Farmers in El Salvador Reaping Big Profits by Supplying Local Market

San Salvador, El Salvador (April 30, 2003) - El Salvador imported more than $113 million worth of fresh and processed fruits and vegetables in 2002 according to official government import statistics. Fresh vegetables imports alone were estimated at $20 million, but are likely much higher as it is thought that many imports from neighboring countries are underreported in official trade data. "The opportunity for farmers to supply their own market was too good to pass up," says Godofredo Pacheco, Marketing Advisor on the USAID-funded Fintrac IDEA Program in El Salvador. In response, Fintrac has been implementing integrated crop-specific production and marketing programs for products with the most immediate potential: onions, tomatoes (field and greenhouse), bell pepper, cucumber, and cabbage.

"Our focus on the local market achieves two goals of the Fintrac program in El Salvador," says Boris Corpeño, Fintrac's Chief Agronomist in El Salvador. "First, it provides for quick returns to farmers to show them that the new technologies being introduced by Fintrac can quickly increase profits. Secondly, it gives farmers experience in modern production practices for horticultural products that, along with substantially increased productivity, will eventually open export market opportunities. If farmers cannot supply the local market where prices are exceptionally high, how can we expect them to compete in the much more competitive international market?"

In just one year since Fintrac started working in El Salvador, it has shown that farmers can indeed compete against foreign suppliers for a wide variety of fresh vegetables - provided that they introduce modern technologies and production practices that increase yields, lower production costs, and provide for a consistent level of quality of supply to local buyers.

Field-grown tomatoes have been one of the most widely planted crops because of high local demand and attractive prices. Since Fintrac started installingdrip irrigation systems, 46 manzanas (1 manzana = 0.6 hectare) have been planted. Yields on these fields have achieved 23-57 tons per manzana (mz), 11 to 45 tons above the national average. The introduction of seedling nurseries and training in nursery production practices have significantly improved seedling condition and saves producers between $800 and $1,000 per manzana as they now do not need to import seedlings from Guatemala. To date, 15 clients have built seedling nurseries with a production capacity of 20,000 to 50,000 plants each, providing them with an additional source of income. Total earnings per manzana depend on individual farm productivity levels, with net incomes ranging from $4,000 to $21,000 per manzana. Based on the returns achieved during the first season, the program will be expanded to 145 manzanas in 2003/2004. Sales are expected to increase from $400 thousand to $3.0 million, average net profit will increase to $15,000/mz, average yields will expand from 50,000 lbs/mz to 125,000 lbs/mz, and per unit production costs will decline from $0.06/lb to $0.04/lb.

Fintrac has also implemented a greenhouse production program for tomatoes, primarily to allow growers with limited land and water resources to benefit from opportunities in the horticultural sector. Greenhouse construction is being concentrated in the departments of Cuscatlán and La Libertad, with scattered clients in the departments of Sonsonate and Ahuachapán. To date, Fintrac has 17 greenhouse clients - 2 clients with commercially purchased greenhouses; 2 clients that had existing low-cost greenhouses; and 13 clients that are new to greenhouse production (of which 4 are coffee producers) and which have been assisted in the construction and operation of Fintrac designed, low-cost 572 m² greenhouses. Four greenhouses are currently producing with the remainder recently completed and transplanted, or currently under construction. With a plant population of 1,500 bags per house (572 m²) and an average yield of 10 lbs/plant, a client can produce 15,000 pounds per 6-month cycle. The production cost with amortized investment is approximately $0.12/lb. With sales prices varying between $0.21/lb and $.38/lb, growers are reaping substantial profits. By the end of the 2003/2004 season, 20 greenhouses will be in operation and the product range will be expanded to include cucumber and colored bell peppers. Bell pepper, like tomato, is a crop that is frequently grown during the rainy season, commands a good price and is one of the crops that some producers have had experience in growing prior to Fintrac's arrival in El Salvador. Forty Fintrac clients planted 62 manzanas during winter 2002/2003. Prior to Fintrac

involvement, production yields averaged 18 tons/mz. With introduction of Fintrac technology, yields have increased to up to 45 tons/mz. With the use of drip irrigation, it was possible to increase plant populations from 10,000 plants to 15,000 plants per manzana, contributing to the yield increases along with other practices recommended by Fintrac. Based on weekly sales prices, gross sales have fluctuated between $10,000/mz and $25,000/mz, with production costs of approximately $4,000/mz. For the 2003/2004 season, Fintrac's program has targeted a 408 percent increase in sales (to $1.33 million), a 58 percent increase in average grower net profit (to $6,000/mz), a 60 percent increase in average yields (to 80,000 lbs/mz), and a 38 percent reduction in per unit production cost.

In April, the first harvests of Fintrac's onion program began in the department of La Libertad. During this first four-month season, 550 tons are expected to be harvested by 26 partner farmers producing on 24 manzanas. Onions are being sold in the fresh form (a group of 4 to 6 onions tied by the leaves), and will soon also be available cured when a Fintrac-designed packing/curing facility is completed in the next few months. Demand from local buyers has already resulted in plans to expand the program for the 2003/2004 season to 100 manzanas (100 growers) with new production zones added in the departments of San Miguel and San Vicente. Sales are expected to increase to $700,000, representing 36 percent of current domestic demand. Through adoption of Fintrac recommended production technologies, average grower net earnings are expected to increase from $2,000/mz to $3,500/mz, farm yields will increase from 40,000 lbs/mz to 52,000 lbs/mz, and unit production costs will decrease from $0.075 to $0.060 per pound.

Fintrac's cucumber program is being expanded from its current 26 manzanas to 50 manzanas. With this expansion, El Salvadoran farmers will be able to supply almost all domestic demand, and at the same time conduct a trial export shipment of 14 containers (257 tons) to the US market during the upcoming winter season. Based on results of these trial shipments, production for export may increase further. Through implementation of Fintrac technology, participating growers can expect to see net earnings increase by 60 percent to $1,600/mz, yields increase from 25,000 lbs/mz to 37,500 lbs/mz, and production costs decrease from $0.068/lb to $0.060/lb.

Cabbage, ejote (green beans), pipian (squash), dried beans, and baby corn are also being produced by Fintrac clients as part of its crop rotation program. Rotation crops are crops for which Fintrac does not have specific programs, but are important as alternate crops in breaking pest and disease cycles that may arise with continued plantings (back to back) of other row crops. Fintrac clients have noted productivity increases in all of these crops since they are applying the same Fintrac technologies to them as they do under Fintrac's crop-specific production programs. Forty-six manzanas of varied rotation crops were planted during the last six months. Planted area is expected to increase by 700 percent during the upcoming production year and sales from these crops are expected to earn growers an additional $570,000. Further expansion is likely, particularly for cabbage as El Salvador imports more than $3.5 million per year in this item alone.

While Fintrac is working with a variety of products, all farmers are being provided with the same package of technical assistance, although tailored to meet the specific requirements of their crops. Fintrac technical assistance includes land preparation, plant nutrition, installation and management of drip irrigation systems, integrated pest management, farm chemical safety, cultural practices, nursery construction and management, greenhouse construction and management, and harvesting. Complementary assistance is also provided in postharvest and marketing operations. "As in all new countries where Fintrac begins operations, Fintrac needed to quickly show that it was different from many of the development programs that farmers saw in the past ... that farmers could double or triple their incomes," says Dennis Lesnick, Fintrac Program Director in El Salvador. "After one season, the word is out that we can deliver on our promises. In the beginning, we had to find farmers willing to take a risk on us. Now, farmers are coming to us and asking to become clients ... and other development programs in El Salvador are asking us to work with them to help incorporate our farm model within their programs."