Innovation

The innovation consists mainly of two parts: the production and the implementation of the product in the real world. Balitsa primarily specializes in producing a special type of wood known for its lightness, firmness and overall insulating properties, called Balsa Wood. When Marcelo - the CEO - set off to create a socially and environmentally conscious production system, he found the small community of Ricaurte. He developed a system where Balitsa would supply the required materials for the production of the wood, and would then “buy” it back from the local community. The production of wood-related products in general is known for the disastrous impacts regarding deforestation. This system allows for Balitsa to control the amount of wood produced, done in such quantities that the trees are able to grow back and there is never a shortage (deforestation). Now that Marcelo has created a sustainable and socially conscious production model, he now had to innovate on where he would utilize the products. Balsa wood is used in an extremely diverse range of products.

As Marcelo realized how Balsa wood obtains light and firm yet insulating properties, he realized how he could expand the business by providing his material in the use of aeolic energy infrastructure. The innovation clearly demonstrates a relationship with SDGs #8 (Decent Work and Economic Growth), where his system allowed to employ a large number of inhabitants of this rural community, and provide for overall well-being in multiple aspects.

Inspiration

The inspiration for the innovation came a few years ago when the company and industry in Ecuador generally suffered from a raw material shortage period. Balitsa decided to take advantage of a bad situation and generate a solution for them, and for the community. By developing a plant nursery they can provide to their business neighbors and community seeds and plants, and by doing that agreeing on a partnership for further sales and development. The deal helps three things: the local industry, the community and the business itself. Since it generates new jobs, the community and industry can grow, and the company now has access to buy raw material from many different providers and sources. It seemed like a win-win, so Balitsa decided to go for it. Since 2018, more than 150,000 plants have been planted on land that was not even used before, and the company has created new relationships with potential suppliers that can even help make the innovation bigger. During the interview, Marcelo explained how the market is unstable during a part of the year, and that raw material was not so easily available during this period. “Not just in Ecuador, but in every country the business faces a change because of the weather so the raw material is harder to buy”. “With the nursery it has been easier to obtain providers that may sell the raw material at an attainable price”. (Both translated from Spanish).

Overall impact

This innovation creates multiple direct and indirect positive impacts for local communities, the environment, and the sustainable energy sector. Initially, Balitsa works with local communities to grow their material (Balsa Wood), in this case the small town of Ricarte in Los Ríos province, Ecuador. By doing so, they are able to boost the local economy by providing jobs and improving overall well-being for the community. As well, since they are controlling the production of the wood, they are able to make sure it is done in an environmentally conscious manner. Since wood-related products generally increase deforestation, Balitsa is able to control and ensure there is no negative impact. This is the first part of the innovation, and how it benefits local communities and the environment.

After the wood is produced, Balitsa realized that they can sell their wood as alternatives for sustainable energy producers such as windmills. The wood serves as an alternative to other environmentally-degrading materials while still ensuring the same or even superior quality. In this particular case, regarding windmills, the wood allows for the same flexibility to serve as the interior insulating layer. Impacting the technological advancements for sustainable energy production, and increasing production with this “sustainable substitute”. Balitsa also has its own forest of 50 hectares, this added to the agreements is equivalent to approximately 33% of the monthly raw material supply needs, which means that we have to get 67% from outside wood suppliers. Balitsa's goal is to have control of its own sources or agreements of at least 50% of the raw material needs, they are doing it gradually.

For what is mostly applied wood needs to have a density (weight / volume) of between 100 kg/m3 to 240 kg/m3, which in time of age would be between 4 to 10 years approximately. Which in times of peak demand makes it difficult to get the raw material in the correct density. Preventing this phenomenon that usually happens from time to time, Balitsa thought the best option was to look for local farmers with unoccupied land to generate the following:

1. Ensure to have raw material and control the optimal time for use, (in 2021 many factories have had to close for not having the minimum volume of raw material sustenance) the projected growth in sales of Balitsa 2022 vs 2021 is 50% in volume.

2. Incentivize local farmers to generate an extra income on land not occupied in traditional or short-cycle agriculture. They have about 65 hectares in planting agreements with a promise to purchase material at market price at the time of harvest. And another 54 hectares for sale of plants without a harvest purchase agreement, but Balitsa has identified where they are and will offer to buy from them.

3. Within Balitsa, the hiring of new personnel has grown by 40% 2022 vs. 2021 to date.

In conclusion, Balitsa allows for the conservation of forests in the local region, and replanting and controlling production for their Balsa wood trees. They benefit the local community of Ricaurte by providing a stable job system and benefiting overall well being for the community. Finally, by utilizing the wood in the production of technology that further benefits the environment, they provide a sustainable substitute compared to other toxic materials.

Business benefit

Balitsa created an agreement with the local community in which they provide the materials, and then buy back the wood once harvested. This allows for Balitsa to have a constant in-flow of materials, and ensures the quality of their standards. Balitsa has been creating more jobs over the years. This not only benefits them, but also the company since they have more workers working for them. In 2014 there were around 20 employees, in 2017 30 employees, in 2018 40 employees and 2022 45 employees.

Moreover, by planting the seeds, the workers have two benefits: on one hand they have the raw material and on the other they have secured suppliers for the future as they are assured that these plants will be sold at a certain price when they plant them.

As the world shifts towards a more sustainable future, Balitsa adapts their production and intended clients respectively. More clients will be willing to work with sustainably grown products. Renewable energy is significantly growing as Balitsa sells to aeolic energy producers, they will be able to provide to a larger clientele.

Social and environmental benefit

Balitsa S.A. is a company that benefits the environment and benefits from the environment. Since it’s located in the perfect conditions, the company benefits by growing the wood in the best conditions possible. However, Balitsa benefits the environment because it gives the excess of production to people who need it and can give it different uses from the company. This also benefits society since the use of this balsa wood is used to fill windmills and airplanes - even some cars, so it gives to society by providing products that are useful to them.

Balitsa takes from the land without damaging it, but enriching it, and giving their product to people in need. The business uses the most effective production method to cultivate this wood without causing permanent nor negative impact to the environment. Balitsa grows their wood on their own land which is exclusively used for this purpose; the cultivation of balsa wood. By doing this the company does not take land which was forestated nor inhabited by any species, but forestates land and gives the world a new green space.

Interview

Marcelo Moral Chiriboga, Founder / CEO