BIODIVERSITY CONSERVATION AND BUSINESS – IS THAT POSSIBLE? LET´S FIND OUT TOGETHER!

Fundação Grupo Boticário de Proteção à Natureza

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Amazon Nectar – on-line shop for native bees’ honey and community-based forest products

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Posted by Joao Meirelles on 24-12-2016 - Last updated on 16-02-2017

1. Idea/ concept maturing This proposal is to implement the Amazon Nectar – a On-Line Shop for community-based forest products, starting by honey from non-stinging native bees (Melipona sp). *Most of the food we eat is produced thanks to pollinators (bees, beetles, birds, bats etc.). Mostly due to loss of habitat, climate change and chemical products, Earth is loosing pollinators at a dramatic level, that world food security became a priority agenda. Globally, the economic value of bee pollination is estimated at 1/10 of the value of agriculture – US$ 153.10 billion [Gallai et al, 2009]. At the same time, locally we haven’t been able to value pollinators’ environmental service. *Amazon Nectar is a direct response to this call for action, by using market driven conservation as a mechanism to save the largest tropical forest left on Earth. Amazon Nectar is a line of products from the forest in partnership with local traditional communities according to fair trade principles. The first product to be launched is the honey from native bees. Other community-based products that are ready to be marketed and don’t find a proper commercial channel will also be sold in the near future (such as cocoa powder, essential oils and others). *By launching in the market products related to the Amazon wild bees we are giving pollination a value recognized by consumers. In the Neotropical region (in Brazil and in Latin America), more than 95% of the non-stinging bee honey is sold in the informal market (illegally). By profiting from wild honey and other products we are fighting deforestation by generating forest-based income for traditional populations. *Peabiru Institute is working for almost two decades to valorize forest products (açaí, forest oils, ecotourism and honey) to discourage forest fires and deforestation while providing an incentive for the conservation of forest biodiversity. At the same time, encouraging pollinators increases the efficiency and yield in agricultural (in general, up to 30%) and non-timber forest production (such as cocoa, brazil nut, açaí and other fruits), besides keeping traditional families in the forest. Native honey production will also help to organize local associations and enterprises. In many regions 1 liter of honey (US$ 20 to 30/l) can represent 30-50% of average monthly income per capita. It can provide an anchor to rural youth, thus helping to stem regional urban migration. *Native honey production provides a source of income accessible to women and compatible to their daily activities. Women’s income can have a direct impact on the security and wellbeing of rural families. * Finally, consumers will be able to buy a unique product from biodiversity & strong local traditional cultural – the whole forest in a spoonful. * We see the Amazon Nectar initiative as a pilot project with the potential to eventually reach a greater population, an incentive to sustainable agriculture, preparing the forest farmers of the future. There are more than one million families living in rural underdevelopment in the Brazilian Amazon. How powerful it would be if each of these families worked to raise native bees and commercialize its honey among other forest products! We envision every Amazonian home garden flourishing under the enterprising activity of these small workers. We cannot stop forest fires with humming birds dropping water in the fire, but we can stop it by consuming honey from wild bees. Complementary photos here: https://peabiru.org.br/multimidia-2/galeria-de-imagens/galeria-abelhas-nativas/

2. Work plan and timeline for implementations;

 

A. Work plan is to launch a virtual shop

A.1. – In 2017, the plan is to launch an Online Shop to sell community based forest products. We will also use an existing shop in Belem to test products with consumers. The plan covers a 4-year period, in principle 2017-2020. The first product is the honey from the wild bees (honey from the Melipona bees (non-stinging bees). The plan is to launch a new product every year, depending on funding and business plans on other products. The other products are being defined, among those that Peabiru already works, such as cocoa powder, andiroba oil and pracaxi oil (cosmetic oils). All of them are being produced and commercialized by local communities that find many difficulties to reach the market and get a better price.

A.2. Market – Consumers – Indians for thousands of years prized honey from native bees as a unique product – a true prize. Traditional farmers used to have a couple of beehives at their yard brought from the wild in tree branches but lost ¾ of the beehives in the process. In the last 50 years a rational management approach developed in Brazil made it possible for local farmers to have dozens and even hundreds of bee boxes in their gardens. Raising bees at home started offering the product in the informal market in very small quantities. We learned that from a single box we could multiply them twice a year, easily reaching a 50-box family system. In the last 10 years, few organizations in the Amazon such as the Peabiru Institute initiated a pioneer work to assist local communities to raise native bees. At the moment, Peabiru runs one of the largest native bee programs in Brazil. Popular medicine considers native honey a powerful prevention medicine for respiratory & throat diseases and it is highly valued. In the last decade it was discovered by cuisine chefs as a unique ingredient and it become a prized product. Health food consumers are more and more interested in native honey. But all of them have difficulty in finding the product regularly. Although there are more than 10,000 very small producers in Brazil, most don’t even sell honey, and the majority of honey sold is in the informal market in small quantities. There are no studies covering this market, but all products are sold and price raised 10 fold in the last years, reaching almost US$ 30/liter.

It is also important to say that we don’t have a study about the size of the market, their desires and needs. In practical terms all competitors to the Amazon Nectar are very small and respond to very local markets. There are two operations, one in Amazonas state (Boa Vista do Ramos) and other in Maranhão (Baixada Maranhense) that can be allied in this venture as they don’t have a powerful on-line sales tool.

A.3. Honey Production potential – Peabiru has been working in the last years with more than 110 producers from 28 communities in different areas of the Amazon in two states (Pará and Amapá). We are expecting that 4,000 bee boxes will be producing honey by the end of 2017. This can be considered one of the largest native honey initiatives ever done. Conservatively, in 4 years, at least we expect a 10% increase in bee boxes that means, 4,400 in 2018, 4,840 in 2019, 5,324 in 2020 and 5,856 in 2021. That is a total increase of almost 50% in 4 years (46,4%). Conservatively, each bee box (also named as bee hive) can produce at least 1 liter/honey/year in the first two years, increasing to 1,5 liters/honey/year in the 3rd and 4th years and 2 liters in the 5th year. Production expected to market: 4 ton in year 1, 4,4 ton in year 2, 7,98 ton in year 3 and 8,78 in year 4. The intention is to produce 25,16 ton of honey in 4 years. The annual production will more than double in 4 years (119% increase). As most of the consumers buy honey in 250 ml packing we are considering that 1-ton means 4,000 honey pots.

A.4. Production groups – in this business plan we are considering the same group of 110 producers in the four years, as some will leave and others will enter in the group. After the 2nd year we can revise this situation. In fact, annually we will do it. As proposed in the map bellow, among the groups involved are Indians (in Oiapoque, Amapá state), African-Americans (Quilombolas)(in Macapá, Amapá state), traditional fishermen and family farmers from river communities (in Curuçá, Almeirim and Monte Alegre, in Pará state).

A.5. Product processing and stocking – the honey is collected in each box by a sucking machine (similar to a very small vacuum cleaner). The honey house (the processing plant) in four strategic points will filter and will put the honey in the bottle and pack it for transport. Local associations and partners will manage existing honey house. Peabiru is working an agreement with Embrapa Amazônia Ocidental (the federal research institution dealing with agriculture technology) for orienting this process, as it is a new but simple technology. Stocking will be in Belém where Peabiru has space for the first year production.

A.6. Sales price – in just the last ten years the price has risen tenfold. Most of the honey to consumers is commercialized from R$ 60.00 to R$ 100.00. Considering United States Dollar (US$) x Brazilian Reais (R$) as R$ 3.5/ US$, local market pays from US$ 17.14 to 28.57. For this study we are considering selling it by US$ 20.00 in the first year, achieving US$ 24.29 in the forth year (R$ 85.00/liter).

A.7. Payment to producers – It is fundamental to pay as much as possible to local producers, that are isolated and can have a significant income from honey. For the moment, we are considering to pay an average of 30% of the sales price to local producers. The intention is to raise this proportion at 1% per year, achieving 40% in the 10th year. For the first year that means US$ 5.70 (R$ 20/liter). The payment will be placed in cash in the moment of the product acquisition. In the future we will consider more sophisticated policies with different prices and payment conditions (such as payment in advance, rewarding productivity etc.). For a producer family with 50 bee boxes, producing a minimum of 1 liter/box, and receiving US$ 6.00 (R$ 20)/liter, that means US$ 300 (R$ 997,50). As most of the per capita income is less than R$ 200 (US$ 57.10)/month, that is equivalent to approximately 5,25 to 7 months for a person, or approximately half of the annual income per capita. This will increase as price paid per liter will raise and the production per box and number of boxes will also increase.

A.8. Branding – Amazon Nectar is the name proposed for the product line. Nectar is mostly associated to be the drink of the gods according to Greek Mythology. It reminds us of something positive, good, powerful, pure, that few have access. In biology/agriculture it is the sugar-rich liquid that the plant offers to attract pollinators. Among other meanings, it recalls nourishment, food, and sugar. Five years ago, Peabiru hired a traditional Brazilian design company (Forminform) for basic branding services (logo design and specific packing). Peabiru has been using the logo associated to the production implementation process. The on-going support by Amazon Fund (Fundo Amazônia) from the Brazilian Development Bank (BNDES) received this name to strength the brand.

A.9. Packing – Although we have decided for glass packing and a box made of palm branch wood, we could not conclude about the viability of this packing for large quantities. Pilot sales were made to companies that gave the honey as a corporate gift for their clients. We still need to test what is better – if plastic or glass, if a palm wood box or a paper box among other issues. We also developed a label with the basic information, but a more detailed label needs be developed to include mandatory information of recently approved legislation (Nutrition facts, ingredients, how to use, net qty., date packed, best before x months etc.). In principle, product will be offered in 2 ways: as 250 ml package and in 1-liter package. Eventually, supplying restaurants with 5-liter package will be available.

A.10. Complementary attributes – 1. Geographic indication (GI) and Certification – it is important to link the product with a certain environment & culture. In Brazil, it is possible to identify the product to a territory. Fair trade, organic and other certification will be requested and will be incorporated in the product in the 2nd year onwards. A budget for a basic certification is considered. 2. Association to combat Climate Change – We will present how many kilos of carbon each kilo of honey is able to sequestrates. Although we have preliminary studies, we verifying the calculations due to new findings. It will be included in the project in the second year onwards. 3. Conservation impact  – We will also inform how many hectares of Amazon rainforest (and savannah and floodplain) the honey collecting is preserving. New calculations are also being made. 4. Social impact – we intend to associate each honey with a different culture & society. For example: honey from traditional fishermen of Amazon mangrove. 5. The label also has a space for artists or children which parents are involved in production to make a unique drawing. It also needs more testing on the viability of this proposal. Other products will also have similar approach.

A.11. Management & sales team – Peabiru Institute’s 10-year experience in the management of native bees and administration of different operations in the region qualifies it for running this on-line shop. We have been testing different on-line sales to our projects such as the Goeldi Museum shop & gift sales (in order to raise funds to revitalize the museum). Our team has business administrators, accountants and people with commercial and marketing experience.

A.12. Juridical aspects – A specific company will be formed in order to attract investors and to guarantee a full commercial initiative. If operations are well succeeded this company can open its capital in order to include supplying traditional communities as part of the shareholders.

B. Timeline

This plan covers a 4-year schedule. In general terms, the first year will be used to launch the on-line shop and the product as a pilot project in specific market niches. The second year will be used to adjust commercial, logistic, marketing, propaganda and other policies. And the 3rd and 4th year will be dedicated to expansion and commercial alliances. In principle, the schedule initiates in January. In the first year, the 1st trimester will be dedicated to planning (through design thinking and other techniques); operational detailing and legal questions concerning commercialization, besides developing the graphic design. It is the moment to spread the world about the project through a communication plan. Product promotion will start slowly and will be reinforced when product is available at the 3rd trimester. The 2nd trimester will be used to design and test the on line shop. It is the moment to solve all logistics and stocks problems. Packing and delivery are major concerns for the 4th trimester. The honey production is expected to occur in the 3rd trimester (Production is in the Amazon summer, in the driest months, usually between July and December). In the end of the 4th trimester an annual evaluation will take place.

 

3. Costs forecast;

 

The first studies indicate the need to invest US$ 55,300.00 according to the table bellow.

Revenues and costs are also presented here. Because it is a very innovative operation we will need to track this finance planning on monthly basis with full review in the first 4 semesters.

 

Value in US$

US$-R$

3,50

 

 

 

 

 

Years

1

2

3

4

Total

average

observation

Revenues

80.000,00

94.285,71

182.400,00

213.228,57

569.914,29

142.478,57

 

Quantity (liters)

4.000,00

4.400,00

7.980,00

8.780,00

25.160,00

6.290,00

 

Average price/liter (US$)

20,00

21,43

22,86

24,29

 

22,14

 

Average price/liter (reais)

70,00

75,00

80,00

85,00

 

 

 

 

 

 

 

 

 

 

 

Investment

55.300,00

0,00

0,00

0,00

55.300,00

 

 

Personnel

9.000,00

0,00

0,00

0,00

9.000,00

 

 

Consulting & training

3.000,00

0,00

0,00

0,00

3.000,00

 

 

Design

5.500,00

0,00

0,00

0,00

5.500,00

 

 

Working capital

6.000,00

 

 

 

6.000,00

 

 

Certification

8.000,00

 

 

 

8.000,00

 

 

Software & web design

6.000,00

 

 

 

6.000,00

 

 

Native Honey Cookbook

8.000,00

 

 

 

8.000,00

 

 

Packing

1.500,00

 

 

 

1.500,00

 

500 liters

Strategic stock

3.000,00

 

 

 

3.000,00

 

500 liters

Other costs

1.800,00

 

 

 

1.800,00

 

 

Taxes & licences

3.500,00

 

 

 

3.500,00

 

 

 

 

 

 

 

 

 

 

Operational costs

83.900,00

90.908,57

132.024,00

146.781,43

453.614,00

113.403,50

 

Personnel

15.600,00

15.600,00

15.600,00

15.600,00

62.400,00

 

 

Transport &Logistics

4.800,00

4.800,00

4.800,00

4.800,00

19.200,00

 

 

Processing (industry)

3.600,00

3.960,00

7.182,00

7.902,00

22.644,00

 

 

Packing

5.200,00

5.720,00

10.374,00

11.414,00

32.708,00

 

 

Certification

4.000,00

4.000,00

4.000,00

4.000,00

16.000,00

 

 

Administration

7.200,00

7.200,00

7.200,00

7.200,00

28.800,00

 

 

Communications

1.200,00

1.200,00

1.200,00

1.200,00

4.800,00

 

 

Honey acquisitions

24.000,00

29.228,57

58.368,00

70.365,43

181.962,00

 

 

Commercial costs

4.800,00

4.800,00

4.800,00

4.800,00

19.200,00

 

 

Marketing & Propaganda

3.000,00

3.000,00

3.000,00

3.000,00

12.000,00

 

 

Promotion  

2.000,00

2.000,00

2.000,00

2.000,00

8.000,00

 

 

Other costs

1.500,00

1.500,00

1.500,00

1.500,00

6.000,00

 

 

Taxes & licences

7.000,00

7.900,00

12.000,00

13.000,00

39.900,00

 

 

 

 

 

 

 

 

IRR

 

Profit/loss

-59.200,00

3.377,14

50.376,00

66.447,14

61.000,29

33,06%

 

Accumulated

-59.200,00

-55.822,86

-5.446,86

61.000,29

 

 

 

 

 

 

 

 

 

 

 

Profit/loss / Revenue (%)

-74%

4%

28%

31%

11%

 

 

 

 

 

 

 

 

 

 

acquisition/liter US$

6,00

6,64

7,31

8,01

 

 

 

sales price/acquisition price

0,30

0,31

0,32

0,33

 

 

 

acquisition price (R$)

20,00

23,25

25,60

28,05

 

 

 

Number of boxes/family

50,00

 

 

 

In reais

Minimum salary

880,00

Family with 50 box - Income/year US$

300,00

332,14

365,71

400,71

 

 

1 liter/box

Family with 50 box - Income/year R$

1.050,00

1.162,50

1.280,00

1.402,50

 

 

 

 

 

 

 

 

 

 

 

Proportion to minimum salary

119,32%

132,10%

145,45%

159,38%

 

 

 

Proportion to averge per capita income

5,25

5,81

6,40

7,01

 

 

 

 

4. Financial return anticipations

 

If we consider the investment (US$ 55,300.00) as part of the cash flow, the balance will be positive in the 4th year. If we consider only the annual balance, it will be almost even in the first and second years and will be very positive in the 3rd year onwards. In the 4th year it is expected that the operation will generate a 31% profit (in fact 30% since the 3rd year).

The rate of return for a four-year operation is 31%, what is very high for such a short time length.

At the moment we are not counting on selling the cookbook and we are not selling carbon credits. The intention is to offer the cookbook for sale from the 2nd year onwards and the carbon credit from the 4th year onwards. No calculations were made for these operations yet.

 

5. Potential associated risks

If we consider a SWOT analysis (Strengths, weaknesses, opportunities and threats) we can point out these key issues:

Weaknesses:

  • We don’t know how big is the market, but up to know, whatever is produced is sold and price and production are growing very fast (no statistics available);
  • The distant between communities and the central office in Belem associated to communication & transport difficulties is a challenge;
  • It is a new product and market may take more time to absorb the quantities produced;
  • The quality variation could not be understood by consumers in first place; and
  • As a natural seasonal product that depends on climatic conditions production may fall in some years due to different natural conditions (droughts, excessive rain, forest fires etc.).

Opportunities

  • Associate an important environmental service – pollination – to a product (honey from native bees) and make people think about the importance of it;
  • Valorizing the forest and natural environment and traditional community knowledge associated to it;
  • There are no trademark for non-stinging bees’ honey capable of supplying the market in permanent terms and minimal quantities; (need)
  • Offering a desired product with food security and significant positive social impact for poor traditional communities;
  • Surfing in the exotic products trend for cooking such as the wild honey can help;
  • Use famous chefs for spreading the word about this product;
  • Use the cookbook as a powerful promotion tool; and
  • To research on the size of the market, its niches and characteristics in order to respond to the market needs and desires.

Threat

  • Logistic difficulties can make the product more expensive;
  • Stocking such a product can be a threat;
  • Retailers will need to treat the product with more care, as it is different from the honey from Apis bees (honey from European bees). For example: it has more humidity.

 

Quality

– As a new product local legislation adjustments are needed. Peabiru and its local partners are addressing local authorities in different Amazon states in order to be able to commercialize it locally, nationally and internationally. For the first year the target is the local market.

 

Photos here:

https://peabiru.org.br/multimidia-2/galeria-de-imagens/galeria-abelhas-nativas/

 

Comments

  1. Pedro Meirelles Pedro Meirelles

    Interesting project