NTFPs

NTFPs value chains

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NTFPs value chains

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Life on Land (SDG 15) Zero Hunger (SDG 2)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Decent Work and Economic Growth (SDG 8)

Business Model Description

Take advantage with value shared, inclusive, and sustainable export-oriented value chains of Colombian biodiversity to transform non-timber forest-based (NTFB). These bio-inputs into value added products for the cosmetics and home & personal care products (e.g., disinfectants, natural soaps, and others.)

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

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Sector Classification

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Sector

Food and Beverage

Development need
> 19,142 companies in Colombia that are in the Food & Beverage sector > USD$ 23B in food and beverage production (14) > A 7.3% CAGR is expected until 2024 (14)

Policy priority
> The National Development Plan (2018-2022) aims to provide business technical assistance services to 4,000 companies to improve their production and administrative processes and the use of markets. It also wants to allocate at least 50% of sector investment so that producers have access to productive assets.

Gender inequalities and marginalization issues
> In rural areas, 36.2% of women are employed in agriculture, livestock, silviculture, and related > Of the national total, there are 29.9% of women who identify themselves as peasants.

Investment opportunities
> Several Funds have invested in the agribusiness in LatAm and Africa, such as Alive Ventures, Carabela, Catalyst Investments, EDFI, Elea Foundation, Incofin, Rabobank, among others.

Key bottlenecks
> INVIMA, the National Regulatory Agency that monitors and controls the technical-scientific character and applies sanitary standards, has presented an obstacle for companies to request the sanitary records necessary for their operation due to their lack of speed when processing a new request.

Sub Sector

Development need
> +1.6M people that today live on forest-based territories (4) > 74k jobs generated by the forestry sector (7) > 24M hectares suitable for forest plantation for commercial purposes (7) > 5.1M of hectares corresponding organic cultivation

Policy priority
> Productive Transformation Program aims to propose by 2032 Colombia as a world leader in the production and export of natural ingredient-based high-quality cosmetics and household cleaning products with sales of +USD$ 2.2B (+ USD$ 780 in exports,) generating +40.000 jobs (19)

Gender inequalities and marginalization issues
> On +38% of the UPA, women are the ones who make the decisions of production (10). > 2.7M hectares of agricultural use by ethnic groups, from which 86.9% correspond to forests (12).

Investment opportunities
> Colombian home and personal care market are expected to grow at a CAGR of 5.3% (2020-2025) (15). > Natural-based products are expected to reach a 6% market share by 2025, reaching USD$ 20.5M (15).

Key bottlenecks
> In Colombia, exporting takes eight times longer than the OECD average > 54.8% of the Agricultural Production Units do not have access to technologies, machinery, and support services, which reduces their productivity > Colombia has 50% of cultivated areas with the use of agrochemicals (16)

Industry

Agricultural Products

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

NTFPs value chains

Production and export of natural ingredient-based high-quality organic cosmetics and household cleaning products
Business Model

Take advantage with value shared, inclusive, and sustainable export-oriented value chains of Colombian biodiversity to transform non-timber forest-based (NTFB). These bio-inputs into value added products for the cosmetics and home & personal care products (e.g., disinfectants, natural soaps, and others.)

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

5% - 10%

The market for organic personal care and cosmetics products will reach up to USD$ 26B in 2026, with a Compound Annual Growth Rate of 7.25%, over the forecast period (2020-2026)(18). In Colombia, the cosmetics market is a USS$ 3.6B opportunity (21).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

20% - 25%

Based on a Colombian transaction, the IRR within six years was 23%. This takes into account that a Venture Capital invested in a company with naturally-derived cleaning and home care products and had a successful exit after six years, obtaining a 3.14 multiple of invested capital (31).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Based on the Colombian transaction of a company with naturally-derived cleaning and home care products, the investment duration was six years (31).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 500,000 - USD 1 million

Market Risks & Scale Obstacles

Capital - Requires Subsidy

Small producers may need a technical assistance grant to develop knowledge of specific species to produce bio-inputs.

Market - High Level of Competition

The market already has different competitors, who can be much stronger than companies that offer green options. Perhaps due to misinformation from customers, eco-products are not considered over traditional products.

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Colombia has +10% of the planet's biodiversity with 56,343 registered species (1).

Despite huge potential, the informality, low technification, lack of plans or permits approved by the environmental authority and established in regulations; have caused ecosystem destruction and biodiversity loss (2).

Emerging contaminants are present in personal care products. They are endocrine disruptive chemical agents that affect hormonal functions and cause several diseases (e.g., cancer) (3).

Gender & Marginalisation

On +38% of the UPA, women are the ones who make production decisions (10).

From 2.7M hectares of agricultural use by ethnic groups, 86.9% correspond to forests (12).

Expected Development Outcome

Generate economic opportunities by taking advantage of the countless plants, trees, and fruits that provide excellent properties to produce natural cosmetic and homecare products.

Ensure forest conservation by formalizing, technifying, and implementing sustainable management plans for the production of NTFB products.

Ensure health improvement for the consumers of the final products and those who are part of the production chain and for the planet where products' waste rests.

Gender & Marginalisation

Improve market and economic opportunities by offering the 38% UPA led by women the possibility to produce bio-inputs for natural cosmetics and home care products.

Allow these ethnic groups to have an additional income without damaging their hectares that have forestry vocation, which may have significant cultural and spiritual values.

Primary SDGs addressed

Life on Land (SDG 15)
15 - Life on Land

15.3.1 Proportion of land that is degraded over total land area

15.1.1 Forest area as a proportion of total land area

Current Value

> As of 2019, 665,549 hectares of land are in the process of restoration (27).

> Colombia, as of 2017, had 51.9% of forest area (27). > Forest Economy was 0.67% of Colombia's GDP as of 2019 (27). > Colombia has 30M protected hectares (27). > 56.2% of total national land with forest vocation, translated into +60M hectares (8).

Target Value

> By 2030, it is expected that this indicator ascends to 1M hectares (27).

> By 2030, Forest Economy is expected that this percentage rise to 1.5% (27). > The government has not published plans to expand the protected area. However, the government is making an effort to care for and restore areas that already belong to the figure above.

Zero Hunger (SDG 2)
2 - Zero Hunger

2.1.1 Prevalence of undernourishment

Current Value

> The proportion of households experiencing food insecurity was 23.5% in 2016 (27).

Target Value

> The proportion of households experiencing food insecurity is expected to reach 13.9% by 2030 (27).

Secondary SDGs addressed

Good health and well-being (SDG 3)
3 - Good Health and Well-Being
Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth

Directly impacted stakeholders

People

> +1.6M people that today live on forest-based territories (4). > 74k jobs generated by the forestry sector (7).

Gender inequality and/or marginalization

> 36.2% of women in rural areas that are employed in agriculture, livestock, silviculture, and related. > On +38% of the UPA, women are the ones who make the production decisions (10).

Planet

> 24M hectares suitable for forest plantation for commercial purposes (7). > 5.1M of hectares corresponding organic cultivation.

Corporates

> +56k people that work in the cosmetics industry (5).

Public sector

> 92% of the budget that the government gives to farmers goes to subsidies and the remainder to technical assistance that could help develop the necessary skills.

Indirectly impacted stakeholders

People

> +40k people that get sick due to chemical intoxications (6).

Gender inequality and/or marginalization

> 2.7M hectares of agricultural use by ethnic groups, from which 86.9% correspond to forests (12).

Planet

> 56.2% of total national land with forest vocation, translated into +60M hectares, followed by 17.7% agroforest vocation, and 13.2% of national land for agriculture (8).

Public sector

> The agroforestry strategy, or land use with non-timber resources, is under the Strategy for Control of Deforestation and Forest Management in Colombia and the Colombian Strategy for Low Carbon Development, promoted by the MinAmbiente (9).

Outcome Risks

> Overexploitation of land by demanding practices of bio-inputs extraction.

> Small producers of non-technical bio-inputs can be displaced.

> Gender inequality and/or marginalization risk: It can affect in certain regions the cultural or spiritual value that the land has for indigenous communities due to the >exploitation of bio-inputs.

Impact Risks

"Execution risk: > Lack of sustainable forest management plans definition technical assistance and implementation in potential territories that can benefit from the technology. > Specify that the supply of raw material is constant and available over time, overcoming learning obstacles and possible climate impacts."

"Stakeholder participation risk: > Expensive R&D for international commercialization permits and value-added product transformation."

"Drop off risk: > Due to lack of knowledge of non-timber activities or lack of technical assistance to adopt new species to be cultivated. > If there are few actors such as suppliers or distributors, the supply chain would be unbalanced and therefore affected, encouraging more actors to abandon the initiative. This rick would evidence the market power that individual players could have."

"External risk: > Unclear regulations, restrictions on access to target markets, long and inconsistent approval processes, intellectual property mechanisms, and regulatory standards. > Lack of sufficient demand due to given the ignorance of consumers of the benefits of these products. > There may be international competitors who are more knowledgeable and can better take advantage of the opportunities the market is offering, with a lower price for consumers."

"Unexpected impact risk: > There could be a risk of eroded land or difficult conditions for the selected species to plant. > Drastic changes in the environment that are not accounted for in big data, such as earthquakes, tsunamis, and other natural disasters. "

Gender inequality and/or marginalization risk: > Both rural women and indigenous communities may not have the necessary knowledge or technical education.

Impact Classification

C—Contribute to Solutions

What

Positive and important outcome due to market expansion

Who

Underserved stakeholders working in the NTFB value chain.

Risk

Pollution of the planet and cause of diseases due to the toxicity of the chemical elements used

Enabling Environment

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Policy Environment

(Productive Transformation Program (PTP)): Aims to propose by 2032 Colombia as a world leader in the production and export of natural ingredient-based high-quality cosmetics and household cleaning products with sales of +USD$ 2.2B (+ USD$ 780 in exports,) generating +40.000 jobs (21).

(Regulation for Organic production): Describes the principles and guidelines to be followed by operators of production, processing, packaging, labeling, storage, import, and marketing of organic production systems. This is established to guarantee consumers directed processes that comply with regulations under the growing national and international demand for organic production systems (29).

(National Plan of Green Businesses): Defines the guidelines and provide tools for planning and decision-making that allow the development and promotion of both the supply and demand of green and sustainable businesses in the country (32).

Financial Environment

Financial incentives: Bancoldex has a particular program and credit lines for those sectors of the Productive Transformation Program (25). By-law 1377 of 2010, article 2 specifies that the government will grant financial support or incentives to promote forestry activities and agroforestry systems for commercial purposes (26).

Fiscal incentives: Decree 2755 of 2005 states that income related to income from the use of new forest plantations, including guadua, are exempt from income tax.

Regulatory Environment

(Resolution 1348 of 2014, Andean Decision 391 de 1996, 1997, 730 Decree and Law 3570 de 2011): Regulation for the access to genetic resources that encompass the access, define contract requirements, and identifies the national authorities to approve access and exploitation of genetic resources (22).

(Decree 1791 of 1996): The decree for using non-timber forest resources regulates the sustainable exploitation of non-timber forest resources designating the CAR as the authorities that must approve the sustainable management permits (23).

(Law 1377 of 2010): Its purpose is to define and regulate forest plantations and agroforestry systems for commercial purposes. It also specifies that the government will grant financial support or incentives to promote forestry activities and agroforestry systems for commercial purposes (28).

(Resolution 036 of 2007): Regulates the use and the administrative entity of the "Ecological Food Seal" under the Ecological Agricultural Products Control System that seeks to guarantee the sustainability and renewability of the resources and the quality of the environment and the care of human health (30).

Marketplace Participants

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Private Sector

Procter & Gamble Co. acquired the New Zealand skincare company Snowberry, which specializes in natural ingredients, including products such as cleansers, toners, and brighteners (24). Mae Selva, Waya Natural, Özö, EcoHome Kattalei are Colombian ventures that create, produce, market personal care products from natural bio-inputs (26).

Government

The Productive Transformation Program (PTP) of the Government of Colombia aims to achieve that by 2032 Colombia is recognized as a world leader in the production and export of cosmetics, household cleaning products, and high-quality absorbents based on natural ingredients (17).

Multilaterals

The Centre for the Promotion of Imports from Developing Countries has been working with natural ingredients exporters from Colombia. UNCTAD developed a trade facilitation program as an instrument of technical cooperation for the study of natural ingredients.

Target Locations

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References

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    • (1) Instituto Humboldt (2015) - Estado y tendencias de la biodiversidad continental de Colombia. Accessed May 30th 2020
    • (2) DNP (2018) - Forest Economy Studires Estudios within the framework of the Green Growth Mission in Colombia. Accessed May 29th 2020
    • (3) NIH (2018) – Endocrine Disruptors. Accessed May 21st 2020
    • (4) Semana (2018) – Más de un millón de personas viven en el bosque nativo. Accessed May 22nd 2020
    • (5) Dane (2019) – Encuesta anual manufacturera (EAM) Accessed May 21st 2020
    • (6) INS (2018) - intoxicaciones por sustancias químicas colombia 2017. Accessed May 22nd 2020
    • (7) MinAgricultura (2015) Colombia's portential for forestry commercial explotation
    • (8) Semana Sostenible (2019) Forests have half of the national land
    • (9) MinAmbiente (2018) Enviromental actions promoted by the National Government
    • (10) DANE (2016) 7th Presentation from the National Agricultural Census
    • (11) Semana (2015) Oriniquia the future Colombian food pantry
    • (12) MinAgricultura, DANE (2016) Land use, National Agricultural Census
    • (13) DANE (2019) UPA caracterization
    • (14) EMIS (2020) Colombia: Food & Beverage Sector 2020/2021
    • (15) Análisis de la competitividad del sector de cosméticos e ingredientes naturales (2018)
    • (16) Fedeorgánicos (2012) General presentation of the sector
    • (17) Cluster Bogota Comestics (2017) Natural Products
    • (18) Infinitum (2020) - Organic Personal Care and Cosmetics Products Market. Accessed June 21st 2020
    • (19) Andi (2020) – Industria Cosmética, aseo, absorbentes y plaguicidas de uso doméstico. June 21st 2020
    • (20) CapitalMind (2019) – The beauty market makes its move to organic. June 21st 2020
    • (21) Colombia Productiva (2019) - Evaluación y reformulación estratégica del Plan de Negocios del sector de Cosméticos y Aseo. Accessed May 22nd
    • (22) MinAmbiente (2020) – Recursos genéticos. Accessed June 20th 2020
    • (23) ] MinAmbiente (1996) – Decreto 1791 de 1996
    • (24) Infinitum (2020) - Organic Personal Care and Cosmetics Products Market. Accessed June 21st 2020
    • (25) Bancoldex (2018) – Programas especiales Bancoldex. Accessed June 20th 2020
    • (26) Marca Colombia (2020) - Cinco emprendimientos de maquillaje y cosmética natural en Colombia. Accessed June 6th 2020
    • (27) National Planning Department (2019) - 2030 Agenda in Colombia
    • (28) Law 1377 of 2010, Colombian Congress
    • (29) MinAgricultura (2008) Regulation for Organic production
    • (30) MinAgricultura (2007) Resolution 00036 of 2007
    • (31) IADB (2016) Impact of Early Stage Equity Funds in Latin America
    • (32) MinAmbiente (2017) – Plan Nacional De Negocio Verdes (2018 – 2022)