BUSINESS & ECONOMICS

Monday, April 20, 1998 Online Edition 103

Honduras has yet to receive official statement from the U.S. government concerning trade sanctions to be applied in retaliation for violations of international author's rights. In a statement to La Tribuna, Vice-minister of Commerce Hernan Erazo said that the lack of official communication could mean that there is still time for negotiations.

The recently signed Free Trade Treaty between Honduras and the Dominican Republic could even out the trade imbalance that currently exists in favor of the Dominican Republic. Ministry of Commerce officials announced to La Tribuna reporters that the producers of cigars and rum in the Dominican Republic have acted with insistence in the Honduran market, while Honduran producers have not made efforts to investigate the Dominican market. Officials hope that the free trade agreement will encourage surplus producers in Honduras to promote their products in the Dominican Republic.

Large amounts of smoke and pollution in the air caused the closing of Tegucigalpa's airport two days last week, according to La Tribuna report.

In an executive decree issued last week, President Flores committed to reducing government expenses by 10 percent in all areas except health and education. A La Tribuna report stated that in addition, 50 percent of all unoccupied positions within the bureaucracy will be canceled, and all government institutions will be evaluated to eliminate duplicate personnel.

Monday, April 20, 1998 Online Edition 102

Consumer prices have risen by 5 percent in the first three months of 1998. According to a La Prensa report, food prices experienced the greatest increase.

A recent study by the International Program for the Eradication of Child Labor has revealed that more than 240,000 children between 10 and 17 years of age are currently employed in Honduras. The study, reported in El Heraldo, states that another 150,000 perform domestic labors as their primary activity. In the 10 to 14 age bracket, approximately 23 percent of the 728,000 children in Honduras are working. Lumber, textile, and shoe industries are the most notorious employers of underage workers.

Industry and Commerce Minister Reginaldo Panting traveled to the Dominican Republic last week to finalize negotiations and to sign the free trade agreement between that country and Honduras. According to a La Tribuna report, Panting could not release the list of products to be included in the free trade agreement, but did specify that flour, roasted coffee, alcoholic beverages, cooking oil, sugar, and petroleum products would be excluded.

The assistant manager of the National Electric Company, Percy Buck, announced to La Tribuna that the demand for electricity was down by 185 megawatts, more than 30 percent, during the recent Semana Santa holiday.

Monday, April 13, 1998 Online Edition 101

Buying Honduran cigars requires knowledge of special terms

Honduran cigars have increased so much in popularity over the last five years that many foreigners here are interested in taking a few home. But as sellers talk about different cigars, mentioning binders, wrappers, ring size, and seeds, the eyes of the uninitiated glaze over. Charlie Richardson of Bucaneros International, which is rolled in San Pedro Sula, explained how to talk about cigars.

"There are five parts of a cigar," he said. "The outside part is called a wrapper. This is grown slowly in the shade so that there are no big veins. The long-leaf wrappers are grown for appearance and appeal.

"There are two main types of wrappers used. Connecticut seed wrappers are grown in Nicaragua and Honduras, but big companies buy up the entire production. This is one reason why Ecuadoran wrappers and Sumatrans are popular here." He uses a Havana seed wrapper grown in Esteli, Nicaragua.

"The next layer is the binder. This uses an elastic leaf." Richardson says he imports Ecuadorian binder together with a Danli producer.

The inside of the cigar is called the filler. There is short and long filler. Long is more expensive, because it comes from one continuous leaf. Short fill comes from leftover cut off from the long filler when they make the better cigars. Long fill is what he uses for his first class "Bucaneros" cigars, which sell for around US$5 - $9, and then short fill is used for his less expensive Dragons line, which sells for under $3 a piece in the United States. Long fill cigars tend to burn more evenly.

While Fulgencio Batista was president of Cuba in the 1950s, some producers grew Cuban cigar tobacco in Honduras due to an ongoing problem with blue mold in Cuba. One year blue mold wiped out most of Cuba's cigar tobacco in the field, and they had to import tobacco seeds from Honduras. Most Cuban tobacco is descended from Honduran seed. This Cuban tobacco grown in Honduras and Nicaragua is called Havana or Cuban seed.

This is a different strain of tobacco than that used in the one lempira cigars sold at medicinal plant stands around Honduras, which is made from "tobacco india" that goes back to pre-Columbian times. It is used in healing ceremonies by the Mayas and the Garífunas, and for fortune telling among the Bay Islanders.

Richardson's registered blend uses Cuban seed filler from Nicaragua and tobacco form Honduras' Copan region. Copan's tobacco is known to be a mild tobacco. To produce a mild to medium taste, he blends the stronger Esteli tobacco with Copan's tobacco.

The other aspect that affects taste is aging. It takes at least two years of aging, a process of wetting the tobacco and letting it heat up and cure naturally, to produce good cigar tobacco. Green tobacco burns your tongue.

Richardson's cigar use two-year-old tobacco, but some cigars on the Honduran market have been aged for seven years. Richardson says that after three years, aging does not change the taste much, but by blending different years, you can avoid the effects of having to use tobacco from a bad year. In addition to aging time before rolling, cigars also age a while in a humidor room to allow different tobaccos of the cigar to "marry." Richardson's cigars are humidor aged a minimum of 30 days before the rings are put on and boxed for export.

The other two parts of the cigar are the head and the foot, which are usually clipped off to smoke the cigar. It is the task of the blender to get a cigar that not only tastes good, but also where the three main parts burn all at the speed.

Another difference between cigars is whether they are organically grown or not. If cigars are kept under 74 degrees Fahrenheit, the tobacco fly lies dormant in the leaf. If the cigar heats up to, say, 84 degrees, then the larvae of the fly hatch and produce worms that ruin the cigar. In the Dominican Republic, producers spray to kill the tobacco worm, but then you are also smoking the chemical that killed the fly.

Richardson chooses to use organic tobacco for his cigars, which makes them more expensive due to cooling costs and there are some losses if for some reason stored boxes get too warm. He packs his cigars in Royal Cedar boxes made in Talanga, Francisco Morazan. Cedar holds humidity at 72 percent for a better taste.

Cigars are classified by length and ring size. Rings sizes are based on 1/64ths of an inch. Richardson produces the following sizes for his Bucanero line: Presidente (8 1/2" long, 52 ring size), Churchill (7" long, 52 ring size), Corona (6" long, 46 ring size), Lansdale (7" long and 42 ring size). Torpedos are wider at the front than at the back. Soon he will carry a torpedo that is 7 inches long with a 36/54 ring size.

Asians tend to prefer thinner cigars. He is developing a new "Fuego de Dragon" line to be sold on the Asian market. Almost all Honduran cigars are hand rolled and a grade 5 cigar wrapper can roll 300-350 cigars a day, working in pairs. One does the cigar and the other the wrapper.

If you would like to try the Bucanero blend, it is available at shops in the Hotel Maya, Hotel Sula, and at the Gringo Bar in Trujillo. To contact Charlies Richardson, write A.P. 43, Trujillo, Colon or Fax 434-4200. His cigars are distributed countrywide in Canada and to golf courses across the United States, selling 400-600 boxes a month.

Monday, April 6, 1998 Online Edition 100

The lempira rose against the U.S. dollar in March. According to a La Prensa report, this is the first time the lempira has recuperated since February of 1997.

The National Congress has given tax payers who have failed to file their returns an extension, according to a La Tribuna report. The amnesty offered last year ended March 31, but the government has offered a 30-day extension before businesses and individuals will fall under the new tax code that imposes stiff fines and prison sentences for tax evasion.

Several cigar factories in the southeastern part of Honduras have been suspending operations and firing employees. According to a recent El Heraldo report, the manager of Rancho Jamastran, a Danli factory, attributed their recent suspension of 700 employees to lack of materials. Other factory owners have mentioned that the cigar market is not as strong as it was a year ago.

The government is considering an increase in alcohol and cigarette taxes. According to an El Heraldo report, the tax reforms will also include an increase of personal income tax deductions from Lps. 10,000 to Lps. 40,000, as part of the economic policies supported by the International Monetary Fund.