Marketing Strategies for Tropical Forest Products
What better way of contributing to social and environmental conservation than by purchasing and devouring a bag of scrumptious crunchy brittle candy, or buying a jar of slightly extravagant peppermint massage cream for somebody else to rub on your aching, calloused feet? The price may not beat the competition, but consumers are assured of contributing to the survival of the rainforest dwellers who harvest marketable rainforest products.
This is the marketing strategy employed by Cultural Survival Enterprises (CSE), established in 1989. An off-shoot of Cultural Survival Inc.(founded in 1972), CSE has created and developed an income-generating model based on non-timber rainforest products (NTFPs). The CSE goal is to maintain the biodiversity of the forest while meeting the economic and social needs of forest residents through sustainable extractive activities.
During the first year of operation, 17 US based companies bought $349,000. worth of NTFPs and manufactured 19 products. In the second year trade increased eightfold, constrained only by a lack of working capital. An additional 75 companies are currently working on product research and development.
Since launching their marketing effort just three years ago, the people at CSE have gained valuable insight into developing international and regional trade as a means of supporting local conservation and development. Here are some of the lessons learned:
Existing products stand the best chance of rapid growth and benefit from international markets. Even so, new product development is by nature a slow process and can take 5-10 years to show a significant impact on local economics. Gaining access to US and European markets is an lengthy process due in large part to health and safety data requirements for raw materials to be included in food or cosmetics.
Diversification is essential to the viability of forest extractive activity because it reduces dependency on a few products. However, diversification must imply the gradual creation and development of one product at a time. High volume and/or high value items should be developed first to create market momentum and increase financing to support lesser-known products later on.
Risk of failure can be reduced by diversifying the number and type of end users of NTFPs for each product. Risk can be further reduced by entering multiple markets; for example, mainstream as well as organic, or natural product markets. Each commodity could have local, regional, national and international markets.
Add Value Locally. Examine ways to increase the value that is added to a product as it leaves its source. This could mean transporting the product further into the market and eliminating an intermediary, or processing products locally. In the case of Brazil nuts, shelling reduced the weight by 2/3 and volume, and thus the transportation costs. In some cases this strategy can create a viable profit margin otherwise insufficient or lacking.
Capture value that is added further from the source of production. Generally, increased product value is added with each transaction, transportation of other alteration of the product away from its source. Value added is related to labor and capital investment, as well as scarcity and monopoly. Producers or their supporters should attempt to capture some of the value added. For example, a 5% charge added to the price of Brazil nuts sold in New York would generate more $/lb than doubling the price locally.
Proposed solutions must equal the scope of the problems. Because of the vastness of deforestation, and the speed with which it is occuring, a lasting solution is needed, one that builds upon itself and is replicable.
A forest group cannot meet the demand for many companies in North America or Europe. The M&M Mars candy company uses 70 metric tons of Brazil nuts in an 8 hour production shift. The Xapuri shelling plant produces this amount in one year. Forest groups are obliged to focus on smaller markets with high overhead, thus increasing the end cost to the consumer. Higher costs mean that lower and middle income people will probably not buy the product and the rainforest cause will mainly reach and be supported by one section of the population.
Controlling a large market share of a commodity allows considerable influence over the entire market. This gives producers more leverage to benefit directly from value added and profits generated. However, unity among producers is essential to obtain this leverage.
Don't become greedy and speedy. Steps to increase product value should be taken judiciously. The removal of intermediary people from the production and marketing must be fully evaluated in the context of differing economic conditions. Although intermediary processes can be exploitative, they are often necessary and their elimination could prove detrimental.
In Northern markets rainforest awareness is generally limited to protection of plants and animals, not people. The growing movement for NTFPs is an attempt to move beyond concerns about recyclable packaging and personal health issues, to include consumer awareness of people whose survival depends upon forest resources.
Certification of environmental sustainability is crucial. Because the primary purpose of the growing green market is animal and plant conservation, the harvest and sale of plant commodities must be monitored to ensure that they do not become endangered.
Most human interactions with the forest have an impact on biodiversity of the plant and animal species within the forest. Although some societies have long coexisted with plants and animals in the forest, the effect of harvesting forest products reverberates throughout the entire ecosystem. An evaluation system must be implemented at the onset of harvesting and marketing for each species. Local communities must share in the responsibility of monitoring the impact of harvesting, for the sake of sustainability.
These are the major lessons learned over the first year of CSE activities. There will likely be new and modified lessons to come as the CSE model is implemented by others.
Some General Principles and Strategies for Developing Markets in North America and Europe for Non-Timber Forest Products. Lessons from Cultural Survival Enterprises, 1989-1990. Jason Clay.