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WOODFIBERFEASIBILITYSTUDY
ANEXPLORATIONOFSUSTAINABLEANDPROFITABLEOPPORTUNITIESFORTHEWOODFIBERTHATISGENERATED
THROUGHSCHEDULEDPLANTATIONTHINNINGS
February24,2010
PresentedTo:PlantingEmpowerment
PresentedBy:JustinButler,AdamRein,LilyRussell,AndreasWallendahlThroughtheMITSloanEntrepreneursinInternationalDevelopment(SEID)Club
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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
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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
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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
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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/
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$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.”
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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
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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.
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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
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*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
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• 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)
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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
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