Thursday, December 28, 2006

A New State-led Initiative

A symbol of the 1980s crisis was the Giol Vineyard (Bodegas y Viñedos Giol Sociedad del Estado) in Mendoza. Giol was founded at the end of the 19th century by Italian and Swiss immigrants and was expropriated to the state during the 1950s in order to regulate the market. By 1987, Giol was operating at a 500,000 USD loss per month and had a debt of over 35 million USD. Yet it still produced 10% of Argentina’s wine and bought grapes from more than 4,000 small and medium sized grape growers in Mendoza. The provincial Mendoza government, wary of the privatization of the state-owned winery Cavic in San Juan, chose to use a “participatory restructuring approach”. This approach meant transforming Giol into a cooperative among several sectors as a way to encourage restructuring among the different factions that had an interest in the winery, namely large business interests, labor unions, and communities of thousands of grape suppliers.

The new cooperative, named Fecovita, had enormous success and eventually earned a profit. It was instrumental in helping its members gain access to credit, markets and training through increased bargaining power with and access to banks, domestic and international distributors, as well as public and private research institutions. As the state-organized cooperative, Fecovita started a trend in Mendoza with the provincial government developing over 75 programs related to the wine industry during the 1990s.

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