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Farmers in the Amazon could earn 9 times more and prevent ecosystem collapse

  • In this opinion piece, Jonah Wittkamper, Alexander Borges Rose, and Denis Minev argue that agroforestry in the Amazon “can replace cattle, generate new wealth, create jobs and develop new economic zones that insulate pristine forest from deforestation risk.”
  • “The opportunity is huge and the needs are urgent,” they write. “If landowners switched from producing soy to a polyculture of fruit and horticultural products, their income would more than triple.”
  • This article is a commentary. The views expressed are those of the author, not necessarily Mongabay.

The smart money is on the Amazon forest. Agroforestry can replace cattle, generate new wealth, create jobs and develop new economic zones that insulate pristine forest from deforestation risk.  Investors are needed for scaling, philanthropic foundations are needed for catalytic first-loss capital, and policymakers are needed to help reward successful outcomes. The opportunity is huge and the needs are urgent.

Global media and academic research have increasingly sounded the alarm about imminent ecological collapse in the Amazon rainforest, which covers nearly two-thirds of Brazil, as well as eight other countries in South America. Due to excessive deforestation, the Amazon is near a tipping point, beyond which much of the forest will turn into grassland, gigatons of carbon will enter the atmosphere, and the global water cycle will be permanently disrupted.  Home to a system of “flying rivers,” this Amazon process is controlled by transpiration rates, the evaporation of water from leaves.  These rates are high in forests and low on cleared land.  The act of deforestation is like cutting a hole in a straw.  Flow is disrupted and the integrity of the system is undermined. Positive feedback loops are taking root and the dry season is already a month longer in regions of the forest. Large scale die-backs are on the horizon as are droughts in California and elsewhere.

The Javari River where it forms the border between Brazil and Peru. Photo credit: Rhett A. Butler

Our weather system and planetary sustainability now require not only halting deforestation, but also reforesting large areas currently occupied by cattle pasture and soy agriculture.

Despite the severity of the deforestation crisis, the restoration process could catalyze a giant wealth creation opportunity for the region. There is a pressing need – and significant opportunity – for a multi-stakeholder group to facilitate the efficient flow of capital to agroforestry development in the Amazon region. While the numbers are large and the conservation opportunity is compelling, large scale agroforestry production is new.

Today, nearly 8 million hectares of deforested Amazon land is used for soy production while nearly 45 million hectares is used for cattle production (mostly with grass monocultures). If landowners switched from producing soy to a polyculture of fruit and horticultural products, their income would more than triple, according to a recent study from the Brazilian state of Pará. For those giving up beef production, their income per hectare could increase by over thirteenfold. Nonetheless, the study finds that local farmers prioritize tradition, lifestyle, and cultural conformity over increasing their incomes.

This conclusion is good news for sustainability advocates and social scientists, emphasizing the importance of tackling both the social and economic elements of this shift.  While media production, public education, and relationship cultivation represent soft power strategies for swaying locals to more sustainable alternatives, the economics could provide further justification for change.  Based on the numbers above, these monocultures planted across 53 million hectares of the Brazilian Amazon probably earn farmers about $19.25 billion USD per year.  If agroforestry production can earn as much as horticulture, per hectare, then converting these deforested areas into agroforestry may generate $174.9 billion a year, sustainably. That represents $155.65 billion more than these farmers earn today and could pull the ecosystem back from collapse.

To help explore this Amazon reforestation opportunity we investigated the yields, market demand and revenue possibilities, per hectare, of 35 leading agroforestry species and compared them to cattle and soy.  See Tables 1 and 2.  According to our data, 94% of species surveyed can financially outperform cattle per hectare and 83% can outperform soy.

Please note that many of the numbers cited in Table 2 need to be revised to consider contemporary market prices and seasonal fluctuations as well as labor, technology, fertilizer, and pesticide costs.  It is also important to update some calculations by using agricultural instead of naturally-occurring plant densities (when the data is available). In addition, the numbers from many of these studies come from crop production outside the Amazon biome (with fertilizer etc.), or from self-promoting agricultural consultants, and need to be adapted accordingly.  Finally, some crops listed are low growing, do not tolerate shade, would be rejected by the agroforestry orthodoxy, and are only relevant for younger forest gardens. Historic currency conversions were made here and calculations for inflation adjusted 2020 dollars were made here. Links to all plant species and data sources on prices, plant densities and more is provided in the Appendix.

Is It Feasible?

If agroforestry can outperform Amazon soy and cattle, then why doesn’t it already?  When pressed on the question, local producers will sometimes explain that Sao Paulo farmers in the South of Brazil can produce cheaper, better and closer to big markets.

The primary obstacles that limit Amazon agroforestry development today include: inconsistent market demand, bureaucratic hurdles, delayed profitability, agroforestry knowledge sharing, labor costs, food quality, disease, and transportation and logistical costs due to distance.

While complicated, the authors of this article see solutions to each problem.  What may be challenges to some look like big commercial opportunities to others.

Inconsistent Market Demand
As Amazon-region entrepreneurs will sometimes say, “Don’t start producing açaí or any agroforestry product if you don’t have a buyer in hand.”  Inconsistent demand has frightened many away from bringing new products to market. Given the dramatic rise of climate finance, reaching $612 billion in 2017, and the pivotal role of the Amazon, it should be possible to increase and maintain demand for sustainable deforestation-free Amazon produce, both internationally and locally. Unrealized and untapped local demand is potentially significant, and accessing it would help bolster efforts to foster international procurement of Amazon produce.

A key step to scaling Amazon agroforestry production will be securing long-term procurement agreements from global companies, a successful strategy seen in other sectors.

As an example, the RE100 pledge, founded in 2014, mobilizes corporations to purchase electricity from renewable sources. This pledge, along with government investments in technology improvement and innovations in the production of silicon, created so much demand that renewables are now cheaper than their fossil fuel counterparts. Is it just a matter of time until a similar strategy is developed for sustainable Amazon produce, enabling farmers to make the switch to agroforestry?

Several startups and nonprofits are working to solve this very issue. 100% Amazonia moves millions of dollars of produce every year by supporting supply chain development, facilitating orders of non-timber forest products, and serving as a bridge to connect local communities with international customers.  While Origens Brasil and Amazônia Hub connect Amazon producers directly with consumers online, Tucum does the same for specific indigenous communities. Producers Market takes a different approach by working with the sustainability departments of Fortune 500 corporations and connecting them to smallholder farmers through new storytelling and sustainability accounting technologies.  Created by a market leader in sustainable Amazon sourcing, the Beraca Institute helps corporations to understand the Amazon and how to develop supply chains from it that ensure sustainability, consistent production, and healthy local communities.

Meanwhile, launched in 2020 through the United Nations 75 Global Governance Forum, the Amazon Investor Coalition wants to develop a new Amazon Regenerative Procurement Alliance to build on the success of these groups and bring them to scale through global collaboration with investors, philanthropists, governments and aligned corporations. Through a global pledge to procure billions of dollars in new, sustainable Amazon produce, corporations in South America and abroad could send a demand signal to markets and incentivize entrepreneurs, financiers and intermediaries to help accelerate agroforestry development in the Amazon region.

Finally, while pigs in China are the primary consumers of Amazon soy, perhaps they can be convinced to eat an equally nutritious agroforestry alternative instead, if it could be produced more economically than soy.  In this scenario, rather than worrying about demand and displacing the market for soy, we would simply transform it.

Bureaucratic Hurdles

Bureaucratic hurdles impede agroforestry business development across Latin America, and especially in the Amazon. These obstacles include transferring investment money to Amazon countries from abroad, qualifying for credit programs, securing environmental permits and land rights, satisfying unrealistic food processing criteria before commercial sale and more.

In the 2019 Ease-of-Doing-Business Index, Brazil ranked 124 out of 190. The cost to transfer money and goods across borders in Brazil runs into the thousands of dollars between time spent, customs compliance, and documentation requirements.  Meanwhile, bank fees for transferring capital into countries like Ecuador, Colombia, Brazil, and Peru can be exorbitant due to local oligopolies. Furthermore, over 60% of South Americans do not have access to a bank account, a number that is even higher in the Amazon region where infrastructure is less developed and much of the population is rural.

Similarly, access to credit in Amazon countries remains under 50% for small businesses. In Brazil, despite significant growth in its agricultural credit program from R$2B reais in 2003 to R$16B reais in 2011, few farmers in the Amazon receive these benefits. Two chief obstacles include local education and lender ignorance about agroforestry.

Additional policy obstacles in Brazil are many and diverse. The country’s 1988 constitution gives states a mandate to administer environmental permits for their residents.  One permit, for example, gives landowners permission to deforest and develop one portion of their land while conserving forest on the rest.  Unfortunately, the constitution does not guarantee funding to help states manage environmental permitting processes.  As a result, many permits are never granted or the process takes too long to be of use, making it is easier for farmers to produce illegally than to register their properties with the government and submit themselves to land-use regulations.

Land rights is another related issue.  In 2019, the Brazilian government disrupted its land regularization program for unclear reasons.  Land tenure security is essential to motivate people to plant crops that might only produce returns years later.  Farmers will always avoid planting for the long term, today, when there is a risk of being separated from their places of residence tomorrow.  Land rights and land tenure is a long standing challenge in Brazil and subject to ongoing political tension.

Flooded forest in the Amazon. Photo credit: Rhett A. Butler

In some Amazon countries, tax incentives offer deductions for large single-product harvests (like soy), thus subsidizing farmers to grow monocultures instead of climate-friendly agroforestry polycultures, which might otherwise be more valuable commercially. In many tropical forest companies, when the benefits of high-labor/high-profit agroforestry crops go mostly to local communities, large corporations have historically pushed governments for policies and subsidies that favor low-employment agriculture regimes and deforestation.

Another Brazilian policy of note offers minimum price guarantees for the sale of diverse Amazon produce (and produce from other regions), including many forest products. Unfortunately, several key – and lucrative – agroforestry crops are not yet on the list.

While recognized for its protection of forests, the Brazilian Forest Code limits some economic activities without consideration of local context or development, even environmentally-sensitive development. For example, the legislation requires that land next to lakes and rivers be preserved.  The areas range from 30m to 500m from the shore, depending on the size of the body of water.  This policy makes sense for many rivers, but not for much of the Amazon where social and commercial affairs are often waterfront activities. Universally limiting commercial activity close to rivers can thwart even forest-sensitive economic progress.

Finally, the processing required to get Amazon products to market is often prohibitive for local farmers, not due to the costs, but rather to licensing requirements for export. In Brazil, many plant and animal products must be licensed by two competing government agencies whose rules often overlap, contradict each other, or are up for interpretation. While the challenge hinders many farmers, the opportunities for innovation are big.

The good news about bureaucratic obstacles is that they can be changed when there is political will to do so, and the prospect of the $156 billion wealth creation opportunity suggested here may inspire action.

Delayed Profitability

Financial innovation is needed to accommodate the delayed profitability inherent to much agroforestry. From year to year, many farmers operate with low profit margins and struggle financially.  Moreover, traditional credit programs do not permit delayed payback schedules. Adding to this challenge, most investors are focused on short-term gains.

Though ripe with some short-term offerings, agroforestry will appeal most to those in search of long-term, stable investment opportunities. Investors who participated in the early renewables industry can see some parallels. Ten years ago many renewable energy sources were prohibitively expensive and not widely adopted. Today, in contrast, there is a burgeoning market for renewables that have gone mainstream and outpriced fossil fuels. Agroforestry is following a similar pattern, with early investors adopting innovative models to develop the market. In the US, there are several groups, from the public and private sectors, that invest in regenerative agriculture financing solutions.  They range from paying farmers to fix carbon in the soil to improving research on carrying capacity and productivity.

By considering new investment models that match biological systems and store long term value, some investors like the Perennial Fund have developed financial products that accommodate delayed profitability.  Various investment vehicles buy, seed and hold land for years until it is mature, sometimes only beginning to pay returns in year 13.  Structured as Revenue Based Loans, borrowers only need to make payments when their land earns income.  Another debt structure allows borrowers to merely pay back twice their original loan values.  This less-restrictive arrangement gives investors a fixed return, solves the problem of yearly payments, puts the challenges of risk and execution solely on the borrower, and allows variability brought on by climate loss or fire or other issues.  In addition, these loans can be bought and sold to help ensure liquidity.  Though investors also use land grants, donations of conservation easements and philanthropic deductions to boost the profitability of some investments, those legal strategies may not be accessible in some Amazon countries and are not explored here.

For investors seeking short-term returns, two options are transition crops and silvopasture to bridge costs while developing longer-term agroforestry projects. Transition crops like pepper and bananas can provide quick returns while forest cover is low and sunlight is high. The plants can be removed after a few years when other taller crops are mature. Silvopasture is a form of agriculture that unites trees and livestock.  It improves soil, offers shade to animals, and diversifies income while trees produce wood, fruit, nuts etc. The main barriers include tree acquisition and labor costs, fencing to protect saplings, and access to knowledge about species selection, planting and cultivation. Organizations like PretaterraReNature, and Crow & Berry Land Management are currently developing innovative financing schemes to help farmers develop silvopasture more effectively.

Using technology to solve the delayed profitability problem, Propagate Ventures offers a software platform to give farmers turnkey access to buyers, lenders, and market knowledge. To make agroforestry a bankable asset, the company conducted exhaustive research about agroforestry commerce, soils, crops, seasonal fluctuations, geographies, prices, capital flows and more to give users advice about how to optimize production and access markets. Similarly, Regen Farmer in the Netherlands helps farmers plan the right agroforestry systems for their land using mapping technology and agroforestry system layouts.  With such knowledge in hand, financiers gain confidence, reduce their risk calculations, and invest more readily – even when profit projections have delays.

The rise of green bonds also points to a bright agroforestry future. The Climate Bonds Initiative has identified a $163 billion opportunity to help Brazil transition to sustainable agriculture.  With a green bond issuance rise of 49% in 2019, bonds are uniquely suited to match the economics of tree growth: both are slow, reliable, consistent, and predictable. However, green bonds have been slow to finance biodiversity and sustainable land-use investments, which attracted less than 3% of the $257.7 billion raised by green bonds in 2019. Technological and financial innovation will be needed for monitoring systems that can scale up and measure the impact of such nature-based investment solutions, including  agroforestry.

Locally, the Brazilian rural credit program, Pronaf, provides billions of dollars in loans every year to farmers across the country.  The Sustainable Connections Institute, affectionately called “Conexsus,” also developed a program to derisk loans for smallholder farmers in the Amazon thereby dramatically improving their eligibility for Pronaf financing.  This intervention could also help agroforestry entrepreneurs hindered by projections of delayed profitability.

An estimated $47.5 billion has been deployed to regenerative agriculture in the US, a pool of which agroforestry is a small subset. The trend is global.  12 Tree Finance has compelled German pension funds to invest in agroforestry, including in South America.  Initiative 20×20, an effort of 17 nations and 90 partners that started in 2014, has mobilized pledges of $2.5 billion to invest in ecological restoration across Latin America.  Perhaps as significant, in December, 2020, Brazil’s largest bank, Itau, hosted its first conference on investing in the Amazon, a significant step demonstrating the wide interest that investors have to get involved.

These numbers and trends suggest that delayed profitability is becoming less of an obstacle to agroforestry every day.

Agroforestry Knowledge

The techniques, systems and logistics of agroforestry are new to most farmers and, like all things new, adoption can take work. Fortunately, the rise of the internet and scientific advances have made agroforestry knowledge increasingly available to the world.

With dozens of crop options and many possible polyculture combinations, farmers need to consider horizontal and vertical spacing as well as root morphologies and whether they go deep or remain on the surface. Other factors that drive decision-making include the labor available, the investment capital on hand, market demands and more. Facing this matrix of decisions, many farmers may choose to stick to tried-and-true methods unless they receive additional guidance to help them make more informed and data-driven decisions. While still maturing as a sector, there have been significant advances to make agroforestry information available to the world, including documentation of previous Amazon agroforestry campaigns, new technology and capacity-building programs, as well as local and international investment in agroforestry-based reforestation programs.

In the US, Propagate Ventures gathered data on soil, water, climate, prices and more to inform choices. The same may be needed for the Amazon, presenting a significant business or investment opportunity to help scale agroforestry throughout the region.

Luckily, there are diverse agroforestry experiences in the region that can serve as a potential blueprint for future projects that seek to scale. The Brazilian Agricultural Research Organization, Embrapa, has published significant research on agroforestry systems.  The Swiss-turned-Brazilian farmer Ernst Goetsch has developed a system of design principles called Syntropic agriculture to guide agroforestry development with impressive results.  Starting in the 1930s, the Japanese enclave of Tomé-Açu in Pará, Brazil grew pepper in the Amazon, suffered a blight and diversified its production with ventures in agroforestry creating the Tomé-Açu Mixed Agriculture Cooperative.  Today, the RECA Project is a reference in the region.  Founded in 1973 in Nova California, Rondonia, Brazil, the cooperative cultivates 40 different agroforestry species across 1000 hectares, holds multiple organic certifications, and manages a training program to teach agroforestry to others from around the country.

A number of newer agroforestry startups have come to life in the last few years, as well.  The Brazilian consultancy Pretaterra was commissioned by Prince Charles to design agroforestry systems capable of large-scale production while providing commercially viable financial returns.  With experience to date transforming 500 hectares to agroforestry, Pretaterra is in the planning phase of a 200,000 hectare project in Mato Grosso, Brazil. Through partnership with the Circular Bioeconomy Alliance, the Pretaterra is working globally, as well. Founded by a Brazilian and a Dutchman, reNature advances agroforestry by consulting producers and corporations as well as developing agroforestry schools and model farms.  Active globally, the organization supports several projects in the Amazon.  Mahogany Roraima uses technology and innovation to plant 50% African Mahogany and 50% native Amazon species across the Brazilian state of Roraima. A subsidiary of the iPlantForest Group, Mahogany Roraima plans to reforest 40,000 hectares over the next 10 years.  Founded 10+ years ago as a B Corporation, AMATA received the first government forest concession in Brazil and is certified by the Forest Stewardship Council.  As a sustainable forestry manager with assets in the Amazon, AMATA engineered upscale wood products and sold directly to consumers. The company, however, fell victim to illegal loggers, was implicated in a deforestation scandal, and ultimately pulled out of the region.

Another sustainable forestry manager, ASF Brazil, also operates in the Amazon but is accusation free.  Founded in 2017, the company reduced costs by setting up sawmills in forested regions thereby cutting costs of tarnsport.  Selling mostly to international markets, the company wants to scale by promoting its strict legal compliance and adherence to the Brazilian Forest Code. Born in 2006, Futuro Florestal (Forest Future in English) is an agroforestry pioneer working on diverse elements of the tropical hardwood value chain, including seed collection and sapling cultivation.  The company also conducts research to understand nutritional needs and develop best practices for each species.  Finally, the operation also experiments with financial models to optimize cash flow and amortization schedules for its ventures.

See related: Can Amazon palm oil be grown sustainably? Agroforestry research suggests it can, and without chemicals

Cacao pod in Peru. Photo by Rhett A. Butler.

While Amazon farmers could technically access relevant information from many of these sources, some of the intellectual property and methodologies are proprietary. Fortunately, a few key organizations serve to promote agroforestry globally, including the Global Landscapes Forum.  Launched in 2013 in association with the UN, the GLF is the largest global platform dedicated to advancing sustainable land use education and knowledge. The organization hosts events, both online and in person, often alongside UN climate change conferences.  Created in 2020, the Land Accelerator supports entrepreneurs who restore degraded forests and farmland. Beyond an online network of mentors and companies, the group offers an intensive week-long agroforestry workshop in person. Finally, CGIAR serves as an inter-governmental network of 15 science centers focused on food security research, of which World Agroforestry and the Center for International Forestry Research (CIFOR) are most relevant to the themes presented here.

Though less focused on the commercial viability of agroforestry, it is worth mentioning a couple of other reforestation efforts.  In 2017, Conservation International announced “the world’s largest tropical reforestation effort” in Brazil using the Muvuca method for native species propagation. In addition, in 2016 the Brazilian government announced a plan to reforest 12 million hectares via the Planaveg program with economic projections offered here by Instituto Escolhas (Choices Institute, in English).

Today, numerous public and private initiatives help farmers learn about agroforestry, including what crops to plant, when to harvest, and how to combine polycultures effectively. However, there is still a significant need for technical support and distance education resources to help scale the industry.

Labor Costs

Investors who stayed away from agroforestry due to employment costs in the past, should consider the innovations available today and take a second look at the sector.

Even though 34 million people live in the Amazon, the vast majority live in urban areas where jobs are hard to find. In contrast, agroforestry is labor intensive while the rural Amazon is labor scarce, a scenario that has enabled low-labor products like cattle and soy to scale. The boom of these low-employment commodities has concentrated land and wealth ownership, increased inequality and accelerated deforestation.  The advance of agroforestry can not only restore the ecosystem, but can also create higher-paying/higher value-added jobs that upskill labor markets, attract investment and foster wealth creation and distribution.

While labor scarcity and costs may have scared away some businesses and limited agroforestry development, new technologies are changing the game today. To scale, these technologies can benefit from new capital and mentorship, presenting a ripe opportunity for financial innovation to improve systems for planting, weeding, field surveys, agricultural decision-making and more.

One leading example of this technological development includes Mahogany Roraima, the tech-savvy agroforestry startup mentioned previously. The company recognized the value of planting polyculture forests and sought to mitigate the labor costs required to plant trees in precise locations.  To address the issue, they designed the RCCM Forest Bot which increased their planting capacity by a factor of 20. To avoid pesticides, automate weeding and reduce workforce expenses, Naino Technologies of France designed the Oz Weeding Bot and other agricultural helper technologies.  To reduce the costs of field surveys, access satellite imagery data and integrate other information technologies into agricultural decision-making, Brazilian entrepreneurs created Agrotools which now has many of the largest Amazon region agro-industrial companies as clients. To monitor weather, energy needs and soil moisture, Agrosmart uses special sensors to reduce irrigation and electricity costs, while increasing production.  Finally, Propagate Ventures, mentioned previously, also brings new technology to the task of agroforestry decision-making.

The technologies available today suggest that there will a large and vibrant agroforestry market tomorrow.

Food Quality

Due to bumpy roads and long distances between the Amazon and global markets, some Amazon produce doesn’t reach those who want to consume it.  While some agroforestry products like rubber, wood and cashews are easily dried and preserved, others are not.  Fortunately, some fleshy produce can be frozen or freeze dried to make trip survival out of the region possible. With the industry of freeze dried food growing at 7.4% a year and new COVID-19 related freeze dryer production, economies of scale may soon lower equipment prices, meaning food spoilage solutions used in other areas of the world could become accessible to the Amazon agroforestry industry.

According to the World Food Preservation Center (WFPC), up to 50% of harvested food is lost in developing countries each year due to spoilage.  At the same time, 95% of agricultural investments focus on food production with only 5% on preservation, even though, compared to production technologies, preservation tech has been shown to provide a much higher return on investment.

Photo credit: Rhett A. Butler / mongabay

The WFPC promotes post-harvest biopesticides, intelligent-and-active packaging, storage innovation and the game-changing price drop in solar energy generation that will change the economics of refrigeration.  The WFPC also promotes courses on post-harvest / fresh-cut technologies and organizes some investors.  A related venture, the Off Grid Cold Chain Challenge has identified several cold storage transport options that could provide a commercial lifeline to future Amazon produce.

These trends and technology innovations promise to change the economics of Amazon food quality and  agroforestry produce. Corporations with experience implementing these solutions in North America or elsewhere could be well-placed to invest in, and lend a hand to, the emergent Amazon agroforestry industry.

Transportation and Logistical Costs

Some parts of the Amazon forest are so remote that they can only be reached after weeks of travel by boat and then on foot. Those areas have not yet succumbed to deforestation from traditional agriculture or other industry, but will continue to be under threat unless economic development in the rest of the Amazon is pursued more sustainably.

Amazon commodities that are tied to global supply chains – like soy and beef – and sold overseas have pre-established transportation networks over roads and rivers.  Most agroforestry products capable of replacing these traditional exports could travel along the same routes, minimizing startup costs.

To consider the market feasibility of new agroforestry in the region, we must consider a number of transportation factors.  What products can survive a trip without special treatment?  What products can be desiccated or freeze dried?  What products need to be shipped by truck, boat or plane?  How should distance from transportation hubs guide crop selection?  What products need packaging?  What kinds of special packaging are available?  What are the options for refrigerated transport?  How do seasonal weather and production changes influence trip viability? What methods of transport are most affordable?

Some logistics solutions have already been identified and could be implemented within a broader initiative to finance sustainable agroforestry in the region. In a recent campaign that brought key Amazon businesses together to develop market intelligence, companies identified numerous ways to increase demand while reducing transportation and logistical costs by using existing solutions to bridge gaps in the supply chain.  One innovation involved developing a partnership with Mercado Livre, the leading online platform of Brazilian e-commerce.  Integrating Amazon products directly into Brazil’s postal system lowers the cost of marketing and product placement in stores, and is particularly timely given the pandemic-accelerated growth of e-commerce in Brazil, already the world’s fourth-largest e-commerce marketplace.  Another innovation involved consolidating products in major Amazonian cities for bulk transport to centers of commerce, a process that reduces shipping costs due to economies of scale.  A shared distribution hub in Sao Paulo to optimize handling costs has also been considered. These ideas provide actionable opportunities for investors and companies looking to build a more agile supply chain in Brazil. The solutions have been identified. Now funders and entrepreneurs have a role to play in making them a reality.

Transport up and down the Amazon river has seen some recent innovation, as well. BEMOL, one of the region’s largest retailers, struck a deal with several transport companies along the river and regularly rents space for direct-to-consumer product transport.  The company guaranteed free delivery in one week at Manaus prices. The move brought many new products online that were not available before and boosted BEMOL’s online sales many times over making the effort profitable within its first two years.  Another new innovation in this space is NavegAM, a new startup that some describe as “Uber” for the Amazon River. It allows riverine residents to plan and book boat trips directly through their mobile phones. Since launch, it has created other business lines as well, involving e-commerce, customer management and more.

These technical, logistical and transportation innovations have transformed the access-to-market obstacles of many Amazonian products and point to further market opportunities ahead.

Crop Disease

Hot and humid year-round, the Amazon is a hotspot for biodiversity, which includes bacteria, fungi and other pathogens that can afflict agroforestry crops.  Commercial rubber production in the region has struggled to compete with Asian production because of the ascomycete fungus Microcyclus ulei, commonly known as the South American leaf blight.  While the disease reduces Brazilian production, it is not yet present in Asia. Also native to the Amazon, cocoa production is grown along the Transamazon Highway, but quality is low and the parasitic fungus, witches’ broom (Moniliopthora perniciosa), which is native to the Amazon, takes a toll. Finally, mahogany plantations of the Swietenia genus have struggled in the region too, due to the cedar tip moth or shoot borer, Hypsipyla grandella.

Researchers like Patricia Shanley and others at the Center for International Forestry Research have documented various diseases that affect agroforestry plants and suggested several species-specific treatments which are not explored here.

The same story that turned soy into a successful Amazon crop may be replayed today to help agroforestry crops to scale tomorrow.  A uniquely adaptable plant, soybeans were cultivated for years until the 1970s and 1980s when the first varieties became available that could tolerate tropical weather and diseases.  Only then did soy production spread across Northern Brazil and the Amazon.

Beyond fungicides and other chemical remedies, two broad strategies can help address the threat of disease in Amazon agroforestry plantations.  First, farmers should avoid monocultures.  Plants of identical species placed in the ground side by side provide optimal conditions for pathogens to spread.  In contrast, polyculture plantations prevent the spread of disease and promote resistance. Second, just as selective breeding developed genotypes of soy that resist tropical diseases and pests, the experimental reproduction of rubber and other agroforestry plants could produce new pathogen-resistant lines as well, a step that may someday help scale production of some agroforestry plants across the Amazon. These experiments, as well was expansion into polycultures, provide additional opportunities ripe for investment for those looking to innovate in Amazon agroforestry.

Conclusion and Call to Action

Conservation of the Amazon is essential for both climate mitigation and the integrity of the global water cycle.  Agroforestry expansion in the region could offer a highly profitable way forward. Traditional concerns about demand, profitability, bureaucracy, knowledge, labor, food quality, transportation, and disease are no longer the obstacles they once were.  It is now just a matter of time until the first Amazon Agroforestry Bond comes to market.

This article was produced as part of a global effort to advance forest friendly economic development and the rule-of-law across the Amazon.  The Amazon needs all of us. Only through support from diverse perspectives, resources and spheres of influence can we turn the tide toward sustainability. Please join forces with us by visiting the Amazon Investor Coalition at www.amazoninvestor.org and subscribing to our newsletter.

 

Appendix

Table 1 Extended: Estimated Earnings of Crops that Historically Drive Amazon Deforestation

Cattle
Earnings/ha/year: $250
Data Sources: Income cited in this 
2017 article. Additional details here.

Soy
Earnings/ha/year: $1000
Data Sources: Income cited in this 
2017 article. Additional details here.

Table 2 Extended: Estimated Earnings of Amazon Agroforestry Crops

Açaí berries
Earnings/ha/year: $2637 to $3000
Data Sources: Calculation made by converting the $1501/ha net annual revenue of site D1 in this study from 1994 dollars to 2020 dollars and the R$10,000/ha or $3000/ha cited in this study. Note that açaí is mostly harvested from wild forest and not from monocultures.

Acerola cherries
Earnings/ha/year: $10,800 to $37,000
Data Sources: Income cited in this 2013 article.

African Mahogany wood
Earnings/ha/year: $8000
Data Sources: Calculation made from the suggested $160,000 per hectare harvest cited here and dividing by 20, for a cut once every 20 years.  Profitability would be $7125/ha/year subtracting $17,500/hectare (or R$70,000) in labor and technology. Additional economic analysis is offered here.

Andiroba seeds
Earnings/ha/year: $233 to $583
Data Sources: Calculated from 2009 price data on page 32 of this study of $0.07/kg with yields of 4kg to 10kg/tree/year in optimal soils and recommended spacing of 12 square meters per tree or 833/ha.

Babassu oil
Earnings/ha/year: $1094 to $2805
Data Sources: Calculated using yield data from this study of 700kg/ha/year producing 5.5kg of oil per 100kg of coconuts and 2011 price data reporting between R$16.83 and R$30.00/L (1L of oil weighs 0.9kg) or $11.71/L and $20.88/L in 2020 dollars.  However, extra production should be discouraged if it displaces the markets that support the current systems of native production described here.

Bacaba fruit
Earnings/ha/year: $128 to $153
Data Sources: Calculated using yield data from this study of 20kg/tree/year and a natural tree density of up to 50 trees per hectare and 2011 data from this study reporting prices between R$1.84/kg and R$2.20/kg or $1.28/kg and $1.53/kg in 2020 dollars.

Bacuri pulp
Earnings/ha/year: $4230
Data Sources: Calculated from yield data on page 56 of this study with 1/metric ton of pulp/ha/year and at a price of R$8/kg with financial conversions made from 2004 Reals to 2020 dollars.

Big-Leaf Mahogany wood
Earnings/ha/year: $8400 to $31,900
Data Sources: Calculated from yield data in this study of 6 to 22 cubic meters per hectare per year and prices of $1400 – $1450 per cubic meter reported on this site in US markets. Note that these studies do not come from the Amazon region where yields are reduced by the cedar tip moth.

Brazil nuts / Castanha-do-Pará
Earnings/ha/year: $850
Data Sources: Calculation made from this study with an estimated $850/ha revenue after 18 years of crop maturity.

Buriti oil
Earnings/ha/year: $5360 to $8813
Data Sources: Calculated using price data from page 34 of this study, paying between €11.50 and €18.90/kg or $13.96 and $22.95/kg and production data from page 188 of this study reporting an average yield of 384/kg/ha/year of Buriti oil.

Camu-camu fruit
Earnings/ha/year: $3 to $188
Data Sources: Price calculated from this study citing a high yield of 1940/kg/ha and a price variation from $0.03 to $2.00 for a 25kg crate or $2.82/ha to $188/ha when converted from 2008 to 2020 dollars.

Cashew fruit
Earnings/ha/year: $19,012
Data Sources: Calculated from income reported in this 2010 study of R$28,750/ha converted to 2020 dollars.

Cocoa beans
Earnings/ha/year: $2030
Data Sources: Calculated from an estimated 700kg/ha yield in this study at a market price of $2900/ton.  An additional article suggests a projected profit of $1750/ha/year.

Coffee beans
Earnings/ha/year: $1034 to $3102
Data Sources: Incomes cited in this 2018 article.

Copaiba oil
Earnings/ha/year: $9910 to $13,874
Data Sources: Calculated using price data from page 91 of this study reporting a price of R$25 to R$35/liter in 2008 or $18.60 to $26.04 in 2020 dollars and yield data on page 90 suggesting a production of 1 liter/tree over 3 years with a suggested tree density here of 1600 trees per hectare.

Cupuaçu fruit
Earnings/ha/year: $17,215 to $30,375
Data Sources: Calculated from yields reported here of 4500kg/ha of pulp and price data from this study reporting 2011 prices from R$4.25/kg to R$6.75/kg or $3.13 to $4.70 in 2020 dollars.

Dragon fruit
Earnings/ha/year: $13,946
Data Sources: Calculated from 2010 data in this study reporting an income of R$63,120/ha over three years converted to 2020 dollars.

Graviola fruit
Earnings/ha/year: $11,592
Data Sources: Income cited in this 2013 study.

Guava fruit
Earnings/ha/year: $11,219
Data Sources: Calculated from 2009 data in this study reporting an income of R$18,000/ha converted to 2020 collars.

Jatobá fruit and resin
Earnings/ha/year: $4164
Data Sources: Or $2280/ha for fruits and $1884/ha for resin or $4164 total/ha, calculated from density data in this study of 57 trees/ha and yield data on page 110 of this study reporting an average of 800 fruits and 15kg (or 16.2 liters) of resin per tree and 2004 prices of R$0.10/fruit and R$4.50/liter of resin or $0.05/fruit and $2.04/liter of resin respectively in 2020 dollars.

Macambo beans
Earnings/ha/year: $150 to $500
Data Sources: Numbers cited in this article for 1-2 hectare plots

Macaúba oil
Earnings/ha/year: $1100 to $9900
Data Sources: Calculated using yield data from this study reporting a production of 600/kg/hq to 5000kg/ha and price data from this 2014 study reporting R$4/kg or $1.98/kg in 2020 dollars.

Mango fruit
Earnings/ha/year: $7059
Data Sources: Calculated from this 2005 study reporting an income of R$12,500/ha converted to 2020 dollars.

Murumuru almonds
Earnings/ha/year: $2700
Data Sources: Calculated using price data on page 26 of this study of R$1.10/kg (2007 price) or $0.68/kg (in 2020 USD) for Murumuru almonds and yield data on page 4 of this study reporting 189kg/tree/year in the Brazilian state of Acre with a density of 100 trees/ha and an almond-to-hull weight ratio of 21.93%.

Passion fruit
Earnings/ha/year: $13,553
Data Sources: Calculated from income cited in this 2005 study of R$24,000/ha converted to 2020 dollars.

Pataua fruit
Earnings/ha/year: $11,584
Data Sources: Calculated from tree density data on page 204 of this study reporting up to 100 trees/ha, a 2004 price of R$8.00/kg or $3.62 in 2020 dollars, and a production rate of 32kg/tree/year.

Pineapple fruit
Earnings/ha/year: $4250 to $33,663
Data Sources: Calculated using 2015 data from this study reporting incomes ranging from R$12,000/ha/year to R$95,040/ha/year and converted to 2020 dollars.

Piquia fruit
Earnings/ha/year: $15,526
Data Sources: Calculated from yield data on page 128 of this study reporting 350 fruits/tree/year and 2008 prices of R$0.50/fruit or $0.28 in 2020 dollars using a tree density of 1 per 64 square meters or 156 per hectare.

Pupunha bud / Palmito
Earnings/ha/year: $3432
Data Sources: Calculated from yield data on page 210 of this study reporting 1200kg/year/ha selling at a 2009 price of R$4/kg or $2.86/kg in 2020 dollars. Additional analysis is offered here.

Rosewood
Earnings/ha/year: $5404 to $94,075
Data Sources: Calculation made from suggested tree densities in this study ranging from 27 trees/ha (naturally occuring) to 470 trees/ha (highest plantation density cited), growth data from this page suggesting harvest of trees at 10 years of age with diameters of 6 inches and a heights of 30 feet, and price data from this “tree value calculator” suggesting a value of $2001.60/per tree of this size in US markets.

Rubber
Earnings/ha/year: $3750
Data Sources: Calculation made from a suggested yield of 2500 kg/ha and a market price of $1.50/kg. Additional analysis is offered here. Note challenges of South American leaf blight mentioned later.

Sacha inchi nuts
Earnings/ha/year: $2000
Data Sources: Calculation made from this estimate about yields of 1000/kg/ha and a price of $2/kg. Additional analysis here.

Teak wood
Earnings/ha/year: $2000 to $4000
Data Sources: Calculations made from the suggested yield reported here of 100-200 cubic meters/ha harvested once every 10 years at a price reported here of $200/cubic meter.

Tucumã-do-pará fruit
Earnings/ha/year: $245 to $352
Data Sources: Calculated from yield data on page 216 of this study reporting 50kg of fruit/tree/year in a density of up to 50 trees/ha selling for R$10 to R$15 for a 60kg bag in 2008 or $5.64 to $8.46 in 2020 dollars.

Uxi fruit
Earnings/ha/year: $888 to $1141
Data Sources: Calculated from price data on page 233 of this study of $0.07 to $0.09/fruit, a tree density high of 34 trees/ha (page 228), and a yield of 850 fruits/tree/year on average.

This piece was originally published on the Amazon Investor Coalition web site.

Editor’s note: the word ‘negative’ was changed to ‘positive’ in the line “Positive feedback loops are taking root and the dry season is already a month longer in regions of the forest.”