Sustainable and safe vegetable supply to Tegucigalpa, Honduras

Honduras is located in the northern triangle of Central America. As in other countries in Latin America, the population is mostly concentrated in two main cities: San Pedro Sula (called the industrial capital) and Tegucigalpa (the capital). Together with Comayalegua these are the largest and most populated cities in Honduras. The search for better life opportunities, remunerative jobs, education and public services, has generated an exodus of the rural population to this city, which has caused, among other effects, the lack of food producers, the aging of the productive population in rural areas and the dependence of other income sources.

Tegucigalpa has grown in the past 50 years; however the capital’s infrastructure has not kept pace with the demographic boom. The lack of adequate planning, dense and uncoordinated urbanization, combined with socioeconomic phenomena, like poverty and crime, make Tegucigalpa an insecure city with deep inequality. At the entry points of the city, especially in the neighboring lands situated on the slopes of many hills, you can see the poverty zones called in Spanish ‘cinturones de pobreza’ (poverty belts), where the population with fewer resources tries to survive, with little access to vital basic services, like water and electricity. Tegucigalpa is surrounded by a mountain range between 935 – 1463m above sea level; traditionally this is where fresh vegetables supply comes from for its population. With the growth of the city and the changing customers’ requirements, there has been a change in the vegetables points of sale. Traditionally, the capital’s population used to buy mainly from informal markets, such as the Las Américas Market, San Isidro Market, Álvarez Market, Colón Market, La Isla Market, Belén Local Market, and Kennedy’s Market. During the past few years, so-called Farmer’s fairs have been permanently established, which work in two spots of the capital; in the National Stadium and towards the eastern exit of the city.

Most of the population, especially the middle and the lower class, assists to these fairs to procure their vegetable supply produced by farmers from Lepaterique, Santa Ana, Tatumbla, The Angeles valley, San Juan, and Santa Lucia, among others. The rest of the population: middle and upper class often make their purchases in supermarkets, of which Walmart (19 stores) and La Colonia (17 stores) are the biggest chains accounting between 30% and 40% of the vegetables demand in the capital. The requirements of these chains in terms of supply, consistency, safety, price and quality has forced horticultural farmers’ organisations to organize themselves and search for more efficient and sustainable mechanisms for the trading of their products, to comply with the requirements and to obtain better or at least more stable prices. The most common procedure in organisational terms has been that small producers gather with cooperatives, farmers’ associations, and associative companies for multiple services. Nevertheless, the Private Fund for Rural Companies’ Development (Fundación Privada para el Desarrollo Empresarial Rural, FUNDER) chose to organise 8 small farmer producer companies under an entity called “Agribusiness Consortium of Honduras” (Consorcio Agrocomercial de Honduras).

Originally, it was created to solve the main problem of vegetable farmers: losses due to delayed selling of the product. Quality degraded, vegetables start to rot, and of course these vegetables are not accepted any more by supermarkets like Walmart, la Colonia and la Antorcha. Also the buying party does not take responsibility: the constant delay of payment for their products; competition between chains to sell their products, because many of them have similar products; the lack of storage; inadequate logistics to deliver the products, etc.

Currently, one of the essential services the consortium offers to its partners is the business establishment. Additionally, and with the technical support for and by technical staff, staggered planting plans are organised, which are required to cover the demand. At this point, each company is responsible for the fulfillment of the production according to their capacities and to provide, as assigned in the production and supply plan.

This organisation is relatively new and on its consolidation and positioning stage, the priority has been to improve the producers’ income of its partner companies, followed by quota management and offerings for their own products, broadening their commercialization services for vegetable farmers from the same integrated producers, keeping a constant integration management of other companies, which are demanding these products within the consortium.

FUNDER keeps helping this consortium through technical assessment, support and promotion for the implementation of good agricultural and manufacturing practices, generation of added value, and assessment in the implementation of a quality label allowing their vegetables trading and building their own-brand as small producers.

Rikolto has taken this consortium as partner since 2014. We have strengthened technical, entrepreneurial and organisational skills of this consortium, providing back-up in the defining of strategies to their role, assessing in the preparation of their strategic plan, looking for market solutions, which would allow them to keep their business model, so every company and each stakeholder of the consortium obtains a secure, fair and inclusive market for their products. Given the importance of (social, economic, environmental…) sustainability, Rikolto has managed to implement strategies and actions allowing the consortium to supply markets of Tegucigalpa on a sustainable basis, to guarantee safe and innocuous products and implementing sustainable productive models that blend good agricultural practices and integrated pest management.

A very interesting element regarding sustainability is the vast majority of the producers participation in the consortium, in a private initiative called “Resources for my land” (Recursos para mi tierra), in which the bank La Banca Privada via the FICOHSA bank, the supermarket chain La Colonia and the foundation FUNDER, have established a deed trust to attend these producers. Under this initiative, the supermarket chain La Colonia supplies up to 80% of their vegetables demand. This way, FICOHSA bank provides production credits (and an agricultural insurance), FUNDER offers technical assessment services and La Colonia buys in the percentages referred to before. With this, producers obtain a safe market and good prices. While this initiative has been good to small producers, there is still room for improvement in aspects directly related to environmental and economic sustainability, and to the inclusiveness in trading relationships and in the achievement of better income for farmers’ families. There are signs the access to this initiative is limited and that the services’ costs (for technical assessment, credits, insurance…) make this model still expensive.

After a year of intervention, Rikolto (formerly VECO MA) sees a few challenges:

• Defining a clear strategic plan for the next 5 years
• Preparing better trading strategies
• Organising technical, productive and logistic aspects in the production plan
• More precise analysis regarding costs along the chain
• Greater emphasis on sustainability within this chain and its environment.

Furthermore, since 2014, a better understanding has been reached with the supermarket chain La Colonia, which has provided a space for discourse between producers and support organisations, such as Rikolto and FUNDER, to find sustainable solutions for problems encountered in the chain and the surroundings. Among the opportunities to seize in the upcoming months is:

• The implementation of a more sustainable productive model
• The use of protected agriculture (La Colonia wants to make more resources available for this)
• The use of technology in irrigation systems that enable a more efficient water use (FUNDER has obtained the resources to strengthen this area)
• The implementation of good agricultural practices
• A better organisation in the processing storage centres
• The implementation and certification in good manufacturing practices
• The adequate solid and liquid waste disposal
• The added value, especially for those products that do not comply with the quality standards of the supermarkets
• To improve the global entrepreneurial logistics in the consortium: this is of vital importance, as the expenditure on fuel is excessive (transport is not centralized and sometimes each producer has to find it by their own means)
• To lower the production and commercialization costs, so their products can be affordable for the rest of the population
• To increase the trading volumes (not only to supermarket chains La Colonia and Walmart) in order to supply the demand of
• Tegucigalpa (trading in a collective way to the so-called informal markets) and to have an operational volumes with economic sustainability and a business model granted by the organisation.

So far ‘Resources for my land’ has been implemented by the private sector and supported by FUNDER and Rikolto. However, the model type and the way small producer have organized helped to respond to the vegetables demand, the public sector and in particular, the municipality of Tegucigalpa could play a very important role to enforce this initiative and to make these products available for the poorer segments of the population.

This model can generate schooling, successful factors and a lesson that can guide the public and private sector in the moment of designing strategies for the food provision to larger cities and to improve the food security for the poor. To us, as part of Rikolto, there is still a long way to go, but we are confident we are at the good track in terms of pilot projects to achieve our mission of developing adequate conditions for small producers to play their part in reducing poverty in rural communities and to help to procure food on a sustainable basis for the growing global population and to reduce the pressure our planet faces.

Fausto Rodríguez Escobar