Linking global environmental benefits to sustainable land use alternatives

“Best bet” Land-use Systems

Country reports

Alternatives To Slash-And-Burn In Indonesia

 

Unique id: IDAQFNZB

Source file: D:\Projects\ASB\ASB Country and Thematic reports\Indonesia PhaseII report\Part IV-V .xml

 

Authors: Thomas P. Tomich, Meine van Noordwijk, Suseno Budidarsono, Andy Gillison, Trikurnianti Kusumanto, Daniel Murdiyarso, Fred Stolle, Ahmad M. Fagi, Iswandi Anas, A.F.S. Budiman, Kenneth Chomitz, Rebecca Elmhirst, Chip Fay, Hubert de Foresta, Dennis Garrity, Danan P. Hadi, Suryo Hardiwinoto, Kurniatun Hairiah, Genevieve Michon, Nu Nu San, Cheryl Palm, Soetjipto Partoharjono, Djuber Pasaribu, Eric Penot, Robert Simanungkalit, Martua Sirait, S.M. Sitompul, F.X. Susilo, David Thomas

 

--------------------------------------------------------------------------

This part of the report concerns Project Output 3.1, recommendations that link global environmental benefits to land use practices by (a) assembling and prioritizing alternatives to slash-and-burn in terms of sustainable agriculture and (b) analyzing environmental impacts and collating these analyses with data on agricultural productivity and sustainability of current and alternative land use. If alternatives to slash-and-burn were to have hope for significant impact in Indonesia (or any of the countries involved in ASB), the scope of the research project had to expand beyond climate change and biodiversity reported in Part II.  This ‘linking’ goal of the project, which necessarily involves assessments of tradeoffs (and complementarities) among impacts spanning the plot, household, landscape, watershed, and national level--as well as global environmental phenomena—could not be achieved meaningfully without assessment of  the sustainability and adoptability of the alternatives reported in Parts III and IV.

 

V.1 ASB-Indonesia matrix

This ASB matrix approach was developed as a tool to link global benefits with sustainable alternatives that are adoptable by farmers (Vosti et al 1998; Tomich et al, 1998).  The ASB-Indonesia matrix links environmental, agronomic, policy, socioeconomic, and institutional indicators and was developed in collaboration with scientists from other ASB sites.  These criteria and selection of specific indicators were discussed in detail in Parts I-IV:  

 

Indicators of global environmental impacts:

            Carbon sequestration, measured as time averaged carbon

            Biodiversity, using the aboveground species richness for vascular plants

 

Agronomic sustainability:

            Summary indicator and specific qualitative indicators for pests and diseases

National policymakers’ concerns:

            Potential profitability (comparative advantage), measured as the net present value of returns to land assessed at social prices

 

            Equity and stability, measured in part by employment opportunities.  Indicators of adoptability presented below also are relevant to poverty alleviation objectives derived from concerns about equity and stability.

 

Smallholders’ socioeconomic concerns and adoptability of land use alternatives

            Production incentives (financial profitability) received by smallholders, measured as returns to labor valued at private prices.

 

            Household food security, where one of the most important considerations is the pathway for obtaining food: own production, exchange, or wage labor.

 

            Qualitative indicators of problems in markets that may create barriers to adoptability.  Problems in input supply, output, labor, and capital markets are indicated respectively by an ‘I’, ‘O’, ‘L’, or ‘K’.  Uppercase letters indicate serious constraints; referred to as ‘red lights’ below.  Lowercase letters indicate potential constriants; called ‘yellow lights’ below.

 

            Qualitative indicators of other institutional problems that also have the potential to create barriers to adoptability.  The specific problems and issues considered below were access to non-market information (indicated by an ‘N’), regulatory issues (‘R’), local environmental issues (‘E’), insecure property rights (‘P’), equity biases (‘B’), and need for social cooperation (‘C’).   Again, uppercase denotes a ‘red light’ and lowercase is a ‘yellow light’. 

 

Now that this array of indicators has been assembled in Table V.1, it is possible to examine tradeoffs and complementarities across the various criteria.

V.2 Relationships among global benefits, sustainability, and local/national objectives

Because of the multiple criteria regarding production and environmental services of forests, ‘deforestation’ must be viewed as a multidimensional phenomenon.  Sometimes this policy problem may simplify to a few key dimensions (tradeoffs).   Conversion of natural forest has the major effect on the supply of forest functions, but the subsequent land uses also matter a great deal for agronomic sustainability and the supply of global environmental benefits. Table V.1 presents very preliminary estimates of the orders of magnitude of these differences for 7 systems that represent the major land uses in Sumatra’s peneplains, the low-elevation, undulating areas of poor soils that comprise the island’s largest agroecological zone.

            All the tree-based systems (smallholder agroforests and monoculture as well as large-scale plantation monoculture) in Table V.1 are agronomically sustainable. On the other hand, shortening of fallow rotations from 10 years or more to less than 5 years with rising land scarcity is undermining sustainability of shifting cultivation, which has been disappearing anyway as population pressure increases in Sumatra (van Noordwijk et al. 1995a)  And continuous cultivation of cassava does not appear sustainable on this land because of depletion of nutrients and of soil organic matter. On these soils, marginal revenues from fertilizer applications to cassava do not cover fertilizer costs at current prices, which are near the world market price for most nutrients except nitrogen, which has been subsidized in Indonesia. (Subsequently, fertilizer subsidies were lifted.)

 

 


Table V.1   ASB Matrix for the Forest Margins of Sumatra

Land use

Global environment

Agronomic sustainability

National policymakers’ concerns

Adoptability by smallholders

Description

Scale of operation / evaluation

Carbon

sequestration

Biodiversity

Plot-level production sustainability 

Potential profitability

Employment

Production incentives

House-hold food security

Institutional & policy issues

 

 

 

 

 

 

Time averaged   (Mg/ha)

 Plant species/

standard plot

Overall rating

Main sustain-ability issues (1)

Returns to land

(Rp 000 / ha) at social prices

Time averaged labor input (days/ha/yr)

Returns to Labor

(Rp  / day) at private prices

Food entitle-mint

via:

Market imperfections (2)

Other institutional problems (3)

 

Natural forest

25 ha fragment / 1 ha

254

 

120

 

1

 

0

 

0

 

0

 

n.a.

 

 

 

Community-based forest management

35,000 ha common forest

 / 1 ha

176

 

100

 

1

 

9.4 to 18

0.2 to 0.4

11,000 to 12,000

own prodn & exchange

o

N, R, P, C

 

Commercial logging

35,000 ha concession / 1 ha

150

 

90

 

0.5

C

(32) to 2,102

31

(17,349) to  2,008

 

wages

O, K

N, R, E, P, B, C

 

Rubber agroforest

1-5 ha plots / 1 ha

116

90

0.5

C

73

111

4,000

exchange

 

P, b, c

 

Rubber agroforest w/ clonal planting material

1-5 ha plots / 1 ha

103

60

0.5

C,K,W,P

234 to 3,622

150

3,900 to 6,900

exchange

I, k

N, P, b, c

 

Rubber monoculture

1-5 ha plots / 1 ha

97

 

25

 

0.5

C,W,P

 

(993)

 

 

133

 

 

3,683

 

exchange

I, k

N, P, b, c

 

Oil palm monoculture

35,000 ha estate

/ 1 ha

91

25

0.5

C,Fert

1,480

108

5,797

wages

I, o, K

N, R, e, P, B, c

 

Upland rice / bush fallow rotation

1-2 ha plots / 1 ha

74

45

0.5

Fert,P

(180) to 53

15 to 25

2,700 to 3,300

own production

 

n, P, c

 

Continuous cassava degrading to Imperata

1-2 ha plots within settlement project / 1 ha

 

39

15

 

0

C,Fert,W

(315) to 603

 

98 to 104

 

3,895 to 4,515

 

own prod’n & exchange

o, K

n, E, p, c

 

Notes for Table V.1

(1) Plot-level production sustainability: C = soil compaction; K = potassium balance; Fert = cost P = pest or disease problem  

(2) Market imperfections: I = input market problem; O = output market problem; L = labor market problem; K = capital market problem

(3) Other institutional problems: N = non-market information problem; R = regulatory problem; E = local environmental problem; B = equity biases (gender or distributional); C = social cooperation required

For market imperfections and other institutional problems: upper case letters indicate more serious problems

 


C sequestration depends largely on cycle length (frequency of clear felling for rejuvenation).  Where treecrop systems can be rejuvenated without clear felling, a substantial increase in C stock may be possible.  Moreover, there do not appear to be big differences among forest extraction and the other tree-based systems regarding carbon stocks and greenhouse gases. Thus, as far as agronomic sustainability and climate change objectives are concerned, tree-based systems dominate among the alternatives.

            Raising productivity of rubber agroforests, which span millions of ha, offers a promising pathway in Sumatra. There appears to be great potential for raising profitability of these systems though adaptation of existing higher-yielding clones within existing smallholder systems, which would also enhance household food security and expand employment opportunities. It may be possible to combine these potential benefits from the perspective of smallholders and national policymakers with significant biodiversity conservation because the mix of planted species is augmented by natural regeneration of forest species (Michon and de Foresta; van Noordwijk et al. 1995b).  Indeed, these agroforests may approximate a number of forest functions, thereby providing the technical foundation for sustainable community-based forest and watershed management.  But it must be emphasized that agroforests are not perfect substitutes for biodiversity conservation in natural forests. Indeed conversion of natural forests to agroforests involves a significant reduction in species richness. For assessments of higher plants made along 100 m line transects in Sumatra, over 350 species were found in primary forests while the number dropped to about 250 species for rubber agroforests. However, the richness remaining in agroforests still is much higher than the 5 or so species of higher plants found in rubber monoculture (Michon and de Foresta).

        As discussed in Part IV, a key unresolved question is whether the potential for development of smallholder rubber agroforests can compete with the (private and social) profitability of large-scale alternatives, including oil palm plantations, industrial timber estates and logging concessions. These are viewed as ‘best bets’ for economic development by many policymakers and donors, in large part because of conventional wisdom of economies of scale in plantation development. If it turns out that large-scale development alternatives are more profitable—recall from Part IV that this is not a foregone conclusion—an important tradeoff between global environmental benefits and national development objectives will have to be faced. This is because there is an important tradeoff with biodiversity conservation for large-scale plantation monocultures such as oil palm.

        Even if further analysis shows that the large-scale schemes hold no advantages in terms of private and social profitability compared to smallholder schemes (see Part IV), a potential tradeoff between profitability and biodiversity conservation remains to be addressed concerning smallholder systems (van Noordwijk et al.,. 1995b). Farmer management aimed at increasing productivity of systems often decreases biodiversity. Whether or not this apparent trade-off between productivity and biodiversity is inescapable is the subject of debate--and further research. Very little is known about the shape of the family of curves describing the trade-off function, or even whether a trade-off always exists (Figure V.1). If the relationship is convex to the origin, even modest productivity gains cause great loss of biodiversity. If the relationship is concave, biodiversity loss is relatively slow for initial increases in productivity. In this case, raising productivity to an intermediate level may involve a modest trade-off in terms of biodiversity loss. Thus, two of the most important research questions regarding the selection of ‘best bets’ in Sumatra are: what is the shape of this family of curves? and what factors influence the biodiversity of these complex, multistrata systems as productivity of their components increases?   So while there may be a tradeoff between potential profitability and aboveground biodiversity in tree-based production systems,  this requires further verification.

 
 

 


Figure V.1  Potential profitability versus biodiversity for new technology

 
V.3Potential for development of technological options

 

A wider range of tree-based ‘best bet’ alternatives for smallholders should be examined regarding their environmental, agronomic, and economic impacts and feasibility of adoption.  The priorities listed in Table V.2 were identified by scientists active in the ASB-Indonesia Research Consortium at a national meeting held in Bogor on 6 May 1998.

 

Table V.2  Priorities for further studies of Sumatran land uses

Meta’ land use

Corresponding land use in Sumatra

Type / scale of operation

Landscape mosaic context

Remarks

 

Candidates for new studies in the Peneplains

Simple treecrop systems

Smallholder oil palm monoculture

 

Smallholders’ plots of 1-5 ha

Indigenous smallholder landscape mosaic

Identified as a priority at May ASB-Indonesia meeting: need for study in Jambi and Lampung?

 

Smallholder timber monoculture

Smallholders’ plots of 1-5 ha

Indigenous smallholder landscape mosaic

Identified as a priority at May ASB-Indonesia meeting: need for study in Jambi and Lampung?

 

 

Candidates for new studies in the Piedmont

Multistrata agroforestry systems

Robusta coffee under shade

Smallholders’ plots of  1-5 ha

Indigenous smallholder landscape mosaic

Linked to watershed work in Lampung – high priority as part of ‘scaling up’ efforts.

 

Damar agroforests (rice-pepper-coffee-fruit-damar)

Smallholders’ plots of 1-5 ha

Indigenous smallholder landscape mosaic

Lots of data on this system are available.

Simple treecrop systems

Robusta coffee monoculture

Smallholders’ plots of 1-5 ha

Indigenous smallholder landscape mosaic

As noted above, linked to watershed work in Lampung – high priority as part of ‘scaling up’ efforts.

 

Cinnamon monoculture

Smallholders’ plots of 1-5 ha

Indigenous smallholder landscape mosaic

Most of the data needed are available from a recent dissertation.


Smallholder rubber production continues to be the most important source of income in most of the lowland peneplain of Sumatra and W. Kalimantan. The current economic crisis has benefited rubber farmers as their rupiah income has increased more than inflation, despite the decrease of world rubber prices when denominated in dollar terms. Yet, to remain an attractive option, rubber productivity (per unit labor and per unit land) will have to increase. We are exploring the potential to incorporate higher yielding clonal rubber into smallholder rubber gardens, building on farmers' current knowledge and decision-making skills. Past efforts have been geared toward part of the target group only, and may have insufficiently addressed the concerns and constraints of small scale farmers.

 

Our experiments have shown that selected high-yielding clones can be successfully established in smallholder systems at substantially reduced management intensity, compared to the monocultural plantations for which they were originally selected. Weeding intensities of 1-3 times per year are sufficient for good rubber growth, and this need only be done within the rows of rubber trees.  We find that fertilizer application can usually be reduced or eliminated.  The main constraint to rubber establishment appears to be pig and monkey damage, which can be controlled by fences, bamboo shafts around individual trees, or regular guarding of the plots. The bamboo shaft technique, a common practice in one of the study villages, but not known in others, appears to be effective against pig damage.

 

Rotational Agroforestry Systems ('RAS') consist of an establishment phase, during which food crops can be interplanted with young trees and a phase in which the trees dominate, before the cycle starts all over, by a (field-level) clearing (often by slash-and-burn) to prepare the land for a next cycle. The harvested fraction of total biomass differs widely from near zero in classical fallow systems to over 50% when most wood is harvested and only branches and ‘slash’ are left in the field. A wide range of RAS system has been developed in various parts of the world, ranging from crop-(improved) fallow rotations, where annual food crops provide the main value to systems where trees such as rubber make the 'fallow' by far the most important phase for continuous revenue generation or where the final harvest of an established wood-lot dominates, as in 'taungya' systems. Where the annual food crops dominate, system improvement will often tend to shorten the cycle, by choosing fallows which restore soil fertility faster. Where the trees (formerly thought of as 'fallow') provide the main value, the systems may evolve toward longer cycles. But all RAS systems have in common that the rotation has a clear end point at which the farmer decides to fell the trees and re-plant (when the expected gains of doing so are higher than the expected gains of waiting). This means that slow-growing trees have little chance to mature, unless they are  very profitable. Some forms of RAS such as rubber agroforestry systems can allow the regeneration of part of the natural forest vegetation, but only for those species that reproduce within the maximum age of the stand.

In contrast to these rotational systems, we may distinguish a class of Permanent Agroforest Systems ('PAS'), where rejuvenation takes place at a patch level of one or a few trees, without slash-and-burn land clearing. The system approaches the character of permanent, forest-like vegetation, even if it started in the same way as a RAS. Prime examples of PAS are Damar agroforests of Krui West Lampung (Sumatra) and mixed fruit tree gardens ('Tembawang') of Kalimantan and Sumatra. Part of the rubber agroforests has evolved in this direction, where gap replanting leads to mixed-age vegetation. Slow-growing elements can be retained in such a system to reach maturity, as decisions are made on a tree rather than forest basis. Environmental values, such as biodiversity conservation and C stocks, which tend to increase with age, can be substantially higher in PAS than in RAS, while environmental problems associated with the slash-and-burn methods used in starting a new cycle in RAS are absent in PAS.

 

Does this mean that Permanent Agroforest Systems are a 'better bet' than Rotational Agroforestry Systems within the frame of the 'Alternatives to Slash and Burn' project where environmental values are considered as well as profitability? For the time-averaged C stock we may expect an increase of about 30 Mg C ha-1 as the average age goes up from 15 – 20 years for a 30-40 year cycle, to 30 for a 60 year’s life span of individual trees. Net GHG emissions are likely to be reduced as the agroforest soil can probably maintain a loose topsoil structure and phases with excess mineral N and thus N2O emissions can be reduced by managing the regeneration process. No problems are to be expected with the sustainability criteria used in our evaluation, so the profitability and institutional issues  may be the main concerns. Returns to labor may be reasonable, if a comparison is made with NTFP collection and rubber agroforestry, but the returns to land will probably be less than the maximum in Table IV.3. There also are institutional concerns:  PAS systems that mimic natural forests have been mistaken for natural forests and classified accordingly by state forestry officials, denying access to the farmers (or their children) who planted and managed the trees.

 

PAS normally occur in a mosaic with land uses that allow food crop production on a rotational or permanent basis, such as in paddy rice fields. Full reliance on the market as a way of ensuring local food security has not generally been attractive, even for PAS systems which generate a constant flow of revenue such as the Damar  agroforests. Agroforest managers can spread risks by maintaining broad portfolio activities, which may yield or earn good prices in different years. The opportunities of benefiting from genetic selection in tree planting material may be no less than in RAS, provided the planting material suits the more competitive environment of an established stand, with less opportunities for the farmer to manage above- and belowground growth conditions to meet the needs of a young individual tree.

 

All tree-crop based production systems evaluated during the second phase of the ASB project in Indonesia are Rotational Agroforestry Systems. Yet, information on the scope of rubber agroforests evolving towards PAS has gradually accumulated. Sandy Williams (pers comm.) documented farmers’ experiences with gap replanting in Jambi and found evidence of active relocation of rubber seedlings to make use of  relatively open places in existing rubber gardens and selective cutting of non-rubber trees to facilitate rubber sapling establishment. Since damage by pigs and monkeys is a major risk to young rubber planted after field-level slash-and-burn, farmers experimented with planting young rubber among partially-cleared fields.  This may reduce the risk of predation, but at the same time does not allow the farmers to take further measures such as fencing. Franz Gatzweiler (pers comm.) working in West Kalimantan found that rubber agroforestry systems can gradually evolve into mixed fruit/timber PAS ('tembawang') by interplanting and allowing natural regeneration to take place.

 

To complement current data, a further analysis of PAS management of rubber agroforests is needed. Two options for management should get attention:

- rubber regeneration by gap planting, and

- enrichment of rubber gardens with fruit and timber species.

 

Best bets for rehabilitating degraded lands

The options for farmers who are trapped in the cassava/Imperata cycle are reduced in comparison with those in the forest margin. The soil has been depleted of those forms of organic matter that can feed crops of young trees by mineralization. However, the soil is not depleted of soil organisms, including micro-symbionts such as mycorrhiza and N fixing microbes. Development of tree-based production systems can be hindered by the landscape context of such plots, with a large chance of fires raging through plots where individual farmers would plant trees. The soil seedbank is nearly exhausted and there is a limited array of tree species that can reach the plot and start the process of succession towards forests – most trees will have to be introduced by the farmer. In what may seem a hopeless situation for any individual, it may be more attractive to abandon the land, look for employment in the city, or open new land where the forest margin is still accessible.

The situation in the North Lampung ASB benchmark area illustrates these hardships, aggravated by the long dry season of 1997 and its effects on the trees that had been planted (against the odds). A long drought and intense fires were followed by a locust plague during the next growing season, devastating rice, maize and sugarcane crops. Opportunities for off-farm employment meanwhile were reduced as the sugarcane plantation in the neighborhood barely survived. The local (illegal) sawmill (which transformed the last trees left in the landscape into construction wood and provided local employment), closed down as timber supply was depleted and the building boom in Jakarta collapsed.

            Are there any bets which are still worth making for farmers in such circumstances? Our rather abstract analysis of ‘best bets’ may need a reality check. Cassava prices have increased after the drought and cassava production is gaining in popularity – despite our judgement that this is not sustainable. Intensive food crop production is biophysically possible, but requires substantial investments beyond the means of local farmers. Oil palm and rubber are feasible, although for both tree crops the length of the dry season is near the limit. The long dry season of 1997 may have caused a 40% decline in oil palm yields in this area (with effects on fruit production for about a year after the drought), while rubber yields in plantations were only reduced by 10 % (S. Budiman, pers comm.). Farmers in the benchmark area still see smallholder oil palm production as an attractive option and are willing to work hard to clear Imperata- infested plots. They reckon they can clean only ¼ ha per year. This type of oil palm production differs substantially from the ‘nucleus estate – smallholder scheme’ on which most government projects are built. It definitely deserves a further study of its prospects, opportunities and constraints. Rubber agroforestry may be the other main opportunity for farmers in the area, managed as pure stands or mixed with timber trees or fruit trees (Paraserianthes is popular but did not perform well in the long dry season of 1997, except for the wettest places in the landscape). A wider array of trees is needed to diversify production for these circumstances. Initial farmer surveys have shown interest in a number of local trees (including Alstonia or ‘pulai’) as well as introduced species. Markets for locally-produced wood may be well enough developed, as there is hardly any wood coming from forest remnants. There are some remnants of mixed fruit tree agroforests, as well as early stages of such a system, based on local fruit trees that have undergone little selection and ‘domestication’. Marketing of such fruits is not well developed, but road access may be good enough. Outside the ASB benchmark area many farmers have planted rubber already, often intercropped with cassava. The cassava – rubber combination is considered risky in the rubber literature as it entails a risk of root diseases shared in the Euphorbiaceae family to which both belong. Farmers may not be aware of these risks, or simply feel that they have no choice, as direct income is needed while waiting for rubber to become productive.

Would this type of tree-crop based intensification of land use be relevant to interest groups aside from the farmers directly involved? The answer to this question has a local/direct part and an indirect one, based on migration as an option for people in the benchmark area. (This depends whether improved opportunities in areas such as the benchmark area reduce the pressure on the forest margins). Direct consequences for biodiversity conservation of a tree-based intensification in the degraded lands are likely to be small, but a change from a land use with a time-averaged C stock of 40 Mg ha-1 to one of 100 Mg ha-1 could be significant. Net GHG emissions may increase during such rehabilitation, as the availability of mineral N will have to increase, but excess N fertilization (standard practice in intensively managed oil palm plantations) may be less likely to occur under smallholder management.

V.4 Potential for adoption of existing land use alternatives

The ASB-Consortium will marshal its research results in order to inform key planners and policymakers about the potential environmental, social, and economic benefits of a smallholder-based development strategy as an alternative to large-scale plantation monoculture. But, as already mentioned, there are some important institutional questions that must be addressed to enable widespread adoption of profitable alternatives by smallholders.  Table V.3 on market institutions and Table V.4 on other institutional issues are summaries of a more elaborate assessment of institutional requirements following Vosti et al. (1998).   Although it does not capture all the nuances of these complex institutional issues, the following notation was developed to ‘flag’ the most serious institutional barriers to adoption by smallholders for further detailed analysis:

Å   indicates no constraint, interpreted as a ‘green light’ to go ahead with development

¨   indicates a possible constraint, a ‘yellow light’ meaning proceed but with caution 

·     flags a serious constraint, a ‘red light’ that jeopardizes prospects for adoption of the

      alternative by smallholders 

 

Market institutions

Input supply markets.   Planting material supply markets are the greatest barrier to adoption of profitable alternatives by smallholders – indicated by ‘red lights’ for clonal rubber and for oil palm. For example, farmers have little access to improved rubber planting material. The Treecrops Advisory Service, which is virtually the sole provider of rubber budwood,  has focused its efforts on supplying planting materials to project participants in the past and largely has ignored the much larger number of non-participants (Tomich 1991). Except in a few areas of Sumatra, the private nursery industry has only begun to develop.  For public and private sources alike, there are serious problems of  reliability regarding quality of planting material, which is difficult to assess until several years after planting.  Current delivery pathways for improved planting material (and the information needed to use it) seem inadequate, but direct government intervention to supply germplasm may be neither feasible nor desirable.  For example, subsidizing germplasm would hamper development of a private nursery industry.


Table V.3

Institutional capacity vis-a-vis system-specific institutional needs

--A market checklist

 

Land Use

Input Supply Markets

Output Markets

Labor Markets

Capital Markets

Community forest

 

¨

Å

Å

Commercial logging

Å

·

Å

¨

Rubber agroforest (seedlings)

Å

Å

Å

Å

Rubber agroforest

(clones)

·

Å

Å

¨

Rubber monoculture

·

Å

Å

¨

Oil palm monoculture

·

¨

Å

·

Upland rice / bush fallow rotation

 

 

Å

Å

Continuous cassava degrading to Imperata cylindrica

Å

¨

Å

¨

blank = n.a,  Å = no constraint,  ¨ = possible constraint,   · = constraint

 

 

Output markets.   Government restrictions on marketing and international trade are the greatest barriers to development of smallholder timber-based alternatives and also hinder community-based forest management.   Beginning in 1998, government has agreed to begin deregulation of timber exports, to abolish joint-marketing associations (that functioned as cartels), and to end export quotas and numerous other restrictive marketing arrangements.  Although export taxes still are high, private firms now should be free to trade timber as they wish. In Part VII, detailed attention is given to export taxes on timber from agroforestry species, which currently are set at 30%.

                        Previous restrictive marketing practices damaged most timber companies’ marketing capacity by inhibiting development of  marketing networks that could respond to buyers’ needs.  The situation is particularly bad for rattan, since the export ban on raw rattan destroyed overseas markets or induced importers to seek alternate supplies.  There also is concern that old ‘rent seeking’ practices (like the plywood and clove cartels) will re-emerge under new guises.  These risks are  increased by lack of market information on these commodities. The lack of information probably is worst for non-timber forest products, especially those occupying narrow market niches.

                        Oil palm also has been subject to export taxes ( set at 60% through the end of 1998) and at times export bans (Tomich and Mawardi 1995) that seriously depress farmgate prices.   For oil palm and cassava there also are some concerns about development of local markets that can link smallholders with processors.  However, these seem to be emerging.

                        Local markets for natural rubber have functioned for a century or more.  Although there are some imperfections affecting quality – viz., difficulty of assessing dry rubber content -- these markets transmit world price changes to the farmgate rapidly and marketing margins reflect transport and other costs.  Natural rubber markets have been subject to few distortions from national policy, but at times the international buffer stock has depressed prices.

 

Table V.4 

Institutional capacity vis-a-vis system-specific institutional needs

--A checklist for other institutional issues

 

 

Land Use

 

 

Non-Market Information

 

 

Regulatory Issues

 

Local Environ-mental Impact

 

 

Property Rights

 

 

Equity Biases

 

 

Social Cooperation

Community forest

·

·

Å

·

Å

·

Commercial logging

·

·

·

·

·

·

Rubber agroforest

(seedlings)

Å

Å

Å

·

¨

¨

Rubber agroforest (clones)

·

Å

Å

·

¨

¨

Rubber monoculture

·

Å

Å

·

¨

¨

Oil palm monoculture

·

¨

¨

·

·

¨

Upland rice / bush fallow rotation

¨

Å

Å

·

Å

¨

Continuous cassava degrading to Imperata cylindrica

¨

Å

·

¨

Å

¨

blank = n.a.,  Å = no constraint,  ¨ = possible constraint,   · = constraint

 

Labor markets.   Although the complete analysis also included skilled labor requirements, the summary analysis presented here focuses on unskilled labor.  Instead of hiring permanent skilled workers, smallholders may be more likely to develop certain technical skills themselves.  So the relevant barrier is the acquisition of technical information (considered in Table V.4) rather than the market for skilled labor.    Although labor markets in Sumatra fall short of the theoretical ‘ideal’ of economics textbooks, recent empirical studies linked to ASB (Suyanto et al., 1998a and 1998b) indicate that labor markets work reasonably well.   All alternatives get ‘green lights’ regarding unskilled labor markets.  It is worth noting that casual markets for skilled labor (e.g., chainsaw operators) also are emerging. 

 

Capital markets.  Capital market problems are second only to planting material supply as a barrier to adoption resulting from market imperfections.  As already noted, there is no long-term institutional credit available in rural Sumatra.  Household  savings, which financed investments in existing smallholder agroforestry systems like rubber agroforests, are often underestimated.  In rural Indonesia, farmers are able to receive considerable credit from informal sources (relatives, moneylenders).  However, current economic hardships – especially rising food prices -- may be straining these resources.   Capital market imperfections (lack of credit and interest rates well above the social price of capital) may constraint smallholders’  nutrient purchases for cassava production, use of clonal rubber planting material, and certainly are a barrier to smallholder oil palm.   Whether or not smallholder timber extraction is constrained by capital market imperfections depends in part on development of contract markets for chainsaw services and log transport.  

 

Other institutional issues

Non-market information.   Information acquired from research (e.g., new technologies) comes primarily from the Government and existing research facilities are inadequate to meet research needs of the diverse productions conditions of these land uses.  This constraint is particularly severe for alternatives, such as NTFPs and smallholder timber, that are not high priorities for Government, especially compared to  rice, the staple food.  This bottleneck on technical information is a concern for all systems, except rubber agroforests using seedlings where indigenous knowledge is well developed.

 

Regulatory issues.   As discussed above under output markets, policies that restrict access to markets are a particular concern for timber and non-timber forest products and for oil palm.  This is compounded for timber and NTFPs by policies that attempt to restrict access to StateForestLand, even if it has been used by local people for generations (see property rights below).  Thus, especially for timber and NTFPs – but to a lesser extent for oil palm – success in these alternatives requires considerable investment of time (and often money) to ‘work the system’ under current policies.

 

Local environmental issues.   Based on available data, production of most of these systems earns a ‘green light.’  (However, there may be water and air quality concerns arising from the processing of rubber, oil palm, and cassava.)  The exceptions are large-scale logging and continuous cassava cultivation, which are susceptible to erosion.  As we emphasized at the end of Part IV, further work is needed to assess the environmental impacts, including air quality, landscape biodiversity, and watershed functions, of expansion of particular alternatives.

 

Property rights. This is a highly-charged political issue that draws a ‘red light’ for all systems except continuous production of foodcrops on a transmigration site; even here there can be problems of tenure conflicts with indigenous groups that pre-date the settlement.     In most cases, tenure status of lands at the forest margins (and the products derived from those lands) needs to be clarified between the government and local communities.  The damar agroforests in Krui exemplify this situation.  Although developed and managed by smallholders for over a century, this land recently was classed as StateForestLand.  As discussed in Part VII, a breakthrough came in this particular case with the former Minister of Forestry's decision to declare the damar agroforest as a 'Special Use Zone' (Kawasan dengan Tujuan Istimewa; KdTI) recognizing farmers’ rights to manage these agroforests and enjoy the benefits derived from them (See section VII.1).  It is hoped that this approach can develop into a prototype for addressing this serious institutional problem.

 

Equity biases.  The primary concern is that potential economies of scale will lead to concentration of land under commercial logging, for which scale economies have been documented elsewhere, and for oil palm, where scale economies probably are not intrinsic but may result from current development policy. Despite the conventional wisdom, the prevailing faith in economies of scale in production of so-called ‘plantation’ commodities receives little (if any) support from agricultural economics (Hayami; Tomich, Kilby and Johnston).  This is, nevertheless, an empirical question that requires further investigation in the next phase of ASB research. Unlike production, marketing and processing of primary products often are characterized by increasing returns to scale. This is the case for three of the most important land use alternatives--rubber, pulp, and oil palm--in Sumatra. The natural rubber industry in Southeast Asia provides an excellent example of the efficiency with which markets can integrate low-cost production by smallholders with processing in factories that achieve economies of scale; similar marketing arrangements should work for pulp. Oil palm conventionally has been viewed as an estate crop in Southeast Asia (but not in Africa) because of its perishability. Even in this case, however, oil palm production on independent plots as small as one ha began to emerge in Sumatra in the 1980s. Outgrower schemes, contract farming, and other institutional arrangements all can help reduce transactions costs in linking efficient smallholder producers with efficient large-scale processors.

There also is some cause for concern regarding gender bias since recent studies have shown that tree planting induces a shift from matrilineal inheritance to partilineal inheritance for some categories of trees in some areas of Sumatra (Suyanto et al., 1998b). Ongoing studies led by the International Food Policy Research Institute (IFPRI) should add to our understanding of potential gender biases.

 

Social co-operation. The main need for social cooperation concerns the two forest extraction alternatives, community based extraction of NTFPs and logging.  In each case, sustainability of the land use is in doubt if communities cannot manage a system to restrict access to their common property resources.   Indigenous communities with their customary laws intact appear to have this capacity (see discussion of ‘KdTI’ in Part VII); recent settlers may not.   Collective action also is required for fire and pest control, and may be an emerging constraint in many agricultural systems.