In the early 1980s, the cattle industry appeared to have the potential to be an important part of the Honduran economy. The Honduran cattle sector, however, never developed to the extent that it did in much of the rest of Central America. Cattle production grew steadily until 1980-81 but then declined sharply when profits fell because of high production costs. The small Honduran meat packing industry declined at the same time, and several meat packing plants closed. As late as 1987, livestock composed 16 percent of the value-added agricultural sector but the industry continued to decline. By 1991-92, beef exports accounted for only 2.9 percent of the value of total exports.
Sales of refrigerated meat were the third or fourth highest source of export earnings in the mid-1980s, but like other Honduran agricultural products, beef yields were among the lowest in Central America. As world prices fell and production costs, exacerbated by drought, rose, there was less incentive to raise cattle. For a period of time, cattle farmers illegally smuggled beef cattle to Guatemala and other neighboring countries where prices were higher, but the Honduran cattle sector never became competitive internationally. The two large banana companies have also owned large cattle ranches where they raised prime beef, but these large companies had the flexibility to change crops as the market demanded.
Honduran dairy herds fared about the same as beef cattle, and Honduran milk yields were also among the lowest in Central America. The dairy industry was further handicapped by the difficulties of trying to transport milk over poor roads in a tropical country, as well as by stiff competition in the domestic market from subsidized foreign imports, mostly from the United States.
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