3.1.- Introduction
A set of seventeen key aspects has been defined (looking at macro and meso level) to determine the competitiveness of a country for the sectors of fruits, vegetables and ornamentals in the Central American region. Both quantitative and qualitative data have been used.
Each key aspect is defined by one or more parameters. The final score of each aspect should therefore be considered as an average of all parameters taken into account in the key aspect. It should be noted that for specific crops, regions or interested parties, one specific parameter of a key aspect could make a difference.
To optimize these parameters, a more detailed list would be required and a weighing factor should be added. However, the target group of this report is considered to use it as a quick scan to formulate their global business strategies and investment location decisions.
A description of each key aspect and its parameters will be given below. All parameters have been defined using (1) for weak, (2) for regular, (3) for good and (4) for excellent. The aspects have been summarized in a table per country and colours have been added to each aspect to visualize their value.
1. Political aspects
Political aspects are referred to as political stability, effectiveness of governing, the level of corruption and the level of bureaucracy.
2. Social aspects
Main issues regarding social aspects are education (primary – high school), health care, social stability, illiteracy, bilingualism, influence of labour unions (strikes).
3. Safety
Safety can be regarded part of the social aspects but because it is an important aspect for business competitiveness it is described as a separate aspect. Safety is described as the occurrence and type crime in a country and the effect on business activities.
4. Economic aspects
Economic aspects will be measured primarily by indicators as inflation, GDP, trade balance and number of sectors that generate the GDP.
5. Fiscal aspects (tax)
Fiscal Aspects have been defined as the tax climate (tax rates, tax exemption).
6. Investment capital
The availability of capital for the agricultural sector, the interest rates for loans, the guarantees required to obtain loans, the accuracy of the banking system, the influence and role of international financial institutes.
7. Infrastructure (local)
Key issues are the road network in terms of quality and density, taking into consideration future plans for improvement. Availability, costs and security of supply of electricity have been taken into consideration.
8. Infrastructure (export)
Both international harbours as well as international airports have been revised. Not only regarding the quality of services, but also considering effectiveness, availability of containers (harbours), frequency and number of destinations, rates of services (airports and harbours).
9. Communication
Regarding communication, focus will be on digital services, both from the point of view of availability as from a quality and price. Another issue will be the country’s policy towards liberation of the market (if applicable) and the role of private suppliers of services.
10. Trade agreements
Trade agreements determine the intention of a country to open its borders and to play its role in a globalizing economy. This aspect defines the openness and preparedness for international trade and regional competition in the near future.
Another parameter is the preparedness and effectiveness to change and to make use of the signed trade agreements.
11. Climate and natural resources
The climate in general is hard to evaluate at country level as most countries have various (micro)climate zones and altitudes. A general evaluation will be made based on the different country regions where horticulture is being practiced and the variety of horticultural crops being produced for (mainly) export purposes. In this parameter natural disasters like hurricanes have been taken into consideration as well. The availability and cost of agricultural land is part of this aspect
12. Agricultural sector organization
Both on a public as on a private level, the organizations have been evaluated on the representation of the interest of individual agricultural companies as well as the sector interests. Collaboration amongst organizations and effectiveness of their policies have been considered. Finally, awareness of international competition and the actual realization of action plans have been taken into consideration.
13. Phytosanitary service
For most agricultural companies, the phytosanitary service in a country is an office frequently to be visited either importing or exporting products. The ease of importing and exporting as far as documents, procedures and physical inspections and requisites have been taken into account.
14. Agricultural supplies
The availability and costs for agricultural supplies have been reviewed. Government regulations and taxes have been considered in case of imported materials.
15. Labour (unskilled)
Unskilled labour is for most agricultural crops one of the major production costs. Availability, quality and legislation have been taken into account defining this aspect.
16. Labour (management)
The availability and quality of middle and top managers has been reviewed. Practical knowledge and experience is an issue which has been taken into account.
17. Subsidies
The availability of subsidies and financial aid (both local and international) for the agricultural sector have been considered. Specific attention has been given to availability of Dutch development support programs like PSOM and PESP
3.2.- Countries
3.3.- Central America
In the table below a summary of the 17 key aspects per country for the countries is presented.
Looking at colours, the first aspect to notice is the fact that safety can be considered as the most serious problem in the Northern part of Central America. Nicaragua and Panama, and to a lesser extent Costa Rica, show far less problems. Besides that, only Nicaragua and Costa Rica have aspects which can be quantified with a 1.
Costa Rica’s figures are rather good but labour is becoming a serious problem together with costs in general. Bureaucracy is the main reason that Costa Rica does not have an excellent score on politics. Aspects directly related to agriculture show rather low figures.
El Salvador shows good figures and is clearly improving on many aspects. However, social aspects and as a result, safety are main reasons of concern. El Salvador definitely shows opportunities for specific products and projects.
Guatemala has shown for just one period of 4 years that real progress can be made but the actual elections and their results will have to show what politics and social aspects will look like in the near future.
Honduras truly seems to be the forgotten country as scores are rather good but the interest for
Honduras as a producer of non-traditional agricultural produce remains to be limited.
Nicaragua is definitely worth considering if transport, electricity and an unpredictable government are no reason of concern to you. It still is the land of the opportunities which will always remain to be opportunities.
For Panama it is quite remarkable that all macro related aspects turn out to be positive while more sector related issues can be qualified as regular. Initiatives taken by the government to develop these last mentioned aspects can turn Panama into a future agricultural player.
