c g/, 0/- /Ljg/,TE
Evaluation of the Potential for the Production of
Several Vegetables in El Salvador I/
El Salvador, the smallest of the Central America republics
possesses several characteristics which make its means of development
unique in the Western Hemisphere. The first and most striking factor
is its very high population density equalled only by Haiti in this
hemisphere. 'MXuch more so than in other countries the large number
of people cannot all be absorbed by the cities so the development of
rural employment opportunities is critical. This is one of the highest
priority goals of the Government of El Salvador. This high density is
also reflected by a preporderance of small and medium holdings (less
than 50 mzs.).
Another factor which sets El Salvador apart from most countries
in the hemisphere is that all of its .land with agricultural potential
is being used there are no large areas of public domain which
remain unsettled or unclaimed. Hence, the only means of increasing
land area in productive use is to increase the intensity of use of
areas already-in some form of production,
Because of the scarcity of land and the abundance of rural labor,
vegetable production offers one of the best alternatives for exploiting
the country's resources. This is particularly true because present
levels of production are inadequate for domestic consumption forcing
the .country to depend in large part on imports from Guatemala even
though there are several areas well adapted to their production.
Agricultural policy places'high priority on promoting vegetable
production in order to improve the human diet, save foreign exchange
or even increase it through exports, increase rural employment and
improve rural income.
L/ Submitted as a sub-project contributing to the North Carolina State
University Project: Evaluaci6n de la Exportacion de Verduras de
Centro Amnrica y Mexico.
/- 2 -
Several factors determine the potential for economic production
of vegetables in E4 Salvador. These factors include the internal and
external demand, the comparative advantage of the country in producing
and transporting the product in various seasons, the potential quality
of product and the disposition of the producers to initiate new,
intensive enterprises. The problem is that there is no sound information
available regarding which are the most promising products to.pursue
1. Determine potential yields, costs, quality and season of production
for several warm season vegetables probably including tomato,
eggplant, cucumber, sweet pepper, carrots, melon, and onions,
2. Estimate the profitability of the crops for small and medium
sized farms and whether. they can be fit into established or new
3. Estimate the competitive position for imports and for exports
against other Central American countries and Mexico for each
4. Make recommendations with respect to which vegetables should be
given priority in promotion programs.
5. Determine production potential of the country in the selected
vegetables and estimate the saving and earnings in foreign
exchange which would be possible, the credit required, the
employment generated and the increase in farm income which would
The project will be conducted by the Department of Farm Management
of the Ministry of Agriculture of El Salvador and the Food and Resource
Economics Department of the University of Florida. Both primary and
secondary information will be used in the project. Preliminary price
and demand information for the U.S. and cost information from other
countries will be obtained early in the project to aid in the
selection of vegetables to be studied. More detailed information on
the U.S. and on other countries will be supplied by North Carolina
State University for use in final analyses of the data.
Primary information will be obtained from ongoing and planned
experiments in the Zapotitdn area, from farm surveys conducted
wherever the vegetables are now grown, and from market surveys.
Analysis of experiments will include fertilizer use, yield potential,
timing of harvest and quality estimates. Surveys will provide
information on current costs, marketing practices and problems in
Farm level analysis will be based on budgets and linear programming.
The project will be initiated in December, 1972 or January, 1973
and will be terminated within 14 months. The study will include a
thesis (M.S.) which will be written in El Salvador, and other reports
which may be forthcoming during the course of the project.
Final selection of priority vegetables will depend on the timely
submission of the necessary information on the U.S. and other countries
provided by North Canolina State University.
To the extent possible (within budget, personnel and material
limitations) the Ninistry of Agriculture of El Salvador, through the
Direccidn General de Economia Agrtcola y Planificaci6n and the
Departamento de Administracidn Agr'colawill supply secretarial services;
office space, equipment and materials; local transportation; field
personnel; experimental facilities and supplies; etc. However, a small
amount for these items is included in the budget to insure the timely
completion of the project.
The funds will be administered by the Food and Resource Economics
Department of the University of Florida directly in El Salvador.
Assistantship 14 mos, at $400 $ 5,600
Staff-Univ.of Fla. 3 mos. at 2,500 $ 7,500
R.A. (2) and wife (1)
Univ. of Fla.Staff (3)
Within C.A. and Mexieo
Per Diem >
Bilingual Secretary (6
Interviewers, etc.. (10
Equipment and Supplies
Equipment and supplies
$ 3, 200
Enrique Alvarez cu.ddu
-"i stro t ricultura
Ren Ag Iilar buir6dn
Director General Econonma Agricola
y Planificacidn ,Hinisterio de
Agriculture y Ganaderi'a
Chairman Dept. of Food and
Resourse Economics Univ. of
Willian D. Toussaint
Dept. of Economics North Carolina
Jefe Depto.Administracidn Agrt-
cola Direcci6n General de
Economfa Agricola y Planificacidn,
Ninisterio de Agricultura y Gana-
"Peter E. Hildebrand
Agrfcola USAID/Univ. of
Professor Dept. of Economics
North Carolina State University
APPENDIX A: PROJECT STATEMENT
A. Title of Project:
Evaluation of export potential for selected horticultural products
in Central America and Mexico.
B. Cooperating Agencies and Participating Economists:
(1) North Carolina State University (under contract with USAID/
Washington). R. L. Simmons, project leader.
(2) Direccion General de Economia Agricola y Planificacion,
Ministerio de Agricultura y Ganaderia, El Salvador.
(3) Instituto de Comercializacion Agricola (INDECA), Guatemala.
Edgar Fuentes, project leader, Ing Agr. Oscar Orozco,
Ing Humberto Ortiz.
(4) Direccion General de Economia Agricola, Ministerio de Agri-
Collaz, Ph.D., project leader.
(5) Departamento de Economia Agricola, Escuela Nacional de Agri-
cultura, Chapingo, Mexico.
Daniel Barrera, project leader, two graduate students.
C. Duration of Project:
From January 1, 1972 to December 31, 1974.
D. Description of Project
This project'involves the evaluation of export potential for
selected horticultural products in El Salvador, Guatemala and Mexico.
Since these three countries are likely to be competing with each other
for the United States and Central American Common Market, it is necessary
to determine what are the comparative advantages of each country for
which products during particular months of the year. Such information
will be useful in each country for planning purposes. In order that the
data and conclusions of the study be valid and useful, it is necessary
to accomplish the work in a coordinated manner in all three countries.
Coordination of the work between the three countries is an important
characteristic of this study.
E. Method of Coordination:
(1) One or more economists will be appointed from each of the
participating institutions to be responsible for the research
in that institution which is related to the project. These
economists will serve as a team.
(2) The members of the team will meet together twice per year
(or as necessary) in a central location in Central America
to coordinate the research, plan the research procedures and
(3) The coordinator from North Carolina (or other consultants)
will visit each participating institution as necessary to
further coordinate and help carry out the research.
F. Products to be Studied:
The specific commodities to be studied are tomatoes, peppers,
melons, cucumbers and okra. Others might be added later. These
products have been recommended by previous surveys recently completed.
Since these products may be close substitutes for the same resources,
it is necessary to study them as a group in order to obtain valid
It may be necessary in some instances to include other commodities
outside of the group'selected if it is found that they are closely
related in terms of production alternatives.
In arriving at the ultimate objective of evaluating export potential,
a series of sub-projects will be completed each of which produces publish-
able information useful for planning and implementing policy decisions.
G. Stages of Research and Benefits Resulting from Each Stage:
(1) Stage 1 (Two months duration)
The first step will be the specification of "Zones of production."
Each country will be divided into regions or zones in which the pro-
duction and marketing conditions are sufficiently homogeneous to facili-
tate further research. Studies are already available which have specified
the broad ecological zones of Central America. These studies were based
primarily on meteorological data and the transportation requirements of
specified classes of plants. Additional considerations necessary for
more precise zonification are soil types, extent of irrigation develop-
ment, topography, size of farm, institutional and sociological consid-
erations, location relative to markets and transportaiton facilities,
existing production patterns and practices and possibly other factors.
This zonification will be accomplished by: (1) consulting with
Extension and agronomy personnel, and (2) a survey of a sample of agri-
cultures in each area.
In most cases, this work will be limited to areas of existing
A report will be published in each country on the characteristics of
each zone. Distribution of the report to interested institutions will be
accomplished. These individual country reports may be summarized in a
On the basis of this information, a complete global picture will be
obtained of current vegetable production in these three countries.
This will provide a basis for recommending priorities for the regional
allocation of research and extension activities in vegetable production.
It will also provide a basis for efficient sampling of producers for
Stage II research.
(2) Stage II (Six months duration)
A sample of producers will be selected for a detailed cost of
production study. A conplete listing of all physical inputs and input
prices will be made as follows:
a. Costs of developing land for irrigation.
b. Labor requirements and input costs for each crop and each
activity as follows:
(1) Preparing ground for planting.
(4) Weed and pest control.
(7) Field sorting and packing.
Data from this survey will be combined with. available experimental
data to provide the following information:
a. Cost of production for each crop for alternative technologies.
b. Evaluation of major factors affecting cost of production.
c. Credit and capital requirements.
d. Seasonal labor requirements.
During the harvest season, arrangements will be made with producers
and purchasing organizations to obtain the following data:
a. yields of each producer,
b. quality of product,
c. proportion of crop suitable for fresh export market, and
d. the effect of alternative technologies on product quality.
Benefits from Stage II
(1) The results of stage II will enable recommendations to be
made as to credit requirements for long-term land development and also
ilioitL-Lerm production. These recommendations will help implement credit
programs more closely designed to farmers' needs.
(2) Information on seasonal employment of farm labor will be useful
to analyze rural unemployment problems.
(3) Recommendations will be made on designing more efficient
pricing policies and "forward contracts," to minimize price uncertainty
(4) Information will be made available to extension personnel to
help inform farmers how alternative technologies affect yields, costs
and quality of product.
Publications will be made in each country extending the indicated
information and recommendations.
(3) Stage III (Six months duration)
Based on information obtained in Stage II, further analysis will
be made as to (1) efficient multiple cropping activities, (2) optimal
crop rotations, and (3) income opportunities from more efficient farm
The technique of partial budgeting and possibly linear programming
will be used to analyze optimal farm plans which maximize the income of
producers given the level of resources available to them. Product prices
and input prices will be varied at different levels to evaluate the
effects of prices on (1) selection of product to be produced, (2) level
of input use, (3) yield and total output, and (4) level of income.
In other words, dynamic elements will be introduced into the analysis
to account for possible price changes and to attempt to estimate the
actions farmers might take in response to different circumstances.
Benefits from Stage III
(1) Information will be made available to extension personnel
for improving producer income through improved farm management and
(2) Estimates of total production which would be forthcoming at
various alternative prices to estimate total supply potential for each
crop. This information is necessary for planning the size, type and
location of marketing and transportation facilities and for evaluating
the adequacy of existing facilities.
(4) Stage IV (To be done independently and concurrently with Stages I,
II and III)
Analysis of market potential in specified United States markets
will be accomplished by North Carolina State University. Emphasis will
be placed on analyzing weekly price changes in major cities as affected
by quantities and qualities of vegetables entering the market. In this
way, it will be possible to determine the length of season in which it
will be feasible for Central American producers to enter the U. S. market.
At the present time, Central American shipments are pointed at "peak"
months only. It may be possible with this additional market information
to establish appropriate planning.procedures which would lengthen the
market season for Central American vegetables.
Also, projections will be made by North Carolina State University
on potential growth of specified city markets based on population and
income trends in these selected cities. This information can be used
in conjunction with estimates of total supply potential from all Central
American countries' and Mexico to determine market limitations and esti-
mate price changes resulting from changes in supply.
(5) Stage V
Since the profitability of vegetable production depends on (a) the
proportion of the product having suitable quality for export, (b) the
extent of local demand for the non-exportable proportion and (c) the
costs of processing or otherwise providing market outlets for non-
exportable portions of the crop, it will be necessary to estimate the
feasibility of developing local marketing facilities for variable
quantities of product. Present single product plants may be converted
to handle multiple products. Scale economies will be a factor.
An analysis of these factors, plus an analysis of local consumer
demands will be accomplished.
(6) Stage VI (Six months duration)
The information on supply potential from each country as developed
in Stages, I, II, and III will be combined with the information on mar-
ket potential developed in Stage IV. A suitable competitive trading
model will be developed which will evaluate the comparative advantage
of each region for each commodity during specified months, as affected
by that region's supply potential and transportation costs. Effects of
tariffs, trade barriers and other exogenous effects will be analyzed
in terms of theirimpact on comparative advantage and development
strategy of developing countries.
Benefits from Stage VI
(1) An evaluation of each region's comparative advantage will be
useful for determining which product or products should be promoted in
the various zones during particular months.
(2) To stimulate the production of crops, farmers must receive
the correct information sufficiently far in advance of planting time
to make plans, they must receive the appropriate type of credit, they
must have information of effects of different production practices,
they should have a reasonable expectation of the price they will receive,
etc. This type of information is'necessary for planning. If the gov-
ernment wants to stimulate production, they must help provide.this
information to farmers. This study will provide the necessary infor-
H. Responsibilities of Participating Institutions:
(1) North Carolina State University will provide the following:
(a) One or two full-time economists,
(b) five becas per year to be distributed among participating
institutions for graduate study at North Carolina State
(c) computer services as needed,
(d) travel expenses, for participating economists to attend
(e) research analysis of Stage IV as indicated above,
(f) consulting services as required to assist participating
(g) a Ph.D. graduate student to be located in Central America
and Mexico to coordinate the work and help with the analysis.
(2) Each participating institution will provide a full-time economist
to assume responsibility for the research pertinent to his country
plus the necessary clerical help, field personnel and research