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Building profitable and sustainable community forest enterprises: Enabling conditions

Duncan Macqueen Team Leader - Forest Team Natural Resources Group International Institute for Environment and Development (IIED) 4 Hanover Street, Edinburgh, Scotland. EH2 2EN Tel: +44 131 226 6860 Fax: +44 131 6247050

Table of contents EXECUTIVE SUMMARY ................................................................................................................. 2 1. INTRODUCTION.......................................................................................................................... 3 2. SECURING A FOUNDATION OF COMMERCIAL FOREST RIGHTS ....................................... 5 3. DEVELOPING THE SCAFFOLDING OF SOCIAL ORGANISATION ........................................ 7 4. ADDING CONCRETE BUSINESS SKILLS ................................................................................ 9 5. CASE STUDIES – PROMISING EXAMPLES ........................................................................... 12 5.1 CHINA.................................................................................................................................... 12 5.2 GAMBIA ................................................................................................................................. 13 5.3 GUATEMALA. .......................................................................................................................... 14 5.4 MEXICO ................................................................................................................................. 15 5.5 NEPAL ................................................................................................................................... 16 5.6 SOUTH AFRICA....................................................................................................................... 17 6. CASE STUDIES – WORK IN PROGRESS ............................................................................... 19 6.1 BRAZIL................................................................................................................................... 19 6.2 ETHIOPIA ............................................................................................................................... 20 6.3 INDONESIA ............................................................................................................................. 21 6.4 LAOS ..................................................................................................................................... 22 6.5 MOZAMBIQUE ......................................................................................................................... 23 6.6 TANZANIA .............................................................................................................................. 24 7. CONCLUSIONS......................................................................................................................... 26 REFERENCES............................................................................................................................... 27

Executive summary The demands for forest products from global economy growth seem insatiable. At the same time, global climate concerns place new emphasis on curbing deforestation. Moreover, global development goals require more concerted action to reduce poverty in forest areas. Meeting all three demands at the same time requires some joined-up thinking. Many countries are moving towards a model in which commercial control over forests is handed to communities – primarily in the North, but increasingly in the global South too. As a result, community forest enterprises are playing an increasing role in the forest product trade with a strong incentive to maintain the resource base on which they are based, and with local reinvestment of profits to reduce poverty. This paper draws on international experience to introduce the three main enabling conditions for profitable and sustainable community forest enterprises: clear commercial forest rights, strong social organisation and competitive business skills. A series of 12 case studies from around the world illustrate some promising examples and works in progress from which lessons can be drawn.

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1. Introduction Between 1985 and 2000, the forest area owned and administered by indigenous peoples, families and communities1 in developing countries more than doubled to over 380 million hectares – representing approximately 22% of the total forest area in those countries (White and Martin 2002). With a further substantial increase up to 2008 (Sunderlin et al. 2008), this ongoing transfer is thought to have three main drivers (White 2007): increasing national appreciation of community rights; growing recognition that secure those rights is essential for community development and poverty reduction; and a broader awareness that state control has often failed in terms of effective forest stewardship. In developed countries, the transfer towards family and community forestry is more advanced. For example, in the North, 40 % of the forest is owned by 30 million families, many of whom are well organized to interface with larger-scale efficient production and processing enterprises - including even pulp and paper manufacture (IFFA, 2009). With this transfer of commercial rights over forests to communities, there has been a corresponding upsurge in the number of community forest enterprises as a component of the forest products and service industries in some countries, for example Bolivia, China, Guatemala, Honduras, India, Mexico and Nepal. In a recent global overview on this subject, community forest enterprises have been found generally to be positive forces for biodiversity conservation (Molnar et al. 2007). The reasons for this are selfevident – if communities have a commercial interest in products derived from standing forest, they are likely to keep the forest standing (Carter et al. 2007). Some communities have even opted for certification for sustainable forest management, despite the huge costs disadvantages of doing so at small scale, with many examples from countries such as Brazil, Guatemala, Kenya, Mexico and Papua New Guinea (Macqueen et al. 2008). Diagnostic studies in 12 countries show that the small enterprises of agro- and forestdependent people account for a large proportion of the pro-poor commercial forest activity in most developing countries – usually in excess of 50% of employees and 90% of enterprise numbers within the forest sector (Macqueen, 2009a). Of course, not all countries have been as enlightened as to give local communities full commercial rights over forests. But a failure to transfer such rights to communities does not eliminate community forest enterprises; it simply drives them underground – into informal enterprises where revenues are lost to government (Kozak, 2007). In many developing countries informality is the norm with the highest rates in Africa (3976%), Central and South America (25-60%) and Asia (13-70%) with huge financial losses to the state (Schneider and Enste, 2000). Mayers (2006) estimates that as many as 140 million individuals may be working in informal small forest enterprises – mostly in 1

For simplicity I subsequently use the term ‘community’ to refer to family, community and indigenous peoples forest initiatives – see section 2

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developing countries. Where the foundations of commercial forest rights are poorly defined, such as in DRC, there is an obvious priority to address this (Hoare et al. 2008). This issue is treated in more detail in section 2. Irrespective of the clarity over commercial resource rights, the scale of operation of community forest enterprises makes them critical to the fate of the forest itself, integral to National Forest Programmes (nfps) and central both to plans for Forest Law Enforcement, Governance, and Trade (FLEGT), and payments for Reduced Emissions from Deforestation and Degradation (REDD). Finding ways to engage these community forest enterprises and help them to reduce poverty, while simultaneously avoiding deforestation, is a challenge. Such enterprises are hard to reach and isolated from: each other, markets, service providers and decision-makers. Pockets of expertise, innovation and success in enterprise support are easy to find, but scaling-up such success to national and international levels is much more challenging. In order to achieve success at scale there is an urgent need for investment in the social organization of community forest enterprises (Macqueen, 2009b) – a subject this paper returns to in section 3. Clear commercial forest rights and well-organised enterprise groups are only two thirds of the picture. In order for such enterprises to be profitable (and thereby have resources to reinvest in sustainable forest management and poverty reduction) it is essential also to build the business skills and capacity to compete in the formal market place. Considerable guidance in doing precisely that is now widely available, not least through an alliance of supporters of community forest enterprise known as ‘Forest Connect’ (Macqueen et al. 2009c). This paper summarises some of that guidance in section 4. Knowing what to do in abstract terms is often not terribly helpful. For this reason, this paper attempts to pull together a number of case studies of best practice or promising developments from 12 countries. The intention is to highlight for each case study country the framework of (i) commercial forest rights; (ii) social organization; and (iii) business models that have contributed to a success. Success can be thought of in terms of profits (both accruing locally to reduce poverty and in government revenue streams) in terms of social resilience (enabling communities to confront the challenges they face together and engage with government) and in terms of sustainable forest management. These short case studies are presented in section 5.

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2. Securing a foundation of commercial forest rights Forest-dependent community ‘rights-holders’ come in different forms. Globally they are represented by three main alliances – whose names reflect the slight difference in their representation: the International Family Forest Alliance (IFFA), the Global Alliance for Community Forestry (GACF) and the International alliance of Indigenous and Tribal Peoples of Tropical Forests (IAITPTF). Each have their own forms of social and business organisation which shape enterprise development and its impacts on elites, marginalised groups, decision making bodies and power struggles (Hobley 2007). Families, communities or indigenous peoples (which I refer to throughout as ‘communities’) may all develop enterprises. These can take on different forms – sole traders, partnerships, companies, associations or cooperatives – some of which may serve the narrow interests of the few at the expense of the many. It is therefore important to differentiate between such enterprises and those that represent community interests more broadly. The latter are defined as (Macqueen, 2008): “A community forest enterprise (CFE) is an entity undertaking commercial exchanges based on forest or trees, overseen by a credible representative body suited to act as certificate holder and which can claim legitimacy within a selfdefining ‘community’ in terms of people and area, that generates and redistributes profits within that community.” (Adapted from Macqueen et al. 2008): This definition clarifies three issues: first, community forest enterprises are not simply about subsistence – they involve commercial exchange of goods for profit (even if this involves payment in kind); second, community forest enterprises represent, and distribute benefits in line with the interests of the whole community - usually through some form of democratic decision making structure, and finally, the community is selfdefining in terms of people and area. So defined, the fundamental enabling condition or prerequisite for profitable and sustainable community forestry is: secure commercial forest rights. It is the foundation on which all else rests. It is the basic building block of economic growth, social cohesion, personal well-being and environmental protection – including climate change mitigation and adaptation (RRI, 2009). To quote this most recent global analysis of tropical forest tenure in full: “Forest tenure security is important because it is often the foundation for the social identity, personal security, and cultural survival of indigenous peoples and ethnic minorities. Forest tenure is also important for economic reasons. It has a strong role in determining who benefits or loses in the competition for economic goods and environmental services provided by forest ecosystems. Security of tenure is often a prerequisite for capital investment by government or businesses, while conversely conflicts over forest lands discourage investment and undermine sound management. Tenure security also has a strong role in the structure of incentives that motivate protection or destruction of forests. Solid evidence exists showing that devolving ownership and management authority to local communities and households fosters improved forest conditions”.

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There are many ways in which commercial forest rights can be secured by forestdependent communities. But the main legal ingredients that must be in place for such rights to be deemed ‘secure’ include (RRI, 2009): • Duration – the timeframe over which commercial forest rights are given needs to be sufficient as to provide an incentive for communities to invest both in the forest, and in businesses that might sustainably use it. • Assurance – the rights to commercial forest use must be clearly prescribed, avoiding any ambiguity or distinction between ‘subsistence’ and ‘commercial’ use or between ‘land’ and ‘forest’ rights – effectively guaranteeing that communities are free to benefit from the returns of their investment without interference. • Robustness – the rights to commercial forest use must be enforced and easily defensible in a court of law. In other words they must be so prescribed and disseminated that they permeate the day-to-day practice of forest officers, transport police, customs officials and the judiciary. • Exclusivity – there must be no overlap between the commercial forest rights of communities and those of external investors or government agencies. • Simplicity – acquiring commercial forest rights should be simple, free of excessive bureaucratic steps, lengthy documents, costly registration procedures in far-distant offices etc. This is not to prescribe a particular way in which commercial forest rights should be prescribed. As the case studies in section 5 show, some countries have opted to give full private property rights to community individuals (e.g. in Brazil), others have given more conditional control over forest lands to indigenous or community groups (e.g. in Guatemala). Yet others have opted to maintain state ownership, but grant commercial forest rights to communities conditional on certain management responsibilities (e.g. Nepal). Working out how long lasting, assured, robust, exclusive and simple rights can be secured in different political and cultural contexts is both possible and necessary if those rights are to deliver successful community forest enterprise (Lynn and White, 2004). An ideal end point for community forest enterprise groups would be equivalent to full private property rights – private property for a group. Communities with private property rights over forests will have much more secure claims over the market benefits that emerge (including both forest products and environmental services) and much stronger protection against exploitation, than communities that only have access rights to state lands.

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3. Developing the scaffolding of social organisation In many instances, enlightened policies do grant forest communities commercial forest rights. But this does not automatically guarantee successful community forest enterprise. Isolated community groups may still struggle to develop anything other than local subsistence activities. Why, with such abundant commercial resources at their disposal, is there such a substantial correlation between forests areas and economic indices of poverty? (Sunderlin et al. 2005). The answer lies at least partially in the lack of the second major enabling condition for profitable and sustainable community forest enterprise: social organisation. Social organization both within and between geographically dispersed enterprise units is critical. At the enterprise level, defining and staffing appropriate business roles, undertaking basic business registration, management and record keeping roles are essential if the business is identify how to manage income and costs effectively (and inspire investor confidence should expansion be desired). At the regional level organisation is essential between enterprises to link them better to each other, markets, financial and business service providers and policy and decision-makers (Macqueen, 2007a). Better organization is important for a number of reasons. First, better organization can pave the way to greater political voice in the pursuit of commercial\l forest rights which are the foundation for secure business. Second better organized enterprise associations can help to increase visibility of products and services to customers and service providers. Finally, better organisation can help to attract external investment by reducing perceptions of risk, lowering the transaction costs of dealing with multiple separate enterprise units and increasing the scale of returns to investors. Making community forest enterprises profitable often requires investment. Few financial investors will reject well written investment proposals that offered adequate returns on eco-friendly production systems at low risk. But a number of stumbling blocks exist: (i) Investment proposals are often beyond the capacity of the community forest enterprise to prepare (ii) the scale of proposals is too small to cover the financial investor’s transaction costs of setting up the investment; and (iii) the risk of dealing with inadequately managed business ventures with little collateral is too high to bear. Addressing these stumbling blocks requires government or donor investment in: (i) enterprise organisation and (ii) ‘investment-preparedness’. Investment in association building and business capacity development are essential to create the credibility, scale and returns in investment proposals that might then be attractive to mainstream financial investors. Building social organisation in this way is not a marginal or peripheral activity. Exactly this sort of government or donor investment has been proposed as a key recommendation by the three global representative alliances of local forest ‘right holders’ - the International Family Forest Alliance (IFFA), the Global Alliance for Community Forestry (GACF) and the International alliance of Indigenous and Tribal Peoples of Tropical Forests (IAITPTF). In meetings of The Forest Dialogue (TFD) in Brussels and then in Panama and Nepal, these three alliances have proposed flexible funding in pursuit of these aims (e.g. TFD, 2009). The intention is to build the types of community business organisation and investment-preparedness that will secure rights, reduce

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investor transaction costs and risk and ultimately both reduce poverty and avoid deforestation. Although the need to build social organisation is great – doing it in practice is an art about which much has been written (see for example Macqueen et al. 2006). For example, government driven or imposed organisational forms rarely work - the most useful support tends to be facilitating or encouraging self organisation among different enterprise groups. An important first step is to make association easy and advantageous. In many countries formal registration of different forms of association is still overly bureaucratic or centralised. Policy makers should find ways to reduce administrative hurdles, provide assistance to smooth the path, and channel support through the associations that result. Secondly, subsidising information services and association networks can be very useful. Creating policy incentives and support programmes to provide information on registration procedures, available finance, market trends, technological innovations etc. is a way of supporting social organisation. Finding ways to support trade fairs, workshops, seminars etc can also be very useful. More proactive still, some governments favour local associations in government procurement. Market access is a perennial problem for forest-based associations. Government procurement policies that favour local products are not only likely to have substantial political cache but also can mean the difference between survival and failure for community enterprise associations.

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4. Adding concrete business skills As noted above, community forest enterprises have different forms that span a range from (i) large numbers of very small, low-input low-output enterprises that proliferate to meet household needs; to (ii) smaller numbers of more productive enterprises. The business skills of those managing such enterprises will vary hugely depending on context. But it is the development of business skills that is the third major enabling condition for profitable and sustainable community forest enterprises. Without such skills there is little chance of greater profitability, attracting investment or managing the forest resource sustainably. There is no rocket science to this – business skills can be easily acquired and should be promoted by government agency facilitators. Business is an organised, innovative and purposeful undertaking in which goods and services are exchanged with one another or money on the basis of their perceived value. It requires planning, rather than ad hoc subsistence activity; critical reflection, not people trapped by force of habit; and marketing, rather than acceptance of given values. There are a number of business basics that can easily be acquired from innumerable business manuals (for an excellent beginners guide see Bonitatibus and Cook, 1995 or a thorough guide for facilitators of small forest enterprise support – Macqueen et al. 2009). Key initial areas where a focus on building business capacity could be useful include: business roles, business structures and value chains, business competition and upgrading, marketing, record keeping and planning. For community forest enterprise to flourish they must be organised to succeed in different areas, each of which implies a business role: general management (business manager); sourcing or supply of inputs (supply coordinator); aggregation, processing, storage and delivery (production coordinator); marketing, sales and market intelligence (marketing coordinator) and record keeping (accountant). For sole traders this implies a heavy burden – that can be lightened by forming a collective business structure and allowing people to take on specific roles as above. But in collective or community business structures there are often democratic or traditional authorities who assume general management duties. Such individuals may be subject to popular removal and are will not necessarily have the best skill set for general managers. Assigning the right people to the right roles is a fundamental starting point for business. Any business needs to understand the various sets of activities that are required to get its chosen product or service to the customer. These linked sets of activities are common called a value chain which can be defined as “sets of activities in the development of a product at which value can be added in pursuit of competitive advantage”. While it is not necessary for a single business to manage a whole value chain (it can work with others who take on particular sets of activities) any business needs to know how different activities will be handled and what value will be added as a result. In order to structure its activities businesses can take on different forms. There are different types of profit or non-profit business structures that could include: sole traders, partnerships, associations, cooperatives or companies limited by guarantee or companies limited by shares. Each of these has its own advantages and risks for the people involved and for society and the environment. Good forest governance could and should actively discriminate in favour of types most likely to deliver what is required from forest businesses (see Macqueen 2007b).

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Inevitably a business will have to face competition for customers and should be able to be specific about how they are going to win customers to their product or service. Who customers chose is ultimately defined by a businesses’ competitive advantage, namely the: “superiority gained by a firm when it can provide the same value as its competitors but at lower cost, or can charge higher prices by providing greater value through differentiation”. Competitive advantage comes in different ways, remembered by the handy abbreviation of the 4Ps: • Product – offer a product that customers want • Price – sell at a price customers will accept • Promotion – bring that product effectively to your customers attention • Place – make the product accessible to customers who will buy it Business is never static. Keeping ahead of the competition requires constant selfevaluation and upgrading. There are different ways in which a business might choose to keep ahead of its competitors. Four main ways of upgrading exist: (i) Market penetration – e.g. work to promote existing products to more customers in an existing market; (ii) Product development – e.g. work to develop new products or product packaging (iii) Market development – e.g. selling an existing product in new places (iv) Diversification – e.g. producing something entirely new for new markets. Businesses should be aware of and focused on at least one of these upgrading strategies. Once clear about competitive advantage and armed with an upgrading strategy, a business should know how it will keep its advantage – what marketing strategy it will use to keep ahead of the competition. Someone in the business should be doing some market research – which essentially means finding out what customers want. Once a business knows what its customers want it can develop promotional materials in appropriate places to convince customers to buy its product or service. Knowing how to target such customers and catch their eye is the business of marketing. To survive, business must constantly assess their progress – and this involves record keeping. All businesses need to know three things – where the money is in their organisation (to avoid theft), how much profit or loss they are making (to avoid bankruptcy), and how much ready cash they need to keep things going (to avoid bouncing cheques, angry creditors and predatory loan sharks). In order to know these things, businesses need to keep good financial records that must include: (i) a balance sheet; (ii) a profit and loss account; (iii) a cash flow analysis. Even if the business is not yet operational, it is vital that a prospective entrepreneur is able to provide an educated estimate of the costs involved in a set of balance sheet, profit and loss and cash flow projections (see Bonitatibus and Cook, 1995). Knitting all of the elements described above into one logical whole is the essence of business planning. Writing a business plan is a good way of checking that a business has thought through its operations – and may be a requirement for a financial institution giving a loan. There are a number of key elements to a business plan, each of which has a purpose as shown below: • Overview (Business owners, name, address, description of the product and enterprise objectives) • Organizational structure (form of business chosen and who does what) • Business operations and upgrading (what activities in production, processing and transport will happen and how these will evolve over time)

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• • •

Market strategy (competition analysis based on product, price, promotion, place – and market strategy) Record keeping (investment and balance sheet, profit and loss account and cash flow) Conclusions (is the business viable?)

As community forest business begin to flourish the demand for business and financial services will inevitably rise. It is advisable to try and ensure that more specialised business capacity development can begin to occur on a paid basis – with facilitators putting most emphasis on linking existing businesses with existing service providers – something broadly know as ‘market system development’.

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5. Case studies – promising examples Having reviewed the three main pillars of the enabling environment for profitable and sustainable community forest enterprises we can now look in more detail at some country case studies in which at least some of these pillars have been put in place. Awareness of how country case studies that show promise (or at least work in progress) can help overcome the paralysis of not believing better options to be available or not knowing where to start. In alphabetical order these case studies include…

5.1 China China is perhaps an unusual example with which to start. Yet with a total forest cover of 197 million hectares, and a significantly increasing afforestation rate approaching 2.2% between 2000-2005, China deserves close attention. During the 1990s as movement towards a market-based economy in China gathered pace there was a rapid growth in non-state enterprises, especially in small and medium scale enterprise sector which comprise 90% of the value in sectors such as wood furniture and wood building materials (Sun and Chen, 2003). This expansion in timber use brought with it domestic environmental concerns. The Chinese Government initiated a number of ambitious forest sector policies including the ‘National Forest Protection Programme’ (controlling domestic production through quotas) while new forest resources were established through initiatives such as the ‘Forest Industry Base Development in Key Regions’. Commercial forest rights – While ambiguity and insecurity of property rights had plagued Chinese forestry for decades, reforms that began in agriculture soon spread to the forest sector. In forestry as elsewhere China talks in terms of households rather than communities. Nevertheless households in China have recently gained land use rights on five tenure types: private plots, village household contracts, village household partnerships, market allocated plots and collective forestland as part of a ‘three-fix policy – stabilizing rights over forests, identifying the boundaries of household plots, and establishing a forest production responsibility system. By 1984, 30 million hectares had been transferred to 57 million households – with many households beginning to invest their own resources in reforestation. The Chinese government has since extended contractual rights for another 30 years and recent assessments suggest that improved land tenure security has been a key incentive for longer term forest management. With further measures such as the Resolution on Accelerating Forest Development (2003) and the Opinion on Impelling Collective Forest Tenure Reform in All Ways (2008) the investment in forestry is expected to accelerate (Luo et al. 2009). By 2001 China already had 47 million hectares of plantation (quarter of the world’s total). Social organisation – While independent association had formerly been seen as a political risk in China, and associations scarcely existed in the 1980s and 1990s – supporting their development is now seen as key to the Government’s agriculture and rural development strategy. Major national associations such as the China National Forest Industry Association and the China National Forestry Products Industry Association are now complemented by increasing numbers of provincial level associations whose role involves both negotiation with government, information sharing, technological training and collective bargaining.

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Business skills – The Chinese Government industry have invested heavily in business skill development, but it was not until 2003 that China introduced a specific ‘Small and medium Enterprise Promotion Law’. By 2008 the Government had invested US$ 500 million in small and medium enterprise development finance. Many of the newly emergent provincial forest associations have a specific focus on training such as the County Processing Enterprises Association in Yong’an (Luo et al. 2009) Conclusions – While China represents a unique national context, the realisation that household-level forest production enterprises and small and medium processing enterprises could provide the backbone of the forest sector is an important insight. The major emphasis on securing commercial forest rights for local people through the ‘threefixes’ policy approach has led to the rapid development of a formidable industrial base – founded on household / community forest enterprises.

5.2 Gambia Despite its tiny overall size, the Gambia has maintained 41% forest cover and has even seen a steady increase in forest cover over the last decade. Nevertheless past inventories have shown that as much as 78% of this forest area is degraded tree and shrub savannah. Recognising that this degradation was the result of a Government controlled top-down approach to forest management; the Government began to introduce participatory forest management in the 1990s. The current Forest Act (1998) and Regulations involve the communities in forest management and protection by legally requiring them to participate in fire prevention and participative forest management activities. Commercial forest rights – Under the new Forest Act, a community can both develop its own Community Forestry (CF) and co-manage national park areas under Joint Forest Park Management (JFPM). For community forestry, communities must: identify a suitable forest area and form a community forest committee (phase 1); demarcate the community forest and develop a management plan – proving their capacity to manage and prevent fires over an 18-36 month period (phase 2) and then be granted ownership and exclusive commercial use rights based on annual plans through the signing of a community forest management agreement (phase 3). Once this is signed the community is free to commercialise products from its community forest. With help from the German government and the United Nations Food and Agriculture Programme (FAO) many communities in Gambia have begun to make use of their commercial rights. Social organisation – The new Forest Act obliged the Government to restructure its Forestry Department away from solely control and enforcement activities towards support for community forestry and a new Participatory forest Management Unit was established with that end in mind. Between the signing of the new Forest Act in 1998 and 2005, 265 community management committees had engaged the Forestry Department to develop their community forests (86 were in phase 1, 89 at stage 2 and 90 had already signed the community forest management agreement). The ultimate aim of the Government is to foster management on more than 200,000 ha of community forests. As described below, part of a process of business development has been the establishment of product interest groups that have now established national

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representative bodies, such as the National Beekeepers Association of the Gambia (NBAG) or the Jamorai Timber and Firewood Federation (JATIFIF). Business skills – Through support from the FAO Markey Analysis and Development (MA&D) approach, communities have been trained to identify potential forest products, markets and means of marketing (e.g. for timber, fuel wood, honey, Rhun palm handicrafts and potentially oil-palm). Interest groups for particular products have been facilitated that have then developed business plans. Financial planning has followed with investment proposals drawn up for particular cases where this was needed (FAO, 2005). Numerous businesses are now operating, founded on sustainable management plans, that are both helping to reduce poverty and avoid deforestation in the Gambia. Conclusions – While inevitably on quite a small operation scale, the Government initiative in the Gambia to hand over commercial forest rights to communities has seen the rapid development of commercial interest groups and sustainable community forest enterprises. Investment in business skills development has played an important part of an overall strategy for community forestry.

5.3 Guatemala. Guatemala in Central America has approximately 37% forest cover (80% of which is tropical forest). The largest area of tropical forest in the country is in the Department of Petén. Prior to 1989 the forests of the Petén had been under Government control, allocated to large scale timber concessions. Conflicts with local communities and high rates of deforestation and degradation led the government to review its strategy. Commercial forest rights – in 1989 the Government established a new management authority for the forests of the Petén called CONAP with a new philosophy of ‘use it or lose it’. CONAP introduced new land zoning into strict conservation areas (Zonas nucleos) multiple use areas (Zonas de Uso Múltiple) and buffer zones (Zonas de Amortiguamiento). In 1994 CONAP set out a 17 step process for awarding forest concessions in the multiple use areas for local communities, but contingent on them attaining Forest Stewardship Council (FSC) certification). Social organisation – With significant funding from donors, a major programme of capacity building was undertaken by the Tropical Agriculture Research and Higher Education Centre (CATIE) that involved sensitising communities to their new rights and introducing notions of a 25-40 years concession cycle with extraction of 1-3 trees per hectare in any harvesting block. Over the next two years 22 Petén communities moved quickly to organise themselves into the Association of Forest Communities of the Petén (ACOFOP) which was formally founded in 1996. Business skills – With support of NGOs such as the Rainforest Alliance, training in business management up to and beyond 2005 enabled the establishment of 15 FSCcertified concessions covering 560,000 ha of land with natural forest cover remaining at about 98%. Initially disjointed harvesting operations by these concessions was markedly improved in 2004 by the establishment of a jointly community owned Forest Services Community Enterprise (FORSCOM), a legally registered company that provides marketing advice and value added processing facilities. FORESCOM now offers

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business management training, forest stewardship services (including FSC certification), leased heavy equipment for harvesting, processing into parquet flooring, decking, and furniture, marketing of timber and Non Timber Forest Products (NTFPs). Approximately 18,000 cubic metres of precious, semi-precious and secondary woods are now harvested and / or processed each year. Value added processed products alone brought in US$ 411,000 in 2006. Conclusions – The decision to allow community groups full commercial forest rights paid substantial dividends to both forest-dependent communities and the Government in the long term. Deforestation and degradation have been substantially reduced. Local communities have substantial commercial profits to help them develop and reduce poverty and Government forest revenues are now substantial. Conflicts based around natural resources have seen significant decline. With secure tenure arrangements in place, Guatemala is also well positioned to capture resource flows from emerging carbon markets.

5.4 Mexico With some 64 million hectares of forest, Mexico has 33.7% forest cover. Deforestation between 2000 and 2005 was close to 260,000 hectares per year (0.4%). Community forestry has a rich history in Mexico. In 1910 the Mexican revolution ended the practice of large private land holding (haciendas) in favour of landless peasants and indigenous peoples. In 1917 the Mexican constitution created the ‘ejido’ structure as not only a secure communal land tenure system but also a judicial, social and economic structure. In the 1980s concessions granted over and above the ejido system began to cause conflict and deforestation. In 1992 the government under free trade reforms attempted to revise the communal nature of the ejido structure towards a more secure form of private land tenure – but difficulties with the subdivision of communal lands have meant that most ejidos still operate on a communal basis – and it is widely believed that building on this structure will best protect Mexico’s forests for the future (Salvatierra Garcia, 2009). Commercial forest rights – Mexico’s forests are predominantly controlled (57%) by community land tenure structures know as ejidos. There are approximately 8500 such ejidos involving between 12-15 million people – and of these, 2400 have forestry permits (Arguelles Suarez and Garcia Trujillo, 2008). With the 1992 move to grant ejidos private property rights over forests, the old concession system was replaced with a system in which communities began to develop their own commercial enterprises. Social organisation - With the greater security over commercial forest rights some 127 ejidos have organised themselves into forest companies with their own processing capacity. Many more sell timber to third parties. Examples of some highly organised community groups include the following: Neuvo San Juan Parangaricutiro, Michoacan; Santa Catarina Ixtepeji, Oaxaca; Ixtlan de Juarez, Santiago Textitlan and Pueblos Mancomunados, Oaxaca; all investing timber profits to develop sawmills, furniture factories, spring water bottling plants and in two cases pine resin distilleries. Noh Bec in Qunitana Roo also stands out as one of 43 FSC certified ejidos with their own sawmill, drying oven and carpentry workshop – exporting Mahogany and the latex Chicozapote overseas.

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Business skills - As an example of business skill development, the Ejido Noh Bec trained its 219 members in the use of skidders, bulldozers, trucking, sawmilling and carpentry. In 2001 it created its own company Noh Bec SPR to handle processing and marketing generating US 1.5 million per year – a third of which comes from Mahogany exports. Conclusions - The historic formation of a community based land tenure system (the ejido) was eventually improved in 1992 to give communities full (private) commercial forest rights. With this incentive to manage and develop forest enterprises, many Mexican communities have begun to move towards enterprise development. With more than 800,000 hectares certified by FSC (the second largest area after Brazil) Mexico has also been a pioneer in certified sustainable community forest management.

5.5 Nepal Nepal has approximately 25% forest cover divided into the lowland forests, middle hills and the upper mountainous areas. The Government has historically controlled forest land in Nepal. But with mountainous terrain and relatively high population densities, much of the middle hills areas had suffered from heavy deforestation and degradation from agricultural communities who saw little benefits from forest conservation. With poverty reduction and environmental conservation in view, the Government began to reassess its strategy towards community forest management. Commercial forest rights – While people’s participation in forest management had been recognised as early as 1976 in the National Forestry Plan, it was not until 1993 that users were recognised to have commercial forest rights and Community Forest User Groups (CFUGs) empowered for forest management conditional on a management plan developed with the Forestry Department. In 1995 the new ‘Forest Rules’ detailed the process of community forestry – including an important change in role for the Forestry Department staff – away from custodial duties and enforcement towards a facilitation role for new CFUGs. Social organisation – With new commercial forest rights available to CFUGs community forestry developed at pace, especially in the highly degraded middle hills areas of Nepal. The CFUGs began to associate into a number of representative bodies, the largest by far being the Federation of Community Forest Users, Nepal (FECOFUN). Since its inception in July 1995, it has grown into a social movement organization with about 8 million people – representing in excess of 11,200 CFUGs out of a total of 15,000 CFUGs across the country – covering 21% of the countries forest area. FECOFUN has become an effective mechanism for developing a dialogue between policy makers and users and also, a learning centre for user groups to take advantage from forest management. Business skills – Alongside the new facilitation role of the Forest Department, there also emerged within Nepal specialist enterprise support agencies such as the Asia Network for Sustainable Agriculture and Bioresources (ANSAB). The majority of community forest enterprises are associated with new CFUGs. Emergent community forest enterprises include several community-based wood depots and sawmills, hundreds of small furniture workshops, thousand of individual carpentry enterprises, large numbers of craft producers (which in the Kathmandu Valley alone produce in excess of US$ 1,000,000 per year), unquantified numbers of medicinal and aromatic plant producers estimated to

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produce US$ 8.6 million per year and numerous other small paper, resin and dye producers (ANSAB, 2009). Conclusions – With a commitment by the Government to grant commercial forest rights to CFUGs, the development of community forest enterprises has occurred on a significant scale across Nepal. Not only has this led to a significant reversal in deforestation and degradation in 21% of the countries forest area, the emergence of representative bodies for community forestry has provided a powerful political voice for those wishing to develop profitable and sustainable community forest enterprises. The facilitation of business skill development has had a considerable impact on poverty reduction with major social investments across the 15,000 CFUGs already established. The main hold up to date has been the rather conservative attitude of Forestry Department officials at district level, some of whom have failed to take on board the new policy provisions developed by central government.

5.6 South Africa South Africa has 7.6% forest cover and almost no deforestation. With strong Government enforcement capacity, and a large plantation base producing 22 million cubic metres of timber per year and employing 170,000 people, South Africa has been among the global powerhouses of the forest industry, especially in sawn timber, pulp and paper manufacture. Nevertheless, the timber industry is currently facing a deficit of 27% in raw material supply which is projected to rise to 54% in the next 25 years. Moreover, the legacy of Apartheid has left a highly inequitable distribution of commercial forest rights in the hands of large private companies. In the post-Apartheid era, this is now undergoing rapid change. Commercial forest rights – The 2007 Forest Sector Transformation Charter towards Broad Based Black Economic Empowerment (BBBEE) seeks to redress historic inequities in commercial forest rights. It is estimated that approximately 60% of the standing timber resources (primarily plantations) may undergo a change in ownership over the next five years. BBBEE aims among other things to increase the number of black people who manage, own and control businesses, provide opportunities for communities, workers and other collective enterprises to own and manage forest businesses and promote and supporting investment in skills development for black employees, including black women and disabled people. Social organisation – A number of recent developments in social organisation bode well for this important transition to local forest community control in South Africa. Memoranda of understanding, for example, between the Land Claims Commission and newly organised Forest Land Claimants Support Initiative, Amahlathi, and between the Forestry South Africa (the SME representative body) and the Department of Water Affairs and Forestry (DWAF), Department of Trade and Industry (DTI) and Department of Economic Development (DED) are promising signs. The presence of established cooperative groups such as the NCT Forestry cooperative Ltd with a track record of helping smallholder develop their forest businesses adds to experience in managing this change. Similarly extensive outgrower schemes that embody company community partnerships with timber growers and large corporations such as SAPPI and MONDI also provide promising options for incorporating new community land claims into

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profitable and sustainable community forest enterprises (see Macqueen and Cotula, 2008) Business skills – South Africa is fortunate to have a number of dedicated institutions tasked with the mandate of developing business skills. The national forest enterprise umbrella association, Forestry South Africa, has identified business skills development as among the major priorities (alongside more coordinated governance of the land claims process and centralised service development). Skill development in land management, business planning, access to market information and fire management are currently receiving attention. Conclusions – The dramatic shift in South African Government policy towards empowering previously disadvantaged community groups has presented a formidable challenge to the well-established South African timber industry. Early indications are that the rapid mobilisation of new land claimant groups through Amahlanthi, and the existing track record of company community partnership in South Africa may be sufficient to develop the necessary business skills to manage this transition.

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6. Case studies – work in progress 6.1 Brazil Brazil has a remaining cover of 57% (477 million hectares) – the largest area of forest in the world. As the same time deforestation exceeded 3 million hectares per year between 2000 and 2005 – compromising an otherwise commendably low carbon emissions total. While it has an expanding plantation base in the South, the majority of Brazil tropical timber comes from the Amazon region. Much of the timber in the region comes from legal or illegal conversion of forest land within new agricultural settlements. Despite this general scenario, there is a growing emphasis on curbing deforestation, in part through clarifying and enforcing tenure arrangements. Commercial forest rights – Under the 2001 National Forest Programme Brazil has laid out various initiatives for different types of ‘community’. In addition to the privatised ‘legal reserve’ that must be kept as forest in new agricultural settlement communities, there are also provisions for indigenous communities under the heading of ‘extractive reserves’, as well as new tendering procedures for the management of productive forests on state lands – all of which potentially allow relevant communities differing degrees of commercial forest rights. By 2005, more than 300 communities had developed community forest management plans (Amaral and Amaral Neto, 2005). In some cases these were in new settlement areas and in other in larger extractive reserves. Social organisation – There are widely differing degrees of social organisation amongst Brazilian forest communities. Indigenous peoples tend to have their own customary forms of organisation – which in some cases have led to the development of commercial activities in extractive reserves – often based on NTFPs such as Brazil nuts, oils and resins – but exceptionally timber. In some settlement communities there have also been advances in social organisation. For example, five FSC certified communities in Acre joined together in 2005 to form a cooperative (Cooperfloresta) to unify community production and centralise timber sales (Gomes et al. 2008). Business skills – While commercial logging skills are widespread among itinerant loggers across the Brazilian forest frontier, the development of community based businesses is a much more recent phenomenon. For example, in the case of Cooperfloresta cited above the community cooperative initially simply sold logs to buyers in the South of Brazil. But with business support from some NGOs such as IMAFLORA they managed to develop their certified products, sub-contracting a local sawmill to produce sawn timber and then selling light coloured woods to a local plywood plant to increase the number of species that could be sued from their forest areas. Conclusions – Despite some progress in terms of extractive reserves and community forest management in settlement areas, the scale of community forestry in Brazil lags significantly behind many other countries. In part this is because of a lack of concerted emphasis from government on ’community forestry’ due to a history of private land tenure – and often land grabs across the forest frontier. With new emphasis on reducing deforestation, early pilot programmes such as Bolsa Floresta have started to develop

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community payment mechanisms for zero deforestation – but it is yet to be seen whether this vision might also include sustainable timber production.

6.2 Ethiopia Ethiopia has 13 million hectares of forest, 70% of which is in the Province of Oromia, with a deforestation rate of approximately 1.1% between 2000 and 2005. As the second most populous country in Africa, forest resources are under increasing pressure from agricultural expansion and fuel wood or charcoal production. With a crisis looming, the Ethiopian Government issued in 2007 a Forest Development, Conservation and Utilisation Proclamation, matched shortly thereafter by the Forest Proclamation of Oromia (Gebremariam et al. 2009). Both recognised the role of community forest management as an important strategy for environmental protection. Commercial forest rights – Within the new Forest Proclamations some forest rights are reserved for the state – but with various pilot initiatives for Participatory Forest Management (PFM). Other areas of ‘private forests’ can be legally accessed by NGOs, private investors and community groups. Unfortunately, there is still a great deal of uncertainty about which forest areas fall into which category. Within Oromia, a forest can be given over to a community based on recommendation of the Rural Land and Natural Resources Administration Authority of the Ministry of Agriculture and Rural Development. The Government transition from ‘Regional forest authority’ to eight financially independent ‘State Forest Enterprises’ will inevitably require a major institutional shift towards a business mindset – rather than an outlook based on being the custodian of the forest resource. With limited means for generating revenue outside of State Eucalypt plantations, these new State Forest Enterprises may have to work in much closer collaboration with community groups in the harvesting, processing and marketing of a range of timber and non-timber forest products. Social organisation – Through a number of donor programmes, notable the Bale EcoRegional Sustainable Management Programme (BERSMP) supported by Farm Africa and SOS Sahel, and the GTZ Integrated Forest Management Project (IFMP) communities have been organised to develop forest management plans under an emerging framework of Participatory Forest Management. Forest blocks have been delineated and agreements signed with local government. As yet, however, very few commercial associations have developed to pursue particular product development. Business skills – Through the PFM programmes described above, local communities have been trained in basic business skills. For example, in 2008 the Oromia State Forest Enterprise Supervision Agency, together with Farm Africa and SOS Sahel organised a business training workshop for both government and private sector individuals. Specific product development training has also been undertaken in bamboo furniture manufacture and honey production. Forest management training has been included within PFM initiatives. As yet, however, these initiatives are occasional and rather ad hoc, and not yet a mainstream component of forest sector strategy. Conclusions – Ethiopia is an example of a country in which recent legislative provisions for community forest management and enterprise development have not yet been matched by practical delimitation of commercial forest rights – much less investments in social organisation and business skills development. There are, hoverer, a number of

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promising initiatives that are now beginning to emerge in pursuit of profitable and sustainable commu7nity forest enterprises.

6.3 Indonesia Indonesia has 48% forest cover representing one fifth of Asia’s remaining forest cover but has the highest rate of deforestation (2% per year) among the top five forested countries (2 million hectares per year). Forest land has historically been under Government control, with the state corporation, Perhutani, in charge of forest management. Against the background of forest loss, Indonesia’s great forest fire in 1998 sent layers of smog into neighbouring countries. Understandably, the Government of Indonesia has started to look for alternative ways to halt forest loss and harness sustainable forest management in the interests of its people. Commercial forest rights - In 1998 the new Government ushered in a policy platform known as Reformasi that sought to turn the national forest situation around. Several statutory laws and government regulations immediately followed, including the ‘Law on Regional Government’ (May 1999) that decentralised forest control to provincial and district governments, and a revised ‘Forestry Law’ that mentions for the first time the involvement of communities in forest management. While the transition was seen by many as a license to clear formerly centralised state forests – the new political framework has also led to some promising new developments, one of which has been described in Java (Adi et al. 2004). Social organisation – In Java, Indonesia’s most populous Island, communities took these political reforms as a signal that a more socially inclusive forest management system was on its way. In 1999 a few progressive Perhutani middle-level managers proposed a new Collaborative Forest Management Programme. A new Communication Forum on Community Forestry (FKKM) has started worked together with local NGOs to push this forward – opening dialogues with forest farmers working on state forestlands and other hamlet and village level representatives. New plans for decentralised forestry have begun to emerge, for example in Wonosobo District in which communities play an active role. This model, known as the District Regulation on Community-based Forest Management (PSDHBM), faced some serious attempts by central government to curtail the commercial forest rights being proposed. For example, central Perhutani offered a 25% timber share to communities provided 75% was retained by the state company. Communities have been torn between accepting this offer, and holding out for complete control that might be forthcoming under the District legislation that has yet to be ratified centrally. Business skills – As might be expected with such doubts over the commercial forest rights, few concrete examples of community forest enterprise development can be cited from this Indonesian case study. That is not to say that community forest enterprise activities do not exist – merely that they are not yet legitimised by Central and District government structures. Resolving the policy issues described above in favour of community control would likely see a much more secure forest resource base, with significant benefits to both local communities and the Government forest services.

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Conclusions – Indonesia is at a cross roads. It has taken the brave step of reforming centralised control over forest resources in favour of provincial, district and ultimately community control. But until government officials at all levels abide by the spirit of Reformasi, Indonesia is unlikely to see the flourishing of profitable and sustainable community forest enterprises.

6.4 Laos Lao PDR has a total forest area of approximately 16 million hectares and an annual deforestation rate of 78,000 hectares. In Lao PDR forest and forest land has always been designated as property of the national community, with the state acting as representative in the management and allocation of forest land. While one of the least densely populated countries of the region, forest loss elsewhere has brought increasing pressure on Lao forest resources. New legislation was passed in 2008 to address this area of concern. Commercial forest rights - According to the new Forest Law (2008) individuals, communities or organisations can acquire commercial rights to trees when permission is received from the relevant government agency. To date there has been very little allocation of forest concessions for industrial purposes. But there has been quite widespread allocation of Production Forests for local community use (Phimmavong and Chanthavong, 2009).There has been wide variability in the willingness of the District Agriculture and Forestry Office’s (DAFO) to grant such rights to communities, however, with some officers seeing community enterprise development as a threat to the forest. In some areas such as Sang Thong District, DAFO staff have been encouraged by international organisations such as SNV to support communities in conducting resource assessments that can then form the basis for granting commercial use rights (e.g. for bamboo production – see Greijmans et al. 2009). Social organisation – For hundreds of years, Lao’s rural people (80% of the total population) have relied on the forest for subsistence use and traded small volumes of product (often as informal businesses). Communities in which forest product processing occurs, especially for bamboo and rattan products, are often poorly organised and have tended to sell to middlemen who then trade with buyers in the cities or overseas. For example in Sang Thong District community producer groups simple elect a head who is also usually a product collector – who manages permits with Government authorities and trade with middlemen. However the Government has recently established a Small and Medium Sized Enterprise Promotion and Development Office (SMEPDO). Together with international agencies such as FAO, WWF, SNV, GTZ and CIAT, this new office is seeking to establish SME networks for different subsectors including for forest products. There already exists a Lao Handicraft Association (LHA) that develops and promotes different producer groups, seeks to develop craft skills and runs trade fairs. Business skills – To date there have been few extensive efforts to develop specific business skills in the forest sector. There has also been little technological assistance to encourage businesses to upgrade by moving away from hand production towards mechanisation beyond the work of specific project initiatives. Nevertheless some project initiatives and new association are trying to move in that direction.

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Conclusions – While private forest rights are unlikely to emerge in the short term for Lao communities, there is scope in the new Forest Act for communities to develop management plans that form the basis for legal permission to commercially exploit the forest on a sustainable basis. With investment in organisation of enterprise groups and the development of business skills, Lao PDR may make a rapid transition towards profitable and sustainable community forest enterprise.

6.5 Mozambique Mozambique has a forest area of just over 19 million hectares and a deforestation rate that has risen in recent yeas to approximately 219,000 hectares per year. As a consequence of reports of illegal logging and forest loss – in part due to local land clearance for agriculture and fuel wood production – Mozambique is exploring anew prospects for community forest management. Commercial forest rights – Mozambique passed in 1997 one of the most progressive land laws in Africa. By dint of their historic occupation of the land, self-defining communities can claim land rights (known as DUAT). However, the National Directorate of Land and Forests prescribes a much narrower set of forest rights under the 1999 Forest and Wildlife Law. While communities can use forest products for subsistence purposes (e.g. housing, food and fuel wood uses) any commercial timber rights are only granted through cumbersome long term concession or annual simple licence legislation which require registration either in the national or provincial capitals – often far distant from the communities. As a result, while there were more than 180 communities with delimited land by 2005, only 3 communities had successfully obtained a simple license to produce timber (Nhancale et al. 2009). While provisions for community-based natural resource management exist in the legislation, they are currently rarely applied in practice – and new legislation on ‘Delegation of Powers’ to communities was never passed by government. Despite these shortcomings, a new multi-institutional alliance, Growing Forest Partnership, is seeking to pilot new commercial forest rights ideas in three areas with a view to scaling up on a national basis. Social organisation - As a result of the failure to grant full commercial rights to forestdependent communities, social organisation to exploit rights has been relatively slow. In NGO driven pilot programmes for community based natural resource management across the country at least 70 Community Management Committees have been established. In addition there are several hundred documented commercial interest groups (usually not formally registered) for products such as charcoal and honey. But the larger commercial timber associations, such as the Commercial and Industrial Association of Sofala (ACIS) are generally dominated by larger concession or simple licence holders, not by community groups. Business skills – Formal business skills are generally poorly developed in rural Mozambique. Yet despite this some new NGO initiatives such as those of Centro Terra Viva (part of the Forest Connect alliance – see http://forestconnect.ning.com) have established links with the Government Institute for Small and Medium Enterprises (IPEME) to begin training in business development in the timber and bamboo furniture and honey sectors.

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Conclusions – Mozambique currently provides an example of a country in which land rights and commercial forest rights are at odds. Without an easy way of acquiring commercial rights, especially for timber, communities have little incentive to preserve the forest and agricultural expansion has often gone hand in hand with illegal logging as a consequence. Changing the Government outlook from one of control and enforcement towards delegating powers to communities and facilitating the growth of community forest enterprises is contemplated but still a long way off.

6.6 Tanzania Tanzania has just under 40% forest cover (approximately 35 million hectares) with a deforestation rate of about 1.1%. With concern growing over deforestation and poverty reduction in the country, the Government opted first to pilot and then to implement participatory forest management. Tanzania is now regarded as one of the first countries on the continent to formally recognise the role of communities in owning and managing the forest. Commercial forest rights – Participatory forest management (PFM) was introduced into Tanzanian law with the passing of the Forest Act in 2002. This act provides a clear legal basis for communities across Tanzania to own, manage or co-manage forests under a wide range of conditions. The law recognises two types of PFM: (i) Community Based Forest Management (CBFM) which allows communities to declare and gazette village, group or private reserves; (ii) Joint Forest Management (JFM) that allows communities to enter into co-management agreements with government and other forest owners and share commercial benefits (Blomley and Ramadhani, 2007). Social organisation – The mobilisation of communities around PFM has spread quite rapidly. Starting with some initial pilot programmes in the early 1990s with SIDA funding, it then took off more seriously after the Forest Act was passed. By 2007 a total of 719 communities were engaged in CBFM and 209 Forest Reserves were under JFM arrangements covering a total of 1.61 million hectares. As communities have become aware of the true commercial value of timber on their lands there are positive signs that they have begun to defend their own forest resources (rather than collude with illegal extraction as in the past). Despite the progress to date, there are still major challenges in building legal literacy both among Government staff and among community groups to make them aware of their legal entitlements. There also remains the challenge of developing commercial activities – perhaps initially in partnership with responsible private sector forest companies. Business skills – As commercial rights over the forest have been secured, some communities have turned their attention to developing forest businesses. An example is the SULEDO Forests of Kiteto District where 9 communities own and manage a 167,400 ha Village Land Forest Reserve through an apex body known as the Zonal Environmental Committee (ZEC). They have been among the first in Tanzania to develop a sustainable harvesting plan (with a 60 year rotation) for valuable timber species such as Dalbergia melanoxylon. More contentious has been the regulation of products such as charcoal production (now restricted to windfall and leftover branches of felling operations). A tender process for timber harvested in the area has been developed to try and secure an initial market. While currently supported by the

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Government District Forest Office – it is recognised by the group that they will need more focused business support as they generate income from initial sales (Lissu and von Mitzlaff, 2007). Conclusions - Tanzania is a good example of a country which is determined to hand over commercial control of forests to communities. Nevertheless, despite good initial progress, there has been a mismatch to date between the level of investment in participatory forest management and the level of investment in business skills development. With more serious attention to business development the potential of Tanzania’s community forest control may start to deliver on its early promise.

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7. Conclusions By looking at a range of country case studies from Africa, Asia and Latin America it is clear that the three enabling conditions introduced in this paper (secure commercial forest rights, strong social organisations and competitive business skills) do seem, on the one hand to be sufficient to explain why profitable and sustainable community forest enterprises flourish in particular countries, and on the other hand, to be necessary for that to be the case. Indeed it is difficult to think of a country example where such conditions are not in place where community forest enterprises have flourished. Similarly it is difficult to think of a country example where such conditions are in place and community forestry has not flourished. This paper has focused primarily on case study countries from developing countries or countries in transition in the South. Had we had time to add in similar surveys of countries in the North – in regions such as North America, Scandinavia and Australasia – the conclusions would only have been made clearer. For example, recent presentations by members of the International Family Forestry Alliance (IFFA) that spans such regions are replete with examples in which secure commercial forest rights, social organisation (often over decades if not centuries) and business skill development, have left smallholder family or community forests connected to national and international forest product markets to an impressive degree. Rather than trying to exert control through overstretched Government agencies – a better strategy might be to delegate authority for forest management to local communities. Government attention could then be focused instead on facilitation of community forest enterprise development coupled with monitoring to ensure new rights are matched by community responsibilities for sustainable forest management. If countries wish to develop profitable and sustainable community forest enterprises, that both help to meet market demand, avoids deforestation and reduces poverty they must consider seriously how to: • Secure commercial forest rights for communities. • Facilitate stronger social organisations between community producer groups • Assist in the development of competitive business skills for those community groups.

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