Purchase for Progress Honduras – Case Study Smallholder Farmer Case Study: Carlos Avila, Ajuterique, Comayagua

“Thank God for WFP, they are a blessing to us, 100 percent.”

Carlos Avila, P4P farmer, Ajuterique, Comayagua

Case Summary Information Name

Carlos Avila, 38

Location

Ajuterique, Comayagua

Number of Members of Household Three: Carlos; his wife, Marlen Mesalena, 19; and son, Carlos Jr., 3.

FO

Unión de Asociaciones de Riego Centro-Occidente (UNIARCO),

Years with FO

Two years, since 2008.

Position within FO Not a member of the board of directors, but is working as a technical assistant, demonstrating techniques to other farmers.

Years with P4P First year selling maize to P4P.

Crops Cultivated

Maize, beans

Size of Land

Owns 7 manzanas. Due to lack of economic resources, he is currently only cultivating one manzana of maize (to be sold to WFP).

Additional Livelihood Activities

Plans to rent out land not currently being cultivated.

Farmer Background Carlos Avila is a 38-year old farmer in the village of Ajuterique, Comayagua, in central Honduras. He and his wife, 19-year-old Marlen Mesalena, have a three-year-old son, Carlos. In addition to tending to her other household chores, Marlen accompanies Carlos to the

fields each day, and Carlos considers her his “right hand.” A relatively inexperienced farmer, Carlos began just three years ago, taking over the family house and farm after his mother’s death. His first crops were papaya and oriental vegetables. Now, in only his first year with WFP, he already says he would like to continue. Before becoming involved in P4P, Carlos grew papaya for the local wholesale buying agent in Central America, Hortifruti.

According to Carlos, this experience was a “total failure,” due to high costs incurred and limited returns. He admits that although the quality of the papaya crop he grew was very good, he

produced a limited quantity and wasn’t able to recoup his expenses. Because he did not produce the minimum amount required, he ended up having to sell his crop to local coyotes instead of Hortifruti for a fraction of his anticipated returns.

Carlos and his maize crop, ready to begin the drying process, on his demonstration plot.

“Planting and tending to my papaya crop for nine months, and then having to basically give it away was very hard. It was a terrible sacrifice for me and my family,” said Carlos. This time, Carlos is hoping for better. In his first year working with P4P, Carlos, who is currently tending to the maize growing on his parcel of one manzana,1 says, “I think I should be able to harvest a maximum yield of 60 quintals2 of maize, optimistically. (The current national average for Honduran smallholder farmers is 40 quintals per manzana). I will deliver it between December and January, shelled and processed for WFP,” he says. Carlos owns a total of seven manzanas, but because he only received inputs from P4P for one manzana of maize, he is currently only cultivating that quantity, due to lack of economic resources. He has plans to plant three manzanas of beans during the late planting cycle and sell one to P4P, while renting the remainder of his land. Because the current wholesale market price of maize grains is very low, Carlos is not planning to save any of his surplus yield for personal consumption. “If it seems like my family will need extra grains, I will save some, but if not, I will sell it all to WFP.” (WFP has agreed to purchase a maximum of 60 quintals per farmer). “It all depends on economic factors, because right now, the price of maize has gone down, and I will only need five or six quintals for personal use, and this I can buy cheaply on the local market,” says Carlos. Farmers’ Organization Union de Asociaciones de Riego Centro-Occidente (UNIARCO) Carlos lives in a region subdivided into irrigation districts, or geographic areas which provide irrigation services through hydro-agricultural infrastructure projects completed during the term of the previous Honduran president. Carlos has been a member of the local farmer’s organization (FO), UNIARCO, for two years. Before joining UNIARCO, Carlos didn’t belong to any other organization, and he says he joined because that was the only FO in the area, and he was told that joining an FO would help him as a farmer. UNIARCO was formed two years ago, but is still in the process of becoming a legal organization. Members of the six irrigation districts in the region are eligible to join UNIARCO. Of the 500 farmers belonging to UNIARCO, 123 are currently participating in the P4P programme. According to Carlos and the WFP Field Monitor, Gustavo Pagoada, the FO is still in the development process. They are still working on strengthening the capacity of the organization and obtaining legal status. “There are still a lot of issues that we need to work on to make UNIARCO a smoothly running organization, but we are in the process of resolving the issues, and I believe that it will become a strong organization,” said Gustavo. UNIARCO does not have an office, nor have plans been mentioned to solicit funding in order to construct one, according to Carlos. This means that they do not currently have anywhere to collect, process or store the grains to be delivered to WFP. Members of the FO do not pay any initial or monthly fee, but are required to contribute two percent of their total sales. Carlos said that this will go toward strengthening the organization and creating a revolving fund to be shared among the farmers.

1 1 manzana is equal to approximately 1.74 acres.

2 1 quintal is equal to 100 lbs.

Credit through UNIARCO Because it is still a relatively young organization and is in the process of becoming legally recognized, UNIARCO does not currently offer credit to farmers, nor have any plans been mentioned to obtain credit in the future. Post Harvest Processing and Support From FO UNIARCO does not own any post harvest equipment or equipment to transport grains. Carlos emphatically stated that he has not heard of any plans for future purchases of this equipment. Because UNIARCO is not well-funded, the burden of post-harvest processing costs falls entirely on the farmers. Although Carlos would like to be able to process his grains with the support of the FO, he, as well as the rest of the farmers are responsible for their own processing. He would prefer going through the FO than working with a private party. Below, Carlos explains the post-harvest process.

Marketing through UNIARCO Aside from WFP, there is no other option available to sell grains. According to Carlos, “It doesn’t exist. Gustavo (P4P Field Monitor) is helping us find alternatives, but here that option is just not available. If you have money, doors open to you, if you don’t have money, the doors shut,” said Carlos, referring to the fact that the agro industry prefers to buy from established vendors who trade in large quantities of processed grains. Challenges Carlos says that he has not had any problems working with WFP so far, although he foresees that there might be problems with the post-harvest processing, especially the costs involved and the time waiting for payment from WFP. He explained that there are some benefits to selling directly to traders. “The coyote comes to your land and pays right away. For an institution, that is a risk that they face. It is a challenge for the farmers to increase production, there is a lot of initial

We are working on the process of organizing the farmers together. The whole crop cycle is long, and we need support throughout it all. From the time I planted my maize, around July 15, to the time it is mature, takes about two and a half months. From there, we let it dry on the stalks for at least another month and a half. At that point, there is another 20-30 days for the processing. From planting to shelling, the total time is around six months. I have to hire five or six workers to help me cut the maize, shell it and load it onto a truck. From there, I will pay to rent the truck to carry the maize to the regional collection center. At the collection center, we can rent the maize dryers for our use. They charge about 20 lempiras per sack. I have also heard of an organization from Comayagua, and they said they will charge us only 15 lempiras per quintal. We would like to figure out a way to connect with this organization to sign a service contract as a group.

The cost of renting a car to the center for shelling maize is around 600 L, depending on the quantity, or the size of the camion. To travel from here to San Pedro Sula or Tegucigalpa, the cost could be between 4,000 to 5,000 lempiras, this is what you have to pay for transport. This is a very long process and very expensive. We hope that working with P4P will make all of this worth it to us and help us to improve our incomes.

investment, as well as throughout the process, especially post-harvest. With coyotes, we don’t have to wait, they come and in two, three months, we see the money. You don’t have to wait for the whole process and pay like with WFP. They come to your plot of land, and pay you, just like that. More than anything, the best part is the easy money. The coyote comes, he pays you, and that’s that. Done,” said Carlos. Benefits of P4P Membership/ P4P Experience Carlos says that he has not had any problems working with WFP so far. He says he became involved because “sooner or later, my children will go to school and they will enjoy the school meals WFP provides.”

Because he is working with them as a technical assistant, WFP has assisted him by providing him with the agricultural inputs at no cost in exchange for his work demonstrating new techniques and training other groups of farmers in the area in bi-monthly sessions. Carlos hopes that working with P4P means that there will be “more profit at the end,” because unlike previous years, he doesn’t have to take out a loan from a bank or a creditor. The greatest difficulty the majority of farmers have is in finding markets, and recouping investments. According to Carlos, he knows many people who have had to flee to the US to find work. But even this is no

guarantee, as one of Carlos’ friends went to the US, but returned, unable to earn a living there due to the financial crisis affecting that country. “Some of these loans even require a mortgage on your house, and if the loans aren’t repaid, you start from zero. I have friends that have had to leave their families and go to work in the United States just to pay off all their debts, in order to repay the investment that they made just in order to try to make a living farming,” explained Carlos. “If it weren’t for the benefits WFP is providing, I don’t know what I would do as a farmer now,” said Carlos. Sometimes one thinks that they have a guaranteed buyer, but they aren’t able to sell for one reason or another, and then they can lose all the crops that they invested. “Thank God for WFP, they are a blessing to us, 100 percent,” says Carlos, who would like to become a member of the board of directors of his FO, in order to contribute to the organization. Lessons Learned

• The FO needs to improve communication with members. Although Carlos is working as a technical assistant, throughout much of the interview, he deferred to P4P Field Monitor Gustavo Pagoada when responding to questions. Gustavo often had to remind him of answers and encourage him to respond.

• At the time of the interview, post-harvest processes had still not been established, including grain processing, transport, and storage.

• Increased training on benefits of post-harvest processing vs. selling unprocessed at farm gate, especially in an area where farmers are not used to processing grains (most maize is sold at roadside stands, or unshelled).

• Carlos (and Field Monitor Gustavo Pagoada) are still not certain how inputs will be made available to farmers next year.

Carlos serves as a technical assistant for his FO. Through his demonstration plot of maize, he teaches trains other farmers on improved agricultural practices, as well as the application of the technological inputs package.

Summary of Key Issues and Indicators to be Tracked Over Time Key Issues/Indicators Current Status Annual average family income 3,800 lempiras/month, 45,600/year Average family reserve of maize/beans 8 quintals of maize/year, 3 quintals of beans/year. Difficulties in selling grains/access to markets Previously sold Papaya to Hortifruti, lost investment,

forced to sell to coyotes, limited access to markets, low price at markets.

Average net income/sale of basic grains 18,000 lempiras/year for sale of maize and beans. Percentage of production traded 80% of production for sale, 20% for personal

consumption. Price at farm gate vs. informal traders, difference in average price

Maize: Farm gate price- 205 lempiras/quintal. Market price- 240 lempiras/quintal. Beans: Farm gate- 900 lempiras/quintal, Market- 940 lempiras/quintal.

Ability to sell products during low season Carlos prefers to store product when price is low, and wait to sell it when the price increases.

Selling through farm gate, FO, other source Only sells through intermediary (coyote). Average yield 50 quintals/manzana maize, 20 quintals/manzana beans. Average production costs Maize: 12,000 lempiras Receiving credits via FO for Inputs In process of organizing credit for inputs package for

maize (4,004 lempiras for six months at 15% interest rate).

Cost of inputs Maize: 4,004 lempiras. Training Has participated in trainings through FO and is also part

of training. Trainings include: Agronomic Management of Maize; Maize Pests and Diseases; Best Agricultural Practices; and Maize Inputs Management.

Processing available through FO No, with no apparent plans to do so. Land ownership Through his father, owns 7 manzanas, 2 of which have an

irrigation system Land use/manzanas cultivated Cultivates 1 manzana of maize for P4P