Brazil - Country of the Future?

So I thought I would take a quick break from blogging about my work to talk a bit about some of my personal thoughts about the Brazilian economy. I certainly don't consider any of this to be definitive analysis as I have not been researching this much here or looked at detailed statistics. I have been reading lots of articles though, and been trying to make sense of all the information coming at me. So this post is basically about my impressions so far.

The Brazilian economy has certainly been on a roll for the last decade or so, and the excitement is palpable here. Even outside of the country, Brazil has been making a name for itself as a new "it" country. With lots of positive international media coverage (is anyone else getting sick of the word BRIC?) glowing about strong growth rates, rising investment and new government programs designed to cut poverty, along with a more robust, outward-focused foreign policy, the common assumption is that Brazil is a country of the future.

While the successes of the last few years and the contagious optimism should not be ignored, I think a few words of caution are in order. After all, this is not the first time that people expected Brazil to catapult onto the world stage. A famous saying here is, "Brazil is the country of the future, and it always will be." This nation has so many advantages - an agreeable climate, rich natural resources, a history of industrialization, a young, diverse population, etc, that it is hard to imagine why it wouldn't be successful. But historically, like most of Latin America, it has been subject to numerous boom and bust periods that tend to ebb and flow based on commodity prices. Is this time different? It seems to me like a mixed bag.

In a recent report, the Council on Foreign Relations identified four pillars of future Brazilian economic growth: agriculture, extraction (mining), energy (offshore oil), and domestic consumption. Note that three out of those four sectors are exports of primary goods. This means that Brazil is really continuing to do what it has always done: export its natural resources and hope that market prices are good. For now, the signs are that market prices are indeed quite promising: surging demand from China (and now India) has driven prices for soy, ore, and oil way, way up for a prolonged period of time. For now, that demand shows no signs of abating, and some economists have talked of a "supercycle" in commodity prices. This has really been the main motor of Brazil's growth over the last decade. As China and India continue to boom, so boom the countries that send them raw materials. Brazil's economic future is thus inexorably linked to its trade with these two countries. This is hardly a recipe for dynamic economic development.

With demand from the East looking strong at least for the near future, Brazil has a unique opportunity to leverage the extra income it is getting from high commodity prices to really transform its economy. Domestic demand has indeed risen, and millions of Brazilians are growing out of poverty and causing a consumer boom (though one that is starting to resemble a dangerous consumer bubble). Bolsa Familia, the largest conditional-cash transfer program in the world, has also helped reduce extreme poverty in the rural interior. The government has announced lots of new investment aimed at combating poverty and promoting infrastructure, health, and education. These are all efforts that should be celebrated, and nothing to be taken lightly. But ultimately, these gains will be fleeting if they do not translate into a new, more dynamic model of economic growth. As soon as commodity prices crash and everyone comes back down to Earth, government investment will dry up and the consumer bubble (especially in real estate) will pop. And then Brazil will be back to square one. This is a story all too common in Latin American history.

The key is not to get complacent. There is a lot that can be done to put Brazil on a more stable economic footing over the long term. The education system needs to be drastically improved. This is not simply a question of throwing more money at the issue, it is about structural reform to improve the quality of teaching and education. As in the U.S., it is not a simple issue, but that does not mean it can be put on the back burner. The public primary education system is terrible, and the differences between public and private education exacerbate the deep societal inequalities that are part of everyday life here.

Corruption is also deeply endemic, from the national level on down to local municipal governments. The recent number of corruption scandals in Dilma's cabinet serves to prove this point. When times are good and the government is flush with cash, people have extra incentives to pocket money for themselves. If Brazil does not make an intense effort to tackle this problem head on, it is going to have a difficult time improving its governance.

A perverse tax regime that protects special interests is another huge problem for Brazil. As I mentioned in a previous post, interstate transportation taxes are mindbogglingly high, which prevents integration of industry across the country. Import taxes designed to protect domestic manufactures make many consumer goods as well as input materials prohibitively expensive. Brazil is the most expensive country in the world for buying a car, not because production costs are so high (the country has a long history of car manufacturing) but rather because of stratospheric taxes. All this money then flows to the government, which uses a good chunk of it to pay very generous salaries and benefits to well-connected government employees. When in Brasilia, everyone I talked to said they hoped to work for the government because they would make so much more money. While I have nothing against rewarding government employees for good work (my parents both have worked for the federal government, after all), the corrupt "who-you-know" patronage system means that privileged insiders are essentially able to reap huge monetary benefits from a government tax structure that hurts the lower classes and creates a huge drag on economic growth.

Overall though, the biggest issue I see is this. Successful capitalist economies have historically depended on one key sector to sustain their development: manufacturing. In fact, if you trace the history of large-scale manufacturing throughout the world, from England to the U.S. North and later to the U.S. South, followed by Western Europe and then East Asia to present-day China, you can see a nice path of the most economically dynamic areas over the last 150 years. In the U.S., the steady eroding of our manufacturing sector due to mechanization and outsourcing has caused a crisis in our middle class, temporarily masked over the last several decades by several credit bubbles, but now painfully laid bare during the current recession. Brazil, and Latin America in general, have largely been bypassed by this process. As great raw material exporters to the manufacturing titans, their success has gone up and down as newly industrialized countries go through rapid growth periods and then peter out. If Brazil and its neighbors want to take their place among the industrialized countries of the world, they cannot continue to play this secondary role. They must become manufacturing titans themselves.

For now, industry in Brazil is heavily concentrated in São Paulo, easily the most economically dynamic region of the country. While the poor North-east of Brazil has experienced strong growth recently, this has reflected mainly new routes for raw material exports, not new industrial manufacturing strength. The strong real has hurt Brazilian manufacturing recently, and a new industrial policy will help to cushion the blow for domestic producers. But ultimately, this is not a new policy to promote dynamic manufacturing growth but rather a continuation of benefits to domestic special interests (not unlike the failed Import Substitution Industrialization wave of the 60s and 70s). Until Brazil finds new dynamic engines for future growth, principally in manufacturing, I would be cautious about getting too optimistic. I guess we will all see what happens, but it seems to me like history may be about to repeat itself here in the perpetual country of the future.

Wasteland (Lixo Extraordinário)

For those of you who are not familiar with this movie, Wasteland is a documentary that came out a year ago about a project by Vik Muniz, a famous Brazilian artist from São Paulo. In this film, Vik goes to Jardim Gramacho in Rio de Janeiro, one of the largest open air dumps in the world, to work with a group of catadores who make their living picking recyclable out of the dump. The movie is very beautifully done and does as an incredible job showing the personal stories of this amazing group of people who manage to survive and thrive in what are truly some of the most abhorrent conditions of poverty that you can imagine. I hope that those of you who take the time to watch it enjoy!


Wasteland - Lixo Extraordinário

São Roberto Factory Visit - Researching the Recycling Industry

Last week, I visited the São Roberto cardboard factory in Santa Luzia, right outside of Belo Horizonte. Together with a group from UFMG, we are researching the supply chain of paper and plastic recyclables. Although the recycling market is in fact quite huge (big business all over the world), it is in a lot of ways relatively unknown. Our goal in this project is to gain a better understanding of the recycling market so that we can better help the cooperatives of catadores to tailor their production to the demands of industry.

São Roberto produces their cardboard almost entirely from recycled paper, so this visit was very interesting for me to learn about the recycling process in general and better understand the economics of the recycling industry. I won't go into details here, but I was really struck by the fact that the input materials for the entire process were loads of pressed cardboard and paper completely identical to those produced by the cooperatives I visited. Although our tour guide explained that the goal was for the material to be as clean as possible upon arrival, he also explained that they used many advanced mechanical and chemical processes to clean the paper pulp and impurities were thus rarely an issue. That is to say, even paper and cardboard that appears somewhat dirty can be sold to industry.

The visit revealed to me how little is actually separating the catadores from industry. It really isn't a question of adding more value to the product (at least as far as paper is concerned). The middlemen clearly do very little other than collect material from the catadores for a dirt cheap price, press it, and sell it to industry at a significantly marked up value. (That is why we call them middlemen, after all!) The catador does all the work of collecting and sorting the material, and yet the middlemen take all the profit.

Instead of adding value to the material, the key for catadores to sell directly to industry is simply to increase scale. Our tour guide explained to us that they only buy their input materials from the large middlemen because they have a very large demand and need to buy materials in bulk and make sure that their suppliers will be reliable. The smallest supplier to the factory provides around 80 tons of cardboard per month. This gives me hope for the future of the commercialization networks - if we start by focusing on the areas that demand greater scale and less value added, we might be able to capture more of the profit within the market, and then we can later expand into more intense value-added areas such as plastic processing. With the infrastructure and equipment that cooperatives and networks can provide, there is little reason for middlemen to exist within the recycling market at all.

One interesting side note: our tour guide mentioned that they only buy materials from within the state of Minas due to high taxes on interstate transport. At the State Conference, an aluminum industry representative complained of the same problem. I will go into further detail in a later post about the Brazilian economy in general, but I find this to be a fascinating example of the complex tax regime in this country that undermines efficient economic production and further concentrates manufacturing in individual, separate clusters rather than a nationally integrated economy.

Are Cooperatives Economically Beneficial for Catadores?

Whenever we talk about an economic development project that targets a specific group of low-income people, one of the most obvious questions to ask is: will this initiative make these people better off financially? In the case of the catadores, most people tend to assume that cooperative organizations will bring a clear economic benefit, given that large groups of people working together can demand a higher price for their product. However, the real story is a bit more complicated.

In January, the State Waste and Citizenship Forum of Minas Gerais published the results of a year-long study of catadores and recycling systems across the state. Data in this study revealed a fact that many may find surprising at first: catadores tend to make more money working in dumps than in cooperatives. Whereas only 11.1% of organized catadores reported a monthly income of at least R$466 (US$290), 25.6% of catadores in dumps reported at least this amount. (By comparison, only 9.7% of catadores in the street reported this amount.)

This makes sense if you think about it intuitively. In the dumps, material is plentiful. Walking around within a few square feet you are likely to find a good number of cans. If you work for long enough hours (and the same study showed that catadores in dumps tend to work significantly longer on a daily basis), then you are likely to make a greater income. But at the same time the drawbacks are significant: smell, hygiene, risk of cuts and/or infections, animals, social stigma, etc. Child labor also tends to be more common in the dumps, as parents recruit their children to help them pick through the material.

But even with these drawbacks, catadores are often reluctant to leave the dumps. Why abandon something straightforward and profitable to face the uncertainty of joining a new organization? In fact, many of the cooperatives I work with began not out of a sudden desire from the catadores to organize themselves, but rather due to external pressure. In the case of ASCAP in Nova Lima, the association only began when the municipal authorities closed the dump and the catadores had no choice but to search for alternatives. In fact, one of the leaders of ASCAP, Leo, explained that for a long time he made much less money in the association than he used to in the dump. ASMARE, the 200-person strong association in Belo Horizonte, was only formed after the local police repeatedly harassed homeless catadores sorting material on the street behind the bus station. Although many of the catadores of these groups are now glad to be part of an organization, they admit that it was an imposition that they resented at first.

This is a struggle we still deal with on a regular basis here. The more established organizations now offer fairly decent salaries that can even compete with the formal market (when times are good associates can make several times the minimum wage). But the associations struggling to solidify their operations also face difficulties in providing strong economic incentives for their members to stay on. And even though we may think of the organization as a more stable form of employment, the truth is that the cooperatives can go through huge boom and bust periods depending on market prices, private donations of recyclables, government contracts, etc. In a lot of ways, life in the dump is much more reliable and safe.

All in all, I think it’s pretty safe to say that the catadores are better off working in organizations than in the streets or in dumps. But the economic incentive is not always on our side, especially when dealing with new organizations, and this makes our work that much more difficult. In the long term, through circumventing the middlemen and selling higher up in the supply chain, we should be able to provide better income for the catadores that make up part of the CATAUNIDOS network. But this is still a work in progress.

ITAURB - An Alternative Recycling Model

Two weeks ago, I went with the UFMG team to Itabira, a mining town a few hours outside of BH. The goal of our visit was to look at the recycling model being implemented in the municipality by an organization called ITAURB.

ITAURB is classified in Brazilian legal terms as an "autarky." Fellow history nerds may find the term familiar from the WWII era. Broadly meaning "self-sufficient," the word was often used in Nazi Germany to describe Hitler's goal of creating an international empire that had complete control over all the resources it needed for long-term economic growth, thus eliminating the need to trade with the outside world. In Brazilian legal jargon, autarky is used to describe a somewhat self-sufficient decentralized government enterprise. The municipal government creates an entity to handle a specific function (urban cleaning, for example), and then that entity establishes an administrative structure and functions independently, although still under ultimate jurisdiction of the state. ITAURB is responsible for Itabira's urban cleaning, which covers trash collection and disposal, recycling programs, street sweeping, and weeding/gardening.

Our site visit took place at ITAURB's recycling sorting center. We toured the area with one of the supervisors to learn about their business model, sorting process, and architectural layout. Overall, the model was very similar to that used by the cooperatives. Material is separated at the source by local residents and businesses and then picked up and taken to the recycling center ("selective collection" is the common term for this activity). As at Coopert, the material is unloaded at a silo, where it is pushed through a chute onto a conveyor belt, where workers sort out the material. The materials are then pressed and stored in a separate area. ITAURB also had a "fine sorting" area where materials were further sorted by hand into more specific types (ex: milk-based PEAD plastic vs. soap-based PEAD plastic).

It was hard not to be impressed by the efficiency of the ITAURB operation. The space was very clean and well-organized, and the finished products seemed to be of higher quality (more precise sorting, less dirty). According to information we received during the tour (still unconfirmed), the ITAURB program not only covers nearly the entire population and achieves a very low rejection rate for the material it collects, it also is able to sell its products directly to industry and thus receive better prices. All in all, I found it hard not to make comparisons with the apparent chaos of some of the warehouses of catadores and wonder if this sort of recycling model would be more replicable on a larger scale (and thus more able to achieve its environmental goals). Compared to the confusion and instability of the cooperatives, I was reminded of the allure of the efficient, hierarchical capitalist business model.

At the same time, however, I reminded myself that ITAURB and the organizations of catadores do not share the same ultimate goal. Although the autarky does make an effort to employ people from low-income communities in its operations, the principal focus is on urban cleaning and not on social inclusion. The catadores, on the other hand, care first and foremost about providing opportunities for marginalized people to participate in society and earn a basic income, and the fact that they are promoting environmentalism is a side benefit. Comparing autarkies and cooperatives side by side, I was once again reminded that our environmental and social goals are not always one in the same. When we are forced to prioritize one objective over the other, it becomes readily apparent that the work we do is not always so straightforward. As someone who cares deeply in both environmentalism and social inclusion, it is hard to have to consider potential trade-offs.

However, when I take a step back and try to think in larger, philosophical terms, I feel less pressure to choose between these two aspects. While our current capitalist economic model has created significant wealth in the world and greatly improved our quality of life in many ways, it has two principal failings in my view. First, it is not sustainable in the long term because it depends on infinite increases in production despite finite limits in natural resources and also fails to fully account for the external costs of pollution. Second, it marginalizes people who are unable to sell themselves on the labor market, designating them as unproductive members of society outside of the economic mainstream. Both of these problems must be addressed. If we want to work toward creating an economic order that is both more sustainable and just, and I for one certainly do, then we need to avoid falling in the trap of thinking that promoting environmentalism and social inclusion are somehow mutually incompatible.

In practice, I know that I will still struggle at times to simultaneously achieve both of these goals in my work. There will be instances when I feel compelled to choose between one aim and the other, as I have already seen through my research here. But ultimately, we have to keep working to combine environmentalism with social inclusion as much as possible, because that is the only way that we will be able to improve society as a whole.

Some pictures from ITAURB:

Unloading the recycling truck at the silo (lower level is the chute and conveyor belt)

Workers sorting on the conveyor belt

'Fine Sorting' - Plastic Area


Pressed materials in storage (wrapped in cardboard, weight written on side)

Minas International Presentation

Several weeks ago, I gave a presentation at an event for Minas International, a network of English-speaking foreigners and native Brazilians here in Belo Horizonte that organizes various business, social, and volunteer events. (More info on Minas International - www.minasinternational.com)

Attached is a link to my presentation. I left most of my talking points brief and then filled them in during the actual presentation, so it's hard to get a full sense of what I discussed, but this nevertheless provides an outline of the key points I tried to raise during the talk.

For any Portuguese speakers, if you look on the right side of the website under "Related", you will be able to see various other presentations from people involved in the MNCR - technical advisors, catadores, government representatives, etc. There are also some international presentations, including some in English, in case anyone wants to check those out. Enjoy!


http://www.slideshare.net/MinasInternational/trash-talk-by-patrick-mcananey-2-august-2011

Capacity Building in the Cooperatives

As I mentioned in my last post, one of the greatest challenges we are dealing with in our work is the process of building capacity within the cooperatives while respecting their existing structures and work methods. Last week, during a visit to Coopert, a cooperative in Itauna, MG that is part of the Cataunidos network, I had to deal with a very simple example of this difficulty.

Currently, we are trying to systematize information gathering across the Cataunidos organizations as part of our goal of standardizing and improving financial management of the cooperatives. At Coopert, we are working with the treasurer to develop systems to measure employee wages and benefits, fixed and variable expenses, and quantity/price of commercialized materials. I helped put together some spreadsheets for the treasurer to use in order to track this data, based off of information the cooperative already collects. However, as we were going over the forms, it became pretty apparent that we were going to have some issues.

Right now, hours of the Coopert associates are added up manually. But instead of using a regular decimal system, the treasurer adds the numbers up so that decimals represent minutes. That is, 18.2 means "18 hours and 20 minutes" even though that is not an equivalent value. So when adding all the hours together and then multiplying it by the hourly wage (dependent on total income earned in the cooperative divided by total numbers of hours worked by all associates), the end result is an inaccurate number. When I tried to explain to the treasurer that she had to convert the hours/minutes numbers into decimal numbers, she quickly became confused. Although I tried for a while to explain the idea (with help from Guilherme, one of the INSEA technicians), it became apparent that she was becoming discouraged and preferred to just keep using the system that they already had in place. Then, an ex-treasurer of Coopert came in to the office and told us that he thought messing around on computers was too complicated and was bound to mess up their administrative process.

The whole experience was quite revealing to me in terms of the practical limits we are dealing with in this movement. The catadores in general lack very basic education, meaning that something as simple as the difference between decimal numbers and hour/minute numbers can be a huge problem for them. This anecdote reveals just how far off we are from having the cooperatives really take control of their financial management, create strategic business plans, and commercialize effectively through the Cataunidos network in order to become commercially viable businesses. The idea of using computers, even for something as simple as spreadsheets, clearly is not going to work, at least in the short term. As soon as something goes wrong (having to add another column, or an Excel formula error), the entire process would become messed up as they would not have the detailed knowledge to fix the issue. The problem is that you cannot build a strong cooperative administrative structure without an educational base to begin with.

And yet building that educational base is a challenge. If we were to show up one day at the cooperative and try to convince everyone to take a math class, they would no doubt yell at us and say the activity was worthless - when a catador needs to collect, sort, and process his materials, what good is learning some abstract theoretical concept like math that has nothing to do with his daily life? Incentivizing the community to build the educational base is extremely difficult.

Yet if we take the other approach and focus simply on skills training for the select few in the directorship, other problems arise. First off, leadership positions are supposed to rotate, and the most successful cooperative leaders sometimes end up leaving the group to pursue new opportunities anyway (the traditional head of the Nova Lima association, for example, is now running for city council). So the strategy can backfire due to the simple issue of turnover. But also, it is hard for the leadership of the cooperatives to stake out unpopular positions among the group, due both to simple peer pressure and presumed respect for democratic decision-making. So if we focuses our training on a few individuals without building consensus, this often fails anyway as the leaders are unable to win support for new administrative procedures. It really creates a tough situation from either direction.

One thing that caught my eye was the history of Rede-sol, a separate network of catadores in the BH metro area that is not affiliated with Cataunidos. The Rede-sol cooperatives are in fact much more effective at financial management than the Cataunidos groups, which at first gave me hope that we had discovered a successful model that could be replicated. However, when I dug deeper I found that this was not the case. Rede-sol is successful in its financial management precisely because it has the sort of traditional hierarchy that the Cataunidos groups try to avoid - the leaders in the diretoria tend to have a very different profile from the rest of the workers, coming from more skilled labor and educated backgrounds. They end up taking control of the cooperatives and centralizing decision-making. While this brings clear benefits in terms of management efficiency, the fear of creating a two-tiered system within the groups certainly gives me pause.

At times, I get frustrated dealing with these issues because there really seem to be no good answers. Is there a way to build and strengthen these cooperatives and associations without sacrificing the social cohesion, inclusion and equality that they have worked so diligently over time to cultivate? At this point, I really just don't know.


Some pictures of Coopert:

Coopert truck - materials are unloaded at the entrance to the cooperative

Entrance to the silo - materials are pushed down the chute to be sorted

Side view of the silo - materials fall down chute and then onto a conveyor belt for sorting. Once sorted, the materials fall down various chutes into bags below the conveyor belt.

At the end of the conveyor belt, rejected material is discarded into an open area, where it is eventually removed to the landfill next to the cooperative.

Reflections on the Cooperative Model

While many aspects of the recycler movement have fascinated me so far in my research, there is one area that has really caught my attention: internal management structures of the cooperatives. My original grant proposal was to focus on that specific topic, so it is no surprise that I keep coming back to it. The cooperative model presents fascinating philosophical and economic questions and I constantly find myself reflecting on its broader implications. At times, these reflections leave me excited and optimistic. But at other times, I find myself becoming increasingly skeptical of the future of this movement.

Positive Aspects

There is a lot to be said for the benefits of the cooperative structure within the context of the recycler movement. The fact that these organizations are completely organized and managed by the catadores themselves is a wonderful testament to the abilities of these individuals. These businesses are run by the workers themselves through a process that emphasizes teamwork and equality, using democratic decision-making processes and rotating leadership responsibilities to maintain a positive dynamic and buy-in from each associate. This stands in sharp contrast to traditional capitalist means of production, which emphasize hierarchical business structures and promote competition as a way to increase incentives. The goal is a more humane production process, one that does not merely treat the worker as another form of input/capital but rather as an individual human being, whose agency and feelings must be taken into account. The trade-off between these two processes is relatively clear: efficiency and maximization of production vs. valorization of the worker and humanization of the production process.

For most catadores, the cooperative structure is not only beneficial because it gives them more agency within their work environment. Simply put, it is the only structure in which many of them are able to make a living. Many catadores live on the margins of society, unable to participate fully in our traditional capitalist system because they are not efficient enough producers to sell their abilities on the labor market. The reasons for this vary: physical or mental disabilities, old age, lack of education, drug/alcohol addiction issues, health problems, etc. Many simply cannot compete and survive within traditional workplace settings, which is why they have been relegated to the streets or the trash dumps. Within the cooperatives, however, the catadores take care of each other. They recognize that there are some who are unable to collect or sort as much material, but they still allow those people to participate in the group and receive a decent share for their efforts. As one catador said to me recently, "our goal isn't just to produce as much as possible, it's to make sure we give everyone a chance to be included and participate."

Drawbacks

Of course, this sort of model has very clear downsides. As pretty much everyone who has ever studied communist economies knows, emphasis on inclusion and equality rather than incentives and efficiency undermines economic dynamism and growth. These cooperatives are certainly not an exception. A common slang term within the organizations is people who are morcegando ("batting"), sitting around and not working hard while letting others pick up the slack. Because remuneration schemes within the cooperatives are not fully based on individual production (some groups divide revenues equally, some by work hours, some by a system of quotas), it can be difficult motivating people to work to the full of their abilities. Some cooperatives use extremely subjective measures of how much someone was perceived to be morcegando in order to dock their pay. It often falls to the associates holding rotating leadership positions within the diretoria to supervise the production process and hold everyone to account, but these people are often busy with administrative duties and do not have time to resolve every problem or conflict. One idea often discussed is to create official supervision posts within the cooperatives, but the creation of such hierarchical structures creates a whole new set of conflicts within the group and undermines the goals of equality and inclusion. This is just one example of the constant trade-off within these organizations between the social goals of the cooperative and the production goals of the business enterprise.

The bigger issue for me, however, has to do more with the leadership of these organizations. Overall, I strongly admire the goal of having the catadores themselves completely run and manage these organizations. This is, after all, their movement. They are the ones who have made livings for themselves collecting recycling and who have made these organizations possible. To believe in the cooperative model, you have to believe in the power of the workers to organize and lead themselves and to manage their own systems of production. For us technicians and outsiders to come in and try and take over these groups not only undermines the agency and empowerment of the catadores, it also reinforces the idea that enterprises must be run by the elite and well-educated.

But at the end of the day, I worry that sticking rigidly to these beliefs undermines the expansion and development of these enterprises. There are many complex aspects of integrated solid waste management and recycling programs in developing urban communities, and for this sector to be able to grow and thrive using a profitable triple-bottom line the companies that pioneer it really need to be dynamic, innovative and capable. While I do not doubt that there are many impressive catador leaders out there (several of whom I already know), most of the individuals within the movement do not have the formal education, business administration skills or technical expertise to fully handle these responsibilities themselves. The strengths of the MNCR tend to lie in the catadores' keen understanding of social issues: organizing workers, social mobilization and political lobbying. In terms of the more business-minded ability to handle complex financial accounting, develop strategic action plans for expansion and improve commercial viability, the organizations seem to be severely lacking. While there are certain individuals with strong leadership abilities who I believe we could single out for intense training and skill development, this risks creating two tiers of catadores within the organizations, which creates its own set of problems. (In practice this inequality between catadores often exists already, but the theory of rotating leadership positions is meant to correct the issue.)

While I do not support the idea of non-catadores taking over the management of the organizations because it would completely undermine the goals and philosophy of the cooperative model, I often worry if this movement will have a very low ceiling unless we change our approach. I just do not see how the catadores themselves will be able to develop large-scale commercially viable social enterprises that can fully handle integrated waste management services and process recyclables with the limited role that outside technicians and business partners currently play.

Basically, everything always seems to come down to this question for me. To what extent should we be sitting back and letting the catadores themselves fully control this movement, and to what extent should we be taking the lead to help build and expand the cooperatives? Is there really a "correct" balance that can be found? And if one thing or another must be sacrificed at times, is it better to sacrifice the ownership of the catadores and the cooperative model to further develop these enterprises, or is it better to pass up opportunities for growth and improvement (and better environmental management) in order to ensure the primacy of the catadores and their cooperative leadership approach?

CATAUNIDOS and the Future of Commercialization Networks

So most of my work here so far has been through the CATAUNIDOS network. As I mentioned in an earlier post, CATAUNIDOS is a commercialization network of nine associations and cooperatives in the BH metro area. Officially registered as a cooperative itself, the purpose of CATAUNIDOS is to pool materials collected by the nine organizations in order to sell as a single unit. There are two main benefits to this approach. First, selling on a larger scale means that the catadores have more influence in the market, circumventing small-scale middlemen and selling higher up in the supply chain to receive a better deal for their goods. Second, pooling materials together creates opportunities to add value to the materials. Normally, most organizations of catadores simply collect, sort, press and sell recyclables. But this is only the first step in the recycling industry. By further processing materials into more finished products, catadores add more value to recyclables and greatly increase their role within the market. CATAUNIDOS has pioneered this approach by opening a plastic processing factory in BH. The nine organizations send the PET plastic they collect to the warehouse, where it is further sorted into various types (I still don't fully understand the categories but the level of sorting within the warehouse is extremely specific). The plastic is then processed through machinery that grinds it, washes it, and molds it into small pellets, the basic raw material used in plastic manufacturing. The CATAUNIDOS factory is the only fully catador-operated factory in all of Latin America.

Currently, the industrial unit is closed for remodeling. A new action plan and business model is currently under development with the help of various technical advisors and consultants, including representatives from SEBRAE (Brazilian Support Service for Small Enterprises), UFMG and SERVAS (a social welfare support program). While I am just starting to get involved with this project and do not have intimate knowledge of the details, I do know that one of the principal goals of this remodeling is to find new machinery that will allow CATAUNIDOS to further process its plastics and sell a more refined final product. One idea that has been discussed is plastic roofing, which is extremely durable and more cost-effective than traditional wood roofs. If the factory were able to develop actual consumer goods like this, it would be a significant step forward for the movement of catadores as it would mean no longer selling only raw materials for input to industry but rather creation of actual products for marketing. However, as far as I am aware this remains a long-term goal and not one that is possible any time in the near future.

With the team from INSEA, I am part of a project sponsored by Petrobras (the Brazilian public-private oil company) to strengthen and expand the CATAUNIDOS network. We are trying to improve the functioning of the nine organizations that currently make up the network, add an additional 16 organizations, and create a more efficient business model through the standardization of practices across the groups and improving the functionality of the factory.

One thing thing that I have found striking so far in my work with CATAUNIDOS has been how nebulous the concept of the "commercialization network" is. In our day to day activities, I have noticed that it is never very clear who actually represents CATAUNIDOS, and the catadores themselves do not feel like members of the cooperative. Madalena and Gilberto, two catadores who jointly run the network, are the two clear leaders of the group. But aside from that, the catadores within the associations and cooperatives do not seem to identify with CATAUNIDOS. They view us, the INSEA technicians, as the members of CATAUNIDOS, when really in fact we are supposed to be merely advisers. Especially right now with the factory closed and all sale of products happening within the individual organizations, the only visible aspect of CATAUNIDOS are the technical visits from INSEA and the training workshops we sponsor for the catadores (more on those workshops in a later post). As one of my co-workers recently put it, "many of these catadores barely feel a connection to their individual organization, let alone the more general network of CATAUNIDOS." This quote sums up one of our principal challenges going forward. How do we get the catadores to take greater ownership of this network going forward, and what should our role be in the process?

The future of cooperatives and associations of catadores will depend significantly on the future of these commercialization networks. By themselves, the organizations do not have the scale, capital or technical expertise to become dynamic, commercially-viable enterprises. Networks can potentially help to overcome these weaknesses, especially by building processing centers for materials such as plastics, e-waste, or even organic materials for composting or biogas. INSEA is focusing now on this concept of networks, or "redes," throughout the state of Minas - there are currently five such projects in the works. Ultimately, though, I think it will be up to CATAUNIDOS to set the example across the state, and even the country. (However, there is one other large-scale network project in Brazil, the CATASAMPA group in São Paulo.) The lessons we learn from the Petrobras project will be key in helping to understand the challenges and opportunities of this movement going forward.

We are currently working both on revamping the INSEA website and creating a CATAUNIDOS site as well. I will be providing English translations. As soon as those are both up I will post the addresses here for everyone to check out!

Display of various PET pellets from the CATAUNIDOS factory