In Honduras, COVID-19 is Taking a Toll on Smallholder Farmers

With COVID-19 continuing to disrupt supply chains, industries, and markets across the globe, we’re checking in with GAFSP Private Sector Window clients to see how the health and economic crisis is affecting their businesses and the smallholders in their supply chains. In this instalment of our “COVID Conversations” series, we talk with Mateo Yibrín, CEO of the Cadelga Group, one of the largest distributors of agricultural products and services in Honduras. IFC’s support to Cadelga has helped strengthen its network of retailers and create a new department, AgroMoney, which provides loans to smallholders in the form of fertilizer, seeds, and irrigation technology. Yibrín spoke to us recently about the panic purchases that are keeping his company afloat, why Honduran farmers are giving away free melons in towns across the country, and his message to the world on behalf of farmers who are suffering. 

Question: How is COVID-19 impacting Cadelga?
At the beginning of the pandemic, our employees couldn’t travel to farms to provide inputs to farmers. The situation is now improving, and we’re able to supply about 85 percent of our growers. Planting season started in May and so getting access to inputs was critical for farmers. Overall, though, the company is doing well given the circumstances: people are confined to their homes and consuming and storing more. We’re seeing demand for basic foods— staples of the Honduran diet like grains, beans, rice, corn and sugar— go up by 15 to 25 percent. People are scared that they will shut down the supermarkets. 

Question: How has the pandemic impacted smallholders you work with?
The main challenge facing farmers in rural areas has been the movement restrictions. Many farmers couldn’t get to their fields or to the highway to access markets. The police and military are monitoring movement and so it takes time and money to get from villages to large markets. Farmers are still able to produce, but often, they are forced to accept lower prices and are losing money. Some smallholders have either delayed planting or decreased the planting area to try to save money.  The environment is tough, because if Honduran farmers aren’t able to supply the market, produce from Guatemala, where farms are much larger, will begin to take over.  The pandemic started in the middle of the coffee harvest and so a lot of coffee was lost. What was harvested was difficult to sell because of the restrictions. As a result, some farmers couldn’t pay their bills or workers, which has created a difficult chain. 

Question: You launched AgroMoney to provide smallholders with access to capital. Is that helping farmers weather COVID at all?
In the past, small growers never had access to financial systems: they went to family, neighbors, or community lenders. AgroMoney is helping address that gap, but our biggest challenge is that we are not growing as fast as we anticipated. We’re now reaching 1,200 smallholders, which is half of what we planned for. In the three years since the project started, we’ve had two years of consecutive drought, bad commodity prices and now a pandemic. We hoped at the beginning of the year that 2020 would be a year of growth, but unfortunately, that didn’t happen. 

Question: What are the challenges now impacting the agricultural sector?
Honduras is big exporter of melons and other fruit, mostly to Europe, but it’s all been shut down. Melon exporters are just giving away melons for free in the town centers and we’ve sent big containers to pick up melons to give out to our employees. Exports of shrimp and textiles are also down and palm oil prices are very low. These are tough times. If I was the voice on behalf of smallholders, I would tell the world to open their markets to our fruits, vegetables and other products. 

Questions: What sort of measures has Cadelga taken to protect its employees?
Cadelga employs nearly 3,500 people across Honduras, Guatemala and El Salvador.  We’ve had about 50 of our people impacted by the virus and all of them were detected early. Thankfully, they’ve been able to isolate at home and no one had to be hospitalized. We’ve implemented strict biosecurity protocols for employees and customers. People who come to our store form a line with two meters between each customer; one by one, they get their temperature checked and then within the stores, we built separations between the clerks and customers. We also disinfect our products before loading them into a client’s truck.  In our fertilizer plants, we are taking similar precautions: medical professionals check our employees every day for symptoms before they enter the factory, and everyone wears a mask and washes their hands. 

Question: How is COVID-19 impacting Honduras more broadly? 
As a country we will take a big hit: some experts are saying the pandemic will create an additional half a million new poor people and some say the number will be closer to one million. Economic activity has decreased significantly since March and we’ve taken a big hit in tourism and textiles, which employ many people.  The government has ordered banks and the tax office to delay the deadlines for loans and payments, which is giving oxygen to many businesses. I think we will feel the real impact only at the end of the year, when payments will be due and businesses will start to shut down. I tell my employees, friends and family that this is something we need to learn to live with. This year it’s COVID, and next year it will be something else and the year after that another thing. We need to learn to deal with the uncertainty, particularly in countries like Honduras, which have a big crisis every few years. The main issue is how much poverty will grow and whether the country has the resources to take care of it.