Community forest management cooperative in the Amazon repays bank loan ahead of time

For the first time, managers of the Verde para Sempre Extractive Reserve get advance funds for production. Their strengthened management practices result from an IEB and CDS project, supported by USAID/Brazil

In May, the Nossa Senhora do Perpétuo Socorro do Rio Arimum Mixed Agroextractive Cooperative (COOMNSPRA) managed to achieve an innovative outcome: the early repayment of its first bank loan to finance the sustainable exploitation of wood in the Verde para Sempre Extractive Reserve, located in the state of Pará. For the first time, forest managers in the municipality of Porto de Moz were able to get funds from a bank to finance their production. As a result, they were less dependent on intermediaries, and had greater autonomy in running their sustainable forest management plans for the region.

This results from all the work that has been carried out in recent years to strengthen cooperatives and associations operating within the extractive reserve. Since 2016, the Brazilian Education Institute (IEB), in partnership with the Porto de Moz Sustainable Development Committee (CDS), has implemented actions to strengthen their institutional arrangements and ensure they match the reality and the demands of the communities. The project is supported by USAID/Brazil, the Climate and Land Use Alliance (CLUA), the United States Forest Service (USFS), and ICMBio. 

Sustainable forest management has become increasingly important as a socioeconomic alternative for the development and protection of community territories in extractive reserves. It is a way of replacing their dependence on primary products with low added value, and reducing the strong role traditionally played by middlemen. That is why it is important to improve the management and governance of their actions and territories. 

In addition to the IEB and the CDS, the Sustainable Connections Institute (Conexsus), the Tropical Forest Institute (IFT) and Embrapa Western Amazon were also involved in the process. Through COOMNSPRA, a group of Verde para Sempre forest managers were able to sign 22 individual contracts with Banco da Amazônia (BASA), which guaranteed advance resources for production in 2019. 

Although they had up to two years to repay BASA, they did it in less than a year, settling contracts that totaled approximately R$ 470,000. This is proof that Community and Family Forest Management (MFCF) activities are financially viable. 

“Now we know that we are able to get funds directly from banks and manage our own projects, without relying on middlemen. This is a particularly important achievement for forest managers,” says Rosalina Ferreira Magalhães, COOMNSPRA's First Secretary, who was also one of the beneficiaries of the loan.

The credit was granted through the Family Agriculture Strengthening Program (PRONAF) operated by BASA. Initially, the interest rates had been set at 3% per year, but as the loan was paid off before the deadline, they managed to reduce it to 2%. In order to access the funding, each prospective borrower was asked to submit a costing spreadsheet to the bank, detailing their planned activities and execution schedule. As a guarantee, they submitted an Exploration Authorization (AUTEX), which is part of their management plan. 

“Having access to credit by offering our sustainable forest management plan as a loan guarantee was a major advance. We were able to rely on collective management. In addition, the contract term, which is usually one year, was extended to two, in view of the time required for timber management,” explains environmental engineer Katiuscia Miranda, IEB Assistant Coordinator. 

With the credit, they used cash to buy inputs and rent the required harvesting equipment, thus reducing costs. Payment for labor was also brought forward. Since 2014, when the cooperative was created, this was the first time that they ended the year with a positive balance. This extra money will be shared among all cooperative members. "We are very happy because we can access credit and pay on time. This means that the forest management plan is sustained. We hope that people will get other lines", celebrates the extractive leader Maria Margarida Ribeiro da Silva, who is one of the most active voices for forest conservation, contemplating the role of traditional communities in the Amazon.

By honoring their commitment, the cooperative now has more credibility with the bank, which will enable its members to obtain credit for their next harvest. “What we can see here is a very promising new financing model for sustainable forestry in Pará and the Amazon", comments researcher Maximilian Steinbrenner, from the Bom Manejo 2 Project (Embrapa), in an interview with the IEB.

Performance – According to data from the Brazilian Forest Service, in 2018 there were 339 conservation units (UCs) in the Legal Amazon, covering about 26% of the total area. Two hundred and twenty are classified as sustainable use areas, that is, they combine conservation actions with the sustainable use of common assets to generate income for communities. Among the UCs, there are 78 extractive reserves, which cover 3% of the total area of the Legal Amazon. 

Verde para Sempre is the largest extractive reserve in Brazil, with more than 1.2 million hectares. It currently has two cooperatives and seven associations with active management plans. COOMNSPRA, which has 50 members, is an MFCF pioneer in conservation units in the country. In 2016, it obtained the FSC (Forest Stewardship Council) certification. 

With the aim of strengthening community organization, another mixed agroextractive cooperative was created at Verde para Sempre: Floresta Sempre Viva Três Rios (COMAR), which currently has 52 producers. Another 49 producers are expected to join the cooperative in the near future.

Katiuscia mentions that they still face a few challenges, such as constant pressure from illegal loggers trying to reduce the reserve area, which makes communities vulnerable in their efforts to defend their land.

In an attempt to increase their autonomy, continuing education programs for managers and members are being carried out. However, as a result of the COVID-19 pandemic, the population went into social isolation to prevent the spread of the new coronavirus, and activities have been suspended, including those related to sustainable logging.

Estimates from the Community and Family Forest Management Observatory indicate that communities may lose up to R$ 1.3 million if they are unable to operationalize the 2020 harvest.