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Closing the citrus supply chain

Date interview: June 14 2016
Name interviewer: Manuela Rosing Agostini
Name interviewee: João Kranz
Position interviewee: Producer-partner. Worked as treasurer and manager in the plant

Values Social-economic relations Providing alternatives to institutions New Organizing Networking Inclusiveness For-profit enterprises Finance Civil Society organizations Breakthrough

This is a CTP of initiative: RIPESS/ Ecocitrus (Brazil)

In 2001, Ecocitrus invested in the acquisition of machinery and infrastructure to equip the factory and began to close the entire citrus supply chain. This process was important to demonstrate the social and economic transformation that the cooperative provided. This CTP demonstrates the importance of cooperation so that producers achieve autonomy and independence, without relying on intermediaries to process the fruits, adding value to the final product and improving the economic development of the region. In the statement below we can observe the process of acquisition and transformation:  

"What was most interesting for the cooperative was that we installed the centrifugal machines to make the essence, that is, the green bergamot essential oil. This was our first project. What did we do afterwards? We financed these machines through the Bank of Brazil, because they’re expensive machines. We started doing that in the factory there. And what happens? With our work starting, the other companies just had to pay more value to the farmers for bergamot, because they were no longer alone. They used to dictate a very low value and almost couldn’t pay for labor. Since then, the value has greatly increased from this raw material, the green bergamot" (Producer-partner. Worked as treasurer and manager in the plant).


 In addition to providing an income increase for the producers associated with Ecocitrus, the acquisition of this machinery benefitted the whole region, since it was able to increase the demand for the product they call "green bergamot". This product was processed at the Ecocitrus plant and transformed into essential oil, making the product more valued in the region, providing economic development for other small producers.  

"We bought these machines and financed them. For this work we need graters and centrifugals, so we bought two centrifugals and a grater and really started this work. Soon we started working with other organized groups, which made the price go up. This organization and cooperative associations make the little ones strong, because now they can compete with other big companies. The value they’ll get for raw material is higher, because he won’t sell green bergamot anymore, he’ll sell the essential oil. He owns the oil now. This is very interesting to the farmer. They can see how much they get stronger, they gets greater sustainability in agriculture" (Producer-partner. Worked as treasurer and manager in the plant).


 The issue of increased incomes has brought empowerment to all producers in the region who have begun to bargain for better prices for their products. Here we notice the presence of a new organization as social innovation, involving not only the associated producers but a whole category of professionals. In addition, we observed that the relationships between these producers were through a network of sustainable production ideals and empowerment of small producers.  

When it comes to closing the entire citrus supply chain, the interviewee reports below how important it was to the members, who were able to sell the raw fruit, process it into juice, extract the essential oil and guarantee the organic fertilizer to restart the process. These socio-economic relationships allowed for financial empowerment and inclusion for producers.  

"Ecocitrus associates started having a greater advantage than he had until then, because since the beginning we always had the fertilizer as an incentive, so that was already a part of the chain, but we had to close all of it. So, with the production of the essence of green bergamot, which is green oil, we already had a part of the chain closed. Not everything, because then we needed to make juices. After we made the juices, then we had the whole chain in our hands" (Producer-partner. Worked as treasurer and manager in the plant).


For this process to be successful, the main partners involved were financial institutions, since for Ecocitrus to close the chain a high investment was necessary for the purchase of machinery. These institutions are classified as for-profit enterprises. "The main partner was BRDE, which is the bank that really financed the industry, because the others didn’t believe that Ecocitrus would go through with that" (Producer-partner. Worked as treasurer and manager in the plant).  

BRDE, Regional Development Bank of the Far South, is a public financial institution of development, controlled by the three southern states of Brazil and has financial and administrative autonomy, being a reference in long term financing for investments.

In addition to achieving long-term financing with BRDE, Ecocitrus was supported by a local political partner, as stated below:

"We did get a small amount from a bill for a parliamentary amendment by Hermínio Bongardo, when he was still a state congressman. He got us R$350,000 (around US$106,000). He got it for us so we could buy equipment. So that's what we did. They came to check on us and everything. We’ve always had a good relationship with this whole political thing, but we never had partner companies in the agroindustry to raise the project" (Producer-partner. Worked as treasurer and manager in the plant).  

Another important partner of Ecocitrus is Banrisul - State Bank of Rio Grande do Sul, which also helps with financing to guarantee cash flow for the cooperative:  

"We have a lot of access to the direction of banks, especially Banrisul. We always get the financing we need to make ends meet. You have to have working capital. You don’t sell oil and juice fast. It takes some time to sell everything. We can always do the financing for working capital. With the money, we pay a part to the farmer, so the farmer doesn’t stay penniless until we can sell and receive the final products" (Producer-partner. Worked as treasurer and manager in the plant).

Related events

2001 - acquisition of machinery for the production of essential oil  

2002 - Production of juice for commercialization outside Ecocitrus "Other factories processed juice for us, they served us, so we launched the organic juice before our factory existed"  

2007 - Getting the IBD Organic Seal "The product that receives this seal meets all the organic certifications made by IBD Certifications in the domestic market. IBD is the largest audit certifier in Latin America and the most important Brazilian certifier of organic products with recognition in international markets” (Ecocitrus website).  

2009 – Ecocitrus stops being a company that does fruit trade and becomes an industrializer (event related to CTP 2 as well)


Even with all the investments that were made, Ecocitrus is still going through financial difficulties, as can be seen in the statement below: 

"The good part was closing the larger supply chain, but of course you have a negative point to that. We invested a lot of money in the plant equipment. For you to set up a factory, you need a minimum value. You can’t start off small. You have to start off big, so you invest a lot of money. For Ecocitrus, it's a small negative point. We have difficulty paying for this financing. But I don’t see any other negatives" (Producer-partner. Worked as treasurer and manager in the plant).  

With this financial difficulty, some farmers opted out of the project. But the interviewee does not see this as a negative factor; he believes that cooperativism is based upon group discussion, as reported in the following statement:  

"We have to show firmly that this is right for the group. Of course, that makes some of them leave. Some people have left and new ones have come in too, because it’s good for them and this is all part of this philosophy that we use. Like I said, there’s always a discussion going on. It’s cool to have discussions, because some of them are a little angrier than others, so a discussion happens. But I like that because the discussion is productive. That’s how you reach a decision. The cooperative is by the members and for the members, so everyone has to speak up, everyone has to defend their idea" (Producer-partner. Worked as treasurer and manager in the plant).  

The principles of cooperativism involve ideals and values that must be built by everyone involved, but even with this engagement differences appear. What is important is that the group can maintain and promote alternatives for the partners who continue to believe and invest in Ecocitrus, as can be seen in the statement below:

 "I don’t know what happens. That the human being is very difficult to understand. We have some people within the Ecocitrus group who don’t work for the group, they only benefit from the group - and that's quite clear. The person built a plant and everything they make in the plant isn’t organic. But they’re still with Ecocitrus, and all they do is complain. What's going to happen? This person is going to have to leave. They’re only fooling themselves because they produce a lot of food that doesn’t feed anyone. They use everything that’s crap and not organic, in their case, in cakes, crackers... It’s a family business, and they’ve invested a lot of money, and it’s strong and sells a lot of products. But they don’t agree with what we defend, so it is they’re always criticizing, they’re against much of what we do" (Producer-partner. Worked as treasurer and manager in the plant).    


When asked about whether the event was anticipated by them, the response, again, was negative. The farmers had no idea of the investments that were made and the projects that were coming up. They could not foresee where this all was going to go, and therefore hired an external consultancy to conduct feasibility studies.  

"We had always been tiny farmers. We never got involved in large projects. Now we’re a big company, but we did a feasibility study. We hired a person who showed us what had to be done. All we needed to give a positive result, such as the volume of the fruits we had to process, how many people, and each person’s job. We hired a company and they did and showed it to us so we did a whole study" (Producer partner. Worked as treasurer and manager in the plant).

 With an opinion that is slightly different, another member mentions that the anticipation was interesting to determine a break with the dominant market structures, the so-called middlemen. Ecocitrus allowed local producers (members and non-members) to get paid a greater value for their product, without relying on pre-determined market value, which exploited the raw materials of the region. Today, Ecocitrus is recognized for paying a fair value to its producers and for raising the selling price for the entire region, as can be noticed in the excerpt below:  

"Ecocitrus sure made this happen and we see today that the fact that Ecocitrus has a factory, for example, in the citrus field, benefits their own fruit. There is no middleman. That certainly influences the other companies in the region, because before that happened, they dictated a market value and it was a monopoly. And if that was the market value, it didn’t matter if it was a fair price or not, that was all they would pay. With Ecocitrus it’s different. They pay their members what’s fair and square, and indirectly influences the market as a whole. It’s like, ‘Hey, if Ecocitrus can pay that much, you guys can pay that, too.’ It certainly had its influence on the market (Technician at the Composting Plant and partner-producer).


With respect to learning, it is clear that the interviewee demonstrates a lot of enthusiasm for the experience. Empowerment is not only financial, but also fairer and more equitable human relations, with the inclusion of farmers and valuation principles and values ??of cooperativism.  

"The main thing is that we learned a lot. I for one learned a lot of things. I would say this “brother” thing… we all ‘click’ in the group. Today it feels like we’re a family" (Producer partner. Worked as treasurer and manager in the plant).  

"What really happened was a big change. More so in the human development point of view than the financial point of view" (Producer partner. Worked as treasurer and manager in the plant).  

The learning was not restricted only to the partners and the ones involved in this CTP. Ecocitrus developed a project to teach children about the conversation of the environment, the consumption of organic products and more sustainable relationships, as we can see in the statement below: 

"We did a project for a foundation and got some money for working with school gardens to produce organic vegetables that children even help produce so they use in their meals at school. We have a person in the group who’s working on a project, the CIEP. Children also work on the garden and they visit the plant once a week. It's a very cool project. We’ll provide the compound, of course, the biodynamic compound, which is a very different fertilizer. What does it do? It can heal the land when the land is contaminated, and heals animals, too. It also heals the humans, so the human beings who understand and practice biodynamic farming live differently (Producer partner. Worked as treasurer and manager in the plant).

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