wdc 2015 lp

Moringa | A Sustainable Agroforestry Fund

Agroforestry systems risk/revenue balance

Clément Chenost, Land & Poverty – Conference 2015

EDMOND DE ROTHSCHILD | ONF INTERNATIONAL | MORINGA 2

Moringa | introduction

� Agroforestry is a promising approach to dealing with the growing need

for agricultural and timber products while preserving the environment

and enhancing the livelihood of small farmers

� To be competitive and achieve greater adoption, agroforestry needs

better access to markets, patient capital and further technical

improvements. The private sector could play a key role

� The Moringa fund was developed by a partnership of public and private

institutions to upscale successful pilot projects and unlock the potential

of agroforestry

� This presentation presents key arguments developed by Moringa and a

first investment illustrating a win-win approach with the private sector in

Nicaragua


Moringa | in a nutshell

� Moringa is a sustainable agro-forestry fund with a target size of

€100m

� Geography: Latin America and Sub-Saharan Africa

Mission

Objectives

Key strengths

� Develop sound agroforestry projects providing a reasonable

commercial return to its investors

� Have a positive environmental impact

� Improve the livelihoods of farmers and local communities

� >€70m already raised (14 investors)

� Core team boosted by two complementary

partners: Edmond de Rothschild and ONF

International

� A first investment in Nicaragua

� An Agroforestry Technical Assistance Facility

associating science partners (ICRAF, CIRAD,

CATIE, etc.)


Deforestation| a land use challenge


� Agroforestry is the spatial or temporal combination of trees and crops or animals,

with biological, social and economic synergies leading to higher productivity,

reduced risks, a more stable income for local populations, and positive

environmental impacts

<+Examples of biological interactions :

� Better use of sun light

� Better use of water

� Biological regulation of pests

Global profitability

Social benefits

Environmental impacts

Agroforestry | the need to develop new and

innovative land use solutions

Coffee under shade Sylvopastoralism

Acacia intertwinned with cassava


Outgrower programs | the need to develop

innovative production schemes


Agroforestry | multiple ESG benefits …

Climate change

Mitigation

Adaptation

Biodiversity

Conservation

Corridors

Desertification

Fixation

Restauration

AGROFORESTERIE

World Agroforestry Center, 2007

Monoculture Agroforestry


Agroforestry | an investor’s point of view

Industrial

monoculture

Unimproved small

scale polyculture

Coffee

Coffee,

etc.

Pro

ject

ris

ks

Lon

g t

erm

rev

en

ue

s

Profitable & sustainable

agroforestry

Improved

coffee tech.

Other revenues.

Price premium

Payment for ES

Market

Environmental

Social

Political

Technical

Market

Environmental

Social

Political

Technical

Increased and diversifiedrevenues

Reduced risks


Positioning | the need to scale up

Small scale

pilot (~100t)

Industrial project

(~5000t)

Bridging the gap


� In January 2015, Moringa announced an

investment into Nicafrance, a Nicaraguan

agroforestry company, specialized in the

production of high quality shade-grown coffee and

timber for high-end applications

� Nicafrance is a large independent coffee farm of

over 1,000 Ha, of which 660 Ha is coffee

plantations under tree shade & 115 Ha is forest

� Moringa will finance an outgrower program

targeting small and medium scale farms in the

Matagalpa region, that have been severely affected

by rust and the effects of global warming

� The cluster aims at producing c.5,000t of specialty

coffee per year for high-end roasters

Nicafrance | an agroforestry case study


� Coffee leaf rust appeared in 1976

� The disease attacks the underside of the leaf, causing it to yellow and drop prematurely, reducing the

plant’s photosynthetic capacity and yield. It inhibits the cherry from ripening

� The process to renew coffee farms is slow: planting higher-yielding varieties that are

varieties more resistant to major diseases and pests takes time

� Although not a new phenomenon, the outbreak of coffee rust in 2012 is considered one of the worst ever

recorded

� The rust outbreak is attributable to changes in rainfall patterns, temperature, poor plant nutrition, failure

to monitor coffee rust and inadequate fungicide application

Source: International Coffee Organization.

Coffee challenges | rust and climate change


Growing demand

in emerging

markets

Regional

differences in

retail coffee value

and volume

Premiumization

Product

innovation

Growing out-of-

home offering

Shift from multi-

serve to single-

serve

76% of volume growth to 2016 driven by rising incomes & middle class, premiumization and emerging

coffee cultures in key countries

� Consumers now demand convenience, variety and quality,

premium flavour both at-home and out-of-home

� Coffee moving into an era of tighter supply and higher volatility

� Sustainability a key differentiator among premium coffees

Coffee opportunities | high end market


La Cumplida is a unique example of profitable, sustainable large scale

agroforestry system

� CIRAD and ECOM have developed specific agroforestry rust tolerant varieties and

hybrids

� A whole timber industry has been created to valorize > 10 native tree species

� The farm is UTZ, Rainforest Alliance and FSC certified

� This model could be replicated in the region

La Cumplida| a flagship agroforestry plantation

Conv. varieties (Caturaï)

MarsellesaHybrid F1

H1

39 QQ/ha 43 – 45 QQ/ha 51 – 55 QQ/ha

++ ++ (acidity)++

+++ (> 1100m)

- ++ ++

- + ++

Seed Seed Clone

20 c/plant 20 c/plant 70 c/plant

Productivity

Quality

Rust tolerance

Shade synergies

Cost

Propagation


Nicafrance| outgrower scheme

� The scheme will select small and medium sized farms in need of renovations each year

� Complete restoration of the farm over 5 years (preparation of the farm, replacement by high performance rust tolerant seedlings, tree planting, revenues from the coffee sale over the first 3 years of production given the first 2 years are unproductive)

� The farmer monitors the plantation (fire, thefts, etc.), and may contribute its workforce, particularly for the harvesting period

� Renovation services to the farmer are valued at $4,000 per MZ, which is transformed into a loan, to be reimbursed by the Farmer after year 5 (the project charging no interest)

Scheme

Overview

Outgrower

s’ Schedule

Year Mz PlantedFarms

Targeted2015 2016 2017 2018 2019 2020 2021 2022 2023

1 500 A

2 500 A / B1

3 500 All

4 500 All

5 500 All

Renovation

Crops

Final crop & reimbursement


Nicafrance Coffee| targeting premium markets

By refocusing its production on higher quality varieties (such as La Marsellesa & Hybrids),

Nicafrance will be able to target quality-driven international roasters, that typically pay $0.40/lbs above traded price


� A global landscape / territory approach developed thanks to a dedicated TA facility program

� Agroforestry model of the project could be further developed to be spread to smaller producers of the region

� Dedicated research & training center on coffee agroforestry systems could be developed and become a

worldwide reference

� Ultimate objective would be to have a positive impact at the landscape level and preserve natural assets in

the region

� A “coffee of origin” could then be developed and attract prestigious brand (other products : cocoa, livestock +

Eco-tourism, etc.)

� Several partners already confirmed : CIRAD, CATIE, CIAT, World Coffee Research, Airbus, Fundenic,

Government of Nicaragua

� Project concept in development and could constitute a part of the engagement of Nicaragua in the 20*20

initiative

Nicafrance | potential impacts

CO2 impact objective

505 493 tCO2 Land impact objectives

0,5 MtCO2 1 700 hectares reforested

3 200 hectares sustainable land management in production

4 000 hectares natural areas impacted

Social impact objectives

6 000 Jobs

500 Farmers empowered

26 000 Individuals impacted

Thanks for your attention !

Clément Chenost: [email protected]