Why aren’t there more Non-Timber Forest Products (NTFPs) on the market?

No matter how for or against timber harvesting somebody is, one thing that that nearly everyone asks me wherever I travel is why aren’t there more NTFPs available at a commercial scale?

NTFPs tend to appeal to the more stringent environmentalists because they almost always appear to be lower impact when compared to a timber harvest, usually consist of food or drink or are often tied to indigenous/ traditional cultures.  However, the production and harvest of certain types of NTFPs can lead to the creation of forest monocultures. These are not always readily noticeable to the general public. In a maple sugar bush, non-maple trees are removed over time to create open growing conditions for maple- yet it still looks like a closed canopy, later successional forest to the untrained eye. A forest floor full of ginseng or black cohosh (if the poachers don’t take them first!) may have a diverse overstory of trees, but passersby gaze at the colorful tree crowns rather than notice the absence of hiding places for small birds and mammals on the forest floor.

To the strictly production-oriented forester, NTFPs mostly bring social benefits, but usually not much additional cash.  Believe it or not, allowing a neighbor to collect mushrooms can translate into one more set of eyes that is willing to report unauthorized activities or to tolerate the visual impacts of a timber harvest.

But there are the cases when NTFPs generate a profit, so what makes certain NTFPs succeed in the marketplace while others do not?

It is a question to which there are many answers, but some that come to mind are that they are usually products with well-established markets and few substitutions (e.g., maple syrup, cork), are difficult to steal without getting caught right away (e.g., sap, cork, bamboo) or otherwise have strong governance/ enforcement mechanisms that ensure a steady supply under secure property rights or a price premium (e.g., illegal drugs, truffles). Without dealing with the issues of property rights, enforcement, access to markets and steady prices first, many NTFPs are harvested at excessive rates that put their supply in danger (e.g., American ginseng) or at unknown rates with low or poorly understood impacts (e.g., fungi).  Many NTFPs, such as fungi and plant parts, can be difficult to find and thus have high harvesting costs at commercial scales.

How does one address these issues in NTFP management?

  1. Remain low intensity: Wildcrafting is a term used to describe NTFP collection techniques based on the reproductive biology of the NTFP and the site. Producers must ensure that collection practices allow for continued reproduction on the site, such as through leaving the seeds, bulbs or stems of the NTFP behind.  Monitoring of the site is required to reduce the threat of poaching and to determine the timing of harvest.  The state may issue permits or licenses to enforce quotas and ensure legal ownership.  If the NTFP is not legally protected, NTFP gatherers may develop a network of secluded sites that are difficult for others to find.  Price premiums or market access may be difficult for NTFP producers to secure, however.  While direct trade to the end user may result in the best price, it may increase the cost to the producer if any processing or grading of the NTFP is required.  A network of middlemen and processors may develop in response to this, which offers pluses and minuses to the producer.  On the one hand, grading and processing may be done by people who can control costs better than the producer, but they may be willing to pay a lower price.  This may incentivize the producer to gather more or become more efficient at gathering.  All in all, there are simply too many variables that become difficult to control the more unpredictable the growth and mobility of the NTFP are.
  1. Go for high intensity: This one pretty much explains itself as it is the most familiar; use intensive cultivation techniques such as agriculture. Wine grapes are forest plants that humans have figured out how to manage under agricultural conditions for thousands of years.  Through daily care and maintenance, the human presence and organization of the crop addresses most property rights issues.  This allows the producer to focus on the growth, quality and sale of the crop, but with the increased risk of disease, drought and other environmental factors that come with monocultures.
  1. Hybrid techniques: Izabal Agro Forest has opted to control production of its NTFP under management, cacao, through agroforestry.  Agroforestry attempts to mimic the natural conditions that lead to higher quality cacao while allowing for intensive management of two or more crops.  Through dependency on multiple products and use of the agroforest system to reduce dependency on external inputs, it attempts to mitigate financial risk.  The use of cacao, understory plants, and high-value, slower growing hardwoods allows Izabal to maintain a presence on the farms year-round, thus ensuring the protection of property rights.  Since Izabal has two main products, cacao and timber, it can focus on managing for quality over the course of the rotation.  It is not fully dependent on the site’s characteristics to ensure a consistent, supply of NTFPs and can focus on selecting superb specimens and using techniques to increase quality.  It must still manage soil and water quality as a farmer would, yet treat the agroforest as natural system in order to provide optimal conditions for cacao flavor to develop.  Unlike rubber tappers, Izabal does not have to wander the forests in search of plants during fruiting season and then hurry to find willing buyers.  Izabal can focus on growing its crop and finding customers knowing that its crop is secure.

The bottom line is that there are trade-offs depending on the type of NTFP collected and what systems are used to manage them.  Many NTFPs are simply too costly to harvest at a commercial scale without the use of alternative management systems.  Izabal Agro Forest addresses these challenges in multiple ways.

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The Ivory Coast: A case study on climate change and the chocolate we eat

The Ivory Coast has featured prominently in this year’s commodity news with reports of cocoa shipments falling far below levels of previous years. This week, Reuters reported that cocoa port arrivals dropped a dramatic 16% year-on-year since the start of the season last October. A series of recent reports have linked unseasonably dry weather to the sharp decline in grindings and exports. In particular, the Harmattan winds that blow from the Sahara southward across much of West Africa have been unforgiving to this season’s harvest. Industry expectations are for the trend to continue into the next growing season mainly due to low rainfall. Not only have volumes been affected, but quality as well with smaller average bean size and high acidity being reported. As a consequence, exporters have turned away as much as half of arriving volumes. The socioeconomic impact of this damage on the country’s smallholder producers has been extensive.

The Ivorian case is emblematic of supply-side challenges being faced worldwide by the cocoa industry. As the world’s largest producer, what happens in the Ivory Coast will have repercussions felt by chocolate consumers everywhere. This article reviews some of the proximate causes as well as the fundamental driver behind the crisis.

In June, a group of researchers at the International Center for Tropical Agriculture published an article examining the impact of climate change in West Africa’s cocoa belt and the results are cause for dismay. The authors predict both increased precipitation and temperature extremes during the dry season. They identify the forest-savanna transition zone to be the most vulnerable, predicting 87% and 57% drops in suitable growing areas in Nigeria and Ivory Coast, respectively, by 2050.

Relative climatic suitability (in percent) for cocoa of the West Africa cocoa belt

Relative climatic suitability (in percent) for cocoa of the West Africa cocoa belt (Source: CIAT)

Although it is difficult to draw a causal link to climate change, farmers in the Ivory Coast recently reported a mass caterpillar invasion that has affected around 17,000 hectares of growing areas. (Link: video). The extent of the damage and the potential spread of the caterpillar have yet to be fully understood.

Another effect of shifting weather has been the conversion of cocoa acreage to informal mining operations as pits are torn directly into cocoa fields to extract gold. In other cases, cocoa farmers are being drawn from parched farms to the mining regions, leaving trees abandoned.

An informal miner on a cleared plot (Source: AFP)

An informal miner on a cleared plot (Source: AFP)

Against this backdrop, ethnic tensions are simmering as thousands of Ivorian refugees return to their homes only to find the farms occupied by newcomers, often from other regions, in the wake of the country’s 2010 civil war. Many settlers include migrants from neighboring countries that have also been subject to a changing climate. The government’s efforts to adjudicate disputes through the issuance of land title have been woefully inadequate; overall, land tenure remains precarious. In such legal limbo, farmers are understandably reluctant to make needed investments in their orchards.

Displacement and the resulting resource conflicts have manifested themselves in widespread squatting across the country’s remaining protected forests. Experts estimate that the Ivory Coast has lost 80% of its forested area since 1960. Forest clearance continues largely unabated and cocoa farming is pervasive on such plots. Experts believe as much as one third of the country’s cocoa may originate from protected areas.

Burnt cocoa farm in a protected area (Source: Reuters)

Burnt cocoa farm in a protected area (Source: Reuters)

This has pitted human livelihoods against the survival of endangered species, including the pygmy hippopotamus and chimpanzees, endemic to these forests. Taking a more muscular approach, authorities forcibly evicted thousands cocoa farmers from these lands. The removal of over 50,000 people from Mont Peko National Park alone may take 10,000 tons of cocoa off the market in short order and is likely to further inflame tensions. Human rights groups have raised the alarm that the evictions have been linked to the illegal destruction of homes, intimidation, extortion and even murder.

Taken together, these factors paint a picture of long-term secular decline that will not be easily resolved by a year or two of plentiful rainfall. Even more concerning is that these trends are not unique to the Ivory Coast. Recent weather patterns attributed to El Niño have adversely affected production from Brazil to Indonesia. While laudable, private and public sectors efforts to combat the effects of climate change would seem to fall short given the magnitude of the problem.

One of the recommendations posed by the CIAT researchers is the adoption of agroforestry systems: “…in view of the relatively high rainfalls and short dry season in this area, the conditions for managing the projected increase in maximum temperatures through the systematic use of shade are particularly good. Cocoa could be grown here in multi-strata agroforests under a canopy of useful trees creating their own microclimate…” (Source: CIAT) Such systems are effective in buffering temperature extremes, modulating humidity, and reducing erosion caused by heavy rainfall. They are also intensive in their capture of carbon dioxide. While cocoa may be the proverbial canary in the mine, agroforestry systems, including those that produce cocoa, will undoubtedly play a role in any serious response to a changing climate.

Update – 15 Sept. 2016

Today, the Wall St. Journal published an article entitled “Cocoa Production Could Be Devastated by Climate Change, Experts Warn,” drawing attention to the potential impact of climate change on cocoa production worldwide. Genetic diversity and the development of new varieties drawn from a broader gene pool is cited as an important part of the response:

“To make cocoa crops more resilient, the industry needs a greater long-term focus on genetic diversity, which will allow plants to better withstand and adapt to changes in climate, said  Brigitte Laliberté an expert on cocoa genetic resources at Biodiversity International, a global research-for-development organization. Genetic diversity in the West African region is low, she said, and while a focus on better agricultural methods can help yields in the short term, in the long term there must be better research and funding for breeding more resilient varieties, she said.”

The lack of genetic diversity makes African cocoa inherently more vulnerable to pests and disease that can be spawned by changes in humidity and temperature vis-a-vis Latin America cocoa farms whose natural genetic pool is more diverse. This point certainly underscores the importance of avoiding monoculture around a handful of clonal selections; embracing endemic varieties; and employing agroforestry systems to enhance the species’ natural resilience.

Update – 16 Sept. 2016

Outcries have mounted over the government’s handling of the Mont Peko evictions with Human Rights Watch issuing a scathing statement:

“International law protects anyone who occupies land from forced evictions that either do not provide adequate notice or do not respect the dignity and rights of those affected, regardless of whether they occupy the land legally.”

Now homeless, thousands of former squatters have been driven into neighboring villages that lack the resources to accommodate them.

Bloomberg reported today that the impending cocoa shortage is likely to worsen over the remainder of the current season and into the next. By one measure (stockpiles-to-grindings), the market is at its tightest in 30 years with cocoa butter in particularly short supply. The head of Olam International’s cocoa division (the company is the world’s 3rd largest processor) stated:

“The light crop has just been a disaster in Ivory Coast and the Indonesian crop has been much smaller than we thought… We are seeing acute shortages in Asia, acute shortages in America, acute shortages in Africa… You are not really going to catch up with that deficit until the latter part of next year. And for that, you are going to need not only good main crops, but above-normal mid-crops.”

Heading into the peak Halloween and Christmas demand period, it seems likely that the scarcity will be felt by consumers and producers alike.

 

 

Pay your cacao farmer well!

Cocoa beans from a Theobroma cacao tree

Cocoa beans from a Theobroma cacao tree

There is a troublesome trend in the farm world; small farmers are throwing in the towel and big farms are getting bigger.  Naturally, these massive operations have effects on the environment, food costs, human health, communities, and more.

This year we had an experience that made this trend personal.  To be honest, we’ve had an awful harvest when we didn’t expect it.   As a medium scale operation, the income that our harvests bring can be a critical element to our financial sustainability.    We want to do things right, and that costs money.

Last November when our “winter” harvest usually comes in we had a series of weather phenomenons that threw a big fat wrench into our cacao efforts.  Climate change for us, has felt very real this year.  In fact we estimate a 70% decrease in production when compared to last year.  Thankfully we have good clients and we’re diversified; for example we’ve been able to sell lumber and services to make up the difference, but what about the small farmer?  How does one who already lives marginally cope with these situations?  Does he/she give up to go work for the industrial farms?

Most Cocoa farmers, the majority of whom live in West Africa, live in poverty.  In Guatemala, where most of the cocoa is grown by cooperatives, the socio-economic situation is not bad, but its still marginal.

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For the poor farmer that eeks out an existence and is burdened with the risks of climate change and commodity prices, something has to change.  And part of that is to address the value chain and to recognize that we can pay our farmers a little bit more given all of the warmth and goodness that chocolate brings us.

Recently Izabal Agro-Forest conducted a market study for cocoa and found that a substantial increase in the commodity price for cocoa who would have almost no price effect on the consumer, which is crazy!  What the message here?: Let us pay our farmers more:

Andrew Miller (of IAF & Big Leaf) comments:

“Higher cocoa prices need not result in proportionally higher chocolate prices as cocoa represents just 5% of the retail price (see table below). Even if this percentage were to double to 10% in 2020, as projected by Euromonitor, chocolate prices could remain roughly flat.”

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Small to medium sized chocolate makers generally understand that quality and social sustainability are critical elements of supporting good quality cacao and its farmers.  We just need the industrial guys to catch on.

Pay your farmer well!

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