Forest Management Public Summary for:

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1 Forest Management Public Summary for: CEPU, KEBONHARJO AND MANTINGAN FOREST MANAGEMENT DISTRICTS, PERUM PERHUTANI UNIT I, CENTRAL JAVA, INDONESIA Certificate Code: SW-FM/COC-053 Date of Certification: October 15, 1998 Date of Public Summary: January 1, 1999 Updated to Include the Results of the 1999 Annual Audit Reports, the August 2000 Correction Action Request Audit Report, and the 2000 Annual Audit Reports THESE DISTRICTS SUSPENDED as of October 20, 2001 This document was produced according to the guidelines of the Forest Stewardship Council (FSC) and the SmartWood Program. No part of the report should be published separately. Certifier: SmartWood Program 1 c/o Rainforest Alliance 65 Bleecker Street, 6 th Floor New York, New York U.S.A. TEL: (212) FAX: (212) smartwood@ra.org Website: 1 SmartWood is implemented worldwide by the non-profit members of the SmartWood Network. The Network is coordinated by the Rainforest Alliance, an international non-profit conservation organization. The Rainforest Alliance is the legally registered owner of the SmartWood certification mark and label. All uses of the SmartWood label for promotion must be authorized by SmartWood Network headquarters. SmartWood certification applies to forest management practices only and does not represent endorsement of other product qualities (e.g. financial performance to investors, product function, etc.). SmartWood is accredited by the Forest Stewardship Council (FSC) for the certification of natural forest management, tree plantations, and chain of custody. Page 1

2 1. INTRODUCTION The purpose of the SmartWood program is to recognize conscientious land stewardship through independent evaluation and certification of forestry practices. Forestry operations that attain SmartWood certification may use the SmartWood and Forest Stewardship Council (FSC) labels for public marketing and advertising. The FSC is an independent, not-for-profit organization with a diverse membership representing environmental, business and social interests globally. This public summary presents the conclusions of an independent assessment of forest management (FM) and chain of custody (COC) at three forest management districts of Perum Perhutani (the State Forestry Corporation) of Java, Indonesia. Public summaries incorporate assessment conclusions along with the mandatory conditions and voluntary recommendations of certification. The detailed findings and scoring results of the assessment team are not published here; these are found in confidential assessment reports only. SmartWood welcomes public comment regarding the certified operation at any time. The assessments were conducted by a team of specialists representing the SmartWood Program of the Rainforest Alliance, which is an accredited certifier of the Forest Stewardship Council (FSC). The purpose of the assessment was to evaluate to what extent Perum Perhutani's Cepu, Kebonharjo and Mantingan Forest Management Districts (FMDs) are ecologically responsible, economically viable and socially responsible. As discussed in further detail below, the scope of the assessment is restricted to these districts. The findings in relation to these districts may or may not have relevance in terms of other Perum Perhutani districts that may be assessed by SmartWood in the future. A SmartWood forest management assessment is not an attempt to generate primary research data in a short amount of time. Rather, assessments must rely on the research and conclusions of existing long-term social, ecological and silvicultural research in the region, conducted either directly by a candidate forest management operation (e.g. Perum Perhutani) or other independent parties. In Java, there are a large number of national and international non-governmental organizations (NGOs) and independent researchers who have conducted in-depth studies on the dynamics of Perum Perhutani's systems, in some cases for decades. The assessment team built and designed the certification assessment process on the foundation of this body of knowledge, collected the most recent information available from various individuals and institutions through private interviews, and conducted field work to independently analyze PP management systems through analysis of management plans, stratified and random field inspection. This certification does not cover either FM or COC certification for the headquarters level of Perum Perhutani (PP) in Java or Madura, except as PP headquarters activities relate to these three specific districts. As such, there are findings, conditions and recommendations related to PP headquarters (PP/HQ) level activities in supervising management in these districts. Specific conditions for improvements at the PP/HQ level have been identified that must be addressed for the quality of management in the three districts to be maintained or improved, since many of the actions occurring at the district level are determined strictly by PP headquarters policy or other actions. It is expected that future audits and consultations may identify other conditions for improvements at the district, unit or headquarter levels. History in relation to Perum Perhutani and SmartWood Certification (1990-Present) PP has a unique history in terms of SmartWood certification. PP was the first forest management operation certified by SmartWood (indeed the first certification of its kind) in November 1990, prior to the establishment of the FSC in PP s operations were certified by Rainforest Alliance based largely on the innovative social forestry initiatives taking place with support from various institutions such as Ford Foundation and universities based in Indonesia, Europe and the U.S. In 1997, based on concerns raised through SmartWood auditing (in particular in 1995 and 1996), consultations with stakeholders in Indonesia, the FSC, and other stakeholders, PP s certification by SmartWood was suspended. The main reasons for the suspension of PP s certification were as follows: PP performance across different forest management districts was too inconsistent in terms of silvicultural and social performance. Thus, comprehensive certification of all PP forest management districts was not viable. As compared to FSC-approved SmartWood procedures and certification assessment standards, the assessments (site visits and consultations) conducted at the time of initial certification by SmartWood in 1990 were insufficient. SmartWood senior management decided that more comprehensive and detailed site-specific sampling of forest management performance had to occur prior to re-certification by SmartWood. Page 2

3 Given the size of PP s total management area, over two million hectares, a district specific approach to certification would allow SmartWood a more effective/responsive structure for evaluating PP performance. As a result of the above, for the foreseeable future, SmartWood certifications of PP will be district-specific. Finally, it should be noted that the forest management certification milieu in Indonesia has changed quite a bit since Most recently, in collaboration with the FSC, SmartWood is currently exploring the concept of mutual recognition between the Lembaga Ekolabel Indonesia (LEI) and the FSC (see Section, 2.4, below). 2. THE CERTIFICATION ASSESSMENT PROCESS 2.1 Assessment Dates Certification for Cepu, Mantingan and Kebonharjo has been based largely on district-specific certification assessments conducted in The process in 1998 included: Stakeholder consultations June-August, 1998 District-specific field review by assessment team -June 29 - July 12, 1998 Draft report preparation - July 13-16, 1998 Report finalization - July 17-August 15, 1998 SmartWood Headquarters Review - August 16-September 15 Peer Review and Discussions - September 16-October 15 Certification Decision - October 15, 1998 Finalization of Certification Agreement and Contract Signing late October 1998 As described in further detail below, this intensive field work was preceded by numerous multi-person assessment team visits by SmartWood assessors, particularly in 1995, 1996 and Of particular importance was the 1996 Recertification Assessment of Perum Perhutani Management Areas for the Smart Wood Program. This work was crucial in establishing a strong base of information on PP activities in terms of field performance and supporting documentation. 2.2 Assessment Team and Peer Reviewers The following team members participated in the field assessment: Chris Bennett, Forestry and Agroforestry Policy Consultant, Vancouver, B.C., Canada Tri Nugroho, Executive Director, The Indonesian Tropical Institute, Bogor, Indonesia Harry Seldadyo Gunardi, Social Scientist, Center for Economic and Social Studies, Jakarta Roylyn Voss, PhD, Tropical Reforestation Enterprises, Alachua, Florida, USA The peer reviewers for this assessment were: Dr. Nancy Peluso, social scientist, University of California at Berkeley, California. Dr. Mark Poffenberger, social scientist, University of California at Berkeley, California. Dr. Junus Kartasubrata, Indonesian forestry scientist, Plant Resources of Southeast Asia 2.3 Assessment Process Prior to assessment, a public stakeholder consultation document was distributed by , fax and hand delivery in Indonesia. The purpose of this document was to seek input for the certification process on PP activities. Environmental, social welfare and community-based natural resource management organizations were contacted as well as foundations, regional universities, and government agencies. A two day on-site field inspection was conducted in each district. This was preceded by a half-day meeting at the Unit I headquarters (June 28) to lay out an overview of the assessment process for the unit and district officials and collect the Page 3

4 latest data on field operations at the Unit and district levels. Site visit locations within each district were chosen by SmartWood assessors, though PP did make suggestions. The first day in the field was spent meeting with district personnel at district headquarters. This included the district Administrator and managers from all the sections of the management organization. Data was collected and discussed with the staff and the management documents were reviewed (ten-year work plan, five year supplemental work plan, annual work plan, and quarter-year reports). The second day was devoted to field visits in each district. The assessment team members split up and visited field areas associated with their assessment responsibilities. Visits were made to forest locations to examine all phases of the forestry operation from newly established plantations to logging operations. The social scientist also visited a number of villages in each district to discuss stakeholder issues with local people. At each district, approximately 12 Perum Perhutani staff were interviewed and approximately 6 local farmers. Subsequent to the field assessment process, a team member also attended a one day meeting in Yogyakarta that focused on the implications of the reformation initiatives ("reformasi") for PP. This meeting included participants from the nongovernmental organization (NGO) community in Indonesia and other relevant stakeholders. 2.4 Guidelines These assessments were conducted using the SmartWood Generic Guidelines for Assessing Forest Management (April 1998) and the associated "SmartWood Addendum on Tree Plantation Certification and Forest Conservation" (See Appendix 1 and 2 at the end of this report for these guidelines and a brief description of the SmartWood assessment process.) All criteria and guidelines are the SmartWood Generic Guidelines which have been approved by the FSC. SmartWood is currently collaborating with the Lembaga Ekolabel Indonesia (LEI) in the development of the LEI certification system and LEI plantation guidelines. The full implications of this process are not yet clear. According to discussions with LEI, LEI standards will be submitted to the FSC for a process of mutual recognition. If the LEI standards are mutually recognized by the FSC, it will be necessary to ensure that certified PP districts also satisfy LEI standards through the annual auditing process. GENERAL INFORMATION 3.1 Name and Contact Information Source Name: Cepu, Kebonharjo and Mantingan Districts, Unit 1, Perum Perhutani Contact Person: Mr. Ir. Bambang Soebijantoro, Marketing Director Address: Manggala Wanabakti Building Block VII FL. 10 Jl. Jend. Gatot Subroto, Senayan Jakarta Pusat INDONESIA Tel: (62 21) Fax: (62 21) pasar@perhutani.co.id CEPU DISTRICT - Contact Person: Sunarno F.A., Administrator KEBONHARJO DISTRICT - Contact Person: Ir. Djabidhi Martakha, Administrator MANTINGAN DISTRICT - Contact Person: Edi Purnomo, Administrator 3.2 General Background A. Type of operation: Cepu, Kebonharjo and Mantingan FMDs are managed by Perum Perhutani (PP) Unit I Central Java, which is a state-owned forestry corporation under the authority of the Indonesian Ministry of Forestry. Page 4

5 The land managed by Perum Perhutani is state land to which there may be no individual or corporate ownership rights. B. Years in operation: PP was formally established in its present form as a company in 1972 (Government Regulation No.15/1972, revised by Government Regulation No. 36/1986, concerning Perum Perhutani). Commercial teak harvesting and regeneration has been occuring since the 17th century. Detailed data on forest management has been recorded since The first ten year management plan document was developed in 1968 by PP Planning Section in Rembang. Currently, the districts operate under the ten year Forest Sustained Yield Plan (Rencana Pengaturan Kelestarian Hutan, RPKH), January 1991 December C. Date first certified: October 15, 1998 D. Latitude and Longitude of certified districts (contiguous): 7 degrees south, 111 degrees east 3.3 Forest and Management System A. Forest type and land use history: The three districts consist of a mix of naturalized and plantation teak (Tectona grandis) forest and a smaller portion with other mixed hardwood species. As per the 1996 Recertification Assessment of Perum Perhutani Management Areas for the Smart Wood Program, the following narrative applies: "Originally most of Java was covered by forest. For thousands of years, the various ethnic groups of Java have been opening the forests for agriculture, which now supports one of the highest population densities in the world. Areas with long dry seasons were not well suited to permanent cultivation, so large areas of natural teak forests existed until exploitation by Dutch colonial interests began in For the next several hundred years, teak forests were cut for the shipbuilding industry, construction material and local uses without deliberate forest regeneration efforts. At the close of the nineteenth century, reforestation by plantation was begun, and the colonial government organized management institutions, management areas, and regulations (Peluso 1992). Studies of forest history at the end of the colonial period (mid 20th century) indicate that during these times of political upheavals, approximately 500,000 ha of the forested land on Java and Madura was severely degraded. During the Japanese occupation, Dutch colonial law on land ownership remained in effect. However, in an effort to double agricultural production to meet war-time needs, Japanese authorities loaned forest land to residents for dry land rice and non-rice crop farming. Timber exploitation increased to approximately 200 times the previous rate, and the sustained yield plantation system was abandoned during this period. Following independence wars with the Dutch and the birth of the Republic of Indonesia in 1945, the Indonesian government restored the Dutch system of commercial concessions for Java's teak forests, with some modifications to the land use classification system. In 1963, forest management in Central Java (Unit I) and East Java (Unit II) was transferred to a state forestry corporation, Perusahaan Negara Perhutani, whereby each province was managed by an independent Directorate, and coordinated by a central Advisory Board (Peluso 1992). In 1972 this was replaced by the present-day state-owned forestry corporation, Perusahaan Umum Kehutanan Negara (Perum Perhutani, or PP). Plantation management was brought under a single Directorate in Jakarta, with regional management performed at the provincial (Unit) level. In 1977 the production-zoned forests of West Java (Unit III) were brought under PP management as well (Simon 1993). Units are further broken down into forest management districts (FMDs). Page 5

6 B. Size of management unit and area (in hectares) of production forest, conservation, and/or restoration: LAND USE AREA (Hectares) CEPU: KEBONHARJO: MANTINGAN FMD: Teak Production Area 23, , ,199.3 Non-teak plantation area 2, , ,804.6 Awaiting replanting 5, , ,170.1 Non-harvest areas: monument forest, 1, seed orchards, steep slopes, etc.) Protection/Conservation areas , Total hectares 33, , ,535.1 Total area in production (%) 30,634 16,401 16,174 Total area in Conservation(%) 2, , Total standing volume in cubic 3,275,659 1,335,000 1,733,254 meters Annual Allowable Cut for 1998 in cubic meters (% of total volume) 29,640 (0.9%) 17,066 (1.2%) 16,145 (0.9%) Total hectares certified in the three districts: 67,298.8 Certified hectares in production:63,209 (94% of the total area) Certified hectares in conservation: (6% of the total area). C. Regional landscape context: The three districts are upland areas that have traditionally been non-productive for agriculture due to steep topography and poor soil conditions. The teak plantations which constitute the bulk of PP's holdings occur in Java at altitudes of 600 m and upwards (Simon 1993). These hill and mountain areas are surrounded by agricultural land with some of the world's highest rural population densities. The forests have been traditionally used by the local populations to supply fuel, fodder and non-timber products such as medicinal plants and wildlife as well as providing timber under the management of governmental agencies over the last several hundred years. D. Annual allowable cut and/or annual harvest covered by management plan: PP follows an annual cut, based on area, for all its planning. Volumes are calculated from the actual volumes of the standing timber in the blocks scheduled for cutting in a particular year and so may vary from year to year as the blocks are harvested. Blocks meeting age criteria for harvest are further scheduled according to volume of standing timber to meet volume requirements. For volumes harvested per district per year, please see Table 3.5.B. Prior to the start of the plan, planting of teak was sufficient only to reforest harvested blocks. Since 1995, teak planting areas have exceeded harvested areas by about two times. This has occurred as reforestation on harvested areas and rehabilitation of poorly stocked teak sites. Mahogany and other non-teak species have also seen an increase in planting hectarage. E. General description of details and objectives of the management plan/system: Silviculturally, the three districts follow PP management principles which are formulated in Jakarta headquarters and conveyed to the Unit and then the district. Detailed plans are handed down through the chain of command and are followed with little modification. All districts share in this procedure and it is difficult to differentiate districts from another in terms of management, philosophy, operations, staffing, planning, etc. Local variation is more noticeable in terms of social aspects, conservation areas, and geographic differences. Consistence in management is created in the rotation of district administrators every three or four years. The basic components of PP s forest management system are sustained yield rotations of plantation species, community participation in reforestation and forest management, local economic benefits from agricultural land access and non-timber forest products, and environmental protection. These have been worked out over a long period and the results have been carefully documented. The silvicultural system applied by PP for both teak and non-teak forest management is Clear-Felling and Facilitated Regeneration. The aim of yield management is to manage harvests such that total yields are more or less consistent over time. If yields increase, this trend is continued through subsequent harvest. Page 6

7 PP s yield management methodologies are laid out in the company Guidelines for Formulating Forest Preservation Plans (PP Directive No. 378/Kpts/Dir/1992), which combine considerations of the area felled and volume felled each year. Efforts are made to ensure that the volume harvested remains constant from one year to the next. The locations to be felled are selected to be consistent with this annual harvest quota based on an 80 year rotation. Work is now underway to evaluate the economic, environmental and social impact of shorter cutting cycles. PP has developed a wide range of silvicultural techniques to ensure development of good quality stands of teak, as well as of several other species. Management guidelines, issued by the Jakarta offices or the respective Unit and district administrators, address germination (from stumps, seeds, and clippings), tree spacing and species mixing at planting, branch pruning and intensity of thinning during growth, and cutting cycle theories to determine the optimal age for harvest. Field observations by SmartWood suggest that these guidelines are appropriate for field implementation. The tree improvement program at Cepu has shared the techniques of improved seed orchards, Plus Tree seed production and clonal work with domestic and imported stock. However, greater investment in staff and facilities is needed to assure adequate testing and evaluation of the output, with special emphasis on keeping a broad genetic base on the clonal research being done. Plantation re-establishment is done through the tumpang sari system, and new plantations are created through the Social Forestry Program. Tumpang sari was observed in practice on various locations in the FMDs. Conscientious efforts have been made to give greater assistance to the local population by experimenting with differing configurations and spacing to allow greater agricultural productivity while maintaining tree crops. All teak harvest operations are done by hand; from girdling, felling, and bucking to loading on small (7-ton) trucks. Skidding is done by draft animal. All labor is contracted by the day or by volume. Local people are the main pool of labor. 3.4 Environmental and Socioeconomic Context PP has extensive experience managing teak and other plantation species utilizing low-impact, labor intensive technologies. Threats to the sustainability of PP's forests appear to be as much from illegal logging as from arson and sabotage of reforestation areas by agriculturists who prefer to keep the land open for the growing of subsistence and market crops (Poffenberger 1998). For over a century, the tumpang sari or taungya system allowed local farmers opportunities to plant agricultural crops between plantation tree seedlings, normally for three years before the canopy began to close. This system worked effectively to draw in local community members and provide them with agricultural land. As population densities in the forested tracts of Java increased, particularly after World War II, in many of Java's forest districts the area targeted for reforestation was no longer sufficient to meet the needs of the growing population of landless agricultural laborers. In 1984, with support from the Ford Foundation, Perum Perhutani and advisors developed a revised social forestry strategy that allowed farmers to plant fruit trees within plantation areas, enhance NTFP production, and gain access to income from thinning operations. The goal of the approach was to allow farmers to have a long-term stake in the economic future of the plantation and a greater share of benefits. The program also sought to build forest farmer groups (KTH) so that community forest managers could represent themselves in negotiations with PP as a group, rather than as individuals, and have a meaningful say in management planning and decision making. Ideally, success of the strategy would have been indicated by lower rates of forest arson, timber smuggling, and violence between community members and PP staff. To be successful, the strategy required PP to meaningfully delegate authority to communities in planning and managing reforestation efforts (Poffenberger 1998). The SmartWood assessment team felt that beneficial steps had been taken in the three districts, although a completely desireable state of affairs between PP and local communities has not yet been reached. Page 7

8 The general context of forestry activities in Indonesia today can be regarded as quite volatile and unpredictable. The recent economic downturn and the "reformasi" movement have created an extremely challenging socioeconomic atmosphere for PP managers in all FMDs and at Unit and HQ levels. One result has been increased pressure on PP areas in terms of theft, often contracted by outsiders and carried out by locals. Though illegal timber trade networks have been operating for as long as the state claimed ownership of all forest lands in Indonesia (Peluso 1992), times of political destabilization, such as 1998, are characterized by sharp increases in illegal harvesting. PP has embarked on a series of actions to respond to this difficult management context, including increased enforcement in many areas. There has also been an increased intensity of discussions about forest management methods that can provide stronger incentives for local villagers to "invest" themselves in protection of the forest, e.g. revenue or production sharing research, improved input of local people into forest management planning, etc. Though PP/HQ has expressed a clear commitment to a "social forestry approach" whereby local villagers are joint managers, the reality is that each FMD faces different challenges and has had different levels of success. For this reason, SmartWood certification is now based on district-specific analyses. Currently in Java there are discussions of moving towards collaborative management of production forests with communities, with varying degrees of land and forest-tenure reform. Ultimately, the forestlands managed by PP may follow the same path. Whether forestlands are managed by PP in collaboration with communities, or if forest tenure is completely transferred to local communities, SmartWood believes that organized structures for forest management need to be in place. The social forestry initiatives at PP provide a basis which could prove useful in the development of such long-term structures. It is impossible to predict the future in this regard. However, if PP's management in certain districts places a strong emphasis on the implementation of effective collaborative management techniques, this bodes well for both communities and forests. From an environmental perspective, although teak forests are often described as monocultures, they do function as important habitats for various animal species and diverse plant communities that have acclimated to the hundreds of years that the forest has existed and been manipulated. The plantations are referred to by local people as forests, not industrial plantations. Foresters consider them to be both. Because of the length of the growing cycle in teak forest production, disruption caused by harvest amounts to a small proportion of rotation length. Harvest systems do not appear to readily affect the long term sustainability of the flora, fauna, and conservation (soil and water) attributes of the area. The three districts are among the older areas of intensive management in central Java. Kebonharjo has relatively more area dedicated exclusively to environmental conservation (about 1122 ha) due to steeper areas and poor sites for teak than do Cepu or Mantingan FMDs. In addition, Kebonharjo District has had to accommodate oil production facilities in the forest areas with their accompanying risks of forest damage and exploitation by outsiders. Of considerable importance are the human populations that are continuing to grow and increase pressure on the forest through grazing, fuel wood collection, hunting, non-timber forest product collection, and the desire for longerterm use of teak areas for agricultural crops. Theft is a major problem and has left various areas in a nonproductive status. Fires may be set by local people in order to keep lands in open for agriculture rather than for state-owned forests. 3.5 Products Produced A. Species and products: Nearly 100% of the production from the certified districts is teak, which is is either veneer grade or sawn lumber destined for manufacture. Other commercial species include mahogany (Swietenia spp.) and sonokeling (Dalbergia latifolia), each being planted at the rate of about 200 to 300 ha per year over the past 3-4 years. These do not yet contribute to any significant production. B. Actual (and potential) annual volumes produced: Due to harvesting techniques, in particular the girdling of harvest trees two years prior to harvest, the impact of changing management strategies (i.e. harvest volume policies) typically takes two years to have an impact in production volumes. Page 8

9 YEAR Annual Allowable Cut (AAC)of Teak Production per district per year: Cepu: AAC (cubic meters) Cepu: Harvest area (ha) Kebonharjo: AAC (cubic meters) Kebonharjo Harvest area (ha) Mantingan: AAC (cubic meters) , , , , , , , , , , , , , , , est. 22, NA NA 16, est. 18, NA NA 16, est. 18, NA NA NA NA 2002 est 19, NA NA NA NA Note: In addition, 74 ha of mahogany was harvested in 1998 in Mantingan. Mantingan: Harvest area (ha) C. Description of current and future production/processing capacity and plans: PP operates processing facilities at the IPKJ Cepu, IPK Brumbung, and IPKJ Gresik, all of which have been evaluated for chain of custody certification under separate assessments. D. Reference stable sources of product: The three districts sell logs to interested purchasers. Log sales are managed at the district level. 3.6 Chain of Custody Certification A. Products Covered by Chain of Custody Certificate: The three FMDs were issued Forest Management/Chain of Custody certificates valid beginning October 15, The certificate covers only the logs produced in these three districts. B. Approximate Annual Quantity of Products: See harvest projections. C. Chain of Custody Code for all three districts: SW-FM/COC RESULTS, CONCLUSIONS AND RECOMMENDATIONS 4.1 General Discussion of Findings Over the last few years there has been a strong effort by the PP headquarters administration in Jakarta to modify their "top down" management structure and to grant autonomy at the Unit and District (FMD) levels. This is a notable trend and the certification assessment team hopes that the trend will continue. Further discussion about this trend, and the potential implications in terms of the "reformasi" movement in Indonesia are provided below. The trend towards increased community participation, responsibility and benefits through forest management is a fundamental basis for the certification of PP districts. Commitment to FSC Principles and Legal Requirements Strengths: PP/HQ in Jakarta agrees with the FSC principles and has distributed FSC Principles and Criteria in both English and Indonesian languages to all district managers and headquarters administrators. To their credit, PP has prepared an internal publication from translation of the ITTO Guidelines on the Conservation of Biological Diversity in Tropical Production Forests, which was important in the development of the FSC Principles and Criteria. In addition, PP Unit I has published and distributed some key national policy documents such as the Government Act No. 5/1990 on the Biological Diversity and its Ecosystem, and Presidential Decree No. 32/1990 on Protected Areas. Page 9

10 Weaknesses: While the local level workers may not understand all the ramifications of the FSC initiative, i.e., the issue and terminology of biodiversity, the FMDs, Unit I and PP/HQ administrators are committed to increase the understanding of the program and implement reforms in the field. Land Tenure and Use Rights and Responsibilities Strengths: The FMDs have a long history of management of the teak forests and are considered among the bestmanaged districts in PP. The FMD is dedicated to long term management of timber and is making a major effort to bring the production to a sustainable condition in spite of some past over-harvesting and deficiencies in restocking. They have maintained relatively good community relations with the surrounding areas and are continually making efforts to improve. Weaknesses: Although the FMDs have historically done a good job balancing security and access to the forests, they are often caught between these two. In the intensively used Javanese forest landscape, it is difficult to balance conflicting directives related to securing the forest and at the same time allowing additional community access to the resource. This has become more common with the recent economic downturn and political turmoil, which has increased the incidence of timber theft. In the past, forest security was done by uniformed, and sometimes armed, PP forestry officers. More recently it has been done by non-pp law enforcement officials (police or military). Although SmartWood recognizes that accidents happen and tempers can flare in law enforcement situations, it is necessary to devise a publicly-accepted and consistent method of handling and reporting conflict situations. One condition of certification requires that a third party analysis be conducted and report sent to SmartWood regarding all incidents resulting in serious injury or death during a security violation. Depending on the results of the investigations, certification of the FMD may be suspended or withdrawn. Where conflicts occur, continued and concerted efforts are needed to come to a balance between the needs of the local populations and the forest industry without jeopardizing the environment or the economy. This has been the intent of the social forestry activities that PP is currently implementing. It is SmartWood's requirement that PP be proactive in identifying and implementing conflict-preventing strategies before major difficulties occur. Among the NGOs dedicated to studying and improving Perum Perhutani's relationships with local people, recent dialogue has focused on the dynamics of teak theft and state control, but conclusive analyses are lacking on how to best address this controversial problem. It will be especially difficult to find appropriate incentives or disincentives for anyone involved in teak theft networks since they benefit little from social forestry activities, educational outreach, or increased enforcement. Several certification conditions and recommendations address this issue. Forest Management Planning and Monitoring Strengths: Management planning and monitoring is uniform and systematic within all levels of PP operations. Detailed records are kept and with the availability of computers these records are becoming more useful and available for making management decisions based on historical performance and realistic predictions. Weaknesses: In general, the management of teak on Java has been going on for centuries. Management has taken an approach which tends to separate timber production from other functions of the forest. PP has been working to improve the social aspects of its planning for the last ten years. PP has only recently begun to incorporate more aggressive planning for biological conservation for its forest management areas. Additional provisions must be made to incorporate, in planning and monitoring, more local input and more conservation concerns than have been done in the past. Sustained yield is still a major challenge. Although the FMDs are moving forward in finding answers and establishing better control, efforts must be strengthened and results monitored more frequently to ensure that progress is being made. Forest Management Practices Strengths: All three districts focus principally on the management of teak (Tectona grandis). Other species such as mahogany (Swietenia spp), johar (Cassia siamea), sonokeling (Dalbergia latifolia) and sengon (Paraserianthes falcataria) are also used for diversification for timber, fodder and fence borders. Because of the relatively large amount of land in non-teak sites, diversification of species has had special attention during the last five years. For rehabilitation purposes in some protected forest areas, the districts have planted some multi purposes tree species Page 10

11 (MPTS), such as candlenut or kemiri (Aleuretus moluccana), johar (Cassia siamea), jackfruit (Artocarpus heterophyllus) or kenanga (Canangium odoratum). For tree improvement, the districts work in cooperation with the Center for Forest Development (the Teak Center) in Cepu. The center tests seeds and seedlings selected as stock based on phenotypic and genotypic characteristics. Development of biotechnology consists of research and development of molecular genetics and cellular biology as well as tissue culture. In both districts there are tree regeneration/improvement activities such as Seed Production Orchards, assignment of Plus Trees, development of clone banks and clonal orchards. Silvicultural operations are based on a long history of management and a local labor force in need of employment opportunities. Forest management practices are labor intensive to a degree virtually unknown on other commercial operations in Indonesia or elsewhere. During harvests, logs are skidded with draft animals and loaded onto small trucks. Since no mechanized skidding currently occurs, site damage is minimal. Weaknesses: Forest management must take a more holistic approach especially in terms of conservation in high risk areas. Field observations indicated that riparian corridors along permanently flowing streams are not given enough consistent attention. Environmental Impacts and Biological Conservation Strengths: The FMDs have realized the importance of forest protection and watershed concerns. Cepu FMD has 73.4 ha in protection forest in strategic areas. Kebonharjo FMD has 1,122.4 ha designated as non-production areas, with protected (750 ha) of reserve forest areas as well as spring and watershed conservation. The spring at Sumber Semen recreation forest area is used as a clean water supply for people in Rembang Regency, and local people have been planting bamboo species in upper watershed restoration. Efforts are being made to diversify some locations with appropriate species for wildlife as well as species useful to local people. No invasive trees are planted and there are no threatened species in the districts. Protected areas such as swamp forest, watershed, coastal areas, riverside, lakes/dam and water sources are protected under national laws and by PP regulations. Threatened, rare, endemic or endangered species are protected under Indonesian laws, and hunting in Perum Perhutani forest is forbidden for those species. At Mantingan FMD, PP officers are developing deer (Cervus timorensis) farming activites. Weaknesses: The districts do not have sufficient contiguous blocks of conservation areas. Activities supporting conservation of animal species are still limited to inventory of wild animals, control of hunting and research conducted by parties other than Perum Perhutani. Landscape-based ecosystem conservation or wildlife corridor concepts are not yet well known here, though PP is now attempting to address these issues. Baseline data on biodiversity is needed in a landscape context where human use pressures continue to seriously undermine biodiversity. SmartWood recommends creation of database to monitor the presence or absence of locally-appropriate indicator species (flora or fauna that indicate a healthy forest ecosystem). Finally, PP restricts fertilizer and seed use to company-supplied stocks. Fertilizers may be more beneficial for soil structure if organic materials are included in the mixture. SmartWood recommends investigating the dilution of chemical fertilizers with organic materials. Community and Worker Relations Strengths: PP recognizes the dependence of local people on agriculture as well as forest resources. The three districts are fully committed to cooperating with local people through the practice of tumpang sari, allowing farmers to grow food crops in areas undergoing replanting, and social forestry activities, which allow for inter-cropping of non-food crops, such as fuelwood and fodder. Programs are implemented with farmer organizations. PP provides agricultural supplies for cultivating areas between trees. Local people are given certain access to the forest to graze animals, collect firewood and other non-timber forest products. Disputes are handled systematically and assistance is given to the local villages for infrastructure such as roads and bridges. Employees of the FMD enjoy the status of government worker and the contract labor force is generally paid at a higher-thanprevailing wage. Weaknesses: Involvement of the local people in the FMD planning procedures is not consistent, though their involvement is officially required. The FMDs should improve performance in terms of consistent communication with the local people regarding ongoing forest operations. Worker safety is always a concern in forestry operations, Page 11

12 and the FMDs do not consistently enforce use of safety equipment by all field workers. PP has allowed workers to organize, but so far only upper levels of workers have some type of organization for their interests. Transferring forest ownership and management authority to local communities may be beneficial for communities' economic and political status. It may however, result in heavier deforestation if locals remain relatively less powerful than those involved in the illegal teak trade. Illegal harvesters may gain more access to resources and seriously undermine the ecological and economic viability of forest management. If local communities do not have sufficient resources or determination to replant harvested or understocked areas, forest regeneration may become highly problematic, and the landscape would become considerably less forested as agriculture expands into marginally productive lands. Benefits from the Forest and Economic Viability Strengths: The districts are major participants in the economy of the hill and mountain areas of Java. In all three districts, farmers are involved with the tumpang sari program. Villages surrounding the forests of the FMDs benefit from use of the forest to graze livestock, collect firewood, and other forest products. In the production of timber, the FMDs provide export earnings as well as supplies of lumber for a sizable domestic wood industry. Sawdust from mills is frequently used as fuel, and scraps are donated for local crafts production, so efficiency of using teak wood is relatively high. Weaknesses The value of lost revenue due to timber theft is under-reported in FMD and PP financial statements. This gives the impression that the value is less significant, which is not the case. A condition has been identified which requires a more realistic assessment of economic loss to be used to report losses due to theft so that the total magnitude of the problem will be acknowledged, more accurately reflected in PP financial reports, and be dealt with equally at all political levels. There is a legacy of irregular access to harvested teak or other forest products depending on the political connections of the recipient. This situation has created a loss of credibility and public support for PP's practices. Though this situation is not completely under PP's control, SmartWood has required that this situation be addressed in the most proactive form possible. 4.2 Certification Decision: SmartWood has decided to award certification with the following conditions to the three Forest Management Districts. Conditions for Certification of Cepu, Kebonharjo and Mantingan FMDs (Note: Condition numbering corresponds to relevant SmartWood criterion). Conditions are verifiable actions that will form part of the certification agreement that the district under evaluation will be expected to fulfill at the time of the first audit or as required in the condition. Each condition has an explicit time period for completion. Non-compliance with conditions will lead to decertification. Condition 1.1 During year 1, in order to facilitate understanding of the FSC and SmartWood certification at the district, unit and HQ level, PP must conduct orientation workshops for all senior staff of Units and certified Forest Management Districts, which orients staff in terms of FSC and SmartWood assessment and auditing processes, the FSC Principles & Criteria, SmartWood guidelines, and the conditions for certification. In future audits, SmartWood auditors will review the progress of PP/HQ's internal assessment of compliance with FSC Principles and Criteria throughout PP operations. Condition 2.1: Throughout the certification period, at each annual audit, certified FMD managers and/or PP/HQ must report to SmartWood any changes in land tenure, land-use or government policy that gives increased recognition to use rights of local people in PP management areas. Condition 2.3: Throughout the certification period, a third party investigative analysis shall be conducted by a designated consultant regarding all major security violations if anyone is seriously injured on PP lands. Reports on each occurrence must be maintained in the FMD security records and provided to SmartWood auditors during annual or random audits. Follow up reports must be done regarding compensation to injured parties or other legal processes. Page 12

13 Condition 2.5a: By year 2, in coordination with PP/HQ, certified FMDs must design and begin to implement a more proactive educational and enforcement program for control of hunting and trapping by outsiders as well as locals. Condition 2.5b: Throughout the certification period, actual volumes of theft should be recorded and reported internally in order to develop a targeted system for theft control at the district level. Data of theft volume and theft control budgets should be made available for SmartWood annual review. These data should be used by PP to revise their overall approach to illegal harvesting. Condition 2.5c: During year 1 of certification, PP must present a plan for further improving social benefits provided to communities, since these have been insufficient in the past. During the second year of certification, alternatives must be selected and implemented. The plan should analyze alternatives for improving social welfare of forest villagers, particularly the poorer people who have not participated in social forestry programs. The primary goal of the plan should be to improve relations with forest villagers. The second goal of the plan should be to reduce teak theft by providing incentives that reach critical stakeholders to protect the forest. This study may be facilitated by NGOs or University programs. Options to study include: 1) Employing forest patrol teams, with responsibilities rotating among a variety of local institutions; 2) Allocating a percentage of the teak harvest for sale to local community organizations or individuals at a discounted price. Local buyers could then choose to use or sell raw materials or products. 3) Building partnerships with other institutions (governmental or non-governmental) to offer inexpensive credit for the poorest farmers; 4) Other options to be determined in consultation with professionals and other stakeholders. Condition 3.2a: By year 2, PP/HQ and certified FMDs must incorporate into the management plans more details of the formal process for local consultation and public feedback. PP responses to feedback must be documented for certification audits at the district and HQ levels. HQ and FMD level planning should more effectively reflect the results of this consultative process. Condition 3.2b: Throughout the certification period, social forestry program planning must become the common planning approach for management on all certified districts. Condition 3.3: PP must complete the ongoing re-evaluations which compare current cutting cycles with future yield projections. As started in 1995, monitoring is necessary to see that long-term management objectives are met. Adjustments must be done by certified FMD staff each year. Re-evaluation should include a continual process of adjustment, balancing ecological, community and financial concerns. By the end of year 1, certified FMDs must produce an annual report on progress in this regard, which will be reviewed by SmartWood auditors. Condition 3.10a: Throughout the certification period, at each annual audit, SmartWood will convene a broadlyrepresentative oversight committee composed of independent, non-governmental parties. This committee will monitor and discuss PP improvements and problems in relation to forest management policies and practices at Headquarters, Units, and certified FMDs. The committee shall also provide input to SmartWood regarding PP compliance to the conditions of certification and FSC Principles and Criteria. This committee should include representatives from each of the following groups: forestry professionals, agroforestry/social forestry professionals, environmental NGOs, social welfare NGOs, and local people's organizations. Though the group will not have decision-making or auditing authority over PP, it shall report to PP and SmartWood any publicly noted violation of the certification conditions or national laws. Public feedback of PP management should be directed to the organizations that participate in the committee as well as to SmartWood and PP. Condition 3.10b: By year 3, PP must implement an improved system for monitoring forest management implementation as well as socio-economic conditions that are considered in forest management decision-making. An improved reporting system for such monitoring will assist certification auditors as well as PP decision-makers. Condition 3.11: By the end of year 3, Certified FMDs must better define how management planning will respond to changing socioeconomic conditions, from local scale to national to international scale, while staying within the Page 13