Forests for People

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Community-based enterprises are typically insufficiently competitive

as there are major shortcomings in their human, financial and physical

assets. Even in the leading countries only a few CFEs have developed

into medium-sized industrial enterprises, and their capacity to get a fair

price for their products and to invest in value-added activities is low.

Apart fromniche markets, buyers generally tend to prefer suppliers who

can provide reliable deliveries in sufficient quantities. As CFEs typically

lack commercial cooperation and other networks, they cannot enjoy

the economic benefits of scale and specialization, keeping their profit-

ability low. This is coupled with isolation from the market, limitations

in market access due to increasing requirements for verifiable legal and

sustainable product supply and general ignorance of market character-

istics and pricing potential. Trade intermediaries tend to unduly exploit

such situations to reap windfall profits, resulting in an inappropriate

sharing of benefits for CFEs. Support programmes have often failed due

to problems with providing the required economic feasibility assess-

ments for community forest enterprises.

Another set of constraints to the development of forest communities,

smallholders and their enterprises can be their limited access to capital

and appropriate technologies. Most rural funding schemes have been

designed for agriculture and only a few countries have targeted financing

schemes for community forestry. This is particularly problematic in fairly

common situations in which the forest areas transferred to community

management are degraded and require significant investment in restora-

tion. Existing credit schemes are not tailored to the need of community

forests for relatively long pay-back periods which are not compatible with

the conditions of regular commercial credit. Financing institutions have

little understanding of the business potential of community forest opera-

tions. Forest growing stock could be used as collateral for financing of

CFEs but this is rarely possible due to lack of relevant regulation and

engagement of the banking sector.

ITTO’s contribution

Since 1992, ITTO has accumulated a significant body of knowl-

edge and experience in the development of community forestry in

its producing member countries. Prior to establish-

ment of the CFME programme, a total of 85 projects

were implemented with an investment of about US$40

million. These projects have had a significant impact

on country and community capacity as revealed by

thematic evaluations.

It has been clearly demonstrated

that community forest management and enterprises can

lead to sustained improvements in livelihoods but they

have to be economically feasible, which is one of the

key issues of the CFME Programme.

ITTO has implemented successful community

forestry projects in Bolivia, Ghana, Panama, Peru,

the Philippines and Togo, among others. In addition,

many ITTO projects in the field of reforestation and

forest management have included a focus on creating

economic and other benefits for the local communities

through their participation in project interventions.

ITTO recently completed a series of forest tenure

conferences in the three tropical regions, raising the

profile of this important topic globally. And the CFME

programme (which commenced operations in 2010) is

already funding important country activities in Ghana,

Indonesia, Papua New Guinea and Thailand.

A considerable body of this work has been under-

taken in partnership with other multilateral and

bilateral organizations such as the Food and Agriculture

Organization’s Forestry Department and the Center

for People and Forests (RECOFTC) and in consulta-

tion with the Rights and Resources Initiative (RRI),

the Global Alliance of Community Forestry (GACF)

and the Forest Peoples Program (FPP) of the World

Rainforest Movement. ITTO will continue to work

with its global partners to ensure that communities and

local people achieve their potential to contribute to the

sustainable management of the forests they depend on.

A community forest nursery in Peru

Dayak villagers with harvested forest incense, providing a source of

income to the East Kalimantan economy, Indonesia

Image: Ruben Guevara, ITTO

Image: Gary B. Wetterberg