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Sweet! New sugar factory in Paraguay expands capacity, job potential

 

Two European products made with organic sugar from Paraguay's Cooperativa ManduviráTwo European products made with organic sugar from Paraguay's Cooperativa ManduviráTen years ago, a group of organic sugar cane farmers in eastern Paraguay came together to sell Fair Trade sugar to European consumers. Today, thanks to USAID’s Paraguay Productivo, the cooperative has the financing to take them to the next level: a dedicated $9 million processing plant—the country’s first sizeable factory to be owned and run by small farmers.

For decades, farmers in the Arroyos y Esteros region of eastern Paraguay have transformed their sugar cane into miel de caña (syrup) and brown sugar. To compete against massive sugar processors, hundreds began working through a local cooperative, Cooperativa Manduvirá, to export certified Fair Trade and organic sugar to Europe. Yet the demand soon far outstripped the processing capacity of Manduvirá, which rents a factory 100 miles from the cooperative—a distance that hikes farmers’ transport costs and diminishes cane quality.

In December 2009, Paraguay Productivo (PyP) signed on with Cooperativa Manduvirá to realize the dream of a new processing plant. After obtaining a waiver allowing USAID to work with the cooperative—as its sugar is organic and destined for European, not US consumers—PyP’s finance team developed Manduvirá’s business plan to attract potential investors, and helped the cooperative navigate a vital financing mechanism, putting members’ lands and other assets into a collective trust fund to use as collateral, a necessary guarantee for lending institutions. PyP helped assemble an international financing coalition to pay for the $9 million plant and connected Manduvirá with the Inter-American Development Bank, which will continue working with the cooperative after the project ends.

Breaking ground on Cooperativa Manduvirá's new organic sugar processing plant with USAID Mission Director Rose Rakas (fourth from left)Breaking ground on Cooperativa Manduvirá's new organic sugar processing plant with USAID Mission Director Rose Rakas (fourth from left)

PyP also kickstarted technical efforts to meet the new sugar cane demand, providing an expert to help Manduvirá develop plots planted with new varieties and apply appropriate technologies for high yield, which translates into more money for each farmer. Ultimately, Manduvirá’s cultivation area will expand from 2,000 hectares to 3,000 hectares, involving more than 1,000 families and allowing the cooperative to process 20,000 tons of sugar a year.

It is the first time in Paraguay that a factory of this value will be built by an organized group of small farmers. Once up and running in 2013, the factory will generate an estimated $20 million annually, benefiting more than 15,000 people through direct and indirect employment.

Published January 2012