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MLR Forestal de Nicaragua SA

Environmental Preservation in Nicaragua The natural forest in Nicaragua has decreased from 7.2 million hectares to 2.4 million hectares in the last 25 years. MLR Forestal de Nicaragua SA was created in 2013 by three entrepreneurs who sought to provide a buffer to the Bosawas UNESCO Biosphere Reserve by planting and managing an agro-forestry system that inter-crops cocoa with shade-providing teak trees. MLR will also keep 30% of land under management as natural forest. This will protect the rivers and streams from erosion and provide protection and habitat for native flora and fauna. Starting in 2030, MLR expects that future planting will occur on previously harvested lands, making its business model sustainable.

Teak is recognized as one of the most valuable premium woods globally. It is particularly sought-after for its beauty, stability, good strength properties, easy workability, and outstanding resistance to decay and rot. Cultivating teak requires patience and investment as the trees take 20 to 25 years to reach a suitable size for the market. Most teak production occurs in Southeast Asia, but the tree also grows in Latin America—and is being cultivated more and more there due to increasing global demand.

Given the long production cycle for teak, models that produce cash flow in the short-term are attractive. Thus, MLR’s program to introduce shade-grown cocoa intercropped with its teak trees is not only good for the environment and for cocoa crop quality—it also sustains and diversifies livelihoods.

MLR’s teak plantations are certified by the Forestry Stewardship Council (FSC) while its cocoa plantations are certified by UTZ-Rainforest Alliance. From a social impact perspective, MLR provides employment for 263 full-time workers and another 109 part-time workers. In expanding its land under management, MLR purchases deteriorated pasture lands and converts them to agro-forestry plantations. Preliminary calculations indicate that the plantations will sequester 3.2 million tons of CO2 over the next twenty years. CSAF member Impact Finance recently approved a $2M loan to MLR as part of a larger financing package.

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