Ani Adiwinata Nawir, CIFOR
Jakarta, 22 February 2007
FST/2005/177
Improving economic outcomes
for smallholders growing teak in Indonesia
(Proposed by CIFOR and ICRAF)
Background issues
 Teak production & its furniture manufacture is a major
industry in Java
 Logs & sawn timber sales: more than 680,000 m3 valued
AUD 115 million (2001)
 In Jepara (Central Java): more than 15,000 factories
depend on teak to survive
 Production from the parastatal plantations is in decline
 Approximately 1.5 million households in Java growing
teak (mostly on degraded land)
Major sources of teak wood supplies
Sources
Perhutani
Areas (ha)
Forestry
households
2.5 million
465,000 cum/year 21 m poor
people live in
(1.6 m in
(illegal harvest:
the surrounding
production forest 900,000 cum/year Perhutani areas
& 0.6 million in
 to USD 180
protection forests) million)
Farm forestry 1.2 million
(i.e.
agroforestry
system)
Production
23.8 million cum
(total)
1.5 million HH
(in Java: 443,908
(Java > outer
ha, and in outer
(in Java: 14.8
islands)
islands: 790,162 million cum and in
ha)
outer island: 8.95
million cum
Teak plantation management involving Perhutani & community
Type of management
Stakeholders involved
Forest areas
Perhutani
Company staff
Protection forest
Collaborative Forest
Management (PHBM
– Pengelolaan Hutan
Bersama Masyarakat
Perhutani and community
organisation (KTHKoperasi Tani Hutan –
forest farmer group)
Production forest
(Perhutani
concession areas)
Community Forestry
(HKM)
KTH-Koperasi Tani Hutan
– Forest farmer group
Production forest
(rights granted by the
MoF in certain
places)
Farm forestry
Community (individually
and or KTH-Koperasi Tani
Hutan)
On community private
lands
Small home industries have preferred to buy logs
sourced from community, because:
 The difficulty in bargaining with Perhutani
 The wood price is set based on negotiation and no
standardised price applied
 Administration procedure is less complicated and shorter
distance to the source of the trees and to their market place
 Larger sales processing companies are not interested in the
smaller market segment
Impediments to profitable smallholder teak plantations:
1.
Poor silvicultural
techniques
 low
quality timber
 lack of capital to invest in teak planting
 limited ability to wait the duration of a teak rotation before
2. Limited market knowledge, access to markets & market inf.
 smallholders are price takers
 prices are often well below market rates
 inability to overcome transaction costs faced by timber
buyers
3. Restrictive timber regulation policies to smallholders
Regulations designed for large-scale production are applied
(e.g. cutting and transportation permits, registration procedures)
Project aims:
to improve livelihoods of smallholders growing teak
Objectives of the project:
1. Introduce and adapt silvicultural technologies
that improve returns for smallholder teak
producers
2. Identify and design financing schemes
providing incentives for smallholder
participation in profitable teak production
3. Enhance market access by smallholder teak
producers
Expected outcomes & outputs include:
1. Improved silvicultural technologies:
Evaluations of current practices & intervention on
silvicultural treatments; manuals/guidelines for improved
practices
2. Financing schemes identified & designed;discussed and
evaluated with key stakeholders
3. Improved market access & greater market awareness :
Production to consumption chain evaluated (RMA);
improved market linkages; best practice marketing
guidelines developed; policy disincentives reviewed;
policy briefs produced; and associated dialogues related to
the regulatory framework implemented
Potential impacts: ex-ante impact assessment
Through better silvicultural treatments combined with
innovative financing schemes and improved marketing:
the project can potentially generate
AUD $112 million of benefits over 30 years
Other relevant activities:
1. EU Project (September 2003-August 2007):
Levelling the playing field: fair partnership for local development
to improve the forest sustainability in Southeast Asia
2. WWF & LEI Certification Program ( as part of Global
Forest Trade Network in linking community-based plantation to
international consumer buyer group)
3. National Movement for Forest and Land Rehabilitation
(GN RHL/GERHAN - Gerakan Nasional Rehabilitasi Hutan dan
Lahan)
4. Hutan Tanaman Rakyat (Community-based Plantation):
Ministerial decree is being finalised (MoF is planning to launch
the decree within this week)