MUNZSSInlD - usaid

ability to find economic solutions to these problems. The next round of
improvements, however, may require more public investment in roads, ports and
airports, and more efficient management of public transport facilities.
Market Prices. Notwithstanding the increased volumes of product flowing
from Central America to foreign markets, principally the U.S., prices are
largely determined by external factors such as consumer demand and seasonal
constraints faced by other suppliers. In both cases, all indications point to
a continued positive market environment for the CA NTE subsector. Changing
diets in the industrialized nations now favor fresh fruits and vegetables, and
seasonality of production in northern climates favor CA suppliers. The
economic health of buyers is the largest determinant of continued prices
sufficiently high to provide profits for growers and exporters, however, a
factor beyond the control of Central America.
Concerns about CA oversupply having an strong negative impact on market prices
appear negligible. Melons probably represent the best example of increasing
flows having a dampening effect on wholesale prices during the export season,
but producers and exporters have shown an ability to anticipite the negative
impact of oversupply in one market through diversification of both markets and
products. Although the U.S. and Canada are "natural" trading partners for NTA
exports, for example, efforts to penetrate the European and Japanese markets
have also shown some success. The Japanese market still remains largely
closed to CA products, however, and experience to date indicates that although
this market is potentially lucrative continued attempts to satisfy regulatory
requirements and establish reputations for quality products will be required.
With respect to product diversification, "older" non-traditional exports-­
melons and snow peas--have been joined by new products such as asparagus and
berries. Most of these are in the initial stages of production and export,
however, and have not yet reached significant export volumes.
Reulatorv Factors. Meeting health, sanitation, and pest regulations is a
continuing problem for the CA NTE subsector. Regulations vary from market to
market and are in a constant state of flux, and the subsector must demonstrate
a more sophisticated capability to monitor and control products leaving the
region. Changing pesticide regulations present the strongest threat to NTA
exports. As regulations change and more producers and exporters enter the
market, the risk of improper use or misuse of pesticides grows. Awareness by
the industry of the importance of regulatory requirements has grown
concomitantly, however, and steps to improve information flow--the recognised
impediment to adherence to regulations--are receiving increased industry
attention.
fCKogs ions. The NTE industry, and therefore this Project, are faced with
several positive and negative factors that determine economic viability. The
growth in NT exports over the past several years testifies to the strength of
the market, however, and the ability of the industry to adapt to changing
conditions. While the industry can still be considered "fragile", a changing
policy environment to favor export industries, a strong consumer preference
for fresh produce, and successful product and market diversification all
suggest a predominance of positive over negative economic factors affecting
the viability of the subsector. The Project is therefore considered to be
economically sound.
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