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Fostering the social forestry program: Inclusive business models (IBMs) in community-based wood & NTFP-based production

Presented by Ani Nawir of the Center for International Forestry Research at the 3rd Asia-Pacific Rainforest Summit, on 23–25 April 2018 in Yogyakarta, Indonesia

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Fostering the Social Forestry Program:
Inclusive Business Models (IBMs)
in Community-Based Wood & NTFP-Based Production
3rd Asia-Pacific Rainforest Summit
24 April 2018
The Alana Yogyakarta, Indonesia
Ani Adiwinata Nawir, PhD
SLF – Sustainable Landscape & Food System Team, CIFOR
THINKING beyond the canopy
1. Inclusive Business Models (IBMs):
Integrate smallholders into value chains (markets) of a certain product
Aims:
improve the overall competitiveness of a value chain,
& reduce poverty (benefiting poor farmers & rural business
community).
Initiators: a group of organized producers, private, intermediary
market brokers, or NGOs.
“Inclusive”: the constraints of linking smallholders to markets.
“Business”:
mainstreaming business tools into product development.
“Inclusive” & “business”:
Involved trade-offs: between competitiveness and inclusiveness.
Source: FAO. 2015. Inclusive business models (FAO, 2015)
Household livelihood strategy & local value chains
are driven by national policy and regulations
2. Integrated supply & value chains based on the nature
of the products: wood, NTFPs, & environmental services
Scales: local, regional, & global
Timber:
The ‘unfavourable characteristics’ of timber-based management to the poor:
a long term investment with high risks due to price fluctuations, tenure
insecurity, and natural hazards (e.g. fire).
Added value small-scale wood processing: needs a financial capital.
Ecological services:
Provided to on-site forest users and off-site beneficiaries at the regional,
national or global levels (e.g. downstream water supplies).
Business model:
Payment for Environmental Services (PES); community-based ecotourism.
NTFPs (Non Timber Forest Products):
Limited economies of scale for commercialization:
high harvesting costs per unit area
Characteristics of the benefits from forest:
NTFPs, timber & ecological services
Limited timber uses
(in village-trading)
Household income portfolio
Privately-
owned lands
Protected forests
or nature reserve
Domesticated NTFPs:
e.g. candle nuts
Policy regulating access
to utilize the forests
(Limited) extractive NTFPs:
wild forest honey
Regulation on timber
management &
harvesting permit
Regulation on
timber legality
verification
NTFPs
Processing &
Market
Timber processing & marketing
Transporting timber
Transporting NTFPs
Regulated locally based
on national policy
Customary
norms &
rules
Regulated locally based
on national policy
Eastern Indonesia: West & East Nusa Tenggara
Inter-relation: livelihood strategy, value chains, & forestry policy and regulations
THINKING beyond the canopy 6
Source: http://www.co.greene.pa.us/secured/gc2/images/conserv/what-is- watershed-... A watershed is
the area of land that drains into a common waterbody.
Watersheds:
as the main unit of the analysis at the landscape level
Grand strategy for integrated management of timber and NTFPs at the
landscape level: directing community-based enterprises development

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Fostering the social forestry program: Inclusive business models (IBMs) in community-based wood & NTFP-based production

  • 1. Fostering the Social Forestry Program: Inclusive Business Models (IBMs) in Community-Based Wood & NTFP-Based Production 3rd Asia-Pacific Rainforest Summit 24 April 2018 The Alana Yogyakarta, Indonesia Ani Adiwinata Nawir, PhD SLF – Sustainable Landscape & Food System Team, CIFOR
  • 2. THINKING beyond the canopy 1. Inclusive Business Models (IBMs): Integrate smallholders into value chains (markets) of a certain product Aims: improve the overall competitiveness of a value chain, & reduce poverty (benefiting poor farmers & rural business community). Initiators: a group of organized producers, private, intermediary market brokers, or NGOs. “Inclusive”: the constraints of linking smallholders to markets. “Business”: mainstreaming business tools into product development. “Inclusive” & “business”: Involved trade-offs: between competitiveness and inclusiveness. Source: FAO. 2015. Inclusive business models (FAO, 2015)
  • 3. Household livelihood strategy & local value chains are driven by national policy and regulations 2. Integrated supply & value chains based on the nature of the products: wood, NTFPs, & environmental services Scales: local, regional, & global
  • 4. Timber: The ‘unfavourable characteristics’ of timber-based management to the poor: a long term investment with high risks due to price fluctuations, tenure insecurity, and natural hazards (e.g. fire). Added value small-scale wood processing: needs a financial capital. Ecological services: Provided to on-site forest users and off-site beneficiaries at the regional, national or global levels (e.g. downstream water supplies). Business model: Payment for Environmental Services (PES); community-based ecotourism. NTFPs (Non Timber Forest Products): Limited economies of scale for commercialization: high harvesting costs per unit area Characteristics of the benefits from forest: NTFPs, timber & ecological services
  • 5. Limited timber uses (in village-trading) Household income portfolio Privately- owned lands Protected forests or nature reserve Domesticated NTFPs: e.g. candle nuts Policy regulating access to utilize the forests (Limited) extractive NTFPs: wild forest honey Regulation on timber management & harvesting permit Regulation on timber legality verification NTFPs Processing & Market Timber processing & marketing Transporting timber Transporting NTFPs Regulated locally based on national policy Customary norms & rules Regulated locally based on national policy Eastern Indonesia: West & East Nusa Tenggara Inter-relation: livelihood strategy, value chains, & forestry policy and regulations
  • 6. THINKING beyond the canopy 6 Source: http://www.co.greene.pa.us/secured/gc2/images/conserv/what-is- watershed-... A watershed is the area of land that drains into a common waterbody. Watersheds: as the main unit of the analysis at the landscape level Grand strategy for integrated management of timber and NTFPs at the landscape level: directing community-based enterprises development
  • 7. THINKING beyond the canopy Management aspect Forest function & watersheds (Zonation) Upstream Midstream Downstream Area management Objective: Enforcing the conservation function of the area as the buffer zone and/or rehabilitating the degraded areas, while enhancing local livelihoods Business management Objective: Promoting the establishment of small-medium scale enterprises for value added processing activities both for timber and NTFPs Institutional arrangements and management Objective: improving the coordination, synergy, and inter- connectivity of various government agencies at various levels, as well as between these agencies and private market industries. Management & business plans: viable & feasible community-based enterprises
  • 8. THINKING beyond the canopy Management aspect Forest function & watersheds (Zonation) Upstream Midstream Downstream Conservation: buffer zone development & forest & land rehabilitation. Agroforestry: combining shading trees & NTFPs for conservation. Intercropping: timber & medicinal herbs Plants: nectar in bees farming. Intercropping timber & cash/food crops. Enhancing local livelihoods Investing on the host trees & nectar plants for wild forest honey production. Timber with high economic values. Bees farming for honey production. Fodder production. Agro-silvopastoral. Integrating environmental services for economic development. Community-based ecotourism: based on local potential and context surrounding the protected and production forest. Managed by: village government & funds. Partnership: Pokdarwis (community group) & FMU/KPH. Business plans based on selected commodities: (complemented by Cost-Benefit Analysis)
  • 9. THINKING beyond the canopy 3. Existing business models in the context Social Forestry: Community Forestry Scheme in Nepal Community Forestry Scheme (Hutan Kemasyarakatan-HKm) in Indonesia Community-Company Partnership Scheme in Indonesia
  • 10. 10 Aspects Nepal: Com. Forestry (CF) Indonesia: CF (HKm) Indonesia: Com-Comp. Partnership Property right regimes for community involvement State forestlands & exclusive full rights are transferred to FUGs State property (no recognition of traditional rights). Part of company concession right (limited traditional rights recognized informally) Description of Benefit Sharing Mechanism (BSM) Rightsallocation-based (bundle of rights): all the benefits; Government: 15% of revenues from the sale of two commercial species of timber Rights-allocation based (limited): 30% (NTFPs) & 70% of land is for timber to be left intact. Mixed of input-based & performance-based: timber production-based paid in royalty to community partners. Monitoring Government monitors the BSM usually through submitted reports and occasionally through visits Limited information sharing between community and local government. Renewed subject to assessment Limited information sharing between company and community partners, and local government as the regulator and evaluator (?)
  • 11. 11 Aspects Nepal: Com. Forestry (CF) Indonesia: CF (HKm) Indonesia: Com-Comp. Partnership Activities being rewarded Improving forest condition: conservation practices and sustainable harvesting Forest rehabilitation activities & enforcement of the State-property boundaries Securing timber plantation development & company access in the areas Other benefits Rights to CF and associated benefits as entitlements; capacity building; ecosystem services. Access for intercropping on State land Financial (e.g. loans) and other incentives (e.g. rubber tree seedlings) Main indirect benefits Community social capital, & local democracy Social capital Securing traditional rights & access inside concessions Legitimate beneficiaries All members of the CF group Cooperative: 35 years Cooperative members (contract agreement) Mechanism for payment Spent on public and social infrastructures, & 35% of revenues for pro-poor income generation activities No mechanism for payment Direct payment to cooperative & no formal shared benefits to local government
  • 12. Source for diagram: https://www.pinterest.com/pin/528821181226854516/ Inclusive Business Model (IBMs) Competitive Business Model 1. Assessment on the current business capacity: comparative advantages & stakeholder analysis along the supply & value chains. 2. Trainings on: policy literacy, developing & managing socio-economically viable small-scale enterprises. 3. Starting-up packages: financing scheme, institutional arrangement (take advantage the existing association), developing management & business plans. 4. Strategic directions for promoting IBMs 4. Tailored incentives framework to overcome challenges: direct & indirect, & enabling. 5. Favorable policy & regulation framework: along supply & value chains.
  • 13. 13 WBCSD claims: A global, CEO-led organization of over 200 leading businesses working together to accelerate the transition to a sustainable world. Sustainable by focusing on: maximum positive impact for shareholders, the environment and societies. Member companies: business sectors and all major economies (a combined revenue of more than US$8.5 trillion and with 19 million employees. Global Network of almost 70 national business councils . Work with member companies along and across value chains to deliver high- impact business solutions to the most challenging sustainability issues. Platform: World Business Council for Sustainable Development (WBCSD) - http://www.wbcsd.org Fostering Public-Private-People-Partnership