The Potential of Acrocomia Value Webs for Rural Development and Bioeconomy in Paraguay

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The Potential of Acrocomia Value Webs for Rural Development and Bioeconomy in Paraguay 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 Beneficiario COLFUTURO 2015 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 2 Beneficiario COLFUTURO 2015 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.
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