Rainforest Alliance Improves Management and Profitability of Community Forest Enterprises

December 14, 2010

Studies in Mexico and Central America demonstrate impacts on economic development and progress on forest conservation

The Rainforest Alliance today published the results of studies in Guatemala, Honduras and Mexico that demonstrate the impacts of technical assistance provided by the Rainforest Alliance’s TREES program on community forest enterprises. These studies show that relatively limited investments in enterprise competitiveness can increase profitability, lead to diversified markets, and create jobs, while conserving forests.

Most significant results were observed in Mexico, where a struggling forest enterprise operated by an ejido returned to profitability by timely improvements in organization and business and technical practices along the value chain, generating new employment opportunities and investments in better forest management and community development.

In 2005, the indigenous community forestry operation San Bernardino de Milpillas Chico, located in the northern Mexican state of Durango, had a net loss of US$561,646. In 2006 the Rainforest Alliance started working with the ejido and facilitated US$1.1 million of investments in equipment and training over three years. A comparison of key indicators during this period shows:

  • 46 percent or over $500,000 of the total amount invested came from the community itself;
  • A 66 percent increase in sawmill productivity and 43 percent decrease in production costs from improved silvicultural practices, better cost controls and higher productivity;
  • 15 new jobs were created;
  • A 15 percent increase in the average price of lumber sold from US$0.59/board foot (bf) to US$0.70/bf, resulting from an increased percentage of processed wood falling into higher grade categories;
  • Market analysis and strategizing expanded the buyer base by producing new product lines and tapping into new markets;
  • US$1.7 million profit by the end of 2008.

“This case shows how relatively small, well-targeted investments in community forestry operations can garner major returns and keep ejidos competitive in increasingly globalized regional and national markets,” said Greg Minnick, TREES Director. “This highlights how the long tradition of community-based forestry in Mexico can contribute to both conservation and rural development.”

Similarly, forest management encompassed by the principles and criteria of the Forest Stewardship Council certification and an enterprise development focus have led community forestry enterprises in Guatemala and Honduras to increase employment opportunities and improve business and social development. In both studies, the Rainforest Alliance’s TREES program provided training in business management and organization, technical assistance in improved sawmilling techniques and valued-added processing, and expanded market linkages. The results include new job creation, improved productivity and efficiency, and declining levels of intermediation as communities sell more product directly.

“In addition to important cultural and social values, forest-dependent communities must also reap tangible economic benefits as a reward for their forest stewardship and conservation,” Minnick continued. “Technical support and capacity building are critical in helping community enterprises reach their potential and become robust and competitive enterprises.”