HSBC NEXT GENERATION DEVELOPMENT PROGRAMME

FIELD CHALLENGE - OAXACA

This document provides an overview of the field project challenge for the Oaxaca
site. The team of participants assigned to this project should review this briefing,
read and investigate the key documents and research topics outlined in order to
maximise their impact on arrival at the site.

It is important to remember that the team

should make contact with the client at an early
stage to understand the challenge fully and
formulate a way of working so questions and
clarifications can be answered in a timely
manner. The group must ensure that all team
members (including the learning facilitator and
business sponsor) are fully briefed in advance
of the field event and have the same level of
understanding to ensure maximum impact on arrival.

CHALLENGE

To assist your clients to develop a regional branding of forestry products for

Oaxaca Indigenous Communities and help them finding ways to access local
(national) and international markets.

LOCATION

Four Indigenous communities at the Sierra Norte, Oaxaca, Mexico: Comaltpec,

Trinidad, Xiacuí and Capulalpam.

http://maps.google.co.uk/maps?
f=q&source=s_q&hl=en&geocode=&q=santiago+xiacui&sll=17.058449,-96.731
986&sspn=0.899309,1.235962&ie=UTF8&ll=17.292585,-96.434834&spn=0.224
546,0.30899&t=h&z=12

REGION

Mexico is a mega diverse country in which Oaxaca, a

state located in the country’s southern part stands
out for its cultural heritage with 15 indigenous
languages and many local variants. This is believed
to be one of the regions in world where agriculture
was first invented (Caran et al. 2006). It is also one of
the areas within the American continent of greatest
human interference in the natural environment. Its
cultural diversity and the different ways in which
landscape was managed have made Oaxaca one of the richest biodiversity
hotspots in Mexico. The Sierra Norte, located on in the north part of Oaxaca is
covered with different types of forests, including tropical rainforest, arid open
forests and temperate pine-oak forests. Pine forests have the highest
commercial value in the region.

After many years of government’s ownership and use of Oaxaca’s forests, local
communities managed to regain control and tenure of their land and forests in a
long and confrontational process. As a result, Mexico managed to develop one of
the most progressive socio-environmental forestry policy approaches in the
world (Chapela, 2005; Sunderlin et al, 2008).

Over the past 15 years local indigenous communities have developed a sound
forest management system (Klooster, 2000). The communities in Sierra Norte
have managed to organize themselves and set up a formal association: the
Zapotec and Chinantec Communities’ Union (UZACHI - Unión de Comunidades
Zapoteco-Chinantecas). Since 1995 communities’ forests managed by UZACHI
have been certified by the Smart Wood program meaning they meet
international social, environmental and economic standards. To receive and
maintain the certification, UZACHI has to go through a series of international
technical audits and follow guidelines set by the international Forest Stewardship
Council.

Local Context

The Sierra Norte or Benito Ramirez Juárez mountain

range is located two hours away from the
city of Oaxaca. The high altitude of the “Sierra Norte”
provides the perfect climate for the growth of Pinus. A
tree widely used in
the forestry industry especially pulp and paper,
furniture and civil construction. This mountain
ecosystem also hosts several other species and is
considered a biodiversity “hot spot”, with many
endemic species, some of them under threat of
extinction.

The inhabitants of this region are native

Mexicans, descendants from two major ethnic
groups: the Zapotec and the Chinantec. Together they
own 25,000 ha of forest, entirely managed by a secular
and sophisticated system in which decisions are made by community members
in a truly participative process. The two indigenous groups are organised in 4
communities: San Mateo Capulalpam, Santiago Comaltepec, La Trinidad and
Santiago Xiacui.
Each community controls and manages its own territory. The management of
natural resources - wood mainly - as well as the provision of services like eco-
tourism is done by Community Based Enterprises (CBE). Each one of the four
communities have its own forestry CBE whose main objective is to create jobs for
community members, contribute to community well-being, manage the forest in
a sustainable way, cut, process and sell the wood. CBE’s are managed by
community members even though some of them lack professional training and
have limited administrative experience. Managers are appointed by a
Community Council and are expected to change or leave jobs every two years.
This has an impact on the development and implementation of business
strategies. In fact, by the time new managers begin to understand the market
and the business; they are relocated to other areas or other businesses within
the community.

This high turnover prevents mismanagement practices but also increases

inefficiencies drastically since new managers spend a lot of their time in training
and learning about the business. This control mechanism is a cultural practice
that is unlikely to change in the short term. On the other hand, it makes
management more transparent as all managers are required to do a rendering of
accounts before a community assembly on a regular basis. Even though
communities are quite similar and explore the same natural resources (wood),
each one sells their production independently and without any shared branding
or joint commercial efforts.

Profits made from selling wood, eco-tourism and other forest products are
invested in community’s projects, like building schools, health programmes or
other projects prioritized by the community. There is still room to increase profits
from the forestry business but the main challenge is to improve the way the
business is being managed. This is the key obstacle preventing Communities’
CBEs to increase their income from wood.

PROJECT DESCRIPTION

In 1989 the four communities jointly set up

the “Union de Comunidades Produtoras
Forestales Zapoteca Chinanteca de la Sierra
Juarez”, (Sierra Juarez’s Zapoteca
Chinanteca Union of Forestry Based
Communities) or UZACHI. UZACHI’s main
objective is to provide technical advice for
the communities and assist them on how to
better manage their forests and process the
wood. UZACHI has a team of forest
engineers and social workers who works with
community members from all 4 groups.

UZACHI’s continuous work has led to the certification of forest products by Forest
Stewardship Council, FSC (http://www.fsc.org/). FSC is a certification
body internationally recognised by the forestry industry, which awards
certificates of good management to forestry and timber processing companies
who manage their forests according to pre-defined social, environmental and
economical standards.
FSC certification is a costly process but usually investments pay off since the
market pays a spread for FSC products. In many countries FSC certification is
now a requirement for forest products imports, in a process similar to ISO 14.001
certification. Unfortunately the communities from the Sierra Norte aren’t bearing
the commercial benefits expected from the FSC certification. Local and regional
wood markets in Oaxaca, where most of its production is currently being sold
don’t pay extra money for the FSC stamp and wood is traded according to
standard market prices. To make things worse, there is little evidence that there
is a big market for FSC wood in Mexico at all. It means that these communities
are incurring in higher production costs (FSC certified wood production
certification costs are usually about US$5,000 per year) without any additional
commercial advantage to date.

UZACHI ten year’s strategy plan recognises this problem. They are working
towards integration of the four communities to go beyond technical cooperation
and move towards joint commercialisation through the development of a
regional brand. They believe that horizontal integration is the way forward and
should not only reduce costs and increase efficiency but also boost sales by
accessing markets that recognise the value of FSC certification. Furthermore, by
selling their production together under a shared umbrella brand these
communities can access wholesales markets, something they cannot do on their
own given their low individual output. A common regional brand is also
expected to promote eco-tourism, an activity all communities have just begun
to explore, but again in isolation.

CHALLENGE

The challenge posed for UZACHI’s communities is to increase the revenue from
certified forest products by reaching markets that are willing to pay a spread for
their FSC certified wood. This means going beyond the regional (sub national)
market and tapping into national and international buyers. A horizontal
integration approach is required to coordinate production output and sales
strategy, in particular product standards, price, marketing strategies and
branding.

A number of challenges are believed to be preventing the Sierra Norte

communities from increasing their revenue from the exploration of timber:

1. Management structure and integration: collective action amongst

communities is happening at a technical level. Although many business
opportunities have been lost, keeping several small administrative units
has proven to be an efficient effective way to avoid any mismanagement
that may jeopardize the survival of UZACHI, and the continued good forest
management. A review of management processes in each of the
community forest enterprises is required. Management processes need to
be standardized in order to minimize the effects of high turnover.
Horizontal integration among the 4 communities can bring efficiency
levels up and have a direct impact on revenue. Nevertheless, this is a
cultural process that operates on its own timing and needs to be
considered accordingly.
2. Collective branding: the four Sierra Norte communities do not have any
branding at all. Their forest products are FSC certified and could be sold to
niche markets. A branding process needs to take into account not just the
products in itself but also the whole social context where these products
are made. Consumer habits are increasingly being influenced by social
attributes of products especially by international markets.

3. Access to market: new avenues for positioning their products need to be

explored. A market segmentation strategy based on research can provide
a sound way to identify partners in markets that haven't yet being
contacted. The FSC wood is a worldwide recognised product especially in
Europe, US and Japan. There is a need to identify the appropriate
commercial partners who can bridge this commercial gap.
TEAM PROJECT

Your project is to assist the UZACHI to increase and enhance their revenue in a
sustainable way.
Specifically you are requested to assist UZACHI to develop a collective branding
system that may help to access socially and environmentally aware niche
markets. You will need to take into consideration that despite management
changes are necessary, the decentralized business model has proven to be
economic and social resilient. You may want to consider the following:

 Creating a branding that incorporates the values, beliefs and attributes of

the Zapotec and Chinantec cultures
 Supporting UZACHI to access new and international markets for
Sustainable Forestry products using the internet
 Developing a set of business guidelines, standards and measures that will
improve the organisation of the production process of Sustainable
Forestry products within the four UZACHI communities.
 Fostering ecotourism in the region to improve communities’ livelihoods.
 Developing a business plan for the UZACHI branding system.

CLIENT

PRIMARY CLIENT

UZACHI is your primary client and many of the recommendations made by NGDP
team will be incorporated into their ten years strategy plan. UZACHI has received
technical advice and guidance from ERA, a local NGO whose objective is to
support communities in promoting sustainable local development. Given their
close interaction and in depth knowledge of the project, ERA will act as your focal
point for information gathering and contacts.

Contact:
Francisco “Paco” Chapela
Coordinador de Estudios
Estudios Rurales y Asesoría
email: fchapela@era-mx.org
http://era-mx.org
http://fchapela.era-mx.org
Tel.: +52 (55) 8421 8441
skype: era-oax

SECONDARY CLIENT

Communities
UZACHI was set up by 4 indigenous communities living in the Sierra Norte
region. Under the 1917 Mexican constitution, the federal and state governments
officially recognized the ownership of territories by those indigenous groups and
traditional communities. After the approval of the Agrarian Act in 1982,
communal lands were also recognized as common property, and fell under the
same environmental protection bill just as any other rural property. UZACHI’s
general assembly is responsible for making decisions about how the
communities will manage its natural resources as well as how profits will be
invested in the community. The council also promotes communal social benefit
and supports production initiatives. The assembly grants plots to each family and
looks after the conservation of grazing lands, water bodies and forested areas in
the commons. Each community is officially represented in UZACHI’s council by
their own commons council commissioner (comisariado de bienes comunales).
Assembly members are the President, a secretary and a treasurer with a 3-year
term. The general assembly also appoints a surveillance council, which oversees
the commons council to assure that the Assembly agreements are fulfilled.

The Four Communities

Comaltepec

The name "Comaltepec" is a Nahuatl1 word meaning

"Comal hill". "Comal" is the Nahuatl name for the dish
used to cook tortilla, and "tepec" means "hill" or
"mountain". Santiago Comaltepec is a Chinantec
community. It has 1,386 inhabitants and most of them
speak Chinantec (1,203). People make their livelihoods
from agriculture, gathering of forest products, coffee
growing and cattle ranching. Over the past few decades,
most of the younger generation emigrated to the United
Stated and now send remittances to their families.
Comaltepec’s territory is about 12 km long with 16,000
hectares in total, covered with rain forest, mesophyll forest, elfin forest, oak-pine
forest and dry forest. Apart from agriculture and gathering of non timber forest
products - activities which are undertaken by families - in 1985 the Comaltepec
community started up a community based forest enterprise (CBE), with a small
sawmill, trucks, winches and a tractor for road building and maintenance. The
main settlement is Santiago Comaltepec with secondary settlements spread over
the community territory named Soledad Tectitlán, La Esperanza y Zoyolapan.

Capulalpam

The name "Capulalpam" comes from the Nahuatl name for the Capulín tree
(Prunus capuli). So Capulalpam means “the land of
capulín”. San Mateo Capulalpam is a Zapotec
community with 1,313 inhabitants and very few of
them speak Zapotec (89). Main sources of income are
provided by jobs in a local mine, forestry and
agriculture. Similarly to Comaltepec, Capulalpam also
faces challenges related to younger generation moving

1
Nahuatl is a group of related languages and dialects of the Nahuan (traditionally called
"Aztecan") branch of the Uto-Aztecan language family. Collectively they are spoken by an
estimated 1.5 million Nahua people, most of whom live in Central Mexico. All Nahuan
languages are indigenous to Mesoamerica.
to the US. And just like their neighbours, they too have started a Community
Based Forest Enterprise in 1985, to extract and process round wood. Capulalpam
people are very proud of their culture and have created a Centre of Traditional
Indigenous Medicine (OMJSJO - Organización de Médicos Indígenas de la Sierra
Juarez de Oaxaca). The organization’s main aim is to preserve the traditional
medicinal knowledge of the indigenous population since it is an integral part of
their history and culture. The indigenous medicine is based on locals' knowledge
of plants, its healing properties and inner balance of energies.

Xiacuí

"Xiacuí" is a Zapotec name meaning “the hill where

the hawk sings”. Is comes from "xia"= hill and "Cui":
hawk. Santiago Xiacuí is a Zapotec community. It has
1,681 inhabitants and only few of them (134) speak
Zapotec. Community members make their income
mainly from jobs in a local mine, forestry and
agriculture. Community’s land is about 6 kilometres
long, in a total of 5,000 hectares covered with oak-
pine forest and dry forest. The Xacui community
started up their forestry CBE in 1987 in a process
similar to the surrounding communities. The main
settlement is Santiago Xiacuí with a secondary
settlement named "Francisco Madero"

La Trinidad

La Trinidad is the Spanish name for Christian’s

trinity: the father, the son and the Holy Spirit,
what exemplifies Spanish influence on local
culture and traditions. La Trinidad is a Zapotec
community with 724 inhabitants and only a few of
them still speak Zapotec. Income and livelihoods
come from carpentry, forestry and agriculture. The
community’s main settlement is located nearby
the town of Xiacuí, 2,360 meters over sea level. Its
territory is about 3 kilometres long, and extends
over 1,000 hectares covered with oak-pine forest.
La Trinidad started up their CBE in 1987 to extract round wood also with very
limited resources.
DELIVERABLE

At the end of the field project you will be required to

facilitate a handover session with the client. The
purpose of this session is to share the team results
and recommendations with the client in a way that
allows for open discussion and agreement on any next
steps. The nature of this session will depend upon
your actions and recommendations and may take the
form of the following:
1Facilitated discussion
2Demonstration
3Presentation

You will need for your client and any relevant

stakeholders to attend this session so that an agreement can be reached on the
next steps.

The handover session should be designed to achieve the following:

1
Agreement on the final product and delivery dates
Agreement on next steps with the client and key stakeholders
Discuss and agree how the client will implement these next steps
Ensure that all parties understand and are clear on their role going forward
2
You will then need to support this handover process with a report written in plain
English. This report will be used by the client as the basis for future
organisational development and will be completed after the handover meeting.
Your team should decide the content, length and final format of this document
ensuring that it covers the requirements set out above. It is critical that your
client fully understands your recommendations and is provided advice and
guidance on the implementation. You are requested to remember your audience
– your client will not be able to act on your recommendations if they do not
understand or do not know how to implement them.

OTHER STAKEHOLDERS

 Estudios Rurales y Asesoría (ERA) – A Mexican NGO that gives technical

support to local communities. ERA trained UZACHI staff and gave them
technical support to build up its forest management strategy http://era­
mx.org (Spanish)

 Mexican Council for Sustainable Forestry http://www.ccmss.org.mx/

(Spanish)

 Oaxaca wood retail shops

 Rain Forest Alliance Smartwood program http://www.rainforest­

alliance.org/forestry
  The Nature Conservancy – international NGO promoting nature
conservation (www.tnc.org)

 Conservation International international NGO promoting FSC wood

markets in Mexico and internationally (www.conservation.org)

 National Forestry Commission: government agency responsible for the

promotion of community forestry and is currently implementing a project
to increase management capacity and enhance coordination amongst
community based forest enterprises http://www.conafor.gob.mx/
(Spanish)

RESEARCH TOPICS

1Management of Community Based Enterprises (CBE’s) –

What are CBEs?
How does its organisation differ from a Small or Medium Enterprise (SME)?
What are the best practices in managing CBEs?
What are Community Based Forestry Enterprises?

2Indigenous groups in the Sierra Norte Region and in Mexico in general

What are the different cultures and values of these groups?
What are the issues facing these groups? (e.g. different ways to access
and use local natural resources, education and health, income
generating opportunities)

1
2Local and international marketing opportunities for FSC Certified
Wood
What mechanisms exist for effective local and international marketing of
these products?
How might we help to sell more?
What are the existing channels for selling FSC Wood?
How can you leverage your own home market experiences to assist the
client?

SUPPORTING DOCUMENTS

UZACHI’s ten year’s strategy plan:

http://era-mx.org/accion/plestrUZACHI.html (in Spanish)

UZACHI’s planning workshops outputs:

http://docs.lead.org/HSBC_NGDP4/OAXACA.zip
OTHER RESOURCES

Indigenous Communities and Sustainable Foresty

Chapela, F.: Indigenous Community Forest Management in the Sierra Juárez,

Oaxaca, in: Bray, D. Merino-Pérez, L and Barry, D. , editors: The community
forests of Mexico: managing for sustainable landscapes. Austin, University of
Texas Press, 2005

Rainforest Alliance: Sustainable Forestry

Rainforest Alliance: Certified Forestry Operation Summary for the Unión de

Comunidades Productoras Forestales Zapotecas-Chinantecas de la Sierra de
Juárez de R.I. (SW-FM/COC-000011)

Klooster, D. 2000. "Towards Adaptive Community Forest Management:

Integrating Local Forest Knowledge with Scientific Forestry." Presented at
"Constituting the Commons: Crafting Sustainable Commons in the New
Millennium," the Eighth Conference of the IASCP

White, A. and Martin, A. 2002. Who owns the world’s forests?. Washington, D.C.
Forests Trends / Center for International Environmental Law.

Branding of Community Products

Harnessing Exports with Collective Brands.

http://www.livinginperu.com/blogs/business/133

Sunderlin, W. Hatcher, J. Liddle, M: From Exclusion to Ownership? Challenges and

Opportunities in Advancing Forest Tenure Reform. Washington, DC, Rights and
Resources Initiative. 2008.

Peskett,L. Luttrell, C. and Brown, D. making voluntary carbon markets work

better for the poor: the case of forestry offsets . ODI Forestry Briefing 11, 2006