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SHARING OF INFORMATION AND EXPERIENCES ON PRIVATE SECTOR SUCCESS STORIES IN SUSTAINABLE FOREST MANAGEMENT

Malaysia-ITTO Project Technical Report PD48/99 Rev.1(F,M)

EditorsB.C.Y. Freezailah,

H. Mohd Basri,M. I. Shaharuddin,

C. C. Chandrasekharan,S. E. Wilson and

I. Tomaselli

Jointly sponsored by

Forestry Department Peninsular Malaysia& International Tropical Timber Organisation (ITTO)


SHARING OF INFORMATION AND EXPERIENCES ON PRIVATE SECTOR SUCCESS STORIES IN SUSTAINABLE FOREST MANAGEMENT Malaysia-ITTO Project Technical Report PD48/99 Rev.1(F,M)



EditorsB.C.Y. Freezailah,

H. Mohd Basri,M. I. Shaharuddin,

C. C. Chandrasekharan,S. E. Wilson and

I. Tomaselli


Forestry Department Peninsular Malaysia& International Tropical Timber Organisation (ITTO)

© Forestry Department Peninsular MalaysiaSeptember 2004

All enquiries regarding this book should be forwarded to:

Director General of Forestry Forestry Department HeadquartersPeninsular MalaysiaJalan Sultan Salahuddin50660 Kuala LumpurMalaysia

Tel : 603 2698 8244Fax : 603 2692 5657Website : www.forestry.gov.my

Perpustakaan Negara Malaysia Cataloguing-in-Publication Data

Sharing of information and experience on private sector sucess Stories in sustainable forest management (Malaysia-ITTO project technical report; PD48/99 Rev.1(F,M) ISBN 983-9269-32-1 1. Sustainable forestry. 2. Forest Management. 3. Forest and Forestry. 634.9068

No part of this publication may be reproduced or transmitted in any formor by any means, whether mechanical or electronic including photocopyingand recording without the written consent of Forestry Department Peninsular Malaysia

Cover photo courtesy by Mr. Che Hashim H., Forestry Department Peninsular Malaysia

Designed & Printed in Malaysia byMouse Studio Sdn Bhd

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CONTENTS

CONTENTS VLIST OF TABLES VIABBREVIATIONS AND ACRONYMS VIIFOREWORD XEXECUTIVE SUMMARY XIII

1.0 BACKGROUND 1

1.1 THE CONTEXT 1 1.1.1 Objectives 1 1.1.2 Project Activities 1 1.1.3 Definitional Boundaries 1 a. Private Sector 1 b. Forest Management 1 c. Success Stories 2

1.2 CONCEPTUAL ASPECTS 2 1.2.1 Sustainability of Management 2 a. Sustainable Forest Management 2 b. Principle of Sustained Yield 3 c. Silvicultural System as a Forest Management Tool 3 d. Benefits and Costs of SFM 3 1.2.2 Sustainable Forestry Development – The Dynamic Dimension 4 1.2.3 Forest (Timber) Certification 5

1.3 SCOPE OF THE REPORT 6

2.0 METHODOLOGY AND OUTPUTS 6

2.1 ANALYSIS OF OVERALL FORESTRY SITUATION 6 2.1.1 Forest Ownership 6 a . Different Arrangements for Managing Forests 7 b. Private Sector Preferences 7 2.1.2 Forest Cover Details 8 a. Changes in Forest Area 8 b. Forest Degradation 9 c. Causes and Impacts of Deforestation and Forest Degradation 9 2.1.3 Current State of Forest Management 10 a. Community–Based Forest Management 10 2.1.4 Wood Production and Utilization 10 a. Logging Bans in Natural Forests 11 b. New Priority for Plantation Forestry 11 c. Trees Outside Forests 12 2.1.5 Situation of Forest Conservation 12 2.1.6 Forestry Outlook 12 2.1.7 Other Relevant Aspects 13

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2.2 FORESTRY SITUATION IN ITTO-PMCS 13 2.2.1 Socio-Economic Background 13 2.2.2 Important Aspects Relating to Forestry 14 a. Forest Resource Endowment 15 b. Forest Cover Change 16 c. Arrangements for Forest Management 16 d. Forest Conservation 16 e. Wood Production 17 f. Conservation Concessions 17

2.3 THE QUESTIONNAIRE SURVEY (Q500) 18 2.3.1 Responses 19 a. Reasons for the Poor Response 19 2.3.2 Analysis of Responses 20 a. Ownership and Tenure Types 21 b. Claims of Sustainable Forestry Practice 21 c. Integration of Forest Management with Processing Industries 21 d. Log Production 21 e. Management of NWFPs 22 f. Forest Services 22 g. Forest Management Planning 22 h. Systems of Silvicultural Management 23 i. Practice of Silvicultural Operations 23 j. Bio-Diversity Conservation 23 k. Social Issues and Contributions 23 l. Legal Violations 24 m. Research and Development 24 n. Certification for SFM 24 o. Important Lessons 25

2.4 PREPARATION OF CASE STUDIES (QS2) 25 2.4.1 Selection of the Cases 25 a. Characteristic Features of the Cases 26 2.4.2 Case Study Methodology 26

2.5 THE INTERNATIONAL CONFERENCE 28

3.0 MAJOR FINDINGS AND CRUCIAL ISSUES RELATING TO SFM 29

3.1 FINDINGS 29 3.1.1 Changes in Perception 30 3.1.2 Status and Dynamics of Forest Resource 30 3.1.3 Tenure and Ownership Situation 31 3.1.4 Institutional Arrangements 32 a. Policy and Legislation 32 b. Rules and Regulations 33 c. Institutions in Charge of Forests 33 d. Decentralisation 33 e. Civil Society Involvement 34 f. Management Information 34

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3.1.5 Natural Forest Management Framework 35 a. Forest Management Implementation 35 b. Cost Burden of Forest Certification 36 3.1.6 Wood Production and Utilisation 37 3.1.7 Non-wood Forest Products 37 3.1.8 Management of Forests for Protection 38 3.1.9 Socio-Economic Aspects 38 3.1.10 Scenarios for the future 39 3.1.11 Overall Assessment 40

3.2 ISSUES IN IMPLEMENTING SFM 41 3.2.1 Introduction 41 3.2.2 Governance Related Issues 41 a. Lack of Governance 41 b. Illegal Activities 41 c. Role of Stakeholders 41 d. Voluntary Compliance and Independent Surveillance 42 e. If You Cannot Measure it, You Cannot Manage it 42 f. Social Cost/Benefit Balancing 42 g. Inadequate Policy Instrumentation 42 h. Other Relevant Questions 42 3.2.3 Institutional Issues 43 a. Weaknesses of Institutional Structure 43 b. Need for Reforms 43 c. Inadequacies of Enforcement Agencies 43 d. Corruption in Public Administration 43 e. Lack of Reliable Information 43 f. Need for Rationalizing the Tenure System 44 g. Complexities of Decentralisation 44 h. Relevance of Global Legal Framework 44 i. Other Related Factors 44 3.2.4 Issues Related to Science and Technology 45 a. Technological Progress may be Unstoppable, but is Delayable 45 b. Forest Resource use and Ecosystem Response 45 c. Technology Gap or Ecology Gap? 45 d. To Reinvent the Wheel or to Turn the Wheel? 46 e. Difficulty to Access the Existing Technology 46 f. Other Related Aspects 46 3.2.4 Issues Related to Forest Utilisation and Trade 47 a. Competitive Advantage 47 b. Cost of Certification 47 c. Certification as a Market-based Instrument 47 d. Certification a Trade Barrier? 48 e. Illegal Logging, an Added Cost on Certification 48 f. Tropical Timber Trade, a Sunset Industry? 48 g. Low-value Use vs. Value-added Use 48 h. Waste Reduction and Promotion of LKS 48 3.2.6 Environmental Issues 48 a. Environmental Degradation 49 b. Protection Measures in Production Forests 49 c. Some Related Considerations and Questions 49

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3.2.7 Socio-economic Issues 49 a. Inadequacy of Social Concern and Commitment 50 b. Wastages in Harvesting and Processing 50 c. Lack of a Regular and Reasonable Flow of Income 50 d. Poverty of Resource Owners 50 e. Other Related Aspects and Questions 50 3.2.8 General and Over-arching Issues 51 a. Poverty and Macro-economic Instability 51 b. Forestry a Transitory Sector? 51 c. Re-defining Forestry 52 d. Inadequate Awareness and Appreciation 52 e. Myths and Realities 52 f. Need for Long-range Vision 52

4.0 CONCLUSIONS AND RECOMMENDATIONS 52

4.1 CONCLUSIONS 52

4.2 RECOMMENDATIONS 54 4.2.1 Addressed to the Companies 54 4.2.2 Addressed to the Tropical Timber Producing Countries 55 4.2.3 Addressed to the International Tropical Timber Organisation 57

5.0 REFERENCES 58

6.0 APPENDIX 62 Appendix 1. List of respondent companies & addresses of Q500 and QS2 survey 62 Appendix 2. Case study summaries 81

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LIST OF TABLES

Table 1. Regional distribution of forest area, 2000 8Table 2. Annual gross and net changes in forest area, 1990-2000. 9Table 3. Wood production, 2000 11Table 4. Socio-economic indicators of ITTO producer member countries 14Table 5. Forestry situation in the producing member countries of ITTO in year 2000 15Table 6. Wood production in ITTO producer member countries in 1992 and 2002 18Table 7. Q 500 – response rate 20Table 8. Companies selected for case study and presentation 26

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ABBREVIATIONS AND ACRONYMS

AAC Annual Allowable CutACA Annual Cutting AreaACT Amazon Co-operation TreatyAdat Traditional or Customary LawADB Asian Development Bank Anon AnonymousAPFD Andhra Pradesh Forest Department (in India)APU Annual Production UnitATFS American Tree Farm System SchemeATO African Timber OrganisationBNDES National Bank for Economic and Social Development, BrazilCBV CIKEL Brasil Verde SACDM Clean Development MechanismCERFLOR Brazilian Forest Certification SystemC & I Criteria & Indicators CIB Congolaise Industrielle du BoisCIFOR Centre for International Forestry Research (CGIAR), COC/CoC Chain of CustodyCum Cubic meterDBH/dbh Diameter at Breast HeightDENR Department of Environment and Natural Resources (of Philippines)EU European UnionFAO Food and Agriculture Organisation of the United NationsFD Forest DepartmentFDS Forest Department of SarawakFLAG Forest Law and GovernanceFMA Forest Management Agreement (in PNG)FMU Forest Management UnitFRA Forest Resource AssessmentFSC Forest Stewardship CouncilGDP Gross Domestic Product GNP Gross National ProductGS Growing StockGTZ German Technical Assistance AgencyHa/ha Hectare = 10,000 square metersHRD Human Resource DevelopmentIBAMA Instituto Brazileiro do Mioambiente e dos Recursos Naturalis RenovaveisIFMA Integrated/Industrial Forest Management Agreement of PhilippinesIOP Integrated Operations PlanITC or ITC Ltd. Indian Tobacco Company Limited (previously Imperial Tobacco Company)ITC-PSPD ITC Paperboards and Speciality Papers DivisionITTA International Tropical Timber AgreementITTO International Tropical Timber Organisation ITTO-PMC ITTO Producer Member CountryIUCN International Union for Conservation of Nature (and Natural Resources).JFM Joint Forest ManagementK Kina, Currency of PNGKg KilogrammeLEI Lembaga Ecolabel Indonesia (Indonesian Ecolabelling Institute)LKS Lesser known speciesM&E Monitoring and Evaluation

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MAI Mean Annual IncrementMDF Medium Density FiberboardMFP Minor Forest ProduceMP Madhya Pradesh State of India.MP-MFP-CFL Madhya Pradesh Minor Forest Produce Cooperative Federation Ltd. (Federation)MTCC Malaysian Timber Certification Councilmt Metric Ton (Tonne)NA/na Not availableNABARD National Bank for Agriculture and Rural Development, IndiaNGO Non-governmental Organizationns Not SignificantNWFP Non-wood Forest ProductsODA Official Development AssistanceODEF Office de Developpement et d’Exploitation des Forets of TogoPA Protected AreaPAGE Pilot Analysis of Global EcosystemPATECO Pacific Timber Export Corporation (in Philippines)PCCS Primary MFP Collector’s Co-operative Society (in MP, India)PEFC Pan European Forest CertificationPFA Public Forest AdministrationPMCs Producer Member CountriesPNG Papua New GuineaPNG-FA Papua New Guinea Forest AuthorityPPP Purchasing Power ParityPSP Permanent Sample PlotPT Perseorangan Terbatas (Limited Liability Company)Q500 Questionnaire Survey aiming for 500 responses – Stage 1 Activity of the ProjectQS2 Stage 2 Survey of Selected Cases, involving detailed company profiling and case studiesR&D Research and DevelopmentRAP FAO Regional Office for Asia and the PacificRFO Regional Forest OfficerRG Rougier Gabon in Haut-AbangaRIL Reduced Impact LoggingRM Ringgit, Malaysian CurrencyRp Rupiah, Indonesian CurrencyRs Rupees (INR), Indian CurrencySBK PT Sari Bumi Kusuma of IndonesiaSFM Sustainable Forest ManagementSGS Societe Generalte de Surveillance of SwitzerlandSPB Samling Plywood (Baramas) Sdn. Bhd.STP Samartex Timber & Plywood LtdTLA Timber Licence Agreement (of Philippines)TNC Transnational CorporationTP Timber Permittpa tonnes per annumTPA Totally Protected AreaTPTI Tebang Pilih Tanam Indonesia (Indonesian Selective Cutting and Planting System)TPTJ Tebang Pilih Tanam Jalur (Selective Cutting and Strip Planting System)TRF Tropical Rain ForestTSI Timber Stand ImprovementUN United NationsUNCED United Nations Conference on Environment and DevelopmentUN-CSD United Nations – Commission on Sustainable DevelopmentUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeUS$/USD United States Dollars

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VFP Vanimo Forest Products Pty LtdVTA Vanimo Timber AreaWCED World Commission on Environment and DevelopmentWCFSD World Commission on Forests and Sustainable DevelopmentWRI World Resources InstituteWWF World Wide Fund for Nature (and Nature Conservation)

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FOREWORD

Tropical deforestation continues unabated, estimated at 14.2 million hectares annually. And qualitatively, tropical forests suffer from various forms of degradation. The immense biodiversity in tropical forests that may ‘fuel’ exciting bio-industries to meet increasing human needs for food and medicines, is being depleted at an alarming rate. Loss of forest values for soil and water conservation must also be highlighted. Already, the lives and livelihoods of some 350 million of forest-dependent people in many tropical countries are adversely affected. Indeed Time Magazine had labelled planet earth as ‘endangered’. In view of the foregoing, the tropical forest development problematique, is high on the international agenda for action. The United Nations Conference on Environment and Development in 1992 and the World Summit on Sustainable Development in 2003 discussed these issues. The G-8 countries also had occasion to discuss problems of tropical forestry. In addition, there has been any number of conferences, meetings and consultations at various levels to combat tropical deforestation. Though opinion differs on various issues, everyone is united on the need to implement sustainable forest management (SFM). Indeed, the ITTO pioneered the formulation of criteria and indicators to assess SFM in addition to various guidelines, manuals etc. to promote its implementation and declared its Year 2000 objective. However, in spite of all these efforts and initiatives, results are meagre as indicated by the continuing deforestation and relatively small area of certified tropical forests. What is SFM? The ITTO defines SFM as ‘the process of managing permanent forestland to achieve one or more clearly specified objectives of management with regard to the production of a continuous flow of desired forest products and services without undue reduction in the inherent values and future productivity and without undue undesirable effects on the physical and social environment’. Therefore SFM is a process, an evolving process that is multifaceted with environmental, social and economic dimensions. Superimposed on this is the complexity of the tropical forest ecosystem which is further compounded with poverty and population pressures in many developing tropical countries. The difficulties and costs to embark upon, let alone achieve SFM, are obvious. Hence, the need to implement SFM and certification by phases. And compliance with legal requirements must be the starting point. The benefits of SFM go beyond the forest area concerned. Even beyond national boundaries spreading benefits globally. Thus, SFM of tropical forests is a development issue in tropical countries that has attracted cooperation and assistance between governments, producers and consumers, international organizations, civil society and the private sector in the ITTO forum. Success in the implementation of SFM undoubtedly depends on the understanding and cooperation of all stakeholders. Regretfully, the role and contribution of the private sector, which must share the burden of implementing SFM substantially has often been misunderstood and viewed with suspicion. Of course, like all other industries, the private sector in forestry has its share of black sheep but the commitment and efforts by the vast majority must not be lost upon us in the pursuit of SFM. Just as the ITTO recognises the role of civil society, it equally values the contribution of the private sector to achieve SFM through its Year 2000 Objective as enshrined in the International Tropical Timber Agreement, 1994. However, in the international dialogue, the voice of the private sector is not always heard. It is within the perspectives outlined above that Malaysia secured the assistance of the ITTO, thanks to the generosity of the Government of Japan, to implement project PD48/99 Rev. 1 (M, F) entitled ‘Sharing of Information and Experiences on Private Sector Success Stories in Sustainable Forest Management’ to enable the private sector to tell their story. The project undertook a global survey on the experiences of the private sector in the implementation of SFM focusing on the factors that promote and those that hinder SFM. To this end regional consultants for Africa, Asia Pacific and Latin America were commissioned to collect the necessary data and information to assess the situation. The methodology adopted and the stages of project implementation leading to the preparation and publication of this Technical Report include:

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• Analysis of the global situation by tropical regions through limited literature reviews• Collection of data from companies involved in forest management in ITTO producer member

countries through Questionnaire survey (Q500)• Study of selected cases (QS2) including field visits to identify operations to be show-cased• Preparation of regional reports• Convening an International Conference

The three-day International Conference was convened in Kuala Lumpur, Malaysia from 13 – 15 May 2004. It was well attended; 165 participants including 69 persons from overseas, from almost all ITTO producer member countries. Apart from the private sector, the International Conference was also well attended by members of civil society. Most overseas participants attended a one-day post-conference tour to the Matang Mangroves, which has been under sustainable management for 100 years, located some 300 km north-west of Kuala Lumpur. After an impressive keynote address, delivered by Mr. Jean-Jacques Landrot, President of the International Technical Association of Tropical Timber (ATIBT) the International Conference was structured into four sessions devoted to each of the three tropical regions with a concluding session which took the form of a panel discussion. Each regional session commenced with the regional report presented by the consultant concerned, followed by presentations of case-studies for the region; four for Africa; seven for Asia / Pacific and four for Latin America. These case studies were presented by representatives of the operations show-cased. During the panel discussion the conference heard viewpoints from the trade, civil society and concession holders on their operations to achieve SFM. The role of international organisations and the need for assistance was also presented. After the brief statements, a lively discussion took place between participants and members of the panel. The reviews undertaken, the results of Q500 and QS2 surveys, the field visits, the case studies presented and the panel discussion during the International Conference generated a wealth of very valuable data that formed the bases of this Technical Report. ITTO Project PD 48/99 Rev. 1(M,F) has been made possible and implemented with success through the generosity, dedication and efforts of so many too numerous to enumerate. But as Coordinator of this Project it is may pleasure to acknowledge with much gratitude the contributions of the following:

• The ITTO and in particular the Government of Japan• Dr. M. Sobral, Executive Director of the ITTO and his dedicated staff, Mr. B. Amha and Miss T.

Naho • Dato’ M. Y. Suboh, Deputy Director General, Ministry of Natural Resources and Environment,

Malaysia• Dato’ M. A. Abdul Rashid, Director General of Forestry, Peninsular Malaysia• Dato’ M. I. Shaharuddin, Deputy Director General of Forestry, Peninsular Malaysia• Dato’ M. Azahar, Director of Forestry, Perak State, Malaysia• Mr. H. Mohd. Basri, Assistant Project Coordinator• Dr. C. Chandrasekaran, Regional Consultant for Asia/Pacific who also prepared the draft of this

Report• Mr. E. Siisi-Wilson, Regional Consultant for Africa• Dr. I. Tomaselli, Regional Consultant for Latin-America/Caribbean • Mr. K. Kotari, Forestry Advisor, Japan International Cooperation Agency (JICA)• The Conference Secretariat, in particular Mr. Thai See Kiam, Mr. U. Razani, Mr. Y. M. Chin, Mr. A.

B. Kamruzaman and Mr. Y. H. Yap• Perak State Forest Department officers including Mr. N. M. Nik Mohd. Shah, Mr. I. Amir and Mr. K.

L. Lim• Conference Session Chairmen and Panellists, Mr. E. Mimbimi, Mr. R. B. McCarthy, Mr. F. Pastore,

Mr. N. Bayol, Mr. Yati Bun, H.E. Mr. N. Nakahira, Mr. Njoto and Dr. I. Tomaselli. • All the companies and operations which responded to Q500 and QS2 and case-study presenters

(Appendix 1)

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The bulk of the wealth of information gathered in this project is published separately as proceedings of the International Conference in two volumes to which the reader is referred for further and detailed information. This Technical Report is a distillation of the main findings on the efforts and experiences of the private sector to implement SFM in ITTO producer member countries. In spite of the limited progress reported, the Conference clearly demonstrated the efforts and commitment of the private sector to implement SFM. It is hoped that this project provides a better appreciation of the contributions of the private sector and the difficulties they face. Clearly the way forward is to forge smart partnership with all stakeholders and organizations of which the private sector has an important role to play. And as this Report indicates they are responding positively. Hopefully, the next report of an initiative such as this, will document further progress on the long and difficult road to achieve SFM in ITTO producer member countries.

DATO’ DR. B. C. Y. FREEZAILAHPROJECT CO-ORDINATOR

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EXECUTIVE SUMMARY

Objective and ScopeThe Project PD 48/99 Rev. 1 (M,F), Sharing of Information and Experiences on Private Sector Success Stories in Sustainable Forest Management, was funded jointly by ITTO and the Government of Malaysia. The aim of the project was to promote sustainable management of tropical forests by facilitating access to, and enhancing awareness of, information and experiences regarding sustainable forest management at country level. All activities for production and utilization of forest goods and services and conservation of forest resources would fall under the purview of this study.

Sustainable Forest ManagementThe emphasis of this study was on sustainable management of forest resources. Unsustainable management and utilization of forest resources have been the cause of great concern, in view of their environmental and socio-economic impacts and implications. In spite of several global, regional and national level initiatives to achieve SFM, deforestation and forest degradation still continues on an unacceptable scale that threatens to upset the earth’s environmental balance, and inflicts serious ecological wounds. Sustainable forest management (SFM) involves planning the production of wood and non-wood products for commercial purposes, as well as for meeting local needs. This calls for the use of forest goods and services at levels that do not change the environment, and within the regenerative capacity of forest estate. Bringing forest harvests to sustainable levels, improving management practices, enhancing forest conservation, providing forest-derived benefits to a broader range of people, and offering non-distortionary incentives to individuals and corporations to encourage development of forest resources are all elements of a viable forest management system. SFM is an enormous task involving money, manpower, materials and management. Governments have increasingly given the responsibility for SFM to a broad range of private sector institutions.

Private SectorPrivate sector, for the purpose of this study, did not necessarily mean (only) individual or private corporate ownerships. It included all autonomous entities (with administrative and financial freedom), whose functioning follows business management principles of efficiency, decentralization of decision powers, transparent accounting system, mobilization of resource through multiple/competitive sources and is delinked from bureaucratic rules and regulations in its day to day operations and affairs.

Success StoriesSuccess stories are those which would meet certain success criteria. The following, among others, were used as criteria for assessing success in sustainably managing the tropical forests: system of long, medium and short-term plan exists; annual allowable cut has been established; management information system is in operation; forest management units are clearly specified; management is based on forest inventory; reduced impact logging is being practiced; minimum acceptable standard of environmental conservation has been prescribed and adhered to; production is consistent with silvicultural systems; protection measures are in place to control pests, diseases, fires etc; ability to attract viable investment is in evidence; social equity obligations are fulfilled; appropriate and non-distortionary incentives are adopted; and effectiveness of monitoring and certification systems has been ensured.

Project ActivitiesThe project was implemented during the period January 2002 to September 2004. The project activities were divided into 4 important stages: situation analysis and implementation of Questionnaire Survey (Q500);

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conduct of case studies (QS2); International Conference to discuss and disseminate the results of the project; preparation and release of the Project Technical Report.

Forestry Situation AnalysisAccording to Forest Resource Assessment 2000 (FAO 2001c), there is an estimated 3,870 million ha of forest world wide, of which about 95% are natural forests and 5% are forest plantations. Forest covers about 1,800 million ha of land in developing countries. Of the approximately 1,300 million people living in poverty in developing countries, more than half live in or near these forests. Nearly 80% of the world’s forests are in 22 countries. There exists an even greater concentration in respect of forest plantations, where 10 countries account for 80% of all plantations. While Asia accounts for 62% of the total forest plantations in the world, half of it is found in four countries – China (24%), India (18%), Indonesia (5%) and Thailand (3%). In terms of wood and biomass volume, the average for Africa is 72 cum/ha and 71 t/ha; for Latin America and the Caribbean 124 cum/ha and 149 t/ha; and for Asia - Pacific 59 cum/ha and 73t/ha, against the global average of 100 cum/ha and 109 t/ha, respectively.

Regional distribution of forest area, 2000

Region Land Area (Million ha)

Total Forest (Natural Forests & Plantations)Natural Forest

(Million ha)

Plantation Forest

(Million ha)

Forest Area per capita

(ha)Area (Million ha)

% of Land Area

% of World’s Forests

Africa 2,978 650 22 18 642 8 0.85

Latin America and the Caribbean 2,053 967 47 25 955 12 1.89

Asia - Pacific 3,934 746 19 19 626 120 0.20

World 13,064 3,870 30 100 3,682 187 0.65

Changes in Forest AreaDuring 1980-1990, annual change in natural forest cover in the developing world was –16.3 million ha. After accounting for new forest plantations, the annual change was –13.1, million ha. In the 1990s, the magnitude of the negative change in the area under forests has been somewhat reduced. The estimated net annual change in forest area worldwide during the past decade (1990-2000) was – 9.4 million ha, representing the difference between the estimated rate of depletion of 14.6 million ha and the estimated annual rate of forest area increase of 5.2 million ha. However, globally, the loss of natural forest cover continues roughly at the same, comparatively high, level over the past 20 years. For the tropical regions of the world, the net annual change in forest area during 1990s was –12.3 million ha, the depletion rate being 14.2 million ha and afforestation rate 1.9 million ha.

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Annual gross and net changes in forest area, 1990-2000(Area: Million ha per year)

Region Forest loss through deforestation Forest gain through afforestation Net change

Tropics 14.2 1.9 –12.3

Non-tropics 0.4 3.3 +2.9

World 14.6 5.2 –9.4Source: FAO, (2001c)

Changes happening to the forest resource are both quantitative (deforestation) and qualitative (degradation) in nature. According to FAO (1999), deforestation was concentrated in the developing world, which has lost around 300 million ha since 1980.

Forest DegradationThe change of closed forests into open forests and reduction in the volume of growing stock are indicative of forest degradation. It is difficult to recognize the early stages of forest degradation and that causes delay in technical interventions, resulting in further deterioration of forest resources. A significant portion of the remaining forests in the developing world is ecologically in various stages of retrogression. Degradation is also evident in forest plantations due to poor site selection, lack of species-site matching, absence of maintenance, and inadequate protection from fire and grazing. While there are several cases of successful forest plantations, the general performance of plantations in the developing countries leaves much to be desired. Apart from poor survival rates, growth rates achieved also are often far below the potential.

Situation in ITTO-PMCsThe ITTO-PMCs together, seem to exhibit a sequence of stages, in the field of forestry – existence of seemingly inexhaustible forest wealth, low population pressure, forest exploitation undertaken for financing development, expanded logging activities go out of control, increasing level of illegal activities and deforestation take place, forest governance becomes weak and succumbs to corruption, shrunken forest is made (often, ineffectively) out-of-bounds for use, people /farmers start “cultivating” forest trees in private lands to meet market demand. In country after country, the trend seems to be repeating. There may be some differences in the actual paths taken; but general direction appears to be the same. The continuing deforestation along with unsustainable management of the remaining forest resource can lead to disastrous impacts. There is need to address the situation with determination. In spite of the existence of success stories, all the ITTO-PMCs suffer from several constraints. The following is an indicative listing of such constraints, one or more of which can be found afflicting all the ITTO-PMCs: lack of SFM framework, defined by a system of C&I for SFM; lack of field demarcation of forest and FMU boundaries; lack of inventory information; lack of a system of forest management information and inconsistency of data/statistics on almost all basic aspects; AAC often based on convenient assumptions; inadequate protection of forest resources (from fire, encroachments, illegal logging, over-harvesting and illegal mining); lack (or inadequacies) of multi-purpose/integrated management; non-existence and/or inadequacies of management plans; poor performance standards; lack of monitoring of performance; poor quality of forest plantations; wasteful forest harvesting practices; limited use of RIL; inadequate structuring of forest product processing marked by over capacity, low technology, low conversion ratio and inefficiency; need for adjusting to changing raw material landscape; no waste reduction and waste recycling programmes; use of an overwhelmingly high proportion of harvested wood for fuel; neglect of NWFPs in the scheme of forest management; inadequate forest management for soil and water conservation purposes (and for watershed protection); lengthening list of endangered flora and fauna; PA system inadequate and poorly managed; and overall weakness in forest governance.

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Q500 SurveyThe prime task envisaged for Stage I was a Questionnaire Survey (Q500) intended to obtain responses from 500 companies/entities globally, on aspects relating to SFM. This stage was completed by the end of July 2002. Q500 sought independent, written responses from a large number of companies/entities involved in the management of forests and/or forestry enterprises in the ITTO-PMCs. 206 responses were received for the 1,786 questionnaires mailed. While the response rate was low and below expectation, it was not at all disappointing. Most of the responses were of good quality and contained very useful and interesting information, covering a wide range of situations – fully adequate for continuing with the study.

Analysis of ResponsesThe responses received to the different questions were tabulated and analysed for assessing the performance standard in forest management, covering: nature of ownership and area involved; forest types; understanding about sustainable forestry practice; integration with industries; nature of forest concessions; staffing and human resource development; safety and welfare of workers; production of logs; wood products, NWFPs and forest-provided services; management planning; silvicultural systems and practices; environmental standards and controls; harvest planning and regulations; bio-diversity conservation; social contributions and services; compliance to legal requirements; research and development; and forest certification. The analysis indicated clearly that in a majority of cases forest management is inadequate and, often, unsustainable. In a number of aspects, there were conspicuous gaps between policy (or principles) and practice. The plans are, in several cases, not implemented. The general lesson that could be drawn was that without bridging the gap between policies/planning and practice, SFM cannot be ensured on a large/national scale and on a long-term basis.. At the same time, it was heartening to note from the responses received that about a quarter of the forest managers/entrepreneurs who responded to Q500 were committed to the cause of sustainable forestry. The excellence of the minority is a matter which gives hope for the future.

Screening for QS2Based on responses to Q500, the responding companies were screened, for identifying candidates suitable for detailed profiling in Stage 2 (QS2). The screening adopted a process of successive elimination of those found deficient in relation to sustainability criteria (such as: not following sustainable forestry practices; not having management planning system; having no harvest plan; not adopting minimum standards and controls like annual allowable cut; lacking in professional and trained manpower; and showing great discrepancy in responses to different questions). The intention was to ensure that the performance of the candidates (companies) chosen is technologically correct, socially responsible, environmentally appropriate and economically efficient. Considering the need for stratifying the samples to be profiled and based on the need for balancing geographic coverage, resource and product categories, type and size of management operations and so on, 28 cases (7 from Africa, 9 from Latin America and the Caribbean and 12 from Asia-Pacific) were selected for detailed profiling. Of these 15 cases were finally selected to be show-cased at the International Conference (see Appendix I). The selected cases (companies) represented a range of situations with regard to size, product mix, management system adopted, method of harvesting operations, tenurial arrangement, source of investment (company ownership), utilization of harvested produce, market for products, and length of experience (period of existence). The case studies were carried out during the period August 2002 to August 2003. The exercise, particularly evaluating the performance of the selected cases against the overall situation in the sector, provided a wealth of information and insight into the functioning of the private sector in forestry, including the strengths, weaknesses, opportunities, potentials and threats being faced.

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The International Conference“The International Conference on Sustainable Management of Tropical Forests – Private Sector Experiences” was held in Kuala Lumpur, Malaysia, 13-15 April 2004, marking the culmination of the project. The outcomes of Q500 and QS2 stages, in the form of regional reports and case studies were presented and discussed at this meeting.

The IssuesThe issues presented here are drawn from the analysis of forestry situation in ITTO-PMCs, responses received to Q500, analysis of case studies and discussion at the International Conference. For ease of presentation, the issues are presented under seven groups: governance-related issues; institutional issues; issues related to science and technology, issues related to forest utilization and trade; environmental issues; socio-economic issues; and general and over-arching issues.

Governance related issues include: lack of political/policy commitment to the cause of SFM; lack of resource information; prevalence of illegal logging and smuggling; lack of urgency to address deforestation and forest degradation; weaknesses in governance marked by inadequate accountability and transparency; lack of enforcement capability; lack of forest demarcation; inadequate emphasis on productivity; inadequate civil society participation; and spurious stakeholding.

Institutional issues are often the ones that lead to governance related issues. These cover: inadequate planning capability; inadequacies of policies and instruments; weak strategies; weaknesses of enforcement agencies; corruption in public administration; gaps and flaws in rules and regulations; lack of reliable information; inadequate human resource; differences in stakeholder perceptions and preferences; inadequate resource mobilization and allocation; absence of relevant research; and lack of a forest resource accounting system resulting in unaccounted and under-accounted use of resources and distortions of forestry’s contributions in the national system of accounts.

Issues related to science and technology are often exacerbated by institutional weaknesses. The issues include: inadequate funds, facilities and human resources for research and development; lack of inventory information on timber in many cases, and on NWFPs in almost all cases; inadequate dissemination of technological packages; and professional preoccupation being more on conceptual aspects and “re-inventing the wheel” than on addressing practical problems; lack of studies on forest resource use and ecosystem response; lack of adequate research on NWFPs; lack of client participation in research planning.

Issues related to forest utilization and trade, directly and indirectly impact on development, and include, among others: wasteful utilization, wastages in harvesting and processing; high level of low value uses (e.g. fuelwood, unprocessed NWFPs); inability to use forest resource (wood and non-wood) as an economic base; lack of emphasis on competitive advantage (efficiency), while reaping comparative (nature-provided) advantage of resource endowment; inadequacy of studies on controlling/balancing of timber (forest) offering as a means of stabilizing price and consumption; need for a proper mix of market forces and pricing policies; inability to use certification, yet, as a market-based instrument; and contradiction in promoting RIL and forest certification while failing to control illegal/corrupt activities (illegal logging becoming an added cost or disincentive for certification). Experts have not yet been able to assess the effectiveness of timber/forest certification as a policy instrument in achieving its two main aims – improved forest management and improved market access. Progress in timber certification has been poor; globally only less than 3% of the forests have been certified, by the beginning of 2002.

Environmental issues are linked to questions on wise-use vs. non-use or mis-use of forest, and include, inter alia: poor condition of PAs; wildlife – human conflict; endangered species and ecosystems; loss of bio-diversity; eco-piracy; degraded ecosystems; poor quality of forests and plantations; watershed deterioration; dead rivers and sterile soils; wise use as policy, and abuse in practice; need for waste re-cycling; and need

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for valuing of environmental services. Kyoto protocol and talk about emission trading, clean development mechanism, use of sinks etc have not made any tangible progress, as it relates to forestry

Socio-economic issues assume serious proportions as a result of inadequate stakeholder participation and inadequate commitment on the part of the leadership. These include: inadequacy of social concern; wastages in harvesting and processing; poverty of resource owners; changes in resource landscapes; lack of rent capture capability; lack of benefit/cost balancing; need for policy and behavioural research; need for balancing of ecological and economic concerns; limitation in the role of forestry for poverty alleviation; inadequacy in employment and income generating capability of forestry due to lack of downstream processing of forest products; seasonal and irregular nature of forestry employment; falling contribution of forestry to GDP; net dis-investment (negative investment) resulting from inadequate gross investment and excessive deforestation; need to modify traditional/customary land ownership based on modern property/enterprise concepts.

General and over-arching issues, among others, include: changes in behavioural norms and creative dissatisfaction; poverty and macro-economic instability; inadequate understanding and appreciation and lack of conviction about the real role of forestry, on the part of policy makers and decision takers; lack of long range vision and vital imagination about forestry; need for enhancing forestry science and profession; need for re-definition of forests and forestry; need to define stake-holding; and the need to clear the confusion about fundamental role of forestry. Some of the issues among these, which were considered as serious and which came up repeatedly and prominently, particularly during the Conference were: illegal logging and its multiple impacts; increasing cost of timber certification and lack of commensurate benefits, which may be labelled as the “tyranny of timber certification’; customary/community ownership and related problems to adopt SFM in certain situations; lack of adequate partnership arrangements between private and public sectors and between private sector and local community; institutional weaknesses impacting on all aspects of SFM; need for long-term vision instead of short-term solutions; need for rationalizing economic considerations in SFM (covering rent capture, transfer pricing etc); and need for translating “commitments” into “action”. The importance of forestry to the national economy has significantly waned in several countries, particularly in those where deforestation and degradation of forests have been serious. Also, there has not been any powerful movement in most such countries, for rehabilitating forests and forestry. In view of this situation, a question has been raised in several quarters whether forestry as a science and profession is destined to be of transitory significance.

Conclusions and RecommendationsSustainable Forestry is an ideal to be aimed at, and its major constraint is not lack of technology, but the institutional factors which militate against the application of the best available technology. These institutional factors appear in the form of short-term perceptions and time preferences of the investors and inadequate concern on the part of policy makers and managers to adopt and follow an appropriate forest management system. At a minimum, forest management activities should include enforcing boundaries, setting yield levels for forest product harvesting and controlling them, and equitably allocating the benefits and costs derived from the resource. Such a forest management system is said to be sustainable when it is able to adapt to changes, in spite of the pressures acting against it, and to maintain the desired forest condition over time. Inappropriate changes to management systems and silvicultural practices can have considerable impact on forests and their biological diversity, their health and vitality. As already noted, the cases of private sector success stories discussed here do not represent the majority situation. They are models selected on the basis of certain suitability criteria for assessing good performance. Their merit is to be judged in the background of the problem situation existing at the country level, particularly since they were able to perform under difficult (and adverse) conditions. Some of the common vital attributes of these cases, which have contributed to their exemplary performance are meticulous planning, high

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standards of implementation, willingness to adopt new and improved technology, innovative approaches (e.g. promotion of LKs, value-added down-stream processing), transparent dealing with stakeholders, support to local community welfare, market orientation, and ability to integrate the concepts of biological and economic sustainability in managing the forestry enterprise. The route to SFM is challenging. Conceptual development or existence of C&I for SFM or elegantly prepared plans, by themselves will not ensure improved and sustained forest management. It belies the fact the effective SFM involves enormous task requiring money, manpower, materials and management. What it requires is absolute commitment, supported by appropriate institutions, technology, human resources, co-ordination mechanism and targeted funding. The project’s recommendations generally call for: new and renewed efforts in multiple fronts to halt the loss of natural forest resources, to ensure SFM; drastic improvement in forest governance and in all related institutional instruments; refinement and enhancement in all the technological, institutional and controlling systems relevant to forest production under SFM; renewed and sincere commitment (and practical efforts) for managing the forests for their protection values and to revamp the efforts in that regard. Specific recommendations are addressed to the companies, the governments (of the tropical timber producing countries) and the ITTO. The recommendations addressed to the private companies emphasise the need on their part to care (for the security of the forest resource), comply (with the regulations relating to SFM), compete (in the market through improved efficiency), communicate (with civil society) and collaborate (with government, local community and other stakeholders) for improved implementation of SFM. The recommendations addressed to (the governments of) the tropical timber producing countries emphasise the need for strengthening all the ingredients of good forest governance, supported by appropriate policy and implementing rules and regulations which are to be enforced in a transparent, fair, efficient and effective manner. The recommendation addressed to ITTO emphasize the need for providing increased assistance to support the role of private sector in SFM, and to ensure equity and balance in the application of policy instruments such as forest certification.

1

1Sharing of Information And Experiences On Private Sector Success Stories In Sustainable Forest Management

1.0 BACKGROUND

1.1 THE CONTEXT The Project PD 48/99 Rev. 1 (M,F), titled “Sharing of Information and Experiences on Private Sector Success Stories in Sustainable Forest Management”, a joint undertaking of ITTO and the Government of Malaysia, was carried out during 2002-2004 with the aim to promote the sustainable management of tropical forests by facilitating access to, and enhancing awareness of, information and experiences regarding sustainable forest management at the company level. The project was implemented by the Forest Department of Peninsular Malaysia with headquarters in Kuala Lumpur. The project activities, globally, was directed and co-ordinated by Dr. B.C.Y. Freezailah, supported by An Assistant Project Co-ordinator, three Regional Consultants and a Project Secretariat. This project was one of the first initiatives by ITTO focusing on the experiences of the private sector, and addressing the issues of concern to them, as it relates to SFM.

1.1.1 Objectives The development objective of the project was to promote sustainable management of tropical forests. It’s specific objective was to facilitate access to (and promote use of) data, information and experiences on cases of successful forest management, to contribute to the attainment of the ITTO Year 2000 Objective, at the forest management unit (company) level. Also, the project was designed to facilitate achievement of the main objectives of the Tropical Timber Agreement of 1994, to support implementation of priority areas identified in the ITTO Libreville Action Plan and to contribute to the realization of various ITTO decisions and priorities in pursuit of SFM. The project also had relevance to national policies of ITTO member countries relating to tropical timber. Specifically, the project attempted to fill the gaps in the availability and dissemination of information and experiences on cases of successful implementation of SFM, by the private sector.

1.1.2 Project ActivitiesThe project activities were divided into four important stages: (i) overall analysis of the forestry situation and questionnaire survey, (ii) case studies (iii) international conference to discuss and disseminate the results of the project and publication of the proceedings and (iv) preparation and release of Project Technical Report.

1.1.3 Definitional Boundaries The emphasis of this project is on sustainable management of forest resources. Resources are scarce inputs that can yield utility through production or provision of goods and services. A free good is characterized by unlimited supply. Many goods, which were once considered free such as wood, fish, and fresh water, have become scarce over time, with drastic increases in their use, along with population and income growth. Inefficiency in resource allocation and use has exacerbated the scarcity situation. For the purpose of this study, it is necessary to clearly define the coverage and scope of the private sector, forest management and success stories, and to briefly explain the concept of sustainable forest management.

a. Private SectorInstitutions, agencies, and/or entities, which enjoy adequate autonomy, adopt corporate/commercial accounting system, conduct affairs consistent with business principles of efficiency and decentralized decision making, fall within the scope of the private sector. Thus, private companies/corporations, public-enterprises, autonomous and/or decentralized public entities and co-operative institutions involved in forestry business, would qualify as private sector for purpose of this project.

b. Forest ManagementAll activities for production and utilization of forest goods and services and conservation of forest resources are included under the definition of forest management, covering wood products (from natural or planted sources), NWFPs, recreation experiences and environmental services.

2 Sharing of Information And Experiences On Private Sector Success Stories In Sustainable Forest Management

c. Success StoriesSuccess stories are those which would meet certain success criteria. But, it is not always practical for any company or entity to fully qualify in respect of all different criteria which depict an ideal case. Criteria can, often, be conflicting – e.g. conservation vs. meeting basic, local needs. When you score success in one, you fail in the other. This project is concerned with sharing of information and experiences. Even a case of failure can often provide a useful lesson or experience. Cases of partial success can, therefore, qualify for consideration. The following, among others, were used as criteria for assessing success in sustainably managing the tropical forests: • System of long, medium and short-term plans exist. • Annual allowable cut (harvest) has been established. • Management information system is in operation. • Forest management units are clearly specified. • Management activities are based on forest inventory. • Reduced impact logging is being practised. • Minimum acceptable standard of environmental conservation has been prescribed and adhered

to. • Production is consistent with silvicultural systems. • Protection measures are in place to control pests, diseases, fires etc. • Social equity obligations have been fulfilled. • Ability to attract viable investment exists. • Effective monitoring and certification system has been established. • Systems of appropriate and non-distortionary incentives are in place.

1.2 CONCEPTUAL ASPECTSSome of the conceptual aspects relevant to the project activities are the following:

1.2.1 Sustainability of ManagementThe term “sustainability”, as is used here, reflects the general sense of the term as in both the Brundtland Report (WCED/UN, 1987) and Agenda 21 (UNCED, 1993). Sustainable development, accordingly, means the development that meets the needs of the present, without compromising the ability of future generations to meet their own needs. In the context of current development, a World Bank paper states that a primary goal of sustainable development is to achieve a reasonable and equitably distributed level of economic well being that can be perpetuated for many human generations. Current activities may be qualified as sustainable if they do not reduce the productive potential of the asset base and the set of opportunities open to future generations. Sustainable management of renewable natural resources should inherently be based on using income or interest, and not consuming capital, as has been happening in the recent past. The rate of harvest of living resources should not exceed rates of regeneration or replenishment. It also implies maintenance, rational use and enhancement of the natural resource base that underpins ecological resilience and economic growth. Sustainable development, thus, is a scientific concept with a social purpose to be achieved through efforts towards optimising production and distribution of benefits with a sense of intergenerational equity. Various elements of sustainable management are outlined below:

a. Sustainable Forest ManagementThere are several definitions of SFM. ITTO defines SFM as the process of managing permanent forestland to achieve one or more clearly specified objectives of management with regard to the production of a continuous flow of desired forest products and services without undue reduction in its inherent values and future productivity and without undue undesirable effects on the physical and social environment (ITTO,1998). Within the broad framework of sustainable development, SFM should ensure that values derived from forests meet present day needs, while ensuring that the forests maintain a quantity and quality that contributes


to long-term development needs (FAO, 1993). A rational and balanced combination of different functions of forests – production, protection, conservation and provision of environmental amenities – is essential to help conserve sustainability of forests. It needs to incorporate large plants, animals, micro-flora and fauna, water and soil as well as traditional knowledge and heritage. The concept is holistic and the task is multi-disciplinary in nature. Its horizon is infinite. In short, SFM is specific and practical action for translating the concept of sustainability into reality in forestry. This calls for the use of forest at levels that do not change the environment and within its regenerative capacity. With many different definitions, there appears to be no consensus on the interpretation regarding the scope, use and context of SFM. Like in the case of the fabled elephant and the blind men, SFM means different things to different people. Also, clear, comprehensive, reliable and adequately analysed information is still not readily available, such that doubts are often raised whether sustainable management of tropical forests is technically and economically feasible.

b. Principle of Sustained Yield The principle of sustained yield management, which was the hallmark of scientific forest management, originated from the vision of the pioneers of forestry profession. The principle was applied essentially for timber harvest (being the main product in demand). What it requires is harvesting wood at an average rate no greater than the forest in question can regenerate it. Therefore, some environmentalists consider this concept to be narrow and irrelevant to SFM in a comprehensive sense. This appears to be a matter of semantics. In fact, trees, the source of timber, provide character and anchor for the forests. If trees were managed scientifically and sustainably, the rest would fall in place. Thus, sustained yield principle is an effective proxy for SFM, for optimising both tangible and intangible values of forests. The scope of management, including yield regulation, can be widened to incorporate both tangible and intangible values.

c. Silvicultural System as a Forest Management ToolSilvicultural system defines the type of operations to be carried out as part of production management of forests. It is a process by which the crops constituting a forest are tended, removed and replaced by new crops. This includes manipulations to influence the nature and composition of the new crop. Thus, the essential features of the silvicultural systems are: the methods adopted for the regeneration of the crops; the character of the crops produced by such systems; and the distribution of the age-classes over the area of the forest. The system adopted should be suitable to the silvicultural requirements of the species involved and their special environment. These requirements may vary greatly from one locality to another, even within the same species or group of species. Therefore, the system applicable under one set of local conditions could be quite unsuitable elsewhere. The choice of silvicultural system under traditional forestry was influenced by the concept of sustained yield. If a forest is to produce sustained yield in perpetuity, it should possess certain characteristics i.e. normal series of age gradations or age classes, a normal increment and a normal growing stock.

d. Benefits and Costs of SFMi. BenefitsSustainable forest management has several benefits. It is difficult to value the benefits of forests only for one product or service, or for a specific dimension – local, national, or global (Panayotou & Ashton 1992). The components of the overall benefits of SFM can be differentiated into categories depending on their nature, tangibility and measurability, into use values (direct values and indirect values) and non-use values (option values and existence values)1

1 Direct use values are those where the output or product can be used or consumed directly (e.g. wood, non-wood products, forest-based recreation). Indirect use values provide functional benefits such as flood control and carbon sequestration. Option values arise from keeping the options open for future. Existence values are those provided by the continued existence of the resource – e.g. ecological resilience, health of habitat.


All the different values have measurement problems, more so for the intangible values or benefits. Very often it is not possible to give a monetary value for the benefits that can be quantified in other measures e.g. time or volume. Total economic value of forests is the sum of the four kinds of values mentioned; and this is to be expressed within defined space and time, if and where they can be measured or estimated. The relationship between the benefits and costs is a prime consideration for investment decisions.

ii. CostsSustainability has clear cost implications. There is a given technology at the back of every production function. The unit cost involved for the various component activities of SFM would depend on the technology in use, scale and organization of operations, objective criteria and efficiency level, ownership and land tenure arrangements and so on (Poore et al, 1989). Total cost of SFM will be the aggregated cost of all component activities. Direct cost (cost of inputs) of SFM may tend to be higher in the short run. However, its social and environmental costs (negative externalities) will be lower with a healthy stream of benefits. Some general considerations relating to SFM having implication on costs are given below:

• An integrated activity may tend to be cost-efficient. • Multi-product and multiple-use management of forests demands higher technology, but each of the

products could be produced cheaper than if they had been produced singly. • Non-destructive and eco-friendly uses of forests can generate attractive revenue. • When all costs involved (private, social and environmental) are considered, SFM entails less cost

and generally provide more benefits. • SFM with people’s participation tends to be more successful than the cases where people are

excluded. • Scale of operation in forestry and forest industry needs to be designed to achieve an appropriate

balance (i.e. of economies and diseconomies of scale). • NWFPs have enormous potential in many tropical forests and it forms a better alternative for SFM

than timber production in some areas. • Multi-storeyed, multi-purpose tree plantations under a polycropping system can reduce pressure on

natural forests for essential goods and services. • SFM requires a minimum area or critical mass depending on the situation or purpose (e.g. sustaining

a tiger population requires a much larger area than protecting an endemic plant spices).

Economists contend that SFM, though a very desirable goal, cannot often compete with alternative forms of land management on purely financial (private benefit) terms (Kishor and Constantino, 1994). Incorporation of external environmental benefits clearly adds to the attractiveness of forestry enterprises.

1.2.2 Sustainable Forestry Development – The Dynamic DimensionDevelopment signifies net positive investment. Sustainability requires that the formation of new capital equals the sum of rents from resource depletion and environmental damages. For sustainable development, capital formation has to be even higher, requiring higher levels of investment (Panayotou, 1995). In a dynamic sense, sustainability would necessitate the need to improve productivity and efficiency. In respect of forestry, investment for sustainable development should, therefore, be more than the value of capital lost through deforestation and forest degradation. UNCED Agenda 21, Chapter 11 and Forest Principles underline the urgent need and importance of new and additional financial resources for SFM in developing countries. Financing is required for short, medium or long term activities, consumption, current production or for investment. When applied to forestry, investment covers the cost of the creation, management and conservation of forest resources for its many and diverse social, economic and environmental benefits and developing facilities for production and marketing of forest products and services. Investment is required on a continuing basis to serve the purpose of replenishing/rehabilitating the capital and for new capital formation. While investment refers to real capital formation,


disinvestment signifies negative investment, resulting from the destruction or depletion of capital stock through consumption. Investment becomes real only where gross investment is greater than disinvestment, resulting in a positive net investment. Deforestation, whether planned or unplanned, leading to destruction of forest capital is a case of disinvestment. Governments and forest owners often consider forest as a revenue source, and as a land bank to support development of agriculture, irrigation, hydroelectric power and so on, leading to increasing rate of deforestation and disinvestment. Several new dimensions have been added to SFM, with new and emerging knowledge about the multiple roles (direct and indirect) of forests. All new conventions, protocols, principles and guidelines bring with them a chain of new dimensions involving biology and biological diversity, chemistry, physics, policy, technology, environmental quality, inter-relationships and linkages, and nurturing of soil, air, water, flora and fauna. Special features of forestry, namely: its long gestation period and investment horizon (often not matching with the social time preference); the difficulty to distinguish between forest capital and incremental growth (often leading to over-exploitation and capital consumption); and the high level of externalities (often resulting in low profit and disinterest on the part of investors) adds complexity to its management. This complexity, along with a host of other constraints facing the sector, often lead to a narrow or partial approach (e.g. concentrating on scientific aspects or institutional aspects) and aiming at limited or partial accomplishments (e.g. bio-physical gains or social gains). What is required is an integrated/holistic view to planning and implementing SFM. A clear set of criteria and indicators(C&I) for SFM can help to remove the confusion that may exist about its scope, and to provide a practical approach for its implementation. There have been several initiatives since the early 1990s to develop C&I for SFM. Apart from C&I for SFM at the national level, these initiatives have also gone into details of C&I at the Forest Management Unit (FMU) level. As of 2000, 149 countries were involved in one or more processes of C&I for SFM (FAO 2001b). While C&I developed by the various processes differ in specifics, they are conceptually similar in objective and approach, providing a small number of criteria and a large number of related indicators. The common fundamental elements of criteria, within the various processes are: extent of forest resource; biological diversity; forest health and vitality; production functions of forest; protective functions of forest; socio-economic benefits and needs; and legal, policy and institutional framework (Wijewardana, 1997). Existence of an elegant system of C&I alone will not ensure SFM. It belies the fact that, effective SFM involves an enormous task requiring money, manpower, materials and management. It has been noted in several reports that criteria and indicators are not standards for certifying forest management and should not be made a basis for trade; but their linkage is obvious.

1.2.3 Forest (Timber) CertificationThe early initiatives for eco-labeling and timber certification predates the new initiatives of C&I. Vigorous calls for boycotting tropical timber originating from certain sources by markets in developed importing countries were first made in mid-1980s, by environmental NGOs. Producer countries tended to interpret this as an attempt at trade restriction and as a non-tariff barrier, preventing the entry of tropical timber into the developed country markets. Foreseeing the trend, some major timber exporting countries started measures to improve forest management and performance of forest concessions, and established Model Forest Practices Code. Indonesian Eco-labeling Institute was established in 1993 with a view to begin certification of FMUs and an ecolabelling scheme in the short run, and to ensure SFM in the medium and the long run. While certification and ecolabelling initiatives are linked to C&I for SFM, it is also linked to issues of trade and environment. Certification is a seal of approval or logo, provided to those that meet or exceed a set of base line standards. Need for certification applies not only to timber but also to NWFPs and services, including ecotourism, even though the current pre-occupation is on timber certification. By the end of 2000, around 90 million ha or about 2% of the world’s total forest area were certified. 92% of all certified forests were in temperate industrialised countries (FAO, 2001b). Seventeen ITTO producer member countries account for 1.7 million ha of forest certified by third parties. Only 8% of all certified forests


are in Asia, Africa and Latin America. The forests certified in the tropics tend to be those that were already relatively well managed (FAO, 2003a). There are a number of forest certification schemes: certification by Forest Stewardship Council (FSC); Pan European Forest Certification (PEFC); Malaysian Timber Certification Council (MTCC); Lembaga Ecolabel Indonesia or Indonesian Ecolabelling Institute (LEI); and American Tree Farm System Scheme (ATFS). FSC tends to certify large forest holdings (through forest certification companies such as Rain Forest Alliance/Smartwood), while PEFC and ATFS are specifically designed for certifying smaller holdings. The “green procurement” policy of the consuming countries will make it increasingly necessary for the forest products exporting countries to obtain certification. Some scepticism, however, is seen expressed that some “green washing” can take place in the name of certification, when ecological objectives are fudged for profit (Anon, 2002). Certification has been a controversial issue concerning trade and the environment. Producer countries and trade groups have tended to highlight the trade-restrictive aspects of certification, while consumer countries with strong environmental lobbies have stressed its potential environmental benefits. However, it must be noted that a green premium for certified timber is currently for from certain.

1.3 SCOPE OF THE REPORTThis technical report is intended to provide an account of the background, methodology including actions taken during the different stages of the project, project findings, conclusions and recommendations.

2.0 METHODOLOGY AND OUTPUTS

BACKGROUND

As already noted, the methodology adopted by stages, leading to the preparation and publication of this Technical Report involved the following:

• Analysis of global forestry situation by regions and ITTO-PMCs • Questionnaire survey aiming for 500 responses (Q500) • Study of selected cases (QS2) • Preparation of Regional Synthesis Reports • Organising an International Conference and publication of the proceedings

Apart from the background, and methodology and outputs, the report provides project findings, conclusions and recommendations.

2.1 ANALYSIS OF OVERALL FORESTRY SITUATIONThis section briefly deals with the global situation of forest ownership, forest cover details and dynamics of forest cover change, causes and impacts of deforestation and forest degradation, constraints for sustainable forestry development, logging bans and other policy changes, new priority for plantation forestry, situation of forest conservation, current state of SFM and the outlook for forestry.

2.1.1 Forest OwnershipGlobally, governments own and administer about 77% of all forests. This includes large areas that local communities manage without official recognition. Communities and indigenous people formally own 7% of the forests and officially administer an additional 4% that the governments have reserved for them. Individual landowners and private companies own the remaining 12%. In the developing countries as a whole, indigenous people and local communities own or manage 22% of all forests, compared to only 3% in the developed countries. Over the last 15 years, the forest area that communities and indigenous people own and administer has more than doubled. It now stands at about 380 million ha. Several countries (e.g. Brazil,


Malaysia and Philippines) have recently taken major steps to recognize indigenous people’s rights to forest territories (White and Martin, 2002). Ownership of forest plantations also varies. In the Advanced Industrialised Economies and Newly Industrialising Economies, plantations are usually privately owned or managed. In the countries previously under central planning system, most plantations remain in public ownership, although some plantation operations are now being privatised. In other countries, ownership patterns are mixed (FAO, 1998a). Property rights over natural resources have several restrictions and are not meant to be absolute. The property rights of individuals are subject to public rights for clean air, water, environmental amenities etc. The concept is that natural resources should be put to beneficial use, while recognizing the interests of others and ensuring that the resource itself is not damaged during the process of (private) use.

a . Different Arrangements for Managing ForestsDifferent institutional arrangements for forest management are seen, based on ownership and operational/investment responsibilities:

• Forest owned and managed privately, subject to government regulations. • Private entrepreneurs manage customarily owned community/tribal forests, subject to legally valid

arrangements. • Small sized private forests (woodlands) managed by co-operatives of small holders and small-

scale local enterprises. • Forests owned and managed (including harvesting), and product processing/marketing fully or

partly carried out by government, either directly or through state-owned companies. • Forests owned and silviculturally managed by government, and harvesting, processing, and

marketing undertaken by private sector. • Forests owned by government and managed (except for protected areas) by private sector on

lease arrangements, including harvesting, processing and marketing. • Forests privately or customarily owned by individuals or communities and managed directly by

government or through state-owned companies, or through arrangements of company-community partnerships, for the benefit of the owners.

The different institutional arrangements involved have different biases, priorities and philosophical stance. The prime objective of the public sector management is normally the enhancement of socio-economic benefit at the national/state level, reflected in social benefit/cost ratio. Priority of the private sector, understandably, will be to ensure attractive returns on investment and to maximize profit, reflected in a high private (financial) benefit/cost ratio. The bias of small investors and local communities tend to be livelihood security and socio-economic welfare. The different stakeholders therefore, perceive the ethical and equity dimensions of SFM differently. This leads to conflicts and, often, confrontations (e.g. between those who manage upland watershed and those who are involved in down-stream land utilisation). Investors rarely show any interest to generate social benefits or avoid social costs, unless pushed by the government or the market. Similarly, beneficiaries have no interest to pay any share of cost involved in generating the social benefits. A proper balancing of the objectives and actions of the various groups involved can help to resolve conflicts and to develop complimentarity.

b. Private Sector PreferencesIn forestry, private sector tend to prefer harvesting, processing and marketing of products, given their higher and quicker pay back. Forest management (including resource creation and development) provide comparatively low profit with a long gestation period; and private sector is normally hesitant to invest in generating unpriced values (externalities) of forest management. It requires attractive incentives to obtain the participation of the private sector in natural forest management. Logging concessions on favourable terms (e.g. low royalty rate and other privileges) provided the necessary incentives. Where private investment in tree planting is sought, incentives in various forms, such as tax remissions and subsidies are often provided.


In countries where the system of forest concessions prevail, medium and large scale investors are present in almost all forestry activities: forest plantations, forest harvesting, forest-based processing and marketing. Some of the large units are integrated complexes. They produce more than one product, integrating upstream and downstream operations – from forest to the market. However, in countries, where such concession system does not exist, private investment in forestry flows mostly into the processing sub-sector, using raw material resources created through local investment or available from government forestlands. With increasing emphasis on sustainable forest management and utilisation, and considering the merits of multipurpose forest management as a sustainable activity, the future forestry scenario is likely to be marked by a different mix of products (goods and services), a different mix of sources and a different mix of institutional and management regimes. Private sector (of different types) is expected to play an increasing role in this scenario.

2.1.2 Forest Cover DetailsA number of publications provide detailed account of the situation and trend in respect of forest resources (FAO 1982, FAO 1995a, FAO 1998a, WRI 1999, UNEP 1999, FAO 2001, FAO 2003). Depending upon the definition of forest resource categories, and estimation methods adopted, differences can be noticed in the information provided by different sources. However, they provide an adequate general picture of the situation in terms of magnitude. According to Forest Resource Assessment 2000 (FAO 2001c), there is an estimated 3,870 million ha of forest worldwide, of which about 95% are natural forests and 5% are forest plantations (Table 1). Forest covers about 1,800 million ha of land in developing countries (FAO 1999). Of the approximately 1,300 million people living in poverty in developing countries, more than half live in or near these forests.

Table 1. Regional distribution of forest area, 2000

Region Land Area (Million ha)

Total Forest (Natural Forests & Plantations) Natural Forest

(Million ha)

Plantation Forest

(Million ha)

Forest Area Per capita

(ha)Area* (Million ha)

% of Land Area

% of World’s Forests

Africa 2,978 650 22 18 642 8 0.85

Latin America and the Caribbean

2,053 967 47 25 955 12 1.89

Asia - Pacific 3,934 746 19 19 626 120 0.20

World 13,064 3,870 30 100 3,682 187 0.65Source: FAO (2001c)* The forest area figures do not include “other wooded land”. For defining forest, Forest Resources Assessment 2000 adopted a threshold of 10 %

minimum crown cover, and the definition includes both natural forests and plantation forests. According to FRA 2000 (FAO 2001), the distribution of forest area by ecological zones is: 47% in the tropics, 33% in the boreal zone, 11% in

temperate areas and 9% in the sub-tropics.

Nearly 80% of the world’s forests are in 22 countries. There exists an even greater concentration in respect of forest plantations, where 10 countries account for 80% of all plantations. While Asia accounts for 62% of the total forest plantations in the world, half of it is found in four countries – China (24%), India (18%), Indonesia (5%) and Thailand (3%). In terms of wood and biomass volume, the average for Africa is 72 cum/ha and 71 t/ha; for Latin America and Caribbean 124 cum/ha and 149 t/ha; and for Asia - Pacific 59 cum/ha and 73t/ha, against the global average of 100 cum/ha and 109 t/ha, respectively (FAO 2001c).

a. Changes in Forest AreaDuring 1980-1990, annual change in natural forest cover in the developing world was –16.3 million ha. After accounting for new forest plantations, the annual change was –13.1, million ha. In the


1990s, the magnitude of the negative change in the area under forests has been somewhat reduced (Table 2). The estimated net annual change in forest area worldwide during the past decade (1990-2000) was – 9.4 million ha, representing the difference between the estimated rate of depletion of 14.6 million ha and the estimated annual rate of forest area increase of 5.2 million ha2. However, globally, the loss of natural forest cover continues roughly at the same, comparatively high, level over the past 20 years. For the tropical regions of the world, the net annual change in forest area during 1990s was –12.3 million ha, the depletion rate being 14.2 million ha and afforestation rate 1.9 million ha (FAO 2001c, FAO 2003a).

Table 2. Annual gross and net changes in forest area, 1990-2000.(Area: Million ha per year)

Region Forest loss through deforestation Forest gain through afforestation Net change

Tropics 14.2 1.9 -12.3

Non-tropics 0.4 3.3 +2.9

World 14.6 5.2 -9.4Source: FAO, (2001c)

Changes happening to the forest resource are both quantitative (deforestation) and qualitative (degradation) in nature. According to FAO (1999), deforestation was concentrated in the developing world, which has lost around 300 million ha since 1980.

b. Forest DegradationThe change of closed forests into open forests and reduction in the volume of growing stock are indicative of forest degradation (FAO, 1997). It is difficult to recognize the early stages of forest degradation and that causes delay in technical interventions, resulting in further deterioration of forest resources. A significant portion of the remaining forests in the developing world is ecologically in various stages of retrogression. Degradation is also evident in forest plantations due to poor site selection, lack of species-site matching, absence of maintenance, and inadequate protection from fire and grazing. While there are several cases of successful forest plantations, the general performance of plantations in the developing countries leaves much to be desired. Apart from poor survival rates, growth rates achieved also are often far below the potential.

c. Causes and Impacts of Deforestation and Forest DegradationThe causes of deforestation and forest degradation include planned and unplanned land use changes, uncompensated land transfers (using forest as a land bank), expansion of agricultural farms, encroachments, shifting and subsistence cultivation, illegal and excessive collection of fuel wood and timber, wasteful and unscientific harvesting of wood and non-wood products, revenue fellings, mining and infrastructure development, fire, grazing, storm, air pollution, pests and diseases, and inadequate investment in forest protection. These causes are exacerbated by other causes common to all sectors, such as poverty, unemployment, population pressure, greed and corruption; and, these are expected to put increasing pressure on the world’s forests in the next few decades (FAO 1999). The immediate causes of deforestation and forest degradation are often the symptoms of a much deeper decay. WCFSD (1999) acknowledges that the causes of the crisis have their roots in human institutions and values. The important underlying causes of the crisis include: low awareness about the values of forests, weak policies and low priority, corrupt practices, accounting distortions, hurdles for people’s participation, conflicting roles of the government forest services and narrow vision of interest groups/lobbies. Each of these represent a cluster of related aspects and are indicative of the failure at several levels – policy, institutions, governance, market and morals.

2 1.5 million ha of natural forest per year was converted into plantations; and the annual loss/deforestation of natural forest will work out to 16.1 million ha, if the area of natural forest so converted is added to the rate of deforestation.


Impacts of deforestation and forest degradation are experienced in the form of soil erosion and loss of watershed values, loss of soil fertility and capability of nutrient recycling, lowering of productivity and growth, ecological retrogression, erosion of genetic wealth and bio-diversity, loss of forest capital, decline in wildlife, fall in forest and agricultural productivity, unhealthy condition of forests and reduced value of the residual resource. Where deforestation occurs in an unplanned and wasteful manner, the economic losses can be substantial, particularly from the loss of timber and other commercial resources. At subsistence levels, deforestation causes severe hardships and social disruptions for forest-dwelling and forest-dependent people. The ecological imbalance caused due to deforestation and forest degradation leads to other effects such as floods, drought, desertification and disruptions in transportation, hydroelectric power supply, tourism etc. Habitat loss is a major threat to bio-diversity in all types of forests; and risks to the world’s rich array of living species are climbing. Deforestation, which releases carbon from trees, accounts for 20% of the human caused carbon emissions that spur climate change (FAO 2000). Loss of forest resource endowment causes scarcity for forest goods and services. While the goods (like timber and other products) can be substituted, the forest’s ecological services for a functioning world cannot. This underscores the severe nature of the forest crisis (WCFSD, 1999). Deforestation impacts negatively on investment. In the early 1990s, the overall estimated gross annual investment in forestry and forest industry, in the developing countries, was approximately US$ 20.4 billion. Against this, the annual disinvestment through loss and degradation of forests was of the order of US$ 45 billion, resulting in a net negative investment of US$ 24.6 billion, while the estimated annual requirement of net investment in forestry during the same period was US$ 33.3 billion. The gap in annual investment for sustainable forestry development in developing countries during early 1990s was over US$ 50 billion globally. The seriousness of the situation multiplies several folds if one considers that this has been a regular feature of forestry over the past several years (UN-CSD, 1996).

2.1.3 Current State of Forest ManagementIn the forest-rich developing countries of the humid tropics, most natural forests are managed at varying degrees of intensity for timber production, under selective cutting systems – the aim being to allow harvesting of some specified (and safe) quantity of timber, while maintaining forest cover for protection and regeneration. Under these systems, the volume and type of trees to be harvested are regulated as AAC, such that removals do not exceed growth increments and the productive capacity of the forest is maintained. In many cases, however, this principle is not practised. Most ITTO-PMCs report that, by and large, their production forests are mainly under some form of management regime. For example, the forests under concession agreements are considered to be under management. However, only a fraction of the forests are actively and effectively managed, leading to misuse and overuse. Given that many forests are not under formal management, responsibility for their protection from fires, diseases and pests is unclear and receives only scant attention.

a. Community–Based Forest ManagementIt has been widely argued that rural people over-use, and hence degrade and destroy forest resources, because they are poor and have no viable alternative; and that this progressive erosion of the forest resource contributes to their becoming even poorer. This downward spiral can only be prevented, according to this argument, if the poor are provided with more attractive livelihood options so that they move away from the destructive use of the forests (Arnold, 2001). Community-based forest management involving participatory management of forests, smallholder and communal tree growing and processing and trading of forest products are seen as viable alternatives. Several countries have initiated CBFM programmes as a means of alleviating the crisis in forestry.

2.1.4 Wood Production and UtilizationTotal world production of roundwood in 2002 amounted to 3,384 million cum, of which industrial wood accounted for 47%, the rest being fuel wood and wood for charcoal. Production of industrial wood in Africa


accounted for only 12%. In several countries use of wood for industrial purposes is even lower than 5%. The situation of wood production by region is given in Table 3. The predominance of fuel wood is likely to continue in the low-income countries. Production and trade of processed goods continue to increase. Approximately 70% of all the internationally traded tropical wood products come from the Asia-Pacific region. NWFPs provide substantial contribution in some countries. In wood production, the concept of AAC has often been neglected. FAO (1997) has estimated a net annual drain (i.e. exploitation above net annual increment of growing stock) of some 151 million cum for Asia-Pacific region as a whole in 1995, equivalent to 14% of allowable cut. Over-cutting continues to be a serious problem in the other tropical regions as well. Further, unrecorded/illegal wood removals also happen routinely in several cases; and, as they come in sizable quantities into the product processing and consumption streams, inefficiency is encouraged (ITTO, 2001).

Table 3. Wood production, 2000 (million cum)

Region Total Roundwood Industrial Wood Fuel wood and Wood for Charcoal

Africa 613 67 546

Latin America and the Caribbean 439 166 273

Asia – Pacific 1,061 272 789

World 3,384 1,587 1,797

a. Logging Bans in Natural ForestsIn order to address the rampant deforestation and environmental deterioration, a number of countries in the Asia-Pacific region, over the past 15 to 20 years, have completely or partially banned logging in natural forests or parts thereof (FAO 2001b). In several of these instances logging bans were successfully used to conserve natural forests and to obtain a larger portion of their wood supply from tree plantations and agro-forestry; but in other instances it largely failed. Since logging bans imply a trade-off between economic and environmental aspirations, success depended on ensuring availability of alternative sources of wood. It is easy to ban logging; but much more difficult to protect forests and develop sustainable alternative timber sources. In some countries logging is reported to continue illegally, and perhaps even more destructively than in the past (FAO/RAP, 2001). Sometimes, restricting logging in one country simply transfers the problem to other countries. China, Philippines, Thailand, and Vietnam all greatly increased their forest product imports after they restricted logging. This fuelled illegal logging and destructive timber harvesting in neighbouring countries such as Cambodia, Indonesia, Laos, Myanmar, and even Russia.

b. New Priority for Plantation ForestryThe emerging situation of restrictions and reduced availability of natural forests for timber production have resulted in a new emphasis on forest plantations, land rehabilitation programmes and trees in farming systems. In the three tropical regions of Africa, Latin America and the Caribbean and Asia-Pacific, hardwood species comprise about 75.4 million ha, representing 54% of the forest plantations, with Eucalyptus being the leading genera (nearly 18 million ha, or 24 of the hardwood plantation area). The plantation area also includes about 10 million ha of rubber (Hevea braziliensis). Other important hardwood species include Tectona grandis, Acacia mangium, Gmelina arborea and Swietenia macrophylla. There is much scope for improving the yields from plantations. Minimum gains of 15 to 20% due to tree improvement should be considered normal. Unfortunately, this aspect of plantation forestry has received little attention and most plantation programmes are still using unimproved planting materials. Plantation management also suffers from a lack of silvicultural tending. Unfortunately, the wood industry faces a difficult situation due to declining profitability of forests (as a result of lower prices for timber). Thus, there is little


motivation for forest owners to invest in silvicultural treatments. This may eventually reduce the quality of the wood stock, although it may not compromise the usefulness of forests for nature-tourism and recreation that are now being given increasing priority. Indeed, a desire to improve the “naturalness” of forests is among the motive factors for establishing “multi-storied plantations” (FAO 1999, FAO 2000b).

c. Trees Outside ForestsWhile governments and private enterprises have undertaken large-scale forestry, rural people have been practicing small-scale forestry on their farms, homesteads and community lands, primarily to meet household requirements for fuel, poles, timber and medicines. Rural people use different combinations of agro-silvo-pastoral systems. With the current emphasis on social forestry, a promotional drive has been launched in many countries to encourage tree planting on wasteland, institutional land and non-forest (public and private) land. Some 120 to 150 million households in the Asia-Pacific region are involved in developing forest resources outside forest areas; and they form an emerging group of partners in SFM. Additionally, the region possesses most of the world’s 14 to 16 million ha of rubber and coconut plantations, both of which are becoming increasingly important as sources of wood (FAO/RAP 1998).

2.1.5 Situation of Forest Conservation Due to various pressures and omissions, the global environment and the world’s natural resources are being degraded at an alarming rate. Living resources are harvested, in many cases, exceeding the rate of regeneration. The forests are one of the worst affected natural resource. Apart from deforestation, the remaining forests are getting further degraded by heavy harvests and frequent forest fires, endangering species and ecosystems. Along with thousands of other species, some 716 tree species globally are critically endangered (Rietbergen, 2000). In September 2000, at the special Millennium Session of the UN, the World Bank, UNDP, UNEP and WRI presented the first result of a Pilot Analysis of Global Ecosystem (PAGE). The report shows that all the five major types of ecosystems – forests, freshwater systems, coastal/marine habitats, grasslands and agricultural lands –are showing signs of deterioration. Many of the statistics are staggering: half of the worlds wetlands have been lost in the past century; 58% of coral reefs are imperilled by human activity; 80% of grasslands are suffering from soil degradation; 20% of dry lands are in danger of becoming deserts and ground water is being depleted almost everywhere. Asia and Latin America have experienced rapid changes – economic growth accompanied by enormous social and political transformation. However, environmental performance has not matched the economic progress in these cases. Environmental quality has deteriorated rapidly. To improve the situation of forest conservation and to protect bio-diversity, some extent of natural forests have been set apart, in most tropical developing countries, as PAs. Management of the PAs are of variable standards. Many PAs lack adequate management plans and resources. An emerging phenomenon in some areas is the growth of eco-tourism; but adequate capacity to manage eco-tourism in forest areas does not exist in most developing countries of the region. There are different figures (some highly inflated) floating around, released by different sources, relating to: the total area and area by categories of PAs, forested and non-forested areas under PAs, PAs under management etc, at the country level. Hardly any information is available on the condition of PAs and the level of management. When conservation became a ‘fashion’ in the late 1980s and early 1990s large areas of degraded/unproductive forests got declared as PAs; and logging was ‘legally’ banned by some countries. Reports from countries indicate that illegal logging and hunting continue to take place in several PAs for lack of effective measures (supported by funds, facilities and manpower) to prevent illegal activities. Several of the parks are “islands” without necessary buffers and corridors.

2.1.6 Forestry Outlook The forestry sector outlook studies carried out by international agencies indicate that if sustainably and efficiently managed, and used, the forest resources presently available will be able to support the future


demand. The Outlook Studies (FAO/RAP 1998, FAO 2003b) have further identified a number of central themes that are likely to dictate the near and medium term future of forestry and the route towards SFM:

• Continuous increase in the demand for a broad range of forest products and services. • Increased attention to multiple roles of forests. • Physical and regulatory restrictions on forest resource use. • Shortage of large logs and possible responses in the processing sector. • Increasing importance of high yielding forest plantations (and use of genetically modified trees),

suitable for specific purposes. • Emergence of a number of non-traditional producers of forest products. • Extensive use of recycled waste paper and non-wood fibre in pulp and paper industry. • Emergence of nature tourism as a growing segment of tourism, having differing impacts on

forests. • Increased priority for poverty alleviation and environmental protection. • Demand for incorporating ethical and equity considerations in forest policy and action plans. • Growing demand of civil society for transparency and good governance. • Increase in urbanization. • Industry-community partnerships. • Increased attention to research and development. • Pressure for implementing SFM in the context of gaining/retaining access to key markets.

2.1.7 Other Relevant Aspects Other common aspects to be flagged, relating to the situation of forestry in the tropical regions are the following:

• General weaknesses/inadequacies of institutions and institutional instruments – i.e. policies, legislation, organizational structure, plans and programmes, R&D and M&E systems.

• Tenurial uncertainties and conflicts, particularly regarding the rights of indigenous communities. • Lack of strategies for managing the increasing extent of degraded and secondary forests. • Chronic shortage of funds for forestry activities; dependence on donor assistance; and lack of

investment in technology development. • Lack of information (and knowledge) about global hot topics such as impact of climate change on

forests, CDM, carbon management (sequestration, conservation and substitution) strategies, bio-diversity resources and so on, at the relevant local levels.

• Widening gaps in SFM and narrowing options to address them.

2.2 FORESTRY SITUATION IN ITTO-PMCSAt the time when the Malaysia/ITTO Project on Private Sector Success stories in SFM was approved in 2001, there were 31 ITTO-PMCs, as included in the project document.Africa (9): Cameroon, Central African Republic, Congo, Cote d’Ivoire, Democratic Republic of the Congo,

Gabon, Ghana, Liberia, TogoLatin American and the Caribbean (12): Bolivia, Brazil, Colombia, Ecuador, Guatemala, Guyana, Honduras,

Panama, Peru, Surinam, Trinidad & Tobago, and VenezuelaAsia-Pacific (10): Cambodia, Fiji, India, Indonesia, Malaysia, Myanmar, Papua New Guinea, Philippines,

Thailand, Vanuatu.The situation in these countries varies considerably in socio-economic background as well as in aspects relating to forestry.

2.2.1 Socio-Economic BackgroundSome of the important socio-economic indicators are given in Table 4. All the ITTO-PMCs are dominated by communities dependent on agriculture (hence, on land), even though the level of dependence varies. In 18 of the 31 countries, more than half of the population lives in rural areas.


2.2.2 Important Aspects Relating to ForestryThe situation in these countries varies considerably in many of the aspects relating to forestry, such as: resource endowment, forest ownership, management systems and capability, forest-based processing and utilization, trade in forest products and institutional arrangements. While these variations and specificities are dictated by their history, demography, political system and geographic location, the countries also share a number of common issues linked to the involvement of private sector in forest resource management and deficiencies in public forest administration. Pressure on land (i.e. on terrestrial resources), along with the socio-economic and development indices, to some extent, provides an indication of the state of forest resources in the country and the constraints to which they are subjected to.

Table 4. Socio-economic indicators of ITTO producer member countries

Country Land area 000 ha

1999 POPULATIONRural

Population %

GNP per capita (1997) US$

1999 GDP per capita PPP US$

Population below poverty line (less

than US$1 per day at 1993 PPP) %

Total (000)

Per Sq. Km

AfricaCameroon 46,540 14,693 31.6 51.9 587 1,573 -Central African Republic 62,297 3,550 5.7 59.2 341 1,166 66.6Congo 34,150 2,864 8.4 38.3 633 727 -Cote d’Ivoire 31,800 14,526 45.7 54.1 727 1,654 12.3DR of Congo 226,705 50,335 22.2 70.0 114 801 -Gabon 25,767 1,197 4.6 45.9 3,985 6,024 -Ghana 22,754 19,678 86.5 62.2 384 1,881 38.8Liberia 11,137 2,930 30.4 52.7 - - -Togo 5,439 4,512 83.0 67.3 337 1,410 -Latin America & the CaribbeanBolivia 108,438 8,142 7.5 36.0 912 2,355 29.4Brazil 845,651 167,988 19.9 19.3 4,514 7,037 9.0Columbia 103,871 41,564 40.0 25.5 2,039 5,749 11.0Ecuador 27,684 12,411 44.8 38.3 1,531 2,994 20.2Guatemala 10,843 11,090 102.3 59.9 1,481 3,674 10.0Guyana 21,498 855 4.3 62.3 766 3,640 -Honduras 11,189 6,316 56.4 53.7 723 2,340 40.5Panama 7,443 2,812 37.8 42.7 2,993 5,875 10.3Peru 128,000 25,230 19.7 27.6 2,580 4,622 15.5Suriname 15,600 415 2.7 48.4 940 4,178 -Trinidad & Tobago 513 1,289 251.3 26.5 4,119 8,176 12.4Venezuela 88,206 23,706 26.9 13.0 3,499 5,495 18.7Asia - PacificCambodia 17,652 10,945 62.0 77.2 303 1,361 -Fiji 1,827 806 44.1 58.1 2,340 4,799 -India 297,319 998,056 335.7 71.9 392 2,248 44.2Indonesia 181,157 209,255 115.5 60.8 1,096 2,857 7.7Malaysia 32,855 21,830 66.4 43.5 4,469 8,209 -Myanmar 65,755 45,059 68.5 72.7 NA 1,027 -PNG 45,239 4,702 10.4 82.9 931 2,367 -Philippines 29,817 74,454 249.7 42.3 1,170 3,805 -Thailand 51,089 60,856 119.1 78.8 2,821 6,132 2.0Vanautu 1,218 186 15.3 80.1 1,315 NA NA

Source: FAO 2001c; UNDP 2001; ADB 2003


a. Forest Resource EndowmentAmong the ITTO-PMCs, 15 countries have more than 50% of their land under forest. Forestry in some of these countries have a high share in GDP and trade. Forestry in PNG, Indonesia and Malaysia have a share of over 10% in GDP. While Brazil, Democratic Republic of Congo and Indonesia have over 100 million ha of forest in absolute terms, Guatemala, Panama, Peru, Suriname and Guyana are among those which carry the highest growing stock volume and above ground biomass (see Table 5).

Table 5. Forestry situation in the producing member countries of ITTO in year 2000

CountryLand Area

(000 ha)

Natural Forest

(000 ha)

Plantation Forest

(000 ha)

Total Forest

(000 ha)

Forest as percentage of land area

Forest area per capita (ha)

Growing stock volume and

above ground biomass

1999-2000 Annual Rate of

increase in plantation area (000

ha)

Rate of annual area

change (%)

1990-2000

Cum/ha t/ha

AfricaCameroon 46,540 23,778 80 23,858 51.3 1.6 135 131 ns (0.2) –0.9Central African Republic

62,297 22,903 4 22,907 36.8 6.5 85 113 ns –0.1

Congo 34,150 21,977 83 22,060 64.6 7.7 132 213 6 –0.1Cote d’Ivoire

31,800 6,933 184 7,117 22.4 0.5 133 130 5 –3.1

DR of Congo

226,705 135,110 97 135,207 59.6 2.7 133 225 ns (0.1) –0.4

Gabon 25,767 21,790 36 21,826 84.7 18.2 128 137 – nsGhana 22,754 6,259 76 6,335 27.8 0.3 49 88 2 –1.7Liberia 11,137 3,362 119 3,481 31.3 1.2 201 196 ns (0.1) –2.0Togo 5,439 472 38 510 9.4 0.1 92 155 1 –3.4Latin America & the CaribbeanBolivia 108,438 53,022 46 53,068 48.9 6.5 114 183 1 –0.3Brazil 845,651 538,923 4,982 543,905 64.3 3.2 131 209 135 –0.4Columbia 103,871 49,460 141 49,601 47.8 1.2 108 196 7 –0.4Ecuador 27,684 10,390 167 10,557 38.1 0.9 121 151 4 –1.2Guatemala 10,843 2,717 133 2,850 26.3 0.3 355 371 21 –1.7Guyana 21,498 16,867 12 16,879 78.5 19.7 145 253 - –0.3Honduras 11,189 5,335 48 5,383 48.1 0.9 58 105 7 –1.0Panama 7,443 2,836 40 2,876 38.6 1 308 322 3 –1.6Peru 128,000 64,575 640 65,215 50.9 2.6 158 245 50 –0.4Suriname 15,600 14,100 13 14,113 90.5 34 145 253 0 nsTrinidad & Tobago

513 244 15 259 50.5 0.2 71 129 ns –0.8

Venezuela 88,206 48,643 863 49,506 56.1 2.1 134 233 50 –0.4

Asia – PacificCambodia 17,652 9,245 90 9,335 52.9 0.9 40 69 3 –0.6


Fiji 1,827 718 97 815 44.6 1 - - 9 –0.2India 297,319 31,535 32,578 64,113 21.6 0.1 43 73 1,509 +0.1Indonesia 181,157 95,116 9,871 104,986 58 0.5 79 136 271 –1.2Malaysia 32,855 17,543 1,750 19,292 58.7 0.9 119 205 35 –1.2Myanmar 65,755 33,598 821 34,419 52.3 0.8 33 57 37 –1.4PNG 45,239 30,511 90 30,601 67.6 6.5 34 58 4 –0.4Philippines 29,817 5,036 753 5,789 19.4 0.1 66 114 30 –1.4Thailand 51,089 9,842 4,920 14,762 28.9 0.2 17 29 225 –0.7Vanuatu 1,218 444 3 447 36.7 2.4 - - 1 +0.1

Source: FAO 2001c.

Those having the lowest percentage of land under forest (and also the lowest per capita availability of forest land), among others, are Cote d’Ivoire, Guatemala, Ghana, India, Philippines, Thailand and Togo. Thailand’s forests have also undergone severe degradation. Some of the above countries have a long history of raising forest plantations (e.g.: Brazil, India, Indonesia, Malaysia and Thailand). For some others, raising forest plantation is a recent development. Plantations account for 50.8% of India’s forests. 33% of Thailand’s’ forests are plantations. Countries with low forest cover tend to have a higher percentage of its forests under plantations. In the countries with large percentage of land under forest, such as Suriname, Gabon, Guyana, Papua New Guinea and Congo, plantations account only for less than 0.5 %.

b. Forest Cover ChangeAmong the 31 ITTO- PMCs, 12 countries, namely Cote d’Ivoire, Ecuador, Guatemala, Ghana, Honduras, Indonesia, Liberia, Malaysia, Myanmar, Panama, Philippines and Togo have shown a negative annual rate of forest cover change, of over 1%, with Togo and Cote d’Ivoire having an annual deforestation rate in excess of 3%.

c. Arrangements for Forest ManagementAmong the ITTO-PMCs, there are variations in the way forests are managed. In some countries such as India and Myanmar, the forests are divided into Forest Districts/Divisions (and further into Forests Working Circles and Compartments), for purposes of forest management (distinct from public forest administration, even though management and administration are closely linked). The Forest Divisions are managed on the basis of Forest Working Plans which are periodically revised and updated. In other countries (eg. Indonesia, PNG, Liberia) the responsibility for forest management is entrusted to forest concessionaires who are awarded the right to harvest specified area of forest, for a specified duration of time. In yet other causes such as Brazil where production forests are mostly (78%) privately owned, management is the responsibility of the private owners/operators based on Government established guidelines. In many cases, however, forests are not properly and sustainably managed. All the countries are in agreement regarding the need for C & I for SFM, and have indicated acceptance of ITTO’s guidelines in that regard. In countries, which are involved in production of timber and forest products for export through the ‘concession system’, some of the exporters have volunteered for certification/eco-labelling. Brazil, Indonesia and Malaysia have established national level institutions in that regard.

d. Forest ConservationAlmost all the ITTO-PMCs have established PAs for conserving ecosystems, biodiversity, wildlife, watershed values, scenic sites and natural heritage. During the last one or two decades, as a measure to counter the trend of illegal activities and deforestation and to limit the environmental impacts of forest exploitation, there have been efforts to set apart and constitute more areas as PAs. There are four countries which have set


apart over 30% of forests as PAs, all in Latin America and the Caribbean. There are seven ITTO-PMCs having only 5% or less of the forest area in PAs. Endangered condition of species (as monitored by IUCN) is, often, used to judge the condition of the natural environment and the need to undertake conservation measures, including establishment of PAs. The number of endangered species is not an indicator of comparative efficiency in conservation measures per se, since it is also a function of the species richness of the ecological zones involved. The countries with high percentage of TRF tend to have high species diversity and hence a comparatively higher number of endangered species. The ITTO, in its project activities, has not neglected initiatives on forest conservation. Indeed, the ITTO has carved a niche in promoting the establishment and management of large transboundary conservation areas between neighbouring producer member countries. Starting with Indonesia and Malaysia (Betung Kerihun National Park/Lanjak Entimau Wildlife Sanctuary) it has spread to Latin America between Ecuador and Peru (Condor Range/Santiago-Comaina Reserved Region) and to Africa, between Cameroon and Gabon (Mengamė-Minkėbė Transboundary Gorilla Sanctuary). Similar transboundary conservation areas between other neighbouring ITTO producer members are now being planned with ITTO’s assistance.

e. Wood Production Total wood production is a function of several factors such as demand, market price, availability of forest resource and trading facilities. Area harvested, annually, depends on the system of resource management and productivity. The share of industrial wood in the total wood harvest in a country depends on the level of forest-based industrialization, log exports, and dependence on fuel wood for meeting local energy needs. Fuel wood accounts for the major portion of wood production in the ITTO-PMCs as a whole, while there are differences in respect of individual countries. Out of the 31 ITTO-PMCs, only in 13 countries did industrial wood production exceed 25% of the total wood production, in 2002. In respect of 8 countries industrial wood production accounted only for 10% or less of the total wood production, rest of the production being for fuel wood (see Table 6). Between 1992-2002, total wood production has registered a falling trend in 13 countries – 6 in Africa, 2 in Latin America and the Caribbean and 5 in Asia-Pacific. In respect of industrial wood, 15 countries have registered a falling trend – 4 countries in Africa, 4 in Latin America and Caribbean and 7 in Asia -Pacific. Relative use (as percentage of total wood) has fallen in respect of 16 countries - 5 in Africa, 6 in Latin America and Caribbean and 5 in Asia-Pacific. This has resulted in changing direction of trade in wood and wood products. The increasing use of fuel wood in many of these countries has also impacted adversely on the sustainability of forest management. Avoidable wastage in logging is an issue. It is complicated by the issue of inadequate capture of rent (levies and charges) on the wood harvested. Logging is fully mechanized in the major log producing countries, whereas it is mostly done manually (in some cases using elephants or draught animals) in countries such as India and Myanmar. RIL is being implemented only by a few operators, mainly those who are interested to have the FMU, and export-oriented production, certified.

f. Conservation ConcessionsForest concessions all over the world have increasingly been blamed for exploiting the forest in an unsustainable manner and for neglecting the principles of forest conservation. The idea of “conservation concessions” developed by Conservation International, a Washington-based International NGO is meant as a means to manage the concessions under principles of equity and sustainability and to support regular sources of income for the local people. Peru established the world’s first formal conservation concession called “Los Amigos” in July 2001. Its 40 year lease covers 130,000 ha of tropical forest. Conservation International has also been negotiating with the Governments of Guatemala, Guyana, Vietnam and Indonesia to establish conservation concessions in those countries. A conservation concession in Sumatra, Indonesia is known to be getting close to signing of the concession agreement.


Table 6. Wood production in ITTO producer member countries in 1992 and 2002

CountryTotal roundwood production (000

cum)Industrial roundwood production

(000 cum)Industrial roundwood as percentage of the total

1992 2002 1992 2002 1992 2002AfricaCameroon 14,371 10,526 2,929 1,270 20 12Central African Republic 3,733 3,058 483 1,058 13 36Congo 3,489 2,437 1,332 1,251 38 51Cote d’ivoire 12,950 11,581 2,783 3,000 21 26DR of Congo 43,919 70,938 3,187 3,653 7 5Gabon 3,802 3,104 1,633 2,584 43 83Ghana 20,812 21,782 1,300 1,104 6 5Liberia 5,745 5,470 1,035 337 18 6Togo 1,259 5,808 191 208 15 4Latin America & the CaribbeanBolivia 1,861 10,238 598 8,054 32 79Brazil 228,617 237,467 79,262 102,994 35 43Columbia 20,092 11,610 2,918 2,012 15 17Ecuador 7,499 6,187 3,268 913 44 15Guatemala 11,263 15,725 121 518 1 3Guyana 180 1,142 166 269 92 24Honduras 5,935 9,681 558 971 9 10Panama 1,019 1,401 118 153 12 11Peru 7,851 8,419 959 1,084 12 13Suriname 131 198 112 154 85 77Trinidad & Tobago 78 87 56 51 72 59Venezuela 2,190 4,924 1,253 1,227 57 25Asia – PacificCambodia 6,770 9,862 735 125 11 1Fiji 307 383 270 346 88 90India 283,275 319,872 24,588 19,308 9 6Indonesia 187,499 115,552 43,107 32,997 23 29Malaysia 54,204 21,141 45,040 17,913 83 85Myanmar 22,475 40,942 4,075 5,539 18 14Papua New Guinea 7,997 7,241 2,464 1,708 31 24Philippines 38,193 16,017 3,833 2,689 10 17Thailand 38,057 28,050 2,777 7,800 7 28Vanuatu 63 119 39 28 62 24

Source: FAO (2004): Year Book of Forest Products 2002

2.3 THE QUESTIONNAIRE SURVEY (Q500)Analysis of the situation and desk studies provided the required insight for designing the Questionnaire Survey and to establish screening criteria to select cases for detailed analysis and profiling. The Questionnaire Survey was carried out between January and July 2002. The intention of the Questionnaire Survey was to obtain about 500 responses relating to relevant aspects of SFM from private firms/entities involved in forestry. The Questionnaire Survey involved several steps: (i) designing of questionnaire which is user-friendly and capable of eliciting clear and simple answers; (ii) identify companies involved in forest production/ processing, preferably for export markets; (iii) mail the questionnaire to the


identified companies/entities in all the major tropical regions of Africa, Latin America and the Caribbean and Asia-Pacific, seeking independent written responses; (iv) analyse the responses received for assessing the situation relating to various aspects of forestry, and for selecting companies successful in implementing SFM. The main purpose of Q500 survey was to select cases for detailed study in the following stage. Apart from seeking specific information about the firm, the questionnaire included questions relating to: ownership and tenure types, claims of sustainable forestry practice, size of company holding by forest types, integration of forest management with processing industries, human resource development, safety record, wood production details, processing facilities, management of NWFPs, forest services, forest management planning, systems of silvicultural management, practice of silvicultural operations, standards of controls in forest management, harvesting plans and systems, bio-diversity conservation, social issues and contributions, research and development and certification for SFM.

2.3.1 ResponsesAfter dispatching of the questionnaires, addressees were reminded, in some cases up to 4 times. In spite of it, the response rate varied from country to country. No responses were received from 8 ITTO-PMCs. Though the response rate against the number of questionnaire forms mailed was only 12%, it was 41% when compared to the targeted number of responses, i.e. 500 (200 for Asia - Pacific, 150 each for Africa and Latin America and the Caribbean). (See Table 7). While the response rate was low and below expectation, it was not disappointing. Most of the responses were of good quality and contained very useful and interesting information, covering a wide range of situations – fully adequate for continuing with the study.

a. Reasons for the Poor ResponseThere are several reasons for the poor response:

• In the recent past, several logging concessions have been closed down, and several of the addresses, to which Q500 was sent, were non-existent. Many of the questionnaires came back undelivered.

• Many of the operators are involved in mining of timber and are not interested in answering the questionnaire truthfully. The issue is non-observance of SFM.

• The concessionaires are afraid of the NGOs. Even the good ones try to avoid limelight, fearing that the NGOs may question the veracity of their claims.

• Reluctance to get associated with inter-governmental/international agencies. For example, one country was not happy with an article which appeared recently in the Tropical Forest Update, suggesting rampant illegal logging in that country.

• Requirement on the part of some governments that the questionnaires should be sent and replies received through a designated government agency.

• In some cases (e.g. Philippines) the period of concessions/contracts are about to be over and there is uncertainty about renewal.

• In other cases, the concession system is in its infancy (e.g. Cambodia) with all its teething troubles.

• Other contributing causes included, length of the questionnaire and the large number of questions listed; absence of capability to complete the questionnaire, in-house; non-existence of the required information for responding to the questions; the fear that the company operations may be inspected on the basis of the response; too many requests received for information, making the company insensitive to the questionnaires.


Table 7. Q 500 – response rateCountry Q 500 mailed Responses received Response rate (%)AfricaCameroon 50 4 8Central African Republic 30 3 10Congo 25 7 28Cote d’Ivoire 65 5 8DR of Congo 30 Nil -Gabon 30 5 17Ghana 110 30 27Liberia 25 Nil -Togo 1 1 100Total 366 55 15Latin America & the CaribbeanBolivia 67 7 10Brazil 232 40 17Columbia 101 5 5Ecuador 59 6 10Guatemala 89 1 1Guyana 10 1 10Honduras 52 2 4Panama 6 2 33Peru 156 3 2Suriname 9 Nil –Trinidad & Tobago 25 Nil –Venezuela 46 2 4Total 852 69 8Asia – PacificCambodia 17 Nil -Fiji 1 1 100India 68 22 32Indonesia 348 21 6Malaysia 40 32 80Myanmar 4 Nil –Papua New Guinea 28 3 11Philippines 40 3 8Thailand 1 Nil –Vanuatu 1 Nil –TOTAL 548 82 15GRAND TOTAL 1,766 206 12

Note: Copies of Q500 were sent to those involved in timber production/logging, forest plantations, NWFP (bamboo, beedi leaves, rattan, medicinal plants) management, recreation/tourism, integrated forestry/forest industry management, JFM Committees, others (e.g. crocodile/reptile farming, coral utilization, rehabilitation of mining sites).

* Information on the Fiji Case (Fiji Pine Ltd) was compiled by a consultant.

2.3.2 Analysis of Responses A summary of analysis of the responses received to Q500 relating to some crucial aspects is given in the following paragraphs:


a. Ownership and Tenure TypesIn Africa, almost all of the forest resource base of the respondent enterprises in the Central African sub-region are state-owned, with a few recently created and acknowledged community-based forests which can be found, especially, in Cameroon and Gabon. Forest concession areas in Cote d’Ivoire and Togo are also government owned. Those in Ghana are d esignated as “stool” land forests, which are vested in government by law; but the State only holds them in trust for the indigenous owners. In respect of responses received from Latin America and the Caribbean, out of the 69 companies, 97% were privately owned, with the majority of them small and medium sized enterprises. The remaining companies were joint ventures between government and private entrepreneurs. There were no exclusively state-owned companies. In the Asia-Pacific region, ownership of the responding companies ranged from purely public (e.g. state-owned corporations/enterprises) to purely private. Out of the 82 responding entities, 48 (or 58.6%) were fully private, 14 (or 17.1%) were fully owned by the State, another 12 (or 14.6%) were under joint ownership of government and private companies, 5 (or 6.1%) were participatory models i.e. local Joint Forest Management Committees, 2 (or 2.4%) were community owned and 1 (or 1.2%) was owned by a co-operative federation.

b. Claims of Sustainable Forestry PracticeAlmost all respondents claimed that they are managing the forests sustainably. Response to the question: “whether sustainable forestry being practised?” was somewhat subjective, depending on the interpretation of those responding. There is no unambiguous and fully accepted definition, yet, for sustainable forestry. Even those who are not practicing SFM, but have intention to do so, consider themselves to be in a grace period (and entitled to respond positively). The claim of sustainable forestry practice on the part of respondents, in many cases, was found to be inconsistent, in an objective screening carried out to select cases to be taken up for detailed study. However, the claim of the respondents that they are practicing sustainable forestry is by itself significant – in that they consider it desirable (and noble) to do so, from the point of view of social and intergenerational equity and ethics. Probably this is a clear indication of awareness; and with appropriate prompting, they will be amenable to practically implement SFM.

c. Integration of Forest Management with Processing IndustriesOf the 55 responses received from Africa, all but one respondent of the 19 from Central African sub-region was not involved in any form of processing activity; whereas, all the 36 respondents from West African sub-region were engaged in some form of value-added processing activity. Saw milling is the predominant form of forward integration, followed by a mix of activities including veneer, mouldings, furniture parts etc. Regarding Latin America and the Caribbean, 91% of the responding companies had integrated operations of forestry and forest-based processing industry. However, such situation cannot be generalized for all of the Latin America and the Caribbean. In the region SFM is mainly practised by timber companies that have vertical integration (of forestry + industry + trade). In Asia - Pacific, in respect of 37 cases out of 82, there was no integration with processing industries. Of the 45 companies having industrial processing facilities, 32 have sawmills; 21 have plywood mills; 11 have wood works; 4 have pulp and paper and 3 have NWFPs. Only one company each produced wood chips and charcoal. Forest management activities are integrated with processing industries in respect of: 41% of responding companies in India; 76% in Indonesia; 50% in Malaysia; 66% in PNG and 33% in Philippines. The situation has come about due to the influence of historical factors. Mechanical wood industries dominate the scene. Pulp and paper is emerging as an important sector. It is interesting to note that all the respondents having processing of NWFPs are in India, a country which has banned/restricted timber harvest in natural forests, and this has resulted in NWFPs emerging as a source of income from forests.

d. Log ProductionIn Africa, in relative terms, the respondents from the Central African sub-region are high volume industrial round log producers, from their natural forests than their counterparts from the West African sub-region. The


respondents from the West African sub-region produce some industrial round logs from planted forests. Most respondents from Africa indicated that they follow harvesting plans. There is general preference for the use of tractor skidding and high lead yarding systems. Most of the responding companies in Latin America and the Caribbean carry out logging based on logging plans, both in respect of natural forests and plantations. The only harvesting system practised is “tractor skidding”. In Asia - Pacific region, 30 companies (representing 37% of responding companies) did not provide any information about the quantity of logs produced from plantation forest and/or natural forest. Few of these companies produce only NWFPs (e.g. medicinal farms and JFM Committees in India). Log production from forest plantations is carried out only by 17% of the responding companies, indicating an area where improvements (and interventions) are feasible and necessary. Harvesting plan is said to exist in 64 companies, 78% of all those who responded. But the harvesting plan is implemented only by some 57 companies (69% of responding companies), indicating the gap between plan and action. Mechanical logging with tractor skidding is the most prevalent system being followed.

e. Management of NWFPsIn Africa, generally, as a result of their characteristics such as extensive variety; low occurance and distribution, which contribute to production inconsistencies, most NWFPs present obstacles for harvesting. They also require lengthy transportation time and higher costs. Their management is also complex. Other factors such as their low value potential, as well as the high risk of collection in comparison to timber species appear to make them less attractive as a business option to most commercial logging operators. This, perhaps may explain why most of the 55 respondent enterprises had nothing or very little to do with NWFPs. In Latin America, only 20% of the companies which responded to the questionnaire produce NWFPs, predominant of them being medicinal plants, fruits and nuts. Although much less important than timber, NWFPs still have an important share of the forest product market in some countries (eg. Bolivia). In Asia - Pacific, even though management of NWFPs has the potential to enhance SFM, 64 of the responding companies (representing 78%) did not report any activities relating to NWFPs. Of the 18 respondent companies involved in managing NWFPs, only 3 are engaged in NWFP–based processing. There is need and potential for improving management and utilisation of NWFPs, for promoting SFM.

f. Forest ServicesFrom the responses received, it would appear that respondents were not clear about the scope and significance of the question relating to services. Since more than half of the responses are positive, it can be surmised that a majority considers it a good thing to promote forest based services such as conservation, wildlife refuge and protection. A service can become a product if there is demand/market for it (e.g. nature and wilderness tourism, facilities for research and field education, and carbon sink).

g. Forest Management PlanningAmong the responses from Africa, 69% in the Central African sub-region and 89% in the West African sub-region reported having management plans, the planning horizon ranging from 1 to 30 years. 42% of the Central African respondents and 86% of the West African respondents indicated that their management plans are consistent with ITTO guidelines. Among those who responded from Latin America and the Caribbean, 94% reported to have management plans. Nevertheless, only 54% of the management plans are consistent with the ITTO guidelines for the “Sustainable Management of Natural Tropical Forests” and “Conservation of Biological Diversity in Tropical Production Forests”. It is important to mention that 41% of the respondents from Latin America and the Caribbean had no knowledge about ITTO guidelines. In respect of Asia-Pacific, 78% of the respondents are following some system of forest management planning. Since we are dealing with selected FMUs, the response, however, is not a surprise. The response here is consistent with that to the question on sustainable forestry practices. In responding to the question about consistency with ITTO guidelines, the companies are somewhat equally split – 42 companies saying


“yes” and the other 40 saying either “no” or “do not know”. While the answer of “no” or “do not know” cannot be taken as an indicator for “unsustainability”, it surely points to the need to have an intensive drive to disseminate the ITTO guidelines more widely!

h. Systems of Silvicultural ManagementThe African regional picture shows the dominance of a single type of broad selection-based management system practised in the Central African sub-region, and a mix of two or more types of broad management systems practised in the forest concessions, by the West African respondents. Prescribed AAC appears to be a common management tool employed by almost all the countries. According to the Q500 Questionnaire results, the main management system practised by the respondents from Latin America and the Caribbean is “selection” (with 65%), followed by “shelterwood”, clearfelling and other ad hoc systems. In Asia-Pacific, the predominant systems of silvicultural management reported by the respondents are those being practised in the tropical rain forests of Indonesia and Malaysia (variations of selection and/or uniform system). Clear felling and seed tree systems are applied for managing forest plantations and also for managing/rehabilitating degraded forests. Coppice system and its variations are applied essentially in India for managing the deciduous forests. Eleven respondents were not following any system of management. As can be expected, they overlap with the group having no sustainable forestry practice and/or having no system of forest management planning. While 59% of the responding companies in Asia-Pacific responded as having prescribed AAC, only 41% of the companies reported to have kept within the prescribed limit of AAC – indicating the gap between prescription and action. This, of course, is a problem for achieving SFM in most situations.

i. Practice of Silvicultural OperationsThe operations specified here are the ones normally prescribed in forest management plans (and also in harvesting plans). It is noted that among the companies having management plans and harvest plans, only about 40 to 50% conduct all the operations properly. The message is that without bridging the gap between planning and practice, sustainability cannot be ensured for forestry on a large / national scale.

j. Bio-Diversity ConservationThe responses to the group of questions relating to bio-diversity conservation show the respondents, generally, in a good light. In Africa, 74% of the respondents from Central African sub-region and 83% of the West African sub-region indicated presence of conservation areas in their concessions. Most companies also did not have any endangered species in the concession. 84% of respondents from Central Africa and 56% from West Africa seem to permit hunting and shooting in their concession. In Latin America and the Caribbean, 70% of all the companies responded have areas reserved for conservation and protection; 43% have reported having endangered species in their areas; in 87% of the companies shooting and hunting are not allowed. In Asia-Pacific, 67% of the responding companies have areas reserved for conservation and protection; 71% of the responding companies do not have any endangered species in their holding; and no shooting or hunting is allowed by 91% of those who responded to Q 500.

k. Social Issues and ContributionsIn respect of social contributions and the way social aspects are handled, the responding companies appear to be faring well, including provision of local welfare facilities. In Africa, most respondents reported that there are communities living in and around company holdings. While 63% of the Central African respondents reported providing employment to members of local community, only 19% of the respondents from West African region provided employment to them. Overall, only 33% of the responding companies provided employment to local communities. Also, some 68% of the respondents from the Central African sub-region as compared to 75% of those from West Africa did indicate that local communities living in and around their concessions are practicing shifting cultivation.


In Latin America and the Caribbean, most of the companies responding to Q500 reported that they provide some kind of welfare facilities to its employees as well as to the community involved, in terms of housing (70%), health care (62%), water (49%), electricity (43%) and education (28%). In Asia – Pacific, in 91% of the responding cases, there are local communities living in and around the company holdings; and 71% of the companies are employing them. In 48% of the cases local communities practise shifting cultivation; in 66% of the cases, the local communities are allowed to hunt, fish and gather food and fuel wood for own use. This last response on hunting and fishing by local communities may be compared to the answer given for questions on bio-diversity conservation, where 91% of the companies had stated that no shooting or hunting is allowed in their holdings. This is an instance of contradiction or interpretational difference!.

l. Legal ViolationsA significantly high percentage (above 80%) of all those responded (in the three regions) have stated that they were not involved in court cases for violation of forest laws in 1999/2000, and this generally reflects good performance standard, and compliance to the forest laws in force. This, however, is a simplistic response, because violations of agreement conditions (e.g. harvesting above AAC, non-compliance of prescribed operational standards, harvesting outside of areas approved in management plans), often, are not referred to the courts, but are handled by the Public Forest Administration. It is, therefore, necessary to look also into contraventions of terms and conditions of concession agreements or contracts, as well as of technical prescriptions, to assess the extent of compliance (or otherwise) to the principles of SFM.

m. Research and DevelopmentWith regard to research and development, while some 47% of the respondents from the Central African sub-region undertook R&D activities, in the West African sub-region some 81% of the respondents undertook R&D activities. No information is available on external assistance for research projects. Among the respondents from Latin America and the Caribbean, 51% undertake some kind of R&D activity. International co-operation has been playing an important role in the region’s forestry research. It is recognized that without the cooperation of developed countries and international institutions, progress in SFM of tropical forests would be very slow and distant. This becomes clear, when analysing research data, since 57% of the R&D projects undertaken by the companies have external funding. In Asia-Pacific region, 54% of the responding companies are undertaking R&D activities, and 27% have projects taken-up with external or domestic funding support.

n. Certification for SFMExcept for one, none of the responding companies in Africa had forests fully certified for SFM. Some 63% of the respondents in the Central African sub-region expressed their intention to undertake forest certification, within a period spanning from 2002 to 2006. In West African sub-region, only about 25% of respondents indicated an intention to undertake this activity, thus a total of 38% of the respondent companies in the African region expressed their willingness to undertake forest certification soon. In Latin American and the Caribbean, only 19% of the companies responding to Q500 had certified forests. The results of the surveys point out that there are signs of improvement in this scenario. Around 62% of the non-certified forest companies have plans to undertake forest certification in the near future. In response to Q 500, 16% of the responding companies in Asia-Pacific have stated that their concessions have been “certified” and another 55% stated that they intent to undertake forest certification. Thus 71% of those who responded to Q 500 are in the fray for practicing forest certification. The remaining companies which have no intention to undertake forest certification are either small local ventures (like JFM Committees in India), or those which have no export ambition (e.g. some of the Government Corporations in India), or those which are uncertain about their continued existence due to Government policy changes (e.g. in Philippines) or those which have not yet experienced market pressure (e.g. the operations in PNG); or those having other reasons. The situation augurs well for SFM. However, more details are required to make a clear


and meaningful analysis of how the certification process is affecting forestry operations of the private sector and its impact on various components of scientific forest management.

o. Important LessonsWhile recognizing that responses to Questionnaire Surveys, often tend to be proper than honest, the analysis indicated clearly that in a majority of cases forest management is inadequate and, often, unsustainable. In a number of aspects, there were gaps between policy (or principles) and practice. The plans are, in several cases, not implemented. The general lesson that could be drawn is that without bridging the gap between policies/planning and practice, sustainability cannot be ensured for forestry on a large/national scale, and on a long-term basis. At the same time, it is heartening to note, from the responses received, that about a quarter of the forest managers/entrepreneurs who responded to Q500 were committed to the cause of sustainable forestry. The excellence of the minority is a matter which gives hope for the future. In spite of the inherent deficiencies of Questionnaire Surveys, such as the personal bias of the respondents and different interpretation of the questions, an analysis of the responses of Q500 considerably helped to identify areas where special attention needs to be bestowed during the QS2 Stage of the project. While awareness about the concepts and formulation of plans and strategies are important parts of the process towards SFM, it is more important, rather vital, to see whether there are (and if so the nature and extent of) gaps between plans and practices/actions. The Q500 questionnaire survey helped to identify and locate some such important gaps. Accordingly, outlines for preparing specific case studies during QS2 stage was drawn up, with the benefit of lessons learned from the Q500 survey.

2.4 PREPARATION OF CASE STUDIES (QS2)Responses received to the Questionnaire (Q500) from the companies were screened for identifying candidates qualified for detailed profiling, and out of these a further selection was made of interesting successful cases suitable to be showcased and presented at the International Conference. This stage was implemented between August 2002 and August 2003 and involved three steps.

• Screening, short listing and profiling of successful cases • Selection of cases for detailed study and presentation at the International Conference • Preparation of case studies

2.4.1 Selection of the CasesThe screening adopted a process of successive elimination of those found deficient in relation to sustainability criteria (such as: not following sustainable forestry practices; not having management planning system; having no harvest plan; not adopting minimum standards and controls like AAC; lacking in professional and trained manpower; and showing great discrepancy in responses to different questions). The intention was to ensure that the performance of the candidates (companies) chosen is technologically correct, socially responsible, environmentally appropriate and economically efficient. Considering the need for stratifying the samples to be profiled, and the need for balance based on geographic coverage, resource and product categories, type and size of management operations and so on, the short list comprised of 28 cases (7 from Africa, 9 from Latin America and the Caribbean and 12 from Asia-Pacific), of which 15 cases were finally selected to be showcased. Of the 15 cases, 14 were presented at the International Conference held in Kuala Lumpur, 13-15 April 2004, and the other case, Matang Mangrove Forest, served as the site for field visit during Post-Conference Tour on 16th April 2004. Apart from meeting the major sustainability criteria, the cases selected were also those which have addressed some of the problems/ aspects brought out under the sections on conceptual aspects and overall forestry situation – i.e., the need for: meticulous planning and methodical implementation; consistency as shown in the longevity of sustainable contributions; research and technology development; dynamic approach to sustainable development through enhanced productivity; innovative approaches; emphasis on socio-economic and environmental benefits; people’s participation; transparency and stakeholder consultation;


improved institutional structures; and capability for adjusting to changing situations. The 15 companies are listed in Table 8.

a. Characteristic Features of the CasesThe selected cases (companies) represent a range of situations with regard to size, product mix, management system, method of harvesting operations, tenurial arrangement, source of investment (ownership), utilization of harvested produce, market for products, and experience (period of existence) of the company. They included private forest concessions in Government Forest land, private logging concessions in forest areas customarily owned by the community, licences for operating/utilizing government forest resource, federation of rural co-operatives managing/harvesting NWFPs in public forest land, private ownership and management of forest resources and forest-based processing facilities, state-owned enterprises managing government forest land, and partnership of large processing company and rural tree farmers involving supply of improved planting materials and extension by the company and buy-back guarantee.

2.4.2 Case Study MethodologyThe selected companies were contacted, supported by a formal letter from the Executive Director of ITTO, regarding their willingness to support the case studies, convenient dates to receive the project consultants/experts, arrangements for local transportation and logistics etc. The companies were very co-operative and welcomed the visits of consultants. They provided specific in-depth information, as requested. The consultants visited all the case study locations and company head quarters between August 2002 and January 2003. It was understood that the “ownership” of the company profiles/case studies will rest with the respective companies; and the role of the consultants essentially was to facilitate the process. The consultants emphasized this point to the company authorities and solicited their support in the process of drafting company profiles/case studies, including reviewing and modifying/enhancing the initial draft. Accordingly, all the companies designated a senior person, as the ‘contact’ for supporting the case studies. A general outline/framework for collecting the information required to prepare the company profiles/case studies was prepared and circulated to the selected companies. In addition, some companies were given a note (to the contact persons) suggesting additional coverage, to capture aspects specific to the individual companies. The exercise of evaluating the performance of the selected cases against the overall situation in the sector provided a wealth of information and insights into the functioning of the private sector in forestry including strengths, weaknesses/constraints, opportunities/ potentials and threats being faced. Apart from the detailed studies of 15 selected cases prepared by the company contacts, supported by project consultants, regional reports synthesizing the regional situation and experiences were prepared for Africa, Latin America and the Caribbean and Asia-Pacific by the respective Regional Consultants, during this (QS2) phase of the project. Summarized versions of the cases listed in Table 8, have been provided in Appendix 2, to obtain an overall view of the lessons to be learned from the cases and their background, and what they foretell about the “common future” of the tropical forests.

Table 8. Companies selected for case study and presentationCountry / No. Name of Company Salient Features

CONGO

Congolaise Industrielle Des Bois

• Well co-ordinated and scientific forest management and harvesting

• Integrated operation• Operates livelihood programmes for local community1.

GABON

Rougier Gabon in Haut-Abanga

• Strategic planning based on inventory and growth modelling

• Healthy co-existence with local community• Commitment to environmental conservation2.


GHANA

Samartex Timber & Plywood Ltd

• Long tradition of SFM; certified by SGS• Follows reduced impact logging• Strong commitment to HRD and to NWFP development3.

TOGOOffice de Developpement et d’Exploitation des Foret

• Planned forest plantation development• Value addition through saw milling• Support to local rural communities4.

BRAZIL

Cikel Brasil Verde SA

• Planning incorporating all the available technological and scientific knowledge

• Partnerships forged with research centres, universities, NGOs

• Commitment to local community5.

6. Guavira Industrial e Agroflorestal Ltda

• Integrated operation in private forest land• Efficient, year-round harvesting operation• Investment in production chain

7. Orsa Florestal, SA

• Linked to Jari Cellulose (Jari Project) activity of the late 1960s

• Multiple use of forest resources• Participatory conflict resolution

BOLIVIAEmpresa Agroindustrial La Chonta Ltda

• Forest management integrated with processing activity• Promotion of lesser known species• Forest Certification by FSC8.

INDIA

ITC Bhadrachalam Paperboards Ltd

• Company-outgrower (farmer) partnerships, in developing clonal tree farms

• High level technology and R&D backup• Innovative institutional arrangements and extension

services9.

10.Madhya Pradesh State Minor Forest Produce (Trade and Development) Co-operative Federation Ltd

• Federation of primary NWFP co-operatives, operating in public forest lands.

• People’s participation and empowerment• Sustainable income to local communities

INDONESIA

PT. Sari Bumi Kusuma

• Dynamic of TPTJ – selective cutting with strip planting• Transparent relationship with local people and local

government• Certification process in progress11.

MALAYSIASamling Plywood (Baramas) Sdn Bhd

• Sound concepts and plans• Integrated operation• Community consultation12.

13 Perak State Forestry Department (Matang Mangrove Forest)

• 100 years of SFM, a classical case of mangrove management

• Strict application of silvicultural principles• Multiple use of forest management

PAPUA NEW GUINEAVanimo Forest Products Ltd

• Full compliance to regulations• Supports social development• Timber operations/export subjected to oversight by

SGS, an independent Swiss company14.

PHILIPPINESPacific Timber Export Corporation

• Resilient and dynamic; one of six surviving concessions, soon to be phased out

• Practised good planning and implementation• Forest plantation development for future

15.


2.5 THE INTERNATIONAL CONFERENCE“The International Conference on Sustainable Management of Tropical Forests – Private Sector Experiences” was held in Kuala Lumpur, Malaysia, 13-15 April 2004, marking the culmination of the project. The outcomes of Q500 and QS2 stages, in the form of regional reports and case studies were presented and discussed at this conference. During the period between September 2003 and April 2004, the project staff engaged themselves in activities in connection with the preparations for the International Conference – refining the case studies and consultant’s regional reports for presentation, finalizing the list of invitees and participants, working out details and arrangements for the opening ceremony, contacting and lining up guest speakers and panellists, making arrangements for field visit and so on. Aside from the opening ceremony and the keynote address, the conference had four technical sessions: (i) Report and Case Studies from Africa, (ii) Report and Case Studies from Asia-Pacific; (iii) Report and Case Studies from Latin America and the Caribbean and (iv) Panel Discussion and Closing. On 16 April 2004, the participants were taken on a post-conference tour to visit the Matang mangrove forest in Perak State in the northern part of Peninsular Malaysia and to see its sustainable management, associated charcoal industry, fishery and conservation activities. A detailed case study of Matang mangroves was also made available to the participants. (A summary of the case has been included in Appendix 2 of this report). The meeting was participated by some 165 persons, including 69 from outside Malaysia. The Conference appreciated the ITTO/Malaysia initiative in holding this International Conference exclusively to analyse private sector experiences and to address issues affecting private sector involvement in SFM. The participation of a large number of private sector representatives at the Conference clearly demonstrated their keen interest to support sustainable forestry development. It was suggested that such conferences should be convened regularly, rotating between the three tropical regions, in view of the important and crucial role of the private sector in the implementation of SFM and hence the attainment of the ITTO Year 2000 Objective. The private sector experiences in sustainably managing the tropical forests cover a wide range of situations with regard to sizes and types of forest operations, varying from very small to very large, and simple to complex. However, the case studies presented were mainly of comparatively large operations, the purpose being to focus on the complex issues affecting SFM operations even under relatively favourable conditions. While economic viability, environmental compatibility and social acceptability are essential attributes of SFM, what attracts private investment, big or small, to a forestry enterprise is the economic viability, expressed in terms of “rate of return” on investment. This truism cannot be forgotten while promoting private sector participation in SFM. The discussions following the different presentations and the panel discussions covered several vital aspects of SFM, among others: forest ownership and tenure, customary rights and communal ownerships, forest resource security, economic incentives and protection for investment, national forest policy and implementing rules and regulations of the government, institutional weaknesses, gaps between policy and practice, impact of illegal logging on SFM, wastages in logging and wood processing, inadequate monitoring, trade and transfer pricing, practical problems in tropical forest certification, stake-holder roles and involvement including of NGOs, company-community partnerships, community needs and livelihood values, concept of rent capture, intangible forest benefits, environmental values and bio-diversity conservation, environmental pricing, complexity of multifunctional forestry, human resource development, management information system, and lack of conceptual clarity in SFM. With tropical deforestation showing no signs of declining, the acreage of certified tropical forests remaining relatively small and illegal logging becoming problematic, some participants tended to believe that tropical timber production, processing and trade will turn out to be a sunset industry, unless remedial measures are taken in a realistic and effective manner. The private sector success stories, show-cased at this Conference, however, gave grounds for optimism. There is still a good chance to save the tropical forests and tropical timber industry. As stated by Dr. Freezailah, the Project Director in his closing remarks “the


world looks to the new ITTO, under a new ITTA, to prevent the tropical timber trade from becoming a sunset industry.” For more information one is referred to the Conference Proceedings which include detailed programme of the meeting, full list and affiliations of participants, addresses by dignitaries, papers presented, discussion notes and so on.

3.0 MAJOR FINDINGS AND CRUCIAL ISSUES RELATING TO SFM

3.1 FINDINGSCrucial issues relating to the implementation of SFM arise essentially from the major findings of the entire project including the survey, the case studies and the international conference. As already noted the project activities covered a questionnaire survey of 206 private sector forestry operations in 23 producer member countries of ITTO and 15 detailed case studies in 11 of those countries. There are variations among these countries in many of the aspects relating to forestry. While a number of these countries are producers and exporters of tropical wood and wood products, others have suffered severe resource loss during the last 4 or 5 decades and have become net importers of wood and wood products. For those of the ITTO-PMCs which are small and fragile island ecosystems, sustainable management of the forest resource is particularly important. Along with the variations, the countries also share a number of common issues. These, among others, include: unscientific management (cutting outside AAC, specified species, size classes and allotted area); lack of appropriate landscape management; inadequate attention on NWFPs; illegal activities; concealed subsidies, inadequate rent capture; inadequate backward and forward linkages; distortion of people-forest relationships; and inadequate efforts for forest conservation. Of the 15 cases studied, 12 are involved in timber management. Of this 12 cases, 8 are large forest/logging concessions in government forests managed by private companies (of which 4 are national and 4 transnational) on the basis of legal agreements, 3 are fully-owned private operations and one is a private forest plantation operation. Of the remaining three, one is a mangrove forest managed for sustainable production of charcoal and poles by several small-scale private operators, under direct supervision and control of the Government. Another is involved in development of clonal tree plantations for pulpwood in private farmlands sponsored by a pulp/paper company. And, the last case is about a federation of a large number of primary co-operative societies of rural/tribal families involved in collection, processing and marketing of NWFPs in government forests3. Majority (10) of the cases are entirely logging operations in natural forests, two are essentially plantation operations and 3 cases cover activities involving both natural forests and forest plantations. Only one case deals exclusively with non-wood forest products with two others having NWFPs as a minor component. Some of the cases are recent developments, others have been long survivors and at least one of the cases is under a phase out plan. Each of these cases is a FMU or a collection of sub-units of management. As such, their role in promoting SFM at the national level is limited, and would depend on the extent to which their positive/successful aspects are emulated. The 15 show-cased studies also represents a range of varying situations in terms of tenurial arrangements and ownership, nature and size of operations, level of technological sophistication, institutional framework, level of official support, nature and source of investment funds (e.g. national, transnational; business house, corporate, co-operative), level of processing, nature of market, duration (and durability/age) of the operation, constraints faced, involvement of stakeholders, and socio-economic and environmental impact. In spite of the differences, these private sector operations are facing similar problems such as: land tenure complications, stake holder conflicts, hurdles (and high cost) for implementing C&I and obtaining forest certification, lack of adequate government support, market instability, inadequate financing and so on.

3 Though there are very limited number of recreation and conservation concessions in some of the tropical countries, they have not been included under the purview of this project.


3.1.1 Changes in PerceptionJust as the pressure of a growing population and other related developments have resulted in loss of area under forest cover, rapid changes have also taken place in the overall socio-political environment of forestry: new interest groups and stakeholders have come into the scene; non-governmental organizations now play a forceful role in policy making; social needs and cultural values have gained in relative importance; conventional forest management for timber alone are questioned; at the same time new and larger markets have come up for forest products; other public policies, such as environmental protection and rural development, strongly influence forest management; and process steering is now considered more important than regulation. With transition to an open society, democratic institutions and a market economy, there has arisen a need for a completely new policy and legal framework for addressing forestry’s contributions to agriculture, nature conservation and environmental protection. Public perception of forests has also moved from a largely sectoral view towards a global view of forests as economic resources, social space and a human environment. This makes it necessary that sustainable forest management needs to be largely determined by local circumstances. However, the disagreement on how forests are to be used and managed continues in spite of a growing public perception to see the forests as a common and holistic heritage.

3.1.2 Status and Dynamics of Forest ResourceOver the years, area under forest cover has considerably dwindled in the tropical countries, (and in the ITTO-PMCs). As forest areas have been put to other uses and the remaining forests subjected to overuse, the area of sustainably managed tropical forests has been variously estimated to account for 15 to 30%, depending on whether the estimation is based on the area of legal forest, actual area under forest cover or area committed (if at all) as permanent forest estate. The dynamics of forest resource change is thus influenced by the factors leading to deforestation, forest degradation, conversion of natural forests into planted forests, as well as those factors linked to science, technology, planning and implementation of forest management. The average gross and net (after adjusting for the newly created forest plantations) forest cover changes in the tropics have been continuously negative for the last several decades. During 1970s, tropical countries were deforested at an annual rate of about 11 million ha; this rate increased to 16.3 million ha in 1980s; and continued at a slightly reduced rate of 14.2 million ha in the 1990s. And, worse, the quality degradation in terms of average stock volume per unit area in the remaining forests has also been falling, in some cases at an alarming rate. Thus, closed forests move into the category of open forests and end up as treeless wastelands. As observed by the World Commission on Forestry and Sustainable Development in 1999, the world is relentlessly loosing about 25 ha of forest every minute. It has been estimated by workers in the field that deforestation (attributable to shifting cultivation, logging and agro-conversion activities, pasture development, forest fires, excessive fuel wood collection and grazing and several forms of illegal activities) releases carbon from trees and it is estimated to account for 20% of the human-caused carbon emissions. According to a UN estimate (UN-CSD, 1996), the annual disinvestments corresponding to deforestation and forest degradation leading to depletion of forest capital in the developing countries during the early 1990s has been about US$ 45 billion, against an investment of about US$ 20.4 billion, indicating a real negative investment (or disinvestment) of US $ 24.6 billion per year. Annual investments going into afforestation is relatively small such that the area afforested, quantitatively and qualitatively, is inadequate to counterbalance the loss of natural forests. Relatively high share of plantations in the total forest is found in some of the countries with low percentage of natural forests (e.g. India). Overall, the per capita availability of forest area and forest growing stock has been falling, creating scarcity for forest products and prompting unsustainable exploitation of the resource. To prevent the further loss of natural forests through unsustainable practices, some countries have banned logging in natural forests (e.g. Thailand and India), particularly in old growth forests (e.g. Philippines). In these ITTO-PMCs, wood processing units are increasingly depending on wood from non-forest sources (e.g. agro-industrial tree crops, farm trees, home gardens) and log imports.


A certain amount of deforestation (clearance of forests for agricultural development and other non-forestry purposes) appears inevitable. Apart from controlling the factors causing deforestation, rationalization of shifting cultivation, use of trees in farming systems and compensatory tree plantations are some of the measures that will have to be adopted. The ITTO-PMCs together seem to exhibit a sequence of stages, in the relentless march towards forest degradation and destruction – existence of large and seemingly inexhaustible forest resource; low population pressure; forest exploitation undertaken for financing development which later becomes uncontrolled timber extraction either through logging concessions or directly by logging agencies; expanded logging activities go out of control, leading to increasing level of illegal activities and deforestation; forest governance becomes weak and succumbs to corruption; shrunken forest is made (often, ineffectively) out of bounds for use; and people/farmers take up high yielding tree plantations or agro-forestry activities to meet the market demand, thus taking forestry to the level of agriculture. The trend seems to be repeating in country after country. There may be some differences in the actual paths taken; but general direction appears to be the same. India has about reached the final stage of the march; PNG is in the early stage of the march and seems to assume that it has inexhaustible resource, to last forever. Considering the facility to move logs easily and speedily across oceans, PNG’s (as well as of other countries, which are still on safer grounds) logging activities can also go out of control and head towards disaster – unless it can break the trend with determination.

3.1.3 Tenure and Ownership SituationThe nature of private sector involvement in different forestry activities such as forest management, harvesting, utilization and trade is influenced by: ownership and tenure; and laws, rules and regulations relating to land holding, land utilization and investment. Because of the variations seen in each of these aspects, different situations, or combination of situations, are found in different countries. The system of forest ownership as found in the ITTO-PMCs can be generally categorized as public (Government), private and customary (communal). While all citizens of a country use the term “public ownership” to mean common ownership, private ownership is used to mean those owned by individuals, families, cooperatives and membership organizations, NGOs, industrial houses, private domestic corporations/companies and multinational corporations. The customary ownership by communities, tribal groups or clans is traditional in nature (i.e. clan commons, communal domains) where the community/clan members enjoy certain rights. Forest ownership pattern is, often, linked to political history of the countries, which explains the differences found between the three tropical regions of Africa, Latin America and the Caribbean and Asia-Pacific. Publicly owned production forests are in many cases leased-out under concession agreements to the private sector for timber management. In some cases, government agencies directly manage them. Customarily–owned production forests are, in almost all cases, under Government’s supervision and control for the benefit of the community, and are treated similar to publicly owned forests for purposes of awarding concessions (generally in consultation with the customary owners). The traditional clan commons are in several cases badly neglected and/or misused. We may see an improved management of clan lands only if and when the clan group members begin to exploit economic opportunities, either as lessees under clan-land usage agreements or other arrangements. The situation with regard to public forests is not as straightforward or simple as it may appear. In a number of countries, the tribal/ traditional communities are making ancestral domain and ancestral land claims in public lands and new disputes are emerging in several cases which calls for fair settlement (e.g. Philippines). Also, new concepts such as community forestry, protected areas and conservation areas are being implemented increasingly in the concession areas of private concession enterprises. Moreover, forest resource tenure situation in some cases is in transition from the control by central government agencies to local government agencies (e.g. Indonesia). And, the situation in several cases is one of evolving forest tenure.


Another interesting aspect in this regard is that, even in cases where forests are owned privately, they are to be managed with due consideration for public benefit. In general, property rights relating particularly to natural forests are beset with problems and uncertainties.

3.1.4 Institutional ArrangementsInstitutional arrangements cover a number of areas linked to public forest administration – policy and legislation, institutions/agencies in charge of forests, decentralization of powers and responsibilities, civil society involvement, management information system, research and development and actions required for forest protection and security.

a. Policy and LegislationThe policies on natural resources which are to reflect national aspirations with regard to their use and management are no longer the main or the exclusive domain of government. They will only be effective if conceived and implemented in conjunction with other public policies and in consultation with the stakeholders. Accordingly, there has been growing demand for adapting forest policies (and legislation) to new social and economic developments. The goals of forest policies (and legislation) are now more diversified and comprehensive. Moving from a perspective which focused on wood as a sustainable resource, they now address a wide range of private and public goods and values, and acknowledge the equal importance of production as well as conservation. Policy goals refer to the role of forests as multifunctional resources: for their economic potential and for their importance to the environment. In the recent years there has been demand that policies should take cognisance of the need to ensure: decision-making processes involving the principal users and environmental groups; a workable arrangement for landowners facing public demands; a shift from regulation to joint management responsibilities; realistic financial arrangements for providing multiple forestry outputs. There are also other factors pressing for changes in forestry related policies such as: globalisation of economy and trade; internationalisation of environment and environmental protection; increasing need for investment and private sector participation; increasing participation of stakeholders and civil society; and more diversified demands of society for forest goods and services. The conditions for policy making have also changed fundamentally as a result of trends towards multi-level policy-networks, privatisation and increased democratic participation. The distinction between private enterprise and public administration is getting increasingly permeable. A major challenge of new forest policies is to develop consistent approaches and adaptive political and legal frameworks for SFM. There is need to redefine the roles of private and public sectors, and to find equitable and effective balances between the benefits and responsibilities of stakeholders. Political processes should move from government intervention to participation and joint responsibilities to ensure economic and social development in rural and urban areas, to safeguard the environment, and to protect flora, fauna and the cultural heritage. This can also help to promote stakeholder synergies and avoid or reduce suspicions and conflicts. International agencies, donors and NGOs are active in the forest policy arena in some of the tropical countries, to provide support in developing policies and laws that are transparent and responsive to people’s needs. If forest resources are considered as scarce inputs that can yield utility through production or provision of goods and services, their pricing structure and policy should accordingly signal the level of scarcity. This, often, is not the case in forestry. Problems that seemed solved in the past, now needs solutions to be found in a new economic, political and social context. Failure to do so leads to unsustainable practices. While some countries have comprehensive and legislated forest policies, in others policy measures are included explicitly or implicitly in the forest laws and regulations. These among others include: measures forbidding or limiting conversion of forest land, incentives for forestation and natural forest management, creation and maintenance of large protected wild areas, promulgation of various legal standards aimed at protecting or regulating the use of resources, strengthening protection programmes against fires, studies on sustainable management indicators and forest certification, and the formulation of national forest programmes. There are yet other countries without an appropriate “sustainable forestry code”, leading to inadequacies and gaps. A common deficiency in policy formulation in developing countries is lack of research, particularly policy


research. For developing an effective forestry sector, there is need to build bridges between forestry research and forest policy, and to build trust between public and private sectors.

b. Rules and RegulationsRules and regulations are creations of institutions (in its broad sense) and they are less likely to be capricious when they are a creation of a large community of institutions weaving a wide array of public concerns. Rules and regulations tend to be week where: it is enforced in situations where other forms of rules provide conflicting stipulations in the same matter it addresses; there are inconsistencies between the descriptive and prescriptive elements of the rules; the assumptions of the rules are not supportive of its intended action; neither the incentives nor disincentives stipulated in the rules are sufficient to arouse compliance or to defuse defiance to it. The current situation of forestry generally reflects serious gaps between policy and practice (compliance), between regulatory instruments and enforcement, and between mission and performance of institutions.

c. Institutions in Charge of ForestsGovernment institutions in charge of forests (Departments, Divisions, Boards, Commissions, Authorities), their affiliations, their powers and mandate, mission and structure, level of decentralization, and the legal instruments in place to enforce the policy writ – all these exhibit variations among countries. The Government institutions (public forest administration) have different roles to play, e.g.: as owners of a substantial portion of the country’s forest; as regulators of forestry-related economic activity; and as development agents. There are problems in law enforcement in the forestry sector – not due to lack of policy and legal framework, but due to difficulties and flaws in implementation, marked by bureaucratic insensitivity, inadequate capability and insufficient funds and manpower. In many countries, property rights (regardless of ownership) are not respected. Private sector involved in forestry finds weak law enforcement an added problem. Although the governments and the private sector have agreed on several standards for SFM, it seems that most governments have under-estimated the needs for new and additional funds to implement it, leaving the task of finding new and additional funds to the private sector. As the private sector is not willing (or has no means) to pay the full bill, the result is less resource to implement SFM. Funds needed for control and monitoring are, often, not available. These lead to inadequate forest management and illegal activities.

d. DecentralisationLevel of decentralization varies considerably. The most common form of decentralization is de-concentration of bureaucratic functions of government forest agencies by devolving specified decision powers and responsibilities to subordinate offices. Delegation of autonomous powers, functions and responsibilities and allocation of resources to local levels of government, communities, co-operatives and private sector is much less common. Central control of forestry is still very evident in many countries. And, in the few cases where increased decentralization has taken place, it has not helped to improve the situation due to several impediments. There are also complaints that decentralization has worsened the situation due to: lack of adequate preparation; contradiction of rules and regulations of the centre and the local governments leading to conflicts; friction between central and regional institutions which causes hardships to business entities; short-term agenda of local governments working against the long-term needs of forest resource management; unstable conditions created by decentralization politics. Monitoring and surveillance by independent third party are being conducted only in rare cases. An example is PNG where the government has entrusted the responsibility for scaling/marking, inspection of logs and surveillance of log movement to an independent third party (SGS – Societe Generale de Surveillance, a Swiss company), on contract. This has greatly helped to avoid allegation of illegal practices (including avoidance of taxes/charges) by private companies.


e. Civil Society InvolvementLevel of civil society involvement in SFM varies, depending on the level of genuine awareness. Civil society involvement is, often, peripheral in nature, due to lack of conditions facilitating their involvement. There is need for enhancing people’s participation. A number of countries in the tropical regions are increasingly incorporating multiple groups of interest in policy and programme formulation, including non-governmental institutions, ethnic groups, rural communities, ecologists, international organizations, and others. This evolution has come about as a response to the growing interest of society in forests and natural resources and in all the environmental benefits associated with them. As a result, subjects such as payment for environmental services and carbon sequestration, which transcend the sphere of the traditional actors of the forestry sector are coming to the fore. On the flip side, there are also some negative aspects. The incessant pressures on, and the poor image projected for, the private sector by certain international and national NGOs, in the public opinion campaigns have caused confrontations and nurtured suspicions instead of synergies. There exists a strong view that neither the donors, nor the logging companies, nor any other foreign stakeholders have the capacity to close the gap between politics and the public interest. The best hope lies in those institutions of civil society with participatory structures, technical expertise and young leadership and in the establishment of the common ground upon which to develop a wider coalition of interests – to build a new “policy community” working for social harmony.

f. Management InformationAn important factor which seriously affect forestry investment and development is the lack of relevant, reliable, consistent, clearly categorized and updated information on all aspects (resource condition and changes, growth and yield, production and productivity, technology gains, harvesting and utilization, processing and trade, conservation and protected areas, plan and programme achievements, costs and benefits) relating to forestry; and means for their dissemination. Often targets are paraded as achievements. Institutions, agencies and NGOs “make” their own estimates to justify their “stand” or views on issues, providing different versions of information. While access to satellite images and data has improved mapping of broad areas, on-the-ground reporting and field level information have tended to become steadily weaker. With decreasing forest area and increasing public demand for forest conservation and sustainable forest management, new and additional regulations and restrictions are being imposed in the form of stringent criteria and indicators, harvesting codes and new levies. The additional costs involved are not adequately compensated, in most cases, through remunerative prices and material incentives. The private sector operators who are conscientious about full compliance find the situation difficult, and the business/investment unprofitable. Further, the inadequate and loose enforcement of forestry regulations in the countries serves as a disincentive to invest in the application of an extensive array of technical forestry actions and the requirements of an elaborate management system. In a fluid situation of inadequate public forest administration and lack of stability in policy and regulatory instruments, the primary concerns of the entrepreneurs will be to safeguard their investment. They will find it difficult to make increased investment. The high level of externalities (which are not internalised in the price and cost structure) and long gestation period or investment horizon are disincentives. Often, production activity is confined only to wood harvest and multi-purpose/multi-product management is not yet a common practice, due to various constraints. For some countries in the Latin America and the Caribbean region, the incentives and financing mechanisms for the establishment of forest plantations is practically a solved problem. By contrast, there are no incentives and financing mechanisms available for natural forest management. In spite of having several problems that continue to inhibit the private sector from investing in SFM in tropical forests, most of whatever financial resources are now flowing into SFM comes from private sources. But, the investors will tend to become more and more cautious. If the private sector has to increase its contribution for financing SFM, governments and other stakeholders need to create the necessary environment for investment. Investment is needed to improve performance and competitiveness in the market. Incentives are needed to catalyse adoption and to enhance performance; but to sustain the process, other conditions also need to be met. These other conditions include, among other


things: appropriate, stable and transparent regulations; economic and political stability; guarantee of access to forest resources and to markets; and effective control of illegal activities. Economic sustainability is crucial to attract private investment into SFM activities. While appropriate rent capture is extremely relevant where forests are publicly owned, forestry should not be considered as a “cash cow” by governments; and taxes and charges should be imposed rationally. Illegal logging has emerged as a very serious problem in several countries. The normal conditions which promote illegal logging, among others, include: inadequate supply to meet demand, presence of organized timber mafia, existence of market for illegal products, high level of unemployment and weak governance (and corruption). Illegal logging destroys bio-diversity and releases millions of tons of greenhouse gases into the atmosphere, which equates each year to billions of dollars in lost revenue that could be used by governments to lift millions out of misery and poverty. The World Bank estimates that illegal logging results in annual losses of US$ 10 to 15 billion in developing countries, worldwide. What has sustained over the past several decades has been deforestation and forest degradation. Reversing this trend calls for unflinching commitment and discipline.

3.1.5 Natural Forest Management FrameworkIf the broad policy statements relating to forestry underling the need for SFM can be called a framework, then all countries have a framework for natural forest management. However, if the framework is taken to mean the specific steps and activities to promote C&I for SFM, the related time-bound targets covering all relevant aspects and an effective monitoring system to ensure implementation, then serious inadequacies can be found in several countries. Criteria and indicators provide a means to measure, monitor and demonstrate progress towards achieving sustainability of forest management in a given country or in a specified forest management unit (FMU) over a period of time. Some of the important C&I for SFM in the tropical regions are: the ATO (African Timber Organisation) process and Dry Zone Africa process in the Africa region; the Tarapoto Process of Amazon Cooperation Treaty (ACT) for the Development of Criteria and Indicators for Sustainability of the Amazon Forest and the Lepaterique Process of Central America in the Latin America and the Caribbean region; and the C&I for Sustainable Management of the Dry Forests of Asia in the Asia-Pacific region. Then, there are the ITTO Criteria for Measuring Sustainable Tropical Forest Management; and C&I for SFM of the Centre for International Forestry Research (CIFOR), which are international frameworks, amenable to be adapted to specific situations. There are also national level C&I for SFM such as in Brazil, Indonesia and Malaysia, linked to the forest certification initiatives. Some other countries have also recently initiated national processes, such as the Bhopal-India process. Analysis of responses to Q500 from all the tree tropical regions provided indications that there is total absence or inadequacy of knowledge about the processes of C&I for sustainable management of the tropical natural forests; and the implementation of the management prescription to ensure sustainability and the integrity of the forest leaves much to be desired.

a. Forest Management ImplementationDeficiencies in forest management usually happen due to flaws and inadequacies in implementation in terms of quality, quantity, timeliness, equity, legal compliance and so on. Irrespective of management arrangements, enforcement of policies and regulations is the responsibility of public forest administration. Management arrangement varies considerably based on responsibility for operations (e.g. private, co-operative or public sectors), size of operations and duration of operation contract. By and large, the main arrangement for forest management implementation in the major timber producing countries is through forest/logging concessions. In Asia, the number of forest/logging concessions (operated by private investors), and the area covered under such concessions has been falling in recent years; and some countries have completely done away with the concession system. Production activities in natural forests are being restricted (including logging bans in some cases) as a measure to ensure environmental conservation.


Selective logging (or selective felling) is the dominant system prescribed for logging concessions. The system, often, is inadequately applied, leading to wasteful practices and affecting sustainability. Prescriptions are often not followed due to lack of capacity (expertise) and funds, to reduce cost or to extract in excess of AAC. Lack of long-term security of concessions, unstable policies and high cost of compliance will exacerbate the situation. While the FMUs involved in the showcased studies are selected for their good performance, and are, therefore, exemplars, the general situation of the vast majority of operations are different. In several cases, the situation is made considerably worse by constraints of differing nature. They are generally country-specific; often situation-specific. Some of the common problems and constraints met with, include: lack of inventory and productivity information; deforestation and forest degradation caused by factors such as fire and shifting cultivation; inadequate policies and policy instruments; ineffective and weak. Institutions and public forest administration; inadequate infrastructure; unfavourable taxes and charges; lack of enforcement; bureaucratic apathy and corruption at different levels and scales; market imperfections; illegal activities; lack of harmony between sectors and instruments; stakeholder rivalries; decentralization without adequate transitional measures and arrangements and above all, lack of proper governance.

b. Cost Burden of Forest CertificationForest/timber certification has an associated cost, which is high; and, there is no understanding or arrangement for sharing the cost burden. This has caused delays and hesitation for undertaking the process of certification on the part of forest management units and timber companies. Despite the efforts for more than 10 years, the progress in tropical forest certification has been slow. According to FAO (2001b), globally only 2.1% of the total forest area (both natural and planted forests) has been certified up to the year 2000; the respective positions in the regions were: Africa 0.1%, Asia 2.9%, Oceania 0.2%, Europe 4.5%, North and Central America 5.6% and South America 0.2%. Of the 15 studies show-cased under this project, all the 4 cases of Latin America and the Caribbean and one of Africa have been certified. None of the cases of Asia-Pacific has yet been certified, but two are expected to obtain the certification soon. For the companies which have been certified, improvement in their ‘environmental image’ will provide some credibility advantage, but the bottom line for an investment project is the profit margin. So far, advantage of certification has not been proved in the market, and it has not been able to attract any premium price. There is scepticism about the certification initiatives on the part of several companies (and countries), and it is viewed by some as a non-tariff barrier for the timber from poor countries. Among the recognized global systems of forest certification are: the scheme of the Forest Stewardship Council (FSC), and its associates such as Rainforest Alliance/Smartwood and Societe Generale de Surveillance of Switzerland; Pan European Forest Certification Scheme (PEFC) and American Tree Farm System Scheme (ATFS). Initiatives are now ongoing for establishing a Pan Asian Forest Certification System. Two of the active National Systems of Forest Certification are of the Malaysian Timber Certification Council (MTCC) and the Lembaga Ecolabel Indonesia or Indonesian Ecolabel Institute (LEI). The Brazilian Forest Certification System (CERFLOR) is now operational for forest plantations and is soon expected to cover natural tropical forests. Ghana and Gabon are moving ahead for introducing National Forest Certification Systems. For most other countries (particularly those which are non-exporters) certification does not seem to be a priority. Atyi and Simula (2002) consider inflexibility of standards as an important impediment in operationalising certification. Tropical forests, they argue, are disadvantaged when certification standards focus on the end-results of management practices and do not recognize stages on the way to sustainability. They recommend a phased approach to certification, one that might help bridge the two paradigms. The first phase, they suggest, should be to demonstrate compliance with forest laws. Leslie et al (2002) argue that forest certification in its current form will remain a marginal activity, with little influence on the retention of forest values (such as bio-diversity) in natural tropical forests – through reduced harvest and reserving TPAs. One reason for this is the declining real value of timber grown in such forests; even now, such timber is not able to generate sufficient revenues to make sustainable (or certifiable)


forest management an attractive land use option, and it seems likely that it will be even less capable of doing so in the future. Some systems, more or less to achieve the same result as is being sought through certification, were in vogue in some countries, in the past – involving detailed timber accounting procedures, auditing, surveillance of timber movements, surprise checks and so on. But along the way, they were cast aside as burdensome, or downgraded. The lesson here is that unless certification can bring in benefits, the producer will lose interest in voluntary certification. Non-Certification need not (and doest not) necessarily mean that all such cases are not sustainably managed. For example, an estimate gives the sustainably managed production forests in Asia as 20% of the total forest, excluding areas allocated as PAs; and this is higher than the certified forest area in the region. It is emphasized that with or without SFM, certification or no certification, logging of tropical forests will continue. But to be dogmatic and demand certification in full, based on standards which are unrealistically stringent and without any flexibility, as demanded under certain schemes, may only result in an indirect boycott of tropical timber. This will kill the international trade in tropical timber. Implicit in this, is the loss in leverage to influence policies and practices to promote implementation of sustainable management of tropical forests. A relatively worse situation will result with no winners. And the biggest loser will be the tropical forest, with stakeholders as their own worst enemies.

3.1.6 Wood Production and UtilisationLack of regard for sustainability principles has affected the fortunes of the forestry sector in several countries. The forestry sector in a number of countries in the Asia-Pacific region, for example, has changed status from a net exporter of wood and wood products to a net importer, and from a net revenue earner to a net spender. This is mainly due to the practice of ‘timber-cantered’, single-purpose, forestry. Wood production/utilisation and sustainability issues are closely linked. As earlier indicated, the bulk of wood production in the developing world is utilized as fuel wood/charcoal, with hardly any value addition. While many of the species (and quality) of wood used as fuel may not be acceptable as commercial timber at present, many of them have been found to be suitable for reconstituted panel products and pulp manufacture. Research has helped improved utilization of lesser known/utilized species and their properties can be enhanced through proper kiln seasoning and treatment. Tropical timber from natural forests for export are being transported from long distances, as far as 1,500 km in some cases in Africa, and this also affects their competitiveness. The use of lesser known/used species and value adding through increasingly integrated operations are the main strategy used by private sector to internalise the cost related to adoption of SFM. It also calls for considerable promotional efforts, to enhance their acceptability. A trend is also evident, particularly in tropical Latin America, to raise timber plantations as a measure to reduce cost per unit output and to enhance consistency of supply. It is important that wood and forest products are made available according to quality standards and consistency required by the market and at affordable prices, comparable to that of its substitutes. Competitiveness of tropical timber can further be enhanced through reducing unnecessary overheads and transaction costs. Improved value addition and increased market value for products are important factors to enhance SFM. The market situation (and the state of forest management, by linkage) is, often, vitiated by unfair completion from illegal and unrecorded production, and supply from unsustainable sources.

3.1.7 Non-wood Forest ProductsAll the tropical regions are rich in NWFPs. However, NWFP management, generally, is a neglected field of forestry, without having adequate technical support and control. Private sector involvement in the management of NWFPs is essentially in the form of small scale enterprises. Most of the activities related to the collection/harvesting of NWFPs and their initial processing are done without adequate attention for efficiency and sustainability. Among the 15 studies show-cased here, only one is concerned with organized management of NWFPs. Two others have NWFPs as a component activity. The remaining 12 cases are purely wood-based enterprises. While NWFPs have an important and traditional role of supporting livelihood of forest communities, their


sustainable management, value addition and processing are areas requiring knowledge-intensive, sophisticated and scientific approach. Lack of: adequate policy support, funds, meaningful programmes, resource information, R&D and expertise has been plaguing this field of forestry which can play a vital role in the coming years to redirect forestry towards sustainability.

3.1.8 Management of Forests for ProtectionThe report on the Global Environmental Outlook 2000 prepared by UNEP and the report on the Pilot Analysis of Global Ecosystems sponsored by the UN had painted a devastating picture of the earth’s health on the eve of the new millennium, which applies equally to the health of the forests as well. Management of forests for protection has two components: i) management of areas devoted for protection (PAs), such as national parks, wildlife sanctuaries and bio-diversity conservation areas; and ii) protection measures in production forests such as stream buffers, protective belts, reduced impact logging and fire protection. In Malaysia, virgin jungle reserves (VJRs) have also been established in such production forests. In a sparsely populated area, with no human interference after logging operations, forests tend to recover naturally and fast without any perceptible environmental scars, whereas in a country or a region within a country with relatively dense population, there is continuous need for purposeful and planned intervention to implement protection management. The whole area of “protection forestry” in most ITTO-PMCs is marked by vagueness in policy, unclear regulations, lack of information, inadequate funding and facilities and lack of ‘protection’ management. The role of forest and vegetation in soil and water conservation is not adequately understood by the public and the policy makers. Deforestation and forest degradation have led to erosion of biodiversity in several cases. Baseline information on biological diversity is lacking in most cases. It is not clear whether positive actions are being initiated in countries to counter the situation, apart from the policy level and conceptual discussions. There are different figures (some highly inflated) floating around, released by different sources, relating to the total area and area by categories of PAs, forested and non-forested areas under PAs, PAs under management etc, at the country level. Hardly any information is available on the condition of PAs and the level of management. When conservation become a ‘fashion’ in the late 1980s and early 1990s, large areas of degraded/unproductive forests got declared as PAs; and logging was ‘legally’ banned by some countries. Reports from countries indicate that illegal logging and hunting continue to take place in several PAs for lack of effective measures (supported by funds, facilities and manpower) to prevent illegal activities. Several of the parks are “islands” without necessary buffers and corridors. There is no credible information available on the extent of sustainably managed protection areas. Watershed degradation and its impacts; inadequate efforts on in-situ and ex-situ conservation and protection of endangered species (number increasing); degraded condition of several of the PAs; wildlife/human conflicts; and carbon emission from deforestation (deforestation is said to be responsible for 20% of human-caused carbon emissions) are some of the deficiencies in the management of protection forests, in several cases. Overall, management of forests for protection in many cases exhibits unacceptable weaknesses; and this is one of the main factors which prompts public attitude of anger and mistrust directed against public forestry institutions.

3.1.9 Socio-Economic AspectsThe prime purpose of SFM is to sustain the socio-economic contributions of forestry (enhanced by its environmental services/contributions). When forest management is not sustainable, its corresponding impact is felt on the socio-economic situation of the country or the region. An important handicap is assessing the real socio-economic gains and losses of forest management (or lack of it) is inadequate information, exacerbated by the resulting distortion of forestry’s position in national accounts (regarding forestry’s contribution to GDP, dynamics of changes in forest capital etc). There are also considerable amount of unrecorded uses of forest production.


Deforestation is often shown/seen as causing an increase in income (the immediate gain of revenue from the materials exploited), without accounting for the capital loss and loss of all the values provided by the forests continuously in support of social and environmental well being of countries and communities. Economic aspects and contributions of forestry to GNP, employment, wage income, export earning etc are not faithfully represented in the national system of accounts. Forestry’s contribution is therefore distorted because of the lack of a mechanism to incorporate the unrecorded (unaccounted), illegal and subsistence uses. Also some of the quantifiable forest benefits (such as wild food and medicine, NWFPs, wilderness tourism are assigned to other sectors like agriculture, health and tourism. Moreover, the externalities generated by forestry (in terms of cost and benefits) are still left out in the accounting system. Thus, the economic aspects of forestry continue to be a neglected area, calling for increased and consistent attention. Lack of productivity criteria in forest management, distortionary subsidies in the form of cheap royalties and charges in some cases and uncontrolled use rights in others, as well as poor rent capture (on the part of government) often promoting inefficient and unsustainable practices; lack of forest resource accounting resulting in poor sectoral allocation; accounting distortions due to unrecorded and misclassified uses and externalities, and concealing of forest resource changes are aspects causing negative socio-economic impacts. Some economists feel that in the present price and cost structure relating to forest products and services, SFM is not an economically viable proposition. Livelihood values of forests have links to its economic aspects, and a strong equity dimension, particularly as it relates to the forest-dwelling and forest-dependent communities. Fuel wood, bamboo, medicinal plants, wild food and other NWFPs, and cultural products have important livelihood values. Subsistence use of these products involve enormous quantities; but they are not accounted in most cases, causing further distortion in the forest accounting system. It is the impression, borne out of estimates made by experts, that forestry’s contribution to GDP as recorded in national accounts is far below its real contribution. The same is true of employment and livelihood support attributable to forestry. Forestry’s role in poverty alleviation is indirect – through provision of employment and income earning opportunities, which in some situations is vitiated by institutional impediments such as land tenure problems, customary land ownership, unsettled rights, lack of resource accessibility etc over which the forest operator/concessionaire has very little control or influence. (A case in point is the lack of improvement in the socio-economic condition, and poverty, found among the forest land owners in Papua New Guinea).

3.1.10 Scenarios for the futureThe 15 show-cased enterprises (Appendix 2), as already noted, represent a minority of large, successful, well-managed operations. They, however, serve to provide interesting insights into the problems facing the sector and the ways of addressing them. The experiences of these successful cases also give indications about the likely scenarios, depending on the synergies that may develop influenced by the differences in the behavioural environment caused due to relative scarcity of forest resource, effectiveness of institutions, ownership pattern, investor attitudes, and the nature and level of government interventions to direct forestry towards sustainability. Scenarios can be influenced by trends and vision. While the past trend and current situation provide a depressive outlook, an achievable vision calls for vital imagination, to add realism to the vision. The global vision of the World Bank/WWF Alliance was that by 2050, about 80% of the global forests will be managed for preservation of bio-diversity, environmental services and non commercial uses; commercial scale production forestry will be concentrated in about 20% of the global forests, accounted for by intensively managed secondary forests and plantations. Other scenarios envisioned (and partly reflected in the cases discussed) include: shift of forestry emphasis to NWFPs and services; intensive natural forest management through continuous/intensive enrichment; industrial tree plantation development or natural forest management integrated with value-added processing; integrated management of wood and non-wood products; and community and farm based sustainable forest management. The scenarios are conditional and location specific. The luxury of one time logging followed by a long period of recovery is a highly restricted scenario. In the absence of a stable framework guiding the course of events, and determination to implement it, these visions are likely to be vitiated by a large number of impeding factors.


If the successful (minority) cases of SFM are unable to influence the future scenario, and if the majority which did not meet the success criteria (many of them being small and medium sized companies struggling under serious constraints), including those who are involved in illegal operations are to set the trend, then the indicative scenario will be one of grim future of forest resource liquidation. The decision as to what should prevail in the future (and whether it should be SFM) may not be difficult to make; but enforcing the decision will not be easy either. That is where commitment is crucial.

3.1.11 Overall AssessmentAt the national level SFM involves a package of inter-related components: appropriate forest land allocation including sufficient extent of protected areas; management and enrichment of natural forests under sound silvicultural principles, and multiple-use concepts; control of deforestation; increased afforestation/reforestation to reduce pressure on natural forests; increase in productivity through improved silvicultural interventions; efficient and waste-free utilization of forest resources and promotion of lesser-used species and NWFPs; promotion of employment in forest based activities; rationalization of shifting cultivation; increase in added value and retained value through policies related to industrial processing and trade; peoples participation and community empowerment; proper administrative arrangements and institutional instruments; inter and intra-sectoral harmony; a realistic plan of investment; and good governance. In view of the closer linkages between these components, it is difficult to set strict priority among them. A balanced development of these components is needed. The private sector companies operating FMUs are expected to contribute to the achievement of the “sustainability package”. Some of the aspects to be flagged, relating to the situation of forestry in the tropical regions are the following:

• General weaknesses/inadequacies of institutions and institutional instruments – i.e. policies, legislation, organizational structure, plans and programmes, human resource capability, R&D and M&E systems and so on.

• Tenurial uncertainties and conflicts, particularly regarding the rights of indigenous communities. • Lack of strategies for managing the increasing extent of degraded and secondary forests. • Chronic shortage of funds for forestry activities; dependence on donor assistance; and lack of

investment in technology development. • Lack of information (almost virtual ignorance) about global hot topics such as impact of climate

change on forests, CDM, carbon management (sequestration, conservation and substitution) strategies, bio-diversity conservation and so on, at the local relevant levels.

• Lack of adequate trust between public and private sectors, community/civil society and government institutions, and civil society and private sector.

Overall, the analysis of the situation indicated clearly that in a majority of cases forest management is inadequate and, often, unsustainable. In a number of aspects, there are conspicuous gaps between policy (or principles) and practice; also widening gaps in SFM practices and narrowing options to address them. The plans are, in several cases, not implemented; and quality is compromised to reduce cost. There is a lot of proven technology and technical knowledge that are not being used. There are too many people who stand to gain from maintaining the existing way of doing things; and others are unaware of the benefits, in the absence of effective extension/outreach. The general lesson that could be drawn is that without bridging the gap between policies/planning and practice, SFM cannot be ensured on a large/national scale and on a long-term basis. It is a common observation that countries with better human development index and per capita income tend to do better in SFM. This is also an area which calls for attitudinal change and bureaucratic reorientation, and determined efforts towards such development. In many cases, it is easily said than done. In this connection, it is to be underlined that the private sector success stories in SFM show-cased here, have clearly exhibited certain valuable attributes: awareness (about the importance of SFM), compliance (to


as many C&I for SFM as possible), commitment (to implement the SFM principles and plans), focused and efficient approach (to ensure success), stakeholder consultation (for wider support), community and civil society involvement (for ensuring harmonious environment), social sharing (in due consideration of equity) and improved marketing (for enhanced economic gains). Considering the constraints being faced, they have fared reasonably well in all aspects of SFM – technical, institutional, social, economic and environmental. Their experiences give a clear message that SFM is a practical and pragmatic approach which can help to enhance overall forest benefits; and they are, therefore, worthy of emulation as applicable to the specifics of the situation.

3.2 ISSUES IN IMPLEMENTING SFM

3.2.1 IntroductionIssues are root causes of problems, about which there will often be differences in perception. Analyses of situations help to identify issues. Indications about issues are seen in inconsistencies, contradictions, eluding objectives, blaming games and searching for scapegoats, lack of focus, and prominence given to processes and peripheral aspects. The issues brought together in this section are based on a review of: the forestry situation in the three tropical regions; the situation in the ITTO producer member countries in these regions, individually and as a group; and the 15 show-cased studies from 11 ITTO-PMCs. In some tropical countries of Asia, natural forest management in its conventional sense seems to have burned out, after a short “glowing” period of useful existence. In those countries, wood and non-wood products are now sourced mostly from non-forest private lands such as farms, home gardens, and tree crop estates (e.g. rubber and coconut). As already noted, the 15 cases of “private sector success stories” cover a wide range of situations and activities. The experiences of these cases may, to some extent, help to find reasonable solutions to the issues discussed below, under seven groups: governance-related issues; institutional issues; issues related to science and technology; issues related to utilization and trade; environmental issues; socio-economic issues; and the general and over-arching issues.

3.2.2 Governance Related IssuesGood governance is more a matter of judicious and timely implementation of policies. Non-observance or inadequate observance of policy specifications, strategic measures and implementing rules and regulations leads to several intractable issues.

a. Lack of GovernanceAn important global issue is related to continuing deforestation and forest degradation without much improvement in the situation, even some 12 years after the UNCED. While the world is loosing some 25 ha of forest every minute (WCFSD, 1999), one cannot disagree about the urgency to control deforestation. The issue here is lack of “real” commitment, reflected in lack of adequate governance.

b. Illegal ActivitiesIllegal activities of different nature (e.g. timber theft and smuggling, cutting outside AAC and species/size classes, eco-piracy, unauthorized cultivation and mining, irregularities in trade, transfer pricing and false accounting) take place, in spite of the existence of laws, rules and control mechanisms. In many cases, legal logging is closely followed by settlers/encroachers and illegal loggers, facilitated by bribery/corruption and political patronage – a situation of “fence eating the crop”. Concessionaires and private operators are often blamed for such developments. Is it a fair allegation?; or is not the issue one of governance failure ?

c. Role of StakeholdersFRA 2000 (FAO, 2001c) shows that in the countries which had suffered forest devastation in the past for various reasons (e.g. India, China, Vietnam) have shown positive forest cover change during 1990s.


Should the countries currently well endowed with forest resource run through the whole course to forest devastation or can the deforestation trend be halted? What would that involve? The need seems to be effective governance, involving accountability, transparency and stakeholder participation. There is also need to define and designate the “real” stakeholders in each case.

d. Voluntary Compliance and Independent SurveillanceSeveral contradictions seem to prevail in the forestry sector. Practice of RIL and illegal logging co-exist. RIL cannot guarantee deforestation control in the face of encroachment, timber smuggling, forest fires and anthropogenic influences. The same is true of forest certification and ecolabelling. There is also the anomalous situation that, in most cases, adherence of law is enforced (if at all) only on the law-abiding operators; and illegal operators/traders are having a heyday. How can sustainability and control of deforestation be achieved in such conditions? The system of surveillance through an independent third party as enforced in PNG is an improvement. Will such systems be relevant or effective in the situations existing elsewhere?

e. If You Cannot Measure it, You Cannot Manage itHaving clear definition of boundaries, area and stock accounts, details of production and utilization and so on are basic requirements for an accountable governance system. This is, by and large, lacking in forestry; and whatever system had existed in the past have mostly been discarded. What is it that really prevents this (measurement and proper accounting) being “practically” done?

f. Social Cost/Benefit BalancingIn the broader market sense, there are no cost-free benefits in financial, social and/or environmental terms. One has to look for what is more beneficial (or less costly) from all angles. And, the situation tends to be dynamic, as it will change with changes in the level of education, awareness, political biases and commitment, and co-operative spirit of the society. The role of the government/governance is to steer the socio-economic progress smoothly and efficiently through appropriate policies and strategies. However, it is often not done. The issue here is the need for social equity and how it can be ensured.

g. Inadequate Policy InstrumentationPolicy instruments can broadly be of three types: (i) regulatory restrictions – e.g. legal framework, prescriptions, permits, inspections, minimum standards and other control mechanisms; (ii) market-based instruments – e.g. user fees, rent capture, performance bonds, deposit-refund system, environmental taxes, elimination of environmentally damaging incentives; (iii) public accountability – e.g. information disclosure, product certification, bench marking systems and practices, public participation requirements, social audit. There have, however, been serious inadequacies in enforcing these instruments in the forestry sector, in several of the tropical countries. There is need to adjust/adapt and strengthen policy reforms and enforcement.

h. Other Relevant QuestionsThere are several related questions which come up in this connection:

• Are the frequent changes of policies, rules, codes and regulations, taking place as political compromises, conducive to the stability required for SFM?

• What causes administrative inefficiencies, failures in law enforcement and corruption? Assuming that the causes are known (or can easily be inferred), can they be addressed effectively, without a change in political environment, in most cases?

• The nature and quality of governance is a reflection of the quality of politics. How can a positive qualitative change be brought about? Without a qualitative improvement in governance and without creative destruction of ineffective and inefficient institutions, piecemeal measures such as cosmetic changes in laws, establishment of token verification systems, judicial enquiries, temporary suspension of concessions etc will not be effective.


3.2.3 Institutional IssuesInstitutions are structured around the core, represented by the policy. The other institutional components are comprised of strategy, laws/rules and regulations, organizations, human resources development, system of financing, R&D and extension and monitoring and evaluation. Lack of co-ordination between the institutional components is, often, a major failure.

a. Weaknesses of Institutional StructureMany are the symptoms of the weaknesses of institutional structure in the forestry sector: (i) failure of government(s), often, in fulfilling their obligations as committed in concession agreements with private investors (e.g. regarding infrastructure development, reforestation, revenue plough-back, timely approvals etc); (ii) confusion about the (duplicating) roles of agencies in reviewing the performance of logging operations; (iii) ineffectiveness of logging bans (e.g. in Cambodia, India, Philippines and Thailand), in the absence of adequate implementation measures; (iv) inability of PFAs to control illegal logging and other unlawful actions; (v) undue delays in settling the rights of indigenous communities in forest lands; and (vi) inadequate skill/capacity development.

b. Need for ReformsUnclear policies, multiplicity and inadequacies of rules/ regulations; weaknesses of sectoral organizations, lacking in commitment and a clear mission; and the inability of institutions to enforce policies, rules and regulations are serious issues which call for drastic institutional reforms. The emphasis of institutional support should be on facilitating development, by reducing or removing hurdles and by helping to reduce transaction costs. Perceptions about the institutional weaknesses and the need to institute reforms vary among stakeholders, which results in inadequate development of the sector. What has been accomplished once as a firm basis for the future has become fragile, and needs further modification and consolidation in many respects.

c. Inadequacies of Enforcement AgenciesIt is a common complaint that the government agencies often create hurdles rather than provide support for private sector activities in the forestry sector, and that their will and capability to enforce regulatory instruments are low. Frequent changes of policies and policy instruments are a feature of the forestry sector in several countries. This adds to the uncertainty in the investment environment, which is not conducive for private sector participation. But in many cases, however, the problem is not in the policy per se, but in policing (monitoring) and enforcement. Experience provides a clear lesson that policies, laws, rules and regulations cannot be left to be voluntarily complied with; they have to be “enforced”. It is virtually impossible for a small minority, who practise sound and sustainable management, to save the forest, while the large majority does not follow unsustainable practices.

d. Corruption in Public AdministrationCorruption in public administration is a revolting phenomenon in several cases; and forestry sector is considered as a fertile field for corruption, where a number of land and security related agencies are active players. Some 30 years ago, the Asian Development Bank compiled an informal report on corruption and its different manifestations, in the forestry sector of Asia. At that time it was a taboo to discuss corruption in public fora. Most of what was in that report now appears in bold print in international gatherings.

e. Lack of Reliable InformationRecord keeping in forestry, in several countries, appears dismal. Even the details of area under forest plantations are, often, unavailable. Other types of information – those based on surveys, inventories, research studies etc. – are also weak in many cases. Even where research information is available, they are not adequately disseminated. A major challenge to researchers is how research findings relating to SFM can be communicated in an effective and easy-to-understand manner to policy-makers. Generally, most policy


makers are not trained in forest science. As such, it is of utmost importance that they are provided with not only the correct facts but also in a format which makes sense to them, particularly from the socio-economic points of view (Abdul Razak et al, 2002).

f. Need for Rationalizing the Tenure SystemLand tenure system, particularly as it relates to the indigenous/tribal communities are vague, ineffective, and inequitable in many cases. The situation of customary land and landowners in PNG and several African countries illustrates the situation as it affects the people’s development. Insecurity of property rights of private forest owners is also a problem in Latin America and the Caribbean. The situation is not conducive for forest resource development and related investment because of tenure restrictions and uncertainties. Forest encroachments, activities of ‘land sharks’ and forceful forest occupation by social movements, make the problem more complex.

g. Complexities of DecentralisationThere are several institutional aspects which are “extra-sectoral” in nature. One such, having impact on forestry, is the policy (and politics) of decentralization. Decentralisation of different forms and at different levels has taken place in many tropical countries. Several international organizations, and donor agencies were involved in the process. Weak institutions in the countries were not able to properly influence or drive the process, and the general result was a quite complex legal framework, that does not take into consideration the local conditions. And this, without adequate transitional measures, has led to problems in law enforcement, including frequent overlaps between different levels of government and fragmentation of functions, facilitating corruption and increasing operational costs (and paper-chasing).

h. Relevance of Global Legal FrameworkLegal instruments adopted during UNCED (1992) or thereafter have produced a substantial expansion of international law on environment and development. Prominent instruments, which now form a complex worldwide legal framework influencing forestry, are: the Convention on Biological Diversity (CBD); the Convention to Combat Desertification (CCD); the Framework Convention on Climate Change (FCCC); the Kyoto Protocol; and the Forest Principles and Chapter 11 of Agenda 21. These (and those prior to these) have not been adequately internalised into the national legal systems. Also, the international community has not (or at least not yet) been in a position to agree on workable measures to operationalise the concepts involved, particularly as it refers to SFM. Accordingly they are yet to prove their efficacy.

i. Other Related FactorsThere are several related situations in the institutional arena which calls for consideration:

• Lack of co-ordination between institutions of different sectors and different levels (central, regional, local) of governments and between governments and private sector, in aspects relating to forestry.

• Lack of advocacy regarding economic contributions and externalities of forestry. • Government’s emphasis on contribution of forestry sector to general revenue, and inadequate

plough-back of the funds for sectoral development. • Need for arrangements to share the additional cost of practices to generate social and environmental

benefits by all beneficiaries. • Conflicting emphasis and narrow agenda of some NGOs – e.g. rural development; tribal uplift;

women’s empowerment; primate conservation; water harvesting; bio-diversity conservation. • Lack of forest resource accounting system; inadequate rent capture and need for rationalization of

levies and charges; unaccounted social costs; concealed and ineffective subsidies. • Inadequate public consultation and people’s participation; inadequate extension and credit support

for people’s forestry. • Gaps between policies and practice; between plans and actions.


• “Flaws in the laws and holes in the rules”; need to ensure legitimacy, public trust and credibility for laws and rules.

• Inadequacies and distortions of incentive system. • Lack of adequate and targeted funding for forestry. • Lack of realistic, implementable plans. • Need for attitudinal adjustments and a reformed bureaucracy.

The private sector in forestry seems to believe, in a number of cases, that forestry profession acts in a defensive manner without asserting their professional knowledge and vision, and hides behind other disciplines such as sociology and anthropology; as a result, the scientific/ professional content of forestry has steadily fallen. Professionalism and commitment are central to the development of the forestry sector.

3.2.4 Issues Related to Science and TechnologyLack of science-based approaches for improving forest management and adequate/ appropriate technology to address the emerging problems related to forest resource management is often exacerbated by institutional hurdles. Some of the issues in this regard are mentioned here.

a. Technological Progress may be Unstoppable, but is DelayableThe dynamic dimension of science and technology is that the frontiers of knowledge are continually expanded; answers/solutions are found for problems, and sustainable development is enabled. This, naturally, should apply also to forestry science. However, there has hardly been any breakthrough or advancement in tropical silviculture, since the adoption/adaptation of the German systems of selection and shelterwood for tropical forests in the middle of 1800s, by Brandis and successors. This is also true of management and utilization of tropical timber and non-timber resources. Recent forest history, in several cases, is one of discarding even the rudiments of scientific management (e.g. working plans, delineation of working circles, silvicultural prescriptions, concept of normal forests, timber accounting). Mechanisation of harvesting, often, has led to increased wastages and damages, RIL notwithstanding. Whatever progress there has been, was in plantation forestry, based mostly on private initiatives in such areas as genetic improvement, cloning and production of improved planting materials (e.g. Brazil, India, Indonesia). Popularisation of these improved plantation technology has in several cases been hindered by legal and tenurial problems. In some countries, misplaced nationalism resulted in resistance to planting of exotics in the guise of bio-diversity conservation and protecting/promoting native species. While development of science and technology is unstoppable, it obviously is delayable as experience has shown.

b. Forest Resource use and Ecosystem ResponseThe admixture of a large number of species in the natural tropical forests, low percentage (and low MAI) of commercially valuable species, high percentage of lesser-known species in the residual stock, and the long interval in the felling cycle raise several questions which are still unanswerable. For example: how to achieve fuller sustainable utilization of resources, without affecting the nature of plant association or admixture?; what will be the long term response of the ecosystem to the changes caused by selective cutting of preferred commercial species?. Lack of knowledge and need for research looms as a crucial issue.

c. Technology Gap or Ecology Gap?The situation in forestry is complex – marked by complexity of biological system, of landscapes, of stakeholders, and in the way all these aspects interact. In this regard, research and scientific approaches are of paramount importance. Tropical technology seems be suffering from an ecological gap. And, inadequate attention to the role of science and technology seems endemic to forestry. Technology is expected to make things better, cheaper and easier. Technology development is market driven. The cost of transmitting a trillion bits of information from Boston to Los Angeles has fallen from US $ 150,000 in 1970 to 12 cents today (UNDP, 2001). While such dramatic progress is not expected in land use sectors, what is disappointing is that forestry lags far behind agriculture, horticulture or floriculture. Holistic,


integrated, multipurpose, science-based forestry systems are still only talking points. How can forestry science and technology be made more dynamic is a moot issue.

d. To Reinvent the Wheel or to Turn the Wheel?In this regard, knowledge of forest history will be of practical value. Because of the long time scale involved in forestry, failures tend to be forgotten and later repeated (Rackham, 1990). Therefore, knowledge of the history of forests and their management may help human societies to avoid repeating such failures, rather than having to live with the consequences of poor decisions yet again and the travails of ‘reinventing the wheel’. Criteria and indicators for SFM is a (reinvented) tool for monitoring and evaluation and for assessing the status of SFM. If properly understood, it can serve as a catalyst for silvicultural refinements of production forestry. C&I are meant to be simple tools, but in some cases it has been artificially elevated to the level of a complex theory such that the industry and field foresters are inadequately aware or informed about C&I. It has been reported that many companies did not respond to Q500, because they were unsure as to how to answer queries relating to C&I and how their response will be interpreted. An issue here is the need for a minimum (short and clear) working definition and minimum acceptable standard (criteria) for SFM.

e. Difficulty to Access the Existing TechnologyTrans-national corporations and large national companies involved in forestry are able to acquire new and sophisticated technology, as available, through employing international consultants, co-operative arrangements with international institutions, in-house training programmes etc. They are also able to commission special studies and develop parameters and prescriptions relating to sustainable forest management and production. However, the medium and small companies find it difficult and unaffordable to access new and existing technology because of the cost involved. National R&D institutions, in many cases, are weak, without funds and facilities and any clear plan or priorities. Available research information and results are not properly disseminated nor converted into technological packages for adoption. Irrelevance of research conducted according to the bias of the researchers, without appropriate problem analysis or consultation with the clients about their needs, is often an issue.

f. Other Related AspectsThere are other related aspects and situations which deserve consideration with regard to the above group of issues: • Confusion between National level C&I (involving, for example, policies, regulations and their

implementation) and C&I at the FMU level (involving silvicultural prescriptions, conservation measures, local community involvement etc)

• Inadequate practical knowledge of C&I evaluators and NGO investigators. • Lack of understanding about the ecological dynamism of selection/shelterwood systems. • Lack of knowledge (ignorance) on the part of field functionaries about new concepts, terminologies

and instruments – for eg. CDM, Carbon Management, Eco-Development, Kyoto Protocol. • Non-implementation of silvicultural prescriptions contained in Working Plans, lack of incentives and

processes to encourage improved practices. • Misinterpretation of forest management, on the part of some logging operators, to mean using the

forest (to take out all that is commercially utilizable). • Lack of adequate attention to the management of NWFPs

The issue in these situations is one failure in disseminating scientific/technological information and encouraging/enforcing their application, caused due to institutionalised indifference.


3.2.4 Issues Related to Forest Utilisation and TradeThe linkages of trade and development have been well established. The dictum: “trade to invest and invest to trade” is true to forestry as well. But, sustainability of trade and development in forestry can be affected by several extraneous factors.

a. Competitive AdvantageCompetitive advantage based on efficiency (distinct from nature-provided comparative advantage) is an important factor in trade. For example, until the mid 1980s, the domestic market for most goods in India was closely protected by import restrictions and administered prices. Liberalisation of trade intensified rapidly after the launch of the economic reforms programme in 1991 and India’s ratification of the World Trade Organization Agreement in 1994. In some of the sectors, the liberalization was not accompanied by increasing competitive advantage. Similar situation has affected the forestry sector in several countries, some of whom were not able to compete in international markets; and others has become dependent on imports of forestry products.

b. Cost of CertificationVolunteered forest certification and ecolabelling has progressed rather slowly, mainly by companies which exports significant part of their production to European, North-American and Australian markets. In Indonesia, between 1993 and 2002 only one company could be “fully” certified, completing all the processes involved. Market is the driving force in this regard; accordingly, a considerable portion of the logging operation in the tropical countries, which are not under any such pressure, will tend to play ‘soft’ on C&I for SFM, because of the heavy transaction cost involved. When absolutely unavoidable the companies decide to bear the cost of certification, provided the cost could be more than offset by market gains, following the simple economic rationale. In this connection a question naturally arises: considering that it does not result in any real economic gain, can the forest certification and ecolabelling of forest products be made universal and policy driven, in the interest of SFM?; and how?

c. Certification as a Market-based InstrumentForest/timber certification as a market-based instrument for environmental conservation has tended to be too stringent – an “everything or nothing” approach. While SFM based on appropriate C&I is expensive, there is no “green premium” for certified timber. Many developed countries provide subsidies to promote SFM, but most developing countries are unable to introduce such an incentive policy. Need for a phased approach has been underlined by several quarters. The pressure for following one or the other form of C&I for SFM and for adopting forest certification by tropical timber exporting countries which depend on certain “green markets”, is heavy. In this context, the complexity of tropical forests and other various constraints when compared to temperate and boreal forests must be taken into consideration. Implementation of SFM fully, in accordance with all the criteria and indicators, will only overwhelm implementation and achieve only meagre results, if any. Implementation by stages must be accepted, not unlike the proposals under the Kyoto Protocol for the emission of greenhouse gases. So too, certification should be adopted by stages, which must follow SFM. Indeed, the ITTO has advocated such a phased approach for forest certification. There is need for intensive efforts to ensure an “honest environmental price” for forest products to cover the additional expenditure required for sustaining the environmental services of the forests. However, the competition from cheaper sources (e.g. from temperate region) and cheaper alternatives (e.g. plastics, aluminium) is real. Such efforts, therefore, are to be associated with efforts for increasing efficiency and competitiveness. Some economists are of the view that SFM for production of logs alone “does not pay”. Integrated multi-purpose management (e.g. for wood, non-wood products, recreation) is considered as a better option by some. Considerable amount of research inputs and scientific studies are essential to make SFM an attractive proposition. Here again, weaknesses and low priority of research loom as a serious issue.


d. Certification a Trade Barrier?The question is still being raised by several honest operators, who go the extra mile or incur extra cost for meeting the eco-labelling and certification requirement – i.e. whether there cannot be a simpler system of control and whether certification requirement is not a non-tariff barrier? And the green premium is far from certain.

e. Illegal Logging, an Added Cost on CertificationOn a similar note, the investors are concerned with illegal logging, as it brings down the market price for logs. When it starts hurting the investment (due to inaction on the part of enforcement agencies), the companies often buy back the illegally produced logs (an unholy compromise), the principle being “self before service”. The flow of illegal logs into the markets including cross border smuggling and illegal exports is affecting the credibility of ‘certification’. The issue here is the need to control illegal logging and trade, and to regulate sectoral development consistent with environmental conservation and sustainability. Illegal logging and related trade has grown into a serious problem in several tropical timber producing countries. The illegal logging operations are, often supported by a network which facilitates “green washing” of the products through bribing and other clandestine means. In Latin America and the Caribbean, the complex regulatory framework (such as restrictions on felling trees in privately-owned forests) has played a role in increasing ‘illegalities’, as the landowners feel that such restrictions are unwarranted. Control of illegal activities is extremely difficult in view of the vastness of area, poor infrastructure, and the large number of influential actors involved. The EU and US have put in place some initiatives (i.e. FLAG - Forest Law and Governance and FLEGT – Action Plan for Forest Law Enforcement, Governance and Trade, respectively) to restrict illegal logging, and are supporting some of the important tropical timber producing and exporting countries to address the problems.

f. Tropical Timber Trade, a Sunset Industry?Considering the unsustainable utilization of tropical forests in many cases, and the ITTO-PMCs having not yet achieved ITTO Objective 2000, there is concern that trade in tropical timber may turn out to be a sunset industry. ITTO, under the new ITTA will need to devote increased attention for achieving its SFM objectives.

g. Low-value Use vs. Value-added UseAs seen earlier, major portion of the recorded production of wood in most tropical countries is used as fuel wood. There is also a considerable amount of unrecorded consumption of fuel wood by rural communities. At least a portion of the wood used for fuel can be converted into value added products with multiplier benefits. Whether the scarce and valuable forest resource need to be used as low value fuel rather than as high value wood products are an important issue with policy implications.

h. Waste Reduction and Promotion of LKSReducing wastes in logging and processing, and product recycling (e.g. used paper for pulp) can support SFM by helping to reduce the volume to be harvested. These are linked to the issue of competitive advantage mentioned above. For promotion of LKS (and NWFPs) as contributing to SFM, research support is vital, for defining their important properties and uses. Research-linked initiatives are also required for promoting internationally tradable development credits, carbon trade, and trading in such other intangibles. These still are only discussion points.

3.2.6 Environmental IssuesIn the conditions existing in many countries, hardly any recognition or reward is obtainable for practicing environmentally and socially sound forest management practices. Often, the reverse happens.


a. Environmental Degradation Ecosystem degradation, species loss, increasing emergence of endangered and threatened species of flora and fauna, watershed depletion, poor condition of PAs, habitat loss and so on are caused by unplanned land use changes, deforestation, destructive logging, and unscientific and unsustainable forest management. Deficiencies of policies and policy instruments are the prime factors leading to the above situation. In respect of areas under logging concessions, degradation results from over-harvesting, neglect of post-harvest silviculture (e.g. enrichment planting and protection) and non-observance of other prescriptions. There need not be a conflict between conservation forestry and commercial forestry, provided commercial extraction is not done beyond the limits prescribed, leaving a lower value residual crop after harvest. Conservation means wise use, not non-use. In fact, in an economic sense, conservation provides maximum discounted present net worth, considering the infinite future ‘costs’ and ‘benefits’. Conservation is a sound economic principle. An important issue involved in environmental (and forest) degradation is the deliberate flouting of scientific principles, management plan prescriptions and license conditions, which should call for drastic penal action. On the positive side, through appropriate silvicultural interventions, the residual stock (i.e. the future crop) can be enhanced qualitatively and quantitatively as has been shown in some cases – e.g. selective cutting and strip planting (TPTJ) followed by some forest concessions in Indonesia.

b. Protection Measures in Production ForestsWhile the condition of protected areas is poor and unsatisfactory in many cases, the protection measures taken-up in production forests are often highly inadequate, which exacerbates soil erosion, watershed damages, erosion of bio-diversity and ecosystem degradation. Logging operations in several cases are followed by unauthorized settlements, utilizing the infrastructure established for logging. The situation reflects the social problems of poverty and landlessness. Whether nature conservation can be, and need be, designed as part of holistic/total development, instead of linking it solely or mainly as part of forest management remains an issue, which receives little attention.

c. Some Related Considerations and QuestionsSome of the related considerations and questions in this regard are the following:

• Need for promoting environmental and commercial viability of NWFPs for positive ecological and economic benefits.

• Need for clearly defining the scope of conservation of tropical biological diversity. • Need for cross-boundary collaboration among the tropical countries, in the field of forestry and

environmental conservation; e.g. ITTO support for transboundary protected conservation areas. • Many logging operators ignore their environmental obligations? Is it to be considered as a minor/

excusable offence? • Is “eco-terrorism” or “environmental activism”, which even prevents the practice of production

forestry under sound management, a factor leading to spurious, illegal activities? • Does the multiplicity of international environmental initiatives represent new sources of support or a

diluted commitment? Will it lead to duplication of efforts and ineffective use of limited resources?

3.2.7 Socio-economic IssuesThe prime focus of policies is (and should be) the direct and indirect benefits (socio-economic welfare) to the people, provided in an optimal manner, through the use of appropriate instruments. It is essential to see that the instruments are not mistaken for the product. Some of the socio-economic issues as it relates to SFM are the following:


a. Inadequacy of Social Concern and CommitmentSocio-economic and environmental issues are closely linked, particularly because of their mutual impacts. The benefits of SFM, accrued to the communities living in and around the forest areas (and to the forestland-owning communities), and the impacts of such benefits in improving the life and livelihood of the people, vary considerably. The cases studied indicate that the more organized the communities are, the more will they be able to claim benefits due to them, and use such benefits for individual and common development. An issue here is the inadequacy of social concern and commitment of the leadership. Often, the leadership tends to make public issue of private problems to gain personal benefits rather than taking up broader social causes such as SFM.

b. Wastages in Harvesting and Processing The level of wastage caused in harvesting and processing is an important issue. There seem to be differences of opinion as to whether the wastage is caused due to technological backwardness, cheapness of the resource, or other economic reasons (cost of extraction of poor quality material being higher than the market price of the produce). Analysis of country and case study information shows that with decreasing availability of forest resources and increasing price for products, the wastage level tends to fall, in most cases. Another category of wastage, which has not been addressed in most timber concessions, is the non-utilisation of NWFPs in the concession area, since they are often not covered in the concession agreement.

c. Lack of a Regular and Reasonable Flow of IncomeIn the past, efforts for getting private investors (mainly the small investors) interested in resource creation were not very successful because of the long gestation period involved, which did not match with the time preference of the investors. Short rotation of tree crops and possibility of multiple cropping have changed the attitude of the people towards investment in forestry. There is need for developing attractive models for investment in forestry ( e.g. multiple cropping which provides better dividend/ payback) for different site conditions and market situations.

d. Poverty of Resource OwnersIn some forest concession areas in PNG, the undivided share of forest (customary right) per person ranges from about 25 ha to over 100 ha (about 150 ha to over 600 ha for a family of 6) – adequate as a source of income for a comfortable life, in normal circumstances. But the forestland owners in PNG still lead a “poor” life. Similar situations are also found in some African countries. Several arguments are put forth, for the situation, by analysts: the situation is the result of inter-tribal conflicts and rivalries; traditional culture and system of sharing falter under the pressure of cash economy, and cargo-cult results; the tribal communities lack the basic discipline required for market-oriented production and related technological sophistication; greed and corruption among community leaders is a negative factor; customary ownership of land is not conducive for intensive land development and so on. Available analysis/studies suggest that there are gaps between policies and public interest, as well as between policies and practice. Two basic deficiencies pointed out are: (i) lack of adequate education and human resource capability of the land-owning communities and (ii) lack of clear definition and delineation of rights/ownerships over the natural resources, including lack of land use planning, land survey and land settlement. For taking advantage of forestry’s potential for poverty alleviation, it requires appropriate institutional mechanisms to ‘deliver’ and to ‘receive’ the opportunities offered. So, who is to be blamed for the situation of poverty of resource owners – the government, the forest concessionaires, the community leaders or external factors? How can the situation be improved? According to the ongoing processes of C&I for SFM, can forest management in such cases be called sustainable, considering that the concession management strictly follows all the implementing rules and regulations?

e. Other Related Aspects and QuestionsThere are a number of related aspects and questions which require attention, to enhance the socio-economic impacts of SFM.


Some aspectsThese include the need for:

• improving the forward and backward linkages of forest resource management; • managing forest resource as a capital asset; • policy and behavioural research related to forestry; • promoting NWFPs, and NWFP-based value-added processing; • waste reduction in logging and wood processing, and improved residue utilization; • improving rent capture and enhancing contribution to GDP; • effective participation of people in production-oriented forestry; • monitoring and evaluation of socio-economic impacts of forest management, and social audit of

forestry programmes; • extension and dissemination of information for enhanced awareness; • balancing ecological and economic concerns (bio-sustainability vs. social sustainability).

Some questions

• Are the illegal activities in forestry a manifestation of social parasitism or vice versa? In either case, are there viable social remedies? Will reaffirmation of social values work?

• Historically, political and demographic changes have lead to changes in social landscape and social relationships, which in turn can affect the physical land use. The case studies have brought out a number of such situations, indicating the importance of social stability. Can SFM and social stability be mutually supportive?

• How can the social themes of evolutionary behaviour (in which a revolting aspect can by stages become tolerable, acceptable and even admirable) and creative dissatisfaction (which prompts perpetual improvement/refinement towards perfection) work in tandem in forestry? (The creative dissatisfaction at the state of affairs could probably help initiate a reverse trend towards excellence).

3.2.8 General and Over-arching IssuesOf the various issues discussed, those covering the need for reforms aimed at clear policy and strategy, professional integrity and commitment for research and technology development, enhancement of human resource, judicious application of the legal provisions and tenure security are over-arching in nature. They also involve aspects essential for enhancing the role of private sector.

a. Poverty and Macro-economic InstabilityWhile the contributing factors causing population pressure, high incidence of poverty and macro-economic instability originate mostly outside the forestry sector, forests/forestry can contribute to the alleviation or worsening of the situation. Capability to improve the situation, particularly for supporting development in remote/rural areas is considered as a significant attribute of SFM; but conscious efforts in that direction, often, are highly inadequate.

b. Forestry a Transitory Sector?The importance of forestry to the national economy has significantly waned in several countries, particularly in those which have suffered serious depletion and degradation of forests. Also, there has not been any powerful movement in most such countries, for rehabilitating forests and forestry. In view of this situation, a question has been raised in several quarters whether forestry science and profession are fated to be of transitory significance (in spite of their long term importance for environmental stability and bio-diversity protection).


c. Re-defining ForestryIn a number of countries, particularly in Asia, wood requirements are met to a significant level by non-forest sources such as home gardens, shade trees and avenue trees, agro-industrial plantations (such as of rubber, coconut, mango, oil palm) and plantations of fast growing short rotation species raised in farm lands. This new development is taking forestry closer and closer to agriculture, making it necessary to redefine forestry and its fundamental role.

d. Inadequate Awareness and AppreciationGenuine understanding is essential to ensure appropriate priority and balanced support for the development of important sub-sectors and programmes of the forestry sector. At the root of all the problems being faced by the forestry sector is the inadequate understanding and appreciation, and lack of conviction, about its real role, on the part of most decision makers such that what it gets, at best, is “lip-service”.

e. Myths and RealitiesThere appears to exist several myths (and unqualified statements) on all aspects of forest resource management – ecological/environmental, social, economic, ethnological, and silvicultural (e.g. logging leads to deforestation; shifting cultivation is an elegant form of land use; subsidy is the best form of incentive; there is solidarity among local/tribal communities; exotic forest plantations affect bio-diversity). Professional leadership has the responsibility to bring out (and disseminate information on) the realities and factual situations.

f. Need for Long-range VisionThe problems of today are the result of shortsighted solutions for yesterday’s problems. To get out of the vicious cycle, reforms with a long-range vision are needed. For this to happen, the prime factor is an adequate system of governance, to properly guide forestry development and to create competitive advantages in the sector. Sustainable growth in the forestry sector will ultimately depend on developing competitive advantages through increasing efficiency (and improved technology), rather than extracting effortless benefits on the basis of nature-provided comparative advantages, which can soon be exhausted.

4.0 CONCLUSIONS AND RECOMMENDATIONS

4.1 CONCLUSIONSSustainable forestry is an ideal to be aimed at, and its major constraint is not lack of technology, but institutional and other factors which militate against the application of the best available technology. These constraining institutional factors appear in the form of short-term perceptions and time preferences of the investors, inadequate concern on the part of policy makers and managers to adopt and follow an appropriate forest management system, and inability of the public forest administration to enforce policy and regulations. Forest management system is a set of rules and techniques that are devised to maintain forested land in a desired condition, including the processes through which the rules and techniques are adapted to changing circumstances. At a minimum, management activities would include enforcing boundaries, setting yield levels for forest product harvesting and controlling them, and equitably allocating the benefits and costs derived from the resource. Such a forest management system is said to be sustainable when it is able to adapt to changes in spite of the pressures acting against it, and to maintain the desired forest condition over time (Poore et al, 1989). With the continuing deforestation, forest degradation and inadequate management of the forest resources the question raised by Poore et al (1989) “whether natural forest management and trade in tropical hardwood have a real future” still remains relevant, and a poignant reminder of the fluid situation in tropical forestry. Professional, scientific and objective approaches under a good governance frame work, and emphasis on socio-economic equity, are needed for ensuring sustainable forestry development.


Governance comprises activities by the government, the private sector and the civil society and the relationship between them. Good governance translates into effective government institutions and an enabling framework (through policies, incentives, appropriate laws and strong enforcement etc) for these three sectors to operate in harmony to achieve national objectives, such as economic efficiency, social equity, improved environmental quality and sustainable forest management (FAO, 2003a). With forests disappearing at the rate of about 25 ha a minute, there is no room for complacency. Experience shows us that participation of local people who, often, possess abundant, site specific knowledge is not an optional condition, but a pre-condition for success. While giving the clear indication that private sector can play a vital role in support of sustainable forestry development, the questionnaire survey (Q500) and the case studies undertaken in the ITTO-PMCs further showed that things are not going on well with SFM. The constraints seem to be growing in terms of intensity and spread. As already noted, the showcased private sector success stories do not represent the majority situation. They are models selected on the basis of certain suitability criteria for assessing good performance. Their merit is to be judged in the background of the problem situation existing at the country level, as well as at the regional level, particularly since they were able to perform under difficult (and adverse) conditions. It is underlined, further, that show-casing of success stories was not meant to camouflage failures, but to sound a clarion call to avert the impending disaster, through ensuring sound and sustainable management /development of the remaining forest resources Despite these success stories, it is evident that many obstacles must be overcome before sustainable management becomes widespread in the tropics. The rare cases of well functioning FMUs, favoured by special conditions or circumstances, cannot alone do much to enhance the condition of forests and their contributions, since the situation is the result of much deeper malaise, which would call for well throughout political interventions at the national level. The route to SFM is, therefore, challenging. Conceptual development or existence of C&I for SFM or elegantly prepared plans, by themselves will not ensure improved and sustained forest management. It belies the fact that effective SFM involves enormous task requiring money, manpower, materials and management. What it requires is absolute commitment, supported by appropriate institutions, technology, human resources, and co-ordination mechanism and targeted funding. Incentives should be rational and non-distortionary. At the national level, producing forest goods for an expanding market from a decreasing resource is a difficult task. Research support is essential for developing intensive and environmentally sound practices of forest management and for continuous refinement of technology to improve productivity and to keep-up competitiveness. Another vital factor is adequately skilled manpower to plan, implement, monitor and evaluate the programmes and projects. SFM is a long-term venture; and the basic issues should be adequately addressed with a long-term perspective, supported by strengthened institutions and good governance – pro-active, transparent, accountable and capable of curtailing illegal activities. While these are often lacking at the national level in several countries, the existence of success stories gives some reasonable room for optimism. Sustainable management of forest involves increased cost. But, when all the costs and benefits, direct and indirect, are taken into consideration, SFM emerges as the most appropriate land use in many cases. If adequate emphasis is not given to its capacity to provide externalities, forestry as a sector will be relegated to the status of a residual land use; SFM may remain an illusion rather than a vision. At the FMU or company level, SFM is manifested by awareness, commitment, consultation, social sharing and efficiency. The show-cased studies (Appendix 2) are cases of SFM which have survived and succeeded against all odds. Good planning, effective implementation of management operations, compliance to best practices, social concern and co-operation with local community, skilled personnel, investment in research activities and adequate financing, inter alia, are the ingredients which enabled their success in SFM. Under proper checks and balances, and effective oversight, most private entities in forestry will be capable of satisfactory performance and to emulate the successful models. Policy reforms and enforcement are an important contributory factor in that regard. While economic viability, environmental compatibility and social acceptability are essential attributes of SFM, what attracts private investment, big and small, to a forestry enterprise is the economic viability,


expressed in terms of “rate of return” on investment. This truism (that SFM succeeds only if it is economically sustainable) cannot be forgotten while promoting private sector participation in SFM. In an inter-related environment, external developments can influence the situation within a sector. Thus, stability of the forestry sector is not decided entirely from within, and much less by the private sector involved in forestry. However, initiatives for sustainability and development have to originate from within the sector; the facilitating and regulating role of the government (without unnecessary over-regulation) is crucial in this regard. Sustainable forestry will, thus, be influenced by concrete political, economic and technological conditions which are reflected in the policy context, which is dynamic and keep changing. The new policy context is characterized by:

• More complex policy networks with many more linkages to non-forest sectors, institutions, laws and agencies, both public and private;

• Broader, more comprehensive, public policy goals; • More actors in public policy formulation and, at the same time, the need for consensus building; • An increased understanding of the private and public benefits of forests and, equally important, that

the private sector needs to be compensated for the public benefits they provide; and • Recognition that government agencies responsible for managing public forests are, indeed, public

service organizations.

There is a need to loosen bureaucratic control and to simplify procedures to allow the private sector to contribute more effectively. There is also a need to promote transparency, which will curb the corruption that plagues forestry in several countries. (Saigal et al 2002). An important lesson from experience is that bureaucratic efforts without stakeholder consultation/involvement tend to become corrupt, destructive of people’s resources and environmentally degrading. Trade is a major engine for growth and a powerful tool for poverty reduction. Trade has significant influence on SFM. And, macro-economic stability and good governance are pre-requisites. A well functioning market economy is the result of trusted partnership between the State and the firms. Key to success in the coming years is that Governments and firms devise strategies to take full advantage of the potential benefits that globalisation, technology and competition offer. It will be necessary for them to understand what competitiveness means and how it fits in as a piece of the development process. Misconceptions of the nature and role of the competitiveness in the national economic development can be counter productive. Understanding that it is firms that compete in an increasingly global market both at home and abroad, and that the national policy environment can either constrain or improve their efforts, is crucial (ADB, 2003).

4.2 RECOMMENDATIONSThe recommendations based on the findings and conclusions of the project are addressed to the collaborating parties i.e. the private sector companies involved in forest management/utilization, the (governments of) tropical timber producing countries (ITTO-PMCs), and the International Tropical Timber Organisation (ITTO).

4.2.1 Addressed to the CompaniesThe recommendations addressed to the private companies emphasize the need on their part, to: care (for the maintenance and security of the forest resource base), comply (with the regulations relating to sustainable forest management), compete (in the market, through improved efficiency), communicate (with civil society) and collaborate (with the government, local community and other stakeholders) for ensuring successful implementation of SFM. Some of the specific recommendations in that regard, inter alia, are the following:


• Nurture and protect the integrity and security of the forest resource base. • Improve the productivity of the forest through appropriate measures and enhance/improve

sustainable production. In this regard, adopt multiple-use /multi-purpose management and reduced impact logging, and promote lesser-known and lesser-utilised species and small-dimensioned materials.

• Effectively integrate non-wood forest products and environmental services of forest into sustainable forest management, including related research and development activities.

• Bestow increased attention on value addition and market requirements; ensure consistency in product supply and product quality.

• Enhance product conversion ratios and reduce wastages in harvesting and processing. • Recognising that profitability is a prime consideration, ensure that product prices are affordable and

equitable to the consumer, while being remunerative to the producer. • In the interest of development and long-term sustainability in the forestry sector, adopt C&I for

SFM following a short and phased time frame; once SFM is accomplished, certification becomes a formality.

• To ensure continuous and sustained flow of multiple benefits, adequately protect the forest resource base (forest capital) and conserve the wealth of bio-diversity.

• Comply with the guidelines and prescriptions applicable to SFM and linked activities, in consideration of their long-term benefits/advantages, even though in the short-term it may cause additional cost.

• Engage in routine consultation and establish/strengthen co-operative partnerships with stake-holders (e.g. rural people, local/tribal communities, farmers, civil society, NGOs), as appropriate in implementing SFM, for mutual benefits.

• Undertake social welfare programmes to benefit communities living in and around the FMUs, in a spirit of social sharing and equity.

• Collaborate with and assist government agencies in protecting the forest from fire and other damaging agents, and in preventing illegal activities in the forest.

• Demand and receive government support and services as provided for under policies and implementing rules and regulations.

• Invest in R&D and human resources development for steadily enhancing the technology component of SFM.

4.2.2 Addressed to the Tropical Timber Producing CountriesTropical forests being a national resource, their management is regulated by the public forest administration. Therefore, majority of the recommendations are addressed to the governments of the tropical timber producing countries. It is the role of the government to facilitate SFM, with fairness and far sight. The recommendations addressed to the governments of the tropical timber producing countries, among others, are as given below:

• Evaluate and document the present condition of forest resources and their management, and critically appraise the technology in use in the context of the new technological developments, research findings, and linkages of research findings and field practices.

• Undertake new and renewed efforts in multiple fronts (e.g. forest fire management, rationalizing shifting cultivation, social fencing) to halt the loss of natural tropical forest resources, to ensure their sustainable management.

• Establish and implement a comprehensive system of planning (involving long, medium and short term plans; sites/locations, systems and markets and so on) to avoid arbitrariness and ad-hocism in developing and managing forest resources on a sustainable basis.

• Conduct comprehensive studies on the ‘socio-economics’ of SFM in comparison to other forms of land uses, to demonstrate its economic viability/superiority and potential (in terms of competitive and comparative advantages) – as a means to attract investment flows.


• Undertake appropriate steps to refine and package up-to-date technology for application in field conditions involving, for example silvicultural practices, conservation and protection measures, harvesting, products development, processing and value addition.

• Design and disseminate guidelines and codes of best practices relating to various steps and stages of SFM, supported by an adequate extension mechanism.

• Develop/expand high yielding and efficiently managed forest plantations as the major source of industrial raw material, emphasizing on: suitable species and sites; economics of production and return on investment; appropriate incentives; community benefits and involvement; increased environmental values; control of potential malpractices in the use of land and loans such that the plantation programme supports sustainable forestry development.

• Refine and enhance technological, institutional and controlling systems relevant for supporting SFM; provide support for enhancing the competitiveness of SFM.

• Develop special measures for dealing with promotion of NWFPs, and lesser-known species. • Review the opportunities for incremental income and employment gains through capturing the

intangible values of forests such as recreation experience and carbon sequestration. • Rationalise and reform the structure and functioning of forest industries (including closures where

necessary): covering size, products, location, efficiency, and ownership; limiting to sustainable availability of raw material from stable sources, whether public or private; and removing perverse subsidies which encourages malpractices and financial improprieties.

• Simplify and streamline the method of valuing/pricing natural forest timber (and natural forest products) with a view to improve the capture of economic rent, to remove concealed subsidies, to limit windfall profits and to induce efficiency in forest resource use.

• Collect, develop and disseminate trade/market information to promote and facilitate market access and success for private sector initiatives in SFM.

• Integrate environmental conservation and protection measures in forest management regulations; provide adequate importance for the protection role of the production forests; revamp the efforts for multi-purpose forest management.

• Identify and analyse unsolved and emerging problems (both technical and non-technical) for SFM on a regular basis and initiate and implement measures to address them adequately in a coordinated and collaborative manner.

• Establish and enforce an adequate and appropriate national system of C&I for SFM by stages within a specified time frame, along with freeing the sector of illegal activities, if and where they exist, so that certification becomes a routine matter.

• Improve forest governance and all related institutional instruments for supporting SFM, through consultation with stakeholders on forest policy formulation and implementation, clarifying responsibilities of stakeholders/beneficiaries, establishing partnership with private sector and joint management arrangements with communities etc.

• Formulate and enforce an appropriate (sub) policy on SFM within the reformed national forest policy, which facilitates private sector participation, and ensures sustainability and long-term security of investments.

• Establish strong and effective laws to enforce national forest policy and allied policies, and particularly to control illegal activities affecting SFM. Address illegal logging and other related illegal activities in forestry by appropriately invoking the provisions of laws and regulations supported and complimented by balanced incentives. Special measures should be introduced to protect conservation areas. A temporary ban on log exports (as a measure to curtail illegal export, if found necessary), timber certification, and log audit are other potential measures. Recognition of community rights to forest resources, in some cases, would help to reduce timber theft for subsistence use.

• Install appropriate people-friendly institutions with a new and reformed structure and mission, as required, for implementing SFM. There is a need to loosen bureaucratic control and to simplify procedures to reduce the “paper-chase” and transaction cost, and to allow the private sector to


contribute more effectively. There is also a need to promote transparency in all the dealings, which will curb the corruption that plagues the forestry sector in several countries (Saigal et al, 2002).

• Enhance rent capture, and undertake innovative measures to mobilize funds (from domestic and external services) for sustainable forestry development; create a stable and healthy investment environment, considering the long term nature of forestry enterprises; plough back revenue in enhancing technology and forest resource capital; provide non-distortionary, policy-based incentives to investors to avoid “capital flights” out of forestry; promote/facilitate establishment of targeted financing (or credit facilities) in terms of adequacy and timeliness particularly to benefit small and medium operators to ensure that plans on SFM are financially supported.

• Involve private sector in the implementation of donor-financed projects on SFM. • Bridge the “capital and technology divide” within the countries, between multinational and national

companies, and between large national companies and small local companies. The small operators are constrained by lack of funds and expertise; and often, a duality is evident in forest management which is detrimental to sustainability.

• Formulate or suitably revise and implement National Forest Programmes, with regional components (regional forest programmes) and detailed programme plans (e.g. forest plantations, forest industries etc), as necessary.

• Decentralise the forestry sector within the broad provisions of the decentralization laws, wherever such exists, appropriate to the sectoral needs and special characteristics, and based on a well thought-out decentralization plan. This involves division and transfer of authority and can take the form of deconcentration of work, devolution of powers, delegation of duties and responsibilities, and privatisation. Co-operation and constructive dialogue between the different decentralized levels are essential.

• Initiate action to make it incumbent that provision of public goods and services from forest be financed with public funds. This follows the same reasoning as in “polluter pays” principle.

• Make concerted efforts to disseminate basic knowledge and information about forestry to the public and civil society on a regular basis, as a means of raising awareness and appreciation.

• Undertake appropriate measures/actions to: - establish forest resource accounting system and rectify the existing accounting distoritions; - institute conflict resolution, co-ordination and monitoring mechanisms; - establish a mechanism for resolving land (tenure) conflicts affecting SFM through legal

means; - build skills and capability in forestry at local level and establish suitable human resource

development programme(s); - improve forestry research facilities to support technology development, particularly the

management of logged over forests.

4.2.3 Addressed to the International Tropical Timber OrganisationEven though the majority of the recommendations are addressed to the countries, the ITTO has a vital role to play in catalysing action at the country level. Often, action at the country level can be initiated only with ITTO assistance. While the recommendations addressed to the ITTO involve global level action, the member countries are ultimately the beneficiaries of such global action. The main recommendations addressed to the ITTO are the following:

• Considering that the ITTO/Malaysia initiative to bring together the representatives of the private sector involved in SFM from ITTO-PMCs has proved to be highly fruitful and a great success, convening of periodical conferences (say in every 2 years and rotated among the tropical regions) of private sector players in SFM be made a regular feature of the ITTO’s programme of work.

• Design, find ways and means and initiate action to ensure that the ITTO guidelines, manuals, bulletins and technical publications reach the “tree roots” level, and help to spread the knowledge about SFM. In most cases, at present, these important materials do not reach the actual implementers


(private sector) and beneficiaries (people) of SFM. They get stuck at the first leg of the relay (in a Government office at the National Level). There is need for a strong and effective programme on knowledge dissemination.

• Expand and strengthen ITTO’s direct assistance to private sector engaged in tropical forest management with a view to: enhance technology, improve capability, promote integration of wood and NWFPs (and forest services) in the management of FMUs, support R&D and increase awareness and understanding about SFM at the FMU level.

• Facilitate increased availability of ODA to the private sector involved in SFM, by supporting pre-feasibility studies, information updates etc.

• In collaboration with the private sector involved in SFM, establish a permanent arrangement to co-ordinate and exchange SFM experiences among those engaged in tropical timber production and forest management in the ITTO-PMCs, in all the three tropical regions.

• Establish, in keeping with its exemplary role, a forest policy advisory group to address policy issues linked to SFM and strengthen activities of its civil society advisory group and trade advisory group. In this context the ITTO Civil Society Advisory Group (CSAG) and the ITTO Trade Advisory Group (TAG) should be institutionalised.

• Establish/opertionalise and strengthen a system of regional and international collaboration, co-ordination and networking, to promote exchange of research results and experiences, and sharing of facilities for training and human resource development, among ITTO-PMCs, supported by private sector, public sector and relevant international agencies.

• Review the present state of timber/forest certification initiatives around the tropical world, and their impacts; take the lead role to simplify and rationalize the forest certification system (by applying it in a phased and steady manner through step by step upgrades and providing a graded compliance scale, as appropriate), and to make it less expensive and more practical.

• The momentum to demonstrate and promote the implementation of SFM in ITTO PMCs through project activities must be strengthened from the resource s of Bali’s Partnership Fund under the framework of the International Tropical Timber Agreement.

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6.0 APPENDIX

Appendix 1. List of respondent companies & addresses of Q500 and QS2 survey

AFRICA

1 Man Fai Tai Congo Holdings Ltd.Brazzaville, Congo

Tel: (242) 94 75 01Fax: (242) 94 75 02

2 Société Congolaise Arabe Libyenne Du Bois(SOCALIB)

Tel: (242) 66 53 27Fax: (242) 81 00 16

3 Mokabi S. A.Brazzaville, Congo

Tel: (242) 51 55 54e-mail: mevellec@groupe rougier.comWebsite: www.rougier

4 Société Thanry Congo

Tel: ( 242) 81 03 13Fax: (242) 81 03 13e-mail: [email protected]

5 Foralac, BP 216Pointe Noire, Congo

Tél: 94 ANNEX TWO 13 42e-mail: [email protected]

6 Congolaise Industrielle des BoisOuesso, Congo

Tel: 00871 761 880 724Fax: 00871 385 055 712e-mail: [email protected]

7 Cristal S.A.BP 2114 Brazzaville Congo orBP 5908 Douala, Cameroon

Tel: 237-9950 602Fax: 237-34206 77

8 Bois Tropicaux et Derives (BTD. SA)BP 543, Bangui

Tel: (236) 61 59 02Fax: (236) 61 59 05

9 Société d’Exploitation Forestière Centrafricaine (SEFCA)BP 391, Bangui

Tel: (236) 61 66 12Fax: (236) 61 03 36e-mail: [email protected]

10 Industrie Forestière de Batamina (IFB) Tel: (236) – 61 68 55, (236) 61 40 95Fax: (241) 70 58 57e-mail: [email protected]

11 Thebault- Transbois BP 18028, Owendo Gabon

Tel: (241) 70 58 55Fax: (241) 70 58 57e-mail: [email protected]

12 Gabon Export Bois BP 8161, Libreville Gabon

Tel: (241) 74 66 02Fax: (241) 74 19 25


13 CEB-ThanryBP 2262, Liberville Gabon

Tel: (241) 76 02 08Fax: (241)76 01 15e-mail: [email protected]

14 Leroy- GabonBP 69, Liberville Gabon

Tel: (331)41b79 55 02

15 SibafB.P 376, Douala, Cameroon

Tel: (237)-342-3648Fax: (237)-342-2608

16 La Forestiere de Campo B.P.1314, Douala, Cameroon

Tel: (237)-342-48-38Fax: (237)-342-2608

17 Wijma-GroupeB.P 1616Douala, Cameroon

Tel: (237)-342-8022, 237-343-0711Fax: (237)-342-3369e-mail: [email protected]

18 Vicwood-Thanry Group (SEBC)B.P 2004, Douala, Cameroon

Tel: (237)-342-5703, (237)-342-6892Fax: (237)-342-3515, (237)-342-4360

19 Improbios S.A01 BP 2719-Abidjan

Tel: 21 35 8916Fax: 21 35 82 45e-mail: improboi@ aviso.ci

20 Bois Transformes D’Afrique (BTA) 01 BP 2719 - Abidjan 01

Tel: 20 22 33 04Fax: 20 22 74 69

21 Tranchivoire SarlAbidjan

Tel: 21 36 01 60Fax: 21 36 08 85e-mail: [email protected]

22 Transformation de Bois IvorienAbidjan

Tel: 225 – 20 22 61 62Fax: 225- 20 22 77 87

23 Société industrielle et forestiere de Cote d’Ivoire (SIFCI)01NBP 2459 Abidjan 01

Tel: 225- 21 35 50 76 Fax: 225- 21 35 58 98e-mail: sifcianet.net

24 Prima Woods Ltd. P.O Box 4043, Kumasi

Tel: 051-23116 or 23258Fax: 051- 261 53

25 Scanstyle-Mim Ltd.Accra

Tel: 021- 22- 69-27, 22 14 99Fax: 021 –22 62 19

26 Mr. Imad BerbariPO Box 8634, Kumasi

Tel: 051 27690, 24315Fax: 051-24315, 25172

27 Pant Timbers Ltd.PO box 1664, Kumasi

Tel: 051 – 22783 0r 25246Fax: 051 – 22783e-mail: [email protected]


28 Logs & Lumber Ltd.PO Box 3344, Kumasi

29 Parashanti Export Ltd.PO Box 16925Accra North

Tel: 027 572 423

30 Coppon wood Processing Co. Ltd.PO Box 32, Akim Oda

Tel: 0882 – 2400, 2047Fax: 0882 – 2315, 031-22887

31 Samartex Timber & Plywood Ltd.P.O Box 1, Samreboi

Tel: 0394-22040 or 22041Fax: 0394-22015e-mail: [email protected], [email protected], [email protected]

32 Pas Timbers Ltd.P.O box 592, Takoradi

Tel: 031 – 22843, 23347Fax: 031 – 21161, 23339

33 Ras wood Products (GH) Ltd.PO Box 3172, Kumasi

Tel: 051-23231, 24246Fax: 031- 46725

34 John Bitar & Co Ltd.PO Box 406, Sekondi

Tel: 031-46321Fax: 031-46725

35 A.G TimbersPO Box 3806, Kumasi

Tel: 051-26814, 26815, 23705Fax: 051-23231, 23232

36 Ejisu Forest Products Ltd.PO Box 3382, Ejisu

Tel: 021-666936, 666937, 663242 Fax: 021-6666938

37 Ehwia Wood Products Ltd. PO Box 3813, Kumasi

Tel: 051-70970

38 Nafy Timbers Ltd.PO Box 282, Teshi-Nungua, Accra

Tel:021- 220914 Fax: 021 228683

39 Dupaul Wood Treatment (GH) Ltd.PO Box 86, Takoradi

Tel: 031- 24040, 772143 Fax: 031 –23024, 021 – 772750

40 Int20ex Co. Ltd.PO B21ox 294, Takoradi

Tel: 031-24997, 24113Fax: 031- 21424, 24995

41 Ghana Primewood Co. Ltd.PO Box 370, Takoradi

Tel: 031-22591, 22592, 22593Fax: 031-23432

42 Kumi & Co. Ltd.PO Box 1644, Kumasi

Tel: 051 – 25773Fax: 051- 25858

43 Asuo-Bomosadu Timbers & Sawmills Ltd. PO Box 220, Berekum

Tel: 0642- 22143Fax: 0642 – 22000


44 Paul Sageo SawmillPO Box 5884, Kumasi

Tel: 051- 23779Fax: 051-23142

45 Bibiani Logging & Lumber Ltd.PO Box 170, Kumasi

Tel: 051-23322Fax: 051 – 28362

46 Birim Wood complex Ltd.PO Box 313, Akim Oda

Tel: 0882 –2122, 2212, 2229Fax: 0882 – 2229, 021-221144

47 Fabi Timbers PO Box I948, Kumasi

Tel: 051-24849Fax: 051- 24849

48 Maxwell Owusu Timbers PO Box 1097, Kumasi

Tel: 051- 26409, 24170Fax: 051-23231, 25318

49 Naja David Veneer & Plywood Ltd.PO Box 1939, Kumasi

Tel: 051-23231, 24246, 24247Fax: 051- 23231, 23232

50 Sunstex Co. Ltd.PO Box 1075, Kumasi

Tel: 051-22175, 22826Fax: 051- 22826, 25318

51 Subri Industrial Plantations Ltd.PO Box 848, Takoradi

Tel: 031-24791, 24608

52 Ghana Veneer Processing Co. Ltd.PO Box 370, Kumasi

Tel: 051- 23399, 23892Fax: 051-23892

53 Oti-Yeboh Complex Ltd.PO Box 244, Sunyani

Tel: 061-27274Fax: 061-27382

54 Office de Développement et d’Exploitation et Forests(Odef Milling Plant)BP 334, Lome

Tel: (228) 221 34 31Fax: (228) 221 34 91

ASIA-PACIFIC

1 Fiji Pine Limited85 Drasa AvenueP.O. Box 521Lautoka, Fiji

Ph: (679) 661511Fax: (679) 667087e-mail: [email protected]

2 Orissa Forest Development Corporation Ltd.A/84 Kharavel NagarBhubaneswar – 751 001, India

Ph: 91-674-501086Fax: 91-674-505934

3 Kerala Forest Development Corporation Ltd.‘Aaranyakom’, KarapuzhaKottayam – 686 003, India

Ph: 91-481-582640Fax: 91-481-581338e-mail: [email protected]


4 Himachal Pradesh State Forest Corporation Ltd.Van Nigam BhavanS.D.A. ComplexKasumptiShimla – 171 009, India


5 Shree Baidyanath Ayurved Bhavan Ltd.172 GusainpuraJhansi – 284 002, India


6 Sterling Tree Magnum (India) Ltd.No. 5, 41st Street6th Avenue, Ashok NagarChennai – 600 083, India

Ph: 91-44-3700639

7 ITC Bhadrachalam Paperboards Ltd.106, Sardar Patel RoadSecunderabad – 500 003, India

Ph: 91-8746-42331Fax: 91-8746-42460/42784e-mail:[email protected]

8 Rajya Van Vikas Nigam Ltd.Panchanan5th Floor, Malviya NagarBhopal – 462 003, India


9 Harrisons Malayalam LtdPost Box No. 502Bristow RoadCochin – 682 003, India

Ph: 91-484-667540Fax: 91-484-666752

10 Forest Protection Committee, PanarikheraPanarikhera Village,Motinala (Post)Mandla DistrictMadhya Pradesh, India

e-mail: [email protected]

11 Forest Protection Committee, JholaJhola Village Keolari (Post) Seoni District Madhya Pradesh, India

Ph: 91-7692-20594Fax: 91-7692-20594

12 Andhra Pradesh Forest Development Corporation Ltd.3rd Floor UNI Building A.C. Guards Hyderabad – 500 004, India

Ph: 91-40-3392652Fax: 91-40-3320039

13 Village Forest Committee, PiparkhuntiPiparkhunti Village Pendra (Post) Bilaspur District Chatisgarh State, India


14 Village Forest Committee, SimroniyaSimroniya Village Simroniya (Post) Sheopur District Madhya Pradesh, India

15 Forest Protection Committee, DugliDugli Village Nagri (Post) Dhamtari District Chatisgarh State, India

16 Village Forest Committee, ChampanerChampaner Village Thandla (Post) Jhabua District Madhya Pradesh State, India

17 Eco-Development Committee, MatharMathar Village Rehti (Post) Rehti Tehesil,Raisen District Madhya Pradesh, India

18 Nivee Gardens NurseryAnna Nagar,Opp. Water Tank Trichy Road Palladam – 641 664 Tamil Nadu, India

Ph: 91-4255-522312e-mail: [email protected]

19 Hindustan Newsprint Ltd.Piravam Road Newsprint Nagar - 686 616 Kottayam District Kerala State, India

Ph: 91-471-441871Fax: 91-471-556375

20 Arya Vaidya SalaKottakkal – 676 503 Malappuram District Kerala State, India

Ph: 91-493-742220

21 Tamilnadu Forest Plantation CorporationPost Box No. 75 Vadassery Nagarcoil – 629 001 Tamilnadu, India



22 Andamans Timber Industries Ltd.Circular Court 7th Floor 8 A.J.C. Bose Road Calcutta – 700 017, India


23 M.P. State Minor Forest Produce (Trade and Development) Co-operative Federation Ltd.Khel Parishar Indira Nikunj Nursery 74-Bungalows Bhopal – 462 011, India

Ph: 91-755-555869/554880Fax: 91-755-552628e-mail: [email protected]

24 PT. Adindo Hutani LestariCentral Office Panin Bank Plaza Lantai 4 Jl. Palmerah Utara No. 52 Jakarta 114 80, Indonesia


25 PT. Finnantara IntigaCentral Office S. Widjojo Centre 8th Floor Jl. Jenderal Sudirman 71 Jakarta Selatan 12190, Indonesia

Ph: 62-21-5272086Fax: 62-21-5272088

26 PT. Suka Jaya MakmurJl. Adisucipto Km – 53, Pontianak West Kalimantan, Indonesia

Ph: 62-561-721866Fax: 62-561-721583

27 PT. Musi Hutan PersadaJl. Residen H.A. Rozak No. 99 Palembang – 30114, Indonesia


28 PT. Hutan MulyaPlaza Dwima Jl. A. Yanti, KAU – 67 Jakarta Pusat – 10510, Indonesia


29 PT. Belayan River TimberJl. Serindit No.12 Samarinda Kaltim, Indonesia

Ph: 62-541-743011Fax: 62-541-202267

30 PT. Inhutani IIGedung Manggala Wanabakti Block VII, Lantai 13 Jl. Gatot Subroto Jakarta – 10270, Indonesia



31 PT. Inhutani IGedung Manggala Wanabakti Block VII, Lantai 12 Jl. Gatot Subroto Jakarta - 10270, Indonesia


32 PT. Sumalindo Lestari Jaya IIJl. Ir. Juanda III / 24 Jakarta, Indonesia


33 PT. Diamond Raya TimberJl. Dr. Sutomo No. 62 Pekanbaru Riau, Indonesia


34 PT. Narkata RimbaJl. Balikpapan Raya, No. 14 Jakarta, Indonesia


35 PT. Kirana ChakrawalaJl. Mononutu SK-11/20 Propinsi Maluku UtaraTernate, Indonesia

Ph: 62-921-21448Fax: 62-921-23582

36 PT. Bina Lestari (Jambi)Gedung Manggala Wanabakti Block IV, Lantai 3 Jln. Jend. Gatot Subroto Jakarta 10270, Indonesia

Ph: 62-21-5704634Fax: 62-21-5704634

37 P.T. Bina Lestari (Riau)Gedung Manggala Wanabakti Block IV, Lantai 3 Jln Jend Gatot Subroto,Jakarta 10270, Indonesia

Ph: 62-21-5704634Fax: 62-21-5704634

38 PT. Wanasokan HasilindoJl. M. Sohor – Komp Puri Indah, Pontianak Kalbar, Indonesia

Ph: 62-561-723979Fax: 62-561-721637

39 PT. Sari Bumi KusumaJl. Balikpapan Raya No. 14 Jakarta Pusat, Indonesia


40 PT. Nusa Wana RayaJl. Sultan Syarif Quasim 80 Pekanbaru 28144, Indonesia

Ph: 62-761-31333Fax: 62-761-22438


41 PT. Ratah TimberBank Panin Senayan Building5th Floor Jl. Jend. Sudirman Jakarta, Indonesia


42 PT. Inhutani VGedung Manggala Wanabakti Block IV, Wing – B, Lantai 4 Jl. Gatot Subroto, Senayan Jakarta 10270, Indonesia


43 PT. RanggakesumaHanurata Graha Lantai 1 Jl. Kebon Sirih No. 67-79 Jakarta Pusat, Indonesia

Ph: 62-21-327810Fax: 62-21-325058

45 PT. ITCI Kartika UtamaBase Camp, Kenangan P.O. Box No. 132 Balikpapan 76146, Indonesia


46 Shin Yang Industries (Bintulu) Sdn. Bhd.124, Jalan Bendahara Miri, Sarawak, Malaysia


47 Ocarina Development Sdn. Bhd.P.O. Box No. 256 96007 Sibu Sarawak, Malaysia

Ph: 60-84-326155Fax: 60-84-316160

48 Samiling Plywood (Miri) Sdn. Bhd.Wisma Samling Lot 296 Jalan Temenggong Dtk. Oyong Lawai Jau P.O. Box 368, Miri Sarawak, Malaysia

Ph: 60-85-413099Fax: 60-85-412751

49 Jaya Tiasa HoldingsNo. 1-9, Pusat Suria Permata Jalan Upper Lanang 96000 Sibu Sarawak, Malaysia


50 Zedtee Plywood Sdn. Bhd.Lot 2367-2371 2nd Floor Boulvard Commercial Centre Miri-Pujut Road, Miri Sarawak, Malaysia

Ph: 60-85-416649Fax: 60-85-416850.


51 Besut Tsuda Industries Sdn. Bhd.Beris Pak Abu, Km – 7 Jalan Kaula Besut 22000 Jertih Terengganu, Malaysia


52 Kampulan Pengurusan Kayu Kayan Terengganu Sdn BhdBandar Bukit Besi 23200 Dungun Terengganu, Malaysia


53 Syarikat Mahajiwa Sdn. Bhd.86, Jalan BRP 4/4 Bukit Rahman Putra 47000 SG. Buloh Selangor, Malaysia

Ph: 60-3-61563890Fax: 60-3-61564733

54 Kim Guan Huat Sawmill Sdn. Bhd.2nd Mile, Jalan Kapar P.O. Box 71, Kelang Selangor, Malaysia

Ph: 60-3-33426522Fax: 60-3-33426523

55 Sebati Sdn. Bhd.Lot 3005 Jalan Ulu Yam Baru 44300 Batang Kali Selangor, Malaysia

Ph: 60-3-60573168Fax: 60-3-60973180

56 Nira Wood Products (M) Sdn. Bhd.Lot Pt. 498 Mukim Sungai Gumut 44100 Kalumpang Selangor, Malaysia

Ph: 60-3-60492388Fax: 60-3-60492314

57 Yayasan Islam KelantanPeti Surat 248 Nilam Puri 15730 Kota Baharu Kelantan, Malaysia


58 Syarikat Seri Bintang Sdn. Bhd.Lot 312 Bangunan Hussin Beladar Jalan Kebun Sultan Kota Baharu Kelantan, Malaysia


59 Ringgit Saksama (M) Sdn. Bhd.P.T. 4218 Taman Bunga Tropika Gua Musang Kelantan, Malaysia



60 Great Eastern Mills Bhd.Batu 40 Jalan Kota Baharu 18000 Kaula Kerai Kelantan, Malaysia

Ph: 60-9-9666353Fax: 60-9-9666090

61 Kompleks Perkayuan Kelantan Sdn. Bhd.Tingkat 7 Bangunan Pkink Jalan Tengku Maharani 15000 Kota Baharu Kelantan, Malaysia


62 Maju Weko Timber Industries Sdn. Bhd.36-38 Lengkok Tasek Timur,Taman Tasek Indra,31400 Ipoh Malaysia


63 Ikatan Syrikat PembalakPembalak PerakLot 1218, Batu 103 Jalan Klian Intan 33200 Gerik, Perak, Malaysia

Ph: 60-5-5486663Fax: 60-05-5450088

64 Perak ITC Sdn. Bhd.No. 8, Lebuh Lasam 30350 Ipoh Perak, Malaysia


65 Borneon Timber Sdn. Bhd.3rd Floor, Lot 16-18 Block K, Jin Ikan Juala Satu Sadong Jaya, Karmunsing 88000 Kota Kinabalu Sabah, Malaysia


66 Bugaya Forests Sdn. Bhd.Locked Bag No. 29 91009 Tawau Sabah, Malaysia

Ph : 60-89-775760Fax: 60-89-765976e-mail: [email protected]

67 TSH Resources Bhd.TB-9, Km 7, Jalan Apas TSH Industrial Estate 91000 Tawau Sabah, Malaysia

Ph: 60-12-4618090Fax: 60-89-913000


68 KTS Plantation Sdn. Bhd.Lot 32, Bandar Pasaraya Commercial Complex Mile 4, North Road WDT No. 20 90009 Sandakan Sabah, Malaysia


69 Idris Hydraulic (Malaysia) Bhd.Levels 4 & 5, No. 2 Jalan Dewan Sultan Sulaiman 1Off. Jalan Tunku Abdul Rahman 60300 Kuala Lumpur, Malaysia

70 Tabung HajiTH – Bonggaya Sdn. Bhd. PPM 107, Elopura 90000 Sandakan Sabah, Malaysia

Ph: 60-89-238851Fax: 60-89-238853

71 Sabah Forest Industries Sdn. Bhd.WDT – 31 89859 Sipitang Sabah, Malaysia


72 Sapulut Forest Development Sdn. Bhd.9th Floor, Lots 1-10 Wisma Harbour View Old Slipway Estate Sabah, Malaysia

Ph: 60-89-216101

73 Anika DesiranLot 9-9, 9th Floor, No. 6 Lor Api-Api 1,Letter Box No. 009 88000 Kota Kinabalu Sabah, Malaysia


74 Timberwell Bhd.Lot – 26, Lor Dewan P.O. Box 12302 88825 Kota Kinabalu Sabah, Malaysia

Ph: 60-88-214222Fax: 60-88-234896.

75 North Borneo Corporation Bhd.Unit 8-08, 8th Floor Menara MAA, No. 6 Lor Api-Api 1, Api-Api Centre 88000 Kota Kinabalu Sabah, Malaysia

Ph: 60-88-263232Fax: 60-88-234363


76 Innoprise Corporation Sdn. Bhd.P.O. Box 11622 88817 Kota Kinabalu Sabah, Malaysia


77 Perak State Forestry DepartmentJalan Panglima Bukit Gantang Wahab 30000 Ipoh, Malaysia

Ph: 60-5-2542007Fax: 60-5-2553644

78 Vanimo Forest Products Ltd.P.O. Box 41 Vanimo, Papua New Guinea


79 Woodland Domain Inc.54, Remarville Avenue Remarville Subdivision Pamplona II Las Pinas City, Philippines

80 Bukidnon Forests IncorporatedBFI Compound Sumpong Malaybalay City Bukidnon, Philippines


81 Pacific Timber Export CorporationRM-201, LGI Building Ortigas Avenue, Greenhills San Juan, Metro Manila, Philippines


LATIN AMERICA – CARIBBEAN

1 Alvorada Madeiras - A. F. G. OliveiraAv. Brazil s/n - Bairro Triângulo 69940-000 Sena Madureira AC, Brazil

Tel: 55 068 229-3808 Fax: 55 068 229-3808e-mail: [email protected]

2 Amaplac Ind. De Madeiras S/AAv. Solimões s/n, km 04, Dist. Ind.69075-200 ManausAM, Brazil


3 Amazônia Compensados E Laminados S/ATrav. Benjamin Constant, 1416 66035-060 Belém PA, Brazil


4 Bedin – Indústria De Madeiras Ltda.Av. Dr. Tancredo Neves, s/n 78510-000 ItaúbaMT, Brazil



5 Brascomp Compensados Do Brasil S/ADistrito Industrial Lote 2, Setor 1, Quadra 3 67030-970 Ananindeua PA, Brazil


6 Cemex – Comercial Madeiras Exportação S/ARodovia Santarém/Curuá-Uma, km 05 68015-510 Santarém PA, Brazil

Tel: 55 093 524-1722 Fax: 55 093 524-1722e-mail: [email protected]: www.forex-cemex.com.br

7 Cikel Brasil Verde S/AEstrada do 40 Horas – km 04 s/n - Bairro Coqueiro 67120-000 Ananindeua PA, Brazil

Tel: 55 091 273-1777 Fax: 55 091 273-1999e-mail: [email protected]: www.cikel.com.br

8 Curuá Mad. Do Amazonas Ltda.Rod. BR 63, km 818,5 78550-000 Sinop MT, Brazil


9 Dal Pai Indústria E Comércio S/ARua Batista da Costa, 322 81810-190 Curitiba PR, Brazil

Tel: 55 041 346-0010 Fax: 55 041 346-9392e-mail: [email protected]: www.dalpai.com.br

10 Dalmad - Dalmaso Madeiras Ltda.Rod. BR 010, km 75 s/n - Zona Rural 68625-970 Paragominas PA, Brazil


11 Eidai Do Brasil Madeiras S/AEstrada da Maracacuera, s/n – Distrito Industrial de Icoaraci 66815-140 Belém PA, Brazil


12 Gethal Amazonas Industria De Madeira Compensada S/A Rua Ernesto Thalheimer, 1412 69100-000 Itacoatiara AM, Brazil

Tel: 55 092 521-1527 Fax: 55 092 521-2090e-mail: [email protected]: www.gethalamazonas.com.br

13 Giachini & Bagatini LtdaEstrada Magda, s/n Fazenda Dona Mercedes 78540-000 União do Sul MT, Brazil


14 Guavirá Industrial E Agroflorestal Ltda.Rua Maranhão, 500 78435-000 São José do Rio Claro MT, Brazil

Tel: 55 066 386-1295 Fax: 55 066 386-1387e-mail: [email protected]: www.guavira.com.br


15 Lunardelli – Agricultura Comércio E Colonização S/AFazenda Santa Maria – Caixa Postal 11 Colniza STATEMT, Brazil

Fax: 55 066 571-1001 e-mail: [email protected]

16 Indústria De Compensados Triângulo Ltda.Rua Chanceler Oswaldo Aranha 570 - Bairro Vila Hauer 81630-160 Curitiba PR, Brazil

Tel: 55 041 275-2113 Fax: 55 041 275-5399e-mail: [email protected]: www.triangulo.com.br

17 Indústria Trianon Ind. De Rondônia Ltda.BR 364, km 360 NR. 5637 78961-970 Ji-Paraná RO, Brazil

Tel: 55 069 422-2277 Fax: 55 069 422-2387e-mail: [email protected]: www.trianon.com.br

18 Internacional MadeirasTravessa W1 nº162 - Conjunto Cohabi 66815-220 Belém PA, Brazil


19 Iruama Madeiras Ltda., EppRua Santo Antonio 78880-000 Vera MT, Brazil

Tel: 55 066 583-1446 Fax: 55 066 583-1422

20 Jari Celulose S/A / Orsa Florestal S/AVila Munguba, s/n 68.240-000 Monte Dourado PA, Brazil

Tel: 55 093 3736-6306 Fax: 55 093 3736-1180e-mail: [email protected]: www.jari.com.br / www.grupoorsa.com.br

21 Juruá Florestal Ltda.Dist. Industrial de Ananindeua, Qd 6 Lote 3 Setor B 67033-310 Ananindeua PA, Brazil


22 Laminit– Lâminas E Compensados S/AAv. Industrial, 300 Coqueiral 65930-000 Itinga do Maranhão MA, Brazil

Tel: 55 099 531-4188 Fax: 55 099 531-4188e-mail: [email protected]: www.laminit.com.br

23 Langer MadeirasEstrada Ruth, Lote 69 78550-000 Sinop MT, Brazil


24 Madeiras Bom Sucesso Ltda.Rod. BR 163, km 739 - Bairro Industrial 78890-000 Sorriso MT, Brazil



25 Madeiras Mainardi Ltda.Rua 1º de janeiro, 110 - Bairro União 67100-000 Marituba PA, Brazil


26 Madeireira Itacoatiara Ltda.Estrada Torquato Tapajós, km 227 69100-000 Itacoatiara AM, Brazil

Tel: 55 092 521-3331 Fax: 55 092 521-3526e-mail: [email protected]: www.pwamazon.com.br

27 Madeireira Jordânia Ltda.Rua Gov. Antonio Marin Coelho, 49 78320-000 Juina MT, Brazil


28 Madesá Madeiras Santarém Ltda.Rodovia Santarém/Cuiabá, km 4 68030-000Santarém PA, Brazil

Tel: 55 091 524-3500/3505 Fax: 55 091 524-1999e-mail: [email protected]

29 Meotel:I Madeiras Amazônica Ltda.Rua G-L, nº 7 228 - Bairro Industrial 78325-000 Aripuanã MT, Brazil

Tel: 55 066 565-1145 Fax: 55 066 565-1309

30 Noroeste Laminados Ltda.Rua Uruguai, s/n - Bairro Industrial 78885-000 Feliz Natal MT, Brazil


31 Nova Aliança Agropecuária S/ARodovia Marta MT 225 km 110 78885-000 Feliz Natal MT, Brazil


32 Palmasola - Madeiras E Agricultura S/AEstrada Rio do Sangue, km 02 78350-000 Brasnorte MT, Brazil

Tel: 55 066 592-1143 Fax: 55 066 592-1143e-mail: [email protected]: www.palmasola.com.br

33 Porto De Moz Ltda.Rodovia Arthur Bernardes, 2342 66115-000 Belém PA, Brazil


34 R. E. Sangalli Com. Imp. Exp. MadeirasMargem Direita do Rio Parauau s/n 68800-000 Breves PA, Brazil

Tel: 55 091 227-1270 Fax: 55 091 227-1269


35 Reforestadora Holanda Ltda. Rua Rio Madeira, 193 – Bairro N.S. das Graças69053-030 Manaus AM, Brazil

Tel: 55 092 9982-7778 Fax: 55 092 521-2259e-mail: [email protected]: www.ecoBrazil.nl

36 Rohden Indústria Lígnea Ltda.R. Samuel Rohden, 350 78340-000 Juruena MT, Brazil


37 Samal Sadielma Madeiras Ltda.Estrada dos Almeidas, s/n – Iripixí 68270-000 Oriximiná PA, Brazil


38 Serraria Marajoara Ind. Com. E Exp. Ltda.Rodovia Transamazônica, km 180 s/n - Setor Industrial 68140-000 Uruará PA, Brazil

Tel: 55 091 258-0030 Fax: 55 091 258-0600/2200e-mail: [email protected]

39 Taiga Industrial Madeireira Ltda.Estrada Ruth, ch 88 78550-000 Sinop MT, Brazil


40 Exporcol Cia Ltda.Zona Franca Industrial Patio GC Cl 24 18 A 104 Santa Harta Magdelena, Colombia

Tel: 3430-9023 Fax: 085 430-9025e-mail: [email protected]

41 Industria Nutibara Ltda.Calle 13 Sur nº 52-120 Medellín Antioquia, Colombia


42 Inversiones Forestales La Cabaña S/ACarrera. 50 E nº 8 sur-63 Medellín Antioquia, Colombia


43 Pizano S.A / Monterrey Forestal Ltda.Diagonal 127 A (calle 127) nº 23-76 Piso 6 Santafé de Bogotá Distrito Capital, Colombia

Tel: 57 1 6279080 Fax: 57 1 6279206e-mail: [email protected]: www.pizano.com.co

44 Plantacion Forestal El EmbrujoCalle 2 Sur nº 46-55 of 330 Medellín Antioquia, Colombia



45 Agricola Ganadera Reysahiwal Agr S/AAv. Carlos Julio Arosemena km 2,5 Guayas, Ecuador


46 Bosques Tropicales S/A - BotrosaAv. Moran Valverde y Panasur, km 9,5 Quito Pichincha, Ecuador


47 Fundación Forestal Juan Manuel Durini/EndesaAv. Moran Valverde y Panasur, km 9,5 Quito Pichincha, Ecuador

Tel: 593 2 2670-631

Fax: 593 2 2674-016e-mail: [email protected]: www.fundacionforestal.org

48 Maderas & Maderas CastilloAvenida America 3-158 - Bairro BlancoCañarAzuay, Ecuador

Tel: 800608 / 835676 Fax: 800608

49 Plywood Ecuatoriana S/AMaldonado 8091 Panamerica Quito Pichincha, Ecuador


50 Servicios Y Trabajo Forestales Cia Ltda. SetraforAv. Moran Valverde s/n y Panasur km 9,5 Quito Pichincha, Ecuador

Tel: 593 2 268694 Fax: 593 2 2675-906e-mail: [email protected]

51 Agroindustrias Salvatierra S/A - AssaXetzac, Tecpan Chimaltenango Tecpan Chimaltanango, Guatemala

Tel: 840-4190 Fax: 840-4192e-mail: [email protected]

52 Barakat Timbers Ltd.Charity Georgetown, Guyana

Tel: 592 771-4497 Fax: 592 2227-4158e-mail: [email protected]

53 Cooperativa Regional Agroflorestal ColónAtlántida Honduras Limitada – CoatlahlBarrio La Merced Ave. Ramón Rosa, entre 15 y 16 calle La Ceiba Atlántida, Honduras

Tel: 504 442-2178 Fax: 504 442-2178e-mail: [email protected]

54 Maderas Curadas LardizabalKm 4 ½ carretera a Olancho, 614 Tegucigalpa Francisco Morazan, Honduras



55 Inversiones Agroforestales S/ACañita, Chepo - Cl Ppal Cañitas Chepo Panama, Panama


56 Futuro Forestal S/A9823 David Chiriquí, Panama

Tel: (507) 727-0010 Fax: (507) 727-0010e-mail: [email protected]: www.futuroforestal.com

57 Exportino SacAv. Lurigancho,1177 - Zarate Lima 36 Lima, Peru

Tel: 00 51 1 458-7560 Fax: 00 51 1 452-0730e-mail: [email protected]

58 Industrial Satipo Sac Carretera Marginal km 1.5 (Tramo Macamari-Satipo) Satipo Satipo, Dpt Junin, Peru

Tel: 064 545048 Fax: 064 545343e-mail: [email protected]


Appendix 2

CASE STUDY SUMMARIES

Case Studies of Africa 1. Congolaise Industrielle du Bois (CIB) of Congo – P.Y. Dubois and D. Paget 2. Rougier Gabon in Haut – Abanga – N. Bayol 3. Samartex Timber & Plywood Ltd. of Ghana – A. Brede 4. Office de Developpement et d’Exploitation des Forets (ODEF) of Togo – A-A. Ayih

Case Studies of Asia – Pacific 5. ITC Bhadrachalam Paperboards Ltd – S.N. Rao 6 Madhya Pradesh State Minor Forest Produce (Trade and Development) Co-operative Federation Ltd. – R. Prasad 7. PT. Sari Bumi Kusuma – N. Suparna 8. Samling Plywood (Baramas) Sdn. Bhd. – S.K. Chan 9. Perak State Forestry Department Operations in Matang Mangrove Forest – M. Azahar and K. L. Lim 10. Vanimo Forest Products Ltd – P. Tiong 11. Pacific Timber Export Corporation – F.A. Lu

Case Studies of Latin America and the Caribbean 12. Cikel Brasil Verde SA – M. Tuoto 13. Guavira Industrial e Agroflorestal Ltda – J. Baldasso and M. Tuoto 14. Orsa Florestal SA – R.S. Waack, R.F. Tocci, A.L. Pironel and E.L. Reckziegel 15. Empresa Agro-industrial La Chonta Ltda – P. Antelo and M. Tuoto


CASE STUDY SUMMARIES

Case Studies of Africa

1. Congolaise Industrielle du Bois (CIB) of Congo – P.Y. Dubois and D. Paget

The company, located in the northern part of Congo is a large-scale multi-national establishment, and forms part of a bigger international group Hinrich FELDMEYER-tt Timber International. The forest concession holdings of this company totals up to 1.3 million ha., which are at four different operational sites. The vegetation (forest type) consists mostly of moist evergreen forest ecosystem, with varying degrees of canopy density. Two of the forest concession holdings of the company share common boundaries with the Nouabale-Ndoli National Park, and the company has established collaboration arrangements and wildlife conservation protocols with the government and other partners. All the harvesting operations are based on selection felling, which derives a lot of strength from experiences acquired and observations made over several years of operations. Most of the trees, which are harvested, are well above the prescribed minimum diameter limits. The enterprise has a forest inventory team in place to facilitate data collection, and also other teams undertaking socio-economic studies, etc., aimed at developing detailed forest management plans. Timber harvesting is well coordinated through the use of modern planning, equipment and methods – for pre-harvest forest zoning, road planning and the application of reduced impact logging techniques. A full complement of mechanical harvesting devices is in use. Training in RIL techniques is provided to the company’s felling crew, and progress with respect to productivity, and minimization of environmental impacts are monitored regularly. An essential aspect of the post-harvest operations is an elaborate logging residue recovery and utilization programme, that ensures removal of logging debris, in order to facilitate natural regeneration and to avoid the occurrence of forest fires. Most activities relating to post-harvest regeneration is jointly being undertaken by the company and the newly created parastatal organisation for reforestation and agroforestry activities. A well equipped road construction and maintenance team builds roads for harvesting, as well as those required for long distance haulage of products to the ports. There is also a complement of an elaborate system of river transportation, and the required equipments to facilitate this. All processing activities of the company are sustained by a well-developed export market, as the domestic market is comparatively very small. The species mainly in use are Sapele, Sipo, Ayous, Bosse, Tiama, Iroko, Mahogany, Wengue and Doussie. CIB’s sales turnover reached about US $50 million in 2002, and its investments amounted to about US $ 5 million per annum during the last 5 years. In collaboration with the ITTO, and also the Keurhout Foundation, the company seems to be progressing well on issues related to C&I for SFM and their application. With reference to human resources development, the CIB manpower strength of 1,665 personnel is supported by a trade school for training, and a whole range of welfare facilities, free of charge. The investment of the company, as they relate to processing, seems to be growing as portrayed by a growth of about 50% in its manpower strength between 1998 and 2002. Socio-economic contributions of the company is essentially based on assistance to the workers and local community, which takes the form of: settlement agreements and follow-up, establishment and maintenance of social infrastructures (living accommodation, schools, health centres, co-operative stores); and initiating alternative activities aimed at developing agriculture, craft and trade, and developing specific support programs for semi-nomadic populations such as Pygmies. These programmes, created as a result of the commercial operations of CIB, benefit about 13,000 people living in villages. Its road network and maintenance programme stretches up to the border of Cameroon, to support various forms of social and economic activities. CIB operates a well-co-ordinated alternative livelihood programme aimed at reorienting the attention of the local populations from forest degrading activities such as shifting cultivation and hunting of wildlife.


In collaboration with an environmental NGO and the Ministry of Forest, a partnership to manage a National Park has been developed; and under an ITTO sponsored project, these organizations have managed to establish an ‘ecoguard’ system, consisting of trained people who patrol the forest area to control poachers. There are also other components to this partnership approach to forest management, including education and awareness creation as well as support for research activities. On the other hand, CIB’s image as projected to certain international environmental NGOs, has militated against its efforts at getting the forest management operations certified. The company is working hard to rectify the situation. The place and location of the company’s forest relative to its markets, which is some 1,300 km away, puts a lot of strain on company resources in terms of time, road maintenance and the provision of security for the products en route to the market. Seasonal fluctuations in the river flow and water level make river transportation partially feasible, only during some parts of the year. Developing a new relationship with some of the indigenous forest dwelling and dependent people has sometimes been a slow process, requiring careful nurturing. CIB is looking forward to develop more effective and increasingly harmonious partnership with all stakeholders. The Congolese forest covers 22 million ha, i.e. about two thirds of the national territory, and represents the second largest economic resource after oil. Since 1974, Congo has opted to engage in responsible management of its forests, by adopting a plan for the management and utilization of forests based on large-scale concessions with 30 to 40 year rotation to ensure a sustained production of timber. Having taken into account the handicaps and the weaknesses of the forest sector, the government promulgated the Law No. 16/2000 of 20 November 2000 to establish the Forest Code, laying down new guidelines aimed at rational management of the whole forest eco-system. CIB falls under the ambit of the new guidelines. The range of factors that led to the improvement of forest management of CIB includes: adoption of the government guidelines for sustainable management of forest ecosystem; partnership with an international NGO (facilitied by an ITTO project); improved collaboration with local people; and increased attention to conservation aspects, including protection of local wildlife.

2. Rougier Gabon in Haut – Abanga – N. Bayol

Rougier Gabon in Haut – Abanga is a subsidiary of the Groupe Rougier, based in France. The parent company has a long history of forest industry tradition in Gabon, as it has been operating here for the past 50 years. Group Rougier, a multi-national group, is also well represented in Congo Basin forests of most countries in the Central African sub-region. Rougier Gabon (RG) was established in 1996 for sustainably managing its concessions in Gabon. The commitment of the company to follow forest management processes is derived from a number of motivational factors, i.e. for: safeguarding the forest heritage under a sustainable concession; acquiring a better knowledge and understanding of the forest resources; rationalization of logging activities for increased productivity; development of long-term activities for planning and investment purposes; responding to market expectations; and responding to issues relating to the corporate image of the company. RG has forest concessions located on four operational sites totalling up to 600,000 ha. The area of the concession site in Haut-Abanga is 282,626 ha. The company, in recognition of the need to pursue a more responsible management of its forest resource, contracted a consulting firm, FRM of France, to undertake pilot studies to provide the proper orientation towards the achievement of this objective, and to prepare the forest management plan valid for 25 years. Consistant with the company’s broad business objective, its core management objective was established as the sustainable maintenance of timber production, encompassing the sustainability of the business venture and of the forest resources. On the strength of the inventory data and growth modelling, parameters for the management of the series of activities relating to forest production were established. The choice of parameters included the length of rotation, minimum diameter of trees for harvesting, list of exploitable species etc.


The preparation of the forest management plan commenced with the inventory of the Haut-Abanga and the Ogooue-Ivindo forest management units of the company’s concessions. This involved: field activities and the use of information generated from topographical maps, aerial photographs and satellite images; undertaking of socio-economic and other complementary studies; and the determination of the activities to be included in the strategic management plan with a horizon of 25 years. The forest management plan, apart from guaranteeing sustained timber production also ensures hydrological protection, conservation of forest biodiversity, protection of slopes and steep lands as well as the conservation of special ecosystems, including river margins. In response to the observations made in the pilot studies, the company has established permanent sample plots which help to generate information on the ecological trends, and to improve on the recommended silvicultural prescriptions of management. Additionally, RG has started regeneration trials based on enrichment planting activities. The approved annual allowable cut for the company has been set at 285,000 cum. Of the total volume of tree species harvested, 85% is comprised of a single species, Aucoumea klaineana (Okoume), which is the prime timber species in Gabon. The company’s processing activities, including veneer and plywood manufacture are well integrated, and uses around 66,000 cum of Okoume logs annually to produce premium quality plywood, targeted for the export market. The personnel of the company, totalling about 950 are encouraged to pursue training, either on the job or through professionally designed skill development programmes. The company provides welfare facilities to the employees in the form of housing, health care, water and electricity, recreation facilities etc. In the socio-economic studies carried out, some 4,000 local people were identified, as living in the vicinity of the concession areas of the company. Accordingly, the company has adopted various measures that will promote and ensure a healthy co-existence with the people. Some 25,000 ha of the company’s original forest concession allocation has been ceded and created into a community forest, for the sole use of these people. As part of its commitment for environmental conservation, the company has demarcated a number of conservation areas, made up of 29,900 ha. of fragile ecosystems. It is involved in the rational management of wildlife resources and their protection against poaching. It has imposed prohibition of commercial hunting in most of its concessions, by the formation of a team of ‘eco-guards’ who check and monitor the movement of vehicles in the forest areas for illegal game hunting. To support the measures of the government to create national parks, the company, in 2002 ceded 83,000 ha of its concession area to form part of the Invido National Park; and, the company participates in the Management Committee of this park. The company’s preference for the harvesting of Okoume, without diversifying production to other species, would perhaps soon impact on the availability of this species. Additionally, the socio-economic implications of the company’s actions on the wildlife trade, needs a careful study and rationalization as this seems to have both positive and negative impacts on the people living in the local community. Some of these people seem to be working with others in the cities, and they are collectively motivated by the profit from the trade in game (and their social needs), to continue the practice of hunting. In order to address this and similar issues, and to pave the way for effective and sustainable forest management, Rougier Gabon has, in recent years, initiated a new dialogue with partners in SFM in Gabon, including NGOs, people’s representatives, administration agents and researchers, who meet, exchange views and work together in furthering common interest.

3. Samartex Timber & Plywood Ltd. of Ghana – A. Brede

Samartex Timber & Plywood Ltd (STP) is a privately owned large-scale company, that inherited a long tradition of sustained timber production from a previously owned, well managed forest operation, with its origin dating back to 1947. The current management team is part of a Germany-based group. The company operations represent one of the biggest in Ghana, and the concession falls under the timber utilization contract system. Equipped with a well-resourced forest management department in terms of tools and expertise, STP has


initiated activities relating to forest management planning and development, and thus supplements the statutory responsibilities of the State in this direction. Operating a forest concession of 145,000 ha in size (spread over 12 forest reserves and an off- reserve area of 30,000 ha), the company’s forest planning activities are based on a forty-year felling cycle, with each felling coupe to be sustainably harvested over a period of five years. The system of silvicultural management of the forest concession is based on selective felling, which derives its strengths from a predetermined AAC, by the Forestry Authority. All the harvesting operations are done in accordance with the prescriptions set out in the Ghana Manual of Procedures for Forest management, which among other things specifies pre-harvest, harvest and post-harvest operations. STP, has a complement of equipment and machinery for harvesting, and ensures a reduced impact of its operations on the ground. With reference to the observance of minimum standards derived from C&I for SFM, the company is implementing most of the management prescriptions as detailed in the Forest Standards of Ghana. It is also making efforts towards obtaining forest management certification, possibly under the FSC scheme. Ghana has been developing a National Certification Scheme for Forestry since 1997. The setting up of the standards was overseen by a National Committee, and it was developed by a technical working group. The standards and checklist have been extensively revised since their inception. They were field tested in March 2000, based upon the STP’s forestry operations. Unfortunately, so far, the final standards have not been ratified by the Forestry Commission – a fact that still creates some confusion with regard to FSC in Ghana. However, in 2003 STP took the lead and the company was certified by SGS for having an uninterrupted Chain of Custody (CoC) as well legal compliance with all rules and regulations as stated in the Ghana Manual of Operations. STP is the first company in West Africa to receive this certification. Trees that are due for harvesting will be determined by the Forestry Department. During stock survey, by compartments, all trees of commercial value with a diameter above 50 cm are physically recorded, and a detailed map of the surveyed compartment is produced. Each tree species has a minimum felling diameter, e.g. Mahogany 110 cm. Only around 20% of the trees above the diameter limit are to be harvested. The rest of the trees are to be retained for the next entry in 40 years. During the harvesting operation not more than three trees per ha are extracted. The company, on an average, achieves a monthly round log production of 10,000 cum. Most of the logging and processing residues are sorted out, and the last grade used to generate electricity for both industrial and domestic purposes. With a variety of primary and secondary processing mills ranging from processing of burls, sliced and peeled veneer, saw milling, plywood mill, moulding and a wood carving centre, the round logs produced are sorted out to suit the best end-uses. The main species used for processing are Khaya ivorensis, Khaya anthotheca, Entandrophragma cylindricum, Entandrophragma candollei, Milicia excelsa, Anigeria robusta, Triplochiton scleroxylon, Terminalia superba, Heriteria utilise, Ceiba pentandra and around fifteen others. In its human resources development programme, the company exhibits a strong commitment to the improvement of the capacities of both its work force and people from the local community. The company has in place a well-coordinated apprenticeship development programme, utilizing the in-house and external facilities. The workforce of the company, totalling 2,350 is provided with welfare facilities in the form of free electricity, water, free medical care, accommodation and schooling facilities for the worker’s children. In responding to the socio-economic needs of the mostly rural communities living in the vicinity of the company, it has prioritised the provision of education, health and the maintenance of the road network in the area, as its contribution to national development, apart from the statutory taxes. Food processing and a range of income generating activities are promoted in order to improve the livelihood of the rural population. Under an alternative livelihood programme, which is jointly implemented by the company and the local communities, agro-forestry activities are being promoted as a basis for discouraging the spread of shifting cultivation. The company is also engaged in NWFP processing in collaboration with a German firm, which is currently at the level of R&D, for developing a sugar free beverage sweetener from a bushy plant found in the forest. In collaboration with Hohenheim University and research institutions in Germany, they are carrying out further research on Thaumatin, a sweetener obtained from the berries/seeds of Katemfe bush (Thaumatococus


danielli). Thaumatin is a natural low calorie sweetener, approximately 3,000 times sweeter than sucrose, and a flavour enhancer with a wide range of applications. Under its forest protection strategies, designated areas with high biodiversity indices are conserved, and fire protection strategies are seriously observed. Within a Forest Reserve, not all compartments are “productive”. There are a variety of protection measures which exclude compartments from logging operations. The most important ones are hillside sanctuaries, research plots, swamps, shrines, river margins and the GSBAs (Globally Significant Biodiversity Areas). In some of the STP’s Reserves, more than 20% of the compartments are under one or other form of protection. Some of the major constraints that seem to militate strongly against the sustainable management efforts of the company include: the, difficulties in protecting wildlife from poachers and the harvesting and chain sawing of timber illegally in the forest concession of the company. As the illegal operators are the preferred companions of the village community, the company faces an uphill task in controlling these activities.

4. Office de Developpement et d’Exploitation des Forets (ODEF) of Togo – A-A. Ayih

This case is essentially concerned with management of plantation forests. The area of natural forests in Togo is currently estimated at only 500,000 ha. In view of the paucity of natural forest resource, the country has emphasized the development of planted forests. In order to achieve the production targets, it has set up a special organization called Office de Developpement et d’Exploitation des Forets (ODEF) responsible for reforestation and promotion of SFM. ODEF is a public-owned autonomous commercial entity, which is empowered by law and financed by the State, as the sole organization to pursue the objective of managing and improving the nation’s forest resources as well as the marketing of its produce. Since commencing its activities as a follow up to a project in 1971, this organization has set an annual planting target of 2,000 ha. This target has been pursued vigorously through the establishment and management of nurseries and operational planning, thus providing the required inputs for setting up the plantations. Techniques developed in-house for seedling development and soil preparation serve as the basis for silvicultural and management prescriptions. ODEF has so far established some 10,000 ha of gradually maturing plantations. The plantation development programme is concentrated on five species, with the main species being Tectona grandis (64%) and Eucalyptus spp (32%). All the plantations have management plans, which are reviewed every ten years. Based on the observed growth dynamics of the plantation species and the determined rotation ages for the five plantation species, the organization has prepared volume tables to guide various management interventions, including the thinning process at intervals ranging between 4 and 5 years. The AAC established for all the thinning operations is currently 13,500 cum of round logs, and this is to be limited to an area of between 50 to 300 ha. per year. All forms of harvesting activities are based on a harvesting plan, which is co-ordinated, controlled and monitored. Post harvest regeneration is carefully conducted to facilitate as much regeneration as possible. Various methods of regeneration are applied, including in-field plantations with assisted natural regeneration, (and sometimes enrichment treatment), when there are natural formations. Once the plantations are established, weeding, early thinning, artificial pruning, vine clearing and successive thinning operations are carried out. The use of uncontrolled fire in the plantations and in the areas surrounding them, are prohibited. Also, grazing animals are not permitted in the vicinity of the plantations. Volume of current harvest of wood has shown an increase of nearly 180% compared to the 1995 wood harvest. The quality of the industrial round logs/saw logs, are considered as average, with their diameters ranging between 14 cm to 60 cm. All the harvested produce has end-use applications in the saw milling facility of ODEF for processing, or is exported in the round form. The sawmill with an installed capacity of 8,000 cum of saw log input is currently being worked at about 62% of the capacity, and has a recovery rate of about 33%. All the sawn timber products are readily sold in the local market, while the organization exports about 8,500 cum of round logs annually. The manpower strength of ODEF, totalling 205, is composed of forest engineers and a complement of related workers, who undertake most of the management and technical functions. Most of the field-level


activities are labour intensive and temporary and hired labour is used for such activities. Inadequacy of professional forest managers significantly limits the activities of the ODEF. Almost all the reserved forests are inhabited by people, who are allowed some use rights. The ODEF is implementing some alternative livelihood programs, in co-operation with the rural communities. It had financed the provision of several social amenities, including the construction and rehabilitation of clinics, wells and schools. Through an initiative to raise plantations under the taungya system, the organization is intending to improve the extent of people’s participation in its operations and to enhance forest protection measures. Its network of roads to and from the plantation sites, has contributed to linking up of several villages with the urban centres. The operations of ODEF with respect to the management of the degraded natural forests, and the natural regeneration techniques adopted, do not seem to be very strong. There appears to be an undue reliance of the plantation development activity on exotic species, with very little effort to promote indigenous species. In the absence of a forest research facility, ODEF has to carry out applied research tasks and foreign assisted research projects in co-operation with the University of Lome. Moroever, very little progress has been made with regard to establishing C&I for SFM and a Forest Certification System in Togo. The forestry law from which the organization derives most of its strength is very old and obsolete, and they need to be reviewed and revised, in order to accommodate evolving concepts of SFM and to control illegal activities. The development plans for reserved forests provide a course of action for the conservation of biological diversity. This includes, amongst others, the systematic preservation of natural forest groves, savanna, woodland and riparian forests. At the present time no endangered species have been recorded in ODEF’s concessions. Traditional hunting for small game (rodents, birds, etc.) is tolerated by the forest legislation and is practised on ODEF’s land. Poaching of big game also exists in spite of regulations. The situation continues to be a source of worry.

Case Studies of Asia – Pacific

5. ITC Bhadrachalam Paperboards Ltd – S.N. Rao

A striking feature of the this case study is the initiative of a private company involved in manufacture of paperboards and specialty paper to promote outgrower (small farmer) involvement to produce pulpwood from genetically improved and high-yielding varieties of pulpwood trees. ITC (Indian Tobacco Company) is one of India’s largest private sector companies. It is a multi-business corporation with business segments covering fast moving consumer goods, hotels, agri-business, information technology and paperboards, speciality papers and packaging. ITC Ltd. Paperboards and Specialty Papers Division (ITC-PSPD) operates an integrated pulp and paper mill located at Sarapaka near Bhadrachalam in the Khammam District of Andhra Pradesh State in India. This mill was established in 1979 and currently has an installed capacity of 100,000 mt of pulp and 182,500 mt of paperboards and paper per year. Present requirement of cellulosic raw material of ITC-PSPD is about 400,000 tpa, which will grow to 800,000 tpa, with increase in its production capacity and product range, as envisaged. The mill currently meets its raw material requirement from various sources. The mill was established on the basis of the commitment of the Government of Andhra Pradesh (GoAP) to supply major part of the raw material need from government forests. The Andhra Pradesh Forest Department (APFD) however could not keep up the commitment beyond 1986; and in 1988, with a view to conserve natural forests and in keeping with the National Forest Policy, the “clearfelling” of forests was terminated. In 1989, the Andhra Pradesh Forest Produce (Fixation of Selling Price) Act was passed. This provided for fixing selling price of raw material from government sources to wood-based industries, following certain prescribed procedure, namely that the selling price of bamboo and mixed wood shall be fixed based on the production cost, but not below the market value of the produce at the point of supply. With the effective enforcement of the above Act all existing arrangements for the supply of raw material was abrogated, since October 1991.


In the 1990s, pulp and paper units in the State obtained 78 to 82% of the raw material requirement from non-government sources. From 1997-98 to 2001-02 there was no agreement signed between APFD and ITC-PSPD. Currently, APFD has agreed to an ad hoc supply of 25,917 mt of bamboo between 29 November 2002 and 31 March 2004. The dire situation has been developing for some time. To save their investment, the company had to find alternative sustainable raw material sources. Accordingly, the company decided to promote pulp wood tree plantations on farm lands, after realizing that supplies from government forests are going to decline in the future, and acquiring lands for plantations would be difficult due to land ceiling laws and restrictions on leasing of forest lands. Beginning 1982, the company distributed a total 4.67 million free Eucalyptus seedlings to farmers, but discontinued it in 1986 due to poor response. From 1987 to 1995 the company implemented a bank loan scheme supported by NABARD to promote farm forestry. A total of 7,441 ha of plantations were established on holdings of 6,185 farmers in 1,138 villages in the districts of Khammam, Krishna, West Godavari, Guntur, Prakasam, Nellore, Nalgonda and Warangal. The farmers were given quality planting stock (of seed route), technical extension services and buy-back guarantees at minimum support price or the market price whichever is higher. However, the acreage achieved was far below the set targets and the productivity of 6 to 10 cum/ha/yr was too low to be attractive to farmers as a land use option. The overall experience with the scheme was not very satisfactory as: (i) farmers harvested their plantations earlier than the stipulated rotation period and (ii) the company paid the farmers for the wood only after first settling the bank loans. Since the proceeds proved insufficient even after waiving the company’s service charge of Rs.70 per mt of wood, the scheme was discontinued after 1995. The need for research to improve the quality of pulpwood plantations and their productivity was realized by the company and it launched a tree improvement programme. Presently, the company is concentrating on research to develop better clones, and on commercial sale of clonal seedlings to the farmers. The research and development programme of the company started in 1989. Based on performance of individual clones in the field trials, promising, fast growing and disease-resistant clones of Eucalyptus tereticornis and E.camaldulensis were identified, including 23 site-specific clones adapted to problematic saline and alkaline soils. 37 of these are categorized as most important commercial clones based on their productivity and disease resistance capability. The company is currently supplying 11 different Eucalyptus clones (called Bhadrachalam clones) on a commercial basis to farmers and offers a buy-back guarantee at an agreed price. Up to 1999/2000, the company had sold over 7.2 million clonal seedlings. The company is in the process of implementing a core area development programme within 150 km radius of the mill to intensively promote tree farms through offering additional incentives to farmers. This should help to reduce the cost of transportation of raw material. By the end of 2002, some 6,400 farmers had participated in the clonal plantation programme and presently about 30% of the company’s pulpwood requirement is met by clonal tree farms. The company expects to obtain 100% of raw material supply by 2007 from 35,000 ha of such farms in the core pulpwood area. The clonal trees are disease resistant, self-pruning and have large clear boles. Survival rate is as high as 95%. The plantation can stand 4 to 5 coppice cuttings, before the area is ready for replanting. The MAI of Eucalyptus spp ranges between 20 and 58 cum per ha per year with farmers earning a net profit of Rs. 50,000 to Rs. 150,000 per ha from the first cutting after 3 years. As is characteristic of coppicing crops, profits increase in subsequent cuttings due to reduced costs. Further, when combined with agroforestry practice, additional income is accrued, with the harvest of agricultural crops. The plantations research unit of the company carries out trials on genetic improvement of the planting stock and silvicultural/agroforestry practices (e.g. spacing on planting rows, type of inter-crop, number of coppice of cuttings and length of cutting cycles) to be adopted. ITC-PSPD is increasingly relying on private tree farmers through bipartite agreements (purchase contracts) and sells the requisite quantity of clonal seedlings to farmers while providing free technical


extension service. The farmers in return sell their pulpwood exclusively to the company at the prevailing market price. Some of the important aspects of the case which entitles it to be qualified as a success are: voluntary mobilization of investment for tree farm development; research, technology development and extension support by the wood processing company; increased productivity of clonal plantations; employment and increased income for local community; reduction of pressure on natural forest for raw material; and, mutually beneficial collaboration between the company and the farmers. The initiatives of ITC-PSPD to forge mutually beneficial productive linkages with the farming community is expected to result in vital multiplier impact on the larger economy of the region.

6 Madhya Pradesh State Minor Forest Produce (Trade and Development) Co-operative Federation Ltd. – R. Prasad

Madhya Pradesh State Minor Forest Produce (Trade and Development) Co-operative Federation Ltd. (MP-MFP-CFL or simply the Co-operative), an autonomous body, was established in 1984. It is the responsible and regulatory authority for resource management, harvesting, trading and development of non-wood forest products (NWFPs) in Madhya Pradesh state, one of the 35 States and Union Territories in India. Its jurisdiction covers mostly the deciduous tropical forests of the state. The prime product falling under the purview of the co-operative is tendu/beedi4 leaves (leaves of the tree, Diospyros melanoxylon) The prime purpose of the co-operative is: to save the minor forest produce (MFP) collectors from the clutches of middle men; to ensure fair wages and benefits to the collectors; to rationalize marketing of products; to empower the community in managing their own affairs through appropriate institutional arrangements; and to ensure that the resources are sustainably managed and protected. The establishment of the Co-operative was prompted by the Constitutional Amendments 73 and 74 which provided for transfer of ownership of NWFPs to Gram Sabhas/ Panchayats (village councils) in States having sizable tribal population, and the policy of the MP State Government to promote the development of the backward and tribal communities. Following a pyramidal structure, the Co-operative is comprised of 1,947 Primary Societies (with a total membership of 5 million MFP gatherers) in which all the NWFP collecting families are members, formed into 58 District MFP Co-operative Unions and a National Apex Body. The extent of forests falling under the purview of the Co-operative is about 8.6 million ha; and the Federation, at various levels in its structure, employs about 50,000 people. The rights and privileges of the members of the primary societies, their responsibilities in terms of managing the resources and delivering the products at the collection centres, payment of wages and sharing of benefits equitably, the functions and roles of the higher level bodies in the hierarchy, have all been specified in the Memorandum of Association of the Co-operative. The Primary MFP Collector’s Co-operative Society (PCCS), forms the bottom tier. Any tendu/beedi leaf plucker, who is an adult and a normal/ permanent resident of the area can become member of the PCCS by paying a membership fee of Rs.20. Such a co-operative society could spatially cover one village or more, depending upon their population and nearness to the forests. For the management of PCCS, a 15-member “Management Committee” which includes a nominated forest department official (who is also designated as the nodal officer), is to be formed. The Management Committee in turn elects a President and a Vice-President. The District MFP Co-operative Union (DCU) is the mid-tier in the 3-tier structure. DCUs have a 16-member committee, of which 10 are elected by the primary collectors and 6 are nominated members. The latter category includes the Divisional Forest Officer as the ex-officio Managing Director of the DCU and the President of the District Cooperative Bank as another ex-officio member. DCUs provide help and guidance to the PCCS in the collection and trade of NWFPs and ensure that all the prescribed tasks are carried out properly.

4 The leaves are used to wrap (roll) tobacco, for making beedis or Indian cigarettes


The MP-MFP-CFL is the State level apex body of the cooperative structure. The Board of Directors has 18 members of whom 9 are elected and 3 (Principal Secretaries of Government Departments of Forest, Finance and Co-operatives) are State Government nominees. Six are ex-officio members, one of whom is a Forest Officer serving as Managing Director of the Federation. The MP-MFP-CFL has the primary role of formulating trade and development related policies relating to minor forest produces, and to provide overall direction and guidance. In the MP State, tendu patta (leaves of Diospyros melanoxylon), sal seeds, harra (fruits of Terminalia chebula) and gums are nationalised products, directly falling under the purview of the Co-operative, whereas the other NWFP’s being non-nationalized can be collected and traded freely. The first NWFP, which was brought under the State monopoly, as early as in 1964, was tendu leaves, solely because of its very high revenue earning potential for the State government. Beedi (Diospyros melanoxylon) leaves, constitute an NWFP of considerable economic importance, with an estimated 350,000 tonnes of leaves, worth about US$ 200 million, collected annually throughout the forests of India. Madhya Pradesh is the largest beedi leaf producing State (41% of total production), followed by Orissa (17%), Maharashtra (15%) and Andhra Pradesh (13%). India exported some 4,700 t of beedi leaves in 1991-1992. Harvesting is conducted manually during the tendu season spanning a month and half to two months (April-May) in the hot summer. Generally, collection starts in the last week of April and ends before the pre-monsoon showers (first week of June), even though the peak harvest season lasts for less than a month. The actual period of harvest may vary between locality to locality. Leaves are generally plucked in the early morning at sunrise and continue for about 5-6 hours before the sun gets too hot. The process essentially consists of four closely related steps: (i) walking to and from the tendu growing areas, (ii) plucking of leaves, (iii) sorting and tying the leaves in small bundles of 50 leaves, popularly known as ‘pudas’, and (iv) delivery of the bundles at the collection centres, or ‘phads’. The collected beedi leaves are sold periodically in auction sales and the profit gets ploughed back for enhancing the welfare and development (infrastructure, health, education, technology etc) of the community who are also the members of the primary co-operative society. In 1998, for example, the Co-operative paid Rs. 1,818 million as collection wages and distributed Rs. 1,270 million as net profit amongst various stakeholders engaged in the collection and trade of the leaves. Beedi leaves are purchased by contractors and manufacturers at an average rate of Rs.22.50 per kilogramme (each standard bag of leaves, on an average, weighs 40 kg, and the average sale price is Rs.900 per bag). Each collector receives Rs.11.25 per kg as wages, Rs.3.12 as incentive or bonus. The Federation and District Union also receive a token commission of Rs. 1 per standard bag. One kilogramme of leaves are converted into 1,500 beedis valued at Rs.200 (US $ 4.50) paid by the ultimate beedi consumers. Rs.54 are spent as wages for rolling of 1,500 beedis, Rs. 23 on transport, distribution, storage, packaging and labour charge and about Rs.20 for materials (tobacco, thread, paper), taxes, market promotion etc. The beedis are distributed to district level dealers by the industrial units, through the state/regional level agents. District level dealers distribute beedis to grocery shops and retail outlets. Finally, at the consumer level, a beedi costs Rs. 0.12 to 0.20 depending upon the quality and brand. Average price spread in the trade channel is: collector’s share 7.2%; manufacturing and marketing cost 46.5%; marketing margin for all actors in the chain (including the Co-operative) 46.3%. Apart from beedi leaves, some of the Primary Co-operative Societies are also involved in producing other nationalised NWFPs such as sal (Shorea robusta) seeds, gums, harra (Terminalia chebula), and medicinal plants. In addition to the nationalized NWFPs, a number of important and valuable non-nationalised produces like aonla (Emblica officinalis), chironji (Buchanania lanzan), mahua (Madhuca latifolia), chirota (Cassia tora), neem seed (Azadirachta indica), mahul (Bauhinia vahlii) patta, honey, tamarind (Tamrindus indica) etc. are also found in the forests of MP. Non-beedi produces, however, account for only 10% of total NWFP production. The establishment of the Co-operative has helped greatly to enhance the welfare of the community involved in NWFP collection, in terms of added employment and income, insurance coverage, social amenities and so on. The highlights of the case, for considering it a success story, include the following: organisation


of primary producers of NWFPs within a strong federated co-operative structure; rationalisation of NWFP marketing to ensure remunerative prices; equitable distribution of benefits to the members of the primary co-operatives; sustainable management of NWFP production; extension and technology support within the co-operative system; wide spread participation of rural families and community empowerment.

7. PT. Sari Bumi Kusuma – N. Suparna

PT. Sari Bumi Kusuma (SBK) is a privately operated logging concession under the Alas Kusuma Group, located some 460 km from Pontianak, in Central Kalimantan province of Indonesia. The company started its operation in 1978 when the Selective Cutting and Enrichment Planting System (TPTI) was practised. Since 1998, under a renewed 70-year agreement, the Selective Cutting and Strip Planting system (TPTJ) is also being implemented. SBK’s 208,300 ha concession of equatorial rainforest is comprised of 148,939 ha for logging, 10,972 ha for replanting and 48,389 ha for conservation. TPTI has cutting diameter limits of 60 cm and 50 cm for limited production and normal production forests respectively, a 35-year cutting cycle and an ACA (Annual Cutting Area) equal to 1/35 of the effective forest area. Its annual cut averaged 48 cum/ha with 8 trees/ha. The system (TPTI) was continued after 1998 for virgin forests, while the TPTJ is practised in areas logged over 20 years ago. In virgin forests the estimated yield is about 55 cum/ha for trees >60 cm dbh. TPTJ is basically a modification of TPTI, where nursery raised seedlings of valuable species (such as Shorea leprosula, other Shorea spp, Dipterocarpus spp) are planted in lines, spaced 25 meter apart and at 5 meter spacing along the line. Width of the clear-cut line is 3m, with interspace width of natural forests of 22 meter. The TPTJ prescriptions include clear cutting and enrichment planting in strips with a 35-year cycle and inter-strip harvesting of all trees of over 45 cm DBH, following the same felling cycle. The ACA is similarly 1/35 of the effective logged-over area with planned annual cut of 40 cum/ha. This conservative cut should enable progressive improvement in forest productivity. Research carried out by SBK has indicated that such strip-planted trees will attain a size of 66 cm dbh within 35 years. In addition, matured trees growing between planting strips constitute a bonus harvest. Total production expected is 300 cum/ha, once the skip-planted trees mature. To ensure sustainability, the management is based on a system of management plans supported by rural development diagnostic study. These constitute a 35-year Forest Management Plan with 5-yearly updates, Perspective Plan, Environmental Management Plan and one-year Operational Plans. Detailed planning is done for: working area arrangement; pre-harvest inventory; road construction; harvest scheduling; tree felling; bucking; skidding; hauling; post harvest inventory; nursery development and seedling procurement; preparing strips for planting; planting operations and maintenance of plants; forest protection and security; manpower development and improvement of technical skills; wood utilization; management and conservation of environment; village development activities; maintenance of boundary marks and so on. Cutting area and yield are prescribed based on growing stock inventory and assessment of crop condition in terms of distribution of diameter classes and species. As part of pre-harvest operation, all harvestable trees are marked and measured to estimate yield. Nucleus trees, selected as seed sources for future regeneration, are marked to ensure safety from harvesting damages. Logging is mechanised, following Reduced Impact Logging (RIL) guidelines, such as directional felling, introduced in stages. Logging operations are controlled by demarcating the work area into 100 ha compartments and ensuring work completion before moving to fresh areas. Logs are measured by qualified scalers. The company also undertakes all prescribed post-harvest operations to assist healthy growth of the residual stock. SBK provides substantial socio-economic contributions. Its annual contribution towards forest-related tax revenue, as a 5-year average (1995-2000), was Rps 35.7 billion. In addition, the company pays non-sectoral taxes including income tax. It contributes substantially to local employment and income generation, with 64% of its workers locally recruited. To enhance community welfare, the company has, among others, liberally invested in infrastructure development, local skill and education development and improvement of


agricultural practices. SBK has a long tradition of supporting local communities in improving their livelihood and living conditions. On an average the company contributes Rps 2.97 billion per year on social welfare and development. The company places high priority for environmental conservation and research and development (R&D); and these have figured importantly in company activities. Practical field-oriented research was initiated as early as 1978, when the company started logging under its first (original) concession, with focus on aspects closely linked to forest operations. Subsequent research activities included growth and yield studies, waste-free logging/RIL, nursery practices (e.g. shade control in adaptive chambers) and progeny trials. Growth and yield monitoring of Shorea leprosula, S. hopeifolia, S. laevifolia, S. johorensis, S. fallax, Dipterocarpus spp, Litsea firma, Scorodocarpus borneensis among others, have produced useful results. The company has also actively collaborated in forestry research with the International Tropical Timber Organisation (ITTO) and some of the Indonesian universities. SBK is working towards obtaining timber (and forest management) certification by initiating a preliminary assessment through an agreement with the Smartwood Programme of the Rain Forest Alliance. While appreciating the intrinsic merits of certification, the company is of the view that some of the C&I for SFM are difficult to implement due to present constraints such as boundary conflicts, illegal logging activities, availability of low-priced illegal logs and conflicting laws/regulations. “Legal labelling”, more than ecolabelling, is crucial for attaining forest sustainability and to control the entry of large volume of illegal timber into the market. There is also a need to further rationalize and simplify the principles and steps involved in certifying forest management units. There are several factors that have enabled SBK to achieve success in sustainable forest management. These include: increased productivity through enhanced technology, healthy condition of forest and growing stock, good forest management planning (including harvesting plans) and implementation, reduced logging wastage, friendly relationship with local community and emphasis on their welfare programmes, commitment to R&D and environmental conservation and compliance to rules and regulations.

8. Samling Plywood (Baramas) Sdn. Bhd. – S.K. Chan

This case pertains to Selaan-Linau Forest Management Unit of Samling Plywood (Baramas) Sdn Bhd, SPB for short. The FMU has a total area of about 100,650 ha, which comprises of 87,352 (87%) of natural forests and 13,298 (13%) of shifting cultivation area, situated in the Upper Baram region of Sarawak, Malaysia. The area is somewhat remote, about 250 km from Miri, with access by road and air transportation. The area of Selaan-Linau FMU covers the area of Forest Timber License (T/0412) issued to Samling Plywood (Baramas) Sdn Bhd, an affiliate of the Samling Group of companies. The present licence period is 20 years, beginning 01 September 1993. Selaan-Linau FMU functions within the context of a number of other Timber License areas managed by the Samling group, and for the Baram Region it stretches upto the Indonesian Kalimantan border. SPB has a plywood mill situated in Kuala Baram and it manufactures plywood of tropical hardwood species like Meranti, Kapur and Keruing for local and international markets. As specified in the laws and regulations relevant for the management and utilisation of forest resources in Sarawak (such as the Forest Ordinance 1958, the Forest Rules 1973 and the Land Code 1958), the authority to approve Timber License applications is the Ministry of Natural Resources and Forestry. The authority to issue the Approved Timber License (ATL) is the Sarawak Forest Department. The Timber License specifies the conditions to be followed in managing and utilizing the forest, including yield control, planned annual area, logging practices, pre-and post harvest operations, social and environmental obligations of the company and so on. Yield Regulation is based on area control, combined with an approved Monthly Production Limit (MPL). Considering an effective forest area of 100,650 ha and a 20 year license period and providing allowances for non-available areas such as stream buffers, the computed allowable annual cutting area is given as 5,900 ha. Six forest types/sub-types have been identified in the FMU. Mixed hill dipterocarp forest accounts for 75% of the area, most of them with medium density stocking.


The FMU is home to 3 ethinic groups – Kenyah, Kelabit and Penan. Shifting cultivation is the most important traditional economic activity for most of the local communities, with hill rice as the main crop. Members of the local community are employed by the company in logging activities. SPB is promoting multiple-use management as the basis of SFM for greater efficiency and productivity, integrating the production, protection and community use functions of the forest. The system of management planning adopted in Selaan-Linau FMU consists of a 10 year Forest Management Plan (FMP) and Annual Operational Plan(s). The 10 year plan provides the overall perspective and guidelines, as well as the conceptual basis for activity planning. The current FMP of Selaan-Linau FMU covers the period July 2003 to December 2013. Continuous participatory stakeholder consultation facilitates and supports the planning, implementation, and monitoring processes of forest management. A Liaison Committee of major stakeholders (i.e. SPB, FDS and local community) has been established to address issues of common interest, in the implementation of the management activities in the FMU. The Forest Management Implementation System of Sarawak (FOMISS) has specified the steps and processes involved in the sustainable management of the concession (FMU). Timber harvesting activities are permitted only in those blocks/compartments (standard size about 100 ha), which have been approved by the RFO Miri, through Permit to Enter Coupe (PEC), based on meeting the pre-conditions prescribed such as 10% tree enumeration; topographical survey and mapping; coupe and block boundary demarcation, road alignment etc. Harvesting is carried out on a rotational basis, on a 25-year cycle; minimum cutting size prescribed is 60 cm dbh for Dipterocarps and 45 cm dbh for non-Dipterocarps. Only merchantable trees are allowed to be harvested and protected species are safeguarded. The company’s SFM programme is built on three essential foundations: economic viability, environmental compatibility and social acceptance. Logging operations follow the system of selective cutting with directional felling and mechanical skidding. All operations follow RIL implementation guidelines (relating to tree felling; ground skidding; density of trails, feeder roads etc). A RIL compliance assessment is routinely carried out, after completion of harvesting operations. The post-harvest activities essentially address two aspects: (i) the crop condition after logging; (ii) crop rehabilitation/enhancement/protection measures suitable to the actual condition of the crop. Apart from post-harvest inventory and normal forest protection measures, the treatment to be given to the harvested natural forest is decided by using the Silvicultural Decision Support System (SDSS). Treatment essentially involves the identification and liberation of potential crop trees. The post-harvest silvicultural operations in the FMUs are designed to bring back the forest to its pre-harvest condition. The various wood-processing facilities of Samling group are fed by logs from several FMUs. The wood harvested from Selaan-Linau FMU is partly exported as logs and the rest utilized for processing into sawnwood, plywood, MDF, paraquet and other wood products. The plywood factory of SPB near Miri has a production capacity of 126,000 cum per year requiring a log input of 240,000 cum. Chain of Custody through a Log Inventory Control System is used to monitor movement of logs to the mills, and proper log-tagging system ensures that all logs produced can be traced back to the stumps in the forest. The company contributes considerably to the welfare of the local communities. An important socio-economic contribution of SPB is the employment and income earning opportunities provided to the local community, directly and indirectly. The company is involved in the community development, as part of the government-company-local community partnership. Samling is actively assisting in coffee planting and deer farming to meet the subsistence needs of the community. A company nursery with a capacity of 500,000 seedlings support community forestry projects in area degraded by shifting cultivation. SPB collaborates closely with the FDS in forestry research activities and in maintaining PSPs to monitor response of residual stands to prescribed treatments and changes in soil and other ecological factors following harvesting. It also undertakes measures of environmental conservation. Pre-assessment for forest certification of the FMU was conducted in September 2003, and the main assessment has been scheduled for 2004-05.


Among the constraints being faced by the company, conflicts with local communities over land claims is an important one. Other constraints faced by the company are related to: difficult terrain features and remoteness of the concession area, low forest productivity, shifting cultivation, native customary rights, conflicts between ethnic groups, inadequate logistics and expertise to implement social projects of the government, and confusion about SFM concept and standards on the part of the stakeholders. The Selaan-Linau FMU served as the pilot area for a Malaysian-German Technical Co-operation project, to implement sustainable forest management with joint participation of the Sarawak Forest Department, GTZ and the Samling Group. The Project covered, amongst others, the following:

• Forest resource assessment and zonation into production, protection (biodiversity, water catchment areas, etc) and communal use forests.

• Model road construction specifications. • Establishment of permanent sample plots (PSPs) to measure the regeneration/growth rate for

assessing sustainability of harvesting levels. • Reduced impact logging (RIL) practices. • A comprehensive forest management plan (FMP) that meets the certification requirements of the

Malaysian Timber Certification Council and the Forest Stewardship Council.

The considerations for qualifying SPB as a success are the following: commitment to the cause of sustainable forestry and sustainable community development; SFM-related capacity building, RIL compliance, environmental conservation, and stakeholder involvement; and phased approach towards timber certification.

9. Perak State Forestry Department Operations in Matang Mangrove Forest – M. Azahar and K. L. Lim

Malaysia’s Perak State Forestry Department’s operations in Matang mangrove forest, covering a total area of 40,151ha, and a productive area of 32,746 ha, is an integrated activity to sustainably produce wood and non-wood forest products. Its main product is charcoal. Matang mangroves came under forest “reservation” in 1902. During the early years, it was the main source of fuel wood for the Malayan Railways and to the tin mining industry. As the demand for mangrove fuel wood dwindled due to competition from inland supply, some local entrepreneurs took to making charcoal in 1930. The charcoal kilns are of the Beehive type, which has not changed much to the present day. Bruguiera spp and Rhizophora spp are dominant in Matang mangroves. The Matang mangrove forest was continuously under management (based on working plan prescriptions) from 1903, including control and regulation of fellings. Trials were undertaken to enhance the regeneration of the felled areas. The first system applied for managing the Matang mangroves was the “minimum girth system” and then replaced by the “standard system”, which was later abandoned, and the “minimum girth system” reintroduced. After 1930, the “shelterwood system” was proposed wherein the prescription provided for carrying out a regeneration felling, five years before final felling. Provision was also made for the retention of standards. In the working plan revision undertaken in 1940, the retention of standards was again abandoned and the ‘two-staged final felling’ was introduced on an experimental scale, only to be interrupted by the Second World War. Since 1950, the Matang mangroves are being managed under prescriptions of a comprehensive working plan, which is revised regularly every 10 years. The primary objective of management is the sustainable production of quality greenwood of Rhizophoraceae, for charcoal manufacturing and production of poles, on a sustained yield basis, with provision for conservation and protection of environment. The silvicultural system currently followed in Matang mangroves is clearfelling in periodic blocks followed by natural regeneration, supplemented by artificial planting as necessary. Rotation has been fixed as 30 years. For ease of control and effective management, the productive area of Matang mangroves has been divided into three periodic blocks, each consisting of about 11,000 ha. Age of the crop is the main criteria for


such a division. Theoretically, the 1990 – 1999 period is in the second period of the second rotation (since the current silvicultural system was started in 1950). Therefore, Period I will have forests in the age class of 1 – 10 years; Period II the age class of 11 – 20 years and Period III the age class of 21 – 30 years. Effectively the Matang mangroves will have forests of age 1 to 30 years. Estimation of yield in Matang mangroves has been carried out on a 10 year periodic basis, and conducted only for the periodic block which will come up for final felling in the 10 year period of the working plan. The estimated average yield per hectare of mature crop is about 175 tonnes. Yield regulation, however, is on an area basis. All clear felled areas are systematically rehabilitated. Rehabilitation involves planting to supplement natural regeneration, and occasional weeding. There are two thinnings, at the ages of 15 years and 20 years, before the new crop undergoes final felling at the age 30 years. Matang mangroves have very strict policy on regulating its (charcoal and pole) industry. The number of charcoal kilns permissible is decided every 10 years, coinciding with 10-yearly revision of the working plan, to be proportionate to the amount of forest resource available for that period. Allocation of areas (for charcoal burning) is, accordingly, made for a period of 10 years. Allocated areas are released for harvesting to the contractors on a year-by-year basis. During the period 1990-1999, the productive area of 7,980 ha (annual average of 798 ha) was allocated to 75 charcoal contractors who operated 336 kilns (approximately 2.3 ha to feed a kiln). Similarly, there were 70 pole contractors approved for the period 1990-1999, for an annual thinning area of 2,136 ha, half of which corresponds to first thinning (15 years) and other half to second thinning (20 years). Additionally, NWFPs such as fronds of Nypa fruticans and Acrostichum aureum are also harvested, on a limited scale. The potential of collecting raw distillate from the charcoal kilns, for refining into pyroligneous acid is currently being tried, by few kiln owners. Matang mangroves also support a large fishery industry, including capture fisheries, shellfish and aquaculture farming. Eco-tourism is also emerging as an economic activity in the Matang mangroves. Within Matang mangroves there are 34 village settlements. In addition, there are several traditional fishing villages along the upstream banks of mangrove tidal rivers. These communities are engaged in various mangrove-related economic activities. Sustainable utilization of Matang mangroves has been a profitable operation. Recent averages indicate that: the revenue collected from timber extraction alone based on premium over the land and royalty over the timber removed has been RM 1,561,086 per annum. As against this, the expenditure on administration, forest development, forest operations, conservation and protection activities over the whole of Matang mangroves amounts to RM 926,550 per annum. Accordingly, the average net revenue realized has been RM 634,536 per annum. The direct tangible economic value of annual harvest of produces has been estimated to be RM 155,474,507 (mangrove wood production: RM 25,350,122; fishery and aquaculture: RM 130,124,385) The diversity of fauna and flora in the area was not directly threatened by the intensive management of the mangrove resources for the sustainable production of fuel wood and poles. Other than the permanent stand of non-productive forest which is hardly exploited, the productive forest is being managed with due consideration for the conservation of the environment. In managing the mangroves on a 30 year rotation, in any one year approximately 1,100 ha or 3.3 % of the total productive forest or only 2.7 % of the total area of Matang are clear-felled. Clear felling of the annual coupes are not carried out in one single cut, but progressively over a period of 12 months, at approximately 100 ha a month. Subsequently, the clear felled areas are ensured total regeneration either through natural or artificial means or a combination of both. As an additional precautionary measure, the annual coupes are further divided into smaller sub-coupes, which are spread out over the whole Matang mangroves. In so doing, disturbance to any particular habitat is localised and the wildlife has ample opportunities to be safe in the adjoining forested areas. In the past, a constraint which affected the capability of the Forestry Department from fully stocking the clear-felled areas was the damages to the seedlings caused by crabs, monkeys and deep flooding. These problems were overcome through the introduction of locally developed potted seedling technique, in 1986. The major constraints are obviously in the area of product development and utilization, which are the basic responsibility of licensed forestry contractors. Other constraints include the lack of research and skilled/ trained personnel to develop non-timber forest products and benefits.


With about 100 years of sustained yield forest management of the fragile mangroves ecosystem (which has disappeared in several parts of the world due to encroachments for prawn culture and illegal logging), the Matang experience is examplary. The contributing factors in this regard include: strong policy and legal framework; high quality of planning, implementation, supervision and monitoring; strong and continuing political commitment; regular ten yearly revision of working plan; clear objectives of management; long-term security of concession tenure; support of local educational and research organizations; adequate staffing; and good will of the community.

10. Vanimo Forest Products Ltd – P. Tiong

Vanimo Forest Products Ltd. (VFP) in the Sandaun Province of PNG is a private concessionaire, under contract with the Government. The concession forest is customarily owned and comprises 287,240 ha of tropical rain forest. After making deductions for non-operational areas such as villages, stream buffers, benchmark sites, national parks and inaccessible terrains, the net productive area is reduced to 207, 080 ha. With further adjustment for logged over areas, the remaining commercially productive forest is 190,160 ha. The Timber Licence of VFP covers a period of 20 years from 1990 to 2010. The company follows a sophisticated system of forest management and harvest planning. Yield is regulated by a combination of “area to volume proportion” is as specified in AAC. The concessionaire is allowed to fell only mature trees of commercial species and is required to leave a healthy residual stock for the future. Except for major roads, which will add to the rural infrastructure and benefit the local communities, all temporary developments such as skid trails and log landings are to be decommissioned after completion of logging, thus allowing the forest to recover its natural state. The Papua New Guinea Forest Authority (PNGFA) provides guidelines and regulations regarding standards and procedures to be adopted in timber management. The package of planning for forest management has the following components: Long-Term Perspective Plan (Project Proposal); 5-Year Forest Working Plan; Environmental Plan; Infrastructure Plan; Finance Plan; Skill Development Plan; Land Use Plan; Business Development Plan, Implementation Schedule; Annual Logging Plan and Set-Up Plan. For its part, the company has been strictly following all the regulations and conditions relating to timber operation and trade, as specified in the above cited package; paying all the levies and premiums due (e.g. reforestation levy, infrastructure maintenance levy, agriculture development levy, provincial government levy, royalties, premium levy on exported logs); and meeting all the company obligations such as infrastructure development, establishment of processing units and post harvest management of logged-over areas. VFP carries out pre-logging requirements such as pre-harvest assessment of stock, preparation of annual logging plans, demarcation of annual coupes and set-ups, preparation of set-up plans, 100% tree marking and tree positioning on the maps, cutting climbers on marked trees, setting up environmental safeguards, establishment of roads, skid trails, log landings and camps following prescribed environmental standards and training of crew. The prescribed log harvest of the Vanimo Timber Area (VTA) as per the Timber Permit (TP) is 300,000 cum during the first five years and 250,000 cum thereafter (years 6 – 20). Starting with 255,000 cum annually, log export is expected to stabilise at 165,000 cum from the 6th year of operation. Species composition varies with site, although tree species such as Instia bijuga, Pometia spp and Terminalia spp are the most common, over 50 cm dbh. The logging system currently practised is selective cutting which strictly follows the Key Standards for Selection Logging in PNG. Since river hauling is not feasible, logs are generally transported overland with an average road transportation distance of over 100 km from VTA to the mill yard/log pond in Vanimo. Average logging cost, during the period of January to June 2002 was K 148.21. Logs produced are partly used as input into the sawmill in Vanimo, and partly exported as raw logs. Logging and log/timber export activities are monitored by a third party (i.e. SGS – Societe Generale de Surveillance of Switzerland). Post Logging Operations undertaken are of two types: 1) those required for reporting completion of logging activities in a set-up to obtain clearance of PNGFA and authorization to start work in the next set-up, and 2) silvicultural operations to support SFM. The second type of operations currently is not a requirement. The TPs stipulate only logging plans; and not silvicultural management plans for inducing natural regeneration,


protecting the crop from fire and other injurious agents, carrying out sanitary and salvage felling operations, scientifically assessing growth and yield, etc. VFP activities generate considerable benefits in terms of government revenue and income/welfare to the land owning local community. It is the prime revenue source of the Sandaun Provincial Government. The annual average of charges and levies remitted by VFP during 1999 – 2000 amounted to K 13.1 million. The company makes all the efforts to employ as many local community members as possible (even though they, often, lack the discipline required for work under strenuous conditions) in the logging and milling operations, with the peak season employment going over 1,000 while the number of nationals in the regular pay roll is 889. The company likewise invests in developing social infrastructure such as schools, hostels, playgrounds, health centres, water supply, communication system and so on, as well as in land and agricultural development. The company also accommodates, to the extent possible, the demands (and compensation claims) of the community, outside of the agreed conditions, in the interest of maintaining social harmony and friendly relationships. The customary ownership of VTA is shared by 12,037 individuals distributed in 1,976 housholds, located in 55 villages and clustered into 26 clan groups. The landowners are encouraged to participate and involve more actively in the preparation of Annual Logging/Working Plans. Poverty and malnutrition is a major problem among the villagers of VTA, considering the wealth of natural resources at their disposal (24 ha per person or about 145 ha per family). It is difficult to comprehend how they can be so poor in the midst of the valuable resource. The flaws in the policies and the community attitude towards cash economy and related work ethics are indicated to be major obstacles. These are problems affecting all the timber permit areas in PNG. The most important constraint in operating forest concessions in PNG appears to be the customary ownership of the land and related restrictions/complications in implementing Forest Management Agreements (FMAs) and TPs. The inadequate knowledge on the part of NGOs about the nature of logging under selection system, and the special conditions existing in PNG, has led to the VFP being attacked for violations of TP conditions; and this is a perpetual irritant to the company. No social survey has been carried out to assess the real impact of timber development on the local community and their sustainable livelihood. It is also the general observation that the government is not playing their role properly for supporting the development of the customary landowners and the village community in a transparent and accountable manner. The following, inter alia, qualifies VFP to be considered a successful case:

• Conduct of logging fully within approved intensity, so that the residual forest is left in a healthy and sustainable condition.

• Strict adherence to the conditions of FMA and related rules and regulations. • Capacity to address the constraints in implementing a sophisticated harvesting operation, in a

customarily–owned forest, in a remote location. • Flexibility to accommodate the extra-legal demands of the community. • Support provided for social capital formation and HRD, benefiting the local community. • Important contribution to government revenue and for generation of local employment and

income. • Respect given to local culture and sensitivities.

11. Pacific Timber Export Corporation – F.A. Lu

Pacific Timber Export Corporation (PATECO) was established around 1960 with the motto “conservation through proper utilization”. Its original concession area of 37,860 ha is located in Dinapigue, Isabela and Dilasag, Aurora, in Philippines. Its Timber License Agreement (TLA) for an area of 34,450 hectares and with an AAC of 46,445 cum was renewed on July 1, 1982 for a 25-year term ending on December 31, 2006. It is one of the remaining 16 TLAs in the Philippines and only one of four operational TLAs with approved Integrated Operations Plan (IOP).


The TLA specifies the conditions for managing the area, covering legal and administrative requirements and prescriptions on silviculture, utilization, infrastructure development and protection, etc. To maintain a high and sustainable forest yield, the company practises scientific logging and selective cutting method, timber stand improvement (TSI) and assisted natural regeneration (ANR) in residual forest, maintenance of seedling nurseries, and development of plantation sites. Timber extraction is done using a combination of truck hauling and tractor skidding. Forest development and environmental enhancement measures are strictly implemented. The area under TLA, and the natural forests in the Integrated Forest Management Agreement (IFMA) areas of the company, are managed under the selective logging system, reinforced by TSI and enrichment planting. The shift of operations from old growth forests to residual/secondary production forests was mandated by Department of Environment and Natural Resources (DENR). It classified and divided the operable area into management blocks based on ‘year elapsed after logging’. The DENR granted arbitrary AAC based on the size of residual forests. Effectively, this policy penalized companies like PATECO which preserved their old growth forests. From 1992 to 1996, the company had to be content with an AAC of 8,042 cum until the approval of its 10-Year Medium Term Timber Management Plan (MTTMP) in 1997, when the AAC was adjusted according to the sustained yield of the area. During the same year, notwithstanding it being one of the first two companies granted an Environmental Compliance Certificate (ECC) for forest activities, the company’s business operation had to be put on hold for seven months while awaiting approval of its ECC and IOP. The TLA area is divided into (i) protection forest (e.g. old growth areas, mossy forest, river embankments, buffer zones, rocky and wilderness areas) and (ii) production forests (natural residual forests and plantation forests). Production forests are divided into management blocks for sustainable harvesting and silvicultural activities. Including its Industrial Forest Management Agreement (IFMA), the available operable area of PATECO is 13,997 ha. PATECO’s timber management is based on (i) 10-year (1977-2006) MTTMP) (ii) 5-year (May 2001-April 2006) IOP; and (iii) ECC. The company continues to practise selective logging system with TSI and ANR as important components. The IOP specifies the actual extent of area to be logged with the corresponding harvest volume and period of operation as well as the target for TSI and ANR. It also prescribes the activities and method of operations governed by the Selective Logging System. The Annual Logging Plan, incorporating the set-up plans and based on the IOP, specifies the annual logging areas/compartments/ set-ups, defined by grid blocks. Further, it provides for the pre-logging inventory, tree marking, location of logging camps and log landings, maintenance of logging roads and so on. The ECC provides the mitigating measures to abate negative environmental impacts and serves as a periodic checklist for ecological balance. For the period of March 1999 to December 2003, the estimated production cost per cum log was PHP 4,278. Timber produced by PATECO is manufactured into lumber, plywood, builders’ woodwork and doors at the company’s integrated woodworking plants. The present production caters mostly to the domestic market. The company maximizes the utilization of wood materials beginning from the cutting area up to the down-stream wood processing mills. Aside from the forest plantations maintained under IFMA No. R-4-0001 issued in 1995, PATECO has no open and denuded areas. As part of its social commitment, the company has entered into Memoranda of Agreement with private landowners in the vicinity of the concession area, to reforest their idle private lands. The community-based forestry projects initiated by the company in 1994 are now under its maintenance phase. So far the 125 farmers/landowners around the company’s concession area, with a total planted land of about 350 ha, have been actively participating in the programme. The company is also into forestry research. A patrol system is sustained for forest protection and to curb illegal activities. PATECO has invested on environmental conservation and watershed management and has taken preventive measures against forest fires. In the period of 1992-2003, the company paid more than PHP 121million in forest charges, fees and taxes. Of this amount, PHP 48.4 million went to the local government units. Likewise, the company has made significant socio-economic contributions. PATECO spends more than PHP 4 million annually for community services and welfare contributions. The company’s contribution to community welfare covers: forest


extension, food production, community education, employment and livelihood projects, health, water supply, infrastructure, tree planting programme and environmental enhancement programme. NWFPs, particularly rattan, in the concession area benefit the tribal families who depend on rattan gathering as a major source of income. The company has adjusted to the changing policies and Implementing Rules and Regulations (IRR), with every change in administration. It maintains cordial relationship with DENR and other agencies. While its operation is constrained by illegal logging and threats from insurgents, it managed to conduct adequate TLA operations. The TLA will expire in 2006 and operation beyond that is uncertain. The company is preparing for the inevitable and envisions the phase-out of TLA and/or its conversion into IFMA. PATECO’s case is a study of possibilities, potentials and hurdles faced by private company operations in achieving Sustainable Forest Management, amidst unstable policy and institutional environment. Considering the innumerable guideline changes that go with political leadership turnover, PATECO has successfully achieved its objectives and missions and more.

Case Studies of Latin America and the Caribbean

12. Cikel Brasil Verde SA – M. Tuoto

Cikel Brasil Verde SA is a 100% private-owned Brazilian group established in 1974. The group’s activities include livestock, forestry and wood processing, and services for the steel industry. The forestry and wood processing business is controlled by Cikel Brazil Verde SA (CBV), a subsidiary of the group. CBV is a fully integrated timber company. Its operations cover logging and harvesting, manufacturing (primary and secondary processing) and trading. CBV is one of the largest timber companies dealing in tropical timber in Latin America. The company employs around 1,800 persons and their total annual income is approximately US$ 27 million. In 2000, CBV decided to incorporate five small forest management plans in just one large project, covering an area of 206,412 ha. of the company’s forest property. The new forest management plan was intended to absorb all the technological and scientific knowledge available. In that regard, initially, CBV invested in human resources development. It developed its own Forestry Department; and all the supporting offices and field infrastructure were created. Simultaneously, the company established several partnerships with research centres, universities, NGOs and others, aimed at enhancing information and knowledge needed for the elaboration of the Sustainable Forest Management Plan of CBV. Experts in different fields, and from several institutes and organizations, were formed into working groups and, together with CBV technicians, they developed the company’s SFM plan. The company’s SFM planning is based on a detailed mapping of all forestland. The forest area under management is divided compartments. The selected compartments are inventoried, where all trees with DBH above 45 cm are measured and catalogued, regardless of whether they are to be felled or not. Harvesting is strategically planned, based on RIL method. Clearings are avoided in the forest, choosing the tree-felling direction and safeguarding the trees to be preserved. Skidders move inside the forest, following narrow trails (skidding trails), previously established by the technical team. Some of the main tree-species harvested by CBV are angelim (Hymenobium excelsum), cupiuba (Goupia glabra), parica (Schyzolobium amazonicum), louro (Ocotea sp), jatoba (Hymenaea courbaril), macaranduba (Manilkara huberi), piquia (Caryocar villosum), ipe (Tabebuia serratifolia) and roxinho (Peltogyne sp). Implementation of the SFM plan required a strong commitment by the company towards local community development. In fact, the company managed to find ways of making the local and indigenous population aware of the importance of SFM and of its environmental contributions. Initially, the idea was to put in practice an environment education programme focused on the community living inside the forest management unit, but in the long run, it was expanded to cover all the surrounding community. The concepts and approaches adopted by CBV in developing and implementing the forest management plan are innovative, multidisciplinary and inter-institutional in nature. It led the company to accept and practise


the principles, criteria and indicators for International Forest Certification, of the Forest Stewardship Council (FSC). Considering the achievements in strategic, tactical and operational levels in the forest harvesting and management, together with the adoption of several measures to reduce impacts on the fauna and flora, waste reduction, water treatment and water resources conservation, expansion of different social benefits and the implementation of relevant aspects in terms of safety at work, the company submitted itself for an auditing to evaluate the operation for Forest Management Certification, over an area of 140,658 ha, the largest tropical forest area certified in the country. In May 2001, the company received the Forest Certification for Good Management, under the registration SCS-FM/COC-0003IN. The company also signed a commitment for having the rest of its forest areas certified within the next few years. The CBV case has proved that the private sector can provide an outstanding contribution by implementing SFM. The main gains of CBV’s efforts are:

• Improved relations with local community based on an educational programme and better employment conditions;

• Higher commitment of the employees in solving routine problems; • Better understanding of the relation between economic benefits and environmental conservation

practices; • Improvement in the image of tropical timber industry; • Increase of the company’s share in the international “green markets”

Against these gains, there were great challenges to be overcome, some of them still present. These among others are: i) lack of incentive mechanisms at the local, state and federal government levels; ii) tendency of media to distort news on projects in the Amazon; iii) price-based market competition, which does not make any provision for an “environmental or social premium” for products from sustainably managed sources, and iv) constant need for innovative investments in environmental technology and related training. It has to be noted that many of the benefits are intangible in nature because of the difficulty to provide them an economic measurement or market value. This issue becomes more serious and relevant since forest harvesting and processing activities are located in regions of significant logistical problems, in comparison to other industrialized sectors where the environmental component is only one of the factors that interfere with the economic performance of the enterprise. In spite of being considered as a model for SFM in the tropics, and having accumulated considerable experience during the last several years, there are still several problems being faced by CBV. These, among others, are: i) lack of adequate government financing mechanisms to effectively promote the adoption of SFM; ii) complex legal framework resulting in cost increase and falling competitiveness in the international market (particularly since there are other sources of timber which are much less regulated); iii) unstable regulatory framework and uncertainties in relation to land and forest property rights adversely affecting long-term investments in forest and forest industrial operations; iv) poor image of the timber industry continuing to be a limitation to access credit and other benefits; v) failure in law enforcement and controlling illegal activities, that leads to unfair competition in the market. Moreover, there is serious shortage of qualified professionals at all levels. The difficulty to recruit qualified, and even unqualified, labour has lead industries to operate at levels below the installed production capacity. The situation is so critical that, most of the time it is necessary to hire people from other regions paying higher wages, and who, often take time to adjust to the local working conditions. The company cannot solve all these problems. It requires the direct involvement and support of the Government at federal and state levels.

13. Guavira Industrial e Agroflorestal Ltda – J. Baldasso and M. Tuoto

Guavira Industrial e Agroflorestal Ltda. is a private-owned Brazilian company, established in 1986. The company is totally integrated, and cover forest operations and harvesting, manufacturing (primary and


secondary processing), and trading. The operations involve around 250 persons, and its annual turnover is approximately US$ 7 million. Guavira owns around 80,000 ha of private land located in Mato Grosso State of Brazil. Out of this total, 58,000 ha are covered by natural tropical forests, managed for production. Its production plan is one the largest SFM plan in Mato Grosso. The SFM plan prepared by Guavira has been considered by the State authorities and also by the national forest agency (Instituto Brazileiro do Mioambiente e dos Recursos Naturalis Renovaveis – IBAMA) as a model to be followed. The SFM plan of Guavira has a planning horizon of 27 years, and is consistent with the ITTO Guidelines for the Sustainable Management of Natural Tropical Forests and the ITTO Guidelines for the Conservation of Biological Diversity in Tropical Production Forests. Although the company could purchase logs in the local market, currently all timber supply for processing originates from their own forestland kept under SFM. Annual harvests amount to about 85,000 cum. In 2003, Guavira successfully completed all the processes required for Forest Certification by FSC. The forestland owned by Guavira is quite unique, with much lower species variation, than in other parts of the Amazon region. There are basically 24 species in the company forests that are considered as commercial tree-species; but in view of the large concentration of species the decision is to harvest only half of the species available. Cedrinho (Erisma uncinatum) is the dominant tree-species and it accounts for around 60% of the total timber removals. Depending on the location, cedrinho volume varies between 10 and 15 cum/ha (in some areas the volume can be higher). The remaining 40% of the volume harvested is represented by 10 other tree-species, including those well known in the international market such as: angelim pedra (Hymenolobium spp), cupiuba (Goupia glabra), itauba (Mezilaurus spp), mandioqueria (Quaelea paraensis), cumaru (Dipterix odorata), and garaperira (Apuleia leiocarpa). It is an important comparative advantage for Guavira to have high volume concentration of single tree-species (cedrinho), which has a high demand in the market. Harvesting operations of Guavira are quite efficient and are based on RIL method. The company’s harvesting and transportation operations are carried out all the year round, while in most situations in the Amazon region, such operations are possible only for 6-8 months per year, because of the rainy season. This advantage is the result of local conditions (particularly soil) and the harvesting infrastructure developed by Guavira, that includes roads to access specific harvesting compartments during the rainy period. Because of its capability to conduct operations during twelve months of the year, and the use of improved harvesting and transportation technology and equipment, the cost of Guavira’s harvesting operation is much lower than those incurred by competitors. The equipments used are basically one skidder, one front loader and five 70-ton trucks, and this is sufficient to supply the 85,000 cum of logs per year consumed by the mill. In order to strengthen its competitive advantage, Guavira decided to invest in a modern sawmill, thus to increase productivity, reduce wood waste, improve the product quality and to gain access to international market. The project for modernizing Guavira’s operations and facilities was carried out with the support of a consulting company. The modernization of the industrial facilities involved: i) the building of a modern sawmill with a production capacity of 60,000 cum/year of sawnwood (to replace the existing three small-sized ones), including dry kiln facilities; ii) the building of a modern secondary processing plant in order to add value to sawnwood, as well as to improve wood recovery; and iii) the establishment of a power plant, utilizing wood waste. The power plant was initially planned to be built during the construction of the sawmill, but due to the involvement of an independent power producer, this investment has been postponed. The total investment in the modernization was around US$ 12 million. About 50% of the total investment was financed by the National Bank for Economic and Social Development, BNDES. This was the first financing granted by the BNDES to a timber industry operating in the Amazon region and based on tropical timber. Besides investing in the modernization of the mill, the funds made available by BNDES were also utilized for expanding forest plantations, to enhance raw material supply. The investments made were important to enable the company to gain access to the international market. (Prior to the new mill, the entire production was sold in the domestic market, mainly as construction material). During the construction of the new mill, several visits were made to main markets to identify best options in terms of products, market channels and clients.


Currently, Guavira produces 45,000 cum of tropical sawnwood, annually. Higher grades are transformed into value added products. (Around 10,000 cum of value-added products are sold annually, mainly in the international market in form of mouldings, decking, furniture components etc). As a result of the strategy adopted (i.e. adding value to a significant part of the production, and trading in the international market), the average selling prices increased by more than 100% over the last 3 years. The increase of average price made it possible for the company to increase revenue and profitability, while the volumes harvested declined. The general improvement in the social and economic situation of the region is partly the result of the contributions of Guavira, made possible by adding value to the forest resource through downstream processing, and enhancing capability in that regard. The Guavira case clearly shows that increasing productivity along the production chain is fundamental to gain competitive advantages in the market, to ensure the economic sustainability of the business, and to ensure that the environmental and social criteria set for management are achieved. However, Guavira has some apprehensions regarding the long-term economic sustainability of the business. Increasing complexity of the legal framework dealing with forests and the overlapping of regulations resulting from the on-going decentralization process are continuously increasing the operational costs. This stimulates illegal activities and corruption, especially when coupled with weaknesses in law enforcement. There are serious doubts regarding how effective the government will be, in enforcing laws relating to property rights in the future. This might limit the investments in the future.

14. Orsa Florestal SA – R.S. Waack, R.F. Tocci, A.L. Pironel and E.L. Reckziegel

Orsa Florestal SA is located in the Jari Valley region of Brazil, falling in the northern part of the Para State, 600 km from the state capital Belem. The region has been commercially exploited since the 19th century, with Brazilian nuts and latex being the main products harvested from the forests, until 1967. Between 1949 and 1967, the Jari valley region exported some timber, in a very limited volume, mainly to be sent to other regions of the State of Para. At the moment, around 100,000 people live in the region. The population is distributed in the four cities and in some 140 small communities, engaged in fruit collecting activities and/or in the practice of itinerant agriculture, of very low efficiency. Jari valley has its history intimately linked to the Jari Celulose forestry activity (known all around the world as Jari Project) installed in the region in 1967. The Jari project started with the establishment of plantations and later (in 1978) a pulp mill was started. To supply the pulp mill, of 220,000 tons/year capacity at that time, around 117,000 ha were planted with Gmelina arborea. Gmelina plantations were not successful due to several reasons, including those related to local soil conditions and pests. It was then decided to replace Gmelina by tropical pines (Pinus caribaea). The results with tropical pines were better, but further research pointed out that the best option would be Eucalyptus spp, both in terms of silvicultural response as well as in terms of final product (market pulp). Initiatally, Eucalyptus deglupta was planted; this was followed by a hybrid (cross between the species Eucalyptus grandis and Eucalyptus urophyla). In the year 2000, Orsa Group took over the Ex-Jari Project, and it was decided to implement in the region a Sustainable Development Plan, focused on the multiple-use of the forest resources, besides continuing with the manufacture of pulp (so far, the main economic activity). Accordingly, the Group made new investments, both in the forests as well as in the pulp mill. The investments increased the pulp production capacity to 330,000 ton/year, and plans are underway to achieve 400,000 ton/year by the year 2006. At present, Orsa Florestal has a total planted area of around 50,000 ha. This area is much smaller than the originally planned area for the forest plantations, and this was due to substantial gains in productivity. The volume currently harvested from the existing plantations is approximately 1.4 million tons/year; and a cutting cycle of 6 years is in force. The sustainable production of the plantations will reach 1.6 million tons by the year 2006. In 2003, Orsa Florestal started the activities of its sustainable forest management plan, in an area of 545,000 ha. The maps of the SFM area indicate that approximately 60% of it can be managed for timber production (operational area). The other 40% is represented by Permanent Preservation Areas (PPAs), and includes areas to be protected in slopes, as margins of rivers and for other special reasons. The area under


management was divided into six management units, and each one will be properly divided into Annual Production Units (APU), for which operational annual plans will be prepared. A rotation of 30 years has been prescribed in the management plan. In the same year (i.e. 2003) the company initiated the FSC certification process, together with the Scientific Certification System (SCS). Besides timber, NWFPs are also expected to be certified. The idea is that NWFPs will be harvested by the local community, with the support of the company and Orsa Foundation. The company has also started a sawmill. The current production is 1,500 cum of air-dried sawnwood per month. By 2004/2005 the sawmill capacity will be expanded to 3,000 cum/month. The company is also putting in place secondary processing facilities, aiming to produce different grades of sawnwood, decking, flooring and other value-added products. The following species are harvested and processed in the company sawmill: red angelim (Dinizia excelsa), angelim pedra (Hymenolobium petraeum), angelim da mata (Hymenolobium excelsum), acapu (Voucapoua american), cupiuba (Golpia glaba), cumaru (Dipteryx odorata), macaranduba (Manilkara huberi), maparajuba (Manilkara bidentata), itauba (Mezilaurus lindaviana and Mezilaurus itauba), jatoba (Hymenaea intermedia), piquia (Caryocar villosum), piquiarana (Caryocar glabum) and sucupira (Diplotropis purpurea and Bowdichia sharp). Other species harvested are tauari (Couratari rhoifolia), fava bolota (Parkia pendula), louro, matamata, quaruba, mandioqueria (Qualea paraensis and Qualea albiflora) and tachi. These other species are being tested in sawmill and veneer mill for their quality. Further, the company has invested in R&D and human resources development, and has developed partnerships and collaborative arrangements in that regard. Orsa Florestal also takes its environmental and social responsibility very seriously. During the last decade Brazil had developed an extensive and complex framework of laws, policies and regulations to support SFM. These include a clear definition of national objectives related to forests (production, conservation and protection), tenure and property rights, control of forest management and harvesting etc. In fact, Brazil is perhaps one of the countries in the world with a comprehensive regulatory framework dealing with forests. Orsa Florestal makes best efforts to comply with the regulations. The Jari project, due to its magnitude, foreign investment involvement and location was a subject of discussion for a long time. Problems related to the internationalisation of the Amazon region and social and environmental impacts of the project have been raised at national and international flora. Furthermore, the economic viability of the project was also questioned; and for more than two decades the project’s capital investments were steadily reduced and there were doubts regarding its continuity. The transfer of the company’s control to a national investor group mitigated the problems related to the internationalisation of the Amazon region, but the concerns about the negative social and environmental impacts, as well as the doubts regarding its economic sustainability continued. Orsa Group, therefore, decided to focus on addressing the weaknesses of the project. New management concepts were introduced, including a clear corporate policy involving environmental responsibility, research and development and better uses of the local resources; these have changed the image of the company. There is no doubt that the lessons learnt over about half a century have been of outstanding importance and value for introducing the new management approach; but it needs to be recognized that Orsa Florestal was able to critically analyse the problem, and use the experience gained to restructure the operations and turn it into a sustainable business, fully integrated with the local reality. The knowledge gained in relation to the establishment of fast growing plantations in the tropical rain forest regions is of significant value. It took several years of intensive research, extensive field-testing and very large investments to reach the current stage of high productive plantations, able to produce high quality pulpwood. The increase in yield of the plantations made it possible to reduce land requirements and, to increase the profitability of the venture. Original extent of the land owned by Jari Project has also been reduced. Orsa Florestal recognized land rights of the local communities and also created protected areas in certain special environments. This reduced the conflicts in the region and improved the image of the company. And, there is still sufficient land to explore, in cooperation with the local community and several organizations, options for the sustainable development of the natural forest. The natural forest potential is now an important component of the company business. It is to be noted that Orsa Florestal is still in process of learning how to manage tropical natural


forests. Its well-established management structure, financial resources and the well-defined strategy and business plan have, however, facilitated the learning process. One of the strengths of the company in the social, as well in the environment area, is the Orsa Foundation. The Foundation is provided 1% of the gross annual revenues of the Orsa Group to implement its programmes and projects. The Foundation’s structure and the funds at its control have greatly facilitated the co-operation with the community and also with national and international organizations. Under the social programme, several of the forest management activities are assigned to the communities, thus helping to enhance their income. One of the activities is related to non-wood forest products. The idea goes beyond the creation of jobs; it supports training in aspects of production and organization, enabling new businesses opportunities to the local communities, and improvement of the local economy. Orsa Florestal is involved in nature and bio-diversity conservation, and collaborates with the Government agencies in that regard. In the Jari Valley region, there are around 1.1 million ha of conservation areas, including genetic reserves, collaboratively managed and maintained by IBAMA (Brazilian Institute for Environmental and Renewable Natural Resources), SEMA (Environmental Agency of the State of Amapa) and Orsa Florestal. Orsa Florestal is an example of a company that has made tremendous effort to adopt SFM, incorporating an integrated approach, taking into consideration that the economic sustainability is the basis to satisfy social and environmental criteria. Availability of financial and human resources is fundamental to achieve SFM. In the case of Orsa Florestal, these factors are not a limitation. It clearly seems that the company is on the right track, but how successful the company will be in SFM remains to be assessed in another few years.

15. Empresa Agro-industrial La Chonta Ltda – P. Antelo and M. Tuoto

La Chonta is a Bolivian private company founded in 1974. The company manages 220,000 ha of tropical forests distributed in two concessions (of government forest land) located in the Guarayos and Bajo Paragua regions, falling in the central western part of Bolivia. 164,000 ha out of the total area is considered as production forest. La Chonta operates three separate enterprises: Agro-industrial La Chonta Ltda, Aserradero Lago Rey Ltda and Bolivian Forest Saver. Agro-industrial La Chonta Ltda as well as Aseradero Lago Rey Ltda are responsible for managing forest concessions and for wood processing facilities and operations. Bolivian Forest Saver is the trade branch. The three companies jointly employ approximately 350 persons and their total annual revenue is around US$ 4 million. After 1997, taking into consideration the new Bolivian Forest Law, the company decided to embark on a new approach, and the forest concession began to be managed in a sustainable way. Social and environmental considerations are adequately internalized into the operations of La Chonta. Besides forest inventory and the management plan, La Chonta has most of the required planning procedures in place to properly operate the concession, including forest harvesting plan, long term projections, monitoring system etc. La Chonta forest concessions have been certified by FSC. Forests of this region are rich in wood species of high commercial value, including mahogany or mara (Swietenia macrophylla), Bolivian oak or roble (Amburana cearensis), Spanish cedar or cedro (Cedrela odorata) and others. To improve forest practices and adopt SFM, La Chonta had to increase the number of tree-species harvested, and thus to harvest high volumes per unit area. In the past, the company’s forest operations were based only on a few valuable species and removals were normally low – less than 1 cum/ha. This was made economically feasible due to the high market price of the valuable species (such as Mahogany). With the adoption of improved forest practices in 1996, increasing the harvesting volumes became quite important, not only to reduce the pressure on more valuable wood species, but also to make it possible to internalise the new and additional costs resulting from the adoption of improved forest practices. Paradoxically, the move towards SFM made La Chonta to reduce the size of its concessions. In the past, to harvest only for 2-3 valuable species, a large area was needed, as removals were very low. Also the previous Forest Law provided for payment of royalties based on removals; so the size of the concession was not a limitation. With


the new law, the payment is to be made based on consideration of the area of the concession as well; and companies were compelled to match the size of the concession with their payment capacity. Presently, the company is harvesting between 3 and 8 cum of wood per ha. This is still a relatively small volume when compared to the yield achieved in other countries of the region, as for instance in Brazil. This is basically a result of the lack of scientific information on forest regeneration and growth, common to most of the tropical world, when dealing with natural forests. To overcome this problem, La Chonta management guidelines prescribes regular assessment of natural regeneration and adoption of measures to supplement natural regeneration, when necessary. Naturally, an increase in the volume removed per unit area reduces the harvesting costs. But it creates another problem: many of the new harvested wood species are not known in the international market, and when accepted they receive only a low price. La Chonta passed through difficult times, since in many cases the cost of production, and cost of transportation to the main consuming centres, depressed the performance for the timbers of LKS with no tradition in the market. The domestic market could be, in principe, an alternative, but it is too small to absorb the high volumes. Value added products and forest certification were the strategic measures devised by La Chonta to deal with the situation. La Chonta has two sawmills, both located close to the forest concessions (La Chonta and Lago Rey). Part of the production is traded in bulk, while better grades are reprocessed into value-added products. The production capacity of the re-manufacturing facility is around 2,000 cum/year of finished products (doors, mouldings and flooring). Annually, about 20,000 doors are produced. The chain of custody has been certified by FSC. Wood processing activities were strongly affected with the adoption of SFM, and with increased output of LKS timber. The knowledge gained in processing of traditional timber species such as mara (Mahogany), roble and cedro was no longer appropriate for LKS. The high commercial value of these preferred species, traditionally traded and widely accepted by the market, contributed to the low level of efficiency in the value chain. With the adoption of SFM and the introduction of LKS, several interventions were needed to improve efficiency of the mill; this included investment to develop new processes and products, and also investments in the processing facilities. The lesson learned by La Chonta points out that promotion LKS is fundamental when adopting SFM. Processing LKS requires an increase in the scale of production (starting with logging) and adoption of improved processing technologies in order to reduce production costs and to increase product values. LKS have a lower market value, well below traditional wood species, and are unlikely to have price increases compared to the well-known timbers. Thus, without cost reduction and addition of value, it is not possible to have a profitable operation, which is essential to improve forest practices. Moreover, the lessons learnt by La Chonta operation in Bolivia indicate that an adequate policy and legal framework, and particularly law enforcement, plays an important role in the promotion of SFM. However, the private sector in Bolivia ended up paying for the full cost of SFM adoption, since the Government has no economic instruments or other mechanisms that would effectively encourage and provide incentives for the adoption of SFM. The private sector hopes to recover the additional costs from the market, but no price premium is paid for sustainably produced timber, even when certified. The changes in favour of SFM require more than good will. Investments are needed in whole value-chain processing. This has been a strong limitation for La Chonta, since in Bolivia financial sources for direct investments in the timber industry are quite limited and, when available, costs are too high. There is also limitation on the number and adequacy of trained professionals, and several technical questions remain to be solved. The capability of the Government of Bolivia to support forest companies in transition towards SFM is low and inadequate. La Chonta is in a better position than most with regard to resource access. The company is slowly improving the situation through strategic planning, which is basically focusing on debt re-negotiation, investments to increase production of value-added products and on the introduction of LKS in the market. La Chonta is an exception in Bolivia, a country where timber production and exports declined during the last few years.

SHARING OF INFORMATION AND EXPERIENCES ON PRIVATE … · 2013-11-11 · SHARING OF INFORMATION AND...

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