LatinFinance - May/June 2016 - Honduras - HS14
Agriculture
Moving up a class
A top global exporter of bananas, coffee and palm oil, Honduras is seeking investment
to add to value chains
About the same size as the US state of
Ohio, Honduras already punches well
above its weight in agricultural exports,
ranking as one of the world's top 10
exporters of bananas, coffee and palm oil.
Blessed with a varied geography and
rich farmland suitable for a vast array
of crops, Honduras has the potential
to turn agriculture into a much bigger
revenue-spinner. The country could
shift up by branching into value-added
products such as aromatic cacao or
ethanol produced from sugarcane,
as well as expanding the export of
vegetables and fruit to US, European
and Asian markets.
Agricultural products account for
around half of Honduras' exports, a figure
which can reach up to 60% "in a good
year when the stars line up with high
prices and high yield," says Agriculture
and Livestock Minister Jacobo Paz.
Honduran authorities are looking to
develop new products and exports, and
break into new markets, under President
Juan Orlando Hernández's 20/20
economic growth plan that aims to add
jobs and ramp up investment.
"Honduras has great potential. We
are working to open markets and create
value chains for products," Paz says.
Processing potential
Adding value in the agro-export sector
would mean building on the country's
existing strengths in some core crops.
Honduras is the world's sixth largest
coffee exporter, according to the
International Coffee Organization,
coming in behind five much larger
countries - Brazil, Vietnam, Colombia,
India and Indonesia. Coffee is not only
important for the revenue it generates,
but for the jobs it creates. The vast
majority of the country's coffee, unlike
in the larger producing nations, is
cultivated by small-scale farmers: 85%
is produced from farms that average
around 12 acres.
Honduras exported 732,000
60-kilogram bags of coffee in April, up
3.2% from a year earlier. The agriculture
ministry expects exports from the
2015/2016 harvest to hit 5.52 million
bags, up 10% from the previous harvest.
Another cash crop, palm oil, follows
a similar pattern. Honduras is the
world's ninth largest palm oil producer,
according to the US Department of
Agriculture (USDA), coming behind
Colombia and Ecuador in Latin America.
Honduras produced 490,000 metric
tons of palm oil in 2015, slightly behind
Ecuador's 510,000 tons and less than
half of Colombia's 1.1 million tons.
Paz says that the government needs
to look at these two crops, as well as
sugar, in a new light, by seeking to
attract investment that could add value
chains.
For example, instead of simply
exporting the raw palm oil, the
government wants the sector to also
process it for human consumption and
as a fuel additive. Local legislation in
the works will require a 5% blending
in diesel fuel. The diversification move
follows a fall in international palm oil
prices in recent years, although the
first quarter of this year showed some
recovery. Prices in March were $632 per
metric ton, up from a low of $483.50 last
September. The increase, however, is still
far below the top price of $1,157 in April
2012.
"We have the raw material, now we
need to attract capital to take production
to a different level. We have to move from
exporting only raw material," Paz says.
Sugar power
The government would also like to see
Honduras do more to use sugarcane for
ethanol production, following the lead of
Guatemala. Congress passed legislation in
2014 to stimulate biofuel production, but
it has not taken off. What has improved is
productivity, with yields increasing by 39%
between 2008 and 2014. Today, 40% of
Honduran sugar is exported, with 60%
consumed locally at subsidized prices.
Guatemala, while not a global sugar
powerhouse, was the US's fourth-biggest
source of ethanol last year, exporting
1.8 million gallons, according to the
Renewable Fuels Association.
Similarly, Honduras' existing 300,000
acres of coffee are considered a promising
target for investment, not only to boost
exports of the bean but also as a vehicle
to enter the growing market for aromatic
cacao, the source of fine chocolate.
The Hernández government plans to
convert coffee plantations lying at lower
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Table of Contents for the Digital Edition of LatinFinance - May/June 2016 - Honduras
Contents
LatinFinance - May/June 2016 - Honduras - HSCover1
LatinFinance - May/June 2016 - Honduras - HSCover2
LatinFinance - May/June 2016 - Honduras - HS1
LatinFinance - May/June 2016 - Honduras - HS2
LatinFinance - May/June 2016 - Honduras - HS3
LatinFinance - May/June 2016 - Honduras - HS4
LatinFinance - May/June 2016 - Honduras - HS5
LatinFinance - May/June 2016 - Honduras - HS6
LatinFinance - May/June 2016 - Honduras - HS7
LatinFinance - May/June 2016 - Honduras - HS8
LatinFinance - May/June 2016 - Honduras - HS9
LatinFinance - May/June 2016 - Honduras - HS10
LatinFinance - May/June 2016 - Honduras - HS11
LatinFinance - May/June 2016 - Honduras - HS12
LatinFinance - May/June 2016 - Honduras - HS13
LatinFinance - May/June 2016 - Honduras - HS14
LatinFinance - May/June 2016 - Honduras - HS15
LatinFinance - May/June 2016 - Honduras - HS16
LatinFinance - May/June 2016 - Honduras - HSCover3
LatinFinance - May/June 2016 - Honduras - HSCover4
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