WOOD FIBER FEASIBILITY STUDY - Squarespace...Planting Empowerment‐ Wood Fiber Feasibility Plan 02.24.10 MIT Sloan Entrepreneurs in International Development 4 plant was not commercially

WOODFIBERFEASIBILITYSTUDY

ANEXPLORATIONOFSUSTAINABLEANDPROFITABLEOPPORTUNITIESFORTHEWOODFIBERTHATISGENERATED

THROUGHSCHEDULEDPLANTATIONTHINNINGS

February24,2010

PresentedTo:PlantingEmpowerment

PresentedBy:JustinButler,AdamRein,LilyRussell,AndreasWallendahlThroughtheMITSloanEntrepreneursinInternationalDevelopment(SEID)Club

PlantingEmpowerment‐WoodFiberFeasibilityPlan 02.24.10

MIT Sloan Entrepreneurs in International Development 2

I. TABLEOFCONTENTSI.ExecutiveSummary .............................................................................................................................3

II. OverviewoftheChallenge..............................................................................................................4

III. Marketforwoodfiber,“desechos”...........................................................................................5A. Biochar .........................................................................................................................................................5B. Fertilizer .......................................................................................................................................................6C. Handicraft/Furniture .................................................................................................................................7D. Biomasspowerplant .................................................................................................................................7E. Industrialfuelcustomer(paper,pellets)directorthroughsawmill..................................................7F. OtherDiscardedAlternatives:Woodchips,firewood,woodash,ink ..............................................8

IV. PlantingEmpowermentRecommendations ............................................................................9A. ImplementingaBiocharProcess..............................................................................................................9B. ImplementinganOrganicFertilizerProcess ....................................................................................... 10C. ImplementingandIndustrialFuelProcess .......................................................................................... 12



I.EXECUTIVESUMMARY

AspartoftheMITSloanEntrepreneursinInternationalDevelopmentClub(SEID),ateamoffourMITstudents[JustinButler(MBA2011),AdamRein(MBA2010/HKS),LilyRussell(MBA2011)andAndreas

Wallendal(MIT2011)](TheTeam)workedwithPlantingEmpowerment(PE)toresearchprofitablealternativesfortheuseofwoodfiberthatisgeneratedfromperiodicthinnings.

Given1)therelativelylong,20‐25yearharvestschedulefortimberplantations,and2)thecurrentpracticeamongallplantationsinPanamatoleaveunwantedwoodfibertorot,PEwaseagertofinda

sustainableuseforthewoodfiberthatcouldgeneratereturnspriortosawtimberharvesting.Forevery11treesplanted,PEexpectstoearnrevenuefrom5atharvest,withnooptionforunsellablewoodfiberexcepttoleaveittorot.MultiplythisbythethousandsofhectaresofteakplantationsinPanamaand

thereisanattractiveresourceofunutilizedwoodfiber.Theteam’sinvestigationhasshownthatPEcanturnthisotherwiseneglectedfiberintoavaluablecommodity.

Biochar,fertilizer,handicraft/furniture,abiomasspowerplantandsellingtoindustrialfuelconsumers

(iepaperandpellets)wereamongthealternativesconsidered.Inordertoevaluateeachobjectively,thefollowingcriteriawereused:revenuepotential,upfrontcapital,fitwithPE’smission,marketdemand,andeaseofimplementation.

Recommendation:ThemostattractiveuseforPE’swoodwastewasdeterminedtobetheproductionof

biochar.Biocharhastheadvantageofmultiplepotentialenduses:(A)selldirectlytotheagriculturalmarket,(B)useasaninputtoproduceorganicfertilizertoselltomarket,or(C)useasaninputtoproduceorganicfertilizerforPE’splantationsorArimae’supcomingnursery.Thecapitalrequirementfor

biocharproductionofa10HAthinningistwo55gallonbarrels,aninvestmentofabout$1,000.Organicfertilizerproductionwouldrequireanadditional$500investmentforcertificationandlegalfees.

WerecommendthatPEwouldprofitmostbyusingbiocharasaninputtoorganicfertilizertosellintothemarket.Thebiocharproducedfromatenhectare,yearfourthinningisestimatedtoproduce

roughly8,000poundsoffertilizerwithapotentialrevenueof$26,000.Thesecondbestoptionistosellbiochardirecttomarket,withpotentialrevenuesbetween$5,000and$15,000foratenhectare,yearfourthinning(dependingonbiocharprices),yieldinga20‐30%profitmargin.Biocharorfertilizer

revenueswouldroughlydoublewitheachadditionthinninginyears8,12,and20,astheamoundofwoodfibernotsuitableforcommercialusealsodoubleseachthinning.Afertilizerbusinesshastheadditionalbenefitofscalingbypurchasingwoodfiberfromneighboringplantationswhenneeded.One

full‐timeemployeewouldberequiredtogatherwoodfiberfortheproductionbiochar,andanotheremployeewouldbeneededpart‐timefortheproductionoffertilizer.

Theotherpotentialoptionsdonotappearviableatthistime.ThereisnoclearmarketforindustrialfuelinPanama–theonlyidentifiedpaperindustrydoesnotutilizewoodfiberand,thoughhighlysupported

byallstakeholders,thereisnopelletindustry.Thebiomasspowerplantwasruledoutgivenexpectedcapitalcostsof$1.5‐3MperMWandareportfromtheMinistryofEnvironmentstatingthatabiomass



plantwasnotcommerciallyviableatascalelessthan5MW–thesizeoftheSantaFeplant.Finally,nohandicraftorfurnituremarketwasfoundthatwouldpurchasefour‐year‐oldteakwoodatscale.

II. OVERVIEWOFTHECHALLENGE

DuringJanuary5‐15,2010theTeamtraveledtoPanamaandmetwithPE,indigenouslandowners,theindigenouscommunitieswithwhomPEcollaborates,otherforestproductscompanies,sawmill

operators,fertilizerproducers,theMinistryoftheEnvironment(ANAM),forestmanagersandotherrelevantstakeholders.Inadditiontoalternativeusesforthewoodfiberafewtertiaryissueswereraised,including:collaborationamongplantationsforco‐croppingresearch;cooperationtocreatea

domesticwoodprocessingindustryforfurnitureand/orwooddrying;impactofcontinuousyearlyplantingschedule;landrightsprioritiesamongtheindigenouscommunitiesandANAM’shesitancytowardsworkingwiththeindigenouscommunities.

ThemissionandgoalsofPlantingEmpowerment(PE)presentsuniquechallengesthatrequireunique

solutions.BychoosingoperatingmethodsthataimtoempowerindigenousPanamanians,PEfacessomeproblemsthatothercompaniesintheteakbusinessdonot,specificallyahighercostofcapital.

Astheteakbusinesscycleisrelativelylong(20‐25yearsfromplantingtoharvest),itpresentssignificantrisksanddiscountedvaluationsofinvestments.IfPEcoulddevelopawaytocreaterevenuebeforethe

25‐yeartimehorizon,itcouldsignificantlyreducerisksfacedbyinvestors,andincreasethevaluationofitsinvestments.

Onepossiblemethodforcreatingrevenuestreamsbeforethe25‐yearharvestistomakeuseofmaterial

removedfromtheplantationduringthinningcycles.Theamountofwastecreatedduringthethinningprocessissignificant,anddeterminingthebestpossibleuseforithasbeenthefocusofourstudy.

Woodcreatedfromthinningsinthefirsteightyearsisnotsuitableforstandardusesof25‐year‐oldteak.Severalalternativeusesforthisfiberhavebeenidentified,andeachencompassesitsownchallenges

andrewards.Forexample,thismaterialcanbeusedasafertilizerfeedstock,usedforhandicraftsbytheindigenouscommunity,orconvertedtopelletsforuseinwoodburningstoves.AcompletelistofidentifiedopportunitiesispresentedintheMarketForWoodFiberSummaryDiagramonpage5.

Inordertoobjectivelyevaluateeachoftheseopportunities,thefollowingcriteriawereused:revenue

potential,upfrontcapital,fitwithPE’smission,marketdemand,andeaseofimplementation.TheuseofthesecategoriesaimstomethodicallyanalyzeeachopportunityrelativetoPE’scurrentfinancial,social,andorganizationalconditions.

Theseconditionspresentsignificantopportunitiesandchallengesthatneedtobeincorporatedinthe

evaluationofprospectivefiberusageschemes.PEwouldliketomaximizetheirrevenuefromthesewastestreamswithminimalupfrontcapital.Duetoahistoryofpreviousworkwithindigenouspeoples,PEhasauniqueopportunitytoleveragevaluablerelationshipstodevelopnewprogramsinvolvingthe

useofthinningmaterial.Amaindisadvantage,however,isPE’sremotemanagementstructure.All



managementislocatedintheUS,withonlyplantationworkerspermanentlyinPanama,whichmayaddsignificantcomplexitytotheimplementationofnewprojects.

Overall,PEfacesaneedtocreaterevenuestreamsbeforethe25‐yearharvestevent.Onepossible

opportunityforrevenuecreationistheuseofmaterialfromthinninginvariousapplications.Eachofthepossibleusesforthismaterial,however,presentsitsownpositivesandnegativesbasedonthenatureoftheuse,andthecurrentstateandmissionofPE.Wehaveidentifiedwhatwebelievetobethemost

feasibleoptionsforPE,andhaveevaluatedtheminanobjectivemanner,keepinginmindPE’smissionofcreatingfinancialgainswhilemaintainingasocialmission.

III. MARKETFORWOODFIBER,“DESECHOS”

Table1–Overview

UseofWoodFiber

RevenuePotential

InitialCapital

FitwithPEmission

MarketDemand

EasetoImplement

1.Biochar‐Mkt Med‐Low Low Med Med Easy2.OrganicFertilizer

Med Low High Med Med

3.Handicraft/Furniture

Med Low Med Low Med

4.Biomass High Veryhigh

Med Med Hard

5.Pellets Med Med Med Low Med6.Paper Low None Low Low Easy

A. Biochar

Itispossibletoturnthewoodfiberproducedfromthinningintobiochar.Biocharischarcoalthatis

producedfromtheheatingofbiomassintheabsenceofair.Biocharcanbeusedasfuelforcookingfood,asaheatsource,orasamethodtosequestercarbon,orasafertilizeradditive.

Thebenefitsofaddingbiochardirectlytosoilsaremany1:i)Suppressedmethaneemission,ii)reducednitrousoxideemissionbyhalf,iii)reducedleachingofnutrients,iv)storedcarboninalong‐termstable

sink,v)reducedsoilacidity,vi)reducedaluminumtoxicity,vii)increasedsoilaggregationduetomorefungalhyphaeandarbuscularmycorrhyzalfungi,viii)improvedsoilwaterhandlingcharacteristics,ix)increasedsoillevelsofavailableCa,Mg,PandK,x)increasedsoilmicrobialrespirationandbiomass,xi)increasednitrogenfixationinlegumes.

However,themostapplicableuseforPEisasanadditivetofertilizers.Whenusedinfertilizer,biocharcansignificantlyincreasetheeffectivenessoffertilizer(estimationsofupto10%moreefficiency).

DiscussionswithfertilizerproducersinPanamaindicatedthatthereisamarketforbiocharforuseinfertilizersthatisworthpursuing.Onemajoragriculturalproducerreportedthathewouldpayupto

1http://biochar.pbworks.com/



$0.75perpoundofbiocharforhisorganicfertilizeroperation,althoughtheinternationalmarketpriceintheU.S.isroughly$0.25perpound.2Theconsumptionforoneproducerisestimatedtobe3,000lbs/yr.

Duringanormalbiocharprocess,15%ormoreoftheweightinputisconvertedtobiocharasanoutput.AssumingthatPE’sfouryearthinningwillyield9.7cubicmetersofwoodfiberperhectare3,PE’srevenuesareestimatetobebetween$5,000and$15,000forPE.Thisrevenuewouldcomefromselling

biochardirectlyintothefuelororganicfertilizermarketinPanama.

Creatingbiocharisarelativelysimpleprocess,requiringminimalcapitalinvestmentinequipment,andsmallamountsofsimplelabor.Detailsofthebiocharprocessareavailablelaterinthisreport.

B. Fertilizer

Ourteamhasidentifiedorganicfertilizerproductionasapotentialsourceofsupplementaryrevenuefor

timberplantations.SomecompaniesinPanamahavealreadyshownthatasmall‐scaleoperationcansaveoncostsand,moreimportantly,beprofitable.Organicfertilizerrequireslowupfrontcapitalastheingredientscanbeobtainedforfree(plustransport)oratalow‐cost.Themainingredientsfororganic

fertilizerarechicken/horsemanure,ricehusks,soilorblacksoil,andcanbesupplementedwithphosphorusrock,lime,sulphurandmolasses.Microorganismscanalsobegrowninthefertilizer;collectingmicroorganismscanincreasescosts,butitcanalsosignificantlyincreasetheretailvalue.

Theseingredientsandadditivescanbecombinedincertainamountstocreatefertilizersthatareoptimalforcertainpurposes.

Themainbarrierstoovercomeforfertilizerare:•Locatingareliablesourceofchickenorhorsemanureatareasonableprice,includingtransportation

costs.•Collectingorpurchasingandbreedingmicroorganismsforenhancementofsoil•Experimentingandtestingdifferentcombinationstofindoptimalmix

•Certificationprocess,toenableretailoffertilizer

Theprofitopportunityforfertilizerappearshigh.Asdescribedindetailonpage18,thetotalcostsoffertilizerproductionareestimatedtobeabout$4.00perbag,whileabagwillsellfor$7.50,accordingtolocalproducers.Arevenuemodelisavailablebelow:

Table 2 – Fertilizer Revenue Model Sacks Produced / Week 200 Lbs / Sack 45 Cost / Sack $4.50 Revenue / Sack $7.50 Profit / Sack $3.00

2 http://www.biochar-us.org/

3Zanin,Daniella.“FeasibilityofTeakProductionforSmallholdersinEasternPanama.”



Profit / Yr (40 wks / yr) $26,520.00 Total Production (lbs) 8,000.00

C. Handicraft/Furniture

Desechosweretoosmalltobeconvertedtolumbertomakehandicraftsorfurniture.Thethinnedtreesafter7yearscanhavesubstantialdiametersrangingfrom10‐20centimeters.However,sawmillsarenotcurrentlysetuptodealwiththesesmallersizesandtoomuchofthetreewouldbelosttotheblade

thicknesstomakefurnituremillingaviableoption.Thesetreesalsoareyoungersothewoodismainlysapwood,whichisnotsoughtafteranddoesnotfinishwell,againnotmakingitsuitableforhandicraftorfurnituremanufacture.

D. Biomasspowerplant

Evidencefromothercountriesshowthepotentialforaprofitablesmall‐scalebiomasscombinedheatandpower(CHP)powerplant.Thisoptionhadthreemajorbenefits:thehighestpotentialrevenuestream,alocalpowerplantusingbunkerdieselfuelthatcouldbeagoodtarget,andadded

environmentalbenefitsfromreducedGHGemissions.

Biomasswouldbechallengingtoimplementforfourreasons

• Capitalandoperationalcostequals$1.5‐3.0millionperMW(IEA2009)• Businessplanwouldrequirethesourcingoflargequantitiesofbiomassfromotherplantations.

Wedidnotfindvalueamiddlemancouldaddinsourcingthisbiomass.NordowethinkitfitswithPE’smodel.

• Implementationtoodifficult,requiringcooperationofpowerplantfirm,localgovernment,andotherplantationowners

• Localworkershavenotechnicalexpertiseregardingthepowerplant

E. Industrialfuelcustomer(paper,pellets)directorthroughsawmill

Woodpelletsareatypeofwoodfuel,generallymadefromcompactedsawdust.Pelletsareahighefficiency,cleanfuel.Theyareextremelydensebutmustbeproducedfromalowmoisturecontentfeedstockbelow10%.

High‐efficiencywoodpelletstovesandboilershavebeendevelopedinrecentyears,offering

combustionefficienciesofover90%.Woodpelletboilers‐havinglimitedcontrolovertherateandpresenceofcombustioncomparedtoliquidorgaseous‐firedsystems‐arebettersuitedforhydronicsystems(useofwaterforheattransfer)duetothesystem'sgreaterabilitytostoreheat.Ahugeexport

markettotheUKhas,inrecentyears,definedthepelletindustry,butthereisincreasingexportpotentialtotheUS.

Apelletplantwouldbeanidealcustomerforwoodfiberatlargescale.AlthoughonesawmillintervieweementionedapotentialpelletfactoryinPanamaCity,furtherinterviewsdemonstratedthat



thisoptionisoftentalkedaboutbutthereisnotangiblecustomer.Thiscouldremainapotentialpartnershipinthefutureifamanufacturerdoesarise.Furthermore,ANAMstronglysupportedthe

feasibilityofapelletplant.Pulpandpapermanufacturerscanusewoodfiberasaheatsourcetoproducepulpandtodrypaper.

OnesawmillerimpliedthathesoldatruckloadofwoodfiberforminimalprofittoapapermillinPanamaCity.WeidentifiedonepaperplantinPanamaCity:PapeleraIsmeñaandpotentiallyKimberly‐Clark,bothlocatedneartheTocumenairport.InaninterviewwithPapeleraIsmeñawelearnedthat

theyonlyproducetissueandtoiletpaper.Therawmaterialsforthisrecyclingoperationarenewspaper,writingpaperandfiberanddonotincluderawwood.OneopportunityforPEcouldbeasamiddlemanandselltoasawmillerwhowouldthenselltothepapermanufacturers.Thisislikelytoearnminimal

revenue,havelittleadditionalbenefits,andrequireownershipofatruckfortransport.Furthermore,servingasamiddlemandoesnotalignwithPE’scommunityandpartnershipbasedmodel.

F. OtherDiscardedAlternatives:Woodchips,firewood,woodash,ink

Firewood:

Firewoodisnormallysoldbythecubicmeter(1m³=~0.276cords).Finalharvestwoodisrarelyusedforfirewood,asitismorevaluableassawtimber.Firewoodmaybeeconomicallysoundforthesmalldiameterwoodproducedfromthinnings,particularlybecausesmallerdiameterstemsaredesirable

becausetheyreducetheneedforsplitting.Howeverfirewoodmarkets,transportationandprocessingareallhurdles.

WoodChips:Toproducefirewoodtheentireusablestemisremovedandprocessedintofirewood.Bycontrast,themostefficientandcost‐effectivewaytodeliverfiberforpellets,paperorbiomassistochipthefiberfor

delivery.Thereiscurrentlynochippinginfrastructurebecausethereisnodevelopedbiomassorpelletmarket.

WoodAsh: Oneby‐productofwoodburningiswoodash,whichinmoderateamountsisafertilizer(mainlypotash),contributingminerals,butisstronglyalkalineasitcontainspotassiumhydroxide[5](lye).Woodashcan

alsobeusedtomanufacturesoap,butthereisnomajorsoapmanufacturerinPanama.Ink:

Thereisapossibilityofusingteakleavestomakespecialtyinkthatcouldbesoldingiftstores.ThiswouldlikelysupportanoperationatPEscalebutnotbeviableatmulti‐plantationscale.Researchshowedthatthemostcommontattooinkcomesfromthejaguafruit,stemmingfromtheGenipa

Americanatree,commoninBrazil.Inkfromteakleavesisusedtopaintclaycrafts.Themostcommonuseappearedtobeincooking,similartothebananaleafinIndia.Thisisunlikelytobeamajorrevenue

source.However,mightbeaninterestingformofbusinesstoberunbytheindigenouscommunities.



IV. PLANTINGEMPOWERMENTRECOMMENDATIONS

Duetoeaseofproductionandsignificantrevenuepotential,theTeamagreesthatmakingbiocharorfertilizerarethebestoptionsforPlantingEmpowerment’swastestreams.BecauseoftherelativelysmallscaleofoperationsandtheminimalshippinginfrastructureinremotePanama,sendingthewood

fibertootherfacilitiesforprocessingwillbecostandlogisticallyprohibitive.

A. ImplementingaBiocharProcess

Usingthematerialfromthinningsforbiocharwillinvolvethedecompositionofthewoodfiberintobasicelementsattemperaturesnear300C.Biocharisrelativelyeasytoimplement,andatabasiclevel

involvespackingasteeldrumwiththewoodfiber,andheatingwithanexternalfire.

Althoughthereareseveralmethodsformakingbiocharthesuggestedimplementationmethodisoutlinedbelow.Othermethodsinvolvehigherpricedsteelunits(i.e.,RE:charorthescaledemonstratedhere:http://www.youtube.com/watch?v=nzmpWR6JUZQ),buttheseoptionswerecost‐prohibitive.

Anotheroptionissimplyburningthewoodinalargepit,butthismethodismorelabor‐intensive,lessefficient,andworsefortheenvironment.Ourrecommendationinvolvesahomemadesteeldrum:

1. Placea55gallonsteeldruminsideofa110gallonoverpacksteeldrum.SAFETYPRECUATION:BESURETOLEAVEVENTILATIONHOLESIN55GALLONDRUM

TOALLOWESCAPEOFGASSES2. Fill55gallondrumwithwasteusedtocreatebiochar.Wasteshouldbechoppedinto

piecesnolargerthan8”inanydirection.AwellpackedcontainerisshowinFigure1.

3. Fillgapbetweendrumswithwooddebrisandotherfuelforfire4. Lightfuel–cover110gallondrum.5. Letburnfor4‐5hours

6. Collectbiochar

Avideoexplanationofthisprocessisavailablehere:http://www.youtube.com/watch?v=RXMUmby8PpU&feature=related

Table3–ListofMaterialsforaBiocharOperationItem Use Price PossibleSource

55GallonStainless

SteelDrumPyrolysisContainer 68$ GlobalIndustrial.com

110GallonOverPackDrum

ExternalCombustionChamber $350 Spill911.com

Metalbestos8”x36”StovePipe

ExhaustFlue 90$ Ventingpipe.com



*RE:Charisanascentandfairlyinterestingoperation.JasonAramburuisarecentgraduateandhasbeengettinga

lotofmediaattention.RE:Charismakingsystemsthatareprobablytoocost‐prohibitiveforPE.However,Jasonislookingforstrongpartnerships.

B. ImplementinganOrganicFertilizerProcess

ThesecondoptionforPEwouldbetoimplementanorganicfertilizeroperation.

Thefirststagewouldinvolvesecuringsourcesfortheseparateingredientsandadditives.However,PEcouldoptforoneoftwodifferentpathswithfertilizer.

• Themostbasicorganicfertilizerincludescarbon‐enrichedsoil(terrapretaorblacksoil,orregularsoilenrichedwithbiochar–seeabove),ricehusksandchickenmanure.

Awellpackedbiocharcontainer

SideView

Wastetobeconvertedtobiochar

110Gallondrum

55Gallondrum

Fuelforfire

DiagramsTopView



• Amorescientificapproachcombinedwiththeadditionofsulphur,phosphorusrock,limeandpossiblymicroorganismsandmolasses(afoodsourceforthemicroorganisms)couldyieldmore

complexorganicfertilizerwithahigherretailvalue.

(A) BasicFertilizer• Forthebasicformulauseamixofblacksoil,ricehusksandchickenmanure• Fornurseryuse;75%manurewithricehusksandsoilmakinguptherest• Forplantationuse;75%blacksoilwithricehusksandmanuremakinguptherest

• Thisprocessisextremelybasicand,oncemixed,requiresnofurtherattention• ThereisnorealmarketforthisbasicfertilizerapartfromPE’sownuse• Theblacksoilherecanbemadefrombiochar

• Costof$4dollarspersack(costofblacksoilandchickenmanure)

(B) ComplexFertilizer

Otherproducershavealreadybeguntheprocessofdevelopingacertifiedfertilizerwiththeuseofmicroorganisms.Accordingtoourresearch,theyareimplementingthebestpracticesforfertilizerproduction.Biocharwouldbetheoneadditivewefoundthatcouldimprovetheirfertilizer.Belowwe

haveoutlinedtheirprocess;howevertheyarestilltestingdifferentmixes.Also,itisimportanttorememberthatdifferentregionsofthecountryneeddifferentfertilizermixes.ForexampleinDarienitiscommontouselessricehusks.

• Mix:800sacks(15gl/sack)=(approx.)400chickenmanure,400horsemanure(ricehusksareincludedaspartofthechickenmanure),8quintaleslime,2quintalessulfur,8quintalesphosphorousrock,20quintalesashes,20gallonsmicrooganisms,5gallonsmolasses.

• 15dayfermentationwithrototillereveryday• 10gallonsofmicroorganisimsappliedwithpump• Microorganisms:microrisa/mycorrhiza,rootfungus,anaerobicconditionfor40days• Costs:manurefreewith$50fortruckpick‐up(lessthanhourdrive),$35/barrelformolasses.

$1.25totalcost/sack.$7.50retail.

• CertificationProcess1. Sample2. Labtotestmineralcontent(1‐1.5monthlongprocess)3. RegistroComercio:Onceyouhavetheformulayouwant,registerwithMIDA

a. MIDAdoesfieldanalysis(bringsample).2‐3monthsb. Needtobringdocumentation

i. Thereareseveralstamps/certificationsfromtechnicalconsultants,sanitationconsultants,ATF,lawyer,regent

ii. NeedbothproductandcompanytoberegisteredMarket

• BasicOrganicFertilizerisbeingsoldinDarienforabout$2.00persmallbag• Otherspricetheirmorecomplexfertilizerat$7.50perlargebag• Somemarketdatasuggestsademandof3000sacks/month.Hugeopportunityisinexport(but

thiscarriesmuchstricterprocessingguidelines.i.e.fertilizercannottouchground)



ItdoesnotmakesenseforPEtoenterthemarketwithabasicorganicfertilizerasthisissellingfor

about$2dollarsforasmallsack(asmallsackisfromsightapproximatelyhalfthesizeofaregularsack),whileothersarespending$4dollarspersacktomaketheirownbasicfertilizer.Abasicfertilizer,however,couldbeusedbyPEorsoldtolocalplantationsdirectly.

Morecomplexfertilizersneedalotmoreattentionandmanymorestepsareinvolvedbuttherearelargerprofitstoberealized.Themainboundariesherearethecertificationprocess,whichtakestime

andcostsabout$200,pluslegalfees,inadditiontothecollection/purchaseandbreedingofthemicroorganisms.4

C. ImplementinganIndustrialFuelProcess

PE’slowestcapitalcostoptionwouldbetotrytosellitswoodfiberforuseinapaperorpelletfactory.

Assumingamarketdevelops,transportationwillbethekeytoeconomicviability.Therearetwomarketing/transportationoptions: (A)Sellthewoodfibertoabroker‐middlemansuchasJunior,thesawmillemployee.Thisisthe

lowesteffort,lowestcapitalcostandlowestrevenueoption.ThekeybenefitwouldbeinJuniorsupplyingatruckfortransport.Optimisticestimatesonlyyield$100ofrevenuepertruckload,whileitwouldcost$60fortransport(assumingtruckrentalandfuel).Afteraccountingforthelaborofloading

thetruck,thisoptionwouldbenearlyprofitneutralwithnootherlabororenvironmentalbenefits. (B)Sellthewoodfiberdirecttoapapermill(currentlynobuyeridentified)orfuturepelletfactory.Thiswouldrequiresufficientvolumeofwoodandeitherin‐houseorhiredtransportation,but

wouldeliminateabrokeragefeeandthusyieldmorerevenue.

4http://www.howtogardenadvice.com/soil_prep/make_biochar.html

Documents

WOOD FIBER FEASIBILITY STUDY - Squarespace...Planting Empowerment‐ Wood Fiber Feasibility Plan 02.24.10 MIT Sloan Entrepreneurs in International Development 4 plant was not commercially