usaid office of food for peace guatemala bellmon estimation

Prepared by Fintrac Inc.
4. Title II monetizations require letters of credit. All large and medium-size companies are
fully capable of obtaining and incurring associated fees of 1-2 percent. However,
companies with established supply chains have lines of credit with their usual suppliers
and, therefore, do not normally incur the cost of opening a letter of credit. Buyers should
be compensated for this extra expenditure.
Market power tends to be heavily concentrated. As in many Latin American countries,
market power tends to be fairly heavily concentrated within a small number of families. In
Guatemala, two families control much of the food imports and processing industries. 94
Within the
commodity markets of interest to current and potential Title II Awardees, the largest group is
Multi-Inversiones, owned by the Gutiérrez and Bosch families. Among its six independent
operations are: the Pollo Campero fast food empire, which stretches across Central America
and the United States, Grupo Avícola (a poultry raising and distribution group comprising 19
companies that control over two-thirds of the Guatemalan chicken market), flour and feed mills
(e.g. Molinos Modernos), among others. 95
A handful of other families control other sectors,
including banking, cement, and sugar. 96
While such market concentration frustrates efforts of
smaller market actors to compete, it can also frustrate PVOs efforts to monetize Title II
commodities at fair market prices.
5.5. Market Analysis - Wheat Grain
5.5.1. Demand and Supply Overview
Demand. Despite Guatemala's dependence on maize as the primary staple, there has always
been some consumption of wheat, even if primarily in urban areas and certain regions where
soft wheat has traditionally been grown. That the largest milling company in Latin America was
first built in Quetzaltenango more than 70 years ago speaks to the history of wheat consumption
and importance of the wheat milling industry in Guatemala. As in many other developing
countries, demand for wheat and wheat products has steadily grown in concert with population
growth and increasing urbanization. Breads and pastas are widely available in municipal
markets, as are cakes and cookies.
Supply overview. Nearly all of Guatemala’s wheat supply is imported commercially, and wheat
grain is among Guatemala’s top commercial imports. While Guatemala has long been a net
importer of wheat, domestic production of soft wheat has declined substantially in the last
decades. In 1985, national wheat production was estimated at 45,000 MT per year (BANGUAT
citation). However, since the 1990s, just prior to trade liberalization and Guatemala joining the
WTO, there has been an increasing shift from wheat to vegetables (WFP, 2005). A small
amount of soft wheat is still produced domestically, estimated at 1,619 MTs per year for 2009
and 2010.
94
Gutierrez and Bosch
95
As the company's website explains: " We are a family held multinational corporation with over twenty eight thousand employees
in three continents. We began our operations almost 90 years ago in Guatemala and today we are one of the most prominent
corporations in Latin America. Our six independent operations include: milling, fast dining restaurants, livestock operations (poultry
and pork), renewable energy, real-estate, and financial services. Corporación Multi Inversiones provides strategic coordination for all
6 entities, however each division operates independently." http://corporacionmultiinversiones.com/english/quienes-somos.php
96
For example, the Castillo family owns Cervecería Centroamericana, which enjoys about 90% of the beer market; the Novella
family owns Cementos Progreso; and the Herrera family dominates sugar and ethanol production with their Pantaleon Sugar
Holdings Company Limited.
BEST Analysis – Guatemala Chapter 5 – Monetized Food Aid 55