http://www.montereyherald.com/mld/monte ... 444551.htm

Posted on Mon, Aug. 22, 2005


Free trade could hurt small company

Acheese factory high in the mountains of one of the world's most diverse ecosystems is fighting to preserve its future amid opening of Central America's markets to free trade.

Earlier this month, President Bush signed the Central American Free Trade Agreement, which will eliminate trade tariffs between the United States and five Central American countries. But the agreement may favor large businesses over smaller ones.

This month while vacationing in Costa Rica, I toured a cheese factory whose collective organizational structure and eco-minded operations will be no match for well-funded, big multi-national competition that will operate without trade barriers starting next year.

The company, Monteverde, is in Monte Verde, a small town about four hours north of Costa Rica's capital of San Jose. It is an unlikely place for a cheese factory, in mountains where roads are still unpaved, yet thousands of tourists flock there annually to the forest and serene way of life. Children still go to school on horseback and cowboys share the roads with tourist buses.

The cheese factory was founded in the 1950s by American Quakers who fled the United States in opposition to war and with pioneer-like hopes of establishing a new life for their families. When the first Quakers arrived, they had to come up with a way to support themselves. Even though they had no experience, they turned to cheese making.

Now, some 50 years later, Monteverde is a $10 million-a-year company. Its products are sold in groceries throughout Costa Rica and Nicaragua, and it is owed entirely by employees. It also collects its milk through a cooperative arrangement with more than 100 small local farmers. The old-style metal milk cans awaiting collection dot the entrances to farms along the rural roads leading to town.

Monteverde is not just a quaint operation. It is efficient and ecologically minded, having set up pig farms to feed cheese-making waste to and cattle lots to feed pig waste to. Both end up as meat products for the growing line of products. It has looked out for the good of its employees by helping them buy the town's sole gas station and setting up the company so no one party has a majority share.

But the company's unique structure is at odds with big business and because of that, its future is uncertain, said Sarah Stuckey, whose grandfather was among the Quakers who founded Monteverde. She gives tours of the cheese plant daily.

"We pride ourselves on our history and what we've created," said Stuckey.

But when trade tariffs are removed next year, the company has two options. It can either expand into new markets or fight to maintain its presence on grocery shelves alongside other new brands, including large American labels.

Expanding into new markets would be the goal of CAFTA, Stuckey said, but the reality is that Monteverde isn't set up to be a large conglomerate. Any reorganization would have to be authorized by the company's more than 100 employee shareholders. To be on the level of other big outside producers would take a tremendous amount of investment, into modernization and distribution, Stuckey said.

"We will be fighting to keep what we have -- we have a good reputation and good products," she said. "But CAFTA might not be good for us. Time will tell."
M. Cristina Medina can be reached at xtinamedina@aol.com.