Somvang Phimmavong, Rod Keenan, Shaikham Phoutthavong, Chittana Phomphila, and others

Transcription

1 Team: Somvang Phimmavong, Rod Keenan, Shaikham Phoutthavong, Chittana Phomphila, and others 1

2 Introduction to the Case study Initial Results from Financial Analysis Sensitivity analysis Conclusion & Perspectives

3 Introduction to the Case studies 19 Mar 17 Prepared by Dr Somvang Phimmavong 3

4 Lao Plantation Policy Increase forest cover to 70% in 2020; 65% in 2015 (Forest protection and restoration). 500,000 ha Plantation by 2020 Strategy for 2030 around 1.2 million ha 700,000 ha of new plantations 60% native + 40% industrial trees sp. Promote fibre and other plantation wood based industries Promote quality and value added (finished products)

5 Foreign company owned timber plantations in Lao PDR. Company/Activity Approved Area (ha) Burapha Agroforestry 2,000 Birla Lao Pulp & Plantation 50,000 Oji Lao Plantation Forest Company. 50,000 Oji South Lao Plantation forest Company 24,974 Sun Paper 9, 235 Stora Enso Company. 2,000 TOTAL 115,732

6 For Larger Plantation Foreign company favoured species of fast growing species: rubber, eucalyptus, acacia, agarwood, jatropha and oil palm. For Small holders ha teak plantations in Lao PDR 98% smallholder managed The majority of teak plantation are found in Luang Prabang (15,000 ha and Xayyabouly Provinces (11,000 ha)

7 This paper investigates the economic return of eucalyptus monoculture, teak monoculture, and eucalyptus-crop intercropping (Rice &cassava)

8 3. Smallholder led production of teak in Xayaboury Lao PDR 2. A private company (Burapha Company) community partnership for eucalypt and acacia growing in Vientiane Provinces, Lao PDR; 1. Private company led production from short rotation Eucalyptus plantations in Borikhamxay & Khammouan Province, Lao PDR

9 Lao PDR Case Study 1: Oji Lao Plantation Forest Company In Laos since 2004 Target area 50,000 ha Lao shareholder 15% Japan s Oji Paper Ltd shareholder 85% First plantation established 1999 Area planted to date, ha 24,000 Outgrower Scheme, ha 5000

10 Lao PDR Case Study 2: Burapha Agroforestry Co., Ltd In Laos since 1989 Registered Capital 2,075,000 Total investment to date 23,000,000 Lao shareholder 5% Swedish shareholder 95% First plantation established 1990 (2012) Area planted to date, ha 3,000 Land acquired, ha 7,700 Sawmill and Furniture factory Annual sales 2016, USD 730,000 Start Up of Plywood Mill Jan 2018

11 Lao PDR Case Study 3: Independent farmer s teak plantation

12 Initial Results from Financial Analysis 19 Mar 17 Prepared by Dr Somvang Phimmavong 12

13 Case study 1: Revenues and costs of plantation models Industrial eucalyptus plantation ( Central Laos) Mono cultural eucalyptus plantation in Vientiane Province Source: Shaikham Phoutthavong, 2016 (Draft manuscript) Mono cultural teak plantation in Xayyabouly Province

14 Land expectation value (LEV) for five types of land use systems in Xayyabouly, Vientiane & Bolikhamxay Provinces (interest rate 12%) Source: Own calculation, 2017

15 Sensitivity Analysis 19 Mar 17 Prepared by Dr Somvang Phimmavong 15

16 Sensitivity of LEV of Eucalyptus Plantation to the discount rate at different MAI Eucalyptus Plantation in Vientiane Eucalyptus Rice intercropping in Vientiane Eucalyptus Cassava intercropping in Vientiane Teak Plantataion in Paklay

17 Conclusion 19 Mar 17 Prepared by Dr Somvang Phimmavong 17

18 Conclusion The timber yields and stumpage prices for Eucalyptus were very good for this exercise and these result in high LEVs Eucalyptus plantations alone are not profitable in Central Laos because of high proportion of site preparation costs & low growth yield. The intercropping models can give higher LEVs than the teak & Eucalyptus monocultures 18

19 Conclusion (Cont ) Some barriers for the intercropping are related to the use of labor intensive than the other models and the demand of more technically demanding (e.g., pruning, fertilizing, and disease control.) The cassava intercropping has gradually been given up and replaced by monoculture mainly the drop in cassava prices 19

20 Next Steps Finalise Financial analysis working paper with SC Approval Undertake sensitivity analysis with to timber & crop prices variation Finalize the Financial Analysis paper and submitted to Scientific Journal. 20

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22 Project: Improving policies for forest plantations to balance smallholder, industry and environmental needs in Lao PDR and Vietnam Activity: Plantation policy frameworks Team: Hilary Smith, Nghia Tran, Rod Keenan, Peter Kanowski, Somvang Phimmavong, Vongvilay Vongkhamsao and others

23 Analysis of context, institutional processes and organisational structures for plantation development. Inputs Policy review Literature review Policy interviews Analysis District Provincial National Gov t NGO 3 Industry 2 4 Total District Provincial National Gov t 15 8 NGO 2 Industry 10 Total Laos, 25 Viet Nam, 35 2

24 Outputs Working Papers on context and institutional aspects of plantations Policy briefs Presentations to key policy makers and to Plantation Policy Forum. Context for Activity 1.5: Development and analysis of alternative plantation policies. 3

25 Laos 446,000 ha Viet Nam 3,890,000 ha Teak 11% Other native species 24% Acacia 39% Eucalyptus and Acacia 15% Rubber 61% Other species 10% Agarwood 3% Rubber 23% Bamboo 2% Eucalyptus 5% Pinus 7% 4

26 Policy context Lao PDR Viet Nam Plantation based restoration & development Forestry Strategy ,000 ha plantation <50% wood? Plantation policy priorities Domestic processing Plantation expansion Current policy focus Review of plantation promotion Decree 96 Forest Law Wood supply Market based mechanisms Certification little adopted <1% certified Forestry Development Strategy M ha afforestation >70% wood? Plantation expansion Import substitution Policy coordination SFM, legality & certification Development of VFCS <10% certified 5

27 Laos 446,000 ha Viet Nam 3,890,000 ha Teak 11% Other native species 24% Acacia 39% Eucalyptus and Acacia 15% Rubber 61% Other species 10% Agarwood 3% Rubber 23% Bamboo 2% Eucalyptus 5% Pinus 7% 6

28 Plantation types & investment parameters Parameter Lao PDR Viet Nam Species Teak, Eucalyptus, Acacia, other species Acacia, Eucalyptus, Pinus, other species Type 5+0, 4+1, 1+1+3, 2+3, 1+4, , 4+1, 1+4, 0+5 Ownership Farmer, absentee, Lao company, foreign company, joint venture, government Farmer, Government Products Saw log, poles, rounds (offcuts), energy, veneer, woodchip, NTFP Woodchip, saw log, veneer Rotation Length Long up to 30 years; short 7 years Mostly short 5 7 years Production system Monocrop, agroforestry, mixed species, scattered trees Monocrop, mixed species, scattered trees Labour Self employed, Contracted Self employed, Contracted Drivers Land security, cash, income, profit Land security, cash, income, environment, profit Investment perspective Integrated with livelihood, standalone Integrated with livelihood, standalone Investment timeframe Long, short Short Livelihood perspective Survival, surplus, investment Surplus, investment 7

29 Recommendations Lao PDR Viet Nam Clarify vision for plantations, & align policies to support Continue current reviews of plantation related policy Describe/analyse (current and potential) plantation arrangements Differentiate plantation from natural forest policies Critically review options for plantation expansion in the landscape Policy & agency coordination Review impacts of policies related to woodchip exports Improve relevant inventory and statistics Critically assess legality and certification options Explore options to enhance cooperation between actors Build capacity in policy development/ implementation 8

30 Finalise Working Papers 1 and 2 with SC Approval Policy Framework for Lao PDR Policy Framework for Viet Nam Draft and communicate Info/Policy Brief on Working Papers Undertake analysis of environmental impacts and options Develop analytical framework Undertake policy analysis 9

31 Project: Improving policies for forest plantations to balance smallholder, industry and environmental needs in Lao PDR and Vietnam (Project Number ADP/2014/047) Module: Value chain analysis: Preliminary findings

32 Improving policies for forest plantations to balance smallholder, industry and environmental needs in Lao PDR and Vietnam Plantations Policy Forum Vientiane, Lao PDR March Professor Rod Keenan

33 Desire for better policy design to meet economic development, poverty alleviation, environment protection and landscape restoration goals In Lao PDR, focus on encouraging foreign investment through concessions. Establishment of new plantations has slowed, there is a moratorium on new concessions and future investment is uncertain In Vietnam >50% of plantations are managed by small holders. The GOV seeks to increase plantation land allocation, generate greater benefits to small holders and industry, including supply to an internationally significant furniture industry and improve and demonstrate environmental sustainability 2

34 To develop policy and institutional options for plantations To understand the positive and negative social, economic and environmental impacts associated with different plantation development approaches To create a network for policy learning that builds capacity in plantation sector policy analysis, development and implementation 3

35 3 year project Evaluation of current policies Research on policy options and their likely impact on policy goals Evaluation of the potential impacts of different policy options. Activities are designed to facilitate policy learning across the two countries and with neighbours in the region 4

36 Increased plantation investment Greater involvement in plantations from smallholder growers Greater community benefit from plantation investment Increased wood production and value adding Increased value along the supply chain, especially to smallholders and the associated rural communities Wider participation and reduced conflict in plantation policy development 5

37 Other plantation companies Government Departments Lao PDR NUoL, NAFRI, Stora Enso Vietnam VAFS, VNForests, IPSARD, HUAF Govt Departments Plantation companies NGOs Communities International organisations Australia University of Melbourne, ANU, USQ Sawmillers Furniture cos Consultants Other ACIAR projects 6

38 Assess environmental benefits and impacts of plantations Regional economic assessment Analysis of policies and laws Options for improved plantations policies to meet government objectives Assess household livelihood impacts Analyse industry and farmer returns Value chain analyses 7

39 Principles Co design Co production Co implementation Between research and policy Reports Journal articles Presentations to policy makers Conference presentations Forum for dialogue Policy Recommendations 8

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41 2015 Project planning meeting, Vientiane, 10/ Plantation Policy Forums, Vientiane, 22/3, Hanoi 25/3 Training workshops on stakeholder analysis 21/3 and 24/3 Project agreement signed 4 April

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43 Lao PDR PMO15 ban on wood exports (including plantation wood, temporarily) Review of National Policy on Forest Plantation Promotion to 2025 and Vision to 2030 Vietnam Introduction of woodchip export tax Privatisation of State Forest Companies Active development of national certification 12

44 Present research project outputs Explore synergies with other projects Facilitate dialogue and learning between researchers, private sector, government and NGOs Analyse alternative scenarios for tree plantations in Lao PDR Consider recommendations for policy makers on policy options to achieve the desired vision Identify pathways and opportunities to provide recommendations to policy 13

45 Activity Content Start Finish Day 1. Mon 20 March Project outputs Policy analysis Household surveys Financial analysis Value chain analysis Questions and reaction Break Presentations from related projects Department of Forestry LIWG SUFORD GIZ/CliPAD Stora Enso Review of recommendations Group discussion Refreshments Day 2. Tues 21 March Plantation scenario exercise Lunch

46 1. Role of plantations in increasing forest cover, sustainable forest management and certification 2. Household income and benefits from different plantation development models 3. Wider economic benefits of different plantation development models 4. Environmental benefits and impacts of plantation development 15

47 Key points Simplify regulations and approval processes Develop markets for plantation timber Develop national standards for environmental sustainability of plantations Landscape level planning with inclusive community consultation Improve communication between governments, local people and industry 16

48 Markets and supply chains Market are variable and dynamic: a key issue for small growers Having one big processor means that grower outcomes are tied to that enterprise, eg. Birla. Raw or semi processed exports may give the best prices for tree growers but provide fewer wider economic benefits this trade off is a policy challenge! Smallholders interact with the market only occasionally. They rely on traders to provide linkages to processors and services like harvesting and transport Smallholders and communities Concession arrangements have provided limited benefits to communities: some wages, land rental, village development funds More smallholder grower benefits (eg. in Vietnam) depend on land tenure, technical package, market access, infrastructure, traders Plantations can provide income and mental benefits hope and a feelings of a better environment 17

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50 Decide where you are going! Get everyone in the car and make sure they re happy with the direction Foot off the regulation brake Foot on the market accelerator Ways to discuss and decide when you come to an intersection 19

51 Improving policies for forest plantations to balance smallholder, industry and environmental needs in Lao PDR and Vietnam

52 Environmental impacts and benefits of different plantation development approaches Presented by: Chittana Phompila Research Teams: Himlal Baral, Rodney J Keenan, Yusuf Bahtimi, Somvang Phimmavong, et al. Lao-Vietnam Plantation Policy Project (LVPPP) LVPPP, Faculty of Forestry Science, NUoL

53 Forest area changes In the past 25 years, Total area of native forest is decreasing Area of planted forest is increasing rapidly Pressure to the planted forests to provide multiple ecosystem goods and services is increasing LVPPP, Faculty of Forestry Science, NUoL

54 Environmental Benefits Multiple environmental benefits: biodiversity conservation, climate change mitigation, provision of clean water, reduced dry land salinity and generally reducing pressure on natural forest resources. LVPPP, Faculty of Forestry Science, NUoL

55 Environmental Benefits In contrast, considered as green deserts, while others claim they should not be called forests at all. In Lao PDR, provision of water, biodiversity and climate regulations are key environmental considerations LVPPP, Faculty of Forestry Science, NUoL

56 Ecosystem services from planted forests International users (Global scale) e.g., climate regulation, UV protection National and provincial users (Regional scale) e.g., purification of air flood mitigation Ecosystem services from Planted forests Baral et al., 2016 Eco Serv (in press) Users inside or nearby forests (Local scale) e.g., pollination, seed dispersal LVPPP, Faculty of Forestry Science, NUoL

57 Plantation-Lao Context ~6-8 mill. Ha of degraded land for a mix of production and conservation The Lao FS-2020 aims to increase forest cover, enhance rural livelihoods and environmental protection To achieve this goal, via planting 500,000 ha of high-value or fast-growing trees by smallholders/corporate investors. For both export and domestic wood products. The Lao Government has recently expanded this target to about 1.2 mil. ha by LVPPP, Faculty of Forestry Science, NUoL

58 Constrains Planting of trees by smallholders has been relatively limited, Over 15,000 ha of teak in Luang Prabang and possibly 40,000 ha in the country. Concessions allocated to industrial companies for plantation development have resulted in 74,000 ha, below their collective target of 133,000 ha. Companies have had difficulties accessing land and local people often do not support A moratorium on pending plantation concessions LVPPP, Faculty of Forestry Science, NUoL

59 Financial Benefits Different Investment models, smallholders investing land and labour or corporations investing capital and technology. Financial returns come from employment and sale of wood (processed locally or exported) Economic benefits from local processing through employment and further capital investment and value adding LVPPP, Faculty of Forestry Science, NUoL

60 Financial Benefits Lao Government is considering future directions for timber plantation development types of plantations to promote, for what purpose, The implications of these plantations for values such as forest cover, household livelihoods, regional economy and environmental values. LVPPP, Faculty of Forestry Science, NUoL

61 Experiences of Plantation Models 1. Foreign investor driven, local processing focused 2. Foreign investor driven, export orientation 3. Smallholder driven, local processing focused 4. Smallholder driven, export orientation LVPPP, Faculty of Forestry Science, NUoL

62 Foreign investor driven, local processing focused Approved Area (ha) 50,000 74,974 ~ Five main foreign investors Fast growing species, e.g. eucalyptus, acacia. To support a pulp mill in Lao PDR. 2,000 9,235 2,000 Burapha Birla Lao Pulp Oji Lao Plantation Sun Paper Stora Enso Co. Source: Smith et al., 2017 LVPPP, Faculty of Forestry Science, NUoL

63 Foreign investor driven, local processing focused Studies in Savanakhet and Salavan: Large scale plantation establishment in degraded forest does not result in direct harm to biodiversity. However, plantations established in these degraded, lower biodiversity areas often highly valued as livelihoods source Thus, any land-use change in degraded forest might drive the community to encroach higher biodiversity areas LVPPP, Faculty of Forestry Science, NUoL

64 Foreign investor driven, local processing focused Studies in Savanakhet and Salavan: Compensations to the community in the form of cash, infrastructure, and employment. Large-scale plantations might also impact environment, e.g. agro-chemical use and waterway degradation. LVPPP, Faculty of Forestry Science, NUoL

65 Foreign investor driven, local processing focused Markets will determine species and silviculture requirements Local timber processing facilities currently include small sawmills or furniture production facilities (or a combination of the two). Proposed local processing options include dissolving pulp mills (or bio-refineries ), veneer mills, larger solid wood mills and furniture production facilities. None of these because the companies have not be able to achieve sufficient plantation area. LVPPP, Faculty of Forestry Science, NUoL

66 Foreign investor driven, export orientation models The Lao PDR government promote DFI in agriculture and forestry This increase rubber plantation, by Chinese and Vietnamese investors to fulfill the Chinese rubber market, but the same as eucalyptus plantation investments eg. Oji LFPL Ltd and Stora Enso. LVPPP, Faculty of Forestry Science, NUoL

67 Foreign investor driven, export orientation models DFI or contract farming: landowners are paid to grow trees Larger plantations by companies on state land through concessions Contract farming is mostly found in the northern provinces due to provincial government policy, while land concessions have mostly developed in the southern provinces. LVPPP, Faculty of Forestry Science, NUoL

68 Foreign investor driven, export orientation models Much of the land allocated for concessions is important for community livelihoods, mainly for different forms of agriculture or grazing This land use change might cause ecosystem services reductions, e.g. challenge food security, or reduce biodiversity Export orientation may lead to a stronger focus on forest certification to ensure the sustainability However, rubber markets in China and Vietnam less demand for certified products. Many timber markets in these countries have also not been interested in certification LVPPP, Faculty of Forestry Science, NUoL

69 Smallholder driven, local processing focused Smallholders Plantations include rubber, teak agarwood or yangbong. Independent smallholders account for 30 percent of rubber plantation. They has more flexibility and full-autonomy towards their plantation compared to contract system However, its production or market risks may create a threat to food security. Smallholder teak plantings bring the economic benefits to rural communities. Employment opportunities but not really offered much by plantations LVPPP, Faculty of Forestry Science, NUoL

70 Smallholder driven, local processing focused Successful examples in rubber and eucalypt plantations in Northeast Thailand and southern China bring hope to smallholder growers wish to sell products. Smallholder plantations can bring environmental benefits: increased tree cover, reduced soil erosion and carbon stocks. Their scatters on landscape are unlikely to have extensive hydrological impacts. LVPPP, Faculty of Forestry Science, NUoL

71 Smallholder driven, local processing focused However, due to a limited land area and finances to undertake mechanical site preparation or harvesting, or procure agro-chemicals These are likely to have small negative impacts on the environment. The integration of these plantations into farming systems through agroforestry or other approaches is also likely to result in them having fewer indirect impacts on surrounding native forest areas. LVPPP, Faculty of Forestry Science, NUoL

72 Smallholder driven, local processing focused However, smallholders are less likely to have knowledge codes of practice for plantation production that limit harvesting of trees on steep slopes, or protect streams and river systems. They will not have the financial resources to put in good quality access roads for harvesting, which may lead to environmental degradation due to poorly designed or constructed roads. LVPPP, Faculty of Forestry Science, NUoL

73 Smallholder driven, export orientation This type of development model is strongly related to contracts between farmers and rubber companies. These contracts amount to 24 percent from the total plantation area 281,772 hectares in The environmental impact of this type of model is similar with the independent smallholder model. LVPPP, Faculty of Forestry Science, NUoL

74 Policy options to mitigate impacts on environment (for discussion) 1. Cooperation with the local community is a key element in building sustainable forest plantation and reducing impacts on surrounding areas. Supporting collaboration between companies and local partners 2. Specific a certain proportion of forest area (perhaps 30%) to be conserved or reestablished with natural forest within concessions or large estates. LVPPP, Faculty of Forestry Science, NUoL

75 Policy options to mitigate impacts on environment (for discussion) 3. Encourage investors to consider integrating native species, or using multi-species plantations to enhance ecosystem services. 4. Allocate responsibilities for government in managing environmental impact at the level with the appropriate skills and understanding and capacity to engage with local communities. 5. Assess management and operational activities for impacts on ecosystem services. Develop codes of practice for plantation development and regulations, education and enforcement of requirements for chemical use are required to mitigate the impacts of plantation. LVPPP, Faculty of Forestry Science, NUoL

76 Policy options to mitigate impacts on environment (for discussion) 1. Establish sound environmental regulations and monitoring and enforcement capacity for processing facilities including sawmills, pulp mills or veneer plants. 2. Appropriate codes of practices designed to incorporate smallholder production systems. 3. Establish inclusive landscape-level planning processes to identify where to support smallholder plantation production and arrangements that best support a mix of agricultural production, tree crops and conservation. 4. Invest in education and awareness raising of the potential environmental impacts of tree growing and harvesting. LVPPP, Faculty of Forestry Science, NUoL

77 Improving policies for Tree Plantations in Lao PDR & Vietnam Plantation Policy Forum March 2017 LIWG Presentation

78 Land Information Working Group Network of civil society organizations that have interest in land issues Goal: Promote and maintain strong Community of Practices and regularly exchanges among members on land matters in order to better influence on policy 3 pillars: Connecting, Mobilizing Engaging

79 Our work related to land governance & forest plantations Some activities Promotion of responsible investment practices (Voluntary Commitments for Responsible Agri-business) Participation to Study tours Policy recommendations on the Land Policy and Land Law Land Initiative for Livelihood and Food Security Enhancement: Land rights education Awareness raising on land rights (calendar) Co-chair the LSSWG LUP study, case studies Learning and exchange events

80 Recommendations Target responsible and sustainable investment Food security & nutrition is primary Communities involved from the beginning of the project (FPIC) taking into consideration power imbalance Provide legal protection & strategic support to small-holder producers who remain at the mercy of the market and the investors (enforcement of the contracts, power imbalance ) Recognition of people tenure rights (customary rights, communal land, the right to chose ) Strengthen the knowledge of the communities on their rights to land, their capacities for negotiation Grievance resolution mechanisms

81 FPIC video