Michael VeltenGerzensee, 12.01.07

The vegetable value chain in Honduras: How small farmers are included

Honduras Context

The vegetable value chain in Honduras: How small farmers are included

Content

Analysis

Intervention

Impact Assessment

Lessons Learnt

Honduras context…

94/125

2006

64.2%

4.5%

2004

97/11794/102Competitiveness5.1%3.5%GDP

Poor households

Variable

63.5%

2003

65.3%

Trend2005

107/159Corruption perception25/100Corruption Control

10%Bureaucratic functional capacity50%Government management38%Resources efficiencyValueIndex

Sources: INE, www.gsdehonduras.org, world economic forum

Honduras context…

•Relevant policies

•Poverty Reduction Strategy

•Agrifood and rural sector development policy

• SME promotion policy

•Fresh fruits and vegetables safety regulations

•USA DR-CAFTA

0

100

200

300

400

500

600

700

800

900

1000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Year

USD millions

Analysis…

•Evolution of Honduras Agri-food trade

7 years after hurricane Mitch

Food processed products (Import)

Vegetable products (Import)

Total agrifood exports

Analysis…Value Chain Framework (Factors and Relationships)

Factors include:

• End markets• Horizontal and vertical linkages• Supporting markets• Firm-level upgrading

Relationships include:

• Power dynamics among firms• Access to learning and innovation• Distribution of benefits

… The local fresh vegetables value chain…

Small farmers

Cooperatives/Producers

Associations

specialized/dedicatedsupplier

Middlemen In Farm

WeekendOpen-air Market

Food Service(Hotels, restaurants)

Supermarkets

User/Consumer

Wholesale market

International Exporter

Importer and/or Wholesaler and/or

Distributor

Analysis…

Input suppliers

Analysis…

BDS

Financial services

Input suppliersBuyers

Transportation

Market information

Selection and packaging facilities

Irrigation tech

Land

Type III: Dedicated suppliers

Type II: Associated small

farmers

Type I: Unassociated small

farmersResources

Small farmer typologies… According to resources availability and organization

Intervention…

Type I: Unassociated small farmers1. Promote association

Type II: Associated small farmers2. Market linkages: field visits with supermarkets /weekend open- air

market managers and vice versa3. Business plan formulation: Interchange of experiences with more developed

farmers; Identification of BDS, financial services & networking needs.4. Business plan implementation:

Embedded services, New BDS providers development, “Key investments” funds

5. Involvement in national and local multi-stakeholder dialogue platforms

Type III: Dedicated suppliersEqual to Type II: 3,4,5 + Promote development of “associated providers”

Instruments according to producer typologies

Impact Assessment…

• I&E promoted by Agropyme in the vegetables sector

Employment

4,878In farms

17731%69%Producers Associations

54269%31%Agro entrepreneurs actively associated

nMenWomen

35%55%Employment change

35%34%Income change

2005-20062004-2005(Income 2006=USD 1.5 mio)

Impact Assessment…

Income and costs distribution

1.0

0.23

0.14

0.27

0.30

0.03

0.02

Producer

ProducerAssociation

Specializedsupplier

Supermarket

Costs

Net Income

Gross Income

Paid byConsumer

Impact Assessment…

84%

57%

12%

9%

20%

7%

24%

82%

5%

3'832

5'8635'899

4'130

1'532 1'227

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

APROHFI, PA TYPE II COHORSIL (COOP) TYPE II DEDICATED SUPPLIER,TYPE III

COMMERCIALIZATION SYSTEM

0

1'000

2'000

3'000

4'000

5'000

6'000

7'000

USD Year 1 & 2

Producer

SME(Associative)External

Costs/Mz/2 Years

Costs/producer /2years

% o

f cos

ts

Cost and financing sources in three commercialization systems that connect small vegetable producers with dynamic markets

Costs of connecting small producers with the value chain according to their typology

OrganizationalPersonnelTechnical AssistancePackaging facilitiesLogisticResearch Irrigation technology

Impact Assessment…

CUALITATIVES

• New (reliable) relationships between stakeholders started during and after VC analysis

• Corporate Social Responsibility promote Small Farmers linkages with Supermarkets chains

• Up scaling: Good Agricultural Practices (GAP) manuals for training as well as Business Plans used as models by other institutions (USAID, IDB, EU), inducing leverage effects.

• Human capital development:• BDS Providers• National dialogue platforms on vegetables sub sector

competitiveness

Lessons learnt

• Flexibility is key to adapt interventions according to differenttypologies of stakeholders and context

• Participatory value chain analysis and consequent actions are good mechanisms of collective learning where public and private sector simultaneously define and continuously update strategies and market information for competitive agri-food chains development.

• Promoting associations will continue being a key issue to connecting small farmers with dynamic markets.

• Traditional markets (weekend open-air) are still key players in the chain, and are more inclusive than supermarkets. Therefore constitute a channel to focus on.

Michael VeltenGerzensee, 12.01.07

Thank you for your attention!