MILPA

At MILPA we want to overcome the lack of financial incentives that exist in Colombia for rural communities to provide ecosystem services. Amid the climate crisis, biodiversity powerhouses, such as Colombia, are called to play a leading role by providing ecosystem services to the world. However, rural communities in Colombia have no incentives to provide these services. 90% of them live in vulnerable conditions or are poor, and have low access to credit to develop agricultural projects. As a result, rural communities in Colombia, specially those that are most poor, have engaged in inefficient and environmentally harmful activities. Thus, Colombia is being forced to choose between its rural development and the preservation of their environment. 

The scale of the lack of financial incentives that exist in Colombia for rural communities to provide ecosystem services is both great in rural communities, as it is globally. On the one hand, 64,85% of all loans for agricultural projects in Colombia are granted to large producers, despite applying only for 2,04% of the total projects. In contrast, Medium and small producers only obtain 18,49% and 16,66%, whilst applying to 16,50% and 81,46%, respectively. In other words, small and medium rural producers in Colombia have low credit access, despite applying for most of the loans for agricultural projects.  

On the other hand, amid the climate crisis, the lack of financial incentives to provide ecosystem services has a great impact. The scale of climate change is indisputable. In this context, biodiversity powerhouses, such as Colombia, have a leading role to play by providing ecosystem services. Colombia is the second most biodiverse country in the world. Biodiversity has a direct relationship with climate change, as it helps preserve ecosystems, making them more resilient to the effects of climate change. Furthermore, resilient ecosystems also help capture carbon from the atmosphere and, hence, reduce the amount of emissions. However, in Colombia, biodiversity is endangered by traditional rural activities, mainly pastoral farming. Rural communities, as seen above, have little incentives to transition from these traditional activities to ecosystem services. Thus, the lack of financial incentives has a direct impact on climate change globally. 

At MILPA, we intended to help overcome the lack of financial incentives that exist in Colombia for rural communities to provide ecosystem services, by channeling resources to medium and small rural producers to fund seed capital and capacity building to execute ecosystem services.

MILPA is a donation crowdfunding platform the raises the initial capital required by small-scale ecosystem services projects in Colombia and provides capacity building to producers in order to execute them.  

Each project has a time limit to raise their initial capital. If the required capital is not raised within that time frame, all funds are returned to the investors. However, there is the possibility for investors to redirect their funds to another MILPA project of their choosing.

If the capital is raised, the MILPA platform charges a fee. This fee has already been calculated and included in the initial capital sought by the project. The remaining funds are released to the MILPA project.

The initial capital raised covers capacity building from our local partner in Colombia, Corporación PBA (”CorPBA”), whom has 20+ years of experience working with producers in Colombia and has a proven work methodology in building farmer associations and in project implementation.

Successful MILPA projects that break even will be charged a success fee, which would be destined to financing other MILPA projects that have not yet raised their initial capital. 

Investors in MILPA projects will be able to visualize all projects and their business models on the platform. As a donation crowdfunding platform, Investors will receive a social return for their investment in MILPA projects: (i) All MILPA projects periodically upload updates of their projects, and (ii) Anyone can verify the amount of carbon captured by each MILPA project thanks to the implementation of Internet of Things (“IoT”) technology, powered by our partner Sistemas Inteligentes en Red.

Finally, MILPA farmers would then be able to trade their carbon offsets in voluntary carbon markets, by registering and trading them through our ally’s, EcoRegistry, platform.

The main target population are small and medium rural producers in Colombia. Rural population in Colombia accounts for 30% of the country's total population. 90% of the rural population lives in vulnerable conditions or is poor. According to the technical group on agriculture, commissioned by the Colombian government, two of the main obstacles faced by small and medium producers in Colombia is access to credit and low association rates. 

Regarding low access to credits, 64,85% of all loans for agricultural projects in Colombia are granted to large producers, despite applying only for 2,04% of the total projects. In contrast, Medium and small producers only obtain 18,49% and 16,66%, whilst applying to 16,50% and 81,46%, respectively. In other words, small and medium rural producers in Colombia have low credit access, despite applying for most of the loans for agricultural projects.

Concerning low association rates, according to a survey made by the Colombian National Statistic Agency in 2019, only 21,2% of the population that identified as farmers in cities, and 23,7% of those in rural areas, were part of a group or an association. Low association rates are significant obstacles to development, as stated by the technical board on agriculture, commissioned by the Colombian government. The board stressed that the importance of association in achieving income opportunities for producers. Association provides economies of scale, negotiation power and the overall ability of participating in the Colombian economy.

MILPA will help overcome the low credit access and association rates faced currently by rural communities in Colombia. First, as a crowdfunding platform, MILPA will help raise the seed capital needed by producers to start ecosystem services projects that otherwise they would difficultly obtain in the traditional financial system in Colombia. Second, part of the funds raised by MILPA will be directed to capacity building and association. We have secured an alliance with Corporación PBA ("CorPBA"), an entity with 20+ years of experience working with producers in Colombia, with a proven methodology of promoting association between producers, in order to provide our projects with capacity building in association and project execution. The working costs of CorPBA will be raised via our MILPA platform. 

Finally, MILPA will further increase producers financial opportunities by allowing them to trade the carbon-offsets they produce in their projects in voluntary carbon markets. We have secured an alliance with Sistemas Inteligentes en Red, a Colombian company, that has a proven methodology of measuring the amount of carbon captured by certain crops. Our idea is that the cost of their services will also be included in the capital raised by the MILPA platform. As a result, investors will be able to see the amount of carbon captured thanks to their donations and producers will be able to trade their offsets in a voluntary carbon market, managed by local Colombian company EcoRegistry.

Both Daniel and I have a special interest in sustainable development. Daniel has worked for more than 10 years with rural communities, helping them develop agricultural projects, through his advisory services to several entities in Colombia. I, in turn, am an avid traveler of Colombia. I have traveled Colombia and I have identified the impact that projects like MILPA can have. For example, I visited the Mavecure region in Colombia and saw first hand how bee-farming has helped indigenous community access other sources of financing that has raised their general welfare. 

Our passion for helping communities runs in our blood. On the one hand, my late father, Guillermo Perry, was a chief economist at the World Bank and served as Finance Minister in Colombia. In both positions he strived to increase the overall welfare of communities in Colombia and Latin America. On the other hand, my uncle, Santiago Perry, is the founder and director of CorPBA, our partner in MILPA. He has dedicated his life to helping rural communities in Colombia become more competitive, in order to increase their overall welfare. Our objective with MILPA is to follow our family's steps and have a positive impact in Colombia. 

Finally, we both have the experience required to execute MILPA successfully. Daniel, has a masters in environmental economics and more than 10 years of experience advising agricultural projects in Colombia. Through his work, he has identified the obstacles small and medium producers face to develop their agricultural projects, and has advised entities in how to overcome them. Amongst others, Daniel has noted small and medium producers in Colombia face low credit access and low association rates. Both of these obstacles will be overcome through MILPA financing and capacity building services.

Antonio, in turn, is a lawyer by training and currently works at the Blockchain & Climate Institute ("BCI"), where he investigates and advises governments in the implementation of emerging technologies in their climate change policies. As a lawyer with 5 years of experience in a leading law firm, Antonio has a clear picture of the regulatory environment in Colombia and knows how to identify clearly legal risks and come up with solutions to overcome them. At BCI, Antonio has had the opportunity of leading projects in the implementation of emerging technologies to develop carbon markets and develop monitoring and verification systems in forest preservation. He has identified first hand how emerging technologies can help leverage sustainability projects, and overcome the lack of financial incentives that currently exist globally to promote these services. That is precisely what MILPA intends to do: overcome the lack of financial incentives that rural communities face in Colombia to preserve the environment, via crowdfunding and measuring carbon captured in MILPA projects, enabling producers to trade their carbon offsets and access additional funds to develop their projects.

We are new in the entrepreneurship world, let alone in  impact entrepreneurship. Although we have been thinking of MILPA for several years, and finally working in its concept for the past 5 months, we have found its implementation difficult. We have presented our project to some communities, and secured relevant alliances, but we have found it  difficult to weave everything together. We have specially found it difficult to develop a financial plan, a marketing strategy, and to pitch our idea to investors.

Solve is a unique opportunity for making MILPA a reality. Not only does it offer us the financial support we need for its implementation, but also the knowledge and support required for it. At this stage of MILPA, we need guidance, both from mentors and peers, in order to have the greatest impact in Colombia. Through its mentoring and monitoring, Solve will give us that opportunity. Furthermore, the possibility of connecting with peers and exchanging ideas is also a unique opportunity for developing and correcting our idea. It might even help us secure other alliances and help us scale MILPA, in order to increase its impact.

MILPA is a innovative solution towards leveraging ecosystem services in Colombia, at least, for three reasons. First, MILPA introduces a new source of financing for these type of projects. As stated when explaining the problem we want to solve, producers in Colombia have little incentives to provide ecosystem services because they do not have the means to do so, they are excluded from the traditional financial sector, and they find that ecosystem services are not profitable all the time. MILPA solves the funding gap by introducing an alternative financial instrument: crowdfunding. 

The second reason why MILPA is innovative is precisely how MILPA solves the profit gap of certain ecosystem services. With MILPA we want help fund carbon capture measurement for ecosystem services, which will allow producers to produce carbon offsets, which they can trade in a voluntary carbon market, such as the ones enabled in Colombia by EcoRegistry. 

Third, MILPA is innovative because we understand that financing is not enough. After analyzing the barriers producers face in Colombia, we found that low association rates are a clear obstacle for rural development. That is why in MILPA we also enable capacity building in order to create associations. 

We believe that these innovations will not only change how the market supports ecosystem services, but also how the government approaches these type of services. First and foremost, we expect the government and other relevant stakeholders identify that ecosystem services are not only necessary, but can be also profitable, via carbon offset trading. As a result, we would expect that climate finance increases towards these projects. Second, we expect that the market and government understand that financing is not enough and that capacity building and association is equally important for rural development in general. We would, thus, expect a different approach when promoting ecosystem services and rural development in general. 

Our impact goals for the next year are reaching as many producers as possible in Colombia, and securing alliances with strategic partners that will allow us to sell the products of our MILPA producers.

For the next five years, we have 3 main goals. First, we want to use Colombia as a successful pilot in Latin America, and take upon the challenge of expanding our operation to other Latin American countries. Second, we want to help transfer additional funds in the form of investments to successful projects. Our platform would visualize successful projects that would present their case to rise additional capital, and the return investors would be entitled from their investment. Finally, we would like to work with the Colombian government in the implementation of model in the substitution of illegal crops in Colombia, such as coca plantations. Ilegal crops are one of the main causes of biodiversity degradation in Colombia. As with ecosystem services, ilegal crop producers have no incentives to stop planting them because of their profitability. We believe that our model at MILPA can help overcome these lack of investments and contribute to eradicating ilegal crops in Colombia and preserving the environment. 

Since we are still in the concept phase of MILPA, we have not implemented any measurable indicators. However, those that we intend to implement are the following: (i) the number of projects visualized in MILPA, (ii) the number of projects that raise the required funds via MILPA, (iii) the number of MILPA projects that break even, (iv) the amount of carbon captured by each project, and (v) the amount of carbon offsets traded in voluntary carbon markets. 

Through MILPA investors donate funds to particular ecosystem projects. If the required funds are raised, MILPA disburses them to the producer association that posted the project, to CorPBA and Sistemas Inteligentes en Red. 

The producer association and CorPBA start executing the project, from its planning, producer capacity building, and its implementation. 

Once the project is implemented, Sistemas Inteligentes en Red uses drones to periodically calculate the carbon captured by each project, processes it, and makes it readily available to the producer association.  

MILPA, CorPBA and the producer association then verify the information and submit it to EcoRegistry, where it is verified against the CERCARBONO standard for carbon offsets.

Once the carbon offsets are verified, with assistance from MILPA and CorPBA, the producer association can trade them through the EcoRegistry platform in any of the voluntary carbon market places with whom EcoRegistry has an alliance. As a result the producer association receives additional funds. 

Consequently, the producers note that ecosystem services can be profitable and, thus, are incentivized to continue providing them. 

Also, other producers note that there are successful ecosystem preservation projects that offer an alternative source of income and, hence, decide to transition towards these services. 

With the increase of ecosystem preservation, the amount of nature based carbon deposits increases, helping offset carbon emissions and, thus, tackling climate change. 

Also, the increase of ecosystem preservation makes the ecosystems more resilient to the effects of climate change; hence, protecting the communities and wild-life that live in them from such effects.

Finally, the overall increase in health of ecosystems has proven to have a direct impact on food nutrients, increasing the population's diet and health overall.

MILPA uses three core technologies. First, the already-known fintech solution of crowdfunding that basically uses web 2.0 technology, via a web platform, in order to raise funds from a great pool of investors.

The second core technology MILPA uses, albeit indirectly, is internet of things ("IoT"), specifically dron imagery. Our strategic partner, Sistemas Inteligentes en Red, has developed and successfully tested the use of drones to measure crop and forest biomass. 

The third core technology, also used indirectly via our partner Sistemas Inteligentes en Red, is AI. Once Sistemas Inteligentes en Red obtain the biomass data from their drone imagery, they process it with their own AI system, in order to calculate the carbon captured by the crops. 

Even though at this stage MILPA co-founders are not diverse, our advisory team is, and we intend to translate this into our leadership team as soon as possible. Our technology advisor is from the United States, both of our marketing advisors are women, and one of our legal advisors is a women as well. Since we are transitioning to the implementation stage we are looking to incorporate a CTO and a CFO to our team, both of which we want to be either women or  LGBTQ .

There are two key actors in our project: investors and producer associations. From the investor side, the current global context is ideal for MILPA. Projects that help fight climate change, are essential amid the climate crisis and, thus, investment in them is growing exponentially. For example, the Glasgow leaders’ declaration on forests and land use pledged USD 12bn in public funding to “support work to protect, restore and sustainably manage forests” from 12 countries, to be delivered over 2021-2025. Colombia is not the exception, provided that the Colombian Government's 2050 pledges are based mainly in nature-based carbon capture activities, such as those promoted by MILPA. 

From the producers side, their is an unsatisfied demand of credit access for small and medium producers. As explained when presenting the problem MILPA will solve, despite applying to most of the credits for agricultural projects, medium and small producers' access to credit is limited. MILPA solves this problem through the power of crowdfunding by providing access to capital that producers would otherwise not have access to. Furthermore, MILPA would also give producers and additional source of income, via carbon offset trading, thanks to the carbon capture measured in each project the producers execute. We have presented our idea to communities, which have expressed their interest in participating in MILPA.

MILPA will be financially sustainable in two ways. First, through a fee charged once a project has successfully raised the capital it needs. The fee will be previously included in the capital the project wants to raise, so as to not reduce the producers' funding. Second, MILPA will make money through a success fee that will be charged over successful projects that break-even. This fee will be directed to other MILPA projects that have not raised the capital required, thus increasing the probability that MILPA will charge its initial fee.

As a non-profit organization, our income would be directed to cover our working cost and platform development, which we have estimated to be USD 20,000 initial capital, and USD 6,000 monthly.

Since we are in the concept phase of MILPA, we have not implemented are financial plan nor raised capital. We are starting to look for these opportunities, and investing equity in order to implement MILPA.