Oscar Arruda has devised a strategy for enabling farmers in Brazil's semi-arid northeast to exploit an abundant local plant as an alternative crop that provides economic self-sufficiency in an otherwise depressed local economy.
The New Idea
Drought-resistant palm trees native to the state of Ceará are the source of carnauba wax, a product that has markets worldwide but is dominated by large distributors. Oscar bypasses the middlemen who have long controlled the purchase of raw materials for processing plants. He has collaborated with small farmers to build a plant in the Bonfim-Conceição Settlement to refine the wax from locally harvested palm leaves. To help the farmers and harvesters become managers of production intead of simply being suppliers of raw material, he offers technical training and links with regional and national distribution networks. The region's small farmers now have a valuable alternative product that can provide them with good livings while taking advantage of local resources. Oscar is applying for environmental certification based on the guidelines of the International Standards Organization.
Oscar is subverting an old prejudice that the climate and droughts are irreversible causes of sub-development and backwardness in northeast Brazil. Brazil's semi-arid Northeast has long been unable to provide livings for its people, who emigrate in droves to cities in the south, where they encounter social and economic discrimination in their search for work. A recent study by the World Bank reveals that at least 70 percent of the state's seven million residents live below the poverty line. Illiteracy exceeds 60 percent. The principal agricultural activities are beans and corn winter farming and raising livestock. However, these do not guarantee even the minimum income for necessities, especially during droughts. Government-promoted agrarian reform has rested on the assumption that giving people land results in economic growth, and that loans will enable them to start profitable livestock businesses. Instead, drought compels farmers to sell much of their stock in order to buy feed, perpetuating a cycle of debt that forces the government to provide emergency services and make-work projects. Instead of alleviating poverty, this welfare system has often created social problems such as dependency, vagrancy, and increased alcoholism. Moreover, as part of its agrarian program, the government's agricultural reform agency, Instituto Nacional de Colonização e Reforma Agrária (INCRA), registered the father of each family as the only member who had an economic interest. This policy excludes young people and limits their options for the future, causing a constant exodus from the countryside to the cities.
The Bonfim-Conceição Settlement, like others in the Northeast interior, survives on subsistence crops planted after the rains in January and February. In drought years, however, residents have no paying work except processing the leaves–the "straw"–of the carnauba palm to make wax. In Ceará, fifteen thousand tons of carnauba straw are harvested annually and sent to the national and international markets in order to make cosmetics, inks, polishes, rinds for cheese and fruit, and waxed cardboard for packaging and other uses. The harvesters are at the end of a chain that is held by a business group which sets the prices and makes profits from export margins. Their efforts to keep the prices low harm the small producers and harvesters, who lack the education and technical skills to take full advantage their local resources in a more sophisticated and profitable manner.
Oscar began by persuading a key local organization to support his strategy for making carnauba production the income-generating focus of local residents. After hearing his plan, the Association of Rural Producers in the Bonfim-Conceição Settlement began to redirect its government funding away from unprofitable cattle raising and toward alternative agricultural endeavors. Oscar appointed the settlement's leaders as cooperative directors to help make the project idea a reality. He created a link with wax-exporting businesses in Ceará and Rio Grande do Norte in order to secure technical advisors to supervise the first production run and to provide training in processing techniques, accounting, and management. In less than a year, producers in the Bonfim-Conceição Settlement began earning 15 percent beyond costs. Once a certain level of profit is reached, a designated percentage will be invested in a Human Development Fund that will finance the settlement's social programs. Oscar plans to make the Bonfim-Conceição Settlement wax producers responsible for the technical training of other settlements, in order to form a grassroots network of wax producers. Workers will then be able to train others among Ceará's seventy-three municipalities and 144 rural settlements. A newspaper article that piqued interest from communities and technicians has made the settlement a widely admired model for income-generation alternatives.
Partnership building has been a key component of Oscar's efforts. Early on, he secured the support of the city government of Santana and the Kellogg Foundation. More recently, support from the Swiss embassy made possible the purchase of machines and security equipment that allowed the settlement to expand production. Oscar also negotiated a partnership with the National Company of Settlements, a public entity associated with the Ministry of Agriculture that certifies communities for subsidized loans.
Oscar is also establishing partnerships with technical groups and citizen organizations to help improve services, as well as to develop more alternatives for sustainable economic and social development. The Getúlio Vargas Foundation of São Paulo is helping to spread the word about Oscar's work by printing materials and providing airline tickets between Fortaleza and São Paulo for developing contacts. The Odebrecht Foundation invited Oscar to present his methodology for use in a project for youth and economic development in the Northeast. More recent endeavors include a diagnostic study of the environmental degradation in the region that counts on technical assistance from the Cearenese Company of Water Resource Management and the Technical Center of Ceará . Oscar is also working with an organization to promote organic production among the carnauba growers. Oscar wants to create a commercial cooperative to bring together the products from thirty-one producers that are the source of thirty-six hundred tons of carnauba wax per year–25 percent of the Ceará market.
Oscar has established the Sertão Institute to foster the creation of partnerships and develop programs to serve the communities of the Northeast. He hopes to ensure the institute's fiscal base by reinvesting a portion of the income from the network of small producers. Oscar's long-term objective is to create a local refining and marketing infrastructure so that raw wax will no longer have to be sent away from the interior in order to make wax emulsion, a product refined only in the national market.
Born in Rio de Janeiro to a family from Ceará, Oscar spent his childhood and adolescence moving from city to city because of his father's job at the Bank of Brazil. At fifteen, he found himself totally out of place when his family moved to Ribeirão Preto, one of the largest cities in the state of São Paulo, where he suffered the jeers of his classmates because of his Northeastern accent. His peers called him "Cearense" and "Paraíba." Oscar constantly heard slurs such as "We are carrying the Northeast on our backs" and "The problem with São Paulo is the Northeasterners." Repelled by the prejudice against Northeasterners, who represent a large part of São Paulo's poor, Oscar began seeking out contacts with migrants, whose values and beliefs he shared. When he was ready to enter the university, Oscar enrolled in the prestigious MBA program at the Getúlio Vargas Foundation's business school in São Paulo, where he battled for a scholarship. He discovered that the upper class of São Paulo is a province itself, in which sons succeed their fathers and power always stays in the hands of a few. This realization led Oscar to work for change. While he was still a student, Oscar was a consultant for the Anthropological and Environmental Institute (IAMA), which works on economic alternatives for sustainable development in indigenous communities in Rondonia.
When Oscar learned about a prize for business administration students, he gathered professors and students to help him develop a project to improve the economic situation of the Northeast, and this proposal became the business plan for the carnauba wax project. Oscar moved to the Ceará interior to dedicate himself to his mission.