Ejido Verde behavior change due diligence satisfied. That’s the headline, but I don’t know how to make a Medium headline yet. This is the rough start, totally transparent of my work with to tell the story of this remarkable, new way of doing a global commodity business, where the indigenous people own the resource and get 95 cents on the dollar of the production. In the case of this renewable, climate enhancing industrial raw material, it actually produces the most reliable supply of a profitable product to nurture the soil and water and work well with local communities.
As an experienced and successful impact investor, (better than 15% IRR and solid mission insurance in Good Capital’s Social Enterprise Expansion Fund’s three successful deals (out of four; the one where the mission was just another brand element is the one that failed, but that’s another story with its own learning. Short version: never let the smart, more experienced, financial professionals bully you to compromise to go for the credibility of being more mainstream if that’s not who you are or something you do well)).
I was applying the lesson of my failed business to Ejido Verde due diligence, trying to imagine the behavior change they would need to go from harvesting resin from 85 pines for the refineries in Moleria, just an hour away, selling them to the family owned Pinosa company, as they had for 86 years, to harvesting and managing 850 pines per hectare on their acreage their family had usage rights for within the 408 hectares of community owned land in a place like the Indigenous Community of Patamban, which recently signed on to produce that exponential growth in the supply of their collectively owned resin for the next 20 years. A community like that, with 400 or so hectares can expect to earn $49 million over the 30 year life of the project, with the income starting to come in in 10 years, when the local varieties of pine begin producing resin and they tap it in the same way they have done for thousands of years, for its medicine and its adhesive qualities, and for the way it links, or emulsifies, oil and water for food.
So how would the landholders, like the ones I met in Patamban handle the sudden need to build their livelihoods from working on their trees as diligently as if it were a job? Turns out they won’t; the people tapping the resin are and will be mostly day laborers, whose families don’t have any land to their name. They are making $2 a day now, hiring themselves out to anyone who will pay, tending cattle, or anything at all. With Ejido Verde, 200 or so of those people will get paid five times what day labor pays; $10 a day vs. $2.
Ejido Verde is already the largest employer in our first community we began in, Cheran, the remarkable showcase of what life is like when the indigenous govern and are the police force. Burglaries have gone down to zero, for one thing. And Dona Chepa, the remarkable hero who made the town safe and mobilized the community to drive out the drug lords is teaching classes to other women. That’s something that could use some philanthropic support; it’s still a highly paternalistic culture, even in indigenous communities living out their culture. But she is gathering women to change that. And everyone knows Ejido Verde could not have existed without her, so so she has huge social capital. We could use some help helping her from women who know how to work in rural indigenous cultures.
I turns out that I had been applying a lesson from my business failure, where I missed out on the behavior change getting digital information would cause when it came to an office in an industry and almost went broke. Sometimes you think you are using your wisdom learned from failure and you discover you are fighting the last war; seeing something that isn’t there, except in your head. I am glad I was disabused of that notion.
Now, here is an update. We are looking for a mezzanine, profit-sharing investor, who would get no equity but get a percentage of top line revenue capped at a target return, say 1.5 to two times their money back. The ideal person will help us figure out how to structure this.
This is a deal with increasing regenerative production of pines that are already improving the ground water, the number of coyotes and deer and more bird sounds heard that meets near infinite demand. If we execute well and work well with the communities over time, it will make 14% IRR. But the money doesn’t start coming for 10 years, as the trees grow. So we need someone who can be there with us and do really well when the profits start coming in in 2026.
We are recording Shaun Paul’s latest war stories from the field as he goes through the laborious process of signing on new indigenous communities within the Purapecha people on the plateau near Morelia in Michoacan. My daughter BJ Harden Jones, who has edited and proof read the SOCAP program book for the last decade has signed up for that task and they will transcribe those to become new Medium posts under his byline. She will also establish an Ejido Verde publishing platform for my Medium posts and Shaun’s and anyone else who has a story to tell under that platform. A website is in RFP and vendor negotiations that will integrate with Medium Instagram, twitter and Facebook. I am excited that BJ will come to understand this story. I think it will make sense to her and to her community.
