Innovative Supply Chain Management in the Amazon Basin.

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Despite having rich and plentiful natural resources, community based
agro-industries in the Amazon Basin face obstacles in their efforts to
market products and engage in sustainable resource management. In terms
of commercialization, these producers often have limited organizational
capacity, as well as limited access to technologies needed to tap into
the larger markets. There is a critical need to bridge the gap these
agro-industrialists face as they try to diversify their production, to
gain information on market demand & quality standards and to establish
relationships with corporations looking for local sourcing agents.\
\
POEMAR, a non-profit organization located in the state of Pará, works
with these Amazonian communities to bridge this gap. Specifically,
POEMAR provides training in all aspects of product development with a
focus on low cost technologies that add value. In addition, POEMAR works
with these producers to establish vital market links with important
corporate buyers. POEMAR provides all of this support in a way that
ensures these local agro-industrialists preserve their natural
environment for future generations.

**POEMAR and the POEMA System.**

POEMAR is part of the larger "POEMA system" within the Environmental
Center at the Federal University of Pará. POEMAR capitalizes on the
university's laboratories to study regional natural products, as well as
develop technologies for processing and quality control. In addition to
the non-profit organization, the POEMA system includes POEMATEC, a
business focused on marketing agro-industrialists' products while
assuring quality and quantity are consistent with market demand.
Recently, POEMACOOP, a cooperative of small producers and specialized
technicians have come together to address issues of market access.
Additionally, the cooperative purchases inputs in bulk for its members
to allow the small producers to benefit from the associated economies of
scale.

In 1998, POEMAR in partnership with the Biotrade Initiative of UNCTAD
and a consortium of private actors, established the Bolsa Amazônia
Program. This program supports sustainable community based
agro-industries in the Amazon. Specifically, the Bolsa Amazonia has
created an efficient network among these small producers and local,
national and international businesses. All members of the Bolsa Amazonia
are committed to environmental and social responsibility vís a vís the
sustainable use of the environment.

**Coconut Fiber Project in Partnership with Daimler-Chrysler.**

POEMAR's competitive advantage is its ability to establish market
relationships between different actors. An example is the link POEMAR
has established between buyers and suppliers in the coconut fiber
industry in Pará. POEMAR approached Daimler-Chrysler (at the time
Daimler-Benz AG) and its Brazilian subsidiary, Mercedes-Benz do Brasil
in São Paulo to conduct research on substituting synthetic inputs with
natural fibers for interior car parts. In 1992, Daimler-Chrysler agreed
to an make an initial investment of US\$1.4 million to research viable
natural fiber products and the role local communities could play as
suppliers for these products. The result of three years of research was
a pilot project to produce headrests and other interior car parts in the
community of Praia Grande. Initially the manufacturing was completed
manually. Eventually Daimler-Chrysler donated equipment to allow for
more efficient processing of fibers. Additional investments in the
project were then financed by Amazonian Bank BASA. POEMAR trained
community members in technology, administration and marketing.
Additionally, POEMAR trained these local agro-industrialists in
innovative agro-forestry practices resulting in increased coconut
production from 9 to 40 coconuts per tree.

There were two major challenges identified in the pilot: transporting
the car parts from the remote community of Pará to São Paulo and meeting
production deadlines that were not customary in rural community
production. With help from POEMAR, these obstacles were resolved and in
March 2001 the first fiber processing plant was inaugurated. POEMATEC
then undertook management of the plant. Financing for the plant came
from the government of the State of Pará, the municipal government of
Ananindeua, the Amazonian Bank, Daimler-Chrysler, and DEG -- the German
Investment and Development Company. Specifically, Daimler-Chrysler's
financed US\$4 million for supply of imported machinery, and provided
training in the use of the equipment.\
\
Today, the plant has a production capacity of 80,000 tons/month. A total
of 25% of its production is dedicated to demand for interior car parts
at Daimler-Chrysler. The plant is quickly expanding to meet new client
demand in the automotive industry from General Motors and Honda.
Additionally, the plant is adding additional product lines like
gardening pots and mattresses.

As easy as it is to get lost in the cutting edge plant and technological
innovations, the real success story is told from the benefits to the
rural community organizations supplying the coconut fiber to POEMATEC.
Eight districts in Pará now supply coconut fiber to POEMATEC. This
translates to approximately 4,000 new jobs created in the coconut fiber
production including agricultural producers, processing plant workers,
and POEMATEC plant workers.

The project also has measurable benefits to Daimler-Chrysler's business.
The company is able to meet its local content requirements by sourcing
its interior car parts from the coconut fiber plant. Also, the company
is able to ensure that its vehicle production meets the high environment
and recycling standards set at home in Germany. Finally, sourcing these
parts is as economically viable, if not more so, than their synthetic
counterparts.

**Consolidating Agro-Extractive Industries.**

In order to expand and diversify the focus of the established
partnership between POEMAR and Daimler-Chrysler and to apply lessons
learned to a new context, the IAF made a grant to POEMAR to consolidate
three communities in Pará engaged in the production of fish, dried fruit
and banana processing. These communities work with the Bolsa Amazônia
Program to improve market penetration through more appropriate quality
and quantity as well as through adding value to their production.

**Artesenal Fisherman.** The Association of Artesanal Fisherman (ASPAR)
of Porto de Moz was established to improve local fishery resource
management. Specifically the Association is improving issues related to
managing product from catch to market. Today, a typical fisherman's
yield is not optimized due to product lost in the transport to market.
The IAF is financing an ice making facility to reduce fish losses and
diminish ice costs by manufacturing rather than buying ice.
Additionally, the Association has also constructed seven fishing boats
for use by its members. Currently, members rely on canoes which are more
time consuming for transportation.

**Agro-Extractive Small Producers in Camurituba.** POEMAR works with the
Agroindustrial Society Camurituba-Beira (SOAGRO) to consolidate
operations of its fruit-drying factory. IAF funds were used to purchase
new drying equipment and packaging materials that allow the factory to
add value and reduce costs. Like their artesenal fisherman counterparts,
these small banana producers suffered product loss in the transportation
process. As a result of the project, these producers are now processing
bananas to make banana flour, thus driving down their loss rate and
increasing their profit margin through adding value to the product.
Consider that the price of one kilo of banana flour costs approximately
US\$1.60, while a 20 kilo bunch of bananas is sold for approximately
half that price. POEMAR has joined banana producers with similar
programs in four municipalities of Pará to jointly market their product
while assuring quality and consistency of the banana flour product.

As a result of the success of this project, the community of Cumurituba
is now diversifying and processing coconut for dried coconut flakes.
POEMAR has taken this project one step further by linking up the
communities that process coconut fiber for automobile parts to supply
Camurituba with coconuts for their value-added processing in the dried
fruit factory.

**Novo Paraiso.** Under the IAF grant, POEMAR assists the Resident and
Small Holder's Association of Grotão dos Caboclos of Novo Paraiso
(ACROCANP) to consolidate its fruit pulp and dried fruit processing
plant activities. The local community has significant supplies of banana
and is now working with POEMAR to produce banana flour. POEMAR is also
helping ACROCANP to establish relationships with buyers in Miami with
high demand for pre-dried frozen bananas.

**Lessons Learned:\
**

-   Corporate self-interest can be a powerful motivator in establishing
    sustainable, successful CSR program. Daimler Chrysler has tied many
    business objectives to this program which is one of the most
    successful economic development programs in the region;

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-   Innovative commercial relationships can be mutually beneficial for a
    company and local communities, while also adhering to
    environmentally sound principles of sustainable development.

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  ***Juliana Menucci** works as a development communications consultant
  in Recife, Brazil, and is currently the IAF LLAS coordinator in Brazil.
  Formerly she worked as program assistant for Brazil and the Southern
  Cone at the IAF, as well as, a communications consultant on various
  international development communications projects.*

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