A workshop in Ecuador heard how a new toolkit is helping practitioners get to grips with risk in locally controlled forest and farm business.
Ecuador's Vice Minister of Agriculture, Jamill Ramón, last month opened the 5th international Forest Connect workshop in Quito, Ecuador, entitled 'Risk management for locally controlled forest business: securing the future'. The meeting brought together participants from 17 countries.
In his keynote address, Vice Minister Ramón set out the government's aim of delivering 'el buen vivir en los territorios rurales', or 'wellbeing in rural territories'.
Since 70-90 per cent of Ecuador's producers are smallholders, achieving this ambition means supporting locally controlled forest and farm business to sustain and diversify production. Promoting proactive risk management is crucial to this.
Testing the toolkit
The Ecuadorian family business Allpa-Bambú (AB) was one of more than 18 locally controlled forest and farm businesses worldwide to undertake a risk assessment process as part of developing (eight cases), and then testing (10 cases), a Forest Connect toolkit on risk management.
The toolkit offers businesses a step-by-step guide in how to assess and then manage or take risks. Being able to anticipate and actively manage risk can not only help businesses grow and increase profits, it can also increase sustainability – for example building up capital resources to counter risks of running out of money during critical periods and limiting dependence on credit.
Allpa-Bambú produces bamboo for the local and international markets in cooperation with other producer associations. It has 55 hectares of bamboo and facilities for sawing, treating and drying bamboo poles.
Using the toolkit, the main risks Allpa-Bambú identified included:
- Dependency on a single US export buyer
- Insufficient raw materials of high enough quality for export products, and
- The uncertain legislative environment in Ecuador exacerbated by an economic (and hence construction industry) crisis.
The action plan to mitigate risks that emerged included:
- Diversifying towards national buyers
- Reducing dependence on its main client by developing alternative products such as charcoal, construction products and craft with other businesses
- Increasing access to raw material, and
- Providing technical assistance to producer associations to improve product quality.
Seven simple steps to managing risk
The workshop heard from all 10 businesses that had tested the toolkit, each strongly endorsing its value.
By introducing risk management as a positive opportunity, the toolkit opens up space to talk about challenges and plan how to address them by taking seven intuitive steps.
Of these steps, the case studies found the prioritisation process helping businesses identify 'killer risks' particularly useful: it forces a solutions-oriented approach with an action plan that allocates specific responsibilities to staff accordingly.
Collaborative testing by members of the Forest Connect alliance brought forward suggestions of how to further improve the toolkit. This will help generate further examples of successful locally controlled forest and farm business.
Making critical connections
Small, locally run agricultural and forest enterprises are often unregistered and isolated from potential partners, buyers, services and government.
As an active knowledge network, Forest Connect equips individuals and organisations with practical ways to connect small and medium sized business to each other and to markets, service providers and decision-makers.
The alliance's generic toolkit on supporting small and medium forest enterprises has now been translated into four languages – English, Spanish, French and Chinese – with more specific toolkits, such as the risk management toolkit giving more detailed knowledge where necessary.
Getting community forest products recognised
The third day of the workshop looked to the future – by revisiting the question of how best to distinguish locally controlled forest and farm business products from others in the market.
Back in 2007, members of Forest Connect had done some of the background work on Fairtrade timber that led to a number of industrial trials to enable the markets to discern locally controlled timber business. Unfortunately, the trials were suspended in 2015.
In the light of that suspension, Forest Connect members are debating how best to develop or use systems and labels to distinguish such businesses anew – linking better metrics to evidence-based advocacy work with government. The aim is policies that help secure resource access and procurement for locally controlled forest and farm business.
Such work is important because it is often over-legislation, not just lack of preferential legislation that drives business under. Tit-for-tat legislative trade barriers erected between Ecuador and Peru in 2015 had contributed to crippling exports of bamboo from Ecuador to Peru – which affected businesses such as Allpa-Bambú.
Participants discussed how locally controlled forest and farm businesses, by their nature, have more prospects to share prosperity compared with industrial-scale capital controlled businesses, offering real opportunities to create jobs, generate wealth and strengthen communities.
The reasons are obvious. Local business owners live with the consequences of their decisions. Being accountable for the resources they manage, they are often committed to sustainable use of forests and land. Group ownership often leads to fairer distribution of profits (often involving community investment of some sort) while collective action often involves developing networks for market access and political representation – that can in turn help resolve land use conflicts.
Local ownership also engenders greater concern for vocational education to develop capacities of both men and women. Finally, group ownership requires some form of negotiated vision of what business is for – which tends to lead to greater buy-in to the concept and practice of sustainable development.
- Find out more about the work of the Forest Connect alliance on Facebook
- Forest Connect is an open ad hoc alliance linking supporters of locally controlled forest and farm businesses (more than 1000 members from 94 countries). It is co-managed by IIED, The Centre for People and Forests (RECOFTC), the FAO-hosted Forest and Farm Facility, and the Earth Innovation Institute. It aims to reduce poverty and protect forests.