Brazil - Sustainable business development in the Amazon with Farinha de Mandioca
Fundacacao Amazonas Sustentavel
Although incredibly important to the overall health of our planet, the Amazon river basin continues to be threatened by illegal logging, poaching, natural resource extraction, and pollution. Over the last ten years, FAS (Sustainable Amazonas Foundation) has led conservation efforts in the Amazon focusing on the sustainable economic development of the natural resources and indigenous river communities. Through initiatives, FAS has sought to balance the economic needs of the communities inhabiting the rainforest with the need for ecological conservation.
What was the problem?
FAS has an expansive reach across 16 Conservation Units (UC) of Amazonas, assisting 9,597 families and benefiting over 40,000 people. Their current efforts to increase the quality of life and income for the communities along the Amazon river include supporting several value chains. One of the most popular is farinha de mandioca.
Farinha de mandioca is kind of flour and staple on every Brazilian table alongside rice and beans. The riverside communities grow their own mandioca roots and process the farinha using a very labor-intensive and artisanal process of finishing the farinha in Uarani style. The Uarani style, also known as ball flour, is unique to the reserve within Mamirauá. The Uarani flour is shaped like a ball to comememorate the fish eggs of the Amazon region.
The BOTFL team was asked to analyze the profitability and short- and long-term sustainability of the Ribeirinha business. Ribeirinha is a Farinha de Mandioca Uarani style farinha product produced by community members of the Sustainable Development Reserve (RDS) of Mamirauá and sold to restaurants, grocers and wholesalers in Manaus through a partnership with FAS. The Ribeirinha business is poised to contribute to local income generation and sustainability of Amazonas.
What did we do?
The BOTFL team researched and analyzed the business case and investment plan to expand farinha production businesses in Amazonas under the high-end Ribeirinha brand. The team investigated potential markets for farinha while researching requirements in terms of quality, lead times, and commodity prices. The current market requirements for the processing and sale of farinha have created the need for geographic designation to distinguish the Uarini style from other types of farinha. The designation may create a short-term competitive advantage, but is essential to compete long term in this market. Through research, detailed analysis, and in-country interviews the team confirmed the costs for the farmers, such as raw inputs, fertilizer, labor, equipment, and infrastructure. The team identified where costs could be minimized and investments in quality of life were needed.
What was the turning point?
When the team visited Ipapachu, a small community outside of Tefe, they saw what a labor-intensive and social activity the production of farinha de mandioca has become within the community. Neighbors and family came back from other communities and cities to help. As Sarah Chandler noted, “the artisanal production of farinha de mandioca is a way for your whole family and the community to band together to support each other while catching up with your friends. We knew that our recommendations need to reflect and honor this very social artisanal production process.”
Through extensive in-country interviews and evaluation of the entire supply chain from farmers to customers for farinha, the team discovered that farmers capture most (64%) of the income from the value chain. Families and communities selling to the Ribeirinha association experience a net increase of at least 25% or R$ 0.60 per kg for the farmer's income. FAS’ role in Ribeirinha’s profitability helps sustain the financial health of the business, representing a 14.8% subsidy.
What was the recommendation?
The BOTFL team recommended five areas that could benefit the long term sustainability of the Ribeirinha business. Those areas include recommendations for establishing and maintaining working capital, key performance indicators to track progress of the business, best practices for growing farinha de mandioca, marketing and targeting customer strategies, and social impact improvements to increase the quality of life of the producers of farinha de mandioca.
- Working Capital Management - The Ribeirinha business needs to use FAS’ capital better or build working capital to allow the business to rent inventory space in Manaus, shorten lead times, and build a rainy-day fund for equipment servicing.
- Key Performance Indicators (KPIs) - FAS tracks over 300 different KPIs across their organization, to actively acccess the health of the business FAS should focus on Ribeirinha sales, contribution margin, on-time delivery, and inventory turn over.
- Farinha de Mandioca Growing Best Practices - The academic and in-country experts on farinha de mandioca have consistent recommendations on best practices that can be shared with communities through seminars and other touchpoints with FAS.
- Marketing and Targeting Customers - The premium boxes of Ribeirinha do an outstanding job of telling the story of the Amazon people and stand out against the traditional plastic bag packaging. This look and feel should be carried through consistently to the plastic bag version. The current customer targeting strategy should be adjusted to align with the profitability of each product.
Social Impact Improvements - Farinha de mandioca processing has detrimental health consequences that effect communities early in life such as back problems from carrying the farinha. Technological improvements like carrying packs that better distribute the weight could have positive health and social impact for the producers of farinha.
What ended up happening?
The FAS team agreed and were satisfied with the team’s recommendations. Over time, the Ribeirinha business could provide an increase in a steady source of income for the agriculture communities in the Uarini area. Furthermore, the Ribeirinha business could expand to include other products from Uarini and enable the communities and FAS in their frontline conservation efforts in the Amazon.