Overview of Harvesting Non- Productive Rubber Trees & Charcoal Production in Liberia. 30 January 2012
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1 Overview of Harvesting Non- Productive Rubber Trees & Charcoal Production in Liberia 30 January 2012
2 Scope of Work The assignment required an assessment of the potential adverse impacts of Buchanan Renewables (BR) unproductive rubber tree harvesting activities on domestic charcoal producers and consumers and the development of a set of options for effectively monitoring and mitigating any potential adverse impacts identified. Methodology The methodology incorporates the Sustainable Livelihoods Assessment (SLA) framework, which offers a holistic view of livelihoods and factors impacting on charcoal producers. It was also used in the absence of reliable data on the charcoal industry. This approach evolved from discussions with stakeholders, some of whom expressed concerns over producer livelihoods within the footprint of BR operations, as well as concerns over the charcoal industry as a single unit. In understanding barriers along the value chain, particular attention was given to charcoal producer interactions with BR and other institutions and processes, and the impact these interactions may be having on charcoal production. Figure 1. Sustainable Livelihoods Assessment Framework During the field visit to Liberia, a series of meetings, semi- structured interviews and focus group discussions were held over nine days to gather information on charcoal production. Data obtained from the field was analysed using the SLA framework, outlined if Figure 1. Potential impact of BR operations on charcoal producers is identified through an analysis of their available assets (social, natural, physical, human and financial). Assets, or capital, represented in the framework as a pentagon, have an interlocking relationship within a wider vulnerability context, which analyses shocks (such as conflict, illness, natural disasters), trends (demand growth, seasonality, technological progression) and change brought about by policy, regulation or emergence of new industry. 2
3 External processes, institutions, regulation, policy and companies (including BR), additionally influence charcoal producers. The analysis attempts to tease out the influence of BR within a broader context of understanding of charcoal producers and the charcoal industry. Summarised Findings Data The initial proposal for this study suggested the collection of a range of data including charcoal demand and supply, price, types and quantities of biomass feedstock used in charcoal production and factors causing deforestation. Much of this data was not available and this limitation has impacted on the ability to conduct a thorough impact assessment. Data available for the study included charcoal consumption estimates; indicative estimates of charcoal production and transport costs; growth models for rubber; and information on BR s activities and operations. Impact on Value Chain The costs associated with producing charcoal were estimated based on a small sample size. Based on the findings of the study, the cost of producing a bag of charcoal is now as high as 114 Liberian dollars (LID). This is considerably higher than the previous roadside price of a bag of charcoal before BR commenced operations in 2007, which was estimated to be 70 LID. The roadside price is now 150 LID. Based on a small sample size 1, the average production costs for 100 bags of charcoal is broken down in Table 1 below. Item Cost (LID) Cost (USD) 2 Production Fuel Cooking bags of rice Grass haulage Raking oven Picking coal Tying bags Haulage to collection point Total Production 11, Cost Sale price 15, Net Profit on 100 bags 3, Table 1. Charcoal Production Costs 1 This data is indicative only and requires further research with greater sample numbers. Additionally, seasonal data will require studying production costs over an annual period 2 Based on an exchange rate of 1 USD = 72 LID 3
4 Although some advocacy groups claim that the charcoal price increase is a direct result of BR s activities, the study does not identify any causal link at this stage. Charcoal price increases are more directly linked to increases in production costs (fuel, labour and feeding labourers (rice)). Transport to markets is also significant, accounting for 20% of the price paid by consumers, see Table 2 3. Item Price/Cost (LID) Price/Cost (USD) % Mark-up Production costs Roadside sale price % for producers Transport costs Storage per bag Haulage per bag Price paid by market % for women Price paid by consumer distributers % for market sellers Table 2. Charcoal Price along the Value Chain per Bag of Charcoal In assessing the available data, it is possible to conclude that there is no discernable causal link between BR s activities and current consumer charcoal price. However, the analysis does not provide enough clarity on whether BR s future operations will have any knock- on impact on supply, which may affect future prices. This will require further data on supply volumes from within BR s operational footprint and price fluctuations to monitor impact. BR s greatest impact is at the biomass sourcing stage of production, although this is not strictly an economic impact. There are some indications that BR has had an impact on how charcoal producers seek access to rubber biomass. However, these impacts must be viewed within the wider context of rubber, palm oil and forest industries, where all such industries are arguably creating greater challenges to charcoal producers. Stakeholder Concerns Stakeholders are concerned for charcoal producers because they are a socially vulnerable group who are often landless, displaced and do not have the support structures provided by traditional community structures. Charcoal producers also provide a vital energy source to urban populations. While smallholder farmers experience similar levels of income poverty, farmers generally have more capital to draw upon and it could be argued, are a less vulnerable group. BR s impact on producers manifests in two ways. Firstly, there is greater competition for a once underutilized resource. While competition for, and the value of, rubber wood logs has increased in BR s operational footprint, BR uses only a portion of the rubber tree. BR currently leaves behind approximately 70% of branches and all the root structure which can be collected and utilized by charcoalers and local communities (with permission from the farm owner to 3 Data in Table 2 is also based on a small sample and data is indicative only. Further research and data collection is required for an accurate analysis. This data includes transport from Kakata region to Monrovia and does not take the LID 500 FDA monthly licence into account, which is paid by distributers. 4
5 access his/her land), creating an opportunity for collaboration as opposed to competition. Secondly, BR makes negotiations for the use of rubber trees more challenging for producers within regions closely surrounding its operational footprint. Charcoal producers are less attractive to farmers, many of whom do not want charcoalers on their property for fear of environmental damage; BR can clear unproductive rubber with greater efficiency and efficacy and provide smallholders with additional support for the rejuvenation of their farms through Farmbuilders. While the SLA analysis demonstrates that there is enough rubber biomass for BR s operations and charcoal production, access to full rubber trees is now more challenging for producers in BR s operational footprint. At the same time, BR s operations facilitate access to rubber wood biomass from branches and roots. Stronger engagement with NACUL could help to further mitigate against some of these impacts, where NACUL would provide important institutional support to producers. There is the possibility that as BR s operations grow in the future, producers will be displaced and move to areas outside of BR s footprint. This will require monitoring in the context of the development of the charcoal, forestry, agriculture and energy sectors to ensure no further knock on impact to consumer price or deforestation. Although BR is impacting on the opportunities for producers to access biomass within the company s operational footprint, this impact must be balanced with the positive impacts of BR leaving behind branches and roots for charcoalers and local communities, supporting the rubber industry, creating jobs and strengthening local economies, which could also benefit charcoal producers. The FDA could also play a greater role in freeing up substantial biomass for charcoal production, removing the need to utilise rubber biomass for charcoal in the future. Complexity of Impact The SLA analysis highlights that several institutions impact on the charcoal industry and charcoal producers and that these impacts are likely greater than the impact of BR s operations. Charcoal producers are not a uniform group, some are supplementing farm income; others have no other livelihood options. Some producers are also responsible for environmental damage and illegal activities, which create tensions between the charcoal industry (including those acting with permission of farmers) and the rubber industry. BR is not responsible for the policies of rubber plantations or smallholder farms and many do not want producers on their property due to fears of environmental damage. While BR leaves behind residues for charcoal producers and community members, access to residues requires the permission and cooperation of the plantation owners. NACUL has the potential to play a key supportive role for producers during their interactions with farmers and therefore, institutional support for NACUL would 5
6 mitigate against the main impact of BR s operations. BR is willing to increase engagement with NACUL as long as the institution is formally recognised by the FDA and a wide section of producers within their footprint. The FDA must play a key regulatory role in the charcoal industry and could potentially free up alternative sources of biomass from palm oil plantations, logging concessions and sawmills. The FDA could also support more community forestry initiatives, providing communities with more control over the use of forest resources, including for charcoal production. Other agencies also have an interest in the charcoal industry including the World Bank, USAID and NGOs, all of which can be approached to provide support to NACUL and charcoal producers. In conclusion, while BR is having some impact on charcoal production within its operational footprint, the rubber industry and FDA are having a much greater impact, the former through creating barriers for charcoal production, the latter by not acting enough to regulate the industry and freeing up alternative biomass sources. These relationships are presented in Figure 3. NGOs InternaFonal Agencies (i.e. WB, USAID) Charcoal Industry Forest Development Authority Rubber Industry NACUL Buchanan Renewables Figure 2: Institutions, impact and influence on the charcoal industry 6
7 Summary Impact Flow Charcoal volumes produced in BR footprint Numbers of charcoal producers Farmer- producer relafons reports Volumes of residues uflised Biomass Sourcing Charcoal ProducFon Supply and demand data Charcoal volumes produced in BR footprint Sources of charcoal producfon Fuel price trends Transport cost trends LocaFons of charcoal producfon Transport to Market Sale at market Supply and demand data Market price fluctuafons Charcoal volumes produced in BR footprint Figure 4: Impact Flow Data Requirements Figure 4 outlines a simplified illustration of the charcoal value chain and the types of data required at each stage to meaningfully assess BR s impact on charcoal producers and consumers. Not all of this data will be obtainable by BR and nor should it be the responsibility of BR alone, given the range of factors affecting the charcoal industry both now and in the future. A full understanding of impact requires a strong understanding of the wider charcoal industry and the roles of other actors such as the FDA. This will require a collaborative effort that BR should ensure they are part of, if indeed, the government and external stakeholders take the initiative. BR should focus efforts on the more obvious impacts at the biomass sourcing stage of the charcoal value chain and in particular, impacts on producers within its footprint through stronger engagement with NACUL. Key Conclusions In conclusion, there is no discernable causal link between BR s activities and the current consumer charcoal price. However, the analysis does not provide enough clarity on whether BR s future operations will have any future knock- on impact on supply (which may affect future prices), or indeed, deforestation. As BR s operations increase over the next five years to expected production volumes, there is potential for greater impact on producer livelihoods. Further data on the charcoal and forestry sectors is required to adequately assess this potential impact, which must be considered in the context of the development of Liberia s charcoal, agriculture, forestry, and energy sectors. The analysis of natural capital has highlighted that in the context of this research, the challenge for charcoal producers is not necessarily an availability of natural resources, but rather, accessibility to natural resources. There are indications that BR has had an impact on how charcoal producers seek access to rubber biomass. Negotiations with farmers and plantation owners regarding the use of rubber trees are more challenging in and around BR s operational footprint. 7
8 Although BR is impacting on the opportunities for producers within the company s operational footprint, it is also creating opportunities for charcoalers by leaving behind branches and roots. Stakeholders must also understand BR s impacts within the wider context of BR s operations and the rubber, timber and charcoal industries. BR s activities and support for the rubber industry is providing direct job creation and strengthening the rubber industry and local economies with likely positive impacts on future job creation. Therefore, BR s impact cannot be viewed in isolation, but within this context and it is arguable that the rubber industry creates greater barriers for producers, while the FDA could play a greater role in freeing up substantial sustainable biomass for charcoal production and promoting more efficiency in the industry, reducing the possibility of supply pressure in the future. The illegal activities of some producers also create further barriers for other charcoal producers. Note: Since the publishing of the report and based on its recommendations, Buchanan Renewables has increased its collaboration with NACUL as a means of mitigating any potential impacts it may have on charcoalers within its operational footprint. 8
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