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This is to certify that the

dissertation entitled

A Socio-Economic Study of the Honduran Bean
Subsector: Production Characteristics, Adoption of Improved
Varieties, and Policy Implications

presented by

Pedro V. Martel-Lagos

has been accepted towards fulfillment
of the requirements for

 

 

Ph.D. degree in Agricultural
Economics

21% )4! 6g ([5:

Major professor

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———-——'——"

A SOCIO-ECONOMIC STUDY OF THE HONDURAN BEAN SUB SECTOR:
PRODUCTION CHARACTERISTICS, ADOPTION OF IMPROVED VARIETIES,
AND POLICY IMPLICATIONS

Pedro V. Martel-Lagos

A DISSERTATION

Submitted to
Michigan State University
in partial fiilfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

Department of Agricultural Economics

1995

ABSTRACT

A SOCIO-ECONOMIC STUDY OF THE HONDURAN BEAN SUBSECTOR:
PRODUCTION CHARACTERISTICS, ADOPTION OF IMPROVED VARIETIES,
AND POLICY IMPLICATIONS
By

Pedro V. Martel-Lagos

Since the early 19803, Honduras’ agricultural sector has stagnated. In the early
19903, the government initiated a structural adjustment program expecting to accelerate
economic development. In 1992, the government enacted the Law of Agricultural
Modernization and Development, which called for market liberalization and a complete
restructuring of the agricultural research and extension system. These reforms directly
affect the bean subsector, an important source of proteins and tradable good throughout
the region. While the National Bean Research Program developed several improved
varieties (with international collaborators), its research priorities have been set with little
empirical knowledge about farmers' and market's characteristics and their efl‘ect on the
adoption process.

To identify constraints and options to increase bean subsector’s productivity, 239
farmers and 57 city traders were surveyed, and a rapid appraisal of El Salvadorian market
was conducted. Data were analyzed with descriptive statistics, logistic analysis, and linear
regression analysis.

This research shows that farmers' socio-economic characteristics, production

environments, and institutional factors affect varietal adoption process. Catrachita and

Dorado, two recently released varieties, were planted by 23% and 20% of the farmers,
respectively. Adoption rates varied across administrative region, topographical region,
arid farm size. Catrachita and Dorado were planted by 27% of Mideastern farmers, and
only by 16% and 7% of Northeastern-faunas, respectively. In the hill-sides, 76% of
farmers planted Catrachita but only 24% in the flat-land. Catrachita was planted by 19%
small and medium farmers, and 32% large farmers. At the market-level, traders paid
farmers USS 0.63/kg for Seda (traditional variety), whereas Catrachita and Dorado only
commanded a price ofUSS 0.56/kg and USS 0.53/kg. Price differences were partly due
to demand fiom El Salvador. Thus, market links also have important implications for the
adoption of new varieties, especially links to Central American markets. Similarly,
competitiveness of the Honduran bean subsector is highly dependent on policy makers' and

plant breeders' ability to adjust to market participants' demands.

 

 

DEDICATED
Above all, I dedicate this work and all of the days of my life to God, our Father and

Creator.

I also dedicate this dissertation to my wife, Sandra, for all her love, support, and

encouragement without which I would have never finish this project. This is as much

Sandra's dissertation as it is mine.

iv

ACKNOWLEDGMENTS

I express my sincere gratitude to Dr. Richard Bemsten, my major professor, for all
his attentive and always supportive, yet critically constructive, comments and suggestions
on my numerous (countless) drafts. I also thank Dr. Bernsten's wife and daughters for
their support and understanding while I took several hours from their father and husband.
I also thank the other members of my committee Drs. Anne Ferguson, Russell Freed,
Lester Manderscheid, James Shaffer, and Michael Weber. They were always willing to
read and make comments on my work as I progressed towards the last page of this
dissertation. Drs. David Tschirley and Michael Weber deserve additional recognition for
their support and intellectual stimulus, during their visits to Honduras and in East Lansing.
They were always eager to work and learn more about Honduras' markets and farmers.

This research would have been virtually impossible without the support of several
people at Escuela Agricola Panamericana Zamorano. In the Department of Agronomy, I
am especially grateful to Dr. Juan Carlos Rosas, Mr. Oswaldo Varela and all of his team,
Muchas Gracias. Also, Dr. James Beaver, at the University of Puerto Rico, was very
supportive of my thesis research and provided valuable comments since the initial stages of
this study.

The Latin American Scholarship Program of American Universities (LASPAU)

and the United States Agency for International Development (U SAID) mission in
Honduras deserve special acknowledgment for their financial and advisory support during
my entire Ph.D. program. Several people at both institutions worked hard to make my life
easier while in East Lansing. I also acknowledge the help and support provided by several
advisors at the International Students and Scholars Ofiice at MSU.

I am also grateful to the Bean/Cowpea CRSP, the Department of Agricultural
Economics, and the Food Security H program at Michigan State University. Their
financial and logistic support made it possible to carry out my field work.

In Honduras, there were several institutions and many individuals who were always
supportive of my research. At the USAID mission in Tegucigalpa, I am especially
thankful to Lie. Guillermo Alvarado and Lic. Vicente Diaz. At the National Agricultural
Census, Ing. Gerardo Reyes and Ms. Carolina Matute deserve special mention. At the
Ministry of Natural Resources, Dr. Federico Rodriguez was always interested in finding
ways to support this study. In addition the personnel at the data management/processing
office ofUPSA were very helpfirl. I am also grateful to Mr. Rigoberto Martel at the
General Statistics and Census Bureau, who responded to my special requests for data. I
also acknowledge the support of ADAI in selecting and helping train enumerators, and
PRODEPAH in scheduling special visits to the traders in Olancho. A

I am extremely thankful to the team of enumerators: Sandra, Nolvia, Magdalena,
Norma, Carlos, and Felipe and to the always helpful Don David. Their long extended
hours of work, many times skipping lunch and dinner, were essential to the completion of

this thesis. I am also gratefirl for Dr. Patricia Bonnard's support and intellectual insights

while our work in Honduras, her input made the challenge much easier.

I will remain always gratefirl to the all of my teachers at MSU for their words of
wisdom, both in and out of the classroom. I will also cherish the good and stressful
moments of studying with so many friends I met in Agricultural Economics. Thanks for
your support and fiiendship Miguel Cabal, Greg Heikes, Pam Miklavcic, Marcelo Siles,
Jim Stems, and everyone else.

Sandra and I are very thankfirl for all the support and love our families provided
while we struggled to finish this endeavor. Muchas Graciasfmnilias Martel-Lagos and
Castillo-Ruiz.

At last but not least, in East Lansing, Sandra and I have received invaluable
support fi'om all the members of the MSU Latin American Community. We are glad we
were part of this organization, and as we go back to Honduras the MSU Latin American
Community travels overseas. We are also extremely grateful to familias: Widders-
Polanco, Young-Gomes da Silva, White-Sarto, and Genish-Sandoval. They were our

closest family in East Lansing.

vii

TABLE OF CONTENTS

LIST OF TABLES ................................................... xii
LIST OF FIGURES .................................................. xiv
CHAPTER ONE INTRODUCTION ................................... 1
1.1 Background .............................................. l

1.2 Problem Statement and Justification for the Study ................. 3

1.3 Research Objectives ........................................ 5

1.3.1 Specific Objectives ..................................... 6

1.4 Organization of the Dissertation ............................... 7
CHAPTER TWO LITERATURE REVIEW AND METHODS ............... 9
2.1 Literature Review ............................................. 9

2.1.1 On the Rapid Appraisal/Subsector Method of Analysis ........ 9

2.1.2 The Interaction of Policy Reforms and Supply Response ..... 11

2.1.3 Production and Adoption of Improved Varieties ............ 12

2.2 Data and Methods of Analysis .................................. 15

2.2.1. Rapid Appraisal .................................... 15

2.2.2 Farmers and Traders Sampling Techniques ................ 15

2.2.2.1. Farmers Data and Sampling Design ............... 16

2.2.2.2. Traders Data and Sampling Design ................ 19

2.2.3. Questionnaire Design ................................. 20

2.3 Summary .................................................. 21
CHAPTER THREE AN OVERVIEW OF THE HONDURAN BEAN SUBSECTOR 23
3.1 Demand Analysis ............................................ 23

3.1.1 Beans in the Honduran Diet ............................. 23

3.1.2 Consumer Preferences ................................. 24

3.1.3 Domestic Consumption ................................ 25

3.1.3.1 Rural Demand ................................ 25

3.1.3.2 Urban Demand ............................... 28

3.1.4 Central American Exports Demand ....................... 28

3.2 Production Analysis .......................................... 31

3.2.1 Harvested Area ...................................... 31

3.2.2 Production .......................................... 35

3.2.3 Farm Size and Commercial Orientation .................... 38

3.2.3.1 Mideastem Region Fanning System ............... 39

3.2.3.2 North-Eastem Region ......................... 40

3.2.3.3. Western Region Farming System ................. 41

3.2.4 Honduran Bean Yields ................................. 42

3.2.5 Central American Production ............................ 45

3.3 Bean Price Analysis .......................................... 46

3.3.1 Trends in Real and Relative Prices in Honduras .............. 47

3.3.1.1 Relative Bean Prices ........................... 47

3.3.2 Bean Price Seasonality ................................ 49

3.3.3 Central American Prices ............................... 51

3.4 The Bean Marketing System .................................... 51
3.4.1 Bean Marketing Channels .............................. 51

3.4.1.1 Farmers .................................... 52

3.4.1.2 Local Traders ................................ 53

3.4.1.3 Regional Traders ............................. 53

3.4.1.4 Wholesalers ................................. 54

3.4.1.5 El Salvadorian Traders ......................... 55

3.4.1.6 Honduran Agricultural Marketing Institute (II-IMA) . . . 56

3.4.1.7 BANASUPRO ............................... 57

3.4.1.8 Bean Packers and Bean Processors ................ 58

3.4.1.9 Retailers .................................... 59

3.5 Bean Improvement Research ................................... 59
3.5.1 Bean Improvement Research Objectives and Priorities ........ 60

3.5.2 Bean Breeding and Foundation Seed Production ............. 61

3.5.3 Agronomic Research .................................. 62
3.5.4Socio-EconomicResearch............... .............. 63

3.6 Government Policies Affecting The Bean Subsector ................. 64
3.6.1 Macro-Policies ...................................... 65

3.6.1.1 Price Control Policies .......................... 65

3.6.1.2 International Trade ............................ 65

3.6.2 Sectoral Policies ..................................... 66

3.6.2.1 Dismantling of the IHMA ....................... 66

3.6.2.2 Agricultural Technology Policy .................. 67

3.6.2.3 Land Market Policy ........................... 68

3.7 Chapter Summary ........................................... 69

CHAPTER FOUR THE BEAN FARMING SYSTEM IN MIDEASTERN AND

NORTHEASTERN HONDURAS .................................. 73
4.1 Introduction ............................................... 73
4.2 Bean Cropping Patterns and Land Use ........................... 75
4.3 Use of Chemical Inputs ....................................... 83
4.3.1 Chemical Input Use and Cropping Seasons ................. 83

4.3.2 Chemical Input Use and Farm Size ....................... 85

4.3.3 Chemical Input Use and Topography ..................... 86

4.3.4 Chemical Input Use by Administrative Region and Types of Inputs86

4.4 Use of Improved Bean Varieties ................................ 89
4.4.1 Distribution Channels of Bean Seeds and Genetic Diversity ..... 90

4.4.2 Use of Improved Bean Varieties and Topography ............ 92

ix

4.4.3 Use of Improved Varieties and Administrative Regions ........ 93

4.4.4 Use of Improved Bean Varieties and Farm Size .............. 93

4.4.5 Improved Bean Varieties and Yields ...................... 96

4.5 Farm Sales ................................................ 98

4.6 Characteristics of the Households .............................. 106

4.7 Summary of the Chapter ..................................... 109
CHAPTER FIVE EMPIRICAL MODELS ON THE ADOPTION OF IMPROVED

VARIETIES AND DETERMINANTS OF BEAN YIELDS ............. 112

5.1 Introduction .............................................. 112

5.2 The Logistic Model and the Adoption of Improved Bean Varieties ..... 112

5.3 Results of the Adoption Models ............................... 116

5.3.1 Results of the Adoption Models ........................ 120

5.4 Econometric Models of Bean Yields Determinants ................. 125

5.5 Results of the Yield Response Models ........................... 128

6.5 Summary of the Chapter ..................................... 132
CHAPTER SDI THE HONDURAN BEAN MARKETING SYSTEM AND THE

IMPROVED BEAN VARIETIES ................................. 134

6.1 Introduction .............................................. 134

6. 2 Bean Market Structure ...................................... 134

6. 2.1 The marketing System at the Farmer Level ................ 134

6. 2. 2 The Marketing System at the Trader Level ................ 137

6.3 Bean Preferences in The Market ............................... 141

6.4 The Market Performance of Improved Varieties ................... 151

6.5 The Honduran-Salvadoran Bean Marketing System ................ 154

6.6 Summary of the Chapter ..................................... 158

CHAPTER SEVEN CONCLUSION AND IMPLICATIONS ................. 161

7.1 The bean Subsector ......................................... 161

7.2 The Modified Subsector Approach ............................. 163

7.3 The Bean Farming System .................................... 164

7.4. Adoption and Yield Determinants Models ........................ 168

7.5 Understanding the Bean Marketing System ....................... 169

7.6 Limitations of the Study and Recommendations for Further Research . . . 171

7.6.1 Recommendations for Further Research ................... 173

7.7 Concluding Comments ...................................... 174

7.7.1 Implications for Policy Makers ......................... 174

7.7.2 Implications for Plant Scientists ........................ 176

7.7.3 Implications for Agricultural Extensionists ................ 179

APPENDIX A ...................................................... 181

APPENDIX B ...................................................... 191

REFERENCES ..................................................... 204

LIST OF TABLES

Table 2.1 Sample Distribution for Bean Farmers’ Survey, Mid-Eastern and North-

Eastern Regions, Honduras, 1994 ............................... 18
Table 3.1 Structure of Bean Production and Sales, 1992, Honduras .............. 27
Table 3.2 Bean Consumption in Central America by Country, 1980/81-1989/90
(‘000 mt.) ................................................. 30
Table 3.4 Average Annual Growth Rate (%) of Harvested Area in Basic Grains,
Honduras .................................................. 33
Table 4.1 Sample Distribution Across Topography by Administrative Region,
Honduras1994. ............................................. 75
Table 4.2 Proportion (%) of Available Land Planted in Different Cropping Systems,
Mideastem and Northeastern Regions of Honduras, 1993-1994. ........ 79
Table 4.3 Proportion (%) of Cropped Land in Different Crops, Mono-Crop Bean
Farmers, Mideastem and Northeastern Honduras, Primera 1993. ........ 80
Table 4.4 Proportion (%) of Cropped Land in Difi‘erent Crops, Inter-Crop Bean
Farmers, Mideastem and Northeastern Honduras, Primera 1993. ........ 81
Table 4.5 Proportion (%) of Cropped Land in Different Crops, Mono-Crop Bean
Farmers, Mideastem and Northeastern Honduras, Postrera 1993-1994. . . . 82
Table 4.6 Bean Farmers Applying Chemical Inputs (%) by Cropping Season,
Mideastem and Northeastern Honduras, 1993-1994. ................. 85
Table 4.7 Bean Farmers (%) Using Chemical Inputs by Farm Size, Topography, and
Administrative Region, Honduras, 1993-1994. ...................... 88
Table 4.8 Bean Farmers (%) Applying Different Types of Chemical Inputs, Mideastem
and Northeastern Honduras, 1993-1994. .......................... 89
Table 4.9 Farmers Using Improved Bean Varieties (%), Mideastem and Northeastern
Regions, Honduras, 1993. ..................................... 96
Table 4.10 Bean Yields Among Adapters of Improved Bean Varieties, Mideastem and
Northeastern Regions, Honduras, 1993-1994. ...................... 98
Table 4.11 Median Bean Farmers Income Records by Commercial Orientation Group,
Mideastem and Northeastern Honduras, 1993-1994. ................ 101
Table 4.12 Market Oriented Bean Sellers and Incidental Bean Sellers by Farm Size and
Topography, Honduras, 1993-1994 .............................. 103
Table 4.13 Beans Sold (%), and Proportional Contribution of Bean Sales to Farm
Income by Farm Size and Topography, Honduras, 1993-1994. ......... 106
Table 4.14 Cumulative Distribution of Household Characteristics, 1993-1994 ...... 109

Table 5.1 Adopters of Improved Bean Varieties by Season, Honduras, 1993-1994. . 117
Table 5.2 Lists of Factors affecting Farmers Decision to Adopt Improved Varieties . 119

Table 5.3 Logit Models for the Adoption of Improved Varieties ............... 124
Table 5.4 Factors Expected to Affect Farmers' Bean Yields ................... 127
Table 5.5 OLS Estimates for Two Yield Response Models ................... 131
Table 6.1 Farmers’ List of Traders' Most Preferred Bean Characteristics,

Honduras, 1994 ............................................ 145

xii

Table 6.2
Table 6.3

Table 6.4

Table A-1
Table A-2

Table A-3
Table A-4
Table A-5
Table A-6
Table A-7

Table A-8
Table A-9

Traders' Most Preferred Bean Characteristics, Honduras, 1994. ....... 146
Average Buying Price for Difi‘erent Bean Varieties in Major Markets,
Honduras, August 1994. ..................................... 148
Comparison of Bean Revenues for Traditional Versus Improved Bean
Varieties, Honduras, 1994. .' ................................... 153

Area Harvested (ha) for Staple Food Grains, 1981/82-1991/92, Honduras 181
Changes in Harvested Area (ha) for Staple Food Crops, 1980/81-1990/91,

Honduras. ................................................ 182
Harvested Area Distribution for Staple Food Grains by Season, 1980/81-
1990/91, Honduras. ........................................ 183
Bean Area Distribution by Region and Farm Size, 1991/92, Honduras . . . 184
Total Staple Food Grains Production, 1980/81-1990/91, Honduras. . . . . 185
Percent Changes in Staple Food Grains Production, 1980/81-1990/91,
Honduras ................................................. 186
Seasonal Distribution (%) of Staple Food Grain Production, 1980/81-
1990/91, Honduras. ........................................ 187
Total and Per Capita Bean Consumption, 1980/81-1989/90, Honduras. . . 188
Agronomic Characteristics of Improved Bean Varieties, Honduras. ..... 189

Table A-10 Reaction of Improved Bean Varieties to Main Bean Diseases, Honduras. 190

xiii

Figure 1.
Figure 2.
Figure 3.

Figure 4.
Figure 5.
Figure 6.
Figure 7.
Figure 8.
Figure 9.

LIST OF FIGURES

Average % Dry Bean Exports, Central American Countries, 1982-91 ..... 31
Basic Grains Harvested Area (has), 1982-92, Honduras. ............... 32
Distribution of Bean Production by Administrative Region, 1989-92,

Honduras. .................................................. 35
Bean Production (mt), 1980-81/1991-92, Honduras. .................. 37
Average Dry Bean Yields (mt/ha), Central America Countries, 1961-1991. . 44
DryBeanArea('000 has), Central America, 1961-91. ................. 46
Producer Price Ratios, 1970-92, Honduras. ......................... 49
Seasonal Wholesale Price Index for Beans, Honduras. ................. 50
Bean Marketing Channels, Honduras .............................. 52

xiv

CHAPTER ONE
INTRODUCTION
1.1 Background

The economies of many developing countries are highly dependent on agriculture
and natural resources outputs. In Honduras, agriculture accounts for approximately 22%
of the Gross Domestic Product (GDP) (World Bank, 1994). If food processing and
marketing are included, the total contribution of the food sector increases to about 50% of
the GDP (Garcia, M., et al., 1988). In addition, agriculture employs 44% of the
Honduran economically active population (MRN, 1994).

In recent years, the salient problems of Latin American economies have been a
slow GDP growth during the 1980s and an unequal distribution of resources (Schuh and
Brandao, 1990). Honduras has been no stranger to these problems. Honduran total GDP,
as well as agricultural GDP per capita, had a negative growth rate during the 19803 (-
1.5%). Focusing on the agricultural sector, the latest Honduran Agricultural Census
(1993) and the Ministry of Natural Resources (MRN) yearly data show that while land
area dedicated to the production of staple food grains has increased, productivity levels
have remained steadily low over the last 20 years.

Moreover, while over 60 % of the farms are less than 5 hectares, they only
account for 10% of the agricultural land. On the other hand, less than 2% of the farmers
(> 100 ha. farms) farm 40% of the land. This pattern of skewed resource distribution is

also reflected among food crop farmers. Corn and beans, the two main food staples of

2
Honduras, are largely produced by small farmers; 36% of corn, and 40% of beans are

produced by farmers with less than 5 has.

In Honduras, policy makers have argued that food productivity has been stagnant
due to low levels of productivity among small farmers. Therefore in 1992, policy makers
concluded that participants in the agricultural sector had not had the proper incentives to
invest in higher levels of technology which would bring about higher levels of
productivity. Following this conclusion, the Government of Honduras (GOH) and
international donor agencies changed their approach toward the agricultural sector. The
major sectoral policy reforms expected to positively influence agricultural productivity
include: the dismantling of the agricultural marketing parastatal, elimination of price
controls, decreased regulation of international trade, decreased support for technology
generation and diffusion by the Ministry of Natural Resources (MRN), and the
institutionalization of more comprehensive land markets (La Gaceta, 1992).

However, an often overlooked fact is that available technology and supporting
services, such as agricultural extension and credit, tend to be conceived to meet the needs
of farmers within certain geographical areas. Mainly due to the environmentally specific
nature of technology, and the fact that under reduced international and national financial
support for credit and extension services; these services are often concentrated in the more
politically influential districts. Hence, in this context, agricultural policy decisions are
often made with little differential assessment about the underlying nature of the behavior

of different participants within the agricultural sector.

3

Therefore, in order to have bigger technological and policy impact it is critical to
envision the agricultural sector as part of a larger economic system. A system in which
farmers decision making process is influenced by environmental and socio-economics
conditions. To better understand this system, it is necessary to Obtain empirical
knowledge about the behavior of farmers and other participants in the agricultural sector.
1.2 Problem Statement and Justification for the Study

Beans (Phasenlus mlgaris) are the most important legume crop in Honduras, and
constitute an important source of protein for rural and urban consumers. Moreover,
beans are viewed as more than simply a source of nutrition. Debates in the popular press
emphasize the importance of beans in the Honduran culture and diet. Production,
productivity levels, food availability, and competitive performance in the Central American
context are at the center of these debates (various newspaper articles, 1993-1995).
Aggregate data show that technological progrws in the bean subsector has been slow over
the past two decades, with population growth out-pacing bean production growth during
the period of 1970-1990, thus supporting the concern voiced in the popular press.

During the 1980's and 1990's, international and local support for agricultural
research programs in developing countries has decreased. For instance, although beans
are still one of the most important crops in Honduras, governmental support for its
research has decreased considerably since 1991. As a result several research positions
have been eliminated at the Ministry of Natural Resources (MRN), and funds for extension
services have been reduced. These events put increased pressure on collaborative

research programs such as the Bean/Cowpea Collaborative Research Support Program

4
(CRSP) and the Regional Cooperative Bean Program (PROFRIJOL) to conduct and

finance research targeted for agro-ecological areas which have the potential for rapid
productivity gains.

The major emphasis of these collaborative research programs has been to develop
varieties with multiple disease resistance, and higher productivity levels. The most
important technological contribution of these programs has been to cooperate with the
MRN in the release of three small bean varieties. Catrachita, released in 1987, is a highly
productive variety but highly susceptible to viral and fungal diseases; and Dorado and Don
Silvio, released in 1990 and 1993, respectively, both have high productivity potential and
are tolerant to the Bean Golden Mosaic Virus (BGMV), the most virulent bean disease in
the low valleys. A

Despite these recent technological successes, there is little understanding about the
acceptability of these new varieties and its impact upon the overall productivity of the
bean subsector. Partly, because it has been implicitly assumed that to improve the
productivity of beans in Honduras only production constraints need to be relaxed.
Moreover, the socio-economic component of the national and the collaborative bean
research programs is very limited. The National Research Program does not have any
trained socio-economist, and PROFRIJOL has only one economist for the Central
American region. Therefore, bean scientists have very little empirical knowledge about
the socio-economic characteristics of bean farmers, and their impact upon productivity.

Furthermore, it is important to study how basic farmer characteristics affect

productivity levels. Moreover, given that farmers and scientists production decisions are

5
influenced by environmental conditions, it is important to study the productive
performance of bean farmers under difi‘erent agro-ecological conditions. Understanding
production characteristics under difl‘erent environments, will help bean researchers and
policy makers better target their research and policy prescriptions.

In addition, the bean market has been one of the most dynamic socioeconomic
components affecting the bean subsector during the last five years. Price control
deregulations and the implementation of the Central American fi'ee trade agreement have
been the most important market policy changes since 1990. These policies are expected to
generate more technological investment in the most competitive commodities produced in
the Honduran agricultural sector. However, no studies have been made to understand
the potential efi‘ect of market interactions upon the productivity of the bean subsector.
Therefore, it is important to understand how market interactions affect the productivity of
the bean subsector.

1.3 Research Objectives

The goal of this study is to use a modified subsector approach to gain better
empirical knowledge about the socio—economic characteristics afi‘ecting the productivity of
the Honduran bean subsector, in the context of different agro-ecological environments and

evolving technology, policy, and institutional changes.

1.3.1 Specific Objectives

The specific objectives of this study are structured to reflect the information needs

of different bean subsector participants, information needed to improve the overall

productivity of beans in Honduras. These objectives are:

1.

to use secondary and primary data sources to present a comprehensive overview of
the bean subsector including information on the historical production patterns of
beans in Honduras, historical price patterns, a description of the National Research
and Extension Program and the role of the internationally funded collaborative
research programs, and a brief overview of the sectoral policies afi‘ecting the
productivity of the bean subsector",

to use primary data to describe field production and socio-economic
characteristics of bean farmers in different agro-ecological environments in the
Northeastern and Mideastem Regions of Honduras; including farm size, input
use, farmers' market orientation, and farmer's demographic characteristics;

to analyze what are the most important factors affecting the adoption of improved
bean varieties in Mideastem and Northeastern Regions of Honduras;

to analyze how production and socioeconomic characteristics help identify
factors affecting bean yields, with an emphasis on understanding the role of the
recently released improved bean varieties;

to describe the domestic bean marketing system and analyze the main market level

constraints limiting the productivity of the bean subsector, emphasizing farmers

7

level of participation in the market and the potential effect of market characteristics

on the acceptability of improved bean varieties;

6. to analyze the existing links between the Honduran bean marketing system and the
larger Central American marketing system;

7. to use the information of this study to highlight the most important implications for
policy makers and researchers to increase the overall productivity of the Honduran
bean subsector.

1.4 Organization of the Dissertation
This study is organized into six chapters. Chapter two presents the conceptual

fi'arnework; literature review on factors afl’ecting farmers productivity, and on market level

constraints to increasing overall subsector productivity. In addition, chapter two presents

a description of the data and the data collection methods used in this study. A
Chapter three presents a comprehensive overview of the bean subsector. Including

a description of historical pattern of bean production, consumption, and an analysis of the

historical price data. Additionally, this chapter includes a description of the Honduran

bean research and marketing system.

Chapter four is subdivided into five major sections. These sections present a
descriptive analysis of bean farmers in the Mideastem and Northeastern Regions of
Honduras. The data used in this Chapter is used to outline a typology of bean farmers
using land topography and farm size as the stratifying variables.

Chapter five presents four empirical econometric models. The first two models

analyze what are the main factors which affect the adoption of two improved bean

varieties. The third and fourth multivariate analysis models study how a set of production
and socio-economic variables help explain bean yields.

Chapter six studies in more detailed the role of farmers in the market by analyzing
farmers inclination to sell output in the market. Moreover, this chapter analyzes how
market acceptability of new improved bean varieties financially afi‘ects farmers welfare. In
addition, this Chapter studies the interrelation of the Honduran marketing system with that
of other Central American countries. Emphasizing the importance of the El Salvadorian
bean market. The information in this chapter is designed to inform decision makers about
the importance of the Central American market in the performance of the bean subsector.

Finally, chapter seven presents some of the implications of the study’s finding for
the formulation of different subsector policies. In addition it helps identify areas of
priority for future bean research both for socio-economists and agronomists/plant

breeders.

CHAPTER TWO
LITERATURE REVIEW AND METHODS
2.1 Literature Review

2.1.1 W

This study was designed to generate insights needed by decision makers (including
scientists and policy makers) to improve productivity in the bean subsector. Thus it falls
under the category of subject matter research, as outlined by Johnson (1986), and follows
a multidisciplinary research approach. The focus of this thesis is to employ a modified
subsector approach to better understand the key farm-level production characteristics of
bean farmers, and establish the relevance of the existing linkages between farm-level
decisions and the market structure in an effort to identify constraints and opportunities to
increasing the productivity of the subsector.

The subsector approach has been used effectively as a tool to conduct subject
matter research on the food systems of different countries, including the United States
under the NC-117 project. The original subsector paradigm was proposed by Shafi‘er
(1973) as the study of ”the vertical set of economic activities in the production and
distribution of a closely related set of commodities. " The vertical set of activities under 1
which a commodity gains value added includes input provision (including research),
extension, farm level production, processing, storage, assembly, transportation,
wholesaling, retailing, financing, and consumption.

The subsector approach, designed to generate a holistic understanding of the

subsector, requires studying both the vertical and hgrizontal relationships associated with

10

the target food system, including farm-level production activities and linkages to other
economic activities (i.e. research, extension, trading, etc.). Moreover, the subsector
approach represents a flexible research methodology. Since first appearing in the
literature, many researchers have modified the subsector approach to adjust it to the
specific analytical objectives and resource constraints that they have faced (Morris, 1986;
Boomgard, 1992; Tschirley, 1988).

While this approach has not been employed in the Honduran setting, it represents
an appropriate methodology for generating a greater understanding of the bean subsector
by prioritizing the study of productivity constraints, and identifying policies to relax these
constraints. In addition, it is an appropriate methodolgy to study the efi‘ects of market
conditions upon the acceptability and adoption of newly released improved bean varieties.
As pointed out by Byerlee (1993 ), the subsector approach generates information especially
useful for policy makers and scientists when "a commodity or a region is undergoing rapid
changes due to demand and supply factors or policy reforms."

Initially, subsector studies were conceptualized as long term, intensive analyses,
requiring considerable time and financial resources. Reflecting the evolutionary nature of
the subsector approach, Holtzrnan (1986) advocates using rapid appraisal surveys to
collect data needed to carry out subsector analyses. While less comprehensive than a
formal subsector analysis, Holtzrnan argues that rapid appraisal techniques provide
researchers with sufficient insights to identify key constraints in the subsector and help set

the bounds and priorities for subsequent technical and socio-economic research.

11

Following Holtzrnan, rapid appraisal surveys were initially carried out to obtain
important information which helped to set the bounds of this study. Issues identified
through the rapid appraisal include the importance of understanding how production
characteristics differ across environmental regions, understanding the nature of market
preferences for beans and how they affect the productivity of the subsector, and the need
to better understand the impact of Central American markets on traders‘ preferences for
difl‘erent bean quality characteristics.

2. 1.2 W

Governments institute policy reforms in the agricultural sector hoping to relax
constraints to using improved technologies designed to increase productivity levels in
agriculture. However, these policy reforms are rarely accompanied by a comprehensive
understanding of the basic conditions affecting the country's agricultural sector.

Therefore what seems, at first glance, like an appropriate policy to promote investments in
technology may prove wrong. Thus several economists have argued that to achieve
successfirl technological improvements; it is important to complement these improvements
with appropriate institutional changes (Bonnen, 1990; Ruttan and Hayami, 1984; Reardon,
1994).

During the last five years, institutional innovations have been pervasive in Latin
America reflecting the influence of donor agencies and creditors in the region. In
Honduras, the 1992 Law of Agricultural Development and Modernization (LAM) largely
bases its potential impacts on the assumption that more stable agricultural prices (due to

price liberalization) will attract more investment into agriculture and thereby raise staple

12

food availability and productivity levels in the agricultural sector. Moreover, as a major
component of the LAM, a new set of land reform rules were prescribed. The core of
these reforms includes legalizing agricultural land leases, and promoting the development
of land markets by establishing a more widespread and inclusive land titling program (La
Gaceta, 1992).

However, these institutional innovations were designed with minimal empirical
knowledge about the production patterns of small farmers and little evidence of their
capacity to respond to macro level incentives —- a key requirement if these reforms are to
increase agricultural productivity. While several studies report that bean farmers are self-
suficient non-commercial small farmers using low levels of technology (Curry, 1993;
Garcia, 1991), these studies are based on aggregate data which shed little light on the
behavior of farmers. Rather, disaggregated data are needed to help better understand and
dirnistified some conventional knowledge about small farmers. For instance, among
Honduran bean farmers Martel and Bernsten (1994) found that even small farmers are
significant market participants, selling over one-half of their bean output.

2.1.3 WWW

Production, diffirsion, and adoption of improved technologies are part of a
continuous process of technological improvement. This process requires that farmers play
an important participatory role in determining research priorities at all stages of
technological improvement. However, in many cases production of technology takes
place as an independent process of the diffusion and adoption stages with little feedback

from farmers. Partly because within the research programs there is little input fi'om social A

l3

scientists who are better trained, than plant researchers, to elicit and evaluate information
fi‘orn farmers. In the process of technological improvement the role of economists has
often been viewed as ex-post evaluators of technology adoption (Byerlee and Franzel,
1993; Eicher, 1992).

Thus there is an extensive literature on adoption studies of improved technologies.
Feder et al. (1985) present a comprehensive survey of the literature on the different types
of adoption studies. These studies include a wide range of models, including those which
solely‘analyze farmers characteristics and the effect of institutional variables such as credit
availability on adoption, to those including risk aversion preferences of farmers.
Nonetheless, only a few adoption studies include intrinsic characteristics of the technology
and its interactions with the farmer’s characteristics and the farming system in which the
technology is used (CIMMYT, 1993). Characteristics of the farming system which
influence adoption of improved varieties include: soil types, rainfall patterns, cropping
patterns (i.e. monoculture, intercrop). Intrinsic characteristics of improved varieties which
are harder to introduce in adoption models include: growth habits (in the case of beans),
consumption characteristics (i.e. culinary characteristics), market acceptability, and
percentage of product sold in the market.

While the need to increase bean yields has overshadowed grain quality factors in
most research programs, as economic growth increases, and international markets become
an important demand component, researchers need to introduce quality criteria within
their research programs. Unnevehr et a1. (1992) present a set of studies of how the

quality of modern rice varieties afi‘ect farmers and consumer welfare, and firrtherrnore

l4

affects the adoption of these MV'S in Southeast Asia. In the past, the most commonly
studied quality characteristics of MV have been cooking attributes and post-harvest
losses. In Honduras, however, neither of these quality criteria have been included in the
bean breeding program.

On the other hand, while the Central American economy has not grown as rapidly
as that of Southeast Asia, Godoy and Hockenstein (1992) argue that quality concerns of
the bean research program in Nicaragua have focused on meeting the preferences of richer
urban consumers. Nonetheless, as trading niles among the Central American countries
change to promote free trade, Honduras and Nicaragua are likely to become the main
suppliers of small-red beans in the region, and El Salvador the main consumer (Herrera
and Jimenez, 1992). This new institutional trading rule creates added pressure on
Honduran producers and researchers to pay closer attention to bean quality concerns to
achieve higher adoption rates of the new improved bean varieties.

In Honduras, only a few attempts have been made to identify the characteristics of
farmers adopting improved bean varieties in the Mideasatern Region of the country
(Torres, 1993; Morazan, J. et al., 1989; Vrana et al., 1993). However, no formal attempts
have been made to model the main determinants of the adoption of improved bean
varieties, or to study the possible impact of the Central American markets on the

performance of the Honduran bean subsector.

15

2.2 Data and Methods of Analysis

2.2.1 RanidAppraimL

A rapid appraisal of the Honduran bean subsector was conducted from November
1993 to January 1994. As previously stated, this rapid appraisal was designed to identify
important constraints to increasing productivity in the bean subsector. In addition, the
rapid appraisal sought to identify information needed by plant scientists, agricultural
extension agents, policy makers, bean farmers, and traders to help improve the
productivity of the bean subsector.

To achieve these objectives, the rapid appraisal focused on compiling and
analyzing existing secondary data, and conducting personal interviews with different
participants within the bean subsector in order to gain insights needed to better understand
the dynamics of the subsector. Chapter three summarizes some of the findings of this
rapid appraisal.

2.2.2 Eammdlmdcmfiamplinalechniques.

A large component of the results reported in this study are based on analysis of
primary data collected fi'om farmers and traders in Honduras. These data were collected
fiom farmers and traders using questionnaires developed by the author in collaboration
with the Bean/Cowpea CRSP, and Food Security 11 Projects. As a multidisciplinary study,
both plant scientists and agricultural economists were consulted in designing the
questionnaire and selecting the farmer sample. The following sections describe the

sampling process, the questionnaire design, and survey implementation.

16

2.2.2.1 Farmers Data and Sampling Design

During 1993, the GOH with the assistance of international donor agencies
conducted a National Agricultural Census (NAC). By April of 1994, data on staple food
grains had already been computer digitized and partially analyzed. Therefore, the
Honduran NAC represented a suitable and available sampling frame for selecting a sample
of farmers.

Preliminary analysis of these data indicated that only one-third of Honduran
farmers planted beans during 1993. Additionally, most of the Honduran bean producers
were small farmers, traditionally considered self-sufficient non-commercial farmers.
Moreover, historical data show that over 60% of bean production takes place in the
Mideastem and Northeastern Regions of Honduras. Therefore, having considered these
bean production characteristics, the author and his collaborators decided to target the
farmer survey in the Mideastem and Northeastern regions of Honduras, stratifying the
farmer sample by farm size. The latter decision was taken to insure that the sample
included a sufiicient number of small, medium and large farmers in order to better
understand the production and commercial orientation of different size farmers, to assess
the alternative economic opportunities available to difi‘erent size farmers, and determine
why so many farmers did not plant beans.

While these stratifying criteria (i.e. location and farm size) were taken based on the
socio—economic knowledge of bean farming in Honduras, insights provided by plant
scientists were critically important to understanding the bean farmers' production system.

For Example, In Honduras, scientists had observed that bean golden mosaic virus

l7

(BGMV), the most important bean disease and for which scientists had introduced some
resistance in the improved varieties, was most prevalent in the low inner valleys of the
Mideastem region. Therefore, because scientists considered it important to stratify the
farmers sample across topographical regions, the sample was distributed across both flat-
lands and hill-sides. In summary, the sample was stratified across three different farm
sizes, two topographical regions, and included farmers who did and did not plant beans
(Table 2.1).

Although the NAC was the basic samMing frame for this study, previous to the
selection of the sampled farmers four steps were conducted to make the actual sampling
fiame more appropriate for the study's purpose. First the NAC data were used to
determine that beans are more intensely produced in the central and eastern sections of the
Mideastem Region, and the Northwestern section of the Northeastern Region. Therefore
municipalities falling outside this arbitrarily drawn boundaries were excluded from the
sampling frame. Second, the NAC divided the country into 2967 segments (clusters)
including clusters in the urban areas. Because farmers living in the urban areas were not
considered full time farmers they were also excluded fi'om the sampling fiame. Third,
using NAC data the remaining clusters were classified into bean and non-bean clusters.
The criterion for this selection excluded those clusters in which less than 30% of the
farmers planted beans. Fourth, the final step was to randomly select 15 hill-side and 15
flat-land clusters, of which five from each category would be replacement segments -if

necessary. Once the sampling fiame was reduced to 10 clusters per topographical

18

stratum, all farmers were numbered together and a random selection of these farmers was
conducted to select the final farmers' sample (Table 2.1).
Table 2.1 Sample Distribution for Bean Farmers’ Survey, Mid-Eastern and North-Eastem

Regions, Honduras, 1994.

‘l

Non-Bean cm... «
“mm“ M - ,

    

Hill-Side
Actual‘ 26 49 29 7 1
L esired" 30 3030 _ , 15 f f 15
Flat-Land
Actual‘ 25 43 43 1 3

 

 

 

 

esired' , (30) $302 30 (15) 15

‘ Actual number of farmers in the sample.
" Desired number of farmers in the sample.

 

Although the NAC sampling fiame was used to identify non-bean farmers, many
of the selected non-bean farmers actually grew beans. Thus, in practice it was very
difficult to find non-bean farmers, and it became expensive «both time-wise and financially
- to try to replace farmers who had previously been identified as non-bean farmers, but
were actually bean farmers. Similarly, a number of farmers who were initially selected to
represent small farmers (farms less than 2 has) actually owned or farmed more than 2 has.
Therefore the actual small farmer sample was less than initially projected. Finally, it
proved to be more time consuming to visit farmers in the hill-side than farmers in the flat-

land areas. Therefore, it was necessary to devise a replacement scheme for hill-side

l9

farmers that would help maintain the integrity of the sampling design‘. At the end of the
farm-level data collection process,’2;3‘9fa~rrin\er§had been interviewed. Of these farmers,
124 were flat-land and the remaining, 115, were hill-side farmers.

2.2.2.2 ImdersDataaanSamnlinsDesisn

Selecting a sample of traders was more dimcult than selecting the farmers sample
because in Honduras there is no comprehensive traders' census. While independent
consulting groups and the Ministry of Economy and Internal Commerce possess their own
lists of traders, as these lists are not regularly or consistently updated they could not be
used as a sampling fiame. Therefore, in order to collect trader level data, the author
visited the major regional markets and generated an ad-hoc sampling frame by asking
individual traders to identify other traders who bought and sold basic grains.

To represent the market diversity of Honduras, five different market areas were
visited and traders interviewed in each, including: a) Tegucigalpa and San Pedro Sula
which represent the largest urban (consuming) centers of the country, b) Danli,
Catacamas, and Juticalpa which are the largest cities in the producing Mideastem and
Northeastern Regions of Honduras, c) Comayagua, and El Progreso which represent mid-
sized cities located in the Central and Northern Regions of Honduras, respectively, d) and
Santa Rosa de Copan, the largest urban center in the Western Region of Honduras. As
discussed in Chapters Three and Six, each of these markets represents a difi‘erent level in

the marketing channel complex.

 

‘ Farmers had to be selected from the replacement clusters, to replace farmers who
could not be reached after two visits to the originally selected clusters.

20

Based on a preliminary assessment of data provided by the 57 traders interviewed
as part of the trader level survey, it became clear that El Salvadorian traders played and
important role in the Honduran bean market. Therefore, a rapid appraisal of the El
Salvadorian bean marketing system was conducted by visiting the main basic grain
markets in El Salvador. Information gathered in this rapid appraisal is discussed in
Chapters Six and Seven. However, given time and financial limitations, the author did
not conduct a formally structured survey in the El Salvadorian market.

223 Qutiannaireflea’sn.

While the questionnaire design phase represents an important component of data
collection, the time required for questionnaire design is typically underestimated. As eager
field researchers, we tend to deal with questionnaire designs as an additional hurdle before
facing our ultimate research goal, field interviews with farmers. Similarly we tend to
overestimate our understanding of the subject matter, and our ability to easily eliciting the
information needed to test our hypotheses.

A considerable amount of time was spent to design the farmer level questionnaire
and pretest different options for eliciting information. This was carried out as a team
effort in collaboration with plant scientists, and agricultural economists. Previous to
training enumerators, the questionnaire was field pre-tested. Following the pre-test,
enumerators were trained on how to collect multi-level data, and the specific use of the
questionnaire designed for this study. The farm level survey was implemented byn’six‘)
experienced enumerater and underwent two field tests before it was finalized. The farm-

level survey was implemented from “ May to July of 1994.

21

The trader level questionnaire was designed as a follow-up to the farmer-level
questionnaire, and incorporated some of the questions included in the farm«level
questionnaire. Because the researcher had a much better knowledge of the region's
mannerism and lexicon, the time invested in the design of this questionnaire was relatively
short. Nonetheless, this questionnaire was also pre-tested, one enumerator was trained to
implement it, and was implemented during late August and early September of 1994 -
during the rainy season bean harvest.

The farmer questionnaire was designed to collect data on farmers household
characteristics, and production conditions with emphasis on understanding the use and
acceptability of improved and traditional bean varieties. In addition data on agricultural
sale practices were collected, with an emphasis on understanding the structure of the
marketing channel, and determining the volume of bean sales. On the other hand, The
trader questionnaire was designed to collect data on the personal and basic trading
characteristics of traders, the bean pricing behavior of different traders, and about the
trader knowledge and acceptability of the improved bean varieties.

2.3 Summary

This chapter introduced the conceptual Work of the subsector approach, and
a review of literature highlighting the importance of considering institutional reforms in
formulating improved agricultural technologies. Moreover it presented a brief overview
of adoption studies underlying the relevance of understanding how intrinsic properties of
improved technologies affect adoption. Chapter two also described the survey

instruments and sampling techniques to collect primary data.

22

The subsector approach represents an appropriate methodolgy to study the
Honduran bean subsector which in the last five years has been greatly influenced by
institutional reforms. It is important to understand farmers' micro-economic behavior to
improve upon the recommendations prescribed by policy makers, and better inform plant
scientists.

Adoption studies try to explain the adoption of new technologies using farmers'
characteristics as explanatory variables, and introducing some variables describing the
institutional environment surrounding farmers. Much less attention has been paid to
intrinsic properties of the technology itself. In the case of beans in Honduras, very little
attention has been paid to quality characteristics as possible constraints to widespread
adoption of improved varieties.

Two surveys were conducted during 1994. A production survey of bean farmers
in the Mideastem and Northeastern Regions of Honduras was implemented, and 239
farmers were interviewed. Farmers were stratified into three different farm sizes and into
hill-side and flat-land farmers. In addition, a trader survey was implemented after the rainy
season bean harvest. A total of 57 traders were interviewed in 8 difi‘erent major Honduran
markets. The farmer survey sought to obtain information on factors affecting field level
productivity of beans, including factors afi‘ecting the adoption of improved bean varieties.
The trader survey was designed to obtain information on the structure of the bean market

in Honduras, and on establishing the main bean market preferences.

CHAPTER THREE
AN OVERVIEW OF THE HONDURAN BEAN SUBSECTOR

3.1 Demand Analysis

This chapter is based on the rapid appraisal work conducted by the author fi'om
November 1993 to January 1994. Using secondary data and data from informal
interviews, this Chapter presents a comprehensive overview of the Honduran bean
subsector. Chapter three is divided in six sections which include an analysis of bean
demand in Honduras (3.1), an analysis of aggregate bean production (3.2), a brief
overview of price history (3.3), a discussion of the basic characteristics of the bean
marketing system (3.4), a description of the Honduran bean research program (3.5), and
an overview of the major policies affecting the bean subsector (3.6).

3.1.1 WW

Beans are the second most important food staple in not only Honduras, but also in
the other northern countries of Central America. In 1988, Hondurans consumed annually
an average of approximately 10.0 kg of beans per capita, compared to 13.1, 11.8, and 9.5
kg per capita in Nicaragua, Guatemala, and El Salvador, respectively‘. In terms of
nutrient value, beans contribute 92 calories/person/day and 6 grams/person/day of
proteins; making beans the second most important source of proteins in the Honduran diet

after com (14 grams/person/day).

 

‘ In Honduras, El Salvador, and Nicaragua households predominantly consume small
red beans, whereas Guatemalans consume predominantly black beans. Source: aggregate
consumption data for 1988 fi'om IICA, 1992; Honduran population data fi'om the 1988
Honduran population census, and the population data for the rest of the countries is fiom
the World Bank, 1990.

23

24

Average data overshadows2 the greater importance of beans among low income
groups and between bean farmers compared to non-bean farmers. For example, data from
a 1978-1979 income and expenditure survey showed that beans were a more important
source of protein for lower income groups than for higher income households’.

3.1.2 CanarmsLPIeferenccs

Consumers preferences for beans are mainly based on color, cooking time, and
cooked texture. Honduran beans are broadly grouped into three market (color) classes:
small light-red beans, small dark-red beans, and black beans. Despite this diversity, the
Government's data collection institutions do not difi‘erentiate between bean color classes.
Therefore, there exists no basis to determine the amount of red or black beans consumed
in Honduras‘. However, visits to markets in several areas suggest that households in the
Northem, Mideastem, and Northeastern Regions consume a significantly larger proportion
of small red beans than black beans. On the other hand, in Western and Central Honduras
black beans account for over 20% of households' bean consumption.

Although it is dificult to determine the optimal cooking time, consumers prefer
quick-cooking beans. Cooking time varies by variety, age, and storage conditions.

Additionally, as with cooking time, it is difiicult to determine the optimal cooked texture

 

2 In contrast to maize and sorghum which are widely used for animal feed, beans are
exclusively used for human consumption in Central America.

3 Preliminary results from a 1993-1994 USAID-financed income-expenditure and
nutritional survey support the findings of the 1978-1979 study.

‘ CIAT agronomist Oswaldo Voysest estimates that 95% of Honduras' beans are small
red types.

25

of beans. Preparation recipes and bean types are typically linked to cooked texture
characteristics. Further details of how improved bean varieties fare against these criteria .
are presented in Chapter 6.

3.1.3 WW

Bean consumption estimates for Honduras are calculated by subtracting fiorn the
estimated production the quantity of net exports, seed use, and storage losses’. While
available data show a stable trend in consumption per capita for the 19803, averaging 9.7
kg/person, an important caveat of these estimates is the presence of unrecorded intra-
regional trade. At the time of these study, customs officials at Honduras/El Salvador and
traders from both countries reported that large quantities of unrecorded beans move from
Honduras to El Salvador. Therefore under a regime of net unrecorded outflows, these
oficial data overestimate the availability of beans for Hondurans -further discussion of
the relevance of Central American markets is presented in Chapter Six.

3.1.3.1 W

While aggregate ofiicial data do not difi‘erentiate between neither urban and rural
consumers nor bean farm size, firrther analysis of official data provides insights on rural
demand. Approximately 109,000 farmers (National Agricultural Census, 1994), one-third
of the total number of farmers, grow beans. Traditionally, beans have been considered a

small farmer's crop, grown mainly for home consumption. Although net-buyers of beans

 

’ Estimated human consumption = [estimated production] - [(exports-irnports) + seed
+ storage losses].

26

cannot be identified from oflicial data, careful disaggregation of these data contribute
important insights towards better understanding the structure of bean demand.

First, during the 1991-1992 crop year, farm households sold 55% of the bean
harvest, consumed 41%, used 3.9% for seed, and recorded a small proportion as losses
(0.1%) (Table 3.1). Second, as expected there is a negative correlation between farm size
and the share of beans retained for home consumption. For example, farm-households
with less than 3.5 ha keep approximately 50% of their beans for home use, while
households with more than 14 ha retained only 35% (Table 3.1).

Third, the average bean enterprise accounts for only a small share of total farm
area. Bean fields for farmers with less than 3.5 ha averaged 0.55 ha, compared to 0.72 ha
for farmers with 3.5-7 ha, 0.76 ha for farmers with 7-14 ha, 1.31 ha for farmers with
more than 14 ha. Assuming an average yield of 700 kg/ha, these data imply that the
smallest bean farmers produce 385 kg per farm per season, or 64 kg/household member
(assuming an average family size of 6 persons). Although these data suggest that even the
smallest bean farmers produce enough beans to meet their households' bean requirements,
there are at least two reasons to treat these figures cautiously when analyzing the
availability of beans among bean farmers. First, average values fail to reflect the
distribution of these data. For example, many small farmers may not produce enough
beans to meet their households' demand from their own production, either because their
bean fields are too small, or because their yields are too low. Second, several farmers sell
a large proportion of beans at harvest to meet their cash constraints, and later repurchase

beans to meet household needs. This situation may be accentuated in today's market

27

environment where bean prices are rising faster than other food crops, due to increased

demand from neighboring countries.

Table 3.1 Structure of Bean Production and Sales, 1992, Honduras.

 

 

 

 

Total Farm Farmers Share of Share of Share of
Size (ha) Growing Total Bean Production Marketed
Beans (%) Production Sold' (%) Surplus‘
- -_I_E__ /- DEE '___ _
<3.5 57 38.3 34.6 50.0
3.5 to 7 16 14.7 13.0 49.1
7 to 14 12 12.9 12.5 54.0
34.0 39. 9 65.0

 

 

 

 

—m_mmm-

' The figures under the heading ”share of total production sold" take as the base the total

amount of beans sold in Honduras, whereas the figures under the heading ”share of

marketed surplus" take as the base total production by farm size.
Source: SECPLAN. 1994. Encuesta Agricola Nacional, 1991-92 (unpublished).

Fourth, although bean farmers account for a large portion of the rural bean

demand, they are not the only rural bean consumers. Non-farming rural households and

the two-thirds of the farmers who do not plant beans are also potential bean consumers.

In Honduras, a country with a large mral population (50%), less than 5% of farm-gate

bean sales are made directly to rural consumers (SECPLAN, 1992). While, this implies

that much of the rural demand is met through formal marketing channels, exactly how

rural marketing channels fimction is poorly understood.

Fifth, tastes and preferences are additional components of bean demand. As

previously mentioned, although consumers have strong color preferences which vary by

28

region, secondary data assume that all Honduran beans are red, and do not make any
distinction of price differences due to color. However, it is not clear to what extent poor.
consumers, and rural consumers in particular, are willing to pay for the “ideal”
characteristics. For example, in 1993 consumer demand was strong for a pale red ”China”
bean, selling for less than one-half the price of the ”preferred" color types. In addition the
strength of consumer's color preference appears to vary by region. For example, in
Comayagua, black beans sold for 20% less than light red beans, but in Santa Rosa de
Copan there was no difference between the price of red and black beans (author's
observation, December 1993).

3.1.3.2 1.1mm

Urban consumers' bean preferences are similar to those of rural consumers,
although the demand for high quality small red beans is stronger among the more amuent
urban consumers. A substantial share of national bean production moves through the
marketing system to urban areas. While urban consumers typically purchase beans in bulk
at local markets, urban consumers also purchase packaged beans and processed fi'ozen
refiied beans are.

3.1.4 W

In Central American, the demand for beans is fragmented into two market classes.
Consumers in Nicaragua, Honduras, El Salvador and Panama prefer red beans, which
account for about 58% of the total beans consumed in the region (Table 3.2). In contrast,

Guatemalan and Costa Rican consumers prefer black beans, which account for 42% of

total consumption (Herrera and Jimenez, 1992).

29

As previously mentioned, key informants and export data (Figure 1) provide
evidence that Honduras is the dominant bean exporter in Central America. For Honduras,
bean exports represent both a promising alternative market opportunity for bean
producers, and a source of foreign exchange earnings. Therefore, it is important that
Honduras implement policies that will increase the efficiency of the bean subsector, if the
country is to continue to exploit regional market opportunities.

For example, reducing transaction costs of recording bean exports may help shed
light on the relative importance of the export demand‘. Additionally, unless producers can
expand production in response to the strong export demand, national stocks will declin --
driving up local prices. The latter point was illustrated in Honduras during the posrrera
(dry season) of 1993. In response to this crisis the Honduran Government imported beans
fi'om the People's Republic of China, and distributed them at subsidized prices through the
government's chain of retail stores, National Supplier of Basic Products (BAN ASUPRO).
This action decreased foreign exchange reserves, increased the budget deficit, and

imposed a high political cost on the Government’.

 

‘ Key informants reported that bean exporters are required to obtain both an export
permit from the Central Bank and a phytosanitary certificate from the Ministry of
Agriculture, before they can legally export beans. These can only be obtained in
Tegucigalpa, thereby increasing the transaction costs of recorded exports.

7 These bean imports were the subject of a number of editorial articles in the media.
Both the low quality of the imports, and the inefficiency of the structural adjustment
program to deal with food security issues were highlighted.

30

Table 3.2 Bean Consumption in Central America by Country, 1980/81-1989/90 (‘000

mt.).

Total Share of Regional Share of Total
Consumption Consumption Consumption (%)
('000 mt) (%)

Guatemala
Ni
El Salvador

Honduras

 

 

 

 

Costa Rica

 

 

 

 

 

 

SourcezHerrera and Jimenez (1992).

31

 

Dry Bean Exports, Central America
1982-91 (2 or total)

(Average Award Exporfs=3. 885 MT)

Panama (2 .473)

9'.'
Nicaragua (16.87.; Costa Rica (22.9 7.)

Guatemala (8.5%)

 
 
  
   

Honduras (44.3%)

Sauce: tear/no

 

 

 

Figure 1. Average % Dry Bean Exports, Central Amer-1am Countries, 1982-91, Source:
USDA/FAG.

3.2 Production Analysis

3.2.1 W

Ofiicial data (APAH, 1991; SECPLAN, 1993) show that farmers harvested an
estimated 74,900 ha of beans annually (1982-92 average), equal to about 15% of the total
staple food grains area. In contrast, the estimated area for com is 347,600 ha (71%),
followed by sorghum (51,500 ha, 10%), and rice (17,900 ha, 4%) (Figure 2 and Table A-

1).

32
Analysis of available data for 1981-82 to 1991-92 highlight three key points. First,

for all food grains, harvested area varied considerably from year-ta-year (Table A-2).
Second, during the past 11 years (1982-92), the total area in food grains grew at an annual
average rate of 3.9%, but the most rapid growth (9.3%) occurred during the 1989-92
period (Table 3.4). Third, while the harvested area for all basic grains grew during the
past 11 years, the sorghum (30.6%) and beans (5.1%) area grew most rapidly, compared

to only 3.4% for corn.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10“ 1...
list- 182 vie-etc be rear/e: '-

 

[C-en +e—u arr—e. ears-l

Figure 2. Bade Grains Harvested Area (has), 1982-92, Honduras.

 

 

 

33
Table 3.4 Average Annual Growth Rate (%) of Harvested Area in Basic Grains,

Honduras.

1982-92

 

1982-88
1988-92
1989-92

 

 

 

 

 

 

 

 

' 1982 refers to the 1981-82 agricultural year.
Source: SECPLAN. Pronostico de Cosechas de Granas Basicas (various years).

Although official data indicate a significant increase in area harvested to beans (and
other basic grains) fi'om 1987-88 to 1988-89, using 1987-88 as a reference year has two
limitations. First, due to a severe drought during the 1987-88 agricultural year, much of
the area planted to beans was not harvested'. Second, after 1987-88 SECPLAN and the
Bureau of Statistics and Census (DGEC) expanded the definition of a farmer to include
the smallest farmers (< 0.7 ha) in the sample used by the Grain Forecasting unit of the
DGEC’. This is particularly important for beans, because 12% of the bean farmers
cultivate 0.7 ha or less.

Honduran farmers typically plant two crops during the year. While the primer-a

(the rainy season) is the most important season for grain production, on average a larger

 

' Galvez, G. personal communication.

’ Previously, farmers with <0.7 ha were excluded from national agricultural statistics.

34

proportion (56%) of beans are grown in the postrera (Table A-3)'°. Moreover, although
on average beans account for 15% of the total harvested area of basic grains for the entire
agricultural year, they account for over 30% of the area harvested during the posrre'ra.

In contrast to com, which is more uniformly distributed throughout the country,
beans are concentrated in the Mideastem and Northeastern Regions (Figure 3).
Especially, during the postrera, beans are the dominant basic staple grain in these two
regions. For example, during the period 1987-91, posrrera beans accounted for an
average of 87% and 69% of the harvested area in basic grains for the Mideastem and
Northeastern Regions, respectively.

Finally, the bean subsector is dominated by farmers who plant a relatively small
area to beans (CRSP, 1991; Stonich, 1992; Curry, 1993). For example, available data
show that over two-thirds of the bean farmers (69%) harvest 1 ha or less, and 97% of the
bean farmers harvest 3.5 ha or less". However, almost one-third (32%) of the bean area

is planted in farms larger than 14 ha (Table A-4).

 

‘° The data suggest that in recent years bean production may have shifted somewhat
fi'am the primera to the postrera. However, key subsector informants report that this may
reflect another weakness of the data published before 1989.

" Approximately 91% of a sample of 1,779 bean farmers mono-cropped beans in the
postrera of 1991-92 (SECPLAN,]994).

35

 

gm 3‘..- Cenbbem See
16% ' ' Atlantis Coast Radon
. 1.1%

 

 

 

 

North-Eastern
Rama

‘3

 

lit-Whom:

 

 

 

 

 

 

Figure 3. Distribution of Bean Production by Administrative Region, 1989-92,
Honduras.

3.2.2 Production

Total bean production averaged 46,020 mt during the 1981-1992 period. As is the
case with harvested area, there is no clear time trend for bean production over the 11-year
period (Figure 4). However, during the past three years (1989-1992), bean production
averaged 66,250 mt, 44% higher than the 11-year average. While it is not readily
apparent what has been responsible for this recent growth in production, it may be
partially due to changes in the definition of a farmer, as noted earlier. The fact that the

trend in the lagged prices (real) of Honduran beans and cam (complement in production)

36

do not follow the trend in bean production for this period, as would be expected (Curry,
1993), further complicates the analysis of production data.

As expected, the seasonal and regional distribution of bean production is largely
determined by the distribution of harvested area. Approximately 67% of the national bean
output is produced during the pomera (SECPLAN, 1993), with two regions, the
Northeastern and Mideastem, accounting for 70% of total national production.
Additionally, although farmers with less than 3.5 ha (57%) produce 38% of the national
output, the small share of farmers with farms larger than 14 ha (15%) account for 34% of
total production (Table 3.1).

The Ministry of Natural Resources defines three production systems: the
traditional, the semi-technical, and the technical system (MRN, 1988), based on the type
of inputs farmers use (i.e., seed, fertilizer, pesticide, herbicide). In the traditional system,
farmers sow local varieties and use no additional purchased inputs. Farmers who use one
to three modern inputs fall under the semi-technical system category, and farmers who use

more than three belong to the technical system group.

37

 

we: r amt?”

 

 

 

 

 

 

rein re'er te'ea re'ea ”Tee "1“ re'es 1:07 rein «be re; re'er
"(‘m-“m'mni)

 

 

 

Figure 4. Bean Production (mt), 1980-81/1991-92, Honduras.

However, this stratification of bean farmers fails to capture the variations in bean
farming systems that exists among farmers across regions and agro-ecological zones.
Available data show that there exist major differences across regions, and visits to several
farming regions confirmed that crapping patterns vary even within regions. The following
section presents an overview of the predominant characteristics of bean production in the
three most important bean-producing areas, the Mideastem, the Northeastern, and the
Western Region. These characteristics include farm size, type of beans produced, crap

associations, and agro-ecolagical characteristics. Using survey data, Chapter 4 presents a

38

more detailed analysis of the variability of farming systems across farm size, and
topographical regions in the Mideastem and Northeastern Regions.

3 .2.3 Eannfirzeandfiammemralflnsntanan

As noted earlier, over 50% of Honduran bean producers are small farmers.
Nationally, almost 20% of the farms with beans are less than 1 ha (total farm area), and
approximately 57% are 3.5 ha or less. On the other hand, 15% of the bean farms are more
than 14 ha. But average farm size varies by regions. For example, in the Northeastern
Region only 34% of bean farms have 3.5 ha or less, whereas in the Mid-Eastern 60% fall
under this category.

These regional farm size data suggests a stranger commercial orientation among
the Northeastern bean farmers. However, national data (SECPLAN, 1994) indicate the
Mideastem bean farmers market 63% of their total bean production, while Northeastern
farmers market only 53%. This paradox may be explained by several factors. First, on
average bean fields are small, regardless of farm size, but larger in the Mideastem Region
(0.98 ha) than in the Northeastern Region (0.84 ha). Second, the Northeastern Region is
less densely papulated, and because many farmers live firrther away fiam the main urban-
trading centers, they have less access to markets. In addition, because inputs are more
readily available in the Mid-Eastem region, these farmers may be more able to produce

marketed surpluses.

39

3.2.3.1 WeastemRegianEanninanstem
The Mid-Eastem region, which accounts for 30% of the bean area, encompasses

the Departments of Francisco Morazan and El Paraiso. The largest urban centers in this
region are Tegucigalpa (580,000 population), the capital of Honduras, and Danli (30,000
population), where the National Bean Program is headquartered. Additionally, Zamorano,
the leading agricultural teaching and research center in Honduras, is located in the middle
of this region.

Topographically, the Mid-Eastem region has a number of small deep valleys,
where tobacco, cotton, and horticultural production are important farming enterprises.
Beans are grown bath in the deep valleys and the hillsides, and 94% of the beans produced
in this region are harvested in the drier postrera (SECPLAN, 1994).

In this region most farmers only grow small-seeded red beans, and the majority of
the improved seed adapters are in this region. The most commonly planted local bean
varieties are Paraisita and Chile, two flat-shaped small-seeded light-red beans. Improved
varieties commonly planted include Catrachita in the hill-sides, and Dorado, an improved
BGMV-talerant variety, in the lower altitudes where bean golden mosaic virus (BGMV)
is an important production constraint.

Secondary data indicate that most beans are grown as a mono-crop, especially
during the posrrera. However, as is shown in Chapter Four, this practice varies floor one
season to another. Additionally, while most Honduran bean farmers apply few modern
inputs (MRN, 1988), bean farmers in the Mid-Eastem Region are more likely to apply

chemical inputs than farmers in other regions of the country.

40
3232mm

This region, which accounts for 34% of total national production, encompasses the
department of Olancho and is less urbanized (75% rural) than the Mid-Eastern region.

The two largest urban centers are Juticalpa (20,000 population) and Catacamas (18,000
population), which are approximately 28 miles apart and connected by a two-lane paved
highway.

Agriculture in this region is more extensive than in the Mideastem Region. Data
fiam the National Agricultural Census (1993) show that there are over 200,000 head of
cattle in Olancho, and most of the flat land in the region is used for pasture, corn, and
sorghum production.

In contrast, beans are mostly planted in the less fertile hillsides. Compared to the
Mideastem Region, bean production is more evenly distributed, between seasons, with the
primer-a accounting for 40% of the region's total bean production and the postrera for the
remaining 60%.

As in the Mid-Eastern region, most of the beans produced in this area are small red
types. But in contrast to Mid-Eastern farmers, few Olancho farmers plant improved bean
varieties. Among farmers planting improved varieties, Catrachita is the most widely
grown cultivar -in fact, very few farmers have planted or even heard of Dorado or Don
Silvio. Among local bean varieties, Cuarentefio, Vaina Blanca, and Chile are most

commonly grown.

41

As in the Mid-Eastem region, farmers in Olancho prefer early- maturing srnall-
seeded light red bean varieties. Farmers prefer these types because they both command a
price premium and their earliness helps to reduce production risk due to drought.

In Olancho, the most common crop association in bean fields is a com-bean relay.
During the primera, bean farmers plant a larger proportion of corn in association with
beans, and during the postrera only beans are planted between the rows of dried corn
stalks.

3.2.3.3 W

The Western Region, which accounts for 10% of total bean output, encompasses
the departments of Copan, Lempira, and Ocotepeque. The region's largest urban center is
Santa Rosa de Copan (20,000 people). This region borders Guatemala (west) and El
Salvador (south), with the border town of El Pay approximately 60 miles fi'om San
Salvador (over 500,000 population), the capital of El Salvador.

This region is divided into three eco-zones. The northern part, which includes one
of Honduras' most fertile valleys, has abundant rainfall (1,600 mm per year) and is
dominated by tobacco, cattle, and corn production. In contrast, in the southern part of the
region, which includes a much drier valley, horticultural crops predominate. Finally, bean
production is concentrated in the more mountainous part of the region.

In general, bean farmers in this region are more traditional than bean farmers of the
Northeastern and Mideastem Regions. Mast farmers visited do not use any modern inputs

and only sell 46% of their total production.

42

Unlike the other regions, farmers in the Western Region produce almost equal
proportions of red- and black-seeded beans. Most of the black-seeded bean cultivars are
climbing varieties, whereas most of the red-seeded beans are short erect bush types.
According to most farmers, black-seeded beans are more resistant to the most common
diseases in the region-web blight, common bacterial blight, and anthracnose.

Although bean farms in this region are relatively small (0.64 ha), these producers
appear responsive to both domestic and export markets. While Hondurans consume both
black and red beans, Guatemalan consumers prefer black beans, and El Salvadorian
consumers prefer light-colored red beans. Because the strength of the demand (and
market price) in these markets varies from year-to-year, farmers grow both red and black
beans as a price risk management strategy.

The most common crop-association in this region is com-beans, with earn as the
main pfimera season crop and beans as the most important posrrera season crop. Also,
climbing beans—which climb on the dried corn stalks planted in the primerauare more
prevalent here than in the other two regions.

Most farmers in this region use few modern inputs, as they do not perceive added
benefits from using them. For example, small traditional bean farmers reported that they
use fertilizer for corn production, but not for bean production because beans are not
responsive to fertilizer.

3 2.4 Welds

Historical data show that bean yields in Honduras vary considerably from year-to-

year (Figure 5). Although, this suggests that yields are driven by weather conditions

43

which are beyond the control of bean producers, in recent years BGMV may have
contributed to yield variability.

Analysis of harvested area, yield, and production data indicates that over the past
decade, increases in harvested area accounted for 60.7% of the production increase, while
higher yields accounted for 39.3% of the total. However, during 1988-91 higher yields
accounted for a larger share (56.1%) of the production increase. Nonetheless, during
these three years the bean area increased by 17,000 ha (25%). This suggests that recent
yield increases may be driven by a combination of factors—good weather conditions and an
increase in new (or fallawed) higher fertility land brought into bean production in response
to attractive market prices”. Therefore, these recent yield increases may not be

sustainable, as suggested by the decrease in yields fi'om 1990-91 to 1991-92.

 

‘2 GOH statistics report area harvested. In poor rainfall years, if land initially planted is
later abandoned, it is excluded from the area estimate. Thus, in good rainfall years both
harvested area and yields will show increases.

44

 

Dry Bean Yields. Central America
1961-1991

 

L2

 

 

 

 

 

 

0.2

 

 

 

 

O V T 1 T V ‘I I V T I If? I 7 r1 Ifi T Vii UM U IfT 1 T U
1961 1966 1971 1976 1981 1986 1991
ere-u- +1... 3'..- ‘

Bear-ea oedema-stratu-

 

 

 

 

 

Figure 5. Average Dry Bean Yields (mt/ha), Central America Countries, 1961-1991, Source:
FAO.

Official data show that among the major bean-growing regions, yields are highest
in the Northern (0.95 mt/ha) and Northeastern (0.88 mt/ha) Regions. Paradoxically, in the
Mideastem Region where improved-varieties and inputs are more widely used, yields only
average 0.68 mt/ha. This may partially be due to a higher incidence of BGMV in the more
intensely cultivated Mideastem Region, where beans and crops that serve as alternate
hosts for the white fly (BGMV vector) are widely grown in the low elevation fertile

valleys". Although, firngal diseases are less of a constraint in the dryer pastrera, drought

 

‘3 As these regional yields are based on one year of data, yield differences may only
reflect difl‘erences in weather conditions.

45

limits this season's yield potential. Thus, as expected, seasonal data Show little difference
in yields between the primera (0.74 mt/ha) and the postrera (0.72 mt/ha). Finally, farm
size does not appear to have much influence on bean yields. For example, yields on farms
smaller than 3.5 ha averaged 0.72 mt/ha, whereas farms larger than 14 ha averaged 0.77
W.

3 .2.5 CcnfralAmerisaandmian

Guatemala and Honduras are the most important bean producers in Central
America, in most years, accounting for over 50% of the region's total output (Figure 6).
In 1991 the Central American governments (excluding Panama) signed a free trade treaty
which established a price-band mechanism for most extra-regionally traded agricultural
products. In the case of white corn and beans (red and black) which were not subjected to
the price-band mechanism; the treaty eliminated all intra-regional tariffs and quantitative
trade barriers which applied to these products. In addition, the signatories agreed to
minimize the role of marketing parastatals in inter-country trade. The expected goal of the
flu trade treaty is to increase the incomes of farmers and reduce the variability of
agricultural prices by insuring a more stable supply of goods in the region.

Reducing variability in the bean supply represents an important challenge for the
governments of the region. Historical data show that bean production in Nicaragua,

Honduras, and El Salvador is extremely variable, and varies together (Figures 5& 6).

46

 

Dry Bean Area. Central America
1951-1991

 

 

 

    

 

 

   

 

o_ a... e e
1961 1966 1971 1976 1981 1986 1991
mam -mee -Mcaewe
Willamette-(toddlers 82PM 5‘”wa

 

 

 

 

Figure 6. Dry Bean Area ('000 has), Central America, 1961-91, Source: FAO.

3.3 Bean Price Analysis

In 1992, the GOH passed the Honduran Law of Agricultural Development and
Modernization, designed to promote agricultural productivity. Most of the anticipated
impacts of this law are based on the assumption that agricultural producers and traders
will respond to price signals. As a result of market liberalization, it is assumed that
welfare among producers and consumers will be distributed on an efficiency basis. This
section explores past behavior of bean prices in Honduras and attempts to analyze how it

relates to the subsector's performance.

47

3.3.1 Wham

Real producer prices for beans fell steadily fi'om 1970 to 1987, then rose through
1991, and fell to their lowest in 1992. In contrast, while consumer prices for beans have
been far more volatile that producer prices, over the period they have increased in real
terms. For example, from 1970-72 to 1990-92 real producer prices fell by 3% while real
consumer prices rose by 2.8%“. Thus, real grass marketing margins of beans were higher
in 1990-92 than in 1970-72, which suggests that either more marketing services are
provided and demanded ofi‘-the farm, or real transportation costs have increased.

3.3.1.1 KW
Historically, although the relative producer prices of beans, vis-a-vr‘s other grains, has
varied considerably fi'om year-to-year, producer prices have been higher for beans than for
sorghum and white corn. During 1970-87, producer prices of beans ranged from 177%
(1978) to 98% (1987) higher than for white corn, and from 152% (1985) to 95% (1981)
higher than for sorghum. On the other hand, producer prices of beans varied fiom 15%
(1975) to 31% (1981) lower than for rice over the same period.

However, since 1988 beans appear to have become an increasingly attractive crop
for farmers. Available data Show that for 1988-92 the relative producer prices of beans
rose to their highest levels-equal to 226%, 195%, and 43% above the producer prices of

sorghum, corn, and rice, respectively (Figure 7). During the same period, bean production

 

“ Compared to a 5%, 29%, and 54% decreased in real producer prices of corn,
sorghum, and rice, respectively (APAH, 1992).

48
grew more rapidly than the other basic grains", suggesting that farmers are price
responsive. Additionally, McCandless (1991) suggests that relative bean prices may have
increased in the latter part of the 1980's because the government of Honduras received
more cereal donations than in the first halfof the 19803. This would have tended to

decrease the price of corn and rice during the period.

 

" From 1988 to 1992, the average annual growth rate in bean production averaged
28%, compared to 3.98% for com, 14% for rice, and 24% for sorghum.

49

 

e 11
“emu“ 90-03.

 

 

 

 

 

 

 

 

re'rer e'r r re'rare‘rar €1ere3ere5er fine'rere‘nr eTeereTe r "1031?”! e'eer eh: “are?" e‘eer gees e'eere'e I Ie'ea

[TD-teem +m-fl1—he—1

 

 

 

 

Figure 7. Producer Price Ratios, 19711-92, Honduras.

3.3.2 Wham

Bean prices in Honduras follow a seasonal pattern that reflects the two bean
production seasons, the primera and the postrera (Figure 8). As farmers sell their
postrera harvest, wholesale prices fall to their lowest levels during January and February.
As bean inventories decrease, prices rise to a peak during July and then fall again during
August and September after the primera harvest. Numerically, the average seasonal price
index for beans ranges from 86% in January to 116% in July" indicating a maximum

spread of 30% between the seasonal maximum and minimum price. The sharp decline in

 

“ Average price index was calculated using six years (1986 to 1991) of monthly data
(UPSA).

50

prices after the two harvests suggest that farmers sell surpluses immediately after harvest
or store for only a short period of time before liquidating their inventories.

Due to the nature of available data, this brief analysis of price seasonality has at
least two limitations. First, in Honduras wholesale price data are only collected at markets
in the major cities. Thus, it is unclear if the large proportion of Honduran bean consumers
who live in rural areas face similar or greater price variations in seasonal prices. Second,
available monthly data only dates back to 1986. Therefore, it is hard to draw firm
conclusions about the price variability that traders face in any given month. High year-to-
year variability in seasonal price patterns make storage decisions more difficult for traders

due to high price risk.

 

 

 

91"

 

 

 

 

 

 

 

 

 

Figure 8. Seasonal Wholesale Price Index for Beans, Honduras.

51
3.3.3 CsntralAmcrisanPrices

As previously mentioned, Salvador is an important export market for Honduran
beans. During 1993, Honduran bean traders reported that the El Salvadorian market
ofi‘ers the highest bean prices in the region. This may be due to the fact that El Salvador is
a more urbanized country with a higher per capita GNP than Honduras; and the fact that
El Salvador, one fifth the size of Honduras, has more limited access to arable land.

Similarly, secondary data show that during the past two years El Salvadorian bean
prices have exceeded prices in Honduras, Nicaragua, and Guatemala. As a result of the
recently signed free trade treaty which reduces transaction costs, regional bean trade-
especially exports to El Salvador-43 likely to expand over the coming years.

3.4 The Bean Marketing System

The bean marketing system consists of both the infrastructure that facilitates
marketing of beans and the channel through which beans are bought and sold. While
Martel and Bemsten (1994) discussed the bean marketing infrastructure, this Section
briefly discusses the Honduran bean marketing channel and his agents. Chapter 4 and
Chapter 6 of this thesis present a fuller discussion of farmers' and traders' market behavior
as they relate to the Mideastem and Northeastern Regions of the country.

3 .4.1 Winona-ls
The principal marketing channel agents are farmers, local traders (rural pulperr‘as),
regional traders (intermediaries fi'om the cities), wholesalers, El Salvadorian traders,
Honduran Institue for Agricultural Marketing (IHMA), BANASUPRO, bean packers,

bean processors, and urban retail markets (Figure 9).

52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 9. Bean Marketing Channels, Honduras.

3.4.1.1 Banners

As previously mentioned, bean producers market approximately 57% of their total
production. Most farmers sell to city intermediaries (or assemblers) who visit their farms,
local traders (or assemblers), and to a lesser extent local consumers. In addition, some
farmers pay the cast of transport and take their beans to the nearest urban wholesale
market. Finally, some producers sell beans directly to traders fi'om El Salvador.

Although, official statistics report low volume of farmer sales to rural consumers,
several farmers reported that during the hungry season some farmers lend and/or borrow

beans ta/from other farmers. These are normally small volume transactions (5-20 lbs),

53

which do not involve written (formal) contracts or monetary exchanges. Normally, when
the borrower's food crops are harvested he/she repays the lender in kind.

3.4.1.2 Winders

Most local traders/assemblers are pulpen’a owners, or larger farmers in the region,
who are familiar with the production 'characteristics in the region and know the farmers.
These middlemen typically sell most of their bean purchases to wholesalers in the nearest
urban center, although some transport their inventories to Tegucigalpa or San Pedro Sula
for sale in the wholesale market.

Some local traders who own a pulperr'a buy beans from farmers and later resell
them to local consumers. However, several pulperia owners reported buying beans fi'om
the nearest urban wholesale markets to resell in the villages. This suggests that pulperr'a
owners do not store beans for long periods-possibly because the return to storage is low
or that, like farmers, they hold minimal inventories because of cash flow constraints.

3.4.1.3 Winders

Regional bean traders operate over a larger geographical area than do local bean
traders. Generally, these traders either work directly for urban wholesalers, or work
independently-selling their purchases to the highest bidder in the market. Although the
relative importance of traders in rural financial markets is not clear, several bean producers

reported receiving loans fiam local and regional traders. Clearly, the low transaction costs

54

and timeliness of these loans are two attractive incentives that encourage small farmers to
borrow fiom traders".

In addition, these traders perform the important role of redistributing beans
throughout the country. For example, some wholesalers reported selling beans to regional
traders for redistribution to the major production zones, as local supplies became depleted,
and for sale in non-bean producing regions where beans are typically in short supply.

Although most farmers interviewed reported that they do not sell to only a single
trader in a given year, at the time of this rapid reconnaissance it was dificult to determine
the level of trader competition at the regional level. Some key informants contended that
one of the major marketing problems in the bean subsector is collusion by traders, who set
buying prices at unfairly low levels.

3.4. 1.4 Wholesalers

Wholesalers buy beans fi'om farmers, some local (rural) traders, and regional
traders; and sell beans to El Salvadorian traders, bean packers, bean processors, urban
retailers, and back to regional and local traders. Available evidence suggests that
wholesalers store most of the beans sold between the harvesting seasons. While traders
reported that they only stored beans for a maximum of 2-4 months because bean quality
deteriorates with time, longer-term storage would likely be unprofitable since beans are

harvested in Honduras twice a year—during the primera and postera seasons.

 

‘7 A farmer in Olancho reported paying 5% simple interest rate per month (not
compounded).

55

Some wholesalers play a major role as bean exporters. F or instance, one
wholesaler in San Pedro Sula reported exporting four truckloads (22 mt/truckload) to El
Salvador in a single transaction, and another wholesaler in Tegucigalpa kept in constant
phone communication with bean traders in El Salvador and Nlcaragua to negotiate bean
sales.

As previously stated, the GOH requires that bean exporters obtain a phytosanitary
certificate floor the Mnistry of Natural Resources, and a certificate of origin from the
Central Bank. While these documents could be readily obtained (prior to September
1993) fi'om the Government, traders reported that they often exported beans without these
oficial documents because obtaining them requires traveling to Tegucigalpa. Although
the Honduran Government recently (September 1993 to January 1994) prohibited all bean
exports to neighboring countries due to a drought-induced bean shortage, traders reported
that they continued to export beans because the ban was not enforced at the borders.
Thus, it is very likely that Honduras' official bean export trade statistics greatly under-
record these flaws. While the actual magnitude of the bean exports trade is dificult to
estimate, the fact that all wholesalers interviewed reported selling beans to El Salvadorian
traders within the last year indicates that it is substantial.

3.4.1.5 Wen}:

Although some El Salvadorian traders buy beans directly fi'om farmers, most

purchase their supplies from wholesalers. These traders mainly buy (and pay a premium

 

" Information about El Salvadorian traders was obtained from Honduran wholesalers
and farmers.

56

for) light shiny red beans, the market class preferred by urban El Salvadorian consumers.
Three categories of El Salvadorian traders operate in Honduras. The first type, small-
volume traders, travel to Honduras in a rented vehicle or a bus, with manufactured goods
that they sell to Honduran stores. On their return trip to El Salvador, they buy 2-4 mt of
pre-contracted beans fi'om wholesalers in La Entrada and Santa Rosa de Copan (Western
region)-which they transport (by bus or in a rented vehicle) back to El Salvador for
resale. The second, interrnediate-volume traders, travel mainly to buy beans directly fiam
farmers in the Mideastem and the Northeastern Regions, or from wholesalers in the urban
centers-typically assembling truckloads of 2-6.8 mt before returning to El Salvador. The
third type, large-volume traders, enter Honduras with manufactured merchandise for sale
to wholesalers and retailers in San Pedro Sula and Tegucigalpa. Before returning, they

purchase firll truckloads of beans (up to 20 mt) from wholesalers for resale in El Salvador.

 

The IHMA was established (1978) with a mandate to improve the production and
marketing eficiency of basic grains (i.e., beans, corn, rice, and sorghum). Its specific
responsibilities were to: 1) provide a direct marketing channel between producers and final
consumers, 2) establish minimum producer price guarantees, 3) build storage facilities in
urban and rural areas of Honduras, and 4) manage all imports and exports of basic grains.

Given this mandate, IHMA's ultimate clients were to be both the producers and
consumers of basic grains. Price guarantees were designed to minimize variability in
farmers' inter-year revenue, with the expectation that this would stimulate investment in

agriculture, which in turn would lead to a higher level of basic grain production. As basic

57

grain production increased and a more ”efficient" marketing system was established,
consumers were expected to benefit from lower consumer grain prices.

However, since its creation IHMA's impact on the production and marketing of
beans has been minimal. First, nominal producer prices in the parallel market have always
been lower than IHMA's guaranteed producer price (Curry, 1993). Second, key
informants at IHMA reported that most bean purchases were made through special
arrangements with local and regional traders, rather than purchased fi'om farmers".
Finally, Garcia er a]. (1991) argues that one of IHMA's main problems was its inability to
support the announced guaranteed price, due to insufficient budgetary resources. Under
the new Law of Agricultural Development and Modernization (LAM), the role of IHMA
as a handler of grains has been significantly reduced (3.6).

3.4. 1.7 W

Although the internal administrative organization of BAN ASUPRO was redefined
under the 1990 stmctural adjustment program to permit the franchising of some of its
retail stores to private managers, BAN ASUPRO'S main objectives remain unchanged. As
a market agent, BANASUPRO is still authorized to contract beans with producer groups
or import beans if necessary.

Procured beans are distributed among all BAN ASUPRO stores and/or sold to
BANASUPRO franchisers. Additionally, in cases of national scarcity, BANASUPRO is

authorized to sell beans to other retail stores. For instance, during the recent bean

 

" SECPLAN 1991-92 reports that for this agricultural year 8% of marketed beans
were sold to IHMA.

58

shortage (third quarter of 1993), BAN ASUPRO imported 2,270 mt of beans fi'om the
People's Republic of China, which it sold to BAN ASUPRO franchisers and privately
operated retail/wholesale stores.

3.4. 1.8 MW

Bean packers buy beans mainly from wholesalers in the larger cities. After
packaging in 5 lb bags (or lb bags), these beans are sold to mini-markets and super-
markets in the main cities. One bean packer reported that he does not enter into long term
contracts with the retail stores. Instead, he visits the stores regularly and fulfills orders
from the retail managers on a case-by-case basis. During periods of abundant supply, bean
packers reported offering special price discounts to the retail stores in order to keep shelf
space and maintain a market share”.

Several small bean-processing firms sell fi'ozen refiied beans, and one large bean-
processing firm (Alimentos del Valle S.A.) sells refiied beans in flexible foil packages.
Alimentos del Valle S.A. buys beans fiam wholesalers, contract farmers, and ham the
canglomerate's production unit. Its processed beans (flexible packages) are sold to the
main supermarkets in urban centers of Honduras, and since September 1993 are being

exportedzl to the rest of Central America and the United States.

 

3° This information was obtained fi'om only one bean packer in Tegucigalpa.

2‘ During the period when bean exports were banned, this firm continued to export
their products because the ban only covered dry unprocessed beans.

59

3.4.1.9Retailezs

Most consumers purchase beans from retailers, located in both urban and rural
areas. While supermarkets and mini-markets typically procure their beans from several
sources (i.e., wholesalers, bean-packers, and bean-processors), some supermarkets and
mini-markets in Tegucigalpa and San Pedro Sula only buy beans from packers and
processors.

Pulperr'as (small privately-owned stores) in major cities purchase beans fi'om both
processors and wholesalers. On the other hand, some pulperr'as in smaller towns buy
directly fi'om farmers who transport their beans to the nearest urban centers. In
Tegucigalpa and San Pedro Sula, street and city-market vendors purchase beans fiom
wholesalers; whereas in smaller towns in the bean-producing regions, city-market vendors
reported buying beans from both producers and wholesalers”. -

3.5 Bean Improvement Research

The Ministry of Natural Resources and the Escuela Agricola Panamericana (El
Zamorano), a private agricultural school founded in 1942, are responsible for bean
improvement research and extension activities in Honduras. The Ministry of Natural
Resources' Agricultural Research Division is administratively responsible for coordinating
all bean research and extension activities under its National Bean Program (NBP). But in

recent years, due to a reduction in Government funding”, the NBP has been downsized.

 

n City vendors in Comayagua, Santa Rosa de Copan, Danli, Juticalpa, Gracias, and
Siguatepeque.

’3 In recent years the Regional Cooperative Bean Program for Central America,
Mexico, and the Caribbean (PROFRIJOL) has provided most of the funding to support

60

Currently, the NBP collaborates with Zamorano in the evaluation and release of improved
bean varieties, conducts agronomic trials, supports an artisan seed multiplication program,
and since 1992 has conducted socio-economic studies to better understand farmers'
acceptability of recently released improved varieties".

In contrast, Zamorano's Agronomy Department has primary responsibility for the
bean breeding program, which has been carried out in collaboration with the University of
Puerto Rico and the University of Nebraska since 1986, in collaboration with the
Bean/Cowpea CRSP. In addition, Zamorano produces foundation seed, which it makes

available to the NBP.

 

The main objective of the breeding program has been to increase bean productivity
through the development and release of high-yielding, multiple disease-resistant, small red,
bush-type varieties. Highest priority has been placed on incorporating resistance to bean
golden mosaic virus (BGMV) which is transmitted by the white fly, and is considered to
be the most important (and an increasingly widespread) yield constraint for Honduran
bean farmers. But because farmers typically save their own seed, the program has given
secondary priority to incorporating resistance to the most common seed borne diseases--

web blight (WB), common bacterial blight (CBB), and anthracnose.

 

the NBP research agenda

2‘At the time of this study, the NBP had only one full-time Ph.D. researcher and one
full-time B.S. level research associate. The NBP receives partial cooperation fiam other
programs which are part of the National Agricultural Research Program.

61

Although the breeding program has focused on disease resistance, it has also
sought to develop heat-tolerant varieties appropriate for the southern and northern region
of Honduras. Heat-tolerant varieties are expected to make it possible to expand the

production frontier of beans into the more fertile lowlands of the southern and northern

regions.

 

Zamorano's plant breeding program can be roughly separated into six stages or
activities. Stage One (germplasm collection) involves the collection and characterization of
local land races and the acquisition of exotic germplasm for use as parents in the crossing
program. Presently, Zamorano's germplasm collection includes over 2,000 small red-bean
acquisitions from Honduras and numerous entries obtained fi'om the CRSP and CIAT's
gene bank.

In Stage Two (early generation), material from Zamorano's germplasm collection
with the desired agronomic and disease resistance traits are selected, hybridized, grown
out, and then evaluated for yield and disease resistance”. All early-generation breeding
carried out to generate these pure lines (F 6) is conducted on-station at Zamorano. In
1992-93, the program evaluated 5,000 entries.

In Stage ”tree (advanced generation), 10-15 advanced lines that performed well in
Stage Two are selected for testing at three different sites located in the main bean-

producing areas of Honduras, namely Comayagua, Olancho, and El Barro (El Paraiso).

 

2’ While these material are also evaluated for agronomic traits including days to
maturity, the breeding program does not screen for cooking time, taste, or any consumer
preference except color and seed size/shape.

62

In Stage Four, the best 2-3 lines from Stage Three are further evaluated in Bean
Advanced Lines Network (RELAF) field trials, in collaboration with farmers and the NBP.
Currently, in each of the 20 multi-locational RELAF trials, 8 advanced lines and 2 check
cultivars are being tested and scored for all major diseases.

In Stage Five, Honduras' most promising lines from Stage Four are further
evaluated each year under the different agro-ecological conditions found in the region.
Zamorano and the NBP implement this stage by sending their best 2-4 lines from the
RELAF trials for evaluation in the PROFRIJOL-sponsored Central American National
Bean Nurseries (NBN). Likewise, each member country sends 24 entries yearly for
evaluation in Honduras' NBN.

Stage Six involves the production, release/certification, and distribution of
foundation seed. After evaluating the performance of multi-location trial data, the NBP
approves the release of lines with superior characteristics. Subsequently, Zamorano
produces foundation seed, which it makes available to the NBP for distribution among
farmers participating in the NBP's artisan seed production program.

3 .5-3 Amnamiakeseamh

Both the NBP and Zamorano carry out a limited number of agronomic trials.
However, due to limited documentation available, it is difficult to assess the implications
or relevance of this research. Compared to the varietal improvement research, it appears
that the NBP's and Zamorano‘s agronomic research is quite limited in scope, particularly

its outreach component.

63
3.5.4SmimEmnamiaResemh

To date, minimal socioeconomic research is being carried out in support of the
bean research program. While the NBP employs no full time social scientist assigned to
carry out bean research, it does support a limited socioeconomic research program .which
is coordinated by PROFRIJOL's regional economist based in Guatemala. The objective of
these activities is to gain a better understanding on farmers' constraints to adopting
improved bean varieties. In Honduras, the required farm-level data is collected by
extension agents from the Ministry of Natural Resources. In addition, an agronomist from
the NBP is currently being trained in primary data collection and analysis techniques.
Because the extension agents were instnrcted to survey the most accessible bean farmers
in each of their regions“, the resulting sampling biases may limit the validity of any
conclusion based on analysis of these data.

Zamorano has the potential to develop a strong socioeconomic research program
to support its bean breeding efforts. Zamorano's Agricultural Economics and Rural
Development Departments have several social scientists in their stafl‘. However, to date
there has been limited collaboration between the bean breeding program and these
departments. Historically, the Agricultural Economics Department has focused its effort
on agri-business development in specific, targeted rural areas. While the Rural
Development Department has provided some support to the bean breeding efforts, this has

been limited to providing technical assistance to farmers participating in the RELAF trials.

 

" Extension agents are expected to visit small, medium, and large size farmers.

64

Thus, Zamorano has yet to establish strong linkages between its social science programs
and the Agronomy Department.
3.6 Government Policies Affecting The Bean Subsector

As previously mentioned, in Honduras, beans are an important crop for small
farmers, and the second most important source of proteins in the diet of a large proportion
of rural and urban consumers. During the past two decades, the performance of the bean
subsector, as well as that of the overall agricultural sector, has been mixed. Recognizing
the need to address structural constraints, in 1992, the Government (with assistance from
international donors) introduced a comprehensive set of macro-economic and sectoral -
policy reforms that are expected to increase agricultural productivity and have a positive
influence on the bean subsector. Under its structural adjustment program, the
Government eliminated price controls, decreased regulation of international trade,
dismantled the marketing parastatal, decreased support to the Ministry of Natural
Resources for technology generation and diffusion, and introduced policies designed to
develop a more comprehensive land market. I

Despite recent increases in the production of beans (1989-1991), Honduras faces
the challenge of sustaining this achievement-as indicated by the severe bean shortages
that occurred during 1993. The future performance of the bean subsector will be greatly
afi‘ected by the impact of these reforms on the structure of incentives facing producers,

traders, processors, and consumers.

65
3.5.1 Wes

Since 1990, the Honduran Government has introduced several macro-economic
policy changes that can be expected to have a major impact on the agricultural economy
and the bean subsector.

3.6.1.1 W

During the second halfof the 1970s and through the 1980s the Government,
through IHMA, established guaranteed producer prices to stimulate the production of
beans and other basic grains. However, large bean farmers and traders, rather than small
bean farmers, benefited the most from these guaranteed prices. Thus, by the end of 1989
the GOH started to gradually liberalize price controls; and in 1992 passed the LAM which
specifically eliminated price guarantees for bean and other basic grains.

Some economists and policy makers argue that price liberalization will result in
higher producer prices, which will encourage more ”efficient" farmers (i.e., farmers who
will adopt more modern technologies) to enter the bean subsector. And as a result, a
higher level of productivity will be achieved in the bean subsector. However, this scenario
assumes that bean farmers face few constraints (other than low prices) to expanding their
production. Thus, it is important to determine what are the main production and off-farm
bottlenecks which need to be relaxed in order to increase bean productivity.

3.6.1.2 WW:

Two recent trade-related developments are expected to have a significant impact
on the bean sector. First, afler 73 years (1917-1990) of maintaining a fixed exchange rate,

in 1990 the GOH introduced a flexible exchange rate, and by 1993 a visible and legal

66

parallel foreign exchange market firnctioned throughout the country. Second, in 1991 the
GOH and the other Central American countries signed a flu trade treaty, which
eliminated tariffs for beans and other agricultural products traded in the region.

Both of these measures are expected to enhance the competitiveness of Honduran
beans in the Central American regional market -a development which highlights the need

to analyze the Honduran bean subsector within the broader context the Central American

27

region .

3 .6.2 W

In addition to macro-policy reforms, the Honduran Government has implemented
several new sectorial policies which will have far reaching impacts. The Council for
Agricultural Development (CODA), responsible for designing the GOI-I‘s sectoral
agricultural policies, is a key actor in the agricultural policy process. Chaired by the
Minister of Natural Resources, the Council includes the heads of the Ministry of
Economics and Commerce, the Ministry of Finance, the Supreme Council of Economic
Planning (CONSUPLANE), and the National Agrarian Institute. Several of the major
sectoral policy reforms introduced since 1990 are discussed below.

3 .62.] W

As previously stated, under the 1990 structural adjustment program, the GOH
gave priority to redefining the role of IHMA. By 1993, IHMA's firnctions were reduced

to purchasing strategic grain stocks from regional and international markets and providing

 

2" A more complete discussion of the history of Honduras' exchange rate policy found
in Schreiner and Garcia (1993). '

67
ancillary services (i.e., market information, technical assistance, and storage of strategic
reserves). Therefore, under a regime of budgetary austerity and as Honduras integrates
into the regional and global markets, it is important to strengthen IHMA's eficiency.

3-62-2 WW

One of the major changes introduced by the LAM was the redefinition of the role
of the Ministry of Natural Resources in the development and transfer of new agricultural
technology. Most important, the LAM created the Division of Agricultural Science and
Technology (DICTA), and placed it in charge of the design, direction, and execution of all
research and extension programs. While previously agricultural research and extension
had been the responsibility of the Ministry of Natural Resources, DICTA's mandate is to
promote agricultural research in the private sector, with the objective of minimizing public
sector participation in agricultural research.

Under these new institutional arrangements, Escuela Agricola Panamericana del
Zamorano, in collaboration with Bean/Cowpea CRSP and PROFRIJOL, are increasingly
responsible for conducting most of the technical research on beans. In addition, the GOH
has delegated the distribution of improved seeds to private agents.

These major institutional changes have important implications for the subsector’s
future performance and raise important questions about the future sources of bean
technology development and transfer capacity. Are available resources suficient to
develop new bean technologies? Do sumcient incentives exist for private agents to
multiply and distribute an adequate supply of improved seeds? How do these subsector

participants view and how will they respond to the new set of institutional arrangements?

68

These issues highlight the need to better understand how new coordinating mechanisms
will be implemented to link public and private sector efforts to develop and extend new ,
technology for the subsector, and what incentives are required to insure successful
performance.

3 .6.2.3 Wig

Finally, the LAM prescribes a new set of rules concerning land reform. The core
of these reforms legalizes agricultural land leases, and promote the development of land
markets by establishing a more widespread and inclusive land titling program. More
secure land tenure arrangements are expected to promote more eficient resource use--
including the rapid adoption of new bean technology.

However, given an already existing skewed land distribution structure, these
reforms raise several problematic productivity and equity issues. Will these new incentives
promote productivity increases on both small and large farm holdings? Will the net efl‘ects
of these changes lead to an inter-sectoral shift in production that reduces the income of
small bean farmers? Insights regarding these potential impact are needed to not only
better understand how the new land reform regulations will contribute to improving the
productivity and welfare of small bean producers, but also to identify additional policy
reforms needed to further increase productivity and equity in the bean subsector. Bonnard
(1995) presents a comprehensive assestment of the current situation, and potential impacts

of the new policies affecting Honduran agricultural land markets.

69 I
3.7 Summary

In Honduras, beans are an important crop for small farmers, and the second most
important source of proteins in the diet of a large proportion of rural and urban
consumers. During the past two decades, the performance of the bean subsector, as well
as that of the overall agricultural sector, has been mixed. This chapter reviews the recent
history of the Honduran bean subsector, using official aggregated production and price
data in addition to a series of informal interviews with subsector participants conducted
fi'om November 1993 through January 1994.

In recent years, per capita bean consumption in Honduras has averaged 10 kg/year.
Although small red beans are the dominant market class, consumer preferences for red
versus black beans varies across the country. Because Government data collection
agencies only report data for red beans, available statistics implicitly reflect the incorrect
assumption that only red beans are produced and consumed. Although consumers express
strong preferences for quality characteristics such as color, cooking time, and cooked
texture, to date little research has been undertaken to determine the most important
factors afl‘ecting consumer preferences. Finally, while most beans are marketed as dried
beans, several entrepreneurs have recently emerged to meet the demand of more
sophisticated urban consumers for processed beans, producing refiied bean in flow and
flexi-pak presentations.

To better understand the role of beans among different farm size strata, oflicial

data were stratified by farm size. Moreover, the Central American region represents a

70

major market outlet for Honduran beans, with Honduras accounting for approximately
44% of the region's ofiicially recorded bean exports (1982-91).

During 1982-92, the bean area averaged 74,900 has, equal to 15% of the total
staple food cr0p area. Although bean production appears to have increased in the past
four years (112,000 has in 1992), it is dificult to determine what has prompted this
production response. Available evidence suggests that part of the response is likely due to
a redefinition of the "farm" to include the smallest holdings (e.g., farms < 0.7 has, which
account for 12% of the bean farmers)-prior to 1987-88, these small units were not
counted by Government data collection agencies. In addition, the expansion of the land
frontier may account for part of the reported production increases. About two-thirds of
the country's beans are grown in the postrera. The most important regions are the
Northeastern and Mideastem, which account for 70% of total national production. While
small farmers (<3.5 has) produce most (57%) of the output, the small share of farms >14
has (15%) account for 34% of total production. Generally, farmers intercrop beans with
corn in the primera, and plant beans as a sole crop in the postera.

Over the last two decades, annual producer prices have been more stable than
consumer prices which have varied considerably from year-to-year. However, wholesale
domestic bean prices are highly seasonal—ranging fi'om 86% of the average annual price in
January to 116% of the annual average price in July. Over the past four years, beans have
become an increasing attractive cash crop for farmers-bean prices, compared to the price
of maize, sorghum and rice, have increased significantly over the period. While this

development has made bean production more profitable for farmers, it has made beans

71

more expensive for consumers. Among the Northern Central American countries, the El
Salvadorian bean price seems to be the best indicator of regional price trends.

Although with market liberalization, the role of government grain marketing
agencies has decreased, this has not resulted in any major problems. Prior to market
liberalization, the Honduran bean marketing system-ocomposed of many private market
agents—was relatively strong and has continued to develop into a very progressive
marketing system. However, a lack of transparency in the intra-regional trading rules
remains a key marketing constraint that negatively affects export trade.

Bean research has made a major contribution to the subsector, primarily through
the development of improved bean varieties resistant to key diseases. As a result of the
restructuring of the GOI-I‘s budget, funding for the Ministry of Natural Resources research
program has decreased significantly. As a result, Zamorano's Agronomy Department is
now primarily responsible for breeding improved bean varieties. In contrast, agronomic
research and socio-economic research has been very limited.

As an additional consequence of budgetary cuts, the Ministry Natural Resources
has reduced its extension services to farmers. The main bean-related extension effort is
the promotion of the artisan seed production programs. In addition to limited access of
extension services, small bean farmers have very limited access to the government-
sponsored credit programs.

Since 1990 the Government has introduced major changes in macro and sectoral
policies, designed to revitalize the agricultural sector. At this point, the efi‘ect of the new

Law of Agricultural Development Modernization on the bean subsector is unclear. In

72

contrast, the new international trade policies are likely to afl‘ect the performance of the

bean subsector, specially under a regime of potential competitive advantage with respect
to the other Central American countries. On the other hand, the potential for Honduran
bean producers to compete in a regional market may be affected by the inability of these
policies to promote an increase bean farmer’s production without significantly raising the

per unit costs.

CHAPTER FOUR
THE BEAN FARMING SYSTEM IN MIDEASTERN AND NORTHEASTERN
HONDURAS
4.1 Introduction
The general characteristics of the bean production systems were described in
chapter 3. This Chapter studies the micro components of the different farming systems
and analyzes how each element of the system is expressed across different macro-
environments and farm sizes; including farmers' land use (4.2), use of chemical inputs
(4.3), use of improved bean varieties (4.4), farmers' market orientation (4.5), and
characteristics of the household members and the decision makers (4.6).
As an introduction to the data analysis presented in this Chapter, recall fi'om
Table 2.1 that in total 215 bean farmers were interviewed. These farmers were distributed
as follows: a) 12.1% small hill-side farmers, b) 11.6% small flat-land farmers, c) 22.8%
medium hill-side farmers, d) 20% medium flat-land farmers, c) 13.5% large hill-side
farmers, and t) 20% large flat-land farmers. Thus a larger proportion of large farmers in
the sample are flat-land farmers. Additionally, as is shown in this Chapter, a larger
proportion of bean farmers plants beans in the postrera (dry season) than in the primera
(rainy season). In the postrera 89% of the farmers planted beans, whereas in the primera
only 64% of the sampled farmers planted. beans.
Moreover, although the sample design did not stratify by Administrative Region it

is shown that there are several production differences associated with the Administrative

Region. Therefore it is important to understand the distribution of sampled farmers by

73

74

Administrative Region. There were 145 bean farmers interviewed in the Mideastem
Region, and 70 farmers in the Northeastern Region. Table 4.1 shows the distribution of
sampled bean farmers across two difl‘erent topographical regions by Administrative region
in each cropping season. While the total number of interviewed farmers is larger in the
Mideastem region, it is clear that a larger proportion of interviewed farmers in the

Northeastern region were in the hill-sides.

75

Table 4.1 Sample Distribution Across Topography by Administrative Region, Honduras

1994.

Count Flat-Land Row
Row Pct. Total ,
1 mn P a . ‘

 

 

 

 

 

 

 

 

Region in Primera .
Mideast 53 42 95
55.8 44.2 68.3
65.4 72.4
Northeast 28 16 44
63.6 36.4 31.7
34.6 27.6
Column 81 58 139
T al 8 3 41.7 00 0 1
Region in Postrera
Mideast 55 77 132
41.7 58.3 68.8 ‘
, 61.8 74.8 .
Northeast . 34 26 60
56.7 43.3 31.2
38.2 25.2
Column 89 103 192
Total 46.4 53.6 100.0

 

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.
4.2 Bean Cropping Patterns and Land Use

Honduran bean farmers can be grouped into three categories: a) farmers who only
plant beans as a mono-crop, b) those who plant beans both as a mono-crop and an inter-
crop, or c) those who only inter-crop beans, typically with corn. Moreover, farmers use

their land resource differently during the two distinct cropping periods, rainy and dry

76

seasons. Therefore, data in this section are reported independently for each season, and
across the three different bean cropping systems; mono-crop, mono-crop/inter-crop, and
inter-crop.

Rainfall is one of the most important elements determining the intensity of land
use. In the Mideastem and Northeastern Regions of Honduras where irrigation systems
are scarce, during the primera (rainy season) farmers use land more intensely than during
the postrera (dry season). In the primera the surveyed bean farmers allocated 54% of
their available land to crops, whereas during the postrera they cropped only 40% of their
land. Weather also influences the intensity of farmers' cropping patterns. For example, in
the primera 22% of the farmers planted inter-cropped beans, whereas in postrera only
3% of the farmers intercropped beans. Moreover, farmers plant corn -with larger water
requirements than beans- more widely in the primera.

Although Honduran agricultural policies have traditionally been biased in favor of
larger farmers, data show that small farmers crop their available land more intensely. .
ANOVA analyses confirmed that during both the primera and postrera, there is a strong
negative association between farm size and the percentage of farm land which farmers

cropped‘. In addition, during the primera flat-land farmers tend to use their land more

 

‘Although pasture for cattle is not reported as a crop, it is important to mention
that only among some larger farmers in the sample, cattle production is an important

agricultural activity .

77
intensely than hill-side farmers2 (Table 4.2); mainly because corn, an important flat-land
crop, is more widely grown in the rainy season.

While exploring how intensely farmers crop available land is important to
determine the potential to increase cropped area, an analysis of the different crops farmers
produce helps understand what these farmers perceive as their agricultural alternatives. In
terms of planted area, the most important crops grown by bean farmers are com, beans,
and cofl‘ee (Tables 4.3, 4.4, and 4.5). While corn is the dominant crop in the primera, in
the postrera beans are planted in a larger proportion than any other crop. However,
although the share of cropped land planted to corn is not associated with farm size, there
is a strong evidence that smaller farmers allocate a larger percentage of their cropped land
to beans3 than do larger farmers. This suggests that under existing technologies and
market environment corn can be successfully planted in larger areas, whereas bean
production appears to be constrained to relatively small enterprises (i.e., < 2 has). Finally,
while cofl‘ee is the third most widely grown crop -within the sample—, among bean

growers who also plant coffee «mainly hill-side farmers- coffee is the most raridely grown

 

2During primera, mono-crop farmers in the flat-lands farm about 8% more of
available land than hill-side farmers (significantly different at 16% level), and inter-crop
flat-land farmers farm about 44% more than their hill-side counterparts (significantly
different at the 1% level).

3AN OVA analyses , indicate that the percentage of all crop land in beans
decreases as the farm size increases, for both the primera and postrera (at a 1% level of
significance). In contrast, for com the evidence for relationship between farm size and
area planted is not so strong (3 8% level of significance in the primera).

78

crop ~accounting for 48% and 45% of the of total land cultivated by hill-side bean
farmers in the postrera and primera, respectively‘.

This overview of the bean farmers' land use sheds some light on the prospects for
increasing bean production. It is clear that medium and large bean farmers have sufficient
land resources to increase their bean production by increasing their area in beans.
However, given the riskiness of bean production during the postrera; it is unlikely that
these farmers will increase their area under bean cultivation without significant changes in
policies/technologies which will enable producers to cope with the unpredictable nature of
rainfall. Moreover, it is important to recognize that for hill-side farmers -with a potential
to grow cofl‘ee- there is less incentive to expand their bean area than for flat-land farmers

who are mainly staple grain producers.

 

‘Among coffee/bean farmers, in the postrera the cultivated land under cofl’ee is
22% larger than for beans (1% level of significance). In the primera the cultivated land
under coffee is 11% larger than for com (10% level of significance).

79

Table 4.2 Proportion (%) of Available Land Planted in Different Cropping Systems’,

Mideastem and Northeastern Regions of Honduras, 1993-1994.

     

Sampling Strata Rainy Season

11 n k. n
All Farmers 108 52% 5 49% 26 64%
‘ 50% 50% 53%

1

Farm Size in has

 

 

186 39% 6 72%
32% 76%

r
|

 

 

 

 

 

 

Region

 

Mideastem 69 50% 4 47% 22 62% 126 41% 6 72%
47% 40% 53% . 30% 76%

Northeastern 39 56% 1 ML 4 72% f 60 35% o
. 55% n.a. 51% * 32%

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security II.

 

 

 

 

 

 

’Mono-cropping, farmers who only plant beans as,a Mono-crop; Single/Inter-
cropping, farmers who plant beans as a single and inter/crop; and inter-cropping, farmers
who only plant beans as an inter-crop.

80

Table 4.3 Proportion (%) of Cropped Land in Difl‘erent Crops, Mono-Crop Bean

Farmers, Mideastem and Northeastern Honduras, Primera 1993.

Bean Farm Categories Crops for Mono-Crop Bean Farmers in Primer-a

 

 

<2 (n=1 9)
2-10 (n46)

 

 

 

 

 

Mid-Eastern (n-69)
North-Eastern n-39

 

 

 

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.

81

Table 4.4 Proportion (%) of Cropped Land in Difl‘erent Crops, Inter-Crop Bean Farmers,

Mideastem and Northeastern Honduras, Pfimera 1993.

Bean Farm Categories Crops for inter-crop bean farmers in him

 

 

Farm Size ha
<2 (n=10) , 2% 74%
2.10 (rt-9) ‘ 14% 53%

 

 

 

 

 

 

 

 

 

8%. 45% 6%
1°. , 56° q 6"
Mid-Eastern (n=22) ‘ 26% 10% 57% 7%
North-Eastern .124 32% 37% , 31% n.a.

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security H.

82

Table 4.5 Proportion (%) of Cropped Land in Different Crops, Mono-Crop Bean

Farmers, Mideastem and Northeastern Honduras, Postrera 1993-1994.

 

Bean Farm Categories Crops for Mono-Crop Bean Farmers in Postrera

 

<2 (n=45)
2-10 (n-77)

 

 

 

 

 

Mid-Eastern (n-126)
North-Eastern n-60

 

 

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.

83
4.3 Use of Chemical Inputs‘

As is the case of the intensity of land use, in the Mideastem and Northeastern
Regions of Honduras, farmers’ input use varies considerably across cropping seasons,
farming systems, farm sizes, and topographical regions. In general, farmers apply
chemical inputs either to increase yields (i.e., fertilizers), reduce labor requirements (i.e.,
herbicides), or to reduce the risk of losses fiom disease and insect attacks (i.e., fungicides
and insecticides). While the intensity of input use, and the type of input use are important
technical questions, in this section input use is a broader concept. This analysis focuses on
understanding different farmers' propensity to make cash investments in bean fields.

4.3.1 WWW

Disaggregating input use across cropping seasons indicates farmers' willingness to
make cash investments in one season versus another, providing researchers and policy-
makers with insights as to the relative importance of the two difl‘erent seasons.

Difi‘erences in use across cropping seasons may arise from two difi‘erent sources. First,
fi'om farmers who plant beans in both seasons (dual-season farmers) and tend to use inputs
more frequently in one season; and secondly, fiom farmers who plant beans only in one
season (single-season farmers) and tend to use inputs more frequently in a specific season.
In the study area, farmers demonstrated a stronger preference to apply inputs in bean

fields during the postrera. For example, in 1993, during the postrera 46% of the farmers

 

‘ In this section chemical inputs refer to purchased inputs such as fertilizers,
insecticides, herbicides, and fungicides (chemical inputs and inputs are used
interchangeably). In this section the use of inputs is measured as a dichotomous variable
(i.e., use, and not use), as opposed to intensity of use. Input users strictly refers to
farmers who use inputs in bean fields.

84
used inputs, whereas in the primera only 35% of the farmers used inputs (Table 4.6).

While dual-season/mono-crop bean farmers used inputs as frequently in both seasons,
single-season/mono-crop and dual-season/mono- & inter-crop bean farmers showed a
stronger preference for applying cash inputs in the postrera.

Overall the evidence suggests that 44% of the single-season/mono-crop postrera
farmers apply inputs whereas only 27% of their primera counterparts use inputs.
Moreover, among dual-season farmers who plant inter-crop beans in the primera and
mono-crop beans in the postrera, a larger proportion of the postrera farmers (83%) use
inputsthan in primera (44%)’. These results suggest that farmers in the postrera are

more likely to perceive the use of inputs as an economically justifiable expenditure.

 

’In the primera the average amount of money spent on all inputs was Lps. 250 per
hectare (median Lps. 100), and in the postrera the average was Lps. 490 (median Lps.
100).

85

Table 4.6 Bean Farmers Applying Chemical Inputs (%) by Cropping Season, Mideastem

and Northeastern Honduras, 1993-1994.

Cropping Systems Season in Which Farmers Plant Beans

(139) 35% (192) 46%

  
    
   

    
   

 

  

All Farmers

   

 

     

      

Single-Season/Mono- (15) 27%” (72) 44%”

Crop

   
   

 

    

Dual-Season/Mono-Crop ‘ (92) 34% (92) 37%

      

 

   

       
  

Dual-Season Inter-Crop (18) 83%°

and Mono-Cron

(18) 44%'

  

 

  

” Significantly different across seasons with a p-value of 0.07.

' Significantly different across seasons with a p-value of 0.21.

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security II.

4.3.2 Chemicallnnummmdhnnflze
Further analysis of the data by farm size, within the same cropping season, helps to

firrther clarify the basic characteristics of input users (Table 4.7). Traditionally, the
National Bean Research Program (NBP) and policy makers have considered larger farmers
to be more progressive. However, data fi'om this study show no significant association
between total farm size and farmers' use of purchased chemical inputs. This evidence
supports the proposition that, in general, chemical input use is similar for small or large

farmers. While this analysis does not present evidence about the level of input use by

86

farm size', it has been found that differences in levels of input use across farm size are
normally explained by institutional variables such as access to credit and extension
services, and proximity to input markets (Mekurai, 1994). Nonetheless, greater access to
these ancillary services by larger farmers emphasizes the already existing institutional bias
towards larger farmers, and sheds little light about differential behavior of small versus
large farmers.

4.3.3 WWW

While beans are more widely grown in the flat-land than in the hill-sides there is no
evidence among the sampled farmers that a larger proportion of flat-land farmers use
chemical inputs. Among sampled farmers, similar proportions of flat-land and hill-side
farmers used inputs. Over 40% of the mono-crop bean farmers in the postrera used .
inputs both in the flat-land and hill-sides, and just over 30% of their primera counterpart
did so. This evidence suggests a need to reconsider the conventional belief that larger and
flat-land farmers are more progressive than smaller and hill-side farmers.

4.3 .4 WWW

While in the past decade basic grain production in the Northeastern Region has
increased faster than in the Mideastem Region, Northeastern bean farmers practice more
traditional production systems than Mideastem farmers. Farmers in the Northeastern
Region use chemical inputs less frequently than farmers in the Mideastem Region. For

instance, about 15% more of the Mideastem farmers used inputs than did their

 

'Data on the level of input use was very hard to obtain specially in the case of
insecticides which are frequently purchased as fluid products. Making it hard to
standardize measuring units and concentrations.

87

Northeastern counterparts (in all different production systems). This marked difference in
the use of chemical inputs between these two regions may reflect the fact that the NBP has
concentrated its research and extension work in the Mideastem region.

Additionally, these data indicate that the two inputs bean farmers use most
frequently are fertilizers and insecticides (Table 4.8). While a majority of the input-users
only apply one input in beans (i.e., 86% and 65% of input-users in primera and postrera,
respectively) the strategy to use insecticides seems to differ from that of using fertilizer.
During postrera, 59% of the farmers who used insecticides applied it in combination with
another type of chemical input, whereas only 43% of those who used fertilizer combined it

with another chemical input.

88

Table 4.7 Bean Farmers (%) Using Chemical Inputs by Farm Size, Topography, and

Administrative Region, Honduras, 1993-1994.

__

Mono-Crop Inter-Crop . Mono-Crop
! . l . l .

Farm Size has

   
       

 

 

 

 

 

 

 

Mideastem

 

Northeastern

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.

89

Table 4.8 Bean Farmers (%) Applying Different Types of Chemical Inputs, Mideastem
and Northeastern Honduras, 1993-1994.

Type «Input Dry Season

Intercrop (n=26) , Mono-Crop

    
 

   

 

  
 

   

 

 

  

 

 

i = "’
Fertilizer ‘ 25%
Insecticide 3 1% 27% I
Herbicide 0% 10% I
Funicide ‘ 1% 0% l 3%

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, if and Food
Security H.

Finally, it is clear that average bean yields of input users are higher than for non-
users of inputs. During the primera input users average a bean yield of 610 Kg/ha
whereas non-users average 490 kg/ha. During the postrera the difference is larger, input
users average 690 kg/ha and non-users only 440 kg/ha’. This suggests that further
analysis of what limits chemical input use among farmers could help improve bean
productivity in the Mideastem and Northeastern Regions of Honduras.

4.4 Use of Improved Bean Varieties

As described in Chapter 3, the most important bean related research and extension

activity of the NBP during the last decade has involved the release of improved bean

varieties. The release of Catrachita in 1987, and Dorado in 1990 were the most important

 

’During postrera yield difl‘erence is significant at 1% level of significance, and
during primera at 18% level of significance.

90

achievements of the NBP”. While Catrachita was released for its yield potential, it was
not tolerant to the most virulent bean disease in the inland valleys, Bean Golden Mosaic
Virus (BGMV). Further research and trials led to the release of Dorado, a bean variety
tolerant to BGMV". Although at the time of this study Dorado and Catrachita had been
widely adopted by farmers in the altr'plano region of Danli, where the NBP had a pilot
program of an artisan bean seed distribution system, there was little empirical knowledge
about the adoption of these varieties in other regions of the country. This section
presents data on the adoption of these improved varieties‘2 during 1993-1994 across
difl‘erent farm sizes, administrative regions, and topographies. This section also analyzes

how bean yields vary among adopters13 versus non-adopters of improved varieties.

 

In Honduras, farmers can acquire seeds through, at least, four difl'erent channels.
First, through the ofiicial government distribution channel (sponsored by the NBP) which
includes the artisan seed production/distribution system; second, through farmers' own
production; third, through relatives or fiiends -- usually neighboring farmers; and finally

through the market fiom traders selling and recommending the use of a specific variety.

 

loIn addition, Don Silvio, a variety fi'om the same genetic source as Dorado, was
released in 1993.

"Dorado (DOR-3 64) was also released in Nicaragua and El Salvador under
different commercial names.

12In this study improved varieties refer to Catrachita and Dorado, unless otherwise

specified.

1"In this section adopters (non-adopters) of improved varieties refer to those
farmers who planted (did not plant) either (neither) Dorado or (nor) Catrachita during the
agricultural year 1993-1994.

91

In the Mideastem and Northeastern Regions, neighbors and traders are the two most
important sources of bean seeds for farmers using new varieties for the first time. In
particular, 55% of the farmers who planted Catrachita during 1993 obtained this improved
seed for the first time fi'om neighboring farmers; this compared to 48% for farmers who
planted Dorado. Traders are the second most frequent source of new seed for Catrachita
(23%) and Dorado users (15%). On the other hand, once farmers adopt a bean variety a
large proportion of farmers save seed for the next season. For example, in 1993 a large
proportion of veteran" Catrachita (69%) and Dorado (41%) adopters planted self-grown
seed. This evidence supports the strategy followed by the artisan bean seed
production/distribution program, which promotes the production and distribution of
improved seeds through neighbors and farmers' own production.

Historically the introduction of improved varieties has reduced genetic diversity by
encouraging farmers to substitute a high-yielding modern variety for several traditional
varieties. However, in the case of Honduran bean farmers the evidence shows that a large
proportion of farmers who grow improved varieties also plant other bean varieties
(traditional or improved). For instance, in 1993, 82% of the farmers growing traditional
varieties planted only one variety, whereas only 52% of those producers who planted
improved bean varieties grew a single variety. When asked why they grew more than one
variety, farmers' two most fiequent reasons were: a) to reduce the risk of production

losses and thus ensure production (3 5%), and b) to conduct their own farm trials and

 

“Veteran users refers to farmers who in 1993 had used the improved variety for at
least two years.

92

determine which variety has the highest potential for yields (29%). On the other hand,
27% of the farmers who planted only one variety did so because their chosen variety was
easier to sell when not mixed with several varieties, and 17% of the farmers said that they
planted only one variety because it was the best yielding variety they knew.

4.4.2 W

The interaction of a variety with weather and topography "variables which the
farmers cannot control— influences the performance of improved technologies. In
Honduras, farmers prefer to grow traditional varieties in the drier season due to their
shorter physiological maturity time (60-65 days); whereas resistance to fungal diseases
may induce farmers to plant disease tolerant improved varieties in the rainy season. While
both Catrachita and Dorado have longer physiological maturity periods (75-80 days) than
traditional varieties; only Catrachita has shown tolerance to some fungal diseases.
Nonetheless, both varieties' yield potential makes them equally attractive to farmers for
both rainy and dry seasons. Thus, in 1993, over 30% of the farmers planted improved
varieties in both seasons". Despite this evidence of widespread adoption of improved
varieties with long maturity periods and low tolerance to fungal diseases, these
characteristics may represent a constraint to long term sustained adoption of these
varieties and more widespread diffusion.

On the other hand, topography has had a stronger influence on the adoption of

improved varieties in Honduras. While Catrachita is markedly planted more often by

 

" In primera 34% of the farmers used improved varieties; in postrera 32% of the
farmers used improved varieties ~Catrachita and Dorado.

93
hillside farmers than flat-land farmers, Dorado is widely grown in the hillsides as well as in

the flat-lands. The data show that while 37% of hillside farmers used Catrachita, only

11% of flat-land farmers planted this variety (T able 4.9). The difference in the adoption of
Catrachita across topographies reflects Catrachita's low tolerance to BGMV, which is
more virulent in the low valleys. On the other hand, Dorado has shown tolerance to this
disease. Thus, this evidence suggests that as farmers acquire knowledge about the
difi‘erent characteristics of specific improved varieties, they make selective decisions about
their use.

4.43“ [I III" ”1.. . 8'

However, in order to acquire personal knowledge about the new technologies
farmers must be exposed to them. Therefore, it is logical to expect that farmers in regions
where there is more access to modern technology are more likely to adopt the technology.

In the case of Honduras, the evidence shows that farmer adoption of improved varieties is
influenced by proximity to ancillary services such as extension, and research activities. As
expected the use of improved varieties is higher in the Mideastem Region where the
NBP has concentrated its efforts. While 27% of Mideastem Region farmers grew
Catrachita or Dorado, only 16% and 7% of the Northeastern farmers planted Catrachita
and Dorado, respectively (Table 4.9).

4.4.4 Use Qflmpmxed Bean ym'gn'g and Elm) Size

On the other hand, as in the case of chemical inputs there is little evidence that the
use of Dorado is associated with farm size. However, the evidence suggests that

adaption of Catrachita is positively associated with farm size. While 19% of the farmers

94

with 10 hectares or less use Catrachita, 32% of farmers with farms larger than 10 hectares
use Catrachita (Table 4.9). This result may suggest that Catrachita may have certain
characteristics which favor larger farmers, as opposed to smaller farmers. For instance,
both traders and producers have stated that while Catrachita has undesirable culinary
characteristics“ it has an acceptable tradeable appearance in some Honduran markets.
Thus making Catrachita more acceptable among farmers who tend to sell a larger
proportion of their bean production. On the other hand, the association between farm
size and use of Catrachita may reflect that larger farmers have had more access to the
improved variety than smaller farmers.

Although it is clear that the interaction between variety and the environment is an
important factor in farmers' adoption decision, farmers' varietal choices are influenced by
additional factors. At first glance, the initial farmers' varietal selection criterion appears to
be similar to the objectives guiding a standard plant breeding program. In ihe Mideastem
and Northeastern Regions of Honduras, a large proportion of farmers said that their first
reason for planting a variety was its potential for good yields. Among farmers who
planted Dorado or Catrachita, 40% listed their potential for good yields as a the first
reason for planting the varieties. Similarly, among farmers who used all other varieties,
35% listed their yield potential as the first reason for using the variety. The second most
fiequently cited criterion for selection is closely related to yield potential. In the case of

Dorado, 19% of adopters reported its resistance for BGMV as their first selection

 

“Farmers and traders reported that Catrachita becomes ”mooshy" after cooking,
thus losing the characteristic texture proper to traditional varieties. On the other hand,
Catrachita is a small-red and round bean preferred in some markets.

95

criterion, while 21% of Catrachita growers listed some kind of resistance as their
selection criterion (i.e., no specific reference to a single disease). Among all other
varieties, 21% of farmers reported they had selected their variety for its ability to escape
droughts (i.e., a short physiological maturity period). These results show that farmers
introduce risk parameters into their decision-making process when selecting a specific
variety, suggesting that advanced improved lines should continue to be evaluated under

risky environments as a means of simulating farmers conditions.

96

Table 4.9 Farmers Using Improved Bean Varieties (%), Mideastem and Northeastern

Regions, Honduras, 1993.

Improved Varieties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative Region
Mid-Eastern (n-144) I 27%' 1 27%"
N orth-Eastern (n=70) I 16%‘| I 7%h
Topographical Region
Hilly (n8104) l 37%“ l 18%
Flat (n-=110) I 11% I 23%
Farm Size in has
< 2 has (n-52) l9%‘I 19%
l 2-10 has (n-91) 19%" 23%
I > 10 has (n-71) 32%‘ 18%

' Significantly different across administrative regions with a p-value of 0.04

" Significantly different across administrative regions with a p-value of 0.00

° Significantly different across topographical regions with a p-value of 0.00

‘ Positive association use of Catrachita and farm size with a p-value of 0.08
Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security II.

4.4.5 imomxednmmetiemmem

The data show that yield performance of improved bean varieties is influenced by
environmental conditions. While bean yields for Dorado adopters were significantly
higher than for non-adopters only in the postrera, bean yields were significantly higher for

Catrachita adopters in the primera only. These results suggest that Catrachita is a higher

97

yielding variety in the primera and Dorado in the postrera" (Table 4.10). This may be
partly due to a season-pathogen interaction. While the postrera environmental conditions
are more appropriate for the development of the BGMV vector (white fly), in the primera
fungal diseases are more prevalent. This suggests that while in the absence of BGMV
Dorado is not a higher yielding variety than other bean varieties, Dorado performs better
than other varieties under the virus' pressure. In addition, bean yields among Dorado
adopters in postrera may be influenced by the use of chemical inputs. While there is no
significant association between input users and Catrachita users in primera, the data show
that there is significant association between Dorado users and input users in the postrera
(70% of Dorado users also use other chemical inputs). This suggests that average bean
yields among Dorado users in the postrera are also influenced by the use of chemical

inputs.

 

”While the results reported in Table 4.10 control for the interaction between
Dorado and Catrachita growers (i.e., Dorado yields cannot be attributed to interaction
with Catrachita, and vice-versa), these results, however, may underestimate the yields of
the improved varieties because they represent an average bean yield including all other
traditional varieties.

98

Table 4.10 Bean Yields Among Adopters of Improved Bean Varieties, Mideastem and

Northeastern Regions, Honduras, 1993-1994.

m,”
w
m

‘ Significantly different adopters vs. non-adopters with p-value of 0.09, (t-test).

" Significantly difl‘erent adopters vs. non-adopters with p-value of 0.03, (t-test ).
Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11. .

  
     

  

4.5 Farm Sales

In Honduras there has been little research on the sales behavior of basic grain
farmers. Much of the conventional wisdom about basic grain farmers' sales behavior
evolves around the notion that small farmers are self sufficient, and that beans are not an
important commercial crop. This section describes bean farmers' sales behavior
disaggregated across farm sizes, and analyzes the relative importance of bean sales with
respect to total farm sales. In addition, this section presents evidence to assess the
relationship between farmers’ commercial orientation and the use of improved varieties.

The sampled farmers can be grouped into three different groups according to their
commercial orientation: first, the 18% of farmers who did not report any farm sales (non-
sellers), second, the 32% of farmers who reported selling farm products other than beans

(non-bean sellers), and third, the 50% of bean farmers who sold beans (bean-sellers). The

99

rest of this section describes the basic characteristics of the farmers within each group, and
their bean sales and purchases behavior.

While 18% of the sample households reported no farm sales, among these
households 71% reported having received wages as laborers or income fiom non-
agricultural enterprises". Their median reported income level fi'om wages and non-
agricultural sales is Lps. 1,000" per year with an average of Lps. 1,600 (Table 4.11).
However, these data under-estimate sales fi'om non-agricultural activities because some
farmers could not recall the value of their sales during the 1993-1994 agricultural year.

On the other hand, eleven farmers did not report any source of income fi'om wages or
non-agricultural sales. These farmers, who did not report any monetary income, on
average harvested a per adult consumption equivalent20 of 0.45 kg of corn and 0.21 kg of
beans per day. This figure is much higher than the national average bean consumption in
rural areas, estimated at 0.03 kg per person per day (ADAI, 1994), suggesting that these
farmers depend to a much larger extent on beans than the average rural household.

On the other hand, of the 82% of bean farmers who reported selling farm products

39% (n=69) reported no bean sales. For these non-bean seller households, the median

 

" Non-agricultural enterprises include trade, carpentry, bread making, and other
activities. All of these farmers have 13 hectares or less of land.

"Lps. is the abbreviation for Lempiras, the omcial Honduran currency, with an
exchange rate between Lps. 5.80 = USS 1.00 and Lps. 7.50 = USS 1.00 for the reference
dates in the survey.

”Adult equivalent factors used are 1.0 for males 18-60 years, 0.83 for males over
60 years, 0.81 for females 18-60 years, 0.72 for females over 60 years, 0.85 for boys 10-
18 years, 0.70 for girls 10—18 years, 0.66 for boys 5-10 years, 0.60 for girls 5-10 years,
and 0.45 for all below 5 years (FAO/WHO/UNU, 1985).

100

income fi'om all farm21 sales was Lps. 2,600 with an average of Lps. 9,400. If income
fi'om wages and non-agricultural sales is added to these farmers' farm sales, the median
income level is Lps. 4,000 with an average total income of Lps. 10,900. Among those
farmers who did not sell beans, but sold other farm products, coffee and corn were the
most important source of farm income each contributing 40%22 to total farm income.

While non-sellers and non-bean sellers account for 50% of all sampled farmers,
37% of these two groups of farmers were net buyers of beans. Similar proportions of
non-sellers (40%) -farmers who sold no farm products- and non-bean sellers (3 5%) -
farmers who sold farm products other than beans- were net buyers of beans. This shows
that a significant number (19%) of bean farmers in the sample bought beans to meet their
household consumption demand, contradicting the notion that all bean farmers are self
suficient. This finding suggests the need to better understand the effects of seasonal price
fluctuations among rural net-buyers, who typically purchase beans late after harvest, when
prices are highest.

As implied above, 50% of the sampled bean farmers sells beans. For these
farmers, the median income fiom farm sales was Lps. 3,800 with an average of Lps.
10,400. Ifnon-farm income is added to their farm sales income, these farmers' median
income is Lps. 5,400, with an average of Lps. 15,000. The remainder of this section

concentrates on analyzing the characteristics of these bean sellers; emphasizing the

 

2‘Farm sales/farm income refers to sales/income fi'om agricultural or livestock
products sold by the household. Non-farm/non-agricultural income/sales refer to wage

and/or non-farm income/sales.

22This figure is an average for all 69 farmers.

101

distribution of these farmers across farm size, topographical region, and across users and
non-users of improved bean varieties.

Table 4.11 Median Bean Farmers Income Records by Commercial Orientation Group,
Mideastem and Northeastern Honduras, 1993-1994.

Sources of Income Commercial Orientation Grouping

Non-Sellers Non-Bean Sellers Bean-Sellers

 

n Lps. n Lps. n Lps.

 

Total Income 4,000 5,400
Total Farm Sales 2,600

Net Bean Sales

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.

 

 

 

 

 

 

In order to determine farmers' market orientation, it is important to distinguish
between bean sellers and net buyers of beans. While 15% of bean sellers reported
purchasing beans from May 1993 through April 1994, none of these farmers bought more
beans than the quantity they sold during the agricultural year”. Therefore, all bean
sellers were net-sellers of beans. Nonetheless, not all bean sellers can be considered
equally market oriented. While some bean sellers only sold their surplus beans (i.e., those
beans produced in excess of the household's demand), other bean sellers grew beans with a
clear intent of selling them. This suggests that a portion of the net-sellers of beans are

residual sellers who are not strongly market oriented. In order to better understand this

 

”The recall periods for purchases and sales for farmers was subdivided into two
distinct time periods, from primera 1993 until before the planting of postrera 1993-1994
and from the planting of postrera 1993-1994 until April of 1994, the month before the
survey started.

102

situation, three variables are studied through the rest of this section: first, total amount of
bean sales in kilograms and lempiras; second, the proportion of beans sold as a percent of
total production; and third, the percent of total farm sales from beans. Careful analysis of
these three variables helps better understand the market orientation of these bean sellers.

Among all bean sellers, the median net quantity of beans sold was 360 kg with an
average of 830 kg; equivalent to a median income from beans of Lps. 1,200 with an
average of Lps. 3,400. To better understand the relationship of these variables to farmers
basic characteristics, net sales are analyzed across farm size, and topography. As
expected, there is a significant positive association between farm size and total bean
sales”. On average, small farmers (<= 2 has) sold 260 kg equivalent to an average bean
sales income of Lps. 950. In contrast, the averages for medium and large size farmers
were 800 kg and 1,200 kg, respectively, with average bean sales of Lps. 3,000 and Lps.
5,300. Moreover, bean sales are also associated with topography. Hillside bean sellers
sold an average of 530 kg with average bean sales income amounting to Lps. 2,050. On
the other hand, flat-land farmers sold almost twice this amount, an average of 1060 kg.
with average bean sales of Lps. 4,400. These data support the hypothesis that small

farmers and hill-side farmers are more likely to be incidental or residual bean sellers”.

 

”ANOVA—tests of net kg. and net Lps. sold by farm size groups had p-
value=0.05 and p-value=0.05 for net kg and net Lps., respectively.

”Comparison of average bean sales by small hill-side and flat-land, and large hill-
side and flat-land farmers support this assertion. Small hill-side farmers sold 210 kg and
small flat-land farmers sold 310 kg (p-value 0.14); in contrast large hill-side farmers sold
690 kg and large flat-land farmers sold 1,450 kg (p-value 0.14).

103

Categorizing net sellers into two distinct groups, market-oriented and incidental
sellers, also supports the hypothesis presented above. To distinguish market-oriented
fi'orn incidental bean sellers, the median amount (kilograms) of beans sold was taken as
the cut-ctr point. Thus, farmers who sold less than 364 kg were considered incidental
sellers, whereas those who sold more than 364 kg were considered market-oriented bean
sellers. Using this classification, only 32% of small farmers would be considered market-
oriented farmers, in contrast to 50% and 65% medium and large farmers. Similarly, a
larger proportion (65%) of flat land bean sellers would be considered market—oriented than
hillside farmers (34%) (Table 4.12).

Table 4.12 Market Oriented Bean Sellers and Incidental Bean Sellers by Farm Size and

Topography, Honduras, 1993-1994.

Market Oriented Sellers Incidental Bean Sellers
0 9 O 1

Farm Size in has'
Small <- 2

 

 

Medium 2-10

 

 

 

Flat-Land 65 (40) 36 (22)
Hill-Side 34 1s 66 29

 

 

 

' Chi-Square test shows positive association with farm size (p-value=0.04)

" Chi Square test shows significant association across topography (p-value=0.00)
Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security II.

104
In addition to analyzing the relationship of total sales with farmers characteristics,

it is important to determine the relative importance of these bean sales. On average, bean
sellers sell 50% of the beans they produce, and bean sales amount to 64% of total income
fi’om farm sales. Comparing percent of beans sold across farm size indicates that medium
size farmers sold a larger percentage of beans produced (55%) than small (44%) and large
farmers (48%). Additionally, flat-land bean sellers sold a larger percentage of beans
produced than hill-side bean sellers (Table 4.13), supporting the evidence that larger and
flat-land farmers sell larger amounts of beans.

On the other hand, the proportional contributions of bean sales to total farm
income is larger among smaller farmers and among hill-side farmers (Table 4.13). This
suggests that although larger sized farmers and flat-land farmers appear to be considered
more market oriented (in absolute terms), bean sales are a relatively more important
source of farm income for those incidental sellers «more likely to cultivate smaller farms
and be located in the hillsides. Therefore, efforts to increase bean yields, which are
positively correlated to net sales, among smaller and hillside farmers would help improve
both these farmers financial conditions through expanding their sales opportunities, and
their ability to achieve food self-sufiiciency as they become more market oriented.

The analysis presented in the previous section (4.3) showed that there is a positive
association between farmers use of improved varieties and bean yields. Although it is
important to understand what factors explain farmers decision to adopt improved bean
varieties, it is clear that improved varieties represent a feasible technological alternative for

improving farmers well being, especially if varieties are available to perform well under

105

difi‘erent environmental conditions. Moreover, among farmers who plant improved
varieties bean sales are larger than among those bean sellers who do not plant improved
varieties. On average, bean sellers who adopt improved varieties sell 1,080 kg of beans,
whereas those who plant traditional varieties only sell 660 Kg”. While the next chapter
studies the market disadvantages commonly associated with the improved bean varieties,
these results suggest that their greater yield potential may expand the economic

opportunities of improved variety adopters.

 

” Using t-test for independent samples these figures were found different at p-
value==0. 191.

106

Table 4.13 Beans Sold (%), and Proportional Contribution of Bean Sales to Farm Income

by Farm Size and Topography, Honduras, 1993-1994.

  

‘ Percent of Sales From
Beans

Bean Farmers Strata Percent of Beans Sold

       

Farm Size (has)

 

 

 

 

Small <— 2 44' (23)
I Medium 2-10 55' (42)
. >- 0 48' 39 ,

 

Flat-Land ‘ 57‘ (5°)
Hill-Side 74‘ 43

 

 

 

' Using One-Way ANOVA test significant association with farm size (p-value=0. 14)
’ Using One-Way ANOVA test significant association with farm size (p-value==0.00)
‘ Using t-test for independent samples significantly different across topography (p-
value=0.1 1)

‘ Using t-test for independent samples significantly different across topography (p-

value=0.02)
Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.
4.6 Characteristics of the Households

The household is the ultimate unit of analysis. In this section four household
characteristics which are commonly found to influence the household's decision making
process are studied. These variables are: family size, availability of labor, age of the
household head, and educational level of the household head. These characteristics are
analyzed across farm size, and topography. In addition a brief analysis of these

characteristics is made in relation to bean yields and the use of improved varieties.

107

Among all been finners, the average number of household members was 6.3
members with a median of six members. Moreover, about 75% of the household in the ,
study have families with 8 members or less and 25% have 4 members or less (Table 4.14).
The number of members in the household is not significantly different across firm size or
topography. Among rural Honduran families”, larger families are commonly associated
with more labor availability, which is an important constraining factor in agronomic
activities such‘as weeding and harvesting. While the data in the sample show that there is
a significant positive correlation between family size and the number of family members
who work in the agricultural fields, the evidence does not support the hypothesis that
larger families obtain higher bean yields”.

Contrary to conventional wisdom, it was found that a significant number of female
members worked on some kind of farming activity. While only 7% of the household heads
were female, 21% of all female members older than 10 years reported working in the
fields. Moreover, although the data collected do not specify which field activity the
household members work on, female labor is most important during harvest and post-
harvest activities.

Two other important household characteristics are the age of the household head
and education level. Among the bean farms in the sample, the average age of the

household head was 50.8 with a median of 50 years old. While no significant difference

 

2"In this study fimily is defined as all members who permanently lived in the
household during the 1993-1994 agricultural year.

”The correlation coeficient of family size and number of members working in the
fields is 0.5491 with a p-value=0.00.

108

was found across age of the household head and topographical region, as expected a
larger firm size was found to be associated with an older age. In contrast, younger
firrners tend to have less land. For example, the average age for farmers firming 2 has or
less of land was 44.6 years, while this figure was 50.7 and 55.5 years for medium and
large farmers”. While this is only a partial analysis of these two variables, these results
suggest that asset accumulation tends to increase over time, thus suggesting that
availability of land may not be the most important constraint over time”.

Although education programs have been an important component of the GOH‘s
development policies, literacy rate is still very low in the rural areas. According the World
Bank 27% of Hondurans are illiterate with a larger proportion of illiteracy in the rural
areas (World Bank, 1994). In the sample, the average level of formal education received
by household heads is 1.97 with a median of 1 year of formal education, and only 25%
with 3 years of formal education or more. While there is no difference across
topographical region and the level of formal education, a positive relationship between
firm size and education level of the household head was found, but at a low level of

statistical significance".

 

”One-way ANOVA tests showed positive association between farm size and age
(p-value=0.00).

3"However, it is important to consider that as population density increases, land
availability becomes a more limiting production factor.

31One-Way ANOVA test show a positive association with a p-value=0.21 between
firm size and education level.

109

While higher formal education is commonly associated with higher agricultural
knowledge, this issue is further explored in the next Chapter where the relationship
between education and both bean yields and adoption of new varieties is explored. In '
addition, lower age of the household head is commonly associated with higher education
and more progressiveness among agricultural households. Although a significant negative
association was found between age of the household head and level of formal education”,
the data did no show a significant correlation between these two variables and bean yields.

Table 4.14 Cumulative Distribution of Household Characteristics, 1993-1994

Household Cumulative Distribution of Household
Characteristics

Characteristics
<1- 10% <- 25%
3 4

 

 

 

Years of Formal
Education 01' HH

Ae ofHH Years

 

 

 

 

 

 

 

 

Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.

4.7 Summary

This chapter was divided into six sections. Section 4.1 introduced the contents of
the Chapter and presented how the sampled bean farmers were distributed across the
different stratifying criteria (i.e., topography, firm size, and administrative region).

Section 4.2 showed that bean production systems are different across cropping seasons.

 

32The correlation coefficient is -0.43 with a p-value=0.00.

l 10
First, among bean farmers bean production is most important agricultural activity in the
partrera (dry season). Second, during the primera (rainy season) inter-cropping is a more
common practice than during the postrera. Third, the data showed that while corn is the
most important crop in the primera, cofi‘ee is an important crop for hill-side farmers in
both seasons.

Section 4.3 presented results on the use of purchased chemical inputs (i.e.,
fertilizers, insecticides, fungicides). The data showed that bean farmers are more willing
to purchase chemical inputs in the postrera. The difference in input use across season is
more pronounced among those farmers who only planted beans in one season, postrera
firmers were more likely to apply chemical inputs than primera farmers. In addition, it
was found that Mideastem farmers tend to use chemical inputs more frequently than do
Northeastern firmers (in all production systems). Finally, it was shown that bean farmers
who used chemical inputs also reported higher bean yields than those firmers who did not
use chemical inputs.

Section 4.4 presented data on the use of improved bean varieties. The findings in
this section suggest that the use and yield performance of improved varieties is influence
by environmental, and institutional variables. First, the variety Catrachita is more
fiequently used among the hill-side farmers, and among Mideastem farmers. On the other
hand, the variety Dorado, tends to be used in equal proportion by flat-land and hill-side
firmers; but more fiequently used among Mideastem farmers. The yield performance of
these varieties is also influenced by environmental conditions. While Catrachita is a better

yielding variety in primera, Dorado is a better yielding variety in the postrera. This

111

suggests decision makers need to understand the diffusion constraint of improved varieties
in different administrative regions, and the performance of different improved varieties
under difl‘erent production environments.

Section 4.5 presented data on the sales behavior of different bean farmers. The
findings in this section show that there are some bean producers (19%) who are also net-
buyers of beans. These firmers tend to be smaller farmers who mainly produce corn and
beans. This suggests that there are small firmers who may be negatively affected by
extreme price increases, specially late after harvest. There is also a large proportion of
bean farmers who do not sell beans, but sell other agricultural products. The sales of corn
and cofl'ee represent these farmers' main source of agricultural income. Thus only 50% of
the sampled bean farmers sold beans during the 1993-1994 agricultural year. However,
some farmers who sold beans could be considered incidental sellers. Further analysis of
the data suggests that large firmers are more market oriented than small farmers. In
addition, it showed that flat-land farmers tend to produce more beans for sales than do
hill-side farmers.

Finally, Section 4.6 showed some of the basic household characteristics. The
median fimily size in the sample is six. While most household heads are male, at least one
fifih of the women in the household reported working in the fields. While the median age
of the household- head is 50 years, the age of the household-head and firm size are
positively related. It was also found that formal schooling is low among the sampled
farmers. The median number of years the household-head has attended formal schooling

is 1 years.

CHAPTER FIVE
EMPIRICAL MODELS ON THE ADOPTION OF IMPROVED VARIETIES AND
DETERMINANTS OF BEAN YIELDS
5.1 Introduction

Chapter four presented a descriptive analysis of bean farmers' production systems,
emphasizing the contribution of improved varieties as a yield increasing technology. In
addition, average bean yields were presented across different factors which influence bean
yields. This Chapter, on the other hand, focuses on analyzing the interaction of different
fictors afi‘ecting the adoption of improved bean varieties, and the interaction of different
factors afi‘ecting bean yields in Mideastem and Northeastern Honduras. Logistic models
are used to analyze the adoption of improved varieties and ordinary least squares (OLS)
models are used to analyze the determinants of bean yields.

Chapter Five is organized in four different sections which include: a) the
theoretical basis for using a logistic model to predict adoption of improved varieties (5.2);
b) an analysis of the results of the logistic models (5.3); c) a description of the variables
used in the OLS regression models to analyze bean yields (5.4); and d) results of the bean
yield response models (5.5).

5.2 The Logistic Model and the Adoption of Improved Bean Varieties

The adoption of improved varieties is assumed to be an economic decision based

on farmers' expected profitability (or expected utility) of using the new variety, given a set

of constraints (i.e., availability of credit, land, labor, type of environment). A farmers'

112

113

profit function depends on a the mix of crops, technologies (i.e., varieties), and non-farm
activities the farmer chooses in any specific time period.

Given this setting, a farmer will choose to plant an improved bean variety (i.e.,
Dorado) instead of a traditional variety if he/she perceives that he/she will attain larger
profits (or will be at a higher utility level) by planting the improved bean variety‘. The
conventional procedure for analyzing farmers' adoption decision making utilizes qualitative
response (QR) models or binary choice models. These models are appropriate for
analyzing the relationship of a discrete dependent variable to a set of continuous or
discrete explanatory variables. These models assume that farmers' will adopt an improved
variety if the utility derived from adopting the improved variety is larger than the utility
derived from planting the traditional variety.

Following Amemiya (1981), the adoption decision can be measured by using a
dichotomous random variable which takes the value of 1 if the firmer plants the improved
bean variety and 0 if he/she does not plant the improved bean variety . The general form

of the dichotomous model is written as:

P..= Pa’,=1) = G(X..6),
i=l,2,...,n.

This general model states that the probability of an event occurring (i.e., adoption

of an improved variety) depends on a vector of explanatory variables Xi and a vector of

 

lA fuller discussion of the assumptions behind several agricultural technology
adoption models can be found in Feder et al. (1985).

114

unknown parameters, theta. However, the functional form of G is too general for the
specific application at hand.
In this study the logit model is used to analyze farrner's adoption of improved

varieties‘. The general form of this model defines the functional form of G to be:

1
1 4. exp' (DIX)

 

PU=1)=

and

Hr=m=1-Pa=1)

l + expW

Where
P(Y =1) is the probability that the event has occurred (i.e., adoption of improved
immfl
P(Y= 0) is the probability that the event has not occurred;
X is a (n x k) matrix of independent variables which capture the farmers' and farrns'
characteristics;

and Beta is a (n x 1) vector of parameters.

 

2Amemiya (1981), and Greene (1990) present a different set of qualitative
response models and their applications.

115

As opposed to a linear probability model, this firnctional form restricts the
probability estimates to lie between 0 and 1. Additionally, the computational ease of this
functional form makes it attractive over alternatives such as the normal distribution
filnction or probit model (Kennedy, 1992; Greene, 1990; Amemiya, 1981). Moreover, the
logit maximum likelihood estimation procedure produces consistent, eficient, and
asymptotically normal estimators.

In contrast to an ordinary least squares regression, where a coeflicient can be
interpreted directly as the change in the value of the dependent variable by a unit change in
the independent variable associated with the coefficient; in the logit regression model, the
probability of an event occurring given the change in an explanatory variable depends both
on the change in the variable and the level of the other explanatory variables. Therefore, a
change of one independent variable does not affect the probability of adoption in a linear
fishion.

In order to specify the adoption model presented in this Chapter it is important to
clearly define what is meant by adoption, the dependent variable in the general model
outlined above. The most common studies of the adoption of agricultural tecnnology are:
a) time-series adoption studies where an aggregate measure of adoption is measured, such
as the percent of farmers using an improved variety; or b) cross sectional studies, which
measure the number of farmers who have adopted the technology at point in time (Besley,
T. and A. Case, 1993).

Specifically, this study uses cross sectional data to determine the factors that

influence the adoption of two different improved bean varieties, Dorado and Catrachita.

116

An adopter of either of these varieties is defined as a farmer who during the 1993-1994
bean farming season, planted either variety. Therefore, the specific form of the general ,
model presented above tries to determine the effect of different variables on the probability
of adopting Dorado and/or Catrachita. Insights gained fi'om analyzing these models will
help researchers prioritize their strategies for achieving wider adoption of the improved
varieties, or alternatively, help to detemrine how farmers' characteristics affect the
adoption of the two improved bean varieties.
5.3 Results of the Adoption Models

To study the adoption of improved bean varieties, this study presents two difi‘erent
adoption models. Namely, an adoption model for the improved variety Dorado, and one
for the improved variety Catrachita. In the first case, the dependent variable (Y,) is one, if
the farmer planted Dorado during the 1993-1994 agricultural year’, and zero otherwise.
Similarly in the second case, the dependent variable (Y,) is one, if the farmer planted
Catrachita, and zero otherwise.

Table 5.1 presents the distribution of sampled bean farmers who planted each
improved variety during the 1993-1994 agricultural year. The data show that 41 sample
firmers planted Dorado, and 46 planted Catrachita. In addition, 7 farmers planted both

varieties in the primera and 7 farmers planted both varieties in the postrera.

 

3The 1993-1994 agricultural year includes both the primera and the postrera
seasons.

117

Table 5.1 Adopters of Improved Bean Varieties by Season, Honduras, 1993-1994.

, Adopters of Improved ‘ Number of Adopters of Improved Bean Varieties by
Bean Varieties

 

 

 

Dorado Adopters ,
, Catrachita Ado . ters
Source: Survey of Honduran Bean Farmers, 1994, Bean/Cowpea CRSP, and Food
Security 11.

Farmers decision to adopt improved varieties is affected by several socio-economic
and environmental factors. These factors can be broadly grouped into demographic or
social factors (i.e., characteristics of the household members), economic factors, farmers'
field management practices, institutional factors, and environmental factors. Table 5.2
lists some of the specific variables measured in this study which were expected to
influence the firmers' adoption decision, and proposes the hypothesized relationship
between the variables and the firmers' adoption decision.

Because the two improved varieties have different attributes, it is expected that
some of these explanatory variables are variety specific. For instance, Catrachita is more
likely to be planted by farmers in the hill-sides than Dorado. On the other hand, some of
these explanatory variables are not variety specific. For instance, the location of farmers
within a specific geopolitical region affects the adoption of both improved varieties in a
similar fashion. Improved varieties are more likely to be used in the Mideastem Region

where the NBP has emphasized the release and diffusion of the variety, and where the

118

BGMV disease is more prevalent. A more detailed discussion of the regressions' results is

presented in Section 5.3. 1.

119

Table 5.2 Lists of Factors affecting Farmers Decision to Adopt Improved Varieties

Factors Variable Measurement Expected

 

 

 

 

 

 

Name in this stud Relationshit
Demographic] Age of HH , AGEHH Years -
Sock] F'ctorg Education 0f HH EDUHH Years Of formal +
education

Sex of HR SEX FM (0/ 1) +/-

Technical Not measured +

Knowledge
Economic Farm Size, Bean ATOTHA, Hectares +/-
Factors A?“ BEAHAS

Relative BEALL % of total farm +/-

Importance of area in beans, +l-

beans relative income

from beans

Management Cropping System INTER Mono/Inter (0/1) -
Practices Use of Chemical

Inputs INUSE, FERT, No/Y es (0/1) +

INSECT

Desired PREYLEI, No/Yes (0/1) +/-

Characteristics PREDROEI

of Bean varieties

(i.e., yield,

drought

resistance)
Institutional Access to credit CREDIT, No/Y es (0/1) +
Factor; in {WC years, CRED93

received credit in

1993-1994.

Visit from H127 No/Y es (0/1) +

r extensionists to

region?

Geopolitical REGCODE Northeast/ +

Region Mideast (0/1)
Environment Topography TOPCOD Hill/Flat (0/1) +/-
Factors Farming Season CICLOl Postrera/Primera +/.

(0/1)

120

5.3.1mmsnflhcAdarttianMadels

As stated above farmers' adoption decisions for different varieties are influenced by
difl‘erent socio-economic, institutional, and environmental fictors. The results of the Logit
models confirm this general hypothesis, and confirms that there is a strong relationship
baween adoption and agro-ecological conditions (Table 5.3). For instance, the
coefiicients for topographical region (TOPCOD) are significant for the adoption of both
varieties, but the signs are opposite. In the Catrachita model, the negative coeficient
implies that farmers in hill-sides are more likely to adopt Catrachita than firmers in the
flat-lands, while the opposite relationship is found for Dorado. As explained in Chapter 4,
the pressure of BGMV in the flat-lands limits the performance of Catrachita in flat-land
environments.

The coefiicient for the socio/demographic factors have the expected signs.
However, formal education level (EDUHH) is not a statistically significant variable in
determining the adoption of either of the two improved varieties. This may be due to the
fict that the formal education level among sampled heads of household is truncated
towards zero -median education level equals to one year (Section 4.6). Farmers'
technical knowledge (i.e., farmers' indigenous knowledge of diseases, farmers‘ knowledge
of new technologies) could have been used as an alternative explanatory variable for

education, however this variable was not appropriately measured in this study. On the

121
other hand, the age of the household head (AGEHH) is only an important‘ variable in the

adoption of Dorado. As expected, this variable has a negative coefficient, which implies ,
that older firmers are less likely to plant the variety Dorado. In addition, the number of
family members who work in the fields (W ORK#) is an important variable affecting the
adoption of Dorado -families with more family labor available are more likely to adopt
Dorado.

The yield of improved varieties is highly dependent on the use of complementary
inputs. The coefficient of the use of fertilizers (FERT) (dummy variable) confirm this
observation, suggesting that farmers who use fertilizers are more likely to plant the
improved varieties. On the other hand, there is a negative relationship between the use of
insecticides (dummy variable) and firmers' adoption of Catrachita. Although, this
relationship is not intuitively expected, it suggests that farmers in the hill-sides may tend
to use less insecticides due to less pressure, in this environment, fiom the white fly, the
BGMV's vector.

Farm size also appears to be a variety-specific variable. Larger farmers tend to
adopt Catrachita, whereas there does not exist a significant relationship between firm size
and the adoption of Dorado. This may be due to the fact that larger farmers in the hill-
side have more access to improved technologies than smaller farmers in the hill-sides.
Additionally, access to credit is only a significant variable among Dorado adopters.

However, it is difficult to interpret this relationship without more information about

 

‘In this context "important variable" means statistically significant at p-values <=
0.10 in the ,logit models.

122
farmers' specific source and use of credit. For example, it may be that firmers who have a

history of having access to credit are more likely to have contacts with extension services,
but this hypothesis needs to be further studied.

Finally, it is clear that administrative region (REGCODE) is an important variable
in the adoption of both improved varieties. Farmers residing in the Mideastem region are
more likely to have planted the improved varieties. This confirms the findings in Chapter
4, which documented the existence of marked differences in the services provided by
extension agents across the two administrative regions. Generally, researchers and
extensionists have concentrated their work in the Mideastem Region.

As shown in Table 5.3 the models correctly predicted 80% and 87% of the cases in
the Catrachita and Dorado adoption models, respectively. While, these models are better
predictors of non-adopters than adopters5 of the improved varieties, these results still
provide useful insights on farmers' adoption/non-adoption decision. For instance, flat land
farmers tend to be non-adopters of Catrachita because of certain production traits of the
variety. Therefore, it is unlikely that simply promoting the use of this variety in the flat
lands will increase farmers' adoption. On the other hand, it is clear that most farmers in
the Northeastern Region are non-adopters of the improved varieties mainly because
firmers in the region have less access to these varieties. In addition, as is shown in the

yield models, farmers in the Northeastern Region have a potential to obtain higher yields.

 

’As shown in Table 5.3, the model correctly predicts 93% and 98% of non-
adopters of Catrachita and Dorado, respectively, and 29% of Catrachita and Dorado
adopters.

123

Therefore, a greater effort should be made to distribute improved varieties in this

politically marginalized region.

124

Table 5.3 Logit Models for the Adoption of Improved Varieties

 

 

List of Explanatory Estimates and Significance Level For Different
Variables Used Dependent Variables
Adoption of Catrachita Adoption of Dorado
(Significance level) (Significance Levels)
EDUHH 0.08 0.05
(Years formal education (0.22) (0.50)
HH)
AGEHH ‘ n.i. -0.04
(Age of Household Head) (0.01) “
ATOTHA v” 0.01 -001
(Total Farrn Area has) (0.03) (0.36)
CREDIT / 0.31 0.72
(Access Credit Last 5 years) (0.33) (0.05)
FERT v ’ ' 0.34 1.40
(Used Fertilizer) (0.02) . (0.00) *
INSECT '- -1.66 n.i.
(Used Insecticides) (0.00)
REGCODE t 1.12 1.43
(Administrative Region) (0.01) (0.01)
TOPCOD .. -1.94 0.93
(Topographical Region) (0.00) - (0.02)
WORK# n.i. 0.30
(# Family Labor) (0.00)
CONSTANT -1 .89 -3 .27
(0.00) (0.00)
CORRECT PREDICTIONS 80% 87%
ADOPTERS 29% 29%
NON-ADROPTES 93° 9°

n.i. Not nuded in the models. '—

125

5.4 Econometric Models of Bean Yields Determinants

Having determined what are the most important factors that influence the adaption
of improved varieties, the following analysis focuses on identifying the most important
variables that affect bean yields in Honduras, including the effect of the improved bean
varieties. Two ordinary least squares (OLS) models were specified to show what
variables afl’ect bean yields in both the primera and the postrera. A list of variables that
are expected to influence bean yields are listed in Table 5.4, and their expected
relationships to bean yields are specified. Although variables included this list are
expected to explain a considerable proportion of bean yield variations, there are several
fictors that limit the explanatory power of these variables as used in these models,
including measurement errors and excluded variables. First, the data used for the
dependent and some explanatory variables are based on recall data for an entire
agricultural year. Second, firmers in different regions used different measurement units,
which were sometimes hard to correctly standardize to an equivalent unit. Moreover,
some respondents tended to under-record/overestimate production data because of
personal reasons (i.e., tax considerations). Third, some important variables which are
expected to explain farmers' yields were not measured or are hard to measure using the
survey methodology. For instance, although soil quality is very likely to affect bean
yields, time and financial constraints made it impossible to accurately measure soil
characteristics in this study.

Although the yield models specified in this study have low explanatory power,

these models do confirm some of the findings in the previous chapter. For instance, the

126

OLS results clearly show that improved varieties have a difi‘erential impact on yield across
season, and that the topographical region in which beans are planted tends to influence

bean yields in the same direction across seasons.

127

Table 5.4 Factors Expected to Affect Farmers' Bean Yields

Variable Name

 

 

 

 

Category Factors Measurement in Expected
this stud Relationsh .
Demographlcl Age of HH AGEHH Years +/-
Social Eudcation of HH EDUHH Years of formal +
education
Sex of HI-I SEX F/M (0,1) +
Technical Not measured
Knowledge
Economic Farm Size ATOTHA Hectares +/-
Factors Relative BEALL % of total farm +
Importance of area in beans, +
beans relative income
from beans
Management Cropping System INTER Mono/Inter (0/ 1) -
Practices Use of Chemical INUSE, FERT, No/Yes (0/1) +
Inputs INSECT
Amount of Input BEINPHA, LPs. of Inputs +
Use (i.e., all BEFERHA, spent on
inputs, fertilizer, BEINSHA, beans/hectare
insecticides)
Use of Improved DORUNI, +
Varieties CATUNI, No/Yes (0/ 1)
IMPVAREI
Insthutlonal Access to credit in CREDIT, No” es (Oil) 4-
Factors five years, CRED93
received credit in
1993-1994. No/Yes (0/1) +
Visit from H127
extensionists to
region? Northeast/ Mideast +
Geopolitical REGCODE (0/1)
Region
Environmental Topography TOPCOD Hill/Flat (0/1) 4-
Factors Farming Season CICLOl Postrera/Prl'mera +
(O/ 1)
Main Production WHEA, No/Y es (101) -
Problem (i.e., INSEPRO,
weather, insects, BGMV
Bean Golden
Mosaic Virus)
Complete loss of No/Yes (0/1) -
Production due to CATASDUM
environmental

CHM.

128

5.5 Results of the Yield Response Models

Because analysis in Chapter 4 demonstrated significant production characteristics
across the two different farming seasons, separate yield models are estimated for the
primera and the postrera. The OLS coefficients and significant levels for these two
models are presented in Table 5.5.

As previously stated, the variables in these models include economic factors (i.e.,
BEAHAS, ATOTHA), farm management factors (i.e., BEINPHA, BEFERI-IA, CATUNI,
DORUNI, INTER), environmental fictors (i.e., BGMSEV, CATASDUM, INSEPRO,
TOPCOD), and institutional factors (i.e., REGCODE). Because the socio-demographic
factors measured in this study did not help explain bean yield variability, these variables
were not included in the models. 1

Before discussing the regression results, three variables need to be further
explained. First farmers were asked to determine if their bean fields had been attacked by
the Bean Golden Mosaic Virus, and to rank how severe these attacks had been. Farmers
were asked to choose from a 4 degree scale (i.e., not severe, little severe, somewhat
severe, and very severe) to determine the severity of the attack. The variable BGMSEV,
included in the models, is equals to one if farmers ranked the disease attack somewhat

severe or very severe and zero otherwise‘.

 

‘Only farmers who reported severe/very severe BGMV attacks were considered to
have been significantly affected by the disease attack.

129

Second, several farmers reported zero production" due to excess rains (primera) or
severe droughts (postrera), or a combination of weather/disease/insect attacks. The
variable CATASDUM, catastrophe dummy, is equals to one for farmers who reported
zero yields and zero otherwise. Finally, farmers were asked to list their most important
production problem in either season. The variable INSEPRO is equals to one if farmers
considered that insect attacks were the most important production problems and zero
otherwise.

In addition, not all the same variables were included in both models because there
were certain variables that were not statistically significant or applicable in both seasons.
For instance, since intercropping is not a common practice in the postrera, it is excluded
from the postrera model. Moreover, the use of fertilizer is more important in the primera
than in the postrera because farmers think that fertilizers are better absorbed by the plants
in the rainy season. However, in the postrera a sum of all inputs (BEINPHA) used is
more appropriate because it includes both insecticides and fertilizer expenses. In addition,
since insects are more constraining during the postrera than the primera, INSEPRO is
only included in the postrera. Finally, while bean area is a significant explanatory variable
in primera, neither bean area nor total farm area have a statistically significant influence
upon bean yields in the postrera. Therefore, in order to include a variable which
measures the influence of farm size, ATOTHA was included instead of the variable for

bean area, BEAHAS.

 

7Some farmers may have reported zero production, when they actually obtained
very low yields.

130

Comparing the results of the models across farming seasons shows the importance
of seasonal differences in the farming systems. First, in the postrera the use of Dorado has
a larger effect on bean yields than Catrachita. In contrast, in the primera Catrachita has a
larger yield impact than Dorado. The results also show that flat-land farmers have higher
yields in both seasons, compared to hill-side farmers'. On the other hand, while
significantly different from zero, cash invested in chemical inputs does not seem to have a
very large impact on bean yields in either season. This supports the finding that the
majority of firmers do not apply chemical inputs on their bean fields. Finally, contrary to
expectations, the BGMSEV dummy variable showed little of impact of BGMV on bean
yields. Yet, this result is consistent with technical assessments made by the NBP which
reported that BGMV was not a very limiting production constraint during the 1993-1994

agricultural year.

 

'In Primers, flat-land farmers obtained bean yields of 525 kg/ha and hill-side
farmers 490 kg/ha. In Postrera, flat-land farmers obtained yields of 600 kg/ha and hill-side
farmers 500 kg/ha.

Table 5.5 OLS Estimates for Two Yield Response Models

131

Estimates for Yield Response Models in Printera and

 

 

‘ Independent Variables
Postrera
Coefficients in Primers Coefficients in Postrera
(significance level) (significance level)
ATOTHA n.i. -0.49
(Total Farm Area has) (0.40)

BEAHAS 75.90 n.i.

, (Bean Area has) (0.00)

‘ BGMSEV 25.48 -83.38
(Severe BGMV attack) (0.76) (0.35)
BEINPHA n.i. 0.04
(LPs. Input per ha) (0.05)
BEFERHA 0.18 n.i.

‘ (LPs. Fertilizer per ha) (0.20)
CATUNI v” 220.03 $9.47
(Used Catrachita) (0.01) (0.51)
DORUNI V. -99.46 156.76
(Used Dorado) (0.30) (0.09) *
CATASDUM -524.03 -634.62
(Catastrophe Dummy) (0.00) (0.01)
INSEPRO n.i. -214.44
(Insects Main Problem) (0.01)
INTER -238.3 1 n.i.
(lumping) (0.00)
REGCODE -65.50 -117.60
(Administrative Region) (0.38) (0.12)
TOPCOD f i a 1 140.04 194.20
(Topographical Region) (0.05) . (0.01)
CONSTANT 454.07 553.38

(0.00) (0.00)

R2 0.26 0.08

‘ F-statistic 6.55 2.72

n.i. not included in the model

132

5.6 Summary

This Chapter presented the basis for using logistic models for explaining farmers'
varietal adoption decisions. The interpretation of the coefficients from a logistic model is
not as straight forward as the interpretation of coefficients from a linear multi variate
regression model. In the logistic filnction, the level of the dependent variable (i.e., the
probability of Y1 = 1) is affected by the coefficient of the variable in question and the level
of the other coefficients. In contrast, in an ordinary least squares model, the level of a the
dependent variable is directly affected by the value of the coetiicicnt of the independent
variable.

The results of the logistic models showed that several explanatory variables that
are variety specific. For example, topography has a differential influence on the
probability of adoption of the improved varieties. Flat-land farmers are less likely to adopt
Catrachita than Dorado. On the other hand, it is clear that the geopolitical region affected
firmer adoption of both varieties. Farmers in the Northeastern Region are less likely to
have adopted the improved bean varieties.

Given that environmental variables such as topographical regions are not easily
influenced, it is hard to expect that flat land farmers will widely adopt Catrachita. On the
other hand, because there has been less emphasis on spreading the improved varieties in
the Northeaster Region, a greater extension effort could increase the level of adoption in

this area.

133

Finally, it was shown that farmers' bean yields are influenced by economic,
management, and environmental factors. The results fi'om the yield response models
showed that bean yields are higher in the flat lands than in the hill-sides. Moreover,
Dorado and Catrachita perform different across farming seasons. The use of Catrachita
has a positive impact on yields only during the primera, and Dorado has a positive impact
on bean yields only in the postrera. This shows the importance of understanding the

interaction of improved varieties and different agro-ecological conditions.

CHAPTER SIX
THE HONDURAN BEAN MARKETING SYSTEM AND THE IMPROVED BEAN
VARIETIES

6.1 Introduction

Chapter Three identified the bean marketing system participants and described the
general characteristics of the system. However, little empirical data about the market
structure and the market participants‘ behavior characteristics were presented. In contrast,
this chapter uses empirical data to a) analyze the existing trading links between farmers
and traders (6.2), b) identify the main market preferences (i.e., farmers', and traders'
preferences) for beans (6.3), c) discuss the implications of market preferences for farmers
welfare by comparing farmers' revenues from improved bean varieties and traditional
varieties (6.4), and d) evaluate the links between the Honduran and El Salvadorian bean
trade (6.5).
6.2 Bean Market Structure

6.2.1 W

Chapter Four identified three types of bean farmers: farmers who do not sell any
farm products (18%), firmers who do not sell any beans (32%), and bean farmers who sell
beans (50%). This section analyzes the marketing links between the sampled bean sellers
and other market participants, focusing on three aspects of farm level trading activities:
the type of traders with whom farmers transact, the geographical distribution of farmers'

sales, and the seasonality of farmers' sales.

134

135

Since the implementation of the Law of Agricultural Development and
Modernization (LAM), which proposed reducing the role of the Honduran Institute of .
Agricultural Marketing (IHMA), the popular media has portrayed private grain traders as
market participants who take advantage of uninformed and uneducated farmers by setting
unfairly low farm-gate prices. Moreover, officials from the Ministry of Economics have
argued that traders in the major cities decrease consumers' welfare by colluding to set non-
competitive high, rent-seeking, prices. Moreover, policy makers, arguing that the existing
market information system is inefiicient, have proposed that the government publish
market prices at different levels in the marketing system, in order to help firmers and
consumers make a better decision about food sales and purchases. While strongly held,
there exists little empirical evidence to substantiate these opinions. Since the
implementation of the LAM, neither the Opinions of farmers nor the behavior of traders
have been analyzed. This section presents an analysis that helps to inform these issues.

As stated in Chapter 3, in general, farmers sell their beans to local village store
traders (pulperos), regional traders or intermediaries, city wholesalers (bodegueros), or
neighbors and/or relatives. Survey data show that 77% of farmers‘ bean sales were made
to regional traders; while wholesalers bought 11% of firmers' sales; neighbors and
pulperos accounted for the remaining 12% of farmers' bean sales‘. As expected, these

sales take place at the farm-gate or in a nearby village (93%). This sales pattern suggests

 

1In this section sales or transactions, used interchangeably, refer to a single transaction
whereby a firmer sells beans, unless specified otherwise.

1 3 6
that if firmels do not have widespread access to market information, traders would be

able to set buying prices at lower levels than in a competitive market.

However, survey data only partly support this assumption. When asked why they
sold their beans to a given trader, 27% of the firmers reported that that particular trader
was the only one in the region at the time of the transaction; 12% said they had sold to
that trader because the trader had lent them money before harvest; 27% said that that
trader paid the highest price; and 8% said they sold to that trader because the trader was a
fiiend or relative. These results suggest that at least in 39% of the cases, farmers had
very limited market options, since there was only one trader in the region, or the firmers
had to honor a loan. Nonetheless, although farmers selling beans to potential colluding
traders received on average a lower price (Lps. 3.8l/kg) than farmers selling beans to
other traders (Lps. 4.06/kg), the difference is not significantly different’. In addition,
given that most farmers who sold beans to potential colluders were in remote segments
(68%), this average difl‘erence may actually reflect the higher transportation cost to
remote areas’. Moreover, in general, hill-side farmers, who lived in the more remote
areas, received lower average bean prices (Lps. 3 .78/kg) than flat-land farmers (Lps.
4.12/kg)‘. Thus, these data suggest that while there may be a potential for traders to

collusively buy beans at lower price levels in remote areas, a better understanding of the

 

2t-test for comparison of means had a p-value of 0.28.

3Remote areas defined as those villages which are two or more driving-hours away
fiom a major trading center.

‘t-test for comparison of means show a mean difference of Lps. 0.34/kg, at a p-
value of 0. l 1.

137

cost structure among difi‘erent traders in the marketing system is needed before concluding
that the price difference is due to collusion.

Finally, as was shown in Chapter 3, bean prices in Honduras are highly seasonal.
In both seasons, most sampled farmers sold their beans within two months after the bulk
of the harvest, when prices were lower. Therefore, farmers revenues are lower than they
would be if they sell their beans several months later after harvest. While this suggests
that farmers could increase their bean revenues by storing beans for later sales in the
higher priced months, the opportunity cost of capital must be taken into account to
evaluate the profitability of storage for later sale.

As reported in Chapter 3, over a six month period the difi’erence between lowest
and the highest average seasonal price is about 30%. Considering that the opportunity
cost of capital in the informal financial markets ranges from a low of 60% to as much as
120% annually, it is clear that in an average year firmers would not be necessarily receive
higher economic revenues by storing beans for 6 months and selling their stocks at the
seasonal highest price’.

6.2.2 WM

To map out the Honduran bean marketing system, 57 traders were interviewed in
the major trading cities of Honduras. These traders were located in three cities nearby the

major production areas of the Mideastem and Northeastern Regions (n= 21), in the two

 

’Assuming a bean price of Lps. 10/kg at harvest time, on average a farmer would receive
Lps. 13/kg at the seasonal highest price. However, using as discount rate of 60% annually, the
present value of these Lps. 13/kg at harvest time is Lps. 9.70/kg (discount rate compounded
monthly).

138
largest cities of Honduras, Tegucigalpa and San Pedro Sula (n= 18); in two mid-size cities,
Comayagua and El Progreso (n= 10); and in Santa Rosa de Copan (n= 8) the largest city
in the Western Region. Wholesalers‘ in these cities were interviewed because they were
considered to be the best source of information to determine how beans are transferred
from firm-gate to consumers’.

As expected, the number of wholesalers is positively related to number of peOple in
each of the cities visited. Discussions with key informants in Tegucigalpa indicate that the
number of bean wholesalers may range from 50 to 75. In San Pedro Sula, there may be
fi'om 25 to 40 bean wholesalers; in Danli, Juticalpa, Catacamas, Comayagua, and El
Progreso, there are fi'om 15 to 30 wholesalers in each city; and in Santa Rosa de Copan
there are approximately 10 wholesalers. Data collected fi'om firmers and wholesalers
indicate that intermediaries (i.e., independent truckers, and wholesalers in the production
cities) are an important link to transfer beans fiom the farm-gate to consumers in the
largest cities (i.e., Tegucigalpa and San Pedro Sula), as all of the wholesalers in the largest
cities reported that they mainly buy beans fi'om intermediaries. In addition, 72% of the
interviewed traders fiom the largest cities also reported that they occasionally buy beans

fiom producers who travel to the main market.

 

‘In this text, bean wholesalers are defined as traders who normally buy more than 130 kg
of beans, have a fixed sales point in the city «normally close to the major city market-g and
normally sell in quantities greater than 45 kg., but may also sell smaller quantities to end
consumers.

7Given time constraints, no independent truckers (intermediaries) were included in the
trader survey.

139

On the other hand, while 95% of the traders located in the production zones
reported purchasing beans from farmers who arrive at the main market; only 62% of the
interviewed traders reported purchasing beans fi'om independent truckers. In addition, at
the time these wholesaler interviews were carried out, the primera harvest had recently
taken place in the Mideastem Region. In Danli, the survey team observed firmers who
visited the main market and searched for difl‘erent traders in an efl'ort to find the trader
who would pay the highest price, and/or a transporter who would charge the lowest price
for hauling beans from the farm-gate to the city. In contrast, bean farmers in the
Northeastern Region visit the market towns less frequently. In Juticalpa and Catacamas,
cities located in the less densely populated area of Olancho, a wholesaler normally goes
out to the firms -using their own trucks-, or mainly buy beans fi'om independent small
truckers.

This suggests that in the main production areas, at least farmers who live closer to
the major trading towns, receive a fiirly competitive price. In addition, it is logical to
expect that farmers who visit the markets to determine price levels communicate this
information back to relatives and/or neighbors in the production villages. These results
firrther support the evidence that farmers in more accessible areas receive higher prices
than farmers living in the more remote regions.

Additional results highlight the relative importance of intermediaries in the
Honduran bean marketing system. Most traders interviewed in the largest cities (84%)
(i.e., Tegucigalpa and San Pedro Sula), and in the mid-sized cities (90%) (i.e., Comayagua

and El Progreso) buy beans at their place of business. These traders cited market

140

competitors, and the cost of buying beans in the farming areas as the two reasons for
buying most beans at their place of business in the city. First, wholesalers argued that if
they decided to go out to the firming areas to buy beans, other competitors would be able
to buy beans fi'om the incoming intermediaries, reducing their market share. In addition,
city wholesalers argued that due to the intermediaries' greater expertise in buying beans
fiom the production areas, they can gather and transport beans fi'om the farming areas at
less cost than a city wholesaler.

The final link between firm-gate and consumers can be capture by determining the
market participants to whom wholesalers sell beans. A large majority of the interviewed
traders (79%) said they sold beans directly to consumers. As expected, since wholesalers
in the largest cities are more specialized, only 67% of the interviewed wholesalers
reported selling beans directly to consumers. However, virtually all wholesalers in the
largest cities (94%) sell beans to retailers. Therefore, the primary role of the wholesaler
in the largest city is to provide retailers with enough beans throughout the year‘; whereas,
in the mid-sized cities and the production cities wholesalers also sell directly to consumers
in addition to supplying retailers with beans throughout the year.

In addition, while less frequently mentioned, traders who purchase beans for
subsequent sales in El Salvador represent an alternative market for wholesalers. Over

50% of all interviewed traders reported selling beans to traders from El Salvador. For

 

'In Tegucigalpa and San Pedro Sula market informants reported that there are some large
traders whose sole purpose is to store beans to supply smaller wholesalers throughout the year.
These traders finance their purchases through the formal banking system at lower interest rates
than the informal financial market available to farmers, thus making it profitable to store beans.

141

instance, among traders in the largest cities, 61% said they had sold beans to traders who
sell beans to El Salvador. In addition, 61% and 45% of traders residing in the production
regions and mid-sized cities, respectively, sold beans to El Salvadorian traders. However,
these figures may under-represent the relevance of bean transactions with El Salvador.
At the time of these interviews, traders in San Pedro Sula were more reluctant to talk
about any transactions with El Salvador than were traders in Tegucigalpa; mainly because
the Ministry of Economics in San Pedro Sula was more strict on penalizing traders who
violated a bean export ban to any Central American country decreed in January of 1994.
Nonetheless, later interviews in El Salvador confirmed the hypothesis that bean trade with
El Salvador was more prevalent than was reported by traders in San Pedro Sula. For
example, several traders in El Salvador confirmed that they had bought beans from traders
in San Pedro Sula who, when interviewed, had denied having conducted any transactions
with El Salvadorian traders. A filller discussion of the El Salvadorian trading links are .
presented in Section 5 of this Chapter.
6.3 Bean Preferences in The Market

While the National Bean Research Program (NBP) has focused on the production
of improved varieties designed to relax key production constraints (i.e., multiple disease
tolerance), the lead researchers at the NBP and Zamorano have maintained a broader
perspective and sought to take into account the preferred attributes of beans by end-users
(i.e., processors, traders, consumers). For instance, in selecting varieties for the
Mideastem and Northeastern Regions, the breeding program screens out genetic material

which is not within the acceptable small-red beans market classes. Moreover the NBP has

142

released small black-bean varieties for the Western and Central Regions, where black
beans have higher demand than in the rest of the country. Nonetheless, there is little
documentation as to the preferred market attributes of beans among farmers or traders,
and how these preferences are reflected on the market prices of difl‘erent bean varieties.

This section presents bean quality preferences, as expressed by firmels and
traders, and provides the background for an analysis of bean quality-price trade-ofi‘. While
the preferred market characteristics of beans include both physical and chemical properties
of thecommodity, the analysis of chemical characteristics is beyond the scope of this
study. However, as information about a particular bean variety is spread in the market,
both traders and farmers are able to associate bean varieties with specific non-physical
properties.

Data presented in this section were elicited both fiom farmers and traders in a
similar format. First, bean farmers were asked to list what they considered to be the three
most important attributes of beans that traders desire. Second, traders were asked to list
the three most important characteristics they desired. This information was used to
determine how well firmers can identify bean market preferences, and obtain better
information about the preferred market attributes for beans.

In addition, using a different set of questions, both traders and farmers were shown
samples of eight difi‘erent bean varieties. These samples included the three most recently
released improved varieties and five traditional varieties, including a small black-bean
variety. Farmers were asked to rank in order of preference, the three varieties they felt

they could sell easier at a higher price. Similarly, traders were asked which of these

143

varieties they would buy and what price they would pay for each variety. Finally, traders
were asked to identify which varieties they would sell to traders from other Central
American countries. This information was used to determine price differences across bean
varieties. In addition, it can be used by bean researchers to further determine what non-
physical characteristics of these varieties may influence market preferences.

As in the previous section, this section only reports information elicited from those
firmers who are net sellers of beans. This decision was based on the assumption that
those farmers who sell beans are most likely to accurately reflect market preferences,
from a seller's view point. Information bean sellers provided about the three bean
characteristics most preferred by traders can be grouped into four categories. First
firmers said that traders strongly prefer red beans -especially lighter colored red beans.
Second, according to farmers, traders desire a good-quality bean (e. g., beans with no
impurities (i.e., dirt, twigs), low humidity content, only containing one variety of beans,
and not physically damaged fiom weevils or harvesting). Third, according to farmers,
traders consider culinary characteristics such as softness and flavor. Finally, according to
firmers, traders consider the shape, preferring small somewhat elongated beans. Thus, the
opinion among bean sellers was that traders mainly look for a good quality red bean.
Because the opinions of farmers who sold more than the median were very similar to those
of farmers who sold less than the median, the results in this section are presented for all
net bean sellers (Table 6.1).

The data collected from bean traders reflects that bean farmers are well informed

about the market preferences, as expressed by traders. Nonetheless, among traders

144

general good-quality characteristics were considerably more important than color
characteristics”. Traders desire beans with no impurities, free of weevils, and sun dried .
(Table 6.2). According to bean traders, cleaner beans command a higher price because it
reduces the cost of processing «needed to prepare beans for sales to their customers. In
addition, the desire for drier beans and free of weevils reflect traders' propensity to store

beans.

 

’This suggests that although some farmers buy black beans, they assumed that most beans
in the market belong to the small-reds market class.

145

Table 6.1 Farmers' List of Traders' Most Preferred Bean Characteristics, Honduras, 1994.

Farmers Ranking of Traders Preferences (%)

 

I Traders' Most

Most Preferred Second Most
Preferred

Red Beans (i.e.,
light reds) .

Good Quality (i.e.,
clean, dry, not
damaged)

 

 

Culinary
Characteristics
(i.e., softness)

 

Shape of Grain
(i.e., small
elongated)

Other
Did not List

 

 

 

 

 

 

' 1% of the bean sellers did not respond this question.
Source: Survey of Honduran Bean Farmers , 1994, Bean/Cowpea CRSP and Food
Security 11.

 

loA respondent was categorized as choosing good quality as the most preferred, the
second and third most preferred characteristic if, for instance, he/she answered clean, dry, and not
damaged beans as preferred characteristics.

146

Table 6.2 Traders' Most Preferred Bean Characteristics, Honduras, 1994.

Traders Ranking of their Bean Preferences (%)

 
   

 
 

 

Traders' Most
Preferred
‘ e e "

11s; l'l

Most Preferred Second Most Third Most
Preferred Preferred

     

l

Red Beans (i.e.,
light reds)

Good Quality (i.e.,
clean, dry, not ‘
damaged) 1

 

 

Culinary 1
Characteristics
(i.e., softness)

 

Shape of Grain
(i.e., small
elongated)

Other
Did not List

All i

 

 

 

 

 

 

Source: Survey of Honduran Bean Traders , 1994, Bean/Cowpea CRSP and Food
Security II.

Farmers assessment of bean varieties also confirmed that bean sellers can
accurately identify traders preferences. In general the bean varieties included in the sample
may be grouped into five different categories. First the small black bean was used to

represent black beans, second Dorado and Don Silvio «both improved varieties« were

 

“A respondent was categorized as choosing good quality as the most preferred, the
second and third most preferred characteristic if, for instance, he/she answered clean, dry, and not
damaged beans as preferred characteristics.

147

used to represent small dark-red beans, Catrachita «an improved variety« was used to
represent small-round red beans; Chile and Cuarenteilo were used to represent small red
beans; and finally Zamorano and Seda were used to represent small light-red beans. Both
farmers and traders agreed that the most marketable varieties in the sample were the small
light-red beans. While a majority of the bean sellers (56%) said that the small light-red
beans were the most marketable bean types, about 20% of the bean sellers said the small
reds were the most marketable varieties, and 18% said Catrachita was the most
marketable variety. Similarly, among traders the small light-red beans were considered the
most marketable varieties (62%), although about 20% said the small reds were the most
marketable beans, and about 14% listed Catrachita as the most marketable variety.

The expected market price for these varieties was obtained by asking traders the
price they were paying for each bean type/variety at the time of the interview. As
expected, traders priced Seda and Zamorano the highest; while the small black bean,
Dorado and Don Silvio were given the lowest market price (Table 6.3). While most
traders reported a buying price for Seda, only a portion of the traders reported a price for
the rest of the varieties. Nonetheless, these price data were used to compare market
prices across different varieties «using paired comparison of prices for two different

varieties to assess the statistical significance of the price spread.

148

Table 6.3 Average Buying Price for Different Bean Varieties in Major Markets, Honduras,

August 1994.

Average Bean Price

Lps/ks (n)
5.06 (55)
5.03 (30)
5.02 (30)
5.00 (20)

(25)
(31)
(17)

 

 

 

 

 

 

 

 

Small-Black

 

 

Source: Survey of Honduran Bean Traders , 1994, Bean/Cowpea CRSP and Food
Security 11.

The average prices for Dorado and Catrachita «the most widely grown and traded
improved varieties« were compared with the average price of Seda, the most preferred
traditional variety. Seda was consistently priced higher than the improved varieties,
averaging 19% higher than the price of Dorado, and 12% higher than Catrachita".

While this analysis is based on data provided by traders who reported a price for both
Seda and the improved varieties , it is clear that Seda commands a higher market price

than the improved varieties.

 

"t-test for paired samples showed that Seda commands a higher price than Dorado and
Catrachita at a p-value of 0.00 in both cases.

149

Most traders priced Dorado lower, compared to the other varieties, because it is a
small dark-red bean, which traders reported costumers are less willing to purchase when
small light-red beans are available in the market, even when priced at a higher level.
Traders argue that early afier harvest, the markets are flooded with high quality small
light-red beans. Thus, the bulk of small dark-red beans will not be sold until the stocks of
light-red beans are low, causing the prices of small light-red beans to rise sumciently high
so that costumers feel better-ofi' buying lower quality small dark-red beans. Traders
argue that the need to carry-over small dark-red beans for later sale represent a storage
cost which they have to cover by paying suppliers a lower price at harvest time.

On the other hand, bean traders argued that Catrachita, a small round-red bean; is
priced lower than Seda because its demand is limited to Honduran consumers. Traders
argued that while Honduran costumers purchase Catrachita, El Salvadorian costumers do
not buy Catrachita. According to the interviewed traders, El Salvadorian traders are
willing to buy any kind of small-red beans, except Catrachita «mainly because its
unacceptable cooking characteristics“. This opinion, coincides with what firmers
reported as the least desirable characteristic of Catrachita.

In addition to providing an explanation for the price difference between Catrachita
and Seda, this information suggests that the El Salvadorian market represents an important
source of demand for Honduran beans. While oflicial data recording the transfer of

beans fi'om Honduras to El Salvador is unreliable and the volume of trade is hard to

 

l"’Catrachita acquires a ”mooshy" consistency after cooked, not necessarily undesirable to
Honduran urban consumers who prepare refiied beans.

150

estimate from visits to the markets; a majority of the traders (58%) interviewed said they
had sold beans to El Salvadorian traders at least once during the last year. These traders
also agreed that Seda or similar varieties were the most preferred bean types among El
Salvadorian traders. A comparison of the wholesale price of Seda destined for Honduran
markets, vis-a-vis those destined for El Salvadorian markets, suggested that traders
expected to sell Seda at a 16% price premium to El Salvadorian costumers“.

This section presented evidence that bean sellers and traders are able to accurately
identify the same market preferences and suggested that the existing informal market
information system effectively transfers information back and forth fi'om traders to
producers. In addition, the evidence has shown that there exists a strong market.
preference for small-red beans, especially for bean varieties which are lighter in color.
While the two most widely grown improved varieties are priced lower than traditional
varieties, consumers penalize each variety because of different reasons. In addition, small
dark-reds are less marketable early afier harvest, which requires traders to incur in storage
costs that they partially cover by paying a lower purchasing price to intermediaries or
firmers. On the other hand, the lower price of Catrachita arises fi'om the limited market
potential, suggesting that the El Salvadorian market is an important market outlet for

Honduran beans.

 

l‘A paired sample t-test for comparison of means show that the price difference was
significantly difi‘erent at a p-value of 0.00.

151

6.4 The Market Performance of Improved Varieties

Chapter four, which presented the characteristics of farmers who plant improved
bean varieties, highlighted " yield potential" as the most desired characteristic of these
improved varieties. However, most farmers also reported that the most important
disadvantage of these improved varieties was their market performance. In addition, the
data in the previous section showed that improved varieties command a lower market
price than do traditional varieties.

As has been studied in the case of modern rice varieties in South-East Asia
(Unnenvehr, L.J. et al., 1992) and corn in Afiica (Rubey, L. et al., 1995); undesirable
market attributes of improved varieties may limit widespread adoption of higher yielding
cultivars, specially if the greater yield potential of the improved genetic materials can only
be observed under certain conditions.

This section presents two different scenarios to analyze the market performance of
the improved bean varieties by first comparing the gross revenues of improved and
traditional bean varieties grown in primera , and then by comparing gross revenues of
improved versus traditional bean varieties grown in postrera. The yield data presented in
Chapter four and the price data presented in the previous section are used to calculate the
estimated revenues.

This comparative analysis incorporates several assumptions. First, it is assumed
that the farm-level survey data, as well as the trader-level survey data, are acceptable
measures of yield and price differences between traditional varieties and improved

varieties. Second, while the price data presented in the previous section were collected

152

afier the primera harvest, it is assumed that the price differences (relative prices) remain at
the same level for the postrera harvest. Third, it is assumed that the costs of production
for traditional varieties are the same as for improved varieties. Fourth, it is assumed that
the yield of traditional varieties is similar for all varieties including Seda; likewise Seda is
assumed to represent the market price for traditional varieties. Finally, for ease of
computation the unit of analysis is a one hectare field of beans planted to traditional
varieties, and improved varieties (Table 6.4).

The analysis presented in Table 6.4 suggests that Catrachita generated more gross
revenues than the traditional variety both in primera and postrera. On the other hand,
Dorado generated higher gross revenues than the traditional variety only in the postrera.
Catrachita generated 28% higher gross revenues than the traditional variety in the
primera, but only 3% more revenues in the postrera. On the other, Dorado generated
only 83% of the gross revenues generated by traditional varieties in the primera of 1993,
and 16% more revenues than the traditional varieties in the postrera.

This analysis suggests that while the improved varieties have a higher yield
potential than traditional varieties, the advantage of the yield potential may be discounted
by the lower market price. Overall, the gross revenue differences between the improved
and the traditional varieties are not very high, especially since the variable costs
associated with the use of improved varieties may be higher than for traditional varieties.
This implies that in a situation where production constraints such as BGMV are absent,
the returns to planting improved varieties may be considerably lower, compared to the

lower yielding but more marketable traditional varieties. For instance, if Dorado users

153

perceive that the Bean Golden Mosaic Virus is not, or has ceased to be a production

constraint, these farmers may shift back to the use of traditional varieties. Subsequently,

in the absence of the tolerant variety, Dorado, the virus could potentially resurge and

result in unexpected production losses for previous users of Dorado.

Table 6.4. Comparison of Bean Revenues for Traditional Versus Improved Bean

Varieties, Honduras, 1994.

. Unit of

I ‘4‘. 1‘.

Primera

Traditional ‘

 

11.x" {—1 lt-s I

2,175.80

 

2,796.20

 

 

Traditional

1827.50

2,631.20

 

Catrachita

2,706.00

 

 

 

 

3 060.00

 

This brief and simple analysis using farm-level data and trader-level data, highlights

the importance of understanding the relationships between a farmers' production system,

the market with which that farmer transacts, and the National Bean Research Program. In

order to improve the performance of the bean subsector, researchers and decision makers

need to pay close attention to these interrelationships.

 

”Prices for Traditional variety is 12% and 19% higher than for Catrachita and Dorado, as

presented in the previous section.

154

6.5 The Honduran-El Salvadorian Bean Marketing System

A Central American Free Trade Treaty, signed in 1991 by the presidents of the
region“, was enacted to improve the economic welfare of consumers and producers
among the trading partners. For instance, when fully enacted bean producers in countries
with a comparative advantage will receive higher prices, and consumers in net bean
importing countries will pay lower prices than under a highly restricted trade regime". In
addition, during the last five years all Central American countries have started to privatize
their respective grain marketing parastatals, and have eliminated price controls on staple
food grains. Moreover, since 1990 the wars which disrupted the region during the 1980s
have subsided. In Nicaragua, in 1990 the Sandinista government allowed democratic
elections after 10 years of continuous fighting. In El Salvador, in 1992 the guerilla and the
Government signed a peace accord.

While these socio-political events have improved the trading environment among
the countries in the region, omcial records documenting the efi'ects of the trading rules on
trading flows are not readily available. In the case of staple food grains, neither Honduras
nor El Salvador keep accurate official data of the trading flows between the two countries.
However, all governments have agreed to report prices of different basic staple grains in
the different countries. Nonetheless, despite this commitment, there are a few
inconsistencies in the price collection methods used across countries which makes formal

analysis dimcult. First, prices are reported on a Central American dollar equivalent.

 

“Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.

"This assumption assumes that the fiee trade treaty is honored by all signing parties.

155

However, the conversion from national currency prices to the standard Central American
price is made using the omcial exchange, which in Honduras (before 1993) was much
lower than the parallel exchange rate. Second, since not all countries have committed to
reporting price data consistently, in the case of Honduras and El Salvador there are several
missing data points. Third, between and within each of the countries there are
inconsistencies as to the precise date of data collection. Finally, in the case of beans there
are several market classes which command different market prices. However, in the case
of Honduras and El Salvador the oflicial records only report a single price for red beans,
despite the fact that the market recognizes difl‘erent market classes of beans.

As an alternative to using inter-country price data to assess the integration of the
Honduran and the El Salvadorian bean markets, this section presents evidence collected
from informal interviews conducted during a rapid appraisal of the El Salvadorian
marketing system during September 1994. This appraisal consisted of visits to three
markets in El Salvador, during which information was elicited about trading links with
Honduras and other Central American countries. The three markets visited were: a) the
city market in San Salvador, the capital; b) farmers market in San Vicente; and c)
wholesalers in San Miguel, the largest city in the eastern section of El Salvador.

As mentioned in the previous section, a large proportion of interviewed bean
traders identified El Salvadorian traders as important costumers. Likewise, in El Salvador
bean traders identified Honduras as one of the most important suppliers of beans for the

national market. All traders interviewed" reported buying beans from three different

 

"In total 15 traders were interviewed.

156

sources: first, fi'om the national intermediaries; second, fiom the Honduran market; and
third, fi'om the Nicaraguan market. In fact, some traders in San Salvador and San Miguel
reported buying most of their beans from Honduras and Nicaragua. Finally, in San I
Salvador wholesalers and retailers differentiated their different beans into three broad
market classes: a) the El Salvadorian pink-bean, b) the Honduran bean, and c) the
Nicaragua bean.

Traders interviewed in the three different cities reported buying Honduran beans
through difi‘erent channels. While in San Salvador, traders identified large bean traders
who buy large amounts of beans fi'om Honduras and sell them to smaller traders, some
traders also reported arranging transactions with Honduran traders over the phone. These
El Salvadorian traders place an order to a Honduran supplier, who then buys beans from
the Honduran market and delivers or waits for the beans to be picked-up. According to
traders, these prearranged transactions considerably reduce the transaction costs,
benefiting both the supplier and the purchaser.

Some traders in San Miguel tend to operate differently. Since San Miguel is about
80 kilometers from the Honduran Border on the eastern side of El Salvador, traders in this
market normally travel to towns on the El Salvadorian side of the border. At these
locations, they purchase beans fi'om intermediaries who have bought the beans in a
Honduran bordering town, or somewhere along the border. Traders argued that this type
of transaction was very common because, at the time of the interview, Honduran customs
authorities did not allow the outflows of beans into El Salvador. Additionally, in San

Miguel there are also traders who make pre-arrange purchases from Honduran traders.

157

Finally, in San Vicente a third type of traders was interviewed «intermediaries
(truckers), who travel around the country selling beans in difi‘erent city markets on
specific market days for each city. Similarly to traders in San Mguel, these truckers
purchase Honduran beans fi'om traders in the bordering towns. As did traders in San
Miguel, these intermediaries claimed that due to transaction costs of crossing the border, it
was less expensive to purchase the Honduran beans in El Salvador, than to purchase them
in Honduras.

The recurring theme among the interviewed El Salvadorian traders was the high
transaction costs" incurred at the Honduran border. In fict, given the trading practices
used in the Honduran borders, some El Salvadorian traders argued that it was less
expensive to purchase beans fi'om Nicaraguan traders «with whom El Salvador has no
borders— than it was to purchase beans fi'om Honduras. While it is not clear what the
nature of the official trade restrictions” «which created an incentive for bribes and other
parallel market trading activities« were at the Honduran border, policy advisors in
Honduras contended that according to the fi'ee trade treaty these trade restrictions should

not be occurring”. This is a clear example of how newly drafted trading rules need to be

 

"The most important transaction cost, were the bribes traders had to pay to Honduran
officials and/or the cost of crossing the border through non-oflicial crossing points.

2"Customs oficial reported the that the new president had enacted a executive decree
restricting the trade of beans, among other goods, with Central American countries.

2‘As of March 1995 the government of Honduras had posted signs at-the Honduran
borders which announced the enforcement of the free trade treaty between Honduras and the
Central American countries, including the trade of beans.

158

monitored to ensure their fulfillment, especially when these rules encompass a complete
turn-around from the previous trading rules previously in force. ‘

In addition to determining the structure of the Honduran-El Salvadorian marketing
system, El Salvadorian traders were asked to express their bean preferences. As with
Honduran traders, El Salvadorian traders were ask to estimate the price of the eight
samples of beans mentioned in Section 6.3. In El Salvador, traders from San Salvador
expressed a marked preference for small light-red beans; whereas in San Miguel traders
were indifi‘erent between small light-reds and small dark-red beans. Moreover, traders in
San Miguel said that in this region of the country small dark-reds are ofien preferred over
small light-red beans.

On the other hand, El Salvadorian traders reported that Honduran beans are
commonly priced lower than El Salvadorian and/or Nicaraguan beans because beans fi'om
Honduras are usually sold at a lower quality standard (i.e., more dirt and foreign matter).
This suggests that either Honduran traders do not believe that the returns to processing
justify its cost, or that in a competitive market Nicaraguan traders and El Salvadorian
producers are adjusting faster to the demand requirements.

6.6 Summary

This chapter was divided into five sections. Section 6.1 was the introduction of
the Chapter. Section 6.2 presented evidence of the existing bean marketing links fiom the
farm-gate all the way to the consumers in the major Honduran cities. The third section
discussed the market preferences for beans, and the price differences between improved

varieties and traditional varieties. The fourth section, presented a comparative analysis of

159

the market performance of improved varieties against traditional varieties. The last
section (6.5) presented some evidence of the existing links between the Honduran bean
marketing system and El Salvador.

Section 6.2 showed that most firmers sell beans at the farm-gate, mainly to
intermediaries who operate on a regional basis. While wholesalers in the larger cities buy
beans mainly from intermediaries, wholesalers in the production regions also serve as
intermediaries between the production zone and the largest cities. While traders in the
more remote areas have a potential to take advantage of a regional monopsonistic power,
it is important to determine if existing price difi‘erences between remote areas and more
accessible areas reflect a lack of competition or mainly reflect transportation costs. In
contrast, in more accessible areas farmers travel to the main market towns to negotiate
prices, suggesting that in these farming areas farmers have access to an accurate although
informal market information.

Section 6.3 emphasized the need of the NBP to maintain market perspectives in
their plant breeding program. Both farmers and traders identified the traditional varieties
as more marketable than the improved varieties. Besides a desire for red color, traders
identified some post harvest handling characteristics as desired attributes of the
commodity. In response to costumer demand, traders reported that cleaner and less
damaged beans are more desired. Finally, this section showed that during the primera of
1993 there was a marked price difi‘erence between improved varieties and the traditional
varieties. Seda «the traditional variety« was priced 19% and 12% higher than Dorado

and Catrachita, respectively.

160

Section 6.4 presented a comparative analysis of the potential revenues farmers may
earn growing improved varieties versus traditional varieties. The results showed that
while on average improved varieties gave higher farm yields, they commanded lower
market prices. Therefore, the gross revenues from improved varieties are only slightly
higher than the gross revenue for traditional varieties. Furthermore, The revenue
difl'erentials are not very attractive, if risky conditions and input costs are incorporated
into the analysis of these estimated revenues.

Finally, Section 6.5 presents the evidence of strong links between the Honduran
and the El Salvadorian bean marketing system. Traders in El Salvador, the smallest and
most densely populated Central American country, corroborated the findings in the
Honduran marketing system. El Salvadorian traders buy a substantial quantity of
Honduran and Nicaraguan beans. Additionally, bean preferences in El Salvador vary
regionally. In the eastern section of the country, small-dark red beans are often preferred,
whereas in the central region the beans found in the market are almost exclusively small
light-red beans. Moreover, according to traders, the most important marketing constraint
between El Salvador and Honduras were the high transaction costs incurred at the

Honduran border.

CHAPTER SEVEN
CONCLUSION AND IMPLICATIONS
7:1 The bean subsector

Beans are one of the most important crops among small farmers in Honduras. At
least one-third of all Honduran farmers plant beans, and about 75% of these firmers have
firms smaller than 7 hectares. As shown in Chapter 3, beans are an important cash crop
both for small and large farmers. Honduran farmers sell approximately 55% of their total
bean production. Beans are also an important part of the diet for most urban and rural
consumers, with national apparent consumption averaging 10 kg per capita per year. In
addition, Honduran bean exports to the Central American market have increased in recent
years and could become an increasingly important source of foreign exchange earnings.

However, the performance of the bean subsector has been mixed. Average bean
yields (697 kg/MT for 1989-1994) are much lower than expected by researchers and
extensionists, and extremely variable from year-to-year. Moreover, as the Central
American countries embark towards a more integrated regional market, Honduran bean
producers will increasingly be competing with their Nicaraguan counterparts for a larger
share of the El Salvadorian bean market.

In recent years, several institutional reforms have been introduced to revitalize the
Honduran agricultural sector. In 1992, the Government of Honduras (GOH) approved
the Law of Agricultural Development and Modernization (LAM), which policy makers
expect will improve the performance of the agricultural sector through incentives which

minimize government's participation in several critical areas of agricultural production and

161

162

marketing. But driven by the politics of market liberalization, these reforms were
introduced with only minimal empirical understanding of the agricultural sector and
constraints facing small farmers.

As an integral part of modernizing the agricultural sector, the Honduran
government has established a new set of market norms which redefines the role of the
Agricultural Marketing Institute (IHMA). Under these new market rules, IHMA's role is
limited to providing market information (i.e., market prices). Additionally, in case of
national emergencies, such as natural disasters which critically reduce food availability,
IHMA may use its basic grains strategic reserves (i.e., corn and red beans) to redistribute
them into the national market. However, although private traders participated widely in
the marketing system even before the LAM was adopted, little empirical analysis has been
carried out to document how the bean marketing system operates. Moreover, there is
little awareness of neither the historical impact of the regional Central American market on
Honduras' bean subsector, nor what will be required to filrther exploit this potential
market.

Additionally, as the National Bean Program (NBP) has sought to improve the
performance of the bean subsector by releasing improved bean varieties, the research
program has tried to introduce genetic materials with some acceptable market attributes.
However, only minimal research efforts have been carried out to better understand how
market preferences can limit the widespread acceptability of the improved bean varieties.

Unfortunately, the GOH's plans to modernize the agricultural sector have

overlooked the potential contribution of public investments. In recent years, public funds

163

for agricultural research and extension activities have been severely reduced, thereby
threatening the viability of the NBP. Currently, Most of the bean research and extension
activities are funded by international collaborative research projects such as the
Bean/Cowpea CRSP, and the Central American PROFRIJOL research program. Given
the scarcity of research funds, in order to help improve the performance the bean
subsector, both the NBP research/extension stafl‘ and policy makers require a better
understanding of the production characteristics of bean farmers, the constraints they face,
and the performance of existing technologies.
7.2 The Modified Subsector Approach

Originally the subsector approach was conceptualized as an in-depth study of the
difl‘erent vertically linked economic activities which generate value added to a narrowly
defined commodity, using the industrial organization paradigm of structure—conduct-
perforrnance. The present study followed a modified subsector approach, focusing on the
farm-level bean production/marketing and on the intermediary/wholesaler level.

To inform the issues outlined in the previous section, surveys of farmers and
traders were conducted. Having identified the Mideastem (3 0%) and the Northeastern
(3 2%) as the largest bean production regions in the country, 215 bean farmers were
interviewed fiom these Regions. In an efl‘ort to represent the national distribution of bean
farmers, these farmers were stratified into small, medium, and large firmers. In addition,
to take into account agro-ecological factors both hill-side and flat-land bean farmers were

interviewed. Farm-level data collection focused on understanding the bean production

164
system, with an emphasis on farmers' use of improved bean varieties, and their marketing
behavior.

At the intermediary/wholesaler level, 57 traders were interviewed in different city
markets throughout Honduras. These interviews focused on gaining a better
understanding of the market links between the farm-gate, urban consumers, and other
potential Central American consumers. Additionally, this survey focused on trying to
better understand the market acceptability of the improved bean varieties, compared to the
traditional bean varieties.

This modified subsector study generated information that enables bean researchers
to better evaluate the performance of the newly released bean varieties, in the context of a
dynamic market. Moreover, policy makers can use insights from this study to consider
policy options to improve the productivity of the bean subsector at both the firm and
market levels, a dual perspective that is especially useful given the increasingly competitive
Central American market.

7.3 The Bean Farming System

While most of the data presented in Chapter 3 (7.1, 7 .2) were obtained fiom
secondary data sources, primary data were used in Chapter 4 to highlight five aspects of
the bean farming system: the bean farmers' cropping patterns (4.2), their of chemical
inputs (4.3), their adoption of improved bean varieties (4.4), bean farmers' sales behavior
(4.5), and key demographic characteristics of the bean farmers' households (4.6). These

different components of the bean farming system were compared across two broadly

165

defined topographical environments (i.e., flat-lands and hill-sides), and across difi‘erent
farm sizes.

Data presented in Chapter 4 were analyzed by comparing the characteristics and
behavior of farmers in the hill-sides and flat-lands because it was hypothesized that the
agro-ecological conditions in these two settings influence farmers' production decisions
difl‘erently. Additionally, it was considered important to understand differences across
firm size because there may exist policy prescriptions and technologies which are more
amenable to the conditions of farmers within a particular firm size group. As a way of
better understanding the bean production system, data in Chapter 4 were also analyzed
within the context of either the primera (the rainy season) or the postrera (the dry
season). When applicable, comparisons of the farming system characteristics were made
across the two seasons.

In the postrera, beans are the most important crop grown by basic grain producers.
During the postrera, which extends from October through May, beans alone account for
most of the land cultivated in the Mideastem and Northeastern Regions (73% of farmed
land in the sample). In contrast, during the primera, corn is the most important crop for
basic grain producers. Therefore, research and policies directed at relaxing bean
production constraints in the postrera are likely to have a larger production impact, than
those directed at relaxing production constraints in the primera.

Consequently, it is especially important to understand what farmers consider to be
their most important production constraints in the postrera. While researchers consider

BGMV to be the primary fictor limiting yields and a large proportion of firmers identified

166

the presence of Bean Golden Mosaic Virus (BGMV) in their bean fields (45%) during the
1993-1994 agricultural year, farmers did not perceive BGMV as their primary production
problem. Instead, almost one-half of the farmers (45%) identified low rainfall in the
postrera season as their primary production constraint. This suggests that bean
researchers need to prioritize their research objectives to relax this production constraints
(i.e., droughts); and that policy makers need to direct resources in support of initiatives
designed to help firmers minimize the adverse effects of weather uncertainties. For
example, in a complementary study, Bonnard (1995) highlighted the importance of
promoting soil conservation practices which help improve soil quality, and improve the
water carrying capacity of soils in the Northeastern and Mideastem Regions of Honduras.

Bean farmers' more fiequent use of chemical inputs in the postrera further
highlights the relative importance of the postrera season for bean producers. In addition,
these data showed that Mideastem farmers are more likely to use chemical inputs than
farmers in the Northeastern Region. While this study did not analyze what factors
determine the use of chemical input, information provided by key informants suggests that
in the Northeastern Region farmers have less access to chemical inputs.

Catrachita (1987) and Dorado (1990), the two most important improved varieties
released by the NBP since 1987, were planted by 21% and 19% , respectively, of the
sampled bean farmers during the 1993-1994 agricultural year. These represent high
adoption rates, if one considers that these sampled farmers reported planting a total of at
least 50 difl‘erent land races. However, Mideastem farmers planted both improved

varieties more fiequently than did farmers in the Northeastern Region. This implies that,

167

as was the case for chemical inputs, extension and research efforts to diffuse improved
varieties has been limited to certain geopolitical areas (i.e., Mideastem Region).

Moreover, the data demonstrated that these two varieties perform differently
across difi‘erent regions and climatological conditions. While a larger proportion of
Catrachita adopters are hill-side farmers, Dorado is used in similar proportions by both
hill-side and flat-land farmers. Moreover, the yield performance of these improved bean
varieties varies across farming seasons. For instance, only in the postrera did Dorado
adopters obtain higher yields (730 kg/ha) than farmers who planted traditional varieties
(520 kg/ha). In contrast, in the primera Catrachita adopters obtained higher yields (620
kyha) than farmer who planted traditional varieties (430 kg/ha). Nonetheless, on average
the bean yields among adopters of these improved varieties are much lower than the 1.7
W and 1.4 mt/ha yield potential of Dorado and Catrachita, respectively, as reported in
the NBP extension bulletins. This suggests the need to initiate research on constraints to
higher yields of improved varieties in farmer-managed fields under different environmental
conditions. This research will help to better identify varietal attributes required to relax
constraints in various agro-ecological settings and guide the distribution of different
improved varieties among bean farmers in difi‘erent environments.

Analysis of farmers' sales behavior (4.5) showed that a considerable proportion
(19%) of sampled bean farmers are net buyers of beans - most of whom farmed less than
10 hectares. This suggests, that contrary to conventional wisdom, many poor farmers are
not self-suflicient in beans. Thus to achieve its goal to alleviate poverty and ensure food

self-sufiiciency among farmers, the GOH must pay particular attention to addressing the

168

needs of this group of farmers. In addition, bean researchers must develop and make
available production increasing-technologies (i.e., improved varieties and crop
management practices) appropriate for different environments (i.e., flat-lands vs. hill-sides)
and farmers' varying circumstances (i.e., small vs. large).

The level of formal education among household heads throughout the farming
regions is surprisingly low (Section 4.6), averaging 1.97 years with a median of only 1
year. This suggests that if farmers are to benefit fiom extension services, the information
they provide must be designed to be accessible to farmers with minimal literacy. For
instance, it is naive to expect farmers to know how or when to'use chemical inputs, as
complements of improved bean varieties, if recommendations are only made available to
farmers through written extension bulletins. In an effort to produce appropriate
technologies, it is also important to better understand the role of women in the production
system. In contrast to conventional wisdom, an important proportion of women in the
household (20%) take part in some bean related activity (20%) -primarily in harvest and
post harvest handling of grains. This suggests that it is especially important to incorporate
women's view-points in designing post-harvest technologies (i.e., improved threshing
technologies).

7.4 Adoption and Yield Determinants Models

Chapter 5 presented an econometric analysis of factors that affect farmers'
adoption of improved varieties and bean yields in the Mideastem and Northeastern
Regions of Honduras. Two logistic models were estimated to predict the adoption of

Dorado and Catrachita, and two OLS models were estimated to identify the factors that

169

affect bean yields in the primera and postrera. The results of the multivariate regression
models confirm and strengthen the findings presented in Chapter 4.

First, the adoption models showed that farmers' decision to adopt improved
varieties is greatly influenced by agro-ecological conditions. Catrachita is more likely to
be planted by hill-side farmers and Dorado is more likely to be planted by flat-land
farmers. In addition, farmers in the Northeastern region are less likely to have adopted the
improved varieties. These findings suggests that to achieve a higher level of impact,
technical recommendations for the use of improved varieties must take into consideration
the farmers' own environmental conditions and the interaction between varieties and major
environments. In addition, providing greater access to improved varieties in marginally
served administrative regions will be required to increase the adoption of improved
varieties over a wider geographical area.

The yield models further stressed the importance of the environment-improved
variety interaction. While adoption of Catrachita had an impact on bean yields in the
primera, adoption of Dorado was associated with higher yields in the postrera.
Moreover, the yield models showed that holding everything else constant, bean yields are
higher among flat-land farmers than among hill-side farmers.

7.5 Understanding the Bean Marketing System

Chapter 6 analyzed the basic characteristics of the difi‘erent marketing channel
participants. Most farmers' sale transactions (93 %) take place as farm-gate sales to
truckers. While farmers in more remote areas receive up to 15% lower bean prices than

do farmers in the areas closer to the most important market towns, additional analysis is

170

needed to establish if these price differences arise from the existing marketing cost
structure (i.e., high transportation costs) or from traders' rent-seeking behavior (i.e.,
monopsonistic behavior).

The analysis of bean market preferences (Chapter 6) suggests that plant breeders
and policy makers need to pay closer attention to the market. For instance, since most
bean traders prefer small light-red beans with minimal post-harvest damage, dark-red
beans and black beans command lower market price than do light-red beans (up to 20%
lower). Thus, given current yields of traditional and improved varieties, farmers who plant
improved bean varieties do not earn significantly higher revenues than do farmers who
plant traditional bean varieties. This suggests that market attributes of improved varieties
may limit the widespread adoption of improved varieties.

Widely available price data which reflect consumers' tastes and preferences help
improve the eficiency of a marketing system. However, bean prices as currently reported '
by the government do not differentiate beans by market classes or physical quality
characteristics. Given that the role of the Agricultural Marketing Institute has been
redefined to provide market information (i.e., market prices), in the future, decision
makers at IHMA must provide price information to farmers and consumers that takes into
consideration different market qualities, especially bean color and cooking quality.

Mth the resurgence of the Central American Common Market and the cessation of
the wars which disrupted the region during the 1980s, trading links to El Salvador have
strengthen in recent years. Section 6.5 documented the close linkages of the El

Salvadorian market vis-a-vis the Honduran bean market. Therefore, in developing

171

improved varieties bean researchers need to explicitly take into account the quality
characteristics that are important in the El Salvadorian market. Otherwise, bean quality
requirements in El Salvador may limit the acceptability of certain bean varieties among
commercially-oriented Honduran bean farmers. Similarly, as the wider Central American
market expands, researchers must consider the quality requirements of each country in the
region when allocating scarce research resources to develop improved varieties targeted
for these regional consumption/production niches.

Finally, policy makers must understand that since Honduran producers and traders
are competing in a regional market, the competitiveness of Honduran beans is strongly
influenced by government regulations. For instance, this study showed that the 1994
export ban to neighboring countries did not eliminate trade. Instead, it generated added
costs to exporters, thus decreasing the attractiveness of Honduran beans vis-a-vis other
regional competitors. As a result, Honduran bean farmers and traders received lower
prices than would have prevailed under a more transparent set of intercountry trading
practices.

7.6 Limitations of the Study and Recommendations for Further Research

The main objective of this study was to identify the most salient characteristics of
the Honduran bean subsector and opportunities for increasing its productivity,
emphasizing the impact of new technologies; within the context of difi‘erent environmental
settings and recent institutional changes. To achieve this goal three sources of data were

used; namely ofiicial government data, key informant data, and primary survey data.

172

While these sources of data were appropriate for this study, some weaknesses are
associated with these data. First, government data are normally highly aggregated (i.e.
reported at regional levels), which makes it diflicult to identify and understand existing
micro-economic relationships. Second, while key informant data are valuable in gaining a
good understanding of regional differences/patterns in farming and marketing practices, it
is difficult to use these data for cross-sectional analysis of microecononric relationships.

Third, while primary survey data are most appropriate for cross-sectional analysis
of micro-economic relationships afi'ecting the performance of the bean subsector, the
primary data collected for this study had some unavoidable limitations. First, due to
time/financial constraints, the farmer‘s and trader's surveys were carried out during single
visit interviews. Therefore, the results presented in the study were based on analysis of
data obtained on a recall basis for an entire agricultural year. While these data are good
indicators of existing differences across different environments and regions, it is important
to recognized that there exist some measurement errors which may bias the specific size of
the estimates (coefficients) reported in this study. Nonetheless, since these biases are
expected to be consistent (upward/downward), the relationships identified through the
analysis of these data are still consistent. To reduce these measurement errors, future
researchers could utilize multiple visit surveys. However, since this data collection
approach is more demanding time/financially, it is more appropriate for studies which give

high priority to estimating production costs and/or consumption patterns.

173
7.6.1 WW

1. While this study demonstrated that beans are an important crop for small
farmers, both as an important source of food and cash income, further economic analysis
of the role of beans in the farmers’ portfolio is needed to more precisely assess the
economic opportunities available to bean farmers. For instance, whole-farm budgets
would help to better understand the relative profitability of beans (compared to other
agricultural and non-agricultural activities), and thereby generate information required to
assess farmers' likelihood to invest in their bean enterprise vis-a-vis other alternative
economic opportunities.

2. This study documented an important interaction between specific agro-
ecological conditions, and farmers' adoption of improved bean varieties. In addition the
data showed an interaction between agro-ecological conditions and bean yields. This
suggests the need to further evaluate the yield performance of recommended technologies
(i.e., improved varieties) within specific environmental conditions, and give greater
priority to developing improved varieties for specific ecological niches.

3. Given the considerable gap between yields in farmers' fields and those reported
as possible through extension bulletins, it is important to firrther analyze what explains this
bean yield gap. Yield constraints studies can be carried out by multidisciplinary teams to
determine key factors that explain experimental station and farm—level yield gaps. Such
studies will both help to better evaluate the performance of improved varieties across
difi‘erent farmers-managed conditions, and serve to prioritize production constraints that

require further research focus.

174

4. The data presented in this study showed that traditional bean varieties command
a higher market price compared to improved bean varieties. This suggests that the market
acceptability of improved varieties may limit the adoption of improved varieties.
Therefore, it is important to continue to evaluate market preferences and incorporate this
information into the breeding program.

5. Given the influence of the Central American market on the Honduran bean
subsector, further research directed at understanding the long-run competitiveness of
Honduran beans in Central America will help policy makers determine how to best use
public funds to improve the performance of the subsector. Central American bean price
data are needed to firrther evaluate the regional market integration process, and help
determine the competitiveness of Honduran beans vis-a-vis its competitors. In addition, a
more efficient record-keeping system of exports and imports is needed to generate data to
better document the Central American trade flows, which in turn help demonstrate the
relative importance of the regional markets for the Honduran bean subsector.

7.7 Concluding Comments

In spite the limitations of this research, there are several conclusions and
implications supported by the total evidence. These implications can be categorized in
terms of results that primarily impact policy makers, plant scientists, and agricultural
extensionists.

”-1 ImulisatinnaforfiolisLMakers

As the agricultural modernization program is implemented, it is important to

understand what economic opportunities are currently available to small and medium size

175

farmers, who conform the majority of Honduran farmers. Oflicial government data, as
Well as primary data, show that beans and corn represent an important livelihood for a
large proportion of Honduran farmers. Beans, particularly, are an important source of
proteins for farmers and urban consumers. Additionally, beans are an important source of
cash income for farmers, as well as an increasingly important tradeable good in the Central
American region. However, as with the rest of the agricultural sector, in order for beans
to make a positive contribution to Honduras' economic development and maintain a
competitive position in the Central American region the productivity of the bean subsector
must be increased both at the production and marketing levels. The need to increase the
bean subsector’s productivity calls for appropriate government incentives, especially more
transparent market rules and norms, and adequate research policies which take into
account subsector participants‘ (i.e., traders, farmers, food processors) conditions. This
Section presents specific policy implications highlighted by the results of this study.

First, while public research funds have been significantly reduced, policy makers
must recognize that the subsector’s regional competitiveness is highly dependent on the
availability of appropriate technologies which increase farm-level and market-level
productivity without significant increases in production/marketing costs. Therefore, it is
important that the existing govemment-firnded research program works in close
cooperation with the internationally firnded research programs (i.e., Bean/Cowpea CRSP,
and PROFRIJOL) to relax production and marketing constraints with a potential for high
impact, such as the development of more market acceptable varieties and water-

conserving agronomic practices.

176

Second, this study has shown that while beans are an important cash cr0p for
farmers, there are significant price differences across bean qualities and across difi‘erent
regions. Therefore, it is important that decision makers at the Ministry of Natural
Resources and Ministry of Economics implement a fluid and accessible market information
system (i.e., daily radio broadcast of producer and consumer prices) which collects and
publishes bean prices for different market classes and for different regions. This
information will help farmers, consumers, and traders to make better informed decisions --
specially among farmers and consumers with less access to large markets.

Third, it is clear that the Central American market represents an important
economic opportunity for Honduran bean producers and traders. However, policy makers
must understand that the regional competitiveness of Honduran beans are directly afl’ected
by regional trading policies. Restrictive regional export/import policies may create
production disincentives which, in the long run, may afl‘ect the regional competitive
position of Honduran beans and as a consequence lead to more volatile prices within the
national bean market. Additionally, restrictive trading rules may create disincentives for
further investments in value added activities such as food processing which could firrther
exploit regional market opportunities.

7-7-2 Imnlmatmmforflmsts

Both the national and internationally sponsored research programs in Honduras are
undergoing significant structural and institutional changes. As these changes take place,

researchers and administrators are being asked to conduct research with the largest

177

potential for impact. The results from this study highlight some implications for bean
researchers.

First, as research activities continue to evolve it is important to highlight the need
for supporting integrated research efforts between social scientists and plant scientists.
This cooperation helps both plant scientistssand socio-economists to better comprehend
the evolving competitive position of the bean subsector within a larger food system. In
addition, it serves as an example for the study of other agricultural commodities within the
economy.

Second, as shown by omcial government data bean production takes place
primarily in the Northeastern, Mideastem, and Northern Regions. To date, the research
program has given highest priority to relaxing the BGMV production constraint. While
this research focus has greatly benefitted producers in the Mideastem Region, less
emphasis has been given to the production constraints of Northeastern farmers, who
produce the largest proportion of Honduran beans. In contrast, for Northeastern farmers,
weather related production problems such as low rainfall patterns are the most important
constraints -- especially in the postrera. This finding supports the bean research program's
recent decision to expand its research directed at relaxing water stress related production
constraints (i.e., drought resistant varieties, water conservation agronomic practices).

Third, bean production patterns differ markedly fiom one season to the other.
During the postrera beans are most commonly grown as a sole crop whereas in the
primera beans are intercropped with com, the primary staple crop. Therefore, during the

primera, plant breeders should join with agronomists and socio-economists to study

178

alternatives to increasing the productivity of bean/corn production systems. Increasing
corn productivity in the primera would enable farmers to supply their corn needs using less
land, thereby releasing land and other resources that could be reallocated to primera bean
production.

Fourth, the performance of available technologies varied markedly across
topographical regions. While flat-land bean farmers obtain higher yields and sell a larger
proportion of their bean crop than do hill-side farmers, beans are also an important crop
for hill-side farmers. Therefore, researchers must develop technologies which increase
productivity in hill-side environments. Clearly, more sustainable production alternatives
for the often marginalized hill-side farmers are needed to both reduce soil degradation and
insure more equitable access to new technologies.

Fifih, farmers' yields are much lower than the "yield potential" reported in
extension publications (1,700 kg/ha), and far below the yields researchers have obtained at
the experimental stations (over 2,400 kg/ha) using improved bean varieties. This suggests
the need to initiate research to identify the most important technical and soCio-economic
constraints that prevent farmers fiom achieving higher productivity, and to determine bean
profitability using inputs at the levels required to achieve the technically ”potential yields”.

Sixth, given the government's commitment to market liberalization to promote
economic development, plant breeders need to pay greater attention to the linkages
between farmers' production decisions and the market. Both farmers and traders
expressed concerns about the market acceptability of improved varieties such as

Catrachita and Dorado. Therefore, in order to increase the domestic and regional

179

competitiveness of the bean subsector, in screening new varieties the bean breeding
program must give greater attention to the potential effect of market preferences on the
acceptability and widespread adoption of new improved bean varieties.

Finally, in order to take full advantage of evolving market conditions, the bean
research program must strengthen its linkages with private sector participants (i.e., food
processors and Central American traders). For example, establishing a ”private sector
bean research advisory committee" would help insure that bean research priorities respond
to market conditions.

7-7-3 ImnlmtinanQLAsnmlmmExtsnmnrm

As the agricultural extension program of the Ministry of Agriculture is restructured
as a result of agricultural modernization program, less public resources and personnel will
be available to provide extension services to farmers distributed over the widely dispersed
bean-producing areas. Several findings fi'om this study have important implications for the
agricultural extension program.

First, while farmers in the Northeastern Region have achieved higher bean yields
than Mideastem farmers, Northeastern farmers have had less access to modern
technologies (i.e., improved varieties, chemical inputs) than their Mideastem counterparts.
Higher bean yields in the Northeastern Region are partly due to an expansion of the
agricultural fi'ontier, and therefore, are not sustainable in the long run. Hence, with
greater access to modern technologies, Northeastern farmers’ would likely be able to
increase their bean yields to higher levels than in the past and at the same time make them

more sustainable. Therefore, decision makers should give priority to expanding

180

agricultural extension services and providing greater access to modern/sustainable
technologies to farmers in the Northeastern Region.

Second, distribution of improved varieties among bean farmers has been an
important concern among decision makers. In Honduras, it was found that a large
proportion of farmers get access to improved varieties through informal distribution
channels (i.e., from relatives and fiiends). Therefore, the extension program should
continue to support and analyze ways of improving the artisan seed
distribution/production system.

Finally, on average Honduran farmers have low levels of formal education.
Therefore, farmers’ formal education level should be taken into account by the extension
service when developing agricultural education materials. Greater attention should be
given to creating graphic extension bulletins, and to facilitating practical training sessions
under farmers conditions in order to more effectively communicate the results of
agricultural researcher to the typical limited resource farmer with minimal formal '

education.

APPENDICES

APPENDIX A

Table A-1 Area Harvested (ha) for Staple Food Grains, 1981/82-1991/92, Honduras.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Pronostico dc Cosechas de Granas Basicas, D.G.E.C.

181

 

1982 345,904 78,031 21,645 59,555 505,135
1983 277,664 52,1 17 15,355 25,822 370,958
1984 315,107 51,757 22,211 52,099 441,174
1985 376,338 60,056 18,270 60,799 515,463
1986 294,690 68,996 14,952 14,048 392,686
1987 352,794 76,334 13,996 44,273 487,397
1988 350,285 67,593 21, 186 27,660 466,724
1989 340,699 80,526 13 804 61 ,028 496,057
1990 358,031 82,886 17,244 66,623 524,784
1991 374,864 94,686 17,929 80,443 567,922
438 143 112 000 21 357 , 75 071 646 571 p

182

Table A-2 Changes in Harvested Area (ha) for Staple Food Crops, 1980/81-1990/91,
Honduras.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

.These figures indicate changes in area harvested from one harvesting year to the next. Negative values
indicate a decreases in area,

positive values indicate an increases in area and negative numbers indicate a decrease in area. Year 1-2
indicates the time that

elapsed between harvesting seasons 1980l81 and 1981l82, etc.

Source: Pronostico de Cosechas dc Granas Basicas, D.G.E.C.

183

Table A-3 Harvested Area Distribution for Staple Food Grains by Season, 1980/81-
1990/91, Honduras.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEI“

'1981 refers to the 1980/81 agricultural year.

Source: Pronostico dc Cosechas de Granas Basicas, D.G.E.C.

184

Table A-4 Bean Area Distribution by Region and Farm Size, 1991/92, Honduras.

(%) (%) (%) (%)l w %) (%) (%)

< 3. 5 42.0 53. 9 35.0 32.0 40.2 45.7 38.7
3.5-7.0 4.7 16.8 11.9 1.4 20.5 15.5 8.5 15.7
7.0-14.0 16.6 14.2 20.5 28.6 14.9 9.5 15.6 13.6
> 14.0 36.7 15.1 32.6 61.4 32.5 34.8 30.2 31.7
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0

. 100.0
Share %

Source: SECPLAN. 1994. Encuesta Agricola Nacional 1991-92 (unpublished).

           

 

         

 

        

 

   

 

                      

          

     

 

                     

    

                       

      

       

 

       

                

 

 

 

 

 

 

 

 

      

185

Table A-5 Total Staple Food Grains Production, 1980/81-1990/91, Honduras.

Year (mt) (mt) (mt) (mt) _. (mt)

1980/81

388,217

512,313

 

1981/82

481,656

618,731

 

1982/83

366,493

451,453

 

1983/84

459,191

 

1984/85

507,857

 

1985/86

423,964

520,597

 

1986/ 87

484,079

577,596

 

1987/88

523,270

 

1988/89

441,407

 

510,718

676,476

 

 

559 142

 

 

 

 

759 227

mm

Source: Pronostico dc Cosechas de Granas Basicas, D.G.E.C.

 

186

Table A-6 Percent Changes in Staple Food Grains Production, 1980/81-1990l91,
Honduras.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

‘Harvest Year 1-2 indicates the percentage change in production from 1980/81 to 1981/82, 2-3
indicates the percentagechange in production from 1982-83 to 19823-84, etc.

Source: Pronostico de Cosechas dc Granas Basicas, D.G.E.C.

187

Table A-7 Seasonal Distribution (%) of Staple Food Grain Production, 1980/81-
1990/91, Honduras.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-mmmmmmm

Source: SECPLAN. Pronostico de postrera (various years).

188

Table A-8 Total and Per Capita Bean Consumption,
1980/81-1989/90, Honduras.

Agricultural Total Consumption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Consumption
1980/81 33 .4 10.1
1981/82 34.6 10.1
1982/83 35.7 10.2
1983/84 36.9 10.2
IF 1984/85 38.1 10.2
1985/86 39.4 10.3
I 1986/87 33.4 8.5
1987/88 30.0 7.0
1988/89 44.4 10.0
1989/90 47.8 10.4
1990/91 49.0 10.3
1991/92 46.6 9.5
1992/93 44.1
Mean 39.5 9.7
I C.V.' I 15.8% 10.3%
'Coeaicientorvnriation

Source: Ministry of Natural Resources. 1993. Compendio Estadisfico.

189

Table A-9 Agronomic Characteristics of Improved Bean Varieties, Honduras.

Improved Seed to: Growth gms/ Yield Release

Variety Habit' 100 mt/ha Year
Flower Maturity

 

'Growth Habit: Type II= bush; Type III=climbing. n.a. =Information not available
to authors
Source: Ministry of Natural Resources

190

Table A-10 Reaction of Improved Bean Varieties to Main Bean Diseases, Honduras.

 

 

 

 

 

 

 

 

 

 

Improved Varieties Diseases

BCMV BGMV CBB WB ANT RUST ALS
Don Silvo R R I S I I S
Dorado R T I I I I I
Oriente R S S I S I S
Catrachita R I S S I I S
Danli-46 S S S S I S S
Desarrural-IR R S S S S S S
Chino-1R R S S S S S S
Zamorano S S S S I I n.a.
Acacias-4 R S S S S I I
Est - 2 -4 S S n a n.a I I I

 

 

 

 

 

 

 

Disease Codes: BCMV =Bean Common Mosaic Virus; BGMV=Bean Golden Mosaic
Virus; CBB=Common Blight Bacteria; WB=Web Blight; ANT.=Anthracnose;
RUST=Bean Rust; ALS=Angular Leaf Spot.

Source: Ministry of Natural Resources

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