AGRICULTURAL CROP DfVBRSIFICATION/EXPORT PROMOTION

CROSS-CUTTING NALUATXON

FINAL WALUAT ION REPORT

Prepared by c

Stephen Lack, Team Leader and Sr. Investment/Financial Management Specialist

C. Kenneth hurent, Sr. Agricultural Economlet Conchita Espinoza, Sr. Agricultural Trade Specialist

Arden Christiansen, Sr. Agronomic/Biological Scientist Donald Calvert, Agricultural Ec!ologist

Under a

Experience, Ina. Contract No. AID/PDC-1406-1-00-7011-00

Delivery Order NO. 16

EXPEMNCE inc.

Washifigton, 0.1: 20006 USA

AGRICULTURAL CROP DIMRSIFICATXON/gXPORT PROMOTION

CROSS-CWPTWG EVALUATION

FINAL SVALUATXON REPORT

Stephen kck, Team Leader and Sr. Investment/Financial Management Specialist

C. Kenneth Laurent, Sr. Agricultural Economist Conchita Espinoza, Sr. Agricultural Trade Specialist

Arden Christianeen, St. Agronomic/Biological Scientist Donald Calvert, Agricultural Ecologist

Under I

Experience, Inc. Contract No. AID/PDC-1406-1-00-7011-00

Delivery Ordes No. 16

Agricul tura l Crop Diversif icat ion/Export Promotion Cross-Cutting Evaluation

SECTION I r EXECUTIVE SUMMlWY -

Table of C m t e n t s

Executive Summary Chile/Mexicor Lessons Learned A . 1 . D . t CD/NTAE Po l i c i e s and Pract ice

Page

v

SECTION 111 BACKGROUND, PURPOSE AND HETHODOLOGY OF THE EVALUATION

A. Background t o t h e Evaluation B. Purpose of t h e Evaluation C . Methodology

SECTION I I I r CROSS-CUTTING DESCRIPTIONS L'

A. Host- Countries J Se t t ings , Projec ts , I n s t i t u t i o n s B. Marketing C. Production Technology D. Environmental Impact E. Financing

Bel ize Caribbean Regional Costa Rica Dominican Republic Ecuador E l Salvador Guatemala Honduras Jamaica Chile Mexico

1V.A 1V.B 1v.c IV. D 1V.E I V . F 1V.d I V .H I V . 1 IV . J 1V.K

* Individual Tables of Contents precede each country repor t i n sec t ion I V .

i

Table of Contents (continued)

SECTION VI APPEND1 CES

A. Scope (Statement) of Work B. Field V i s i t I t ine ra ry C. Persons Met D. The Caribbeai. Basin I n i t i a t i v e ( C B D ) E. The Bumpers Amendment and Policy Determination F. Guides t o F ru i t s and Vegetables Approved fo r Export

t o t he U. S. from Selected Countriesr Guatemala, Honduras, E l Salvador

G. Bibliography

LIST OF TABLES

SECTION I x

1. A. I. D. CD/NTAE-Related Projects i n Countries Surveyedr C a t e e ~ r y One - Category ZLwo

2. A . I .D . Development Loan and Local Currency Funding Pa r t l y Related t o CD/NTAE

SECTION 111:

1. U.S. Imports of NTAE Products, Selected Countries, 1983-87 2. Major Changes i n Exports of NTAE, Selected Countries, 1983-87 3. Estimated Volume of NTAE from Selected Countries/Regions

Receiving A. I. D. Support, 1986 4. Non-Traditional Crops fo r Diversification/Exportation,

Specific Countries, 1988 : Central America Caribbean Area and South America

SECTION IV:

A. Belize 1. Exports of Selected Non-Tr'aditl. m a 1 Agricultural Products,

1980-86 I V . A-2 2. L i s t of Plant Pathogens and Insect Pests on Cextain Crops I V . A-1C

Table of Contents (continued) - LIST OF TABLES (continued)

Page - B. Caribbean Regional

1. Selected Statistical Information IV. B-1 2. Non-traditional Agricultural Exports, 1985 IV. B-3

C. Costa Rica 1. Non-Traditional Agricultural Exports, 1980-87 IV. C-2 2. Exports of Non-Traditional Agricultural Crops to Major

Market Areas, 1980-87 IV. C-3 3. Exports of Selected Non-Traditional Agricultural Crops

to the U.S., 1980-87 IV. C-4 4. CAAP Budgets for 1986-88 IV. C-6

D. Dominican Republic 1. Volume and Value of Non-Traditional Agricultural Exports,

1981-87 IV. D-2 2. Exports of Non-Traditional Agricultural Products, 1981-87 IV. D-3 3. Outline of Suggested Guidelines for the Pre-Inspection Program 1V.D-19 4. A LLgting of Products from the Dominican Republic that can - Enter into the U.S. under the Pre-Inspection Program IV. D-2 0 5. Fresh Vegetables Exported Under the Pre-Inspection System IV. D-21 6 Pre-Inspection Program (USDA-APHIS/AID/JACC/SEA) IV. D-22

E. Ecuador 1. Exports of Agricultural Products to the U.S., 1982-87 2. Pesticide Contamination 3. Pesticide Importations Realized During the Period

1987-82 in kg. of Active Ingredient

F. El Salvador 1. Imports of Non-Traditional Agricultural Crops into

the U.S., 1983-87

G. Guatemala 1. Value of Non-Traditional Exports, 1980-86 2. Exports of' Selected Non-Traditional Ag Products, 1981-85

H. Honduras 1. Non-Traditional Agricultural Exports, 1980-87 2. Exports of Non-Traditional Agricultural Crops, 1980-87

I. Jamaica 1. Selected Non-Traditional Agricultural Exports, 1986-87

IV. E-2 IV. E-11

IV. G-3 IV . G-4

IV. H-2 IV. H-3

IV. 1-2

iii

Table of Contents ( continued)

LIST O F TABLES (continued)

Page

J. Chile - 1. Agricul ture Sector Exports, 1983 and 1987 2 . G e s h F r u i t and vegetable Exports, 1971/72 - 1986/87 3 . Value of P r inc ipa l F r u i t Exports, 1983-87

K. Mexico 1. Export of F r u i t s and Vegetables, by S t a t e , 1986/87 2. Export of F r u i t s and Vegetztbles, 1977/78 - 1986/87 3. Exports of F r u i t s and Vegetables, 1986/87 Season 4. Points of Ex i t f o r F r u i t s and Vegetables, 1986/87 5. Means of Transporting F r u i t s and Vegetables from Mexico

and Volume Carried

I V . J-1 I V . J-2 I V . J-2

1V.K-2 IV. K-7 1V.K-8 IV. K-9

IV. K-10

A . I . D . A A X ADOE RPO ADP A I R AND% APHIS ARDO AVT

BABCO BADC BANC CMEX BANEX BEIPU

CAADES

CAAP CABEI CUC CACL CACM CAEP CAMIS CARD AT^ CARD1 CARICOM CATCO CATIE CBB C BH CBI C BPC CD CDB CDI CEDOPEX

CEDP CENPRO CEN'ZA CFC CFSC CINDE

CNAA COFISA

Agency f o r In te rna t iona l Development Asociaci6n de ~ g r . t c o l a s d e l Estado de Sinaloa (Mexico) Asociaci6n Dominicana de Exportadores (Dominican Republic) Agribusiness Development Projec t ( E l Salvador) Agr icul tura l and I n d u s t r i a l Reactivat ion Project (Costa Rica) Asociaci'on Nacional de Empresarios (Ecuador) Animal and Plant Health Inspection Service Agriculture and Rural Development Office ( A . I . D . ) Agr icul tura l Venture Trust (Caribbean)

Belize Agribusiness Company Barbados Agr icul tura l Development Corporation Banco Nacional de Comercio Exter ior (Mexico) Banco Agro I n d u s t r i a l y de E x p o r t a c i h (-sta Rica) Belize Export and Investment Promotion Unit

Confederaci'on de Asociaciones Agrlcolas d e l Estado de Sinaloa (Mexico) Consejo Agropecurio y AgroindustriaL Privado (Costa Rica) Central American Bank f o r Economic In tegra t ion Commercialization of Al ternat ive Crops Projec t (Bel ize) Chicago Association of Commerce and Industry Central American Common Market

L' Caribbean Agr icul tura l Extension Projec t CARICCM Agr icul tura l Market Information Service Caribbean Agr icul tura l and Rural Development Advisory Service Caribbean Agr icul tura l Research and Development I n s t i t u t e Caribbean Cornunity Caribbean Agr ica l tura l Trading Co. Centro Agron'dco Tropical de Invest igaci6n y Ensefianza Central Bank of Belize Central Bank of Honduras Caribbean Basin I n i t i a t i v e Caribbean Basin Promotion Center Crop Divers i f i ca t ion Caribbean Development Board Crop Divers i f i ca t ion / I r r iga t ion Projec t (Jamaica) Centro Dominicana para Promoci'on de Exportaciones (Dominican Republic) CARICOM Export Development Projec t Centro de Promoci6n de Exportacibn (Costa Rica) Centro Nacional de Tecnologfa Agricola ( E l Salvador) Caribbean Food Corporation Caribbean Financia l Services Corporation Coalicibn Costarr icense de I n i c i a t i v a s de Desarrol lo (Costa Rica) C&~ara Nacional de Agricultura y Agroindustria ( Costa Rica) Corporacion Costarricense de F inanc iaden to Indus t r i a l (Costa Rica 1

ACRONYXB/ABBREVIATIQNS (continued)

COOPEFRESA COOPEPLANT CORFO

DACEA

DFC DIVAGRO

ECA ECAD EC I PS EDF EEC EP A

FAS FC FDA FEDECOOP FEDEXPOR F EP ROE XAAH

L'

F H I B FIDE

FORT AS Fruta de Sol

FUNDAGRO FUSADES

G DP GOB GOC GOCR GODR GQES GOG GOH GOJ GREMUILL

has. HIAMP

Cooperative de Productores de Fresa (Costa Rica) Cooperativa de product ore^ de Plantas (Costa Rica) ~ o r p o r a c i 6 n de Fomento (Government Development Corporation, Chile

Direcci6n General Operaciones Agroindustr iales , Consejo E s t a t a l do1 AzGcar (Dominican Republic) Development Finance Corporation (Be l i ze ) Diversification Agropecuaria (FUSADES)

Eastern Caribbean Agencies ( a t r ad ing co . ) Eastern Caribbean Agribusiness Development Eastern Caribbean Investment Promotion Service European Development Fund European Economic Community Enviromnental Protec t ion Agency (U.S.)

Ford.gn Agr icul ture Service Pundaci6n Chile (Chile Foundation) Food and Drug Administration Cooperative Federat ion (Costa Rica) Federaci6n Ecuatoriana de Exportadores Federaci6n de Productores y Exportadores Agropecuarios y Agro-Industriales de Honduras. ~ u n d a c i h n de Invest igaci6n Agrlcola (Honduras) Fondo de Inversi6n pa ra e l Desarrol lo Econ6mico (Dominican Republic ) Fortalacimiento de Asociaciones (FUSADES) Cooperative Regional de Servic ios Agropecurios de "Fruta Del Sol" Limitada (Honduras ) Fundaci6n pa ra e l Desarro l lo Agropecuario (Ecuador) ~ u n d a c i 6 n SalvadoreEa de Desarrol lo Econ6mico y Socia l ( E l Salvador)

Gross Domestic Product Government of Bel ize Government of Chi le Government of Costa FUca Government of Dominican Republic Government of E l Salvador Government of Guatemala Government of Honduras Government of Jamaica Non-Traditional Product Exporters Guild (Guatemala)

hec tares High Impact Agr icu l tu ra l Marketing and Production P ro jec t (Caribbean Region)

ACRONIR(S/ABBREVIATIONS (continued)

IBRD ICAFE ICAITI

I CATA

I C I ICTA I DB IDEA I I C A INCAE INDRHI I N IFAP

IPC ISA/CALDER

ITESM

JACC/DR JADF JAMPRO JANEC JETCO JNEC JNIP

LAAD LAC LOP

MAG MAGA MOA MOE m t MTIA

NCBA

NDF NETS NTAE

World Bank I n s t i t u t o de ~ a f & (Costa Rica) I n s t i t u t o Centro Arnericano de 1nvestigaci6n y Tecnologia I n d u s t r i a l (Guatemala) I n s t i t u t e of Environmental Sciences and Agr icul tura l Technology (Rafael Landivar U n i ~ e r s ~ t y . ) Intermediate Credi t I n s t i t u t i o n I n s t i t u t o de Ciencia y Tecnologia Agricolas (Guatemala) Interamerican Development Bank I n s t i t u t o de EstratGgias Agropecuarias (Ecuador) Interamerican I n s t i t u t e f o r Cooperation on Agriculture I n s t i t u t o Centroamericano de Administracibn de Empresas I n s t i t u t o Nacional de Recursos Hydr5ulicos (Dominican Republic) National Forestry, Agriculture and Livestock Research I n s t i t u t e (Mexico) Investment Promotion Council (Dominican Republic) I n s t i t u t o Superior de Agricultura/Centro de Admin. de Desarrol lo Rural The Monterrey Technical I n s t i t u t e of Higher Studies (Mexico)

J o i n t Agr icul tura l Consultat ive Committee/Dominican Republic Jamaica Agr icul tura l Development Fund Jamaica Promotions

,.Jamaica National Export Corporation Jamaica Export Trading Co. Ltd. Jamaica National Export Corporation (absorbed i n t o JAMPRO) Jamaica National Investment Promotion Ltd. (absorbed i n t o JAMPRO )

Lat in America Agribusiness Development Projec t (ROCAP) La t in America and Caribbean L i f e of Projec t

Ministry of Agriculture Ministry of Agriculture and Livestock (Guatemala) Ministry of Agriculture Ministry of Economy metric ton Ministry of Trade, Industry and Agriculture (S t . Vincent)

National Cooperative Business Association (formerly CLUSA) (Guatemala) National Development Foundation (Jamaica) Non-Traditional Export Technology Support (Costa Rica) Nonqrad i t iona l Agriculture Export

v i i

ACRONYMS/ABBR~BIATXOWS (continued)

OECS OICD ORD

PACD PDO PED PPI PIC P I D PIE PP PPQ P RE PRIDEX PROCHILE

PROE XAG

PROP EMI PSO PSOJ

RDO REMS ROCAP

SAG

SARH SEA SEIC SN A

SRN STP

TDB

UCR UNPH

USAID USDA us DC U W I

Oficina de ~ l a n i f i c a c i 6 n Agricola (Agriculture Planning Off ice , Chile Organization of Eastern Caribbean S t a t e s Off ice of In te rna t iona l Cooperation and Development Organization f o r Rural Development

Project. Assistance Completion Date Projec t Development Office, USAID Pr ivate Enterpr ise Development Projec t (USAID/G) Par t i c ipa t ing Financial I n s t i t u t i o n Pr iva te Investment Carporation (Costa Rica) Projec t Implementation Document Program of Investment and Exports (CINDE) Projec t Paper Protect ion and Plant Quarantine (USDA) Bureau f o r P r iva te Enterpr ise ( A I D ) Promocih de Inversiones de Exportaciones (FUSADES) ~ i r e c c i 6 n de ~romoci6n de Exportaciones (Bureau of In te rna t iona l Economic Af fa i r s , Foreign Ministry, Chile) Nonl l radi t ional Agr icul tura l Export Support Projec t ( ROCAP/USMD/Guatemala) ~romoci6n de l a Pequesa y Microempresa (FUSADES) Pr iva te Sector Off ice ( A . I . D , )

private Sector Organization of Jamaica

Quick Response Fund

R i a l Development Office Regional Environmental Management S p e c i a l i s t Regional Of f i ce f o r Central America Programs ( A I D )

Se rv ic io Agricola y Ganadera (P lan t and Animal Service Division, Ministry of Agriculture, Chi le) s e c r e t a r i a de Agricultura y Recursos ~ i d r a f i l i c o s (Mexico) s e c r e t a r i a de Estado de Agricultura (Dominican Republic) S e c r e t a r i a de I n d b t r i a y Comercio (Dominican Republic) Sociedad Nacional de Agricultura (National Agriculture Society, Chile) Sec re ta r i a de Recursos Naturales (Honduras) Secre ter iado Tdcnico de l a Presidencia (Dominican Republic)

Trafa lgar Development Bank (Jamaica)

Universi ty of Costa Rica Uni6n Nacional de Organism0 de Productores de Hortal izaa y Frutas (Mexico) United S t a t e s Agency f o r In te rna t iona l Development United S t a t e s Department of Agriculture United S t a t e s Department of Commerce Universi ty of t h e West Indies

v i i i

S E C T I O N I

EXECUTIVE SUMMARY

Crop Dive r s i f i ca t ion and Non-Traditional Agr icul tura l Export (CD/NTAE) projoc to co t i s t i t u t e , f o r A. I .D . and f o r t h e coun t r i e s surveyed* i n this cross-cut t ing evaluat ion, key i n i t i a t i v e s i n promoting economic development and growth. Since 1982, f o r t h e count r ies surveyed, A . I . D . has authorized US$182.4 mi'lion i n CD/NTAE-specific p r o j e c t g ran t and loan funds.** Of t h i s amount, ~ ~ $ 4 9 . 1 mi l l ion have a l ready been expended) it is l i k e l y t h a t most of t h e author ized balance w i l l have been expendcd by 1992. New CD/NTAE-related p r o j e c t s Ere being designed and/or implemented by d i f f e r e n t Missions. Host coun t r i e s , f o r t h e i r p a r t , have become keenly aware of t h e p o t e n t i a l socio- economic b e n e f i t s from CD/NTAE. For Chile and Mexico, surveyed here f o r comparative gurposes, CD/NTAE i n i t i a t i v e s have a l ready proven t h e i r worth and enjoy s t rong support from both t h e p r i v a t e and pub l i c sec to r s . (A. I .D. has only a minor presence i n each of these two countries.!

I n cons idera t ion of A. I . D . 's a l ready extens ive resource inputs , and i n an e f f o r t t o provide guidance f o r f u t u r e CD/NTAE au thor i za t ions , t h e e v a l u a t i o r ~ team attempted first t o measure t h e " re turns" on A . I . D . ' s inguts . It wae quickly found t h a t accura te measurement of these r e t u r n s is not f eas ib le . 1.c is, f o r example, a matter of a r b i t r a r y judgement a s t o what po r t ion of t h e combined NTAE s a l e a of t h e coun t r i e s surveyed has been o r w i l l be a t t r i b u t a b l e t o those inputs . By t h e same token, it Is t o o e a r l y t o determine unequivocal lyl ' that one o r another of A . I . D . ' s p r o j e c t s o r approaches t o CD/NTAedevelopment can ensure sus t a inab le success over time. ( I n po in t of f a c t , most of A.I.D.'o au thor i za t ions occurred a f t e r 6/85.] AndI a s t h e team's research i n Chi le and Mexico showed, achievement of p r o f i t a b l e , sus t a inab le a g r i c u l t u r e export takes t i m e . E f f o r t s a t CD/NTAE i r r t hose count r ies d a t e back over 30 years.***

* Includes i n Cent ra l Americar Costa Rica, Honduras, E l Ellvador, Guatemala and Belize. Includes i n Caribboanr Jamaica, Dominican Republic, and t h e Eastern Caribbean Regional coun t r i e s of Barbados, Antigua, Dominica, S t . K i t t s , S t . Vincent, S t . Lucia, Gxenada and Montserrat. Includes i n South Americar Ecuador.

** See a l s o Table 1 on pages 1-11 and 1-12. Pas shown i n t h i s t a b l e , a f t e r inc luding t h e non-specific but CD/NTAE-related p r o j e c t au thor i za t ions (Category Two), t h e t o t a l would be ~ ~ $ 3 6 9 . 5 mi l l ion , with expenditures a s of March 31, 1988, of ~ ~ $ 1 2 1 . 5 mi l l ion . After adding f i g u r e s from Table 2 (page l 3 ) , t h e t o t a l s would increase t o ~ ~ $ 4 7 8 . 0 milliw.l and U.s.$l83.7 mi l l ion , respect ive ly .

*** Even C h i l e ' s dramatic performance over t h e p a s t few years was supported by t e n previous years of s teady buildup and a p r i o r pe r iod of t e n years when many of t h e foundations were l a i d f o r t h i s growth.

Study of myriad va r i ab les khat can and do cause p ro jec t breakdowns confirmud t h e need f o r ample time t o make adjustmer~ts t o CD/NTAE p r o j e c t s . Numerous interviewees ins ide and out of A . I . D . a l s o s t a t e d t h a t a sound time frame f o r these types of development p r o j e c t s would be c lose t o t e n years , not l e s s . A , I . D . ' s CD/NTAE pro jec t s , with average LOPS of 4.8 years , have been handi- capped because, desp i t e a b i l i t y t o extend PACDs, t h e time frame "thinking" of project: designers and managers has uoually been guided by t h e o r i g i n a l LOP span.

Given t h e d i f f i c u l t i e s or' p r e c i s e measurement of r e tu rns m what a r e assen- t i a l l y new A . I . D . investments, t h e team sought t o evaluate t h e impact or ienta- t i o n of A . I . D . ' s CD/NTAE p r o j e c t s , t h a t is , A . I . D . ' s c e n t r a l approaches anmd i t s implemnting methodologies. In terms of approaches, it was dtrtermined t h a t A. I .D . -- meaning t h e peop1.e t h a t work f o r A. I .D . -- understand abundant- l y t h e i s sues and t h e r e q u i s i t e c e n t r a l approaches (e.g., marketing, c r e a i t , technology t r a n s f e r ) f o r attempts a t helping t o achieve e f f e c t i v e CD/NTAE. Personnel i n evary Mission and i n Washington have learned t h e nature of t h e bas ic i n t e r n a l and external c o n s t r a i n t s t o CD/MTAE development. This knowledge is perhaps "half t h e b a t t l e won". I t is i n t h e o the r ha l f of t h e b a t t l e , namely reducing and/or e l iminat ing t h e cons t ra in t s , t h a t t h e evalu- a t i o n team has i d e n t i f i e d areas of concern and prepared recmunendations t o address these areas . The primary concern is t h a t , i n implementation, p r o j e c t s a r e being handled by A.1.D.-funded arganiza t ions t h a t a r e not y e t capable of doing t h e job. A c lose ly r e l a t e d concern is t h a t A . I . D . has no t provided f o r t h e establishment of s o l i d production o r marketicg bases. Ins tead , it seems, A . I . D . ' s i n i t i a t i v e s have been too short-term i n nature.

L'

A f ind izg t h a t tends t o support both of t h e s e concerns i s t h a t much of t h e progress i n CD/NTAE i n the countr ies s tudied -- progress such a s increased investment, technology t r a n s f e r , t h e achievement of export s a l e s and t h e spread of socio-economic benef i t s -- is occurring independently of A . I . D . ' s primary e f f o r t s . Examples of such independent progress include t h e s tar t -up and growth of t h e c u t flower and ornamental p l a n t export i n d u s t r i e s i n Costa Ricar t h e success of t h e melon export indus t ry i n E l Salvadorr and t h e export of "ethnic" crops from t h e Eastern Caribb.?an and t h e Dominican Republic.

This is not t o say t h a t l e v e l s of progress i n t h e countr ies s tud ied would necessa r i ly have occurred without A . I . D . ' s presence o r t h a t A . I . D . ' s a c t i v i t i e s may no t have supported t h i s progress. In f a c t , t h e evaluat ion team found convincing evidence t o t h e e f f e c t t h a t A . I . D . ' s work has been pr imar i ly responsible f o r t h e 2 o s i t i v e p r i v a t e and publ ic s e c t o r a t t i t u d e s toward and understanding of CD/NTAE t h a t p r e v a i l i n those countr ies today. The immediate and t h e long-term importance of t h e s e a t t i t u d e s should not be underestimated. Also, a number of t h e independent i n i t i a t i v e s described above were underway before A.I.D. began t o emphasize CD/NTAE. But, i n t h e team's view, A.I .D. 's implementation methodology w i l l not r e s u l t i n t h e r e a l i z a t i o n of p o t e n t i a l s i f adjustments a r e no t made i n t h e way A.I .D. works through t h e implementing agencies and i n t h e type of t ecbn ica l a s s i s t ance packages i t provides f o r CD/NTAE . A bas i s f o r descr ib ing t h e team's f indings regarding implementinj agencies and t echn ica l a s s s i s t ance is provided i n t h e following breakdown of t h e $182.0 mi l l ion i n author iza t ionsr

PURPOSE -- Long-term technica l a s ~ i s t a n c e Short- tern t echn ica l a s s i s t ance P r i v a t e / p \ h l i c s e c t o r i n s t i t u t i o n a l support Credi t and equ i ty Training Trade/Inver\tment promotion Fixed a s s e t s (veh ic les , computers, e t c . ) Evaluation and a u d i t I n f l a t i o n and contingencies

TOTAL

AMOUNT ( roundad)

$ 22.0 mil l ion 12.0 mil l ion 30.0 mil l ion

103.0 mil l ion 3.0 mil l ion 2.0 mil l ion 3.0 mil l ion 2.0 mil l ion 5.0 mil l ion

$182.0 mil l ion

A s shown, t h e s i n g l e l a r g e s t item i n t h e breakdown is c r e d i t and equity. This amount of author iza t ions , which includes f i n a n c i a l f a c i l i t i e s f o r most of t h e p r o j e c t s s tudied , was probably j u s t i f i e d on t h e bas i s of c r e d i t surveys and t h e knowledge that: lack of c r e d i t is a se r ious c o n s t r a i n t t o CD/NTAE duvelop- ment. Placement of these funds is planned pr imar i ly through f i n n n c i a l i n s t i t u t i o n s , but movement of s i g n i f i c a n t amounts depends upon t h e performance of A . I . D .-funded p r i v a t e and pub l i c s e c t o r i n s t i t u t i o n s . I f these i n s t i t u - t i o n s , such a s FEPJWEXAAII i n Honduras, FUSADES i n E l Salvador, CAAP i n Costa Rica, o r FEDEXPOR ::.n Ecuador, JACC i n t h e Dominican Republic, o r t h e GREMIAL i n Guatemala, do no t channel and r e l a t e loan demand through t h e i r a c t i v i t i e s , impact p o t e n t i a l s ,#ill not be r ea l i zed s a t i s f a c t o r i l y . And while a c t u a l placement is not usual ly t h e d i r e c t r e s p o n s i b i l i t y of these i n s t i t u t i o n s , c r e d i t and equity funds do form major p a r t s of t h e i r p r o j e c t s thereby imputing respons ib i l i& t o them.

- Such respons ib i l i ty is d i f f i c u l t t o discharge when mandates a r e too broad. Spec i f i ca l ly , i n t h e t h e team's judgement, t h e $30.0 mil l ion authorized f o r these i n s t i t u t i o n s has probably made it d i f f i c u l t f o r some t o focus on near-term a t t a i n a b l e objec t ives , ins t ead of on what has become t h e development of considerable bureaucracies. By i t s e l f , t h i s i s not a se r ious problem, p a r t l y because it is a na tu ra l occurrence a t t h e s t a r t -up of any new organizat ion. Also, over time, these e n t i t i e s can r e f i n e t h e i r p r o j e c t implementation s k i l l s and even ca r ry out wholesale res t ruc tur ing . ( A case i n p o i n t is FEPROEXAAH which has r ecen t ly undergonc a complete reorganiza t ion including a sharp reduction i n personnel. what is unfortunate, however, is when these young "bureaucracies" a r e not supported with adequate, complementary, long-term techn ica l a s s i s t ance , p a r t i c u l a r l y a s r e l a t e s t.o t h e bas ic production and marketing needs of CD/NTAE development.

Apart from noting t h a t t h e $22.0 mil l ion shown i n long-term techn ica l a s s i s t ance autbc.r izat ions was l e s s than t h e amount authorized f o r t h e p r o j e c t implementing i n s t i t u t i o n s , t h e team found t h a t t h e composition of t h e s e $22.0 mil l ion was not e n t i r e l y or iented toward fundamental production and marketing developmentt it included about 20 percent i n p r o j e c t management and admini- s t r a t i o n l i n e items. S t i l l , one item i n t h e composition, which measured $8.0 mil l ion and seems a s t e p i n t h e r i g h t d i r e c t i o n , is t h e ROCAP Non-Traditional Agriculture Export Support Projec t (PROEXAG). (Despite t h e f a c t t h a t t h i s

p r o j e c t s u f f o r a from itar e f f o r t s bolncj spruad too th.Ln, il: doea seem t o bo on t h e r i g h t t r a c k Jn reopondiny t o p r i n c i p a l CL/NTAE development c o n s t r a i n t s . )

The $12.0 m i l l i o n short- term t e c h n i c a l i laais tance complement i n t h a breakdown i a n o t an a p p r o p r i a t e anewer t o product ion and marketiny aos le tunce requi ro- msnts f o r s u s t a i n a b l o CD/NTAE growth. Short-term a s s i s t a n c e 1s a p p r o p r i a t e f o r Chi le o r Moxico perhaps, b u t it is queot ioncble a t p reoent a s a p roper development rmde f o r t h e l.ess developed c o u n t r i e s surveyed.

Close ly r e l a t e d t o t h e need f o r long-term product ion and marketing t e c h n i c a l ans i a t ance is t h o need f o r a p p r o p r i a t e t r a i n i n g . The t r a i n i n g a u t h o r i z a t i o n s , a t $3.0 m i l l i o n , seem low and do not i nc lude s i g n i f i c a n r . amounts f o r t h e long-term t r a i n i n g of h o r t i c u l t u r i s t s -- something which is b a s i c t o t h e development of CD/NTAE. I t was a l s o noted t h a t some of t h e t r a i n i n g -- p a r t i c u l a r l y f o r bankms -- was no t c a r r i e d o u t o r was rlot e f f e c t i v e ,

One a s p e c t of A . I . D . ' s a s s i s t a n c e t h a t is c r i t i c a l and t h a t should have s i g n i f i c a n t impact over time is its emphasis on p o l i dy reform. In Chi le and i n Mexico t h e team found a very d i r e c t r e l a t i o n s h i p jjecween p o l i c y envii 'mment and p rog re s s i n CD/NTAE development and growth. A . I . D . has pursued d e l i c a t e p o l i c y reform i s s u e s through p o l i c y s t u d i e s , t h e formation of p o l i c y groups, and t h e educa t ion of po l i cy makers. Continued a c t i v i t y , a l r eady planned by most Missions, is e s s e n t i a l . Po l icy reform w i l l have a sha rp m u l t i p l i e r e f f e c t t h a t w i l l h e lp t o c a t a l y z e A . I . D . 's o t h e r e f f o r t s . But t h e r e a r e r e l a t i v e l y low l i m i t s t o t h e funding requirements of p o l i c y r e f o m p r o j e c t s , and p o l i c y rezorm is a slow p roces s t h a t f r equen t ly s u f f e r s se tbacks . More impor tan t ly , i f p o l i c y reform is no t accompanied by t h e implementation of sound p r o d ~ ~ i o n and marketing technologies , t h e m u l t i p l i e r e f f e c t of such r e f o q - w i l l be dimininished and s i g n f i c a n t o p p o r t u n i t i e s w i l l be l o s t .

Recognizing t h a t A . I . D . ' s CD/NIFAE i n i t i a t i v e s a r e s t i l l f a i r l y young and t h a t i t s p r o j e c t s could n o t have been expected t o proceed wi thout adjustments , t h e team b e l i e v e s it t ime ly t o review t h e c e n t r a l f i n d i n g and c e n t r a l recommenda- t i o n of t h i s eva lua t ion . Res ta ted , t h e s e a rea

C e n t r a l Finding

A . I . D . ' s s u b s t a n t i a l i n i t i a t i v e s w i l l n o t genera te commensurate r e t u r n s t o resource i n p u t s u n l e s s h o s t count ry implementing e n t i t i e s become more focused on s p e c i f i c , a t t a i n a b l e o b j e c t i v e s a s opposed t o i n s t i t u t i o n a l growth f o r its own sake. Nor w i l l r e t u r n s be commensurate t o i n p u t s wi thout t h e p rov i s ion of comprehensive long-term product ion and marketing t e c h n i c a l a s s i s t a n c e packages.

Cen t r a l Recommendation

A.I.D./W and t h e Missions should develop l i m i t e d o b j e c t i v e CD/NTAE development s t r a t e g i e s t o i nc lude t ( a ) p r e c i s e d e f i n i t i o n of reasonably a t t a i n a b l e objec- t i v e s f o r , and a t t a inmen t a c c o u n t a b i l i t y wi th in , h o s t country implementing

e n t i t i e a r (b) t h e des ign and implamentation of! p r e c i s e l y detiaied, p ro f s s - u i o n a l l y s t a f f e d long-term techn.Lca1 a e s i s t a n c a packages t h a t w i l l support: a t t a inmen t of thclue o b j e c t i v e s and t h a t w i l l i n c lude app rop r i a t e and ~ u f f i a i e n t t r a in ing ! and ( a ) cont inuad r e f i n e d e f f o r t s t o impact on h o s t country p o l i c i e s t h a t w i l l f a c i l i t a t u CD/NTAB: development.

I n c a r r y i n g o u t t h i s eva lua t ion , t h e team has p re sen t ed its f. indinge and ~.~ecommsndations under seven headings, t o w i t r Host Countr ies , S e t t i n g e , P r o j e c t s and I n s t i t u t i o n s r -- Marketinqr Product ion T e c h n o l o a l Environmental Impact r Financinqr Chile/Mexicor Lessons Learned t and A. I . K). r C ~ N T A E Po l i cy - - -- and P rac t i ce . Dtc :ailed c r o s s - m t t i n g d o s c r i p t i o n s of f i nd ings and recommendations undex each of t h e f i r s t f i v e headinga a r e provided i n Sec t ion 1x1 . The headings on Chile/Mexico and A . I . D . f o l l ow t h i s Executive Summary. Sec t ion I V c o n t a i n s e leven rapo..;a covering t h e c o u n t r i e s surveyed f o r t h e c ros s - cu t t i ng evaluat . ion.

Following a r e summary f indi.ngs and recommendations f o r t h e s p e c i f i c Sec t ion I11 cross -cu t headings.

Host Counfr ieer S e t t i n g s , P r o j e c t s , l n e t i t u t i o n s - o Despi te r ecogn i t i on by both t h e h o s t c o u n t r i e s and A.I.D. t h a t without

p roper p o l i c y reforms CD/NTiU i n i t i a t i v e s cannot advance e f f e c t i v e l y , most of t h e c o u n t r i e s surveyed have not acconpl ished adequate reforms o r p u t them i n t o p r a c t i c e .

L'

o Pol icy reform i n t h e c o u n t r i e s surveyed is a slow, p a h s t a k i n g process , sub je ,z t t o t h e o f t e n c o n f l i c t i n g economic and p o l i t i c a l i n t e r e s t s of p o l i c y makers. When governments change, p o l i c i e s -- good and bad -- a l s o f r e q u e n t l y change, a s does t h e implementation of po l i cy . But t h e payoff from e f f e c t i v e p o i i c y reform, even over r e l a t i v e l y s h o r t pe r iods of t ime, can be s u b s t a n t i a l .

Recomrnendationt A . I . D . should v igorous ly pursue its e f f o r t s a t p o l i c y r e f o m inc lud ing g r e a t e r emphasis on t h e "car ro t - s t ick1 ' approach. The primary a r e a s t h a t r e q u i r e a t t e n t i o n because of t h e i r impact on CD/NTAE inc lude exchange r a t e po l i cy , i n ~ p o r t t a r i f f p o l i c y and investment incen- t i v e s po l i cy . Emphasis i n each of t h e s e a r e a s w i l l depend upon t h e p a r t i c u l a r country i n ques t i on a s w i l l t h e degree of emphasis on implemen- t a t i o n of p o l i c y o r on p o l i c y es tab l i shment . (For example, i n t h e Dominican Republic many p o l i c i e s o therwise conducive t o CD/NTAE a r e i n p l a c e , t h a t is, l e g a l i z e d , b u t they a r e n o t be ing uniformly app l i ed o r r e spec t ed by government agencies.! The key t o A . I . D . ' s success i n ach iev ing p o l i c y reform is q u i t e s impler perseverance.

o I n t h e c a s t i n g of CD/NTAE p r o j e c t s a t t h e PID and PP s t a g e s , d i f f e r e n t a r e a s such a s marketing, c r e d i t , . i n s t i t u t i o n bu i ld ing , e t c . , are o f t e n " integrated1 ' . But i n implementation t h e r e is o f t e n a tendency t o overemphasize one a r e a without adequate ly i n t e g r a t i n g o t h e r a r ea s .

Recommendationr A . I . D . should bui ld g r e : ~ t o r f l a x i b i l i t y i n t o i t s CD/NTFrE p r o j e u t s and budgets such t h a t even major adjustments can be made a s necessary.

Recommendationr A s a general propos i t ion , but s p e c i f i c a l l y t o respond t o t h e above f inding , A. I. D. should undertake "mini-evaluations" e a r l y i n t h e l i v e s of CD/NTAE projec ts . I f t hese evalua t ions a r e conducted by exper i - enced p ro fess iona l s , major e r r o r s i n approach emphasis w i l l be i d e n t i f i e d immediately.

o The p r i v a t e , A.1.D.-funded implementing agencies t h a t ca r ry ou t A . I . D . " s CD/NTAE a r e r a r e l y se l f -sus ta in ing .

Recommendations A . I . D . should help i n the design of and i n s i s t on t h e successfu l implementation of revenue generat ing mechanisms t h a t w i l l help these i n s t i t u t i o n s t o become se l f -sus ta in ing . Self-sustenance progress should be a condit ion t o A.I.D. support f o r such i n s t i t u t i o n s .

Recommendationt A . I . D . should encourage these i n s t i t u t i c n s t o work harder a t promoting producer commodity a s soc ia t ions which can take b e s t advantage of se rv ices o f fe red and can eventual ly pay f o r these se rv ices through check-of f s from t h e proceeds of expor t s a l e s .

c'

o The most e f f e c t i v e a s s i s t ance i n export marketing inva r i ab ly comes from t h e market i t s e l f . Product r ece ive r s , including brokers, importers, d i s t r i b u t o r s e t c . , because of t h e i r keen i n t e r e s t i n obta in ing product , t ake pa ins t o ensure t h a t producers/exporters have and can use market information, mater ia ls , production technology and f inancing.

Recommendation: A. I. D. should l e a r n more about t h e r ece ive r community than it has t o da te , with t h e immediate goals o f t ( a ) developing i ts own, - comprehensive desc r ip t ive and r a t i n g r epor t s on rece ivers1 (b) t ransmit- t i n g these r epor t s t o hos t country pub l i c and p r i v a t e groups f o r f u r t h e r d i s t r i b u t i o n , by product s ~ b - s e c t o r s ~ t o producers/exporterst and ( c ) tak ing up contac t with r ece ive r s , through rece iver groupo such a s t h e Produce Marketing Association, t o explore p r o j e c t i n i t i a t i v e s i n c o n s t r a i n t a reas where r ece ive r s have experience i n working o u t so lu t ions .

Recommendationx A.I .D. should he lp f o s t e r t h e growth and formation of domestic export- t rading companies i n hos t count r ies . Such f i rms, l i k e t h e r ece ive r s , can help resolve c o n s t r a i n t s by providing e f f e c t i v e t echn ica l a s s i s t ance i n t h e i r swn b e s t i n t e r e s t . In add i t ion t o providing f u r t h e r support t o f i rms such a s CATCO i n t h e Eastern Caribbean, A.I.D. should encourage t h e formation of new export- t rading companies, including approaches t o importers and d i s t r i b u t o r s a l ready i n food marketing channels, such a s h o ~ t country supermarkets.

o A.I .D. and i t a grantme implementing i n s t i t u t i o n s havs bas i ca l ly used a short-term, "quick-fix" consultancy approach t o production, post-harvest handling technology and market l t~g cons t r a in t s . Such an approach is genera l ly incons i s t en t with t h e long-term needs of ncn-tradLtiona1 expor t a g r i c u l t u r e . Recommendation: A. I .D . needs t o p r e c i s e l y d e f i n e and implement long-term t echn ica l a s s i s t a n c e packages t h a t focus on marketing i n a comprehensive way, t h a t is, from farm-to-market. A. I .D . should review some of i ts own succ!esses f o r guidance, including aapects of t h e ROCAP-PROEXAG p r o j e c t and t h e t echn ica l a s s i s t a n c e being provided t o t h e ~ i n c d n Grande strawberry cooperat ive i n Guatemala.

o A.I .D. g rantees and p r o j e c t s have over~mphasizsd t h e sub jec t of market information ga ther ing and have not been a s e f f e c t i v e a s they could have been i n t h e disseminat ion of market information. Nor have p r o j e c t s focused adeqyately on t h e a n a l y s i s of market information t o provide market in t e l l igence .

Recommendation: A . I . D . and its grantees should expand but s impl i fy e f f o r t s by making more e f f e c t i v e use of newspapers and t h e r a d i o i n hos t count r ies . A.I.D. should a l s o f u r t h e r a s s i s t i n and encourage p e r t i n e n t da ta ana lys i s and dissemination of market in t e l l igence .

o Entry requirements and p ~ o d u c c inspect ion f o r products coming i n t o t h e U.S. a r e Wkely t o increase and become s t r i c t e r i n t h e near f u t u r e . - Recommendationr Producers/exporters i n t h e hos t count r ies should es tab- l i s h and use USDA/APHIS pce-clearance inspect ion f a c i l i t i e s . A.I.D. should work c l o s e l y with USDA/APHIS t o design and implement cos t - e f fec t ive pre-clearance f a c i l i t i e s . I t should a l s o engage hos t government counter- p a r t support and p r i v a t e s e c t o r i n t e r e s t by i n v i t i n g r ep resen ta t ives t o v i s i t t h e Jamaican and Dominican Republic f a c i l i t i e s a s wel l a s t h e APHIS program i n Chile.

Production Technology

o Adequate research and extension f o r CD/NTAE were not i n evidence i n most of t h e counl r ies surveyed i n t h e cross-cut t ing evaluat ion.

Recommendationr A. I .D . should b u i l d s p e c i f i c research and extension components i n t o i ts CD/NTAE p r o j e c t s . l'hese components should be provided for-on a lotg-term b a s i s in s t ead of on an as-needed basis .

Recommendationt A.I .D. should seek t o involve farmers i n research a c t i v - i t i e s , s p e c i f i c a l l y by promoting on-farm t r i a l s .

Recommendationr A s a condit ion t o new funding of CD/NTAE production p ro j - e c t s , A . I .D . should e s t a b l i s h t h a t a s a t i s f a c t o r y assessment of c u r r e n t

reuaarch and extonsion a c t i v i t i e s be completed t o determine t h e adequacy of these a c t i v i t i e s t o serve producers.

o In most of t h e countr ies surveyed, t h e following production-related i s s u e s were t r e a t e d only a s secondary considerat ions i n t h e rush t o produce and grof it from CD/NTAEr cj:op monoculturingr s o i l and water conservation! improved support se rv ices labor planning! and appropr ia te use of f e r t i l i z e r s and o the r chemicals.

Recomendation: The rtpecific t echn ica l response t o each of these i s sues w i l l vary according t o crops and condit ions i n each country, but A.I .D. should ensure t h a t these responses a r e long-term i n nature and involve experienced profess ionals i n CD/NTAE production-related technologies.

o Most l o c a l h o r t i c u l t u r a l i s t s i n t h e countr ies surveyed do not have adequate train:Lng o r experience i n CD/NTAE.

Recommendation a A. I .D. should t ake a long-term approach by providing f o r s e v e r a l years of course and f i e l d s t u d i e s i n t h e U. S., combined with work experience i n hos t country h o r t i c u l t u r a l a c t i v i t i e s .

Environmental Impact

o Increased production of non-tradit ional crops has a l ready led t o increased incidenceCof crop p e s t s and disease. In t h e absence of proper preventive a n T cor rec t ive ac t ion , p e s t and d isease incidence w i l l grow a t a rapid pace.

Recommendation: A.I .D. should sronsor country and regional seminars t o inform government o f f i c i a l s , producers/exporters and researchers about p e r t i n e n t p e s t and d i sease problems, quarantine and o ther regula t ions i n t h e U.S. and proper measures f o r p e s t management including proper use of approved pes t i c ides .

Recommendation: In addi t ion t o sponsoring p e s t i c i d e and chemicals use education pograms, A.I .D. should a l s o sponsor a regional monitoring program t o independently determine p e s t i c i d e and o the r chemical res idue l e v e l s i n NTAE crops.

Recommendation: A. I .D . should expand t h e scope of ROCAP's Regional In te- g ra ted Pest Management P ro jec t t o include NTAE crops. Al ternat ive ly , a sepa ra te IPM p r o j e c t might be es tabl i shed only f o r NTAE.

o Environmental Impact Assessments f o r individual CD/NTAE p r o j e c t s have n o t been s u f f i c i e n t l y comprehensive. .

Recommendation: A. I .D . ' should conduct regional and crop-specif ic environmental assessments, pr imar i ly t o assess increases i n t h e use of

p e s t i c i d e s , Such assessments should r e s u l t , a t l e a s t , i n t h e dissemina- t i o n of guide l ines f o r res idue monitoring, t e s t i n g and repor t ing , a s we l l a s f o r approved chemicals use.

Financing

o Despite t h e f a c t t h a t s i g n i f i c a n t amounts of c r e d i t have been ava i l ab le t o fund CD/NTAE, f inancing has genera l ly not reached p r o j e c t undertakings i n a t imely fashion.

o The most important reasons f o r placement (disbursement) de lays r e l a t e t o r unnecessary procedural complications a t t h e A. I .D . , I C I ( in termedia te c r e d i t i n s t i t u t i o n ) and Centra l Bank l e v e l s # t h e genera l ly high r i s k s a s soc ia t ed with making CD/NTAE loans; f requent f r i c t i o n between A. I .D . , I C I s and Cent ra l Banks over t h e i n t e r p r e t a t i o n of r e s p o n s i b i l i t i e s i n t h e loan approval and disbursement processes; and l ack of development banking s k i l l s among I C I and o the r bankers.

Recommeridationr A. I .D. should sponsor seminars and CD/NTAE-specif i c c r e d i t t r a i n i n g f o r p r i v a t e s e c t o r and pub l i c s e c t o r bankers. The goal of these a c t i v i t i e s should be t o upgrade on-lending e f f i c i e n c y a s well a s t o educate and inform t h e two s e c t o r s a s t o t h e i r r e spec t ive concerns and requirements s o a s t o f i n d common ground on which t o bu i ld f u t u r e cooperation.

o Monetary Cpolicy and o the r p o l i c y changes, p a r t i c u l a r l y i n r e l a t i o n t o i n r e r e s t r a t e s and l i q u i d i t y , can have a s i g n i f i c a n t e f f e c t on t h e supply and demand of f inance f o r CD/NTAE.

o Regardless of general i n t e r e s t r a t e and l i q u i d i t y l e v e l s and t rends t h e r e a r e always inves to r s prepared t o pursue CD/NTAE i n i t i a t i v e s .

Recommendation J A. I .D. should continue its e f f o r t s t o promote po l i cy reform -- on monetary a s w e l l a s o t h e r i s s u e s -- bu t should recognize t h a t i n t h e process CD/NTAE i n v e s t o r s w i l l become discouraged i f otherwise a v a i l a b l e A.1.D.-sourced f inance is not forthcoming. For t h i s reason, A.I.D. should seek t o s impl i fy , adminis t ra t ive ly , i ts c r e d i t p ro jec t s , provide guarantee f a c i l i t i e s t o reduce lending r i s k s , and undertake t h e seminar and t r a i n i n g a c t i v i t i e s descr ibed above.

o CD/NTAE p r o j e c t s need working c a p i t a l a t l e a s t a s urgent ly a s they need longer-term p r o j e c t finance. A.I .D. has f requent ly provided t h e l a t t e r , but not always t h e former.

Recommendation: A. I .D. c r e d i t p r o j e c t s f o r CD/NTAE should always include a provis ion f o r working c a p i t a l f inance.

o Development banks invar iably need some subsidy l e v e l a t s t a r t -up bu t ' a l so beyond s tar t -up .

Recommendationr In determining when o r whether t o withdraw subs id ie s from development banks, A . I . D . should measure not only t h e banks' income per- formance but a l s o t h e i r development performance.

o Most of t h e working c a p i t a l f inance f o r CD/NTAE businesses comes from t h e t r ade , t h a t is, from receivers/ importers .

Recommendationr A s recommended elsewhare i n t h i s e v a l u a t i m , A.I.D. should seek c l o s e r t i e s with t h e r ece ive r community, s p e c i f i c a l l y , i n t h i s case , t o work on poss ib le f inancing mechanisms, perhaps using t r u s t funds, t o channel c r e d i t through rece ive r s t o producers.

o CD/NTAE i n i t i a t i v s s , because they a r e high-r isk, have d i f f i c u l t y i n a t t r a c t i n g e i t h e r debt o r equ i ty f inance.

Recommendationr A . I . D . should continue i t s c a p i t a l markets formation e f f o r t s and should a l s o continue with t h e d i r e c t provis ion of share-equity and equi ty f inance f o r new CD/NTAE p r o j e c t s . A.I .D. should keep t h e s e programs simple.

Recommendation: A. I .D . should a l s o expand its experience with and funding of debt/equity swap p r o j e c t s t h a t bear s p e c i f i c a l l y on CD/NTAE i n i t i a t i v e s .

Recommendationr A. I .D . should make more e f f e c t i v e use of l o c a l h i r e personnel- in t h e channeling of funds by employing such personnel a s c r e d i t f a c i l i t a t g r s o r promoters and having them maintain d i r e c t , f requent con- taz with borrowers, lenders and monetary a u t h o r i t i e s .

Rec~mmenda~ionr A.I .D. should make more e f f e c t i v e use of organiza t ions such a s LAAD i n t h e design and implementation of new p r o j e c t s t o on-lend A.I.D. funds f o r CD/NTAE.

o Foreign i n v e s t o r s w i l l not i n v e s t i n CD/NTAE i n coun t r i e s where t h e po l i cy environment provides l i t t l e o r no incen t ive t o do so.

Recommendationr Apart from redoubling e f f o r t s t o inf luence po l i cy reform, A.I.D. should reduce its CD/NTAE fo re ign investment promotion a c t i v i t i e s f a r count r ies t h a t a r e not e f f e c t i n g adequate po l i cy reforms.

T A B L E I (continued)

A. I .D. alfiTAEfZELATED PROJECTS IN COUm I ES SURVEYED: CATEGORY TWd'

-------------- --- COUNTRY/AREA d, PROJECT TITLE DATE PACD* CENTRAL LOAN GRANT TOTAL AID EXPEW. PROJECT NO. 1 AUTH. APPROACH++ ($000) (6000) ($000) AS OF

3/31 /88 ( $000, ------------ -

G s t a Rica 3 1 5-0204 51 5-0233

E l Salvador 51 9.031 6

Guatemala -1

Honduras 522-0249 522-0325

Y Daninican Republic I * 51 7-01 56 N 51 7-01 90

51 7-0216

Jamaica 532-0 I 23 532-01 28

Carl bbean Reqional 538-0084 538-0099 538-01 19

Ecuador -032

51 8-0051

Export i nvesiment Promot ion 66/86 06/91

P r i vate l nvestment Corporation 08/84 08/88 Agr icu l tura l and 1 ndustr l a l React1 vatlon 08/86 08/89

Association Strengthening 08/85 05/89

Pr 1 vat6 Enterpr i se Devel oprnent 08/87 08/92

Agricul t u r a i Research Foundation 08/84 08/94 Poi lcy Analysis 2nd lmplementatlon 08/87 08/94

Agr icu l tura l Pol i cy A ~ a l y s i s 07/84 09/88 Export and Investment Promotion 08/85 25/89 Development Tra l n i ng 07/86 07/91 Sugar Di versi f i ca t ion 09/87 09/92

Crop D i ve r s i f i ca t i on and I r r i g a t i o n 09/85 09/90 Agr icu l tura l Research 07/86 07/93

Carl bbean F inancial Services 08/e3 - East Cari bbean Farming Systems Res. L Dev. 07/83 09/88 Investment Promotion and Export Dev. 08/84 12/89

Rural Technology Transfer Systems 07/80 09/88 Agricui t u ra l Sector Reorientat ion 07/85 07/90

IB

F/CR F/CR

I B

I B

n-RES POL

POL I B TR I 8-TT

IB-INFR RES

F/CR RES

10-IP

RE S-TT POL

TOTAL OF CATEGORY TWO 70,740 1 1 6,390 187,130 72,423 - -~ - - - - - - - -

TOTAL OF CATEGORY ONE AND CATEGORY TWO 147,790 221,729 369,519 121,535 - --. --------_---------------------------------------- 1' Category Orie pro jects are d i rect1 y re!ated t o CD/NlAE. Category Two pro jec ts are close1 y re la ted t o CD/NTAE.

* Project ac t i v i t y conp l e t i on date.

** m: F/CR = 'inance and Credit; INFR = Infrastructure; IB = i n s t i t u t i o n Bu i l d l n IP = Investment Promotion; MTG = Marketing; P a = Pol icy; E S = Research; IT = Technology Transfer; % = Training.

Chi le and Maxico have been engaged i n crop d i v e r s i f i c a t i o n and non- t radi t ional expor t of f r u i t 3 and vegetables f o r many years. In each of those coun t r i e s fanners/exporturs have learned how t o take advantage of na tu ra l resources and condit ions and how t o overcome disadvantages and cons t ra in t s . A s p a r t of t h e cross-cut t ing evaluat ion, t h e team s tudied t h e CD/NTAE h i s t o r i e s of these two coun t r i e s t o iden t i fy lessons t h a t might se rve A. I .D . and t h e hos t countr ies where A . I . D . is supporting crop d i v e r s i f i c a t i o n and non-tradit ional at j r icul- t u r a l export.

The f i r s t lesson learned is t h a t it takes time t o d i v e r s i f y and export a g r i c u l t u r a l crops. Mexico has been involved i n CD/NTAE s ince t h e t u r n of t h e century. Evidence of Ch i l e ' s success with CD/NTAE has emerged i n j u s t t h e l a s t t e n years , but t h i s success was b u i l t on foundations t h a t da te back t o t h e 19503. On t h e o the r hand, the countr ies and a reas s tudied i n t h i s evaluat ion d id not r e a l l y become i n t e r e s t e d 2nd involved i n CD/NTAE u n t i l a f t e r 1980. (Many d id not make CD/NTAE i n i t i a t i v e s any s o r t of p r i o r i t y u n t i l 1984-85 -- l a rge ly because of A.I .D. urging and support.) Also, a s a p r a c t i c a l matter , achievement of cons i s t en t commercial y ie lds , e s p e c i a l l y i n new crops, takes time, regardless of how much support may be ava i l ab le from n a t u r a l and o ther development conditions.

A co ro l l a ry lesson learned is t h a t t h e development of CD/NTAE requ i res adequate time-framing -- probably i n minimum measurement periods of not l e s s than t e n years.

L'

i! Perhapzr a s important a s t h e f i r s t lesson learned is t h e f inding t h a t growth i n CD/NTAE i n Mexico and Chile was a d i r e c t funct ion of t h e types of macro- economic pol icy and t h e degrees of in te rven t ion i n , o r disengagement from, CD/NTAE a c t i v i t y t h a t charac ter ized t h e respect ive governments. Spec i f i ca l ly , where governments implemented consis tent , f r e e market exchange, t a r i f f and incent ive p o l i c i e s , and where they reduced o r l imi ted t h e i r regula tory and o the r types of o f f i c i a l in tervent ion , CD/NTAE i n i t i a t i v e s moved forward quickly. Conversely, where t h e respect ive governments f a i l e d t o implement appropr ia te p o l i c i e s and intervened excessively i n production and marketing a c t i v i t i e s , CD/NTAE i n i t i a t i v e s slowed i n growth o r came t o a f u l l s top. This f ind ing charac te r i zes Chile t o a g rea te r ex ten t than it does Mexico. Chile has experienced extreme examples of both types of government economic po l i cy and p r a c t i c e j u s t described. But over Mexico's h i s to ry , t h e government has a l s o achieved a p o s i t i v e balance i n its po l i cy and p r a c t i c e a s t h e s e r e l a t e t o CD/NTAE. In p a r t i c u l a r , s ince t h e 1 9 6 0 ~ ~ t h e government has a c t u a l l y been guided by and has cooperated with t h e p r i v a t e , National Association of F r u i t and Vegetable Producers (UNPH) i n pol icy formulation.

Another cross-cut t ing lesson learned concerns t h e importance of having s t r o n g organizat ions t o represent producer/exporter i n t e r e s t s i n solving problems and i n t ak ing advantage of oppor tuni t ies . In both countr ies , producer and exporter organizat ions have played key r o l e s i n CD/NltAE development and

growth. The apparent keys to t h e i r success have been; (1) common under- s t and ing among members of t h e need t o t ake an organized approach, p r imar i l y t o so lv ing common problems! (2) s a t i s f a c t i o n among members t h a t they a r e b e n e f i t i n g from momberahip, p r i m a r i l y i n terms of g e t t i n g problems soLveda and ( 3 ) t h e a b i l i t y of t h e o rgan iza t ion t o genera te s u f f i c i e n t income t o fund i ts a c t i v i t i e s from year-to-year.

A f u r t h e r s i g n i f i c a n t l e s son l ea rned from eva lua t ing t h e Chi le and Mexico exper iences was t h a t t h e most e f f e c t i v e s o l u t i o n s t o c o n s t r a i n t s , ranying from a r e a s such as product ion technology and i n p u t procurement t o t r a n s p o r t and f i n a n c i n g f o r CD/NTAE, i n v a r i a b l y come from t h e marketplace. This i nc ludes r e c e i v e r s , impor te rs , brokers , e t c . The grouping a l s o i n c l u d e s expor t t r a d i n g companies based i n t h e producing country, o f t e n involv ing p a r l n e r s from t h e import ing country.

A f i n a l l e s s o n learned was t h a t each of t h e gene ra l i zed l e s s o n s descr ibed above can b e s t be app rec i a t ed through v i s i t i n g w i th t h e Mexicans and t h e Chi leans and see ing f i r s t -hand the d e t a i l s of t h e i r accomplishments.

In the course of t h e cross-cut t ing evalua t ion , t h e tearn found c o n s t r a i n t s and o the r i s sues r e l a t e d more t o A . I . D . p o l i c i e s and p r a c t i c e s than t o any o the r a reas covered i n t h e evaluat ion. These c o n s t r a i n t s and i s s u e s a r e enumerated below, and pa i red with recommendations o r obse rva t im~s .

In designing CD/NTAE p r o j e c t s , A . I . D . does not always use personnel w:Lth s p e c i f i c experience i n CD/NTAE. A s a r e s u l t , p i v o t a l cons idera t ions a r e f requent ly ignored o r improperly addressed1 p r o j e c t documents a r e too general! and schemes a r e constructed t h a t do not hear enough r e l a t i o n s h i p t o the r e a l needs of CD/NTAE development.

Racommendationr A t t h e l e a s t , A . I . D . should h,ve its CD/NTAE Pro jec t Paper d r a f t s reviewed by panels of p r i v a t e s e c t o r exper ts , including hos t country exper ts . A t b e s t , it should h i r e such panels t o p a r t i c i p a t e i n t h e prepara t ion of Projec t I d e n t i f i c a t i o n Documents a s wel l a s Projec t Papers .

A.I .D . has c l e a r l y had a p o s i t i v e impact i n promoting CD/NTAE i n terms of helping t o achieve t h e r i g h t pub l i c and p r i v a t e s e c t o r a t t i t u d e s toward t h e subjec t .

Ilecommendationr Missions should continue t o promote po l i cy reform s o t h a t a t t i t ~ d e s ~ c a n be t r a n s l a t e d i n t o exports .

Because of t h e enormous p o t e n t i a l of successfu l pol icy reform, some A. I .D . o f f i c i aLs , a s w e l l a s o the r s i n t h e p r i v a t e sec to r , a r e i n c l i n e d t o de- emphasize s p e c i f i c product export programs and favor g r e a t e r po l i cy reform i=f f o r t s ins tead .

Recommendationi Given t h a t po l i cy reform is a slow and uncer ta in process, :A.I.D.'s g o a r s h o u l d be t o help r e l i e v e o t h e r c o n s t r a i n t s and t o upgrade, - -

as f a r a s poss ib le , t h e t echn ica l c a p a b i l i t i e s of i t s t a r g e t groups. Spec i f i ca l ly , A. I .D . should seek t o provide t a r g e t group members with t h e bes t poss ib le " tools t t i n order t o compete and survive i n CD/NTAE under- tak ings u n t i l t h e i r economic performance, i t s e l f , can inf luence po l i cy reform.

I n t e r o f f i c e d i f f e rences i n A. I. D. Missions -- usual ly between t h e Agriculture/Rural Development and Pr iva te Sector Program o f f i c e s -- have f requent ly d e b i l i t a t e d CD/NTAE p r o j e c t implementation.

Recommendationt Closer cooperat ive p a r t i c i p a t i o n i n t h e design uf CD/N?IAE p r o j e c t s might help t o r e l i e v e such d i f f e rences a s would t h e establ ishment from t h e o u t s e t of c l e a r implementation a u t h o r i t y and accou.ntabi l i ty guidel ines.

o A. I .D. has recognized t h e importance of ga the r ing and ana lyz ing ou tpu t d a t a from its CD/NTAE pt 'o jec t s , bu t t h e Missions have not been c o n s i s t e n t i n ca r ry ing o u t t h e s e a c t i v i t i e s . A s a cnnsequence, t h e team could no t s a t i s f a c t o r i l y a s c e r t a i n impact l e v e l s .

Recommendationr - Monitoring and a n a l y t i c a l t echniques should be imple- mented a s soon a s p o s s i b l e t o measure e f f e c t i v e l y and con t inua l ly key impasts such a s expor t s , jobs, value-added, new investment , i nc reased incomes and technology t r a n s f e r .

o Experience has shown t h a t t a r g e t groups i n CD/NTAE p r o j e c t s a r e b e s t se rved through t h e formation of commodity a s s o c i a t i o n s where members sha re coinmon i n t e r e s t s i nc lud ing , e s p e c i a l l y , i n t e r e s t i n problem so lv ing .

Recommendationr A .I. D. should provide g r e a t e r suppor t t o e x i s t i n g p r o d ~ c t / ~ r o d u c e r a s s o c i a t i o n s and should f o s t e r t h o formation of new a s s o c i a t i o n s , p r e f e r a b l y by working through t h e p r i v a t e s e c t o r p r o j e c t implementation agencies which a r e a l r eady funded by A. I .D .

o A . I . D . has ignored o r p a i d l i t t l e a t t e n t i o n t o h o s t country p u b l i c e n t i t i e s -- e s p e c i a l l y M i n i s t r i e s of Agr i cu l tu re -- i n t h e des ign and implementation of CD/NTAE p r o j e c t s . There is no ea sy s o l u t i o n t o t h i s problem because of t h e budgetary and p o l i t i c a l ] . imitat ions t h a t c h a r a c t e r i z e t h e s e e n t i t i e s . But t h e s e i n s t i t u t i o n s should be enabled t o cont inue &art of t h e work t h a t A.I .D. and o t h e r s have begun.

~ecommendationt A . I . D . should fund smal l t a s k f o r c e s w i th in M i n i s t r i e s of Agr i cu l tu re t o s e r v e as l i a i s o n wi th A. I .D . CD/NTAE p r o j e c t s . Their purpose would be t o i d e n t i f y l i m i t e d a s s i s t a n c e o b j e c t i v e s where t h e M i n i s t r i e s could s t i l l achieve some ongoing impact.

o A.I .D. h a s f r e q u e n t l y overemphasized market ing i n its CD/NTAE p r o j e c t s . I n so doing it has p a i d t o o l i t t l e a t t e n t i o n t o t h e development of c rop product ion.

Recommendationr A.I.D. should seek t o f i e l d long-term t e c h n i c a l a s s i s t a n c e teams. It should a l s o s tudy d i f f e r e n t elements of success i n i t s long-term t e c h n i c a l a s s i s t a n c e e f f o r t s such a s t h e PROEXAG p r o j e c t i n Cen t r a l America and t h e a s s i s t a n c e be ing provided t o t h e ~ i n c 6 n Grande s t rawberry coopera t ive i n Guatemala.

o Although s h i f t i n g i n approach, A.I.D. still e x h i b i t s a b i a s i n f a v o r of e a r l y in~7olvement of smal l farmers i n CD/NTAE i n i t i a t i v e s . The na tu re of t h e s e i n i t i a t i v e s and t h e high r i s k s involved, however, c a l l f o r l a r g e r fa rmers and ag r ibus ines se s t o l e a d t h e way.

re command at Lon^ A . I .D. should sponcl more tima i d e ~ l t i f y i n g and working wi th thooe Larger farmers and nyribueineseoa ln CI)/NTAP projactra. *

o Mission r a t i n g s of LAC/DH suppor t for CD/NTAE i n i t i a t i v e r ~ ranyed from "No suppor t r equ i r ed" t o "Great!". Most inverviewees po in t ed o u t t h a t t h o Missions were u s u a l l y a b l e t o i d e n t i f y t h e needs f o r and e f f e c t . t v e l y s e c u r e short - term coneul t a n t s wi thout LAC/DR a s s i s t a n c e . Some i n t e r - viewees i n d i c a t e d t h a t LAC/WR was q u i t e h e l p f u l i n moving P. t .D,s and PPs th rough t h e Washington bureaucracy. Others were very p l ea sed w i th LAC/DRt s c o n t r i b u t i o n i n i d e n t i f y i n g and s ecu r ing long-term p r o j e c t management a s s i s t a n c e . The l a c k of s p e c i f i c t e c h n i c a l e x p e r t i s e i n t h e Bureau was recognized a s one of t h e main reasons Missions f a i l e d to c a l l upon t h e Bureau f o r a s s i s t a n c e more o f t e n .

Recommendationr LAC/DR should cons ide r expanding i t s p r o f e s s i o n a l s t a f f t o i nc lude s p e c i a l i s t s i n h o r t i c u l t u r a l p roduc t ion and produce marketing.

* On t h e o t h e r hand, th rough t h e p rov i s ion of long-term a s s i s t a n c e to organized producers -- a s i n t h e ca se of t h e ~ i n c b n Grande s t r awbe r ry coope ra t i ve i n Guatemala -- A.I.D..can and ,?hould r each smaller farmers.

S E C T I O N X I

BACKGROUND, PURPOSE AND METHODOmY 08' THE EVALUATION

S E C T I O N I I

BACKGROUND, PURPOSE AND METHOROLOGY OF THE EVALUATION -

A. BACKGROUND M THE EVALUATION

During the 1960s and 1 9 7 0 ~ ~ much of Latin America (Centra l America, South America) and t h e Caribbean a rea experienced steady growth i n t h e i r economies. Prices of tradit.Lona1 a g r i c u l t u r a l expor ts -- coffee , cot ton, sugar, bananas and beef -- were general ly good. I n Central America, t h e advent of the Centra l American Common Market (CACM) i n t h e e a r l y 1960's provided an o u t l e t f o r unprecedented growth i n small manufacturing and Lrading en te rp r i ses . Toward t h e end of the 1970s and t h e beginning of t h e 1980s, however, a s e r i e s of events occurred t h a t changed t h e s i t u a t i o n . Worldwide recession se r ious ly a f fec ted p r i c e s f o r the r eg ion ' s export products? o i l p r i c e s rose sharply! and p o l i t i c a l turmoil se r ious ly d e b i l i t a t e d t h e CACi4. Annual growth r a t e s of Gross Domestic Products (GDP), which had already slowed t o between 2 and 4 percent , dropped t o negative f i g u r e s f o r sond countr ies by 1981. Inf l a t i o n increased s u b s t a n t i a l l y , and exchange r a t e s , some of which had been steady vis-a-vis t h e U.S. d o l l a r f o r decades, l o s t s t a b i l i t y . P o l i t i c a l and c i v i l s t r i f e i n Centra l America caused an o i~ t f low of d o l l a r s , reduclng funds ava i l ab le f o r investment and f u r t h e r increas ing i n f l a t i o n a r y pressures . Although 1981-82 appears t o have been t h e Low po in t , economies i n t h e region were slow t o recover and t h e GCP of many of t h e countr ies showed l i t t l e improvement. Governments of t h e regmn, faced with bleak econon~ic prospects and having d i t t l e o r no f u r t h e r debt capacity, b e p n t o look a t non-tradit ional expor ts ( i n d u s t r i a l and a g r i c u l t u r a l ) a s a l o g i c a l means t o generate fo re ign exchange, jobs and growth. I n response t o government reques ts f o r a s s i s t ance , A. 1. D. began preparing p r o j e c t s t o s t imula te the production and marketing of non-tradit ional products. Agr icul tura l product exports became important components of t h e USAIDs' s t r a t e g i e s . In many ins tances , these s t r a t e g i e s have a l s o been dovetai led with f a c e t s of t h e Caribbean Basin I n i t i a t i v e (See Appendix D . )

8. PUFU?OSE OF THE EVALUATION

Over t h e l a s t f i v e years , the a s s i s t ance given by t h e USAIDs in t h e region t o t h e development of non-tradit ional a g r i c u l t u r a l exsor t s has been ext raor- dinary. Even p r i o r t o 1983, however, various USAID missions had envisaged t h e export of non-tradit ional crops a s a means of helping farmers, e spec ia l ly small farmers, t o d i v e r s i f y from crops t h a t had become unprofi table. Farmers with small acreages were encouraged t o grow higher value crops (e.g., snow peas, broccol i , caul i f lower) and t o reduce acreage i n t r a d i t i o n a l crops such a s corn and beans, which o f t e n r e f l e c t e d low y i e l d s and which underut i l ized labor.

The magnitude of A . I . D . ' s support f o r t h e production and marketing of non- t r a d i t i o n a l crops i s i l l u s t r a t e d i n Tables 1 and 2 of Sect ion I, pages 1-11 t o 1-13. A s shown, A.I .D. has authorized over ~ ~ $ 1 8 0 mi l l ion f o r p r o j e c t s

d i r e a t l y r a l a t e d t o c rop dlvors i fLcatLon and non - t r ad i t i ona l a y r i c u l t u r n l expo r t (CD/NTAE). A f t e r adding a u t h o r i z a t i o n e f o r p r o j e c t 6 n o t d i r e c t l y calcltstl hu t tiilviricj il CLOBU ot p a r t i a l ,l.mpact on CD/N'I'AE, t h e t o t a l approaches ~ ~ $ 5 0 0 mi l l i on . (Th i s i nc ludes t h e sum of au tho r ixu t i on t o t a l s i n Category 1 and 2 of Table 1, t o y a t h e r with t h e " P r n c t i c a l A v a i l a b i l i t y " t o t a l i n Tablo 2 . )

Most of t h e p r o j e c t s l i s t e d i n Tablc 1 and 2, Sec t i on 1 have been underway f o r two to t h r e e y e a r s , which i s over ha l f of t h e i r average LOPS. Accordingly, t h e L a t i n Amorican/Caribbean Burtd*l of A. I. D. (LAC/DR) , i n response t o UgALD D i r e c t o r s ' r eyuea t s and i n o rde r t o nccomplioh a mid-course review, asked t h a t a mu l t i - d i ec ip l jmi ry team l ~ o k a t t h e d i f f o r e n t A. I. D. programs t o determine what seems t o bs working and what i s no t and t o draw some conc lus ions f o r p o s a i b l e f u t u r e r e d i r e c t i o n . More specifically, t h e purpose of t h e "cross- c u t t i n g " e v a l u a t i o n is t

1. To determine t h e e x t e n t t o which s u s t a i n a b l e c rop d i v e r s i f i c a t i o n and expo r t development programs a r o be ing developed i n t h e L a t i n America and Caribbean reg ion .

2. To i d e n t i f y l e s s o n s t o be l e a rned from crop d i v e r s i f i c a t i o n e f f o r t s i n more advanced expo r t i ng c o u n t r i e s l i k e Mexico and Chi le which can apply t o A.l .D.-assisted c o u n t r i e s .

3 . To i d e n t i f y t h e r e l a t i v e m e r i t s of t h e d i f f e r e n t approaches suppor ted by J a r i o u s USAID miss ions and t o sugges t a c t i v i t i e s where a d d i t i o n a l r e sou rce s could be used p roduc t ive ly .

4. To detercPine t h e e x t e n t t o which c rop d i v e r s i f i c a t i o n and e x p o r t dewlapment programs a r e environmental ly sound and s u s t a i n a b l e from an e c o l o g i c a l pe r spec t i ve .

Among i s s u e s t o be looked atz

A r e ongoing c rop d i v e r s i f i c a t i o n / e x p o r t promotion a c t i v i t i e s r e c e i v i n g adequate suppor t from t r a d i t i o n a l a g r i c u l t u r a l s e c t o r i n s t i t u t i o n s and f i rms f a c i l i t a t i n g market expo r t a c t i v i t i e s ?

How e f f i c i e n t l y a r e t h e t o t a l United S t a t e s ( A . I . D . , USDA/APHIS, USDA/OLCD and USDA/FAS) and l o c a l i n s t i t u t i o n a l approaches being coord ina ted i n a r e a s such a s p roduc t qua ran t i ne a c t i v i t i e s , u se of l o c a l cur rency resources , j o i n t ven ture promotion, market s e l e c t i o n , i r r t e l l i gence and a n a l y s i s ?

Has t h e p r i v a t e s e c t o r i n LAC c o u n t r i e s and t h e U.S. been brought i n t o t h e s e p r o j e c t s i n ways t h a t ensure cont inued involvement?

To what e x t e n t a r e l e g i s l a t i v e r e s t r i c t i o n s and r e l a t e d l ega l / admin i s t r a - t i v e c o n s t r a i n t s (e i -kher t h o s e of t h e h o s t country o r t h e U . S . ) i n h i b i t i n g c o u n t r i e s from developing p roduc t s f o r which t hey have a comparative advantage?

5. Are 1onge.c tom resource conservation measures ( e . g., s o i l , water, f o r e s t cover, p e s t management) e f f e c t i v e l y being incorporated by producers of non- t radi t ional axport crops?

A f u l l statement of the team's Ycope of work is provided as Appendix A, Section V,

C. METHODOLOGY - The team consis ted of f i v e persons who brought together f i v e professional. d i sc ip l ines1

Investmerrt/Flnancial Managoment S p e c i a l i s t Agricul.tura1 Economist I n t e r n a t i c n a l Agr icul tura l Trade S p e c i a l i s t Agronomic!/Biological S c i e n t i s t Agr icul tura l Ecologist

The team met i n Washington, D.C. f o r th ree days during which timu meetings were held with LAC/DR o f f i c i a l s , o f f i c i a l s i n t h e USDA and o the r government agencies, and with o f f i c i a l s of Experience, . Inc., t h e consult ing company f o r which t h e team worked. Mater ia ls provided by t h e LAC Bureau were reviewed arid t h e scope of work was reviewed with LAC o f f i c i a l s .

V i s i t s were made t o seven countr ies by a l l of t h e team members and t o four coun t r i e s by b t : l e a s t two team members. (See Appendix B, Sect ion V f o r t:he countrkes v i s i t e d and t h e d a t e s ) . The general approach i n each country was a s fol lows r

A v i s i t was made t o t h e USAID o f f i c e t o d iscuss t h e cross-cutt ing evalua- t i o n and thse p r o j e c t ( s ) being a s s i s t e d by USAID. USAID personnel supplied p r o j e c t pagers, r epor t s and o the r documents r e l a t i n g t o a g r i c u l t u r a l diversifica1:ion and expor t promotion. USAID a l s o provided names of o the r ins t i tu t ionr ; and persons t h a t various team members should meet.

Team members held meetings with persons involved i n d i v e r s i f i c a t i o n and NTAE and made f i e l d t r i p s t o v i s i t production areas , processing p l a n t s , research p l o t s , l abora to r i e s , e t c . Financing i n s t i t u t i o n s were contacted a s well a s the Agr icul tura l Attaches and APHIS personnel. Daily team meetings were held t o d i scuss prel iminary f indings and recommendations.

Draf ts were prepared on each country and s e n t t o t h e Washington o f f i c e of Experience, Inc., along with o ther documents requi red t o prepare t h e f i n a l repor t .

Af ter a l l the countr ies were v i s i t e d , t h e team met i n Washington, D.C. t o prepare t h e f i n a l repor t .

S E C T I O N 1 1 1

CROSS-CUTTING DESCRIPTIONS

S E C T I O N I 1 1

CROSS-CUTTING DESCRIPTIONS -

The following subsections contain croes-cutt ing desc r ip t ions of t h e team's f indings and recommendations under f i v e headings. These are8 Host Countriesc Se t t ings , Projec ts , Insl t i tut ionst Marketing? Production Technology) Environmental Impact? and Financing.

A. HOST COUNTFUESI SETTINGSI PROJECTS, INSTITUTIONS -

Se t t ings

A s a lready indica ted , t h e A.1.D.-assisted countr ies surveyed f o r t h i s evalua- t i o n have undertaken crop d i v e r s i f i c a t i o n and non-tradit ional a g r i c u l t u r a l export (CD/NTAE) a s means t o achieve economic recovery and growth. Given t h a t t h e resource bases of these countr ies genera l ly include ample a v a i l a b i l i t y of land and labor and t h a t the re is s u b s t a n t i a l in t e rna t iona l demand f o r non- t r a d i t i o n a l a g r i c u l t u r a l products,* t h e decis ion t o pursue CD/NTAE i n i t i a t i v e s was log ica l . A.I .D. 's decis ion t o support and f u r t h e r advance these i n i t i a t i v e s was a l s o log ica l . Spec i f i ca l ly , A.I . D. could be expected t o provide t h e t echn ica l a s s i s t ance necessary t o achieve d i v e r s i f i c a t i o n and export growth and t o thereby generate economic benef i t s ranging from fore ign exchange ear&ngs t o increased incomes f o r t h e coun t r i e s ' populations. A d d i t i o ~ a l l y , A.I.D. could be expected t o provide proper market o r i e n t a t i o n f o r new i n i t i a t i v e s i n terms of i ts d i r e c t r e l a t ionsh ip t o t h e U.S. market i t s e l f which has been and w i l l 1ikel.y continue t o be t h e region 's major customer. A s shown i n Tables 1 and 3 a t t h e end of t h i s subsect ion, well over half of t h e value of t h e region 's NTAE s a l e s comes from expor ts t o t h e U.S.

A s hos t countr ies and A.I .D. began t o consider programs and p r o j e c t s t o develop CD/NTAEt they were faced with a v a r i e t y of cons t ra in t s . Foremost

* The denotat ion "non-traditional" r e f e r s t o t h e f a c t than t h e products i n quest ion have no t been produced o r exported t r a d i t i o n a l l y by t h e s e countr ies . This is no t t o imply t h a t t h e countr ies have no t grown o r processed o r exported such products ever before? i n f a c t , t h e team found t h a t the re was a t l e a s t some production of most non-tradit ionals i n each of t h e countr ies v i s i t e d . The reduced s c a l e and economic s ign i f i cance of t h i s production, however, combined with its export and o the r p o t e n t i a l s have given rise t o t h e term non-tradit ional . Also, some of t h e items -- such as ornamental p l a n t s from Costa Rica, yams from Jamaica o r snow-peas from Guatemala -- have already bec&ne ' ' t radi t ional" following a number of years i n which production and export have increased s t e a d i l y and during which t h e markets have come t o recognize t h e producing country a s a r e l i a b l e source.

among these was the region 's lack of experience i n the production and marketing of the non-tradit lonals . Then, t o t h e ex ten t t h a t the re already d i d e x i s t some export t r ade i n those products, the re wore c e r t a i n cons t ra in t s -- such a s inadequate ocean o r a i r f r e i g h t -- t h a t made it d i f f i c u l t t o expand t h a t t rade . Lack o.F c r e d i t was a l s o a se r ious cons t ra in t r host country f i n a n c i a l systems were fac ing l i q u i d i t y shortages and lenders were r e l u c t a n t t o provide c r e d i t f o r what were seen a s r i sky CD/NTAE ventures. And hos t government macroeconomic p o l i c i e s were not always conducive t o CD/NTAE developmentr in numerous ins tances , p o l i c i e s a c t u a l l y discouraged inves to r involvement. Hesitancy t o address t h e problems of overvalued currencies , p r o h i b i t i v e raw mater ia l import du t i e s , confused monetary regula t ions andweak investment incent ive programs charac ter ized most ~f t h e governments a t t h e time. Policy reform progress i n these a reas has been made i n t h e l a s t few years -- par'ily a t A. I. D. ' s urging -- but t h e progress has been slow, and tho implementation of reforms has not always been smooth! some governments have l ega l i zed reforms bu t , i n p rac t i ce , have ac ted a s i f t h e laws were not on t h e books.

A f i n a l , U.S.-imposed c o n s t r a i n t was t h e Bumpers Amendment, enacted i n Ju ly , 1986 (See Appendix El. This l e g i s l a t i o n prohibi ted A. I .D . and hos t country benef i c i a r i e s from using Foreign Assistance b c t funds t o f inance a g r i c u l t u r a l commodity exports t h a t might, compete with U.S. commodities. The evaluat ion team did not f i n d any violat.ions of t h e Bumpers Amendment. Nor d id t h e Amendment seem t o overly c o m t r a i n t h e development of CD/NTAE i n i t i a t i v e s i n competing commodities such a s c i t r u s o r palm o i l a s these i n i t i a t i v e s could usual ly obtain f inance from domest.ic c r e d i t l i n e s and fore ign sources such a s t h e IBRD, IDB, e t c .

L

A s a g n e r a l focus, and with varying degrees of agreement and cooperation from governments, A.I .D. Missions determined t h a t CD/NTAE development a s s i s t ance should be channeled through and t o t h e p r i v a t e s e c t o r s of t h e d i f f e r e n t hos t countr ies . Simultaneously, Missions sought t o engage publ ic s e c t o r involve- ment i n CD/NTAE programs by providing some d i r e c t a s s i s t ance t o government agencies and/or by e s t a b l i s h i n g re levant loan f a c i l i t i e s through Central Banks. Further publ ic sec to r involvement was t o be sought through f o s t e r i n g po l i cy reform dialogue between governments and p r i v a t e sec to r e n t i t i e s . (See a l s o Country Reports, Section I V ) .

Against the backdrop j u s t described, USAIDs, with guidance from AID/W, began t o design and implement p r o j e c t s t h a t would mi t iga te o r el iminate c o n s t r a i n t s t o CD/NTAE developmentr t h a t would help producers/exporters t o a c t i v e l y pursue market oppor tuni t iesr and t h a t u l t imate ly would cont r ibute t o economic recovery including increased r e a l incomes f o r CD/NTAE par t i c ipan t s .

Most of A.1 .D. ' s CD/NTAE p r o j e c t s f a l l i n t o one of seve ra l broad ca tegor ies which t h e team would c a l l "approaches". These approaches a r e shown below, with t y p i c a l examples of each from Category 1 l i s t i n g s i n Table 1 of Sect ion I.

APPROACH

Marketing

Institution Building

Technology Transfer

Finance/Credit

Inf rastucture

Foreign Investment Promotion

Research

Policy

Training

EXAMPLE

Ecuadorr Non-Traditional Agricultural Export Project.

Costa Ricac Private Agricultural and Agroindustrial Council (CAAP) .

Belizea Commercialization of Alternative Crops.

Guatemala8 Agribusiness Development Project.

Jamaicat Crop Diversification and Irrigation Project (CDI) . E. Caribbean1 High Impact Agricultural Marketing and Production. *

Hondurast Honduran Agricultural Research Foundation (FHIA) . Dominican Republict Agricultural Policy Analysis Project . Dominican Republic: Agribusiness Training (PID).

In evaluating the different approaches, it was clear to the team that each was appropriate %o address pertinent constraints. It was also clear that, in casting projects at the PID and PP stages, proper reference was almost always made to the importance of integrating initiatives from other approach areas. Thus, in a marketing project there would usually be a finance component and an institution-building component. Or, in an institution- building project there would be a marketing component and perhaps a foreign investment promotion component. Bug for many projects the team found that, during implementation, components were integrated in name and budget only. On the one hand, it seemed that excessive emphasis was often being placed on a given area -- marketingharket information is an example -- at the expense of equally important components. On the other, it seemed that components were frequently being managed in a vacuum. At least to some degree, this was because project management was often divided between two or more Mission offices -- usually ARDO and PSO -- where each focused on pertinent areas but where neither coordinated its activities sufficiently with the other. Another possible reason for failure to adequately integrate components may be that the project designs themselves had weaknesses. In some cases, such as the Non- Traditional Agricultural Exports Project in Ecuador, the team found excessive

* This project is no longer as focused as it was originally on foreign investment promotion.

emphasis on information gathering and on promotion1 i n t h e Agribusiness Development Projec t i n Guatemala, t h e p r o j e c t design included complicated and u n r e a l i s t i c condi t ions f o r obtaining loans. These weaknesses r e l a t e , i n tu rn , t o t h e f a c t t h a t p r o j e c t designers were no t always experienced i n CD/NTAE -- which was understandable because of t h e newness of these undertakings -- and they o f t e n had t o r e l y on short-term inpu t s from consultants . A poss ib le so lu t ion t o t h i s problem f o r the f u t u r e would be t o have PIDs and PPs reviewed by exper t panels t h a t include p a r t i c i p a n t s with spec ia l i za t ions i n marketing, f inance, i n s t i t u t i o n building, e t c . This would a l s o help t o avoid o the r p r o j e c t design problems encountered by t h e team. (One of these was t h e sometimes poor choice of v e r i f i a b l e ind ica to r s t o measure p r o j e c t success, including t h e use of broad, d i f f i c u l t - t o - r e l a t e measures such a s GDP growth o r t o t a l NTAEs, and narrow, easy-to-relate but s i m p l i s t i c measures such a s t h e number of f i e l d missions o r s tud i6s completed.) It would a l s o be use fu l t o have exper t panels conduct e a r l y evaluat ions of CD/NTAE p r o j e c t s t o determine i f s i g n i f i c a n t adjustments a r e necessary.

Perhaps t h e most common and s i g n i f i c a n t f a u l t i n the p r o j e c t designs reviewed by t h e team was t h e absence of s u f f i c i e n t provision f o r appropr ia te long-term technica l a s s i s t ance . Given t h a t a g r i c u l t u r e is a long-term proposi t ion and t h a t t h e export of non-tradit ional a g r i c u l t u r a l products a l s o requ i res highly spec ia l i zed , continuing, day-to-day a t t e n t i o n , it is e s s e n t i a l t h a t develop- ment e f f o r t s include long-term f i e l d t echn ica l ass is tance . This was absent from many of t h e projec ts . (A s i g n i f i c a n t exception is t h e ROCAP - PROEXAG pro jec t , discussed below.)

A. I .D . 's "weighting" of long-term techn ica l a s s i s t ance r e l a t i v e t o o the r p r o j e c t inveakments f o r CD/NTAE development is highlighted i n t h e executive summary- of t h i s evaluat ion. A s indica ted from t h e breakdown and desc r ip t ion of CD/NTAE author iza t ions , long-term techn ica l a s s i s t ance was l o s s "important" than was support f o r implementing i n s t i t u t i o n s 1 and not a l l of t h e long-term technica l a s s i s t a n c e was f o r production or marketing. pa^, probably 2 0 percent , was f o r p r o j e c t management o r administrat ion. Yet without adequate long-term a s s i s t a n c e i n production and marketing, it is unl ike ly t h a t A . I . D . ' s p r o j e c t investments w i l l achieve t h e i r po ten t i a l s . In f a c t , even i f t a r g e t groups succeed a t producing increased volumes of NTAE, without c l o s e marketing ass i s t ance provided by experts i n t h e f i e l d , they may s t i l l l o s e money o r opportunity. By t h e same token, i f producers/exporters l e a r n enough about markets and marketing but cannot develop a s o l i d production base, they, too , may l o s e money o r opportunity.

The team a l s o noted t h a t p r o j e c t s included r e l a t i v e l y l i t t l e t r a i n i n g . This area, which r e l a t e s d i r e c t l y t o long-term ass i s t ance , is e s p e c i a l l y important f o r h o r t i c u l t u r i s t s and f o r bankers who a r e o r w i l l become involved i n CD/NTAE programs. There has been some advanced t r a i n i n g work done i n t h e Dominican Republic, culminating i n a new agr ibus iness t r a i n i n g p ro jec t . An9 the re is s u b s t a n t i a l A.I.D. l o c a l currency g ran t a s s i s t ance being provided i n Costa Rica t o e s t a b l i s h a regional a g r i c u l t u r a l col lege. But t h e team d id n o t f i n d adequate l inkage between ongoing CD/NTAE pro jec t s and re levan t t r a i n i n g

components. In some instances, budgeted t r a i n i n g f o r bankers had not taken p lace while, i n o the r s , t h e q u a l i t y of t h e t r a i n i n g was quest ionable a s it focused more on t h e o r e t i c a l than on p r a c t i c a l CD/NTAE loan appra i sa l tech- niques. A s regards t h e t r a i n i n g of h o r t i c u l t u r i s t s . the team learned t h a t such prepara t ion had been instrumental i n C h i l e ' s dramatic CD/NTAE growth and t h a t much of the t r a i n i n g of Chileans had taken p lace i n t h e U.S. a t univer- ~ i t i e s and through p r a c t i c a l f i e l d work. This typo of t r a i n i n g should probably be b u i l t i n t o A . I . D . ' s f u t u r e CD/NTAT i n i t i a t i v e s i n t h e region.

Despite weaknesses i n p r o j e c t design, t h e team found s g a c i f i c elements t h a t demonstrated success o r prospecta f o r success i n a number of A . I . D . ' s CD/NTAE pro jec t s . Two s i g n i f i c a n t a reas where A. I .D. has made important progress a r e i n t h e establishment of p o s i t i v e a t t i t u d e s towards CD/NTAE i n i t i a t i v e s i n t h e region and i n bui ld ing an awareness of t h e importance of macroeconomic po l i cy reform t o pave t h e way f o r CD/NTAE development. The pol icy reform a r e a has been complex because of? i ts p o l i t i c a l s e n s i t i v i t y and because macroeconomic p o l i c i e s a f f e c t and depend upon more than j u s t CD/NTAE. But impacts from pol icy reform i n exchange r a t e s , import d u t i e s , banking and monetary regula- t i o n s , and investment incent ives can be s u b s t a n t i a l and warrant ongoing e f f o r t s . These e f f o r t s should probably inc lude a "Carrot-Stick" approach from A.I.D. whereby accomplishment of appropr ia te reforms is "rewarded" with new A.I .D. support and where f a i l u r e t o achieve reforms such support.

A more complete l i s t of elements of A . I . D . ' s CD/NTAE p e r t i n e n t examples followsr

Fostering a p o s i t i v e a t t i t u d e toward and understanding of CD/NTAE.

Policy Reform.

Fostering t h e formation of and supporting Commodity Associations t o gain development mul t ip l i e r e f f e c t .

Delivery of appropr ia te long- term technica l ass is tance .

r e s u l t s i n a slowdown of

development success, with

A.I .D. has succeeded v i r t u a l l y everywhere.

Progress has been gradual everywhere1 perhaps most successful i n Costa Rica.

Ecuadorr Asparagus, b e r r i e s , snow-peas. ( a f f i l i a t e d with ANDE).

Guatemalar Asparagus. ( a f f i l i a t e d with GREMIAL. )

Guatemalar Rinc6n Grande strawberry coop- e r a t i v e (Cooperative Component of Agri- business Development P ro jec t ) .

Central Americas ROCAP/PROEXAG mult i- d i s c i p l i n a r y approach.

Provision of t imely, well- Costa Rice: Project loane/grants t o devel- s t ruc tu red debt finance t h a t opment banks - COFISA, BANEX, PIC. r e f l e c t s a d d i t i o n a l i t y .

Jamaica: Projec t loans /gr~nt :e t o development banks - TDB, JADP.

Central Americar LAAD. (Export Agribusiness Development Project 1.

Provision of t imely, well- Caribbean8 The HIAMP project, has p o t e n t i a l , -/

s t ruc tu red equi ty f inance but needs time. t h a t r e f l e c t s add i t iona l i ty .

Xnst i tu t ion Building Guatemala: The GREMIAL. -- Dominican Republic! JACC. - Honduras! The "new" FEPROEXaAH.

Resolution of External Const ra in ts

Centra l Americar ROCAP/PROEXAG work on t r anspor ta t ion .

Dominican Republic: JACCt USDA/APHIS - pre-clearance inspect ion programt market i n t e l l i g e n c e gathering and dissemination.

A. I. D. s h o u l h bu i ld on these successes by providing a d d i t i o n a l and continuing supporF t o these a c t i v i t i e s . More importantly, A.I .D. should be ab le t o repeat its successes i n countr ies and p r o j e c t s where, f o r l ack of proper focus o r because of excessive focus on o the r elements, CD/NTAE development progress has been slow.

Two of t h e ROCAP p r o j e c t s have demonstrated key elements of success t h a t bear f u r t h e r descr ip t ion . These a r e t h e Non-Traditional Agr icul tura l Export Support P ro jec t - PROEXAG (596-0108) and t h e Export Agribusiness Development

9 Projec t - LAAD (596-0123). Both p r o j e c t s a r e important because they have helped t o reduce o r e l iminate major cons t ra in t s t o CD/NTAE development. The PROEXAG p r o j e c t , which e n t a i l s t h e f i e l d i n g of a mul t id isc ip l inary , long-term technica l a s s i s t ance team, has provided profess ional production and marketing guidance t o growers/e~cporters i n Centra l America. PROEXAG has provided "farm- to-market" support t o t a r g e t groups on a p r a c t i c a l , business-oriented and continuing bas i s . In. t h e evaluat ion team's view, t h i s is p r e c i s e l y t h e kin& of t echn ica l a s s i s t ance necessary f o r CD/NTAE development. Confirmation of PROEXAG's cont r ibut ions were provided i n d i f f e r e n t interviews throughout t h e region. Spec i f i c examples included production and pos tharves t handling a s s i s t a n c e t o melon growers i n Costa Ricaj guidance f o r melon and cucumber growers i n Honduras, including planned ass is tance through t h e re s t ruc tu red FEPROEXAAH together with FHIA, t h e research foundationt production and

L marketing i l s s i s tance to new asparagus and rnepberry yroware Ln Cuatemalat i

a s s i s t a n c e i n s o l v i n g t ransport : problems i n E l Salvadorr and across-tire-board a s s i s t a n c e t o oxpor te r f ede ra t i ono i n t h e reg ion , aimed a t reducing market information, t r a n s p o r t and even c r e d i t c o n e t r a i n t s .

Notwithstanding t h e s e important c o n t r i b u t i o n s , impact from PROEXAG is less t h a n what it could be becauae t h e team c o n s i s t s of only f i v e persons who must each cover Guatemala, E l Salvador , Honduras, Costa Rica and, i n i t i a l l y , Panama. S t i l l , t h e PROEXAG-type of p r o j e c t , i f it is expanded and r epea t ed on a country-by-country b a s i s , w i l l e v e n t u a l l y he lp ensure t h a t adequate produc- t i o n and marketing t e c h n i c a l a s s i s t a n c e and technology t r a n s f e r a r e provided t o t a r g e t groups i n CD/NTAE i n i t i a t i v e s . This could perhaps be accomplished by s e t t i n g up l o c a l - h i r e m u l t i d i s c i p l i n a r y teams i n each count ry t o work under s e n i o r PROEXAG o f f i c e r s .

Tho LAAD ( L a t i n American Agribusiness Development Corporat ion) p r o j e c t e n t a i l s on-lending A . I . D . funds and LAAD r e sou rces , p r i m a r i l y t o non - t r ad i t i ona l a g r i c u l t u r a l expor t ven tures , i n C e n t r a l America. LAAD has helped t o reduce t h e c r e d i t c o n s t r a i n t f o r CD/NTAE development by keeping its l o a n ope ra t i ons s imple y e t formal, and f l e x i b l e enough t o meet d i f f e r e n t p r o j e c t r equ i r e - ments. LAADts d e c i s i o n a a k i n g p roces s i s e f f i c i e n t , t h e r e is v i r t u a l l y no bureaucracy, and t h e company fo l lows its loans c l o s e l y t o f a c i l i t a t e t ime ly s o l u t i o n s t o repayment problems. LAAD's development banking s t a f f a r e a l s o f u l l y conversant wi th p i v o t a l p roduct ion , marketing and l e g a l i s s u e s t h a t bear on t h e b a n k a b i l i t y of p r o j e c t loans .

LAAD has s u c c e s s f u l l y d i sbursed over ~ ~ $ 4 0 m i l l i o n of A . I . D . funds i n C e n t r a l A m e r i a b as w e l l as i n t h e Caribbean du r ing t h e p a s t seventeen years . I nc lu s ive of re f low placements and placement of i t s own r e sou rces p l u s commercial bank borrowings, LAAD has d i sbu r sed over ~ ~ $ 1 1 0 m i l l i o n throughout La t in America du r ing t h e same pe r iod . Some 60 p e r c e n t of i ts l o a n s have been f o r CD/NTAE. On t h e b a s i s of t h e company's t r a c k record , A.I .D. should probably a t l e a s t c a l l upon LAAD t o a s s i s t i n t h e des ign of f u t u r e c r e d i t f a c i l i t i e s f o r CD/NTAE. Cons idera t ion should a l s o be given t o t h e p o s s i b i l i t y of us ing LAAD as a f i d u c i a r y agent t o on-lend A . 1 .D. CD/NTAE resources . This might i nc lude t h e management of l o c a l currency g r a n t s f r o q t r u s t funds set up f o r t h i s purpose.

New P r o j e c t s

During in t e rv i ews a t t h e d i f f e r e n t Missions, t h e team l ea rned about a number of new p r o j e c t s t h a t w i l l have bea r ing on CD/NTAE i n i t i a t i v e s . These are8

COUNTRY PROJECT AMOUNT ................................................................................ Costa Rica Program t o provide CD/NTAE ~ ~ $ 1 8 m i l l i o n (ESF Grant

C r e d i t , esp. f o r Smaller Funds ) Farmers.

E l Salvador Technical Support, Po l i cy US$ 7 m i l l i o n (Grant ) Analysis and Tra in ing (519-0349)

Dominican Republic .gribualneau Training (517-0243)

~ ~ $ 1 2 mi l l ion (Grant)

Jamaica Promo t ion of Investmente U9$12 mi l l ion (Grant) and Exports (532-0135)

Caribbean Regional West Indies Tropical Produce US$ 6 mi l l ion (Grant) Support ("FROPRO", 538-0163)

Ecuador 3,gricultural Reaearc h, Extension and Evaluation US$ 7 mi l l ion (Grant)

From Mission b r i e f ings on most of these new p r o j e c t s , and basad upon readings from some of the p ro jec t documents, the team concluded t h a t most of t h e p r o j e c t s have s u b s t a n t i a l merit. By t h e same token, however, it was agreed t h a t much would depend upon p r o j e c t implementation.

I n s t i t u t i o n s

For pol icy , l e g a l and p r a c t i c a l purposes, A.I.D. has sought t o implement most of i ts CD/NTAE p r o j e c t s through hos t country p r i v a t e s e c t o r i n s t i t u t i o n s . In many ins tances , even where these i n s t i t u t i o n s may have ex i s t ed p r i o r t o rece iv ing A!?.D. support, they have now come t o depend heavily on A.I . D. Most of txe i n s t i t u t i o n s have only l imi ted means of sus ta in ing themselves f inanc ia l ly , and almost a l l appeared t o t h e team t o be operat ing "over t h e i r heads". They seemed t o have been charged with broad CD/NTAE development mandates f o r which they do no t have technica l exper t i se . Instead, they appear t o be managed and s t a f f e d more by g e n e r a l i s t s , with technica l support coming from short-term consultancies. The r e s u l t has been a tendency toward bureaucracy, fragmentation of e f f o r t and b lu r r ing of objec t ives . The l ack of s u f f i c i e n t input from long-term technica l a s s i s t ance packages (of t h e PROEXAG type) has a l s o reduced t h e intended impact of these i n s t i t u t i o n s . In t h e team's judgment, t h e s e f a c t o r s have mi t iga ted ' aga ins t t h e t imely implementa- t i o n of A . I . D . ' s CD/NTAE p r o j e c t s and have thereby diminished p o t e n t i a l r e t u r n s t o A . I . D . ' s resource inputs .

Following i s a l i s t i n g of most of t h e key i n s t i t u t i o n s involved i n implementing A. I .D. ' s CD/NTAE p r o j e c t s with a br ief couunent about each.

BELIZE -- Bel ize Agribusiness Company (BABC0)r BABCO has probably estab- l i s h e d an adequate adminis t ra t ive s t r u c t u r e but it does no t have t h e r e q u i s i t e t echn ica l a s s i s t ance c a p a b i l i t y t o support t h e Commercialization of ~ l t e r - na t ive Crops Project (CAC) .

COSTA RICA -- Coneejo Agropecuario y Agroinduetrial Privado (CAAD) r CUP has dcsvelogad a aube tan t i a l bureaucracy and from l n f e r v i e w ~ with t h e A. I .D . p r o j e c t manager ins ide CAAF, t h e team had t h e lmyreasion t h a t the re arc1 erne p r o jest implementation bott lene~ake owing t o CAN?' e Lack of initiative and excessive a t t e n t i o n t o bureaucra t ic d e t a i l Theee ehortoomings have not beer1 conduolve t o t h e establishment of an e f f e c t i v e implementation e t ra tegy. The team a l s o sensed t h a t CAAB was "doing too l i t t l e of too muah'', ranging from t h e provis ion of only short-tcmn aeeietance i n its produot programs, t o i n d l r e c t involvement i n pol icy dialogue, t o the eetabliahment of a marketing o f f i c e t h a t seems more focused on investment promotion than on marketing. A t t h e earn t i m e , CAAP is involved i n preparing s tudiee on a v a r i e t y of r~ubjec te , not t o mention looking a f t e r i t s own, i n t e r n a l administrat ion,

EL SALVADOR -- Fundacih Salvadoreiia de Estudios Sociales (PfUSADES)r FUSADES has received more A. I .D . support than any o t h e r s i m i l a r i n s t i t u t i o n . Like o the r i n s t i t u t i o n s , FUSADES has a l s o developed a l a rge bureaucracy. Recently it t r ans fe r red CD/NTAE marketing functions from i t 9 Agr icul tura l Development Division (DIVAGRO 1 t o i ts Export Investment Promotion Division (PRIDE20 . PRIDEX does not y e t have, i n t h e team's opinion, an adequate marketing s t r a t egy o r s t r u c t u r e t o t r a n s f e r marketing s k i l l s and ass i s t ance t o producers/exporters . GUATElw,firA -- Non-Traditional Exporters ' Guild (GREMIAL) r The uREMT.AL has develop= i ts share of bureaucracy but enjoys t h e b e n e f i t s of an ac t ive , i n t e r e s t e d and numerous membership of non-tradit ional a g r i c u l t u r a l expor ters , a s w e l l a s a c lose r e l a t ionsh ip with PROEXAG, which is headquartered i n Guatemala. Like the o ther i n s t i t u t i o n s , t h e GREMIAL is s t a f f e d pr imar i ly by g e n e r a l i s t s b d does not have a genuine long-term technica l a s s i s t a n c e capah i f l ty .

HONDURAS -- Federaci6n de Productores y Exportadores Agropecuarios y - Agro- i n d u s t r i a l e s de Honduras ( FEPROEXAAH) t "FEPRO" has been f u l l y restxuctured, including a sharp reduction i n personnel, a f t e r it had become excessively bureaucra t ic and f a i l e d t o focus on p r o j e c t goals and purposes. The new "FEPRO", and A.1 .D. personnel support ing it, impressed t h e team favo~rablyr prcyxz;..ta f o r more e f f e c t i v e p r o j e c t implementation a r e good. They w i l l be be tce r i f F'SPRO can obta in o r access a long-term techn ica l a s s i s t ance c a p a b i l i t y i n production and marketing.

HONDURAS -- Fundaci6n Hondurefia de Investigaci6n Agricola (FHIAIr This A.I . D .-supported research foundation is well-focused on NTAE crops. I t needs t o e f f e c t c l o s e linkage t o FEPRO and, i n p a r t i c u l a r , it needs ti work through enough ex tens ion i s t s t o t r a n s f e r research r e s u l t s i n t o f i e l d production.

DfMINfCAN REPUBLIC -- Junta Agroempresarial de Consultor$a y Coinversion - (JACC) r JACC has a f a i r l y a c t i v e and s t rong NTAE membership and it appeared t o t h e team t h a t JACC had made some important progress i n terms of obta in ing and disseminating market in te l l igence . It, has a l s o provided market l inkage guidance and has helped t o set up t h e USDA/APHIS pre-clearance inspect ion program. JACC has no t y e t successful ly launched its banker t r a i n i n g program.

DOMXNICAN MEPtJBLfC -- -- DiraacLbrr General da Opocnciones RgroinduitriaJ.ee Conaejo E s t a t e 1 del AxGaac -- ( D A C E A ) r DMIEA, a p u b l i c a e c t o r a n t i t y , ah luh i; p a r t of t h e Stat t r Sugar Council , le uharged wi th lmglementiny A.I .Dqta new suga r dlversificatA.on pro jeot . DACEA peraonnol made a good imgreselon on t h e team1 s e v e r a l were t r a i n e d I n t h e U.3. and a l l seemed capabla of working round and through t h e Sugar C o u n c l l q s own bureaucracy.

CARIBBEAN REQZONAC -- AgrLcul tural Venture T rus t (AVT) , AVT has been burdened wi th excese ive investment: a n a l y s i s proaeduree and de l ays , o r i g i n a t i n g w i t h t h e co re cont raceor -- Eas te rn Caribbean Agribuciness Development Company (ECHD) -- and wi th A , I . D i t s e l f . Nor a r e AVT's t r u s t e e s exper ienced i n CD/NTAE. The r e s u l t i n g p roces s t o ach i eve e q u i t y investment approva ls is t o o long.

CARIDBEAN REGIONAL -- Caribbean Agr icu l tu ra l . Trading Company (CATC0)r CATCO, a l though burdened w i th an A. I .D . l o an which it cannot s e r v i c e adequa te ly , has made p rog re s s n o t on ly a s a t r a d i n g concern bu t a l s o , i n e f f e c t , a s a development agency. Opera t ing w i th what appears t o be a very low overhead, CATCO has genera ted non - t r ad i t i ona l c rop produc t ion o n , s e v e r a l i s l a n d s . I t dese rves f u r t h e r A . I . D . s uppo r t , a t l e a s t of t h e t y p e el lvis ioned i n t h e new TROPRO p r o j e c t .

ECUADOR -- Federacidn Ecuator iana de Exportaciones (FEDEXP0R)t FEDEXPOR has done an s x c z l e n t job of promoting t h e i d e a of CD/NTAE b u t it has n o t gone beyond t h i s t o p rov id ing e f f s c t i v e t e c h n i c a l a s s i s t a n c e i n marketing. Expenses f c r market in format ion g a t h e r i n g seem exces s ive and ques t i ons have been r a i s e d about t h e u se fu lnes s of FEDEXPOR1s Niami o f f i c e .

L

ECUADOR--- Asociaci6n Nacional de Empresatios ( A N D E ) t ANDE 1.3 an e x c e l l e n t forum f o r b r ing ing t o g e t h e r CD/NTAE p a r t i c i p a n t s and f o r coo rd ina t i ng p r o j e c t implementation. Nonetheless , its work is less e f f e c t i v e t h a n it could be i f i ts A . I . D . p r o j e c t were t o i n c l u d e a long-term t e c h n i c a l a s s i s t a n c e component f o r market ing ( a t t a c h e d to FEDEXPOR) and f o r product ion.

A s i n d i c a t e d , most of t h e above i n s t i t u t i o n s are n o t s e l f - s u s t a i n i n g . I n t h e team's view, whi le it is n o t impera t ive t h a t t h e y ga in s e l f - s u f f i c i e n c y immediately o r even i n t h e near f u t u r e , it is impe ra t i ve t h a t t hey implement revenue-generating o p e r a t i o n s on a p r o y r e s s i v T s c a l e . This w i l l n o t on ly h e l p t o reduce "make-work" bureaucracy, bu t it w i l l a l s o h e l p t o reduce dependence on A.I.D.

As r ega rds t h e b l u r r i n g of purposes and o b j e c t i v e s , it seems t h a t t h e implementing agenc ies , w i t h A.T.D. ' s a s s i s t a n c e , could p r i o r i t i z e t h e i r a c t i v i t i e s more e f f e c t i v e l y . This cou ld perhaps i nc lude , a long wi th long-term t e c h n i c a l a s s i s t a n c e , t h e e ~ t a b l i s h m e n t of c o u n t r y w i d e t a r g e t s i n terms of p r o g r e s s i v e increments i n a r e a s p l a n t e d , y i e l d s and e x p o r t s of s e l e c t e d NTAE crops. Grea te r s p e c i f i c pe r sona l a c c o u n t a b i l i t y f o r achievement of t h e s e t a r g e t s would a l s o he lp t o ensu re progz-ess. I n a word, t h e p r i v a t e s e c t o r agenc i e s should act l i k e p r i v a t e s e c t o r agencies . ( A remark from a s e n i o r

o f f i c i a l of C t ~ i l e ' a well-known privaf:x s e u t o r CD/NTAB: Ioundatiotl , t h e Bunduc'ih Chi le , la agyropoer "We're euccaorrEu1 k ) ~ c d t l s ~ we t un the Poundbtkm Lika n buainuea.")

In many i n s t a n c e s t h e team nqted t h a t t h e implementing agenc ies , wi th urg ing from A . I . D . , wero a l r eady making o p e r a t i o n a l improvomenta a long t h e l i n e s euggested here . Such improvements a r e e s s e n t i a l t o enaur ing a reasonable r e t u r n t o A . I . D . ' s a l r eady s u b e t a n t i a l investment i n CD/NTAE.

A . I . D . ' s emphasis on working w i t h and through p r i v a t e s e c t o r i n e t i t u t i o n s is c o r r e c t i n t h e team's view) bu t a t t h e same t ime, it seems t h a t A . I . D . h a s l a r g e l y ignored p u b l i c s e c t o r i n s t i t u t i o n s , e s p e c i a l l y m i n i s t r i e s of a g r i c u l - t u r e . I gno r ing t h e s e i n s t i t u t i o n s seems an e r r o r given t h e i r p o t e n t i a l r o l e s , ranging from i n f l u e n c e on p o l i c y i s s u e s t o being a b l e t o reach sma l l e r fa rmers w i th r e l e v a n t CD/NTAE i n i t i a t i v e s . While recogniz ing t h a t t h e p u b l i c s e c t o r i n ~ t i t u t ~ i o n s a r e o f t e n p o l i t i c i z e d and underfunded, it would s t i l l make s ense f o r A . I . D . t o involve them more i n i t s CD/NTAE p r o j e c t s s o a s t o t a k e advantage of whatever p r o j e c t implementation a s s i s t a n c e t h e y might p rov ide i n t h e near-term a s w e l l a s t o b e t t e r p o s i t i o n t h e s e i n s t i t u t i o n s t o c a r r y o u t t h e i r own CD/NTAE i n i t i a t i v e s i n t h e f u t u r e . A s t a r t i n g p o i n t i n t h i s r e s p e c t might be t o select and fund sma l l t e c h n i c a l t a s k f o r c e s from h o s t count ry m i n i s t r i e s of a g r i c u l t u r e t o work wi th Missions on t e c h n i c a l a s p e c t s of p r o j e c t de s igns and f o r eva lua t i ons .

A l a s t grouping of i n s t i t u t i o n s , th rough which A . I . D . has implemented t h e c r e d i t components of its p r o j e c t s , i nc ludes t h e Cen t r a l Banks, f i nance companies, p q l i c and p r i v a t e development banks, and commercial banks t h a t make UQ t h e f i ~ r a n c i a l systems of t h e h o s t coun t r i e s . These a r e d i s cus sed under t h e F inanc inp heading of t h i s s e c t i o n a s w e l l a s i n t h e i n d i v i d u a l count ry r e p o r t s of t h e fo l lowing s e c t i o n (Sec t i on I V ) . SuffLce it t o n o t e he re t h a t A. I .D . has had s e r i o u s d i f f i c u l t y i n channe l ing c r e d i t through most of t h e s e i n s t i t u t i o n s because of t h e i r l a c k of exper ience and t h e i r pe r cep t ion of r i s k i n l end ing t o CD/NTAE ventures . S o l u t i o n s t o t h e s e bo t t l enecks can on ly come from a p p r o p r i a t e t r a i n i n g and exper ience . I n t h i s regard , A.I .D. should look t o some of i t s own succes se s a t LAAD, COFISA, BANEX, T r a f a l g a r Development B a ~ k and Jamaican A g r i c u l t u r a l Development Foundation f o r guidance.

TABLES 1 - 3

Data ga thered by t h e USDA on imports of non - t r ad i t i ona l a g r i c u l t u r a l p roducts i n t o t h e U.9. p rovide t ho most c o n s i s t e n t d a t a over time. Table 1 showo t h e s e imports from 1983-87. The products i nc lude f r e s h , f rozen , proceesod and o therwise preserved f r u i t s and vege tab les r r o o t cropor e d i b l e nu ts1 l i v e p l a n t s and c u t f lowers . They do n o t i nc lude f r e s h bananas from Costa Rica, Guatemala and Honduras -- c o u n t r i e s where t h e s e a r e t r a d i t i o n a l a g r i c u l t u r a l expor t s .

It is c l e a r t h a t NTAE t o t h e U . S . i nc reased S ~ b ~ t a n t i a l l y between 1983 and 1987, r i s i n g from 170,000 m t i n 1983 t o 310,000 m t i n 1987 -- an 82 pe rcen t i nc rease . The d o l l a r va lue ro se from $88 m i l l i o n t o $180 mi l l i on , a change of 104 pe rcen t . This r e f l e c t s bo th t h e h igher va lue of c rops (snow peas , b r o c c o l i , Live p l a n t s and c u t f lowers , p ineapple , e t c . ;I and t h e i n c r e a s e i n t h e amount of p rocessed product being exported. Table 2 shows t h e c rops t h a t have experienced t h e most changes. Not a l l c rops have shown inc reases . Live p l a n t s expor ted from Guatemala, while showing an 86 p e r c e n t i n c r e a s e i n volume, had a 1 6 pe rcen t d e c l i n e i n va lue of expor t s . This p a r t i a l l y r e f l e c t s i nc reased competi t ion s i n c e o t h e r c o u n t r i e s a r e a l s o expanding t h e product ion and expor t of l i v e p l a n t s and c u t f lowers . I n t h e Dominican Republic, ok ra e x p o r t s (mainly f r o z e n ) dec l ined from 4,713 m t i n 1983 t o 1,530 m t i n 1987 -- a d e c l i n e of a lmost 70 percent .

I t should be a o t e d t h a t expor t s t o t h e U.S. p rovide on ly p a r t of t h e s t o r y on NTAE i & t h e c o u n t r i e s s tud i ed . I n Cen t r a l America, Guatemala e x p o r t s l a r g e q u a n t i t i e s of f r u i t s and vege tab les t o o t h e r c o u n t r i e s i n t h e region, e s p e c i a l l y t o E l Salvador. There is some i n t r a r e g i o n a l t r a d e among a l l t h e coun t r i e s . Costa Rica has a l a r g e t r a d e i n l i v e p l a n t s wi th European c o u n t r i e s , e s p e c i a l l y t h e Nether lands and West Germany. Count r ies i n t h e Caribbean send s i g n i f i c a n t q u a n t i t i e s o f e t h n i c a g r i c u l t u r a l p roducts t o the U.K., Western Europe and Canada, as w e l l a s t o t h e U.S. Table 3 g ives an e s t i m a t e of t h e o v e r a l l amounts expor ted i n 1986 and t h e i r values . These d a t a should be compared wi th t h e combined f r u i t and vege tab le e x p o r t s from Chile and Mexico, which i n 1986 amounted t o over $1.0 b i l l i o n . Exports shown i n T a b l e 3 measured only 25 p e r c e n t of t h e Chile/Mexico t o t a l .

T A B L E 1

U.S.Uports of Non-Traditional Agricultural Export Products, Selected Countries, 1983 - 1987 1

Winduardfieeward Is. 161 183 114 103 649 898 1,451 552 866 1,996 Barbadas 15 2 2 2 4 6 3 21 61 18 47 4 32 .....................................................................................................................

Sub-Total 176 205 138 166 670 959 2,014 1, 498 556 898

Daolinican Republic 68,856 Jamaica 5,453

Sub-Total 74,309 n H ii I + Central America w Betize 668

Guatemala -?&as

Total 169,877 87,688 211,428 115,208 141,247 142,880 308,787 162,139 309,611 179,812 ..................................................................................................................... Source : USDADAS.

Ncte: Does not include fresh bananas in Costa Rica, Guatemala and Honduras. -

T A B L E 2

Hajor Changes in Exports of NTAE Selected Countries, 1983 - 1987 - I

C O U N T R Y D 1983 D 1987 : A . O U ~ ~ r US$ @ A ~ O U ~ ~ us$

Belize Citrus Juice 323 mil l+ss $ X . 3 d l

1,231 mt $0.7 mil

Pineapple Cut Fiowers Live Plants

134 mt $37 thous. 1,025 mt $260 thous. 3,716 mt $1.1 mil 34,321 mt $13.4 mil

3.4 mil units $0.6 mil 14.0 mil units $4.5 mil 56 mil units $2.7 mil 102 mil units $7.2 mil

i+ I 61 Salvador .- h Broccoli $461 thsus.

Cucumbers 0 mt $0 299 mt $91 thou. Melons 971 mt $332 thous. 8,912 mt $2.6 mil Okra 1,607 mt 3,690 mt $2-3 mil ...........................................................................................................

Guatemala Broccoli Celery Melons

$1.8 mil 12,630 mt $0 3,567 mt $0.7 mil 9,984 mt

$8.7 mil $0.6 mil $3.6 mil

Preserved -ut 53 mt $44 thous. 1,272 mt $1.0 mil Soow peas 0 mt $0 4,900 mt $4.0 mil Strawberries - Frozen 4 mt $5 thous. 1,155 mt $0-5 mil Cut Flowers 4.9 IILil units $0.8 mil 13.3 mil units $1.8 mil Live Plants 30.9 mil units $2.1 mil 57.6 mil units $1.8 mil

IIondura s Melons 2,471mt $1.5 mil 22,607 mt $6.8 mil Pineapple Juice 5.7 nil ltrs $0.6 mil 17.2 m;l l t r s $2.0 i i i i3.

Pl=tains 171 mt $39 thous. 8,878 mt $2.4 mil Snow Ekas 0 mt $0 177 mt $164 thous. Live Plan- 28.9 mil units $1.3 mil 14.7 mil units $1.3 mil

T A B L E 2 (continued)

C O U N T R Y ! 1983 1 I 1987 : Anwunt us$ r Amount

Dominican Republic Citrus 544 mt f$~.l mil 2,185 mt $0.5 mil Melons 3,913 mt $0.9 mil 9,266 mt $1.7 mil Okra 4,713 mt $3.6 mi1 1,530 mt $1.3 mil Tomatoes 780 mt $0.2 mil 7,576 mt $1.5 mil Cut Flowers 3.2 mil units $0.3 mil 4.7 mil units $0.5 mil Live Plants 3.0 mil units $0.5 mil 5.3 mil units $0.8 mil

Jamaica Fruit Juices 45 thous. ltrs $53 thous. 4.3 mil ltrs $1.4 mil

Squash' Live Plants Cut Flowers Citrus

$2.1 mil 5,282 mt $45 thous. 1,660 mt $0.3 mil 579 mt

$4.8 mil $0.4 mil $0.7 mil

53 mt $11 thous. 322 mt $0.2 mil 27.9 mil units 81.0 mil 5.5 mil units $0.8 mil 4.4 thous. units $64 thous. 2.3 mil units $0.9 mil

494 mt $0.3 mil 1,806 mt $0.5 mil

~arbados - No significant changes 1983 - 1987. .................................................................................................... Winduard/Leevard Islands

Fruit Juices 522 ltrs $1.2 thous. 1.4 mil ltrs $0.4 mil.

T A B L E 3

Eet imated Volume and Value o f NTAE from B e l e a t e d Count r i e s / Region8 Race iv ing A.I.D. Bupport , 1986*

E S T I M A T E D Volume Value

(metric t o n s ) (U.S. $ m i l l i o n )

B e l i z e 8# 500 13.0 Cos ta Rica E l S a l v a d o r Guatemala Honduras

SUB-TOTAL

Dominican Repub l ic 135, 000 43. C Jamaica 26# 000 Id. 3 Car ibbean ~ e ~ l o n a & / 45,000 18.0 --

SUB-TOTAL 206,000 - I ... - 3

Ecuador 18,000 ~ 3 . 0 -------------...--------------------------------------------- m u - - - > -LA.---

TOTAL 618,000 ? % ' / , ';

----------&-------------------------------------------*.-. a,. - -- a-e.... .--

S o u r c e s a E s t i m a t e s from v a r i o u s coun t r y / r e g i o n d e x p o r t citkks s:,'.: ?:;e e.

I n c l u d e s Ant igua, Barbados, Dominica, Grenada, Montsei-r , c, St,;, K i t t s , S t . Luc ia , and S t . Vincent.

* I n c l u d e s bananas a n d p l a n t a i n s i n c o u r ~ t r i e s where t h e s e havv n o t been t r a d i t i o n a l e x p o r t c r o p s .

B. MARKETING

The ovaluat ion of Non-Traditional Agricultural Export marketing focused on A. I. D . -supported p ro jec t performance i n areas usually denominated " c o n s t r a i n t s " ~ production and post-harvest handling tochnology (ava i l ab le volumesr q u a l i t y and c o n t i n u i t y ) ? t r anspor ta t ionr market information, market i n t e l l i g e n c e and receiver l inkaget and import proceduren. I t wall found, i n general , t h a t while A.1.D.-supported i n s t i t u t i o n s and personnel f u l l y under- s tand t h e nature of each of these cons t ra in t s , a number af t h e i n i t i a t i v e s taken toward re l i ev ing them have been l e s s than successful . In some cases, such a s t h e t r a n s f e r of production and pos tharves t handling technology, t h e fundamental problem seems t o be lack of a long-term approach1 p a r t i c i p a n t s tend t o favor a short-term consultancy, "quick f i x " approach. In o ther cases, such a s r ece ive r l i~ lkage , t h e problem r e l a t e s more t o apparent misunder- s tandings about the proper r o l e of p a r t i c i p a t i n g i n s t i t u t i o n s and personnel. A number of examples were found of excessive, d i r e c t involvement i n linkage of expor ters with se lec ted rece ive r s and overinvolvement i n t r ade arrangements. Too few examples were found of broad-based l inkage undertakings t h a t might provide expor ters with a l i s t i n g of rece iver a l t e r n a t i v e s and bas ic d a t a t h a t would enable expor ters t o make t h e i r own, informed s e l e c t i o n s of t r a d i n g par tners .

An across-the-board f inding, s o l i d l y confirmed i n Chile and Mexico, was t h a t t h e most e f f e c t i v e marketing a s s i s t a n c e i n NTAE invar i ab ly comes from t h e market i t s e l f , t h a t is, from t h e rece ivers / t raders , In t h e i r own b e s t i n t e r e ~ t , t o secure a steady supply of p r o f i t a b l e product, t hese market p laye r s provide growers and expor te r s with technica l , mater ia l , informational and f inanc ia l ' suppor t on a regular bas i s . A s a p r a c t i c a l matter , t h i s support tends to a s s i s t i n reducing and eventual ly e l iminat ing const ra in ts . Nor a r e t h e r e c e i v e r h r a d e r s l imi ted t o t h e import s i d e of t rading. Export t r a d i n g companies -- over 50 of these now opera te i n C h i l e ' s f r u i t export indus t ry -- a l s o provide a na tu ra l in-country "div is ion of labor" f o r producers t h a t can help reduce cons t ra in t s and f a c i l i t a t e t h e growth of NTAE t rade .

A. I .D . l i a i s o n with r ece ive r s / t r ade r s and e f f e c t i v e involvement of them i n its NTAE programs is not a simple task! it is f raught with p i t f a l l s a s each p a r t y t r i e s t o do the o t h e r ' s job, A. I .D . t r i e s t o "do" marketing while t h e r e c e i v e r s h rade r s t r y t o "do" development, but ne i the r is proper ly equipped t o c a r r y ou t t h e o t h e r t s work. Notwithstanding, A . I . D. has emphasized marketing programs extens ively and much has been learned by both p a r t i e s . In some ins tances , a longer term, more p ro fess iona l approach by A.I.D. t o t h e sub jec t i s beginning t o show r e s u l t s . I t is time t o fine-tune and mult iply t h e b e n e f i t s of t h i s approach.

Perhaps t h e most cons i s t en t cross-cut f inding i n NTAE marketing a c t i v i t i e s i n t h e coun t r i e s surveyed was t h a t most successful agr ibus inesses and agribus- inessmen have very l i t t l e , i f anything, t o do with A.1 .D. o r A.1.D.-sponsored p ro jec t s . To some ex ten t , given t h a t A.I. D. ' s development a s s i s t ance is ta rge ted a t those who have t h e p o t e n t i a l f o r but have n o t achieved success, t h i s s i t u a t i o n is understandable and perhaps even normal. Yet on c l o s e r examination, it was learned from t h e "successful" t h a t i n t h e i r view A.I.D.

t ends t o complicate t h ings , is buraaucra t l c and r a r e l y prov ides adequate long-term t euhn ico l a s s i s t a n c e f rotn p r o f e s s i o n a l s wi th r e a l "hands-on" exper- ience. Af te r d i s coun t ing tho f a c t t h a t succos s fu l ayribusineosmen probably s e e A . I . D . ' s p r o j e c t s a s sou rce s of even tua l compet i t ion, t h e i r obse rva t i ons s t i l l r i n g t r u e . A s t a r t i n g p o i n t f o r improvement, t h e team concluded, is f o r A . I . D . t o s eek o u t , l e a r n from and work w i t h more of t h e s e agr ibusinessmen than it has i n t h e p a s t .

Following a r e f u r t h e r d e s c r i p t i o n s of t h e team's f i n d i n g s i n each of t h e marketing c o n s t r a i n t a r e a s mentioned above, t oge the r w i th recommendations f o r improving approaches to r e l i e v i n g t h e a e c o n s t r a i n t s #

Product ion and Pos tha rves t t iandling Technology

From a market ing s t andpo in t , A. I. D. ' s f i r s t p roduc t ion - r e l a t ed a c t i o n i n most of i t s p r o j e c t s has been t o i d e n t i f y what t h e market is looking f o r . This l o g i c a l approach has l e d t o an a r r a y of s t u d i e s and lists and 1is t .s w i th in l ists ( s e e Table 4). The r e s u l t i n g s e l e c t i o n of p r i o r i t i e s has been a u s e f u l a x e r c i s e , b u t it seems t o have been p a r t i a l l y flawed because of t h e A.I .D. Missions' and o t h e r i n s t i t u t i o n s ' own s e l e c t i o n of s p e c i f i c p r i o r i t y i t ems f o r which a s s i s t a n c e would o r should be given. ( I t is n o t clear whether t h i s cou ld have been completely avoided, e s p e c i a l l y given t h e i n e v i t a b l e p o l i t i c a l and pe r sona l p r i o r i t y s e l e c t i o n s of t h e i n s t i t u t i o n s and people th rough whom A.I .D. has been implementing its p r o j e c t s . ) A . 1 .Dm and its g r a n t e e s have a l s o o c c a s i o n a l l y f a i l e d t o f u l l y a d v i s e t a r g e t groups about some of t h e p o t e n t i a l marketing p i t f a l l s r e l a t e d t o many of t h e i tems. Of t h e s e p i t f a l l s , perhaps t h e most s i g n S f i c a n t has been t h a t A . I . D . and t h e h o s t governments a r e o f t e n v igorous ly promoting t h e same c rops i n each count ry , a t t h e same t i m e , and i n t h e same p r i o r i t y o rde r , For t h e f u t u r e it would seem w e l l f o r A.I .D. and h o s t count ry agenc ies t o p rov ide more comprehensive background in format ion t o t a r g e t groups, i nc lud ing b a s i c p r i c e , c o s t of p roduc t ion , and supply/demand d a t a , and l e t t h e growers and e x p o r t e r s dec ide f o r themselves which NTAEs t o emphasize.

T A B L E 4

CENTRN APERICA: NorrTradlt lonal Crops f o r Dlverslficatlon/Exportation. Speclf lc Countries. 1988

1 I t ! I

3EL!E ! COSTA RlCA ! EL SALVADOR ! GUATEWA ! HONDURAS * - - - - I -- ! ! !

I I j GEMIAL (I i PROEXAG ! I ! ! ! Guatemala ! tl Salvador ! Honduras ! Costa Rlca ! . 8 I I I t I I

Carwbol a- Corn ( s e e d ) Guava**

%E%e ! P r i a r i t ! Export o f non- ! P r l o r l ; p r i o r i t P r l o r l t i P r l o r l t P r l o r l t ! ! I rad l t l ona l s . sparagus s I&S i d s i d

6rocccl i. Fresh ! Fresh & Sa l t ! Carrots ! Ber r ies ! Cantaloupe ! Berr les ! Berr les ! C a r d m Broccoli. Frozen ! Water Shrimp ! French Beans ! Cut Flowers : Cucumber ! Cantaloupe ! Cantaloupe ! Cucumber Caul If lower, Fresh ! Flowers & Fo l iage ! Minl-Squash ! Spec. Vegs. ! Honeydew ! Cucumber ! Cut Flowers ! Cul t ivated Caulif lower. Frozen : Melon ! Purplo Lettuce ! : Spec. Vegs. ! Honeydew ! Honeydew ! Melon

I Sweet Peas ! ! Tropical ! Tropical ! ! Pineapple ! ! ! Flowers ! Flowers ! ! Planta ln

Mini-Vageiables Snow Pea

! Okra I

! I

Boysenberries Black Pepper Heart o f Palm Sney Macadmi a Mango Nutu?sg and Mace Plantain iiasp berr 1 es Specialty %Ions Sour%p/CherI moya Tea Vanl l l a

Possible Export Poten+! a l

Ann a t t n Casheh Ethnic n-T Crops " ~ a v a Passion F r u i t

(Hawai i an type) Persian Lima Pineapp l e aubber Shrimp T m j t o f o r proces-

s l 3

! Lower P r i o r i t y ! Asparagus ! Baby Corn*** ! Be l l Pepper*" ! B lackberries*** ! Cabbage ! Carrot*" ! Cashew ! Cucumber*** ! Ginger ! Jalapeno*** ! Onions*** ! Pineapple*** ! Raspberries- ! Redf l sh *- ! ( s a l t water) ! Seed less Water- ! melonf** ! StrawberrieP** ! St r ing Bean*- ! Str iped Bassc** ! ( f resh water) ! Tanato ! ! ! ! ! I

! I

! Products wi th ! ! Market Windows ! ! Asoaraaus I

! alackberr ies !

! Good Markets ! ! 'but Must Have ! !Qua l i t y &Can- ! ! p e t i t i v e t'rlces ! ! Brussel S ~ r o u t s ! ! Cebolllnes ! ! Celery I

! Cucumbers ! ! Ginger ! ! Strawberries ! ! ! ! I

I 1

! I

I

! Tunato ! Tropical F I ! ! ! ! ! I

! I

! ! I

I

! ! ! ! ! I

Shrimp

owers

Mi-a F r i o r i t y f o r the future. ** Highest P r i o r i t y f o r the future. *** Research underway o r planned.

CARIBBEAN AREA AH) SOUTH AKRICA: Non-Traditional Crops f o r Df versl f icationlExportation. Speci f i c Countries. 1988

CARIeAN AEd' SOUTH AHERI GI ,,a ,- : I ---

CARIBBEAN REGIONAL j WHlNlCAN REPU8LIC ! JhMAlCA ! ECUADOR '. I- 1-

! I ! P r i o r i t y

Breadf r u 1 t ! Cashew ! Annato ! Annato Dasheen ! Cucumber ! Avocado ! A r t lchoke i3 i nger ! Cut Flowers ! Fo l iage Plants ! Asparagus M a w ! Eggplant ! Ginger B l ackberri es Passion F r u i t ! Guava ! Guava ? Cut F lowers papaya ! Macadunia ! Mango Endive Pineapple ! Melon ! Orchids 4 French Bean Planta in ! Papaya ! Y a ! Ginger Soursop ! Passion F r u i t ! ! Granldei lo Y a m ! P i geon Pea ! ! Mango

! Plantain ! ! Melon ! Soursop I ! Okra ! Star F r u i t ! ! Papaya ! Tanato ! ! Passion Fru It ! Cassava : ! Pigeon Peas I I ! Pineapple 1 ! ! Raspberries I ! ! Snow pea ! ! ! ! I I

1/ No spec i f ic crop p r i o r i t y l [ s t ing by country, bu t emphasized by one o r .mre institutions.

Au rergards autuaL prwluc:t ion i l ~ ~ d posttrarvuet hantlLLn(j, t h e nl~ort-t;acm consu l - tatir!y ilpproacti beincj c;mp Loy13tl by A . 1.1). ar~d Lte implement Lncj q tan totas i g not voty uft 'oatlvta. N o r couLd I t bo yivon ttla naturo of u ~ ~ r i ~ u l t u r e , e epuu la l l y Euc t tro pro(1uction f nor ) - t rad i t iona l perlsrtiable Ltoms, on ly lorry-term t e c h n l c a l auslut t ince can ~ ~ f f e c t i v u l y h e l p t o assura il cont inuous Elow of markatablo q u a l i t y product: i n voli~mes s u f f i c i e n t t o produce adequate p r o f i t s f o r tho yrowers, che t r a d o r r ~ , and u l l p rov ida r s o f p e r t i n e n t eupport nerv iaes . 'I'wo of what mtyht be termed A . I . D . successes i n t h i s regard hulp t o illustrate t h e p o i n t . The f i r c l . of t h e s e concervrs t ho Small Farmor Coop- e r a t i v e component of t h e Ayribusinaes Dclllaloprnent P ro j ec t (520-0276) i n Guatemala. Thoro, a Long-term consultant has been working on a f a i r l y con t in - uous b a s i s w i th a smal l coopera t ive of s t rawber ry yrowers. H e has success- f u l l y a s s i s t e d t h i s coope ra t i ve t o improve its performanca and c a p a b i l i t y i n v i r t u a l l y every a s p e c t of t h e farm-to-market system f o r s t r a w b e r r i e s , includirig no t on ly produc t ion /pos tharves t technology, bu t a l s o t r a n s p o r t , f i nance , r e c e i v e r l inkage and gene ra l management. Impor tan t ly , he has begun t o t r a c s f e r necessary a n a l y t i c a l and execu t ive s k i l l s t o coope ra t i ve memhera who should be f u l l y capable of managing t h i s a g r i b u s i n e s s a f t e r t h e consu l t an t completes h i s ass ignment . In d i s cove r ing t h e reasons f o r t h i s c o n s u l t a n t ' s success , it was f i r s t l e a rned t h a t he was no t p r e c i s e l y a p roduc t ion " s p e c i a l i s t " b u t d i d have cons ide rab l e p rev ious expor ience , s p e c i f i c a l l y with s t r a w b e r r i e s and p r i m a r i l y i n t h e market ing contex t . On c l o s e r examination, t h e team observed t h e fol lowing c h a r a c t e r i s t i c s which could probably s e r v e a s g u i d e l i n e s i n any s e l e c t i o n of long-term consu l t an t s , a thorough c u l t u r a l unders tanding of t h e c o o p e r a t i v e ' s members# o r g a n i z a t i o n a l s k i l l s , e s p e c i a l l y i n overcoming t h e p o t e n t i a l problems of working wi th numerous "owners" when an a c t i v i t y must be c a r r i e d o u t as! a s i n g l e , coheren t business! r e sou rce fu lnes s i n s e c u r i n g %he s e r v i c e s of a r e l i a b l e f r e i g h t f owarder i n s t e a d of t r y i n g a lone - to s o l v e t r a n s p o r t problems, and i n i d e n t i f y i n g and s ecu r ing pos t - ha rves t , prec:ooling f a c i l i t i e s a s w e l l a s p roduc t ion c r e d i t ! perse rverance i n t h e f a c e of numerous f r u s t r a t i n g o b s t a c l e s common i n L a t i n Americar and s e l f - s t a r t i n g i n i t i a t i v e . Again, a s suggested, t h e worth of t h e s e cha rac t e r - ist ics can on ly be proven over t h e long term -- probably i n ass ignments of n o t less t h a n f i v e yea r s .

The second example concerns t h e ROCAP A g r i c u l t u r a l Export Support P r o j e c t (596-01081, known as PROEXAG. This Central. American r e g i o n a l t e c h n i c a l a s s i s t a n c e p r o j e c t deploys f o r f i v e y e a r s a m u l t i d i s c i p l i n a i y team with produc t ion , pos tha rves t , marketing, communications and t r a i n i n g s k i l l s . The p r o j e c t has had d i f f i c u l t y i n r e c o n c i l i n g i ts o r i g i n a l i n s t i t u t i o n s t r eng - t hen ing nlandate w i th its subp ro j ec t o r "deal" o r i e n t a t i o n . (Both approachas a r e v a l i d and r e c o n c i l i a t i o n is r e p o r t e d l y nea r . ) What i s impor tan t conceptu- a l l y about PROEXAG is t h a t it p rov ides a long-term t e c h n i c a l response t o marketing, a s be11 a s t o t h e o t h e r c o n s t r a i n t s t h a t bea r on NTAE development. Each of PROEXAGVS s p e c i a l i s t s has had s u b s t a n t i a l p r a c t i c a l exper ience i n h i s a r e a of e x p e r t i s e and each e x h i b i t s t h e c o n s u l t a n t c h a r a c t e r i s t i c s de sc r ibed above. There is s t i l l a problem w i t h PROEXAG, however. S p e c i f i c a l l y , because i t s s p e c i a l i s t s must work i n f o u r o r f i v e d i f f e r e n t c o u n t r i e s , consu l tancy impact is s p r e a d t h i n and t h e long-term e f f o r t is f r e q u e n t l y s p l i t i n t o a series of shor t - te rm e f f o r t s . Nonetheless, i npu t , p a r t i c u l a r l y on r eg iona l c o n s t r a i n t s such a s t r a n s p o r t , is r a t h e r longer term t h a n s h o r t , and t h e

cmntinuerl prooance of! t l~r mneul tank6 work.Lncj o r r oirnilar prc)bl.orne country- to-aourrt ry La muoh be t te r Limn the ahart-to n n approach uwxl l n maat projects . 'I'he woakncaas o l elEorr;tl b ~ L n c j apreacl th in can be curu11 by b ~ i l d i n q .loauL country ~ t a f f ~ l t o work undar each of the expurts -- by dieobpllnta or by s e t t i r ~ y up PI<ORXAGEJ by count:zy. T h i s i a , aclmlttsdly, an expenslive progoai- t ion, bu t Ln tho Long tun i t wi l l surely be much more Lmpaat-offeative.

A general finding t ha t r e l a t e s t o in£ras t t .~ct ;u te far postharvest tiandling, and mote sp tx i f i c a l l y t o t h e aubject of gre-coding and packing, was t h a t t a rge t groups have not s a t i s foc to r i l y recognized the importance of having such f a c i l i t i e s . In some inetances , however, pre-cooling and packing un i t s can be constructed inexpensively and, while not idea l , they can s t i l l preserve product uniformity and qual i ty and eventually pay fo r themeelves by helping t o reduce losaes. A . I . D . should consider t h i s i ssue an in tegra l pa r t of the overal l package of assistance it ds l ivers f o r NTAE development.

Through i ts d i f fe ren t NTAE projects , A . I . D . has done a good job of ident i fying basic t ranspor t const ra ints and of i n i t i a t i n g lobbying effodtu wherever per t inent i n order t o gain goverment cooperation i n achieving be t t e r and more frequent service a t lowar costs . S t i l l , a s a p r ac t i c a l matter, exporters and cargo t ranspor ters a re faced with a fundamental "chicken-or-egg-comes-first" s i tua t ion . That is , service w i l l increase and cos t s w i l l drop when cargo througliput increases suf f ic ien t ly r but cargo throughput w i l l not increase su f f i c i en t l y without the presence of adequate, cost e f fec t ive transport . Responses such a s overland trucking of product through Mexico t o the U.S. f r m E l Salvador o r Guatemala may provide a solut ion fo r some exportersf seeking out a l t e rna t ive por t s is another solutionr chartering ( o r buying, with A . I . D . ' s heyp) sh ips may a l so work. ~ u t t he most e f fec t ive avenue w i l l proba61y be f o r exporters, i n associat ion, a t l e a s t by commodity but possibly a l so on a countrywide o r regional basis , t o pool t h e i r cargo and t h e i r e f f o r t s t o d i r ec t l y address t he maritime conference l ines . They should address the l i n e s with spec i f ic minimum seasonal offer ings and pr ice proposals and should explain t h a t these same offerir . js and proposals a re being presented t o non-conference l i n e s a s w e l l . R . I . D . should continue t o a s s i s t both i n t h e technical area -- the preparation of projections and proposals -- and i n preparing exporters t o organize and t o negotiate. A nascent i n i t i a t i v e i n Honduras along these l i ne s is already underway and can perhaps form the bas i s f o r s imilar e f f o r t s i n other A.I.D. countries, o r regionally. The same approach should a l s o be applied t o re l ieving the a i r t ransport const ra int .

Market Information, Market Intel l igence an11 Receiver Linkage

Many of A . I . D . 's p ro jec t s have properly ' ~ e e n ca s t a s "market-driven" on t h e premise t h a t the marketplace must ult imately d i c t a t e what NTAE products should be produced, t o which specif icat ions and i n what quant i t ias . NTAE pro jec t s have a l so included an "information" o r "intel l igence" component, and most p ro jec t s have enta i led some version of :receiver linkage a s well, t h a t is, bringing together grower/exporters with b:cokers/import d i s t r i bu to r s and other t raders .

As acecjardo markat ln£ur;'mcltion, r:onsist.irrq i m i y of pltlue lnflormntlon q a t h a r i ~ i c j and t rar roml~lnion, t h o t k j r I rn lourrtl t h a t A.T.13. and t h e 1mplemantLng ogorwloe may tlavu rjo~ro i n t o "ovnrkLL1" on t h e c ja thor i rq EunctLon w h l l e ~hortctra11ginc.J Ehe r ranemies ion o r dineaminiltLon f u n c t i o n . Aa team menhers l u a r r ~ e d i n ChlLe, qrowers arid o x p o r t e r e r e a l l y rleed l i t t l e mote t h a n c o n c l ~ e d a i l y nowapaper reportr l o r b u l l e t i n s on p r l c e 8 , t o g e t h e r , pe rhaps , wlI:h a r a d i o r e p o r t . I f yrowers and a x p o r t e r a have been p r o p e r l y informed a b o u t t h e workings of t h e marke tp lace , t h e y w i l l know t h a t p r i c e i n f o r m a t i o n y i v a s a n " idea" o f what is happening, t h a t C t o f t e n needs t o be d i s c o u n t e d f o r c h e e f f e c t of n a t u r a l l y i n f l a t e d repor t inc ; , and t h a t i n t h e l a s t a n a l y s i s i t c a n o n l y be a g u i d e f o r new p a r t i c i p a n t s who canno t y e t e x p e c t t o be on t h e i n s i d e of what i s happsniny when t h e i r volumes a t e n o t s i g n i f i c a n t . While t h e A . I . D . p r o j e c t s h z / e made e f f o r t s a t d i s s e m l n c : t l ~ m , it s e e m t h a t t h e y have overcompl ica ted t h e p r o c e s s f o r t h e m a j o r i t y of p o t e n t i a l l y i n t e r e s t e d p a r t i e s when s i m p l e seminars w i t h d a i l y newspaper and r a d i o f c i l o w up c o u l d have dons t h e job. A r e l a t e d problem i s t h e l a c k o f market i n t e l l i g e n c e boing g e n e r a t e d i n p r o j e c t s . Y l ~ i s i n c l u d e s t h e a n a l y s i s o f p r i c e ( h i s t o r i c a l and c u r r e n t ) a n d o t h e r d a t a t o d i s c e r n and t r a n s m i t t r e n d s . S t a l s o a p p e a r s t h a t many of t h e proposed o r e x i s t i n g Miami o f f i c e s o f t h e implementing a g e n c i e s a r e p r e d i c a t e d a s much on t h e need t o g a t h e r market i n f o r m a t i o n as on t h e need t o h e l p r e c e i v e , moni to r and d i s t r i b u t e p r o d u c t s . T h i s seems unnecessa ry g iven t h e b a s i c r e l i a b i l i t y of market news s e r v i c e s and communications f a c i l i t i e s . *

One i n s t i t u t i o n , JACC, i n t h e Dominican Republ ic , h a s begun t o p r o v i d e its membership w i t h market i n t e l l i g e n c e r e p o r t s t h a t , a s d e s c r i b e d t o t h e team, s h o u l d be ex t remely h e l p f u l . A . I . D . s h o u l d more a c t i v e l y promote t h e p r e p a r a t i ~ n ~ a n d d e l i v e r y of s u c h r e p o r t s i n o t h o r c o u n t r i e s as w e l l . (Team members n o t e d i n Mexico t h a t t h e N a t i o n a l Union o f F r u i t and Vege tab le p roducers d i s s e m i n a t e s such r e p o r t s f o r numerous c r o p s t h r o u g h o u t t h e y e a r . 1

A s r e g a r d s r e c e i v e r l i n k a g e s , A . I . D . h a s done much t o b r i n g g rowers /expor te r s t o g e t h e r w i t h r e c e i v e r s / t r a d e r s , r a n g i n g from fund ing o f e x p l o r a t o r y a n d f i e l d v i s i t m i s s i o n s i n b o t h d i r e c t i o n s t o t n e fund ing o f p u b l i c a t i o n s , announce- ments, c o n v e n t i o n s , workshops and p a r t i c p a t i o n i n t r a d e f a i r s . Y e t it was c l e a r t o t h e team t h a t i n some i n s t a n c e s A . 1 .D. and t h e implementing i n s t i t u - t i o n s have gone t o o f a r , w h i l e i n o t h e r s t h e y s imply have n o t gone f a r enough. A s n o t e d e a r l i e r , e f f o r t s have gone t o o f a r when implementing a g e n c i e s b e g i n s e l e c t i n g a n d even n e g o t i a t i n g w i t h b r o k e r s and buyers o f NTAE. And t h e y have n o t gone n e a r l y f a r enough when t h e y p r o v i d e e x p o r t e r s w i t h a n y t h i n g less t h a n a comprehensive l i s t i n g , w i t h r a t i n g a n a l y s e s , o f r e c e i v e r s . I t is u n d e r s t a n d a b l e t h a t implementa t ing agency p e r s o n n e l a r e a n x i o u s t o a c h i e v e e x p o r t sales as soon as p o s s i b l e on b e h a l f o f NTAE c o n s t i t u e n c i e s r b u t t h e r i s k s o f c r e a t i n g dependencies o r , worse, o f making bad d e a l s , are t o o g r e a t f o r t h e s e p e r s o n n e l n o t t o t a k e a s t e p back and t h i n k t w i c e a b o u t t h e i m p l i c a t i o n s o f t h e i r a c t i o n s . And t h e development o f a r e c e i v e r s ' l i s t i n g , based on r e l i a b l e , up-to-date r a t i n g s , is a r e l a t i v e l y e a s y t a s k .

* A . I . D . i t s e l f h e l p s f i n a n c e t h e Miami Market N e w s Repor t f o r H o r t i c u l t u r a l Crops .

Ard Nfl'AE tnahketbncf pa r t i a lpan ta and A . L .D. tiavu luarrrotl, ill 1 IJL~ thuLs marketing - a f f o r t o w i l l bu nullified if produate oxported do not aompLy with increas ingly a t r inqen t requirements f o r ent ry Lnto tho U . 9 . anti o ther aountrieu. Camgll- ance is bes t achieved through the p.irnely exg1ici;tion arrd a s s imi la t ion of p e r t i n e n t requirements and, wherever f eae ib la , through t h e eatabliehment and oyera t lon of authorizad pfemclearq nce inspection f a c i l i t i e s . A s indiaa ted 7,

eXeewtiare i n t h i s evaluat ion, A . 1 .D. has aea l s t ed NTAE p a r t i c i p a n t s with a c t i o n s i n each o f these a reas , but neede LO i r l tensify i t s e f f o r t s , p a r t i c u l - a r l y i n tenne of helping t o promote and i n i t i a l l y fund the establishment of in-country pre-clearance f a c i l i t i e s . These f a c i l i t i e s have already had a demonstrably p o s i t i v e e f f e c t f o r exportarfd i n Chile , t h e Dominican Republic: I

and elsewhere. Ultimately, they w i l l be of b e n e f i t a s well t o U.S. producers , who a r e properly concerned about p o t e n t i a l s f o r t h e spread of p e s t s and d i sease , about s u b s t a n d a r d product qua l i ty , and about increased volumes of NTAE coming i n t o the 11.9.

Packaging, Pleooeseed ve Fraeh NT,%E, Eiome Markets

F inal marketing oboervations r e l a t e t o packagingt t o t h e sub jec t of processed versus f r e s h NTAEt and t o t h e subjec t of home markets.

Ae t o packaging, no se r ious cons t ra in t s were found. This is p a r t l y due t o t h e f a c t t h a t seve ra l of t h e countr leo v i s i t e d have car ton manufacturing f a c i l - i t i e s t h a t can meet t h e kraf t -s t rength spec i f i ca t ions necessary f o r most produce e x p o p . (These finctories usual ly produce banana car tons and i n most countr ies , such a s Ecuador, they a r e ab le t o produce s a t i s f a c t o r y car tons f o r c u t flGwers, snow p a s , roo t crops, e t c . ) In some instance%, countr ies lack carton-makin:~ p lan t s , but it i s usual ly uncomplicated t o import t h e appropri- a t e cartons, o f t en inexpensively. Receivers a l s o o f t en supply packaging a s p a r t of t h e i r arrangement with expor ters .

A s regards processed products, t h e tehm noted t h a t non-traditior.81 expor ts of theae items a r e general ly behind t h e fzesh i n unit. volume, bu.t t h e i r growth r a t e is s i g n i f i c a n t and w i l l increase a s more f r e s h product is grown, a s yj,el.ds increase , rind a s surpluses look f o r a "home". In a n t i c i p a t i o n of t h i s t r end , A.I.D. would do well t o obta in p e r t i n e n t market and food processing research da ta and bagin disseminating it t o NTAE t a r g e t groups. This theme is very cur ren t i n Chile because of t h a t country ' s high r a t e of y i e l d and p i a n t i n g increments and, consequently, expected surpluses. It is a l s o inpor tan t because t h e Chileans have rea l i zed t h a t t h e i r f r e s h products w i l l eventual ly be displaced i n some markets by o t h e r countries. An example concerns asparagus, One a u t h o r i t y s t a t e d unequivocally t h a t Chile axpects Central America t o eventual ly d i sp lace it from t h e U.S. winter market f o r f r e s h asparagus. When asked what Chilean producers would do, he responded t h a t they would export dehydrated, frozen, canned o r o the r processud forms of t h e product t o t h e U.S. , t o Europe and t o new markntr i n A s h . Several companies i n Chile confirmed t h a t s u b s t a n t i a l investments i n ag ro indus t r i a l processing p l a n t s and equipment w i l l be undertaken i n t h e near fu ture .

In looking a t a l t e r n a t i v e o u t l e t s f o r NTAE production, t h e team b u n d t h a t i n add i t ion t o t h e opkion of agro-processing, producers could o f t en look t o t h e i r

owrr clomctatlu rnar'L.at%. Yana of! the tod duct^ and volumesr i n cluefition aould not q u a l i f y i n this sonse, but o ther# dnfl~lltely would. Examplea .LrmLudsr papaya and plurrtaln I n t lm Womlniuun liaputsl.La and t rue tomato (tarnarrt.110) ln -- Pouadox. Tho lmpurtallca of the home market: acr an outSet , particubar' ly f o r new ptoducera, i t h a t i t : oan o f t e n alsrarb leaoar q u a l i t y product a t eti.11- p r o f i t a b l e p r i ces . (Yomstimoa home market g r l a a s a c t u a l l y net more f o r t h e p r ~ ~ d u c ~ r than do mxport pr ice~e. )

C. PRODUCTION TECHNOLOGY - Research and Extension

Research and extension a r e the e s s e n t i a l foundations f o r long-term successful agronomic performance i n any a g r i c u l t u r a l system, e spec ia l ly i n a non-tradi- t i o n a l system. Strong, ongoing research and extension programs were not i n evidence i n any of t h e A.1.D.-eupported countr ies s tudied by t h e toam. Nor, f o r the most p a r t , were such program s a t i s f a c t o r i l y contemplated o r in teg ra ted i n t h e A. I. D. p r o j e c t s und.er review. In te res t ing ly , i n Chile and Mexico it was learned t h a t , o v e r a l l , research and extension a r e not e n t i r e l y adequate e i t h e r , desp i t e t h e success those countr ies havcs had i n achieving NTAE. The market-led experiences of Chile and Mexico have been production- supported through t h e regular use of "off-the-shelff ' imported inputs and technologies w i t h too l i t t l e formal adaptive research, much l e s s extension. To a dellree, t h i s approach can work -- it obviously has f o r Chile and Mexico -- but ove& time, p a r t i c u l a r l y i n l e s s developed countr ies , t h e r e s u l t i n g oppol;t;ll.nity c o s t may be excessive. This r e l a t e s both t o t h e q u a l i t y of technology and t o i ts t r a n s f e r and d i s t r ibu t ion . Direct c o s t s can a150 be very high. Irnported inputs and technologies, geared t o ensuring s p e c i f i c market q u a l i t y outputa, without proper adaptive research, can lead t o r e s i s t a n t p e s t and p e r s i s t e n t d isease problems t h a t a r e expensive t o c o r r e c t and t h e correc t ion of which can r e s u l t In still o the r , more oxpensive complications such a s excessive pes t i c ida res idues i n otherwise marketable export crops. *

The d i f f i c u l t y , it was found, does not l i e i n host country o r A . I . D . lack of apprecia t ion of the importance of research and extension. In f a c t , on paper, and i n terms of organizat ional s t r u c t u r e , t h e " r ight" i n s t i t u t i o n s and p r o j e c t s seam t o be I n placer and t h e r e is ample l i p se rv ice given t o t h e subjec t . Making research and extension work e f fec t ive ly , however, is another

* A t y p i c a l example of a technology import-related problem would be t h e use of Cal i fornia row-spacing and ~ l a n t population planning f o r asparagus. In t h e absence of t r i a l adjustment, f a s t e r growing condit ions in , say, Guatemala, could lead t o crowding and t h e a t t r a c t i o n of fungus o r o the r d i sease with consequently diminished s u s t a i n a b i l i t y prospects and t h e need f o r expensive appl ica t ions t o c o r r e c t problems.

e ~ n d t a r . f n t h e t ~ o s t country pldbLic sackocll, prlmnc L1.y a k thu i l ~ j r 1 0 u L t ~ r 0 min.Lntry levol . , the main pccrb1.m m c m u ko be one of! t n ~ l u f f i c i a n t budgetary auppor t . Snl.arLett a r e t oo low t o a t t r a c t i t r ~ d r o t d i n qualified porsonneLl and g lobs1 budyetra pctrvlde insufficient ~ U ~ L L I E ) f o r adaquatu rouearch mid ex t ens ion suppor t programs. Haaearchere anjoy o n l y l i m i t e d l abo ra to ry and t r i a l p l o t P a c i l L t i e s , e x t e n s f o a l a t e a r e s h o r t of voh lc loe , and n e i t h a r group has r ~ u f f i o i o n t ope ra t i ng funds t o c a r r y o u t theLr work c o n s i s t o n t l y . T ra in ing o p p o r t u n i t i e s o r e a l s o l i m i t e d by budget. In genera l , it was found t h a t r e sea rcha r s laaked iidequate t r a i n i n g i n r ep l i ca tLons and a t a t i s t i c a l a n a l y s i ~ and t h a t e x t e n s i o n i s t s were weak on ex t ens ion leverage methodologies.

Nur do p~ycho loc~ ic in l rewards come q u i c k l y i n r e sea rch o r ex t ens ion ) t hus , personne l a r e a a s i l y a t t r a c t e d t o a l t e r n a t i v e employment. The problem is f u r t h e r complicated by t h e f a c t t h a t numerous key p o s t s i n t h e a g r i c u l t u r e m i n i s t r i e s a r e E i U e d with p o l i t i c a l appo in t ee s who seek t o c a r r y o u t agendas o f t e n very d i f f e r e n t from a c o u n t r y ' s r e a l , immediate r e sea rch and ex t ens ion needs.

In most c o u n t r i e s a l s o , r e sea rch and ex t ens ion a c t i v i t i e s themselves a r e i n s u f f i c i e n t l y and inadequa te ly r e l a t e d ? even more s i g n i f i c a n t l y , f o r NTAE i n i t i a t i v e s , bo th a r e a s a r e u n s a t i s f a c t o r i l y o r simply n o t i n t e g r a t e d i n t o s p e c i f i c p r o j e c t s . A f u r t h e r compl ica t ion i s t h e tendency f o r r e s e a r c h e r s and a c t e n s i o n i s t s t o p r o t e c t t h e i r " , t u r fM the reby f a i l i n g t o communicate ade- q u a t e l y wi th one another . This makes it d i f f i c u l t f o r them t o ach i eve p rope r l i nkage where, f o r example, t h e e x t e n s i o n i s t i d e n t i f i e s f i e l d problems and p r o s p e c t s and p a s s e s t h e s e on t o t h e r e s e a r c h e r f o r s o l u t i o n s and approaches t h a t can t h e n be extended back t o farmers .

C

One e E h p l e where t h e r e seems t o be a near-term p o t e n t i a l f o r p rope r l i nkage was found i l l Honduras. Thsre , FHIA (Fundaci6n Hondurefia de Inves t i gac i6n Agr!kola) has been c a r r y i n g o u t s p e c i f i c t r i a l s on p r a - se l ec t ed non-tradi- t i o n a l c rops and has expressed its i n t e n t i o n of working c l o s e l y wi th FEPROEXAAH (Federac i6n de Productores y Exportadores Agropecuarios de Honduras) i n its A.1.D.-sponsored NTAE p r o j e c t . (Notwithstanding t h i s expressed i n t e n t i o n , r e s u l t s of i n t e rv i ews a t FHIA and FEPROEXAAH d i d n o t l e ave t h e impression t h a t enough i n t e r a c t i o n had y e t been i n i t i a t e d . This is presumably due i n p a r t t o t h e f a c t t h a t FEPROEXAAH has been r e c e n t l y reorganized and has o t h e r p r i o r i t i e s 1 hope fu l l y t h e necessary i n : , ~ r a c t i o n w i l l commence soon and con t inue on a r e g u l a r b a s i s . )

P r i v a t e s e c t o r a g r i c u l t u r e o r g a n i z a t i o n s i n t h e h o s t c o u n t r i e s t a l k b road ly about r e s e a r c h and ex t ens ion b u t r a r e l y d e f i n e s p e c i f i c a l l y t h e i r o b j e c t i v e s i n terms of problems t o be so lved o r benchmarks t o be accomplished. A f a i r l y obvious problem i n t h i s r e s p e c t h a s been t h e observed men ta l i t y of personne l whereby most want t o be a d m i n i s t r a t i v e " ch i e f s " and few want t o do t h e r e a l work, u s u a l l y work t h a t must be done i n t h e f i e l d , inc lud ing , e s p e c i a l l y , t h e e s t ab l i shmen t and ope ra t i on of on-farm trials.

The h o s t c o u n t r i e s ' and A . I . D . ' s p a r t i a l answer t o inadequate and i n s u f f i c i e n t r e sea rch and ex t ens ion has been t o c o n t r a c t consu l tan t s t o i d e n t i f y and a c t on CD/NTAE i n i t i a t i v e s and problems. While i n no way a s a t i s f a c t o r y s u b s t i t u t o

for omjolny ceauarch arid oxtonalon, t i r ia approach i~ not unraasonable. What i s unreaaonaJ~lo .la t t ia b e l i e f t h a t a "complomont" of short - term corieul tante can provide u u f f l a i s n t , onduring i n p u t , much Leos LneLuanue Lha f'utura o P ,

reneurch and ex tons ion i n t h o boat: aounLriou. Such i npu t and Fnflusnccl a r e perhaps more important f o r non - t r ad i t i ona l c rop development than f o r o t h u r c rops . S p u c i f i c a l l y , non - t r ad i t i ona l c rops r e q u i r e more day-to-day managemer~t. F'armerw i n t h e t a r g e t group c o u n t r i e s a r e no t u~led Lo day-to-day manayament because they have been a c c u ~ t o m e d t o r a l s i n y on ly commodity c rnge t h a t do no t r e q u i r e ae much a t t e n t i o n us t h e non - t r ad i t i ona l s . Also, i n many ine t ancea it is not e n t i r e l y c l e a r t h a t t h e short - term c o n s u l t a n t eve r ha@ enough time t o s a t i s f a c t o r i l y complete an assignment given t h a t a p a r t of h i s a l l o t t e d t ime must u s u a l l y be s p e n t i n f a m i l i a r i z a t i o n wi th a s p e c i f i c s u b j e c t ass ignment i n t h e l o c a l con t ex t .

There is no short - term answer t o t h e l a c k of a p p l i e d r e sea rch and ex t ens ion f o r CD/NTAE. A.I. D. should probably bagin, however, by focus ing more on the importance of t h e s e i s s u e s i n a l l f u t u r e p r o j e c t designs. S p e c i f i c a l l y , A . I . D . should r e q u i r e assessments of t h e a v a i l a b i l i t y of adequate r e sea rch and ex t ens ion f a c i l i t i e s f o r , and should be s u r e t h a t a r e saa rch / ex t ens ioc component w i l l he i n t e g r a t e d i n t o , any new CD/NTAE p r o j e c t be fo re funding i s approved. On a broader s c a l e , A.X.D. Missions should review and t r y t o implement some of t h e recommendation^ and work p l a n s provided i n r e c e n t s t u d i e s . An impor tan t c o n t r i b u t i o n i n t h e a r e a of r e sea rch i n s t i t u t i o n b u i l d i n g is a r e c e n t r e p o r t * t h a t h i g h l i g h t s and recommends a p p r o p r i a t e a c t i o n s on s e v e r a l f r o n t s . These i nc lude t h e need t o improve l i nkage between h o s t country and f o r e i g n r e sea rch programst t h e need t o support; h o s t c o u n t r l p u b l i c s e c t o r r e sea rch e f f o r t s ) t h e need t o p rov ide f o r r e sea rch t r a i n i n g 1 and t h e need a c o l l a b o r a t e w i th t h e p r i v a t e s e c t o r . Key recommendations from t h i s - s t udy focus on t h e importance of i nvo lv ing fa rmers i n p r a c t i c a l , a p p l i e d on-3 arm re sea rch , e s p e c i a l l y where A. I. D. i s encouraging farmers t o grow new conunodities. This i s t h e c a s e f o r CD/NTAE. Also, t h e recommendations of suppor t f o r h o s t country p u b l i c s e c t o r r e sea rch a r e p a r t i c u l a r l y p e k t i n e n t f o r CQ'NTAE. A s noted e a r l i e r , f o r budgetary and o t h e r reasons , most p u b l i c r e s e a r c h e f f o r t s a r e inadequate . But A . I . D . w i l l n o t be o p e r a t i n g f o r e v e r i n most c o u n t r i e s , much less w i l l it be con t inu ing i ts c u r r e n t l e v e l of suppo r t f o r CD/NTAE. Host count ry p u b l i c s e c t o r i n s t i t u t i o n s r e spons ib l e f o r r e sea rch , however, w i l l con t i nue t o func t ion . A. I .D . should make every e f f o r t now t o h e l p them t o f u n c t i o n e f f e c t i v e l y . A s suggested i n t h e r e p o r t , t h i s should i nc lude innova t ive funding arrangements such a s t h e u se of l o c a l cur rency endowments (as i n Honduras) and should a l s o aim a t p r i o r i t i z i n g r e s e a r c h i n accordance wi th n a t i o n a l o b j e c t i v e s , such a s CD/NTAE.

* Recommendations f o r Support ing A g r i c u l t u r a l Research I n s t i t u t i o n - B u i l d i n g i n L a t i n America and t h e Caribbean, Div is ion of Agr i cu l t u r e and Rural Development, Bureau f o r L a t i n America and t h e Caribbean, A .I. D. (Washing- ton , D.C., 1987).

Ae rugarfla ax tona lan , a 19UG manual* produarrd for A . 1.0. i n Ilondurua Lu u good caxnmglo of t r a i n i n g arid rofurence mnatturiu.1 khnt i w p r a c t i c a l --I Lncludiny s h o r t c a m u tud iea -- and t h a t : is p a x t i c u l o r l y useful i n tho t r a i n i n g of t r a i n o r e . Other e i m i l a r documents have baan prapared i n ocher aoun t r i ee . A.Z.D. should yloan t h e best: e lements from the se documunts and should try t o produaa s imple but. e f f e c t i v e ex t ens ion t r a i n i n g courses geared s p e e i e i c a l l y t o CD/NTAE.

A . I . D . ' s long-term response to inadequa te rusoarch and e x t e n s ~ o n as well a s t o o t h e r weaknesses, descr ibed below, should be long-term t e c h n i c a l a s s i s t a n c e . In p a r t i c u l a r , a s e i s t a n c e packages should be designed t o cover n o t on ly p r o d u c t i m , b u t a l s o poo tha rves t handl ing, marketing, and even f i nance c o n s t r a h t s . The ROCAP/PROEXAG p r o j e c t , a l though appa ren t l y sp read t h i n , i s an axample of t h i s long-tesm t e c h n i c a l approach. The t e c h n i c i a n s chosen t o p rov ide long-term a s s i s t a n c e should be f u l l y exper ienced i n t h e i r s p e c i f i c a r e a s a s t h e y r e l a t e t o CD/NTAE. Sen io r personne l should a l s o be complemented wi th l o c a l - h i r e t e c h n i c i a n s who cou ld he lp t o a l l e v i a t e t h e thin-spread of e f f o r t whi le ga in ing on-the-job t r a i n i n g .

Another impor tan t a s p e c t of long-term a s s i s t a n c e concerns t h e t r a i n i n g of h o r t i c u l t u r i s t s . Again, a s e r i e s of shor t -courses is n o t a s a t i s f a c t o r y s u b s t i t u t e f o r long-term formal c lassroom and f i e l d t r a . i n ing . The team saw c l e a r l y t h e d i f f e r e n c e between t h e s e two approaches i n comparing t h e s i t u a t i o n i n Ch i l e w i th t h a t of most of t h e o t h e r c o u n t r i e s , S p e c i f i c a l l y , many of t h e Chi lean agronomists involved i n CD/NTRE a c t i v i t i e s had s t u d i e d f o r f i v e t o e i g h t y e a r s i n C a l i f o r n i a p r i o r t o becoming involved i n p r i v a t e bus ine s s o r government se&vice. I n most o f t h e o t h e r c o u n t r i e s t h i s h a s n o t been t h e c a s e , ~ a r t l y because o.E l a ck of oppo r tun i t y t o s t udy and p a r t l y because of l a c k of i n c e n t i v e t o work. A . I . D . should act more broadly on bo th of t h e s e problems by i nc lud ing U. S. u n i v e r s i t y t r a i n i n g ( i nc lud ing s tudy i n Pue r to Rico) components i n its long-term t e c h n i c a l a s s i s t a n c e packages and by making p a r t i c i p a t i o n c o n d i t i o n a l upon cont inued , s ea sona l involvement i n ongoing CD/NTAB p r o j e c t s , p a r t i c u l a r l y f o r p u b l i c s e c t o r employees.

Other CD/NTAE p roduc t ion - r e l a t ed i s s u e s which a r e n o t g e t t i n g enough a t t e n t i o n i n t h e c o u n t r i e s s t u d i e d i nc lude t h e r i s k s of monocul tuxe~ f a i l u r e t o adequa t e ly p rov ide f o r water and s o i l conserva t ionr t h e need f o r adequate suppor t s e r v i c e s t p lanning f o r l a b o r requirements t and a p p r o p r i a t e l and use.

The s t r o n g push i n t o n o n - t r a d i t i o n a l c rop promotion -- spearheaded i n many i n s t a n c e s by A.I.D. -- is a i r e a d y l e a d i n g t o monoculture farming. This p r a c t i c e , undertaken i n t h e expec t a t i on of s u c c e s s f u l un in t e r rup t ed year-to-year ou tpu t of a c rop on t h e same s i t e o r i n t h e same gene ra l a r e a , can e a s i l y i n v i t e t h e appearance and m u l t i p l i c a t i o n of c rop - spec i f i c p e s t s p r e v i o u s l y unknown o r n o t harmful i n a given, de f ined a r ea . This has a l r eady

* Manual P r s c t i c o de Extensibn, ~ i r e c c i 6 n Regional Cen t r a l , Proyecto Manejo de Recursos Natura les , S e c r e t a r i a de Recursos Natura les , USAID Proyecto No. 522-0168 ( ~ e ~ u c i ~ % l ~ a , Honduras, 1986 1.

happened Ln Guiltornalir whura arrow p a p l a n t i n y s havo o x p o r i o r ~ c ~ d t ~ i y n i f i c a n t aptrid LnCeuti~tlor~la, arid In the Dominlcon Hopublic whsro vogutnble mono- c u l t u r l n y baa l e d t o w r i o u u whltt, f l y problems. Growors of t ho NTAE crops , i f t h e y have considerod t h e s e pos s ib i l l k t t r o , have appa ren t l y dec ided t h a t t h e near-term p r o f i t p o t e n t i a l from ouch c rops w i l l mora than o f f s e t p o t e n t i a l monaculture problems. This is a d e c i s i o n t h a t can have long term nega t ive consayuences, i nc lud ing c l a i m t h a t "it was a11 A . I . D . ' s f au l t . ' ' Nor is it c l e a r t h a t many of t h e imported t e chno log i e s f o r n e u t r a l i z i n g monoculture impacts a r e a p p r o p r i a t a , because they a r e s o c o s t l y . (An example is s o i l fumi y a t i o n be fo re r e p l a n t i n g s t r a w b e r r i e s , a w e l l known p r a c t i c e i n Ca l i fo r - n i a , bu t p robably t o o expansive f o r t h e LDCs. i t could even be dangerous because of t h e l i k e l i h o o d of r e s i d u e runoff from t h e h i l l y a r e a s where s t a w b e r r i e s a r e u s u a l l y grown i n t h e s e c o u n t r i e s ) . A . I . D . should c l o s e l y monitor subp ro j ec t growing o p e r a t i o n s t o determine where monoculturing i s occu r r i ng and t o recomnend cropping a l t e r n a t i v e s .

S o i l and wator congervat ion i s s u e s t a k e on i nc r ea sed s i g n i f i c a n c e where growing NTAE c rops -- e s p e c i a l l y row c rops and o t h e r s being grown on undula t ing o r s t e e p land -- o f t e n r e s u l t s i n e ro s ion , p o l l u t i o n and contaminat ion from runof f . Again, t h e hope of e a r l y , low-cost g a i n s l e ads growers t o i gno re tiiris6 impacts and t o pay l i t t l e o r no heed t o t h e longer term d e v a s t a t i o n of having "mined" o r "depleted" s o i l and h a t e r resources . Wen i n Be l i ze , where t h e Cormnarcialization of A l t e r n a t i v e Crops (CAC) p r o j e c t was cen t e r ed on prodnc t ion t r i a l s , it was found t h a t , p a r t l y because of eagerness t o undertake marketing t r i a l s , p r o j e c t management had tended t o ignore some of t h e long-term fundamentals of s o i l and water conserva t ion . More A . I . D . mani to r ing i n t h e s e a r e a s should a l s o be undertaken.

- Support s e r v i c e s f o r CD/NTAE, d e s p i t e t h e e x i s t e n c e of some channe ls f o r t h e d e l i v e r y of t h e s e s e r v i c e s , have n o t been a v a i l a b l e on a t imely b a s i s f o r growers. Inputs , s o i l and wate r t e s t i n g f a c i l i t i e s , and mechanization s e r v i c e s a r e u sua l l y a v a i l a b l e t o growers on ly a t a h igh c o s t , i n c l u d i n g t h e t ime va lue which t h e farmer must i n v e s t t o s e c u r e t heae s e r v i c e s . The f low of suppor t s e r v i c e s should i n c r e a s e concu r r en t l y w i t h t h e i n c r e a s e i n p l a n t i n g of n o n - t r a d ~ t i o n a l crops. Over time, t h e supp ly of the.ee s e r v i c e s p robably w i l l come i n t o l i n e w i th demand f o r them. Never the less , i n t h e near-term, h o s t country agenc i e s and A . 1 .D. should h e l p speed t h i s p r ace s s th rough t h e de s ign and implementation of e f f e c t i v e t a r i f f - r e d u c t i o n and c r a d i t programs.

A s r ega rds l a b o r , i t is p o s s i b l e , even probable , t h a t i n t h e absence of i nc r ea sed mechanization, growth i n t h e demand f o r CD/NTAE l a b o r w i l l e v e n t u a l l y c l a s h wi th t h e l a b o r demand of t r a d i t i o n a l c rops i n many c o u n t r i e s . Add i t i ona l l y , because of q u a l i t y requirements i n t h e market p l a c e , t h e demand f o r t ime ly , t e chn ique - sens i t i ve l a b o r w i l l e v e n t u a l l y l e a d t o shor tages . These e v e n t u a l i t i e s , and o p p o r t u n i t i e s t o avo id c o n f l i c t , should be a n t i c i p a t e d by t h e h o s t c o u n t r i e s and by A. I .D . Labor requirement p r o f i l e s should be prepared f o r d i f f e r e n t c r o p s and f o r d i f f e r e n t p a r t s of each country. E f f o r t s a t i n t roduc ing sma l l s c a l e mechanization should probably a l s o be expanded.

FindLLy, on the dubjoct of Land uso, L t was Leund tha t many produceru of non-tradit ional atope hava been uelny Prnyllu, h i l l y sLtae bocauee mout of tho beet Land La held by traditional. farmers or by yevarnmonte and i s frequently subject t~ t i t l i n g problems. I'heso be t te r lands, which a re f l a t t o r and of ten have r icher eo l l s , a re usually planted t o t r ad i t i ona l crop6 or t o pasture and a r e underuti l ized o r , worse, unueed. Wherever possible, A. 1. D. ought t o encourage policy or t i t l i n g changes t ha t would help onsure acoeos t o these b e t t e r lands by growers of the high-value non-traditional c r o p whiah, i n any case, do not require large land areas for t h e i r production.

s

A s noted, Crop dive:csification and export development o r promotion programs have received and a re receiving s ign i f ican t support and backing from A . I . D . Missions in Latin America and Caribbean countries. The success of these e f f o r t s would promote economic growth and employment, expand the base of economic a c t i v i t y , and increase the contribution of the agr icu l tu ra l sector and ag r i cu l t u r a l enterpr ises t o gross domestic production. Given t h a t t h e long-term in t e r e s t s and welfare of these countries a re of primary concern, it is a l s o expected t h a t A . I . D . ' s programs w i l l prove t o be ecologically sustainable.

The issue of susta.Lnable agr icul ture has been examined c losely i n the l a s t few years (e.g. , Peter: H. Freeman, Sustainable Agriculture i n Development A s s i s - tance, AugusiS-, 1984.1 and i s a matter of thoughtful and personal concern t o - a g r i c e u r a l development workers and internat ional development ass is tance agencies a l ike . Certainly, the goal and d e s i r a b i l i t y of a sus ta inable agr icu l tu re can he agreed upon, even i f t he means t o a t t a i n it are ye t undecided, and it is becoming more and more a focus of discussion and planning among internat ional agr icu l tu ra l development ass is tance i n s t i t u t i ons . However, i n the context of t h e present evaluation, t he concept of sus ta inable agr icu l tu re i n the accepted sense is not the proper focus by which we should examine the environmental sus ta inab i l i ty of these export d ivers i f i ca t ion programs.

A concise def in i t ion of sustainable agr icul ture would be d i f f i c u l t t o formulate but, undeniably, it would need t o convey t h e idea of a fanning system t h a t was i n coexistence, harmony and accommodation with the forces of t he natural environment. The term i s a l so generally associated with agr icu l tu ra l s i t ua t i ons where low or minimum input fanning techniques a r e pract iced by resource poor, small farmers, of ten i n marginal o r degraded physical environments. In con t ras t t o t h i s , the cu l t iva t ion of crops i n export promotion pro jec t s , i n order t o be economically viable, requires t h e adoption of more intensive farming methods such a s the use of f e r t i l i z e r s , pes t i c ides , improved va r i e t i e s , e tc . Obviouslyt i n t he l a t t e r type of resource exploitat ion, there i s more of an opportunity fo r accommodation with

naturu t o becomu disrupted. Connaquently, tho ooncupt of ocologicnl s u e t a i n a b i l i t y acquires u dif ferent ; noaning and must; be viewed i n a much ~.educud clme frame. Furthermore, under the condit ions of! modern, intensive farming, t h e idea of suetaintabil i ty would extend not only t o production, but a l s o t o s torage , procosoing, t r a n s p o r t , marketing and consumption a c t i v i t i e s , and would a l s o include f inanc ia l , economic and technological aspects of those activ.Lties.

A s has been suggested e a r l i e r , t h e advent of non- t radi t ional crop production i n t h e surveyed countr ies has already brought with it p e s t s and d i sease previously h a m l e s s or uncommon i n those countr ies . Most CD/NTAZ undertakings a r e e t i l l r e l a t i v e l y young and with new p r o j e c t s occurring on a regular b a s i s , t he re i o every reason t o be l ieve t h a t p e s t s and d iseases w i l l increase s i g n i f i c a n t l y i n t h e coming t h r e e t o f i v e years. The r e l a t i v e l y humid, warm condi t ions t h a t p r e v a i l i n many of t h e growing a reas i n t h e countr ies v i s i t e d a r e e s p e c i a l l y conducive t o such rapid increase. (Chile and, t o some ex ten t , t h e prime growing areas of northwestern Mexico have enjoyed a good measure of na tu ra l environmental p ro tec t ion including well-balanced cl imate condit ionst but i n those countr ies a l s o , t h e rapid increase i n new crop production and t h e consequent increases i n p e s t and d i sease problems have required concentrated remedial e f f o r t s . )

The following discussions a r e intended t o h ighl ight key environment-related i s sues and recommendations a s they r e l a t e t o CD/NTAE, e s p e c i a l l y i n terms of t h e need t o accommodate shor t time frames.

Quarantine Regulations

Among t h e f a c t o r s t h a t bear d i r e c t l y on t h e expor ta t ion of a g r i c u l t u r a l products t o t h e United S t a t e s a r e quarantine regula t ions which restrict and con t ro l t h e en t ry of p l a n t s and p l a n t products i n t o t h e country i n order t o prevent t h e in t roduct ion o r spread of p l a n t pes ts . These regula t ions have s p e c i a l s igni f icance t o countr ies i n Latin America and t h e Caribbean where a complex of na t ive f r u i t f l y spec ies i n t h e genus Anastrepha and t h e e x o t i c Mediterranean f r u i t f l y , C e r a t i t i s cap i t a t a , occur. ~ r u i G .and vegetables known t o be hos t s of these p e s t s a r e not permit ted e n t r y i n t o t h e United S t a t e s from i n f e s t e d areas unless t h e commodity has been previously t r e a t e d with a USDA-approved contro l t reatment. (See Appendix F, Sect ion V,!

With t h e p roh ib i t ion of t h e use of ethylene dibromi.de f o r t h i s purpose, research o r a l t e r n a t i v e t rea tments have had t o be conducted f o r each f r u i t f l y species and on each f r u i t species by v a r i e t a l type. I f t h e research r e s u l t s a r e successful , t h e treatment method must s t i l l be approved f o r use on t h a t commodity by APHWPPQ (Animal and P lan t Health Inspection Service/Plant Protect ion Quarantine 1.

Development of an approved procedure f o r t h e con t ro l of t h e s e f r u i t f l i e s is an expensive and time consuming t a sk ; Currently, f o r example, Del Monte is at tempting t o r e a r four species of Anastrepha and C e r a t i t i s c a p i t a t a i n Costa Rica f o r t h e purpose of conducting forced i n f e s t a t i o n t r i a l s on papaya i n t h e

luboratory. They have a l a o been conducting f i e l d trapping u tudies of wild f r u i t f l y populat ions i n the papaya growing area fo r the Last. twenty-four months and ure monitoring natura l i n f e s t a t i o n of f r u i t i n the f i e l d ,

A . I . D . should sponeor a s e r i e s of country and rag.lona1 euminare t o inform government o f f i c i a l s , exporters and producere, and reoearchero of rogul a t i o n s and f a c t o r s a f f e c t i n g f r u i t and vegetable exports t o t h e Unltod S ta tes . Seminars should include d iscuss ions of t h e current s t a t u s of a l t e r n a t i v e treatments f o r t h e cont ro l of f r u i t f l i e s . Addit ionally, A . I . D. Mlssions should undertake a review of e x i s t i n g o r proposed g r o j e c t s t o determine t h e poss ib le e f f e c t of U.S. quarantine regula t ions on any non-tradit ional export crop t o be included i n p ro jec t support a c t i v i t i e s .

USDA/APHIS has already been a c t i v e , p a r t i c u l a r l y i n Central America, where it has conducted an extensive educational campaign through its Mediterranean f r u i t f l y e rad ica t ion p ro jec t , Moscamed, i n Guatemala. APHIS has a l s o been monitoring and providing ass i s t ance i n C h i l e ' s e f f o r t s t o t o t a l l y e rad ica te f r u i t f l y , p a r t l y i n order t o comply with requirements f o r product en t ry i n t o Japan. A . I . D . should expand such educational programs t o o the r countr ies a s well. In add i t ion t o a s s i s t i n g with quarantine, which u l t ima te ly benef i t s both U.S. and fore ign growers, APHIS has o f t e n a s s i s t e d i n t h e i d e n t i f i c a t i o n , t e s t i n g and approval of t reatments such a s hot water, hot a i r and i r r i d a t i o n , designed t o e l iminate f r u i t f l y from export shipments. A . I . D . , i n cooperation with USDA/APHIS, could provide more a s s i s t a n c e i n t h i s a rea , e spec ia l ly i n helping t o defray t h e high c o s t s of e s t ab l i sh ing treatment f a c i l i t i e s and of conducting t e s t s which can take two years t o complete.

An e f fec t ivemeans f o r t h e e a r l y de tec t ion of U.S. entry problems f o r NTAEs is t h e mtabl ishment and operat ion cf USDA/APHIS-authorized pre-clearance inspection f a c i l i t i e s i n host countr ies . A.1.D.-supportsd f a c i l i t i e s i n Jamaica and i n t h e Dominican Republic have made it poss ib le f o r expor ters t o save time by having APHIS inspect ions and approval s e a l s provided p r i o r t o shipment and, i n some instances, j u s t a f t e r packing. A. I .D . has considered pre-clearance programs f o r o ther coun t r i e s and, i n c lose cooperation with USDA/APHIS, should probably proceed with t h e s e a s soon a s poss ib le because of t h e r e l a t i v e l y long lead time necessary t o t r a i n personnel, e s t a b l i s h procedures and convince shippers of t h e value of pre-clearance. Neither t h e Jamaican nor t h e Dominican programs have achieved t h e i r throughput goals a s y e t , p a r t l y because of expor ters ' concerns t h a t pre-clearance inspect ions could l ead t o t h e discovery of se r ious farm problems about which t h e exporter o r grower may be aware but unwilling t o acknowledge i n t h e hope t h a t h i s exports may reach t h e market without de tec t ion of any problems. Addit ionally, many growers and expor ters a r e i n i t i a l l y opposed t o paying any f e e f o r t h e pre-clearance inspection. (Notably, and i n good measure because of expor ters ' w i l l ing cooperation and f e e payments, APHIS i n Chile inspec t s samples of v i r t u a l l y a l l of C h i l e ' s f r u i t shipnents t o t h e U.S.) As indica ted above, p e s t problems and disease incidence i n non-tradit ional export crops a r e l i k e l y t o increase i n t h e next few years) pre-clearance inspect ion programs, i f i n s t a l l e d now, can o f f e r t h e most productive near-term response t o t h e s e t r a d e impediments.

The rnoet P rec~ue r~ t rooponse t o moat p o ~ t and d iaeaea probhma, o r i l n t l c i p a t l o n of same, has been t h e e a r l y , o f t o n i n d i s c r i m i n a t e and uninformed appl.lciatlon of peo t i c idee , herbicides and funyic ldes . Growurs, sometimerj P a l l i n g prey t o t h o marketing e f f o r t s o f t h e companies t h a t s e l l t he se chemicals , bu t more o f t e n simply t r y l n g t o a s s u r e maximum l e v e i s of c rop q u a n t i t y and q u a l i t y t o s a t i a f y mnrltar; t,,quirements, r e g u l a r l y i gno re t h e longer term consequences of such npp1.i ca. t;on These consequences i nc lude water and a i r contaminat ion, food contamination and, i r o n i c a l l y , t h e b u i l d up of r e s i s t a n c e s t h a t can n o t on ly render t he chemicals i n e f f e c t i v e , b u t a l s o r e s u l t i n t h e l and be ing unproduct ive f o r extended pe r iods of time.

Ind i sc r imina t e use of chemicals can a l s o i n f luence t h e e n t r y of a g r i c u l t u r a l p roducts i n t o t h e U. S. S p e c i f i c a l l y t t h i s i nc ludes t h e presence of p e s t i c i d e r e s idues , e i t h e r i n excess of l e v e l s which have been determined by t h e Environmental P ro t ec t i on Agency a s s a f e f o r a p a r t i c u l a r p e s t i c i d e , or i n d e t e c t a b l e amounts of a chemical t h a t does n o t have an approved t o l e r a n c e l e v e l f o r t h e commodity sampled.

Shipments of f r u i t s and vege tab les from Cen t r a l America and t h e Caribbean a r e occas iona l ly i n v i o l a t i o n of t h e s e t o l e r a n c e l e v e l s and when t h i s occu r s t h e Food and Drug Adminis t ra t ion r e q u i r e s t h e of fending f i rm t o accompany any f u r t h e r shipments of t h a t commodity by a C e r t i f i c a t e of Analysis s t a t i n g t h e amount and type of p e s t i c i d e regidue conta ined i n t h e product . The v a l i d i t y of t h i s C e r t i f i c a t e i s monitored by t h e FDA by p e r i o d i c a u d i t samples which a r e c o l l e c t e b a t t h e time t h e products a r e aga in s e n t t o t h e United S t a t e s . The c e i k i f i c a t e requirement i s removed from t h e expor t i ng f i rm when t h e FDA is s a t i s f i e d t h a t t h e r e s i d u e problem no longe r e x i s t s o r t h e f i rm provides s a t i s f a c t o r y evidence t h a t t h e product being shipped o r i g i n a t e d from f i e l d s which were no t t r e a t e d wi th t h e p e s t i c i d e i n ques t ion .

Among t h e f i rms c i t e d i n 1987 f o r sh ipping commodities conta in ing exces s ive p e s t i c i d e r e s idue l e v e l s t o t h e U.S. were approximately a dozen expor t i ng f i rms l o c a t e d i n t h e Dominican Republic. The c rops involved included Thai eggplan t , okra , b i t t e r melon, long squash, h o t peppers, fuzzy squash, snow peas and eggplant . F i r m s i n o t h e r c o u n t r i e s sh ipping t h e s e and. o t h e r products , such a s cabbage, b l ackbe r r i e s and chayote , have a l s o been c i t e d f o r non-compliance w i th EPA r egu la t i ons .

A.I.D. should sponsor a r eg iona l program of monitor ing p e s t i c i d e r e s i d u e l e v e l s i n non - t r ad i t i ona l expor t c rops t o determine preva lence and e x t e n t of r e s i d u e problem, t o o b t a i n d a t a on amounts of contamination, and t o f a c i l i t a t e compliance wi th EPA regu la t i ons . A. I. D. should a l s o suppor t a p e s t management s t r a t e g y f o r non - t r ad i t i ona l expor t c rops t h a t is based on an e c o l o g i c a l approach which minimizes p e s t i c i d e use, such a s through t h e des ign and implementation of b i o l o g i c a l p e s t c o n t r o l t echniques and programs.

A s illf:~)ilcly rmtad, I II(- r jx , .ar~~lvn i n L I E ' O ~ I ~ J o f (!ropf3 cjr'ow~~ f o r expot't , and ctm Lnetoductlnn of! now c r o p in A . t . D. -auppo rtotl CU/NTAL y rocjram 111 LaLir~ A m e r Lca and t h e Caribbean triae benn nocompanied by new o r intarralELad pest and d i s e a s e probLom~ wtllch havo important lmp l i ca t l ona f o r tho ~~uacamet!ul product lon of t h e m c r o p . In UaL.lzc, f o r axamplo, a d i s e a s e of! can ta loupa which producod a marginul l e a f scorch and p roy ros s ive dLubaok of t h e v i r u s durLng Che f r u l t i n y perFod l e d t o t h e f a i l u r e of a melon product ion p r o j s c t i n 1984. More r e c e n t l y , thu i n t roduc t i on of the green-house wh i t e f l y i n t o t h e Dominican Republic wi thout i t s i w t u t a l enemy comy~lex has l e d t o i nc r ea sed produc t ion c o s t a on a number of crops , i nc lud ing tnmatoos, beans and po ta toes . A s t i m e

m pas sa s , ~ r r d wi kh s t i l l f u r t h e r i n c r e a s e s i n ac reage of non-tradi t ional . s x p o r t c rops , s t r o n g p e s t and d i s e a s e management t echniques w i l J . be e s s e n t i a l t o overcome produc t ion problems t o ensure cont inued c rop s u s t a i n a b i l i t y .

A.L.D. should i n c r e a s e i t s e f f o r t s t o promote development of p e s t and d i s e a s e macagmnent toahniquesr i t should also .involve p u b l i c s e c t o r i n s t i t u t i o n s i n t h e m e f f o r t s . E'urthermore, A.T . D. should expand t h e scope of ROCAP's Regional I n t e g r a t e d Pes t Managnment P r o j e c t t o i nc lude non - t r ad i t i ona l expor t c rops . A i t o r n a t i v e l y , a s e p a r a t e I n t s g r a t e d P e s t Management P ro j ec t should be e s t a b l i s h e d f o r NTAE.

P r i v a t e S e c t o r Oraan iza t ions

Responses t o environmental impact from CWNTAE p r o j e c t s must u l t i m a t e l y be t h e r e o p o n s i b i l i k y of i n d i v i d u a l growers. Because of t h e cons ide rab l e need f o r educatdon and concer ted e f f o r t t o ident1.f y and implement uniform, accep t ab l e p rocedures , growers should approach t h e i r r e s p o n s i b i l i t y through t h e i r own o rgan i za t i ons . Th i s can i nc lude o r g a n i z a t i o n s t h a t wore set up f o r o t h e r p u r p s e s a s w e l l a s o rgan i za t i ons s o t up s p e c i f i c a l l y t o respond t o p o t e n t i a l problems from, say, t h e i n c r e a s e d u se of p e s t i c i d e s . I n t h i s connect ion, it is no tab l e t h a t USDA, through i t s O I C D P r i v a t e Sec to r F a c i l i t a t i o n Of f i ce , has been a s s i s t i n g growers and e x p o r t e r s i n some c o u n t r i e s -- euch a s Guatemala -- t o o rgan i ze themselves f o r t h e purpose of l e a rn ing about and t a k i n g concer ted a c t i o n t o comply with USDA product e n t r y requirements and procedures. Th i s a c t i v i t y has s i g n i f i c a n t p o t e n t i a l impact because it r e l a t e s t o group mot iva t ion through a c l e a r l y de f ined approach t o a conunanly unders tood problem. I t deserves ample suppor t from A . I . D . i n each country, e s p e c i a l l y i n c o u n t r i e s where A . I . D . has a l r e a d y i n v e s t e d l a r g e sums i n i n s t i t u t i o n b u i l d i n g and i n t h e format ion of commodity grouping o r p roduc t a s s o c i a t i o n s .

Environmental Assessments

The c rop d i v e r s i f i c a t i o n and expo r t promotion programs r e c e i v i n g A.I .D. s uppo r t i n Cen t r a l America, t h e Caribbean and Ecuador inc lude a l a r g e d i v e r s i t y of w in t e r vege tab le and t r o p i c a l f r u i t crops grown under a v a r i e t y of environmental and c l i m a t i c cond i t i ons , rang ing from t h e cool , mois t highland a r e a s o f Guatemala and Costa Rica t o t h e ho t , humid lowland a r e a s of

Warhdos arid t h e Enetsrn Caritbcann. Altlrouc.jti aondltl.cme vary cjonrrbtlesahly f ttsm oncs rncjlorl 60 anothu r , the ria t u r a l c mourue and erivlzatrmnn tal management; ioauee y r ~ ~ l e r i t e d by i l r i 1 naroaaing huaran poyulatLo11 and intuna.LBioatim of! a top ptocluatiorr a r e a LmiZar.

Ce r t a in of t h e c rops (8. (3. , aspdlrclgu~, RIIOW psae and e t r awber r i ee ) have been in t roduaed only w i t h i n t h e p e s t few yslare irrta cJomc of t heae c o u n t r i e s while !n o t h e r s (e .y . , GuetemaLzr and t h e Dolnlniaan Hepublic) they have been grown f o r more t h a n a decade1 f r u i t urope euah mnyo and papaya a r e na t ive ko t h e region. The q u a l i t y and appoarance of t h e s e products f o r t he expor t market are very impor tan t and a r e o f t e n achieved, as noted e a r l i e r , through t h e i na reased use o f p e s t i c i d e s .

The p o t e n t i a l environmental impacts of A. I .D. CD/NTAE p r o j e c t s a r e examined through an e v a l u a t i o n procedure s p e c i f i e d i n A . I . D . ' s environmental regula- t i o n s ( 2 2 CFR 216). However, t h e ma jo r i t y of t h e s e p r o j e c t s were sub jec t ed t o t h e l e a s t comprehensive of t h e e v a l u a t i o n s provided f o r i n t h e s e r egu la t i ons , t n e I n i t i a l Environmental Examination. Although A . I . D . may n o t be d i r e c t l y funding t h e purahaoe o r use of p e s t i c i d e s i n t h e s e programs, it is obvious t h a t A . I . D . ' s suppor t of c rop d i v e r s i f i c a t i o n and expor t promotion p r o j e c t s has l e d t o s i g n i f i c a n t l y increased use of p e s t i c i d e s . I t is I n A . I . D . ' s i n t e r e s t , t h e r e f o r e , t o provide guidance i n t h e use and management of p e s t i c i d e s i n t h e s e p r o j s c t s and t o suppor t measures t o m i t i g a t e t h e i r adverse impact . A s a gene ra l p ropos i t i on , A . I . D . should consicler t h e conduct of r eg iona l and c r o p s e c i f i c environmental impact assessments , inc lud ing a s smsmen t s on t h e

from use of p e s t i c i d e s and o t h e r chemical a p p l i c a t i o n s . A wel l -daf ined ou tpu t i n t h i s a r e a would reduce t h e need f o r i n d i v i d u a l country and p r o j e c t assessments by s e t t i n g minimum r e g i o n w i d e s t anda rds , adherence t o which would be compliance cond i t i ons f o r bo th p r o j e c t b e n e f i c i a r i e s and A.I.D. Misalons. The o u t p u t of such assessments might we l l be a c h e c k l i s t i nc lud ing g u i d e l i n e s f o r monitor ing, t e s t i n g and r epo r t i ng , as w e l l a s f o r approved chemical user s c h e c k l i s t t h a t would he lp t o a n t i c i p a t e and even tua l ly m i t i g a t e and p reven t environmental problems. Highl igh t ing t h e need f o r and use of such a c h e c k l i s t is a r e c e n t r e p o r t of an A.I .D. p r o j e c t t h C, had i n i t i a i l y been given a nega t ive environmental assessment# t h a t is , it was presumed t o have no nega t ive environmental impact. It was l a t e r Learned, however, t h a t t h e p r o j e c t e n t a i l e d t h e u se of FURADAN ( a dangerous chemical i f

, i nges t ed ) on a l o e , a c rop which is used, i n p a r t , f o r human consumption. The i n c o r r e c t assessment was discovered i n t ime, b u t had an a p p r o p r i a t e c h e c k l i s t been used, t h e assessment might n o t have been an i n c o r r e c t one and t h e p o t e n t i a l consequences would have had s t i l l l e s s a chance of ma te r i a l i z ing .

Moat oft the A.1.D.-sponsored CD/N'rAE initiatives i n La t in AmecLcta have involved o r h e n l i nkad t o a f i nanae compcrnzsnt. Yoma s g e c i f i u CD/NTAE g r o j e o t a have been a a e t p r i m a r i l y t o impaat on t h e a r e d i t a o ~ ~ s t r a i n t ( e , g , , Agribuaineea I)evelopment P ro j ec t 520-0276 i n Guatemala). Other g r o j e a t o have focueed on d i f f e r e n t c o n e t r a i n t e euch as na rka t ing , bu t , i n terms of d o l l e ~ s , t h e i r c r e d i t components have bcivn g r e a t e r t han any o t h e r component ( e . g . . Non-Traditional Agr icu tura l Exports P r o j e c t 518-0019 i n Ecuador). In t o t a l , f o r t h e n ine c o u n t r i e s surveyed by t h e c ros s - cu t t i ng eva lua t ion team, A. I .D . has au thor ized over ~ ~ $ 1 0 0 . 0 m i l l i o n i n CD/NTJMnspocific credit: f a c l l i t i e e arir~ce 1982. Of t h i s amount, U~$42.0 m i l l i o n had been u t i l i z e d by Apr i l , 1.988. (The balance sliould be expended by 1992.) Addi t iona l o r e d i t a v a i l a b l e f o r CWNTAE t o t a l l i n g L-oughly t h e equ iva l en t of ~ ~ b 1 1 0 . 0 m i l l i o n have a l s o been provided by A . I . D . i n d o l l a r s and i n l o c a l cu r r enc i e s generated by ESI, PL-480 and Sec t ion 416 Sugar mots Compensatory aoa is tance . Of t h i s amount, it is es t ima ted t h a t t.he equ iva l en t of U8$62.0 m i l l i o n had been u t i l i z e d by Apr i l , 1988. Fu r the r A.1.D.-supported c r e d i t f o r CD/NTAP: has come from t h e Trade C r e d i t Insurance Progrnm (TCIP). TCIP e n t a i l s A. I .D . r e insurance of EXLMBANK guaran tees t o commercial banks involved i n t h e f i nanc ing of U.S. expor t s t o Cen t r a l America. S ince 1986, short- term l e t t e r of c r e d i t f i nanc ings under TCIP have t o t a l l e d n e a r l y ~ ~ $ 5 5 0 . 0 mi l l ion . No s p e c i f i c breakdown is a v a i l a b l e , b u t it i.a prob&ly f a i r t o assume t h a t n o t l e e s t han 15 pe rcun t of t h e t o t a l , o r about US$ 80.0 mi l l i on , has been used t o f i nance working cagi(ial uses such a s f e r t i l i z e r s , chemicals, and o t h e r raw m a t e r i a l s a n d / ~ r - ~ a r t s t h a t were u l t i i ~ t e l y purchased by CD/NTAE businesses .

Addressing t h e money c o n s t r a i n t has been an A.I.D. and h o s t count ry p r i o r i t y because c f t h e r e l a t i v e l y h igh s t a r t - u p and maintecance c o s t s of CD/NTAE i n i t i a t i v e s . CD/NTAE p r o j e c t s a r e a l s o new and r i s k y and are t h e r e f o r e (fvequently a t a disadvantage i n any competi t ion w i th o t h e r investmenke t r y i n g t o a i t r a c t f i n a r ~ c i a l resources .* The a u t h o r i z a t i o n and promotion of s p e c i f i c CD/NTAE f inanc ing by A. I .D . has consequent ly been a necessary complement t o i ts m a r k e t ~ n g , p roduct ion , environmental and i n s t i t u t i o n a l suppor t programs.

The Placement Process

Aa suggested by t h e f i g u r e s above, ho th a u t h o r i z a t i o n and u t i l i z a t i o n have been s u b s t a n t i a l i n abso lu t e terms. In t h e f i e l d , t h e eva lua t ion team could

* The dimensions of t h e c r e d i t c o n s t r a i n t were h igh l igh t ed i n one i n t e rv i ew w i t h t h e manager of a n A.1.D .-supported p r i v a t e s e c t o r i n s t i t u t i o n . The manager i n d i c a t e d t h a t of a l l t h e c o n s t r a i n t s t o CD/NTAE developmant, i nc lud ing product ion , m a r k e t h g , p o l i c y and o t h e r a r e a s , t h e c r e d i t c o n s t r a i n t was t h e on ly one f o r which h e r i n s t i t u t i o n and its NTAE membership could f i n d no l a s t i n g s o l u t i o n s .

foquea tb for Lnformatlrm eomet Lrnoa aorref.tleced c:orlf i d e n t i a l., I t wag found that: t heee Ineonvsnlerraea ace ga , r t i cu l . a r ly bothezuume t o XCfe beaauee they reaslon t h a t h f t h y a r e to Lako tho cradit: 1 they ohsuld n o t be "second- guessed". FrLution between ICIs and Cen t r a l Wankera i s probably unavoidable , b u t A . I I . 0 . ooulcl he lp t o m.i,tigatcn euuh t r i o t i o n by s g o n o e r i . ~ ~ g j o i n t seminars a t whiatr t h e p u b l i c and p r i v a t e oeu to t bankers could exchange p rocedu ra l viawo and m a r c h f o r common ground on whloh t o b u i l d more e f f i a i e n t a rec l i t p r o a w e - i ng , ino lud ing t h e y toues s ing of a r e d i t s f o r CD/NTAE.

Monetary P o l i a l

A f u r t h e r e e t of problems t h a t impede t h e smooth disbursement of CD/NTAE c r e d i t f a c i l i t i e s r e l a t e s t o monetary po l i cy . The pr imary i s s u e s i r i t h i s a r e a a r e i n t e r e s t r a t e s and l i q u i d i t y .

As r ega rds i n t e r e s t r a t e s , t h e team faun? p r e v a i l i n g r a t e s country-to-country t h a t ranged from h igh nega t i ve t o h igh p o s i t i v e a f t e r a d j u s t i n g f o r i n f l a t i o n . In each cashe t h a r e were C D / N T U credit t a k e r s and t h e r e were thoae who were n o t borrowirrg because t h e y found t h e r a t e s a*- even h igh nega t i ve ra teq! -- t o o "hisn" . I nva r i ab ly , t hose who found r a t e s high baaed t h e i r r e a c t i o n on t h e f a c t t h a t t h e s e r a t e s had moved up t o o qu i ck ly from what t h e y pe rce ived a s h i s t o r i c a l l e v e l s . They a l s o reasoned t h a t , t o g e t h s t wi th p e r s i s t e n t o r a n t i c i p a t e d i n f l a t i o s , "high" i n t e r e s t r a t e s would r a i s e p r o j e c t c o s t s , squeeze ca sh fl.ows and d imin ish p r o f i t s t o t h o p o i n t t h a t new investment would r e a l l y n o t be worthwhile. Many of t h e s e i n v e s t o r s a r e p robably feecling i n s e c u r e about t h e i r p r o j e c t s i n t h e f i r s t p l a c e and a r e adducing two t o t e n percen tage p o i n t s of h ighe r nominal l oan i n t e r e s t a s t h e r e a s o n f o r n o t borrowing, i n o r d e r t o h ide such i n s e c u r i t y . Others , perhaps c o r r e c t l y , reason t h a t CD/NTAE and a l l new a g r i c u l t u r e - r e l a t e d c r e d i t s should be a v a i l a b l e a t " p r e f e r e n t i a l " r a t e s . A . 1 .D. f a c e s a dilenuna on t h e i s s u e o f r a t e s because a t one and t h e same t i m e it wants t o cond i t i on i ts a s s i s t a n c e on t h e a l i m i n a t i o n of i n t e r e s t s u b s i d i e s and t h e a p p l i c a t i o n of p o s i t i v e ret.1 r a t e s , whi le it s e e k s to promote e s s e n t i a l f i nanc ing f o r i n t e r e s t r a t e s e n s i t i v e CD/NTAE borrowers. The dilennna has r e s u l t e d i n more t h a n a few ba*+Jes be tween' A. 1. D. and hosc count ry monetary a u t h o r i t i e s which have e n t a i l e d long impasses and corresponding c r e d i t f a c i l i t y placement de lays . The s o l u t i o n t o t h i s problem, i n f a i r n e s s t o bo th sides, should be one of g r acua l i n t e r e s t r a t e increments . From d i s c u s s i o n s i n va r ious Missions, it secm t h a t A . I .D . is p repa red t o s1:pport t h i s approach. I n implementing t h e corresponding p o l i c y , A. I .D . w i l l want t o e s t a b l i s h con t inu ing c o n d i t i o n a l i t y by u s ing q u a r t e r l y o r semiannual i n t e r e s t r a t e reviews and by a s s i s t i n g i n t h e de s ign of a p p r o p r i a t e increment mechanisms such a s "prime" r a t e ba s ing o r o t h e r ad jus tment i n d i c e s .

An i n t e r e s t r a t e - r e l a t e d i s s u e concerns t h e s u s t a i n a b i l i t y of most of t h e development banks which have been supported by A.I .D. These banks -- which a r e s p e c i f i c a l l y mandated t o do CD/NTAE l o a n s -- f a c e a s p e c i a l l y h igh r i s k s which can on ly be o f f s e t , as a p r a c t i c a L ma t t e r , by achieving high sp reads on t h e i r c r e d i t s . This means t h a t t.hey must e i t h e r charge above-market i n t e r e s t on t h e i r l o a n s o r pay below-narket i n t e r e s t f o r t h e i r funding. The former

syproauh wllb not ELnd many ciuali fie13 ZL:/N'L'A$ credL t takers. 'L'llet Leaves bsrr'owlng at: bslew-marker. Lnta roa t arb the moat: vitrb1.u meann of a tkainirry aimtilei! aor",nfy gpreads. Opetotinq axpeneao darl a l s o be wovared If rom other inuome eouroeG such aa servboe cevonue, bu t J n t h e abaenoe of a e l y n i f i d a ~ ~ t epread t heee banks w i l l i r ~ e v l t a b l y do orio ol! tw t h L n g e ~ lend Lo l.eua r i d c y , lee8 clevelopment-oriented pro j e c t e , o r f a i L. A. I. D. haa ~ b v i o w 3 l y a p p r e c i a t e d tM.s p r i n d i g l e i n i t s r e l a t i o n s h i p a :~t t . l l L M D , Trafa.lgnr Development Bank, COFTSA and o t h e r s . 'me Ayenoy has been ~ , ~ ~ n ~ ~ ~ r n c n d , though, about CRcp long-term o f f a c t s of! l.anding t o t h e s e inst i tu;;lr~no <it- " a ~ ~ b s i d i z e d " r a t e s , I n f a c t , however, provided t h a t development i r . d r i s t o crnd-users a r e a t market o r near market r a t e s , t h e l o n y term effect , cE i i . 1 . D . ' ~ ~ "eubsidy" is a very p o s i t i v e ane l namely t o keep t h e develognrent: bank i n busirless an3 i n t h e bushnes$ of moving A.X.D.'a money t o in tended t o r y e t group6 and p r o j e c t s , o f t e n i u an i n n o v a t i v ~ ~ e f f i c i e n t fash ion .

A s to l i q u i d i t y , it was found t h a t maL?y c o u n t r i e s , i n e f f o r t s t o c u r t a l l i n f l a t i o n and t o meet 1.F c o n d i t i o n s , have implemented t i g h t monetary p o l i c i e s t h a t s h r i n k a v a i l a b l e c r e d i t . T h i s t e n d s g e n e r a l l y t o l i m i t t h e a v a i l a b i l i t y of f inanc ia , l r e sou rce s f o r CD/NTAE. However, i n most c a s e s it was found tha t . r e g u l a t i o n s do permi t t h e i s suance of c r e d i t s szourced from approved hard cur rency f a c i l i t i e s , such a s t h e A . I . D . l o a n s through Cen t r a l Banks and I C I s f o r CD/NTAE. In f a c t , during pe r iods of i l l i q u i d i t y , I C I s o f t e n become very i n t e r e s t e d i n such A. I .D . f a c i l i t i e s because u s ing them is one of t h e few ways i n which t o i n c r e a s e loan volume and income over t h e per iod . A . I . D . should be a l e r t t o such ci rcumstances , bu t to t a k e b a s t advantage of them it must focus f i r s t on s t r eaml in ing t h e placement p roces s t oge the r w i th I C I s and Cen t r a l Banks.

L

Anothsr monetary p o l i c y f a c e t t h a t A . I . D . should look a t more c l o s e l y concerns r e se rve requirements and r e l a t e d s e c t o r l oan i ncen t ive s . S p e c i f i c a l l y , A.I .D. should review wi th C e n t r a l Banks and I C J s t h e possibilities of f avo r ing c r e d i t s f o r CD/NTAE by reduc ing l o c a l r e s e r v e requirements on such c r e d i t s and/or by prov id ing o t h e r r egu l a to ry r e l i e f f o r i n c r e a s i n g CD/NTAE p o r t f o l i o s .

Working C a p i t a l and C o l l a t e r a l - Two o t h e r s i g n i f i c a n . ~ impediments t o e f f e c t l ~ c CD/NTAE on-lending have been f a m i l u r e t o o f f e r adequate workini.l c a p i t a l a long wi th f i x e d a s s e t f i nanc ing , and exces s ive c o l l a t e r a l requizements. The f i r s t of t h e s e is o f t e n t h e r e s u l t of A . I . D . ' s no t i on t h a t i ts role is t o prov ide long-tenn p r o j e c t f i nance and t h a t working c a p i t a l should come from, o r a t l e a s t be found byl t h e end user . I n well developed f i i i dnc i a l markets t h i s makes s ense and it is a p r a c t i c a l approach. But i n C e n t r a l America and t h e C,?rfbbean, where markets a r e n o t developed, l a c k of t ime ly working c a p i t a l can o f t e n s p e l l d i s a s t e r f o r a CD/NTAE p r o j e c t . A . I .D . should t h e r e f o r e no t restr ict any of i ts c r e d i t f a c i l i t i e s to long-term f inanc ing a lone and should probably p u b l i c i z e t h e f a c t t h a t its credit programs - do make working c a p i t a l a v a i l a b l e .

An impor tan t f i n d i n g r e l a t e d t o sou rce s of working c a p i t a l f b r non - t r ad i t i ona l a g r i c u l t u r a l e x p o r t e r s is t h a t a t l e a s t h a l f , and f r e q u e n t l y more, of such

firranulng acmes d i r e c 4 t l y from r ece ive r s . Therte tXeder;'a, i m l u d i n g laroktlcle, importerid and tliot;r.lbutors have da tnkl lahed Lony-tern r e l a t i oneh ipa with both l a r g e r and omaI.1 exgc r t e ro whereby they advarrue the oxpor te ra working o a ~ i t a l -- e i t h e r i n aaah, i n mater ia lo euah a s eeed, f e c t l l d z e r , boxea, eta. , o r even i n ersrviaes eucth a s egronomla aeo ls fanoe -- a t t h e beginning of t h e season. RQgaymer?%, i nc lud ing imputed Ln te re s t , i a ueual ly tuken o u t from t h e grooeeds of produat s a l e s . Reaeiverrr' wiL1Fngnaoa t o undertake t h e r i s k s a s soc i a t ed wi th euah f i nana ing is baaed on t h e need t o o b t a i n ari aeaured eource of yual.ity product , on a thorough uncleratanding of t h e t r u e working c a p i t a l requiremente f a t a given item, and on t r u s t . A . X . O . would do we l l t o a tudy t h e p o v s i b i l i t l e e of channel ing i t s own resources f o r CD/NTAE working c a p i t a l through r e c e i v e r s . The Agency has sometimes s e t up and implemented what a r e f r equen t ly c a l l e d "bridge" mechanisms whereby funds a r e l e n t t o ag r ibus ines s processora who, i n t u r n , advance t h e s e nconies, i n caeh o r kind, t o growers t o f inance t h e i r p roduct ion of raw mate ria!.^ f o r p rocess ing . I n t h e case of "on-lending" through r ece ive r s , t h e same p r i n c i p l e could apply. A .I. D. 's problem with t h i s has been t h a t it cannot d i r e c t l y lend t o U.S. o r o the r r e c e i v e r s nor can it expose i t s e l f t o c la ims t h a t it has favored ono o r another of such r ece ive r s . Both of t h e s e o b s t a c l e s can perhaps be overcome through t h e establ iahmeil t of a s p e c i a l i z e d t r u s t o r t r u s t s -- perhaps through t h e P r i v a t e E n t e r p r i s e Bureau (3PF' -- t o provide r e c e i v e r funding f o r advances t o A.1.D.-sporieored expor t e r coups i n d i f f e r e n t coun t r i e s .

On t h e s u b j e c t of excess ive c o l l a t e r a l requirements, u n t i l bankers l e a r n t o l end t o p r o j e c t caah f lows and t o p rope r ly va lue movable a s s e t s , t h e on ly p r a c t i c a l response open t o A . I . D . is t o e s t a b l i s h c r e d i t guaran tee funds t o reduce I C I r i s k s . This has been done around t h e world, i nc lud ing i n A.I .D. p r o j e c t s i n S e v e r a l coun t r i e s , and d i f f e r e n t ve r s ions of such funds a r e being t r i e d i n L a t i n America. f f kep t s imple and func t iona l , t h e y w i l l a c t r a c t I C I u t i l i z a t i o n and w i l l s e r v e a s an e f f e c t i v e l e v e r t o promote CD/NTAE 011-lending.

Debt and Equity

Xn examining. t h o a r e a of iavestment f i nanc ing f o r CD/NTAE i n i t i a t i v e s , and s p e c i f i c a l l y t h e s u b j e c t of deb t ve r sus e q u i t y f inanc ing , it waa found t h a t because of t h e absence of genuine ~ a p i t a l ~ m a r k e t s i n t h e c o u n t r i e s surveyed, e q u i t y f i nance has been de minimus. For t h e most p a r t , A .I. D. has undertaken on ly limited a c t i v i t i e s t o provide e q u i t y f inance , t h e s e have not been e n t i r e l y succes s fu l , p a r t l y due t o problems i n d.esign. The Agency has , however, e s t a b l i s h e d a f u l l p r o j e c t i n t h e Eas te rn Caribbean based on e q u i t y f i nance f o r CD/NTAE i n i t i a t i v e s . This p r o j e c t has had s e r i o u s problems i n both des ign 2nd implementation, b u t it is innovat ive and deserves morn t ime 20 prove i tself . It was c r e a t e d as a response ':o t h e f a c t t h a t d e b t f i nanc ing f o r CD/NTAE, even i n a s i t u a t i o n where t h e r e has been c o n s i s t e n t l i q u i d i t y , has no t been reaching subpro jec t s . Inadequate channel ing of deb t f inance , as suggested, is common t o most of t h e c o u n t r i e s surveyed, a s is t h e absence of e q u i t y c a p i t a l markets. Consequently, t h e Eas te rn Caribbean p r o j e c t experience may have a p p l i c a t i o n s i n o t h e r coun t r i e s . S imi l a r ly , A.I .D. w i l l want t o look more c l o s e l y a t t h e debt-equity swap experiences of Costa Rica and Ch i l e t o s e a r c h f o r a p p l i c a t i o n s i n o t h e r coun t r i e s . And, i n genera l ,

A . 1 ,U. ul~oulcl s t f eny then i t 0 u f turchl t o aupgort t h ~ formatlon and growth of c u p i t n l marketa i n hoe t cnun t r l o s . fn s o doing, !.I; ahould t ake a p e o i a l c a r e t o keep l t e grograme eirnple. ('llhure h a s been s tondonay to, c o n s u l t a n t s and A . 1 . D . o f f i c e r s t o t h i n k i n terms of doveloped c a p i t a l markets when aonslclering chc format ion of such morkete i n tUCs. A t s t a r t - u p , t h i s klnii of t h i n k i n g can be counte rproduc t ive becautle aukhoc i t t oe ' and, mora impor tan t , i n v e s t o r e ' behaviors a r e bound by c e r t a i n l e g o l l t i e s , expericnncos nnd viewe t h a t canrrot y e t accommodate many of t h e Peutureb of n developed c a p i t o l market , 1

F i n a l l y , A . I .D . should s eek i n its credit and f i n a n c e a c t i v i t i e s f o r CD/NTAE t o make b e t t e r use of i t s "a s se t s " . 'I - ncludes , p a r t i c u l a r l y , t h e u se o f t a l e n t e d l a c a l h i r e s who unders tand t h e m me times hidden o r i n t a n g i b l e f a c t o r s i n moving CD/NTAE c r e d i t i n a country. A . I . D . Missions should seek t o have two o r more such " c r e d i t promoters" working i n t h e f i e l d on c r e d i t p r o j e c t s w i th I C I s i n s t e a d of depending on t h e I C I s a l one t o draw down c r e d i t s . A.I.D. should a l s o cons ide r us ing LAAD more e x t e n s i v e l y t h a n it has , perhaps i n a s e r v i c e capac i t y , whereby LMD could des ign and implement l o a n programs f o r a f e e . This might be p a r t i c u l a r l y u s e f u l f o r t h e on-lending of PL 480, S e c t i o n 108 funds, perhaps through t r u s t mechanisms. LAAD has proven its a b i l i t y t o

Desp i te t h e importance of d i f f e r e n t , p r o j e c t - r e l a t e d a c t i o n s t o promote t h e f low of deb t and e q u i t y f i nance , t h e eva lua t i on team found t h a t p o l i c y reform p rov ides t h e s i n g l e g r e a t e s t impact on such flow. I n t e r e s t i n g l y , t h e t y p e s of p o l i c y reform that; gene ra t e such impact a r e no t always d i r e c t l y r e l a t e d t o deb t o r e q u i t y f i nance . Rather, t hey r e l a t e t o t h e eutabl iahment and maint;enanco of "even p l a y i n g f i e l d s " and c l e a r , a t t r a c t i v e " ru le8 of t h o game". They i nc lude es tabl is i tumnt and adherence t o f i s c a l and exchange i n c e n t i v e s , r e a l market v a l u a t i o n of cu r r enc i e s , e l i m i n a t i o n of s u b s i d i e s and p ro t ec t i on i sm, and l i b e r a l remi t tance and r e p a t r i a t i o n laws t o r f o r e i g ~ l i nvas to r s . Once t h e s e cond i t i ons a r e i n p l a c e , i n v e s t o r s themselves a r e t h e ones who manage t o "move" t h e money i n a ru sh t o t a k e advantage of what t h e y p e r c e i v e a s c l x r c u t o p p o r t u n i t i e s t o e a r n p r o f i t . A.I.D. has long been aware of t h e importance of p o l i c y reform and i t a p o l i c y refqrm e f f o r t s have had some success i n a number of coun t r i e s . Progrerm i n t h i s a r e a is time- consuming and f r e q u e n t l y s u b j e c t t o breakdowns because of changes i n h o s t count ry governments. Nonetheless , t h e s e e f f o r t s should be cont inued and s t rengthened . The payof f , i n r e l a t i o n t o t h e f low of f i nance and t o development kmpact a t l a r g e , can be enormous. - The absence of "even p l ay ing f i e l d s " and a t t r a c t i v e " r u l e s of t h e game", has been a d e t e r r e n t no t on ly t o domestic investment i n CD/NTAE i n %he c o u n t r i e s surveyed, bu t a l s o t o f o r e i g n investment. A number of A . I . D . ' s p r o j e c t s have emphasized and funded t h e promotion of f o r e i g n investment i n CD/NTAE. Resu l t s , however, have been g e n e r a l l y poor. Even a f t e r some f i r m s make investments , t h e y wish t h e y had no t because of t h e l a c k of or u n s a t i s f a c t o r y implementat.ion of a p p r o p r i a t e suppor t p o l i c i e s f o r CD/NTAE bus inesses . Again, A . I . D . ' s on ly recourse is ko cont inue working on t h e isme -- perhaps by demonstrat ing t o s e n i o r government o f f i c i a l s t h e succes se s of p o l i c y reform i n countr:Les l i k e Chi le o r Costa Rica. In che meantime, A .I. D. should probably reduce its l e v e l of e f f o r t i n promoting f o r e i g n investment i n CD/NTAE.

move A . 1 . W . Pun& fo r CD/N'LIAE pro jec t s a f f l c lon t ly , without: t h o comgliuation~ that: a re ~ ~ a u a l l y aseoolatod w i t h A .l. D. acedit: proyrams. A.S. D. should taka acivantet~o of th la ahll.ity. And It: should dleo learn rnore about and eetabl ieh al.oeer aouncry-llaiesn w i t h the programs of other ayencieo such ae t h e Znteramericnn Davelopment eank (IDB), the World Dank ( I D R D ) and k t ~ u European Economic Community (EEC) . A t a m.Lnimu~, contact w i t h these programs and with respective officials w i l l help t o generate development di rect ion consansurr. Beyond t h i e level , programs m a y be coordinated, duplicate e f f o r t s may be avoided, and e f fec t ive jo int p resmres may be brought t o bear on host governments fo r policy reform.

S E C T I O N I V

COUNTRY REBOHTB

B E L I Z E

Table of C o n t e n t e

P a g e

A c r o n y m s / A b b r e v i a t i o n s 2. MACROECONOMIC, PROJECT AND 1NSTITUT.SONAL 9&TJ!INGS

A. R e a e n t H i s t o r y D. Policy- dated Issues C. Trends i n N o n - T r a d i t i o n a l A g r i c u l t u r a l E x p o r t (NTAE) D. A.I .D. P r o j e c t s and Key I n s t i t u t i o n s

11. PRODUCTION OR NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. In t roduct ion 8. T e c h n o l o g y T r a n s f e r r R e s e a r c h

1. Seed and V a r i e t y S e l e c t i o n 2. Water Management 3. F e r t i l i z e r and Ag C h e m i c a l , U s e 4 . M e c h a n i z a t i o n 5 . L a b o r Management

C. T e c h n o l o g y T r a n s f e r r E x t e n s i o n D. Land U s e

1. M o n o c u l t u r e 2. S o i l and Water C o n s e r v a t i o n 3. Improper U s e of F e r t i l i z e r and Chemicals

E. Support S e r v i c e s

111. ENVIRONMENTAL IHPACT FROM CROP DIVERSIFXCATION AND NON-TRADITIONAL AGRICULTURAL EXPORT

IV. CREDIT/FINANCE/INVESTHENT FOR NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

L I S T OF TABLES

1. E x p o r t s of Selected N o n - T r a d i t i o n a l A g r i c u l t u r a l P r ~ d u c t s , 1 9 8 0 - 8 6

2. L i s t of P l a n t P a t h o g e n 3 and Insect P e s t s on C e r t a i n Crops

I V . A - i i IV. Am1

I V . A-4 I V .A-5 1V.A-5 I V .A-6 I V .A-6 XV .A-7 1V.A-7 I V .A-7 IV. A-8 I V .A-8 1V.A-8 I V .A-8 I V .A-9

A.L.D. BABCO BEIPU C AC CARICOM CBB CB3 CD CDB DFC GBP GOB LA AD MOA NT AE PACD USAID

Agency f o r In te rna t iona l Development Belize Agribusiness Company Belize Export and Investment Promotion Unit Commercialization of Alternative Crops Pro jec t Caribbean Community Central Bank of Bel ize Caribbean Basin Z n i t i a t i v e ~ r o p ~ ~ i v e r s i f i c a t i o n Caribbean ija ' apment Board Development ance Corporation Gross Domee Product Government c ~ l i ~ C 3

Latin Americu 'yr ihusiness Development Projec t (ROCAP) Ministry of Agriculture Non-Traditional Agriculture Export Projec t Assistance Completion Date United S t a t e s Agency f o r In te rna t iona l Development

B E L I Z E

1. MACROECONOMIC, PROJECT AND INBTLTUTXONAL SETTINGS

Belize has a population of approximately 172,000, almost a t h i r d of which l i v e s i n Belize City. The area of t h e country is 22,963 square kilometers, a l a rge p a r t of which is fo ree t . Bel ize obtained independence on September 22, 1981.

Belize enjoyed sus ta ined economic growth during t h e 1960s and 1970s. But, ae was t h e case with most Central American countr ies , B e l i z e ' s economy began t o s tagnate i n t h e e a r l y 1980s. Sugar p r i c e s collapsed and a re-export t r ade with Mexico decl ined d r a s t i c a l l y , f a l l i n g by almost 60 percent by 1983. Real GDP growth decl ined from about a 4 percent r a t e i n 1980 t o around zero i n

4 1982-83. The GDP r a t e of growth increased t o 1.5 percent by 1985. Per cap i t a income i n 1985 was U5$938.

Agriculture is t h e most important s e c t o r i n t h e Belizean economy, accounting f o r approximately 20 percent of t h e GDP and employing 30 percent of t h e labor force. Sugar is the major export product although it has declined s u b s t a n t i a l l y s ince 1980. On t h e o the r hand, exports of c i t r u s have almost doubled s i n c e 1980.

The USAID Mission has focused on four approaches i n i t s program of a s s i s t ance t o Belizer economic s t a b i l i z a t i o n , a g r i c u l t u r a l d i v e r s i f i c a t i o n , export promotion, and selected human resource development.

The GOB i s committed t o supporting a s t rong p r i v a t e s e c t o r by l imi t ing t h e government r o l e i n t h e a rea of p r i v a t e en te rp r i se s o a s not t o s t i f l e investment i n i t i a t i v e . Foreign investment is welcome i f i t s

1. U t i l i z e s indigenous raw mater ia ls . 2. Produces f o r an export market. 3. Produces import s u b s t i t u t e s . 4 . Contr ibutes t o t h e employment and upgrading of s k i l l s of Belizean

nat ionals .

P r i o r i t i e s f o r investment include a g r i c u l t u r e , l ives tock, agro-industr ies , and aquaculture. Non-nationals must ob ta in l i censes f o r ownership of more than 10 ac res i n r u r a l areas. The Alien Landholders Ordinance leavea it t o t h e d i s c r e t i o n of t h e Ministry of Agriculture whether o r not t o g r a n t a fore igner a l i cense f o r less than 1000 acres . The law provides t h a t l i c e n s e s may be rescinded without compensation due t o non-compliance with t h e development plan. Foreign developers a r e e l i g i b l e f o r concessions f o r up t o 15 years.

major t h r u s t of! UYAbTa'd NTAE: proytam i a b d n q made tt i ia~tgh Prrojml: No. 5 O 5 - O O 0 B t CommercllalizatLon of ALtcarnakLve Crape ( P A C ) whLcrh began i n l W 5 m d haa a PACD of Yeptembel: 30, 1093. PuLlowiny are clesartptiond oft CAC'R goal, g u q o t e , i n p u t e and output13.

at: Q W ~ J To g e n e r a t e h m r e a s e d employment:, income and foreign

P r o j e c t Purpose: To oxpcrnd t h e base of economia a u t i v i t y i n B e l i z e by d e v e l o p i n g a l t e r n a t i v e a g r i a u l t u r a l p r o d u c t s fo r e x p o r t and impor t e u b e t i t u t i o n .

USAID USAIU

USAID T o t a l Hos t Country

TOT=

I n p u t s i

(Thousand) -7 Gran t

~ ~ $ 2 , 0 9 3 G r a n t (Loca l Currency) i j i i i i 8 r US$O, 680 ( L o c a l Currency) vs$"t,aso

-- P r i v a t e S e c t o r Component A . I . D . US$,^. 8 m i l l i o n

-- P u b l i c S e c t o r Component A.I .D. US$^. 0 m i l l i o n GOB ~ ~ $ 0 . 6 8 m i l l i o n

O u t p u t s 1

-- P r i v a t e S e c t o r Component 1) C r e a t i o n o f t h e B e l i z e Agri-Busineos Company

Gran t

Gran t Gran t

( BABCO ) 2 ) Product ion/market ing o f n o n - t r a d i t i o n a l e x p o r t c r o p s

a ) S e l e c t i o n o f a t least two e x p o r t a b l e c r o p s . b) 3,000 acres i n p r o d u c t i o n o f e x p o r t a b l e c r o p s . C ) Involvement o f B e l i z e e n t r e p r e n e u r s i n pack ing , s h i p p i n g and

sales.

-- P u b l i c S e c t o r Component 1) P a r t i c i p a t i o n i n BABCO. 2 ) Development o f a n a c t i o n p l a n .

1. %'ha or ig ina l . g r o j e a c cancsp t was Lnnevativa and o o r r e a t .

2 . The oon t r aa to r a Cound a voSd OF bae i a and app l i ed r eeea rch t thelref&re, a " turnkey" approach t o quiok d i v e r e l f iaaeior l of sugar aane zones could no t t a k e p laae .

3. Seve ra l sub-cont rac tors were te rmina ted Eor non-performance, and s e v e r a l key c o n t r a a t o r personne l l e f t t h e p r o j e c t pramatuxely. As a r e s u l t t h e p r o j e c t has n o t reached t h e l e v e l of ouput expeoted.

4. Ris ing s u g ~ r p r i c e s may dampen any enthusiaem l o c a l p roducers have f o r producing a l t e r n a t i v e crops.

5. The p r o j e c t oho:rld ~ 0 n S i d ~ r producing import s u b s t i t u t i o n crops t o r e p l a c e t hoee comSng from Mexico.

A review of t h e p r o j e c t ' a q u a r t e r l y r e p o r t s i n d i c a t e d t h a t t h e major market ing a c t i v i t i e s involved t r i a l shipments of can ta loupes and h o t peppers by t r u c k through Mexico t o McAllen, Texas. The response t o t h e s e shipments was r epo r t ed t o be favorab!s, The ou tpu t from t h e f i e l d t r i a l s was s o l d on t h e l o c a l market i n B e l i z e o r donated to governmental or non-prof i t i n s t i t u t i o n s .

On the s u b j e c t of marketing, it was no ted t h a t t h e t r i a l s seemed t o be "one-shot" d e a l s wi thout s u f f i c i e n t long-term development impa.ct i n terms of t h e t r a n s f e r of p o s t h a r v e s t technology o r market l inkage .

PRODUCTION OF NON-TRADITIONAL AGRXCULTURAL EXPORT CROPS

A. I n t r o d u c t i o n - B e l i z e is a sma l l country wi th o n l y 23,000 square k i l ome te r s o f l and a r ea . Considered s u b t r o p i c a l , B e l i z e ' s r a i n f a l l ranges from about 1500 m p e r y e a r i n t h e n o r t h t o over 4000 mm per yea r i n t h e south. Only a small percen tage of B e l i z e ' s l a n d i s c u r r e n t l y used f o r a g r i c u l t u r e . S o i l s are sha l low and g e n e r a l l y l o w i n n a t i v e f e r t i l i t y . Most o f t h e s o i l s have h igh c l a y c o n t e n t and must be managed c a r e f u l l y t o be p roduc t ive . Water t a b l e s are r e l a t i v e l y h igh and most count ry water s u p p l i e s c o n s i s t of shal low wells t app ing i n t o a q u i f e r s w i th l i m i t e d supply. Land a v a i l a b i l i t y f o r a l t e r n a t i v e c rops could be expanded cons ide rab ly wi th proper management.

11 Howard S t e e l e , e t d l . , Eva lua t ion of Commercialization o f A l t e r n a t i v e Crops P r o j e c t , D r a f t Report (Washington, D.C., May, 1988).

About- onsl-thFrtl uf ~ e J i t e ' a populat,Lon works Cn Rome phaee of a c ~ r i u u l t u r e . 'I'eahnoLogy uae La Luw among natAve tlelizean Earmere. Mid-nizer! farms a r e ownad and operate11 by Mer~nonibee, wllLle must; of t h e lar'qe l a ~ l d h t ~ l d i n y s a r e aurpornt,e-owned. 'l'ho W Y mainta ine t . i t l e t o a euhe t a n t i a l pe raen taye of t h e r~rmntryor; l m d .

Ehlizo'er main a m p is alugar cane , Eollowed i n o r d e r by c!oKAn, a i t r u s and bananas, he noted, a y t i o ~ l t u r a l p roduc t ion teuhnobogy 16 l im i t ed , 'Phe banana and c i t r u s ope ra t i one u t l l l z e hiytrer l e v e l a of technology than does t h e sugar i n d u s t r y , but, much rown for improvment at; ill e x i s t o . Crop d i v e r s i f i a a t i o n e f E o r t s have n o t been very s u c c e s s f u l e i t h e r , i n good p a r t beaau~ta of l a c k of adap t ive r e sea rch o r e x t e n s i o n se rv ideo .

Das i ca l l y , on ly one paved road e x i s t s i n t h e count ry , rurrninq no r th and sou th . Farm-to-market roada a r e d i r t , poorly maintained and iira no t s u i t a b l e f a r t r a n s p o r t i n g p e r i s h a b l e produce,

D. Technology - Tzaneferr Reasarah

From an h i s t o r i c a l s t a n d p o i n t , a s might be expected, B e l i z e ' s a g r i c u l t u r a l t e s eazch programs have no t been suppox-tive of CD/NTAE. Apart: from the f a c t t h a t t h e country has focused p r i m a r i l y on i t s t r a d i t i o n i l l a g r i c u l t u r a l commodity e x p o r t s ( sugar , bananas and, more r e c e n t l y , c i t r u e ) , i t s o v e r a l l r e sea rch c a p a k r ~ l i t y has been l i m i t e d due t o inadequa te budgetary p rov i s ions , p a r t i c u l a r l y f o r t h e Minis t ry of Agr icu l tu re . The count ry ' s main r e s e a r c h c e n t e r , Cen t r a l Farm, performs r e sea rch a l n o s t e x c l u s i v e l y f o r t r a d i t i o n a l crops. More r e c e n t l y , p u b l i c and p r i v a t e i n s t i t u t i o n s havcr vo iced t h e i r concern f o r i n c r e a s e d r e sea rch i n CD/NTAE, bu t budgetary suppor t is s t i l l l a c k i n 7 a s i s r e s e a r c h planning. F a i l u r e t o p l a n and fund CD/NTAE r e s e a r c h could r e s u l t i n h igh oppo r tun i t y c o s t s . S p e c i f i c a l l y , f a i l u r e t o conduct adap t ive r e sea rch th rough on-farm t r i a l s cou ld r e s u l t i n c rop monocultures and t h e expensive use or misuse of i npo r t ed technolog ies . New fanning van tu re s i n CD/NTAE a r e e s p e c i a l l y vu lne rab l e t o t h e s e r i s k s because of market r equ i r e - ments f o r product q u a l i t y and quant. i ty. I n t h e ru sh t o meet t he se r equ i r e - ments and i n t h e absence of on-farm t r i a l r e s e a r c h programs, p roducers msry wel l f i n d f u t u r e c o s t s wiping o u t any c u r r e n t ga ins . To some e x t e n t t h i s has occu r r ed i n A . I . D . ' s Commercialization of A l t e r n a t i v e Crops P r o j e c t (CAC) i n

, Be l ize .

For CD/NTAE i n i t i a t i v e s t o succeed over t h e long-term, ongoing a d a p t i v e r e s e a r c h must be conducted i n a number of a r e a s i nc lud ing s eed and v a r i e t y s e l e c t i o n , water management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use , mechanization, and l a b o r management. These a r e a s a r e d i s cus sed below.

1. Seed and Var ie ty S e l e c t i o n

Seed and v a r i e t y t r ials f o r CDl'NTU i n Be l i ze have been an impor tan t p a r t of t h e CAC p r o j e c t . Notwithstanding, it does n o t seem t h a t t h e t r a n s f e r of con t inu ing on-farm r e s e a r c h i n v a r i e t i e s has been implemented. This is p a r t l y

corlfLmed i n rnaommendations made Ln the May, L98tJ eval.uation o r CAC. Spec i f idal lay, the evaluat lorr emphdei zed t h e need f o r uonl;inuLng work by reeeardh aqronomlsts and ECJK the dont rac t f ru j of s i x fLe ld teatrniuians t o work on a bae ie wlth fartner p a r t i u l p a n t s . Without dut~ti onyoFnq adap t ive researdti , much of what otherwiee may have been uae fu l i n t h e p r o j e a t ' e s eed and v a r i e t y proyram w i l l be t o a t .

Water Management - - '

T o some e x t e n t , producers of CD/NTAE i n Be l i ze cannot avo id t h e conduct of wate r managemefit "rsraearch". Threshholds of " t oo much" o r " t oo l i t t l e " a r e u s u a l l y easy t o d e f i n e and i d e n t i f y f o r most crops. But f o r high-value CD/NTAEs, f a i l i n g t o d e f i n e and ach ieve t h e " j u s t r i g h t " l e v e l of i r r i g a t i o n can r e s u l t i n a s i g n i f i c a n t oppor tun i ty c o s t through reduced y i e ldn and diminished product q u a l i t y . E f f i c i e n t d i scovery of t h i s l e v e l is b e a t accomplished throegh s e t - a s i d e water management t r i a l s . In t h i s way, t imely answers can be found t o q u e s t i o n s such a s when t o i r r i g a t e 1 what t y p e ( s ) of i r r i g a t i o n t o use t what d e l i v e r y r a t e s t o user how t o manage excess water1 how t o manage t h e s o i l / w a t e r r e l a t i o n s h i p r and what t h e c o a t of i r r i g a t i o n should be. Growers and CAC personne l were concerned wi th each of t h e s e ques t i ons , e s p e c i a l l y wi th problems of exces s water. But, aga in , wi thout adequate , ongoing, on-farm t r i a l s and t r a i n i n g , fo r e ~ m p l e , i n p roper t i l l a g e and l and forming techniques , wator management w i l l be less e f f e c t i v e and CD/NTAE y i e l d 8 w l l l be l e s s t han s a t i s f a c t o r y .

3. F e r t i l i z e r and A g r i c u l t u r a l Cheinicals Use - Non- t rad i t iona l c rops r e q u i r e p roper f e r t i l i t y c o n d i t i o n s and p e a t and d i s e a s e c o n t r o l t o ach ieve and s u s t a i n marketable y i e l d s . Fer t i l . i . ze r , p e s t i c i d e and o t h e r i n p u t s a r e expensive and consequent ly must be used e f f i c i e n t l y . Be l izean farmers a r e no t s u f f i c i e n t l y aware of t .he q u a l i t y requirements of t h e market and a r e consequent ly no t always ready L 9 accep t t h e need f o r t h e s e i n p u t l e v e l s . Also, s o i l and o t h e r cond i t i ons i n B e l i z e are d i f f e r e n t f r m those of t h e U.S. -- most Be l izean s o i l s f o r t h e CAC p r o j e c t a r e heavy- t e x t u r e d and no t w e l l d r a ined -- and t h e a p p l i c a t i o n of t h e s e i n p u t s t h a t is a p p r o p r i a t e i n t h o U . S . may n o t be t h e most s u i t a b l e f o r B e l i z e f o r a given crop. A t t h e o u t s e t , it is reasonable t o use an imported technology package, p a r t i c u l a r l y i f s eed f o r a s p e c i f i c c rop is a l s o being tnlportsd. Yet, wi thout p rope r adap t ive r e sea rch , c r i t i ca l ques t i ons w i l l go unanswered. These in - c l u d e proper r a t e s of a p p l i c a t i o n , methods of a p p l i ~ a t i o n , t iming, f e r t i l i t y / water r e l a t i o n s h i p s , and environmental e f f e c t s r a n g i ~ g from immediate impact on f i e l d workers to contaminat ion of water. S a t i s f a c t o r y answers t o t h e s e q u e s t i o n s and to t h e c e n t r a l i s s u e -- how t o ach ieve optimum CD/NTAE y i e l d s -- r e q u i r e f r e q u e n t t e s t i n g of s o i l s and water -- t e s t i n g t h a t should be done on a con t inu ing bas i s . Transfe r of methods and techniques i n t h e s e a r e a s should be a key o b j e c t i v e i n t h e CAC p r o j o c t .

N o n - t r a d i t i m a l export c : z ~ p ptodudt:ion 1s h l y h l y t i m e - s ~ n ~ l i t ; ive . *st- efficient mechanization is of!ten &he b e s t response t o suuh time a e n e h f i v i t y and to po ten t ia l , labor ahor taqsa o r o t h e r ohocfaomings, Ftrr moet non- t r a d i t i o n a l axpo r t a rops and for f lk l6 I t farmsre l n Be l i ze , t h i s does no t have t o imply ownerahip of ti tracutor or o t h e r b i g t i c k e t item. Ine tead , it meane aca see to and uee of proven, c o a t e f f i c i e n t meahanLcal a i d e f o r one o r nore of t h e key t a ska of t i l l a g e and l and p repa ra t i on , c u l t i v a t i o n , harves t ing , and f e t t i l i z e r and chemicals agp l icak ion . A s far: a s t h e team could de tennjne , t r a n s f e f i n t h i s a r e a has not been adequa te ly c o r ~ s i d e r e d i n t h e CAC p r o j e c t .

5. Labor Management

Non- t rad i t iona l a g r i c u l t u r a l expo r t c rops a r e b a s i c a l l y l abo r i n t e n s i v e i n c l u d i n g a s l g n i f i c a n t requirement. For hand ha rves t . A s p l a n t i n ~ r , : of t h e s e c rops i n c r e a s e , s ea sona l demand far l a b o r w i l l i n c r e a s e a s w e l l AI:: w L l l a l s o i n e v i t a b l y co inc ide w i t h some p a r t of t h e l a b ~ r demand of t radi t l .ona.1 c rops . Be l i ze probably has a s u f f i c i a n t number of people a t p r e s e n t t o sl?pply l a b o r t o a growing i n d u s t r y of n o n - t r a d i t i o n a l c rop produc t ion , ha rves t i ng dnd nandl ing. However, "people" do n o t e q r s l " labor" . There is a c e r t a i n l e v e l of t r a i d n g r equ i r ed f o r e x p o r t p roduc t ion and a c e r t a i n "work e t h i c " r equ i r ed . Timel iness of c u l t u r a l p r a c t i c e s is c r i t i c a l . Dependabi l i ty i s important . The a v a i l a b i l i t y of a l a b o r f o r c e and i t e management is b a s i c a l l y a people problem, r a t h e r t han a p roduc t ion problem p e r s e . I t t a k e s a d i f f e r e n t t ype of i n d i v i d u a l t o be a euuces s fu l f r u i t o r vege t ab l e grower t h a n t o bu a cane fanner . I t is no t premature t o begin a n t i c i p a t i n g t h e p o s s i b l e impact of i nc r ea sed CD/NTAE p l a n t i n g s on l a b o r requirements and t o beg in p lanning t o meet t h e s e requirements we l l i n udvance of h a r v e s t "me.

C. Technology Transf err Extension

Techrrology t r a n s f e r , through ex tens ion , a s suggested above, has n o t been s t r o n g i n B e l i z e and has t h u s c o n t r i b u t e d t o r e l a t i v e l y low p roduc t iv i t y . A s a r u l e , t achnolog ies have been imported through c o n s u l t a n t s o r en t r ep reneu r s and "extended" i n t a c t t o d i f f e r e n t graving a rea s . This is, i n p a r t , what has been done i n t h e CAC p r o j e c t . Extension personne l from d i f f e r e n t i n s t i t u t i o n s i n c l u d i n g t h e Min i s t ry of Agr i cu l t u r e , a s w e l l a s t h e CAC p r o j e c t a r e l imited i n numbers and budget. And, a s noted above, they are n o t adequa te ly emphasizing t h e need f o r on-farm a d a p t i v e research . In f a c t , t h e MOA "counte rpar t " c o n t r i b u t i o n t o f u r n i s h ex t ens ion ~ e r v i c e " t r a inees " t o t h e CAC p r o j e c t ha s on ly been p a r t i a l l y implemented! most f i e l s n e n were no t i n c l i n e d t o t e a c h o r t r a i n . In e f f e c t , t h e M O A t s ex t ens ion s e r v i c e has had l i t t l e s i g n i f i c a n t impact on t h e p r o j e c t and v i c e versa . A s i n s i m i l a r p r o j e c t s , t h e ex t ens ion concept was sound bu t it was no t adequa te ly r .on i to red o r implemented.

f nereased produa t ion of n o n - f m x l l ~ i onal. crape w i l l ceyuf re more eff ittiorrt; uee of evai lebl ta Land. Them As eu f f i o i en t : room for expansiun so t h a t Be l izean farmere w i l l no t be f s r o e d t o use f r a g i l e landv o r dleplace any tradit ; ianal, c r o p praduor;Lon, but: e f t i c i e n t l a n d uae i s s t i l l erasent ia l . It: c a n e i e t a of avoid ing problems t h a t are common t o t h e produot ion of nona t r ad i t i on i l l s , Theae groblarna, whioh a l g a p e r t a i n c.0 cropping on even t h e most a p p r o p r i a t e l ands f o r non- tcad i t iona la , i nc luda monoculture, inadequa te eoL1 and water conaerva t ian and improper w e of ' . e r t i l i z e r and a g r i c u l t u r a l ahemlcale.

I n t h e i r i n t e r e s t i n o b t a i ring maximurn b e n e f i t from new, s h o r t e r c y c l e c rops i n Be l i ze , fa rmers may begin t o u se a monoculture c ropping eystem, r e p l a n t i n g t h e i r c rops -uccess ive ly on t h e same p l o t of land. This can e a s i l y upse t p r ev ious ly balanced ecologic?al systemo wi th r e s u l t i n g increments i n weeds, p e s t s and d i soase . The costfj t o e l i m i n a t e t h e s e problems and t o ach ieve renewed ba lance can be very h igh and can even tua l l y minimize r a t h e r t han maximize benef i t g f rom t h e naw crops . Ce r t a in techniques can f a c i l i t a t e monoculturing, b u t t h e s e techniqu~es a r e very expensive. The b e s t a l t e r n a t i v e is c r o p r o t a t i o n , which t ends t o upse t t h e l i f e c y c l e s of p e s t s and d i s e a s e whi le s t i l l keeping l and produc t ive . I n t h e shor t - run , t h i s nay no t be a s p r o f i t a b l e a s monoculturing, bu t over time it w i l l i nva r i a i t l y be a more p r o f i t a b l e approach t o land use.

2. S o i l and Water Conservat ion

Topography i n Be l i ze is such t h a t e r o s i o n should n o t be a s e r i o u s problem. S t i l l , s l a s h and burn a g r i c u l t u r e ha s led t o some e r o s i o n problems. Be l i ze a l s o f r e q u e n t l y f a c e s excess water problems and consequent d ra inage d i f f i c u l t i e s . The CAC p r o j e c t needs t o emphasize t r a n s f e r of conserva t ion p r a c t i c e s t o avo id such s o i l and wate r problems and t he reby make more ef f e c t i v a use of land f o r non-tradi t i o n a l crops.

3. Improper U s e of F e r t i l i z e r s and Chemicals

I n t e n s i v e cropping u s u a l l y means i a t e n s i v e chemical and f e r t i l i z e r use . Chemical runoff t o s t reams i s no t on ly c o s t l y i n terms of chemicals l o s t , bu t can be hazardous t o people and dnimals who may d r i n k from t h e streams. Chemical d r i f t can a l s o be of concern ais i n t e n s i v e c r o p produc t ion i n t r u d e s i n t o popula ted a r e a s o r a r e a s where o t h e r t r a d i t i o n a l food s t u f f s a r e produced. Unless p roper t e chn iques a r e t a u g h t ts Bel izean growers and t h e n monitored, t h e r e is a d i s t i n c t p o s s i b i l i t y of c o n f l i c t between c r o p produc t ion , p rope r l and u se and environmental preserv@.t ion. CAC p r o j e c t personne l d i d confirm to t h e e v a l u a t i o n team t h a t f e r t i l i z e r and p e s t i c i d e s a f e t y procedures were adhersd t o c l o s e l y i n f i e l d t r i a l s and were d i s cus sed wi th farmers .

IV. A-8

HeLbze doee n0G have a well structured or efficient support ~ e r v i c e otructure t o sus ta in non-troditiona L agr icul ture . 'I'hsc~\~gh Ltiu CAC pra jeo t , ef fodts ehould be made t o improve exLs t ing nugport clervicea, i nuludlng the development: of small d ie t r ibu t ion f a a i l i t i e e c loser t o furma. T h i s dhould be oa t r i r d out oo~raurrently w l t t i production and marketing trial activities t o help enaure the eucltainability of NTJU ventures.

1x3. ENVIRONMENTAL UIPACT FROM CRZ)P DIVERBIFICATION AND NQN-Tf(ADITItB3AL AGRIClJLTURAL EXPORT

The humid t rop i ca l climate of Belize pennits the rapid buildup of insect and plant pathogel. opulations. Individuals reviewing the crop pes t s i t ua t i on i n the country note t h a t growers frequently c i t e pest: problems a s a serious constra int t o crop production. A l i s t of conunon insect pes t s and plant pathogens at tacking varicus vegetable and f r u i t crops i n Belize i s presented i n Table 2 , beginning on the next page. This l i s t was compiled by a pes t management s p e c i a l i s t who v i s i t ed Belize i n 1986.21 He examined and discussed four export-oriented projects t (1) a tomato producing venturec ( 2 ) a cucumber and pickle growing venturer ( 3 ) a cantaloupe producing project1 and (4) an okra producing venture, and observed t h a t pes t management problems were one of t he p r inc ipa l causes of the demise of these projects , along w i t h high transportat ion costs and lack of technological assistance. Based on these experiences, adequate support f o r pes t management research would seem t o be an indispensable requirement fo r future agr icu l tu ra l projects.

21 Jamfas C . Mertely, Pest Management Assessment and Recommendations. (Report submitted t o U S A I D / B ~ ~ ~ Z ~ , 1986.)

T A B L E 2

BELIZE8 Liot of Plant Pathogene and Inseat Prluto on Certain Cropr

CUCUR8IT8 (Ci t rul lue vulgaria, -,- Cucurnia opp,, Qraurbita srpp.)

Coryneepora aaeoiiatila . .

tap. suiarium spp. Olomerella cingulata ( Colletotrichum lagenatium) Meloidogyno spp. - - - Bsetiiiomonae laahrymans Rsaudoperonospora cubensis WatermaLon mosaic virus Unidmtif ied virus diseases A physiological disease

f ungue Eungr'. 'd

fungue

fungi e ~ g i f ungus

nematode bacteria fungus virus vi rus( e s ) none

Cucurbit Insect Peeta

Acalymma blomorum Colaoptetar Chrysomelidae A. vittatum Coleoptersr Chrysomelidae - -- Agallia l ingula Homopterar CicadelLidae Anasa scorbutica Hemipterar Coreidae Aphis gossypii Homopterar Aphididae Bothrophorella nigra Hemipterar Miridae Cerotoma ruf icornis s ~ o l e o ~ t e r a r Chrvsomslidae Diaphania hyalinata hp idopte ra r Pyralididae D. n i t i d a l i s Lepidopterar q r o l i d a e - Diabrotica bal teata Coleo~tera r Chzvsomelidae Epilachna borealis ~o l eo&rnr ~ o c c i n e l l i d a e Erithrogonia jucunda Homopterar Cicadellidae E. laudata Homopterar Cicadellidae - Halticils c i t r i Hemipterar Miridae Homophoeta aequinoctial is Coleopterar Chrysomelidae Mvochrous t i b i a l i s Coleo~tera r Czvsomelidae . - - Notograma stigma Dipterar Otit idae wireworms Coleopterat Elateridae

OKRA (HitTLscus oscumentus) - Cercqspora abelmoschii

LJnidentGied v i rus disease ( s 1

fungus nematode

Bloesom blight Target pot Gu~my stem blight

Pnwdety mildew Fusarium w i l t Anthracnoee

Root-knot nematode Angular Loaf bpot Downy mildsw

Bloesom end r o t

defol ia tes defol ia tes foliage

-0

foliage "- defol ia tes f r u i t borer Fruits , Flowers, stems leaves, flowers, stems defol ia tes foliage foliage

r i

defol ia tes defol ia tes stem borer f r u i t borer (cantaloupe)

Cercospora leaf mold Root-knot nematode virus

Okra Xneaat Poets 111

DyaderaG ep. Hemiptera r Pyrrhoaocbclae Eueahietue bifibulue Hemigterar Pentatomidaa L .I

Oedionyahue ulygeatuo Coleogeerar C7lrymmeJ.i.Ans Onaometopia o la r io r Homogterar Cicadellidae Peeudophera contraria Homogterar Cicadellidae P. diveraene ~ o ~ o ~ t z a r Cicadellidae

PAPAYA (Carica papaytr)

Collatotrichurn papayae Fuearium spp. Meloidogyne spp. Ph t o hthora sp. -aback

fungus fungi nematode fungus MtO/Vi r us?

Papaya Insect Poets

A c o n o ~ h ~ r a pallescens Homopterar Membracidae Paracoccus spp. Homopterar Pseudococcidae Toxotrypana curvicauda Dipterat Tephritidae aphids (*his gossypii 1 Homopterar Aphididae leafhoppers Homopterar Cicadellidae spider-mites ~ c a r i d a r Tetranychidae

PEPPBRS ( Capsicum spp . ) Collectotrichum nigrum Corticium r o l f s i i

Phomopsis sp. Phiophthora sp. Pseudomonas solanacearum Xanthomonas vesicatoria - Mosaics and other virus(es1

fungus fungus fungus

fungus nema todos Fungus fungus bacteria bacteria vi rus

fol iage f ollirge foliage

Anthracnaae Root r o t Root-knot riematodo Phytophthora root ro t

Foliage, shoots etem, foliage, f r u i t f r u i t f l ; ~ fol iage, stem fol iage fol iage

Frog-eye leaf spot Anthracnose ( f r u i t r o t ) Southern bl ight

Stem bl ight Roct-knot nematode F ru i t r o t Root ro t , stem canker Bacterial w i l t Bacterial spot

fol iage f o l i a ye fxui te , bude defolilrtes defol ia teo - - defo l ia tes defol ia tee fol iage fol iage fa l iage fol iage stems - - stem

9 a l l j . a l lngula Homopterar Cioedrll idas Anma aaorbutiaa Hemlgtorar Coreidao Anthonomus eugenii Coleogterar Curaulionidae Coretama ruf iaornia Coleopterar Chrysomelidaa Biabrotiaa rgp. ( 2 ) Coleogterar Chryeomelidae 3 sdotcuo enyf 'catua I!unigtstas 2--rrzhsi;l~ziP,ro Egilaahna boreal is Coleoprrrao Cooainellidae E i t r i x sp. Coleoytetar Chrysomelidae %T Eryt rogonia mgp. ( 3 ) Homogterar Cicadellidae Hortenaia similis Homopterar Ciaadellidae Myzue pereiaae Homopterar Aphididae Onoometopia ahar ior Hompterat Cfcadellidae Orthezia i n s ig in i s Homopterar Ortheziidae Blatytylellus la t ipennis Hemipterat Miridae Pseudophera divergens Homopterar Cicadellidae

PINEAPPLE (Ananas comosus)

Phytophthora sp. various fungi

fungus

none

Phytophthora root r o t F ru i t l e t core r o t ye1 lowing alkal ine s o i l s

P i n e a ~ l e I m e c t Pests

Dysmicoccus brevipes Homopterar Pseudococcidae Momidae p i c t i ven t r i s Hemipterar Pentatomidae vertebratee (b i rds , opossums, e t c . )

roots , f r u i t -- f r u i t s

TOMATO (Lycopersicon esculentum)

Alternaria so lan i fun, u s Early bl ight , stem canker

Leaf spot Southern bl ight

Cercospora sp. Cort i c i um r o l f s ii

fungus fungus

fungus fungus

Target ( l e a f ) spot Leaf mald

Corynespota cass i ico la -- Fulvia Fulva

- . -8Q

Fuearium oxysporum f . s p . lycopersici fungus - Fusarium w i l t Stem r o t Root-knot nematode Leaf spot Bacter ia l w i l t Rhizoctonia leaf

b l igh t Bacterial spot

Macrophomina sp. Meloidogyne spp. Phoma ( o r Phyl los t ic ta?) sp. - Pseudomonae solanacearum

fungus nematode fungus bacteria f ungus Thanatabhorus cucumeris

bacter ia v i ru s none

Xanthownas vesicator ia Mosaic and other virus(€! Physioloqical disease Blossom end r o t

Epiaarrra v i t - iaolI.fi Coleogeerair Meloidae 9 i t r i x up. Colcrogteret ChqroomelIdae Eueahirrtur bifibulurs - Hemipteriar Pentatomidae r - i w i n u s watipennun Coleogterar CurculioniAle -.. Yaltiaur c i k r i Hemipterar Miridae Haliothia viteecens Legidogterar Noctuidae H. zea Lepidopterar Noatuidae .-

clefollatea daf aliatorl

""

sucks f r u i t glen! bcrcnr foliage f rui t : barer f r u i t borer

~ e t o g r a m m a phaeopteralie Legidogterar Pyralidaa d e f o l i a t e ~ Leptogloeeua gonagra Hemipterar Coreidae Phthia p i a t a Hemipterar Coreidae ~ h y r e d e n u i i v e r g e n e Coleopterar Curculionidae Beeudoplueia includens Lepidopterar Noctuidae Spodoptera dolichoa Lepidopterar Noctuidae S. er idania Lepidopterar Noctuidae S. l a t i f anc i a Lepidopterar Noctuidae - S. orni thoqal l i Lepidopterar Noctuidae Zicca taeniola Hemipterar Coreidae

YAMS, OOOO (Colocasia esculenta) (Xanthosoma indica)

Xanthomonas campestris var. aracearum bacteria ( X . diffenbachia)

Coco Yam Insect Peeta

sucks f nit aucke f r u i t

-I

f r u i t borer, defol. f r u i t borer de to l ia t se defol ia tes f r u i t borer --

Bacterial leaf spot

Lema relucens Coleopterar Chrysomelidae - - Oedionychus decemgutatus Coleopterar Chrysomelidae -- Platytyle l lus Lat ipomis Hemipterar Miridae -- - -- Typophorus p a r a d o x ~ : ~ Coleopterat Chrysomelidae defo l ia tes

Basep on conversations with government o f f i c i a l s and loca l commercial company re& ..eatatives, it appears t h a t the leve l of awarene -s of the dangers of pest ic ides is par t icu la r ly high i n Belize, ao evide---ed by one group of workers t h a t peti t ioned a chemical company t o provide them with sa fe ty clothing. Increased involvement of the pest ic ide companies i n sa fe ty issues involving handling and use of pest ic ides was confirmed by the development of a closed system container f o r dispensing MOCAP. In t h i s system the appl icator does not need t o f i l l t he container and, a f t e r use, t he container is returned t o t he manufacturer f o r r e f i l l i ng .

T h e Commero5altzat;ion of A Lter t ia t ive Cropd Pro jeclk had nn envLrorrmenta1. aeeedsment: w r i t t e n in 1Wti tor i t s in tended procurement atrd U U ~ of p e d t i o i d e a , end n l i e t of p e e t l ~ l d e a whinh were au thor Lzad f o r use i n t h e yroJeut: waa psov Lded. Xn disauas ione wi th p r o Jest: personnel, it was beamed t h a t there had been no uhanged t o t h i s LLet. It wacl no t t h e i n t e n t i c 9 of t h e team &a d e t e r n i n e i f a t r i a t ; anmplian~ca w i t h t h e tarme of t h e $A waa being obeerved, b u t t h e team d i d l e a r n w i t h e a t i s f a c t i o n t h a t g r o j e a t personne l had a o a i e t e d i x thz prsse i i t& t im G: ii t w ~ day ~rairiirld uuhirdw i r r 1'337 i n peatiaide e a f s t y f o r s i x t y e x t e n e i o n l s t a , fa rmers and t e c h n i c a l personne l . The ah ie f -of -par ty a l e 0 a f f i rmed t h a t p e s t i c i d e s a f e t y p r a u t i o e s were c l o s e l y adhered t o i n t h e conduct: of f i e l d t r i a l s , t h a t p r o j e c t personne l worked c l o e e l y with farmera i n de te rmin ing when a p p l i c a t i o n s should be made and p rope r methode of apg l i aa - t i o n , and t h a t fa rmers were r a r e l y unsupervised when they a p p l i e d p e s t i c i d e e . The p r o j e c t had purchased p r o t e c t i v e c l o t h i n g and s a f e t y equipment m d i n s t r u c t e d a p p l i c a t o r s on t h e i r p roper use. However, t h e e v a l u a t i o n team d i d no t e t h a t t h e s t o r a g e room behind BARCO'S o f f i c e s used t o s t o r e p e s t i c i d e s d i d no t have a s i g n on t h o door i n d i c a t i n g t h a t p e s t i c i d e s ware conta ined within.

According t o t h e ch ie f -of -par ty , p e s t i c i d e use i n t h e p r o j e c t ' s f i e l d t r ia ls was on an as-needed b a s t s s i n c e p r o j e c t personnel v i s i t e d t h e s e t r i a l s n e a r l y every day and were a b l e t o monitor t h e bu i ldup i n d i s e a s e and p e e t popu la t i ons c l o s e l y . In papaya, t h e p r o j e c t en tomologis t found t h a t a s p e c i e s of c o c c i n e l l i d b e e t l e could c o n t r o l mite p e s t popu la t i ons and, s i n c e t h e r e were no f a c i l i t i e s f o r r e a r i n g t h i s p r e d a t o r , had shown t h e f anne r s how to recognize it, c o l l e c t it i n p l a s t i c bags from i n f e s t e d l e aves , and t r a n s f e r it t o t r e e s where t h e p r eda to r was a b s e n t o r occurred i n o n l y l o w numbers.

N. ~DIT/FINANCE/INVBSTMENT FOR NON-TRADITIONAL AGRXCULTURAL EXPORT CROPS

A . I . D . ' s CD/NTAE focus i n B e l i z e has been p r i m a r i l y i n t h e a r e a s of p roduc t ion and i n s t i t u t i o n bu i ld ing . Thus, t h e Commercialj.zation of A l t e r n a t i v e Crops P r o j e c t (CAC - 505-0008 ) has sought t o i d e n t i f y and t r ia l -produce/market w in t e r f r u i t s and vege t ab l e s and t o s imul taneous ly s t r e n g t h e n a l o c a l o r g a n i z a t i o n -- t h e B e l i z e Agxi-Business Company (BABCO) -- t o b e t t e r . enab le it t o h e l p promote t h e p r ~ d a c t i o n and marketing of t h e a l t e r n a t i v e c rops .

Given t h e CAC p r o j e c t purpose, a s p e c i f i c c r e d i t component was probably n o t necessary , a t l e a s t i n t h e f i r s t two years . However, a s CAC has advanced, t h e need f o r bo th c rop e s t ab l i shmen t and produc t ion working c a p i t a l has become ev iden t . As a p r a c t i c a l ma t t e r , f u r t h e r p rog re s s i n CAC is cons t r a ined f o r l a c k o f such f i nance t and w i t h producers a l r e a d y indebted from prev ious borrowings f o r t r a d i t i o n a l c r o p s , t h e r e is l i t t l e l i k e l i h o o d t h a t t h e y w i l l have o r be w i l l i n g t o advance t h e i r own c a p i t a l f o r t h e new and r e l a t i v e l y r i s k y a l t e r n a t i v e c rops .

The needs f o r term f inanc ing t o cover b a s i c irrigation expend i tu r e s and f o r normal s ea sona l o p e r a t i n g c a p i t a l have been f a i r l y we l l i d e n t i f i e d a s a r e s u l t of p roduc t ion and market ing t r i a l s . But wi thout having adequate credit

f a a i l l t A e e L n place orr a tLmely h a l e , those needB w l l l rrot: be met eat.ie- t 'autorLly, rcaaultlnq i n eb(jrriPicant L ~ d t o p p o r t u n l t i e ~ . Adequauy i n thLa aase probably mearira Ghat terms atrould b~ E lex ib lo , eapeaJ.aLly w i t ; t ) rclgard t o o o l l a t e r a l l z a t l o n . Moat ptoclu~elra Lrl t h e CAC projwut have mortgaged t h e i r p rope r ty for p r ev lous firiancLnya and would have d iEElau l ty p rov id ing seaurLfy on n e ~ m a l te tme f o r new loans . The i r pr;obl.em ie f u r t h e r compounded hy t h e f a c t that, per a c r e , beoaase of the h igh t;eahnol.ogy yackaqee f o r growing enr?.tn am1 *rq.g.rtnblcs, i n v m t n w t n an? ~porAtinr : cosCc a m coneidczataly h lgher than tor suga r cane or o t h e r t r a d i t i o n a l c rops . And w l t h p r i c e s f o r sugar improving, producers would be more l i k e l y t o commit l i m i t e d rasourceo co t h a t c rop than t o a l t e r n a t i v e crops.

Adequate c r e d i t from t h e commerical banks f o r a l t e r n a t i v e c rops w i l l probably be l i m i t e d u n l e s s a guaranty program can be p u t i n p l aae . Even then , the commercial banks w i l l probably s t i l l p r e f e r t o l end f o r t r a d i t i o n a l a g r i c u l - t u r e . Notwithstanding, e f f o r t s should be made t o involve t h e s e hanks where pos s ib l e . (One of t h e banks has r e p o r t e d l y begun t o l end t o some of t h e growers involved i n t h e p r o j e c t ' s market ing t r i a l s . ) E f f o r t s should a l s o be made, probably th rough t h e Development Finance Corporat ion (DFC), t o e s t a b l i e h l oan programs t o cover p l a n t a t i o n es tab l iuhment wi th t h e p r o v i s i o n of longer- term loans geared p r i m a r i l y t o f i n a n c i n g i r r i g a t i o n equipment and i n s t a l l a - t i o n . Also, shor t - te rm product ion c r e d i t cou ld be provided i n i t i a l l y through t h e DFC. Eventua l ly , a s i s t h e c a s e throughout t h e i ndus t ry and f o r growers i n v i r t u a l l y eve ry count ry , shor t - te rm produc t ion advance8 w i l l come from impor te rs , b roke r s and d i s t r i b u t o r s .

The Be l i ze Export and Investment Promotion P r o j e c t (505-0027) inc luded a s one of t h e o b j e c t i v e s of t h e Be l i ze Export and Investment Promotion Uni t (BEIPU) a s s i s t i n g ". . e x p o r t e r s t o o b t a i n short - term working c a p i t a l from i n s t i t u t i o n s such a s LAAD, OPIC, CDB and o thers . " No evidence of such a s s i s t a n c e is found i n r e c e n t q u a r t e r l y r e p o r t s on t h i s p r o j e c t , a t l e a s t a s t h e s e r e l a t e t o a l t e r n a t i v e c rop expo r t s .

C A R I B D E A N R E O f O N A t

Table oP Content&

A c r o n y i n u i ' A b b r a v l a f ions

I. MACROECONOMIC, PROJECT AND INB'ZITUTIONAL SE'J!TXNGM

A. R e c e n t P b t o r y B. P o l i c y - R e l a t e d l asues C. T r e n d a i n N o n - T r a d i t i o n a l A g r i c u l t u r a l E x p o r t (NTAE) D. A.I .D. P r o j e c t s a n d Key Xns t i t u t i ons

11. MARKETING OF NCN-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. I n t r o d u c t i o n B. A v a i l a b i l i t y , V o l u m e , Q u a l i t y and C o n t i n u i t y of Non-

T r a d i t i o n a l A g r i c u l t u r a l E x p o r t C r o p s 1. P r o d u c t i o n 2 . p o s t h a r v e s t H a n d l i n g

C. M a r k e t i n g

111. PRODUCTXON OF NON-TRADITIONAL AGRICULTURAt EXPORT CROPS

A. I n t r o d u c t i o n B. T e c h n o l o g y T r a n s f e r r R e s e a r c h

1. S e e d and V a r i e t y Selection 2 . Water M a n a g e m e n t 3. F e r t i l i z e r and Ag Chemical U s e 4. Mechanization 5. L a b o r M a n a g e m e n t

C. T e c h n o l o g y T r a n s f e r r E x t e n s i o n D. L a n d U s e

1 Monoculture 2 . S o i l and Water C o n s e r v a t i o n 3. I m p r o p e r U s e of F e r t i l i z e r and C h e m i c a l s

E. Support Services

IV. ENVIRONMENTAL IMPACT FOR CEEDP DIVERSIFICATION AND NON-TRADITIONAL AGRICULTURAL EXPORT

IV. B-1 1V.B-2 IV. B-2 IV. B-4

IV. B-5

I V . B-5

I V . B-5 I V . B-5 I V . B-6 I V . B-6

I V . B-?, I V . 3-9 I V . B-9 1V.B-10 IV. B-10 1V.B-10 I V . B-11 1V.B-11 IV. B-11 1V.B-11 I V . B-12 1V.B-12 I V . B-12

I V . B-12

A. A . 1 .D.-Authorized Primary P a a i l i t i a o Available t o r CD/NTA&

8. Pl.ac6..,,drrt 1. outstandings 2 . The Placement Process

C . Other P inaming Pox CD/NTiU3

LIST OF TABLIES

1V.B-14 I V . 0-16 ZV.0-15 IV. B-15 1V.B-17

1. Se l ec t ed S t a t i s t i c a l Information 2 . Non-tr;tditional Agricultural Exports, 1985

I V . 0-1 1V.B-3

IV. B - i i

A . 1 . D. AVT BADC W P CAMIS CA RDAT'S CARDL CARICW CATCO CBI CDB CEDP CFC CFSC ECA ECAD ECIPS ED F EEC GDP HIAMP IDB IEE LAC MT IA NTAE OECS ORD P ACD P W Qm . RDO/C REMS USAID UWI

Agetray for fnternational Development; Agriuuiturai VenLure Trust earhdoa Agriaultural Development Cxrrporation Caribbean AgrlculGuraL Exteneion Baojeat CARl.COM AgriduLtureal Market Information Service Caribbean AgkiaulturaL and Rural DeveLopment Advisory Service Caribbean Agricultural Researah and Development fnstLtute Caribbean Community Caribbean Agricultural Trading Co. Caribbean Basin Initiative Caribbean Development Board CARSCOM Export Development Project Caribbean Food Corporation Caribbean Financial Service8 Corporation Eastern Caribbean Agencies (a trading co.) Eastern Caribbean Agribu~iness Development Eastern Caribbean Investment Promotion Service European Development Fund European Economic Community Gross Domestic Product High Impact Agricultural Marketing and Production Project Interamerican Development Bank Initial Environmental Evaluation Latin America and Caribbean Ministry of Trade, Induetry and Agricviture (St. Vincent) Non-Traditional Agriculture Export Organization of Eastern Caribbean States Organizatino for Rural Development Project Assistance Completion Date Project Development Office, USAID Quick Response Fund Regional Development Office/Caribbean Regional Environmental Management Specialist United States Agency for International Development University of the West lndies

A. Resent H i e t o 3 illl- -llll.

Tho e ight countries irmluded In t h i s regional a n a l y s i e are shown I n Table 1 along w i t h se leated e t a t i e t i c a l information.

T A B L E I

CARIWAN REGIONAL: Selected S t e t l s t l c o l l nfonnst ion

! ! Estimated ! GDP a t ! Agrlcul tu re ! GDP Growth ! Per Cap l t a Country Year ! Area ! Population ! Current ! Share of GOP ! Rate ! ODP

! Km2 ! (000) ! Market Pr lces ! (percent) ! (psrcent) ! (US$) ! I ! (US$ m l I l l o n ) : I I

Anl-lgua f Barbuda Barbados Domlnlca Grenada Montserrat S i . r i i t t s 6 r b l s S t . Lucla S t . Vlncent d the

Grenadines

Source: Carl bbean Development Bank.

These c o u n t r i e s are widely d i v e r s e i n t h e i r economies -- some, such a s Barbados and Montserrat , d e r i v e a smal l p o r t i o n of t h e i r GDPs 2rom a g r i c u l - t u r e , while o t h e r s , such a s S t . Lucia, Grenada and S t . Vincent, a r e h igh ly depatident upon a g r i c u l t u r e .

Like o t h e r Caribbean and Cen t r a l American coun t r i e s , t hose of t h e Eas te rn Caribbean were no t immune from t h e world economic downturn t h a t occur red dur ing t h e late 1970s. For example, Dominica's GDP f e l l from $201 m i l l i o n i n 1978 t o $167 m i l l i o n i n 1979, and on ly began t o recover s lowly a f t e r 1982. Other counL1 ie s were l e s s a f f e c t e d by t h e sha rp drop i n t h e world p r i c e s of a g r i c u l t u r a l commodities b u t were s t i l l a f f e c t e d by t h e r i s e i n petroleum

p r i m e and t h e overa l l . Lecemsiun d u r i n g t h e late 2970s and earLy 1980e. l n L Y H 2 r Barhadoe' GDP clr'r3pped by n e a r l y 4 . 9 p e r c e n t . Any ohanye i n tourist a d t i v i k y has a c lef i r r i te effect on Darhados' economy a s i t does For o t h e r l e l a n d s whete kour j em Fa important,. These i s l a r lda a r e ~ .xuey t i o n a l l y v u h e r a b l - e to urrfavorablo ewt,srnal: d i r o u q a t a n c e e i n u l u d l n g d e c l i n e e i n world t r a d e , weather d o n d t t i r m s ( d r o u g h t , h u r r i c a n e e l , and vaciaLione i n p r i c e s o f t h e Few traditional e x p o r t e . T h i s v u l n e r a b i l i t y i e n o t l i k g ~ y t o dhange.

It i a i m p o r t a n t t o n o t e t h a t t h e p r i n c i p a l s o u r c e o f a g r i c u l t u r a l qrowth i n t h e r e y i o n has been ~ L r a d i t i o n a l a r o p a , mainly bananas and sugar . The p r o s p e c t s for expanding m a t k e t s f o r t h e m c r o p s is n o t good. A s a r e e u l t , t h e y o v e r m e n t e o f c o u n t x i e a i n t h e r e g i o n a r e g i v i n g p r i o r i t y t o a r o p d i v e r - a i f i a a t i o n and t h e e x p o r t of n o n - t r a d i t i o n a l ctrogef d e s p i t e t h e problems i n v o l v e d , i n c l u d i n g low p o p u l a t i o n bases , l i m i t e d l a n d r e s o u r a e s a n d l i m i t e d e x p e r i e n c e w i t h CD/NTAE. The USAIWCaribbaan Regional o f f i c e ha8 p r e p a r e d a number of p r o j e c t s t o a s a i s t i n CD/NTAE. Some of t h e s e are d i s c u s s e d below.

B. Po l i ay -Re la ted Ieeuee

The major p o l i c y s h i f t i n r e c e n t y e a r s , a s augges ted , has been t h e vaxioura governments ' emphasis on c r o p d i v e r s i f i c a t i o n i n o r d e r t o r educe dependence upon one or two t r a d i t i o n a l c r o p s . T h i s s h i f t c o i n c i d e d w i t h t h e economic downturn i n t h e Late 1970s a n d e a r l y 1 9 8 0 ~ ~ and w i t h t h e emergence o f t h e Car ibbean Bas in I n i t i a t i v e * . Var ious r e s o u r c e s have been p rov ided to assist i n t h e new t h r u s t . These have i n c l u d e d inves tment promotion, t echno logy t r a n s f e r and i n c e n t i v e p o l i c i e e dos igned t o encourage CB/NTAE i n i t i a t i v e s .

Among t h e most s e r i o u s problems f a c e d is t h e h i g h c o s t , poor q u a l i t y and i n f r e q u e n t t r a n s p o r t a t ion from t h e r s ~ i a n . 9w.e of the islanda, w i t h a larga i nf lux o f t o u r i s t s , have c o n s i d e r a b l e a i r c a r g o t r a n s p o r t a v a i l a b l e . However, a s a matter of p o l i c y , bo th p r i v a t e and publ i r ; . c a r g o t a k e s second p l a c e t o t h e needs of t o u r i s t s . A s a r e s u l t , a i r c a r g o t r anspor t : t e n d s t o b e u n r e l i a b l e . The small amounts o f p r o d u c t a v a i l a b l e i n t h e v a r i o u s i s l a n d s a l s o makes it d i f f i c u l t t o assemble a t s i t e s where a d e q u a t e t r a n s p o r t i s a v a i l a b l e .

C. Trends i n N a n - T r a d i t i o n a l A g r i c u l t u r a l Expor t (NTAE)

There were ti0 d a t a on long-term t r e n d s i n NTAE. However, d a t a f o r 1985 show t h a t e x p o r t s from t h e c o u n t r i e s a s s i s t e d by A. I .D . wore around 45,000 m t ( T a b l e 21. Of t h e s e , St. Vincen t accoun ted f o r o v e r two- th i rds t h e to ta l amount. Ninety p e r c e n t o f t h e e x p o r t s remained w i t n i n t h e reg ion . Of t h a 1 0 p e r c e n t e x p o r t e d o u t s i d e t h e r e g i o n , 74 p e r c e n t went t o t h e U . K . Canada r e c e i v e d a b o u t 1 6 p e r c e n t and t h e U.S. a b o u t 1 0 p e r c e n t .

* See a l s o Appendix D, S e c t i o n V.

I V . B-2

T A B L E 2

CARIBBEAN REGIONt Non-Traditional Agricultural Exports, 1985

PRDWCT Antigua Barbados Dami~ica Grenada Montserrat St , K i t t ~ St . Lucia St . Vincent Total (Metric Tons)

Fruit: Avocados Bananas Citrus Golden Apples Mangoes Plantain Other

7 0 620 No exports No exports 3 0 880 1,600 700 1,160 of of 285 600 2,745

3,195 120 NTAE NTAE 80 180 3,575

Sub-Total 9 0 4,790 5,880 2,185 6,910 19,655 .

Root Crops Dasheen/Eddoes

Source: Cavid Jones & Associates, Market Development Programme fo r Non-Traditional Agricultural Products from the Countries of CARICOM. Prepared f o r EEC. (Middlesex, U.K., March 1988). --

D. A.I.D. P ro jec t s - Several USAID/C p r o j e c t s involve CD/NTAE but those now most d i r e c t l y r e l a t e d include t h e fcllowingr

PROJECT NUMBER

PROJECT TITLE DATE PACD A I D FUNDING - AUTH. Grant Loan

1. Caribbean Agr icul tura l Trading Co. (CATCO) (No. 538-0080)

This p r o j e c t e s s e n t i a l l y provided US$^. 0 mi l l ion i n working c a p i t a l t o CATCO t o enable it t o purchase and t r a d e i n nun- txadi t imals .

2. Investment Promotion and Export Development (No. 538-0119)

The goal of t h i s p r o j e c t is t o increase p r i v a t e s e c t o r productive employment i n t h e Eastern Caribbean LDCs, Barbados and Belize. The p r o j e c t ' s purpose i s t o i d e n t i f y and promote p r i v a t e investment i n productive, export-orient.ed businesses. To date , t h e p r o j e c t has f a c i l i t a t e d approximately 50 investments having n e t annual export earnings of ~ ~ $ 1 2 . 4 mi l l ion and employing approx- imately 2,800 people. Four of t h e investments were i d e n t i f i e d a s agro- i n d u s t r i a l .

3. High Impact Agr icul tura l Marketing and Production (HIACIP) ( N o . 538-0340 1

This p r o j e c t is complementa1,y t o t h e Investment Promotion and Export Develop- ment Project . Designed bas ica l ly t o support CD/NTAE i n t h e Eastern Caribbean, t h e s t a t e d purpose of t h e H I , W p r o j e c t is t o increase t h e cont r ibut ion of t h e a g r i c u l t u r a l s e c t o r and ag:cicultural e n t e r p r i s e s t o GDP by improving t h e investment environment, r e l i ev ing development cons t ra in t s t o p r i v a t e c a p i t a l inflows, and dem0nstratin.g a t t r a c t i v e r e t u r n s on c a p i t a l a t acceptable l e v e l s of inves to r r i s k . The p ro jec t has th ree components;

1. A quick response a c t i v i t y (QRA) f o r p r o j e c t s l e s s t h a n '~~$500 ,000 .

2. Major eub-pro j e c t a c t i v i t i e s t o complete t h e restructuri l ;g of a g r i c u l t u r e by d i r e c t involvement i n t h e major crop l i n e s and producer associa t ions . (This component, budgeted a t approximately ~ ~ $ 1 5 mi l l ion , has been segregated ou t of t h e o r i g i n a l p ro jec t . )

3. A core contract to provide integrated design, coordination and management services.

The project's major thrust today is in providing equity funding to NTAE projects through a trust, the Agricultural Venture Trust (AVT). AVT is assisted by Eastern Caribbean Agribusiness Development Company (ECAD) in the identification, write-up and negotiation of equity investment opportunities,

A review of HIAMP'S activities was undertaken in January, 1988. The review team commended the RDO/C "for developing an experimental project in a risk averse region that does not provide an apparently attractive climate for diversified non-traditional investment opportunities in the agricultural sector." The review' team made a number of recommendations for improving HIAMP'S performance and called for a new review in 1989.

11. MARKETING OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction - As discussed above, several A.I.D. projects promote NTAE. Only two of these relate to marketing; High Impact Agriculture Marketing and Production (HIAMP) and Caribbean Agri'cultural Trading Co. (CATCO) . A third project, West Indies Tropical Produce Support (TROPRO), will begin operating this year. Its goal is to "contribute to long-term economic growth through the expansion of non-traditional agricultural exports from the West Indies". The USAID Mission firmly believes in the development and diversification of non-traditional crops1 the

B.

-

TROPRO project is specifically designed to address this belief.

1. Production -- No significant provisions ..:ere made in either of the two existing projects for the transfer of production technology. The central HIAMP purpose is to find and assist agribusiness investors with solid projects. Business plans are formulated for and reviewed for approval by both A.I.D. and the Executive Director of the Agricultural Venture Trust (AVT). The AVT Board is comprised of professionals including lawyers and accountants. (It unfortunately lacks businessmen with agribusiness experience). It has taken from 9 to 12 months from project inceptions to AVT approvals. Once the project for equity investment has been approved, HIAMP monitors the project to help ensure its success and, if necessary, provides some short-term technical assistance.

Caribbean Agricultural Trading Co. (CATCO) exports and markets non-traditional products on behalf of producers of the West Indies region. It has on-site

IV. B-5

managers i n f i v e of t h e i s l a n d s t h a t can provide some ass i s t ance t o t h e producers*. This was not p a r t of CATCO's i n i t i a l object ive; however, t o export a q u a l i t y product, considerable technica l a s s i s t ance i s necessary i n production and pos tharves t handling. But CATCO has a l imi ted budget and can n o t adequately and e f f e c t i v e l y provide very much techno.logy t r ans fe r .

The evaluat ion team v i s i t e d a papaya grower who had 8 0 acres which he had taken out of sugar. He had been export ing f o r seve ra l months t o t h e U.K. through CATCO with considerable success. I t was noted t h a t he was rece iv ing t echn ica l a s s i s t ance from I I C A (Interamerican I n s t i t u t e f o r Cooperation on Agr icul ture) f o r t h e l a s t year and a h a l f . The producer s t a t e d t h a t I I C A e x p e r t i s e was ntcessary t o t h e p r o j e c t ' s survival. and success. This f u r t h e r confirmed t h e team's view t h a t A. I .D . should p lace a team of production exper ts on a long-term b a s i s t o work i n and t r a i n h o r t i c u l t u r i s t s i n t h e region.

2. Postharvest Handlina

The a rea of pos tharves t handling was .not an important i s s u e addressed i n t h e p r o j e c t s . CATCO has assumed most of t h e r e s p o n ~ i b i ~ i t y of providing pos t - ha rves t handling technica l a s s i s t ance t o its growers because of t h e need, t o obta in q u a l i t y products. However, a s noted e a r l i e r , t h i s a c t i v i t y has been l imi ted because of a lack of funds. Notably, t h e TROPRO p r o j e c t has a pos tharves t handling component t h a t should a l l e v i a t e CATCO's l i m i t a t i o n i n t h i s a rea .

In Barbados, CATCO's on-s i te manager oversees a packing house t h a t grades, packs and pre-cools seve ra l e thn ic products such a s bread f r u i t , red h o t pepper, yam and papaya. This on-si te manager a l s o v i s i t s farmers, provides boxes, coordinates shipments, i d e n t i f i e s new producers and provides t echn ica l guidance. Similar a c t i v i t i e s a r e c a r r i e d out by CATCO personnel on o ther i s l ands , but t h e p r o j e c t s t i l l needs long-term exper t i se .

Approximately 8 0 percent of t h e non-tradit ional crops from t h e region, such a s papaya, bread f r u i t , r ed ho t pepper and yams, a r e exported f o r t h e e t h n i c t r a d e i n England. The next major market i s Canada, with very l i t t l e being shipped t o t h e U.S. Two key reasons f o r t h i s a r e ( a ) U.K. a i r l i n e s give p r e f e r e n t i a l cargo p r i c e s f o r f r e s h produce out of t h e West Indies i n comparison t o p r i c e s f o r cargo t o t h e U.S./Canadat and ( b ) t h e r e is a b e t t e r market, including g rea te r demand and higher p r i c e s f o r t h e e thn ic products i n t h e U.K., a s w e l l a s a b e t t e r exchange r a t e .

* HIAMP a l s o has personnel on some of t h e i s l ands who have provided o r helped t o secure technica l ass is tance .

CATCO was involved i n a p i l o t cucumber p r o j e c t l a s t yea r t h a t was no t cont inued because of t h e l a c k of p roduc t ion technology. I t i s i n t e r e s t i n g t o no te , however, t h a t t h e c o s t of a box of cucumber landed i n s o u t h e a s t F l o r i d a was approximately $8.00, which was l e s s t h a n t h e c o s t of Honduras and F l o r i d a cuc~unber. Th i s was p r i m a r i l y due t o low ocean t r a n s p o r t a t i o n c o s t s . (There i s l i t t l e no r th bound ~ l r g o and t h e marine l i n e s a r e w i l l i n g t o s h i p a t lower r a t e s t o t r a n s p o r t any ca rgo . ) Producers /expor te rs i n t h e reg ion can t a k e good advantage of such lower t r a n s p o r t a t i o n c o s t s i f t h e y o b t a i n adequate p roduc t ion and p o s t h a r v e s t handl ing e x p e r t i s e t o gene ra t e i nc r ea sed produc t volumea.

Another reason f o r l i m i t e d expo r t s a l e s t o t h e U.S. i s t h a t t h e CARICOM c o u n t r i e s themselves , a re a market because of t h e l o c a l demand a s we l l a s demand from t h e t o u r i s t t r a d e . The l o c a l t o u r i s t markets a r e seen a s good o u t l e t s f o r producers because, i n a d d i t i o n t o p rox imi ty , t h e r e a r e few import r e s t r i c t i o n s as would be t h e c a s e i n t h e U.S., i nc lud ing FDA in spec t i ons , p e s t i c i d e r e s i d u e s i n spec t i ons o r p e s t i d e n t i f i c a t i o n .

CATCO p rov ides t h e fo l lowing s e r v i c e s f o r & f e e (10 p e r c e n t ) t o growersr (1) supply of seeds, equipment, boxes1 ( 2 ) a g r i c u l t u r a l t r a d e in format ion? ( 3 ) s a l e of p roduc t i n f o r e i g n market? (4) a r r ang ing t r a n s p o r t a t i o n ? and ( 5 ) where p o s s i b l e , t e c h n i c a l a s s i s t a n c e i n p roduc t ion and p o s t h a r v e s t handl ing technology.

CATCO has had i n t h e p a s t an i n e f f i c i e n t management team t h a t f a i l e d t o gene ra t e adequate cashflow. A s a r e s u l t , t h e Company has been unable t o repay its obLigat ion t o A . I . D . I n 1985, however, t h e board of CATCO accepted an EEC o f f e r t o p rov ide e x p a t r i a t e management th rough FINTRAC Consulting. The d i r e c t o r of CATCO has over 20 y e a r s of exper ience i n t h e expo r t of f r e s h produce an? has ex t ens ive c o n t a c t s i n t h e U.K. S ince t h e new management has t aken over , CATCO' s t r a d i n g and bus iness pe r f o m a n c e have improved s i g n i f i c a n t l y .

o In 1988, management s t a t i s t i c s i n d i c a t e d t h a t a smal l n e t p r o f i t of about ~ ~ $ 2 0 , 0 0 0 w i l l be achieved f o r t h e f i r s t time.

o The d i r e c t o r has implemented a marketing s t r a t e g y which has 4 main components;

Improvement i n t h e q u a l i t y and c o n t i n u i t y of non - t r ad i t i ona l c rops ( cons ide red t r a d i t i o n a l i n t h e West Ind i e s t yam, b r e a d f r u i t , g inger , eddoe) f o r expo r t t o e t h n i c markets.

Market promotion of o t h e r s o c a l l e d t r a d i t i o n a l / e t h n i c c rops such a s mangoes and pumpkin.

Development of smal l markets f o r non - t r ad i t i ona l c rops -- melons, papaya I cucumbe r.

Development of high va lue s p e c i a l i z e d n i che p roduc t s f o r f o r e i g n markets.

Based on i n t e rv i ews wi th t h e executival d i r e c t o r and t h e o n - s i t e manager i n Barbados, CATCO seems t o be prov id ing a good marketing o u t l e t f o r p roducers , S p e c i f i c a l l y , two of t h e growers in te rv iewed were very p l ea sed wi th CATCO1s s e r v i c e s and s a l e s performance. But because CATCO has found such a wide d i s p a r i t y between normal performance of Caribbean growers and t h e producers1 expec t a t i ons of buyers , a l l of CATCOvs t r a d i n g a c t i v i t i e s have t o be supported by developmental a s s i s t a n c e i n va r ious forms. This has absorbed CATCO re sou rce s a s t h e company has had t o a c t as a development e n t i t y i n o r d e r t o be a b l e t o s a t i s f y i t s t r a d i n g mandate. CATCO seems t o have t h e c a p a b i l i t y and s u f f i c i e n t t r a d i n g s k i l l s a s w e l l a s e x i s t i n g co re bus ine s s t o be s e l f - f i n a n c i n g as long a s i t s developmental a c t i v i t i e s a r e funded s e p a r a t e l y . The TROPRO p r o j e c t should work c l o s e l y wi th CATCO i n p rov id ing t e c h n i c a l a s s i s t a n c e t o growers' i n p roduc t ion and p o s t h a r v e s t handling. Added volume and produc t q u a l i t y w i l l a l s o even tua l l y h e l p CATCO t o expand i n t o new markets i nc lud ing t h e U.S.

111 PRODUCTION OF NON-TRADITIONAL AGRICULTIJRAL EXPORT CROPS

A. I n t r o d u c t i o n

For purposes of t h i s eva lua t i on t h e Eas te rn Caribbean r eg ion w i l l be t r e a t e d a s one e n t i t y , a l though it is recognized t h a t g r e a t d i v e r s i t i e s e x i s t between t h e i s l a n d s which compose t h e region. The i s l a n d s have had a somewhat t u r b u l e n t h i s t o r y of co lon i a l i sm and s l a v e r y which s t i l l has an impact on t h e i r a t t i t u d e toward a g r i c u l t u r e and r e l a t d d a c t i v i t i e s .

Because t h e y a r e d i s p e r s e d it cannot be s a i d t h a t t h e i s l a n d s have common c l imates1 however, each is in f luenced by t h e f a c t t h a t it i s surrounded by water. The i s l a n d s v phys iographic f e a t u r e s i n f l u e n c e t h e r a i n f a l l p a t t e r n which ranges from very w e t (50 t o 200 inches /year on Windward I s l a n d s ) t o d ry (30 t o 50 inches /year on Leeward I s l a n d s ) . Some of t h e i s l a n d s a r e of vo lcan ic o r i g i n wi th s t e e p , ragged h i l l s and young, e a s i l y e rodab l e soils gene ra l l y w i th h igh n a t i v e f e r t i l i t y . Others a r e developed from exposures of c o r a l r e e f s which then develop soi1.s which a r e h.Lghly ca l ca r eous , y e n e r a l l y shal low with low moisture holding capac i t y .

The i s l a n d s have vary ing popula t ion d e n s i t i e s ranging from about 300 persons p e r square m i l e on Dominica t o over 801.) persons p e r square mile on S t . Vincent. Because of t h e c o l o n i a l an,d s l a v e background, a g r i c u l t u r e is n o t a p r e s t i g i o u s p ro fe s s ion . Land ho ld ing o r owning is d e s i r o u s and g i v e s t h e people a s ense of s e c u r i t y a l though most w i l l work o f f t h e farm i f g iven a choice. This cou ld have nega t i ve i m p l i c a t i o n s f o r any p r o s p e c t s of s i g n i f i c a n t i n c r e a s e i n non - t r ad i t i ona l c rops e x p o r t s from t h e a r e a .

The t o t a l l and a r e a of t h e i s l a n d s on ly amounts t o about 3500 square k i l ome te r s and, because of rough topography, on ly about one- th i rd o f k h e i r c o l l e c t i v e a r e a can be cons idered farmable* Farms a r e small s o a g r i c u l t u r e is

genera l ly a small farm, fanuly typo operat ion. A s s t a t e d , people a r e re1,mtant t o work i n a g r i c u l t u r e unless they own t h e land. Production, genexally, is of the t r a d i t i o n a l food type crops, most of which a r e consumed l o c a l l y . Advanced methods of production a r e sca rce ly used.

Because of the t o u r i s t indus t ry , most of t h e i s l a n d s have a reasonably well developed road system connecting various p a r t s of each country. However, farm-to-market roads a r e l imi ted and in te r - i s l and t r anspor ta t ion is incons i s t en t a s is island-to-market t ranspor ta t ion .

Agriculture production i n t h e region is l imi ted i n p a r t by lack of na tu ra l resources. S o i l s s u i t a b l e f o r production, and water f o r i r r i g a t i o n a r e no t abundant. Because of ' t h e s i z e s of oach of t h e i s l a n d s the re is i n s u f f i c i e n t incent ive o r regional absorpt ive capacity f o r investment. Also, o v e r a l l productl.on output is s o small t h a t the region has r e l a t i v e l y L i t t l e inf luence on ou t s ide markets. A t t h e same tima, c l ima t i c f a c t o r s (0 .g ." hurricanes) can wipe out t h e e n t i r e a g r i c u l t u r a l sec tor . There i s not s u f f i c i e n t s i z e f o r any spreading of r i s k s .

B. Technolow Transfer? Research

From an h i s t o r i s a l s tandpoint , a s might be expected, t h e r eg ion ' s a g r i c u l t u r a l research programs have not been supportive of CDl'NTAE. Apart from t h e f a c t t h a t t h e region has focused pr imar i ly on t r a d i t i o n a l a g r i c u l t u r a l food crops and commodity exports , i ts o v e r a l l research c a p a b i l i t y has been l imi ted due t o inadequate budgetary provisions, p a r t i c u l a r l y at: t h e Min i s t r i e s of Agricul- tu re . On t h e o the r hand, t h e regional Caribbean Research and Development I n s t i t u t e ( C A R D I ) through i t s Fanning Systems Research and Development

I Projec t , which is supported and funded by A.I. D., has reached farmers i n t h e i s l a n d s with p r a c t i c a l a s s i s t ance . This inc ludes t r a i n i n g i n on-farm t r i a l s . This is c r i t i c a l , because f o r CD/NTAE i n i t i a t i v e s t o succeed over t h e long-term, ongoing adaptive research must be conducted i n a number of a reas including seed and vdr ie ty se lec t ion , water management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use, mechanization, and labor management. These a r e a s a r e discussed below.

1. Seed and Variety Selec t ion

For both new non- t radi t ional export crops and f o r t r ~ d i t i o n a l o r "ethnic" NTXs -- which c o n s t i t u t e t h e bulk of t h e region 's non-tradit ional expor ts -- producers should be conducting on-farm t r i a l s with d i f f e r e n t seeds and v a r i e t i e s . A.I .D. p r o j e c t s should probably include more emphasis on t h e t r a n s f e r of t r i a l methodologies i n t h i s respect . This w i l l mean b e t t e r

I l inkage between t h e CARD1 and CAEP Projec ts (See a l s o below.) An advantage i n t h e region is t h a t farmers a l ready know many of t h e "ethnic" crops w e l l and need only l ea rn proper methods of t r i a l conduct, a n a l y s i s and report ing.

2. Water Management

To some e x t e n t , producers of CD/NTAE cannot avoid t h e conduct of water management "research1' . Threshholds of " too much" o r " t oo l i t t l e " a r e u s u a l l y ea sy t o d e f i n e an6 i d e n t i f y f o r most crops. But f o r high-value CD/NTAEs, f a i l i n g to d e f i n e and ach ieve t h e " j u s t r i g h t " l e v e l of wate r i npu t can r e s u l t i n a s i g n i f i c a n t oppor tun i ty c o s t through reduced y i e l d s and diminished produc t q u a l i t y . Some mechanical i r r i g a t i o n i s a c t u a l l y be ing done on most of t h e i s l a n d s , bu t water management i nc ludes proper use of r a i n f a l l through a p p r o p r i a t e l a n d p repa ra t i on . E f f i c i e n t d i scovery of t h e proper l e v e l s of water i n p u t a r e o f t e n b e s t accomplished through s e t - a s i d e water management and l and p r e p a r a t i o n t r i a l s . I n t h i s way, t imely answers can be found t o q u e s t i o n s such a s when t o i r r i g a t e , what t ype ( s) of i r r i g a t i o n and l and forming t o user what d e l i v e r y r a t e s t o u s e l how t o manage exces s watery how t o manage t h e s o i l / w a t e r r e l a t i o n s h i p , and what t h e c o s t of i r r i g a t i o n should be. A.I .D. p r o j e c t s should focus on t h e s e i s s u e s i n a sy s t ema t i c f a sh ion s o t h a t f a rmer s a r e no t l i m i t e d t o an aa hoc approach a s t h e y have o f t e n been t o -- da t e . This probably means t h e f i e l d i n g of long-term t e c h n i c a l a s s i s t a n c e teams.

3. F e r t i l i z e r and A g r i c u l t u r a l Chemicals U s e

Non- t rad i t iona l c rops r e q u i r e p rope r f e r t i l i t y c o n d i t i o n s and p e s t and d i s e a s e c o n t r o l t o ach i eve and s u s t a i n marketable y i e l d s . F e r t i l i z e r , p e s t i c i d e and o t h e r i n p u t s are expensive and consequent ly must be used e f f i c i e n t l y . S o i l and o t h e r cond i t i ons i n t h e E a s t e r n Caribbean reg ion a r e d i f f e r e n t from t h o s e of t h e U.S. and a p p l i c a t i o n of t h e s e i n p u t s t h a t is a p p r o p r i a t e f o r t h e U.S. may n o t b e t h e most s u i t a b l e f o r t h e r eg ion f o r any g iven crop. A t t h e o u t s e t , it is reasonable t o u se an imported technology package, bu t i n t i m e , e s p e c i a l l y cons ide r ing t h a t many of t h e r e g i o n ' s NTAF: c r o p s a r e a c t u a l l y n a t i v e , wi thout p roper adap t ive r e s e a r c h t o r e f i n e such packages, c r i t i c a l q u e s t i o n s w i l l go unanswered. These i nc lude c o r r e c t r a t e s of a p p l i c a t i o n , methods of a p p l i c a t i o n , t iming , f e r t i l i t y / w a t e r r e l a t i o n s h i p s , and environmental e f f e c t s rang ing from immediate impact on f i e l d worke r s t o contaminat ion of water. S a t i s f a c t o r y answers t o t h e s e ques t i ons aad t o t h e c e n t r a l i s s u e -- how t o ach ieve optimum CD/NTPLE y i e l d s -- r e q u i r e f r e q u e n t t e s t i n g of s o i l s and water -- t e s t i n g t h a t should be done on a con t inu ing b a s i s and under t h e supe rv i s ion of long-term t e c h n i c a l suppo r t programs.

4. Mechanization

Non- t rad i t iona l expor t c rop produc t ion is h igh ly t ime - sens i t i ve . Cost- e f f i c i e n t mechanization is o f t e n t h e b e s t response t o such t i m e s e n s i t i v i t y and t o p o t e n t i a l l a b o r sho r t ages o r o t h e r shortcomings. For most non- t r a d i t i o n a l e x p o r t c rops and f o r most fa rmers i n t h e r eg ion , t h i s does n o t have t o imply ownership of a t r a c t o r o r o t h e r b i g t i c k e t item. In s t ead , it means a c c e s s t o and u s e of proven, c o s t e f f i c i e n t mechanical a i d s f o r one o r more of t h e key t a s k s of t i l l a g e and l a n d p repa ra t i on , c u l t i v a t i o n , ha rvs s t - i ng , and f e r t i l i z e r and chemicals a p p l i c a t i o n . Again, a s f a r as t h e team could de te rmine r e sea rch i n t h i s a r e a has n o t been adequate o r c o n s i s t e n t .

I V . B-10

5. Labor Manaaemont

Demand f o r labor i n non- t radi t ional a g r i c u l t u r e w i l l coincide w i t h demand from t h s r eg ion ' s tourism indus t ry a s well a s manufacturing. A . I . D . should include i n i t s CD/NTA\E p r o j e c t s a provision f o r labor management "research", t h a t is , a n t i c i p a t i o n of labor demand and a plan t o accommodate such demand.

C. Technology Transfer8 Extension

Technology t r a n s f e r , through extension, has not been s t rong i n t h e region and has t h u s cont r ibuted t o r e l a t i v e l y low product i v i t y i n non- t radi t ional export crop production. ~ u t the re a r e extension and extension t r a i n i n g a c t i v i t i e s underway with sponsorship from CARDI, UWI, and CARDATS/CARDI t h a t have made some progress. The primary A. I. D. -sponsored p r o j e c t i n extension, t h e Caribbean Agr icu l tu ra l Extension Pro jec t (CAEP) Phase I1 has begun t o show s igns of success, reaching e x t e n s i o n i s t s and farmers w i t h t r a i n i n g i n t h e conduct of on-farm t r i a l s . E f f o r t s i n t h i s a r e a ought t o be continued. (The

- p r o j e c t ' s PACD i s now 6/30/89. I t should probably be extended f o r a t l e a s t two t o t h r e e yea r s beyond t h a t da te . ) E f f o r t s must a l s o be made t o ensure l inkage between such extension programs and t h e research work being done by CARDI i n t h e region.

D. Land U s e

Increased production of non- t radi t ional crops w i l l r equ i re more e f f i c i e n t use of ava i l ab le land. Land resources s u i t a b l e f o r farming NTAE crops a r e l imi t ed i n t h e i s l a n d s and t h e r e f o r e r equ i re s p e c i a l a t t e n t i o n s o a s t o avoid problems common t o CD/NTAE production. These problems, which p e r t a i n t o cropping on even t h e most appropr ia te lands f o r non- t radi t ionals , include monoculture, inadequate s o i l and water conservat ion and improper use of f e r t i l i z e r and a g r i c u l t u r a l chemicals.

1. Monoculture

In t h e i r i n t e r e s t i n obtaining maximum b e n e f i t from non- t radi t ional export crops, t h e r eg ion ' s farmers may tend t o use a monoculture cropping system, r ep lan t ing t h e i r crops success ive ly on t h e same p l o t of land. This can e a s i l y upse t previous ly balanced ecologica l systems with r e s u l t i n g increments i n weeds, p e s t s and disease. The c o s t s t o e l imina te these problems and t o achieve renewed balance can be very hj-gh and can eventual ly minimize r a t h e r than maximize b e n e f i t s from t h e new crops. Cer ta in techniques can f a c i l i t a t e m o n o ~ u l t u r i n g ~ but t h e s e techniques a r e very expensive. The besz a l t e r n a t i v e is crop r o t a t i o n , which tends t o v.psqt t h e l i f e cycles of p e s t s and d isease while still keeping land productive. In t h e short-run, t h i s may not be a s p r o f i t a b l e a s monoculturing, but over time it w i l l i nva r i ab ly be a more p r o f i t a b l e approach t o land use.

I V . B-11

2. S o i l and Water Consarvation

The s o i l s on i s l a n d s which haire developed from volcanic ac,tion a r e most vulnerable t o eros ion because of s o i l phys ica l a s well as topographical f ac to r s . Proper p rac t i ces , including t e r r a c i n g and o ther land forming need t o be employed so a s nut t o incur deplet ion.

The l e v e l s of water resources vary betweerl the Leeward and Windward I s l ands , but whether t h e problem is water deficiency o r excess, t h e farmer must achieve a f f i c i e n t use of t h i s resource so a:, not t o misuse t h e land. E'ailures i n proper s o i l o r water conservation might a l s o have d i r e consequences f o r t h e t o u r i s t indus t ry i f , . f o r example, contaminated so11 runoffs were t o reach c o r a l r e e f s and beaches.

3. I m ~ r o ~ e r U s e of F a r t i l i z e r s and Chemicals

In tens ive cropping usual ly means in tens ive chemical and f e r t i l i z e r use. Chemical runoff t o streams i s not only cos t ly i n terms of chemicals l o s t , but can be hazardous t o people and animals who may dr ink from tho streams. Chemical d r i f t from in tens ive crop production can a l s o in t rude i n t o populated a reas o r areas where o the r t r a d i t i o n a l food s t u f f s a r e produced. Unless proper techniques a r e taught t o growers and then monitored, t h e r e is a d i s t i n c t p o s s i b i l i t y of c o n f l i c t between crop production, proper land use and environmental preservat ion ,

E. Support Services

Essen t i a l support s e r v i c e s r e l a t e d t o a g r i c u l t u r a l inpu t supply a r e i n p lace i n t h e region. Distances from farms t o supply c e n t e r s w e not g r e a t and road connections a r e adequate a s a r e supply t r anspor t f a c i l i t i e s . Support s e r v i c e s r e l a t e d t o pos tharves t handling -- such a s pre-cooling, packing and cold s torage -- a r e not genera l ly ava i l ab le except under s p e c i a l arrangements. A t p resent l e v e l s of output t h i s is not a problem, but A. I .D . should a s s i s t i n a n t i c i p a t i n g f u t u r e needs, perhaps i n developing new low-cost i n f r a s t r u c t u r e designs and'means t o encourage t h e establishment of pre-cooling, packing and s torage se rv ice en te rp r i ses .

11 IV. ENVIRONMENTAL IMPACT FROM CROP DIVBRSIFICATION AND NON-TRADITIONAL - AGRICULTUW EXPORT

There a r e a number of e n t e r p r i s e s cu r ren t ly being considered f o r funding under t h e HIAMP p r o j e c t and which typ i fy t h e kifids of p r o j e c t s which a r e being proposed. A b r i e f desc r ip t ion of some of these a r e presented below, followed by a discussion of environment-related i ssues .

o Dominica -- Windward Is lands Aloe Ltd.1 This company i s engaged i n growing, processing and merchandizing a loe Vera g e l f o r export. Equity investment w i l l allow expansion of acreage i n a loe Vera and t h e construct ion of an a l o e processing p lant .

Barba.dos -- Cherry-Bim Agro Indus t r i e s Ltd. r This is n new company which manayes a cherry orchard p lanted i n 1984 aKd 1986. Funds w i l l be used t o double present p lant ing dens i ty , i n s t a l l a well and t r i c k l e f e r t i g a t i o n siyotem, and purchase o ther farm equipment and supplies .

Dominica -- Corona Development L h i t e d r This company operates a passion --- - f ru i t , pulp ex t rac t ion fac tory . Requested funds a r e t o be used t o expand pulp production, add capaci ty t o produce juice a s well, and buy add i t iona l f ac to ry equipment and vehicles.

St. Vincent -- Organization f o r Rural Development r This organizat ion comprises number of p a r t i c i p a t i n g f a r n ~ e r s who produce vegetables and roo t crops f o r export. Equity funds w i l l be used f o r t h e construct ion and opera t ion of a packing shed/agrochemical s torage and s a l e s depot, and f o r t r a i n i n g personnel i n vegetable grading and packing operat ions.

S t . Lucia -- Windward Is land Tropical8 Ltd.8 This f i rm operates an ornamental plar,t nursery which expor ts pot ted t r o p i c a l p lants . Equity investment w i l l allow expansion t o an add i t iona l 20 ac res and i n e t a l l a t i o n of i r r i g a t i o n and o ther equipment.

some s t age i n t h e investment approval process, proposed p ro jec t s a r e subjected t o an environmental review t o ensure compliance with USAID environmental regulat ions. For t h i s review, an I n i t i a l Environmental

"I Examination ( I E E ) was prepared f o r each of t h e f i v e p r o j e c t s j u s t described. Four of t h e f i v e SEE'S were not approved by t h e Agency's Chief Environmental Off icer f o r La t in America and t h e Caribbean ( i n Washington, D.C.) because they d i d not s a t i s f y USAID regu la t ions on p e s t i c i d e use. The r e j e c t i o n of these IEE's, while demonstrating t h a t Agency procedures f o r reviewing t h e p o t e n t i a l adverse environmental impact of USAID-funded p r o j e c t s funct ion w e l l , a l s o i n d i c a t e s that: t h e i n i t i a l review process rmeds t o be strengthened.

The p r i n c i p a l objec t ive of the HIAMP p r o j e c t ' i s t o achieve an increase i n t h e exportat ion o:E non-tradit ional produce from t h e region. Pa r t i c ipa t ion i n t h e p ro jec t by p r i v a t e sec to r f i rms from severa l Caribbean coun t r i e s is an expression of t h e d e s i r e i n t h e region f o r s u b s t i t u t i n g l o c a l l y grown f o r imported foods a s w e l l a s f o r producing crops f o r export . Despite c u l t u r a l and p o l i t i c a l d i f ferences , widespread i n t e r e s t i n t h e region i n developing a common plan f o r sus ta ined economic development r e su l t ed i n adoption of t h e Caribbean Action Plan i n 1981. This agreement c o m i t s p a r t i c i p a t i n g s t a t e s and t e r r i t o r i e s t o a p lan f o r the p ro tec t ion and development of t h e marine and c o a s t a l resources of t h e wider Caribbean region. The Plan s t r e s s e s protec t ion of t h e n a t u r a l environment a s a p r i n c i p a l objec t ive while it a s s i s t s t h e i s l a n d na t ions of t h e Caribbean i n p u r s u i t of programs t h a t r e s u l t i n sus ta ined economic development.

I V . B-13

This r e g i o n a l i n i t i a t i v e f ~ r m e d a btrckdrop f o r tho USAID mooting of r eg iona l e x p e r t s i n Bridgetown Barbados on Auclust 5, 1908 which was he ld t o d i s c u s s key environmental i s su t l s i n t h e Caribbean. Among t h o t o p i c s d i scussed were t h e problems a s s o c i a t e d wi th t h e degrada t ion of c o a s t a l zones, t h e uncont ro l led use of p e s t i c i d e s , t h e dep le t i on of t r o p i c a l f o r e s t s and t h e management oL f i s h e r i e s r e soumea . Up t o t h e p r e s m t , t h e United S t a t e s has no t con t r ibu t ed t o t h e T r u s t Fund which suppor t s tk,e Caribbean Environment Programme and hau no t made a s i g n i f i c a n t con t r ibu t ion t o s p e c i f i c p r o j e c t s of t h e Action Plan. However, through implementation of t h e HIAMP and o t h e r p r o j e c t s , USAID has t h o oppor tun i ty t o mobi l ize a v a i l a b l e s c i e n t i f i c and t e c h n i c a l e x p e r t i s e to f u r t h e r economic development i n t h e reg ion i n a manner t h a t is compatible with environmental o b j e c t i v e s and sound resource management. To t h i s end, HIAMP personnel should be adequately b r i e f e d on t h e key environmental i s s u e s f o r t h e

A d i f f e r e n t t y p e s of p r o j e c t s t o be funded. They should a l s o be provided with

"check l i s t s " t o he lp ensure p r o j e c t compa t ib i l i t y with environmental ob j ec t i ves .

A. A.1.D.-Authorized Primary F a c i l i t i e s Avai lable f o r CD/NTAE

The c e n t e r p i e c e of A . I . D . ' s f i nanc ing e f f o r t f o r CD/NTAE i n t h e Eas te rn Caribbean (Caribbean Regional) has been t h e High Impact Agr i cu l tu re Marketing and Product ion p r o j e c t (HIAMP, 538-0140 ) . The equ i ty investment component of t h i s grant-funded p r o j e c t was au tho r i zed a t ~ ~ $ 2 5 . 2 mi l l i on .

The p r o j e c t is unique i n two r e spec t s ; F i r s t , i ts t h r u s t , no t observed i n any o t h e r A. I .D . p r o j e c t surveyed i n t h i s r e p o r t , is t h e p rov i s ion of e q u i t y f i nance p r i m a r i l y through d i r e c t investment . Second, of t h e approximately ~ ~ $ 2 1 . 0 m i l l i o n i n au tho r i zed p r o j e c t funding, n e t of contingency and s p e c i a l s tudy items, ~ ~ $ 1 2 . 0 m i l l i o n a r e f o r e q u i t y investment while ~ ~ $ 9 . 0 m i l l i o n a r e f o r p r o j e c t implementation and admin i s t r a t i on . (Th i s r a t i o of one d o l l a r i n implementation/aJministration expense f o r every d o l l a r and t h i r t y t h r e e c e n t s i n d i r e c t sub-project investment, i . e . , .75x, is e a s i l y t h e h i g h e s t such r a t i o encountered i n t h e c ros s - cu t t i ng eva lua t ion . )

Other A.1 . D .-sponsored f inanc ing sources f o r CD/NTAE inc lude a US$^. 0 m i l l i o n a g r i c u l t u r e component of a ~ ~ $ 1 4 . 3 m i l l i o n loan t o t h e Caribbean F inanc i a l Se rv i ce s Corporat ion (CFSC) and a U ~ b 1 . 3 m i l l i o n loan t o t h e Caribbean Agr i cu l tu ra l Trading Company (CATCO). The CFSC loan was made f o r t h e purpose of on-lending t o a g r i c u l t u r a l and a g r i c u l t u r a l expor t bus ines se s i n t h e region. The CATCO loan was made t o he lp CATCO e s t a b l i s h a commercially s u s t a i n a b l e t r a d e i n NTAE from t h e reg ion .

I n a d d i t i o r t o t h e HIAMP, CFSC and CATCO f a c i l i t i e s , A.I .D. has provided c r e d i t components w i t h i n many of its a g r i c u l t u r e - r e l a t e d p r o j e c t s i n t h e region. Cred i t and f inance were no t t h e p r i n c i p a l focus, however, o f t h e s e p r o j e c t s . A f u r t h e r a c t i v i t y , t h e Small En te rp r i s e Ass i s tance p r o j e c t

(538-0133) has provided some loan c a p i t a l t o very small agribueiness procemor s.

A.I .D. and o ther records show the following disbursement l e v e l s f o r t h e HIAMP,

-n CFSC and CATCU p r o j e c t investmentsi

FACILITY ". AMGUNT --- H I A M P Equity Investments ~ ~ $ 1 . 2 mi l l ion CFSC Loan Disbursements t o Agribusinesses US$^. 2 mi l l ion CATCO U t i l i z a t i o n of A.I .D. Loan ~ ~ 8 1 . 0 mill.ion -

Tota l U~$3.4 mi l l ion

Thus, out of a t o t a l of U~b16.3 mi l l ion f o r p r o j e c t loan and investment f inancing i n CD/NTAE, roughly 22 percent has been placed t o date. (Noter - HIAMP was authorized i n 1986, with an o r i g i n a l PACD of July 19911 t h e CFSC loan was authorized i n 1985 with a f i n a l drawdown deadline of December 31,

= 1 9 8 9 ~ t h e CATCO f a c i l i t y was authorized i n 1982 with a PACD of September 30, 1988. )

2. The Placement Process

Disbursement of t h e HIAMP and CFSC f a c i l i t i e s has been very slow. The CATCO f a c i l i t y disbursement was s a t i s f a c t o r i l y completed, but CATCO is unable t o repay t h e loan on o r i g i n a l terms.

HIAMP'S slow execution r e f l e c t s A.1.D.-originated problems i n design and management together with problems t h a t a ro fundamental t o most equi ty f inance

rn undertakings but perhaps t h e more s o i n t h e Eastern Caribbean.

A s r e l a t e s t o A.1.D.-originated design problems t h a t have caused delays, it appears t h a t t h e e a r l y - and t o some ex ten t continuing - focus on a t t r a c t i n g fore ign equity pa r tne r s has been nonproductive. A s one fnterviewee succ inc t ly s t a t e d s "Foreign inves to r s t h a t might have an i n t e r e s t i n what probably would be a small agr ibus iness investment i n any case, would more l i k e l y inves t i n a farm o r processing f a c i l i t y a t home than i n t h e Eastern Caribbean." A f u r t h e r design problem seems t o have been t h e l a rge complement of people and overhead& o r i g i n a l l y deemed necessary t o implement and aitni.,?ister t h e p ro jec t . (See r a t i o above. This has l e d t o "second-guessing" and "layering" i n t h e equi ty investment appra i sa l and approval processes. On t h e management s i t e , a number of ~n te rv iewees indica ted than A.I. D. a c t u a l l y "micro-managed" t h e prcrject f o r nea r ly one year while o the r implementing i n s t i t u t i o n s , such a s t h e Eastern Caribbean Agribusiness Development Corporation (ECAD) and t h e Agr icul tura l

Venture T r u s t (AVIP) woro o f t e n t r y i n g t o perform t h e same t a s k s . Au tho r i t i e s , a c c o u n t a b i l i t y and f u ~ l c t i o n a l i t y became b lu r r ed and o v e r a l l performance wa,a hobbled t o t h e p o i n t thai: t h e p r o j e c t eventually l o s t and/or r e ~ l e a s a d personne l and i t s managoment was movod o u t of t h e USAID a y r i c u l t u r a l o f f i c e . ( I t was t h e team's unders tanding t h a t i n e a r l y 1989 a d e a i s i o n w i l l be made t o e i t h e r r e t u r n t h e p r o j e c t from t h e P r o j e c t Development Off ica t o t h e Agr i cu l t u r e Of f i ce o r p l a c e it i n s t e a d under t h e P r i v a t a Sec to r O f f i c e . )

The d i f f i c u l t i e s de sc r ibed above f u r t h e r complicated khe need t o r e s o l v e problems fundamental t o t h e execut ion of any e q u i t y f i nance undertaking. On t h e side of p o t e n t i a l p a r t n e r s , t h e key problem is i n v a r i a b l y concern over t h e u l t i m a t e f a i r n e s s a n d . f u t u r e i m p l i c a t i o n s of proposed terns and cond i t i ons f o r t h e e q u i t y investment. Often, e s p e c i a l l y i n t h e E a s t a w Caribbean, p r i n c i p a l s a r e very a v e r s e t o "shar ing" ownership i n a s s e t s W ~ ~ C I A they have acqui red o r i n h e r i t e d , p a r t i c u l a r l y land. On t h e o t h e r s i d e of t h e n e g o t i a t i o n s f o r e q u i t y -- i n t h i s case t h e ECAD/AVT/ALD s i d e -- t h e r e is a l s o concern t h a t t h e "dea l s" be done proper ly . This o f t e n can l e a d t9 exces s ive a n a l y s i s , documentation and complexity t h a t e v e n t u a l l y s c a r e o f f t h e p o t e n t i a l parzner . To remedy t h i s s i t u a t i o n it i s obvious t h a t n e g o t i a t i o n s f o r t h e p r o j a c t must en joy adequa te l e v e l s of a u t h o r i t y combined wi th a c c o u n t a b i l i t y and t h a t , most impor tan t , t h e u l t i m a t e c r e d i t committee -- i n t h i s c a s e t h e AVT t r u e t e e s -- must view t h e i r approval r o l e a s one of judging o v e r a l l e l i g i b i l i t y and n o t t e c h n i c a l f e a s i b i l i t y . Fu r the r , on t h e ECAD/AVT/AXD s i d e , p a r t i e s must recognize t h a t whi le a c e r t a i n percen tage of t h e i r e q u i t y d e a l s w i l l r e s u l t i n l o s s e s , t h e i r o b j e c t i v e must n o t be t o avoid l o s s e s buk r a t h e r t o ach ieve o v e r a l l ga ins . None of t h e s e c o n d i t i o n s has been present: i n t h e H U M P p r o j e c t . And whi le o t h e r c o n s t r a i n t s such a s s t a r t - u p s t a f f i n g , l e g a l frameworking i n d i f f e r e n t c o u n t r i e s , e t c . , could n o t have been avoided and had t o consume va luab l e time, t h e r e is evidence t h a t even more time has been consumed i n t h i s p r o j e c t by t h e unnecessary a c t i o n s and/or i n a c t i o n s sugges ted above. A no t ab l e measure of t h e problem is t h e f a c t t h a t whi le some f i f t y under tak ings have a t l e a s t reached t h e s t a g e of p r e l im ina ry review, on ly f i v e d e a l s have been c lo sed , one of which w i l l probably r e v e r t through a s h a r e buy-back i n t h e near fu tu r e .

A d i f f i c u l t y which could no t be adequa te ly explored, bu t which does seem t o f a c t o r i n t o slowness i n ach iev ing e q u i t y investment i n t h e Eas t e rn Caribbean, concerns a c u l t u r a l b i a s . A s exp la ined by one inverviewee, people i n t h e r e l a t i v e l y sma l l Eas t e rn Caribbean i s l a n d communities a r e commonly and u n f a i r l y judged and "branded1' by mi s t akes o r f a i l i n g s . Second chances a r e r a r e . A s a consequence, p o t e n t i a l e q u i t y p a r t n e r s and even ECAD/AVT personne l can unders tandably be expected t o h e s i t a t e and overanalyze a j o i n t ven ture be fo re making any dec i s ion .

HIMAPgs p a s t performance i n no way i n v a l i d a t e s t h e no t i on t h a t e q u i t y f inance , may be a p rope r r o u t e t o he lp ing ach ieve CD/NTAE i n t h e Eas t e rn Caribbean. The r eg ion has enjoyed ample s u p p l i e s of l oan c a p i t a l b u t most banks have been t o o r i sk - ave r se t o cons ide r CD/NTAE ventures . S t i l l , t h e r e are a s i g n i f i c a n t number of p o t e n t i a l l y v i a b l e p r o j e c t s - many a l r eady i d e n t i f i e d by HIAMP - t h a t a r e n o t going forward on ly because of l a c k of f inance . HIAMP, a f t e r s t r e a m l i n i n g its a p p r a i s a l and n e g o t i a t i o n process , should be a b l e t o h e l p launch t h e s e p r o j e c t s .

The CFSC on-landing p roces s f o r agrLcuLtura1 p r o j e c t s has a l s o been slow. The company's Managing D i r ec to r indicates t h a t a g r i b u s i n e s s ven tu re s a r e very r i s k y , t h a t v i a b l e p r o j e c t s a r e d i f f i c u l t t o f i n d , and t h a t i t ; has t aken nea r ly t h r e e y e a r s t o accomplish t h e f i v e a g r i c u l t u r e l o a n s made by CFSC t o d a t e w i t h A . I . D . funds. On t h e o t h e r hand, i n reviewing CFSC a p p r a i s a l and approva l p rocedures , it was l e a r n e d t h a t t h e company's approach is q u i t e s i m p l i f i e d f i ts formal c r e d i t p r e s e n t a t i o n s f o r Board approva l c o n s i s t on ly of 3-page proposa l s . (The AVT Executive Di r ec to r i n d i c a t e d t h a t hu is hopeful of reducing c u r r e n t documentation and ach iev ing a 10-page format f o r T rus t ee reviews and approvals!)

The CATCO p r o j e c t has ' f a l l e n f a r s h o r t of c a sh f low p r o j e c t i o n s and i s unable t o s e r v i c e its loan o b l i g a t i o n t o A . I . D . Over t h e last yea r , however, CATCO has shown s u b s t a n t i a l improvements. I n o rde r t h a t t h e s e improvements -- measured i n terms of i nc r ea sed expo r t volumes and a c c e p t a b l e g r o s s margins -- con t inue , A . I . D . w i l l have t n p rov ide a d d i t i o n a l suppor t t o CATCO o r induce t h e CARICOM c o u n t r i e s and p r i v a t e s e c t o r CATCO s tockho lde r s t o a s s i s t t h e company wi th i t s d e b t s e r v i c e . Th i s a s s i s t a n c e i s impo~%ant because CATCO has, i n d i r e c t l y , become an e f f e c t i v e development Lender th rough i t s dea l i ngs wi th and advances t o growers throughout t h e region, much a s r e c e i v e r s / t r a d e r s i n t h e NTAE i n d u s t r y a t l a r g e have been "bankers" t o growers.

C. Other Financing f o r CD/NTAE

S i g n i f i c a n t c r o p d i v e r s i f i c a t i o n e f f o r t s have been o r a r e be ing c a r r i e d o u t by t h e Caribbean Development Bank (CDB) , i nc lud ing a model farming p ro j eck i n S t . Lucia and a l a n d r e s e t t l e m e n t scheme i n S t . Vincent. CDB i s a l s o working w i th t h e I I C A on c r o p d i v e r s i f i c a t i o n p r o j e c t s i n most of t h e i s l a n d s , y e t wi.tllout s p e c i f i c c r e d i t l i n e s f o r NTAE.

The IDB ha s had i n p l a c e s i n c e 1981 a U ~ $ 2 . 0 m i l l i o n non - t r ad i t i ona l expo r t r ed i s coun t f a c i l i t y . The f a c i l i t y ha s been " turned" f o u r times t o d a t e , b u t of t h e US$& 0 m i l l i o n i n f i nanc ing , on ly a smal l p o r t i o n has r e p g r t e d l y been f o r non - t r ad i t i ona l a g r i c u l t u r a l expor t . T o t a l l i n e u t i l i z a t i o n a t p r e s e n t is on ly about ~ ~ $ 2 0 0 , 0 0 0 .

LAAD ( L a t i n American Agribusiness Development Corpo ra t i on ) , which has a l s o had d i f f i c u l t y i n f i n d i n g bankable p r o j e c t s i n t h e reg ion , c u r r e n t l y ho lds a ~ ~ $ 7 0 0 , 0 0 0 p o r t f o l i o i nc lud ing p r i m a r i l y NTAE f i n a n c i n g s f o r an e t h n i c f r e s h produc ts e x p o r t e r and f o r a grower-exporter o f a l o e produc ts .

C O S T A R I C A

T a b l e of C o n t e n t 8

I* MACROECONOMIC, PROJECT AND INSTITUTIONAL SETTINGS

A. R e c e n t H L s t o q y B. P o l i c y - R e l a t e d Issues C. T r e n d s i n N o n - # T r a d i t i o n a l A g r i c u l t u r a l E x p o r t (NTAE) D. A.I.D. P r o j e c t s and Key I n s t i t c t i o n s

11. MARKETING OF NON-TRADITIONAL AGRXCULTURAL EXPORT CROPS

A. Introduction B. A v a i l a b i l i t y , Volume, Qual i ty and C o n t i n u i t y of Non-

T r a d i t i o n a l A g r i c u l t u r a l E x p o r t C r o p s 1. P r o d u c t i o n 2 . P o s t h a r v e s t H a n d l i n g 3. T r a n s p o r t a t i o n 4 . I m p o r t P r o c e d u r e s 5. M a r k e t Information and M a r k e t L i n k a g e

C. L i n k a g e B e t w e e n A.I.D. P r o j e c t s and Independent P r o d u c e r s / E x p o r t e r s

111. PRODUCTION OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction B. T e c h n o l o g y T r a n s f e r 1 R e s e a r c h

1. Seed and V a r i e t y Selection 2 . Water Management 3. F e r t i l i z e r and Ag C h e m i c a l U s e 4 . M e c h a n i z a t i o n 5. L a b o r M a n a g e m e n t

C. T e c h n o l o g y T r a n s f e r , E x t e n o i o n D. L a n d U s e

1. M o n o c u l t u r e 2. Soi l and Water C o n s e r v a t i o n 3. Improper U s e of F e r t i l i z e r and C h e m i c a l s

E. Support Services

IV, BNVIRONMENTAL IMPACT FROM CROP DIVERSIFICATION AND NON-TRADITIONAL AGRICULTURAL EXPORT

P a g e

1v.c-iii

IV. B-1 IV. B-1 IV. B-2 1V.B-5

IV. B-13

1V.B-13 IV. B-14 1V.B-14 IV. B-15 IV.B-15 IV. B-16

IV . B-16

IV. B-17 1V.B-18 IV. B-18 1V.B-19 IV. B-19 1V.B-20 IV. B-20 1V.R-20 IV,, B- 2 1 XV.B-21 IV. B-22 1V.B-22 IV . B-22

IV. B-22

Table of Contents (cont inued)

Pa. ge

V. OIEDIT/PINANCE/INVBS!CMENT FOR NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. A.1.D.-Authorized Primary F a c i l i t i e s Avai lable f o r CD/NTAr:

B. Placement 1. Outstandings 2. The Placement Process

C. The I s s u e of Debt VekSus Equi ty D. Foreign Investment i n CD/NTAE E. Other Financing f o r CD/NTAE

LIST OF TABLES

1. Non-Traditional A g r i c u l t u r a l Exports , 1980-87 2 . Exports of Non-Tradi t ional A g r i c u l t u r a l Crops t o Major

Market Areas, 1980-87 3 . Exports of S e l e c t e d Non-Traditional A g r i c u l t u r a l Crops

t o t h e U.S., 1980-87 4. CAAP Budgets f o r 1986-88

1V.B-24 I V . B-25 1V.B-25 I V . B-26 1V.B-29 IV. B-30 1V.B-31

IV . C-2

I V . C-3

A.I .D. A I R BANEX mAF' CABEI CACM CD CENPRO CINDE CNAA CNP COF ISA COOPEPRZ SA COOPEPLANT EEC FDA FEDECOOP GDP GOCR IBRD ICAFE I C I IRB INC AE LllAD NETS NT AE PACD PIC PIE PPQ PROEXAG TCIP UCR USXCD USDA

Agency f o r In te rna t iona l Development Agr icul tura l and I n d u s t r i a l Reactivat ion Projec t Banco Agro I n d u s t r i a l y de Exportacion Consejo Agropecurio y Agroindustr ial Privado Central American Bank f o r Economic In tegra t ion Central American Common Market Crop Divers i f i ca t ion Centro de Promoci6n de ~ x p o r t a c i 6 n .Coalici6n Costarr icense de I n i c i a t i v a s de Desarrol lo Chars Nacional de Ayricultura y Agroindustria Consejo Nacional de Producion Corporacion Costaxricense de Financiamiento I n d u s t r i a l Cooperative de Productores de Fresa Cooperativa de Productores de .Plantas European Economic Community Food and Drug Administration Cooperative Federation Gross Domestic Product Government of Costa Rica World Bank I n s t i t u t o de Caf6 Intermediate Credi t I n s t i t u t i o n Interamerican Development Bank I n s t i t u t o Centroamericano de Administraci6n de Empresas Lat in America Agribusiness Development Project (ROCAP) Non-Traditional Export Technology Support Non-Traditional Agriculture Export Projec t Assistance Completion Date P r iva te 1nvestmer.t Corporation Program of Investment and Exports (CINDE) Protect ion and Plant Quarantine Non-Traditional Agr icul tura l Export Projec t (ROCAP) Trade Credit Insurance Program University of Costa Rica United S t a t e s Agency f o r In te rna t iona l Development United S t a t e s Department of Agriculture

I V . C - i i i

C O S T A R I C A

I. MACROECONOMIC, PROJECT AND INSTITUTIONAL SETTINGS

A. Recent ist to&/ From 1960 t o t h e e a r l y 198013, Costa Rica followed a pol icy of import subat i tu- t i o n a s a means t o bu i ld i t s l o c a l economy, r e ly ing mainly on t r a d i t i o n a l a g r i c u l t u r a l exports (coffee , bananas, sugar and beef) t o generate fore ign exchange. This pol-icy was e f f e c t i v e u n t i l t h e mid-1970s when t h e Central American Common Market began t o decl ine . Increasing o i l p r i ces , a world wide recess ion ( c u t t i n g t h e value of Costa Rica ' s expor t s ) , and regional p o l i t i c a l c o n f l i c t s impacted heavily on Costa Rica ' s economy and by 1982 GDP had f a l l e n by 7.3 percent . From t h i s low point , t h e country 's economy began t o recover and Prom 1985-87 t h e GDP growth r a t e averaged 3.0 percent1 it is expected t o measure 2.4 percent f o r 1988.

The experience of t h e l a t e 1970's and e a r l y 1980's l e d t h e GOCR t o look ou t s ide t r a d i t i o n a l a g r i c u i t u r a l export crops f o r fore ign exchange earnings and t o reques t USAID'S ass i s t ance i n developing its non- t radi t ional exports , including non-tradit ional a g r i c u l t u r a l crops. I t a l s o sought a s s i s t ance f o r i ts t r a d i t i o n a l a g r i c u l t u r a l sec to r , e s p e c i a l l y f o r coffee which wad fac ing a c r i s i s due to t h e discovery of co f fee r u s t i n 1983. USAID has responded t o t h e GOCR' s reques ts with s p e c i f i c p r o j e c t ass is tance , inc luding encouragement and consu l t a t ion on pol icy i s s u e s and funding f o r export development. These a c t i v i t i e s have been d i r e c t l y support ive of Costa Rica ' s growth i n non- t r a d i t i o n a l a g r i c u l t u r a l export.

B. Policy-Related Issues -- 1. Exchanae Rate Unif ica t ion

The GOCR un i f i ed t h e exchange r a t e and adopted a pol icy of mini-devaluations p a r t l y aimed a t keeping Costa Rica's expor ts competitive.

2. Export Incentives

Beginning i n September, 1985 t h e GOCR allowed8

o A 100 percent income t a x deduction on earnings from s a l e s of non- t r a d i t i o n a l products t o non-tradit ional markets ( those ou t s ide t h e CACM.)

o A 50 percent deduction i n t h e amount; pa id through a commodity exchange f o r t h e purchase of nominative sha res i n companies t h a t export 100 percent of production.

1( Based on USAID/CR Stra tegy Update, March 1988.

I t should be mentioned t h a t , although the term agro indus t r i a l crops cover those crops t h a t a r e processed o r des t ined f o r processing, some a g r i c u l t u r a l crops a r e a l s o included i n the " Indus t r i a l " s t 3 , t i s t i c a l category. For example, such items a s cacao powder, cocoa b u t t e r , f r u i t purees and mixed sp ices a re included under t h e i n d u s t r i a l category. 'Ln 1986, these amounted t o approximately ~ ~ $ 1 3 mil l ion.

A s shown i n Table 2 , t h e p r i n c i p a l market f o r non-tradit ional crops is t h e U.S.. From 1980-87, t h e U.S. imported approximately 61 percent of t h e NTAE cropo, while t h e EEC coun t r i e s imported approximately 1.7 percent.

T A B L E 2

COSTA R I C h Exports of Non-Traditional Agr icul tura l Crops t o Major Market Areas, 1980-1987

(u.s.$ Mil l ions)

Market Area Dest inat ion Centra l Europe Rest of

Year America U.S.A. World To ta l

In t h e breakdown between a g r i c u l t u r a l and agro indus t r i a l crops during t h e per iod 1980-87, 74 percent were a g r i c u l t u r a l products (84 percent i n t h e case of exports t o t h e U.S.).

It is important t o note t h a t beginning i n 1984, NTAEs began increas ing s u b s t a n t i a l l y and f o r 1987 probably exceeded ~ ~ $ 1 0 0 nt i l l ion -- a 250 percent increase over 1983. In te res t ing ly , expor ts t o Europe a r e a l s o increas ing, with West Germany being t h e main importer. In 1986, West Germany imported over US$^ mi l l ion i n c u t flowers, fo l i age and r e l a t e d p lan t s , and over US$^ mi l l ion of pineapple.

Table 3 shows t h e major non-tradit ional a g r i c u l t u r a l crops exported Prom 1980-87.

I-'

10

31

I

WI

Some new c rops have become important i n z m e n t years . Flowers and f o l i a g e p l a n t s have experienced a r a p i d growth s i n c e they were f i r s t r e p o r t e d i n 1983. Pineapple has developed i n t o t h e majoz NTAE c rop wi th in t h e p a s t 5 years . Crops such a s macadamia, papaya and s t r a w b e r r i e s a r e now s i g n i f i c a n t enough t o be repor ted . On t h e o t h e r hand, t i q u i s q u e , name, namje and malanga have dec l ined i n importance while chayotes and yuca have remained f a i r l y cons t an t i n d o l l a r terms.

D. A.I.D. P r o j e c t s and Key I n s t i t u t i o n s - A s i n d i c a t e d , t h e GOCR has made s i g n i f i c a n t e f f o r t s t o i n c r e a s e non- t r a d i t i o n a l expor t s , i nc lud ing non- t r ad i t i ona l a g r i c u l t u r a l crops. USAID/CR has been respons ive i n funding a number of p r o j e c t s designed t o a s s i s t t h e s e e f f o r t s . USAIDVs primary e f f o r t s t h a t r e l a t e t o non - t r ad i t i ona l ag r i cu l tu ra l . expor t s a r e desc r ibed below*

1. Consejo Agropecuario y Agro indus t r i a l Pr ivado (CAAP)

Backgroundr I n 1982, USAID was i n s t rumen ta l i n e s t a b l i s h i n g t h e Coal ic ion Cos t a r r i cense de I n i c i a t i v a s de Desa r ro l lo Economico (CINDE) t o a s s i s t t h e p r i v a t e s e c t o r of Costa Rica. CINDEVs e f f o r t s were a lmos t e n t i r e l y devoted t o t h e i n d u s t r i a l s e c t o r . I n 1985, a meeting was h e l d between a number of prominent ag r ibus ines s l e a d e r s and USAID o f f i c i a l s t o d i s c u s s t h e p o s s i b i l i t y of forming a s e p a r a t e independent o rgan iza t ion t o do f o r a g r i c u l t u r e what CINDE was doing f o r t h e i n d u s t r i a l s e c t o r , It was decided t h a t such an o rgan iza t ion could b e s t ope ra t e a s a subd iv i s ion of CINDE and i n August 1985, The Consejo Agropecuario y Agro indus t r i a l Privado (CAAP) was c r ea t ed . (The Eng l i sh t i t l e is The P r i v a t e Agr i cu l tu re and Agro indus t r i a l Council (PAAC11 t h i s paper w i l l r e f e r t o t h e Spanish acronym - CAW.

CAAP is 100 p e r c e n t funded by USAID through a memorandum of understanding wi th CINDE which is a l s o funded by USAID.

CAAP Adminis t ra t ive S t ruc ture3 CAAP has a 1 2 person Board of D i r ec to r s who r e p r e s e n t d i f f e r e n t i n t e r e s t s i n a g r i c u l t u r a i product ion/agro- i n d u s t r i a l a c t i v i t i e s r e l a t e d t o NTAE, and who a l s o r e p r e s e n t d i f f e r e n t a r e a s of t h e country. A General Manager, program managers and s t a f f c a r r y o u t t h e d i r e c t i v e s of t h e Board.

Fundingr The CAAP budgets f o r 1986/87 and 1988 are shown i n Table 4.

T A B L E 4

CAAP Budgets for 1986-88

Budgats ( 0 0 0 Colones) 1986 1987 1988

Operating Expenses Fixed Assets Audit Contingency

Sub-Total Administration

Policy Dialogue Studies CNAA

Sub-Total

1nvcat.ment Promotion

Product Programs - Strawberries Flowers Ornamental plants Vegetables N e w products Cacao Mango Laboratories Diffusion of technology Other Contingencies

Sub-Total

* Approximately equal t o US$^ mill ion.

I V . C-6

o Ob-jectives of CAAPt Four primary ob jec t ives have been es tabl i shed. CAAP tor

Serve a s a lobbying group t o i n i t i a t e pol icy reform and/or promote po l i cy dialogue with var ious GOCR i n s t i t u t i o n s wi th in t h e a g r i c u l t u r a l s e c t o r t h a t e i t h e r d i r e c t l y o r i n d i r e c t l y inf luence a g r i c u l t u r a l production, exports and investment a c t i v i t i e s .

Promote a g r i c u l t u r a l and agr ibus iness export and investment p r o j e c t s i n o rde r t o secure necessary f inancing.

Design and implement an export and investment and promotion s t r a t e g y aimed a t achieving increased l e v e l s of fo re ign exchange earnings, employment, and agricultural/agroindustr$al exports .

Es tab l i sh and manage a development fund t o f inance pol icy s t u d i e s , product f e a s i b i l i t y s t u d i e s , i n s t i tu t i . ona1 s t u d i e s and product a s s i s t a n c e programs t h a t f o s t e r quan t i f i ab le a g r i c u l t u r a l development and exports .

o Five-Year s t ra tegy&/ The CAAP s t r a t e g y focuses on t h r e e major a reas ,

- Lobbying - Product Development - Implementation of Agr icu l tu ra l Export and Investment and Export Promotion St ra tegy

Lobbying_¶ The primary focus w i l l be t o lobby f o r changes i n t h e a g r i c u l t u r a l s e c t o r which w i l l f a c i l i t a t e t h e development of non- t r a d i t i o n a l a g r i c u l t u r a l exports . These changes include resolv ing problems of a i r cargo s e r v i c e f o r per ishable expor ts and a s s i s t i n g flower producers i n obta in ing a suspension of countervai l ing du t i e s . CAAP p lans t o c a r r y ou t a po l i cy dialogue with o t h e r a g r i c u l t u r a l a s soc ia t ions such a s t h e sugar indus t ry , Consejo Nacional de Production (CNP), etc., as a means of broadening its own base of support . Special s t u d i e s have been i n i t i a t e d by CAAP covering po l i cy cons idera t ion f o r r e f o r e s t a t i o n r a g r i c u l t u r a l c r e d i t and t h e c a t t l e indus t ry . CAAP has a c lose working (and f i n a n c i a l ) r e l a t i o n s h i p with t h e Camara Nacional de Agropecuaria y Agroindustria (CNAA) and has joined with t h e Camara i n lobbying e f f o r t s . I t has a l s o used t h e extens ive d a t a base maintained by t h e Camara.

21 CAAP/CINDE, Five-Year S t r a t e g y (San Jose, Costa Rica, December 1987).

2. I?roduct Developmen~r CUP employed 8 consult ing f i rm t o analyze t h e c lops having export po ten t i a l . The company provided a preliminary list of 21 f r u i t s and vegotables which had export po ten t i a l . z / These a r e shown below,

Upland Vegetables Asparague Broccoli, f resh Broccoli, f rozen Caulif lower, f r e s h Caulif lower, frozen Artichokes Snow peas Miniature vegetables

Other Top-ranking Products - Black pepper Haart of palm Macadamia nut Specia l ty melons Tea Honey Mango Vanil la Nutmeg and more Planta ins Soursop/Chirimoya Blackberries/ Boysenberries Raspberries

Possible Export Po ten t i a l Passion f r u i t Tomatoos f o r processing Shrimp Pineapple Papaya Cashew Annatto Rubber Ethnic roo t crops Persian l imess

The Board of Directors of CUP has se lec ted t h e following crops f o r development i n 1988,

Melons Asparagus Black pepper Passion f r u i t Vanil la Sour sop

CAAP a l s o commissioned a s tudy of aquaculture a l t e r n a t i v e s and w i l l consider t h e s e i n t h e near fu ture .

For t h e products se lec ted , s p e c i a l programs covering production, p o s t harves t handling, t r anspor ta t ion and marketing w i l l be developed. CAAP's Board of Directors f e e l s t h a t proper i d e n t i f i c a t i o n of products and development of s p e c i a l programs a r e key t o a successful program f o r t ransformation of t h e a g r i c u l t u r a l sec tor .

3. Investment: and Export Promotion; CAAP has i n i t i a t e d its investment and export promotion program through f i n a n c i a l support from t h e USAID gran t of ~ . ~ . $ 3 . 5 mi l l ion t o t h e Non-Traditional Agr icul tura l Exports Technical Support Project (575-02371, together with U.S.$8.4 mi l l ion

21 Preliminary Analysis of Twenty-one Non-Traditional Agr icu l tu ra l Exports from Costa Rica (Phase I) (Stanford. Connecticut8 IRI Research I n s t i t u t e , Inc. r epor t f o r USAID, October 3, 1986).

i n ESP and PL480 l i t l a I funde and producer cont r ibut ionr , Tha p r o j s a t funds hnve been granted t o CAnR through CIWDE. The NETS p r o j e c t is 4 years i n durat ion, mding September 30, 1991. The p r o j e c t i s t o provide t h e Collowingc

-- Short-term Teahniaal Aesietance a ) Sec&ar Policy Reform b) Proalotion of - on-~raditional Exports a ) Investment and Trade Promotion dl 4pecia l S tudies

1) Laboratory Services Development 2 ) A i r Caryo Development 3 ) ' ~ w s i s t a n a e t o t h e Chamber of Agriau1,ture 4) Tzzunpers Amendment Analysis 5) Projec t Evaluation

-- Lonq Term Technical Assistance A"-.--.,

a ) Project Advisor ( 4 years) b) Chr::ao Production and Marketing Advisor

C A A 2 , w!3i' s rlaving respons ib i l i ty f o r i d m t i f y i n g and programming uses of t h o D,bl 'S p r o j e c t funds a s well as f o r supervising a c t i v i t i e s funded, w i l l work c lose ly with CINDE's promotion arm - The Program of Investment and Exports (PIE) - which works mainly at. a t t r a c t i n g manufacturing inves to r s t o Costa Rica, but which a lno t a r g e t s agribusiness. PIE has a network of f i v e overseas of f i c e s inn t h e U.S. and Europe. CAAP's own f i r s t overseas o f f i c e was trstablished i n Miami.

CAAP' s s t r a t e g y f o r investment and export promotion w i l l inc lude t h e following#

a ) Targeting companies f o r p o t e n t i a l investment r n s p e c i f i c product areas.

b) Promotion of j o i n t ventures (wi th CNAA). c ) Technical a s s i s t ance i n production, postharvest handling and

packing, market information and feedback. d ) Marketing ass is tance . e ) Sales monitoring.

o Progress t o Date; CAAP has;

1. Been es tab l i shed as an i n s t i t u t i o n r

2. Provided a s s i s t a n c e f o r products a l ready having an es t ab l i shed production base and a successful export h i s to ry but which need he lp before expansion can be p r o f i t a b l y promoted (s t rawberr ies , c u t flowers, and ornamentals.)

3. I d e n t i f i e d new non-tradit ional a g r i c u l t u r a l products f o r export and investment promotioni I

IV. C-9

Eutablilrhed an o f f i c e i n Miami f o r inveetmente and export promotion ( Ju ly 1, 1988))

Worked with CNAA t o ecarah f o r so lu t ions t o t h e a i r t ranagor t problem. Obtained an increase i n f l i g h t s ,

Prepared c o s t p r o f i l e s and f e a s i b i l i t y s t u d i e s f o r a g r i c u l t u r a l aroper

Begun expariments i n poet harves t i n s e c t con t ro l (wi th USDA)#

Asoisted t h e f l o r i c u l t u r e indust ry i n i ts e f f o r t s t o ob ta in compensatory r ightar

Provided inveetment information t o i n t e r e s t e d personet

Brought consul tants t o Costa Rica t o study s p e c i a l problemst

Collaborated with o ther a g r i c u l t u r a l organiza t ions i n t h e i r lobbying e f f o r t s .

o CAAP ~ v a l u a t i o n t ~ / The evaluat ion d a t e ) made t h e following observations

of CRAP ( t h e f i r s t evaluat ion to and recommendations:

Ow The repor t which ou t l ined t h e products t o be se lec ted f o r emphasib by CAAP served a s a s t a r t i n g p o i n t f o r product se lec t ion . While t h e r epor t has been c r i t i c i z e d , t h e evaluators s t a t e d t h a t the re has no t been a systematic a n a l y t i c a l evaluat ion by CAAP f o r product se lec t ion . There has been a lack of input da ta regarding export oppor tuni t ies , e s p e c i a l l y regarding competition from o the r countr ies , ocean t r anspor ta t ion and t h e p o t e n t i a l of Or ien ta l and European markets. The evaluat ion recommended t h a t a formalized wr i t t en set 02 c r i t e r i a be developed f o r select inc, programs and product areas.

-- There is t h e general f e e l i n g i n CAAP t h a t USAXD does no t understand non-tradit ional a g r i c u l t u r a l development. "Mixed s igna l s , confusing d i r e c t i o n s , changes i n USAID personnel, changes i n program requirements, have no t crea ted confidence i n USAID's a b i l i t y t o properly and const ruct ive ly provide leadership i n objec t ives and s t ra tegy." (No recommendation made.)

-- The s t r u c t u r a l organiza t ion of CAAP should genera l ly remain a s it now is.

$1 Donald F i e s t e r and Randal Rede~ius , Evaluation of t h e P r iva te Agricul- - t u r a l and I n d u s t r i a l Council ( CAAP , rought d r a f t , ( Toynette , Wisconsin, Apr i l 1988.)

.*I- Dudget approval h a s beoome a major h.tnderanc.a t o p r o j e a t implementation. Multiyear planning, programming and funding should be imglemcsntml. The f i s c a l year should be changed from a calender b a s i s t o e July/June f i a c a l year and CAAP ehould preaent i ts annual bwdgot p lan a t Leaet s i x months before t h e f i s a a l year begine. Mechaniema f o r acce le ra t ing USAID approvals should be imglenrsnted.

on Lobbying o f f o r t e should be l imi ted t o areare t h a t d i r e c t l y motivate exports . (CAAP is not i n agreement s ince it f e e l s ag r i cu l tuxa l associa t ione should support each o the r i n lobbying e f f o r t s . )

I- CRAB has n0.t generated mi l l ion d o l l a r export: programs t h a t can be p o s i t i v e l y i d e n t i f i e d . A fore ign o r dornestia investment program i n non-tradit ional crops has not been generated by CAAP a s ye t .

-- CAAP programs i n s p e c i f i c commodities should become se l f -sus ta in ing a t t h e end of well-defined time frames (on-going programs i n s t rawberr ies , flowers and ornamentals have 5-year maximum plans t o become se l f -au f f i c ion t . )

.I CAAP's resources f o r market ana lys i s and program se lec t ion and development should be g r e a t l y expanded.

-- A pe r iod ic monitoring system should be es t ab l i shed i n USAID on CINDE/CAAP disburaements.

2. Non-Traditional Export Technology Support (NETS) ~ r o j e c t d E o ~ 575-0327)

The NETS p r o j e c t has the following goal , purpose, inputs , outputs , and v e r i f i a b l e indica tors :

o Projec t Goalr t o s t imula te growth i n t h e Costa Rican a g r i c u l t u r a l sec to r , r e s u l t i n g i n increased l e v e l s of employment and fore ign exchange earnings. Ver i f iable ind ica to r s include t h e followingr

1. Increased a g r i c u l t u r a l exports. 2. GDP growth rees tabl i shed a t 5 percent pe r annum. 3. Public sec to r d e f i c i t reduced - c o s t declined, revenues increased. 4. Xncremental foreign exchange earnings of $28 mi l l ion by 1995.

o Projec t Purpose8 t o support t h e devenoprnent of Costa Rican expor t programs f o r non-tradit ional export products. Ver i f iable indica , tors inc iude t h e foilcwiny r

1. CAW functioning e f f e c t i v e l y t o develop support plans, address 2o l i cy promotion i s s u e s and develop investment promotion packages f o r expor t products.

2. Production and markeiting p lans d e v e l o p d and being implemented.

IV. C-11

3. Investment packages formulated. 4. CAAP and CH agribusiness export groups e f f e a t i v e l y uooperating f o r

mutually agreed goals. 5. CINDE overseas o f f i c e s functioning i n invastment and t r ade promotion

ro les .

Inputs r

1. USAID grant funds $US 3 , s mi l l ion 2. Pr iva te counterpart cont r ibut ion $US 4.0 mil l ion 3. CAAP contrib.ution,s

Outputs I

$US 4.4 mi l l ion (Local currency) $uS11,9 mi l l ion

1. Produce se lec ted f o r export promotion. - Year fourr 8 t o 16 products (cumulative) 2. Product promotion p lans developed f o r each chosen export product. - Year fourc 8 t o 16 product promotion plans 3. Technical support pol icy and investment promotion packages developed

a s p a r t of product plan. - Technicians contracted, investments made 4. Trade and promotion functioning overseas. - Three CINDE/CAAP o f f i c e s e s t ab l i shed

3. Agr icul tura l and I n d u s t r i a l Reactivat ion ( A I R ) Projec t (No. 515-0223)

The purpose of t h i s p r o j e c t is t o make c r e d i t ava i l ab le through p r i v a t e banks f o r on-lending t o p r i v a t e businesses seeking t o expand o r upgrade t h e i r f a c i l i t i e s f o r t h e production of non- t radi t ional expor ts t o extra-regional markets.

4. Coffee Technif icat ion and Divers i f i ca t ion

The purpose of t h i s p r o j e c t is t o provide funds t o enable co f fee farmers t o improve e x i s t i n g farms, i n p a r t by p lan t ing r u s t r e s i s t a n t coffee v a r i e t i e s , and t o d i v e r s i f y low-producing cof fee farms t o more p r o f i t a b l e crops. I n March 1985, USAID made ava i l ab le $20 mil l ion f o r t h e p ro jec t , $2 mil l ion of which was f o r d i v e r s i f i c a t i o n t o non- t radi t ional crops. An evaluat ion made i n September, 1987, s t a t e d t h a t t h e t e c h n i f i c a t i o n phase of t h e p r o j e c t had progressed very wel l but t h a t t h e d i v e r s i f i c a t i o n phase has moved more slowly. This was due, i n p a r t , t o both t h e re luc tance of coffee producers t o abandon a f ami l i a r crop and t o a shortage a t t h e t i m e of macadamia seedl ings a s w e l l a s t o i n s u f f i c i e n t t echn ica l a s s i s t a n c e i n c u l t i v a t i o n of a l t e r n a t i v e crops. The s i t u a t i o n has s ince improved and most of t h e $2 mil l ion has been used.

X I . MARKETING OR NON-TRADXTIONAL AGRICULTtJRAL CROPS

A. Introduation

The bas ic marketing goal o r objec t ive of CINDE/CAAP i s t h e development of a s t rong , e f f e c t i v e and sound marketing base f o r t h e export of non-tradit ional products. A s a r e s u l t , CAAP f i r s t i d e n t i f i e d , out of a list of 21 non- t r a d i t i o n a l crop& , t h e 1 0 o r 11 crops seen a s having t h e g r e a t e s t p o t e n t i a l t o successf u l l y compete i n foreign-markets r

ornamental p l a n t s f lowers s t rawberr ies melons cacao macademia nuts i n d u s t r i a l tomatoes '

asparagus black pepper mango/papaya

Ornamental p l a n t s , flowers, and strawberry p r o j e c t s have been implemented, and a p i l o t melon p r o j e c t i n Guanacaste was i n i t i a t e d l a s t year with s i x small producers. The remnining t a r g e t crops, however, a r e s t i l l i n developmental s tages .

According t o t h e USDA Foreign Agr icul tura l Service Report on a g r i c u l t u r a l , non-tradit ional import i n t o t h e U.S. from Costa Rica through November 1987, t h e l a r g e s t group of non-tradit ional crop expor ts i n and d o l l a r s were (1) pineapples, ( 2 ) ornamental p l a n t s and flowers, and ( 3 ) chayote (squash p e a r ) .

A s indica ted above, CUP d i d not include chayote i n i ts p r i o r i t y l i s t of 21 exportable crops. The team v i s i t e d one independent producer of chayote who has exported approximately 600,000 boxes of chayotes i n t o the U.S. market t h i s p a s t year. This volume does not s a t i s f y market demand.

B. Avai labi l i ty , Volume, Q u a l i t y and Continuity of Non-Traditional Aar icul tura l E m r t Cram

I n marketing, a bas ic premise is t h e understanding t h a t t o successful ly export a non-tradit ional product, producers must have t h e capacity t o grow a high q u a l i t y crop during "the winter - f ru i t season", with t h e con t inu i ty and volume required by t h e marketing firm/receivers. CAAP, i n p r inc ip le , has deve1,oped marketing p lans t h a t encompass most of t h e important marketing functionsr

5/ Preliminary Analysis of Twenty-one Non-Jlkaditional Agr icul tura l Exports - -- from Costa Rica.

1. Production

CAAJ? has contracted severa l extension s p e c i a l i n t s f o r each of the s p e c i f i c p r o j e c t s -- s t rawberr ies , melons, ornamental p lan ta , flowers -- t o a s s i s t and t r a n s f e r production technologies i n the f i e l d t o tho fanners. The purpose is t o increase y i e l d s and improve t h e q u a l i t y of t h e product t o exportable standards. These advisors a r e t o inform t h e farmer of t h e d i f f e r e n t v a r i e t i e s of seeds o r p l a n t s ava i l ab le , t h e acceptable p e s t i c i d e s and l e v e l s of app l i ca t ion , and t h e d i f f e r e n t kinds of f e r t i l i z e r s . Overal l , t h e i r aim i s t o a s s i s t the farmer on a regular bas i s t o produce higher y ie lds of q u a l i t y product a t reduced cos ts .

The s i z e of farming iand i n Costa Rica is small i n comparison t o o ther Centra l American countr ies . For example, t h e l a r g e s t independent farmer of straw- b e r r i e s has a t o t a l of 30 hectares divided i n t o severa l d i f f e r e n t parce ls . In t h e case of s t rawberr ies , it i s d i f f i c u l t f o r t h e small farmer with 1 o r 2 hectares t o achieve volumes t n a t can reduce u n i t cos ts . Therefore, these farmers have formed a cooperative, Coopefresa, t o export t h e i r crop. Another c o n s t r a i n t is t h e lack of labor ava i l ab le i n t h e area . The Coopefresa growing areas not only produce s t rcwberr ies but a l s o have a concentrat ion of ornamental p lan t s , flowers and o the r crops which provide year round jobs.

2 . Postharvest tiandling

Proper methods f o r timely picking, so r t ing , grading and packing/ proximity of pre-cooler t o t h e f ie ld! and e f f i c i e n t loading of t h e product i n t o shipping conta iners a r e e s s e n t i a l s f o r t h e a r r i v a l of a q u a l i t y product. Postharvest- ing remains a problem f o r most of t h e smaller farmers because i n f r a s t r u c t u r e such a s packing sheds o r pre-cooling f a c i l i t i e s a r e lacking. For some of t h e crops i d e n t i f i e d by CAN? a s having t h e g r e a t e s t p o t e n t i a l i f flowers, s t rawberr ies and cantaloupe), a pre-coaling f a c i l i t y is e s s e n t i a l t o preserve q u a l i t y and add t o t h e s h e l f - l i f e of t h e product.

CAAP has not contracted extension s p e c i a l i s t s i n posthdrvest technology and depends so le ly on t h e pos tharves t s p e c i a l i s t from t h e PROEXAG p r o j e c t (ROCAP Non-Traditional Agr icul tura l Export Support) Co provide o r a s s i s t i n obta in ing t echn ica l personnel. The postharvest ing s p e c i a l i s t f,rom PROEXAG does no t l i v e i n Costa Rica and is responsible f o r seve ra l o the r p r o j e c t s within Centra l America which can l i m i t h i s time and t h e concentrated e f f o r t needed f o r a s p e c i f i c projec t . For example, i n t h e p i l o t melon p ro jec t , a need was i d e n t i f i e d f o r a postharvest ing s p e c i a l i s t t o a s s i s t t h e s i x farmers. A s p e c i a l i s t was brought i n from t h e U.S. f o r two weeks t o a s s i s t i n pos tharves t handling of t h e melons. However, he only a s s i s t e d i n picking t h e melonst a neighboring, independent farmer had been contracted t o s o r t , grade, pre-cool and load boxes i n t o a container . The farmers were reportedly concerned about t h e prospect of t h e short-term consul tant not being ab le t o provide adequate a s s i s t ance i n t h e two week span and were anxious t o work with someone who knew t h e region a s w e l l a s t h e market and t h e pos tharves t handling techniques.

Another problem, faced by the strawberry growers from Coopefresa, is t h e d is tance between some of t h e f i e l d s t o t h e pro-cooler f a c i l i t y near t h e a i r p o r t . In many ins tances the berry was not pre-cooled f o r a s long a s s i x hours a f t e r picking and packing, causing a f a s t e r r a t e of product d e t e r i o r a t i o n and lowering i ts s h e l f - l i f e and qua l i ty . Additionally, no con t ro l s were s t s t up t o d i f f e r e n t i a t e t h e poor q u a l i t y product from t h e product t h a t was properly pre-cooled.

CAAP should p lace g rea te r emphasis i n iden t i fy ing and coordinat ing t h e implementation of postharvest ing technologies where needed. CAJW should a l s o work more c lose ly with ava i l ab le resources i n t h e a rea by coordinat ing postharveat techniqqes between successful independent exporters/farmers and new entxznts .

The provision of adequate space and f requent schedules of a i r and ocean shipments a t a reasonable c o s t is important t o ensure cont inui ty , a v a i l a b i l i t y and movement of volume i n t o fore ign markets a t competitive pr ices . Lack of adequate and frequent t r anspor ta t ion has been a major roadblock f o r t h e producers of non-tradit ional crops. A i r cargo se rv ice has e spec ia l ly been a c o n s t r a i n t ' d u e t o t h e e f f e c t of anti-competitive elements i n t h e Costa Rican a i r l i n e business. For exanlple, t h r e e d i f f e r e n t types of products -- ornamental p l a n t s , flowers and otrawberries -- a r e cons tant ly competing f o r a i r space on t h e country ' s na t iona l a i r l i n e . One major grower from Coopefresa with 3 years experience i n growing and export ing s t rawberr ies i s se r ious ly considering c los ing down h i s opera t ion due t o t h i s lack of a i r space. H e experienced l o s s of product and revenue due t o inconvenient scheduling and o v e r a l l lack of ava i l ab le cargo space.

While C M appears t o be a c t i v e l y involved -- along with CENPRO and t h e Ministry of C iv i l Aviation and Transport -- i n improving air/ocean t r anspor ta t ion services , it needs t o continue lobbying e f f o r t s t o improve t h e s s and r e l a t e d services , including f a c i l i t i e s and handling of t h e product p r i o r t o i t s departure.

4. Import Procedures

The "c lear ing process" of NTAE cargo once it a r r i v e s a t p o r t s of ent ry , s p e c i f i c a l l y , i n t o t h e U.S., is two-fold. The cargo is f i r s t inspected by USDA/PPQ* f o r any insec t /pes t problem. After it is re leased by USDA, customs has t h e opt ion t o hold t h e product f o r inspect ion of poss ib le contra- band. Addit ionally, t h e Food and Drug Administration (FDA) pe r iod ica l ly t akes sample boxes f o r p e s t i c i d e res idue t e s t i n g . Problems a r i s i n g i n any of t h e above t h r e e a reas can lead t o delays, poss ib le fumigation of t h e product, d e t e r i o r a t i o n of t h e product, o r even t o t a l l o s s of t h e cargo.

* Plan t Protec t ion and Quarantine

I V . C-15

I n t h e "Non-Traditionml Agribusinees Export S t r a t egy , USAID Costa Rica" paper , t h e Mission i d e n t i f i e s t h e importance of t r a n e f e r i n g import procedures in format ion t o t h e producer. But i t seems t h a t C U P has no t addressed t h i s i s s u e o r i ts r ami f i ca t i ons . Within CAAP, t h e marketing/promotion s p e c i a l i s t has no t p laced any emphasis on import procedures . No a c t i o n p l a n i s a v a i l a b l e t o educa te t h e farmer on t h e c l e a r i n g p roces s o r on t h e p o s s i b l e r e s u l t i n g disadvantages from ignor ing t h i s p rocess . An independent grower/exporter of melone exper ienced problems with FDA because of p e s t i c i d e r e s idue d i scovered i n one shipment of m ~ l o n t h i s p a s t season1 t h i s caused a l o s s f o r t h e sh ippe r and, hencefor th , h i s product. was thoroughly Inspec ted , causing delays.

CAAP needs t o develop and monitor a p l a n t o inform producers /expor te rs of import procedures and p o s s i b l e responses , i nc lud ing t h e s t a r t - u p of a pre- c l ea rance i n s p e c t i o n program.

5. Market Information and Market Linkaae

During t h e "season", t h e flow and d issemina t ion of market in format ion such a s p r i c e s , market t r e n d s , q u a l i t y s t anda rd s p e c i f i c a t i o n s , volulnes a t p o i n t of en t ry , model c o n t r a c t s , and o t h e r r e l e v a n t information w i l l s t r eng then producers ' a b i l i t y t o make marketing dec i s ions . Maintaining a list of p o t e n t i a l r e c e i v e r s t h a t handle s p e c i f i c p roducts and a r e a s is b e n e f i c i a l , e s p e c i a l l y t o t h e sma l l producer, when s e l e c t i n g overseas d i s t r i b u t o r s .

I n terms of he lp ing producers t o e s t a b l i s h market l inkage , CAAP has n o t developed a f u n c t i o n a l marketing p lan . CAAP emphasizes its Miami o f f i c e a s p l ay ing t h e v i t a l r o l e i n ga the r ing marketing informat ion a s we l l a s i n formula t ing a marketing plan. But while c e r t a i n market in format ion inc lud ing p r i c e s and market t r o n d s a r e r ece ived from t h e Miami o f f i c e , t h e r e is no apparen t sy s t ema t i c p roces s t o d i ssemina te t h i s information. CAAP a l s o seems t o concen t r a t e i t s e f f o r t on promoting f o r e i g n bus iness investment i n Costa Rica. Marketing o p t i o n s -- i n terms of l i nkage t o d i f f e r e n t r e c e i v e r s -- seem no t t o be addressed adequately.

A procedure needs t o be developed and implemented f o r t h e e f f e c t i v e dissemina- t i o n of market in format ion t o a l l growers and expor te rs . This should i nc lude g r e a t e r emphasis on marketing methods and r e c e i v e r op t ions a v a i l a b l e t o producers/exporters i n Costa Rica.

C. Linkage Between A.I.D. P r o j e c t s and Independent Producers/Exporters

Many of t h e independent producers /expor te rs of non - t r ad i t i ona l c rops began t o expor t two t o t h r e e y e a r s ago. S e . ~ e r a l p roducers /expor te rs were in te rv iewed about t h e i r own experiences . These producers o f t e n took a t r i a l and e r r o r approach and experienced numerous s e tbacks due t o t h e i r inexper ience i n e s t a b l i s h e d i n t e r n n t i o n a l markets. However, t hey have managed t o s u r v i v e and succeed i n expor t i ng chayotes , melons, f lowers , ornamental p l a n t s and straw- b e r r i e s . There has been very l i t t l e communication between t h e s e e x p o r t e r s and

CAAP. In the case of the chnyote grower previously mentioned, CAAP had not L

contacted him o r expressed an i n t e r e s t i n a s s i s t i n g i n t h e t r a n s f e r of technology t o o ther farmers through the CAAP p ro jec t . I t seems t h a t an opportunity was l o s t here bocause chayote is an export crop with add i t iona l market p o t e n t i a l and one which more Costan Rican farmers could e a s i l y produce i f they had t h e necessary t echn ica l support from a p r o j e c t l i k e CAAP.

It was a l s o t h e general concensus of t h e "independent" producers interviewed t h a t CAAP is not well equipped t o a s s i s t i n o r so lve t h e l o g i s t i c s of t r a n s - por t a t ion , t o t r a n s f e r product technologies, o r t o t r a n s f e r pos tharves t ing techniques o r marketing s k i l l s .

The A. I .D . Mission should promote establishment of l inkages between producers/ expor te r s of non-tradit ional crops t h a t have succeeded i n exporting t o fore ign markets and producers i n t e r e s t e d but not y e t e s t ab l i shed i n exporting. In p a r t i c u l a r , t h e Mission can a l s o t ap t h e resources of independent packers, processors and expor ters and l i n k t h e i r exper t i se w i t h t h e small farmer who is capable of growing a crop but i s not i n a pos i t ion t o export.

111. PRODUCTION OF NON-TRADITIONAL AGRICULTURAL CROPS

A. Introduction

Costa Rica, with an a rea of only 51,000 square kilometers, is t h e second smal le s t republic i n Central America. Conditions f o r growing many non- t r a d i t i o n a l a g r i c u l t u r a l export crops a r e excel lent . The country 's topography is dominated by mountain ranges t h a t run from northwest t o southeast with peaks, predominantly volcanic, ranging from about 1,600 t o over 3,300 meters. These mountains separa te t h e country i n t o a s e r i e s of va l leys of varying a l t i t u d e s . A l l of Costa Rica ' s numerous c l ima t i c zones, including a t l e a s t t h r e e d i f f e r e n t r a i n f a l l zones, a r e influenced by marine a i r masses. Tropical r a i n f a l l condit ions a f f e c t t h e e n t i r e countryr nationwide r a i n f a l l ranges t o over 2,500 mm per year. Annual temperatures range from about 26OC on t h e Caribbean coas t and 28OC on t h e Pac i f i c coas t down t o about 5OC a t high e levat ions .

The populat ion dens i ty of Costa Rica is about 45 t o 50 persons pe r square kilometer. Most of t h e population i s concentrated i n t h e intermountain Centra l 17alley.

The a g r i c u l t u r a l sec to r has t r a d i t i o n a l l y played a major r o l e i n Costa Rica ' s economy, including a s i g n i f i c a n t socio-economic ro le . Agriculture is t h e l a r g e s t s e c t o r a l employer, accounting f o r near ly 30 percent of t h e t o t a l work force. The major export crops i n ord5r of importance a r e coffee, bananas, beef , sugar and cacao. Of t h e b m i c gra ins , only r i c e is exported, while food g ra ins , e spec ia l ly wheat, account f o r over 30 percent of a g r i c u l t u r a l imports. F r u i t s and vegetables a r e produced f o r l o c a l consumption but a r e imported a s w e l l . Although Costa Rica has t h e p o t e n t i a l t o produce a l l its

required bas ic foodntuffs , much i s n t i l l imported because of crop growing preferences, low y i e l d s and r e l a t i v e l y high c o s t s of domestic production. Product iv i ty remaintl low due l a r g e l y t o inefficient technology t r a n s f e r and poor land use p rac t i ces . Labor is r e l a t i v e l y cheap, but c o s t s of imported inputs such a s f e r t i l i z e r s and p e s t i c i d e s a r e high, p u t t i n g pressure on Costa Rica ' s a b i l i t y t o compete, e spec ia l ly i n t h e production of non-tradit ional crops.

Costa Rica has a f a i r l y extensive and well maintained road system. I n t e r n a l and e x t e r n a l tran13portation f a c i l i t i e s a r e adequate a s a r e p o r t f a c i l i t i e s , although const ra i r i t s have developed due t o inadequate scheduling of ex te rna l t r anspor t systems. Farm-to-market roads a r e reasonably good and most farming areas a r e near a paved road. E l e c t r i c a l power is inexpensive i n t h e country though not e n t i r e l y well d i s t r ibu ted . Post-harvest handling f a c i l i t i e s a r e occasional.ly ava i l ab le a s t h e r e s u l t of excess capacity a t one o r another firm.

B. Technology Transferr Research - - From an h i s t o r i c a l s tandpoint , a s might be expected, Costa Rica 's a g r i c u l t u r a l research programs have not been support ive of CD/NTAE. Apart from t h e f a c t t h a t t h e country has focused pr imar i ly on t r a d i t i o n a l a g r i c u l t u r a l commodity exports , its o v e r a l l research c a p a b i l i t y has been l imi ted due t o inadequate budgetary provis ions , p a r t i c u l a r l y f o r t h e Ministry of Agriculture. More recent ly , s i n c e 1982, publ ic and p r i v a t e i n s t i t u t i o n s have voiced t h e i r concern f o r increased research i n CD/NTAE, but budgetary support is s t i l l lacking a s is adequate research planning. Fa i lu re t o p lan and fund CD/NTAE research could r e s u l t i n high opportunity cos ts . Spec i f i ca l ly , f a i l u r e t o conduct adaptive research through on-farm t r i a l s could r e s u l t i n crop monocultures and the expensive use o r misuse of imported technologies. New farming ventures i n CD/NTAE a r e e spec ia l ly vulnerable t o these r i s k s because of market requirements f o r product q u a l i t y and quant i ty . I n t h e rush t o meet t h e s e requirements and i n t h e absence of on-farm t r i a l research programs, producers may wel l f i n d f u t u r e c o s t s wiping out any cur ren t gains. This could occur f o r some strawberry producers i n Costa Rica a s it could -- and t o some ex ten t has -- f o r producers of ornamental p l a n t s arrd c u t flowers. Nor is short-term consultancy -- t h e usual p resc r ip t ion -- a s a t i s f a c t o r y answer.

For CD/NTAE i n i t i a t i v e s t o succeed over t h e long-term, ongoing adaptive research must be conducted i n a number of areas including seed and va r i e ty se lec t ion , water management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use, mechanization, and labor management. These areas a r e discussed below.

1. Seed and Variety Se lec t ion

Most seed and v a r i e t i e . o r CD/NTAE i n Costa Rica have been imported. This is p a r t l y due t o t h e f a c t t h a t many of t h e crops a r e e s s e n t i a l l y "new" t o Costa Rica. But even i n cases where f r u i t s and vegetables have been grown before i n t h e country, t h e marketplace tends t o d i c t a t e t h e s p e c i f i c seed o r v a r i e t y t h a t should be planted. From t h e team's observations, while producers d i d

conduct some pre l iminary "research" t o choose Prom two o r p o s s i b l y more accep tab l e market v a r i e t i e s of a p a r t i c u l a r c rop -- such a s s t rawberry , b rocco l i f o r f r e e z i n g , o r melons -- a s a r u l e , they were no t c a r r y i n g ou t ongoing adap t ive r e sea rch t r i a l s t o fo l l ow and improve t h e performance of a s e l e c t e d v a r i e t y . A s i n d i c a t e d above, t h e r e has been r e l a t i v e l y l i t t l e suppor t i n t h i s a r e a from t h e Costa Rican Min i s t ry of Agr icu l ture . Also, from in t e rv i ews and f i e l d v i s i t s with personnel from t h e A.1.D.-supported Consejo Agropecuario y Agro indus t r i a l Privado (CAAP) , it d i d n o t appear t h a t they , e i t h e r , were p lanning t o c a r r y o u t wi th t a r g e t groups adequate l e v e l s of on-farm adap t ive r e sea rch f o r d i f f e r e n t CD/NTAE seeds and v a r i e t i e s .

2. Water Manauement

To some e x t e n t , producers of CD/NTAE cannot avoid t h e conduct of water management "research". Threshholds of " t o o much" o r " too l i t t l e " a r e u s u a l l y easy t o de f ine and i d e n t i f y f o r most c rops . But f o r high-value CD/NTAEs, f a i l i n g t o d e f i n e and achieve t h e " j u s t r i g h t " l e v e l of i r r i g a t i o n can r e s u l t i n a s i g n i f i c a n t oppor tun i ty c o s t through reduced y i e l d s and diminished product q u a l i t y . E 2 f i c i e n t discovery of t h i s l e v e l is b e s t accomplished through se t - a s ide water management t r i a l s . I n t h i s way, t imely answers can be found t o q u e s t i o n s such a s when t o i r r i g a t e 1 what t y p e ( s ) of i r r i g a t i o n t o user what d e l i v e r y r a t e s t o user how t o manage excess water1 how t o manage t h e s o i l / w a t e r r e l a t i o n s h i p 1 and what t h e c o s t o f i r r i g a t i o n should be. Growers and CAAP personnel were concerned wi th each of t h e s e ques t ions . But it seemed t h a t t h e i r concern was d i r e c t e d more a t s tudying t h e nominal p o t e n t i a l s of d i f f e r e n t i r r i g a t i o n systems and t h e i r r epo r t ed c o s t s t han i n t h e conduct of adap t ive on-farm re sea rch wi th any given system.

3. F e r t i l i z e r and A g r i c u l t u r a l Chemicals Use

Non- t rad i t iona l c rops r e q u i r e p r e c i s e f e r t i l i t y cond i t i ons and p e s t and d i sease c o n t r o l t o ach ieve and s u s t a i n marketable y i e ld s . F e r t i l i z e r , p e s t i - c i d e and o t h e r i n p u t s a r e expensive and consequent ly must be used e f f i c i e n t l y . S o i l and o t h e r cond i t i ons i n Costa Rica are d i f f e r e n t from t h o s e of t h e U.S. and t h e a p p l i c a t i o n of t h e s e i n p u t s t h a t is app rop r i a t e , say, f o r C a l i f o r n i a , may no t be t h e most s u i t a b l e f o r Costa Rica f o r any given crop. A t t h e o u t s e t , it is n o t i napp rop r i a t e t o use an imported technology package, p a r t i c u l a r l y i f s eed f o r a s p e c i f i c c r o p is a l s o being imported. Yet, without p roper adap t ive zesearch, c r i t i c a l q u e s t i o n s w i l l go unanswered. These i n - c lude proper r a t e s of a p p l i c a t i o n , methods of a p p l i c a t i o n , t iming, f e r t i l i t y / water r e l a t i o n s h i p s , and environmental e f f e c t s ranging from immediate impact on f i e l d workers t o contamination of water. S a t i s f a c t o r y answers t o t h e s e ques t i ons and t o t h e c e n t r a l i s s u e -- how t o achieve optimum CD/NTAE y i e l d s -- r e q u i r e f r equen t t e s t i n g of s o i l s and water -- t e s t i n g t h a t should be done on a cont inu ing bas i s . Again, t h e team cou ld n o t d i s c e r n very much of t h i s t ype of r e sea rch i n Costa Rica.

4. Meahanization

Non-traditional export crop production is highly time-senoitive. Cost- e f f i c i e n t mechanization i s o f t en t h e bes t response t o suah time s e n s i t i v i t y and t o p o t e n t i a l labor shortages o r o ther Short~~omingS. For most non- t r a d i t i o n a l export c rops and f o r most farmers i n Costa Rica, t h i s doera not have t o imply ownership of a t r a c t o r o r o ther b ig t i c k e t item. Ins tead , it means access t o s.nd use of proven, cos t e f f i c i e n t mechanical a i d s f o r one o r more of t h e key t a s k s of t i l l a g e and land preparat ion, c u l t i v a t i o n , harvest ing, and f t g r t i l i z e r and chemicals appl ica t ion . A s f a r a s t h e team could determine, rosearch i n t h i s a rea has been l imi ted i n t h e CAAP p r o j e c t . I f anything, it has been ad hoc. The r e s u l t could be an opportunity c o s t f o r -- farmers.

5. Labor .Management

Non-traditional a g r i c u l t u r a l export crops a r e bas ica l ly labor in tens ive including a s i g n i f i c a n t requirement f o r hand harvest . A s p l an t ings of t h e s e crops increase , seasonal demand f o r labor w i l l increase a s w e l l and w i l l a l s o inev i t ab ly coincide with some p a r t of t h e labor demand of t r a d i t i o n a l crops. Thus, demand f o r l abor t o harves t asparagus and s t rawberr ies i n Costa Rica could coincide with labor demand f o r coffee picking i n t h e same growing a rea , It is not premature t o begin a n t i c i p a t i n g t h e poss ib le impact of increased CD/NTAE p lan t ings on labor requirements and t o begin planning t o meet t h e s e requirements w e l l i n advance of harves t t i m e . It did not appear t h a t t h i s type of planning was being adequately considered i n t h e CAAP-NETS pro jec t .

C. Technology Transferr Extension

Technology t r a n s f e r , through extension, has not been s t rong i n Costa Rica. This could a l s o con t r ibu te t o low product iv i ty i n non-tradit ional crop production. A s a r u l e , technologies have been imported through consul tants and "extended" i n t a c t t o d i f f e r e n t growing areas . Extension personnel from d i f f e r e n t i n s t i t u t i o n s including t h e Ministry of Agriculture and CAAP a r e l imi ted i n numbers and budget. And, a s noted above, they a r e not adequately emphasizing t h e need f o r on-farm adaptive research. In v i s i t s with fanners t h e s e shortcomings were confirmed. Same indica ted t h a t t h e i r con tac t s with extension agents were inf requent and t h a t so lu t ions t o problems were not timely. It was learned t h a t while i n t h e CAAP program some f i e l d day sess ions had been held and one-on-one farmer contac ts had been made, these a c t i v i t i e s were not being c a r r i e d o u t on a cons i s t en t bas i s , nor were they s u f f i c i e n t l y formalized from a t r a i n i n g standpoint . By t h e same token, t h e team noted t h a t t h e r e was only l imi ted in-service t r a i n i n g f o r ex tons ion i s t s i n crop sub jec t matter s p e c i a l i t i e s o r i n methodologies. CAAP's a c t i v i t i e s a r e focusing on sene s p e c i f i c crops and organized t a r g e t groups -- such a s Coopefresa -- which could serve a s a good s t a r t i n g po in t f o r an adequate extension program, even on a l imi ted scale.

In examining slome of t h e crop p r o f i l e information ava i l ab le from CAAP and from Chars Nacional de Agr icul tura l y Agroindustria (CNAA) it appeared t h a t while t h i s information might p a r t i a l l y complement e x i s t i n g crop b u l l e t i n s , much of the d a t a was not i n useful "manual" form f o r e i t h e r farmers o r ex tens ion i s t s . I t a l s o seemad t h a t some of t h e information might not be appl icable o r p r a c t i c a l for , Costa Rica. Preparation and use of such mater ia ls ohould be coordinated a3 an i n t e g r a l p a r t of CAAP's CD/NTAE program.

A s suggested, t h e l imi ted extension capab i l i ty t h a t does e x i s t under CAAP'e program, and f o r Costa Rica i n general , is not adequately linked t o adaptive on-farm research. Instead, program emphasis seems focused more on marketing and promotionr tha t , is, on g e t t i n g non-tradit ional crops t o market a s soon a s poss ib le . This type of extension e f f o r t is not conducive t o t h e growth of a sus ta inab le non-tradit ional a g r i c u l t u r a l production system.

D. Lamd Use - Increased production of non-tradit ional crops w i l l r equ i re more e f f i c i e n t use of a v a i l a b l e land. Only 18-20 percent of t h e a g r i c u l t u r a l lands i n Costa Rica a r e a c t u a l l y s u i t a b l e f o r in tens ive cu l t iva t ion . While t h i s land a rea can s t i l l accommodate a s i g n i f i c a n t expansion of CD/NTAE a c t i v i t y , economic and cropping pressures may well r e s u l t i n c u l t i v a t i o n of lands which should not be farmed in tens ively . This is not y e t a se r ious problem, bu t monitoring shouid be undertaken soon so a s t o avoid f u t u r e problems, soma of which a r e a l ready i n evidence. These problems, which a l s o p e r t a i n t o cropping on even t h e most appropr ia te :Lands f o r non-tradit ionals , include monoculture, inadequate s o i l and water cronservation and improper use of f e r t i l i z e r and a g r i c u l t u r a l chemicals.

1. Monoculture

In. t h e i r i n t e r e s t i n obta in ing maximum benef i t from new, shor te r cycle crops i n Costa Rica, farmers may tend t o use a monoculture cropping system, replant ing t h e i r crops successively on t h e same p l o t of land. This can e a s i l y upset previously balanced ecologica l systems with r e s u l t i n g increments i r 2

weeds, p e s t s and disease. The c o s t s t o e l iminate these problems and t~ achieve renewed balance can be very high and can eventual ly minimize r a t h e r than maximize benef i t s from t h e new crops. Some problems a r e already occuring with s t rawberr ies and ornamental p lan t s . Certain techniques, such a s s o i l fumigation/sterilization -- used i n Cal i fornia on strawberry f i e l d s -- can f a c i l i t a t e monoculturing, bu t t h e s e techniques a r e very expensive. The b e s t a l t e r n a t i v e i s crop ro ta t ion , which tends t o upset t h e l i f e cycles of p e s t s and d i sease while s t i l l keeping land productive. In t h e short-run, t h i s may not be a s p r o f i t a b l e a s nionoculturing, but over time it w i l l invar iably be a more p r o f i t a b l e and s a f e r approach t o land use.

Eroeion i e t h e small, by smaller w e l l water chemicals.

2. S o i l and Water Coneervation

a se r ious problem i n many p a r t s of Costa Rica, and espec ia l ly on h i l l y p l o t s where many of t h e non-tradit ional crops nre being grown f a n n ~ r s . Ref ores ta t ion has compouncled t h e problem. Rainwater and run down h i l l s i d e s car ry ing away s o i l and s o i l n u t r i e n t s a s well a s

Smaller farmers a r e e s s e n t i a l l y forced t o use these f r a g i l e landa because they cannot access o r obta in t i t l e t o b e t t e r landel t o some extent they have made e f f e c t i v e use of t e r rac ing , contouring and proper furrowing. But t h e s e conservation p r a c t i c e s a r e not adequately disseminated through t echn ica l a s s i s t ance packages. The same app l i e s fo r f o r e s t conservation p rac t i ces . CAAP sho,uld include long-term s o i l and water conservation t r a i n i n g i n i ts t echn ica l a s s i s t ance packages.

3. Improper U s e of F e r t i l i z e r s and Chemicals

In tens ive cropping usually means in tens ive chemical and f e r t i l i z e r use. Chemical runoff t o streams is not only c o s t l y i n terms of chemicals l o s t , but can be hazardous t o people and animals who may dr ink from t h e streams. Chemical d r i f t can a l s o be of concern a s in tens ive crop production in t rudes i n t o populated a reas where o ther t r a d i t i o n a l food s t u f f s a r e produced. Unless proper techniques a r e t ransmit ted t o growers and then monitored, t h e r e is a d i s t i n c t p o s s i b i l i t y of c o n f l i c t between crop production, proper land use and e~nvironmental preservat ion. CAAP personnel d i d assure t h e evaluat ion team t h a t they imparted technica l information t o producers and f i e l d workers involved i n t h e use of pes t ic ides .

E. Support Services

Essen t i a l support se rv ices r e l a t e d t o a g r i c u l t u r a l input supply a r e i n p lace i n Costa Rica. Distances from farms t o supply cen te r s a r e no t g r e a t and road connections a r e adequate a s a r e supply t r anspor t f a c i l i t i e s . Pr ices f o r imported inputs a r e high, but farmers can s t i l l c l e a r reasonable p r o f i t s from non-tradit ional export crops. Support se rv ices r e l a t e d t o pos tharves t handling -- such a s pre-cooling, packing and cold s torage -- a r e no t general ly ava i l ab le except under spec ia l arrangements. A t p resent l e v e l s of output t h i s is no t a problem, but A.I .D. should a s s i s t CAAP i n a n t i c i p a t i n g f u t u r e needs, perhaps i n developing new low-cost i n f r a s t r u c t u r e designs and means t o encourage t h e establishment of pre-cooling, packing and s torage se rv ice en te rp r i ses .

IV. ENVIRONMENTAL IMPACT FROM CROP DIVERSIFICATION AND NON-TRADITIONAL AGRICULTURAL EXPORT

A s ind ica ted elsewhere i n t h i s r epor t , CD/NTAE programs can l ead t o negative environmental consequences. These includer increased incidence of p l a n t p e s t s and d i sease due t o t h e intro?.uction and in tens ive c u l t i v a t i o n of crops

t h a t r e s u l t i n ecologica l imbalances, especially through monoaulturet arop, water and a i r contamination throuqh improper use of paotj.cidee and o the r chemiaalsr and vicious cycling i n thaee area8 a5 pas te develop res i s t ance t o ahemioal troatmante and producers Increase chemicals ueta.

P:roduoers and exportere i n Costa Rica a r e oftern aware of these ieeuee, but probably do not y e t have ecough teahnicnl o r regulatory information i n order t o understand and a c t on t h e long-term environmental implicat ions of t h e i r pxoduc!tion a c t i v i t i e s . I t irn c r i t i c a l , however, t h a t they gain euah underatanding and agply preventive o r c o r r e c t i v e measuree e a r l y on s o ae t o avoid both f i n a n c i a l lose and i n j u r y t o t h e environment.

Experience t o da te w i t h CD/NTAE i n Coeta Rica has already l e d t o t h e i~ i t rod ,uct ion of expanded c u l t i v a t i o n of crops f o r which s p e c i f i a p e s t s and d iseases a r e already well known. I t i e not d i f f i c u l t t o a n t i c i p a t e t h e kinds of problems which may a r i s e with these crops and t o prescribe preventive o r a c t i v e treatments t h a t conform t o i n t e r n a t i o n a l s tandards including, e spec ia l ly , p e s t i c i d e to lerance levels . S imi lar ly , producers can l ea rn about in teg ra ted p e s t management programs and t h e use of b io log ica l con t ro l methods t h a t can reduce t h e need f o r using c e r t a i n chemicals. Much of t h e p e r t i n e n t information on these su.bjects is ava i l ab le i n Costa Rica. A.I.D./W and t h e Mission i n Coeta Rica have d e a l t t o some ex ten t with environmental i s s u e s i n CD/NTAE p r o j e c t s but it seems t h a t appropr ia te guidance could be pr.ovided on a broader basis!. It would be t imely f o r A.I.D. t o condact crop-specif ic and Costa Rica re'gional environmental impact assessments isnd t o t ransmit r e s u l t s and guidel ines through implementhg agencies such a s CAAP and PROEXAG. Guidelines should include methodologies f o r ongoing, s tandardized monitoring of environmental impacts.

I n interviews and during a f i e l d v i s i t , t h e following s p e c i f i c information was obtained on strawberry and mango p e s t problems i n Costa =car

Strawberries have been p lanted i n some a reas i n t h e Central Plateau on land previously devoted t o pas ture . One of t h e s o i l p e s t s of t h e l a t t e r , a scarab b e e t l e , i s a l s o a t t ack ing the roo t s of s trawberries . Granular insec t i c ides , such a s Mocap, a r e used t o cont ro l t h i s grub, and t h e l e v e l of a t t a c k appears t o decrease each year. The larvae of t h e b e e t l e have been found t o be in fec ted with a b a c t e r i a l d isease , and Hugo Aguilar of t h e Universidad de Costa Rica is at tempting t o c u l t u r e t h i s d isease i n t h e laboratory f o r use i n con t ro l experiments.

Phytophagous mites a r e a l s o a p e s t i n s t rawberr ies and M r . Aguilar, i n another laboratory a t t h e Universi ty, i s at tempting t o r e a r a predacious mite species , Phytoseiulous pe r s imi l i s , inported from Cal i fornia , f o r l a t e r r e l ease i n t h e - f i e l d aga ins t Tetranychus a r t i c a e .

Extensive f i e l d sampling s tud ies on mango and o the r t r o p i c a l f r u i t spec ies has been conducted by another Universi ty of Costa Rica entomologist, Luis Feraando J i ron , t o determine d i s t r i b u t i o n , occurrence and importance of t h e complex of f r u i t f l i e s a t t ack ing t h e s e f r u i t s , Anastrepha spp., and t h e Mediterranean f r u i t f l y . According t o h i s da ta , C e r a t i t i s c a p i t a t a is a r e l a t i v e l y minor

geot of mangos. Navertheleea, tho laboratory i n Buenos Aireo i n the Valle Be Elan Ia id ro de EL Genc~ral ie concbcting experimente ueiny t h a hot water dig t reatment t o comply with USDA requirements f o r un e f f a c t i v e treatment of t h i s f r u i t .

V. CREDIT/BINANCE/INVEBflllEN11' BOR CD/NTAE

A. AXD-Authorized Primary Baailitiee Available f o r Crop Divere i f iaa t ion - - and NonlCra&ifional AQriaultural Export

In t h e per iod 1982 t o da te , primary Mission-sourced f inancing f a c i l i t i e s ava i l ab le f o r crop d i v e r s i f i c a t i o n and non-tradit ional a g r i c u l t u r a l export includt3 t h e followingr

AMOUNT

Oil-ect A.I.D. loan t o ~ o r p o r a c i 6 n Costarricenee de Financiamiento I n d u s t r i a l (COFISA) ~ ~ $ 1 0 . 0 mi l l ion

r !~ rea t A.T.D. loan t o COFISA i n l o c a l currency 5.0 m i 3 l i on

Direc t A.L.D. loan t o Banco Agro I n d u s t r i a l y de ~ x p o r t a c i d n (BANEX) 10.0 mi l l ion

Direc t A.I.D. loan t o t h e Costa Rican Pr iva te Inveotment Corp. (PIC) 20.0 mi l l ion

Agr icul tura l and I n d u s t r i a l Reactivation ( A I R ) loan t o t h e Central Bank of Costa Rica f o r rediscount thxugh l o c a l p r i v a t e banks 20.0 mi l l ion

TOTAL

It should be

Technif i c a t i o n and Diversif i ca t ionr a tsl mill ion ( l o c a l currency equivalent) f o r t o FEDECOOPI d i v e r s i f i c a t i o n port ionr 2.0 mi l l ion

~ ~ $ 6 7 . 0 mi l l ion

noted t h a t t h e above t o t a l does not include ESF funds equivalent t o over ~ ~ $ 1 0 0 . 0 mi l l ion which have been on-lent s ince 1983 through Centra l Bank Rediscount Line ( t h e Specia l Credit Line.) This f a c i l i t y was not e s t ab l i shed f o r t h e e x p l i c i t purpose of supporting o r promoting CD/NTAE. Rather it was es tabl i shed a s an o v e r a l l p r i v a t e productive sec to r f i n a n c i a l a s s i s t ance f a c i l i t y . However, u t i l i z a t i o n af t h e f a c i l i t y has undoubtedlybeen support ive of CD/NTAE. A rough est imate, based upon discuss ions with A.I.D., Cent ra l Bank and l o c a l bank o f f i c i s l s is t h a t no l e s s than 1 5 percent , o r ~ ~ $ 1 5 . 0 mi l l ion , of t h e ~ ~ $ 1 0 0 . 0 mi l l ion equivalent has probably been d i r e c t l y support ive of CD/NTAE. An add i t iona l ~ ~ $ 1 8 mi l l ion l o c a l currency equivalent

I V . C-24

(MSIF) loan fund is prtreently being designed by out:eJ.de aonsrultant:~~ and w i l l re~gor tedly inalude emphasis on non-traditional/ilgriauLtural crop c r e d i t , ea1geaia1l.y for small l a m e r e .

Of t h e ~ ~ $ 6 7 . 0 mi l l ion a v a i l a b i l i t y , ~ ~ $ 1 9 . 1 were placea f o r CD/NTAE by t h e end of June, 1988. .The plaaemant breakdown is as follower

FACILITY - - - -

Dollar loan t o COB:ISA

AMOUNT -.. US$^. 8 mil l ion

Local currenay loans t o COFISA (equivalent ) 2.0 mi l l ion

Uollar loan t o BANEX 5.0 mi l l ion

Dollar loan t o PIC 5.4 mi l l ion

Dollar loan t o t h e Central Bank ( A I R ) 0.1 mi l l ion

F E D E C ~ P Trus t Fund (Diver s i f i ca t ion Port ion) 1.8 mi l l ion

TOT,?? ~ ~ # 1 9 . 1 mi l l ion

Arl shown, about 29 percent of t h e t o t a l A.1.D.-authorized primary sources of f inancing ava i l ab le f o r CD/NTAE a r e p resen t ly outstanding. In examining t h i s f i g u r a it is important t o bear i n mind t h a t each 02 t h e f a c i l i t i e s , with t h e exception of t h e FEDECOOP t r u s t fund, has been ava i l ab le icr t h e funding of non-agriculture-related a s wel l a s CD/NTAE-related a c t i v i t i e s . COFISA and BANEX have i n f a c t f u l l y placed t h e i r f a c i l i t i e s including f inance f o r both kinds of a c t i v i t i e s , and a r e beginning t o p lace reflows. PIC has placed a total of $9.0 mi l l ion of t h e A.1.D. loan, leaving t o t a l a v a i l a b i l i t y before reflows of $11.0 mil l ion. Only ~ ~ $ 5 0 0 , 0 0 0 -:ave been used under t h e A I R f a c i l i t y , including t h e CD/NTAE f i g u r e above, leaving a v a i l a b i l i t y of over $19.0 mil l ion.

Loan placements have been f o r a wide variiety of a c t i v i t i e s with concentrat ions i n ornamental p l a n t , c u t flower and macadamia nut projec ts . To an ex ten t , t hese have been t h e areas where t h e "smart" money has been going, t h a t is, where a number of experienced and normally well-off l o c a l and fo re ign agribusinessmen have been inves t ing i n Costa Rica s i n c e t h e 1970s. Their investments have l e d t o f a i r l y publ ic t r a c k records f o r d i f f e r e n t product export ~ndeavors . In ~ k s process, l e v e l s of r i s k perception by new inves to r s and by lenders have diminished, and, l o g i c a l l y , new investments i n and loans f o r such undertakings have occurreti more f requent ly and rap id ly than they have

f o r o ther CD/NrI'U produacs. The r e su l t ing concontratlon, by i t s u l f , i s probably not an important iasue. A s suggested, it i s part; of the na tu ra l riek-roward ilnalyels proceqs. On the o thor hand, "smart" morioy invclstors aan uaually achiave needed finance without A . I . 0. -sourcad support. And i f t h e ready o v a l l n b i l i t y and use of A . I . D . money f o r what have become " t radi t ional1 ' non- t radi t ional p ro jec t s m~eana that: inadequate resourcoe cand/or placement e f f o r t s w i l l be ava i l ab le fo r o r d i rec ted a t o ther areas , than some form of product group c r e d i t nl,lotment guidel ine should be cbstab.Lished and implemented. In Costa Hiaa t h i s would probably make senstr because of t h e r e l a t i v e maturi ty of these emdeavors.

Other a reas t o which p ro jec t f inance has been going include, f r e s h and processed f r u i t s such a s otrawberry, melon and, more recent ly , raspberry and blackberry I upland vegetables suoh a s asparagus, sr~ow peas and r n i n i v e g e t a b l e s ~ and o the r s such a s black pepper and o the r sp ices , shrimp, ju ices and concentrates, and roo t crops.

There a r e s e v e r a l export crops t h a t have been developed s u c c e s , ~ f u l l y i n Ccsta Rica e s s e n t i a l l y without d i r e c t A . I . D . f i n a n c i a l support. Two of tnese a r e pineapple and chayote (squash pea r ) . Commercial pineapple production and export t o t h e rJ,S. has been c a r r i e d out l a rge ly by PINDECO ( a Del Yonre holding) s t a r t i n g i n t h e l a t e 1970s. Squash pear production and export , f i r s t f o r Europe and now pr imar i ly f o r U.S. e thn ic consumer markets, has been c a r r i e d out by medium-sized entrepreneurs including fore ign inveljitors.

A s f a r a s could be ascer ta ined, including a review of 1987/1988 evaluat ions of COFISA, BANEX and PIC and an examination of se lec ted cases from t h e respect ive loan p o r t f o l i o s , t h e loans made by these banks d i d represent a d d i t i m a l i t y . This is t o say t ' l a t t h e investments probably would not have been acconplished without t h e s p e c i f i c f a c i l i t i e s and/or t h e p a r t i c i p a t i o n of those banks. In most ins tances , a s w e l l , t h e c r e d i t s a r e v a l i d examples of ganuine p r o j e c t finance.

2, The Placement Process

Disbursement of t h e ~ ~ $ 1 9 . 1 mi l l ion which have been placed t o da te has been much slower than o r i g i n a l l y a n t i c i p a t e d and, a s indica ted , t h e P I C and A I R f a c i l i t i e s have s u b s t a n t i a l unplaced balances. The reasons f o r slow disbursement include per iodic devaluat ion and recession-related decl ines i n c r e d i t demand! reluctance of many intermediate c r e d i t i n s t i t u t i o n s ( I C I s ) t o do genuine p r o j e c t lending f o r t h e r e l a t i v e l y high r i s k CD/NTAE undertakings) inadequate development lending appra i sa l s k i l l s a t t h e I C I s t extraordinary ca re and d e t a i l , on t h e p a r t of BANEX, PIC and COFISA i n working up t h e i r f i r s t loanst monetary pol icy ac t ions t o con t ro l l iquid i ty! and t h e exis tence of s a f e r , more p r o f i t a b l e lending a l t e r n a t i v e s f o r t h e I C I s . A f u r t h e r cause f o r slowness i n disbursement has been adminis t ra t ive delay a t t h e Central Bank (BCCR) rediscount l e v e l and, more espec ia l ly , do l l a r -conver t ib i l i ty de lays f o r loan repayment. The l a t t e r , together with a general preference a t t h i s t i m e f o r borrowing i n r e a d i l y ava i l ab le l o c a l currency, a s opposed t o taking d o l l a r loans, p a r t l y expla ins t h e very l imi ted use of t h e A I R f a c i l i t y .

Notwithstanding the Pact t h a t disburaementra have been s1,ower than hoped f o r , the re have been notable benef i t s from t h a placomont proceam. Key among tlrese is t h e emergence of cadrae of! increas ingly s k i l l e d and accountablts development bankers =- pr imar i ly a t BAEEX, COFISA and PIC. Conversations with o f f i c e r s a t each of these i n s t i t u t i o n s , and an examination of t h e i r banks' loan appra i sa l , processing, follow-up and problem-solving approaches, including t h e use of computers, provided convincing evidence of t h i s . Also s i g n i f i c a n t is t h e f a c t t h a t from t h e not inconoiderable placements act t lal ly accol~iplished t o da te , a l a rge body of s e c t o r p r o f i l e experience has been gleaned. Ths bankers now know enough about c r i t i c a l piroduction, merrketi.ag and management itisles i n severa l product groups t o be ab le t o make more timely and e f f e c t i v e creclit dec is ions than previously. This knowledge is al.80 read i ly ava i l ab le t o USAfD f o r incorporat ion i n planning f u t u r e c r e d i t f a c i l i t i e s t o support CD/NTAE. A f u r t h e r success is t h e f a c t t h a t each of t h e t h r e e banks has maintained an acceptable financial. condit ion and p o s i t i v e , improving earnings. Each has i t s problem loans and each w i l l s u f f e r some l o s s e s from its CR/NTAE poxtfo l io . To date , however, reported problem loans a r e not excessive i n e i t h e r number o r amount. 1mpo:ctantly , t h e monitoring and problem solving e f f o r t s of these banks a r e well-developed. More importantly s t i l l , t h e i r loan appra i sa l and placement s k i l . 1 ~ a r e conducive from t h e o u t s e t t o t h e development of sound CD/NTAE por t fo l ios .

Genuine development lending f o r CD,/NTAE o u t s i d s of COFISA, BANEX and PIC is no t s i g n i f i c a n t . The four na t ional ized banks a r e not properly s t a f f e d t o do sound p r o j e c t f inance i n general , and less s o t o do p r o j e c t f inance f& CD/NTAE. CAAP is a t t e a p t i n g a small t r a i n i n g seminar with t h e Banco Nacional de Costa Rita, which should represent a p o s i t i v e l inkage, but t h e na t ional ized banks a r e very f a r behind i n t h e development banking f i e l d , and it would be wrong t o be l ieve t h a t r e a l progress nlight be expected any time soon. Nor is it c l e a r that. t h e state-owned banks s e e t h e i r mandate a s one of promoting p r o j e c t f inance f o r CD/NTAE. Ins tead , they a r e more concerned about t r a d i t i o n a l c:rop f inance and about what they sse a s t h e i r own a g r i c u l t u r e const i tuency, t h e t r a d i t i o n a l , usual ly smaller , farmer-borrower.

The twenty p r i v a t e commercial banks have a l s o been l e s s than a c t i v e i n t h e a r e a of CD/N'TAE p r o j e c t finance. To be su re , these banks do f requent ly provide t imely working c a p i t a l loans f o r CD/NTAE pro jec t undertakings] but much more o f t en than not , these c r e d i t s involve f i n a n c i a l l y s trong, well-connected borrowers and t h e loans a r e mads aga ins t c o l l a t e r a l , not p r o j e c t cash flow. There is no t much a d d i t i o n a l i t y , i f any, f o r such loans. Of f i ce r s ' and ana lys t s ' understanding of t h e nature of CD/NTAE : x o j e c t f inance, though reportedly improving, i s l imi ted . (A.1.D.-funded t r a i n i n g through PROCAP has had some p o s i t i v e r e s u l t s with commercial bankers, but it w i l l t ake t i m e t o t r a n s l a t e i n t o e f f e c t i v e development lending operat ions.) This is understandable, because such f inance i s new by de f in i t ion . And given t h a t t h e commercial banks -- a l s o e s s e n t i a l l y by d e f i n i t i o n -- a r e short-term, minimum-risk or iented , t h e i r minor involvement i n CD/NTAE p r o j e c t f inance is logica l . Also, t o t h e ex ten t t h a t such banks have a r e spons ib i l i ty t o depos- i t o r s , it is easy t o apprecia te t h e i r unwillingness t o undertake r e l a t i v e l y high r i s k loan i n i t i a t i v e s , regardless of p o t e n t i a l p r o f i t .

The i n a c t i v i t y of tho n a t i o n a l i z e d banks and of t h e commercial banks ve r sus t h e i n c r ~ a s i n g l y developmental l anding work of BANEX, COFISA and PIC is n o t d i scourag ing , eapecia1l.y :In comparieon t o s i t u a t i o n s i n o t h e r c o u n t r i e s i n Can t r a l America. Developmont banking f o r CD/NTAE i n Costa Rica was i t s e l f n e g l i g i b l e through t h e e a r l y 19700, with t h e pous ib l e except ion of t he LAAD ( L a t i n Amerinan Agribusino~as Development Corporat ion) p o r t f o l i o , and t h e r e has d e f i n i t e l y been a growth p roces s underway. 'Phe process has i n e v i t a b l y r e e u l t e d i n t h e emergence of l e a d e r s and fo l lowers . A t t h e same time, t h e r e is ample evidence t h a t t h e breakdown is na tu ra l8 development banks do development lending1 commercial banks do comm r c i a l lending. 9ve r time, each can be expected t o do a l i t t l e more of t h e o t h e r type of lending, bu t t h e r e a r e obvious ly good reasonat f o r t h e r e s p e c t i v e s p e c i a l i z a t i o n s . A.I .D. w i l l wan.t t o bear this1 i n mind a s i.t c a s t s Future c r e d i t f a c i l i t i e s t o suppor t CD/NTAE. Ideally. , e f f o r t s should be m d e t o b r ing t h e co~nmercial and development banke.rs t oge the r i n co-f inancings with A. I .D. f a c i l i t i e s being designed p r e c i s e l y f o r t h i s purpose.

Excessive s e c u r i t y requirements f o r CD/NTAE loans i n Costa Rica have been a c o n s t r a i n t f o r s e c t o r growth, b u t t h e i s s u e is n o t a s s e r i o u s a s i n o t h e r c o u n t r i e s i n t h e region. A s suggested, it is f a r more s e r i o u s i n Costa Rica a t t h e commtarcial bank l e v e l t h a n a t t h e development bank l e v e l . In t h i s regard , t o t h e e x t e n t t h a t A.I .D. seeks t o make commercial bank e n t r y i n t o CD/NTAE f inanc ing more a t t r a c t i v e , cons ide ra t i on may be given t o t h e des ign of a p p r o p r i a t e c r e d i t guarantee f a c i l i t i e s .

A s t o t h e v i r t u a l l y unused A I R f a c i l i t y and p rospec t s f o r i ts f u t u r e , it should be noted t h a t u t i l i z a t i o n i s being slowed n o t on ly f o r t h e reasons mentioned above b u t a l s o because of a banking r egu la t i on . S p e c i f i c a l l y , under Banking Law A r t i c l e 63, banlcs may n o t fund more t han 30 p e r c e n t of t h e i r l oan a s s e t s through r ed i scoun t ope ra t i ons a t t h e Cen t r a l Bank. Many banks a r e a l r e a d y topped o u t and/or t end t o p r e f e r red iscount f a c i l i t i e s o t h e r t han AIR. This r e g u l a t i o n , t aken t o g e t h e r w i th t h e f a c t t h a t p o t e n t i a l borrowers a r e p a r t i c u l a r l y scsnsit ive about d o l l a r l oans a t t h i s t i m e , does no t bode w e l l f o r A I R . And whi le A . I . D . ' s e f f o r t s t o promote modi f ica t ion of IWAcle 63 a r e worthwhile, s i g n i f i c a n t near-term r e s u l t s do no t seem l i k e l y .

Apart from t h e problems w i t h t h e A I R f a c i l i t y , A . I . D . ' s po . r t fo l i o p rospec t s f o r cont inued e f f e c t i v e suppor t of CD/NTAE p r o j e c t s a r e good. Reflows under t h e DANEX and COF1S.A f a c i l i t i e s and t h e balance of t h e A.1.D.-funded PIC f a c i l i t y a r e p l aceab le i n a good number of new and expansion p r o j e c t s . O f f i c e r s from t h e banks have a l r eady i d e n t i f i e d and, i n s e v e r a l c a s e s are working on, over US$^. 0 m i l l i o n i n new p r o j e c t s ranging from shrimp c u l t i v a - t i o n t o dwarf coconut palm propagat ion. Loan work-up t ime f o r such p r o j e c t s is coming under p rog re s s ive ly g r e a t e r c o n t r o l and t h e r e is every reason t o b e l i e v e t h a t t h e p o r t f o l i o s can be expanded a t a s a f e and t ime ly pace. I n t h e c a s e of COF1:SA and BANEX, expansion w i l l obvious ly r e q u i r e a d d i t i o n a l resources . A.I.D. should seek t o provide p a r t of t h e s e resources whenever they are n o t otherwise r e a d i l y a v a i l a b l e . I n p a r t i c u l a r , cons ide ra t i on should perhaps be given t o c a s t i n g CD/NTAE-specific p r o j e c t f i nance f a c i l i t i e s f o r BANEX and C0FI:SA t o enable t h e n t o r e a c t qu i ck ly t o new c r e d i t demand which may exceed ref:Low capac i ty .

The Ieeue of Dtabt Ve,rsus Equi ty - While empowered and/or mandated t o i n v e s t i n e q u i t i e s , BANEX, COFISA and P I C have moved very s lowly i n t h i s a r ea . Purduant t o l e g i s l a t i o n and normal banking p r a c t i c e , t h e cornmcllrcial and state-awnad banks v i r t u a l l y never t a k e e q u i t y p o s i t i o n s d i r e c t l y . (They do, of courso, become owners of bus ines s a s s e t s a s t h e r e s u l t of loan d e f a u l t s and f o r e c l o s u r e s . )

I t is f r e q u e n t l y argued t h a t because CD/NTAE bus ines se s a r e high-r isk, t h e y cannot q u a l i f y f o r loan finance and t h e r e f o r e r e q u i r e e q u i t y venture c a p i t a l . In p o i n t of f a c t , however, any k ind of c a p i t a l p laced i n a high r i s k bus ines s -be it deb t o r e q u i t y money- is "venture c a p i t a l " . Through loan s e c u r i t y ( c o l l a t e r a l , pe r sona l guar 'antees, e t a l . ) , a l e n d e r ' s r i s k is u ~ u a l l y l e s s than t h a t of an i n v e s t o r , bu t t h e r e is cons iderab le r i s k j u s t t h e same. I t is p r e c i s e l y t h i s element of reduced r i s k , however, t h a t enab le s and encourages development f i nance i n s t i t u t i o n s t o impact a broader base of new bus inesses t han would be p o s s i b l e i f a l l o r most of t h e i r f i nanc ings were c a r r i e d o u t a s e q u i t y investment. In t h i s s ense , t h e t h r e e A.1.D.-sponsored development banks have been prudent . On t h e one hand, t h e y have no t f r equen t ly engaged t h e a d d i t i o n a l manpower and o t h e r r e sou rces r e q u i s i t e t o analyzing, c a r r y i n g o u t and fo l lowing equ i ty investments , while on t h e o t h e r t h e y have, through development loans , used those r e sou rces t o accomplish d e s i r e d economic r a s u l t s on a broader s c a l e and more qu ick ly . The mix of l oan ve r sus e q u i t y ope ra t i ons i n t h e p o r t f o l i o s of t h e s e banks is t h e r e f o r e no t a s impor tan t a s t h e l e v e l and q u a l i t y of p o r t f o l i o growth. And while t h e a v a i l a b i l i t y of more mandated e q u i t y c a p i t a l might be u se fu l , t h e r e is no proof t h a t t h e end r e s u l t i n terms of development impact would be any more e f f e c t i v e o r t ime ly t h a n t h a t which can be achieved through deb t f inanc ing . ( I n f a c t , t h e f a i r l y oppos i t e exper iences of t h e A0E.W). and LAAD f i nance companies would sugges t t h a t , over t ime, l oan f i nance may be a more e f f e c t i v e means t o ach ieve development impact t h a n is e q u i t y f inance . ADELA moved bold ly i n t h e e q u i t y a rena , i nc lud ing investments i n i ndus t ry and ag r ibus ines s between t h e 1960s and 1970sr by 1977 it faced s e r i o u s problems, and today it is e s s e n t i a l l y i n l i q u i d a t i o n . LAAD has emphasized ag r ibus ines s lending and has no t i nves t ed heav i ly i n e q u i t i e s . It has had s t eady ea rn ings growth and an improved f i n a n c i a l cond i t i on f o r each of t h e p a s t seventeen years! and its loans have had a s i g n i f i c a n t impact i n terms of economic growth and b e n e f i t s i n t h e c o u n t r i e s where it ope ra t e s . )

There a r e o t h e r , i n d i r e c t e q u i t y a l t e r n a t i v e s open t o some of t h e banks i n Costa Rica. One of t h e s e is t o l end t o i n v e s t o r s f o r equ i ty . Such loans w i l l r epo r t ed ly be p o s s i b l e through t h e A I R f a c i l i t y a s t hey have been through o t h e r l i n e s . Another a l t e r n a t i v e is through e q u i t y investments i n f r e e t r a d e zones o r i n d u s t r i a l parks where new businesses , i nc lud ing non- t r ad i t i ona l agro-export f i rms , may loca t e . Both COFISA and PIC have made such investments.

Debt-equity swaps i n Costa Rica have given r i s e t o a number of new e q u i t y investments i n CD/NTAE bus inesses over t h e l a s t two years . These t r a n s a c t i o n s -- i n which an i n v e s t o r purchases Costa Rican deb t a t a d i s coun t and exchanges it through t h e Cen t r a l Bank i n t o l o c a l currency ins t ruments and p h y s i c a l a s s e t s a t a premium over t h e deb t purchase p r i c e -- have occur red f r e q u e n t l y i n Costa Rica. To ta l swaps t o d a t e have exceeded ~ ~ b 1 0 0 . 0 m i l l i o n i n over 30

t r a n s a c t i o n s . A t o t a l of 1 9 of t h e s e t r ansac t ion6 have involved CD/NTAE projects, inc lud ing 8 f l o r i c u l t u r e and ornamontnl p l a n t p r o j e c t s and 4 shrimp and o t h e r sclefood product p r o j e c t s . COPISA haa b o w lrlvolved i n brokering a number of Costa R i c a ' ~ debt-equi ty swaps. In p a r t i c u l a r , l t has s a v e d a s a f i d u c i a r y agen t f o r i n v e s t o r s and f o r t h e Cen t r a l Bank t o ensure t h a t transfers a r e accomplished i n an o r d e r l y fash ion . PXC and BANEX have a l s o h e n i n d i r e c t l y involved by provid ing l o a n s t o some of t h e p r o j e c t s . P I C has r e c e n t l y approved a U S & , O O O , 000 loan f o r one of t h e p r o j e c t s , TIC0 Fru t , S . A . , a j u i c e concen t r a t e processor t h a t w i l l be promoting t h e product ion of p ineapple and pas s ion f r u i t i n no r th -cen t r a l Costa Rica. l h e j u i c e concen t r a t e s w l l l be exported t o Europe and t o t h e U.S.A. a s we l l a s t o o t h e r world markets.

Costa Rica' s debt -equi ty swaps have been temporar i ly suspended by t h e Cen t r a l Bank, which i s developing new g u i d e l i n e s f o r t h e s e t r a n s a c t i o n s . One of t h e reasons f o r suspension has been t h e adverse e f f e c t t h a t conversion can have on t h e c c u n t r y ' s money supply. Another reason has been r epo r t ed abuses of t h o swaps wherein they may have been used f o r exchange ga in with no t r u e a d d i t l o n a l i t y o r ongoing investment value.

D. Foreign Investment i n CD/NTAE

Although complete d a t a a r e no t r e a d i l y a v a i l a b l e on t h e s u b j e c t , it is c l e a r t h a t a s i g n i f i c a n t p o r t i o n of t h e investment i n Costa R i c a ' s CD/NTAE s e c t o r has been made and/or is he ld by f o r e i g n inves to r s . These persons and co rpo ra t i ons u s u a l l y have t h e r e q u i s i t e f i n a n c i a l , marketing, p roduct ion technology and managerial resources f o r CD/NTAE endeavors? and they a r e o f t e n a t t r a c t e d t o Costa Rica no t on ly because of e x i s t i n g bus iness o p p o r t u n i t i e s b u t a l s o because of t h e c o u n t r y ' s s t a b l e p o l i t i c a l environment and i n v i t i n g l i v i n g condi t ions . Many of t h e s e i n v e s t o r s have been i n t h e count ry f o r over 1 5 y e a r s and have, through t h e demonstrat ion e f f e c t , been t h e c a t a l y s t s f o r CD/NTAE a c t i v i t y . This has been t h e c a s e f o r f l o r i c u l t u r e and ornamental p l a n t s . To some e x t e n t , it has a l s o been t h e ca se wi th p ineapple , p r e s e n t l y Costa R i ~ a ' s most is lportant non- t rad i t iona l a g r i c u l t u r a l export . S p e c i f i c a l l y , PINDECO, a Del? lon te holding, has been growing and expor t i ng f r e s h pineapple f o r over 1 0 years . The company's 1988 expor t volume of n e a r l y US$20 m i l l i o n w i l l probably exceed 95 p e r c e n t of t h i s y e a r ' s t o t a l p ineapple pack from Costa Rica, and PINDECO's o p e r a t i o n s can be expected t o cont inue t o dominate i n t h e i n d u s t r y f o r t h e fo re seeab le f u t u r e . Pineapple product ion and expor t on a reasonable1 s c a l e can on ly be accomplished wi th t h e k inds of resources a v a i l a b l e t o lal'ge t r a n s n a t i o n a l f i rms t i n t h i s s ense t h e PINDECO investment probably makes macroeconomic s ense f o r Costa Rica. But t h e company's a c t i v i t i e s a l s o genera te o t h e r b e n e f i t s . These i n c l u d e p ineapple outgrower o p p o r t u n i t i e s and, more r e c e n t l y , r e sea rch by PINDECO i n t o papaya and mango. The work on t h e s e c rops i n seed development, p e s t c o n t r o l , s t anda rd i za t i on , e t c . - i s qu ick ly s e t t i n g t h e s t a g e f o r e f f e c t i v e f u t u r e growth through l o c a l a s wel l a s a d d i t i o n a l f o r e i g n investment.

Other Binanaing f o r CD/NTAE

In a d d i t i o n t o A . L . D . ' e d i r o c t f i n a n c i r q ~ ~ u p p r I : for CD/NTAE bus i r~osoos Ln Costa Rlcu., t h e r o i s i n d i r a c t f i n a n c l a f suppor t provided through r a y i o n a l

I

e n t i t i e s which on-lend A . I .D. funde. Theoe i nc lude t h e Cen t r a l American Bank f o r Economic I n t e g r a t i o n (CABEI) and t h e L a t i n American Agr ibus iness Development Corporat ion (LAAD). CABEI is i n t h e procesci of d i s b u r s i n g i t s Us815 m i l l i o n Agroemprasas I1 F a c i l i t y throughout t h e region. Approvals f o r Costa Rica t o t a l approximately US$3 m i l l i o n l nc lud ing non - t r ad i t i ona l expo r t m,

p r o j e c t s , c p e c i f i c a l l y f o r f e r n and ornamental plank projects. (ROCAE, r e q u i r e s t h a t a t l e a s t 50 pe rcen t of t h e f a c i l i t y be used t o f i nance NTAE.) Disbursements a r e made t o t h e r e g i o n ' s Cen t r a l Banks whiah ope ra t e Agroempresa r ed i s coun t l i n e s through l o c a l i n t e rmed ia t e c r e d i t i n s t i t u t i o n s ( I C I s ) . Progress has been slow s i n c e 1985, r e p o r t e d l y because of I C I inexper ience w i t h NTAE loan a p p r a i s a l and i n s i s t e n c e on high l e v e l s of c o l l a t e r a l . CABEI does expec t , however, t o have t h e f a c i l i t y f u l l y d i sbureed by t h e end of 1988.

LAAD, which has boen on-lending A . I . D . funds f o r CD/NTAt" s i n m 1970, has developed and expanded a s i g n i f i c a n t , s u c c e s s f u l p o r t f o l i o in Cm:a Rica. The company has f inanced over 40 p r o j e c t s and d i sbu r sed o t e r i.E$l5, O n l i l l i on t o t hose p r o j e c t s i n t h e p a s t s i x t e e n years . Its present: ~ c r r i . ' o l i o exceeds US$^. 0 m i l l i o n and i nc ludes l oans f o r l e a t h e r l e a f f e r n prl l i l c ~ i o ~ ~ a..d expo r t1 c i s s u e c u l t u r i n g 1 b l ack pepper and macadamia p r o d u c t L i 2. 4 t : y d c a l r r u i t p rocess ing . These and o t h e r new p r o j e c t s i n Costa Rica 1'.-1 by. '9 f i nanced by LAAD, i n p a r t , wi th its l a t e s t US$~S. 0 m i l l i o n A g r i b u s i n e ~ ~ d n f L * ,, ROCAP.

Two o t h e r important sou rce s of f i n a n c i n g f o r CD/NTAE i n C ~ * t a '?...I* axe t h e L ~ t e r a m e r i c a n Development Bank ( IDB ) and t h e World Bank ! 12:3 ; , ' , , l i t h e r of t h e s e i n t e r n a t i o n a l o r g a n i z a t i o n s has p l aced l i n e s speci8;e .L .y 5;: CD/NTAE, b u t each has e s t a b l i s h e d f a c i l i t i e s t h a t enab le such finnnc.l,?:,

F i n a l l y , under its Trade C r e d i t Insurance Program (TCIBI, A. ' 1:. ha i s p rov ided over $800 m i l l i o n i n cumulat ive a u t h o r i z a t i o n s f o r gr;.aran ..aes to EXIMBANK program c r e d i t s f o r Cen t r a l America, of which Co,a?-.a Rica has used approximately 8105 mi l l i on . This f a c i l i t y , which w i l l irx!'lude annua l a u t h o r i z a t i o n s of some $200 m i l l i o n through i ts conc lus ion i n 139C, covers t h e shor t - te rm f inanc ing of impor t s from t h e U. S., i nc lud ing a g r i c u l t u r a l i npu t s . The team e s t ima te s t h a t a t l e a s t 1 5 pe rcen t of Costa R ica ' s impor t s under t h e f a c i l i t y were f o r u se i n CD/NTAE product ion.

D O M I N I C A N R E P U B L I C

Table of Content0

I. MACROECONOMIC, PROJECT AND INSTITUTIONAL SETTINGS

A. Recent History 0 . Policy-Related Insues C. Trends in Non-Traditional Agricultural Export (NTAE) D. A.I.D. Projects and Key Institutions

11. MARKETING OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction 0. Availability, Volume, Quality and Continuity of Non-

Traditional Agricultural Export Crops 1. Production 2. Postharvest Handling 3. Transportation 4. Import Procedures 5. Market Information and Market Linkage

111. PRODUCTION OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction B. Technology Transfer8 Research

1. Seed and Variety Selection 2 . Water Management 3. Fertilizer and Ag Chemical Use 4. Labor Management 5 . Mechanization

C. Technology ~ransfexr Extension D. Land Use

1. Monoculture 2. Soil and Water Conservation 3. Improper Use of Fertilizer and Chemicals

E. Support Services

IV. KNVIRONMENTAL IMPACT FROM CROP DIVERSXFICATIQN AND NON-TRADITIONAL AGRLCUL!lWRU EXPORT

Page

XV. D-ii1

IV, D-1

IV. D-1 IV. D-1 IV, D-2 IV. D-5

IV. D-7

IV. D-7

IV. D-8 IV. D-8 IV. D-9 IV. D-9 IV. D-10 IV. D-10

IV. D-11

XV. D-11 IV. D-12 IV. D-12 IV. D-12 IV. D-13 IV. D-13 IV. D-14 IV. D-14 IV. D-15 IV. D-15 IV. D-15 IV. D-15 IV. D-16

IV. D-16

IV. D-i

Table of Contents (continued)

v. CREDIT/BINANCE/INVESTMENT FOR NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. A.1.D.-Authorized Primary Facilitien Available for CD/NTAE

B. Placement 1. Outstandings 2. The Placement Process

C. The Issue of Debt Versus Equity D. Foreign Investment in CD/NTAE E. Other Financing for CD/NTAE

LIST OF TABLES

IV. D-23 IV. D-23 IV. D-23 XV. D-24 XV. D-26 IV. D-26 IV. D-27

1. Volume and Value of Non-Traditional Agricultural Exports, 1901-07 1V.D-2

2. Exports of Non-Traditional Agricultural Products, 1981-87 IV. D-3 3. Outline of Suggested Guidelines for the Pre-Inspection Program IV. D-19 4. A Listing of Products from the Dominican Republic that can

Enter into the U.8. under the Pre-Inspection Program IV. D-20 5. Fresh Vegetables Exported Under the Pre-Inspection System IV. D-21 6 Pre-Inspection Program (USDA-APHfS/AID/JACC/SEA) IV. D-22

IV. D-ii

A.I.D. AD F ADOEReO APHIS CACI CARICOM CBI CBPC CD CEA CEDOPEX DACEA

EP A FDA FIDE GDP GODR IBRD IDB INDRHI IPC ISA/CALDER

LAAD NTAE PACD PFI SEA SEIC STP USAID USDA

Agency for International Dovelopment Fundacion de Dea~rrollo Agropecuario, Znc. ~sociaci6n Dominicana de Exportadores Animal and Plant Health Inspection Service (USDA) Chicago Assoaiation of Commerce and Industry Caribbean Community Caribbean Basin Initiative Caribbean Basin Promotion Center Crop Diversification Consejo Estatal de Azucar (State Sugar Council) Centro Dominicana para Promoci6n de Exportaciones Direcci6n General Operaciones Agroindustriales, Consejo Estatal del ~z6car Environmental Protection Agency Food and Drug Administration Fondo de 1nversi6n para el Desarrollo ~con6mico Gross Domestic Product Government of Dominican Republic World Bank Interamerican Development Bank Instituto Nacional de Recursos Hydraulicos Investment Promotion Council Instituto Superior de Agricultura/Centro de Admin. de Desarrollo Rural Junta Agroenlpresarial de Consultariia y Coinversi6n, Inc. (Joint Agricultural Consultative Committee/Dominican Republic ) Latin America Agribusiness Development Project (ROCAP) Non-Traditional Agriculture Export Project Assistance Completion Date Participating Financial Institution secretaria de Estado de Agricultura secretaria de Industria y Comercio Secreteriado ~6cnico de la Prasidencia United States Agency for International Development United States Department of Agriculture

IV. D-iii

D O M I N X C A N R E P U B L X C

I, MACNOECONOMIC, P M C T AND IMSTITUTIONAL SETTINGS ---.

The Dominican Republic has a population of approximately 6.5 mil l ion, In 1985, its p e r cap i t a income averaged 054873. Agriculture provided about 19 percent of t h e GDP.

The economy of the country performed well during t h e 1960s and u n t i l t h e mid-1970s. The sharp drop i n sugar p r i c e s i n 1976 resu l t ed i n a major downturn i n the economy which was exacerbated by r i s i n g o i l p r i c e s i n 1978 and 1979. Although sugar p r i c e s recovered from t h e lows of 1976, a world receasion i n t h e e a r l y 1980s resu l t ed i n negative o r zero growth during t h i s period due mainly t o t h e f a c t t h a t approximately 90 percent of t h e country 's export earnings came from suyar, coffee , cocoa, tobacco and minerals, a l l of which su f fe red severe p r i c e decl ines on t h e world markets. Consequently, fore ign exchange became scarce. By 1985, GDP growth had returned t o t h e

ll p o s i t i v e s i d e , r e g i s t e r i n g a 1.3 percent increase over 1984. The Caribbean Basin I n i t i a t i v e ( C B I ) has generated i n t e r e s t i n developing NTAEs from t h e Dominican Republic and severa l USAID p r o j e c t s a r e d i r e c t l y r e l a t e d t o crop d i v e r s i f i c a t i o n and NTAE.

B. Policv-Related Issues

The importance of ag r i cu l tu re t o t h e economy of the Dominican Republic, and its v i r t u a l s tagnat ion through t h e 1970's and e a r l y 198O8s, l ed USAID t o develop a p r o j e c t aimed a t improving policy-making f o r t h e a g r i c u l t u r a l sec to r (P ro jec t No. 517-0156, Agr icul tura l Policy Analysis) . The major pol icy i s sues involve agrar ian reform, p r i v a t e s e c t o r involvement, exchange r a t e cont ro ls , export incent ives , p r i c e s , taxat ion , t h e r o l e of t h e Agriculture S e c r e t a r i a t (Ministry of Agr icul ture) , e t c . A p a r t of t h e goal of t h e pol icy ana lys i s p r o j e c t is t o increase exports , including NTAEs.

Like o ther Caribbean countr ies , t h e Dominican Republic is a r ec ip ien t of b e n e f i t s under t h e C B I and is a member of CARICOM. It has a package of export and investment incent ives t h a t , on paper, make it competitive with o ther Caribbean countr ies . But t h e government has occasionally placed taxes on some export products. Also, t h e r e is uncer ta in ty a s t o whether fore ign inves to r s w i l l be f r e e t o r e p a t r i a t e t h e i r earnings under t h e Agro-industry Incentives Law (No. 409) approved i n 1982, which seeks t o promote a s r o i n d u s t r i a l exports and allows incent ives t o p r o j e c t s i n which fore igners hold 49 percent o r less of t h e equi ty i n a p ro jec t . Furthermore, t h e government h::s f requent ly ignored duty-free import l i censes issued under incent ive laws, and has l ev ied d u t i e s aga ins t holders of these l i censes -- o f t e n non-tradit ional crop exporters .

I V . D-1

In gene ra l , Lt can be o d d k h a t vtrilo it: i a t h o Domlnicnn Republic p o l i c y t o promote NTAEe, a c t u a l performance t o data doos 1 i& t l e t o ericaurnye i n v e s t o r s

a t o undertake p r o j e a t v of t n i a na tu re .

C , Trende i n Non-Traditional h g r i a u l t u r a l Export (NTAII)

Exports of non - t r ad i t i ona l producte have been i nc r ea s ing a l though t h e growth hae been e r r a t i c , wi th e x p o r t s ranging from 84,152 m t . i n 1983, t o 134,225 m t . i n 1986 (Table 1). A more d e t a i l e d a n a l y s i s of t h e c rops expor ted can be seen i n Table 2. Flowers and l i v e p l a n t s have shown s t eady growth over t h e pe r iod . Among t h e vege tab les , e x p o r t s of cucumbers, eggp lan t s , peppers , tomatoeo, s t r i n g beans, and yenchoy have i nc r ea sed s u b s t a n t i a l l y . A t one p o i n t (1982-841, f rozen okra was an impor tan t expo r t .

The dramat ic i n c r e a s e i n melon produc t ion from e s s e n t i a l l y z e r o t o l,7,56l m t . i n 1906 demons t ra tes t h e r ap id r a t e a t which expo r t s can i n c r e a s e i f a s p e c i f i c e f f o r t is mads. C i t r u s and p ineapp le a r e o t h e r examples.

T A B L E 1

DOMINICAN REPUBLIC1 Volume and Value of Non-Traditional

Sourcer Compiled from d a t a p rov ided by t h e Centro Dominican0 de Promotion de Exportaciones .

T A B L E 2

DOMINXCAN - REPUBLICr ICxporte of Non-Traditional. A g r i a u l t u r a l Protiuat;a, ~4)z-907

8-

Live P l a n t a 898 Flowers 280 C t h ~ j r 1 2 -

Sub-To La.! 1,190

~ u c u m b e r a 565 Eggplan t 636 Musuchino 252 Okrar F r e s h 218

Frozen 56 Peppers 2,296 Pue rr o 1 4 3 Pumpkins/Squash 3,097 Tomatoes 1 ,676 S t r i n g beans 1,245 Yenchoy 7 Other o r n o t s p e c . 153

1 om Sub-Total

F r u i t r Avocado Banana C i t r u s r

Sweet Orange Mandarin G r a p e f r u i t S o u r Orange B i t t e r Lemon Sweet Lemon Limonc i l lo

Cundeamar Guanabana Mango Melons Papaya P i n e a p p l e P l a t a n o Tamarindo

t a b l e c o n t i n u e d n e x t page ...

IV. n-3

1 A B L E 2 ( o o n t i n u o d )

DOnINLCAN RgPUBLICl Pxporta of Non-'Craditional A g r i a u l t u r a l Rtodriote, - 1981 - 1907

F r u i t 4 ( c o n t . ) - Watermelon 6 Zepote 15 Other , F r e s h 645 Frozen F r u i t 366

Sub-Total 36 284

Legumes 2,062

~ o o t Crops r N a m e 142 P o t a t o e s 1 3 Sweet P o t a t o e s 6,105 T u r n i p s 1 7 5 Yau t ia 17 ,293 Cassava 4 ,631 Other 2 6

Sub-Total 28, 385

Nuts r - Coconut-Dry 14,717 Coconut-w/Water -

Sub-Total 14,717

S p i c e s r C i l a n t r o 160 Ginger 624 -

Sub-Total 784 ---------------------------..------------------..-----------------------..-------- TOTAL 93,710 87,962 64,152 119,525 114,407 134,225 116,159

Sourcer Compiled from d a t a p r o v i d e d by t h e C e n t r o D o m i n i c a n ~ d e Promociones d e Expor tac ioaes .

517-0156 Aqriburineee Policy Analysis 7/94 09/88 517-0166 Agribuninees Promotion 8/85 12/88 517-0390 Export and Investment PromotAun 8/85 06/08 517-0214 Conuieraial Farming Syataws 7/87 07/92 517-0236 Sugar 1)iversif i a a t i o n 9/87 09/92 ~~---~-------~----~~%--"~--~II~"-~"--I-~I---<.---"----"---------~----------------

1. Aqribusinese Policy - Analysis (No. 517-0156) - Pro jec t Goal I To incraase a g r i c u l t u r a l production, ra-do farmer incomes, s a t i s f y consumer demand, promote expor ts and reduce imparts.

P ro jec t Purposet To a s s i s t t h e National Council of Agricul ture (CNA), and through it t h e GODR, t o formulate sound, coherent a g r i c u l t u r a l s e c t ~ r p o l i c i e s .

Most of t h e accompliahnents t o da te r e l a t e t o t h e general a g r i c u l t u r e s e c t o r , which i n d i r e c t l y a f f e o t s CD/NTAE.

Funding r

A.1 .D . r Amount Authorized US$l, 250,000 (Grant)

A.1.D.r Accumulated Expenditure US$ 304,590 (February 31, 1988)

GODRn ~ ~ $ 1 , 9 5 0 , 0 0 0 (PL 480 and C9I Funds)

2. Agribusinese Promotion (No., 5l7-0186)

2ro j e c t Goal r To increase employment, incomes and fore ign exchange sarn ings o r savings.

P ro jec t Purpose: T s i n i t i a t e new, o r expand e x i s t i n g , agr ibus iness investmant p r o j e c t s under t h e management of p r i v a t e f i rms davoted t o t h e production of raw o r processed a g r i c u l t u r a l commodities f o r s a l e i r ; export o r domestic markets, and t o improve t h e mechanisms f o r agr ibus iness promotion and f inancing.

This p r o j e c t has been implemented, i n p a r t , by t h e J o i n t Agr icul tura l Consultat ive Committee (JACC) which is d i r e c t l y involved i n a g r o i n d u s t r i a l development, including membership engaged i n CD/NTAE.

A. I.[>. r Amount: Authorized

Total

0!3# 2 .5 mlllion (Grant) ~ ~ $ 1 7 . 3 million ( Loan) ~ ~ $ 3 9 . 8 million

Ir. I .D. r Accumulated Expenditure US$ 0.5 million (Grant)

Total US$ 8.7 mill ion (Loan) US$ 9.2 million

GODR ~ ~ $ 3 0 . 9 million

3. Export and Xnveetment Promotion (No. 517-0190) - o Project G-1: To increased employment, incomes and foreign oxchange -

earnings.

o Project Purpose: To es tab l i sh t h e Investment Promotion Council ( I P C ) a5 a mechanism t o coordinate public and pr iva te e f f o r t s i n the promotion and development of investment and export opportunit ies i n the Dominican Republic.

T h i s p ro jec t involves indus t r i a l as well a s agr icu l tu ra l promotion. Most of its a c t i v i t i e s t o date involve indus t r i a l promotion. I t has an ind i rec t e f f e c t on CD/NTAE.

o Funding I

A . I . D . , Amount Authorized

Total.

A . 1 . D . t Accumulated Expenditure

~ ~ $ 5 . 0 9 million (Grant) ~ ~ $ 0 . 9 1 million (Grant - Local

Currency 1 US$^. 00 mill ion

US$^. 3 mill ion

RD$Z. 075 million

4. Commercial Farming Systems (No. 517-0214)

o Project Goal: To contribute t o sustained and equitably distr ibuted economic growth i n t he Dominican Republic by accelera t ing t h e movement of the agr icu l tu ra l sector i n t o non-traditional crops, thereby increasing small farmer incomes and r u r a l employment, and earning o r saving foreign exchange.

o Project Purpose : To increase production of non-traditional crops through expanded farmer linkages with agribusinesses and d i r e c t access t o c r e d i t and improved technology.

IV. D-6

A . 1 . D . r Amount Authorizad

Tota l

u8$10,00 mil l ion (Loan) US$ 4.75 n~>tlLion (Grant) m~rniliion

A.1 .D . t Accumulated Expenditure US$ 1.495 mi l l ion (March 31, 1988)

5. . Sugar Diver s i f i ca t ion ( N o . 517-0236) - Projec t Goal I Contribute t o sus ta ined and equi tably d i s t r i b u t e d economic growth i n t h e Dominican Republic by t h e rapid d i v e r s i f i c a t i o n from sugar production t o a l t e r n a t i v e productive a c t i v i t i e s .

Projec t Purposer To strengthen t h e i n s t i t u t i o n a l capacity t o p lan , pr0rnn.t;~ and implement a na t iona l sugar d i v e r s i f i c a t i o n program i n t h e Dominican Republic.

This p r o j e c t involves t h e c los ing of s i x sugar m i l l s and t h e convarsion of t h e i r lands (approx. 50,000 Haa. ) t o productive uoes. The ~ i r e c c i 6 n General ds Operaciones Agro-Industriales, Consejo E s t a t a l de AzGcar (DACEA) has boen c rea ted by t h e Consejo E s t a t a l de ~ z f i c a r (CEA) t o prepare and implement p lans f o r these lands. The p ro jec t has d i r e c t implicat ions f o r CD/NTAE. Projec ts involving pineapple, p lan ta ins and pigeon peas a r e already underway. Training is an important component of t h e p r o j e c t .

Funding r

A.1.D.x Amount Authorized Us$3.5 mil l ion (Grant)

A.1.D.r Accwnulated Expenditure -- (March 31, 1988)

GODRr R D $ ~ . 0 mi l l ion

MARKETING OF NCIN-TRRDITIONU AGRICULTURAL W O R T CROPS 7

A. Introduction

Economic p o l i c i e s of t h e Dominican government have been incons i s t en t ly imple- mented and lack cont inui tyr a s a consequence, t h e p r i v a t e sec to r , including fore ign inves tors , has not had t h e incen t ive t o i n v e s t i n and develop NTAE. Although laws favorable t o t h e development of export agr ibus iness have Deen es tab l i shed (Laws 409, 69, 5321, t h e government has not supported t h e i r proper implementation. On t h e o the r hand, t h e i n d u s t r i a l sec to r is doing w e l l through t h e successful establishment of f r e e zone areas , and a s a r e s u l t of lesser r i s k s involved and l e s s government in tervent ion .

UYAXD/Dominicnn iiegublic tiaa been inetrumontn1 i n dclsisting t h e 60DR t o formu- l a t e policieu condualve t o NTAE. I t has i n s t i t u t ed several projects such aa the Agribuuineeo Promotion, Suyur Diversif ication, and Export and Investment Promotion projects . The main th rus t of each i e t o develop non-*traditional exporta which w i l l in tu rn increane producuxa' income, provide new employment opportunit ieo, and genorate foreign exchange. The country is greeently tsxgorting t he fol1.owing non-traditionul agr icu l tu ra l item81

1. Melons (cantaloupe, honby dew) 2 . Tomato 3. Winter vegetables (snow peas, chinese vegetables, cucumbers, green

peppers 4. Root crops '(malanga, yams, cassava) 5. Coconuts 6. Cut flowers 7. Strawberries 8 . Avocados

There a re several organizations established and supported through USAID/DR t h a t a s s i s t i n t he development of NTAE; IPC (Investment Promotion Council), JACC/RD, and ADOEXPO (Dominican Exporters Association) . IPC has concentrated i ts e f f o r t s i n promoting l i g h t manufacturing through t he f r e e zones. Minimal work has been done t o iden t i fy U.S. companies in te res ted i n an agribusiness j o in t venture, mainly f o r two reasons; (1) r i s k s a re too high i n ag r i cu l t u r a l ventures, and investors can make more money i n other business e . , r e a l e s t a t e ) a t lower r isks . ( 2 ) Government policy i s not conducive t o investment by foreign and Dominican Republic agribusinessmen. JACC/RD i s an associat ion of producers/exporters and other members whose businesses a re d i r ec t l y r e l a t ed t o the agr icul ture f i e l d ( i . e . , seed and f e r t i l i z e companies). ADOEXPO is a l s o an associat ion of producers and exporters. However, t he ADOEXPO main focus has been t o t r y t o ensure t h a t the government complies with its laws 409, 69, and 532 on behalf of t h e producer/exporter.

B. Availabil i tv. Volume. Qualitv and Continuitv of Non-Traditional ~ g r i c u l t u r a ~ Export Crops

1. Production

JACC/RD does not have the funds t o provide production technology ass is tance on a long-term basis. It is ab le t o obtain short-term kechnical ass is tance f o r spec i f i c groups of producers. For instance, JACC/RD brought i n a flower s p e c i a l i s t t o address problems with viruses and pes t s In t he f i e ld . However, according t o one flower grower interviewed, t he process JACC/RD goes through t o br ing i n the s p e c i a l i s t is too complex and time-consuming, especial ly s i n c i immediate act ion is needed when a vi rus or pes t problem is ident i f ied . Nor does t h e "band-aid" approach t o technical ass is tance s a t i s f a c t o r i l y address t he long-term needs of non-traditional agriculture.

XV. D-8

Duo t o thLo l iml ta t lon , UBAID/Santo DomLnrjo, Ln oilrly I.LJUt3, nwilrdad contrac t t o d U . S . coneultincj Eltm t o provido 54 pornon-months aurvioau of! il Sanior SaLentiet speciaLizu11 L I I hortlcuJ.turaL ror~o~rcch drrtl 47 pest~on-monttie oorvicen of! short-term a p u c i a l h t s Ln L\ broad array of f r u i t and vegetable production- ru la ted d i sc lp l inea . The objoct ivo of the roquouted uervicea iu tho provLslon of a s ~ i s t a n c e i t 1 t he eetabliuhment a i d operatLon of t h e Agriculturnl Dsvelop- mont Foundation (NIP) which waa crea ted under the Agr icul tura l Technology Developmont and Support component of tho Cornmeraial E'amlng Syatems Projea t (517-0214). The objec t ives of t h i s p r o j e c t component a re r (1) in t h e medium t6rl1r ,, to improve a g r i c u l t u r a l production technoloyg f o r producers/axgorters on non-tradit ional crops! and ( 2 ) i n t h e long torm, t o develop a p r iva te sec to r organizat ion t h a t provides direct i ,on, t r a in ing , and f i n a n c i a l clnd technica l aas i~ l t ance f o r c e r t a i n kinds of a g r i c u l t u r a l technology development occuring i n both t h e p r i v a t e and publ ic s e c t o r s .

2 . Poet Harvest Handling

ZACC/RD has again provided short-term technica l a s s i s t ance by i n v i t i n g severa l exper ts t o give seminars on postharvest handling technology.

In e a r l y 1988, JACC/RJl f urmed a technica l ass is tance committee (Cornit6 de Consultoria) with t h e objec t ive of bringing more technica l a s s i s t ance support t o farmers. The committe~e is composed of consult ing companies within t h e Dominican Republic. However, i ts main e f f o r t w i l l repor tedly be in conducting f e a s i b i l i t y s t u d i e s f o r t h e farmers.

In t h e team's judgment, 1on.g-term techn ica l ass is tance i n pos tharves t handling is needed both t o t r a n s f e r tachnologies t o l o c a l h o r t i c u l t u r i s t s and on t o farmers,

Cost uf t r anspor ta t ion is a major c o n s t r a i n t f o r producers/export;ers of NTAE. I t is more expensive t o sh ip produce from t h e Dominican Republic v i a sh ip t o south Flor ida than from Central America. According t o JACC/RD and a grower of r o o t crops, space a v a i l a b i l i t y and se rv ice frequency is not a major obstacle. However, t h e c o s t of t r a n s p o r t a t i ~ n is sti l l a s much a s 60 parcent of t h e t o t a l c o s t of t h e product, C.I.F. To reduce t r a n s p o r t conts , growers/ exporters , through JACC and with A . I . D . support, should negot ia te d i r e c t l y with t h e shipping l i n e s a s is planned i n Honduras and elsewhere.

The producers/exporters do have t h e option t o s h i p products d i r e c t l y t o two por ts r South Flor ida and New York. The cos t of shipping t h e product t o New York is approximately t h e same a s t o South Florida. Direct a c c e s s i b i l i t y t o two markets by way of sh ip gives t h e growers an advantage over t h e Central American producers. Also t h e Dominican Republic has d i r e c t a i r f l i g h t s i n t o New York with ava i l ab le space and acceptable frequency.

In 19136, USDA/APHIY was conkracted through JACC/HD ( A . I .D. ) and tho Minis t ry of! Agr i cu l tu re t o orr tabl ish t h e neuessnry procoduree and s t a f f t r a i n i n g f o r t h e pre-cloaranct , p l a n t h e a l t h inlapactions of produce des t i ned t o t h e U.S. m a r k e t . The USDA/APHJ.S inepec tor and h i s Dominican coun te rpa r t prepared normative procedure@, v i s i t e d ope ra t i ons i n Jamaica and o f f L c i a l l y began t h e pre-c learance i n spec t ion s e r v i c e i n February 1987. Seven i n s p e c t o r s under t h e supe rv i s ion of USDA/APLiIS are p r e s e n t dur ing t h e loading of c o n t a i n e r s a t farme. From 1987 t o May 1988, 2 ,500 con ta ine r s of melons, r o o t c rops , tomatoes, green poppers, avocados, coconuts and ch inese vege tab les were inspec ted and sea l ed . This has onabled r e c e i v e r s i n t h e U.S. t o exped i t e t h e product wi th no "h i tchnicker" bug problems, t h u s e l imina t ing t h e p o s s i b i l i t y of fumigat ion o r l o s s of cargo. For t h i s s e r v i c e t h e producer/exporter pays a f e e p e r con ta ine r .

During an i n t e rv i ew with a f lower grower some r e s e r v a t i o n was voiced i n r e f e r ence t o u s ing t h e pre-clearance s e r v i c e . Although t h i s i n d i v i d u a l has had s e v e r a l shipments r e j e c t e d i n Pue r to Rico due t o i n s e c t problems, he i s a f r a i d t h a t i f USDA/APHIS v i s i t s h i s farm, t h e y w i l l c r e a t e an even g r e a t e r problem by demanding t h e e r a d i c a t i o n of a l l t h e fa rm's p e s t problems before a l lowing t h e e x p o r t of any f u r t h e r product . ( I t should be noted t h a t 3 yea.rs ago, s t rawberry expor t s from Ch i l e t o t h e U.S. were stopped e n t i r e l y by USDA/APHIS a f t e r t h e inc idence of a 2 5 p e r c e n t r e j e c t i o n r a t e . ) This i s c l e a r l y one of t h e drawbacks f o r a grower. However, t h e r e a r e c e r t a i n U.S. s t anda rds t h a t must he m e t by t h e producer who wants t o expor t . Ove ra l l , t h e o t h e r growers/exporters interviewed were p l ea sed wi th t h e implementation and results of t h e pre-c learance i n s p e c t i o n se rv i ce . The team recommends cont inued suppor t of t h e pre-clearance i n s p e c t i o n s program i n t h e Dominican Republic wi th t h e goa l of s e l f - s u s t a i n a b i l i t y through f e e c o l l e c t i o n s , a s i n Chi le .

Market Information and Market Linkage - - J A C C / R D V s main o b j e c t i v e s are t o r (1) promote the product ion o f t r a d i t i o n a l and non- t r ad i t i ona l c rops i n t h e Dominican Repub;!ic, ( 2 ) promote j o i n t - ven tures between f o r e i g n and D. R. i n v e s t o r s , ( 3 ) ga the r and d issemina te market information a s w e l l a s i d e n t i f y r e p u t a b l e b r o k w s f o r t h e growers, and ( 4 ) r e p r e s e n t t h e growers by monitor ing government p o l i c i e s and ac t i ons .

A new Executive D i r ec to r was appoin ted about a yea r and h a l f ago and a i n c e then JACC/RD has been a c t i v e l y r e c r u i t i n g new members. I n t h e a r e a of market information and i d e n t i f i c a t i o n of b rokers , JACC/RD has con t r ac t ed a f i r m i n Chicago t o i d e n t i f y markets, t r e n d s and p r i c e s a s w e l l a s check on t h e q u a l i f i c a t i o n s and backgrounds of brokers . I n one i n s t ance , JACC was asked by a grower t o i d e n t i f y and check a r e c e i v e r ' s c r e d i b i l i t y and performance. The r e p o r t came back nega t ive . However, t h e grower s t i l l decided t o conduct a bus iness t r a n s a c t i o n wi th t h i s r ece ive r . (The n e t r e s u l t s f o r t h e grower a t t h e end o f t h a season included s e r i o u s f i n a n c i a l l o s s e s ) . JACC a l s o provides market p r i c e s on a d a i l y o r weekly b a s i s f o r its members. A t l e a s t 35

IV. D-10

companies u ~ o this se rv ice por weak. Growers intorviewed uae tho PRO-NET se rv iao provided by JACC/RD a s a baak-up t o cheuk p r i c e s i f they ara urlsure of! what is happening i n the U . S . market. However, tho growere r e l y pr imar i ly on t h e i r rece ivers t o pos t them on da i ly g r i c c s and trende. Overal1, those interviewed were pleasod with tho ~ l e r v i c e provided by JACC/RD.

111. PRODUCTION OR NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction

The Dominican Republic occupies about two-thirds of t h e i s l a n d of Hispaniola which is t h e second l a r g e s t of t h e Caribbean i s l ands . I t has a land a rea of 48,000 square kilometers. The p r inc ipa l mountain range, t h e Cord i l l e ra Centra l , runs e a s t and west across t h e country and forms t h e country ' s p r i n c i p a l watershed. El.evations range t o over 10,000 f e e t . Other mountain ranges a f f e c t t h e agr i .cul ture of t h e Dominican Republic by d iv id ing t h e country i n t o numerous, f a i r l y small va l leys . The Cordi l le ra Central infl.uences t h e r a i n f a l l p a t t e r n s o t h a t t h e lands i n t h e south a r e r e l a t i v e l y dry and must be i r r i g a t e d f o r any fanning o ther than subsistence crops.

Various f a c t o r s influence t h e cl imate and vegeta t ion zones of t h e i s land. Rai~.- +ails mainly during two periodsr May t o June and October t o November. Rai,~;all v a r i e s from 500 mm t o 2,700 mm per year bu t is not well d i s t r i b u t e d s o t h a t production of q u a l i t y crops, p a r t i c u l a r l y non-tradit ional crops, must de~pend upon i r r i g a t i o n .

S o i l s a r e genlerally adequate and can be productive i f properly managed. The major l i m i t a t i o n t o production is t h e topography. There a r e not many l a r g e expanses of land t h a t a r e s u i t a b l e f o r i r r i g a t i o n , p a r t i c u l a r l y by su r face methods. About 12 percent of t h e country's land a rea is s u i t a b l e f o r ixitensive cropping and most of t h i s land is used f o r food crops including corn, beans, .sweet pota to , p lan ta in , cassava, peanuts and tomato.

Agriculture c:ontributes s u b s t a n t i a l l y t o the GDP and is t h e major employer. The major production a reas a r e t h e Cibao Valley and t h e North coas t regions. A high percentage of t h e farms i n t h e Dominican Republic a r e owner-operated bu t most a r e l e s s than f i v e a c r e s i n s i z e which l i m i t s larger-scale, more e f f i c i e n t production. The country 's p r i n c i p a l a g r i c u l t u r a l export commodity is sugar. I t a l s o produces and expor ts coffee and tobacco. I n t h e l a s t f i v e years t h e country ' s non-tradit ional a g r i c u l t u r a l exports have increased s u b s t a n t i a l l y , including crops such a s pineapple, melon and chinese vegetables.

Major roads a re i n r e l a t i v e l y good condition, but secondary farm-to-market roads a r e not i n good r e p a i r desp i t e t h e cu r ren t government's l a rge p u b l i c works program. Postharvest services such a s pre-cooling, packing and s torage have no t y e t been developed on a formal b a s i s although some agr ibus inesses occasionally l ease o u t excess capacity.

I V . D - 1 1

8, Teahnoloqy Tranefer r b e e a r a h - From un h ia tor lcu .1 ntandpoi.nt , au mni! r, tla expacted, t h o Uonlinican l i epubl ic ' s a y r i c u l t u r a l resoarch proyrams havo n o t been suppor t i ve of CD/NTAE, Apart: from t h e f a c t t h a t t h e country has focused p r i m a r i l y 01.1 t r a d i t i o n a l a g r i c u l - t u r a l commodity expo r t s , mainly suga r , i t s o v e r a l l r e sea rch c a p a b i l i t y ha s been l i m i t e d due to illaclequata budgetary p rov i s ions , p a r t i c u l a z , l y f o r t h e Sec re L a r i a t ( M i n i s t r y ) of Ayricul t u r e . Even f o r suga r , r e sea rch has been l i m i t e d . This i 5 r a f l e c t e d i n thq coun t ry ' s low cane y i e l d a irnd i n t h e a d m i n i s t r a t i v e top-heaviness of t h e S t a t e Sugar Council (CEA), which has t r a d i t i o n a l l y been weak i n r e sea rch . Nor has CEA conducted any s i g n i f i c a n t f i e l d t r i a l s f o r NTAE c rops on t h e l ands which it p l a n s t o l e a s e a s p a r t of its sugar d i v e r s i . f i c a t i o n program. Foreign i n v e s t o r s w i l l probably undertake such r e s e a r c h on t h e i r own b u t would be more l i k e l y t o i n v e s t i n t h e f i r s t p l a c e i f adequate r e sea rch was a l r e a d y underway. For domestic investment , however, such r e sea rch is more impor tan t .

S ince 1982, l e a d e r s i n p u b l i c and p r i v a t e i n s t i t u t i o n s i n t h e country have vo iced t h e i r concern f o r i nc r ea sed r e sea rch i n CD/NTAE, b u t budgetary suppor t is s t i l l l a c k i n g a s is adequate r e sea rch p lanning . Add i t i ona l l y , r e sea rch f a c i l i t i e s i n d i f f e r e n t p a r t s of t h e count ry a r e badly neg lec ted . F a i l u r e t o p l a n and fund CD/NTAE re sea rch could r e s u l t i n h igh oppo r tun i t y c o s t s . S p e c i f i c a l l y , f a i l u r e t o conduct a d a p t i v e r e sea rch th rough on-farm t r i a l s cou ld r e s u l t i n c rop monocultures and t h e expensive use o r misuse of imported t e chno log i e s . N e w farming ven tu re s i n CD/NTAE a r e e s p e c i a l l y vu lne rab l e t o t h e s e r i s k s because of market requirements f o r p roduc t q u a l i t y and q u a n t i t y . I n t h e ru sh t o meet t h e s e requi rements and i n t h e absence of on-farm t r i a l r e s e a r c h programs, producers may w e l l f i n d f u t u r e c o s t s wiping o u t any c u r r e n t ga ins . Nor is short - term consu l tancy -- t h e u sua l p r e s c r i p t i o n -- a s a t i s f a c t o r y answer.

A p o t e n t i a l l y important advance i n r e sea rch could be A . I . D . ' s A g r i c u l t u r a l Technology Development and Support P r o j e c t which has c r e a t e d a Research Foundation t h a t w i l l fund r e sea rch , technology t r a n s f e r and t r a i n i n g i n t h e a r e a of non - t r ad i t i ona l c rop produc t ion . The founda t ion is s t i l l i n a s t a r t - u p phase , bu t is expected t o promote app l i ed on-farm r e ~ e a r c h t o p rov ide p r a c t i c a l suppor t t o farmers .

For CD/NTAE i n i t i a t i v e s to succeed over t h e long-term, ongoing adap t ive r e s e a r c h must be conducted i n a number of a r e a s i n c l u d i n g s eed and v a r i e t y s e l e c t i o n , water management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use , mechanization, and l abo r mnagement. These a r e a s a r e d i s cus sed below.

1. Seed and Var i e tv S e l e c t i o n

Most seed and p l a n t m a t e r i a l s of v a r i e t i e s f o r CD/NTAE i n t h e Dominican Republ ic have been imported due, i n p a r t , t o t h e t a c t t h a t many of t h e c rops a r e e s s e n t i a l l y "new" t o t h e country. But even i n c a s e s where f r u i t s and vege t ab l e s have been grown b e f o r e i n t h e country ( e s p e c i a l l y i n t h e ca se o f e t h n i c c r o p s ) , t h e marketplace t e n d s to d i c t a t e t h e s p e c i f i c seed o r v a r i e t y

I V . D-12

t h a t lahould be pl imtod. Prom t h e t u m l 8 oboorvatione, whlLo producers d i d conduct ~101n0 pr'ol.lminary "ruaeuroh" t o chooae from two o r pos s lb ly moro acceptab la market: varletLon of a p a r t i c u l a r crop1 a s a r u l e t h y were not: c a r ry ing nut ongoing adaptive rosanrch t r i a L e t o follow and improve t h e performance of il s e l e c t e d v a r i a t y . A 8 indicated rlbove, t h e r e hcra bean r a l a t i v e l y l i t t l e suppor t i n t h i s a r e a from t h e Sucre ta r ia l : of Agriculture.

2. Water Management

Proper water management is c r i t i c a l t o optimi.zing economic r e t u r n s from CD/NTAEs. The b e s t method t o accomplish t h i s is through se t - a s ide water management t r i a l s . I n t h i s way, t ime ly answers can be found t o ques t i ons such a s when t o i r r i g a t e ? what t y p e ( s ) of i r r i g a t i o n t o use? what d e l i v e r y r a t e s t o user how t o manage excess water? how t o manage t h e so i l /wa te r r e l a t i o n s h i p r and what t h e c o s t of i r r i g a t i o n should be. Growers and personnel from i n s t i t u t i o n s such a s t h e Nat ional I n s t i t u t e of Hydraulic Resources ( I N D R H I ) , involved i n A.I. D. ' s On-Farm Watez Management P ro j ec t , were concerned wi th each of t h e s e ques t ions . But, d e s p i t e some success i n t h e formation of water-user a s s o c i a t i o n s , it was appa ren t t h a t r e sea rch e f f o r t s were d i r e c t e d more a t s t udy ing t h e nominal potentia3.s of d i f f e r e n t i r r i g a t i o n systems and t h e i r r epo r t ed c o s t s t h a n i n t h e conduct oC adap t ive on-farm research .

3. F e r t i l i z e r and A g r i c u l t u r a l Chemicale Use

Non-tradi t ional c rops r equ i r e proper f e r t i l i t y cond i t i ons and p e s t and d i s e a s e c o n t r o l t o ach i eve and s u s t a i n marketable y i e ld s . F e r t i l i z e r , p e s t i c i d e and o the r i n p u t s a r e expensive and consequent ly must be used e f f i c i e n t l y . S o i l and o t h e r cond i t i ons i n t h e Dominican %pub l i c a r e d i z f e r a n t f r o = t h o s e o f t h e U.S. and t h e a p p l i c a t i o n of t h e s e i n p u t s t h a t is a p p r o p r i a t e , say , f o r Ca l i fo rn i a , may n o t be t h e most s u i t a b l e f o r t h e Dominican Republic f o r any given crop. A t t h e o u t s e t , it is n o t i napp rop r i a t e t o use an imported technology package, p a r t i c u l a r l y i f s eed f o r a s p e c i f i c c r o p is a l s o be ing imported. Yet, wi thout proper adap t ive research , c r i t i c a l q u e s t i o n s eiZl go unanswered. These inc lude proper r a t e s of a p p l . ~ c a t i o n , methods of app l i ca t i on , t iming , f e r t i l i t y / w a t e r r e l a t i o n s h i p s , and er.vironmenta1 e f f e c t s ranging from immediate impact on f i e l d workers t o contamination of water . S a t i s f a c t o r y answers t o t h e s e q u e s t i o n s and t o t h e c e n t r a l i s s u e -- how t o ach ieve optimum CD/NTAE y i e l d s -- r e q u i r e f r equen t t e s t i n g o f s o i l s and water -- t e s t i n g t h a t should be done on a cont inu ing bas i s . I n t h e On-Farm Water Management P r o j e c t a few fer t i l ! .zer r e sea rch demonstrat ions under i r r i g a t i o n were c a r r i e d o u t , b u t t h e s e were n o t "extended" t o on-farm t r i a l s t o enable farmers t o c a r r y o u t t h e i r own, cont inu ing adap t ive research .

4. Labor Management

Non-tradi t ional a g r i c u l t u r a l expor t c rops product ion and ha rves t i ng is b a s i c a l l y l a b o r i n t ens ive . A s p l a n t i n g s of t h e s e c rops i n c r e a s e , s ea sona l demand f o r l a b o r w i l l i nc rease and w i l l a l s o i n e v i t a b l y co inc ide wi th some

TV. D-13

part of! t h e Labor clemund of traditional cropu. Bor examplu, datnand far l abo r t o ha rves t c h i n a m vegetnblatl and melons i n t h e Daminlaan liupuhlic aould coinc ide w l t h l abor dalnand f o r coffees pioking o r cane ha rves t i n t h e eamw qrowiny a r aa . I t Is not premnturo t o begin enntioipating t h e p o s s i b l e impact: of increased CD/NTAE g l n n t i n y s on labor roqulrements and t o beyin p lanning t o meet t h e e e ruquirements we l l i n ildvarlce of h a r v e s t time.

5 , Mechanization

A s nor,-traditional expor t c rop product ion ha rves t i ng i s h ighly t ime- sens i t i ve , - -

c o s t - o f f i c i a n t mechanization is o f t e n t h e b e s t response t o such time sensitLq:ity and t o ' p o t e n t i a l l abor shor tages . For most nun- t rad i t iona l e . qo r t c rops and f o r most fa rmers i n t h e Dominican Republic, t h i s does n o t have t o imply i nd iv idua l ownership of a t r a c t o r and o t h e r expensive equ.i.prnont, I n s t ead , it could imply acces s t o and use of proven, c o s t e f f i c i e n t m e c h a n l ~ a l a i d s f o r one o r more of t h e key t a s k s of t i l l a g e and land p repa ra t i on , c u l t i v a t i o n , ha rves t i ng , and f e r t i l i z e r and chemicals a p p l i c a t i o n on a cwtom s e r v i c e b a s i s through a p roduce r ' s a s s o c i a t i o n . A s f a r a s t h e team could determine, r e sea rch i n t h e a r ea of NTAE c rop mechanization h a s n o t been adequate. I t was a l s o noted tha . t i n some " p i l o t p r o j e c t s " mechanization is be ing introduced which, a s a p r a c t i c a l ma t t e r , is beyond t h e f i n a n c i a l c a p a b i l i t y of p r o j e c t farmers.

C. Technolocnr Tranaferr Extension

The da l ivo ry of technology t r a n s f e r , through ex tens ion , has been l i m i t e d i n t h e Dominican Republic, c o n t r i b u t i n g t o r e l a t i v e l y low p r o d u c t i v i t y i n non - t r ad i t i ona l c rop product ion. A s a r u l e , technologies have been imported through consu l t an t s and "extended" i n t a c t t o d i f f e r e n t growing a r ea s . Extension personnel from d i f f e r e n t i n s t i t u t i o n s incl.uding t h e Minis t ry of Agr i cu l tu re and INDRHI a r e l i m i t e d i n numbers and budget. An a d d i t i o n a l l i m i t i n g f a c t o r is t h a t SEA e x t e n s i o n i s t s and SEA r e s e a r c h e r s f a i l t o work i n a n i n t e g r a t e d o r coopera t ive manner, p r e f e r r i n g t o work independent ly of each o the r . And, a s noted above, inadequate emphasis is being given t o on-farm adap t ive research . Some ex tens ion t r a i n i n g has occur red i n t h e On-Farm Water Management P r o j e c t , b u t impact i n t h e f i e l d wi th growers has n o t been measured adequately.

A s suggested, t h e l i m i t e d ex tens ion c a p a b i l i t y t h a t does e x i s t i n t h e Dominican Republic i s no t adequately l i nked t o adap t ive on-farm re sea rch . In s t ead , program emphases seemed focused on marketing and promotion, c r e d i t , i r r i g a t i o n , e t c . But without sound ex t ens ion i n t e g r a t e d i n t o A . I . D . ' s p r o j e c t s , t h e long-term success of t h e s e p r o j e c t s w i l l be r e s t r i c t e d .

IV. D-14

D. Land Uea - Inc~renuurl produatiorr of rwn-traditional cr'upe w l l l r e q u l r s rnoro e e f i u i a n t Use

of! a v a i l a b l e land. AH noted, on ly about L2 p r a e n t of t h e n y r t c u l t u r a l l ands i n t h e Deminlcarl HegubLic a r e a c t u a l l y eul tablo f o r i n t e n s i v e ncrn- t radi t ional c rop c u l t i v a t i o n , While t h i s l a n d a r e a can s t i l l accommodate a s i g n i f i c a n t expansion of CD/NTAE a c t i v i t y , economLc and cropping p r e e s u r e s muy we l l r e s u l t i n c u l t i v a t i o n of l ands which ohould no t be f a ~ m e d i n t e n s i v e l y . Il.lis is becoming an i n c r e a s i n g l y s e r l o u s problem and monitor iny e f f o r t s should be cont inued t o avoid f u t u r e problems. These problem^, which a l s o p e r t a i n t o cropping on even t h e most a p p r o p r i a t e l ands f o r non - t r ad i t i ona l e , i nc lude monoculture, inadequate s o i l and water conserva t ion and improper use of f e r t i l i z e r and a g r i c u l t u r a l chemicals .

1. Monoculture

In t h e i r i n t e r e s t i n o b t a i n i n g maximum b e n e f i t from new, s h o r t e r cyc l e crops i n t h e Dominican Republic, fa rmers may t fmd t o use a monoculturo cropping oystem, r e p l a n t i n g t h e i r c rops s u c c e s s i v e l y on t h e same p l o t of l and . This can e a s i l y u p s e t p r ev ious ly balanced f8cological systems wi th r e s u l t i n g increments i.n weeds, p e s t s and d i s e a s e . The c o s t s t o e l i m i n a t e t h e s e problems and t o ach i eve renewed ba lance can be very h igh and can even tua l l y minimize r a t h e r t han maxi,mize b e n e f i t s from t h e new crops. Se r ious problems a r e a l r e a d y o c c u r r i n g on vege t ab l e farms i n t h e "El Valle" a r e a o f Constanza where t h e r e has been a white f l y i n f e s t a t i o n . Ce r t a in techniques , such a s s o i l fumignt ion/u ter i l iza t ion can f a c i l i t a t e monoculturing, b u t t h e s e techniques are very expensive. The b e s t a l t e r n a t i v e is crop r o t a t i o n , which t ends t o u p s e t t h e l i f e c y c l e s of p e s t s and d i s e a s e while s t i l l keeping land produc- t i v e . In t h e short - run, t h i s may n o t be a s p r o f i t a b l e a s monoculturing, bu t over t i m e it w i l l i n v a r i a b l y be a more p r o f i t a b l e approach t o l and use.

2. S o i l imd Water Conservat ion - Erosion is a problem i n t h e Dominican Republic, and while t h e r e has been some r e f o r e s t a t i o n , p rog re s s i s slow owing t o i napp rop r i a t e government p o l i c i e s regard ing l and u se , l a n d t e n u r e , c u t t i n g r i g h t s and o t h e r a s p e c t s of Dominican f o r e s t x y , a long wi th cont inued r u r a l popula t ion use o f wood f o r f u e l . I n A . I . D . I s CD/NTAE p r o j e c t s , more needs t o be done t o encourage and t r a i n producers i n t echniques of s o i l and water conserva t ion s o as t o minimize l o s s e s and maximize e f f i c i e n t l a n d use. Again, t h i s may e n t a i l shor t - run c o s t s b u t w i l l pay o f f over t h e long-term.

3. Improper Use of F e r t i l i z e r s and Chemicals

I n t e n s i v e cropping u s u a l l y means i n t e n s i v e chemical and f e r t i l i z e r use . Chemical runof f t o s t reams i s n o t on ly c o s t l y i n terms o f chemicals l o s t , b u t can be hazardous t o people and anima1.s who may d r i n k from t h e s t reams. Chemical d r i f t can also be o f concern a s i n t e n s i v e c r o p produc t ion i n t r u d e s

i n t o pogu.latatl cireaa or: araile where o the r t ~ s a t l l t i s r ~ a b food e t u f f s arm p ~ o d ~ d e t l o r where tourLam i r a being promoted. IJrrleod proper teohnlques a r e taught: to qrowere and then rnonLtored, thore Fa a d t po~laibLLity of a o n f l i c t between drop production, propof Land use and environment a 1 gresorvatiot! .

Eesential support s e w i c e s r e l a t e d t o agricultural input eupply a r e present ly adequate f o r non-tradit ional crop production in the Dominican Fbpublic. Diotances from farms t o supply c e n t e r s a r e not greac and road conneations a r e adequate a s a r e suppLy t r anspor t f a c i l i t i e s . Pricao f o r imported inputs a r e high, but farmers can s t i l l c l e a r reasonable p r o f i t s from non-tradit ional export crops. Support se rv ices r e l a t e d t o postharvest handling -- such ae pre-cooling, packing and cold s torage -- z re not general ly ava i l ab le except under s p e c i a l arrangements. A t p resent l e v e l s of output t h i s l ack of se rv ices i d not a problbm, but A . I . D . should a s s i s t , probably through JACC, i n a n t i c i p a t i n g f u t u r e needs and, perhaps, i n encouraging low-cost pre-cooling, packing and s torage service en te rp r i ses ,

IV. ENVIRONMENTAL IMPACT FROM CROP DIVERSXFICATION AND NON-TRADITIONAL AGRICULTURAL EXPORT

A s indica ted elsewhere i n t h i s r epor t , CU/NTAE programs can l ead t o negative environmental consequences. These includer increased incidence of p l a n t p e s t s and d i sease due t o t h e in t roduct ion and in tens ive c u l t i v a t i o n of crops t h a t r e s u l t i n ecologica l imbalances, e spec ia l ly through mono culture^ crop, water and a i r contamination through improper w e of p e s t i c i d e s and other chemicalst and v ic ious cycl ing i n t h e s e a reas a s p e s t s develop res i s t ance t o chemical t reatments and producers inc rease chemicals use.

Producers and expor ters i n t h e Dominican Republic a r e o f t e n aware of these i ssues , but probably do not y e t have enough technica l o r regulatory information i n o rde r t o understand and a c t on t h e long-term envirol~,aental implicat ions of t h e i r production a c t i v i t i e s , I t i s c r i t i c a l , however, t h a t they gain such understanding and apply it e a r l y on s o a s t o avoid both f inanc ia l l o s s and in ju ry t o t h e environment.

Experience t o d a t e with CDINTAE: i n t h e Dominican Republic has already led t o the in t roduct ion of expanded c u l t i v a t i o n of crops f o r which s p e c i f i c p e s t s and d iseases a r e already w e l l known. I t i s not d i f f i c u l t t o a n t i c i p a t e t h e kinds of problems which may a r i s e with these crops and t o presc ibe preventive o r a c t i v e t rea tments that: confotm t o in te rna t iona l s tandards including, e spec ia l ly , p e s t i c i d e tolerance l eve l s . Similarly, producers can l e a r n about in tegra ted p e s t management programs and t h e use of b io log ica l con t ro l methods t h a t can reduce t h e naed f o r using c e r t a l n chemicals. Much o f t h e p e r t i n e n t information on t h e s e sub jec t s is ava i l ab le in t h e Dominican Republic. A.I.D./W and t h e Mission i n t h e Dominican Republic have d e a l t to some ex ten t with environmental i s sues i n CD/NTAE p r o j e c t s but it seems t h a t appropr ia te

yuidanae rrould be yrovlderl on n Lroader b a s h . Quir l e l i r~en uhould Inaluda metlwdologlfao f o r or~qoing, er tanilardired monit.oriny of orrvb canmental Lmpaetra.

Followltzy a r a def4~rLpt.hW of environmental ienuea t h a t were dnnaidered during t h e team's f i e l d v i e i t s arid interviewel

The urop d i v e r e i f i c a t i o n p ro jec t -- managed by DACEA -- of ths Esperanza sugar r e f ine ry was beyun i n t h e middle of 1987 on an afea of 25,000 tareae (6.4 t a r e a s * 1 ac re ) f o r the purpose of incronuing a g r i c u l t u t & l production and reduoiny t h e food d e f i c i t i n suah crops a s caasava, oniov, r i c e r p lan ta in , auyanw squash, red and black beana, snryhum, pigeon pea and sweet pota to . Important p e s t s of pigeon pea a r e HeJ.i.othie v i resaens and Nezara vir iclulal on sorghum, it i s t h e sorghum midge Contarinia sorghiaola, and' on cassava, it is Erionyis - e l l o . Application of p e s t i c i d e s t o can t ro l these pas ta is by a i r c r a f t based a t an a i r s t r i p two ki lometers away. Methamldophos is used t o con t ro l Hel io th is while Dipel (Baci l lus thur ing iens i s ) i s appl ied f o r -- - con t ro l l ing t h e sphingid, E. e l l o . Apparently, t h e l a s t appl ica t ion of Dipel - - d i d not con t ro l t h e l a t t e r pes t , even though t h e population was compooed of f i r s t and second i n s t a r la rvae a t t h e time of appl ica t ion . The evaluat ion team was informed t h a t t h e stinkbug, N . v i r i d u l a , was more of a problem on - -- r i c e , but when r i c e was not ava i l ab le , t h e insec t kould become a p e s t on pigeon pea.

The team v i s i t e d a l a rge pineapple p lan ta t ion a t Vi1,la Altagracia on former sugarcane land, and ta lked with t h e United Brands agronomist i n charge of technica l operat ions. He took t h e team on a tour of the p lan ta t ion and explained t h a t p e s t con t ro l app l i ca t ions were made with tractor-mounted boom sprayers. Fol idol (Methyl parathion) and pyrethroids were being used t o con t ro l insec t pes t s . The larvae of a spec ies known a s t h e sugar math pupates a t t h e base of t h e f r u i t without, however, causing damage. The agronomist d i d no t know t h e l i f e cycle of t h i s species , b u t thought t h a t t h e l a rvae could be a t tacking t h e blossoms. Although not considered a p e s t of pineapple, t h e spacieo was of concern because of USDA's quarantine regula t ions p roh ib i t ing en t ry i n t o t h e U.S. of p o t e n t i a l p l a n t pes t s . A t t h e packing p l a n t , t hese l a rvae and pupae were removed from t h e f r u i t with a b l a s t of a i r from a compressed a i r pump. As i t s common name implies, t h e moth is normally a p e s t of sugarcane. Experience i n o the r countr ies with pineapple p lanted i n land formerly devoted t o sugarcane production ind ica tes t h a t t h i s species w i l l dec l ine i n importance within a few years.

When asked whether they were p a r t i c i p a t i n g i n t h e USDA preclearance program, t h e agronomist s a i d no and gave a s t h e reason t h e problem they were having i n con t ro l l ing t h i s species. He d id not want t o p a r t i c i p a t e i n t h e program t o avoid inspectors v i s i t i n g t h e p lan ta t ion and giving recommendations on con t ro l methods f o r t h e moth.

Although t h e a rea was not v i s i t e d , information was obtained from severa l sources ind ica t ing t h a t a se r ious s i t u a t i o n e x i s t s i n t h e Constanza Valley with regard t o p e s t i c i d e use. A medical team obtained blood samples from 1 2 5 persons and found t h a t 4 0 percent of t h e individuals t e s t e d had cho l ines te rase l e v e l s t h a t were less than 40 percent of normal. Recent outbreaks of t h e greenhouse whitefly on severa l crops had caused alarm# ass i s t ance from USDA\

(ABllf9) hail teqttested. The APtlCG advisor i n Haiti, and a USDA biologioab aantroL e y s e i a l i a t from Washington were eerlk t o tho Dumirllaan HegublLo lin reego!i+cn to this taqueat, arid the evatuat ion team had an opportunity t o learn abaut t h s i r flndinya a f t e r t h e UBDA 1;eam returned fhom a v i a l t t~, the Valley.

The greenhouse whi tef ly , although ceamopl i t an In oaourrenae, is an appacent r eaen t ly inttd'oduaed peat i n t o t h e Dominiaan RBpub1ia. I t has a wide hos t range and wee found on a v a r i e t y of vegetable a m p s I n the Constanza Valley, euutl a e gar]-ia, pota to ; beans, unions, l e t t u c e , cabbage, bee t s , tomato, and c a r r o t s . Farmera i n the area r e so r t ed t o in tens ive use of pee t i c ides i n e f f o r t s t o oontrol t h e whitefly , applying auoh products a s Folidol , Tamaton, Lannate , Lor sban, P o l i t ryn , Monitor, Kenophos and Horta th ion on a aalendar bas is . The U9DA team concluded from t h e i r v i s i t t o t h e a rea and interviews with farmers t h a t the whi tef ly was probably r e s i s t a n t t o many of t h e pee t i c ides being used t o aolttrol it. They did not f i n d any p a r a s i t i z e d individuals and bel ieve t h e whi tef ly was introduced without any of i ts na tu ra l enemies. They suggested t h e i n i t i a t i o n of an in tens ive education campaign %o teach the farmerr about t h e dangers of excessive p e s t i c i d e uaa and t h e implementation of an in teg ra ted p e s t management program f o r t h i e p e s t , including t h e in t roduct ion of a number of t h e whitefly's natuxal enemies.

The Dominican Republic has a f a i r l y successEu1 USDAvsponsored pre-inspection program f o r vegetable, f r u i t and roo t crops whish a r e exported t o t h e United S ta tes . Table 3 provides a scnematic diagram f o r t h e guidel ines used i n t h i s program. A l ist of commodities approved f o r t h e program i s provided .in Table 4. The pre-inspection program was i n i t i a t e d on February 3, 1987, and had examined 2,363 shipping conta iners a s of Ju ly 11, 1988 (Tables 5 and 6;, f o r a t o t a l of 68,256,350 pounds. Thirty-seven companies and producers, shipping th i r ty-nine d i f f e r e n t a g r i c u l t u r a l products, a r e p a r t i c i p a t i n g i n t h i s program.

During 1987, excess p e s t i c i d e residues on crops from t h e Dominican Rspublic were found on a number of samples analyzed by t h e Food and Drug Administration. An examination of da ta from nine d i f f e r e n t crops involving t e n producers c i t e d f o r noncompliance with e s t ab l i shed p e s t i c i d e to lerance l e v e l s s e t by t h e Environmental Protect ion Agency showed res idue l e v e l s i n samples from 0.10 ppm t o 2.79 ppm f o r pes t i c ides with to lerance l e v e l s of 0.05 ppmr one sample had a s much a s 13.50 ppm. Shippers were n o t i f i e d of t h e s e excess res idue l eve l s and informed of t h e procedures required t o be i n compliance with FDA regula t ions and EPA requirements.

Common Spanieh Namt

Albaheoe Leahaze Beplno Auyama Sandia Melon A j i (Morron, Cubanela, Caribe) Moe t aza

Cundeamor Berengena China Berengena Tha: Tamar indo Bangana, Calabaza Pepino Peludo Mwu Chino Vainitas Largas Vaini tas Cortas

Vaini tas ve rdes Limoncillo Pue r r o Vaini tas Tiernae Ton Kwa Nabo Tomate

* Guinea Platano Macho Aguacate Batata Yame Yuca Yautia Jengibre C i t r i coe Pere j i l Oregano (Oregano Dominicano) C i l an t ro Roeemary

nael1 Papaya Cuausnli c? t:

Bcjua~~l Watet'miaLon Cantuloupe, Honey Dew Peppers, Hot, B e l l , etc. Mustard Green

Bitter Melon Chinese Eggplant Thailand Eggplant Tamarind Baan Pod Long Squash Fuzzy Squash Luffa Squash Long beans* Gwr beans*

Green beam Lmon Grass Chives Snow Pea Chineso Water Melon White Radish Tom t o

Banana Plant s i n ( cookin? banana) Avoc, rdo s w e e ~ Potato Yam Cassava Dasheen Ginger Root C i t r u s Par s e l y Oregano Coriander Roaemary

Oaimun basiliaurn Csrfoa papaya Cuaurnie ea t ivue Zuaurbita maxima C i t ru l lue lunatue Cuaumie melo Capeimm sgp Brassica juncea

Momordica charant ia Salanum melongena Solanum melongena Tamarindus indica Lagenaria a i c e r a r i a Benincaea h ispida t u f f a aautangula Vigna unguicula t a Cyamopsis Tstra-

g o n ~ l o b a Phsseolus spp Cymbopogon c i t r a t u s Allfum spp Piaum sativum Benincasa Hiepida Raphanus s a t i v w Lycopersicon

esculentum Musa spp Musa spp Persaa epp Ipomea bata ta* * Dioscrea eppg* Manihot esculenta XMthosoma spp Zingiber o f f i c i n a l e C i t r u s spp Petroselinum crispum Oreganum vulgare Coriandrum sativum Roemarinus o f f i c i n a l i s

Can enter. the U.S.A. without being t r e a t e d i f t h e shipping des t ina t ion i s 8

northern U.S. including Washington, D.C. and western U.S. including S a l t Lake Ci ty . Anywhere s h e treatment is required.

** Can only en te r i n t o Puerto Rim.

T A B L E 5

tHPBH VEGIGTABCEL EXPOf1'CED UNDER TllE PRIG-INBPECTION SYEJJ!&M

QPNERAL IV3'PAL

BWBHUARY 3 1 1 9 8 7 TO JULY 111 18B8

-A CONTAINEW POUNDS W.S. F.O,B, , VALUE

A TOTAL OF THIKZY-NINE ( 3 9 ) FRESH VEGETABLES ARE ON THE PRE-INSPECTION LIST.

T A B L E 6

R R E - I N 3 O E C T I O N P R O G R A M

TCYl'AL FREIGHT V I A A I R AND MARITIME

FEBRUARY 3, 1987 TO JULY 11, 1980

---- ----------------------..----.----I----"---------

PRODUCT AMOUNT OF NUMBER 08 FRl4 IGHT POUNDS .-------------------.--------------------------.---

Melons 889 36,253,689 Tomatoes 560 13,095,200 P i n a p p l e 1 7 578,080 P l a n t a i n 61 Banana 8 3291 850 Hot p e p p e r s 1 2 703,316 Avocado 1 6 807,120 Papaya 47 119,020 Wa t e n n e l o n 3 9 1,482, 000 Chinese v e g e t a b l e s 729 2,245,373 Orange 3 77*, 460 Squash 7 315,000 Herba l med ic ines 4 1,306 S p e c i a l t y c r o p s t 3 2 12,248,936

(Tropical t u b e r - Casava Sweet P o t a t o e s - P e p p e r s D r y Coconuts - Ginger Root C i t r u s f r u i t s - Tamarind)

A. A.X.D,-Authorized Primary F a a i l i t i a u Available for CD/IKTA& ,-

In the pe t iod 1985 t o da te , primary Mi~ldlon-oouroed finanairrg f a a t l i t i a r r a iva i labh f o r urog cliveraif icat ion and non-tradit ional a g r i o u l t u r a l oxport i , ~ the Dominican Republic inalude t h e Eallowingr

FACILITY

Loan t o Central Bank' f o r on-lending through p r i v a t e banking eystem a s p a r t of A ~ r i b u e i n e s s Promotion Projec t

Loan t o Central Bank f o r on-lendinq through p r i v a t e banking system as p a r t of Commercial Fanning Systems Project

AMOUNT --

~ ~ $ 1 7 . 3 mi l l ion

~ ~ $ 1 0 . 0 mi l l ion

TOTAL ~ 5 8 2 7 . 3 mi l l ion

In add i t ion t o these two f a c i l i t i e s , t h e r e a r e complementary l o c a l currency f inance f a c i l i t i e s t h a t r e l a t e t o t h e p r o j e c t s above a s w e l l a s t o t h e broad i n i t i a t i v e of sugar d ive r s i f i ca t ion . These l o c a l currency f a c i l i t i e s include roughly ~ ~ $ 1 5 mi l l ion equivalent i n counterpart ESF funds f o r t h e Agribusiness Promotion Project1 t h e present equivalent of roughly ~ ~ $ 6 0 mi l l ion sourced i n Section 41 6 (Agr icu l tu ra l A c t of 1949 1 sugar quota reduction compensatory ass i s t ance r and t h e present equivalent of roughly ~ ~ $ 3 0 mi l l ion sourced i n PIA30, Sect ion 108 funding.

It should be noted t h a t t h e combined e f f e c t s of inflat ion-devaluat ion and non-disbursement of these l o c a l currencies is and w i l l continue r e s u l t i n g i n value shrinkage and hence reduced development impact po ten t i a l .

B. Placement

Of t h e ~ ~ $ 2 7 . 3 mi l l ion a v a i l a b i l i t y , only US$& 7 mi l l ion have been disbursed t o da te , from t h e Agribusiness Promotion Loan. No disbursements have been made from t h e Commercial Farming Systems Projec t Loan. Placements from t h e ESF counterpart; have been roughly equal t o t h e Agribusiness Promotion Loan d o l l a r disbursements. Placements of t h e o the r l o c a l currency f u n d have been negl ig ib le .

2. The Blaamment Proc:eee

Aa regordd placement Prom the Agrlbusinoev Promotion Project, a l l diebursemclnt was halted i n July, 1987, follow.lny an audit which demonetratad nonaompliance on the par t of the Central Bank implementing off lca, the Vondo de Inveceion pare e l Desarrollo Economtco (FIDE). A s of early August, 1988, A . I . D . had not yet approved resump%ion of dhbursaments, but was reportedly close t o approval.

Disbursement of! the ~9$8 .7 million placed pr ior to the BIDE "window closing1' was subject t o considerable delay due t o a variety of causes. These included FIDE' e f ime consuming review of project propoeale, i n e f fec t second gueseing the private banks' analyses deapite specif ic st ipulations to eliminate such second gueeslngr f a i lu re of FIDE t o ra i se in te res t ra tee t o sa t i s fy A . I . D . ' s goal of reducing and eventually eliminating loan subeidiesr and government monetary policy moves which effect ively u t i l ized FIDE as a policy instrument: by having it slow credi t disbursements.

A . I . D . and FIDE have agreed on the measures necessary t o cure noncompliance problems and t o enable the resumption of disbursements. And F I D E reports a backlog of well over uS$l. 0 mill isn of loan approvals pending disbursements. However, whether o r how quickly sat isfactory disbursement can be accomplished is not clear for several reasons1 f i r s t , doubts e x i ~ t about FIDE's ultimate willingness and a b i l i t y to comply with the s p i r i t of the Agribusiness Promotion Project loanr and second, borrowers and potential borrowers, dis- tressed because of rea l and reported FIDE delays, have obtained finance elsewhere, have decided not t o deal w i t h FIDE a t a l l , or have abandoned the i r project undertakings altogether.

No disbursement has occurred under the Commercial Farming Systems Project Loan -- called a "Bridge Credit: Fund" t o r e f l ec t the notion of on-loan "bridging" through agribusiness processor-borrowers expected t o extend credi t t o the i r fanners-suppliers of raw materials. Delays have been caused par t ly as a resu l t of A.I .D. 's decision, following the FIDE audit , t o work t h i s loan through the state-controlled Banco de Reservas instead of through FIDE as intended originally. Further delay was caused owing t o a lengthy Con- gressional r a t i f i ca t ion process required under Dominican law t o approve international loans.

According t o several private bankers, the vehicle selected for administering the Commercial Farming Systems credi t component -- t h a t is, the Bwco de Reservas -- was not ent i rely appropriate. Specifically, it was pointed out t h a t t he Banco de Reservas, in se t t ing up the loan program, has already overstepped its presumed role as only a "Depository Bank" by requiring excessive and confidential information of participating financial ins t i tu- tions. I t was a l so noted tha t the Banco de Reservas' establishment of participating bank o f f se t accounts w i t h automatic debit authority for Banco de Reservas would be unacceptable t o some banks. Finally, concern was expressed about the a b i l i t y of Banco de Reservas t o administer .::n agribusiness project, based part ly on its reported lack of agribusin: , loan appraisal and management s k i l l s .

Raeulta t o date on t h e Agribueinom Promotion loan .Include aver 40 urlsdlts t o a wide spectrum of ayribueineaaoo Lrr tha f t u i t , vegetable, f l o r i c u l t u r s , e t h n i c und condlmont crop oubaectors. Thaae c rod l tu do not r e f l e c t e x a e ~ s l v e subaector concmt ra t ion and have been m d e t;o ernall, medium and Large borrowers a l iku . I n most instanaev tho subpro jectra axe evidence of addi t ion- a l i t y I t h a t Ls, they probably would not have been undertaken were it rlot f o r A.1.D.-sponsored f inancing. I t i a too e a r l y t o adequately measure t h e f i n a n c i a l succoss of t h e s e ventures) however, they c l s e r l y reprenent khe intended t a r g e t s of A. I . D. ' s Agribueiness Promotion IJro j e c t . The stoppage of disbursl?ments the re fo re r ep resen t s e i g n i f i c a n t opportunity lose f o r both A . I . D . and t h e Dominican Republic 's agr ibus iness export s ec to r .

The s e c t o r has a l s o suffert3d f o r lack of non-A.I.D. f inance because of d i f f i c u l t i e s i n t h e f i n a n c i a l and economic system a t la rge . In general , l i q u i d i t y l e v e l s have been c u r t a i l e d by a monetary po l i cy t h a t s e e m t o d iscr iminate aga ins t agribusi.ness. In add i t ion t o t h e problem c i t e d concerni:.g FIDE disbursement: slowdowns and stoppage, it is apparetnt t h a t bank reserve requirements and incen t ives favor c r e d i t s i r ~ t o t h e conutruct ion and tourism sec to r s . Nor a r e f i n a n c i a l i n v t i t u t i o n a r e a d i l y ab le t o ob ta in depos i t and investment resources il circumvtances where i n f l a t i o n and devalua- t i o n f i n d such resources flowing t o r e a l e s t a t e , t o hard currency, t o tax-f ree high i n t e r e s t income producing bonds i ssued by t h e government, and t o t h e inforrdal depos i t and loan sec to r . The l imi t ed resources obtained, of course, a r e r a r e l y ava i l ab le f o r higher r i s k , new agr ibus iness investments a s they must be used f o r s a f e r , t r a d i t i o n a l l o m a , usual ly t o e x i s t i n g customers. By t h e same token, i n an economy where r e a l e s t a t e , cons t ruc t ion , tourism and manufacturing invesfments can produce f a i r l y c e r t a i n e a r l y re turns, p o t e n t i a l :i.nvestors a r e h e s i t a n t about undertaking r i sky , problem-laden agr ibus iness p r o j e c t s . This s i t u a t i o n is f u r t h e r complicated by an economic po l i cy environment t h a t seems t o change by t h e hour. According t o v i r t u a l l y a l l interviewees, incent ive laws a r e not respected# monetary and exchange regu la t ions a r e changed r e g u l a r l y without warning? and pub l i c e n t i t y approvals f o r most ac t ions a r e s u b j e c t t o corrupt p rac t i ces . Consequent uncer ta in ty discourages entrepreneurs i n general , but e s p e c i a l l y those i n t h e a g r i c u l t u r a l expor t sec tor . A f u r t h e r problem has been t h e government's f requent a t t e n t i o n t o land reform i n i t i a t i v e s aad t h e o v e r a l l problem of land t i t l i n g . In conbinat ion, t h e government's a c t i o n s and inac t ions on t h e economic po l i cy f r o n t have l e d many observers t o quest ion its commitment t o NTAE a l together .

For agr ibus iness entrepreneurs t h a t ent.ertain new investment p l ans , perhaps t h e most se r ious f i n a n c i a l problem now faced is t h e double t h r e a t of increased c o s t s owing t o inf lat ion-devaluat ion, combined with reduced l i q u i d i t y i n t h e banking system. Thus, even i f t h e entrepreneur is a b l e t o provide o r o ther - w i s e secure bas i c long-term f inance -- r a r e l y a v a i l a b l e i n any case except through FIDE -- he is s t i l l unable t o ob ta in working c a p i t a l ? h i s p r o j e c t may be slowed, stopped o r abandoned a s a r e s u l t . Addit ional ly, i n t e r e s t r a t e s a r e r i s i n g , and while they have no t genera l ly reached r e a l , p o s i t i v e l e v e l s , t h e increments a r e a d e t e r r e n t t o new agr ibus iness investment, e spec ia l ly when most banks, including t h e development banks, a r e h e s i t a n t tt, provide t h e i r own resources on terms t h a t adequately match t h e cash flow p r o f i l e s of agribus- i n e s s p r o j e c t s o r t h a t include provis ions f o r eventual re-financing.

IV. D-25

On A r a l a t a d auhject -- banker t r a i n i n g f o r NTAB: lending -- L t was learned t h a t a prel iminary JACC e f f o r t t o accomplitrh a t r a l n i n y gzoyram through t h e DsveXogment Banketa' Aeeocbatlon f a i l e d due t o diff!erencea over who would aonduat t h e course work. A new program, ko be ca r r i ed ou t by Citibank, l o t o be srgoneored through the Commecaial Banker's Association.

Few of t h e banks i n t h e Dominican Republic have taken equi ty pos i t ions i n NTAE p r o j e c t s although tha re have been exaeptionu, including gome of t h a devologment banks and one o r two of t h e commercial banks. (One of t h e l a t t e r became involved i n rrr j o i n t venture -- a pineapple export p r o j e c t with a U.S. pa r tne r -- but subasquently l iqu ida ted i t s pori t ion.! LAAO i f f a l s o reportedly considering an equity investment i n an a g r i c u l t u r a l export venture. A s wne entrepreneur pointed out , however, the re is r e a l l y no lack of investment c a p i t a l f o r t h e Dominican Republic whether it i s sourced from l o c a l inves tors o r from abroad, including from Dominicans l iv ing abroad. The problem, he explained, is t h a t t h e "rulee of t h e game", a s noted above, a r e unclear and changing. No one readi ly inves t s i n such circumstances.

'The Dominican Republic has not taken any s i g n i f i c a n t s t e p s t o achieve debt-equity swaps, but A.I .D. 's design of a debt converuion p r o j e c t has been approved. It is hoped t h a t t h i s new p r o j e c t w i l l a t t r a c t fore ign inves to r s and w i l l l ead t o expanded investment i n agr ibus iness equ i t i e s . The s p e c i a l incen t ives of debt-equity swaps w i l l qurely be a t t r a c t i v e i n combination with already e x i s t i n g agribusiness laws and incent ives (Laws 409, 532, 69, e t a l ) . But t h e s e incent ives could e a s i l y be neut ra l ized by fore ign inves tors ' perception of an "uneven playing f i o l d with ever-changing game rules". The A . I . D. P r iva te Sector Off i c e a l s o r e p o r t s t h e p o s s i b i l i t y of using some l o c a l currency resources t o f inance equi ty investments.

Y

D. Foreign Investment i n CD/NTAE

Apart from a r e l a t i v e l y amall number of fore ign inves to r s -- DOMEX (melons), United Brands (p ineapple) , Dole (p ineapple) , Southland Frozen Foods ( o k r a ) , t h e Canelos Group of Mexico (melons) , and soms o the r l a r g e mul t ina t ionals t h a t have been opera t ing i n t h e country f o r over 1 0 yants -- t h e r e has been l i t t l e ou t s ide investment iii t h e Domini~an Republic ' s NTAE s e c t o r ( excluding investments by Dominican8 l i v i n g i n t h e U. S. 1. A number of interviewees t r aced t h i s s i t u a t i o n d i r e c t l y t n t h e uncertain and changing pol icy environnenf described e a r l i e r . ( In more than one ins tance , cu r ren t fore ign inves to r s have reportedly ha l t ed f u r t h e r f ixed expendi twes and a r e looking a t o ther coun t r i e s t o source t h e i r products.) The investment c l imate j?roblem has got ten t o t h e point t h a t t h e Dominuan Investment Promotion Council (IPC) -- a l s o p a r t l y financed by A.X.D. -- has decided not t o ca r ry ou t a general agr ibus iness inves to r search i n t h e U.S., but r a the r t o conduct promotional work on a case-by-case b a s i s following se luc t ion of NTAE investment candidates by JACC.

In the aaaruh f o r foraigrl Lrrvnsc~ta , ae wara notad Ln an interview with t h e Uovernor of t;he CnnLrnl Dank, It would probably be prudent t o look at medium and ~malbac alzed ELrms wLth npeclnl, produc t ion ox: marketing niaheo. Theee ilrms a r e yenekaLly a b l e t o mova mote q u i a k l y than the l a r g e ~ n u l t i n a t i o n a l e and t h e i r businetm.as a r e o f t e n mara a p t f o r jo in t -ven tur iny . Again, however, wi thout a s a t i a t a a t u r y r egu l a to ry and i n a e n t i v e environment, l i t t l e f u r t h e r f o r e i g n investment w i l l oaaur.

IS. Other Binanaing f o r CD/NTAE - - - The largest s p e d i f i c a g r i b u s i n e s s development f a c i l i t y from i n t e r n a t i o n a l sou rce s a t t h i s time' is an I n t e r a m r i c a n Development Bank ( 1 D B ) l oan f o r ~ ~ $ 9 0 mi l l i on . This f a c i l i t y , which a l s o o p e r a t e s through FIDE, is p r i m a r i l y t o cover agro- indus t ry i n p u t import and p roces s ing requirements. I t has a l s o encountered problems i n d i sbu r s ing , bu t FIDE has r epo r t ed ly c o r r e c t e d most of t h e s e problems and disburaements a r e i nc r ea s ing .

The LAAD ( L a t i n American Agribusiness Dlevelopment Corpora t ion) p o r t f o l i o i n t h e Dominican Re~public i s under ~ ~ $ 2 . 0 m i l l i o n inc lud ing , p r i m a r i l y , a g r i M c u l t u r a l expo r t p r o j e c t s . Borrowers, however, a r e p r e s e n t l y r e l u c t a n t t o t a k e d o l l a r l oans and a r e n o t gene ra l l y i n v e s t i n g i n a g r i b u s i n e s s i n any case . A s a consequence, LAAD has had d i f f i c u l t y i n expanding its p o r t f o l i o except through new l o a n s t o e x i s t i n g borrowers.

E C U A D O R

Table of Contvnte

A a r o n y m s / A b b r e v i a t i o n e

I. MACBOFEONOMIC, PROJECT AND INSTITUTIONAL SFlYTLNGS

A. liecent H i s t o r y 8. T r e n d e i n N o n - T r a d i t i o n a l A g r i c u l t u r a l E x p o r t C. A.I.D. P r o j e c t s and Key I n s t i t u t i o n s

11, MARKETING: PROJECT 5 1 8 - 0 0 1 9

( NTAE

111. PRODUCTION OF NON-TRADITIONAL AGRICULTURRL EXPORT CROPS

A. ,Introduction 8. T e c h n o l o g y T r a n s f e r c R e s e a r c h

1. S e e d and V a r i e t y S e l e c t i o n 2 . Water M a n a g e m e n t 3 . F e r t i l i z e r and A g C h e m i c a l U s e 4. M e c h a n i z a t i o n 5. L a b o r M a n a g e m e n t

C. T e c h n o l o g y T r a n s f e r r E x t e n s i o n D. L a n d U s e

1. M o n o c u l t u r e 2. So i l and Water C o n s e r v a t i o n 3. I m p r o p e r U s e of F e r t i l i z e r and C h e m i c a l s

E. Support S e r v i c e s

IV. ENVIfZlOKMENTAL IMPACT FROM CROP DIVERSIFICATION AND NON-TRADITIONAL AGRICULTURAL EXPORT

L I S T OF TABLES

1. E x p o r t s of A g r i c u l t u r a l product^ to t h e U.S., 1982-87 2. Pesticide C o n t a m i n a t i o n 3. Pesticide I m p o r t a t i o n s R e a l i z e d D u r i n g t h e Period

1987-82 i n kg. of A c t i v e Ingredient

ZV . E - 1 I V . E-1 I V . E-2

IV. E-3

I V . E-4 1V.E-5 1V.E-6 1V.E-6 1V.E-7 1V.E-7 1V.E-7 1V.E-7 I V . E-8 1V.E-8 IV. E-9 1V.E-9 1V.E-9

I V . E - I

A.L.D. ANDE CD EP A FA0 FDA FEDEXBOR FUNDAGRO GDB IDEA NTAE USAID USDA

Agency f o r , h t e rna t i ona l Development ~eoo laa i6n lhwianal de Lmpceoario~ Crop Divaro,Lfication EnvironmentcaS, Broteoeion Agenay Food and Ag:riaul~ure Oryanieation (United Nations) Food and Drug Administration Ifederaoibn :Ecuatoriana de IGxgortadoree R'undaaibn p,ara e l Desarrollo Agroyeauario Qroee Domeetic Product l n s t i t u t o de Eetrat6giae Agr~gecuariaa Non-Traditional Agriculture Export United Sta tes Agency f o r Intornational Development United S ta tes Department of Agriculture

I V . E - i i

Eauador ha@ a land area of 283,561 square kilometere and a population of sgproximately 10 million. Xn 1987 the CUUntEy had a GDP of $12 b i l l i o n whiah graw a t t he r a t e of 3 . 8 percent over 1906. Tha per capita income average is around )11,3OO. ~ g r i c u l t u r e accounts f o r about 14 peraent: of Eauador' s ODP,

Ecuador is a n o i l exporting country and en joyed ''boom" times during the 1970s when o i l p r ices rose rapidly. However, t he downturn i n world economies i n the l a t e 1970s and ea r ly 1980s had a severe e f f ec t on the country's economy, Revenues from o i l exports and those of t r ad i t i ona l a g r i a u l t w a l export6 (mainly bananas) f e l l ehargly. This experience led government planner8 t o look fo r new ways t o increase foreign exchange earning#. Export d ivers i f ica t ion was seen a s one of t he means t o -achieving a more balanoed economy and, given the country's resource bases, it was conaidered t h a t agr icul ture could provide a substant ia l pa r t of these new exports. In response t o the government@a request, USAID/Ecuador ass i s ted by developing a project fo r non-traditional agr icu l tu ra l exports,

A t the time the pro jec t was prepared and in i t i a t ed , t he government was strongly i n favor of pr ivate i n i t i a t i v e s t o move the economy forward. Exchange r a t e controls were modified t o encourage exports, and exemptions from taxes and du t i e s were allowed on exports and on imported item used i n producing exports. Investment c r ed i t s were made available, The project developed by USAID/Ecuador was designed t o promote and support t he government's NTAE policy and, spec i f ica l ly , t o address key constra inte faced by po ten t ia l exporters i n the areas of marketing and finance.

Trends i u Non-Traditional Agricultural Bxport (NTAE)

Figures avai lable from the USDA show the following imports from Ecuador f o r the yeare 1902 - 1987 (Table 1).

There was no s ign i f ican t trend i n t he exports of NTAE t o t he U.S, during t h i s s i x year period. Total export of NTAE from Ecuador t o a l l countriee during 1987 is estimated not t o exceed 25,000 m t . Potentials f o r growth, however, a r e s ign i f ican t as producers a re expanding acreage i n a var ie ty of crops including Tamarillo ( t r e e tomato - f o r export t o Europe)r asparagus? snow peast cu t flowers? and, more recently, i n raspberries and strawberries. The country's shrimp exports, now considered t rad i t iona l , have a l so grown enormously -- t o over $500 million a year -- including output from shrimg farming ventures.

C. A.I.D. Projeate and Ksy Inr t i tu t ione

The centerpieoe of A. I. D. ' s assistance i n the NTAE sector i n Ecuador is the Non-Traditional Agricultural Exports Project (518-0019). '1Che project e n t a i l s a $2.4 mill ion grant component and an $8.0 mill ion loan component. The goal of t h i s p ro jec t i a r "To p r~mote economic growth through the accelerated development of non-traditional agricultural-based exporte. " Ita purpose is t o "Promote non-traditional agricultural-based exports.n

The project has been implemented through two pr iva te sector en t i t i eo , the Federaclan Ecuatoriana de Exportadoree (FEDEXPOR) and the Asociaaion Nacional de Empresarios (ANDE). FEDEXPOR, which represents non-traditional exporters, has been responsible f o r s e t t i n g up a computerized information system f o r developing background s tud ies on export potent ia ls and re la ted policy issues. ANDE, a large association of p r iva te entrepreneurs and cmpaniae, was ac tua l ly involved i n the design of the A. I .D . project and has been responsible f o r supervising the p ro j ec tge implementation. This has entai led coordination, through a project Advisory Board, of a Planning Component, a s well a s t he execution of key policy and technical studies. MDE has a l so been responsible f o r publicizing the A.I.D. project t o the producer and agribusiness communities. Both FEDEXPOR and ANDE have organized and coordinated exploratory missions f o r exporters t o observe and learn about markets and production i n t he U.S. and i n other Latin American countries. (Produccrrs v i s i t ed snow pea growers i n Guatemala., f o r example.)

In addit ion t o its marketing component, the Project contains a finance f a c i l i t y , operated through Ecuador's Central Bank and avai lable f o r non-traditional agr icu l tu ra l exporters t o finance t h e i r start-up o r expansion investments. ( ' f ie Advisory Board reviews loan requests before the;' a r e sent t o t he Central Bank. )

IV. E-2

'Thco Republia of Eauadar l e botdered by Co'Lombla on the noith, Peru an t h a eoueh and t h e braailiia Oaean on the weot. Ao noted, .tto hmd azea meae'uress 283,561 aquare kilometem.

The Andw Mauntrrino aroes Ectrildal: from north t o eouth whiah Qividerr the oonntry i n t o two pr inaipal arecia with three natural reqionet (1) t he CeaataJ. region, ( 2 ) the Highlando or S ie r ra , and ( 3 ) the Amazon region. The 6al&pagoo Irlaurdr uonetitwte a fourth region. The coaotal cegion i e influenaed i.ly numeroua riverla, the pr inaipal waterways being the Guayaa and the Eemeralda. Seaports on the Paaific form an important commercial l ink f o r world trade.

Agricultural a c t i v i t i a e of the coaatal region are mainly devote~d t o crop8 fo r export, both tr i ldi t iona l and incneas Fngly non-(tradi t iona l crop s4 ana an as, cacao, cof f ee , r ice , sugar, wood , and shrimp are the g ::edominarst exr)~ la@.

Recently shrimp farming output has eurpaeeed bananas i n do l la r v a l w of exports.

The climate of the coasta l region is t rop ica l t o aiodera,te, w i t h temperatures ranging from 25O t o 31°c. The Humboldt c u ~ r e n t i n the Pacif ic influences the cLimate of Ecuador' e coast.

Thu Highlands, or Sierra region, is mountainous w i t h eievatione between 2800 and 6000 meters above sea level ... High peaks and inact ive volcanoes a r e prclvalsnt throughout this region, Thc ragimr hra a varied climate influenced by the a l t i t ude w i t h tempes'ature from OOC t o 28O~:. Crops grown t r ad i t i ona l ly i n t h i s region have bean f o r the in te rna l market, f o r example, r i c e corn, barley, legumes, vegetables and sugar cane. Increa,sinuly, t h i s region has become involved i n the production of non-traditionail crops f o r export, examples being asparagus, snow peas, strawberries, blackberries, e t c .

The Amazon region represents about 48 percent sf t he land area of Ecuador and is characterized by dense vegetation and virgirl fo res t s . No other region of Ecuador has more r i ve r s than the Amazon region. The region has four provincee, mast of which were opened up by o i l exploration i n 1972. The climate of t h i s region is hot and humid throughout the year. Besides o i l , t he Amazon region is the courrtry's major supplier of wood i~nd lumber.

The four th region, The Galapagos Islands, a re primarily noted f o r t h e i r specialized f l o r a and fauna and a r e valued more f o r t h e i r scient1fl.c i n t e r ee t than f o r any other a t t r i bu t e . A s a "National Park1*, t h e i r exploi ta t ion is protected and controlled by the Government of Ecuador.

The country has a wide var ie ty of s o i l s includiny r i ch loarning s o i l s i n armas of the S ie r ra where NTAEs a re now being grown.

A t eaeonably cell developed and main tail led i n £ ras trudt;ure e x i e t e i n Euuador , A good ayatem of farm-to-market toadd exisGd~ w i t h paved highway8 Loaatnd near t h e major p r o d ~ d t l n t l areea. Euuador hae ttlajclc a icpurbe i n both QuiCa and cduayaquil aud oval: 100 o t h e r a i q o r k e and a i r dtleips i n t h o aountry. $eaper%e o f f e r i n g i n t a ~ r r a t i o n a l chipping e e r v i a e e a r a 16uat;ed i n Gluayaquil, M&ntsr, and Ee~ncercldca. Othet navigable waferwaye alee dtrveloprcrl and are bleed extanmively , A good dummuniuation syetem linke; a l l u i k i e e i f \ Eauador ae w e l l l a i n t e r n a t i o n a l l y .

D. Toahnology T r a n ~ t a t c r Reeaar-~h

From an h i s t o r i c a l s t andpo in t , .A$ might hle expected, Ecuador's a g r i o u l t u r a l r e s e a r a h programs have no t bmen atxpportive of CD/NTAIE. Apetr. from t h e f a u t t h a t t h e count fy hau focused p r i m a r i l y on t r a d i t i o n a l ag r i cu l t u r tx l aommodity expo r t a , i t s o v e r a l l reaearch l a p a b i l i t y has been 1.iinited due t o inadequa te budgetary p rov i s ions , p a r t i c u l a r l y f o r t h e Min i s t ry of Agr i cu l t u r e . Mom r e u e n t l y , s i n c e 1984, p u b l i c and p r i v a t e i n a t l t u t i o n o have voiced t h e i r concern f o r i n o . d s e d r e sea rch i n CD/NTAI,P, but btdgcatary eag,oort i e a t i l l backing a s is adequate r e sea rch p iannlng . F a i l u r e t o p l a n and Eund CD/NTAP re sea rch could r e s u l t i n high oppo r tun i t y coa t s . Speclf i c a l l y , faLll;se t o conduct adapthve r e s s a m h through on-farm t r i a l s aould r e s u l t i n c r o p monocultures and t h e expensive u se n r misirec of imported tcrchncloyies. Mew farming ven tu re s i., CD/NTAE a r e e s p e c i a l l y *rulmrahLe t o t h e s e r i s k n b~caua l s of market requ i rements f o r product q u a l i t y and quan t i t y . I n t h e ru sh t o meet t h e s e requi rements and i n t h e absence oi." on-farm t r i a l reecltrrd~ programfl, p roducers may w e l l f i n d f u t u r e c o s t a wiping o u t m y current ga ins . Thi.8 could occur f o r some snow e e a t n d b e r r y producers l.n Ecuador. Nor t a s h o r t - t a m consultaiicy -- Li l e urruai prescription -- a s a tlsf a c t o r y anawar.

Under A . I . D . ' s Non-Traditional A g r i c u l t u r a l Expor t s Project, one of t h e implementing agenc ies , ANDE ( t h e Nat iona l Aasoc ia t ion of .!:,,kragreneuxs ) , has successl ful ly f o s t e r e d t h e format ion o f s e v e r a l producer a s s o c i a t i o n s . This is an e x c e l l e n t s t a r t i n g p o i n t f o r i n i t i a t i n g technolog:: t r w s f e r and axxending p r a c t i c a l research . FUNDAGRO ( t h e A g r i c u l t u r a l D e v e l o p s ; ~ t Foundat ion) , a l s o supported by A . I . D . , i s working on a g r i c u l t u r a l r e s e a r c h and Sechnology t r a n s f e r , b u t i t s focus does n o t i nc lude NTAEs, a l though it dosa have a "Spec ia l P ro j ec t s " compment which could presumably s t udy t h e non- t r a d i t i o n a l ~ . Other o r g a n i z a t i o n s involved i n A.I .D. p r o j e c t s such a s FEDEXPQR ( t h e Ecuadorean Expor te rs ' Fede ra t i on ) and IDEA (the I n s t i t u t e f o r A g r i c u l t u r a l S t r a t e g i e s ) a r e n o t engaged i n r e s e a r c h a c t i v i t i e s . INIAP ( t h e Nat iona l A g r i c u l t u r a l Research I n s t i t u t e ) , which is t h e Minis t ry of Agr i cu l t u r e r e s e a r c h d i v i s i o n , has begun some t r i a l work on NTAEs, b u t due to budget l i m i t a t i o n s and inadequate l i nkage wi th ex t ens ion s e r v i c e s , p r o g r e s s has been slow.

For CD/NTAE i n i t i a t i v e s t o succeed over t h e long-term, ongoing a d a p t i v e r e s e a r c h must be conducted i n a number of a r e a s i nc lud ing s e e d and v a r i e t y s e l e c t i o n ? wate r managemrntr f e r t i l i z e r and a g r i c u l t u r a l chemicals use? mechanization, and l a b o r management. These a r e a s a r e d i s cus sed below.

IV. E-5

A truwtaineble d t o y produatLon proyrnm requiree t h a t the bout gasaSbta grautiaeo be u t i l i z ed . Ttris eanaegt app l ies t o var ie ty eeleation. The non-traditional cropu ( e . y . , aogaragus, t a ~ g b c t c ~ l a @ , eCa, 1 have no a ign i f iaan t hlatory of graduation i n Eauudatr therefore, the re a re no va r i e t iea etapealally devcrlopcld fo r Ecuadorean aondl tionfa. Eauador 19 riot: C ~ l i f ornia , nor N e w Jorlsey, nor B'lorida o r Texae. V a r i e t l e ~ dwfeloped for thoee placcsa were se lected a f t e r long breeding and t e ~ l t i n g program t o be euitmd for egeuifia condikione.

Varietien ara usually. introduced t o Ecuador by consultants who a re famil iar w i t h a par t i cu la r varfiety i n t h e i r own country. Oftcan they aome down fo r a very short, time, lonk azvund and expect t h a t "Variety X w i l l do well i n Ecuador". This is a s t r i c t l y suliJecti.ve view because short-term aonsultancies do noc d L o w for adequate tes t ing. Certainly introduction Ln t h i s manner i s a good place t o s t a , but the foreign var ie ty may nct be shown to be t he bes t unlesla subjected t o an extensive te.%ltl.:'lg program for adaptation.

Seed qua l i ty hacr been anottmr concern. Haintenance of qua l i ty , variety-puro seed supplies should be of concortl t o those implementing non-traditional croppi,lg grograms. Tea t i ny programs and regulatory a c t i v i t i e s , aB necessary, must be put i n place. This is nut yet happening i n Ecuador a s f a r a s t he team could determine.

2 Water Manacr~ment

To some extent , producers of CD/NTAE cannot avoid the conduct of water management "rwearch" . Threshholds of "too much" or "too l i t t l e " a r e usually aauy t o define and idensi fy fo r most crops. But fo r high-value CD/NTAEs, f a i l f ng t o dsf iae and achieve the " j u s t r ight" l eve l of i r r i g a t i o n can r e s u l t i n a s ign i f ican t opportunity cost through reduced yie lds and diminished product qua l i ty . Ef f ic ien t discovery of t he r i g h t l.ovel is bes t accomplished "hrough set-aside water management t r i a l s . In t h i s way, timely answers can be iound t o qraestions such a s when t o i r r i g a t e ? what t ype ( s ) of i r r i g a t i o n t o user what delivery r a t e s t o use? how t o manago excess water1 how t o manage the ~mil /water ralat ionshipr and what the cost of i r r i ga t i on should be.

I r r iga t ion and drainage research i s not being carr ied out on any meaningful soa le i n Ecuador, particular1.y f o r NTAE crops. Water requirements of t h e new cropu a re n o t being defined i n any systematic manner by public o r p r iva te auencies. Sui table types of i r r i g a t i o n f o r t h e new crops a r e not beiit!j researched systematically e i ther . Such research is important i n determining l o n g - t e ~ s c c s t h e n e f i t s from LUTMs. A. I .D . should endeavor t o provide f o r t h i s i n its programs which, t o da te , have apparently been market-orlented with too l i t t l e focus on production.

IV. E-6

3. Bclztilizer and Aqrlaultural - Chomiaalo Uoa yl

Nan-traditional arcpa require pfopa1: fertility oonditionbi and peat: and dieease c o n t r ~ l t o aahieve and e u ta in marke table yields. ITertSlizer, geatiad.de and o thw inputs are expenaiva and aoneequsntly must be uoed efEiciently. goi l and oehar conditionr i n Lcwdor are different from those of the U.g. and the application of them inputs tha t I s appropriate, say, for California, may not be t h e moat suitable for Earlador foc a given crop. A t the outset, it i e teaeonable to uee an imported teahnology gaakag-, par t icular ly i f seed tor a egecific crop i a a lso being imported. Yet, without groper adaptive reeearch, c r i t i c a l queetions w i l l go unanswered. These include groper ratee of

I application, methode of application, timing, fertFlity/watar telationshige, and environmental e f fec ts ranging from Lmmadiate impact on f i e l d workers t o contamination of water. Slntisfactory answera: t o these questions and t o the central issue -- how to achieve optimum CD/NTAE yields -- require frequent tes t ing of s o i l s and water -- tes t ing t h a t should be done on a continuing baeis. The ovaluatlon tcdam ccould not discern very much of t h i s type of research in Ecuador f o r NTAEs, or plans for such research.

4, Mechanization - Export crop production is highly time-sensitive. Cost-efficient mechanization is often the best icsponse t o such time sens i t iv i ty and t o potential labor shortages or other shortcomings. For most non-traditional export crops and for most farmers i n I~cuador, t h i s does not have t o imply ownership of a t rac tor or other big t i cke t item. Instead, it means access to and proper use of proven, cost e f f ic ien t wchanical aids including hand-operated equipment, for one or more of the key tasks of t i l l a g e and land preparation, cultivation, harvesting, and f e r t i l i z e r and chemicals application. A s f a r a s the evaluation team could determine, research i n t h i s area has not been adequate. If anything, it has been ad hoc, wiLh the resu l t being an additional - - opportunity cost for farmers.

5. Labor Management

Non-traditional agricul tural export crops are basically labor intensive J including a s ignif icant requirement for hand harvest. As plantinge of these 1

I crops increase, seasonal demand for labor w i l l increase as w e l l and w i l l a lso 1 I

inevitably coincide with some pa r t of the labor demand of t rad i t iona l crops. Thus, demand for labor to harvest asparagus and strawberries in Ecuador could

I coincide with labor demand for coffee picking i a the same growing area. I t is not premature t o begin anticipating the possible impact of increased CD/NTAE plankings on labor requirements and t o begin planning t o meet these requirement? de l l in advance of harvest t i m e .

C. Technology Transfer8 Extension

A s indicated, technology transfer, through extension, has not been strong i n Ecuador. This can contribute t o re1ativel.y low productivity, especially for

non-traditional arop p roduatLon. As a rule, tecrhnohr ?ea have been imported through aonraultanta and 'kextendeb" intaal: t o d i f fe ren t growing areara. Lxfenclion peraonneS from d i f f e r en t ina t i tu t iane including trle Miniratry of Agri,aulture and the reeearah organizations ara limited i n nW. ' rec~ and budget. They have carr ied out adequate axteneian aa t i v i t i e e t o r traditionaL aropo, but are not abXo t o grovidr oignifioant eerviaoa fo r NTAL. Xn p r r t i au l a r they are not able t o promote adequate on-farm a&ipt.r.r'e reaearah. A t ra ining program for eryriaultural studentr i s being eponaored by BZltJBaQRO with A.I .D. eugport and khia ls a ateg in the r igh t direction. These studento, who are pr inaipal ly involved i n reeearah aoureo work, ara in teraaf ing with aome exteneionists . This type of a c t i v i t y should be expanded a8 ehould linkage betwsen exte,neionists and the research organization@.

Ae suggested,, the limited extension capabi l i ty t h a t does e x i s t i n Ecuador for CD/WTAE, 163 not adequately linked t o adaptive on-farm researah. Instead, program emphasis, par t i cu la r ly for A . I , D . ' s NTAE project , is focueed on marketing and promotion, and on ge t t ing non-traditional crops t o market a s soon a s posrible. This approach is not conducive t o t he yro,&n of a sustainable non-traditional agr icu l tu ra l produation system.

D. Land Wee

Increased production of non-traditional crops w i l l require more e f f i c i e n t use of avai lable land. Land ava+. labi l i ty , per s e t is not a problem in Ecuador. But "market-driven" production of NTAE crops can ea s i l y lead t o land use problems. These include monoculturet inadequate s o i l and water conservation and improper use of f e r t i l i z e r and agr icu l tu ra l chemicals.

1. Monocul tu re

In t h e i r intertast i n obtaining maximum benefit from new, shor ter cycle crops i n Ecuador, farmers may tend t o use a monoculture cropping system, replanting t h e i r crops successively on the same p lo t of land, This can ea s i l y upset previously balanced ecological systems with resrfitlng increments i n weeds, pes t s and disease. The costs t o eliminate these problems and t o achieve renewed balance can be vary high and can eventually minimize ra ther than maximize benef i ts from the new crops. Some problew a r e already occurring with strawberries and snow peas. Certain techniques, such a s s o i l fumigation/ s t e r i l i z a t i o n -- used i n California .-m strawberry f i e l d s -- can f a c i l i t a t e monocultur ing, but these techniques ? c 2 very expensive. The bes t a l t e rna t ive is crop rota t ion, which tends t o upsec the l i f e cycles of pes t s and disease while s t i l l keeping land productive. In t he short-run, t h i s may not: be a s p rof i tab le a s monocultu~ing, but over time it w i l l invariably be a more prof i t a b l e approuch t o land use.

i 2. Poi1 and Water Csnrarvation

I--

Theee loeuno should ba oonsidared togekhec beoauee of t he i r aloae i n t e r - aotion. Ti l lage methods and watac management methode beaome mora intenee and inteneive fo r non-traditional croge. Soila a t e generally prepared t o a &in@!: level making them more eubjeot t o erorillon. Non-traditional arope are eelborn croge which proteal: soil, w i t h t h e i r aanoyieo, therefore the s o i l i s more eubjeat t o the e f f e c t s of r a i n f a l l , wind and o ths r soil-moving e l tuat ione. Water i e ueed more intensively and may of ten bs moved from one glaae to another through canale o r furrows. P i l t ra t i cm loreee oan ocaur with consequent water logging of subsoils . S a l t s tend t o be brought i n o r accumulated by water i f the waters contain adverse aaounte of soluble ea l t e . Foreats and grasslands, which a re by t h e i r nature :ater conserving and s o i l conserving, may be pressured and put i n t o production. Production pressures may force growers t o use more f r a g i l e lands, i .e. , those on steeper h i l l s i de s which may be subject t o erosion. To auaid these prcblems, farmers must learn t o use consis tent s o i l and water conservation techniques i n t i l l a g e , p lant ing pa t te rns and drainage. The team learned t h a t CARE, under an A.1.D.-funded project is providing precise ly t h i s type of assistance t o one group of v i l lages . A . I . D . should include such conservation and land use t r a in ing i n its CD/NTAE p ro jec t s on a greater p a r i t y w i t h its emphasis on areas such as marketing .

3. Impro~~er Use of F e r t i l i z e r s and Chemicale

Intensive cropping usually means intens:ve chemical and f e r t i l i z e r use. Chemical runoff t o streams is not only cos t ly i n terms of chemicals l o s t , but can be hazardous t o people and animals who may drink from t h e stream. Chemical d r i f t can a l so be of concern a s in tensive crop production intrudes i n t o populated areas or areas where other, t r ad i t i ona l food s t u f f s a r e produced. Unless proper techniques a re taught t o growers and then monitored, there is a d i s t i n c t pos s ib i l i t y of con f l i c t between crop production, proper land use and environmental preservation.

E. Support Services

Essent ia l support services re la ted t o ag r i cu l t u r a l input supply a r e i n place i n Ecuador. Distances from farms t o supply centers a re not normally g r ea t and road connections a r e adequate a s a r e supply t ranspor t f a c i l i t i e s . Prices f o r imported inputs a re r e l a t i ve ly high, but farmers can still c l e a r reasonable p r o f i t s from n o n - t r a d i t i ~ \ a l export crops. Support services re la ted t o postharvest handling -- such a s pre-cooling, packing and cold s torage -- a re not generally ava i lab le except under spec ia l arrangements. A t present l eve l s of output t h i s is not a problem, but A.I .D. should a s s i s t :in an t ic ipa t ing %ture needs, perhaps i n developing new low-cost in f ras t ruc ture designs and rieans t o encourage t h e establishment of pre-cooling, packing and storage service enterpr ises .

IV. E-9

Ao ind.iuatatl elrrewhrt~e J tr thirr ceporC, CD/Nrf'RB: program <Jan lead t o rmyative envLrarunenta1 ounPuquencee. nleeo inc:l,~~Is r increaesrd ina idernae of p l a n t puate mrl dirreom tlue t!, the in t foduat ion and in tens Lve c u l t i v a t i o n of aropa

.U t h a t j m n l t i r ~ ec"Loqi.aa1 imbaI.d;tma, eegec ia l ly through mon~oul turoj crop, II watex and a i r aontamtnation throucjh imptaper use of pes t i c ides and o ther I

ohemic*lsr and vioioun cycling i n t.hese a reas aa pos t s c\evcillop res ie tanoe t o chem,tcnl trcpatmenw and prorlucers irwreaslr chemicals uaa.

Prod~~aexs and expor ters i n Ecuador a r e o f t e n aware of t hese i s sues , but probably do not ye t have enough technica l o r reyulatory !,nformation i n order t o ur~d\srst;and and a c t or\ t h e long-term environmental . 'mpliaations of t h e i r production a c t i v i t i e a . It i!3 a r i t i c a l , however, t h a t they gain such understanding and apply it e a r iy on s o a s t o avoid both f i n a n c i a l 105s and in jury t o the environment.

Experience t o da te with CD/'NTRE i n Ecuador has a l ready l e d t o t h e in t roduct ion of expanded c u l t i v a t i o n of crops f o r which s p o c i f i c pea t s and d i seases a r e a l ready wel l known. I t i r a not d i f f i c u l t t o a n t i c i p a t e t h e kinds of problenrd which may a r i s e with t h e s e crops and t o p resc ibe preventive o r a c t i v e treatments t h a t conform t o i n t e r n a t i o n a l s tandards including, e spec ia l ly , pesticide to lerance levels . S imi lar ly , producers can l ea rn about in teg ra ted p e s t management programs and the use of b io log ica l cont ro l methods t h a t G,?.n reduce t h e need f o r using c e r t a i n chemicals. Much of t h e p e r t i n e n t information on these sub jec t s is ava i l ab le i n Ecuador. A.I.D./W and t h e Mission i n Ecuador have d e a l t t o some ex ten t with environmental, i s s u e s i n CD/NTAE p r o j e c t s but it seems t h a t appropr ia te guidance could be provided on a broader bas is . Guidelines should include methodologies f o r ongoing, standardi:ted monitoring of environmental impacts.

Following a re comments on s p e c i f i c environmental i s s u e s t h a t were iscus cussed during the1 team's v i s i t t o Ecuadorr

A v i s i t was made t o a p r i v a t e environmental organizat ion, F1mda<-i6n Natura, which has been accumulating information and data f o r the l a s t few years on t h e use and misuse of p e s t i c i d e s i n Ecuador. Last year, t h e Foundation i n i t i a t e d an environmental. education program t o disseminate information about t h e problems a ~ s s o c i ~ c e d with p e s t i c i d e use t o the general population and t h e media. 9fif i c i a l s have , t o da te , developed eleven modules of information concer - p e s t i c i d e s which they have s e n t t o various medi- i n s t i t u t i o n s with t h e re.+est t h a t t h e l a t t e r publ ish t h e mater ia l . Inform ;ionti1 mater ia l on p e s t i c i d e s f o r o ther groups -- peasants , housewives, doctors , paramedical personnel, p e s t i c i d e salesmen and community l eaders -- is a l s o m i a g prepared. In t h e course of prepara t ion of these modules and o ther educat ional ma te r i a l , members of t h i s organizat inn s tudied t h e system of p e s t i c i d e d i s t r i b u t i o n r reviewed Legal considerat ions] inves t iga ted t h e a c t i v i t i e s of businesses engaged i n t h e importat ion and formulation of p e s t i c i d e s t conducted survey qucsstionnaires of fanners, housewives, p e s t i c i d e d i s t r i b u t o r s and agronomist;^ t and performed o t h e r background s tud ies . ~ u n d a c i b n Natura' s work

-- and t h e mudulen -- ehouLd be Lncocporated Lnto A . 1 .D. ' e NThE p r o j e a t e a f t e r be2ng aheaked t o enr3ure t h a t USBA/rrDA/tCBA raqulwtozy Fnfotmakion i e iirawrgoratvd as well.

Reeearah e f fo le t r uonvinoed mernbez's of t h e foundat ion t h a t goor p e a t i a i d e management and handl ing g r a a t i a e e ware a l t o g e t h a r too f r e q u e n t i n t h e oountry, n o t on ly among i l l i t e r a t e peaean te b u t a180 amony ayronomdsts who should have known t h e danger8 presen ted by pne t i c ideo . Again, A.f,D. should eeek t o p rov ide agp rapx i a t e p e s t i c i d e in format ion and use-guidanue t o agxonomie ts~ t hey , I n t u r n , can t r a n o f e r same to o t h e r growers and u se t h e Fnf!ormation i n produoing c r o p s f o r which they , themselves, may be r e spons ib l e .

An a p p r e a i a t i o n of t h e amount o f p e e t i c i d e contaminat ion i n t h e human d i e t may be ob t a ined from t h e d a t a p r e sen t ed i n Tabla 2 . The number of poisoning o a s e s due t o pes t . i c i de s was no t a v a i l a b l e . Table 3 g ive s t h e amount of p e s t i c i d e s imported i n t o t h e country from 1378-82.

T A B L E 2

ECUADOR; P e s t i c i d e Contamination*

P e s t i c i d e Percen t Average MRL * * Maximum Minimum samples ( P P ~ ) ( P P ~ ) ( P P ~ ) ( P P ~ )

Contaminated

Sourcer Mercedes Bolaiios de Moreno, Ximena Santacruz, Olga Pazmina and Os~waldo Munoz. Proyecto ~e t e i 'm inac i6n de Residuos de Pes t i c i d a s C1,orados cn Leche Materna . ~ e c e b e r . 1986.

* Samples t aken from 160 women l i v i n g i n t h r e e c i t ies o f Ecuador.

** MRL = Maximum Reaidus Limit e s t a b l i s h e d by FAO/OMS f o r cow' 6 milk.

*** The v a l u e s given f o r DDT correspond to t h e sum o f isomeresr op'DDE, pp8'DDE , opDDT , and pp ' DDT .

T A B L E 3

ECWADOHt Psotiaida t . o r t a t i o n e Hea1.i.med During the Period I -

1978 - 1982 i n kg. of Active, Inngradiont

~ . ~ 1 o ~ ~ ~ - - ~ " ~ o 1 ~ ~ " 1 o ~ ~ - . I o I o " ~ ~ ~ " I I n ~ L I L ~ I I ~ L ~ ~ ~ . w ~ ~ ~ " . ~ ~ ~ M ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ " ~ " . ~ " ~ ~ ~ ~ ~ o "

, Pea t i c i d e a 1978 1979 1980 1901 L 982 TCITAL ~~~.~-d*1"1.1~-I~~"LILL~..oo..~"o--~~L.Lo-~~~o~-."IL~.o~~~.~~~...~~..-*...~~IooLIM1.......""~..II-

Herbicide 1,655,513 1,654,092 1,659,300 2,042,772 2,223,689 9,235,366 Fungiaide 728,466 966,799 1,353,707 926,124 1,122,236 5,097,411 Nematiaide 531,660 882,521 466,981 361,971 394,317 2,637,450 Ixisecticide 503,575 464,229 585,773 478,177 419,864 2,451,618 Othor 77,049 50,254 61,367 84,148 233,832 506,650 S t i ake r s and Emulaifiere 48,067 132,090 38,650 62 091 42,319 323,217

Sourcer Los Plaguicidas en e l Ecuadort MQS a l l & de una simple advertencia. F u n d a c i h Natura, January, 1985.

Another organiza t ion t h a t has become a c t i v e i n p e s t i c i d e i s s u e s is CARE. In d iscuss ions with t h e i r personnel, t h e prevalence of poor p e s t i c i d e p rac t i ce6 i n t h e country was confirmed. Amng t h e p r o j e c t s they a r e implementing i n Ecuador i s a USAID-funded s o i l c o n s ~ ~ r v a t i o n and i r r i g a t i o n p ro jec t . They haw5 es t ab l i shed a number of demonstration p l o t s on bench t e r r a c i n g and r e f o r e s t a t i o n p r a c t i c e s f o r t h e eleven vi l lages served by t h e pxojec t , and have introduced a p e s t i c i d e s a f e t y t r a i n i n g component i n t o t h e i r program.

V. CREDIT, Project 518-0019

Credi t f o r NTAE devtalopment has been, dol la rwise , an important p a r t of A. I. D. ' s Non-!I'raditior?al Agricultural. Exports Project i n Ecuador. Specif - i c a l l y , t h e P ro jec t provides ~ ~ $ 8 . 0 mi l l ion f o r t h e long-term f inancing of NTAE subprojects .

To da te , over $4.5 mi l l ion have been disbursed under t h e c r e d i t f a c i l i t y , pr imar i ly t o c u t flower and sh?im - re l a t ed p ro jec t s . According t o t h e May, 2y disbursement was sub jec t to s i g n i k i c a n t 1988 evalua t ion of t h e Pro; L -', ,, delays. Delays were caused by ,complicated loan processing procedures? disagreements between p r i v a t e lending i n s t i t u t i o n s and Ecuador's Cen t ra l Bank?

Evaluation of t h e Non-Traditional Agr icu l tu ra l Export* P ro jec t (Washing- ton, D.C.8 C3emonics In te rna t iona l Consulting Division, May 1988).

I V . E-12

fakluge of 6he dOE t o provide oounteryart Puridsr laok of aonaieterit: A . I . D . management; r arid 1iquidlt;y gcobleme in Eauador' o f inanoial ayetern. 'me Qit$bbus&4emerrt delays gave the Pcojeut'e loan cYamponank a bad name. T h i s wee unfortunate brraauue a uloee linkage had been ealal\l,ished between the loaf1 component and the Projeut 'e Advieozy Board wlliah provided e l i g i b i l i t y approvals for requests. Had dieburesmsnte been effected on a timely batale, the Advisory Board and the en t i r e Projeat would have yained s t a tu re and there would have been a yreatsr number of NTAE 1,oan sppliclante.

The f a i l u r e of the Project t o adequately in tegra te i t s c r ed i t and marketing development components through timely Implementation i e not a typiaal , Similar f a i l i ngs were obeerved by the team i n other ao:?tries where A.X.D. hae NTAE projects . Nor a re these f a i l i ngs easy t o correct because they often r e l a t e t o conditions, po l ic ies and pract ices t h a t a r e endemic t o the f inancial systems of each country. Nonetheless, A .I. D. ohould respond by attempting t o develop t ra ining programs jo in t ly w i t h pr ivate sector lending in s t i t u t i ons and with ~ n t r a l Banks. These programs should include t ra in ing i n NTAE loan appraieal

technique^ and i n the development of standardized, commonly accepted procedures fo r loan processing. Such procedures should be d i r ec t l y linked t o A. I .D . 's NTAE financing f a c i l i t i e s ) t h a t is, they should be put i n t o prac t ice i n an e f f o r t t o speed up disbursement processes u d t o quickly iden t i fy remaining bottlenecks. Only i f , 7 1 1 in teres ted pa r t i e s -- both i n the pr iva te and public loectozs -- understand the t ime-sensit ivity L' NTAE operations from khe borrower's standpoirit and loan recovery concerns from the lender ' s standpoint, can any progress be made toward more e f fec t ive c r ed i t f o r NTAE development .

X. KAUWLCONOHXC, PROJET AND INSTITUTIONAtr 8ETl'INGS

A, Reoent Hietory 8. Policy-Rula.eed Ieeuee C. Trenda i n Non-Traditional Agr icul tura l Export (NTAE) D. A.I.D. Pro jec t s and Key I n a t i t u t i o n a

11. MIWUTING OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. In t roduct ion 8. Avai l ab i l i t y , Volume, Quality and Continuity of Non-

Trad i t iona l Agr icul tura l Export Crops 1. Ptoduction 2. Poethameet Handling 3. Transportation 4. Import Procedures 5. Market Information and Market Linkage

111. PWODUCTION OF NON-TRADITIONAL AGRICULTURAL EXPORT CROP8

A. Introduction B. Technology Transf e r r Research

1. Seed and Variety S e l s c t i o n 2 . Water Management 3. F e r t i l i z e r and Ag Chemical U s e 4. Mechanization 5. Labor Management

C. Technology Transfer, Extension D. Land Use

1. Monocul t u r e 2. S o i l and Water a n s e r v a t i o n 3. Improper Use of F e r t i l i z e r and Chemicals

E. Support Services

IV, ENVfBlONMeeSTAL INPACT FOR m P DIVZRSIRICATION AND NON-TRADITIONAL AdRICULTURAI; BXPORZ

A, A.I.D,-Authorized Primary P'aaiLitiee Available for C D/NTAE

8. Placacrdnt 1. Outarandinge 2 . The Plaaement Proceee

C, The i s s u e o f Debt Versus Equity D. Foreign Investment i n CD/NTAE E . Other Financing for CD/NTAE

LIBT OF TABUS

1. Imports of Non-Traditional Agricultural Crope i n the U.S., 1983-87

A . I . D . R D V CACM C D CSNffA DZ VAG W S'ZDEX FORTAS B'V IJADE S 6DP WE9 IBRD 1 DB ISRP NTAE PfUDEX PROPEMI ROCAP USAID USAID/ES USDA

AWWPD$AUtrWVXATXWPL "YIYILI I1IUw-Y-

Agenay Eor htel;naciWttsil Development Ajribueinsns 3eVdopmant P t o j e ~ t CsntlcaA Ameriaan Cbtmnon Markat; Crop Dive~eiEiaatbon Centro Naaional do Tcsonalogfa Agrgaola Divereifi aaeian Agropeauaria ( FUSABEB) F i r m w k r n i e n t o de tngortaoioneo Fortalaoimiento de Aeoaiacionea (P'UGADIM) Bundaai6n ~a lv t t o r a f i a~ dd oeealhlrallo Eoonomioo y ~oc r i a l Qroee Daaeetid Pk-oduat Oavernmnsnt of E l Saltradot World Bank h t e ramcsrican l~ervelopment Bank fnduetr ia l S t a h ~ i i z a t i o n and Recovery Project Non-Traditional Agricultvxe Export. Promocion da Xnvereiones de &%poxtacianee (PVSADES) Promocion de l a Pequena y Microempreaa (FUSADES) Regional Office for Central America Programs ( A I D ) United Starere Agency fo r International Development U S A I D Mission t o E l Salvador United Skates Department: of AgricuJ.ture

E l 9alvailcsr enjoyed a th i r tydyear period 0% euetained economic? growth w i t h Low i n f f r t i o ~ a;rd without major f i e c a l de f ia ies ot balanae of payments prcableme c~rfAl t he l a t t e r pa r t of 1978. The advent of high o i l pr iacs , low pr iaee of export arops, an in ternat ional recension, in te rna l s t r i f e whiah oaused a dienrption of production, the uollapse of t h e CACM, and an eroaion of p r iva te seator aonfidence were fac tors t h a t led t o a rapidly deter iora t ing econc~nic s i tua t ion . The GDP f e l l from 3602 million colonee* i n 1973 t o 3012 d l l i o n colonee* i n 1986. The agr icu l tu re port ion of the GDP f e l l from 887 mill ion colones* t o 7 2 U million colones* during the same period. A aataclysmic ear th- quake i n October, 1986 added t o EL Salvador's woes.!/

One of the goals of the U.S. government has been t o support a rapproclmnent between t he GOES and the p r iva te sector. Another goal is t o aos ie t i n increasing the export of noil-traditional products, including those generated by the ag r i cu l t u r a l sector .

8. Policv-Railated Iasuee

The overriding fac tor influencing the agr icu l tu ra l sector i s the agrarian reform program t h a t began i n 1980. Prapert ies of more than 500 ha. each were nationalized (,210,674 ha. t o t a l ) . This land wag formed i n t o 315 coopera- t ive# . A second and thizd phase of the agrarian reform program allowed f o r fu r ther nationa.lization of p r ~ ~ r t i e s . In conjunction with land reform, the C i E S is committed to increase production through i r r i g a t i o n and divers i f ica- t ion. I t has a l so created a Rural Development Directorate i n the Ministry of Agriculture (MAG) t o a s s i s t cooperatives develop basic bueineas s k i l l s .

Trends i n Non-TradLtional Agricultural Bxport (NTAE)

A time ae r i e s f o r non-tr8-.ditional agr icu l tu ra l crope going back to 1980 was not avai lable a t the time the team v i s i t ed E l Salvador. I t i a c lea r , however, t h a t E l Salvador'e exports of NTAEs is small. A report by USAID/ES s t a t ed t h a t the t o t a l value of f resh f r u i t exaortn i n 1385 amounted t o U~$4.8 mill ion and Fn 1986 had increased t o ~ ~ $ 1 0 mill ion, led by cantaloupes and honeydew

* Constant 1962 colones.

Baeed i n part on information from the Economic Section/USAZD/ES.

I V . F-1

2. The Agribusiness Development Projec t (ADP) (No. 519-0327) - The ADP's goal 13 t o increase employment and fore ign exchange earnings, and i t s purpose is t o increase t h e production and export of non-tradit ional a y r i c u l t u r a l products. Key assumptions f o r t h e p r o j e c t ' s success include t h e fol1owinc;r

o G3ES p o l i c i e s and regula t ions w i l l support r a t h e r than i n t e r f e r e with o r discourage investment, production a:ld export a c t i v i t i e s .

o The p r i v a t e sec to r i n E l Salvador w i l l be wi l l ing t o p lay a major r o l e I n t h e implementation of t h e export s t r a t e g y f o r non-tradit ional products.

o Domestic investment, complemented by fore ign investment, w i l l p lay a key r o l e i n t h e development o r expansion of export-oriented non-tradit ional agribusiness.

o The i n t e r n a l s e c u r i t y s i t u a t i o n w i l l not i n t e r f e r e s i g n i f i c a n t l y with investment, production and export.

ADP is t o u t i l i z e FUSADES (Fundasibn Salvadorefia para e l Desarrol lo Econ6mico y Soc ia l ) t o implement t h e p ro jec t . The remainder of t h i s sec t ion is devoted t o a discussion of FUSADES which has become E l Salvador 's key CD/NTAE devel- opment agency and t h e major channel f o r USAID'S ass i s t anca t o E l Salvador 's p r i v a t e sec tor .

3. Fundaci6n Salvadoreiia para e l DeSartoll0 ~ccm6mico y Socia l ( FUSADES )

o Backgrounds FUSADES was faunded i n 1983 by over 100 Salvadorean business- men a s a vehic le t o study economic and s o c i a l i s s u e s of importance t o t h e na t ion and t o mobilize resources f o r a concerted p r i v a t e e f f o r t i n development f o r svs ta ined aconomic recovery and growth.

o Funding, USAID/ES began supporting FUSADES; e f f o r t s i n 1984 through t h e I n d u s t r i a l S tabi l iza t i .on and Recovery Projec t ( ISRP - 5lg-O28? 1 which ' provided ~ ~ $ 6 . 9 a i l l i o n t o a s s i s t FUSADES i n providing tachnica l a s s i s t ance , technology t r a n s f e r , market information, and o the r se rv ices t o producers and eupsrkers of non- t radi t ional products. (The ISRP a l s o had a publ ic sec to r conwnent of ~ ~ $ 2 . 5 6 mi l l ion i n g ran t funds t o support t h e development of government p o l i c i e s , s t r a t e g i e s and laws t o give impetus t o a new export growth model.)

I n 1985, FUSADES received a g ran t of ~ ~ $ 1 . 0 mi l l ion tc support ag r i cu l - t u r a l d i v x s i f i c a t i o n and another US$^. 8 mi l l ion g ran t i n 1986 (under t h e Agrazian Reform Sector Support Projec t 519-0265) t o support an agr icul - t u r a l r l ivers i f ica t ion program (DIVAGRO). USAID'S Water Management Projec t (519-0:;03) made ava i l ab le l l~$18.8 mi l l ion i n 1985 t o both t h e publ ic and

p r i v a t e s e c t o r s t o encourage investment i n i r r i g a t e d farming f o r the production and export of non-tradit ional agricultura!: products. The p r i v a t e ctector component, ~ ~ $ 1 3 . 5 mi l l ion , i s being impleulented by FUSADES and CORPREX, a new p r i v a t e s e c t o r i r r i g a t i o n associa t ion .

In 1987, t h e Agribusiness Development P ro jec t provided ~ ~ $ 2 0 mi l l ion i n g ran t funds t o FUSADES f o r t echn ica l a s s i s t ance , t r a i n i n g , i n s t i t u t i o n a l support , and f o r t h e establishment of a c r e d i t fund ( ~ ~ $ 1 0 m i l l i o n ) . The p r i v a t e s e c t o r t s matching funds and FUSADES contr ibut ion amounted t o US$^. 7 mill.ion, f o r a t o t a l of ~ ~ $ 2 6 . 7 mil.iion.

Oruanization of FUSADES;

1. Department of Economic and Socia l Studies; This department i d e n t i f i e s economic and s o c i a l problems t h a t a r e most important t o t h e country and brings these t o t h e a t t e n t i o n of t h e p r i v a t e sec tor .

2. Department of Studies and Publicat ions; This department undertakes and publishes s t u d i e s on sub jec t s of na t iona l i n t e r e s t .

3. DIVAGRO Program - (Diversification Agropecuar ia)~ This is FUSADES' production program f o r promoting non-tradit ional a g r i c u l t u r a l export crops .

4. PRIDEX Program (Promotion de Inversiones de Exportacio1es)r This program includes a s s i s t ance t o agroindust r ies , i n col labora t ion with DIVAGRD, i n monitoring investment i n and export of non- t radi t ional products.

5. RIEGO ( I r r i g a t i o n Program) ; This program promotes t h e use of i r r i g a - t i o n f o r non-tradit ional agr icul tura l . crops.

6. FORTAS Program (Fortalecimiento de Asociacioncs)z This program provides a s s i s t a n c e t o p r i v a t e s e c t o r business and t r a d e associa t ions .

7. PROPEMI Program (Promorion de l a Pequena y Microempresa)t Provides t r a i n i n g and c r e d i t t o small s c a l e en te rp r i ses .

8. FIDEX Program (Financiamiento de Exportaciones)r Provides f inancing f o r export p ro jec t s .

FUSADES Evaluationr An evaluation?/ of FUSADES was i n t h e d r a f t r e p o r t s tage a t t h e time of t h e team's v i s i t . Preliminary f indings included t h e followingr

31 Evaluation of FUSADES, Draft (Development Associates, Inc. r epor t f o r USAID, El Salvador, June 15, 1988).

The r e s u l t s achieved by FUSADES have been phenomenal. The s t a f f has grown from 14, doing pr imar i ly pol icy reseazch, t o 133 pereons involved i n s i x major programs.

Export and investment a c t i v i t i e s a r e ahead of schedule. Twenty-seven companies a s s i s t e d by PRIDEX have exported products during t h e f i r s t four months of 1988, generat ing ~ ~ $ 5 . 7 mi l l ion i n fore ign exchange, and 1,000 jobs.

The f i n a n c i a l s t r u c t u r e of FUSADES is sound a s long a s USAID maintains i ts f i n a n c i a l support. FUSADES' cont r ibut ion t o t h e operat ing budget is only a rou t 2 percent . Without USAID funding t h e present l e v e l of programmifig is not l i k e l y t o continue.

T1.e management team has provided e f f e c t i v e leadership.

The evaluat ion team's t e n t a t i v e recommendations a r e t

Implement a s t r a t e g i c planning exerc ise before ac t ion p lans a r e prepared.

Increase t h e base of support from o the r segments of t h e p r i v a t e sec tor .

Increase support f o r PROPEMI.

Develop a fund r a i s i n g p lan f o r implementation i n t h e f u t u r e when A.I.D. funding decraases.

Formalize annual management r e t r e a t s f o r s t r a t e g i c planning.

11. .MARKETING OF NON-TRADITIONAL AGRICULTURAL EXP0P.T CROPS

A. Introduction

E l Salvador has t r a d i t i o n a l l y produced th ree main crops f o r export -- coffee , sugar and cotton. A t t h e same time, t h e country has imported from Guatemala a l l of i ts vegetables and f r u i t s f o r domestic consumption. The system functioned successful ly f o r years u n t i l t h e l a t e 1970's when t h e market p r i c e s f o r coffee , sugar and cot ton began t o drop. Low world p r i c e s f o r t r a d i t i o n a l a g r i c u l t u r a l export crops and E l Salvador 's heavy dependence on imported goods l e d t o a d i v e r s i f i c a t i o n program f o r non-tradit ional crops while coffee production was maintained and production e f f i c i ency upgraded.

The USAID Mission has been c l o s e l y involved with t h e country 's non-tradit ional expor t i n i t i a t i v e s . FUSADES, formed i n 1954, was se lec ted by USAID t o implement t h e p r i v a t e sec to r components of t h e A. I. D1 -funded Agrarian. Reform Sector Support Project , t h e Agribusiness Development Projec t and t h e Water Management Projec t . A.I.D. s e l e c t e d FUSADES because of its highly educated

and q u a l i f i e d s t a f f and because i ts board members rapresented a cross-sect ion of t h e most experienced peopla i n t h e a g r i c u l t u r a l , i n d u s t r i a l and financial s e c t o r s of E l Salvador.

FUSADES organized i ts XVAGRO d i v i s i o n t o implement t h e a b o v ~ p ro jec t s . One of DIVAGRO's f i r s t s t e p s was t o con t rac t Fundaci6n Chile (See repor t on Chile i n t h i s evaluat ion) t o perform a study on what types of crops could be commercially grown i n E l Salvador f o r t h e export market. Following is t h e l ist of t h e "potent ia l" cropst

1) Shrimp 2 ) Flowers . 3) Okra 4 ) Melons 5 ) Cucumbers

6 ) Baby corn 7 ) Asparagus 8) Cashew nuts 9 ) Pineapples 10) Ber r i e s 11) Ornamental p l a n t s

DIVAGRO has concentrated most of its e f f o r t over t h e l a s t few years on a s s i s t - ing and f u r t h e r developing t h e melon industry s ince melons i n E l Salvador already had an export. h is tory . This year DIVAGRO has planned t o concentrate i ts e f f o r t s on baby corn, asparacps, shrimp, okra and cashew nuts, by providing t echn ica l a s s i s t ance i n production technology and marketing.

B. Ava i l ab i l i ty , Volume, Quali ty and Continuity of Non-TraBitional Agricutural Export Crops

1. Production

In i ts production of coffee, sugar and cotton, E l Salvador has used a r e l a t i v e l y advanced l e v e l of technology. Intensive cropping and day-to-day management requirements f o r t h e production of NTAE crops however w i l l r equ i re t h e t r a n s f e r of new and d i f f e r e n t technologies.

A s mentioned above, E l Salvador had been exporting honeydew melons f o r a number of years p r i o r t o USAIC involvement i n CD/NTAE. Althoagh t h e majority of honeydew melon exports can be a t t r i b u t e d t o one independent grower, t h e number of companies involved i n t h e indust ry has increased i n t h e l a s t t h r e e years. FUSADES/DIVAGRO's r o l e has reportedly been one of l ink ing small fanners t o work with t h e l a r g e r producers who a r e exporting. It a l s o seeks t o disseminate production technology t o t h e medium and small fanners. FUSADES, however, has no t y e t had s i g n i f i c a n t involvement i n t r a n s f e r r i n g production technology t o these farmers. ( I t has been successful though i n e f f e c t i v e l y monitoring t h e melon export production. ) Rather, DIVAGRO is more a c t i v e l y involved i n developing o the r export crops such a s okra, cucumbers and asparagus, by overseeing its own experimental t r i a l p l o t s and t e s t i n g d i f f e r e n t seed v a r i e t i e s under va r i ed s o i l conditions. The r e s u l t s of these t r i a l s w i l l reportedly be t r a n s f e r r e d t o t h e farmers. In t h e case of cucumbers, a s p e c i a l i s t has been contrac ted t o decipher v i r u s problems t h a t have prevented successful export .

I V . F-6

2. Postharvest Handling

DIVAGRO, i n coordinat ion with PKOEXAG (ROCAPr Non-Traditional Agr icul tura l Export Support P r o j e c t ) , has been fonning l inkages with f irms t h a t can a s s i s t producers i n postharvest handling methods. To date , D I V A G R O ' s main post- harvest handling technology focus has been i n r e l a t i o n t o melon. DIVAGRO has a l s o a s s i s t e d i n iden t i fy ing receivers/ importers capable of t r a n s f e r r i n g postharvest technology t o t h e "new" melon producers. Addit ionally, it i s a s s i s t i n g small producers of baby corn and okra i n developing a commercial l i a i s o n with a processor i n E l Salvador. FUSADES/DIVAGRO s t i l l needs t o develop a broader-based ac t ion plan t o provide postharvest handling technology t r a n s f e r f o r o ther export crops.

3. Transportat ion

Lack of adequate and c o s t e f f e c t i v e t r anspor ta t ion is a common problem fac ing a l l of t h e Central American countr ies . E l Savlador's growers have an add i t iona l in land f r e i g h t expense of approximately $1,000 per conta iner t o sh ip t h e i r product from t h e f i e l d s t o Sto. Tomas de Cas t i l l a , t h e Guatemala At lan t i c p o r t , where it is loaded i n t o s h i p s of one of t h e th ree conference l i n e s . ?he a s s i s t a n c e of PROEXAG has been instrumental i n making some progress toward a l l e v i a t i n g c o s t s and providing a l t e r n a t i v e means of t r anspor ta t ion . Spec i f i ca l ly , E l Salvador 's growers, with PROEXAG ass i s t ance , and i n coordinat ion with FUSADES, hatre i n i t i a t e d an a l t e r n a t i v e shipping method -- t rucking f u l l loads througn Central America, Mexico and i n t o McAllen, Texas o r Nogales, Arizona. According t o PROEXAG and FUSADES, t h i s has been very e f f e c t i v e i n reducing t r anspor ta t ion cos ts . An add i t iona l advantage of t h i s t r anspor ta t ion mode is t h a t expor ters a r e f r e e t o s e l e c t t imes and frequencies f o r t h e i r shipments. Results t o d a t e have been promising but f u r t h e r t r i a l s w i l l be necessary i n t h e coming season t o e s t a b l i s h long-term v i a b i l i t y .

PROEXAG and FUSADES a r z a l s o a c t i v e l y working t o d ive r s i fy t h e e x i t and en t ry p o r t s f o r E l Salvador 's produce. E l Salvador already has developed a U.S. West Coast t r a d e and can use its Pac i f i c p o r t f o r shipments.

4. Import Procedures

The USAID Mission has addressed t h e importance of t h e c l ea r ing process a t t h e p o r t of en t ry i n t h e United S t a t e s by proposing t h e establishment of a Salvadoran a g r i c u l t u r e export inspect ion se rv ice which can a t t e s t t o t h e q u a l i t y s tandards requi red by t h e U.S. a u t h o r i t i e s such a s USDA and FDA. Such pre-clearance inspect ion f a c i l i t i e s a l ready e x i s t i n Chile, Jamaica and t h e Dominican Republic. Operating c o s t s f o r t h i s type of se rv ice a r e high and t h z volume of non-tradit ional expor ts from E l Salvador must inc rease f o r fu l l - sca le se rv ice t o be ecanomically f eas ib le . Unt i l a f u l l - s c a l e inspect ion se rv ice is f e a s i b l e , an a l t e r n a t i v e p lan needs t o be developed, perhaps involving inspect ion approvals from some arganiza t ion -- such as F u n d a c i h Chile -- whose exper t i se and r e l i a b i l i t y i n t h i s f i e l d a r e a l ready recognized i n t h e market place.

5. Market Information and Market Linkaae

In t h e area of market information and dissemination, it appears t h a t FUSADES has provided r e l a t i v e l y l i t t l e a s s i s t ance t o growers on a day-to-day bas i s . L

PROEXAG has e s t ab l i shed a good markot information system inc lcding information on market t r ends f o r p a r t i c u l a r crops and dissemination techniques. PROEXAG should work more c l o s e l y with NSADES on dissemination.

FUSADES' work i n l ink ing producers and rece ive r s has been mainly i n r e l a t i o n t o melons. FUSADES/DIVAGRO has not formulated a marketing plan p a r t l y because melon growers had a l ready es t ab l i shed t h e i r own rece ive r s i n t h e U.S. Neither have they made a concerted e f f o r t t o improve accees t o raputable marketing rece ivers . I n ~ t e a d , + they have apparently r e l i e d on one rece iver of melon i n t h e U.S. and have l inked d i f f e r e n t growers t o t h i s p a r t i c u l a r rece iver . I n t h e 1985-1986 season, many growers experienced problems such a s l a t e and undeta i led l iqu ida t ions and very low sa le s . A s a r e s u l t , some l o s t money and were unable t o continue producing melons. Even though growers who were interviewed reported t h a t they s t i l l had problems ( l a t e l i qu ida t ions , low p r i c e s ) with a r ece ive r l a s t year , FUSADES has not developed c r i t e r i a o r a p lan t o come up with an appropr ia te l i s t of rece ivers .

FUSADES is presen t ly r e s t r u c t u r i n g i ts marketing cnmponent and t r a n s f e r r i n g its main marketing r e s p o n s i b i l i t i e s from DIVAGRO t o PRIDEX,. PRIDEX , however, has very l i t t l e d i r e c t NTAE marketing experiencet nor has it y e t developed a concre te plan. PRIDEX needs (1) t o develop a marketing base t h a t inc ludes t h e flow and disseminat ion of market informationt ( 2 ) t o develop c r i t e r i a f o r access t o reputable r ece ive r s? and ( 3 ) t o i d e n t i f y new market t rends. PRIDEX should work more c l o s e l y with PROEXAG -- which has formulated c r i t e r i a t o check on t h e background of r ece ive r s and which has e s t ab l i shed a good market information system -- t o achieve these goals.

111. PRODUCTION OF NON-TRADITIONAL AGRICULTUWr EXPORT CROPS

A. Introduction

E l Salvador has a land a r e a of about 21, OCO square miles and i s one of t h e sma l i e s t count r ies on t h e continent . It is bordered on t h e west by Guatemala and t h e north and e a s t by Honduras. There a r e no peaks higher than 2730 meters, but t h e country has a rugged topography formed by anc ien t a s w e l l a s r e l a t i v e l y r ecen t volcanic a c t i v i t y . The c o a s t a l a reas , where t h e s o i l s are a l l u v i a l and have been der ived from volcanic o r ig ins , a r e t h e most f e r t i l e and productive f o r i n t e n ~ i v e a g r i c u l t u r a l production, and c o n s t i t u t e about 10 pexcent of t h e land a r e a of t h e country. The mountainous zones of t h e coas t , about 20 percent of t h e country, conta in a r e a s more eroded and consequently l e s s f e r t i l e and productiver here t h e a g r i c u l t u r e is mostly subs is tence farming. The northern zone of t h e country, conta in ing about 1 5 percent of t h e land area , has been defores ted and eros ion has reduced t h e f e r t i l i t y and p roduc t iv i ty of t h e s o i l s . Mountains, which a r e b a s i c a l l y unf a m a b l e , a t l e a s t on anything o the r than a subs is tence l e v e l , comprise about 25 percent of t h e land area.

About 37 percent: of t h e land a rea of E l Salvador has s o i l s with high c lay content and pH varying from a l k a l i n e t o acid. Native f e r t i l i t y is general ly moderate t o low. Twenty th ree percent of t h e s o i l s of E l Salvador a r e of volcanic o r i g i n with varying t e x t u r e s and general ly high na t ive f e r t i l i t y . Approximately s i x percent of t h e s o i l s a r e heavy c lay with physica l condit ions d i f f i c u l t t o manayel t h e i r f e r t i l i t y i s moderate t o low. Al luvia l s o i l s make up about 15 percent of t h e land a rea of E l Salvador. These a l l u v i a l s o i l s range i n t e x t u r e from coarse t o f i n e , have nat ive f e r t i l i t y moderately high t o high, and occur mostly i n t h e c o a s t a l p l a i n s o r i n t e r i o r va l leys .

The c l imate of E l Salvador i s influenced by various f a c t o m . The l a t i t u d e makes t h e country bas ica l ly t r o p i c a l with l i t t l e temperature va r i a t ion during t h e day. Proximity ' t o t h e ocean and t h e country 's mountainous t e r r a i n a l s o influence E l Salvador 's cl imate. The mountains' e f f e c t on atmospheric cu r ren t s diminish r a i n f a l l and c r e a t e dry a reas i n t h e nor th and northeastern p a r t s of t h e country. I r r i g a t i o n must be provided t o s u s t a i n production during t h e dry season i n these areas .

E l Salvador 's population dens i ty has reached about 580 persons pe r square mile and is t h r e e times t h e population dens i ty of any o the r country on t h e American continent . E l Salvador i s b a s i c a l l y r u r a l . The majori ty of t h e people a r e engaged i n some f a c e t of a g ~ i c u l t u r e . Unemployment and under employment a r e high.

E l Salvador 's a g r i c u l t u r a l sec to r has always been an important component of . t h e economy. Emphasis i n t h e p a s t has been on t r a d i t i o n a l crop production such a s co f fee , cot ton and sugar cane f o r exporLation with o the r crops such a s bas ic g r a i n s and animal products being u t i l i z e d i n t e r n a l l y . E l Salvador has needed t o import much of its foods tu f f s including f r u i t s and vegetables, o f t e n from Guatemala, and some o the r products such a s r i c e , cooking o i l , e t c . Recent yea r s have seen a decl ine in production aggravated by c o n f l i c t s and p o l i c i e s not always conducive t o a g r i c u l t u r a l development. Speci f ic e f f o r t s a r e now being made with A . I . D . ' s a s s i s t ance t o implement production of non- t radi t ional crops t o o f f s e t redu.ced export income from t r a d i t i o n a l crops.

Lnf ras t ruc tu ra l condit~~.ons, e.g., roads and t r anspor ta t ion f a c i l i t i e s , a r e l imi ted i n E l Salvador. R ~ a d s a r e not well maintainedt e spec ia l ly i n more remote areas , and f arm-to-market roads a r e inadequate f o r t ranspor t ing per ishable produce. Support f a c i l i t i e s f o r postharvest handling a r e general ly not r e a d i l y ava i l ab le e i t h e r .

B. Technoloav Transferr Research

From an h i s t o r i c a l s tandpoint , a s might be expectedt E l Salvador 's agr icul - t u r a l research programs have not been supportive of CD/NTAE. Apart from t h e f a c t t h a t t h e country has focused pr imar i ly on t r a d i t i o n a l a g r i c u l t u r a l commodity exports , i t s o v e r a l l research capab i l i ty has been l imi ted due t o inadequate budgetary provisions, p a r t i c u l a r l y f o r t h e Ministry of Agriculture (MOA). The Centro de Tecnologia AgrIicola (CENTA), which opera tes under t h e MOA and is a s s i s t e d f i n a n c i a l l y by A.I.D. and by t h e Interamerican Development

Bank ( I D B ) , does conduct research, but. almost exclusively f o r t r a d i t i o n a l c rops and f o r subsistence farming. CENTAgs research e f f o r t s do not seem or ien ted toward long-term adaptive cropping i n terms of s p e c i f i c production problems - espec ia l ly f o r NTAEs. DIVAGRO, t h e Agr icul tura l Dive r s i f i ca t ion Program of FUSADES, t h e Salvadorean Economic and Socia l Development Founda- t i o n , has been c.onducting its own NTAE c rop research t r i a l s s ince 1986, but it is not c l e a r t h a t DIVAGRO i s promoting on-farm t r i a l s with producers. Its extension s t a f f is l imi ted and o r i en ted p r i n c i p a l l y toward short-term problem solving.

Fa i lu re i n p r o j e c t s t o plan and fund CD/NTAE research could r e e u l t i n high opportunity cos t s . Speci f ica l ly , f a i l u r e t o conduct adaptive research through on-farm t r i a l s could r e s u l t i n crop monocultures and t h e expensive use o r misuse of imported technologies. New farming ventures i n CD/NTAE a ro espec ia l ly vulnerable t o these r i s k s because of market requirements f o r product q u a l i t y and quant i ty . In t h e rush t o meet these requirements and i n t h e absence of on-farm t r i a l research programs, producers may wel l f i n d f u t u r e c o s t s wiping out any current gains. This could occur f o r some melon growers i n E l Salvador who have now been through severa l export seasons. Nor is short-term consultancy -- t h e usual p r e s c r i p t i o n -- a s a t i s f a c t o r y answer.

For CD/NTAE i n i t i a t i v e s t o succeed over t h e long-te.nn, ongoing adaptive research must be conducted i n a number of a reas including seed and v a r i e t y se lec t ion , water management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use, mechanization, and l abor management. These a reas a r e discussed below.

1. Seed and Variety Se lec t ion

Most seed and v a r i e t i e s f o r CD/NTAE i n E l Salvador have been imported. This is p a r t l y due t o t h e f a c t t h a t many of t h e crops a r e e s s e a t i a l l y "new" t o t h e country. But even i n cases where f r u i t s and vegetables ha*?@ been grown i n E l Salvador before, t h e marketplace tends eventual ly t o d i c t a t e t h e s p e c i f i c seed o r v a r i e t y t h a t should be planted. From t h e team's observations, while producers d i d probably conduct some prel iminary "research" t o choose from two o r poss ib ly more acceptable market v a r i e t i e s of a p a r t i c u l a r crop, a s a r u l e they were not car ry ing o u t ongoing adaptive research t r i a l s t o follow and improve t h e performance of se lec ted v a r i e t i e s . This is c r i t i c a l t o e s t a b l i s h - ing and maintaining a competitive p o s i t i o n i n export markets.

2. Water Management

To some ex ten t , producers of CD/NTAE cannot avoid t h e conduct of water management "research". Threshholds of " too much" o r "too l i t t l e " a r e usual ly easy t o def ine and i d e n t i f y f o r most crops. But f o r high-value CD/NTAEs, f a i l i n g t o def ine and achieve t h e " j u s t r i g h t " l e v e l of i r r i g a t i o n can r e s u l t i n a s i g n i f i c a n t opportunity c o s t through reduced y i e l d s and diminished product qua l i ty . E f f i c i e n t discovery of t h i s l e v e l is b e s t accomplished through se t -as ide water management t r i a l s . I n t h i s way, t imely answers can be found t o quest ions such a s when t o i r r i g a t e ; what type ( s1 of i r r i g a t i o n t o

user what del ivery r a t e s t o user how t o manage excesa water1 how t o manage t h e soi l /water r e l a t ionsh ip r and what t:he cos t of i r r i g a t i o n should bs. Growers and DIVAGRO personnel were concerned with each of t h e m questions. But it w ~ s apparent t h a t t h e i r concern was d i rec ted more a t studying the nominal p o t e n t i a l s of d i f f e r e n t i r r i g a t i o n systems and t h e i r reported c o s t s than :in t h e conduct oP adaptive on-farm research with any given system. S p e c i f i c a l l y , under A.I.D.'a Water Management and Agribusiness Development project^ through FUSADES, considerable a t t e n t i o n has been given t o i r r i g a t i o n and d i f f e r e n t i r r i g a t i o n systems, pr imar i ly "precision" o r d r i p i r r i g a t i o n s y s t e m . These Bystems a r e expensive and u t i l i z e advanced technologies which can only be ass imi la ted through p r a c t i c a l f i e l d t r i a l s . Fa i lu re t o conduct adequate research i n t h i s a rea could r e s u l t i n misleading c o s t b e n e f i t p ro jec t ions and could u l t imate ly render CD/NTAE i n i t i a t i v e s una t t r ac t ive .

F e r t i l i z e r and Agr icul tura l Chemicalu Use - Non-traditional crops requi re proper f e r t i l i t y condi t ions and p e s t and d isease c o n t r o l t o achieve and s u s t a i n marketable y ie lds . F e r t i l i z e r , p e s t i c i d e and o t h e r inpu t s a r e expensive and consequently must be used e f f i c i en . t ly . S o i l and o the r condit ions i n E l Salvador a r e d i f f e r e n t from those of the U.S. and elsewhere and app l i ca t ion of these inpu t s t h a t i s appropriate, say, f o r Ca l i fo rn ia may not be t h e most s u i t a b l e f o r E l Salvador f o r any given crop. A t t h e o u t s e t , it i s not inappropr ia te t o use an imported technology package, p a r t i c u l a r l y if seed f o r a s p e c i f i c crop i s a l s o being imported. Y e t , without proper adaptive research, c r i t i c a l quest ions w i l l go unanswered. These include proper r a t e s of appl ica t ion , methods of appl ica t ion , timing, f e r t i l i t y / w a t e r r e l a t ionsh ips , and environmental e f f e c t s ranging from immedi- a t e impact on f i e l d workers t o contamination of water. Sa t i s fac to ry answers t o these quest ions and t o t h e c e n t r a l i s s u e -- how t o achieve optimum CD/NTAE y i e l d s -- requi re f requent t e s t i n g of s o i l s and water -- t e s t i n g t h a t should be done on a continuing basis . Again, t h e team could not d iscern enough of t h i s type of research i n t h e CENTA o r DIVAGRO programs.

4. Mechanization

Non-traditional export crop production is highly time-sensitive. Cost- e f f i c i e n t , mechanization is of t e n t h e bes t response t o such t i m e s e n s i t i v i t y and t o p o t e n t i a l labor shortages o r o the r shortcomings. For most non- t r a d i t i o n a l export crops and f o r nos t farmers i n E l Salvador, t h i s does not have t o imply ownership of a t r a c t o r o r o ther b ig t i c k e t item. Instead, it means access t o and use of proven, cos t e f f i c i e n t mechanical a i d s f o r one o r more of t h e key t a sks of t i l l a g e and land preparat ion, cu l t iva t ion , harvest- ing , and f e r t i l i z e r and chemicals appl ica t ion . A s f a r a s t h e team could determine, research i n t h i s a rea has not been adequate. If anything, it has been ad hoc, with t h e r e s u l t being an add i t iona l opportunity cos t f o r farmers. --

5. Labor Management

Non-traditionel a g r i c u l t u r a l expor ts crops a r e b a s i c a l l y labor in tens ive including a s i g n i f i c a n t requirement f o r hand harvest. A s p l an t ings of t h e s e crops increase , seasonal demand f o r labor w i l l increase a s wel l and w i l l a l s o inev i t ab ly coincide with some parts of t h e labor demand of t r a d i t i o n a l crops. Thus, demand f o r labor t o harves t melons o r baby corn i n E l Salvador aould coincide with labor demand f o r harves t ing t r a d i t i o n a l and subsistence crops i n nearby growing areas . T t i s not premature t o begin a n t i c i p a t i n g t h e poss ib le impact of increased CD/NTIIE p lan t ings on labor requirements and t o begin planning t o meet these requirements well i n advance of harves t time.

C. Tachnology Transf e r t Extension

As suggested, technology t r a n s f e r , through extension, has not been s t rong i n E l Salvador and may contr ibute t o r e l a t i v e l y low product iv i ty i n non- t r a d i t i o n a l crop production. A s a r u l e , kechnologies have been imported through consul tants and "extended" i n t a c t t o d i f f e r e n t growinu areas . Extension personnel from d i f f e r e n t i n s t i t u t i o n s including t h e Ministry of Agriculture and OIVAGRO a r e l imi ted i n numbers and budget. Nor a r e they adequately emphasizing t h e need f o r on-farm adaptive research. I t is under- s tandable f o r DIVAGRO and A.I.D. t o seek e a r l y r e s u l t s i n non-tradit ional c rop export programs, but i f t hese r e s u l t s a r e achieved without e s t ab l i sh ing concurrently a v iab le extension capab i l i ty , t h e i n i t i a l e f f o r t s w i l l t r a n s l a t e t o progress ively diminishing re turns . A. I .D. could help t o improve t h e s i t u a t i o n by increasing budgets f o r extension i n its p r o j e c t s , perhaps by reducing funding f o r expensive i r r i g a t i o n equipment.

The l imi ted extension capab i l i ty t h a t does e x i s t under t h e DIVAGRO program, and f o r E l Salvador i n general , i s not adequately l inked t o adaptive on-farm ressazch. Instead, program emphasis is focused excessively, it seoms, on marketing and promotion, and on g e t t i n g non- t radi t ional crops t o market a s soon a s possible.

D. Land U s e

Increased production of non- t radi t ional crops w i l l r equ i re more e f f i c i e n t use of ava i l ab le land. Population pressures have brought much of t h e ava i l ab le a rab le land i n E l Salvador i n t o some l e v e l of productiont cropping pressures have a l ready l e d t o c u l t i v a t i o n of some lands which should not be farmed in tens ive ly . Increased production of NTAEs can e a s i l y lead t o f u r t h e r prcblems. These problems, which p e r t a i n t o cropping on even t h e most appropr ia te lands f o r non-tradit ionals , include monoculture, inadequate s o i l and water conservation and improper use of f e r t i l i z e r and a g r i c u l t u r a l chemicals.

1. Monocul t u r e

I n t h e i r i n t e r e s t i n obta in ing maxjmum b e n e f i t Prom new, s h o r t e r cycle crops i n E l Salvador, farmers may tend t o use a monoculture cropping system, r ep lan t ing t h e i r crops success ive ly on t h e same p l o t of land. Th.Fs can e a s i l y upse t previously balanced ecologica l systems with r e s u l t i n g increments i n weeds, p e s t s and d isease . The c o s t s t o e l iminate these prolillems and t o achieve renewed balance can be very high and can eventual ly minrimize r a t h e r than maximize b e n e f i t s from t h e new cropa. Growers i n E l S'alvador have a l ready faced v i r u s problems with t h e i r melons. Certain techniques can f a c i l i t a t e successfu l monoculturing, but these techniques a r e very expensive. The b e s t a l t e r n a t i v e is crop r o t a t i o n , which tends t o upset t h e l i f e cycles of p e s t s and d i sease while s t i l l keeping l and productive. In t h e short-run, t h i s may not be a s p r o f i t a b l e a s monoculturing, but over time it w i l l invar iably be a more p r o f i t a b l e approach t o land use.

S o i l and Water Conservation

Conservation i n E l Salvador is a 2ormidable t a s k because t h e country i s 80

small. Watersheds a r e already de fo res t ed t o a l a r g e e x t e n t and streams run muddy on h i l l s i d e s where many farmers may at tempt t o grow NTAE crops. S o i l e ros ion , i f not checked, w i l l a l s o erode NTAE crop y i e l d s and revenues. I f farmers a r e not educated t o t h e need f o r proper s o i l and water conservat ion they w i l l eventual ly l o s e t h e p roduc t iv i ty of t h e land not only f o r NTAE crops but f o r subs is tence crops a s w e l l .

3. Improper Use of F e r t i l i z e r s and Chemicals

In tens ive cropping usual ly means i n t e n s i v e chemical and f e r t i l i z e r use. Chemical runoff t o streams is not only c o s t l y i n terms of chemicals l o s t , b u t can be hazardous t o people and animals who may d r ink from t h e streams. Chemical d r i f t can a l s o be of concern a s in t ens ive crop production in t rudes i n t o populated a r e a s o r a reas where o the r t r a d i t i o n a l food s t u f f s a r e produced. Unless proper techniques a r e taught t o growers and then monitored, t h e r e is a d i s t i n c t p o s s i b i l i t y of c o n f l i c t between crop production, proper land use and environmental preservat ion. A .I. D. should f u r t h e r emphasize these land use concerns and means of t r ansmi t t ing them t o producers i n i ts p r o j e c t s en E l Salvador.

Support Services

Essen t i a l support s e rv ices r e l a t e d t o a g r i c u l t u r a l input supply a r e i n p lace i n E l Salvador - l a r g e l y a s t h e r e s u l t of t r a d i t i o n a l a g r i c u l t u r e needs . Distances from farms t o supply c e n t e r s are no t g r e a t and road connections a r e adequate a s a r e supply t r a n s p o r t f a c i l i t i e s . Pr ices f o r imported inpu t s a r e high, but farmers can s t i l l c l e a r reasonib le p r o f i t s from non- t radi t ional export crops. Support s e rv ices r e l a t e d t o postharvest handling -- such a s pre-cooling, packing and cold s to rage -- a r e not genera l ly a v a i l a b l e except

under s p e c i a l arrangements. A t p resent levols of output t h i s is not a problem, but A.I .D. ahould a s s i s t FUSAUEB i n an t i c ipa t ing f u t u r e needs, perhaps i n doveloping new low-cost in2ras t ruc tu re designs and means t o encourage tho establishment of prc-cooling, packing and s torage se rv iae enterprises.

IV. ENVIRONMENTAL W A C P FROM CROP DIVERSIFICATION AND NOW-TRiGDITIONAt - --.- AGRICOLTURAL EXPORT ...

A s indi1,sated elsewhere i n t h i s reElort, CD/NTAE programs can lead t o negative environmental consequences. Thesu includar increased incidence of p l a n t p e s t s and d isease due t o t h e in t roduct ion and in tens ive c u l t i v a t i o n of crops t h a t r e s u l t i n ecologica l imbalances, e spec ia l ly through monoculturet crop, water and a i r contamination through improper use of pes t i c ides and o the r chemicals) and v ic ious cycling i n these areas a s p e s t s develop r e s i s t a n c e t o chemical t reatments and producers increase chemicals use.

Producers and expor ters i n E l Salvador a r e o f t e n aware of these i s sues , bu t probably do not y e t have enough t echn ica l o r regulatory information i n order t o understand and a c t on t h e long-term environmental implicat ions of t h e i r production a c t i v i t i e s . I t is c r i t i c a l , however, t h a t they gain such understanding and apply it e a r l y on s o a s t o avoid both f i n a n c i a l l o s s an8 i n jury t o t h e environme.~t.

Experience t o d a t e with CD/NTAE i n E l Salvador has already led t o t h e in t roduct ion of expanded c u l t i v a t i o n of cropa f o r which apec i f i c p e s t s and d i seases a r e already w e l l known. I t is not d i f f i c u l t t o a n t i c i p a t s t h e kinds of problems which may a r i s e wikh these crops and t o prescibe preventive o r a c t i v e treatments t h a t conform t o i n t e r n a t i o n a l s tandards including, e spec ia l ly , p e s t i c i d e to le rance levels . S imi lar ly , producers can l e a r n about in teg ra ted p o s t management programs and t h e use of b io log ica l con t ro l methods t h a t can reduce t h e need f o r using c e r t a i n chemicals. Much of t h e p e r t i n e n t in fo r - mation on these sub jec t s i s ava i l ab le i n E l Salvador. A.I.D./W and t h e Mission i n E l Salvador have d e a l t t o some ex ten t with environmental i s s u e s i n CD/NTAE pro jec t s but it seems t h a t appropr ia te guidance could be provided on a broader bas is . It would be t imely f o r A.I.D. t o conduct crop-specif ic and E l Salvador regional environmental impact assessments and t o t ransmit r e s u l t s and guidel ines through implementing agencies such a s FUSADES and PROEXAG. Guide- l i n e s should include methodologies f o r ongoing, s tandardized monitoring of environmental impacts.

Following a r e qyec i f i c observations on environmental i s sues t h a t were reviewed during f i e l d v i s i t s .

The DIVAGRO f i e l d s t a t i o n a t Z a p o t i t h i n t h e San Andr6s Valley was v i s i t e d with t echn ica l personnel who were conducting v a r i e t a l t r i a l s on s e v e r a l vegetaLles crops. Baby corn, beans, cabbage and tomatoes were seen a t var ious s t a g e s of growth. Technical a s s i s t ance on i r r i g a t i o n is being provided by an I s r a e l i s p e c i a l i s t . Water q u a l i t y was a problem i n t h e a rea a s it has a high i r o n content. Serious d i f f i c u l t i e s with water drainage were a l s o reported.

A t the time of the evaluation t o a a q s viait; , a cabbayo plo t wu:r being egrayad with peet ia ides , and the toam wan informed t h a t apglicatione of pestloidus on t h i s crop were begun a t ehe cotyledon s t r je hacauae of problems with aphid vectors of a v i r u ~ dioease. Problems of pesticide ceeistance had already appeared with t h i s and other pesto of cnbbayo because of the intenwive uee of these chemicals. A continuation of these control pract ices w i l l only lecd t o higher production costs and increased environmental contamination. I t is strongly recommended t h a t technical ass i r~tance on Integrated pest management pract ices fo r t h i s and other vegetable crops be requested fxom spec i a l i s t s of ROCAP'S Regional Integrated Pest Management Project.

The o f f i ce s and laboratories of the Centro Be Tecnologia Agrfuola (CENTA) i n San Andres were a l so v i s i t ed and discussions held with t he plant p ro tmt ion personnel empl.oyed there. Research e f f o r t s were beintg carr ied out i n three program areas - basic grains, agroindustr ia l crops and vegetables. From 1982 t o 1987, CENTA was the implementing agency f o r a USAID/GOES funded integrate,-l pest management program i n cotton. They are presently one mi t he collaborating i n s t i t u t i ons involved i n ROCAPqs Central American Rsgiohal IPM Project.

The CENTA pest ic ide residue laboratory was a l so v i s i t ed . The f a c i l i t i e s and equipment a r e i n very good condition, and personnel #are capable of conducting re l iab le monitoring programs. I f funds become available, the laboratory w i l l undertake a residue monitoring program on sevoral vegetable and f r u i t crops, e.g., tomato, sweet pepper, okra, cantaloupe, cucumbek, pineapple, and plantain. I t is very strongly recommended t h a t USAID/E1 Salvador provide support t o the laboratory f o r the conduct of a monitoring program on non- t r ad i t i ona l export crops. This is timely a s it could well save money f o r growers i n the future.

The E l Salvador Mission has developed an ac t i v i t y proposal fo r the estab- lishment of a Salvadoran agr icul ture export inspection service which would a s s i s t domestic producers and exporters t o respond t o U. S . phytosanitary requirements. T h i s pre-clearance program would be s imi la r t o those already established i n Jamaica and the Dominican Republic. When t h i s dew ?opment was discussed with t he APHIS Area Director i n Guatemala, he remarked tha t the Mission may not have been f u l l y famil iar w i t h APHIS import requirements and t h a t t he establishment of a pre-clearance lsroyriun would take longer than may have been envisioned by the or iginators of t he proposal. In t h i s regard, recent e f f o r t s t o improve communication and collaboration on p lan t and animal health issues between USAID and USDA, as expressed i n Department of S t a t e Cable No. 223121, dated July 12, 1988, a re a welcome development.

A. A.1.D.-Authorized Prieoary F a c i l i t i e s Available f o r CD/NTAE -- In t he period 1984 t o date, primary Mission-sourced financing f a c i l i t i e s avsi lable f o r crop d ivers i f ica t ion and non-traditional agr icu l tu ra l export include t he followings

IACILITY AMOUNT - A.3.D. Local currrency g r a n t t o B"USADES a s c r e d i t component of Water Management P ro jec t (519-0303) ~ ~ $ 1 0 . 0 mi l l ion

A.S.D. Grant t o FUSADES ae c r e d i t component of Agribueinese Development Projec t (519-0327) 40% FX/60% Loaal Currency ~ ~ $ 1 0 . 0 mi l l ion

Tota l ~S420 .0 mi l l ion

An a d d i t i o n a l US#~O. .CI I m i l l ion Agribusiness Development Credi t f a c i l i t y has no t as y a t been f i n a l i z e d and is the re fo re not included i n t h e above t o t a l . There have a l s o been a number of ESB-sourced f a c i l i t i e s which a r e not included here, but which have had some i n d i r e c t impact on CD/NTAE. The most important of t h e s e a r e t h e C75 mi l l ion US$:^ mi l l ion) Local, Currency Credit Lines Projec t (519-LC018/26) f o r economic s t a b i l i z a t i o n and r a a c t i v a t i o n ~ t h e C152 mi l l ion ( ~ ~ $ 3 0 mi l l ion) Investment Promotion Insurance System ( 519-LC-19 ) designed t o cover r i s k s of p r i v a t e sec to r inves tors , e spec ia l ly non-tradit ional product expor ters# and t h e C293 mi l l ion ( ~ ~ $ 5 9 millicrn) Eastern Zone Reactivat ion Program designed t o generate growth among productive s e c t o r s of t h e country ' s Eastern region and t o provide insurance a ~ j a i n s t damage caused by terrorism. (The MissLon is planning t o undertake, with t h e Centra l Reserve Bank, a d e t a i l e d ana lys i s of t h e u t i l i z a t i o n of theae c r e d i t f a c i l i t i e s which w i l l help t o d e l i n e a t e s p e c i f i c amounts used f o r CD/NTAE p r o j a c t s . )

B. Placement

To da te , only t h e ~ ~ $ 1 0 . 0 mi l l ion Water Management f a c i l i t y has p a r t l y been used, including disbursements equivalent t o ~ ~ $ 5 0 0 , 0 0 0 and approvals t o t a l l i n g ~ ~ $ 4 . 0 mil l ion. The Agribusiness Development f a c i l i t y i s r e l a t i v e l y new with condit ions precedent only recen t ly m e t . (Conditions precedent f o r t h e c r e d i t component of t h e Water Management P ro jec t were, i n Eack, n o t m e t u n t i l ,April , 1987 even though t h e Frojec t was authorized by September, 1985.) And because t h e r e is a f a i r l y s i g n i f i c a n t time l a g between loan approval and t h e manufacture of and b i l l i n g f o r f i x e d a s s e t s being financed (processing p l a n t and equipment and i r r i g a t i o n un i t s , f o r example), t h e approval r a t h e r than t h e disbursement l e v e l is t h e c l o s e r measure of u t i l i z a t i o n . Thus measured, u t i l i z a t i o n represents 20 percent of t o t a l a v a i l a b i l i t y ($4 ~M/$20 MM) and t h e r e is an ava i l ab le lending balance of ~ ~ 6 1 6 . 0 mil l ion.

Loan approvals t o d a t e cover 1 8 separa te p ro jec t s with p a r t i a l disbursements accomplished t o 14 of t h e 1 8 borrowers. The loans are of two types, denoainated A and B. Type A loans a r e made f o r t h e purahase and i n s t a l l a t i o a of i r r i g a t i o n systems. Approvals f o r type A loans t o t a l approximately ~ ~ $ 2 5 0 , 0 0 0 t o da te , including t h e f inancing of i r r i g a t i o n f o r a rose farm, an h a r i c o t v e r t ( s t r i n g bean) farm, a tomato and watermelon farm and a honeydew melon farm. Type B loans e n t a i l funding f o r agro-processing businesses

I V . F-16

including packing c ipera t ion~. Approvni:: of Type B l c i r~na t o data t o t a l agprox:lmatuly ~~'!3,7!:r0,000, including t h e f inancing of a rixrigold (co lo r ing) processing plant*, a i:'ruit and veyetablo proc:.~.:)mort and a v.ropica.1. ( e x o t i c ) flower expo.:-t businese, Under t h e :4yribusir?ess Dovelopmont Pxo j e c t (51'3-.0327 ) c r e d i t f a c l k i t y , l.oane a r e anticipaP.ed fox v a r i e t y of p r o j e c t s including eevera l new shrimp farming busineseos, a vey,? tabla f reeziny operat ion and a c h i l e j a l apmo, baby corn and black I.~ea~r procemor. The f a c i i . i t y wi l . . 1 be ava i l ab le f o r funding a11 types of ag:.i.businetr~ loans o the r than t h 0 m f o r i r r i g a t i o n .

There appears t o have been cttlditionaJity urlder most of t h e approvals t o data , especial!y i n l i g h t ' o f t h e f ~ c t t h a t ))orrowec.s canno: r ead i ly obta in long-term finance ou t s ide of these f a c i l i t i e s . I t is too e a r l y t o judge t h e perforn:ance of t h e buoinessas which have liorrowedr howevcr, one o f t h e companies - t h e Marigold processor - has a c t u a l l y repald i ts loan and is reportedly i n t h e black.

Most of t h e growers t h a t have received i r r i g a t i o n loan approvals would have t o be c l a s s i f i e d a s medium-to-larger farmers, which i s t o be expected because of the high-risk nature of CD/NTAE p r o j e c t s an& because of t ; ~ e r e l a t i v e l y high collat .era1 requirements t o obta in 1oan.s. Smaller farmers do benef i t however, i n d i r e c t l y , a s a r e s u l t of loans t o processing p l a n t s which buy some of these farmers' f r u i t 1 vegetable o r g r a i n production.

The Placement Process

The placement of a l l of t h e ~ ~ $ 2 0 mi l l ion available f n r CU/NTAE is under t h e adminis t ra t ion of t h e export f inance (FIDEX) divj.sio~a of FUSADES. ? IDEX, with ag r i cu l tu ra l - t echn ica l support from t h e a g r i c u l t u r a l development arm of FUSADES (DIVAGRO) conducts a l l loan apprsisai . and ;,ipproval a c t i v i t i e s . There is no d i r e c t Central Reserve Bank invo1v~:tment or ccrmmercial bank involvement i n loan a n a l y s i s o r approval. Local banks a r e involved only i n paying, receiving and monitoring a c t i v i t i e s . I n t h i s sense, FIDEX i s a "second f l o o r bank". The Water Management f a c i l i t y opera tes v i a A I D advances t o FUSADES (FIDEX) which a r e deposited i n a s p e c i a l " i r r i g a t i o n account" a t a l o c a l bank t h a t d isburses t o supp l i e r s a g a i n s t FIDEX instx:uctions. The Agribusiness Development Projec t w i l l opera te through an offshore FUSADES d o l l a r t r u s t t h a t w i l l d i sburse aga ins t FUSADES (FIDEX) ins t ruc t ions . Diabursernents w i l l be r eg i s t e red a t t h e Central Reserve Bankt payments t o fore igu equipment supp l i e r s w i l l be e f fec ted offshore. ( A s a general r u l e no funds reach e i t h e r WSADES o r t h e borrowers most disbursements a r e pa id d i r e c t l y t o supp l i e r s of goods and se rv ices . )

Disbursements t o da te have repor tedly been c a r r i e d ou t snoothly although they have been understandably slowed because of t h e l ead t i m e necessary t o manufacture and de l ive r equipment. There has obviously a l s o been some slowness because of t h e r e l a t ive ly l imi ted number of q u a l i f i e d app l i can t s wi l l ing t o undertake high r i s k CD/NTAE investments, e spec ia l ly given t h e unse t t l ed p o l i t i c a l environment of E l Salvador. There is some concern, a s w e l l , on t h e p a r t of FIDEX o f f i c i a l s about poss ib le Centra l Reserve Bank

delays i n i s s u i n g approvals f o r import r e g i s t r a t i o n 01 d o l l a r loans and f o r repayments of t h e d o l l a r loans. Theore t ica l ly , because faxporters a r e permit ted t o hold d o l l a r accounts p r e c i s e l y f o r t h i s purpose, t h e r e should be no problem wit.h Central Reservo Bank clearance. But because of t h e Bank's strict regulatory po l i cy f o r t h e opera t ion of t h e accounts, Rome l e v e l of delay i s ce r t a in . Another poss ib le problem f o r t h e FIDEX progrinm is its focus on f i x e d a s s e t loans t o t h e s u b s t a n t i a l exclusion of working c a p i t a l , leaving t h e l a t t e r type of f inance t o t h e l o c a l commercial banks. A t Irrest, t h i s means t h a t borrowers have t o make separa te app l i ca t ion f o r r e l a t e d f:Lnancings, while a t worst, they may be underfinanced o r unable t o operate t h e i r businesses properly and the re fo re l e s s a b l e t o repay long-term FIDEX loans. Anticipat ing such problems, p o t e n t i a l borrowers may h e s i t a t e t o do business with FIDEX. Consequently, it would be prudent i f FIDEX could provide o r arrange f o r complementary, t imely working c a p i t a l f inance f o r i t s appl icants .

FIDEX, with DIVAGRO's t echn ica l support , is f u l l y competent t o appra ise loan app l i ca t ions , e f f e c t approvals, schedule disbursements, and ca r ry ou t problem-solving i n cases of nonpayment. There is no reason t o be l i eve t h a t FIDEX w i l l not be a b l e t o manage s i g n i f i c a n t l y increased p o r t o l i o s before having t o h i r e more personnel. On t h e o the r hand, t h e d iv i s ion is a l s o managing an i n d u s t r i a l p o r t o l i o and sooner o r l a t e r time pressure w i l l bu i ld on t h e p resen t s t a f f . Additionaly, because FIDEX i s leaving loan admini- s t r a t i o n (paying, rece iv ing and monitoring) i n t h e hands of l o c a l commercial banks t h a t bear no c r e d i t r i s k s , p o r t o l i o c o n t r o l problems could set in . For t h e s e reasons, p l u s t h e f a c t t h a t development f inance a r e b e s t executed by a "ful l-service" development bank, considerat ion should probably be given by A I D and FUSADES t o sponsoring t h e c r e a t i o n of such a bank, perhaps by eventual ly spinning off FIDEX.

A s regards t h e l o c a l commercial banks, t h e r e is a f a i r l y high l e v e l of r i s k aversion toward CD/NTAE investments - which helps t o expla in t h e need f o r a FIDEX-type intermediary i n t h e f i r s t p lace . Notwithstanding, these banks do f inance NTAE i n i t i a t i v e s f o r t h e i r b e s t borrowers, p a r t i c u l a r l y f o r working c a p i t a l needs i n a reas such a s vegetable processing and shrimp fishing/shrimp farming. It would probably make sense f o r FIDEX tct work more c lose ly on s p e c i f i c loans with t h e commercial banks i n order t o coordinate long-term and s h o r t - t e ~ f inance packages f o r borrowers and, perhaps, t o help develop and ca r ry ou t t r a i n i n g courses f o r agr ibus iness c r e d i t ana lys t s and Loan o f f i c e r s .

Although not a t a f a s t pace, q u a l i f i e d loan app l i ca t ions a r e reaching FIDEX regular ly , and prospects f o r a s u b s t a n t i a l money increase i n p o r t f o l i o by t h e end of 1989 a r e s a t i s f a c t o r y . Growth w i l l , however, be hampered because of t h e ongoing c i v i l war i n t h e country and t h e 1989 e lec t ions .

C. The I s sue of Debt Versus Equity - The f inancing of equi ty is a d i s t i n c t p o s s i b i l i t y f o r FIDEX including considerat ion under t h e Agribusiness Development Projec t f o r f inancing up t o 25 percent of owner's equi ty f o r q u a l i f i e d borrowers. FUSADES' management f e e l s t h a t t h e 25 percent l i m i t i s t o o low and t h a t , i n any case, they would

want t o r e t a i n management con t ro l f o r such investments. They a r e a l s o repor tedly not i n agreement with an A I D provision requi r ing t h a t FUSADES l i q u i d a t e equi ty pos i t ions within f i v e years. Hopefully, A I D and FUSADES can

I come up with a s a t i s f a c t o r y modus operandi becauser equi ty is much needed f o r some of t h e high-capital investment CD/NTAE p r o j e c t s such a s shrimp farming and food processing i n El Salvador.

Debt-Equity swap t r ansac t ions f o r E l Salvador a r e e s s e n t i a l l y a moot t o p i c because t h e r e is v i r t u a l l y no p r i v a t e fore ign debt t o swap. E l Salvador 's debt is held pr imar i ly by in te rna t iona l organizat ions and governments.

D. Foreign 3nvestment i n CD/NTAE

Understandably, t h e r e is not a g r e a t deal of fore ign investment i n CD/NTAE i n El Salvador. A notable exception i~ a f r u i t and vegatable b o t t l i n g and canning b u s i m s s p a r t l y owned by a U.S. investor . The inves tor has b u i l t t h e business i n t o a p r o f i t a b l e , mult i- l ine operat ion including, pr imar i ly , domestic s a l e s but with over U~$500,000 i n export s a l e s a s well. He is p a r t i c u l a r l y anxious t o develop h i s export business and is cur ren t ly introducing severa l new l i n e s through a U.S. broker, including cherry peppers and c h i l e jalapenos. FUSADES, i n addi t ion t o approving a loan f o r t h i s company, is providing t echn ica l a s s i s t ance through a p l a n t technician.

B. Other Financina for CD/NTAE

The CABEI Agroempresas I1 p r o j e c t has approved only US$^. 5 mi l l ion ko d a t e f o r E l Salvador, but expects t o approve an add i t iona l , equal amount by t h e end of 1988. Projec ts include a sesame seed decor t i ca t ing p l a n t and poss ib le f inancing f o r t h e U.S. inves to r p r o j e c t described above. . W ' s ( L a t i n America Agribusiness Development Corporation) new p o r t f o l i o a l s o includes a sesame processing p l a n t , a shrimp f i s h i n g opera t ion and a small ornamental p l a n t export business. This p o r t f o l i o t o t a l s ~ ~ $ 8 3 0 , 0 0 0 .

I D B f a c i l i t i e s f o r El Salvador a r e not s p e c i f i c a l l y geared t o CD/NTAE but have had some impact1 a new non-tradit ional export f a c i l i t y from t h e Venezuelan Fund (36 VF) f o r ~ ~ $ 5 . 0 mi l l ion w i l l be ava i l ab le t o f inance export agro-industr ies . World Bank ( I B R D ) f a c i l i t i e s a r e a l s o not s p e c i f i c a l l y geared t o CD/NTAE.

Final ly , under i t s Trade Credi t Insurance Program, A.I .D. has provided over $800 mi l l ion i n cumulative author iza t ions f o r guarantees under EXIMBANK program c r e d i t s f o r Centra l America, of which E l Salvador has used approximately $317 mil l ion. This f a c i l i t y , which w i l l include annual au thor iza t ions of some $200 m i l l i o n through its conclusion i n 1990, covers t h e short3-,enn f inancing of imports from t h e U.S., including a g r i c u l t u r a l inputs . The team es t imates t h a t about 1 5 percent of E l Salvador 's imports under t h e f a c i l i t y were f o r use i n CD/NTAE production.

G U A T E M A L A

Table of Contents

Page

I. MACROECONOMIC, P-CT AND INSTITUTIONAL SETTINGS

A. Recent Hiotory B. Policy-Related Issues C. Trends i n Non-Traditional Agr icu l tu ra l Export (NTAE) D. A.I.D. P ro jec t s and Key I n s t i t u t i o n s

11. MAFUCETING OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction B. Ava i l ab i l i t y , Volume, Quali ty and Continuity of Non-

Trad i t iona l Agr icu l tu ra l Export Crops 1. Production 2. Postharvest Handling 3. Transportat ion 4. Import Procedures 5. Market Information and Market Linkage

C. Linkage Between A.I.D, P ro jec t s and Independent Producers/Exporters

111. PRODUCTION OF NON-TRADXTIONAL AGRICULl'URAL EXPORT CROPS

A. Introduction B. Technology Transferr Research

1. Seed and Variety Se lec t ion 2. Water Management 3. F e r t i l i z e r and Ag Chemical Use 4. Mechanization 5. Labor Management

C. Technology Transfers Extension D. Land Use

1. Monoculture 2. S o i l and Water Conservation 3. Improper U s e of F e r t i l i z e r and Qlemicals

E. Support Services

IV. ENVIRONMENTAL IHPACT FROM CROP QIVERSI'FICATION AND NON-I'RADITIONAt AGRICULTURAL EXPORT

I V . G-1

Table of Contents (continued)

Page

V. CRTEDIT/RXNANCE/I#VESTMENT FOR NON-TRADXTIONAL AGRICULTURAL EXBORT CROPS

A. A . I . D .-Authorized Primary F a c i l i t i e s Available for CD/NTAE

B. Placement 1. Outstandings 2. The Placement Process

C . The Issue of Debt Versus Equity D. Foreign Investment i n CD/NTAE E . Other Financing for CD/NTAE

LIST OF TABLES

1. Value of Non-Traditional Exports, 1980-86 2 . Exports o f Selected Non-Traditional A g Products, 1981-85

A.I.D. ARDO CATIE CD G DP GOG GREMIAL IBRD I C A I T I

ICATA

ICTA I DB I I C A Iu?.rn MAGA MOE NC BA NTAE PACD PED PRE PROEXAG

HOCAP TCIP USAID USA1 D/G USDA

Agency fo r International Development Agriculture and Rural Development Office ( A I D ) b n t r o Agronhico Tropical de Investigaci6n y gnsefianza Crop Diversification Gross Domestic Product Government of Guatemala Non-Traditional Product Exporters Guild World Bank Ins t i tu to Centro Americano ds Investigaci6n y Tecnologsa Industrial Ins t i tu t e of Environmental Sciences and Agricultural Technology (Rafael Landivar University) Ins t i t u t o de Ciencia y ~ecnologia ~ g r h o l a s Interamerican Development Bank Interamerican Ins t i tu t e fo r Cooperation on Agriculture Latin America Agribusiness Development Project (ROCAP) Ministry of Agriculture and Livestock Ministry of Economy National Cooperative Business Association (formerly CLUSA) Non-lYaditiona3. Agriculture Export Project Assistailce Completion Date Private Enterprise Development Project (USAID/G) Bureau fo r Private Enterprise ( A I D ) Non-Traditional Agricultural Export Support Project (ROCAP/USAID/G) Regional Office for Central America Programs ( A I D ) Trade Credit Insurance Program United States Agency fo r International Development USAID Mission t o Guatemala United States Department of Agriculture

G U A T E M A L A

I. MACROECONOMIC, PIZlWECLI AND INSTXTUTXONAL SETTINGS

A. Recent Ustory

A s with o the r Central American countr ies , Guatemala's economy grew s t e a d i l y during t h e 1960's and through most of t h e 1970's. Prices of its p r i n c i p a l expor ts were good, and t h e r e was tl steady flow of fo re ign investment and financing. The Quetzal maintained i ts p a r i t y with th,e U.8. d o l l a r -- a p a r i t y t h a t had e x i s t e d s ince 1926.

During t h e l a t e 1970's and e a r l y 1980's economic condit ions began t o d e t e r i o r a t e , t h e p r i c e s of Guatemala's p r i n c i p a l expor ts began t o decl ine , p o l i t i c a l unres t a f fec ted t r ade within t h e CACM, c a p i t a l began t o move out of Guatemala, tourism declined, and o i l p r i c e s rose sharply. A severe earthquake i n 1976 f u r t h e r damaged t h e economy. GDP growth r a t e s f e l l from an annual average of 4.5 percent between 1978-80, t o 0.7 percent i n 1981, and a minus 3.5 pe rcen t i n 1982. Although some improvement occurred a f t e r t h i s low po in t , t h e growth r a t e was s t i l l a negative f i g u r e i n 1985, in f l a , t ion was over 30 percent and a conzplicated exchange system aggravated t h e economic s i tua t ion . '.,'he exchange r a t e rose from Q1.45 p e r U.S. d o l l a r i n l a t e 1984 t o Q3.80 i n '3ctober, 1985. I t has s ince f a l l e n t o a "unified" 22.70 to t h e U.S. .dol lar (July, 1988). Onel of t h e key e f f e c t s of t h e country 's economic decl ine has been a sharp drop i n expenditures f o r i n f r a s t r u c t u r e , e s p e c i a l l y roads and agr i cu l tu re .

The prospects f o r seve ra l of Guatemala's export crops (e.g., cot ton, sugar cane and caz'damom,l a r e discouraging and a t t e n t i o n i s being focused on non- t radi t ional a g r i c u l t u r a l expor ts and some import-subst i tut ion crops f o r which Guatemala has a comparative advantage. For s e v e r a l years USAIDts a g r i c u l t u r a l program has been d i rec ted toward improving t h e productive capaci ty of f armera, e spec ia l ly i n t h e Highlands, and i n d i v e r s i f i c a t i o n towards crops which increase atrployment and incomes and which earn needed fore ign exchange.

B. Policy-Related Issues

The GOG does not i n t e r f e r e with t h e a g r i c u l t u r a l s e c t o r t o t h e ex ten t t h a t governments of o ther countr ies i n t h e region do. This is n o t t o say t h a t t h e GOG is not d i r e c t l y involved i n many aspects of t h e a g r i c u l t u r a l s e c t o r t h a t d i r e c t l y a f f e c t producers, consumers and exporters.

Exporters of non-tradit ional a g r i c u l t u r a l crops have s p e c i a l concerns which include exchange r a t e policy, c r e d i t policy, t r a d e pol icy , inpu t and commodity pol icy , t r anspor ta t ion policy, and t h e myriad of r u l e s and regula t ions t h a t go with t h e s e po l i c i e s .

1. Exchange Rate Policy - Exporters have been subjec t t o mul t ip le exchange r a t e s a s well a s having t o ass ign designated percentages of t h e i r fo re ign exchange earnings t o a p a r a l l e l markoi. e s t ab l i shed by t h e GOG. Also, exhange r a t e s have a t t imes favored imports, p lac ing expor ters a t a disadvantage both i n c o s t of purchased inputs and earnings from export sa l e s .

2. Credi t Policy

Crr3di.t f o r t h e export of NTAEs is d i f f i c u l t t o obta in and a c t s a s a severe production c o n s t r a i n t i n Guatemala. Monetary p o l i c i e s have tended t o restrict l i q u i d i t y and banking laws requi re excessive amounts of loan c o l l a t e r a l , usual ly land, t o secure c r e d i t s .

3. Trade Policy

Export taxes, ru les , regulat ions, l i cens ing and o ther requirements have a l l impeded t h e flow of products i n t o i n t e r n a t i o n a l markets a t some point . The GOG has, however, es tabl i shed a "one-.stop window" which is considerably reducing t h e t i m e requi red t o expedite exports .

Transport Policy

The na t iona l a i r l i n e is protected from competition i n order t o make it prof i t ab le . This d i r e c t l y a f f e c t s NTAEs i n t h a t many of t h e products must go by a i r , o r could go i f a i r f r e i g h t r a t e s were lower. S imi lar ly , p o r t f a c i l i t i e s and access t o these p o r t s are poor, increas ing c o s t s and reducing movement of products.

The G E N I A L (Non-Traditional Products Exporters ' Guild) and o the r a g r i c u l t u r a l organizat ions have an a c t i v e program t o address these problems and t o dialogue with t h e government. The "one-stop window" was introduced by t h e GOG l a r g e l y a t t h e ins i s t ence of t h e GREMIAL and o t h e r p r i v a t e sec to r organizat ions.

C, Trends i n Non-Traditional Agr icu l tu ra l Export (NTAE)

Guatemala has exported some non- t radi t ional products f o r many years. Cardamom i s an example of a crop t h a t is now considered a " t r ad i t iona l t ' export crop, bu t many o the r crops have long been exported a l so , mostly t o Centra l American countr ies ( p r i n c i p a l l y t o E l Salvador) , but a l s o outs ide t h e region.

The t r end i n non- t radi t ional a g r i c u l t u r a l expor ts showed l i t t l e change between 1980 and 1986, a s can be seen i n Table 1 below,l/

Rosario Reyes, Review of Guatemala Non-Traditional Exports 1980-87 (Off i c e of Economic Policy and Analysis, USAID/Guatemala, September, 1987).

1V.G-2

T A B L E 2

CUATEHALAt Exporte of Se l ec t ed Non-Traditional Agr i au l tu ra l Products, 1981-85 .

I - P R O D U C T E X P O R T S ( m e t r i c t o n s ) ! Exports ! 0 t o I . : t o U.3. : U.S. ! 1981 1982 1983 1984 1985 ! i n 1985 !

Fresh F r u i t Apples & Grapes 697 2,206 2,830 1,985 2 , 358 0 Avocado 2,349 3,267 2,499 3,661 4, 635 0 Oranges & Mand. 2,419 3,473 1,537 704 957 2 0 Passion F r u i t 1, 560 2,500 906 1, 252 1,937 40 Pineapple 472 864 928 951 1,432 489 Other* 10,134 9,273 10, 083 15, 738 16,483 5,516

Sub-Total. 17, 625 20, 583 18, 783 24, 301 27,802 6,065 22

a Fresh Vegetables Beans 115 Cabbage 20, 685 Let tuce 1,362 Okra 179

'wl Peppers 399

%I Snow peas - Other 16, 806

Sub-Total 39,546

Processed Vegetables - 41 1 855 255 1,504 34 3 0

Root Crops Garlic Onions 9,848 13,884 12,570 9,037 14,978 ' 18 Potatoes 18,608 25,350 17,064 18, 811 16,775 0 Yucca 7,359 12,400 12, 493 10,361 14,978 3 3 Other 485 509 384 2411 485 183

Sub-Total 37,837 53,862 44,449 39,876 49,163 3 96 8

P l a n t s and Flowers Seed, Bulbs &

Fol iage 3,143 4,002 5,537 10,012 12,450 2,353 Cut Flowers 5,956 3,417 2,919 2,951 3,324 2,460

Sub+otal 9, 099 7,419 8,456 12 963 15,774 4,803 3 0

Spices Cardamom 4,406 4,025 4,367 4, 394 6,171 482 8

Sourcer Banco de Guatemala * Excluding bananas and p l an ta ins .

I V .G-4

D. A.I.D. Projeats and Key In s t i t u t i ons

USAID/Guatemala has had a s e r i e s of projects designed t o a s s i s t i n crop d ivers i f ica t ion and non-traditional agr icu l tu ra l exports. A p a r t i a l l i s t i n g is shown below1

~---1---1-~-~,-1--~-~----~0--------------~----~--------..---0-..-0~------~0---1----

FY of I n i t i a l Project No. T i t l e Obligation PACD

Project 520-0238, Small Farmer Marketing Systams, was designed t o a s s i s t cooperatives t o develop a f a c i l i t y and s k i l l s t o market t h e i r products mainly i n the domestic market. The project was not successful. Project 520-0255, Small Farmer Diversif ication Systems, had f i ve components, small-scale i r r i ga t i on ) s o i l conservationr and vegetable, f r u i t and l ivestock production. I t was only ind i rec t ly involved i n NTAE and terminated i n December, 1987. Project 520-0274, Highlands Agricultural Development, was a l s o designed t o a s s i s t i n small-scale i r r iga t ion , s o i l conservation and fores t ry , p lus ru ra l access roads.

Project 520-0276, Agribusiness Development, is the main vehicle f o r ass i s t ing Guatemala i n developing NTAEs. It was designed with several objectives, (1) t o a s s i s t cooperatives* i n domestic and export marketing, ( 2 ) t o provide funds t o t h e Bank of Guatemala f o r on-lending t o agribusinesses and cooperatives, and ( 3 ) t o a s s i s t t he Non-Traditional Products Exporters' Guild t o develop a market information system and t o strengthen i ts export and investment promotion a c t i v i t i e s . The project s goal, pur,pose, inputs, outputs, funding, and mid-term evalution are described below.

o Project Goals To increase ru ra l family intcomes through improved produc- t ion , storage, processing, marketing, and t h e generation of employment opportunities re la ted t o the production of high value crops. The sub-goal is t o expand and divers i fy Guatemala's export of non-traditional crops.

o Project Purposa,; To provide small farmers with prof i tab le ou t l e t s f o r t h e i r f r u i t and vegetable production through new or expanded agribusiness enterpr ises i n ru ra l areas.

* The ass is tance t o cooperatives terminates i n 2988, but w i l l probably be extended.

o Inputsr

Provide agr ibus iness and production c r e d i t t o entrepreneurs and cooperat ives through four f inanc ie res ( f inance companies), p a r t i c i p a t i n g commercial banks and BANDESA, t h e National Agr icul tura l Development Bank.

Provide t echn ica l assistirnce and t r a i n i n g t o f i n a n c i a l i n s t i t u t i o n s .

Provide t echn ica l a s s i s t ance and t r a i n i n g t o entrepreneurs.

Provide t echn ica l assistinnce and t r a i n i n g t o cooperatives.

Es tabl ish a market information system i n t h e Guild (GREMIAL).

Carry ou t an export investment and promotion program through t h e Guild.

Carry out p r o j e c t evaluat ions and a u d i t s of funded agribusinescau.

1. Es tab l i sh or expand a s i g n i f i c a n t number of f r e s h and processed product agr ibus iness e n t e r p r i s e s (20 agr ibus iness p l a n t s t o be es t ab l i shed and 75 entrepreneurs and p l a n t managers t o be txa ined) .

2. Train 20 f inanc ie ra and commercial bank managers and s t a f f i n c r e d i t ana lys i s and f e a s i b i l i t y study techniques.

3. 15,000 small farmers producing crops f o r agribusinesses o r cooperat ives and 1,500 workers employed by p r i v a t e agr ibus inesses t ra ined.

A.I.D. Loan Grant 3,000 --

Sub-total 12,500

Pr ivate Sector 8,300 GOG - 8 0 --

Sub-total 8, 380

Tota l . ~ ~ $ 2 0 , 8 8 0 =nza==a==a

o Mid-Term Evaluationr

An e v a l u a t i o d carr ied out i n December 1987 found tha t ,

1. 'Phe Btink of Guatemala component ( c r e d i t ) had only marginal euaoese -- 3.ees than U S $ ~ . 5 mi'l.lion of the US$~. 5 million were dislbursed aa of December 8, 1987.

2 . The impact of loans, Ln t e r r a of Senofits t o the ru ra l poor, had been modest.

3. I11 ternrs of ins t i tu t iona l iz ing improved agribusiness c r ed i t analyeis and loan appraisal capabi l i t i es , r e su l t s had bean negligible.

4. The Guild had made considerable progreas i n es tabl ishing an i n s t i t u t i ona l frauowork f o r market information and for assistanoe t o agribusinesses.

5. The Guild had been successful i n obtaining pr iva te oector counterpart funds.

6. The G u i l d had not been a s successful i n moving toward other goals eetablished i n t he Project Paper.

7. Aseistance t o cooperatives had f a l l e n shor t of t he goals e s t a b l i ~ h e d i n The Project Paper. Three cooperatives accounted for a majority of t he time spent by technical assistance advisors.

8. A f e a s i b i l i t y study f o r a processing f a c i l i t y , prepared by t h e technical assistance team, was not pract ical . The evaluation included a recommendation t h a t a new study be carr ied out.

11. MARUTIWG OX? NON-TRADITIONAL AGRICULTURAL EXPUIKl! CROPS -- --

The majority of t he population i n Guatemala ( approximately two-thirds 1 l i ve s i n t h e ru ra l areas and a high number a r e small farmers. One of the A.I.D. Mission's goals is t:o increase ru ra l families ' incomes through improvement i n t he production, processing, and marketing of non-traditional export crops. A focus of the Agribusiness Development Project has been on f i ve of ten cooperatives t h a t arte currently exporting non-traditional crops. These area

2/ Arthur Young, Mid-Term Evaluations Agribusiness Development Project , Prepared fo r USAID/Guatemala. (Washington, D .C. , December, 1987 1.

Cuatro Binoe MerydaZena Hinaon Orande Peaomerq Aguacatan

important: project i n the a1:ae of malcketing w i l l be the Private Enterpriee Develogmetrt Pro Jwt (No. 520-0341) which includea promotion of t he export QC non-traditional productu.

There a r e three o r q a n l ~ a t ~ o n a t h a t play a key ro le i n production, poetharveot teahnology , markutiq 3 and export promotion a c t i v i t i e ~ i n Guatemala, ( 1) GREMIRt ( Non-Traditimal Product Exportere' Guild) I ( 2 ) National Cooperative Bueinares Aeaociation (NCBA, formerly CWSA) # and ( 3 PIPS)EXAG ( ROCAPI Non- Tradit ional Agriculture Export Support Project) . NCBA has concentrated primarily on providing technical assi8tance t o t he c~ope ra t i ve s . The GREMIAL and PROEXAG have a much broader base group and a var ie ty of roles i n the area of marketing. The l a t t e r two groups have iden t i f i ed a list, of p r io r i t y crops8

1. Melons 2. Snow peas 3. Specialty vegetables 4. Asparagus 5. Berries (Strawberries, raspberries, blackberries) 6. Broccoli 7. Mangoes 6 . Cut flowers 9. Ornamental p lants 2;

B, Availabil i ty, Volume, Qunlity and Continuity of Non-Traditional Agricultural Export Crope

1. Production

A i l three of the organizations NCBA, GREMIAL and PROEXAG provide production technoloyy a s needed.

The th ree s t a f f members of NCBA work with the cooperatives by providing extension technology and have concentrated t h e i r e f f o r t s on th ree cooperatives (Magdalena, Uncon Grande and Aguacatan) t h a t need ass is tance i n a l l o r a few of t he key markethg functions. In t h e case of Rincon Grande, which is composed of 51 strawberry growers, there has been a concentrated e f f o r t by one of t he NCBA t e m members, Peter Alfonso, t o produce a qual i ty crop f o r export. Major improvements have occurred since l a s t year. In 1987 t h i s cooperative exported only 5,000 boxes of strawberries# f o r t h e 1988 season it has doublsd the number of acres planted (now over 18) ) planted three d i f fe ren t va r i e t i e s of strawberries imported from the U.S.? incorporated drip- i r r i ga t i on , and expects t o produce 40,000 - 50,000 boxes. During interview^? the general manager and some of t h e members of t he cooperative working i n t he

elohdo €$aid t h a t thoy ware gLedsud w i t h tho toahnicnl ass ia tanca and o v e r a l l yuidanco from the N C M roprnsontat lve and t h a t he had boen Lnstrumental i n teaching improvod praduation technologies t o tho cooporatFve membere. According t o one of the i i~d~v i t iun l t l lnterviewud, tho t echn ica l a s s i s t ance aupport provided through thitr p ro jec t was c r u c i a l t o t h e p r o j e c t ' s o v e r a l l sucaess. (Notat A.X.D. has funded nine i r r i g a t i o n eyetems f o r t h e omall farmers t o grow traditional o r non-traditional arogs. Funding f o r t h e Rinc6n Grancle p r o j e c t , however, was obtained from an Interamerican Development Bank c r e d i t l i n e . M r . Alfonso d i rec ted loan negot ia t ions f o r t h e cooperat ive.)

The GREMIAL, which is a seven yoar o l d a s soc ia t ion of producer/exporter r ep resen ta t ives of the i n d u s t r i a l and a g r i c u l t u r a l sec to r s , appears t o be a cohosive group working t o promote and a s s i s t i n t h e export marketing of non- t radi t ional crope. I t provides a s s i s t ance i n production technology t r a n s f e r t o i t s members through seminars and short-term advisors. Such assj-stance is useful , but should probably be provided on a long-term bas i s t o obt.ain more permanent technology t r a n s f e r . The GREMIAL and PROEXAG work together i n a s s i s t i n g associa t ion members t o improve crop y ie lds , con t ro l v i ruses and reduce overa l l c o s t s of production. They a l s o provide information on production technologies and fund seminars t o educate grawers on d i f f e r e n t growing, postharvese and marketing aspects of NTAE. For instance, within t h e GREMIAL, an a s soc ia t ion of asparagus growers v i s i t e d Cal i fornia t o l ea rn about asparagus groduction and postharvest technologies. This seminar was funded through A . I . D . and organized by t h e GREMIAL and PROEXAG.

Long-term techn ica l a s s i s t ance is necessary i n general f o r growers of NTAEs, but e s p e c i a l l y f o r new cropa such a s raspberr ies and asparagus t h a t have r e l a t i v e l y l . l t t l e h i s to ry i n Guatemala. A . I . D . should help t o provide such ass i . - t ance a s soon a s poss ib le t o help Guatemalans t ake advmtage of t h e long-term incoma oppor tuni t ies from t h e s e crops.

2. Postharvest Handling

In Guatemala some of t h e non- t radi t ional crops such a s snow pea, sugar snap and melous have been successful ly produced and exported f o r seve ra l years . Cuatro Pinos, a cooperative composed of approximately 1,700 growers, has been successful ly export ing snow peas f o r t h e l a s t e igh t years. The cooperative has a packing shed with a forced-air cooler and r e f r i g e r a t e d holding area. Because of e f fec t iveness i n c o r r e c t l y so r t ing , packing and cooling, t h e coopera t ive ' s products a r r i v e i n t h e U.S. market with few q u a l i t y o r condi t ion problems. A s a r e s u l t , t h e cooperat ive has been a b l e t o increase i ts volume s u b s t a n t i a l l y and has even d i v e r s i f i e d i n t o spec ia l ty vegetables such a s mini- vegetables, h a r i c o t v e r t , and raddichio. C w t r o Pinos has p lans t o expand operat ions and bu i ld a f reez ing p l a n t t o export frozen snow peas, broccol i and o the r vegetables.

Cuatro Pinos' p o s t i ~ a r v e s t success is pr imar i ly a t t r j b u t a b l e t o its Executive Director , M r . Tul io Garcia, who is a l s o t h e pres ident of t h e Fresh F r u i t and Vegetable Assoziation within t h e GREMIAL.

NCOA, t he GREMIAL and PROEXAG, i n planning and implementing postharvest handling t echn ica l a s s i s t anae , would do well t o study t h e Cuatso Pinos oxporience c lose ly . Conceivably, they could arrange f o r regular t a r g e t group vie i t t l t o t h e Cuatro Pinos f a c i l i t i e s and business contacts with personnel from the cooperative.

3. Tranoportation

High c o s t and l imi ted a v a i l a b i l i t y and frequency of t ranapor ta t ion a.ro major cons t ra in t s f o r producers/exportrars of non-tradit ional crops. The t h r e e conference l i n e s which provide ocean t r anspor ta t ion f o r a l l of t h e Cantral American countr ies have a monopoly on p r i c e s and space.

A i r t r anspor ta t ion is a l s o a problem f o r flower, ornamental p lan t , mini-vegetable, snow pea and strawberry growers. A i r space f o r t h e growing volume of crops i s l imi ted and c o s t l y . Although the re a r e a number of small cargo a i r l i n e s , expor ters s t i l l must contend with untimely depar tures a s well a s t h e possibility of having t h e i r cargo l e f t behind. Export product volumes a r e increas ingr but t h e r e a r e no coolers a t t h e a i r p o r t ; t he re fo re , exporters must t i m e shipments p e r f e c t l y o r t a k e cargo back t o t h e i r own coolers . There a r e severa l f r e i g h t forwarding agencies t h a t secure space f o r t h e l a rge es tabl i shed growers. However, t h e new producer who needs t o export h i s product has d i f f i c u l t y f inding space and r e l i a b l e c a r r i e r s .

The GREMIAL is working t o improve t h e cost/availability/frequency of t r anspor ta t ion a s they r e l a t e t o increased volumes of NTAE products. With t h e support of PROEXAG it should develop production schedules based on projec ted p lan t ings i n order t o f o r e c a s t t r anspor ta t ion needs.

Impor t Procedures

Increased awareness of problems encountered during t h e c l e a r i n g process is occurring among producers a s t h e r e s u l t of i d e n t i f i c a t i o n of p e s t i c i d e residues and i n s e c t s - i n cargo a t p o r t s of ent ry . The GREMIAL has held seminars on FDA and USDA regula t ions t o inform producers of problems a r i s i n g i n t h e c l ea r ing process, but needs t o improve t h e dissemin<tion'of information on p e s t i c i d e to le rance regula t ions and t h e con t ro l of i n s e c t s i n cargo. PROEXAG could p lay a r o l e i n disseminating t h i s type of information t o producers/exporters i n a l l of t h e Central American countr ies where it provides support.. The GREMIAL needs a l s o t o evaluate t h e importance of pre-clearance inspect ions and a c t i v e l y seek t h e i r implementation, a s has been done i n Chile, Jamaica and t h e Daminican Republic.

5. Market Information and Market Linkage

One of t h e GREMIAL1s functions i s t o provide marketing news, t rends, and

p r i c e s which it: doec through tho marketlng se rv ices of PROEXAG*. Since PROEXAG i s headquartered i n Guatemala, market p r i cos , crop volume ana lys i s and t rends a r e gathered t h e r e by the o rgan iza t ion ' s communication s p e c i a l i s t . This information was disseminated through a monthly l e t t e r 1 however, dissem- i n a t i o n se rv ices have beon temporarily ha l ted while PKOEXAG and t h e GREMIAL evaluate new, more e f f e c t i v e methods t o disseminate market p r i c e s and t rends . ( I n o the r countxies, notably i n Chile, it was found t h a t t h e most e f f e c t i v e methods of dissemination, namely through newspapers and the radio , a r e o f t e n t h e s imples t . )

The GREMIAL provides. market l inkage i n severa l ways. I t represents producers/ expor ters a t t r a d e f a i r s and it has b u i l t up a p o t e n t i a l p o r t f o l i o of inves t - o r s o r marketing f irms i n t e r e s t e d i n marketing non-tradit ional products. The most e f f e c t i v e mechanism cur ren t ly used t o i d e n t i f y a "qual i f ied rece iver / broker" i s word-of-mouth from i ts members. Although t h i s is a reasonable ba,ginning , t h e GREMX.PL needs t o develop a broader, funct ional marketing p lan froin which a sound base can be b u i l t . Ingredients f o r success a r e present , bu t improvements w i l l be necessary. A f i r s t s t e p i n t h i s regard should probably be t h e development of comprehensive l i s t i n g s and ~ a t i n g s of r e c e i v e r s b r o k e r s according t o d i f f e r e n t product groupings. PROEXAG has considerable experience and can provide guidance i n t h i s a rea .

PROEXAG c r i t e r i a t o determine t h e worthiness of a r e c e i v e r b r o k e r proper ly include*

1. Blue Book/Red Book c r e d i t r a t ings .

2 . Company experience i n marketing product from Central America.

3 . Number of years i n t h e business and type of Dun and Brads t ree t ra t ing .

In l ink ing producers with appropr ia te rece ivers , PROEXAG has tended t o promote l a r g e mul t ina t ionals such a s Del Monte o r Dole, and one o r kwo rece ive r s t h a t have i n t h e p a s t supported and l e n t exper t i se t o t h e Projec t through p a r t i c i - pa t ion i n t h e High-Level Advisory Group (Grupo de Asesores de Alto Nivel) . Outside of t h i s " e l i t e " group, PROEXAG' s linkage of producers/exporters t o r ece ive r s has been l imi ted . In t h e team's judgement, PROEXAG should d i v e r s i f y its receiver lists, perhaps by working together with t h e GREMIAL on t h e l i s t i n g s / r a t i n g s mentioned above.

C. Linkage Between A.I.D. Projec ts and Independent Producers/Exporters

Most independent producers/exporters i n Centra l America have succeeded t o d a t e without d i r e c t a s s i s t ance from A . I . D . Missions. Guatemala ap]?ears t o be t h e

* PROEXAG has an e x c e l l e n t communications department which !gathers market n e w s , crop amalyses, and p r i c e t r ends and t r ansmi t s t h i s .information t o t h e d i f fe ren , t federa t ions l i k e t h e GREMIAL i n t h e o the r Central American countr ies .

only country i n Central Amarica i n which a CD/NTAE assoc ia t ion of producers/ expor ters was founded by na t iona l s and not crea ted by A . I . D . a s .a p r o j e c t implementation channel. A.T .D. does however, s u b s t a n t i a l l y fund t h e GIWMIAL today and sha res i n i ts CD/NTAE development influence. The GREMIAL represents small, medium and l a rge growers a l i k e and can p lay a v i t a l r o l e i n providing t echn ica l a s s i s t ance and market information f o r i ts members. A.I.D. can help ensure G R E M I l l t success i n car ry ing out i t s r o l e by providing f o r more o r expanded long-term technica l a s s i s t ance of t h e type now being given by PHOEXAG.

It is a l s o p e r t i n e n t t o again mention t h e very immediate r e s u l t s of t h e inpu t s of NCBA i n helping t h e Rincon Grande cooperative t o produce and export s t rawberr ies . T h i s i s perhaps one of t h e b e s t examples of an A.S.D.-supported CD/NTAE success.

PRODUCTION OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction

Guatemala has an a rea of approximately 70,000 square kilometers. I t i s bordered on t h e north and west by Mexico, on t h e southeas t by E l Salvador, on t h e e a s t by Honduras, and on t h e nor theas t by Belize. Its southern boundary i s t h e Pac i f i c Ocean.

Two major mountain ranges running genera l ly from e a s t t o west d iv ide t h e land i n t o more o r l e s s d i s t i n c t provinces. Guatemala l i e s e n t i r e l y within t h e t rop ics , but a l t i t u d e and c o a s t a l inf luences a f f e c t t h e cl imate. The primary physiographic areas a r e (1) t h e Pac i f i c coas ta l lands, (2 ) The highlands, and ( 3 ) t h e Caribbean coast . Of primary i n t e r e s t is t h e Highlands area where most of t h e non-tradit ional crops a r e being grown. This a rea has d i s t i n c t w e t and dry seasons with average yea r ly r a i n f a l l between 40 and 60 inches. Al t i tude influences t h e temperatures which average 1 6 O ~ i n December t o 1 8 O ~ i n April . S o i l s general ly a r e of volcanic or ig in . The majori ty of t h e Guatemalan people l i v e i n r u r a l a reas and a r e engaged i n ag r i cu l tu re , o f t e n a s subsistence farmers.

The a g r i c u l t u r a l s e c t o r has t r a d i t i o n a l l y played a major r o l e i n Guatemala's gconomy, including a s i g n i f i c a n t socio-economic ro le . Agriculture is t h e l a r g e s t s e c t o r a l employer, accounting f o r near ly 60 percent of t h e t o t a l work force , and about one-fourth of t h e country 's GDP. The major export crops a r e coffee , cot ton, bananas, sugar and cardamom. F r u i t s and vegetables have long been produced i n t h e highlands f o r l o c a l consumption and an exce l l en t base e x i s t s f o r export production.

Guatemala has a reasonably wel l developed t r anspor ta t ion network of paved highways and roads. However, maintenance on many secondary roads is nbj lec ted which can lead t o bruis ing of pe r i shab le crops during t r anspor t .

Post harves t handling f a c i l i t i e s , including pre-c:ooling, packing and s torage f a c i l i t i e s , a r e not r e a d i l y avai lable . However, an A.1.D.-supported cold-

packing u n i t which wars not being used was reportedly going t o be leasod t o a strawberry producers' cooperative which receives teahnica l a s s i s t ance from A . I . D .

B. Teahnoloav Traneferr Researah

From an h i s t o r i c a l s tandpoint , a8 might be expected, Guatemala's a g r i c u l t u r a l research programs have not been support ive of CD/NTAE. Apart from t h e f a c t t h a t t h e cr>untry has focused pr imar i ly on t r a d i t i o n a l a g r i c u l t u r a l commodity expor ts , its o v e r a l l research c a p a b i l i t y has been l imi ted due t o inadequate budgetary provis ions , p a r t i c u l a r l y f o r t h e Ministry of Agriculture and i ts Agr icul tura l Science ' and Technology 1nstiZut.e ( ICl 'A) . ICTA' s o r i e n t a t i o n is pr imar i ly toward research i n food crops and it has only been marginally involved i n A . I. D. ' s and ROCAP' s CD/NTAE projec ts . The ROCAP-f unded PROEXAG p r o j e c t has encou,raged producers t o conduct on-farm t r i a l s , but monitoring and follow-up a r e l imi ted because PROEXAG personnel must a l s o cover o the r coun t r i e s i n Centra l America. Since 1985, public and p r i v a t e i n s t i t u t i o n s have voiced t h e i r concern f o r increased research i n CD/NTAE, but budgetary support is s t i l l lacking a s i s adequate research planning. Fa i lu re t o p lan and fund CD/NTAE research could r e s u l t i n high opportunity cos t s . Spec- i f i c a l l y , f a i l u r e t o conduct adaptive research through on-farm t r i a l s could r e s u l t i n crop monocultures and t h e expensive use o r misuse of imported technologies. N e w farming ventures i n CD/NTAE a r e e s p e c i a l l y vulnerable t o t h e s e r i s k s because of market requirements f o r product q u a l i t y and quanti ty. I n t h e rush t o meet these requirements and i n t h e absence of on-farm t r i a l research programs, producers may w e l l f i n d f u t u r e c o s t s wiping o u t any current gains. This could occur f o r some vegetable growers i n Guatemalar t h e r e have already been aphid problems with snow pea production. Nor is short-term consultancy -- t h e usual p resc r ip t ion -- a s a t i s f a c t o r y answer.

For CD/NTAE i n i t i a t i v e s t o succeed i n Guatemala over t h e long-term, ongoing adaptive research must be conducted i n a number of a reas inc luding seed and v a r i e t y se lec t ion , water management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use, mechanization, and labor management. These a reas a r e discussed below.

1. Seed and Variety Se lec t ion

Most seed and v a r i e t i e s f o r CD/NTAE: i n Guatemala have been imported. This is p a r t l y due t o t h e f a c t t h a t many of t h e crops a r e e s s e n t i a l l y "new" t o t h e country. But even i n cases where f r u i t s and vegetables have been grown before i n Guatemala, t h e marketplace tends t o d i c t a t e t h e s p e c i f i c seed o r va r i e ty t h a t should be planted. From t h e team's observations, while producers d id conduct some prel iminary "researcht' t o choose from two o r poss ib ly more acceptable market v a r i e t i e s of a p a r t i c u l a r crop -- such a s strawberry, broccol i f o r f reez ing, o r min ivege tab les -- a s a r u l e , they were not car ry ing o u t ongoing adapt ive research t r i a l s t o fol low and improve t h e performance of a se lec ted var ie ty . A s indica ted above, t h e r e has been r e l a t i v e l y l i t t l e support i n t h i s a r e a from t h e Guatemala's Ministry of Agriculture. Also, from interviews and f i e l d v i s i t s with personnel from t h e A .I. D. -supported Non-

Trad i t iona l Product8 Exporters ' Guild (GREMIAJL) , i t d i d not appear t h a t t h y , e i t h e r , were promoting f o r t a r g e t groups adequate 1eve:Ls of on-farm adapt ive research f o r d i f f e r e n t CD/NTAE seeds and v a r l e t i e e . (PROEXAG o f f i c i a l s include on-farm research a s a technology t r a n s f e r objec t ive , but they must cover s e v e r a l coun t r i e s i n add i t ion t o Guatemala and they have only one production technology exper t . )

2. Water Management

To some ex ten t , producers of CD/NTAE cannot avoid t h e conduct of water management "rosearc h" . Threshholds of "too much" o r "too l i t t l e " a r e usual ly easy t o de f ine and ' i d e n t i f y f o r most crops. But f o r high-value CD/NTAEs, f a i l i n g t o def ine and achieve t h e " j u s t r ight ' ' l e v e l of i r r i g a t i o n can r e s u l t i n a s i g n i f i c a n t opportunity c o s t through reduced y i e l d s and diminished product qua l i ty . E f f i c i e n t discovery of t h e r i g h t l e v e l of water supply is b e s t accomplished through water management t r i a l s . In t h i s way, t imely answers can be found t o ques t ions such a s when t o i r r i g a t e 1 what type ( s1 of i r r i g a t i o n t o user whaL del ivery r a t e s t o use? how t o manage excess waterr how t o manage t h e so i l /water r e l a t ionsh ip r and what t h e c o s t of i r r i g a t i o n should be. Growers and personnel from d i f f e r e n t agencies v i s i t e d were concerned with each of t h e s e quest ions. But it seemed t h a t t h e i r concern was d i r e c t e d more a t studying t h e nominal p o t e n t i a l s of d i f f e r e n t i r r i g a t i o n systems and t h e i r repor ted c o s t s khan i n t h e conduct of adapt ive on-f arm research with any given system.

3. F e r t i l i z e r and Agr icul tura l Chemicals U s e

Non-traditional crops r equ i re proper f e r t i l i t y condi t ions and p e s t and d i sease c o n t r o l t o achieve and s u s t a i n marketable y ie lds . F e r t i l i z e r , p e s t i c i d e and o the r inpu t s a r e expensive and consequently must be used e f f i c i e n t l y . S o i l and o t h e r condi t ions i n Guatemala a r e d i f f e r e n t from those of t h e U.S. and t h e app l i ca t ion of these i n p u t s t h a t is appropr ia te , say, f o r Ca l i fo rn ia , may not be t h e most s u i t a b l e f o r Guatemala f o r any given crop. A t t h e o u t s e t , it is not inappropr ia te t o use an imported technology package, p a r t i c u l a r l y i f seed f o r a s p e c i f i c c rop is a l s o being imported. Yet, without proper adapt ive research, c r i t i c a l ques t ions w i l l go unanswered. These include proper r a t e s of appl ica t ion , methods of app l i ca t ion , t iming, f e r t i l i t y / w a t e r r e l a t i o n s h i p s , and environmental e f f e c t s ranging from immediate impact on f i e l d workers t o contamination of crops, water and a i r . S a t i s f a c t o r y answers t o t h e s e ques t ions and t o t h e c e n t r a l i s s u e -- how t o achieve optimum CD/NTAE y i e l d s -- r equ i re f requent t e s t i n g of s o i l s and water -- t e s t i n g t h a t should be done on a continuing bas is . Again, t h e team could not d i sce rn enough a t t e n t i o n t o t h i s type of r e s e a m h i n Guatemala general ly, nor s p e c i f i c a l l y i n A . I . D . ' s p ro jec t s .

4. Mechanization

Export c rop production is highly t ime-sensi t ive. Cost -ef f ic ient mechanization is o f t e n t h e bes t rosponee t o such time s e n s i t i v i t y a s w e l l a s t o p o t e n t i a l labor shortages o r o ther shortcomings. For most export crops and f o r most farmere i n Guatemala, t h i s does not have t o imply ownership of a t r a c t o r o r othter b ig t i c k e t item. Instead, it means access t o and use of proven, c o s t e f f i c i e n t mechanical a i d s f o r one o r more of t h e key t a s k s of t i l l a g e and land prepara t ion , cu l t iva t ion , harvest ing, and f e r t i l i z e r and chemicals applica- t ion . A s f a r a s t h e team could determine research i n t h i s a rea i s not s i g n i f i c a n t . I f anything, it has been - - ad hoc, w i t h t h e r e s u l t being an add i t iona l opportunity cos t f o r farmers.

5. Labor Management

Non-traditional a g r i c u l t u r a l export crops a r e b a s i c a l l y labor in tens ive including a s i g n i f i c a n t requirement f o r hand harvest . A s p l an t ings of these crops inc rease , seasonal dernand f o r labor w i l l increase a s well and w i l l a l s o inev i t ab ly coincide with some p a r t of t h e labor demand of t r a d i t i o n a l crops. Thus, demand f o r labor t o harves t asparagus, broccol i and s t rawberr ies i n Guatemala could coincide with l abor demand f o r coffee picking i n t h e same growing area . It is not premature t o begin a n t i c i p a t i n g t h e poss ib le impact of increased CD/NTAE p lan t ings on labor requirements and t o begin planning t o meet these requirements well i n advance of harvest time. A . L . D . shou!.d a s s i s t i n t h i s type of advance planning by c o l l e c t i n g and analyzing pe r t inen t labor demand d a t a and by reaching growers with t h e r e s u l t s through appropr ia te implementing agencies and wherever poss ib le through s p e c i f i c growers' commodity associa t ions .

C. Technology Transfer8 Extension - Technology t r a n s f e r , through extension, has not been s t rong i n Guatemala and could t h u s cont r ibute t o re:Latively low product iv i ty i n non-tradit ional c rop production. A s a r u l e , technologies a r e imported through consul tants and "extended" i n t a c t t o d i f f e r e n t growing areas. This is part1.y because extension personnel from d i f f e r e n t i n s t i t u t i o n s including, primari ly, t h e Ministry of Agriculture, a r e l imi ted i n numbers and budget. PROEXAG, f o r i t s p a r t , i s spread too t h i n t o be ab le t o provide adequate extension se rv ice t o l a r g e numbers of growers. And, a s noted above, most agencies a r e not adequately emphasizing t h e need f o r on-farm adaptive research, and t h e r e Ilr

r e l a t i v e l y l i t t l e linkage between research and extent3ion.

The short-term approach t h a t has been taken i n extension is sometimes a r e s u l t of t h e l ack of cro; pec i f i c grower associat ions. In Guatemala, however, seve ra l such associa t ions do e x i s t and could w e l l s e rve a s t h e bas i s f o r crop-specir ic extension programs. An important case i n po in t is t h e GWMIAL-affiliated Asparagus Growers Association. PROEXAG has conducted s i g n i f i c a n t information gathering research on asparagus and could, hopefully

with Ministry and GREMIAL support , develop a p r a c t i c a l extension program t o t r a n s f e r t h i s research t o growers.

In reviewing PRDEXAG's and t h e GREMIAL's production l i t e r a t u r e , it seemed t h a t eome of t h e information might not be app l i cab le o r p r a c t i c a l f o r Guatemalan growers o r f o r t h e t r a i n i n g of extens ionis to . Preparat ion and use of such mate r i a l s should be coordinated a s an i n t e g r a l p a r t of A . I . D . ' s CD/NTAE program ra the r than being taken a s "off-the-shelf" items.

A s noted, t h e l imi ted extension c a p a b i l i t y tha , t does e x i s t i n Guatemala is not adequately l inked t o adaptive on-farm research. Instead, A.I.D.'a program emphasis seems too ,centered on marketing, pramotion and c r e d i t . Extension e f f o r t s t h a t a r e guided by these program emphasfes alone w i l l not be sound nor conducive t o t h e growth of a sustain able^ non-tradit ional a g r i c u l t u r e production system.

D. Land U s e

Increased production of non-tradit ional crops w i l l requi re more e f f i c i e n t use of ava i l ab le land. While Guatemala's land a rea can accommodate a s i g n i f i c a n t expansion of CD/NTAE a c t i v i t y , economic and cropping pressures may w e l l r e s u l t i n c u l t i v a t i o n of lands which should no t be farmed in tens ively . This is not y e t a se r ious problem, but monitoring should be undertaken soon s o a s t o avoid fu tu re problems, some of which a r e a l ready i n evidence. These problems, which p e r t a i n t o cropping on even t h e most appropr ia te lands f o r non-tradit ionals , include m o n ~ c u l t u r e ~ inadequate s o i l and water conservation and improper use of f e r t i l i z e r and a g r i c u l t u r a l c h e d c a l s .

In t h e i r i n t e r e s t i n obtaining maximum b e n e f i t from new, s h o r t e r cycle crops i n Guatemala, farmers tend t o use a monoculture cropping system, r ep lan t ing t h e i r crops success ively on t h e same p l o t of land. This can e a s i l y upset previously balanced ecologica l systems with r e s u l t i n g increments i n weeds, p e s t s and disease. The c o s t s t o e l iminate these problems and t o achieve renewed balance can be very high and can eventual ly minimize r a t h e r than maximize benef i t s from t h e new crops. Some problems have a l ready occurred with snow peas. Others can be expected with s t rawberr ies and vegetables f o r processing. Cer ta in techniques, such a s s o i l fumigation/sterilization -- used i n Cal i fornia on strawberry f i e l d s -- can f a c i l i t a t e monoculturing, but these techniques a r e very expensive. The b e s t a l t e r n a t i v e is crop ro ta t ion , which tends t o upset t h e l i f e cycles of p e s t s and d isease while s t i l l keeping land productive. In t h e short-run, t h i s may no t be a s p r o f i t a b l e a s monoculturing, but over time it w i l l invar iably be a more p r o f i t a b l e approach t o land use.

2. Soil and Water Conservation

Increased t i l l a g e and i r r i g a t i o n requirements f o r non-tradit ional crops can e a s i l y lead Zo eros ion and water misuse, e s p e c i a l l y on h i l l y p l o t s where many of t h e non- t radi t ional crops & r e being grown by smaller farmers. Deforesta- t i o n has compounded tho problem. Rainwater and well water run down h i l l s i d e s ,. carry ing away s o i l and s o i l n u t r i e n t s a s well a s chemicals. Smaller farmers a r e o f t e n forced tc use f r a g i l e lands because they cannot access o r obta in t i t l e t o b e t t e r lands) t o some ex ten t they have made e f f e c t i v e use of t e r rac ing , countouring and proper furrowing. But those conservation pracLices a r e not adequately disseminated through t echn ica l a s s i s t ance packages. The same app l i e s f o r f o r e s t conservation p rac t i ces .

3. Inproper Use of F e r t i l i z e ~ r s and Chemicals

In tens ive cropping usual ly means in tens ive chemical and f e r t i l i z e r use. Chemical runoff t o streams is not only c o s t l y i n terms of chemicals l o s t , but can be hazardous t o people and animals who may drink from t h e streams. Chemical d r i f t can a l s o be of concern a s in tens ive crop production in t rudes i n t o populated areas and areas where o the r t r a d i t i o n a l food s t u f f s a r e produced. Unless proper techniques a r e taught t o Guatemalan growers and than monitored, the re is a d i s t i n c t p o s s i b i l i t y of c o n f l i c t between crop production, e f f i c i e n t land use and environmental preservat ion. Proper use of f e r t i l i z e r and chemicals cannot be inculca ted on a short-term b a s i s e i t h e r ) it must be c a r r i e d ou t through long-term extension e f f o r t s , e spec ia l ly f o r new crops .

E. Support Services

Adequate support se rv ices r e l a t e d t o a g r i c u l t u r a l input supply f o r non-tradit ional crops a r e i n p lace p resen t ly i n Guatemala. Distances from most producing farms t o supply cen te r s a r e not g r e a t and road connections a r e adequate a s a r e supply t r a n s p o r t f a c i l i t i e s . heices f o r imported inputs a r e high, but farmers can s t i l l c l e a r reasonable p r o f i t s from non- t radi t ional export crops. A s a p r a c t i c a l matter , increased output of non-tradit ionals w i l l eventual ly a t t r a c t required support services . (There is already a t l e a s t one l a r g e non-tradit ional crop c u l t i v a t i o n s e r v i c e ) . A. I. D. , however, should a s s i s t t h i s process by making c r e d i t ava i l ab le f o r t h e formation of inpu t supply and se rv ice f irms and by pinpoint ing t h e types of f i rms t h a t could have t h e most impact (e .g. , chemicals supply, pre-cooling, packing and s torage se rv ice , c u l t i v a t i o n service , e t c . )

IV. ENVIRONMENTAL WACP FROM CROP DIVERS IBICATION AND NON-TRADITIONAL m. --- AGRICULTURRL EXPORT

A s indica ted elsewhere i n t h i s r epor t , CII/N'PAE programs can lead t o negative environmental consequences. These include8 increased incidence of p l a n t p e s t s and d isease due t o t h e in t roduct ion and in tens ive c u l t i v a t i o n of! crops t h a t r e s u l t i n ecologica l imbalances, e spec ia l ly through monocultur'e~ crop, water and a i r contamination through improper use of p e s t i c i d e s and o the r chemicalst and vicious cycl ing i n these a reas a s pests develop res i s t ance t o chemical t reatments and producers increase chemicals use.

Producers and expor ters i n Guatemala a r e o f t e n aware of t h e s e issuee, bu t probably do nc t y e t have enough t echn ica l o r regulatory information i n order t o understand and a c t on t h e long-term er~vironmental implicat ions of t h e i r production a c t i v i t i e s . I t i s c r i t i c a l , however, t h a t they gain such understanding and apply it e a r l y on s o a s t o avoid both f i n a n c i a l l o s s and in ju ry t o t h e environment.

Experience t o da te with CD/NTAE i n Guatemala has already l e d t o t h e in t roduct ion of expanded c u l t i v a t i o n of crops f o r which s p e c i f i c p e s t s and d iseases a r e already well known. It is not d i f f i c u l t t o a n t i c i p a t e t h e kind5 of problems which may a r i s e with t h e s e crops and t o presc ibe preventive o r a c t i v e treatments t h a t conform t o in te rna t iona l s tandards including, e spec ia l ly , p e s t i c i d e to lerance l eve l s . S imi lar ly , producers can l ea rn about in tegra tod p e s t management programs and t h e use of b io log ica l con t ro l methods t h a t can reduce t h e need f o r using c e r t a i n chemicals. Much of t h e p e r t i n e n t information on these sub jec t s is ava i l ab le i n Guatemala. A.I.D./W aud t h e Mission i n Guatemala have d e a l t t o some extent with environmental i s s u e s i n CD/NTAE p r o j e c t s but it seems t h a t appropriate guidance could be provided on a broader bas is . It would be t imely f o r A.I.D. t o conduct crop-specif ic and Guatemala regional environmental impact assessments and t o t ransmit r e s u l t s and guidel ines through implementing agencies such a s t h e GREMIAL and PROEXAG. Guidelines should include methodologies f o r ongoing, s tandardized monitoring of environmental impacts.

According t o a recent study of t h e p l a n t p ro tec t ion s i t u a t i o n i n Guatemala by t h e Interamerican I n s t i t u t e f o r Cooperation on Agriculture - I I C A (Apr i l , 1988) s t a t e d t h a t losses due t o p e s t s and d iseases were of t h e order of 34 percent i n coffee, 29 percent i n sugar cane, 23 percent i n banana, 28 percent i n cardamom, 34 percent i n cot ton , 30 percent i n maize, 29 percent i n beans and 24 percent i n r i c e i n t h e f i v e year per iod 1983/1984 t o 1987/88. The amount of losses i n o the r crops was not given, but they may be reasonably expected t o be a t a s i m i l a r o rde r of magnitude. An inventory of t h e phytosanitary problems of t h e p r i n c i p a l crops grown i n t h e country was published i n 1985, but t h e authors, acknowledging t h a t it was incomplete, r e fe r red t o it a s a f i r s t approximation. In f a c t , with many of t h e newer vegetables introduced f o r t h e i r expor t p o t e n t i a l , it may be expected t h a t t h e l is t of p e s t s and d iseases a t t ack ing them w i l l grow r a t h e r r ap id ly a s t h e amount of a rea devoted t o t h e i r c u l t i v a t i o n expands and a s they a r e introduced i n t o o the r p a r t s of t h e country. For example, t h e pub l i ca t ion c i t e s s e v e r a l unnamed species of aphids a s t h e only i n s e c t p e s t s of snow peas, but t h o r e

have been r e p o r t s of d i f f e r e n t spec ies of lepidopterous l a rvae a t t ack ing t h i s pl.ant, although t h e e x t e n t of t h e problem is not y e t known.

In a two year s tudy t h a t ended i n 1977, personnel from I n s t i t u t o Cantro American0 de Inveatigaci6n y Tecno1og.f.a I n d u s t r i a l (ICAITI), which 11.8 head- quar tered i n Guatemala, i nves t iga ted t h e environmental and economic conse- quences of pet3ticA.de use i n co t ton production i n Central America. Levels of p e s t i c i d e res idues i n cowa' milk, meat, shrimp, f i s h , crustaceans, maize and beans were determined i n 2,000 samples from seve ra l coun t r i e s and demonstrated t h a t contamination of these products was pervasive i n t h e co t ton growing a r e a s of Central America. A s i m i l a r study i n o thor crops has not been done and t h i s s tudy i r r s t i l l c i t e d f requent ly when problems of pealtid.de contamination of t h e environment i n Central America a r e discussed. In an interview with ICAITI's head of t h e Division of Analysis, Tes ts and Experiments, t h i s i n s t i t u t i o n ' s cu r ren t e f f o r t s i n t h i s f i e l d were discussed. They do not have a formal program of residue a n a l y s i s i n vegetables, but do analyze samples t h a t a r e brought t o them by ind iv idua l growers. This, however, only occurs sporadica l ly . They have undertaken d iscuss ions with I I C A t o conduct res idue a n a l y s i s i n vegetables i n t h r e e of t h e l a t t e r o rgan iza t ion ' s p r o j e c t s , but a formal agreement has not been signed. According t o t h e Division head, aJ.1 of Guatemala's c a t t l e growers send t h e i r meat samples t o be analyzed t o I C A I T I and not t o t h e o t h e r regional res idue labora tory . He be l ieves t h i s is due t o a USDA v i s i t t o ICAITI 2 o r 3 years ago and favorable commentary about t h e i r labora tory . Regular res idue t e s t i n g on vegetables could be conducted a t t h i s l abora to ry and A . I . D., through i ts ROCAP o r Cooperatives p r o j e c t s , should encourage such t e s t i n g .

A s regards t h e sub jec t of p e s t i c i d e manufacture, it was learned t h a t t h e I C I d i s t r i b u t o r i n Guatemala proposed a t one po in t t o move t h e i r paraquat formulat ing plant. t o a new s i t e , but t h a t t h e government, through its Comisi6n Nacional d e l Medio Ambiente, (National Environment Commission) persuaded them t o fund a s tudy of t h i s h e r b i c i d e ' s e f f e c t on t h e environment before t h e i r r e loca t ion . This s tudy w i l l be conducted by t h e Asociacibn Guatemalteca pa ra e l Manejo Seguro de Plaguicidas (Guatemalan Association f o r t h e Safa Manage- ment of Pes t i c ides , Fungicides and Herbicides) and involves sampling t h e o o i l , p l a n t s and water i n maize and co f fee farms, p r i n c i p a l u s e r s of t h i s herbi- cide. A . I .D . should encourage cooperat ion with t h e Associat ion i n o rde r t o consider s i m i l a r t e s t i n g f o r NTAE crops.

A. A.1.D.-Authorized Primary F a c i l i t i e s Available f o r CD/NTAE

A.I.D. 's primary f inancing f a c i l i t y f o r CD/NTAE i n Guatemala is its US$^. 8 mi l l ion Agribusiness Development Fund component of t h e Agribusiness Development P ro jec t (520-0276). A number of o the r A.I.D. p r o j e c t s r e l a t e d t o small farmer i r r i g a t i o n and d i v e r s i f i c a t i o n i n i t i a t i v e s , such a s t h e Small Farmer Marketing Projec t (520-0238)r Small Farmer Dive r s i f i ca t ion Systems

( 520-0255 ) and Highlands Agricultural Development ( 520-0274 havo each entai led a r ed i t a c t i v i t y but not a s a cen t ra l project feature re la ted pr incipal ly t o NTM a s i n the case of 520-0276. A fur ther d i f fe ren t ia t ion was the 0276 focus on financing agribusinesaes which might depend upon raw material supplios from s n ~ a l l farmers. This weie deemed a logical means for t rans fe r r ing ultimate c r ed i t benefit t o such farmern.

The Fund was s e t up through a loan t o Guatemala's Central Bank with on-lending t o take place through a rediscount mechanism. Of tho t o t a l Fund, ~ ~ 8 1 . 5 mill ion was t o be channeled through the National Agricultural Develop~nent Bank (BANDESA) t o reach smallor farmers i n associationrl and cooperatives.

In addition t o t he Agribusiness Development Fund, future uupport f o r CD/NTAE can be expected from the Local Currency Credit Guaranty Fund of t he new Private Enterprise Development Project (PED-0341) and from PL 480, Section 108 funds which a r e being programmed presently. The Local Currency Credit Guaranty Fund w i l l be especial ly important i n t h a t it w i i l help t o a l l ev i a t e co l l a t e r a l problems faced by borrovers with otherwise viable projects. The section 108 monies a r e expected, as a rule , t o support agr icu l tu ra l projects , especial ly NTAE-type projects , financing 2or which is presently limited.

B. Placement

1. Outstandings

According t o Central Bank (Banco de Gwteaala) records, as of June 20, 1988, approvals -- some pending disbursement -- under t he Agribusiness Fund to ta led thc equivalent of US$^ .2 million. A.L .D. I s own records indicate t h a t a t t he end of July an addi t ional ~ ~ $ 4 . 5 mil1.ion i n e l i g i b l e loan applications had been or were about t o be submitted by pr iva te banks t o t he Central Bank f o r approval. Some portion, perhaps ~ ~ 8 1 . 5 t o ~ ~ $ 2 . 0 million, of t h i s l a t t e r amount w i l l probably be subject t o approval and disbursement setbacks, but it is sa fe t o forecast t h a t by ear ly 1989, t he Fund w i l l have been f u l l y disbursed. Loans have been f o r f r u i t and vegetable processing businesses, f lo r icu l tu re , ornamental plar.ts, and a number of import aubnti tution projects w i t h high labor and value added impact, most evidencing addi t ional i ty .

2. The Placement Process

The f a c t .that f u l l disbursemeat may well be achieved a year ahead or' t he PACD (3/30/90) tends t o obscure t he d i f f i c u l t i e s encountered from t h e outset i n placing the Fund. These d i f f i c u l t i e s stemmed from A.I.D. design and management problems a s well a s from continuing banking system impediments t o e f fec t ive development lending i n Guatemala,

Most of t he A. I . D.-originated problems i n placing the Fund have been cured. These included a requirement t h a t borrowers had t o prove t h a t over 50 percent of t h e i r raw material supplies came from small farms a s defined by A.I .D.1 and

l a c k of c1a r . I . t~ over requiraments t h a t borrowero p r e s e n t formal f e o a i b i l i t y etudiera ae p a r t of t h e i r loan a p p l i c a t i o n s . A. I .D . a l s o had e a r l y problems, s i n c e resolvecl, i n e s t a b l i s h i n g which o f f l c e (AIIDO or O/P::P) should manege t h e Loan Fund.

The banking syrrtem impediments have not been m a t e r i a l l y reduced rnuch l e e s e l imina ted . These i nc lude cont inued Cen t r a l Bank review of p r o j e c t f e a s i b i l i t y i n a d d i t i o n t o e l i g i b i l i t y with consequent p rocess ing delays! cont inued f r i c t i o n between t h e Cent ra l Bank and t h e p r i v a t e f i n a n c i a l i n s t i t u t i o n s t e ~ x o r b i t a n t c o l l a t e r a l requirements s e t by t h e bankst and bank p re fe ronce f o r working wi th t r a d i t i o n a l borrowers on t r a d i t i o n a l p r o j e c t s , The s i t u a t i o n has been f u r t h e r complicated by f i n a n c i a l system i l l . i q u i d i t y and p o r t f o l i o exparxsion l i m i t s set by t h e government, t oge the r wi th s e r i o u s r s s e r v a t i o n o on t h e p a r t of t h e banks about becoming involved i n what they c o r r e c t l y pe rce ive a s complex, time-consuming A. I. D .-sponsored f inancings,

The M i ~ s i o n ' s u l t ima te success i n ach iev ing disbursements under t h o Fund d e s p i t e t h e impediments desc r ibed can be a t t r i b u t e d t o i t s t e n a c i t y i n combination with a genuine pent-up demand f o r c r e d i t , i nc lud ing f o r a i g n exchange f i nance , i n a very t i g h t market. Such FX sho r t age and a gene ra l l y i l l i q u i d system were a c t u a l l y p a r t of t h e o r i g i n a l premise f o r e s t a b l i s h i n g t h e Lorn: Fund. Rut it had a l s o been hoped t h a t , through banker t r a i n i n g and o t h e r A . 1 - D , guidance, t h e r e might be a r educ t ion i n t h e impedimenta descr ib3d . The t r a i n i n g has been l i m i t e d and inef fecCiva and, a s i n d i c a t e d , t h e r e has been on ly l i m i t e d p rog re s s toward s t r eaml in ing t h e lending process . b r h a p s t h e on ly measurable example of such p rog re s s has been t h e Cen t r a l Bank's es tab l i shment -- with A. I .D. ' s encouragement -*- of an i n£ ormation o f f i c e t o guide i n t e r e s t e d p o t e n t i a l borrowers a s t o t h e e x i s t e n c e and ope ra t i on of f o r e i g n c r e d i t l i n e s .

C. The I s s u e of Debt vs. Equity

Equity f i nanc ing i n Guatemala is r a r e . And i n combination wi th t h e f a c t t h a t 3 e ;nun , ry t s t r u e development banking a c t i v i t y i s l i m i t e d , t h e r e is a c l e a r aaed for e q u i t y f inance . A . 1 .D. cou ld p l ay an impor tan t r o l e i n t h i s regard by des ign ing a p r o j e c t aimed a t p rovid ing e q u i t y f i nance through t r u s t l o a n s f o r o r investments i n t h e s h a r e s of numerous v i a b l e p r o j e c t s t h a t have been tu rned down by t h e p r i v a t e banks f o r reasons such as c o l l a t e r a l de f i c i ency . The new P r i v a t e En te rp r i s e Development P r o j e c t (PED) would do w e l l t o exp lo re such a p o s s i b i l i t y under i ts F i n a n c i a l Markets Development component.

Guatemala has no t undertaken any formal debt-equi ty swaps t o da t e . Ifowever, t h e Cen t r a l Bank and p r i v a t e s e c t o r r e p r e s e n t a t i v e s are s tudying t h e p o s s i b i l i t y and have r e c e n t l y a t t ended a r eg iona l conference on t h e s u b j e c t . The PED p r o j e c t a l s o ought t o s tudy t h e s u b j e c t c l o s e l y under it F i n a n c i a l Markets and N e w P r i v a t e E n t e r p r i s e I n i t i a t i v e s .

Foreign Lnvolrrtmont has nor ylayacl a ~ i c j r ~ i f i a a n t r o l e Ln the devaloprnont: of Cuatemala'ia CD/NTAE i n terms of t o t a l d o l l n r ~ l lrlveated. but: it ha@ played a very important r o l e aa r e l a t e s t o Lbchnoloyy and markets f o r itemo suah ae a h igh land vege t ab l e s and ornamental p l a n t s . In eauh of t h e s e a r e a s f o r e i g n Ptme and Lndivtduals have l e d t h e way i n i d m t i f y i n g aild r e a l i z i n g p r o f i t o p p o r t u n i t i e s from Guatemala's n a t u r a l campatat lvo advantagas. Large i n c r e a s e s i n such f o r e i g n investment , j o i n t ven ture o r o therwise , a r e probably n o t l i k e l y i n t h e f o r e a e e a b h f u t u r e Locauae of t h e u n e e t t l e d Cent ra l American environment..

Othsx Financing f o r CD/NTAE - M A D ( La+ in American Agribusiness Develo;?mnnL Corpora t ion) has been an e f f e c t i v e sou rce of CD/NTAE funding .in Guattma1.a. L W , o p e r a t i n g i t s f o u r t h C e n t r a l Amr ican Agribusiness loan Prom WCAP (Us$lS. 0 m i l l i o n ) , has c a r r i e d o u t over 75 p r o j e c t s i n Guatemala -- moskly i n NTAE -- s i n c e 1977, f o r a t o t a l of more t h a n Us827.n m i l l i o n i n disbursements. Its p r e s e n t Guatemala p o r t f o l i o is ~ ~ $ 6 . 5 m i l l i o n i nc lud ing , among o t h e r s , l o a n s f o r vege tab le and sesame produc t ion , p rocess ing and e x p o r t ? f r e s h f i s h expo r t ? and g inge r p r o d ~ c t i o n and expor t . LAAD'S approach, appa ren t l y b a s i c t o i ts success , has been t o keep t h e development l oan t r a n s a c t i o n s imple -- no formal l oan a p p l i c a t i o n form o r f e a s i b i l i t y s t udy is r e q u i r e d of LAAD'S borrowers. I n s t e a d , t h o company's exper ienced o f f i c e r s and s t a f f s eek t o e s t a b l i s h a s qu i ck ly a s p o s s i b l e t h e underpinnings of a worthwhile loan -- borrower i n t e g r i t y and p r o j e c t b a n k a b i l i t y i n terms of cash f low and reasonable c o l l a t e r a l -- and t h e n move on t o an uncompbicated ban agreement and t ime ly disbursement.

Other f i nanc ing sou rce s f o r CD/NTAE i nc lude t h e CABEI Agroempresas I1 US$^. 0 n l i1 l ion) t a ~ ~ $ 6 0 m i l l i o n d o l l a r I D B I n d u s t r i a l Reac t i va t i on Loant and, i n nego t i a t i on , a ~ ~ $ 8 0 m i l l i o n World Bank f a c i l i t y t h a t w i l l be e s t a b l i s h e d t o f i nance expo r t s , i nc lud ing NTAEs.

F i n a l l y , under i t s Trade C r e d i t Insurance Program (TCIP), A. I .D. has provided over $800 m i l l i o n i n cumulat ive a u t h o r i z a t i o n s f o r guaran tees t o EXIMBANK program c r e d i t s f o r Cen t r a l America, o f which Guatemala has used approximately $75 mi l l i on . This f a c i l i t y , which w i l l i n c lude annua l a u t h o r i z a t i o n s of some $200 m i l l i o n through i ts conc lus ion i n 1990, covers t h e s h ~ r ' ~ - ~ ~ t , . ? n - f i n a n c i n g of impor t s from t h e U.S., i n c l u d i n g a g r i c u l t u r a l i npu t s . The team estimates t h a t a t l e a s t 1 5 pe rcen t of Guatemala's impor t s under t h e f a c i l i t y were f o r u se i n CD/NTAE produc t ion .

% ""td . 'I'

H O N D U R A S

Table of Cantenta

I. MACRDECONOMXC, PROJECT AND INSTITUTIONAL SETTINGS

A. Recent ist tory B. Pol icy-Related I s sues C . Trends i n Non-Traditional A g r i c u l t u r a l Export (NTAE) D. A . I . D . P r o j e c t s and Key l n s t i t u t i o n a

X I , IUWCETING OF NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. I n t roduc t ion . A v a i l a b i l i t y , Volume, Q u a l i t y and Cont inu i ty of Non- T r a d i t i o n a l A g r i c u l t u r a l Export Crops 1. Production 2. Poe tharves t Handling 3. Transpor ta t ion 4. Import Procedures 5. Market Information and Market Linkage

C. Linaage Between A.I.D. P r o j e c t s and Independent Producers/Exporters

111. PRODUCXION OF NON-TFWDITIONAL AGRICULTURAL EXPORT CROPS

A. I n t roduc t ion 8. Technology Transfer r Research

1. Seed and Var ie ty S e l e c t i o n 2. Water Management 3. F e r t i l i z e r and Ag Chemical Use 4. Mechanization 5. Labor Management

C. Technology Transfer r Extension D. Land Use

1. Monocu1,ture 2. S o i l and Water Conservation 3. Improper Use of F e r t i l i z e r and Chemicals

E. Support Se rv i ce s

IV. ENVIWDNMBNTAL IMPACT FROM CROP DIVERSIFICATION AND NON-TRADITIONAt AGRICULTURAL EXPOKP

I V .H-1 1V.H-1 1V.H-1 I V . H-4

Table of Contents (continued)

CREDIT/IINANC&/INVESaLlLTjT FOR NON-TRAI)ITXOMAL AGRICULTURAL EXPORT CROPS

A. A .I. D .-Authorized Primary F a c i l i t i e s Available f o r CD/NTM

B. Pl.acement 1. Outstandings 2. The placement Process

C . The Issue of Debt Versus Equity D . Foreign Investment i n CD/NTAE E . Other Financing for CD/NTAE

LIST OF TABLES

1. Non-Traditional Agricultural Exports, 1980-87 2. Exports of Non-Traditional Agricultural Crops, 1980-87

A . I . D . APHIS CABE I CBH CD DEPRO VEPROEXAAH

P H I A FIDE Fruta de Sol

GDP GOH IBRD I C I I DB LAAD NTAE PACD TCIP USAID US DA

Agency f o r In te rna t iona l Development Animal and P lan t Health Inspect ion Service (USDA) Centra l American Bank f o r Economic In teg ra t ion Cent ra l Bank of Hondurae Crop Dive r s i f i ca t ion See FEPROEXAAH Federacibn de Productores y Exportadores Agropecuarios y Agro-Indut r ia les de Honduras

,Fundacibn de Invest igacibn A g r k o l a Entrepreneurial Research and Development Foundation Cooperativa. Regional de Se rv ic ios Agropecurios de "Fruta Del Sol" Limitada Gross Domestic Product Government of Honduras World Bank Intermediate Credi t I n s t i t u t i o n Interamerican Development Bank La t in America Agribusiness Development Projec!t (ROCAP) Non-Traditional Agricul ture Export hcojec t Assistance Completion Date Trade Credi t Insurance Program United S t a t e s Agency f o r In te rna t iona l Development United S t a t e s Department of Agricul ture

H O N D U R A S

A. Recent Historv

Honduras, i n common with o t h e r Central American countr ies , experienced favorable growth during the 1960's and well i n t o t h e 1970's. The rise i n o i l p r i c e s and f a l l i n g p r i c e s f o r i t s bas ic expcrrt crops r e su l t ed i n i t s GDP growth r a t e f a l l i n g f ;om an average of about 7 percent i n t h e l a t e 1970's t o 2 percent i n the e a r l y 1980's and t o a negative f ~ . g u r e by 1982/83. Some recovery has occurred s ince 1984, bu t growth i s s t i l l a t a very low leve l .

Over 60 percent of Honduras' populat ion l i v e s i n r u r a l a reas . Bananas and coffee represent t h e main a g r i c u l t u r a l exports , accounting f o r 43 percent and 31 percent , respect ive ly , of t o t a l exports of a g r i c u l t u r a l crops i n 1987. Because of tho country's overwhelming dependence upon banana~l and coffee f o r export earnings, and the vu lne rab i l i ty t h i s e n t a i l s , t h e GOH, with t h e a s s i s t a n c e of USAID, has begun a program t o support non-tradit ional ag r i cu l - t u r a l exports .

B. Policv-Related Issues

The GOH named 1987 "the year of t h e exports" and undertook severa l measures t o s t imula te p r i v a t e investment and exports , with emphasis on non-tradit ional exports . I t el iminated import taxes f o r inputs incorporated i n t o export products. Exporters a r e now a l s o allowed t o r e t a i n p a r t of t h e i r export earnings f o r d i r e c t import purchases. GOH is c e n t r a l i z i n g and simplifying investment po l i cy and export regula t ions with USAID's a s s i s t ance and both d o l l a r and lempira c r e d i t l i n e s have been s e t up t o f inance exports .

C. Trends i n Non-Traditional Agr icd t t a ra l w o r t (NTAE)

The export of non-tradit ional a g r i c u l t u r a l crops has increased s ince 1980, r i s i n g from around ~ ~ $ 2 1 mi l l ion t o around ~ ~ $ 2 9 - 3 0 mi l l ion (See Table 1, next page). Export of ag ro indus t r i a l crops has shown l i t t l e o v e r a l l change during t h e e i g h t year period, but has var ied considerably between years. Exports of shrimp and lobs te r , on t h e o ther hand, more than doubled during t h e period.

A/ Based, i n part, . on USDA's 1987 Agr icul tura l S i tua t ion Report f o r Honduras.

T A B L E 1

HONDURASa Non-Traditional Aar i au l tu ra l E x ~ o r t e . 1980-87

Exports (US$ mi l l ion 1 Agricul t u r d Agro-Industrial Shrimp and

Year Crop s Products Lobs ters Tota l ---------------------------------------------------------n----"-----------o----

Sourcer SecretarZa de P lan i f i cac i6nr Coordinaci6n y Presupuesto, Tegucigalpa.

The a g r i c u l t u r a l crops exported from 1980-87 a r e s h o h i n Table 2. Some increase has occurred i n t h e expor ts of pineapple s i n c e 1982, b u t expor ts appear t o have reached a p la teau . Exports of melons have increased t o almost ~ ~ $ 3 . 5 mi l l ion annually. New crops, such as s t r awber r i e s , cardamom and cucumbersr have been added t o t h e list. Some of t h e s e were no doubt previously incl.uded i n t h e "other" category.

T A B L E 2

tlONDURA3r Exports of Non-Traditional A ~ r i a u l t u r a ~ Crope, 1980-87

Exports (US,$ m i l l i o n ) Crops 1980 1981 1982 1983 3.984 i985 1986 1987*

Pineapple Grapefruit P l a n t a i n Melons Coconut-peeled Cocoa Palm n u t s Sesame P l a n t s e e d s ,

rhy zomes Cucumbers Cardamomo Strawberries Sn3w p e a s Flowers &

ornamentals Watermelon Other

* Estimated

IV. H-3

D. A.I.D. Qrojeata and Kay Xnstitutione

m u

liontiurns has only recently been looklng t o the non-traditional agr icu l tu ra l sector t o provide e iyn i f ican t amoimta of foreign exchange earnings and employment. The pr ivate sector hao provided most of the i n i t i a t i v e i n creat ing export opportuni,t.ias. Ilowover, the GOH is developing SUPpoTi programs to fur ther a s s i s t the p r iva te sector t o expand exis t ing NTAE and t o add new crops t o those already being exported. Tho USAID-supported Export Development and Services Project (No. 522-0207 ) , designed t o a s s i s t t h i s NTAE t h ru s t , is diacusoed below.

o Project Goal; To promote economic growth and employment through - ..- developmenc of non-traditional exports.

o Project Purposer To increase non-traditional exports.

o Funding* USAID provides ~ ~ $ 7 . 5 mill ion i n grant funds ($6.9 million i n FX ' 9 0 . 6 million i n loca l currency). An addi t ional ~ ~ $ 1 6 . 0 million i s provided through a USAXD loan ($14.4 million i n FX and $1.6 million i n loca l currency). The! GOH is t o provide $8.1 mill ion i n loca l currency a s counterpart.

o Time Framer 'Tile projocl bngm i n September 1984 and the PACD is September 30, 1989.

o Project Ac t iv i t i es :

-- Export Policy and Promotion ($1.4 mill ion A . I . D . 1 $0.9 mill ion

counterpart): This phase of t he p ro jec t is aimed a t ass i s t ing the GOH i n analyzing po l ic ies and developing actions and l eg i s l a t i on t o reduce t he disincentives and constra ints t o developing non-traditional exports. Assistance includes t ra ining overseas t rade representatives and developing materials and exhibi ts t o a t t r a c t foreign investment i n Honduras .

-- Export Development ($10.7 mill ion A. I .D.1 $4.7 mill ion counterpart) ; This a c t i v i t y , focusing on manufactured and ag r i cu l t u r a l expoxts, is t o a s s i s t individuals and companies tor gain access t o a wide var ie ty of information and services t o assess markets! design and manufacture i ndus t r i a l goods! grow and process agr icu l tu ra l products! and market t h e i r products. Implementation is carr ied out f o r t h e i ndus t r i a l sector by FIDE, and f o r the agr icu l tu ra l sector by FEPIiOEXAAH (The Honduran Agricultural Producers and Exporters Federation).

-- Financial Services ($10.2 mill ion A. I .D . ) $2.5 mill ion counterpart)$ A t r u s t fund i s t o be es tabl ished and other f inanc ia l mechanisms s e t up

t o provide f inancing and access t o imports required f o r export products tleve1.oped under t h e manufacturad and a g r i c u l t u r a l axport a c t l v i t i e a .

- - Continuity of E'IDE and FEDROEXAAH A c t i v i t i e s I An i n t e r e s t bearing -- _LI

t r u s t fund is t o be s e t up t o provide revenue f o r debt se rv ice on the A . I . D . loan and a l s o p r o v h e add i t iona l incoma f o r FIDE and FEPROEXAAH.

-- Projec t Manayoment ($1.2 mi l l ion A. I .D . ) r This is t o provide f o r t h e se rv ices of is b a n l h g / f i a n c i a l advisor f o r 5 years t o a s s i s t USAID i n monitoring and implementing t h e p ro jec t .

11. MARXETING OF NOH-TRADITIONAL AGRICULTURAL EXPORT CROPS -

A. In t roduct ion - From a marketing standpoint , two p r o j e c t s i n Honduras a r e of p a r t i c u l a r in te res t8 (1) Small Farmer Organization Strengthening Projec t and ( 2 ) Export Development and Service Project .

The Small Farmer Organization Strengthening Projec t is p resen t ly evaluat ing e x i s t i n g cooperat ives ' organiza t ional and f i n a n c i a l s t a t u s t o a s s i s t i n r e s tn ic tu r ing debt . Two cooperat ives t h a t have exported products i n t o t h e U.S. market f o r t h e l a s t t h r e e years a r e Fruta d e l So l i n Comayagua -- which produces and expor ts cucumbers -- and Crehsul i n Choluteca -- which produces and expor ts cantaloupe.

The Export Development and Service Projec t was designed t o promote t h e export of non-tradit ional products t o s t imula te economic growth and employment i n Honduras. Under t h i s p r o j e c t , an organiza t ion of 27 assoc ia t ions of producers and expor ters of Honduras, FEPROEXAAH, was formed t o a s s i s t i n t h e development of NTAE. (However, only 42 percent of t h e t o t a l members, composed of 13 of t h e a s soc ia t ions , a r e a c t u a l producers/exporters of non-tradit ional crops.) This organizat ion has been plagued with problems and has no t been successful i n reaching its goals and expectat ions. A s a r e s u l t , FEPROEXAAH has been res t ruc tu red and reorganized.

One of the reorganized FEPROEXAAH's f i r s t funct ions was t o i d e n t i f y a pre- se lec ted group of crops which a r e cu r ren t ly being grown and have an exportable base. The i n i t i a l l i s t of crops, chosen because they have an export h i s to ry and because a market a l ready e x i s t s f o r them, a r e l i s t e d below:

1. Cacao 2. Cucumbers 3. Cardamom 4. Melons 5. Pineapples

6. Tomatoes 7. Shrimp 8. Orname~taL P lan t s 9. Flowers 10. P lanta ins

Availabtllity, Volume, Quality and Continuity of Non-Traditional Agriaultural Export Csnpe

1. Prclducr t i on - In general, there Fs a lack of technical ass is tance extended t o the small, organized farmers o;c t o independent producers. Both cooperatives, Fruta Del Sol and Crehsul, have been exporting cucumbers and melons for several years, but no d i r ec t , consistent technical ass is tance is being provided t o increase production levels per hectare. The cooperatives provide some c red i t t o t h e i r members f o r producti'm cos t s and provide equipment a s well as some l imited technical ass ie tance,dur ing the growing and harvesting period. However, it seems t h a t production costs a r e s t i l l high and yie lds remain low.* The cooperatives need t o make e f f o r t s t o reverse t h i s trend. A f i r s t s t ep i n t ry ing t o reduce production costs is exemplified by UNICOOP ( a service oriented organization established t o a s s i s t several cooperatives) which has been able t o buy f e r t i l i z e r i n bulk a t lower r a t e s t h i s year.

FEPROEXAAH has several , ongoing programs i n melon, pineapples, cacao, shrimp and plantain. The pipeapple and plantain programs were unsuccessful l a s t s<eason, however, due t o lack of adequate technical assistance a t the production level . For instance, t he pineapples were affected by a vi rus disease t h a t was iden t i f i ed but not corrected. Also, while the melon program was prof i tab le f o r t he receiver, Agribusiness Corporation of America (ACA) , t he cooperative involved, Coagraval, experienced lower than expected yie lds which increased t h e i r un i t production costs.

I t is d i f f i c u l t t o assess the new FEPROEXAAH8s a b i l i t y t o a s s i s t producers/ exporters -- whether associations o r groups of independent growers -- i n procuring necessary technical assistance services. Although FEPROEXAAH is supposed t o coordinate these services f o r a fee , t he "new FEPRO" was only i n existence a l i t t l e over one month a t the time of t h i s evaluation and it was d i f f i c u l t t o measure its impact. FEPROEXAAH plans t o continue i ts development cf non-traditional crops fo r export. I t i s a l so considering importing volume f e r t i l i z e r a t a lower p r i ce a s a means of generating income -- an a c t i v i t y t h a t could be a duplication of e f fo r t s of two A.1.D.-funded programs.

Both FEPROEXAAH and the cooperatives need t o work i n coordination with services -- Fundaci.Cn Hondureiia de Investigacidn ~ g r x c o l a (FHIA) , f o r example -- t h a t can provide technical assistance i n production technology. The A.I.D. Mission a l so needs t o ac t more e f fec t ive ly as a l i a i son t o f a c i l i t a t e communication and cooperation between its own and other programs i n order t o avoid the type of duplication mentioned above.

* Noter A jo in t t x i a l project between FEPROEXAAH and F H I A ( t h e pr iva te agr icu l tu ra l research foundation operating i n San Pedro Sula) achieved higher yie lds of cucumbers a t a lower cos t than Fruta Del So l ' s producers. Results have apparently not been adequately t ransferred t o t he cooperative s members.

2. PoeCharveet Handlina

Uoth F ru t a Do1 Sol and Crohsul have had seve r s1 yonrs of experience p ick ing , s o r t i n g , grading, packing and pra-cool ing t h e i r product . Each have a packing shed a s w e l l a s pre-cu:)ling f a c i l i t i e s . The eva lua t ion team v i e i t e d Comayagua and observed t h e i n f r a a t r u c t u r o , pro-coolrilrs and equipment belonging t o Bruta Del. So l . I n Choluteca, Crehsul has a s i m i l a r ope ra t i on , inc lud ing a hydro- coo le r .

For t h e most p a r t , however, o t h e r growers/producars of NTAEs do not have adequate o r economical acces s t o pos thu rves t i ng f a c i l i t i e s . One example is t h e Coagraval group which in tended t o conduct i t s own p o ~ t h a r v e s t handl ing wi th t h e a s s i s t a n c e of its r e c e i v e r , ACA, which was t o a r r ange f o r pre-cool ing f a c i l i t i e s a t Nacaome. ACA, however, d i d no t render Chis s e r v i c e and t h e coope ra t i ve tu rned t o an independent grower/exporter wi th packing and pre-cool ing f a c i l i t i e s . A s a r e s u l t , Coagraval had good q u a l i t y f r u i t upon a r r i v a l , b u t a t a much h igher c o s t t han p ro j ec t ed . The members of Coagraval were f r u s t r a t e d wi th ACA s i n c e t h e pre-cooler i n Nacaome was no t completed a s promised i n t h e i r c o n t r a c t u a l agreement, c o n ~ t i t u t i n g , appa ren t ly , a breach of t h a t c o n t r a c t .

In one of t h e FEPROEaXAAH subpro j ec t s , t h e p ineapp le growers/exporters exper ienced pos tha rves t handl ing problems, e s p e c i a l l y i n grad ing and packing t h e product . They a l s o lacked t h e i n f r a s t r u c t u r e f o r packing and cool ing. Thus, t h e product had q u a l i t y problems upon a r r i v a l . FEPRO neeGs t o make g r e a t e r e f f o r t s t o provide long-term pos tha rves t handl ing t e c h n i c a l a s s i s t a n c e t o growers.

3. Transpor ta t ion

Ocean t r a n s p o r t a t i o n is t h e b igges t problem f a c i n g producer/exporters i n Honduras f o r t h r e e reasons:

1. Three conference shipping l i n e s e x i s t , bu t t h e frequency and number of s h i p s is no t s u f f i c i e n t f o r t h e volume p o t e n t i a l o f non - t r ad i t i ona l expor t .

2. The c o s t of sh ipping NTAEs from Honduras is a c t u a l l y h igher than t h e c o s t of product ion. (Approximately 60 pe rcen t of t h e t o t a l c o s t is i n t h e t r a n s p o r t a t i o n of t h e product . )

3 . Every yea r t h e c o s t of t r a n s p o r t a t i o n r i s e s by 3-5 p e r c e n t and a l l t h r e e sh ipp ing l i n e s have t h e same conference t a r i f f r a t e , l e av ing l i t t l e room f o r r ~ e g o t i a t i o n .

The A. I .D . Mission and FEPROEXAAH have p laced emphasis on f i n d i n g a s o l u t i o n t o t h e h igh c o s t o f t r a n s p o r t a t i o n which w i l l , i n t u r n , f a c i l i t a t e an i n c r e a s e i n t h e expor t of non- t rad i t iona l p roducts . The meion and cuf,umber growers/ e x p o r t e r s , wi th USAID a s s i s t a n c e , have joined f o r c e s t o e x e r t p r e s s u r e on t h e conference sh ipping l i n e t o provide adequate sh ipping a t a lower r a t e i n o rde r

IV. H-7

t o compete with o t h e r count cia^, u q x m t n l l y M~xico . A.I.D., w i t h t h e a s a i s - t ance of YEPRO, ira finalizing a t:anaportution ntudy t o v e r i f y t h e f o e ~ i b l l i t y of urvlng r o f r i g o r n t o d atl ips t o t r u n s p o r t non-tradl t ionaJ groductn f o r tho corning eeason. FEPRO and A . I . D . are a l s o cons ider ing o t h e r a l t e r n a t i v e s such a s l u r i n g n non-conference sh ipping l i n e i n t o Honduras by yunranteoing a percentage of t h a i r cargo.

Import Procedures

The "new1' FEPROEXAAH has no t addressed t h e importance of educa t ing t h e grower/exportera a s t o procedures a t p o i n t of e n t r y , r e f e r r e d t o as t h e "c l ea r ing process" , ' ~ u t t h e proper load ing of melon c o n t a i n e r s , f o r example, can p reven t an undes i rab le i n s e c t from e n t e r i n g t h e con ta ine r s , t h u s avoiding t h e need f o r expensive fumigation. Lacking t h i s knowledge, sotile independent growers/exporters have encountered t h i s very problem i n t h e c l e a r i n g process . A . I . D . and FEPROEXAAH should s t r o n g l y corisider expanding a s s i s t z n c e t o growers/exporters i n propor pre-c learance procedures i nc lud ing packing a s w e l l a s p ra - inspec t ion , pos s ib ly under USDA/APtIIS supe rv i s ion a s i n t h e Dominican Republic and i n Chile. FEPROEXAAH can inc lude t h i s a r e a i n i t s planned t r a i n i n g s e s a i o n s and s e r v i c e s .

5. Market Information and Market Linkage

The new FEPRO has r e s t r u c t u r e d its marketing component, and it appears t h a t FEPRO is d i r e c t i n g i t s e f f o r t s i n t o more e f f e c t i v e marketing techniques. The Fede ra t i on ' s export /market ing s p e c i a l i s t seems very knowledgeable a s t o what is "happeniilg" i n t h e f o r e i g n market wi th p r i c e s , t r e n d s and q u a l i t y s tandards . H e w i l l work very c l o s e l y wi th PROEXAG -- which has e s t a b l i s h e d a good market in format ion system -- t o g a t h e r and analyze d a t a on market p r i c e s and t rends . According t o FEPRO' s marketing r e p r e s e n t a t i v e , FEPRO is a l s o p lanning t o a l l o c a t e r a d i o t ime e a r l y i n t h e morning t o broadcas t d a i l y market news t o t h e farmers .

FEPRO i n h e r i t e d s e v e r a l subp ro j ec t s from l a s t yea r which were l ack ing marketing e x p e r t i s e . The t r i a l FEPRO/FHIA cucumber and tomato p r o j e c t was a p a r t i a l success r FHIA was a b l e t o produce h igher y i e l d s t however, t h e r e was a t o t a l l a c k of marketing and management s k i l l s from p o s t h a r v e s t handl ing t o t h e a c t u a l s a l e of t h e product . Cacao and shrimp programs, a l s o i n h e r i t e d , have r ece ived minimal a s s i s t a n c e i n marketing, p a r t l y because producers have s u c c e s s f u l l y developed t h e i r own marketing channels without USAID a s s i s t a n c e .

For its melon, p l a n t a i n and p ineapple subpro j ec t s , FEPRO was r e spons ib l e f o r i n t roduc ing and a r ranging l inkages between growers/exporters and ACA, an in te rmediary company wi th no exper ience i n t h e produce bus ines s and no s a l e s f o r c e to market p roducts d i r e c t l y t o wholesa le rs o r supermarkets. The members of Coagraval have manifested t h e i r d e s i r e t o break away due t o low sale p r i c e s , late l i q u i d a t i o n s and payments rece ived t h r e e months a f t e r shipment, a l l of which appa ren t ly c o n s t i t u t e breach of con t r ac t . I t was n o t c l e a r t o t h e team t h a t FEPRO o r FEPROts marketing/export s p e c i a l i s t have been

adayuntaly focueed o n oolvincj thu Coilc~ravd problom w l t f i ACA. S p o u l f i c n l l y , it aaerns t h a t FPYItO is i n s i e t l n q khat tho yrowoso honor tho f i v e yacrr con t ruu t that: wile unturacl wi th ACA. Yet:, i n tho produce bua inow 4 3 , 4, 5 yuar c o n t r a c t is unheard o f . Although BEPIiO wcrs responsible eor n a g o t i a t l n g t h i s c o n t r a c t on behalf of i ts pruducottl /oxf?ortera, it probably should not: have bucome a s involved a8 i t d i d i n t:he a c t u a l c l o s i n g of t h e dea l . PEPRO'a func- t i o n should be t o a s s l a t t h e growar/axport~gr i n t h e expor t of non - t r ad i t i ona l c rops , mainly by he lp ing iter members t o b u l l d l i n e s of communication w i th var ioue r epu t ab l e receivers and by prov id ing marketing srarvicos a s needed, no t by c l o s i n g d e a l s o r a c t u a l l y managing p r o j e c t s . In t ho f u t u r e , FEPRO should probably r e v e r t t o a more p a s s i v e r o l e i n t o m s of "dea l making" and a more a c t i v e r o l e i n o b t a i n i n g and prov id ing long-tarm t e c h n i c a l a s s i s t a n c e t o members .

Linkage Between - A.I.D. P r o j e c t s - and Indpendent Producer~l /Exporters

A s i n o t h e r C e n t r a l American c o u n t r i e s , t h e p r i v a t e ' s e c t o r ha13 managed t o e x p o r t non - t r ad i t i ona l c rops l a r g e l y wi thout A .I. D. a s s i s t a n c e . "Non-A. I. D .I'

p r o j e c t s have been very succes s fu l . For i n s t ance , apyroxinsntely 2,000 c o n t a i n e r s of melons were expor ted l a s t yea r from Honduras# on ly some 140 c o n t a i n e r s were shipped by A.1.D.-supported Crehsul and Coagraval.

The A. I .D . Mission has , a s noted, been i n s t rumen ta l i n coo rd ina t i ng w i t h t h e p r i v a t e s e c t o r on new t r a n s p o r t a t i o n a l t e r n a t i v e s . A. I. D. can f u r t h e r i n f l u e n c e N T M by e x p l o r i n g means t o t a p p r i v a t e s e c t o r r e sou rce s and t o coo rd ina t e t h e s e r e sou rce s t o b e n e f i t A. X .D. -funded programs. This would i nc lude c l o s e r , p r a c t i c a l c o n t a c t and coopera t ion w i th independent f i r m s and producers .

PRODUCTION OF NON-TRADITXONAL AGRICULTURAL EXPORT CROPS

A. In t roduc t i on

Honduras, wi th approximately 112,400 square k i lometers , is a high.Ly noun- t a i n o u s country. S lopes g r e a t e r t h a n 25 p e r c e n t occu r ove r more t h a n 75 p e r c e n t of t h e l and a r ea . Its landforms can be d iv ided i n t o t h r e e t y p e s t ( a ) t h e lowlands of t h e no r the rn and e a s t e r n p a r t of t h e count ry which havs a t r o p i c a l c l ima te wi th h igh p r e c i p i t a t i o n # ( b ) t h e dry lowland of t h e P a c i f i c p l a i n i n t h e sou th? and ( c ) t h e i n t e r i o r h igh lands and mountains i n t h e c e n t r a l p a r t of t h e country. There a r e 20 major r i v e r v a l l e y s i n Honduras which, a long wi th t h e Caribbean lowlands, r e p r e s e n t t h e coun t ry ' s best s o i l s . The more impor tan t of t h e s e v a l l e y s a r e V a l l e s d e Sula and Lean i n t h e no r th , Va l l e de Aguan i n t h e n o r t h e a s t , Va l le de Guayape Patuca i n t h e e a s t c e n t r a l , and t h e Va l l e de Nacaome - Choluteca i n t h e south.

More t h a n two-thirds of Honduras' popu la t i on i s r u r a l , l i v i n g i n 22,798 se t t l emen t s . S i x t y p e r c e n t of t h e popu la t i on l i v e s i n t h e western p a r t o f t h e

count ry on Lands wtrlah contolrl on1.y L J porcont uP t h o t;ot;al land a r e a deemcad e u i t n b l e f a r i n t e n s i v e a y r i c ~ l t u ~ o . 'l'ho l lorthern and caaetartr xonue of! t h a count ry lravo a much Lower populn t iun t lenal ty , yet a yrurrcec ayr:Lcul tural p u t e n t l n l . Non-tradi tonal agr icu l t i l ra l , p roduc t ion i a ocmnentrated Ln t h r e e o r Pour df ms I Comayayua, Siguatepdquet Quimi~l t a n and Choluteca. But p roduot ion i n t h e s e a r e a s s t i l l doos n o t pose any l and a v a i l a b i l i t y probleml ardple additional l ands o n which t o grow non - t r ad i t i ona l c rops a l a o e x l s t .

Only about one- th i rd of t h e l and c l a s e i f i e d a s adequate f o r annual c rops is e o u t i l i z e d . On t h e o t h e r hand, much of t h e land t h a t is u t i l i z e d f o r annual and p e r e n n i a l c rops is only c l a s s i f i e d f o r f o r e s t r y o r e x t e n s i v e uses suah a a wi ld lands o r c a t t l e . farming. Land use i s g e n s r a l l y c h a r a c t e r i z e d by t h e e x i s t e n c e of l a r g e ho ld ings on good so l13 which a r e used e x t e n s i v e l y f o r c a t t l e p roduc t ion , and by small ho ld ings l oca t ed on s t e e p s l o p e s and/or poor s o i l s t h a t a r e i n t e n s i v e l y u t i l i z e d by a dense popu la t i on f o r eood c rop produc t ion . Land t enu re i s c h a r a c t e r i z e d by many sma l l holdings (over 50 p e r c e n t of t h e farms a r e l e s s t han t h r a e h e c t a r e s i n s i z e ) and a few very l a r g e holdings. The d i s t r i b u t i o n of a g r i c u l t u r a l l y p roduc t ive land i s ex t remely unequal, wi th t h e g r e a t ma jo r i t y of m in i fund i s t a s occupying an average of 3 t o 6 hec t a r e s . Farming is c a r r i e d o u t i n t h e country mainly by t h e sma l l subs i s t ence producers who p r a c t i c e s h i f t i n g and semipermanent a g r i c u l t u r e , g e n e r a l l y on s l o p i n g r marg ina l ly p roduc t ive s o i l s . Large commercial farms u t i l i z e some mechanization, f e r t i l i z e r s , and p e s t i c i d e s on t h e more p roduc t ive s o i l s , b u t on ly on l i m i t e d a r e a s of t h e t o t a l farmable l a n d o f Honduras a r e fa rmers u s ing "advanced" technology.

De fo re s t a t i on i n Honduras is occu r r i ng a t t h e r a t e of 80,000 h e c t a r e s p e r yea r i n t h e broadleaf f o r e s t s due t o s l a s h and burn a g r i c u l t u r a l p r a c t i c e s . An i n c r e a s i n g popu la t i on and an i n f l u x of immigrants from L 1 Salvador and Nicaragua have r e s u l t e d i n an even g r e a t e r number of campesinos moving i n t o t h e s t e e p mountain a r e a s and c l e a r i n g v i r g i n and secondary f o r e s t s t o c u l t i v a t e beans and corn. In t h e absence of a p p r o p r i a t e c u l t i v a t i o n and conse rva t i on techniques , t h e s o i l s a r e u s u a l l y exhausted of n u t r i e n t s o r h i g h l y ezoded i n 2 t o 5 years .

Honduras has an adequate road system f o r i ts p r e s e n t non - t r ad i t i ona l c rop c a p a b i l i t y . Most farming a r e a s a r e l o c a t e d w i th r e f e r e n c e t o t h e road' system and en joy adequate a c c e s s i b i l i t y . Some farm-to-market roads a r e n o t w e l l maintained. Although inconvenient , t h i s does n o t y e t r e p r e s e n t a major c o n s t r a i n t .

B. Technoloav Transfe r8 Research

From an h i s t o r i c a l s t andpo in t , a s might be expected, Honduras' a g r i c u l t u r a l r e s e a r c h programs have n o t been suppor t i ve of CD/NTAE. Low nat ionwide p r o d u c t i v i t y i n a g r i c u l t u r e a t t e s t s t o t h i s . Apart from t h e f a c t t h a t t h e c o m t r y ha s focused p r i m a r i l y on t r a d i t i o n a l a g r i c u l t u r a l commodity expo r t s , its o v e r a l l r e s e a r c h c a p a b i l i t y has been l i m i t e d due t o inadequa te budgetary p r o v i s i o n s , p a r t i c u l a r l y f o r t h e Min i s t ry of Agr i cu l t u r e . More r e c e n t l y , s i n c e 1985, p u b l i c and pr iva,ke i n s t i t u t i o n s have voiced t h e i r concern f o r

triureaned rnmnrcl t~ in CD/NTAL, hub Lucltjetary support; l a d l ; L L L lackinrj iiM l e aclaquate roooarulr pI,annLrrc~. An h l e t o t i a a l t o r ~ d ~ n c y f o r agcicuLturaL t r i s t i t u t i o n a t o becmma po1t l ; l c i~md h a aLso cleLill l-ctad roauardh o ~ P c , c ~ B . F a i l u r e to y l m and fund GD/NTNI: r esearoh , tmwevat, oouLJ reclult i r l h iqh opportunl . ty uoettr. YpecifLcaLLy, f a i l u r e to aonduat rrrlaptlvu regearoh through on-farm t tLaLs could rezlult i n c rop ~nunocul tu ree and t h e expnta ive use o r mieuee of imported technoluc~iee . Yew ParmIny ven tures i n CD/NTAB: a r e e e p e a i a l l y vu lne rab l e t o t heee r i akg becauee of market: requirements f o r product: q u a l i t y and quentlty. In the rueh t o meat t h e s e requirements i ~ n d i n t h e absence of on-farm t r i a l r e sea rch programs, p roducers may w e l l f i n d f u t u r e c ~ s t e wlping out: any c u r r e n t ga ins . This aou ld occur f o r tomata.o, cucmb~dr and melon producers i n Honciuras. Fundac i6n Hondurefia de I n v e s t i yacibn Ayrkcola (FHIA) , t h e A . 1 .U. -supported p r i v a t e r c m a r c h f a c i l i t y t h a t formerly beLcrngecl t o United F r u i t Company, does have tfre p o t e n t i a l t o become an excal l lent r e sea rch agency, But d e s p i t e its special focus on n o n - t r a d i t i o n a l c rops , i t does no t y e t seem t o have adequate p h n a f o r ex t ens ion l inkago t o ach i eve on-farm adap t ive research .

E'or CD/NTAE h i t i a t i v e u t o succeed over t h e long- t s -a , ongoing adap t ive r e s e a r c h must be conducted i n a, number o f a r e a s i nc lud ing s eed and var:ie.ty e e l o c t i o n t water mansqement~ f e r t i l i z e r and ag t r i cu l t u r a l chemlcale use)

mechanizationr and l a b o r management. These a r e a s a r e d i scuosed below.

Seed and Var i e ty S e l e c t i o n -- FHIA has a good t e s t i n g program on v a r i e t i e s f o r many non - t r ad i t i ona l c r aps , an advantage n o t found i n most of t h e o t h e r c o u n t r i e s v i s i t e d by t h e team. S t i l l , t h e team noted t h a t farmers,, even i f t hey knew about YIIA's work, d i d n o t , a s a r u l o , c a r r y o u t t h e i r own adap t ive r e s e a r c h t r i a l s t o f o l l ~ w and improve t h e performance of s e l e c t e d v a r i e t i e s . A s i n d i c a t e d above, t h e r e has been r e l a t i v e l y l i t t l e suppor t i n t h i s a r e a from t h e Honduran Minie t ry o f Agr i cu l t u r e . But FEPROEXAAH -- t h e Honduran A g r i c u l t u r a l Producers an,d Expor te rs Federa t ion (all30 supported by A . I . D . ) has d i r e c t l i n k s t o bo th fa rmers and FHIA. (FEPRD and FHIA a r e both headquartered i n San Pedro Sula. )

FEPRO has r e c e n t l y gone through a restructuring and it is hoped t , ha t , i n coopera t ion wi th FHIA, it w i l l begin t o promote adap t ive r e sea rch programs among its membership f o r s eed and v a r i e t y s e l e c t i o n a s w e l i a s f o r t h e o t h e r a r e a s d i s cus sed below.

2. Water Hanagament

To some e x t e n t , producers of CD/NllAE cannot avo id t h e coilduct of water management "research". Threshholds of " t oo much" o r " too l i t t l e " arc c a u a l l y easy to d e f i n e and i d e n t i f y f o r most crops. But f o r high-value CDJNTAEs, f a i l i n g t o d e f i n e at~cl ach i eve t h e " j u s t r i g h t " l e v e l of i r r i g a t i o n can r e s u l t i n a s i g r i f i c a n t oppo r tun i t y c o s t through reduced y i e l d s and dlminishetf p roduc t q n a l i t y . E f f i c i e n t discovezy of t h i s l e v e l i t , b e s t accomplished through s e t - a s ide water management trials. I n t h i s way, t ime ly answers can bo found t o q u e s t i o n s such a s when t o i r r i g a t e # *hat t y p e ( s ) o f i r r i g a t i o n t o

wet what deLlvery rate0 t o user trow t o manaye axceea water? how to mwage tha eoil/water relirt:l~rraehigr and what ella coaC of 1,rriyation will. be. (Jrowera, I W f A and FERItO yeruonnel ware abnsernerl wLth eauh of t hem quoetrlons. U u t it: wee apparerrt that; t h e i r concern was s t b l L dlrcactud more a t etudyinsf the nomLnaX poten t ia l s of cliffecerrt i r r i ga t i on oyetemn and the i r rapoxted costa than in the oonduct: of adaptive on-farm t~aoazoh w i t h aay given ayetern.

3. Caxtil izar and Agtiaultural Chemiaalo Ure __L-

Non-traditional cropa require proper f e r t i l i t y conditions and pes t and disease control t o achieve and eustain marketable yields. Bertilizsnr, pcslaticide and nther inputs a re axpensive and consequently must be used e f f ia ien t ly . So i l m d other conditions i n Hondurae a r e d i f fe ren t from thoee of t he U.S. and application of inputs appropriate, say, fo r Florida, may not be, the most su i tab le i n Honduras f o r a given crop. A t t h u outset , it i s reaeonable t o use an imported technology package, par t i cb la r ly i f soed for a specif ic crop i s a l so being imported. Yet, without proper adaptive research, c r i t i c a l tidestions w i l l go unanswered. These incl:~de groper r a t e s of application, methods of application, timing, fe r t i l i ty /wate r re la t ionships , and environ- n~ontaL e f f ec t s ranging from immediate ,inpact on f i e l d workers t o clontamination of water. Sat isfactory answers t o theee question^ and t o the centra l isrrue -- how to achieve optimum CD/NTAE yie lds through proper ltse of chemica l~ -- require freqhent t es t ing of aol.Ls and water -- t es t ing L! Lit should be done on a continuing basis. F H I A reguLarlv conducts such t e s t s af i t s own facilities and, t o a l imited degree, on Locdl farms. Thr- l a t t e r a c t i v i t y should be expanded to other areaa of the r : omkryp particuLarly w i t h assistance from FEPRn and, wherever possible, ,ram the Ministry of Agriculture.

4. Mechanization - Export crop production is highly time-sensitive. Cost-efficien.t, mechanization is of ten t he best response t o such time sens i t i v i t y and t o p o t m t i a l labor shortages or other labor shortcomings. With most non-traditional export crops t h i s does not have t o imply ownership by the Honduran farmer of a t r a c t o r o r other hkg t i cke t item. Instead, it means access to and use of proven, cos t efficien: mechanical, aids fo r one o r more of the key tasks of t i l i a g e and land preparation, cul t ivat ion, harvesting, and f e r t i l i z e r and chemicals app1:Lca- t ion. A s f a r a s the teain .could determine, research i n t h i s area octs ide of FHIA, has not been adequate.

5. Labor hnagement

Non-traditional agr icu l tu ra l export crops are basical ly labor intensive including a s ign i f ican t requirement f o r hand harvest,. A s plantinge of theae crops increase, seasonal demand f o r labor w i l l increase a s well and w i l l a l so inevitably coincide with some p a r t of t h e labor demand of t r ad i t i ona l crops. Tllus, demand fo r labor t o harvest cucumber or melon could compete with demand f o r workers i n the banana industry. It is not premature t o begin ant ic ipat ing

the y o s s l b l u Impact of Lnarmeod CD/NllAE p lan t l nga on l abo r rocplrsmente and t o b e y h plcrrliliny to meet: t h e m requixementcl wtc.11 i n irdvanco of! hervcar~t t ime,

C. Teahnoloav Tcanaforr Extension

Ae eugyested above, a y r i c u l t u r a l ex t ens ion i e n o t well developsd I n Honduras. Thia hae c o n t r i b u t e d to low p r o d u c t i v i t y i n non - t r ad i t i ona l m o p produc t ion . A l <A r u l o , technologies have been imported through consultants and "extendedn i n t a o t t o d i f f e r e n t growing a r e a s . Extension personne l from d i f f a r e n t L n e t i t u t i o n s i nc lud ing t h e Min i s t ry of Agr i cu l t u r e ( S e c r e t a r i a de Recureos Na tu ra l e s ) and FHIA o r FEPRO are l i m i t e d 1.n numbers and budget. And, a s noted above, they a r e p robably no t adequa te ly emphasizing t h e need f o r on-farm a d a p t i v e reeearch . In v i s i t s wi th farinero t h e s e shortcomings were confirmedr some i n d i c a t e d t h a t t h e i r c o n t a c t s wi th ex t ens ion a g e n t s were i n f r e q u e n t and t h a t ~ o l u t i o n a t o problems were no t t imely. Desp i te t h e Pac t t h a t FHIA and FEPRO have i l l t h e p a s t sponsored some f i e l d days and i n d i v i d u a l c o n t a c t s wi th fa rmers , t h e s e a c t i v i t i e s have n o t been c a r r i e d o u t on a c o n g i s t e n t b a s i s 1 nor were they adequa t e ly forminlized from a t r a i n i n g s t andpo in t . By t h e same token, t h e team noted that : t h e r e was o n l y limited in - se rv i ce trnin.i,ng f o r e x t e n s i o n i s t s i n c rop s u b j e c t ma t t e r s p e c i a l t i e s o r i n methodologies. This i e un fo r tuna t e i n t h a t , th rough FEPRO, e x t e n s i o n i s t s should be a b l e t o reach l a r g e groups of o rgan ized farmers , inelud,ing coope ra t i ve s , growing t h e same c rops .

I n t h e a r s a of w r i t t e n m a t e r i a l s f o r ex tens ion , t h e team noted t h a t FHIA's Communica%ion Div is ion p u b l i s h e s r e s e a r c h d a t a and o t h e r p roduc t ion in fo tmat ion , most of which should be u s e f u l f o r e x t e n s i o n i s t s . The team a l s o ob t a ined cop i e s of o t h e r u s e f u l dx t sns ion and e x t e n s i o n i s t t r a i n i n g m a t e r i a l s t h a t should be used by FHIA and Pn'PRO i n t h e i r f u t u r e coopera t ion i n CD/NTAE. (Tkeel m a t e r i a l s , p repared under USAID c o u t r a c t s w i th Chemonics a r e a v a i l a b l e throixgh t h e Na tu ra l Resources S e c r e t a r i a t - Min i s t ry of A g r i c u l t u r e ) .

D. Land use

The produc t ion of non - t r ad i t i ona l c rops is complex when compared t o t h e produc t ion of t r a d i i i o n a l c rops . I t e n t a i l s i nc r ea sed day-to-day management and more c u l t u r a l p r a c t i c e s t han dces t r a d i t i o n a l a g r i c u t t u r e . I n c d d i t i o n , t h e achievement of e f f i c i e n t l and u s e is s u b j e c t t o s e r i o u s p i t f a l l s , incl ; lding monoculturer inadequa te s o i l and water conserva t ionr and improper u se of f e x t i L i z e r s and a g r i c u l t u r a l chemicals .

I n t h e i r i n t e r e s t i n ob t a in ing maximum b e n e f i t from new, s h o r t e r c y c l e c rops i n Honduras, fa rmers may t end t o u se a monoculture c ropping system, r e p l a n t i n g t h e i r c rops succes s ive ly on t h e same p l o t of land. This can e a s i l y u p s e t p r e v i o u s l y balanced e c o l o g i c a l systems w i t h r e s u l t i n g increments i n weeds, p e s t s and d i s e a s e . The c o s t s t o e l i m i n a t e thesi? prohloms and t o ach ieve

IV . H-I. 3

renewed balance can be vary high rind can ovorituully tninimlzu rat t ier than maximize b e n o t i t s from t h e new cropg. In ordor t o re turn t o such balance, farmers st-lould r o t a t e crops. This i.lic2udea r o t a t l n g betwean rmn-tradit ionuls a e we11 a s betwoon non-trilditionals and some t r a d & i i o n a l crops. In t h e short-run t h i s may not be a s profitabLo a5 monoculturlng, but over time it w i l l invar iably lo a mare p r o f i t a b l e approaah t o land use,

S o i l and Water Coneervation -- Inadequate a t t e n t i o n t o erosion and water runoff -- hazards t h a t a r e common among Honduras' smaller farms -- contr ibute not only t o diminished y i e l d s but t o land "depletion". ' This can t r a n s l a t e , i n tu rn , t o higher cos ta f o r f u t u r e p lan t ings on t h e same land and can eventual ly fo rce producers t o move onto o ther , l e s s appropr ia te lands f o r non-tradit ionals , implyin? s t i l l increased. cos ts . T o avoid t h e s e problems, farmers w i l l r equ i re adequate t r a i n i n g . A.I.D. car1 help t o provide such t r a i n i n g by ensuring t h a t s o i l and water conservation monitoring and techniques a r e p a r t of its technica l a s s i s t a n c e packages, e spec ia l ly though FHIA and FEPROEXAAH.

3. Improper Uee of F e r t i l i z e r s and Chemicals

In tens ive cropping usual ly means in tens ive chemical and f e r t i l i z e r use. Chemical runoff t o streams is not only c o s t l y i n terms of chemicals l o s t , bu t can be hazardous t o people and animals who may d r ink from t h e streams. Chemical d r i f t can a l s o be of concern a s in tens ive crop production in t rudes i n t o populated areas o r a reas where o ther t r a d i t i o n a l food s t u f f s a r e produced. Unll -s proper techniques a r e taught t o growers and then monitored, t h e r e is a d i s t i n c t p o s s i b i l i t y of c o n f l i c t between crop production, proper land use and environmental preservat ion. FHIA and FEPRO should be s u r e t o focus on these techniques f o r t h e i r non-tradit ional crop producing const i tuencies .

Support Services - Essen t i a l support se rv ices r e l a t e d t o a g r i c u l t u r a l input supply a r e i n p lace i n Honduras. Increased needs i n t h e fu tu re , however, w i l l r equ i re more and b e t t e r support services . A.I .D. should review planning f o r those needs with FEPRO t o consider how FEPRO and its membership may f i l l gaps u n t i l support se rv ices evolve themselves a s a r e s u l t of increased demand. A.I .D. should a l s o continue its e f f o r t s a t pol icy reform t o g e t import t a r i f f s lowered. S imi lar ly , it should support research i n t o t h e timely, low-cost cons t ruct ion of pre-cooling, packing and cold s torage f a c i l i t i e s t o handle f u t u r e increases i n production of non-tradit ionals . A. I. D. should a l s o promote t h e formation of se rv ice companies i n those areas .

I V . ENVIRONMENTAL ZnPACT PROM CROP DIVEWXR'ICATION AND NON-TWITXONAL AGFUCULTORAL EXRORT

A 3 i n d i c a t e d uluawhore i n thLs r e p o r t , CD/NTAE prorjzams can load t o nega t ive anvironmuntal consaquencaa. 'I'heso inc lude , increased incidence of p l a n t p a s t s and d i s e a s e due t o t ho i n t roduc t ion and i n t e n s i v e c u l t i v a t i o n of c rops t h a t r e s u l t i n e c o l o g i c a l imbalances, a s p u c i ~ l l l y through monoculturer c rop , water and a i r contamination through improper use of p e s t i c i d e s and o t h e r c l~amica l s r and v i c i o u s cyc l ing i n t h e s e a r e a s a s p e s t a develop r e s i s t a n c e t o chornlcnl t r ea tmen t s and producers i n c r e a s e chemicals use.

Producers and expor t e r s i n Honduras a r e o f t e n aware of t h e s e i s s u e s , b u t probably do not y e t have enough t e c h n i c a l o r r egu la to ry in format ion i n o rde r t o understand and a c t on t h e long-term environmental imp l i ca t i ons of t h e i r p roduct ion a c t i v i t i e s . I t is c r i t i c a l , however, t h a t they ga in such understanding and apply p r e v e n t a t i v e o r c o r r e c t i v e measures e a r l y on s o a s t o avoid both f i n a n c i a l l o s s and i n j u r y t o t h e environment.

Experience t o d a t e wi th CWNTAE i n Honduras has a l r eady l e d t o t h e i n t r o d u c t i o n of expanded c u l t i v a t i o n of c rops f o r which s p e c i f i c p e s t s and d i s e a s e s are a l r eady we l l known. I t i s n o t d i f f i c u l t t o a n t i c i p a t e t h e k inds of problems which may a r i s e with t h e s e c rops and t o p r e s c i b e p reven t ive o r a c t i v e t r ea tmen t s t h a t conform t o i n t e r n a t i o n a l s t anda rds inc luding , e s p e c i a l l y , p e s t i c i d e t o l e r ance l e v e l s . S imi l a r ly , producers can l e a r n about i n t e g r a t e d p e s t management programs and t h e use of b i o l o g i c a l c o n t r o l methods t h a t can reduce t h e need f o r u s ing c e r t a i n chemicals. Much of t h e p e r t i n e n t in format ion on t h e s e s u b j e c t s is a v a i l a b l e i n Honduras. A.I.D./W and t h e Mission i n Honduras have d e a l t t o some e x t e n t wi th environmental i s s u e s i n CD/NTAE p r o j e c t s bu t it seems t h a t a p p r o p r i a t e guidance could be provided on a broader bas i s . I t would be t ime ly f o r A.I .D. t o conduct c rop - spec i f i c and Honduras r e g i o n a l environmental impact assessments and t o t r a n s m i t r e s u l t s and gu ide l ines through implementing agenc ies such a s FEPRO, FHIA and PROEXAG. Guide l ines should i nc lude methodologies f o r ongoing, s t anda rd i zed monitor ing of environmental impacts.

The fo l lowing d i scus s ion concerns p o s s i b l e environmental concerns r e l a t e d t o USAID p r o j e c t s i n Honduras.

A g r i c u l t u r a l p roduct ion i n Honduras has h i s t o r i c a l l y been dominated by p l a n t a t i o n c rops grown mostly f o r expor t , whi le mixed farming of food c rops f o r domestic consumption and p a s t u r e f o r c a t t l e p roduct ion a r e t h e o t h e r major u se s of land. Production of vege t ab l e s f o r expor t is a r e l a t i v e l y r e c e n t endeavor and, a s a l r e a d y suggested, has con t r ibu t ed t o t h e increased use of p e s t i c i d e s i n t h e country. Although app l i ed f o r t h e purpose of c o n t r o l l i n g major p e s t s and d i seases , t h e s e p e s t i c i d e s a l s o a f f e c t a wide range of non-target ~ r g ~ a n i s m u , i nc lud ing i n v e r t e b r a t e n a t u r a l enemies of t h e s e p e s t s . Based on h i s experience i n t h e Comayagua Val ley dur ing t h e l a s t t e n yea r s , t h e manager of t h e coopera t ive , Fru ta d e l So l , f e l t t h a t t h e r e had been a decrease i n t h e ace ion of n a t u r a l enemies i n t h e va l l ey . When asked about t h e p e s t s i t u a t i o n i n Comayagua, t h e entomologis t of t h e Fundaci6n HondureEa de Inves t i gac i6n ~ g r i c o l a (FHIA) a t La Lima supported t h i s observat ion. On a

f i e l d t r i g to t h o ComayacJua Vnl lcy , t h o b'ruta d e l Sol manager a l s o rrtatecl t h a t h e be l i eved farmera wore trecntiny mom f r e q u e n t l y t o con t ro l " n l cogol lu ro" , Spodopttlrn Frugiperdn, than they had Ln tho p a s t , and t h i s lndy be due t o t h o r educ t i on i n numbers of r h i o peek ' s n a t u r a l anomius.

The Comayagun Val ley i s a l s o t h e s i k o o f a f i f t y h e c t a r e axper imenta l farm i n t h e community of Las Liconnca where a vege t ab l e demonstrat ion p r o j e c t has been conducted by FHIA i n c o l l a b o r a t i o n wi th o t h e r l n s t i t u t i o n e . Th i s p r o j e a t was i n i t i a t e d i n Ju ly , 1986 wi th t e c h n i c a l assistance provided by Louis Berger I n t e r n a t i o n a l , Inc . , and perhaps t y p i f i e s t h e problems encountered when h igh ly i n t e n s i v e t e chno loy i cn l p r a c t i c e s a r e in t roduced i n t o an a r e a wi thout s u f f i c i e n t c o n s i d e r a t i o n of p r ev ious expe r i ences i n t h e a r e a and t h e need f o r a s t r o n g r e s e a r c h e P f o r t t o i n v e s t i g a t e and i d e n t i f y p roduc t ion constraints. The purpose of t h e p r o j e c t wzs to demonstrate f o r f a rmer s t h e technology r equ i r ed f o r p r o d d i n g compet i t ive q u a l i t y vege t ab l e s i n s u f f i c i e n t volume f o r expo r t . The c rops s e l e c t e d f o r p roduc t ion were win te r squash, cucumbers, tomatoes, can ta loupes , okra and European cucumbers. P r epa ra t i on of t h e seedbeds, l e v e l i n g , sub-so i l ing , harrowing, g rad ing of t h e l a n d and o t h e r p roduc t ion p r a c t i c e s were performed us ing technology developed i n C a l i f o r n i a and F lo r ida . Resu l t s of t h e s e produc t ion t r i a l s were mixed and it was concluded t h a t s e v e r a l v a r i e t i e s and c r o p s were n o t S u i t a b l e f o r e x p l o i t a t i o n i n t h e . r e g i o n . Among t h e produc t ion problems encountered i n t h e m t r i a l s were t h e fol lowing:

Cucumber -- t h e var ier .y S p r i n t 440 was d r a s t i c a l l y a f f e c t e d by v i r u s t o t h e e x t e n t t h a t t h e p lo2s had t o be plowed under)

Cantaloupe -- t h e v a r i e t y Magnum 45 s u f f e r e d s e v e r e l o s s e s from l o w t empera tures and t h e stem b l i g h t , Mycosphaerella melonis. Desp i te i n t e n s i v e a p p l i c a t i o n s of Benomyl every t h r e e days, t h e lat ter d i s e a s e could n o t be c o n t r o l l e d )

Tomato -- va r ious agronomic problems reduced tb.e y i e l d i n t h e v a r i e t i e s grown

Winter Squash -- t h e v a r i e t y p l a n t e d showed a h igh s u s c e p t i b i l i t y t o a v i r u s d i s e a s e 1

Okra -- f o r unknown reasons , and independent ly of th~e v a r i e t i e s used, t h e - p l a n t s showed r e t a r d e d growth, l e a f c h l o r o s i s and gene ra l poor development)

European Cucumbers -- t h e t h r e e v a r i e t i e s grown s u f f e r e d a h igh inu idencs of v i r u s and a l s o deformi ty o f t h e f r u i t .

a r e c e n t e v a l u a t i o n of FHIQ/, a review team a s se s sed t h e p o t e n t i a l f o r p roduc t ion of vege t ab l e c rops i n t h e Comayagua Val ley f o r e x p o r t a t i o n i n t h e fo l lowing manner8

Eva lua t ion of FHIA. Winrock I n t e r n a t i o n a l I n s t i t u t e ( f o r USAID), Morr i l ton , Arkansas, November, 1987.

Procrgectrt f o r oxporting temporate vegetables i n the off aeason a r e vesy uhaky,. . . 1Shese hlyhly per lehable crops have r i g i d q u a l i t y raqulremente, tranriport: m a t e drs oxorbi tant , and marke1: competition from b e t t e r s i t u a t e d countcisu i n very high.

Production technoloyg f o r vegetables i b l h ighly soph i s t i aa t ed and requ i re s c l o s e mana gement t o produce an acceptable produat . Moreover, many p a r t e of t h e va l l ey a r e contaminated by previous indiscr iminate use of agrochemicals~ ground water may be of poor qua l i ty1 and exper t , c lose management is neceeoary t o coordinate c a r e f u l l y timed production. FHIA has no comparative advantages i n t h i s r o l e .

Based on t h e team's r ecen t b r i e f observat ione of t h e s i t u a t i o n , theaa remarks a r e probably va l id .

In d i s c u ~ n i o n s with Sanidad Vegetal ( P l a n t Health) o f f i c i a l s , it was learned t h a t p e s t i c i d e poisoning inc iden t s were f a i r l y common a s indica ted by a s tudy made of t h i s problem near Comayagua. ( I t was not poss ib le t o ob ta in a copy of t h e s tudy s i n c e t h e l o c a l h e a l t h c l i n i c s a r e not requi red t o submit t h e s e r e p o r t s t o t h e Department of Public Health c e n t r a l o f f i c e s i n Tegucigalpa.)

A farm i n t h e Comayagua Valley owned by one of t h e cooperat ive mambara was . v i s i t e d and p e s t con t ro l p r a c t i c e s were discussed. Chemical app l i ca t ions were made by a tractor-mounted sprayer , genera l ly i n t h e evening t o avoid problems with bee k i l l s . Conditions f o r s t o r i n g pes t i c ide6 on t h i s farm were unsa t i s f ac to ry l t h e shed had a d i r t f l o o r and was not posted with a s i g n i .ndicat ing t h a t p e s t i c i d e s were s to red within.

V. CREDIT/FINANCE/INVESTMENT FOR NON-TRADITIONAL AGRICULTURAL EXPORT CROPS

A. A, I.C. -Authorized Primary F a c i l i t i e s Available f o r CD/NTAE

In t h e period 1984 t o da te , primary Mission-sourced f inancing f a c i l i t i e s a v a i l a b l e f o r crop d i v e r s i f i c a t i o n and non- t radi t ional a g r i c u l t u r a l expor t include t h e following;

FACILITY AMOUNT

Direc t A . I . D . l oan t o t h e Central Bank of Honduras (CBH) under t h e Export Development and Services P ro jec t (522-0207) ~ ~ 8 1 0 . 0 mi l l ion

ESF l o c a l currency equivalency administered by t h e Central Bank (48 mi l l ion lempira^)^ under P ro jec t 522-0207 US $2 4.0 m i l l i o n

Possible t o t a l P r a c t i c a l t o t a l

~ ~ $ 3 4 . 0 mi l l ion ~ ~ $ 2 7 . 0 m i l l i o n

Although t h e r e i o tl Z e a e l b l a t o t a l a v a i l a b i l i t y of t J ~ $ 3 4 . 0 m i l l i o n , ae a p r a c t i c a l matter ava i l a%s . t l i ty i a u c t u a l l : ~ t h o equivcrlant: o f ~ ~ $ 2 7 . 0 m i l l i o n . The reaeonrr f o r t h i s arcs e e v o r a l . B i r t e t , t h e ~ ~ $ 1 0 . 0 mill.!.-n f a c i l i t y i s grca-ahanneled th rouyh t w ~ i n e t i t u t J . o n e i n equal. h d v u a . One h a l f i e f o r a g r o - r e l a t e d f i n a n c i n g e , pre-channelad th rough FEPHO.~XAAHI t h e o t h e r i e f o r i n d u s t r y - r e l a t e d f i n a n c i n g e , pre-channeled t h r o u y h FXtU. The l i n e between t h e two a r e a s is n o t c l e a r i y drawn b e c a u m FXDE'e p o r t i o n c a n b e u ~ o d t o f i n a n c e a g r o i n d u s t r i a l p l a n t s and w e n c e r t a i n p r imary a g r o - r e l a t e d activities. ( I n f a c t , FIDE h a s a l r e a d y f i n a n c e d wood p r o d u c t e x p o r t b u s i n e s s e s and i s f i n a n o i n g shr imp f a n n i n g p r o j e c t s as well.) Tak ing t h e s o f a c t o r o i n t o c o n d i d e r a t i o n , It is n o t u n r e a s o n a b l e t o reduce t h e " p r a c t i c a l l y a v a i l a b l e " amount o f t h e U.S. d o l l a r f a c i l i t y from ~ ~ $ 1 0 . 0 m i l l i o n t o ~ ~ $ 7 . 0 m i l l i o n . A s r e g a r d s t h e ESF local c u r r e n c y f a c i l i t y , w h i l e t h e e n t i r e 48 m i l l i o n Lempiras ( ~ ~ $ 2 4 . 0 m i l l i o n ) is nomina l ly a v a i l a b l e f o r f i n a n c i n g NTAE, a n amount o f 10 m i l l i o n Lempiras ( ~ ~ $ 5 . 0 m i l l i o n ) h a s been se t a s i d e a s a g r a n t t o R'IDE f o r t h e p u r p o s e o f r e f i n a n c i n g t h e d e b t s o f p o t e n t i a l n o n - t r a d i t i o n a l e x p o r t e r s . Again, p a r t o f t h i s amount t h r o u g h FIDE, c o u l d b e i n d i r e c t l y s u p p o r t i v e o f NTAE b u s i n e s s e s . A r e a s o n a b l e l e v e l f o r such a p p l i c a t i o n wou3.d be 2 m i l l i o n Lempiras, or US$^. 0 m i l l i o n . Thus, t h e n e t p r a c t i c a l a v a i l a b i l i t y from t h o l o c a l c u r r e n c y f a c i l i t y would measure ~ ~ $ 2 0 . 0 mill ion ( ~ ~ $ 2 4 mn - US$^ mn + US$^ mn). Taken t o g e t h e r w i t h t h e n e t f i g u r e o f ~ ~ $ 7 . 0 m i l l i o n f o r t h e d o l l a r f a c i l i t y , t h i s g i v e s t h e t o t a l p r a c t i c a l a v a i l a b i l i t y o f ~ ~ $ 2 7 . 0 m i l l i o n shown above. ( T h i s f i g u r e d o e s n o t t a k e i n a c c o u n t t h e real v a l u e o f t h e Lempira which is closer t o 3 o r 4 t o 1 t h a n t h a n t h e o f f i c i a l rate of 2 t o 1.). P r e v i o u s ESF-sourced and PL-480 monies have been s u p p o r t i v e o f CD/NTAE t o some e x t e n t , b u t t h i s would n o t b e e s p e c i a l l y s i g n i f i c a n t because it is o n l y i n t h e l a s t two o r t h r e e y e a r s t h a t i n t e r e s t i n CD/NTAE i n i t i a t i v e s h a s ga ined any momentum .

B. Placement

1. O u t s t a n d i n g s

Of t h e ~ ~ $ 2 7 . 0 m i l l i o n a v a i l a b i l i t y , t h e e q u i v a l e n t o f ~ ~ $ 1 1 . 3 were p l a c e d f o r CD/NTAE by t h e end o f June, 1988 t h r o u g h FEPROEXAAH. f 013.0~s r

FACILITY

U.S. D o l l a r f a c i l i t y Loca l Currency f a c i l i t y T o t a l

Equa l t o

The breakdown is as

AMOUNT

US$ .8 m i l l i o n ~ ~ $ 1 0 . 5 m i l l i o n ~ ~ $ 1 1 . 3 m i l l i o n *

* T h i s t o t a l d o e s n o t i n c l u d e sh r imp ar wood p r o d u c t l o a n s t h a t were p r e - c h a ~ e l e d by FIDE.

A s ahown, 45 porcent of tho t o t a l A.1.D.-ohligated primary tlourceo of f inancing f o r CU/NTNC a r e presant ly ou t s tonding, leaving an ava i l ab le balance of U~$l5 .7 mi l l ion .

BEPHOEXAAII-ra l a tad loan placements have been concan t ru ted i n ohrimp farm financing6 (35 percent of the t o t a l ) 1 melon and r s l a tbd f r u i t production and export packing opera t ions (26 percent of t h e t o t u 1 ) r f e r n and o the r ornamental p l a n t growing operat ion@ (17 pe rcen t l r and i n one atrawberry farming loan ( 6 percen t ) . A loan t o a pineapple ju ice processor represented 5 percent of t h e t o t a l , while t h e balance waa taken up with loans f o r squash pear production and export , p l an ta in and cacao production and export , and a loan t o a p lan ta in cooperative f o r f e r t i l i z e r import and d i s t r i b u t i o n ,

In t o t a l , 25 borrowera have taken down loans, with over 60 percent of t h e loan funds going t o four of these borrowers. One borrower has repor tedly defaulted os tens ib ly because of melon export losses . For most of t h e o the r borrowers it is too e a r l y t o obta in a va l id performance reading.

A s i n Costa Rica and elsewhere, loan concentrat ion i n c e r t a i n crop and product groupings i s t o be expected f o r h i s t o r i c a l and r i sk - re la t ed reasons. And f o r t h e most, p a r t , it would appear t h a t t h e r e has been an acceptable l e v e l of addi t ioni l l i ty i n t h e Honduran loans. But, a l s o a s i n t h e case of Costa Rica, A. I .D. w i l l want, t o develop e f f e c t i v e guidel ines t o promote g r e a t e r a t t e n t i o n t o products o the r than those t h a t have become " t r a d i t i o n a l " non-tradit ionals .

A s regards placements f o r medium and small producers, c r e d i t s a r e reaching some of t h e s e farmers through cooperat ives and a s a r e s u l t of on-lending in-kind from processors t h a t have received A . 1 .D. -funded loans. S t i l l , a3 i n many countr ies , t h e agr ibus iness exgort experience f o r cooperat ives and o t h e r farmer groups has not been a successful one and new loans have o f t e n ended up f inancing losses . %'his s e e m t o be t h e case with t h e "F'ruta d e l Sol" cooperative i n Comayagua. This cooperat ive has received pe r iod ic A.I .D. support -- pr imar i ly through PL-480 l o c a l currency f inancing -- over t h e p a s t t e n years , but has been unable t o achieve a s a t i s f a c t o r y f i n a n c i a l condit ion o r adequate income f o r a l l i t s members. In general, and f o r t h e foreseeable fu tu re , t h e medium and smal lers growers w i l l probably ant: be ab le t o obta in timely crop f inancing from any of t h e commercial banks! instiead, they w i l l have t o r e l y on ex i s t ing o r new re la t ionsh ips w i t h processoro, packing p l a n t s and, i n some cases , with 'overseas r ece ive r s t h a t may advance production funds t o secure a c e r t a i n l e v e l of product.

2. The Placement Process

Placement of t h e US$11.3 mi l l ion has been slower than expected, and t h e f a c t t h a t only ~ ~ $ 8 0 0 , 0 0 0 of t h e d o l l a r f a c i l i t y have been placed is a disappoint- ment. A p a r t of t h e problem i n moving t h e d o l l a r f a c i l i t y seems t o be t h a t it can only be used f o r d o l l a r f inancing of imported goods and c e r t a i n services . And while exchange r i s k is f o r account of t h e Central bank, demand f o r t h i s typo of f inance is no t as high a s was o r i g i n a l l y ant ic ipa ted . In addi t ion , borrowers, and e s p e c i a l l y t h e I C I s ( intermediate c r e d i t i n s t i t u t i o n s ) , p r e f e r

the local currency Pact l i ty bacause I t an ta i l s n guarantee feature whareby up t o 60 puraernt of the Loan may not be guusnnteecl. In the event of! a default , the ultinulte r isk on t h i s GO percent ie for account of the CBII. A di rec t ly related is~sue is tho f ac t tha t local bank6 normally require loan col la te ra l covurage tha t fa r exceede the free assots of borrowera. A s might be expected, the guarantee feature has been used in moat of the FEPKO&XAAII-related loans.

Other reported reasons for slowness in disbursement include poor credi t and guarantee waX'lais by FEPKOEXAAM i n the determination of loan e l ig ib i l i ty! inexporimm lfit:h NTAE project analysis on the part of the ICIsr excessive analysif, by the Central Bank on some of the credits! and the ava i lab i l i ty t o commer?ial banks of safe , profitable alternatives, including investments i n governmarrt bonds that' effect ively reduce reserve requirements. These problems are found t o one degree or another i n each of the Central American countries, and they seem t o occur wherever the underlying transaction is t o finance CD/NTAE. A . I . D . ' s responses, including special incentives such as the guarantee and/or special 20 percent and 40 percent export dol lar retention features for borrowers and ICIs tha t use the FEPRODEXAAH loan f a c i l i t i e s , are probably worthwhile e f fo r t s i n the short run.* For the long term, however, the emergence of professional NTAE development banking cadres w i l l be essent ial t o promote and sustain growth i n the NTAE sector. In t h i s regard, it would be prudent for A.I .D. t a support the establishment of a t rue development bank i n Honduras, perhaps on the order of the BANEX or COFISA i n Costa Rica.

In addition t o r i s k aversion and analyt ical l imitations tha t characterize the Honduran bankers, the NTAE f ina.~cing f a c i l i t i e s face other obstacles. On the macroeconomic side, the Lempira is overvalued and the monetary authori t ies are moving only very slowly t o correct the s i tuat ion. Also, a s in Costa Rica and elsewhere, the convert ibi l i ty process i s slow and there are insuff ic ient "no-strings-attached" incentives for the exporters. On the microeconomic side, it appears tha t A. I .D . and FEPROEXAAH have created a problem with the requirement for the so-called "cer t i f ica tes of e l ig ib i l i ty" . This require- ment, which enta i l s loan appraisal by FEPmEXAAH, seems superfluous i f commercial banks are a l so going t o do t h e i r own appraisals a s they inevitably must i f they are t o take any r i s k s . A t best, the ce r t i f i ca t e of e l i g i b i l i t y causes delays1 a t worst it resul t s i n poor appraisals, alienates potent ial exporters and gives the loan program a bad reputation. Plans t o eliminate the requirement should probably be implemented as soon a s possible.

Pursuant t o the recent reorientation and restructuring of FEPROEXAAH, t h e loan program had substantially come t o a halt . On the basis of new product promotion plans, however , and given FEPROEXAAH ' s objective of only providing financial intermediation assistance a s opposed t o continuing i ts ro le a s a

* On the other hand, these incentives sometimes e n t a i l features t h a t a re not t o the l iking of borrowers. One commecial banker indicated t h a t borrowers did not l i ke a number of provisions under the FEPROEXAAH program whereby t h e i r export proceeds -- and the banks' dol lar flows -- were being unduly t i ed t o the program.

"ga tekeepec", prougouta now saom Lmptovod %or Lnareased loan a c t l v l t y i n euggor t of NTAE. 'Ille p o m l b l l i t y of dopoe l t tny t h a avuiLahle d o l l a r and Lempira l end ing h to r r caa l n t o a p r f v a t o bank in t h t ~ Enrm of a tr~let: also w r i t e c loeu study ~ Z B t h l 6 COULCI t1eI.g t o s t r e a m l i n e diabursoment;ci.

C. The I s s u e of Debt Versue Equi ty -- In Honduras t h e r e i u no formal market f o r sou rc ing a y u i t y c a p i t a l , muatr less s o f c ~ r t h e ven ture e q u i t y c a p i t a l r equ i r ed by CD/NTAE p r o j e c t s . Nor would it be p ruden t f o r A.I.D. a t t h i a time t o gush f o r t h e format ion of such a market. I t would, however, make s ense t o p rov ide f o r l o a n s t o en t r ep reneu r s t o g a r t l a l l y f i nance 'new e q u i t y inves tments i n CD/NTAE.

Although n o t on t h e s c a l e exper ienced t o d a t e i n Costa RFca, t h e r e have been a number of deb t -equi ty swaps f o r CD/NTRE ope ra t i ons i n Honduras. These i nc lude t r a n s a c t i o n s involv ing e q u i t y i n melon and cucumber packing p l a n t s and i n a shrimp bus iness . Monetary a u t h o r i t i e s have imposed annua l l i m i t s however on deb t -equi ty swaps i n o r d e r t o reduce t h e impact on money supply.

D. Foreign Investment i n CDDTAE

While n o t n e a r l y a s p r e v a l e n t o r d i v e r s e a s i n , s ay , Costa Rica, t h e r e is some s i g n i f i c a n t f o r e i g n investment i n CD/NTAE bus iness f o r Honduras. In a d d i t i o n t o t h e p ineapple , melon and o t h e r a c t i v i t i e s c a r r i e d o u t by t h e l a r g e banana companies, t h e r e a r e a v a r i e t y of p r o j e c t s t h a t have a t l e a e t some f o r e i g n ownership. These i nc lude I s r a e l i s i n t h e melon growing and packing i nduo t ry and U.S. i n v e s t o r s , a l s o i n melon, as w e l l a s i n shrimp farming. Fu r the r U.S. i n v e s t o r involvement can a l s o be expected f o r ornamental p l a n t s . Addition- a l l y , f o r e i g n investment cou ld come about a s t h e r e s u l t o f debt-equi ty swaps, i nc lud ing one l a r g e t r a n s a c t i o n t h a t would e n t a i l t h e p r i v a t i z a t i o n of a government-owned tomato and f r u i t p roces s ing p l a n t . On paper , a major exchange of t h i s type would be b e n e f i c i a l t o t h e CD/NTAE e f f o r t i n Honduras. However, some government o f f i c i a l s a r e r e p o r t e d l y concerned t h a t a nega t i ve outcome might be i n c r e a s e d m u l t i n a t i o n a l c o r p o r a t e c o n t r o l of s e c t o r a s s e t s .

E. Other Financing f o r CD/NTAE

The A.1.D.-funded r e g i o n a l e n t i t i e s , CABEI and LAAD have been involved i n f i n a n c i n g Honduras1 CD/NTAE growth f o r s e v e r a l years . CABEI1s Agroempresas I1 p r o j e c t has r e s u l t e d i n approva ls f o r l oans of some US$^ m i l l i o n over t h e p a s t y e a r i n c l u d i n g bo th a g r i c u l t u r a l and f i s h i n g p r o j e c t s , LAAD p r e s e n t l y ho ld s a ~ ~ $ 1 . 5 m i l l i o n p o r t f o l i o i n new CD/NTAE l o a n s under its r e c e n t ~ ~ $ 1 5 m i l l i o n ROCAP l o a n program. P r o j e c t s i nc lude shrimp 2arming and s e a shrimp f i s h i n g , melon packing and expo r t , and a broom manufacture/export bus iness . An a d d i t i o n a l melon expo r t p r o j e c t ha s r e c e n t l y been approved.

The f nteramer Luarr t)evelugmslnt: bank has been adminia te r ing revolving ured l tr. faa i l i t l e e Par axport: through khe Vermzurtlan Fund bu t t e g o s t o on ly LJ,rlr.tttrtl u t t 1 i x a t i o n for NTAJW. 'Tllo Unnk' s Local cepreoenta t l v u noten t h a t N T A I U i s e t i l L young i n Hondu~aa athl t h a t Cta growth La p a r t l y Llm,bteii by o f t J a f a l croncern about: gene ra l a r ed l t , expansion and dc~fsrlee of t h e Lempira a t Lhi3 p a i n t i n tlme. The Bank hna obeotved inareaeed expor t0 however, of eesame eeed, cladamom, ornamentale and vege tab les . World Dank ( I B R D ) f a a i l i t i e e havo been broad-baaed and no t d l r e a t l y r e l a t e d t o NTRB: i n l t i a t l v e e .

F i n a l l y , under i t s Trade C r e d i t Insurance Program (TCIP) , A. I . D. hae provided over $800 m i l l i o n i n cumulat ive a u t h o r i z a t i o n s f o r gukarantees t o EXIMBANK program c r e d i t s f o r Cen t r a l America, of which Honduras has uaed approximately $51 mt1l.ion. This f a c i l i t y , which w i l l i n c lude annual a u t h o r i z a t i o n s of some 9200 mi l . l ion th raugh its conc lus ion i n 1990, covers t h e short - term P inana ing of impor t s Prom t h e U . S . , i nc lud ing a g r i c u l t u r a l inpute . The team e s t i m a t e s t h a t a t Leas t 1 5 p e r c e n t of Honduras' impor t s under t h e f a c i l i t y were f o r uae i n CD/NTAE produc t ion .

J A M A I C A

TabLe of Content8

I. HACRO$CONOMIC, P ~ T AND INSTITUTIONAL S E T T I N 6 8

A. R e c e n t H i s t o r y 8 . P o l i c y - R e l a t e d Issues C. Trends i n N o n - T r a d i t i o n a l A g r i c u l t u r a l E x p o r t (NTAE) D. A.I .D. P r o j e c t s a n d Key I n s t i t u t i o n 8

11. U R K E T I N G O F NON-TRADITXONAL AGRICULTURAL EXPORT CROPS

A, I n t roduc t ion B. A v a i l a b i l i t y , V o l u m e , Qual i ty and C o n t i n u i t y of Non-

T r o d i t i o n a l A g r i c u l t u r a l E x p o r t C r o p s C. Transportation D. Import P r o c e d u r e s E. M a r k e t Information and M a r k e t L i n k a g e

111. PRODUCTION O F NONJTRADITIONAL AGRICULTURAL EXPORT CROPS

A. Introduction B. T e c h n o l o g y T r a n s f erf R e s e a r c h

1. Seed and ' V a r i e t y Selection 2. Water M a n a g e m e n t 3. Fe r t i l i ze r and A g C h e m i c a l U s e 4. M e c h a n i z a t i o n 5. L a b o r M a n a g e m e n t

C. T e c h n o l o g y T r a n s f e r 1 E x t e n s i o n D. L a n d U s e

1. M o n o c u l t u re 2. S o i l and Water C o n s e r v a t i o n 3. I m p r o p e r U s e of F e r t i l i z e r a n d C h e m i c a l s

E. Support Services

IV. ENVIRONMENTAL IHPACT FROM CROP D I V E R S I F I C A T U N AND NON-TRADITIONAL AGRICULTURE EXPOKC

I V . I-I

IV.1-1 I V . 1-1 IV.1-2 I V . 1 - 3

I V . 1-5 I V . 1 - 6 1 V . I - 7 I V . 1 - 7

I V . 1-8

IV.1-8 I V . 1-9 IV.1-10 1 V . I - 1 0 IV.1-10 I V . 1 - 1 1 I V .I-11 I V . 1 - 1 1 IV.1-12 IV.1-12 1 V . I - 1 2 IV.1-12 1 V . I - 1 3

A. A.1.D.-Authorized Primary Faoi lLt ies Available for CD/tJTAE:

R. Placement 1. Outatartdings 2. The Placement Process

G. The Issue of Debt Versus Equity U. Foreign Invcatmcnt i n CD/NTAE K Other Financing for CD/NTAE

LIST OF TABLES - 1. Se i ec ted Non-Traditional Agricultural hkports, 1986-87

XV.1-14 1V.I-15 1V.Z-15 IV. 1-16 XV.1-17 1V.I-19 Ii7.I-19

IV. I - i i

AaX.13. CARXCOM CBL C D CO/I EEC GDP G O J IBRD 1 DB JADF JAMRRO JANEC JETCO JNEC JNIP

MO A N D F NTAE PACD Y90J TDB U S A I U USDA

Agenoy for fnternat.lunal Development; Caribbean Gommuni ty Caribbean Uaeln I n i t i a t i v e Crop Dlveraif iaa tion Crop Dive-sifiaation/Srrigation Projeot ( J a m h a ) Eutogean Euonomia Community Grotas Domeetir: Product Government of Jamaica World Bank Xnteramariaan Development Bank Jdmaica Ayricultural Development Fund Saalaice. Promotione Jamaica National Export Corporation Jamatca Export Trading Co. Ltd. Jamaica National Export Corporation (absorbed in to JAMPRO) Jamaica National Investment Promotion Ltd, (absorbed i n t o JAMRRO) Ministry of Agriculture Sational Development Foundation (Jamaica) Non-Traditional Agriculture Export Project Assistance Completion Date Private Sector Organization of Jamaica Trafalgar Development Bank (Jamaica) United States Agency fo r Internat ional Development United S ta tes Department, of Agriculture

J A M A I C A

Jamaioa has a population of ayproxlm.~tuJ.l~ 2 . 4 ln iLL lnn on an area of 1 0 , 9 9 1 nquaze ~~~~~~~~~a, Prior t o tndependor~cs in 1962, Jamaioa' c4 econ~my wan aloeely aligned t o the United Kir~t!dorn and pr ivate ownerehip dcrminat-cid a 1 1 emonomia eeutore. Af t e t indepen~ : t ill:.?, suameeive governmerite aontinwd t o aupgorc p r iva te ownership u n t i l t !72 when the governmcmt beaame t~cmvily involved i n n i l f a ce t s of! scanomic ~ c t i v i t y inalcding hhe purchase ali many pi-ivate sector firms. Z ~ V e r n ~ u t expenditures rose from 22 percent of tha GDP i n 1972 t o 52 percent i n 1979. These act ions led t o s ign i f ican t s a p i t d l f l i g h t , l a rger government borrowings, emigration of p r iva te sector manayccra, a nagative growth r a t e , high i n f l a t i on , h i g h unompLoyment., and a foreiyn ax- change earning capacity baaed on a narrow range of t r ad i t i ona l ecortarnlc a c t i v i t i e s . The dorld ~conomic recession t h a t began around 1980 compourlded Jamaica' s ec ,nomic problems.

A new government, elected i n 1900, took a number of . i n i t i a t i ve s t o reveree the previous government's actlono. I t promoted d ivers i f i ca t ion through prj.vato sector axpansion (inciuding pr iva t iza t ion of a number of government-omad businesses), emphasized exports, and reduced public sec tor expenditures. In 1987, the GLP increased 4 percent over the previous year, t he second year of poei t ive growth. A s p a r t of USAID's ass is tance t o Jamaica, several CD/NTAE- re la ted pro jec t s were i n i t i a t e d during the ea r ly and mid-1980s.

8. Policy-Related Iseues

The basic policy issues affect ing CD/NTAE i n Jamaica have been t i ed to the overa l l s t r a t sgy of the present government t o re tu tn more of t he economy ,to the p r iva te sector . The present government has ;tto!;gly supported t he move t o develc;;, more exports -- both industrial arid :rqti.cu.ltural -- as well a s promoted import subs t i tu t ion fo r products t ha t ctn be produced economically i n Jamaica.

Certain concessions a re i n place f o r exporters of manufactured or processed products, including income tzix exemptions (up t o 1 0 years ) , and exumptions from import du t ies during the concessionary period. A s a benef i t of The Caribbean Basin I n i t i a t i v e (CBI)*, most agr icu l tu ra l products can enter t h e U.S. duty f r e e u n t i l September, 1995. A s a member of CARICOM, Jamaica has f r e e t rade arrangements with 12 other Caribbei:n countries, and k t paxt ic ipates i n the Lome I f Convention which provides p re fe ren t ia l access t o EEC markets.

1/ Based mainly on "Annex A t Macro-economic Conditions", A. I .D. 1989-93 - Country Development Strategy f o r Jamaica (Washington, D.C., June, 1988).

* See a l s o A2pendix D , Section V.

IV. 1-1

Jamaica rlosn export a wide v%ric*t;,y of nol,-?,raadltlonal ayr iuu1lufa .L uxogra alttmuyh t h e total. of all exgocci, La mudl ( T a b l e 1). UnPor tuna te ly , d a t a were not: d v a i l a b l a f o r a long-tcalem t r e n d a n n l y s i e , b u t it: i a known that; t u b e r e have been @Xport.fad POL' tnmy yeara, mainly Lo t h e U.S. ( a b o u t two-Chirdfa o f sxpoctt4 A.Wirig 19H6 and 1987 ), the r J . l C . and Canada ( a b o u t o n e - f i f t h each dutirlg 1986 and 1'387). Almost all . cueulnbere exported have been to t h e t3.S.

Ths large d e c l l n o oE expc)r';d of EruLtu i.n L987 wae due a lmoe t comple te ly t o the l a c k of any axporto of honeydew mnlons. I t i ~ ! n o t known i f this was a ~ t a t i a t F c a . L r e p o r t i n g e r r o r or due to t lw abandonment of a l a r g e melon-growing p r o - j e ~ ~ t . D e c l i n e s in e x p c ~ r t e of c;;zumbere, swee t peppers and e t r i n g beans are p a r t t y related t o problems encountereG i n Tne A G W 21 p r o j e c t .

T A B L E 1

J W X C A , Selected Mon-Tradit ional A g r i c u l t u r a l Exports, 19% - 1987 *I.- -

Mx.!fc:.e1. Laneoun 74 -- Sub-Total 4 ,861

Vege tab les Breadfruit C a l l a h t o 12ucumber Hot Pepper Okrs Pumpkin Squash Sweet Pepper Zucch in i Miscelaneous 225 -

Sub-Total 9,668

c o n t i n u e d n e x t page.. .

IV. 1-2

T A B L E 1 (continued)

Produot e 19U6 - ( m t )

Tuber ar r .- coco 737 544 Desheen 1, 400 Sweet Potato 901 Yam 7,824 O t h e r 8 -.

Sub-Total 10,870

Legumes I Cluster Beans 5 "Congo" 6 Snow Peas 3 S t r ing Beans 169 0,ther - -

Sub-Total 183

Other Crops - 36 3 276 --I--..-.--.---------.I--.-.---o--,-------------.---------,-m--~----n------------o--o--

TOTAL 25,945 18,103 " o ~ - ~ L ~ 4 - - - - - ~ ~ ~ - ~ - ~ ~ - - ~ - - o ~ ~ ~ ~ ~ ~ - ~ ~ - ~ ~ o - ~ o ~ ~ ~ , ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ o ~ ~ , . - ~ . - ~ .

Sourcer Marketing Research Section, Marketing f i Crop Divers i f ica t ion , Ministry of Agriculture, Jamaica.

D. A.1-D. P ro jec t s and Key Xnst i tu t ions - USAID/Jamaica has been involved i n a g r i c u l t u r a l marketing f o r a number of years , Project: No. 532-0060, Agr icul tura l Marketing ! ~ ~ $ 7 . 8 m i l l i o n ) , began i n 1981 and was designed t o upgrade the MOA's c a p a b i l i t y i n marketing, including t h e gathering of market information, and i n t h e cc.lstruction of assembly and grading s t a t i o n s throughout t h e countxy. Jamaica's export pre-clearance f a c i l i t y and fumigation procedures were i n s t i t u t e d by t h i s program. The Agr icul tura l Marketing prc 9 ' was followed, i n 1982, by t h e Agroinduetry Development Projec t (US$€ ..: mil.Lion), designed t o f inance e x i s t i n g agribusinesses and t o promote new agro- indust r ia l ventures. It a l s o funded s t r a t e g i c planning f o r AGRO 21, a GOJ p a r a s t a t a l investment promotion agency which. received USAID support begi.nning i n 1985 under Projec t No. 532-0123, Crop Diversificationjfrrigation (CD/ I ) . This Projec t is b a s i c a l l y t o encourage crop d . ivers i f ica t ion , it is designed t o increase product iv i ty , p a r t i c u l a r l y of smaller farmers. The ex ten t t o which NTAEs a r e involved w i l l be determined by t h e type of inves to r and farmer i n t e r e s t s t h a t u t i l i z e r e h a b i l i t a t e d land. De ta i l s of t h e CD/I Projec t a r e described below.

o P r o j e c t 6 0 ~ 1 1 To Dsvulop t h e Ayr.lcuLturaL Seotor to l nc ruase g r o d u u t i v l t y , inareaace omplo~ymsnt arid enhance t h e coun t ry ' s c lapabi l i ty t o e a r n and save f o r e i g n exahatq-e .

o P r o P u r p o To reinforce t h e i n e t i t u t i o n a l crrpaaity of! AGRO 21 t o - -- develop grlvntcl a g r i c u l t u r a l investment i n Jamaiza.

( ~ ~ $ 0 0 0 )

u r n 8 Grant USA tD ~ ~ $ 1 1 , 1 2 2 Grant (Local Currency 1

USAID T o t a l 'm- Horrt Country US$ 6,000 (Local Currency)

TOTAL L-

1. Long-Term Technical Ass i s t ance 2. Short-Term Ttrchnical. Ass i s tance 3. Commodities 6 Operat ing 4. I r r i g a t i o n Cons t ruc t ion 5. T ra in ing 6. I n t e r i m 0 & M 7. S p e c i a l P r o j e c t s Fund 8. Evaluat ion/Audi ts 9. I n f l a t i on /Con t ingenc i e s

TOTAL

0 Outputs:

1. R e h a b i l i t a t i o n of i n f r a s t r u c t u r e ( cana l s , we l l s , a cce s s roads) f o r approximately 13,400 a c r e s f o r p l a n t i n g d i v e r s i f i e d c rops .

2. Small Farmer Program -- Tra in ing programs -- Linking sma l l fa rmers t o l a r g e r a g r i c u l t u r a l e n t e r p r i s e s f o r marketing, technology t r a n s f e r

3. Upgrading of o p e r a t i o n s and management f ~ r r -- Rio Cobre I r r i g a t i o n Works (RCIW) -- Rio Cobre I r r i g a t i o n Author i ty (RCIR)

11. MARKETING OF NON-TRADITIONAL AGRICULTURAL EXPORT (NTAE) - - A, In t roduc t i on

The main a c t i v i t y of t h e USAID Miss ion ' s c rop d i v e r s i f i c a t i o n i n i t i a t i v e ha s been t h e Crop Diversification/Irrigation ( C D / I ) Water Management P ro j ec t .

IV. 1-4

Aucording t o the Miasion, the track record i n urog d lvo re t f i cac~an o f non-trad.ltiona1 croptr eor export has btren dismal becau13e large agrlaultut 'al investore i n Jamaias aro not convinced t h a t divercjification of c r o p w i l l bring i n e ign i f ican t amounee of income. They are coneequently e a t h f iacl with produaing only t r ad i t i ona l aropa.

The non-traditional crops presently being exported a re ,

1. Coffee (Blue Mountain - special var ie ty) 2. Ornamental Horticulture (mainly exotic flowers) 3. Aquaculture ( f i s h products)

USAID/Jamaica is not "product" project oriented. Rather, it i s focusing on the p.rovision of export services. Some of' these services area

1. Ackee reaearch 2. USDA/APHIS pre-clearing, fumigation 3. Mango research 4. Developing and providing i r r i ga t i on t o fanners

In general, USAID/J is not d i r ec t l y promoting thi., production and export of non-traditional crops. The Mission apparently does not believe t h a t winter vegetables have a future i n Jamaica following the f a i l ed Spring Plains and Bernard Lodge pro jec t s of AGRO 21. However, there is an independent grower (Trelawny Vegetables) i n another region of t he country which has been exporting cucumbers, be l l peppers and melons f o r 3 years apparently with success. Also, according t o AGRO 21 personnel, the Spring Plains and Bernard Lodge projects simply did not have long-term investor commitments.

A s explained t o t he team, the philosophy of U S A I D is aimed now a t ass i s t ing medium and smaller farmers t o grow whatever type of crop they choose -- t r ad i t i ona l o r non-traditional.

B. Availabil i ty, Volume, Quality and Continuity of Non-Traditional .Agricultural Export Crops

1. Production

AGRO 21 was organized i n 1983 by the Jamaican Government t o generate foreign exchange, t o increase job opportunit ies by ass i s t ing farmers t o develop and increase the export of non-traditional crops and, a t the same time, t o reduce dependence on food imports by increasing domestic production of crops. The agri-business project managed by AGRO 2 1 was designed t o lease unused, Government-owned sugar land t o large sca le farmers f o r two-24 year periods. AGRO 21's function included the development and prc-ision of an i r r i ga t i on system f o r t he Plains area. In one venture, a I... '. portion of land was leased t o a group of three Jamaican farmers t o gzow winter vegetables. A nmber of problems such a s high production and administrative costs , coupled with low yields and management problems a s well as lack of commitment on the

IV. 1-5

part: of invmtorct, I d t o th la p r o j e c t ' s f a l l u r u . Another p l a i n s p r o j e c t , ogoratutl by Xaraolia, has a l s o been disaantinuad. AEI a Consequence of t h e m failurefd, thure i r r r e a l l y very l i t t l e i n thu way of new NTAEa Prom Jamaica.

AGRO 2 1 has now s e t up varioua t r i a l p lo to t o demonstrate t o p o t a n t i a l invea to t s t h a t c e r t a i n crops can be e f f e c t i v e l y yrown i n the a rea , A s a r e n u l t , t h e r e i g l on8 j o i n t venture with a U.S. f i rm i n the f o l i a g e busrinesarr. About ona quar t e r of t h e government-owned land i a a l s o s t i l l ava i l ab le f o r l e a s e . Other p o t e n t i a l cropu yrown i n t h e a rea a r e exo t i c f lowers and bananas. The remaining 75 peroent of t h e land has been l e a m d t o small farmers who a r e growing r i c e ar~d e thn ic crope f o r l o c a l conslumption. The team learned t h a t AGRO 2 l ' o n l y provides the land Lease and i r r i g a t i o n systems. I t has no production ex tens ion i s t s t o a s s i s t t h e farmer i n increas ing y ie lds o r solving p e s t problems. I t a l s o appears t h a t t h e amall/medium farmere w i l l have t o seek pos tharves t handling technology on t h o i r own o r expect t o obta in it from receivers or j o i n t venture p a r t i e s . (On t h e o ther hand, t h e r e i s no major demand f o r t h i s technology s ince t h e expor t of non-tradit ional crops is s o l imi ted . 1

A f i n a l note on product a v a i l a b i l i t y i n Jamaica; The team was informed t h a t p raed ia l larceny is a s i g n i f i c a n t problem i n t h e country. This does not bode ,de l l f o r any NTAE venture. Because it i s repor tedly widespread and no t l i k e l y t o s top soon, producers/exporters a r e probably b e s t advised t o " fac tor" such larceny i n t o t h e i r c o s t s while taking whatever appropriate preventive measures.

C. Transportat ion

Frequency and space a v a i l a b i l i t y i n ocean t r anspor t has decl ined due t o Jamaica's drug problem. The one l a r g e marine l i n e , which previously c a l l e d severa l times a week, has been f ined exorb i t an t ly by U.S. Customs because of drugs found aboard and now only goes i n t o Jamaica once a week. Thfl problem a l s o a f f e c t s sh ips going t o England.

A i r t ranspor t is adequate with nufiorous f l i g h t s leaving t o the S t a t e s and Europe on a d a i l y bas is . However, one t r a d i n g company s t a t e d t h a t cargo space is l imi ted on these f l i g h t s , a s the a i r l i n e s p r e f e r passenger t r a f f i c f o r which they have f a i r l y s teady business.

I t was noted t h a t both ocean and a i r t r anspor t c o s t s a r e lower f o r Jamaica than f o r t h e Central American countr ies .

In order t o help reduce the drug problem, JAMPRO, which is Jamaica's o f f i c i a l export and promotion agency, should lobby government o f f i c i a l s t o p lace more customs agents a t p o r t s and a i r p o r t s t o inspec t cargo more thoroughly.

D. sort Proasdureo

A grs-claaranctl irtugectlorr c e n t e r t l t l ~ l b m n aatilblir~lhed i n Samalca undex t h e guidanae of UBDA/APIiTY. P'ox t h e expor t e r t h i e s e r v i c e provents de l ays whish cm aauoe deter1.orotion of t h e product o r lol~hl e f market. Even more impor- t a n t , t h i o s e r v i a e can o f t e n d e t e c t i f any "Hitchhiker" ( i n e e u t ) is i n t h e aacgo, he lp ing t o reduce fumigat ion needs and p o s s i b l e l o s s of t h e cargo a t t h e p o r t of on t ry .

Although pre- inspec t ion can be very e f f e c t i v e and beneficial to t h e expor t e r , two cons t ra i r r te i n Jamaica's program have impeded its euccseer

1. Problems with t h e expor t of drugs i n s i d e f r e s h produce cargo. 2. Thta Government has no t been f u l l y suppor t i ve of t h e pre- inspec t ion

syrstem.

Even t h o 3 ~ g h IISDA inspector^ and Jamaican i n s p e c t o r s p l a c e a s e a l on cargo, d rug e x p o r t e r s have been a b l e t o circumvent t h e system by breaking and r e p l a c i n g sealla. A r e l a t e d problem i e t h e l ack of s t a f f a v a i l a b l e t o develop and conduct b e t t e r i n spec t ion techniques f o r expor ted products . Nei ther a r e t h e r e enough motor v e h i c l e s f o r i n s p e c t o r s t o t r a v e l t o farms and observe t h e load ing of cargo.

I n an i n t e rv i ew with t h e d i r e c t o r of a t r a d i n g company, it was learned t h a t t h e pre-cleaxance program can be ' ) ene f i c i a l . S p e c i f i c a l l y , t h e in te rv iewee noted t h a t t h e f a c i l i t y reduced t h e t ime t h a t h i s p roduct ( c u t f lowers ) would have t o s i t on t h e h o t ramp i n t h e Miami a i r p o r t .

The Minis t ry of Agr icu l ture , which ope ra t e s t h e pre-c learance program, needs g r e a t e r budget and s t a f f oupport from t h e government t o add re s s t h e problems c i t e d above s o t h a t t h e pre- inspec t ion c e n t e r can more e f f e c t i v e l y s e rve t hose producers /expor te rs who do dec ide t o i n v e s t i n NTAE.

E. Marketing

I t is d i f f i c u l t t o a s s e s s marketing a c t i v i t i e s of NTAE p r o j e c t s i n Jamaica because t h e r e has been r e l a t i v e l y l i t t l e STAE product ion. The team d i d l e a r n of one s u c c e s s f u l j o i n t ven ture between a G.S. f o l i a g e company and Jamaican i n v e s t o r s . S a l e s , t h e f low of intormatior . on t r e n d s an6 p r i c e s , and tech- nology a r e e s t a b l i s h e d through t h e U.S. i n v e s t o r who has e x p e r t i s e i n t h e s e a r ea s . I t seems t h a t JAMPRO p r i m a r i l y promotes j o i n t ven tu re s w i th f o r e i g n i n v e s t o r s who can provide product ion , pos tha rves t and marketing technologies t o t h e i r Jamaican p a r t n e r s . A s a consequence, JAMPRO has no marketing informat ion o r market l i nkage programs p e r s e . Also, JAMPRO'S main focus is i ts i n d u s t r i a l component s i n c e it is e a s i e r t c promote i ndus t ry t h a n a g r i - c u l t u r e f o r fo re ign i n v e s t o r s i n Jamaica.

2x1. PIIC)DUCTXON 08 NON-TRADXTXONAL AGIUCULfPURAt EXPORT CIU)Pfl

Jamaica i e t h e t h i r d l a r g e s t of the group of ie lands which comprise the Englieh-sptaaking Caribbean. Jamaiaa's land mas6 has a maximum width of approximately 51 MliLee and & maximum length of about 146 milee. The country's topography i s varled and rugged. More than half of t h e i s l a n d has an a l t i t u d e above 1000 fleet1 only about one percent is higher than 4900 f e e t . Three prominent physiographic f a c t o r s i n Jamaica a r e (1) The I n t e r i o r Mountain areas , ( 2 ) The Central-Western Limestone Platoau, and ( 3 ) The Coastal P la ins and I n t e r i o r Valleys.

The i s l a n d is divided i n t o 14 p o l i t i c a l subdivisions c a l l e d par ishes which a r e t h e p r i n c i p a l adminis t ra t ive u n i t s f o r both general governmental a c t i v i t i e s and extension and technology t r a n s f e r mechanisms.

About half of Jamaica's 2.4 mi l l ion c i t i z e n s l i v e i n r u r a l a reas . Agriculture accounts f o r a L i t t l e over 30 percent of t h e t o t a l work force . Ninety-three percent of t h e farms have less than 10 ac res , but 65 percent of t h e c u l t i v a t e d land is on farms of 10 acres o r more. For governmental s t a t i s t i c a l purposes, "farmers" have been categorized t o include those who have even very small holdings, less than one acre i n many cases.

A wide v a r i e t y of a g r i c u l t u r a l endeavors can be c a r r i e d on i n Jamaica because of i t s moderate cl imate, both temperate and. t r o p i c a l # v a r i a t i o n i n r a i n f a l l , and v a r i a t i o n s of s o i l s and micro-environments. The o v e r a l l cl imate i e considered t o be m a r i t i m t r o p i c a l with t h e influerice of t h e sea predomina- t ing . So la r reduction and temperatures a r e q u i t e adequate f o r p l a n t growth. Day length v a r i e s only about 1, and 1/2 hours from June t o December.

The average annual r a i n f a l l is about 77 inches, but ranges from 35 inches t o over 200 inches depend?".( upon locat ion . B0CaUSG of t h e topographic varia- t ions , r a i n f a l l i s not optimally d i s t r i b u t e d . Some r a i n occurs i n every month but t h e main ra iny seasons a r e Apr i l t o May, and September t o November. Where adequate p r e c i p i t a t i o n may not occur, sur face water and we l l s a r e used f o r i r r i g a t i o n .

Jamaica has a wide range of s o i l types. About 64 percent a r e a l l u v i a l s o i l s # 11 percent a r e derived from conglomerates, t u f f s and shales , about 7 percent from calcareous sha les / and 4 percent from igneous and metamorphic rocks.

Major s o i l s which occur i n t h e t h e Crop Diversification/Irrigation ( C D / I ) Projec t a rea include Caymanas c l ay loam (very high pH, calcareous, w e l l d ra ined) , r e l a t i v e l y "young" s o i l s formed from alluvium and Sydenham and Churchpan c l a y (high pH, imperfect ly drained, slowly permeable), snd r e l a t i v e l y "old" s o i l s formed on alluvium.

For a g r i c u l t u r a l developmental planning, and a l s o f o r research purposes, t h e country has been divided i n t o t h r e e main regionsr southern, western, and

nor thern . The srouthern cegion ie t h e g r i n a l g a l eg~ iuu1 t ;u r a l regLon OF t h e i e l and . Tha main Grope a r e suga r , bananas, ooaoa, aitrumr, aoffeta, and ooconuta. Other c rops ouch aa beana, yame, and caaaava a r e yrown i n s o a t t e r e d ha ld lnga by smell growera on marginal l anda o f t e n on exuoosive slogceo, Thera Ira g e n e r a l l y good p o t e n t i a l f o r p roduc t ion of! non - t r ad i t i ona l a m p s , The Min i s t ry of A g r i a u l t ~ r e has two experiment s t a t i o n 8 i n t h i e reglon. 'me wesltarn r eg ion has l a r g o a r e a s devoted to augar canor bananaa and pimentos a e w e l l a s l iveeeock . This reg ion ha6 h igh r u r a l pover ty , h igh unemployment ra te and a h igh migra t ion r a t e t o urban a r e a s . The a r e a is oervced by one exger- iment s t a t i o n . The no r the rn regelon has no experiment e t a t i o n , b u t i e s e rved by a Cnllego of Agr icu l tuxe l oca t ed i n Po r t Antonio.

The con t r i bu t i . on of ' a g r i c u l t u r e t o Grosa Domestic Prod.uction has d e c l i n e d i n r e c e n t y e a r s o r has remained r e l a t i v e l y f l a t . The o v e r a l l performance of a g r i c u l t u r e AS below its p o t e n t i a l . Food impor t s have i nc r ea sed much more d r a m a t i c a l l y t han e x p o r t s s o t h a t a g r i c u l t u r e is no t making any p o ~ i t i v e , s i g n i f i c a n t c o n t r i b u t i o n t o Jamaicat s ba lance of pa.yments. A . I . D. o C D / I a c t i v i t i e s a r e des igned t o a t t empt t o t u r n t h i s around by promoting e x p o r t s whi le a t t h e eame t i m e emphasizing food p roduc t ion s e l f - s u f f i c i e n c y .

A r e l v t i v e l y good road system e x i s t s i n t h e country bu t maintanance is no t adequate . Many r u r a l households d o n o t have running wate r and i n some c a s e s r u r a l communities a r e n o t se rved by a l e c t r i c a l s e r v i c e .

Technology T rans f e r r Research

From an h i s t o r i c a l s t andpo in t , Jamaica had a r e l a t i v e l y good r eco rd o f a g r i - c u l t u r a l r e s e a r c h up u n t i l t h e 1970s. The coun t ry ' s r e s e a r c h program from t h e n u n t i l now has n o t been adequate. Apart from t h e f a c t t h a t t h e count ry ha s focused p r i m a r i l y on t r a d i t i o n a l a g r i c u l t u r a l connnodity e x p o r t s * its o v e r a l l r e sea rch c a p a b i l i t y has been l i m i t e d due t o inadequa te budgetary p r o v i s i o n s , p a r t i c u l a r l y f o r t h e Minis txy of Agr icu l tu re . More r e c e n t l y , p u b l i c and p r i v a t e i n s t i t u t i o n s have vo iced t h e i r concern f o r i nc r ea sed r e s e a r c h i n CD/NTAE, b u t budgetary suppor t is s t i l l l ack ing as is adequa te r e s e a r c h planning. There a r e a numher of u s e f u l p h y s i c a l f a c i l i t i e s such a s t h e experiment s t a t i o n s r e f e r r e d t o above, b u t t h e s e have l i m i t e d personne l and ope ra t i ng funds. F a i l u r e t o p l a n and fund CD/NTAE research , however, cou ld r e s u l t i n h igh oppo r tun i t y costs. S p e c i f i c a l l y , f a i l u r e t o conduct adap t ive r e s e a r c h th rough on-farm trials cou ld r e s u l t i n c rop monoculturea and tohe expensive u s e o r misuse of imported technolog ies . New farming ven tu re s i n CD/NTAE a r e e s p e c i a l l y vu lnerab le t o t h e s e r i s k s because of market r equ i r e - ments f o r p roduc t q u a l i t y and quan t i t y . I n t h e r u s h t o meet t h e s e r equ i r e - ments and i n t h e absence of on-farm t r i a l r e s e a r c h programs, p roducers may w e l l f i n d f u t u r e c o s t s wiping o u t any c u r r e n t gains . To some e x t e n t t h i s probably occur red i n expo r t p r o j e c t s sponsored by AGRO 21. Nor is shor t - te rm consu l tancy -- t h e u s u a l p r e s c r i p t i o n -- a s a t i s f a c t o r y answer.

Foz CD/NTAE i n i t i a t i v e s to succeed over t h e long-term, ongoing a d a p t i v e r e s e a r c h must be conducted in a number of a r e a s i nc lud ing s eed and v a r i e t y s e l e c t i o n , wate r management, f e r t i l i z e r and a g r i c u l t u r a l chemicals use , mechanization, and l a b o r management. These a r e a s a r e d i s cus sed below.

I V . 1-9

I. Seed and Variety Yeleatlon I--

Many geed@ arid v a r i e t i e o fo r CD/N'ltAE i n Jamaica have t:o bbo imported. 'I'hie i a p a c t l y due ko the f a a t t h a t many of the urops a r e aeeentCally "new" t o Jamaiaa. Hut: evari LII cases where f r u i t s and vegetables have been grown before i n t h a o u n t q , the marketplace tende t o d i c t a t e t h e s p e o i f i c aesd o r v a r i e t y t h a t dhould be planted. Prom the team's observatione, ne i the r t h e A , I .D. CD/f p r o j e c t nor t h e Jamaioan Ministry of Agriculture have regulaf ly promoted on-Perm v a r i e t a l k r i a l e . Thia hae been Left up t o individual inveatorn, both fo re ign and dommtic. Up t o a po in t , t h i s wae reasonable, pax t i cu la r ly because of t h e an t i c ipa ted eatahlisnment of l a rge farmcr. But a s a p r a c t i a a l mat ter , no crop d i v e t s i f i c a t i o n program can be c a r r i e d out e f f e c t i v e l y without ongoing seed and va r i e ty t r i a l s . The conduct of such t r i a l s would, i t s e l f , have served t o a t t r a c t inves to r s , p a r t i c u l a r l y domestic inves tors .

2. Water Management - To some ex ten t , producers of CD/NTAE cannot avoid t h e conduct of water management "research". Throshholds of "too much" o r "too l i t t l e " a r e usual ly easy t o def ine and i d e n t i f y f o r most crops. But f o r high-value CD/NTAEs, f a i l i n g t o def ine and achieve t h e " j u s t r igh t " l e v e l of i r r i g a t i o n can r e s u l t i n a s i g n i f i c a n t opportunity c o s t through reduced y ie lds and diminished product qua l i ty . E f f i c i e n t discovery of t h i s l e v e l is b e s t accomplished through water management t r i a l s . In t h i s way, t imely answers can be found t o ques t ions such a s when t o i r r i g a t e 1 what t y p e ( s ) of i r r i g a t i o n t o user what del ivery r a t e s t o user how t o manage excess water) how t o manage t h e s o i l / water r e l a t ionsh ip , and what t h e c o s t of i r r i g a t i o n should be. AGRO 21 and CD/I personnel were concerned w i t h each of these quest ions, but it seemed t h a t t h e i r concern was d i rec ted pr imar i ly a t studying t h e nominal design p o t e n t i a l s of d i f f e r e n t i r r i g a t i o n systems and t h e i r reported c o s t s and not very much with t h e conduct of adaptive on-farm research with any given system.

3. F e r t i l i z e r and Agr1culture.l Chemicals Use

Non-traditional crops requi re proper f e r t i l i t y condi t ions and p e s t and d i sease con t ro l t o achieve and s u s t a i n marketable y ie lds . F e r t i l i z e r , p e s t i c i d e and o the r inputs a r e expensive and consequently must be used e f f i c i e n t l y . So.il and o the r condit ions i n Jamaica a r e d i f f e r e n t from those of t h e U.S. and t h e app l i ca t ion of these inputs t h a t is appropriate, say, f o r Florida, may not be t h e most s u i t a b l e f o r Jamaica f o r any given crcp. A t t h e ou t se t , it is no t inappropr ia te t o use an imported technology package, p a r t i c u l a r l y i f seed f o r a s p e c i f i c crop i s a l s o being imported. Y e t , without proper adapt ive research, c r i t i c a l quest ions w i l l go unanswered. These include proper r a t e s of app l i ca t ion , methods of app l i ca t ion , timing, f e r t i l i t y / w a t e r r e l a t ionsh ips , and environmental e f f e c t s ranging from immediate impact on f i e l d workers t o contamination of water. S a t i s f a c t o r y answers t o t h e s e quest ions and t o t h e c e n t r a l i s s u e -- how t o achieve optimum CD/NTAE y i e l d s -- requi re f requent t e s t i n g of s o i l s and water -- t e s t i n g t h a t should be done on a continuing bas is . Again, t h e team could not d iscern enough of t h i s type of research i n Jamaica.

Nan-tratlitior~al export: drop pr'oduclti.on is h i c j h l y t tnre-sensi t ive. Coat- ePEic i en t meohanixation i e o f t e n the beet reeponse t o suoh time senEl l t iv i ty arrd t o p o t e n t i a l Labor sho r t ages or o t h e r ahortuominya. For moat non- t r a d i t i o n a l export crops and f o r moet farmers l r r Jamaim, t h i e does no t have t o imply ownezatrig of h t r a a t a r o r o t h e r b i g t ic tket item. In s t ead , it meane auaeae t o and wee of proven, a o e t e f f i a i e n t mneohaniatll a i d e f o r one or more o t t h e key t a e k s of t i l l a g e and l and p repa ra t i on , a u l t i v a t i o n , ha rves t i ng , and f e r t i l i z e r and chemiaals a p p l l a a t i o n . Ae Ear a s t h e team aould determine, r e sea rch i n Lhis a r e a , p a r t i c u l a r l y f o r t h e average s i z e d farm, hag not been adequate . I f anything, it has been ad hoa, wikh t h e r e s u l t being an

u -

a d d i t i o n a l oppor tun i ty c o a t f o r farmers .

Non- t rad i t iona l a g r i c u l t u r a l expor t c rops a r e b a s i c a l l y l abo r i n t e n s i v e inc ludinq a s l q n i f i c a n t requirement f o r hand ha rves t . A s p l a n t i n g s of t h e s e c rops i n c r e a s e , seasona l demand f o r l a b o r w i l l i nc r ea se a s w e l l and w i l l a l s o i n e v i t a b l y co inc ide wi th some p a r t o f t h e l a b o r dsmand of t r a d i t i o n a l c rops . Thus, demand f o r labor t o harvest: vege tab les i n Jamaica could co inc ide with l a b o r demand f o r c o f f e e picking. I t is no t premature t o begin a n t i c i p a t i n g t h e p o s s i b l e impact of increased CD/NTAE g l a n t i n g s on l abo r requirements and t o begin p lanning t o meet t h e s e requirements we l l i n advance of ha rves t t ime.

C. Technology Transfer? Exteneion

Technology t r a n s f e r , through ex t ens ion , has nu t been s t r o n g i n Jamaicar t h i s w i l l even tua l ly c o n t r i b u t e t o low p r o d u c t i v i t y i n non - t r ad i t i ona l c r o p product ion. A s a r u l e , t e chno log ie s have t o be imported through c o n s u l t a n t s and "extended" i n t a c t t o d i f f e r e n t growing a r ea s . Extension personnel from t h e Minis t ry of Agr icu l ture a r e l i m i t e d i n numbers and budget. (During 1987, t h e MOA ex t ens ion s t a f f was reduced by h a l f . ) As implied, t h e l i m i t e d ex tens ion c a p a b i l i t y t h a t does e x i s t i n Jamaica is not adequate ly l i nked t o adap t ive on - f am research. Some ex t ens ion personnel i n d i c a t e d t h a t inadequate technology i s a major problem i n Jamaica and t h a t !+!Anistry of Agr icu l ture r e sea rch i s u n r e l i a b l e f o r l a c k of funds. Without ex t ens ion o r research , however, c r o p d i v e r s i f i c a t i o n e f f o r t s such a s t h e CD/I p r o j e c t w i l l have on ly l i m i t e d impact.

D. Land Use

Increased product ion of non - t r ad i t i ona l c rops w i l l r e q u i r e more e f f i c i e n t use of a v a i l a b l e land. The AGRO 21 p r o j e c t and surrounding l and a r e a s can still accommodate s i g n i f i c a n t expansion of CD/NTAE a c t i v i t y without having t o move o n t o marginal l ands , but. farmers must be e f f i c i e n t i n t h e i r l a n d use t o avoid p o t e n t i a l problems i n t h e f u t u r e . These problems inc lude monoculture,

irradeguate aoj.1 and water aonmrvatinti and improper uee of f e l t i l i a e t and aqlriaut t u r a l alhemiaals.

fn thei,: i n t e r e s t in obtaining maximum benefit, from new, ehotter aycle crope, farmots tend t o use a monoclultuxe cropping ayetern, replanting t h e i r otope euaaesraively on the same p lo t of land. T h i s a m eas i ly upset ptevioualy belanaed eaologiaal systems w i t h resul t ing inarements in weede, pes t s and diseaee. The coate t o eldminate kheee problem and t o achieve renewed balanue aan be varfy high and aan eventually minimize ra ther than maximiee benefita from t h e flew crops. Certain teahniquea, suah as s o i l fumigation/sterili&ation can f a c i l i t a t e mon~au l tu r ing~ but these teahniques are vefy expaanaive. The best a l t e rna t ive is crop rotatiou, which tende t o upset the l i f e ayclee of pes t s and disease while s t i l l keeping land produative. In the short-run, t h i s may not be as p rof i tab le as rnonoculturing, hut over time it w i l l invariably be a mote psof i table approach t o 1ar.d uae.

2. So i l and Water Conservation

Ef f ic iea t land use requires a t ten t ion t o s o i l and watar conservation, The e f f e c t s of erosion and unnecessary water lose o r misuse a r e of ten ignored i n meeting primary project goals such a s t he i n s t a l l a t i on of i r r i ga t i on equipment;. This can be avoided i n Jamaica a s elsewhere i f A.I .D. includes adequate s o i l and water conservation t ra in ing i n i ts projects.

3. LmDro~er Wee of Fe r t i l i z e r e and Chemicals

Intensive cropping usually means intensive chemical and f e r t i l i z e r use. Chemical runoff t o streams is not. only cos t ly i n terms of chemicals l o s t , but can be hazardous t o people and animals who may drink from the streams. Chemical d r i f t can a l so be a problem a s intensive crop production intrudes i n to populated areas and areas where other t rad i t iona l food s t u f f s a r e produced. Unless proper techniques a r e taught t o growers and then monitored, there is a d i s t i n c t pos s ib i l i t y of conf l ic t between crop production, proper land use and environmental preservation.

E. Support Services

Essential support services re la ted t o agr icu l tu ra l input supply a r e i n place i n Jamaica. Distances from farms t o supply canters a re not g rea t and road connections a r e adequate as a r e supply transport f a c i l i t i e s . Prices f o r imported inputs a r e high, but fanners can e t i l l c lea r reasonable p r o f i t s from non-traditional export crops. Support services re la ted t o postharvest handling -- such as pre-cooling, packing and cold storage -- a re not generally avai lable except under specia l atrangements. A t present l eve l s of output t h i e is not a problem.

AR indiuated elsewhere Ln t h i e report , CD/NTAE ytoyrarna aan lead t o nega t i ve environmental aoneequenws. These inc?ludet i nc f saeed inu dehos of p l a n t pe$ t e and d i eeaee due t o the in t roduct i .on and intensive a u l t l v a t i o n of drops t h a t r e s u l t i n e a o l o g i a a l imbalancae, eopaoialby throuyh mon-,culture# a roy , water: and a i r aontaminet ion throuyh imptopex u se of pes t ic . ides and o t h e r ahemicalsr and vioiout3 c y c l i n g i n t l ~ e o e a r eaa a s peata develop r e s i s t a n c e to chemiaal treatmeilta and ptoducet e inu r ea se ahemicale uee.

Producers and exporters i n Jamaica axe o f t e n aware oP t h e s e i s s u e s , b u t p robably do not, y e t have enough ter lhnical or r e g u l a t o r y in format ion i n o r d e r to unders tand and a c t on t h e long-term environmental imp l i ca t i ons of t h e i r p roduc t ion activities. It is c r i t l . c a 1 , however, t h a t they ga in such unders tanding and apply it e a r l y on s o as t o avoid bo th f i n a n c i a l l o s e and i n j u r y t o t h e environment.

Experience t o d a t e wi th CD/NTAf i n Jamaica hae a l r e a d y l e d to t h e L t~ t roduc t ion of expanded c u l t i v a t i o n of c rope f o r which s p e c i f i c pestra and d i s e a s e s a r e a l r e a d y w e l l known. I t is n o t d i f f i c u l t t o a n t i c i p a t e t h e k inds of problems which may a r i s e wi th t h e s e c r o p s and t o p r e s c i b e p r even t ive o r a c t i v e t r ea tmen t s t h a t conform t o i n t e r n a t i ~ ~ l a l s t anda rds i nc lud ing , e s p e c i a l l y , p e s t i c i d e t o l e r a n c e 1evel.s. S i m i l a r l y , p roducers can l e a r n about i n t e g r a t e d p e s t management programs and t h e uoe of b i o l o g i c a l c o n t r o l methods t h a t can reduce t h e need f o r u s i n g c e r t a i n chemicals . Much of t h e p e r t i n e n t in format ion on t h e s e s u b j e c t s is a v a i l a b l e i n Jamaica. A.I.D./W and the Mission i n Jamaica have d e a l t t o some e x t e n t w i t h e n v i r a m e n t a l i s s u e s i n CD/NTAE p r o j e c t s b u t it seems t h a t a p p r o p r i a t e guidance could b e provided on a b roader b a s i s . I t would be t imely f o r A . I . D . t o conduct c rop - spec i f i c and Jamaica r e g i o n a l environmental impact assessments ah to t r anw! . t r e s u l t s and g u i d e l i n e s through implementing agenc i e s such as AGRO 21, t h e Jamaican Agromedical Assoc ia t ion and t h e Mixristry of Aq;.culture. Guide l ines should i n c l u d e methodologies f o r ongoing, ?tar!dardized, moni tor ing of environmental impacts . Ornamental h o r t i c u l t u r a p l a n t s a r e bcLgoming very impor tan t on t h e l i s t of Jamaica ' s non - t r ad i t i ona l export crops. Among t h e more papula r of t h e s e p l a n t s a r e syngonium, xanthosoma, aglaonema and anthurium. The anthurium p l a n t s have been found t o be a t t r . cked by a b a c t e r i a l organism, Xanthomonas Campestria, which causes a s e r i o u s l e a f b l i g h t . Anne Alvarez, a p l a n t p a t h o l o g i s t from t h e Un ive r s i t y of Hawaii, v i s i t e d Jamaica earlier t h i s y e a r t o i d e n t i f y t h e causd l organism, determine its inc idence and g i v e c o n t r o l recommendations. C h a r a c t e r i s t i c symptoms o f t h i s di; .aase were found i n a l l farms v i s i t e d , and i t appea r s t h a t t h e d i s e a s e is w e l l e s t a b l i s h e d i n the country. Addi t iona l t e c h n i c a l a s s i s t a n c e w i l l be r e q u i r e d t o t r a i n a l o c a l p l a n t p a t h o l o g i s t i n t h e procedures f o r i d e n t i f i c a t i o n of t h i s d i s ea se .

Problame a a s c ~ c i a e ~ d w i t h t h e overulae of pegtir!irled ate of uonuefn t o ttro sufentif!icl aolnmun i f y ar\d variouia group8 trawii been tormed t o deal, w i t h t h i e i,srdue, The Yama tda Agro~nadiaal Aeeodiat; ton wae Zourlded i n Uatober", l ' J k J l , & g n otanaequenue of a UElAID-~~ponec>red t r a i n i n g proyram Ln s a f e tree of p e g b i o i d e ~ ~ and hag among t h e l t p r i n u i p a l objeokiveg, t h e fol lowingr

..,I Endouraye a n i n t e g r a t e d Agrortediaal approat; h t o t h e a o n t m l and use of p e e t i a i d e s i n acoordanae with e x i e t i n g I e g i s l a t i o n r

-- Kduaate t h e public i n gene ra l , and high r i o k groups i n p a r t i c u l a r , tow~irds proper p e s t i c i d e management gractLcesr

-- Act a s an advisory resouroe gcoug on p e s t i c i d e management.

The aoscrciation pub l i shes a p e r i o d i a a l news le t t e r i n whish it encourages personnel in a g r i a u l t ~ i r e ~ h a a l t h , i n d u s t r y and r e l a t e d f i e l d s t o have an increased awareness of t h e i r r e s p o n s i b i l i t h e a f o r ensur ing s a f s and e f f e c t i v e use and handl ing of p e s t i c i d e s .

Sane of t h e members of t h i s assoclatAon a l s o belong t o t h e P o s t ~ c ? d e and P e s t Research Group , (1 m u l t i d i s c i p l l n a ~ y team composed of members of t h e f a c u l t i e s of Natura l Sciences and Medical Scl.ences a t t h e Un ive r s i t y of t h e West I n d i e s i n Mona. Researchers a t t h i s school have pooled resourcecn and i n i t i a t e d coope ra t i ve programs a i m 4 a t deve lop i~ ig an in format ion base r e l a t i n g t o .Local p e s t s and p e s t i c i d e use and dev i s ing r e l e v a n t s t r a t e g i e s f o r p e s t and pea t ic idfa management i n t r o p i c a l ~ s l ~ a i a d ecosystems. Typical of t h e i r e f f o r t s is a p r o j e c t t e s t i n g compounds from a v a r i e t y of n a t i v e p l a n t s p e c i e s f o r p o s s i b l e p e u t i c i d a l a , c t i v i t y . Also, entomologis ts i n t h o qroup fire curr tsnt ly s tudy ing popula t ion f l u c t u a t i o n s of! t h e diamondback moth i n cabbage and de te .min ing its r e l a t i v e s u s c e p t i b i l i t y t o over twenty i n s e c ' t i r i d e s .

D i f f e r e n t popula t ions of t h i s moth -- Mona, Douglas Cas t l e i n S t . A A U ' I ~ ~ Sandy River i n Clarendon and Guy's H i l l -- were t e s t e d f o r r e s i s t a n c e t o i n s e c t i c i d e s , and it was found t h a t t h e r e was v a r i a b l e r e s i s t a n c e t o organophoophate compounds i n t h e d i f f e r e n t popula t ions , with t h e Douglas Cas t l e b p u l a t i o n showing the most r e s i s t a n c e . Tho i n s e c t s t e s t e d were s t i l l s i l s cep t ib l e t o phosdrin and py re th ro ids . I n t e r e s t i n g l y , it appeared t h a t s e v e r a l s p e c i e s of p a r a s i t e s of t n i a p e s t may a l s o be showing r e s i s t a n c e t o t h e organophosphate i n s e c t i c i d e s used t o c o n t r o l t h e moth. This r e sea rch is s t i l l i n progress and t h e r e s u l t s have no t y e t been publ ished.

A. A-1.R.-Anthorizd Primary F a c i l i t i e s Avai lab le f o r CD/NTAE .*- --

I n t h e pe r iod 1984 t o d a t e , primary Miss ion-surced c r e d i t f a c i l i t i e s a v a i l a b l e f o r c rop d i v e r s i f i c a t i o n and n o n - t r a d i t i c r ~ ~ i l ~ g r i c u l t u r a l e x p e r t i n Jamaica i nc lude t h e fol lowingr

Direat A . T , D . loan t o TrafaLqal: Development ~ a n k (TDB)

Direat A , f .D. loan t o 'fDB Wurded fxom DL 400, $eat ion LOU. b a a & aurrenoy equivalent t o

PL 4M0 T i t l e Zf l w a l auzranay grant generated From doakie.l.de aommodity ea lee by and on-lent by Jamaiaa Agriaultural Development Foundatian (JADB) equivalent t o da te : ~ t

Direct 4.1.D. lodn t o National Development Found- a t i o n (NDF) eouraed from PL 480, Section 1 0 8 . Local currency eyuivalont t o r

A . I . D . Development: Aesist,anco g ran t t o NDF TOTAL

UB$ 5.0 mil l ion

tJE$iO. 0 mil l ion

US$ 1.0 mil l ion

It is important t o note t h a t an-lending a c t i v i t i s e by TDR and NDF a r e not f o r a g r i c u l t u r e alone whereas the JADF mandate i e s p e c i f i c a l l y t o promote eueta inable a g r i c u l t u r e and agribusinews, AR a consequence, t h e p r a c t i c a l a v a i l a b i l i t y "or CWNTAE is lee0 than shorn ehove. Based on c a r r e n t p o r t f o l i o breakdowns a t TDB and NDP, a coneervativa es t imate of t h e l r combined A.1.D.- sourced a v a i l a b i l i t y f o r CD/NTAE would he only US$5.0 xnilU.cn. Adding t h i s f i g u r e t o t h e JADF f a c i l i t y would provide a p r a c t i c a l t o t a l a v a i l a b i l i t y f o r CD/NATE of US$1%0 mil l ion. It is a l s o important t o note t h a t i n addi t ion t o d i r e c t on-loan funding sourced through A . I . D . , JADF and TDB have a l s o received A. f .D. g ran t s of ~ $ 7 . 6 mil l ion and US$8OO, 000, respect ive ly . While t h e g ran t s have not been f o r on-lending, bu t r a t h e r f o r t echn ica l a s s i s t ance development and research, they have had and w i l l continue t o e x e r t a p o s i t i v e impact on both i n s t i t u t i o n s ' a b i l i t y t o e f f e c t i v e i y ider :iPy and process loans f o r CD/tiATE en te rp r i ses . More i n d i r e c t , hut equal ly a i p i f i c a n t impact: on t h e e f f i c i e n c y of on-lending, comes from A . I . D . ' s bLwAc g r a n t s t o Jamaica'e government export promotion agency, now known broadly as JAMPRO, and t o the Pr iva te Sector Organization of Jamaica (PSW). These g ran t s , each f o r ~ ~ $ 7 5 0 , 0 0 0 , have, setrpectively, supported t r ade promotion and tax/foreign exchange po l i cy reform t o t h e b e n e f i t of CD/NTAE e n t e r p r i s e s by re f in ing t h e d e f i n i t i o n OR t h e i r f i n a n c i a l nrleds and helping t o c l e a r t h e way f o r smooth on-lending opera t ions by TDB, JADF, NDF and others .

Of t h e ~ ~ $ 1 5 . 0 mi l l ion p r a c t i c a l nvailab,'.lity of A. I .D.-sourced funds f o r on-lending t o CD/NTAE ventures, c u r r e n t outs tandings measuro US$^, 2 million. The rounded placement breakdown is as f o l l o w c ~

~ 8 8 3 . 0 mil l ion U1346,. 0 mil l ion

TDD JADE'

N13P 2 mi l l ion

Ac ehown, oritet:andingu a r e over 60 geraent of t h e g rac t i c r l . a v s i l e b i l i t y f o r CD/NTAB:. Placements have bean f o r a v a r i e t y of g r c j e c t s b : t t t he re have been dirotirtct r rsae of aonacantfation. TD8 hae mada a t o t a l of 9 CD/NTAE loans, 8 ~f whioh have been ' For ornamental p l a n t s , fo l i age and filowerrr, inaluding exo t i c flowera, f o r a t o t a l of 80 geroent of t h e bank's loan d u l l e r o u t s t ~ n d i n j e f o r CD/NTAEC. The n in th loan was t o A proaessor of j a m and je .Uies. JADF has l e n t t o a ,nuch l a r g e r number of Lorrowersr, :ref. f u l l y 35 percent of JADF's p a r t f o l i o l e i n Blue Mount:ain coffee p r ~ ~ d u c t i o n f o r export. An addit ior . 9 percent has been f o r e x o t i c flowers. About 27 pement has been f o r l ives tock, e saon t i a l ly beef and da i ry c a t t l e , not f o r export. The NDF portfolio consin ts of numerous small loans f o r crop produation and small s c a l e foad procesa~iny but a l s o f o r l ives tock.

The concentrat iona~ i n ornamental h o r t i c u l t u r e and Blue Mountain coffee a r e j u s t i f i a b l e , e s p e c i a l l y becaure of t h e s h o r t time span involved s ince TBB and JADF got startled. During t h i s span these have been t h e crops backed by t h e g r e a t e s t number oi! i n t e r e s t e d and competent borrowers. The l ike l ihood of p r i n c i p a l recovery has been t h e g rea tes t . And even though t h e borrowers have of ten been "better-off" , e spec ia l ly T D B t s borrowers, t h e r e has c l e a r l y been a d d i t i o n a l i t y i n most, i f not a l l , of t h e subprojects. ( A poas ib le weakness could be eventual complacency of t h e respect ive managements of TDB and JADF whereby they might be s a t i s f i e d t o continua i n t h e i r CD/NTAE concentrat ions and d is regard o the r a reas t interviews with cu r ren t manapments do not suggest t h a t t h i s w i l l be t h e case.)

2. The Placement Process

Disbursement of t h e U ~ $ 9 . 2 mil l ion has occurred a t a r e l a t i v e l y rapid pace. Each sf t h e t h r e e lending i n s t i t u t i o n s has apprwently been a b l e t o overcome r i s k perceptions and adminis t ra t ive bott lenecka t o smooth on-lending and equi ty :investment. In t h e process, however, aach i n s t i t u t i o n and USAID have come t o r e a l i z e t h a t growth and s u s t a i n a b i l i t y problems loom around t h e corner. TDB, JADF and NDF have e s s e n t i a l l y been subsidized by A.I.D. w! t h regard t o c o s t of funds. I n tu rn , these f i n a n c i a l i n s t i t u t i o n s have been ab le t o on-lend a t r a t e s a t l e a s t competitive with t h e Agr icul tura l Credit Bank ( J,maicat s major source of agr ibus iness c r e d i t ) , and genera l ly below market. The end-user r a t e has the re fo re been acceptable f o r r e l a t i v e l y high-risk CD/N!SAE ventures,. But a f t e r the A.I.D. subsidy is withdrawn, TDB, JADF and NDF, without m y f u r t h e r subsidy w i l l only be a b l e t o grow, eueta in t h e m e l v e s and continue t o support. CD/NTAE by obta in ing aarket-cost funds and p lac ing t h e s e a t market rates. Many CD/NTAE e n t e r p r i s e s w i l l e i t h e r be unable o r unwilling t o pay these r a t e s and t h i s w i l l diminish t h e t r u e development

imgaut of TDB, JAIJtc ahd NDF. The kay i eeuee tshen are when and based on whlwlr -. u r i t e e i i i 01rouLd t h e A . 1 . D. ~8ubs id ios bo etoppedl arrd what a l t e t n a t l V e a a r e Chore. There i a t h e i l l u e l o n t h a t tlieoe i eeuea may be d e a l t w i t h i n time, ar ipeuial ly oinatr t h e r e a r o e t i l l un l en t fund balnncoa, The problem, however, i e t h a t c l i reotoro and management: of tho f lncrnaial i n s t i t u t t o n o , aware of t h e f u t u r e imgesee, a r e p ~ o b a b l y e t a r t i r ry a l r s a d y tm f avo r crecl i ta t o e t r o n g e r borrowers f o r lecre r l e k y under tak ings i n o r d e r t o a t l e a s t avoid o r l i m i t f u t u r e l oan bosaee, even though thLe w i l l mean t h a t CD/NTAB: w i l l g e t p r o g r e s s i v e l y l o sa ntt;cnntlon. A s t r i k i n g example of what may happen i e provided by one of t h e recammendatione made i n t h e June 20, 1987, USAID- aommioeioned t rvaluat ion of TDB. Tho recommsnda t i o n was t h a t TDB should ". . . i nu rea se t h e r e l a t i v e p r o p o r t i o n of a e s e t s i n investments r e q u i r i n g l i t t l e a n a l y s i s and monitor ing wotk, such aa bank C/D1s o r w e l l c o l l a t e r a l i z e d l oans to "blue ch ip" companies". This is probably sound advice for: TDB long - tom s u r v i v a l ? t h e e tvaluators were c l e a r l y doing t h e i r job i n making such a recommendation 2s they , t oo , had analyzed t h e bank's p r o s p e c t s wi thout f u t u r e 8ubsirl.y. But i f TDB ware t o f a i t h f u l l y fo l l ow such a recommendation, i t s near-term a t t e n t i a n t o genujnaly developmental CD/NTAE i n i t i a t i v e s would d e c l i n e r a d i c a l l y and A . 1 .D. would have t o a s k i t s e l f t h e ques t i on , Why was TDB suppor ted i n t h e f i r s t p l a c e i f adequate , cont inued funding f o r i t s mandate would n o t be ava i l abAe?

Outs ide of TDB, J'Ai;F znd NDF a c t i v i t i e s , t h e r e is l i t t l e genuine development l end ing a c t i v i t y going on i n Jamaica f o r CD/NTAE. The A g r i c u l t u r a l C r e d i t Bank does some lending of t h i s so.ct b u t i ts r o l e is more t h a t of an a g r i c u l t u r a l c r e d i t wholesaler . Its funds, a s w e l l a s o t h e r f a c i l i t i e s and own c a p i t a l on- len t by t h e commercial banks, a r e p r i m a r i l y f o r t r a d i t i o n a l a g r i c u l t u r a l c rops a d , i n t h e case of t h e commercial banks, u s u a l l y f o r short - term working c a p i t a l needs, normally h e a v i l y c o l l a t e r a l i z e d . C o l l a t e r a l requirements of TDB and e s p e c i a l l y o f JADF and NDF a r e less s t r i n g e n t t h a n t hose of t h e commercial bankst t h i s f a c i l i t a t e s o p p o r t u n i t i e s t o ga in f i nanc ing f o r C:D/NTAE. JADF is unique i n t h i s a r e a i n t h a t it a c c e p t s i n v e n t o r i e s and f i e l d c rops as s e c u r i t y a s w e l l a s equipment and o t h e r a s s e t s purchased wi th l oan proceeds. I t a l s o prov ides its guaran tee t o secu re commercial bank l oans f o r i ts CD/NTAE c l i e n t s .

C. The I s s u e of Debt Versus Baui tv

TDB is empowered and expec ted t o do e q u l t y investments a long wi th i ts loans , b u t a s i n t h e c a s e o f t h e development banks i n Casta Rica and as w i t h t h e L a t i n America Agribusiness Development P r o j e c t (LRAD), e q u i t y investment has been l i m i t e d . A t 30 September, 1987 o n l y t h e e q u i v a l e n t of US $l5O,OOO ( 3 percer.c of t o t a l p o r t f o l i o ) i n CD/NTAE e q u i t y p o s i t i o n s had been taken, i n c l ~ d i n g US $100,000 i n a c u t f lower farm and US $50,000 i n a Blue Mountain c o f l s e farm. The l a t t e r e q u i t y is p a r t of ail e q u i t y package t h a t i nc ludes JADF and ano the r bank a s w e l l as t h e p r o j e c t ' s p r i n c i p a l . JADF, by June 30, 1987 had made close t o US $1,0(30,000 i n CD/NTAE e q u i t y investments , repre - s e n t i n g n e a r l y 25 p e r c e n t of i ts t o t a l p o r t f o l i o a t t h e t i m e . By June, 1988 however, CD/NTAE e q u i t y a s a p r c p r t i o n o f t o t a l p o r t f o l i o had dropped t o below 1 5 p e r c e n t , p r i m a r i l y because t h e pace and volume of l oan growth was

IV. 1-17

taignif!iaantly greater then the paae and valuma for equi ty growth. JADF's irrveotmente, have bean moetby i n out: flower, tolLaye and HJ.ue Mountaln ooflEee p m j e a t s , b u t a l so i n woocl groaeeoing and, more reaent ly , i n a food proaeouing grojout .

The TDB and JADP managamante a s well a s A.Z.D. o f f i c l e l s a r e properly aonn cerned with t h e e f f e a t t h a t reducred o r no f u r t h e r donor agenay rugport: w i l l have on t h e ab i l ' i t y t o make f u r t h e r equity investment@ i n CD/NltAE. Such invrstmenta requi re a t l e a s t a s muoh time and expense t o aaaomglish a s do loene, and aa a r u l e they generate much ~ l ~ w e r aash flowa i n t h e i r f i r s t f i v e yeate. They a r o Pax more r i s k y ae wel l -- t h e r e i a no seauxity on whioh t o r e a l i z e any recovery of investment pr inc ipal . Under theso oircumstances, managements axe understandably h e s i t a n t t o continue committing resouraee t o t3qui.t~ invsstmentr and t h e i r a t t i t u d e s a r e not: l i k e l y t o change u n t i l they have assurances of adequate funding f o r o v e r a l l p o r t f o l i o growth and maintenance.

An i n t e r e e t i n g aspect of JADF's approach t o equi ty is a loan conversion f e a t u r e whereby t h e Foundation, i n c e r t a i n ins tances , w i l l " cap i t a l i ze" loan i n t e r e s t and p r i n c i p a l payments i n t o share c a p i t a l f o r i t s e l f . Doing t h i s on its d i r e c t o r guaranteed loans provides an exce l l en t a l t e r n a t i v e t o loan acce le ra t ion , work-outs and p r o j e c t stoppage. I t recognizes agr ibus iness p r o j e c t time needs and, u l t imate ly , recognizes t h e need f o r par tnership i n working toward p r o j e c t succesa. Also, both f o r t h e case of TDB1s equi ty p a r t i c i p a t i o n s a s well a s f o r JADF's d i r e c t equi ty purchases, t h e r e is normally a buy-back provision s o t h a t t h e p r o j e c t ' s p r inc ipa l s may regain t h e i r o r i g i n a l equi ty while t h e f i n a n c i a l i n s t i t u t i o n r ~ y use buy-back proceeds f o r o ther investments.

A s i n t h e o ther countr ies surveyed f o r t h i s repor t , CD/NTAE equi ty i n t e r e s t -- ou t s ide of what is provided through TDB and JADF -- is l imited. There have been a number of fore ign and j o i n t venture investments and a considerable number of l o c a l s tar t -ups . Only a handful of a l l of t h e s e investments have a c t u a l l y been p r o f i t a b l e , however, and many simply d i d no t have t h e s t ay ing power -- nteaning s u f f i c i e n t a d d i t i o n a l equi ty c a p i t a l -- t o keep up opera t ions i n t h e f ace of ea r ly , normal production and marketing problems.

In s e v e r a l ins tances c i t e d t o t h e evaluat ion team, inves tors were apparently not committed t o t h e i r p r o j e c t s and used t h e i r e q u i t i e s a s minor gambles o r even a s pub l i c r e l a t i o n s o r "tax" contr ibutions. This l ack of t r u e commitment probably f igured t o some exte;:r in one of t h e AGRO 2 1 e f f o r t s , r c fe r red t o above. In t h e p a r t i c u l a r instdilce c i t e d , AGRO 21 gained A.I.D. appraval for an in fus ion of grant-equity t o a vegetable p r o j e c t t h a t had previously had an unsuccessful season. The new e f f o r t l ed t o improvements but not immediate f i n a n c i a l success. The pa r tne r s , whose equi ty was no t s u f f i c i e n t i n t h e f i r s t p lace , would not provide add i t iona l funds f o r another season and t h e p r o j e c t was discontinued.

I V . 1-18

Thtarca have been1 a number of f o r ~ i g n Lnvasmcante i t r Jamaina 'a GD/NTNE eea t ac , 'flra Jdmaida Nat iona l Pnveet.ment PromatLon obfioe, new p a r t of JAMPRO, regorta; t h a t s.tnao 1982 there have been over 8 0 Porelyn e q u i t y invee tmet~ te i n a g r i c u l t u r e ina.luding both s o l e t o r s i g n ownerehip and j o i n t fo to ign /Jameiaar~ vonturesr, wi th t o t a l project : investtmentd equivalent: t o n e a r l y ~ ~ $ 5 0 mi l l i on . Ovst 40 peraent: of! t l laee i n v e u t r ~ e n t e have been i n t r a d i t i o n a l a g r i c u l t u r a l ven tures , l n c l u d l n g bananas, r i c e and f l o u r rfdll ing. Of! t h e us430 m i l i l o n ba lance , no t more t h a n ti0 p e r a e n t -- 70 p e r c e n t is a c t u a l equ i ty . Thue, the t o t a l f o r e i g n investment i n CD/NTAE is ae t imated a t approximately ~ ~ $ 1 6 m i l l i o n t o ~ S $ 2 l mi l l i on . Of t h i s amount, a number of t h o inveetmente have been suspended o r d i scont inuad owing t o l o s s e e and o t h e r d i f f i c u l t i e e , repre- s e n t i n g a t o t a l of approximately US$^ m i l l i o n e q u i t i e s . The remaining US$13-16 m i l l i o n a r e i nves t ed p r i m a r i l y i n ornamental p l a n t , c u t f lower , f i eh ing , aquacu l tu r e , f r u i t / v e g e t a b l e and c o f f e e und%rtakl.ngs.

A review o f . t h e d a t e s on which t h e f o r e i g n investments were r e g i s t e r e d by JAMPRO shows a d e f i n i t e slowdowrr i n t h e l a s t two yea.rs'. The slowdown is probably a t t r i b u t a b l e t o a v a r i a t y of reasons ranging fro111 t h e s t ock ~r iarket c r a s h i n t h e U S . t o u n c e r t a i n t y about Jamaica's p o l i t i c a l f u t u r e . One impor tan t CD/NTAE-related reason however, may be " s a t u r a t i o n " , mraaninq t h a t a number of t h e areas where Jamaican investments could p r o v i d e ' compat i t ive r e t u r n s t o i n v e s t o r s nave a l r e a d y a t t r a c t e d t h e i r optimum number of i n v e s t o r s and investments .

Other Financing f o r CD/NTAE

A s might be expected t h e r e has n o t been a g r e a t d e a l of CD/NTAE funding a v a i l a b l e i n Jamaica. One excep t ion has been f o r Blue Mountain coffee8 Japanese donor agenc ies have prov ided a v e r ~ S $ 5 0 . 0 m i l l i o n f o r c o f f e e p r o j e c t s i n t h e country. Other sma l l e r c r e d i t f a c i l i t i e s have inc luded a Canadian I n t e r n a t i o n a l Development Agency ( C I D A ) Oyster Cu l tu r e p r o j e c t ( ~ ~ $ 1 5 0 , 0 0 0 and an EEC p r o j e c t f o r Beekeeping Development ( ~ ~ $ 8 0 0 , 0 0 0 ) . IDB, UNDP and World Bank f a c i l i t i e s have focused p r i m a r i l y on r e h a b i l i t a t i o n of sugar l a n i b , on l and t i t l i n g cmd on c i t r u s development.

C H f L &

Table of Cantentr

IV. J-1

IV. J-3

XII. PRODUCTION

IV. J-6

V. FINANCE

VI . INSTITUTIONAL DEVETJOPHENT IV. J-8

VII. THE BUTURB.

VIII. NOTES ON E'RPINSPECTION AND FUMIGATION PV. J-12

A . Pre-Inspection B. Fumigation

IV. J-I2 IV. J-12

IX. LESSONS TO BE LEARNED FROM CHILE IV. J-13

LIST OF TABLES

1. Agriculture Sector Exports, 1983 and 1987 2. Freah Fruit and Vegetable Exports, 1971/72 - 1986/87 3. Value of Principal Fruit Exports, 1983-87

IV. J-1 IV . J-2 IV. J-2

IV. J-i

FC E'TSA GlDY OOC 'LBm 1 DB I W I A t A A D NTAE ODEPA

SAG

SNA . USAID NSDA

Agenoy f o r f n f a t n a t i s n a l Davelopmont, Animal and P l a n t Health Xnegaotlon Qerv ioo ( U B D A ) Crop D i v a r s i f i a s t i o n ConfaderaoLBn de Fomento /Qovernment: Development Cozporat ian, Ch i l e ) Funrlaai6n Ch i l e ( C h i l e Fotmdation) I n t e r n a t i o n a l F a i r of San t i ago Oroee DcnnePtic Broduut Dovsrnment of Chile World Bank In te ramer ican Develogtfient Bank Institute Naai6nal 3e invee t i gaa idn ~yrZcoXa L a t i n America Agribueinees Development Bru jec t (ROCAP) Non-Traditional Agr i cu l t u r e Export Of i c ina d e ~ l a n i f i c a c i 6 n ~ g r x c o l a ( A g r i c u l t u r e Planning Of f i ce , C h i l e ) Direcci6n de Promoci6n da Exportacionae (Bureau of I n t e r n a t i o n a l Economic A f f a i r s , Foreign Minis t ry , Chile) S e r v i c i o ~ g r h o l a y Ganadera ( P l a n t and Animal Se rv i ce Division, Minie t ry of Agr i cu l t u r e , Ch i l e ) Sociedad Nacional de A g r k u l t u r a (Na t iona l Agr i cu l t u r e Soc i e ty , Chile) United S t a t e s Agency f o r I n t e r n a t i o n a l Development United S t a t e s Department of Agr i cu l t u r e

Chile' a ouauoee with Crop DiveteiPiaa t ion a i ~ d Non-Traditional. Agriau.Ltura1 Exparte (CD/NTABe)* hae been nothing ehort of dramatio. Table 1 below is i l l u e t x e t i v e r

T A B L E 1

CHXLEI Agriaulturo S e a t o r Exportr, 1983 and 1987 (US$ Mil l ion)

Fresh F r u i t Dried F r u i t and Preserves hrlpa and Purees To ta l F r u i t

Vegetables and Other Crops Tota l Crops

Animal-baaed Products Fores t ry Products -- T o t a l Ag, Animal, Forestry

Sourcest (1) Central Bank of Chi1 ~ s o c i o c i b n de Exportadores de Chile A.G., Documento Resumen - t i c a s de Exportacidn Hortof r u k k o l a

.$ (Deciembre, 198711 and ( 3 Chilet "Estadls tl'cas Agropecuarias 1975 - 1987" (June, 1998).

A s shown, C h i l e ' s d o l l a r volume of crop exports, including pr imar i ly f r e s h f r u i t , has grown a t an average compound annual r a t e of over 27 percent f o r t h e p a s t 14 years. Total f r u i t d o l l a r exports f o r the period grew a t an average compound annual r a t e of near ly 30 percent . Prelimirrary f i g u r e s f o r 1988 ind ica te t h a t , t o t a l f r u i t expor ts w i l l reach US$700 mi l l ion , r e f l e c t i n g a s t i l l s t r o n g 1 7 percent increase over 1987. Even a f t e r adjustment f o r d o l l a r i n f l a t i o n , t h e year-to-year inc re~aen t s have been extraordihary . A s a pescen- tage of t o t a l exports , d o l l a r a g r i c u l t u r a l exports measured only 5 percent i n 19731 by 1987 they measured over 26 p r c e n t . The comparable measures f o r f r e s h L r u i t expor ts a s a percentage of t o t a l d o l l a r expor ts were only .8 p r c e n t i n 1973, but * ; >ercent i n 1987. Unit volume f i g u r e s fa , f r u i t s and vegetables i n Table 2 he lp t o Eulrther i l l u s t r a t e t h e dtamatia growth i n exports s

* I n Chile, almost a l l f r u i t expor ts a r e now considered t r a d i t i o n a l .

A s shown, t h e compound a n n u a l growth r a t e i n boxes e x p o r t e d o v e r t h e 1 5 y e a r p e r i o d was 20.5 p e r c e n t . P r e l i m i n a r y f i g u r e s f o r t h e 1987-88 s e a s o n i n d i c a t e exports of 88 m i l l i o n b o x e ~ , a 22 p e r c e n t i n c r e a s e o v e r l a s t yea r .

T a b l e 3 l i e t o C h i l e ' s p r i n c i p a l f r u i t e x p o r t s i n o r d e r o f impor tance as measured by rounded d o l l a ~ v a l u e o v e r t h e l as t f i v e yea r s8

T A B L E 3

CHXLBI Value of P r i n c i ~ a l . F r u i t gxDorts. 1983-1987

F r e s h F r u i t Grapes 126,000,000 165,000,000 216, O O U , 000 249,000,000 276, 000,000 Apples 63,000,000 74,000,000 74,000, 000 126,000, 000 142,000, 000 P e a r s 9,000,000 11,000,000 13, 000,000 25,000,000 24, O O U , 000 N e c t a r ~ n e s 7,000,000 14,000, 000 15,000,000 22,000,000 22, 000, 000 plum^ 4,000, 000 9t000,000 l l t O O O ~ O O O 16tOOOtOOO 20t000,OOO Peaches 2,000,000 5,000,000 6,000,000 9,000,000 11,000, 000 K i w i F r u i t 185,000 493,000 1 ,400, 000 2,000, 000 N/A

Dried F r u i t Ra i s ins* 3,000,000 3,000,000 5 , 000 , 000 8,000,000 9,000,OtlO

Sources r Same as s o u r -s f o r Tab le 1.

* C h i l e a n s are c u r r e n t l y p l a n n i n g to produce and e x p o r t c o n s i d e r a b l y in- c r e a s e d q u a n t i t i e s o f r a i s i n s t o o f f s e t what t h e y e.xpect w i l l b e a p e a k i n g i n t h e i r t a b l e g r a p e t r a d e .

IV. J-2

ZIla uiynifLa.'lnue st C h l l e ' d Cd,/NTAJl growth, esrgeo.lally w a r ctw past daoade, i u raf leatad i r r eharply reduaed unemploymentr a cornplate turnaruund of t he aourrtry'e ~~griaulCuraL trade balnnael growth arid dowlopment of fdlakecl e r rv i a r alaatarer inarsablerd, increaaii~gly e f f j d e n t uoa of land1 and inarcaaned real inaomee fox perliaig8,nce i n the agr iaul tural aa well aa other eoatoxa,

ma importanlre of! egrFoi~J.tural export perforntanac~ and growth i a undatoWmd by v i r t ua l l y everyone i n Chilean eoaiety, Ooverrruwnt and the privat.9 8eat;oc provide t h e i t f u l l e s t eupport and aontinuard invartment i n the export e f fo r t . There, are today over 51) grivtrte agriaultuleal mcpar't trading uompaniae i n Chilsr, inoludlnq a number of foreign partners, and the aeutor aontinues t o a t t r a c t investments Prom abroad a s well aa a t home.

XI HISTORICAL BACKQlWUND - The extraordinary growth of Chi le ' s agr icul tural exports i s a re la t ive ly recent phenomenon. In f ac t , h i s to r ica l ly , t he sector wa# res t r ic ted and even penalized. Trade and pr ice po.Liciea, especially a f t e r the 19308, tended t o favor induatry and indus t r ia l import subs i t i tu t ion a t the expenoe of agricul- ture . Exchi~nge policy entai led a f ixed or "cheap" do l la r , and when t a r i f f s were f i r s t lowered, agr icu l tu ra l import8 were being subsidized i n e f f ea t . Gove r~mnt was heavily involved not only i n s e t t i ng policy but In es tabl ishing and enforcing regulations and controls t h a t r e s t r i c t ed exirrting producers/ exporters and discouraged po ten t ia l production f o r export. Futher disincen- t i v e occurred when land reform was ins t i tu ted , especial ly in t he 1960s and ear ly l.970~1. A radical changct took place, howe~+r, a f t e r 1973, when the present government took power. The new government's f r ee market approach t o economics provided i n c r e a s i n ~ incentive t o agr icu l tu ra l production fo r export by eliminating t r ad i t i ona l obstaicles. It eliminated export l ev ies? it lowersd and standardized t a r i f f s , du t ies and taxesr it eventually ( 1982-83 1 freed dp the peso-dollar relat ionehip a;Llowing for a "high" r ea l exchange rate*^ k t eliminated regulaLory and pr ice control tmttlenecks and withdrew from i ts former administratf.ve r o l e i n t rade? and it corrected most of the worst abuses of agrarian r o f ~ r m , pr incipal ly by making c lear t o producers and po ten t ia l producers t h a t t h e i r lawfuLly held property would no longer be sW&jact t o public interven Lion. Today, government's ro le is reportedly l imited t o those a c t i v i t i e s which the pr lvate sector cannot o r w i l l not undertake alone, such

During the period p r io r t o 1982, when the government maintained a f ixed, r e l a t i ve ly low par i ty between the do l la r and the peso, many new planta- t i ons were s tar ted. The start-ups, which entai led s ign i f ican t expendi- t u r e ~ f o r imports of p lan t materials, f e r t i l i z e r s and other inputs were, in e f fec t , favored by t h e re la t ive ly lower cos t of do l la r s a t the time. Later, following the do l l a r ' s rise, the owners of these plantat ions enjoyed the Gouble benef i t of higher dollar-based revenues fo r t h e i r export crops, with a greater proportion of t h e i r production costs occur- r ing i n pesos.

a a qua ran t i ne and f i u l k i l a t s r a t t r a d e nego t i a t i ons . Ttiue, M t t h a "Level pZeyLng t i e l d " , aqcibuelneee enktrapseneure oouLd b e q i t ~ t o p r o f i t Prom ChiLe'e n a t u r a l advantageu, itlaluf1l;nf~ the dbincl idence o f ita harveek eeaeotl wi th khe Neflh Ameriaan wlnfer , incrtaaoiny demand for Clre~tl f r u k t e and vege tab lee ark3 C h i l e l o t ' e lak ive ly prateatcad, d i e e a s e arid p e a t - f r e e geography. Add i t i ona l l y , entrepzeneuxs could b u i l d t h e i r aglefbueineeaee ueinp va luab l e qcciclanoe and taahnFoaS, or ientatAon, der ived i n good p a r t i t o n i u a l l y -- from evente and expetisnocae of! t h a 1960~. P'f n a l t y , t h e eame ay t ibooineue e x p o r t lrnvironment that; l e d t o euah gapid yrawtt-1 i n t h e f r u i t e u h e a t o r even tua l l y provided impatua Coc t h e development of f o r e s t produaco expot to and, more r e c e n t l y , of Pish and eeatood praducr: expor to , ( F i s h ptoduct expor t e a e t u a l l y exoeeded both f E u i t 4 f o r e s t r y produc t exyo r t a i n 1987. They measured U6$663 m i l l i o n , an i n c r e a s e of 22 p e r a e n t ove r t h e prev ious y e a r , )

The fo l lowing s e c t i o n s focua on t h e p i v o t a l a s p e c t s o f C h i l e ' s NTAE gr-h i n terms of p roduc t ion , marketing, f i nance and i n s t i t u t i o n a l developfient. A f i n a l s u c t i o n focuses on t h e s e c t o r ' o f u t u r e i nc lud ing s t r a t e g i c ad jus tments , expaneion of t h e f o r e s t r y and f i s h produc ts aubsec tore and p o s s i b l e r o l e e f o r A.1.D.

III PRODUCTION

Chi le has been a producer and e x p o r t e r of deciduous f r u i t s s i n c u t h e 1920s.* Growing c o n d i t i o n s i n Chi1.e a r e de sc r ibed a s s i m i l a r o r s u p e r i o r to t h o s e i n C a l i f o r n i a -- many of t h e same f r u i t s a r e grown -- and growers, wi thout a g r e a t d e a l of technology o r e f f o r t cou ld o b t a i n good y i e l d s from year to y e a r from t h e i r app le , pear , p lum and peach p l a n t a t i o n s . During t h e 1960o, however, l a r g e l y a s p a r t of t h e g l a n s f o r land reform, t h e government undertook s e v e r a l p roduc t ion- re la ted i n i t i a t i v e s t h a t have s i n c e l e d t o impor tan t t e c h n i c a l advances. Two of t h e most impor tan t o f t h e s e i n i t i a t i v e s were t h e complet ion of a s e r i e s of l and use s t u d i e s and t h e e s t ab l i shmen t of a t e c h n i c a l s t udy exchange program known as "Ch i lwCa l i f o r n i a " . The l and u se s t u d i e s c l a s s i f i e d app rop r i a t e p roduc t ion o p t i o n s on a r e g i o n a l b a s i s accord ing t o s o i l , water , climate and o t h e r condi t ions . These s t u d i e e s e rved a8 a s t a r t i n g p o i n t f o r a v a r i e t y of new p r o j e c t s a t t h e time and a s r e f e r e n c e p o i n t s f o r new e f f o r t s i n t h e 1970s and 1980s. The "Chi le-Cal i fornia" program, which involved longterm, p r a c t i c a l s t udy exchanges -- many o f which were i n connect ion wi th t h e Un ive r s i t y of C a l i f o r n i a a t Davis -- r e ~ u l t e d i n t n e educa t ion a f a s i z e a b l e c a d r e of exper ienced Chi lean agronomist^ who e v e n t u a l l y r e t u r , ~d t o Chi le t o work. Today t h e s e agronomists , through t h e i r work a t C h i l e ' s u n i v e r s i t i e s , and d i r e c t l y i n government and bus inese p o s i t i o n s , have a s i g n i f i c a n t p o s i t i v e impact on t h e a g r i c u l t u r a l s e c t o r ' s p roduc t ion technology and e f f i c i e n c y l e v e l s .

* Nat iona l Soc i e ty of Agr i cu l t u r e O f f i c e r s r e p o r t t h a t app lea were f r e - quent ly ' shipped above decks ts New York, u sua l l y s u r v i v i n g t h e t h r e e or f o u r week journey i n s t i l l marketable condi t ion .

IV. J-4

A f u r t n e i direat: reeul,r, o; t h e a g r a f i a n reforin noted by aome eaonomist-a has becan pfoduuegs' vigotoust sea toh L'oE' ir lereased yiehda a s a r ead t i on Lo w'cnduations In farm s i z e bWaud9 of Land r'eform. 'Chis sea rah has t e y o r t s d l y Led t o Rhe r ap id , m o c e s a f u l adopt ion of new tsalmoloqicas and t~o indraaein.yly open at'CLtuded t,owinrri more a d ~ 6 n d e d approauIiee, Suah dtlange hn a t t i t u d e i s ilaerwd t o have a m u l t l p l i e l ' e f f e a t In Chile bedause of t h e f amer s l ' y aad t ioe of aapy lnq t h e i r rd.crhbote ' m thode .

P a r t l y a s a ~ t w \ . l l t O € t h e fatltora just desa r ibed and p a r t l y because of t h e ncawly nupyorted e n t r e p r m e u r l a l d t i v e i n t h e a g r i c u l t u r a L Beator , produdt ion hae d e c e n t r a l i z e d Ln Chi le . Fror, t h e c o u n t r y ' s middle xegion, producjkion has branuhnd o u t t o t h e r e l a t i v e l y a r i d , des+=r t* i ike no r th and t o tho mote f e r t i l e noireh, wi th aypxopr ia te tachno1 o g i w and c r o p sela?tlc*rl In each c a s e l e ad inq t o oxtrarordinary c e s u l t e inclucl 'ng t h e prodttr:lion of takPL0 qrapee to t h e no r th and b e r r i e e and moot o t h e r b m ? , t 3 and vege t ab l e s t o t h e oaut!~ . The entrcs- y reneurs who led t h e way included p rev ious f r u i t and vege tab le producers and importer^, as well a s some i n d u s t r i a l i n t v who saw i n acfr ibueinees a s a f e t a x havon i n added land , val.ue and an oppo r tun i t y t o ea rn Foreign exchange.

Anotllisr i n p ~ r t . ~ ~ n t sou rce of p r o a ~ c t i o u t.echnoloqy and its a p g l ~ c a t i o n has bean t h e t r a d i n g companies mentioned above. These companies employ tulL-t ime agronomists, i nc lud ing Loreijrr p e r n o m e l , t o look a f t e r and .improve tJre p l a n t a t i o n s fcom which t h e i r expo r t c rops come. AdditionalLy, thmix t r a d e gu.ild, t h e Expor t e r ' s Assoc ia t ion , a l s o eq$oys t e c h n i c a l personne l f o r t h e s p e c i f i c purpose of ensu r ing t h a t c rop c u l t u r a l pract icers --. p a r t i c u l a r l y t h e u se of f e r t i l i z e r e and p e n t f c i d a s -- comply wi th requiremeaits f o r e n t r y t o f o r e i g n markets. These agronomists , t o g e t h e r with ~ t h e r o from both bus ine s s and government, a r e con t inua ls ly improving t h e i r s k i l l s by t a k i n g cou r se s and a t t e n d i n g seminars t h a t are provided a t t h e univercrltiaca ( p r i m a r i l y Univer- s i d a d de Ch i l e and Univers idad c a t 6 l i c a cie C h i l e ) and, a t o t h e r i n s t i t u t i o n s such a s Fundaci6n Chi le (See below). TM! p e r t i n e n t course w ~ r k ranges from methods f o r the i n txoduc t ion of new c rop v a r i e t i e s t o complex, i n t e g r a t e d p e s t management programs.

Desp i te many of t h a counf r y ' s t e c h n i c a l t r a n s f e r successeo, i n t h e broad a r e a of c rop reeearch , ChiJ-e r epo r t ed ly has n o t been adequa te ly organ ized to e f f e c - t i v e l y manage r e q u i s i t e programs. A World Bank 5@udyL/ on t h 9 s u b j e c t found t h a t C h i l e ' s o v e r a l l r e s e a r c h plarining was weak and t h a t m e t r e s e a r c h c l r ~ a t p u b l i c and p r i v a t e r e s e a r c h i n a t i t u t i o n s were o v e r l y autonomous and d i d n o t g e n e r a l l y coo rd ina t e t h e i r a c t i v i t i e s . It waa a l s o found t h a t most o f t n a advances I n f r u i t c rops and horticult!xrsi could be t r a c e d t o im;?orted technol - ogy -- l a r g e l y because of i ts ready a v a i l a b i l i t y and C h i l e ' s a b i l i t y t o adopt such technolggy w i th e a r l y , p r o f i t a b l e r e s u l t s . F i n a l l y , t h e s t udy found t h a t a p r i c u i t u r a l ex tena ion waa baaical.1.y de tached Erom r e sea rch a c t . i v i t i e s acd t h a t technology e r a n e f e r pe r tonmnce was n o t s a t i s f a c t o r y , Th6sse b,m-tcom.tngtd

Eduardo V&nnrl.&n, Chi l e and t h e CGIAR Cente rs r A Study of t h e i r Co l l abo ra t i on i n ~ ~ r i c u l t u r h l Research, Apr i l , 1987. - -

IV. J-5

have been Laryely a f f e a t e d by pg iva re Eieatur innovation, but: the Ladk of e f f e a t i v e r e sea rah and ex t ens ion on a i lakional ecjah dould have hepei~ctueslone aa inureased p a e t iridjdenae oclcurs *= ~ 3 . g . ~ red ayi4er LhEeetatioris ~n apyhe ordharcls, Thexe may ale(> be an oppor tun i t y aost a e e o a i a t s d wi th t h e f a i l u r e t o adequate: y develop and d i sesmina te new v a r i e t i e s a 1 4 uultut'al prar.cioea tor t h e nex t genera t ion of Prl;it;s and vegtltable prorluc~te.

4s augqestwl, Chi le ' a a g r i o u l t u r a l expor t rnarketi rig p r o f i l e has been dominated by t r a d i n g cmyan iee . Most of t h e s e were formed a f t e r 1975, al though t h e Largest f i rm waa astabliolhed much e a r l i e r . The expo r t t r a d i n g companiea a r e s a s e n t i a l l y s e r v i c e Sirma t h a t l i n k producers t o expol% markets by aseembling t h e i r p roduc t ioc , providing Eor t e c h n i c a l a s s i s t a n c e and packing, and c a r r y i n g ou t a l l necessary a a t i a n s t o get produc ts t o fo re jgn buyera , t o s ecu re payment and t o make payment t o t h e producer . (Payment8 a r e made n e t of clommiseiona for broke r s abroad and for t h e t r a d i n g company itsell -- usua l l y averag ing L O p e r c e n t of t he F.O.B. value f o r each of t h e s e two p a r t i e s . 1 The p r o v i ~ i m of t h e s o key farm-to-market s e r v i c e s almotat always a l a o i nc ludes financino. by advances which are l a t e r recovered a g a i n s t shipments,

The t r a d i n g cartyaniea t ake a v a r i e t y of forme. The major c a t e g o r i e s a r e j o i n t ven tures i nc lude f o r e i g n and Chi lean p a r t n e r s t wholly owned f o r e i g n f i n n e which o f t e n d i r e c t l y purchase and produce expo r t o rops f o r t h e i r own accountr wholly-cmned Chi lean f i n n s t produce-exporter conniortiar and coopera t ives . These e n t , i t i e s u sua l l y v i s i t c i t h and a r r ange t o market f o r a cons ide rab l e number of growers of a s p e c i f i c crop o r crops. Arrangements may f d u d e programmed t e c h n i c a l a s s i c ~ t a n c e , thcoughput c o n t r a c t s , and packing and sh ipp ing l o g i s t i c s , a s w e l l ae terms f o r money and in-kind advances. Terms of p roduc t s a l e a r e u sua l l y worked o u t 5y t h e t r a d i n g company depending upon t h o p a r t i c u l a r market. I n gene ra l , s a l e s i n t o t h e G.S. (which purchases over 65 p e r c e n t of Chi le ' s f r u i t en,port s 1 are ~,%omplished through f u l l consignment# sales i n t o Europe a r e uaua1,ly based on minimum guaranteed p r i c e l e v e l s ) and s a l e a i n t o Japan, a r e l a t i v e l y new market f o r Chile, a r e ueua l l y based on f i x e d p r i c e s .

Marketing e f f o r t s i n C h i l e have been supported and s t i m u l a t e d by bo th gov- ernment and p r i v a t e s e c t o r o r g a n i z a t i o n s i nc lud ing , p r imar i l y , PROCHILE, Fundaci6n Ch i l e and The Expor t e r ' s Associat ion. These i n s t i t u t i o n s , de sc r ibed below, have p layed key roles i n o b t a i n i n g markst in format ion and f n t e l l i g o n c e ) i n promoting Chi lean p x d u c t a abroadr and i n e s t a b l i s h i n g programs to h e l p eneure q u a l i t y c o n t r o l and compliance wi th market ex igenc ies . They have u s u a l l y coord ina ted t h e i r e f f o r t s w i th t h e t r a d i n g companiea and wi th pro- ducers . A measure of t h i e coo rd ina t i on is Q l i l e ' s p r e s e n t n e g o t i a t i n g approach f o r e n t r y i n t o t n e Japanese markutr each o f t h e i n s t i t u t i o n s men- t i oned , t o g e t h e r wi th t r a d e r and producer r e p r e s e n t a t i v e s , have, been p r e s e n t i n t h e t r a d e nego t i a t i ons . F i n a l l y , t h e s e i n s t i t u t i o n s have bosn i n s t rumen ta l i n f o a t s r i n g i n Chile t h e development of a p o e i t i v e , informed a t t i t u d e toward a g r i c u l t u r a l expor t s .

IV. J-6

Xn addi t ion t o Chile 'a e f f o r t s t o e n t e r new markets, including Japan, China and Korea, t r a d e r s and producers a r e introducing l e s s t r a d i t i o n a l produots i n t o t h e i r markot of fer ing . These include asparagus, blackberries , blue- b e r r i e s , raspberxles, s trawberrieo, avocadoes, and, more recent ly , t h e chirimoya f r u i t . These items a r e expected t o benef i t from the same pre- channeling t h a t helped t o enable Chi le ' s successful introduction and marketing eevera l years ago of k i w i f r u i t . Pre-channeling, the r e s u l t of C h i l e ' s long experienae with apples, qrapes, pears and peaches, now includes an exce l l en t name i n fore ign marke t p laces? a well developed and broad-based broker net- work? and state-of- the-art experience i n s tandardized packing, t r a n s p o r t and storage.

V. FINANCE

Financing f o r t h e growth of Ch i l e ' s a g r i c u l t u r a l exports has come i n p a r t from government and from t h e p r i v a t e banking s e c t o r , p r i n c i p a l l y f o r in f ras t ruc - t u r a l investment such a s p lan ta t ion , pre-cooling and packing p l a n t e s t a b l i s h - ment. More o f t e n than not , such f inancing or ig inated i n loans from t h e mult inat ional banks, e s s e n t i a l l y the World Bank ( IBRD) and the Interamerican Development Bank ( I D B 1. But t h e key source of ongoing operat ing c a p i t a l f o r t h e industry has been t h e t r ad ing companies. In turn , these companies have obtained advances from par tner8 and brokers abroad -- o f t e n f o r over 50 percent of t h e amounts a c t u a l l y advanced t o producers -- a s each p a r t y s t r i v e s t o ensure a regular , t imely supply of q u a l i t y product.

In conjunction with i t s land use s t u d i e s and agra r i an reform programs i n t h e 1 9 6 0 ~ ~ t h e Government, through i ts Development Corporation (CORFO) provided crop-specif ic f inancing and c r e d i t t h a t enabled t h e s tar t -up of a l a rge number of new p lan ta t ions and improvements i n e x i s t i n g farms. A sharp decl ine i n Ch i l e ' s economy toward t h e end of t h e decade and i n t o t h e e a r l y 1970s, combined with continued government in tervent ion and regula t ion of ag r i cu l tu re , r e su l t ed i n growing farm lossess and general i n a b i l i t y t o repay debts. After t h e new governman: took power, CORFO again provided i n f r a s t r u c t u r e c r e d i t , p a r t i c u l a r l y f o r t h e reestablishment of farms t h a t had de te r io ra ted through t h e period. A s a r e s u l t , producers now a r e heavily indebted and cannot c o l l a t e r a l i z e f u r t h e r borrowings. They the re fo re v i r t u a l l y depend upon t h e t r a d i n g companies f o r t h e i r operat ing c a p i t a l . From a l l accounts, it appears t h a t t h i s dependency is, f o r t h e most p a r t , sa lu tary . The t r a d e r s know b e s t what t h e market wants and how b e s t t o s e l l t h e producers' crops. When they advance monies it is f o r t h e purpose of securing t h e r i g h t q u a n t i t i e s and q u a l i t y of product. I f t h e producer complies he can usually expect add i t iona l advances. I f he f a i l s t o comply he may l o s e h i s source of working c a p i t a l . In consequence, a t one and t h e same time producers a r e constrained t o provide what the- market demands while obtaining M e c r e d i t t h a t must have f o r t h e i r operat ions.

The t r ad ing companies, themselves, have usual ly b u i l t t h e indus t ry ' s f r u i t packing and pre-cooling p l a n t s with f inancing from COKFO through IDB, IBRD and o the r f a c i l i t i e s . In many ins tances these p l a n t s have excess packing and holding capacity and thsy a r e pe r iod ica l ly leased t o smaller t r ad ing companies o r producers by t h e l a r g e r t rading companies.

IV. J-7

The r o l e of t h e commercial banks has been b a s i c a l l y t h e same a s i n a l l o t h e r coun t r i ee t t h e banks have been h e s i t a n t t o f i nance new a g r i c u l t u r a l under- t ak ings because of t h e h igh r i s k . When they have p a r t i c i p a t e d i n such f i nance , t h e y have u s u a l l y r equ i r ed excess iva amounts of s e c u r i t y and r a r e l y accepted pro jso t -genera ted c o l l a t e r a l such a s f i e l d crops, r ece ivab le s , equip- ment, e.tc. Also i n Chile, a s elsewhere, t h e commercial banks have r e c e n t l y experienced two oppooi te phenomena, n e i t h e r of which was a t a l l conducive t o f i nanc ing ag r ibus ines s . The f i r s t was a f i n a n c i a l c r i s i s i n t h e e a r l y 19808, whiah l e d t o t h e f a i l u r e of a number of banks and i ' inancial i n ~ t i t u t i o n s . The second has been an economic boom i n t h e aeoond h a l f of t h e 1980s t h a t has o f f e r ed up less r i s k y , more immediately p r o f i t a h l e loan o p p o r t u n i t i e s t h a n ag r ibus ines s .

There have been, i n a d d i t i o n t o t hose c i t e d , a v a r i e t y of o t h e r f i nanc ing sources f o r a g r i b u s i n e s s i n Chi le , ranging from coopera t ives t o f o r e i g n inves to r s . One of t h e more i n t e r e s t i n g sources has been LAAD ( L a t i n Alnerican Agribusiness Development Corporat ion) which has been lending and i n v e s t i n g i ts own r e sou rces i n Ch i l e f o r over t e n years . A s i n d i c a t e d elsewhere i n t h i s c ros s - cu t t i ng eva lua t ion , LAAD l ends A . I . D . funds f o r ag r ibus ines s i n Cen t r a l America and i n t h ? Caribbean. LAAD has i n v e s t e d n e a r l y $12 m i l l i o n i n t h e count ry i n a g r i b u s i n e s s e s t h a t inc lude f r u i t and vege tab le product ion and expor t s , f o r e s t r y products , and f i s h c u l t u r e . The company is a l s o completing its f i f t h swap of deb t f o r equ i ty .

Debt-equity swaps have been a major f a c t o r i n t h e r educ t ion of C h i l e ' s f o r e i g n d e b t over t h e p a s t t h r e e years . (There have been n e a r l y ~ ~ $ 4 . 0 b i l l i o n i n such t r ansac t ions . And a s i n t h e c a s e of LAAD, many of t h e swaps have involved ag r ibus ines s e q u i t i e s . A s one in te rv iewee noted, t h e s e swaps would no t have occurred i f t h e p r i n c i p a l s d i d no t s e e long-term b e n e f i t s from i n v e s t i n g i n Chilean ag r ibus ines s , e s p e c i a l l y i n t h e expor t s e c t o r .

On t h e f o r e i g n investment s i d e , i n a d d i t i o n t o t r a d i t i o n a l U.S. and European p a r t i c i p a t i o n i n Chi le , it is i n t e r t e s t i n g t o no t e t h a t Japanese i n v e s t o r s are now coming t o Ch i l e t o pursue i n i t ? a t i v e s i n t h e f o r e s t r y and f i s h product i n d u s t r i e s . This i nc ludes investments i n r e sea rch a s we l l a s commercial product ion.

VI. INSTITUTIONAL DEVELOPMENT

The key p u b l i c and p r i v a t e i n s t i t u t i o n s t h a t have played p i v o t a l r o l e s i n Ch i l e ' s NTAE development are C O W 0 and PROCHILE f o r t h e government and, f o r t h e p r i v a t e s e c t o r , t h e Expor t e r ' s Assoc ia t ion and t h e Nat ional A g r i c u l t u r a l Soc i e ty (SNA). P, f i f t h entl , ' ;y, Fundacion Chile , is a non-profi t j o i n t ho ld ing of t h e governmefit and ITT. Other i n s t i t u t i o n s t h a t a r s p l ay ing i n c r e a s i n g l y impor tan t r o l e s i nc lude t h e Min i s t ry of Agr i cu l tu re , u n i v e r s i t i e s , and t h e I n s t i t u t o Nacianal de Investigation Agricola ( X N I A ) , which ope ra t e s s i x r e g i o n a l a g r i c u l t u r a l r s s e a r c h c e n t e r s .

A s suggested i n t h e fol lowing remarks, t h e f i v e i n s t i t u t i o n s descr ibed have

IV. J-8

been charac ter ized by t h e i r u l t imate commonality of purpose, t h e i r profes- sionalism, and t h e i r general a b i l i t y t o coordinate ac t ions i n support of a g r i c u l t u r a l exports.

1. CORFOt CorporaciSn de Fomentor This is t h e Chilean Government's economic development corporation. CORFO was instrumental i n t h e design and exe- cut ion of a f r u i t export development program t h a t included the completion of l a d use s t u d i e s and t h e establishment of an agranomics t r a i n i n g exchange program with Cai i fornia . CORFO a l s o channeled government and i n t e r n a t i o n a l lending agency funds f o r p r o j e c t f inancing of t h e expor t a g r i c u l t u r e sec tor . I t continues i n t h i s r o l e today. Its experience i n t h e a rea of agr ibus iness f inance has l ed t o t h e establishment of p r o j e c t lending guidel ines t h a t c lose ly match t h e t r u e needs and p o t e n t i a l s -- tenors , grace periods, ref inancing, col latxir izat ion, e t c . -- of t h e export sec to r . And it can be counted upon t o respond quickly t o new i n i t i a t i v e s and needs a s t h e s e c t o r advances i n t h e fu tu re .

2. PROCHILEa ~ i r e c c i 6 n de Promoci'on de Exportacionesr This is Chi le ' s - export promotion d iv i s ion of t h e Foreign Ministry. The d iv i s ion ' s a g r i c u l t u r a l department, which coordinatei i ts ac t i ; i t i e s with p r i v a t e s e c t o r e n t i t i e s , f o c u ~ e s on improving oppor tuni t ies i n e x i s t i n g markets and on developing new markets, most recent ly i n Asia. Through i t s d i f - f e r e n t in te rna t iona l o f f i c e s and Chile's consular s t a f f s abroad, PROCHILE searches f o r new t r a d e oppor tun i t i e s and leads t h e way i n t r a d e negotia- t ions . Its personnel a r e se lec ted on t h e b a s i s of p r i o r t r a i n i n g and experience i n t h e a rea of i n t e r n a t i o n a l t r ade r through PROCHILE these personnel rece ive add i t iona l t r a i n i n g including course work abroad. PROCHILE has been instrumental i n el iminating bureaucrat ic export proce- dures and r e s t r i c t i o n s . I t cons i s t en t ly coordinates i t s a c t i v i t i e s with o the r pub l i c and p r i v a t e s e c t o r e n t i t i e s a s w e l l .

3. Asociaci'on de Exportadores de C h i l e , A.G.8 The Exporter 's Association, although o r i q i n a l l y formed i n 1935 t o represent - a l l exporters , has - evolved, e spec ia l ly s ince 1975, i n t o a grouping of 53 members, 52 of which a r e f r u i t export t r ade companiss. The Associat ion 's modern ra ison d ' e t r e re l t i tes t o its r o l e i n f inding solueions t o export problems ranging from perceived r e s t r i c t i o n s a s t h e r e s u l t OF USDA marketing orders, t o inade- quate a i r t ranspor t . To help a l l e v i a t e bott lenecks and negot ia te on obs tac les , t h e Association r e t a i n s counsel i n t h e U.S. and conducts an ongoing lobbying program. It a l s o seeks t o promote f r u i t expor ts through a pub l i c r e l a t i o n s e f f o r t f o r which it has engaged a spec ia l i zed f i rm i n t h e U.S. The Association is d i r e c t l y invoL;red, a s w e l l , i n t h e USDA/ APHIS-authorized pre-clearance inspect ion program i n Chile. I n addi t ion , t h e Association has begun t o c a r r y out its own q u a l i t y con t ro l program f o r i n t e r e s t e d members. The program is conducted j o i n t l y with t h e Universidad ~ a t b l i c a de Chile and has already resu l t ed i n t h e issuance of a l a r g e number of approval s e a l s f o r grapes, peaches, nectar ines and plums. The Awocia t ion is working c lose ly with PROCHILE on new i n i t i a t i v e s f o r f r u i t expor ts t o Japan, including t h e development of a quarantine program f o r

IV. J-9

f r u i t f l y e radica t ion . (Chi le has f r u i t f l y incidence i n only one northern region where l i t t l e f r u i t is a c t u a l l y grown, but Japan requ i re s t h a t t h e country be e n t i r e l y f r e e of f r u i t f l y before it can commercially export f r u i t t o t h e Japanese markets. )

The Association, which employs 25 persons fu l l - t ime, is se l f - sus t a in ing , with income from members' dues ( equ iva len t t o us$5000/yr f o r many members) and from q u a l i t y con t ro l se rv ices , o t a t i s t i c a l repor t ing and market p r i c e and information se rv ices , a s wel l a s o the r a c t i v i t i e s such a s t h e estab- lishment of t h e quarantine program.

4. National Agr icu l tu ra l Society (SNA)r This 150-year o ld farmers' organ- i z a t i o n repor tedly represents growers of ovsr 70 percent of Chi le ' s marketable produce. Its purpose i s t o defend farmers' i n t e r e s t s , g r i n - c i p a l l y by helping t o ensure a f r e e market economy and pub l i c adherence t o farmers' r i g h t s t o property. SNA executives serve a s in termediar ies between growers and government on p o l i c y and program i s s u e s by p a r t i c i - p a t i n g a c t i v e l y i n o f f i c i a l a g r i c u l t u r a l commissions, prepar ing production and marketing s tud ies , and formally present ing t o t h e government, i n wr i t ing , t h e p o s i t i o n s of t h e membership. SNA a l s o i s s u e s monthly publications on farm technology, economics, market news and ana lys i s , and on t a x and l e g a l i s s u e s t h a t concern farmers. It opera tes a r a d i o network t h a t provides market news a l d o t h e r information a s w e l l . It opera tes its own experimental s t a t i o n and a s e r i e s of secondary schools t h a t t r a i n s tuden t s i n agronomy and farm administrat ion. F ina l ly , SNA sponsors and adminis ters t h e In te rna t iona l F a i r of Santiago (FISA), one of t h e world 's important annual a g r i c u l t u r a l events. SNA employs over 400 persons and is s e l f - sus ta in ing with primary income derived from i t s FISA sponsorship. Its e n t i r e membership i s aware of t h e importance of a g r i c u l t u r a l expor t and SNA genera l ly coordinates i t s information and program disseminat ion a c t i v i t i e s with t h e o the r key i n s t i t u t i o n s mentioned herein.

5. Fundacian Chi le (FC) I T h i s non-profi t foundation was s t a r t e d j o i n t l y by t h e government and ITT i n 1974. Each p a r t y contr ibuted t h e equivalent of ~ ~ $ 2 5 mil l ion. The ITT share was recognized from a s s e t s t h a t had been expropriated r o m t h e company by t h e previous government. FC's o r i g i n a l mandate was t o help achieve broad technology t r a n s f e r . By 1979, however, p a r t i c u l a r l y i n l i g h t of t h e need t o so lve obs tac les t o successfu l a g r i c u l t u r a l export , it began t o focus p r imar i ly on t h i s sec to r . S taf fed by over 60 profess ionals , it has undertaken p r a c t i c a l research and t ransmi t ted r e s u l t s through seminars, demonstration p l o t s , and p r o j e c t t echn ica l a s s i s t ance . It has s t a r t e d and "gone publ ic" ( s o l d sha res ) with i t s own farming and a g r i c u l t u r a l export opera t ions and has l e d the way i n r isk-taking on new products such a s asparagus, b e r r i e s and, more recent ly , salmon farming. FC has e s t ab l i shed voluntary q u a l i t y con t ro l progranrr f o r expor t t r a d i n g companies and its logo s e a l is recognized and respected i n Europe and t h e U.S. It enjoys a high degree of c r e d i b i l i t y i n both t h e pub l i c and p r i v a t e sec to r s . Recently, FC has operated a s a subcontractor on A.1.D.-funded p r o j e c t s i n E l Salvador and Bolivia, where it provides

IV. J-10

those countr ies t echn ica l a s s i s t ance i n export marketing and a g r i c u l t u r a l planning i n genttral. FC, l i k e t h e o ther p r i v a t e e n t i t i e s described above, is se l f -sus ta in ing with over 60 percent o f i ts operat ing revenue derived from se rv ice income and commercial operat ions. The balance of its oper- a t i n g revenue der ivas from i ts endowment income. FC profess ionals a r e performance-evaluated! on a monthly b a s i s and a r e general ly not awarded tenure. A s one off l ic ia l pu t i t t "We opera te t h e Foundation l i k e a business." A s with each of t h e o the r i n s t i t u t i o n s mentioned here, FC coordinates its a c t i v i t i e s wherever poss ib le with t h e others! it is usual ly present i n a l l new a g r i c u l t u r a l t r a d e i n i t i a t i v e s .

According t o some economists and agronomists, Ch i l e ' s production progress could r e s u l t i n a doubling of output over t h e next f i v e years. Y e t , faced with growing competition from other countr ies and faced with t h e spec te r of t r a d e b a r r i e r s i n some t r a d i t i o n a l markets, t h e r e may be no "home" f o r p a r t of t h e add i t iona l output , except a t unprof i table pr ices . Charac te r i s t i ca l ly , interviewees have responded t o t h i s f u t u r e challenge by noting t h a t t h e country, through its p r i v a t e sec to r , w i l l make s t r a t e g i c adjustments. Thus, i f Central America d isplaces Chile from f r e s h asparagus markets, then Chile w i l l sh ip dehydrated o r frozen or canned asparagus. I f grapes a r e no longer going t o be a s p r o f i t a b l e , then Chileans w i l l switch v a r i e t i e s and produce r a i s i n s instead. And i f apple quotas a r e r a i s e d i n Europe, then Chi le w i l l process t h e apples and s e l l apple ju ice concentrates, e t c . In t h e meantime, Chilean entrepreneurs w i l l work on developing and marketing o ther f r e s h f r u i t s and vegetables, including b e r r i e s , chirimoyas, endives, and new hybrids of t r a d i t i o n a l f r u i t s .

C h i l e ' s moves i n t o a reas such a s processing w i l i probably be expensive, but can be expected t o pay off handsomely i n t i m e i n m?.ch t h e same fashion a s d i d t h e e a r l y investments i n f r u i t p l an ta t ions and packing p lants . What is important is t h e country's wil l ingness, even eagerness t o a d j u s t and adapt t o f u t u r e market parameters. Chile can be expected t o remain a majar p layer i n world agr ibus iness t r ade f o r t h e foreseeable fu ture .

Also on t h e horizon f o r Chile a r e vas t increases i n i ts wood products and f i s h products exports. Wood products expor ts already exceed ~ ~ $ 5 0 0 million! and f i s h product exports a r e near ~ ~ $ 7 0 0 mill ion. Both a r e growing a t a r ap id pace with expanding markets i n t h e U.S. and Asia. (Ch i l e ' s salmon farming "fever" is expected t o c a t a p u l t t h e country i n t o second o r t h i r d p lace a s a world exporter of t h e product within t h e next t h r e e years.) Progress I.n t h e s e two a reas should be s tudied by Ecuador and by CBI coun t r i e s , some of which a l s o have abundant f o r e s t and f i s h resources and resource po ten t i a l s .

A.I .D. , f o r its p a r t , has j u s t returned t o Chi le and is i n an e x c e l l e n t p o s i t i o n t o examine f i r s t hand t h e country's crop d i v e r s i f i c a t i o n and expor t successes and problems. In s o doing, it can provide ongoing guidance t o and help develop f o r o ther A.I .D. o f f i c e s t h e types of programs and p r o j e c t s t h a t

IV. J-11

w i l l l ead t o more e f f e c t i v e CD/NTAE e f f o r t s elsewhere. Spec i f i ca l ly , USAID/ Chile can serve a s a l i a i s o n between A.1.D.-supported countr ies and p r o j e c t s and appropr ia te i n s t i t u t i o n s and f irms i n Chile.

V I I I . NOTgS ON PRE-IlJSPECTI3N AND FWUGA'l'ION

Pre-Inspection

USDA/APHIS began i n 3.980 t o conduct USDA pre-inspection i n Chile f o r apples and pears . USDA personnel inspected f r u i t s a t t h e a i r p o r t and p o r t of e x i t , r e l eas ing only t h e product t h a t was f r e e of s p e c i f i c p e s t s not permissable i n t o U.S. t e r r i t o r y . .The success of t h e program l e d t o an agreement between t h e A s o c i a c i h de Exportadores, USDA and Minis ter io de Agricultura t o increase its number of boxas and type of products inspected i n Chile. During t h e 1987- 1988 season, 27 d i f f e r e n t products were inspected f o r a t o t a l of 4.5 mi l l ion packages. The 8 USDA inspectors ' s a l a r i e s , benef i t s , mode of t ranspor ta t ion , inspect ion centers , a s w e l l a s SAG (Servic ios ~ g r l c o l a s y Ganaderos), USDA's counterpar t f o r t h e program i n Chil.e, a r e financed by t h e members of t h e Asociaci6n de Exportadores de Chi le A.G. (The budget f o r t h i s se rv ice is approximately $300,000). During inspect ion a t t h e a i r p o r t o r s e a p o r t s , USDA inspectors and severa l SAG inspec to r s a r e present t o inspec t and s e a l t h e product. The SAG inspectors were t r a i n e d through t h e years by USDA and, as a r e s u l t , only 8 USDA inspectors a r e s t a t ioned i n Chile during t h e season.

B. Fumigation

Grapes and s tone f r u i t s (peach, nectar ine , plum, a p r i c o t ) have t o be fumigated t o be admissable i n t o t h e U.S. Fumigation can e i t h e r be conducted a t t h e country of o r i g i n o r a t a U.S. p o r t of ent ry . The process of fumigating f r u i t s f o r export i n Chile began i n t h e mid-1970's. By 1979 an agreement was reached between t h e A s o c i a c i h de Exportadores, Minis ter io de Agricultura and USDA/APHIS t o e s t a b l i s h fumigation chambers under USDA regu la t ions and super- vision. I n 1985, approximately 30 t o 32 percent of a l l grapes were fumigated i n Chile and by t h e 1988 season, 70 percent of t h e qxapes were fumigated i n 74 d i f f e r e n t chambers throughout t h e country. Chile has became s o spec ia l i zed and soph i s t i ca ted i n its fumigation methods t h a t SAG conducts a l l of t h e on-si te work and supervision alone. ( A USDA inspector is not required t o be present during fumigation.)

USDA/APHIS is very a c t i v e i n a s s i s t i n g Chile i n t h e e rad ica t ion of t h e f r u i t f l y . There a r e 9,000 t r a p s a l l over t h e country which a r e checked on a weekly b a s i s during t h e season f o r any poss ib le f l y . Af ter 1980, Chile was s a i d t o be f r e e of t h e f r u i t f l y except f o r region No. 1 which is t h e north a r e a bordering PerG. USDA/AeHIS and Ministry of Agriculture a r e a c t i v e l y working t o e r a d i c a t e t h e f r u i t f l y from t h i s region. (Japan requ i res t h a t t h e whole country be f r e e of t h e f r u i t f l y before accepting t h e import of Chilean f r u i t s . 1 In 1983, t h e r e was ra infes t i r t ionr one f l y was found i n a t r a p and an e n t i r e program of e rad ica t ion and quarantine was implemented includingr

IV. J-12

1. c u t back of f r u i t t r e e s , 2. s o i l fumigation, 3. a e r i a l fumigation.

This p lan of ac t ion quickly eradica ted any f u r t h e r in fes ta t ion .

The following i s a comparable pub l i c s e c t o r a g r i c u l t u r e organiza t ional c h a r t f o r t h e U.S. and Chile.

U. S. - Chile - Department of Agriculture (USDA) = Ministerio de l g r i c u l t u r a

APHIS - - S.A.G. Protect ion & Plant Quarantine (PFQ) = ~ i v i s i 6 n de Rotecc i6n Agrlcola

\ These organiza t ions work together , in publishing regula t ions t o meet standards f o r t h e U.S. , European and Japanese markets.

IX . LESSONS TO BE LEUWED FROM CHILE I

Chile has enjoyed a number of key advantages t h a t have enabled it t o success- f u l l y produce, d i v e r s i f y and export f r e s h f r u i t s and vegetables as w e l l a s t o overcome a s i g n i f i c a n t disadvantage, namely, d is tance from world markets. Some of Chile ' s advantages a r e n a t u r a l , o t h e r s a r e "man-made". Together Lhey should serve a s useful lessons i n t h e conduct of CD/NTAE programs. They a r e l i s t e d below i n r e l a t i v e order of importancet

Growing condit ions s imi la r t o o r b e t t e r than those of Ca l i fo rn ia but with a harves t season which coincides with t h e U.Sa winter.

A clear-cut pol icy environment t h a t , s ince 1973, has encouraged production and export. Key p o l i c i e s have included a f r e e market exchange r a t e and low t a r i f f s . Concurrently, government has e s s e n t i a l l y el iminated proce- dura l bureaucracy f o r expor ts and t r i e d , wherever poss ib le , t o i n i t i a t e and f a c i l i t a t e new t rade oppor tuni t ies .

The emergence of Chilean export t r a d i n g companies, usual ly with fore ign p a r t n e r s o r a f f i l i a t i o n s . These companies have provided market informa- t i o n , t echn ica l a s s i s t ance and f inance t o grower/exporters.

Well-trained agronomists who spent a s many a s e i g h t yea r s studying and working i n h o r t i c u l t u r e a t u n i v e r s i t i e s i n Cal i fornia and who pu t i n t o p r a c t i c e e x i s t i n g land use s t u d i e s f o r crop d i v e r s i f i c a t i o n and propaga- t ion .

The emergence of a number of se l f -sus ta in ing i n s t i t u t i o n s t h a t could demonstrate t h e i r worth by solv ing problems and iden t i fy ing oppor tun i t i e s f o r growers and exporters.

IV. J-13

C h i l e ' s f o u r "man-made" advantages descr ibed above, can se rve a s g u i d e l i n e s f o r CD/NTAE p a r t i c i p a n t s and p r o j e c t s i n Cen t r a l America, t h e Caribbean and Ecuador. They a r e e l e g a n t i n t h e i r s i m p l i c i t y r Good Pol icy , Good Organiza- t i o n , Good Training.

Chi leans are proud of t h e i r accomplishments i n a g r i c u l t u r a l expor t and a r e more than w i l l i n g t o sha re t h e i r exper ience wi th o the r , l e s s developed na t ions . A.I.D. should t a k e advantage of i ts renewed presence i n Ch i l e t o formula te j o i n t programs wi th o t h e r Missions s o t h a t r e p r e s e n t a t i v e s from o t h e r h o s t c o u n t r i e s can l e a r n more about C h i l e ' s "man-made" advantages and hopefu l ly make t h e s e t y p e s of advantages t h e i r own.

IV. J-14

A c r o n y m d A b L r e v i a t i o n s

I. INTRODUCTION

PRODUCTION

A. T e c h n i c a l A s s i s t a n c e B. P e s t i c i d e s

IV. CREDIT

V. VOLUMES EXPOR!FED

M E X I C O

T a b l e 0% C o n t e n t s

A. 1 9 7 7 / 7 8 t h r o u g h 1 9 8 6 / 8 7 Seasons B. Fresh Products E x p o r t e d C. Po in ts of E x i t f r o m M e x i c o D. S t a t i s t i c a l R e v i e w E. A N o t e on Mexico's R e a c t i o n t o t h e C B I F. A N o t e on A. I .D . ' s M e x i c o P r o g r a m

VI. UNION NACIONAL DE ORGANISMOS DE PRODUClCORES DE HOR!CALIZAS Y FRUTAS (UNPH)

A. Production B. M a r k e t i n g C. L a b o r

V I I . LESSONS TO BE LEARNED FROM MEXICO

IV. K-I

P a g e

XV. K - i i

IV. K-1

1V.K-3 IV. K-4

IV. K-5

IV . K-6

IV. K-6 1V.K-7 I V . K-9 1V.K-10 IV. K-11 1V.K-12

IV. K-13 1V.K-14

A.I .D. AARC RANCOMEX CAADES

CBI CD EP A FDA GDP IBRD I DB INIFAP

ITESM m t NTAE PPQ SARH UNPH

USAID USDA

Agency f o r I n t e r n a t i o n a l Development Aaociaci6n de Agrlcolas d e l Estadu de Sinaloa Banco Nacional de Comercio Exter ior Confederaci6n de Asociaciones ~ g r h o l a s d e l Estado de Sinaloa Caribbean Basin I n i t i a t i v e Crop Divers i f i ca t ion Environmental Protec t ion Agency Food and Drug Administration Gross Domerjtic Product World Bank Interamerican Development Bank National Fores t ry , Agriculture and Livestock Research I n s t i t u t e The Monterrey Technical I n s t i t u t e of Nigher Studies metric ton Non-Traditional Agriculture Export Protect ion and P lan t Quarantine ~ e c r e t a r z a de Agricultura y Recursos H i d r a u i c o s uni6n Nacional de Organismo de Productores de Hortal izas y Frutas United S t a t e s Agency f o r In te rna t iona l Development United S t a t e s Department of Agriculture

MEXICO

X. INTRODUCTION

Mexico is the l a r g e s t exporter of f r u i t s and vegetables i n t o t h e U.S., f a r exceeding expor ts from Central American and Caribbean countriee. The h i s to ry of Mexico's development of exports of f r u i t s and vegetables t o t h e U.S. da tes back many years. Tomataes were being exported from Sinaloa i n t h e e a r l y 1 9 0 0 ~ , being shipped from Mazatlan t o Los Angeles by boat.l! Although small

I i r r i g a t i o n works had been b u i l t around t h e t u r n of t h e century, it was not u n t i l t h e constsuct ion of t h e Sinaloa dam i n 1954, which provided i r r i g a t i o n f o r 70,000 hectares , t h a t production began t o increase rapid ly . The Sinaloa D a m p r o j e c t W i i S followed by o the r s , including Lopez Matias, Miguel Hidalgo, and Diaz Ordaz, which wan inaugurated i n 1982 and which w i l l provide i r r i g a - t i o n f o r an add i t iond l 112,000 hectares.

The previous experience with growing vegetables, e spec ia l ly tomatoes, t h e a v a i l a b i l i t y of adequate i r r i g a t i o n , t h e l a r g e a rea of r e l a t i v e l y f e r t i l e land i n t h e Sinaloa Valley, and t h e nearness of a l a rge market i n t h e U.S., a l l provided an impetus t o produce f r u i t s and vegetables, e spec ia l ly f o r t h e export market. The only a rea i n t h e U.S. t h a t provided competition f o r t h i s wint..er market was South Flor ida which is sub jec t t o frequent , k i l l i n g f r o s t s . Consequently, t h e production of f r u i t s and vegetables began t o expand rap id ly

i during t h e 1950s and 1960~1, and by t h e 1986/87 season expor ts had reached almost 1.5 mi l l ion metr ic tons.

The purpose of t h i s sec t ion of t h e Agr icul tura l Crop Diversification/Export Promotion Cross-Cutting Evaluation is t o look more c lose ly a t some of t h e f a c t o r s t h a t were important t o t h e development of t h i s very l a rge export indus t ry and t o r e l a t e them t o t h e s i t u a t i o n i n Central America and t h e Caribbean I s l ands a s we l l a s Ecuador, where e f f o r t s a r e underway t o develop exports of non-tradit ional a g r i c u l t u r a l crops. For some of t h 6 countr ies , t h i s e f f o r t is undertaken i n order t o d i v e r s i f y from some of t h e t r a d i t i o n a l crops, especia l ly sugarcane and bananas, t o crops t h a t a r e more i n demand and which give higher r e tu rns t o the producers.

I I. PRODUCTION

Mexico has l a rge a r e a s of f e r t i l e lands t h a t have been provided with i r r i g a - t ion . This is espec ia l ly t r u e i n Sinaloa S t a t e which i n t h e 1986/87 crop season exported 721,000 m t of h o r t i c u l t u r a l crops, o r 49 percent of t h e t o t a l h o r t i c u l t u r a l expor ts i n t h e country (Table I). Over many years, land has been c leared , leveled, and di tched f o r i r r i g a t i o n and drainage.

CAADES, Sinaloa, Agricultura y Desarrollo, (Culiacan, Mexico, 1987).

A f e a t u r e t h a t immediately s t r i k e s one on t r a v e l i n g through the Sinoloa River Val ley is t h e l a r g e s i z e of t h e cuJ . t ivat ions . This g ive s t h e appearance of a small number of very l a r g e land owners. There a r e Dome l a r ~ e p r i v a t e holdinga ranging u? t o 5000 hec t a r e s . However, much of t h e l and is owned by amall- ho lde r s o r i s farmed by e j i d a t a r i o s * . The l ands a r e l eve l ed wi th l and p l a n e s i n o r d e r t o u t i l i z e s u r f a c e i r r i g a t i o n . Some farms a r e now us ing d r i p irri- g a t i o n systems i n s t a l l e d w i t h t h e assistance of I s r a e l i t e c h n i c i a n s who p io- neered t h i s form of i r r i g a t i o n . One producer wi th 100 has. of d r i p i r r i g a t i o n s a i d he was no t t o o happy wi th it because of maintenance prob.Lems.Certain c rops a r e d i r e c t seeded, e . g . , melons, cucumbers and beans. Others a r e grown i n groenhouses under c a r e f u l l y c o n t r o l l o d condition^ p r i o r t o being t r a n s - p l a n t e d i n t h e f i e l d s . Crops p r e - s t a r t e d t h i s way i nc lude tomatoes and va r ious t y p e s of peppers. Considerable amounts of l a b o r a r e r equ i r ed f o r t h e greenhouse ope ra t i on .

Because t h e f i e l d s a r e l e v e l and unobs t ruc ted , most fa rmers use a e r i a l spray- i n g t o c o n t r o l p e s t s on some c rops . Othors use l a r g e tractor-moui5ed o r backpack sp raye r s . F e r t i l i z e r s a r e app l i ed , botd by hand and by t r a c t o r equipment. Farmers u s ing d r i p i r r i g a t i o n can f e r t i l i z e and apply p e s t i c i d e s through t h e system.

Cxop r o t a t i o n i s p r a c t i c e d on some farms, wi th r i c e be ing t h e main a l t e r n a t i v e crop. This h e l p s break p e s t c y c l e s and bu i ldup of d i s ea se s .

A. Technica l Ass i s tance

Farmers o b t a i n advice from a number of sources , bu t mainly from t e c h n i c i a n s working w i th companies p rov id ing i n p u t s ( seed , f e r t i l i z e r s , p e s t i c i d e s , t r a c - tors, e t c . ) , from r e p r e s e n t a t i v e s of t h e va r ious a g r i c u l t u r a l a s s o c i a t i o n s t o which they belong, from t h e s e c r e t a r i a de Agr i cu l t u r a y Recursos ~ i d r & u l i c o s (SARH), from r a d i o programs, and Prom f r e q u e n t moet ings h e l d t o d i s c u s s pro- duc t i on and market ing p r a c t i c e s .

1 I n t h e e a r l y days, b rokers and o t h e r s who were involved i n g e t t i n g produc t ion underway provided s eed and f e r t i l i z e r advances and a l s o s e n t people i n t o t h e a r e a t o supe rv i s e and a s s i s t i n p roduc t ion , ha rves t i ng and packing of p roduc ts f o r expor t . These i n t e rmed ia r i e s s t i l l prov ide f i nanc ing f o r over 60 p e r c e n t of t h e p roduc t ion b u t a r e riot a s involved i n p roduc t ion p r a c t i c e s a s i n e a r l i e r years . However, new v a r i e t i e s o r new p r a c t i c e s , e.g., seedless water- melon and d r i p i r r i g a t i o n , s t i l l r e c e i v e cons iderab le t e c h n i c a l a s s i s t a n c e from o u t s i d e sources .

* Farmers who use l and owned by t h e government. They farm communaly, work- i n g t h e l and t oge the r i n o r d e r t o u t i l i z e machinery and o t h e r i n p u t s r e q u i r i n g l a r g e l and a r e a s f o r economic use.

IV. K-3

B. Peetiaidoe

Pes ts a r e a major problem i n tho Culiocan a rea , A l l Earma have measures f o r co.rtro1 and farmers a r e f u l l y aware of the problem of gerjt.icide residues. Pes t i c ides a r e s to red away from packing sheds which of ten havc s i g n s pxohlb- i t i n g t h e en t ry of unauthorized persons. A program is constant?.^ waged t o make users aware of the dangers t o themselveo and t o othere. The danger of having produce turned down a t tho border is f u l l y appreciated. Recent ac t ions by vegetable growers i n the U.S. t o have more inspection f o r res idues and accuslatione t h a t Mexico's f r u i t s and vegetables have oxeess res idues have c e r t a i n l y been f e l t by t h e Mexicans and they a r e f u l l y aware t h a t any misuse by t h e i r growers w i l l be exploi ted.

111. MARKETING

Marketing a c t u a l l y begins with the s e l e c t i o n of the crops and v a r i e t i e s t o be grown. The Uni6n Nacional de Organismos de Productores de Hortal izas y Frutas (UNPR) p l ays a r o l e i n determining t h e crops t o be grown and the amount of land t o be devoted t o production. More w i l l be s a i d l a t e r about t h e UNPH.

Large harvest ing machines a re used f o r some of t h e crops. These may span 50 meters and have conveyor b e l t s t h a t move products t o l a rge conta iners t h a t a r e moved from the f i e l d s by t r a i l e r s . For e g p l a n t , specia l ized equipment is used t o f i e l d pack. Products such a s tomatoes a r e dumped .in.to v 3 . t ~ f o r wash- ing and moved over r o l l e r s through d r i e r s and onto grading a reas where they a r e se lec ted and packed according t o s i z e , maturity and grade. They a r e precooled and s to red i n cool rooms u n t i l loaded i n t o r e f r i g e m t e d t r a i l e r s . There a r e approximately 60 packmg p l a n t s i n t h e Sinaloa Valley. The average investment pe r p l a n t , including harvest ing equipment, is a b o ~ ~ t , U.S.$500,000. Most packing p l a n t s have r e f r i g e r a t e d t z a i l e r s s tored on t h e premises t o be used during t h e harves t ing season. One farm with 800 hectares under cul t iva- t i o n had 40 t r a i l e r s and 15 t r a c t o r u n i t s on hand.

After a r r i v i n g a t t h e border, t h e produce is held i n a compound on the Mexican s i d e u n t i l Mexican custom brokers c o l l e c t export f ees , process expor t docunlun- t a t i o n and oversee movement t o the U.S. s i d e of t h e border. On t h e U.S. s ide , U.S. custom brokers assume respons ib i l i ty f o r co l l ec t ing inpor t t a r i f f s , pro- cessing export documentation and providing inspection c e r t i i i c a t e s .

Most of t h e producers i n Mexico depend upon brokers and/or commission agents t o s e l l t h e i r produce. Many growers have formed associa t ions with a d i s t r ibu- t o r . I t is estimated t h a t 60 e rcen t of t h e d i s t r i b u t o r s a r e p a r t n e r s with f one o r more Mexican growers.-/ Some growers have establighed t h e i r own s t a t e s i d e marketing operat ions, but s t i l l depend t o an ex ten t on commission agents. A few producers have entered i n t o agreements with very l a rge food marketing organizat ions which allow them t o devote f u l l time t o production.

2/ Katharine C. Buckley - Winter Fresh Market, - D.C., June 1986).

eS a l . , F lor ida and Mexico Competition f o r t h e USDA/ERS A?. Econ. Report No. 556, (Washington,

IV. K-4

The UEPH has r ecen t ly hiced oaven persons i n t h e U.S. i:o monitor shipments of Mexiaan produae an& t o promote s a l e s and yaodwill. This ac t ion was baaed on a artrategy suggested by a marketing conuultant.

IV. CREDIT I_L

Avai lab i l i ty of financir.g f o r NTAEb from Mexico has been and continues f o be a major problem. Despite ~ u b s t t i n t i a l , e f f o r t s by UNPH t o f a c i l i t a t e t h e flow of c r e d i t t o growers, packers and shippers, l i t t l e progress has been made. Bankers continue t o be s t rongly averne t o t h e r i s k s of f inancing non-tradit ional ag r i cu l tu re , and farmers a r e unable o r unwilling t o pay what they consider t o be .excessively high i n t e r e s t r a t e s . A s a consequence, f inancing f o r NTAE frequent ly is provided by t h e U.S. distributors-importers-brokers. Often, such f inancing is pcovided "in-kind"? t h a t is, t h e buyer providos f e r t i l i z e r , p e s t i c i d e s , e t c . , which a r e reimbursed aga ins t product shipments. In some ways these t ransact ions a r e akin t o t h e drawback" o r "maquila" t r ansac t ions t h a t cha rac te r i ze t h e appare l export business. 1

Notwithstanding i t s shortcomings, the re is a pub l i c sec to r e f f o r t underway t o provide more adequate c r e d i t f o r NTAZ. The program is ba on so red pr imar i ly by the Banco de Mexico, Mexico's Central Bank, and by t h e Bmco Nacional de Camercio Exter ior (BANCOMEX). The NTAE c r e d i t program cons i s t s e s s e n t i a l l y of t h e following components,

1. F. I. R. A. ( " I n s t i t u t e d Trusts i n Relat ion t o Agriculture" ) . This IBRD-IDB financed $75 mil l ion d o l l a r Trust Fund, lodged i n t h e Banco de Mexico, is a pre-export f a c i l i t y designed t o provide f ixed a s s e t and working c a p i t a l loans f o r post-harvest handling, pro6uct assembly and packing a c t i v i t i e s . For t h e p a s t two years u t i l i z a t i o n was slow because of borrower concern about d o l l a r obl iga t ionsf concerns, however, have abated and u t i l i z a t i o n has recent ly reached $72 mill ion. The f a c i l i t y opera tes on a redis - count b a s i s through t h e commercial banking system and has been used pr imar i ly by l a r g e packers, and shippers.

2. F.I.R.A. ' - Guarantied Production Credit . This $70 mi l l ion production c r e d i t f a c i l i t y e n t a i l s c r e d i t guarantees t o commercial banks f o r up t o 90 percent o f . crop working c a p i t a l and f i x e d asset loans t o growers. A s noted, many growers a r e unable o r unwil l ing t o pay t h e r e l a t i v e l y high i n t e r e s t r a t e s on these loans, s o t h a t u t i l i z a t i o n is l imi ted , e s s e n t i a l l y t o c e r t a i n l a r g e r growers. Central Bank a u t h o r i t i e s a r e hopeful t h a t these production loans w i l l be l iqu ida ted with proceeds from pre-export loans (see above) s o a s t o provide a chain of " in tegra ted financing".

3. BANCOMEX F a c i l i t i e s t BANCOMEX has set up it own agro-export c r e d i t d iv i s ion and is developing spec ia l i zed l i n e 3 of c r e d i t r e l a t e d t o s p e c i f i c crops. It has done t h i s f o r c u t flowers and ornamental p l a n t s and is now s t a r t i n g one f a c i l i t y f o r chick peas (garbanzos) and another f o r shrimp and s c a l e f i s h fanning.

A l l of the above c r e d i t f a c i l i t i e s have mer i t , but they s t i l l f a i l t o adequately reach t h e broad base of Mexico's NTAE growers. Instead they tend t o favor agro- indust r ia l c l i e n t s and t h e b e t t e r oLf growers. Only t o n l imi ted ex ten t have they provided answers t o the needs posed by UNPHts c r e d i t departmentr

1. Production loans, t h e amort izat ion of which should be matched t o 5- year-average crop-cycle cash flowsr

2. Revolving production c r e d i t s over f i v e years with automatic ref inancing i n t h e event of a seasonal l o s s ,

3. Five-to-ten. year equipment loans with semi-annual amort izat ion timed t o match export inflows a f t e r an i n i t i a l grace per iod . These c r e d i t s would cover not only t r a c t o r s 61 farm equi,vment but pre-cooling, se lec t ing , s t o r i n g and packing shed u n i t s a s w e l l !

4. Recapi ta l iza t ion loanst These would be used t o r e c a p i t a l i z e small agribusinesses t h a t have good export p o t e n t i a l but t h a t were wiped o u t by a s i n g l e bad season.

Another a rea of f inancing which has been of concern t o UNPH has been f o r In te rna t iona l Promotion. The government has progressed c o n s i d e r a l y i n t h i s a rea , including t h e f inancing of commercial a t t a c h e o f f i c e r s abroad, p a r t i c i - pa t ion i n in te rna t iona l t r a d e mission and f a i r s , and t h e t a rge t ing of s p e c i f i c new t r a d e i n i t i a t i v e s . (Recently a concerted e f f o r t has been begun t o break import b a r r i e r s i n Japan.)

V. VOLUMES EXPORTED

A. 1977/78 through 1986/87 Seasons

Ten years ago, Mexico exported over 1 mil l ion metric tons of f r u i t s and vegetables. In t h e 1986/87 season (September-June) , Mexico exported about 1.5 mi l l ion m t . Production over t h e 10 year period has been i r r e g u l a r , but has climbed s t e a d i l y s ince 1981/82 (Table 2, beginning naxt page).

IV. K-6

T A B L E 2

MEXICOa Export of Fru i t s and Vegekablea, 1977/78 - 1986/87

0 - 0 0 - ~ 0 0 - . ~ ~ 1 ~ ~ 0 1 ~ 0 - - 0 - - ~ 0 - 0 0 ~ ~ ~ " ~ ~ 0 ~ ~ 0 0 ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ - ~ ~ ~

Season Export of Frui ts and Vegetables (metric tons)

Source; UNPH

Mexico's exports during the ear ly 1980's were affected by the worldwide reces- sion t h a t was underway duriing t h i s period.

B. Fresh Products Exported

Vegetables made up almost 77 percent of the f resh produce exports from Mexico (Table 3, beginning next page.) Within the vegetable grouping, tomatoes accounted f o r over 41 percent, and cucumbers about 17 percent. What is s ign i f ican t is the wide range of vegetables being exported.

Within t he f r u i t category, melons (cantaloupe and honeydew) and watermelon consti tuted two th i rd s of t he t o t a l exports.

The major means of transport are large refrigerated trucks or t r a i l e r s . (Table 5) Approximately 111 ,000 vehicles carried almost 1.5 million m t . The average truck carried 1 2 m t and the average t r a i l e r 14 m t .

T A B L E 5

MEXICO; Means of Wans~or t ina Frui ts l ~ ~ d Vesetables from Mexico and kdume car r ied , 1306/87

Type of . No. of % of Volume % of Volume Transport uni ts each Transported* Transported

( m t ) --.--.--u----------------o------.--.-------------------.---------.---

Source~ UNPH * Figures rounded. ** Less than 0 . 1 percent.

D. S t a t i s t i c a l Review

Data seltwted from a UNPH 1988 strategy background paper and from its 1986- 1987 Annual Fruit and Vegetable Season Bulletin help t o round out the NTAE

4 picture for Mexico;

Frui t and vegetable production takes up 4% of Mexico's agricul tural surface area, while contributing 20% of the country's gross agricul- t u ra l product.

They represent 5% of the t o t a l value of Mexico's exports, including petroleum products, and 41% of the value of the nation's agricul tural exports. (Coffee represents 48% of t o t a l agricul tural exports.)

Of t o t a l national f r u i t and vegetable production, approximately 17% is exported.

Roughly 90% of Mexico's f r u i t and vegetable exports are t o the U.S. The balance includes about 7% ko Canada and 3% t o Europe. (Projec- t ions for the 1987-88 season were for a breakdown as followst U.S. 85% 1 Canadax 10% 1 ~7apanr 3% 1 and Europer 2%.

5.

6.

A s shown

Net breakdown of 1986-87 ~ ~ $ 7 0 0 million export of NTAEa

Gross I ~ ~ $ 7 0 0 mill ion U.S. Import Duties; ( L O O ) mil l ion Distributor Commissions (85) million Broker Commissions (25) mill ion

Net Export Income t o Mexico8 ~ ~ $ 4 9 0 mill ion

Multiplier e f f ec t fo recas t f o r the 1988-89 seasons (UNPH Projec- t i o n )

Land arear Investment: Jobs r

Wages r Packagingr Transport r Agricultural Inputs r Other:

Total dl - h)

200,000 has. ~ ~ $ 2 7 0 mill ion 1,700,000 ( Direct and Indirect , over 6 months. ) US$ 70 mill ion US$ 50 mill ion US$ 50 million US$ 45 mill ion US$ 20 mill ion Us$235 mill ion

i) Cost and Price Increments by Percentage, U6-87 season 0ve.r: 82-83 season ( 5 yeare)r

Costs 1848% Prices 875%

( Eighteen and one-half times) (Eight and three-quarters times 1

i n these l a s t items, and a f t e r accounting f o r s ign i f ican t year-to- year exchange gains for exporters, cos t s have s t i l l r i s en a t a much f a s t e r xate than pr ices . The process has resul ted i n a substant ia l shrinkage of margins. Before t h i s trend leads t o losses, Mexico w i l l have t o improve its product qua l i ty image, fur ther improve its yields and achieve mutual t a r i f f reductions on its fruit /vegetable exports and i ts fertilizer/pesticide/seed imports.

E. A Note on Mexico's Reaction t o the CBI

Mexican government o f f i c i a l s and UNPH o f f i c i a l s a re disturbed by USAID'S CBI program, especial ly by what they consider unfair t rade practices. These include, basically, duty-free entry t o t he U.S. fo r CBI country f r u i t and vegetable exports, and what is deemed concessionary o r subsidized financing fo r CBI exporters, t h e i r governments and the pr ivate agencies which a r e promoting NTAE from the CBI countries. Mexicans explain t h a t they a r e not bothered by the prospect of competition, but t h a t they f e e l betrayed by t h e i r major t rading par tner because a t t he same time t h a t CBI countries a r e provided

with concessior.s, Mexico must s t i l l pay high ad valorem d u t i e s on t h e i r pro- duce enter ing t h e U.S. A s a poss ib le o f f s e t , i n addi t ion t o pursuing mutual t a r i f f reduction e f f o r t s , t h e Director General of t h e Foreign Af fa i r s Off i c e of t h e SARH suggested t h a t perhaps Mexican t r ad ing companies could become involved In A.1.D.-supported programs, including the provision of t echn ica l assistance i n production and marketing. Another p o s s i b i l i t y described by t h e Director General would involve Mexican equi ty investments i n CBI countr ies . This has already occurred through s e v e r a l p r i v a t e i n i t i a t i v e s i n t h e Dominican Republic and Costa Rica.

I?. A Note on A.I.D.'a Mexico Prosram

The small A . 1 .D. off i c e . i n Mexico is not d i r e c t l y involved i n any major NTAE program. Instead, it has developed a scholarship p r o j e c t known a s t h e Cochran Scholarship Program which seeks t o increase t r ade between t h e U.S. and Mexico by, among o the r th ings , t r a i n i n g Mexicans i n t h e U.S. i n t h e s e l e c t i o n and operat ion of equipment f o r agroindustry. AID/Mexico a l s o sponsors p i l o t research i n i t i a t i v e s on non-U.S.-competitive crops such a s oregano and o the r spices.

VI. UNION NACIOMAL DE ORGANISMOS DE PRODUCTORES DE HORTALIZW Y FRUTAS (UNPH)

The UNPH was formaily es tabl i shed i n 1961 a s a na t iona l union of t h e then e x i s t i n g vegetable and f r u i t grower associa t ions . The majori ty of its found- ing associa t ions a r e located i n t h e Culiacan Valley of t h e S t a t e of Sinaloa i n t h e West of Mexico, about 700 kms. south of t h e U.S. border a t Noqales, A r i - zona.

The UNPH headquarters is located i n t h e c i t y of Culiacan, but it has regional o f f i c e s throughout Mexico and i.t has member associa t ions ( a t o t a l of 280, making up a t o t a l of 30,000 individual growers) i n 26 of Mexicots 27 s t a t e s . The organizat ion was o r i g i n a l l y founded f o r t h e purpose of represent ing growerst i n t e r e s t s before t h e Federal Government. In these p a s t 27 years, however, UNPH has grown i n s t a t u r e t o t h e p o i n t t h a t it deals a s an equal with

7 t h e Federal Government and, more o f t en than no t , government o f f i c i a l s consul t f i r s t with UNPH before taking any a c t i o n which could i n any way a f f e c t t h e UNPH membership. Today, a t l e a s t a s in~por tan t a s i ts government lobbying e f f o r t s , a r e UNPHts mult iple d i r e c t and i n d i r e c t se rv ices f o r t h e membership.

UNPH is organized v e r t i c a l l y , s t a r t i n g a t t h e base with a s soc ia t ions formed by a s few a s 3-5 members under t h e na t iona l law of a g r i c u l t u r a l associa t ions . Associations join i n t o regional federa t ions cr unions, which, i n tu rn , make up t h e d i r e c t membership of UNPH. Individual membership composition today includes th ree bas ic groupingsr Small landholders (up t o 20 has. ) represent- ing 40 percent a t t h e t o t a l ) e j i d a t a r i o s (average 5 has.) represent ing 51 percent a t t h e t o t a l ) and c o l l e c t i v e s (with individual holding of less then 5 has.) representing roughly 9 percent of t h e t o t a l . There are s e v e r a l l a r g e r handholders-members representing less then 1/2 percent of t h e t o t a l . (Under

law i n Mexico, individual landholdingo may no t exceed 150 has.) From t h e assoc ia t ion membership, s p e c i a l product groupings have a l s o been es tabl i shed. These a r e known a s "Specialized National Assemblies" (Asambleas Nacionales Especial izadas) and have been s e t up f o r 1 3 crops including melon, onion, b e l l pepper, cucumber, e t c .

UNPH f inances i t s e l f through export shipment check-offs. Through t h i s mechan- i s m it has been ab le t o s u s t a i n a ful l- t ime employee base of 120 i n Culiacan and throughout Mexico a s well a s a part-time port-of-entry q u a l i t y con t ro l and information gathering s t a f f of over 25, including coverage of v i r t u a l l y every U.S. and Canadian p o r t of en t ry f o r Mexican products.

A s noted, over t h e pears t h e UNPH r o l e has wcpanded and UNPH has become i n f l u e n t i a l i n a l l a reas of NTAE. Its p u b l i s h e ~ 7bjoct ives today a r e (1) t o promote and support t h e production of vegetables and f r u i t s and (2 ) t o provide order t o and planning f o r f r u i t and vegetable production and marketing. I t should be noted t h a t UNPHts a c t i v i t i e s a r e focused on t h e domestic supply- demand scene a s w e l l a s on export supply and deuand. Project ions f o r t h e 1987-88 season, j u s t completed, ind ica te than t o t a l production of f r u i t s and vegetables w i l l measure 8.5 mi l l ion m t with exports est imated a t about l a s t season's l e v e l , 1.5 mi l l ion m t . The 7.0 mi l l ion m t d i f f e rence represents product dest ined f o r domestic consumption. (Computed before any processing breakdown ar l o s s count.) A s t rong home market can be a v i t a l f a c t c r i n t h e development of NTAE and i n Mexico this has c l e a r l y been t h e case. VNPH is aware of t h i s i s sue a s w e l l a s of t h e importance of p laying a r o l e i n support- ing o rde r ly growth of t h e na t iona l food supply. To these ends, t h e organiza- t i o n has crea ted a National Maxketing Department with a wholesale market program designed t o improve domestic q u a l i t y and packing standards and t o c r e a t e a mediation system t o resolve d.isputes between producers and merchants.

A. Production

-W UNPH does no t operate a f u l l extension service , bu t its agrszanis ts , publica- t i o n s , seminars and i t s in te r face with SARH contr ibute s i g n i f i c a n t l y t o t h e . dissemination and appl ica t ion of improved c u l t u r a l p r a c t i c e s among NTAE grow- ers . Perhaps t h e most important of UNPH's production r e l a t e d a c t i v i t i e s i s i ts t echn ica l research program. This program c o n s i s t s of domestic and i n t e r - na t iona l cooperative agreements withr

The National Fores t ry , Agriculture and Livestock Research I n s t i - t u t e (INIFAP)) The Monterrey Technical I n s t i t u t e of Higher Studies (1TESM)f The University of Sonorar The Technical I n s t i t u t e of Culiacan) Purdue Universi ty, U.S.A.9 The Weizmann I n s t i t u t e , I s r a e l ) The Hebrew Universi ty, I s r a e l r The Volcani I n s t i t u t e , I s r a e l .

Through technica l cooperation agreements with each of these organizat ions,

UNPH conducts reoearch on a var ie ty of NTAE products. Much of t h i s research is applicable d i r ec t l y t o ensure improved crop yie lds , va r i e t i s s , pest and disease control l UNPH disseminates r e su l t s through technical bul le t ins , f i e l d demonstrations and l i a i son with National Specialized Assemblies.

In the spec i f ic area of post and disease control, UNPH agronom.tots survey crops regularly t o detect problems) they respond immediately t o spec i f ic prob- l e m brought, t o UNPH on a case-by-case basis, usually i n cooperation with p lan t health au thor i t i es from the SARH. Through such cooperation s ign i f ican t progress has1 been made toward eradicating t he mango f r u i t f l y .

As regards pest ic ides and f e r t i l i z e r s , UNPH transmits SARH - USEk - FDA - EPA - PPQ reguLations and. advice t o the membership with deta i led ins t ruct ions as t o acceptable inputs and t h e i r proper application, crop by crop. UNPH is a l so reportedly on constant ecological a l e r t , taking pains t o advise growers on how t o avoid d-eterioration of s o i l s , water supplies and crops. There have been few reports of serious pest ic ide viola t ions , but one example t h a t took place i n ea r ly 1988 i l l u s t r a t e s U N P H ' s role. Specifically, UNPH inspectors, advised by USDA/PBQ inspectors, confirmed t h a t a declared-unacceptable pest ic ide had been used by cer ta in growers of b e l l peppers. UNPH traced the problem t o a loca l pes t ic ide d i s t r ibu tor who had not consulted the UNPH-approved list of acceptable pesticides. The d i s t r i bu to r was confronted by angry growers - who had believed t h a t the recommended pes t ic ide came from the approved l i s t - and was temporarily "decertified1' by UNPH from its own list of approved input dis t r ibutors . (UNPH secures from SARH a number of import permits which it makes ava.ilable t o members and qualifying non-members fo r t h e i r f e r t i l i z e r and pest ic ide import needs. )

Over t he ' yea r s UNPH has a l so taken measures t o ensure t h a t produce from around the Mexico City area -- grown with contaminated water supplies -- is not e l ig ib le ; f o r export permits.

UNPH has been intimately involved i n Mexico's marketing of NTAE since 1962, when the government instructed its export customs au thor i t i es t o request t h a t shippers present a UNPH-designed and sponsored "Cert i f icate of Origin and Shipping Manifest". In t he ensuing years, UNPH began t o survey growers t o determine projected plantings and t o develop global plans t o provide i n ad- vance f o r input requirements, t ransport arrangements, e tc . Today, i n repre- sentation of i ts membership, but a l so i n behalf of qualifying non-members, UNPH uses its export crop forecast accomplished i n June-July) t o secure from the SARH global export permits. These cover over 90 percent of projected f r u i t and vegetable exports. !The balance of permits a r e issued by the SARH d i r ec t l y t o independent growers, but many independent growers needing addit ional permits during the season apply f o r these through the UNPH quota.

UNPH o f f i c i a l s report t ha t the most ser ious problem faced by grower-exporters is nonpayment from t h e i r customers. Nonpayment is usually the r e s u l t of a product qua l i ty complaint, and UNPH has undertaken t o serve a s a mediator of

such disputes. Most important, U.S. distributor-importers know UNPH and recognize t h a t the organization "plays by the ~:ules". Specifically, UNPH is guided i n i t s conci l ia t ion e f f o r t s by U.S. noxms and pract ices f o r the reso- l u t i on of marketing disputes, including the use of PACA services wherever warranted. UNPH a l s o maintains a broker-distr ibutor ra t ing syotem t o guide exporters. Brokers and d i s t r ibu tors usually a re careful t o keep i n good standing under t h i s system.

While IJNPH do08 not d i r e c t l y involve i t s e l f i n the buying o r s e l l i n g of pro- duce, it s tudies export markets closely and ea r ly enough t o be able t o make global planning recommendation^ t o the memberxhip. It has been doing t h i s f o r over 20 years f o r tomato, cucumber and b e l l pepper plantingsr more recently it has begun t o provide recommendations f o r most other crops a s well.

One of U N P H ' s increasingly important marketing services concerns its inspec- t o r s ' qua l i ty control repor ts t o grower-shippers. This service includes advising poor product qua l i ty exporters t h a t UNPH w i l l not represent them in the event of disputes. UNPH has determined t h a t t h i s type of measure is essen t ia l t o h a l t t he flow of l esse r qua l i ty export produce and t o counteract Mexico's bad "press" i n the U.S. Other re la ted UNPH marketing services include the conduct of t ranspor t and post harvest handling s tudies and t r a in - ing courses, and the design and implementation of norms and standards f o r grading, packaging and labeling.

C. Labor

Mexico's e j i da t a r i o s a r e reportedly conformists, content t o do j u s t anough farming work -- usually with government subsidy -- and no more. They a r e reportedly not concerned with the importance of i ssues such a s qua l i ty control , employment of proper crop cu l tu ra l pract ices , and a o i l o r water conservation. As a consequence, a p a r t of t h e i r not inconsiderable produce output is not up t o export standards. An unacceptably high proportion of t h i s output, however, s t i l l reaches the U.S. market, w i t h negative consequences varying from monetary losses t o t he creat ion of a bad image f o r a l l Mexican produce.

UNPH is working hard t o motivate and t r a i n e j i da t a r i o s t o become more effec- t i ve , successful export growers. But progress is reportedly slow. The most immediate consequence of a bad image f o r a l l Mexican produce exports has been a boon t o present and po ten t ia l exporters from the CBI countries and Ecuador a s it has t o some extent f o r s ta tes ide winter vegetable producers, p r inc ipa l ly i n Florida. Growers-shippers from both areas can probably expect continued market apportunit ies i n the near future a s a r e s u l t of the e j i da t a r i o prob- lem. (Mexican government and UNPH o f f i c i a l s claim t h a t smear campaigns a re being carr ied out against the qua l i ty of Mexican produce.) But it would probably be well t o monitor progress and spec i f i c crop trends i n Mexico's e f f o r t s t o solve the problem, as the country's po ten t ia l competitive advan- tages a r e staggering, especia l ly considering U N P H ' s a b i l i t y t o plan and order seasonal production and marketing ac t i v i t i e s .

V I I . LESSONS TO BE LEARNED FP9M MEXICO - Mexic!o han a number of advantages i n the production of h o r t i c u l t u r a l crops f o r che U.S. market:

1.

2 .

3 .

4.

5 .

6.

7.

8.

9.

1 0 .

Against

1.

Large areas arop8 which Ca l i fo rn ia ) .

of land, well s u i t e d t o t h e production of h o r t i c u l t u r a l can use large-scale production techniques ( s i m i l a r t o

Climatic condit ions t h a t permit the production of winter f r u i t s and vegetables.

I r r i g a t i o n systems t o provide water during dry periods.

A well developed system f o r supplying a g r i c u l t u r a l inputs .

Close proximity t o t h e U.S. border (12 hours by t r a i l e r from Culiacan t o Nogales) . A l a rge , f l e x i b l e labor force a t r e l a t i v e l y low c o s t .

Close producer /d is t r ibutor linkages.

Direct f inancing by d i s t r ibu to r s /pa r tne r s .

A long h i s to ry of production f o r export.

A s t rong assoc ia t ion t o represent producer/marketer i n t e r e s t s .

these advantages, Mexico has c e r t a i n disadvantages o r problemsr

Limited water supplies , e spec ia l ly during drought periods.

2. Most of t h e land i n t h e Culiacan Kiver Valley is f u l l y farmed (Baja Cal i fornia , however, is expanding).

3. Long-term farming of s i m i l a r crops has c rea ted d isease and i n s e c t problems.

4. S a l i n i t y is becoming a problem, precluding t h e production of c e r t a i n crops.

5. Production c o s t s have been r i s i n g f a s t e r than proceeds from sa les .

6. The Caribbean Basin I n i t i a t i v e (CBI) provides Central America and t h e Caribbean Area with t a r i f f advantages, vis-a-vis Mexico.

7. Credit is inadequate and is dependent t o an extraordinary ex ten t on ou t s ide sources.

8. Quality of products is becoming a problem.

9. Pes t ic ide residues have become i%n isaue and have resu l t ed i n c a l l a f o r I s t r i c t e r monitoring of Mexican produce by U.U. o f f i c i a l s .

Although Maxico has a number of physica l f a a t o r s t h a t were conducive t o t h e development of i t s horticu1t:ural exports , c e r t a i n o ther f a c t o r s were probably more important:

A long ges ta t ion period during which a few dedicated persons began export ing t o t h e U.S. and continued t o expand a s both demand and product acceptance grew. (The e a r l i s s t exports began around t h e t u r n of t h e century. )

The d i r e c t p a r t i c i p a t i o n by broker/di#jitributors i n production and marketing crea ted a s t rong b a s i s on which t o bu i ld t h e indust ry ( f inancing and technica l a s s i s t ance were provided by these broker/ d i s t r i b u t o r s , p lus p a r t i c i p a t i o n i n p r o f i t s ) .

The flow of products from Mexico t o t h e IJ.S., and inputs 2rom t h e U.S. t o Mexico were not unduly impeded by e i t h e r government. (The U.S. t a r i f f l eve l s , while high, were no t an unreasonable b a r r i e r . )

The development of an e f f i c i e n t t ranspo.r tat ion system kept t r a n s p o r t c o s t s low and enabled buyers t o accura te ly p lan shipments t o markets.

The development of commodity groups within Mexico t o promote and look a f t e r t h e i r spec ia l i n t e r e s t s was a p o s i t i v e f a c t o r i n t h e growth of t h e industry. The un i t ing of these groups (and assoc ia t ions ) under t h e UNPH gave the indust ry a s t rong voice a t na t iona l and in terna- t i o n a l levels .

A system of q u a l i t y con t ro l enabled Mexican producers t o meet U.S. grades and standards.

What do these lessons hold f o r producers i n countr ies where A.I.D. is a s s i s t i n g i n promoting NTAEs?

1. Mexico is t h e major competitor and can produce most, i f not a l l , of t h e crops being promoted by Central America, and Caribbean countr ies . However, the re a r e s h o r t per iods where c l ima t i c condi t ions may l i m i t t h e type of crops t h a t can be grown i n Mexico. These per iods a r e t h e "windows" o f t en al luded t o when speaking of NTAEs from Central America and t h e Caribbean Area.

2. Mexico is a mass producer and, a s such, may no t necessa r i ly be t h e h ighes t q u a l i t y producer. While it may produce l a r g e q u a n t i t i e s 0%

high q u a l i t y products, t h e "average" pack may be of standard qua l i ty . This may enable shippers from o the r areas t o pene t ra te s p e c i a l t y

market8 raqui r lng vary high q u a l i t y g.coduate ( e. y. , producere of mini- vegatablas i n Guatemala).

3 . Maxico does not enjoy the ta r . l f f benef i t8 provided by t h e Ci31, and .in 1986/87 paid about U.S. B l O O rn.Fllion i n t Cffs. Broduaere i n Central, America and t h e Caribbean have CBI ad tageta u n t l l December 31, F 1995. Consequently, these producers w i l l have t o deveLog a aompeti- t i v e export capebiZity within t h e next sevorn years. They a r e not s t a r t i n g from ground zero, but muah w i l l need t o be dona i f they a t e t o compete on more than j u s t a minimum basia.

4. Mexico's major p rodnc t im a rea i s only a half day's d r i v e from t h e J.S. border ' a t Nogales. Except f o r a i r snipments, moat Central American and Caribbean producers a r e severa l dayo t o t h e neares t por t . (Generally, Miami, which i e e t i l l one t o th ree days from most major markets). The nearness of t h e U.S. border (by land) i a a major advantage t h a t Mexico has ovel: o ther areas. Central American and Caribbean producers have t o improve t h e i r t r anspor ta t ion s i t u a t i o n i f they a r e t o compete successful ly . (The recent movement of Centra l American products by t r a i l e r through Mexico may be a s t e p i n t h e r i g h t d i rec t ion , but is s t i l l c o s t l y vis-a-vis product8 from t h e Culiacan o r Baja Cal i fornia a reas . )

5. The development of s t rong commodity associa t ions has helped Mexico develop its hoict icul tural exports. The recent move6 t o develop s i m - i l a r a s soc ia t ions i n Costa Rica, Guatemala and Ecuador should enable producers i n those countr ies t o move ahead fai l ter than by working alone. So f a r , most of t h e NTAEs i n Central America and t h e Caribbean have been done by individuals o r , i n a few cases, by l a r g e multina- t i o n a l firms. The development of a major NTAE progrdm w i l l r equ i re t h a t indiv idual producers combine t h e i r e f f o r t s f o r t h e i r mutual benef i t . Mexica.n producers obta in f inancing f o r t h e i r associa t ions through a check-off of produce exported. This se l f -he lp provides t h e i n t e r e s t required f o r an assoc ia t ion t o be successful .

S E C T I O N V

APPENDICES ---

SCOPE (STATEMENT) CB WORK

The contrac tor s h a l l perform the following tanksr

A. Examine the ~ocio-economic ~ ~ e m e n t s , pol icy s e t t i n g , i n s t i t u t i o n a l and i n f r a s t r u c t u r a l s e t t i n g , and c o n s t r a i n t s among countr ies iden t i fy ing those which a re s imi la r and those which a r e d i f f e r e n t .

B. Analyze t h e background, r a t i o n a l e and common elements and problems encountered among USAID-supported export d i v e r s i f i c a t i o n p ro jec t s i n t h e region.

C. Describe how t h e USAIDs a r e going about these p r o j e c t s country by country8

Types of a c t i v i t y ( i n v e s t o r promotion, export f a c i l i t a t i o n , research/extension, c r e d i t , co-ops, etc.11

Host country publ ic and p r i v a t s s e c t o r capab i l i ty and p a r t i c i p a t i o n i n export d i v e r s i f i c a t i o n t

External inves tor involvement]

Implementation mechanisms used, and the r o l e of p r i v a t e sec to r groups i n t h e process]

Types of a g r i c u l t u r a l and land use p r a c t i c e s and cropping systems being promoted through export d ive r s i f i ca t ion .

Environmental management (.e.g. s o i l and water conservation) and agronomic (e.g. p e s t management) cons t ra in t s and l i m i t a t i o n s t o e f f e c t i v e export d i v e r s i f i c a t i o n r

Approaches which seem t o be t h e most successful and t h e lessons learned.

. Analyze inputs used i n order t o determine, by country and by type of involvement ( d i r e c t support and i n d i r e c t funding of support a c t i v i t i e s , some of which may a f f e c t export d i v e r s i f i c a t i o n ) , how much A . I . D . , hos t country and p r i v a t e sec to r resources a r e being dedicated t o t h i s e f f o r t r

1. grant funds, 2. loan funds, 3 . l o c a l currency by sources, and 4. p r i v a t e s e c t o r c a p i t a l investment.

E. Provide an a n a l y t i a a l desc r ip t ion of programmed ~ u t p u t s by countr iesr

1. Degrees of success i n aahieving programmed outputs and probable causesr

2 . Analysis of p ro jec t s or p r o j e c t elements which f a i l e d t o meet programmed outputs , and probable cuusas.

F. Analyze p r o j e c t impacts i n achieving objec t ives ( d i f f e r e n t i a t e between ob jec t ives of t a r g e t group impact, fore ign exchange generation, etc.)

1. Projec t elements showing high degree of success across country p r o j e c t s and probable causes?

2 . Projec t elements requi r ing f u r t h e r refinement o r el imination i n f u t u r e p r o j e c t s of a s imilax nature.

G. Analyze support services provided a t a regional l e v e l by t h e LAC/Bureau and comment on appropriateness and e f fec t iveness of these services .

H. Provide an economic ana lys i s of Bureau-wide e f f o r t s includingr

1. In-depth a n a l y ~ i s of resources d i rec ted and used f o r d i v e r s i f i c a t i o n f o r export development vs a g r i c u l t u r a l d i v e r s i f i c a t i o n f o r domestic markets, t h e i r c o s t s and probable returns1

2 . Sources of these resources, i.e., indigenous ( p r i v a t e sec to r and government), United S t a t e s ( p r i v a t e s e c t o r and government), o the r donors r

3 . An evaluat ion of t h e t o t a l amount of economic g rowthbenef i t s (i.e., GDP, employment, fore ign exchange earnings, etc.) , e i t h e r present ly achieved o r reasonably projec ted , cl i rect ly a t t r i b u t a b l e t o inpu t s and input c o s t s by USAIDs f o r export d i v e r s i f i c a t i o n a c t i v i t i e s , r e s u l t i n g i n d i r e c t l y on improved domestic markets and s e c t o r growth.

I. Evaluate t h e suska inab i l i ty from an ecologica l perspect ive of changing agronomic and land use p r a c t i c e s promoted by export d i v e r s i f i c a t i o n and i d e n t i f y p o t e n t i a l i s sues t o be considered i n f u t u r e p r o j e c t development r e l a t e d t o t h e long-term environmental management (e.g. water and p e s t management) implicat ions of t h e s e a c t i v i t i e s .

J. Evaluate t h e ne t impact of USAIDs crop d i v e r s i f i c a t i o n and export development p ro jec t s?

1. What should A.I.D. do t o improve t h e e f fec t iveness of its support f o r expor t d ive r s i f i ca t ion?

2. How do t h e expor t d i v e r s i f i c a t i o n i n i t i a t i v e s i n A.1.D.-assisted c o u n t r i e s compare wi th the long-term, successful e f f o r t s of Mexico and Ch i l e? What t ypes of a g r i c u l t u r a l management, env i ronn~en ta l and p u b l i c h e a l t h i s s u e s have a r i s e n i n Mexico and Chi16 and what c o n s t r a i n t s do t h e s e poee?

3 . How much more e f f o r t of t h i a t ype can A . I . D . Mission h o s t c o u n t r i e s p r o f i t a b l y absorb?

a , Where is t h e p o i n t of d imin ish ing marginal r e t u r n Prom t h i s t ype of development a c t i v i t y ?

b. When should A . I . D . ' s p r o g r e s s i v e emphasis be phased o u t ?

4. What h o s t count ry p o l i c i e s c o n s t r a i n t h e succes s of t h e s e e f f o r t s ?

5. What h o s t country i n s t i t u t i o n a l and human r e sou rce c a p a b i l i t i e s c o n s t r a i n t h e development of s u s t a i n a b l e c ropping systems?

A P P E N D I X B

BIELD VISIT ITINERARY

FIELD VISIT ITINERARY

COUNTRY

Costa Rica

Honduras

El Salvador

Guatemala

Mexico (Mexico Ci ty)

Bel ize

Jamaica

Dominican Republic

Barbados

Mexico ( C u l i a c h )

Chile

Ecuador

DATES - Ju ly 10 - Ju ly 15

Ju ly 15 - J u l y 19

Ju ly 19 - Ju ly 22

Ju ly 22 - J u l y 28/30

July 28 - Ju ly 30

July 28 - Ju ly 30

August 3 - August 6

August 6 - August 12

August 12 - August 17

August 17 - August 20

August 17 - August 24

August 17 - August 2 3

TEAM MEMBERS PRESENT

F u l l Team

E'ull Team

F u l l Team

F u l l Team

Investment/Financial Management S p e c i a l i s t

~ ~ r o n o m i c / ~ i o l o g i c a l S p e c i a l i s t r Agr icul tura l Ecologis t

F u l l Team

F u l l Team

F u l l Team

Agr icul tura l Economist

Investment/Financial Management S p e c i a l i s t t In te rna t iona l Agr icul tura l Trade S p e c i a l i s t

Agronomic/Biological S c i e n t i s t r Agr icul tura l Ecologis t

PERSONS MET

A. BELIZE

Bachofer , Jack Bellington-Banks, Barbara Brown, Magdalene Franklin, Exasmo J.

Graham, Gilroy Hunter, Fred Jr..

Logan, Carol Mi l le r , John Mil le r , Winston G. Novelo, Jose Perez, Pedro Szadek, Stephen A. Tokar, Matthew

B. CARIBBEAN REGIONAL

Boyce, Darcy Brenton, Desmond

Clarke, Darwin Dacosta, David

De Georges, Andre Paul Donawa, Christopher Finan, Kimberly Fros t , Lynette Grohs, Roy Guenette, Paul Inniss , Norman Jimenez, Fred

Ju l i en , Michael Laird, Larry Moore, Tom Moran, Mike Mutchler, Marina

New, Stephen W. Oberbeck, Charles

Pa ta l ive , Chuck Robinson, Ian S.

Agr icu l tu ra l Economist, Chemonics Deputy, Agr icul ture Development Off ice , USAID Administrat ive Ass is tant , BEIPU Manager, Agrochemicals Division, James Brodie & CO., Ltd. Agr icu l tu ra l Promotion Of f i ce r , BEIPU P ro jec t Manager, Agricul ture Development Off ice , USAID Research Of f i ce r , Central Bank Managing Direc tor , Belize Bank Limited Industry and Tourism Promotion Of f i ce r , BEIPU Aminiutrator, BABCO Pro jec t Of f i ce r , BEIPU Cnief, Agr icul ture Development Off ice , USAID Chief of Par ty , Chemonics

Executive Direc tor , Agr icu l tu ra l Venture Trus t Deputy Director/Agric. Credi t , Caribbean Development Bank (CDB) USAID Evaluation o f f i c e r Managing Direc tor , Caribbean F inanc ia l Services Corporation (CFSC) Regional Environmental Of f i ce r , USAID CATCO USAID Pro jec t Development Of f i ce r Program Ass i s t an t , PDO/USAID Economic Off icer , USAID Deputy Direc tor , HIAMP F i e l d Supervisor, CATCO I n d u s t r i a l Credi t S p e c i a l i s t , Interamerican Development Bank ( I D B ) Program Direc tor , HIAMP Chief, ARDO, USAID USAID Deputy/Private Sector Of f i ce I I C A Representat ive , Barbados Executive Ass is tant , U.S. Business and Communication Center General Manager, CATCO Pro jec t Off icer /Projec t Development Off icer , ARDO, USAID USAID Pr iva te Sector Of f i ce Owner Constant (Papaya) P lan ta t ion

Sampson, Frank Sleeper, Jack Springer, Basil G.F.

C. CHILE - Balbontin, Juan E.

Correa, Juan Eduardo

Curt is , Robert . Dur iin , Rodrigo

F r i t z , Paul Hennicke, K. , Luis H. Kawas, Eduardo Meyer, Mauricio Prieto, Jorge

Reszczynski, Anabella Schuler , Pedxo Ta gle , Jaime Vial, J u h Enrique

D. COSTA RICA

Aguilar, ROCIO

Albracin, Ricardo M. Anderson, David J.

Barbee, W i l l i a m Baucom, William

Brealey, John Chiri , Angel Cordero, Arturo Espr ie l la , Eduardo de l a , Estrada, Alvaro Hayden Q., William

Hidalgo, Orlando Mantamoros S., Geiner May M., Alex Morales Carlos Phelps, W i l l i a m J.

Manager, Procplant, Constant Plantation Deputy Chief, ARDO, USAID Managing Director, SCL

Foreign Commerce Director, Chilean Exporters Association Director of Studies, National Socioty of Agriculture (SNA) Agricultural Attache, U.S. Embassy Deputy Director, Exports, David de l Curto, S.A. USAID Ag. Advisor, U.S. Embassy President , COMERTEX Manager, Qual i ty Control, Fundaci6n Chile Director of Agriculture, PROCHILE (Foreign Ministry) APHIS/PPQ, USDA Manager, Fruta, S.A. LAAD Americas, S.A. Principal, Fruta, S.A. and a f r u i t grower

Deputy Manager, Banking Services, Banco BANEX, S.A. Agricultural Economist, US Ag Attache Office General Manager, Pineapple Development Corporation of Costa Rica USAID Advisor t o CAAP Supervisory Agricultural Development Officer, USAID President, Exporpack Regional Pest Management Spec ia l i s t , ROCAP Chief, Development Credit, Banco BANEX, S.S. Gerente General, CAAP Project Director, CAAP Director General, Corp. Privada de Inversiones de CA. ~arketing/Prornotion Spec ia l i s t , CAAP Dpto. de Invest., CAAP Jefe , Depto. de Abonos, MAG Producer/Exporter, Chayote/Root Crop Gerente General, Banco de COFISA, S.A.

Rathbun, Larry P.

Rivera A., Marco Antonio

Rosenberg, Richard Sabal les , Ivan Simard, Lorraine J. Smith, John GUY Vi l la lobos F., Arturo Viquez, Arturo Cordero Zadroga, Frank var ious strawberry growers

E. DOMINICAN REPUBLIC

Benitez, Osmar C. Black, W. Stanley

Blood, Brian Ceballos, Jos6 R. Crouch, Miguel Crouch, Luis Cruz, Cesar E. D e Mena, I lse Diaz C., Miguel A. Duffield, Paul C.

Fernandez, Rafael Espinal Gomez, P., Manuel E. Guzman S., Lazaro

Harbert, Lloyd S. ~ e r n h d e z , Alejandro Lanza, Kenneth A.

Malagon A., V i rg i l io McCluskey, Delbert N.

Meyerdirk, Dale E.

Nuiiez, Augusto A. Nusez, C., Juan A. Perez, J u l i o

P ie te rz Gomez, Manuel Pimentel, Bienvenido Ravelo, Carlos Recio, L d s Garcia Rodriguez, Are l i s

Aseociate Dean, Cal Poly S t a t e University (San Luis Obiego, Ca l i fo rn ia ) Technical Off icer , P roce~ned Foods, CENPRO (Export and Investment Promotion Center) Director , Pr iva te Sector Off ice , USAID Director de Program Agro-Expo Chief, Program Division, USAID Post-harvest Handling Advisor, PROEXAG Agribusiness Development S p e c i a l i ~ t , USAID J e f e C r . Des., Banco Banax, S.A. Regional Environmental Off icer , ROCAP Coopefresa

Direc tor Ejecutivo, JACC/RD President and General Manager, Dole Dominicana, S. A. Economic Off icer , U.S. Embassy, DR Pre-Inspector, USDA/APHIs, SEA Flower Producer, Santo Domingo, DR President , INASCA Rural Development Division, USAID V i c e President , FINEMPRESA Gerente Fin., DACEA S c i e n t i f i c Consultant, Dominican Agriculture Foundation Jef e, Dpto. de E s t . Econ., CEDOPEX Executive Director , CEDOPEX Encargado Divisi6n Registro de Pes t ic idas , SEA/Sanidad Vegetal Agr icul tura l Attache, USDA V i c e Pres ident , Banco D e l Comercio Deputy Chief, Pr iva te Sector Office, USAID Direc tor , Departamento FIDE Pro jec t Off icer , Rural Development Office, USAID Biological Control/Technical S p e c i a l i s t , USDA/APHIS Sub-Gerente de Agroindustrias, DACEA Div. de Estud. Econ., DACEA Sub-Director Departamento Educaci6n Ambiental, SEA/Recursos Naturales Direc tor , CEDOPEX Pres ident , Agroexpo~rt Regional Representative, WAD-CARIBE, S.A. V i c e Pres ident , Banco Popular Executive Director , Consejo Prom. de Inv. Extran jeras

~odrsguez, Hector LUIS

Saladin S., Roberto Sarita, Hugueto A. Ndez 811fa C., Federico Tineo , M i guel

Tollet t , David Q. Valdez, A r t Valdez, Ricardo Valiente, Oscar Welhoua, Henry J. Wiegand, Kenneth B.

F. ECUADOR

Alverson, David Bonifaz, Neptali

Bustamante, Teodoro

Chang, Jorge De At'teaga, Roceo G.

Dousdebes , Tamas

Flores , Jaime Harrison, Dale Ortiz Crespo, Fernando Peters, Richard J.

Puga Vasconez, Jose

Santacruz, Gimena

T e r h , Antonio S.

Director Ejecutivo, Dominican Agriculture Foundation Governor of the Central Bank Gerente de Agroind., DACEA Aast. Director, FIDE Vice President, Banco Dominican0 De Desarrollo Officer in Charge, USDA/APHIS/Haiti Program Officer, USAID Director, ADOEXPO A s s t . Treaeurer, Chase Manhattan Bank E c o ~ o ~ s ~ , USAXD Agricultural Economics Advisor, USAID

Agricultural Economist, U S A I D Director Ejecutivo, Inst i tuto de Estrategias Agropecuarias, ( I D E A ) Asesor, Program de Plaguicidas, Fundaci6n Natura Director, FUNDAGRO Jefe de Biblioteca, Agencia para e l Desarrollo Internacional, ( U S A I D ) Asistente del Director Ejecutivo, Fundaci6n para e l Desarrollo Agropecuario, (FUNDAGRO) Ag and Rural Development Office, USAID Director, (CARE) International Ecuador

I. Natural Resources Specialist , USAID Chief, Office of Agriculture and Rural Development, USAID Consultor, Federacian Ecuatoriana de Exportadores, (FEDEXPOR) Encargada , Program de Plaguicidas , Fundaci6n Natu-1 a Director Ejec C ~ V O , Asociacibn Nacional de Empresarios, ( ANDE)

G. EL SALVADOR

Altshul, Ernesto Deputy, Private Sector Office, USAID Alvarado L., Jose Reng Manejo de Agws y Suelos, CENTA Alvarez , Raf aeL Program Director, FIDEX/FUSADES Baires P., Filadelfo Leopoldo Program Director, DIVAGRO/FUSADES Cristales, Rodolfo Agronomist, ARDO/USAID E l l i s , Kenneth C. Chief Agricultural and Rural Development

Officer , USAID Escalante O., Ren6 David Cons. Privado Amor de l a Tierra

Gavidia 1P ., Carlos Roberto Gilaei t Ehud Gir6n C., Rafael Edmundo Gonzales, Antonio Gower, Guillermo Gutierrezr Ju6.n Joe6 Hand, Ph i l l i p Heriot, ~ u l i b n , Economist Mata, Roberto Palacio, Carlos Pedraz, ~ m 6 n Rodriguez C. Manuel F. Skowronski, Frank Torrico, Jos6 Isaac Ulloa, Roberto Samuel Valenzuela, Pablo Alvarado Valladaree, Cesar Augusto

Webbe r, Clemence

Alvarado , Edgar

Arellano, Horacio J u h e z Brower, L. Bruce Cabrera H., Jorge

Coto, Arnulfo Curtis , Ronald D e Estrada, Fanny Figueroa, Roberto Fuell , Lawrence D. Gannon, Brendon Ivers, Thomas Lamb, John E. Matta, Guillermo

Mazariegos A , , J. Fernando ~ h d e z , Jorge Mondonedo, Joe6 R. Paaearell i , Rafael F.

Reyes B., Axmando Rudert , Brian Truj i l lo , Jr., Aud6n Wing, Harry

Environmsntal Officer, USAID I r r iga t ion S ~ e f l i a l i s t ~ FUSADES President, Banco Cuscatlan Agribueinese Spea ia l i s t , ARDO/USAID FUSADES/PRIDEX President, FRWEX, S.A. Bon Apgetil;, S.A. de C.V. Economias Officer, USAID FUSADES/DIVAGRO Director, PRIDEX/FUSADES Eng. Bon Appetit Gerente T6cnico DIVAGRO, FUSADES Agribusiness Development Officer, ARDO/USAID Agricultural Economiet, ARDO/USAID Marketing Director, CASVEL, S.A. Fundaci6n Chile Je fe Dpto, Fomento Export., Central Reserve Bank (BCR) Assistant RDO, USAID

Asistente de Investigaciones, Manejo Interno de Plagas, CATIE Gerente General, ICTA Computer Ut i l izat ion Advisor, PRDEXAG Coordiwdor, ami s i6n Nacional del Medio Ambiente Credit Promoter, PSO, USAID Chief, RDO/ROCAP Gerente E j e ~ ~ t i v o , GREMIAL Environmental Officer Assistant Agricultural Attache, U.S. Embassy Deputy C/Privato Sector Office, USAID Project Officer, RDO/USAID Team Leader, PROEXAG Financial Services Officer, PSO, USAID and former General Manager, Central Bank of Guatemala Jefe , Divisi6n An&lisis, Pruebas y Ensayos. Departmento de Proyectost GREMIAL Agricultural Production Advisor, Chemonics President, Internacional de Alimentos Proc., S.A. I I C A Representative i n Guatemala Project Officer, RDO/USAID Regional Planning, USAID Chief of RDO, USAID

Alvarenga A., Francieao Alvarado, Guillermo Bendana , Frank Carranza , Jon& Contrerasi, Mario Cooper, Blai r L. Cordova E . , Wilf redo

Cordova, Wilfredo Ghaskell, Mark Conzalez C., Omar '

Garcelon, George Grossman, James Guzman V., Marti l Hatcher, S tuar t Hernan, Pineda B. Lopez, Ricardo Martdriaga, Guillermo Michener, Bruce C.

Molina, Miguel Pel l , Richard P. Pineda , Hernh Pr ie to , Rolando Reyes, Melido Rockeman, Kurt A. Salgado, ~omhs Archibaldo

Schaer, David H. Smart, Gerald Soto, Pablo Suazo, Amado Suazo, Mauro Tabora, P h f i l o Villanueva, Ben j a d n Wilson, Michael E. Wilson, Robert Zelaya, Gustavo

Zucca, Alan

Gerente, Cooperativa "FruCa Del 901'' ARDO/ClSAID USAID Brojttat Manager, USAID Research Director, FHIA Agriaultural Development Offioer USAID Direator, Proyecto Manejo da Reaureoe Naturalee, SRN D i r . Sec. Recureos Naturelea FHIA Agricultural Resident Advisor, USAID Agriaultural Speaial is t , USDA Advieor t o FEPWEXAAH Chieft Private Sector Office, USAID Reg. Sanidad Veg., Relaciones Naturales Economic Offiaer, US Embasey, C. R. President, FEPROEXAAH Chieft Admin . & Fin. Services, FEPROEXAAH CREHSUL Marketing Advisor, Regional Economic Recove~ry Program, CABEI Montelibani, S .A. Gerente General, FEPROEXAAH President, FEPROEXAAH Marketing Export Special ie t , FEPROEXAAH President, COAGRWAL Project Officer, ARDO, USAID Jefe, Laboratorio de ~ n b l i s i s de Pesticidiis, FHIA Chief, Agricultural Development Office, USAID General Manager, AGRO In t ' 1 Jefe Depto. de Entomologia, FHIA President, Fruta Del Sol Carven, Inc . Jefe de ~ i v e r s i f i c a c i 6 n ~ FHIA Agribusiness Spec ia l i s t , ARDO/USAID Agricultural Economist, FHIA Project Officer, ARW, USAID Agricultural Special is t , Banco de 10s Trabajadores USAID Advisor t o CONAFEXAH

Chin, Peter D. Coles, Walter Crowe, Paul A. Easterl ing, Tommy L.

Financial Manager, JADF Private Sector, USAID Sr. Economic Advisor, USAID Sr. Director of Operations, AGRO-21

Ful ton, binworth Hamilton, Harnan L, Jonlin, W L l l i e u n Lewie, Errol

Manaingh, Ajai Maxwell, Zan Mahindon, k4iahael Miller, Carol1 Nolan, Mark N O ~ V U I I Edward O'Connor, Tim Owens, Riahard Park, Aaron

Prendergast, Norman Radon, Raymond

Rampair, Stanley Reid, Janice Robineon, Brenda Rochester, Vivian Thomas, Carol Wahlberg, Debra Young, FLorence

Contrerae, Jorge Garcia, Gerardo de l a Peiia Gonzalez, Hector M. Gonzalez, Rodolfo J. Kelly C., Marco Antonio Leyvn , Gabriel

Martinaz, Consuelo Ontaweros, Maria de l

Ro.sario Ritz H., L. Guillermo Taylor, Samuel Vida.:Li, Carlos

Ayrioul t u r d Econamief , USAID Dirsofor Oenoral/Manargsrt YETCO Ditector , UYAZD Manager - Loan Admini o t r a to r r Waf algar Development Bank, Ltd. Zoology Department, U W I genior Investment Ot!ticec, JADB Eaonomtet, USAID Agricultural Speaial iot , USDA/CAS Agricultural Development Sgeaial is t , USAID Chief Exeautlve, AUW-21 Food Aid Officer, USAID Aoting Chief, RDO, U 3 A I D Diceator of Agribusiness Jamaiaa Pramotiono ( JAMPRO) General Manager, YAMPRO Aset. Director Data Bank/Evaluation Division, MOA Director of Land Uti l izat ion, AGRO-21 CARD11 U W I General Manager, JNEC - Project Officer, USAID Plant Protection/Quarantine, MOA Ind. Development D iv i~ ion t USAID Plant Pathologist, MOA

Agricultural Spec:Lalist/Economiat, USDA Jefe, Dpto. de Prom y Geetoria, UNPH President, UNPH Jefe, Dpto. de Invest. y Aseist. Tech., UNPH Gerante, UNPH Agricultural Export Credit Officer, Banco Nacional de Comercio Exterior ( B A N C W X T ) Geronte de ~ r6d i toSr BANCOMEXT

Gerente de Cam,, Intern., UNPH Vegetable Producer, Culiacan A I D Representative Director General SARH (Asuntos I n t ' l )

A P P E N D f X D

THE CMUBBEAN BASIN INITIATIVE (CBI)

THE CARIBBEAN BABIN XNITZATZVE ( CBI )

In Auguet, 1983, Preeident Reagan signed 'the Carihhraan Basin Economic Recovery Act of 1983, which was designed t o improve economic and p o l i t i c a l s t a b i l i t y i n t h e Caribbean region through t r ade , a i d and investment. Benefiaiary coun t r i e s f o r duty-free t reatment under t h e Act include Antigua and Barbuda, Barbadoe, t h e Bahamas, Belize, Coeta Rica, Dominica, Dominican Republic, E l Salvador, Grenada, Guatemala, Ha i t i , Honduras, Jamaioa, Panalura, S t . Lucim, S t . Vincent and The Grenadines, The Netherlands A n t i l l e s , 3 t . 3ritrtogher-Novis, Trinidad and Tobacjo, Montserrat and t h e Virgin I s l ands ( B r i t i s h ) . Botent ig l benef ic i - a r i e s not y e t designated by t h e Prrmsident a r e Anguilla, t h e Caymen Is lands , Guyana, Nicaragua, Suriname, Turks and Caicos Is lands.

The Act al lows t h e President t o e l iminate d u t i e s on a l l products f o r 12 yea r s , with c e r t a i n exceptions. Most a g r i c d l t u r a l products have duty f r e e access t o t h e U.S. u n t i l September 30, 1995. Sugar, beef and veal i tems have s p e c i a l requirements. In o rde r t o be e l i g i b l e f o r duty-free t reatment , a product must be grown, produced o r manufactured i n a benef ic iary country and must meet c e r t a i n rules-of-.origin. The Act inc ludes safeguard provis ions i n t h e event increased import^^ cause o r th rea ten t o cause i n j u r y t o domestic indus t ry , l abor o r ag r i cu l tu re . Upon t h e recommendations of t h e Secre tary of Agri- c u l t u r e , t h e Preuident can taka a c t i o n t o prevent much in jury . Under t h e " f a s t t rackg1 provision, an indus t ry can f i l e a p e t i t i o n f o r emergency a c t i o n on a pe r i shab le commodity. Duty f r e e t reatment could be suspended wi th in 21 days. Products e l i g i b l e f o r f a s t - t r a c k p r o t e c t i o n include l i v e p l a n t s , var ious f r e s h o r c h i l l e d f r u i t s and vegetables, f r e s h c u t f lowers, and f rozen concentrated c i t r u s ju ices .

A s shown i n t h e macro-economic statements f o r t h e coun t r i e s v i s i t e d by t h e team, economic condit ions had worsened f o r most of these coun t r i e s by t h e e a r l y 1980s and they were searching f o r ways t o improve t h e i r economies and t o generate fore ign exchange. Most of t h e coun t r i e s i n The Caribbean Basin and Centra l America had a g r i c u l t u r a l p o t e n t i a l s t h a t could t a k e advantage of t h e C B I 1 s i n t e n t and looked t o t h e U.S. f o r a s s i s t ance i n developing t h e s e p o t e n t i a l s . USAID Missions i n t h e regions responded by developing var ious programs t o a s s i s t i n crop d i v e r s i f i c a t i o n and non- t radi t ional a g r i c u l t u r a l expor t programs. It should be noted t h a t various USAID Missions had attempted over t h e years (goixg back t o t h e l a t e 1960's and e a r l y 1970's; t o a s s i s t i n developing non-tradi t ional a g r i c u l t u r a l programs (e.g., Guatemala, E l Salvador, Honduras, Costa Rica) , but t h e r e was no t t h e widespread e f f o r t t h a t occurred a f t e r t h e CBI .

Excerpted from OICD/USDA Agr icu l tu ra l Marketing Workshop from The - Caribbean Basin. Washington, D.C., September 1985.

A P P E N D I X E

THE BUMPERS AMENDMENT AND POLICY DETgRMINATION 15

THE BUMPERS AMENDMENT AND POLICY DEXEXMINATION 15

A. The Bumpers Amendment

(Section 209 of The Urgent Supplemental Appropriation Act of 1986 (PL 99-394), enacted July 2, 1986).

The Bumpers Amendment provides thatr

None of the funds appropriated by this or any other Act to carry out Chapter 1 of Part I of the Foreign Assistance Act of 1961 ahall be available for any testing or breeding feasibility study, variety improvement or introduction, consultancy, publication, conference, or training in connection with the growth or production in a foreign country of a agricultural commodity for export which would compete with a similar commodity grown or produced in the United Statesr Provided, that this section shall not prohibit (1) activities designed to increase food security in developing courtries where such activities will not have a significant impact on the export of agricultural commod- ities of the United States) or (2) research activities intended primarily to benefit American producers.

B. Policy Determination 15 (PD 15) - Aseistance to Support Agriculture Export Develoment

The following is an excerpt from A.I.D. Policy Determination 158

1. Introduction

The goal of A.I.D. agricultural development assistance is to help the developing countries achieve food self-reliance, which represents a balanced approach to addressing the problem of hunger. Food self-reliance involves supporting (1) the production of agricultural commodities that are economically viable to produce, (2) more efficient food distribution, (3) expanded purchasing power, and ( 4 ) international trade.

Although A.I.D. encourages international trade as one important element of the development process, the Agency is concerned about potential injury to U.S. agricultural exports. A.I.D. does not intend to support production of agricultural commodities for export that are likely to have a significant impact on competing U.S. exports.

2. A.I.D. Policy

A.I.D. assistance Posters the food uecurity objectives of developing coun- tries. Long-run food security, as defined in A.I.D.'s "Food and Agricultural Development" Policy Raper (May 19821, is the ability of a country to assure a nutritionally adequate food supply to its population on a continuing basis. This can result from a combination of domestic' production and importation of food on commercial terms paid with foreign exchange earnings. Comparative advantage provides the conceptual underpinning governing the decision of which commodities to produce, whether for domestic consumption or for export.

Food security defined in this way is consistent with a strategy of - food self-rslian~, rather than a strategy of food self-sufficiency . Food self-reliance recognizes that a country's food supply can be assured not only through increased domestic food production and more efficient food distribu- tion, but also through expanded purchasing power and international trade, including intra-regional trade.

In this context, it is A.I.D. policy to avoid supporting the production of agricultural commodities for export by developing countries when the commodities would directly compete with exports of similar U.S. agricultural commodities to third countries in direct competition with U.S. producers.

3. Implementation

To comply with Agency policy on this issue and with applicable statutory requirements, missions will examine whether or not an activity designed to increase the production of a particular commodity for export can reasonably be expected to have a significant impact on U.S. exports of that or a similar commodity. Proposed activities, as well as components of ongoing activities for which funds have not yet been obligated, that are likely to have a significant impact on exports of U.S. agricultural commodities to third country markets will not be funded.

A.I.D./Washington will regard the agricultural export dimension of all projects as an important policy issue when considering New Project Descriptions (NPDs) included in Mission Action plans. Proposed projects likely to have a significant impact on U.S. agricultural exports to third countries will not be approved at the NPD stage. (If a determination cannot be made on the basis of the information provided in the NPD, a Project Identification Document (PID) may be developed, but the PID will be reviewed in A.I.D./Washington, not in the field.) This is consistent with current Delegation of Authority procedures regarding projects having special policy concerns.

Examination of the export dimension of on-going and proposed projects will include consideration of the following factorst

-- export p o t e n t i a l of the commodity i n questionr -- magnitude of production l i k e l y t o r e s u l t from the project ! -- l i k e l y export markets! I- volume of U.S. exports of the commodity i n question and s imi lar

aomrnoditiesr -- U.S. share of t h e world or regional market tha t could reasonably be expected t o be a f f e c t e d by increased exports o f the aommodity,

A P P E N D I X B

GUIDES TO BRUITS AND VEGETABLES APPROVED FOR EXFORT 'TO THE 11.8. RROM BEUCTED COUNTRIES8

GUATmmA HONDURAS

EL SALVADOR

r n t r lctlons

okln pr lckl y wlm ma r o w turn pa3 la onlm I n k plmrwle colwy btradf ruit

okra m ) a l twlrcho ds aunplrr r jo cob01 l a p e r ro p l h rplo 6rbol de pim Iruta do phn none eepirregoa W J ~ W V p l n a - p l ~ C0)ollllo q u l l l t h ramlacha amlqa rurab.ga rcpollo bra011 col l f lor

Artoorpus o d o r r t l w h Asparqua otf iclnalir Aa t roca rp app.

Bruaica nrpu Braral~a oleracea

mne mr

Braseica raps Cejanur ca jan C.aWma .pp.

Clt rw aurantilfolla Citrus limm

Citrus m d h

Cltrus pa rd l s l Citrua r r t l cu lah C l i > ~ aincsis

Coloca?lia eeculenta Xsn b s a r a 8 ~ . tdccanla w. Crescentla em,

Oumrhl k e a e

MI= gandul cantah

rrns consult IWIIS/PPO for detal ls trertnmnt vIUI neLhy1 b r m l b rqul red a r t i f ica te of origln, conault USM d y anooth rkln variety I r enterable t r e a b n t required, consult AR(IS/PW fcr detal ls idan l h idem

grapefruit tanger lrm orange. Valencla orango dJdrca:, -0 )an taro gourd calabash tree e.o. c a b l o u p s emJnber. .gus* v a t e n l a lufa glote artichoke carrot ysn

toronja nwdarlna narmja

none

o n l y throqh NA ports m uaabrent 4 t h mthyl brunlde rqul rad m e mM Callfornls prohibltr entry nune Idry)

aJrlo zikthinum Fraqaria spp. Holianthur tukrosw Hlbleeus rabdsritta

dur lan stravkrry Jerusalem artichoke rose1 le Januica mrrel lettuce tana to m~nloc a m a v a

Iresa alcachofa rosa do jamaka

Lactuca sativs L-r icon esculmtm M i h o t esculenta

m e enterable Weugh NR and NP ports llQY

srrcwroot b d w plantain watercress uaterl l ly root parsley rrtrhg ban pas radish blackberry raspkrr y mrrel chr istcphlne w e t a b l e p a r

m no p r m l t required, f ru i t and leaves ace enterable none mra none aauiult m S / P m for & h i l a mno without leaven llxn

NMtur titun off lcinale Nclunbo nucifera Pe trosellnrrm cr ispun Phaaeolus vulgaris PhUll fdtlWIl Raphjnus a a t l w Rubua +p.

p r e j i l valnica arver ja r b m f t W I b W B d

vlnsgr 111 chayote quisquil Ichintal naranjllla sspinaca coca0 tar1 1 l o ~ l s i f 1 elote dc mh q e r i b r e jmqrbra

c d y through M ports mn-cpmrrcial, enterable ml y through SAG ports

on1 y through NA ports m only Uuouph NA ports m none m nono

~~~ qui tanse S~irracia oleracea

~ r a n j l l l a splnach COCW thpz Salolfy corn, green g w e r root

'I)lecbram cacao ?h)mu vulgaris Troqcpogon porrlfollus 2ea map Zlngber o f f l c l ~ l e

okra p r l c k l y pslm m r q r o v r fern gar 1 l c on Am 1-k p l r u a ~ l r cs ler y

okro -)a1 h111echo d r manqlar '10 cebol la pu r r ro P l M oplo nulr!ng erpar rogoa P J ~ ~ W p l n a - p l ~ co)vl l J l o g u l l l e h r w l a c h e aCe1qa rutsbega repal lo b r a 0 1 1 c o l l ~ l o r

m a M r C ~ S U I Aplm g r a v b o l e ~ Aftcearpun o d o r a t l s r h Aspmragur o f f l c l n a l l r Cuttccaryun ow.

Beta vu lga r l r , bwt v l a s chard rutabaga a w e b r c c o l l uul i f 1-er etc. tu rn lp p l 9 w n p a chestnut

Bcasrlca rspa Cajanum cajnn b s b n r a sm.

rand corwult APlIIS/PFQ f o r d e t a l l r treatment w l t h m t h y l branlde requl r rd consult APIIIS/PFQ l o r d e t a i l 8 a7 l l m l t e d port: r n t r u r r mM a l l y smooth r k l n va r ie ty Ir enterable treatment r e q u l r e d ~ consul t AnlIS/PFQ f o r detsl l rr I d m idem Idem

C l t rus a u r a n t l l f o l l a C l t rus l h n

1 i d n c r l o l l o 1 Mll

e t r q

Cl t rus pacedlsl C l t ~ s re t l cu la ta C l t r w slnesln

g r a p f c u l t tangerlna orange Valencla oranqe Ubll!een -0 yw u r o gourd c s l a h s h t ree e.q. cantaloupe CLCmber squash ua t e r m l o n l u f a globe artlchake c a r r o t ylYn

toron j a nrandar I n s m r a n j a

comnerclal shlpncntm on ly

enterable on ly t h r w h NA p o r t s mne treatment w i t h m t h y l branIda requlred M n e m e n t e r ~ b l e on ly though NA, SFC a d NP por t8 none

Durlo z lbe th lnw Fragarla sm. Hellanthus tubccosw

dur Ian s t rav tc r r y Jerusalem artichoke

rose l le Jamaica so r re l l e t t r r e t m t o mania: cassava

rosa de j ~ ~ z r l c s

L a c t u ~ a sat iva L ) ~ o p r l c o n c x u l e n t m Hanlhot esculenta

none enterable Lhrargh NA and NP por ts none

a r r m r w t banana p lan ta in water c r e u P a radich b l a c k k t r y r a s p k t r y

' sor re l chr l s t q h i n e

. vegetable p a r

HOn no pdt requlred, f r u i t and leaves are enterable rWY rwlc enterable w1VKwt leaver r u m

enterable on ly through Nh p o r U non-camrrclal, enterable on ly throrrgh SAC por ts

R w x spp. Scch lm edule

Splnacla o l e r a c a neobrarw cacao 'Itqwus vulqar 1s Tragcpoqm porr l f o l l u s &a ma)% Zlnglbcr o f f l c l n a l e

spinach coca t h p e SalslEy corn, green g h e r toot

none enterable on ly t h r o q h NA pxtr none KnC none . m

ot ta pc lck l y palm nu rove far11 g a 2 i o o n l m I n k plnerpple ce lery

aaprragut black pn lm m.ch wh

Beta vulgar18 Wt r l a r chard r u t a k q a C'Jbhsgd

, brocol 1 csu l l f l ouer rtc. turn lp pigcon p a char tnu t

Braor lcr M ~ I U B t u r l c a o l e r w r a

Brssslca raps C.janur wjan Castdma .pp.

T*M conru l t AFHlS/PFQ f o r d e t r l l r t r r a ~ n a n t u l t h m a y 1 branlde tequlral none only m t h r k l n var ie ty 1s enterable t reabmnt c t x p l r d t connul l MiIS/PFQ l o r d a t a l l r I d a l d m ldem

l b d n c r l o l l o 1 ldl

C i t rus p a r a d l r i C i t r u s r e t i c u l a t a C i t rus r l n e s i s

g c a p f c u l t tanqer Lrs orange Valerkla oranqe dashen -0 YIM tdro gourd LalpLabll tr.b

toronje mand~r l ru naranja

Colccasla e x u l e n b Xanthorrrrra sw. Alocasia sw. C t e s c u ~ t h spp.

mlanqay C a o taco a)sle blirlsa

toturno melon p c ~ l r o a)ote n n d l a pashte alcachofa sMahor La b n e

none

0.9. c m t a l w p c cucunhr squad u a t e m l o n l u f a globe artichoke car ro t yam

enterable on ly through Nh p r t s norm t rea tn rn t u l t h m t h y l branIda r e q u l r d none rOOC enterable o n l y though M, SFli and t@ prtr, none

dur Ian strcvberry Jerusalem art ichoke

rosel lC Jamaica so r re l l e t t w e tonuto nunia: cassava a r r c w r w t banana planta ln watercress p a radlsh b l a c k k r r y r a s p k r r y sor re l chr istophlne vegetable p a r

rosa de j m l c a

k t u c a u t l v a L)copcclcon esculentun h n i h o t ebculenta

none enlcrable t h r a y h Nh and W por ts rue

m no pennl t r q u l r e d l trult and leave^ are enterable nona none enterable without leavsr ru le

barlano p l i t a m t x r r o arver j a r h o frMLuera

Hasturtlum off l c i r a l e P i s m s a t l w n Raphanus s a t i w -s spp.

enterable. on1 through NA ports mn-rclal , enterable on ly through SAG por ts

v i n a q r l l l c h a p t e g u i s q d l l c h i n t a l esplnaca cacao tan i l l o sa ls i f i e lo te de nufz

SpLMcla oleraces Theobrcnu cacao ?~Y'NS vulgar i s Trqopogon porr l f o l l w Zea map z l n g l k r o f f i c l n a l e

splnach COCW

t " P o ~ l s i f y corn, green

none enterable o n l y through NA p o r t r noM m e none mn ginger rwt gencglbre

jengibre

*Lh A t l n n t l c url Culfr South o f b l t l r r c r c # Puerto Rlco, ~ l r g i n l s l a ~ d s .

PR - Puerto nlm.

A P P E N D I X G

BIBLIOGRAPHY

(PR(XTECP PAPERS, BVALUATIONS, REPORTS)

A. BELIZE

A I D . Commercialization of A l t e r n a t i v e Crops. P r o j e c t Paper, P r o j e c t No. 505-0008. Washington, U. C., August 1985.

BABCO. B e l i z e Commercialization of A l t e r n a t i v e Crops P r o j e c t : 1986-87 Farm -- - T r i a l Eva lua t ion . ' Orange Walk Town, Belize, June 30, 1987. -' -

Bachofer, Jack and Azucena Quan. PD-15 Threshold Analysis8 CACI P ro j ec t . Prepared f o r USAID/B. Be l i ze C i ty , Be l i ze , January 28, 1988.

CBB. F i f t h Annual Report and Accounts - 1986. Be l ize C i ty , Apr i l 1987.

CBB. S t a t i s t i c a l Digest . Be l i ze C i t y , December 1987.

GOB. Be l i ze Investment Code. Prepared by Be l i ze E ~ p o r t & Import Promotions, Ltd. Chief of Commodities and O f f i c e r of Economic Development, Min i s t ry of Foreign A f f a i r s & Economic Development, Be l i ze , n.d.

GOB. F ive Year Macro-Economic Plan f o r Be l i ze , 1985-89. Min i s t ry o f Foreign A f f a i r s and Economic Development, Belmopan, n.d.

GOB. P e s t i c i d e s Cont ro l A c t 1985. Min i s t ry o f Agr icu l tu re .

GOB. P e s t i c i d e s Cont ro l Act 1985. Be l i ze C i ty , December 25 1985.

Keeves, Wade H. S t rengthen ing The Minis t ry o; Agr i cu l t u r e , Be l i ze , Draf t Eva lua t ion of The B e l i z e Col lege of Agr i cu l t u r e . Prepared f o r Min is t ry of Agr icu l tu re . Belmopan, August 10, 1987.

Kieh l , Elmer R. and Brian M. Fos t e r . S t rengthen ing The Min i s t ry of Agricul- t u r e , Be l i ze t Draf t Review of The Research/Extension Capab i l i t y . Prepared f o r Min i s t ry of Agr icu l tu re . Belmopan, August 6, 1987.

S t e e l e , Howard, e t a l . Eva lua t ion of USAID Commercialization of A l t e r n a t i v e - Crops, P r o j e c t N o . 505-0008 ( D r a f t ) . LAC/DR. AID/Washington, D.C., May 1988.

U.S. Embassy. Be l i ze t Investment Climate Statement . Be l i ze C i ty , November, 1986.

USAID. Review of uSAID/~e l i ze P o l i c y Dialogue w i t h Government of B e l i z e ( D r a f t ) . B e l i z e C i ty , January 1988.

A I D , Dominica Supplement t o tlie Caribbean Heyional. CDYS 1986-1990. USAID. Bridgetown, June 19U5.

AID. High Impact Agr i cu l t u r a l Marketing and Production. Amendment No. 1, P r o j e c t No. 538-0140. USAID. Washington, D. C . , ~ G n e 2988.

A I D . High Impact ~ ~ r i c u l t u r a l Marketing and Product ion. P r o j e c t Baper No. 538-0140. USAID. Washington, D.C., February 1986.

A I D . Investment Promotion and Export Development. P r o j e c t Paper No. 538- - 0 l i 9 . USASD. Washington, D.c., ~ u g u s t 1984.

A I D . Investment Promotion and Export Development. Amendment No.2, P ro j ec t No. 538-0119. Washington, D.C., May 1987.

A I D . S t . K i t t a - Nevis Country Supplement t o t h e Caribbean Regional CDSS 1986 t o 1990. USAID. Bridgetown, June 1985.

A I D . S t . Lucia Country Supplement t o t h e Caribbean Regional CDSS 1986 t o 1990. - USAID. Bridgetown, June 1985.

A I D . S t . Vincent and t h e Grenadines Countrv Sumlement t o t h e Caribbean - .. Regional CDSS 1986 t o 1990. USAID. Bridgetown, June 1985.

Brown, A lbe r t L. , and J . A . Chapman. Eas te rn Caribbean A g r i c u l t u r a l Sec to r S t r a t egy . Chemonics I n t ' l . Consu l t ing Divis ion, Washington, D.C, June 1988.

CDB. Annual Economic Report 19878 Grenada. Economic and Program Department. Bridgetown, March 1988.

CFSC. Fourth Annual Report. Bridgetown, March 1988. -- David Jones & Assoc ia tes . Market Development Programme f o r Non-Traditional

A g r i c u l t u r a l Products from t h e Coun t r i e s of CARICOM. Prepared f o r EEC. Middlesex, U.K.1 March 1988.

Dimpex Assoc ia tes . CARD1 Farming Systems Research and Development P r o j e c t - Ev?lua t ion ( D r a f t F i n a l Repor t ) . Prepared f o r USAXD. Washington, D.C., -.. n.d.

Gochenour, J o e l G. The Future Outlook f o r Dominican Banana E m o r t s and t h e Devulopment S t r a t e g y Needed a s a Resu l t of This Outlook.

HIAMP. Uuiainesa Plan Pot Wtndwarcl lalami-caL (WLT). YubmLtted t o --- -a- -I--

AyrboulturaL Uusineea Truat . 13ridget9wn, October 19, 1987.

HIAMP. BueLr~ees Plan f o r Cherry - L4im A?.ro-lnduatries - Tnc6 Rre~~tantecl t o Ag ~ e n t F e True t . Bridgetown, &rilY, 1988.

HIAMP, BusLneee Plan f o r A g r o - l n d u s t r i e s s . Presented t o the Ay Venture -- Trus t . Bridgetown, March 14, 1988.

WIAMP. f l ~ n c ~ k l i s t -- v . Format f o r Prepar ing HIAMP Business Plans . Bridgetown, - 19811.

HIAMP. Quarxers I and 11, 1988 Reports. Bridgetown, 1988. - - HIAMPS. Business Plan Prepared f o r Agroindustrieal Limited, S t . L u c ~ ~ . --

Bridgetown, February 1988.

Jackson, Donald R . , L. F o r s t e r and C. Glesne. Evaluat ion of t h e S t . Vincent A g r i c u l t u r a l Development P r o j e c t (No. 538-0101). Prepared f o r USAID by Midwest Un ive r s i t y Consortium f o r I n t e r n a t i o n a l Development, Ohio S t a t e Univers i ty , September 30, 1986.

La Gra, J e r r y and R. Marte. Proposed S t r a t e g y f o r t h e Development of t h e F r u i t Sec to r of t h e Windward I s l ands . I I C A Of f i ce , Castries, S t . Lucia, A p r i l 1987.

La i rd , Larry. USAID Observat ions About a Pos s ib l e S t r a t e g y f o r Market-led, -- - -

Targeted, A g r i c u l t u r a l D i v e r s i f i c a t i o n i n t h e astern Caribbean. Presen ted t o CARICOM M i n i s t e r s of Agr icu l tu re . Tr inidad, May 1988.

Louis Berger I n t e r n a t i o n a l . Evaluat ion of t h e P r o j e c t Development Ass i s tance Program. F i n a l Report t o USAID. Washington, D.C., January 1988.

Louis Berger I n t e r n a t i o n a l . Economic Analysis of t h e HIAMP P r o j e c t , Dra f t Report. Prepared f o r USAID. East Orange, New J e r s e y , May 1988.

MTIA. S t . Vincent and t h e Grenadines* Winter Vegetable P i l o t P r o j e c t , F i n a l ~ e ~ y r t . Prepared by RONCO Consul t ing Corporat ion f o r USAID. Bridgetown, May 1986.

New, Stephen CATCO P a s t , P resen t and Future ( d r a f t ) . Bridgetown, 1988. -- Sau l , Hugh Problems and Progress i n Marketing F r u i t s and Vegetables i n t h e --

Eas te rn Caribbean Region. FA0 Marketing Consul?ancy. 1982. -- S t e e l e , Howard L. L b a l e t i o n of t h e Caribbean A g r i c u l t u r a l Trading - Co.

(CATCO) . p r o j e c t No . 538-0080. OICD/USDA. Washington, D. C., A p r i l 1986.

8. CARIBBEAN KtEOLONAt (continued)

UNCTAD/QATT. Caribbeanr Freeh F r u i t and Veyetablee Export %ly/Demand _I-

Study. I n t e r n a t i o n a l T r & d ~ Center . January 1988.

U.S. Department of Commerce (USDC). Guidebook f o r Caribbean Basin Exporters. - Waahington, D.C., 1988.

USDC. What i s t h e CHI? I n t e r n a t i o n a l Trade Adminis t ra t ion, Washington, D.C.

USDC. Barbadosr For:oign Eaonumic Trends and The i r Imp l i aa t i ons f o r t h e U.S. YET 88-64. Washington, D.C., J u l y 1988.

USDC. Dominicar Foreign Economic Trends and The i r Imp l i ca t i ons f o r t h e U.S. FET 88-36. Washington, D.C., March 1988.

USDC. Dominican RopublLc; Foreign Economic Trends and Their Imp l i ca t i ons f o r - t h e U.S. FET 88-5:l.. Washington, D.C., June 1988. -

.f USDC. S t . Luciat F o r e i s . Economic Trends and Thei.r Imp l i ca t i ons f o r t h e

U.S. FET 88-35. Washington, D.C., March 1988. - U.S. Departmont of S t a t e . S t . Luciat Background Notes. Bureau of Pub. Aff. ,

Washington, D.C., June 1987.

U.S. Department of S t a t e . Barbadosr Background Notes. Bureau of Pub. Aff. , - Washington, D.C., June 1987.

U.S. Department of S t a t e . Dominica; Background Notes. Bureau of Pub. Aff. , - Washington, D.C., June 1987.

Vincent, A?.bert. P rospec ts f o r Employment Crea t ion i n Agr i cu l t u r e . Paper p r e sen t ed a t Fourth Annual Meeting of t h e Tr in idad and Tobago Econ. Associat ion. 7 - r t of Spain, Tr in idad , May 1988.

W i l l i ~ ~ s , A. , S. Wingert and P. Buckles. High Impact A g r i c u l t u r a l Marketing and Product ion P r o j e c t (HIAMPI-. LAC Bureau Review, A I D . Washington, D.C., May 6 , 1988.

C. CHILE - A y r i c u l t u r a l Attnchu. Froeh Doaiduoils F r u i t Annual. ACR numberr CI8001,

Bregercbd f o r USDP,/F~S. San t iago , Chi le , January 5, 1988.

Aeociaci6n de Exporta~dores de Chi le A.G. Documonto Resumen E s t a d f s t i c a s de - E x g o r t a a i h Hor to f ru t l co l a . Tempokada Septiembre 1986 - Agoeto 1987. San t iago , Deaiembre 1987.

Di reca i6n de ~ r o m o c i h , Departamento ~conomia Agrar ia (Univers idad Cat6lica de Ch i l e ) , Sociedad Necional d e Agricul t u r a . Panorama ~con6mico Vru t icu l tu re r l , 1'387. November, 1987. -

Hyatt , John. "Conven,Fo de l a F ru t a de Inv ie rno Chi lenar Nuevas Puertas/'Nuevas --- Oportunidades, New Orleans, Louis iana, A p r i l 8, 1988. --

ODEPA. Chi le r " E s t a d i s t l c a s Agropecuarias 1975 - 1987". San t iago , June, 1988.

ODEPA. Evoluclbn de l a s Exoortaciones de 10s Productos S i l v o a a r o ~ e c u a r i o s No - * .. L

T r a d i c i o n a l e s y s u P a r t i c i p a c i 6 n Dentro d e l T o t a l S ~ l v o a g r o p e c u a r i o , 1982 - - 1986. San t iago , Agosto 1987.

ODEPA. ~ o l e t h de Comercio E x t e r i o r Sec to r Pesquero, Diciembre 1986. San t iago , n.d.

PROCHILE. Chi le r Exportaciones , Invers iones , Economla. Aiio G - No. 29. San t iago , Marzo - Abr i l 1988.

U.S. Embassy. Ecorlomic Trends Report . Sant iago, Ch i l e , March 1988. - Venezian, Eduardo. Ch i l e and t h e CGIAR Centersr A Study of t h e i r

Co l l abo ra t i on i n A a r i c u l t u r a l Research. A ~ r i l . 1987.

AID. Costa Ricar Ayr,Lcultural and I n d u e t r l a l Reac t iva t ion . P r o j e c t Pager. P r o j e c t No. 515-0223. Waehington, D.C., August 27, 1986.

AID. Costa Ricar Non-Traditional A g r i c u l t u r a l Exports Technica l Support . P r o j e c t Paper P ro j ec t No. 515-0237. Washington, D.C., September 25, 1987.

Allen, Glen. Export Expansion Program f o r Non-Traditional A g r i c u l t u r a l Expor t s f o r t h e Agriculture/Agribusinoee Sec to r of Costa Rica. I n t e r n a t i o n a l Rese,aroh Group Ltd. f o r USAID/CR. ~ a s h i n ~ t o n 7 - b .C. , November 1985.

BANCK. Memoria Anual - 1987. San ~ 0 8 6 , Coota Rica.

B a d i l l a C. , Mauricio. Plan P i l o t o Increment0 de l a Produc t iv idad Cosecha de Fresa . Informe F ina l . San Jos6 , Costa Rica, Febrero 1988. ( D r a f t ) -

CAAP-CNAA-ICAFE-UCR-COOPEFRESA. Programa Nacional de Fresas . San Jos6, 1986.

CAAP. Five Year S t r a t egy . San Jose , December 1987.

Presupues to 1987. San Jose, n.d.

CAW. Programa de Fresas . San Jos6, 1988. - CAAP. Resumen E jecu t ivo de 10s Programas d e l CAAP - 1986-87. San Jos6r

December 1987.

CENPRO. ~ 0 1 0 t h de InformaciBn Comercial. San Josg. Mav/June 1988.

CXNDE.

CNAA . CNAA.

CNAA . CNAA . Centro

Memorandum of Understanding. San ~ 0 8 6 , June 6 , 1988.

Costos de Producci6n de Pirnienta (Min i -Pe r f i l ) . San Jos6 , n.d.

Costos de ~ r o d u c c i 6 n - 36 Productos. San Jose, 1989;

Modelo d e Fresas . San Jos6 , J u l y 198R.

P e r f i l d e F a c t i b i l i d a d d e Fresas . Can Jos6, n.d.

C i en tP f i co Tropica l . Costa Ricar P e r f l l Ambiental. Es tud io d e Campo. Prepared under c o n t r a c t f o r USAID/CR, San Juan, December 1982. -

Costa Rican American Chamber of Commerce. I nves to r s ' Guide t o Costa Rica. -- August 1985.

F i e s t e r , Donald and Randal Redcnius. Eva lua t ion of CAAP ( D r a f t ) . Prepared f o r USAID/CR. San Jose , March 1988.

D. COBTA RZCA

Frnnco, Albert. s i o n only).

( aan t Lnued)

by USAID/CR.

Sances, Frank V. for CAAP by

Stevens, Wendell. by IESC for

Strawberry Production i n Costa Hicar Part I. Prepared Pacific Aguic. Labs. San Diego, California, May 1986.

R. A i r Export of Perishables from Costa Rica. Prepared USAID/CR. San Jos6, August 22, 1986.

Non-Trudltional Expert Drojeat (Draft) (Preliminary conalu- L a Acadomia ds Centro AmSrica. San Joe&, A p r i l L O , 1987.

Huffstutler, Yteven C. Situation Reports Coopefresa, R.L. Prepared by A C D I to r USAID/CR. San Jos6, July 11, 1986.

INCA& y Universidad de Miami. Laa Exportacionee No-Tradicionales de Costa - Rtcat Retoe y Perspectivas. Borrador. February 1987.

I R t Research Ingt i tute , Preliminary Analysis of Twenty-one Non-Traditional -- Agricultural Exports from Costa Rica. Report t o USAID/CR. Stanford , Connecticut, October 3, 1986.

Kayser, Anne Nikki. Costa Rican NonJPraditional Exportsr Product and Market - Staff Y . San Jos6, October 1987. - --

MAG. Informe de Productos Vegetales Exportados, 111 Trimestre 87. Departa- mento de Cuarentih. San Jos6, July 1988.

MAG/CNAA. ~ i a g n 6 s t i c o del Sector Agropecuario y A n s l i s i s de l a Polstica Agropecuariar Acta Verbal (Version Provisional). San Jos6, Marzo 24-25, 1988.

OICD/USUA. Agribusiness Development Strategy. Office of Private Sector Relations. Washington, D.C., n.d.

PAAC. Project Description. Annex 1 of Project Paper. - PIP. Post Harvest Handling of Strawberries for Exgort i n Costa Rica.

P

University of Idaho, Moscow, April 1987.

Poole, Hugh A. A Review oE Analytical Laboratory Services Available t o the Horticultural Industries of Costa Rica (Amex 1). Prosrama de Laboratorio - CINDE, San Jos6, July 2 , 1987.

Quiktec Interamericana. 3M Global Trading Jams Project Report. San Jos6, August 28, 1988.

SEPSA. Informaci6n sdsica del Sector Agropecuario de Costa Rica. ~ e c c i i h ~jec=.va de Planeamiento, Secretario de Desarrollo Agropecuario de Relaciones Nacionales Renar. No. 3 . San Jos6, n.d. (About 1985). Funded

D. COSTA RZCA (continued)

TIC0 F r u i t . Resutnen Ejeautivo, 3an ~ 0 0 6 , March 24,

Torree, James h ' . An Evaluation of Costa Rica's Project of Coffee Technifi- cation and DiveruificatLon. Prepared by ACDX f o r USALD/CR. Snn Jofi6, - September 2 , 1987.

Tropical Science Center. Costa Ricar Country Environmental Prof i le . San - 13006, December 1982. (funded by USAID).

USAID. Economic rends and Problems. Economic Analp i0 Office. San Jos6, March 8, 1988

USAID. Non-Traditional A.yribusiness Export Strategy 1986-1990. San ~ o s 6 , January 1987.

USAID. Strategy Update. San Jose, Maich 1Pd8.

USDA. Costa Ricar Annual Agricultural Si tuat ion Report - i987 (Draf t ) . San Jos6, Costa Rica.

E. DOMINXCAN fZ&PUBLXC

AID. Agribusiness Promotion (517-0186). Project Paper. Waohington, D.C., - - Auguof 1985.

AID. Dominican Regubliur A M U ~ ~ Budget Submiasion - FY 1989. Waehington, D.C. June 1987.

AID. Dominican Republicr Annual Aation Plan. - Washington, D.C., February 1988.

AID. Export and ~nvestmerlt Promotion ( 517-0190 ) . Project Paper. Washington, D.C., Novembar 1985.

Coutu, A.J. ID/A Project Development Assessment and Recommendations for Completion. North Carolina State University, Raleigh, May 1985.

Crouch, Luis B. The Institutionalization of the Agricultural Research in the Dominican Republic. Agricultural Policy Research Seminar, St. Paul, Minnesota, April 14, 1986.

ISNAR. El Sistema de Inv~sti~aci6n Agropecuria en la ~epkblica Dominicans. Prepared for the GODR. The Hague, Netherlands, August 1983.

Jones, Earl arid E. Robles. Preliminary Analyses for the Development of the Commercial Farming Systems Projectr Volume 1, Project Description. Prepared for USAID/DR by Development Associates, Inc. San Fransisco, California, March 1986.

Thomas, Joseph M. Mid-Project Operations Evaluation on the JACC Agribusiness Promotion Project. Prepared for USAID/DR and Joint Agricultural Cons. Corn., Santo ~orngcp, September 15, 1987.

USDA. Programs r'Pre-Inspeccibn". APHIG/SEA/IACC. Santo Domingo, 1987.

B. ECUADOR

ANDE. Informe c1eL Proyeator "Eatudios Sobre Exportaaionee ~ g r x a o l a a No- Tradicionalee. 1986.

M3E (UNIPAC d e l Ecuador). Diayn6otiao de l a Situaci6n de l a ProducciQn de Algunae Eepeciee Frutales en Ecuador (Reemen Ejecutivo), December 1986.

BEDE. Informe de l Sr. Gerente General a l a Junta de Accionietae, 1987. ~uil :o, Ecuador, n . d .

Beinroth, F . U . , and W. Luzio L., F. Maldonado P., and H. Eewaran. Proceedings of t he Sixth International So i l Class i f icat ion Workshop, Chile and Ecuador. Par t III, Tour-Guide f o r Ecuador. Sociedad Chilena de l a Ciencia d e l Suelo, Santiago, Chile, 1905.

Bennett, Thomas, Stephen Lack and Rafael Diez. Evaluation of t he Non- Tradit ional Agricultural Exports Project . (Project No. 518-0019). Prepared by Chemonics, I n t ' l . f o r Private Sector Office, USAID, Quito, May 1988.

CENDES. Ecuadorr "~nfonnaci6n para e l Inversionista Extranjerol'. Comit6 de ~oord inac i6n Nacional para l a PromociBn de Inversiones, n.d.

CENDES. Memoria, 1969-1980. Publicacidn d e l Centro de Desarrollo d e l Ecuador. Quito, July 1 2 , 1988.

Colyer, Dale. Agriculture and the Public Sector (Draf t ) . Prepared f o r USAID, July 30, 1988.

CorporaciBn Financiera Nacional (CFN). Proyecto Sobre e l Cultivo Comercial de Esphrago Fresco para Exportaci6n. - Subgerencia de PromociBn, Departmento de Pron\ociBn. Quito, December 1985.

Devres, Inc. Quarterly Reports -- Ecuadorr Non-Traditional Agricultural Export Projects. Prepared f o r USAID, April 1987.

Discurso d e l Economista Marcos Espinel ~ a r t i n e z . Ministro de Agricultura y Ganaderia de l a ~ e p u l i c a de l Ecuador. Quito, Ecuador, 1986.

Dow, Kamal J. and Rirmulo Soliz. Generation and Transfer of Technology. Prepared f o r USAID, Quito, August 1984

Espinoza, Patr ic io , e t a l . ~e todolog$a Para Determinar Prioridades de Investigacidn Agropecuaria por Rubros y Areas de Trabajo ( E l Caso Ecuatoriano). J s f e PlanificaciBn INIAP (hasta Ju l i o 19871, Coordinador Investigaci6n FUNDAGRO (desde Ju l i o 1987). Quito, Ecuador.

FEDEXPOR. Informe Sobre l a ~ j ecuc i6n d e l Programa FEDEXPOR-AID. Quito, September 1987.

FEDEXPOR. Informe d e l Director Ejecutivo a 1 Presidente de l a Federacidn Ecuatoriana de Emortadores. Quito, June 1987.

If. ECUADOR ( continued)

FEDEXBOR. New Producta from Ecuador (Pamphlet). Imprentu Marisc,~l , ~ i e e f i o Grhf ico, Azuca, Eauador, n.d.

FEDEXDOR-ANDE-USAID. Oeearrollo de Agroindustrios en e l Ecuador. - ~undaci6n Natura, Evidencias d e l Dotorioro Ambiental en e l Ecuador. Quito,

March 1982.tores S.A.

Fundaci6n Natura. Log Plaguicidns en e l Ecuadorr Mas a116 de una simpls advertencia. Edited bv Marco Escalada. Januarv 1985.

Fundaci6n Natura. Sugarenciae para Evitar e l Efecto DaEino de 10s Plagui- cidaa. Prepared under the auspices of A . I , D . f o r the EDUNAT I1 program. - Q ~ i t o , August: 1986.

FUNDAGRO. Bibliografia Anotada Sobre l a Producci6n de Papa en e l Ecuador. Ser ie TQcnica Documento ~ i b l i o g r s f i c o No. 1. Quito, April 1988.

FUNDAGRO. By-Laws, Fundaci6n para e l Desarrollo Agropecuario, September 8, 1987.

FUNDAGRO. Informe Anual 1987. Quito, n.d..

GOE. Ecuador; A Country f o r Investment. January, 1986. - GOE. Ecuadorean Business Delegation To the Eduadorean American Business

Encounter On the Occasion of the S ta te V i s i t of Leon Febres-Cordero t o t he United S ta tes of America. January 1986.

I.D.E.A. Alternativan para l a Estrategia de hne rc i a l i z ac i6n de ~ a i z y Arroz en e l Ecuador. Quito, May 1988.

I.D.E.A. Estudio de Costos de ~enovaci6n, Rehabilitaci6n y Producci6n de Cacao. Vol. I Estudio. QuAto, November 1987

I.D.E.A. Estudio de Riesgos Naturales dc l a s C,rencas Hidrogrsficas de 10s Rfios Aguarico y Quijos. Quito, June 1987. -

I.D.E.A. Mejoramiento de 10s Mecanismos de ~omercia l izaci6n de Alimentos para Proteger a 10s Consumidores de Bajos Ingresos en e l Contexto de l a C r i s i s Econ6mica. Quito, October 1987.

I.D.E.A. Memorias de l Seminario, Uso de ~ g r o c r b d i t o para Asistencia Tgcnica a1 Agricultor. Quito, July 1987.

I.D.E.A. Pol.fticas de Maneio de Suelos v Aauas en Tierras Aarlcolas de - - - - - - . . . - --- -- - - - - - - - - - . a - - ~ - - - ., -

l a Cuenca d e l Rio Pastaza, Conclusiones y Recomendaciones d e l Seminario y Estudio T6cnico. Quito, Januarv 1988.

R. ECUADOR ( continuad

I . D . E . A . Yeminufio Yobra e l Deearrollo del Sector Cacaotero Ecuatoriuno. (Vol. 11, ~ e n b r l a u ) . (Quito, November 1987.

Informe de Visitat, a Areas Produc ta ra~ .- de Frs ta les de l Ecuador (5-11 de Mayo de 1986 1.

INIAP. Manual Agricola de 10s Principales Cultivou de l Ecuador. Quito, 1987.

IRX Research Inet i tu tg . The World Market Potential f o r Selected Agricultural Products -- Ecuador. Prepared f o r USAID, Quito, July 1985. -

Javed, Zia U . Environmental Assessment and Analysis of Pesticide Use i n t h e Pr ivate Sector. Coffee Renovation and Rehabilitation Project No. 518-0054. Prepared f o r USAID, Quito, September 5, 1986.

Kelly Harrison Associates. Markets f o r Non-Traditional Exports from Ecuador. Prepared f o r ANDE. Quito, July 1985.

MAG. ~ i r e c c i 6 n Sector ia l de Planificaci6nt ~ i v i s i 6 n de Informhtica y Estadis t ica . Precios de Productos Agropecuarios a Nivel de Productor 1983. ~ o l e t f n No. 9. Quito. n.d.

MAG. Informe de Labores, 1984 - 1988.

MAG/CONACYT. Provecto ~e te rminac i6n de Reniduos de Pesticidas Clorados en Lethe Materna. Quito, December 1986.

MAG/PNSV. Inventario de Plagas, Enfermedades y Malezas d e l Ecuador. Programa Nacional de Sanidad Vegetal de l Ministerio de Agricultura y ~ a n a d e r i a , con l a cooperaci6n de l a Deutsche Gesellschaft Fuer Technische Zusammenarbeit (GTZ). Quito, August 1986.

Mdoz, Francisco A. ~ i a g n d s t i z o de l a ~ i t u a c i d n de l a ~roduccidn de Algunas Especies Frutales en Ecuador. October 1986.

Ramos, Hugo H. Agricultural Credit Situation. Prepared f o r Pres ident ia l Mission on Agricultural Development from the United Sta tes . August 1984.

Reorientation of t h e Agricultural Sectort A Strategy t o Accelerate Appli- ca t ion of Science t o Increase Agricultural Productivity i n Ecuador. (Prepared by a Joint Ecuadorean/N.C. S ta te University Subcommittee to support the Agricultural Science and Technology Committee and f o r the Advisor t o t he MAG/L of Ecuador. Quito, February 1987.

Rodgeus, W i l l i a m L. Report on t he Findings, Conclusions and Recommendations on Assistance f o r the Non-Traditional Agricultural Exports Project (Project No. 518-0019). Prepared f o r USAID, Quito, November 1987.

( continued)

Sigma One Corporation. Evaluation of Frash Vegetable Export Po ten t i a l (Ecuador). Prepared f o r USAID under Brea ident ia l AgricuLturaL Task Force Follow-Up. June 1986.

USAID. 1942 - 1982, Cuarenta ABos de Cooperaci6n para e l Progreeo y Desar- r o l l o Ecuatoriano. Editora, Mant i l la Hurtado S.A.. Qui to , December 6, 1982.

USAID. Ecuadorr Non-Traditional Agr icul tura l Exports. P ro jec t Paper, P ro jec t No. 518-0015. Washington, D.C., August 9, 1984.

USDA. Ecuadorr Annual Agr icul tura l S i tua t ion Report. Quito, Ecuador, March 4, 1987.

USDA. Ecuadorr Annual Agr icul tura l S i t u a t i o n Report. Quito, Ecuador, March 1, 1988.

USDA/FAS In te rna t iona l Agr icul tura l S t a t i s t i c s Trade and Economic Informa- t i o n Division. Ecuador 1985. Qui to , 1985.

USDA/FAS I n t e r n a t i o n a l Agr icul tura l S t a t i s t i c s Trade and Economic I n f o n a - t i o n Division. In t e rna t iona l Marketing P r o f i l e f o r Ecuador. Quito, 1984.

Weil, Thomas E., e t al. Area Handbook f o r Ecuador. (Prepared by Foreign Atea S tud ies Department of American Univers i ty) . Washington, D.C., U.S. Government P r in t ing Office, 1973.

Whitaker, Morris D. Low Product iv i ty i n Ecuadorean Agricul ture. Prepared f o r USAID, Quito, June 14, 1988.

World ;Bank. Ecuador Agricul turer An Assessment and Direct ion f o r Develop- ment. Aucrust 22. 1983.

A I D . Cash Trnnafer. E W . 9nn Salvador, E l Salvador, Apri l 1988. {from ... Iiariot 1 .

A I D . E l S a l v a d o r ~ Agrarian Reform Finanalnp. Project Paper. Brojoat No. 519-0307. Washington, D.C., July 15, 1906.

A I D . E l Salvador1 Agribusiness Devolopmant Support (Amendment). Project Paper, ProjeatTlo. 519-0265. ~ a r h i n ~ t o n , D .C., July 18, 1986.

A I D . E l Salvador, Water Management,. Projec t Paper, Project No. 519-0303. - Washington, D.C., A.ugust 26, 1985.

Browen, Bruce L. and S . R . Dainee, Pr iva te Sector Extension Evaluation: Extension System ~ o d e l f o r ~ r r i g a t e d w r t ~ g r i c u l t u r e i n E l Salvador. - --- Prepared by SRD Rusource Associates, Inc. f o r USAID, San Salvador, August

Daines, Samuel R. Un nili is is de las Posibilid,?des de Produccibn y Exportaci6n - de Espsrragoa, Fresau, Frambuezas, ~ r a n d a n o e para e l Salvador. Prepared by SRD R e s . Crp., Inc. f o r USAID, San Salvador, 1987.

Development Associates, Inc. Evaluationr Salvadorean Foundation f o r Economic and Socia l Development (FUSADES) ( d r a f t ) . Prepared f o r USAID/ES. June P

10, 1988.

3USADES. Memoria de Labcres 1986. San Salvador, E l Salvador.

Fundaci6n Lhile. ~ i a g n b s t i c o de Divers i f icac ibn Agrlcola para El Salvador, Div. de Frutas y Hor ta l izas ( d r a f t ) . San Salvador, 1985.

Fundaci6n Chile. Projectos de Control y ~ e r t i f i c a c i b n de Calidad de Alimentos, ~ e p h l i c a de E l Salvador. Prepared f o r USAID, Sail Salvador, June 1987.

MAG. Amario de sta ad is tic as ~g: ropecuar ias 1986-87. Director General de ~cbnornla Agropecuaria. San Salvador, September 1987.

MAG. ~ 0 l e t . h T'ecnico Infonnativo de l a Direccibn General de Economfa Agropecuaria. No. 37. San Salvador, Ausust-September 1987.

Skowrowski, Frcnk S. A Suggested Framewrk f o r an Agribusiness St ra tegy ( d r a f t ) . Agribusiness Development Off icer , ARDO, San Salvador, E.S., October 14 , 1987.

I D , Oudtcr~mcila Agribuainesiu Deva Iop IL~n t . Projeot: Papex Projeat: No, 4 2 1 ) - ~ - 0 3 ~ ~ , -- Waehingrton, D .C., November 27, 1984.

AID. Qutitemala P r i v a t o En te rp r iue Development. P r o j e c t Paper, P r o j e a t No. - 5 2 m m ~ ~ a s < i n g t o n , D . C . , July 311 Im.

A I D . ROCAPr Non-Traditional A g r i c u l t u r a l Export Support . P ro j ec t Paper - P r o j e c t No. 596-0108.

A I D . Small Farmer D i v e r s i f i c a t i o n Systems. P r o j e c t Paper, P r o j e c t No. - .- 520-0255. Washington, D.C., A p r i l 29, 1987.

A I D . Small Farmer D i v e r s i f i c a t i o n Systems. (Amendment) P r o j e c t No. 520-0255A. -- Washington, D.C., March 20, 1985.

ARD. Small Farmer D i v e r s i f i c a t i o n Systems P r o j e c t . F i n a l Evaluat ion, P r o j e c t -- No. 520-0255. Prepared f o r USAID by Assoc ia tes f o r Rural Development ( A R D ) . Burl ington, Vermont, October 30, 1987.

, Arthur Young. Mid-Term Evalua t ionr Agribusiness Development .- Pro j ec t . Prepared f o r USAID. Washington, D.C., December 1987.

BID. Informe ~oc.i.oecon6mico: Guatemala. Washington, D .C. , December 1986. - Buckley, Kathar ine C., e t a l . F l o r i d a and Mexico Competit ion f o r t h e Winter

F re sh Vegetable Market. USDA/ERS Agr. Econ. Report No. 556. Washington, - D,C., June 1986.

CATfE. Manejo In t eg rado de Plagas . Rev. d e l - Turr ia l :ba , Costa Rica, Sep t e rbe r 1986.

Consortium :Eor I n t e r n a t i o n a l Crop P ro t ec t i on . Impact Analysis . Prepared f o r LAC/DR ,.~d Maryland, July 1988.

Pro jec to . MIP/CATIE No. 1.

Guatemala Medfly Environmental USAID/Guatemala. Col lege Park,

Economic Perspect i .ves , Inc . Report o f t h e A g r i c u l t u r a l Task Force t o Guatema1.a. Prepared f o r USAID/Gu3temala. McLean, V i rg in i a , June 1987. -

GCG. Decreto - t N h r o 43-74t Sobre Importacibn, Elaboraci6n, Almacenamiento, Transpor , te , Venta y Uso de P e s t i c i d a s . Sari Jose, Costa Rica, May 20, 1974.

GOG. Decret.:, NGmero 4462 Ley de Sanidad Vegetal . San J o s ~ , Costa Mca , May 20, ;974,,

GOG. ~rogi 'aulaci6n de l a Reorganizaci6n National, 1987-88, - Guatemala C i t y , Guatemala, J u l y 22, 1987.

H. WATEOUILA ( continued

GIIEMSAL de Exportadores de Productos No-tradiaionalee. fnforme d e l IF~atudicr d s O f e r t a Exportable de Guatemala, 1987-88. Guatemala k i t Y , ~ u a t e m a i a , 19867

Higgine, Mary Lou, e t a l . Environmental Assesemant of the H z l a n d e Agricul- - t u r a l Develo~ment P r o j e c t Amendment and Review of the Off t ae of! Rural - Development Pro-jeats involved i n t h e Proaurament and/or i n t h e U s a Z -L-

P e s t i c i d e s . ~ ~ ~ f ~ / ~ u a t e m a l a , 1 9 8 8 .

ICATA. Environmental P r o f i l e of Guatemalar Executive Summalrly. Prepared £or ROCAP , Guatemala C i t y , November 1984.

ICTA. Conozca a 1 I n e t i t u t o de C ienc i a s y Tecnologla Agrlcolae. Pub. Misc. No. 20. Guatemala C i ty , Guatemala, November 1987.

I I C A . ~ i a g n h t i c o de l a ~ i t u a c i 6 n de l a Sanidad Vegetal en Guatemala. Guate- ma l i C i t y , A p r i l 1988.

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