Enforcing food quality and safety standards in Brazil: The case of COBRACANA

Globalization of production has been complemented by increasingly stricter product quality and safety regulations. This trend is particularly acute in the food and beverage sectors, which puts enormous strain on producers from developing nations. This paper examines the trajectory of a cooperative of sugarcane, sugar and ethanol producers from Brazil that, once confronted with this challenge, failed to meet the standards but ultimately came around. It credits the coop’s turnaround to three variables: (a) a new cost accounting methodology that monetized some of the differences in product quality and attenuated tensions among the membership; (b) a low-cost but high-powered system of regulatory incentives that subverted rigid hierarchies and empowered middle-managers vis-à-vis top-executives; and (c) the action of external auditors who acted not as police-officers or consultants, but as conduits who reestablished information flows and helped create a business atmosphere conducive to productive change.