Are community based forest enterprises financially viable: Three case studies from the Brazilian Amazon


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Shoana Humphries, University of Florida
Dr. Tom Holmes, USDA Forest Service
Dr. Karen Kainer, University of Florida
Carlos Gabriel Koury, IDESAM
Rosana de Miranda Rocha, IDSM
Edson Cruz, Projeto Ambe

Presentation for the conference on
Taking stock of smallholders and community forestry
Montpellier France
March 24-26, 2010

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  • ACAF: Potential volume is 29.54 m3/ha over 40 species
  • ACAF: Potential volume is 29.54 m3/ha over 40 species
  • ACAF: Potential volume is 29.54 m3/ha over 40 species
  • Ambé: R$ 137 avg cost > price R$ 100Mamirauá: R$ 63 avg cost > price R$ 47Mamirauá: R$106 cost > R$ 97 price difference [R$ 200 – (R$ 47 x 2.2)]ACAF: R$ 327 cost > R$ 222 price difference [R$950 – (R$ 280 x 2.6)]
  • Mamiraua harvests ~50% and ACAF harvests ~8%
  • Are community based forest enterprises financially viable: Three case studies from the Brazilian Amazon

    1. 1. Are community-based forest enterprises financially viable? Three case studies from the Brazilian Amazon<br />Shoana Humphries, University of Florida<br />Dr. Tom Holmes, USDA Forest Service<br />Dr. Karen Kainer, University of Florida<br />Carlos Gabriel Koury, IDESAM<br />Rosana de Miranda Rocha, IDSM<br />Edson Cruz, ProjetoAmbe<br />Montpellier, France<br />March 25, 2010<br /><br />
    2. 2. Background<br /><ul><li>Community forest management (CFM) is growing in importance around the globe as a tool for improving local people’s livelihoods and conserving forests.
    3. 3. For CFM to be successful it must be financially viable and competitive with alternative land uses.
    4. 4. After ten years of subsidized CFM in Brazil, knowledge of the financial viability and impact of community-based forest enterprises (CFEs) is still lacking.
    5. 5. This study evaluates the profitability of three CFEs in the Brazilian Amazon. It will be used to develop a handbook for collecting and analyzing financial data for CFEs in the region.</li></li></ul><li>Ambé<br />Study Area<br />
    6. 6. Ambé<br />Mamirauá<br />Study Area<br />
    7. 7. ACAF<br />Ambé<br />Mamirauá<br />Study Area<br />
    8. 8. Methodology<br />Ambé & Mamirauá<br /><ul><li>2 4-day workshops
    9. 9. Training in financial concepts
    10. 10. Participatory data collection and analysis</li></ul>ACAF<br /><ul><li>Interviews, monitoring sheets, cash box receipts over 1 year</li></ul>Scenarios<br /><ul><li>Ambé – actual volume (2007)
    11. 11. Mamirauá – average volumes (2002-2007)
    12. 12. ACAF – average volume (2006-7)</li></li></ul><li>Methodology<br />Cost Data<br />Cost type<br /><ul><li>Labor
    13. 13. Machinery and equipment (chainsaw)
    14. 14. Materials and services (fuel)</li></ul>Activity type<br /><ul><li>Pre-harvest
    15. 15. Commercialization
    16. 16. Harvest
    17. 17. Skidding
    18. 18. Processing (portable sawmill)
    19. 19. Measurement
    20. 20. Administration (technical assistance, training)</li></ul>Revenue data<br />Analysis<br /><ul><li>One year analysis: snapshot
    21. 21. Profit = Total revenues – Total costs
    22. 22. Rate of return = Profit / Total costs</li></li></ul><li>Results & Discussion: Costs<br /><ul><li>Ambé(industrial scale) had the highest total costs
    23. 23. The distribution of costs by type was similar for the 3 cases</li></li></ul><li>Results & Discussion: Costs<br /><ul><li>Administrative costs (including technical assistance) were the highest for Ambé and ACAF
    24. 24. Processing was the highest cost for Mamirauá, followed by administrative costs</li></li></ul><li>Results & Discussion: Costs<br /><ul><li> ACAF (the smallest scale) had the highest cost/m3
    25. 25. Mamirauá had the lowest cost/m3 for logs due to low use of machinery
    26. 26. There were two cases where the average production costs/m3 were higher than the lowest value log price/m3:
    27. 27. Processing costs/m3 were higher than the added benefit in price for ACAF. (but created a lot of daily wages)</li></li></ul><li>Results & Discussion: Profits & Income<br />11%<br />Profits<br /><ul><li>Two cases were profitable
    28. 28. Ambe sensitive to labor costs
    29. 29. Mamiraua sensitive to number of associations</li></ul>2%<br />-48%<br />Income<br />* 2007 minimum was $219/month<br />
    30. 30. Results & Discussion<br />What factors make CFM so expensive?<br /><ul><li>High administrative (fixed) costs and low volumes
    31. 31. Machinery costs were quite high
    32. 32. Processing: low efficiencies (time and waste)
    33. 33. Sales taxes: 12 – 17%</li></ul>What factors affect revenues?<br /><ul><li>Prices were higher for upland forest species and for processed boards.
    34. 34. Certification helped ACAF get higher prices for its boards.
    35. 35. Innovative sales strategies may have helped Ambé and Mamirauá.
    36. 36. Isolation may also affect price (abundance of cheap illegal wood, higher transportation costs).
    37. 37. Total income was also greatly affected by volume sold.</li></li></ul><li>Conclusions: Are CFEs financially viable? <br />YES - large and small scale CFEs can be financially viable …….<br />BUT - viability was fragile for these cases<br /><ul><li>CFEs must improve economies of scale:
    38. 38. Increase volume harvested and/or efficiencies
    39. 39. Collaborate with other CFEs (cooperatives and producer groups)
    40. 40. Consider objectives of processing (not always profitable, but provides wages)
    41. 41. Collaborators must help reduce costs:
    42. 42. Subsidize technical assistance (extension service, fee for services)
    43. 43. Low interest loans
    44. 44. Reduce bureaucracy and taxes
    45. 45. Community forestry is important source of cash income
    46. 46. Reconsider what we mean by viable -- Community forestry will require continued support if it is to continue as a viable land-use</li></li></ul><li>Acknowledgements<br /><ul><li>Office of International Programs, USDA Forest Service
    47. 47. National Science Foundation and Working Forests in the Tropics IGERT Fellowship at University of Florida
    48. 48. AmbeProject, Mamirauá Sustainable Research Institute, and ACAF
    49. 49. Marcos Vinicio, EMBRAPA-Acre
    50. 50. Paulo Amaral, IMAZON
    51. 51. Johan Zweede, FundaçãoFloresta Tropical</li></li></ul><li>Thank you<br />