Although all lands planted in export crops were exempted from reform, about 120,000 hectares were, nevertheless, divided among 35,000 poor families.
By 1975 the pendulum had swung back, and agrarian reform was all but halted. From 1975 through the 1980s, illegal occupations of unused land increased once again. Sony VAIO VPCW11S1E/T Battery,Sony VAIO VPCW11S1E/W Battery
The need for land reform was addressed mostly by laws directed at granting titles to squatters and other landholders, permitting them to sell their land or to use it as collateral for loans.
including land tenure and other needs of small farmers, the early 1990s were jolted by increased conflicts between peasants and the Honduran security forces. Agricultural credit and government support increasingly favored export crop producers at the expense of producers of basic food crops. Sony VAIO VPCW127JC/P Battery,Sony VAIO VPCW127JC/T Battery
The Honduran land reform process under President Callejas between 1989 and 1992 was directed primarily at large agricultural landowners. An agrarian pact, signed by landowners and peasant organizations in August 1990, remained underfunded and largely unimplemented. Sony VAIO VPCW127JC/W Battery
Furthermore, violence erupted as discharged members of the Honduran military forcibly tried to claim land that had already been awarded to the peasant organization Anach in 1976. In May 1991, violence initiated by members of the Honduran military resulted in the deaths of eight farmers. Sony VAIO VPCW127JC/WZ Battery,Sony VAIO VPCW12AAJ Battery
To keep similar situations around the country from escalating into violence, the government promised to parcel out land belonging to the National Corporation for Investment (Corporación Nacional de Inversiones—Conadin). The government also pledged to return to peasants land that had been confiscated by the Honduran military in 1983. Sony VAIO VPCW12AKJ Battery,Sony VAIO VPCW12AVJ Battery
An Agricultural Modernization Law, passed in 1992, accelerated land titling and altered the structure of land cooperatives formed in the 1960s. The law permitted cooperative members to break up their holdings into small personal plots that could be sold. As a result, some small banana producers suffering from economic hard times chose to sell their land to the giant banana producers. Sony VAIO VPCW12S1E/P Battery,Sony VAIO VPCW12S1E/T Battery
After an agreement was reached with the European Union (EU) to increase Honduras's banana quota to the EU, the large banana companies were avid for additional land for increased production to meet the anticipated new demand from Europe.
Throughout the 20th century, Honduras's agriculture has been dominated first by bananas and then to a lesser extent by coffee and sugar. Sony VAIO VPCW12S1E/W Battery
Although their overall importance has declined somewhat, bananas and coffee together still accounted for 50 percent of the value of Honduran exports in 1992. The combined value of the two crops also continued to make the biggest contribution to the economy in 1992. Total banana sales that year were US$287 million, and total coffee sales amounted to US$148 million. Sony VAIO VPCW213AG/P Battery
These figures, which reflect a substantial decline from previous years' sales, reflect production losses suffered by banana producers and the withholding of coffee exports from the market in a futile effort to force improvements in the face of record breaking price declines. Sony VAIO VPCW213AG/W Battery
Two United States-based, multinational corporations—Chiquita Brands International and Dole Food Company—now account for most Honduran banana production and exports. Honduras's traditional system of independent banana producers, who, as late as the 1980s, sold their crops to the international banana companies, was eroded in the 1990s. Sony VAIO VPCW215AG/L Battery,Sony VAIO VPCW217JC Battery
In the absence of policies designed to protect independent suppliers, economically strapped cooperatives began to sell land to the two large corporations.
Although Honduran banana production is dominated by multinational giants, such is not the case with coffee, which is grown by about 55,000 mostly small producers. Sony VAIO VPCW217JC/L Battery,Sony VAIO VPCW217JC/P Battery
Coffee production in Honduras has been high despite relatively low yields because of the large numbers of producers. Honduras, in fact, consistently produced more than its international quota until growers began to withhold the crop in the 1980s in an attempt to stimulate higher prices. Despite the efforts of the growers, Sony VAIO VPCW217JC/T Battery,Sony VAIO VPCW217JC/W Battery
coffee prices plunged on the international market from a high of more than US$2.25 per kilogram in the mid-1970s to less than US$0.45 per kilogram in the early 1990s. As a result of the declining prices, coffee producers were becoming increasingly marginalized.
The outlook for the sugar industry, which had boomed during the 1980s when Honduran producers were allowed to fill Nicaragua's sugar quota to the United States, seemed bleak in 1993. Sony VAIO VPCW218JC Battery,Sony VAIO VPCW218JC/L Battery
Restoration of the sugar quota to Nicaraguan growers has been a major blow to Honduras's small independent producers, who had added most of Nicaragua's quota to their own during the United States embargo of Nicaragua. Higher costs for imported fertilizers because of the devaluation of the lempira add to the problem. Sony VAIO VPCW218JC/P Battery
Honduran producers seek relief from a relatively low official price of 25 lempiras per kilogram of sugar by smuggling sugar across the borders to Nicaragua and El Salvador, where the support prices are higher. Sugar growers who can afford it have begun to diversify by growing pineapples and rice. Sony VAIO VPCW218JC/W Battery
Many independent sugar growers, like independent banana producers, have become indignant over the relatively high profits shown by refiners and exporters. Strikes by producers at harvest time in 1991 forced the closure of the Choluteca refinery for a short time but had little effect on the depressed long-term outlook for the industry. Sony VAIO VPCW219AJ/P Battery,Sony VAIO VPCW219AJ/W Battery
While the total value of export merchandise fell in 1990 and 1991 and had still not recovered in 1993 to its 1989 level, the overall agricultural sector output has grown somewhat because of growth in the sale of winter vegetables and shrimp. Sony VAIO VPCW21AAJ Battery
Nontraditional vegetables and fruit produced US$23.8 million in export revenue in 1990, a figure that was almost double the 1983 figure. Nontraditional agricultural crops represented 4.8 percent of the value of total exports in 1990, compared to 2.8 percent in 1983. Some development experts argue that government protection of corn, bean, and rice production by small farmers is a futile effort in the long-term goal of poverty reduction. HP 448007-001 battery,HP Pavilion DV7 battery
On the other hand, they see significant economic potential for nontraditional crops, if they are handled properly. Analysts also note, however, that Honduras is at a distinct disadvantage relative to its Central American neighbors because of its poor transportation system. Nontraditional exports require the ability to get fresh produce from the fields to distant markets rapidly. HP DV6-1120SA battery
In the early 1980s, the cattle industry appeared to have the potential to be an important part of the Honduran economy. The Honduran cattle sector, however, never developed to the extent that it did in much of the rest of Central America. Cattle production grew steadily until 1980-81 but then declined sharply when profits fell because of high production costs. Compaq CQ50 battery,HP Pavilion DV8 battery
The small Honduran meat packing industry declined at the same time, and several meat packing plants closed. As late as 1987, livestock composed 16 percent of the value-added agricultural sector but the industry continued to decline. By 1991-92, beef exports accounted for only 2.9 percent of the value of total exports. Sony VGP-BPS13 battery
Sales of refrigerated meat were the third or fourth highest source of export earnings in the mid-1980s, but like other Honduran agricultural products, beef yields were among the lowest in Central America. As world prices fell and production costs, exacerbated by drought, rose, there was less incentive to raise cattle. Compaq CQ35-100 battery,Sony VGP-BPS11 battery
For a period of time, cattle farmers illegally smuggled beef cattle to Guatemala and other neighboring countries where prices were higher, but the Honduran cattle sector never became competitive internationally. The two large banana companies have also owned large cattle ranches where they raised prime beef, but these large companies had the flexibility to change crops as the market demanded. Sony VAIO VPCW111XX/P Battery
Honduran dairy herds fared about the same as beef cattle, and Honduran milk yields were also among the lowest in Central America. The dairy industry was further handicapped by the difficulties of trying to transport milk over poor roads in a tropical country, as well as by stiff competition in the domestic market from subsidized foreign imports, mostly from the United States. Sony VAIO VPCW111XX/T Battery,Sony VAIO VPCW111XX/W Battery
Honduras significantly developed its shrimp industry during the 1980s and in the Latin American market was second only to Ecuador in shrimp exports by 1991. In 1992 shrimp and lobster jumped to 12 percent of export earnings. Shrimp contributed US$97 million in export sales to the economy in 1992—an increase of 33 percent over the previous year. Sony VAIO VPCW111XXP Battery,Sony VAIO VPCW111XXT Battery
The industry was dependent, however, on larvae imported from the United States to augment its unstable natural supply. Technicians from Taiwan were contracted by large producers in 1991 to help develop laboratory larvae, but bitter feuds developed between independent shrimpers and the corporations.Sony VAIO VPCW111XXW Battery
Local shrimpers charged that corporate methods were damaging the environment and destroying natural stock through destruction of the mangrove breeding swamps. Corporate shrimp farmers then began to move their operations farther inland, leaving local shrimpers to contend with diminished natural supplies on the mosquito-infested coast. Sony VAIO VPCW115XGP Battery,Sony VAIO VPCW115XW/P Battery
As in much of Central America, Honduras's once abundant forest resources have been badly squandered. In 1964 forests covered 6.8 million hectares, but by 1988 forested areas had declined to 5 million hectares. Honduras continued to lose about 3.6 percent of its remaining forests annually during the 1980s and early 1990s. Sony VAIO VPCW115XW/T Battery
The loss is attributable to several factors. Squatters have consistently used land suitable only for forests to grow scantyield food crops; large tracts have been cleared for cattle ranches; and the country has gravely mismanaged its timber resources, focusing far more effort on logging than on forestry management. Sony VAIO VPCW117XC/P Battery
The government began an intensive forestry development program in 1974, supposedly intended to increase management of the sector and to prevent exploitation by foreign-owned firms. The Honduran Corporation for Forestry Development (Corporación Hondureña de Desarrollo Forestal—Cohdefor) was created in 1974, Sony VAIO VPCW117XC/W Battery
but it quickly developed into a corrupt monopoly for overseeing forest exports. Timber was mostly produced by private sawmills under contracts selectively granted by Cohdefor officials. In fact, ongoing wasteful practices and an unsustainable debt, which was contracted to build infrastructure, appear to have undercut most conservation efforts. Sony VAIO VPCW119XJ/P Battery,Sony VAIO VPCW119XJ/W Battery
The military-dominated governments contracted huge debt with the multilateral development agencies, then extracted timber to pay for it. Cohdefor generally granted licenses to private lumber companies with few demands for preservation, and it had little inclination or incentive to enforce the demands it did make. Sony VAIO VPCW11AXJ Battery
With encouragement from the United States Agency for International Development (AID), the Honduran government began to decentralize Cohdefor beginning in 1985. Under the decentralization plan, regulatory responsibilities were transferred from the central government to mayors and other municipal officials on the assumption that local officials would provide better oversight. Sony VAIO VPCW11S1E/T Battery
Despite decentralization and the sale of government assets, Cohdefor's remaining debt was US$240 million in 1991. The government also assumed continued financial responsibility for the construction of a new airstrip in the area of timber extraction, upgrading facilities at Puerto Castilla and Puerto Lempira, and providing electricity at reduced prices to lumber concerns as part of the privatization package. Sony VAIO VPCW121AX Battery
Major legislation was passed in 1992 to promote Honduran reforestation by making large tracts of state-owned land more accessible to private investors. The legislation also supplied subsidies for development of the sector. The same law provided for replanting mountainous regions of the country with pine to be used for fuel. Sony VAIO VPCW127JC/P Battery
Natural resources and energy
Mining, the mainstay of the Honduran economy in the late 19th century, declined dramatically in importance in the 20th century. The New York and Honduras Rosario Mining Company (NYHRMC) produced US$60 million worth of gold and silver between 1882 and 1954 before discontinuing most of its operations. Sony VAIO VPCW127JC/W Battery
Mining's contribution to the GDP steadily declined during the 1980s, to account for only a 2 percent contribution in 1992. El Mochito mine in western Honduras, the largest mine in Central America, accounted for most mineral production. Ores containing gold, silver, lead, zinc, and cadmium were mined and exported to the United States and Europe for refining. Sony VAIO VPCW12AAJ Battery,Sony VAIO VPCW12AKJ Battery
Honduras has for many years relied on fuelwood and biomass (mostly waste products from agricultural production) to supply its energy needs. The country has never been a producer of petroleum and depends on imported oil to fill much of its energy needs. In 1991 Honduras consumed about 16,000 barrels (2,500 m3) of oil daily. Sony VAIO VPCW12AVJ Battery
Honduras spent approximately US$143 million, or 13 percent of its total export earnings, to purchase oil in 1991. The country's one small refinery at Puerto Cortés closed in 1993. Various Honduran governments have done little to encourage oil exploration, although substantial oil deposits have long been suspected in the Río Sula valley and offshore along the Caribbean coast. Sony VAIO VPCW12S1E/T Battery,Sony VAIO VPCW12S1E/W Battery
An oil exploration consortium consisting of the Venezuelan state oil company, Venezuelan Petroleum, Inc. (Petróleos de Venezuela, S.A.--PDVSA), Cambria Oil, and Texaco expressed interest in the construction of a refinery at Puerto Castilla in 1993, with production aimed at the local market.
petroleum, 29 percent; and electricity, 4 percent. In 1987 Honduran households consumed approximately 60 percent of total energy used, transportation and agriculture used about 26 percent, and industry used about 14 percent. Food processing consumed about 50 percent of industrial sector energy, followed by petroleum and chemical manufacturing. Sony VAIO VPCW213AG/T Battery,Sony VAIO VPCW213AG/W Battery
Honduran electrification is low and uneven relative to other countries in Latin America. The World Bank estimates that only about 36 percent of the Honduran population had access to electricity (20 percent of the rural population) in 1987. The country's total capacity in 1992 was 575 megawatts (MW),Sony VAIO VPCW215AG/L Battery
with 2,000 megawatt-hours produced. A mammoth hydroelectric plant, the 292-MW project at El Cajón, began producing electricity in 1985 to help address the country's energy needs. The plant, however, soon became heavily indebted because of the government's electricity pricing policies (not charging public-sector institutions, for example) and because of the appointment of political cronies as top management officials. Sony VAIO VPCW217JC/L Battery
El Cajón also developed costly structural problems requiring extensive maintenance and repairs. Officials estimated that the government's decision to provide free service to publicsector institutions contributed to a 23 percent increase in publicsector consumption in 1990. Experts estimated that additional electrical generation capacity would likely be needed to keep pace with demand. Sony VAIO VPCW217JC/T Battery
The Honduran Congress assumed authority for setting electric prices beginning in 1986 but then became reluctant to increase rates. Under pressure from the World Bank, it did agree to a 60 percent increase in 1990, with additional increases in 1991. To offset these increased rates for residential users, the National Congress initiated a system of direct subsidies that ran through 1992. Sony VAIO VPCW218JC Battery,Sony VAIO VPCW218JC/L Battery
The country's manufacturing sector was small, contributing only 15 percent to the total GDP in 1992. Textile exports, primarily to the United States, led the Honduran manufacturing sector. The maquiladora, or assembly industry, was a growth industry in the generally bleak economy. Sony VAIO VPCW218JC/P Battery,Sony VAIO VPCW218JC/T Battery
Asian-owned firms dominated the sector, with twenty-one South Korean-owned companies in export processing zones located in the Río Sula valley in 1991. The maquiladoras employed approximately 16,000 workers in 1991; another nine firms opened in 1992. Job creation, in fact, is considered to be the primary contribution of the assembly operations to the domestic economy. Sony VAIO VPCW218JC/W Battery,Sony VAIO VPCW219AJ/L Battery
The export textile manufacturing industry all but wiped out small, Honduran manufacturers, and food processors, whose goods were historically aimed at the domestic market, were also adversely affected. The small Honduran firms could not begin to compete with the assembly industry for labor because of the maquiladoras' relatively high wage scale of close to US$4 per day. Sony VAIO VPCW219AJ/P Battery,Sony VAIO VPCW219AJ/W Battery
Small firms also found it increasingly difficult to meet the high cost of mostly imported inputs. Membership in the Honduran Association of Small and Medium Industry (Asociación Hondureña de Empresas Pequeñas y Medianas) declined by 70 percent by 1991, compared to pre-maquiladora days, foreshadowing the likely demise of most of the small shops. Sony VAIO VPCW21AAJ Battery,Sony VAIO VPCW21AKJ Battery
Honduran domestic manufacturers also suffered from increased Central American competition resulting from a trade liberalization pact signed in May 1991 by Honduras, El Salvador, and Guatemala. Overall, the Honduran manufacturing sector has mimicked other sectors of the economy—it is mostly noncompetitive, Sony VAIO VPCW21AVJ Battery
even in a regional context, because of insufficient credit and the high cost of inputs. Relatively high interest rates and a complicated investment law have also inhibited the foreign-dominated manufacturing sector from taking off. Sony VAIO VPCZ110 Battery,Sony VAIO VPCZ110GB/BI Battery
The government-sponsored Puerto Cortés Free Zone was opened in 1976. By 1990 an additional five free zones were in operation in Omoa, Coloma, Tela, La Ceiba, and Amapala. A series of privately run export processing zones were also established in competition with the government-sponsored free zones.Sony VAIO VPCZ112GD/S Battery
These privately run zones offered the same standard import-export incentives as the government zones. Most of the government and privately run zones were located along the Caribbean coast in a newly developing industrial belt. Sony VAIO VPCZ114GX/S Battery
Firms operating outside of the special "enterprise zones" (either privately run, export-processing zones or governmentsponsored free zones) enjoy many of the same benefits as those operating within the zones. Sony VAIO VPCZ115 Battery
The Honduran Temporary Import Law permits companies that export 100 percent of their production to countries outside the CACM countries to hold ten-year exemptions on corporate income taxes and duty-free import of industrial inputs. Sony VAIO VPCZ115FC/B Battery
Analysts continue to debate the actual benefits of the shift away from the import-substitution industrialization (ISI) policies of the 1960s and 1970s toward a new focus on free zones and assembly industries in the 1990s. Critics point to the apparent lack of commitment by foreign manufactures to any one country site or to the creation of permanent infrastructure and employment. Sony VAIO VPCZ115FC/S Battery,Sony VAIO VPCZ116 Battery
They question whether new employment will be enough to offset the loss of jobs in the more traditional manufacturing sector. A value of US$195 million to the Honduran economy from assembly industries in 1991—when the value of clothing exports was greater than that of coffee—was a compelling argument in favor of the shift, however. Sony VAIO VPCZ116GX/S Battery,Sony VAIO VPCZ117 Battery
High interests rates, particularly for housing, continued to hurt the Honduran construction industry in 1993, but danger from high rates was partially offset by some public-sector investment. Privatization of formerly state-owned industries through debt swaps also negatively affected construction as prices for basic materials such as cement increased and credit tightened. Sony VAIO VPCZ117FC/B Battery,Sony VAIO VPCZ118 Battery
A major devaluation of the lempira added to the already high cost of construction imports. Construction contributed 6.0 percent to the GDP in 1992.
After 1985, however, the sector began to grow rapidly. The average annual growth rate of value added to the economy from the financial sector for the 1980s was the second-highest in Latin America, averaging 4 percent. Sony VAIO VPCZ119 Battery
By 1985 Honduras had twenty-five financial institutions with 300 branch offices. Honduran commercial banks held 60 percent of the financial system's assets in 1985 and nearly 75 percent of all deposits. With the exception of the Armed Forces Social Security Institute, all commercial banks were privately owned, and most were owned by Honduran families. ony VAIO VPCZ119FJ/S Battery,Sony VAIO VPCZ119GC/X Battery
In 1985 there were two government-owned development banks in Honduras, one specializing in agricultural credit and the other providing financing to municipal governments.
At the behest of the International Monetary Fund (IMF) and World Bank, Honduras began a process of financial liberalization in 1990. Sony VAIO VPCZ119L Battery
The process began with the freeing of agricultural loan rates and was quickly followed by the freeing of loan rates in other sectors. Beginning in late 1991, Honduran banks were allowed to charge market rates for agricultural loans if they were using their own funds. By law, the banks had to report their rates to monetary authorities and could fix rates within two points of the announced rate. Sony VAIO VPCZ119R/S Battery
In 1991 commercial banks pressured the government to reduce their 35 percent minimum reserve ratio. This rate remained standard until June 1993 when the minimum requirement was temporarily lifted to 42 percent. The rate was dropped to 36 percent three months later. The banks had excess reserves, and lending rates were in the area of 26 to 29 percent, with few borrowers. Sony VAIO VPCZ11AGJ Battery,Sony VAIO VPCZ11AVJ Battery
Prior to liberalization measures, the Central Bank of Honduras (Banco Central de Honduras) maintained interest rate controls, setting a 19 percent ceiling, with the market lending rate hovering around 26 percent in late 1991. With inflation hitting 33 percent in 1990, there was, in fact, a negative real interest rate, but this situation reversed in 1991 when rates were high relative to inflation. Sony VAIO VPCZ11CGX/X Battery
Rates of 35 to 43 percent in 1993 were well above the inflation rate of 13 to 14 percent. Bankers argued for further liberalization, including easing of controls in the housing and nonexport agricultural sectors.
A Honduran stock exchange was established in August 1990 with transactions confined to trading debt. Sony VAIO VPCZ11FHX/XQ Battery
Nine companies were registered with the exchange in 1991; in 1993 this number had grown to eighteen. It appears doubtful, however, that the market will develop fully, given the reluctance of family-held firms to open their books to public scrutiny.
Foreign tourists are attracted to Honduras by the Mayan ruins in Copán and coral reef skindiving off the Islas de la Bahía (Bay Islands). Sony VAIO VPCZ11X9E/B Battery
Poor infrastructure, however, has discouraged the development of substantial international tourism. Despite these problems, the number of visitors arriving in Honduras rose from fewer than 200,000 in 1987 to almost 250,000 in 1989. Small ecotourism projects in particular are considered to have significant potential. Sony VAIO VPCZ125GX/S Battery
In the early 1990s, the United States was by far Honduras's leading trading partner, with Japan a distant second. United States exports to Honduras in 1992 were valued at US$533 million, about 54 percent of the country's total imports of US$983 million. Most of the rest of Honduras's imports come from its Central American neighbors. Sony VAIO VPCZ128GC Battery,Sony VAIO VPCZ12M9E/B Battery
Despite its status as beneficiary of both the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences (GSP)--both of which confer dutyfree status on Honduran imports to the United States—Honduras has run a long-standing trade deficit with the United States. Total exports of goods and services by Honduras in 1992 were US$843 million, Sony VAIO VPCZ13M9E/B Battery,Sony VAIO VPCZ13V9E/X Battery
of which about 52 percent went to the United States. The current account deficit, however, continues to rise, from US$264 million in 1992 to an estimated US$370 million deficit in 1993.
With the exception of relatively recent, Asian-dominated investment in assembly firms along Honduras's northern coast, Sony VAIO VPCZ13Z9E/X Battery
the country remains heavily dependent on United States-based multinational corporations for most of its investment needs in the early 1990s. Overall investment as a percentage of GDP declined dramatically during the 1980s, from about 25 percent in 1980 to a meager 15 percent in 1990. Sony VAIO VPZ117 Battery,Sony VAIO VPZ118 Battery
Dole Food Company and Chiquita Brands International together have invested heavily in Honduran industries as diverse as breweries and plastics, cement, soap, cans, and shoes.
The solutions relied on in the past—traditional export crops, the maquiladora assembly industry, and 1980s' development schemes—appear unlikely to provide enough new jobs for a rapidly growing population. The major economic challenge for Honduras over the next decade will be to find dependable sources of sustainable economic growth. Sony VPCM11M1E/W Battery,Sony VPCM12M1E/L Battery,Sony VPCM12M1E/P Battery,Sony VPCM12M1E/W Battery,Sony VPCM13M1E/L Battery,Sony VPCM13M1E/P Battery,Sony VPCM13M1E/W Battery