Commercial forestry plantations for sustainable timber production
Commercial forestry plantations for sustainable timber production
Business Model Description
Specializing in the transformation of primary timber products into value-added products, with a strong emphasis on innovation and production of timber goods, aiming to consolidate a forestry cluster.
Expected Impact
Promote sustainable forestry economic activities that can bring opportunities to the local communities as well as women.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Costa Rica: Quesada, San Carlos
Sector Classification
Extractives and Minerals Processing
Development need
Consolidate this pole as a cultural and agricultural innovation center for the North Huetar Region.
Policy Priority
Promote a resilient system with the potential to adapt to climate change.
Gender inequalities and marginalization issues
Average percentage of women of working age unemployed (4.03 potential gender index).
Investment opportunities introduction
GAM Connector and Chorotega Triangle
Key bottlenecks introduction
242.11 km of roads in poor condition, 394.94 sq. km with access problems to energy substations, 338.53 sq. km without 4G connectivity, 160.38 km with gaps in social development.
Forestry and Paper
Development need
Reduce pressure on forests.
Policy Priority
According to the National Decarbonization Plan, the objective is to promote domestic wood consumption from plantations and agroforestry systems.
Gender inequalities and marginalization issues
Forest nurseries can be an entrepreneurial opportunity for women if they are encouraged to own and manage them.
Investment opportunities introduction
Pallets for agro-export -packaging-, biomass, kitchen furniture, and timber trees for sustainable housing construction.
Key bottlenecks introduction
Timber product marketing schemes.
Construction Materials
Pipeline Opportunity
Commercial forestry plantations for sustainable timber production
Specializing in the transformation of primary timber products into value-added products, with a strong emphasis on innovation and production of timber goods, aiming to consolidate a forestry cluster.
Business Case
Market Size and Environment
In 2018 sales of pallets were USD 72 million (11).
Between 2017-2018 pallets exports grew 1.5%. From 2012 to 2016, furniture exports grew 6% (11).
Banana exports required 2.7 million pallets, and pineapple exports 2.2 million in 2018 (11).
In 2018, it was determined that 17.4% of the pallets were manufactured with sawn wood imported from Chile or 1,137,854 pallets. For the production of the 5,397,796 pallets with wood produced in Costa Rica, 427,344 m³-r were used. The following are used: melina, laurel, pochote, acacia, botarrama, cebo, pylon, coral oak, and even bitter cedar (11).
The construction segment is supplied by imported wood mainly because of the scarcity of local wood (29.3%) and the good quality of imported wood (29.3%) (12).
In general terms, 62% of the wood obtained from an average tree is used for further processing while the remaining 38% remains in the field recycling nutrients to the soil and is rarely used as commercial forest biomass (at least at present in Costa Rica) (11).
In 2016 Costa Rica imported $25.9 million in wood furniture (14).
Indicative Return
Melina and Teak harvest yields are estimated 1.7% and 1.9% (13).
Labor represents 41% of total costs in Melina. Maintenance costs can be constant for the first 4 to 5 years to control weeds (13).
Labor accounts for 44% of total costs in teak. Years 1, 4, and 8 are relatively expensive, explained by the initial maintenance, thinning, and harvesting of trees (13).
Investment Timeframe
Long Term (10+ years)
A melina production cycle can take eight years (13).
A teak production cycle can take 16 years (13).
Ticket Size
In a silvopastoral system, the costs of management, preparation, and establishment of trees in strips can be around USD 229-281 per hectare (13).
Market Risks & Scale Obstacles
Market - High Level of Competition
Capital - Limited Investor Interest
Market - Highly Regulated
Impact Case
Sustainable Development Need
Address 621.62 sq. km of priority cropland for decarbonization in this development pole.
Gender & Marginalisation
Sustainable forest nurseries can be an entrepreneurial opportunity for women if they are encouraged to be owners and administrators.
Expected Development Outcome
To increase the Social Development Index (SDI) in this development pole.
Gender & Marginalisation
To decrease the gaps in the Potential Gender Index in this development pole.
Primary SDGs addressed
15.3.1 Proportion of land that is degraded over total land area
Carbon emissions from pole exports: 3.03%.
By 2050, foster highly efficient agri-food systems that generate low-carbon goods for export and local consumption.
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Outcome Risks
Not being able to compete with importing competitors.
Not finding enough market interested in using wood as a housing construction material.
Overexploitation of soils.
Impact Risks
Increase local timber quality standards and greater integration in the value chain.
Include specific topics on the use of wood in construction in the curricula of related careers (12).
Training in preservation and treatment processes for those species is competitive to do so (12).
Impact Classification
What
Increasing the quality of forestry production to increase sales.
Who
Smallholder farmers and exporters.
Risk
FWeak marketing schemes in the construction of sustainable housing with timber.
Impact Thesis
Promote sustainable forestry economic activities that can bring opportunities to the local communities as well as women.
Enabling Environment
Policy Environment
Territorial Economic Strategy for an Inclusive and Decarbonized Economy 2020-2050 in Costa Rica: Transforming agriculture through R+D+I towards technological innovations (1).
National Decarbonization Plan 2018-2050: Promote increased forest cover and ecosystem restoration.
Strategic interventions plan 2019-2022: Boosting sustainable and competitive production through innovation, access to technology, implementation of good production and manufacturing practices, value addition, and associativity (4).
Financial Environment
Financial incentives: Of the funds placed by the Development Banking System in 2019, 45.09% went to agricultural activities. In turn, in the Rural Credit System -INDER- placed ₡719.6 million current (USD 1.4 million) (15).
Fiscal incentives: Law 7210, Free Trade Zone Regime Law; Law 7092, Income Tax Law, which gives differentiated treatment to MSMEs and SMEs.
Other incentives: Fondo de Financiamiento Forestal (FONAFIFO) of MINAE, "Clúster Forestal de la Región Huetar Norte" project resulting from an alliance between Comisión de Desarrollo Forestal de San Carlos (CODEFORSA), FONAFIFO, and ONF.
Regulatory Environment
Law 7779, Soil Use, Management, and Conservation Law: Promote the implementation and control of improved practices in the use of systems that prevent erosion or other forms of soil resource degradation.
Law 7064, Law for the Promotion of Agricultural Production and MAG: Promote the production of agricultural goods by encouraging producers to increase such production.
Export Guide: Exporting a product or service involves a series of procedures such as Exporter registration, Technical notes or exit permits, Certification of origin (6).
Law 7575, Forestry Law: to ensure the conservation, protection, and administration of natural forests and the production, use, industrialization, and promotion of the country's forestry resources.
Marketplace Participants
Private Sector
San Carlos Forestry Development Commission (CODEFORSA) is a non-profit that promotes scientific and technical research programs, especially applied, that allow establishing a serious and responsible policy in the management of forest resources to conserve and increase wild flora and fauna, as well as ensuring that their ecological balance is maintained.
Government
MAG Institute, Ministry of Housing, INDER, MEIC, COMEX, Public Universities, Municipalities, MINAE, National Forestry Financing Fund (FONAFIFO), National Forestry Office (ONF).
Target Locations
Costa Rica: Quesada, San Carlos
References
- (1) MIDEPLAN (2021). Estrategia Económica Territorial para una Economía Inclusiva y Descarbonizada 2020-2050 en Costa Rica
- (2) Gobierno de Costa Rica (2018). Plan Nacional de Descarbonización 2018-2050.
- (3) INAMU (2018). Política Nacional para la Igualdad Efectiva entre Mujeres y Hombres 2018-2030, PIEG
- (4) MAG (2018) Plan de intervenciones estratégicas 2019-2022.
- (5) Presidencia (2021). EXPORTACIÓN DE PLANTAS ORNAMENTALES CRECE EN UN 31% ESTE AÑO. Comunicado oficial.
- (6) PROCOMER (2021). Guía de exportación. Trámites y requisitos.
- (7) INEC (2015). VI Censo Nacional Agropecuario. CARACTERÍSTICAS DE LAS FINCAS Y DE LAS PERSONAS PRODUCTORAS. INEC (2021). Anuario estadístico
- (8) Asamblea de Costa Rica (1998). Ley 7779, Ley de Uso, Manejo y Conservación de Suelos.
- (9) Asamblea de Costa Rica (1997). Ley 7064, Ley de Fomento a la Producción Agropecuaria y MAG
- (10) Asamblea Legislativa (1996). Ley 7575, Ley Forestal.
- (11) ONF (2019). USOS Y APORTESDE LA MADERA EN COSTA RICA. Oficina Nacional Forestal
- (12) Chavarria y Molina (2017). ¿Por qué no incrementa el consumo de madera local? El caso de Costa Rica. Revista Forestal Mesoamericana Kurú
- (13) Ospino et al (2020). Costos de producción de teca (Tectonagrandis) y melina (Gmelinaarborea) en sistemas silvopastoriles de la zona Norte de Costa Rica. Revista de Agronomía Costarricense
- (14) PROCOMER (2017). Mercado mundial de la madera y tendencias para productos de valor agregado. Dirección de Inteligencia Comercial.
- (15) SEPSA (2019). Informe de Gestión del Sector Agropecuario, Pesquero y Rural Mayo 2018 – Abril 2019