Strengthening Ties with Indigenous Communities: How Paradise Ingredients Builds Inclusive, Resilient, and Scalable Supply Chains Paradise Ingredients is a leading banana puree processor based in Costa Rica.i It sources 90 percent of its organic banana supply from indigenous Bribri smallholder farmers in a remote region of the country. The company’s use of inclusive employment practices helped Bribri smallholders to increase production volumes, lower market entry barriers, and improve their livelihoods, while enabling Paradise Ingredients to grow its offerings and brand. The Challenge Inclusive Employment Solutions Paradise Ingredients wanted to develop a new range of organic banana products, but conditions in most of the country required the use of fertilizers and chemical control of pests and diseases. Participation In 2016, it began working with indigenous Bribri smallholder farmers in the remote Talamanca region in Costa Rica. The Bribri Committed to purchasing 100 percent of the faced a wide range of barriers that have resulted in poverty rates community’s crop, thereby providing stable of over 70 percent, and only produced a small harvest of organic incomes. bananas. Paradise Ingredients wanted to find ways to enable the Bribri to commercialize production, access new income-generating opportunities, and improve their well-being. Advancement Benefits for Business Climate-smart, culturally-sensitive technical assistance along with financial management training to a local producers’ association. Secured a reliable local source of raw product. Increased production in the Supply Chain higher-value organic market. Resilience: Resilience Technical assistance more than Advance payments to the local producers’ doubled the supply of organic association to make capital investments. bananas from indigenous Human Capital producers in two years. Performance Benefits for Workers Many of the 170 indigenous producers participating in the Talamanca Aligned with growing consumer demand project have increased their banana production by 100 percent, with for organic products. Access significant positive impacts on their incomes, living conditions, and to markets investments in health and education. Secured international investment through its commitment to improving Access to well-being at the base of the pyramid. Capital 1 Paradise Ingredients: Building Resilience and Scalable Supply Chains in Indigenous Communities Industry: Banana processing Operations: 99% of the company’s products are exported to major food and beverage manufacturers worldwide. Base of the Pyramid Workforce: In 2021, the company employed 353 people, 42% of whom were women. Roughly 80% were in low-skilled production roles, such as banana peelers. It sources 90 percent of its organic banana supply from indigenous Bribri smallholder farmers who face discrimination, limited access to public services, market entry barriers, and land rights issues. 2 Paradise Ingredients: Building Resilience and Scalable Supply Chains in Indigenous Communities How Paradise Ingredients Puts Inclusive Employment Solutions into Practice The company’s Talamanca Project works with the local Ucanehu The indigenous producers who participated in the Talamanca producers’ association and its 170 self-employed Bribri farmers to Project saw significant increases in production. In the first year increase their productivity. Paradise Ingredients provides financial alone, banana yields increased by 70 to 80 percent, and many management advice and technical assistance to improve production producers doubled their production. The corresponding increase in volumes, while respecting indigenous agricultural practices. incomes has been transformative, allowing producers to invest in mobile phones, transport, and their children’s higher-level education outside the community. Participation: Reduce entry barriers In 2022, the project entered a new phase using ‘lead farmers’. This model provides more intensive technical assistance for two local Since the project’s inception, Paradise Ingredients leaders, so that they increase the productivity of their plots. They are has consistently purchased 100 percent of the community’s crop, then expected to inspire neighbouring farmers to learn from them, providing smallholder famers with crucial market access. On thereby further increasing productivity. This is expected to create a average, the company sources 30,000 kilograms per week from domino effect that spreads new knowledge and techniques to all the the Ucanehu Association, and over the coming years, the company association’s farmers. expects to continue purchasing all of association members’ organic bananas. Along with technical assistance for smallholders, Paradise Ingredients has helped the Ucanehu Association to improve its Prior to the project, due to their remote location and limited financial management. This included an analysis to identify options commercial experience, most smallholders only grew crops for for reducing operating costs. Third-party crop transport was their own consumption, or they earned just a small amount from identified as a significant cost, and as a result, the association will be the sale of their bananas, cocoa, corn, cane, and wood. Improved using advance payments from Paradise Ingredients to purchase its market access has resulted in a substantial increase in their own trucks to transport members’ bananas. earnings. “With this small farm and the little things that I’ve Advancement: Build capacity for self-employment done… I’ve been able to send my children away to study.” Each month, Paradise Ingredients sends agricultural technicians to Talamanca to provide free crop management training Farmer, Ucanehu Association and technical assistance for Ucanehu Association members. This technical assistance focuses on helping smallholders to increase their production by identifying and recuperating unplanted areas on their plots, increasing the total production area, and improving the productivity of existing plants. Resilience: Enhance job and income security Technicians introduced new productivity techniques and inputs, At the beginning of the harvest, Paradise Ingredients such the use of organic fertilizers with natural plant residues, provides advance payments to the Ucanehu Association for which protect plants from disease and stimulates growth, thus 50 percent of members’ projected production.ii This allows the reducing time between harvests. association to improve its financial planning and invest in much- needed equipment and transport. The Talamanca Project respects the community’s traditional growing practices, including cultivating bananas with no use of In turn, the association pays its producers on a weekly basis, which pesticides, minimal preparation of the soil or use of machinery, gives producers important financial stability compared to waiting and respect for nearby forests. This alignment with traditional for the income from their harvest. methods has been crucial for securing acceptance of the company’s technical assistance. The project also helps farmers to manage risks associated with climate change. For instance, technical advisors have encouraged farmers to cultivate multiple crops in the same space to protect against pests and crop disease. 3 Paradise Ingredients: Building Resilience and Scalable Supply Chains in Indigenous Communities The Benefits for Business: Paradise Ingredients’ Experience Supply chain resilience Access to markets The Talamanca Project has provided a local sourcing Growing demand for organic bananas provides solution for Paradise Ingredients to scale up its organic offerings. higher-value opportunities for Paradise Ingredients, as well as for Sourcing within Costa Rica is a key aspect of the company’s brand, the Talamanca producers, because organic banana products tend to demonstrating the company’s support for local producers while sell at a higher price than conventionally grown bananas. Having a lowering transport costs. larger, secure supply of organic bananas means Paradise Ingredients can plan the expansion of its business, secure new clients, and The project’s climate-smart technical assistance provides investors develop new organic products, such as juices. with assurance that Paradise Ingredients has a resilient, local supply chain over the long term. According to company’s management, the demand for organic banana products in the European Union alone is growing at 10 to 15 percent annually, providing significant future opportunities for “The real benefit is that we know that year-on-year Paradise Ingredients. we will have more organic produce and we can scale up…the effort we put in this year, pays off next year.” Access to capital Alfonso Vargas, Senior Agriculture Coordinator, Paradise Supporting workers at the base of the pyramid Ingredients in its supply chain has enabled Paradise Ingredients to attract international investment to finance business growth. The company’s people-centred approach has enabled it to align closely with the goals and philosophy of its key investor, the Central American Small and Medium Enterprise Investment Fund (CASEIF), which seeks Human capital performance investments that achieve high social standards and ensure positive impact. Since Bribri producers began receiving technical assistance, they have steadily increased their productivity, year- CASEIF was impressed by the company’s policies and its technical, on-year. As a result, Paradise Ingredients is confident that it can human, and operational capacity, as well as its potential to improve continue to expand its organic product line. opportunities for farmers and their communities.iii In 2018, after only two years of providing technical assistance to the members of the Ucanehu Association, the company was able to purchase twice the volume of bananas that it had in 2016. In addition, owing to the high demand for its products, Paradise Ingredients estimates that it could buy at least 30 percent more of the community’s bananas in 2022 than it did in 2021. 4 Paradise Ingredients: Building Resilience and Scalable Supply Chains in Indigenous Communities Endnotes & Sources i Paradise Ingredients was acquired in 2016 by CASEIF, an IFC client and private equity investor, which supports the growth of SMEs. IFC made a $10 million equity investment in CASEIF in 2015. Through CASEIF, IFC encourages transparency and good corporate governance for the sustainable growth of SMEs that are crucial to Central American economies. Paradise Ingredients. 2021. Our Organic Plantations. Paradise Ingredients. https://youtu. ii be/0mkDHE1rH7E de Leon, Monica. 2020. “Ripe for Growth.” IFC Insights. Washington DC: International iii Finance Corporation. https://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_ external_corporate_site/news+and+events/news/insights/ripe-for-growth This case study also used company interviews and focus group discussions conducted in February–March 2022, and workforce and other data provided by Paradise Ingredients. IN PARTNERSHIP WITH 5 Paradise Ingredients: Building Resilience and Scalable Supply Chains in Indigenous Communities