US embassy cable - 05TEGUCIGALPA1823

UNCLAS TEGUCIGALPA 001823 
 
SIPDIS 
 
USDA/FAS/EXPORT CREDITS FOR MARY CHAMBLISS, DEPUTY ADMINISTRATOR 
AND PPD DIRECTOR RON CROUSHORN, PROGRAMMING DIVISION 
USDA FOR FAA/WHAO/JBAILEY 
GUATEMALA FOR AGRICULTURAL COUNSELOR 
 
E.O. 12958: N/A 
TAGS: EAGR, EAID, HO 
SUBJECT: HONDURAS FY06 USDA FOOD ASSISTANCE PROPOSAL 
 
REF:  SECSTATE 139203 
 
1.  FAS/Tegucigalpa requests an FY 2006 Food For Progress (FFP) 
government-to-government grant of USD 9.4 million for Honduras. 
We request the following donated commodities:  USD 3.4 million 
soybean meal, USD 5 million yellow corn, USD 0.7 million red 
beans (for direct feeding), USD 0.3 million milled rice (for 
direct feeding). 
 
2.  Corn and soybean meal will be monetized and the proceeds 
will be used to continue Post-guided strategy of food security, 
rural development, CAFTA-DR implementation, and administrative 
support.  We propose four programs be supported with the donated 
commodities. 
 
A. Direct school feeding:  The Government of Honduras (GOH) 
already carries out a very successful direct feeding program. 
However, with continued high levels of poverty, the fuel crisis, 
and the threat of drought, the need for additional food is 
urgent to meet basic nutrition goals for school-age children. 
The beans and rice will be devoted to direct feeding through the 
Escuela Saludable program (supported in the FY05 Agreement). 
 
B. Implementation of the National Agricultural Policy: The 
Ministry of Agriculture and Livestock (SAG) has developed a 
national agricultural policy for the short, medium, and long 
term.  Since FY03, USDA has supported plans to implement those 
agricultural policies.  Roughly one half of the monetized 
proceeds will be used to strengthen the implementation of those 
policies.  FY06 funds will continue to support the 
implementation of ongoing programs, including agribusiness 
development, agricultural information, agricultural 
diversification, and good agricultural and food manufacturing 
practices. 
 
C. CAFTA-DR Implementation:  Roughly one half of the monetized 
proceeds will be used to support Trade Capacity Building 
activities in support of CAFTA-DR.  The primary area would be 
capacity building in sanitary and phytosanitary systems, 
especially within the GOH. 
 
D. FFP Technical Assistance Office:  A small portion of the 
monetized proceeds will be used to support SAG's FFP program 
administration. 
 
3.  Justification:  First, Honduras is the third poorest country 
in Latin America.  Roughly two-thirds of Hondurans live below 
the poverty line, and close to half live in extreme poverty. 
Honduras is slowly overcoming the effects of a long-term 
economic crisis caused by cyclical low commodity prices for 
traditional commodities (bananas, coffee), droughts, and floods. 
The agricultural and livestock sector, traditionally the most 
important area of economic activity in Honduras, accounted for 
13 percent of GDP in 2003, and employed more than 35 percent of 
the work force.  Honduras' potential in agriculture can and 
should be developed so it can be the driving engine in Honduras' 
economic development. 
 
4.  Second, the GOH is actively promoting economic openness as 
well as private sector investment as a key element of its 
national development strategy.   The GOH is a strong and 
dependable ally of the United States' global war on terrorism. 
In international multilateral fora, especially the United 
Nations, Honduras is the most consistent Latin American 
supporter of U.S. positions. 
 
5.  Third, Honduras has been a major supporter of CAFTA-DR, and 
was one of the first to approve the Agreement.  FFP proceeds 
will be used for trade capacity building efforts under CAFTA; 
these efforts will facilitate U.S. exports to Honduras, as well 
as Honduran exports to the U.S.  The USG made commitments to 
trade capacity building as part of CAFTA-DR, and a FFP would 
provide additional resources for rapidly implementing effective 
programs that will benefit both sides. 
 
6.  AgCounselor has discussed this proposal with USAID Honduras, 
which has cleared this cable.  USDA and USAID look forward to 
cooperating in carrying out development projects in Honduras so 
as to enjoy synergies and avoid duplication. 
 
Williard