Cocobolo saplings growing in Arimae's nursery

This morning I pulled my old hiking boots out of the closet and brushed off the residual clumps of dirt. After a few years of wearing them down to Panama, they’ve given in to the humidity and now require regular applications of Shoe Goo to keep the soles on. I should probably just get another pair, but I’m hoping they’ll make it through my next trip.

Next week we begin the planting of five hectares (12 acres) of mixed tropical hardwood trees in our partner community of Arimae. This is the first planting we’ll have done since 2008 and represents a big momentum boost for us as we continue to evolve the business. 

Besides bringing our planted area up to over 60 acres, this planting contributes to one of our main goals as a company: promoting community forestry as a sustainable economic alternative. As part of a UNDP-GEF Small Grants project in 2009, we helped Arimae set up a community-owned native tree nursery to sell saplings to forestry businesses like us. For this planting they’ve agreed to sell us spanish cedar, spiny cedar, zorro and cocobolo saplings raised from seed collected from their rainforest reserve and surrounding areas. It’s a positive development for the community, and we’re hopeful that the trees will meet or exceed the quality of the ones we’re buying from more established suppliers.

While we’re only buying about ⅓ of the stock from Arimae, they have the potential to become our biggest supplier of native tree saplings.

The land is prepped, the stakes are ready, we have the fertilizer, and the saplings are on their way. Now, all we need is steady rainfall and a couple weeks' worth of hard work to get them planted. In my opinion this is the most rewarding aspect of what we do. Growing the business here in the US is exciting and rewarding, but it doesn't provide the same tangible sense of accomplishment that I get from putting trees into the ground, getting the hands dirty and building relationships with our partners.

I'll capture as many photos and videos as I can during the planting and upload them to our Facebook and Twitter accounts. Not sure how often I’ll be able to do this—internet access tends to be spotty in the campo—but keep an eye out for updates!

When Planting Empowerment was just a wee company, we participated in social business plan competitions at several universities including Notre Dame, University of Texas Austin, and Yale. While we never came away with a first place, they were an excellent way for us to gain valuable (and yes, critical) feedback about our business plan and become more comfortable pitching our concept. We even earned a little money which helped us get off the ground. These days, we stay involved through judging and mentoring roles, and have seen a lot of different business plans. Below we present a few suggestions on how to improve your chances at these competitions.

Have your product/service already developed. The judges see hundreds of business plans, and your amazing idea is competing with all the other amazing ideas. Having something already in production, or even a working prototype, signals that you’re serious about your business and are actually making it happen. Include photos of the product. Photoshop it being used. Include a positive testimonial from someone who has actually used your product or service (be honest, of course). Judges want to be known for choosing something that is already a reality or is well on its way, not an idea that may become reality.

Use real numbers. Assumptions won’t get you too far. Do your research and cite your sources for the assumptions you are using to develop your numbers. This is especially important for sales numbers. If you’re going to quantify your social impact, use the New Economic model system. A 568% SROI or $1-$10 cost-benefit ratio will raise eyebrows because the analysis probably isn’t accurate. Run it by one of your friends who is studying economics.

Forestry technician stands with a teak tree in PanamaThe site and its descriptions provide an opportunity to describe how our investments are evolving as Planting Empowerment grows. The Forest Investment would be classified as “Tree Certificates” in the site’s definition, i.e. investors own all or a portion of the trees planted in specific timber plantation with a certain “vintage”. While the Tree certificates approach enables smaller investors to access forestry investing, the opportunities tend to be riskier because there is minimal liquidity, meaning the investor can’t exit the investment easily.

Planting Empowerment is in the process of consolidating our funds to operate more like the “Tropical Timber Company” described on the site. This means that we will merge our two original plantations and investors into a single entity. This consolidated company will have a larger capital base and multiple vintages of timber to smooth revenue streams.

We decided to take this route to give our investors more liquidity and regular revenues, and to decrease our administrative expenses from running multiple independent timber funds. Instead of gaining large dividends, investors will benefit from share appreciation and smaller dividends as we reinvest profits into planting more trees and crops.

Over the long term, we believe that operating as a private timber investment company makes sense for our investors and the growth of the company.

As always, before choosing any investment, investors should understand how to choose forestry investments and consider how they fit into their broader financial plans.

A view of the Trump Tower sun deck in PanamaAs for-profit business, we believe that everyone can benefit by participating in capital markets. We’re not calling for the redistribution of Panama’s wealth to the urban and rural poor. Rather, we’re working to grow the proverbial pie through profitable, sustainable forestry, while ensuring that our community forestry partners, as an essential part of our business, benefit from that overall increase in wealth creation.

While this may seem altruistic, it’s not. What our sustainable forestry model does is consider the long-term economic, social and environmental impacts of empowering those who are critical to our business. Attracting increased foreign investment and including more local stakeholders as economic winners makes business sense. Higher wages reduce our labor turnover and increase productivity. Profit sharing reduces our political risk. We are ensuring that we have continued access to necessary, and increasingly costly, plantation inputs such as land and labor.

Panama will continue to grow, and holders of our Forest Investment should be glad to see this. But Panama also needs to consider the potential of those who are currently excluded from the economic process. Until they become stakeholders in the growing wealth of the country, Panama will continue to have the road blocks and strikes that point to this economic disparity. In the meantime, we wouldn't feel too bad if all the luxury SUVs in Panama City were made to suffer the wait.

Learn more about Panama.

We’ll be speaking on the “Launching and running a business across continents” panel, which explores how social businesses operate multi-nationally.

Planting Empowerment competed in the WJF’s Social Enterprise Competition in 2007, and has served as a judge for the competition for the past five years.

The William James Foundation connects for-profit social entrepreneurs to industry experts and impact investors to help scale those entrepreneurs' ideas into sustainable ventures.

A Cocobolo tree on the side of the Inter-American Highway in Darien, Panama

Logging of Cocobolo has reached a feverish pitch in Panama, where loggers are encroaching illegally onto Indigenous Peoples’ land to extract the wood. As with most logging, the “poachers” are not discriminate when they harvest the Rosewood - they destroy significant amounts of forest to reach the one tree they want to harvest. The wood is culturally important to the indigenous, who use it medicinally and to create artisanry.

Looking up the trunk of a Yellow wood (Armarillo) tree in Panama

From our perspective, the bill represents a couple of features that would enable smaller investors to access the forestry investments marketplace.

For a summary of the presentation, visit the Yale School of Forestry blog, or download the presentation slides below.

Yale Forestry Presentation (1 MB)