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A small project started in Nicaragua in 1980 to develop the production and marketing of fuelwood and charcoal. It had US$5 000, a pick-up truck, an international adviser and the fuelwood from 14 000 ha of coffee-under-shade groves being cleared. This meant some 2.8 million m3 of fuelwood a considerable amount to deal with even if it is located only 40 km from a fuel-hungry city such as Managua.
First, a quick assessment of the domestic fuel-use patterns in the city found that over 70 percent of the population used fuelwood and/or charcoal. Urged by the National Commission for Coffee Renovation (CONARCA), the project started charcoal production in order to speed up the clearing of old coffee groves which had to be replanted as soon as possible.
After six months, 100 people were making charcoal on the basis of their best knowledge (earth-pit technology, 6:1 conversion rate, 200 sacks per couple per week), ten more worked on the wood and storing the sacks, production had risen to 10 000 sacks per month and it was necessary to find storage space and buyers who could pay in cash.
The project tried selling charcoal at cut-rate prices in the four public markets of Managua and a shop was opened in each one. However, most people go to the markets for vegetables, fruit or meat but not for charcoal. Some charcoal was sold to end users, but most was bought by the sack by the charcoal traders and resold to grocery stores and consumers at doubled prices. Obviously something was going wrong.
The rainy season started. The projects charcoal makers stayed on the production sites (carboneras), but most of the independent ones returned to their fields to plant maize and beans. Traders appeared in the carboneras asking to buy a truckload or "at least 30 sacks". An informal agreement was made: the project agreed to sell them all they wanted at the regular price, on the understanding that they would resell at no more than a 30 percent profit.
The project had by now achieved a 30 percent share in the Managua market, some control of the consumers price level and a steady cash flow. Fuelwood kept coming into the carboneras, reaching nearly 50 000 m3, and there was still a lot left in the fields. An attempt was made to sell fuelwood, which proved to be much more difficult, so the project approached the industrial consumers who wanted large volumes, prompt delivery and monthly bills. A cigar firm wanted 4 000 sacks of charcoal per month for tobacco curing; only the project could provide this quantity, so the firm became the main buyer. The sugar mills were used to burning fuel oil and did not want to go back to the old days of fuelwood firing. The project proposed delivering woodchips, right by the side of the bagasse pile. The payload driver could choose between bagasse or fuelchips according to the boiler workers preferences; since seasoned wood with about 20 percent humidity burns much better than wet bagasse, the boiler workers usually preferred woodchips.
A mobile chipper was bought, a powerful tractor rented, the wood delivered by railway (12 wagon loads per day), and in one short season some 5 000 tonnes of fuelchips were sold. The sugar mills made a big saving since 1 tonne of fuel oil costing about US$190 was substituted by 3.5 tonnes of chips at US$35 per tonne with no additional handling cost.
The government wanted to widen the projects objectives. It was, in fact, a kind of government-owned enterprise, was growing fast and making large profits which it was investing in its own growth. The ministry decided to invest the profits in other priority activities such as refurbishing a sawmill, harvesting logs in other parts of the country and setting up a forest. There was also the social aspect: the charcoal makers were paid according to their individual production; they did not have any social security or a minimum wage, but they earned three times more than any other worker in the field.
Thus the project became a fully state-owned enterprise with the corresponding overhead structure. It built more efficient brick kilns and hired the workers needed to operate them. It planted trees in order to provide wood for charcoal, with the result that the fuelwood from land reclamation areas was burnt uselessly. Production fell to 1 000-2 000 sacks per month and market penetration dwindled. The charcoal makers went back to their villages and, once again, sold to the traders at one-third of the street price.
It is a pity that these simple facts were not well understood and taken into account.
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