1 Are Community-based Forest Enterprises Viable? Building capacity for monitoring and evaluating production costs in the Amazon region Dr. Shoana Humphries Scientist, IPAM International Program
2 Overview Project description Background information Overview of project Overview of Handbook Results to date Conclusions Other USDA Forest Service International Programs activities in the Amazon region
3 Project Description Strengthening Community-based Forest Enterprises in the Amazon Funding Office of International Programs, USDA Forest Service, with resources from the US Agency for International Development (USAID) as part of the Amazon Forest Sector Initiative Timeframe Aug 1, 2012 to July 31, 2013 Objectives Support sustainable forest management and economic development through the strengthening of CFEs in the region with (1) building capacity in financial analysis, (2) applied research, e (3) through the sharing of experiences and lessons learned. Tools Countries (1) A Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics, (2) Interviews, and (3) Cross-site visits. Bolivia, Brazil, Colombia, Ecuador, Peru
4 Background Community forest management (CFM) is growing in importance around the globe as a tool for improving local people s livelihoods and conserving forests. Communities are trained in sustainable forestry and receive assistance to obtain legal permits. Models vary greatly in scale, intensity, and complexity, as well as in products. CFM became prominent in the 1980s, and has become more important globally with the devolution of forests to local communities. In Brazil, CFM began in the mid 1990s and enjoyed much financial support from through the ProManejo program, which ended in In 2006, there were 176 community timber management plans in development in the legal Brazilian Amazon, of these only approx. 30% were completed.
5 Background cont. With the end of ProManejo, the future of CFM in Brazil came into question. The success of the new community-based forest enterprises (CFEs) depends on if they can be financially viable with no or small subsidies. Knowledge of the financial viability and livelihood impacts of CFEs is still lacking. Participatory study/training on the profitability of three CFEs in the Brazilian Amazon in Turned the spread-sheets and methodology into a Handbook to facilitate the collection and analysis of financial data for CFEs in Brazil and other developing countries.
6 Theory of change EFCs are complicated commercial initiatives with a diversity of objectives with weak financial management and analytical skills. If CFEs are not financially viable and competitive with other land uses, CFM and forests will lose ground. Training of NGOs and CFEs CFEs have a simple tool to help them make financial decisions. CFEs operate in complex local, regional, and national contexts. As such, there are many internal and external factors that affect their financial viability and longterm sustainability. Policies are needed that address CFE challenges and that promote CFE products in state procurement. Sharing experiences and lessons learned CFEs and partners are better aware of how others confront similar challenges. Outsiders (policy makers, donors, academics) have a greater understanding of the contexts in which CFEs operate.
7 Main activities Completed Competitive process to identify 10 representatives of NGOs who work with CFEs to receive training as trainers Train the trainers event Six workshops with CFEs in Peru, Bolivia, and Brazil to train CFE staff, reinforce NGO skills, and produce case studies (5 completed to date) In progress Two cross-site visits for sharing experiences and ideas Planned Follow-up visits by NGOs to CFEs Closing meeting to discuss tool, policies, and future collaboration as a network Make Handbook and case studies available on the web
8 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics 5 Sections 1. Introduction to community forestry and the Handbook 2. Financial concepts for the analysis of CFEs 3. Overview of two case studies of CFEs 4. 6 steps for monitoring, organizing, and analyzing financial data 5. Extensions of the basic analysis Annexes: I. Excel worksheets II. Practice data III. Other sources of information
9 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. Types of activities monitored Planning and production activities for one production cycle (costs) Administrative activities (costs) Sales (income) Cost data is collected and analyzed by activity and cost type Labor: temporary and permanent workers A daily wage value is estimated if workers do not receive a salary in order to include the value of their labor in the total cost of the product Materials and services: items that do not last more than one production cycle (e.g., fuel, transportation fees) Machinery and equipment: items that last more than one production cycle (e.g., chainsaws, hardhats, GPS) All costs are included, even those subsidized including donated machinery/equipment still in use, technical assistance, training.
10 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. 1. Planning 2. Collect field data 3. Enter data 4. Compile data 5. Analyze and summarize results 6. Reflect on results
11 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. Ex: Step 2 Collect field data for labor MONITORAMENTO: MÃO DE OBRA Nome do Produtor: Atividade: Inventario Responsável: Edivan Informação General Trabalhadores Dias Trabalhados Primeiro dia da Área de (1= um dia completo, 0.5 meio dia, 0 = Subtotais de Dias semana trabalh Nome do não trabalhou) Trabalhados Dia Mês Ano o Trabalhador Cargo S T Q Q S S D Soma Responsável Outro Pagamento Edivan Sosa Machetero Saiu na terça-feira para trabalhar em outra atividade Patricia Ruiz Paulo Rocha Anotador de dados Ficou doente na tarde do dia quinta-feira. Patricia Ruiz Diário ($) Observação Dados Introduzidos Por (Nome) Dados Introduzidos Em (Data)
12 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. Ex: Step 3 Enter field data for labor into Excel spreadsheet by activity DADOS DE CAMPO: MÃO DE OBRA NOME DO PRODUTOR: Atividade: Inventário Informação Geral Primeiro dia da Responsável: Edivan Edivan Sosa Bruxuleio Paulo Rocha Libretista Subtotales $ Atividade: Planejamento Responsável: Floraiano S. Informação Geral Dia Mês Ano trabalho Trabalhador Cargo S T Q Q S S D Soma Responsável Outro Floraiano S Nilson R Subtotales $ Atividade: Corte de arvores Responsável: Joelson B. Informação Geral Trabalhadores Dias Trabalhados (1= um dia completo, 0.5 meio dia, 0 = Subtotais de Dias semana Área de Nome do não trabalhou) Trabalhados Pagamento Subtotal de Dia Mês Ano trabalho Trabalhador Cargo S T Q Q S S D Soma Responsável Outro Diário ($) Pago ($) Primeiro dia da Área de Nome do Trabalhadores Dias Trabalhados Trabalhadores Subtotais de Dias Primeiro dia da Dias Trabalhados Subtotais de Dias Pagamento Diário ($) Subtotal de Pago ($)
13 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. Ex: Step 4 Compile labor data by activity COMPILAÇÃO: MÃO DE OBRA Nome do Produtor: Atividade Custo Subtotal por Atividade Inventário Planejamento Colheita / Corte de Árvores Transporte / Arraste Medição de Produtos Custo Total $ Dados Introduzidos Por (Nome) Dados Introduzidos Em (Data)
14 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. Informação sobre o Produtor Nome COOMFLONA Produto ou Serviço MADEIRA EM TORA Analisado Período de Análise Jan a Dez 2011 Custo por atividade e tipo de custo Materiais e Máquina e Informação Operacional Básica Unidade monetária R$ Área de produção (ha) 1, Unidade de venda m³ Volume vendido 15, Volume /área médio Custo médio por Custo Médio por Custo Subtotal Atividade por Atividade por Atividade Mão de Obra Serviços Equipamento ($) Unidade de Área Unidade Vendida Inventário 80, , , , Corte de Cipó 7, , , Abertura de estrada 7, , , , Derruba 57, , , , Arraste 91, , , , Romaneio 63, , , , Baldeio 9, , , , Comercialização 1, , Administração 158, , , , Custo Subtotal 474, , , ,282, , Porcentagem 37% 57% 6% Ex: Step 5 - Analysis Calculate subtotal by: - activity - cost type - per ha - per m3 sold Calculate Net income Calculate Rate of return Renda Total Custo Total $ $ 3,144, ,282, Utilidade Total $ 1,861, Taxa de Rendimento %
15 Tool Handbook for Financial Analysis of Community-based Forest Enterprises in the Tropics cont. Custo em $ Custo em $ GRAFICOS Nome do Produtor: Atividade Custo Subtotal Porcentagem do Custo Administração 419, % Baldeio 241, % Arraste 209, % Romaneio 140, % Derruba 100, % Inventário 84, % Abertura de estradas 75, % Corte de Cipó 9, % Comercialização 1, % Custo Total $ 1,282, % Ex: Step 5 cont. - Subtotal by activity in table, and graphics showing proportional costs of each activity Custo Total por Atividade 1,400, ,200, Comercialização Corte de Cipó 450, , , , , , , , , Custo Total por Atividade 1,000, , , , , Abertura de estradas Inventário Derruba Romaneio Arraste Baldeio Administração -
16 Main Results to Date Training Original 10 representatives trained + 11 of their colleagues in CFE trainings Country Bolivia Brazil Colombia Ecuador Peru Participating Organizations CESVI Servicio Holandés de Cooperación al Desarrollo (SNV) Instituto Floresta Tropical (IFT) Instituto Internacional de Educação do Brasil (IEB) Instituto de Manejo e Certificação Florestal e Agrícola (IMAFLORA) WWF Colombia Naturaleza y Cultura Internacional Red Internacional de Bambú e Ratan (INBAR) Instituto de Bien Comun (IBC) Asociación para la Investigación y el Desarrollo Integral (AIDER)
17 Main Results to Date Training cont. 5 workshops with a total of approximately 34 CFE staff trained; 1 more planned 12 case studies Product Unit of Analysis Peru Bolivia Brazil Timber: standing trees Association (4 cases) VIABLE Timber: logs in the forest Association VIABLE Timber: logs in the log deck Cooperative VIABLE Timber: blocks of wood 1 Association Not viable REDD project NGO program VIABLE Artisan textiles 2 Individual Producer Not viable Tourism 3 Association Not viable Brazil nut Family VIABLE Rubber production Individual Producer VIABLE 1. The inclusion of technical assistance costs provided by the partner NGO made this activity unviable. 2. The inclusion of labor costs made this activity unviable. 3. The inclusion of infrastructure and administrative costs made this activity unviable.
18 Conclusions The tool will improve transparency and inform decision making processes EFCs producing timber products usually have a system to monitor costs and income, however few people understand how to use it, and results are rarely shared in an easy to understand way. The EFCs producing non-timber forest products did not commonly have a system in place and therefore did not have a calculation of their total costs or net income. Trainees consistently expressed that the tool is very useful and important for compiling and/or organizing data, understanding the financial situation of the CFE, presenting the results to others, and analyzing scenarios for the future. The net income is more important for CFEs than the rate of return on investment. The tool still needs more work to simplify analysis of machinery and equipment The simplified methodology for calculating annual depreciation that we propose is useful and understandable, but the method for dividing this cost among activities in a proportional way is still difficult to understand. There is a lot of interest in using the tool to help CFEs and in using results to inform policy makers so they can adapt policies to better support CFEs
19 THE FOREST SERVICE WORKS INTERNATIONALLY TO: Bring expertise to assist in conservation and natural resource management activities, policy development and trade issues Bring important research and technology gained overseas back to the US Assist countries in responding to disasters Internationalize the US Forest Service Leverage our investments in workforce diversity awareness overseas assignments provide agency personnel with cross-cultural experiences
20 Amazon Forest Sector Initiative Key activities Brazil Sustainable Landscapes Carbon assessments (SWAMP) Restoration Fire (Prediction and Forecasting; Monitoring; Management) Forest monitoring and information management Community Forestry Management