Jonah Wittkamper:

Hello everybody. Welcome to the 91st call of the Amazon Investor Coalition. This is a weekly call and podcast series dedicated to advancing force friendly economic development and the rule of law across the Amazon region of South America. This week we’re going to be focusing on the work of Thiago Noga Faras and Pedro Noga. They have a company called Kumbaru Partnerships and they have a focus on the Buuna. Pedro and Chiago feel free to come off mute and tell us a little bit about yourselves and what you guys did before getting involved in Kumbaru.

Pedro:

Sure. Good afternoon everyone. First sorry because I’m having a little bit of problems with my internet today. So I’m trying to share my video but it’s not sharing my own video my showing me. So but I’m here. So my name is Pedro Thiago is with me over here too but I’m going to be presenting our business. And so I am based in Quaba. We are based in Matros state in Brazil which is in the state located in the Amazon region. We have been working with Karu for the past with Baru Nuts right we call over here Kumbaru which is a like a local name for Baron Nuts and we have been working since 2020 where we have been we were accelerated by Funu Valley and also by climate ventures in Brazil.

So I have been developing this business model working in our experimental area in down here in the south of Matroso and so I think to introduce a little bit of ourselves and also talking a little bit a little bit about Chiago. So I am a biologist. Chiago is a forestry engineer. He’s based in North Floresa which is in the northern region of Matroso in the Amazon region of Matroso and he is an expert in restoration of degraded areas and I am an expert on sustainable supply chains and which I’m going to talk a little bit more in a few minutes.

Jonah Wittkamper:

Great. Chiago, did you want to introduce yourself? You’re on mute if you’re there.

Unidentified participant:

Can be like this. Sure. Okay. So, if you want to say something about yourself and.

Jonah Wittkamper:

His video is not coming through. Okay. Okay. I also have your pitch deck which I could share from my screen if you want.

Pedro:

I can share over here Jonah so we can start. Okay. Great. So, you’re seeing.

Unidentified participant:

My Yeah, we see it. Okay. So, okay. So, let’s start.

Pedro:

Again just a little bit. So, we are Kumbaroo productive partnerships. We are a social business startup focused on Matroso based in Matroso and focus in the Amazon in the matros state in the Amazon region of Brazil. So talking a little bit about us. So I am a co-ounder and working on the strategy of Kumbalur at the moment. I’m a biologist have masters on sustainable development practice and MBA in social business management. Thiago is the co-founder and now we are on the transition to him to be to become the CEO of Kumbaru.

He’s the first engineer as I said and he has a master in biodiversity conservation and sustainable development. We have both experience working as a consultant and also as employees on these companies that are on the slide such as E4 B PEXA which is an impact business company in the Amazon region of Montgu which is a Brazilian NGO. Embraa I think you probably know ICV which is a Brazilian NGO as well and W Brazil and we are working in partnership with Belad Florestas which is work as an advisor for us and also a coin investor.

Kumbaru was created with the aim to contribute to solve some of the main challenges associated with food production in the tropics. So one the first main challenge that we have talking specific about Brazil is the JGM issues in Brazil which are mainly associated with the firstation and agricultural production. So through our business model we aim to contribute to solve this issue. Today in last in 2020 72% of Brazil GG emissions were associated with deforestation and agriculture. All another big problem over here in Brazil is the land degradation problem mainly talking about pasture degradation.

So just considering our state where we are based in the southern region of the Amazon region in Brazil Matrosi state which is this map on the on the screen we have 9 million hectares with signs of degradation. So which represents 45% of the pasture area in the state of Mroso. So this is another big problem that we want to contribute to solve through our business model also the problem of deforestation and conversion as I mentioned it. So since our business model is focused on the on increase productivity in already open areas or deforested areas and in order to avoid the deforestation of new areas to increase productivity increase production of food we are growing or we aim also to contribute to solve the problem of deforestation and conversion of native vegetation.

So on the slide on the left you have the hot spots of deforestation and conversion in the sahi biome of mroso which is the Brazilian satana biome and on the right we have the first station hotspots in the Amazon biome of the state of mroso we have three different biomes. In this state. So we are working mainly on these two ones also we so based on this problems we also have this benchmarking process in order to study some fundraising strategies sustainable agriculture models partnership models business models carbon neutral standard certification integrated corp livestock forest systems relationship and business with communities and bioeconomy supply chains.

So we study these topics considering this these organizations and based on that and the problems that we want to solve we are working initially with this business model focus on restoration of degraded pastures through pastoral systems. So how it works Umbaru fund raise with donors and investors impact investors mainly and based on this fund raise we establish partnership with the small holders in order to bring investments technical knowledge and management knowledge in order to increase productivity on the graded pastures. Since after the partnerships formalized the system is implemented restored in the degraded areas we start to produce our agricultural products such as milk beef calves and baron nuts which is then commercialized to dairies cattle ranchers of bakers g economy companies and comparatives and with that income pays an annual rent or monthly rent to the small holder partners or can if it is on a partnership model that the income that is going to be shared with the small holders will depend will be proportional to the investment that was made in order to reform that area restore that area.

So this is a like layout of our single pastoral system. So we have like three lines of Kumbaru trees ble trees and 32 mters of pastures between these three lines. So in this system civil pestro system we have 210 trees per hectare and just focus on the bar tree. So this is the Kumbaru or baru nuts for those that don’t know it yet. So buu the baron nuts is the seed which is in the middle of the of the fruit. This is the which has the main commercial value is a superfood rich in protein zinc iron omega 6 and 9.

There’s a growing demand in USA and entering in Asia possibly also in Europe but in Europe that there is some regulations that need to be overcome. Also there’s the potential to for the messocarp which is this outside part of the fruit which is protein is rich in carbohydrates. So it can use it can be used it for human consumption or animal consumption. And also there is the potential to use the endocarb which is the more this more dense part of the fruit which involves the seed which can be used for example as a renewable source for those in the cement industry as an alternative to fossil fuels.

This is just one example of what there is some kind of initial demand for this. A little bit about our some of our some of our different differentials and innovations. So we have this partnership with Delha which is a agroforestry company that has been working very like developing agroforestry system in different regions of Brazil. We have a partnership with Embappa as well in order to subsidize pestro systems in the sahada region. We have also clients such as Barukas in Labra Florida which buys the baron nuts already engaged formalized butters of thick agreements and outside of the innovation we have like the use of this forest species in order to generate additional revenue sequest carbon improve soil and microclimate conditions of the civil pestal system contribute to animal welfare and increasing productivity.

Also we use in vitro fertilization technique to produce beef calves of superior genetics in dairy cows. We are going to produce as well carbon neutral lowcarbon cves. Also deforestation zero deforestation zero conversion calves which is aligned with the commitments of the three main logger houses in Brazil and also using organic compost to increase soil fertility. We have a big partner over here working with this which contributes to reduce the use of chemical fertilizers, reducing the cost of best restoration and contributing to GG reduction of GG emissions. Just to finish this first part so we can open to talk a little bit.

So this is our financial indicators for the 2,000 hector project which we are fundraising for the moment. And sorry if there is a strange noise because there is a someone working in an apartment above me. So this is the financial indicator that we can go a little bit talk a little bit more if you want. So we have a high RR of 13.3% payback in 10 years and breaking even in 4.7 years. This just to illustrate that our system can be adapted to the Amazon region. So one of our friends over here in the meeting was about tik.

So we are considering tik as well plus n other native species such as tatula guani fa from Brazil which are species from the Amazon region to produce to produce wood. So this is an example of the system. This is another example of a civil pestal system with five lines of wood trees native and tick and just to finish now that’s true. So these two systems that we have already implemented one in Pona which is Sahu region of Murrosu. So it was is a it’s this is our experimental area which is a nine hectares area.

It’s the nine hectares area that were restored right. So it was a degraded area that we restored the pastures and maintained the native trees such as baroba and this is like a overview of the area that were resto that was restored and this one in the floresta a 12.6 six hectare area which is a focus on beef cattle range intercroped with native and exotic tree spec tree species. So the pasture is intercroped kpi plus fruit tree species to attract birds because in this range they work with bird watch. So I think this is like the first part of that I want to bring Joanna so we can maybe talk a little bit more and then there is a second part that is more specific to the like you know like on the on the on the business of Karu in terms of milestones and impacts and our geograph geographic area as well.

Jonah Wittkamper:

Okay great. Maybe we should take it off of screen share or do you wanna do you have some slide? Okay. Yeah. So a couple questions for me and then those in the audience might have a couple of questions. This is you may get into this in the second part of your inquiry but do you have an idea what the market size is of the baruna?

Pedro:

Yes, J. You know, this is something since Kumbaru market, the bar nuts market is something, you know, like quite new. It’s not that new, but it’s quite new. Our estimates is that the market size is around 11 million eyes is not that big, you know, because it’s something quite new in terms of scale. But this is something that we found in the internet, you know, that was a material published in English because in Portuguese we didn’t find nothing about it. So it’s something around this with the market growing you know like mainly in the US as I said with the potential to grow to Europe and also Asia since there is this demand for superfood as a as a.

Jonah Wittkamper:

Ma too why don’t you go ahead and go and then Fernando I think you might have a question as.

Mauricio:

Yes. Thank you for the presentation. But if I got it right, you seem to be a company focused mo mostly on cattle ranching then on the baron nuts because for the sarado biome you had the cattle ranching and barun nuts but the trees that you were planting between the pasture in the Amazon were not baron nuts. So it was the only common denominator was always the cattle ranching. Is this just a mistake of mine or have I seen this correctly?

Pedro:

You know like since Kumbaru or baru nuts is a native species from the sahada region. We initially were are thinking that the baru nuts could be used in agroforest system or silver pastor system or integrated crop livestock forest systems mainly in the sada region you know. So this is our first idea. But since there is this possibility to use bottl nuts in the Amazon region as well, it can be used in the mix of species, you know. We see that there is this possibility but there is some challenges as well because since BU is from a region that is more dry in terms of pometric indices index possibly you can have some problems in terms of fungus in the Amazon region you know we didn’t try it yet we want to try this you know there is the there is a cousin of the baron nuts in the Amazon region which is the kumaru which there is there can be used the fruits use it for cosmetics and also the wood is very good in terms of to produce wood.

So you instead of Kumbaru if instead of the bar tree you can use the kumaru tree. I can send you the species specifically. And so you have this alternative to use this the cousin of baron nuts in the Amazon region which is the kumaru but also you can try to use the kumaru in the Amazon region but there is this possibility of problems with the fungus not you know.

Mauricio:

The kumaru is one of the main trees that we use. It’s in very high demand, but it’s low growing hardwood. So, haven’t heard that yet that it was planted. We just do sustainable forestry in the forest and may take out five to 10% of the trees in the forest every 25 years.

Pedro:

Okay. Okay. So just adding to this there we know some a guy that we know that is planting the baron nuts in the Amazon region. But they just have planted I think there is they probably the trees they have they’re going to have one to probably two years now and we can talk with them to see how it’s going the experience but for now we don’t have this information of the bar planted but the bar nuts from the sahu planted in the region okay thank you.

Jonah Wittkamper:

I just want to make one comment about whether the dominance is the buun nut or the cattle the part of the proposal here is to reclaim cattle pasture and put in burun nuts for the first time. So, so there is an innovation just to you know restore ecosystem services with agroforestry or silva pasture. So it’s about creating a not new cattle pasture but reforming the existing cattle pasture to be more environmentally friendly.

Pedro:

Yeah. And Jonah just add one thing to that very important because probably you that operate in the Amazon region know how the ranchers independently if you’re small medium or large how they see trees right it’s something quite new for them at least in the like matroso and par states probably in au because like they trees they usually want to cut in general to put cattle. So when you are trying to restore cattle, make cattle range more productivity, more productive we also trying to bring trees intercroped with pasture in order to be something that they can you know like not radically change but make a change that is more phasing you know to forestry system.

Trees have a value if you have a sawmill within 300 350 kilometers from where the trees are standing because if the sawmill is farther away the transport cost are higher that the value of the tree at the factory. So what we realize we need an interconnected system to protect the forest to give value to the forest. You need to have the production units at regular intervals so that every owner sees trees as a value and not something that he can’t sell for any money and he has to burn and at least the have a more concentrated value per kilogram and that’s why the forest are completely destroyed.

So it’s change the numbers and you change the possibility of making money. Can actually actively protect the forest.

Jonah Wittkamper:

Sure. Great motives, great points. Thank you. Well said. And we’ll be covering that in the future, Fernando.

Fernando:

Yeah, great, Pedro. We have a lot of synergies. U we’re doing something similar up there in Pasto Vivo. The agroforestry system we have is a little bit more biodiverse. I’m happy to I’m happy to share with you more next when we have a call next week. But besides Bahu, we’re adding also Makuba and Aruera in the system. Aruera for wood, Makuba because we feel having a palm tree adds to the ecological system of it. Sure. And then we’re using the Makuba nut to kind of go back and feed the cattle.

But is the one thing that we’re most excited about. What I wanted to ask you, you find really challenging process in the baron net. Have you come across anything that is not like a manual processing, manual breaking the nuts?

Pedro:

Yes, Fernando, this is a great point because it’s one of the main challenges for the from the PU production, right? So, there is this challenge produced to restore degraded areas plant in PU which it there is some variations where when the bar is going to start to produce, right? But from the processing perspective there is this challenge to break the like the shell that protects the nut. So we have been visiting some like very small factories over here near Quyaba and we found some traditional communities you know kilomala community that is working with an automatic machine that process the Kumbaru the baron nuts.

So the you know like was the first time that I saw this. I have seen some in the internet and it was very interesting for me for us also because we saw this working on the hand working with some traditional community. So it was a small factory that they are starting to operate and they have this machine to process the bar and also to the then the machine to dry that like some kind of cook stoves to prepare the bar to for consumption.

Fernando:

Oh amazing. Would love to learn more about this because I think that’s the one thing we need to do to make this bar value chain really work.

Unidentified participant:

For the sahado. I think that’s an important point and just as a follow on question if I may I’m curious on this 30.3% IRR you reached how much of this is bar how much is kettle just to know are you adding carbon too already to this no just yeah.

Pedro:

Exactly how much is how much is cattle how much is bar I don’t have this answer right now but over there on this calculation we are considering milk production, calves production which is this is a like breeding right breeding system. So milk production, cow’s production and butter nuts production. But you know like we over in this calculation in this financial modeling we consider it not the price of the baron nuts but the price of the fruit of the balloon which is around 50 cents per kilo.

Jonah Wittkamper:

Great. Great. Thanks. Okay. Jacob.

Jacob:

Hi, this is Jake Oland from EAN. Joan, I’m glad I’m in the right meeting this time. I bombed an earlier session with the time zone confusion. Dedra, thanks for the presentation. That was that was great. I was curious if you could talk a little bit more about your contractual and other relationships with the small holders. Wasn’t clear to me whether this is sort of a standard outgrower scheme or where you’re actually contracting and operating on rented land and given kind of the long payback and break even points I’m curious to see how you how you’ve sorted that out.

Pedro:

Okay, Jacob. Thank you. So, we are working basically with two types of partnership like we can one is the rent of the land. So we pay an a specific amount monthly or annually to them and we manage basically we just manage the land right we bring the investment the technical knowledge implement the system and then we manage the system for at least 10 years right so this is the more simple one and the other one which is a little bit more complex and there will be more variations is that partnership one which We bring the investments technical knowledge and management knowledge as well.

But there is the possibility for the small holder to put something that he has available. Put something in terms of investment and so since small holders in general they don’t have like they don’t are able to invest in restoration of degraded areas and the res resources that they have is usually like in the context of matroso is like cattle so they can enter in investment with their cattle also for sure with their land and in this in this model of partnership. The investment is going to be made like let’s say 70% kumbalu 30% the small holder and then the income is going to be proportionally shared according to the this investment that’s that was initially done to restore the area.

So initially we’re working with these two like main groups of partnership rent or this partnership that there’s possibility for the smaller to be more participative in terms of investment and also in terms of adopting and increasing their knowledge during the period of the contract.

Jonah Wittkamper:

Great. Pedro, why don’t you go ahead and do the second part of the presentation, then we’ll follow on with appropriate questions to that. Great. Oh, oh, wait, wait. I’m sorry. Danielle had a question.

Danielle:

No, it’s fine. Actually, Jacob asked a very similar question, but I do have another my dog is going another question that wasn’t clear about the you talked about all of the different components of the buu fruit, buu fruit that’s beyond the nut itself. Is there a circular economy component where part of the fruit or the shell is being used as feed stock for the cattle? I didn’t catch that.

Pedro:

Yeah, I said that there is this possibility to use the like the poop of the fruit for cattle ranging you know like to feed cattle ranging because it’s rich in carbohydrate so can be used it for feed to feed animals or two for human consumption as well. But for now it’s something like for cattle for example is something quite new you know there is some studies that need to be done and in order to see because that you know like on the trees that are on the on the pasture cattle usually eats them like normally eats them when they fell on the ground because it’s when the fruit is ready for gathering.

So usually normally the cattle eats the this part of the food which is rich in carbohydrate. So we see that there is this potential that is something to be explored. Got it. Thanks.

Jonah Wittkamper:

Okay. Great. Go ahead Pedro and do the second half of the presentation. Okay.

Unidentified participant:

Can you see it? Yeah. Okay. So, just to show some.

Pedro:

Pictures of the trees, the debaru tree for those that don’t don’t haven’t seen it yet. So, this is this big tree on the upper left side is the is like a adult tree of this on the upper right side is a young tree of the bar. The middle of the picture. This is pictures from the area that we implemented in Pocona which we restored the pasture and maintained the native B trees. So just to show some photos, okay, this one is just showing another young tree of Buu, the fruit of Buu in the middle and on the right the bar nuts which is inside the fruit.

Over here another pictures as well. This one on the like on the right the bottom right is that our first prediction of butters just to share with some partners and this is this one is ready to for consumption. Okay so like over here just to talk a little bit about our milestones for the next year. So we are like a third stage startup. Okay. So we have this experimental area which is 40 hectares 40 hectares area of cattle ranching integrated into prop with piki and jatobba and which is we are managing according to our investment capability capacities but we are planning we are now like this meeting today is part of our fundraising strategy.

In order first to enable the 100 actor pilot project in terms of restoration of degraded pastures with seal the pastoral system that I mention it so 20 24 25 do a second fundraising for the our we call it our commercial pilot project which is a 3,000 hector project until 2031 One also for 2425 design and validation of our carbon project and also carbon project registration 26 27 for sale of our calves which are the first zero defer station zero conversion 2829 we are going to validate the preosity and productivity of the bar plant of the bar that it was planted that I was mentioning with Fernando that there is this is one of the main challenges in terms of using the bar nuts for restoration in terms to use the fruit and 2030 possibly our third fundraising for scale and 2031 first verification of our VCS program project.

So this is our main milestones for the next years until 2031. So this is the our first geographic area that we’re going to where the our experimental area is based and where we are going to we are planning to initially expand our operations. So the main the main number over here is that we have 14 A6 rural properties considering small and mediumsiz properties in this municipality which represents 309,000 hectares. Our second geographic area is in the up north region of Matroso which is in the Amazon region and over there we have 5579 rural properties which represents 5668,000 hectares just to illustrate where we are planning to expand our operations amounts that we have already leveraged with investors so we have this partnership with Bela that’s going to the our co-investor to enable this 100 actor pilot project.

We haven’t established how much they’re going to invest but we have this deal with them. We are also pre-selected at AMAS accelerator. So there’s this potential investment between 200,000 highs and six 60,000 highs. And we our strategy for prospecting new investors. We are prospecting impact investor donors. As I said, this meeting over here is part of this process in order to enable the project to restore 3,000 hectares of degraded pastures by 2031. And also we are planning to access a low one to finance the catering component of the 100 100ctor pilot project which is more easy to access on a traditional bank.

So over here are potential GG emissions reductions and CO2 sequestration of the project considering 3,000 hectares of divided pressure restoration. So our estimate is that we’re through this project and considering our silver pastoral system is going to be 645,000 tons of CO2 our social and environmental impact. So 3,000 hectares of degree patch restored with regenerative and sustainable productive systems 100 increase of this small holders partner income at least 100 new jobs farmers managers technicians back office temporary workers conservation of kp key species of the Brazilian biodiversity such as pulma jaguar and eater mash deers ocelot among the others also bariki mak and others sequestration of 650,000 tons of CO2 which is equivalent to 12 tons of CO2 per hector per year and 20 to 30 new regenerative and sustainable business models of business supported through hur partnerships over here some of the risks that we have to manage.

So one of them is engaging small holders and mid-size ranchers in long-term partnerships associated with train planting that I just mentioned as well. So we plan to manage this through the pilot project as a showcase for engagement of ranchers and also considering some contractual clauses. Another risk is the productivity of the bar planted as I mentioned it already too which has a high genetic diversity. So to manage this we did we have this partnership with Barapa and Saski that develop a genetic improvement process over here in Matroso not just Moso but in the Sahara region and other risk is the forest fires which of basically training our team on the field with adequate equipment and preventive fire management.

So just to finish we were accelerated by the zapior star which was developed by funu valley in 20120 and was selected one of the highlights of the agroforest challenge. We were third place at the at the national stage of the climate launch plan climate launchpad climate ventures which is an acceleration process as well and we were featured as an innovator on the one trillion trees Amazon geconomic challenge in 2021 last year and I think yeah that’s it for now and here is my contact and I’m would be I would be I’m open to discuss possible partnerships, possible technical exchanges as well and open for questions too.

Jonah Wittkamper:

Great. If you could take it off full screen and put your email address in the chat so it’s easier for people to copy and paste and I got a couple questions and then we’ll open it up. My question is about agroforestry systems versus pass silver pasture systems. Do you know how much you could earn per hectare with a pure kumaru agroforestry monoculture just based on possible tree density and yields? And then and then if you do know the answer to that, what would the labor cost to be harvest to harvest it?

And then how would that compare to cattle?

Pedro:

Yeah, J. So consider being considering an agroforestry system with 700 trees of baru per hectare. You know like not just bar on per hector but the main species would be buou 700 individuals per hectare. We on the first year of production which we consider to be on the fifth year no five years after the after planting we would have a revenue of three 3,200 high per hector. So this is the first year of production which is the fifth year and considering after 10 years of planting this would rise to just a minute.

Okay, this would rise to 80 89,000 hector oh or 89,000 he sorry 89,000 he eyes per hectare after 10 years you know this is the gross revenue and on the cost of this Jonah we have to I think we would need some time more time to give you this answer but for Sure. You know, like when considering wild harvesting, this is one of the main costs because trees are more sparse and stuff like this. But since we’re going to plant on like more homogeneous and in lines that the cost of the labor cost will be lower than the than comparing to the wild harvesting.

Jonah Wittkamper:

Sorry, I’m speaking on with it on mute. Okay, thank you. So, the those numbers are impressive. Economically, that points to a real big future opportunity as long as you worry about disease and things like that. G based on those numbers, it looks like 10 years from now it’d be so much more profitable to have a bu system than a silo pastor system. Is the reason why you would prioritize a silver pastor system first just because that’s what’s palatable politically, locally, people believe a lot more in cows than trees.

Pedro:

Yes. Jonah, this isn’t a strategy that we are we are we define it to start with it because you know like we are in a based on a state that is the main cattle ranging producer in Brazil. So it’s always malo but nowadays Mroso is the main producer of cattle in Brazil. So that was that what was I was trying to say to Mauricio that over here people see trees in general you know like not to exploration not for wood exploration they see trees as a as something that needs to be managed on not managed but something that needs to be cut down.

So when we are trying to bring this new approach where trees can generate resources for them, we thought that this intercropped system integrated system between cattle ranching and trees in this case balloon trees would be a like a better strategy to initiate this transition for systems that involve trees. For then probably after some years we can maybe start to negotiate more you know like agroforestry systems without cattle and maybe not know the range you know we can have like maybe 30% of the range 20% depends on the you know like what the rer is looking for and we can do like let’s say 60% silver pasture and 40% of a forestry system with bua banana and ninjoka for example.

So this is something that we are thinking as a you know like this transition from monoculture cat ranching which in general is very extensive to something more ecological with trees and that is bring additional revenue as well.

Jonah Wittkamper:

Okay great do others have questions? Fernando, go ahead.

Fernando:

Hi, Pedro. A question around the seedlings. Do you plan to produce your own seedlings? How are you looking at having a nursery? What is the idea behind that?

Pedro:

Fernando for you know, like for this scale that we are planning for this 3,000 hectares, we will probably need to produce this nursery, right? Thiago my partner he’s as I said he’s he’s an expert in restoration he has something around 700 actors of restored areas over here in Matrosu so we really count on him on this on this area and but for the beginning of our project for this pilot 100 actor pilot area we will we will probably work with the nurseries that we have already around Matrosya in different regions of the Sahalu region possibly also with this partnership that I mentioned with Sahadus and also with Saski which is the Sask over here they have a like a small initiative that they did some kind of this genetic improvement process so we’re going to access some of these varieties that are already you know like more produce there is more capacity and also they are more productive.

So this is our planning for the next for the next years.

Jonah Wittkamper:

No great thanks. I have a couple questions about future market potential. So I heard you mention that there is a regulatory stumbling block at the moment for importing Baru nuts into Europe but not into the United States. Do you have an idea of how what percentage of the market of buun nuts are consumed locally in Brazil versus exported?

Pedro:

This is another great passing to you know something that we I said like we as a society need to support this to have this information but from a feeling perspective you know I think most of the nuts of theu nuts bar nuts are being exported I think nowadays you know probably from the past I don’t know maybe four to five years something like this. I think most of it are being exported because there is this pro probably because the price are better right there is this different between and dollars I’m not I’m not sure about the exactly percentage but I think mostly of it that is being harvested and processed is being exported.

Jonah Wittkamper:

Do you have a an appreciation of what percentage of the nuts that are produced and sold are wild harvested versus those that are grown in Silva pasture agroforestry systems?

Pedro:

Jonah 100% is wild harvest nowadays. You know like this restoration knows is very used to for restoration with for ecological purposes you know like ecological restoration. So it has been used for a couple of years. But in terms of to use the balloon tree for restoration with an economic purpose this is something a little bit new you know we have some initiatives but most of it is at least where I know most of it is associated with wild harvesting. Okay. And it’s something very interesting because there is just to add some information it’s very important because the wild harvesting of BU is there is a strong social impact right it’s really involved with traditional communities with the small holders so and they are the main responsible for this harvesting so there’s incredible and really important social impact social positive impact in this in this process.

Jonah Wittkamper:

Great. Next question from Ursula and then if there’s still time, Maritzio.

Ursula:

Hello. My question is about the price. You mentioned like 50 cents per kilo that I think it’s too low. Maybe I misunderstood. In Bolivia we have like a similar not probably same species. The producer is getting like over $2 per kilogram and the market value is over $12. Also in United States, I checked that the price is like $15 per pound. So it’s like double the price. So the question is why the price is so low for the producer in Brazil?

Jonah Wittkamper:

Pedro, you still there? I think that Pedro might Pedro, you’re on mute or perhaps you’re having a connectivity issue. Ursula, I two things come to mind. One is that perhaps there’s an over supply in Brazil compared to how much demand. That could be part of it.

Pedro:

Hello, I just came back. Sorry, but I heard the question from.

Unidentified participant:

Ursula. Go for Can I answer it? Okay. So, Ursula,.

Pedro:

Yeah, the price is very low, but the price that I was saying that is 50 cent per kilo is the price of the fruit, you know, so without processing. Okay. So the price of the nuts over here in Brazil, the kilo of the nut is 32 high. Okay. So you split by five, you’re going to have it in dollars. So it.

Unidentified participant:

Will be $6 per kilo more or less. Yeah. Now it has sense. Thank you.

Pedro:

Yeah. So that’s why because you can consider both you know like if you there’s some people there’s some organizations over here companies that want to buy the fruit because they’re going to have the nut and also to use the poop of the fruit but and the other ones that want to buy just the fruit or just the nut. Sorry that’s why I said.

Unidentified participant:

Different prices. Yes, I understand the whole fruit. Thank you. Thank you. You’re welcome,.

Mauricio:

Maraio. Yes. Thank you. It’s going back to the silly pastoral system for the Amazon. You were different kind of trees. So the valuable trees were just the you have five rows of trees. The valuable trees, the future valuable trees are just in the two rows. Could you explain why you chose that mix and what is the thinking behind it?

Pedro:

Okay, just this one I’m going to bring my friend over here. Okay, layout one plus natives in rows with five lines. Okay. Just bring Chago.

Unidentified participant:

Oh, now I have my camera.

Pedro:

I don’t know if Chago is there, but you know, Mauricio, this one this strategy, you know, is in order to attend some demands of some impact investors that want to work with native species as well. I think this is like the main reason why we the system is like this you know we could use just also native species but they are more valuable so why not just make everything with them and they are native yeah you know because tik ch is there but you know like te there is this growing grow faster now you don’t have.

Mauricio:

Sorry or perhaps I got it wrong, but you say edge species and non-edge species. What does that mean?

Unidentified participant:

Let me bring Fore foreign speech. Foreign speech. Brazil, I think his video is not working. Yeah. Yeah, his video is not working.

Pedro:

But you know Mauricio maybe I can bring this answer to you a little bit later in another maybe send you a message or an email so we can discuss a.

Unidentified participant:

Little bit more about the systems you know really I’m very interested to know that.

Pedro:

Yeah, sure. Because you know and we can bring Chago also so we can go a little bit more deeper on the technical issues, technical part of this system because he is the one that is more aware of this detail parts of the system. Okay.

Unidentified participant:

Okay. Thank you. Great. We’re at the top of the hour.

Jonah Wittkamper:

This is where we switch over to water cooler time and have less structured conversation and some people leave the call. I’m going to leave the line open. Pedro, are you able to stick around for a little longer? Okay, great. And Thiago, is there a chance you’ll see? Okay, I think it’s okay. So now it’s unstructured time. Anyone else is free to free to ask questions.

Pedro:

I’ll let my phone over here. Okay. My contact and Maicio if you can get like send a message for me throughout and we can set a meeting to discuss.

Unidentified participant:

About this possible. Just a message through the chat with my email.

Jonah Wittkamper:

Okay, great. Great. And Modi, so you’re Are you fluent in Portuguese?

Mauricio:

Well, I tried to be. I started learning, but you know, one of my never do business in a country when you don’t speak the language. And if you don’t speak it, learn it.

Jonah Wittkamper:

Good job. Great. Any anyone else have any other questions? Ursula, I’m wondering if you know anything about the export of BU from Bolivia into Europe if there are any regulatory hurdles.

Ursula:

It’s very the production is pro probably 5 000 kilograms and there is a lot of trees here in Bolivia actually two years ago probably six million ectctors were burned in fires. It’s incredible. So we lost a lot of here is called Chikitano almond. So, we lost a lot of those trees, but the trees are there, but there’s not there’s not funds to collect the seeds, unfortunately. So, there’s a lot of potential. But the amount that is available annually is probably just five tones, 5,000 kilograms a year.

Jonah Wittkamper:

And do you know who the primary markets are for Bolivia? Is it is it local.

Ursula:

It is okay. Yeah, just local market. It’s not enough to export. Obviously, if you come and we need I think intermediaries. We need big intermediaries that could process the almonds and everything else because the communities are very small, just families and they don’t have the technology. But if you can help them even u restoring now because there’s a lot of trees that were burned yeah there’s a lot of potential.

Jonah Wittkamper:

Do they survive burns? Sorry. Do the trees survive burns?

Ursula:

I don’t think so because it was very it was not like a small burn. It was intense burning for months. If it’s a natural like season burn they will survive but in this case we had a big a huge fires here two years ago but mostly intentionally you know trying to gather those lands from the tribes. So that’s the I don’t know the intention of the fires unfortunately.

Jonah Wittkamper:

P Pedro are you guys ready to go international?

Pedro:

I was thinking about that Jonah you know this that you know like this one of the things that interesting about PU is that you have this potential that goes across borders you know as Ursula is saying about Bolivia. So probably I’m not sure but probably in Paraguay they have this there is this potential to produce bu as a native specy. So we are not ready yet but I hope that soon we are ready to support you to restore degraded areas and increase production of pu trees intercroped with other species. No.

And we hope so to be there soon.

Jonah Wittkamper:

I have a question about the wild harvesting of the buirun nut. I know that wild harvesting of acai can be limited for transportation reasons because acai you need to keep refrigerated but nuts you can let them desiccate and therefore they have a longer travel life. Is there a limited supply of wild harvesting potential or is it really unlimited? The current wild harvesting industry is taking less than 1% of what’s affordably available. Do you have any?

Pedro:

This is another great question, John. You know like baru supply chain have a lot of questions but you know I would say like considering just the region that we are based in which there is this huge potential for wild for wild harvesting I would say that we are using I don’t know maybe 30% maybe of the potential 40 yeah it’s a huge potential because the specy the butter tree grows and in any place you know there is no need for like good soil or stuff like this and is a it’s a kind of opportunistic species you know so it’s it grows quite fast for a native specy and without management you know so you can have some three old three year old trees or something like this starting to produce without any management.

So there is a lot of potential to in order to be managed to be to be assessed and but there is some challenges in terms of this you know like the trees are sparse in like in a in the on the on the landscape and there is some issues regarding know like land rights because since the main responsible for wild harvesting are the small holders and traditional communities which usually has really small like pieces of land, they usually go to other ranches, other farms to harvest the baron nuts. So they get to the hazer legal of a huge farmer which is neighbor.

So they walk they go to harvest in different farms. Sometimes they have the permission for that, sometimes not. And so there is this you know like some kind of potential conflict and in terms of you know like you get into the farm of another people another person that doesn’t allow you to access their farms and possibly they permits you to access today but since there’s a growing demand for the mark for the nuts possibly in two to three to five years is not going to allow you to access the land.

So this there’s this is something that needs to be considerate.

Jonah Wittkamper:

I’ve got more questions but I don’t want to keep on going in front of mouth others. So another question I have is about the transition from the serado to the Amazon. So the tree is drought tolerant compared to a lot of the Amazonian trees. Of the 70 million hectares of the Brazilian Amazon that’s been deforested since 1970. I assume that land is a lot more dry because it has few much less tree cover. And therefore for the historical Amazon biome there’s literally millions of hectares that could be reforested with bu.

Is that true? Or is there something about the soil or something else that would prevent it from growing in that region?

Pedro:

Yeah, I think I don’t know. I think first of first thing is that over here in Brazil at least the ecosystem that I am based people usually don’t want to like you know like use a species that is from a different biome on another biome you know like using baron nuts that is from sahado in the Amazon region it’s something that we need to change but there is this idea of you know like If you are in the Amazon, you should use Amazon species. If you’re in the zah, you are in the sah, you should use sahad species.

But considering the context that you just said, I am for me it makes a lot of sense to use bar as one of the species that is going to be used in this preparation to a more moisture forest in the future, you know, because it grows really fast. It produces the fruit that there is economic value. It produced a great shadow for let’s say cattle or if there is no cattle it produce a great shadow for to protect the soil. So I think it’s a it’s a great specy to be in the like the this group of species that’s going to utilize it to forestration.

As I said to you, BU has been used it for ecological restoration, you know, in the for the past 10 to 15 years because of these characteristics that I just said, you know, grow fast, produce shadow, and there is a, you know, like attract biodiversity, right? Animals such as rodents and macaws and birds, bats and so for ecological restoration is amazing. So we just need to bring this experience from ecological restoration and to mix in with more like an economic perspective also.

Jonah Wittkamper:

Is there a region where BU and its Amazonian cousin Kumbaru coexist or is it like there’s a mountain peak and it’s only Kumbaru on one side and only BU on the other side?

Pedro:

Jonah, another great question. But I think in this transition zone, you know, like over here in the middle of Mroso, like in the region of Sou, Lucas V just in the middle in the transition between Sahad and Amazon biomes. Probably you can have you have the conditions like ecological conditions to have this both species and probably you don’t have like a like a huge number of individuals as you have over here you know okay when you have the opportunity to be over here we going to our range and I’m going to show it to you man it’s just you know like bar is a dominant specy on the landscape so you have this different probably this region that I said this transition zone there you have this conditions to have both but really sparse ones.

Jonah Wittkamper:

I remember reading that the trees get to be 60 years old can they grow older than that or do they begin to fall apart when they’re older than that.

Pedro:

Yeah you know like in the range my which is my father’s range he bought 40 years ago and we have buou over there that were already there when he bought 40 years ago and it’s still there. So I think it’s more or less like this as you said as you said 60 years. Yeah, that’s what I think. So I think I think it’s around this and they start to be like to fall you know like be more susceptible to termites and something like this.

Jonah Wittkamper:

Okay. So it is it’s its ecological niche is being a fast growing plant that Okay. So it could be good for macrolevel e sort of economic and ecological transition for reforesting the Amazon.

Pedro:

For sure. Yeah. And you know Jonah something that it’s really interesting because over here we are we are presenting this potential of degraded pastures restoration right so it’s one it’s one like model but you have also the restoration that needs to be done in order to complies with the forest code right and in this context depending or in some specifics you can use native species and also exotic species in order to complies with the forest code mainly in the legal reserve. Right? So you can have this mix of ecological with economic perspective in order to promote restoration that will contribute for you to comply with the first code and also will generate additional revenues that you know can you can combine this both strategies and so it’s something that we can use it for productive areas right so such as parry degraded areas that we need to produce more food and maybe on a more sustainable way that what we are looking for but also in the area that you need to do you need to restore to be to comply with the first code.

You can also have this idea of mixing native species with exotic species if you want to. But if you want just ex just native species but with this potential for economic benefits as well is something that is must be done right and it is allowed by the legislation.

Jonah Wittkamper:

Nice. In an agroforestry system because the nuts fall and are easy to pick up would you mow the understory?

Unidentified participant:

Oh, what is that? Would you cut the trees in an understory in order to keep it low vegetation so there’s not interfering plants. So you could use machines to drive around the trees and collect the nuts.

Pedro:

Yeah, this is something like that this you know like this management of the tree is really important you know. So if the bu the wood of Buu is really good too, you know, people use to produce like for fences and the ranches, but also to build houses. So if you want to use the wood, which is something that is possible, you can you have to manage it in one way, right? To maintain like the tree very straight. But if you want to for like to prod to use the fruit, you can manage it in another way.

So you can keep the tree will be not too high and she can be like more width with more width. Wider. Yeah. Wider. Yeah. Will be more wider. So you can you have to you have to manage like the cuts so you can like establish how the tree is going to grow depending on what you are looking for the wood or the fruit or both maybe.

Jonah Wittkamper:

Why do you why do you think that cultivation of the buu was not popular 30 years ago and is more popular now? What’s the change?

Pedro:

You know like people arrived to the forest, right? So they didn’t first they didn’t they didn’t know that Bahu there is this economic potential for BU probably I think this is the first thing the second thing is that they need to deforest in order to guarantee that they owns the land that they have some activity on the land and third that probably they realize that after a few years that the tree the wood can be used it for you know like build houses is a good wood so there is this also this so I think this is probably this is the train three main causes that didn’t contribute to have this economic view for of the bad tree and yeah and now we have this what we were saying that the consumers are more health consious.

Yeah. Right. So this is something that superfoods in general are really growing the demand for it. Like have the Brazil nuts and now the balloon nuts I have acai there’s a lot of superfoods and this is something that probably now is supporting this probably you know I think for sure is supporting this restoration with the ble trees great.

Jonah Wittkamper:

Last question for me maybe this is linked to Ursula as well one of the things that limits sale of a lot of these aggroforestry products is the demand. Do you do you guys have more buyers than you’re able to supply or is getting access to new markets something you need help with?

Pedro:

Yeah, Jonah, this is another great question because for now we have these two main companies that I mentioned which is Barukas and Lara Flora which both are exporting to the US. Many mainly California and but also we have some cooperatives that work independently of this company which lets as I think coper central I think is that which is based in Brasília so we have some companies that work in that but not too much so initially we’re going to work with these ones that have already access to markets. But on the following years probably we can develop our own access to markets and our develop our own product to do to do like a to sell directly to consumer, you know.

But for now we have a just a few organizations that are working with this that are buying these products and selling in a in a considerable scale. Great. Ursula, do you have anything?

Ursula:

Yes, better to talk. You know, we are just three. So here in Bolivia the issue is that we don’t have enough processing plants and any product for example the Brazilian nut we have a huge plants now and before probably the total production was like $1 million now is over 80 million so it’s huge regarding asai I think we need freeze drying plants everywhere and with that it will be easier to export you know it’s just a powder instead of a fresh fruit if you check Amazon web page you will see all the demand the demand is there I think what is missing is the middleman between the forest production and the and the import in United States That’s because United States, Europe, Germany, all those are our markets.

It’s not really local consumption.

Pedro:

Yeah, understood. Okay. This processing this processing is really crucial and for in case of bud is totally manual you know like the we begin with the wild harvesting which is really important from a from a social perspective but is not too productive but and then you go to a to the factories the small factories that are not are totally.

Unidentified participant:

Manual you know they broke each fruit. Yeah, I know how it is.

Ursula:

That’s why it’s so painful. But I’m pretty sure well, I’ve been in Spain two years or three years and I’ve been I saw the almond how it how they do with the almond. I think you need a little I don’t know think outside the box for sure someone can copy or start a small manufacturing something that is easier you know you have to we have to do that it’s there’s a lot of machines for coconut and in coconut is difficult so I think we have one.

Unidentified participant:

For have you seen the automatic one for baron nuts For sure you can you can make it. Yeah. Yeah. I’m pretty sure we have the bigger one, the Brazil nut that is a huge like similar to a coconut and inside there are smaller nuts.

Pedro:

Yeah. And I think it’s with those is more difficult because in the case of the baru nut it’s just a fiber and inside is just one nut you know.

Ursula:

Yeah. Yeah. I think it’s possible to have something automatic that will change everything. And regarding the harvesting, I think it’s something similar to the olive trees, we can copy too. It’s like some kind of device that makes the tree like tremble. Yeah.

Unidentified participant:

And all the nuts fell down. Yeah. Yeah. Yeah. I was saying I was.

Ursula:

Watching the feedback. Very good. Yeah, the tree is not damaged, I think. And we need to think outside the box, but we need those big processors because the market is the key,.

Unidentified participant:

You know. Yeah. Yeah. Yeah. Wow. And we need some investment as well.

Ursula:

Yes. A lot. One plan of like I did it one million, two million. It’s just a lot of investment. A lot. Yeah. So, thank you. Thank you very much.

Pedro:

Thank you, Ursula.

Jonah Wittkamper:

Great guys. Okay, great call. Lots of learning. Any other questions from anybody? Okay, I think we’re set.

Unidentified participant:

Okay, Jonah. Great. Thank you. Thank you, Ursula, for Yes. Bye. Nice to meet you. Bye. Bye. Bye. Bye.