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WASHINGTON, D.C. - From a
hot spot on travel posters, Central
America recently jumped into
world headlines as the trouble spot
of the Western Hemisphere.
Attention has focused primarily
on El Salvador, Nicaragua, and
Guatemala, but important changes
have also confronted neighboring
Honduras, Panama, Costa Rica,
and Belize (pronounced Bah
leez’). In a combined land area
smaller than Texas, these seven
nations of 23 million people share a
host of common problems.
Perhaps the most serious is the
increasing violence on the narrow
land bridge that links North and
South America. Guerrilla activity,
terrorism, and political un
certainty have economic con
sequences even for those nations
not directly involved.
“The rising level of violence and
uncertainty in the region is con
tributing to declining investment,
capital flight, growing foreign
debts, and social, economic, and
agricultural disruptions,” says
economist Donnel O’Flynn, a
specialist on Central America with
USDA’s Economic Research
Service.
Food and farming are at the very
core of the crisis. Agriculture is, by
far, the major industry, major
occupation, and major export
earner, so a healthy agricultural
sector is vital to the region.
The fighting in El Salvador and
Guatemala has affected not only
the credit available to agriculture.
It has interfered directly with food
production, trade, and land
reform; it has added to refugee
problems, food shortages, and
overcrowding in cities; and it has
spread fear among rural
populations, which generally take
the brunt of the violence.
But even if all hostilities ended
today, Central American would
still be facing difficult times,
according to O’Flynn. He points to
the current depressed state of the
world economy, rapid regional
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Ag tinder lire in Central America
population growth, and the ob
stacles to earning enough foreign
exchange to meet expanding
demand for unports unports not
just of consumer goods by also of
oil, industrial products, and
agricultural inputs needed to feed
productivity gams.
Only Panama and Nicaragua
made good economic progress last
year. For most of Central
America, however, high interest
rates and tight credit severely
crimped or reversed economic
growth Lower prices for the
region’s chief export commodities
beef, coffee, sugar, bananas,
and cotton hurt, too. Even
worse, agricultural output has
been falling behind population
gams.
Despite this turmoil, Central
American agricultural exports
remain high. Unlike most of our
trading partners worldwide, all
seven Central American nations
can claim a favorable balance of
agricultural trade with the United
States.
In total farm product commerce
with us, Central America earns
around four times more than it
spends. The region sold from $1,3-
$1.7 billion in agricultural goods to
the United States in each of the last
3 years, compared with unports
from us of $251 million in fiscal
1979, $385 million in fiscal 1980, and
$373 million last year.
The United States in Central
America’s top customer, ac
counting for about 40 percent of the
region’s farm export earnings.
Close to 10 percent of our total
agricultural unport bill is spent
there on such products as sugar,
cocoa, coffee, bananas, beef, and
tropical fruits.
For U.S. farmers, however,
Central America is a small and
currently depressed market. It
represents only around 1 percent of
our agricultural export earnings,
although the region buys more
from us than from any other
supplier.
Attention!
YiS
Overall, about nine out of every
ten dollars worth of U.S. exports
are on commercial trade terms,
but the percentage vanes from
year to year and from country to
country. In fiscal 1961, 30 percent
of U.S. agricultural exports to El
Salvador were under long term
credit, P.L.-480, or other con
cessional programs, whereas 98-
100 percent of our exports to
U.S. Imports Far Exceed Exports in Farm Trade with Central America, But Central
America Counts on the U.S. as Both Buyer and Seller
$1 5
Bit
$1 0
Bil
$5OO
Mil
U.S. Agricultural Exports
1975 76 77 78 79 80 81 82
Fiscal years
1981 Estimated, 1982 Forecast
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Panama, Costa Rica, and Belize
were commercial.
Panama is the biggest com
mercial customer for our farm
goods in Central America, with
|61.3 million in purchases last
year. Another $1.6 million in ex
ports came through concessional
programs. Total U.S. farm exports
to Guatemala were slightly higher
$85.1 million but commercial
*
i
j
/ %
sales amounted to
million.
From us, Central America buys
wheat, flour, wheat, flour, com,
soybean meal and oil, tallow, and
many processed foods. Our fiscal
1980 export record of 8385 million
wasn’t matched in 1961 because of
the suspension of food aid to
Nicaragua and smaller sales to
(Turn to Page Al 7)
U.S. agricultural imports from
Central America equal:
10% of total US but about 40% of
agricultural imports Central America's
agricultural exports
U.S. agricultural exports to
Central America equal:
. but about 50% of
Central Amenca's
agricultural imports
1% of total U S
agricultural exports
only *77.7