1. The Business of Agroforestry:
Opportunities & Challenges
for Commercial Investment in
Agroforestry-based Ventures
Sagun Saxena
Rahul Barua
World Congress on Agroforestry
New Delhi
10 – 14 February 2014

2. • A privately-held venture development company with offices in
New York, Kampala & Rio de Janeiro
• Focused on Agriculture, Energy and Retail sectors in India, Africa &
Brazil since 2007
• Create ventures from “blank-sheet” stage through to commercial
operation
• Earn return only from capital gains or dividends generated by successful
ventures
– Not a consulting services or donor-supported organization
2
Introduction: Who we are

3. Brazil
• Forestry
• Silvi-pastoral systems
• Biomass energy
Mozambique
• Clean Cooking Fuel
& Food production
India
• Diesel displacement
• Off-grid energy
Australia
• Aviation fuel
• Forestry
USA
• Head office
Haiti
• Clean cooking
Introduction: Where we operate
3
Uganda
• AgVentureLab
• BoP retail

4. 4
• Research unmet
market needs in
target sectors
• Explore innovative
technologies &
business models
• Develop venture
concepts
• Identify potential
partners
Explore Market
Opportunities
Design New
Business Models
Launch
Ventures
Introduction: What we do

5. 5
• Refine venture
concept in field with
target customers and
partners
• Develop business and
technical models
• Estimate pilot launch
budget & mobilize
funding
• Research unmet
market needs in
target sectors
• Explore innovative
technologies &
business models
• Develop venture
concepts
• Identify potential
partners
Explore Market
Opportunities
Design New
Business Models
Launch
Ventures
Introduction: What we do

6. 6
• Refine venture
concept in field with
target customers and
partners
• Develop business and
technical models
• Estimate pilot launch
budget & mobilize
funding
• Recruit “founding” team
• Oversee detailed
design, engineering, develop
ment
• Launch pilot operation
• Strengthen venture model
based on lessons from
launch
• Run roadshow & help raise
implementation capital
• Research unmet
market needs in
target sectors
• Explore innovative
technologies &
business models
• Develop venture
concepts
• Identify potential
partners
Explore Market
Opportunities
Design New
Business Models
Launch
Ventures
Introduction: What we do

7. Brazil
• Forestry
• Silvi-pastoral systems
• Biomass energy
Mozambique
• Clean Cooking Fuel
& Food production
India
• Diesel displacement
• Off-grid energy
Australia
• Aviation fuel
• Forestry
USA
• Head office
Haiti
• Clean cooking
7
Uganda
• AgVentureLab
• BoP retail
CASE STUDY 1

8. Brazil
• Forestry
• Silvi-pastoral systems
• Biomass energy
Mozambique
• Clean Cooking Fuel
& Food production
India
• Diesel displacement
• Off-grid energy
Australia
• Aviation fuel
• Forestry
USA
• Head office
Haiti
• Clean cooking
8
Uganda
• AgVentureLab
• BoP retail
• Introduction to the
Market Opportunity
we identified
• Overview of the
Business Model
CleanStar developed
• Why Agroforestry?
• Opportunities
• Challenges
• Conclusions
CASE STUDY 1

9. Charcoal industry across Africa
• Over $10 billion annual cash spend
• $25-$35/month per urban household
• Between 10-30% of household income
Charcoal is the primary cooking fuel
for urban consumers throughout SSA
9

10. Using charcoal impacts women’s health and quality of life
10

11. Charcoal-based deforestation
• Causes erosion, degradation & flooding
• 10kg of wood = only 1kg charcoal
• Major Greenhouse Gas emissions
Charcoal has wiped out nearly one third of Africa’s natural forest cover (FAO)
11

12. Meanwhile, Charcoal is often a primary source of cash income in rural areas
12

13. Market Opportunity: replacing charcoal for urban cooking
• Can a new cooking solution be launched for urban households?
• Must be affordable and deliver enough incentives over charcoal
– Fast: must save time
– Safe: parents must be comfortable letting children cook
– Convenient: fuel must be available everywhere and in small amounts
– Clean: users are tired of dirty pots, walls, hands & hair
• Various solutions considered:
– Biomass briquettes: not faster, expensive to distribute, not much cleaner
– LPG Cooking gas: considered unsafe, stove too expensive, fuel supply
– Ethanol gel: too weak flame, fuel too expensive
– Ethanol liquid fuel: never been tried commercially?

14. Business Model: New ethanol cooking solution
Ethanol Stove:
Fast: Ignite & extinguish instantly; 2x efficiency of Improved Charcoal Stoves
Clean: No smoke or odour; no soot on walls; fuel handled without dirtying hands
Safe: Not pressurized; won’t leak or explode 14
Loaded into stove
after refilling
Ethanol fuel
• Ethyl alcohol with denaturant & color
• Can be produced locally from different feedstocks
• Can be bottled and sold in small amounts

15. Business Model: How can ethanol fuel be produced and marketed sustainably?
• Partnering with
smallholders to produce
feedstock using
improved planting
material and practices
• Procuring surpluses
directly from farmers
and processing them
into food & cooking fuel
products for urban use
• Retailing products via
own shops + 3rd
parties, under NDZiLO
brand
15
A vertically-integrated business model is essential to secure margin over long-term

16. 16
$21 million was raised in commercial equity and debt investment from
strategic corporate and institutional investors between 2010-2013
 Founder, impact venture developer, Africa, Asia & Latin America
 Urban Cooking Fuel, Sustainable Agriculture, BoP Retail, Rural Utilities
 Global leader in enzymes for bioenergy and agriculture
 $2 billion revenue & 6,000 people
 US ethanol process technology contractor
 Built 6.7 billion gallons of ethanol capacity globally over last 30 yrs
 Leading global bank, $50 billion environmental commitment
 Innovative financier in carbon and climate solution markets
 Impact investor in post-conflict societies, part of Soros group
 Invests in sustainable businesses that alleviate poverty
 Danish government-owned Development Finance Institution
 Invests in sustainable businesses in least developed countries
Soros Economic
Development Fund

17. Distribution: Since early 2013, stoves and bottled cooking fuel are being sold via
direct sales team, company stores and large network of 3rd party retailers
Large direct sales team delivers
in-home demonstrations and takes orders
Customers
visit shops
to fulfil
orders
and collect
stoves &
fuel
Customers
return
every day /
week to buy
fuel
NDZiLO shop network in
low-income neighbourhoods
17

18. Distribution: The cooking fuel is bottled in a custom-built facility in Maputo
18

19. Processing: The cooking fuel has been produced in a custom-built facility in
central Mozambique (pilot plant opened May 2012; now being upscaled)
Sales team undertakes in-home
demonstrations and take orders
19

20. Cultivation: What is the best farming strategy?
• Many different ethanol feedstock sources possible
– Sugarcane, Sweet Sorghum, Cassava
• Many commercial farming models possible
– Large-scale land acquisition for sugar cane plantation
– Contract Farming / Outgrower Schemes with Smallholders
– Tenant farming / Sharecropping
– Joint ventures
– Farmer-owned businesses

21. Cultivation: Guiding principles for strategy
• Engage subsistence farmers (ex-charcoal producers) in cultivation
• Build on their existing knowledge & capabilities
• Don’t burden them with more risk (i.e. no debt)
• Provide year-round benefits in terms of food security & income
• Recognize gender issues & opportunities
• Design for long-term sustainability & mutual growth

22. Rotation 1
Rotation 2
Rotation 3
1 ha Forestry Shelterbelt Zone
1 ha Agroforestry Zone
Cultivation: CleanStar co-designed a smallholder-based agroforestry program that
is low-input and resilient
SubsistenceFood
ProcessedintoFoodProd
ProcessedintoEthanol
ProcessedintoDieselAlt
Pruningasfirewood/mulch
Ecosystemservices(z)
Cassava X x X
Cowpeas* X X x x
Soyabean * x X x
Sorghum X x s x
Ground
nuts*
X X x
Native
trees*
x X
Pongamia* y X x x
Lucaena* y x X
Pigeonpea* x x X
X : main uses; x : secondary uses; y : leaves can be used as fodder; s: if sweet variety of sorghum; * : leguminous /nitrogen-fixing ; ** : cycle nutrients, promote biodiversity, sequester CO2, provide shade, retain moisture
Mix of multi-purpose crops & trees
Integrated food & energy farming system boosts local food security & cash income
22
KEY ELEMENTS
• Better
planting
material
• Crop
rotation
• Agroforestry
• No burning
• Integrated
pest mgmt

23. Cultivation: Over 1000 smallholder farmers adopted the approach in 2012-2013
Baseline farming is subsistence-only
Lack of inputs/storage/markets
CleanStar has identified high-yielding disease-
free cassava, soya, beans, sorghum, pigeon
peas through collaboration with IIAM & IITA
Nitrogen-fixing trees provide free fertilizer
and help improve soil over time
CleanStar provides free planting material and
guidance to farmers that agree to adopt system
23

24. 24
Cultivation: The cassava is pre-processed, procured and transported to the plant
Community-level pre-processing
Local aggregation and storage
Standardized inspection, weigh & pay Efficient transport to pilot plant

25. POTENTIAL BENEFITS OF 20% ADOPTION OF
ETHANOL-BASED COOKING IN AFRICA
• 5 million women save time & improve quality of life
by avoiding need to buy, handle & ignite charcoal
• 25 million people saved from indoor air
pollution, charcoal burns, or unsafe LPG equipment
• 50 million trees saved every year
• 90 million tons CO2e emissions reduction every
year
• 1.5 million farmers benefit from greater and more
diverse income every year
• 500,000 new jobs created in urban and rural areas
Benefits of this approach are becoming clearer and can be scaled across sub-
Saharan Africa where charcoal is used
25

26. Summary of Key Opportunities Presented by Agroforestry Approach
• Reduction of common risks
– Low input and low cost  faster scalability
– Mutual value creation with local communities
– Multiple layers of resilience to market shocks
– Creation of multiple product value chains with low cost base
• Delivery of environmental benefits
– Improved soil fertility and health
– Restoration of multiple ecosystem services
– Potential to receive PES (e.g. carbon)
• Delivery of real social and economic benefits to local communities
– Food security and nutrition
– Income (increase and smoothing)
– Knowledge, capacity, and resilience

27. Summary of Key Challenges Presented by Agroforestry Approach
• Design of business model
– Identify “anchor” market opportunity
– Build internal and network resilience to market shocks
• Design of venture
– Identify appropriate stakeholders and create venture ecosystem
– Manage expectations
• Venture development and implementation
– Prove out initial hypotheses
– Adjust to local community responses
– Manage stakeholder platform
– Allow for continued innovation and operational improvements

28. Conclusions & Takeaways
• For commercial developers and investors
– Agroforestry an attractive approach to reducing commercial risk and
delivering developmental benefits to local communities
– Requires a platform of stakeholders - design and maintain carefully
– Requires ongoing innovation, patient capital, and stakeholder
management
• For research, NGO & governmental organizations
– Publicly funded groups can support commercial actors during early
stage design and development activities
– Advocate streamlined institutional processes within host country
governments
– Continue public-private linkages to ensure best practices are
implemented and shared

29. 29
USA
Sagun Saxena, Managing Partner
CleanStar Ventures LLC
373 Park Ave South, 6th Floor
New York, NY 10010
s.saxena@cleanstarventures.com
BRAZIL
Richard Taylor, Presidente
CleanStar Brasil Bioenergia Ltda
Rua Carlos Goís 469/401
Leblon CEP 22440-040, Rio de Janeiro
r.taylor@cleanstarventures.com
UGANDA
Greg Murray, Managing Partner
CleanStar Ventures
41 Luthuli Avenue
Bugolobi, Kampala
g.murray@cleanstarventures.com
AUSTRALIA
Don Murray , Chairman
CleanStar Australia Pty Ltd
Level 29, The Chifley Tower
2 Chifley Square Sydney NSW 2000
d.murray@cleanstarventures.com
INDIA
Vikalp Pal Sabhlok, Partner
CleanStar Ventures
Bangalore
v.sabhlok@cleanstarventures.com
Contact Us
www.cleanstarventures.com