A case study of a successful Projeto Marketing Municipal: Mafra

Mafra is a Brazilian city of about 50,000 inhabitants which is located at the border between SC and Paraná, where it has a twin city, Rio Negro with about 35,000 inhabitants. Even though only a third of Mafra’s population is living outside the boundaries of the urban parameter, it is basically a rural place. Mafra’s industry is resource-based - sawmills, furniture and other wood products, brick manufacturing; the only apparently "modern" firm is a ceramic tile manufacturer whose performance indicators, however, are below those of competitors elsewhere in SC. Mafra has got a somewhat stronger profile in services (especially wholesale and retail trade, medical services, and education) as it is the center of a micro-region encompassing a number of smaller towns. Per-capita-GDP was about R$ 4,800 in 1995 (at that time, the Real had about at 1:1 parity with the Dollar), i.e. 20 % below the average of SC.

Economic promotion activities started in the mid-1990s. In 1996 local government succeeded in attracting a factory of an U.S.-firm which will employ 85 employees at its final stage. The firm is producing surface replacements for truck tires, using a high-tech process. There were no subsequent investments, but this experience created a consciousness regarding the possibilities of local activities. In 1997, a new mayor entered office who picked the former president of the local chamber (ACIM) as secretary for economic development. Both participated in 1997 in a seminar on concepts and instruments of local economic promotion organized by Fundação Empreender (FE). In 1998, ACI and city government invited FE to support the elaboration of an economic development strategy, called "Projeto Marketing Municipal". The proposal of the FE consultants was to conduct a quick appraisal of competitive advantages and disadvantages.

The appraisal exercise was conducted in September 1998 by two FE consultants, accompanied by the executive secretary of ACIM. The main findings were

• relatively weak structure of industry, overall mediocre competitiveness of industrial firms, but some potential in trade and agriculture;
• an adequate structure of support institutions, especially regarding education and vocational training, a highly competent agricultural extension NGO (BNAF), two credit cooperatives for agricultural development with some potential, and a very high credibility of ACIM;
• a critical financial condition of the city government;
• a strong commitment of local leaders and organizations to get involved in economic promotion as a result of a sense of a looming crisis, plus a strong commitment to collaboration between organizations and associations.

The proposals of the FE consultants included conceptual issues and concrete suggestions. Regarding conceptual proposals, the consultants tried to convince local actors that the main approach to local economic development should be to mobilize existing potentials (rather than trying to create from scratch some structures in areas which appear to hold a lot of potential, like conference tourism where Mafra so far has next to nothing to offer). They also tried to get across the message that economic promotion should be about creating a difference, a specific local profile which cannot easily be replicated elsewhere, a profile which creates a localized competitive advantage. Concrete suggestions included connecting local agriculture with local trade, strengthening existing industries (for instance by launching energy efficiency programs), and developing a difference in the area of tourism. The subsequent activities of ACIM focused mainly on agriculture/trade, tourism, and energy (Santa Catarina is being connected to the Bolivia-Brazil pipeline for natural gas, and it is crucial for the region of Mafra with its energy-intensive resource-based industries to get connected).

Linkages between local agriculture and local trade

Activities in this respect built on the existing initiatives of BNAF, which had gone on for two years and so far had gone more or less unnoticed by other local actors. The work format of BNAF was based on a new concept of associativism. BNAF encouraged smallholders to form associations with about ten members, each initially focusing on just one product. Each association is accompanied by BNAF’s consultants. Each smallholder who wants to enter an association is obliged to pass through a week of training at EPAGRI, a government agricultural research and advisory agency. At the beginning, the main product was tomatoes which were grown in simple, cheap greenhouses (consisting of a wooden frame covered with robust transparent plastic). Subsequently, new products were introduced, including some cultures for greenhouse cultures (zucchini, cucumbers, melons, and strawberries) as well as other products (milk, honey, beans, snails, and rabbits). BNAF receives a small amount of government subsidies and is otherwise reliant on financial support from its target group, i.e. families owning small properties. It is scanning worldwide experiences in agricultural innovation; BNAF consultants have paid visits to Israel, France, China, and Mexico to get first-hand information on new techniques. In September 1999, BNAF gave assistance to 800 smallholders in Mafra as well as neighboring towns, with more families waiting to be integrated.

The cooperation between BNAF and ACIM involved two aspects: linking BNAF and its clientele with local trade, and conflict resolution. Linking local small producers with local trade was no easy task. Local supermarkets had tried to purchase vegetables from local producers before, but this had failed due to unreliable and predatory behavior of the producers. Ever since local producers had sold their products to wholesale traders in Curitiba (two hours away from Mafra), and supermarkets had purchased fruit and vegetable there. Convincing the supermarket owners to give it another try with local producers, this time with the intermediation of ACIM and BNAF, involved intense persuasion by the executive secretary of ACIM. Initially, it involved only tomatoes (with everybody being better off - producer prices were 31 % higher, purchasing prices for supermarkets 22 % lower, and the consumer price dropped by 15 %), subsequently being expanded to other products. Local marketing of milk involved one association investing in equipment to sterilize and package the milk. Producer prices rose from R$ 0,16 to R$ 0,41, with the producers still selling it at a much lower price than large firms. It happened thus that the association won a bid to supply local schools against large competitors like Parmalat.

An unexpected effect of the link between producers and trade, and of the trust which quickly built between BNAF and ACIM, was that local trade firms started to deposit money at one of the local credit cooperatives which is working closely together with BNAF. Initially, this involved an amount of about R$ 600,000, which by September 1999 had grown to more than R$ 4 million and then also involved the other credit cooperative. While in September 1998 BNAF had various projects in the drawer and was desperately, and with little success, looking for funds, today the situation has reversed - BNAF has to work hard to put all the money at productive use.

Conflict resolution by ACIM so far involved two cases which might have blown the whole experience. First, BNAF had come up with the idea to organize joint purchases of all the affiliated smallholders. It turned out that the best way of organizing this was to organize an open auction, with the suppliers bidding against each other until the lowest acceptable price for various inputs was reached. The suppliers reacted by asking ACIM for support in forming a cartel to deal with BNAF. It took the executive secretary of ACIM several meetings to dissuade the suppliers from proceeding with this scheme, mainly by pointing out the fact that local agriculture is going through a period of crisis (since traditional cultures are becoming less productive and earning lower prices, while interest rates have been raised to extremely high levels during the last three years), and that is was in the long-term interest of suppliers to strengthen local producers.

Second, apparently one of the representatives of a large milk producer bribed a health inspector of the city government to classify the milk produced by the association as hazardous. The inspector inspected the association’s installations at ten o’clock in the morning, and by 3 p.m. came up with the incriminating exam. The manipulation was immediately obvious since the next laboratory is located in Curitiba; it was technically impossible to have an exam in hands within such short time. The association alerted ACIM, which immediately called for a meeting. It was decided to send a sample to Curitiba for an examination, and ACIM was to call the local newspapers immediately to alert them of the inspector’s fraud. This worked just fine - the real exam arrived the next day, showing that the milk was just fine; the newspapers published this result, thus reinforcing the standing of the local producer; and ACIM successfully lobbied with the mayor to have the corrupt inspector fired.

Tourism and paleontology

In terms of tourism, Mafra has a lot of potential - a nice landscape, beautiful waterfalls, extensive forests, and so forth. However, this is no particular advantage since all the municipalities in the region have such a potential. The difference between Mafra and neighboring cities is the fact that Mafra has a number of important paleontological sites, which are not just normal sites but actually prove the hypothesis that millions of years ago Africa and America were a single continent. These sites have been known since the 1930s, but they have never been systematically explored or exploited. The existence of these sites came back to the memories of many local actors when such a site was uncovered during the earth-moving for the construction of the plant of the U.S. firm mentioned before, with an immediate intervention of federal authorities and an acute risk that the firm would cancel its investment. It was through swift action of several local actors that the findings could be secured in the local university, and construction could proceed.

Leveraging the paleontological sites to attract tourists was one of the suggestions of the Projeto Marketing Municipal. Local actors liked this idea, and ACIM convened a working group of representatives of several organizations, not only from Mafra but also from neighboring Rio Negro, to elaborate a project (among them a retired professor, an internationally renowned specialist in the field). The project which evolved was quite ambitious: Create a National Center for Paleontology, not just for tourism but also as a research center, especially catering to visiting researchers and groups of students from Brazil and abroad. It also took not long to find the ideal place: a big and very beautiful building in Rio Negro, constructed as a Franciscan seminar at the beginning of the century, abandoned since the 1970s and recently partially renovated.

It took some time to overcome short-sighted rivalries and jealousies between Mafra and Rio Negro to get the project moving. A big step forward took place in August 1999 when the working group, together with representatives from the two city governments and city councils, defined six separate elements which together make up the whole project, which are to be divided evenly between Mafra and Rio Negro. In September, a memorandum of understanding was signed by the two mayors, the two presidents of the city councils, and the two presidents of ACIs. Three persons were identified who will work full-time for the project - one paid by the city of Mafra, another one by the city of Rio Negro, and the third one by both the state governments of Santa Catarina and Paraná. In terms of Brazil, such a project involving two cities from two different states is very unusual and a big achievement.

The direct economic effect has been estimated at R$ 5 million per year. However, this calculation was based on very restrictive assumptions, and counted tourism income only. It is quite likely that the direct and indirect effect of the project, once it will be up and running (probably early 2000), will be more substantial. Apart from that, it will raise a lot of attention for Mafra, which so far is perceived as a relatively unimportant backwater, and it will enforce the self-esteem of local actors in Mafra and Rio Negro, thus creating favorable conditions for further projects.

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