4.2.4.- Honduras

Honduras has the conditions to become an important player in the market for non-traditional agricultural products. However, the interest for Honduras from international companies has traditionally been limited and remains to be limited. A reason for this is the complexity of doing business. Together with Costa Rica and Guatemala, Honduras scores lowest figures on the Doing Business indicator. Another reason is the fact that the country just isn’t very well known and focus therefore goes to countries like Costa Rica and Guatemala.

As an agricultural country, most crops can be produced in Honduras but it should be said that highlands are hard to find making the production of moderate crops more difficult. Most fruits can be grown in Honduras as well as a wide range of ornamental crops. However, products like leatherleaf or flower bulbs will not find a very favourable climate 

The second biggest harbour of Central America, Puerto Cortez, makes infrastructure to export markets very competitive compared to most other Central American countries. Infrastructure in Honduras itself is very acceptable around the Central Highway in the country, from San Pedro Sula to Tegucigalpa. Further away from this road, transport can become a bigger problem.

Honduras shows good opportunities for greenhouse produced vegetables for the North American market, pre-finished pot plants and fruits like melon, water melon and pineapple.

 

Figure 4.6 Business Ideavelopment Chart Honduras.
*Tomato, cucumber, pepper and eggplant

4.2.4.1.- Pineapple

Pineapple production in Honduras is located in the Caribbean lowlands which has a tropical wet climate with consistently high temperatures and humidity, and rainfall fairly evenly distributed throughout the year. There is only one main company that produces pineapple which is Dole. The productivity in pineapple has increased in the last years although the area hasn’t grown.
Honduras has a good climate and has land available for large scale pine apple production but Mitch has been an important reason for limited development of this sector. It will most likely depend on developments on the short and middle long term in Costa Rica if Honduras can increase its area of production.

Opportunities  

4.2.4.2.- Banana

Bananas are cultivated on the northern coast of Honduras, which has rich soil and a good climate for the production of this crop. The main operators are two large US companies, Chiquita and Dole (The Tela Railroad Company and The Standard Fruit Company, respectively), along with local independent producers and peasant co-operatives. The two US giants have long dominated the export trade as they hold monopoly export contracts with independent producers. In 1989-90 an Anglo-Irish firm, Fyffes, mounted a successful challenge to one of Chiquita’s monopoly export contracts. Since then, other international companies have shown an interest in sourcing bananas from independent producers, but exports continue to be dominated by the two US companies.
Banana production and exports suffered heavily from the 1998 hurricane Mitch. Following a replantation programme, exports increased, but between 2001 and 2003 the sector experienced mixed trends: while the Tela Railroad Company reduced the size of its plantations by 3,000 ha, the Standard Fruit Company expanded its plantations in the northern Aguán valley and has more recently replanted bananas in the region of Isletas. In 2005 banana export volumes totalled 27.6m 40-lb boxes (down from 29m boxes in 2004), as tropical storms towards the end of the year triggered floods affecting many of the plantations. Banana export volumes also suffered from the introduction of higher tariffs in the EU, the second-largest market after the US for Honduran bananas.

Like in the rest of Central America, it is not expected that banana will further increase. It is clear that a more environmental and social approach is required to maintain the current market position. Organic production and certificates like Rain Forrest Alliance will become more of a necessity in the near future.

Opportunities

4.2.4.3.- Melon and Watermelon

The melon industry in Honduras is dominated by three large companies. Melon companies employ more than 25,000 workers (mainly women) in the south of Honduras during the harvest season (January – April). Production is mainly located in the south of the country near the border with Nicaragua. Labour is available and cheap. Supply materials are available at reasonable prices. Melon is traditionally a crop which is exported to the USA and to a far lesser extent to Europe. Assuming that quality requirements can be met for exports to the European market, production can still expand substantially. As production costs in Honduras are lower than in Costa Rica, new opportunities start to appear. Foreign investment in melon and watermelon in Honduras could be another (and necessary) way to expand this sector and put more focus on Europe.

Opportunities

4.2.4.4.- Young plants

The production of young plants in Honduras has a long history and it can be said that the ornamental plant sector started in Honduras. Nevertheless, there are few companies and the ornamental sector is relatively small with about five active companies. Exports are mainly live plants and are mainly being exported to the Netherlands and in lesser extent to the United States. Main products for the Netherlands are Palms, Cycas and Yucca canes. Due to the limitation of imports to the United States mainly (un)rooted cuttings are being exported.

Foreign investments have not further proceeded resulting in stable exports for many years now. The most likely reason that this sector has not faced further expansion in the last 10 years, is that existing farms in Costa Rica and Guatemala have no interest in activities abroad. There are just a few examples of growers of ornamental young plants which have farms in various countries.

Nevertheless, opportunities can definitely be detected and with imported knowledge and capital, the young plant sector is likely to have a bright future. Production of young plants for flowering plants and bedding plants, an existing sector in Costa Rica and Guatemala, is unlikely to pick up in Honduras.

Opportunities

4.2.4.5.- Pre-finished pot plans

As seen above the main export of plants are live plants to Europe and therefore Honduras has good opportunities to make use of the knowledge and experience to upgrade their products to pre-finished pot plants. The transport facilities through Puerto Cortés are favourable and the first PSOM project to develop this market has been awarded by the EVD in spring 2007.
Pre-finished pot plants is one of the most interesting markets in all of Central America for the near future and Honduras has a strong card to play its role in this new market. For Dutch suppliers, importers and investors, this development creates new opportunities as listed.

Opportunities

4.2.4.6.- Cut flowers, foliage and mango

Cut flowers are being produced in Honduras, mainly chrysanthemums, but it is unlikely that this market will develop strongly. One of the reasons is that there are hardly any exports of flowers at this moment indicating that there will be a lack of supply materials for this type of produce. More important is the lack of altitude in Honduras required for the production of cut flowers. This same reason should be mentioned regarding foliage, the climate just isn’t good enough to be competitive on large scale with countries like Guatemala and Costa Rica.
Mango is a small export product and there are no signs that it will increase although the international market is still growing and the Honduran conditions are favourable for this crop.

4.2.4.7.- Vegetables

Honduras has gained a fairly good position on the North American market as far as vegetables like cucumber and tomatoes are concerned. The export of vegetables is being dominated by cucumbers. Cucumbers are partly grown outdoors and shipped as a commodity product by sea container to the United States and Canada. Besides cucumbers, tomatoes, peppers and eggplants are being grown for exports.  Other vegetables like okra and preserved vegetables in solution (chilli peppers) are mainly being exported to the United States and El Salvador. 
For exports to the United States, a market protocol for green house grown sweet pepper and tomatoes has been approved. This opens opportunities for the vegetable sector in Honduras that is concentrated around Comayagua in the central part of the country. This area has all the preconditions to become a vegetable production area for the North American market. Investment in infrastructure for high quality production for that market could work as a catalyser for future investments and development of the sector (e.g. suppliers of products and services). One of the main constraints is the finance of the relatively high initial investments of a green house production crop. Co-investment from the private investor or from development programs will be necessary to accelerate the development and should not, like most of the agricultural sectors in Honduras, be hindered by the (financial) restraints many medium size companies are facing. Opportunities are listed on the next page.
Opportunities

4.2.4.8.- Processed fruits and potencial crops

Honduras has a small sector of processed fruit and vegetable juices and preserved vegetables to the United States and the Central American region (El Salvador, Nicaragua and Guatemala).
Melons, pineapples, bananas and mangoes are available for processed fruit products.
Crops that can be mentioned as potential for Honduras are rambutan, avocado, guava and mango. Production for the local market exists but no significant exports. 

Opportunities:

4.2.4.9.- Sumary