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Access to markets case studies
CACH CACH, a rural women's association in Chordeleg, Ecuador, is dedicated to commercializing artisanal products — specifically Panama hats — inside and outside the country. Weaving hats and other household objects is a skill that has been passed down to more than 70 per cent of rural women, from generation to generation. Chordeleg is Ecuador's artisanal centre, and competition on the local market is fierce. 
Women weave hats and other domestic objects with paja toquilla, a local straw.
Credits: IFAD/A.Manikowska, 2007 | CACH has seen hard times. Twice in its history the organization has had to start anew, repaying debts and regaining strength after suffering from exploitation and abuse. The association’s name had lost credibility and 80 per cent of its members had abandoned it. With the support of local government and external technical support, the association was able to overcome the crisis and regain control of the business. In its new reincarnation, CACH focuses primarily on producing hats for local markets and for export through fair trade channels. The association strengthened the business branch and the organization of members, established clear communication channels and worked to distribute production orders efficiently throughout the network. To avoid the conflicts of interests and abuses of the past, business management has been kept separate from the association's leadership, elected annually. The association improved the quality of its products and was able to increase its income and redistribute it to members. The three main strategic actions that have enabled CACH to access markets successfully are: - continuously improving the organizational structure and operations, improving quality and diversifying products, researching and monitoring markets, analysing costs and introducing innovations in design
- identifying appropriate commercial partners among various intermediaries such as export firms, non-governmental organizations and the country’s main distributors and shops
- adjusting marketing strategies to meet the requirements of local, national and international markets
Association members have learned through experience how to adjust their social structure and organization to produce for competitive and constantly evolving markets, "changing mentalities, not culture". They have also learned that by investing in building the capacities of the new generation of rural women, they can gain in autonomy and improve the management of the organization. Another lesson that emerged was that involving the community in the entire production and market chain not only allows them to control their product better, but it also translates into social and political empowerment. But individual income generated seems to be insufficient for the women, who consider weaving for CACH as a secondary activity. The activity has the advantage of being flexible and home-based – women weave whenever they have time — but they consider the earnings too low to justify dedicating more time to weaving, and they prefer to farm or tend to their animals. Lessons learned
| Markets and marketing opportunities CACH provides an excellent example of how attractive the fair trade market is for small-scale rural producers. It is a market that fits their scale of production and allows them to sell small quantities -- in this case about 1,000 hats -- at favourable conditions. The ‘fair intermediary’ pays three times the price of local middlemen, and this is itself a big step forward, although the final product is sometimes sold for 100 times that price. By selling through fair trade, CACH increased monthly profit from US$50 to US$150. Selling all production on one market is a risky business strategy. The fair trade market is very volatile and is based on ideological criteria rather than quality. It is much less transparent than one would hope, and association managers and members admit that they do not know either the selling price or how their products are presented in European fair trade shops. CACH also has an artisanal shop in the centre of Chordeleg, which the municipality allows them to operate at no cost. There they sell small objects made of straw, such as baskets and toys. A visit to the shop revealed shortcomings in their marketing strategy. The straw hats on display are not clearly identified as Panama hats, which originated in Ecuador but got their name because they were used by the construction workers who built the Panama Canal at the beginning of the twentieth century. Recovery of the designation of origin of the Panama hat is crucial to adding value to the product. Although Panama hats are the association’s main product, they represent only 10 per cent of the total amount of straw products in the shop. Producers need to communicate to customers the fact that they export the product, as a way of increasing its visibility and value on the local market. Instead, their shop looks like any other handicraft shop for tourists. Organization andleadership CACH was created 20 years ago as an association of the region’s poor women farmers who were struggling to maintain their weaving traditions and to find alternative sources of income. Even today they consider this activity as a supplement to their household and family obligations. According to the women producers, an increase in production would destabilize the balance of their work load. This explains the low volume of productivity of the members. Soledad López is the indisputable leader of the association and of the community. The post as manager of CACH rotates every two years among members. Innovation and technology CACH owns a facility for processing, colouring and drying the straw. It is paid for by the same Spanish NGO that acts as intermediary in distributing the association's production to European fair trade shops. The facility made it possible for members to introduce colour into their products and create new and different products. A formal innovation plan does not exist for the products, but individual producers introduce changes according to their own creativity. Despite external support, there were no changes in the internal management processes of the organization. Business management Business management is one of the association's weaknesses. Management responsibility has been passed from one person to another, resulting in failures and business collapse. A rotating management policy is a palliative measure, but it is not the best strategy in the opinion of the route participants, since because it does not allow for accumulating knowledge and because not all members have sufficient management skills. There is no strategy for building capital, mainly because of past failures and mismanagement. A credit fund allows members to borrow money to purchase raw material. Members are not taking into account future needs for management of the aspects that are provided for today by supporting institutions, such as the processing facility or rental of the shop, which is now covered by the municipality. There is no accounting system in the shop, which does not produce receipts or keep accounts. | Source: IFAD
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Paja toquilla straw is processed and bleached in the sun or coloured.
Credits: IFAD/A.Manikowska, 2007
Specific goals of the visit were to: learn about the association and its business processes and how it improved members' living conditions learn about the empowerment process experienced by CACH members learn how gender and cultural issues act as catalytic factors in small rural producers' associations learn how CACH was able to add organizational, productive and commercial value to traditional knowledge and practices learn about the association’s strategies for innovation in production, processing of the raw materials, design and manufacturing of new products and strategies for positioning these products in the various markets learn about the role played by external partners in the functioning of CACH learn about the government-sponsored local network for the development of the area learn about the impact on household income and living standards of the business observe how women weavers integrate domestic, paid and handicraft work observe all phases of the association’s work
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