Wednesday, October 6, 2010

Emergency Foretold

The Lobo Sosa government seems to exist only between the emergencies. First there was the agricultural emergency in which the government, two weeks before the end of planting season, realized it needed 12,000 more acres of beans to be grown this year to avoid shortages, and allocated money and seed to farmers to encourage planting of beans.

Then there were the many emergency decrees resulting from the natural disasters like tropical storms Agatha and Matthew, where roads, bridges, and hillsides have collapsed, been destroyed or otherwise become useless, with significant impacts on industries such as coffee that need to ship their products to market.

Another emergency decree called for the construction of jails. Honduran jails are terrible, with prisoners having all kinds of contraband, including weapons, cell phones, and drugs. The facilities are run down, even by Honduran standards, and in recent years over 100 prisoners were killed when an electrical fire swept through a prison near La Ceiba. A new maximum security prison is under construction near Choloma, and there's one near Tegucigalpa, but Security Minister Alvarez wants more because he plans to arrest more criminals. This emergency decree allows for private investment in prisons, as we do in the US.

Another emergency decree was against dengue, a mosquito borne fever that has killed over 70 Hondurans this year. The coup in 2009 brought a halt to the mosquito eradication programs that had been successful in keeping mosquito populations, and therefore dengue infections, at a low level.

There have been emergency decrees because of the high violent crime rate in Honduras as well. This has brought us the unified police and military patrols that confound best practices for either group. The military aren't trained to maintain civilian order. They don't know the law and so repeatedly violate civilians' rights; but then, so do the police.

Now it's the emergency foretold, a bean shortage. Yesterday in the council of Ministers, yet another emergency decree, for the purchase of ten million lempiras worth of beans on the international market. This is made necessary by the loss of nearly 60 percent of the annual crop this year because of rain and flooding. These beans will be stored by the government in its own grain silos and distributed through the BANASUPRO stores that sell government subsidized food.

At the beginning of July, beans sold on the open market for about 28-30 ($1.47 - $1.58) lempiras for a five pound measure. By the end of August, that price had risen an average of 16 lempiras ($0.80) to 45 lempiras for a five pound bag of beans. By October 4, the end-of-August price had more than doubled to 100 lempiras ($1.05 per pound), or more than three times what beans cost in July.

A bean shortage due to losses from heavy rains, this time in October, also happened in 2008. However, then, the price never exceeded $0.72 a pound in pulperias. In 2009 the Zelaya government put in place a strategic reserve to prevent the recurrence of this shortage. The de facto Micheletti regime sold the strategic reserves to raise cash for itself in 2009.

Honduras is facing a similar situation to El Salvador, where just this week beans rose from $0.55 to $0.95 per pound, and to Nicaragua, where in the same time period, bean prices rose from $0.64 to $0.97 per pound. Nicaragua will allow its commodity brokers to import a large quantity of beans from elsewhere duty-free. The government of El Salvador will buy beans directly for sale, as will Honduras. All three Central American governments have promised they will closely supervise their commodity brokers to see that there is no hoarding or speculation.

Beans are an essential protein source in the average Honduran's diet. Meat and eggs are luxuries but beans are eaten at every meal. These price increases mean that some Honduran families will go without necessary food this year. The newspapers already have stories about entire communities on the edge of starvation with no government help in sight. The Lobo Sosa government's emergency decrees will not help there.


Marcus Brewer said...

There might exist government reports declaring the target price of beans in 2008, but that need not correspond to the actual price in pulperias - in other words what Hondurans actually pay. At the exact time in question, in much of Southern Honduras beans were routinely way above $0.72 (the price was often over $1). So much so that I was helping deliver beans bought in massive quantities in Tegus or beyond, to outer Choluteca regions and as far out as San Marcos de Colon. This couldn't be done by bus as Mi Esperanza service was almost always maxed out with food cargo being delivered to San Marcos. Whatever plan was in place, it did not work in measurable areas of the country as I was shown what to do by people doing the same thing to routes in greater Danli and also Santa Rosa. The plan did not help any poor Hondurans I encountered, becuase there was no enforcement and it was open profiteering on every level from generation to mom-and-pop pulperia. Discounting the reserves plan, the "success story" last time around was a success on paper.

RAJ said...

The actual price of beans paid by a consumer might well have been higher in 2008, but also might well be higher in 2010.

You are comparing apples and oranges. We are comparing apples and apples: the official price is what is registering an astonishing increase.

We aren't clear where you are getting the idea that anyone is describing a "success story" in 2008. What we are describing is the fact that under similar conditions in 2008, the price rise according to the National Statistical Institute was not as steep (apples to apples).

The price you or anyone else paid could well have been different-- but the proportional rise today in the same communities and situations is likely to be much higher. (oranges to oranges.)

The question is, why the steep rise? why the emergency declaration?

One factor that we can point to that is clear is that the strategic reserve developed in 2009-- which was intended to prevent similar price spikes-- was sold off under the Micheletti regime.

No success stories here. Plenty of failures, though.

Marcus Brewer said...

If the actual price to consumer might have been higher, then this claim seem pretty meaningless: "A bean shortage due to losses from heavy rains, this time in October, also happened in 2008. However, then, the price never exceeded $0.72 a pound in pulperias". You introduced the price, "never" (not exactly ambiguous) and specifically, pulperias. This is what prompter my reply (it isn't true, on the ground, in any type of pulperia, official or otherwise). Since the official price is not the real price, it is of little value in any analysis (comparing hypothetical statistical apples to hypothetical statistical apples has nothing to do with real life in Honduras). The reserves may or may not be all that noteworthy, since if sold at crisis they will have an even greater real price. Truth be told, there was no big bean shortage in 2008. Anyone who had money and needed beans could easily find them in great quantity. Beans were all over the country. The problem was not a lack of beans but the price of the beans. Few could afford them. A reserve, in itself, doesn't solve this problem, one that is magnified by irrational claims regarding fuel costs, speculation, fear mongering, and local-level profiteering.

RAJ said...

We are astounded that you think the price of beans registered by the national statistical institute has no relationship to the actual prices of beans. That simply makes no sense, and we simply cannot understand your logic here. The price of beans as registered by surveys of the pulperias in Tegucigalpa (which is the source we linked to, you really need to read the links) is a real price. Not a fictional, ideal, price. The fact that you might have paid a different price for some beans doesn't change that. And it is ONLY with comparative data-- measured in PRECISELY THE SAME WAY-- that you can ever compare economic circumstances. So sorry: apples to apples, not apples to oranges. Both are real fruit, but in this case, only one is really recorded in a historical form one can actually use.

We also wonder what you basis is for claiming that there was no bean shortage in 2008. It is bizarre to claim that there was no shortage because if you were willing to pay enough you could buy beans. A shortage refers to the lack of adequate supplies to provision everyone. When a shortage occurs, the demand (number of people wanting a product) is higher than the supply (amount of the product absolutely available). This drives the price up. For the people with the resources to pay the price, there is no shortage. But for the people without those resources, there is a shortage.

I am quite sure you will continue to insist there was no shortage, and perhaps there is no shortage now. But the economic statistics show otherwise. And while you may want to insist that a reserve would not matter, a reserve can be released into a market where a shortage exists, increasing the supply and thus countering the forces that would increase the price.

That's economics. It isn't our opinion. Not sure why you want to insist that your personal experience-- which you must acknowledge did not cover every outlet in the entire country-- counts more than the actual statistically measured reality. As the saying goes: you are entitled to your own opinions, but not your own facts.

Anonymous said...

Well, of course a random poster who suddenly appears on Wordpress is more credible than government statistics, RAJ. It's part of the magical thinking by means of which the current dictatorship is going to feed its population.