Using Market Forces to Improve Rural Livelihoods and Conserve Smallholder Forests;

Lessons in Certification of Smallholder Community Forests

Subtitle

25th March 2010

Linking Business with Responsible Forest Management

The Forest Trust (TFT)

• A Non-profit company registered

in UK

• Started in 1999

• A Membership Organization

• Focus on Forest Industry & Trade

• Financed by Members & Donors

TFT Forest Partners(Forest Concessions &

Communities)

TFT Supplying Members

(Wood factory)

TFT Buying Members

(Retailer)

LEGEND

Financial Support

Advice, guidance, and technical support

Products

Purchase payment

External Funding Partners

Community Forest Program

Goal: To facilitate communities and smallholders managing forests for timber to:

• Implement international Best Management Practices for forest management,

• Achieve FSC Certification, and • Link to international markets paying a price

premium for certified wood.

Progress to dateExisting Community Forest Projects; 6 Worldwide• 3 in Indonesia• 1 in Laos• 1 in Vietnam• 1 in Brazil

In Scoping or Development

• 1 in China• 1 in Madagascar

Indonesia & Laos• Independent smallholders

planting high value wood (teak and mahogany) on private plots

• Agrarian households; agroforestry systems

• Wood planted on farmers’ own initiative

• Long history of cultivation of these species by smallholders

Vietnam

• Acacia plots planted on private smallholder land

• Part of government ‘greening’ initiative

• Government forest agency buying wood from smallholders

Brazil• Settlers (colonos) receiving

100 ha natural forest from government

• 80 ha to be managed as forest

• 20 ha for agriculture• Natural forest managed as a

contiguous unit; contracted to logging company MAFLOPS

How it got started; KHJL Case Study

• 2003: High demand for certified teak among garden furniture factories in Indonesia

• Exploration of teak sources in SE Sulawesi

SE Sulawesi; Konawe Selatan District

• Pre-existing program aimed at community management of state teak plantation

• Pre-existing social capital of a 36 villages organized into a cooperative

• Farmers growing teak on their private land• Local partner ‘JAUH’ (Jaringan Untuk Hutan)

• Build on the existing strengths, or social capital of the location in which you start a project

Approach• Facilitate farmers to agree on group guidelines and rules for

management• Empowerment through action-oriented trainings (such as

forest inventories, chain of custody, accounting, contract negotiation)

• Help with documentation• Bringing stakeholders together; farmers, government officials,

market actors• Pilot first, then scale up

Initial ChallengesLegality & Land Tenure

• Lack of land certificates

• Harvesting License Expensive & bureaucratic

• Unexpected Positive Impact

Solutions

• Used receipt for payment of land tax + letter from Head of Village

• Organized large number of farmers to spread out cost (>500)

• Dedicated cooperative staff to process license

• Short-term loan from TFT• Better engagement between

community members and government

• Increased understanding of the laws among farmers AND local officials

Complex Supply Chains

LEVEL 4

LEVEL 5

FIGURE 3. UD. SERBA ADA MAHOGANY CHAIN OF PRODUCTION

LEVEL 2

LEVEL 1

LEVEL 3

FACTORY

6 LOG YARDS

LARGE WOOD TRADERUD. SERBA ADA - BANYUMAS

(CENTRAL OFFICE)

5 SAWMILLS

B A K U L(small wood trader)

WOOD BUYER

F A R M E R

WO

OD

TR

AD

ER

SA

WN

TIM

BE

R

tens of thousands; throughout Java

10-25 small wood traders per medium traders; or approx. 2,300 people

Medium Wood traders 135 total; 50 permanent & 85 non-permanent

Large Wood trader owning multiple sawmills & log yards

Trends: Defining a Group Structure• 2 of 6 (KHJL & KOSTAJASA in

Indonesia) are cooperatives• 1 (PT Dipantara in Indonesia) is

an NGO-owned business• 2 (Vietnam & Laos) are co-

management structures between local government and local communities

• 1 is a logging company (Brazil)

KHJL elected

leadership

council

Cooperative’s All-

Member

Meeting

Village farme

r group

Members Membe

rs

Members

Hired Staff

; such

as accountant,

secretary &

forester

Market Linkage• Selling as a group to overcome middlemen• Calculating expenses per cubic meter• Contracting for transport & sawmill• Estimating time required• Negotiating a Sales Contract; down payments• Ensuring Chain of Custody was applied, and wood was 100%

legal

• Result: Price immediately increased by 50%

KHJL12 villages Assessed February 2005

FSC Certified!– 20 May 2005

2010 28 villages,; 750+ members; FSC certificate maintained

Benefits of Certification• Price Premium• Link with appropriate market;

(small volumes ok; commitment to FSC & CSR principles )

• Increased credibility in the eyes of government & market

• Increased access to information, & inclusion in national policy discussions

Replication of the ApproachJava Mahogany Program

• 2006 began program to certify mahogany smallholders in Kebumen, Central Java, based on demand from TFT member

• 2008 KOSTAJASA mahogany cooperative formed

• 2009 Achieved FSC Certification; 10 villages, 500+ members

Luang Prabang Teak Program; Laos

• 2007 Scoping Visit• 2008 Program Launch with

partners SIDA, JICA, WWF & Laos government

• 2009 first wood sales; formation of co-managed group structure (farmers & provincial government)

• Expected Certification 2010

Lao Cai District, Vietnam• Scoping in late 2007

• Signed MOU to work with the District Forest Department on group certification for surrounding smallholder acacia + government acacia plantations

• Delayed due to lagging market demand

Central Java Teak; Dipantara• NGO focused on empowerment

of smallholder forestry

• Now developed business largely owned by local communities; aimed at group certification and improving local prices

• Started 2007; expected certification 2010

Moving Forward• Developing a Smallholder Certification Handbook

with trainings for how other NGOs can facilitate similar projects; partner with TFT for market linkage

• Exploring possibilities of ‘community wood’ labels or FSC-Fairtrade

• Options to work with plywood factories

TFT Community Forest ProgramSustainable Forests, Improved Livelihoods, Good

Governance