Scheduling medical checkups for the staff, preparing the housing modules to maintain social distance and adapting the logistics of transporting people are challenges that the sugar mills will face during the 2020-2021 harvest.
The sugar cane harvest that is about to begin represents a source of employment for thousands of people in the region and in this context of the propagation of covid-19, the companies will have to face multiple challenges to get the harvest going.
Discounts and offers, increase in the price level generally and the rise in operating costs due to new health and safety protocols are the main threats to the profitability of companies in this new commercial reality.
Given this context of economic and health crisis, which derives from the outbreak of covid-19 at the global level, Ariel Baños, a specialist in price management and founder of Fijaciondeprecios.com, explains what are the main threats that could affect the profitability levels of companies, and details some strategies that could be applied to mitigate the adverse effects.
Through the implementation of data mining and machine learning techniques, companies can improve their efficiency and optimize their production processes.
EDITORIAL
Analyzing large volumes of data to make decisions that result in better results for a company applies not only to the commercial and sales field, but also to other areas of the same or even more sensitive companies: the production process.
In a competitive scenario for lower costs and higher productivity, devaluation against the Lempira Dollar in Honduras and the Cordoba Dollar in Nicaragua is a factor that could help these economies stay competitive.
In the last five years, the exchange rate in Honduras increased by 17%, from 21.06 Lempiras per U.S. dollar in June 2014 to 24.67 in the same month in 2019.
In recent years, the sector in Guatemala has lost nearly 30,000 jobs, because the high costs resulting from having one of the highest minimum wages in the region, makes it more profitable only to export raw materials, rather than making them in the country.
Vestex figures show that in recent years several jobs have been lost in the sector, given that between 2006 and 2018 the industry lost a considerable number of jobs, going from 82,109 to 53,636 places, equivalent to a 35% decrease.
While in Nicaragua and El Salvador the minimum monthly cost of farm labor is just over $100, in Guatemala it is $345 and in Costa Rica it is over $460.
In a region where agricultural production is relatively the same in most countries, production costs are very different, resulting in very different levels of productivity that ultimately benefit some more than others.
In Honduras and Nicaragua the cost that a company must assume to formalize a worker amounts to more than 70% of what they will produce, while in Costa Rica, El Salvador and Panama, it is just under 40%.
From a statement issued by the Inter-American Development Bank (IDB):
Formalizing a worker in Latin America costs 39% of what they produce
Wage and non-wage costs relative to productivity, are 50% higher in Latin America than the average in OECD countries.
The state run power company estimated that starting May 2015 the cost of electricity will go down from $165 to $109 MW/h, as a result of its energy diversification.
The entry into force of contracts which were awarded in tender processes using the method of successive rounds will create a reduction of up to $56 MW / h, according to Jorge Alonso, manager of Empresa Eléctrica de Guatemala (EEGSA).
For the second consecutive year the increase was agreed between the private sector, trade unions and the Government.
A press release from the Government of Guatemala reads:
The Government of Guatemala has announced an adjustment to the minimum wage for 2014, representing an increase of 5%, as was announced by the Minister of Labor, Carlos Contreras. The increase will benefit 1.5 million Guatemalans formally working in the country.
The encounter is sponsored by Ramacafe and with coffee growers from Costa Rica, Mexico and Guatemala and Government officials invited.
More than 400 big and medium coffee growers from Nicaragua starting a three day meeting to discuss solutions for the increasing production financing and infrastructure costs faced by the leading sector of agricultural exports, reported the president of the organizing committee of the event, Henry Hueck.
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