Rural-Based Micro Food Processors in Honduras Report Increased Sales and Expand Markets as a Result of Fintrac Assistance

Honduras (January 22, 2004) - In 2003, microprocessors receiving assistance from Fintrac's Agribusiness Development Center (CDA) reported an increase in sales of 31 percent over 2002 with the development of new products and expansion into new domestic markets. In 2004, sales are expected to expand an additional 130 percent as local sales continue to expand and exports to the US begin.

Since mid-2002, CDA has been providing assistance to rural microprocessors in Honduras under a component of its integrated agribusiness development program. The microprocessor component was developed to increase raw material sales outlets for small-scale farmers, add value to domestic agricultural produce, and to provide employment opportunities in rural areas.

Before Fintrac's interventions, most microprocessors in Honduras sold locally to informal markets, were not legally registered, and did not have legal brands and sanitary licenses to operate. Most of their products were sold in used bottles and had poor labeling and packaging. In order to increase company sales and profitability, microprocessors' products needed major improvements in quality, consistency and overall image.

During 2003, CDA worked with twenty-five food microprocessors, located in nine of Honduras' eighteen departments. The companies are owned by 309 individuals, ninety percent of whom are women. The companies produce a variety of processed products including pickled jalapenos, jellies, orange wine, honey, flour, plantain chips, and pickled baby corn, cucumbers, and other vegetables. CDA, in partnership with domestic private-sector service providers, provided assistance in a range of areas, including: plant design and operations, labeling and packaging improvements, marketing support, market linkages, product formulation, new product development, equipment design, and legal requirements.

In partnership with local law firms, all clients were able to obtain sanitary licenses. Assistance was also provided with company registration, brand identification, brand registration, development of bar codes, and sanitary registration for products. By overcoming these legal hurdles, clients are now able to sell to major supermarkets, restaurant chains, hotels, and convenience stores. Plant modifications required to meet these legal requirements also assisted in improving product quality and plant efficiency. In partnership with local graphic design firms and printing companies, new jar and bottle designs with attractive labels and safety seals were developed, enabling clients' products to compete head-on with national and imported brands being sold in large supermarkets and convenience stores located in the major cities.

Fintrac has worked with the National Vocational Training Institute (INFOP) to train trainers and to develop new processed food products for production by microprocessors. In order to address the issue of inconsistent product quality, all clients were assisted in establishing detailed formulas and recipes for all of their products. New products were also developed, including pineapple and jalape¤o jellies, garlic pure, pickled baby onions, flavored plantain and yuca chips, ranch sauce, "Jamaica" drink, and peach and "arrayan" wines. Microprocessors and operators have been trained in a wide range of areas including marketing (visits to supermarkets to view competing products and meet end buyers), processing systems, food safety, basic infrastructure requirements, equipment operation, legal requirements, and food processing workshops. Emphasis has been placed on business control systems including basic accounting, cost calculation, and inventory controls. In 2003, 151 women and 173 men have received direct hands-on training from CDA.

Microprocessors have received support in developing market linkages. CDA located two Honduran distributors that were interested in selling these improved products to supermarkets, convenience stores, hotels, restaurants and souvenir shops. All of the microprocessors have individually negotiated sales contracts with the distributors and are using their services for sales in the major Honduran cities. Local sales in their home town are done by the microprocessors themselves. For the introduction of products in new establishments, both the distributors and microprocessors have cost shared product promotion and sampling in different stores and supermarkets. Product acceptance has been excellent.

Microprocessors' products also have export potential. With technical assistance and market contacts made by CDA, four processors were involved in trial shipments of pickled baby corn to California stores that specialize in Latin American food products. Initial feedback from the stores has been positive and CDA is now providing technical assistance to these companies to meet FDA regulations and to certify the process for acidified and low-acid canned food products in all four processing plants. Certification is expected by April 2004. Initial monthly volumes from the exporter are for one container (worth $30,000 in sales per month for the microprocessors). Further export sales growth is expected as the companies certify their processes, which will allow them to also sell other products such as pickled hot peppers, onions, and assorted vegetables into the US Latino market.

In 2004, CDA will provide increased levels of assistance in new product and new market development. Processed product development and market testing will be carried out for potato, sweet potato, onions, eggplant, and plantain. New sauces will also be developed for peppers. Work will also begin with several small-scale coffee roasting operations (mainly cooperatives) for sale to the local market. Sales of client microprocessors are expected to expand an additional 130 percent in 2004.