1. Assessing small-holder Participation in Vegetable value chains tomato, bell pepper, cucumber, broccoli, lettuce, carrot and potato Cases from El Salvador & Honduras, in collaboration with FAO, CIAT, CRS, Agropyme Presented by Madelon Meijer, Agricultural and Development Economics Division (ESA), at the Governance, Coordination and Distribution among Commodity Value Chains workshop, FAO, Rome, April 2006.

2. Structure of the presentation Purpose of the study Brief note on the methodology used Results of the analysis Points of reflection/discussion

3. Purpose of the study: Confront the barriers of linking small farmers with the supermarket supply chain 1.Identify bottlenecks 2.Facilitate strategic alliances

4. General scheme for value chain analysis and intervention plan (from SNV-Peru) GLOBAL STRATEGIES (2) Strengthening of Producers Organizations Mechanisms for stakeholder dialogue Semi- participative Participative CHAIN ANALYSIS CONSTRUCTION OF AN ACTION PLAN TO IMPROVE CHAIN GOVERNANCE IMPLEMENTATION OF THE ACTION PLAN

5. Analysis INFLUENCE OF EXTERNAL FACTOR ProductionWholesaleRetailConsumption Services USE OF NATURAL RESOURCES MARKET AND CONSUMER DEMAND HISTORY SINTHESIS OF ANALYSIS Competitiveness Comparative advantages Bottlenecks Sustainability Define the space of analysis Territory Product Product flow ACTORS AND INTERRELATIONS

6. Evolution of the relation supermarket – producer

7. Vegetable chain in Honduras CAFTA 70s: Veg.production on scale MINAG: agricultural policy Competitive framework for the horticultural sector THE ENABLING ENVIRONMENT Large producers 0.12 % Small producers 72 % Medium producers 24.6% % Ag. hhs: 317.000; Veg. producers: 15.000 Supermarket n=51; 43% FM Unorganised farmerTraditional informal trader Traditional retailer Traditional wholesaler Producer organization n=395 Lead farmer n=13 Specialized wholesaler Imports Restaurant Hotel Hospital HARVESTER COORDINATION QUALITY CONTROL PACKAGING STORAGE & BULKING UP ROAD TRANSPORT CEL PHONES ORGANIZATION MARKET INFORMATION BUSINESS SERVICES TECHNOLOGICAL EXTENSION LABELS AND STANDARDS

8. ACOPO 23 members Annual sales US$ 140.000 PHOC 143 members Annual sales US$ 96.000 AGROLEMPA 70 members Annual sales US$ 177.000 COHORSIL 185 members Annual sales US$ 89.000 APRHOFI 110 members Annual sales US$ 184.000

9. Growth of the lead farmer model Year Sales per producer (in US$) Regino Ramirez Percentage increase from 2002 Olvin Salgado Percentage increase from 2002 20021,510-150- 20032,23048%699366% 20042,76483%1,214709% 20053,280117%1,267745%

10. Analysis 1.Margins, costs and benefits 2.Gap analysis: requirements vs. what small farmers can currently offer 3.NRM Impact

11. 1. Distribution of final consumer price among supply chain actors in Honduras Products Variables Toma te Bell peppe r Potat o Broccol i LettuceCarrotsAverage Production costs.15%22%24%15%17% 18% Farm to packing shed transportation costs 4%12%1%4%6%1%5% Net farmer income for sale to producers organization 20%0%24%14%18%12%14% Transportation costs to Tegucigalpa or San Pedro Sula 2% 1%4%5%1%2% Net producer organization income for sale to specialized wholesaler in Tegucigalpa or San Pedro Sula 4%3% 1%2%5%3% Gross profit for specialized wholesaler for sale to supermarket 25%32%16%32%22%33%27% Gross profit for supermarket30% Retail price paid by final consumer 100%

12. Tomato, wholesale price in TGU y SPS (Lps/Lb) 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 Aug 06Aug 16Aug 24 Sep-03Sep-13Sep-21 Oct-01Oct-11Oct-22 Nov-02Nov-12Nov-22Nov-30 Dec 10 Jan 04Jan 14Jan 25 Feb-04Feb-14Feb-22 Mar-04Mar-14 Apr 01Apr 11Apr 20Apr 29 May-10May-20May-30 Jun-07Jun-17Jun-27 Jul-05Jul-15Jul-25 Date ZONAL BÉLEN MEDINA CONCEPCIÓN/DANDY 20042005 Período de análisis de precios en la cadena Fuente: www.agroemprendedor.org, basado en precios SIMPAHwww.agroemprendedor.org

13. 2.48 4.55 7.48 - 2.00 4.00 6.00 8.00 10.00 12.00 Tomato (03 april 2005- 04 june 2005) 1.60 Production costs 4.06 Producer org. 4.66 Specialized wholesaler 3.89 Trader farm gate 3.45 Wholesaler BUY 5.10 Wholesaler SELL 7.25 Sp. wholesaler-superm. 10.36 Supermarket-Consumer Wholesaler SELL max. average Wholesaler SELL average Wholesaler SELL min. average Lps/Libra Los precios Mayorista VENTA máximo promedio, promedio y mínimo promedio corresponden a un período de dos años Los demás valores corresponden a valores promedio de diferentes actores en cada eslabón en diferentes ciudades para el período del 03 de abril al 04 de junio del 2005.

14. TécnicosComerciales La plántula para el transplante es producida principalmente en invernaderos comerciales. Dado el alto costo de la semilla híbrida, esta práctica es cada vez más común. Los suelos deben estar bien nivelados para obtener un buen drenaje y reducir la incidencia de enfermedades. Se prefieren los suelos sueltos en época lluviosa. Los tomates para el mercado fresco son cultivados en forma arbustiva, con soporte y cosechados en estado verde-maduro (aproximadamente de 80 a 110 días después del transplante). En la zona de siguatepeque, se utiliza mayormente el riego por goteo, con rendimiento promedio de 42 toneladas por hectárea (60% de primera calidad y el 40% de segunda o tercera). Las principales enfermedades son mancha bacteriana, tizón temprano y tizón tardío (Xanthomonas campestres, Alternaria solani y Phytophthora infestans respectivamente). Se debe transportar al mercado de destino clasificados en canastas. Los supermercados en Hondura demandan 28.5 Toneladas por semana. La presentación de mayor venta es a granel. También se encuentra empacado en bandejas de foam #2 (cinco a seis tomates) y en mallas plásticas (pesos variables). El peso promedio por unidad es de 130 gramos en bandeja y de 232 gramos a granel. La única marca Hondureña es Zamorano, las demás marcas son importadas de Guatemala (La Carreta, San Lucas Fresh y BELUGAS). LA CARRETA y BELUGAS (San Lucas Fresh) están certificados por la PIPAA de Guatemala en cuanto a inocuidad de alimentos que garantiza el cumplimiento con buenas prácticas agrícolas (BPAS) y buenas prácticas de manufactura (BPM). Las normas de calidad para comercializar tomate manzano exigen forma y tamaño uniforme, turgente, libre de enfermedades, libre de daño mecánico, con un mínimo de 50% de coloración roja, sin deformaciones, sin sucio. El precio por caja de 25 libras es de USD 4.62 para el tomate de primera y de USD 2.56 para el tomate de segunda. La variación de precios se puede apreciar en la gráfica adjunta. Resumen de aspectos relevantes en la cadena de Tomate de mesa

15. Required investment - tomato InvestmentEstimated cost US$ / Mz. ProductionQuality seedling800.00 Micro irrigation1,815.91 Micro tunnels437.86 GAP / T.A.968.04 Post-harvestAssembly point (refrigerated) 5,000.00 Packing1,010.00 CommercializationRefrigerated transport28,000.00 Working capital24,000.00 OrganizationManagement team (costs per year) 37,512.00

16. 3. NRM impact To meet requirements: Investment needed in Management techniques –waterharvesting and drip irrigation –contour planting –soil conservation / IPM / GAP Organizational issues –scaled planting –post-harvest management –marketing

17. Vegetable chain in Honduras CAFTA 70s: Veg.production on scale MINAG: agricultural policy Competitive framework for the horticultural sector HARVESTER COORDINATION QUALITY CONTROL PACKAGING STORAGE & BULKING UP ROAD TRANSPORT CEL PHONES ORGANIZATION MARKET INFORMATION BUSINESS SERVICES THE ENABLING ENVIRONMENT Large producers 0.12 % Small producers 72 % Medium producers 24.6% % Ag. hhs: 317.000; Veg. producers: 15.000 Unorganised farmer Producer organization n=395 Lead farmer n=13 Traditional informal trader Specialized wholesaler Traditional retailer Traditional wholesaler Supermarket n=51; 43% FM Restaurant Hotel Hospital Imports TECHNOLOGICAL EXTENSION LABELS AND STANDARDS

18. Conclusions Regarding horizontal coordination: Low levels of organization among small holder producers Regarding vertical coordination: Lack of coordination among supply chain actors Regarding the enabling environment: Public policies of of step with chain reality

19. Main recommendations strengthen the espacios de concertación. develop alternative organizational models improve the linkage between supply and demand of service provision, esp. financial services (credit, leasing, compra de facturas and ag. insurance) improve public policies, aimed at both making the chain more competitive and with a fair distribution of benefits

20. Discussion points Replicability of PO support Experience in alternative organizational / business models Implications for policy Further empirical work required