Fintrac Begins Programs to Rehabilitate Melon Export Sectors in Honduras and El Salvador

Washington DC (December 4, 2002) - Honduran watermelon and El Salvadoran honeydew melon exports have plummeted during the last decade as a result of natural disasters and market fluctuations. The decline has most affected small and medium-size farmers and the already struggling rural communities who rely on export revenues earned from these and other crops. In October, Fintrac began programs in both countries to rehabilitate these export sectors as part of its overall programs to increase rural incomes and employment.

Honduran Program Aims to Triple Watermelon Exports This Season

Honduran watermelon exports to the US have fallen 36 percent since their height of $1.8 million in 1994. In Honduras, the watermelon export program aims to triple watermelon exports in just its first season. A production program has been developed with independent small and medium-size growers linked to two exporters with defined buyers in the US, Canadian and European markets. The exporter contracts include seedless and non-seedless watermelon (as well as smaller quantities of canary melons) with an estimated volume of 585,000 cartons (480 containers) and a total FOB value of US$3.0 million.

A total of thirty-five individual growers and five grower groups will be involved with a total production area of 600 manzanas (420 hectares). Almost 150 manzanas of this area are comprised of farms which have been uncultivated since Hurricane Mitch and which have been rehabilitated specifically for this activity. The production operations utilize up to 160 person days of labor per crop cycle for each manzana. An estimated 96,000 person days of labor will be required for this first season alone, equivalent to 320 permanent jobs and Lps 4.8 million ($297 thousand) in farm salaries.

Planting is being carried out on a calendarized basis; the first seedlings were transplanted during the second week of October and will continue until the middle of February 2003. The first exports will begin at the end of December and will continue until the end of April.

The program will significantly expand watermelon export volumes overall and more importantly position Honduras to compete in the faster growing seedless watermelon market. It is also being looked at as a model for coordination and cooperation between the private and public sectors in commercial production and export operations. The direct cost of the technical assistance provided by Fintrac CDA is being covered by Swisscontact, a Swiss foundation contributing 70 percent of the cost of field extension services to growers delivered by Fintrac ($28 thousand), and also by the growers and the exporters themselves, who are each contributing 15 percent of the extension service cost. Fintrac is also providing other assistance as needed through its full-time field staff under its USAID-funded Fintrac CDA program.

The Honduran Ministry of Agriculture (SAG) has contributed a vehicle for the Fintrac field technician and has also provided Lps 10 million for non-collateralized grower loans (a first in agriculture in Honduras) distributed through Banadesa, a local savings bank. Loans to growers are being made based on three factors: guaranteed market for the producers (fixed-price contracts which Fintrac helped negotiate), professional technical assistance being provided by Fintrac (including part of the credit supervision) and agricultural insurance being provided by a Mexican company that recently entered into the Honduran market. Exporters will pay the local savings bank, which will deduct loan payments prior to disbursing payment to the producers.

Fintrac field agronomists have there work cut out for them in this sizeable start-up operation. "Attention has to be given to the coordination and logistics for this size of operation, starting with the needs of the overseas buyers, right back to the date the seeds are planted in the greenhouse," says Choluteca-based Fintrac Agronomist Guillermo Maradiaga. "This is not an easy process given the number of growers and companies involved in the overall operation, but everyone wants to see this succeed and they are working together."

The program is progressing well to date and there is a strong likelihood that it will expand significantly during the next winter season in 2003/2004. "The growers have responded well to the introduction of improved field technologies and we are seeing the results with initial plant development and fruit formation," reports Fintrac Field Agronomist Rene Gonzalez, who is dedicated full-time to the program. "With expected results, we can expect to double the area under production for next season," according to Fintrac Chief Agronomist Ricardo Lardizábal. Production area would need to be increased in the existing locations of Choluteca and Valle, and the program would also likely expand into the Comayagua region.

El Salvador Starts from Zero

El Salvador exported no honeydew melons to the US since 1999, a culmination of a steady decline for the industry that began in 1994 after peaking at $2.9 million in export sales to the US the year before. Melon exports discontinued in January of 1999 when prices declined and both buyers and growers could not reach payment agreements. During the export years of the 1980s, El Salvador was considered by many buyers the favored growing location for honeydew melons in terms of fruit quality, because of the mild costal growing conditions during the winter months. More than 1,200 manzanas were planted annually.

The USAID-funded Fintrac IDEA program will be initiating trial export shipments of honeydew melons to the United States beginning in January of 2003 with 10 to 12 containers. Fintrac's approach to reinitiating melon exports is to enter the market with trial shipments selling to one or two buyers under contract agreements. "With anticipated high fruit quality, El Salvador can again regain its name and eventually begin to build its volume in succeeding years. This is a very important export program that Fintrac is initiating and one that will have significant impact on future exports ... not only for honeydew melons, but for other crops as well," says Dennis Lesnick, Fintrac IDEA Program Director.

However, since El Salvador has not been an active fresh product exporter for many years, there is hesitation and concern from growers about net earnings as no fixed sales price is being offered by the buyers, at least not for this first season. Therefore, only two medium-size growers will initially be participating in the program, who will act as demonstration farmers for new growers that will be added in subsequent seasons. It is expected that the 16 manzanas planted this season will expand to a minimum of 50 manzanas next year. Fintrac is providing assistance to the growers in procurement of seeds and cartons, rehabilitation of an old packing facility, and in field extension services.