FAO: Communitybased tree and forest enterprise development CBED

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FAO Community-based tree and forest enterprise
development (CBED)

• Part of FAOs support to Participatory Forestry
  (former Community Forestry) focus on people
  centered, sustainable NRM
• Support capacity building to all stakeholders to
  enhance better understanding of SMFE (on
  request)
• Stimulate the ongoing discussion on the need for
  an enabling environment for SMFE
• Support inter-institutional information sharing
  and networking on SMFE
• Web page www.fao.org/forestry/site/25491/en
• SMFE International Conference May 2006 ?

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(No Transcript)
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Conference in Costa Rica (May 2006)

• Participants and sponsors
• 180 participants from 35 countries
• 10 overview presentations
• 40 case studies from Asia, Africa and Latin
  America
• Sponsored by FAO, IDB-MIF, CATIE, ICCO, SNV,
  CIFOR
• Objectives
• Develop a common understanding of role of forest
  SME in promoting poverty reduction and
  sustainable forest management
• Identify opportunities to strengthen
  institutional frameworks for poverty reduction
  through forest SME development
• Major outputs
• Proceedings (printed and on-line)
• Communication/exchange network on SMFEs ?
• Policy brief (printed copies available here)

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Policy Brief Towards an enabling environment
for small and medium forest enterprise
development
Jason Donovan, CATIE Sophie Grouwels, FAO
International Conference on Managing Forests for
Poverty Reduction Ho Chi Minh City, Viet Nam, 2-6
October 2006
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The development context

• Millennium Development Goals reduce global
  poverty and ensure environmental sustainability
  by 2015
• High stakes in forest communities poverty more
  pervasive and deeper and importance of protecting
  natural resources
• Development of small and medium forest
  enterprises (SMFEs) opportunity for
  strengthening forest-based livelihoods and
  conserving the natural resource base

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Expanding market opportunities for SMFEs

• Increased scarcity of and price increases for
  certain tropical hardwoods
• Expanding markets for handicrafts and eco-tourism
• Specialized export markets like fair trade
  (NWFPs) and certified timber
• Growing local urban markets for furniture, wood,
  and NWFPs such as herbs, medicinal plants,...
• Greater awareness of certified forest products
  and ecosystem services and the need to pay for
  them

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• Preconditions for SMFE development
• secure land tenure that includes rights to
  harvest and sell forest-based products
• technical capacities for sustainable forest
  management

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CHALLENGES / CONSTRAINTS
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Challenges for increasing the competitiveness of
SMFEs

• Difficulties to deliver quality products on-time
  and in sufficient volumes
• Limited access to useful market information
• Unclear internal rules and regulations
• Conflicts over economic and social objectives
• employment generation vs. profit maximization
• community leaders vs. entrepreneurs
• board of directors vs. professional managers
• SMFE leaders seldom have broad experience in
  business management, accounting or marketing
• Lack of cooperation between first and
  second-level associations for collective
  (centralized) processing and marketing efforts
• Limited experiences in creation of trust
  relationships to forge alliances with other
  chain actors and service providers

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Challenges for effective service provision for
SMFE development

• Lack of specialized business development services
  (BDS)
• Providers of financial services reluctant to
  offer services due to their perception of the
  high risks involved with forest SMEs
• SMFEs lack willingness and capacity to pay for
  services
• Unrecognized need/demand for services

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Constraints in the political-legal framework

• High transaction costs to comply with regulations
  of forest product extraction and
  commercialization
• Requirements that SMFEs hire professional
  foresters for elaborating and executing forest
  management plans impose large costs on SMFEs
• Appropriate forms of business organization have
  yet to be developed for SMFEs
• Unfair competition weak or selective enforcement
  of existing regulations (e.g., illegal logging)
• SMFEs lack resources and networks to manoeuvre
  through bureaucratic processes

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The road ahead RECOMMENDATIONS
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Recommendations for SMFEs

• Acquire the technical, business and financial
  capacities that allow for mutually-beneficial
  partnerships with other businesses along the
  supply chain and provide basis for negotiating
  more favourable terms of trade
• Create specialized institutions for business
  management that reduce production and
  administration costs
• Invest in associations that unite SMFEs for
  increased economies of scale in processing and
  marketing and greater bargaining power
• Foster alliances with technical, business and
  financial service providers that impact the
  bottom line and strengthen rural livelihoods
  among resource owners
• Ensure that productivity and efficiency receive
  at least as much attention as social and
  environmental goals through the development of
  specialized institutions for business management
  at the community level and among SMFEs

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Recommendations for service providers

• Invest in and develop services related to
  business development and value chain integration
• Assist SMFEs in formulating their demand for
  technical, business and financial services
  through a process of awareness raising and
  confidence building
• Identify and strengthen core competencies and
  establish partnerships with other service
  providers and businesses who can provide
  complementary services
• Designing and implementing effective cost/benefit
  sharing mechanisms with SMFEs
• Make credit accessible to SMFEs expand the range
  of credit and saving products available, broaden
  customer base, and take measures to reduce
  transaction costs

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Recommendations for governments and international
organizations

• Create an enabling environment for SMFE
  development clear tenure rules, simple
  association, business registration and export
  procedures, accessible tax and financial
  incentive schemes
• Foster market-based approaches to service
  delivery innovation payment mechanisms
  (embedded services, vouchers, ...) and upgrading
  the capacities of service providers to identify
  and respond to the needs of forest SMEs
• Promote communication platforms and information
  networks between SMFEs, providers of technical,
  business and financial services, and other actors
  along the supply chain VISABILITY
• Support research for increased understanding of
  the successful cases and sound practices of SMFE
  development, the underlying critical success
  factors, and the potential for scaling up

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• For more information

www.fao.org/forestry/site/35689/en
www.catie.ac.cr/econegociosforestales/conference
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Thank You!