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Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=tfor20 Australian Forestry ISSN: 0004-9158 (Print) 2325-6087 (Online) Journal homepage: http://www.tandfonline.com/loi/tfor20 Paths to sustainable wood supply to the pulp and paper industry in Indonesia after diseases have forced a change of species from acacia to eucalypts E. K. S. Nambiar, C. E. Harwood & D. S. Mendham To cite this article: E. K. S. Nambiar, C. E. Harwood & D. S. Mendham (2018): Paths to sustainable wood supply to the pulp and paper industry in Indonesia after diseases have forced a change of species from acacia to eucalypts, Australian Forestry, DOI: 10.1080/00049158.2018.1482798 To link to this article: https://doi.org/10.1080/00049158.2018.1482798 Published online: 16 Jul 2018. Submit your article to this journal Article views: 119 View Crossmark data

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Page 1: Paths to sustainable wood supply to the pulp and paper

Full Terms & Conditions of access and use can be found athttp://www.tandfonline.com/action/journalInformation?journalCode=tfor20

Australian Forestry

ISSN: 0004-9158 (Print) 2325-6087 (Online) Journal homepage: http://www.tandfonline.com/loi/tfor20

Paths to sustainable wood supply to the pulpand paper industry in Indonesia after diseaseshave forced a change of species from acacia toeucalypts

E. K. S. Nambiar, C. E. Harwood & D. S. Mendham

To cite this article: E. K. S. Nambiar, C. E. Harwood & D. S. Mendham (2018): Pathsto sustainable wood supply to the pulp and paper industry in Indonesia after diseaseshave forced a change of species from acacia to eucalypts, Australian Forestry, DOI:10.1080/00049158.2018.1482798

To link to this article: https://doi.org/10.1080/00049158.2018.1482798

Published online: 16 Jul 2018.

Submit your article to this journal

Article views: 119

View Crossmark data

Page 2: Paths to sustainable wood supply to the pulp and paper

Paths to sustainable wood supply to the pulp and paper industry in Indonesiaafter diseases have forced a change of species from acacia to eucalyptsE. K. S. Nambiara, C. E. Harwoodb and D. S. Mendhamb

aCSIRO Land and Water, Black Mountain, Canberra, Australia; bCSIRO Land and Water, Hobart, Australia

ABSTRACTIn Sumatra and Kalimantan in Indonesia and Sabah in Malaysia, the spread of two diseases, aggra-vated by damage by fauna, and by the humid tropical environment, has forced a change of plantedspecies from Acacia mangium to Eucalyptus pellita and related interspecific hybrids, at a scaleunprecedented in the history of plantation forestry. This experience highlights the risks of relyingon any single species for large contiguous plantation estates in environments with endemic biotic andabiotic stresses. There is a need to transition to multiple-species plantation forestry, adopting theopportunities for changeover of species and varieties in short-rotation systems. Industry’s responsesfor coping with this rapid change have been helped by earlier collaborative research on acacia whichpromoted management practices that conserved site resources and avoided site degradation duringthe critical harvesting and inter-rotation phase. The current growth rates of E. pellita and its hybridsare lower than that of A. mangium. Estimates of production from plantations and expanding capacityof the pulp and paper mills highlight a risk of significant shortfalls in wood production. Improving thequality and consistency of forest operations and revision and refocussing of research and develop-ment are critical to set and achieve realistic targets for stable, incremental improvements in produc-tivity. Each company should consider investing systematically in contemporary adaptive research fordeveloping and applying integrated management practices that are efficient and feasible on largescales and suitable for their circumstances. There is also a critical need for research to understand thedynamics of local human capital and its relationships with the forestry sector, with focus on improvingaccess to a stable labour force.

KEYWORDSIndonesia; plantations;sustainable woodproduction; diseases; specieschange

Introduction

In Indonesia, expansion of the pulp and paper industry beganin late 1970s. During the first two decades, wood supply forthe pulp mills was highly dependent on harvests from nativeforests. At the same time, industry was allocated concessionareas to grow plantations, a large proportion of which wasdeemed as secondary, degraded forests or was alreadycleared, burned and dominated by Imperata grass. Most ofthis land was on mineral soils and formed the base for woodand oil palm plantations. Companies expanded plantationforests in Sumatra and Kalimantan. Based on trials whichevaluated a range of species, including tropical Eucalyptusspecies, Falcataria moluccana (Miq.) Barneby & J.W.Grimesand Gmelina arborea Roxb., Acacia mangium Willd. was cho-sen as the most suitable candidate for expansion. Harvest ofA. mangium plantations began in the mid-1990s enabling agradual shift of pulpwood supply to plantations. The resourcebase was further expanded from the late 1990s by planting A.crassicarpa Cunn. Ex Benth. on low-lying peat lands.

Companies which are vertically integrated own and man-age both growing and processing and expect the mills torun at full capacity with uninterrupted production. Each millrequires a steady and reliable supply of wood from its plan-tations and synchrony between the rates of sustainableproduction and consumption. This has been hamperedfrom time to time. Based on discussions with managersand some consultants, reasons include variability in growthrates across the estates and shortfalls from predicted pro-ductivity, errors in inventory, dysfunction in planning and

operations, labour shortages and conflicts with local com-munities over land ownership.

In addition to the pulp and paper companies, plantationsare also owned and managed by many small to mediumwood growing enterprises. The economic and social impactsof this sector in Indonesia are important. In some regionssuch as Riau in Sumatra the net impacts of the sector oneconomy, tax revenue, employment (with high job multipliereffects) and household income are substantial and critical(ITS 2011). According to a recent industry statement(Setyawati 2017), the pulp and paper industry accounts for6.7% of Indonesia’s gross domestic product generated bycomponents of processing industries, employs 260 000workers directly and 1.1 million workers indirectly, and in2016, it ranked as the country’s seventh largest foreignexchange earner contributing US$3.8 billion.

Two fungal diseases, Ganoderma root rot (Francis et al.2014) and the fast-spreading stem-wilt canker caused byCeratocystis manginecans sp. nov. (Tarigan et al. 2011),became epidemic and rendered A. mangium plantationsunviable in Sumatra (Harwood & Nambiar 2014b) andincreasingly so in Kalimantan. Industry, faced with this ser-ious and largely unanticipated threat to wood production onmineral soils and without effective control measures, rapidlychanged species from A. mangium to Eucalyptus pellita F.Muell. and related interspecific hybrids. The rate of replace-ment in one company reached more than 50 000 ha y−1. Intotal, more than 600 000 ha had been replaced by2016–2017 (Fig. 1). In Sumatra, this may represent 95–98%

CONTACT E. K. S. Nambiar, [email protected] CSIRO Land and Water, Black Mountain, Canberra, Australia© 2018 Institute of Foresters of Australia (IFA)

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of the area previously under A. mangium. The rates and scaleof this change and the ensuing consequences for woodproduction, the economy and ecosystems are unprece-dented in plantation forestry.

Some companies are heavily reliant on A. crassicarpa plan-tations on peat ecosystems which represent 50–60% of theland concessions they hold. Acacia crassicarpa appears lesssusceptible to diseases than A. mangium. There are uncertain-ties and controversies about the sustainability of commercialproduction from peat systems and vexed questions aboutgreenhouse gas emissions, fire management, biodiversityand community responses. Recent governmental directivesare to maintain water tables within 40 cm of the surface atall times in all areas, and restore deep peat areas for conser-vation, but how these directives are to be achieved at such alarge scale remain unclear. Furthermore, some companieshave voluntarily withdrawn some areas from productionafter 2016–2017 fire outbreaks, and the Ministry of Forestryand Environment has instructed individual companies not toreplant in large areas after harvesting the current stands.Cumulatively, these major challenges to wood productionwarrant a separate analysis which is beyond the scope ofthis paper. Estimates of wood production and demand citedhere includes the production from A. crassicarpa from peatland because all publicly available data reports productionand demand as acacia wood without segregating species.

Elsewhere in South-East Asia, A. mangium plantations inSabah and Sarawak cover over 250 000 ha (Nambiar &Harwood 2014). Diseases have also caused severe damagein eastern Sabah where A. mangium is being replaced mostlyby eucalypts. Plantations of A. mangium, A. auriculiformis andtheir interspecific hybrids now total 2 million ha in Vietnam(Ministry of Agriculture and Rural Development, unpubl.2017). The area is expanding, as is the impact of diseases(Harwood & Nambiar 2014b; Thu et al. 2014) and Ceratocystisstem-wilt canker is already damaging some plantations in anumber of locations. Therefore, experience in Indonesia andthis analysis has direct relevance to the future of majorplantation resources elsewhere in South-East Asia.

This paper provides an overview of the challenges tosustainable wood supply to the pulp and paper industry inIndonesia, given the change in planted species necessitatedby impacts of diseases. We focus on plantations on mineral

soils, key issues of operations, future research and develop-ment (R&D) and the importance of gaining more active localcommunity participation. Our field studies and a significantpart of the Indonesia-based research cited here were carriedout in Sumatra where pulp mills are located but will beapplicable to Kalimantan. Based on earlier field work andreview (Harwood & Nambiar 2014b), this analysis is highlyrelevant for addressing the parallel situation in Sabah. First,we provide a brief account of the production and consump-tion of pulpwood from plantation resources and describethe background and the nature of the problem. Then wediscuss the rationale of the choice of plantation species andmanaging risks in the context of short-rotation forestry inIndonesia, with implications elsewhere in South-East Asia.This is followed by a discussion on key operational manage-ment and research issues for the future. An analysis of theperception of the ‘R&D-Operations gap’ drawing on theviews and experience of operational managers is presented,and the importance of understanding this gap is empha-sised. We highlight the need for fostering integrated man-agement for sustaining production and the context ofoperational realities and community engagement.

Collection and review of information and industryinputs to analysis

Sources of information include research by CSIRO in partner-ship with public institutions and pulp and paper companiesin Indonesia, information gathered during a comprehensivereview of sustainability of plantation forestry in South-EastAsia (Harwood & Nambiar 2014b), and other related researchcited in this paper. In addition, on several earlier occasionsand more specifically in 2017, we visited several experimen-tal and operational sites in Sumatra, facilitated by the com-panies’ staff, observed operations and their impacts and thecondition of plantations and had several site-specific in-fielddiscussions. Among the senior managers in the companies,there is a widely held belief of a large ‘R&D-Operations gap’(we quote this term as used and sometimes posted bycompany managers) as a reason for not achieving produc-tivity at levels they expect and think are possible or haveobserved in countries such as Brazil and China. To explore

53,100

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Banten

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25,000Sabah

120° E

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100° E

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Figure 1. Distribution of plantations where Acacia mangium has been replaced with Eucalyptus pellita or its hybrids in regions of Sumatra, Kalimantan andSabah from 2012 to mid-2017. Numbers are areas in hectares. Data for Indonesia was provided by E. B. Hardiyanto (Faculty of Forestry, Gadjah Mada University,pers. comm. 2017)

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this with operational managers, in 2017 we facilitated threeforums, informal in style but semi-structured in process, inseparate regions in South Sumatra and Riau. In total about45 staff, the majority operational managers and the rest localR&D teams and auditors of quality monitoring, participated.In one forum, the senior executive team participated onequal terms with others. In all sessions, the majority ofparticipants were Indonesians but there were also someexpatriates. Language translation was provided whenrequired. Each participant (all were male) was requested todraw on their experience and score on the feasibility andconstraints of all operations, regardless of their individualexpertise, role and ranking.

These sessions were guided by two questions:

(1) What are the limiting steps — feasibility, operationaldifficulties and the level of knowledge required —that are holding back the realisation of higher pro-ductivity in your management units?

(2) If you were allocated 30% more budget per hectarefor operations by the Chief Executive with a target ofincreasing wood yield by 10–20% operationally in thenext 3–5 years, where and how would you spend thatmoney?

For the first question, participants were asked to score inincrements of 2, in a scale ranging from 2 (least feasible —low feasibility and difficult to implement) to 10 (most fea-sible — high feasibility and easy to implement). In addition,the level of knowledge required for dealing with the pro-blem along with any additional comments were sought. Alloperations from harvesting of one rotation to the end ofthe next were considered (Table 1). For the second ques-tion, participants were assumed to have access to informa-tion and technology from the company R&D group as is thecase now. Everyone contributed to the analysis. Althoughas noted earlier we did not examine the issues of produc-tion on peat land, for exploring managers’ experience onoperations we have considered their preference for com-parison between mineral soil and peat as their

responsibilities sometimes straddle both land bases(Table 1). Not all three species (Table 1) were consideredin all sessions; we followed the most relevant comparisonfor each subregion. For example, one company had no peatland, so A. crassicarpa was not considered in that case.Eucalyptus pellita and related hybrids featured in all ses-sions. To simplify presentation and focus on major issues,the scores were aggregated across three forums againstindividual operations or constraints. For interpreting themanagers’ scores and related information we have reliedon our experience of working in Indonesia and elsewhere.

The senior author followed this up in Jakarta in separatesessions exploring: (1) main findings from these forums withsenior executives of one company; (2) trends in nationalforestry developments, policies and issues related to engage-ments with local communities with senior staff of Indonesia’speak Forest Concession Holders Association (APKI membersrepresent 154 separate plantation forests units, ranging in sizefrom 10 000 to more than 100 000 ha), (3) experiencedIndonesian forest managers and (4) with the InternationalFinance Corporation (IFC), a long-term co-investor in planta-tion forestry for economic and social development, to gettheir perspectives. All this information contributed to theanalysis and discussion presented in this paper.

Wood production and consumption by the pulpsector

Asia Pulp and Paper (APP) and APRIL Group, two dominantcompanies have publicly announced their decision not usewood from native forests, sourcing their wood only fromplantations, and made commitments to zero deforestation.Thus, the impacts of the species change can be understoodif it is placed in the context of the wood supply fromplantations, the only source of wood, for the establishedprocessing capacity. By 2013, the area of acacia plantationsin Indonesia was estimated to be at least 1.2 million ha,including about 500 000 ha of A. mangium on mineral soilsand about 700 000 ha of A. crassicarpa on low-lying peatsoils (Nambiar & Harwood 2014). This was an underestimate,

Table 1. Managers’ evaluation and perceptions of the feasibility to implement, and the level of knowledge available to support, a range of operational decisionsand practices

Feasibilitya

Operation Epc Am Ac Knowledgeb Comments

Genetic source and access 6–8 6–8 4–8 8 Needs continuous investmentNursery production &delivery on site on time

4 8 4–6 6 (Ac) Logistics of site access on peatland are a primary limitation

Planting 6 10 8 8 Logistics of site access on peatland are a primary limitationWeed control 4 8–10 6–8 4 R&D needed to optimise strategies for Ep; mechanisation R&D needed for Ep,

Am and AcFertiliser application 6 8–10 4–6 6–8 More R&D needed for wood ash application technologyManagement of pests &diseases

6 2–4 4–6 4–6 Ep is new to environment, so need to improve knowledge of itsmanagement

Fire protection 4 4–6 2–4 Peat fire a major threat for Ac which needs better managementStand management 6 8 6 6 (Ep), 4–6 (Ac) Knowledge to manage wind-throw is needed on peatHarvest & site preparationfor the next rotation

8 6–8 4–6 4 (Ac), 6–8 (Ep) New knowledge needed around hydrology of peat and site access for Ac.Operations for Ep are feasible, but need fine tuning

Transport, access & delivery 8 8 4 6 A major issue for AcFire watch, outbreaks &control

4 4 2–4 4 Special need to build relationships with locals, minimise conflicts, fostergood neighbour charter

Quality control of operations 4 4 4 2 By far the most significant issue across all systems and in all regionsaFeasibility scores for operational implementation range from 2 (least feasible) to 10 (most feasible)bScores for available knowledge range from 2 (little knowledge) to 10 (very good knowledge)cSpecies are Eucalyptus pellita (Ep), Acacia mangium (Am) and A. crassicarpa (Ac)

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as indicated by the area under species change especially forKalimantan (Fig. 1) and did not adequately capture the areasmanaged by the many medium to small scale concessionholders many of whom may be members of APKI.

There are six pulp mills operating in Indonesia, all inSumatra. Of these, five produce Kraft pulp, until recently fromacacia wood, and a small mill based in North Sumatra producesdissolving pulp from eucalypt wood. Estimates of both woodand pulp production vary between sources. According to offi-cial government estimates (Sub-Directorate of Forest Statistics2016) the harvested log wood volume of acacia in 2016 was23.1 million m3 (about 88% in Sumatra and the majority of thebalance in Kalimantan) and eucalypts 1.8 million m3 (79% inSumatra). This report also gives a total pulp production of 6.0million tonnes. According to another estimate, the totalamounts of plantation-grown timber consumed by all indus-tries in Indonesia increased from about 5 million m3 in 2000 toabout 30 million m3 in 2014 (Forest Trends 2015). A consultingfirm (Hawkins Wright 2017) estimated that by 2020 the com-bined production capacity of Indonesia’s pulp mills is expectedto reach 10.1 million tonnes y−1 and the wood demand (underbark) of 41.5 million m3. An investment statement (Setyawati2017) reported that when the new PT OKI mill is fully opera-tional the national target is to raise pulp production capacityfrom the current 7.9 million tonnes y−1 to 10.5 million tonnesy−1 and paper production to about 13 million tonnes y−1.

To estimate the standing volume required to serve the 10.1million tonnes of pulp capacity in 2020 estimated by HawkinsWright (2017) requires assumptions about losses in harvesting,transport and chipping, the proportion of bark in the standingvolume, wood basic density and pulp yield as a proportion ofdry wood mass. Based on our own estimates for six-year-old A.mangium (bark volume 14%, losses in harvesting and transport2%, loss of fines during chipping 2%, basic density of460 kg m−3 and air-dry pulp yield from wood dry mass 52%),5.0 m3 of standing volume of this species will be required toproduce 1 tonne of air-dry pulp with 5% moisture content.Thus, to produce 10.1 million tonnes of air-dry pulp wouldrequire harvesting a standing volumeof about 51millionm3 y−1

of A. mangium. The equivalent standing volume from A. crassi-carpa or from E. pellita and its hybrids would be somewhatdifferent. For example, eucalypts may have lower percentageof bark and slightly higher wood basic density and pulp yield.For both acacias and eucalypts all these factors are influencedby genotype, age at harvest and growing environment. Theremay also be minor differences in the recovery of pulp fromwood by different mills. There are also potential losses of woodbetween standing volume and the mill, such as those due tofire and access disputes with local communities. Regardless ofthese variables, the estimates of standing wood volumerequired for meeting the capacity is about twice the totalamount of acacia and eucalypts logs harvested in 2016 (Sub-Directorate of Forest Statistics 2016).

There are several small companies growing pulpwood,but reliable estimates of their production are not easilyfound. There have been attempts to expand the plantationestate through partnerships with small out-growers arisingfrom the Government-promoted Hutan Tanaman Industri(HTI) initiative but companies have not been able to enlistlarge numbers and areas of partnerships with small growers.For example, APRIL supports about 28 000 ha of farm andcommunity-owned acacia plantations in their CommunityFibre Farms program, compared to the 480 000 ha managed

directly for production (APRIL 2018). Furthermore, inSumatra the growth rates of HTI plantations were abouthalf of that on nearby company land (Mendham &Hardiyanto 2011). Given the current policy and politicalenvironment, it is unlikely that companies would have anyadditional allocation of land suitable for forestry. Reasonsinclude the Government’s moratorium on forest conversion,companies’ commitment to zero deforestation and the con-tested environmental, social and political policy delibera-tions prevailing in Indonesia. Greenhill et al. (2017)examined community perceptions about their engagementwith wood growing for the Finnantara company inKalimantan over 20 years and identified limitations andopportunities to foster more sustainable community-com-pany partnerships.

Despite the variations between reports on current pulpproduction and wood production, there is clearly a criticaldeficit between the current and expected mill capacity forpulp production and the production of plantation wood inthe country. To produce more wood in Indonesia, it isessential that the productivity of the current land base benot only sustained, but increased, with due care for thelandscapes and the rights and welfare of local people. Itwould also be prudent for companies to revitalise theirout-grower programs for wood production with new andequitable benefit sharing arrangements.

The rise and fall of Acacia mangium and change toEucalyptus pellita

Acacia mangium is native to northern Australia, Papua NewGuinea and adjacent Papua province, Indonesia. The speciesgrows well on a range of mineral soils with diverse pedologi-cal profile features and properties (Nurudin et al. 2013) inhumid lowland tropical climates. As an example of the climaterange, South Sumatra is seasonally dry (annual average rain-fall of 3000 mm y−1; potential evaporation of 1220 mm y−1

with typically 2–3 months of dry period) and in Riau rainfall ismore evenly distributed (annual average rainfall 2800 mm y−1;potential evaporation 1270 mm y−1). Mean annual tempera-ture ranges from 25 to 27°C. Acacia mangium also grew wellin Kalimantan, Sabah and Sarawak. In experiments, meanannual increment (MAI) of 43–48 m3 ha−1 y−1 have beenobtained on second-rotation sites in Sumatra (Siregar &Nurwahyudi 2008; Hardiyanto & Nambiar 2014). Operationalinventories of stands in Sumatra planted during 1990–2004showed that while MAI among subregions ranged from 14 to34 m3 ha−1 y−1 (due to variation in soils, sites, genetics ofplanting stock and management), average rates were20–30 m3 ha−1 y−1 and stable over two 6–7-year rotations(Harwood & Nambiar 2014a).

During the first two decades of plantation development,insect pests and fungal pathogens of A. mangium, althoughpresent, were not threats to wood production. Observedincidence of fungi-induced stem heart-rot was not a problemfor pulpwood because in most areas fewer than 5% of logshad any decay and proportional loss of pulpwood was verysmall (Barry et al. 2004). Root rot pathogens (Ganoderma spp.)were found in Sumatra since 1990; patches of wilted andweakened trees suffering crown die-back and dead treesbecame more common over time (Irianto et al. 2006; Siregar& Nurwahyudi 2008). Incidence increased progressively, sothat in some second-rotation stands 40–60% of trees were

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killed by age 5–7 years (Mohammed et al. 2012). A secondfungal disease, the stem-wilt canker spread initially at a slowrate (Tarigan et al. 2011) and then began to cause seriouslosses. Stem boring by beetles opened entry points for thepathogen. Monkeys, squirrels and elephants, which movedbetween protected areas of native forests and adjacent plan-tations, damaged stems by peeling the bark of trees as theydeveloped a taste for the sweet exudates from the exposedstem. Monkeys and squirrels together may have severelydamaged more than 100 000 ha in Sumatra and 30 000 hain Kalimantan, respectively (E.B. Hardiyanto, Faculty ofForestry, Gadjah Mada University, pers. comm. 2017) Apartfrom direct damage to trees, the inflicted wounds also pro-vide entry points for the pathogen. Thus, the spread of dis-ease was accelerated. The downward trends in yields,apparent from about 2005, became serious from 2010. Theimpacts of diseases were several: (1) in some areas 8–60% oftrees died (Siregar & Nurwahyudi 2008; Mohammed et al.2012) and elsewhere mortality averaged 45% among 880plantation units at age 3–4 years (Hardie et al. 2018); (2) astrees died in patches, gaps opened in stands which exposedtrees to wind-throw, seriously so on sloping land in Riau; (3)weakened, stressed and defoliated crowns reduced growthrates down to 10–12 m3 ha−1 y−1 at sites which previously had25–35 m3 ha−1 y−1 and (4) the rates of failure of plantationsincreased with successive rotations. Thousands of hectares ofthird-rotation stands failed with little or no salvageabletimber.

Hardie et al. (2018) found no reliable relationship betweensite properties, including soil types and topography, and treelosses attributable to diseases and wind-throw. In the absenceof such relationships there was little scope of managementinterventions for containing and reducing risk. Research inprogress indicates limited possibility to reduce Ganodermaroot rot incidence through biocontrol (Mohammed et al. 2014).

In Sumatra, most A. mangium sites have been replantedwith E. pellita or its interspecific hybrids (Fig. 1). Similarly, inSabah, Malaysia, where A. mangium had been grown fordecades, large parts of the estate are being replaced byother species, including E. pellita, and in Sarawak, althoughthe Ceratocystis attack seems less virulent to date, compa-nies are increasingly transitioning to E. pellita (D. Boden,Boden and Associates, pers. comm. 2017).

Choice of species for sustainable plantationforestry

Historically, plantation forestry worldwide has been devel-oped by planting one, and in some cases, two or threespecies; indigenous, exotic or both, from one or two genera,in successive rotations. Such decisions were based on experi-ments which evaluated a range of species and identified thebest or preferred species for a region or subregion, based ontheir growth potential, tolerance to biotic and abiotic risks inthat environment, and acceptable wood properties for targetend uses. The development of Pinus radiata D.Don planta-tions in 25–35-year rotations serving both the solid woodand pulp sectors in Australia, and A. mangium plantations forpulp in Indonesia, are examples of single-species-dominantplantation forestry over a large eco-region. In Australia, P.radiata has been grown since 1878, successfully, often insoils low in fertility and available water, over periods span-ning major climatic events, including ambient temperature

and CO2 rise, long droughts, fire and pest attacks (O’Hehir &Nambiar 2010). Pinus radiata from its original habitat ofsome 7 000 ha on the California coast, USA, is grown onsome 4 million ha in countries, including Australia, Chile andNew Zealand.

However, when the primary goal of a plantation forestryventure is wood production with environmental and socialresponsibility, the purpose and pursuit of sustainabilitydoes not require an adherence in perpetuity to a singletree species or genus. The productivity measured at a siteat a given time is not an immutable reference point; pro-ductivity (sometimes expressed as site quality) is a snapshot in time and can be raised or lowered by management(Nambiar 1999; O’Hehir & Nambiar 2010; Nambiar &Harwood 2014). What is essential is that the foundationsfor sustainability — the productive capacity of the naturalresource base of soil, available water and landscape — isprotected and continually improved, so that the system cansupport the soil-based requirements of diverse species andtheir productivity (Nambiar 1996; Powers 1999; Nambiar &Sands 2013). Ideally, a decision to change species, or toplant more than one species, should be a pre-planned andinformed response to achieve sustainability in the sameway that managers change to improved genotypes withina species, and adopt site and stand management practicesin response to constraints on production, changes in mar-ket and product value. Short-rotation forestry in the tropicsand subtropics provides regular and frequent opportunitiesto implement such changes.

The single-species-dominant strategy of planting of A.mangium in large, contiguous estates has not been a pathto sustainable forestry for Indonesia. Similarly, with euca-lypts, lessons have been learned about the high risk fromplanting too few clones; in one case, leading to failure inlarge areas in Riau, Sumatra as a single fast-growing eucalyptclone succumbed to Botryosphaeria disease (Harwood &Nambiar 2014a). A species change was implemented in the1990s in central Vietnam after eucalypt plantations (mainly E.camaldulensis) were destroyed by leaf blight disease(Cylindrocladium quinqueseptatum Boedijn & Reitsma)(Booth et al. 2000) and had to be replaced by A. mangiumand acacia hybrids.

Climate change is poised to bring not only ongoingchanges to growing conditions but more frequent extremeevents which would impact on plantation forestry in diverseecosystems (Meason & Mason 2014; Battaglia & Bruce 2017).A recent scenario analysis suggests that the predictedchanges in the temperature over the medium to long termwould influence the suitability of E. pellita in Sumatra and E.urophylla × E. grandis W. Hill ex Maiden hybrid in southernChina (Booth et al. 2017). Eucalypts are vulnerable to attackby a number of insect, fungal and bacterial pathogens(Wingfield et al. 2011; Wingfield et al. 2016). The humid-equatorial climate provides little or no seasonal check topathogens, which may aggravate biotic risks. Beyond thechange that is underway, Indonesian plantations may faceother ecological threats forcing further change of species onboth mineral soils and peat ecosystems. Informed responsesto these challenges would require strong commitment toholistic and sustainable ecosystem management and moreflexible and robust deployable options for germplasm.

Eucalyptus pellita is native to tropical northernQueensland, Papua New Guinea and the adjacent Papua

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Province of Indonesia, where its natural habitat is at themargins of lowland tropical rainforest (Harwood 1998). Asshown in Fig. 1, areas where E. pellita has replaced A. man-gium are within 5° 0’S–5° 0ʹ N of the equator, characterisedby humid lowland equatorial climates. There are over 20million ha of eucalypt plantations worldwide, but mostly intemperate, subtropical and seasonally dry tropical environ-ments. Eucalypt species and hybrids adapted to the season-ally dry lowland tropics such as E. camaldulensis Dehnh., E.urophylla S.T. Blake and E. urophylla × E. grandis hybridstypically succumb to attack by leaf blight diseases in thehumid lowland tropics. Provenances of E. pellita from PapuaNew Guinea and Papua, Indonesia, which are better adaptedto lowland humid equatorial environments than these othertropical eucalypt species (Harwood et al. 1997) first becameavailable for international evaluation in the late 1980s, andthe first plantations in South-East Asia based on these pro-venances were established in the late 1990s, so there is littleexperience with them beyond the first rotation. Eucalyptuspellita and related hybrids offer the best available option forSumatra to face the current challenge, on the basis of theirpotential growth rates and adaptability. Pulp mills whichwere processing acacia wood are already pulping eucalypts.

Maintaining and improving plantation productivity

In this section we review and discuss the main drivers ofproductivity and the integrated management requiredfor realising productivity gains in new E. pellita planta-tions. Where relevant, comparison is made with A. man-gium and what can be learned from previous experience.

There is very limited publicly available information tocompare the rates of production for A. mangium and E.pellita in Sumatra. In Riau, the inventory from first rota-tion eucalypts showed a mean MAI of 15–17 m3 ha−1 y−1

with high spatial variability (CV of plots 57–72%) andsome eucalypt clones, despite their early promise, faileddue to disease (Harwood & Nambiar 2014a). For compar-ison, E. urophylla × E. grandis hybrid in different subre-gions of southern China grew at average rates of16–28 m3 ha−1 y−1 (Harwood & Nambiar 2014a). OnUltisols in the Riau region, in a comparison of growthin matched, adjacent plots which previously had twosuccessive rotations of A. mangium, volume growth ofE. pellita × E. grandis hybrid at age two years was sig-nificantly lower than A. mangium (Siregar 2017). At agefive years, close to harvest, acacia standing volumesacross three fertiliser treatments ranged from 138 to165 m3 ha−1, and those for eucalypts from 116 to 125 m-3 ha−1, despite the survival of acacia being lower (61–76%) than eucalypts (70–83%) (Siregar 2017). In compara-tive experiments, with improved genotypes and goodmanagement at ages ranging from three to six years A.mangium gave MAI 42.2 m3 ha−1 y−1 (SE 2.9 m3 ha−1 y−1,n = 8 stands) compared to 39.6 m3 ha−1 y−1 (SE 5.9 m-3 ha−1 y−1, n = 5 stands) for E. pellita (Mendham et al.2015). It is too early to know how trends in productivityand sustainability of E. pellita will unfold in this environ-ment. However, indications are that it is growing at ratessubstantially lower than A. mangium at the same sites.There are, however, a number of pathways that can leadto higher productivity.

Genetics and breeding: prospects and priorities

Continuous genetic improvement with appropriate traitselection has played a major part in the success of planta-tions. In Brazil, breeding and deployment of interspecificeucalypt hybrids incorporating E. urophylla and E. pellitahas improved tolerance to a range of leaf and stem diseasesand productivity (Guimaraes et al. 2010; Dehon et al. 2013).In South Africa, large areas first planted to E. grandis werereplaced with more disease-tolerant hybrids of E. urophylla ×E. grandis (Morris 2008). Interspecific hybrids (P. caribaeaMorelet × P. elliotti Englem.) have extended the plantablerange, and improved wind-firmness and productivity of sub-tropical pines in Australia (Kain et al. 2016). Improved Acaciaspecies and hybrids are also productive in a range of envir-onments in Vietnam (Harwood & Nambiar 2014a).

Recent developments in genetic improvement strategiesfor fast-growing, short-rotation Acacia (Harwood et al. 2015)and Eucalyptus (Dehon et al. 2013; Harwood 2014) providemethods to improve disease and pest tolerance and adapt-ability to changing climate. It is useful conceptually first toseparately consider breeding (the creation of new varietiesthat are genetically superior over previous varieties), anddeployment (the mass propagation of improved varietiesproduced by breeding), and then ensure that they areintegrated.

BreedingSince the 1990s, A. mangium and E. pellita have been bred aspure species in Indonesia by identifying the best sets ofnatural provenances (in terms of adaptation to site, growthrate and pest and disease resistance), and then assembling abreeding population, ideally incorporating at least 100 unre-lated families from superior provenances, from which seedorchards are developed. Some companies and governmentagencies now obtain seed from second-generation seedorchards of these two species. Genetic gain, measured asincrease in wood volume per hectare at harvest, has seldombeen demonstrated (Harwood & Nambiar 2014b), butincreases of 10–20% over the starting point (the best naturalprovenances) is a realistic expectation from second-genera-tion seed orchards using this approach.

Genetic improvement in disease tolerance, beyond thatof the selected natural provenances, is hard to deliverthrough seed orchards because selection intensity is nothigh, and specific gene combinations that may impart toler-ance to selected individual trees are not passed on in full tothe next generation. Two linked approaches applicable toboth acacia and eucalypts are therefore recommended(Dehon et al. 2013): clonal propagation (enabling captureof non-additive as well as additive gain in disease toleranceand other important traits) and interspecific hybridisation(enabling combination of complementary traits from twoor more closely related species).

Acacia mangium has unusually low genetic diversity com-pared with other forest tree species, as revealed by molecu-lar assays (Son et al. 2016). So far little genetic variation intolerance to Ceratocystis (Brawner et al. 2015) andGanoderma root rot (Barry et al. 2004) has been found.Preliminary testing in Vietnam has shown a range of genetictolerance to Ceratocystis within A. auriculiformis A. Cunn. exBenth. and acacia hybrids but no tolerance within A. man-gium (Kien et al. 2017). This raises the prospect of

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developing disease-tolerant acacia hybrid clones. Advanced-generation hybrid breeding from a broad base of hybridgenotypes (Kien et al. 2017) and polyploid breeding (Griffinet al. 2015) could contribute to production of hybrids thatcombine the best attributes of both parent species.

Eucalyptus pellita is tolerant to many of the serious pestsand diseases prevalent in the lowland humid tropics(Harwood 1998; Guimaraes et al. 2010), although it is notfully tolerant to Ganoderma and Ceratocystis. Interspecifichybridisation with other tropical species including E. brassi-ana S.T. Blake, E. deglupta Blume, E. grandis, E. tereticornisSm. and E. urophylla may confer additional vigour andimproved wind-firmness not readily achievable by breedingwithin E. pellita. Complex hybrids incorporating much of thegenome of E. pellita while also bringing desirable traits fromtwo or more additional species have been developed inBrazil (Resende & Assis 2008). This approach widens thegenetic base for creating new varieties, facilitating therepackaging of the most favourable gene variants for tar-geted traits from several species into individual clones,rather than having to choose among individual species andbi-parental hybrids.

DeploymentPerformance of improved varieties or individual genotypesmust be confirmed by rigorous testing in the plantationenvironments, and then the best performers multiplied forplanting. Simple seed-based strategies for mass-productionof seedlings (family-pedigreed seedling seed orchards andunpedigreed seed production areas) have served the initialrotations of A. crassicarpa, A. mangium and E. pellita planta-tions in Indonesia.

Because of ageing effects, it is not practical to mass-propagate clones of A. mangium and A. crassicarpa for plan-tations, whereas this can be done readily for A. auriculiformisand many clones of hybrids between A. mangium and A.auriculiformis (Harwood et al. 2015). Eucalyptus pellita and itsinterspecific hybrids are easy to mass-propagate for clonalforestry (Dehon et al. 2013), and this is now done inIndonesia.

Integrating breeding and deploymentGiven the serious losses to diseases, breeding of both aca-cias and eucalypts should give strong selection weight onincreasing the tolerance to diseases and pests (Nambiar &Harwood 2014; Nambiar et al. 2015). Ideally, new tolerantvarieties should be available for prompt release as threatsemerge (Wingfield et al. 2016). This is best achieved bystrategies that combine clonal testing (which enables thetolerance of individual genotypes to be more accuratelyassessed by exposure of each genotype to pathogens inmultiple locations) and clonal deployment, which enablesthe most tolerant genotypes, including interspecific hybrids,to be deployed as clones. The best clones are tested inten-sively for growth rate, tolerance to major abiotic environ-mental stresses, pests and pathogens and ease ofpropagation. Individual clones may be planted commerciallyfor only about five years, after which their use is scaled downand they are replaced by new ones (Dehon et al. 2013). Atthe same time, a broad breeding base must be maintainedto secure the genetic diversity needed for breeding to tacklenew problems as they emerge.

Managing pests and diseases

Control of pests and diseases using chemicals is seldompracticed operationally in forestry, for both environmentaland economic reasons. For some insect pests, which oftenreach epidemic proportions in exotic environments in theabsence of natural predators or parasites, biological controlshave been successful. For example, the eucalypt gall waspLeptocybe invasa Fisher & Lasalle, has been managed bybiocontrol in a number of countries, with varying degreesof success (Kim et al. 2008). Introduction of antagonistic soilfungi to the root zone have shown some promise for reduc-tion of Ganoderma root rot in A. mangium (Mohammed et al.2014), but this work is at an early stage.

Tree breeding to increase tolerance to pests and diseasesis the most effective strategy to reduce their impact.However, breeding is neither easy nor a panacea, and thevalue of improved genotypes can be realised only when theyare used as part of an integrated management strategy(Nambiar et al. 2015). In addition, effective forest healthsurveillance, proactive response to outbreaks, rigorousadherence to international and local quarantine regulationsand investment into the development and deployment ofseveral species are all key aspects for managing risk.

The large area of contiguous single-species plantationestates in the landscape in the humid tropics ofIndonesia is highly conducive for the buildup and spreadof insects and diseases. By contrast, in Vietnam, acaciaplantations are dispersed in small units across the land-scape among land uses including fields of rice, cassavaand tree crops such as rubber, eucalyptus, cashew andfruit trees, seldom bordering natural forests. Such spa-tially dispersed layout and a longer and more intenseannual dry season probably reduce the buildup andrate of spread of pests and diseases. However, recentobservations show that these landscapes are changing,for example in central Vietnam where many thousands ofholdings owned by individual small to medium growersare coalescing into contiguous areas of short-rotationacacia hybrid plantations. A chequer-board layout (at anoperational scale) of stands of two or more species, orgenetically distant sets of hybrid clones belonging todifferent genera (which differ substantially in theirgenetic profile and have contrasting tolerance to pestsand diseases), may help reduce pest and disease buildup. Rotational cropping of different species or hybridclone sets could also play a role in the future. For eval-uating any of these approaches the imperative is achange in our thinking: rather than species selectionleading to planting of a single species, because of itsproductivity and simplicity, managers may have toforgo some immediate productivity advantage and planttwo or more species and/or unrelated clone sets in rele-vant scale units across a landscape. There is a strong casefor empirical testing and developing of one or more ofthe above approaches in Indonesia.

Site management

The earlier R&D on site and stand management from harvestto replanting and early establishment provided manage-ment guidelines, protocols and technology for acacia(Hardiyanto & Nambiar 2014; Nambiar & Harwood 2014;

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Mendham et al. 2015) which are being adapted to eucalyptsites. This include conserving site resources by retaininglitter and slash and low-impact management.

Some managers consider that past operations have com-pacted soil in many areas and practice deep ripping to alle-viate compaction along the planting rows. However, there hasbeen very little experimental work to test the prevalence ofcompaction as a constraint on tree growth, or to demonstratethe benefit of deep soil ripping. Soil compaction is largelyavoidable especially when low-impact harvest and inter-rota-tion management are adopted. There may be some sites andoperations (e.g. wet weather whole tree harvest with indiscri-minate machine passes on soils with heavy texture) wheresoils are compacted. Given the common perception by man-agers that eucalypts are ‘more sensitive’ to sites and compac-tion than acacias and the cost of ripping, a systematicevaluation of this issue would be profitable.

Vegetation managementWeed control in eucalypt plantations is one of the mostcommon problems identified by managers (Table 1). Someconsider it as the defining operational problem. Unlike A.mangium which closes canopy within 1–2 years, eucalypts ingeneral seldom develop a dense crown and have an opencanopy even on sites with good growth rates. Inadequateweed control leading to water deficit may be a commonreason for low growth rates and mortality in the early ages,and this could be more severe in dry seasons and on shallowsoils. In such cases, there are already examples of stand fail-ure, aggravated by mis-steps in operational planning, the sizeof the areas to be treated and the shortage of skilled labour.In contrast, some managers use high intensity herbicide appli-cation aiming for zero weeds, although there is no evidencethat eucalypts or any other species require bare earth at anystage during stand development, nor is continuous exposureof bare soil a desirable outcome in the humid tropics.

Vegetation management for eucalypts warrants greaterattention to operational detail than is required for acacia,but enough is known about the mechanisms underpinningcompetition between vegetation and trees with age of standand the guiding principles for its management. Key areas fordevelopment include:

(1) development of judicious, evidence-based, weed con-trol practices

(2) mechanisation adopted to supplement manual opera-tions on amenable terrain

(3) investment in training and retaining skilled-motivatedlabour with due attention to safe use of herbicides (andavoid health risks) and increasing labour productivity.

Significant further progress in these areas is possible withinthree years with modest investments.

Survival and stockingSurvival of trees to harvest is a predominant stand attri-bute that determines volume production in both A. man-gium and E. pellita. For E. pellita, Harwood and Nambiar(2014a) found a positive relationship between stocking atpre-harvest inventory and growth rates across hundreds ofplots/sites in Riau. Typically, trees die throughout therotation as a result of both biotic and abiotic stresses.Our field observations and several unpublished accounts

confirm low survival rates as a significant issue for produc-tion. Even in experiments, mortality ranges from 30% to40%. While mortality in A. mangium has been aggravatedby diseases, it is also high in eucalypts and, as yet, is notwell-explained. This is an area requiring systematic experi-mental studies and analysis of inventory data. Final stocksurvival is a critical factor in deciding options for coppicemanagement.

Coppice managementCoppice management is an option for eucalypts, unlikeacacias. With control of re-sprouting and competing vegeta-tion, coppicing is practiced in countries including Brazil,China and South Africa to reduce costs of replanting.Genetics, site fertility, available water and stocking interactin producing the yield in the second rotation. Coppicingbeyond the second rotation is rare in commercial eucalyptforestry because of declining survival and growth rates.Whether to plant the latest improved germplasm or retainthe previous stock to save on replanting cost requires carefulevaluation. Resorting to coppice rotation is not a desirablepractice unless stands have been planted with suitablegermplasm and coppice management protocols are well-developed. There is a clear need for research on coppicemanagement under Indonesian conditions.

Water and nutrient management

WaterPlant available water has strong influence on growth rates oftrees. For example, MAI of eucalypts in Brazil, decreasedsignificantly and linearly from 50 m3 ha−1 y−1 at zero milli-metres water deficit (an estimate based on rainfall, evapora-tion and soil storage) to about 30 m3 ha−1 y−1 as the deficitincreased to 250 mm (Gonçalves et al. 2017).

Fast-growing tree plantations in general are expected touse more water than slower growing ones. White et al.(2016) suggested that based on climate wetness index(CWI) or the ratio of rainfall to potential evaporation, anygiven site or location could be conceptually allocated to oneof three categories of water balance. These are: (1) thosesites where there is a significant surplus of water on anannual basis (with a CWI greater than about 1.5), wheretree growth is not strongly related to current rainfall, andcatchment water yield is not substantially affected by theland use, (2) those sites where CWI is less than about 0.5,which are dry landscapes where water yield is also generallylittle influenced by land use, and tree growth rates are alsolow, and (3) those sites in the middle range of availablewater with a CWI between about 0.5 and 1.5, where treegrowth is related to rainfall, and land use has an influence onwater use and water yield. Much of the major plantationgrowing regions in Indonesia, including those in Sumatraand Kalimantan, are in Category 1. Parts of South Sumatrahave a distinct dry period which may extend to 2–3 monthsand a CWI of 2.5. In a study on water use at four sites by 2–3-year-old A. mangium and E. pellita, Hardie et al. (2018) foundno differences in soil water depletion among species orfertiliser treatments.

Studies on eucalypt plantations in a subtropical environ-ment in Brazil (Almeida et al. 2016) identified managementoptions for balancing production and water yields in thelandscape and demonstrated methods and tools for

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evaluating them. Given the increasing importance of avail-able water to a range of stakeholders, it is advisable toevaluate the potential impacts of management on catch-ment water yield and quality in plantations in selectedIndonesian landscapes.

NutrientsApplication of fertilisers containing one or more nutrientsimproves productivity of eucalypts under a range of soilsand growing conditions. Responses to fertilisers are highlydependent on management practices (notably weed controland organic matter management during the inter-rotationphase), available water, and absence of growth limitinglevels of pests and diseases, and in some cases, genotypes.Increase in productivity of eucalypts by integrated manage-ment practices including fertiliser application ranged from12% to 256% in a network study in the subtropics andtropics (Nambiar & Harwood 2014). However, application ofhigh rates and frequency of fertilisers without sound evi-dence is not uncommon, as observed in China (Harwood &Nambiar 2014b) and in Sumatra.

NitrogenNitrogen supply needs to be well-managed in most planta-tion systems especially with eucalypts and pines. Acacia is anN-fixing genus. In Sumatra, using improved genotypes, highdoses of P fertiliser and good weed control, N fixation rateby A. mangium was about 200 kg N ha−1 during the first18 months of growth (Wibisono et al. 2015). Similarly, Huonget al. (2015) found increases in total soil N (0–10 cm depth)ranging from 450 to 820 kg N ha−1 depending on sitemanagement practices under a second-rotation A. auriculi-formis plantation in South Vietnam, measured over the rota-tion period of six years. This N increase is only partlyattributable to N fixation, as it would have been augmentedby soil N cycling, including return from decomposing litterand slash.

Acacia mangium plantations would have built up soil N inareas now being planted with eucalypts, and accordingly noresponses to N application in eucalypts plantations havebeen found in areas where eucalypts have replaced A. man-gium (Mendham et al. 2015). However, N availability to treesis likely to decline under successive rotations of Eucalyptusboth through N export in harvests (Nambiar & Harwood2014) and changes in soil organic matter as found under E.globulus in Australia (Mendham et al. 2004). Furthermore,unlike P, N in fertilisers (e.g. urea) is highly vulnerable toboth volatilisation and leaching losses, especially in humidtropical environments. Therefore, systematic research tounderstand and manage N dynamics and the N economy isan important area for research underpinning eucalyptproductivity.

PhosphorusApplication of a modest dose of P fertiliser has improvedearly growth of A. mangium in Indonesia (Mendham et al.2017). Similar responses have been found in A. auriculiformisin South Vietnam (Huong et al. 2015), and Acacia hybrid incentral Vietnam (Harwood et al. 2017). However, suchresponses have provided little or no increase in woodvolume at harvest. Huong et al. (2015) with A. auriculiformisin Vietnam, and Hardiyanto and Nambiar (2014) with A.mangium in South Sumatra, found a decline in extractable

soil P over the course of a rotation. Early results withEucalyptus in Sumatra suggest that application of P at estab-lishment provides an initial growth response (Mendhamet al. 2015; E. B. Hardiyanto, pers. comm.) even at siteswhich had received P in 2–3 previous rotations. Until newexperimental results are available it would be prudent tocontinue the rates of application (10 kg P ha−1) used foracacia.

CationsCations are taken up by fast-growing short-rotation Acaciaand Eucalyptus plantations in relatively large quantities(Mendham et al. 2004; Nambiar & Kallio 2008; Nambiar &Harwood 2014). Growth responses to K or Ca have not beenfound in acacia or eucalypt plantations in Sumatra(Mendham et al. 2015). However, the export of cationsthrough multiple harvests may deplete the soil pools ofcations. For eucalypts in Brazil, K deficiency became morecommon after the third rotation (Gonçalves et al. 2008).There is little detailed information on the rates of removalof nutrients, including cations, by eucalypt plantations inIndonesia and this needs addressing. Results from a networkof experiments on short rotations of several species and sitesin the subtropics and tropics showed that if harvesting andsite management practices during the inter-rotation phaseconserved site resources and modest levels of nutrients areadded as fertilisers, as needed, organic matter and soil nutri-ent levels can be maintained over successive rotations(Nambiar 2008; Nambiar & Harwood 2014).

‘R&D-Operation gap’ and management priorities

In Indonesian companies, there is a commonly perceived‘R&D-Operation gap’ as the large difference between thestanding timber production in experiments in well-managedsmall plots and that achieved in operational plantations. Allmajor companies maintain reasonably stable R&D units, insome cases with staff having specific disciplinary skills andgood facilities. They also have ready access to operationalstaff and field sites. These units provide improved germ-plasm, management recommendations and technical ser-vices and are the conduits for external collaborations. So,what are the issues underlying this perceived gap? This is amatter of importance which requires objective and thought-ful, company-specific analysis. We offer some overarchingsuggestions here.

Productivity gaps can be examined in terms of differencein yield in the descending order (1) potential productivity —achievable when a well-adapted genotype is grown underconditions when light, water, and nutrients are in abun-dance and the plantations are largely free of stresses fromweeds, diseases and pests, and climatic extremes, (2) practi-cally achievable (exploitable) production — represented bygrowth rates and volumes at harvest in experiments, forexample the MAI of 48 m3 ha−1 y−1 (336 m3 ha−1 at ageseven years) for A. mangium (Hardiyanto & Nambiar 2014),and (3) realised productivity — as measured by standinginventory in operational units or harvested wood deliveredto the mill door which tends to be variable and much lower(11–35 m3 ha−1 y−1) than in the experiments (Harwood &Nambiar 2014a). For management decisions, including rota-tion-length, growth rates measured in local experimentsrepresenting diverse sites and times should be the base

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line of interest rather than potential productivity. Worldwideexperience is that productivity increases on a sustainablebasis from a particular land base have in most cases beenachieved by steady, incremental steps and not by big leaps(Morris 2008; Gonçalves et al. 2013).

For an objective analysis, it is necessary to examine thevalidity of such yield gaps in quantitative terms then identifythe sources and points of potential dysfunctions that mayoccur while translating R&D outcomes, and in the quality ofoperational steps over the rotation. We have observed thatthe mismatch between the expectation and reality and theabsence of analysis of the reasons for this mismatch areprompting short-sighted management responses. For exam-ple, when the pulp price is high, there is a rush to increaseproduction to reap the benefit. This leads to harvesting atvery short rotations and overcutting, which disrupts ongoingplanning and operations and threatens sustainable woodsupply. It also drives a propensity to intensify practicesexpected to deliver more growth, such as multiple applica-tions of fertilisers and herbicides, without reliable evidence.Anxiety about wood shortfalls can cause unhelpful alloca-tions of blame about the causes and who is responsible.Experimental sites are usually selected with a potential biastowards increasing the chance of success and can seldomadequately represent the spectrum of spatial variation interrain, soil, available water and quality of operationsencountered across the landscape. This may explain someof the mismatch between yields in experiments versus thosein operational inventory.

Information from sound yield gap analysis can inform (1)decisions on setting R&D priorities and the balance betweenstrategic and immediate problem-solving work, (2) invest-ments in relevant technology transfer and training, (3) howresearch projects are designed and implemented with dueconsideration to scaling up the findings and operationalfeasibility and (4) upfront design of impact pathways as anintegral part of applied research.

Table 1 summarises managers’ evaluation scores on therelative importance and feasibility for achieving effectivenessof all operations over a full rotation. Most operations, includ-ing nursery production, planting and fertiliser application,were seen as being readily feasible for E. pellita, being thesame as or only slightly harder than for A. mangium.Maintaining the quality of harvesting and site preparationfor the next rotation were seen as easy tasks for E. pellita butless so for A. crassicarpa. Weed control was identified as acritical issue but also a major feasibility problem for E. pellita.Failures in timely and effective application of weed controldue to labour shortage, contract failures or planning wereobvious in our visits to some units. The last two issues inTable 1, operational effectiveness and fire management,stood out as the most critical issues in all forums. Thedominant constraint identified in dealing with most, if notall, these issues was around people: labour availability, moti-vation and retention. The constraints highlighted includeddiscontent, labour shortage, lack of skills, poor wages, healthand reliability and the performance of contractors.

The responses to the second question (allocation ofadditional resources to improve operations and impacts)clearly reflected the nature of the challenges highlightedin Table 1. Because most responses converged substantiallyand unambiguously to a common solution in all threeforums, details of responses are not presented here. The

core point was that most, if not all, managers would typi-cally spend 70–100% of the additional funds to pay higherwages to workers, train and retain them and supervisors ‘toimprove their quality, skills and retention’. Some managerswould focus on improving stock survival and to that end,they would direct ‘100% effort’ to encourage workers forgood planting and weed control. There were some differ-ences of opinion on the proportional share of the reward tobe directed to labourers and supervisors. Surprisingly, man-agement of pests and diseases did not rank high, althoughit featured as a problem in Table 1 and was recognised as ahigh-risk area in discussion. That may be because it isthought to be beyond managers’ control and to be mana-ged centrally. Mechanisation was suggested as a partialsolution, especially for herbicide application, but seniormanagers cautioned that mechanisation should avoid joblosses and community anguish, highlighting the balancerequired between the problem of managers to find willingworkers and the need to be caring about employment forlocal communities.

Companies conduct internal audits of operational out-comes against set targets. Outcomes from audits areused to regulate the payment to contractors for workdone. Concerns were aired about the reliability andappropriateness of threshold values and targets used tojudge pass or fail in this process. Auditing may be auseful step but penalising those who already have lowjob security and wages, may be at best, a band-aid solu-tion, and at worst, grounds for more labour losses,resentment and agitations.

There was unanimous agreement among managers in allforums, field visits and private discussions about the poten-tial benefits that would flow by improving the wages andworking conditions of workers and supervisors. It was sug-gested at one forum that an immediate 25–30% increase indaily wages to workers and supervisors would be good startfor achieving better outcomes.

Research and development directions

We do not provide here a catalogue of all issues identifiedin the preceding sections. This is partly because the relativeimportance of some of the problems are best examined inthe context of the operations of a particular company (thatis outside the remit of this paper) and all challenges do notmanifest equally in all organisations. From the discussionson sections on managing productivity and the ‘R&D-Operations gap’, one can deduce areas for scaling upresearch efforts (e.g. judicious weed management, improv-ing survival and coppice management) and areas suitablefor downsizing (e.g. fertiliser-rate, form and number ofapplications). We identify below some broadly applicablestrategic and overarching issues, building on earlier analy-sis (Harwood & Nambiar 2014b; Mendham et al. 2015;Nambiar et al. 2015).

Transition from single-species to multiple-speciesplantation landscape

The total dependence on any one species planted in very largeareas, as in the past, is not a sound business model for thefuture. Changes to improved varieties within species and inter-specific hybrids are common practices in plantation forestry.

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For a sustainable future industry should develop a set ofspecies/hybrids-in-waiting ready for deployment, togetherwith new plantation designs and integrated managementpractices. To increase flexibility for risk management, includingadapting to climate change, planting multiple taxa, either inrotation or in a mosaic of blocks in discrete management units,need to be studied. When the need for further change arises, itcan be more strategically managed without the emergencypressures faced in recent years.

Understanding productivity for management

In short-rotation forestry in South-East Asia, pre-harvest inven-tory data is largely treated as one-time stock take and littlemore (Harwood & Nambiar 2014b). A high degree of error ininventory data is a common, but poorly addressed problem insome companies. Consequently, there is a lack of coherentknowledge on reliable long-term trends in production basedon systematic pre-harvest inventory, including fromPermanent Sample Plots with relevant supporting data(Harwood & Nambiar 2014b). Despite investments in soil sur-veys, maps and descriptions, there is only a weak understand-ing of how terrain and soil properties are related to growth.Consequently, there is little understanding of what drives thehigh degree of spatial variation in productivity even withinmanagement units, without which, developing site-specificmanagement recommendations and precision forestry wouldremain as an elusive goal. Accurate and readily retrievableinventory which can be linked to relevant bio-physical attri-butes, in space and time, is a bank of information central formanaging sustainable production and for assessing theimpacts of R&D outcomes (Morris 2008; O’Hehir & Nambiar2010; Harwood & Nambiar 2014b). Companies would benefitby strengthening their in-house capacity, including the skillsfor bio-physical interpretation of inventory, and by minimisingad hoc and fragmented dependency on short-term consultan-cies. It would be valuable to understand why the growth ratesof plantations in out-grower programs are far behind thoseobtained in adjacent company land because achieving higherproductivity and higher value may well be incentives for smallgrowers to join in partnerships.

Breeding and germplasm deployment for riskmanagement

Disease and pest problems are not going to be solved with asingle round of selection and deployment of a few ‘superclones’. Long-term planning and investment are required todevelop broader base populations and use them in breedingprograms which focus on improving disease and pest toler-ance. Indonesia would benefit by publishing the tree improve-ment strategies being followed by the companies, so that theycan be improved through peer review. There is much to begained from exchange of breeding populations to widen thegenetic base available to all companies, and joint testing ofselections in collaborative experiments. Such collaborationand resource sharing can also support dedicated diseasescreening facilities which can test the pathogen tolerance ofgermplasm available country-wide under controlled condi-tions. This approach has been successful in countries such asAustralia, Brazil, China, New Zealand and South Africa. Equallyimportant, as noted previously, is the need to build Indonesiancapability so that companies and the country can be less

reliant on expatriate consultants, which has often led toshort-term approaches and disruptive changes in strategy.

Intensive monitoring of biological risks, forecasting andpre-emptive responses

Systematically linking inventories of diseases and pests andproductivity will assist in evaluating the changing impact ofdifferent pathogens on production and enable responseactions and targeting traits for improvement. There is astrong case for collaboration and coordination of researchat the national level so that emerging major challenges arebrought into focus for the benefit of all and decisions onsound quarantine policies are developed and implemented.

Adaptive research for integrated management andreducing the yield gap

Planting of improved germplasm in itself will not deliverbetter yield, unless all operations before and after plantingare managed well. Company R&D groups develop and pro-vide Standard Operational Practices (SOPs) which managersstrive to apply operationally achieving varying degrees ofeffectiveness. These are reviewed and revised from time totime incorporating new research results and local experi-ence. While this is a path to continuous improvement,SOPs may not be sufficiently robust or spatially representa-tive to improve production when applied at large scales,given the variations and vagaries encountered from plantingto harvest. The greater the scale of operations and thepressure on meeting the targets for production the lessrepresentative SOPs may become as effective prescriptionsand the higher the chance of errors and operational failures.Problems are not solved by poorly tested practices such asrepeated fertiliser applications and ‘zero-weed’ targets —such intensive SOPs require labourers (already in scarcesupply) to walk each tree row 6–8 times over many thou-sands of hectares during the first few years of a rotation. Weknow of no case in Indonesia where the productivity gainsfrom planting improved genotypes and SOPs are validatedby pre-harvest operational inventory.

Adaptive research done in partnership between research-ers and managers is an approach through which the pre-scribed management practices can be scaled up at strategiclocations in sufficient scale, at prescribed times, to rehearseand revise the operational realities for synchronised deliveryof integrated practices and evaluate costs and benefits.Adaptive research can foster adaptive management (contin-uous learning by doing for researchers and managers). Inparticular, these approaches can help evaluation of impactsof R&D innovations and identify the next generation of R&Dprojects and their relative priorities. Improved and sustainedproductivity is achieved only by integrated management,including the application of a package of practices correctlyin space and time (see Table 1 for constraints). This is also apath to understanding and addressing the ‘R&D-Operationgap’ discussed earlier.

Building human capital and access to labour supply

The pulp and paper industry contributes to rural economy,employment, infrastructure and national revenue. Yet, for-estry seems to be the least attractive choice for workers in

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the local communities, despite the relatively high level ofunemployment and prevalence of poverty in rural Sumatra.There is a serious lack of reliable and coherent informationon the extent, trend and nature of employment in forestrysector, including plantation forestry and wood processing,changes in wages and conditions over time, gender balance,equity, transparent regulations on contract labour, andimportantly, a sound assessment of impacts of forestry busi-ness on rural economy, livelihood and poverty reduction,beyond generalities. Surprisingly, industry associations, aca-demics and various agencies participating in forestry seemhesitant to collect and analyse such information. When suchimportant information is missing negative perceptions anddoubts spread about the pursuit of holistic sustainability byforest industry. Commercial forestry can contribute more torural poverty reduction than other forest-related incomestreams, including payment for ecosystem services, REDD+and non-timber forest products (Nambiar 2015). The tradi-tional Corporate Social Responsibility (CSR) activities mayhave a role but they are not a substitute for dealing withthe specific problems on hand. Actions beyond CSR, basedon analysis of the type discussed earlier, are necessary tofoster and build community participation in the forestrysector in Indonesia. In that context, we concur with Duff(2017) that ‘An industry can be said to have gained a sociallicense to operate when it is viewed as a socially responsible,legitimate and trusted contributor to the host communityand to society more broadly.’Critical questions to be answered in this context include: doforestry enterprises provide paths for improving the lives ofpeople working in plantations, mills and related services?Are the lives of rural people being advanced, if so, by whatlevel and how can this be improved? The failure in buildinghuman capital in partnerships with community may well bea major cause of the labour problems highlighted by man-agers. For the resolution of that challenge, the factors whichdetermine the supply of and access to labour and its pro-ductivity should be identified. We urge that research on thedynamics of human capital should be a core and ongoingpart of the company R&D portfolio with appropriate skills(in-house or outsourced), in the same way management ofbio-physical issues of resource protection and productionare dealt with.

Conclusions

In the humid lowland tropics of Sumatra, Kalimantan andSabah, A. mangium plantations have suffered severelosses from Ganoderma root rot and Ceratocystis stem-wilt disease. They are being replaced with E. pellita andrelated hybrids in the most significant and rapid specieschange in the history of plantation forestry. The inci-dence of major pests and diseases attacking E. pellita,while current relatively low, will likely increase overtime. Early indications are that E. pellita is growing atlower rates than A. mangium and this will reduce futurewood supply from the land base on mineral soils, unlessproductivity is improved significantly. We did not explorethe sustainable production issues on peat ecosystemswhich also faces severe challenges. The ability of planta-tions to supply the current demands and the expectedincreased capacity of the extant pulp and paper industryis therefore a serious sustainability challenge.

The total dependence on any one species, as in the past,is unlikely to be a sustainable business model for the future.Wood production would be more secure for industries ifthey developed a set of taxa backed by a diverse array ofgermplasm as species/hybrids-in-waiting, ready for plantingwith new plantation designs and integrated managementpractices and thus greater flexibility for risk management.

There is only a very limited knowledge of the limits toproduction in the humid-equatorial environments, terrainand soils, and the impacts of operational dysfunctions onestate-wide production. It is therefore important to set evi-dence-based targets of productivity. Unrealistic expectationsof faster growth rates and shorter time to harvest may leadto overzealous management practices that not only fail todeliver increased growth but add to the cost of productionand trigger adverse impacts on ecosystem processes.

There is clear scope for reordering R&D priorities andbetter targeting impact-focused and operationally feasibleoutcomes. This can be achieved if R&D investments are well-guided by a long-term plan for sustainable production, riskmanagement options and expected trajectory of industrygrowth and performance. The critical limiting path forimproving productivity on mineral soils currently is notnecessarily technical knowledge but implementation of inte-grated management prescriptions at operational scale andin time. Several of the current constraints are bound bycompany-specific issues and goals and are best addressedat that level and aided by systematic R&D impact evaluation.Therefore, investments in yield gap analysis coupled withwell-designed and systematically carried out adaptiveresearch would help the realisation of higher productivityin the short and medium term.

Quantitative research on human capital and dynamics inthe local rural landscape, including wages and conditions, isa high priority issue for the sector as a whole. Knowledgefrom such studies and commitments for systematically build-ing labour capital are vital for managing productivity in thefuture.

Indonesian companies suffer from a long-held, hesitantand negative culture of the value of collaboration amongthemselves for targeting what are clearly generic and pre-competitive industry-wide problems. Examples of mistrustare common, in our experience. There is only limited pub-lic-private, symbiotic partnership to support the pulp andpaper sector. Co-operative breeding, pest and disease sur-veillance and responses, and studies on dynamics of labourand contributions of forestry to rural development areamong the prime examples for potential private-public col-laboration. There are significant and continuing challengesfor the pulp and paper industries in Indonesia and some ofthese are best tackled by cooperation rather than competi-tion between companies.

Acknowledgements

We thank managers of Indonesian companies, P. T. Musi Hutan Persada(MHP) and Sinarmas Forestry, for sharing their valuable experience withus for this study. Dr E. B. Hardiyanto (Gadjah Mada University) providedthe data and a template for Figure 1, helped to find some Indonesiansources of information and guided fieldwork in South Sumatra. MrRianto Marlop (Sinarmas Forestry) and Mr Bambang (MHP) guided field-work and local organisation of regional forums. In Jakarata, Dr M. Brady(International Finance Corporation), Mr G. Golani (Sinarmas), Dr IrsayalYasman (APKI) and Mr Hardjono Arisman (Senior Forester) helped with

12 E. K. S. NAMBIAR ET AL.

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discussions. Mr Oliver Landsell of Hawkins Wright Inc. provided informa-tion from an unpublished report. Reviews of drafts by Drs G. Kile, R.Griffin and S. Roxburgh helped to improve the paper. Reviews by twoanonymous journal reviewers also were helpful.

Funding

This work was supported in part by the Australian Centre forInternational Agricultural Research.

Disclosure statement

None

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