José Méndez and his wife, Martha, used to scrimp

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					Ethical Corporation • February 2009                                                                                                                        Latin America      19




    The argument is not new to Latin America’s                     $21bn from international donors
more progressive policymakers, as pockets of inno-                 to finance the battle against defor-
vation prove. Mexico’s national strategy on climate                estation in the Amazon.
change, for example, identifies mitigation measures                    Establishing     a    consensus
that would reduce its greenhouse emissions by                      among lawmakers is essential if
107m tonnes (21% of current levels) within the next                Latin America is to develop a
six years. Brazil’s high dependence on hydropower                  coherent and effective political
for energy and agricultural products for fuel also                 framework to combat climate
warrants note.                                                     change. It is also key to building
                                                                   private sector buy-in.
Incentives plan                                                        “A lot of the private sector
The third pillar of the World Bank’s policy strategy               is adopting a ‘wait-and-see’ Fuel creation, Brazil style
– building an international climate change architec-               attitude,” says John Nash, co-
ture – has further to go. The lender envisions a                   author of the World Bank report. Finding the right
system of Latin American countries receiving finan-                incentives, he argues, will shake businesses into
cial incentives to advance low-carbon options.                     action. He cites fiscal subsidies for the development
    One of the more interesting projects derives                   of green technologies as a possible example. Public
from the World Bank itself. In September last year,                financing for reforestation or afforestation – estab-                      Brazil hopes
the bank announced a series of climate investment                  lishing forests where there were previously none –
funds worth more than $6.1bn. Financed by inter-                   in rural areas could serve as another.                                     to raise up
national donors, the mechanism will provide                            A context of global economic slowdown is not                           to $21bn from
funding via multilateral development banks to                      the time to discuss environment issues, sceptics
support low-carbon initiatives in developing coun-                 argue. But it is never the right time for sceptics. By
                                                                                                                                              international
tries, such as developing clean technology and                     establishing policies to promote low-carbon                                donors to finance
climate change adaptation methods.                                 economic growth, the region’s legislators hope not                         the battle against
    Meanwhile, Brazil has set up a fund of its own.                only to silence the critics but also to help tackle
The biodiversity-rich country hopes to raise up to                 climate change. I                                                          deforestation


  Wal-Mart                                                    The benefits are not all one-sided. Wal-Mart is          Hortifruti, a subsidiary of Central American Retail
                                                          provided with a reliable, more diverse net of                Holding. Wal-Mart has taken the opportunity
  Small but fertile                                       suppliers. By extending its supplier base, it exercises      provided by its new projects to attempt a broader
                                                          more influence over prices as well.                          partnership approach.
  By Oliver Balch, Latin America editor                       “There is a clear commercial benefit. We can help            In Guatemala, for example, the retailer is now
  Wal-Mart’s adoption and adaptation of                   our suppliers grow, which is very important for a            working with the US-based charity Mercy Corps and
  a farmers’ capacity-building programme                  supermarket in Central America,” says Jorge Calderón,        local non-profit Fundación Alianza. In El Salvador,
  in Central America shows the big retailer               regional director for institutional relations at Wal-Mart.   meanwhile, Wal-Mart has signed an agreement
  can think small                                             To its credit, Wal-Mart has not just sat back. In        with the economy ministry, as well as local non-
                                                          the past 12 months, it has exported the Tierra Fértil        profit service providers.
    osé Méndez and his wife, Martha, used to scrimp                                                                        “In terms of sustainability, we are starting to
  J a living harvesting cushaws (winter squash) from
  a seven-acre plot. Over the past three years, they
                                                                                                                       open our model and try and involve governmental
                                                                                                                       partners as well to see if this model can be repro-
  have quadrupled their land under cultivation and                                                                     duced in the region’s public policy,” Calderón says.
  turned their hands to growing a wide variety of                                                                          Scaling up the programme brings challenges of
  vegetables. Even better, they have a guaranteed                                                                      its own. Attracting international donors is key to
  purchaser for their produce: Wal-Mart.                                                                               speeding up the programme’s expansion. Working
      The US retail giant entered the Central American                                                                 with multiple partners also presents a more
  market through the acquisition of local supermarket                                                                  complex management model. Tierra Fértil’s
  group Central American Retail Holding in 2006. As                                                                    ultimate success is underpinned by its commercial
  part of the deal, it inherited a farmer assistance                                                                   logic. Persuading non-profit organisations and
  programme dating back more than three decades.                                                                       governmental agencies to think in market terms,
      The Terra Fértil (fertile land) programme offers    Sourcing policies not set in stone                           Calderón admits, often requires a shift in their
  technical expertise and business management                                                                          mindset.
  advice to more than 5,000 small farmers. It also        model from its established bases in Costa Rica,                  The same is true for the participating farmers.
  provides producers annual contracts at a fixed price,   Nicaragua and Honduras to new markets in                     José and Martha Méndez now have a telephone,
  enabling farmers to plan ahead. With a contract in      Guatemala and El Salvador.                                   electricity and a range of home appliances. As
  hand, farmers traditionally excluded by credit             The move has enabled the company to                       commercial expansion goes, they are content to
  providers can obtain business loans.                    innovate. Historically, Tierra Fértil was managed by         leave it there. I

				
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