Evaluation of the PL-480 Title I programs in Honduras : report of the Winrock International Institute for Agricultural Development study team

480 Title I wheat import program in Honduras. Impact evaluation covers the period 1975-86; methodology is not specified. Since 1975, more than 400,000 tons of wheat have been imported under Title I and the program now accounts for about 80% of annual wheat imports. Overall, the program has had substantial positive - though not always evenly distributed - nutritional and economic benefits. Wheat is a significant source of nutrition in Honduras and it is unlikely it could be completely replaced by domestic grains; clearly, even without Title I, wheat imports would be high. These wheat imports (which are subsidized due to, inter alia, declining world market prices and the overvaluation of the lempira) have influenced the domestic prices of other crops, especially corn. The wheat is mostly consumed by urban and higher-income groups, but the associated decline in corn prices has also benefited poorer, more rural consumers, and also very small (under 2-ha) farmers, i.e., those who must purchase more corn each year than they could sell. The biggest losers are the medium-scale farmers; the largest farmers face production disincentives, but they also consume proportionately more wheat. However, it must be remembered that these are effects of wheat imports (which are essentially demand-driven) per se, and not necessarily effects of Title I. Title I local currency generations have benefited the agricultural sector when used for development projects, but their principal use - to provide 32% of the budget of the Ministry of Natural Resources (MNR) - has not contributed to the strengthening of that institution; it appears that the Government has compensated for MNR's receipt of these funds by reducing other funding for the Ministry. In fact, the MNR budget has been declining in both absolute and relative terms in recent years and MNR's effectiveness as an institution has actually weakened; both average salary levels and the availability of supporting funds have declined. A program of contracting some MNR staff at higher salaries through Title I does not appear to have improved the Ministry's performance and is not, in any case, sustainable. On the positive side, the program has meant foreign exchange savings of millions a dollars a year, both in deferred principal payments and in interest savings. Also very successful have been the agricultural development projects funded through an adjunct Title I/III local currency program; their greatest impact has been on export crops. Recommendations address, inter alia, the volume and composition of Title I imports, Honduran pricing policies, and strengthening of the MNR.