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    Can a Nut Save the Rainforest?


    © International Trade Centre, International Trade Forum - Issue 4/2004

    Photo: Photodisc

    In Bolivia, a group of enterprising companies survived the collapse of the rubber industry by harvesting and processing Brazil nuts. As the lead export of the Amazon region, these humble - but difficult - nuts may be the secret to saving the precious rainforest. ITC's assistance in addressing quality management issues has helped these exporters, as part of a project designed to boost Bolivian exports in ten industry sectors.

    In the north of Bolivia, rural areas around the towns of Riberalta and Cobija are benefiting from harvesting and processing Brazil nuts. At the same time, this growing industry is saving the rainforest, creating employment and lifting thousands of workers and their families out of poverty.

    These communities traditionally depended on wild rubber extraction for survival, an industry gradually eclipsed in the 1970s by southern Asia's market domination and the introduction of synthetic substitutes. The economic shock devastated the people of the
    region. However, they picked themselves up and launched into a new activity that showed considerable promise - Brazil nuts.

    In 2003, the nuts had a total market value of US$ 48 million and are the lead export of the Amazon region, an area that covers 100,000 square kilometres or more than twice the size of Switzerland. Around 28,000 families depend directly on the industry, which generates up to 100,000 jobs directly and indirectly.

    Brazil nuts are principally produced by Bolivia, which controls 80% of the market. The other producers are Brazil and Peru. The nuts grow in the border area where the three countries meet.

    Deforestation, a threat to the industry

    But Brazil nuts are a difficult prize. The nuts only grow in the wild, with one to three tall trees per hectare. The trees take 40 years to mature before nuts can be harvested.

    The Amazon rainforest is being systematically destroyed as farmers, desperate to scrape a living from the soil, indiscriminately burn tracts of land to clear forest for crops. Once the crops are harvested, farmers move on to another area and the destruction begins anew. This threatens both the Amazon's fragile ecosystem and the Brazil nut industry, since the trees cannot be cultivated.

    Meeting new challenges in disease control

    In the post-harvesting phase, the nuts are vulnerable to aflatoxin, a mould that is very difficult to control due to the high humidity in the forest during harvest time.
    The Brazil nut entrepreneurs were particularly affected by a 1998 European Union (EU) regulation regarding the level of aflatoxins in nuts, which set the amount at 4 parts per billion (compared to 20 parts per billion in Australia and the United States).

    As the EU represents about 50% of the market, the entrepreneurs decided to take action. Through their Northeast Export Chamber, they set up a Centre of Training and Quality for Northern Bolivia, with a laboratory in Riberalta to control sanitary and hygiene conditions and one in Cobija to control quality. However, lack of expertise was hampering progress.

    Measurable impact

    ITC's project, launched in 2001 with the support of the Swiss State Secretariat for Economic Affairs (seco), involved five of the region's 20 companies. The project resulted in the creation of the Centre of Training and Quality, which analyses export consignments to verify compliance with food safety requirements, thus increasing the sector's competitive edge. It provides a forum for training in areas such as product quality, disease control and monitoring market trends. The building also incorporates sport and social facilities, such as a football field and a theatre, which fills an important gap in the local community.
    This technical assistance helped firms by improving export packaging practices, fostering market links and setting up hazard analysis and critical control point systems. The impact upon the industry has been measurable: exports in 2003 reached 16.3 million kilograms, up from 7.25 million kg in 1995.

    Improvements in hygiene, working conditions and long-term economic viability have prompted the remaining 15 companies to request that ITC assistance be extended to them. "Training, good labour conditions and quality control are an investment that quickly returns a profit," concludes Wilfredo Jurado, the Bolivia-based Chief Technical Adviser for the project.

    "Investment in quality control and certification has proved to be an argument not just to get better sales, but a requirement to access foreign markets. And better packaging practices have reduced costs and product losses during transportation, improving relations with the buyer," he explains.

    "This project has strengthened the region's capacity to cope with a changing economic environment while providing meaningful employment for its people," says Eric Alvarez Gurza, Chief of ITC's Office for Asia-Pacific, Latin America and the Caribbean, Division of Technical Cooperation Coordination. "This bodes well for the Brazil nut exporting sector and as it grows, there is hope that farmers will no longer need to burn the forests."

    Boosting exports in Bolivia

    Other Bolivian businesses, too, are making inroads into the global market as part of the same ITC project.

    The project, launched in 2001, followed an earlier needs assessment carried out by ITC with the Vice Ministry of Industry, Trade and Exports, the Bolivian Trade Promotion Organization, the Bolivian Institute of Foreign Trade and the Santa Cruz Export Chamber. With the aim of increasing and diversifying exports, the project selected ten sectors featuring non-traditional products with potential niche markets worldwide: quinoa; Brazil nuts; cotton textiles and clothing; cameloid hair textiles and clothing; organic products; wood manufactures; leather manufactures; beans; gold and silver jewellery; and high altitude wines.
    The companies selected for the project operate in more than one geographic area, are already exporters or have products with strong export potential, and produce value-added products and goods for which ITC has experience.

    "The companies' products showed potential, but they needed support to comply with the requirements of international markets," explains Pablo Lo Moro, ITC Trade Promotion Officer for Asia-Pacific, Latin America and the Caribbean. "The project has helped these companies take on the challenges ahead."

    The project involved a cross-section of partners, including firms, government bodies, trade associations, standards institutes and educational institutions. In an effort to reach outlying areas of Bolivia, the project targeted seven of Bolivia's nine regions: La Paz, Cochabamba, Santa Cruz, Tarija, Oruro, Beni-Pando and Cobija.

    Consistent quality and attention todetail are critical disciplines for Bolivian exporters targeting international supply chains. Quality management starts with inspection at every stage of the production process. Here Ingrid Vargas, Production Manager of San Agustin, a Bolivian company, checks final products for export. (Photo: ITC)

    Results show promise

    "First, the project has had a demonstration effect," says Mr Lo Moro. "Working with these companies, we show that it is possible for firms to be successful exporters. Second, we build local capacity by working with local institutions, such as universities. It's important to train people, so they can train others. The next step will be to foster the further development and sustainability of national business development services."

    Five business organizations, eight laboratories and 25 firms are expected to complete a quality management system this year and pursue accreditation as a result of the project. More than 60 professionals have been trained in using ITC's Business Management
    System through a local university, the Universidad Privada Boliviana. A national packaging organization, Organismo Boliviano de Envase, was set up to continue the project's work and further develop training. A set of recommendations was drawn up to strengthen the Bolivian Trade Promotion Organization. And a new web site showcases exports and provides a link to Bolivian trade and technical information.

    The three short case studies below illustrate the same principles that have been applied throughout the project in other sectors.

    Climbing the value-added ladder

    Industria Madera Sali, a company in Cochabamba, began as an exporter of fine red woods, such as mahogany and Bolivian oak, with little value added. With the help of a Danish-funded ITC project (1990-94) the company invested in drying and new production equipment, which enabled it to compete with Asia. It also started manufacturing doors using new species. This diversification reduced pressure on increasingly threatened forests, which together with the company's strict environmental management systems improved the impact of its activities.
    Under the seco-supported ITC project, Industria Madera Sali is now improving its environmental management practices, quality control and packaging and is benefiting from human resources training. It has diversified its exports to supply integrated needs of international real estate development projects. Most of its exports are destined for Chile and the United States.

    "ITC support helped the company produce and export more complex goods," says Mr Jurado. "By diversifying its production portfolio, the company is playing an important role in revitalizing the country's wood sector."

    The company successfully navigated through adverse national economic conditions and survived sharp demand cycles for wood in international markets. Many of its competitors did not. Since 1998, it has steadily increased exports, from US$ 700,000 to US$ 1 million in 2001. It has been supplying US giant Home Depot Stores since 1993.

    Healthier exports of quinoa

    Another Cochabamba-based company, Andean Valley, began as a bulk exporter of quinoa, a cereal that grows mainly in the high plateaux of the Andes in Bolivia and Peru. Quinoa is valued for its nutritional properties and is sold both in health food stores and in traditional food shops.

    Building on ITC's support, the company diversified its offer to processed quinoa foods. Andean Valley also obtained organic certification for some of its products, making them attractive to a growing and lucrative niche market.
    The company participated in all available ITC-sponsored activities and usually contributed to the costs. "This participation played a substantial role in increasing the quality of our products and our international competitiveness. With ITC's marketing support, we have benefited from a substantial increase in exports," says Manager Javier Eduardo Fernandez.

    Traditionally dependent on US buyers, Andean Valley now sells to Denmark and Germany. As orders grow, so does the supply. This market force is helping to reduce poverty, as quinoa is grown mainly by small-scale farmers in severely deprived areas of the Bolivian highlands.

    Bean farmers benefit from fair trade

    Bolivian Shoji exports beans - red, kidney, black, white, carioca and fava beans. The company's productive base is small farmers who benefit from a fair-trade scheme, designed to reduce poverty in the area. The farmers benefit from Bolivian Shoji's technical assistance, financing and secure purchasing agreements for their harvest, processed at company facilities in the industrial park of Santa Cruz.
    The market is 100% oriented outside the country and the company exports to Brazil, Colombia, Japan and Spain, among others. ITC has helped with market reach and quality control to comply with food safety requirements and packaging. For example, a technical adviser suggested using a new 1 kg plastic bag to solve the problem of loss during shipping to Japan.

    Sales were US$ 1 million last year and are expected to reach US$ 1.2 million in 2004.

    Mr Lo Moro concludes: "We have made significant progress, but there is more work to be done to connect the companies with international markets. At the same time, the project strengthened institutions and the business community is much more aware of the relevance of export markets. It is a good example of how ITC's expertise can be used to help build capacity."

    Releasing the brakes on Bolivia's export potential

    Bolivia is one of the poorest Latin American countries, with 70% of the population living below the poverty line. The nation made considerable progress in the 1990s towards developing a market-oriented economy with a free trade agreement with Mexico, associate membership in the common market of the south (MERCOSUR) and a privatization programme. Today, however, Bolivia still has one of the lowest per capita export levels in Latin America.

    The country is landlocked in the middle of a huge continent and limited by an unforgiving topography. With towering mountains, deep valleys and a climate that varies with altitude (from humid and tropical to cold and semi-arid), just 2.76% of the land is arable. Distances are huge, both within the country and to potential export markets. These factors, exacerbated by political and economic crises, have put the brakes on Bolivia's export potential.

    Because the domestic market is small, reaching international buyers is essential to reboot the economic growth needed to lift its citizens out of poverty. But Bolivian exporters still face a number of challenges to diversify from their reliance on primary commodities. Among the issues the country needs to address:

    • Managerial skills in areas such as international cargo transport logistics.
    • Reliable trade information systems, as well as training and tools to conduct market intelligence.
    • Better awareness of quality control and packaging export requirements.
    • Training on product design and overall needs of export companies.
    • A network of public institutions and trade organizations that supports export development.

    Writer: Dianna Rienstra
    Contributor: Natalie Domeisen

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