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domingo, 16 de agosto de 2015

1575 - A miracle called Tupandi

 In two years (1993 and 1994), Tupandi had 198 modern pigpens and poultry
in the city.

Under this assumption we are pleased to introduce the case of a Brazilian city, located in Cai Valley near the city of Porto Alegre (Capital of Rio Grande do Sul state) in the southern part of Brazil. This city is called Tupandi, where a competent administrative work transformed a community from a poverty situation to a wealthy and prosperous condition in just two decades.
Tupandi became an independent city in 1988 through a local referendum. On its first 11 years of existence, its GDP per capita increased 11 times, from USD776.16 to USD 10,438.16. On this period, average growth was 28% per year. On the next six years, from 2001 to 2006, average growth was not so intense. Even tough, in 2006 the GDP per capita reached USD22,239.26, similar to South Korea.
It is important to consider that no exogenous factor contributed significantly for this growth. Tupandi’s differential is based on the quality of his municipal administration. Also, there are strong arguments favoring the leadership from the former mayor Mr Hilario Junges, who played a fundamental role on this achievement.
The book titled “A miracle called Tupandi”, analyses the tactics, policies and procedures led by Mr Hilario Junges during his administration. It was possible to find to quite accurate conclusions, which make an administrative procedure that can be applied in other municipalities. Neighboring municipalities in the same region of Cai Valley are trying to apply this method looking for similar success.
The method is simple and nothing prevents it to be implemented in any municipality with similar results. It may therefore be a practical and applicable way to improve economic condition in communities worldwide.

The method
Everything begins with basic premisse that the mayor and his key advisors must commit their action based on honesty and public spirit. Overall, the administrative method that provided such great progress in Tupandi is extremely simple:
1. Increase investment capacity through expenditure reduction
Tupandi’s administration implemented a rigid control of municipal spending, avoiding unnecessary expenditures, e.g. excessive employment. In addition, employees were chosen for their efficiency and not for political reasons or personal preferences.
Since most public administrations are usually inefficient, the adoption of an austere and efficient administration results in higher savings and significantly increases the investment capacity of the municipality.
2. Seek resources outside of the municipality
Besides the capital saved, administration should seek resources outside the municipality, especially in development programs promoted by federal and state governments. The key point is the administrator’s commitment in the project formulation to be submitted to funding providers. From private sector, productive investments were selected, even if the companies are located outside the municipality.
3. Preference for production stimulus
Resources obtained from savings and external sources should be initially invested in the development of production capacity in the city. Reasons: i) increase the income of the population; ii) increase collection of taxes. As a consequence, city hall can multiply its investment capacity.
4. Adopt a strategic plan
Develop a strategic plan is very important. This plan does not have to be sophisticated, in fact, for Tupandi’s case it was very simple. Taking advantage of the agricultural vocation of the local population and using the resources that the city has accumulated through the strict control of expenditure, the administration has provided a strong stimulus to the local farmers to help them build aviaries and pigpens.
On this activity, the farmer works on integration with a large company who buy their production. In addition, they have access to advanced techniques and supplies to increase productivity. The production is sold with the issuance of invoice and proper collection of taxes, differently from before.

Jumping to development
The city was extremely poor. There was no industry, trade was very precarious, the structure of communications (roads, telephone) was disastrous. Agriculture was rudimentary, usually as subsistence for the family. Young people had no perspective in their city then they migrated to larger ones, seeking jobs in factories with low wages.
Initially, Mayor Hilário Junges tried to leverage development of his city through attraction of industries, taking advantage of labor availability. However, the lack of access by road asphalt, lack of telephony and poor electricity supply represented enormous barriers to industry attraction.
In Brazil, industry attraction is the conventional strategy that municipal governments use to promote development.
Realizing the limitations of this model and the difficulty of applying it in a municipality as Tupandi, the administration developed a new plan that proved to be extremely appropriate and effective, resulting in a development leap.
This development plan was done in the fifth year after the effective creation of the municipality. The new plan was based on a strong incentive for the raising of chicken and pigs. The administration took the opportunity in partnership with a major meat exporter. In two years (1993 and 1994), Tupandi had 198 modern pigpens and poultry in the city.
The plan was original in the region since it was the first time for a city to directly invest in local producers. A farmer who was willing to build an aviary was granted with roads, earthmoving, roof and curtains for the hall. The city and the company provided, further, technical assistance and support in obtaining bank financing.
On the other hand, the plan consumed a large part of Tupandi’s investment capacity. There was some damage to other immediate needs of the population. For example, due to the intense use of the city hall machinery, municipal roads remained without maintenance a long time.

The result of this effort was notorious: the municipal GDP growth reached 93% in 1995 and kept high on the following years. However, benefits for the population were not felt immediately and the municipal government lost popularity. As a consequence, in 1996 elections, Hilário Junges failed to elect his successor.
Some years later, however, the success of the strategic development plan became evident. Nowadays, Tupandi offers first world living conditions to its population. Most roads are paved, even the ones with low traffic. Young people are granted with university tuition. Public health service is an example for the region and household consumption is much higher than those of other municipalities.
Hilário Junges is not a genius on administration or economy. The work he performed was relatively simple and even obvious. The achievement of this remarkable result was possible because of his honesty, enthusiasm for public causes and persistence. Undoubtedly, the tenacity in formulating a viable and ambitious development strategy was essential to achieve this positive result.
Tupandi’s success is motivating several municipalities in the region of Cai Valley to follow the same model. The result was a stronger development of poultry and swine industry focused on exporting food goods. Nowadays there are more than 1,000 modern poultry and pigpens in the region (whose population is only 160 thousand inhabitants). Industrial base are strong players like Doux, Oderich, Agrosul, Naturovos, Ouro do Sul Cooperative and Agrogen.
These are evidences of a spontaneous creation of an agroindustrial cluster dedicated to food production for export.

The next challenge
Currently, Tupandi and other municipalities in the region of Cai Valley need a plan for a new development leap. A viable alternative would be a joint effort to create a regional cluster for cost reduction, incrementing production and enhancing competitive strengths in the region.
The cluster concept is currently under discussion. It tries to integrate city halls, farmers, industries and public institutions. Some initiatives have been proposed such as:
· Construction of a port on Cai river in order to reduce transport costs to main the port of Rio Grande (connection to Atlantic Ocean);
· Creation of technical schools and support academic research toward food production;
· Asphalting more rural roads;
· Deployment of biodigester to generate energy and fertilizer from pigpen and poultry residues;
· Increase public support for the establishment of poultry and pigpens to local families.

Final remarks
In 20 years, Tupandi transformed itself from a poverty situation (per capita income of USD700) to a wealthy condition comparable South Korea (per capita income of USD22 thousand).
The same type of administration and development strategy applied in Tupandi could benefit similar communities around the globe. And the phenomenon occurred in Tupandi is an evidence that this is possible.

Texto de Daniel Fink baseado no livro Um Milagre Chamado Tupandi

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