TCHO’s cacao

Tcho's dark chocolate form Ecuador

Tcho’s dark chocolate form Ecuador

While in California my wife and I dropped in on family friend Brad Kintzer, chief chocolate maker at Tcho in San Francisco.  Not only does Brad have the sweetest job title I can think of, he also works for a company that has developed an innovative relationship with its cacao producers.

Most of the world’s chocolate, at least 90%, is made of cacao grown by micro producers, meaning farmers with two hectares or less.  Many of these small farmers are organized into cooperatives.  In a sense this is great, but because you’re dealing with so many individuals there has been a historical lack of consistency in product.  Cooperatives can have any number of members, in Mexico and Central America my very broad estimate is that these average about 500 members.  Presumably in Western Africa and South America cooperatives are just as big or bigger.  So controlling individual practices and processes to attain uniformity of quality and flavor has been one of the major challenges of selective chocolate makers.  Moreover most cacao producers have never tasted the chocolate made from their own beans.

Tcho’s solution, and it’s a good one, has been to create a program that is dedicated to creating a direct partnership with their growers (tchosource).  Tcho provides the tools, training, genetic advisory and education to its buyers, empowering them to “improve their livelihoods and hone their craft”.  By doing so they provide the company with the high quality beans that enable the company to create excellent chocolate.  Its created a mutually beneficial relationship that stokes vested interest and a sustainable relationship in both the financial and social sense.
One of the more interesting components of the program is the use of “flavor labs”.  These are essentially small, affordable chocolate factories designed to quickly make chocolate and analyze the quality of a batch of beans.  And because the quality of the beans are directly affected by its growers and cultivators, Tcho’s major coop partners are supplied with their own “flavor labs”.  These field labs are essentially identical to the lab used in Tcho’s San Francisco headquarters.  And for the producers to really take advantage of this system, (and to facilitate communication), sensory training is provided to their producers around the world.

I found the concept so important that we’ve decided to invest in a flavor lab for our own cacao plantation.  The thought is that we’ll be more equipped to produce consistent & flavorful beans for our own purposes and also give local growers access to the equipment.  In the end we want chocolate to garner the same respect, in terms of attention to origin, genetics and process as that of wine or cheese and Tcho’s efforts are a big step in that direction.
Molly chatting with Tcho chocolate maker, Zohara.

Molly chatting with Tcho chocolate maker, Zohara.

Cacao bean cross section

Cacao bean cross section

Brad, Jefe de los Chocolates

Brad, Jefe de los Chocolates

Finished chocolate bar, yummy

Finished chocolate bar, yummy

View near factory

View near factory

On my last trip to the Darien I stopped in on this girl's family, whom have had cacao trees around their houses as long as they can remember

On my last trip to the Darien I stopped in on this girl’s family, they’ve cultivated the cacao around their home for as long as they can remember.

Taylor Guitars

Finished Taylor Guitars

Finished Taylor Guitars

We visit home, California, a couple times a year.  While here we bask in the fresh food, family fun and general goodness that is the Bay Area.  It also gives me an opportunity to visit with the wood workers and craftsmen that consume the hardwoods we work so hard to cultivate and protect in the tropics.

A few days ago I had the opportunity to visit the Taylor Guitar facilities in Southern California.  Taylor is a world class acoustic guitar producer that has become one of the leading proponents of sustainable hardwood sourcing.  They use Genuine Mahogany, Cocobolo, Sapele, Koa, Rosewood, Ebony and other species for their guitar components.  After a substantial number of processes, including milling, drying, sanding, laser cutting, treating, sealing and more, the incredible aesthetic potential of these woods is revealed in spectacular fashion.  The shapes, patterns, color and luster were a vivid reminder of why these woods have been sought and traded for so long.

My host was Chris Cosgrove, wood buyer for Taylor Guitars.  He, better than most, understands the finite nature of these endangered woods (most are cites appendix I or II listed) and we’ve been discussing long-term sourcing solutions for their instruments.  To the company’s credit, they work with responsible suppliers and concessions and do their best to buy from sustainable sources.  Recently they’ve invested in a concession and mill in Cameroon, a move that was risky but possibly necessary to secure the medium term availability of precious hardwoods, particularly ebony (Diospyros crassiflora).

Taylor’s Spring Limited Edition Granadillo and Ebony Guitars

Since I’ve always been a huge fan of Mahogany and its viability as plantation species we spent quite a bit of time discussing its qualities and availability.  In their warehouses we saw Mahogany from Fiji, Guatemala, Belize and Honduras.  (Only the Fijean lumber is plantation sourced, however Fijian politics and bureaucracy have severely limited its viability.)  Tropical Mahogany is one of the most important tonewood species, used by generations of instrument makers for its workability and balanced tonewood qualities:

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Genuine Mahogany (darker boards) at the Taylor facilities

In general most tropical tonewoods are sourced from natural (non-plantation) forests, which means of course that they are being depleted without being replaced.  Species like Cocobolo and American Rosewood are already difficult to acquire and must be extracted from isolated forests, which even if purchased legally (bought through a concession) will be subject to less oversight.  (see National Geographic’s recent issue on Mahogany for the many problems with concessions: June 2013)  Essentially there is and will continue to be a need for plantation tonewoods, even moreso in the next decade when the concessions dry up.  Musicians and lute makers alike would do well to consider the future of their craft and consider and support the only viable, not to mention sustainable, solution for their longterm raw material needs: meaning an international tonewood reserve & plantation needs to be established and supported as soon as possible.

A few photos from my visit:

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Taylor Guitars 016  Taylor Guitars 018  Taylor Guitars 020  Taylor Guitars 022

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CoastEcoTimber

Corotu

Last week I visited Coast Eco-Timber’s new storefont in Panama City.  The founder, Alana Husby, is a fellow West Coast Canadian and fifth generation logger.  Like me, her grandfathers worked during a time of (seemingly) endless forests and timber abundance… that landscape of course has changed quite a bit and the timber/forest industry has had to change with it.  Alana has made that adjustment beautifully.  A few years ago she embarked on what she calls the most “challenging and unusual project yet, underwater logging in Panama.  When a concession in Panama’s Lake Bayano (owned by the Kuna Madugandi Tribe) was brought to her attention the fit between past and present came into alignment. Working with the indigenous tribe as well as her team of skilled divers and sawmill staff, CoastEcoTimber is delving deep to recover timber that has lay preserved in the underwater jungles of Panama since 1979”  In this way they provide their customers with spectacular historic wood.

It was great to see, firsthand, the beautiful pieces they are extracting from the lake.  Most of the species they seem to be finding are “lesser” known, at least in the international market but long used by woodworkers in Central America.  To my delight many of these species are the very ones slowly gaining acceptance as plantation woods (see pic below).  A few of these are: Zapatero (Hieronima alchorneoides), Amarillo (Terminalia amazonia), Almendro (Dipteryx oleifera), Cedro Amargo (Cedrela odorata) and others.  By offering these woods, (successfully) Coast Eco Timber is validating what we, native species planters, have believed for so long: that these woods are beautiful, workable and will one day fulfill a demand.

Photographs of Alana’s salvaged wood:

zapatero

Cedro Espino

Quira stump

Plantation Amarillo:

Plantation Amarillo - Las Lajas, Panama

For more info on CoastEcoTimber click here

 

 

An energy crisis

Late rains have caused an energy crisis in Panama.  Hydroelectric generators, as with most tropical economies, are this country’s main source of energy; so when weather patterns don’t hold up, the whole system falters: Schools have been closed, A/C prohibited during certain times of the day, public offices have shortened business hours, and rolling blackouts may follow.  People are angry.  A national group of engineers has demanded a government plan for alternative energy, parents are confused and don’t know what to do with their children, and in cattle country, ranchers are demanding subsidies for feed, the problem has affected everyone.

Deforestation means reduced evapotranspiration (evaporation of plants and soil) resulting in both a decrease in rainfall and changing annual rainfall patterns with unusually dry conditions

In a recent newspaper article describing the predicament, the ranchers complain of climate change, expressing frustration at their parched fields and demand government action.  The problem, however, lies at their feet and looking for a bail-out is like sweeping dust under the rug.  Long-term watershed management has to be a part of the conversation.

Latin America’s #1 driver of deforestation is the cattle frontier. Photo credit: Andy Berry

In other words THE essential ingredient for your operation (water), be it agriculture, forestry or ranching is directly dependent on natural forests.  We can assume this (water cycle) process, can happen elsewhere, but there is significant evidence that suggests forests have an effect on precipitation in their immediate area.  (See TED talk ‘How to Restore A Rainforest’.)

There is simply NO conversation about the effects of deforestation on the water cycle.  Trees, brush and spores play an integral cycle in the tropical water cycle.  But because more pasture, means more cattle and more meat, (and therefore money) cattle ranchers will generally clear as much land as possible.  Right to the edges of their land.  It is no secret that the vast majority of deforestation in Central America is driven by the cattle frontier.    The process goes something like this:

1. Sell family plot

2. With the money, buy cheap land in remote areas (usually tree covered)

3.  Extract and sell all and any valuable lumber on property

4.  Burn

5.  Apply herbicide

6.  Introduce/establish hardy exotic grass for pasture

7.  Truck in cattle

8.  Make 2, maybe 3% annual profit

There’s a saying here: “A cattle farmer lives poor and dies rich”.  This isn’t because cattle eventually become profitable, it’s because of land-value appreciation.  And its true, cattle ranchers occasionally end-up owing significant real-estate.  Recently, while pitching an environmental restoration project to a cattle ranching association, a colleague of mine posed the question: what would your land be worth without water?  Unanimously, they all agreed that it would be worth close to nothing.  Interestingly they all understood, from firsthand experience no-doubt, that forested areas have more water and more rain.  The idea then is to convince them that if they can each allocate a small percentage of their holdings to conservation, particularly along waterways, that there is tangible economic upside.  I wrote about this concept in an earlier post.  Its an uphill battle I’m sure, but based on the receptive conversation I think these situations do make people reconsider their role climate change .   Conversation about drought, particularly in the tropics, must include reforestation and conservation.  Governments would do well to incentivize cattle operations that conserve forested areas or employ forward thinking silvo-pastoral systems instead of exacerbating the problem by buying them transported feed, or subsidizing beef.

Our impact over time

In the end our goal is to improve the way we manage our finite natural resources and offer alternatives to unsustainable land management practices.  I recently came across these Google earth animated Gifs that demonstrate the profound changes “development” can have on different landscapes, (these are not unique and are simply examples of common themes).

1. The effects of urbanization in the Amazon, (areas that have remained green are protected):

Photo

2. This image demonstrates the establishment of industrial crops in the Saudi Arabian desert (water/energy deficiency):

Photo

 3. Lake Urmia in Iran, used for Salt extraction.   Today there are proposals for accelerating this process since restoring the lake would be expensive:

Photo

The case for Genuine Mahogany

Last month, an article about Genuine Mahogany was featured in National Geographic magazine.  In it the author discusses its threatened state, demand, and solutions to curbing its illegal harvest.  Since most large Genuine Mahogany (Swietenia macrophylla) stands are found in the remote forests of South America controlling its illegal harvest has been difficult, despite its endangered species status (cites.org).  Apparently logging companies will buy or lease legal forest concessions, usually quickly depleted, but then will use these permits to sneak into adjoining protected forests or indigenous territories.  These circumstances are met with increased patrolling and stricter trade laws but in the end, like drugs, the product will make its way to the consumer.  Its a great read, but I ask myself why one of the world’s great timber species is still rejected as a plantation crop.  I know the answer, I’ve worked with foresters and timber investors my whole life, it all come down to a pesky insect.  The Mahogany shoot borer (Hypsipyla grandella), damages trees when its larva bores into and kills the terminal shoot. A lateral branch grows upward to replace the lost terminal shoot, resulting in a crooked main stem. Also, the damage to the terminal breaks apical dominance, resulting in excessive lateral branching. (Howard and Meerow 1993). Small trees whose terminal shoots are attacked repeatedly in successive years become extremely deformed, severely reducing its commercial value/potential.  The shoot borer has created a situation in which the only considerable plantations are located on islands (exotic to mahogany) where the moth doesn’t exist, namely Fiji and the Philippines.  That said, and despite what you may hear, the shoot borer can be controlled.  We’ve been doing it for years.  There is a cost effective, easy method for doing so, the only requirement is consistent management.  The big argument is that individual control is too labor intensive and therefore too expensive.  In Guatemala, we recently did a cost study of shoot borer management for 13000 trees.  In the first year we averaged $0.16 per tree, in the second year when the trees are taller and more difficult manage, that increased by 25%.  By the third year, no more control was necessary due to height and hardening of the shoot.  Furthermore mahogany requires less formative pruning than other species because it naturally grows vertically.  There is significant data on its growth, recently a comprehensive study conducted by the University of Munich estimated optimal rotation length for mahogany at roughly 25 years, which is more than competitive when compared to other hardwoods.  This estimate is roughly in line with our own growth predictions.

Geniune Mahogany stand with zero bifurcation

Genuine Mahogany stand with zero bifurcation on lateritic soil

The biggest advantage of Mahogany against, say Teak, is its incredible robustness.  Mahogany can grow on very poor  and diverse soils, which is evident when you consider its wide distribution from Mid-Mexico all the way down to the Southern Amazon.  Meaning, even if the labor requirements are slightly higher, you can establish it on cheaper lands.  In Panama’s Western Darien “teakable” lands cost anywhere between $4000 and $7000 per hectare, marginal lands may be procured at half of that price.  That ratio remains roughly consistent throughout Central America and I speculate Brazil is similar.

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Mahogany’s wide distribution is a testament to its vigor and durability

Mahogany is a “cites” listed species, meaning endangered.

The other side of this story is calculating market value for plantation mahogany and how it sizes up to Teak expectations.  And of course a quality comparison between natural and plantation mahogany.  I will be discussing both subjects in an upcoming entry.

Earth Day

In honor of Earthday I thought I would share this fantastic map of the world’s Intact Forest Landscapes created by Greenpeace.  In it shades of green represent intact (virgin) areas, and shades of gray secondary or intervened forests.

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Keep in mind that tropical forests have up to 100 times the diversity of temperate forests:

Barro_Colorado_Panama

 

Forest management & investment basics

Speaking to a few of my readers I have been asked to write a bit about the basics of timber management and investment.  And just for kicks I’m going to include a tidbit of its history:
HISTORY
In the fifth century a group of Romanian monks established a pine forest on the Adriatic coast.  This was one of the first examples of timber management established to provide the monastery with a source of fuel and food.  This (now) massive forest was mentioned by Dante Alighieri in his 1308 poem Divine Comedy.   In China the Han and Ming dynasty adopted forest management practices, and in Germany forest management and sustainable harvesting were practiced as early as the 14th century.  In almost all cases these forests consisted of different types of Pine and Oak.
The practice of actually establishing forests, at a large scale at least, came about in conjunction with the invention of the steam engine and the great navy’s of the colonial era.
TROPICAL FORESTRY
Tropical Forestry is the branch of forestry which deals with equatorial forests that yield woods such as teak and mahogany.   Tropical forest management, particularly with hardwoods is relatively new.  These forests weren’t really “managed” until the 20th century, which explains why we are still identifying best practices for the region.  However, there is speculation that the Mayans did indeed plant and manage certain tree species.  Unfortunately very little of this knowledge was passed down after the great cities were abandoned.  The advantage of tropical forests is that they grow year-round with no significant dormant period; tropical hardwoods can grow up to ten times faster than its temperate counterparts.
FOREST INVESTMENT
As I mentioned above, forest management has been practiced for centuries, however forest investment as we see it today is, in relative terms, new.  Since natural forests are finite and evermore protected, there has been and always will be a real necessity to establish “man-made” plantations.  When people or institutions invest in forestry, generally they are investing in the raw material for pulp or lumber.  Naturally, these are considered longterm investments since most timber species require between 15 and 40 years before they become “harvestable”.  That said, many plantations today are bought and sold at different stages of the harvest cycle.  Most of the large plantations, particularly in Latin America, have been sold at least once.  For example there are risk averse investors who prefer to enter once the forest has been established, at say, year 4 or 5.  The reason for this is that new forests are more prone to damage, be it physical or biological, when they are young.  An established forest (4+ years old) is generally more robust and has a higher survival rate.
Investments in the establishment of new plantations usually include costs for: land purchase, legal fees, nursery/germination efforts, planting costs, management, and the subsequent maintenance of a timber forest.  These investors often seek to exit at that 4 or 5 year mark.  (By the way, a well-prepared forest manager should be able to facilitate this transaction.)  Investors who come in at that secondary mark should expect to pay ongoing maintenance costs, as well as a start-up premium for entering at a low-risk stage.
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MARKET
Timberland investment has grown substantially as market volatility and inflation rates have boosted demand for tangible-asset investments.  The good news for timberland investors, is that no matter what the market is doing, the trees will continue to grow as long as the sun continues to shine and the rain continues to fall.  So, for example: if timber prices are down in a particular year (Due to housing market slumps, etc) the investor may simply choose to delay harvesting, and in the meantime the wood volume will continue to grow/increase.
Historically timber investments have shown market resiliency through the decades, several factors can be attributed to it continuing this performance trend:
  • Global population/demographic changes: expected to reach 7.5 billion in 2020
  • New environmental policy and regulation will limit natural-forest sources of timber
  • Increased demand for alternative energy sources
  • Global economic growth (as measured by GDP) is expected to double by 2030
  • Scarcity!
  • Demand from emerging markets, particularly in Asia (link to chart)
SUSTAINABLE/IMPACT TIMBER INVESTMENTS
This blog, as it were, aims to promote and discuss impact reforestation investments.  In theory these should not only perform financially but also:
  1. create stable job creation and economic development in the rural areas
  2. promote transparent and non-corrupt business practices
  3. promote environmentally friendly forest projects
  4. provide the investor with returns with 5 to 12% IRR’s
  5. mitigate pressure on standing natural forests
  6. create biodiversity protection
  7. at least partially rehabilitate degraded ecosystems and improve natural habitats
  8. sequester greenhouse gases in the atmosphere
  9. protect natural forest stands

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California REDD

 

On January 1st my homestate of California launched its long-awaited cap-and-trade program, establishing a limit on greenhouse-gas emissions.  These limits are slowly reduced over time, meaning that at some point the emissions should reach levels from two decades ago.  Its an exciting and important moment for carbon programs, like REDD+, not only because of the California factor (The US’s most populous state and the ninth biggest economy in the world) but because other states may follow suit, assuming of course that things pan out correctly.  “California is a big economy, and it is very diverse, like the U.S. as a whole,” says Mary Nichols, chairman of the California Air Resources Board (CARB), which is overseeing the cap-and-trade system. “If it can work in California, it can work in the U.S.”

Assuming other jurisdictions will participate in offset generation, we could see an impact on conservation efforts and reforestation in Latin America.  There’s quite a bit of work ahead, with many actors, but so far there seems to be pointed-effort.  A recent article published in ‘Ecosystem Marketplace‘, discusses the California REDD program which seeks to bring international REDD+ credits to the state’s program:

Link to article