By Lucy Conger
Now, here’s something that doesn’t seem to make sense. Can you imagine exporting hot chili peppers to Mexico? Or exporting corn-husk decorations to Appalachia? What seems even more unusual is that hundreds and even thousands of microentrepreneurs in South and Central America are making a living by doing just that.
These non-traditional exports speak to the success of business development services, a new type of assistance to microentrepreneurs. Lack of credit is only the most obvious problem for microenterprises; they also suffer from poor access to raw materials and no information on marketable products or linkages to markets.
Today, a plethora of institutions provide loans to microentrepreneurs to answer their basic financing needs. But a handful of non-profit organizations and even commercial businesses are beginning to offer business development services as well. “We serve as the linkage between sellers and producers,” says Maria Emma Jaramillo, director of business development for Fundación Carvajal of Colombia, which is working with 70 producers of cayenne peppers and hot sauces in rural areas of southwestern Colombia.
A similar service for rural and urban artisans, predominantly women, is provided by three export companies in partnership with Weidemann Associates. “We bring the market to producers,” says Wesley Weidemann, president of the technical assistance agency, which links wholesale buyers of decorative home accessories with artisans who produce for local export companies in three Central American countries.
If microentrepreneurs are to create viable businesses, they must have markets—preferably steady markets—and their products must meet the requirements of wholesale buyers, retail vendors and consumers. On their own, small farmers, chili pickers, potters and corn-husk craftswomen lack the knowledge and resources to bridge the gap between their modest and often remote homesteads and the requirements of fancy shops or mass market outlets in the country’s capital or foreign lands.
That’s where business development services come in. In Colombia, Fundación Carvajal is working on both sides—supply and demand—to generate jobs, income and a market for campesinos. The Fundación helps organize peasant associations and trains small farmers to increase their production of chili peppers, which are sold to agro-export firm Hugo Restrepo, S.A., for processing. The resulting paste is exported to Mexico and the United States, where there is ample demand for hot sauces and cayenne, Jaramillo says.
It takes six months for extension workers to organize the campesino associations. The Fundación also offers the groups technical assistance in watering, cultivating organically and managing seedbeds. Campesinos also receive a course in small-business administration to prepare them for managing chili-processing activities.
Helping the farmers increase their harvests keeps the processing plant running by ensuring an adequate supply of chilies. But improving agricultural production is only the beginning. “We do not want to be selling chilies only as a fruit,” Jaramillo says. “We want also to process them and incorporate women into the project.” Fundación Carvajal is now seeking financial support so it can include another 60 farmers in the project.
Typical of business development services for microenterprises, the chili project is multilayered and involves coordinating with a range of organizations and businesses. Colombian oil company Ecopetrol, which supports social development in oil-producing areas, was an early promoter of the project. The local municipal government provided land and a warehouse where the bottling plant is located. Ecopetrol and the campesino associations are financing the purchase of machinery and equipment for the plant. Fundación Carvajal set up the links with an export trading company and the secretary of agriculture that provide technical assistance for the producers and market their chilies. To raise funds for expanding the plant, Fundación Carvajal is “beginning to make strategic alliances with private companies and the oil company,” Jaramillo says.
In Central America, Weidemann Associates is providing business development services for a project that will train 2,000 female artisans and craftswomen and link them with national and international markets. “We’re not running this as a project; we’re looking at business linkages so that when money runs out, the business will continue,” Weidemann says. Based in Virginia, Weidemann Associates has contacts with wholesale buyers ranging from Bloomingdale’s to Pier 1 and Home Depot, and will promote Central American decorative home accessories, gifts and furniture to these and other U.S. buyers.
Weidemann contacts wholesale firms’ buyers and product designers. The designers design a product and the buyers sign off on it, indicating a commitment to purchase samples. Weidemann then commissions the samples through the Central American export companies, which have artisans produce them. Those samples are presented at major home furnishings fairs; if they find interested buyers, Weidemann arranges for technical assistance to help the artisans turn out large quantities of quality product. “Artisans have skills, but they have to be shown the colors, the right dyes,” says Weidemann.
Three experienced and growing export companies—Atuto in Honduras, La Casa in Guatemala and Oyanca in Nicaragua —work, in turn, with hundreds of artisans and producers. “If you get a production group hooked into a mainstream marketing organization, they’re on the way,” says Holland Millis, executive director of Atuto, which helps 700 artisans find export markets for their products.
Millis has developed the handicrafts industry as a decorative accessories industry, and the business relationships he manages resemble manufacturing processes more than traditional handicraft production. Atuto specializes in products—including candleholders, iron baskets for gardens, topiaries, clay bowls and nightstands—that “are nothing people have to have but they feel empty without,” he says cheerfully. The products are sold to wholesalers who then sell them to thousands of stores.
Some 110 manufacturers work at Millis’ factory in Tegucigalpa, and more than 600 microentrepreneurs—along with many more family members—work as subcontractors making corn-husk flowers, clay pottery and iron decorations. Most Atuto products contain multiple components that are produced by artisans in different areas and assembled at the factory. For example, topiaries have bushes made of corn husks, ironwork details, wooden poles and clay finials and are set into ceramic vases after the parts are assembled at the factory.
The rural producers are scattered over an area 100 kilometers square, south of Tegucigalpa. Atuto sends a trainer from the factory to teach them what products to make and how to make quality items.
Another partner in the project is La Casa in Guatemala, whose main product lines are pottery tabletop accessories and candleholders, bamboo wind chimes and natural fiber placemats and bags. Weidemann Associates is arranging for designers from the United States and Guatemala to help artisans remodel their products for the major industry fair in High Point, North Carolina, in October. “We show the designers what these women can do, and the designers see how their items can be improved so they don’t have to make a wholesale change,” says Ian Gonzalez London, director of La Casa.
Technical assistance from Weidemann will also improve the quality of the products—for example, making the fragile low-fire pottery sturdier by introducing high-fire kilns. The financial support channeled through Weidemann “enables me to widen the scope of my work and to bring more items into the product line,” Gonzalez says. He will now work with indigenous potters in Quiché, a remote area, whom he could not have reached with his own resources.
The Weidemann project will help create markets in another way. By bringing together crafts from three countries and hundreds of producers, the project will generate the critical mass needed to win the attention of volume buyers. This should overcome the fears of buyers who say that Central America’s production capacity is limited. “We have a regional strategy—they will source together and as a result of the project will export jointly,” says Jacky Bass, principal associate of Weidemann Associates.
From his vantage point in Honduras, Millis of Atuto claims that Central America can compete with China, the looming giant competitor in low-cost crafts. Central American producers can exploit advantages of geography and volume. “You can get to Central America and be back in your office in two days. There’s little time change,” says Millis. “And we can manufacture in quantities that are not Chinese-size. We don’t need orders of 20,000, so we have an edge with some wholesalers.”
Business development services require strategic thinking, diverse relationships and a wide range of areas of expertise. As microenterprises become linked with global markets, the need for these services will grow and the range and complexity of services will expand.