BUSINESS & ECONOMICS

Banana sales improving:
EC protection hurts producers and consumers alike; US fighting for market reform

Growing in greater Honduras
By MAS DINERO

Bananas are important to the Honduran economy. In 1996, banana sales brought US$254.6 million in export revenue, nearly 20 percent of Honduran export earnings, and just a little less than coffee.

Not bad, you say. But neither Honduras nor the United States are satisfied. Export volumes -- the number of boxes sold -- and the price received per box was higher during the 1990-1992 period than it has been since 1993. The primary cause was that in mid-1993, the European Community began restricting banana imports from Latin America in order to favor former European colonies, like Martinique and various other Caribbean and African nations.

During the 1990-1992 period, Honduras exported an average of 40.5 million 40 pound boxes and received an average of US$7.65 per box. Since 1993, Honduras has exported an average of only 35.4 million boxes, a 13 percent decline, and the price received declined to an average of only US$6.54 per box, a 15 percent decline.

Some of the export shortfall has been taken up by the production of banana fritters or crisps, that are similar to potato chips, except they are made from bananas. There is a growing market for snack foods, and in the long run this should be a good business.

Unfortunately, some of the banana growing areas have been taken out of production in part due to low world prices, and perhaps even more to the banana strike in 1994. Other countries, particularly Ecuador and Costa Rica, have seen increases in banana exports during the last few years, and labor stability has been an important factor.

Latin American banana producers have joined forces with the United States to seek a just solution from the World Trade Organization, and U.S. Secretary of Commerce Charlene Barshefsky, has gone on record as saying, "This is the third time that they've determined that the banana protectionism violates the Law of International Commerce. We are not interested in any alternative to real reform."

It appears that world pressure may work to produce reform. The current European position is hardly defendable. All Latin American bananas producers will benefit by a reopening of the Western European market. Of course the average European will benefit too, as he will be able to buy bananas cheaper.

With the growth in trade with Eastern Europe, sales should grow nicely. Bananas are now available in Eastern Europe and Russia. With a little luck, all should win here, the producers, the workers and the consumers.

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Gas prices are down an average of 29 centavos after the latest Petroleum Administration Commission's price adjustment last Saturday. Pump prices in Tegucigalpa are now Lps. 24.97 per gallon for super, Lps. 24.35 for regular, Lps. 16.38 for diesel and Lps. 13.83 for kerosene.

Argentine banker Juan de Dios Padilla says Honduras has gained new credibilityin the international arena since the country has earned good standing with the International Monetary Fund. The economy expert said in a La Tribuna report last Saturday that his negotiations with Honduran businessmen have revealed "a great deal of professional talent" and a welcoming legal framework.

Unemployment in Honduras' major cities grew by more than six percent last year, says the Labor Ministry and the International Labor Organization. But rural unemployment is at an all time low of 2.3 percent. Experts blame the first on the disappearance of small-and medium-sized job sources in cities and the second on increased investment in agricultural export projects.

A Trujillo fishing cooperative is trying to widen the Honduran appetite for fish by introducing a variety of new products to the national market. The Fishing Modernization Project, sponsored by the General Department of Fish and Agriculture and the Japanese International Cooperation Association recently exhibited many of its products at a North Coast fair. Not only does the fishing industry provide jobs for Caribbean Hondurans, they say, it also provides the national diet with important nutrients. The new products include patties, sticks and soups made of fish.

The Honduran Telecommunications Company says Honduras will switch from six-digit phone numbers to seven-digit numbers on November 1. The change, say HONDUTEL spokespeople, is part of an aggressive new project to modernize phone services nationwide. There are currently 3.5 phones per 1,000 Hondurans for a total of 192,000 phone lines, said a La Tribuna report. Costa Rica, by comparison, has 17 phones per 1,000 inhabitants.

A recent proposal by the U.S. Federal Trade Commission to allow "Made in USA" labels to be placed on products that have been manufactured in part by foreign labor has caused an uproar in that country. The U.S. labor union AFL-CIO says "the words 'made in USA' are simple, clear and easy to understand as long as they mean what they say." If the FTC proposal is passed, it could mean many of the products assembled in Honduran maquilas for the U.S. market will no longer be marked "Hecho en Honduras".

Private group makes offer to ENEE

A private consortium consisting of three local banks and a geographical information service submitted an offer this week to the National Electric Company (ENEE) promising to save the company Lps. 500 million a year and improve both its service and its public image. Calling the offer "an important step in the privatization process" consortium members Banco Atlantida, Banco Mercantil, Banco de Occidente and the Geographic Commercial Information Service (SIGMER) say that if they take over ENEE billing and meter reading services it would be "a short-term solution to the problems of the recuperation of capital, finances and public service." So far the ENEE -- a government-owned company that many say should be privatized -- has given no official response.

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Tourism gets Lps. 8 million bonus

The Honduran Institute of Tourism has been granted a one-time-only budget hike of Lps. 8 million by the Reina administration, said a La Tribuna report this week. The funding, says IHT director Ricardo Martinez, will be distributed over the next 11 months and will be used to create better incentives for investors in the tourism sector, as well as to continue the Institute's marketing, promotion and educational activities. It is also hoped that the funding will help the IHT to be more self sufficient. Although it receives a relatively small portion of the national budget, tourism is expected to generate $50 million in foreign incomes in 1988 alone.

Construction halted on SPS Holiday Inn

Police stopped construction on a Holiday Inn hotel in San Pedro Sula this week after neighbors complained that the builders had weakened surrounding lands, causing property walls, pavement and other structures to crack or fall. Upon closer investigation of the project -- which will provide the city with a international quality 5-star hotel -- it was revealed that investors had gone ahead with construction without obtain all of the necessary permits. Police say the project will be free to continue as soon as all of the necessary paperwork is done and called the shutdown "temporary." The new Holiday Inn is located between 7th and 8th Avenidas.

BUSINESS BRIEFS

Gas costs a few centavos more

For the seventh time this year, the Petroleum Administration Commission (CAP) has adjusted national gasoline prices to fit with international trends. But for the first time this year, prices have experienced an overall rise, although a slight one. Hondurans, who have grown used to a steady drop over the past several months, are disappointed. The CAP said in a press release last weekend that the price increase "obeys international petroleum prices, modified by the exchange rate." Effective last Saturday (May 3), regular gasoline is up 7 centavos to Lps. 24.64 per gallon; super is up 3 centavos to Lps. 25.25; diesel is up 7 centavos to Lps. 16.44; and kerosene is up 5 centavos to Lps. 18.98.

Italian investor looking at Punta Sal

Land titles are the only obstacle facing an Italian investor interested in building a tourist center in Punta Sal National Park, said a La Tribuna report Wednesday. Investor Carlos Venturello, who would carry out the $5 million project, met with Economy Minister Fernando García Tuesday to finalize details on the ownership of the land where the center would be located. "The Minister is very interested [in the investment]," says Venturello. "There are just a few problems because the land we've been offered was sold to the National Port Authority and we're trying to avoid legal problems." Once the project is launched, it should be complete within three years, says La Tribuna. Punta Sal National Park is located near the North Coast beach town of Tela. Other investments, like the multi-million dollar Tela Bay resort project, promise to make Tela one of the hottest spots for tourists in the next century.

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Europe loses banana quota war

After nearly four years of fighting, Latin American banana producers have finally made headway against the quotas imposed on the fruit by the European Union in 1993. Last month, the World Trade Organization ruled in favor of the Latin American producers, who have argued all along that the quotas were unfair. Although the WTO is the third international organization to side with Latin America, it is the first with the power to enforce its decision. The EU now has 15 months to implement a new system that will not put Latin American bananas at a disadvantage. "How the regimen is modified is up to the European Union," said Sergio Nuñez of the Ministry of Industry, Trade and Tourism in an El Heraldo report last Saturday (May 3). "We believe the ideal would be a free market for bananas, but if they want to return to a quota system they will have to modify it so that no producer country is discriminated against."

Phone workers seek Lps.500 million raise

The union of the Honduran Telecommunications Company (HONDUTEL) is asking for a global Lps. 500 million (US$38 million) wage hike, the daily La Tribuna reported Thursday (May 8). This amount would be distributed among 3,800 employees over a three-year period. Vice Minister of Finances Mario Andino Avendaño considers the union's proposal excessive, and said the government's counter offer will be based on the inflation rate, which is currently 26 percent.

BUSINESS BRIEFS

Congress passes new minimum wage law

In response to growing frustrations among Honduran workers, who are finding it increasingly difficult to maintain their buying power in the face of spiraling inflation, the National Congress approved a new Minimum Wage Law last Thursday (April 24). The new legislation calls for two wage adjustments each year to keep worker incomes rising at a rate similar to that of inflation. The previous law mandated only one wage revision every three years. The new law also promises a Bono Escolar for families whose monthly income is less than that of two minimum wages. The Bono would provide families on the lower end of the income scale with a Lps. 500 bonus to help defray the costs of school tuition, uniforms and educational materials.

Fourth bank goes online

La Vivienda is the fourth Honduran bank to make its services available through the Internet. Aimed primarily at Hondurans living in the United States who wish to keep their lempira accounts active here, the site (http://www.lavivienda.hn) allows customers to check their balances, keep an eye on interest rates, make transfers, make deposits and more. The Web page also features general information about the bank and its property and projects and is fully bilingual. La Vivienda facilitates international banking with representatives in Florida, California, Texas, New Jersey, Louisiana and Washington, D.C.

Filipino investors look at Honduras

A group of investors from the Philippines will visit Honduras this month to negotiate the establishment of a factory to manufacture prefabricated cement walls for export. The operation's link, Dagoberto Ramos of the Honduran Consulate in Los Angeles, says foreign investors see Honduras as a good place to invest due to its financial facilities, abundance of material and low cost labor.

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