usaid office of food for peace guatemala bellmon estimation

Prepared by Fintrac Inc.
USDA/Guatemala reports it is considering monetizing wheat grain for its new FY12 FFPr
programs in Guatemala, but has yet to do so. For the FY12 FFPr, USDA intends to raise US$12
million through monetized wheat.
5.5.2. GoG Policy
There are no GoG policies that would impact the importation of wheat grain. There is a 10
percent tariff on wheat flour imports. During recent years, particularly during the global food
price crisis, the GoG opened specific quotas to import volumes of flour with a zero percent tariff
in order to offset increases in flour and bread prices. In 2005, this contingent was set at 6,690
MT (equivalent to 49 percent of total imported wheat flour); in 2007, this proportion was 20
percent, and 2008 the proportion rose to 63 percent.
5.5.3. Starch Substitution
Demand for wheat and wheat products has steadily grown, as population has increased and the
country has become increasingly urbanized. Among the key staples that would be likeliest
substitutes for wheat -- maize and rice, there appears to be continued growth in production and
marketing on the whole. To the extent that wheat products, like pastas, 98
may be displacing
another staple carbohydrate source that is domestically produced, the most likely substitute is
rice, which has faced flat production but increasing demand overall. There is no reason to
believe that monetization of a small volume of current commercial wheat imports would have a
negative impact on domestic production of likely substitutes.
5.5.4. Competitive Environment
The Guatemalan wheat market is heavily concentrated. Though there are seven 99
operational
mills, the largest company, Molinos Modernos, owns four of those mills and has an estimated 70
percent market share. Molinos Modernos started operations with a single mill in Quetzaltenango
over 70 years ago, from which Multiinversiones Holding SA emerged. Molinos Modernos has
acquired some of the 23 mills that existed in 1992 through a series of mergers and acquisitions.
A fully vertically-integrated company, Molinos has its own vessels which allow it to procure
grains for its own Group's businesses; in addition, Molinos resells to other Guatemalan mills. As
with several of the other largest Guatemalan industries reviewed in this study, the Molinos
Group is vertically integrated, with its own well-established supply chains to serve the Group's
businesses. The Mill is the first actor in the chain producing flour and transferring companies
related to flour mill for the baking industry, cookies, and pasta, among other foodstuffs.
The estimated market share for each mill/group is as follows:
1. Molinos Modernos (Molinos Modernos and Molinos Excelsior, INH SA, PASTA INA, with
two additional mills in Quetzaltenango), all owned by Multiinversiones Holdings SA), with
an estimated market share of 70 percent.
2. Molinos CENTIA (Mill and Mill Central Helvetia), with an estimated market share of 13
percent.
98
Pastas are among the more common wheat-based products. Pastas are typically manufactured with durum wheat, which is not a
typical Title II monetization commodity such as HRWW, which is commonly used to produce high quality wheat flour for baked
goods such as pan breads.
99
Officially, there are 11 mills; however, of these only 7 are operational, with the other 4 idle as "a reserve for any growth in the
market or to cover any unforeseen or technical failures in one of the major mills in each group" (Personal Communication, August
27, 2011).
BEST Analysis – Guatemala Chapter 5 – Monetized Food Aid 57