Economic Development

ReDes Program Supports the Independent and Sustainable Work of Production Groups; the Total Income Generated Between 2013 and 2018 Was R$ 30 Million

Created in 2010, the ReDes program has sponsored 64 projects. It is developed through a partnership between the Votorantim companies, the Votorantim Institute and the National Bank for Economic and Social Development (BNDES, for its initials in Portuguese) with the objective of combining efforts and leveraging investments to promote the development of different communities. The first few projects started in 2013 and were planned to last five years. Having worked in 34 municipalities since the beginning of its activities, the ReDes program has already benefited approximately 2,000 families, generating an estimated total income of R$ 30 million, distributed among its beneficiaries over the years. A total of R$ 65 million has already been invested in the program.

ReDes operates in municipalities within the area of influence of Votorantim companies. The idea is to foster the creation of inclusive, income-generating businesses, molded according to the strengths and potential of each location. The project beneficiaries are groups that organize themselves in associations or cooperatives and receive support from Votorantim to structure and develop their activities. The support covers both technical and financial aspects, including the resources to put the project on its feet. To this end, ReDes has a financing line for global investments of up to R$ 100 million in the 2013/2020 period—50% of which comes from Votorantim and another 50% from BNDES.

Of the 48 projects already completed since the beginning of the program, 20 reached their final stage in 2018 after undergoing a careful evaluation of their business sustainability level performed by the Institute and an external consultant. The assessment includes five blocks of indicators with a total of 18 items to measure governance, planning and local networking aspects, production and supply, sales, market and logistics, business management, and business formalization. Projects with a 60% or higher approval rate in this checklist are considered to be capable to move independently. As Filippe Barros, project management analyst at the Votorantim Institute, says, “they are self-sustaining and will be able to walk with their own legs.” In 2018, 16 projects achieved an 80% approval rating in the sustainability requirements.

ReDes supports projects in different areas, such as food supply (fishing, family farming, poultry, beekeeping, and dairy production), trade and services, crafts and recycling (see case studies). The type of activity depends on the local characteristics, the abilities of the group members and the potential for income generation. The work of the Votorantim Institute begins in the planning phase, with a diagnosis of the local potential and the creation of a business plans and a feasibility analysis. The formation of the groups is also closely monitored by program technicians.

Learnings

Based on the experience acquired over the years, the Votorantim Institute and the BNDES have been perfecting the program’s methodology. A detailed assessment, carried out in 2015, made it possible to identify success and failure factors that are common to the various projects and to identify areas for improvements. The strengths of the projects included knowledge of production practices, the entrepreneurial profile of the organizations, sound marketing strategies, regular documentation and product quality. The main challenges identified were centralized and poorly participative management, sales challenges, absence or insufficiency of controls (mainly financial), and lack of fiscal regularity.

To leverage the strengths and empower the groups to face the challenges, the methodology was reformulated in 2016. Among several measures, the ReDes program started to use a project management tool, called Maturity Ruler, with the support of the Inter-American Development Bank (IDB). The Maturity Ruler is an evaluation system that analyzes the group’s cohesion (interaction), its ability to build the business and achieve results (edification) and business management, including financial controls and compliance with legal requirements (organization).

The Maturity Ruler is applied at different times during the business implementation process, starting at the planning stage. This is an important tool to point out possible course corrections, which helps increase the rate of success of the projects. Another measure resulting from the review of the methodology was the creation of an “internal manager”—a professional with experience in the business production chain, hired by the group with support from the Votorantim Institute, to monitor their daily activities.

In addition, through an “expert bank”, the program makes available to the groups an external consultant, who can be accessed when the project faces specific challenges or when there are questions in specific areas of knowledge. Fiscal and tax issues, marketing issues and agricultural techniques were some of the inquiries made in 2018, which, when addressed by specialists, ensured the good results of the program during the year.

ReDes in Numbers

Oil Co-Processing and Factory

An example of the transformative potential of the ReDes program is a project to create a factory for the production of babassu oil that will be officially launched in the first half of 2019. Five communities within the area of influence of the Votorantim Cimentos plant in Sobral, in the Brazilian state of Ceará, are part of the project, coordinated by the Nossa Senhora da Conceição Association. Since May 2018, the Nossa Senhora da Conceição Association has been selling raw babassu seeds to the Votorantim unit—approximately 200 tons per month, providing the associates (around 50 people) with an extra income of R$ 82,000 (between May and December).

In addition to the social and economic benefits provided by the oil factory—it will generate income for families in need living in the Serra do Meruoca region, where the babassu palm is abundant—the project has a strong environmental angle: the waste resulting from the production process will be delivered to the local Votorantim unit to be used in cement kilns, partially replacing petroleum coke.

This arrangement results in an environmental gain, since the use of babassu waste enables the reduction of greenhouse gas emissions and offsets the use of fossil fuels, which are nonrenewable natural resources. The Sobral cement plant generates power through co-processing, utilizing various types of waste, such as urban and industrial waste and crushed tires.

Once the factory is operating, the income of the families involved in the project is expected to increase even more, thanks to the commercialization of babassu oil, which is widely used in cosmetics and also has medicinal properties.

Jelly Production

Vidal Ramos, a town in the Alto Vale do Itajaí region of Santa Catarina, is known as “the city of sweets”. With a population of just over 6,000 residents—the majority of whom are of German and Italian descendance—the town hosts an annual festival where they sell jellies, cookies, cakes and all sorts of sweets made by the resident families using recipes that have been passed down from their ancestors.

Therefore, it’s only natural for the town to host projects within the ReDes program that are anchored in this tradition. There are three initiatives sponsored by the local Votorantim Cimentos unit: an association of beekeepers, a cookie factory and a jelly and sweet factory, which became independent in 2018.

Named Doce Acolhida, the factory brings together 13 families of small farmers who supplement their income with the production of sweets and are also part of a local rural tourism project, welcoming visitors at their properties on weekends.

The jellies and sweets are made with local fruits—orange, guava, strawberry, lemon, grape and pineapple—and sold in markets, bakeries and directly to tourists. The support of the ReDes program has leveraged this tradition, maintained the artisanal characteristic of production and, at the same time, professionalized the activity, which, starting in 2019, will begin to be fully operated by the families themselves.

To enable the project, ReDes invested R$ 287,000 to upgrade the factory’s facilities (a property loaned by the town of Vidal Ramos) and purchase equipment and supplies. Two important parts of the project were training the families (focusing on commercialization—the group’s main challenge—and the formalization of the activity) and supporting the development of product presentation (creation of a logo, packaging and labeling according to legal standards and National Sanitary Surveillance requirements).

In 2018, the group had a total revenue of R$ 17,300—36% higher than the goal that had been set at the beginning of the year. But for Fernanda Ramos, Social Responsibility consultant at Votorantim Cimentos, the main benefit to the families is intangible: “It’s the possibility of perpetuating the local culture. People’s skills and talents are being strengthened because they also have commercial value, and so the new generations feel encouraged to preserve them.”

Forest Management

One of the most significant examples of benefits to vulnerable populations created by the ReDes program is undoubtedly the project by the Cooperative of Rural Workers and Farmers of the Quilombo Community of Córrego de São Domingos, in the town of Conceição da Barra, Espírito Santo. Sponsored by Fibria and linked to its industrial unit in the neighboring town of São Mateus, the project changed the lives of the 26 cooperative members and is considered a model of successful enterprise in the state.

The group that founded the cooperative used to live on waste collection in eucalyptus plantations, a very precarious activity, in which there is an excess of labor, scarce raw materials, exploitation of child labor and several levels of intermediation. Waste collectors deliver the material collected to charcoal companies in the region and are poorly paid. In the case of the current cooperative members of São Domingos, their monthly income was around R$ 300 before they started the project in 2014.

After joining ReDes, the cooperative specialized in providing forest management services and received R$ 344,000 that was used to purchase a bus to transport the cooperative members and in the renovation of the organization’s headquarters (which, in addition to an administrative office, now also has a kitchen, auditorium and meeting rooms, and amenities such as air conditioning).

According to Douglas Pereira, sustainability specialist who supports the São Domingos project, transportation was the item with the highest impact on the costs of the cooperative, because to perform jobs such as removing brush (most commonly requested) the cooperative needs to be constantly traveling. Renting vehicles and hiring drivers reduced their earnings, so by owning their own bus they have become more profitable (up to 40% more).

Having achieved independence from the ReDes program at the end of 2018, the group expanded its activities and, in addition to brush removal, they were trained to perform other services. Their main customer is Fibria, but the cooperative also serves farms and highway concessionaires.

The income of cooperative members has grown and some months it might be up to 10 times higher than what they earned before joining the project (R$ 3,500 per month). But, to be prepared for uncertainties, they deposit about 15% of their monthly income in a fund that they maintain.

The money they save can be used to supplement their income in the months when demand for services is lower but is also used for investments. The São Domingos Cooperative already has, for example, three vehicles of their own to support their activities.