Sustainable Cocoa Production in the Dominican Republic. September 27, 2016

Transcription

1 Sustainable Cocoa Production in the Dominican Republic September 27, 2016

2 Important Click to edit legal Master information title style This presentation has been prepared by Nature Ventures LLC, Switzerland ( NatureVentures ), a wholly owner subsidiary of NatureBank Asset Management Inc., and is current as of September It constitutes marketing material and is not the result of independent financial research. Therefore the legal requirements regarding the independence of financial research do not apply. The information and opinions expressed in this publication are subject to change without notice. This publication is intended for information purposes only and does not constitute an offer or an invitation by, or on behalf of, ForestFinest to make any investments. Opinions and comments of the authors reflect their current views, but not necessarily that of other group entities or third parties. Services or products mentioned in this publication may not be suitable for all recipients and may not be available in all countries. Persons interested in these products and services are kindly requested to contact ForestFinest in order to be informed about the services and products available in a specific country. This publication has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Before entering into any transaction, investors should consider the suitability of the transaction to individual circumstances and objectives. Nothing in this publication constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate for individual circumstances, or otherwise constitutes a personal recommendation for any specific investor. ForestFinest recommends that investors independently assess, with a professional advisor, the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences. Past performance is not a reliable indicator of future results. Performance forecasts are not a reliable indicator of future performance. The investor may not get back the amount invested. Although the information and data herein are obtained from sources believed to be reliable, no representation is made that the information is accurate or complete. ForestFinest Consulting, Germany and its affiliated companies do not accept liability for any loss arising from the use of this publication. This publication may only be distributed in countries where its distribution is legally permitted. 2

3 NatureBank is a leading consultancy and investment service provider for sustainable land use projects. With a highly qualified core team and a wide network of leading experts, we assist investors and project owners in the development, establishment and management of forestry and agroforestry projects worldwide. Our Mission To establish and manage bespoke commodity investment opportunities with meaningful impact and attractive returns for investors. 3

4 Investments in Sustainable Cocoa Production in the Dominican Republic Naturebank seeks to establish a leading cocoa company in the Dominican Republic with focus on the production of certified fine or flavour premium cocoa Naturebank will introduce climate-smart agroforestry practices, latest technology and expert know-how to the production value chain, acting as a catalyst for change to the local cocoa sector We finance and channel investment into a cluster of scalable cocoa operations, leveraging central resources and processes from which local smallholders and larger projects will benefit alike Naturebank already secured financing for the first hectares and established an experienced team of cocoa experts expanding established highly-productive premium cocoa finca operations Overall it is planned to establish hectares of new cocoa forests, producing additional tons p.a. of certified premium cocoa for export Projects are expected to create direct employment for at least people in rural areas and substantially increase household income of local smallholder cocoa farmers The sustainably-managed agroforestry systems increase resilience against the impacts of climate change, store carbon and maintain biodiversity. 4

5 Global experience International Group with project experience and experts around the world Consulting projects Proprietory projects 5

6 Holistic approach to cocoa production Tree Nurseries Traceability Management & Monitoring 360 Concept Marketing Certification Production & Processing 6 6

7 Delivered Best Practice Proven partner for capacity building and state-of-the-art project design Capacity Building in Forest Management, Vietnam Team conducted a three year Capacity Building in Vietnam to establish sustainable forest management (SFM). The program was financed by the German Government. The program established by ForestFinest Consulting developed into a national standard for forest management. Feasibility study on Cocoa Investment, Dominican Republic The German DEG has funded a comprehensive feasibility study conducted by our subsidiary Forest Finest Consulting on commercial investments in cocoa production in the Dominican Republic. The results will be used to establish outstanding investment opportunities in this market. 7

8 Delivered Best Practice Proven track record of successful cocoa production and commercialisation Cocoa project Panama (since 2009) Composition of plant systems and selection of cocoa varieties Farm installation and supervision of the farm management Design of management plans Running proprietary post-harvest stations Successfully UTZ certified since 2014 Cocoa project Peru (since 2012) Composition of plant systems adjusted to local conditions, including the selection of appropriate cocoa varieties Farm installation and supervision of the farm management Design of management plans Planning of adjusted harvest and post-harvest technologies Preparation of UTZ certification processes 8

9 Long-term management experience We have real experience along the whole production chain Designed, developed and operate own productive cocoa operations in Peru and Panama Acquiring established and productive cocoa operations in the Dominican Republic Generating additional incomes from carbon credits, shade trees and secondary crops Cacao flavonoid extraction and sale as income source Established offtake agreements with European chocolate manufacturers 9 9

10 Poor shading Best Practice Poor site Best Practice Long-term management experience We have real experience along the whole production chain Project choice Soil and topography Climate and water Contamination risks Staff and wages Transport and logistics Security Establishment optimized clone mix Structured planting pattern Mixed culture with temporary and permanent shade trees Pollinating insects Low impact soil treatment 10

11 Poor quality Poor control Best practice Best practice Long-term management experience We have real experience along the whole production chain Maintenance Site-adapted management Frequent disease controls Adjusted harvesting methods Mechanization, where possible Post-harvest Fermentation and drying adjusted to site, varieties and quality requirement Optimization of processes Cacao quality assessments 11

12 The Dominican Republic Political and economic stability One of the fastest growing economies in Latin America at 7.3% in 2014 GDP growth of 213% in Among the top 5 in LatAm for Foreign Direct Investment Attractive business climate Trade Agreements US access through the Caribbean Basin Trade Partnership European community access through the Cotonou Agreement DR-CAFTA between the US & Central American countries CARICOM Free Trade Agreement between Caribbean countries Inward FDI in the Central America and Caribbean Region Source: Consejo Nacional de Zonas Francas de Exportación 12

13 The Dominican Republic Excellent infrastructure for import and export Maximum of 2-3 hours distance to the nearest international port Maximum of 2-3 hours travel from international airports to the project site Source: Consejo Nacional de Zonas Francas de Exportación 13

14 The Dominican Republic The Dominican Republic is an established and important cocoa producer Main cocoa producing countries (thousand tonnes) Organic production 2011 (MT) Côte d Ivoire Ghana Indonesia Brazil Nigeria Ecuador Cameroon Dominican Republic Estimates for 2013/2014 Estimates for 2014/2015 Forecasts for 2015/2016 Sources: ICCO; SSI Review 2014; CONACADO Largest organic cocoa producer Fine or flavor country (ICCO Appendix C) Number 8 cocoa producer Low disease rate due to seasonality and absence of certain diseases Excellent soil and weather conditions Proposed planting areas are outside of hurricane pathways Large fincas with appropriate soil and existing infrastructure available 14

15 Strong team The experienced local team is supported by our consultants and cocoa specialists ForestFinest Consulting Nature Ventures DR Dr. Silke Elwers (Team-Lead Cocoa) Andreas Schnall (Senior Manager) Alberto Roa (Head of Operations) Ralf Rathsack (Cocoa Consultant) Gualberto Acebey (Senior Manager PostHarvest) Mamerto Valerio (Senior Manager Field Operations) Jaime G. (Senior Cocoa Consultant) Adriano de Jesus Rodriguez (Manager PostHarvest ) Lino Gonzales (Manager Field Operations) 15 15

16 Upcoming cocoa regions Established pipeline of high-quality farmland Province Region Monte Plata Bayaguana This is one of the regions of the DR in which fundamental site factors like soil and climate conditions are very suitable for cocoa. So far, forestry, livestock and sugarcane production are dominating. As the competitiveness of local sugar production is declining, large contiguous areas for a comparatively low price per hectare are available. Forest Finest Consulting analyzed, tested and secured several largescale farms at approx. 10km south of the city of Bayaguana as potential project areas. 16

17 The cocoa investment case Purchase of 550 hectares of high-quality farmland (tapping into Naturebank s developed project pipeline) Planting of UTZ or organic certified cocoa agroforestry system intercropping with plantain and value trees Conservative yield projections of 2.00 tons p.a. according to internal yield growth profile Assumed sale at USD per ton for certified premium cocoa leveraging local processing and established offtakes Additional income from plantain as shade crop according to conservative assumptions Additional income from harvesting timber, selling clonal material and carbon credits offers unmodelled upside Making use of experienced local management team, logistics, corporate structure and central overheads generates economies of scale Net IRR of 12%+ and capital requirement of USD 10.5 million Project start: within next 12 months 17

18 Investment Structure Investment in listed stock and convertible bonds Nature Ventures LLC «Swiss Holding» Forest Finest Consulting GmbH «German Consultancy» Operational Management 100% Nature Ventures (Dom. Rep.) S.A.S «Finca Operator» Operational Management Logistics / service providers Procurement Expert Support 100% 100% Nature Ventures CacaoCo «DR Trust» Ownership of land and biological assets Environmental licences Administrated by local fiduciary Cocoa Purchase Agreement Nature Ventures FTZ Co S.A. «DR Processor» DR company established in Free Trade Zone Import of Inputs, Packaging Cacao Export Offtake Agreements 18

19 Dedicated Project Finance Opportunities Investor InvestCo Forest Finest Consulting GmbH «German Consultancy» Operational Management 100% Nature Ventures (Dom. Rep.) S.A.S «Finca Operator» Operational Management Logistics / service providers Procurement Expert Support 100% 100% CacaoCo «DR Trust» Ownership of land and biological assets Environmental licences Administrated by local fiduciary Cocoa Purchase Agreement Nature Ventures FTZ Co S.A. «DR Processor» DR company established in Free Trade Zone Import of Inputs, Packaging Cacao Export Offtake Agreements 19

20 Impact estimation Sustainable cocoa production in the Dominican Republic Employment $/t cocoa Ecosystem services $/t cocoa $ One ton of cocoa creates additional ecological and socioeconomic values worth $ The calculated ecological and socioeconomic impact of a sustainable cocoa project in the Dominican Republic is based on calculations conducted by ForestFinest Consulting for comparable projects in similar project environments. Provisioning Services $ 353 $ 418 $ 895 $ Regulating Services Habitat Services Cultural Services 20

21 Impact estimation The Sustainable Development Goals Because it is not yet possible to calculate all impacts of the envisioned project or illustrate them with specific numbers, the Sustainable Development Goals (SDG) of the United Nations will help to present the diverse impacts of the project. In fact, the potential project makes a significant contribution to at least 6 of the 17 goals. The planned outgrower-concept lets smallholder farmers participate in the project's commercial opportunities by buying inputs and using the project developer's distribution channels. This will lead to an estimated 20% increase in revenue. To empower rural communities, improvements in infrastructure are essential. While the extent depends on the final layout, investments into transportation infrastructure and housing is an integral part of the project's implementation. All employees, including supervisors and administrative personnel will have access to specific trainings including farming techniques, sustainable agriculture and financial planning. Capacity building for smallholder farmers is also a vital part of the project's design. The project will directly lead to job creation for different levels of employees. Opportunities in farming, supervision and general management become available, mainly for the local population. Climate change is affecting every country, especially countries such as the Dominican Republic. By planting trees and creating a sustainable agricultural ecosystem, the project helps to mitigate and build resilience to climate change. The positive impact of 100 ha project area equals getting almost 5000 cars off the streets for one year. The trees, which are planted, not only give home to different species of animals, plants and insects. The project activities also regulate the local water flow, reduce soil erosion and provide sustainable economic opportunities for the rural community 21

22 THANK YOU. Thank you for your attention! Questions? We would be happy to answer any of your questions