Problem: What problem is this project trying to address?
Spain’s recent long period of vigorous growth before recession did not sufficiently reach rural areas, as evidenced by the resulting pattern of population concentration in larger cities and the backwardness of rural areas with regards to many economic and social indicators. However, there is movement to try to shift these trends in Spain. For example, the new Law on Sustainable Development of Rural Areas includes employment and economic development as a main priority, along with addressing environmental concerns promoting sustainable development for rural areas. In fact, in today’s crisis, rural areas are starting to be regarded as a new source of employment and wealth creation, while contributing solutions to environmental challenges.
There are no virgin forests in Spain, and survival of existing forests depends on resource intensive management. Forests require constant stewardship and frequent thinning and clearing of underbrush to avoid natural fires and other threats. Traditionally, forests were naturally maintained, thanks to the economic value of its resources (dry wood and resin); however, as rural life is increasingly independent from its closest natural resources, maintaining forests is not only unprofitable, but a costly activity for municipalities. Additionally, today the producers in the primary sector, especially in forestry, very seldom benefit from the returns generated by their own resources. As small producers at the earliest stages of the biomass production chain, with multiple competitors, rural producers have little pricing power and are often pressured to sell below production costs.
During his years as Director of Innovation for the Basque Government, Martin worked with many primary sector producers and small companies. He understood the barriers they encounter when attempting to compete efficiently with larger businesses, especially when there is no cooperation among the smaller businesses. In traditional value chains each independent player, from producer to consumer, is only interested in maximizing his own individual profits; there are no incentives to cooperate and the chains generally create negative effects for other participants. On the other hand, Martin found that existing models such as cooperatives were bound to fail due to the lack of incentives of workers to maximize future returns. Traditional cooperatives distribute the benefits in the hands of all owners, who usually have an employee mentality rather than that of a shareholder motivated to invest in long-term growth. On top of that, traditional cooperatives have proven inefficient to integrate multiple players of different sizes and sectors, or to build a sustainable model of relationship between cooperatives vertically integrated.
Martin saw an opportunity for changing this pattern in the biomass sector, where traditional production was being handled at a very large-scale, with very high environmental impact from heavy and intensive transportation and few, if any, economic returns to the primary producers or the regions in which the primary commodities were grown. If no alternative solutions are successfully implemented, there is a risk of forests being degraded for poorly and costly management. Also, if larger energy companies step in with the establishment of large capacity biomass plants, producers will not hold a strong enough position to protect environment values and will remain part of a disintegrated value chain, unable to fully enjoy generated returns.
Solution: What is the proposed solution? Please be specific!
Martin Ascacíbar is creating vibrant, profitable new businesses in rural Spain by restructuring value chains and processes related to biomass. These structures engage local small producers and businesses who then reap significant economic benefits that previously only went to larger non-resident investors and industries. The new vertically linked enterprises are accelerating rural development, providing livelihoods for dwindling rural populations, and helping steward and preserve Spain’s remaining forest lands.