorable marketing conditions for basic grains as a result of the conflict with El Salvador.  AL'lNE.X 7 Page 14 42. During the 1971/72 and 1972/73 crop seasons, FECOAGROH borrowed approximately L 800,000 from FACACH which it re-Ient to member coops for short-term loans for the production of basic grains. Loan repayments by the member coops for the first year loans amounted to about 80%. However, the recovery rate for loans extended during the 1972/73 season resulted in a delinquency rate of about 75%. As a result, FECOAGROH ceased operations as an intermediate credit institution and presently, under the auspices of Fomento Cooperativo, is carrying out limited supply and management functions. The delinquent loans of the member coops reverted to FACACH. An intensive collection effort has resulted in the recovery of approximately 50% of the outstanding loans. Approximately L 300,000 has not been recovered. Since FECOAGROH is no longer performing agricultural credit functions, no further mention will be made of it in this section. Honey Lenders 43. A study on credit for small farmers in Honduras 1/ indicates that about 90% of the small farmers ~ in Honduras do not have access to credit except from money lenders, relatives, landowners, and shopkeepers. Such transactions are normally very costly to the borrower, when compared to interest loans from credit institutions and cooperatives. In many cases, no interest rates are stated in such arrangements, but in fact they are extremely high. (Decree-Law No. 14 of January 9, 1973, in establishing legal protection for wages of employees, defines usurious lending and establishes a registry for non-formal money lenders.) The maximum rates now authorized are 18% for a loan with mortgage collateral and 24% with a fiduciary guarantee (co-signer); in fact, mortgage collateral has a limited potential in view of the situation of most small farmers, and the typically unclear ownership situation. It is believed that the annual interest rates charged for loans without such a guarantee is close to 40%, counting nominal interest rates, higher prices for inputs charged by the non-institutional credit sources and lower prices for outputs paid by them. During the first OvO months of the Decree, 360 non-formal money lenders had registered, with total portfolios of approximately L 30 million. About L 18 million of this total was in the hands of individual informal lenders and about L 12 million in mercantile companies (empresas mercantiles). J../ Santos, Reinaldo, W. et aI, The National Development Bank of Honduras, published in Small Farmer Credit in Hexico and Central America, AID Spring Review of Small Farmer Credit, Vol. I, February 1973, No. SR101, p. vii. 1/ A small farmer is defined as a farmer not exceeding anyone of the following limits: (a) capital stock - up to a maximum of $10,000; (b) gross annual income - up to a maximum average overtime of $15,000; (c) size of farm - up to a maximum of 15 ha.  ANNEX 7 Page 15 JUDGMENTS MiD CONCLUSIONS 44. In searching for practical improvements in the farm credit system, it is essential to first understand the consequence of the ~resent situation. The Existing Situation and Its Consequences 45. Although the extension of institutional credit to the agricultural sector has increased at the rate of 16% per year over the past five years, the coverage is still far from optimum. In 1971 i t ,vas estimated that only 12% of the small farmers were being served by institutional credit and, even though some increases have been made over the past three years, it is pro­ bably safe to assume that less than 15% of the small farmers will be served in 1974. The proportion of medium-sized and large-scale producers that receive institutional credit undoubtedly is much higher, although specific data are not available. 46. Host small-scale farmers are primarily engaged in the production .of staples such as corn, beans, rice and sorghum. As a secondary activity, they may operate small livestock projects. At any rate, a significant portion (probably as much as 50%) of their total production is consumed on the farm and does not enter commercial market channels. A sizeable portion of these small farmers do not own land, but are renters or squatters. For those that possess some degree of ownership, the lack of a clear title is likely to pre­ vent the use of such properties as collateral for loan purposes. The mere fact that staple grains and livestock can be freely sold or traded throughout Honduras make most bankers skeptical relative to their acceptance as collateral. In essence, one or a combination of the above conditions is sufficient to pre­ vent small-scale producers from acquiring institutional credit. This is especially true in the case of commercial banks that usually insist on having real properties pledged as collateral. The BNF, when making individual loans, does make exceptions to the requirements for mortgageable properties. Nonethe­ less, in most cases, they require a solvent co-signer to endorse the loan docum~nts. ---" 47. In contrast, in most cases the medium- and large-scale producers have acceptable titles or leases for land. Furthermore ,such prod~-cers-often--­ specialize in production of crops such as coffee, sugarcane and cotton. Large­ scale livestock producers also fall into this category. Markets for the above products usually have a limited number of outlets that can be easily monitored by the banking institutions. Indeed, there is usually an understanding between the banking and marketing institution relative to loan repayment. Producers that fall within this category represent a definite minority (less than 10%). They are important, however, from the standpoint of total production, both for domestic consumption and for foreign exchange. With few exceptions, private commercial banks limit agricultural credit to this type of commercial operations. The B~F also participates actively in loans of this nature.  fu~EX 7 Page 16 48. In recent years (especially since the enactment of Decree No. 8 in January 1973), agricultural cooperatives and/or associations have rapidly expanded in numbers and prominence. Simultaneously, they have assumed a more active role in providing agricultural credit, especially for the small-scale producers. In 1971, cooperatives and/or associations extended loans that reached an estimated 6,000 producers. The number of producers affected through cooperative or group loans in 1974 will probably be double this number. Both the public and private sectors have been actively involved in the promotion and funding of cooperative or group credit ventures, but, in spite of an ac­ celerated effort by all concerned over the past few years, a large majority of Honduran farmers remain outside the reach of credit institutions. As a result most of them borr~v at high interest rates and/or curtail the use of improved practices to the point where yields are drastically reduced. 49. The services provided with institutional credit for agricultural pur­ suits vary widely, depending on source of credit, purpose, size of loan, quality of security pledged, and such. A number of long established cooperatives that are directly affiliated with coffee, cotton and banana producers not only pro­ vide technical assistance but play a major role in the purchase of inputs such as seeds, fertilizers, and pesticides. They also provide a ready market for the produce. Other institutions such as private commercial banks provide very limited services. Between these OvO extremes fall such institutions as the BNF and most of the small farmer cooperatives and/or associations. The BNF has made a number of attempts to establish and standardize small farmer super­ vised credit programs. These efforts have had only very limited success for a variety of reasons. In the first place, it proved to be too expensive for the BNF to employ agronomists to supervise the small producers on an individual basis. Subsequently, an agreement was made with the Ministry of Natural Re­ sources to the effect that the Agricultural Extension Service (now DESAGRO) would provide technical supervision and BNF personnel would carry out its normal functions such as appraisals and inspections. This effort had limited success only until such time as DESAGRO became committed with other assignments to the extent that they could not possibly comply with the terms of the agree­ ment. Based on past experience, it can be concluded that efforts on the part of the BNF to provide close supervision to small-scale farmer borrowers have proven to be too costly and have not effectively prevented delinquency rates from reaching levels that are not conducive to sound banking practices. 50. On the cooperative/association side, past small farmer supervised credit efforts appear to have been more successful or, at least, there seem to be fewer difficulties. Some of the earlier established (before Decree No. 8) land reform cooperatives, i.e., those producing bananas and some that are producing a combination of basic grains and cotton are definitely making progress, although they have had their ups and downs. These cooperatives have received technical assitance mostly from the public sector (DESAGRO and INA) and credit funds have been provided by the BNF. Management decisions, however, are the responsibility of elected officials of the respective co­ operatives. A majority of the ANACH affiliated cooperatives are also shOWing signs of progress. Although some technical assistance has been provided by  ~mX7 Page 17 ~ACH, they rely heavily on DESAGRO personnel. Reports also indicate that many of the FUNDHESA-affiliated groups are making satisfactory progress. FUNHDESA, as mentioned previously, has established its own system of providing technical assistance. 51. Many agricultural cooperative efforts have failed. Nevertheless, the movement is gaining momentum and public officials are now in agreement that the only way adequate technical assistance and other necessary services (such as credit and supplies) can be provided is through cooperative action. By going this route, one agricultural technician can provide assistance to several hundred farmers, whereas by working with individual farmers he can assist perhaps not more than 50. 52. High delinquency rates for agricultural loans have been a perennial problem in Honduras. Private commercial banks probably have the lowest rate of delinquent loans, recently reported to range around 8% (this includes some loans that were actually refinanced and are no longer delinquent). FUNHDESA has reported that its affiliated cooperatives/associations have defaults and refinanced loans amounting to from 8% to 10%. AN~~~_~~~reported delinquencies for its affiliates to be around 18%. FACACH has reported a delinquency rate for all loans (the majority are not for agricultural pur­ poses) in the 8% to 10% range also; delinquency rates for agricultural loans are considerably higher due to their inheritance of a number of FECOAGROH­ affiliated loans, some of which are two years in arrears. The above default rates, with the exception of the ANACH-affiliated cooperatives, are low, however, when compared to the BNF, reported as of March 1974 to be 18% of the total portfolio. In addition, another 15% representing past due loans re­ portedly had been refinanced. This situation presents a serious problem for the BNF and there is no question that improvements must be made. (Continu­ ing subsidization of BNF is not a proper solution; in the longer term, such a policy will severely weaken the entire agricultural credit system.) 53. The BNF has reported that administrative costs for individual loans are such that it loses money on all loans for less than L 2,500. Nonetheless, in 1973, the BNF made approximately 14,000 loans, of which nearly 12,000 were for less than L 2,500. Alternative ways of getting credit to small farmers need attention. 54. The land reform asentamiento credit program (as prescribed by Decree No.8) is not included in the above situation report of the BNF. This program is more than half-way through its second year and all indications are that loan repayments will be much lower than has normally been experienced by the BNF. Although this program is financed by a special fund and the BNF will not be responsible for losses, a high loan delinquency rate will create a poor image both for the BNF and for the Government's land reform program. It will also establish a precedent, i.e., land reform beneficiaries will assume the attitude that they are not obligated to repay Government loans. It is true, of course, that asentaminto borrowers have had little experience  ANNEX 7 Page 18 with institutional credit, and that most are still in the starting-up phase. As the asentamientos mature, a better repayment performance should be insisted upon by the INA-BNF management. Suggestions for Improvement 55. Past performances in Honduras reveal that the private sector (private banks, cooperatives, group associations, etc.) has compiled a much better record in agricultural lending from the standpoint of efficiency and loan repayments than have public or Government banks. This does not imply that there is no place for Government banks. However, there is sufficient evid­ ence in favor of the private institutions, including cooperatives, to justify further expansion in this direction. The Government banking system must establish and maintain a set of conditions that encourages private banking institutions to seek ways and means of expanding agricultural credit. 56. The private commercial banks should certainly assume a greater role in the provision of agricultural credit, except for small farmers. It would be much cheaper for the Government to offer additional incentives to private banks to expand agricultural credit than to continue to channel public funds through subsidized Government banks (the BNF). Incentives could be a more favorable rediscount rate, a guarantee agreement for bad debts, and the like. The BNF is presently making many loans to medium- and large-scale farmers/ ranchers that possess the necessary requirements to borrow from the private sector. The IBRD Livestock Production Loan that is being channelled through private banks is a step in the right direction. 57. Cooperatives and/or group associations should be given more incen­ tives to expand agricultural loans. Such groups should also be given much more support in the form of technical assistance for education, promotion, and administrative procedures. Wherever feasible, intermediate credit agencies should be fostered (such as ANACH, FACACH, FUNHDESA) and supported. A system should be established to wholesale loans and they should be permitted at low interest ra-tes, such institutions should be' given~respons-ibility for adminis tratiOli-and -coIlecEion-a-roans .--Theyshould be permitted -to'apply interest rates for end users that reflect the true cost of credit. Technical assistance for groups should be partially supported by the intermediate institutions and partially by the Government (the system presently being used by ANACH could serve as a starting point). 58. The office of Fomento Cooperativa should be 'strengthened in order to efficiently and effectively cope with regulatory functions, promotion and cooperative education. Outside technical assistance should be sought for this purpose. 59. An exerted effort should be made by INA to improve the administra­ tion and productivity of the asentamiento program. This should take precedent over the establishment of additional asentamientos. Likewise, an exerted effect should be made by the INA to select and graduate the most promising  ANNEX 7 Page 19 asentamientos to the status of cooperatives. This will require action on the part of Fomento Cooperativa. Once this change is made, the converted asentamientos should immediately become affiliated with an intermediate institution in order to secure credit, technical assistance, and other sup­ port. The Federation of Land Reform Cooperatives (FECORAH) could possibly assume this function. If not, affiliation could perhaps be with ru~ACH or FACACH. 60. A major problem of the asentamientos that has a direct bearing on credit availability and their performance is the present tenure situation. A majority of the asentamientos have received no assurance from INA that they are permanently settled. Indeed, after more than one-and-one-half years they are still functioning under Decree No. 8 which provides only temporary tenure. This situation offers little or no incentive for making necessary investments in such activities as land use, buildings, water development, drainage and fences, etc. Land reform legislation to rectify the above situation is absolutely essential. 61. The BNF should further review its role as a development bank after 24 years of operation. A significant portion of BNF's portfolio is used to finance medium- and large-scale farmers' credit needs. A majority of such clients would have no problem getting credit from private commercial banks. The BNF should give every consideration to adopting a system tvhereby it would "graduate" clients for commercial bank lending. This could be done over a period of, say, three to four years in order not to cause undue stress. Perhaps of more importance, the BNF should strengthen its cooper­ ative lending program as rapidly as possible. Wherever possible, it should loan to intermediate credit institutions for sublending to end users along with ANACH, FACACH, and FUNDHESA. Simultaneously, it could reduce the number of small loans to indivicfuarfarmers. The BNF simply cannot afford to provide the necessary administrative support for a large number of individual, small farmer loans •. Furthermore, past performance has proven that the BNF has not been very effective in getting funds to farmers at the appropriate time, and in providing the necessary supervision. Collection rates have also been unsatisfactory. 62. The BNF, since its establishment, has been assigned a number of non-credit functions such as (a) the price stabilization program for basic grains, (b) industrial promotion and (c) the provision of a wide variety of agricultural supplies and the management of sales outlets. Although such activities, for the most part, are complementary to the credit program, it is highly questionable if such projects should be an integral part of the BNF. The management of such diverse activities surely causes some distraction from the more important credit functions. In view of the establishment of the Corporacion Nacional de Inversiones (CONADI), it is suggested that consideration be given to the transfer of non-credit activities to this, some other quasi-governmental body or private organization.  ANNEX 7 Page 20 63. An impediment to the possible success of most of the above sugges­ tions is the present chaotic land titling and identification system. The present system is not conducive to capital investments nor, in most cases does it afford a clear and negotiable record of equity or tenure rights, that can be used for collateral or possession purposes. An up-dated cadaster project is an absolute essential for the major farming areas of Honduras and is a prerequisite for' any long-range agrarian reform program. The Government should give high priority to this program and move forward soonest. The titling process should be simplified, and the associated effort to inventory the natural resource base should be given less emphasis. It is understood that USAID has the authority to negotiate a loan for financing major cost components for this project. The Role of International Donors 64. A breakdown of agricultural credit loans granted by the IBRD, IDB and AID is given in Table 15. The IDB has approved $22 million in four agricultural credit loans since 1962, of which $14 million were disbursed as of April 1974. Another IDB loan,primarily for the colonization of the Aguan Valley for $7.7 million, with a 25% credit component, was signed in 1969 but, as of April 1974, only $2.7 had been disbursed. AID has approved one agricultural credit and grain storage loan for $9.5 million, with a 67% credit component. About $0.8 million were undisbursed as of April 1974. The !BRD has granted two loans for livestock production, the first in 1970 amounting to $2.6 million and the second in 1973 amounting to $6.6 million for a total of $9.2 million. 65. The above loans represent a total agricultural credit component of $39.7 million of which $19.5 million, approximately 50%, remained un­ disbursed as of April 1974. The undisbursed portion is represented primarily by two loans that are of 1973 vintage ($15.8 million). There is one 1969 loan, (IDB-210)t however, that ~ias only 35% disbursed as of April 1974. 66. In addition to the above undisbursed agricultural credit loan funds, USAID/Honduras has recently received authority from AID/Washington to negotiate an agriculture sector loan for a total of $12 million, of which $6 million would be for agricultural credit (primarily for agricultural cooperatives/associations and asentamientos). It may be possible to draw on this loan by mid-1975 or earlier. It is anticipated that disbursement will continue over a four-year period. 67. The unpublished draft national development plan for 1974-1978 identifies total agricultural investment needs for the public sector to be L 368 million, of which 40%, or L 147 million is to be sought from external sources. The Plan states further that the agricultural credit program should receive an additional L 40 million annually for the five-year period; no source breakdown is given. In addition, the Plan estimates BNF's needs for agricultural credit funds for th~ same period to be L 101 million--L 78 million from internal sources and L 23 million from external sources. No  ANNEX 7 Page 21 indication is given as to how the undisbursed portions of on-going and authorized (the proposed AID loan) agricultural credit loans were treated, or if they were taken into consideration at all. At any rate, there remains available to the BNF from external sources $19.5 million of undisbursed funds, plus $6 million of authorized loan funds, for a total of $25.5 million for agricultural credit purposes. This is in excess of the estimated need of L 23 million by $14 million. It is probable, however, that the $19.5 million of undisbursed funds were included as funds already committed. 68. In view of the above, and considering the limited absorptive capacity of the BNF, it seems unlikely that additional external funds will be required in support of the BNFfs agricultural credit program for the next two years (CYs 1975 and 1976). Concerning the private sector, the picture is less clear since little information is available on needs and sources. If the present trend prevails, however, cooperative institutions such as ANACH, FACACH and FUNHDESA will be looking to the BNF for a major portion of their agricultural credit funds. The BNF is also charged with providing credit for the land reform program. If the land reform program and the agricultural cooperative movement progress as hoped for, there will probably be a need for additional external funds for agricultural credit by the end of CY 1976. It is suggested that the agencies that com­ pose the tripartite group keep a close watch on the situation and be ready to respond to justifiable needs. 69. In Honduras there is an urgent need for effective technical assistance in the agricultural credit sector. Cooperative credit specia­ lists are in very short supply as are credit administrators, evaluators, and such. The tripartite agencies should make every effort to provide technical assistance of this type, preferably on a grant basis.  Table 1: NEW LOANS DISBURSED BY TIlE BANKING SYSTEM, 1960-75Y Agriculture Crop Total as Percent Agricultural Loans Year Production Livestock Other Total Industry Other ~ of Total bI Develoement Banks ----------------------------------- ·------L Thousand-------------------------------·----­ % L % 1960 , 9,271 1.525 10,796 6,440 44,414 61,650 17 .5 7,004 64.9 1961 9,048 2,547 11,595 8,528 44,789 64,912 17.9 5,660 48.8 1962 14,100 4,698 53 18,851 9,208 51,989 80,048 23.5 10,339 54.8 1963 19,018 6,337 323 25,678 11,422 49,602 86,702 29.6 13,149 51.2 1964 26,123 6,256 572 32,954 16,472 62,609 112,035 29.4 19,502 59.2 1965 36,216 7,692 719 44,627 24,810 80,403 149,840 29.8 27,241 61.0 1966 38,055 10,230 1,097 49,382 31,078 99,746 180,206 27.4 29,283 59.3 1967 35,649 14,199 1,664 51,512 47,286 98,562 236,225 21.8 29,110 50.7 1968 35,935 10,342 5,821 60,098 51,926 133,561 245,585 24.5 27,078 45.1 1969 50,646 24,792 8,135 83,573 75,338 167,983 326,894 25.6 26,675 31.9 1970 63,989 40,070 11,612 115,671 103,982 202,874 422,527 27.4 29,894 25.8 1971 61,918 47,288 12,104 121,310 103,885 193,961 419,156 28.9 29,958 24.7 1972 60,964 68,828 14,708 144,500 102,403 237,010 483,913 29.9 41,556 28.8 1973 71,521 63,159 18,463 153,ltf3 137,285 286,148 576,576 26.6 44,418 29.0 1974 74,146 51,674 16,991 142,811 128,654 347,374 611l,838 23.1 41,728 :13.4 1975 y 63,121 21,855 8,191 93,167 84,587 209,777 387,531 24.0 34,899 37.5 Average Annual Growth Rates (%) 1960-74 16.1 28.5 24.8 23.9 15.8 17.9 14.7 Average Annual Gt'owth Rate (%) 1969-74 7.9 15.8 15.8 11.3 11.2 15.6 13.6 12.3 ~ 11 Excludes loans by credit cooperatives. "II Through July 1. Source: Banco Central de Honduras, Departamento de Estudios Economicos.  Table 2: NEW LOANS DISllURSED BY TIlE BANKING SYStEJ>l, BY SECTOR AND SIJBSECTOR, 1969-75 Y 21 1969 1970 1971 1972 1973 1974 1975­ -:::---------:::::--------~------L Thousand------::::=--------~---------~ Total Agricu1tur~ 83,573 115 z671 121 1 310 144 1 500 153 1 143 142 z811 93,167 Crop 31 50,646 63,089 61,918 6°1 964 71 1521 74,146 63,121 Bananas - 716 948 918 1,170 1,361 1,506 1,356 Coffee 24,407 33,829 33,469 28,677 34,333 30,769 20,532 Tobacco 2,106 2,447 1,905 4,835 3,808 3,996 2,203 Cotton 8,202 5,029 3,263 5,642 7,871 10,180 6,305 Sugarcane 3,930 4,284 5,097 4,202 6,086 5,379 6,998 Grains 5,525 7,510 7,628 8,428 8,158 12,526 12,600 Rice 940 1,946 2,491 2,702 2,801 3,897 3,472 Corn 4,026 4,607 ll,254 4,626 4,403 6,863 8,218 Beans 559 957 883 1,100 954 1,766 910 Other grai"s 13,127 5,760 9, 9f~2 9,575 8,010 9,904 9,790 Livestock 24,792 40,070 47,288 68,828 63,159 51,674 21,855 Other - 8,135 n,612 12,104 14,708 18,463 16,991 .Jh!!!. --Poultry 2,123 2,657 2,461 3,013 2,961 3,127 3,260 Forestry 3,883 3,628 5,163 6,834 7,604 6,684 2,6 i .3 Bees 42 57 81 143 309 301 235 Fishing 2,087 5,270 4,399 4,718 7,589 6,879 2,053 Industry 75,338 103 1 982 103,885 102,403 137 1 285 128.654 84,587 Manufacturing 72,108 102,479 102,292 101,982 136,974 128,356 84,321 Mines and quarries 3,230 1,503 1,593 421 311 118 266 Services 27,995 28,924 34,876 27,766 31,550 65,572 37,907 Transportation and communication 13,217 12,730 14,365 10,076 10,905 11,619 7,472 Other services 14,778 16,194 20,511 17,690 20,645 53,953 30,1,35 Real Estate 41,009 56,865 §.Q. 290 65,216 70,719 70,999 ~603 Construction 32,712 48,835 49,697 47,917 50,897 57,0l8 32,103 Sales and purchases 8,113 7,931 10,578 16,996 19,693 13,858 9,443 Payments for taxes and other charges 184 99 15 303 129 123 57 Commerce 72.279 85,016 71,044 109,051, 146.998 169,949 112,465 Consumption 24,273 29,900 25,877 33,187 35,353 31,219 17,361 ~ hl!30 2,169 1,874 1,787 1,528 9,635 441 TOTAL 326 1 897 422,527 419 1 156 483,913 576 1 576 618,839 387,531 11 Excludes loans by credit cooperatives. 21 Through July 1. ~~ If Banana companies not included. Source: llanco Central de Honduras, Departamento de Estudios Economicos.  Table 3: LOAN PORTFOLIO OF THE RANKING SYSTEM BY SECTOR AND SUBSECTOR, END YEAR POSITION, 1969-75 !! 1969 1970 1971 1972 1973 1974 1975~/ ~---------~---------::::-------L Thousand------~-~---------~--------~- Total Agriculture 90,687 106,155 116.831 129,190 149.761 176.191 195.725 Crop Produc t ion 50,641 53.663 59 1 303 59.640 64 1 692 83 1 194 99,146 Bananas :J} 744 1,127 779 1,261 894 1.672 2.151 Coffee 13,299 15,737 19,103 15,992 14,409 21,860 19,503 Tobacco 4,839 5,425 5,043 5,791 6,009 7,384 7,746 Cotton 14,392 8,516 8,584 10,429 10,105 13,000 15,230 Sugarcane 5,357 5,155 6,149 5,707 7,484 7,441 10,414 Grains 7.396 -L.ill. 10,710 lla 520 13,662 18.536 24.073 Rice 963 1,803 2,588 3,260 4.517 5,495 6,841 Corn 5,603 6,196 6,787 6,881 7,209 10,279 14,510 Beans 803 1.174 1,335 1.379 1,936 2,762 2.722 Other grains 4,614 8.530 8,935 8,940 12,129 13,301 20,029 Livestock 34,301 41,999 47,655 56,267 68,635 76,3'.7 79,478 Other 5.745 10,493 9,873 13,283 16,434 16,650 17 .101 Poultry 1,822 2,669 2,498 3,064 3,273 3,6 89 4,825 Forestry 2,084 3,658 2,547 3,071 4,261 3.145 2,109 Bees 34 46 79 105 279 461 555 Fishing 1,805 5,122 4,839 7,043 8,621 9,355 9,612 Industry 59,760 77,942 86,951 84,324 102 1 790 119.709 126.444 Manufacturing 58,926 76,452 85,097 82,723 101,331 118,621 125,424 Mines and quarries 834 1,490 1,854 1,601 1,459 1,088 1,020 Services 23,593 23,283 26,247 22.662 23.742 49,736 52.294 Transportation and communication 12,698 10,112 11,310 7,848 9,012 11,177 11,956 Other services 10,895 13,171 14,937 14,814 19,730 38,559 40,338 Real Estate 49,497 54,654 60,113 73,264 89,041 105,894 113,026 Construction 38,793 43,100 48,038 58,300 62,137 78,249 83,112 Sales and purchases 9,551 10,828 11,713 14,423 26,688 27,278 29,524 Payments for taxes and other charges 1,153 726 362 541 216 367 390 COlIDnerce 52.827 45.466 65,288 92,311 83,161 91,420 Consumption 14,695 18,349 17.329 23,258 25,287 21.449 22.677 Others 2,298 .b.ill 1,862 1,755 ~ 3,407 3,624 TOTAL 288,133 335,481 354,799 399,741 605,510 1/ Excludes loans by credit cooperatives. ~ 2/ Through July 1. 1/ Banana companies not included. Source: Banco Central de Honduras, Departamento de Estudi~s Economicos.  Table 4: DEMAND, SAVIOOS AND TIME DEPOSITS OF THE BANKIOO SYSTEM, END YEAR POSITION, 1969-75 Average Annual Growth Rate 1969 1970 1971 1972 1973 1974 1975 y 1969-74 COimlercial Banks Demand deposits 81,143 87,294 96,511 113,569 131,616 146,029 142,095 12.4 Savings accounts 69,932 80,479 89,783 97,783 116,640 120,763 126,510 11.5 Time deposits 29,557 42,109 57,389 66,164 77 ,097 84,125 93,895 13.0 Banco Nacional de Fomento Demand deposits 5,259 5,164 6,132 7,730 8,620 8,369 10,766 9.7 Savings accounts 3,423 4,000 4,143 4,542 5,806 5,867 5,901 11.4 Time deposits 3,896 3,899 7,486 9,049 8,752 7,189 8,296 13.0 Banco MuniciEal Autonomo Demand deposits 1,500 1,369 973 850 821 599 1,054 -11.0 Savings accounts 352 390 356 447 292 144 103 -10.1 Time deposits 122 451 1,350 1,378 1,295 31 4 -12.0 Other Institutions Demand deposits Savings accounts 195 636 1,344 1,779 2,841 2,898 2,981 70.2 Time deposits 64 504 232 282 295 950 1,774 70.5 Total Banking System 195,443 265,324 226~95 ~()~!)~ 354&15 17(>J 965 39b469. 14.0 Y 111rough end June. Source: Banco Central, Superintend:ncia de Bancos. ~  ~: NEW LOANS DISBURSED IIY THE BANKING SYS'fEM, BY TYPE OF INSTITUTION AND SECTOR, 1~69-1511 Average Annual Crowth Rate 1969 ,1970 1911 1912 1973 1974 1915'1:..1 1969-74 Commercial Banks and Savinsa and Loan Assoclationa (L '000) 291,568 378.406 377.989 433.865 520.108 556.359 347,224 Annual Rate of Increase(%) 29.8 -0.1 14.8 19.9 7.0 -37.6 13.8 Total Asriculture 56,898 85,777 91,352 102,944 108,725 95.083 58.268 Annual rate of increaae 50.8 6.5 12.7 5.6 -12.6 -38.7 11.0 Cr;'p Production 33,835 46.841 44.452 37.398 46.583 41,527 36,923 Annual rate of increaae 38.4 -5.1 -15.9 24.6 -10.9 -11.1 4.2 Livestock 15,148 27,920 35,314 51,739 44,382 27,125 13,825 Annual rate of increaae 84.3 26.5 46.5 -14.2 -16,4 -62.8 23.4 Other ~/ 7,915 11,016 11,586 13,807 11,760 16,431 7.520 Annual rate of increase 39.2 5.2 19.2 28.6 - 7.5 -54.2 15.7 Industry 72.522 96,625 97,462 97,869 131.681 123.816 81,429 Annual rate of increase 33.2 0.9 0.4 34.5 - 6.0 -34.2 11.3 Other 3/ 162,148 196.004 189.115 233,052 279,702 337.460 207,527 --Annual rate of increase 20.9 -4.5 23.2 20.0 20.6 -38.5 15.8 Development Banks (L '000) 35,329 44.121 41.167 50,048 56.468 62.480 40,307 Annual rate of increase (%) 24.9 -6.7 21.6 12.8 10.6 -35.5 12.1 1 ota.L!lrlc ulture 26,675 29,894 29,958 41,556 44,418 47,728 34.899 Annual .rate of incresse 12.1 0.2 38.7 6.9 7.5 -26.9 12.3 Crop Production 16.811 17 .148 17 .466 28.566 24,938 32.619 26,198 Annual rate of increase 2.0 1.9 34.9 5.8 30.8 -19.7 14.2 Livestock 9,644 12.150 11,974 17 ,089 18.777 14.549 8,030 Annual rate of increase 26.0 -1.5 42.7 9.9 -22.5 -44.8 8.6 Other y 220 596 518 901 703 560 671 Annual rate of increase 170.1 -13.1 73.9 -22.0 -20.3 19.8 20.5 I Industry _. ~ ___ .. 2.816 7,357 6,423 4.534 5,604 4.838 3,158 Annual .rate of increase 161.3 -22.7 -29.4 23.6 -13.7 -34.7 11.4 Other 4/ 5.838 6,870 4,786 3.958 6,446 9,914 2,250 --Animal rate of increase 17.7 -30.3 -17 .3 62.9 53.8 -77 .3 11.2 Total BankinG Slatem (L '000). 326.897 422,527 419,156 483,913 576.576 618,839 387,531 An,nual rate of increase .(%) 29.3 -0.8 15.4 19.1 7.3 -37.4 13.6 !J Excludes loana by credit cooperativea. 2/ 3/ t;.! Source: Through July 1. Poultry, foreatry, bees and fishing. Servicea, real eatate, commerce. consumption and minor items not listed above. Banco Central de Honduraa, Departamento de Eatudioa Econom1co8. 2 ,,/ .' ! Table 6: LOAN PORTFOLIO OF THE BANKING SYSTEM, BY TYPE OF INSn'IUnON AND SECTOR, END YEAR POSI'l'ION, 1969-75Y Average Annual Growth Rate 1969 1970 1971 1972 1973 1974 1975Y 1969-74 Commercial Banks.and ~avlnB8and Loan Associations (L '000) 220,696 262,377 278,442 312.295 389,324 440.190 472,084 Annual rate of increase ('%.) 18.9 6.1 12.2 24.7 13.1 7.2 14.8 Total Aariculture 38,495 52,466 56.721 59,039 70,580 19,029 84,514 Annuli1 rate of increase 36.3 8.1 4.1 19.5 12.0 6.9 15.4 Crop Production 19,241 24,878 26,496 23,451 25.341 29,915 34,489 Annual rate of increas!, . 29.3 6.5 -11.5 8.1 18.3 15.1 9.2 Livestock • 14,025 17.978 21,508 23,884 29,627 34.305 35,131 Annual rate of increase 28.2 19.6 11.0 24.0 15.8 2.4 19.5 Other 11 5,229 9,610 8.717 11,704 14,612 14,745 14.894 Annual 'rate of increase 83.8 -9.3 34.3 24;8 0.9 1.0 83.0 Industrx 52,869 67,436 75,701 72,323 89.151 105,882 112,573 Annual rate of inc.re.ase 27.6 12.3 -4.5 24.1 18.0 6.3 14.9 2!!!!:.r. 11 129,332 142,475 146,020 180.933 228,993 255,219 214.997 Annual rate of increase 10.2 2.5 23.9 26.6 U.5 7.7 14.5 Deve1o~ent Banks (L '000) 67.437 73,104 76,351 87,446 100,382 119.357 133,426 Annual .:ate of increase (1) 8.4 4.4 14.5 14.8 18.9 11.8 12.1 Total Aariculture 52.192 53,689 60,110 10,151 80,181 97,162 111,211 Annual rate of increase 2.9 12.0 16.7 14.3 21.2 14.5 13.2 Crop Produc tion 31,400 28.785 32,807 36,189 39,351 53,219 64,657 Annual rate of increase -8.3 14.0 10.3 8.7 35.2 21.5 11.1 Livestock 20.276 24,021 26.147 32,383 39,008 42,042 44,341 Annual rate of increase 18.5 8.9 23.8 20.5 7.8 5.5 15.7 Other 1/ 516 883 1,156 1,.5-19 1,822 1,901 2,207 Annual rate of increase 71.1 30.9 36.6 15.4 4.3 Hi.1 18.8 InduBt!)! 6,891 10,506 11,250 12,001 13,039 13,827 13,871 Annual ,rate of increase 52.5 7.1 6.7 8.6 6.0 0.3 14.9 Other 4/ 8,354 8,909 4,997 5,294 7,162 8,368 8,344 --Annual rate of increase 6,6 -43.9 5.9 35.3 16.8 -0.3 1.0 Total Banking System (L '000) ,288.133 335,481 354,799 399,741 489,706 559,547 605,510 Annual rate of incre~~~ (%) 16.4 5.8 12.7 22,S 14.3 8.2 14.2 !! Excludes loans by credit cooperatives. 2/ 11,rough July 1. ~ "iJ Poultry, forestry. bees and fishing. Services, real estate, commerce. consumption and minor items not listed above. '.!! Source: Banco Central de· Honduras, Departamento de Estudios Bconomico8.  ANNEX 7 Page 28 Table 7: BNF - LOAN PORTFOLIO BY SECIDR, END OF YEAR, 1969-75 Agriculture Excluding 1/ Total Livestock Livestock Industry Others­ -------------------------------L Thousand---------------------------­ 1969 64,484 31,338 20,232 6,704 6,210 1970 69,243 28,363 23,872 10,010 6,997 1971 72,172 31,848 26,043 10,992 3,289 1972 84,148 35,628 32,405 11,839 4,376 1973 97,589 38,349 38,962 12,092 8,186 1974 114,302 50,489 42,014 12,977 8,822 197sY 127,957 61,060 44,849 12,848 9,200 Average Annual Growth Rate 1969-74 !I Not consistent with Tables 5 and 6. ~ As of end September. Source: Banco Nacional de Fomento, Departamento de Creditos.  ANNEX 7 Page 29 Table 8: BNF - DISBURSED NEW LOAL'fS BY SECIDR, 1969-75 Agriculture Excluding Total Livestock Livestock Industry Othe~ -------------------------------L Thousand--------------------------­ 1969 33,708 17,099 10,122 2,635 6,210 1970 41,029 16,939 11,898 6,397 5,804 1971 38,646 17,260 11,841 5,745 3,800 1972 49,203 23,544 17,060 4,365 4,234 1973 58,959 24,923 18,748 5,465 9,823 1974 62,012 32,621 14,547 4,771 10,073 197# 52,269 33,305 10,152 3,683 5,129 Average Annual Growth Rate 1969-74 11 Not consistent with Tables 5 and 6. 2/ As of end September. Source: Banco Nacional de Fomento, Departamento de Creditos.  ANNEX 7 Page 30 Table 9: BNF - SUBSCRIBED NEW LOANS BY SECTOR, 1969-75 Agriculture Excluding 1/ Total Livestock Livestock Industrl Others­ ----------------------L Thousand-----------------------­ . 1969 33,208 17,765 9,347 2,577 3,520 1970 39,383 13,665 10,374 4,366 10,978 1971 40,606 15,828 10,868 5,051 8,859 1972 50,605 21,272 14,901 4,476 9,956 1973 70,237 32,576 19,586 5,461 12,614 1974 80,342 50,617 15,870 . 6,796 7,059 197# 78,950 57,690 11,027 3,320 6,913 Average Annual Growth Rate 1969-74 11 Not consistent with Tables 5 and 6. ~ As of end September. Source: Banco Nacional de Fomento, Departamento de Creditos.  !.i'lliEX 7 Page 31 Table 10: BNF - SUBSCRIBED NEW LOANS BY TYPE OF SECURITY, 1969-75 Chattel Of Of Of Total Mort~§!Be Total Mort~~e Total Mortg~e Total ----L Thousand--­ % L Thousand % L Thousand 1969 33,208 21,064 63.4 9,224 27 .8 2,920 8.8 1970 39,383 24,785 62.9 11,417 20.0 3,181 8.1 1971 40,606 25,036 61.7 12,945 31.9 2,625 6.4 1972 50,605 37,816 74.7 9,835 19.4 2,954 5.9 1973 70,237 50,496 71.9 13,967 19.9 5,774 8.2 1974 80,342 62,887 78.3 9,205 11.5 8,250 10.2 197sli 78,950 66,222 83.9 9,676 12.3 3,052 3.8 11 As of end September. Source: Banco Nacional de Fomento, Departamento de Cradi tos •  ANNEX 7 Page .32 Table 11: BNF - LOAN PORTFOLIO BY PERIOD OF LOANS, END YEAR POSITION, 1969-75 Medium and Total Seasonal Of Total Lo!!& Term Of Total -----L Thousand------ % L Thousand % 1961 12,939 6,694 51.8 6,245 48.2 1962 15,464 7,674 49.6 7,790 50.4 1963 19,127 8,755 45.7 10,37 2 54.3 1964 24,261 11,336 46.8 12,925 53.2 1965 32,584 11,898 36.5 20,686 63.5 1966 39,472 19,548 49.5 19,924 50.5 1967 48,850 20,886 42.8 27,964 57.2 1968 54,259 12,758 23.5 41,501 76.5 1969 64,484 17,372 26.9 47,112 73.1 1970 65,69 8 24,197 26.8 41,501 63.2 1971 72,172 14,804 20.5 57,368 79.5 1972 84,148 18,644 22.2 65,504 77.8 1973 97,590 21,229 21.7 76,361 78.3 1974 114,302 26,263 23.0 88,039 77.0 197511 127,957 21,243 16.6 106,714 83.4 11 As of end September. Source: Banco Nacional de Foment 0 , Departamento de Creditos.  .. Table 121 BNF - SUBSCRIBED NEW LOAIIS BY SIZE, 1969-1, or Total ..l.21l­ Of Total .l:.lli. OrT"oliaT .i2n. Of Total Loan Size in Lempiras :J:W. L '000 or Total ..121Q. % L '000 % L '000 % L '000 i L '000 % 1914 LTOOO Of Total :t :.12l.L L '000 --,­ Of Total Up to 200 80 0.2 ,1 0.1 68 0.2 116 0.2 21, 0.3 158 0.2 191 0.2 200 ,01 1,001 - ,00 - 1,000 - 2,,00 1,614 2,325 3,4,9 4.9 1.0 10.4 1,298 2,101 3,081 3.3 ,.4 1.8 1,349 2,390 6,,41 3.3 ,.9 8.1 1,622 3,009 4,,82 3.2 6.0 9.1 1,964 3,8,6 6,662 ,., 2.8 9.~ 1,910 4,1,1 6,16, 2.4 ,.2 8.4 2,130 4,324 1.410 ,., 2.1 9., 2,$01 - ,,000 3.889 11.1 3,402 8.6 3,103 9.1 ,,058 10.0 6,,91 9.4 6,123 8.4 1,188 9.1 ,,001 - 10,000 3,581 10.8 3,184 8.1 3,501 8.6 4,148 9.4 ,,983 8S 6,882 8.6 1,91, 10.1 10,001 - 20,000 3,011 9.2 2,,30 6.4 3,05, 1., 4,683 9.3 ,,66, 8.1 1,413 9.2 1,161 9.1 20,001 - 50,000 3,183 11.4 3,224 8.2 8,692 9.1 5,215 10.2 6,558 9.3 10,259 12.8 11,163 14.1 ,0,001 - 100,000 2,482 1.5 2,3,1 6.0 3,00. 1.4 4,460 8.8 5,699 8.1 8,123 10.1 8,331 10.6 100,001 - 2~O,ooo 5,261 15.9 5,130 14.6 1,102 19.0 9,583 18.9 1,401 10., 6,118 8.5 9,311 11.8 250,001 - 500,000 2,301 6.9 4,111 12.1 3,191 9.4 3,439 6.8 6,871 9.8 5,329 6.6 8,679 11.0 500,001 - 150,000 1,3,0 4.1 2,642 6.1 1,800 4.4 2,392 4.1 3,100 4.4 4,610 '.B 3,109 3.9 1,Q,OOl - 1,000,000 1,919 2.7 1,000,000 and more - -­ -­ ~ .Jb.1. 3,000 -1.Jl ...blQQ ~ -LJhl. 21d 11,116 ...1.h§. ..L.2QQ. .-1.J!. TOTAL 33,209 100.0 '39,383 100.0 48,608 100.0 ,0,601 100.0 10,237 100.0 .80.)h2 100,0 7B.2SQ 100.Q Source; Banco Naciona1 de Fomento, Departamento .de Creditos. ~~  Table 13: COMMERCIAL BANK AGRICULTURAL LOAN PORTFOLIO, END 1974 !I 2/ Agencies - Primary Agriculture Agro-IndustrI 11 Total No. Basic Grains Other Total ~--------L Thousand----~-- L Thousand L Thousand % Banco Atlantida ~ 47 417.2 12,522.8 12,940 12,640.9 25,580.9 26.0 Capitalizadora Hondurena ~ '32 1,447.2 6,160.9 7,608.1 5,047.2 12,655.3 12.8 Banco de El Ahorro lIondureno 'll 23 1,490.4 12,204.7 13,695.1 3,333.2 17,028.3 17.3 Banco de Occidente 5/ 13 393.6 7,680.1 8,073.7 1,445.6 9,519.3 9.7 Banco de Honduras §.7 9 276.5 7,338.8 7,615.3 3,472.5 11,087.8 1l.2 Banco de Londres y Montreal 7 1,608.1 1,608.1 2,427.9 4,036.0 4.1 Banco de Los Trabajadores 10 15.1 403.3 418.4 228.7 647.1 0.7 Banco de Comercio 3 313.2 1,395.2 1,707.4 638.1 2,345.5 2.4 Bank of America 3 74.0 1,786.9 1,860.9 1.657.2 3,518.1 3.6 Financiera Hondurena 2 381.6 6,766.2 7,147.8 3,618.0 10,765.8 10.9 Banco Continental I 379.9 517.5 897.4 488.9 1,386.3 1.3 Total 150 5,188.7 58,383.5 63,572.2 34,998.2 98,570.4 100.0 7. Dis tribution (5.3) (59.2) (64.5 ) (35.5) (100.0) 1/ Agro-industry in this table includes table textiles and footwear; therefore the total cmmnercial bank agricultural loan - portfolio is higher than shown in Table 6. 2/ Includes the head office, regional offices, and local agencies. 3/ Industries include food, beverages, textiles. and footwear. 4/ the Chase Manhattan Bank of New York currently owns 53% of Banco Atlantida. 5/ Affiliated. §} Affiliated with the First National City Bank of New York. 2 . ,­  ANNEX 7 Page .35 Table 14: . FACACH - DISBURSED NEW LOANS, LOAN PORTFOLIO AND DEPOSITS, 1969-74 Disbursed Loan Portfolio New Loans December ~1 DeEosi ts -------------------L Thousand--------------------­ 1969 666 613 91 1970 1,155 1,058 134 1971 2,817 1,881 274 1972 2,997 2,399 438 1973 2,696 3,164 568 1974 4,728 808 Average Annual Growth Rate (%) 1969-1974 44 48 55 Source: Federacion de Asociaciones Cooperativas de Ahorro y Credito de Honduras (FACACH)  ANNEX 7 Appendix 1 LIST OF FINANCIAL INSTITUTIONS, 1974 Central Bank Development Banks Municipal Bank (3) 1/ National Development Bank (22) Commercial Banks Banco At1antida (46) Banco de Honduras (9) Banco de Londres y YlOntreal (7) Banco de los Trabajadores (6) Banco de Comercio (3) Capitalizadora Hondurena (29) Bank of America (J) Banco del Aherro Hondurena (20) Financiera Hondurena (2) Banco de Occidente (11) Savings and Lean Associations Hipotecario (J) IMVA (1) Vivienda de Sula (1) Casa Propia (1) La Vivienda (1) 2/ 11 Number of branch officeso ?/ Lends through Capi talizadora Hondurena, Banco del Ahorro Hondurena, and Banco de Occidente..