USDA and TechnoServe Help Rural Producers Increase their Incomes by Developing Agri Businesses in Honduras
TechnoServe, Honduras, 2005, FFP
Intibucá, in southwestern Honduras, enjoys a favorable climate for farming, yet is one of the poorest regions in the country. During the past decade, the region's producers, most of whom own less than 1 hectare of land, have attempted to take advantage of these conditions by planting crops like cauliflower, broccoli, carrots and lettuce and by organizing themselves into the Producers' Association of Fruits and Vegetables of Intibucá (or APRHOFI by its Spanish acronym).
Still, the change posed hurdles. Lacking technical or commercial experience in these crops, APRHOFI's members weren't achieving the quantity, quality or consistency of production needed to enter high-value markets and raise their incomes.
TechnoServe saw potential, though. Since 2005, USDA – through the Food for Progress program – has supported TechnoServe in reducing poverty and food insecurity in Northern and Western Honduras by creating rural economic growth. Through this program, TechnoServe provides business development services and technical assistance to small agri-businesses that purchase from small-holder farmers that generally depend on one commodity (e.g., coffee, milk), and are therefore subject to very high-income volatility and few market alternatives. Programs like these are vital to economies like Honduras’ where agriculture generates 15% of the country’s GDP and employs a third of its labor force. This USDA-supported program concentrates on sectors that have attractive market opportunities – such as dairy and produce – and the potential to benefit the rural poor as suppliers or employees. Its strategy is to focus on strengthening business management processes, obtaining financing to invest in infrastructure and inputs and diversifying into more profitable, value-added products that will allow producers to increase their incomes.
In 2005, with support from USAID and USDA, TechnoServe helped the APRHOFI group improve its ability to sell produce year-round, increase its supply base, and grow valuable crops such as potato. TechnoServe also helped them forge commercial linkages with new buyers and strengthen the association's administrative and financial processes.
Working with a pilot group of 10 members, TechnoServe introduced new technologies to increase yields and quality, including a drip irrigation system, greenhouses, mechanized plowing, and quality seeds. Together these increased producers' yields by more than half.
With TechnoServe’s support, APRHOFI also introduced the production of value-added potatoes; that is, potatoes that are washed and sorted by quality standards. The high-yield crop grows well in the region and allows the association to sell in Honduras' major cities. In the first quarter of 2007, potato sales racked up over third of the association’s total sales, and amounted to more than APRHOFI's total vegetable sales for the same period the year before.
APRHOFI also strengthened its relationships with buyers, boosting prices paid to producers by more than a third. The association recently celebrated a major landmark when it signed a supply contract worth $350,000 with Grupo Comidas Especializadas, which owns the Pizza Hut and Kentucky Fried Chicken franchises in Honduras. An important factor in this achievement was the construction of a new processing facility, which is enabling the association to apply best manufacturing practices and meet buyers' stringent quality standards. TechnoServe helped APRHOFI secure financing for the facility from the European Cooperation, and since opening in December 2006, it processes 50,000 lbs of product a week.
The capacity to raise funding for better infrastructure, add new products, negotiate prices with buyers and serve more markets would not have been possible without the support of USDA's Food for Progress program. APRHOFI is now a thriving and sustainable business, and its members are sharing in this success. TechnoServe's business advice has stimulated a culture of production efficiency in Intibucá and influenced the quality of life there. Residents now enjoy access to a bounty of nutritional vegetables. Other nearby producer groups view APRHOFI as a model. Thanks to the new opportunities, APRHOFI member José Abraham Dominguez tripled his weekly income, invested an estimated $2,500 in home improvements, and now hires four workers a day to help with the increased production on his farm. Plus, he can afford for his children to attend school. Jose is also giving back to his community by raising money for the school and helping to bring potable water to the town.