VZCZCXRO9517
RR RUEHLMC
DE RUEHSN #2156/01 2981849
ZNR UUUUU ZZH
R 251849Z OCT 07
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC 8362
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 03 SAN SALVADOR 002156 
 
SIPDIS 
 
STATE PASS USAID/LAC 
STATE ALSO PASS USTR 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
3134/ITA/USFCS/OIO/WH/PKESHISHIAN/BARTHUR 
USDA FAS FOR BZANIN AND YWEDDERBURN 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD AGR USTR ES
SUBJECT: EL SALVADOR: POULTRY INDUSTRY MAIN PLAYERS 
 
¶1. (SBU) Summary. The entrance of U.S. poultry producers to the 
Salvadoran market has been deterred by GOES claims that U.S. poultry 
and eggs do not meet stringent GOES sanitary and phytosanitary 
requirements.  However, there are also a small number of 
well-connected business interests who control not only the domestic 
market but much of the Central American market.  The most 
influential figure is Carmen Elena Diaz de Sol, the main 
presidential adviser regarding agricultural policies and the 
National Director of the Agricultural Sector for the ARENA ruling 
party. De Sol heads the largest egg operation in Central America and 
owns the second-largest chicken producing company in El Salvador. 
End Summary. 
 
Current Status 
-------------- 
 
¶2. (U) El Salvador produces around 1.2 billion eggs per year and 
around 58 million chickens per year (about 223 million pounds 
annually). The poultry industry represents approximately 2% of GDP 
and 16% of agricultural sector GDP. 
 
¶3. (U) El Salvador has prohibited the entry of U.S. poultry and 
eggs, claiming they don't meet stringent Salvadoran sanitary and 
phytosanitary standards, including in the latter case that the eggs 
are salmonella free.  When the GOES first notified its stringent 
standards to the WTO in the late 1990s there apparently were no 
objections filed to those standards, even though some of the 
standards appear to lack a scientific basis.  The entry barrier has 
been raised with the GOES at all levels in El Salvador and at the 
WTO SPS Committee in Geneva. 
 
¶4. (SBU) The GOES has also argued that eggs are not poultry products 
and were not negotiated under CAFTA.  The GOES cited a single U.S. 
Federal Registry notice where eggs were not considered as poultry 
products.  During a October 22 meeting with Ministry of Agriculture 
officials, Rafael Gonzalez, a legal advisor to the Minister, 
expressed surprise that eggs were being considered together with 
poultry when discussing GOES regulations. 
 
¶5. (U) The Superintendent of Competition has begun a study of the 
poultry sector in El Salvador.  That could lead to an investigation 
of the companies in the sector for anti-competitive behavior. 
Similar sector reports on the electricity distribution and gasoline 
distribution and retail sale sectors by the Superintendent have led 
to investigations and the imposition of fines on several companies 
for alleged non-competitive behavior. 
 
Carmen De Sol: Agricultural Commissioner/Queen of Poultry 
------------------------- ------------------------------- 
 
¶6. (SBU) The most influential figure in the Salvadoran poultry 
industry is Carmen Elena Diaz de Sol.  Ms. de Sol is heavily 
involved in politics as a prominent member of the Alianza 
Republicana Nacionalista (ARENA) ruling party and an important 
contributor to their political campaigns.  Currently, she is the 
special Presidential Agricultural Commissioner for El Salvador.  In 
this role, she is the main presidential adviser on agricultural 
policies, and every relevant policy measure taken by the Ministry of 
Agriculture has to be approved by Ms. de Sol. She is also the 
National Director of the Agricultural Sector for the ARENA National 
Executive Council (COENA).  De Sol is very close to President Saca, 
and one of her ex-husbands, Mr. Ramon Gonzalez Giner, was Minister 
of Foreign Affairs during the Presidency of Armando Calderon Sol. 
 
¶7. (U) De Sol heads the largest egg operation in Central America, 
owns the second-largest chicken producing company in El Salvador, 
and is also an important sugar cane producer. In El Salvador she 
owns the second-largest Salvadoran egg producer "El Granjero," and, 
together with other poultry producers, is a co-owner of the main 
Salvadoran eggs distributor "Empresas de Granjas Guanacas 
(Salvadoran Farm Company)," or EGG El Salvador.  "El Granjero" was 
founded in 1961 and produces around 194.4 million eggs per year, 
roughly 16.2 percent of the Salvadoran eggs market.  De Sol also 
owns "Avicola Santa Rosa" in Honduras and "Avicola Julia" in 
Guatemala and owns part of the mega-distributors EGG from Guatemala 
and Avicola the mega-distributor of eggs in Honduras. 
 
¶8. (U) In the chicken business, de Sol owns "Productos Alimenticios 
Sello de Oro," the second-largest chicken producing company in El 
Salvador, which annually processes more than 12 million chickens and 
controls 20% of the Salvadoran market.  Their brands are "pollos 
sello de oro," "patties," and "chompipollo."  They also own an 
 
SAN SALVAD 00002156  002 OF 003 
 
 
animal feed factory that, under the brand "Ganamas," produces feed 
for chicken, dairy cattle and pigs.  The Executive Director of 
"Pollos Sello de Oro," Engineer Agustin Martinez, is the President 
of the Salvadoran Poultry Association (AVES). 
 
Gutierrez Group: The Owners of "Pollo Campero" 
--------------------------------------------- - 
 
¶9. (SBU) The Gutierrez Group is the second most influential player 
in the Salvadoran poultry sector. The Gutierrez Group, or Compania 
Multi Inversiones (CMI), is considered the largest agro-industrial 
holding company in Central America.  They are perhaps best known as 
the owners of the well known fast food chicken outlets "Pollo 
Campero."  The group includes 300 companies with more than 30,000 
employees and operates in 14 countries including Guatemala (its 
Headquarters), El Salvador, Honduras, Nicaragua, Costa Rica, Panama, 
Dominican Republic, Brazil, Paraguay, Ecuador, United States, Spain, 
Mexico, Indonesia and China. They operate in several divisions: 
poultry and pork; "Pollo Campero" fast food restaurants; flour 
mills, pasta and cookie production; construction and real state; 
communications (telephone and newspaper); hydroelectric power 
generation, and financial services. 
 
¶10. (U) The Gutierrez group owns "Avicola Salvadorena," the largest 
Salvadoran Chicken company, which processes around 30 million 
chickens per year (52% of the Salvadoran market) and sells another 
five million chicks to third parties.  They are vertically 
integrated, with operations in incubation, production, processing, 
and distribution. The Gutierrez Group also owns chicken producing 
companies, factories of animal foods and sausages in Guatemala, 
Honduras and Costa Rica. They sell fresh chicken in all countries 
except Honduras (frozen chicken only). Their most known brands are 
"Toledo," "Pollo Rey" and "Pollo Indio." The Group has expansion 
plans for Mexico and the Caribbean, and in El Salvador they are 
investing to increase "Toledo fryings" (hot and ranch wings) 
production capacity by 50%. Engineer Francisco Flores Recinos, the 
General Manager of Multi Inversiones (CMI), has referred to CAFTA as 
"a stone in the shoe" that they will have to overcome. 
 
The Group Lemus-O'Byrne 
----------------------- 
 
¶11. (U) Another powerful company in the Salvadoran egg market is 
Group Lemus-O'Byrne (formerly Group INCOCA). The group is the 
largest egg producing company in El Salvador, and operates both in 
El Salvador and Honduras. The Group is heavily involved in the ARENA 
political party.  Executive President Licenciado Roberto Lemus 
Gonzalez's brother, Mr. Eduardo Lemus-O'Byrne, is Director of 
Affiliation and Statistics of the ARENA National Executive Council 
(COENA). The group produces around 292 million eggs per year, 
equivalent to 24 percent of the Salvadoran eggs market. The Group 
Lemus-O'Byrne also partly owns EGG El Salvador and the Avicola 
Mega-distributor in Honduras with Ms. de Sol. 
 
Other Players 
------------- 
 
¶12. (U) The owner of "La Granja Catalana," the third eggs producing 
company in El Salvador, Mr. Juan Duch Vidri, is the uncle of the 
ex-ARENA deputy and ex-President of the Legislative Assembly Juan 
Duch Martinez. He owns around 500,000 chickens that produce 150 
million of eggs per year (approximately 12.5 percent of the egg 
market). 
 
¶13. (SBU) "Criaves," a genetic incubator of chicken, is owned by 
Roberto Trabanino and family. Mr. Trabanino is the best friend of 
Mr. Eduardo Zablah, the ex-Technical Secretary of the Presidency. 
 
Comment 
------- 
 
¶14. (SBU) Although the producers have successfully blocked U.S. 
access for the time being, they have acknowledged that CAFTA-DR 
eventually will require them to open the market to U.S. producers. 
CAFTA-DR establishes a chicken quota of 464 metric tons beginning 
the third year (2008), with annual growth until reaching free trade. 
Licenciado Carlos Molina, manager of the Salvadoran Poultry 
Association (Asociacion de Avicultores de El Salvador, AVES), has 
stated that the industry will have three years to develop a plan to 
face cheap U.S. chicken imports allowed by CAFTA. Continued 
political pressure will be required to ensure that this provision 
enters into force and to push for earlier access to the market. 
 
SAN SALVAD 00002156  003 OF 003 
 
 
 
¶15. (SBU) It remains to be seen whether the Suerintendent of 
Competition's sector study will lad to an investigation for 
non-competitive practces.  We are somewhat skeptical, given the 
powerful interests involved in the sector.  However, we could be 
proven wrong.  In addition to the poultry sector study, the 
Superintendent told us that she intends to study the fertilizer and 
cement sectors.  Those sectors are also widely believed to be 
controlled by local and influential oligopolies.  Thus, she seems 
willing to take on vested interests, but it is an open question 
whether she will be able to do so.  Resolution of the poultry access 
issues might also come from the USDA invitation, reiterated again in 
an October 19 letter from USDA Under Secretary Mark Keenum to 
Agriculture Minister Salaverria, for GOES officials to visit the 
United States to discuss poultry/egg access issues and review 
poultry sanitary standards in the United States.  It would also be 
useful to have an independent review of El Salvador's poultry 
(including eggs) sanitary standards for an independent opinion that 
they are not supported by scientific standards. 
 
 
Glazer