Fintrac Harvest Summer 2009

Despite higher production costs, Fintrac farmers still turning a profit

LA LIMA, Honduras — As the global economy continues to slump and production costs continue to rise, small farmers are finding it harder and harder to turn a profit. A recent study by Fintrac’s MCC-EDA program in Honduras found that production costs for a range of crops increased by an average of 47 percent between March 2007 and March 2009, while market prices increased by an average of only 12 percent. This has led to a significant drop in profit margins for many farmers. Production costs for cucumbers, for example, increased by 30 percent, directly affecting the bottom line for farmers like Santos Joel Padilla, a Fintrac client in San José del Potrero, Francisco Morazán. To help maintain profitability and sustainable farm operations, the program supported him by coordinating with local input suppliers to purchase agricultural supplies in bulk and pass down the savings. Through program interventions, client farmers are now able to buy drip irrigation equipment and fertilizers at lower rates. The program also helps neighboring farmers pool resources such as packing and grading supplies, and coordinate transport logistics.

In the field, Fintrac technicians provide regular technical assistance to increase production and reduce costs. For example, Padilla has learned to incorporate dozens of new techniques such as drip irrigation, raised beds, trellising and proper postharvest handling, which have resulted in increased yields and quality, giving him access to formal markets. Today, he is supplying local supermarket chains. After one year with the program, Padilla’s income per hectare increased from $3,636 to $10,787, a 197 percent increase.

Through the EDA program, Fintrac is working with more than 4,000 clients like Padilla to introduce basic production practices that improve yields and quality, generate consistent product, and lower unit costs of production