The South African-based CMO Group has secured investment from venture capital fund E4E Africa to grow its forest-based operations and establish a global trading platform for certified forest products.
“The funding will be used to further enhance the company’s existing software, as well as to build a trading platform to provide market access for responsibly produced forest products in the mainstream global market, especially in the northern hemisphere,” says Michal Brink, CEO and founder of the CMO Group.
Michal says that the main driver of the development is to create and guarantee supply chain security all along the value chain. To achieve this goal the CMO model hinges on three pillars:
• The establishment of Forest Stewardship Council® (FSC®) certified Group Schemes using its in-house developed PerForm software – enabling digital management and auditing of forest operators, with the emphasis on small to medium growers who have been largely excluded from the certification process, as a result of complexity and cost.
• Providing technical support services such as training and consulting to FSC certified Group Schemes and forestry companies and using this expertise to beef up technical compliance of CMO Group Schemes.
• The development of an online, worldwide trading portal for FSC certified forest products, named IcePik.
Michal said that the CMO team has been innovating and researching in this field for many years. He said the funding from E4E Africa presents a great opportunity to secure critical market access for sustainably produced forest products, and a means to introduce small forest producers to international markets.
“CMO has the full support of the FSC International Center GmbH in Bonn, as well as other key stakeholders including the Association of Natural Rubber Producing Countries (ANRPC) and the Namibian Charcoal Association (NCA).”
The trading platform will be launched in Namibia and South Africa in the last quarter of this year, focussing initially on sales of FSC certified charcoal. Michal said that commodities traded across IcePik would expand to include a wide range of forest products derived from sustainably managed forests, including roundlogs, lumber, treated poles, chips for pulp as well as non-forest products.”
According to Bas Hochstenbach, co-founder and partner at E4E Africa, the partnership hinges on the fact that CMO is a South African company with real intellectual property that is operating in a huge global industry. E4E Africa has taken a 10% stake in CMO.
Bas added that the group scheme certification methodology and trading platform create access to global markets for sustainable forestry products for parties like smallholder farmers and smaller processors – parties that traditionally had difficulty fulfilling the administrative requirements of FSC certification, disqualifying them to trade on the more lucrative markets where certification is required.
“CMO touches many aspects: significant environmental impact due to sustainable production processes and social impact through job creation, better worker conditions and a higher price for the small producer through direct access to international markets.
“CMO is a great example of the type of businesses that we seek to invest in: entrepreneurial teams leveraging technology to address real societal challenges at scale, combining a highly scalable business model with a high impact,” he said.
CMO has positioned itself to set up group certification schemes in 44 countries over the next five years, whilst selling the FSC certified products through IcePik across the globe. CMO’s FSC group scheme has certified around 35 forestry operations in South Africa, the majority of which are small-scale tree farmers operating on communal land.