Authors: Promoting Andrew Clark
Sustainability Nancy Khweiss
Lina Salazar in the Value Leona Verdadero Chain of
With Special Collaboration Natural from:
Ana Paula Bisabolol, Malavazi & Pietro Rodrigues a Brazilian May 2011
Rainforest School of International and Public Affairs, SIPA Product at Columbia University Acknowledgements
This report was done with special collaboration from the Instituto de Relações Internacionais of the Universidade de São Paulo (USP). We would like to thank Professor João Paulo Cândia Veiga for his inputs, and recognize the effort in the field of Ana Paula Malavazi and Pietro Carlos Rodrigues, students at USP. Their presence in Brazil was determinant for the success of this project.
For opening its doors and availability in teaching us about the alpha-Bisabolol industry, we want thank Eduardo Roxo, Director of Operations at Atina Ativos Naturais (Atina).
A note of appreciation and admiration to our Faculty Advisor, Scott Martin, for his guidance and advice.
At SIPA, a special thank you to Eugenia McGill and Melissa Giblock for their support and coordination efforts.
To the Instituto Estadual de Florestas (IEF) in the state of Minas Gerais, thank you for your key contributions.
Executive Summary
“Promoting Sustainability in the Value Chain of Natural Bisabolol, a Brazilian Rainforest Product” was elaborated by second year students from the Masters of International Affairs and Public Administration (MIA and MPA) at the School of International and Public Affairs (SIPA) in Columbia University.
As part of the concentration in Economic and Political Development (EPD) a team of four students developed a research project around the value chain of alpha-Bisabolol, a natural component obtained from the Candeia tree that grows in Southeastern Brazil. Alpha- Bisabolol is highly demanded by cosmetic companies for its natural properties.
The project was developed in collaboration with the Instituto de Relações Internacionais of the Universidade de São Paulo and the Brazilian company Atina Ativos Naturais Ltd.
Being a producer of alpha-Bisabolol, Atina was the reference to analyze the market and the social dynamics that surround alpha- Bisabolol. With the aim of providing the reader with a clear idea of the complexity behind this component, this report will be divided in nine main chapters.
Section 1 will introduce the reader to the topic. It will give a brief explanation of the goals, the problematic, and our approach. Some details about the client will be given in section 2.
To put the reader in context, section 3 will describe Brazil and the State of Minas Gerais as our physical focus. Detail will be provided about the Candeia tree, the cosmetics industry, and the market of alpha-Bisabolol in particular. Additionally, this section will examine the regulatory and environmental frameworks. After explaining the objectives and methodology in parts 4 and 5, respectively.
Section 6 will give a detailed analysis of the value chain.
The reader will find several maps of the industry that will help him understand what are the main actors, what are their interests, the opportunities, the constraints, and the challenges.
There will be a specific explanation of each link of the chain: input supply, loggers, producers, distributors, and end market.
The recommendations will be presented in section 7. They are divided according to their role in regards to sustainability or smallholder upgrading.
Finally, the conclusions will be shown in section 8
Table of Contents
1. Introduction ...... 2 2. Client Agency ...... 3 3. B a c k g r o u n d ...... 4 3 . 1 Local Context ...... 4 a. B r a z i l ...... 4 b. Minas Gerais ...... 5 3 . 2 Extraction of a l p h a - Bisabolol in Brazil ...... 8 a. The Candeia Tree (Eremanthus Erythropappus) ...... 8 b. A l p h a - B i s a b o l o l ...... 10 c. T h e Cosmetics Industry in Brazil ...... 11 d. A l p h a - Bisabolol. Market Characterization ...... 13 3 . 3 Regulatory Framework ...... 14 a. Domestic level ...... 15 b. International level ...... 16 c. Certifications and Standards ...... 20 3 . 4 Environmental Context ...... 25 a. B r a z i l ...... 25 b. Mata Atlântica ...... 26 c. The Case of Candeia ...... 27 4. O b j e c t i v e s ...... 30 5. Methodology ...... 31 5 . 1 D a t a C o l l e c t i o n ...... 31 A. Desk Research (Secondary Data Sources) ...... 32 B. Field Interviews (Primary Data Gathering) ...... 33 5 . 2 Value Chain Mapping ...... 34 5 . 3 Analysis of Opportunities & Constraints ...... 35 6. A n a l y s i s ...... 35 6 . 1 Porter’s 5 Forces Evaluating the Strength of Different Industry Forces ...... 35 6 . 2 Value Chain Analysis ...... 39 6 . 2 . 1 Map of Relationships in alpha - Bisabolol Value Chain .. 39 6 . 2 . 2 Map of Industry Relationships ...... 41 6 . 2 . 3 Description of Value Chain Actors ...... 42 a. Input supplier ...... 42 b. L o g g e r s ...... 46 c. P r o d u c e r s ...... 47 d. Distributors ...... 50 e. End Market: Skincare & Cosmetic Product Manufacturers ...... 53 7. Recommendations ...... 58 7 . 1 Smallholder Upgrading ...... 59 7 . 1 . 1 Increase Farmers’ Bargaining Power through Cooperative Formation and New Market Linkages ...... 59 7 . 1 . 2 Niche to Niche Industry Alignment ...... 63 7 . 1 . 3 Raising Consumers’ Awareness ...... 65 7 . 2 Promote the sustainability of the Candeia Tree in the a l p h a - Bisabolol and Candeia oil Supply Chain ...... 70 7 . 2 . 1 Regulatory and Environmental Auditing and Reporting 70 7 . 2 . 2 Financial Incentives Program for Compliance by the IEF alongside Increased Penalties for Illegal Deforestation A c t i v i t i e s ...... 74 8. C o n c l u s i o n ...... 77 9. Team Organization ...... 78 1 0 . R e f e r e n c e s ...... 80 1 1 . A n n e x ...... 86 Exhibit 1. Logic Framework ...... 86 Exhibit 2. Objectives and Activities ...... 87 Exhibit 3. World Bank Extended Value Chain ...... 88 Exhibit 4. USAID Value Chain Analysis Process ...... 88 Exhibit 5. Initial Basic Mapping ...... 89 Exhibit 6. Adjusted Industry Map ...... 90 Exhibit 7. USAID Value Chain Development ...... 91 Exhibit 8. USAID Analysis Table ...... 92
Page 1 of 116
1. Introduction Brazil in the context of the global skincare and cosmetics value chain where alpha-Bisabolol is a key This report is the culmination of a six- ingredient. The objectives were to month study on the global value chain determine strategies in which the of Candeia Oil and alpha-Bisabolol product could be sourced in a industry based in Minas Gerais, Brazil sustainable manner while improving that was conducted by graduate competitiveness in the market. students from Columbia University‘s
School of International and Public Current local regulation, asymmetrical Affairs (SIPA). information along the value chain, and
the complexity of the certifications and In addition to background research and standards that deal with organic and literature reviews, field research was natural product ingredients, make performed in collaboration with the alpha-Bisabolol and Candeia oil difficult Instituto de Relações Internacionais of to market as products derived from the Universidade de São Paulo (USP) Brazil‘s threatened Atlantic rainforest. who initiated the project and also serves as the client agency of the In order to devise the appropriate research. Field visits were conducted strategies and recommendations, we during January and March in the cities employed the following steps: of Sao Paulo, Carrancas, Pouso identification of value chain constraints; Allegre, and Ouro Preto. Information different stakeholders in the industry obtained came from both Portuguese and their power/influence; and and English sources. For Portuguese willingness to cooperate and improve sources, translation methods were linkages along the chain. While these utilized as well as field support from activities will be useful for the Candeia USP researchers. and Alpha-Bisabolol industry, they can
also serve as a guideline for other The primary focus of the study was to developing countries rich in natural identify the current market constraints that affect alpha-Bisabolol producers in
Page 2 of 116 resources facing problems with director, Dr. João Paulo C â n d i a Veiga. uncompetitive market structures.
Atina, a private company based in São 2. Client Agency Paulo, supplies liquid natural alpha- Bisabolol to both local and global The Columbia University SIPA team cosmetic industr i e s , w h i c h h a v e collaborated in conjunction with a increasingly turned to sustainable student team from the Universidade do resources for use in their products. São Paulo (USP) and received support Founded in 2003 by biologist Eduardo from Atina Ativos Naturais Ltd in our Roxo and his business partner Cristina evaluation of the sustainable resource Saiani, Atina provides natural Candeia- production of the Candeia tree‘s alpha- derived alpha-Bisabolol through legal Bisabolol. and sustainable methods, unlike The many of their Universidad competitors. de São Paulo Natural alpha-Bisabolol extracted from served as the Candeia tree is used in cosmetic both a and pharmaceutical products and partner and contains soothing, anti-irritant, wound- client for healing, antibacterial and deodorizing this project with support from its Center properties. for the Studies of International Negotiations (CAENI). USP acted as a Atina is responsible for the production focal point for our research efforts, of 30% of all natural, Candeia-derived particularly through the collaborative alpha-Bisabolol sold in the world, and is efforts of two USP students on this the only FSC (Forest Stewardship project, Ana Paula Malavazi and Pietro Council) and Ecocert certified Rodrigues under the direction of CAENI
Page 3 of 116 producer. 1 Atina complies with local sustainable product to the global environmental regulations to ensure cosmetics industry. Currently, their that its practices are sustainable for the primary clients are Brazilian cosmetic long-term benefit of the environment, giant, Natura, and international especially for the maintenance of the companies including Impag, Sintal, Candeia tree and the Mata Atlântica or Selco, Agipal, Canada Colors, and RIA the ―Atlantic Rainforest‖. 2 International.
Atina‘s staff consists of 35 employees, 3. Background with offices in São Paulo and an industrial plant in Pouso Alegre, located in the state of Minas Gerais. In addition, 3 . 1 Local Contex t Atina owns Candeia tree groves in Carrancas and Naterecia, also located a. B r a z i l in southern Minas Gerais. The forestry The Federal Republic of Brazil, the fifth team is composed of a biologist, largest country in the world, lies in environmental managers, forestry central and northeastern South engineers, and agriculture technicians, America. Brazil is the world‘s eighth who are among the staff responsible for largest economy by nominal GDP and the harvesting, extraction, and ninth largest by purchasing power distillation processes of alpha- parity. Its economy is the largest among Bisabolol. all South American nations and the
second largest in the western Atina temporarily closed its operations hemisphere. Brazil is one of the fastest- in 2009 as lower prices crippled its growing major economies in the world ability to compete in the natural alpha- with an average annual GDP growth Bisabolol market. Operations restarted rate of over 5 percent. in 2010 to streamline new market approaches in its pursuit to viably In Brazilian reais currency, its GDP was compete in the market and provide a estimated at R$ 3.143 trillion in 2009,
2 Atina Ativos. 2010 Company Presentation. PPT. 1 Atina Ativos. 2010 Company Presentation. PPT. Page 4 of 116 approximately $2.04 trillion in US dollars. The official language is The services sector has grown strongly Portuguese. Almost all of the in recent years, encompassing unskilled inhabitants profess Christianity, and and low-value-added personal services about 76% are adherents of the Roman to high earning professional and Catholic Church.3 Brazil is a federative financial services With its ample natural republic with a presidential system. The resources, Brazil has comparative current president, Dilma Rousseff, is advantages in agriculture and primary the first woman to be elected as Brazil's goods processing, including iron and president. steel. Among the main agricultural commodities are soybeans, sugar, oranges, tobacco, cocoa, meat and poultry. The strength of agribusiness is a reflection of links developed between the food industry and the agriculture sector. Brazil has an extensive and diversified industrial base, ranging from heavy engineering to consumer goods, mainly concentrated in the country‘s southeast region, in the states of São Paulo, Rio de Janeiro and Minas Gerais.
Brazil has increasingly become a service-oriented economy, although it is b. Minas Gerais one of the world‘s largest agricultural producers and boasts a diversified industrial base. Services accounted for 65.8% of GDP in 2007, while industry accounted for 28.7% and agriculture 5.5%.
3 http://www.europaworld.com/entry/br.is.2 Page 5 of 116
Minas Gerais, or ―general mines‖, is one emigrants flocked to Southern Brazil for of 26 federated states of Brazil and is the excavation of its natural gems like located in the southeast region of aquamarine and topaz,5 thus paving the Brazil. Minas Gerais may receive less way for the rich cultural diversity found attention than well-known neighboring today in Minas Gerais. states of São Paulo and Rio de Janeiro, but it nonetheless plays a pivotal role in Despite the region‘s wealth in minerals the history, economy, and society of the and gold, mining eventually slowed as country. Rich in minerals, the discovery gold was discovered in neighboring regions, inducing Minas Gerais to form and strengthen its cotton and iron industries. 6 In the 1960s and 1970s, Minas Gerais distinguished itself from São Paulo through the implementation of important policy formations of establishing industrial relations with major multinational companies including the Italian automaker, Fiat and German appliance maker, Krupp. 7 These strategic alliances with multinational corporations fueled foreign direct investment into the state and paved the of gold in the late 1600s resulted in a way for Minas Gerais to become the large migration of Brazilians and
Portuguese colonists to the region, 5 Keith Proctor, "Gem Pegmatites of Minas Gerais, bringing with them their African slaves Brazil: Exploration, Occurence and Aquamarine Deposits," Gems and Gemology (1984), 78-100. to extract gold from the mines.4 6 Bieber, p.22. 7 Alfred P. Montero, “Making and Remaking "Good
Wikipedia 2011. Government" in Brazil: Subnational Industrial Policy in Furthermore, large numbers of German Minas Gerais,” Latin American Politics and Society, Vol. 43, No. 2 (Summer, 2001), pp. 49-80, 57.Published by: Distributed by Blackwell Publishing on behalf of the
4 Center for Latin American Studies at the University of Judy Bieber, Power, patronage, and political violence: state building on a Brazilian frontier 1822-1889 Miami, Stable URL: (Lincoln: Universty of Nebraska, 1999), p.20. http://www.jstor.org/stable/3176971 Page 6 of 116 second largest economy in the country, only behind São Paulo. 8 In turn, steel, Secretariats operate on a local level to coffee and auto manufacturing lead provide services to the population, as Minas Gerais‘ industrial sector. states are autonomous administrative bodies that collect their own taxes and As to the political configuration in Minas receive federal funding. Currently, the Gerais, Alfred Montero writes: Minas government is headed by ―Mineiro political leadership is divided Governor Antônio Anastasia of the into a traditional elite descended from Brazilian Social Democratic Party the oligarchical period and a political (PSDB) elected in October of 2010 for a technocratic segment with ties to four-year term.11 national public firms and the state's industrial policy agencies.‖ 9 Montero Labor is an important topic in Minas further analyzes that state domination Gerais, especially as farmers log of development initiatives was for the Candeia trees to sell the wood to alpha- most part left unchallenged by workers Bisabolol producers for processing. and labor groups, who lacked the The state government of Minas Gerais experience and resources needed to has implemented projects to help effectively influence state policy. farmers with the reforestation of Additionally, the success of public- degraded forests to ensure the private partnerships implemented by sustainability of the Candeia tree.12 Minas Gerais was due in large part to Minas‘ historical influence in Brazilian politics and its ability to secure funding from the federal government, especially due to its sizeable demographics in 10 comparison to other states. 11 http://g1.globo.com/Noticias/Politica/0,,MUL1552679- 8 Ministerio do Turismo, Brasil, November 2010, 5601,00.html November 2010 12 Cláudia M. Abreu, "Brazilian Farmers Get Paid for
It is also the only state in Brazil to have regulations limiting the logging of the Candeia tree, in particular “The Atlantic rainforest through Portaria Nº 001/2007, later was one of the largest in discussed in the regulations the Americas, once section. consisting of approximately 150 million ha. (…) today only 11% of 3 . 2 Extraction of a l p h a - the rainforest remains. ” B i s a b o l o l i n B r a z i l
occupying a large area of the Atlantic a. T h e C a n d e i a T r e e rainforest. Other countries were ( E r e m a n t h u s Candeia is found includes northeast E rythropappus) Argentina and in eastern parts of
Paraguay. Besides Minas Gerais, The Candeia tree used for production in Candeia grows in other Brazilian states the alpha-Bisabolol industry, or like Bahia, Espiritu Santo, and Rio de emerantus erythropappus, is an Janeiro. In less concentration, Candeia e n d e m i c s p e c i e s considered flourishes in Parana, Goias, Rio Grande to be a precursor in grassland invasion. do Sul, Santa Catarina, and São Paulo. It grows mainly in the state of Minas Gerais in Southeastern Brazil,
Rich in biodiversity, the Brazilian Atlantic rainforest where Candeia grows faces a worrisome situation in terms of deforestation. The Atlantic rainforest was one of the largest in the Americas, once consisting of approximately 150 million ha. Covering tropical and subtropical regions, with ample rainfall
Page 8 of 116 rates, and its longitudinal range made disturbance exists, since [Candeia] is a the rainforest home to more than sun-loving species and the incidence of 20,000 species of plants, 261 species of light benefits it.‖15 The candeia tree is mammals, 688 species of birds, 200 in blooms from May through August and species of reptiles, 280 species of suffers the dispersion process from amphibians, among others.13 August to October. It germinates in humid environments and in altitudes
ranging from 2,624 and 4,265 feet.16 Today, 80% of the rainforest exists in fragments of less than 50 ha that are isolated from each other by more than a Candeia timber is broadly used to build mile in average. According to SOS Mata fences to divide pastures in rural areas Atlântica, a Brazilian non-profit and for the production of Candeia oil. organization that works with the Also, as highlighted by a report preservation of the rainforest, 14 As a performed by GFA Consulting Group for consequence, several species native to the Secretaria de Estado do Meio the rainforest are threatened to Ambiente e Desenvolvimento extinction. Sustentavel (SEMAD) and the Instituto Estadual de Florestas (IEF), the
easiness with which the tree adapts to As mentioned by several studies dry grasslands, makes it useful for developed by the Federal University of reforestation processes in degraded Lavras in Brazil, Candeia ―develops areas.17 rapidly in open grasslands, forming relatively pure stands. It can also 15 Silva, I;, Oliveira, A., Soares, J.R., Melho, J.M., Weimar, F., Camolesi, J.F.. (2009). “Market Chain develop inside the forest where a Analysis of Candeia Timber”. CERNE, Universidad de Lavras. Vol. 15, No. 3, July-September, Brazil. pp. 257.
16 13 Ribero, M.C., Metzger, J.P., Camargo, A., Ponzoni, F., Magalhaes, A., Horta, A. (2011). Presentation of the Sistema Estadual de Meio Ambiente, Minas Gerais. Makiko, M. (2009) “The Brazilian Atlantic Forest: How SISEMA. Done during the field trip in March 2011. much is left, and how is the remaining forest distributed? 17 GFA Consulting Group GmbH in collaboration with Implications for conservation”. Biological Conservation, IP Institut fur Projektplanung GmbH (2006). Brasil No. 142, p. 1141. Projecto Protecao da Mata Atlântica em Minas Gerais, PROGRAMA MG. Analise de Mercado e da Cadeia 14 Ibid. Productiva do Oleo de Candeia e do Alfa-Bisabolol. For Page 9 of 116
of alpha-Bisabolol are found in Candeia trees that are least 12 years old.21 b. A l p h a - B i s a b o l o l
3 Alpha-Bisabolol, also called levomenol To get 6kg of Candeia oil 1m of wood p, (L)-alpha-Bisabolol or (-)-alpha- from small trees is needed (5 to 10cm Bisabolol, is obtained after steam- of diameter). Bigger trees (40-45cm) 22 distilling the Candeia oil extracted from yield approximately 11 kg of oil . One the Candeia tree. The resulting cubic meter is equivalent to 2,67stm component is natural. It is an optically (stere meters refers to stacked logs active, monocyclic, unsaturated interspaces included). Based on sesquiterpene-alcohol. Because of its calculations done by Perez in his article anti-phlogistic, deodorizing, anti- Management System for Native inflammatory, antibacterial, Candeia Forest, the Option for Selective 23 dermatological, and spasmodic Cutting, given the average yield of 10 3 properties 18 it is used by the perfume, kg of oil/m and an approximate yield of pharmaceutical, and cosmetic industries 70% in the extraction of alpha- 3 in lipsticks, shampoos, suntan lotions, Bisabolol, 1m of timber yields 7kg of dental creams, after-shaves, shaving alpha-Bisabolol. This means 0.381stm creams, hair removal lotions, among of Candeia are consumed for each kg of 19 others. On Yield And Alpha-alpha-Bisabololalpha- Bisabololalpha-Bisabolol Content Of Candeia Trees It is important to note that older (Eremanthus Erythropappus)”. Cerne, Vol. 15, No. 3, July-September, 2009, p. 344. Candeia trees contain higher 21 Curado M.A., Oliveira C.B., Jesus J.G., Santos S.C, concentrations of alpha-Bisabolol in Seraphin J.C. & Ferri P.H. (2006). “Environmental 20 factors influence on chemical polymorphism of the them; best concentrations and quality essential oils of Lychnophora ericoides”. Phytochemistry. 67(21), 2363-9. the Secretaria de Estado do Meio Ambiente e 22 Ibid. Desenvolvimento Sustentavel, the Instituto Estado de 23 Pérez J.F.M, Scolforo J.R.S., de Oliveira A.D., de Florestas. KfW Entwicklungsbank, Brasilia and KfW Mello J.M., Borges L.F.R., Camolesi J.F. (2004) Entwicklungsbank, Frankfurt. June, p. 9. "Management system for native Candeia forest 18 Silva, I;, Oliveira, A., Soares, J.R., Melho, J.M., Weimar, F., Camolesi, J.F.. (2009). Idem. (Eremanthus erythropappus (DC) MacLeish) - the 19 Ibid. option for selective cutting.” Cerne, Vol. 10, No. 2, pp. 20 Lopes, C; Brito, J; Soares, J; Vidal, E; Marin, L 257-273. (2009). “Influence Of Altitude, Age And Diameter Page 10 of 116 alpha-Bisabolol produced. Then, to kilos were consumed domestically while produce 100 tons of oil it is necessary 61,308 kg were exported abroad. In that to harvest almost 17,000m3 of Candeia same year most of the demand for timber, the equivalent of around Candeia oil emanated from abroad with 850ha.24 a total of 68,170 kg requested.25
c. The Cosmetics I n d u s t r y The global demand for alpha-Bisabolol i n B r a z i l has increased the industry‘s size. By
2007, over 187 products containing the Most of the Candeia oil and Alpha- ingredient were launched worldwide. 26 bisabolol produced in Brazil is exported. In 2009 the exports of essential oils ●●● generally represented 91% of top three 80% of the exported products, while the alpha- Bisabolol industry exports have shown alpha- a 5% per annum value growth.27
Bisabolol
production is Although a small share of the Candeia exported. oil and alpha-Bisabolol production stays in the country, Brazil has positioned ●●● itself as a leader in the global market of
perfumes, toiletry and cosmetics. Field interviews with several local According to the Brazilian Association companies indicated that 80% of the production goes abroad. Although data 25 Ibid. 26 is not accurate and there is little Prance, L. “Worldwide Manufacturers Harness Powers of Alpha-Bisabolol”. Cosmetics Design-Europe. June 7, oversight on the statistics, information 2007. 27 International Trade Centre. Trade Competitiveness from 2005 indicated that of the 76,678 Map. Trade Performance HS : Exports and imports of Brazil - 33 Essential oils, perfumes, cosmetics, toileteries kg of alpha-Bisabolol produced, 15,370 (2009, in USD millions). http://legacy.intracen.org/appli1/TradeCom/TP_TP_CI_ 24 GFA Consulting Group GmbH in collaboration with HS4.aspx?IN=33&RP=076&YR=2009&IL=33%20%20 IP Institut fur Projektplanung GmbH (2006). Ibid. p. Essential%20oils,%20perfumes,%20cosmetics,%20toilet 27. eries&TY=T Retrieved April 14, 2011. Page 11 of 116 of the Industry of Personal Hygiene, Fragrances and Cosmetics (ABIHPEC), Moreover, Euromonitor indicated that ―Brazilian exports in the sector [in 2010] Brazil became the third perfumery, were US$201,9 million against US$ toiletry, and cosmetics market in 2009 181,7 million in imports, reaching a with 8,1% of the world market, following surplus of US$25,3 million.‖28 the USA (16,8%) and Japan (11,4) 31 Recent reports from ABIHPEC confirm this showing that exports in the sector By 2010 the sector had grown 10.4%, have had an accumulated growth of while GDP and the industry in general 275.3% between 2001 and 2010 while only increased by 3.1 and 2.7 percent imports only grew 216%.32 respectively. Additionally, employment potential of the sector has increased by 112% in the last 15 years.29 Banco Fator, a Brazilian investment bank explain this explosion by indicating several reasons among them Reports of ABIHPEC state that the including: ―More women in the ―Brazilian industry of personal hygiene, workforce; lower prices engendered by fragrances and cosmetics is the only better productivity; an increase in niche chemical complex—which includes products to address specific consumer cleaning products, pharmaceuticals, demands; and an increase in life paints and fertilizers, among others—to expectancy and the desire of older produce a surplus.30 people to look their best.‖33
28 Association of the Industry of Personal Hygiene, Fragrances and Cosmetics (ABIHPEC) (2011). “Panorama del Sector. Higiene personal, perfumeria y cosmeticos”. In http://www.abihpec.org.br/conteudo/panorama_do_setor _2010-2011-14042011.pdf Retrieved April 14, 2011. 31 ABIHPEC, 2010. Ibid. 32 ABIHPEC, 2011, Ibid. 29 ABIHPEC, 2010. Ibid. 33 Hinchberger, B. (2008). What I learnt by writing about 30 Azevedo, J. (2009) Natura Eco-Beauty. In the Brazilian cosmetics market. In http://www.brandchannel.com/features_profile.asp?pr_id http://www.brazilmax.com/columnist.cfm/idcolumn/113 =429 Viewed November 21st, 2010. Viewed November 21st, 2010.
Page 12 of 116
The fact that Brazil has become the (Carrancas, Minas Gerais), Citroflora largest cosmetics market in Latin Ltda (Morro do Pilar, Minas Gerais and America is also explained by its ―low Ituaçu Bahia), Atina (Pouso Alegre, cost manufacturing facilities and [has] Minas Gerais), Purita Óleos Essenciais well developed infrastructure with Idústria e Comércio Ltda (Torrinha, São government support that is making the Paulo), Destilaria Maripá Óleos country an ideal destination to essenciais (Maripá Paraná), and a establishing cosmetic and toiletries younger company Atlântica which only production base and target export produces oil.35 market. Also, as the country has a large consumer base, manufacturers can easily tap the domestic market.‖34
d. A l p h a - Bisabolol. M a r k e t Characterizati on All of the aforementioned companies extract the Candeia oil but only Purita,
Citroleo, and Atina additionally produce Among the main manufacturers and natural Alpha-Bisabolol. retailers in the cosmetics Brazilian market include Natura, O Boticario, and Next to the domestic players, there are Agua de Cheiro. International retail foreign companies established in Brazil cosmetic companies attracted by for the extraction of essential oils and Brazil‘s emerging power include cosmetic preparation markets (either as L‘Oreal, Avon, and Unilever. The main distributors or as manufacturers of actors within alpha-Bisabolol extraction specific preparations). They work with and processing are Citróleo Óleos Brazilian raw materials and Essenciais Indústria e Comércio Ltda commercialize their products in Brazil (Torrinha, São Paulo), Citrosul and abroad. The GFA report of 2005
34 RNCOS. Industry Research Solutions (2008). 35 De Oliveira A.D., Andrade, I., Soares, J., de Mello, J., Cosmetics and Personal Care Market in Brazil. In http://www.rncos.com/Report/IM595_fig.htm Viewed Acerbi, F., Camolesi, J. (2009). “Market Chain Analysis November 21st, 2010. of Candeia Timber”. Cerne, Vol. 15, No. 3, pp. 262.
Page 13 of 116 presented data indicating that German 3 . 3 Regulatory Framework corporations Symrise, Merck, and BASF control the foreign market for alpha- Environmental regulation is a key Bisabolol. Other companies with lower aspect to be considered when analyzing demands include Impag, Kult the value chain of Candeia oil and Kosmetics, Gerlic, LIPO, and RTD. natural Alpha-Bisabolol. Regulation
largely explains the behavior of the different agents in the market, the Certification systems in place check the constraints arising for some of the legality and sustainability of the sources players, and the misunderstandings of alpha-bisabolol—many of which about the natural or organic character include illegal logging. While several of the products. Domestically, producers initiated certification regulation is carried out by the Instituto processes, only Atina has completed Brasileiro do Meio Ambiente e dos the process of both Ecocert and FSC. Recursos Naturais Renováveis (IBAMA, Atina became certified for the federal level) and the Instituto Estadual production of natural Candeia-based de Florestas (IEF, state level). alpha-Bisabolol in an effort to Considering the large demand from the differentiate their product from the rest US and Europe we considered the of the market; however, only one major existing regulation at the international company in the industry responded by level. The USDA National Organic paying an ‗equitable‘36 rate. The lack of Program and the European Commission ‗equitable‘ receptiveness to the directives for organic and natural sustainability certifications of Atina products regulate the American and demonstrates two things: the natural European cosmetics and organic Candeia-based Alpha-Bisabolol market products markets respectively. does not yet buyers do dominate value sustainability, and the market prices. There are also independent certification organs like Ecocert, authorized by the
Comité Français d'Accréditation 36 Interview with Eduardo Roxo, General Manager, (COFRAC) in Europe and the USDA in Atina. Field trip. January, 2011. Page 14 of 116 the US, to certify companies interested Gerais] vegetation for alternative in adopting the seals and the practices usages of land‖ needs to be first they imply. Other players include approved by the IEF through COSMOS-Standard and the Authorizations for Forestry Explorations International Standardization (APEF), which are user permits. Organization (ISO) who concentrate on According to studies37 of 2010, the fee the standardization of regulations. charged is R$ 0.50/m3 of timber Another important actor is the Forestry harvested. This means the cost of the Stewardship Council (FSC), certifying APEF is around R$22.50/ha. companies in their forestry management procedures. In 2005 the IEF issued the Portaria No. 234 to frame the elaboration and The following is a brief overview of the implementation of the Management main regulations and certifications Plans for the Sustainable Production of surrounding the production of Candeia Candeia Oil in the State of Minas oil and Alpha-Bisabolol. Gerais. Portaria No. 01 of 2007 later superseded it and complemented it. Article No. 1 states that ―the exploration a. Domestic level in the form of forest management of the Domestically exploitation of Candeia of species Emeranthus Erythropppus and Candeia is regulated by the Brazilian Emeranthus Incanus (Candeia) can only Forestry Code and other decrees and be authorized by IEF, with the aim of laws issued by IBAMA and IEF. The sustainable use, protection, and Minas Gerais State Decree No. 43,710 perpetuation of the species.‖ It also sets of 2004 that rules Law No. 14,309 of a general framework for the licensing 2002 covers issues such as forestry and reporting processes. policies and biodiversity protection, and touches on the IEF role regarding the 37 utilization of natural resources and Donizette, A; Silva, I; Scolforo, J; Mello, J. de; Pereira, J. (2010). “Economic Analysis of Sustainable alternative land uses. The decree Management of Candeia”. ”. CERNE, Vol. 16, No. 3, July-September, Universidad Federal de Lavras, Brazil, establishes that the ―sustainable pp. 335. exploitation of the State‘s [Minas Page 15 of 116
At the federal level, IBAMA issued cosmetic products commercialized in Portaria Normativa No. 44-N of 1993, EU markets. There are no specific which regulates the transportation of regulations for alpha-Bisabolol or Forestry Products (ATPF). IBAMA Candeia oil. The Directive calls for all issues such ATPFs and it can only do member States to ―take all necessary this once the legal requirements measures to ensure that only cosmetic regarding forestry reforestation are products which conform to the fulfilled. provisions of this Directive are placed on the market.‖ This directive also Although the system formed by the touches on ingredients and cosmetic Forestry Code, IEF‘s portarias and composition, labeling (name of IBAMA‘s decrees seems company, weight, volume, durability, comprehensive, the industry of Candeia precautions, and ingredients), market and Alpha-Bisabolol during the last 20 surveillance, and animal testing. years has been characterized by a lack Directive 76/768/EEC will be replaced in of enforcement, illegal harvesting, a 2013 by the Directive No 1223/2009 of failure to monitor the management the European Parliament and of the plans, and the complete absence of the Council of 30 November 2009 on State. Deficient technical, human, and cosmetic products. The provisions of financial resources have undermined the new regulation ―aim at ensuring that institutions. Nevertheless, since 2007 consumers‘ health is protected and that efforts are being made in terms of land they are well informed by monitoring the protection, monitoring, planting, composition and labeling of products.‖38 reforestation, and soil enrichment. Although positive, the EU directives are focused on consumers‘ health and safety and less on the value chain of b. International level the ingredients used in cosmetic
products. The United States and Europe are the Another regulatory tool in the EU is the main destinations of Candeia oil and EC No. 1907/2006 on the Registration, Alpha-Bisabolol. The European Union
Directive 76/768/EEC regulates 38 Directive No 1223/2009 of the European Parliament. Page 16 of 116
Evaluation, Authorization and the European Union. Article 22 of the Restriction of Chemicals (REACH) Directive No 1223/2009 establishes that which aims at ―ensuring a high level of ―member States shall monitor protection of human health and the compliance with this Regulation via in- environment as well as the free market controls of the cosmetic movement of substances, on their own, products made available on the market. in preparations and in articles, while (…) Member States shall entrust to enhancing competitiveness and market surveillance authorities the innovation.‖ necessary powers, resources and knowledge in order for those authorities This is complemented by the EC No. to properly perform their tasks.‖ 834/2007, which covers Organic Production and Labeling of Organic The market surveillance agencies of the Products. This repealed the Regulation member States established the Platform No. 2092/1991. The EC 834/2007 of European Market Surveillance ―provides the basis for the sustainable Authorities for Cosmetics (PEMSAC) in development of organic production order to coordinate activities, and while ensuring the effective functioning exchange information on the cosmetics of the internal market, guaranteeing fair market. For example, in France, the competition, ensuring consumer authority in charge is the Agence confidence and protecting consumer Française de Sécurité Sanitaire des interests. It establishes common Produits de Santé whereas it is the objectives and principles to underpin Bundesamt für Verbraucherschutz und the rules set out under [this] Regulation Lebensmittelsicherheit (BVL) in concerning: a) all stages of production, Germany. preparation and distribution of organic The equivalent to the European products and their control; b) the use of Commission in the United States, in indications referring to organic terms of regulation and control of production in labeling and advertising.‖ organic and natural products is the US The enforcement of these Directives is the United States Department of depends on each country member of Agriculture National Organic Program
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(USDA NOP). It is: ―a system that is makes reference to the origin of the raw managed in accordance with the materials used to manufacture the final Organic Foods Production Act (OFPA) products. The focus is consumers‘ of 1990 and regulations in Title 7, Part health and safety.39 205 of the Code of Federal Regulations to respond to site-specific conditions by The Food and Drug Administration integrating cultural, biological, and (FDA) does not regulate the term mechanical practices that foster cycling ‗organic‘ when applied to cosmetics, of resources, promote ecological body care, or personal care products. balance, and conserve biodiversity.‖ Nevertheless, the product can receive The NOP is in charge of developing, the USDA-NOP seal if the ―[it] contains implementing, and administering or is made up of agricultural ingredients, national production, handling, and and can meet the USDA/NOP organic labeling standards. Imported production, handling, processing and agricultural products, as specified by labeling standards.‖40 If this is the case, Section 2106 [7]. USC 6505] of the the label should specify, in percentage, OFPA, can be sold as organic only if how much of the product is organic, e.g., the USDA ―determines that such ―100% Organic‖. products have been produced and handled under an organic certification program that provides safeguards and guidelines governing the production and handling of such products that are at least equivalent to the requirements of [this] title.
It‘s worth mentioning that the existing 39 Federal Food, Drug, and Cosmetic Act. regulation of cosmetics in the US, the http://www.fda.gov/RegulatoryInformation/Legislation/F ederalFoodDrugandCosmeticActFDCAct/default.htm Federal Food, Drug, and Cosmetic Act Retrieved April 29, 2011. 40 National Organic Program. Cosmetics, Body Care (FD&C Act), only covers misbranded Products, and Personal Care Products Fact Sheets. http://www.ams.usda.gov/AMSv1.0/getfile?dDocName= and adulterated cosmetics. It never STELPRDC5068442&acct=nopgeninfo Retrieved April 29, 2011 Page 18 of 116
The impact of both the American and As seen, in the EU there is no specific European regulatory frameworks legislation for essential oils. ―Instead, resides on the extent and range of the EU legislation establishes legislative norms and rules. In the United States requirements for products or product the USD-NOP focuses on the groups, restricting substances that may procedures through which the organic be present and laying down other product is produced. The certification requirements for these applications. must be received by ―operations or This means that different requirements portions of operations that produce or and legislation apply for essential oils handle agricultural products that are depending on their uses and how they intended to be sold, are marketed in the labeled, or EU.‖42 represented as "100 “The Food and Drug percent organic," Administration (FDA) The fact that the EC "organic," or "made does not regulate the directives and the with organic term „organic‟ when USDA-NOP establish ingredients" or food applied to cosmetics” regulation only to the group(s).‖ contents of the products or the procedures used in their Among the aspects that need to be manufacturing leaves little space for audited are the substances applied to smallholders like Atina to differentiate the land, the monitoring practices, the itself in the market. The problem arises record-keeping system, among others.41 when the traceability of the raw There is no specific mention to raw materials is not covered in the material coming from endangered regulation. Companies like Atina, who forests. The law is general and broad. are certified in Forestry Stewardship Council (FSC), are insignificant in the
41 National Organic Program. Certificaion Fact Sheets. 42 Center for the Promotion of Imports from Developing http://www.ams.usda.gov/AMSv1.0/getfile?dDocName= Countries. STELDEV3004346&acct=nopgeninfo Retrieved April http://www.cbi.eu/marketinfo/cbi/docs/eu_legislation_fo 29, 2011. r_essential_oils_case Retrieved April 29, 2011 Page 19 of 116 foreign markets given the little value accredited by the USDA NOP to certify traceability has in the market. products coming in the US.43
Being certified implies extra costs for c. Certifications and companies willing to do it and thus S t a n d a r d s implies higher prices for consumers Certifications and standards are an willing to pay a premium. Field research important aspect in the industry of indicates that a 5-year FSC certification Candeia oil and alpha-Bisabolol. Having costs $20,000 certifications and adopting international (the cost of the standards help companies built better audits are marketing strategies and access separate) and markets willing to pay premiums. Ecocert is around Although these tools are voluntary, the $6,000 per year. entrance of natural and organic The premium, as products, ingredients, or raw materials seen in the value to American and European markets is chain analysis, is conditioned by their adoption. between $10-$30. Accessing those markets claiming to be For FSC and a natural or organic product will not be Ecocert, audits happen every year. The possible without the approval of the US difference is what they certify. Ecocert Department of Agriculture‘s National confirms that the production followed Organic Program (USDA NOP) and the the guidelines of o r g a n i c COFRAC respectively. These agencies agriculture . FSC validates the value authorize private organizations to certify chain and the traceability of the wood. in their name using their guidelines.
Ecocert, for example, is authorized by Notwithstanding the higher costs, which COFRAC to certify products with the EC at the end are transmitted to customers regulations and norms and is also
43 Decision on Accreditation. April 29, 2002. http://www.ams.usda.gov/AMSv1.0/getfile?dDocName= STELDEV3003163 Retrieved April 22, 2011.
Page 20 of 116 when they buy organic products over means Ecocert is authorized to verify non-organic, there is an increasing and attest that a company or a product awareness among them over organic, complies with the traditional processes natural, and environmentally friendly of organic production required by each products all around the world. In national/regional standard. Understanding the Post-Recession Consumer, Paul Flatters and Michael Depending on the market, there are Wilmott 44 highlight that the recession different certification organizations. The intensified consumer demand for equivalent of Ecocert in Italy, for simplicity and ethical and green example, is the Instituto per la consumption. Certificazione Etica e Ambientale (ICEA), which is accredited by the As mentioned, Ecocert is a private International Organic Accreditation inspection and certification body Service (IOAS). In Germany and the created in France (but of global United Kingdom we find the Association character) in 1991 in France by a group of German Industries and Trading Firms of agronomists also active in the (BDIH) and the Soil Association development of organic agriculture in respectively. All of them follow the Europe. In order to certify any entity European Commission guidelines and requesting it, Ecocert needs to be regulations but have formulated accredited by national regulatory different certification schemes that go bodies. In France, following the EC beyond the law to different extents. For directives and the NF EN 45011 on that reason and with the aim of General Requirements for Bodies harmonizing and improving the Operating Product Certification standards, they all formulated the Systems, Ecocert is accredited by COSMOS-Standard for organic and COFRAC, and by the USDA NOP in the natural cosmetics. United States. Each accreditation
44 Flatters, P. Willmott, M. (2009). “Understanding the Post-Recession Consumer”. Harvard Business Review. July-August.
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The new standard (expected to be fully adopted in 2016) applies to the origin While Ecocert and the USDA Organic and processing of ingredients, the seals focus on the composition of the composition of total product, the product and the way they are storage, manufacturing and packaging, manufactured and labeled, there are environmental management, labeling certifications that place emphasis on the value chain of the ingredient. The Germany-based Forestry Stewardship Council (FSC), one of them, is a non- governmental organization established in 1993 with the objective of promoting responsible management of the world‘s forests. The Council‘s work is concentrated in the development of forest management and chain of custody standards, and in providing accreditation to businesses and and communication, and inspection, organizations all around the globe. certification and control. The innovative element is the inclusion of green The Instituto de Manejo e Certificação chemistry principles which is the Florestal e Agrícola (Imaflora), in Brazil, ―design of chemical products and is accredited by the FSC to certify processes that reduce or eliminate the companies in the country who want to use or generation of hazardous attest that their forest products were substances Green chemistry applies extracted respecting the environment across the life cycle of a chemical and the surrounding communities. This product, including its design, NGO evaluates companies‘ compliance manufacture, and use.‖45
45 United States Environmental Protection Agency. with the standards and submits a report http://www.epa.gov/gcc/ Retrieved April 22, 2011. Page 22 of 116 to the Rainforest Alliance (also environmental protection, food accredited by the FSC) for the approval technologies, and shipbuilding, among of the certification. FSC has others 46 . The ISO develops the representatives all around the world in standards through the work of highly Asia and Oceania, Europe and Russia, specialized Technical Committees (TC), Latin America, North America, and which include the national Africa. Besides FSC certifications –from standardization institutions of the which Imaflora gets 70% of its countries interested in specific topics. revenues– this NGO has other projects The main goal of companies certifying on conservation, biodiversity, and in ISO different standards is to certification fairs to promote agricultural demonstrate competence and reliability certifications in Latin America. to business partners within their industries. While Ecocert is market-specific and certifies the organic or natural character There are TCs that have a potential link of a product or ingredient and the FSC with the value chain of alpha-bisabolol: focuses on sustainable forestry ISO/TC54 that works on Essential Oils management schemes, there are other and the ISO/TC207, in charge of standards such as the ones issued by Environmental Management. Under the the International Standardization latter, there‘s the Subcommittee 3 on Organization (ISO) which pertain to Environmental Labeling or TC207/SC3. ―best business practices‖ in areas of While the standards issued by these quality and environmental management. committees are very specific and technical and geared toward improving The ISO is a non-governmental the efficiency of management organization (NGO) that comprises the systems47, the extent to which they go national standards institutes of 159 46 countries all around the world in an International Organization for Standardizaiton ISO. About ISO. http://www.iso.org/iso/about.htm Retrieved effort to develop international standards April 22, 2011. 47 The TC54 focuses on “methods of analysis and that cover a diversity of industry sectors specifications for essential oils, that includes: development of specific monographs for quality like agriculture, building construction, standardization of every essential oil; standardization of analytical methods to control essential oils quality; Page 23 of 116 in the value chain is limited. Also, the As seen, the complexity of the projects on which each committee regulatory system as well as of other works depend on its country- certifications and standards sets composition and the interests of the challenges for the Alpha-Bisabolol leading members. Inside the TC54, for industry. While Brazil has regulation example, France, Spain and Germany that deals with the source of the value are very active members. They propose chain, it lacks a legal framework for topics, draft standards, and turn them in organic cosmetic ingredients. This for the rest of the members‘ would improve the status of companies consideration. that do follow organic agriculture guidelines and will raise awareness of Another way in which the ISO touches local consumers. on the value-chain of bisabolol is ISO65, or General requirements for Another problematic is the only bodies operating product certification company certified with FSC and Ecocert systems. COFRAC, for example, in Brazil is Atina and only Natura finds requires that organizations like Ecocert value in FSC. Symrise, the largest follow the already mentioned EN45011 demander of Brazilian bisabolol and also the ISO Guide 65. It is a appears as certified in the European general guide for certification and has website because it has indeed certified been referenced or used as a base for the ingredients of the products they sell. most organic norms and regulations Not their value chain. Being the largest (Europe, Canada, Japan etc).48 buyer of bisabolol in Brazil with no interest in FSC or local Ecocert alpha- bisabolol makes things complicated for
smaller companies like Atina. requirements for transport, labeling and marking; nomenclature, botanical names, etc., and revision work.” The TC207 formulates “standards for environmental At the international level, Candeia oil is auditing and performance evaluation, product labeling and declarations, lifecycle assessment, greenhouse gas not considered or even known by the emission reporting, and others”. Seen in Business Plan TC207 and Business Plan TC/54. ISO committees dealing with essential 48 International Organic Accreditation Service IOAS. On ISO/IEC Guide 65 Accreditation oils. Also, the labeling committee is http://www.ioas.org/iso65.htm Page 24 of 116 largely disconnected from the industry Trabalhadores Rurais Sem Terra (MST, and ignores that not only safety must be the Landless Rural Workers‘ the goal when setting the guidelines for Movement) 49 . Instead, the government labels. has put greater emphasis on the development of family-based agricultural communities that are 3 . 4 Environmental Context benefiting from greater access to credit,
than on land reform. a. B r a z i l
Brazil is very well endowed with natural Environmental problems, which include resources but weak environmental widespread pollution and deforestation protection persists. Vegetation is in the Amazon region, attract diverse across the country‘s vast land international attention. Around 60% of area, which covers around one-half of the 5.5m sq km Amazon forest, the South America. The climate is mostly world‘s largest tropical forest, lies within tropical or subtropical. Mineral Brazil‘s borders, 13% of which has resources include oil and natural gas, already been destroyed. It contains vast amounts of iron ore, bauxite and around 2 million species, representing manganese deposits. It is a leading the greatest global concentration of producer and exporter of coffee, biodiversity.50 oranges, soybeans, sugar and ethanol, meat (beef and chicken) and tobacco.
Vast farmlands are underexploited and Despite the dire situation facing the the agricultural frontier is being rainforests in Brazil, the country has extended. However due to inequitable succeeded in an attempt to slow land distribution, much of the country‘s deforestation rates. ―Satellite images 330m ha of farmland lies unused, while analyzed by Brazil's National Institute over 2m rural families are landless. for Space Research (INPE) show that The government has promised to an estimated 6,450 square kilometers of implement land reform, but slow progress has frustrated land activists 49 Wood and Mackie. including those from the Movimento dos 50 Wood and Mackie. Page 25 of 116 forests were cleared in the 12-month Presidential Approval of the Climate period, bringing rates to their lowest Change National Policy on 29th since monitoring started in 1988.‖ 51 December, 2009 in Brazil made into law Contributing to the efforts to slow its agreement in the Copenhagen deforestation and promote reforestation Accord to reduce its emissions by in Brazil come from REDD, a 36.1% – 38.9% of 2005 emission levels collaborative program in the United by 2020. 53 Efforts such as these Nations for Reducing Emissions through demonstrate that Brazil is cooperating Deforestation and forest Degradation. on an international level to reduce its As stated by Kirsty Galloway McLean in emissions and improve the an article called Sharing Risks and environment. Avoiding Risks of REDD in Tropical Forests, Brazil b. M a t a A t l â n t i c a initiated a REDD
project in the Once considered to be one of the northern state of largest rainforests in the Americas, Pará which Brazil‘s Atlantic Rainforest (or Mata involves rural Atlântica) is among the top five hotspots communities with of bio-diversity in the world yet only the goal to 11% remains of its original cover. 54 ―promote effective change in the rural Much of the Mata Atlântica is situated in development model of smallholders into sparse and isolated fragments of a more sustainable basis and recognize southern and coastal Brazil and daily REDD as an important opportunity to deforestation continues in large part to make … economic transition clear lands for cattle ranching, coffee possible.‖ 52 Additionally, the plantations, mining, and resource
51 MundoGEO, retrieved from extraction. http://www.mundogeo.com.br/noticias- diarias.php?id_noticia=18845&lang_id=3, December 10th, 2010 52 McLean, Kirsty Galloway, “Sharing Risks and 53 McLean, Kirsty Galloway, “The Coppenhagen Avoiding Risks of REDD in Tropical Forests”, Disaccord”, January 20, 2010, retrieved from November 30, 2009, retrieved from http://thereddsite.wordpress.com/, April 6, 2011 http://thereddsite.wordpress.com/, April 6, 2011 54 Ribeiro, 1149 Page 26 of 116
Deforestation of the Mata Atlântica has raised much attention among a wide array of stakeholders—both regionally and internationally. International nongovernmental organizations like the Nature Conservancy, Conservation International, GreenPeace International and others along with private corporations, all partner with local civil society organizations like SOS Mata Atlântica to implement policy concerning forests, fishing, important initiatives including renewable resources and biodiversity. reforestation programs, raising Yet, despite calls for increased action awareness activities, and lobbying and additional raising awareness efforts for improved enforcement by activities within local communities, local authorities. Additionally, the deforestation in Minas Gerais remains environmental wings of state among the highest in Brazil.55 governments work towards enforcing legislation to tackle deforestation in their regions. In Minas Gerais, the c. The Case of Candeia state‘s environmental agency, Meio The illegal logging of the Candeia tree, Ambiente, is composed of three a native species of the Atlantic departments that each tackles specific rainforest, has been particularly environmental aspects of the state. The profound in the state of Minas Gerais. State Forest Institute or Instituto However this problem takes a lesser Estadual de Florestas de Minas Gerais priority in the state where other matters (IEF-MG) develops and executes state 55 http://www.inpe.br/ingles/news/news_dest64.php Page 27 of 116 take precedence including deforestation However, despite the Pact‘s mission of caused by large mining companies, restoring native forestry, the Candeia coffee plantations, and urban growth. tree is not among the species on the Pact‘s agenda and further is unlisted on its website containing a list of native species of the Atlantic rainforest. This exclusion of Candeia from the Pact‘s extensive list gives further evidence of its minor priority among many of the organizations working on protecting native floresta of the Mata Atlântica.
Few nongovernmental organizations within Minas Gerais tackle the problem
of sustainable management of Candeia. Currently, numerous initiatives focus on Our research revealed three NGOs that restoring the Atlantic rainforest in work directly with Candeia and they critical states with Minas Gerais being include Amanhagua, Ama Lapinha and one of them. One initiative, the Pacto AMAJF-Juiz de Fora. These small pela Restauração da Mata Atlântica NGOs work with the IEF and Promata (Atlantic Forest Restoration Pact) aims staff to implement important initiatives at restoring 15 million hectares of forest including paying local farmers to replant by 2050. 56 The Pact works through Candeia seedlings. Not only is public and private institutions to reforestation important in their work, but implement forest restoration activities providing sustainable means of living and disseminate awareness about for rural workers and farmers is a deforestation and its threat to the critical part of encompassing local multitude of species within the Atlantic communities into the sustainable rainforest. management of a rainforest product
while deterring illegal logging at the
56 http://www.pactomataAtlântica.org.br/misSão-e- same time. objetivo.aspx?lang=en Page 28 of 116
Scolforo 2000 The involvement of local NGOs has had Federal University of Lavras (UFLA) for an increased impact on combating the implementation of a sustainable illegal logging of the Candeia tree. One management system of the Candeia organization, Amanhagua tackles this tree. This entails selective cutting of through a reforestation program with the tree specific to the particular use local farmers. Farmers produce the that it will be used for—either Candeia seedlings, wood or oil which are in distillation, turn bought and for by various logging to organizations be done in for regions replanting. where Local Candeia farmers also covers plant these more than seedlings in 70% of the open farm vegetation nurseries in the where the organization hopes to particular area. 57 One UFLA report organize a future cooperative of small- published in 2004 concluded that scale producers of Candeia tree ―…Candeia is one of the most important products whereby they can pressure tree species in the native forest studied other producers to extract natural and its exploitation is economically alpha-Bisabolol in a sustainable 58 feasible.‖ manner.
57 In addition to reforestation initiatives by Pérez, Jorge Faisal Mosquera, et al. MANAGEMENT SYSTEM FOR NATIVE CANDEIA FOREST local government and civil society (Eremanthus erythropappus (DC) MacLeish) -THE OPTION FOR organizations, there have been various SELETIVE CUTTING. 58 Pérez, Jorge Faisal Mosquera, et al. MANAGEMENT studies, most prominently by the SYSTEM FOR NATIVE CANDEIA FOREST (Eremanthus Page 29 of 116
as it is the base on which the project stands. 4. O b j e c t i v e s
OBJECTIVE 2 The overall purpose for the SIPA team “Determine potential in Civil was to identify the primary stakeholders Society Organizations (CSOs) in the value chain of alpha-Bisabolol for collaboration of sustainable and make recommendations of how alpha-Bisabolol advocacy .” these stakeholders can come together and design strategies for the long-term There are numerous CSOs advocating sustainability of the Candeia tree and/or for organic products, free-trade, strategies to increase the protecting the rainforest etc… The CSO competitiveness of smallholders in the atmosphere is complex, and global market. In order to achieve this understanding which CSOs are acting purpose the SIPA team endeavored on for what reasons is an instrumental step the four objectives listed below. For the SIPA team needs to make in order information on specific activities to understand the extent of the potential undertaken please look to the logic- partnership network in the Candeia framework (see Annex, Exhibits 1 and value chain. 2) as well as the methodology section.
OBJECTIVE 3 OBJECTIVE 1 “Determine potential of the “Determine industry potential local government for for partnership of sustainable partnership in enforcing alpha-Bisabolol production .” sustainable harvesting
practices .” Understanding the role alpha-Bisabolol plays in the global cosmetic industry is Having partnerships in the global the first research objective, and is cosmetic industry and in the civil essential to the success of this project society is important for the success of erythropappus (DC) MacLeish) -THE OPTION FOR smallholders. Nevertheless, in order to SELETIVE CUTTING. Page 30 of 116 have an immediate local effect chain mapping process, we will use two smallholders in the Candeia value chain primary sources as our reference: the will also need to identify key political USAID Value Chain Framework 59 and figures and institutions, which can help, the World Bank/International Finance assist in the cause for promoting the Corporation Value Chain Approach sustainable harvest of the Candeia tree. (See Annex, Exhibits 3 and 4).60 Our value chain analysis process is OBJECTIVE 4 based on the USAID VCA Framework, “Identify network of potential which is a series of four interconnected partners through which Atina steps:61 can expand their mar ket - Data Collection access.” - Value Chain Mapping
- Analysis of Opportunities & Only by achieving the first three Constraints objectives can the SIPA team - Presentation of Findings w/ successfully complete the fourth Stakeholders & Recommendations for objective, which directly feeds into the Future Actions project purpose. The network of potential partnerships that the SIPA team identifies could play an instrumental role in the long-term 5 . 1 Data Collection sustainability of the Candeia tree and alpha-Bisabolol supply chain as well as The data collection phase included desk the economic impact on smallholders research as our secondary data source within the Candeia value chain. 59 USAID. Microlinks Value Chain Development Wiki. 5. Methodology http://apps.develebridge.net/amap/index.php/Value_Chai n_Development
60 World Bank. "Moving Toward Competitiveness: A In conducting the value chain analysis, Value Chain Approach." August 2007. 61 USAID. Microlinks Value Chain Development Wiki. we utilized various frameworks to guide http://apps.develebridge.net/amap/index.php/Value_Chai n_Development us in our study. For the overall value
Page 31 of 116 and targeted interviews as our primary - Information about the uses of data source. Our objective was to gain alpha-Bisabolol and synthetic familiarity with the industry, market and alternatives. the operating business environment of Preliminary Sources: Previous Atina. In conducting interviews, we academic studies by Brazilian targeted to interview firms and academics, Association of the Industry individuals from all functional levels of of Personal Hygiene, Fragrances, and the chain. Our concern was in obtaining Cosmetics (ABIHPEC), business the following types of information: magazines, emerging markets movement of product and distribution of specialized websites, information benefits, how information is exchanged provided by client and contact in USP. among participants, knowledge on market trends, production techniques b. Candeia Tree Harvesting (Minas and the level of trust that exists among Gerais, Brazil) actors. - Data and information on the
threats the rainforest is facing. A. Desk Research (Secondary - Information on the harvesting and Data Sources) oil extraction from the Candeia tree. a. Cosmetics & Personal Care Industry - Data on amounts of trees in Brazil necessary for the production of oil inputs. - Data and information about the market in Brazil (domestic) and the country‘s position in the Sources: Previous academic studies by global market. Brazilian academics, publications done - Information about the main by the FSC, Cropwatch and government players in the market agencies, and study made by Federal (competitors, e.g. Citroleo, University of Lavras together with distributors, e.g. Symrise; end Symrise and the state government (the customers, e.g. Natura, Avon). Instituto Estadual de Florestas).
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Sources: FSC branch in Brazil, Ecocert, c. Regulatory framework (National and Instituto Ethos, academic literature. State level) - Regulatory framework of B. Field Interviews (Primary Data harvesting and related activities Gathering) at the state level (Laws and rules
issued by the Instituto Estadual a. Interviews with Producers: We de Florestas). conducted interviews with only Atina - Regulatory framework for the as other larger producers such as cosmetics and personal care Citróleo and Purita declined. We sector at the national level (Laws analyzed Atina‘s concerns of the and norms issued by AVINSA). natural alpha-Bisabolol market and - Identification of critical aspects of how the sustainability of their the regulation procedure company affects their production— (corruption, bribes, police control, specifically abiding by IEF supervision). regulations and private industry Sources: Instituto Estadual de Florestas certifications. IEF, AVINSA, Ministry of Environment, information provided by client. b. Interviews with Distributors: We
spoke to US and German distributors d. Corporate Social Responsibility and concerning the natural alpha- Sustainability Certifications Bisabolol market including UHE - Information on the Forestry based in New Jersey and Symrise‘s Stewardship Council FSC regional office in São Paulo. This certification procedures and gave us some insight to how they Ecocert processes. view the bisabolol market and the - Information on other sustainability centrality of price as opposed to certifications followed by Atina. sustainability. - Data on the costs these
certifications imply. c. Interviews with Cosmetic Sales or Marketing Staff: We gathered further Page 33 of 116
information from end consumers— the cosmetic companies. We e. Interviews with Civil Society: We met obtained insight into marketing and/or interviewed with civil society strategies of particular brands, organizations working on emerging trends in the cosmetic reforestation efforts in Minas Gerais. industry, and the reliance of These included Iracambi, cosmetic giants like L‘Oreal and Amanhagua, SOS Mata Atlantica, Body Shop on distributors for Conservation International and other ingredients and products. We also relevant organizations. We observed performed a field visit to Natura the pertinent role that CSOs had in offices in Carancas, São Paulo. Here pressuring industry actors against we were given an overview of Natura destructive environmental activities operations within Brazil and their and working with local communities concentration on natural products to raise awareness on the issue of and sustainable sources. deforestation.
f. Interviews with Private
Standardization Organizations: We d. Interviews with Minas Gerais Local consulted with organizations working State Officials: We had an on-site on standardization and certification visit to Itacolomi State Park, an IEF processes. These included Ecocert, protected area within Minas Gerais Cosmos, ISO, USDA, and others. where we met with various IEF and From these interviews and meetings, Promata officials. This allowed us to we gained further knowledge of the define the problem with enforcement complicated procedures behind of state law in preserving the certifications and ingredient labels. candeia tree. It also gave us a first-
hand experience into their operations and the deforestation 5 . 2 Value Chain Mapping problems they face in Minas Gerais with low compliance and limited We developed a value chain map to funding for stronger oversight. visually illustrate the structure of the Page 34 of 116 cosmetic industry value chain. Our goal was to represent the way the product is End Markets developed from raw material to end Business Enabling Environment markets and to show how the industry Vertical Linkages functions on both local and international Horizontal Linkages levels. We employed a two-phased Supporting Markets process for developing the value chain Value Chain Governance map: Inter-Firm Relationships
Upgrading Initial Basic Mapping – Based on CSR Concerns: Environmental information from desk research (See Sustainability. Annex, Exhibit 5). With regards to analytical tools, we
used the following in studying the Adjusted Mapping – Revised based on industry stakeholders and end markets: interviews and feedback from Stakeholder Analysis, Institutional stakeholder interviews with firms and Analysis, Interview Guides, and Porter‘s individuals (See Annex, Exhibit 6). Five Forces Analysis.
5 . 3 Analysis of 6. A n a l y s i s Opportunities & Constraints
6 . 1 Porter’s 5 Forces We utilized the value chain framework Evaluating the Strength to analyze the data we have gathered in of Different Industry the first two phases. We looked at the F o r c e s factors affecting the performance of the 62 chain to identify opportunities and Competitive Rivalry: High constraints. These factors were (See Natural alpha-Bisabolol production in Annex, Exhibit 7). Minas Gerais is a nascent industry, with
only 20 years of existence. Industry 62 Ibid. Page 35 of 116 competition is high with strong rivalry among an oligopoly of firms extracting Of the firms mentioned above, Atina, Candeia essential oil out of the wood. Purita and Citroleo provide some slight Candeia producers are comprised of six differentiation by also manufacturing players, namely Citroleo, Citrosul, natural alpha-Bisabolol from the
Atina, Purita, Maripa and Atlântica. The Candeia oil. Candeia trees growing in competition in the market for specialty Minas Gerais are normally found in ingredients such as Candeia oil tends to reserved forest areas. As such, a firm‘s be oligopolistic, with competing current supply is regulated based on companies offering products partly or licenses issued by the government to fully differentiated63. producers allowing for a number of trees to be logged. There is strong
63 GFA Consulting Group GmbH in collaboration with rivalry among firms to obtain the IP Institut fur Projektplanung GmbH (2006). Brasil Projecto Protecao da Mata Atlântica em Minas Gerais, greatest number of licenses to log in PROGRAMA MG. Analise de Mercado e da Cadeia Productiva do Oleo de Candeia e do Alfaalpha- order to secure their oil supply. Bisabololalpha-Bisabololalpha-Bisabolol Page 36 of 116
Currently, Citroleo is the largest Buyer‘s threat of backward integration producer of natural alpha-Bisabolol with is high. There is backward integration a 60% market share64. among producers such as Atina and Citroleo who have their own Candeia Bargaining Power of Suppliers: farms that contribute to their overall Low supply.
Natural alpha-Bisabolol suppliers are There is a potential threat of entry of composed of small rural farmers and new suppliers in the form of Candeia large plantation owners that have native tree growers who represent a Candeia trees growing on their land. prospective market supply in the next Both are contracted by producers who 10 years. These refer to smallholder purchase the rights to extract alpha- farmers who have received subsidies Bisabolol oil after the tree has matured and technical assistance from the and is available for cutting. Suppliers government of Minas Gerais to are responsible for the logging, participate in Candeia replanting transportation and delivery of trees to programs to curb deforestation. Major the producers, which are either done in- producers such as Citroleo are already house or outsourced. They have limited trying to establish agreements with bargaining power due to the lack of these smallholder farmers in an effort to transparent market price information on increase alpha-Bisabolol supply. alpha-Bisabolol and Candeia oil. This information asymmetry allows Bargaining Power of Buyers: producers to dictate their prices, leaving High suppliers with low margins.65
Industry buyers are in the form of large 64 Lopes, C; Brito, J; Soares, J; Vidal, E; Marin, L (2009). “Influence Of Altitude, Age And Diameter multinational chemical companies who On Yield And Alpha-alpha-Bisabololalpha- distribute and sell commodities/raw Bisabololalpha-Bisabolol Content Of Candeia Trees (Eremanthus Erythropappus)”. Cerne, Vol. 15, No. 3, materials to cosmetic manufacturers July-September, 2009 65 Lopes, C; Brito, J; Soares, J; Vidal, E; Marin, L (2009). “Influence Of Altitude, Age And Diameter On Yield And Alpha-alpha-Bisabololalpha- (Eremanthus Erythropappus)”. Cerne, Vol. 15, No. 3, Bisabololalpha-Bisabolol Content Of Candeia Trees July-September, 2009 Page 37 of 116 internationally. Buyers are alpha-Bisabolol directly to cosmetic characterized by a handful of manufacturers and secure higher companies, namely Symrise, BASF, margins and partnerships. Impag and the George Uhe Company (Uhe). These alpha-Bisabolol However, it is possible for cosmetic distributors reap the greatest margins manufacturers to be direct buyers from with high price negotiating power due to producers, especially domestic Brazilian their oligopolistic structure and companies and niche companies. An exclusive contracts with cosmetic example is Natura, a Brazilian manufacturers who comprise the end cosmetics and skincare company market. Alpha-Bisabolol producers lose specializing in eco-friendly and natural power in pricing as they compete tightly products. The company is sourcing in order to get a biggest piece of the alpha-Bisabolol directly from Atina due share. to the organic product certification guaranteed by the producer. For These distributors normally have manufacturers with a niche market longstanding supply chain contract positioning and specific organic material arrangements with global cosmetic requirements, there is an opportunity for manufacturers who source a variety of direct partnerships with alpha-Bisabolol other cosmetic ingredients (apart from producers. alpha alpha-Bisabolol) from them. This is a key characteristic of the Threat of New Entrants: Low relationship between distributors and cosmetic manufacturers – the Threat of new entrants is currently low environment endorses developing long- due to high barriers to entry, specifically term partnerships for a more cost- the tightly controlled oligopolistic effective and efficient raw materials structure of alpha-Bisabolol producers sourcing. An example is the global and the actual available supply of partnership between L‘Oreal and mature Candeia trees for cutting. There Symrise. These partnerships serve as is a potential for new entrants within the a barrier for producers to sell alpha next few years if smallholder farmers
Page 38 of 116 currently re-growing Candeia trees Bisabolol. The key difference between decide to upgrade in the value chain by the two is in its chemical formulation: developing the ability for oil extraction. ―natural alpha-Bisabolol is 97% active (- Forward integration of these small ) –alpha-Bisabolol isomer, while suppliers would require significant synthetic alpha-Bisabolol is 42.5% as extension services, technical support active (-) –alpha-Bisabolol isomer.‖ 67 and financing from private and public Natural alpha-Bisabolol has more purity sector institutions. than Synthetic alpha-Bisabolol however both are essentially derived from the Threat of Substitutes : Medium same source – alpha-Bisabolol extracted from candeia oil. The choice
German Chamomile trees serve as a to use Synthetic alpha-Bisabolol for substitute as the essential oil containing cosmetic manufacturers involves up to a 50% concentration of alpha- utilizing a lower concentration however Bisabolol. However the threat of this they still need to source from Candeia substitute is quite low as Candeia trees oil & alpha-Bisabolol producers, hence the presence of a synthetic bisabolol are still preferred because of their higher alpha-Bisabolol concentrations of alternative does not pose a large threat. 63 to 72% purity. 66 Overall, Candeia trees are still the more economical source of bisabolol given its 6 . 2 Value Chain Analysis concentration, despite the lengthy period of tree growth. 6 . 2 . 1 M a p o f Relationships in Out of alpha-Bisabolol, cosmetic a l p h a - B i s a b o l o l manufacturers can either formulate a V a l u e C h a i n Natural alpha-Bisabolol or Synthetic
In order to analyze the stakeholders 66 Lopes, C; Brito, J; Soares, J; Vidal, E; Marin, L identified throughout the project the (2009). “Influence Of Altitude, Age And Diameter On Yield And Alpha-alpha-Bisabololalpha- Bisabololalpha-Bisabolol Content Of Candeia Trees (Eremanthus 67 http://www.bulkactives.com/abisabololnatural.htm Page 39 of 116
SIPA team compiled a table (Box 1 in within the alpha-Bisabolol value chain Stakeholder Analysis Boxes) which (source of supply chain, production, contains information on each distribution, or end market), the stakeholder we identified throughout the importance of the stakeholder to the duration of this project 68 . The data in alpha-Bisabolol value chain and the Box 1 identifies the function or capacity stakeholder‘s ability to influence change in which the stakeholder operates within the value chain (as perceived by (industry, government, or civil society), the SIPA team through research and geographical location, area of focus interviews), the motivational drivers of
the stakeholder, and the potential to
68 It should be noted that the list of stakeholders in Box 1 actively undertake initiatives to change is an incomplete list and does not contain every stakeholder within the alpha-Bisabolol value chain. Due either the sustainability of the alpha- to our limited time and resources we were only able to Bisabolol value chain or improve identify immediate stakeholders, and we acknowledge that there may indeed be stakeholders which have smallholder competitiveness within the importance and relevance to the alpha-Bisabolol and are missing from our tables. Page 40 of 116 alpha-Bisabolol value chain (as nevertheless play a role in its current perceived by the SIPA team through state. research and interviews). The information for each stakeholder in Box By using the information found in Box 1 1 was then pushed through a series of for each stakeholder we are able to matrices and tables in order to create a graph distinguishing the basic determine their relevance to the alpha- framework of the alpha-Bisabolol Bisabolol industry or either of the areas industry. This framework illustrates for potential initiatives (see Boxes 2 and which areas the primary and secondary 3 below in the Value Chain Analysis stakeholders (identified in Box 3) are section and Boxes 4, 5 and 6 in the operating by categorizing the Recommendations section). stakeholders as Industry, Government, or Civil Society. 69 We further analyze Boxes 2 and 3 (in Stakeholder Analysis the stakeholders by separating them Boxes) compare each stakeholder‘s into the various areas within the alpha- perceived importance to the alpha- Bisabolol value chain denoted as Bisabolol industry as well as their Source, Production, Distribution and perceived influence upon the alpha- End Market. Bisabolol industry in order to determine their classification as either a primary, 6 . 2 . 2 Map of Industry secondary or tertiary stakeholders. Relationships Primary stakeholders are principal actors within the alpha-Bisabolol value chain and their presence is crucial for the industry to continue in its current state. Secondary stakeholders have influence in determining how the alpha- Bisabolol industry operates today but are not necessary for the continuation of the industry. Tertiary stakeholders 69 We have included Atina in this map as they were the focus of our study on the Bisabolol value chain and they are not crucial for the industry but are the only company identified as being successfully certified to sustainably produce Bisabolol. Page 41 of 116
The value chain map (following) depicts landowners will continue to supply the industry actors in Brazil and their Candeia to the alpha-Bisabolol industry interactions within the country as well after the introduction of the Candeia as with the international market. The from the plantations. broad arrows depict the flow of goods
from one stage to the next currently 6 . 2 . 3 Description of occurring in the market today. The Value Chain Actors narrow orange dotted lines represent the flow of investments from both a. Input supplier s suppliers as well as distributors for future supplies of Candeia trees on Input suppliers provide the alpha- plantations, and the narrow blue lines Bisabolol industry with the Candeia reflect the future flow of supplies from trees in order to produce alpha- the plantations once the Candeia has Bisabolol. There are three types of input matured. It should be noted that
Page 42 of 116 suppliers: future supply held on planted was established on degraded plantations, future supply as a result of lands (reforestation) or the land is community-based reforestation substituting for other agricultural uses. initiatives, and current, naturally- occurring Candeia in the Mata Atlântica. Efforts to create plantations, however, The first two types of input suppliers are are extremely capital intensive, as they categorized as ―future‖ suppliers require land as well as the coordinated because it takes time for trees to grow efforts of planning trees. Producers of and the plantations and reforestation alpha-Bisabolol such as Atina and efforts are too recent to have any Citroleo have been able to work in impact on the current supply of mature collaboration with distributors such as Candeia trees. The remaining category Natura and Symrise, respectively, to of input supplier is comprised of finance and create Candeia plantations. individual landowners and small By collaborating to create Candeia farmers, which hold the available supply plantations both the producers and Candeia for the alpha-Bisabolol market distributors were able to secure future on their land. income as well as gain tighter control of their supply chains. Landowners who Opportunities and have large amounts of land available Constraints could attempt to have producers co- finance the creation of Candeia Plantations plantations much like the producers There are several opportunities for have done with distributors. plantations stemming from the fact that it is a long term investment which Reforestation Efforts requires thoughtful planning. Reforestation efforts in the Atlantic Entrepreneurs wishing to enter the rainforest could possibly lead to an alpha-Bisabolol industry are free to buy increase of available Candeia in the or lease land and plant Candeia. These future, dependent on the type of land on plantations can be certified by FSC if which planted. Reforestation efforts the terrain on which the Candeia was within protected areas would not
Page 43 of 116 contribute towards the future supply of The current supply of Candeia is Candeia oil rather it is the participation located on the property of small farmers of small farmers and landowners in and landowners. The amount of reforestation efforts on their own land Candeia available for harvest each year contributing towards the future supply of depends on the amount of permits given Candeia and future incomes. from the IEF. This amount changes annually based on analysis conducted If reforestation efforts were to link by the IEF, as defined by the regulation directly to the future supply of Candeia surrounding the harvest of Candeia– the private sector should collaborate making it difficult for small farmers and with the organizations initiating these landowners to plan ahead for future reforestation efforts, the small farmers incomes. and landowners on which the Candeia would be planted, and the IEF. Issues The sustainability of the supply of to be resolved while collaborating would Candeia trees, however, is based on an be the current deforestation rates of the analysis that assumes quantities being alpha-Bisabolol industry as well as the harvested adhere to the quantities future deforestation of forests as assigned through permits. opposed to the reforested areas. A Nevertheless, there are discrepancies possible outcome of this collaboration between the quantity assigned to be could be a strategy of selecting specific harvested in the permits and the areas for reforestation and logging to amount of Candeia actually harvested; facilitate the transition from logging the not all trees which are harvested are current supply of Candeia to the logging accounted for as they are extracted of reforested areas, which would illegally. Efforts are currently being eventually become plantations. This undertaken to develop the technology outcome could allow the trees in the which would enable the regulatory Atlantic rainforest to continue to grow agencies to comprehend the actual and promote a healthier ecosystem. amount of Candeia being harvested each year, but the overall sustainability Current Candeia Supply of Candeia rests in reforestation
Page 44 of 116 activities to offset the balance of Amanhagua, which encourages the Candeia trees being harvested each planting of Candeia with the specific year and the amount allotted in the intention of future harvest after the permits. trees have matured. Additionally, the IEF is also involved with two other L i n k a g e s projects including Promata, which, among other objectives, aims to Private Sector Linkages promote the ―sustainable development Smallholder farmers and landowners in the surroundings of the Protected either harvest the trees themselves or Areas and areas of connectivity.‖70 As a work with hired loggers who come to result, the IEF is very active in involving their land and harvest the Candeia for small farmers and landowners, in them. The harvested trees are then sold restorative efforts of the rainforest as as either input materials for alpha- well as promoting sustainable Bisabolol producers or as fence posts. livelihoods for their local communities. Often times the alpha-Bisabolol producers will contact landowners to Civil Society secure future sales of Candeia and they Several civil society organizations are will sign a contract if the landowner is involved in reforestation initiatives in willing to sell the Candeia. the Mata Atlântica and are thus influencing the future supply of Government Linkages Candeia. The Reserva da biosphere da The government agencies within the Mata Atlântica (RBMA), Pacto Pela scope of the input suppliers are Restauracao da Mata Atlântica, involved in regulating the amount of Amanhagua, and Fundacao SOS Mata Candeia which can harvested on an Atlântica are a few of the organizations annual basis as well as reforestation which are currently involved in efforts which increase the future supply 70 Retreived from of Candeia. The IEF, for example, is http://translate.googleusercontent.com/translate_c?hl=en &sl=pt&u=http://sigap.ief.mg.gov.br/promata/projeto.ht involved in a program in collaboration m&prev=/search%3Fq%3DIEF,%2Bminas%2Bgerais% 26hl%3Den%26safe%3Doff%26prmd%3Divns&rurl=tra with local civil society organization, nslate.google.com&twu=1&usg=ALkJrhjzV6JUpMPrS ViZS_15JGirWhVOag, on April 18th, 2011 Page 45 of 116 reforestation initiatives and are working landowners. As Scolforo et. al state in with small farmers and landowners in their study ―Manejo Sustentado da several different reforestation schemes Candeia‖, ―rural workers (loggers) are located in areas throughout Minas persons not owning land, most of the Gerais. Amanhagua currently has a time dedicated to removal of a Candeia reforestation initiative specifically for in the land of others.‖ 72 Nevertheless, Candeia aimed at the communities small farmers and landowners can often living around the Serra Papagaio. Their times dedicate some of their own time website states ―The Familial Nursery towards the harvest of Candeia on their Seedling the Candeia seedlings of tree own lands, and are thus categorized as are cultivating by the rural families in a second type of labor harvesting the order to optimize costs and to promote Candeia. the social and environmental development of the communities living Opportunities and around the State Park of the Serra do Constraints Papagaio.‖71 The project intends for the planted Candeia to be harvested once Landowning Loggers the trees mature in order to create an Landowners have more control about economic stimulus for the community. future incomes as a result of Candeia because they own the land the Candeia would be planted on. Small farmers and b. L o g g e r s landowners, however, are considered to
be under the category of Future Input Loggers are typically men who work Suppliers and Current. These two with axes and chainsaws who harvest categories are covered in the above Candeia from the small farmers and section.
71 Retrieved from Landless Loggers http://translate.googleusercontent.com/translate_c?hl=en &sl=pt&u=http://www.amanhagua.org/projetos/reflorest amento_candeias.html&prev=/search%3Fq%3DAmanha gua%2BIEF%26hl%3Den%26safe%3Doff%26prmd%3 Divns&rurl=translate.google.com&twu=1&usg=ALkJrh 72 Scolforo, Jose Roberto et. a., Manejo Sustentado da hTPl5e2BrXdPYduEroJokMwW20hg, on April 18th Candeia (Eremanthus erythropappus (DC.) McLeisch e 2011 Eremanthus incanus (Less.) Less.), page 171 Page 46 of 116
Landless loggers have very little which has a program to produce food opportunities within the value chain as for the landless workers. These they do not own land and cannot secure initiatives, however, leave the landless means of future incomes by planting loggers in the same position they are Candeia. Furthermore, it is difficult for currently in within the Candeia value landless workers to bargain for higher chain. prices because there they are unskilled workers and add little value within the c. P r o d u c e r s value chain. There are, however, initiatives and organizations aimed to As explained in the market improve the position of the landless characterization, the Candeia oil and workers such as the Movimento Dos alpha-Bisabolol market in Brazil is Trabalhadores Rurais Sem Terra small. There are a few small companies (Brazilian Landless Workers that produce only candeia oil and Movement). These initiatives do not Citroleo, Purita, and Atina who produce help the landless workers improve their Candeia oil and alpha-Bisabolol. bargaining power, but are designed specifically to subsidize their livelihoods Citroleo owns Citrosul, Citrominas and with food in order to increase their Citroflora. These three companies discretionary spending. extract the oil in different geographic
locations and supply it to Citroleo who L i n k a g e s does the distillation in its facilities.
Among other reasons, this explains Landless Loggers Citroleo‘s dominant role in the market. As mentioned in the Opportunities and Citroleo has the largest production and Constraints section above, the landless geographic presence, covering the loggers are the center of local initiatives states of Bahia, São Paulo, and Minas helping to promote the livelihoods of Gerais. While its distillation facilities are landless workers. Such initiatives are located in Torrinha, Sâo Paulo, the run by organizations like Movimento other three companies are found in Dos Trabalhadores Rurais Sem Terra, Morro do Pilar, Carrancas, and Ituaçu. Page 47 of 116
Although access to data is difficult coming from certified lands 75. The fact because of the companies‘ reserve in that there is not enough demand for disclosing information about production certified alpha-bisabolol obliges Atina to and prices, studies from 200573 showed limit its operations. Because there is a that out of a total annual production of premium for the certified alpha- 102 tons of candeia oil, Citroleo was Bisabolol, distributors prefer to buy non- responsible for 60 (and aggregate of certified product. Non-certified alpha- Citroleo, Citrominas, and Citroflora 74 ), Bisabolol is bought for US $80-90/kg,76 Purita 34, and Atina 8 tons. Though while certified is sold at approximately Citroleo is the most powerful player in US $110/kg according to field the market, Atina has the largest interviews. capacity. Data from 2005 indicated that Atina could produce 9 tons, while In the market only Atina has the FSC Citroleo and Purita (individually) only 4. certification, which means that its farms Data gathered from the two field trips ―are verified from the forest of origin performed in 2011, suggested that through the supply chain.‖ 77 According Citroleo‘s current alpha-Bisabolol to information provided by the company, production ranges around 30-40 tons they own 4 farms that are FSC certified per year. Atina produces around 12 and also have contracts with 8 other tons. There is no information available farms that have received Ecocert for Purita. certified standards. As explained before, Ecocert verifies the specific The reason why Atina fails to operate at procedures typical of an organic its full capacity is that it only distills oil production process. The Ecocert label implies Atina has the USDA-NOP and 73 GFA Consulting Group GmbH in collaboration with IP Institut fur Projektplanung GmbH (2006). Brasil Projecto Protecao da Mata Atlântica em Minas Gerais, PROGRAMA MG. Analise de Mercado e da Cadeia Productiva do Oleo de Candeia e do Alfaalpha- 75 Interview with Eduardo Roxo, General Manager, Bisabololalpha-Bisabololalpha-Bisabolol. For the Atina. Field trip. January, 2011. Secretaria de Estado do Meio Ambiente e 76 De Oliveira A.D., Andrade, I., Soares, J., de Mello, J., Desenvolvimento Sustentavel, the Instituto Estado de Acerbi, F., Camolesi, J. (2009). “Market Chain Analysis Florestas. KfW Entwicklungsbank, Brasilia and KfW of Candeia Timber”. Cerne, Vol. 15, No. 3, pp. 261. Entwicklungsbank, Frankfurt. June, p. 27. 77 Forestry Stewardship Council FSC. FSC Certification. 74 Citrosul did not exist in 2005. Citrosul appears in http://www.fsc.org/certification.html Retrieved April 30, 2008. 2011. Page 48 of 116 also the authorization to sell in more than half of the 20% sold in Brazil European markets. is later sent abroad (this is better explained in the Distributors chapter Citroleo‘s case is different. They only following). have certifications that verify the quality of their facilities, not the organic Opportunities and character of their processes or the Constraints traceability of their raw materials. They have ISO9001-2008 (quality Four aspects characterize the management systems) and United production side of the value chain of Kingdom Accreditation Service (UKAS). alpha-Bisabolol. There is a fierce UKAS ―means that evaluators i.e. competition between the two largest testing and calibration laboratories, players, Citroleo and Purita. certification and inspection bodies have Considering there is little space for been assessed against internationally differentiation of the products offered (a recognized standards to demonstrate differentiator could be purity but prices their competence, impartiality and are inelastic to this aspect) these performance capability.‖78 companies marketing strategies are based on a price differential, rather than Most of the production of oil and alpha- on better quality or value added. Bisabolol is exported. Small pharmaceutical or cosmetic companies As a result there is an aggressive price use the production staying in Brazil. war that affects smallholders like Atina, The GFA report from 2005 establishes who face higher costs because of the that 20% of the oil and alpha-Bisabolol different sustainability certifications. As is sold domestically and the 80% a result of product homogeneity and the remaining is sold to foreign companies. limited supply source, the primary Nevertheless, it‘s worth mentioning that forces driving competition in the industry have been the ability to secure
78 United Kingdom Accreditation Service UKAS. “What permits to harvest Candeia trees and is Accreditation?”. http://www.ukas.com/about- accreditation/What_is_Accreditation/What_is_Accredita the price at which producers are able to tion.asp Retrieved April 30, 2011. Page 49 of 116 sell Candeia oil and natural Candeia- by lack of transparency and distrust. based alpha-Bisabolol. None of the companies, except Atina, have connections with certification A second aspect is that of asymmetrical bodies like Imaflora or Ecocert. information. Citroleo is the largest Inevitably, all of the companies involved producer and supplies the largest in extraction and dealing with contracts consumer of oil and alpha-Bisabolol, and landowners are linked to the IEF. Symrise. The size of both companies, There is definitely space for the and their roles in the market (one being producers to align their efforts with civil supplier and the other global distributor) society organizations like SOS Mata restrict the entrance of other Atlântica. In regards to distributors, the competitors. This also creates a most powerful linkage is the one scenario of asymmetrical information Citroleo has with Symrise. allowing Symrise the power to determine prices and terms of trade. d. Distributors
Finally, since of most of the demand After the production stage, producers of comes from abroad and is mainly for natural alpha-Bisabolol either sell to raw materials, there is little space for cosmetic manufacturers directly or to innovation at the local level. There are distributors, who then sell the product to no incentives for companies to add these retailers. Many of the larger value to alpha-Bisabolol or the Candeia cosmetic companies buy from these oil because competition resides on price distributors as they provide a wide array differentials. of items needed for the manufacturing of their products. L i n k a g e s The largest distributor of natural alpha- There are no organized associations Bisabolol is the German conglomerate that bring together alpha-Bisabolol Symrise who accounts for 65% of the producers. Relationships between the different companies are characterized
Page 50 of 116 market. 79 Headquartered in Germany, Dragosantol® 100 also serves as a Symrise has a presence in over 35 measure to protect the environment.‖82 countries, specializing as a global supplier of fragrances, flavorings, However the realities on the ground in cosmetic active ingredients and more. Minas Gerais contradict the actualities Symrise‘s Scent & Care Division sells of these statements because our over 15,000 products to approximately research revealed that Symrise does companies in 135 countries. 80 Symrise not buy alpha-Bisabolol from Atina—the also manufactures its own products only company that conforms to state including SymRelief®, an anti-irritant standards surrounding the logging of composed of natural alpha-Bisabolol the candeia tree. Rather, Symrise ―from a sustainable source‖ as claimed obtains much of its alpha-Bisabolol from by the company.81 Citroleo, who does not hold Ecocert or FSC recognition despite being the Symrise publicized its utilization of the largest producer of the ingredient in naturally derived product in terms of the Brazil. corporate social responsibility lines stating that: ―…Symrise has been According to a consultancy report by working for years to protect the Candeia the German bank, KFW, their findings plant and is now broadening the scope concluded that sales of natural alpha- of its efforts by making considerable Bisabolol totaled 8.4-10 million euros investments to protect the rainforest annually.83 Further, German corporation and develop networks with certified Merck comprises of 10% of sales of partners. Besides carefully selecting the natural alpha-Bisabolol. IMPAG, natural ingredients for ‗alpha-Bisabolol another distributor claims Ecocert sustainable,‘ producing ultra-pure certified alpha bisabolol stating on their synthetic bisabolol in Dragosantol® and 82 Ensuring sustainability in the product and farming: Symrise manufactures the botanical active ingredient (-)- α-bisabolol while supporting environmental standards, 25 June 2009. http://www.symrise.com/en/news- 79 GFA Consulting Group Report, p.31. media/press-releases/2009/detail/article/ensuring- 80 http://www.symrise.com/en/company-info/symrise-at- sustainability-in-the-product-and-farming-symrise- a-glance.html manufactures-the-botanical-active-ingred.html 81 Symrise product brochure 83 GFA report Page 51 of 116 website and is a buyer of such a market is unique—possessing the product from sustainable producer, ability to negotiate the price and Atina Ativos. availability of the product. In essence, the market revolves around the Distributors buy natural alpha-Bisabolol powerhouse Symrise as most of the from Brazilian suppliers for US $80 to purchasing of natural alpha-Bisabolol is US $90 per kilo and in turn sell it on done by them. Not only can Symrise the international market for prices set the price of the product but dictates ranging from US $140 to US $160 per when it purchases it—any stoppages by kilo. 84 According to the UFLA study the German enterprise will in turn have distributors of natural apha-Bisabolol reverberations throughout the market. profited the most out of the entire market chain of the product. A lack of responsibility and Distributors field a profit of roughly 43% transparency in the value chain are the of marketing margin, or the price two largest constraints concerning the percentage of net gain. Global sales of long-term sustainability of natural natural alpha-Bisabolol were estimated alpha-Bisabolol. Distributors are simply at roughly 80 ton per year.85 careless when it comes to the origins of the product and how it was extracted or perhaps believe that a certain supplier Opportunities and is certified but fails to follow up Constraints periodically to ensure adequate compliance of rules and certifications. Distributors of the natural alpha- Bisabolol are among the most important Lin k a g e s actors of the value chain as they have a large say in the pricing of the product. Distributors have minimal activities with As the largest buyer of natural alpha- local actors working towards the Bisabolol, Symrise‘s position in the sustainability of the Candeia tree. This impedes the success of reforestation 84 Oliveira, Cerne, Lavras, v. 15, n. 3, p. 257-264, jul./set. 2009 efforts as illegal logging persists with 85 GFA report Page 52 of 116 most of the demand emanating from depilatories and sun care. Alpha- these distributors. Distributors of the Bisabolol is an ingredient found in all of alpha-Bisabolol market must establish the aforementioned categories. A more clearer and more open lines of detailed definition for all skincare and communication with local government cosmetic categories is found in the and civil society actors to collaborate on appendix. recognizing the critical issue of the sustainability of the Candeia tree and There are many players in the industry, identifying modes of collaboration which both large multi-national and small can ensure results that are beneficial to niche companies that are competing all key stakeholders of the natural against one another to capture a share alpha-Bisabolol market. of the multi-billion dollar cosmetic market.
e. End Market: S k i n c a r e & The overall skincare and cosmetic Cosmetic Product market can be broken down into two Manufacturers main segments: mass and premium
categories. The distinction between The skincare and cosmetic industry is a these two segments is dependent on very lucrative, innovative, and fast the price, label/positioning and paced global industry representing a distribution. Premium brands are value of $400 billion as of 2011.86 It is normally distributed in department projected to grow at roughly 12% and stores and specialty boutiques while reach a market size of $450 billion by mass brands are located in drug stores 2015. The industry is characterized by and convenience shops. the following product categories: baby care, bath & shower products, The major industry leaders are deodorants, hair care, color cosmetics, comprised of giant corporations which men's grooming products, oral hygiene, have grown their market shares through perfumes & fragrances, skin care, acquisitions of numerous brand name
86 Euromonitor State of Skincare & Cosmetics Industry products, both premium and mass. Report 2011. Page 53 of 116
These refer to the following companies beauty care and is home to Natura and their corresponding brands: Procter Cosméticos SA, the thirteenth largest & Gamble Co (Max Factor, Oral B, skincare company in the world. Natura‘s Pantene, SK-II, Gillette), L‘Oreal positioning is unique – it has Groupe (L‘Oreal, Maybelline, The Body established a global brand with a strong Shop, Lancome, Kiehls), Unilever presence in Latin America and Europe, Group (Dove, Vaseline, Axe), Colgate- yet promoting an image that is eco- Palmolive Co, Avon Products Inc, friendly and sustainable, more similar to Beiersdorf AG (Nivea, Nivea for Men), small niche companies. For instance, it Estee Lauder Inc (Bobbi Brown, has strong company policies on Clinique, MAC Cosmetics, Aveda, sourcing from natural ingredients, Origins, La Mer) and Johnson & supporting sustainable environment Johnson Inc (Neutrogena, Johnson‘s, practices and providing livelihood to Purell, Aveeno). local communities as suppliers.
Despite the dominance of these Lastly, it must be emphasized that international corporations, there are product innovation and consumer also hundreds of smaller niche preferences are inextricably linked. companies involved in the industry. The ―Beauty is in the eye of the beholder‖ as last few decades has seen a rise in the the industry markets their products organic cosmetic and skincare industry, based on consumers‘ perceptions of with a number of smaller production beauty. Consumer preferences play an companies competing with the big important role in determining the life names for a share of the global market. cycle or longevity of a product. Brand examples include Yes To, Lush Manufacturers develop and select and L'Occitane, Burt‘s Bees, Korres, ingredients according to their Jurlique, Phyto, Bare Escentuals and preferences. Nude Skincare. As their demands and needs change It is important to highlight that Brazil is over time, firms are forced to innovate a the third largest market for personal and new product, replace a product, or
Page 54 of 116 upgrade its products to meet the sustainability and traceability. They demands of consumers at all levels. ―select suppliers… not only by means of With this in mind, innovation and fast- technical quality criteria, but also based paced adaptability are necessary on socio-environmental indicators. Their elements to industry success. philosophy is that they will ―retain those Continuous investment in R&D and partners with the greatest potential for technology are essential in the search preserving natural resources, while at for groundbreaking ingredients and the same time creating positive social formulations. impacts‖87.
Opportunities and An example of this is their sourcing of Constraints natural alpha-Bisabolol from Atina where they require for the producer to The growth of natural & organic be certified organic via private label skincare & cosmetics industry leads to standard such as Ecocert. In exchange, demand for greater product credibility Natura pays a premium for certified and traceability. The industry has seen natural alpha-Bisabolol, a price that is a strong growth of products that are well-above market prices.88 positioned as natural or organic, driven by consumer motives to buy ―natural‖ Other skincare and cosmetic companies products for fear of ingredients typically foresee implementing a similar found in standard cosmetics. This procurement requirement particularly for increase in consumer awareness had their products with a ―natural‖ claim. For led to a bandwagon of large and small instance, L‘Oreal currently does not manufacturers with product offerings require certification for alpha-Bisabolol claiming to be based on natural as they are using this ingredient for ingredients. products without a natural claim. However as the natural industry grows, To enhance product credibility, they do foresee paying more for manufacturers such as Natura have 87 Natura Cosmeticos SA “Policy for the Sustainable Use developed sourcing strategies linked to of Biodiversity”. 88Interview notes with Atina. Page 55 of 116 certified ingredients in the near future, claims at least 98% plant and fruit- particularly for their beauty brands derived natural ingredients; Procter & under The Body Shop.89 Gamble‘s NatureLuxe, a make-up range with natural ingredients; Beiersdorf‗s In terms of natural brands, small Nivea Pure & Natural which claims at manufacturers have more credibility to least 95% of its ingredients from natural consumers versus larger and organic sources. Other companies manufacturers. Consumer awareness have acquired brands with an for natural/organic products has proven established image, such as L‘Oreal‘s to be beneficial for smaller acquisition of The Body Shop, Clorox's manufacturers that have enjoyed acquisition of Burt's Bees and Estée greater credibility, as consumers appear Lauder's acquisition of Aveda.91 to be suspicious of mass manufactured natural/organic products and overall However, it is the smaller players such corporate commitment to nature. 90 as Yes To, Lush and L'Occitane which Currently this is a limitation for large are in general experiencing above companies unless they create an industry growth rates. L'Occitane's opportunity to increase their CAGR of over 24% between 2004 and competitiveness in a market that is 2009 in its primary Asian market more inclined to smaller firms. compares to an industry average of 7%.
Similarly, Lush, which specializes in The number of large companies offering bath and shower, posted a 6% CAGR products within the natural/organic between 2004 and 2009, compared to a space has increased in recent years. little over 5.5% for the global bath and Examples include: the Johnson & shower market. This is because Johnson line of Johnson's Natural consumers appear to be more skeptical
about mass produced natural/organic 89 Interview notes with L’Oreal. products, thus favoring smaller brands. For example, The Body Shop saw its 90 Euromonitor International: “Beauty Players to Benefit from Small Independent Entities Managing Their Green Brands”, April 2011. 91 Ibid. Page 56 of 116 share of the global beauty and personal include product labeling in which care market fall from 0.5% in 2006 to ingredients must be declared in 0.4% in 2008 and 2009 due to its descending order of predominance on a association with L'Oréal.92 visible label or a package insert. Companies must also have established L i n k a g e s procedures for manufacturing product, distribution, and packaging. Logistics Regulatory Agencies & Government becomes vital to a cosmetic company, The industry is tightly regulated due to as all products need to be traced back high concerns for consumer safety and to the raw materials in the event of a well-being. recall or field notification. Companies in All cosmetic and skincare violation of regulation can face serious manufacturers must comply with consequences such as product recall, product regulations that govern the closure of manufacturing facility or even countries where their end markets are criminal action.93 based and work with the specific regulatory agencies. In addition to these regulatory agencies, there are also private certification For example, In the USA, all marketed organizations specifically catering to cosmetic and skincare products are organic and natural skincare and regulated by the Food and Drug cosmetics. These entities have created Administration (FDA) and subject to the private standards due to the lack of Federal Food, Drug and Cosmetic Act current legislation governing organic (FD&C Act), the Fair Packaging and and natural products. Any company Labeling Act (FPLA). that needs organic/natural product certification must work with these For selling products in Europe, the private standard organizations. These European Agencies & Government refer to the following groups: (EMEA) serves as the FDA counterpart. COSMEBIO & Ecocert (France), BDIH Regulations common to most countries 93 S.Kumar, “Comparative Innovative Business Strategies of Major Players in the Cosmetics Industry”, 92 L’Oreal Company Website. Emerald Group of Publishing, 2007. Page 57 of 116
(Germany), ICEA (Italy), Soil operation. For instance most companies Association (UK), Natural Organic are involved in recycling programs and Program (USA) and Japan Agricultural work with outside organizations for Standard (JAS). Although these outreach. For example, Estee Lauder standards have no legally binding participates in recycling programs and power, manufacturers of organic/natural endorses employee volunteerism. They products have a great incentive to are known for the ―Pink Ribbon Breast comply if they wish to increase their Cancer Awareness Campaign‖ (CITE). credibility with consumers. No company advertises animal testing. Avon was the first company to Industry Associations advertise, ―not tested on animals‖ back Industry associations are also common in 1989 (Arkonline, 2003). Estee Lauder among skincare and cosmetic states that it does not test any product manufacturers. These have proliferated on animals; only on human volunteers. across countries and regions with Natura in particular is very active in members ranging from major their CSR efforts in Brazil, promoting international cosmetics manufacturers the preservation of biodiversity in the to small family-run businesses Amazon, providing support services to operating in niche markets. Members local communities they source from and gather together to dialogue on the latest reducing carbon footprint by energy product trends, technological efficient production techniques. innovations, and consumer research findings. Examples include American 7. Recommendations Cosmetic Manufacturing Association,
Euro Institute of Skin Care etc. The recommendations we are making fit Corporate Social Responsibility into two categories: improving the Many manufacturers have established sustainability of the alpha-Bisabolol corporate policies, which involve value chain, and upgrading working with the environment and the smallholders (see log frame in Annex). local communities in their areas of In order to determine which actors had
Page 58 of 116 the potential to work on initiatives on 7 . 1 Smallholder either recommendation we used a U p g r a d i n g series of boxes and matrices to determine which stakeholders would be 7 . 1 . 1 Increase Farmers’ effective in implementing change in the Bargaining P o w e r respective areas (see Boxes 1 and 3). t h r o u g h Cooperative Formation and New We then compared their categorization M a r k e t L i n k a g e s in Box 3 as Primary, Secondary or
Tertiary with information in Box 1 A c t i o n gathered during research and interviews about initiatives they are This recommendation targets the currently engaged in or the potential to farmers who are part of the community- participate in future initiatives to based reforestation initiatives organized promote sustainability or upgrade by the Brazilian (IEF) & German smallholders. Information on the governments, and the Federal potential for stakeholders to undertake University of Lavras. The project, initiatives in either of the launched in 2002, was implemented by recommendation areas can be found in Amanhagua, a local non-governmental Boxes 4 and 5 (Stakeholder Analysis organization in Minas Gerais working on Boxes). Further analysis on the regional ecosystem preservation and motivational drivers which propel each the promotion of sustainable stakeholder can be found in Box 6 development practices to rural (Stakeholder Analysis Boxes). It should communities. As of 2009, Amanhagua be noted, however, that while we have had worked with 200 farmers from 6 identified the following stakeholders as cities in Minas to replant Candeia trees primary and secondary, the in degraded areas. stakeholders may not identify themselves as such. All the inputs were given to the farmers
with funding support from the project sponsors and Amanhagua and IEF
Page 59 of 116 provided technical training. The planting negotiating power of the farmers in their of Candeia trees is meant to provide an program. The farmers are at a alternative livelihood from rural disadvantage for the following reasons: communities in Minas who are used to the first is due to the information producing milk and cheese. Apart from asymmetry and lack of clear market the market potential of extracted price information on Candeia Oil and Candeia Oil and alpha-Bisabolol, the alpha-Bisabolol; second is that the Candeia timber can be sold or used by program participants are all the farmers themselves to create independent, solo farmers with no fences. In addition, 30 family-based collective organization in the group. nurseries were also established, Also, Amanhagua is an environmental producing Candeia saplings, which are organization and its core expertise is sold every 5 months, supplementing not in cooperative formation and incomes. management.
As mentioned in the value chain To help address these constraints, the analysis on the input suppliers, these following actions are recommended: reforestation efforts represent a future supply of Candeia Oil and alpha- Formation of Cooperatives: Candeia Bisabolol. Producers such as Citroleo Oil Farmers Association have already expressed interest in To help farmers capture a larger market partnering with Amanhagua and to share and a larger portion of the final purchase the oil supply when the sale price, they must be organized into Candeia trees mature 10 years since associations and cooperatives. A planting. The first plantation that was Candeia farmer‘s cooperative can help established in 2002 will be ready for catalyze rural economic growth and cutting by 2012. While Amanhagua serve as a vehicle for more equitable acknowledges this income generating community planning. As a cooperative, opportunity, the organization has farmers can mobilize capital, pool expressed hesitation in any knowledge, achieve economies of scale partnerships due to the current lack of and foster vertical integration. They can
Page 60 of 116 further upgrade in the value chain by to agribusinesses. enabling access to competitively priced inputs, research, telecommunications, Responsibility or finance, transportation. These Coordination shareholder-owned businesses provide an efficient vehicle for transferring The coordination will be led by an NGO technical and business knowledge as such as the Agricultural Cooperative well as for reducing policy constraints Development International and and protecting the environment. Volunteers in Overseas Cooperative Assistance (ACDI/VOCA). ACDI/VOCA Agribusiness Development & is an organization that works to promote Increase Market Access economic opportunities for An agribusiness development strategy cooperatives, enterprises and can be targeted to the entire communities through the innovative cooperative where they are provided application of sound business practice. with training to master crop-specific It is dedicated to poverty alleviation and technical skills, acquire market broad-based economic growth. They knowledge, approach farming as a work to form and develop cooperative business and have a group marketing by providing the following areas of campaign promoting their cause. In expertise: terms of market access, they can create - Technical Assistance: Has in- greater leverage in the marketplace and house technical staff and policy arena, attract business service specialized local consultants and providers and more efficiently link to volunteers providing a range of urban and export markets. services in almost any area of agribusiness specialization. Financial Support - Institutional Strengthening: Helps It would be more feasible to avail of producer groups to lower input financial support as a cooperative as costs, negotiate higher sales they can avail of group lending prices, access business services schemes or microfinance loans targeted and end markets
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- Farming as a Business Training: obtain this kind of support. Trains farmers to view agriculture as a profitable business and T i m e F r a m e adopt management techniques tailored to local needs. The project is on a long-term horizon, between 10-15 years given the length of time for Candeia trees to mature. The Actors involved short term objective would be to set up and Relationship a dialogue with the farmers in the
The key actors involved are the Amanhagua program, discuss the following: ACDI/VOCA, Amanhagua, advantages of cooperative development and Minas Gerais State Government. and secure a funding source for the ACDI/VOCA will lead the initiative and initiative. This will be followed by facilitate the multi-stakeholder dialogue agribusiness and cooperative training between governments (IEF), civil and multi-stakeholder dialogues. society (Amanhagua), the farmers and end market (eg. buyers). In terms of Monitoring funding, the project can seek funding Indicators from Minas Gerais Development Bank (MGDB) and the Inter-American - Number of farmer members in the Development Bank (IDB). An example cooperative of a specific funding source would be to - Number of new Candeia trees tap into the IDB ―Cluster Development planted every year Fund for Minas Gerais‖ that was - Number of new market linkages recently launched last 2007. The fund established as a cooperative provides financing activities to improve - Capacity building/trainings received the competitiveness of business as a cooperative clusters specific to Minas Gerais. Given - Multi-stakeholder dialogues the uniqueness of Candeia trees to established with cooperative Brazil, particularly in the state of Minas, representation the project may have strong grounds to
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Similar Case buyers. This entails reaching out to cosmetic companies who are already ACDI/VOCA already has a presence in well-positioned in the natural and Brazil, establishing a Cooperative organic segment of the cosmetic Development Program (CDP) in 1994, industry. working with 30 different agricultural cooperatives throughout the country. However it must first do so by Their past projects have included the establishing a strong clientele base in following: tropical fruit and vegetable Brazil. Companies including Vyvedas, processing and marketing; Surya Brasil and Natura all originate on cooperative/producer association claims of sustainability and natural business planning; palm heart products. Atina should promote its packaging and export; agroforestry and product to these Brazilian companies to reforestation training; Brazil nut post- establish its name within the local harvest handling and marketing; and industry. dairy cooperative product development and quality control. Once this is done, Atina will be more recognized within the global cosmetic industry—paving the way for 7 . 1 . 2 Niche to Niche Industry partnerships with Burt‘s Bees, Aveda, A l i g n m e n t Kiehl‘s and more. Atina‘s target of
smaller, niche companies will prove to A c t i o n be more successful than its current
strategy of targeting and supplying to Atina, a sustainable bisabolol producer large distributors who do not place as targets niche actors, like itself to much emphasis on sustainability as promote its product and increase its smaller niche companies care about. competitiveness through its offer of Additionally, Atina can further its aims certified natural alpha-Bisabolol. Atina at raising awareness on the issue by can improve its competitiveness within establishing ties with organizations like the bisabolol market by implementing The Organic Monitor, a research and precision targeting to recruit more Page 63 of 116 consulting company focused on better products from natural and organic providing information on organic origin to consumers. Thus this will products supply chains. solely be a private-to-private business alignment scheme, bringing together Through its Industry Watch section, The actors whose energies lie in the Organic Monitor publishes research sustainability sector of cosmetics. articles and investigative pieces on sustainable cosmetic ingredients. It also has launched an annual Sustainable Cosmetics Summit where T i m e F r a m e various actors assemble to discuss and observe key issues and industry trends. Short – term: Atina develops a It would be useful for Atina to establish marketing strategy but first focuses on a link with this organization to Brazilian sustainable actors like disseminate information on alpha- Vyvedas, Surya Brasil and Phytophilo Bisabolol. among others.
Responsibility or Medium – term: Once Atina establishes Coordination a strong Brazil base, it can focus its efforts on reaching actors in the US and Atina develops a marketing strategy to Europe. Here Atina can reach larger target small nice companies focusing on companies like Burt‘s Bees and Aveda organic and sustainable ingredients and become more influential in its including Burt‘s Bees, Kiehl‘s, and efforts to raise awareness on the more. sustainability issue concerning the Candeia tree and the wider problem of Actors involved deforestation in the Atlantic rainforest. and Relationship Long – term: With successful This will allow actors of similar mindsets implementation, Atina can become a to align their activities and provide powerful market player with more
Page 64 of 116 influence and weight than those at companies‘ need for CSR projects present. More companies will be more similar to those of Unilever with palm knowledgeable about the sustainability oil, and Aveda with it Green Ingredient of the Candeia tree and in turn will buy Policy. from certified sources. Besides the market failures in the Monitoring Candeia oil and alpha-Bisabolol I n d i c a t o r s industry, there is a problematic lack of awareness from consumers about the origin of the products they buy. This is - Amount of business partners Atina obtains. can be caused by apathy or asymmetrical information. If end - Supply and Demand for certified, sustainable natural alpha-Bisabolol consumers were informed about the increases chain behind their products they would probably make greener and more - Supply and Demand for regular, uncertified natural alpha-Bisabolol responsible decisions. It is desirable that end consumers have the capacity decreases. to trace back the set of inputs that
culminate in the goods purchased.
Raising consumer awareness hence 7 . 1 . 3 Raising Consumers’ would solve the problem of high A w a r e n e s s demand of uncertified alpha-Bisabolol.
If consumer demand were to be A c t i o n reoriented towards FSC certified alpha- Bisabolol the market would take a Launch a marketing strategy to increase different direction. consumers‘ awareness on the origin of the ingredients in the products they buy. This is an upstream action as it focuses The goal is to address: a) consumers‘ on end consumers and cosmetic current tendency to prefer or support companies. It addresses consumers in green products and b) cosmetic their desire to be responsible, and
Page 65 of 116 companies in their interest to have programmatic goals in the country. clean reputations through the They go from preserving natural implementation of CSR programs. ecosystems and promoting sustainable forest management, to ―improving social Responsibility or and economic inclusion through Coordination mechanisms such as Global Development Alliances, while fostering We suggest the implementation of this trade-led micro and small enterprise strategy is led by an alliance composed development‖. by the IEF, the potential Candeia Oil Farmers Associations (COFA), and USAID has a great interest in the USAID. deforestation of the Atlantic Forest 94 and works closely with NGOs in the As concluded from fieldwork, IEF is field like Instituto BioAtlântica (IBio), a willing to tackle the problem and it has civil society non-profit organization work already in that direction. The IEF whose goal is the conservation and has implemented several programs that reforestation of the Atlantic Forest and could be replicated and expanded. The its associated ecosystems95. This is an most important has been the opportunity or ‗open door‘ for potential Conservation and Recovery of the alliances with IEF and COPA and also a Atlantic Rainforest Program of 2007. As method in which USAID can execute its part of one if their promotion strategies budget. there are the alliances with the private sector. Actors involved In Brazil, USAID ―establishes and Relationship cooperative agreements and partners with local organizations aiding [Brazil] 94 United States Agency for International Development with projects in sectors such as USAID. “Public-private alliance restores Brazil’s Atlantic Forest on private land. Restoring a Vital environment, health, and economy.‖ Rainforest”. http://www.usaid.gov/stories/brazil/ss_br_forests.html This recommendation is compatible with Retrieved April 23, 2011 95 Instituto BioAtlântica. “IBio”. USAID‘s environmental and economic http://www.bioAtlântica.org.br/ibio.asp Retrieved April 23, 2011. Page 66 of 116
local media has shown interest in past The alliance IEF-Association-USAID occasions.96 would address the following actors: Internationally: Locally: a. ABIHPEC, the cosmetics and a. Organic Consumers Association toiletry association in Brazil. The (OCA). 97 They are an online and alliance needs to do a planned, grassroots non-profit that campaigns for informed, and persistent approach to health and sustainability. They deal with this business association. ABIHPEC different related topics like industrial has the capacity to summon large agriculture, corporate accountability, cosmetic companies together and Fair Trade, and environmental promote fields where its members can sustainability. They do this through implement their CSR projects. There is education and network building all an opportunity there given their interest around the world. in highlighting its members CSR initiatives. b. Media. With the help of the OCA, the international media can also be b. SOS Mata Atlântica, a Brazilian approached. There have been articles non-profit organization that works for in this sense.98 the protection of the Atlantic rainforest.
It is a civil society coalition that works to provide knowledge about the Atlantic T i m e F r a m e forest since 1986. Their technical knowledge and their aim to give This is a long-term recommendation. visibility to the issue are opportunities for this recommendation. 96 Ribero, A. (2000) “Rede clandestine devasta madeiras de Minas”. Tribuna de Lavras. 97 Organic Consumers Association (OCA) c. Media. The local media also http://www.organicconsumers.org/bodycare/index.cfm Retrieved April 23, 2011. needs to be addressed in order to give 98 Quenqua, D. (2010). “Well, is it organic or not?”. The New York Times online. visibility and range to this initiative. http://www.nytimes.com/2010/07/15/fashion/15skin.htm Field research demonstrated that the l?_r=2&scp=1&sq=whole%20foods%20organic%20cos metics&st=cse Retrieved April 1, 2011. Page 67 of 116
The process of making the alliance or sell products, internet banners, among signature of a Memorandum of others). Also, the number of articles Understanding with USAID is a long written on the topic and their visibility negotiation procedure. Also, designing would be ways to measure the success the consequent strategy to approach of the recommendation. the ABIHPEC and the companies willing to consider the proposal is also a Similar Case challenge. It involves: There are two successful cases that are worth highlighting from the private - Creating material, contents, specific bullet point and speeches around the sector perspective. Unilever had a palm idea that sustainability doesn‘t oil initiative and Aveda implemented a Green Ingredients Soil To exclude profit making. policy and BottleSM practice. - Contacting business associations Three years ago Unilever announced - Studying each companies CSR strategy in Brazil and locating them. that the palm oil they purchase for their products will all be certified by 2015. - Create one proposal per company. The trigger for such action was - Implementing the marketing campaign. Greenpeace‘s campaign to highlight the environmental consequences of the
global increase in demand for palm oil. Monitoring Not as aggressive, USAID, IEF and Indicators SOS can implement a similar strategy.
The objective is to give visibility to an A way to monitor this is how many issue and incentivize the private sector companies are actually adopting the to act accordingly. campaign. Also, on a case-by-case Unilever saw opportunity in the palm oil basis, evaluate to what extent they have environmental problematic. Already in committed to publicize and raise 2004, Unilever became one of the consumer awareness about the origin of founders of the global Roundtable on the ingredients (presence in stores, Sustainable Palm Oil (RSPO) that today brochures, training to employees who Page 68 of 116 has more than 300 members including the farm or harvesting co-op to ensure growers, processors, manufacturers, that they are grown and harvested in a retailers, banks, and NGOs. Altogether way that helps protect the environment they represent 40% of the global palm and establish fair pay for and respectful oil production. When talking about their treatment of indigenous harvesters or certification goals, Unilever states that local farmers.‖ 99 Aveda has they ―are ambitious targets and implemented these strategies Unilever‘s readiness to take a partnerting with local NGOs and leadership role in establishing secure, communities. Such case can be certified supply chains for palm oil is referenced by the IEF, SOS, and particularly significant.‖ USAID.
Other example is Aveda, a company In Brazil, for example, Aveda partnered that was born in 1978 as a with the Associação em Áreas de manufacturer of flower and plant-based Assentamento no Estado do Maranhão beauty products. Estée Lauder (ASSEMA) or the Association of Companies bought it in 1997. Aveda Settlement Areas in the State of calls Green Ingredients those ―sourced Maranhão in order to get babassu oil from organic, sustainable or renewable from the region. They financed a plant-based origins; represent processing facility so the local women ecological and cultural diversity by who traditionally extract the oil from the being sourced from different habitats all babassu nut would be more organized over the world; provide fair and had access to global markets. This compensation to suppliers; and do not project accomplished to support more negatively impact the ecosystems from than 1,500 families in that State and which they are source‖, among others. higher levels of competitiveness for the local producers. 100 This is certainly a As a complement to the Green
Ingredients, the company has Soil to 99 Aveda. Soil to BottleTM. http://www.aveda.com/aboutaveda/soil2bottle.tmpl BottleTM which ―allows plant-derived Retrieved April 29, 2011. 100 Aveda. Babassu from Brazil. ingredients to be directly traced back to http://www.aveda.com/aboutaveda/babassu.tmpl Retrieved April 29, 2011. Page 69 of 116 case that can be replicated in Minas We suggest the launch of regulatory Gerais with the local communities, the and environmental audits of the Alpha- local government, and cosmetic Bisabolol value chain under the companies interested in developing a spotlight of international environmental marketing strategy similar to that of media. Aveda‘s. There is some concern that illegal Unilever and Aveda show that it is harvesting, or harvesting of Candeia possible to convince companies to work trees without the proper legal with the local communities as far as documentation accompanying a they perceive an economic incentive in specific quantity of trees, is currently it. In both cases the participation of occurring within the Candeia-based organized local communities and the bisabolol value chain in Minas local knowledge of NGOs were Gerais. The regulatory auditing and determinants for the success of the investigative reporting would projects. confront this problem using two different strategies aimed at 7 . 2 Promote the changing the regulation as well as sustainability of the the attitude in the marketplace. Candeia Tree in the
a l p h a - Bisabolol and The audits would illuminate Candeia oil Supply problems and loopholes within the C h a i n regulatory framework and would
theoretically lead to improvements 7 . 2 . 1 Regulatory and within the legislation. The use of the Environmental Auditing media to report on the process of a n d R e p o r t i n g undertaking an audit and then publishing the results would help put
A c t i o n pressure on the more influential industrial players such as distributors and large end market
Page 70 of 116 buyers by shining a spotlight on the and the amount of acreage of trees issue of sustainable supply chain each company claims to have management. harvested and the amount they have been exporting without any Stakeholders such as Amanhagua, explanation as to other supply SOS Mata Atlantica, Natura, Atina, sources or production methods Ima Flora, Ecocert, Reserva da (synthetic/ chamomile), regulatory Biosfera da Mata Atlantica, World action should be taken to shore up Wildlife Fund identified in box 5a the loopholes in the current would undergo efforts to convince framework and punitive action the Ministerio Publico in Minas should be taken by the proper Gerais to examine the amount of authorities in Brazil. Ideally, these acreage each Candeia oil and audits will be performed on a regular Candeia-based bisabolol producer basis to promote transparency and has obtained permits for. The continual improvement within the Ministerio Publico, in coordination Alpha- Bisabolol value chain. with Amanhagua, SOS Mata Atlantica, Natura, Atina, Ima Flora, At the same time as the push to Ecocert, Reserva da Biosfera da initiate audits begins, however, Mata Atlantica, World Wildlife Fund environmental magazines as well as or any other stakeholders identified other organically and in box 5a which have decided to environmentally focused undergo efforts to initiate the audits stakeholders with forums and regular would then reconcile these numbers literary publications such as against the sales receipts of the OnEarth, Conservational producers using the mathematical International, Orion Magazine, E equations for converting acreage Magazine, Eco Magazine, or the into kilos of bisabolol. Organic Trade Organization101 could
If there are any discrepancies 101 A more comprehensive list of environmentally focused magazines can be found at: between the amount being produced http://www.ecobusinesslinks.com/environmental_magazi ne.htm as well as Page 71 of 116
undergo efforts to publish articles on the endeavors and results of the Investigative reporting can begin with stakeholders conducting the the efforts of the stakeholders regulatory auditing mentioned mentioned above trying to initiate the above. This would create awareness regulatory audit. Often times even the of the issues in Minas Gerais and threat of an audit can create skepticism Brazil and cause some of the more from the most socially responsible socially responsible buyers of buyers to the distributors themselves bisabolol such as Johnson and and they may push for internal Johnson to become skeptical of the transparency processes to be improved major distributors exporting bisabolol by themselves. and demand more transparency from them or switch to certified sources of Candeia-based bisabolol. Actors involved and Relationship Responsibility or C oordination The private sector, governmental and civil society stakeholders involved in the Efforts to start or raise awareness about regulatory audit must all work together the need for the regulatory audit can be in order to successful. Depending on led by Amanhagua, SOS Mata which stakeholder is initiating the drive Atlantica, Natura, Atina, Ima Flora, to conduct the regulatory audit the Ecocert, Reserva da Biosfera da Mata private sector may not necessarily be Atlantica, World Wildlife Fund identified needed to complete this in box 5a, but The audit cannot be recommendation. It is very likely that conducted without the full cooperation civil society organizations would partner of the Ministerio Publico in Minas with local governmental agencies to Gerais or a relevant governmental push for the regulatory audit as well as agency with the appropriate amount of promote the investigative reporting on authority. the process.
http://www.world-newspapers.com/environment.html Page 72 of 116
T i m e F r a m e Long-term: Issues addressed in the report are addressed and audits Short-term: Media contacted and begins continue on regular basis to ensure reporting on efforts to initiate audit improvements are made in regulation of the value chain. The magazines and organizations which would be doing the investigative After the results of the audit are reporting should be contacted first to published the necessary long-term ensure that the entire process is goals to ensure the sustainability of documented to put pressure for Candeia would be: develop regulation agencies to perform the regulatory to close the loopholes identified by the audit. Stakeholders initiating the push audit; improve transparency systems by to conduct the regulatory audit should creating an easy to view electronic then prepare a case listing the reasons version of the permits to make future for why the regulatory audit should be audits easier, and to make this conducted. information publically accessible; and to push for easier ways to identify which Medium-term: audits are undertaken sources of bisabolol are certified as and results are published. In the organic and sustainable by changing medium-term the stakeholders initiating the certification graphics to more clearly the regulatory audit should contact the differentiate the meaning as well as to necessary governmental agencies, such promote customer knowledge of the as the Ministerio Publico, and push for different types of certifications. In order the audit to be conducted. At the same to oversee improvements in the system time investigative reporting can be are made audits should occur on a documenting and publishing the efforts regular basis. to perform the regulatory audit. While transitioning into the long-term actions Monitoring of this recommendation the regulatory I n d i c a t o r s audit should be performed.
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- Percent of acreage audited out of Quality Management, DOI total acreage given in permits 10.1002/tqem, Spring 2008 - Number of published articles on the Urban Land Use and Regulatory Audit matter Study, from the Centre for Good - Degree of concern of illegal Candeia Governance, Road No: 25, Jubilee Hills, harvesting (as measured by a Hyderabad -500033, 2003 quantified survey encompassing Environmental Auditing: The Case of private sector, government agencies, Ecuadorian Industry, Carlos Paez civil society and the public) UNEP EIA Training Resource Manual ® - Number of producers successfully Case studies from developing countries, completing organic or sustainable Case Study 21. certification processes
- Number of Distributors successfully 7 . 2 . 2 Financial Incentives completing supply chain Program for Compli a n c e sustainability certification processes by the IEF a l o n g s i d e If concerns were exposed through the Increased Penalties for regulatory audit: Illegal Deforestation A c t i v i t i e s - Number of improvements in the regulatory system leading to the closure of regulatory gaps. A c t i o n - Profits of distributors and companies identified as illegally harvesting IEF implements new initiatives to Candeia and producing bisabolol promote compliance through financial incentives and tougher penalization for non-compliant actors. Similar Case s
Regulation and oversight by the IEF is Environmental Auditing in India: A Case crucial is maintaining acceptable levels Study from the Wood Pulp Industry, by of logging in the Mata Atlantica. As a N. S. Raman, Mamta Makode, and key stakeholder, the IEF can implement Sukumar Devotta , Environmental new initiatives with a new approach to Page 74 of 116 companies working in the rainforest. We they are not paid in time, will increase suggest a two-layered approach to the until a maximum period set by the IEF IEF‘s activities. The first layer whereby the IEF will suspend that composes of compliance through company‘s licenses for logging. voluntary participation of companies with the appeal of financial incentives. Responsibility or These include tax breaks, lower interest Coordination rates and other support like providing forestry technical assistance programs The IEF will implement this action with can attract companies to comply with assistance from the BDMG (Banco de local regulations and at the same time Disenvolvimiento de Minas Gerais), The help companies financially with Development Bank of Minas Gerais. programs that can cut their costs and/or This partnership will allow for the Bank bring in extra capital. Promoting to provide incentives to companies who compliance will also encourage observe local regulations concerning companies to entrust more faith in the logging of the candeia tree. IEF and establish critical partnerships among private and public actors. Actors involved The second layer to this and Relationship recommendation entails implementation of larger fines for violation of local The IEF has an opportunity to establish regulation and improved collection of good relations with the companies those fines. The IEF can further ensure working on the production of natural observance by implementing this alpha-Bisabolol. It also established second layer, for those who do not linkages for the Minas Gerais participate in the financial incentives Development Bank—providing them program for compliant actors. This with more investment opportunities includes strict and large fines for through these companies. violators, which will be imposed upon random and frequent site visits by the T i m e F r a m e IEF. The fines will be collected and if
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Short-term: Establish linkages with Long-term: With successful BDMG and propose the project to them. implementation of both initiatives, fines Contact companies and set up meetings should decrease as compliance rates to discuss this project with them. will be much higher—with strong Additionally, the IEF should strategize relations between the IEF, private an improved management plan for producers and the Development Bank, handling of fines and violations. BDMG.
Medium-term: Once the project is Monitoring publicized, companies will have the I n d i c a t o r s opportunity to open their offices to IEF authorities for auditing purposes where - Number of business loans handed the IEF will determine whether the out by BDMG to compliant amount of candeia oil sold corresponds companies to the amount of trees that the company - Amount of taxes paid to the local obtained official licenses for. Once a government by compliant companies company is determined to have - Rate of illegal deforestation. observed these regulations, it will in - Number of fines given out and turn be entitled to financial incentives collection rate offered by the Development Bank.
At the same time, the IEF will Similar Case implement tougher standards on companies who do not participate in the Hirakuri, Sofia. ―Sustainable Forestry financial rewards program. This will be Management and Law Enforcement: A a built-in layer of added protection to Comparison between Brazil and deter companies from continuing to log Finland.‖ Tacconi, Luca, ed. illegal candeia trees illegally. Fines will be logging: law enforcement, livelihoods larger and the IEF will take a stricter approach to collecting those fines. and the timber trade.
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8. C o n c l u s i o n further deforestation of the Candeia tree in the Atlantic rainforest.
The case of natural alpha-Bisabolol and In turn, we have four main the sustainability of the candeia tree recommendations to combat the within the largely depleted Mata difficulties surrounding the value chain Atlantica raises many concerns not only of natural alpha-Bisabolol. Two of our for key stakeholders but for the issue of proposals focus on improving conditions deforestation in general and its for the upgrading of smallholder devastating implications. With 2011 producers while the other two being the UN‘s International Year of the concentrate on tackling deforestation. Forest, we believe this issue resonates key challenges that must be addressed We believe that implementation of these before the problem intensifies. recommendations will improve the
inequalities confronted within the value Through our seven months of desk chain and enhance the sustainability of research, interviews and two separate the candeia tree and its naturally field visits we studied and analyzed the derived product, alpha-Bisabolol. value chain of natural alpha-Bisabolol.
Following the various actors within the This can only occur through cooperation value chain, we analyzed their roles, among civil society, local government their dynamics with other value chain and private sector actors who can actors, and the influence of external implement these changes to ensure that parties. these problems diminish—producing
results for local communities, global Our findings came up with the consumers and most importantly, the conclusion that minimal oversight and oligopolistic control by key stakeholders depleting rainforest. within the market constrain smallholders by setting lower prices and places pressure on the environment by fueling
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9. Team Organization Budget Officer: Nancy Khweiss Nancy Khweiss graduated from
Fordham University with a Bachelors in Project Manager and Management Political Science and Middle East Arrangements: Andrew Clark Studies. She then went to work at Andrew Clark began working at Pacific MADRE, an international women's Injection Molding Corp in 2002and human rights organization based in New worked his way up to Systems/Project York as Development Associate and Manager by the time he left the Public Education Manager. company in 2009. During his time at
Pacific Andrew studied at Western She then managed civic education Washington University, and graduated programs for the Palestinian non- in 2009 with a BA in Finance and governmental organization, Civic Forum Economics. Institute based in East Jerusalem.
Additionally, she has worked for He spent last summer in Nairobi UNIFEM's Fund for Gender Equality on working as a Volunteer Consultant for database management and program EcoSandals, a small social enterprise assistance with grantees. She is based in the slums which produces currently studying Economic and environmentally friendly sandals, Political Development, with a developing their information concentration in the Middle East at management systems and develop ping SIPA. their capacity as a company. He is currently a fellow at Community Lab working as an Implementation Client Contact: Lina Salazar Management Analyst Team Lead on a Lina is a political scientist (2006) and a project, which will create an online tool lawyer (2007) from the University of los for Millennium Villages. He is Andes in Bogotá, Colombia. She also concentrating in Economic and Political did politics and social sciences studies Development and specializing in at the University of Notre Dame, Management Analysis. Indiana. Before starting the MPA, Lina
Page 78 of 116 was the Director of Government and specializing in Management Relations at the Colombian American Analysis. Chamber of Commerce in Bogota. Among her main functions was the Corporate Social Responsibility strategy of the Chamber, its editorial projects, and consular and government relations. Lina did her first year of MPA at Sciences Po. Before going to SIPA, Columbia, she interned for 3 months at the Organization for Economic Cooperation and Development (OECD).
Faculty Contact: Leona Verdadero Leona has worked in the private sector for four years, beginning her career in business development for Shell Petroleum Company in the Philippines. She then worked as a business analyst for Procter & Gamble Asia, living in Korea, Japan, and Australia. She is currently working for UNDP's Private Sector Division on promoting inclusive business initiatives. She spent the last summer working for Endeavor New York on an emerging market entrepreneurship study and in Syria for a brief project with a microfinance NGO. At SIPA, she is concentrating in Economic and Political Development
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1 0 . R e f e r e n c e s
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- ―Panorama del Sector 2010-2011. Higiene personal, perfumeria y cosmeticos‖. Association of the Industry of Personal Hygiene, Fragrances and Cosmetics ABIHPEC. http://www.abihpec.org.br/conteudo/panorama_do_setor_2010- 2011-14042011.pdf Retrieved April 14, 2011.
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- ―Brazil 2010 Amazon deforestation data shows lowest rate ever recorded‖. MundoGEO http://www.mundogeo.com.br/noticias- diarias.php?id_noticia=18845&lang_id=3, Retrieved December 10th, 2010.
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- Instituto Estadual de Florestas. http://www.ief.mg.gov.br/ Retrieved December 2, 2010
- Intellectual Network for the South. Brazil Country Profile. http://www.insouth.org/index.php?option=com_content&view=article&id=70:bra zil&catid=31:country-windows&Itemid=86 Retrieved November 22, 2010.
- International Trade Centre. Trade Competitiveness Map. Trade Performance HS : Exports and imports of Brazil - 33 Essential oils, perfumes, cosmetics, toileteries (2009, in USD millions). http://legacy.intracen.org/appli1/TradeCom/TP_TP_CI_HS4.aspx?IN=33&RP= 076&YR=2009&IL=33%20%20Essential%20oils,%20perfumes,%20cosmetics, %20toileteries&TY=T Retrieved April 14, 2011.
- GFA Consulting Group GmbH in collaboration with IP Institut fur Projektplanung GmbH (2006). Brasil Projecto Protecao da Mata Atlântica em Minas Gerais, PROGRAMA MG. Analise de Mercado e da Cadeia Productiva do Oleo de Candeia e do Alfaalpha-Bisabolol. For the Secretaria de Estado do Meio Ambiente e Desenvolvimento Sustentavel, the Instituto Estado de Florestas. KfW Entwicklungsbank, Brasilia and KfW Entwicklungsbank, Frankfurt. June.
- Lopes, C; Brito, J; Soares, J; Vidal, E; Marin, L (2009). ―Influence of Altitude, Age and Diameter on Yield and alpha-Bisabolol Content Of Candeia Trees (Eremanthus Erythropappus)‖. Cerne, Vol. 15, No. 3, July-September, 2009.
- Montero, A (2001). ―Making and Remaking Good Government in Brazil: Subnational Industrial Policy in Minas Gerais,‖ Latin American Politics and Society, Vol. 43, No. 2, pp. 49-80, 57. Published by: Distributed by Blackwell Publishing on behalf of the Center for Latin American Studies at the University
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of Miami, Stable URL: http://www.jstor.org/stable/3176971
- Magalhaes, A., Horta, A. (2011). Presentation of the Sistema Estadual de Meio Ambiente, Minas Gerais. SISEMA. Done during the field trip in March 2011.
- National Health Surveillance Agency. http://www.anvisa.gov.br/eng/index.htm Retrieved November 29, 2010.
- Natura. Company History Index. Reference For Business. http://www.referenceforbusiness.com/history2/65/Natura-Cosm-ticos-S-A.html Retrieved November 29, 2010.
- ―News on Worldwide Cosmetics Regulations - Focus Brazil‖. SpecialChem. July 21 2010. http://www.specialchem4cosmetics.com/services/editorials.aspx?id=5431 Retrieved November 29, 2010
- New Ventures Brazil. http://new-ventures.org.br/ Retrieved December 16, 2010.
- Camolesi J.F. (2004) "Management system for native Candeia forest (Eremanthus erythropappus (DC) MacLeish) - the option for selective cutting.‖ Cerne, Vol. 10, No. 2, pp. 257-273.
- Prance, L. ―Worldwide Manufacturers Harness Powers of alpha-Bisabolol‖. Cosmetics Design-Europe. June 7, 2007.
- Pérez J.F.M, Scolforo J.R.S., de Oliveira A.D., de Mello J.M., Borges L.F.R., Camolesi J.F. (2004) "Management system for native Candeia forest (Eremanthus erythropappus (DC) MacLeish) - the option for selective cutting.‖ Cerne, Vol. 10, No. 2
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- Proctor, K (1984). "Gem Pegmatites of Minas Gerais, Brazil: Exploration, Occurence and Aquamarine Deposits". Gems and Gemology, pp. 78-100.
- RNCOS. Industry Research Solutions (2008). Cosmetics and Personal Care Market in Brazil. http://www.rncos.com/Report/IM595_fig.htm Retrieved November 21st, 2010.
- Ribero, M.C., Metzger, J.P., Camargo, A., Ponzoni, F., Makiko, M. (2009) ―The Brazilian Atlantic Forest: How much is left, and how is the remaining forest distributed? Implications for conservation‖. Biological Conservation, No. 142, p. 1141-1153.
- Routledge, Taylor & Francis Group. ―Brazil. Location, Climate, Language, Religion, Flag, Capital‖. http://www.europaworld.com/entry/br.is.2 Retrieved December 14, 2010.
- Silva, I;, Oliveira, A., Soares, J.R., Melho, J.M., Weimar, F., Camolesi, J.F.. (2009). ―Market Chain Analysis of Candeia Timber‖. CERNE, Vol. 15, No. 3, July-September, pp. 257-264. Universidad Federal de Lavras, Brazil.
- Symrise. Annual Report 2008. The Nature of our Business – Stable Growth. http://www.symrise.com/fileadmin/user_upload/pdf/Symrise_AR08.pdf Retrieved December 16, 2010.
- Ministerio do Turismo. Brasil November 2010 http://www.braziltour.com/site/en/destinos_roteiros/lista.php?id_estado=338&r egioes=206&cidades=0
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- United States Environmental Protection Agency. Green Chemistry. http://www.epa.gov/gcc/ Retrieved April 22, 2011.
- USAID. Microlinks Value Chain Development Wiki. http://apps.develebridge.net/amap/index.php/Value_Chain_Development
- World Bank. "Moving Toward Competitiveness: A Value Chain Approach." August 2007.
Database Websites
- The World Bank. ―Brazil‖. http://data.worldbank.org/country/brazil Retrieved December 16, 2010 - World DataBank. http://databank.worldbank.org/ddp/home.do?Step=1&id=4 Retrieved December 16, 2010
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1 1 . A n n e x
Exhibit 1. Logic Framework
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Exhibit 2. Objectives and Activities
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Exhibit 3. World Bank Extended Value Chain
Source: World Bank. "Moving Toward Competitiveness: A Value Chain Approach" August 2007
Exhibit 4. USAID Value Chain Analysis Process
Source: USAID. Microlinks Value Chain Development Wiki
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Exhibit 5. Initial Basic Mapping
Source: PPT Presentation Atina Ativos Naturais S.A.
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Exhibit 6. Adjusted Industry Map
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Exhibit 7. USAID Value Chain Development
Source: USAID. Microlinks Value Chain Development Wiki.
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Exhibit 8. USAID Analysis Table
Source: USAID. Microlinks Value Chain Development Wiki.
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12. Stakeholder Analysis Boxes and Tables
Box 1: List of Stakeholders
Box 1 shows a list of stakeholders we identified in the bisabolol value chain and actors which may be willing to endeavor to either ensure the long- term sustainability of Candeia or to increase the competitiveness of smallholders in the bisabolol value chain. Perceived importance refers to the significance of the stakeholder within the bisabolol chain (1 being “not essential for the value chain” and 3 being “necessary for the functionality of the value chain”) whereas influence refers to the stakeholders’ ability to control change in the value chain (1 being “low capacity to influence change” and 3 being “high capacity to influence change”). The perceived potential for collaboration boxes refer to the likelihood of the stakeholder to actively pursue activities which will either ensure the long-term sustainability of Candeia or to increase the competitiveness of smallholders in the bisabolol value chain (1 being “not likely”, 2 being “possibility of being convinced”, and 3 being “already engaged in activities of this nature”). Civil Society Organizations and Certification bodies will be referred to one classification called “CS/C”.
Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function (Profits, Environment, Importance Influence Potential for Potential for Promoting Organic (1-3) (1-3) Collaboration Collaboration Products, Social (Sustainability) (Smallholders) Accountability, (1-3) (1-3) Corporate Collaboration, Facilitating Networks, CSR, Standardization, and/or Sustainability)
CS/C- Source of Environment (Anti- 1 1 2 2 Consumer Supply Chain plantations), Social CEPEDES Awareness Brazil Accountability
CS/C- Source of Promoting organic 2 2 3 1 Consumer Supply Chain products, profit. COSMOS-Standard Awareness Global
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
CS/C- Production Organic Products, 3 2 3 1 Consumer Legislative Policy Ecocert Awareness Brazil
CS/C- Production Organic Products 3 3 2 1 Consumer Ecocert Awareness France
CS/C- FSC Source of Environment 2 2 3 1 Ima Flora Certification Brazil Supply Chain
Instituto Akatu End Market Sustainability 1 2 2 2 (Akatu Institute CS/C- for Conscious Consumer Sao Paulo, Consumption) Awareness Brazil
CS/C- End market Organic Products 1 1 2 1 The Organic Consumer United Center Awareness States
Reserva da CS/C- Source of Environment 3 3 2 3 Biosfera da Mata Environment Sao Paulo, supply chain Atlântica, RBMA (Air Quality) Brazil
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Source of Environment, 1 2 3 3 CS/C- Minas supply chain Sustainability, Environment Gerais, Economic Amanhagua (Forestry) Brazil Development
Atlantic Forest Source of Environment 2 2 3 3 Restoration Pact supply chain (Pacto Pela CS/C- Restauracao da Environment Sao Paulo, Mata Atlantica) (Forestry) Brazil
CS/C- Source of Environment (pro 1 1 2 1 Brazilian Society of Environment Sao Paulo, supply chain plantation), Silviculture (SBS) (Forestry) Brazil Sustainability
Source of Environment, 1 1 2 2 CS/C- supply chain, Sustainability, Conservation Environment End market Corporate International (CI) (Forestry) USA Collaboration
Source of Environment, 1 1 2 2 Conservation CS/C- Minas supply chain, Sustainability, International, Environment Gerais, End market Corporate Brazil Office (Forestry) Brasil Collaboration
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Forestry CS/C- Source of Environment 2 2 2 1 Stewardship Environment supply chain Council FSC (Forestry) Brazil
CS/C- Source of Corporate 3 3 3 2 Fundacao SOS Environment Sao Paulo, supply chain, collaboration, Mata Atlantica (Forestry) Brazil End market Environment
CS/C- Source of Environment 1 1 2 2 Greenpeace Environment supply chain International (Forestry) Global
CS/C- Production, Organic products, 1 1 2 1 Environment End Market legislative policy IFOAM/GALCI (Forestry) Argentina
International CS/C- Source of Environment 2 2 3 3 Tropical Timber Environment Yokohama, supply chain, Organization (Forestry) Japan distribution
CS/C- Source of Environment, 1 1 2 2 Environment São Paulo , supply chain Corporate Rainforest Alliance (Forestry) Brazil collaboration
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
The Forests Source of Environment, 1 2 3 3 Dialogue (Dialogo CS/C- supply chain Corporate Florestal) at Yale Environment collaboration University (Forestry) USA
CS/C- Rio de Source of Environment, 1 1 3 2 The Nature Environment Janeiro, supply chain Corporate Conservatory (Forestry) Brazil collaboration
CS/C- Source of Environment 2 1 1 3 World Rainforest Environment supply chain Movement (Forestry) Uruguay
World Wildlife Source of Environment, 2 2 3 3 Fund (WWF) supply chain Corporate CS/C- collaboration, Global Forest & Environment Facilitating networks Trade Network (Forestry) USA
World Business Whole industry Sustainability, Social 1 1 3 2 Accountability Council for Sustainable Development CS/C- Ethics USA
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Whole Industry Facilitating networks 1 1 1 1 COLIPA European Cosmetics CS/C- Industry Associations Organizations EU
Production Environment, 1 1 2 2 Sustainability, Environmental CS/C- Industry Corporate Entrepreneurs Organizations New York Collaboration
Production Corporate 1 2 1 1 International collaboration Standardization CS/C- Industry Organization (ISO) Organization Switzerland
End Market Organic products, 1 2 3 3 promotion of Facilitating networks, Organic Trade CS/C- Industry North organic Social Accountability Association Organizations America consumption
End Market/ Sustainability, Organic 1 1 3 3 Production/ products, Facilitating CS/C- Industry networks, Social Organics Brazil Organizations Brazil Accountability
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
End Market/ Corporate 1 2 3 3 production Collaboration, Social Accountability, Union for Ethical CS/C- Industry Switzerland/ Environment, BioTrade (UEBT) Organizations Sao Paulo Sustainability
Building and Source of Facilitating Networks 1 1 3 2 Wood Workers' supply chain, International CS/C- Labor Sao Paulo, End Market (BWI) Rights Brazil
Movimento Dos Source of Social Accountability 2 3 3 1 Trabalhadores supply chain, Rurais Sem Terra CS/C- Labor Production (MST) Rights Brazil
Social Production Social Accountability 2 1 1 2 Accountability Accreditation CS/C- Labor Services Rights New York
Social Production Social Accountability 2 2 2 2 Accountability CS/C- Labor International Rights New York
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Associação Business End market Facilitating Networks 3 1 2 1 Brasileira da association Indústria de Higiene Pessoal, Perfumaria e Cosméticos (ABIHPEC) Brazil
Comité Français Government End market. Standardization 3 1 1 1 d'Accréditation (COFRAC) France
Brazilian Government Source of National 3 1 2 1 Institute of supply chain. environmental policy Environment and enforcement. Renewable Natural Resources (IBAMA) Brazil
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Forestry Institute Government Source of Environment, 3 3 3 3 of the State of supply chain Sustainability Minas Gerais (IEF) Brazil
Government End market Development, 3 3 1 1 implementation, and administration of national production, USDA National handling, and Organic Program US labeling standards.
Industry Production Profits, Sustainability, 2 1 3 2 Environment, Organic Atina Brazil Products
Industry Production Profits, Environmental 2 1 2 2 Atlantica Brazil Sustainability
Industry End Market Profits, Organic 3 2 3 3 Aveda** Products
Industry End Market Profits, Environmental 3 3 3 3 Avon* New York Sustainability
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
BASF Industry Switzerland Distribution Profits 3 3 2 1
Biolnter Industry Brazil Distribution Profits 2 2 2 1
Biospectrum Industry Germany Distribution Profits 2 2 2 1
Industry End Market Profits, Organic 3 3 3 3 Products, Environmental Burts Bees** USA Sustainability
Citroflora*** Industry Brazil Production Profits 3 3 3 2
CitroMinas*** Industry Brazil Production Profits 3 3 3 2
Citrosul*** Industry Brazil Production Profits 3 3 3 2
Estee Lauder Industry Internation End Market Profits, CSR 3 3 3 3 Companies* al
Johnson and Industry End Market Profits, CSR 3 3 3 3 Johnson* Brazil
Industry End Market Profits, CSR, Organic 3 2 3 3 Kiehls* USA Products
L'oreal* Industry France End Market Profits, CSR 3 3 3 3
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Mary Kay* Industry End Market Profits 3 3 2 2
Multiquim Industry Brazil End Market
NARS Cosmetics** Industry End Market Profits, CSR 3 3 2 2
Industry Sao Paulo, End Market Profits, CSR, Organic 3 2 3 3 Natura Brazil Products
Origins Industry End Market Profits, CSR, Organic 3 3 3 3 (Cosmetics)** Products
Procter & Industry End Market Profits, CSR, Corporate 3 3 3 3 Gamble* USA Collaboration
Revlon* Industry USA End Market Profits, CSR 3 3 3 3
Symrise Industry Brazil Distribution Profits, CSR 3 3 3 3
Industry Distribution Profits, CSR, Corporate 3 3 3 3 Symrise Germany Collaboration
Symrise Industry New York Distribution Profits, CSR 3 3 3 3
Industry Source of Profit 3 1 2 3 Landowners Brazil Supply Chain
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Industry Source of Profit 2 1 1 3 Loggers Brazil Supply Chain
UHE Company Industry USA Distribution Profits 3 2 2 1
*End Market: Industry End Market Profits, CSR, Corporate 3 3 3 3 Cosmetic Collaboration Conglomerates Global
**End Market: Industry End market Profits, CSR, Corporate 3 2 3 3 Niche Cosmetic Collaboration Firms Global
***Citroleo Industry Brazil Production Profits 3 2 3 2
United States Government Source of CSR, Environmental 2 2 3 3 Agency for Supply Chain management in Brazil International Development USAID Brazil
CS/C- Source of Conservation and 2 1 3 3 Instituto Environment Supply Chain restoration of the BioAtlântica (iBio) (Forestry) Brazil Atlantic Rainforest
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
CS/C- Source of Consumer awareness. 2 2 2 2 Consumer Supply Symmetrical Organic Consumer Awareness United Chain/End information. Association (OCA) States Market
Government Source of Environment, 1 1 3 1 Supply Chain, Sustainability, Social Production, Accountability Ministerio Publico Brazil Distribution
Inter-American Government Whole industry Environment, 2 2 3 3 Development Sustainability, Bank Regional development projects
Agricultural Civil Society Whole industry Environment, 1 1 3 3 Cooperative Sustainability, social Development accountability, International and Development, Volunteers in facilitating networks Overseas Cooperative Assistance (ACDI/VOCA) Global
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Stakeholder Stakeholder Location Area of Focus Motivational Drivers Perceived Perceived Perceived Perceived Function Importance Influence Potential for Potential for (1-3) (1-3) Collaboration Collaboration (Sustainability) (Smallholders) (1-3) (1-3)
Private Whole Industry Environment, 1 2 3 3 Research sustainability Organic Monitor Company Global
Banco de Bank Development, 1 3 3 3 Disenvolvimento Sustainability, de Minas Gerais Local Competitiveness
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Box 2: Importance/ Influence Matrix
Box 2 compares the importance of each stakeholder listed in box 1 against their respective influence on the market. The different shading in the box categorizes the stakeholders into three categories (see box 3), with the dark shade being primary, the lighter shade being secondary, and no shading being tertiary.
1 - High Imp/ High Infl 2 – Med. Imp/ High Inf 3 - Low Imp/ High Inf
Symrise (Brazil) Movimento Dos Banco de Disenvolvimento de Minas Gerais Symrise (Germany) Trabalhadores Rurais Sem Symrise (New York) Terra IEF Ecocert (France) Reserva da Biosfera da Mata Atlântica, RBMA Fundacao SOS Mata Atlantica BASF *End Market: Cosmetic Conglomerates Forestry Institute of the State of Minas Gerais (IEF) USDA National Organic Program 4 – High Imp/ Med. Infl 5 – Med Imp/ Med. Inf 6 – Low Imp/ Med. Infl
Ecocert (Brazil) Pacto Pela Restauracao da Instituto Akatu UHE Mata Atlantica The Forests Dialogue **End Market: Niche Cosmetic International Tropical Amanhagua Firms Timber Organization Organic Monitor ***Citroleo World Wildlife Fund Natura (WWF) Biolnter Biospectrum COSMOS-Standard United States Agency for International Development USAID Organic Consumer Association (OCA) Inter-American Development Bank 7 – High Imp/ Low Inf 8 – Med. Imp/ Low Inf 9 – Low Imp/ Low Inf
Associação Brasileira da Indústria World Rainforest CEPEDES de Higiene Pessoal, Perfumaria e Movement Brazilian Society of Silviculture Cosméticos (ABIHPEC) Atina Conservation International Comité français d'accréditation Atlantica Conservation International (Brazil) (COFRAC) Loggers Greenpeace International Brazilian Institute of Environment Instituto BioAtlântica IFOAM/GALCI and Renewable Natural Resources (iBio) Rainforest Alliance (IBAMA) The Nature Conservatory Landowners Building and Wood Workers' International World Business Council for Sustainable Development COLIPA European Cosmetics Associations Ministerio Publico Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance (ACDI/VOCA)
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Box 3: Stakeholder Categorization
Box 3 is the categorized output of box 2.
Primary Stakeholders Secondary Stakeholders Tertiary Stakeholders
Symrise (Brazil) Organic Trade Association Social Accountability Symrise (Germany) Ima Flora Accreditation Services Symrise (New York) FSC (Brazil) The Organic Center IEF Social Accountability Environmental Entrepreneurs Ecocert (France) International Organics Brazil Ecocert (Brazil) ISO Certifications CEPEDES Reserva da Biosfera da Mata (Switzerland) Brazilian Society of Atlântica, RBMA Union for Ethical BioTrade Silviculture Fundacao SOS Mata Atlantica Instituto Akatu Conservation International Movimento Dos Trabalhadores Pacto Pela Restauracao da Conservation International Rurais Sem Terra Mata Atlantica (Brazil) BASF International Tropical Timber Greenpeace International Natura Organization IFOAM/GALCI UHE The Forests Dialogue Rainforest Alliance *End Market: Cosmetic World Wildlife Fund (WWF) The Nature Conservatory Conglomerates Biolnter Building and Wood Workers' **End Market: Niche Cosmetic Biospectrum International Firms COSMOS-Standard World Business Council for ***Citroleo Amanhagua Sustainable Development IEF USAID Atina USDA National Organic Organic Consumer Atlantica Program Association (OCA) ABIHPEC Banco de Disenvolvimento Inter-American COFRAC de Minas Gerais Development Bank IBAMA Organic Monitor COLIPA European Cosmetics Associations Landowners Loggers Instituto BioAtlântica (iBio) Ministerio Publico (ACDI/VOCA)
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Box 4a: Categorization/ Potential for Collaboration Matrix - Sustainability of the Candeia Tree
Box 4a compares the categorization of the stakeholders (see box 3) with their respective potential to participate in activities leading to the long term sustainability of Candeia. (Same shading standards applies as in box 2)
1 – Primary/ High Potential 2 - Secondary/ High Potential 3 - Tertiary/ High Potential
Symrise (Brazil) Organic Trade Association Organics Brazil Symrise (Germany) Ima Flora The Nature Conservatory Symrise (New York) Union for Ethical BioTrade Building and Wood Workers' IEF Pacto Pela Restauracao da International Ecocert (Brazil) Mata Atlantica World Business Council for Fundacao SOS Mata Atlantica International Tropical Timber Sustainable Development Movimento Dos Trabalhadores Organization Atina Rurais Sem Terra The Forests Dialogue Instituto BioAtlântica (iBio) Natura World Wildlife Fund (WWF) Ministerio Publico *End Market: Cosmetic COSMOS-Standard (ACDI/VOCA) Conglomerates Amanhagua Organic Monitor **End Market: Niche Cosmetic USAID Firms Inter-American ***Citroleo Development Bank IEF Banco de Disenvolvimento de Minas Gerais 3 – Primary / Med. Potential 5 – Secondary / Med. Potential 6 – Tertiary / Med. Potential
Ecocert (France) FSC (Brazil) Environmental Entrepreneurs Reserva da Biosfera da Mata Social Accountability CEPEDES Atlântica, RBMA International Brazilian Society of Silviculture BASF Instituto Akatu Conservation International UHE Biolnter Conservation International Biospectrum (Brazil) Organic Consumer Greenpeace International Association (OCA) IFOAM/GALCI Rainforest Alliance Atlantica ABIHPEC IBAMA Landowners
7 – Primary / Low Potential 8 – Secondary / Low Potential 9 - Tertiary/ Low Potential
USDA National Organic Program ISO Switzerland The Organic Center Social Accountability Accreditation Services COFRAC COLIPA European Cosmetics Associations Loggers
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Box 5a: Stakeholders Representing Potential Partnerships – Sustainability of the Candeia Tree
Box 5a is the categorized output of box 4a.
Primary Stakeholders Secondary Stakeholders Tertiary Stakeholders
Symrise (Brazil) Organics Brazil ISO Switzerland Symrise (Germany) Environmental Entrepreneurs The Organic Center Symrise (New York) CEPEDES Social Accountability IEF Brazilian Society of Silviculture Accreditation Services Organic Trade Association Conservation International COFRAC Ecocert (Brazil) Conservation International USDA National Organic Ecocert (France) (Brazil) Program Ima Flora Greenpeace International COLIPA European Union for Ethical BiOTrade IFOAM/GALCI Cosmetics Associations FSC (Brazil) Rainforest Alliance Loggers Social Accountability The Nature Conservatory International Building and Wood Workers' Instituto Akatu International Reserva da Biosfera da Mata World Business Council for Atlântica, RBMA Sustainable Development Pacto Pela Restauracao da Mata Atina Atlantica Atlantica Fundacao SOS Mata Atlantica ABIHPEC International Tropical Timber IBAMA Organization Landowners The Forests Dialogue Instituto BioAtlântica (iBio) World Wildlife Fund (WWF) Ministerio Publico Movimento Dos Trabalhadores (ACDI/VOCA) Rurais Sem Terra Organic Monitor BASF Biolnter Biospectrum Natura UHE *End Market: Cosmetic **End Market: Niche Cosmetic Firms Conglomerates ***Citroleo COSMOS-Standard Amanhagua IEF USAID Organic Consumer Association (OCA) Inter-American Development Bank Banco de Disenvolvimento de Minas Gerais
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Box 4b: Categorization/ Potential for Collaboration Matrix - Smallholder Upgrading
Box 4b compares the categorization of the stakeholders (see box 3) with their respective potential to participate in activities leading to the competitiveness of smallholders in the bisabolol value chain. (Same shading standards applies as in box 2)
1 – Primary/ High Potential 2 - Secondary/ High Potential 3 - Tertiary/ High Potential
Reserva da Biosfera da Mata Organic Trade Association Organics Brazil Atlântica, RBMA Union for Ethical BioTrade Landowners Natura Pacto Pela Restauracao da Mata Loggers *End Market: Cosmetic Atlantica Instituto BioAtlântica Conglomerates International Tropical Timber (iBio) **End Market: Niche Organization (ACDI/VOCA) Cosmetic Firms The Forests Dialogue Organic Monitor IEF World Wildlife Fund (WWF) Banco de Disenvolvimento Amanhagua de Minas Gerais USAID Inter-American Development Bank
3 – Primary / Med. Potential 5 – Secondary / Med. Potential 6 – Tertiary / Med. Potential
IEF Instituto Akatu Environmental Entrepreneurs Fundacao SOS Mata Atlantica Organic Consumer CEPEDES ***Citroleo Association (OCA) Conservation International Conservation International (Brazil) Greenpeace International Rainforest Alliance
The Nature Conservatory Building and Wood Workers' International World Business Council for Sustainable Development Atina Atlantica 7 – Primary / Low Potential 8 – Secondary / Low Potential 9 - Tertiary/ Low Potential
Symrise (Brazil) • Symrise Ima Flora The Organic Center (Germany) • Symrise (New FSC (Brazil) Social Accountability York) ISO (Switzerland) Accreditation Services Ecocert (France) Social Accountability Brazilian Society of Ecocert (Brazil) International Silviculture Movimento Dos Biolnter IFOAM/GALCI Trabalhadores Rurais Sem Biospectrum ABIHPEC Terra COSMOS-Standard COFRAC BASF IBAMA UHE COLIPA European USDA National Organic Cosmetics Associations Program Ministerio Publico
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Box 5b: Stakeholders Representing Potential Partnerships – Smallholder Upgrading
Box 5b is the categorized output of box 4b.
Primary Stakeholders Secondary Stakeholders Tertiary Stakeholders
IEF Organics Brazil Symrise (Brazil) Organic Trade Association Environmental Entrepreneurs Symrise (Germany) Union for Ethical BioTrade CEPEDES Symrise (New York) Instituto Akatu Conservation International Ecocert (France) Reserva da Biosfera da Mata Conservation International Ecocert (Brazil) Atlântica, RBMA (Brazil) Ima Flora Pacto Pela Restauracao da Greenpeace International FSC (Brazil) Mata Atlantica Rainforest Alliance ISO (Switzerland) Fundacao SOS Mata Atlantica The Nature Conservatory Social Accountability International Tropical Timber Building and Wood Workers' International Organization International The Organic Center The Forests Dialogue World Business Council for Social Accountability World Wildlife Fund (WWF) Sustainable Development Accreditation Services Natura Atina Brazilian Society of *End Market: Cosmetic Atlantica Silviculture Conglomerates Amanhagua IFOAM/GALCI **End Market: Niche Landowners Movimento Dos Trabalhadores Cosmetic Firms Loggers Rurais Sem Terra ***Citroleo Instituto BioAtlântica BASF IEF (iBio) Biolnter USAID (ACDI/VOCA) Biospectrum Organic Consumer Organic Monitor UHE Association (OCA) COSMOS-Standard Inter-American ABIHPEC Development Bank COFRAC Banco de Disenvolvimento IBAMA de Minas Gerais USDA National Organic Program COLIPA European Cosmetics Associations Ministerio Publico
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Box 6: Motivational Drivers
Box 6 compares the motivational drivers for each of the identified stakeholders found in box 1.
Stakeholder Corporate Facilitating Environment Social CSR Development Standardization Organic Profit Sustainability Collaboration Networks Accountability Products ACDI/VOCA X X X X X Amanhagua X X X Associação Brasileira da Indústria de X Higiene Pessoal, Perfumaria e Cosméticos (ABIHPEC) Atina X X X X Atlantic Forest Restoration Pact (Pacto Pela X Restauracao da Mata Atlantica) Atlantica X X X Aveda** X X Avon* X X X Banco de Disenvolvimento de Minas Gerais X X BASF X Biolnter X Biospectrum X Brazilian Institute of Environment and X Renewable Natural Resources (IBAMA) Brazilian Society of Forestry Engineers X (SBEF) Sociedade Brasileira de Engenheiros Florestais Brazilian Society of Silviculture (SBS) X X Building and Wood Workers' International X (BWI) Burts Bees** X X X X X CEPEDES X X Citroflora*** X CitroMinas*** X Citrosul*** X COLIPA European Cosmetics Associations X Comité français d'accréditation (COFRAC) X Conservation International (CI) X X X Conservation International, Brazil Office X X X COSMOS-Standard X X Ecocert X Environmental Entrepreneurs X X X Estee Lauder Companies* X X Page 113 of 116
Stakeholder Corporate Facilitating Environment Social CSR Development Standardization Organic Profit Sustainability Collaboration Networks Accountability Products Forestry Institute of the State of Minas X X Gerais (IEF) Forestry Stewardship Council FSC X Fundacao SOS Mata Atlantica X X Global Forest & Trade Network X X X Greenpeace International X IFOAM/GALCI X Ima Flora X Instituto Akatu (Akatu Institute for X Conscious Consumption) Instituto BioAtlantica X Inter-American Development Bank X X X International Standardization Organization X X (ISO) International Tropical Timber Organization X Johnson and Johnson* X X Kiehls* X X X L'oreal* X X Mary Kay* X Ministerio Publico X X X Movimento Dos Trabalhadores Rurais Sem X Terra (MST) Brazilian Landless Workers Movement NARS Cosmetics** X X Natura X X X Organic Consumer Association X Organic Monitor X X Organic Trade Association X X X Organics Brazil X X X X Origins (Cosmetics)** X X X Procter & Gamble* X X X Rainforest Alliance X X Reserva da Biosfera da Mata Atlântica X
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Revlon* X X Stakeholder Corporate Facilitating Environment Social CSR Development Standardization Organic Profit Sustainability Collaboration Networks Accountability Products Social Accountability Accreditation Services X Social Accountability International X Symrise X X X The Forests Dialogue (Dialogo Florestal) at X X Yale University The Nature Conservatory X X The Organic Center X UHE Company X Union for Ethical BioTrade (UEBT) X X X X USAID X X USDA National Organic Program X World Business Council for Sustainable X X Development World Rainforest Movement X World Wildlife Fund (WWF) X X X ***Citroleo X **End Market: Niche Cosmetic Firms X X X *End Market: Cosmetic Conglomerates X X X
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