Connecting smallholders and the private sector: unleashing the real potential of forestry in Asia

8 March 2016 News

“The world needs more wood. And in the crowded landscapes of Asia, this wood won’t be coming from conventional large-scale plantations, but from millions of dispersed smallholders,” remarked Stephen Midgley during the opening session of PEFC’s Stream Event at the Asia-Pacific Forestry Week (APFW).

“But how can we connect the markets and investment that private sector provides to smallholders in a way that addresses their barriers – such as providing competitive prices for wood compared to other crops?” Mr. Midgley continued.

PEFC’s event was designed for this question; exploring the interface between large-scale private sector and smallholders in the Asia region. The event featured perspectives from a range of companies: community engagement models from Burapha in Laos, APP in Viet Nam, April Group in Indonesia, and SCG in Thailand.

The case studies from Viet Nam and Thailand illustrated how large-scale industries can be built upon a dispersed, smallholder resource base. In Laos and Indonesia, the case studies showed longer-term company programs incrementally engaging more smallholders into company business models.

“Institutional investors want to invest in forests; at any one time there are fund managers holding several billion dollars allocated to forest investment opportunities. But so far, little of that is being invested in Asia, and why not?” questioned Dennis Nielsen, DANA Investment.

“Supporting smallholders to come together in establishing institutional structures and pitching innovative opportunities to investors, could be one way to close this gap and start channeling some of the much needed investment into productive forestry in Asia,” Mr. Nielsen continued.

“For SCG in Thailand, we rely predominantly on farmer-grown eucalyptus to supply our mills and we are in the process of expanding our capacity, based on this sourcing model,” said Mr. Joompot, SCG.

“One of the reasons Thai-based pulp and paper industries are working successfully with smallholders is that we promote the integration of trees in and amongst agriculture crops, rather than trying to compete with them. This increases overall productivity on farms,” Mr. Joompot continued. “The wood markets also offer a more reliable price compared to the volatile markets of other agriculture commodities.”

Emerging from the case studies and intense exchange amongst participants was a strong conclusion that both companies and smallholders can ‘get rich together’ by getting the model right and delivering to the growing global markets for forest products.

“Managing and adequately sharing risk is a critical issue at the interface of private sector and smallholder models, but to get it right will unleash the real potential of forestry in Asia. It’s an extremely efficient way to improve rural livelihoods and the environment,” highlighted Richard Laity, PEFC International, while concluding the session.