economic incentives and household perceptions on smallholder timber plantations lessons from case...

THINKING beyond the canopy

Economic incentives and household perceptions on smallholder timber plantations: Lessons from case studies in Indonesia

By: Dede Rohadi, Maarit Kallio, Haruni Krisnawati and Philip Manalu


The importance of smallholder timber plantations (in particular in Indonesia):

1. High demand on wood and diminished supply of timber from natural forests.

2. Smallholder timber plantations could potentially contribute in timber supply and be as mean of poverty alleviation.

3. Government is intensifying its efforts to support the development of smallholder timber plantations.

Background


Characteristics of various people participation schemes on smallholder timber plantations in Indonesia

No. Types of management system

Land tenure Main actors (land users) who use the rights

Management purposes

ExamplesOwnership Rights given to

land users/managers

1 Community forest or Hutan Kemasyarakatan (HKm)

State (provincial or district level)

Access, use and manage

Provincial or District Forestry Offices and Community groups

- Production- Conservation

- Damar forest in Lampung

- Smallholder teak plantaions in Java.

2 People Plantation Forests or Hutan Tanaman Rakyat (HTR)

State (district level)


Community groups, District Foresty Offices and possibly private companies (under contract agreement)

- Production To be established in many parts in Indonesia

3 Village forest State (District to local/village level)


Community groups, individuals and village government (under contract agreement)


Village forests in Java

4 Company-community partnership models

State owned company


Community groups and state owned companies (under contract agreement)


PHBM or MHBM models in Java.

5 Company-community partnership models

Private companies Access, use, and manage

Community groups, individuals and private companies (under contract agreement)

Production Smallholder Acacia plantation in some parts of Indonesia

6 Farm forest Private Access, use, manage and transfer

Individuals Production Smallholder teak farm forests in Java


• What are the available economical benefits of timber plantations for smallholders?

• What are smallholder’s perceptions on these benefits as compared to other income generating activities?

• What are the challenges for improving economical benefits and smallholders’ livelihoods through timber plantations?

• What policy interventions are necessary for these challenges to overcome?

Key questions:


Research Methods The case studies:

• Smallholder teak (Tectona grandis) plantations at Gunungkidul district, Yogyakarta

• Smallholder kadam (Anthocephalus cadamba) plantations at Tanah Laut district, South Kalimantan

The case studies:



• Other land use systems:Food crops at GunungkidulRubber (Hevea brasiliensis) and oil palm

(Elaeis guinensis) plantations at Tanah Laut


Research Methods The case studies:



• Other land use systems:Food crops at GunungkidulRubber (Hevea brasiliensis) and oil palm

(Elaeis guinensis) plantations at Tanah Laut


Research Methods

Data collection and analyses:

• Household surveys, In-depth interviews, FGD, Farm inventories

• Financial analyses (BCR, NPV), descriptive analyses


Research Methods Some assumptions in the financial analyses:

• Timber plantations: Tree density is 500 trees/ha, half of the trees is harvested at 15 yrs old. Rotation age 25 yrs.

• Food crops: Based on real farmers’ practices (5 respondents were compared).

• Rubber plantations: Tree density is 625 trees/ha. Harvesting starts at age 4 yrs. At the end of rotation (25 yrs) the farm produces 150 m3 of rubber wood.

• Oil palm plantations: Tree density is 130 trees/ha. Harvesting starts at age 5 yrs.

• Costs of inputs and revenues are based on the average values derived from the surveys and in-depth interviews.


RESULTS AND DISCUSSIONS

No. Types of plantation

Cost of establishment Maintenance cost until the first harvest

Potential income per month Net Present Value

B/C ratio

million Rp US$ million Rp US$ million Rp US$ million Rp US$

1 Teak plantations: a. Kitren system 3.51 369 1.03 108 NA NA 15.07 1,586 2.35b. Tegalan system

- Respondent 1 1.67 176 1.58 166 0.44 47 44.62 4,697 4.31

- Respondent 2 14.71 1,549 14.59 1,536 0.73 76 73.05 7,690 1.59

- Respondent 3 5.14 541 4.99 525 2.18 230 220.43 23,203 6.21

- Respondent 4 23.68 2,493 23.53 2,477 4.89 515 494.07 52,008 3.49

- Respondent 5 7.97 839 7.87 828 1.45 153 185.40 19,516 3.202 Kadam plantation

- Low price 3.50 368 1.15 121 NA NA -0.07 -7 0.99- High price 3.50 368 1.15 121 NA NA 6.02 634 2.17

3Rubber plantation 6.80 715 2.50 263

1.05to

2.89

111to

304151.80 15,979 3.41

4 Oilpalm plantation 11.87 1,249

1.92to

2.44

202 to

257

4.65to

9.85

489to

1.036484.89 51,041 10.22

[N1]IS there potential income per month for timber?

Financial analyses of smallholder timber plantations and other farm based activities




Household perceptions on timber plantation activities (Gunungkidul)

Teak contributes relatively low in the household income structure





Households in Gunungkidul allocate in average 10% of their limited area for growing teak





The main reason for planting teak is for household saving account and safety net




Household perceptions on timber plantation activities (Tanah Laut)

The main household income comes from off farm activities





Timber planters allocate significantly for rubber plantations





Rubber seems the most favorite species for non timber planters





Timber plantations are generally objected for saving accounts

Reason for planting (%) % of farmer's responds (n=30)

Savings for the oldies/investment/ future income

83

Environmental reason (prevent erosion or deforestation/ greening)

23

Influenced by the company/participate the program/ follow the other farmers/ social pressure

20

For future generation (savings, house, education)

10

For subsistence/ daily use/collect fruits

10

Incentives 10




Challenges and policy intervention options1. Timber plantation is not the best land use option financially2. Smallholders plant timber mainly for saving accounts and safety

net3. Many of smallholders are challenged by:

• Limited market information• Low bargaining power• Limited capital to purchase production inputs• Manage their timber plantations based on traditions• Limited land ownership area (in the case of Gunungkidul)




Challenges and policy intervention options4. Some intervention options:

• provide regular extension services of best practices in timber plantation management

• provide better market information and assist farmers’ collective action to improve market access and bargaining power

• provide micro finance supports through soft loan programs which are carefully designed to meet farmers’ needs

• Prevent timber trade regulation that tends to generate high transaction costs

• Provide more access to state land (in Gunungkidul)


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