Legality-related challenges faced by small-scale and community forest producers and enterprises

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The presentation of Simon Milledge, principal researcher in IIED’s Natural Resources Group and team leader of IIED’s Forest Team, to the Chatham House event ‘Small scale and community forest producers: the challenges and opportunities of legality verification’ held at the British Academy, London, 19-20 May 2014.

The presentation focuses on legality-related challenges faced by small-scale and community forest producers and enterprises, taking lessons from Ghana, Indonesia, Malaysia and Papua New Guinea.

More information on Simon Milledge’s work: http://tinyurl.com/SimonMilledge.

Further details of the workshop: http://tinyurl.com/mkmol9c.

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  • Participation (access), partnership (sharing of benefits), recognition (improved rights), decision-making authority (self determination
  • Legality-related challenges faced by small-scale and community forest producers and enterprises

    1. 1. 1 Chatham House British Academy 19 May 2014 Author name Date Chatham House British Academy 19 May 2014 Lessons from Ghana, Indonesia, Malaysia and Papua New Guinea Simon Milledge, IIED Legality-related challenges faced by small-scale and community forest producers and enterprises
    2. 2. 2 Chatham House British Academy 19 May 2014 Characteristics of SMFEs Flexible, highly diverse Rapid job creation Supply domestic markets and exports Less capital‐intensive, high IRR Address broader dimensions of poverty: resource rights, local wealth, entrepreneurship, social capital
    3. 3. 3 Chatham House British Academy 19 May 2014 Learning from the past Why the focus on exports/formal sector? Drivers of major initiatives Emphasis on foreign exchange earnings Visibility, number and ease of working Emphasis on resources not people Underestimated value Political economy Low ‘domestic demand’ signals
    4. 4. 4 Chatham House British Academy 19 May 2014 Assessing feasibility Sociological Economic Environmental Political Administrative Financial Technical Institutional Remote Industry Operating
    5. 5. 5 Chatham House British Academy 19 May 2014 Sociological challenges Perceptions: SMFEs, informal sector Mistrust: bad advice, exploitation Societal concerns: market signals Poverty: illiteracy, labour availability Social capital: underdeveloped
    6. 6. 6 Chatham House British Academy 19 May 2014 Economic challenges Industry trends: domestic markets increasing relative to export markets, outpacing enabling environment Resource availability: supply-demand mismatch Competition: from imports Subsidies: in an inadequate policy environment
    7. 7. 7 Chatham House British Academy 19 May 2014 Environmental challenges Land degradation and declining quality of forest resources Unsustainable harvest levels driven by: - high demand - excessive competition - major land allocations to large-scale enterprises - ineffective regulation - corruption - weak incentives for sound management
    8. 8. 8 Chatham House British Academy 19 May 2014 Political challenges Unsupportive legal framework: insufficient focus on the laws that affect small-scale and community forestry – resource access & control Insecure tenure: creates uncertainty Illegality: chainsaw milling illegal but unenforceable, inequitable use of enforcement Dispute resolution: lack of support Regulatory inconsistencies: ineffective regulation, discretionary and discriminatory concession allocations, corruption
    9. 9. 9 Chatham House British Academy 19 May 2014 Administrative challenges Regulatory processes: Unclear, complex, excessive - land allocation, business registration, trade permits, taxation, finance Poor quality of data: land, informal sector, SMFEs
    10. 10. 10 Chatham House British Academy 19 May 2014 Financial challenges Investment incentives: price incentives uncompetitive with other permitted land uses, high transaction costs, low security Partnerships: low bargaining power Sources of finance: financial management, collateral, start-up capital, risk profiles, terms, financing avenues
    11. 11. 11 Chatham House British Academy 19 May 2014 Technical challenges Certification: low awareness, high cost, inflexibility of standards, lack of market-place differentiation Information: markets, contracts, land allocation and financing Forest management: plantation inputs, natural forest management
    12. 12. 12 Chatham House British Academy 19 May 2014 Institutional challenges Capacity: finance, business skills, quality control, marketing, negotiation Support: training, mediation Organisation: cooperatives and associations Collaboration: participation and partnership, less on recognition and decision-making authority
    13. 13. 13 Chatham House British Academy 19 May 2014 •Market signals •Business skills •Organisation •Finance, cost • Industry structure • Harvesting practices • Legal reform • Tenure • Formalisation • Enforcement • Public perception • Livelihoods • Resource access • Benefits regime Social acceptance Legality Economic viability Environmental sustainability • Legality needs to be addressed together with wider priorities • Includes structural reform/enabling environment aspects (c.f. coloured text) and more operational areas
    14. 14. 14 Chatham House British Academy 19 May 2014 Where focus is needed Legality definition Tree tenure and benefits regime Inclusive management and benefit sharing Financial instruments and incentives Adequate training and improved product Improved enterprise organisation Trade chain partnerships

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