by Melissa Alexander
Guatemala is a food deficit country, with 80% of the population living under the poverty line. The precarious nutritional situation of many population groups remains a serious concern, and malnutrition is the third-leading cause of death in the country. The country is also facing environmental difficulties including deforestation and soil erosion.
The agricultural sector is characterized by commercial and subsistence farming. Both forms are located throughout the country, but large commercial operations are mainly in the southern coastal areas and in the northern part, while small-scale farms are primarily located in the western highlands.
These small farms are operated by subsistence producers who grow edible beans, maize and vegetables, mainly for home consumption. These products, especially for the indigenous population are common in the daily diet.
Coffee is the top agricultural export for Guatemala, but the country also produces a variety of other commodities. During the 1980s, Guatemala became the world’s largest exporter of the spice cardamom, and it is a developing producer and exporter of non-traditional agricultural products such as fruits, vegetables, cut flowers and seafood.
The government offers technical support to small farmers and established a "Land Fund" to support those who do not own land. The government does not provide production incentives or subsidies to agriculture, but is involved in developing agricultural markets and agricultural policies that will benefit the sector.
The government also is mostly uninvolved in the country’s major crops, with the private sector controlling the production of coffee, bananas, sugar, rubber, fruits and vegetables. Producer prices for sugar are decided by mutual agreement among producers, processors and the government.
In past years, the Guatemalan government, with support from the U.S. government, the European Union and several other countries, has worked with small producers to raise their incomes and diversify their production. The primary vehicles of this policy have been projects demonstrating the technologies of small-scale production and irrigation, terracing of land, improvement in marketing infrastructure and crop diversification.
WHEAT AND FLOUR MILLING.
Of the six countries in the Central American region, only Guatemala produces wheat. Production trends have diminished from the more than 50,000 tonnes a year that were produced in the 1980s to a recent level of about 5,000 tonnes annually. Wheat produced in Guatemala is typically a soft wheat, 10% to 11% protein, with high moisture levels, according to information from U.S. Wheat Associates.
The largest milling group in Guatemala is Molinos Modernos, which has about 85% of the national market. That company also owns a milling operation in Costa Rica and purchased a durum mill and pasta factory in Honduras in 2000.
Guatemala is the largest and fastest growing market for wheat in the region, based on increased urbanization. The evolution of franchising, fast foods, convenience stores, snack foods, two-income households and more demanding consumers has led to the establishment of new products, better quality, more uniform standards, and a larger market for wheat-based foods.
Two segments of the market that currently stand out in terms of growth are cookies and crackers and pasta, according to U.S. Wheat. The number of cookie and cracker plants has increased significantly throughout the region, particularly in Guatemala, and these locally-produced products now are widely seen on supermarket shelves.
In addition, pasta has grown immensely in popularity, and as pasta consumption has grown, so has the demand for durum imports. Annual per capita pasta consumption in Guatemala is estimated to be 1.58 kg, U.S. Wheat said.
Guatemala’s annual wheat imports from all sources totaled 424,000 tonnes in the June 1, 2000-May 31, 2001 marketing year. The country’s tariff rate quota for wheat is 415,950 tonnes, with a tariff of 1.2% within the quota and 6% outside of the quota. The quota level for wheat flour is 19,116 tonnes, with a tariff of 8.28% within the quota and a tariff of 15% outside of the quota amount.
LIVESTOCK AND FEED.
The poultry industry has grown in the past 15 years. Poultry has replaced beef as the popular meat choice because of its competitive price and availability. Beef output in the 1990s continued to decrease, declining to 47,000 tonnes in 1999-00 from 48,000 the previous season.
Meanwhile, poultry production has increased to 135,000 tonnes from 129,000 in the same period. This industry has been growing at around 5% annually in recent years, with small producers being the fastest growing subsector.
In 2002, observers expect the growth rate to be even higher as the economy recovers. Also, imported chicken should continue to become more available and less costly following changes in February 2001 that reduced import tariffs.
The poultry industry in Guatemala is based on three different groups: Campero, PAF (Pesca, Areca y Frisa) and small producers. Campero is a large group that owns and operates poultry farms, feed mills and processing plants, as well as Pollo Campero, the largest restaurant chain in Central America. PAF also operates poultry farms and processing plants.
The Campero group and the PAF group control around 75% of Guatemala’s total poultry production, with the remaining 25% provided by small producers. However, small producers have experienced the most growth in the past few years.
Poultry imports are subject to a tariff rate quota of 7,000 tonnes at a tariff of 15% within the quota and 45% outside the quota. The United States is by far the primary source of imported chicken, as well as the major supplier of feed ingredients for the poultry industry.
Imports include yellow maize, soybean meal and tallow. A TRQ of 501,820 tonnes for yellow maize has been established, with a tariff of 5% within the quota and a tariff of 35% outside the quota.
The two largest producing groups are vertically integrated and use the latest technology to increase production yields, improve food quality and control diseases. Almost all the poultry industry’s feed is manufactured domestically from yellow maize, soybean meal and tallow. In 2000, the industry consumed over 450,000 tonnes of yellow maize.
The smaller producers receive direct or indirect support from the Guatemalan National Poultry Producer’s Association (ANAVI). ANAVI organizes seminars, provides technical assistance and represents the industry in lobbying for changes in government policies.
The Guatemalan beef industry is starting to recover slightly as a result of an increase in beef prices following the BSE and foot-and-mouth disease crisis in Europe and some South American countries. Domestic cow-calf operations have held their own in spite of an increase in beef imports.
Total beef consumption remains steady, despite declining per capita use, based on an increase in population. Another factor is the growing niche market for special cuts of beef in the hotel and restaurant sector.
Guatemala is a net agricultural exporter, with the United States its chief market for agricultural products. Nearly 45% of Guatemala’s agricultural imports are from the United States, and a substantial portion of imports of bulk commodities have been financed under U.S. government assistance programs.
Coffee, which accounts for about 23% of Guatemala’s export earnings, represent a major source of revenue. However, export earnings from coffee continue to be affected because of lower world prices. The non-traditional agricultural products sector is growing fast; increasing its export earnings to 20% a year from 10%.
Imports are led by bulk commodities, especially wheat, yellow maize, cotton, vegetable oils and protein meals. Guatemala is also a growing import market for tallow because of the increasing demand from the animal feed and soap industries.
In recent years, yellow maize imports have increased due to the growing demand for chicken, low domestic yields and competition for land from the expanding non-traditional agricultural sector.
Guatemala’s government has been taking steps to liberalize the economy and to make it more competitive in a global economy. A weakening exchange rate versus the U.S. dollar has encouraged exports and has contributed to expansion in the traditional as well as non-traditional agricultural sectors.
The weaker quetzal has also made imports more expensive. As part of the liberalization efforts, import tariffs of most agricultural products are between 0 and 15%, with higher tariffs for products purchased outside any tariff rate quotas.
Guatemala is a member of the Central American Common Market, which means it has special marketing arrangements with Costa Rica, El Salvador, Honduras and Nicaragua, the group’s other members. The government also has bilateral agreements with several European Union countries and with some South American and Caribbean countries as well.
Since 1984, Guatemala has qualified for trade benefits from the United States under the Caribbean Basin Initiative, which seeks to support economic activity and expand private sector opportunities in the Caribbean region.