University of Hohenheim Institute of Agricultural Economics and Social Science in the Tropics and Subtropics (490) Department [Social and Institutional Change in Agricultural Development (490c)]
The potential of Acrocomia value webs for rural development and bioeconomy in Paraguay
Master Thesis
by
Ricardo Vargas Carpintero Submitted in August 2018
1st Supervisor: Prof. Dr. Regina Birner 2nd Supervisor: Prof. Dr. Iris Lewandowski
This work was financially supported by the foundation Fiat Panis
Reutlinger Straße 12 70794 Filderstadt
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Table of contents Abstract 4 1. Towards an inclusive bioeconomy for poverty alleviation– Fiat Panis 5 2. Introduction 6 2.1.Objective 8 3. Literature review 9 3.1.Vegetable oils 9 3.2.Acrocomia: a multi crop and native palm to Latin America 10 3.3.Bioeconomy and biomass-based value webs 25 3.4.Family farming in Paraguay 33 4. Research design 36 4.1.Conceptual framework: 36 4.2.Research area 36
4.3.Data collection 39 4.4.Data analysis 40 5. Analysis of Acrocomia value chains and webs in Paraguay 42 5.1.Acrocomia fruits value web in Paraguay 42 5.2.Traditional, non-commercial uses of Acrocomia fruits 43 5.3.Industrial, commercial uses of Acrocomia fruits 45 5.4.Structure of the Acrocomia value chains and webs in Paraguay 49 5.5.Characterization of actors and linkages in the value web 51 6. Value web linkages and governance 82 6.1.Actors 82 6.2.Horizontal linkages 83
6.3.Vertical linkages 83 6.4.Supporting services 84 6.5.Enablers 84 1 Beneficiario COLFUTURO 2015
6.6.Public sector 84 7. Market and economic analysis of the value web 90 7.1.Supplied quantities 80 7.2.Products 92 7.3.Markets 93 7.4.Prices 96 7.5.Added value 98 7.6.Net profit distribution 104 8. Upgrading the Acrocomia value web 109 8.1.Actual state 109 8.2.Identification of pro-poor upgrading strategies 110 8.3.Process upgrading: Plantations 116 8.4.Process upgrading: Harvesting 117 8.5.Product upgrading: Kernel oil as an edible oil 118 8.6.Product upgrading: Activated carbon from endocarp 118 8.7.Product upgrading: Pulp flour 119 8.8.Functional upgrading: case study San Pedro del Paraná 120 9. Conclusions and further recommendations 127 10. References 136 11. Appendix 141
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Acknowledgments
Firstly all my thanks and love to my family, who has supported me constantly in every step of my life. This work is the result of the collaboration, ideas and discussions with brilliant minds and generous persons that I have met during my master studies. Thanks to Lina Mayorga, my soulmate, who started this adventure with me, with whom I have the greatest conversations and who contributed significantly to the realization of this work. Thanks to the Prof. Regina Birner for your interest in supervising my thesis and sharing your priceless knowledge with me through different lectures, which inspired me to link the bioeconomy with rural development. Thanks to Johannes Mössinger and Athena Birkenberg for your ideas, comments and energy. Thanks to the Foundation Fiat Panis for supporting my research stay in Paraguay and even more, for your commitment with Latin American countries. I deeply thank the contribution of every single person who offered me help in Paraguay. From the farmers, whose kindness is appreciated, to the industrial actors and public servers who attended my questions and provided me valuable information. All kilometers traveled and the hundreds of minutes for the interviews are now condensed in this work, which I really hope serve as a baseline for further development. Sincerely thanks to the Pastoral Social San Pedro del Paraná for your continuous support during my research stay in Paraguay, for their work in pro of the rural community and sharing their values with me. This visit connected me again with the reality of Latin America rural areas and the importance of finding own alternative pathways and recognizing territorial and bottom-up approaches based on particular relations between rural inhabitants and native plants. This work provided me an opportunity to reflect on my studies of bioeconomy and to think on alternative futures.
3 Beneficiario COLFUTURO 2015 Abstract
Acrocomia ssp is a native palm tree in Latin America which produces rich oil-bearing and drupaceous fruits traditionally used as food and fodder. Acrocomia fruits are composed on a dry matter basis by epicarp (19%), mesocarp (42%), endocarp (31%) and kernel (8%), varying among species and biophysical conditions. Considering a plantation system of 400 palm trees per hectare, suitable to agroforestry, high yields of fruits (20 t ha-1) and oil (2.5 t ha-1 of kernel and pulp oils) are projected. In addition, remaining fruit components have several uses, which makes Acrocomia a promising crop in the bioeconomy. Through industrial processing, oil is extracted from pulp and kernel (lipids 45-60% and 61-68% dry matter). Husk, endocarp and pressed cakes result as by-products. Acrocomia oils have industrial applications in pharmaceutical, cosmetics and food sectors as well as a biofuel source. Husk and shell are used as solid fuels and potentially as input for activated carbon and charcoal. Pulp flour can be used as a food product while kernel and pulp cakes are utilized in animal nutrition. Further applications are being progressively studied, as well as agronomic aspects, cultivation, breeding and crop management. Paraguay, an agriculture-based country located in the Neotropics, is a natural habitat of Acrocomia. This wildly growing palm gained economic importance by mid of the 20th century with the emergence of industry for oil extraction. It is considered as an alternative crop to diversify income sources for peasant and smallholder family farmers. They represent 90% of farms in Paraguay and increasingly face multiple socio- economic challenges associated to agribusiness activities. Using the approach of biomass value web as a multidimensional and holistic framework, this research aims to analyse the existing Acrocomia value chains in Paraguay, identifying opportunities and constraints for further upgrading. Complementary, a bottom-up Acrocomia adoption initiative in the region of San Pedro del Paraná (Dep. of Itapúa) is studied. Through an economic analysis of a small-scale (pre-) processing system of Acrocomia fruits, different scenarios for local value addition are built, integrated with an outgrower scheme for the development of inclusive and pro-poor biobased value chains.
4 Beneficiario COLFUTURO 2015 1. Towards an inclusive bioeconomy for poverty alleviation– Fiat Panis Bioeconomy emerges in a context of complex and increasing socioecological challenges. In the case of the global south, rural poverty is one of those wicked problems that affect millions of elderly, women, children and men. In the specific case of Paraguay, 39.7% of the rural population faces poverty and more than 300000 rural inhabitants live in conditions of extreme poverty, according to the DGEEC (2016). Family farming represents around 90% of the farming units, with a land size lower than 50 hectares (CAN 2008). There is an urgent need to find strategies of livelihood diversification. In this study, using the rationale of inclusive value chains, it is analyzed the case of a traditional productive sector based on a native multi-purpose crop called Acrocomia. Smallholder farmers play an active and crucial role in this value web through the collection and provision of raw material for industrial processing. A peculiarity of this value chain is that it relies on wildly growing Acrocomia palm trees. It is estimated that more than 8000 family farms benefit from the income received for the collection and trading of these oil- rich fruits.
As part of the development programs, local authorities in Paraguay see the relevance of orienting actions towards the reduction of rural poverty and extreme poverty. Inclusive bio-based value chains offer opportunities to link smallholder family farmers in conditions of vulnerability with a growing and local bioeconomy, allowing them to perceive alternative income sources. In this way, family farmers can meet their basic needs and guarantee their economic access to food. Furthermore, Acrocomia is appropriate for agroforestry systems, in which staple food crops such as cassava, maize and beans can grow together with palm trees.
Upgrading the value web with a focus on smallholder family farmers can guarantee the inclusiveness of them as primary producers. Through functional upgrading strategies such as the small-scale (pre-) processing of Acrocomia fruits, there is a potentiality to add more value locally and improve the economic conditions at the first stage of the value web.
Participation of multiple stakeholders is needed to identify, design and implement pro- poor actions. In the case of the Acrocomia value web and given the conditions of this sector, inclusion of smallholder family farmers represent a win-win situation for processors and other actors. For this reason, the analysis conducted in this study is
5 Beneficiario COLFUTURO 2015 holistic, with the aim to understand the sector from multiple perspectives and involving different actors, from primary producers to industrial processors.
Bioeconomy in the context of developing areas serves promising possibilities for economic development that supported by inclusiveness offers social benefits for peasants and smallholder family farmers.
2. Introduction Acrocomia is a native palm tree that grows wildly throughout tropical and subtropical areas of the Americas, from Mexico to the North of Argentina (Cardoso et al., 2017, Plath et al., 2016, Colombo et al., 2017), with high potential for the bioeconomy. Its oil-bearing and drupaceous fruits are composed of “tough and fibrous epicarp, pulp and nut consisting on lignified endocarp and kernel” (Evaristo et al., 2016 cited Lorenza 2010) that offer multiple possibilities to create value chains and supply local and international markets. Acrocomia fruits have high oil content in both pulp and kernel; according to the chemical composition of these parts, lipids represent 45%-60% and 61%-68% dry matter of pulp and kernel respectively (Evaristo et al., 2016), although there are variations among species and biophysical conditions. Acrocomia oils can reach the market in different ways due to the different characteristics of pulp and kernel oils (Cardoso et al., 2017). In the food sector Acrocomia fruits can be processed into pulp flour, cooking oil among other food inputs (Cardoso et al., 2017).
Given the high yield of fruits per plant and the high oil content and properties, Acrocomia is considered as a raw material of great interest for the production of biodiesel (Evaristo et al., 2017). Oils from Acrocomia fruits are also employed in the cosmetic and pharmaceutical sector (Cardoso et al., 2017). Residual materials from oil extraction processes like husks and shells can be used as solid fuels for combustion and the production of steam (Cardoso et al., 2017, César et al., 2015). The production of activated carbon and charcoal has been tested at lab scale through hydrothermal carbonization processes (Correa el al., 2014). Residual pulp and kernel cake can be used for animal feed, bioethanol production (César et al., 2015) or as fertilizer (Cardoso et al., 2017). Simultaneously to the advances on industrial applications of Acrocomia, agronomic aspects and research on cultivation, breeding and crop management have increased recently. Plath et al., (2016) highlight the importance of a “cautious, comprehensive and
6 Beneficiario COLFUTURO 2015 locality-specific assessment of species’ fundamental ecological and agronomic requirements” to succeed in the establishment of novel biomass production systems as a prerequisite for the development of socially co-beneficial production models.
Paraguay is a natural habitat of Acrocomia, palm tree used by local indigenous people (Markley 1956) and consumed traditionally for food specialties, animal feed or medicine (Poetsch et al., 2012). By the mid of the 20th century the industrial oil extraction expanded and since then Acrocomia has gained economic importance nationally (Markley 1956). Paraguay is an agriculture-based country where 90% of the farming systems are classified as family farming. San Pedro del Paraná is a district located in the South of Paraguay (department of Itapúa) with high poverty levels and a large share of population working in agriculture, mainly peasants and smallholder family farmers. They predominantly produce manioc and maize and face a growing pressure associated to agribusiness activities, which justifies the need to find alternative income sources (Mössinger 2014).
Acrocomia is seen as an opportunity for smallholder family farmers through small-scale production models, which foster their participation in value chains and rural development and enable them to diversify their income sources (Poetsch et al., 2012). Using the approach of biomass value webs as an extension of the value chain concept (Scheiterle et al., 2017, Virchow et al., 2016), this study aims to analyze the multiple Acrocomia value chains and their potential contribution to rural development and bioeconomy in Paraguay. Decentralized (pre-) processing of locally produced biomass from Acrocomia can contribute to local and rural development. Understanding specific conditions, market aspects, actors, business linkages and conversion processes within the Acrocomia value web in Paraguay, allows to identify opportunities and challenges to for inclusion of smallholder farmers in existing and potential value webs. This study aims to address uncertainties on the Acrocomia value web in Paraguay, guide actors, enabler institutions and organizations and policy-makers in the identification of upgrading strategies to foster rural development.
7 Beneficiario COLFUTURO 2015 2.1.Objective This study aims at understanding, analysing and evaluating the existing and attainable Acrocomia value chains in Paraguay, the role of smallholder farmers and the possibilities for rural development and bioeconomy. It is employed the concept of biomass value web to study holistically the Acrocomia sector in Paraguay and identify pro-poor upgrading strategies. Through a case study in San Pedro del Paraná, a bottom-up initiative to add value at local level is analysed economically.
The following questions are addressed throughout the research, which include crucial points this study wants to look at:
- Which are the existing Acrocomia based value chains in Paraguay, what products are produced?
- How is the structure of the Acrocomia value web? What actors are involved and what are their characteristics?
- How are the links among actors, what are their strengths and weaknesses?
- What are the price and quantity values in Acrocomia value chains? How are the market dynamics and drivers?
-What is the economic viability of decentralized and local processing units to be integrated in Acrocomia value webs? What are the investment and production costs and potential benefits?
- How can local processing units increase the farm gate price of Acrocomia fruits and intermediates?
This baseline study will provide useful insights and inputs for further research and development of a smallholder-centred bioeconomy for sustainable development. Outcomes and findings of this research will assist local communities, smallholders, scientists, the private sector, policy-makers and NGOs in establishing projects to develop Acrocomia value chains with a pro-poor perspective.
8 Beneficiario COLFUTURO 2015 3. Literature review 3.1. Vegetable oils The production of vegetable oils in the world has increased due to their growing demand for food and fossil fuel replacement (Colombo et al., 2018). According to data from the United States Department of Agriculture (USDA), the production of major vegetable oil has been on average 191 million tons in the last 5 years with an average annual growth of 3.67% (2018). Palm oil represents 34.74% on average of the global production of vegetable oils, followed by soybean oil with 28.25% and rapeseed oil with 14.85% (USDA 2018), what means that only these three vegetable oils represent 77.84%. as shown in Table 1.
Table 1. Share of production of vegetable oils in the world
Vegetable oil Average share of production Olive Oil 1.53% Coconut Oil 1.82% Cottonseed Oil 2.56% Peanut Oil 3.06% Palm Kernel Oil 4.07% Sunflower seed Oil 9.1% Rapeseed Oil 14.86%
Soybean Oil 28.25% Palm Oil 34.74%
Source: USDA 2018 In general, the vegetable oil sector has grown except for a drop in 2015/2016. Palm oil and soybean oil have increased during the last 5 years around 4.5% annually on average, while cottonseed and peanut oil have had the least increment of around 1.5% (USDA 2018) (Fig. 1).
Fig 1. Production of vegetable oils in the world (2012-2017) (Colombo et al., 2018)
The major producers of vegetable oil are Indonesia, China, Malaysia, the European Union, the United States, Argentina, and Brazil. The first three countries represent the 48% of the global production. The share of the American continent is around 25%, being soybean, canola and palm
9 Beneficiario COLFUTURO 2015 oil the main products with a share of 58%, 8%, and 5% respectively (Colombo et al 2018 cited Torres 2013).
The vegetable oil consumption will grow according to the forecast of the USDA due to the population and GDP growth, being the main reason the biodiesel production (Colombo et al 2018 cited USDA 2017 and Byerlee et al 2016). However, this growth in production should be done through diversification of the sources for oil production chosen depending on locality, economic aspects, storage conditions, properties of the oil, soil properties, climate characteristics, and technology, among others. Therefore, interest has arisen in alternative crops such as jatropha, castor bean, and Acrocomia spp (Colombo et al 2018).
3.2.Acrocomia: a multi crop and native palm to Latin America 3.2.1. Elementary description and botanic aspects
Acrocomia is an endemic genus of palm to the neotropics in Latin America, from northern areas of Mexico to the north of Argentina, including some areas of Central America and the Caribbean. It grows wildly and under natural conditions yields more oil than oil palm (Elaeis guineensis) and coconut (Cocos nucifera) (Crocomo and Melo 1996), a reason of its important economic value and potential in the bioeconomy. It belongs to the family Aracaceae (palmae) and its name derives from the Greek “akros” and “kome”, which means 'crown of leaves' (Helderson et al., 1995). Acrocomia is known by several popular names: macaúba, côco-de-catarro, côco baboso (southeast Brazil); mucuja, macajuba, macaiba (northern region of Brazil); gru-gru (Antilles); coyol (Costa Rica, Mexico, Honduras); macauba (Surinam); Mbokajá, coco (Paraguay); corosse (Haití); corozo (Venezuela, Colombia); tamaco (Colombia) (Crocomo and Melo 1996; Jácome de Carvalho et al., 2011; Mössinger 2014). In English is known as macaw or macauba palm, although this name refers usually to the specie Acrocomia aculeata.
According to Cardoso et al., (2017), there is evidence of high genetic variability among populations and individuals. More than 25 species of Acrocomia has been described, but few are accepted, and it is still questionable if those are real species, variations or synonyms. Eight species have an accepted status on The Plant List database, with a high confidence level, based on peer reviewed datasets (The Plant List, 2013): Acrocomia aculeata (Jacq.) Lodd. ex Mart.; Acrocomia crispa (Kunth) C.F.Baker ex Becc.; Acrocomia hassleri (Barb.Rodr.) W.J.Hahn.; Acrocomia media O.F.Cook.; Acrocomia emensis (Toledo) Lorenzi; Acrocomia glaucescens Lorenzi; Acrocomia intumescens Drude; Acrocomia totai Mart. Henderson et al., (1995) indicate that Acrocomia contains
10 Beneficiario COLFUTURO 2015 merely two species: Acrocomia aculeata and Acrocomia hasslerei. According to the authors, the former is widely distributed in drier tropical regions of America, and the latter is limited to cerrado vegetation of Brazil and Paraguay (Henderson et al., 1995 cited Henderson 1994). Some authors have even reduced the number of species through the taxonomic revision of the genus to only one form, i.e Acrocomia aculeata (Crocomo and Melo 1996). This species of Acrocomia is the most extensively distributed throughout Latin America (Crocomo and Melo 1996, Henderson et al., 1995). Taxonomic classification is shown in Appendix I.
Crocomo and Melo (1996) argue that is questionable if the species Acrocomia totai Mart., common in Paraguay and known as Mbokaja or Mbocayá, is a real species or a variation or synonym of Acrocomia aculeata. Differentiation of the species may be a result of adaptation to local geographical and environmental factors (Crocomo and Melo 1996 cited Lopes et al., 1991; Mössinger 2014). In fact, researchers from Brazil propose that Acrocomia aculeata have three distinct ecotypes or subspecies: A. intumescens, A. sclerocarpa and A. totai (Cardoso et al., 2017 cited Pimentel et al., 2011). Markley (1955), who conducted research on Mbocayá palm in Paraguay (Acrocomia totai Mart) mentions that this specie is closely related and not easily distinguishable from A. aculeata. Some scholars list A. totai as a synonymy of A. aculeata (as explained by Jácome de Carvalho et al., 2011; Henderson et al., 1995), while other accept the existence of A. totai as one species of Acrocomia (as pointed out by Cardoso et al., 2017; Markley 1955; Vilela et al., 2016). In a recent study conducted by Vianna et al., (2017) in Brazil, evidences of biometry variation among species of A. aculeata, A. intumescens and A. totai confirm that those species are distinct. Based on this and for the purpose of this study, the author will refer to A. totai as specie of Acrocomia, and the genus Acrocomia will be used instead of another popular name to refer to Acrocomia spp. Macaw palm (Acrocomia aculeata) is a robust and large tall- and single-stemmed palm with a high up to 10-15 meters (Jácome de Carvalho et al., 2011; Balslev et al., 2011). In Paraguay, Acrocomia totai reaches between 8 and 12 meters in height, and sometimes ancient palms reach up to 20 meters (Markley 1955). Acrocomia has a deep and extensive root system (Markley 1956; Jácome de Carvalho 2011). The trunk is cylindrical, occasionally curved or bent and spiny (less frequent in old palms), with 10 and 35 centimeters diameter, up to 50 cm (Henderson et al., 1995; Markley 1955; Kahn and de Granville 1992). Markley (1955) points out that the spines are between 7.5 and 12.5 cm in length (up to 17 cm), arranged in circles close
11 Beneficiario COLFUTURO 2015 to the leaf scars and the persistence on the trunk vary: 'some trees are almost devoid of spines except for a short distance below the crown; others are covered with spines from the base to the crown, and all variations between these two extremes are observed in close proximity to one another' (Markley 1955, p 407). The spines can be also found on leaf sheath, petiole, rachis, and pinnae (Kahn and de Granville 1992). Henderson et al., (1995) describe that the palm has on average 10-30 grayish-green leaves, 2.5 to 3 m in length (up to 5 m) and with numerous leaflets (100 to 114 leaflets on each side of the rachis) (Markley 1955; César et al., 2015). Those are irregularly arranged, giving a plumose appearance to the leaf (Henderson et al., 1995). The crown is dense and has a spherical aspect, with dead leaf basis hanging at the crown's base and covering part of the steam (Henderson et al., 1995; Kahn and de Granville 1992). The inflorescence is interfoliar and yellowish with a long and erect peduncle and infructescence pendent with many branches (Kahn and de Granville 1992).
According to Markley (1956), all species of Acrocomia are monoecious with sexes separate in the flowering cluster. A single plant has between 2 to 8 fruit clusters, from which 250 to 500 fruits hang per cluster (César et al., 2015). Fruits are drupaceous and oil-bearing, with a globose, yellowish-green and smooth aspect and medium to large size (2.5-5 cm diameter). Figure 2:8 illustrates the previously described elements. The fruits are protected by an epicarp that cracks easily at maturity (Henderson et al., 1995). Besides of the fibrous and tough epicarp, the fruit is composed by a mucilaginous and greasy pulp (mesocarp) and a nut or seed, which consists of a hard and lignified shell (endocarp) and oily kernel (Crocomo and Melo, 1996; Barbosa et al., 2016; Markley 1955). Figure 9 illustrates the fruit composition.
Fig. 2 Acrocomia aculeata (Jacq.) Lodd. Ex Mart. (as Acrocomia mexicana Karw. ex Mart., a synonymy); a. General appareance; b. Portions of leaf; c. Fruit from below; d. Fruiting cluster; e. Spathe.
12 Beneficiario COLFUTURO 2015 (http://plantillustrations.org, original source: Standley P and Steyermark J (1958). Flora of Guatemala. Fieldiana: Botany, no. 24)
Fig. 3 Acrocomia spp., in Paraguay (Author)
Fig. 4 Root system of Acrocomia (Left and top-right: author, bottom-right: Jácome de Carvalho et al., 2011)
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Fig. 5 Acrocomia's trunk with and without spines. (Left: Author; center and right: Ciconini et al., 2013)
Fig. 6 Inflorescence of Acrocomia; a. Late blooming (author); b and c. Spikelets containing female flowers at the base (rounded structures) and male flowers (in the form of ears of corn) (Junqueira N, in Vilela et al., 2016)
Fig. 7 Fluit clusters; a. Unripe frits (author); b. Ripe fruits (Junqueira N, in Vilela et al., 2016)
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Fig. 8 Fresh fruits (author)
Fig. 9 Fruit of Acrocomia and components: Epicarp (hull or husk), mesocarp (pulp), endocarp (shell) and kernel or seed ((Fruit photo: adapted from Castro de Oliveira et al., 2017))
3.2.2. Habitat and distribution
Acrocomia aculeata grows wildly isolated or densely in different biomes and soil types, being more abundant in dry places and on clayey and eutroferric soils, although it also grows in sandy and low fertility soils (Machado et al., 2016 cited Motta et al., 2002; Balslev et al., 2011).
Acrocomia is adapted to dry periods and grows in open vegetation on sandy soils, in coastal and open savannahs and woodlands, disturbed areas such as secondary forests and degraded grasslands (Kahn and de Grandville 1992; Henderson et al., 1995; Cardoso et al., 2017; Machado et al., 2016 cited Negrelle et al., 2002). Junqueira de Carvalho et al., (2016) report that the most productive Acrocomia areas are located in fertile soils, according to research conducted by scientists in Brazil.
Acrocomia does not grow in zones with periodic flooding and soil with waterlogging (Junqyeura de Carvalho et al., 2016; Poetsch et al., 2012 cited Martin 1976). A. aculeata is found in tropical and subtropical areas of the Americas with seasonal rainfall between
15 Beneficiario COLFUTURO 2015 1500 to 2000 mm, climatic range from tropical to temperate (temperatures from 15 to 35 ºC) and low elevations ranging from 150 to 1000 m, although there are populations at 1200 m in the Colombian Andes (Cardoso et al., 2017 cited Motta et al., 2002 and Manfio et al., 2012; Henderson et al., 1995; Markley 1955). A. aculeata has the advantage of broad geographical distribution. It occurs from Mexico to Argentina, Bolivia and Paraguay, as well as in the Antilles, and is notably absent in Ecuador and Peru (Henderson et al., 1995).
Plath et al., (2016) estimate that the total potential distribution area for A. aculeata in Latin America and the US state of Florida is about 3.7 million km2. In their work, the authors describe two main distribution areas: 1) Central America including northern Colombia and Venezuela; 2) Southern Brazil and eastern Paraguay (Plath et al., 2016). In Brasil A. aculeata is considered as the palm with the highest dispersion, from north to south although especially concentrated in the Cerrado biome (Jácome de Carvalho et al., 2011; Cardoso et al., 2017). In Paraguay, A. totai is among the most abundant palm, occurring mainly in the central zone of eastern Paraguay (Markley 1956). It is also part of the palm flora in Venezuelan llanos and dry places of the Pantanal of Brazil and Bolivia (Balslev et al., 2011). Figure 10 illustrates the distribution of A. aculeata in the Americas. It is thought that humans have influenced its geographic range since the pre-columbian period (Henderson et al., 1995).
Fig. 10 Distribution of Acrocomia aculeata; a. Distribution; b. Modelled distribution (http://nwfdb.bioversityinternational.org)
16 Beneficiario COLFUTURO 2015 3.2.3. Characterization of the fruit
Variability among natural occurring genotypes of Acrocomia cause variation of composition and physical characteristics (Cardoso et al., 2017 cited Conceiçao et al., 2015). Furthermore, soil fertility and soil usage around the palm tree, agricultural practices, cut of leaves for fodder, leaf-eating pests, moisture regime, fruit maturation and local environment are also factors that cause a high physical and chemical variability and different yield in Acrocomia fruits (Zanatta 2015 cited Amaral 2007 and Santos 2010; Markley 1955; Ciconini et al., 2013). Biometric and morphologic aspects such as the color of peel and pulp, size, weight, number of seeds, among others, vary among Acrocomia species, subspecies, and ecotypes, even in individuals of the same population (Vianna et al., 2017). Figure 11 compares some characteristics of fruits of A. aculeata, A. totai and A. intumescens.
Fig. 11 Morphological variation of fruit size, number of seeds, and epicarp and mesocarp colours among Acrocomia species, sub-species/ecotypes; a. A. aculeata; b. A. intumescens; c. A. totai (Berton in Vianna et al., 2017)
For A. totai or mbocaya palm, the average fruit size is 3 to 4 cm in diameter and height (Markley 1956). Haupenthal et al., (2011) estimate an average transversal diameter of 3.23 cm for A. aculeata fruits. Vianna et al., (2017) report a mean diameter of 2.8 cm for A. totai, lower than the one of A. aculeata (4.1 cm, mean diameter reported by Berton 2013 and Vianna et al., 2017). Fresh mature fruits weigh around 14 grams (35% to 37%
17 Beneficiario COLFUTURO 2015 moisture, up to 42.5%) and air-dry fruits weigh between 9 and 10 grams (8-10% moisture) (Markley 1956; Balick 1979; Barbosa et al., 2016; Vianna et al., 2017).
Main components of Acrocomia fruits in a fresh fruit basis are the pulp (mesocarp) and shell (endocarp), which represent about 40% and 32% respectively. Hull is about 19% of the fruit whereas kernel is the smallest part, with a share of 9% (see Figure 11). Average distribution of the fruit components and their average weight per fruit are shown in Table 2 and summarized in Fig. 11.
Table 2. Distribution of Acrocomia fruit components according to different studies
Component (%) a b c d E f g h i j k l m mean SD
Epicarp (Husk) 18.1 17 24.1 19.9 18.7 17.3 18 16.5 18 23 19.1 21.4 20.8 19.4 2.3
Mesocarp (Pulp) 44.9 35.7 39.6 34.4 49.1 40 36 48.5 36 46.7 49.8 44.0 41.1 42.0 5.3
Endocarp (Shell) 28.3 35.8 29 34.2 25.7 32 36 26.2 36 23.8 24.3 30.8 38.1 30.8 4.7
Kernel 8.7 9.2 7.3 11.5 5.9 11.4 10 7.7 10 6.3 6.2 3.8 6.2 8.0 2.2
a. Markley (1956). Fresh fruit basis, moisture content 35% b. Markley (1956) cited Range (1930) and Landmann (1951). Mean of observations from other researches on A. totai air- dried fruits to different moisture contents c. Silva and Andrade (2011) cited Rettore and Martins (1983), observations for A. aculeata fruits d. Silva and Andrade (2011) cited Hernández and Pitre (2005), observations for A. aculeata fruits e. Ciconini et al., (2013). Average of A. aculeata fruits from the Cerrados and Pantanal biomass in Mato Grosso do Sul, Brazil. Mass weighed using an analytical balance. Moisture content not specified. f. Haupenthal et al., (2011). Observations for A. aculeata fruits. Moisture content not determined. g. Büttner (2009) cited Agroenergías S.L.R (2009) h. Zanatta (2015) i. Mössinger (2014) cited Bohn (2009) j. Evaristo et al., (2016a) cited CETEC (1983). Dry basis k. Lescano et al., (2015) l. Lescano et al., (2015) cited Hiane et al., (2006) m. Lescano et al., (2015) cited Chuba et al., (2011)
Water content in fresh fruit is between 35 and 42%, and is higher in pulp and husk than kernel and endocarp (Markley 1956; Evaristo et al., 2016b; Vianna et al., 2017). Moisture varies during the fruit formation, containing more moisture in a green stage than intermediate and mature phases (César et al., 2015 cited Amaral 2007). It hampers the oil extraction and facilitates the growth of microorganisms that deteriorate the oil quality (Ciconini et al., 2017). Various scientists consider Acrocomia as a rich-oil palm.
18 Beneficiario COLFUTURO 2015 Total oil content in the whole Acrocomia fruit is about 24.1% in a dry matter basis, reaching values up to 34% (Evaristo et al., 2016b; de Carvalho et al ., 2013 cited Lopes and Steidle Neto 2011). Oil content in the fruit is concentrated in pulp, around 44% and kernel, about 60% on a dry basis. These values are the average from manifold sources. Oil content, same than moisture, varies along fruit development and is influenced by the harvesting time, post-harvest processes and storage conditions (Evaristo et al., 2016; Lombardi and Caño 2016; Silva et al., 2017; Montoya et al., 2016). Table 3 summarizes the oil content in pulp and kernel.
Table 3. Oil content in pulp and kernel
Oil content a b C d e f g h I j mean SD (%)
Pulp 25.1 55.9− 43.8− 24.1 27.9 42.0 45.0− 23.6 37.9 61.9 40.6 14.5 69.9k 51.8k 60.0k Kernel 63.5− 55.2− 55.7 61.5 66.7 65.0 61.0− 47.0 56.9 56.3 59.6 5.9 68.9k 58.0k 68.0k a. Ciconini et al., (2013). Average of A. aculeata from the Cerrados and Pantanal biomass in Mato Grosso do Sul, Brazil. Dry basis b. Ciconini et al., (2013) cited Cetec (1983). Moisture content not specified. c. Crocomo and Melo (1996) cited Novaes (1952), moisture content lower than 10%. d. Markley (1956) cited Range (1930), Landmann (1951). Mean of observations from other researches on A. totai air-dried fruits to different moisture contents e. Markley (1956) cited Markley et al., (1952). Moisture content lower than 5% in both kernel and pulp. f. Evaristo et al., (2016b). Moisture content not specified. g. Evaristo et al., (2016b) cited de Lanes et al., (2014), Motoike et al., (2013), Scariot et al., (1991). Dry basis h. Lescano et al., (2015). Moisture content not specified. i. Berton (2013). Dry basis j. Machado (2014) cited Rettore and Martins (1983). Mean of values calculated by Rettore and Martins (1983). Dry basis. k. Average of upper and lower limits are used to calculate the general mean
In kernel oil, lauric acid is predominant (38-45%), whereas, in pulp oil, oleic acid has a larger share (63-65%) among fatty acids (del Río et al., 2016; Poetsch et al., 2012; Cardoso et al., 2017). Pulp oil has higher thermal stability than kernel oil (Cardoso et al., 2017 cited del Río et al., 2016). Kernel and pulp oils can be used in cosmetics, pharmaceuticals, food, and bioenergy sector, and by-products generated such as pressed cakes can be used for animal nutrition, endocarp for the production of activated carbon or as solid fuel, same than husk (Ciconini et al., 2013, Plath et al., 2016).
19 Beneficiario COLFUTURO 2015 3.2.4. Fruit yield and productivity estimation
Acrocomia reaches a productive stage around 4 to 6 years after germination (César et al., 2015 cited Manfio et al., 2012). The production cycle of Acrocomia fruits lasts between 12 and 14 months from flowering until fruit maturity (César et al., 2015 cited Pimentel 2013). It occurs from September to January throughout Latin America and from March to June in the Midwest region of Brazil; from January to March takes place the highest production peak (César et al., 2015 cited Pimentel 2013). During this period the fruits detach naturally or manually and are collected. There is a decreasing production cycle every three years and the production life cycle may last over more than 60 years and up to 100 years (César et al., 2015 cited Borcioni 2012; Poetsch et al., 2012).
Yield of Acrocomia vary largely among trees (Ciconini et al., 2013; Markley 1956). In a research conducted by Ciconini et al., (2013) in Brazil, fruits from wild A. aculeata trees of two different biomes were studied and characterized. According to their results, palm trees in the Cerrado and Pantanal biomes have on average 3.8 and 3.7 bunches per palm respectively, although these values present a high variability. The authors report trees with up to 13 bunches per palm. Markley (1956) indicates that wild A. totai trees in Paraguay have on average five bunches per palm and ranging from 3 to 8. These values are among the range observed by other researchers in Paraguay and Brazil (3 to 5 bunches and 2 to 8 bunches per palm respectively), as reported by Markley (1956) and César et al., (2015). However, there are isolated trees with up to 17 bunches of fruit and very old and immature palms have none or at most two bunches (Markley 1956). César et al., (2015) suggest an average of 5 bunches per palm.
Three different yield scenarios are set up based on the values from scientific literature about the number of bunches per palm and fruits per bunch fruits per palm (see Appendix
I).
According to the estimations, in a low-yield scenario Acrocomia palm is expected to produce between 5.7 and 25 kg of fresh fruits; in a mid-yield scenario, up to 50 kg of fresh fruit would be produced and in a high-yielding scenario, fruit production would reach about 95 kg per palm tree. Some reports on Acrocomia yield in Paraguay describe a productivity between 20 to 30 kg per palm, up to 50 kg (Markley 1956). Other conservative estimations calculate 10 kg of dried fruits (around 16 kg of fresh fruits) per palm tree (Balick 1979). Comparison of estimated productivity in Brazil and Paraguay
20 Beneficiario COLFUTURO 2015 reflects a higher yield per palm tree in Brazil, with values above 60 kg and up to 125 kg per palm, whereas in Paraguay the range oscillates from 16 kg with a maximum of 67 kg per palm (Mössinger 2014 cited Burkhardt 2014).
A cultivation arrangement of 400 palms per hectare in a row spacing of 5 m x 5 m is suggested by some scholars as an appropriate plant density to allow the establishment of agroforestry systems such as agrosilvipastoral, silvopastoral and agrisilviculture (Ciconini et al., 2013; Mössinger 2014 cited Teixeira et al., 2011; Nair 1985). Accordingly, fresh fruit production in a low-yield scenario reaches maximum 10 t ha-1, approximately 20 t ha-1 in a mid-yield scenario and circa 40 t ha-1 in a high-yield scenario (see Table 4).
Table 4. Fresh fruit Acrocomia fruit yield per hectare
Parameter Low-yield Mid-yield scenario High-yield scenario scenario
Fresh fruit mass per 2.3−10.2 ≥ 10.2−20.5 ≥20.5−38.6 hectarea (t ha-1)
a. Assuming 400 palm trees per hectare. Own calculations based on Table 3.
As found in the literature, estimations on Acrocomia productivity vary largely and several factors affect it, such as genetic variability, geographic and climatic conditions as well as agricultural practices. Evaristo et al., (2016b) conclude that projections on yield correspond to natural populations given the non-domesticated status of Acrocomia. Therefore, there is high potential to increase productivity.
3.2.5. Acrocomia value chains
There exist different traditional uses of Acrocomia by local communities (Plath et al., 2016). Among examples of small-scale industry applications of Acrocomia, Balick (1990) highlights the production of Coyol wine or palm sap wine. In this case, fruits are not the raw material but the trunk. In Brazil, the pulp is used for the production of pulp fluor, which is further utilized in bakery applications and elaboration of ice creams (Ciconini et al., 2013). Soap is a common product elaborated from kernel oil (Ciconini et al., 2013). Direct consumption of fresh fruits and nuts is also reported (Oliveira et al.,
21 Beneficiario COLFUTURO 2015 2012). Adult cattle ingest the fruits and regurgitate the nut (seed and endocarp) with portions of epicarp and/or mesocarp (Scariot 1998). The primary commodities produced from Acrocomia fruits are kernel and pulp oil (Plath et al., 2016).
According to Plath et al., (2016), Paraguay and Brazil lead the implementation, and development of Acrocomia cultivation, Acrocomia-based value chains and marketing. In Paraguay, the industrial processing of Acrocomia fruits started around seven decades ago (Markley 1955; Plath et al., 2016; Ciconini et al., 2013). It relies on extraction of wildly growing palm trees due to the lack of technical knowledge on cultivation and domestication of the species, which limits the sector (Plath et al., 2013). The authors estimate that Paraguay has around 60000km2 of highly suitable areas to grow Acrocomia, which would provide enough raw material for the local oil industry (Plath et al., 2013).
Plath et al., (2016) points out that the establishment of Acrocomia value chains based on commercially managed Acrocomia plantations is in an early phase of development, as most of the existing plants occur naturally.
3.2.6. Acrocomia Value Chain in Paraguay McDonald presents the history of the Acrocomia industry in Paraguay and how from a slow start in the 1940s, the industry started to grow. Mac Donald pointed out the challenge of the industries concerning the supply of the fruit and their low productivity and explains how the Acrocomia industry is slowly left behind to specialized in the use and extract of cash crops because of logistic and economic reasons (2007).
McDonald realized a characterization of the value chain of the Acrocomia in Paraguay (2007) that is shown in Figure.12, Mc Donald identifies three stages of the value chain and makes a first characterization with the names of companies involved, prices, the capacity of the companies in the industry stage, and products. He identified some institutions that work in this value chain as the National Institute of Agriculture (IAN) and the National University of Asunción (UNA).
Fruit collecting Industry Markets
•Companies •Companies •Products •Distance •Volume •Prices •Capacity •Equipment
Fig. 12 Value Chain in Paraguay (author based on McDonald 2007)
22 Beneficiario COLFUTURO 2015
Loup (2017), made a project proposal that aims to have seedlings with a focus on the industry stage of the value chain, with some information of the palms cultivation and harvesting and some benefits and incentives for the farmers to overcome the challenge of lack of supply for the industry.
As shown, the research in the identification and characterization of the value chain of Acrocomia in Paraguay is still in his infant phase although it has been established for more than 70 years. A deeper focus in the first stages is needed: the cultivation, harvesting and collecting of Acrocomia fruits that allow the industry to have a higher productivity and a stable supply of the fruits.
3.2.7. Cultivation Acrocomia palm grows wildly and spontaneously in areas where native forests have been cleared, as described by Stoffel (2006). It is still an undomesticated crop whose 'cultivation is not yet in place and its exploitation relies mostly on extractive activities' (Cardoso et al., 2017, p 573; Stoffel 2006). Domestication programs might last one decade as Acrocomia is a perennial plant, which demands the use of efficient selection techniques to accelerate the breeding process and increase the genetic gain to possibly achieve yield improvements (Cardoso et al., 2017). Crocomo and Melo (1996) point out that A. aculeata is propagated only by seed and this represent a major challenge because of issues such as seed dormancy. Increasing research efforts in recent years have brought significant progress in the area of propagation, seed germination, seedling production, and breeding. Characterization of genetic variability, identification of seed dormancy factors, establishment of germoplasm banks and experimental areas for genomic selection as well as the development of a patented protocol to overcome seed dormancy with a germination rate around 80%, are among the significant advances towards crop domestication (Cardoso et al., 2017 cited Motoike et al., 2007, Conceição et al., 2015). Further exploration is necessary in aspects such as ecophysiological requirements and yield variability, potential performance under cultivation conditions, crop management, pest and diseases control, post-harvest processes, efficient fruit processing and socio- economic benefits, given the scarce knowledge in these areas (Cardoso et al., 2017; Plath et al., 2016).
23 Beneficiario COLFUTURO 2015 Acrocomia is considered as a sustainable and alternative oil source in a context of increasing demand for plant oils and arising criticism to conventional vegetable oil sources such as the African Oil Palm (Elaeis guineensis Jacq.) and soybean, because of ecological and social negative impacts (Poetsch et al., 2012; Plath et al., 2016). Plath et al., (2016) highlight that 'a sustainable deployment of A. aculeata requires a precautious, evidence-based approach' (Plath et al., 2016, p 186). The authors argue that a broad and locality-specific assessment to identify ecological and agronomic requirements is fundamental to the success of novel biomass production pathways (Plath et al., 2016). Consequently socially co-beneficial production models need to be explored to ensure social acceptance, adoption, and sustainability (Plath et al., 2016).
Agroforestry is a cultivation system suggested by different authors as suitable with Acrocomia. Manifold ecological and socioeconomic benefits are mentioned as potential outcomes of agroforestry systems (Cardoso et al., 2017). Such systems might bring options to improve and diversify livelihoods and foster smallholder inclusion and participation of small farms in rural development (Poetsch et al., 2012; Cardoso et al., 2017). One of the main challenges in the cultivation of Acrocomia and adoption by farmers is the extended period that it takes to reach a productive stage, which is a typical issue when developing value chains based on tree products (Cardoso et al., 2017). Therefore, it is crucial the design and implementation of agricultural and financial strategies to overcome the temporal gap between investment and profit and ensure positive cash flow in the short-term (Cardoso et al., 2017; Poetsch et al., 2012). One possibility is the intercropping of palm trees with annual crops such as manioc and maize, which is in line with agroforestry. This combination has the potential to ensure the production of staple food and cash crops such as Acrocomia fruits. Cardoso et al., (2017) emphasize the importance of recognizing the local agro-climatic conditions and socio- economic characteristics of rural communities when selecting agroforestry and production arrangements.
In Brazil, the scientific research on domestication of Acrocomia as an alternative crop has advanced significantly with the support of multiple public and private actors, from farmers to investors (Plath et al., 2016). Their focus is principally oriented to the energy sector and inclusion of family farmers in Acrocomia-based value chains (Plath et al., 2016). Among different projects, it is to highlight the germplasm bank established by the Federal University of Viçosa (Portal Macauba 2015) and the plantations already started
24 Beneficiario COLFUTURO 2015 in different locations in Brazil. Twenty smallholder family farmers that process fruits from wild palm trees were certified by the Round Table for Sustainable Biomaterials, as result of collaborative work with academic institutions and private sector (Portal Macauba 2016). ICRAF (2017) reported about a project to promote agroforestry with Acrocomia palm trees through the participation of smallholder family farmers who already process and benefit from natural occurring palm trees.
3.3.Bioeconomy and biomass-based value webs 3.3.1. Bioeconomy concept: a brief overview Bioeconomy, also known as bio-based economy, is a concept increasingly discussed in the last years at political and scientific level. Its importance is justified by the necessity of addressing complex, and global socio-ecological issues such as climate change, food and, energy security, population growth, resource depletion, environmental degradation among others. A shared definition of bioeconomy is the following: ‘Bioeconomy as the knowledge-based production and utilization of biological resources, innovative biological processes and principles to sustainably provide goods, and services across all economic sectors’ (Birner 2018 cited Bioeconomy Summit 2015, p 4), such as food, feed, bio-based products and energy. The German Bioeconomy council considers not only the tangible biological resources (such as biomass) but also the biological knowledge: ‘Bioeconomy is defined as the production and utilization of biological resources (including knowledge) to provide products, processes and services in all sectors of trade and industry within the framework of a sustainable economy’ (Bioökonomierat 2018).
3.3.2. Bio-based value chain and webs: principles and concepts
The Value Chain concept and its evolution
Bio-based value chain is a term commonly used to illustrate and describe economic activities within the bioeconomy (Kindervater et al., 2018). Value chains can be defined as “forms of vertical coordination between actors for the production and movement of a product until it is consumed” (Biénabe et al., 2017, p 2). Initial approaches as the filière and the ‘commodity chains’ are the roots of the value chain concept (Fasse et al., 2009).
In the agricultural sector the concept of filière, developed by the Centre de Coopération Internationale en Recherche Agronomique pour le Développement (CIRAD) in the
25 Beneficiario COLFUTURO 2015 1960s, is considered as a first approach to study the interaction between farmers, processors and actors among agricultural production systems in developing areas (Kindervater et al., 2018; Lançon et al., 2017; Nang’ole et al., 2011). Filière or value chain is a systems approach defined by Lançon et al., (2018) as the ‘linked sequence of technical, logistical, and commercial operations necessary to produce and distribute food or agro-industrial product, from production to consumption’. The authors argue that the use of this concept is suitable for agri-chains since the initial agricultural product (raw material) provide a common thread at every production step.
The concept of ‘commodity chains’ was elaborated by Wallerstein in the 1970s. It is focused on the distribution of value chain activities in the world economy (Fasse et al., 2009). One decade later Porter introduced the value chain term as a firm-level and management tool. It allows to analyze business strategies and identify sources of competitiveness and value added by disaggregating the firm in primary and support activities (Nang’ole et al., 2011; Kindervater et al., 2018). However, this approach is limited to the firm level.
More sophisticated concepts such as ‘global value chains’ and ‘value networks or value webs’ emerged recently as a result of complexity and internationalization of business activities. The ‘global value chain’ framework evolved from the ‘global commodity chain’ approach which is an extension of ‘commodity chain’ concept, proposed by Gereffi (Lançon et al., 2018; Fasse et al., 2009). This approach addresses the study and analysis of globally dispersed value chains (such as the agri-chains) through the identification of governance drivers and upgrading possibilities (Lançon et al., 2018). Value networks or value webs include value chains that have multiple intra-chain linkages and links with different value chains (Kaplinsky and Morris 2001). They provide analytical and holistic frameworks to study the complexity and organization of interconnected value chains.
In the context of bioeconomy, Virchow et al., (2016) argue that beyond product-centered commodity or value chain approaches, there is need to address the complex biomass pathways in integration with social, economic and ecologic angles. For this purpose, new analytical frameworks such as the biomass-based value webs are proposed (Virchow et al., 2016). 3
26 Beneficiario COLFUTURO 2015 Value chains in the context of bioeconomy: The bio-based value chains
On a practical level, Bioeconomy is realized through value chains. A definition of bio- based value chains is proposed by Lewandowski (2015): “Bio-based value chains are defined as the sequence of processes from biomass production to bio-product along with its opportunities for value generation, including economic, social and ecological values. An integrated bio-based value chain optimizes the interaction of these processes and the material flows involved, with the objective of optimizing the overall performance in economic, ecological and social terms.” (Lewandowski 2015, p 40).
There are three main Bioeconomy value chains: food and feed, bio-based products and bioenergy (Cristóbal et al., 2016). A simplified structure of such bio-based value chains is integrated by biomass production and supply, conversion processes and final use. Additional activities such as biomass pre-processing (e.g pretreatment processes), storage, feedstock and product transportation, packaging, trading and commercialization among others are also components of the value chains (Gregg et al., 2017, Cristóbal et al., 2016, Philp 2017, Parish et al., 2016, Wang 2015, Cambero and Sowlati 2014).
Primary production sectors such as agriculture (including livestock), forestry and fisheries provide different type of feedstock like wood, grass, sugar and starch plants, oil crops and fats, proteins, lignocellulosic biomass, algae and seaweed complemented by mixed wet or dry biomass from multiple sources (e.g industrial, agricultural and municipal wastes) (Budzianowski and Postawa 2016; Kovacs 2015 cited Piotrowski et al., 2015). Further pretreatment and transformation of biomass are performed through the different combinations of physical, chemical, thermochemical and biotechnological chemical processes in bio-refineries, an emerging industrial application of Bioeconomy (Budzianowski and Postawa 2016). Subsequently, manifold added-value products are obtained, providing feed and food, biofuels, electricity, heat, biopolymers, platform and fine chemicals, organic fertilizers, pharmaceuticals, composites, pulp and paper, wood- based materials, lubricants, etc. (Budzianowski and Postawa 2016; Kovacs 2015 cited Piotrowski et al., 2015). Fig. 13 illustrates the generalized bio-based value chain.
27 Beneficiario COLFUTURO 2015
Fig. 13 General structure of the bio-based value chains (Adapted from European Commission 2015 cited Piotrowski et al., 2015)
The Biomass-based Value Web approach
The study and analysis of bio-based value chains demand systemic perspectives that integrate multiple dimensions. Virchow et al., (2016) proposed a comprehensive framework called ‘biomass-based value web’, as an extension of the value chain concept to ‘analyze the manifold uses of biomass in the bioeconomy’ (Scheiterle et al., 2018, p 3853). This approach ‘uses a ‘web perspective’ as a multidimensional framework to understand the interrelation and linkages between several value chains and how they are governed’ (Virchow et al., 2016, p 233). According to Birner (2018), this concept takes into account the cascading use of biomass that results on the interlinking of various bio- based value chains. Instead of analyzing single product’s paths, the web approach facilitates the integration of different applications from a biomass source (Virchow et al., 2016). In addition, it allows studying the interactions of a biomass web with other agricultural products cultivated at farm-level (Virchow et al., 2016). In fact, this approach is suitable for agrarian-dominated economies (Scheiterle et al., 2018).
Contributions of using a web perspective
The biomass-based value web approach is considered as a useful scientific and policy perspective for equitable rural development and efficiency of the agro-biomass sector (Virchow et al., 2016). ‘The web perspective helps to explore synergies between value chains, identify inefficiencies in biomass use and pinpoint potential for sustainable productivity increases in the entire biomass-based value web of a defined local, national
28 Beneficiario COLFUTURO 2015 or international system’ (Virchow et al., 2016, p 233). Applying such concept may result in new sources of value-added to be captured at local scale, through different strategies to optimize biomass use. The biomass-based value web takes the physical flow of biomass as the basis of analysis (which include potential by-products).
For this reason, it is also helpful to recognize the actors involved with activities related to primary production and use of biomass, processing, trade, products and by-products (Virchow et al., 2016; Scheiterle et al., 2018). Besides, organizational setups and characteristics of stakeholders can be derived. As a result, technical and organizational aspects can be identified, such as ‘missing links or actors, information gaps, and capacity constraints, as well as governance issues and power relations’ (Virchow et al., 2016 p 234). Further, economic aspects can also be analyzed under the framework of biomass- based value webs. Analysis of income and profit distribution among stakeholders allows to detect opportunities to increase benefits and inclusiveness in value webs.
Virchow et al., (2016) summarize the benefits and usefulness of the web perspective in the bioeconomy in the following three principal arguments: a. Flexibility to shifting demand: ‘The value chains of multi-purpose crops, and the various forms of demand (food, feed, energy, industrial material) which are jointly satisfied by diverse crops and/or production systems, strongly resemble a web structure’ (Virchow et al., 2016 p 235). b. Flexibility to price fluctuation: ‘Organizational features of value webs are inherently flexible and, thus, better suited to a volatile price environment, as compared to the classical linear value chains’ (Virchow et al., 2016 p 235). c. A web perspective allows the upgrading of value webs through the identification of inefficiencies, synergies, and opportunities to create social, economic and environmental value (Virchow et al., 2016).
Inclusive bio-based value chains and value networks: the role of bioeconomy in rural development
The growing bioeconomy anticipates an increasing demand for higher-value agricultural products in local and international markets. This has the potential to bring livelihood diversification possibilities for smallholders and rural laborers and market opportunities for local agricultural-based small and medium-sized enterprises (SMEs) in developing countries (Donovan et al., 2016). Tobin et al., (2015) argue that integrating small-scale
29 Beneficiario COLFUTURO 2015 farmers into value chains has emerged as a pathway to foster rural development. Due to the nature of bioeconomy, it is considered as a promising strategy to contribute to local development in rural areas of developing countries areas where biomass is produced. Production systems in forestry and agriculture sectors have unique characteristics such as seasonality, decentralized supply and quality variations due to environmental conditions (Kindervater et al., 2018). Furthermore, logistic operations to transport biomass are challenging due to low density and deterioration. Based on these patterns and issues, biomass processing at regional scale is seen as a reasonable strategy (Kindervater et al., 2018).
Decentralized conversion processes to facilitate local biomass source and create value at local level, satellite pre-processing and densification of biomass to supply central industry facilities are mentioned by Lewandowski (2015) as strategies to optimize bio-based value chains. Biorefineries1 are considered a practical implementation of bioeconomy. Their design, scale and optimization have raised the attention of scholars from technical and economic perspectives. Multiple aspects must be taken into account, such as transportation costs, production costs and yields, investment costs, among others (Bruins and Sanders 2012). Budzianowski and Postawa (2016) point out that biorefinery systems have a regional character due to the limited and small amount of biomass produced locally. Asveld et al., (2011) add that biorefinery is a concept appropriate for small-scale and local (decentralized) applications, in contrast to the petrochemical industry. From the techno-economic point of view, some scholars argue that local small-scale (pre) processing systems have lower investment costs and simple process technologies (Bruins and Sanders 2012). Additionally, the authors argue that densification and pre-treatment of biomass are advantageous before transportation to centralized facilities where further processing occurs. From a socioeconomic perspective, such systems can create rural employment and redistribute the income in the value chain through the creation of local added-value (Bruins and Sanders 2012). Clauser et al., (2016) point out that in small-scale systems farmers can be both primary producers of biomass and processors, which offer them diversified livelihood options. However, more research is needed to investigate the
1 Biorefinery is defined as the sustainable processing of biomass into a spectrum of marketable products (food, feed, chemicals) and energy (biofuel, power, heat) (Michels 2017 cited IEA Bioenergy 2016; Cherubini 2010)
30 Beneficiario COLFUTURO 2015 potential economic viability of such systems at small-scale (Muniz et al., 2017). Diverse scholars argue that local agro-processing is a key component of the rural non-farm economy with the potential to create employment and non-farm income sources, contributing to rural livelihoods. Consequently, smallholders, landless and near-landless households and SMEs in rural areas could perceive several socioeconomic benefits (Horton et al., 2016).
Inclusiveness and participation of farmers as main stakeholders in the primary production of biomass are crucial for bioeconomy. Instruments that guarantee a high involvement of farmers determine the acceptability and sustainability of bioeconomy-oriented projects. Lewandowski (2015) highlights that local smallholders and any farmer who use the land should be involved in the planning for biomass production. Neglecting their inclusiveness might bring threads to local development possibilities, hinder access to natural resources and affect food security. Bryden et al., (2017) highlight in their work ‘inclusive innovation in the bioeconomy’ the embeddedness of bioeconomy in communities and social systems that exist in a territory. They argue that these social systems are often long standing, difficult to change and have a dependency on the local natural resources for subsistence, recreation and other ecosystem services (Bryden et al., 2017). Consequently, any external intervention in these social and biological systems has considerable impacts on inhabitants (Bryden et al., 2017). Therefore, understanding the implicit institutional preconditions and value premises is crucial for the social acceptance and sustainability of bioeconomy projects (Bryden et al., 2017).
Pro-poor and inclusive Value Chain Development The contribution of agriculture to growth and poverty reduction depends on the broad participation of smallholder farmers at theoretical and empirical levels, as evidenced by numeorous studies (Birner and Resnick 2010 cited Diao et al., 2007; Lipton 2005; World Bank 2007). Seville et al., (2011) point out that growth generated by agriculture is more effective in reducing poverty than growth in other sectors, which justifies the current strategies focused on agriculture in the international development agenda. In fact, promoting market access and integration of smallholder producers in formal markets, as well as improving agricultural production, are common pillars of market-driven strategies for poverty reduction and rural development in developing areas (Nang’ole et al., 2011).
31 Beneficiario COLFUTURO 2015 Setting up and upgrading of value chains centered on small-scale farmers is considered as an effective strategy to alleviate poverty in agricultural-based countries, from a market perspective. Harper (2010) explains that value chains and the focus on the links between actors along it have recently been considered as a tool to alleviate poverty and foster development community, under the approach of ‘inclusive value chains’. Identifying and implementing effective interventions to build and strengthen agricultural and agroindustrial value chains in developing countries is a complex process. It involves several actors with different interests and social, technological and institutional dimensions. Therefore, the value chain approach, based on the interrelatedness of actors, is extensively used for the identification, design and implementation of pro-poor and win- win upgrading strategies (Nang’ole et al., 2011, UNIDO 2011, Donovan et al., 2013).
Value Chain Development (VCD) is considered as a development approach aimed at stimulating economic growth, and increasing competitiveness of agricultural sector (Donovan et al., 2013 cited Humphrey and Navas-Alemán 2010; Staritz 2012; Stoian et al., 2012), although also applicable to other economic sectors and subsectors. When it targets specific actors such as smallholders with the purpose of ‘making markets work for the poor’ through strengthened links, it is portrayed as ‘pro-poor VCD’ (Donovan et al., 2013; Tobin et al., 2015 cited Hellin et al., 2009).
This emerging approach is defined as a ‘positive or desirable change in a value chain to extend or improve productive operations and generate social benefits: poverty reduction, income and employment generation, economic growth, environmental performance, gender equality and other development goals’ (UNIDO 2011, p 1). For instance, pro-poor VCD has been increasingly adapted and used in rural poverty-reduction strategies (Horton et al., 2016). Measures of pro-poor VCD try to overcome entry barriers for poor and marginalized agricultural producers and providers of inputs and services (UNIDO 2011). If such measures are effective, pro-poor value chains are expected to encourage social progress and trigger economic growth (Tobin et al., 2015 cited Brinkerhoff and Brinkerhoff 2011; Fuchs et al., 2011; Porter and Kramer 2011). Horton et al., (2016) define a successful intervention for pro-poor value chain upgrading as ‘one that generates significant and potentially lasting benefits for rural poor at scale’ (Horton et al., 2016 p 24).
32 Beneficiario COLFUTURO 2015 3.4.Family farming in Paraguay Paraguay is divided into 17 departments plus its capital Asunción and has two different geographic and climatic regions: eastern and western or Chaco (FAO n.d.), the first one with 97% of the population and 39% of the total area (FAO 2007). Easter Paraguay has an average annual rainfall between 1200 and 1800 mm and western Paraguay between 400 and 1200 mm. The average annual temperature in the country is between 20 and 25° C (Bohn 2009).
According to the household survey 2013, Paraguay has approximately 6.709.730 inhabitants with 40.8% of rural population (FAO n.d.), share that has been decreasing in last decades from 51% in 1990 to 44% in 2000 (World Bank 2007). Around 56.6% of the population is younger than 30 years old.
According to DGEEC (2018), in Paraguay 26.4% of the population is poor and rural poverty affected 36.2% of the rural population in 2017, which represent about 1 million people from 2.6 million inhabitants in rural areas (36.22% of the total population in Paraguay). Around 9% of rural population face extreme poverty (monthly per capita income lower than 234492 Gs). Average monthly income per capita in rural areas in 2017 was around 180000 Gs for the poorest decile and 290000 Gs for the second poorest. These factors bring food vulnerability to almost 40% of the population in Paraguay, and undernourishment to 800000 persons, e (FAO n.d.; PLANAL 2009; FAO 2013).
Indigenous population represents the 1.74% of the population. It is divided in 5 linguistic families, Guaraní being the most numerous with 54% of the indigenous population, and 19 indigenous groups distributed in 13 departments mainly in Presidente Hayes and Boquerón, followed by Canindeyú (FAO n.d.).
The female rural population share is 47%, from which 53% is less or equal to 19 years old. One of three women between 15 and 24 years old declared to have one or more pregnancies in rural areas. Paraguay has a one the highest mortality rates for preventable causes and related to sexual education in Latin America. On the other hand, Illiteracy is higher in women than in men. In rural areas, 10 of 100 women are illiterate and the average time of study of rural women are between 4 and 6 years (FAO n.d.).
The agricultural sector contributes 24.6% of the GDP (16% corresponds to crop production) with 27% of the economically active population (Muñoz et al 2015; Riquelme 2016) and 50% of the exports of the country are generated by this sector (FAO 2007).
33 Beneficiario COLFUTURO 2015 The main products from the sector are soy, cassava, corn, wheat, and livestock having the soy the biggest share with 52.6%. The agriculture in Paraguay is characterized for two different agricultural types, one focused on cash crops, managed by medium and big commercial farms usually from Brazilian, German or Japanese immigrants or their offspring and the second one, family farms with more diversified crops (FAO 2007).
Family farming is a key sector for the decrease and eradication of poverty and hunger and at the same time it has limitations due to the land grabbing and lack of adequate policies. In Paraguay, these farms concentrate 95% of the rural population. Family farming is defined as the farming managed by a family and its workforce, up to 20 laborers per year, is provided by family members; the farms have up to 50 hectares of area in the east and up to 500 hectares in the west, and its production is mainly for own consumption. Its main income comes from the agricultural activities, although family members realize other labors. This definition includes those without land too (Riquelme 2016). Just 6.3% of the agricultural land is for family farming, the lowest share of the Mercosur countries, with 264 047 farms (Riquelme 2016 cited Salcedo and Guzmán 2014). Family farming produces most of the demand for beans, cassava, and sugar cane. It also contributes with a big share of cash crops such as cotton, tobacco and sesame and export products such as organic sugar cane and cassava starch (FAO n.d.). Other products produced in family farms are corn, milk, poultry, swine and cattle (Riquelme 2016). The census shows that 264 047 farms have less than 50 hectares, which represent 91% of all the farms (CAN 2008) with just 6% of the cultivated area, 13% of those receive technical support, and 16% have access to credit (FAO n.d.). The family farms producers in Paraguay work mainly in the farm (53%), but there is a share of people with just off-farm work of 2.2%, the 40.34% do both and the rest (3.82%) do not do any work (CAN 2008).
It has been evident the reducing number of family farms in the last years. From 1991 to 2008 more than 15 000 farms and more than 366 000 hectares have been reduced from this category. In contrast, the number of farms bigger than 100 hectares and bigger than 10000 hectares have increased considerably (Riquelme 2016). The rural population has decreased too, in 1991 more than 1 million of people lived in rural areas and according to the CAN (2008), the rural population was around 800 thousand of people living in the rurality. The number of people between 25 and 34 years old has diminished in 42% (CAN 2008).
34 Beneficiario COLFUTURO 2015 The Paraguayan economy depends strongly on the agricultural sector. Thus, the climatic conditions make the economy vulnerable because of the high dependency on few cash crops and the poorly developed infrastructure and logistic capacity (Muñoz et al 2015). Drastic changes in climate threaten the food security as well, the overcoming of poverty and the sustainable development because it creates uncertainty. For example, in Paraguay the extreme changes in temperature and precipitation have impacted the food production. One reason is the deforestation, mainly in the east region (Riquelme 2016).
The biggest challenges for family farming in Paraguay, according to Riquelme, are the access to land and the lack of governmental support for the agricultural production (2016). These two issues have resulted in a production decrease. Riquelme identified four main reasons: youth migration, uncertainties in access to market, expansion of agribusinesses or big farms and weak governance (Riquelme 2016) in spite of the National Development Plan for 2014-2030 in Paraguay, that recognized three pillars for development: poverty reduction and social development, inclusive economic growth and inclusion of Paraguay in global markets (World Bank 2018).
35 Beneficiario COLFUTURO 2015 4. Research design 4.1.Conceptual framework:
Fig. 14 Conceptual framework (Author) The proposed conceptual framework is based on the concept of biomass-based value web and value chain analysis, aiming at identifying pro-poor upgrading strategies.
4.2.Research area:
The geographical areas of research are San Pedro del Paraná, Quiindy, and San Roque González de Santa Cruz in Paraguay, where the author approached and interviewed the relevant actors of the Acrocomia value chain.
4.2.1. San Pedro del Paraná San Pedro del Paraná is a district at the north of the department of Itapúa, which is located at southern Paraguay (Fig. 15). Itapúa is distributed over a land area of 1 551 km2, from which 8% is part of a conservation area (San Rafael).
36 Beneficiario COLFUTURO 2015 San Pedro del Paraná has 34742 inhabitants, 52% are men, 48% are women, and 41% are younger than 15 years old. The primary activity is agriculture, whose core product is the manioc. Other significant cultivated products in the region are beans and maize. Although the principal activity is agriculture, agribusinesses have increased in the last years (Mössinger 2014 cited Parroquia San Pedro, 2005). The rate of illiteracy is 8%, only 34% of the households have access to water service, while 94% has electricity services (STP 2016). The district distinguishes itself for having white soils, different to the red clay soils of Itapúa. The temperatures in the district, on the other hand, is between 10 and 33-Celsius degrees, being December and January the hottest months, and there are precipitations of around 1700 mm (Mössinger 2014).
As part of the sustainable development plan 2016-2020, the district proposes social, economic and environmental goals. Some of them are the decrease of extreme poverty in 15% and the chronic infant malnutrition in 20% by 2020 through the strengthening of family farming, regularize land tenure, increment the access to water services in 30%, encourage native tree plantations, and Promote the care and multiplication of native seeds as protection measures for food sovereignty (STP 2016).
In 2016, 85613 persons from were considered poor in Itapúa, from which 19,45% suffered from extreme poverty (DGEEC 2016). While in San Pedro del Paraná the poverty share is 57%, and the share of households in extreme poverty reaches 37.1% (Mössinger 2014 cited Altervida).
Fig. 15 Map of San Pedro del Paraná (Demoinfo.com n.d.)
37 Beneficiario COLFUTURO 2015 4.2.2. Paraguarí
Department of Paraguay, whose capital city is Paraguarí, located at the south of the country and the north of Itapúa (Fig.16). The department is divided into 17 districts. The quantity of persons suffering extreme poverty in the department is 268794, from 396266 under the poverty line (DGEEC 2015).
Fig. 16. Map of Paraguarí department (Skyscrapercity.com n.d.)
Quiindy
Quiindy is a district located in the middle of the Paraguarí department with 885 km2 of area. The total population is 19643 inhabitants, 10233 men, and 9410 women. One-third of the population is under 15 years old, and the illiteracy rate is 8.6%. The share of households with electricity service reaches 83,9% and for water service 40%. The principal activity is agriculture, including livestock tenure. 74% of the population lives in rural zones. The most important agricultural product is sugar cane, but other products are grapes, cotton, and manioc. In the manufacturing sector, the most important product is leather balls (STP 2016).
San Roque Gonzalez de Santa Cruz
The district is distributed over a land area of 293 km2 with 12764 inhabitants, 6548 men, and 6216 women, from which 35.8% are under 15 years old. 73.4% of the population in the district live in the rural zone. The sustainability development plan has within its goals diminish the extreme poverty, and undernourishment and increase the use of renewable energies (STP 2016).
38 Beneficiario COLFUTURO 2015 4.3.Data collection: For the data collection, the author realized two different questionnaires (farmers and collectors) and in-depth semi-structure interviews for the actors and key experts of the value chain of the research object, in the areas described before, who are described in the table below. The table 5 shows actors and key experts from every linkage of the value chain. The number next to the variable n represents the number of persons interviewed. Before starting the fieldwork, the author implemented a preliminary investigation and a first contact with the first actors. Other actors, farmers, and some key experts, were introduced through the partner organization: Pastoral Social de San Pedro del Paraná, a Catholic faith-based organization. The author effectuated contact with the other actors through snowball sampling to continue the study.
Table 5. Interviewees
Acrocomia production and procurement Acrocomia processing Markets
Farmers from San Pedro del Paraná (n=12)
Managers from three active Actors Farmers from Quiindy (n=5) industrial companies (n=3) Collectors from San Roque González de Santa Cruz (n=5)
Public server of the department of extension services (n=1) Former bioenergy producer (n=1) Researcher (n=1) Former manager of Public server of the industrial company (n=1) Public server from the Ministry of Agriculture and Export and Investment Livestock (MAG) (n=1) Network of Paraguay, REDIEX (n=1) Key experts Public server of the National Forest Institute, Infona (n=1) Animal nutrition expert
(n=1)
Acrocomia sector experts (n=2) Involved actor from Paraguayan Industrial Union (UIP) (n=1)
Source: Author
The author executed, in addition to the semi-structured interviews, participatory sessions within the interviews for mapping the value chain and identifying problems and opportunities for upgrading the value chain. Ten selected actors and key experts of the value chain, who have a holistic view contributed with mapping the value web. These actors are shown in bold in the Table 5.
39 Beneficiario COLFUTURO 2015 Furthermore, the author accomplished the research through observation and taking notes and photographs of important aspects for the research purpose.
The author faced some challenges due to a language barrier because some of them, mainly farmers, only speak Guarani. To overcome this situation, two members of the Pastoral Social accompanied the author for some of the interviews to serve as a translator. Owing to the informality of the value chain, especially in the primary production and procurement stage, the identification and approaching of farmers was a complex task, that was overcame through the sampling method used and the support of members of the Pastoral Social de San Pedro del Paraná.
4.4.Data analysis: The master thesis is integrated by four different sections: Value web mapping and characterization of actors Analysis of linkages and governance Economic analysis Upgrading the Acrocomia value web and case study
The value chain mapping of the Acrocomia in Paraguay and its characterization of actors was deduced and characterized by the data collected. Information from the farmers and collector questionnaires was analyzed through basic descriptive statistics and analyzed to characterize the qualitative and quantitative features of the first stage of the value chain. Interviews with key actors complemented the information that farmers and collectors gave through their systemic and holistic thinking for the first stage of the value chain.
For the value chain analysis, the identification and mapping of actors, and their quantitative and qualitative characterization is the result mainly from the participatory tool, where similarities and tendencies were included, and differences were verified through the notes that the author took during the field work and the investigation of secondary sources.
For the analysis of linkages and governance, questions in the interviews were asked to acquire the information about the relationships between actors and the enabling environment for a good governance. The author analyzed information about past failed projects to complement this section.
40 Beneficiario COLFUTURO 2015 For the economic analysis, the author analyzed the data collected through the calculation of the added value and net profit in the different stages of the value chain.
For the last section: Upgrading the Acrocomia value web, the author analyzed the upgrading strategies that the interviewees commented. Besides, a case study of a potential project is described. The final result of the case study was analyzed through the Internal Rate of Return (IRR), which is the discounted rate that forces the present value of the annual incomes to equal costs. It is frequently used to evaluate projects.
In this case, it is perpetuity because the assumption is that the company receives the same income every year, a scenario that will be discussed in the study case. Then, the rate is calculated as follows (Brealey et al, 2014):
41 Beneficiario COLFUTURO 2015 5. Analysis of Acrocomia value chains and webs in Paraguay Acrocomia palm has several uses beyond the fruit, as reported in the literature. The author evidenced this during the fieldwork as well through conversations with locals. Flowers, leaves, and trunk have traditional applications for decorative purposes, animal feed and as building material. However, fruits represent the primary product of this palm, and therefore the value web analysis is based on them.
5.1. Acrocomia fruits value web in Paraguay Traditional and non-commercial as well as industrial and commercial uses of Acrocomia fruits are found simultaneously in Paraguay. Figure 17 illustrates a holistic view of the Acrocomia value web in Paraguay. For the purpose of this study, the focus is on industrial and commercial uses of Acrocomia fruits along the value web.
Production of kernel and pulp oil and various by-products such as cakes, endocarp, and husk are among existing commercial and industrial uses of Acrocomia fruits. Past links refer to applications that have been tried but are not currently active at an industrial level, such as the production of biodiesel. Emerging links are new applications that are either in the initial phase of commercialization or under research. Traditional uses are those non- commercial applications of Acrocomia fruits with self-consumption purposes and low degree of processing.
In the Acrocomia value web in Paraguay there are two flows of raw material:
- Whole fruits, conformed by husk, pulp, endocarp, and kernel.
- Chewed fruits (called “chapí”), which are fallen fruits swallowed and split by ruminants, integrated by rests of pulp, complete endocarp and kernel.
More than 95% of the fruits that flow currently along the value web are whole fruits.
42 Beneficiario COLFUTURO 2015
Fig 17. Acrocomia value web in Paraguay (Author)
5.2.Traditional, non-commercial uses of Acrocomia fruits Traditional use is understood as the self-consumption of fruits by smallholder farmers and family members, who collect them in their farms or neighbor areas without incurring in trading activities. Such uses mainly represent cultural values for the local population and economic value in the form of alternative and occasional food, energy, feed, and fertilizer source. Consumption of seeds and pulp from fresh fruits as snacks and ingredients for traditional meals and drinks are among the most common uses of Acrocomia fruits (See Figures 18:20).
43 Beneficiario COLFUTURO 2015
Fig. 18 Direct consumption of Acrocomia fruits as snacks or as traditional ingredients; a. Kernel; b. Pulp (Author)
Fig. 19 Use of endocarp as solid fuel for baking in traditional oven called “Tatakua” (Author)
Fig. 20 Acrocomia chewed fruits swallowed and spit by cattle (Author)
44 Beneficiario COLFUTURO 2015 5.3. Industrial, commercial uses of Acrocomia fruits 5.3.1. Products Several intermediates, by-products, and final products are part of the industrial and commercial uses of Acrocomia fruits (Figure 21:25). Oil extraction from kernel and pulp are the primary commodities produced at industrial level. Those are used as input in the soap industry in Paraguay and for exporting (kernel oil) to countries such as Brazil, Uruguay, Chile, and Argentina. Residual cake from oil extraction is commonly used for animal feed, which is sold by the oil extraction facilities to livestock farmers. Husk is used by the oil extraction industries as a solid fuel during the production process, and residual ashes and organic impurities are commercialized as organic fertilizer. Endocarp is sold to different industries as solid fuel for heating processes and steam production. Emerging high added-value applications are oriented to segmented markets, such as activated carbon from endocarp, edible oil from kernel and pulp flour. First two are commercialized since 2017 whereas the latter application is under development.
Fig. 21 Oil extracted from Acrocomia fruits by an industrial facility in Paraguay; a. Kernel oil; b. Pulp oil (Adapted from www.oisa.com.py)
Fig. 22 Cosmetic sector: Solid soap from Acrocomia oils; a. Kernel oils soap; b. Pulp oils soap (Adapted from www.oisa.com.py)
45 Beneficiario COLFUTURO 2015
Fig. 23 Some soap brands from kernel oil in Paraguay (Adapted from: www.trovatocisa.com; www.inca.com.py; www.cavallaro.com.py; www.maahsa.com.py; www.stock.com.py; www.superseis.com.py)
Fig. 24 Some soap brands from pulp oil in Paraguay (Adapted from: www.trovatocisa.com; www.inca.com.py; www.cavallaro.com.py; www.maahsa.com.py; www.stock.com.py; www.superseis.com.py)
Fig. 25 Some liquid soap and soap powder brands from Acrocomia in Paraguay (sources: www.trovatocisa.com, www.cavallaro.com.py; www.maahsa.com.py; www.stock.com.py)
46 Beneficiario COLFUTURO 2015 5.3.2. By-products Cakes are usually sold in bulk after the oil extraction process without further processing. Occasionally, the cake is ground in a hammer mill as a form to add value to the by- product. Packaging the cake in plastic bags after ground and pelletizing using a pellet mill are other forms to add value to these by-products. Ground and pelletized cakes facilitate the mixing with other feeds. (Fig. 26 and Fig. 27). Epicarp and endocarp are tipically used as solid fuels to their high calorific value (Fig. 28 and Fig. 29).
Fig. 26 Cakes as by-products from oil extraction in an industrial facility in Paraguay; a. Kernel cake; b. Pulp cake (Adapted from www.oisa.com.py)
Fig 27. Grinded cake for animal nutrition; a. kernel cake; b. pulp cake (Industrial Aceitera S.A.C.)
47 Beneficiario COLFUTURO 2015 Epicarp and endocarp Use of epicarp as solid fuel and organic fertilizer
Fig. 28 Other fruit components and by-products generated from oil extraction by an industrial facility in Paraguay; a. Endocarp (Author); b. Husk or Epicarp; c. Impurities (Adapted from www.oisa.com.py)
Use of endocarp as solid fuel and other applications
Fig. 29 Granular activated carbon from endocarp in two different sieve sizes, produced by an industrial facility in Paraguay (Author)
5.3.3. Other applications Other applications are edible oil and use of the pulp for flour production (See Fig. 30 and Fi. 31).
Fig. 30 Edible oil from Acrocomia, produced by an industrial facility in Paraguay (www.casarica.com.py)
48 Beneficiario COLFUTURO 2015
Fig. 31 Pulp flour from Acrocomia, produced at pilot scale in Paraguay (Author)
5.4. Structure of the Acrocomia value chains and webs in Paraguay 5.4.1. General structure
The structure of the Acrocomia value chain and web in Paraguay as observed and described by the experts interviewed fits the scheme of the bio-based value chain and web introduced in the theoretical framework. It has three main stages: biomass production and procurement, processing, distribution, markets, and consumption. The illustration in Fig 32 shows a general structure. The section "linkages" explain furtherly some variations in the value web structure.
Fig 32. General structure of the Acrocomia value chain in Paraguay (Author)
The value web starts with the production of Acrocomia fruits by wildly growing palm trees. Producers collect the fruits they provide to collectors or traders. Those supply the raw material to the primary processor, which are industrial facilities that extract oils from pulp and kernel and produce a set of by-products with commercial value, conforming new value chains. Secondary processors are those such as soap production facilities, where oil is used as primary input for cosmetic applications. When kernel oil is exported, additional actors such as brokers play a role in trading the commodity with secondary processors. Retailers are the market channels to transfer the final products from Acrocomia oils to the consumer (e.g. soap). Endocarp and cakes from oil extraction are directly distributed to
49 Beneficiario COLFUTURO 2015 the industry that uses the former by-product as solid fuel whereas the cakes are provided for livestock farming. The primary processor uses husk as an energy source for steam production and also sold as organic fertilizer together with agricultural residues from the process. It is distributed to the producers through the collectors, closing the material loop. Integration of existing commercial value chains from Acrocomia fruits conform an Acrocomia value web, as illustrated in Fig. 33.
Fig 33. General structure of the Acrocomia value web in Paraguay (Author)
5.4.2. Unit of measurement
Unit of measurement (cajón, here referred as "crate") is a standard volumetric unit with a volume of 0.143 m3 as shown in figure 34. It was modified by the Office of Commercialization of the Ministry of Agriculture and Livestock of Paraguay (MAG) in 2008 through the Resolution 985/08. According to a critical expert interviewed, the former unit of measurement had a volume of 0.116 m3, around 23% smaller. However, the capacity varies among processors; some follow the standard capacity while others use a unit of measurement with lower volumes between 0.128 and 0.132 m3. The weight of the unit of measurement varies according to the fruits’ conditions. If the fruits are recently harvested and have a high moisture level, the weight is higher than air-dried fruits, although the volume remains stable.
50 Beneficiario COLFUTURO 2015 For this reason, the unit of measurement is volumetric. Through the visits and interviews with managerial staff of different processing, companies mean weight of 55 kg of fruit per crate of whole fruit it was determined, with values ranging from 45 to 55 kg for dried fruit and 60 kg to 70 kg for fresh fruit. For chewed fruits (fallen fruits that ruminants swallow and spit, leaving the endocarp with the kernel, without husk and some fractions of pulp), a crate weights between 80 kg 100 kg. Mean weight is 92 kg.
Fig 34. Unit of measurement for the collection and supply of Acrocomia fruits in Paraguay (Author)
5.5. Characterization of actors and linkages in the value web 5.5.1. Acrocomia production and procurement
Primary production of Acrocomia fruits as the first process of the value web relies entirely upon extractive activities from natural palm trees. It concentrates in the east region of Paraguay. According to the Censo Nacional Agropecuario (2008), departments with the highest primary production of fruits are Paraguarí (64%) and Cordillera (22%), followed by Concepción (4%), San Pedro (3.5%) and Misiones (3.3%) (Figure 35).
51 Beneficiario COLFUTURO 2015
Fig. 35 Location of primary production regions in Paraguay (Author, based on CAN 2008)
5.5.2. Producers
Producers are peasants and smallholder family farmers who collect fruits from wild Acrocomia palm trees and sell them to collectors or industrial facilities, receiving an economic income in a certain period of the year. There is scarce information that describes the primary production of Acrocomia fruits in Paraguay, as the activity remains informal. According to the Censo Agropecuario Nacional in Paraguay (CAN 2008), 4866 farmers reported about the collection of Acrocomia fruits. However, this data is underestimated, since the total production reported was 19308 ton (about 351000 crates), a lower value than the 162800 ton (2960000 crates) supplied in 2008, calculated by a critical expert interviewee who has direct contact with the processing facilities of Acrocomia fruits in Paraguay. In part, this is a consequence of the informal character of the sector and limited information. Acrocomia is not listed among crops cultivated in the agricultural sector in Paraguay, as evidenced in the reports published annually by the Ministry of Agriculture and Livestock (MAG).
52 Beneficiario COLFUTURO 2015 Using data published in CAN (2008) and extrapolating it for 2016 based on the quantity reported by Loup (2017) (See Table 6), the author suggests an estimation of the number of farms and wild productive palm trees in Paraguay. CAN (2008) reported the existence of 289649 farms in total in Paraguay. Based on this value and the estimated quantity of farms for 2016, around 3% of the farms in Paraguay find in the collection and trade of Acrocomia fruits an income source. Table 6. Farms and palm tress 2008 and 2016 CAN (2008) Estimated to 2016a Farms 4866 8108 Wild productive palm trees 834030 1281051 a Based on a weighted average plant density of 158 palm trees per farm and yield of 36,15 kg fruits per palm tree estimated by the author using data reported by CAN (2008) and commercialization of 46310 t (842000) of fruits in 2016 (Loup 2017). Data published by CAN (2008) do not report the quantity of land surface.
Nineteen farmers who collect and trade Acrocomia fruits were interviewed. Twelve of them, who belong to the study region “San Pedro del Paraná” in the department of Itapúa, collect fruits with commercial purpose since 2017 (Fig. 36). This situation is a result of an initiative to promote Acrocomia as an alternative income source in the region that started in 2017 (further explained). Seven interviewees are from the city “Quiíndy,” located in the Department of Paraguarí, where collection and trading of Acrocomia fruits are traditional since the 1940s. 31.6% of the interviewees are female (N=6), while 68.4% are male (N=13).
Fig. 36 Number of years of fruit collection among farmers (Author)
53 Beneficiario COLFUTURO 2015 Average size is 5 hectares per family farm. Sixteen farmers own land (84.2%), and 75% of them own between 1 and 5 hectares2. According to a middleman located near Quiindy, 60% of the farmers who supply fruits are smallholder farmers with less than 5 hectares while 40% have up to 30 hectares of land. Communal land tenure was evidenced in one household, and in two cases the land is owned by a third and the farmer is a foreman assigned by the farm’s owner. On average 43% of the land is used for cultivation of crops for self-sufficiency, and the remaining fraction is used for livestock or non-used. Most commonly cultivated crops are cassava, beans, and maize. Some cash crops reported are peanut, sesame, sugarcane, cotton, orange, and watermelon. Eighteen farms are classified as mixed farms, where chicken (89.5% of visited farms), pigs (57.8% of visited farms) and cattle (52.6% of visited farms) are commonly found. In quantity, cattle and chicken are the most common animals, varying between 1 and 30 and 1 and 70 respectively and representing a source of food for self-consumption, dung as well as an income source.
Farms visited are composed on average by five family members, of which 2 are children, 2 are adults, and one is elderly on average. 21% of the farms are managed entirely by elderly farmers, with ages up to 87 years old. Male and female represent 55.2% and 44.8% respectively.
Acrocomia fruits for self-consumption
Around 79% of the farmers occasionally consume Acrocomia fruits as a food source. The fresh pulp is consumed chewed as a snack by kids and adults. Seed is extracted from the endocarp, breaking the nut manually with a stone or wood tool or a hummer. It is mainly used to prepare drinks with yerba mate. Farmers mill the seed through an artisanal mortar, a manual grinding machine or a mixing machine. Then it is mixed with boiled milk and yerba mate or used for baking cookies. Roasting the kernel with other grains and flours is another domestic application.
In some cases, whole seeds are merely stored in the fridge or at room temperature inside plastic bags or recipients and consumed as a snack. Consumption of Acrocomia fruits by farmers is currently not as significant as it was in the past, according to the farmers. Some
2 According to the CAN (2008) in Paraguay 40.5% of the farms have a size smaller than 5 hectares and 83.3% have a size below 20 hectares. Family farming (farm size lower than 50 ha) has a share of 91.2% of the total number of farms.
54 Beneficiario COLFUTURO 2015 farmers, mainly female, mentioned nutritional and health benefits from the consumption of Acrocomia kernel. Other applications include the use as fodder for animals, more often during winter using the palm leaves. Two farmers reported this. Some expert interviewed affirmed that this practice threats fruit yield and plant growth. One interviewee mills the whole fruits (air-dried) daily to feed pigs.
Plant density
93.8% of the farmers who own land have wild Acrocomia palm trees on their farms (N=16). Plant density varies, and there is uncertainty on the number of palm trees per hectare and farm, given the fact that they grow wildly and disperse, which difficult the assessment. Farmers interviewed report a plant density per farm34 between 45 and up to 1000 (Fig. 37). Estimated values of palm density per hectare, according to the information provided by farmers, vary from 10 and up to 330 palm trees ha-1 (Fig. 38). Based on this, 64.3% of the farmers interviewed who own land and have palm trees hold up to 50 productive Acrocomia palm trees per hectare. Estimated plant density varies between the two regions selected. The farms visited in San Pedro del Paraná have on average a plant density of 45 palm trees per hectare whereas in those located in Quiindy the average rounds 153 palm trees per hectare.
Fig. 37 Estimated number of Acrocomia palm tress per farm (Author)
3 Average family farm visited is 5 ha. 4 Fourteen farmers out of sixteen that have palm trees in their farms provide an approximate number of palm trees.
55 Beneficiario COLFUTURO 2015 According to Markley (1956), the occurrence of Acrocomia in Paraguay is higher in the central zone of Paraguay than in other regions. In his estimations, the district of Quiindy is included. Other studies describe that the department of Paraguarí, where Quiindy is located, as a region with a high density of Acrocomia palm trees (McDonald 2007 cited Martin 1976 and Bertoni 1941). This statement explains the higher density of palms in Quiindy in comparison to San Pedro del Paraná. During an interview, a key expert in the Acrocomia sector mentioned that Acrocomia is not native to the Department of Itapúa (south-east region of Paraguay and where San Pedro del Paraná is located) and it was introduced throughout the 16th and 18th centuries. In general, palm trees are close to each other in dense groups, and there are dispersed palm trees in the same area too. Farmers described that some palm trees are arranged in thickets, and others separated to each other in distances between 5, 10, 20 and 40 m.
Fig. 38 Estimated palm tree density (Author) There is not a complete study that reveals the number of wild palm trees in Paraguay. Few studies published in 1953 by Markley, Bertoni in 1941 and Martin in 1976 contain estimations on the geographic distribution of Acrocomia (McDonald 2007). A contribution to this information gap was made by the Censo Agropecuario Nacional (2008) in Paraguay, although their data corresponding to 11.9% of the total production in that year. This data is used in this study to estimate the number of palm trees per farm5. Accordingly, 29% of the productive regions have a plant density below 50 palm trees per farm, 21% have a plant density between 50 and 100 palm trees per farm and 26%, between 100 and 200 palm trees per farm. A larger plant density per farm between 200 and 400 palm trees per farm was found in 14% of the zones while 6% have farms with 400 to 800
5 This value depends on the farm size but there is not available information in the CAN (2008)
56 Beneficiario COLFUTURO 2015 palm trees. The lowest share is for those regions with a density higher than 800 palm trees per farm (Fig. 39).
Fig. 39 Share of palm trees per farm (Author) Agricultural practices
There are few agricultural practices implemented by farmers interviewed to manage Acrocomia palm trees. Three interviewees out of nineteen informed that they had fertilized those trees that grow close to annual crops with organic fertilizer (manure or compost). In fact, palm trees that grow close to cultivated areas receive indirect care by the farmer, according to some comments during the interviews. Farmers do not fertilize palm trees growing in scrublands. Young plants that germinate in the shelter of mother palm trees are abundant and result in the formation of dense groups. Cattle is a dispersal vector of Acrocomia when chewing and spitting out the nut. Some farmers informed that they used to remove young Acrocomia plants because they considered them unwanted. After they realized the economic value from this plant, they leave them to grow and remove some of them if needed to cultivate other crops.
Weeding at the base and surrounding of productive palm trees is usual before harvesting, to facilitate the identification and collection of fruits (N=17). Most of the farmers only reported one common pest, which is the larvae of Brassolis sophorae which feed on the palm tree’s leaves. Farmers do not use any mechanism to control the pest, and they inform that its occurrence is discontinuous and it does not attack all palm trees. Other known pests of lower incidence on Acrocomia palm trees are Rhinostomus barbirostris and Rhynchophorus palmarum. The latter is a vector of a nematode that causes the red ring disease, a common infection in other palm species (Gublin-Davis et al., n.d). A key expert
57 Beneficiario COLFUTURO 2015 mentioned the foliar spots caused by fungus Pestalotiopsis spp in the interview. It is unknown the geographic distribution of the pests previously mentioned.
Farmers named some practices to achieve higher fruit yield, such as turning the soil over and weeding, which according to them, benefit the Acrocomia palm trees. Two farmers cultivate cassava and maize in closeness to palm trees. They consider that having palm trees in cultivated soils is convenient for Acrocomia.
Fruit collection
Fruits are collected entirely from wild Acrocomia palm trees that grow in rural areas mainly in the oriental region of Paraguay6. Producers are peasant and smallholder family farmers that exploit this natural resource found on their farms. Eleven farmers interviewed belong to this group. There are also landless peasants and smallholder farmers who collect fruits from neighboring farms owned by relatives, neighbors or third persons (Fig. 40). Through the research, eight farmers out of nineteen interviewed gather the fruits on other farms, and those who own land and palm trees also collect them on their farms. Usually, they obtain permission to gather the fruits from wild palm trees based on closeness and familiarity, or they work as a foreman for the landowners, which facilitates the permission. In some cases, the landowner receives a payment equivalent to the proportion of the fruits collected, typically 50%.
Fig. 40 Strategies for gathering Acrocomia fruits by farmers (Author)
6 There exist about 6 plantations in Paraguay mainly for experimental purposes with an area lower than 13 ha according to a researcher who was interviewed during the research stay. McDonald (2007) reported the existence of a large plantation of 129 ha from which a former processor partly self-supplied, as well as other trials which state is unknown.
58 Beneficiario COLFUTURO 2015 Labor
Acrocomia is part of the family agriculture in Paraguay. Labor for the collection of Acrocomia fruits is provided principally by family members in small-size farms, while in larger farms hired workers to collect fruits. In five farms older adults are actively involved in the harvesting activities. Children support their parents or grandparents in the collection of fruits during free time. In seven farms only one person undertake this task, mainly male (Fig. 41). There is an essential incidence of women and female children in the harvesting of fruits, participating in the harvesting of Acrocomia fruits in 42.1% of the farms visited. In one farm labor is provided by one external worker who receives as payment 50% of the total income from the fruits collected.
Fig. 41 Labor factor in Acrocomia collection (Author)
Harvesting methods and season
There are two methods for collecting the fruits. One wide-spread method in the region of San Pedro del Paraná is to manually pick up the detached ripe fruits that naturally fall on the ground, around to the palm tree. In the case of fruits chewed by cattle, the farmers gather the air-dried fruits in grazing zones and barnyards. Elements such as buckets and sacks are used to collect the fruits. Another method to collect the fruits is cutting off the bunch with a long stick with a knife on the top. This process is commonly known as “cacheo” (from Spanish “cacho”, a colloquial form to call the bunch) and has been practiced by six interviewees, all located in the region of Quiindy. There are two frequent means to transport fruits from the collecting spots to the storage place: sacks carried
59 Beneficiario COLFUTURO 2015 manually (63.1%) and ox-drawn carts (26.3%). Wheelbarrows are also used to carry fruits.
The most mentioned difficulty in the harvesting process are spines, which represent a physical risk when fruits are collected manually from the ground. In general, farmers consider fruit gathering as a time-consuming and challenging task. However, it is easier if the area under the palm tree is manually cleaned and weeded before the harvest season, using the hoe, machete, and rake, what minimizes the risk of contact with spines and increase the efficiency of the process. Young Acrocomia plants occasionally obstruct the collection of fruits from the ground, as they grow around the adult palm trees.
According to farmers, early-ripe fruits usually fall in November (late spring) and continue falling until May (mid-autumn). Most of the fruits detach naturally between December and March. Farmers from the region of Quiindy point out that fruits start falling in October and they consider that an appropriate time to cut the bunch is November and December, as the fruits are riper (Fig. 42). It was evidenced that farmers in this region start cutting off bunches in October and November until December, January, and February. Farmers in the area of San Pedro del Paraná start collecting fallen fruits generally in March.
Fig. 42 Harvesting schedule (Author) Most of the farmers interviewed (63.2%) collect fruits on a daily basis during the harvest season. Those who cut off the fruit clusters harvest a tree only once during the season since they remove all bunches at one time (one harvesting round per palm tree)7 to reduce the number of fallen fruits chewed by ruminants. Farmers who collect fruits that fall on the ground harvest a tree more than once during the season (more than one harvesting round per palm tree), since the fruits detach irregularly. Some collect the fruits at one time per palm tree, at the end of the harvest season (one harvesting round per palm tree). An
7 Farmers who collect fruits cutting off the bunch also collect fallen fruits on the ground that detached naturally.
60 Beneficiario COLFUTURO 2015 interviewee from a former industrial company informed that farmers do first harvesting round in December, then in February and then in March or April. Some return in May or June to collect the last fallen fruits. Nine farmers informed that they spend between 3 and 5 hours per harvesting round, four between 1 and 3 hours and six farmers dedicate between 5 and up to 8 hours per harvesting round. On average there is labor productivity8 of 44 kg fruits h-1. Based on the information provided by farmers from the region of Quiindy, this value is higher when harvesting is performed by cutting off bunches, on average 89.5 kg fruits h-1. Farmers who pick up fallen fruits on the ground collect on average 33.2 kg fruits per hour (Fig. 43).
Fig. 43 Harvesting time (Author) The length of every harvesting round, as well as the harvesting frequency, varies mostly between farmers. Farmers in Quiindy define a specific work season for the harvesting. Most farmers in San Pedro del Paraná tend to plan and define a certain period for collecting the fruits. On the other hand, there are farmers for whom collecting fruits is only done if there is free time. Planning and allocating time resource for this task is a result of the importance of Acrocomia, as explained by those farmers who consider it as a primary activity and agricultural product, temporary and only in a short period of the year though. In the case of Quiindy, Acrocomia fruits collection is an activity already established as also in other districts with the most significant share of primary production of fruits. In San Pedro del Paraná this sector recently emerged and the interest of farmers is raising. Several factors influence the harvesting period, such as the ripeness of fruits, supply period by collectors and processing industries, economic need during Christmas
8 Estimation based on the information provided by farmers on the lenght of every harvesting round and the quantity of sacks or “cajones” collected.
61 Beneficiario COLFUTURO 2015 time, school activities and Easter week, absence of other cash crop at the beginning at the end of spring and to avoid deterioration of fruits or consumption by livestock, as mentioned by farmers and key experts interviewed.
Postharvest and storage
Besides the classification of fruits as whole fruit or chewed fruit by ruminants, there are no additional criteria to classify the fruits. Whole fruits have a more significant share of the total collected and traded fruits. From the farmers interviewed, twelve collect the whole fruit exclusively whereas six gather both types. However, the proportion of whole fruit is significantly higher (Fig. 44).
Fig. 44 Type of harvested/collected product (Author)
When bunches are cut off, they are air-dried, and after two or three weeks the bunch is shaken manually to detach the fruits. Fruits are generally stored in bulk or bagged in sacks and kept in open spaces. A less frequent practice is the storage of fruits in enclosed spaces and without direct contact between fruits and ground. Interviewed farmers in the region of San Pedro del Paraná keep the fruits on average two weeks before selling them to the collector, whereas in Quiindy this period last on average six weeks.
Quality issues
Acrocomia fruits are sensitive to various factors during harvest, postharvest and storage processes. The following quality issues were mentioned by farmers and observed during the field research:
62 Beneficiario COLFUTURO 2015 - Lack of ventilation in storage affects the quality of fruits if these have a high moisture content due to a fresh state of fruits or weather conditions, what could lead to fruit putrefaction, affecting pulp and husk principally. - The early cut of the bunch when the young fruits are unripe affects the development and composition of fruit which has further consequences on yield at the processing level. - Cracking the husk (epicarp) while handling the fruits accelerates the decomposition of the pulp, thus increasing the acidity level. - Leaving the fruits for a long time in contact with the ground accelerates the degradation of pulp and husk. - The storage of fruits for long periods of time increase the decomposition of pulp, its acidity level as well as the quality of kernel. - In the Region of San Pedro del Paraná, seed predation by the larvae Pachymerus nucleorum Fabricius (Coleoptera, Chrysomelidae, Bruchinae) was observed. Larvaes were consumed by indigenous people, according to some farmers. It is not clear when the oviposition of this insect occurs.
Yield
The yield of fruit per palm tree varies between trees and years, according to the description provided by farmers. There exist a high variety of fruit sizes, the number of bunches, age, and height, which influences the productivity. Climatic conditions affect the fruit yield strongly. For instance, droughts negatively impact the productivity of Acrocomia. Based on interviews with key experts and farmers, Acrocomia yield varies yearly with a pattern as follow: two years of stable yield, a drop followed by a peak, and yield stabilization (Fig. 45).
Fig. 45 Yield variability among harvesting seasons (Author)
63 Beneficiario COLFUTURO 2015
Interviewees in San Pedro del Paraná and Quiindy point out that usually mature and tall palm trees have more fruit bunches (between 8 and 12) and higher yields than young and short trees (between 4 and five bunches). Other farmers suggest that old palm trees (which have around four bunches) produce more fruits, while others note that old palm trees have a decreasing production. Palm trees in closeness to cultivated lands under direct or indirect agricultural care such as weeding yield more than palm trees in non-cultivated lands9. Those that grow distant from other palm trees present larger fruit size and yield than trees in dense groups. Some farmers argue that palm trees that produce smaller fruits yield more amount of fruits than those with more abundant fruits, but collecting is more difficult and demands more effort. Another observation is that although the number of bunches in some palm trees is low, their fruits have a larger size. On average, one palm tree produces 43.2 kg of fruit, based on the data provided by farmers. This value is within the ranges calculated by the author using the data published by CAN (2008). From their report, in 89% of the productive areas, productivity is lower than 60 kg per palm tree (Fig. 46). Loss of fruits is likely in the collecting from the ground method since more fruits might fall after farmers make the last harvesting round.
Fig. 46 Estimated productivity per palm tree (Author)
Total output per visited farm ranges between 550 kg up to 27.5 tons. Seven farmers produce less than 30 crates (1.8 tons) and six farmers, between 30 and 65 crates (1.8 to 3.6 tons). These intervals are calculated by the author based on the plant density ranges and a weighted average yield of 36.15 kg per palm tree derived from CAN (2008). From
9 Weeding and cleaning the area around the palm facilitates the visual identification of fallen fruits, which can be a reason of perceiving higher yields.
64 Beneficiario COLFUTURO 2015 this, six intervals are set to describe the total output per farm during a harvest season. Distribution values correspond to the plant density in the productive regions studied in CAN (2008). From this, it is estimated that 29% of the Acrocomia productive areas in Paraguay have a total production of maximum 1.8 tons per farm, 21% between 1.8 and 3.6 tons and 26% between 3.6 and 7.2 tons (See Table 7).
Table 7.Share of productive regions per productivity
Output per farm and harvest season Percentage of Crates Tons productive regions ≤ 30 ≤ 1.8 29% 30 ─ 65 1.8 ─ 3.6 21% 65 ─ 130 3.6 ─ 7.2 26% 130 ─ 265 7.2 ─ 14.5 14% 265 ─ 530 14.5 ─ 29 6% > 530 > 29 4% Source: Author
In summary, the distribution of the output of Acrocomia fruits per farm shows that a large fraction of farmers (76%) collect and supply less than 130 crates. There is a need for more extended and detailed data to reduce uncertainty on these values in order to inform decision-makers and stakeholders involved appropriately.
Linkage to the industry
52.6% of the farmers do not know the industrial applications of Acrocomia fruits as well as well as industrial processors. Proportionally more farmers in the region of Quiindy than those in San Pedro del Paraná are aware of uses such as vegetable oil production, soap manufacturing and animal feed, which is explained by the geographic closeness to industrial processing facilities and the established fruit collection activity in the zone. This is confirmed by the fact that all farmers interviewed in such area know at least one processing company, whereas in San Pedro del Paraná 75% of the farmers do not know the Acrocomia industrial sector.
Fruits trade
Farmers sell Acrocomia fruits to local intermediaries who come to their farms and transport the fruits to an industrial facility for further processing. Occasionally, farmers
65 Beneficiario COLFUTURO 2015 who live in closeness to industries carry the fruits using a car of low load capacity or ox- driven carts. Paid prices are based on the quantity delivered, and there is no incentive for fruit quality. All farmers interviewed affirmed that all fruits are accepted and purchased by the middlemen, without any rejections for quality or other reasons.
Economic importance
Farmers interviewed are mainly on-farm workers, and family members provide labor for agricultural activities. All farmers interviewed cultivate crops such as cassava, beans, and maize, as well as some fruit trees used for self-sufficiency and surplus, which is sold. Livestock is also used for self-sufficiency and represent an on-farm income source for fourteen farmers. Off-farm activities were rarely reported, except for two cases: an artisanal tannery and production of cheese. Temporary jobs in other farms or construction, as well as foreman, are common non-farm income sources, as informed by eleven farmers. Two farmers mentioned income from pension and remittances from relatives. Collecting fruits from Acrocomia is perceived by all farmers interviewed as a profitable activity that increases on-farm income, although it occurs only once a year. Most of them consider Acrocomia as one of their main agricultural products and valuable livelihood. Given that palm trees grow naturally, few agricultural inputs are provided to them, and there is not hired labor for harvesting the fruits, costs are merely composed of the time and workforce required to weed and prepare the area, collect fruits and transport them to the storage place. Based on the information provided by farmers10, in 2017 ten farmers were paid between 140000 PYG (24.6 USD) and 500000 PYG (87.7 USD) for selling Acrocomia fruits, four perceived income ranging from 500000 to 1 million PYG (175.3 USD) and five farmers obtained more than 1 million PYG (Fig. 47).
10 Payment by farmers to other farmers who allow them to collect fruits in their farms is excluded from received income.
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Fig. 47 Income perceived by farmers (Author)
5.5.2. Collector
Collector agents are middlemen who buy Acrocomia fruits from the farmers (primary producers) and sell them to industrial facilities. They are located in closeness to areas where Acrocomia fruits are traditionally collected and therefore, where processor are established. Five collectors were interviewed11, all male from the region San Roque González de Santa Cruz, located in the Department of Paraguarí and 13 km away from Quiindy. They operation place is based on the collection of fruits at the farm No storage or pre-processing is performed by the middlemen. One collector agent informed that in the past he used to store the fruits, waiting for a higher sale price by the end of the harvest season, a statement that was also mentioned by some key experts interviewed, although other collector agents did not confirm it. Distance traveled by middlemen to collect fruits at the farm ranges between 5 and 40 km, with smaller distances between 5 and 10 km away. All middleman interviewed own one or two trucks with load capacity ranging between 4 and 10 tons. They usually hired a crew for loading and unloading the fruits, composed of 2 or 3 male workers and a driver per vehicle. Their compensation generally depends on the number of fruits transported per workday of 10 to 12 hours. Some collectors also supply other agricultural products such as cotton.
From December until July and August (the latest) middlemen collect and supply Acrocomia fruits. The beginning of the operation depends on the date that processors start purchasing raw material. The peak of the collection is from December to March (Fig.48).
11 The section “case study San Pedro del Paraná” includes the description of a collector in this region.
67 Beneficiario COLFUTURO 2015 During the peak period, intermediaries interviewed deliver between 11 and 33 tons of fruits per day. On average, the total quantity supplied in 2017 reached 962.5 tons per middleman (Table 8).
Fig. 48 Supply schedule (Author)
Table 8. Quantity of fruits delivered by collectors
Crates Tons Middleman Whole fruit Chewed fruit Whole fruit Chewed fruit A 13000─14000 1500─2000 715─770 138─184 B 13000 1000 715 92 C 12000 500 660 46 D 37000 1000 2035 92 E 12000 1000 660 92 Source: Author
All interviewed collectors purchase fruit from farmers, and two of them collect raw material from sub-collectors. Those are local traders that occasionally serve as an intermediary between farmers and intermediaries. They collect fruits locally from neighbors in their communities, transport them with ox-driven carts or low load capacity vehicles and store them in bulk and ordinarily outdoor until they have enough volume to sell them to the middlemen. Another possibility is that farmers bring their product to the place where the sub-collector is located. Their role in the supply chain is to collect fruits from smaller primary producers. Middlemen reported that providers range between 100 and 200 farmers (10% ─ 20% collect in neighbor farms) and between 7 and 14 sub- collectors. Based on the information provided by middlemen, total output that farmers sell ranges from 1.1 tons (20 crates) up to 27.5 tons (500 crates) of Acrocomia fruits. These values fit the intervals displayed in Table XX. Sub-collectors provide between 55 tons (1000 crates) and 165 tons (3000 crates) of fresh fruits per supply season.
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Fig. 49 Type of collected product (Author)
Fruits are manually loaded in bulk using shovels. Collectors load fruits from larger farms only once in the supply season. In this case, middlemen’s staff load the fruits without measuring the number of crates. As the quantity delivered is estimated at the processors, the middlemen use this value to pay the raw material to the farmer. If middlemen collect fruits from different farmers in one freight, as it is the case for smaller farms which represent more than half of all producers, fruit is measured in crates before loading up. Processors buy all fruits and receive all raw material they supply, usually without rejections for quality reasons. About 60% of the fruits they supply are harvested using the technique of cutting off the bunch, according to them.
Two of the collectors interviewed own grocery stores. They occasionally sell essential goods on credit to farmers, who pay back with Acrocomia fruits. Organic residues which processor produce are usually sold or given free of charge to collectors who trade it with farmers in exchange for fruits.
5.5.3. Primary processor
Industrial processing of Acrocomia fruits began in Paraguay in the 1940s in regions with a high plant density of Acrocomia. Existing facilities belong to the private sector and are located in the areas with the highest primary production of Acrocomia fruits, as shown in Fig. 50. The author visited three processing companies and conducted in-depth interviews with managers. They are located in the district of Yaguarón, San Roque González de Santa Cruz, and Ybycuí, all belonging to the Department of Paraguarí. Additionally, one
69 Beneficiario COLFUTURO 2015 interview with a former manager of an industrial facility and a key expert from the sector contributed significantly to the research.
Fig. 50 Acrocomia processing industries (Author)
Five companies are active in the Acrocomia value web. In total there are six processing units, as one of the companies operates in two different areas. These process the total quantity of Acrocomia fruits collected in Paraguay (Fig. 50). Together all active processing units have a design production capacity of around 276000 tons per year (5 million crates)12 13 (Table 9). In the last two decades, four companies entered into the Acrocomia value web, and six stopped their operations, which evidences the instability
12 Production capacity assuming 12 months of continuous operation in the year. Assuming an average production capacity of 46000 tons per year and processing unit, based on own calculations and date published by Loup (2017)
70 Beneficiario COLFUTURO 2015 and dynamism of the sector. Since 2010 four have closed and two started operating. around 276000 tons per year (5 million crates). In the last two decades four companies entered to the Acrocomia value web and six stopped their operations, which evidences the instability and dynamism of the sector. Since 2010 four have closed and two started operating.
Supply of raw material takes place from the beginning of December until July, with a peak season that extends from December until March. At the end of March starts the processing of fruits, usually lasting between 3 and five months (Fig. 51). During this time all fruits supplied are processed. Thus, industrial companies operate considerably below production capacity due to the shortage of raw material.
Table 9. Design capacity of processors
Design capacity Company Per day Per year Crates Tons Crates Tons A 2000 110 730000 40150 B 2500 137.5 912500 50187.5 C 2500 137.5 912500 50187.5 Source: Author
Fig. 50 Acrocomia processing industries (Author)
Processing consists mainly of pretreatment of fruits and extraction of pulp and kernel oil. A set of by-products such as kernel cake, pulp cake, endocarp, husk and agricultural residues are generated in the process. Frequently, companies operate 24 h in two or three shifts during the processing period. Every processing unit is supported by 15 to 30 production operators, among them 5 to 10 exclusive for industrial maintenance.
71 Beneficiario COLFUTURO 2015 Supply of raw material
Fruits are, in a significant proportion, supplied by middlemen located in a radius of 80 km away from processing units. From the interviews, there are three categories of middlemen according to the volume of fruits supplied: small-size collector (between 1000 and 5000 crates), medium-size collector (between 5000 and 15000 crates) and large-size collector (more than 15000 crates). Visited companies have between 10 and 25 collectors. Large-size collectors are usually few, but their volume represents more than 30% of the fruit received by companies. The number of medium- and small-size collectors varies among companies. Some of them have a more extensive participation of small-size collectors (up to 16 from 25 collectors); other, more medium-size collectors (up to 6 out of 11 collectors).
Sub-collectors also participate in the supply and sometimes are classified as small-size collectors if their volume is higher than 1000 crates. They supply from 50 and up to 3000 crates of fruits per year, using low load capacity vehicles. A company reported receiving fruits from around 5 of such Sub-collectors. Farmers as primary producers rarely supply raw material directly to the processor. In few occasions, they carry between 5 and 15 crates in ox-driven carts or small vehicles. A company reported that less than 100 crates are supplied in this form. Occasionally, the processor uses own vehicles to collect fruits at farms nearby or even to sub-collectors and intermediaries.
Around 97% of fruits supplied correspond to whole fruit (with epicarp and pulp), and 3% are fruits chewed by ruminants whose husk is removed and there is a remaining part of pulp covering the nut (endocarp and kernel) (Table 10).
Table 10. Type of fruit supplied
Company Whole fruit Chewed fruit A 96,3% 3,7% B 95,8% 5,2% C 99,2% 0,8% Source: Author
Reception of raw material
Trucks that transport the fruits are weighed in a truck scale at the entrance of the industrial facilities. Once the vehicle is unloaded the Acrocomia fruits, the empty truck is weighed. This value is then converted to the number of crates, based on a sample of the transported
72 Beneficiario COLFUTURO 2015 material to estimate the average weight per crate. Another method is performed by a company, which created a database with information about collectors to facilitate the delivery of material (Fig. 51). When the trucks arrive, staff from the company check the information in the database. Based on the type of vehicle, volume capacity and height of load, a total volume of product is calculated, which is then divided by the volume of the unit of measurement (0.132 m3, in this case, the standard unit is not utilized) and converted to the crates. Afterward, the difference between the load and empty truck is calculated and divided by the number of crates to determine if the weight belongs to the normal range (45 kg to 70 kg). This practice reduces the time and cost of the reception according to an expert from the company visited. After determining the number of crates, the total cost to be paid is calculated.
Fig. 51 Weighting of a sample of fruit during the reception of raw material (http://abc.com.py)
Quality control of raw material
Quality control is evaluated visually without using check lists or other mechanisms. Ideal fruits are those with the following characteristics:
- A bit of dirt (agricultural residues, sand, empty bunches, and so on) - Appropriate fruit ripeness (based on external color, pale green (unripe), yellowy- greeny (ripe, fresh fruit), dark brown (overripe, dry fruit), darker tones (spoilage, damaged). Epicarp of unripe fruits has a wrinkled and shrunken aspect. - Raw material has low external moisture content. - Husk still in contact with pulp
73 Beneficiario COLFUTURO 2015 These factors are solely visually checked without rigorous inspection. Given that farmers mix fruits collected from the ground with fruits manually detached, it is difficult to identify the unripe ones through quick visual revision. Generally, all material received is accepted. An industry reported some minor cases in which the material was rejected due to a significant fraction of unripe fruits or abundant dirtiness. Such strict measures, according to the interviewee, raises the attention to quality aspects.
On average the visited companies receive between 30% and 40% of fruits collected through the method of cutting off the bunch, mainly at the beginning of the supply season. This value differs from the one reported by collectors, although it is only an estimation from the interviewees since there is not monitoring of quality. One interviewee informed that there are regions where fruits are commonly collected in such form. According to farmers and experts interviewed, when fruits are harvested through this technique before fruits are ripe (before November and December), there is a high risk to collect mainly unripe fruits. These affect the industrial productivity. According to experts from the industry, pulp, kernel, and endocarp of unripe fruits are not entirely developed. Therefore the yield is low. Oil content is about half of mature fruit and acidity level, as well as colorification, might be affected.
Storage
Acrocomia fruits are piled up in storerooms and occasionally in open yards after receiving the raw material in the industrial facilities. Storage capacity in every facility varies between 40000 crates of fruits (2000 t) and 150000 crates (8000 t). Fruits are usually not processed immediately after the reception and lead time in storage reaches periods between 1 week and up to 90 days. During this time fruits are air-dried. The aim of the storage period is to facilitate the separation of epicarp and pulp as well as endocarp and kernel. There is not continuous ventilation of fruits during storage. The raw material is processed in a first in, first out (FIFO) system. All raw material is processed during the
74 Beneficiario COLFUTURO 2015 processing period; there is not stock of fruits in storage for the next year.
Fig. 52 Indoor and outdoor storage of Acrocomia fruits after receiving raw material (Author; top and bottom center and bottom right pictures: http://www.abc.com.py)
Pretreatment
Pretreatment and extraction processes is illustrated in Fig. 53. The kernel and pulp for oil extraction are prepared in a continuous flow production. Raw material is initially sieved mechanically through a vibrating sieving machine to separate impurities such as organic residues, soil fractions, bunches, and dirt. Afterward, a hulling machine removes the husk from the fruit, which is used as solid fuel in a boiler to produce steam for further processes. Remaining husk is sold as organic fertilizer together with agricultural residues generated during sieving and occasionally as solid fuel. Dry state of fruits due to long lead times in storage facilitates the dehulling since the mesocarp size shrinks. Subsequently, a pulper machine separates the mesocarp from the nut through the action of rotating drums or disks with spikes or pressing the fruits against sharp-edged plates. A sieving machine was implemented in a processing facility to remove the remaining pulp in the nut. A roll crusher machine is used for cracking the nut, resulting in a cracked mixture of kernel and endocarp. The mixture enters from the top to a clay-water bath, where a solution of kaolin and water flows and the solids separate due to the different specific gravity of kernel and shell. Kernel, which is lighter, floats whereas endocarp precipitates and is further stacked and posteriorly sold in bulk. The density of the clay- water bath needs continuous monitoring to avoid the loss of seeds. Then, water and clay
75 Beneficiario COLFUTURO 2015 are separated through decanting; water recirculates typically or is disposed of as wastewater and residual clay is mixed and sold as organic fertilizer. The kernels carry some particles of clay. Vibrating sieving and a washing process that sprays water out remove the clay particles. Before the oil extraction, steam that flows through a heat exchanger system removes moisture from the surface of the kernels. Drying the kernels is necessary before the oil extraction, using steam that flows through a heat exchanger system to remove surface moisture (Fig. 53: Fig 56). Grinding of kernels is performed through a hammer mill before the material enters the cooker and screw press, breaking the seeds in smaller fragments and increasing the extraction efficiency due to the rupture of cell walls. All materials are transported into, along and outside the system through conveyor chains and elevators. By-products are stored in warehouses or open yards.
Fig. 52 Process flow (Author)
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Fig 53. Vibrating sieving machine for separation of impurities from fruits (Author)
Fig 54. Roll crasher for cracking the nut and separating the endocarp from the kernel (Author)
Fig 55. Tank for separation of endocarp and kernel using clay kaolin dissolved in water (Author)
Fig 56. Heat exchanger for drying the kernel after the clay-water bath (Author)
77 Beneficiario COLFUTURO 2015 Oil extraction
Oil from seeds and pulp is extracted mechanically in different oil pressing (expeller pressing) units in continuous flow production. Those for pulp oil extraction are larger as the pulp is bulky. Presses are generic for other, but they are set up for the conditions of Acrocomia pulp and kernel. Before pressing, seeds and pulp are separately heated up in a steam kettle at temperatures ranging from 60ºC and up to 100ºC. This thermal treatment facilitates the extraction. Then the material is fed into the screw press, which continuously extracts the oil through the action of a rotating screw shaft with many worms inside a horizontal chamber.
As a consequence of the high pressure, oil is released and flows out through various spaces between the chamber’s bars. As a by-product, the press cake flows out through the end of the chamber as a by-product. Oil is filtered and purified in chamber filter presses that employ a filtration cloth, retaining suspended solid particles. These units work in batch and usually process kernel and pulp oil separately, although in some processing facilities pulp oil is not filtered. Afterward, the crude oil is stored in tanks to be sold in bulk (Fig 56: 59).
Fig 56. Oil presses with round kettles in the top for oil extraction from Acrocomia’s pulp and kernel in two industrial facilities in Paraguay (Author)
Fig 57. Rotating screw shaft inside the screw press’s chamber (Author)
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Fig 58. Chamber filter press for filtration and purification of kernel and pulp oil (Author)
Fig 59. Storage tanks of pulp and kernel crude oil separately (Author)
One Acrocomia processing company employs two methods for the extraction of kernel oil: first through expeller pressing, followed by solvent extraction, in which kernel cake produced by the mechanical pressing, with 10% to 12% of residual oil, is reprocessed. After extraction using solvents this value lowers to 1.5% to 2%. Extraction solvent is a batch process with a capacity of 40 t per day, performed in 6 units. Effluent treatment and recovery of oils is a process that follows the solvent extraction. One interviewee in a processing facility pointed out that solvent extraction requires high investment and high volumes to be profitable. Implementing such technology would be feasible with a higher volume of raw material.
Residual oil in pulp and kernel cake ranges between 8% to 20% and 5% to 12% respectively (Table 11).
Table 11. Residual oil in cakes
Parameter Company A Company B Company C Extraction efficiency of kernel oil 88−90% 92−93% 90−95% Residual oil in kernel cake 10-12% 7−8% 5−10% Extraction efficiency of pulp oil 91−92% 86−88% 80−85% Residual oil in pulp cake 8−9% 12−14% 15−20% Source: Author
79 Beneficiario COLFUTURO 2015 According to interviewees, acidity level (percentage of free fatty acids in oil) in industrially obtained oils ranges between 65% and 70% in pulp oil and between 1% and 3% in kernel oil (Table 12).
Table 12. Acidity level
Parameter Pulp oil Kernel oil Acidity level 65%─70% 1% ─ 3% Source: Author
Industrial yields
Seven products from Acrocomia fruits are generated along the pretreatment and oil extraction processes. The interviewees reported yields obtained at industrial level14. Largest fractions correspond to endocarp and epicarp, which on average account for 45.3% and 28.4% respectively from processed fruits. Pulp cake sums on average 14.2% whereas kernel cake has a share of 4.5%. Around 6 % of kernel oil is produced. The lowest portion corresponds to pulp oil, with 1.6% on average (Table 13 and Fig. 59).
Table 13. Industrial yields by company and product
Product or by-product Company Aa Company Ba Company Ca kg % kg % kg % Kernel oil 2.2b 4.9 2.9 6.4 3.0 6.7 Pulp oil 0.7 1.6 0.9 2 0.5 1.1 Epicarp (husk) 13.6 30.2 11.7c 26 13 28.9 Endocarp 21 46.7 20.2 44.9 20 44.4 Kernel cake 1.5 3.3 1.4 3.1 3.25 7.2 Pulp cake 6 13.3 7.9 17.5 5.25 11.7 a Crate of 45 kg b2.4 liters, assuming a kernel oil density of 924.6 kg m-3 (Costa 2016) c2.7 kg from the value given are considered as agricultural residues (including rests of husk) that are further sold as organic fertilizer.
14 Air-dried basis
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Fig. 59 Share of components in a crate of Acrocomia fruit (Author)
For fruits chewed by ruminants the product and by-product composition is different. In this case, the nut has a remaining fractions of pulp but its average quantity is unknown. Assuming that there is not remaining pulp, yield of processing Acrocomia nuts is 81.1% endocarp, 10.7% kernel oil and 8.2% kernel cake, based on own calculations using the yields reported by the interviewees for whole fruits (Fig. 60).
Fig. 60 Share of components in a crate of Acrocomia fruit (Author)
81 Beneficiario COLFUTURO 2015 6. Value web linkages and governance Understanding coordination and organization among actors that belong to the value web as well as identification of support services and enablers serves as a baseline for the formulation of upgrading strategies. The governance and linkages of the value chain are illustrated in Fig. 61. During the interviews, a participatory tool to map the value web was applied, which facilitate the identification of actors, linkages, support services, and enablers. Results were validated and complemented through iterative use of this tool with industrial managers that belong to the value web, key experts with specialized knowledge and experience in specific sectors and practitioners with a holistic view of the value web.
6.1.Actors and value chain structure There are four types of structures in the procurement of Acrocomia fruits:
1. Producer→Collector→Processor 2. Producer→Sub-collector→Collector→Processor 3. Producer→Sub-collector→Processor 4. Producer→Processor
The first two types are more frequent. As stated by experts interviewed, only in very few cases exist contact between producer and processor. All relations, except the link between collector and processor, are informal and function under free market exchange conditions. If a collector offers a higher price, producer and sub-collector change their actual collector. However, specific informal mechanisms strengthen the relationship between collectors and their suppliers. Collectors receive payment in advance by processors so that that collector can finance the purchasing of fruits. Collectors also pay in advance to farmers (if there is a long-standing relation) and through that they secure that farmer will sell fruits to a specific collector. The same situation occurs between the collector and sub- collector and between sub-collector and farmer. Another type of informal links between collectors and farmers is when the former owns a grocery store and sell essential goods on credit to the farmer, who pays back with fruits. In general, there exist a long-standing relationship between farmers, collectors, and sub-collectors, who might be neighbors and even relatives. They communicate with each other personally or by phone, to plan the collection. Collectors and sub-collectors do not enforce quality aspects.
Order contract between processor and collector is a mechanism through which the processor secures the supply of raw material. Collectors commit to supply certain quantity
82 Beneficiario COLFUTURO 2015 of fruits. Additionally, aspects such as price, compensation and some general aspects about quality are included. The Processor pays in advance to the collector and sign a promissory note. According to interviewees, payment in advance is mainly paid to collectors that have a long-standing relation with processor and when there is loyalty and trust between both actors (usually with larger collectors). If the collector supplies fruits to other processors without reaching the quantity agreed on the contract, the processor does not pay compensation to the collector. Both actors communicate personally and via phone.
The processor usually has order contract with importers of kernel oil abroad. Other products and by-products are sold through the operative period and after processing stops. According to the interviewees, relationships between buyers and processor are stable and continuous.
6.2.Horizontal linkages
There exist no horizontal linkages between producers. One collector mentioned that sometimes collectors merge to reach the quantity of raw material that allows them to receive compensation. Besides that, there are not horizontal linkages among collectors. Industrials were associated in an organization named “Cámara de Industriales del Coco” (CAINCO), which was created with the aim to increase the competitiveness of the Acrocomia sector through enforcing quality requirements, agreements on purchasing prices and promotion of the rational cultivation of Acrocomia (McDonald 2007). This institution does not exist today according to the experts interviewed. Some of them pointed out that relations between processors are weak. There have been some initiatives led by processors to retake the aims of CAINCO but ideas are not implemented. Competition to reach supply goals increases the pressure and deteriorates the relations between processors, given the limited raw material. Processors interviewed stated that they are open to collaborating with actors within the value chain and external ones.
6.3.Vertical linkages Vertical linkages between actors are generally incomplete. Processors have a direct relation with collectors, but there is no contact in most of the cases with the primary producer. This creates situations in which the primary producer do not even know the final uses of Acrocomia fruits, which affects his/her awareness of quality aspects. Some experts interviewed claimed that there are mistrust and misinformation in the value chain.
83 Beneficiario COLFUTURO 2015 One example is the use of a larger crate by collectors so that they pay less to farmers for more fruits. Collectors interviewed informed that they use the crate size under instructions given by the processor. Weak linkages among actors increase “win-lose” relations, which jeopardize the competitiveness of the whole value web. According to an expert interviewed, one processor which is vertically integrated with a soap manufacturer has a closer relation to primary producers and incentivize the quality of raw material with higher prices.
6.4. Supporting services In the domestic market, oil is distributed by the primary processor using own or outsourced tankers. All other materials are transported in outsourced or own trucks, which costs are paid either by customers or by the primary processor. Suppliers of input for the production process such as kaolin and suppliers of pieces for machinery are also considered as supporting service. One company that exports kernel oil certifies the product regarding parameters like acidity level, humidity, and colorification. There have been a couple of entrepreneurial initiatives to set companies oriented to supply inputs for the cultivation of Acrocomia, such as seedlings. Their impact on the current value web is rather low due to the lack of plantation projects.
6.5.Enablers There have been different ideas and initiatives to contribute to the competitiveness of the Acrocomia sector, but they have not impacted the value web significantly, according to the interviewees. Through the interviews, it was evidenced the need for coordinated endeavors that provide and strengthen the enabling environment for the competitiveness of the Acrocomia value web.
6.6.Public sector During an interview with a person from the Department of Extension Services from the Ministry of Agriculture and Livestock, it was acknowledged that extension agents promote the rational cultivation of Acrocomia and commercialization of fruits. Aspects covered according to the interviewee are: selection of natural seedlings from farmers’
84 Beneficiario COLFUTURO 2015
the value chain (Author)
ig. 61ig. Governance of F
85 Beneficiario COLFUTURO 2015 land, transplanting, plant density, cover crops, association with food and medicinal crops for self-sufficiency, harvesting, and use. Information communicated is mainly based on empirical knowledge. This initiative is led by the expert interviewed without direct support from the Ministry of Agriculture and Livestock. Farmers visited during the conduction of this study, informed that they had not received advice or information from extension agents.
Another actor that has offered support to the sector is the Export and Investment Network (REDIEX), which selected Acrocomia as a crop with the potentiality for international markets.
In 2011, a national program oriented to the Acrocomia sector called “Plan Nacional Mbokaja” was discussed and proposed by interinstitutional actors with the participation of the Viceministry of Mines and Energy, National Institute of Technology, Normalization and Metrology (INTI), National Institute of Rural Development and Land, Petropar (company from the oil and gas sector), Ministry of Industry and Commerce, Ministry of Agriculture and Livestock, among others. The plan was not implemented. The project planned to have pilot cultivations with smallholder farmers who were part of farmer-based organizations. The same year the Law 4309 was issued, declaring the forestation and reforestation with Acrocomia in Paraguay of national interest. This offers Acrocomia the benefits of other tree species through the Law 536/95 that promotes and offers incentives for the forestation and reforestation. Through a personal conversation with a member of the National Forest Institute (Infona) it was highlighted that the Law 536/95 target mostly timber trees such as eucalyptus and that Acrocomia was introduced more for political and energetic reasons.
In 2012 the Ministry of Industry and Commerce financed a Project to cultivate 50 hectares of Acrocomia in the south of Paraguay (District of Villalbin, Department of Ñeembucu) with the participation of smallholder farmers. There is little information about the state of the project. According to an expert interviewed, who participated in the project, there were failures in the transplanting of seedlings. Another challenging aspect is the location of this project, which is located about 300 km away from the processing areas.
International cooperation
During the interviews with experts in the Acrocomia sector, different projects supported by international organizations were mentioned. Five initiatives were identified and
86 Beneficiario COLFUTURO 2015 summarized in Table 14. Most of the projects are inactive and did not accomplish the goals proposed for different reasons such as lack of knowledge and technical aspects of Acrocomia domestication and cultivation, engagement of smallholder farmers, weaknesses in governance, and financial and organizational problems in projects’ executors. Other projects were recently initiated. Experiences from past projects should ideally offer insights to success in current initiatives.
There is a need to develop appropriate horizontal and vertical linkages between actors within the value web. Endeavors led by public and private institutions lack coordination, support and inclusion of actors from the value chain.
87 Beneficiario COLFUTURO 2015 Table 14. Past initiatives and experiences for Acrocomia value chain development based on international cooperation (Author)
Project/year/status Agency/ Description Results organization/ donor PR-L1108 : Coconut IDB This project aimed at setting a value chain in the region of Misiones, Very limited information exists about the results of this project. It Oil-based Renewable (Inter-American Paraguay, through building an industrial processing unit for production of was not identified any processing company in the region. Fuel: Pilot Biodiesel Development Bank) Acrocomia oil and further conversion to biodiesel. The main goal was to Apparently, the project was not implemented. Proyect increase income and quality of life of producers who collected Acrocomia (2007, inactive) fruits by integrating them into Acrocomia value chains. According to the newspaper Ultima Hora (Dec 2007), the company The project included technical support, assistance and supply of inputs for Agro Granos S.A., installed a nursery for the production of smallholder farmers. Organization of farmers through productive seedlings, which were transplanted in farms from beneficiaries of the committees was aimed to manage collection centers. In this way, farmers project (smallholder farmers). Through a personal interview with an would have direct link with processors without the intervention of expert in Acrocomia plant production in Paraguay it was informed middlemen. that this project failed due to the lack of knowledge in the production Additionally, it was planned the provision of inputs and support for of seedlings and transplanting to the field. cultivating annual crops to be cultivated in association with Acrocomia palm trees. PR-M1007 : Integral IDB This Project aimed at improving the productivity and income of primary - According to the reports by the IDB the results were unsatisfactory, Use of the Coco (Inter-American producers as well as processors in three districts located in two and the sustainability of the project was not guaranteed. Indeed the Mbokaja (2009, Development Bank) departments that concentrate Acrocomia production. project did not continue according to the interviewees. inactive) Two components: - The project contributed to the decision of setting a new processing 1. Promotion of rational cultivation of Acrocomia unit, which was led by a third 2. Collecting, logistics, and commercialization of fruits. - 3 committees of producers were created - Increase in the collection of fruits (20%) by producers (smallholder farmers), which were supplied to the new processing unit. - Transplantation of 50000 seedlings out of 180000 -Technical assistance for 150 producers about agricultural cares after transplantation out of 300 -Distribution of 30000 seedlings to farmers located in every district - Establishment of 1 nursery - Around 250 smallholder farmers perceived an increase in their income related to the collection of Acrocomia fruits - Cultivation of 50 hectares out of 300 ha. A.C.E.I.T.E.S (2016, Program AL-Invest Project formed by 3 sectors; one of them is the Acrocomia sector in -Establishment of a multisectoral platform to enable collaboration Active) 5.0, European Paraguay. This project aims at fostering competitiveness of the Acrocomia and dialogues among actors. Commision value web through innovation and technological cooperation. It is based -Participation of industrial processors that belong to the Acrocomia on the connection between diverse actors from the value chain with sector research and innovation institutions such as universities and the National -Diffusion of research advances from the Universidad Nacional de Council for Science and Technology (CONACYT), as well as actors from Asunción (UNA) in the area of bio-catalyzers from fruit’s pulp, with other countries. support of CONACYT.
88 Beneficiario COLFUTURO 2015 Manejo Sostenible de German One component of the project “Sustainable Management of Natural - Increase in the supply of fruits by smallholder farmers directly to Recursos Naturales Corporation for Resources” aimed at increasing the production of Acrocomia fruits and the processor (Borsy et al., 2011). (Sustainable International maize to elaborate concentrate for animal nutrition, in partnership with an -Implementation of a collection center close to productive farms management of Natural Cooperation (GIZ), industrial processor (Industrial Aceitera S.A). (Borsy et al., 2011). Resources) Kreditanstalt für -Provision of transport service, reducing the transportation cost and MAG-KfW-GTZ (2008, Wiederaufbau intervention of middlemen (Borsy et al., 2011). completed) (Reconstruction -Promotion of good agricultural practices to improve production in Credit Institute) wild populations of Acrocomia (avoid burning to clean area around the palm tree, avoid cutting off the leaves to feed cattle, use of cover crops, avoid soil compaction caused by cattle, pest control) (Mc Donald 2007). -According some experts interviewed, it was planned to cultivate Acrocomia in 9 hectares with the participation of smallholder farmers, however this was not implemented partly due to failures in the adoption and cultivation of palm trees by farmers. Improving income International Rural Project financed by ILD and local government and coordinated by a -Construction of a collection center in San Pedro del Paraná to sources for peasants and Development Catholic faith-based organization (Pastoral Social de San Pedro del storage the fruits collected by peasants and smallholder family smallholder farmers Service Paraná). It aims at promoting the cultivation and collection of Acrocomia farmers. through the cultivation (Internationaler fruits as an alternative income source for peasants and smallholder family -Service of collection of fruits at the farm and processing of Ländlicher farmers in the region of San Pedro del Paraná. -Collection of 2500 crates (135 tons) of Acrocomia fruits since Acrocomia spp. in San Entwicklungsdienst, 2017 Pedro del Paraná. ILD) -Cultivation of around 35 hectares of Acrocomia palm trees with (2017, active) the participation of smallholder farmer. -Technical support in establishing the plantation -Supply of seedlings to farmers under a contractual arrangement Manejo del Cocotero Japan International As part of the project “J-Green, Validation study of participative rural - Illustrated book with good agricultural practices (McDonald 2007; (Management of Cooperation development based on soil conservation” a document was elaborated with J-Green 2006). Acrocomia palm tres) Agency information about agricultural management and practices related to (2006, completed) Acrocomia palm trees
89 Beneficiario COLFUTURO 2015 7. Market and economic analysis of the value web 7.1.Supplied quantities The quantity of supplied raw material depends on factors such as purchase price, climatic conditions, fruit yield of Acrocomia palm trees, productivity in farms and supply capacity by actors involved. Supply of Acrocomia fruits in Paraguay has decreased in 67.3% between 2005 and 2016 according to the information registered by Loup (2017), a key expert in the Acrocomia sector who was interviewed for the purpose of this research. In 2016 approximately 46300 tons (842000 crates) of Acrocomia fruits were collected and supplied. At the same time, demand for Acrocomia fruits has decreased. In the last ten years, five companies stopped operating and three entered the market. One of these operated only for three years. Since 2014, three companies have closed. Today, five companies15 constitute the Acrocomia industrial sector. Processors operate notably under design and effective capacity16 (276000 tons, 5 million crates). Capacity utilization in the industry sector had its highest level in 2005 (54.3%) and its lowest level in 2016 (83.5%), according to Loup (2017).
Fig. 62 Suply vs. design and effective capacity (Author based on Loup 2017)
Visited industrial companies utilize between 3.3% and 16.5% of their effective capacity. According to Loup (2017), on average the six existing processing units that currently operate had a capacity utilization of 15.1% in 2016. Maximal utilization level of effective capacity in the companies visited was 39.4% in 2012 and the minimal level was 3.3% in 2018 (Fig. 63;Table 15 and 16).
15 There are today 5 companies and 6 processing units operate in total (e.g. one company has 2 processing units) 16 Design capacity: assuming 12 months of continuous operation; effective capacity: assuming 10 months of continuous operation 90 Beneficiario COLFUTURO 2015
Table 15. Capacity utilization of the visited companies
2016 2017 2018a Capacity Capacity Capacity Company Crates Tons utilization Crates Tons utilization Crates Tons utilization (%) (%) (%) A 60000 3300 9.9 40000 2200 6.6 20000a 1100a 3.3 B 106000 5830 13.9 105000 5775 13.8 125000a 6875a 16.4 C 109200 6006 14.4 125600 6908 16.5 90000b 4950b 11.8 a By July 2018 b By March 2018 Whole fruits
Fig. 63 Suply vs. design and effective capacity of the visited companies (Author)
Table 16. Capacity utilization of the visited companies
Minimal supply Maximal supply Capacity Capacity Company Crates Tons utilization Crates Tons utilization (%) (%) A 20000 1100 3.3 240000 13200 39.4 B 60000 3300a 7.9 160000 8800 21 C 98000 5390 12.9 220000 12100 28.9 aDuring 2013 there was not processing of whole fruit due to commercial conditions with oil buyers. This year is not assumed as a season with minimal supply since this was a decision by the company rather than a supply condition.
91 Beneficiario COLFUTURO 2015 7.2.Products Considering that in 2016 around 46000 tons of Acrocomia fruits were supplied and processed and using the yields per crate of whole fruit, the output per product and by-product during that year is estimated. Accordingly, circa 2700 tons of kernel oil were produced and less than 1000 tons of pulp oil. Around 21000 tons of endocarp and 13000 tons of husk were generated and more than 8 tons of both kernel and pulp cake (Fig.64).
Fig. 64 Quantity of products and by-products (Author)
The economic value of products and by-products and their yields determine the income sources for industrial processors. According to the interviewees, kernel oil is the most valuable product in the current state of the industrial sector although it is only a small fraction of the fruit. On the other hand, endocarp is the most voluminous by-product, but its economic value is relatively low. These two fractions have the highest economic importance for industries, according to the interviewees. Pulp oil and kernel cake have a similar relevance; pulp oil has a higher economic value, but its quantity is slightly lower than the amount of kernel cake, which has a lower economic value. The economic value of pulp cake is inferior to kernel cake but the difference in quantity is higher compared to kernel cake and pulp oil. Around 20% of husk is usually used in the same process as solid fuel to generate steam. A fraction of the remaining husk (50%) is sold as solid fuel and organic fertilizer (30%), which has a low value and relatively large volume (Fig. 65).
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Fig. 65 Economic importance of products (Author)
Among interviewees, the ranking position of kernel cake, pulp oil, and pulp cake vary. Some consider pulp cake as less economically significant than kernel cake and pulp oil. The latter is also seen as less profitably important than kernel cake.
7.3.Markets Products and by-products from Acrocomia fruits reach the market in different forms. Commercialization of oils and endocarp is business-to-business (B2B), and commerce of cakes and husk are usually based on a combination of business-to-consumers (B2C) and B2B relations. A common practice among processors is to set formal and informal sales commitments with specific customers (B2B) before the operative year starts. Oils and by- products are traded along the production cycle. After the production cycle finishes, all products are customarily sold, leaving cero stock of oils.
7.3.1. Kernel oil Acrocomia kernel oil is a protein-rich oil with a significant fraction of lauric acid (43.6%) from fatty acids, which makes it valuable for cosmetics and pharmaceutical applications (César et al., 2015 cited Amaral 2007). Kernel oil is the only product from Acrocomia fruits that reach international markets, all located in South America. Visited industrial companies export between 30% and 100% of their output17. The volume of kernel oil exported fluctuates yearly according to the conditions of international markets, prices and production capacity of industrial processors. In the last ten years, exports have decreased by 64.3%, from 2500 tons to less than
17 Four companies export kernel oil. One company exports 12% to Chile and 88% in domestic market. Another company does not export, since they use the kernel oil for further elaboration of soaps. 93 Beneficiario COLFUTURO 2015 900 tons. The main destination is Brazil, which accounts for 61.3% of the exports on average. In 2017, 86% of the exports went to Brazil. The second largest importer is Argentina with mean participation of 25.9%. The lowest share corresponds to Uruguay and Chile (Fig. 66). Kernel oil is an input for secondary processors that belong mainly to the cosmetics and chemical industries. According to the information provided by two experts in the sector, there was a company in Brazil from the food industry that imported kernel oil before 2011 and currently, there is an industrial food company in Chile that imports kernel oil. In Argentina, a company refines the kernel oil to blend it with other edible oils (Loup 2017). According to an interviewee from the industry, kernel oil has to meet a certain quality requirements (through certification) for exports such as acidity level lower than 3%, moisture lower than 1% and specific color parameters.
Fig. 66 Exports of kernel oil (Author based on data provided by REDIEX)
Kernel oil is also marketed locally to four large industrial enterprises in Paraguay for the manufacturing of toilet, bath and washing soap manufacturing. One interviewee informed that for one year they supplied kernel oil for biodiesel production for a low price (less than 5000 PYG kg-1, standard price rounds 8000 PYG kg-1), because of the unfavorable conditions in international markets. During an interview with an expert in biodiesel production, it was mentioned that kernel oil is not appropriate for biodiesel production because of its fatty acids of short chains.
7.3.2. Pulp oil
Pulp oil from Acrocomia is rich in oleic acid (53.4%), offering interesting properties for the food industry (Colombo et al., 2018; César et al., 2015 cited Amaral 2007). However, given the current conditions of the Acrocomia value web, pulp oil is considered an inferior quality oil,
94 Beneficiario COLFUTURO 2015 due to its high acidity level. Companies in Paraguay consume the total quantity of pulp oil for the production of washing soap. Small- and large-scale manufacturers use it. One processor informed about the export of pulp oil in the past by a buyer interested in the fatty acids that this oil content. In the domestic market, pulp oil from Acrocomia is used on a minor scale as a lubricant and adjuvant (e.g., additive) for enhancing the performance of pesticides and herbicides.
7.3.3. Endocarp
The endocarp has a high calorific value (20.45 MJ kg-1; Barbosa-Evaristo et al., 2018 cited Evaristo et al. 2016). For this reason, it is an alternative material for combustion and is sold in bulk to industries demanding solid fuels to produce steam and heat for production processes. Industrial companies from the food industry and other sectors such as cardboard production are buyers of endocarp as a substitute to conventional fuels such as firewood and fuel oil. Primary buyers are located in the Central region of Paraguay.
7.3.4. Epicarp (Husk)
Epicarp has a calorific value of 20.24 MJ kg-1 (Barbosa-Evaristo et al., 2018 cited Evaristo et al., 2016). It is partly used in the same production plant, and the remaining is sold as solid fuel to other industrial companies in the region.
7.3.5. Cakes
Pulp and kernel cakes from Acrocomia oil extraction have valuable properties for animal nutrition, according to an expert in the field who was interviewed for this research. Kernel cake is palatable and highly digestible. Protein content ranges between 32% and 34%, which make it competitive with other protein sources such as soybean cake, sunflower press cake and spent grains from corn distilleries18. The expert argues that this competitiveness is higher if the by- product is commercialized locally, avoiding transport costs. Kernel cake is mixed with other feeds for nutrition of hogs, chickens, and calves.
On the other hand, pulp cake has a low protein content (between 7% and 8%) and high-fat content (14.7%; Loup 2017), which make it a source of energy. It is mixed with other feeds and consumed mainly by cattle. According to the interviewee, around 200 small-scale companies use pulp and kernel cake for the elaboration of concentrates, which are located in areas close to Acrocomia primary processors. Some Acrocomia industrial processors mill pulp and kernel
18According to the interviewee when comparing the ratio price per protein, kernel cake has one of the lowest values in comparison to other protein sources (around 5300 PYG/kg protein) 95 Beneficiario COLFUTURO 2015 cake and sell them for a higher price. Pulp and kernel cakes are also sold to farmers. Sales are directly realized by the primary processors, without involving retail actors. Fat content is a quality parameter for kernel and pulp cakes, according to the expert interviewed.
7.3.6. Organic fertilizer
Processor supply the organic fertilizer to their collectors (middlemen), who sell it to farmers (usually Acrocomia fruit collectors) in exchange for fruits.
7.4.Prices Purchasing prices of Acrocomia fruits fluctuate during the harvest season. At the beginning (before January) prices are lower than at the end of the supply period (after March). Figure 67 illustrates the price fluctuation. This is a strategy used by processors aiming at increasing the supply of raw material to reach output goals and satisfy their clients’ demand. Collectors change their price as informed through interviews, although some of them keep the price constant during the season. Farmers from the area of Quiindy reported that sometimes the price fluctuates.
Fig. 67 Economic value perceived by processor, and collector (Author)
Industrial processors pay compensation to collectors based on the quantity supplied. Normally there is no incentive for quality. One interviewee informed that they pay between 1000 PYG and 2000 PYG less per crate to collectors from specific areas where the collected fruits are usually unripe. If collectors have to travel long distances, the price paid to farmers could be lower.
An influential factor on the purchase price generally mentioned by interviewees from the industry is that kernel palm oil price serves as a reference to define the price to buy Acrocomia
96 Beneficiario COLFUTURO 2015 fruits. This is because that kernel oil has the highest economic importance in the industry and this product is exported in a large proportion. Using price data from the Export and Investment Network of Paraguay (REDIEX) for Acrocomia kernel oil and Indexmundi for palm and palm kernel oil, the dependence of Acrocomia kernel oil prices from international markets is observable, as shown in Figure 68. Effects of such variabilities impact the whole chain. According to the interviewees, if kernel-palm-oil price rises, the purchasing price of raw material increases and therefore the incentive for farmers is higher and more fruits are supplied. If the kernel-palm-oil price decreases, industrial processors lower the price of kernel oil, which negatively repercusses in the purchasing prices of raw material. Processors usually agree on quantities and prices with buyers during the time the harvest and supply take place. Negotiation conditions and prices influence the purchasing price of raw material. If during this time, the kernel-palm-oil price decreases and the buyer shifts to other offers, the processor has a high risk to reduce its profit. In this case, an option is to decrease purchasing price, which would lower the incentive of farmers to collect fruits, causing a shortage of raw material. Another option is to find buyers in other domestic markets, which implies transaction costs and possibly a lower selling price. In summary, dependence on external prices influences the Acrocomia value web at every stage.
Fig. 68 Economic value perceived by processor, and collector (Author based on information provided by REDIEX and Indexmundi.com)
Average prices of raw material and final products per crate of Acrocomia fruit (taxes not included) are illustrated in the Acrocomia value web (Fig. 69). Prices are estimated based on the information provided by key experts and actors interviewees. A constant purchasing price is assumed, which is the mean of prices reported by farmers, collectors and experts from the industry. For the price paid by the industry, the average price of the five existing processing
97 Beneficiario COLFUTURO 2015 companies is calculated, although this price is object of fluctuation. All prices were researched during the period between February and May 2018.
7.4.1. Selling prices
Selling prices are estimated using data provided by experts interviewed. They are shown in table 17 and 18, and correspond to the period 2017/2018. Added-value taxes are not included. In total, a crate of whole fruit has a final value after processing of 48000 PYG (8.4 USD). This value is higher for crate of chewed fruit (weight: 92 kg, assuming only endocarp and kernel) with a total selling price of 121050 PYG (21.2 USD).
Table 17. Selling prices per crate of whole fruit
Product or by-product Selling pricea Quantity per crate Selling price per crate PYG kg-1 USD kg-1 PYG crate-1 USD crate-1 Kernel oil 7500 1.3 3.3 24750 4.3 Endocarp 500 0.087 24.9 12450 2.2 Pulp cake 500 0.087 7.8 3900 0.7 Kernel cake 1260 0.22 2.5 3150 0.5 Pulp oil 3077 0.54 0.9 2770 0.48 Husk 100 0.017 7.8b 780 0.13 Organic fertilizer 40.6 0.007 4.7b 190 0.03 aWithout including value-added tax b20% of the total husk is self-consumed by the processor, 50% is sold as husk and 30% as organic fertilizer Table 18. Selling prices per crate of chewed fruit
Product or by-product Selling pricea Quantity per crate Selling price per crate PYG kg-1 USD kg-1 PYG kg-1 USD kg-1 Kernel oil 7500 1.3 9.9 74250 13 Endocarp 500 0.087 74.6 37300 6.5 Kernel cake 1260 0.22 7.5 9500 1.7 aWithout including value-added tax b20% of the total husk is self-consumed by the processor, 50% is sold as husk and 30% as organic fertilizer
7.5.Added value Added value is calculated as the difference between the buying price and selling price (gross profit; Jäckering 2015; GIZ 2007) of an individual crate of Acrocomia fruits and its products
98 Beneficiario COLFUTURO 2015 and by-products. For the calculation of added value, value-added taxes19 (VAT, 5% for agricultural products, 10% for selling goods) are applied to prices shown in Fig. 69.
Four value chains are selected for the analysis of share in value added. Variations are based on the type of raw material (whole or chewed fruits) and the supply structure. In all scenarios, the producers gather fruits from wild palm trees in his/her own farm, because this was the most common source of fruits according to the interviewees with farmers. All products and by- products’ flows are considered, except the one corresponding to organic fertilizer bought by the collector, given that this product is not exclusively sold to farmers who belong to the Acrocomia value web20.
19 Value-added tax is applied to raw prices without including compensation paid to collector 20 It is estimated that collector buys organic fertilizer from the processor with a price of 40 PYG /kg and sells it to farmers for 50 PYG /kg 99 Beneficiario COLFUTURO 2015
Monetary (Author)flow
69 Fig. Fig.
100 Beneficiario COLFUTURO 2015 7.5.1. Value chain 1: Collector as middleman
Fig. 70 Value added in value chain 1 (Author)
The farmer receives on average 14000 PYG (2.5 USD) per crate of whole fruit and 21000 PYG (3.7 USD) per crate of chewed fruit when selling them to the collector and has a share of 26.6% in the whole fruit chain and 15.8% in the chewed fruit chain. There is any contract between producers (farmers) and collectors (middlemen). Therefore, the producer can sell the fruits to the collector with the highest offer. However, there are two mechanisms through which the producer is linked to a particular collector: 1. If the collector owns a grocery store, it is likely that the farmer buys basic goods given on credit, which is paid by the farmer with fruits; 2. Collectors usually pay in advance before the harvesting season starts, which benefit farmers with a short-term income source (value ranges between 50000 PYG up to 2000000 PYG, depending on yield from past harvest seasons). Collector pays farmers in cash, discounting gradually the pre-payment paid in advance. Collectors have a close relationship with their suppliers and there is high loyalty, according to farmers and collectors interviewed.
Collector sales raw material to the processor for 21000 PYG (3.7 USD) and 35050 PYG (6.1 USD) inclusive value-added tax per crate of whole fruit and chewed fruit respectively. Collector reaches his/her highest gross profit when the fruits are directly bought from farmers without intervention of sub-collectors. Collectors participate with 13.3%, and 10.5% of the value added in the whole fruit and chewed fruit chains respectively. Collectors and industrial processors normally agree on a sales contract before the harvest season starts, which include price, compensation, payment conditions, expected quantities and some indications about quality. Collector receives between 1000 PYG (0.17 USD) and 4000 PYG (0.7 USD) per crate that sums up to the regular price (which includes 5% added-value tax) paid by the processor21. This compensation depends on the amount of fruits supplied. Processor pay collector in advance, after signing the contract. Such payment ranges between 10 and 100 million PYG and is used by the collectors as a financial mechanism to cover supply cost. Collectors hand that money out
21 An average of 2500 PYG (0.43 USD) per crate is assumed for calculations 101 Beneficiario COLFUTURO 2015 to sub-collectors and farmers by November and December, who pay back with Acrocomia fruits. Processor pays typically in cash the purchasing price to suppliers upon delivery of raw material without including compensation. At the end of the supply season, the payment done in advance is discounted from the accumulated compensation, no interest rate is charged.
Primary processor has the highest share in the value added along the value chain and it is higher for chewed fruits (73.7%) than whole fruits (60.2%). In total, a processor receives on average 52789 PYG (9.3 USD) (10% added-value tax included) per crate of whole fruit and around 133155 PYG (21.2 USD) (10% added-value tax included) per crate of chewed fruit22. These numbers evidence the economic importance of kernel and endocarp for the industry.
An remarkable insight observed is that Acrocomia fruits serve as a currency in the supply chain, mediating in commercial operations between actors and offering peasants and smallholder family farmers the possibility to buy basic goods in collectors’ grocery stores and receive cash in advance.
7.5.2. Value chain 2: Sub-collector and collector as middlemen
Fig. 71 Value added in value chain 2 (Author)
Sub-collectors play an essential role linking farmers to the market. They usually pay the same price than collectors to farmers. One collector informed that they suggest sub-collectors the price. Price received by sub-collectors is 1000 PYG (0.17 USD) higher for whole fruits and 4000 PYG (0.7 USD) for chewed fruits in comparison to the price paid to the producer. Their share of value is the lowest among actors, between 1.9% and 3.3%. Collector’s gross profit reduces when sub-collector intervenes, but the quantity of fruit can compensate such a reduction. There is not a contractual agreement between sub-collectors and collectors, and their commercial relation is rather informal. Same than farmers, sub-collectors have a close relationship with collectors.
22 Assuming chewed fruits do not have remaining fractions of pulp 102 Beneficiario COLFUTURO 2015 Sub-collectors receive payment in advance by collector, and they distribute it to farmers. The share of value of producers and primary processors remains the same.
7.5.3. Value chain 3: Sub-collector as middlemen
Fig. 72 Value added in value chain 2 (Author)
When sub-collector sells directly to the primary processor, without the intervention of collectors, the price received is 3500 PYG (0.6 USD) and 7500 PYG (1.3 USD) (5% value- added tax included) more per crate of whole fruit and chewed fruit respectively in comparison to the prices paid by the collector to sub-collector, what raises the share of value to 8% and 8.2%. Additionally, sub-collector has the possibility to receive a compensation if volume supplied is higher than 1000 crates. In this case transport of fruits to the processor is under the responsibility of the sub-collector. Depending on the location of sub-collector, some processor could provide vehicles to collect the fruits but this would reduce the selling price. There is no contract agreement between them and industrial processors.
Farmer’s share remains the same. Processor’s share increases if the sub-collector supply a low volume in such a way that compensation is not paid.
7.5.4. Value chain 4: Producer as direct supplier
Fig. 73 Value added in value chain 3 (Author)
103 Beneficiario COLFUTURO 2015 This scenario is not very frequent in the value chain. According to interviews with farmers, experts from the industry and the Acrocomia sector, generally there is no direct connection between producers and primary processors. If the farmer sells fruits directly to the processor, he/she earns the highest income possible under the current conditions: 18480 PYG (3.2 USD) and 32550 PYG (5.7 USD) per crate of whole and chewed fruit respectively. The share of value, in this case, increases to 35% for whole fruit and 26.9% for chewed fruit. Farmers, which lowers their earning assume cost of carrying the raw material. In one of the industrial processors visited, low capacity vehicles collect fruits at the farm in distances up to 10 km away from the industrial facility. In this case, prices paid to the farmer are lower (around 16800 PYG (2.9 USD) and 29400 PYG (5.1 USD) per crate of whole and chewed fruit respectively including value-added tax), which would lower the share of value to 31.9% and 26.7%, but still higher than selling fruits to collector or sub-collector. Processor pays in cash upon delivery. Processor’s share increases as there is no compensation payment for high volumes. Therefore, this is a win-win situation, although the volumes of raw material are significantly lower. On the other hand, quality could be improved, as claimed by some experts from the industry.
7.6.Net profit distribution For analyzing the distribution of net profit, one typical structure in the Acrocomia value web is selected. It has a collector as the middleman between the producer and processor. Sub-collector is not included because of limited data. Two variations are studied: 1. assuming zero cost for the producer; 2. assuming a labor cost of 17325 PYG (3 USD) per crate of whole fruit, based on the time consumed to collect fruits23. Analysis for chewed fruits is not included for two reasons: 1. the largest proportion of fruits that flow along the value chain are whole fruits; 2. there is limited data on transportation and processing costs of chewed fruits.
23 Own calculations based on data provided by farmers: 89.5 kg fruits h-1 when fruits are collected through cutting off the bunch and 33.2 kg fruits h-1 for farmers who pick up fallen fruits on the ground. Additionally, 30 minutes per palm tree to weed and clean around the palm tree are assumed. Day laborers earn 9813.1 PYG h-1 (1.7 USD h- 1) in Paraguay by law (2018). Total labor cost: 12212 PYG /crate (2.1 USD) when cutting off the bunch, 22438 PYG/crate (3.9 USD) when picking fallen fruits on the ground. An average of 17325 PYG/crate is assumed. 104 Beneficiario COLFUTURO 2015 7.6.1. Value chain 1: Cero costs for producer
Fig. 74 Costs and net profit in value chain 1 (Author)
In this value chain, the net profit is around 23110 PYG (4 USD) per crate, after subtracting off taxes and production costs as well as collection costs. Regarding the share of costs (total costs in the value chain including raw material: 64679 PYG, 11.3 USD), the most significant share corresponds to the processor (70.8%), who also has the most significant share of value. Collector’s share of costs is 29.1%. The largest share of net profit is 60.6% and corresponds to farmers, who have 0% share of total costs, under the assumptions defined for this scenario. Processor’s share of net profit is 30.2%, the second highest among actors.
Farmer`s cost structure is composed principally of labor cost for harvesting24, as the farmer does usually not use inputs for cultivating Acrocomia. Collector’s cost to collect and transport is around 4000 PYG (0.7 USD) per crate, according to the interviewees. Processor’s total cost, including raw material, is around 45799 PYG (8 USD) per crate25. According to interviewees from the industry, the three main components of total costs are raw material, labor (including maintenance) and electricity. It is important to highlight that processors have high financial costs. Their expenses start early before the harvesting season, and the earliest income takes place between 4 and six months later, during the processing period, when products are sold. There is no interest rate charged to collectors in the pre-payment. This situation implies a financial risk for processors, who assume the financing of all suppliers. Financial costs are not included in the analysis of net profit distribution.
24 Cost of tools to collect fruits and the space to storage them represent other costs, although these are not considered in this calculation. Opportunity cost to cultivate other crop, raising livestock, selling or leasing the land where wild palm trees grow is not considered. 25 Price of raw material plus other costs 105 Beneficiario COLFUTURO 2015
7.6.2. Value chain 2: Including labor cost of harvesting
Fig. 75 Costs and net profit in value chain 2 (Author)
A different situation is seen when considering the labor cost of harvesting (17325 PYG, 3 USD per crate). In this case, which is more realistic, farmers have a net loss of -57.5% when subtracting off the labor cost from the price received. The producer has the second largest share of value among the three actors. However, the price paid by the collector compensates neither the cost nor the value added. This loss is absorbed by the primary processor, whose share of net profit along the value chain is 120.8%, twice its share of value. Collector’s share of net profit is 36.6%, which is 2.75 times the share of value added by this actor. Regarding the share of total costs including raw material (82000 PYG, 14.4 USD), the farmer has a share of 21.1%, collector 23% and producer 55.9% of total costs along the value chain.
7.6.3. Estimating total net profit in the current Acrocomia value web
After calculating the value added and net profit per crate, actual quantities are included to estimate the net profit created by each actor according to the volume they trade in the Acrocomia value web. This analysis only includes whole fruits, since this is the raw material with the highest trade currently (97% in the companies visited).
In 2016, 842000 crates of Acrocomia fruits were supplied, according to an expert in the sector. Five companies processed all fruits collected, with the following share:
Table 19. Share and crates per processor
106 Beneficiario COLFUTURO 2015 Processor Share Crates A 7,1% 60000 B 12,6% 106000 C 35,0% 294700 D 12,0% 101040 E 33,0% 277860 Calculations based on information provided by the experts interviewed and Loup (2016)
The average quantity of crates processed by industrial companies per year is around 170000. Considering an average supply of 10000 crates per collector there would be 82 collectors in Paraguay supplying 100% of the raw material. An average output per farm of 80 crates is assumed (average output of farmers interviewed)26, what results in around 10500 primary producers of Acrocomia fruits.
Fig. 76 Net profit per actor and total net profit (Author)
Farmer’s cost is principally composed by labor cost, which is provided by the farmer’s family. Therefore, peasants and smallholder family farmers who collect Acrocomia fruits receive around 1.1 million PYG (196.5 USD) in a harvest season with an output of 80 crates of whole fruit. In Paraguay, the poverty threshold in 2017 for rural areas is 446798 PYG (78.4 USD) per person monthly, and extreme poverty threshold is 235088 PYG (41.2 USD) per person. The income received for the commercialization of fruits allows a maximum of 2 family members to not be under the poverty limit and up to 4 persons in the case of extreme poverty. On average family farmers visited are integrated by five family members. Therefore, the income received for Acrocomia collection does not suffice to reach the poverty thresholds and farmers require
26 Amount of crates varies according to land size, plant density and available labor among other factors. One could also assume a weighted mean of 116.7 crates/farm. However, it is more realistic to employ the data gathered directly with farmers. 107 Beneficiario COLFUTURO 2015 other income livelihood options. Most common options are off-farm jobs, cultivating crops for self-sufficiency and trading surplus.
Collectors have a net profit of 21.2 million PYG (3719.2 USD) on average when trading 10000 crates per supply season and a net profit margin of 10%. So, one collector’s profit is around 19 times the profit received by one farmer. Collector benefits of economies of scale, since the quantity traded is high although the net profit per crate is comparatively low. Additionally, collector’s financial risk is rather low since money to finance the operation is handed out by the industrial processor. It is important to highlight that the collector signs a payment commitment with the processor, to enforce him/her to supply the raw material.
Every processing company has an average net profit of 1173.7 million PYG (205912 USD). Processor’s net profit per crate of whole fruit is 6990 PYG (1.2 USD), and the profit margin is about 13.2%. What the whole industrial sector earns per year, which is around 5868.8 million PYG (1.02 million USD) is around half of the earning received by all farmers from the Acrocomia value web, which is 11788 million PYG (2 million USD).
8. Upgrading the Acrocomia value web 108 Beneficiario COLFUTURO 2015 8.1.Actual state The Acrocomia value web in Paraguay has experienced negative growth in the last decade. Manifold external and internal factors drive the unfavorable performance and results. Among external factors, dependence on international markets brings opportunities to the sector but at the same time represent high risks due to fluctuations of substitute products such as palm kernel oil, which logically affect the entire value web.
Among internal factors, the decreasing supply of raw material appears as the primary challenge and represents a critical aspect for the sector. Industrial processors face shortages that have consequences such as low utilization of production capacity, high costs, and risks, loss of markets and low-profit margin. Purchasing price paid to farmers does not incentivize the collection of fruits, which is a time-consuming task. Despite this, peasants and smallholder farmers consider Acrocomia as an important crop in their farming activities that provides them temporarily an income source. Raw material relies entirely on wildly growing palm trees, which indeed represents costs advantage for farmers and the whole value web but also uncertainty regarding yields and quality. Palm trees grow dispersed and are neglected. Poor quality of raw material has a direct impact on productivity and economic performance of processing companies. Harvesting, storage and handling practices affect the fruits and reduce the possibilities to exploit their potential value, resulting in low yields and economic losses. Most of the processing companies, under the pressure of limited raw material prioritize quantity above quality, which rebounds in their own operation. Weak or inexistent horizontal and vertical linkages among actors, mistrust and lack of organization and integration are constraints that jeopardize the evolution of the sector, which remains informal in spite of its economic importance. Lack of coordination and implementation of ideas, projects and initiatives reduce the potential to develop an appropriate environment for the competitiveness of the value web.
Building a vision and strategy to upgrade the value web is a complicated process that requires the commitment of actors to work collaboratively. During the field research, different stakeholders were identified and approached, but it was observed disconnection among them. Through participative mapping of the value web with actors interviewed different ideas, visions and interests were identified. A shared vision of the value web, trying to include most of the ideas discussed, is: A competitive value web that motivates the production and supply of high- quality Acrocomia fruits and delivers high added-value products, driven by innovation and inclusion, based on strong linkages that integrate and benefits all actors involved.
109 Beneficiario COLFUTURO 2015 There are different opinions concerning the role of peasants and smallholder family farmers in the value web. Most of the interviewees considered that they need to be integrated into upgrading strategies in their role of producers of raw material. Others proposed ideas beyond solely producing biomass, such as decentralized processing and reduced power of middlemen. Some experts differ and consider that the best option would be to establish large-scale plantations under the direct control of industrial companies, reducing the risks and challenges of working with multiple small-scale producers. However, they recognize the high financial investment that this requires, the time it would take and the risks associated with the lack of technical knowledge. It was evidenced that failures in past projects that aimed at integrating smallholder farmers have increased the resistance, distrust, and pessimism of diverse sectors, among them industrial companies. As a result, a significant constraint is to rebuild the interest of companies and strategic actors to design and implement improvement actions oriented to increase the competitiveness of the sector through value creation and capture, a goal that converges with the pro-poor interest of this research and many other actors and initiatives. Strategies oriented to upgrade the value chain with a pro-poor approach require combined efforts by the private sector, public institutions, third sector and outsider development institutions.
8.2.Identification of pro-poor upgrading strategies The current state of the Acrocomia value web justifies the need for interventions (See SWOT matrix in appendix III). Those are aligned with the pro-poor rationale of this study, with the aim of improving the situation of peasants and smallholder farmers that currently or potentially find in Acrocomia an income source to alleviate poverty and minimize the risk of food insecurity. Producers are key actors in the Acrocomia value web. Their participation determines the economic sustainability of processors and the whole Acrocomia sector directly, and indirectly, numerous economic activities that depend on the products delivered by Acrocomia processors. Therefore, designing and implementing pro-poor upgrading strategies have the potential to stimulate the growth of the whole sector and the local and national economy. Through the interviews, discussions, observations, and analysis of the value web from different perspectives, various vital points were identified. They are visualized along the value web and are a result from the interaction with experts who contributed with their ideas through the use of a participatory tool to map the value web, identify linkages, problems and potential solutions (See Fig 77). The upgrading strategies shown in Table 20 summarize the input provided by the stakeholders that participated in the study. They are classified based on the typology compiled by various scholars (Mitchell et al., 2009) 110 Beneficiario COLFUTURO 2015 Table 20. Description of types of upgrading interventions
Type of upgrading Description intervention Process upgrading -Adoption of small-scale plantations of Acrocomia palm trees by producers (e.g., smallholder farmers) -Improvement of harvesting through the identification of optimal and efficient techniques -Implementation of appropriate post-harvest practices to reduce the deterioration of fruits -Definition and application of mechanisms to incentivize and control quality requirements of raw material -Improvement of the production process to minimize lead times in storage and reduce losses Product upgrading - Develop high-added value products from Acrocomia, oriented to new markets nationally and internationally Functional upgrading - Decentralized pre-processing of Acrocomia fruits Horizontal coordination - Farmer-based organizations and producer cooperatives - Creation of an entity that represent processing companies Vertical coordination - Direct linkage between processor and producer Upgrading the enabling -Development of companies that provide inputs and know- how for establishing and managing Acrocomia cultivation. environment -Outsourcing transportation of fruits -Conform multi-stakeholder platforms to enable collaboration between actors inside and outside the value web -Develop linkage between processors and academic and research institutes -Direct support from the Ministry of Agriculture and Livestock (MAG) Source: Author based on interviews
Securing the supply of raw material is considered an essential upgrade intervention. Plantation of Acrocomia at small-scale is a possibility that reduces the high investment and risks in comparison to large-scale plantations and brings possibilities to smallholder farmers to diversify their income sources. However, a plantation takes around five years to be productive, which is a constraint for adoption. One possibility proposed by some interviewees is to use wild seedlings that naturally grow in farms and transplant them (See Fig. 78). Another option is through a support service that offers inputs and technical support (See Fig 79). In both cases, technical knowledge is needed to avoid failures in the establishment of Acrocomia and to manage the crop correctly. Know how is also needed to improve the harvesting and post-harvest processes with the aim to enhance productivity and quality. Mechanisms such as incentives and strict controls, together with a closer linkage between farmers and producer have the potential
111 Beneficiario COLFUTURO 2015 to improve quality. At the processing level, technological improvements, as well as logistic and operative interventions, can lead to reduce losses and costs and increase productivity.
Adding value and developing new products have a high potential to upgrade the value web, which would allow increasing purchasing price paid to farmers. Through the interviews with industrial processors, it was evidenced the importance of moving up from the production of commodities to more valuable products from oils and by-products generated. As functional upgrading, it was often mentioned the possibility to locally add value to Acrocomia fruits in decentralized locations before centralized processing. Creating horizontal linkages through collective structures that group producers have multiple advantages such as achieving economies of scale and reducing transaction costs (Mitchell et al., 2009). These structures facilitate the success of functional upgrading strategies as the local adding value previously mentioned (Mitchell et al., 2009). Collectivity among processors has the advantage to gain bargaining power and representation in the agricultural and agro-industrial sector in Paraguay. Strengthen the linkage between farmers and producers was an intervention suggested continuously by the interviewees. For some of them, exclusion of middlemen is necessary, for which an outsourced transport would a possible solution. Vertical coordination offers the possibility to farmers of having a stable market for Acrocomia fruits and benefits the processor with the supply of raw material.
Working collaboratively with research institutions in multi-stakeholder platform provides a framework for the value web development. Multiple aspects demand technical knowledge at the primary production of biomass, processing, and final uses. Formalization and recognition of the Acrocomia value web at the strategic level of the agricultural and agro-industrial sector in Paraguay is an important process for further support of the primary production of Acrocomia fruits, which benefits the whole web.
One case of process upgrading, two emerging examples of product upgrading and one case study about a functional upgrading strategy are presented.
112 Beneficiario COLFUTURO 2015
Upgrading Upgrading strategiesproposed intervieweesby (Author)
77 Fig.
113 Beneficiario COLFUTURO 2015
Possible enabling environment(Author)
78 Fig. Fig.
114 Beneficiario COLFUTURO 2015
onment supply ofwith inputs (Author)
Enabling Enabling envir
79 Fig. Fig.
115 Beneficiario COLFUTURO 2015 8.3.Process upgrading: Plantations An experimental plantation of Acrocomia was established gradually from 2007 to 2014 by the company Procesos Industriales S.A.C. e I (PROIN) (oldest palm trees are 11 years old whereas the youngest plantation is four years old). It has an extension of 7 hectares with a plant density between 570 and 625 palm trees per hectare, arranged with a space of 4 to 5 meters between rows and 3.5 to 4 meters between plants. Céspedes et al., (2015), report the plantation setup and performance in the experimental field owned by the company previously mentioned.
Seedlings used were the offspring from selected mother plants with a high fruit yield and number of bunches. For this purpose, plants 1.5 m around the mother plant which already had 2 or 3 leaves were chosen (Céspedes et al., 2015). Two methods of seedling cultivation were considered for the initial plantation (area 5.8 ha): hardening off and naked-rooted seedlings. The former method lasted six months, whereas the later was performed in less than 48 h (Céspedes et al., 2015). For hardening off, seedlings were transplanted in pots composed by soil and manure. Posteriorly they were kept under the shadow provided by trees during 3 months and then under weathering conditions. Care of seedlings included protection against pests, irrigation among other agricultural activities. For the naked-rooted seedlings, a moistened cloth was used to keep the plants in right conditions before transplanting to the field. After transplantation, agricultural practices such as soil loosening, manual and mechanical weeding and irrigation during critical dry conditions. Pests were not observed after transplantation. The obtained survival rate of hardening off seedlings was 93%, significantly higher than the success rate of naked-rooted seedlings which was 58% (Céspedes et al., 2015). 1
Sunflower (Helianthus annuus) was cultivated in one-third of the total area planted between the palm trees rows (e.g., alley cropping), two years after the plantation was established. After harvesting the sunflower, residual biomass was left in the soil as vegetable cover. It was evidenced by researchers associated to the plantation that the palm trees of Acrocomia flowered twelve months before the control population, as result of the possible influence of intercropping on soil nutrients (Céspedes et al., 2015). Other annual crops for self-consumption like tomato and pepper were planted in combination with Acrocomia in the early years of the plantation when the palm trees had a height lower than 1.5 meters. Currently, alley cropping is not practiced due to the shade provided by the palm trees, which are already older than ten years.
Experimental yields reveal a production of 25 kg to 50 kg of fresh fruits per palm tree. Staff from the company collect the detached fruits manually during the harvest season every two weeks, depending on the ripeness stage. 116 Beneficiario COLFUTURO 2015
Fig. 80. Experimental field of Acrocomia established by Procesos Industriales S.A.C. e I (PROIN) in Yaguarón, Paraguay (Author)
According to managerial staff from the company, the purpose of this experimental field is to identify good practices and asses yield of Acrocomia palm trees and later include smallholder farmers.
8.4. Process upgrading: Harvesting A technological innovation was identified in the international market with potential uses in the primary production of biomass in Paraguay. An interviewee who introduced the tool in Paraguay proposes to collect the fruits using this tool that is designed for harvesting small fruits and nuts and commercialized under the name Nut Wizard® (Fig. 81). This tool facilitates the collection of fallen fruits on the ground.
Fig. 81 Nut Wizard (Author)
8.5.Product upgrading: Kernel oil as an edible oil Edible oil produced from 2017 by the company Procesos Industriales S.A.C. e I (PROIN). Kernel oil is filtrated after extraction and bottled in glass jars with a net content of 500 ml.
117 Beneficiario COLFUTURO 2015 Another variety of edible oil is further refined, bleached and deodorized through alkali refining and bottled in glass jars with the same content previously mentioned. Figure XX shows the two products. Distribution channels are gourmet and organic supermarkets, stores, and trade fairs that offer “healthy” food products and marketplaces for agricultural products. Product marketing relies on the organic and natural origin of Acrocomia fruits, making use of these attributes for entering into niche markets (Fig. 82).
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Fig. 82 Edible oil from Acrocomia (Source: https://www.facebook.com Aceite de Coco Ybycuí)
Market prices are around 36000 PYG (6.3 USD) for not refined oil and 39000 PYG (6.9 USD) for refined, bleached and deodorized oil. The company led the research and innovation process to produce and market the edible oil of Acrocomia.
8.6.Product upgrading: Activated carbon from endocarp The Company Oleaginosas Industrializadas S.A. produces since 2017 granular activated carbon from endocarp, which commercializes in the domestic and international market. According to the interviewee from this company, the product is sold in different particle sizes.and has an iodine level between 600 and 900 mg g-1.
118 Beneficiario COLFUTURO 2015
Fig. 83 Activated carbon from endocarp (Author)
8.7.Product upgrading: Pulp flour Production of dehydrated pulp flour is a project led by Eduardo Bohn in Itapúa, Paraguay. It has the potential to be used as a food input for the production of ice cream and bakery. For the production of pulp flour, it is necessary to process ripe fruits shortly collected after they fall from the bunch. However, to remove the husk in the pulping machine is necessary to dry the fruits, to facilitate the process. When dehulling and pulping the fruit, the husk is generated as a by-product, as well as the endocarp with the kernel inside.
Fig. 84 Pulp flour from Acrocomia pulp (Author)
119 Beneficiario COLFUTURO 2015 8.8.Functional upgrading: case study San Pedro del Paraná The project “Mejoramiento de la situación de ingresos de pequeños productores campesinos a través del cultivo y procesamiento del coco Acrocomia spp. en San Pedro del Paraná” (“Improving income sources for peasants and smallholder farmers through the cultivation and processing of Acrocomia spp. in San Pedro del Paraná” is a social entrepreneurship initiative led by a grass-roots, non-for profit, Catholic faith-based and local organization called Pastoral Social de San Pedro del Paraná. It started in 2017 and has the financial support of the International Rural Development Service (Internationaler Ländlicher Entwicklungsdienst, ILD) and the local government. The project aims at promoting the cultivation and processing of Acrocomia as strategies to improve and diversify socioeconomic conditions and livelihood of peasants and smallholder family farmers in the region. Its goal is to cultivate 250 hectares with Acrocomia palm trees in small-scale plantations adopted by smallholder family farmers. This initiative provides basic technical support to establish the plantation and deliveries inputs such as wild seedlings grown in nurseries by a partner actor under contractual arrangements between farmers and the coordinator (Pastoral Social de San Pedro del Paraná).
The region of San Pedro del Paraná is not traditionally linked to the production of Acrocomia fruits. Collection campaigns started in 2017 to promote the economic activity. As a result, around 135 tons of fruits have been collected by peasants and small-holder family farmers from the region. This represents a total income of 35 million PYG (6000 USD) received by 120 producers. The current operative process is described as follow: farmers gather the fruits between March and July, staff from the project collect the fruits at the farm and transport them to a collection center that belongs to the project. There are stored and posteriorly sold to the industry.
8.8.1. Ex-ante economic analysis
Using data collected during the research stay in Paraguay, an ex-ante analysis is performed
One of the main challenges of this initiative is the location. The closer processing unit is 278 km away. First, it is considered a scenario in which the fruits are supplied to the industry in a raw state without (pre-) processing, as they currently do. For this, a price of 22575 PYG per crate of whole fruit is assumed (5% VAT included), which was the actual price paid by an industrial company located 356 km away from San Pedro del Paraná. Currently, the project pays to the farmer 14000 PYG per crate of whole fruit. Although it represents an income source, the effort that demands to collect fruits from wild palm trees and time consumed converted to
120 Beneficiario COLFUTURO 2015 the minimum wage per hour could make the collection of fruits low attractive for farmers. Additionally, in a plantation system, labor and inputs could represent higher production costs. For this analysis, the paid price of 14000 PYG to farmers per crate of whole fruit is assumed.
Fig. 85 Value added without pre-processin in San Pedro del Paraná case (Author) In this scenario, the value chain has a share of value similar to the conventional value chains in the Acrocomia sector. The producer has a share of the value of 26.5% of the total value added, collector (part of the social project) has a share of 16.2%, and the primary processor has a share of 57.2%. Looking at the costs and net profits, the collector has a net loss of 268.9 PYG per crate (0.05 USD). Transport cost represents 24% of the total costs, being the second largest and caused by the long distance between the collection center in San Pedro del Paraná and the processing unit to whom the raw material is sold. Transport is assumed as a subcontracted service, as it happens today. Collecting and handling are operative tasks performed by staff from the project, who collect the fruits in a vehicle with a load capacity of 100 crates of whole fruit (5.5 tons). Distances between the collection center and farms are 15 km, although this value varies, affecting the collecting cost directly. Additional parameters and numbers employed are shown in the appendix II.
Fig. 86 Cost structure and net profit (Author)
121 Beneficiario COLFUTURO 2015 During the interviewees with managers from visited processing units, they highlighted the economic value of endocarp and kernel. Given the sensibility of pulp to degradation and current logistics constraints that cause long lead times before processing the fruits, pulp has poor quality, and only a small fraction of its value is actually captured. This situation justifies the interest of industries to purchase peeled fruits rather than whole fruits. Peeled fruits in contrast to chewed fruits, would have not pulp and only endocarp and kernel, the most valuable components for the industry. Processing at the local level has the advantage to reduce lead times that impact on pulp quality when harvesting at the right time and storing the fruits appropriately. According to Colombo et al., (2018), fruits harvested from the bunch or naturally detached without having contact with the soil can be stored for two weeks without increasing the acidity level above 5%, and up to 6 months in thermal and hygienic treatment (Colombo et al., 2018 cited Evaristo et al., 2016 and Souza 2013). Several logistic challenges need to be studied and modeled to guide decision-making for the strategic, tactic and operative design of pre- processing units, with the objective of increasing the value added at local scale.
A scenario of decentralized pre-processing is the production of two Acrocomia-based products: peeled fruits, which are further processed by a central processing unit and raw pulp, with potential to be used in bakery and food industry. A selling price of raw pulp of 3300 PYG kg-1 is assumed (10% VAT included), which is significantly lower than the selling price of dehydrated pulp flour in Brazil27. Assumed purchasing price of peeled fruits is 39900 PYG (5% VAT included)28 per crate of 92 kg29. Under these circumstances, the pre-processing unit has an income of 45477 PGY per crate of whole fruit. Price received for raw pulp represents around 80%, whereas peeled fruits have a share of 20% of the revenue.
27 Based on own market research in mercadolivre.com.br, 1 gram of pulp flour costs 0.08 USD 28 Willingness to pay by one interviewee from the industry located 290 km away from the pre-processing unit 29 Assuming a efficiency rate of 0.23 crates of peeled fruits per 1 crate of whole fruit considering a yield of 30.8% endocarp and 8% kernel on fresh fruit basis. 1 crate of whole fruit yields around 21 kg of kernel-based products and by products and endocarp. Therefore, to produce 1 crate of peeled fruit (endocarp and kernel), circa 4.3 crates of whole fruit are needed. 122 Beneficiario COLFUTURO 2015
Fig. 87 Value added with pre-processing (Author)
The share of value added increases to 47% for the pre-processing unit. The total value added from the value chain changes from 52789 PYG (9.2 USD) per crate of whole fruit to 66925 PYG (11.7 USD), which reflects the value of pulp fruit. In this scenario, net profit for the primary processor30 is 17956 PYG (3.1 USD) per crate of whole fruit, with a net profit margin of 58.6%. The net profit margin for the primary processor is 50.1%
Considering the cost structure shown in Fig 88, pre-processing unit has a net profit of 1943 PYG (0.3 USD) per crate of whole fruit, and a net profit margin of 4.3%, which is rather low. As it was the case for the first scenario (no pre-processing), transport costs represent 25% of the total costs, given the long distance between the pre-processing unit and the central facility where peeled fruits are processed. Therefore, it is evidenced the importance of locating such pre-processing units in areas close to industrial facilities in order to reduce transport cost and increase the net profit. On the other hand, possible markets for raw pulp with high quality as well as further pre-processing stages such as pressing of pulp oil (which would generate pulp cake as a by-product), have the potential to increase income and net profit.
30 The processor receives a price per crate of whole fruit in this scenario that equals the price the market pays for the products from a crate of peeled fruits divided in 4.3, given than a crate of peeled results from pre-processing 4.3 crates of whole fruit. A processing cost of 20000 PYG per crate of peeled fruit divided by 4.3 is assumed 123 Beneficiario COLFUTURO 2015
Fig. 88 Cost structure and net profit with pre-processing (Author)
Producing high-quality pulp demands careful harvesting. Paid prices to farmers for raw material can increase if transportation costs lower or if the selling price of raw pulp and peeled fruits increase. Production of goods with a higher level of processing such as pulp oil with low acidity level and inputs for the food industry are promising revenue sources. As the project is planned, a horizontal coordination is required between farmers and pre-processing unit. As seen, the industrial processor has a high net profit. Therefore, through negotiation and strong linkages, the price paid for the peeled fruit could improve, or the processor could partly or wholly provide transport.
Investment and Internal Rate of Return (IRR)
Projection of quantity of raw material
In a low-yield scenario for 250 hectares of Acrocomia palm trees cultivated in San Pedro del Paraná and considering a plant density of 400 palm trees per hectare, a mean of 6.2 tons ha-1 are expected.
Table 15. Yields projections
Parameter Low-yield Mid-yield scenario High-yield scenario scenario
Fresh fruit mass per 2.3−10.2 ≥ 10.2−20.5 ≥20.5−38.6 hectarea (t ha-1)
a. Assuming 400 palm trees per hectare. Own calculations based on Appendix I.
124 Beneficiario COLFUTURO 2015 Equipment and investment
Total investment estimated for the acquisition of equipment, vehicle and facility rounds 670 million PYG (116844 USD).
Table 16. Investment
Investment concepts Value Sieving 33.000.000,00 PYG Hulling machine 42.000.000,00 PYG Pulper 50.000.000,00 PYG Installation service 60.000.000,00 PYG Warehouse 293.503.004,00 PYG Truck 108.000.000,00 PYG Other tools and machines 75.000.000,00 PYG Water and electricty installation 4.511.395,00 PYG Total 666.014.399,00 PYG
Production capacity is 1 t h-1 for pulper and hulling machine, for an aggregated capacity of 8 t day-1 in one shift of 8 hours day-1. It is important to highlight that among equipment there are not devices to storage properly the raw pulp.
Internal rate of return
Assuming a conservative projection on the number of fruits produced per hectare in a plantation system of 400 palm trees ha-1, amount of raw material per hectare rounds 6.2 tons (112.7 crates of whole fruit), for a total of 1550 tons in 250 hectares (circa 28000 crates). Thus, the calculation of the IRR considering this low-yield scenario is:
55 218 678.6 퐼푅푅 = = 8.3% 666 014 399 푃퐺푌
NPV equals zero, as this project is considered to function as perpetuity, in which the company receives the same quantity of income every year (without considering inflation) (Brealey et al., 2014). The internal rate of return (IRR) is lower than the Weighted Average Cost of Capital (WACC), which is 11.4% in Paraguay for the industrial sector (WACCexpert 2018). This could lead to a rejection of the project, and therefore a deeper financial analysis is recommended considering a mid-yield scenario and all cash flows.
In summary, intervention strategies oriented to the functional upgrading such as pre-processing of raw material in the Acrocomia value web bring potential benefits to producers and processors. In the case of the project studied in San Pedro del Paraná, it represents a complex 125 Beneficiario COLFUTURO 2015 endeavor that demands horizontal coordination and organizational skills among farmers, efficient strategies to reduce transaction costs, process upgrading through the plantation of Acrocomia palm trees and a sustainable business model for the pre-processing of fruits. It integrates diverse points mentioned by interviewee and has the potential to become in a pilot to be scaled-up in other regions of Paraguay, for which evidence and information are needed to support decision-making processes.
126 Beneficiario COLFUTURO 2015 9. Conclusions and further recommendations
Acrocomia-based value web and bioeconomy
Paraguay is pioneer in the industrial processing of Acrocomia, relying entirely on wild palm trees that grow in farms and open extensions, as pointed out by several scholars (Markley 1955; Plath et al., 2016; Ciconini et al., 2013). The Acrocomia value web in Paraguay is an outstanding case of traditional bioeconomy, in which a single crop is the source of seven products and by-products: kernel oil, pulp oil, kernel cake, pulp cake, endocarp, husk and agricultural residues to be used as organic fertilizer. Traditional uses as food, feed and fossil fuel, prove that Acrocomia is a multi-purpose crop with manifold advantages and potential applications. Acrocomia value web provide bio-based products with industrial purposes in the cosmetics sector, for animal nutrition and for energy production. Furthermore, the use of husk as energy source for the processing of Acrocomia fruits is an important strategy that leads to lower costs of production and a higher energy efficiency. Such kind of strategies offer design insights for practitioners when planning and establishing Acrocomia-based value chains, processes and operations.
Following the definition of biorefinery by Odegard et al., (2012), industrial processing units of Acrocomia fruits suit the concept of biorefinery as the maximization of the total functional use through co-production of different functional streams from one biomass stream (Odegard et al., 2012; Kindervater et al., (2018). The return of the agricultural residues to be used as organic fertilizers constitute as a circular flow that evidences the theoretical link between bioeconomy and circular economy (Mair and Stern 2017). Regarding uses of biomass, it was evidenced through the research that the most valuable product from Acrocomia for the industry is kernel oil which is produced in relatively low amounts per crate of product. This product has potential uses in different sectors, which is an aspect to consider for marketing. For now kernel oil is the only product from Acrocomia usable in the food sector, as is the case of one company that recently released an edible oil to the market. Endocarp has a low economic value but is produced in large amounts, which makes it highly valuable for companies. There are no other uses today besides of energy carrier, but the scaling up of applications for activated carbon can change this situation. Press cakes are exclusively sold for animal nutrition without further applications. Husk is the product with lower value, typically used as solid fuel.
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Peasants and smallholder family farmers as primary producers
Primary production of Acrocomia fruits is an extractive activity from wild Acrocomia palm trees. This situation has not changed from the very beginning of the industrialization of Acrocomia, based on Markley (1955). Homma (2012) suggests that a crop faces a high difficulty to be planted when it is abundant naturally, has low economic value, there are substitute products, technical difficulties to be planted or long time to yield products. In the case of Acrocomia, and based on the insights from interviewees consulted, large stocks of natural palm trees, technical difficulties to domesticate the plant and the time it takes to produce fruits are the main reasons for the prolonged extractivism. Most of the farmers interviewed have palm trees in their farms. Plant density is rather difficult to estimate, since there is not data available and plants grow dispersedly. Some studies conducted more than four decades ago estimated the existence of around 8 million palm trees distributed in densities between 5 and up to 150 palm trees per hectare (Markley 1956; McDonald 2007). From the data collected and published by CAN (2008), regions with predominant primary production of Acrocomia fruits are located in the Department of Cordillera and Paraguarí. These areas are among the regions with highest plant densities according to Markley 1956 and McDonald 2007 (cited Martin 1976).
Gathering of Acrocomia fruits is an activity performed by peasants and smallholder family farmers, for whom Acrocomia represents a relevant income source in a context of few income alternatives. It is estimated that collection of fruits takes place in around 8000 farms, based on data provided by CAN (2008) and Loup (2017). Farmers provide very few or no agricultural management to palm trees. Only when the palm tree are located in close areas to cultivated lands, farmers indirect or directly take care of them. This is an aspect of importance for future plantation programs that include family farmers.
Extractivism on other farms under informal arrangements with landlords is an option to collect fruits, according to farmers. Spines from the palm tree are considered as a risky when collecting manually the fruits. Rudimentary tools are used to collect fruits, which are normally stored outdoor.
Quality and agricultural practices
Harvest, post-harvest and storage practices influence on the quality of Acrocomia fruits and products, according to various scholars (Evaristo et al., 2016; Lombardi and Caño 2016; Silva et al., 2017; Montoya et al., 2016). A common harvesting method found is
128 Beneficiario COLFUTURO 2015 through cutting off the bunch, which is air-dried and later fruits are detached by shaking the bunch. Optimal harvesting time of Acrocomia fruits remain under research, as well as the impacts on oil quality and concentration (Montoya et al., 2016. According to Cardoso et al., (2017), multiple studies led to the conclusion that “it is possible to harvest the whole bunch at once due to the homogeneity of ripening in the fruits of the same bunch” (Cardoso et al., 2017). César et al., (2015) argues that Acrocomia fruits ripe unevenly and oil content varies according to ripeness, therefore, an early harvesting of fruits affects negatively the yields. The authors state that “in order to fully utilize the fruits they should be completely ripe and only harvested after they are detached from the cluster” (César et al., 2015). Cutting off the fruit when the first fruits start detaching naturally seems to be a feasible harvesting practice (César et al., 2015). Farmers who collect fruits through this method reported higher labor productivity than farmers who collect fallen fruits on the ground. Adopting a more efficient collecting method without affecting the quality of the product would lead to more agile harvesting. However, under current conditions of wildly growing plants there is low productivity and few options to manage and control optimally the process (César et al., 2015).
It was evidenced that harvesting through cutting off the bunch has a negative reputation among interviewees. It is important to understand why this practice is done and identify the conditions under which this practice is negative (e.g. early harvesting) or actually efficient. Three principal reasons are identified of why farmers collect the fruits through cutting the bunch: easiness and quickness to harvest, need to sell quickly, and avoiding cattle to eat the fruits. Additionally, lack of raw material and competence between companies to avoid shortages led to start the supply early, which forced farmers to collect fruits by November and even before. According to a researcher interviewed, unripe fruits manually detached have the endocarp and kernel already developed, and there is fewer loss in kernel oil than in pulp oil. Despite the visited industries receive between 30 and 40% of the raw material harvested through cutting off the bunch, the yields they report do not reflect a loss for other products different than pulp oil. However, yields provided are average estimations that do not specifically explain low-yield scenarios. In the case of pulp oil yield, it is evident the gap between theoretical and obtained yields. Furthermore, acidity level of pulp oil is higher than 60%. Current storage practices and lead times between the harvesting and the processing, affect directly the quality of pulp. Pulp is sensitive to moisture content and external agents that accelerate the acidity (César
129 Beneficiario COLFUTURO 2015 et al., 2015). Fast processing or pretreatment methods are suggested to stabilize the fruit pulp (Ciconini et al., 2013). Pre-processing of Acrocomia fruits is a possible solution for this situation, as the fruits would be pre-processed in shorter times.
Shortages of raw material
Supply of raw material has significantly reduced in the last years, leading companies to stop operating and hindering the competitiveness of the sector. Among causes, paid price for raw material is one commonly mentioned. In fact, based on the amount of time that farmers invest on collecting a crate of fruits and the price they receive, the cost of opportunity to perform an off-farm job is higher. Homma (2012) argues that extractivism relies on rural labor, which decreases as result of rural migration to urban areas or abroad, a pattern observed in Paraguay. Homma (2012) describe the issue of low labor and land productivity of extractivism as follow:
“Due to the dispersion of extractive resources in the forest, labor and land productivity is very low, making this activity feasible only because of the lack of economic options, domesticated crops or synthetic substitutes. As alternatives are created and social achievements raise the minimum wage, its low labor and land productivity nature makes it unfeasible.” (Homma 2012, p. 169)
This situation leads to decreasing provision of raw material, which impacts the whole Acrocomia value web. Some pro-poor upgrading interventions to improve this situation is to increase the purchasing price of raw material through removing the intermediation of collectors and developing new products that allow to pay a higher price to producers.
Another often mentioned cause that could explain the shortage of raw material is the urban expansion in the Central zone of Paraguay, which leads to the reduction of natural populations of Acrocomia palm trees.
Lessons from failed projects and initiatives
Various past projects were identified, which had the goal of upgrading the value web and were financed by international organizations. The orientation of such projects was the inclusion of smallholder farmers and promotion of cultivation of Acrocomia palm trees. Four main causes were found through the interviews and documentary research: high transaction costs, weak organizational structures, technical limitations and social acceptance of Acrocomia plantations.
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Acrocomia yields fruits five years after plantation. Costs of supervision and provision of extension services during that time are costly and require efficient strategies to guarantee the success of a project. Horizontal linkages among farmers (e.g. collective action), capacity building and involvement of industrial partners in plantation projects are strategies that could lead to achieve project’s goals. At the moment, the linkage between processors and farmers remains weak, at least in the visited companies. Thus, vertical coordination is definitely needed. Technical difficulties in selection, propagation, establishment and management techniques of plantations hinder the success of projects oriented to cultivation of Acrocomia. Increasing research in these areas has the potential to reduce the technical failures, through validated methodologies in experimental trials. Different experiences of that kind were identified in Paraguay. Social acceptance of Acrocomia plantations and a high commitment and engagement of farmers is fundamental for development projects of this nature. An issue commonly mentioned during the interviews was the “short-term thinking” of smallholder farmers, who expect immediate income. Diversify strategies such as the promotion of annual crops in combination with Acrocomia palm trees could partly provide solutions for this issue.
Linkages and enabling environment
Horizontal linkages are inexistent in the Acrocomia value web. There are no vertical linkages along all actors from primary production of biomass to processing. This fragmented situation increases the vulnerability of the sector. A common finding was the awareness of managers from industrial companies about the importance of having a direct contact with farmers, which can improve quality of raw material as well as trust. It is important for further pro-poor upgrading interventions, to consider the power relation and dependence that farmers have from collectors. Different interviewees described practices by the collector that affect farmers, such as the use of a larger crate than the official one to measure the fruits. Collectors and sub-collectors have a significant role in the value web. They offer the marketing channel for farmers and facilitate the transport. Considering future scenarios, it is important to explore possibilities and win-win situations with all actors. Collectors hold an influential position in the value web, given the conditions of limited raw material. A balance of power would lead to more efficient supply processes, stable and trustful relations.
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An enabling environment requires the participation of multi-stakeholders to collaboratively design strategies to upgrade the value web with a focus on the inclusion of smallholder family farmers.
Enhancing quality
Existing arrangements and price mechanisms do not inforce quality aspects of fruits. Compensations paid to collectors are given for amount of fruits supplied, which is a strategy to secure raw material to work. The question “what do you prioritize, quality or quantity?” was often answered as follow: “both, but without raw material we cannot work”. An interviewee from the industry affirmed that “if raw material is rejected because of quality, there is another company who will buy”. These situations hinder quality. Dialogue and collaborative solutions among processors and a closer connection to farmers contribute to enhance quality. According to some interviewees, there have been attempts to find agreements between processors, but there is not implementation when the supply season starts. A higher price could also incentivize quality, as is the case for a company that process Acrocomia fruits and use the kernel oil for manufacturing of soap. They pay a higher price and insist on quality of raw material. Another issue that threats quality is the starting time of the supply period. The earliest a company buys raw material, the earliest the farmers collect, which result in collection and supply of unripe fruits. Contractual agreements between processors and collectors are weak in regard to quality. Therefore, a collector who commit to supply certain quantity without strict quality requirements, only aims at delivering a large amount without thinking on quality.
Economic analysis
Multiple processing companies have stopped operating in the last years. Lack of raw material and strategies to overcome the shortages led to this situation, as described by interviewees. Current processing companies survive through different strategies, such as the processing of other agricultural product during the time when Acrocomia fruits are not processed. Another strategy is the vertical integration, so that higher added-value products beyond basic commodities are produced. In conversation with a managers from the industry it was highlighted the importance of producing goods that reduce the dependence on fluctuating prices in international markets.
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Decentralization
Through an economic analysis of an bottom-up initiative to promote cultivation of Acrocomia palm trees in San Pedro del Paraná and pre-processing of fruits to add value locally it was evidenced the possibilities that decentralization brings for the whole value web. Decentralized processing is a pro-poor upgrading strategy, suggested by interviewees from the industry and experts in the sector. Establishing horizontal linkages among farmers, enable possibilities to add value locally, in such a way that farmers benefit from the pre-processing unit. In the economic analysis conducted, long distances for transportation of raw material reduce the profit. It is evidenced how a small-scale processing offer possibilities to add value and reach new markets. Further economic analysis with different processing alternatives are needed to guide decision-making in the project of San Pedro del Paraná.
Plantation
Acrocomia starts producing fruits after five years, what makes it unattractive to smallholder farmers. A researcher in the area of agronomy informed during an interview that Acrocomia production evolves as follow: 5th year, 30% of full production; 6th year, 50%; 7th year, 75%; 8th year, 100%.
Through the interviews with experts it was mentioned the lack of acceptance to cultivate Acrocomia due to the long period it lasts to be productive is caused by the short-term thinking of smallholder farmers. A suggestion shared by some experts is to design plantation programs in which the cultivation of Acrocomia is promoted together with other annual crops. They suggest that if less emphasis is put on the palm trees it would be likely that the farmer cultivates the annual crops and meanwhile take care of the palm tree indirectly. Through the visits and talks with farmers interviewed it was found that they consider viable the cultivation of associated crops, such as maize, beans, cassava in the same plot where Acrocomia palm trees grow. Some of them actually do it. Furthermore, some farmers informed turning the soil over where the palm tree grows and having the palm tree close to cultivated lands are forms to reach higher fruit yield.
Considering a pro-poor upgrading strategy to cultivate Acrocomia palm trees, it is important to recognize and include actors who do not adopt the fruit for different reasons such as the abundant existence of wild palm trees in their farms. This was an insight found through interviews with farmers. Farmers’ age influence in the decision of adopting the
133 Beneficiario COLFUTURO 2015 crop. Among common responses to justify the opposition to plant, it was mentioned that they do not want to adopt the crop because they were already old.
Next scenarios
Homma (2012) describes three phases of extractivism in an economic cycle. The current state of the Acrocomia value web fits the second phase that is “when limit of the supply capacity is reached, due to the reduction in the stocks available and the increase in the cost of extraction” (Homma 2012, p. 168). It is difficult to estimate a number of palm trees due to the lack of accurate information. Based on the data published by CAN (2008) and extrapolating for 2016, around 1.3 million trees are estimated. A possible pathway to develop the Acrocomia value web with the inclusion of smallholder family farmers is as follow: 1. Incentive to collection; 2. Promoting small-scale plantations using wild seedlings; Promoting small-scale plantations using commercial varieties.
In order to enhance competitiveness of the Acrocomia value web in Paraguay, support and coordinated actions are needed between different stakeholders from public and private sector, research and academic institutions as well as community-based organizations, NGOs and donors. From bottom-up, horizontal linkages among smallholder farmers could provide a framework for collective action that facilitates the direct linkage with industries and the implementation of upgrading strategies such as the cultivation of Acrocomia palm trees and local (pre-) processing of fruits. Actions led by industrial companies, as evidenced, are rather oriented to the development of new products. In this way, new markets for higher-added value products can be reached, which allow companies to increase the purchasing price paid to biomass producers. Acknowledgement and formalization of the sector by the Ministry of Agriculture and Livestock is an important step to strengthen the enabling environment and encourage primary producers to collect fruits and cultivate Acrocomia. Projects that aim at upgrading the Acrocomia value web and are led by NGOs, donors, public sector or private investors need to be aware of the failure factors from past experiences, such as the technical challenges of cultivating Acrocomia palm trees and the weakness of linkages among actors and the unstructured enabling environment. It is important to highlight that projects oriented to the cultivation are long-term, given the natural growth cycle of Acrocomia. Specific pro-poor interventions should include both processors and primary producers, and thrive the collaboration with actors from public and research institutions to reduce the failure risks. 134 Beneficiario COLFUTURO 2015
Final comments
The Acrocomia value web in Paraguay has a rather simple structure composed by peasants and smallholder family farmers as the primary producer of Acrocomia fruits from wild palm trees, collectors who serve as a marketing channel and transport service to carry the raw material to the industrial companies, where fruits are converted to seven different products. Manifold opportunities and challenges were found through interaction with actors from the value web and external actors. There is a high potentiality for this sector in Paraguay, which can benefit from the implementation of pro-poor interventions. Through this extensive value web analysis, a baseline is provided for the design and implementation of pro-poor upgrading strategies in the coming years. What this study contains illustrate in great detail an exemplary case of bioeconomy based on extractivism in Paraguay. Multiple dimensions of the value web were covered as well as actors. Having the opportunity to walk along the value chain, talking to a farmer and later to an industrial processor allow the author to have a whole picture of the sector with detailed information of every stage. Conducting a systemic research has difficulties such as setting boundaries and defining clearly the object of study, which were lessons learned by the author.
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Appendix
Appendix I. Setting yield scenarios
Acrocomia fruit average weight
Weight a b c d e f g h mean SD (g)
Fresh-fruit 14 22 - 18.2 12−23.5i 22.1 21.8 16.4 18.9 2.9
Dried-fruit 9−10i 15 12 - - - - 9.4 11.5 2.3
a. Merkley (1956); Balick (1979). Fresh fruit with 35% moisture, air-dried fruit with 8-10% moisture. Fruits from A. totai. b. Mössinger (2014) cited Bohn (2006). Moisture content not determined, sample from Itapúa (Paraguay) c. Haupenthal et al., (n.d), fruits collected in Itapúa (Paraguay). Moisture content not determined. d. Zanatta (2015). Moisture content not determinated, sample from São Paolo e. Ciconini et al., (2013), 90% of fruits collected from trees in one area of Cerrado bioma and two areas of Pantanal biome (Brazil), pulp moisture content varying from 49% to 63%. f. Lescano et al., (2015) g. Lescano et al., (2015) cited Hiane et al., (2006) and Chuba et al., (2011) h. Vianna et al., (2017), specific values for A. totai i. Average of upper and lower limits is used to calculate the general mean
Total mass of fruits per fruit cluster and per palm tree is calculated assuming an average weight for individual fresh fruits of 18.9 grams (see chapter 3.2). Number of fruits per bunch to further calculation of yield per palm tree, the values found in the literature suggest a yield between 200 and 500 fruits per bunch. Total number of fruits per palm is calculated multiplying the number of bunches per palm by the number of fruits per bunch. Regarding the correlation between the number of fruits and their individual mass, Ciconini et al., (2013) conclude that there is not significant correlation to confirm that a higher quantity of fruits is associated with a lower individual fruit mass. The authors deduce that there is a strong correlation between the fruit mass and the mass of hull, pulp, shell and kernel (Ciconini et al., 2013).
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Number of bunches per Acrocomia palm and fruits per bunch
Parameter a b c d e f
Number of bunches per palm 3.8 3.7 2−8 5 2−3; 8−10 8
Total number of fruits per bunch 168 258 250−500 200 200−500 -
Total number of fruits per palm 638.4 g 954.6 g 500−4000g 1000g 400−5000g -
a. Ciconini et al., (2013). Average of A. aculeata from the Cerrados bioma. Age of palms is not determined. Coefficient of variation between 40-65% b. Ciconini et al., (2013). Average of A. aculeata from the Pantanal bioma. Age of palms is not determined. Coefficient of variation between 40-65% c. César et al., (2015) cited Manfio et al., (2012) and Borcioni (2012) d. Estimations by Merkley (1956) on mature trees in the Central zone of Paraguay e. Estimations by Balick (1979) f. Mössinger (2014) cited Bohn (2009) g. Own calculations based on given values
Estimations of fresh Acrocomia fruit production per harvest
Parameter Low-yield Mid-yield scenario High-yield scenario scenario
Bunches per palm 2−5 ≥5−7 ≥7−10
Fruits per bunch 150−265 ≥265−380 ≥380−500
Mass per bunch (kg) 2.8−5.0 ≥5.0−7.2 ≥7.2−9.5
Fruits per palm 300−1325 ≥1325−2660 ≥2660−5000
Mass per palm (kg) 5.7−25.0 ≥25.0−50.3 ≥50.3−94.5
h. Own calculations based on Table V and assuming an average weight of 19.3 g for individual Acrocomia fresh fruits.
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Appendix II. Calculated factors for the case study San Pedro del Paraná
Transport 264 PYG/ton-km Labor 13341 PYG/h Collecting time 6,3 h/100 crates Loading time 1,5 m/crate Electricity 310 PYG/KWh
Appendix III. Strenghts, Weaknesses, Opportunities and Threats of the Acrocomia value web
Author
Appendix IV. Please visit this link to see the questionnaires used for this research: goo.gl/PcwqWR
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