This Mexican company is helping family farmers become forest stewards

Small-scale farming can be a precarious business. But through an innovative community lending model, a company in Mexico is supporting indigenous landowners to build a more secure future with seed capital. Or should that be sapling capital?

Ejido Verde is aiming to become the world leader in the pine resin chemicals industry - while also tackling climate change and wealth inequality.

The company offers loans to entire communities - helping generate jobs, revitalize cultural heritage and replenish endangered species.

Under a for-profit model, farming cooperatives or “ejidos”, indigenous communities, and small landowners are helped to establish commercial forest plantations on degraded or abandoned lands in the state of Michoacán on Mexico’s west coast. Zero-interest loans support farmers with superior seedlings, technical assistance and plantation maintenance.

After 10 years, the trees start producing resin. Approved resin tappers, who harvest the product prioritizing the health of the trees, repay the loan with a 10-15% share of the resin. Ejido Verde buys the remaining resin at a fair price. After 20 years, the tappers get 100% of the revenue from the resin harvested.

Resin has a number of uses as a sealant, glue and varnish, as well as being processed into other products.

Reshaping an industry

Part of Ejido Verde’s mission is to influence the global pine chemical industry to adopt more sustainable practices and prove the worth of investing in stable, integrated supply chains. The industry, which employs 800,000 tappers, currently operates primarily on a ‘just-in-time’ basis that is affected by volatile commodity markets.

By creating a secure demand for resin, and generating jobs in commercial pine tree plantations, the company aims to reduce emigration, and strengthen gender and social equality.

There are also environmental benefits. Ejido Verde aims to reforest areas with native, endemic and endangered tree species. This in turn helps with carbon sequestration and boosts biodiversity.

As of June 2020, the company had around 4,200 hectares of plantation under management, involving 652 family farms. It generated 2,145 jobs in 2019. It has recently been named by Fast Company as one of the most innovative companies in Latin America.

Cutting back on cutting down

Despite efforts to limit deforestation, primary forest loss was 2.8% higher in 2019 than the year before - and has remained consistently high for the last 20 years.

The World Resources Institute says the coronavirus pandemic may hold back efforts to get deforestation under control, with many countries already likely to miss forest loss commitments.

With focus elsewhere, a lack of enforcement may result in more illegal clearing and fires. And in the medium term, weakened economies may turn to forests and other natural resources as a means of stimulating recovery.