Honduras planted some 12 million manzanas of beans in the last 3 month crop harvested in January. That should have been more than enough to accommodate Honduran demand for the next 9 months according to IMAH, the Instituto de Mercadeo Agricola de Honduras. But Honduras isn't a closed market. Its basic grains middlemen have ready access to the basic grains markets in El Salvador, Nicaragua, and to a lesser extent, Guatemala. So some of the beans are simply leaving Honduras, gone to markets in El Salvador and Nicaragua where prices were higher prior to the recent harvest, which brought prices back down (to around the equivalent of 52 lempiras for 5 pounds today).
The biggest problem continues to be the "coyote", a speculator who simply buys the beans at harvest and stores them, knowing that by creating a shortage in the country, it will raise prices.
Speculation requires investment; you have to already have money to buy the beans and store them for any period of time. Generally, such speculation involves more than one speculator, although single extremely wealthy individuals have tried to corner commodity markets in things like silver (google "Hunt brothers scandal").
"The speculator is the most evil in business, the one who makes all the profit and squeezes the producer and consumer. This is a person who is not associated with any organization in Honduras, but the problem is that they have so much money that they buy the production and store it and then begin speculating in the market, bringing it out sack by sack (little by little) until it squeezes the consumer with the price of the product,...the [Ministry of] Industry and Commerce is incapable of attacking the coyote,"
said Congressman Francisco Rivera. Congress voted a further 50 million lempiras be given to BANASUPRO, but that does not good if they can't find somewhere to buy them.
Price controls imposed on basic grains, including beans, during December and early January failed because there was no effective enforcement. While the frozen price of beans was 70 lempiras for 5 pounds, the price in farmer's markets in Tegucigalpa never dipped below 85 lempiras for 5 pounds.
Rivera suggests that rather than keep giving money to BANASUPRO to buy beans at market rate and sell them for a lower price (eg, food subsidies), that the money be given to bean producers to plant more beans (producer subsidies). He suggests planting 25 million manzanas, which would produce a new crop in three months. Rivera suggests that this will bring the market price down. Producers will still gain because they've been subsidized to produce these beans, and Rivera hopes that the coyotes won't be able to absorb this crop too, benefiting consumers with lower prices.
Rivera's idea might work, but it may also be true that the coyotes have sufficient capital and the will to continue to absorb the increased Honduran production. Such are the gambles of the free market.
Andres Carias, Director of AGRIBOLSA, has another idea, establish a marketplace for contracts to buy and sell beans where both buyers and sellers can establish the real price of beans by agreeing on a price. Carias agrees with Rivera that historically, the middle men have been setting the price, provoking artificial shortages and high prices for their benefit. However, there's nothing to keep the middle men out of Carias's marketplace and thereby still potentially controlling the market.
The free market offers no solution other than supply and demand setting the price. Speculators are controlling the supply in Honduras, keeping the price artificially high. This can be demonstrated by comparing the price of red beans in the El Salvador market with Honduran markets. El Salvador reports a price today of $0.55/pound; Compare that to Honduras's market price of $0.90/pound. That $0.35 a pound price difference shows the extent to which the Honduran market has been distorted by speculators.
In the meantime, Honduran families continue to pay artificially high prices for food while the government does nothing.