• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Acknowledgement
 Table of Contents
 List of Tables
 List of Figures
 Abstract
 Chapter I: Introduction
 Chapter II: Methodology
 Chapter III: Results and analy...
 Chapter IV: Summary, conclusions,...
 Appendix A
 Appendix B
 Appendix C
 Appendix D
 Glossary
 Literature cited
 Biographical sketch






Group Title: Economic potential for increasing vegetable production in the Zapotitan District, El Salvador
Title: The economic potential for increasing vegetable production in the Zapotitan District, El Salvador
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00054845/00001
 Material Information
Title: The economic potential for increasing vegetable production in the Zapotitan District, El Salvador
Physical Description: ix, 104 leaves : ill. ; 28 cm.
Language: English
Creator: Zimet, David J
Publication Date: 1974
 Subjects
Subject: Agriculture -- Economic aspects -- El Salvador   ( lcsh )
Vegetable gardening -- El Salvador   ( lcsh )
Food and Resource Economics thesis M.S
Dissertations, Academic -- Food and Resource Economics -- UF
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Thesis: Thesis (M.S.)--University of Florida, 1974.
Bibliography: Includes bibliographical references (leaf 103).
Statement of Responsibility: by David Joseph Zimet.
General Note: Typescript.
General Note: Vita.
Funding: Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.
 Record Information
Bibliographic ID: UF00054845
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 000566502
oclc - 37900529
notis - ACZ2934

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Page i
    Acknowledgement
        Page ii
    Table of Contents
        Page iii
        Page iv
    List of Tables
        Page v
        Page vi
    List of Figures
        Page vii
    Abstract
        Page viii
        Page ix
    Chapter I: Introduction
        Page 1
        Page 2
        Agricultural production patterns
            Page 3
        Vegetable imports
            Page 4
            Page 5
            Page 6
            Page 7
            Page 8
        Vegetables in the government development strategy
            Page 9
            Page 10
            Page 11
        The Zapotitan irrigation and drainage district
            Page 12
            Page 13
            History and land use
                Page 14
                Page 15
                Page 16
                Page 17
            Credit
                Page 18
            Marketing
                Page 19
            Technology
                Page 20
        The research project
            Page 21
            Propositions
                Page 21
            Objectives
                Page 22
                Page 23
        Organization of the thesis
            Page 24
    Chapter II: Methodology
        Page 25
        The conceptual model
            Page 25
            Page 26
            Page 27
            Page 28
            Page 29
            Page 30
        The working model
            Page 31
            Page 31-a
            Land costs and constraints
                Page 32
            Credit costs and constraints
                Page 33
                Page 34
            Labor costs and constraints
                Page 35
                Page 36
            Demand constraints
                Page 37
                Page 38
            Imports
                Page 39
            Farm prices
                Page 40
                Page 41
            Net return
                Page 42
            The model and analyses
                Page 42
                Page 43
        Summary
            Page 44
            Page 45
    Chapter III: Results and analysis
        Page 46
        Production and land use
            Page 46
            Page 47
            Page 48
            Page 49
            Page 50
            Page 51
            Page 52
            Page 53
            Page 54
        Credit
            Page 55
            Page 56
        Employment
            Page 57
            Page 58
            Page 59
            Page 60
            Page 61
        Income
            Page 62
            Page 63
            Page 64
        Imports and the balance of trade
            Page 65
            Page 66
            Page 67
        Policy alternatives
            Page 68
            Page 69
            Page 70
            Page 71
            Page 72
    Chapter IV: Summary, conclusions, and recommendations
        Page 73
        Summary
            Page 73
        Limitations of the study
            Page 74
            Page 75
        Conclusions and recommendations
            Page 76
            Page 77
            Page 78
            Page 79
            Page 80
            Page 81
    Appendix A
        Page 82
        Page 83
        Page 84
    Appendix B
        Page 85
        Page 86
        Page 87
        Page 88
        Page 89
        Page 90
        Page 91
    Appendix C
        Page 92
        Page 93
        Page 94
        Page 95
        Page 96
    Appendix D
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
    Glossary
        Page 102
    Literature cited
        Page 103
    Biographical sketch
        Page 104
        Page 105
Full Text
Dr. PETER HILDEBRAND
twall PnRUmA SOW. mLm U
INSTITUTE DE CIENCIA Y TECNOLOGIA AGRICOLM

# 0/0


THE ECONOMIC POTENTIAL
FOR INCREASING VEGETABLE
PRODUCTION IN THE ZAPOTITAN
DISTRICT, EL SALVADOR














By

DAVID JOSEPH ZIMET


Food and Resource Econoaics Department
Institute of Food and Agricultural Sciences



University of Florida
1974





Dr. PETER HILDEBRAND
C~OAlmImR PIGRAMA. SOCIO [CONOMIA IRA
INSTITUTE DE CIENCIA Y TECNOLOGIA AGRICOLAS


THE ECONOMIC POTENTIAL
FOR INCREASING VEGETABLE
PRODUCTION IN THE ZAPOTITAN
DISTRICT, EL SALVADOR





By

DAVID JOSEPH ZIMET


A THESIS PRESENTED TO THE
GRADUATE COUNCIL OF THE
UNIVERSITY OF FLORIDA IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE OF MASTER OF SCIENCE IN AGRICULTURE












U /i I,'.l""Y OF FLia D.,
1974







ACKNOWLEDGEMENTS
The author wishes to express his appreciation to the
North Carolina State University Project, "The Potential for

Vegetable Production in Central America and Mexico", its
director, Dr. Richard Simmons, and the Florida Agricultural
Experiment Station for making this thesis research possible.
Appreciation is also extended to the members of the Super-
visory Committee, Dr. C.0, Andrew and Dr. R. Emerson for

their help in all phases of graduate study including this
thesis.

The author is greatly indebted to Dr. P.E. Hildebrand
for his supervision and assistance during the periods of
research and document preparation. The support of the
USAID/E1 Salvador, Agricultural Section, is also appreciated.

The author is also grateful to the staff of the Department of

Agricultural Economics at the Centro Nacional de Tecnologia

Agropecuaria, most especially Rosa Maria de Florez and Maria
Consuelo de Miranda for their aid in typing parts of the
early drafts of this thesis. Thanks is also extended to Miss
Beth Zimpfer of the University of Florida for her help in

preparing the final draft and to Miss Jill Byrum for typing
the manuscript.
The greatest appreciation is due to Jan, the author's
wife, for typing the many pwes of rough draft and for pre-

paring the graphi.:.. Most importantly, however, she withstood
the author's dark lay,, and nights with a smile, and presented
a cheery ouuntcrn, when all seemed bleak.


(ii)








TABLE OF CONTENTS


ACKNOWLEDGEMENTS . . . . .

LIST OF TABLES . . . . .

LIST OF FIGURES. . . . . .

ABSTRACT . . .. . . a

CHAPTER

I. INTRODUCTION. . . . ..

Agricultural Production Patterns. . ,

Vegetable Imports . . . .

Vegetables in the Government Development
Strategy . .

The Zapotitan Irrigation and Drainage District. .

History and Land Use . ....

Credit ... . . ..


Page

ii

v

vii

viii


1

3
4


9
12

14

18


Marketing .. . 19

Technology.. . . . 20
The Research Project . . . 21

Propositions .. . . . 21

Objectives .. . . . 22

Organization of the Thesis, . . 24
II. METHODOLOGY . . . 25

The Conceptual Model. . . 25

The Working Model . . 31

L-,and Costs and Constraints,. . 32

CL dit Costs and Constraints, . 33

Labor Co:.' and Cns :i:a i.ts .. 35

Demand Constraints .... 37


(iii)







CHAPTER Page

Imports . . . 39

Farm Prices.. . . 0 a 40

Net Return . .. . . 42

The Model and Analyses . . .. 42

Summary . .., ,, 44
III. RESULTS AND ANALYSIS . . . 46

Production and Land Use. . . . 47

Credit . . . 55

Employment . . . 57

Income . . . . .6 62

Imports and Balance of Trade .... .. 6.

Policy Alternatives ... .. 68
IV. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS . 73

Summary 0 . . . . ,. 73

Limitations of the Study . . 74

Conclusions and Recommendations. . ... 76
APPENDIX A . . . . 82

APPENDIX B. . . . . . 85

APPENDIX C. . . ,. . 92
APPENDIX D. ,* .. 97

GLOSSARY. . . . . 102
LITERATURE CITED . . ., . . 103

BIOGRAPHICAL SKETCH . . 104


(iv)










LIST OF TABLES


1. Salvadorean Agricultural Balance of Trade (19691r972
Aver ge). . . . . .

2. Average Monthly and Annual Vegetable Imports,
19 9-1972 . . . . .

3. Months of Highest and Lowest Vegetable Retail
Prices and Highest National Production. . .

4. Comparison of Production Costs of Selected
Vegetables between Guatemala and Zapotitan
(Colones) . . . . .

5. A Comparison of 1966-1969 Average Zapotitan Plant-
ings to the 1972-1973 Crop Year in Selected
Crops . .. ... . . .
6. A Tableau of the Models .. . .

7. Areas and Returns for Selected Enterprises in the
Zapotitan District . . .

8. Man-Days Available by Month for Employment within
the Zapotitan District . . .


9. Summary of Credit Use (Colones) . .
10. Credit Use by Quarter (Colones) . .

11. Labor Available and Labor Utilized Under Actual
Conditions and in the Models . .

12. Annual Labor Use by Product Group Under Actual
Conditions and in the Models . .

13. Income, Summary and Comparisons Under Actual
Conditions and in the Models .
14. Potential Ci:.ii; in the Agricultural Trade
Surplus Indicated by the Models. . .

15. Summary of the Results from the Modelst Land
Use, Labor Use, Income and Trade Conditions.
16. Vegetables in 'Whr.! the Zapotitan District
can Compete . .. .

17. Vegetables Which Require Slf, t Yield Increases
for the District to Compete with Guatraa .


S. 56

. 56


. 58

. 61


. 63


. 66


. 69


4 4


72


(v)


Page

5

7

8


10


17
26


27






Page
18. Net Return from Import . . .. 86

19, Vegetable Import Values in Colones .. 93
20. Optimal Production in the Zapotitan District,
Non-Competitive Model . . .. .. 99


(ti)










LIST OF FIGURES


Page


1. Map of Central America . .

2. Map of El Salvador . . . .

3. Total land use in the Zapotitan District . .

4. Non-competitive models well drained land use. .

5. Competitive model with sugar cane: well drained
land use . . . . .

6. Competitive model without sugar cane, well
drained land use . . .

7. Non-competitive models poorly drained land use.

8. Competitive model with sugar'cane: poorly drained
land use . . . .

9. Competitive model without sugar cane poorly
drained land use. . .. . .


(vii)


. 2


* ,

* a

a a


a *






* a


a a








Abstract of Thesis Presented to the
Graduate Council of the University of Florida in Partial
Fulfillment of the Requirements for the
Degree of Master of Science in Agriculture


THE ECONOMIC POTENTIAL FOR INCREASING
VEGETABLE PRODUCTION IN THE ZAPOTITAN
DISTRICT, EL SALVADOR

By
David J. Zimet

June, 1974

Chairman, Dr. C.O. Andrew
Major Departments Food and Resource Economics

Two linear programming models with emphasis on vege-
table production were used to maximize the annual net return

to management and resident labor of the Zapotitan Irrigation

and Drainage District. One model utilized vegetable imports

implicitly and then specified an optimum enterprise com-
bination for the District. A second model explicitly in-

cluded vegetable imports to determine the ability of the

District to compete with Guatamala. Demand specification in

both models for crops grown in the District included: upper

limits for vegetables equal to current production in the

District plus imports; upper limits for fresh corn, tobacco,
and citrus equal to present production, and no limits for
milk and grains.

All the solutions included large increases in the land
used for pastures for dairy production and a more even

distribution of vegetable .i j,durction over the year. The
results suggest that: 1) inoreast,., in vegetable production,

(viii)







particularly during non-traditional production periods when

the District can compete favorably with Guatamala, would

augment employment and income, but that limited domestic

demand prevents vegetable production from having a major

impact on employment, income, and the agricultural trade

surplus; 2) sugar cane production in the District has
adverse effects on employment and income, while contributing

slightly to the agricultural balance of trade surplus and

3) increases in pastures for dairy production by approximately
2,000 manzanas would have the greatest positive effect on

land used in the District and the balance of trade by
eliminating imports of dairy products.




Chairman


(ix)








CHAPTER I

INTRODUCTION

El Salvador, the smallest mainland country in Latin

America, is the only Central American republic that does not

border on both the Pacific and Atlantic Oceans. It lies in

an east-west orientation with the Pacific being its southern

border, Honduras forming the north and northeast border,

and Guatemala forming the western border (Figure 1). The

Gulf of Fonseca borders on Honduras and Nicaragua.

El Salvador differs substantially from other Central

American countries and Mexico in several important respects.

With an estimated population of 3,800,000 (12) and a total

land area of approximately 8,000 square miles (about the size

of Maryland), the 1973 population per square mile was 471.7

persons, as compared to 101.8 for Costa Rica, 73.5 for

Mexico, 133,2 for Guatemala, and 78.1 for Central America as

a whole (12). El Salvador has almost no unused land and

suffers from very high seasonal unemployment and underemploy-

ment. During the coffee, cotton, and sugar cane harvest

season from November through February, there is virtually no

unemployment, yet unemployment during the rest of the year

has been esti.,:ted to be at least twenty percent (2, p.3).

Even when compared to other Central American countries,

its population growth rate is high at 3.2 percent for 1972-

1973. For the same year, for example, the growth rate for

Mexico was 3.3 percent, 2,7 p -..nt for Costa Rica, 2.6


. 1


















Guatemala


Atlantic Ocean


Pacific Ocean


Figure 1. Map of Central America








percent for Guatemala, 2,9 percent for Nicaragua and 3.2

percent for all Central America (12).

Agricultural Production Patterns

Besides these important population and demographic

differences, the Salvadorean agricultural production pattern

also differs from other Central American countries. Several

enterprises which require some production activity on a year-

round basis, Included in this group are sugar cane, cotton,

coffee, citrus and other fruit, poultry and cattle. The

egg production industry in El Salvador is one of the most

advanced in Central America. Most of the cattle are dual-

purpose, but specialty herds exist and are becoming more

popular.

As is true for most of the Pacific coast of Central

America, El Salvador has a long dry season extending from

November through April. The production of seasonal crops

and the activities related to their production have histor-

ically followed the rainy-dry season pattern. The bulk of

the producel- who follow this pattern plant corn when the

rainy season begins in mid to late May. When the corn has

matured, the stalks are doubled-over below the ears and the

ears are left in the field to dry. Beans are then planted

and the bean plants w P. up the doubled-over corn stalks

while the n dries, i n the beans have matured in early

November as the dry season commences, the plants are cut and

spread out around the field to dry, The corn is then har-

vested. Following the bean and corn harvest small farmers

with no irrigated land leave the', h,,.,. to work in the








harvests of the three export crops: cotton, sugar, and

coffee. Towards the end of February the harvesting slackens

and it is curtailed by mid March.

Horticultural crop production also follows the rainy-

dry season pattern, During the dry season, if irrigation

water is available, vegetables are produced in large quan-

tities with planting usually taking place in October or Novem-

ber. The dry season horticultural harvest also terminates

in March. There is relatively little horticultural production

during the rainy season. Owing to a higher incidence of

disease problems on poorly drained soils, horticultural pro-

duction at this time is limited to well drained soils. If

no irrigation is available, planting does not take place until

June because of the irregularity of the rain in May which may

be insufficient to start a new crop. The rainy season harvest

begins in July and is terminated in September or October.

Vegetable Imports

During the March-December period El Salvador imports

large quantities of 0.,_re.-bles primarily from Guatemala. In

the 1962-1969 period, El Salvador had a fruit and vegetable

trade deficit rf.1'i~-nr from 4.3 million dollars in 1962 to

7,0 million dollars in 1968 (14, p. 75), approximately 7

percent of the total agricul; ,r,. Imihii:.i,, (Table 1).

The figures for calendar years 1969 through 1972 reveal

the wide monthly variation in irmpoc:i1:.. This wide variation

can be seen for five heavily mT.'.'Pl-.red vegetables (onions,

potatoes, cabbage, 4-,...- and ca: ) in r.,ile 2. The

month of highest value of imports 3~J.. not r-:.. sarily







Table 1. Salvadorean Agricultural Balance'of Trade (1969-1972
Average).

Product Group Value ( )
gr-^t


Coffee

Cotton

Sugar

Other

Total Export

Imports

Surplus

Source, Banco Central De Reserva,
November, 1973.


247,150,000

68,375,000

25;256,000

114,511,000

455,292,000

76,082,250

379,209,750
Revista Mensual,


~I"U~


m








correspond to the month with the highest volume of imports

due to price changes caused by gluts and the product is both

purchased and consumed, even when it is to be exported to

El Salvador (10, p. 3-21). A further stimulus for these

attitudes and' practices is that for many products Salvadorean

produce sells at a higher retail price than Guatemalan

produce.

Imports, retail prices, import volume and national pro-

duction (Table 2 and 3) illustrate that prices vary sub-

stantially from month to month. This variation can be

explained by differences in quality, cost of production,

marketing margin, growing conditions, and/or transport costs

between the two countries. Only when El Salvador has little

or no production is the quality of Guatemalan produce better

than Salvadorean produce. At other times Salvadorean produce

is at least of comparable quality to the Guatemalan produces

for example, in July, El Salvador imports lower quality

tomatoes primarily for cooking and processing and exports

better quality salad tomatoes.

As there are no truly comparable cost of production

figures, it is difficult to compare costs of production in

Guatemala and El Salv:1.l.,. A comparison between weekly

wholesale price ii fe"rent:..' in Gu:t,..Rla and El Salvador

reveals that wholesale ar IiWs are nrierlaly higher in El.

Salvador than in Guatemala,-e ;,...:.-, when Salv.'.io e an pro-

duction is at its L ..) i i,..- is an 'i-r i-t.it ,n that Sal-

vadorean production costs i'v.'-t be lower than Guait-rnalan

costs during parts of the -year on a per unit weilt basis.







Table 2. Average Mont.hly and Annual Vegetable Imports, 1969-1972.

Onion Potato Cabbage Tomato Carrot
Annual Import:
CWT 35,388.5 162.091.5 156,136.5 43,593.0 42,696.5
Value (f) 120,044.50 418,803.00 186,613.70 68,800.40 79,083.80

Monthly Average:
CWT 2,944.04 13,507.63 13,001,37 3,632.75 3,566.29
Value (V) 10,003.71 34,900.25 15,551.04 5,733.37 6,536.40
Highest Monthly
Import:
CWT 4,048.0 19,148.0 16,592,25 10,102.75 4,587.5
Month October September September December May
Value(P) 20,713.10 48,101,00 28,086.30 16,707.00 10,025.10
Month October January January December July
Lowest Monthly
Import:
CWT 1,733.75 5,131.75, 6,882.25 294.25 2,838.5
Month April March April July August
Value() 4,571.50 12,993.50 9,962.10 59 50 4,660.10
Month March March April July December

Sources: Anual de Estadisticas and Noticias de Mercadeo Agricola.





Sources


Noticias de Mercadeo Agricola.


Table 3. Months of Hi:l-rh.st and Lowest Vegetable Retail Prices
and Highest National Product ion.
Month of highest Month of lowest Month of highest
Crop retail Drice retail price national production

Onion September April September-February

Potato February September March-September

Cabbage April September February

Tomato February October March

Carrot June November August








The differences might also be influenced by marketing

margins. Another indication of seasonally lower Salvadorean
production costs as compared to Guatemalan costs is that

although Guatemala has year-round production of most vege-

tables, at times it does import vegetables from El Salvador.

Only cantaloupe, watermelon and tomato, however, show con-

sistently high and regular El Salvador to Guatemala exports.

Using available information on marketing losses and rudimentary

cost of production figures (Table 4), it appears that El

Salvador, through higher retail and wholesale prices, pays

Guatemala a premium for vegetables that Salvadorean pro-

ducers could, but do not, produce year-round. Much of the

rest of this thesis will be devoted to tbis point.

Vegetables in the Government Development Strategy

Importation of vegetables seems to be an inadequate

solution to the seasonal supply and price instability pattern

scarcities in Guatemala.

The problems of seasonal production and unemployment

are a major concern of the Ministry of Agriculture. The

May, 1972, market resi shows that the price of potatoes
had increased one hliundred percent over the previous month.
'h. report states "To have the products (vegetables)

available durnl.,, this time of y,.t'o, would benefit the

nat ri,'l. i .rs, .-il r', r, .' the ...r.'ry because

of the decrease in '.w of. e.ou>:..-. abroad" (3, P. 9).



Little is 'amown ,iboui market: ,.; i,,..-. ':- and fthl i.
author is rell .:. nt to comment upon t.








Table 4, Comparison of Production Costs of Selected Vegetables be-
tween Guatemala and Zapotitan (Colones).
Product Guatemalaa Zapotitanb
Cucumber 0.53/box 0.54/box

Potatoes 4.43/cwt 3.89/cwt
Tomatoes 2.14/cwt 2.36/cwt
Cabbage 0.72/dozen 0.37/dozen
Onion 4.36/cwt 3.67/cwt
Carrot 0.10/ddzen 0.34/dozen
Sources: a1968 production budgets of Banco Agricola of Guatemala.
The production budgets used in this study.







El Salvador experienced a U.S. $56,000.00 balance of trade
deficit in vegetables during that month as a result of the

deficiency in national production (3, P. 17).

Because there is virtually no quality grading done in
either Guatemala or El Salvador, the Guatemalan producers,
wholesalers, and exporters are not pressured to deliver a

quality product to El Salvador. The truckers, most of whom

are Salvadoreans, face the same situation as the Guatemalans.
One reason for this attitude is that the Guatemalan producers
do not think it is necessary to handle vegetables carefully

because in a relatively brief period they are shipped into

El Salvador. Because of the problem of seasonal fluctuations
in employment and vegetable prices, and the balance of pay-
ments deficits caused by vegetable imports, the Ministry of

Agriculture has embarked on an agricultural diversification

and import substitution program. Because vegetables are

high yielding and are labor and land intensive (11, p. 5),
the government has made increased vegetable production an

important goal of its diversification program. The Ministry
of Agriculture recently has been spending large sums of money

on vegetable pr,-lduction research and extension. For example,
the National 'e*,:.,-r of A '.~ ..-tutural T.~,-: ology (CENTA) uses
much of the 1,i available to it for vegetable production
research. This res-a-.-_th is f.u.-;:ing on variety adaptation,
optimum plant iT',,ity, fertilize levels, and disease and
pest control me,. ,;;,- The I s..a.i, S<::.!. of Agriculture
has a large horticultural de~,.- ,r:.-; which trains students in








vegetable production methods through the use of field work

in which students have their own vegetable plots as well as

through course work. Many of the foreign agricultural
technicians and specialists who work directly with the
Ministry or with CENTA devote much of their time to horti-

cultural work. It is hoped that through this type of overall

endeavor Salvadorean vegetable production will increase,

employing more people, generating more income, as well as
substituting for Guatemalan imports. An important part of
the diversification effort is the Zapotitan Irrigation and

Drainage District (henceforth referred to as the District)

created by Legislative Decree No. 214 on January 20, 1972

(8, 0. 3).
The Zapotitan Irrigation and Drainage District

The District (Figure 2) is comprised of 4490 hectares

(one hectare equals 2.47 acres) with a net of approximately
4,000 hectares being irrigated, and is favorably situated
relative to the population centers of El Salvador. Its
northwestern border is LthU Pan American Highway which connects
the District to San Salvador, the capital and largest city,

30 kilometers to the East (one kilometer equals 0.6 miles).
Santa Tecla, or pn.-tu San Salvador, the fourth largest
city is 23 kil .m;.;.'-. to the East of the District on the
Pan American T-T :;, F .y Forty-five ,i.'(utes from the District

to the West is Santa Ana, the third largest city. The

southern 1I. .t.,.. ..T: the h.?.:,'ay to Sonsonate, the fifth
largest city ,; ,...t twenty-fi'. 1, <.4,tes from the District.

The eastern border i.., the ru.7- o of "...''.-,




















('


.1


A Santa Ana

B San Salvador

C Nueva San Salvador
or Santa Tecla

D Sonsonate

Figure 2. Map of El Salvador


Zapotitan Valley

ri, road

road


road


railroad







History a and Land Use

On November 17, 1970, the Salvadorean Legislative

Assembly passed Decree No. 153, the first Irrigation and
Drainage Law. The preamble to the law states

"Considerings

I. That the large population increase, relative to the

limited endowment of land and water, imposes upon the

Government of the Republic ..., the non-postponable

measure to increase agricultural production by using

the said resources for the economic and social devel-

opment.
II. That the lack of an appropriate law regarding Irri-

gation and Drainage is evident, for the orderly,
rational, and optimum use of water and the progressive

development of natlorinli agricultural and livestock.

III. That the State must execute works that, because of

their magnitude, cannot be realized by private
i5.itiatite and that p,:--);rit i1? < development of irri-

gation and drainage .." (13, p. 1,2),

The law also made the Ministry of Agriculture respon-
sible for the : .... ch and development, administration,
and maintenance of ;,1j and all irrigatio. districts.

Accordingly, th .. -.-ated the Division of Irrigation

and J ,-,.; ., ., ,- bible for the Z.) ,.i.Ltan. District

as well as th'e '.-velop. rJ,.j-tration of other
distri., .
S~i la C:w '...t d the

District. Land for as .ut:.. ..z Aut 20,







1934, by the Junta de Defensa Social (The National Social
Defense Committee), presently called Instituto de Colonozacion
Rural (The Institute of Rural Colonization). This land and
that immediately adjacent were parcelled and transferred to
rural families.

Land tenure circumstances in the District are separated
because of Article 34 of the Irrigation and Drainage Law.
This law states that the Ministry of Agriculture must be
advised of any transfer of landtitle in an irrigation

district within ninety days and Article 20 of the Law states
that the Legislative Decree creating an irrigation district
must set both amihimum and maximum on land holdings (13,
pp. 12,14). The Law of Creation of the Zapotitan Irrigation

and Drainage District set the Title limits on land at two

to fifty hectares (9, pp. 15,16). It also stated that with-
in ninety days of the creation of the District all land
holdings had to reported to the Ministry of Agriculture.
From 1947 uvti February, 1971, eleven studies were

published about the Zapotitan area. The first ten were
designed to determine the agricultural potential of the
region. When land use was determined in these studies,
year-round horticultural production was highly recommended
for at least some of the land, particularly the better
drained, .iad.. '.-* .i.o:,:., ..ils. The other major clay-
loam and organic soil types were recommended for horticul-
tural production only when drainage and water conditions
permitt.ca, ii.,. IEJiL irr,-. :.n ~i: the dry season, The







most recent of these studies was "Proyecto de Desarrollo

Agricola del Valle de Zapotitan" (Agricultural Development
Project of the Zapotitan Valley), prepared by Tahal Consulting
Firm, Ltd. (an Israeli firm) in 1970. The last study was
published in February, 1971, by the Ministry of Agriculture.
Unlike the other ten studies, it deals with the economic
and social problems instead of the technical aspects of an
irrigation and drainage district or the agricultural potential
of the region under irrigation.
Before the Zapotitan area was drained, vegetables were
produced during the dry season, and corn and rice were the
major crops during the wet season (Table 5). Vegetable pro-
duction had always been important in the valley, and it was

hoped that development would increase vegetable production
significantly. Road construction was finished in late 19701
the drainage system was completed in 1971. The irrigation
system is not complete as of this writing. The effects of
drainage were large increases in area planted in sugar cane
(from 242.0 h- .-tares in 1968 to 693.3 hectares in 1972),
vegetables, including .",.l corn (ifrt.i 224.0 hectares in
1968 to 456.0 hectares in 1972) and improved pasture (from
none in 1968 to 450.0 hectares in 1972)$ there was a sharp

decline in t~<.- area vd ... for natural pastures (from 1407.0
hectares in 1-,6', to -1.5 -.i1 ~ ;i 1972), Although the
District does ;no p:',.;,. as many ltl*i,- -.:J as had been
an-t ilpa1.:, i ,t is the single most important vegetable pro-
ducing 3 .. in El ,. v., ... ... ISIC-FAO
diversification study in 1-. Za,.. titan District relative








to the'entire country encompassed approximately 24%, 84%,

31%, 43%, and 30% of the total area planted in tomatoes,
potatoes, cabbage, cucumber and sweet pepper, respectively

(11, pp. 12,25,29,30,36).

Table 5. A Comparison of 1966-1969 Average Zapotitan Plantings
to the 1972-1973 Crop Year in Selected Crops.

1966-1969 Average 1972-1973 Crop Year
Crgo Rainy Season Dry Season Rainy Season Dry Season
------------ -- -l-Hectares ---------------..----
Vegetables 169 224 515 456
Corn 886 3,018 1,172 100
Sugar Cane 242 242 693 687

Rice 802 --- 500 ---

Sourcet Department of Studies, Division of Irrigation and
Drainage.
The Irrigation and Drainage Division feels that the
high investment involved in creating the District requires
that the .lnd and water reso1r,-c,..s be used :*.ore intensively.

They suggest the production of crops that could be harvested
at least three t~'i, a :r-i. .-i1, that require irrigation to
maintain year-round prodtc !ioan.
It is also *..' i'_f. :i;ved t.at '.t',; stable production
in the District is more profitable than other crops and live-

s~ ;u k: altelii 1. ', .. : e, .i U.-..-1 try officials believe
that if a .tie.-.::. of restrictive c.:.';I tonss were removed then
mior.)'. ".- ta. b.L wol .. :.. .... they would be produced

year-row-r. to deer c .i..- cI. el.miriat. imports. The restrictive

conditi-:
commercial or marketing prob'.,n--, and ,-.rsion or technical
~ nf n








Credit

The Zapotitan Cooperative, (henceforth referred to as
CODEZA), and the Agricultural Promotion Bank (Banco de

Fomento Agropecaurio), a governmental agency, are the

District's major sources of credit. To borrow money from
CODEZA one has to be a land owner in the District and a

member of the cooperative for at least three months. The
interest rate is twelve percent annually and a loan is due,

when used for production purposes, immediately after the

product would normally go to market. Thus, storage is not
encouraged and credit policy is not helping to reduce seasonal
price variability. The Agricultural Bank makes eight percent

interest loans to any land user in the District. The bulk

of its clients are renters and small land owners. Bank and

credit association loans, generally long term (a year or more)
and at twelve percent interest annually, are also available

to the land owners of the District.

The credit available from the Agricultural Promotion
Bank and CODEZA, however, is not fully utilized. The Agri-
cultural Bank for example had 0385,000 (one Colon = U.S.
$0.40) in loanable ..j,-;, available to the District in 1972,

and it loaned ol r.i'.,000. The 1973 loan goal is 0580,000

and it is expect that ot; .oi.,mtely 4Q0,000 will be loaned.
The cause of I'; ..~', 1i J, i th !ugt:- to be that "campesinos""
are not accueli:.'d to institutional credit, and request loans

at the "last minute". Many loans are not granted because a

loan cannot be author".,,id in the short p~ iod of time allowed









by the campesinos. To overcome this problem the Agricultural

Bank is attempting to plan with each borrower his annual

seasonal credit needs So it can in turn make the loan

available upon the "campesinos" request.

Marketing

Marketing of Zapotitan crops is carried out in several

ways. The first is somewhat organized on a District level.

There are six "centros de acopio" (gathering and selection

centers) to which a producer can bring his produce. At these

assembly points produce occasionally is graded and sized,

and then sold to buyers who come to the centers.

Individual sales represent a second method including

1) producer delivery of the product to the market 2) buyers

going to the District to buy directly from producers and

3) producer contracts with buyers to produce a given quantity

of product which will be sold at the contract price. The

last practice is least common.

A third major sales method is through cooperative

marketing, CODEZA sells produce for its members, generally

acting as a s~p.: representative and agent. A buyer, for

example, will ,lapprh C''DEZ, representatives and say he wants

a certain qu-v'-ti-fty of tr!i.*r1cular pro~oaui.t. The cooperative

gathers the p!.. ...t I.~ V, i .. members, axi'anTe:; for the

transfer to the ', r~ and then I.ys- ;.fh m?.aibers who con-

tribute,! -d r* - ... ...~~~ a fee fI.. itself, CODEZA also

operate .. ,..1.':-,.. r etall :..r Set: but with limited sales,

during the main 6.. .. I....i --; period,








Producers, who have had their products rejected during

the height of the traditional dry season production period,

are reluctant to request credit for vegetable production

during any part of the year. During this peak period, because

of the glut on the market, buyers can afford to purchase only

the highest quality produce. A product that is rejected then

might readily be accepted during another time of the year.

Thus marketing experience of some producers makes the job

of the extension agent difficult as he attempts to promote

year-round vegetable production.

The combination of good internal transport facilities

and easy access to highways which connect the District to

the rest 6f the country greatly facilitate marketing of

highly perishable products. The major roads, although

unpaved, are all weather roads and connect to the country's

major highways. Hence, for the District, roads are not

presently a restriction to further development.

Technology

Producers are likely to face crop failures without

proper technical assistance, owing to the technical problems

of disease, pests, and poor drainage which are common during

the wet season. Bea-.i.:.- producers are aware of this they

plant crops ':i,~y- they .-..' I- est, such as rice and corn, and

which are least subject to iYe:.-ne and marketing problems,

.Improved Lr<...Lio i d .. C-".s and better technology could
.::.i,.hly .,... ....:r. *.. market situation of gluts and

scarcities of '. ..<" ... .. .~ .. ...' i-iI,.ival 1.-' this adverse






21

market'condition through more research'and extension activ-

ities could make the vegetable market more secure, thus

enhancing the chance of further modification of the pro-

duction pattern.

The Research Proe ct

Officials of the Ministry of Agriculture believe that

increasing vegetable production in El Salvador is the most

promising means for improving the present low rural income

and employment situation, while 'improving El Salvador's

agricultural balance of trade. Little is known, however,

about the relative profitability and competitive situation of

vegetables within the District, the District's ability to

compete with Guatemala in vegetable production, and what

conditions are necessary to make promotion of year-round

vegetable production successful. Therefore, the remainder

of this thesis studies the above three i.rrknownL situations

for vegetable production in the District.
Propositions

The following propositions are-examineds

1) Is year-round vegetable production in the District

profitable relative to other crop and livestock

alternativL es?

2) Can '- i! tri,;; compete with Guatemala in vege-

table .. i- i. .s

3) Woi.i, increas',:i overall vegetable production and
,';I?,. i1 t he cyclical .ir; .-,

a) i,"-,'. income *t.. the ...ple of the District, an'd

b) inc2 *m e0E;\ p.'0Y; : tr






21

market'condition through more research'and extension activ-

ities could make the vegetable market more secure, thus

enhancing the chance of further modification of the pro-

duction pattern.

The Research Proe ct

Officials of the Ministry of Agriculture believe that

increasing vegetable production in El Salvador is the most

promising means for improving the present low rural income

and employment situation, while 'improving El Salvador's

agricultural balance of trade. Little is known, however,

about the relative profitability and competitive situation of

vegetables within the District, the District's ability to

compete with Guatemala in vegetable production, and what

conditions are necessary to make promotion of year-round

vegetable production successful. Therefore, the remainder

of this thesis studies the above three i.rrknownL situations

for vegetable production in the District.
Propositions

The following propositions are-examineds

1) Is year-round vegetable production in the District

profitable relative to other crop and livestock

alternativL es?

2) Can '- i! tri,;; compete with Guatemala in vege-

table .. i- i. .s

3) Woi.i, increas',:i overall vegetable production and
,';I?,. i1 t he cyclical .ir; .-,

a) i,"-,'. income *t.. the ...ple of the District, an'd

b) inc2 *m e0E;\ p.'0Y; : tr










4) Are credit supply, sugar cane production, extension

problems and marketing channels presently barriers

to increasing year-round vegetable production?

The existence and the extent of the last two

hypothetical barriers are not tested specifically

in the thesis, If it is determined that vegetable

production is profitable relative to other crop and

livestock alternatives', that the District can compete

with Guatemalan sources, that there is enough credit

available for vegetable production, and that sugar

cane production does not affect vegetable production,

it can be assumed that a combination of the latter
two hypothetical barriers is in fact a barrier to

increasing year-round vegetable production,

Qjiectives

The primary objective of the study is to determine the

feasibility of expanding vegetable production and ascertain

the effectiven,..i : of ,i.-,. so as a .l.ro of inducing rural

unemployment and increasing rural income. The Zapotitan

District has been chosen as the study region since it is

apparently the area. wit', most p(Jtenl;~u3" for vegetable pro-
duction. ',.. .al .-t .i:ci are the following
1) DeveBg -.!.. -,.i 1 ,.-:. '.ion :,..,,. L.,s for specified

cr i .,-l. livesti:., enit: p,~ in the Districtl

2) De.. "mine ;, amount of ,:.1 -ot available to the
t t ., the or .. : ".t c.mnts of the speci-

f::d A ,..> li, .. 1k al ." ive to '..* in 0. .i nc=r-







mining if cr'.di% is a limiting factor of pro-

duction;
3). Determine the present production patterns in the

District and compare them with other possible

patterns;
4) Determine present employment and income in the

District for comparison with employment and income
effects of different production patterns

5) Determine if year-round vegetable production is
profitable and if so, how the present vegetable

production pattern could be changed;
6) Determine present vegetable import values to have

a basis for comparison between the District and
Guatemalan sources;

7) Determine present vegetable import levels to aid
in determining present vegetable consumption;
8) Determine under what conditions and in what crops
the District can .*-,,p>te with Guatemala in vege-

table p, *. -, tion,

9) Determine the effects of aigar cane production on
otthr .,- ir.i0 .i livestock alternatives, income and
empl-rcment, and the balance of trade because sugar

--.*,: most ...i:, y e.i.. a ,nl crop in the


10) L': tV,- mine a Cii ii, of make. iking and

extens'i,; >blems limit ve ;..: -_.1.le eLoduction,








Organization of the Thesis
The methodology is described in the second chapter
which begins with a presentation of the concepts and assump-
tions that were used in constructing the economic model
employed in the study. The workings of the model are then
reviewed by explaining the constraints used, as well as the

activities and the net return figures employed in the objective
function. The final section of the second chapter explains
how the propositions were evaluated.

After the model is reviewed, the outcome of the various
situations are discussed in the third chapter. The results
are presented to show the effects of different situations on
land use, employment, income, and the balance of trade.
The policy alternatives are presented at the end of the third
chapter. The fourth chapter begins with a summary of the
analyses. After the summary, the limitations of the study
are discussed. Finally the conclusions and corresponding
recommendations are given.









CHAPTER II

METHODOLOGY

The Conceptual Framework

In accordance with the Salvadorean government's goals

to decrease unemployment and increase rural income, an ob-

jective of the present study is to determine the potential

for increasing employment and real incomes in the Zapotitan

Irrigation and Drainage District. Special emphasis is

given to increasing year-round vegetable production as a

means of reducing imports, and increasing employment and

income. Hence the study includes an analysis of the

ability of the District to compete with Guatemalan sources

of vegetable supply and its ability to maximize annual net

returns to the people of the District.

Two basic linear programming models, termed competitive

and noncompetitive, are used in the research. The com-

petitive model contains two separate situations based upon

the inclusion and exclusion of sugar -.: production. Linear

programming is used to maximize or minimize a given linear

function (the objective function) subject to a given set

of linear c.zSrI;ral.'l (1, p. 592). The objective function

of both models is the maximization of net returns to man-

agement and ridident labor in the Zapotitan District. This

objective actionon is the sum of the monthly volume demanded

multiplied by farm -'ce less :pr- t.i-ion and/or import


25









CHAPTER II

METHODOLOGY

The Conceptual Framework

In accordance with the Salvadorean government's goals

to decrease unemployment and increase rural income, an ob-

jective of the present study is to determine the potential

for increasing employment and real incomes in the Zapotitan

Irrigation and Drainage District. Special emphasis is

given to increasing year-round vegetable production as a

means of reducing imports, and increasing employment and

income. Hence the study includes an analysis of the

ability of the District to compete with Guatemalan sources

of vegetable supply and its ability to maximize annual net

returns to the people of the District.

Two basic linear programming models, termed competitive

and noncompetitive, are used in the research. The com-

petitive model contains two separate situations based upon

the inclusion and exclusion of sugar -.: production. Linear

programming is used to maximize or minimize a given linear

function (the objective function) subject to a given set

of linear c.zSrI;ral.'l (1, p. 592). The objective function

of both models is the maximization of net returns to man-

agement and ridident labor in the Zapotitan District. This

objective actionon is the sum of the monthly volume demanded

multiplied by farm -'ce less :pr- t.i-ion and/or import


25









costs, adding back the local (not Tiie..l-tory) labor charges

used in production. The constraints are demand, labor,

credit and land (Table 6).

Table 6, A Tableau of the Modelsaa
Competitive riuodel Non-Competitive
Production Import Production

Constraint/Objective Function + + +

Land + 0 +

Labor + 0 +

Credit + 0 +
Demand + + +

a/A + indicates a positive value or resource use and a 0
indicates that the resource is not used.

The activities in the competitive model which generate

income are production and import (Table 7 and Appendix A). In

the non-competitive model only production activities generate

income (Table 7).

When vegetable imports are explicitly included in the

analysis, the Salvado-ri-"an di,na!d.. must met by either pro-

duction or import. In the t,"o situations of the competitive

model producers of the District are cornidered to be purveyors

who are responsible for supplying El Salvador with specific

amounts of all vegetables. As such, to meet this demand the
district can produce or import vegetables supplying the

required amount of a vegetable product at the gireatest.income

relative to the production or import of otht-.,~ vg1.etable and

non-vegetable products. Thus, if it is more profitable








Table 7; Prices and Returns for Selected Enterprises in the
Zapotitan District.
Code Farm Price Yield Gross
Product Month per cwt (cwt) Return
Colones Colones


Ayote (a squash)
Beets
Broccoli
Cabbage
Cantaloupes
Carrots
Cauliflower
Celery
-Cucumber
Eggplant
Guisquil (a squash)
Lettuce
Onion
Sweet Pepper
Pipian (a squash)
Potatoes
Radish
String Beans
Processing Tomatoes
Salad Tomatoes
Watemmelon
Baby Corn
Fresh Corn
Beans
Corn
Rice
Sugar Cane
Pastures


10
10
10
10
11
11
10
10
10
10
12
10
10
10
10
11
10
10
10
10
11
11
11
8
5
5
N.A.,
N. A,


10.00
3.00
37 00
2.66
3.60
15,00
22.22
20.00
4.50
5.00
6.60'
10.83
10.00
15.00
10.00
10.00
4.00
30.00
6.00
7.50
2.10
10,00
1.40
30.00
8.00
10.00
1.06
N.A.


80
560
648
650
300
.280
180
210
430
720
880
470
380
200
72
320
280
64
350
300
715
84
336
22
75
85
2053.33
N.A.


800.00
1680,00
1800.00
1729.00
1080.00
4200.00
4000.00
4200.00
2002.00
3600.00
5808.00
5808.00
3800.00
3000.00
720.00
3200.00
1120.00
1920.00
2100.00
2250.00
1501.50
840.00
470.00
660.00
600.00
850.00
2176.53
1920.96


I _vo







Table 7. Extended.
Costs Less Net Return to Management
(Labor) and Labor
(Colones)


274.89
383.06
530,78
459.78
257.38
2757.49
514.49
469.56
851.96
308.48
2162.11
2767.86
810.21
1388,28
177.72
884.84
294.13
683.64
419.68
419.68
392.72
203.40
186.60
233.88
321.49
426.36
1402.53
850.90


525.11
1296.94
1438.92
1269.22
822.62
1442.51
3485.51
3730.44
1150,04
3291,52
3645.89
2322.24
2989.79
1611.72
542.28
2315.16
825.87
1236.36
1680.32
1830.32
1108,78
636.60
z283 '40
426.12
278 51
423.64
774.00
1070,06


--- -- ----------------------YI~--------------








relative to the El Salvadorean market to produce cucumbers
in July than it is to import them, but their production uses
resources required for cauliflower production which is rel-
atively more profitable within the District than cucumber pro-
duction, then the competitive model dictates that the District
will import cucumbers and produce cauliflower.

In the non-competitive model the people of the District
are not purveyors responsible for producing a specific amount
of produce at the least cost relative to production and
import. Even if the District is in a poor competitive position
relative to Guatemalan sources for a particular crop, the
farmers might still earn more from producing that crop than
from producing another. Thus, a model which includes imports
only implicitly is also studied. In this non-competitive
model it is assumed that the supply of any commodity not
produced in sufficient quantity in the District is imported
but earnings from imports do not accrue to the District.
This model determines the optimum product mix for the District,
given the constr.-inte and prices used, Thf solution of the*
non-competitive model is more relevant from the point of
view of the farmers while allowing for optimal enterprise com-
binations within the Dic'. :,
In both the -.ompr.titive d non-competitive models, it
is assumed that production in the remainder of the country
is static so that changes in supply from the District directly
affect foreign ex;:cj!,A.Ino0e. The effect of an increase in vege-
table production in the District, Li,,c,,, irrLght be at the






30

expense of grain production, for example, causing an increase

in foreign exchange expenditures for grain and perhaps
worsening the overall balance of trade situation. Thus,
the total effect on the balance of trade of the various
situations is also analyzed.
The following are the basic assumptions upon which

the analyses are based:
1) Constant prices the prices of inputs and out-
puts do not change with changes in quantities
supplied or demanded.

2) Fixed demand a deficit in quantities produced

compared to current demand must be filled by
import and represents a loss in foreign exchange
earnings, while an increase in production over

present levels substitutes for imports.

3) Import variations are affected only by production
in the District while production in the rest
of El Salvador remains constant.
4) Exports are not affected by production in the

District except for sugar cane, a special case.
This requires that the upper limits on production
be set equal to domestic demands.

5) The supply of chemicals, fertilizer and seed
is unlimited.
6) Production takes place in one year and there

are .n mulL)le y : cr.-op rotati *inc.








7) The level of technology used in the production
budgets will be in general use in 1975, and

thus 1975 is the target year.
8) An appropriate objective function to maximize

income to the people of the area is return to
management (as a residual) plus local (not

migratory) labor earnings. This combination
does not favor management to the detriment of
the laborer, nor labor (employment) to the

detriment of the land owner.

The Working Model

Each enterprise, excluding fruits, sugar cane, and dairy
production, has several production budgets, each corr-
esponding to a different planting date. The vegetables,
excluding cabbage, lettuce, and onions, have six budgets

each, representing a planting every other month. Onions
are represented only five times, the April planting is excluded
because of the photo period sensitivity of the varieties used
in El Salvador. E are repr'e L,3 by five planting dates,
corn by four, r.t.,e by six, and tooryaco by three,' The budgets
are based upon bud'..',ts -.Ipplied by the u;.'tension agents of the
District and the Department of Research of the Division of
Irrigation and Drainage, Ministry of Agriculture, Unfortunately,

these budots are generally for Oc(Lobt-r or November only and
input levels are not ril4j.ys consistent with yields, as demon-
strated by pT .,:.'!,. e1 1q.' 'i.i .... I uT. .h: basic budgets









were revised when necessary to correspond to seasonal plantings.
The monthly product price variations to be discussed later,

as well as input variations, were specified to make the proper

revisions.

All inputs, such as land, labor, credit, fertilizer,

pesticides and seed, represent direct costs. The costs.are

based on the most current price available for the inputs.

The levels at which fertilizer, seed, and pesticides are used

are realistic but not optimum. That is, the levels are set

at amounts which a farmer is apt to use in 1975 and not the

optimum amounts determined by production experiments, Since

land, labor, and credit ;re available in limited quantities

which cannot be readily expanded, they also form constraints.

The costs and constraints used in the models for these

resources are discussed below,

Land Costis and Constraints

The amount of land available is specified on a monthly

basis with draineJ and poorly drained slls coi';:.idered sep-

artely. Well drained land in the District has an upper limit

of 1035.66 manzanas (one manzana = .6 hectares) for each
month, and the upper limit for poorly drained land is 4678.84

manzanas for each month. Rainy season vegetable production

is limited to the well drairrd .and, but dry season vegetable

production is possible on either soil type. Production of
livestock and Yl2. other crops i. r; mit;:( on either land

type,









The cost of land regardless of type is $300.00 per

manzana, per year, a rental fee fixed for the District by

the Ministry of Agriculture. Land rental fees and use require-

ments for a product are adjusted by the productls'lengthr6f

growing season. Because the seedbed and transplant practice

is common, this method is represented in most of the pro-

duction budgets. Thus, the land requirement for a crop that

used a seedbed and transplant operation is reduced, but

corresponding labor costs are present,

Credit Costs and Constraints

Credit, like land, is separated into two groups. One

group represents the credit available via CODEZA and commer-

cial loans, at a twelve percent interest rate. The other

represents the credit available through the Agricultural

Promotion Bank and has an eight percent interest rate.

The credit requirements in the models for an enterprise

are set equal to sixty percent of the operating costs plus

interest charges. The credit year is divided into quarters.

Each production activity :,ses crer1it during the appropriate

quarters when a loan he: been repaid the money can be loaned

again in the first :ullT quarter after Ila~p:nt This

arrangement correspnnd.- to the actual situation described

by the Agricultural Pr,., ('..E?. and the extension agents
in the Dislf)i-t.

To .~:~'-.: o'i-.imum creditt .,- p' iternns, all credit

is initially allocated to the first .;uarter. Any unused

credit can be transf *d ih.' s, *' or sl receive quarters









at no cost. Loan repayment is another source of credit for

the second, third, and fourth quarters. If a crop has a

short growing season, e.g. radishes, it can generate credit

for the quarter immediately following the quarter in which it
is required. For most products, however, the credit generated

is not made available until the second quarter after it is

required. There is a credit dumping activity in the fourth

quarter to transfer unused credit to the following year.

This credit, however, is not used by the model.
To avoid repeating all production activities, the eight
percent funds are permitted to be increased by the twelve

percent funds at an additional cost of four percent. This

transfer of funds can take place only during the first quarter,

but the money can be used in whichever quarter it is needed
because of the inter-quarter, no cost transfer activities.

The interest payment required from an eight percent loan is

deducted from the gross return as a cost, Interest payments

are considered to be part of the credit requirements the
credit available to the District through the Agricultural
Bank is increased by eight percent, to 2626,400 from '580,000

to form the eight percent interest constraint and to avoid
double counting. Similarly, the credit available at the
twelve percent interest rate is increased from 5,427,500 to

05,861,700. Of the 05,427,500 the amount available through
CODEZA is 0427,500. The remaining V5,000,000 is an estimate

of the credit that is available to the District through
commercial loans. If necEsaR-, the twelve percent credit









constraint can be increased in the models to determine

approximately how much credit is required by the District to

maximize the annual net return to labor and management.

Labor Costs and Constraints

Unlike land and credit. labor is assumed to be homo-

geneous. There are twelve monthly labor constraints cal-

culated in number of man-days per month (Table 8). To form

the constraints, the predicted number of economically active

people in the District for 1975, reduced by ten percent to

account for illness, lack of mobility, and imperfect know-

ledge on the part of the workers, is multiplied by the number

of work days per month.

Excluding the labor required for the sugar cane harvest,
all labor is assumed to be from the District. Labor is

migratory during the sugar cane, coffee and cotton harvest

season and flows into the District to cut the cane. In

November, 1972, approximately 64,000 man-days were required

to harvest 650 hectares of sugar cane and plant, care for,

or harvest other crops and livestock. A-, -ririmately 48,000

man-days, were aM: 1-ble ". .-. r L -- ..' : ict for all tasks.

If all the 34,000 -. ... .-.ijired f.. 1- *; ... her than -

those related to :...r. \ ... :...tion ,', t; kei from within

the PD ,strict, 14,?. .' -. ... would be ...~.-. -.1..-- from the

SDistrict to ;ri'r cane. The 14Cr. .,) ,..ayo is approx-

imately f'r..y ,:'. o percent af th.. 30,000 ('i .,:i,.lays that were

required for the .r cane !. .-.', Tus ,labor coeffic-

ients used in the .' for the a are forty-








Table 8, Man-Days Available by Month for Employment within
the Zapotitan Distric'..
"r----- --- '"'""----~~l ~~ a/"-"~IIUII-
Month Work Days Man-Days Available-a/

January 23 46,529
February 22 44,506
March 25 50,575

April 20 40,460
May 25 50.575
June 24 48,552
July 25 50,575
August 23 46,529
September 23 46,529
October 25 50,575
November 24 48,552
December 20 40,460
i J,. i ,- ,,,- ~ J ,, r ........ll---~---


A/2023 laborers mul.., ,lied
equals the nurmb~-. of man-days


by "'1 .. w' ,rs: u, per month
~,~iluble per month.








seven percent of the man-day requirements for harvest, which

prevents the utilization of migrant labor for tasks other than

the sugar cane harvest. This reduction is also reflected in

the objective function. All labor requirements represent

costs to management, but only forty-seven percent of the

labor income for the sugar cane harvest is included in the

Objective function.

Coefficients of the objective function are calculated by
adding labor costs to the net returns to management. Although

the addition of labor costs to the objective function is not

in strict accordance with mangerial profit motives expressed

in economic theory, labor costs are included because of the
desire of the government to increase employment. Also,

approximately one-half of all land owners in the District

supply their own labor in which case labor and management

returns are one in the same. Labor costs are calculated at

the rate of g2.857 per man-d.t.y, while the minimum Salvadorean
agricultural '~w '.. is .02.75, The .,lt..,~.il. *1 i,...t :.ll.ws

for over-time,

Demand Con. tra It-

The vegetable ,i:kd- ..r. ,nt ruCIfral' are equal to present
production from the D. I..~cLet pIlus total imports. To
g ara,., that b. .,...ean *.:. .. 'tis.t'ic.. by either

productI..i- or ': '.. .,-: 3,'i..i eL';.a '' qualities, forcing

a comparison bet.een the two alt-!rnatives. Baby corn, a
corn that is ai-ro. 1,,itely two .inc,;e long with tender kernels
and a cob which is ..ire ea .., .. .- .. ex' -.:a'i P.:.by

corn pri.duc-'ion l ii,;d '.. n ." .. ,








Because baby cron is a speciality product with a

limited fresh market demand, its demand constraints are based

upon the capacity of the largest baby corn processing plant

in El Salvador. The corn is grown from a special seed, H-101,

which is not used for other purposes. The monthly capacity

of the processor is 2,000, twenty pound boxes. The con-

straint places an upper limit on production which is slightly

greater than the capacity of the processor to account for

limited fresh market sales and a newly founded processing

plant, There are no imports recorded or allowed in the models

for baby corn.

The non-vegetable products might or might not be imported,

but their import is not explicitly accounted for in the models.

The non-vegetable products are +;.baccog citrus, peanuts,

rice, beans, corn, plantains, dry-lot and pasture milk pro-

duction, and sugar cane. C.i i-*,-, i.lantS'i and tobacco

production are not permitted to exceed, but can be less than,

their present pr. tion levels .3,- the DB:-.-_ i.~ ., Grain a:d

milk pr;,%fo.:ition are not ", .. i''! '., -...i -action is not

limited because of the government's concern to increase milk

production and ie t ......* ',.otitan is well

situated relative :. thv .. -,or Salvadorean Iarkket,, :so milk,

a highly pe, .' "e : ;, '. be :i., to market with-

out fear r.'f spo,.! ...c. :... :.,rintion capacity for peanuts,

deterim.inrd by i t.-r.view with i Israeli '.hr.<'ian in in El

SalvadorI f.... the .i.t for p au' production. Sugar

cane is ,e~: .. "fe t in ;, .t ..; ..A.. i '. ion l.v ls

form the I.i.. r 3 it on pI .- '.:_ c*.ne Oid not






39
enter .the solution of the competitive model on the basis of

the crops net return, it is forced into the second solution

at the present level of production.
For all crops present production was calculated as

the average seasonal production from November 1970 through

October 1972i The production through this period was

determined by studies conducted by the extension agents and

Development of Research Division of Irrigation and Drainage.

Import levels are determined from two government publications

(3,4).
Imports

In order to compare the District with Guatemalan vege-
table sources, import activities are included explicitly in

the two situations studied under the competitive model.

The monthly per unit value of import2 plus ten percent for
transport costs comprise the import c.ots used in the models

(Appendix B). The gross return for import is the same as the

.gross return for production. That h, the :.-jtrict receives

the farm price for a product, no ..:'.; I. what source is used.

Thus, the net return for L..,ipoi I 1 .:qu.l to the farm price less

the cost of import.



2 The value .. 1 .. di'... -. the monthl.j. per
unit value of la. L.:ct and the ...-.. value imported of each
'vegetable by the total volume imported as reporte'din the 1971
and 1972 editions of Utlti .. i" A r I. a and the
1969/1970 and 197 0/1. -'7 ed it of the Anuario de Estadi:-s ti.as
Ac~~pc) i ?* ij.~.








Quality of imports, as well as value of imports, had to

be determined relative to the quality of the product from

the District to know whether or not the produce from the

District could be sold as easily as the Guatemalan produce.

If it had been determined that produce from the District was

inferior to Guatemalan produce, a reduction in price would

have been necessary for produce from the District. Produce
quality information was obtained from Salvadorean wholesalers

and retailers and personal observation in El Salvador and

Guatemala, It was determined that produce from the District

is as high',in quality as the Guatemalan produce.

Farm Prices

Unfortunately, Salvadorean farm prices have not been

recorded or reported to any great extent. The production

budgets that were supplied by the Zapotitan extension agents

and the Department of Research, Division of Irrigation and.

Drainage report farm pri,. only for the plantings to which

they pertain. Two me4r.- .$- to determine :f- m prices for the

remainder of the year' were .:J, '.; K' st ne lt~.h-'. employed
the wholesale prices of either San Salvador or Guatemala

City as bases for *:.. pa1.nsons with pri-e'- F:per.ified in pro-

duction budgets, Ti':i farm price gi,/,,. in a production budget

was used to fc-. -r a ratio with the wholesale price for the

harvest months in ". ':'.v: central market, as reported

by the Ministry of A.. culturer, hni the Salvadorean whole-

sale price .. ablel, the Guatemala City wholesale






41

price was used. The ratio was then multiplied by the whole-
sale price of the harvest month in question, giving a farm
price estimate. This method assumed a constant marketing
3
margin.

A symbolic representation of the method is:

FP x WPaiq PP iq

aij
where FP= the farm price of product
Si in period ji
WPaiJ = the wholesale price of
product i in period j in
country at
-WP I = the wholesale price of
aiq product i in period q in
S"country al
:FPiq = the farm price of product
i in period qt
a =/ Guatemala or El Salvador,
and j q.
Interviews with wholesalers were the second method

utilized in determining farm prices. Wholesalers in the

central market in San Salvador were asked how much they usually
paid for a given product in a given month. Since the whole-

salers specialize in a small group of products or in a single
product, the infoc,-:..:I obt-ined in this manner was thought

to be reasonably a:.cur. : farm price was multiplied by

yield to determine the gross return for production.



3
Recent work has shown that Salvad..rer- prices are highly
dependent on Guatermal, pri r : fio,. many .i:oducts. Thus the
author feels that the use of Ga ..4- ,: ,l,- :, :c*: 1.. justified.








Net Return

Gross return less product acquisition costs equals net

return to management. The costs of product acquisition are

equal to the total cost of production or the cost of import.

For each production activity labor costs are added to this

net return figure to determine net returns per manzana to

labor and management in :~i-~i growing season. Because imports

require no resident labor, the net returns for imports are

the coefficient used in the objective function for the import

activities. In reality, the returns for imports do not accrue

to the people of the District. To calculate the actual return

to the District the sum of the net returns for import is

subtracted from the maximized net return figure after the

solution is obtained.

The Models and Analyses
When imports were I.X.' icitly included in the competitive

model, all v.. h-.table d: ,,~,i ..:,n. int:s X excluding baby corn,

form equaal.i', and all the non-ve-.'.-table demand constraints,

including a;.._ .. fonr upper .i..,., ;i:cqualities. A

variation on h. .... ..:titive d": dl forced sugar cane pro-

dcicti.cn to be .', ':.. its present level. The second model,

or ron.-.orpeti? ve did :.,t explicitly )r.,clude vegetable

imports, 'Th' '', .v I:', .,:it of those products

which are 'n..i pi. i th .' tive model were changed

to in~.qualities th a lower limit of -. ,,o i;,,, an upper limit

-qual to .., levels at ., the .a ltraints were

fixed. h' *,.. .- ... -t .' r, -. le demand








Net Return

Gross return less product acquisition costs equals net

return to management. The costs of product acquisition are

equal to the total cost of production or the cost of import.

For each production activity labor costs are added to this

net return figure to determine net returns per manzana to

labor and management in :~i-~i growing season. Because imports

require no resident labor, the net returns for imports are

the coefficient used in the objective function for the import

activities. In reality, the returns for imports do not accrue

to the people of the District. To calculate the actual return

to the District the sum of the net returns for import is

subtracted from the maximized net return figure after the

solution is obtained.

The Models and Analyses
When imports were I.X.' icitly included in the competitive

model, all v.. h-.table d: ,,~,i ..:,n. int:s X excluding baby corn,

form equaal.i', and all the non-ve-.'.-table demand constraints,

including a;.._ .. fonr upper .i..,., ;i:cqualities. A

variation on h. .... ..:titive d": dl forced sugar cane pro-

dcicti.cn to be .', ':.. its present level. The second model,

or ron.-.orpeti? ve did :.,t explicitly )r.,clude vegetable

imports, 'Th' '', .v I:', .,:it of those products

which are 'n..i pi. i th .' tive model were changed

to in~.qualities th a lower limit of -. ,,o i;,,, an upper limit

-qual to .., levels at ., the .a ltraints were

fixed. h' *,.. .- ... -t .' r, -. le demand









constraints of those products which were produced in the

competitive model unchanged (they had all been produced at

their upper limits), Sugar production was forced into the

solution of the non-competitive model, and the other non-

vegetable demand constraints formed inequalities. It was

assumed in the non-competitive model that all vegetables not

produced in the solution would be imported, but income accruing

from vegetable imports was not included in the objective

function of the model.

To analyze proposition 1 the net return figures of the

budgets are examined to determine whether vegetable production

is profitable. Then, the net returns to labor and management

per manzana for all specified crop and livestock alternatives

are used in the objective function of the non-competitive

model to determine the relative position of vegetable pro-

duction in the District, The c ,a.petitive model evaluates

piLoposition 2 by i. Li,.'; ~.-i ..table imports in the objective

function.

Proposition 3 is e~,.,r; nt, by comparing the estimate.of

present lie ,. ....... in the District and total.veg-

.etable imp,.,lt .::'-- < -.. *'. income, employment and import

levels in --.:.... of "' runs. AlI~.c.,~h imports are excluded
from the non-competi.-tive : '.., it is assumed that commodities

not Produced are .. ,. .. .. ir...;rt value for the non-

j'tp.t itive ..*. 1 .- be ..- -l- .: d .

The profitability oaf v .ta1Able p..>~l'tit.,i credit avail-
ability and the role of :,' .- can: l.: ,:....t.' i, alative to








vegetable production are the only part of proposition 4
that can be analyzed directly by the models. Market coor-

dination and the ability of the District to compete with
Guatemala are intertwined to some degree because of the
marketing channels that now exist between Guatemala and El
Salvador. If the competitive model indicates that the

District can compete with Guatemala, then it could be said

that a combination of extension problems, market coordination
-problems and the periodic presence of gluts are barriers to

vegetable production in the District. On the other hand, if
vegetable production is determined to be unprofitable in
an absolute sense, unprofitable relative to the other crop and

livestock alternatives or that the District cannot compete
with Guatemala, the other parts of proposition 4 become
irrelevant.

SurmaRry
The goal of this thesis is to determine the potential
for increasing the employment and real income of the people
of the Zapotitan Irrigation and Drainage District. Special
emphasis is placed on determining the economic feasibility

of increased year-round vegetable production, to improve
the employment and income? situation. To do this, the maxi-
iizationof annual net r't-.rn to labor and management is used
as the objective function in the linear programming models.
The government desires to decrease agricultural imports, 'To

determine whether or not the District can'compete with

Guatemalan sources of voectale supply, imports are explicitly
included as alternative supply sources in the -.,mpetitive model.






45

The constraints of the model are labor, credit, poorly

drained and well drained soils, and demand. Rainy season

horticultural production is limited to the well drained soils,
but dry season horticultural production and all other pro-
duction can take place on either soil type. Thus when imports
are included explicitly, the demand for a vegetable grown

during the rainy season must be met by production on well

drained land or by import. When imports are not explicitly
included, and the vegetable demand constraints are in-
equalities (not equations) the demand constraint of a veg-

etable grown during the rainy season can be met by production

on well drained soil, although production does not have to

occur. Since demand must be satisfied, imports are implicitly
included in the latter case.











CHAPTER III

RESULTS AND ANALYSIS

This chapter presents the results of the competitive

and non-competitive models by.showing how changes in assum-

ptions and policy objectives affect product mix, land use,

employment, income, credit, imports and the balance of trade.

A comparison of the non-competitive model (no direct compe-

tition from Guatemala) with the actual situation is accomplished

first. Then the non-competitive model is compared to the model

in which vegetables from Guatemala compete with those from

the District. Finally, the effect of eliminating sugar cane

is studied in the competitive model. Also when appropriate,

the competitive model is compared to the actual situation.

Production and Land Use

Land is used ,'.re fully and uniformly in the non-com-

petitive mod.- t.' i it is currently being utilized (Figure 3)

as indicated by a land use '
tion in the model -ifipar-:'l to 62 percent at present. The

major cause for i.- diff::r,.:e is an increase in pastures

for dairy production to 6.84 times the current area devoted to

pastures. There is also an increase in vegetable production

during the la%:,.~' part of the dry season and during the


- llC---^l11-------
The.. land use inex represents manzana-months used
divided by manzana-months available,











CHAPTER III

RESULTS AND ANALYSIS

This chapter presents the results of the competitive

and non-competitive models by.showing how changes in assum-

ptions and policy objectives affect product mix, land use,

employment, income, credit, imports and the balance of trade.

A comparison of the non-competitive model (no direct compe-

tition from Guatemala) with the actual situation is accomplished

first. Then the non-competitive model is compared to the model

in which vegetables from Guatemala compete with those from

the District. Finally, the effect of eliminating sugar cane

is studied in the competitive model. Also when appropriate,

the competitive model is compared to the actual situation.

Production and Land Use

Land is used ,'.re fully and uniformly in the non-com-

petitive mod.- t.' i it is currently being utilized (Figure 3)

as indicated by a land use '
tion in the model -ifipar-:'l to 62 percent at present. The

major cause for i.- diff::r,.:e is an increase in pastures

for dairy production to 6.84 times the current area devoted to

pastures. There is also an increase in vegetable production

during the la%:,.~' part of the dry season and during the


- llC---^l11-------
The.. land use inex represents manzana-months used
divided by manzana-months available,









































































8 9 10 II 12
--------- a My S----


Figure 3. :1;:.!. ue :. the titann District.


2 3


4~ 5


L-'\






48
entire rainy season, J..'air production decreases in the non-

competitive model. This causes greater uniformity in land

use due to an increase in vegetable production, the most
profitable enterprise alternative. The decrease in grain

production permits more land to be used for the less labor

intensive dairy enterprise which requires land throughout

the year.

When competition from Guatemala is considered, there is
not only a decrease in vegetable-production, but also in

corn, rice, and dairy production. The decrease in vegetable

production occasioned by an inability to compete with
Guatemala makes more labor available for the production of
beans, the most profitable and labor intensive of the three

grains considered. The large increase in beans, which is

seasonal, causes a d-crease in corn, and rice because these

enterprises cannot compete favcr ably for labor and also a
decrease in pasture because less land is available for

pasture production ("'J:ures 4,5,7, and 8). In all, less

land is used in *..(* 0,.r;pti 've model (an 80 percent land

use index compared to E pe~ --ent) and there is greater .vari-
ation in monthly land I.-.: 'i-.. in the non-competitive model
(Figure 3).

When sugar .. is .l ' .d land use becomes less
uniform and ,J. l.1 s ....-" .,.: .. ? .. year (Figure 3). Land
use intensity in the ...;. .iltive model would decline to 76
percent without sugar cane from 80 ,i. cent with sugar cane.















S110

1055
I OSS


1000


945


890


835


780


725


660

605


'. VEGETABLE SUBTOTAL

\ /- .-..--.


1i'-*-


I 10 BEANS



PEANUTS ..,-

6 7 5 ? 10 II 12 I 2 3 4 s


Figure 4 :'i w e W' ;WC -, .d land use.


MZS.


uMS. AVAILABLE _



GRAND TOTAL /




\V/












SUGAR CANE


495

440


385


330


275

2 20


165


_ __ ~__ _1111111_11


,




















J .AW LABL_.E _,.._._ \,.,----- .----_- ---



GRAND TOTAL


SUGAR CANE


I


vEGETABLE SUSITIAL
." '


/


TOBACCO

PEANUTS

4
... wONTHS --- -- ---- an- well

ve u model with s'!... canes well
Us,e


I 1 10


1035
MZS.
1000


945


890


835


780


725


60O


605


550


440


305


330


275


220


IS5


' : I B~















1110


MZS.1055 uZS AVAILABLE -_- --

1000

945 I \ \RANO TOTAL

090


835

I S
780


725

660 I

605 -.


2 I

4495 1 1 BEANS

t 440


38 ---PASTURE

330


275 /j


220

165

10

/ -

PEANUTS

S-------

S.1.-.- .. 6, d.joi.pf v alv to ....o canes a well















5000


MZS.4750- z

4500


4250-


4000


3750


3500


3250


3000


0 2750


2500
0
2250
>-J
*C 2000
0
0
1 750


1 500


1 2 50


1000


750


500


20





S* *


5. AVAILABLE

/ GRAND TOTAL Y




^'\/ /


PASTURE


,/ CORN


1 !2 I 2 3 4 5


:;. ve mocel : i d land


I_ IIII__U_____I_____I__I__CL3_11~YI(---


~' \
--,*~~ \


/
















5000



MZS.4750

4500


4250


4000


3750


3500


3250


3000


2750
0
w
2500


22 50

>-
-J 2000
0

I 750


1500


1250


1000


750


500


250


0


BEAI


._ ._ ,. \VEGETABLE SUBTOTAL
\


/


- .. TOBACCO r..--- PEAJTSR .


SUGAR CANE


S 6 7 8 9 10 11 12
--- N0 THN --


2 3 4


Figure 8. Competitive model with sugar canes poorly
drained land use.


MZ5. AVAILA8LE -___ ______

"LAE -" RANO TOTAL






















PASTURE


-~~,


..c,.
~.,'-- --~


--- L~




















4750
NZS.

4500


4250


4000


3750


3500


3250


3000


2750


2 5QO


2250


2000


1750


1500


1250


1000


750


500


2 50


0


AL

CORN



NU
V "-' A A N U T S "


5 6 0 II 12 2 3 4
-- O THS --- 3-----


Figure 9.


Competitive model without sugar cane:
poorly drained land use.


GRAND TOTAL


VEGETABLE SUBTOT

\


1-'---'- 171 ` ---------~


- -~---- ---------


.
r





55

The decline is caused by a decrease in pastures, even though
seasonal bean and corn production increase (Figures 5,6,8,

and 9). Bean production increases because labor is no longer
required for the sugar cane harvest, permitting plantings at
times that would utilize labor during the sugar cane harvest
period. The increase in bean production also requires some
land that is used for pastures when sugar cane is produced.
Thus, the release of labor by the sugar cane harvest to bean
production permits beans to displace pasture. Vegetable pro-
duction in these two situations is the same, showing that

sugar cane production has no effect either on land used for
vegetable production or the ability of the District to compete
with Guatemala.
Land use intensity is greater in the competitive model
with or without sugar cane than at present primarily because
of the large increase in pastures (Figure 3). Vegetable

production, although less than current levels on an annual
basis, is more uniform throughout the year.
Credit

Although the total amount of credit required by the

models varies (Table 9), no model utilizes all of the credit
available, The models require very little more than the
A1,007,500 supplied by CODEZA and the Agricultural Promotion
Bank in 1973. Because the relative quantities of credit vary
directly with area, the pattern of credit use is the same in
all of the models. The highest use of credit is during the
first quarter followed by the fourth quarter (Table 10).







Table 9, Summary of Credit Use (Colones).
Non- Competitive Model
Competitive With Without
Model Sugar Cane Sugar Cane
Total Used 2,674,000 2,265,000 1,940,000
Less Generated 1,281,000 1,095,000 803,000
Net Used 1,393,000 1,170,000 1,137,000


Table 10. Credit Use by Quarter (Colones)
Non- Competitive Model
Competitive With Without
Quarter Model Sugar Cane Sugar Cane
1 1,063,000 995,000 962,000
2 320,000 175,000 175,000

3 518,000 544,000 225,000
4 773,000 561,000 578,000






57


Employment

Both models utilize more labor than is currently

employed, but the employment level in all is still relatively

low (Table 11). Much of the increase is caused by the large

increase (approximately 2,000 manzanas) in pasture for dairy

production, even though it is a relatively low labor intensity

enterprise.

Employment in the non-competitive model is approximately

23 percent greater than current employment and the index of

labor use intensity increases from 60 percent to 72 percent.

The increase is caused by greater vegetable and dairy pro-

duction which offset a decline in employment in grain pro-

duction. Approximately 11 percent of the labor in the

District is employed by grain production in the non-com-

petitive model, yet at present over one-half of the labor in

the District is so employed. The percentage of labor

employed by vegetable production increases from approximately

15 percent to 40 percent (Table 12).
Employment from January through March and from June

through August is much greater than at present. The differences

are caused by increased vegetable production in the late dry

season (January-March) and in the rainy season as well as

the large increase in dairy production.

The decrease in vegetable production that occurs

in the competitive model creates less labor demand during the



The index of labor use intensity is specified as man-
days used divided by man-days available.








Table 11,


Labor Available and Labor Utilized Under Actual
Conditions and in the Models.


Actual
Month Man-Days
Used

January 26,031.48
February 9,031.25

March 42,298.17
April 28,047.83
May 45,312.26
June 15,740.88
July 17,117.23
August 17,316.89
September 18,593.39
October 37,523.01
November 42,876.03


December


30,037.05


Man-Days
Available in
the Models
46,529.00
44,506.00

50,575.oo
40,460.00

50,575.00
48,552.00

50,575.00
46,529.00
46,529.00

50,575.oo
48,552.00
40,460.00


Non-Competitive Model
Man-Days Used Percent

46,529.00 100.0

37,065.48 83.3
42,804.86 84.6
27,646.57 68.3

50,575.00 100.0
45,843.84 94.4

31,257.99 61.8
23,001.04 49 4

17,532.21 :37.7
16,569.35 32.8
41,027.35 84.5


25,155.73


62.2


TOTAL 329,925.47 564,417.00 405,008.42 71.8


11___1 __ _I I I_ _







Table 11. Extended.
Competitive Model
With Sugar Cane Without Sugar Cane
Man-Days Used Percent Man-Days Used Percent
46,529.00 100.0 46,529.00 100.0
36,510.72 82.0 34,762 34 60.0
30,750.74 61.0 30,334.36 60.0
22,246.99 55.0 20,039.56 50.0
33,942.09 67.0 32,204.80 64.0
35,539.98 73.0 35,790.65 74.0
21,053.03 42.0 20,823.75 41.0
22,612.03 49.0 22,201.93 48.0
19,891.56 43.0 19,663.28 42.0
18,883.44 37.0 48,292.97 96 0
40,119.77 83.0 41,684.56 86.0
17,526.68 43.0 29,692.90 73.0

345,606.03 61.0 382,021.10 -68.0
345,606.03 61.o 382,021.10 68.o







first eight months of the year than in-.the non-competitive

model and the labor index drops from 72 to 61 percent (Table

11). The decrease in labor required for vegetable production

permits an increase in bean production which has relatively

large labor requirements, although less than for vegetables.

This shift in the enterprise mix due to labor availability

makes less land available, causing a decrease in pastures for

dairy production in the competitive model.

In spite of greater vegetable production in the non-
competitive model than in the competitive model, the differ-

ences in monthly labor requirements are not great during the
last five months of the year. This is true because the

influence of sugar cane production on labor requirements is

greater than that of all other enterprises.

If sugar cane were not produced, local employment would
be higher (Table 11) as indicated by a 68 percent labor

index compared to 61 percent. The difference is due to

increased bean and corn production. Without sugar cane,

about 35 percent of the labor employed in the District is
for grain production, while with sugar cane production only

6 percent is used for grains and there is a decrease in the

relative .importance of peanuts and tobacco in reference to

employment (Table 12).

The differences in monthly labor requirements when
sugar cane is not produced are great only for the last three

months of the year because of the high amount of labor that

is required for the cane harvest. Without sugar cane there







Annual Labor Use by Product Group Under Actual
Conditions and in the Models.


Situation Vegetables Dairy Grains


Actual


Baby and Sugar
Fresh Corn Cane Othera


-------------------per cent ----------- ------ --
15.45 3.54 52.30 16.57 10.08 2.06


Non-compe-
titive Model 40.45


Competitive
Model with
Sugar Cane

Without
Sugar Cane


17.69

16.00


24.25 11.26


24.32 6.06


21,08 34.80


15.34


18.71

16.26


5.35 3.35


6.27 26.95


0.0 11.86


aTobacco, peanuts and fruits.


Table 12.


~II~ ~_~L~l_____~


I -I --~ --"-"-~-"C-----^-----rCIC-~-u~- ---







is a large October bean planting, with heavy labor require-
ments in November. Because of the large November labor

requirements for sugar cane, bean plantings in October are
nearly curtailed when sugar cane is produced. Because
labor can be used more profitably in bean production than in

dairy and the additional bean production requires land that,
is used for pastures when sugar cane is produced, dairy pro-

duction decreases when sugar cane is not produced.

Income
The total net return to the District increases relative

to the actual situation by almost $1,400,000 or 38 percent
in the non-competitive model (Table 13). Labor income is
approximately 68 percent or $600,000 greater than current

labor income because of the increase in vegetable production.

Due to more intensive land use, the net return to management
in the non-competitive model is approximately 28 percent
greater than the current net return to management.

In the non-competitive model, a higher proportion of the

net income to the District is from labor earnings than in the
actual situation. The non-competitive model displays this
result because of an increase in the relative importance

of vegetable production, which is labor intensive, and a

decrease in the relative importance of sugar cane production,

which produces high returns to management relative to labor.
The, increase in the share of net income from labor earnings

occurs inspite of the decrease in the relative importance of

grain production which is more labor intensive than dairy
production.








Table 13.


Income, Summary and Comparisons Under Actual
Conditions and in the Models.


S Actual
% of Total


Labor Income
9~2,597
26.3


Non-Competitive
Model 1,582,387
% of Actual 167.9
% of Total 31.9

Competitive Model
With Sugar
Cane 1,154,473
% of Actual 122.5
% of Total 33.5

Without
Sugar Cane 1,433,804
% of Actual 152.1
% of Total 34.4


Net Return
to Management
2,647,470
73.7

3,378,637
127.6
68.1


2,290,893
86.5
66.5


2,728,610
103.1
65.6


Total
3.590o0o7-'-


4,961,024
138.2



3.445,366
96.0


4,162,413
116.0


I~_ _I _


_ __ __ 1111~_--^ 1~1


II I~-I ---------- II- I







Relative to the non-competitive model the total net
return to the District decreases by approximately '1,500,000

in the competitive model when sugar cane is produced.

Labor income decreases by approximately '400,000 and net
return to management decreases in vegetables, corn, rice, and
dairy production, but these income decreases are mitigated

by increases bean production and by tobacco production.
Although labor income in the competitive model is approximately

0200,000 (23 percent) greater than current labor income the
current net return to labor and management is approximately

0150,000 or 4 percent greater than the competitive solution.
For the competitive model total income to the District
would increase by approximately /700,000 is sugar cane were

not produced. Income of local labor would increase by P380,
000, and total labor income, that of migrant (not included in
the model) and local labor, would increase by approximately

V115,000. The net return to management is 0437,700 greater
when sugar cane is not produced than when it is produced
because of increased corn and bean production. The net return
to labor and management when sugar cane is not produced is

greater than current net return to labor and management,

Total income earned by labor in both-solutions of the
competitive model is less than in the non-competitive model
because of the decrease in relative importance of labor
intensive vegetable production. Although the relative impor-
tance of grain production increases it is not sufficient to
offset the decrease in income and employment from vegetable
production.











Both imports and exports are relevant to the role

played by the Zapotitan District in the balance of trade.

The importation of three product groupings-vegetables, grains,

and dairy products-is important in the models. Sugar cane

is the only export crop considered.

Compared to present import levels, vegetable imports

decline sharply, by nearly 9904,.000 in the non-competitive

model (Table 14). The number of vegetable products imported

is also less as celery, cauliflower, and salad and cooking

tomato imports are eliminated (Appendix C), Carrot, cabbage,

guisquil, lettuce, onion, potato, string bean, and sweet

pepper imports are greatly reduced, while only yuca shows

a large increase in import value.

The increase in dairy production in the model is large

enough to eliminate the importation of dairy products,

presently valued at (12,357,200. Corn production is

approximatley 100,000 less than current production,,so corn

imports increase appreciably. Rice imports increase by over

3j4,000 and bean imports also increase. Overall, the balance
of trade improves by over A13,000,000 in the non-competitive

model due almost entirely to the elimination of dairy product

importation,
*' 'The need for dairy importation is also eliminated when

competition from vegetable imports is considered. Vegetable

imports increase sharply and are greater than current imports









Table 14. Potential Changes in the Agricultural Trade Surplus
Indicated by the Models.
Non-Competitive
SModel Competitive Model


With


Without
sugar cane Sugar Cane


Vegetables

Corn

Rice

Beans

Dairy

Sugar Cane

Total Change

% of Current
Agricultural
Trade Surplus


+ 903,627.70

- 123,398.93

- 9,876.49
- 18,662.76

+12'0357,200.00

0.0

+13,108,989.52


131,08
142,20933

34,209.33
+ 17,911.04

+ 12,357,200.00
0.0

+ 12,198,397.94


- 191.08

- 107,127.33

- 34,312.69
+ 44,247.44

+12,357,200.00
- 2,672,000,00

+ 9,587,816.34


--~--I~3,5- L 3,2 _I__ __


_ _I_~~l~l ~I_ I_ I I


3.5


3.2





67

with the composition of vegetable imports changing compared

to the non-competitive model (Appendix C). Imports increase

markedly for carrots, celery, cucumbers, guisquil, lettuce,

onions, sweet peppers, potatoes, string beans, and cooking
and salad tomatoes. Corn, and rice imports increase, bean

imports decrease, and no change is indicated for sugar cane

exports and the imports of dairy products. The agricultural

trade surplus is reduced by approximately j1,000,000, caused

primarily by an increase of over. 903,000 in vegetable imports.

Vegetable production is not affected by sugar cane

production at present levels. Although dairy production

decreases when sugar cane is not produced, sufficient milk

would still be produced in the District to eliminate the need
for the importation of dairy products. Corn production increases
when sugar cane is not produced, causing a reduction in corn

imports. Imports of corn in the competitive model without
sugar cane are greater than current imports. As when sugar
cane is produced bean production increases over current
levels. In fact, the increase when sugar cane is not produced

is so great that a potential for export exists. In neither
solution of the competitive model is tice. produced, causing

an increase in imports to compensate for the decrease in pro-
duction.
Sugar cane production is important when the balance of

trade is considered. When sugar cane is not produced at
present levels, there is a reduction in foreign exchange

earnings of %1,672,000 with respect to sugar. Although







corn and rice imports increase, and the elimination.of sugar

cause an increase of over O9,500,000 relative to the current

balance of trade surplus, due to the elimination of dairy

imports, but a reduction of over 02,600,000 compared to when
sugar cane is produced.

Policy Alternatives
If vegetable imports were limited, land use, employment,

labor income, net return to management and the contribution
to the trade surplus would be higher than when vegetable

imports are unlimited (Table 15). Much of the increase in

land use is due to the increase in dairy production and 94

percent of the increase in the trade surplus is from replacing

dairy imports. Prices paid by consumers for vegetables would

increase to cover part of the increases returns created by

import restrictions, when the District produces at costs in

excess of those in Guatamala. The greater incomes, however,

would improve the well being of consumers in the District and
could provide an effective demand stimulus for other goods

and thereby contribute to the development process. Relative

to the entire economy, a policy to limit vegetable imports
would have a very minor impact and such a policy is also in
conflict with the free trade goals of the Central American
Common Market. For both these reasons it is unlikely that

vegetable imports will be restricted. Hence, the ability,

to compete with Guatemala becomes an important concern.
The District can compete-with Guatemala in the pro-

duction of several vegetables whether or not sugar cane is

produced (Table 16), Production of thesk vegetables would








Table 15.


Summary of the Results from the Models: Land Use, Labor Use,
Income and Trade Conditions.


Non-Competitive Competitive Model
Actual Model With Sugar Without Sugar


Land Use 62 87 80 76
Index

Labor Use 60 72 61 76
Index

Labor a! 942.6 1,582.4 1,154.4 1,433.8
Income-

Net Return tk 2,647.5 3,376.6 2,290.9 2,728.6
Management-

Labor and
Management 3,590.1 4,961.0 3,445.4 4,162.4
Incomee-

Change in
Balance of -- +13,109.1 +12,198.4 +9,587.8
Trade-


1,000's Colones.






70

Table 16, Vegetnbles in Which the Zipotitan District can Compete.

Product Months Planted


Beets




Cabbage








Cucumber


Onion

Potato

Radish


Cooking Tomato

Salad Tomato


Watermelon


Yuca


April
June
August
October

January
February
March
October
November
December

February

February
April

February

February

April
June
August
October

February

February
April
June
August

January
March
September
November

May


I~----Cllll~-C----Lll ~1~-)--~III~-


-LI------l LII--llllll~~-ll~LII-- 1_1







increase employment, labor income and net returns to manage-
ment in the District. If slight yield increases were made in

the production of several vegetables shown in Table 17 without

increasing production costs--that is, if there is a shift in

the production function rather than a movement along the

function--the District could compete with Guatemala in

producing these vegetables. If a competitive advantage can

"b attained in producing these vegetables increases in land

use, employment, labor income and net returns to management

could be realizd without increasing costs to consumers. The

research required to make this change would utilize many of

the limited resources available to researchers in El Salvador

and could thus delay possible advances in areas that might

have greater effects on the varied development objectives of

the government.

In a free trade situation with and without sugar cane

production, the District could contribute to the agricultural

trade surplus by increasing dairy production. This increase

would also serve to intensify land use in the District. Sugar
cane production intensifies land use and adds to the balance

of trade surplus, but it causes a decline in employment and

income.








Table 17.


Vegetables Which Require Slight Yield Increases for the
District to Compete with Guatemala.


Percent Increase in Yields
Product Months Planted With Sugar Cane Without Sugar Cane


Cabbage


April
May
June


Celery


Cucumber



Guisquil


Onion


String Beans

Sweet Pepper


April
June
August
October
December

June
August
October
December

January

October
December

February


April 29.39


20.95
29.24
28.86


20.89'
29.17
28.80

25.71
27.09
13.38
7.05
12.12

22.74
27.93
16.10
17.12

5.23

15.40
2.07

32.87


25.73
26.86
16.54
8.12
16.46


22.82
34.27
19.11
21.22

5.48

15.00oo
3.55
25.86

22.59











CHAPTER IV


SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS

Summary

El Salvador has a very high population density and suffers

from high seasonal unemployment, low rural income, and a

generally deficient national diet. To improve the situation,

the Ministry of Agriculture embarked on an agricultural

diversification program with emphasis on promotion of vegetable

production. It is believed that increased vegetable pro-

duction can improve rural incomes and employment while simul-

taneously improving the balance of trade by substituting

locally produced vegetables for Guatemalan imports. The

primary objective of this study was to determine the feasi-

bility of expanding vegetable production in the District, the

most important vegetable growing area in the country, and to

ascertain the effectiveness of doing so as a means of reducing

rural unemployment and increasing rural incomes. Another

objective was to define barriers to increasing vegetable

production when vegetable enterprises were found to be econ-

omically feasible. A third objective was to determine the

potential of the Zapotitan Irrigation and Drainage District

for producing sufficient quantities of vegetables to reduce

imports.

Two linear programming models were used to maximize the

annual net return to management and resident labor in the

Zapotitan District and to determine the effects of increasing

73











CHAPTER IV


SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS

Summary

El Salvador has a very high population density and suffers

from high seasonal unemployment, low rural income, and a

generally deficient national diet. To improve the situation,

the Ministry of Agriculture embarked on an agricultural

diversification program with emphasis on promotion of vegetable

production. It is believed that increased vegetable pro-

duction can improve rural incomes and employment while simul-

taneously improving the balance of trade by substituting

locally produced vegetables for Guatemalan imports. The

primary objective of this study was to determine the feasi-

bility of expanding vegetable production in the District, the

most important vegetable growing area in the country, and to

ascertain the effectiveness of doing so as a means of reducing

rural unemployment and increasing rural incomes. Another

objective was to define barriers to increasing vegetable

production when vegetable enterprises were found to be econ-

omically feasible. A third objective was to determine the

potential of the Zapotitan Irrigation and Drainage District

for producing sufficient quantities of vegetables to reduce

imports.

Two linear programming models were used to maximize the

annual net return to management and resident labor in the

Zapotitan District and to determine the effects of increasing

73






74

vegetable production on employment and income as well as the

balance of trade In the competitive model vegetable imports

were considered explicitly to determine the competitive

position of the District relative to Guatemalan vegetable

supply sources. In this model the District received the farm
price for a product whether it was produced or imported

The cost of production, excluding labor costs, was sub-.

tracted from the gross return to determine the net return for

importation. Thus, the supply source of vegetables that
would maximize the net return to resident management and

labor, given the resource limitations and other production

potentials of the District, could be found.

The non-competitive model included an assumption that

vegetables not produced would be imported, but no income was

earned from importation. This model is more analogous to

the farm management situation of producers and permits

determination of an optimum enterprise mix without import

--competition. Thus, the District might not be able to compete
with Guatemala in production of a particular commodity but

this commodity could be a very profitable production alter-
native within the District itself.
Limitations of the Study

The assumption of constant priced combined with fixed

vegetable demands is a limitation of the study. A future

study should hold either demand levels or prices constant

and vary the other. Prices, technology, and consumption

change over time. Because of these chonrgcu this study should





75

be updated periodically. The prices of fertilizer and other

petroleum based inputs are greater than they were when the

analyses were conduced so appropriate changes should be

made to reflect these price increases.
The quantities forming the vegetable demand constraints

are subject to question because of the reliability of the

import figures. The Salvadorean estimates of quantities and

values of the Guatemalan imports are not equal to the

Guatemalan export estimates. Because more Salvadorean data

were available to the author and the Guatemalan figures are

not thoughtto be any more accurate than the Salvadorean

estimates, Salvadorean data were used entirely. Work is

presently being conducted to improve the quality of the

Salvadorean information. The changes in information based
upon this work should be included in a future study.
Another shortcoming of the study is the maximization

of the net return to management and resident labor. It is

possible, although the situation did not occur in this

research, that an unprofitable, highly labor intensive enter-

prise would enter the solution. Other similar studies might

maximize the net return to management and thus provide for

comparisons between the two solutions. To maximize the net
return to management and resident labor and to then develop

policy recommendations from the research presupposes that

the government can direct production patterns and enterprise

combinations within the District. This is necessary in
particular if returns to management conflict with returns to
labor.










Coglusions and Recommendations

Limited domestic demand prevents vegetable production

from having a major impact on employment, income and the
balance of trade through import substitution. The increased

production of certain vegetables, particularly during non-
traditional production periods (Appendix D), would, however,
increase income in the Zapotitan District. This holds even
though the District can compete with Guatemalan supply
sources in only a few vegetables during specific months
(Table 16). Demand should be determined for those vege-
tables whose production would increase income and employ-
ment with particular attention given to vegetables consumed
most frequently including cabbage, onion, potatoes, and
tomatoes. Experiments to improve the yields of several

vegetables where the District is in a poor competitive position
relative to Guatemalan sources should be undertaken (Table 17).
Increasing the production of vegetables for exportation

could serve to increase the employment and income effects
of vegetable production. In the near future Quality Foods
of Central America, Inc. will open a vegetable freezing
facility on the outskirts of the District. The impact of
this facility should be included in a future study which
includes the potential for vegetable exports. At present
levels of technology, labor limitations in key months
restrict the potential for export of fresh vegetables to
the United States.









As indicated by the amounts of credit required in the

models, there is sufficient credit available to the District

for increasing vegetable production through credit generation

via loan repayments. For credit to be effective requests for

loans must be made with ample time for processing. Extension

agents need to better inform producers about credit avail-

ability and procedures for requesting loans.

A recently completed study.on the support services in

the District, conducted by the Department of Research,

Division of Irrigation and Drainage, shows that the extension

agents visit approximately 60 percent of the vegetable producers

at least once a week during traditional production periods.

If these producers were to produce vegetables during the nqn-

traditional production periods, production in the District

could increase greatly. The extension agents, therefore,

must be able to deliver a complete package of technology for

each season. To accomplish this task the extension service

must work closely with the credit agencies and researchers,

and have adequate personnel and transportation facilities

to give the necessary coverage. A method of alleviating

the extension contact problem and for delivering part of the

technical knowledge package would be well organized field

days during various seasons and stages of the growth cycle.

These field days would 1) demonstrate to producers improved

methods for producing specific vegetables, especially in

non-traditional periods 2) emphasize costs, thus explaining

credit requirements, and 3) illustrate the importance of








vegetable production as a means of auglienting employment

and income.

The most important vegetable marketing problems to be

considered are the present seasonal scarcities and the

firmly established marketing channels with Guatemala during

non-traditional Salvadorean production periods. If the

present production pattern were changed, Salvadorean buyers

would probably seek the closer source and buy from the

producers in the District as they do presently during the

traditional production periods. Such a change, however,

would require a permanent and stable production pattern in

sufficient quantities to meet the produce needs of the

Salvadorean buyers. That is, a new production pattern must

emerge with market dependability for both producers and

buyers. For vegetables from the District that can compete

with Guatemalan sources (Table 16), marketing facilities

would require improvements to provide for year-round pro-

duction.

An increase of over 2,000 manzanas in pastures for

dairy production would have a much greater effect on employ-

ment, income, and import substitution than an increase in

vegetable production in the absence of export considerations.

The increase should take place primarily on poorly drained

land, replacing much of the seasonal corn and rice production.

Dairy production increases would require an expansion of
the dairy herd withinn the District and the origin of these








cattle would be important to agricultural trade balances.

If the cattle were from other parts of El Salvador, there

would be no increase in the national dairy herd size.

Similarly, a transfer of cows from one part of the country

to another would not change trade balances. On the other

hand, cattle importation would have a large adverse, but one

time, effect on the balance of trade and potential long term

benefits through import substitution effects of the pro-

jected increased milk production to the cost of cattle

import.

An increase in the dairy production could also take

place because of dairy herd improvement it is recommended

that credit and extension agencies promote herd improvement

programs.

Officials of the Ministry of Agriculture are planning

to promote livestock and grain enterprises in the recently

created Atiocoyo Irrigation and Drainage District. A study
should be made which includes the Zapotitan and the Atiocoyo

District as competing and complimentary sources of dairy

products.

Sugar cane adversely affects employment and income in

the District. When approximately 600 manzanas of sugar cane

are produced (equal to present production levels), resident

employment declines 10 percent and total employment,

including migratory labor, decreases by 4 percent from the

hypothesized situation when none is produced. The net return

to management decreases by 16 percent and earning to the






80

District, including net returns to management and resident

labor income, decreased by .7 percent (0717,000). Reasons
for the increase in amount of sugar cane production in the
District have not been determined so further research is
recommended to better understand this trend.

Labor requirements of the sugar cane harvest necessitate

a reduction in the production of beans and corn. The decrease
makes more land available for the entire year, permitting an

increase in pastures used for dairy production. Recently,
Ministry of Agriculture officials have stated that they want
bean production in the District and in El Salvador as a whole
to increase (6, p. 3). An increase in production can take
place if sugar cane is produced, but the increase would be
less than if sugar cane were not produced. The increase
when sugar cane is produced would cause a reduction in
vegetable production because bean production would then
compete for labor at the beginning of the dry season.
Because of the adverse effects of sugar cane production,

this research suggests that cane production should not be
expanded in the District. Although sugar cane production
in the District accounts for over 02,600,000 in foreign
exchange earnings, the production from the District is
relatively unimportant to total foreign exchange earnings
(Table 1). Thus, given the income and employment objectives
of the government it appears that sugar cane production in
the District can be reduced or eliminated without creating
trade problems.








Grain production uses labor that is made available by

changing conditions in the models and acts as a buffer to

extremely low employment. When dairy production increases,

grain production declines in the models because these enter-

prises compete for land. If grains are to become more

important, their profitability must increase. That is,

yields and/or prices must increase, yet present domestic

prices are high relative to world prices. Thus, research and

extension programs are needed to increase yields if the desire

to augment grain production is to be fulfilled without

adversely affecting Salvadorean consumers.' It should also

be noted that the use of labor for increased vegetable pro-

duction causes a decline in grain production and that grains

do not compete favorably with vegetables for labor.

In summary, vegetable production can increase in the

Zapotitan District, and thereby employ more people, increase

incomes, and substitute for imports. Vegetable production

increases, in the absence of extensive exports, cannot solve

the rural unemployment and income problem. At present,

vegetable imports are relatively unimportant to the balance

of trade. Thus, vegetable production research and the research

related to vegetable consumption levels may be of lower

priority than research on dairy herd improvement and expansion.

Relative to employment and income, however, the importance of

vegetables could increase if exports especiallyy to the United

States) were to increase suggesting that research oriented

toward export'demand potentials is necessary.































APPENDIX A








A symbolic representation of the

Maximize, Pi Yi + Si Zi

Subject to: Aq (Yq + Zi) <

C q(Yiq + Ziq) <

Ei (Yiq + Z ) <-

iq iq iq
Giq(Yiq + Ziq) <

Yiq + q =-
or Yq
iq

iq


Where


model ist
+ iq Xi

B

D
q

Fq
H
r
Liq (competitive model)

Liq (non-competitive
model)

Niq

1,2,... ,12
1,2,3, 4


= the net return to labor and management per man-
zana for producing vegetable i in period qs
= the quantity of vegetable i produced in period qs

= the net return to labor and management per manzana
for producing non-vegetable or baby corn i in
period q;
= the quantity of non-vegetable i or baby corn
produced in period qs
= the net return per hundred weight for importing
vegetable i in period qI

Sthe quantity of vegetable imported in period qt

= the labor required to produce product i in period
qi
= the labor available in period qI

= the well drained land required to produce product
i in period qI
= the well drained land available in period qs


Piq

Yiq

Siq


Z




iq

Aiq

Bq

Ciq

D
q





84

Eiq = the poorly drained land required to produce
product i in period qj
Fq = the poorly drained land available in period q

Giq the credit required to produce product i in
period qj
Hr = the credit available at eight percent in
quarter rs

Liq = the quantity of vegetable i demanded in period ql

N. = the quantity of non-vegetable i or baby corn
demanded in period q.




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