Enforcing Food Quality and Safety Standards in Brazil: The Case of COBRACANA

In numerous product lines, globalization of production has been accompanied by increasingly austere product quality and safety regulations. These regulations are particularly stringent in the food and beverage sectors and put enormous strain on producers from developing nations. This article examines a cooperative of sugarcane, sugar, and ethanol producers from Brazil that, when confronted with the challenge of new regulations, adopted three policies that encouraged its members to upgrade quality and safety standards, enabling them to compete successfully in a demanding business environment. I argue that the co-op's success was due to (1) a new cost accounting methodology that monetized some of the differences in product quality, attenuating tensions among members; (2) a low-cost, high-powered system of regulatory incentives that empowered middle managers vis-à-vis top executives within regulated firms; and (3) external auditors who acted not as police officers or consultants but as conduits, reestablishing information flows and helping to create a business atmosphere conducive to productive change.