Contract tree farming and smallholders: Drivers of adoption in Thailand
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Contract tree farming and smallholders: Drivers of adoption in Thailand

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Fast-wood plantations are needed to supply large quantities of fresh fibre for the paper industry. The most popular outsourcing arrangement between companies and smallholders is known as ’outgrower ...

Fast-wood plantations are needed to supply large quantities of fresh fibre for the paper industry. The most popular outsourcing arrangement between companies and smallholders is known as ’outgrower scheme’ or ’contract tree farming’. In Thailand as in other countries, contracts for eucalypt (Eucalyptus spp) growing have become critical for the major pulp companies to ensure their raw material supply. I present the current situation of eucalypt plantations in Thailand, the pulp and paper industrial growth and the development of contract tree farming. It is based on a thorough review of most recent works and original research.

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  • we have 8400 euca trees,k5,k7 from double a.they are 5yrs old and ready to cut,does anybody know how much they are worth,i have been told many different prices,farm 80k from khon khen
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    Contract tree farming and smallholders: Drivers of adoption in Thailand Contract tree farming and smallholders: Drivers of adoption in Thailand Presentation Transcript

    • Contract tree farming and Small landholders: Drivers of adoption in Thailand Source: Boulay, Axelle. 2010. Contract tree farming and smallholders: Drivers of adoption in Thailand, PhD Thesis, Australian National University, Australia [email_address]
    • Overview of the presentation [email_address]
      • Situation
      • Conceptual framework
      • Research question
      • Limitations of existing research
      • Theoretical framework
      • Case study
      • Methods
      • Results
      • Recommendations
    • Situation: Market opportunities and partnerships
      • Decline in wood supply from natural forests
      • Forest industries want to out-source wood production
      • Forest industries need land
      • -> Smallholders = potential sources of wood supplies
      • -> Partnerships between smallholders and forest industry
          • Contract tree farming
      [email_address]
    • Conceptual framework: Strategies and marketing situations Government [email_address] SELL TO Smallholders Contract growers Industry
    • Research question: What factors promote adoption of contract tree farming?
      • Why is it important to answer the research question for the different stakeholders?
      [email_address] Policy makers - To understand all the drivers of decisions to enter or not a contract - To provide a sound basis for improved policies Forest industry - To understand what conditions are more attractive to smallholders - Better inclusion of smallholder issues in companies’ decision-making frameworks - Business strategy Smallholders - To improve livelihood
    • Limitations of existing research [email_address] Agriculture partnerships Forestry partnerships
      • Academic research: many case studies and economic articles on risk strategy
      • Few comprehensive studies on smallholders’ interests
      • Little academic research
      • Many reports from development agencies and research institutes, but most are too descriptive, superficial
      • - Weak socio-economic analyses
      Donor agencies are highly supportive of partnerships but v ery few studies provide a basis for understanding where, how and under what conditions smallholders enter into partnerships.
    • Theoretical framework
      • Contract theory and economic theory: Adoption of contract tree farming is influenced by the utility function that trades off the household’s desire for more income, more leisure time, less risk and less effort.
      • Diffusion of innovation theory: Adoption is influenced by
        • attributes of the innovation
        • optional/collective/authority decision making
        • communication channels
        • social system
        • change agents’ diffusion strategies
        • incentives
        • stages of the innovation-decision process
      • Livelihood theory: Adoption is influenced by
        • each of the five types of capital
        • the vulnerability context
        • transforming structures and processes
        • livelihood strategies
      [email_address]
    • Case study: Contract eucalypt tree farming in Thailand
      • 336,000 ha of eucalypts under contractual arrangements = 70% of total eucalypt area
      • Eucalypt tree farming =
        • source of income for many smallholders
        • critical to the resource supply of pulp and paper companies
      • Smallholder = <100 rai (16 ha) of land
      [email_address]
    • Case study: Contract eucalypt tree farming in Thailand [email_address] Advance Agro Chachoengsao Siam Forestry Ratchaburi Phoenix Pulp and Paper Khon Kaen Siam Forestry Kamphaeng phet 3 large pulp and paper companies and >60,000 contract tree growers Bangkok
    • Case study: Contract eucalypt tree farming in Thailand
      • The 3 companies own tree nurseries
      [email_address] 2008 / 01 / 29 NampoKalasin
    • Case study: Contract eucalypt tree farming in Thailand
      • The 3 companies supply pulp mills
      [email_address]
    • Case study: Contract eucalypt tree farming in Thailand Company extension work [email_address] 2008 / 01 / 26 AgriculturalFair_KhonKaen
    • Case study: Contract eucalypt tree farming in Thailand Eucalypt block planting [email_address]
    • Case study: Contract eucalypt tree farming in Thailand Eucalypt intercropped with cassava [email_address] 2008 / 02 / 13 Kanchanaburi
    • Case study: Contract eucalypt tree farming in Thailand Eucalypt paddy-bund planting [email_address]
    • Methods
      • Data collection:
        • 4 case study areas
        • Key informant interviews
        • Focus groups
        • 800 Household surveys of eucalypt tree growers and non-tree growers
      • Data analysis:
        • Quantitative – logit analysis used to corroborate hypotheses about the drivers of adoption
        • Qualitative – used to inform interpretation of the quantitative results and shed light on the role of contract eucalypt tree farming in smallholders’ livelihood
      [email_address]
    • Methods
      • 800 household surveys
      [email_address]
    • Methods
      • A range of livelihood assets
      [email_address]
    • Methods
      • A range of livelihood activities
      [email_address]
    • Results [email_address]
      • Drivers of adoption of tree farming
      • Drivers of adoption of contract tree farming
      [email_address]
    • Results: Drivers of adoption of tree farming
      • Potential financial return from eucalypts compared to rice, cassava and sugarcane
      [email_address] Item Rice a (per year) Cassava (per year) Sugarcane (per year) Eucalypts b (per year) Yield (t/ha) 2.28 16.71 66.10 100 Farm gate price (baht/ton) 10,000 1,500 800 1,200 Revenue (baht/ha) 22,800 26,250 52,880 120,000 Production costs (baht/ha) 10,981 12,950 32,638 12,297 c Profit (baht/ha) 11,879 14,688 20,242 10,243 d a Glutinous rice is mostly grown for home consumption b eucalypts spacing 3x2 m. (approximately 270 plant/rai) c include 13,219 baht/ha in year 1; 8,687 baht/ha in year 2; 1,125 baht/ha in year 3 and 36,125 baht/ha in year 4, discounted with a 10% discount rate. d Profit at year 4 discounted with a 10% discount rate. 1,000baht=32.9US$ ; 10rai=1.6ha . Data from 2008
    • Results: Drivers of adoption of tree farming [email_address] Mean characteristics of sampled non-tree growers and tree growers for variables assessed in the quantitative survey, and significance of differences Mean for Non-tree growers n=171 Mean for Tree growers n=461 P-value ***p<0.01 ** p<0.05 * p<0.10 Total land owned (rai) 19.5 29.5 *** Percentage of land owned with sandy soil 43% 45% Total income (baht/month) 9,890 10,395 * Off farm income as % of household income 38% 41% Household on-farm labour available (number of persons) 2.1 2.0 Smallholder age (years) 49.3 50.0 Education (scale from 1 to 5) 2.3 2.2 * Number of middle men known 4.8 2.8 *** Knowledge about eucalypt tree farming (scale from 1 to 5) 2.0 2.5 *** Source: Boulay, Axelle. 2010. Contract tree farming and smallholders: Drivers of adoption in Thailand, PhD Thesis, Australian National University, Australia.
    • Results: Drivers of adoption of tree farming [email_address] Previous use of plots planted with eucalypts unused cassava rice sugarcane kenaf fruit trees
    • Results: Drivers of adoption of tree farming
      • Conclusions:
      • Adoption is enhanced by:
        • Availability and suitability of land
        • Compatibility with past experiences, complexity, trialability, observability, and stages of the innovation-decision process
        • Perception of land tenure security but not influenced by holding a formal land tenure document
      • Adoption ≠ land-use intensification strategy
        • eucalypts = alternative crop for low productivity land, on which eucalypts are the most profitable crop.
        • = opportunity to diversify income + advantage of requiring low labour inputs between planting and harvest. This is particularly advantageous for many tree growers who have off-farm income or rely on hired labour for farming their land.
      [email_address]
    • Results [email_address]
      • Drivers of adoption of tree farming by Thai smallholders
      • Drivers of adoption of contracts tree farming
      [email_address]
    • Results: Drivers of adoption of contract tree farming [email_address] Mean characteristics of sampled independent tree growers and contract tree growers for variables assessed in the quantitative survey, and significance of differences Mean for Independent TG n=169 Mean for Contract TG n=292 P-value ***p<0.01 ** p<0.05 * p<0.10 Total land owned (rai) 28.5 30.3 Percentage of sandy soil 49% 41% * Area planted with eucalypts (rai) 11.1 10.9 Total income (baht/month) 10,315 10,475 Eucalypts’ rotation planned (year) 3.7 4.0 *** Frequency of company’s visits (scale 1 to 3) 1.3 1.8 *** Trust in company for wood measurement 1-5 3.5 4.0 *** Experienced tree growers 55% 28% *** Growers who preferred the company’s plants 55% 97% *** Number of middle men known 4.4 1.8 *** Source: Boulay, Axelle. 2010. Contract tree farming and smallholders: Drivers of adoption in Thailand, PhD Thesis, Australian National University, Australia.
    • Results: Drivers of adoption of contract tree farming
      • Conclusions:
      • The adoption of contracts for tree farming is enhanced by:
        • size of landholding (explained by economies of scale in adopting a contract)
        • previous experience with contract agriculture
        • extension work conducted by contracting companies and especially company change agents’ visits to the farms
        • collection of information
      • There was no evidence that contracts increased profit made from tree growing
      [email_address]
    • Recommendations: Theoretical framework used
      • The use of a theoretical framework combining economic , diffusion of innovation and livelihood theories was successful.
      • The only factors that were not well predicted by this framework included the importance of the negative perceptions of eucalypts and the economies of scales in contracts.
      [email_address]
      • Forestry companies should focus on extension in order to attract more smallholders to eucalypt tree farming.
      • Extension needs to be supported by applied research into eucalypt tree farming, such as in tree improvement, site selection, and soil management within the context of sustainable land use.
      • Governments could assist the realization of more sustainable outcomes by establishing programs which help smallholders assess and monitor the suitability of land for planting.
      • The provision of information and technical advice , , and some assistance for smallholders to organize themselves into associations, would facilitate contract tree farming.
      Recommendations: for Companies and Governments [email_address]