Pulp and Plantation Development in South China: A Preliminary Assessment of Livelihood Implications

Transcription

1 Pulp and Plantation Development in South China: A Preliminary Assessment of Livelihood Implications C. Cossalter, M. Beach and C. Barr Center for International Forestry Research (CIFOR) Beijing September 18-19, 2006 Funded by EC Asia Pro Eco Programme and DFID-MFP

2 Coastal South China is the leading region for wood pulp industry development Up to 5.0 m tonnes of pulp capacity is now planned for Hainan, Guangdong, and Guangxi. Can the region provide a fiber base to support this new capacity? APP-Hainan What are implications for local livelihoods?

3 Wood cost in South China (1/2) In coastal South China, flat land suitable for mechanized plantation management is scarce Depending on site, cost of land rent = US$ /ha/yr These sites generally have lower development costs, easier logistics, and higher wood yields Production costs of recovered wood US$13-18/m3 (standing, 1st rotation) US$ per tonne at mill gate For land rental price below RMB 55/mu/yr (approx US$ 100 /ha/yr) C.Cossalter@cgiar.org

4 Wood cost in South China (2/2) Most future plantation development will occur on laborintensive hilly sites Cost of land rent is normally in the range of US$ /ha/yr These sites generally require much more labor and higher fertilizer inputs Production costs of recovered wood US$13-28/m3 (standing, 1st rotation) US$ per tonne at mill gate For average land rental price of RMB 15/mu/yr (approx US$ 27/ha/yr)

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6 Land for new plantations is very limited in Guangdong

7 and in Hainan

8 Land for new plantations is much more available in Guangxi

9 Most plantation expansion is occurring on collective land Guangxi: Asia Pulp and Paper Unit: Hectare Collective Land Provincial forest farm Prefecture and counties land Other land

10 Types of Land Lease Models (1) Contract Arrangements Company pays the farmers land rents based on a flat rate per mu per year Base price of the land is partially determined by the provincial government Length of contracts ranges from years, commonly 30 years Under some contracts, company directly handles all stages of tree planting and site management Under other arrangements, company offers employment and/or land-sharing to community members In some cases, the pulp company works through contractors (or private investors) who lease the land from farmers/collectives

11 Types of Land Lease Models (2) Benefit-Sharing Individual or collective land-owner provides the land Company provides the capital Generally, the company is responsible for tree planting and site management Timber is owned jointly by both land-owners and the company Profits are shared according to a pre-defined ratio (i.e ) Local labor is sometimes, but not always, used Hainan Provincial Government phased out benefitsharing contracts in August 2004 in response to frustrations from participating communities

12 Self-Financed & Managed Plantations by a Pulp and Paper Company Producer: Previous Land use: Plantation type: Tree species: Commercial harvest: Pulp co. on leased community land Agricultural land with marginal productivity for agriculture Flat land; a 4 ha block. Land lease accounts for 66 % of all direct costs prior harvesting Eucalyptus (monoclonal) Expected 135 m 3 (sub) per ha at age 6; MAI 30 m 3 /ha/y The Pulp Company Invested per ha USD (year 0) + USD (year 1) + USD x 3 (year 2, 3 & 4 ) + USD (year 5) for land lease and silviculture; Expect to harvest 142 tonnes at year 6 with a market value, at the mill gate, of 142 x USD 28.6 = USD The Community Will receive: USD per ha (equivalent to RMB 120 per mu) every year between year 0 and 4 USD per ha (equivalent to RMB 70 per mu) at year 5

13 Share Benefit Agreement Between a Pulp & Paper Company and Land Users Producer: Previous Land use: Plantation type: Silviculture: Tree species: Commercial harvest: Community on its own land Low-productivity eucalyptus exserta Flat land; a 113 ha block Low-input silviculture for a low-fertility site: weeding and fertilization were sub-optimal Eucalyptus (monoclonal) 60 m 3 (sub) per ha at age 6; MAI 13 m 3 /ha/y The Pulp Company Invested USD (year 0) + USD 27.4 (year 1) + USD (year 6). Harvested 63 tonnes at year 6 with a market value, at the mill gate, of 63 x USD 28.6 = USD The Community Is to receive USD per ha equivalent to RMB 28 per mu and per year. The Pulp Company is proposing to share the benefit on the base of RMB 100/m 3 (equivalent to USD 12.17/ m 3 )

14 Implications for Livelihoods (1) Overall, pulp industry expansion offers potentially huge livelihood opportunities But, the scale and rapid pace of change also pose significant threats if not managed carefully with attention to well-being of local communities Land lease contracts are generally long-term (commonly 30+ years), and could lock in communities to low land rental prices Contracts often controlled by village leaders/committee In coastal flatlands, there is often competition with other land-uses (i.e. sugar cane)

15 Implications for Livelihoods (2) In hilly areas, land lease for plantation development often provides new income from wasteland or less productive lands. Significance of these areas as common property resources and effects on poorest of the poor have not been assessed Implications of recent tenure reforms (elite capture of benefits?) Farmers often have very limited information about costs, yields, and projected profits to make informed decisions Company-community contracts often have limited specificity, transparency, and accountability Participating farmers often have difficulty knowing whether the companies are calculating costs and profits fairly Channels for legal recourse not always clear

16 Implications for Livelihoods (3) Labor opportunities are often limited for local communities, particularly on company-managed sites and sites managed by contractors In some areas, this has caused tensions In many parts of Guangxi, out-migration makes this less of an issue Delivered cost of wood is highly variable, depending on: Cost of land rental Productivity of soils and other biophysical conditions Species used and appropriateness to site Slope and distance of plantation to road (labor) Distance to mill (transport) Labor costs

17 Implications for Livelihoods (4) Wood paying capacity of pulp mills is limited by overall pulp costs, and mills have a strong incentive to keep wood costs as low as possible High delivered wood cost from some sites suggests that there will be limited profits for some farmers Need to better understand conditions under which growing pulpwood is sufficiently profitable Pulp capacity expansion creates structural pressure to redirect wood chip exports to meet local demand Price differential between local market and exports Tree growers likely to be affected by any effort to limit access to export market