Guayakí Yerba Mate: Market-Driven Regenerative Agriculture at the Base of the Pyramid
The following was written for a course on doing business with the world economic "Base of the Pyramid," taught by Dr. Stuart Hart, as part of The University of Vermont's Sustainable Entrepreneurship Masters in Business Administration program. Guayakí Sustainable Rainforest Products is a private business that uses market forces to heal ecosystems and communities. Conclusions are drawn and recommendations are based on public information; this work should be read with that in mind, as the true nuances of Guayakí's interaction with their supply chain are proprietary and need not be broadcast to the broader business community.
Interact; come to life
We are nothing more than solar energy that has come to life. Markets let us exchange the energy we create and derive from our biotic and abiotic surroundings. Market forces pull some of us up, but rock and displace others. The 4 billion poorest people on earth and the majority of humanity has yet to be pulled up: we refer to them as the Base of the Pyramid, or the “BOP.” Can we move past our evolution, think long-term, and create a just society? Creating value for ourselves while equitably distributing resources is the ethos of regenerative enterprise. A United States business, Guayakí Sustainable Rainforest Products, has found success in serving the marginalized and underserved. Guayakí markets yerba mate (pronunc. yair-bah ma-teh) in developed countries such as the United States, Canada, Norway, and Japan. Yerba mate is an understory shrub in the holly family, native to the Atlantic Rainforest of Argentina, Paraguay, and Brazil. Its leaves naturally contain caffeine, antioxidants, and a wide array of vitamins and minerals. The plant is consumed as a tea, and provides mental clarity, sustained energy, and a strengthened immune system. Guayakí sells loose leaf yerba, along with bottles, cans, and energy-shots of mate. For clarity’s sake, yerba refers to the leaves of the plant, while mate refers to the drink itself. The firm had sales of $11.8m in 2008, and $27m in 2014.
Guayakí’s mission goes far beyond selling mate; they seek to “steward and restore 200,000 acres of rainforest and create over 1,000 living-wage jobs by 2020” by leveraging their Market Driven Restoration model. This restoration is not only of ecosystems, but also of communities. Colonialism and market-driven imperialism have historically either enslaved the Atlantic Rainforest indigenous tribes or driven them off of their land into urban and rural shantytowns. This process is all too common throughout the BOP. Nonetheless, Guayakí counteracts this injustice with the only force that can quell the dark side of the market: the market itself. From fracking to clear-cutting the rainforest to soft drinks, systematic extraction of value has been a mainstay of the second wave of capitalism. Interaction and the resulting co-creation of value must be the future of the business world, should long-run profitability and survival be of consequence. Guayakí’s interaction with the BOP exemplifies this. Here we will walk through Guayakí’s success and provide recommendations to the firm moving forward.
BOP 1.0: Small margins, large markets?
The 4 billion poorest people on earth buy goods and services. They may not buy high-margin items, but they are many. Theoretically, if one were to sell low-margin items to large numbers of them, profits would be substantial, and satisfaction of basic needs would increase standards of living. While well-intentioned, shared-value success in the “BOP 1.0” sphere has not been ubiquitous. Hindustan Unilever sells sachet-soap, and Grameenphone provides communication, but the generic Nike “World Shoe” flopped and though commendable, Essilor’s attempt to provide eyeglasses to rural India has yet to take off. Attempts to replicate U.S. consumerism by way of selling products that lacked any sort of intrinsic value to those that had zero expendable income was not successful. In 2010, The Economist published “The world turned upside down,” that albeit among valuable insights, promoted bottom fishing: “[Companies] need to get inside poor people’s heads and develop new markets, shaping people’s tastes and establishing habits.” This sort of corporate imperialism has created value for many an MNC, but changing the climate of the mind in each rural village across the BOP has resulted in prohibitive transaction costs. The heterogenous across-the-globe poor have tastes, recognize value, and prefer to spend money on goods that actually improve their quality of life. Who knew?
Though it has taken decades of cultural sterilization and displacement, the dark side of the market has been somewhat successful in creating consumer markets in the BOP. When a natural resource base is destroyed, resident people are disempowered and displaced, and value-creation (extraction) is centralized via unfettered capitalism, humans flock to urban peripheries. There they live off of the wisps of excess value that cities create. We often hear that by 20xx, y% of people will live in “cities.” The rural “poor” will not be living in Manhattan. These “cities” consist of shantytowns such as the favelas of Brazil and the slums of Mumbai. Fortunately for firms such as Coca-Cola, MNCs can extract value from these populations. “Business as usual” for the slow-moving industry giants however, is no longer. In part due to the viral growth of human connectivity, optimists would have it that a better world is in sight. Here, let us have market-driven restoration and Guayakí represent the light that is regenerative enterprise.
The history of the indigenous people of Misiones, Argentina, eastern Paraguay, and Southern Brazil was no exception to Colonial and market-driven invasion and seizure of land. Since the beginning of the yerba mate trade, “hired laborers have contended with high levels of marginalization.” To this day, due to “control of the market by large agri-businesses, small farmers are economically unable to sustain production [and] forced to abandon family lands in search of new sources of income.”2 It suffices to say that yerba mate displays the typical social externalities of commodity markets: those at the end of the supply chain have no one left to pass costs and deflated prices onto, and exit the industry. A non-market approach would suggest simply paying producers more for their yerba. This strategy relies on isolated goodwill, which unfortunately dissolves in myopic self-interest. Guayakí’s strategy not only involves paying double fair-trade prices for yerba, but also includes investing in their own supply chain by way of installing shade-grown plantations and consequently creating a product that is worth paying more for.4 Guayakí not only sends value to the BOP, they create it there.
In their pioneering framework, “The Fortune at the Bottom of the Pyramid,” C.K. Prahalad and Stuart Hart assert that creating buyer power –both by increasing earning potential and providing access to credit– is essential in BOP market creation. Increasing buyer power in this context is synonymous with elevating a standard of living. Bringing the BOP into the global exchange of value starts with providing them with value. The BOP, not necessarily connected to global markets, can be thought of as an uncolonized medium. Guayakí does well to inoculate their communities with beneficial fungi that create value for all parties involved: in the spirit of microfinance, they “provide zero-interest loans and grants to develop and promote life-regenerating enterprises” in addition to providing the enabling service of access to markets. The mycelium of the shade-grown yerba mate market have run, and “Market-Driven Restoration” has taken hold.
Markets are unique, so how do we make sense of them? How do we decide on an inoculant, i.e. the basis for interaction? Ted London and Stuart Hart’s 2015 co-edited volume, “Next Generation Strategies for the Base of the Pyramid, New Approaches for Building Mutual Value” centers on “fortune creating” as opposed to “fortune finding.” In this comprehensive update, Erik Simanis suggests that we “step into the shoes of the consumer and consider the process of market creation from their point of view,” that we become anthropologists and inquire as to where markets derive their significance. He rightfully proposes that markets are community bases that share “norms and traditions...even experiences with the natural environment, including rivers, forests, and wildlife.” Deep dialogue is required to understand new cultures, and Guayakí has engaged with its rainforest constituents exceptionally well. Two quotations from Margarita Mbywangi, Aché tribal leader and Paraguay’s Minister of Indigenous Affairs, and Nelson Garay, Paraguayan and Guayakí Production Manager together provide a theme for Guayakí’s endeavor:
We want to retain our hunter-gatherer lifestyle, it’s who we are, and perhaps others can see that we can have money and the things we need in this world without destroying the forest. -Margarita Mbywangi
Yerba mate has always been part of their (the aché) traditions. What we are trying to do with this project is to join culture and tradition in a business model that creates energy. -Nelson Garay
Guayakí has excelled at fusing tradition and trade, taking into account desired and ecologically-sound comparative advantages of the BOP. Conscious, whole-systems decision making is at the root of their success. Consequently, we can draw extensive parallels to the work of Stuart Hart and Erik Simanis, “The Base of The Pyramid Protocol: Toward Next Generation BOP Strategy.” Coming down from 30,000 feet, let us walk through Guayakí’s convergent evolution with the BOP protocol.
The BOP Protocol:
The pre-field steps of the BOP protocol include site selection, team formation, local partner selection, and establishment of an R&D whitespace. Here we would like to stress that analogous to the scientific method, this is not a linear process. Nonetheless, we will start with site selection. Landing sites should be in alignment with long-term strategic interest, and should contain limited infrastructure but lack an entrenched firm presence, as existing operations are prone to swallow new initiatives and stifle creativity.8 Guayakí chose to connect with the Aché tribe on their ancestral lands, which were sufficiently detached from industrial yerba plantations, but close enough to foster cross-community learning. This “white space” is indeed necessary, as an industrial crop method would “destroy a cultural affinity with the plant,” and disrupt the Aché’s integral community structure and traditional ecological knowledge (TEK). Before venturing into the Aché community, Guayakí connected with North American anthropologists Kim and Magdalena Hill, who for the past 27 years have lived with the Aché and have maintained a tight-knit relationship.
Team formation, for the purposes of this analysis, consisted of Alex Pryor and David Karr, college friends and co-founders of Guayakí, Nelson Garay, Guayakí project manager, and Margarita Mbywangi, Aché tribal leader and Paraguayan Minister of Indigenous Affairs. These four present a range of functional experience, from business acumen and knowledge of U.S. markets to conventional Paraguayan-centric agronomy and forestry to indigenous social structures and culture. Together, they share a vision and vocabulary; central to the Guayakí strategy is “becoming intimately involved with partner communities by making long and deep commitments to their ecological, economic, and community health.”
The protocol’s “local partner selection” step is essentially the formal establishment of social capital. Participatory methods are central to the model, and Guayakí maintains this social capital with democratic, participatory community councils.11 This is an ongoing, fluid process. Firms must continuously build trust in their BOP communities, and make significant deposits of social capital. In this case, the growers and Guayakí together having banked deep dialogue and trust, and are open to acquiring new capabilities and using enterprise to advance their mission. Guayakí provides financial and technical support in the growing process, and subsequently pays twice the market price for yerba.2 On the Aché side of the equation, it would be strange to refuse such genuine, well-intentioned endeavors. Conscious capitalism is indeed powerful.
R&D white space is integral to Guayakí’s sourcing. Corporate headquarters in San Luis Obispo, California recognizes that their supply chain and the health of their mycelium are one in the same; hence, Guayakí maintains an office in Buenos Aires. Alex Pryor, founder and now VP of South American Operations heads up the efforts along with a team of dedicated, innovative employees in Argentina.
The BOP protocol is outlined as a 3-phase process of immersion, building the ecosystem, and enterprise creation. Phase one consists of immersion, listening, opening up, and engaging in deep dialogue. Self awareness is imperative, and immersion is continuous. Alex has spent the past decade building relationships with growers committed to sustainable forest production in Paraguay, Argentina and Brazil. Initial immersion is vital, but the process is never-ending. In a short documentary entitled “Aché Tribe – Guardianes de la Selva,” Argentine Actor Boy Olmi takes part in one of Guayakí’s immersion retreats, and it is unmistakably clear and explicitly stated that that the Aché view Guayakí’s non-indigenous (those of the global north or of European descent) as “brothers, as opposed to business people.” Franklin Smith, in his extensive thesis entitled “Exploring Fair Trade Yerba Mate Networks in Misiones, Argentina,” highlights that Guayakí “makes explicit efforts to avoid paternalism in relationships with indigenous tribes, discussing all decisions during community-wide gatherings.”2 This sense of paternalism seems to be pervasive in 20th-century business thought, but is fading away seemingly due to natural selection. Blindly imposing solutions and needs to either extract value or aid the global south and BOP has largely failed. Though well-intentioned, blind enterprise and aid often do more harm than good. Business concept co-creation by definition finds a benefit equilibrium. Co-creation is iterative, engages the broader business community, and has an open-ended value proposition. At the end of the day, reforestation is a service and intact ecosystems provide much more than income from the sale of leaves. Broad, value-open services maintain community interest as they allow for prolonged co-creation, and also serve as pivot points for new businesses, minimizing entrenched mental and financial constraints.
The second phase of the BOP protocol, entitled “Building the Ecosystem,” consists of project team development, new capability development, and further business prototype co-creation. In terms of corporate project team development, new members must possess a deep commitment to a participatory ethic, and if they have not immersed themselves in the culture of the BOP target market, they should complete a thorough induction period. Guayakí assures this by bringing integral team members down from the company headquarters in California to an Aché village in Paraguay. In being a business that competes on social and ecological health, maintaining the restoration ethos is imperative. This ecological literacy also falls into the capability development category as it relates to the North American team members. While marketable value takes the form of yerba mate, the service of reforestation is where Guayakí derives value. Through this lens, the interaction with the Aché has served as a prototype to be refined and replicated through the region.
Phase three of the BOP protocol centers on enterprise creation. Here, new capability development is paramount for Guayakí. Dried and cut yerba sells for four times the price of green (unprocessed) yerba, and Guayakí creates value by drying and cutting the leaves on-site or nearby to boost the human capital of their own supply chain and financially improve the workers’ quality of life. A continued commitment to shared organizational identity, i.e. the Guayakí culture, is of the utmost importance. Guayakí’s competitive advantage stems from a short, transparent supply chain. 20th-century marketing tactics take a backseat to storytelling and an honest representation of what it means to grow, harvest, and drink mate. Guayakí’s lifestyle brand starts with livelihoods at the BOP and brings Tier 1 markets to life with honesty and mental clarity. Guayakí aggregates yerba from the micro-enterprises that are smallholder farms. This allows them to theoretically expand and contract with fluidity, through growth has been the theme of the past eight years. We are advised to “be impatient for profit, but patient for growth,” but alas, the profitability of operations that co-create value with of a natural resource base has leant itself to growth.
Hart and London’s work suggests that in the face of this growth and consolidation, we focus on “maintaining the social connections among various participants by creating tangible markers of their involvement” and “visibly showcasing to the broader community the growing mass of people using the consumer offering.” Guayakí celebrates the involvement of their entire human value chain by showing Tier 1 consumers where their yerba mate comes from, and celebrating those that harvest the leaves. Different varieties of Guayakí yerba come from different growing communities, resulting in different tastes and textures. Guayakí’s lifestyle brand revolves around the phrase, “Come to life.” Much in the way that Red Bull celebrates extreme sports, Guayakí sponsors consciousness and connection. The community, from the growers to the brand ambassadors is running with the mycelium of a formerly niche market that is emerging as a global product.
It is important to note that Guayakí’s alignment with the BOP protocol is convergent evolution. Working business relationships were built over the past decade, and Participatory Rural Appraisal (intentional or not) was the result of impeccable cultural and self-awareness by all parties. Before we move on to how Guayakí has scaled their business, we must take a moment to recognize how impressive their process of base-building has been.
If a firm is to justify the time and energy spent on market inoculation, its business model needs to be extensively replicable and it needs to be able to run. To scale the BOP protocol, we are given a triad of reaching out to new communities, linking the ecosystems, and re-creating the enterprise. Guayakí started by reaching out to COFAECO (Cooperative of Agro-Ecological Families) in Paraná, Brazil. They represent 25 farms that each year produce 20 metric tons of organic yerba, which represents a viable substitute to cattle-silage driven deforestation. Guayakí states that “the model established with the Aché in Paraguay has transferred the lessons” to these communities in Brazil. Unmistakably, the ecosystems have been successfully linked. This exchange in itself constitutes re-creating the enterprise, but Guayakí goes well beyond simply buying shade-grown yerba. Enterprise re-creation is pursued from the ground up in Comandante Andresito, in the Misiones province of Argentina. There Guayakí runs a tree nursery, focusing on 30 different species including several varieties of yerba mate. They are an incubation center for new plantations, and work towards Guayakí’s mission of stewarding and restoring 200,000 acres of rainforest by 2020. With much of the eastern part of the country planted to industrial soy, their efforts are desperately needed. In this case, re-creation and regeneration start with a seed. In addition, Guayakí is affiliated with the Fundación Agroecologica Iguazú, an NGO that contributes to the region’s environmental, social, and economic health. The market is not a panacea, and a market-nonmarket hybrid model can work wonders. Allen Hammond of Ashoka suggests that incorporating an NGO into the business ecosystem is preferable, as opposed to the reverse. Both the FAI and The Guayakí Foundation serve this purpose.
At the end of the day, The Economist’s “The world turned upside down” is again wrong in stating that “in [the BOP] it helps to have the spirit of a frontier settler.” The Jesuit Missions accepted and integrated with first nations of the Atlantic rainforest, as opposed to contributing to the very dark history that is colonialism. Those that hope to succeed in the BOP should view themselves as missionaries, out to spread the good word. All religious undertones aside, business should be rooted in peace and the health of mankind.
Nelson Garay, tree nursery
Servicizing, Bundling, Ecosystem Services
The post WWII business cycle was driven by marginally-useful goods, mindless consumerism, and planned obsolescence. Marketing drove the margin wedge, and intrinsic value of goods was ignored. Consumers sought status by way of buying goods. Marketing the extrinsic value of a product is known as service-dominant logic. Carpeting becomes “covered floor” and even food can be viewed as the mitigation of hunger. Capturing the essence of what people really want from a goods-based transaction, and selling it as such is known as servicizing. Uber and Zipcar have become substitutes for owning a vehicle, and rented winter apparel competes with clothing sales. Under goods-dominant logic, growers sell their harvest, and Guayakí buys fair-trade yerba. Under service-dominant logic, growers interact with the forest to create right livelihoods, and Guayakí provides access to markets. Access to markets and startup capital fall under what Erik Simanis calls “enabling services” in his Harvard Business Review piece, “Reality Check at the Bottom of the Pyramid.” Guayakí provides growers with harvesting, drying, and milling capabilities, giving them the tools they need to maximize the utility of the plant and of the forest. Simanis suggests that firms show consumers how to use goods that they are unfamiliar with in order to close the gap between the perceived and intended value propositions. This gap varies in width in accordance with different groups of users, and the Guayakí business ecosystem seemingly allows for the firm to customize the needed level of service without compromising returns. Were profit margins to be dependent on extensively replicated factory-like processes, these services would perhaps be limited. Alas, the turnkey nature of this interaction and the connection to non-saturated North American markets provide sufficient room for these enabling services.
Shade-grown yerba mate plantations are multi-faceted services, not sources of industrial, low-quality commodities. Much in the way that from the air or via satellite imagery, it is difficult to distinguish a shade-grown coffee plantation from naturally-occurring rainforest, polyculture yerba mate plantations replicate the default ecosystem. From a human-centric point of view, we could even say that they improve upon it. This forest, in addition to providing sufficient marketable value from yerba sales, is a bundle of goods. Erik Simanis suggests that while the poor perceive value in bulk buys, they often lack the cash flow to make large purchases approachable. He suggests bundling goods to diversify and bolster a value proposition while lowering the quantity of transactions needed to justify interaction in the first place. Stepping back from this valuable, but goods-centric analysis, a forest can be viewed as a bundle of services. “Food, fiber, fuel, and freedom” could serve as a mantra for its value proposition.
Ecosystem services are the direct and indirect contributions of nature to human well being. Clean water and air, cloud formation, and carbon sequestration are examples of services that a forest provides. Through an economics lens, however, ecosystem services are public goods and thus represent a market failure. They are non-rival and non-excludable, and thus we are not incentivized to make direct payments to conserve them. The deforestation of Paraguay and the resulting devastation from floods and drought makes this clear. Shade-grown yerba mate represents marketable value, and consequently monetizes and conserves ecosystem services. One would prefer a increased level of ecological awareness as a substitute for such a capitalism-centric approach, but human myopia has proven to be extensive, and at minimum, this economic explanation of environmental degradation and regeneration is necessary in the context of this analysis. In forested biomes, tree crops do an infinitely better job of conserving ecosystem and human health than does industrial monocropping of corn and soybeans. In tropical climates, shade-grown coffee and açaí exemplify this phenomenon, while chestnuts, hazelnuts, and maple syrup are viable cold-climate tree crops.
Reverse Innovation, Disruptive Innovation
The BOP serves as a testing ground for goods and services that satisfy human needs in an unforgiving market. The BOP pushes businesses to focus on intrinsic value, as opposed to consumerism-driven marketing-centric value. The world’s four billion poorest people do not have time for smoke and mirrors. Goods and services that pass the test of the BOP, often present an incredible value proposition and are ripe for introduction into Tier 1 markets. Due to limited banking infrastructure, Kenyans were paying each other by cellphone years before North Americans began to do so on via Venmo and Facebook. Solar lanterns and water filters that serve as one’s only option for light and potable water in the BOP have become go-to products for camping enthusiasts. This phenomenon is known as “reverse innovation.”
Kodak once had a near monopoly on film. Their razor-razorblade model was founded on film photography. Interestingly enough, an engineer at Kodak invented and shelved the first digital camera as a novelty and nothing more. Kodak believed that they were in the business of selling film, but service-dominant logic would suggest that they were in the business of preserving memories. The digital camera, marketed by competitors, brought down the goliath. This phenomenon is known as “disruptive innovation:” incumbent industries are swiftly out-competed by a product whose value proposition and market penetration move at a rate too quick for the standing industry to adapt to. The BOP is a breeding ground for disruptive innovation. Kenya’s matatu system privatized collective transportation long before Uber.
Shade-grown yerba mate out-competes industrial monocropping in the Atlantic Rainforest BOP. A working model of yerba mate plantation establishment could accelerate the adoption of a wider variety tree crops in Vermont and other forested regions, a la reverse innovation. Southern Paraguay is plagued by flooding due to the reduced water holding capacity of industrial monocropped land post-deforestation. Hurricane Irene caused $733m in damages in Vermont alone due to rivers swollen with runoff from a deforested landscape. It is time that New England looks to the south for inspiration from a working model of market-driven restoration.
The Natural Resource Base of the Pyramid
There are many different pyramids that have corresponding bases, and these pyramids interact. Our natural resource base and the base of the economic pyramid must maintain constant contact in order to create sustainable value; we must build our business models from the ground up. The value that humans derive from the biosphere originates in plants, and we would do well to heed those that depend directly on the natural world for sustenance. In this sense, cross-cultural interaction becomes reverse innovation. Even so, we must ask ourselves if reverse innovation is the correct term. Perhaps we are just out to rediscover what it means to be human.
This is an academic paper, and conclusions may be drawn from information that has been translated and transcribed multiple times. We have analyzed Guayakí through the lens of existing BOP literature, but we have made a conscious effort to avoid cherry picking data and information to suit a particular agenda. Guayakí Sustainable Rainforest Products is a mission-driven business that creates energy everywhere it goes. Mate fosters mental clarity and connection, and the firm has seen impressive financial success in bringing people to life. Guayakí’s business model does not extract value, but rather creates it through interaction. The firm inoculates the human BOP of the Atlantic Rainforest with both enabling services and startup capital, all the while seeking to understand the holistic vision of those that make up the base of its supply chain. Entrance into and integration with the BOP is a continuing endeavor for Guayakí, and deep dialogue was and will continue to be vital. By respectfully engaging the Aché without preconceived notions of what constituted success, Guayakí has created a replicable and scalable model that demonstrates convergent evolution with the BOP protocol.
Referred to multi-strata agroforestry, biomimetic agriculture, or sustainable rainforest products, the act of marketing shade-grown yerba mate monetizes ecosystem services, and is the quintessence of regenerative enterprise. The Atacama Desert lies at the same latitude as the Atlantic Rainforest. It is the driest non-polar region on earth. Deforestation changes macrocycles of weather, and we would be well-advised to maintain the health of the planet’s lungs. Reverse innovation of subtropical agroforestry into the forested biomes of North America will allow us to continue to breathe clean air and live in sync with the rhythms of the planet.
Recommendations: Scale out, Scale deep
Recommendations from 30,000 feet can either be disruptively useful or incoherent. Not being intimately involved with Guayakí, these words may only be marginally helpful. Guayakí has a seemingly working model. They have successfully entered the BOP and co-create value with the communities of Misiones, eastern Paraguay, and southern Brazil. When glaring errors are not to be found, we can focus on further geographically scaling the business model and deepening the value proposition. We will refer to these processes as scaling out and scaling deep.
In the context of sales and distribution of BOP consumer products, Olivier Kayser and Valeria Budinich’s work entitled “Scaling up Business Solutions to Social Problems” proposes four methods for maximizing revenue: hunting, shifting cultivation, farming, and gardening. “Hunters” seek to maximize the number of clients with low client spending per year. Those that “shift cultivation” maximize penetration in a given area before heading to the next. “Farmers” serve a limited number of households with a comprehensive, higher-margin offer. Finally, “gardeners” offer a basket of goods via salespeople. Geographically and in terms of interacting with communities, Guayakí is currently farming and is moving into shifting cultivation. The comprehensive offer that represents their interaction with the Aché is limited to a specific preserve where plantations have been established beneath an existing rainforest canopy. Kayser and Budinich suggest that when farming, firms must “build relationships over time, selling not just one product, but a comprehensive package that answers their needs.” Guayakí has undoubtedly built relationships, but the nature of the comprehensive package is something we can only speculate on. The Guayakí Foundation, outside of providing financing to constituents, works in the realm of providing technical assistance and grants to develop effective and sustainable food security programs and democratic participatory community councils. Non-market action and partnership with NGO’s to build capacity at the base of one’s supply chain is undoubtedly worthwhile. However, we would be interested to find out if food security has been intertwined with plantation management. We will discuss this further in the context of “scaling deep.”
The benefits of organic mate plantations go far beyond financial gain: ecosystem services from the practice are extensive. The “shifting cultivation” strategy stresses maximizing penetration in a specific region. Guayakí has done well to concentrate its efforts between COFAECO and the Turvo Cooperative in Brazil. Investment having been concentrated in these regions, positive ripple effects from ecosystem services and social well being should be of considerable magnitude. In plain English, this means that people likely have a higher standard of living in the mate-growing regions that interact with Guayakí. By way of providing target regions or pockets of interest with qualitative data in hopes of further inoculation, proof could theoretically be found in the pudding of extensively reforested sectors and communities —in contrast with small pockets of shade-grown yerba among the soy monocultures. Saturating a watershed with shade-grown plantations could further provide strong proof of concept for Market Driven Restoration. One would also suspect that Guayakí communicates with firms such as Kraus and Titrayju, two other fair-trade, organic yerba brands, in regard to best practices. In the early days, and hopefully throughout the lives of mission-driven sectors, intra-industry teamwork likely makes the “dream” work. An open-source or consultancy-based model of establishment could catalyze a tipping point of shade-grown yerba both in global and Argentine markets.
For the purposes of this analysis, scaling deep is comprised of building a comprehensive bundle of value. The BOP protocol would suggest that Guayakí engage in deep dialogue to discern what it is that the mate growing communities want and need. Fortunately, pre-established relationships minimize barriers to productivity: Guayakí is in a good position to figure out how to further co-create value in the BOP.
Franklin Smith’s thesis provides us with a problem statement:
The yerba mate harvest lasts, at most, six months. It is still unclear what strategies these workers adopt for the rest of the year, in order to find a source of income.
This, combined with the Guayakí foundation’s focus on food security suggests a parallel to the “thin months” in Central America’s coffee-growing regions. In the coffee-growing BOP, farmers suffer the social externalities of growing a commodity, and have limited income to buy food. The “thin months” are those in which they do not have enough to eat. The Mendez et al. 2008 volume, “Confronting the Coffee Crisis: Fair Trade, Sustainable Livelihoods, and Ecosystems in Mexico and Central America” highlights that integrating other crops with coffee, either for sale or consumption by farmers, diversifies a family’s income and increases quality of life. Shade-grown yerba mate plantations are already polycultures; they are bundles of goods. Mango trees grow throughout Misiones, and dairy farmers in Santa Catarina, Brazil have had success incorporating açaí palm into their silvopasture. In future iterations of plantation establishment, mango trees, açaí palm, and other tree crops with staggered harvest periods could strategically serve as an edible and marketable overstory for yerba mate. A conversation the author of this piece had with the manager of the Piporé processing facility in Santo Pipo, Misiones confirmed that livestock have also been employed to graze the understory of plantations. Guayakí, if it were to make long-term logistical and financial sense could involve itself in the co-creation of such systems.
These recommendations may sound appropriate to the northern ear in an academic paper, however interventions in agriculture are notorious for being ill-suited to the communities they take place in. The Regrarians Platform, based on the Keyline Scale of Permanence, is a gradient and framework for making decisions in landscape planning. The scale begins at climate, which is the most inalterable, and works through geography, water, access, forestry, buildings, fences, soil, economy and energy. Guayakí would do well to create a replicable framework for yerba plantation establishment, based on the Regrarians Platform. As permanence decreases, potential for co-creation increases, and we advise a pause at “forestry.” This provides ample room for appropriate and diverse use of the system by the farmers that manage the plantation; it is a value-open proposition.
There is a fine line between the provision of enabling services and paternalistic intervention. A firm should not enter a BOP community (or any market for that matter), with intense, preconceived solutions to problems viewed from the outside-in. Nonetheless, Patrick Whitney, in “Next Generation Strategies for the Base of the Pyramid” provides us with two important insights into product and services design. First, a firm should incorporate user understanding of prototypes: one must “look at what people actually do, rather than what they think and say they do.” A thorough investigation into current alternative uses of existing yerba plantations would be imperative. Secondly, firms must use results-oriented logic, looking at the problem “from the point of view of what the users are trying to achieve, rather than what products and services they currently use.” This fits well into both the lens of service-dominant logic and the lessons learned from coffee farmers in Central America: perhaps farmers don’t need more income from yerba mate, but simply need more income. Yield diversification would bolster the lives of BOP farmers, but would it transitively benefit Guayakí? Under a whole-systems mindset, it likely would: increases in quality of life trickle up supply chains. The nuances of this are speculative and out of the scope of this analysis, but parallels can be drawn to a group of dairy farmers in Santa Catarina, Brazil. The farmers were initially under the impression that they needed to adopt better silage-based practices, but post-implementation of Management-Intensive Grazing, as a substitute to feeding silage, farmer income and quality of life increased, and a host of ecosystem-service indicators drastically improved. Patrick Whitney suggests that we “define the problem at a higher, more abstract level than is determined by the activities and related values that surround the product.” In relation to Guayakí, once again we are not buying and selling yerba, but rather providing access to markets and interacting with the rainforest to create a right livelihood. When the activities are phrased in such a way, the realm of possibilities for value creation is infinitely expanded.
Creating a systems analysis of what growers, Guayakí central, and the global consumer all desire would be a starting point for expanding and deepening the value proposition. Resources and capabilities of all parties would be outlined, and in this realm, deep and inclusive dialogue would continue. Conversations would need to range from the abstract to the literal, and a search for patterns would be imperative. Yerba mate plants can be harvested for 85 years, so in essence, Guayakí is planning for livelihoods as far away as the turn of the next century. Markets are amorphous, but human needs remain constant. Whitney’s insight is valuable: we must “ground problems in the patterns of users’ daily life – patterns that are often unspoken and need to be discovered – can lead to unusual solutions about how people live.”
30,000-foot recommendations can seem generic, though it is often valuable to step back and undertake a whole-systems approach to a firm’s modus operandi. The specifics of yerba mate, mango, and açaí may seem under-informed, but will ideally serve to stir a pot somewhere. Guayakí’s business model successfully restores ecosystems and communities by way of agroforestry, making it difficult to critique. Even so, socially responsible firms can internalize the frameworks of academia that have grown out of conventional markets. In the sphere of regenerative enterprise, profit is still imperative and growth in value is still vital. Should we seek to inoculate this movement in all corners of the globe, we must harness and run with the market: we must harvest sunshine and come to life.