As long as anyone can remember in the Cerrado region of Brazil, the macauba palm tree has mostly been cut down as a nuisance. It is simply more profitable to clear the land and raise cattle. But the region’s vulnerability to climate change and deforestation, and persistent lack of opportunities for income in poorer communities has prompted a search to simultaneously address these concerns.
The humble macauba may prove to be one solution. Native to Brazil, the tree produces a steady supply of palm oil with significant potential for green energy, namely, biofuel, and uses in food and cosmetics. Unlike the more commonly cultivated African oil palm, the Macauba is drought resistant. It grows in pastures that can at the same time be used for livestock grazing, offering an alternative to traditional single-crop African palm plantations, which tend to result in degraded land and deforestation.
Despite its many advantages, the macauba had not been commercially cultivated in Brazil until recent years. And getting a new environmentally friendly agribusiness off the ground is not a simple task. But it is happening—with a US$3 million investment from the Climate Investment Funds’ (CIF) Forest Investment Program (FIP) through the Multilateral Investment Fund of the Inter-American Development Bank (MIF/IDB) Lab and a partnership with a private start-up company, INOCAS.
The Cerrado region is now home to the world’s first macauba agroforestry project. The potential of mass commercialization is huge. If the project takes off nationally and globally, it could disrupt the global palm oil market.
“If half of the current pasturelands in the Cerrado had macauba planted there, the volume of oil would probably be higher than the volume obtained from palm to use in most industrialized food worldwide,” notes Johannes Zimpel, the director of Inocas.
Brazil could assume a leading role in the industry, harvesting “green gold.” Further, it has ambitious goals of reducing greenhouse gas emissions by 43 percent below 2005 levels by 2030. Getting there requires finding alternative crops and agroforestry schemes that address land use changes and agricultural practices, which are the country’s two largest sources of emissions.
Photo courtesy of INOCAS
The project aims to establish 2,000 hectares of Macauba plantations that also serve as cattle farms. The macauba palm trees will eventually yield 1,500 tons of fruits per year to produce palm oil, while absorbing 300,000 tons of carbon dioxide equivalent that would otherwise end up in the atmosphere. As importantly, in training local farmers on new practices in agroforestry and multipurpose agriculture, the project is improving livelihoods and protecting the environment.
Much is at stake in the Cerrado biome, a savanna ecosystem covering more than 2 million square kilometers. A biodiversity hotspot, it stocks 9 gigatons of carbon in its primary vegetation and hosts 4,200 species. Two-thirds of Brazil’s hydrographic regions originate there. Yet the region suffers higher deforestation rates than the Amazon. Nearly half the area has been converted to pasture or cropland.
In the state of Minas Gerais, where the project is taking place, the emphasis on clearing land for cattle has come in part because the topography impedes the use of agricultural machines. For smallholder farmers in particular, there are few other options to make a living. With climate change taking an increasing toll, through drought and worsening soil fertility, farmers struggle to get by through cutting down trees and expanding their pastures. That further reduces the forests, increases run-off and leads to erosion, adding to the climate crisis.
INOCAS was a logical partner to demonstrate the potential of the macauba in Minas Gerais, given earlier experience in developing biofuels for the airline industry. Through a feasibility study supported by the European Union, it showed that Brazil could exceed current global palm oil production by converting half of current pastures into mixed-use systems, including those combining macauba trees and cattle grazing.
But before it could start working with farmers to plant the trees, INOCAS had to overcome a difficulty. Local financial institutions were reluctant to channel loans for an experimental and possibly risky venture. The macauba tree was well known to farmers, but its commercial potential was not. Lending criteria would not stretch to accommodate issues such as treating the trees as collateral.
FIP funding typically offers a blend of grants and concessional loans to de-risk investments and bridge the “pioneer” gap. In this case, to surmount the barriers posed by local financial institutions, the FIP took an unprecedented and innovative step. It converted a loan of US$3 million into equity shares of INOCAS. Other investments turned into equity shares came from local partners, including a nursery, an agricultural product company and an entrepreneur with extensive experience in organic farming.
The initial infusion of money allowed INOCAS to begin establishing macauba trees, including through partnering with a local nursery to boost germination and growth rates. It also took note of earlier, unsuccessful experiences in persuading local farmers to grow biofuel crops, which left a legacy of skepticism. Many farmers were also reluctant to try the trees because they would have to move their cattle for three years until the trees had grown large enough.
Photo courtesy of INOCAS
The INOCAS team set out to make the case to farmers that growing the trees would deliver a significant return. It would diversify sources of income, and even improve existing profits from cattle, who could eat some of the fruit from the trees. Farm workers too would draw benefits, because the Macauba harvest would happen just after the coffee harvest, another major industry in the region.
All told, the team traveled 90,000 kilometres on dirt roads and distributed a YouTube video garnering 100,000 views. Members spoke on local television, and met with a few “champion” farmers to explain the business case. A few began cultivating the trees, improvising and improving as they went. In the initial period of establishing new plantings, for example, when pastures could not be used for cattle, some farmers mixed in seasonal cash crops, such as pineapples, beans, sweet potatoes, cassava, pumpkin, rice, corn, watermelon and peanuts. Soon neighboring farms were coming on board.
By early 2020, an initial vision of a new use for the macauba tree had blossomed into the planting of nearly 33,000 trees on over 500 hectares. Over 29,000 tons of fruit had been collected. It is only the beginning, but enough to show how much is possible.
INOCAS already plans to scale up beyond the FIP investment. Planting the first 2,000 hectares is slated for completion by the sixth year of the project. After that, using its own cash, INOCAS expects to grow by 1,000 hectares per year, and raise additional finance of US$4 million to build its own processing factory.
As each slender sapling pushes towards the sky, it sends a message. Whole new industries can be created to solve the climate crisis and improve human lives. Sometimes it’s as simple as seeing value and possibility in what once was discarded.
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