Blog posts on smallholder agroforestry, indigenous communities, and tropical timber.
In January we presented our Equitable Forestry model at the Yale International School of Tropical Foresters' annual conference. Thanks to the organizers for recording all of the conference sessions, which you can access on the iTunes website (we're #9).
Cocobolo saplings growing in Arimae's nursery
This morning I pulled my old hiking boots out of the closet and brushed off the residual clumps of dirt. After a few years of wearing them down to Panama, they’ve given in to the humidity and now require regular applications of Shoe Goo to keep the soles on. I should probably just get another pair, but I’m hoping they’ll make it through my next trip.
Next week we begin the planting of five hectares (12 acres) of mixed tropical hardwood trees in our partner community of Arimae. This is the first planting we’ll have done since 2008 and represents a big momentum boost for us as we continue to grow the business.
Besides bringing our planted area up to over 60 acres, this planting contributes to one of our main goals as a company: promoting community forestry as a sustainable economic alternative. As part of a UNDP-GEF Small Grants project in 2009, we helped Arimae set up a community-owned native tree nursery to sell saplings to forestry businesses like us. For this planting they’ve agreed to sell us spanish cedar, spiny cedar, zorro and cocobolo saplings raised from seed collected from their rainforest reserve and surrounding areas. It’s a positive development for the community, and we’re hopeful that the trees will meet or exceed the quality of the ones we’re buying from more established suppliers.
While we’re only buying about ⅓ of the stock from Arimae, they have the potential to become our biggest supplier of native tree saplings.
The land is prepped, the stakes are ready, we have the fertilizer, and the saplings are on their way. Now, all we need is steady rainfall and a couple weeks' worth of hard work to get them planted. In my opinion this is the most rewarding aspect of what we do. Growing the business here in the US is exciting and rewarding, but it doesn't provide the same tangible sense of accomplishment that I get from putting trees into the ground, getting the hands dirty and building relationships with our partners.
I'll capture as many photos and videos as I can during the planting and upload them to our Facebook and Twitter accounts. Not sure how often I’ll be able to do this—internet access tends to be spotty in the campo—but keep an eye out for updates!
When Planting Empowerment was just a wee company, we participated in social business plan competitions at several universities including Notre Dame, University of Texas Austin, and Yale. While we never came away with a first place, they were an excellent way for us to gain valuable (and yes, critical) feedback about our business plan and become more comfortable pitching our concept. We even earned a little money which helped us get off the ground. These days, we stay involved through judging and mentoring roles, and have seen a lot of different business plans. Below we present a few suggestions on how to improve your chances at these competitions.
Have your product/service already developed. The judges see hundreds of business plans, and your amazing idea is competing with all the other amazing ideas. Having something already in production, or even a working prototype, signals that you’re serious about your business and are actually making it happen. Include photos of the product. Photoshop it being used. Include a positive testimonial from someone who has actually used your product or service (be honest, of course). Judges want to be known for choosing something that is already a reality or is well on its way, not an idea that may become reality.
Use real numbers. Assumptions won’t get you too far. Do your research and cite your sources for the assumptions you are using to develop your numbers. This is especially important for sales numbers. If you’re going to quantify your social impact, use the New Economic model system. A 568% SROI or $1-$10 cost-benefit ratio will raise eyebrows because the analysis probably isn’t accurate. Run it by one of your friends who is studying economics.
Read MoreWe recently had the opportunity to do an interview with Shoestring Venture—The Startup Bible Blog. If you haven't heard of them, take some time to browse the website; they feature stories about startups and offer practical advice to entrepreneurs.
Investors interested in adding alternative investments to their portfolio have a range of options when it comes to forestry investments. Each comes with its own characteristic risks, management style, and type of returns. The website Investing Alternatively does a good job of explaining the types of forestry investments available to retail investors.
Forestry technician stands with a teak tree in PanamaThe site and its descriptions provide an opportunity to describe how our investments are evolving as Planting Empowerment grows. The Forest Investment would be classified as “Tree Certificates” in the site’s definition, i.e. investors own all or a portion of the trees planted in specific timber plantation with a certain “vintage”. While the Tree certificates approach enables smaller investors to access forestry investing, the opportunities tend to be riskier because there is minimal liquidity, meaning the investor can’t exit the investment easily.
Planting Empowerment is in the process of consolidating our funds to operate more like the “Tropical Timber Company” described on the site. This means that we will merge our two original plantations and investors into a single entity. This consolidated company will have a larger capital base and multiple vintages of timber to smooth revenue streams.
We decided to take this route to give our investors more liquidity and regular revenues, and to decrease our administrative expenses from running multiple independent timber funds. Instead of gaining large dividends, investors will benefit from share appreciation and smaller dividends as we reinvest profits into planting more trees and crops.
Over the long term, we believe that operating as a private timber investment company makes sense for our investors and the growth of the company.
As always, before choosing any investment, investors should understand how to choose forestry investments and consider how they fit into their broader financial plans.
Planting Empowerment is a sustainable agroforestry company working with indigenous communities and smallholders in Panama.
