Project assistance completion report (PACR) : non-traditional agricultural export support project (PROEXAG) (project number 596-0108)

During the first months of the project the name PROEXAG was created to represent the contract team. From 10/86-9/91, PROEXAG provided TA to the Central American NTAE industry, and assisted in the expansion of Central America's foreign exchange earning capacity, a critical element in the region's long-term economic growth prospects. Through a skillful, energetic, and well-targeted campaign of promotion and TA, PROEXAG introduced new crops, new methods, new growers, new exporters, and new markets. The general consensus is that PROEXAG provided substantial impetus to the impressive growth in non-traditional exports over this period. Despite the chaotic condition of economies throughout Central America and the political buffeting all regional efforts have taken, production and export of non-traditional crops rose in PROEXAG's original four participating countries (Guatemala, Honduras, Costa Rica, and El Salvador). After the first four years, production and export sales were steadily higher in these countries. Today the trends and prospects appear promising. Panama, Nicaragua, and to some extent, Belize were incorporated into the project in the latter years. The longer PROEXAG runs the greater seem its benefits. From the beginning TA was targeted at members of the export federations and export-oriented development foundations that were designated as formal counterparts to PROEXAG. These included the following: (1) in Guatemala, the Guild of Nontraditional Products Exporters (GEXPRONT); (2) in El Salvador, the Salvadoran Association of Nontraditional Producers and Exporters (ASPENT), which was later transformed into the Agricultural Diversification Division (DIVAGRO) of the Salvadoran Foundation for Economic and Social Development (FUSADES); (3) in Costa Rica, the Private Agricultural and Agroindustrial Council (CAAP), which was later changed to the Agricultural Division (DIVAGRI) of the Coalition of National Development Initiatives (CINDE); (4) in Honduras, the Federation of Agricultural and Agroindustrial Producer and Exporter Associations (FEPROEXAAH), subsequently "FPX;" (5) in Panama, first the National Council for Productivity (CONDEPRO), which never really got started and eventually folded once A.I.D. withdrew from Panama, and from 1990 onward, the Guild of Nontraditional Exporters of Panama (GREXPAN); (6) in Belize, Belize Agribusiness Company (BABCO); and (7) in Nicaragua from 1990 onward, the Nicaraguan Association of Producers and Exporters on Nontraditional Products (APENN). During the first year of PROEXAG short-term TA was also provided in support of mariculture (e.g., shrimp farming) and aquaculture (e.g., tilapia, catfish, and trout farming) activities in several countries. However, it was soon decided that further requests for assistance in these areas would not be accepted, the main reasons being that the core team was not familiar with these businesses, more specialized sources of TA were available, and separate bilateral projects were being developed within or for several counterpart entities to address these areas. By the end of the first year, PROEXAG's product focus had narrowed to horticulture. Within horticulture, however, there are many segments, numerous crops, and various product forms for each crop, so further prioritization was necessary. The major segments of horticulture are: (1) fruits, vegetables, and their derivative products; (2) ornamental crops and their derivative products; (3) specialty crops and their derivative products; and (4) propagative materials. The latter segment was immediately discarded (except as an adjunct to other export businesses--a pineapple nursery, for example) because such businesses are very specialized and do not usually generate large export volumes. The specialty crop segment was also discarded because the industrial crops within it each have unique marketing systems and because specialty edible crops such as herbs and spices typically generate only small volumes. One of the important notions to come from the project was the "deal making" concept, which was the cornerstone of the project even though the players varied as products, shippers, and markets changed. The contract provided the know-how through direct TA, training, and market information. The delivery methods for providing this know-how and the recipients were the focus of this project; they provided the foundation for the philosophy behind the follow-on EXITOS project. Lessons learned indicate that desirable characteristics in NTAE projects include: (1) commitment to achieving a self-sustaining increase in export volume; (2) a project built around the needs of enterprises, but with complementary efforts at improving the macroeconomic environment and strengthening producer/exporter and crop associations; (3) a budget with the resources and flexibility to hire the best possible staff and consultants; and (4) a positive approach that encourages experimentation, experiential learning, and on-going design. (Author abstract)