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Acquiring land in Honduras

With access to land, farmers are able to establish profitable and sustainable farm enterprises (© PACTA-FAO)
With access to land, farmers are able to establish profitable and sustainable farm enterprises

In Honduras, less than two per cent of landholders own more than 40 per cent of the total agricultural land, while 50 per cent of the rural population have little or no access. Since the 1980s, rural land titling has enabled smallscale farmers to legalise the land in their possession that was acquired through the informal land market. But this has been of no benefit to landless rural families, who are most likely to live in extreme poverty. As a result, the Access to Land Project (PACTA) began as a pilot project, implemented by the World Bank and administered by the UN's Food and Agriculture Organization (FAO), to support landless and land-poor families to acquire land and establish profitable and sustainable farm enterprises using public-private partnerships.

Unlocking potential

PACTA began as a pilot project in 2001 with the private sector lending money to purchase land whilst public funds from the National Agrarian Institute (INA) were used for technical assistance and complementary investments to develop agricultural activities. When the project started, access to credit for small producers was extremely limited. However, after starting out working with only a single bank, PACTA has now signed working agreements with 21 financial institutions.

"As these lenders gained more confidence in PACTA and loans started to be repaid in a timely way, they gradually improved credit terms and increased their overall commitment, increasing lending for land purchase, working capital and fixed assets by groups of small farmers," explains Raúl Alemán, PACTA programme supervisor. "As a result, private financial institutions were strengthened in that they were led to identify a potential market that has been increasingly underserved and unrecognised for many years."

PACTA provides technical assistance and training on sustainable agriculture (© PACTA-FAO)
PACTA provides technical assistance and training on sustainable agriculture

Prior to their participation in PACTA, subsitence farmers Emiliano and Ana Dominguez had to rent land on a seasonal basis. Now, the Donminguez family owns three hectares of land acquired with a long-term loan from a private credit cooperative. When the cooperative approved their loan, Emiliano became eligible for a complementary grant to implement his business plan and cover the costs of technical assistance and other services for at least two years. After little more than a year, the family was marketing strawberries grown throughout the year on irrigated fields, and cultivating potatoes, corn and beans for their own consumption. The loan they received was paid back in less than three years.

The irrigation system, based on a simple hydraulic pump costing less than US$600, is shared with neighbours who also participate in PACTA. They receive technical assistance and market products as a group. Instead of renting land on a seasonal basis without the means to invest in sustainable farming, families can now invest for the long-term in their own property, effectively manage soil and water resources, and generate seasonal employment in the neighboring community.

"With the land and the resources with which to work it, our family feels safe; we are achieving what we have always dreamed of achieving. Now we have land, technical assistance, access to market, working capital and our house," exclaims Dominguez.

Widening the net

Since 2007, PACTA has been expanding its services and supporting enterprise development for families who own land, but don't have access to credit, technical assistance and commercial markets. So far, the average income of families involved in the project has increased by 130 per cent, and at the end of 2009 a total of 2,500 families were productively employed.

Edith Villanueva is proud of her organic coffee (© PACTA-FAO)
Edith Villanueva is proud of her organic coffee

"The project has improved the rural sector's capacity to adopt modern market mechanisms and manage business risks by fostering sustainable partnerships between the public and private sectors that allow the stakeholders to build mutual credibility," explains Alemán. "The project has also addressed the key challenges to raising rural competitiveness, such as land and labour productivity, and access to markets, technology, information, and credit, as well as expanding non-farm investment, increasing the ability of poor people to diversify their livelihoods."

At the end of the pilot, INA concluded that PACTA's approach of leveraging credit from private financial institutions to support rural enterprise development should be implemented nationwide. At the same time, INA suggested prioritising all business opportunities that are likely to be sustainable and generate income in rural areas, irrespective of the need to acquire land, due to limited availability of private financing and capacity of service providers to support viable projects. As a result, the Honduran government has pledged US$4 million over the next three years to scale up the project to a national programme, which FAO will continue to administer.

Date published: May 2010


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