Conservation news

In Vietnam, small farmers and timber magnates forge uneasy alliance

Smallholder Ho Da The at work in his FSC-certified acacia plantation in Phu Loc district, Thua Thien Hue. Photo by James Morgan/WWF with permission.

HO CHI MINH CITY – In a bid to address the history of poor management that has ravaged its forests and the quality of its timber, Vietnam is embracing a more sustainable approach to its smallholder-driven forestry sector.

The Vietnamese government has set targeted goals to certify 5,000 square kilometers (1,930 square miles) of the country’s 67,000 square kilometers (25,870 square miles) of plantation forest and to raise its timber export value to at least $8 billion by 2020, according to Vietnam News.

Since the majority of the country’s plantation land is divided into small family plots, focusing on improving smallholders’ ability to produce quality timber could be paramount to meeting these goals.

As a key player in the global timber trade, Vietnam exports manufactured wood products to over 120 countries worldwide. But quality remains low: only 20 percent of the country’s domestic output is of high enough quality to be used for furniture exports, according to the NGO Forest Trends.

Earlier this year, the Ministry of Agriculture and Rural Development (MARD) told Voice of Vietnam that it expects timber exports to reach $7.5 billion by the end of 2017. There is a growing emphasis on sustainability across all state departments, with steady progression in the National Action Program on REDD+ and the recent conclusion of Vietnam’s VPA negotiations for involvement in Europe’s FLEGT trade program. (FLEGT, or Forest Law Enforcement, Governance and Trade, is an EU action plan established in 2003 as a way of promoting trade in legally produced timber and banning illegal wood from entering the EU market.)

This drive for higher-quality timber and better forestry practices is mirrored in Vietnam’s private sector. As international demand for FSC-certified timber grows, the country’s wood processors and exporters are pushing for higher domestic supply, the key to which could lie with Vietnam’s smallholders.

A member of a local FSC-trained harvesting team at work in Phu Loc district, in Vietnam’s Thua Thien-Hue province. Photo by James Morgan/WWF with permission.

Nearly a quarter of Vietnam’s forests are currently managed by smallholders, producing 20 million cubic meters of low-value timber each year, according to Forest Trends. Since most are living hand to mouth and dependent on short harvests, up to 85 percent of their timber is harvested young and is too small in diameter to be used for furniture or quality wood products, according to a Forest Trends report for FLEGT.

Each smallholder plot is typically managed by a family and is about 3 to 4 hectares (7.4 to 9.9 acres) in size.

“Most smallholders have only a few hectares of land,” said Huynh Van Hanh, the vice chairman of the Handicrafts and Wood Association. “At around the five-year mark they cut [their trees] because they have to get money to keep their family alive.”

Small farmers trained for export supply chain

Smallholders currently lack the capacity to farm high-quality wood, but a WWF initiative to train them in FSC-standard timber production could change their situation.

WWF’s Sustainable Bamboo-Acacia-Rattan Project functions as part of its National Strategy on Sustainable Production, addressing targets for conservation and biodiversity protection in Vietnam’s Central Annamites region.

“We … support the smallholders here to get more income [and manage] sustainable acacia plantations to reduce the pressure on the natural forest,” said Nguyen Vu, project manager for the initiative.

First implemented in the central province of Quang Tri and later in Thua Thien-Hue and Quang Nam, the initiative is tailored to each region and developed in close collaboration with local government bodies.

“We work with them to [establish] any parallels between the targets of our project and the objectives of the province,” Vu said. “We base [our targets] on their strategic plan … to ensure sustainability after the project finishes.”

The program begins with a seminar on its economic, environmental and social implications. According to Vu, only a certain proportion of the province’s farmers will opt to register for training at this point, while others prefer to watch their neighbors’ experiences first. Future members are then certified through the smallholders, rather than through WWF.

“The [smallholder] association will provide an application form, guide them through it and do a quick assessment of their land,” Vu said.

Auditors review a smallholder plantation at the preliminary stages of certification during a 2016 FSC audit in Phong Son district, Thua Thien-Hue province. Photo by Loc Vu Trung/WWF with permission.

As per FSC standards, training is based on forest management and chain of custody assessments for each smallholder. “We also run a training needs assessment to get a better understanding of what their training and capacity building needs [are],” said Le Thien Duc, forest program coordinator for WWF. “Then we will see a gap, develop a plan and conduct the training.”

Once the smallholders are ready, they undergo an FSC audit for certification, which lasts for five years. Within this period, they will be audited every year to ensure continued compliance with FSC standards.

A work in progress

In parallel to this, WWF sets up management structures for the smallholders to coordinate. Each province is organized into a clear hierarchy with an executive board at the provincial level, sub-associations at a village level, and individual members. They function as a legally recognized entity and all representatives are elected through a vote among the smallholders, held every five years.

But a key flaw in this system is that local authorities are still heavily involved.

“At this stage our key partner is the Forestry Protection Department,” WWF’s Vu said. “They staff the executive board at the provincial level and farmers run the sub-associations.”

This prevents smallholders from being totally independent and is a short-term solution since the government board members have their own tasks within their department and cannot commit to the project indefinitely.

“We want the smallholders to be more independent,” Vu said. “But at this stage they don’t have the capacity and skill to manage the whole certification group.”

WWF plans to address this once the smallholders have more experience in working as part of the plantation association model.

According to Phuc Xuan To, a policy analyst for Forest Trends, there is also a need for clearer legal guidelines around the model.

An acacia plantation belonging to TTH-FOSDA members in Ben Van village, Phu Loc district, Thua Thien-Hue province. Photo by Loc Vu Trung/WWF with permission.

“Most upland households, they have no idea what [an economic contract] is! They may for example cut down the tree, sell to someone else instead of selling to the company,” he said. “Or the company may run away from the contract if the [market] price of timber drops. Legal framework for regulating that kind of economic transaction is not strong enough yet.”

Contending with short-term income demands

Despite the clear long-term financial benefit of the program, short-term needs are a pressing issue for smallholders who are used to harvesting every few years. (*Editor’s note: Mongabay was unable to speak with any smallholders for this article because of the complex bureaucracy around arranging interviews and the Vietnamese government’s policy to send an official escort with a journalist for potential in-person interviews).

According to WWF, all training costs are covered by WWF sources, but cost of living is still the farmers’ responsibility. Many plantation owners sustain themselves with simple labor, animal husbandry or farming agricultural crops.

Others reserve a small part of their plantation for shorter-term, non-FSC harvests.

“Many households have several forest areas, for example 4 hectares but divided into three different areas,” WWF’s Vu said. “Joining our program is voluntary. We tell them they don’t need to join all of their forest; they can save 1 or 2 hectares for wood chips to cover their short-term income.”

In some instances, farmers may also be able to receive assistance from the smallholder association they belong to.

“We set up a kind of member fee,” said Thien Duc, the forest program coordinator. “Then they use that money for association initiatives and to support members if they come into financial difficulty.”

These membership fees are renegotiated every year. According Vu, there are three main fees that the Quang Tri smallholders are required to pay: an annual fee, a land fee per hectare of plantation, and a harvest fee of 7 percent of the overall difference in price that farmers receive for their FSC-certified wood versus that for non-certified wood.

Since there is such a high level of risk involved in investing in a long-term acacia harvest, particularly in central Vietnam where storms and natural disasters such as landslides and floods are common, most banks do not want to offer loans to small-scale farmers.

“The plantation requires quite a long-term investment [and high risk],” said Forest Trends’ Phuc Quan. “No commercial bank is prepared to provide that kind of loan.”

Instead, WWF tries to encourage the companies that contract smallholders to offer them credit or an advance for their timber. Both Quang Tri and Thua Thien-Hue’s smallholder associations have contracts with Scansia Pacific, a supplier to Swedish furniture giant IKEA. One Forest Trends report found that this company provides loans of up to about $176 per hectare per year for household plantations with at least six years growth, which are repaid when the wood is ready to be bought.

Model set to evolve

The conditions for these loans and smallholder-company collaborations depend completely on negotiations between the two parties.

Acacia is processed into parts for garden furniture at Minh An Co., a factory that processes 100 percent FSC timber and works exclusively with Scansia Pacific, a supplier to IKEA. Photo by James Morgan/WWF with permission.

“We build up the cooperation and relationship between the buyer and the seller,” Vu said. “This way, we shorten the value chain and remove any unneeded middle men. They negotiate without us; we just bring people together.”

Because of the high demand for domestic FSC-certified timber among Vietnam’s processors, smallholders are able to negotiate 15 to 20 percent more for their FSC timber than they can for non-certified wood, according to WWF. Without smallholder arrangements, many manufacturers have to rely on expensive imports, and although the transacted costs of working with small plantations are also high, it is still more viable to buy from smallholders than to rely on imports, according to FSC Vietnam.

One such Vietnamese timber processor, Thanh Hoa Corporation, used to rely on imports before working with small farmers.

“There is more and more competition to buy FSC-certified wood here,” said company chairman Thien. “Before, we imported acacia from Malaysia and the Solomon Islands, but now there is not enough to feed our demand.”

For him, the future of Vietnam’s FSC-standard timber industry lies in merging its now scattered plantation land together.

“Smallholders cannot easily use plantation techniques; with small land you cannot do anything,” he said. “You must have big land and invest the money, the technology, the time, to get more product.”

Although certified smallholders do work as one body, their land remains scattered into household plots. This could change, however, as WWF’s model develops. According to Vu, the project is improved on each time it is reapplied to a new province.

“In Quang Tri we took two-and-a-half to three years to prepare the smallholders for FSC auditing because they were the first in Southeast Asia,” he said. “But last year we applied the program to [Thua Thien-]Hue … and it took one to one-and-a-half [years].”

With this consistent approach to development, the smallholder model seems set to change and grow as it is applied further in Vietnam. The concept of linking small farmers with manufacturers is itself a clear asset to Vietnam’s efforts for sustainability; the question just remains how it will be used.

Banner image: Smallholder Ho Da The at work in his FSC-certified acacia plantation in Phu Loc district, Thua Thien Hue. Photo by James Morgan/WWF with permission.

Zoe Osborne is a freelance journalist based in Vietnam. You can find her at www.zoeosborne.com.

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