VZCZCXYZ0986
RR RUEHWEB

DE RUEHTG #0213/01 0671949
ZNR UUUUU ZZH
R 071949Z MAR 08
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC 7789
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE USD WASHDC

UNCLAS TEGUCIGALPA 000213 
 
SIPDIS 
 
SIPDIS 
 
WHA/CEN, EB/CBA, STATE PASS TO USDA 
 
E.O. 12958: N/A 
TAGS: EAGR EINV ECON HO
SUBJECT: THE OLANCHO REGION OF HONDURAS 
 
REF: REF: 08 TGG 181 
 
¶1. (U)  Summary:  Considered the "Wild East" of Honduras, 
Olancho is famous for its meat, milk and cheese. 
Nonetheless, new industries, including aquiculture, mainly 
sugar and corn, are doing well in this fertile land.  The 
family farm is slowly disappearing, being replaced by 
corporate farms.  Some residents are abandoning tradition 
and considering new crops and businesses.  Their success 
will ultimately depend on their access to capital. 
End summary. 
 
------------------------------------ 
Welcome to Honduran Marlboro Country 
------------------------------------ 
 
¶2. (U) Olancho is Honduras's cowboy country, home to an 
estimated 300,000 cattle and tens of thousands of horses 
and pigs.  It has a reputation as the "Wild East," lawless, 
dangerous and beautiful.  Young boys are at ease in the 
saddle, cowboy boots or work boots are omnipresent, and 
most male residents wear cowboy hats.  Business people wear 
jeans and collared shirts to important meetings. 
 
¶3. (U) President Zelaya hails from Olancho. 
Although Honduran presidents typically shower their 
hometowns with special projects (Roberto Suazo Cordova, 
Honduras's first civilian president after the end of 
military rule in 1982, built a soccer stadium in his 
hometown of La Paz that locals joke must be for the goats 
and donkeys to play in, because there are no local teams to 
use it), government investment in Olancho during Zelaya's 
term has been scant.  The highway from Tegucigalpa to 
Olancho is one of the worst major roads in Honduras. 
Several locals expressed disappointment to EconOff that 
their favorite son has neglected them.  But the town of 
Catacamas, for one, has nonetheless built and/or paved new 
roads with primarily local funds. 
 
¶4. (U) Olancho's traditional industries have been meat, 
milk and cheese.  There are approximately 80 cheese plants 
in Olancho.  Most milk arrives in 30-gallon blue plastic 
containers in the back of pickup trucks, though EconOff 
also observed far smaller quantities arriving via bicycle 
and even ox carts.  The plants produce a bland semi-liquid 
cheese called "quesillo." An industrial-scale 
pasteurization process could allow the cheese plants to 
produce higher-margin cheddar and mozzarella, but such 
machines are beyond the reach of most owners, who have 
fewer than 30 employees and whose plants are about the size 
of a gas station. 
 
-------------------------------------- 
New Industries: Tilapia and Sugar Cane 
-------------------------------------- 
 
¶5. (SBU) Two decades ago tilapia farming, in rivers and 
man-made ponds, arrived in Olancho.  Residents now eat fish 
once a week on average, providing an excellent source of 
low-fat protein and vitamins.  Before tilapia farming 
arrived, fish consumption was nonexistent.  More recently, 
the sugar cane industry has been buying up land; to date, 
four mills are involved (reftel).  EconOff visited the 
fields of La Grecia corporation and spoke with site manager 
Walter Herman.  The Olancho soil is better than at La 
Grecia's primary operation in Choluteca, and therefore he 
has been experimenting with different varieties of cane. 
One has grown well; once he finds two more, he will give the 
green light to plant substantial acreage in cane.  Until 
that time, the land will produce corn. 
 
----------------------------- 
The Times They are a Changing 
----------------------------- 
 
¶6. (U) Aside from the growth of aquiculture and sugar cane 
farming, there are obvious signs of change and 
modernization in Olancho.  Modern pick-up trucks abound, 
and merchandise imported from the United States is 
available even in small towns.  Home construction is booming, 
though much of this is financed by remittances from Hondurans 
living in the United States.  A tremendous influx of Honduran 
tourists is expected during Holy Week, and hotels throughout 
Olancho are preparing for the onslaught. 
 
¶7. (SBU) Even the cattle industry is slowly changing away 
from the traditional family farm model.  The sons and 
daughters of wealthy landowners prefer city life and no 
longer wish to manage or even visit the fields.  For 
example, the Honduran Chief of Defense, Romeo Vasquez 
Velasquez, told PolCouns that managing his family's ranch 
takes so much time and effort that he has simply given 
almost all of the cattle to those who work the ranch with 
the understanding that they must give him  40 percent of 
all profits.  Thus, most farms consist of elderly owners 
and an army of teenage to twenty-something workers, with 
those aged in between nowhere in sight.  Ordinary workers 
do not have, and never had, the financial wherewithal to 
own their own farm.  The GOH just 
approved a 2 Lempira (10 US cents) increase in the price of 
a liter of milk, which should provide some relief to 
financially stressed ranchers.  But the land is slowly 
passing into the hands of corporate entities such as 
La Grecia. 
 
¶8. (U) Corn grows well in Olancho and is therefore within 
the means of small farmers, though at least a medium-scale 
plot would be necessary to lift a farming family out of 
poverty.  However, capital for undertaking new economic 
activities is scarce.  One sign at a local credit union 
urges those who receive family remittances from the US: 
"Don't spend all the remittance.  Save.  Invest!" 
 
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Comment 
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¶9. (U) Olancho is a traditional region of a conservative 
nation, and change comes slowly.  Nonetheless, new 
industries and new ways of doing business are clearly 
visible, including tilapia and corn production, corporate 
farming, even importing and reselling merchandise from the 
United States.  During a presentation to a local chamber of 
commerce, in addition to the usual questions of whether 
the U.S. Embassy could provide financial assistance to the 
locality, participants informed EconOff they were 
considering new crops and new ideas, including grape 
cultivation, forest management and hydroelectric power. 
There are substantial opportunities in this land of rich 
soil, moderate temperatures and ample rainfall.  But until 
investment capital is made more easily available to those 
with ideas but without ties to the ruling elite, these 
opportunities may remain unexploited.  End comment. 
 
 
FORD