The Multinational Monitor

MAY 1981 - VOLUME 2 - NUMBER 5


H O N D U R A S

Banana Companies Still Dominant

Two multinational firms-Standard Brands and United Fruit dominate the economy of Honduras, a country which is about the size of Tennessee and is the poorest country in Latin America. Bananas contribute most of the nation's export earnings, and Standard Brands and United Fruit handle virtually all of the Honduran crop. The two firms are also among the one percent of large landowners who control 25 percent of the farmland, while 63 percent of Honduran farmers at the other end of the spectrum own only six percent of the land. Per capita income is less than $U.S. 300 per year, the population numbers 3.2 million.

Standard Brands and United Fruit are able to use their dominant position to obtain tax privileges: several years ago, although banana exports were worth three times as much as second-place coffee, bananas accounted for only f I percent of export duties while coffee accounted for 68 percent.

Increasing petroleum prices in recent years have hit Honduras hard. In 1972, 57 pounds of bananas or three pounds of coffee bought one barrel of petroleum. Last year, that same barrel cost 440 pounds of bananas or 24 pounds of coffee.

Nevertheless, the government has embarked upon ambitious development schemes: a $600 million hydroelectric project at El Cajon and the S200 million Olancho pulp and paper complex. Although these projects will drastically increase Honduras' indebtedness, they are intended to encourage industrial foreign investment in coming years. Total direct foreign investment currently stands at about 5200 million, mainly in bananas, mining, petroleum, and light manufacturing. Non-agricultural firms with subsidiaries in Honduras include Exxon. Mobil, Shell, Standard Oil of California, Texaco, Occidental, IBM. Colgate-Palmolive, and Rosario Resources.

More than 40 percent of Honduras' imports are supplied by the U.S., and Honduras sends more than 50 percent of its exports to the States.


Table of Contents