IHMA to Hondurans: What Emergency

Beans are sky high. Today's price is $1.26 a pound, or 120 lempiras for 5 pounds. You will recall that in July, beans sold for $0.47 a pound.

When we last checked in on the bean crisis in Honduras, it was to report that the Finance Minister, William Chong Wong, had not, more than 30 days after the declaration of a crisis by President Lobo's Council of Ministers, released the money to the Instituto Hondureño de Mercadeo Agricola (IHMA) to purchase beans on the international market to improve supplies and drive the price back down. That was the goal of the emergency decree.

Yesterday, the head of IHMA, Carlos Girón Ayala, announced that Chong Wong had released 20 million lempiras to IHMA, more than authorized in the decree, to buy 60,000 quintals of beans and 100,000 quintals of corn to guarantee the national supply of both foodstuffs.

Girón Ayala announced that the corn purchases had already started last Friday, and that the bean purchases would begin in 15 to 20 days, when producers begin the new harvest in Honduras. Girón Ayala announced he already has 30,000 quintals of beans which he is distributing to BANASUPRO. That should be more than enough to keep BANASUPRO supplied until the new harvest comes in.

So, the money will go to national bean producers, not international grain merchants, which makes sense as part of a national economic plan. However, it is also misleading. IMHA would be buying those beans anyhow as part of its mission. IMHA buys beans every year during the postrera harvest, so there's nothing extraordinary about it. It's business as usual, not an emergency purchase.

This purchase will have no impact on the elevated prices people are paying for beans, which was one of the announced goals of the emergency decree.

It won't increase supplies; the postrera harvest will do that by itself. From an economic standpoint, this is actually the worst time for IHMA to make a purchase in the domestic market, at the high side of a predictable downward curve. Bean prices will be starting to come down as the harvest begins to appear on the market, but they'll still be much higher than they will be in a few weeks, once the harvest is finished. The purchase will serve, IHMA hopes, to guarantee supplies to BANASUPRO over the coming year.

So the message of Girón Ayala's announcement today is, if you're Honduran and you eat beans, you'll continue to suffer high prices until the harvest of the postrera crop improves the supply and brings the market price down. The government isn't going to do anything to solve the problem; instead it is waiting for the harvest to do that. There is no emergency to be solved that time alone won't deal with well enough.

Beans 2: Moving at the speed of bureaucracy

You will recall that on October 5, the Executive branch of the Honduran government declared an emergency because of the high domestic price of beans, a staple of the Honduran diet. The high prices were supposedly due to the scarcity of beans, allegedly caused by environmental conditions in Honduras. That emergency decree authorized the government, through the Instituto Hondureño de Mercadeo Agrícola (IHMA), to purchase up to 10 million lempiras worth of beans, store them, and use them to supply the local markets.

On October 21, Vice Minister of Agriculture, Juan Angel Artica, announced the 10 million lempiras had been spent, implying the supply of beans had been secured.

It never happened.

First came the investigations that found some distributors were deliberately withholding beans from the market to drive up prices. It also came to light that there were fair quantities of beans still to be bought and brought to market in places like Olancho, though insufficient to supply the entire nation for more than 20 days. IHMA itself found it still had some beans. Still, beans kept appearing, both in the BANASUPRO stores run by the government, and in the markets. Indeed, prices dropped for a bit. though they are still quite high, around 100 lempiras for 5 pounds, or 20 lempiras a pound. BANASUPRO maintains its price at 65 lempiras for 5 pounds, but limits purchases to 5 lbs. a day.

Now, with the new harvest of beans only 7 or so days away, it has come to light that the Finance Minister, William Chong Wong, didn't tranfer the 10 million lempiras to IHMA for it to purchase any beans.

Why not, you ask?

The Council of Ministers authorized the transfer on October 5 from the funds on loan from the Banco Social de Venezuela. These funds are sitting in an account in BANADESA, the national agricultural development bank.

In the Council of Ministers' meeting yesterday, William Chong Wong said that he had not authorized the transfer of government funds because IHMA has a 14 million lempira debt with BANADESA.

Huh? How is IHMA's debt to BANADESA an excuse for not carrying out an emergency order to address a government declared crisis? It is a government declared emergency, after all, and the transfer was properly authorized. BANADESA, at the time, even offered to take IHMA further into debt, 70 million lempiras further, to fund the purchase back when the emergency decree was issued.

Emergencies don't move at the speed of William Chong Wong's bureaucracy, they need real responses in real time.

Thirty days after it recognized the problem, the Honduran government still lacks a creditable response to the bean crisis. There is no accountability.

Its the Honduran people who continue to be hurt.