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TCP/LAO/3002(A) Marketing System Development for Non-Wood Forest Products Effective Policy, Law and Regulations for Sustainable Development and Marketing of Non-wood Forest Products Report on the Second Consultancy Mission By C.Chandrasekharan International Expert in Forest Policy and Legislation Food and Agriculture Organisation of the United Nations Vientiane, October 2005 i Table of Contents ABBREVIATIONS AND ACRONYMS STATISTICAL PROFILE OF LAO PDR EXECUTIVE SUMMARY 1. viii xii xiv INTRODUCTION........................................................................................................... 1 The Project .............................................................................................................................. 1 Scope of a Marketing System ........................................................................................... 2 The Consultancy on Forest Policy and Legislation .......................................................... 2 TOR for the Consultancy .............................................................................................. 2 Concepts linked to marketing system for NWFPS ............................................................... 3 Markets ............................................................................................................................. 4 Marketing .......................................................................................................................... 5 Marketing Factors ......................................................................................................... 6 Marketing Stages .......................................................................................................... 6 Market Players and Channels........................................................................................ 6 Role of Middlemen ................................................................................................... 7 Marketing Channels .................................................................................................. 7 Marketing of Non-Wood Forest Products..................................................................... 8 Market Information ....................................................................................................... 9 Market Infrastructure .................................................................................................... 9 Institutional Support...................................................................................................... 9 Trade ............................................................................................................................... 10 Impact of Globalization .............................................................................................. 10 Competitiveness ...................................................................................................... 10 Sustainability and Sustainable Development .................................................................. 11 Sustainable Forest Management ................................................................................. 12 Production and Productivity ........................................................................................... 13 Products....................................................................................................................... 13 Produces ...................................................................................................................... 14 Product Classification ................................................................................................. 14 Productivity ................................................................................................................. 14 Value Addition ............................................................................................................ 14 Rent and Rent Capture .................................................................................................... 15 Policy and Policy Instruments ........................................................................................ 15 Policy .......................................................................................................................... 15 Policy Instruments ...................................................................................................... 16 Rules ....................................................................................................................... 18 Regulations ............................................................................................................. 19 Supplimentary Instructions ..................................................................................... 20 Other Important Legal Instruments ......................................................................... 20 Governance ................................................................................................................. 21 i 2. Forestry Situation in Lao PDR .................................................................................... 22 The Country Profile .............................................................................................................. 22 Macro-Economic Situation ............................................................................................. 23 Important Economic Sectors ....................................................................................... 24 Agriculture .............................................................................................................. 24 Forestry ................................................................................................................... 25 Industry ................................................................................................................... 25 Tourism ................................................................................................................... 25 The Financial Sector ............................................................................................... 25 Income and Trade Balance.......................................................................................... 26 Political Division and Decentralization .......................................................................... 26 Forestry Situation ................................................................................................................. 28 Extent and Condition of Forest Resource ....................................................................... 28 Forest types ................................................................................................................. 28 Forest Plantations ........................................................................................................ 28 Plantations for Future .............................................................................................. 29 Dynamics of Forest Resource Change ............................................................................ 30 Deforestation ............................................................................................................... 30 Forest Degradation ...................................................................................................... 31 Forest Management ......................................................................................................... 31 Management Objectives.............................................................................................. 32 Management Activities ............................................................................................... 32 Stabilisation of Shifting Cultivation ....................................................................... 32 Crop Production ...................................................................................................... 33 Village Forest Management .................................................................................... 33 Community Forestry ............................................................................................... 34 Forest Production .................................................................................................... 34 Management Plans and Planning ................................................................................ 35 Forest Resource Utilization............................................................................................. 36 Forest Production ........................................................................................................ 36 Forest-Based Processing and Value Addition............................................................. 37 Forest Products Trade ................................................................................................. 39 Protection and Conservation ........................................................................................... 40 Protected Area Management ....................................................................................... 40 Institutions and Instruments ............................................................................................ 42 Sectoral Objectives ..................................................................................................... 42 Legal Framework for Forestry Sector ......................................................................... 43 The Forestry Law of 1996....................................................................................... 44 Implementing Rules and Regulations ..................................................................... 46 Weaknesses in the Legal Framework ..................................................................... 47 Public Forest Administration ...................................................................................... 49 Plans and Programmes ................................................................................................ 51 Forest Revenue............................................................................................................ 53 Support Services ......................................................................................................... 53 Human Resource Development .............................................................................. 53 Forestry Research.................................................................................................... 54 ii Eorestry Extension .................................................................................................. 55 Marketing Support .................................................................................................. 58 Lao National Chamber of Commerce and Industry ............................................ 58 Co-Ordination of Forestry activities ........................................................................... 59 Sectoral Constraints ........................................................................................................ 59 Benefits not backed by Investments ........................................................................... 61 International Assistance Projects .................................................................................... 62 Forestry Situation in the Project Area ............................................................................. 63 Luang Prabang Province ............................................................................................. 63 Xien Ngeun District ................................................................................................ 64 Long Leuad Village ............................................................................................ 64 3. NON-WOOD FOREST PRODUCTS IN LAO PDR ................................................. 66 Global Situation .................................................................................................................... 66 Need for a Clear Definition............................................................................................. 68 Product Boundary ....................................................................................................... 68 Source Boundary......................................................................................................... 68 NWFPs and Agro-Forestry ......................................................................................... 69 Need for an Appropriate Classification .......................................................................... 69 Role of Domestication .................................................................................................... 70 Complexity of Technology ............................................................................................. 71 Harvesting ................................................................................................................... 71 Post-Harvest Treatments ............................................................................................. 72 Value-Added Processing ................................................................................................. 73 Markets and Marketing ................................................................................................... 74 NWFPs of LAO PDR ............................................................................................................. 75 Goals of the NWFP Sub-Sector ..................................................................................... 76 Production and Trade ...................................................................................................... 78 Processing ................................................................................................................... 80 Trade in NWFPs ......................................................................................................... 81 The Quotas .............................................................................................................. 83 NWFP Resource Management ........................................................................................ 87 Management Technology............................................................................................ 88 Investment ....................................................................................................................... 89 External Assistance Projects ....................................................................................... 90 Constraints for NWFP Development .............................................................................. 90 Future of NWFPs in Lao PDR ........................................................................................ 92 NWFPs Under Forestry Strategy, 2020 ...................................................................... 93 Situation and Role of NWFPs in Project Sites................................................................ 94 A System for NWFP Development and Marketing ........................................................... 95 4. POLICY AND INSTITUIONAL ARRANGEMENTS FOR NWFPs ..................... 97 Situation in Lao PDR ............................................................................................................ 97 Need for a Formal Policy ................................................................................................ 97 Strategic Objectives for NWFPS ................................................................................ 98 Hierarchy of Legal Instruments ...................................................................................... 98 iii Situation of Legal Frame Work for NWFPs ............................................................... 98 Tyranny of Quotas .................................................................................................... 100 Customary Use Rights .............................................................................................. 102 Organizational System .................................................................................................. 102 Weaknesses of PFA .................................................................................................. 104 Inadequacy of Research Efforts ................................................................................ 104 Lack of Extension Facilities...................................................................................... 105 Trade and Investment ................................................................................................ 105 Innovative cases of NWFP development in Lao PDR ..................................................... 106 Lao Farmers products and batieng product ................................................................... 106 Self Help Groups........................................................................................................... 107 Independent Authority to Manage the Plantation Sector .............................................. 107 Analysis of NWFP Situation in Selected Countries. ........................................................ 107 Bangladesh .................................................................................................................... 109 Homestead Forests .................................................................................................... 109 Importance of Non-wood Forest Products ................................................................ 109 Constraints for NWFP Development .................................................................... 110 Role of NGOs ........................................................................................................... 111 India .............................................................................................................................. 113 The Forest Policy ...................................................................................................... 113 Joint Forest Management ...................................................................................... 113 NTFPS in India .......................................................................................................... 114 Constraints for Development of NWFPs .............................................................. 115 Institutional Models .................................................................................................. 115 Amul Model .......................................................................................................... 115 Madhya Pradesh State Minor Forest Produce (Trade and Development) Cooperative Federation.............................................................................................. 118 The Girijan Co-operative Corporation of Andhra Pradesh State .......................... 120 The Tribal Co-operative Marketing Development Federation of India Ltd. ........ 120 Co-operatives of Different Kinds.......................................................................... 121 The Agro-forestry Federation of Maharashtra State. ........................................ 121 Self Help Groups............................................................................................... 121 Commodity Boards ............................................................................................... 122 Forest Development Corporations ........................................................................ 122 Public-Private Partnerships ................................................................................... 123 Company – Farmer Partnerships ........................................................................... 124 Other Cases ........................................................................................................... 125 Public Limited Company .................................................................................. 126 e-Choupal Initiative .......................................................................................... 126 Others individual efforts ................................................................................... 126 Indonesia ....................................................................................................................... 127 Policy Guidelines ...................................................................................................... 127 Important Non-Wood Forest Products ...................................................................... 128 Institutional Models .................................................................................................. 129 NWFP Concessions .............................................................................................. 129 NWFP Activities of Perum Perhutani ................................................................... 129 iv Production of Kayuputih Oil ............................................................................. 130 Silk Production.................................................................................................. 130 Bee-keeping ...................................................................................................... 130 Production of Gum Rosin and Turpentine ........................................................ 130 Nucleus Rattan Furniture Factory ......................................................................... 131 Manufacture of Traditional Medicines ................................................................. 131 Republic of Korea ........................................................................................................ 132 Village Forestry Associations under Saemaul Undung ............................................ 132 Malaysia ........................................................................................................................ 133 Policy Aspects ........................................................................................................... 134 Important Non-wood Forest Products ....................................................................... 135 Nepal ............................................................................................................................. 135 Some Policy Aspects................................................................................................. 135 Important Non-Wood Forest Products ...................................................................... 135 The Herbs Production and Processing Company.................................................. 137 Papua New Guinea ........................................................................................................ 137 Some Policy aspects .................................................................................................. 138 Important Non-wood Forest Products ....................................................................... 139 Philippines..................................................................................................................... 139 Some Policy Aspects................................................................................................. 140 Community-Based Forest Management ................................................................... 140 Important Non-Wood Forest Products ...................................................................... 142 Self Help Groups....................................................................................................... 142 Vietnam ......................................................................................................................... 142 Policy Changes.......................................................................................................... 143 Important Non-wood Forest Products ....................................................................... 145 Some Project Models ................................................................................................ 146 SNV – North Central Vietnam Income and Employment Generation Project ..... 146 Extension and Training Support for Forestry and Agriculture in the Uplands. .... 147 Other Experiences ......................................................................................................... 148 The Shea Project of Uganda ..................................................................................... 148 Integrated Agro-forestry in China............................................................................. 148 The Lessons .................................................................................................................. 148 Resource-related ....................................................................................................... 149 Production-related ..................................................................................................... 150 Processing-related ..................................................................................................... 151 Market –related ......................................................................................................... 151 Related to Socio-Economics ..................................................................................... 152 Environment–related ................................................................................................. 154 Science and Technology-related ............................................................................... 154 Information–related................................................................................................... 155 Policy-realted ............................................................................................................ 155 Related to Plans and Programmes............................................................................. 156 Related to Institutions ............................................................................................... 157 To round up…. .......................................................................................................... 159 An Indicative Framework for a Policy on NWFPS in LAO PDR .................................... 159 v Components of Policy Framework ............................................................................... 159 Organisations for Policy Implementation ..................................................................... 161 Governance Agencies ............................................................................................... 161 Development/Enterprise Agencies............................................................................ 161 Innovative Arrangements .......................................................................................... 162 The Enterprise Concept................................................................................................. 163 A Federated Co-operative Enterprise System for NWFPS ....................................... 163 Development of a Formal Policy .................................................................................. 166 5. RECOMMENDATIONS AND CONCLUSIONS .................................................... 169 Recommendations ............................................................................................................... 169 Conclusions .......................................................................................................................... 171 BIBLIOGRAPY .................................................................................................................. 172 vi Appendices 1 2 3 4 Terms of Reference: International Expert in Forest Policy and Legislation List of Some of the Better Known Species in Lao PDR Providing Non-wood Forest Products Extract of Section 2.5 NTFP Management from the Report on Legal Framework of Forestry Sector, for Forestry Strategy 2020 in Lao PDR, by Todd Sigaty (2003) An Annotated Outline for a National Policy for Non-Wood Forest Products for Lao PDR 178 180 182 186 List of Tables Table 1 Table 2 Table 3 Table 4 Table 5 Land Allocation for Different Uses in Lao PDR, 1995-2002 Production and Consumption of Wood Products, 2003 Wood Products Trade, 2003 NWFP Exports, 1995-96 to 2004-2005 Some details of NWFP Quota in Lao PDR for 2004-2005 24 37 39 82 84 List of Figures Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Organizational Chart of the Ministry of Agriculture and Forestry Organisational Structure of the National Agriculture and Forestry Research Institute The organization structure of the National Agriculture and Forestry Extension Service Linkages Involved in Quota Administration Diagrammatic Illustration of a System for NWFP Development and Marketing Amul Model Replication Graphical Representation of Organisational Re-structuring for NWFP/Forestry Development 52 55 57 85 96 117 168 List of Boxes Box 1 Grameen Bank of Bangladesh 112 vii ABBREVIATIONS AND ACRONYMS ADB ANSAB APB ASEAN BFL BRAC BTC C&I CBD CCD CIFOR CIRDAP CITES CPC CRMF cum DAFO DCU DENR DoF EU FAO FAOR FCCC FDC FDI FINNIDA FMU FRA FRC FS 2020 FYP GCMMF GDP GIS GMS GoL GTZ Ha/ha Asian Development Bank Asia Network for Sustainable Agriculture and Bio-resources Agriculture Promotion Bank Association of South East Asian Nations Basic Forestry Law (of Indonesia) Banglades Rural Advancement Committee Belgian Technical Cooperation Criteria and Indicators Convention on Biological Diversity Convention to Combat Desertification Centre for International Forestry Research Centre on Integrated Rural Development for Asia and the Pacific Convention on International Trade in Endangered Species (Provisional) Central Product Classification Community Resource Management Framework Cubic Meter District Agriculture and Forestry Office District MFP Co-operative Union ( of MP-MFP-CFL) Department of Environment and Natural Resources (of Philippines) Department of Forestry European Union Food and Agriculture Organisation of the United Nations FAO Representative Framework Convention on Climate Change Forest Development Corporation Foreign Direct Investment Finnish International Development Agency Forest Management Unit Forest Resource Assessment Forest Research Centre Forestry Strategy 2020 Five Year Plan Gujarat Co-operative Milk Marketing Federation Gross Domestic Product Geographic Information System Greater Mekong Sub-Region Government of Lao PDR German Agency for Technical Co-operation Hectare viii HDI HRD HS ICIMOD ICRAF IDRC INBAR IRR ISIC IT ITC ITC-PSPU IUCN JFM JICA km Lao PDR LDC LNCCI LGU m MA&D MAF MFP MIH MIS MNCs MOA MP MP-MFP-CFL NAFES NAFRI NBCA NC NGO NMIS NPC NPD NTFP Human Development Index Human Resources Development Harmonised Commodity Description and Coding System International Centre for Integrated Mountain Development International Centre for Research in Agro-forestry International Development Research Centre, Canada International Network for Bamboo and Rattan Implementing Rules and Regulations International Standard Industrial Classification Information Technolgoy International Trade Centre Paperboard and Speciality Paper Unit of ITC (Indian Tobacoo Company), India. International Union for Conservation of Nature Joint Forest Management Japanese International Co-operation Agency Kilometer Lao Peoples Democratic Republic Least Developed Country Lao National Chamber of Commerce and Industry Local Government Unit Meter(s) Market Analysis and Development Ministry of Agriculture and Forestry Minor Forest Produce Ministry of Industry and Handicrafts Market Information System/Management Information System Multi-National Corporations Memorandum of Association Madhya Predesh State of India The Madhya Pradesh Minor Forest Produce Co-operative Federation Limited, India. National Agriculture and Forestry Extension Services National Agriculture and Forestry Research Institute National Bio-diversity Conservation Area National Consultant Non-Governmental Organisation NWFP Marketing Information Service National Project Co-ordinator National Project Director Non-Timber Forest Product ix NWFP ODA PA PAFO PCCS PFA PFO PM PNG PO PPP PRA R&D SFD SFM SHG SIDA SITC SME SNA SNV SOE STC SUFORD t TCP TDRs TFAP TOR TP TRIFED UN UNCED UNDP UNESCO UNFF US $ USA US AID VAT VFA Non-wood Forest Product Official Development Assistance Protected Area Provincial Agriculture and Forestry Office Primary Collectors Co-operative Society (of MP-MFP-CFL) Public Forest Administration (also Production Forest Area) Provincial Forestry Office Prime Minister Papua New Guinea People’s Organisation Purchasing Power Party Participatory Rural Appraisal Research and Development State Forest Department Sustainable Forest Management Self Help Group Swedish International Development Agency Standard International Trade Classification Small and Medium Enterprise System of National Accounts Netherlands Development Organisation State-Owned Enterprises Swiss Association of Technical Co-operation Sustainable Forestry and Rural Development Project Tonnes (metric tones) Technical Cooperation Programme of FAO Tradable Development Rights Tropical Forestry Action Plan Terms of Reference Timber Permit The Tribal Co-operative Marketing Development Federation (of India) United Nations United Nations Conference on Environment and Development United Nations Development Programme United Nations Educational, Scientific and Cultural Organisation United Nations Forum on Forests United States Dollar United States of America United States Agency for International Development Value Added Tax Village Forestry Association (of Republic of Korea) x VFI VMG WB WCED WHO WRI WTO WWF Village Focus International Village Marketing Group World Bank World Commission on Enviroment and Development World Health Organisation World Resources Institute World Trade Organisation World Wide Fund of Nature and Nature Conservation xi STATISTICAL PROFILE OF LAO PDR Area 23.1 million hectares Terrain Mainly (about 70%) mountainous (except Mekong river flood plain) Rainfall 1,500 – 3,000mm/yr Main river systems Mekong river Political division Number of provinces 18 Number of districts 142 Number of villages 10,912 Number of households 849,330 Number of agricultural holdings 662,000 Length of roads 14,000 Km (of which 80% are not asphalted ) Land use (as percentage of total) Area under permanent crops 10% Area under forest cover 54% Fallow/degraded/not under use/other uses 37% Forest area Area under forest over (2000) 12.6 million ha Natural forest area (2000) 12.5 million ha Area of forest plantation (2000) 54,000 ha Volume of forest biomass (2000) 391 million tonnes Annual forest cover change 1990 to 2000 – 53,000 ha/year (annual loss 0.4%) Forest area per capita 2.4 Ha Forest area by vegetational types Evergreen 30% Moist deciduous 50% Dry deciduous 15% Others 5% According to one report, total arable area in Lao PDR is only 877,000 ha (3.8% of the total land area) xii Socio-economic information Population 2003 5.7 million Population density 25 per/sq.km Rural population 2003 79.3% Population dependent on agriculture 80% to 85% Average GDP per capita, 2003 (estimated) US$ 361 GDP share of forestry (estimated) Various estimates ranging from 8% to 10%. Forest products consumption Total wood production (2003) 6.3 million cum Total wood consumption (2003) 6.2 million cum Industrial wood production (2003) 0.4 million cum Fuelwood consumption (2003) 5.9 million cum Fuelwood as percentage of total energy use (estimate) 80% Per capita fuel wood consumption 1.04 cum Note on sources of statistical information No reliability is attributed to the statistical details given in this report. Sources are various: published and unpublished reports, meeting documents and information provided during interviews; details provided differ considerably. Since none of the sources consulted had comprehensive information covering all aspects, it was necessary to use information provided by different sources in the report, depending on the context, for purposes of illustration and to indicate rough orders of magnitude. No attempt could be made to reconcile the differences in statistical information for want of time. Such reconciling was also not essential for purposes of this Consultancy. The sources have been listed under Bibliography. xiii EXECUTIVE SUMMARY Defined as “goods of biological origin other than wood, as well as services derived from forests and allied land uses”, NWFPs cover a wide range: food, fodder, fibre, fertilizer, flosses, organic construction materials, non-wood lingo-cellulosic products, natural dyes, tannin, gums, resins, latex and other exudates, waxes, essential oils, spices, edible oils, medicinal extracts, phyto-chemicals, aroma-chemicals, decorative articles, cocoons, cage birds, culinary herbs, horns, bones, pelts, plumes, hide and skin as well as services such as eco-tourism and environemtnal conservation. The emphasis of this report, however, is on material goods. There are certain characteristics, which set the NWFPs apart from wood products. As a broad group NWFPs exhibit a high degree of heterogeneity in their source, production systems and utilization. It is multi-dimentsional (i.e., social, economic, environmental, cultural and ethical) in scope. These produces are derived from a variety of sources – plants (palms, grasses, herbs, shrubs, trees) animals (insects, birds, reptiles, large animals) and microorganisms. Different parts of a plant or animal often provide different products, simultaneously and/or at different times. Also, similar products can be obtained from different sources. NWFPs are used at subsistence, local use and commercial levels. NWFPs exhibit considerable variation in their use. Some of them are consumed immediately on harvest (e.g. fruits, fodder, wild meat) or after primary processing (e.g. edible nuts, bamboo products). Some others go through a series of downstream processing or refinements to meet the market specifications and standards, adding value to the product all along the way. These produces vary in their habitat and management requirements. Under natural conditions, NWFPs can be managed along with wood in an intergrated manner, thus increasing overall productivity. NWFPs can be sustainably harvested without causing damage to the eco-system, and they are, therefore, environmentally friendly. Unlike wood, NWFPs can be harvested continuously or more frequently. Many NWFPs are available from timber species; harvesting of wood and non-wood products, in such cases, is not mutually exclusive and needs to be carried out with great care. Being capable of providing all the basic needs of local communities, these represent a complete resource base. xiv Some 80% of the population in the developing world depend on NWFPs for their primary health and nutritional need. As raw materials, NWFPs support village level artisanry, craft activity and processing enterprises such as those of rattan and bamboo furniture, essential oils, resins and pharmaceuticals. Some NWFPs are internationally traded and used in flood flavourings, perfumes, medicines and confectionary. A large number of NWFP appear as ingredients of varying proportion in a large number of items of our everyday use such as medicines, perfumes, sun tan lotions, nail polish, mouth wash, hair conditioners, cosmetic products, detergents, shaving creams, tooth pastes, stress relievers, cheese, chewing gum, soft drinks, peanut butter, breakfast cereals, golf balls, paints, corrosion inhibitors, insecticides, fungicides and a host of others. With extensive deforestation and forest degradation resulting from various causes, and the government-owned forests being kept out-of-bounds and reserved for conservation purposes, in several countries, the natural sources of NWFPs have shrunken, and growing of domesticated and genetically improved NWFPs in private farm lands is becoming more common. Because of their special attributes and environmental friendliness, sustainability of forestry in the future will depend more and more on NWFPs. However, very little attention has been given to NWFPs so far, in spite of their importance and potentials. This, in one way or another is related to the characteristics of the produces. NWFPs as a group are extremely heterogeneous, requiring a mix of different skills, technology and research support in their management. Resources of these produces are often dispersed and vary considerably in their concentration. Knowledge on NWFPs to a significant extent is local, empirical and often linked to local culture. This makes information gathering or exchange more difficult. Overlapping of their uses and sources adds to the complexity of managing and utilizing the NWPFs, causing added difficulty for their development. NWFPs have, however, re-emerged in many countries from relative obscurity, and their development has gained some momentum due to: increasing awareness about their importance, the new market preference for natural products, concern about the conservation of forests and their bio-diversity, realization that many NWFPs give more income for forest owners compared to income from timber species, and their potential as sources of new food and medicines. It has, therefore, become necessary especially in respect of commercially important NWFPs to have a marketing-orientation rather than simple production - orientation. Simple production-orientation have the effect of creating increased supply, thus reducing price and profitability. A successful marketing-orientation for NWFPs on the other hand, should increase demand and value, thus allowing more of the products to enter the market, without reducing the overall price of the concerned commodities. An enhancing aspect of the market-orientation is value-addition through down-stream processing. xv Generally, however, establishment of sophisticated, down stream, value-added processing in most developing countries is constrained by lack of capital, technology and skills, market, and research support. Thus, in most developing country situations, harvested produces reach the market, local or foreign, either after some intermediate processing in the form of cleaning and grading or after primary (or early stage) processing. The success of NWFPs in the market would depend on certain imperatives: productivity and sustainable production; appropriate cultural practices; waste-free harvesting; value-added processing and consistency in product quality. Commercialization of NWFPs is more than a strategy for poverty alleviation; it is a strategy for growth. Market, as an institution, is expected to ensure economic efficiency, providing necessary means to maximize the value of products and to distribute the benefits equitably among the participants. National economy and income are influenced by the market. A market is considered as fair and moving towards perfection, if its functioning is characterized by full knowledge and free competition, and not vitiated by monopolistic/oligopolistic tendencies. Marketing of NWFPs is one of the most challenging undertaking because of their number, versatility, dissimilarities, end-use variations, and resource richness. Markets range from simple, local level village fairs to most sophisticated industrial and niche markets in numerous end-use sectors. Some of the attributes of NWFP production such as: small size, product diversity, seasonal production, labour intensive technology and accessibility to lowincome group of the community have both advantages and disadvantages. While these are advantageous on the production side, some of them are disadvantageous on the marketing side. To circumvent the disadvantages, market-oriented production of NWFPs can be taken up as co-operative ventures. Globalisation of commerce (further supported by greenconsumerism) has opened up new opportunities for NWFPs. The response form the producers/collectors to market demand for NWFPs will be influenced by: how the returns from it compare with other income-generating activities, the capability of the producers, and the availability of primary inputs. Access to credit facilities and markets will influence the type of activities, species and technology adopted. A rational and effective policy on NWFPs, supported by adequate instruments (i.e. laws, rules and regulations) and organizational support for enforcement of policy objectives and implementation of policy measures, is vital in this connection. Policies represent the principles that govern actions, directed towards given ends. A forest policy has been defined as principles regarding the use of a nation’s forests, which it is felt, will contribute to the achievement of some of the national objectives. On the same basis, a NWFP policy can be defined as principles regarding the use of a nation’s NWFP resources, which it is felt will contribute to the achievement of some of the national objectives. In spite of the new favourable trend, however, the NWFP sub-sector has not attracted sufficient (and in some cases, any) policy attention. As a result of this neglect, the sector is variously constrained, and these constraints lead to further neglect. These constraints fall under various categories – technological, physical, socio-economic, environmental, xvi infrastructural and institutional. These constrains have been elaborated in the report. And, globalization has brought to the forefront the need for developing competitiveness in the arena of NWFPs. Therefore, the importance of having a specific policy for NWFPs (with supportive instrumentation), taking into consideration the special attributes and potentials of this subsector of the forestry sector, needs to be further re-emphasised. NWFPs are a major natural resource of Lao PDR. These include: food products, spices, condiments, food additives, sweetners, gums, oils, oleoresins, fibers, plaiting materials, medicinal and aromatic plants, animals and animal products and others. It has been claimed that the estimated value of NWFPs produced in Lao PDR, annually, is worth US$216 million, of which US$184 million accounts for local use. Some of the more important NWFPs of Lao PDR are: cardamom, cinnamomum and cassia, Sa paper from paper mulberry, yang oil, dammar, agar, bamboo, rattan, benzoin, galanga, annato, lac, ginseng and medicinal plants. Harvest/production of NWFPs is based on annual quota granted (allocated) to registered companies by the Government. In this regard, the provincial and district level traders play a prominent role. The system, in practice, is not based on any scientific assessment of sustainable harvest, and has several deficiencies. Value-added processing of NWFPs in Lao PDR, for final consumption and/or for export, is limited. Wherever processing has been attempted, the units, in most cases, are small and inadequate in technology and efficiency. Performance of the NWFP sector, overall, is poor. The reasons for this poor performance are several: falling availability of raw material sources, inadequate technology and skills, lack of product and process research, existence of illegal activities, lack of adequate knowledge and information, institutional weaknesses etc. Most important of all constraints is the lack of a clear policy for NWFPs and weaknesses of (and gaps in) the laws, rules and regulations. There is need to strengthen all relevant aspects. In spite of official statements in favour of NWFPs and their important socioeconomic contributions, very little attention has so far been given to NWFPs in Lao PDR. They are not being managed scientifically. Current situation in Lao PDR is exemplified by: a lack of basic information; inadequate resource development, management and conservation; lack of adequate integration of management of wood and non-wood products; deforestation and land degradation; wasteful and inappropriate harvesting practices; lack of incentives for introducing and implementing sound technology; hurdles in the development of organized people’s participation and entrepreneurship; unscientific and uncontrolled system of NWFP collection and the influence of exploitative middlemen; lack of market orientation, supply fluctuations and inadequate adherence to quality; lack of competitiveness in the international market due to weaknesses in the chain of NWFP management and utilization; inadequate processing and storage technology and facilities; inadequate research, lack of appropriate xvii extension facilities, and lack of facilities for skill development and training in areas related to NWFPs; lack of adequate investment, an appropriate policy and strategy for development of NWFPs; and inadequacy of institutional support. There are, however, few bright spots of institutional innovations (e.g. establishment of village level marketing groups) in support of NWFP development, mostly initiated and facilitated through donor-assisted projects. In order to learn lessons on market-oriented NWFP development, interesting experiences of several countries of Asia were examined, along with some of the interesting initiatives of Lao PDR. The lessons have been discussed in the text, categorizing them as: resource-related, production-related, market-related, related to socio-economics, environment-related, science and technology-related, information-related, policy-related, related to plans and programmes, and related to institutions. These lesson have clearly indicated the need for several strategic measures to remove the constraints and to develop NWFPs as a competitive and efficient sector. Some of the important lessons are given below: It is vital to assess and enhance: information and knowledge; market and trade situation; sustainability of NWFP enterprises. Treat market as the prime factor; achieve and maintain competitiveness. Institutional and policy support is equally important as technology and management. Policies should create conditions conducive for development of NWFPs. Unpredictable price movement affects the NWFPs. Processing and value addition, if competently undertaken, can support market stability. R&D and human resource development are important for supporting NWFP development. Also: start with products already in the market; organize for strength in numbers; diversify products for economic advantages; introduce domestication and commercialization; improve harvesting techniques; control grades and quality; capture reasonable share of value-addition. Bestow scientific efforts to continuously enhance technology and reduce bureaucratic control. Access to funds/credit and extension services is very important. It rationally carried out, NWFP development can reduce or remove conflicts of interest in forest utilization. Without economic viability (return on investment), NWFPs cannot achieve its other objectives (of household welfare and poverty alleviation). xviii In a nutshell, for NWFPs to succeed at the market, it should meet the criteria of efficiency/effectiveness, productivity, value-addition, competitiveness and market satisfaction, in the new environment of global sourcing of merchandise and e-commerce. Collaboration at Greater Mekong Sub-Regional or ASEAN Regional levels will help considerably. In the actual implementation of policy-directed, market-oriented NWFP development, several activities will have to be taken-up simultaneously and executed by stages. Therefore, for effectiveness, the various strategic proposals for market-oriented NWFP development are to be addressed in its immediate, short, medium and long-term aspects. Corresponding to the time periods mentioned, four development phases/stages are proposed, total duration of which may be kept flexible, but is not be exceed 20 years – (i) initiation/design phase (immediate term); (ii) transition/testing phase (short term); (iii) consolidation phase (medium term) and (iv) towards ‘auto-expansion’ or steady-state phase (long term). Length of the phases may, as appropriate, vary between 3 to 6 years. The strategic actions to be taken are related to: land capability classification; agronomic improvement; human resource development and capacity building; research support to develop competitiveness; primary and down stream processing and value addition; subsidiary income earning opportunities; producer partnerships/co-operatives for increased bargaining strength; access to information and extension; funding and financing; marketing facilitation; and institutional reforms. Each of these areas/aspects are to be progressively enhanced by phases/stages. A solid scientific base and constant upgradation of technology through continued research, supported by innovative ideas and approaches, are essential to ensure sustainability of NWFPs as a dynamic system. To conclude: subsistence-orientation of NWFPs is no longer an important policy goal. New emphasis is on market-orientation. Strategic measures to establish, expand and manage sustainable market-oriented NWFP development involve several inter-related steps: resource creation and enhancement; research and technology development; efficiency and capacity building; increasing productivity; quality improvement; harvest/post-harvest technology; value-added processing; improved market access; accessing updated information on prices and market changes; critical mass for effective operation; access to funds; and dynamic/strategic planning. Failure to adopt market-orientation (and market requirements of quality and quantity), will result in failure of NWFP enterprises, inspite of their other favourable attributes such as environmental friendliness. Productivity, efficiency and competitiveness through constant innovation are the key to ensure success, resulting in an outward spiral of growth. xix xx xxi 1. INTRODUCTION THE PROJECT The FAO-TCP project: Marketing System Development for Non-Wood Forest Products in Lao PDR was taken up for implementation in August/September, 2004. The development objective of the project is to assist the Government of Lao PDR in reducing rural poverty and promoting sustainable use and management of forest resources through the development of appropriate marketing system for the non-wood forest products. Two related specific objectives are to: establish a model for the development of marketing system(s) for priority NWFPs, adopting appropriate approaches; and promote income generation in rural areas through sustainable management of NWFP resources and strengthening of NWFP marketing. The focus of the project is on improving marketing systems and market information services, as well as to address issues such as obsolete legislation and regulations and the limited country capacity to support NWFP producers, traders and industries. The Forest Research Center of the National Agriculture and Forestry Research Institute (NAFRI) under the Ministry of Agriculture and Forestry is the implementing agency of the project. Field level activities of the project, with particular emphasis on demonstration and capacity building at local level have been taken up in 6 villages in 3 different districts falling in 3 different provinces. Laung Prabang Province – Xien Ngeun District – (1) Ban Long Leuad, (2) Ban Houay Hia Savannakhet Province – Phin District – (1) Ban Nathong, (2) Ban Alouay Kham Noy Champasak Province – Pathoumpone District – (1) Ban Lak 29 (2) Ban Heua Kheua. The propose is to develop marketing systems for priority NWFPs, through a market analysis and development approach, which will enable local communities to identify potential products and develop markets that will promote income generation through strengthening the capacity of stakeholders for marketing and sustainable management of NWFP resources. 1 The two specific objectives mentioned above are designed to be achieved through six outputs involving 24 different activities. An important output is “model approach for NWFP market development”, which aims to build a model for NWFP market development supported by: improved market information service and legislation (including legislated policy), and also to develop an indicative agenda for promoting a sustainable marketing system for NWFPs in Lao PDR. Activities in this regard include a critical review of the NWFP–related rules, regulations and their enforcement, and provision of advisory guidance to the GoL to update/enhance them. Scope of a Marketing System As the title of the project indicates, the focus is on developing a marketing system for NWFPs. The key word is system. A system refers to a methodical and comprehensive arrangement (or organization) of things, which work together or are strongly linked, employing principles of system science. A system involves a series (or number) of inputs, which passes through a series (or number) of processes (procedures) in systematic stages and steps, resulting in the production of a series (or number) of outputs. The stages and steps are influenced (regulated) by institutional arrangements and instruments (e.g. policy, laws, rules) in force. A perfect system would represent an optimum situation. The Consultancy on Forest Policy and Legislation The project activity (consultancy) relating to forest policy and legislation represents the wider and long term dimension of the project, since the scope of the (national) forest policy and legislation goes beyond the filed sites (six villages) covered and the envisaged life of the project. It covers all NWFPs found in Lao PDR and not only those prioritised in the project sites. It takes national concerns and long-term scenarios into consideration. It further considers the global nature of the markets, the influence of globalization of trade (and of WTO), and the need for being competitive in the national and international market. It highlights the role of trade in development including the need for increasing rent capture, value addition and retained value. TOR for the Consultancy The Terms of Reference of the international expert/consultant in forest policy and legislation is essentially of advisory nature, i.e. to provide technical inputs and guidance to the work of the National Working Group on NWFP-related policy and regulations and to the work of the National Forest Policy and Legislation Expert. This part of the work has been completed during the first mission (see Mission Report, Chandrasekharan, 2005). 2 The task specified in the TOR for the second (present) mission (at home station of the consultant) is to conduct a study on the existing forestry policy and regulations on NWFP production and marketing, including quota systems and import taxes in the sub region. As suggested by the project authorities, the scope of the study has been expanded to include an evaluation of the NWFP sub sector in Lao PDR and to indicate how the lessons learned from elsewhere can be made use of, to improve the NWFP sub-sector. The present report is the overcome of the second mission of the International Expert/Consultant in forest policy and legislation. The report has been divided into five sections. In addition to the background and purpose of the project, the introductory section deals with the important concepts related to sustainable management and marketing of NWFPs. The second section provides a brief analysis of the overall forestry situation in Lao PDR. The third section discusses, specifically, the situation and potential of NWFP management and marketing in Lao PDR. This is followed by a section dealing with policy, policy instructions, and institutions, to support NWFP development. The fifth and final section contains recommendations and conclusions. [A disclaimer : The statistical information available are of low reliability and lack consistency. Statistics on forest area, stocking, forest production, trade etc vary depending on their sources. There is multiplicity of statistics, often arbitrary, related to the various aspects of forestry. Inconsistent numbers can be found in different reports, and often in different sections of the same report. For example, there are nine different sources for trade statistics in Lao PDR and they often provide different figures. Therefore, the quantitative figures/numbers appearing in this report do not claim any accuracy and serve only to present broad orders of magnitude and to make comparisons. Also, aggregation of information, analysis, conclusions and suggestions contained here, therefore, have used some amount of subjective judgment]. CONCEPTS LINKED TO MARKETING SYSTEM FOR NWFPS Some aspects of the conceptual foundation of “Marketing Systems Development for NWFPs” are dealt with in this introductory section, to serve as a background for the forthcoming discussions. These cover: market, marketing and associated aspects; sustainability and sustainable management of forest resources; production/products and productivity; value addition; rent and rent capture; institutions, institutional instruments and governance. There are, often, no “single sentence definitions” for these concepts, and may require some amount of explanations and elaborations. 3 Markets Markets are potential outlets for products. A market is created whenever potential sellers of a good or service are brought (directly or indirectly) into contact with potential buyers and a means of exchange (in form of money or barter) is available. Exchange agreements are reached through the operations of the laws of supply and demand. A market is normally qualified by location, size, nature of products, end uses, nature of transactions, customer needs and preferences etc. It is thus possible to distinguish, inter alia, the following. Based on nature of transaction Based on the nature of product Based on location : : : Based on size/turn over Based on the quantity and nature of distribution Based on commodities/services involved : : Based on who utilizes the products : Based on nature of market control : Others based on identifying characteristics : : Monitised, barter (exchange) Market for goods; market for services Local, national, international (export/import); rural and urban Large, medium, small Bulk, wholesale, retail General, specialized (fish, fruits, cattle, meat, spices, live birds, furniture, garments), green, niche Consumer marketing; industrial marketing Free, monopoly, monopsony, oligopoly, oligospony Illegal market (smugglers market, thieves market); promotional market (exhibitions) etc. The process of exchange in its simplest form takes place in village markets, between the producers and final consumers (e.g. fodder, food items, other items of basic needs). Products entering national markets are durable; semi processed or processed goods of comparatively higher value (e.g. nuts, spices, factory products). To enter the international market it is necessary to know the markets outside the country of production, and to develop capability to supply large orders of specified quality within tight time schedules. The concept of market as a ‘place’ is getting blurred with the emergence of emarkets, mail order markets, market for services, carbon market etc. Markets result from production. Managing the source of raw-material production, harvesting of produces, processing and marketing of products for intermediate and or final consumption form a compct set of activities. These activities are closely related, having intimate forward and backward linkages. Growth of market is linked to economic growth and vice versa. 4 Markets are influenced by a number of factors: quality and technical standards, health and safety regulations, certification requirements, tariff and non-tariff regulations etc. A basic requirement of market includes sustainable and regular product availability in stable and consistent quality (and in adequate quantity). Market for some products which are not linked to essential daily needs or are not required to feed a processing industry may not be affected much by irregular supply, but their contribution to development will however be limited. Market as an institution is expected to ensure economic efficiency, providing a means to maximize the value of products, and distribute the value equitably among the participants. National economy and income are influenced by the market. A market is considered as fair and moving towards perfection if its functioning is characterized by full knowledge and free competition, and not vitiated by monopolistic/oligopolistic tendencies. Supply and demand are influenced by product price and vice versa. Interaction of these vital market forces (supply, price and demand) finds equilibrium in a competitive market, defined by their elasticities. While certain essential items of every day use (food, fuel) are price inelastic (or of low elasticity), most products exhibit considerable elasticities. In general, price signals the level of scarcity, unless distorted by market deficiencies and flaws. There are non-market/non-priced values as well as unpaid (social) costs linked to the natural produces, which adds to the social benefit and social cost of the natural resource base (e.g. forest resource). Policies relating to these externalities (e.g. restrictions on forest product harvesting for bio-diversity conservation) can affect product supply and hence their price and demand. Probably the most important factor in sustaining a market is the price level of products, which should be remunerative to the producer and equitable to the consumer. However, this aspect is often distorted in respect of rural based production (agriculture and forestry), where the traders and middlemen seem to have a tendency to maximize windfall as long as the opportunity lasts. There is need to improve the economic benefits and incentives to the (local) producers, if supply are to be stabilized in terms of quantity and quality. Weaknesses of the market reflect the deficiencies of the marketing system. Market failure is a situation in which economic efficiency has not been achieved through imperfections in the market mechanism. One aspect which gives strong indication about the need and the possibility of rationalizing and improving efficiency of the marketing system is the vast difference between the price paid to the local producer and that obtained for it in the market. Marketing Marketing is the process of creating markets through several related steps. It is the two way process by which the space between the producer and the consumer is bridged, such that produce flows from rural areas (production centers) to market centers; money and 5 market information flows back. While market is an entity, marketing is a service – in fact, a series of services involved in producing and moving a product in demand from the point of production to the point of consumption. Marketing is thus, basically a technology which is at the disposal of producers to: identify market opportunities in the form of market needs and wants; analyze competition; develop appropriate approaches to reach the markets and to make profit. It uses a mixture of basic factors by which the needs and wants of the customers in the markets are satisfied. Marketing operates in an environment, which is created by economic, social, cultural, technological, political, regulatory, legal, institutional and infrastructural factors, all of which are beyond the control of the individual marketing operators. It involves the functions of product planning, production, promotion, sales, distribution and product research – to meet the needs and interests of the consumers and to ensure reasonable earnings form the service. Marketing Factors The factors by which markets are characterized (including their strengths and weaknesses) are several, and, among others, they include: size, scope and nature; products and prices; marketing approaches and practices; stages in marketing; marketing players; market channels and chain; infrastructure; market information and research; institutions and institutional support; and impacts of globalization. Marketing Stages Often, the marketing activities/approaches are taken up by stages and sub-stages, defined by the specificity of activities and the players and places involved. Marketing stages of most forestry and agricultural products can be divided into: harvesting, marketing of raw produce, processing and marketing of semi-processed or finished industrial or consumer products. In respect of sophisticated products such as medicines, beauty care products, aroma chemicals, food additives, flavours and nuts for candy bars etc., the first two stages (until the raw produce reaches the industrial user) are mainly carried out in the producing/developing countries with less developed marketing organizations, while the latter stages are carried out in the consuming, industrialized countries with modern marketing organizations (involving different activities such as cleaning, grading, quality testing, storing, packaging etc., within each stage). The industrial processing stage is highly complex and sophisticated for transforming the semi-processed product into valuable consumable items, appropriate to the needs of the end users. Market Players and Channels Each of the marketing stages has its main and subsidiary players. The players involved in marketing of NWFPs are: individual NWFP collectors or producers; harvesting contractors; local trades (merchants); local middle men; district level buying organizations; main wholesalers (agents of exporting companies, national level brokerage firms, exporters); and individual customers. In situations where the market chain is long (in fact, except where the producer directly sells the produces/products in the local market), the producers and consumers hardly ever meet. For example, marketing of essential oil for flavour and 6 fragrance industries is dominated by few multinationals who procure essential oil from developing countries through brokers (brokerage firms) and relies on them to ensure quality of supply. Role of Middlemen Individual producers are often at a disadvantage in selling the produces locally through middlemen. As a group, the producers can control larger markets; and if organized, they can do away with middlemen at various levels. The role of middlemen is not always exploitative or dishonest. In several cases they carry out essential services, which are otherwise missing – they serve as informal financing source, they take part of the risk load, and also provide market information to the producer. Marketing Channels The role of the market players are variously linked by a chain of co-operative (and competitive) actions, following appropriate channels for specific products and services. As an example, the simple process of marketing grass brooms often goes through a short chain: Broom grass collector. Broom grass trader Middlemen Broom producer Market MANY CONSUMERS SEVERAL PRODUCERS In a complex situation it may look somewhat as follows: Transport Local buyer, middle men or collection centre Assembling market or provincial traders Processing Whole salers Retailers Gaps in the chain are promptly taken over by middlemen. Final consumption takes place after a great many number of successive loops in the production product market chain. Although primary producers are influenced by all the repetitive loops, they usually manage only the first loop. It is essential to know well enough the whole chain (as well as the particular role and importance of the raw produce concerned in the final product) to claim, and justify getting, a “fair” share of the total wealth created between the extraction of the raw produce and the sale of the final consumer products. The need for an appropriate marketing information system thus becomes vital. 7 Marketing of Non-Wood Forest Products Marketing of NWFPs is one of the most challenging undertaking because of their number, versatility, dissimilarities, end use variations, and resource richness. Markets range from simple, local level village fairs to most sophisticated industrial niche markets in numerous end use sectors. Some of the attributes of NWFP production are: small size, product diversity, seasonal production, labour intensive technology and accessibility to lowincome group of the community. While these are advantageous on the production side, some of them are disadvantageous on the marketing side. To circumvent that, market-oriented approaches have to be taken up as co-operative ventures. Globalization of commerce (further supported by green consumerism) has opened up new opportunities for NWFPs. The diversity and special attributes of NWFPs and their markets mean that practically all possible approaches/practices of marketing are needed, linked with, and influencing, the physical activities involved (e.g. haulage, sorting/grading by quality standards, packaging for storage and shelf life, display etc.). The type of products, infrastructure and institutions influence the decision on the marketing approaches to be used. Among others, these include: Market-led approaches (involving analysis of market situation and outlook); supply driven approaches (involving promotion). Industrial marketing (of raw material, e.g. for pulp and paper and pharmaceuticals); consumer marketing; processed marketing. Money-based exchange; barter (this customary sharing/exchange system exists still at local levels). Direct marketing (by producer); through intermediaries (middleman). Immediate sale (to avoid deterioration); delayed sale (for advantages); long storage (to manipulate supply and supported by market stabilization funds, storage facilities such as controlled conditions and refrigeration). Negotiated contract sale (under different specifics e.g. as standing crop where purchaser/agent take responsibility for harvest, transport, storage etc); auction (competitive bidding). Spot sale; advance sale (futures market as hedge against changes in price e.g. of raw materials). Individual marketing; co-operative (pooled) marketing (for bargaining power); contracted (commission) marketing. As it is, where it is (e.g. harvest site; primary processed); with guarantee for quantity and quality of supplies. The marketing approaches should suit the production systems and production opportunities. 8 Market Information Marketing is essentially a “software based” function where knowledge and information are important ingredients along with attitudes, skills and capability of those who are involved in the market development. Market operations are based on information about current and potential markets, means of accessing the markets, competition and business environment. Efficient marketing relies on a well functioning market information service that provides necessary quantitative and qualitative information regularly, reliably, timely and at the lowest possible cost. For orderly, efficient and equitable functioning of markets, and to facilitate healthy competition, information relating to: product demand, end-uses and situation in the end use sectors (such as pharmaceuticals), alternative supply sources, distribution channels, market related institutions, product specification and quality, safety and hygienic requirements, packaging specifications, consumer preferences and concerns, price levels and supply/demand outlook, is vital. Lack of information results in market distortions. Marketing studies and research are relevant in this regard. The specific market information which the producers are looking for are: price of products, price differences linked to quality, whole sale and retail margins, reasons causing price differences, packaging specifications, preferred marketing channels, terms of payments, promotion opportunities, mandatory regulations, transaction costs etc. The consumers look for information on the quantity and quality of supply, alternative supply sources, production costs, supply channels etc. Free flow of information and transfer of technology will contribute to strengthening the market. Market Infrastructure Infrastructural facilities are another important factor contributing to the success of marketing efforts. These cover services and facilities relating to: harvesting tools and technique; post-harvest treatment; transport and storage; protection against damages; quality testing; packaging etc. Institutional Support Institutional support for marketing is provided basically at two levels. At the highest level, it comes in the form of government policy measures and regulations governing their implementation. At the operational level, institutional support consists of the various cooperative arrangements among producers, standarization organizations, product and quality monitoring and control institutions, research institutes, extension and human resource development services, banking and credit services, marketing information services, transport and communication networks etc. Regulations for grading and standards exist in many countries for traded products. General quality standards for internationally traded products are established by the International Organization for Standards. Quality and safety/sanitary regulations, including packaging standards established by Food and Drug Administrations and Consumer Protection Groups of importing countries are, often, rigid in respect of items such as medicinal extracts, 9 phytochemicals, food colorants and additives. Inability to meet the standards would normally lead to loss of market. Where export is involved, it is governed by foreign trade policy – which is a combination of foreign exchange policy, import/export policy and international relations through which trade negotiations are conducted. Regulations in most cases, however, are weak in ensuring an “environmentally honest” price for the products based on biological resources, for the environmental benefits they provide (i.e. global and country-specific externalities). Trade The terms marketing and trade are often used interchangeably. Trade, in its limited sense, is the act of exchange of products for money or other products i.e. the transaction. Apart from the agreement relating to price, trade transactions are influenced by policies, regulations, legal restrictions, controls and standards. International trade, particularly, is affected by tariff and non-tariff barriers, quality specifications, terms of importation and exportation and exchange mechanicms. For the intents and purposes, market is the seat of trade in time and space. It is the actual trade, which brings in revenue (and foreign exchange earnings), and as such it is an integral part of economic development. Trade is often influenced by “supply push” and/or “demand pull”. Impact of Globalization Globalization is defined as the process of economic integration of the entire world through the removal of barriers to free trade and capital mobility, as well as through diffusion of knowledge and information (thus considerably reducing the transaction cost). Technology is both driven by and is a driver of globalization. Globalization manifests in intensified competition among firms, to dominate the market. Competitiveness Competitiveness is primarily a firm-level concept and is linked to productivity. A firm is competitive if it can produce products and services of superior quality and at lower cost than its domestic and international competitors. Competitiveness, defined as a firm’s ability to survive under competition, is the essence of a well functioning market system; and being competitive implies succeeding in an environment where firms try to stay ahead of each other by reducing prices, by increasing the quality of their products. A firm’s competitiveness is a function of factors such as: i Its own resources (human capital, physical capital and level of technology). 10 ii Its market power. iii Its behaviour towards rivals and other economic agents. iv Its capacity to adapt to changing circumstances. v Its capacity to create new products and new markets. vi Its institutional environment, largely provided by the government, including physical infrastructure and the quality of government policies. Firms become more competitive by competing, and slowly and patiently learning how to do business better. They accomplish this by both striving to enhance their entrepreneurial and technological capabilities, defined as the ability to use/generate/change and add to the pool of the industrial arts, and by taking risks. The steps involved in the path towards competitiveness are: investment technological progress increase in labour productivity improvements in technical and allocative efficiency. Since a critical mass is of importance for enhancing competitiveness, resources of small sized firms (farms) can be pooled to improve their competitiveness. The State can (and should) promote competitiveness and competitive marketing through such activities as: creation of export processing zones; establishing industrial clusters with common infrastructure facilities; negotiations with MNCs and attracting FDI; adopting technology upgrading activities/strategies; enhancing country capability and ensuring availability of skilled man power as a dynamic competitive force; establishing appropriate regulatory instruments; synergizing company-community partnerships; and promoting global value chains (e.g. internationalization of manufacturing processes in which several countries participate in the different stages). Sustainability and Sustainable Development Sustainability, as is used here, reflects the general sense of the term as in both the Brundtland Report (WCED/UN, 1987) and Agenda 21 (UNCED, 1993). In the context of current development, a World Bank paper states that a primary goal of sustainable development is to achieve a reasonable and equitably distributed level of economic wellbeing, that can be perpetuated continually for many human generations. It requires that the allocation of resources to meet the needs of present generation should not prejudice the interests of future generations. Current activities may be qualified as sustainable if they do not reduce the productive potential of the asset base and the set of opportunities open to future generations. Sustainability subsumes productivity (growth) and equity (World Bank 1992). Development has physical, environmental, economic, social, cultural and other processes. These processes influence each other. Physical development that is poorly conceived, planned and implemented causes many of today's severe environmental problems, affecting soil, water, flora and fauna, bio-diversity and the integrity of eco-systems, vital for human welfare and security. Though sustainable development is based on dynamic 11 interaction among the production, the natural and the social systems, planners have tended to focus on the production system as an easy and practical entry point. It is assumed that natural and social systems will adjust to a changing production system; however, this does not always happen. Only appropriate interaction among ecology, economics and sociology will lead to harmonious development. From a policy point of view, sustainability is not an option; it is an imperative. Sustainable development, the central theme of UNCED Agenda 21, underline the need to link growth to environmental quality and conservation. Without sustainability, environmental deterioration and economic decline will be feeding on each other, leading to social decay and political upheaval. Development of all aspects or sectors of the economy should be carried out in a sustainable fashion; development of one should not result in sacrificing the sustainability of another. Development in the past, for example, caused land use changes leading to deforestation. Expansion of agriculture/pasture and infrastructure resulted in forest clearance. Also forests were cleared to generate funds for investment in other sectors. Sustainable management of renewable natural resources should inherently be based on using income or interest, and not consuming capital. The rate of harvest of living resources should not exceed rates of regeneration. It also implies maintenance, rational use and enhancement of the natural resource base that underpins ecological resilience and economic growth. An important aspect of sustainable development is the search for economic activities that are either consistent with ecological health and quality of life or at least are done in ways that minimise the harmful side effects of economic development. Ecologically, sustainability has two attributes in addition to equating harvest to regeneration: (I) sustain adaptability and capacity for renewal of plants, animals, soils and waters; and (ii) maintain biological diversity. It also implies understanding the irreplaceable and unknown values of wild plants and animals and the utility of watershed forests and wetlands. However, there is no market mechanism to value them adequately. Sustainable Forest Management Forest management refers to the application of business methods (emphasising on efficiency and accountability) and technical forestry principles to the operation of a forest property; and sustainable forest management involves processes essential to achieve sustainable forestry development. Forests form the main body of the terrestrial ecological system and a complete resource base. Within the broad framework of sustainable development, SFM should ensure that values derived from forests meet present day needs, while ensuring that the forests maintain a quantity and quality that contributes to long-term development needs. This implies the need to consistently improve the productivity and contribution of forests such that future generations can continue to receive benefits of forest goods and services at least equal to those of the present generation. This scenario is compatible with the concept of sustainable development and the UNCED-adopted Forest Principles. As re-iterated by UNFF, sustainable forest management calls for managing the sector along a reasonable and steady growth path. A rational and balanced combination of different functions of forests production, protection, conservation and provision of environmental amenities - is essential 12 to ensure sustainability of forests. It needs to incorporate large plants, animals, micro-flora and fauna, water and soil, as well as traditional knowledge and heritage. The concept is holistic and the task is multi-disciplinary in nature. Its horizon is infinite; it has very high positive externalities such as soil protection and carbon sequestration. As highlighted by FAO (1993), SFM involves planning the production of wood and non-wood products for commercial purposes, as well as meeting local needs; it includes protection, or setting aside areas to be managed as plant or wildlife reserves, for recreational or environmental purposes; it ensures that conversion of forestlands for agriculture and other uses is done in properly planned and controlled way; it covers the regeneration of wastelands and degraded forests and establishment of forest plantations; it promotes integration of trees in farming landscape and agro-forestry. In short, SFM is specific and practical action for translating the concept of sustainability into reality in forestry. This calls for the use of forest, goods and services at levels that do not change the environment (including elimination of wasteful consumption), and within the regeneration capacity of forest estate. Sustainability is to be ensured at the national level as well as at the forest management unit level. In the present day context, the scope of SFM must be widened to incorporate both tangible and intangible values; and both these values should be optimized, rather than maximizing just one of them. The multiple benefits, economic and ecological, of forests can be optimized by limiting the use to within sustainable productivity (i.e. remaining within production possibility curve). By providing increased technological and other inputs, it is possible to increase the sustainable production potential (i.e. pushing production possibility curve to a higher level). Instead of increasing production, an alternative is to reduce use. This can be achieved by forgoing consumption, increasing efficiency of processing to improve input/output ratio and by using substitutes. Sustainability, as is clear, is linked to productivity. Production and Productivity Production is understood as a physical process, carried out by institutional units that use labour and assets, to transform inputs of goods and services into output of other goods and services. Incomes are generated continuously by production and it is the basis of national income. The defined boundary of production determines the amount of value added (by the transformation process), included in GDP. Products Products refer to things, substances and/or articles produced by a process. They arc outputs of goods and services resulting from the input of resources or factors of production used to produce them. The term 'product' is often used to refer to a manufactured good. 13 Produces The term produce(s)1 is used to refer to the things grown on land (and water) – for example: forest produce and farm produce, which are simply collected or harvested (including post-harvest treatments), as distinct from product(s) which are manufactured. Product Classification The word “class” refers to a group of things having the same or similar characteristics; and “classification” is assignment to, or arrangement by, hierarchical classes (e.g. category, division, group, class of products). Product classes are based on: raw or base material involved, stage of production and degree of processing, physical profiles, related economic activities, intended use of product etc. Purpose of product classification (as in the case of other systems of classification, e.g. relating to land use, non-produced assets or resources) is to compile and collate quantitative and qualitative information for analysis and use, in designing future (development) actions. Product classification at the national level needs to be consistent with international classification(s), to facilitate international comparison and trade. Productivity Productivity is an expression or measure of relationship between input(s) and output(s). Emphasis in production should be on productivity gains through refined/improved technological inputs, and efficiency in the use of raw material (and/or land), labour and capital inputs. Production decisions need to be linked to, and consistent with, the market situation. Value Addition Value added is the difference between total revenue of a firm and the cost of boughtin raw materials, services and components. It, thus, measures the value, which the firm has added to these bought-in materials and components by it’s process of production.2 NWFPs are capable of high value-addition along value chain involving resource management harvest/collection dressing/cleaning storage transport primary processing secondary processing downstream processing packaging wholesale and retain marketing. Investment in value addition is generally a commitment to locally process the raw material, and to improve technology and marketing arrangements. 1 Some glossaries of forest terms use “minor forest produce” or “non-wood forest produce” for harvested or collected non-wood forest goods. 2 The value added, often, attracts a tax known as value added tax (VAT). VAT is applied at each point of exchange of goods and services from primary production to final consumption. It is levied on the difference between the sale price of goods and services (outputs) and the cost of goods and services (inputs) bought-in for use in its production. 14 Rent and Rent Capture Rent is the income accruing to the owner, for the services of a durable good such as a piece of land and forest, and other types of property. It is the difference between the return made by a factor of production and the return necessary to keep the factor in its current occupation. To put it in another way, rent is the surplus available after all factors of production have secured the minimum return needed to keep them engaged in the activity in question. Government policies are, often, instrumental in creating or diminishing rents and in deciding who gets them. In a situation of perfect competition, no rents are made by any factor, because changes in supply changes the price of inputs to the level just necessary to keep them engaged. Capacity to capture increased share of rent is often taken as an indicator of increased efficiency on the part of “factor” owners. Policy and Policy Instruments The term policy generally refers to the principles that govern actions directed towards given ends. It defines agreed upon or settled course(s) adopted and followed by governments and institutions. These courses (of action) are normally selected from among alternatives and in the light of given or assumed conditions, to guide and determine present and future decisions. At the national level, policy embraces general goals and acceptable measures, and strategies to achieve the goals. While the policies reflect the long-term objectives, they are subject to modifications based on the dynamics of policy environment. Formal policy enunciation is to be undertaken as a political process, to ensure its acceptability by those who will be affected by the implementation of the policy. Policy There are different types of policies following a hierarchy – national policies, regional policies, sectoral policies. Various policy levels are to be closely linked and free from conflicts. While broad national policies tend to be in the nature of manifestos, the sectoral/sub-sectoral policies are normally more detailed and of a portfolio type. A formal policy normally comprises of: Policy imperatives (non-negotiable): e.g. sustainability; environmental and biodiversity conservation; gender mainstreaming; equity considerations; respect for traditional rights. Principles and considerations: e.g. need for transparency, accountability and people’s participation; need to ensure efficiency and competiiveness; need to enhance information base; need to adopt international classification of products; need to have adequate management guidelines/techniques for specific groups of produces (such as medicinal plants, gums, resins, essential oils); need to control bio-piracy; need to promote productivity; need to undertake institutional reforms etc. 15 Policy objectives: influenced by the desired/preferred outlook scenario and derived from the imperatives, principles and considerations. Policy focus: indication of priorities. Policy measures: e.g. resource appraisal; resource conservation, management and enhancement; collection and/or production; domestication and cultivation; harvesting; processing; value addition; trade; rent capture and value retention (as appropriate). Stretegic elements: involvement of community/private sector; producers associations; autonomous/decentralized institutions of adequate scale; product standardization and certification; eco-labelling; coding/registration of brands; research and development; human resource development and capacity building; fund mobilization; value-chain investment; development of business/enterprise management skills etc. A national forest policy specifies certain principles regarding the use of the national forest resources, which it is felt will contribute to the achievement of some of the national objectives. The premise is that national forest policy should deal with forestlands including all biomass resources, the utilisation of wastelands and degraded lands, and trees growing in other non-forest lands. In the forestry sector, its policy provides a basis for legislation, regulations, plans and programmes. It defines the contributions of the sector to national development and welfare. It profoundly influences the way in which organisations and individuals manage and utilise their forest/tree resources. Forestry has evolved into a web of inter-related activities that goes far beyond the limits of forestland, and it affects the welfare of every one economically and ecologically. A serious concern is how forest can be managed to retain their essential roles as part of natural resource systems, while maintaining their capacity for supporting people. Development is a major consideration in today's society and forest policies should serve as agents and facilitators of change. Thus, a national forest policy is now seen as a formal and comprehensive statement, which provides a conceptual frame work, and clear objectives, for forestry development as well as orientation for the choice and execution of forestry programmes and related activities. It sets standards for decision-making and discourages acts of expediency. Policy development, implementation and evaluation are more or less a continuous process and closely related to the corporate planning process. Policy Instruments As earlier indicated, policy instruments include laws, rules, regulations and organizations (to enforce the laws, rules and regulations). Laws Law is an instrument of policy. Laws are the main tools with which policies are implemented. Laws can be punitive and negative in their connotation, prescribing what should not be done and specifying punishments for doing what is prohibited. They can also be facilitating, enabling and encouraging with a positive connotation, prescribing what 16 should be done and also suggesting rewards and incentives. In fact, laws can have both these characteristics on a rational balance, to suit the situation at hand. A viable and efficient legal system is very important for effective implementation of policies, and achievement of policy objectives. Laws, as a policy instrument defines the power of the State and the nature and scope of sectoral institutions. The legal system covers the legislated/enabling laws, and related rules and regulations, along with the relevant institutional and judicial system. The legal system of a country is the creation of its Constitution, into which the various sectors of the economy are designed to fit. Accordingly, the various sectors will have their own system of legislation, which is expected to be properly co-ordinated with the other component systems. Between legislative enactment (laws) and implementation, the system involves a hierarchy of rules, regulations, supplementary instruments, prescriptions/provisions, orders and records. There are, in most cases, clear guidelines for making of the laws, rules, regulations and decisions. The Constitution of the country is the source of all laws. The Constitution specifies the national goals and objectives, the fundamental principles of State policy (and fundamental rights), and the basis for making laws. It also provides, among others, for the system of legislature and judiciary, financial procedures, auditing and accounting, executive branches of government and implementing agencies, national planning agency etc. In addition there are, in most countries, clear guidelines for the making of laws, rules, regulations and decisions. The laws are made, depending on the circumstances and the constitutional provisions, as enactments of the parliament/legislative body, as ordinances, or in some cases as decrees. The laws normally include enabling provisions to make rules and regulations to implement/enforce them. The power to make detailed rules and regulations are delegated, for example, to the Minister or Head of Departments. In some cases/countries, laws and rules often are legislated as a package. In some other cases, Basic Laws are enunciated as covering both policy and related legislation. (Generally, legislation consists of the aggregation of laws enacted by the legislative authorities of a country over time, plus the common law and customary law, which have accumulated respectively through judicial or traditional practice. These laws help to ensure that the population acts itself in accordance with the body of rules and requirements contained in them). Forest laws provide the legal instruments, which are necessary to put into effect the objectives of a forest policy. It permits the translation of the objectives of a policy into specific legal provisions affecting the use of forests, forestlands and wild lands, and the way these resources enter into the life and development of communities, regions and nations. Since policy objectives change and evolve over time, new laws must be enacted or older ones revised or abrogated, to be consistent with these changes. Forest laws as a means of contributing towards the achievement of policy objectives affects both governmental agencies and the general public. In regard to governmental agencies, legislation stipulates the responsibilities and actions, which the agency and its personnel are instructed to carry out, and explicitly or implicitly, the limits of their authority. Forest legislation is directed towards the public in different ways: 17 a. By establishing laws, with sanctions for violations; prohibiting, limiting, requiring or regulating actions relative to the exploitation, utilization, transport and marketing of the goods and services derived from the forest. b. By encouraging certain actions usually involving a reward or gain on the part of the user or observer of the law. The gain mostly may be economic through tax relief or financial subsidies for such activities as tree planting, timber stand improvement and carrying out research. c. At times the absence of legislation will also contribute to the achievement of an objective. For example, if the intent of forest policy is to allow the export of forest products in any form, then the absence of a restrictive legislation on transport and/or exports will be conducive to achieving this objective. If there is a prospect of economic gain or profit for the actions of the people, which are in accord with policy objectives, this incentive may be sufficient such that that no legislation is required. Forest laws contribute to the achievement of policy objectives by regulating: (1) the relations between persons (with respect to natural resources); (2) the relations between the government and users of the resource, (3) the relations between persons and resources in establishing how the former use the latter, and (4) the internal activity of the government in relation to publicly owned resources. With regard to forests and forestlands, forest laws recognize two broad classes of tenure: private holdings (individuals, communal ownerships, corporations, private institutions, etc.) and some form of public ownership (i.e. government, municipal, etc.). Compatibility of forest laws with general land laws of the country should be ensured. In the case of forestry, wildlife and environment (as well as other sectors having global implications), there are several international declarations, manifestos, and conventions, which have been signed and ratified by national governments. These also assume significance similar to laws, for example: CITES, CBD. Rules Rules are directives concerning methods and procedures for implementing and observing a law or an established custom. The laws are normally elaborated (or broken down) into sets of rules or codes to be followed (e.g. civil service rules, financial rules, contract rules, game rules, grazing rules etc.). Rules elaborate the procedures for implementing the provisions of law(s). Often the term (rule) encompasses the law(s) forming the basis of the rules as well as the related instructions, frame works and guidelines. The rules can be formal or informal. The rules are the product of behavioural tradition or of the political and legal construction of the State (e.g. rules regulating customary rights; rules relating to tenure; rules relating to natural resource extraction). Rules have descriptive and prescriptive components. Rules have assumptive (e.g. implied “normal” conditions of growth, management, institutional capability, infrastructure and facilities) and pro-active (legal intervention) aspects. Rules specify privileges and obligations and provide for incentives and penalties. 18 At the governance level, rules form the interface between the public and the mechanism of policy implementation on the part of the government. Rules are, thus, creations of the power of institutions; they are less likely to be capricious, nor possibly avaricious, if and when they are a creation of a large community of institutions, weaving a wide array of interests and public concerns. In virtually all formal rules issued by the Government, the descriptive aspects include what laws the rules are based upon, the policies conveyed or inunciated in the rules, the publics that the rules are intended to govern and the related requirements. Rules do not only describe; a basic intention of rules is to prescribe the procedures of conduct for a given situation or condition or when certain events occur – for example, the user of a resource while enjoying certain benefits is also reposed with certain obligations for its use and care. Rules invariably contain certain assumptions about their objects and subjects. Assumptions (e.g. level of people’s income, capability) become the basis for the pro-action being intended by the rules. Rules or codes, enabled by law, have legal standing and validity. But some others do not, if they are not so enabled. In several cases, there are no rules of proper or adequate legal standing, for example, pertaining to technical operations in forestry such as seed collection, raising of nursery stock, felling of trees, and collection of NWFPs and genetic materials. Rules can often become weak, because they may suffer either structural or formulation defects. Structural defects are evident where: the rule is enforced in situations where other forms of rule provide conflicting stipulations on the same matter it addresses; there are inconsistencies between descriptive and prescriptive elements of the rule; the assumptions of the rule are not supportive of its intended actions (e.g. on availability of vital information, required skills etc); neither the incentives nor disincentives stipulated in the rules are sufficient, either to arouse compliance or to defuse defiance to it. Formulation defects are found in inadequate vocabulary, grammatical mistakes, legal imprecision (due to careless use of terminologies), unnecessary compliance requirements (such as unnecessary documentation) etc. Rules should help to elicit transparency, accountability and participatory process. In most cases, the rules are kept updated (incorporating changes, amendments etc) as codes applicable to a Sector or Department. Some of the rules/codes cut across all sectors in their legal influences and impacts - e.g. Penal Code, Civil and Criminal Procedure Codes. Regulations To facilitate application, the enactment of laws should be followed by careful preparation of subsidiary, more detailed and specific regulations. It is often difficult to make a clear distinction between rules and regulations. However, in normal contexts, regulations 19 are used to mean the steps and procedures involved in enforcing rules, and to make sure that it works. For example, hunting rules will have regulations related to seasons, size of animals, claim on trophies etc. The regulations prescribe/control the successive bureaucratic steps involving applications, appropriate forms, plans, agreements/legal commitments, entries in registers and so on. These are, in several cases, presented along with related interpretations in the form of reference manuals (e.g. personnel regulations, financial regulations, timber harvest regulations, purchase/procurement regulations). In countries where forest concessions are awarded to private individuals, there are detailed regulations regarding the preparation, approval and implementation of Working Plans, including obligations to local communities, their rights and privileges etc. Within the framework of laws and rules, regulations may undergo changes, and in many countries, some of the powers for amending/modifying the regulations are delegated to lower levels of administration for facilitating speedy actions and decisions. Supplimentary Instructions Then, there are the supplementary instructions; and irrespective of the bureaucratic levels from which they are issued, they take various forms – executive orders, guidelines for maintaining records, interpretations/explanations, special directions, information bulletins, standing orders, temporary exemptions to rules/regulations, circulars, notifications, memoranda and so on. Workings of lower units of operation/administration are guided to a considerable extent by these instructions. These tend to change frequently and supersede older instructions. Keeping these updated is a major task, which is often neglected. These instructions, however, invoke the main laws, rules and regulations and are issued by authorized persons. As such, they form part of the legal system. They often involve a number of registers/records/maps serving as evidence regarding boundaries, areas, occupations, dates, values etc. Ensuring that the rules, regulations and instructions are carried out properly to the benefit of the people is almost impossible in a centralized system. Also, decentralized systems can work only if supported by capacity building, adequate preparation and a suitable incentive system. Other Important Legal Instruments In the legal system, there are instruments/documents which cut across the hierarchy of laws, rules and regulations, representing legal decisions, deeds, orders, agreements etc. covering contracts, leases, land transfers, establishment of new units of production/service, and/or personnel matters. These may range from a service (say, appointment) order to a settlement (say, of stewardship certificate) order. Importance of complete recording and safe storage of these documents cannot be over emphasized. Since these documents are based on the rules and regulations existing at the time of their issue/preparation, they are important legal documents. Some of these are also notified in government gazette(s) or publications, as a formal requirement. Autonomous bodies (e.g. Boards, Authorities), co-operative societies/associations and their federations are legally established, based on instruments varying from Bills passed by legislative bodies to memoranda of associations, and relevant regulations. These, as well as 20 the strategic planning documents the approved by the appropriate authority can also be considered as part of the legal instrumentation. Governance Governance relates to the manner of governing and involves exercise of authority by the government through appropriate means (and agencies) to enforce policy, to ensure rule of law and to conduct the affairs of the State. Models of organizational (agency) structure, depending on circumstances vary considerability – centralized structure, decentralized and federated structure, socialized structure, co-operative structure and combinations of these. The general institutional infrastructure of a country, largely provided by the government, affects how firms develop entrepreneurial and technological capabilities. Therefore, a development strategy requires a working partnership between the State and the “market”. A general area of responsibility for the State in this regard and particularly to ensure an “economy of national competitiveness” is to establish a basic legal frame work, which encompasses: (i) the rule of law, (ii) public administration, (iii) laws regarding contracts and the regulatory structure affecting the key sectors, and (iv) intellectual property rights. Appropriateness of an institution involved in governance is gauged by Legitimacy: e.g. correct agency to exercise a mandate. Public trust: confidence of the constituents in the institution. Credibility: confidence of the constituents on the ability of the institution to execute the mandate. An appropriate institution is characterized by transparency, accountability and participatory processes – to ensure rule-based decisions and to support development. Natural resource governance has to balance sustainability of the resource (aspects linked to environment and development) and efficiency/productivity (aspects related to trade and development). In respect of NWFPs, in many countries, several departments, boards, corporations, federations etc. are involved in their governance, without really governing them. 21 2. FORESTRY SITUATION IN LAO PDR THE COUNTRY PROFILE Lao PDR, with an area of 230,800 sq. km, is a land-locked country, bounded by Thailand and Myanmar in the west, China in the north, Vietnam in the east and Cambodia in the south. All of Lao PDR is within the tropics, between latitudes 14o N and 23o N, and longitudes 100o E and 108o E. Rivers and mountains dominate the topography and their interaction accounts for most of the country’s geographic variation. All rivers and tributaries west of the Annamite Chain drain into the Mekong river. Those to the east of the Annamites eventually flows into the gulf of Tonkin, off the coast of Vietnam. The Mekong river valley and its fertile flood plains form the country’s primary agricultural zones, including virtually all of the country’s wet rice lands. The Mekong and its tributaries are also an important source of fish. Mountain and plateau cover well over 70% of the country. Running about half the length of Lao PDR, parallel to the course of Mekong river, is a rugged mountain range, known as the Annamite chain. The estimated population of Lao PDR in 2003 was 5.7 million (population density 25 per sq.km), with the population projected to reach 8.5 million by 2025 (Population Reference Bureau, 2003). Population of Lao PDR is comprised of some 230 different ethnic groups from 4 ethno-linguistic families. Traditionally, they are divided into four groups, roughly according to the altitude at which they live. Their land use/tenure system is complicated. The highland and mid-land people of Lao PDR practice shifting agriculture, whereas lowland people follow a stable form of agriculture. According to the UN Human Development Report, 2001, Lao PDR is a “low human development” country with a Human Development Index3 of 0.476 (its rank being 133 out of 173 countries surveyed), with 26.3% of the population earning below US$1 per day at 1993 PPP4. 3 Human Development Index (HDI) measures the overall achievements in a country, in three basic dimensions of human development – longevity, knowledge, and a decent standard of living. 4 Those living under nationally defined poverty line was 46.1%. 22 Macro-Economic Situation It is anachronistic that Lao PDR, a country blessed by nature and well endowed with natural resources, and having only a relatively small population, is also one of the poorest in the world. Lao PDR has predominantly a rural society with about 85% of the population depending on agriculture, fishery and forestry for their livelihood. Because of the extended struggle for political freedom and the resulting instability, Lao PDR was left behind in the “development race”, compared to other countries in the region. During the last 30 years, Lao PDR has seen several shifts in the policy and approaches to economic development. Between 1975 and 1980 all private enterprises and property were nationalized and collectivized, and private ownership was abolished. During 1981-85, though collectivization was encouraged, private sector was tolerated. In 1985, about half of Lao farmers were organised into over 3,000 agricultural collectives that covered half of the country's agricultural lands. Nationalization, collectivization and creation of state enterprises continued till 1986. After the 4th General Party Congress in 1986, the Government initiated wide-ranging economic reforms called "new economic management mechanism" which promoted market mechanism in the place of administrative controls. The new economic mechanism promoted open market; provided autonomy for enterprises; and encouraged management efficiency. The State was no longer to directly intervene with production, and government's primary role was defined as macro-management, monitoring and evaluation and developing appropriate legislative framework. Private land ownerships became legal. Along with the transition of the country from a centrally-planned to a market-oriented economy in the later part of the 1980s, there has been corresponding shift from administrative to participatory approaches (such as "focal site" approach) to solve the problems in the land using sectors. The "focal site" approach is an area-based livelihood systems approach to decentralized rural development, in which interventions are tailored to the area's specific needs. Such an area-based approach is geared toward promoting locally owned 'centers for change and learning'. The main goal is to increase food and commodity production, to create employment opportunities, and develop the conditions for improved living standards. The success of the "focal site" approach is dependent not only on an enabling policy framework, but also on the way the Districts and Local Institutions are empowered, human resources are developed, and capacities are built for public management and participatory community development. The Nation’s development is guided by the policy and programmes covered in the major documents such as the Five Year National Socio-Economic Development Plans, the government's Strategic Vision for the Agriculture Sector and so on. Currently Lao PDR is in the process of implementing the 7th Five Year National Socio-Economic Development Plan, which incorporates the millennium development goals such as: reducing poverty, supporting livelihood and enterprise development, reversing environmental degradation, ensuring access 23 to safe water etc. The national goals are aimed to be achieved within a National Poverty Eradication Framework, with access to appropriate land use (agriculture, forestry) 5, markets (infrastructure, information), social services, human resource development, financial resources and facilities for grass-roots initiatives. Land-use Planning and Land Allocation Programme of Lao PDR has been going on since the mid-1990s. Between 1995 and 2002, an area of 8,129,374 ha has been allocated6 to 379,290 households in 6,188 villages as given below (see Table-1). Table 1 – Land Allocation for Different Uses in Lao PDR, 1995-2002 Land-use Area (ha) Paddy crop Commercial crops Forest plantations Pastures Forestland Other uses Total 285,303 431 59,429 21,951 6,712,911 1,048,349 8,129,374 Reports, however, indicate that landuse planning and land allocation has been inconsistent and ineffective, because the process has been more prescriptive than participatory and there were flaws in the way the process was being conducted. Important Economic Sectors A brief account of the important economic sectors are given below: Agriculture Around 10% of the land area of Lao PDR is considered suitable for agriculture. Cultivation in effect is carried out according to a dual pattern – one for the lowlands and one for the highlands. Important lowland crops are wet rice, corn, wheat, cotton, tobacco, peanut, soyabean, fruits and vegetables. Highland crops include dry rice, tobacco, tea, coffee and maize. Inspite of the Government's efforts to eradicate opium cultivation, in remains a lucrative business in the highlands. The Lao Government has been trying to discourage the practice of shifting cultivation by the highland communities, but the practice seems to persist. 5 6 Emphasis of land-use includes, among others, reduction of shifting cultivation, elimination of opium cultivation, land and forest allocation, livelihood systems (agricultural production supported by small scale irrigation, agro-forestry, handicrafts, commercial tree crops, NWFPs, fishery and animal husbandry), and integration of tree and non-tree crops. Some 13% of the Country’s land area is reported to be under shifting cultivation 24 The agriculture sector is estimated to account for about 52% of the GDP. Forestry Since considerable area in Lao PDR is still under forests, forest products (timber and non-timber forest products) are economically important, and form a major source of foreign exchange earnings (more on this will be dealt with, later). Industry Industrial development in Lao PDR is a comparatively recent occurrence; it is currently a fast growing sector with construction, power generation and garments playing a key role. Others in this growing sector include: hotels and restaurants; motor cycle manufacturing; furniture; mineral water and soft drinks; cement and bricks; cigarettes; handicrafts; NWFP processing; mining and fish processing. The sector is predominantly comprised of small and medium size units. It is constrained by inadequate technology and skills, and low quality of production. Tourism Tourism plays an important role as a substantial source of income; and it has the potential to be a large earner of foreign exchange. The total tourist arrivals in Lao PDR in 2004 was 105,513 of which 30.3% was from Asia-Pacific region, 51.8% from Europe, 11.0% from North America and 6.9% from other regions. With increasing investment in infrastructure development, tourism sector is expected to register a fast growth. The Financial Sector Lao PDR has been dependent on foreign aid since 1950s. However, the amounts and sources varied greatly over the intervening years. The quantum of foreign aid (both multilateral and bi-lateral) has increased since 1980, making up as much as 80% of the national budget in certain years. State investments as at the end of May 2005 included 1,143 projects worth 504.4 billion kips, of which 68.7 billion kps were sourced domestically and 435.7 billion kips from abroad7 (report in Vientiane Times, 30 Mary 2005). In 1987, the Government relaxed restrictions on private enterprise. Also, Lao PDR now has a liberal foreign investment regulation, even though there appears to have several problems in practice. Among the important foreign investors by nationality are: Thailand, Republic of Korea, USA, Japan, Australia, Malaysia etc. Lao PDR is a country with relatively low production cost. However, relatively low production cost cannot make up for the high procedural, logistic and transport costs faced by industry. Also the multitude of middlemen, brokers and agents seems to add to the transaction costs. Thus, the level of competitiveness of Lao industry remains weak. 7 1 US$ = 10,700 Kips 25 Over all, the financial sector reform has emerged as a priority for the government and it is in the process of undertaking these reforms with the support of ADB, IMF and the World Bank. Income and Trade Balance GDP per capita of Lao PDR in 2003 was US$ 361. Considering the country’s natural resource endowment and potential for growth, some observers attribute the current situation of low productivity partly to people’s lack of economic discipline and preference for leisure. Due to higher imports, particularly of capital goods, the position of balance of trade, in Lao PDR, is negative. Trade deficit during the period January to May 2005 has been reported as US$ 127.8 million. Electricity (from the hydro-electric projects), garments, wood and other forest products and gypsum are the leading items of exports. An important source of foreign exchange for Lao PDR is the remittance made by Lao labour employed in Thailand and elsewhere (estimated at about US $ 100 million per year)8. Some 300,000 Lao Citizens are estimated to be working in Thailand alone. Borders of Lao PDR with China, Thailand and Vietnam are somewhat porous and there seems to exist a tolerance for free (illegal) trade across the borders9. There is need to substantially improve the situation, considering the impending accession of Lao PDR as a member of the Asian Free Trade Agreement, and the standards to be achieved to meet the WTO requirements. In this regard, ITC is providing support to the Lao Trade Center (the erstwhile Export Promotion Department). Political Division and Decentralization Administratively, Lao PDR has been divided into 18 provinces, 142 districts, and 10,912 villages. Since all the natural resources (forests, minerals etc.) are state property, these administrative units are responsible for their management and governance. Lao PDR, conceptually, follows a decentralized system of administration. Decentralization refers to the transfer of political, fiscal and administrative powers from the central to the peripheral entities, on the basis of a political-administrative and territorial hierarchy. It is a political action that strives to ensure inter-locational equity in the distribution of development and sharing of resources. This official power transfer can take two main forms. The administrative decentralization, also known as deconcentration, refers to a transfer of power to lower level authorities of central government, or to other local authorities, who are upwardly accountable 8 Compared to US$50 million a year from export of garments. 9 Some estimates suggest that there are some 80,000 unauthorised traders overseeing the illegal trade activities across Lao-China border. 26 to the Central Government (Ribot 2002). In contrast, the political or democratic decentralization refers to the transfer of authority to representative and downwardly accountable actors, such as elected local governments. Decentralisation in Lao PDR is aligned with a 2000 directive that redefined centrallocal relationships – with provinces as strategic planning units; districts as planning and budgetary units; and villages as implementation units. Centre takes care of overall strategy, resource allocation, and providing policy and regulatory framework. National legal frame work of the different sectors provide guidance for the functioning of decentralized units at the provincial, district and village levels. The lower levels look up to the succeeding higher levels for support and assistance including technical inputs and funds. There is, often, a sharing of powers (delegation of authority) between province and districts. For example in respect of industrial units, the districts are empowered to register handicraft units and those workshops using engines of below 5 HP capacity. Those above that limit are registered by the provincial authority. In Lao PDR, the broad frame work of decentralized management of resources is the provision for devolution of responsibility for planning and implementation of rural development and management of agriculture and forest lands to provincial, district and village authorities, with required advisory and technical assistance by concerned central agencies. The District Administration is considered as pivotal to the system. In respect of forestry, organizational responsibility for public forest administration follows a decentralized system. At the national/central level, MAF is responsible for policy implementation and regulations, as well as for research and development. Role of the central department of forestry in respect of many matters regarding administration is only to provide guidance and advice. Central support services in forestry are channeled through NAFRI and NAFES. At the provincial and district levels, PAFO and DAFO respectively are responsible for public forest administration. Decisions on forest administration and management are made by the provincial governor (on advice of PAFO). The province advises the districts on the various decisions for appropriate action and implementation. Village level workers (with guidance of DAFO and PAFO) interact with farmers and farmer groups, and provide guidance in forestry matters. There are, however, several flaws and weaknesses in the functioning of the system. In fact, decentralization in Lao PDR is still evolving and are guided by decrees, rules and executive orders. A formal and comprehensive decentralization law is yet to be legislated. The involvement of different institutions (of different sectors) at all levels, in forestry matters have often lead to conflict of interest affecting governance. The need for coordination among sectors and levels is high. Moreover, effectiveness of forestry organizations is generally poor, due to lack of adequate skills, experience, development discipline and orientation, funds, facilities, infrastructure, and people’s participation. At the decentralized level, the overall situation is worse. There is also the issue of critical size required (particularly for districts and villages), for self-sustainable development. 27 At a cross-sectoral level the UNDP’s Governance and Public Reforms Project is addressing some of the critical institutional weaknesses. FORESTRY SITUATION In comparison with its neighbours, Lao PDR is endowed with valuable and ecologically unique forests, which are not only a vital economic resource, but also provide essential contributions to the livelihood of the rural population. Some 80% of the population relies heavily on the forests for timber, fuel, medicines and spiritual protection. Extent and Condition of Forest Resource According to the Global Forest Resources Assessment 2000, an area of 125,610 sq. km, representing about 54% of the land area of Lao PDR (125,070 sq.km of natural forest and 540 sq.km of plantation forest), is under forest cover10, giving a per capita share of 2.4 ha (FAO 2001, 2005). Lao PDR has more forest per capita than most other developing countries. Distribution of the forest is uneven, with commercially valuable forests occuring in central and southern parts of the country. Forests of Lao PDR is owned by the State. Forest types 99.5% of the forests of Lao PDR are natural tropical forests, categorized as evergreen forests (30%), moist deciduous forests (50%), dry deciduous forests (15%) and others (5%) (Kingsada, 1998). Forest are also differently classified as wet evergreen forests, monsoon forests, mixed deciduous forests, dry evergreen forests and dry Dipterocarp forests11. Parts of Annamite Chain are covered by tropical montane evergreen forests, while tropical pine forests can be found in the Nakai Plateau and Sekong areas to the south. There are more than 150 utility trees occurring in the forests of Lao PDR. 30 to 50 species are commercially valuable (Dipterocarps, teak, Pterocarpus species and others). Forest Plantations The first forest plantation raised in Lao PDR was in 1975, mainly as “species trials”. Species raised included Eucalyptus spp., Acacia spp., teak, Melia azadirachta, Alstonia 10 Forest as defined in Global Forest Resources Assessment 2000 refers to land with a tree canopy cover of more than 10%, and an area of more than 0.5 ha. 11 Yet another categorization based on ecological zonation is: rain forest (25%), moist forest (25%); dry forest (35%); montane forest (14%) and others (1%) (FAO 2001). 28 scholaris, Styrax spp., Pterocarpus macrocarpus, Sacrocephalus spp., Bixa orellana and others. According to Global Forest Resources Assessment 2000 (FAO, 2001), reported area of forest plantation in Lao PDR is 54,000 ha. Acacias Eucalyptus spp. Teak Other broad leaved spp. - 5,000 ha 8,000 ha 14,000 ha 27,000 ha Due to various reasons, it was not possible so far, for Lao PDR to pursue a consistent effort for raising high value forest plantations. Recently, high priority has been accorded to establishment of plantations, in order to enhance the forest resource base; and during the last few years, there have been considerable increase in plantation area. In Luang Prabang province alone, the area of teak plantation as in 2005 was reported to be 15,340 ha. Both private and public sectors have contributed to the expansion of plantations. Some of the plantings, particularly of teak, took place with funds provided to farmers by industrialists in Thailand, on the basis of buy-back arrangements. Tree planting increased from some 1,500 ha/year in early 1990s to about 17,000 ha/year in 2000s, with support under the ADB loan project. Commercial species such as teak are being increasingly planted. Small holders constitute the largest tree-growing group; but on average have smaller plantations (1.8 ha). They account for 30% of the total area planned under the ADB loan project. A large number of species, both exotic and indigenous, are used for planting depending on the purpose for which they are raised. So far, contribution of plantation wood to total wood supply has been negligible. Growth and yield studies relating to forest plantation in Lao PDR are scanty. Available information is based on random observations than on scientifically designed studies. Such information, however, indicate that the growth and quality of planted trees is very low, when compared with international standards. Poor performance of plantations in most situations is the cumulative effect of several contributory factors, in addition to the pilferage – i.e., poor site selection, lack of soil studies, inadequate technology, inappropriate species, lack of species/site matching, inadequate attention regarding seed quality and provenance, poor protection (against fire, pests and diseases, pilferage), inadequate tending and maintenance, and deficiencies of management. Plantations for Future Forest plantations, being an intensive investment-oriented activity is often designated as industrial forestry, for producing industrial raw material (saw logs, ply logs, pulpwood, chip wood), construction timber, and fuel wood. A unit area of forest plantation can substitute for a natural forest 20 or more times its size in terms of growth and yield of wood (or other products), though not in terms of its environmental attributes such as conservation 29 of biodiversity. Some of the advantages of industrial plantations are the uniform quality of product, amenability for manipulating growth and other properties though genetic improvement, relative low cost of harvesting, economy of scale and so on. They can be grown as pure crop or mixed crop, for single product or multiple products. Because of its high-input/high-output potential forest plantations often are the practical answer to meet the increasing demand for forest products. Future of production forestry, whether for wood or non-wood products, will to a significant extend depend on plantation forestry. Since profitability (viability) of such ventures depends on productivity, it is necessary that priority attention is given to improving productivity of plantations. Considering the importance of forest plantations for meeting the future production (and protection) needs, and the enormous increase expected in this activity during the coming years, the whole area of plantation technology (covering soils and sites, seeds, nursery, planting stock, plantation silviculture, pests and diseases, tending and maintenance) will have to be dealt with as a high priority. Particular emphasis will have to be given to management packages. Related research would include: high-input/high-output combinations; multipleuse/multiple product plantations (e.g. resin + timber; fruit + spices + timber; wood + rattan); complementary roles of indigenous and exotic species; scattered tree silviculture; ecological zoning for plantation planning; and economics of plantations. Dynamics of Forest Resource Change The forests of Lao PDR, one of the major natural resources of the country, has been devastated in the past 35 to 40 years, partly as a result of civil unrest and partly because of other pressures. Much of the country’s once rich forest resources and forestlands are in degraded and depleted condition. Deforestation In the 1940s, Lao PDR had more than 17 million ha (74% of land area) under forest. According to Global Forest Resources Assessment, 2000 (FAO, 2001), the estimated forest area (having a crown cover of 10% or over) in 2000 was 12.56 million ha, compared to 13.09 million ha in 1990 - indicating an annual deforestation rate of 53,000 ha (0.4%) during 1990-200012. Excessive and illegal logging, planned and unplanned land use changes, forest fires, and inadequate protection measures have been the major causes leading to continuous loss of forests. 12 Another (Lao-Swedish ?) study conducted in 2002 indicted that forest which has more than 20% canopy density, cover only 41.5% of the land area (or 9.83 million ha) of Lao PDR, compared to 47% in 1992 and 70% in mid –1960s (MAF, 2005). 30 Forest Degradation A less conspicuous, but equally serious aspect of the dynamics of forest resource change is forest degradation – caused by unscientific uses, grazing, fire, slash-and-burn agriculture and management deficiencies, which gradually leads to the disappearance of forests. Due to non-observance of silvicultural and other prescriptions, lack of scientific forest management and rehabilitation, and uncontrolled (legal and illegal) selective logging, several areas have become degraded. These degraded forests are of low economic value. Forest degradation is manifested in the form of low stocking, damages to (and declining quality and commercial value of) the residual growing stock, imbalance in the distribution of species and size/age classes, falling growth and productivity, lack of under growth, loss of wildlife and plant habitats, soil erosion and so on. In Lao PDR, much of the remaining forest is in a highly degraded condition. The estimated volume of growing stock of wood in 2000 was only 29 cum/ha compared to 128cum/ha in 1990. The corresponding estimated quantity of above ground biomass in 2000 was 31t/ha, down from 193t/ha in 1990 (FAO, 2001). Fall in the growing stock often suggests drastic loss of NWFP resources. There is at present growing concern over the adverse social, economic, and environmental impacts of these trends. Moreover, deforestation and forest degradation affects most severely the poorest segments of Lao society, and particularly women and ethnic groups whose livelihoods are more closely dependent on the health of the nations forests. Forest Management In the earlier section, we discussed the dynamics of forest resource change in Lao PDR and the extent of deforestation and forest degradation that have taken place in the recent past. The discussion also indicated the serious inadequacies of forest management. Over the years, several activities have been proposed to reverse the negative trends of the past in forest management. These include: forest land allocation to local communities and other resource managers; strengthening systematic forest plantation development; development of national village forestry strategy; and development and piloting of sustainable forest management systems. Overall, the strategy proposed is intended to achieve forest management through rehabilitation, protection, conservation, enhancement of productivity and expansion of forest resources, in collaboration with local people, private sector and NGOs. Accordingly, there has been a change, recently, in the emphasis from large scale production forestry towards people-oriented community forestry. However, most of the proposals are yet to materialize. 31 Management Objectives The prime objective of forest management, as has often been reported, is to ensure and support environmentally sound and sustainable development, including improvement of productivity and biodiversity conservation. One of the specific objectives in this regard is stabilization of shifting cultivation by phases and resettlement of shifting cultivators in the uplands of Lao PDR. Management Activities Forest and land allocation programme covering community forestry, agro-forestry and JFM type approaches; production-oriented forestry; forest protection and biodiversity conservation with peoples participation; plantation forestry with participation of private sector and village community; and management of village forests have all been proposed as forest management interventions. The above categorization and the system of management to be followed for each of the categories, for achieving the management objectives, area afflicted by confusion and lack of action. During the Mission to Lao PDR during May/June, 2005, the author could not get consistent information regarding considerations for categorization, activities undertaken, type of areas involved, production figures and so on. Information obtained during meetings at various levels were often contradictory. Stabilisation of Shifting Cultivation With the objectives of stabilising shifting cultivation, poverty reduction, improving economic (income generating) benefits, promoting protection and rehabilitation of natural resources, activities are planned under different programme titles (e.g. land and forest allocation programme, village forestry and community forestry), which more or less mean (or aim to achieve) the same thing. The strategy dealing with shifting cultivation stabilization, as given in official documents includes the following: Land use zoning based on slope and land capability. Sedentarization of agriculture in sloping lands through farming system diversification and agro-forestry development. Enhanced access to markets through feeder road construction and delivery of market information. Rural savings mobilization and credit grants, and Land allocation and land use occupancy entitlement. Land and forest allocation and village re-location and consolidation have been used as the main stabilization mechanisms for shifting cultivation and for enhancing cash crop production and forest conservation. Land allocation activities began in the early 1990’s and were consolidated into a National Programme under PM’s Decree No 3/1996. A specific decree on allocation of land and forestland for tree plantation and forest protection (PM’s 32 Decree No 186/1994) enabled allocation of land for these purposes. MAF instruction No 822/1996 has set the general principles, specific targets, implementation procedures, types of land to be allocated within villages and eligibility for land and forest allocation. The Land Law (No 1/1997, Arts 17 and 21) provides the framework for areas of land to be allocated. Accordingly, up to 25 ha can be allocated for agriculture and forestry to each labour unit available in an organization, or to individuals. Crop Production Degraded forestland has been allocated to farmers and individual households for crop production, grazing and tree planting through the land and forest allocation progrmme, under which they are entitled entirely for the produces grown. Temporary land use certificates are signed for a period of 3 years, after which longterm use rights would be given if the allocated land has been developed satisfactorily, according to the agreed objectives. Rotational upland cultivation on allocated plots or within agreed areas, without encroachment upon new forest areas, is an accepted alternative, although sedentary cultivation on upland or sloping areas using improved, conservation-oriented farming methods is preferred. Promotion of non-rice crops, fruit and commercial trees, cattle, and fishponds potentially provide alternative sources of food and income for affected populations. Since 1990, significant reductions in the area involved and the number of families practicing shifting cultivation have been reported. From 249,000 ha and 210,000 families in 1990, figures dropped to 110,000 ha and 99,000 families in 2001. The current targets are to eliminate 70% of the area under shifting cultivation by 2005 and to eradicate it completely by 2010. Five provinces in the north of the country (Luang Prabang, Oudomxay, Huaphanh, Phongsaly and Luang Namtha) are the focuses for these programme, each being given an annual reduction target. No statistics exist, however, on the permanent occupations and livelihoods of farmers who have abandoned shifting cultivation, although some reported successes are promoted as models. Village Forest Management Inspite of the Government’s past and on-going efforts, the legal frame work concerning village land use and forest management has not been adequately clear. The relevant legislation includes the Forestry Law of 1996, MAF Instruction 822/1996 and MAF Regulation 535/2001 on village forest management. Village boundaries, including forest boundaries, are to be officially drawn with acknowledgement from neighbouring villages, through the Land and Forest Allocation process. Village forest is classified into several types (i.e. production use, protection, rehabilitation) and rules on the use of each are agreed upon with villagers’ full participation. Villagers are allowed to collect and sell NWFPs and harvest timber for domestic use. They may be allocated land for tree planting and regeneration, and ownership of the resulting trees is guaranteed upon registration. Land tax may also be waived on tree plantations under certain conditions. This is expected to help expansion of agro-forestry and plantation forestry by small farmers rather than by large companies. 33 Information on the implementation and achievements of village forest management is scarce. Community Forestry The term community forestry is seen used rather loosely. Often it is used synonymously with “village forestry” and “participatory forest management”, undertaken as a means of poverty alleviation. The objective of the existing community forestry sites appears to be to protect what few forest that remains, and to rehabilitate the degraded ones. The “use” of these forests is limited to the collection of NWFPs and fuelwood. Community forestry is considered as suitable to be extended to areas where NWFPs are an important source of income. As of 2003, community forestry in Lao PDR occupied 150,000 ha of forest, approximately 1.3% of the total forest cover. By the end of 2001-02 fiscal year, some 6,200 villages, more than half of all villages including those in urban areas, had partaken in the allocation exercise, receiving on average just above one thousand hectares of village forest each. In addition, about 380,000 households, about 60% of agriculture households, have been allocated land. It is reported that shortages of funds, equipment and technical staff are the main causes of both delay in program implementation and its inadequate effectiveness. Forest Production It has been reported that some 35,000 ha of forest are annually covered under different categories of wood harvesting activities. However, the details about the sources of forest products and the system(s) adopted in their management is ambiguous. Production forest is known to include “village use forests”, wherein NWFP collection and felling of trees for bona fide domestic uses are allowed. Without a clear legal basis for boundary location and management planning, the production forests, with the exception of a few in Savannakhet and Khammouane provinces are not under systematic management. Also, there is hardly any reliable information available. Lao PDR had made a commitment to initiate SFM, in 1992. However, wood (as well as non-wood) production is still based on provincial quota allocations, which is ad-hoc in nature. Additional quota is also often allowed for extracting timber from dead and wind blown trees, which often leads to illegal and over extraction. To encourage sound and appropriate logging, a National Code for Timber Harvesting Practice was developed in 1997; but it has hardly ever been followed. Once the anticipated system of production forest management has been fully established based on the principle of SFM, and management plans are in place, the ad hoc logging and provincial allocation system may cease, as all harvesting will then be (hopefully) on the basis of scientifically established annual allowable harvest. Log harvesting and sales will be conducted for each production forest area by concerned local organizations. The transition between the two systems will be gradual; and, challenging decisions may have to be made to ensure that the transition progresses smoothly. It is underlined that there is need for a policy to improve overall productivity in the production forests by developing nonwood and service benefits of forests (in addition to wood), and by promoting integrated 34 forest management. Research on alternative interventions to ensure socio-economic benefits of forest will help proper and balanced decisions. Management Plans and Planning Even though the GoL has committed to adopt sustainable forest management, there has been undue delay in designing and conducting component activities of SFM such as resource inventory/assessment, demarcation of forest management units, establishing criteria and indicators for SFM, preparation and implementation of forest management plans etc. Lao PDR had carried out a forest resource assessment in the 1980, and again a reconnaissance survey in 1992. While there has been a considerable change in the forest resource position, no detailed (and national level) assessment has since been made. There are no reliable figures on annual increment of growth in natural forests (and plantations), for estimating annul accountable cut. The figures in use are conjectural in nature and not based on continuous inventory. There is need to undertake scientifically designed growth and yield studies to support management planning. It is claimed that the production forests have been (or are to be) divided into FMUs for management planning, and that for the purpose of production control, each of the FMUs are to be divided into 50 annual compartments. It was also suggested that if an FMU falls in more than on district, it is to be sub-divided into sub-FMUs – one sub-FMU in each of the districts involved. No clear and consistent account could be obtained about the extent to which this work (including field demarcation of FMUs and preparation of management plans for the FMUs) has progressed. While broad management prescriptions are provided only for production forests, they are not adequately supported by well thought-out criteria and indicators. Trials are now being taken up on criteria and indicators for SFM in Savannakhet and Khammouane provinces. It is known that scientific forest management prescriptions are being developed and tested for the four provinces included under the World Bank/Finnida Project on sustainable forestry and rural development (SUFORD). It was not clear whether any comprehensive and currently valid/applicable plans exist, outside those under SUFORD. It is expected, however, that appropriate and science–based management plans will be prepared for all FMUs in due course. At present the situation is somewhat unsettled. Inspite of the stipulations contained in different documents, in the absence of their implementation, forest management remains weak; and forest resource of the country is not managed/used efficiently and sustainably. Overall, the standard of forest management is not adequate or satisfactory. The situation is exacerbated by the lack of co-ordination among the large number of national and local (decentralized) level agencies (dealing with agriculture, forestry, environment, finance, planning, processing, trade, science and technology etc). 35 Forest Resource Utilization Forest resource utilization covers direct (e.g. wood and non-wood products) and indirect (e.g. tourism, soil and water conservation) uses. Indirect uses are often externalities – i.e. out of the scope of market mechanism. Harvesting of forest produces is the first stage in forest utilization: and, due to technological and managerial inadequacies, harvesting operations in Lao PDR results in considerable wastage of usable materials. Available data on forest harvest is also incomplete and inconsistent. In the year 2003, reported production of round wood in Lao PDR was 6,305,000 cum, of which 5,913,000 cum, representing 94%, accounted for fuelwood (FAO, 2005). While there has been an increase of about 36% in total wood production in 2003 compared to 1991, industrial utilization had in fact fallen indicating that the increased wood supply was consumed as fuel wood, supporting subsistence instead of value-addition. NWFPs are very important to the rural economy. Inspite of their importance to vast sections of society, and their economic potential, information on these are scarce, inconsistent and incomplete. More discussion on NWFPs is available in a later section of this report. Forest Production In the past, under the centralized economy, State Forest Enterprises were managing forest production. In 1970s, there were several Forest Enterprises, each having an average allotted area of 200,000 to 300,000 ha of production forest. As of 1986/87, the situation with regard to production forestry was as follows: Central government operated 9 logging companies, 6 saw mills, one plywood mill and 2 parquet factories. Provincial governments operated 17 logging companies, 70 saw mills, 6 parquet factories and 8 integrated processing units. Private sector operated 16 sawmills and 2 integrated processing plants. In the changed policy environment, state-run wood utilization/processing units were sold or leased to foreign/private companies. There was also provision to lease them to workers’ co-operatives (collectives) or to establish joint ventures of state and private sectors. With the change-over from centralized to market economy, the approach to forest utilization and enterprises has changed in Lao PDR, and the State Forest Enterprises have been dissolved. Forest produces, wood and NWFPs, are now disposed off either by quota allocation, negotiation/bargaining or by competitive bids. The decision regarding whether the produces are to be disposed off through establishment of quota or through competitive bids is made by the Government, based on specific circumstances. Quota is the yearly planned/allowed harvest in a specified area. In the absence of technical inventory and management information, the annual quota is fixed arbitrarily, relying on rough/casual estimates provided by forestry staff. Currently, quota system is in vogue only for a few categories of wood and NWFPs. 36 The standard system for the sale of logs is through negotiation/bargaining, although bidding at second landing has also been practiced in some cases. For the latter (i.e. bidding), concerned Ministries co-ordinate with relevant local authorities to arrange bidding procedures on the basis of information provided by the Provincial Forestry Office. Bid winners negotiate and sign a sale contract with the Provincial, Municipal or Special Zone Commerce Division, make a down payment for the logs to the Provincial Finance Divisions and also sign an afforestation contract with PAFO and pay the re-afforestation fee. Studies have shown, however, that the bidding system is inappropriate under the prevailing conditions, with limited number of buyers. Therefore, negotiation/bargaining remains as the preferred system. Harvesting of saw logs and veneer logs has, however, been controlled – reducing it from 734,000 cum in 1999 to 260,000 cum in 2003 (and an estimated 150,000 cum in 2004). Government has now decreed that logs and NWFPs be sold on annual basis to processing plants through competitive and transparent methods to secure better prices and maximize revenues. Log sale decisions will be made by the Provincial Log Sales Working Group under the guidance of the Provincial, Municipal or Special Zone Governor. Gross revenues from log sale will be utilized for: (i). remittance to the national budget, (ii). contribution to the forest development fund, (iii). defraying forest operating costs, and (iv). funding local development including village development activities. Furthermore, PM’s order no.18/2002 stipulates that the wood processing companies have to invest on raising their own plantations, in order to secure supply of raw material in the future. Forest-Based Processing and Value Addition Forest-based processing sector in Lao PDR makes important contributions in terms of income and employment generation. The government policy has been to promote forestbased processing domestically, by linking processing and harvesting and by promoting export of processed products. These objectives are far from being achieved. The main wood-based processing activity in Lao PDR is saw milling. There are over 100 registered saw mills in the formal sector with a total production capacity of about 500,000 cum, and many more small saw mills and pitsaw operations outside the formal sector. There are also two plywood mills with a combined capacity of about 100,000 cum. The larger factories are mainly located in the southern provinces and often have integrated operations including saw milling, drying and re-manufacture. Actual production of these two products is far below the capacity (see Table 2). Table 2 - Production and Consumption of Wood Products, 2003 Product Round wood(cum) Production 6,305,000 Sawnwood (cum) Wood-based panels (cum) Paper and paperboard (t) Import - Export 63,000 Consumption 6,243,000 182,000 - 131,000 51,000 13,000 1,000 5,000 9,000 - 3,000 3,000 37 Sawnwood production registered a fall of 39% compared to the 1991 production (and 66% compared to 1995 production), while wood based panel production showed an increase of 30% compared to 1991 production (but a drastic fall of about 850% compared to 1996 production and 285% compared to 1999 production). Ownership of wood processing factories is now dominated by the private sector although there are a few joint ventures with state-owned companies. There are no large corporations that exercise significant control in the wood-processing sector. The woodprocessing sector has recently formed the Wood Producers Group to exchange information on trade issues and organize training courses. This group could also organize marketing initiatives to avoid domination by the trades and buyers from neighbouring countries. To establish wood processing facilities in Lao PDR, a local investor must obtain an Enterprise Registration Licence from the Ministry of Trade, a tax license from the Tax Department of the Ministry of Finance and an operating license from MAF and/or MIH. In addition, foreign investors must obtain a foreign investment license from the Foreign Investment Monitoring Comittee. Regulations require the wood-processing factories to obtain operation permits annually. Pursuant to the Forestry Law of 1996, Art 22, and MAF Regulation 261, wood processing is an activity to be authorised by MAF. Specifically, MAF governs the registration and licensing of wood processing factories as well as any transfer or change in factory ownership. PAFOs are required to register all machinery and authorize and monitor the import and use of wood and NWFPs for factories. DAFOs are mandated to monitor and inspect factories based on relevant legislation/rules and to submit reports to MAF. As already noted, forest-based industries are generally operating below capacity, due to a variety of factors. While there is scope for improvement in all cases, in respect of saw milling industry the conversion factor (i.e. output per unit input of raw material) is very low due to inefficiency of equipment and operations and lack of trained manpower. While wastages (residues) in logging and processing are high, there are no viable measures for waste utilization. Integrated operations can help to improve the situation. Downstream processing for value-addition is still relatively limited comprising mainly of parquet production for export and furniture manufacturing, mainly for domestic use. Apart from added income and retained value, development of secondary processing will help to generate employment and to promote a technological skill base. One of the attempts on the part of the Government has been to down size and upgrade the forest industry sector, through selection of processing units meeting certain criteria, such as: producing semi-finished or finished products; using high technology and having high productivity; demonstrating superior environmental protection, safety and welfare; having appropriate management; and having a good record of law abidance. On this basis, in 2002, the Government proposed closure of 26 out of about 130 saw mills and 169 out of 918 furniture factories, and ordered them to cease operation. 38 Forest Products Trade Lao PDR is a net exporter of wood products. Total value of forest-based imports in 2003 has been valued at US$ 1.55 million, against an export valued at US$ 62.68 million. Export earning essentially comes from sawnwood, value of which increased from US$ 32.8 million in 1991 to 52.75 million in 2003 (see Table 3). Table 3 - Wood Products Trade, 2003 (000 units) Product Import Quantity Export Value US $ Quantity Value US $ Roundwood (cum) - - 63 8,955 Sawnwood (cum) - - 131 52,745 Wood-based panel products (cum) 1 - 5 977 Paper and paper board (t) 3 1,545 - - Total - 1,545 - 62,677 Sourc: FAO (2005) In order to promote export of semi-finished and finished products the Government ordered a ban on export of logs and a reduction in sawn timber export by PM Orders No 11/1999, 10/2000 and 15/2001. In PM order No 18/2002 export of sawn timber is also banned to restrict export of roughly processed sawn timber or ‘square logs’. These orders are yet to be effectively implemented. However, export does take place, including logs of Pinus merkusii. The wood-processing industry of Lao PDR has difficulty to compete against established facilities in neighbouring countries when international parity prices are paid for logs. Therefore, export of secondary or finished products is limited. Instead, these neighbouring countries process logs and sawn wood from Lao PDR and export final products to lucrative markets in Japan, Europe and North America. Foreigners with direct market access do own some of the sawmills; however, a number of producers use the services of Thali timber traders to sell their products, and do not therefore have much knowledge about prices or market dynamics. Also, no one really knows how much teak and other hardwoods are being smuggled out. According to estimates, the export of timber and other forest products (including NWFPs) accounts for about 34% of the export earnings of Lao PDR. (The forestry sector, on the whole, it is claimed, accounts for about 8 to 10% of the per capita GDP of the country). The current situation of wood supply and wood use brings up certain efficiency issues, and the need to improve the situation. 39 Protection and Conservation Deforestation and other forms of misuse of forests have negatively affected soil and water conservation. The Forest Law of 1996 has provided a framework for all aspects of forestry, including a basis for zonation of areas into “strictly protected” and “control use” zones. High elevation forests are to be protected as watersheds. There are also regulations regarding conservation of soil and water, which are not being strictly enforced. Management of natural biodiversity conservation areas are still rudimentary, without boundaries and management plans. Resource depletion continues even in protected areas. Protected Area Management Environmental protection is key to socio-economic development; little action was taken by the Government in relation to the environment until recently. Forests of Lao PDR are rich in bio-diversity. But, as a result of deforestation and forest degradation several species of flora and fauna are facing danger of extinction; and, current efforts at conservation of bio-diversity and environmental protection are insufficient, even considering that the ecology of Lao PDR is less subject to threats compared to most other countries in Asia. There is need for quantitative and qualitative improvement of protected areas and to improve the effectiveness of their management. Intellectual property rights relevant to the use of forest resources, e.g. ethno-botany and ethno-pharmacology, are an aspect related to conservation, requiring attention. The conservation of ecosystems, species diversity and genetic variability, as well protection of wildlife in Lao PDR is based on a National Bio-diversity Conservation Area Programme (NBCA). Of the 1,325 species in Lao PDR, listed under 7 species groups, 85 are now endangered. Three among these endangered species are country-endemic, of which two are forest-occurring. Of the forest-occurring endemic endangered species, one is a tree. Bio-diversity conservation efforts are of recent origin in Lao PDR. In 1986, the Department of Forestry established the Centre for Protected Areas and Watershed Management. Besides the initiatives in the forestry sector, a Science, Technology and Environmental Organization was established in 1993 under the Prime Minister’s office. Legal framework for protected area management has also been strengthened. Lao PDR is a signatory to most international agreements relating to environmen; ASEAN Agreement on the Conservation of Nature and Natural Resources of 1985; Convention of the World Cultural and Natural Heritage of 1972; Convention on Biodiversity Conservation of 1992; Convention on International Trade in Endangered Species of Flora and Fauna (CITES) of 1973; Kyoto Protocol 1997; Ramsar Convention on Wetlands of International Importance of 1971; UN Convention to Combat the Desertification 1994; UN Framework Convention on Climate Change of 1992; Vienna Convention for the Protection of the Ozone Layer of 1985. 40 In 1993, the Lao Government conferred legal protection upon 17 national biodiversity conservation areas (NBCAs), for a total of 24,600 sq.km. So far, Government of Lao PDR has established 20 national protected areas covering about 30,000 sq. km or 12.5% of the country’s land area; and, several PAs have been established by Provincial governments. There are 57 provincial and 114 District Protected Areas. All the Protected Areas together cover about 21% of the country. There are plans to expand the area of PAs. The objective of the NBCA programme is to protect natural areas for conservation of flora and fauna, maintenance of ecological stability and watershed functions, and to preserve historically, aesthetically, culturally or scientifically valuable sites. Programme objectives should, wherever possible, be achieved through local, participatory management benefiting NBCA residents. The designation of an area for inclusion in the NBCA programme may impact on villagers’ access to forest, and more generally on their livelihoods. Villages involved in NBCAs are classed into one of the following four types: Enclave villages, whose production forests fall entirely within the NBCA boundary; Straddle villages that may be outside the NBCA, but some or most of its production forest are within it; Adjacent villages whose production forest borders, but does not impinge on, the NBCA; and External villages whose activities have an impact on the NBCA. Details of protected areas by ecological zones of the country indicate that there is no balance in its coverage. They do not have scientifically prepared management plans, and suffer from insufficient protection, hunting and poaching, and peripheral encroachments. Conservation regulations are not properly enforced. Traditional trade in endangered wildlife and wildlife products across the boarder to China, Vietnam and Thailand is continuing at an increasing scale. Illegal timber felling and the smuggling of wildlife species would decrease, if all officials involved were held responsible and accountable for their actions. The challenges facing the natural resources of Lao PDR are the internal pressures of economic growth and the external pressures of the more populated and more affluent neighbours – China, Thailand and Vietnam, who exploit the resources of Lao PDR, as much as possible. Overall, there is need to improve the effectiveness of protected area management. 41 Institutions and Instruments13 Normally, sectoral policies decide the type of institutions and institutional instruments required to achieve the policy goals. Sectoral policy, thus, guides the functioning, growth and development of the sector. No ‘legislated’, formal policy exists for the forestry sector in Lao PDR. Policy prescriptions tend to come in the form of occasional statements, objectives of plans and programme, declarations at national events and so on. These tend to vary in their emphasis (priority) and also in the content, which causes interpretational differences and confusion. Sectoral Objectives One document (Chanhsamone, 2005) areas/principles, requiring continued efforts. 13 mentions the following as policy Enhancing village-based natural resource management for poverty alleviation; Introducing reliable systems for harvest determination; Controlling unsustainable harvest and export of NTFPs, and promoting sustainable participatory management and processing of NTFPs; Improving the performance of the wood industry by measures including: bringing processing capacity into closer accord with sustainable timber supply and producing more finished products; Promoting tree planting and management by clearly targeting owners and markets, and developing investment schemes to strengthen the wood supply base; Preventing encroachment, unauthorized activities and biodiversity degradation through solid law enforcement, capacity building and assisted participation of villagers in forest management; Formulating a national land use policy and introducing land use planning both at macro and field level; Completing and improving the forestry related legal framework, clearly defining different stakeholder’s responsibilities and providing sound criteria for, and transparency in, decision-making; Improving sector efficiency and strengthening international competitiveness through greater market-orientation; Completing decentralization process (or bottom up planning) and implementation system and capacity building, especially at local level; Maximizing benefit generation and allocation through innovative mechanisms; Mobilizing effective international co-operation. Regarding this aspect, please also see section 4 : Policy and Institutional Arrangements for NWFPs. 42 It has to be noted that most of the above are either action proposals or strategic measures. Recently, the draft Forestry Strategy 2020 has indicated the following as objectives, which is in the form of long-term policy objectives: To maintain a healthy and extensive forest cover, as an integral part of rural livelihood support system including stable water supply and mitigation of natural disasters; To generate a stream of forest produces for domestic processing and consumption, and many of them for eventual export, thereby generating adequate household incomes and contributing to country’s foreign exchange reserves; To preserve the existence of many species and unique habitats, which are threatened with extinction. The real forest policy intention and design of related actions (irrespective of whether it is legislated or not) appears to be to: re-orient the forestry sector to a market economy with emphasis to prevent forest degradation; use the forest resource efficiently; develop institutions and human resource; stabilize shifting agriculture; and develop forest industry. Strategic interventions in that regard include: creation of lead co-ordination bodies for harmonizing planning, development and extension; streamline the use of local resources and foreign aid; enhance R & D activities; develop sustainable upland landuse and management practices; undertake appropriate technological interventions; and establish a strong management information base. Along this line, the government brought out a National Village Forestry Strategy in 1997, which was also meant to rationalize the swidden-based livelihood system. Legal Framework for Forestry Sector Laws, rules and regulations for achieving the forestry sector objectives (issued from time to time) are several, having long, medium or short-term relevance. In the absence of a stable sectoral policy, which is approved by the legislature, the sectoral objectives and related instruments tend to be changing continuously. This causes confusion on the part of the public and the implementing agencies. The most important legal instrument relating to forestry in Lao PDR is the Forestry Law of 1996, complemented in certain aspects by the Land Law of 1997, Environmental Protection Law of 1997 and Processing Industry Law of 1999. For the purpose of implementing the various policy-type stipulations and the Forestry Law, several decrees, orders, rules, regulations, memoranda etc. have been issued by the Government at various levels from time to time, some superceding and others overlapping with the previous ones; yet others are in conflict with the other existing rules and regulations. Lao PDR has gone through a series of changes in national policies and related laws, rules and regulations, following its political independence. From 1975 through to the early 1990s, several legislative measures were introduced in the forestry sector. 43 The first comprehensive forest legislation of 1975 was considered as a good document, having appropriate provisions; but implementation was limited. It was in the 1980s that PM No.16 decreed strengthening of tree harvest control, by introducing a 2-tier logging system (to be practiced by State Owned Enterprises for export, and provincial companies for domestic use). In 1986, the New Economic Mechanism and the shift towards a state-lead market oriented economy, caused corresponding changes in forestry. In 1989, the Council of Ministers issued two decrees. 117 on management and use of forest and forestlands and 118 on control and management of aquatic animals, wildlife, hunting and fishing. Decree 117 provided for allocating 2 to 5 ha of forest and forestland to each household, and 100 to 500 ha to each village. Households were allowed to inherit or transfer the allocated forestland. The decree PM No.67 of 1991 declared a nation wide logging ban and ordered proper management of forests. In 1993, decree PM No.164 was introduced for establishing national conservation forests. Another decree in the same year, P.M.No.169 of 1993 on management and use of forest and forestland provided for forest management contracts – i.e. collective forest management contract (between districts and villages); family forest management contract (between districts and households); and afforestation business contract. This decree (PM 169/1993) replaced decree 117/89. Further, in 1994, a new decree, PM 186 on delineation and allocation of land and forest for tree planting and protection was issued, provisions of which was later incorporated into the Forestry Law of 1996 (01/NA), replacing both PM 169 of 1993 and PM 186 of 1994. Decentralization of administration has provided a new dimension to the implementation of legislative provisions pertaining to the forestry sector. All laws, rules (decrees) and regulations and all major decisions touching on national policy level issues, are initiated at the national level and disseminated to provinces, districts and villages. The decentralized units can take some decisions pertaining to local issues and matters, based on powers delegated14. The Forestry Law of 1996 The scope and coverage of Forestry Law, 1996 inter-alia, include: forest land use allocation (and taxation); development and management of tree plantations; management of conservation and protection forest; wood processing factories; NWFP management; village use and rights in forest management and management of production management (Sigaty, 2003). Forest categories described in the Forestry Law of 1996 include: production forest; protection forest (watersheds), conservation forest (NBCAs); regeneration forest; degraded forest; forestlands designated for defence and security purposes; and forest areas designated for scientific research. While production forest and the special purpose forests (for defence, security, research) are allocated for national level control, protection and conservation forests 14 Legislation relevant to forests in Lao PDR exists on atleast five levels: national, provincial, district, village and military. Province, district and village can enact legislation, which gives effect to, or strengthens national laws, as well as create legislation in fields not covered at the national level. 44 are assigned/allocated for management to provincial, district and village levels, and regeneration forest is allocated to village level. The Law supports development of forest plantations by allocating degraded forestland to households as well as to private sector and by exempting land tax. A National Land Management and Forest Land Allocation Steering Committee was set up in July, 1996. The Forestry Law of 1996 is the main and governing document concerning conservation of wildlife, including control of hunting, capture, transport, import, export etc. of wildlife. The Forestry Law of 1996 has provisions dealing with: investment in wood processing factories, permits for their establishment and management, trade in processed products and so on. Both MAF and MIH have authority to regulate wood processing factories. Establishment of wood processing factories also require: Enterprise Registration Licence from Ministry of Trade; a tax certificate from Ministry of Finance; and operation licence from MAF and MIH. There are conflicts and vagueness in these provisions. With regard to production forest, MAF is responsible for co-ordination with all relevant sectors. Provincial Agriculture and Forestry Offices (PAFOs) are responsible for the implementation of instructions for sustainable management of production forest areas under their jurisdiction, and to guide and monitor implementation. District Agriculture and Forestry offices (DAFOs) are responsible for the organization of the implementation of production forest management plans. The actual management activities itself are carried out jointly by the Forest Management Units (FMUs) and Village Forest Organizations (VFOs), including inventory and planning, harvesting and sales. Sales will take place with the participation of all concerned parties, including VFOs. Revenues from sales will be used for common purposes (remittance to national budget, forest development fund, forest operations’ cost, local development fund). Regarding harvesting of timber and other forest produce, the Forestry Law states that the harvest of timber and other forest produces can proceed only in surveyed and inventoried production forest areas for which there is a forest management plan. Pre-logging surveys are required and logging operations must aim at a sustainable yield on the basis of a logging rotation system. The harvesting of other forest produces such as mushrooms, roots, tubers, shoots, leaves, flowers, bark, resins and gum must be carried out according to specific regulations issued by concerned agencies. Laws covering disciplinary action are contained in articles 69 to 73 of Forestry Law, 1996. Disciplinary action, however, appears inappropriate for illegal activities and violations of legal provisions. The Penal Code of Lao PDR (1989) specifies penalties for violations of decrees and instructions, e.g. for hunting and fishing violations, illegal exploitation of natural resources, illegal trade in commodities belonging to the State, including wildlife and aquatic fauna, and violations of tax regulations (IUCN, 2002). Since 2000, responsibility for all harvesting/logging plans and their implementation has been given to the provinces. In 2001, the MAF issued regulations for village forest management; and in 2002, another decree P.M.No.59 was issued on sustainable management of production forest. 45 Implementing Rules and Regulations There is an array of rules and regulations in support of enforcing/implementing Forestry Law, 1996. Apart from the Law itself, there are some 50 implementing rules/regulations relating to forest management, conservation, harvesting, processing, trade, taxes/charges etc. Most of these are administrative instructions or rules of limited scope and coverage. Some of the important ones are: Establishment of National Biodiversity Conservation Areas, PM Decree 164/1993. MAF instructions for implementing forestland allocation, 1996. Customary rights and use of forest resources, MAF order 54/1996. Customary use of forest resources, MAF order 377/1996. National code of timber harvesting practices, 1997. MAF order 1848/199915 for planting or payment of compensation for NWFP harvest. Harvesting of wood and NWFPs, MAF Regulation 221/2000. Management and use of the fund from fees for harvest of natural trees and NWFPs, Ministry of Finance order 111/2000. Management of forest and forestry operations, PM order 10/2000. Management of NBCAs and wildlife, MAF Regulation 524/2001. Management of village forests, MAF Regulation 535/2001. Management of forest and forestry business, PM order 15/2001. Sustainable management of production forest areas, PM decree 59/2002. Apart from legislation directly related to the forestry sector, laws and rules of other sectors/departments (such as industry and handicrafts, trade, finance and taxes, health, environment, science, biodiversity and culture) exert influence on the sector, to varying degrees. If not adequacy co-ordinated and harmonized, these influences may not be beneficial, and may even be injurious, to the forestry sector. Lao PDR is a signatory to a number of international conventions and agreements, such as: 15 Agreement on the sustainable development of the Mekong River Basin (1995); ASEAN agreement on the Conservation of Nature and Natural Resources of 1985; The order applies to both timber and NWFPs. For example, for each tonne of rattan harvested 10 trees must be planted or 6 US$/tonne paid, and for one tonne of oleo-resin (black resin of Dipterocarpus spp) harvested 50 trees must be planted or 10 US$ / tonne paid. 46 Convention of the World Cultural and Natural Heritage of 1972; Convention of Biodiversity Conservation (CBD) of 1992; Convention on International Trade in Endangered Species of Flora and Fauna (CITES) of 1973; Kyoto Protocol 1997; Ramsar Convention on Wetlands of International Importance of 1971; UN Convention to Combat Desertification of 1994; UN Frame work Convention on Climate Change of 1992; Vienna Convention for the Protection of the Ozone Layer of 1985. This has placed considerable responsibility on the country for enforcing the provisions contained in these international legal instruments. Weaknesses in the Legal Framework There are several weaknesses in the legal framework for forestry in Lao PDR. While some of these weaknesses are common to most sectors of the economy, others are specific to forestry. These weaknesses can be categorized as intrinsic deficiencies, implementational deficiencies, and external influences. The intrinsic deficiencies are reflected in the following: Inappropriateness or ineffectiveness of the legal provisions to achieve the stated objectives, such as poverty alleviation in rural areas Lack of clarity (vagueness, ambiguity) in the legal provisions leading to widely differing interpretations. The lack of skills in drafting legal documents leads to poor formulation of laws and rules. (Lao PDR is known to have only about 40 qualified lawyers) Lack of clear definition of terms have worsened the confusion. Villagers are unable to understand the difference between conservation forest, core areas, corridors etc., in regulating collection of NWFPs. The provision for traditional use of forest produces to cover “economic necessity” has often lead to unauthorized commercial collection for earning income Gaps and incompleteness in coverage (e.g. lack of appropriate penalty clauses for violations; lack of provisions regarding targeted funding, gender mainstreaming and market facilitation; lack of safety provisions in forestry and forest industry regulations) is a major weakness. In the absence of appropriate legal provisions, if some one is caught in the process of transporting materials illegally, he is made to pay only the normal taxes and charges due with no additional penalty. In the absence of stringent penalty, rules are not treated with respect; smuggling and bio-piracy are known to continue unabated Inconsistency, conflicts and contradictions within the legal framework of forestry (as well as in the laws, rules and regulations of the related/interacting sectors) is 47 another important weakness. Several authors has dealt with this aspect (IUCN 2002, Sigaty 2003, Chanhsamone 2005). As an example: article 25 of the Forestry Law, 1996 requires that “the harvest of timber and other forest produce can proceed only in surveyed and inventoried production forest areas for which there is a forest management plan. In reality, however, forest management is based on “management plans” only in some project areas; and there are a number of technical issues which lack regulation – such as scope of management plan; responsibility for approving plans, monitoring the implementation of plan etc. Also other regulations such as PM order 15/2001 (management of forest and forest business) does not even require the development of a management plan or the estimation of allowable cut Moreover, the legal framework for forestry in Lao PDR suffers from inadequate development orientation and concern for sustainability, poor support for private sector, incongruity with several related rules and overall difficulty in enforcement Apart from the inadequacies of the legal instruments due to their structural and formulation deficiencies, there are inadequacies and lapses in enforcing these instruments. Often, laws and rules are simply ignored. Arrangements for disseminating information about the currently valid legal instruments, regarding their scope and coverage, appropriate interpretation (including exceptions, limitations) etc. to the concerned functionaries and to the people are highly inadequate (Sigaty, 2003; Chandrasekharan, 2005). Implementational deficiencies are evident in several situations: Legal instruments are not adequately and properly disseminated, such that the repealed (invalid) rules are often followed, even after new rules have replaced them. Although the Forestry Law, 1996 expressly replaced PM Decree 169/1993 (management and use of forest and forest lands), many local authorities still implement the provisions of PM 169/1993 Inadequate understanding about the scope and purpose of the legal instruments on the part of staff (and other stakeholders) at the decentralized levels. The laws and rules are disseminated top-down through the Government system of regional seminars, and the copies of documents concerned are, often, not made available to the implementing staff. There is also lack of detailed instructions and guidelines Failure to implement the legal instructions due to various real and imaginary reasons; and lack of transparency in implementation is common. Provisions of the available rules are often not property implemented (e.g. ad hoc quota system continues, instead of scientifically calculated annual allowable harvest/collection) There is inadequacy of staff and other organizational support for enforcing laws/rules/regulations Lack of compliance on the part of concerned persons is common, either because of ignorance or because non-compliance (or involving in illegal activities) provide them more benefits 48 Lack of adequate monitoring, in the name of decentralization, is another implementational deficiency. So is the lack of adequate implementation of international legal commitments and obligations The existing legal documentation (of rules, orders etc) are not kept updated, nor are they available/accessible in one volume (or in one place) – such that one is at a loss to know what rules apply to particular situations. Problems of law enforcement are found mostly related to harvesting and utilization of timber and NWFPs. In spite of the government’s efforts to regulate forest resource use, there have been cases of unauthorized harvesting, utilization and trade of forest products at various levels. Weak enforcement of laws and regulations has led, in many cases, to logging in production forests not in accordance with the targets set in the respective management plans; to excessive cutting by those who have been allocated a logging quota/permit; to cutting outside the boundaries to which the logging plans are bound; and/or to excessive or inappropriate extraction of NWFPs. Similarly, weak enforcement of laws and regulations has permitted, or not detected, cases of illegal harvests, even in conservation and protection forests. External influences (such as interference from other sectors, influence of policies/laws/rules of other sectors acting contrary to the interest of the forestry sector, lack of inter-sectoral co-ordination etc) are yet another weakness to be addressed. Further-more, the legal instrument are deficient in measures to address the new trends of globalization and free trade, product certification, carbon trade, e-commerce etc. – all of which emphasise the need for sustainable efficiency and competitiveness. Even though some of the above issues were already brought out boldly by Sigaty (2003), there has not been any significant follow-up. Sigaty (2003) analysed the legal frame work in the forestry sector of Lao PDR under seven heads: forest land use, planning and allocation; development and management of tree plantations; management of conservation and protection forests; wood processing factories; NWFP management; village use and rights in forest management; and management of production forest. Under each, the author discussed the background on legal framework, relevant legislation, major legal issues with summarized findings on the existing legal frame work, and recommendations for improving the frame work. An extract, of Section 2.5 NTFP Management, from Sigaty’s (2003) report is given in Appendix 3. Public Forest Administration Evoluation of forestry organizations (which covers enforcement and service agencies, as well as those involed in forest management and conservation) in Lao PDR is linked to the political and related structural chances in the country (including recent decentralization). In order to re-orient the forestry sector to be capable of meeting the needs of market economy, the Government has shifted from predominantly administrative/authoritative approaches to participatory approaches. Most forestry enterprises under the centralized planning system 49 (prior to 1990s) were managed by State Enterprises; whereas, the new approach encourages and promotes private enterprises. Currently, the affairs of the forestry sector are handled by the Ministry of Agriculture and Forestry at the centre and by the Provincial Agriculture and Forestry Offices (PAFOs) and District Agriculture and Forestry Offices (DAFOs) at the provincial and district levels, respectively. Within MAF the Department of Forestry is responsible for all activities relating to forestry. MAF, PAFO and DAFO have separate unit/staff to deal with forestry matters. Out of a total staff of over 2,000 in MAF, forestry staff accounts for about 25%. The Government supported research is under the control of MAF. All research activities falling under the purview of MAF are overseen by National Agriculture and Forestry Research Institute (NAFRI). Extension activities relating to agriculture and forestry are handled by the National Agriculture and Forestry Extension Service (NAFES). (The organizational chart of MAF is given in Figure 1). While the Department of Forestry within MAF is the prime agency in the country concerned with public forest administration, there are many other agencies/offices responsible for specific aspects of forestry: Quota system is the responsibility of the Prime Minister Office, Ministry of Agriculture and Forestry, Ministry of Commerce, Ministry of Finance Land Management is the responsibility of Prime Minister Office, Ministry of Finance and Ministry of Agriculture and Forestry Timber and NWFP factories management is under the responsibility of the Ministry of Industry and Handicrafts, Ministry of Agriculture and Forestry, Science Technology and Environment Agency Land tax is the responsibility of the Prime Minister Office’s and Ministry of Finance Natural resources tax is the responsibility of the Ministry of Finance International Co-operation is co-ordinated by the Ministry of Foreign Affairs, Science Technology and Environment Agency, and relevant Ministries Conservation is under the Prime Minister’s Office and Ministry of Agriculture and Forestry Medicinal plants development (including research and propagation) is the responsibility of Ministry of Health and MAF All decrees of individual ministries are to be cleared by the Ministry of Justice and approved by the Prime Minister (and in some cases reported to the National Assembly). The Department of Forestry develops guidelines and instructions to be followed by the decentralized levels. The purpose is to avoid concentration of power at the center. 50 At all the levels, however, there is a multiplicity of agencies (or their decentralized units) involved in controlling forestry activities. These, apart from agencies related to agriculture and forestry, include those of finance, commerce, trade and handicrafts, science and technology, environment and so on. Due to the influence of various factors, there have been serious inadequacies in the functioning of the different organizations involved in forestry; transparency and accountability have been sidelined and illegal activities have tended to persist, negatively affecting the rule of law. Plans and Programmes An important strategic measure to achieve sectoral objectives is to develop and implement action plans and programmes. Forestry activities have been covered under the Five Year Plans of the Government. The current Five Year Plan, which has just been completed (in the financial year 2004-05) was the 6th; and the 7th plan is due to start in the financial year 2005-06. The 7th Party Congress in 2001 set the development targets for 2005, 2010 and 2020, and these were endorsed by the National Assembly. Specific long term plans such as the Forestry Master Plan prepared in 1991 and the Environmental Action Plan prepared in 1993 were expected to guide and provide inputs for the development of the forestry sector. The Forestry Master Plan had emphasized the need for programmes on: forest inventory, forest classification and delineation, forest (including watershed) conservation, silviculture, human resource development and capacity building, stabilization of shifting cultivation, research support and peoples participation. The programmes/activities included in the five year plans, funds made available for forestry and the actual implementation of programmes were often not in consonance with the sectoral objectives and priorities proposed in the long term forestry (master) plan. Targeted funding for forestry development is not available (and the national environment fund is small and limited in scope). In this context, the new Forestry Strategy 2020 (MAF 2005), prepared with the assistance of a group of donors, is relevant. For achieving a set of targets by the year 2020, the new forestry strategy presents a set of objectives for forestry development, specifies priority areas, suggests programmes and actions, identifies responsible agency and main stakeholders for each proposed action and provides guidelines for monitoring and evaluation of programme implementation. The priority areas of Forestry Strategy 2020 are: land and forest use; production forests; non-wood forest products; tree plantation development; harvest/logging plan and royalties; wood processing and value addition; biodiversity conservation; protection forests and watershed management; and village land and forest management for poverty eradication. 51 Figure 1 - Organizational Chart of the Ministry of Agriculture and Forestry (As of January 2005) Minister Functional Set-up of MAF Board of Science and Technology (Board Secretary) Vice-Minister General Administrative and Overall Supervision Overall Policy and Strategy formulation, Planning, Monitoring and Evaluation (M&E), Resource Allocation and Regulation, HRD Permanent Secretary Office Technical line Departments Department of Agriculture Vice-Minister Department of Personnel Technical Supervision, Subsectoral Planning/Programming, M&E and Training Department of Livestock and MAF Technical Implementing Institutions Department of Forestry District and Village Authority Department of Irrigation Department of Meteorology and Hydrology Overall Planning, Monitoring and Evaluation, Resource Management and Regulation , HRD National Agriculture & Forestry Research Institute Provincial Authority Department of Inspection Department of Planning National Agriculture & Forestry Extension Service Provincial Agriculture and Forestry Divisions (18) District Agriculture and Forestry Offices (142) Villages Village Workers, Farmers/Groups of Farmers'/Farmers Organisations at intra-village and/or village levels 52 The Forestry Strategy 2020 incorporates 16 programmes, 45 areas or activity groups and 144 actions. The programmes, representing the component aspects of forestry development in Lao PDR are the following: land and forest use; production forest; non wood forest products; tree plantation development; harvest/logging plans and royalties; wood processing industry; biodiversity conservation; protection forests and watershed management; village land and forest management; legal frame work and implementation; law enforcement and governance; institutional strengthening and human resources development; research and extension; gender; funding and allocation; international co-operation. Forest Revenue As noted, inadequacy of funds has been one of the major factors causing under achievement of plan targets. The revenue-generating capacity of sustainable forest management (SFM) has not been tapped properly. The main sources of forest revenue in Lao PDR are the auction bids for forest products, the forest charges (taxes and development cess totaling to about 5% of the assessed product value), penalties for forest offences, registration charges and annual taxes on certain private plantations and so on. The charges and penalties mostly accrue to the Central Government (except for penalties, where 30% of it is kept for providing incentives locally), who in turn distributes it based on the norms in force. An issue here is the lack of effective efforts to capture the rent due to the resource owners. It is considered by many that bulk of the rent goes to the private business, as windfall. Support Services Under the overall scheme of institutional development, three aspects to be specially flagged are the critical roles of: skill development and capacity building, forestry research and technology, and extension service. Support to the forestry sector in the form of human resource development and capacity building, research, and extension services are generally weak. Human Resource Development Institutions providing facilities for forestry education and training in Lao PDR are the following: Faculty of Forestry at the National University of Laos. Faculty of Forestry at the Southern University in Pakse, Champasak. Souphannavong University of Luang Prabang (there is no faculty of forestry at this university; but forestry related courses are offered by other faculties). Forestry School in Bolikhamsai province (under the MAF). Northern Training School for Agriculture and Forestry in Luana Prabang, having a sub-centre in Xieng Ngeun (formerly the Forestry College, under the MAF). 53 Southern Agriculture and Forestry School in Pakse, Champasak (under the MAF). Agriculture and Forestry Training Center, Savannakhet (under the MAF). Agriculture and Forestry Training School, Vientiane (under the Education Department). Forestry Research Research unravels new scientific knowledge, isolates/identifies factors leading to problems and how to address them. Technology converts research findings and theoretical solutions into tools and techniques suitable for practical application. Technological innovation and development is a strategically important dimension of forestry development and it is to be made possible by research. Forestry in Lao PDR critically needs research support to: improve productivity; reduce losses and wastage; maximize utilization; improve quality and value of products; sustainably manage forest resources; improve conservation of genetic resources and wildlife; develop NWFPs; and diversify products. Research support is also essential for carrying out basic surveys and studies (e.g. on biodiversity, land sustainability, inventory and bioprospecting), for providing basic technical data (e.g. growth and yield under different management intensities) and for documenting and validating indigenous knowledge. Further, research input is essential for producing and supplying improved and certified seeds and improved planting stock, in-situ and ex-situ conservation of genetic resources, and for transfer of technology to the users. Forest policy, forest economics and marketing are other important areas requiring research support. Economic research relating to costs, output, financial yield, rent and externalities are of great relevance for providing management prescriptions. Organized research in agriculture and forestry is rather new in Lao PDR. NAFRI was established only in 1999. NAFRI is comprised of research centers, dealing with specific disciplines/sub sectors (Figure 2). According to NAFRI’s research strategic vision, its research priorities focus on the following: Agriculture: rice varieties, maize hybrid, legumes species, integrated plant protection and improved productivities. Horticulture and vegetables: fruit trees and garden, post-harvest activites and processing. Livestock: food, animal health and management. Fishery: indigenous fish species, fishing, basin management and wetlands management. Forestry: indigenous fast growing species, seed sources management, Para rubber, NWFPs (inventory, domestication, harvesting, processing, marketing and networking), agro-forestry, forest certification. 54 Management of natural resources: land and water management and other natural resources. Forestry research activities of NAFRI are the responsibility of Forestry Research Centre (FRC). Within forestry the priority areas include indigenous fast growing species, seed sources management, Para rubber and NWFPs. FRC is almost the sole facility available in Lao PDR for forestry research. FRC also has the mandate to co-ordinate and monitor forestry research activities in the country. FRC is comprised of four units, i.e., Silviculture, NWFPs, Information and Administration. This institution suffers from inadequacy of funds, trained personal and research facilities. Figure 2 - Organisational Structure of the National Agriculture and Forestry Research Institute National Agriculture and Forestry Research Institute Ministry of Agriculture and Forestry Administration, Planning, Finance and Cooperation Division Research Management Division Agriculture Research Center Horticulture and Vegetable Research Center Soil Survey and Land Classification Center Forest Inventory and Planning Center Living Aquatic Resource Research Center Livestock Research Center Information Management, Policy and Strategy Planning Division Forestry Research Center Coffee Research and Experimental Center Northern Agriculture and Forestry Research center Agriculture and Forestry Machinery Applied Research Project Some limited amount of research specifically on ecology and plant morphology is also being undertaken by the Botany and Forestry Faculties of the National University of Laos. Eorestry Extension Extension service can be provided to farmers and communities in different ways. Forestry extension has traditionally been a weak area, due to various reasons. Demonstration of research results and dissemination of research information are very relevant, but often overlooked, aspects of forestry research. Research has little value if its results cannot be 55 applied in practice. Extension of research results and a two-way transfer of information are important in that regard. National Agriculture and Forestry Extension Service (NAFES) under the MAF, provides an extension niche for groups of villages and is engaged in disseminating research results and technology to the farmers. NAFES is a young institution, established in 2001. It is comprised of 3 sections, 5 centres and 2 projects at the national level, with agriculture and forestry extension services at the provincial and district levels, directly serving the villages. For the organizational structure of NAFES, see Figure 3. Responsibility of NAFES as mandated include: Knowledge management in agriculture and forestry (based on knowledge acquired through technology transfer and through research activities in the country). Dissemination of information and knowledge to the farmer. Establishment of technical norms and encouraging farmers (and private sector) to adopt such norms. Supply of quality agricultural inputs (seeds, fertilizer). Teaching farmers about the need for fund management. Providing marketing support. Establishment of agricultural extension niches for groups of villages. Extension administration. NAFES is actively promoting community involvement in extension service through forming a cluster of 5 to 7 villages into a group – e.g. rice farmers group; horticulture group; water utilization group. Forestry extension in Lao PDR is included under the mandate of NAFES. While NAFES has a Forest Plantation and Re-afforestation Extension Centre, its role in the field of forestry is limited. NAFES provide extension services only for teak, agar, rubber, mulberry and cardamom, planted by villagers in private lands/home-steads. Even though all the village areas are included in the mandate of NAFES, it is NAFRI which looks after technical aspects of managing village forests. And, it is DoF, which looks after extension needs of protected areas. Also, extension with regard to medicinal plants is not with NAFES, but with the Institute of Medicinal Plants. Further, the national chamber of commerce helps in marketing of products through their product groups/associations based on membership. 56 Figure 3 - The organization structure of the National Agriculture and Forestry Extension Service Ministry of Agriculture and Forestry National Agriculture and Forestry Extension Service 1. 2. 3. 4. 5. Administration and Personnel Section Planning and Co-operation Section Personnel Unit Administration Unit Inventory Unit Finance Unit International 1. Planning Unit 2. Statistics Unit 3. Economic, Marketing, Savings and Community Development Fund Unit 4. Co-operation Unit 5. Legislation Unit Technical Section 1. Training Unit 2. Agriculture and Irrigation Machinery Unit 3. Dissemination and Publication Unit Provincial Agriculture and Forestry Extension Service District Agriculture and Forestry Extension Service Village Livestock and Fishery Extension Center Soil and Crop Extension Center Irrigation Extension Center Forest Plantation and Reafforestation Extension Center Shifting Cultivation and Stabilization Extension Center Integrated Agriculture and Forestry Development Project Rural Development of Target Area Project 57 Marketing Support There are no effective arrangements to support marketing of forest products. Lao National Chamber of Commerce and Industry (LNCCI) is stil a young, and can grow into a strong institution capable of actively promoting trade and investment. Lao National Chamber of Commerce and Industry Chambers of Commerce and Industry, in countries, are normally registered societies or associations of producing and trading institutions; they are involved in promoting and safeguarding the interests of their members – thus, also helping to expand trade/markets and investment in the country. The Lao National Chamber of Commerce and Industry has existed since 1989. It received formal recognition only much later. PM decree No.125/2003 (dated 24th July 2003) on the organisation and activities of LNCCI defined its roles, functions, authority, structure etc. LNCCI started its full-fledged functioning only since 2004. Articles of association of LNCCI defines categories of membership, criteria and qualification, registration, management, assembly, board of management, the committees etc. Membership in LNCCI is voluntary – there is an initial fee of US$20 to join, and thereafter US$ 10 per year as annual membership fee. LNCCI is directed by a board (Executive Committee) of 15 elected members, representing different business and industries. Currently its membership is 685. LNCCI is a member of NCCIs of France, Germany, Denmark, India and also of ASEAN Chamber of Commerce and Industry. They essentially exchange views and information and carryout joint projects for export promotion. LNCCI has several groups/associations relating to different specific trades: Lao handicraft association (mostly of silk, silver, rattan, bamboo, ceramics, hand made paper, wood). Lao textile and garment industry association. Lao agricultural products processing group. Furniture (design) and interior decoration group. Lao manufacturing industry group (brewery, soft drinks, tobacco, sugar, paper cartons, cement, plastics, stone ware). Lao pharmaceutical and medicine group Lao wood and wood products export group Lao travel business association Transport association Subsidiary to the LNCCI, every province has a Council of Commerce. 58 LNCCI has the authority to issue certificate of origin for the products manufactured in Lao PDR as well as to issue registration on National Brands. LNCCI is expected to carry out export promotion activities, conduct trade fairs and provide loan financing. Currently, it is designing a strategy for promoting export of medicinal plants. Overall, however, LNCCI is still a weak institution with limited capacity for providing services to its members. There are only 12 regular staff members, all on secondment from the Ministry of Commerce. There are no specialists (lawyers, finance experts) in the staff. Co-Ordination of Forestry activities With a large number of agencies (such as DoF, NAFRI and NAFEs under MAF; Department of Traditional Medicine and Traditional Medicine Research Centre; Department of Trade; Department of Industry and Handicrafts; Department of Taxes and others), involved in public forest administration and delivery of support services, and without a clear lead agency to take professional leadership, there is lack of adequate co-ordination, resulting in conflicts; and leading to unsustainable forest management. Sectoral Constraints Constraints are seen in all aspects of forestry – technological and scientific (related to management and measurement), environmental, informational, economic, infrastructural and institutional. Inadequate and inappropriate technology in forest production and protection/ conservation, lack of attention to pre-conditions and preparatory actions, and lack of adequate research support (e.g. for domestication and genetic improvement of species, for improving productivity of forest plantations, for rationalizing shifting cultivation), among others, reflect the technological weaknesses in the sector. Management calls for assessments and measurements, and actions to promote progressive improvements and to prevent resource deterioration. Absence of correct measurement and details of forest area under different categories of management (production, protection, conservation) and administrative control (national, provincial, district, village), lack of updated inventory of forest resource, continuing forest degradation and frequent occurrence of forest fires, inter alia, are suggestive of the severity of weaknesses in forest management. Apart from several species having suffered extinction, many others in the wild are under threat, in varying degrees. Still, adequate efforts are lacking to address the situation effectively, and loss of forest cover continues unabated. There is serious dearth of forest information – statistical and non-statistical, covering the dynamics of forest resource change and the different aspects of forest management and utilization. Available information, often, are inconsistent and of low reliability. Moreover, there is no adequate system of gathering and disseminating new and updated information. Further, there has not been any 59 recognizable flow of practical information on improved technology, from central institutions (particularly forest research institutions) to provinces, districts and villages (Thomas, 2004). The situation of forestry information affects the effectiveness of forestry planning and implementation. The overall economic situation, particularly poverty, remains a constraint affecting the forestry sector, as the remaining forests are subjected to increasing pressure for practicing subsistence agriculture. Inadequacy of necessary infrastructure, low level of investment in forest-based processing and value addition, poor level of capability/skills and technology relating to forestry etc. can, to some extent be attributed to the impacts of poverty. On the institutional front, weaknesses are seen in all its components. First of all, there is no formal legislated forest policy, which is consistent and comprehensive, and thus there is inadequate policy coverage for the sector. In the absence of a formal forest policy, laws and rules serve the twin functions of providing development guidelines as well as enforcement mechanisms; and these, often, lead to conflict of interest. The legal profile of the forestry sector is somewhat skewed, with uncertainties, inconsistencies, conflicts, contradictions and other flaws. Generally, the legal mechanisms suffer from structural and other weaknesses. Even those mechanisms which are argueably rational and legally appropriate have failed to be implemented adequately, due to several problems which among others include: inadequacy of trained staff, weakness of enforcement institutions; unnecessary bureaucracy; wide spread corruption; lack of co-ordination among related sectors; inadequacy of financial resources; inadequate understanding between the local community and the bureaucracy and so on. Lack of clarity about traditional rights vs village enterprise activities in forestry, unclear and unscientific nature of the quota system16 for forest products and the deficiencies in its implementation and so on are reflective of the need to strengthen the legal instruments relating to forestry. Inadequacies of organizational units of public forest administration in terms of transparency and accountability leads to delays and flaws in implementing the declared programmes (e.g. land allocation, stabilizing shifting cultivation, NWFP development and value-added processing) and prevalence of illegal activities (illegal logging and illegal trade in forest products). Procedures for obtaining official approvals are protracted and cumbersome. In the operation of the quota system, some eleven institutional units are involved; and the emphasis is on tax/revenue collection rather than on scientific management of forest resources. Plans are often, unrealistic “wish lists” as they are not based on realities of the situation; they lack action, as they are not supported by funds, facilities and manpower. Funding/budget constraint is particularly serious. Lack of adequate boundary demarcation of the various management categories of forests in the field is a serious deficiency (a programme in that regard is known to be delayed due to lack of funds). Record keeping on forest areas/resources (providing clear tabulation of area by compartments, forest management categories, FMUs, administrative controls etc., as delineated in the field, and showing changes as they take place) has also not been taken 16 The establishment and allotment of arbitrary quotas for forest produces are against the spirit of scientific forest management, and principles of free and fair trade. 60 seriously. Inadequate preparation and capacity for effectively undertaking decentralized functions have added a new dimension to the constraints. All constraints, in a way, are symptoms or results of institutional inadequacies. Technological weaknesses, declining resources and productivity, insufficient capability for planning/implementing SFM, inadequate involvement of primary stake holders or beneficiaries, and market failure – all these result, primarily due to institutional weaknesses. Apart from the territorial space (comparatively sizeable land area per capita) available, Lao PDR also needs social, economic, ecological and scientific space for ensuring growth and development. Benefits not backed by Investments Forests of Lao PDR have contributed to the socio-economic status of the country, and serve as a source of Government revenue as well as additional income and employment for the people. Recently attempts have been initiated to convert forests with high aesthetic value into tourist and recreation areas, as a new avenue for development. Some 80% of the population of Lao PDR relies heavily on the forest for timber, food, fuel, fibre, shelter, medicines, condiments and spiritual protection. In rural areas, forests provide one of the few available economic activities and NWFPs often provide more than half of a family’s total income. According to Forestry Strategy 2020 (MAF 2005), forests contribute some 10% of the GDP and 15-20% of the non-agricultural GDP of Lao PDR. They also account for some 34% of total export earnings17. Forest royalties now provide some 11% of total tax revenue, down from some 20% in the mid 1990s. In terms of energy consumption, wood energy including charcoal and fuel wood is the dominant source of energy for cooking, even in the capital city of Vientiane, and in highland areas it also provides necessary heating. The multifarious benefits of forests enjoyed by the society (both direct and indirect, such as income, employment, subsistence, basic needs), by and large, are through accessing the resource (legally or otherwise) and not by actively and adequately participating in developing and enhancing the resource as an organized enterprise. In the absence of adequate investment to create or enhance forest capital and resource base, the benefits are mostly mined, not appropriately managed, thus leading to capital consumption and resource deterioration. It is in this regard that the establishment of a Forest Development Fund as proposed in Forestry Strategy 2020 (MAF 2005) becomes very relevant. Capital is essential for all development. Rural residents are short of capital and unfamiliar with market economics. They are in real need of Government support. Capital loans (not grants) with low interest repayments is an incentive, but not easy to obtain. Mobilization of funds (through all appropriate means, particularly improved rent capture strategy, and promoting the role of lending institutions, foreign investment, venture capital etc.) is an important strategy in this regard. 17 Log production alone contributes 3.2% of GDP; and wood products alone contribute some 20 to 25% to the total export earnings. 61 Since the decentralized levels of administration are to take increasing responsibility for development and investment programmes, there is need to establish and strengthen capability at those levels. There is also the need to enhance the participatory approaches (and the benefits therefrom) to ensure a harmonious environment for decentralized forest management. International Assistance Projects Donor funded international assistance projects (both bilateral and multilateral) have helped the forestry sector in Lao PDR, by providing guidelines and frameworks and catalytic support for SFM, including support for human resource development, capacity building, field research and pilot demonstration. Lao PDR has received such support, in the form of loan and grant projects from a large number of sources: ADB, World Bank, Sweden, Japan, England, IDRC Canada, Australia, GTZ, FAO, ITC, IUCN, SNV and others. The ADB has been involved in the forestry sector of Lao PDR for the last several years. The ongoing loan project on industrial tree plantation involves there institutional categories, involved in raising pulpwood plantations of Eucalyptus spp. for export (to Thailand): i.e. small holder family groups; local companies/enterprises; international companies/joint ventures. Loans to the enterprises are underwritten by the Agriculture Promotion Bank. The second phase of the project, to be known as “Lao Plantation Sector Project” and to be initiated soon, will be implemented by the proposed “Lao Plantation Authority” managed by a Governing Board. In addition, the ADB is assisting the forestry sector of Lao PDR through a technical assistance project, financed by the Poverty Reduction Co-operation Fund, for “Poverty Reduction in Upland Communities through Improved Community and Industrial Forestry”. The World Bank has also been present, intermittently in the forestry sector of Lao PDR. The forest management and conservation project (FORMACOP) was implemented during 1993-97 with a view to lay the foundation for sustainable forest management and conservation. The ongoing World Bank Project (2003-2006) with participation of FINNIDA for “Sustainable Forestry and Rural Development” (SUFORD), continues with the same group of activities taken up under the earlier project: i.e. research and development, sustainable forest management and forest/biodiversity conservation, involving management planning, establishment of permanent sample plots, preparation of volume tables, capacity building, development of NWFPs etc. Sweden provided support during 1997-2000 for conducting a forestry sector pilot study to promote sustainable forest harvest through appropriate scientific management. The ongoing Lao-Swedish project on upland development through community development follows up on the above pilot study. Another ongoing noteworthy project is of JICA, on forest management and community support. Others include FAO support for marketing system development for NWFPs, ITC support for developing national export strategy, and IDRC (Canada) support for 62 development of bamboo and rattan. Lao PDR has also received support from regional projects on forestry research and code of practice for forest harvesting. Forestry Situation in the Project Area As already noted the ‘project area’ is comprised of six villages distributed in three districts falling in three different provinces. The consultant was able to visit only one site, Long Leuad village in Xien Ngeun district of Laung Prabang province. A brief account of the situation in the site visited will be in order to obtain a sense of the situation and capabilities at the decentralized levels. Luang Prabang Province Luang Prabang is the northern most province of Lao PDR and has common boarders with Thailand, Myanmar, China and Vietnam. In the past, Luang Prabang was somewhat cut off from major markets due to a lack of reliable surface transport, and therefore, it developed a small, fragile and largely insular economy of local production and servicing, resting on a traditional subsistence foundation. With a new highway linking Laung Prabang with Vientiane and Thailand (and another, soon to be completed, linking Laung Prabang with Chinese border), the situation is fast changing. Luang Prabang is becoming a relay point in China-Laos-Thailand commerce. Luang Prabang city is the capital of Luang Prabang province. Following the inclusion of the city to UNESCO’s World heritage list in 1995, the future of Luang Prabang will be bright as a tourist destination. Luang Prabang has 11 districts and several sub-districts. The districts are divided into villages, the lowest level entity among decentralized levels. Economy of Luang Prabang is agriculture oriented with few commercial crops like sugar cane. Industrial processing sector is small comprising of cement, concrete mouldings, electricity, sugar, handicrafts (such as hand-made paper, wood carvings, silk) etc. Being a mountainous province, most of Luang Prabang is covered by forest, but heavily subjected to shifting cultivation, fires, cross-border smuggling and qualitative degradation. The province is still a source of valuable timber, and hosts several carpentry shops and few furniture factories, engaged in production for export. During the last several years, small-scale plantings of teak has taken place in the northern provinces, as part of a timber (forest) farming programme. Luang Prabang already has some 15,340 ha of teak plantations raised under this programme. These are expected to be managed on a 30-year rotation; but plantings were lumped and erratic, and did not follow a normal age gradation. Since they were not subjected to proper tendings/thinnings, quality is also poor. Through ingenious management interventions, quality of the plantations can be enhanced. In Luang Prabang province, NWFPs are an important source of income for the villagers, as well as a source of revenue for the local Governments. Cardamom, 63 cinnamomum, benzoin, broom grass, bamboo, rattan and mulberry bark are some of the important NWFPs, which have an export market. Since some non-wood produces (e.g. rattan) can be grown along with timber trees (e.g. teak), the prospect/potential for their integrated production and processing (e.g. furniture) deserves to be seriously explored and pursued18. All the Central Departments have decentralized counterpart organizations at the provincial level, under the overall jurisdiction of the provincial Governor. The Provincial Agriculture and Forestry Office (with separate forestry unit and staff) deals with all matters related to technical aspects of forestry. The provincial offices/departments involved in sale of forest produces, collection of taxes, planning etc. include among others: commerce, finance, industry and handicrafts, planning and environment. The provincial offices have the responsibility to guide and support the district level functionaries, as appropriate and necessary. Overall, the capacity (and the facilities available) at the provincial level is highly inadequate. Xien Ngeun District Xien Ngeun is one of the 11 districts of Laung Prabang province. The main economic activity of the district is agriculture, including forestry. Overall productivity is low. In 2004, total revenue of the District was 672 million kip (about US$ 65,000), of which close to 20% was accounted for by agriculture, mostly contribution of forestry. (NWFPs alone contributed 8%). There are no industries in the district except for few furniture shops. NWFPs are of considerable importance to the district. It supports subsistence and provides income to villagers. Rattan, bamboo, paper mulberry bark, broom grass, Bohemeria malabarica and cinnamom are the main NWFPs. There are some 2,500 ha of tree plantations in the district (of which about 2,000 ha teak 110 ha paper mulberry and 164 ha of broom grass). The plantations are poorly maintained. Forestry in the district is the responsibility of district agriculture and forestry office (DAFO), headed by a Director. There are limited numbers of deputies in charge of different specific subject areas. The facilities (and personnel) available at DAFO is highly inadequate, record keeping is dismally poor and capacity is low - compared to the pivotal role assigned to districts under decentralization. District finance office is in charge of collection of all taxes, including tax on forest produces. Long Leuad Village Long Leuad village within Xien Ngeun District of Luang Prabang province has a population of only 231, distributed in 43 households (number of females only 93). Their sole means of livelihood is farming. There is no industrial activity in the village. 18 There are several such potential combinations of wood and NWFPs. 64 The land/forest resources available to the village are: 54 ha of agricultural land, 42 ha of village forest, 5.5 ha of paper mulberry plantation and 1 ha of home garden. The resources are not jointly managed. Individual families manage their respective share (property). Major items of produces grown/harvested/collected for sale at local market or to traders/middlemen are essentially NWFPs (i.e. paper mulberry for bark, bamboo shoots, broom grass, bohemeria bark, bitter bamboo, sugar palm, medicinal herbs), banana and some teak poles. Food crops grown in the village are adequate only to meet the requirements for 6 months and the rest are imported. NWFPs account for about 50% of the village income. With an average per capita income of less than US$ 1 per day, the entire village lives below poverty line19. The village infrastructure is minimal. No facilities are available for post harvest storage. The villagers have no access to credit other than what is provided by traders. They have no access to market information. They have no idea as to what for the produces they sell to the traders are used and where (except the general understanding that some of it goes to China or Thailand). Also villagers (including the chief and deputy chief) have no clear knowledge of the laws, rules and regulations. They are not aware of technical prescriptions regarding village forest resource management or guiding harvest operations. At the village level, committees have been formed to look after woman’s welfare, development etc. Also selected individuals have been assigned responsibility for forestry activities, for maintaining statistical information etc. without any form of training (or access to technical handouts). They have no means of action, to perform their responsibility. The situation of villages in Lao PDR (based on the situation of Long Leuad) raises several issues, inter alia, relating to: concept and purpose of decentralization of the sectoral activities; viable village size for meaningful delivery of development (including infrastructure and facilities, economic enterprises); need for adequate preparation and capacity building for effective decentralization; and need for informed participation. 19 The estimated total income of the village is US$ 55,440 which is equal to US $ 20 per month per person. 65 3. NON-WOOD FOREST PRODUCTS IN LAO PDR GLOBAL SITUATION The NWFPs are of legendary importance as the earliest traded products and earliest amongst those to be domesticated, leading to the agricultural revolution. However, along the way, the NWFPs lost their primacy to timber, during colonial expansion and industrial revolution (and later to synthetic products); and they became collectively known as Minor Forest Produces (MFPs) whose existence was incidental to the management and utilization of the timber resource (and not as a natural resource of great value in its own right). The emerging concern for bio-diversity conservation, bans on timber extraction to control deforestation, and green consumerism (and interest in organic products) provided a revival of interest in, and a new life for, NWFPs. Still, it has not been easy to reverse the trend, to get NWFPs back to their old glory. So, after some 30-40 years of the so-called revival of interest, the situation is full of nagging issues in the whole chain of resource management to marketing of NWFPs. NWFPs are eco-friendly products that consist of biological goods and services other than wood, derived from forests and allied land uses. The use of NWFPs is as old as human existence and with few exceptions, NWFPs remain a local interest. In recent years, however, NWFPs have attracted considerable global interest, due to the increasing recognition that NWFPs can provide important community needs for improved rural livelihood. NWFPs also contribute to household food security and nutrition; help to generate additional employment and income; offer opportunities for processing enterprises; contribute to foreign exchange earnings; and support biodiversity conservation and other environmental objectives. Green consumerism has helped spur market interest in NWFPs. As a broad group, NWFPs exhibit a high degree of heterogeneity in their sources, production system, characteristics, and utilization. These products, of both plant and animal origin, fall under a large number of product groups, each of which includes a considerable variety of components. Product groups include: edible products, fodder, fiber and flosses, gums and resins, medicinal extracts, spices, phytochemicals, agro-chemicals, aroma chemicals, alcohol, enzymes, sweeteners, flavours and fragrances, organic acids, bio-control and chemotherapeutic agents, essential and fatty oils, bio-diesel, dyes and colorants, culinary herbs, ornamental products, horns, bones, pelts and plumes. They also include services such as grazing and recreation experiences. These products are derived from a variety of sources – plants (palms, grasses, herbs, shrubs, trees) and animals (insects, birds, reptiles, large animals). Different parts of a plant or animal often provide different products, simultaneously and at different times. Even the celebrated teak trees provide NWFPs – e.g. pigments used to dye silk from the juvenile leaves and some chemical extracts from its wood. NWFPs are utilized at the subsistence, 66 local use and commercial levels. Some of these products are sold in bulk; others reach specific niches. Each major geographical/agro-ecological region is bestowed with a wide range of species providing useful NWFPs, some of which though quite important locality, are seldom known outside that region. In subsistence and rural economies, the role and contributions of NWFPs are crucial as sources of food, fodder, fibre, fertilizers, herbal potions, construction materials and cosmetic and cultural products. Some 80% of the population in the developing world depend on NWFPs for their primary health and nutritional need. As raw materials, NWFPs support village-level artisanry, craft activity and processing enterprises such as those of rattan and bamboo furniture, essential oils, resin and pharmaceuticals. Some NWFPs are internationally traded and used in food flavourings, perfumes, medicines and confectionary. A large number of items of our every day use, such as insecticides and fungicides, medicines, perfumes, suntan lotions, dental creams, deodorants, nail polish, mouth wash, hair conditioners, toiletries, cheese, chewing gun, ice cream, soft drinks, juice drinks, peanut butter, breakfast cereals, bakery products, canned fish, dairy deserts, food colourants, flavourings, fancy bags, decorative buttons, chess pieces, golf balls, paints, inks and varnishes, corrosion inhibitors, industrial solvents and a host of others, contain varying proportion of NWFPs. Under natural conditions, NWFPs can be managed along with wood in an integrated manner thus increasing the overall productivity of forests. Their proper management can support conservation of genetic wealth and variability. Often non-wood products can be harvested without cutting down trees or plants, while some can be grown as pure or mixed crops under agro-forestry systems. A number of silvicultural/technical operations related to NWFPs involve different and often higher levels of skills, as well as high investments. For example, inventory of NWFP resources is very different from an inventory of wood resources due to heterogeneity of sources and produces, and differences in their distribution pattern. It involves bio-prospecting of unexplored flora and fauna for the treasure of biochemicals. Similarly, harvesting of NWFPs is different from wood harvest in terms of use of tools and technology and involves more elaborate pre-harvest preparations and post harvest treatments. Because of the variety, markets for NWFPs show corresponding variation, from local level bartering to specialized international niche marketing. Enhancement of NWFP production and processing involves aspects related to land use planning, improvement of production/cropping technology, pre-harvest and harvesting operations, post-harvest treatments including storage and transportation, product development and value added processing etc. Emphasis here should be on productivity gains through refined/improved technological inputs. Efficiency in the use of raw material, labour and capital inputs and technology are the main means to achieve better performance in producing increased volumes of higher quality products, at lower costs. There is also need to achieve uniform and consistent quality of production to avoid market-capture by substitute products. 67 Need for a Clear Definition A clear definition for NWFPs is still evolving. The International Expert Consultation in Non-Wood Forest Products held in Yogyakarta, Indonesia, 17-27 January, 1995 defined NWFPs as consisting of “goods of biological origin other than wood, as well as services, derived from forests and allied land uses”20. Subsequently FAO has re-defined NWFPs as “goods of biological origin other than wood, derived from forests, other wooded land and trees outside forest”. These definitions lack adequate clarity about the product boundary and the source boundary. For example, according to the above definitions, mango and jack fruit (also produces of other integrated fruit tree systems) are NWFPs. Mango and Jack are fruits of trees, which have been traditionally treated as cultivated tree crops providing agricultural produces. Rubber is another similar example. There are several other definitions for NWFPs with somewhat different product boundaries and resource boundaries. Product Boundary An ambiguity and confusion regarding the scope of NWFPs is the lack of clear understanding about its boundary. Can composite manufactured products, wherein raw or primary non-wood produce is only one of the component ingredients be considered as NWFPs ?. While the attributable share of NWFPs in such composite products (e.g. confectionary; cosmetics, golf balls, chewing gum, patent medicines) can be estimated to assess or indicate the role and importance of NWFPs, they cannot be considered as NWFPs. On the other hand, some of the harvested produces (such as culinary herbs, wild fruits, fronds and flowers, palm hearts, roots and bark), primary products (such as edible nuts, wild honey, galanicals, essential oils and spices), and also some secondary products (such as traditional herbal medicines, rattan and bamboo furniture) where the basic ingredients (except for labour, energy, packaging etc) are wholly derived from non wood resource or where the share of other ingredients is insignificant, are to be considered as NWFPs. For example, hand made paper using non-wood forest fibres is an NWFP, where as specialty paper made of chemical pulp of the same raw material, mixed with high quality wood pulp and other quality-enhancing materials such as sizing is not an NWFP. Source Boundary It has been difficult to establish a clear and universally acceptable definition, because a number of non-wood goods (such as gums, dyes, non-wood fibers, nuts, fruits, spices, medicinal and aromatic plants) are also obtained from cultivated non-forest sources. These are, most often, reported as agricultural or horticultural produces, even though estimates indicate that major part of the NWFP production is sourced from forests. There is need for a clearer (re)source boundary. 20 An economic good is any physical object, natural or man-made or services rendered, which could command a price in the market. 68 Several of the produces considered as NWFPs are obtained from a combination of different sources – both wild (wilderness areas, managed natural forests, natural secondary forests, waste lands) and domestic (monoculture plantations on NWFPs such as of bamboo, rattan and cinnamomum; mixed plantations of timber and NWFP species; and agro-forestry plots) sources. NWFPs and Agro-Forestry A common approach to create/enhance NWFP resource is under agro-forestry systems, along with agriculture, horticulture and forest/tree crops. While wild plants can, and often do, form a component of agro-forestry, in majority of cases domesticated species are used, because of higher productivity and ease of management. The range of agro-forestry combinations are highly varied and interesting: fuelwood and tobacco; rubber and rattan; timber trees, bamboo with tropical fruits and spices; poplar with sugar cane and millet; mulberry along farm bunds; Eucalyptus spp. and cardamom; shrimp and NWFPs in mangroves; cattle under coconut etc. Fruit and medicinal tree farming (Emblica officinalis, Achras sapota, Punicia granatum) mixed with valuable tree species like teak and Gmelina arborea has helped to put comparatively dry and otherwise unproductive land to profitable use, in some parts of India. The scope for crop combinations is limitless. The role of NWFPs in many indigenous agro-forestry systems, and the potential role of agro-forestry as an approach to NTFP development have been identified and recognized. Agro-forestry and NWFPs are interesting areas which, somewhat, had a history of coevolution. Considering that agro-forestry places a strong emphasis on small holder, low input, multiple output systems and many of the trees and other species that produce NWFPs are amenable to integrated management, agro-forestry as a land use approach and NWFPs as an output are closely integrated. Most of the available reports describe systems where NWFP-yielding plants are grown in association with commercial tree crops. These reports identify a number of localized, under-exploited tree species that produce NWFPs in a variety of ecosystems and outline the potential for their improvement through domestication and agro-forestry; some reports also deal with the soil-improving potential of some such species. Need for an Appropriate Classification Accounting of NWFPs is extremely weak; and a classification system for NWFPs (consistent with other existing systems) is not available in most cases. NWFPs mostly form part of an informal sector and information about their production and trade are not properly compiled21. The existing system(s) of produce/product classification include several items of NWFPs. But products from non-forest sources are the ones reported (in most cases) under these items for national and international statistical compilations. In some cases, undefined 21 Improvements in the classifiction and accounting of NWFPs have to take place within an improved system for forestry as a whole. 69 items of NWFPs are included (if at all) under the catchall category of products “not elsewhere classified or specified”. For the purpose of management and marketing, a rational grouping and classification of NWFPs is essential. The heterogeneity of NWFPs demands such a classification. The purpose is to differentiate characteristics and to collect/collate quantitative and qualitative information for analysis and for designing future action. Product classification takes into consideration the source, raw material involved, stage of production and degree of processing, physical profiles, intended use etc. For a scientific and comprehensive treatment, NWFPs will have to be separately classified, consistent with the existing product classifications22. Role of Domestication Plants (and animals) providing NWFPs of commercial value are increasingly being domesticated and cultivated. Domestication of wild plants, involving their genetic improvement, and growing them under intensive cultivation practices is considered as a means of improving efficiency in production. Oil palm, rubber, cashew, coffee, cocoa, cardamom, pepper, mangostein, durian, rambuttan and litchi are but a few of the many wild forest plants that have been largely replaced by production from cultivated sources, both under monoculture plantations and under agro-forestry systems. It has been the experience that once a product achieves commercial importance, its supply from wild sources tends to be replaced by cultivated sources, with a view to bring production, quality and cost under control. Domestication and conservation of genetic resources are two issues that need to be considered jointly. Characteristically, domestication for monoculture leads to substantial decline of wild populations. Agro forestry offers a very good opportunity for avoiding such a danger and for maintaining genetic variability. In the history of plant domestication, annual crops vastly outnumber tree crops. We are now becoming more conscious of the importance of domesticating trees. Several tree crops have been domesticated to varying extent and are being commercially exploited – e.g. oil palm (Elaeis guianeensis), and rubber (Hevea brasiliensis), both supported strongly by commercial plantation industries. The domestication process involves several stages of organized scientific steps – characterization, germplasm exploration, vegetative propagation, genetic selection, and incorporation into a sustainable land-use system. Also, semidomesticated forest species can be integrated very well into agro-forestry systems, and thus could be genetically conserved. Since tree domestication by breeding is a long and slow process, vegetative propagation and clonal selection that have been developed for tropical trees are particularly promising techniques. In some instances these techniques are already in practice. All tree 22 Such as: International Standard Industrial Classification (ISIC); Standard International Trade Classification (SITC); Harmonised Commodity Description and Coding System (HS); Provisional Central Product Classification (CPC); and System of National Accounts (SNA). 70 domestication efforts are linked to economic needs (demand) for the products of such plants and offer a tool for ensuring steady and environmentally sustainable supply. Complexity of Technology The complexity of NWFPs as a product group of biological origin provides them with a variety of characteristics and a commensurate range of uses, supporting a range of situations from rural subsistence and poverty alleviation to economic development through high level of value addition in downstream processing and meeting the needs of bulk and niche markets. Many of the non-wood primary (and intermediate) products can be used for valueadded downstream processing, producing consumer items. Apart from added income and retained value, development of downstream processing will also help to provide employment and to develop a technological skill base. NWFPs are also amenable to integrated, multiple use management, thus capable of enhancing land use, biodiversity conservation and environmental protection. While the technology involved in NWFP extraction for subsistence (and direct, unprocessed use) is rather simple and primitive, sophisticated/integrated NWFP resource management and utilization of biochemical active ingredients are very complex, demanding high-level technology. NWFPs being derived from different parts of (and different types of) plants (and animals), have varying requirements for their resource management (including resource inventory, resource creation/cultivation), harvesting, post-harvest treatments, processing possibilities and marketing needs. Because of the high heterogeneity of the NWFP resource base, there is considerable variation in the way in which the non-wood forest produces are managed, harvested and utilized. Even the same category of NWFP resource, often, has several varieties (for example, bamboo resource comprising of varieties which are thorny and non-thorny, clump forming and non-clump forming, edible and non-edible, hollow and solid), requiring different approaches/technology for their inventory, management, harvesting and utilization. Harvesting A product’s journey to market starts with its harvest. And, quality of the different non-wood products depend on how (properly) they are harvested. The harvesting tools and techniques vary considerably for various NWFPs. Harvesting often does not involve a whole tree or plant, but only parts thereof. It varies from collection of nuts and leaves to tapping of latex, harvesting of palm heats, extraction of medicinal plants and plant materials, extraction of wax and collection of tubers. Timing (season, time of the day) and technique of harvesting vary for mature and tender (immature) parts – fruits, leaves, shoots. Ripe fruits are hand picked or collected using nets (picking bags) and poles and/or “polythene tunnels”. Some of the medicinal herbs are collected only at night. Roots are harvested by digging 15 to 20cm 71 away and by levering the root. Exudates are to be tapped into small containers and transferred to field containers. Unskilled, untrained or inexperienced labour can spoil or damage the product. Highly modern harvest techniques are impractical, unless quantity involved is large, trained manpower exists and appropriate infrastructure is available (e.g. cooling chambers, uninterrupted supply of electricity etc.). Assessments of the impact of harvesting on biodiversity should proceed before launching into large scale harvesting and utilization of NWFPs. An important action to improve the efficiency and quality of harvesting is to reduce and utilize the harvest waste. However, it becomes impractical, where individual production units are small – unless they join together as co-operatives or collectives, based on mutual agreement. Post-Harvest Treatments Perishability of harvested produces is relative, and some amount of harvest losses and degradation do happen for all produces – depending on the post-harvest care given. Post harvest action before supplying the produces at the intermediate or final markets, can be broadly categorized as: treatment to avoid deterioration, storage, packaging and transport. Different treatments are given to different produces to avoid or reduce the degradation, deterioration or losses caused while storing and transporting: The storage life and recommended storage condition (of shade, moisture, light, surface hardness) vary for different categories of NWFPs. Ventilation is important in all cases to allow air circulation and to avoid moisture and vermin. However, humid shady conditions are required for roots and tubers for evaporative cooling; saw dust and straw is used in cases of some fruits to avoid skin damage; some spices are to be kept spread over ventilated trays. Mixing of different produces in the same storage room is to be avoided, as odours and gases given off can cause degradation. Storage, often, reduces quality and selflife. Therefore, storage period should be reduced to the minimum. Packaging to avoid damages during transport (due to vibration), and packaging to improve presentation and shelf-appearance are somewhat different. While the first one is a post-harvest treatment, the second one is a marketing requirement. Some of the NWFPs cannot stand multiple stacking and require appropriate packaging to prevent compression/impact damages and bruises. Some fruits require individual wrapping. Appropriate medium should be used – e.g. straw, bubble paper, corrugating medium, wooden or plastic trays. Transport by open or containerized trucks, trains or boats involving loading and unloading is expensive. This is particularly so where perishable goods are to be sent through refrigerated (or temperature controlled) trucks or vessels. Most of the NWFP collectors are unable to afford the cost of long distance transportation to the market, and to use appropriate loading and unloading equipment (e.g. forklifts, conveyors). They are obliged to dispose off the produces at the local (or nearby) market to which the produces can be send using local transportation (e.g. bullock cart or hand cart), or sell at site to the middlemen/traders. 72 Through a co-operative arrangement, transport space can be shared, thus facilitating improved market access. Value-Added Processing The vastly different NWFPs present equally different, simple to complex, possibilities of value added (primary and downstream) processing. Fruits can be processed into jams, jelleys and juices for urban consumption. Bamboo and rattan can be processed into mats, baskets, furniture etc. Aromatic plants are the source of essential oils. Steam distillation is the widely used technique in the extraction of essential oils. In this process, steam is passed through the plant material whereby the constituents that are volatile are carried along with the steam. Though the process sounds simple in theory, the actual commercial process for greater efficiency and quality varies widely, depending on the characteristics of the raw material and the final product. Production of some expensive essential oils from certain flowers takes place through a process called enfleurage. Expression and solvent extraction are other methods of extraction. Essential oils can be further processed into aroma chemicals, enriched oils and absolutes. The international market for essential oils is dominated by a few countries. Some of these countries import oils from developing countries and export them after refinement or blending. The market is quite competitive and protected. Hence, the developing countries have to adopt strong market strategies for promotion of down- stream products. Most developing countries stop at the primary level of essential oil production for want of necessary skills and technology, and market access. Medicinal plants enjoy both national and international market, as raw material for producing medicinal preparations. Some 4,000 to 6,000 botanicals are of commercial importance, globally. About 80% of the world population still depends on medicinal plants for their health care. Medicines prepared using traditional methods are still used by the practicing healers in the developing countries. Hence, there is a demand for these traditional medicines, which are prepared using widely growing plant species. Around 20% of the drugs in modem pharmacopoeias are also plant derived, either as pure phytopharmaceuticals extracted from plants or as synthetic derivatives of them. Although the raw materials for the production of phytopharmaceuticals have been produced by cultivation of selected varieties of plants, most of those used for traditional medicines are being collected from the forests. In fact, this had in certain instances lead to threats of extinction of some valuable species. As a result, domestication and cultivation of medicinal plants have been initiated. In order to encourage cultivation, there should be a market guarantee. This could be better achieved by introducing small-scale processing units for the production of traditional medicines. While in some cases medicinal plants could be sustainably harvested form forests for small scale processing, systematic cultivation has to be introduced to meet the demands for medicines at the national level. 73 The medicines for domestic use prepared in the traditional manner involve simple methods such as hot or cold water extraction, expression of juice after crushing, powdering of dried material, formulation of powder into pastes via such a vehicle as water, oil or honey, and even fermentation after adding a sugar source. The value of medicinal plants is a source of income and foreign exchange for developing countries depending on the use of those plants as raw material in the pharmaceutical industry. These raw materials are used to: Isolate pure active compounds (phtyopharmaceuticals) for formulation into drugs; Isolate intermediates for the production of semi-synthetic drugs; Prepare standardized galenicals (extracts, powders, tinctures). If one is to produce known pure phytopharmaceuticals used in modern medicine, more processing stages and more sophisticated machinery are required. In order to achieve economy of scale, it requires large amount of raw material and heavy investment. Most of these processes and formulations are patent protected. Even transferring technology through contractual arrangements, on payment, will not be of much help, unless there is a large local demand for these drugs. Export production involves complicated legal requirements governing registration, quality specifications, packaging etc. Therefore, most developing countries, by their own, have not been able to obtain value added benefits from their medicinal plant resource. Several joint venture models of collaboration with resource owners in developing countries and pharmaceutical companies in developed countries are now in operation. Certain plants are rich sources of intermediates used in the production of drugs. The primary processing of the plants or parts of plants containing the intermediates could be carried out in the country of origin thus retaining some value of the resource material. For example diosgenin (from Dioscoria sp) and hecogenin (from sisal) used in the production of steroids can be commercially produced in the countries of origin where there are steady supplies of sufficient raw materials. Generally, however, establishment of sophisticated, down stream, value added processing of NWFPs in most developing countries is constrained by lack of capital, technology and skills, market, and research support. Thus, in most developing country situations, harvested products reach the market, local or foreign, either after some intermediate processing in the form of cleaning and grading or after primary (or early stage) processing. Markets and Marketing NWFPs comprise such varied groups of products that meet the needs of all kind of end users involving different stages and channels of marketing. NWFPs are consumed by people of varying economic levels. Consumption can be in raw, semi-processed or multistage processed form. 74 Production, harvesting/processing and marketing of products for intermediate and/or final consumption form a compact set of activities. It is necessary especially in respect of commercially important products to have a market-orientation emphasizing on efficiency of production, consistency of quality, reliability of supply etc. Marketing can help crate better linkages among resource management, processing and end-use. Marketing provides a set of tools with which people can create economic value for the resource and products made of it. Proper marketing also assists in a better distribution of the economic value created, among the participants. Marketing is vital not only to the medium and large-scale industrial enterprises but it also helps small farming communities to start and sustain profitable enterprises. Resource owners and entrepreneurs often concentrate on producing something: then start looking for markets for the products which may not, in several cases, be the one the market is looking for, or willing to accept. As against this production-oriented approach, a market-oriented approach has to identify and solve problems related to market (and marketing) factors such as: products and production, price, promotion, distribution channels, people and procedures, and institutions (and instruments). An efficient market information system is vital for effective marketing of products. In respects of NWFPs, this is lacking in most developing countries. Macro/global information available can help to some extent.23 NWFPS OF LAO PDR Wild plants and animals (e.g. insects, small and large animals, birds and reptiles) of Lao PDR provide a wide range of useful products. People depend on NWFPs for food and traditional medicine. NWFPs support rural subsistence as well as trade development, and provide cash income. These NWFPs include: food products (nuts, fruits, mushroom, bush meat); spices and condiments; food additives; sweeteners; gums (food and non food); oleoresins; latex, industrial oils; essential oils; tanning materials; natural pigments; fibers; plaiting materials (bamboo, rattan, palm leaves); insecticides; flavours and fragrances; medicinal and aromatic plants; decorative items; insect products (lac, honey, bees wax); animals and animal products (horns, bones, plumes); and others. It has been claimed that the estimated value of NWFPs produced in Lao PDR annually is equivalent to US$ 216 million, of which US$ 184 million accounts for local use. Foppes and Ketphah (2000) estimate the annual value of NWFPs used per rural house hold to be US$ 320 (of which 44% is the value of subsistence use and 56% earning as cash 23 Market News Service of ITC (International Trade Centre) provides details of demand/supply situation of some NWFPs – such as medicinal and aromatic herbs and extracts, with indicative prices. The Market News Service prepares and disseminates reports weekly for fresh tropical and off-season fruits, vegetables and cut flowers; fortnightly for tropical ornamental young plants; monthly for pharmaceutical starting materials, essential drugs and spices, and quarterly for fruit juices, medicinal plants and extracts. 75 income). NWFPs are estimated to contribute 46% of the rural household economy. These figures are rough estimates and may not add-up. Vidal (1960) had identified some 1,600 plant species in Laos, of which some 1,000 are medicinal and aromatic plants. 120 of them are orchids. There are about 30 species of rattan and several species of bamboo. Some of the plant species, which are less important (or of no importance) in Laos are often valued species in other countries, as sources of NWFPs; this indicates the need for exchange of information (and also the potential for trade). [A list of some of the better-known species (trees, palms, shrubs, perennial herbs, grasses), providing NWFPs is given in Appendix 2]. Goals of the NWFP Sub-Sector The broad goals of the NWFP sub sector of Lao PDR as seen expressed in various documents are, to: develop viable alternatives to shifting cultivation; support poverty alleviation and alternative livelihoods for rural communities; increase income from NWFP based industry and trade; and ensure sustainable management of NWFP resource. Growing and harvesting/collection of NWFPs are an important component of the programme to rationalize shifting cultivation, particularly in the uplands. Also, NWFPs are seen as a key means to address the poverty issue. NWFPs’ contribution to the cash income of the community is as high as 75% in some forest areas (Foppes & Ketphanh, 2000; IUCN 2002). However, while sustaining of the NWFP resource is professed to be the prime objective (and other objectives are to be achieved consistent with sustainability of the NWFP resource), not much care is seen bestowed to achieve that important objective. Out of a large number of NWFP species found in Lao PDR, only few are in common use – both for subsistence and commerce (including the few valuable niche species). Some of the more important NWFPs of Lao PDR are: cardamom (Amomum spp.)24, cinnamomum and cassia 25, sa paper from paper mulberry 26, yang oil 27, dammar 28, agar (Aquilaria 24 Amomum species are herbs growing under forest cover, whose seeds are used as a spice. It is also cultivated in some parts. Even though there are over 10 different species of Amomum, the main species in use is Amomum villosum. 25 True cinnamomum and cassia spices are the prepared, dried bark of the trees belonging to the genus Cinnamomum. Apart from food flavouring, cinnamomum powder and oil are also used in producing fragrance and medicines. 26 ‘Hand-made paper’ is produced as a cottage level industry from the bark of Broussonetia paperifera. 27 Yang oil is the oleoresin extracted from yang (Dipterocarpus alatus) tree, and is used in high quality varnishes and in perfume production. 76 crassna)29,bamboo medicinal plants 37. 30 , rattan 31 , benzoin 32 , galanga 33 , annato 34 , lac 35 , ginseng 36 and Yet others of importance include: mushrooms, insect larva, broom grass (Thysanolaema maxima), sisiet bark (Pentace burmanica), paukmauk (Boehmeria malabarica), phoebe spp., berberine (Coscinium fenestratum), malva nut (Scaphum macropodium), Pandanus spp., pepper (Piper spp.), sugar palm (Arenga spp.), Rauwolfia serpentina, makkhene (Zanthoxylum limonella), and Alpina spp., FRC/NAFRI (2002) has short listed some 50 species as important with potential for NWFP development. The priorities of different products provided in different reports vary indicating that in some parts of the country certain NWFPs are more important than in other parts. Similarly, the comparative importance of NWFPs for household use and for earning cash income also vary. In a study covering 28 villages, distributed in 3 provinces, an IUCN study assessed bamboo shoots as heading the list in terms of importance for house hold economies (contributing 13%), while cardamom ranked first in terms of capacity to earn cash income (contributing 9.5%). The perceived importance of NWFPs varies for upland and low land 28 Damar is the hard resin obtained from several tree species of Dipterocarpaceae family, mainly from Shorea obtusa. 29 Agar is the fungal infection in the heartwood of Aquilaria crassna. The unique infested portion of wood contains a concentrated amount of oleoresin of commercial value and it is made use of for production of incense, perfumes and certain traditional medicines. 30 Bamboo is a versatile resource with multiple uses – from food (edible shoots) to use as raw material for industrial products (e.g.pulp, ply wood). There are a number of bamboo species in Lao PDR falling under different genera, with different morphology and culm characteristics. 31 Rattans or canes (Calamus spp.) are the stem of climbing palms forming a characteristic component of many forest types. It is a very important NWFP used extensively for making a whole range of furniture, plaited materials (mats, baskets) and handicrafts. Bulk of rattan production comes from natural forests; and the rest from plantations. 32 Benzoin, produced from Styrax tonkinensis is used as incense and in medicinal preparations. 33 Galanga is the root of Alpinia officinarum, a herbaceous plant, which is used as a ginger like spice; and also in local medicine. 34 Annato is a reddish-orange colourant called Bixin, derived from the seeds of Bixa orellana, and is widely used in food dyes and polishes. 35 Lac is a resinous secretion obtained from the body of a hemipterous insect, Laccifera lacca. Naturally occurring resin is collected from baraches of host trees in the forest. A more common practice, however, is the deliberate inoculation of host trees, either wild or more frequently cultivated. Stick lac is the crude product (encrustation) obtained directly from the trees, from which shellac can be extracted. 36 Ginseng, the extract from the roots of Panax spp. are extensively used as a general well being drug to improve health and resistance. 37 The number of medicinal plants in use are large. Some 30 medicinal plants are commonly collected and used in traditional medicinal preparations of Lao PDR. Details of trade in medicinal plants are difficult to collect, since there is considerable amount of informal trade across the boarder with neighbouring countries. 77 villages and among north, central and southern regions of the country, due to variations in ecology and species distribution. Because of their rarity, leading to high price, some of the niche forestry products (e.g. fragrances like agar38 and spices like cinnamomum and pepper) had attracted high prices in special niche markets. In cases where these species were domesticated and their cultivation expanded (or where synthetic substitutes have been developed), prices had tended to fall. This is a risk, which is to be guarded against 39. Production and Trade As a measure to compensate for the fall in the timber revenue, due to ban on timber fellings in order to control deforestation, NWFPs have become an important source of forest revenue in recent years. As we have seen, with its overwhelming biodiversity, the forests of Lao PDR can contribute to the development of food and health product industries and those producing insecticides, flavours and fragrances, cosmetic products, fiber products, honey and bees wax, lac products, dyes and colorants, and many others. Considering the vital need to support rural livelihood, NWFPs cannot exclusively be devoted for revenue earning commercial production. Based on its prime purpose, collection/production of NWFPs can be broadly categorized as: for local subsistence (and traditional) uses; for domestic market; for local/domestic (value added) processing; and for export market. No statistical information is available on total production by categories, to know how these various categories are balanced. Products for subsistence use are outside the market, and therefore not accounted. Even the production for market, both domestic and export, are not fully and adequally recorded or accounted, due to prevalence of illegal activities (particularly illegal cross border trade). Several NWFPs in Lao PDR are comparatively important to meet the international and national market demand – e.g. benzoin (Styrax tonkinensis), cardamomum (Amomum spp.), broom grass (Thysanolaema maxima), Paukmauk (Boehmeria malabarica), bark of 38 39 Agar wood (Aquilaria crassna) is a CITES listed species, which had been (and is being) studied for ensuring their survival in nature, by IUCN and TRAFFIC. Agar has a highly specific niche market in the Gulf Arab Countries where the market is controlled by a single trading house. High price of the produce led to illegal trade in a big way, and serious fall in the natural stock of the species. There is also a view that its value is over-rated; future market (at the present high price) is uncertain; natural formation of scented wood needs a long time horizon (about 50 years for about 3 kg of scented wood of acceptable quality from a tree); and technology of inducing fungal attack and artificial formation of scented wood is imperfect and often, a gamble. It is this “mystery” of agar formation, which helped it to gain the status as a valuable niche product. Once the technology for producing agar in large quantity by raising plantations of Aquilaria spp. is available in the public domain, its attraction as a niche product will somewhat be reduced. To illustrate several countries have taken up pepper (Piper nigrum) production, with improved agronomic practices; and in the recent past price of pepper in global market has fallen, and as a result its price in local market has correspondingly fallen. In such situations, farmers will have no long-term guarantee of price stability in the market. 78 paper mulberry (Broussonetia paperifera), Bamboo, Rattan, Medicinal plants and natural dyes. Figures on commercial exploitation seen in different reports vary considerably. Value of commercial exploitation of NWFPs during 1998-2001 reported in Annual Reports of DoF, as quoted in IUCN (2002) in US dollar equivalent is as follows: 1998 : US $ 310,011 1999 : US $ 215,668 2000 : US $ 16,445,413 2001 : US $ 14,057,836 Current commercial collection, in terms of quantity per year, of some of the important NWFPs are: Broom grass (Thysanolaema maxima) : 200 tonnes/year Sugar palm fruit (Arenga westerhouttii) : 600 tonnes/year Paper mulberry bark (Broussonetia paperifera) : 500 tonnes/year Benzoin (Styrax tonkinensis) : 50 tonnes/year Paukmauk (Boehmeria malabarica) : 700 tonnes/year Agar (Aquilaria crassna) : 20 tonnes/year Bitter bamboo (Indosasa chinensis) : 200 tonnes/year Cardamom (Amomum spp.) : 500 tonnes/year (Source: NAFRI, 2005) The reported quantity of NWFP extraction does not give any idea of resource depletion – particularly of the wild natural resource of NWFPs. Bulk of the NWFPs are collected/harvested in the wild. Over-harvesting is too common. There are no codes of practice for harvesting the different categories of NWFP resources (e.g. palm heart, bamboo culms, bark, roots/tubers, fruits, exeudates). The villagers collecting NWFPs for traders are not provided with appropriate tools or funds to acquire tools. Frequent price fluctuations also cause disinterest among producers; and neither the traders nor the collectors have any interest to conduct efficient and waste-free harvest. There are a number of species listed as “threatened with extinction” by CITES, for Lao PDR. In the family Orchidaceae, there are six species of genera Paphiopedilum, so threatened. As a measure to protect the rare and threatened species, the Government has prohibited collection of the bark of bong tree (Nutabhoebe umbelliflora) for incense sticks. Tapping of yang oil from Dipterocarpus spp. is also restricted in some cases. Still, illegal collection is known to be going on. As a group, medicinal plants seem to be affected more than the other species. According to a decree endorsed by the Prime Minister in September 2003, medicinal plants are categorized into three groups, based on abundance;.Group I consist of rare and 79 endangered medicinal plant species, exploitation of which is to be certified by the Ministry of Health. The supply base of medicinal plants is largely the wild sources. For some medicinal plants sanction of quota is required from the Department of Agriculture and Forests. Domestication and cultivation of medicinal plants is limited. In very few cases, there are plantations being raised by private companies and farmers – of such species as Styrax tonkinensis (benzoin), Aquilaria crassna (agar) and Artemesia spp. Paper mulberry is a pioneer species; in Lao PDR, it is cultivated in Sayaboury province as a cash crop, while in Luang Prabang province naturally occurring paper mulberry is harvested from fallow lands. (Bark of paper mulberry is mostly bought by Thai entrepreneurs; it is processed into paper in Thailand and exported to Japan and Korea). Processing Experience elsewhere has demonstrated that the scope and amenability of NWFPs for downstream value added processing is remarkable. This potential, however is not adequately explored and exploited in Lao PDR. Except for few items of NWFPs, others are exported without further processing – intermediate, final or downstream. There are several constraints leading to his situation, which are linked to the lack of adequate country capacity. Wherever processing happens, it mostly goes upto the intermediate or primary level, involving cleaning, drying, grading etc. For example, harvested cardamom fruits are sun dried, rub cleaned, smoke dried, graded and packaged for export. No processing is done to produce essential oil and oleo-resin used in medicinal preparations. Similarly, medicinal plants or parts thereof are converted into powders and extracts (galanicals) for export. In the few stages of processing of NWFPs for final consumption and/or for export, the operations are carried out essentially on a small scale. These include: rattan workshops producing furniture; bamboo units producing baskets, mats and furniture; handicrafts utilizing sa paper, silk etc; incense factories; resin distillation plants; berberin processing plants; essential oil distillation units; traditional herbal medicine workshops etc. Details about these (number of units and their distribution, product range, source of raw material, capacity and so on) are not available. In several cases, product quality is low requiring further refinement or refinishing in importing countries. Production, in terms of quantity, fluctuates. While some companies obtain quota for collecting required raw material, many of the small scale NWFP processing units operate outside quota rules, tax rules and official monitoring. Many of the Lao traditional medicine production units collect plant materials from natural forests by paying only collection charges (wages) to the villagers. While the private sector is the prime source of investment in small scale NWFP processing, the larger units are run by the Government. Thus, five medicine (drug) manufacturing factories (including the one of Lao-Vietnam Joint Venture) were under Government control. One of these has been closed for lack of raw material and another is operating with imported raw material. The reasons for the low performance in the NWFP processing sector in Lao PDR are several: falling availability of raw material resources; inadequate technology; lack of product and process research; inadequate skills; lack of industrial extension service; inadequate 80 infrastructure and institutional support. There is need to strengthen all relevant aspects. There is also need to progressively move up from producing low value products of transitory nature (e.g.broom grass) to high value products such as aroma chemicals, agro-chemicals, flavours and fragrances, bio-diesel, industrial ingredients and value-added downstream products. Trade in NWFPs NWFPs are included within the top 10 of the export development priorities of Lao PDR – ahead of tourism, coffee and some other well-known sectors. Inspite of it, the sector is afflicted by lack of adequate statistical information on production and use, including trade. Data on NWFP trade, in the context of the total use (customary local bona fide use commercial extraction for domestic use, and for export) of the produces is important for designing a programe for development of NWFPs. Sadly, no clear or consistent data is available by products, by formal and informal trade, by sources and destinations etc. Local bona fide consumption and traditional uses are currently outside the formal institutional system; and, within the NWFP-sector, the capacity for monitoring and record keeping is also low. Apart from this institutional weakness, there are several other reasons for the state of affairs, in the NWFP sector, including the existence of corrupt/illegal practices. Commercial uses and trade in NWFPs can be categorized as formal (legal) and informal (mostly illegal). While informal uses (including illegal cross border trade) by their very nature fall outside the system of statistical records, even on the formal uses (including trade) statistical information is incomplete and inconsistent. Different sources provide different figures. Illegal activities related to trade are of different kinds – harvesting outside allotted areas, extraction in excess of allocated quota, collection and export of banned items of NWFPs (e.g. dammar, natural agar), showing local illegal collection as imported material for processing, using of fudged documents and so on. On formal NWFP trade, there are several different sources providing statistical information (on quantity, quality, value etc), based on their role in the procedures involved – e.g. Department of Commerce, Department of Forestry, Department of Finance, Department t of Customs and so on. Figures on NWFP exports provided by the Ministry of Commerce for the years 199596 to 2004-2005 are given in Table 4. If the above is compared with production figures provided by DoF, mentioned earlier in this report, one can see serious inconsistency40. 40 Reports seen on production and export of NWFPs for different years vary considerably, in terms value, volume and/or percentage of the total. Ingles (1998) reports the 1996 NWFP export, valued at US$ 4.3 million to be equivalent to 2.5% of the total exports. Another report mentions the average annual value of NWFP export during 1995-1999 to be US$ 5,183,000 (IUCN, 2002). Trade in wildlife is not included in the statistics of NWFP trade. Wildlife trade in Lao PDR is claimed to be substantial, with an estimated value in the year 2000 of some US $ 11.8 million, at Chinese whole sale prices (IUCN 2002). 81 Moreover, there are considerable annual fluctuations in the quantity and value of different products traded, and in the average price. Cardamom (along with medicinal and aromatic plants) account for about half of all NWFP exports, followed by resins. Recently, there has been a decline in the export value of a number of non-wood forest products. Table 4 - NWFP Exports, 1995-96 to 2004-2005 (Value in US$) Year Total Export NWFP Export Percentage of NWFP Export 1995-96 247,127,337 2,278,960 0.9 1996-97 217,454,036 3,638,891 1.7 1997-98 251,054,235 3,160,271 1.3 1998-99 271,059,676 2,548,709 0.9 1999-2000 323,974,602 4,163,165 1.3 2000-01 324,885,835 6,617,544 2.0 2001-02 322,618,759 11,298,003 3.5 2002-03 352,624,287 5,722,813 1.6 2003-04 374,320,000 3,368,684 0.9 2004-05 (Planned) 420,000,000 6,300,000 1.5 Source: Statics/Planning Division, Ministry of Commerce The policy of GoL is to promote export of processed, finished or semi-processed products, rather than raw materials. By Prime Minister’s order No.10 of 2000 and No.15 of 2000, export of unprocessed NWFPs has been banned. There are also restrictions on the export of unprocessed rattan and bamboo. Inspite of it, raw materials with minimum treatment such as drying, bundling, grading etc. are known to be exported for further processing in neighbouring countries. NWFP exports from Lao PDR is dominated by raw or semi processed products; share of processed products in the export of NWFPs is comparatively low. None of the raw produces go through high level of value addition. For example, bamboo as a raw material can be processed into panel products, parquet, moulded materials, pulp and paper, rayon fiber, cellophane etc. Lao has a considerable quantity of bamboo, which can be sustainably managed for industrial development. However, bamboo processing taking place in Lao PDR before export is confined to making such products as split bamboo, mats, baskets, cheap furniture, and handicrafts. Also, one often hears the comment that there is much more illegal export of NWFPs taking place in Lao PDR, than legal export. 82 While the main domestic markets for NWFPs in Lao PDR are the concerned provincial capitals and the capital city of Vientiane, much of the commercial harvest of NWFPs is exported to China, Thailand and Vietnam; some of it also goes to Japan, Korea, India, Europe and North America. The main products/produces exported to the neighbouring countries, among others, include: medicinal plants, broom grass, mulberry bark, sugar palm, dragon blood (chandai), dammar, sa paper, pauk-mauk (Boehmeria malabarica) and handicrafts. Medicinal plants are generally in chipped, dried and/or powdered form. There is also a small export market for the traditional herbal medicines of Lao PDR, in countries where people of Lao origin live. According to Phongphachanh (2005) some 10 medicinal plants (Orthosiphon stamineus, Styrax tonkinensis, Coscinium usitatum, Amomum ovoideum, Kaempferia parviflora, Dracaena cambodiana, Cinnamomum cassia, Sterculia lychnophora, Centella asiatica and Strychnos nuxvomica) were or are being exported41. Lao PDR is a land locked country, with active land routes to Thailand, China and Vietnam, and a long land border which is porous. And, NWFPs being of low bulk, the scope for smuggling and illegal trade is enormous. As already noted, the trade chain, often does not include processing. A number of NWFPs follow a chain of harvester/producer small scale trader trader in district capital trader in provincial and national capitals trader and consumer in importing countries. The rural communities often, are not properly linked to the business sector. The Quotas Quota allocation and role of trading companies are central to trade and marketing of NWFPs in Lao PDR. A valid quota, contract and various permits/letters are required for legally exporting NWFPs from one district to another district, province or country. Quotas are set annually by a PM Decree for exploitation and transportation of a product out of a district or province. Quota is specified by product and provinces. (Consumption for bonafide local/traditional uses are not covered by quota and are allowed by customary use rights recognized by the Government). Quota is supposed to be subject to a quantitative limit, based on annual allowable harvest. Results of NWFP surveys are to be submitted, annually, as part of this process (but, often, not done or done property). Provinces and districts intimate the annual quotas to be approved by the Ministry of Agriculture and Forestry. Quotas are, often, fixed arbitrarily. And, not all NWFPs are covered by quota. Quota (for harvesting a produce or group of produces) is set annually, based on requests from registered trading companies for produces/products, assessment of trader’s 41 The same author provides another list of 26 species with potential for export, some of which are in extensive use in other Asian countries and where improved varieties of some of these species are being planted. The species are: Alstonia scholaris, Smilax glabra, Terminalia nigrovenulosa, Homolomena aromatica, Amorphophalus companulatus, Curcuma domestica, Aegle marmelos, Stephania rotunda, Streptocaulon extensum, Curcuma xanthorizae, Adenosma indianum, Eleutherine subaphylla, Morinda tinctoria, Passiflora foetida, Butea superba, Tinuspora crispa, Andrpgraphis paniculata, Morus acidosa, Emblica officinalis, Catharanthus roseus, Artemesia annua, Brucea sumatrana, Codonopsis javanica, Polygonum multiflorum, Coix lacrymajobi, Osbeckia chinensis. 83 capacity to handle a certain amount of the product/produce requested for, and an assessment (often not done) of the capacity of the forest to produce. The process of granting quota work as follows. A (registered) company or individual, trading in NWFPs, makes a bid to the district or provincial administration (generally of forestry and commerce). The bidder requests approval to buy a specific amount/volume of specified products, depending on quantities needed, and expected availability of them in the area. The provincial Government then puts up the request to the Central Government. Then the process of resource assessment should take place regarding quantity, price, extraction methods etc. by provincial officials. Based on assessment of each quota request, and recommendation by the PAFO and the MAF, quotas are set annually by a decree of the Prime Minister for exploitation and transportation of a product out of a district or a province or the country. Quota is set for every year separately; and every quota setting involves a PM decree. Quotas are assigned not just for provinces as a whole, but for specific areas, even specifying villages. The track record of the company is also a consideration for granting quota (IUCN 2002). Details of NWFP quota awarded during the past years is not readily available. Some information obtained from an internal document of the project is given in Table-5. Table 5 - Some details of NWFP Quota in Lao PDR for 2004-2005 NWFP Pauk mauk (Boehmeria malabarica) Quota 2004-05 950 t Price per kg. at farm gate (Kips) 3,500-6,500 Cardamom (Amomum spp.) 1,015 t 8,000-30,000 Kheam (Thysanolaena maxima) 1,415 t 1,500-2,000 Po Sa (Broussonetia papyrifera) 1,075 t 2,000-2,500 Bitter bamboo (Indosasa sinica) 1,630 t 2,000 1,455,000 numbers 1,500 1,450 t 2,500 110 t 2,000 Rattan (Calamus spp.) Pauk Bong (Phoebe powenebsis) Ginger (Zingiber officinale) Orchids (different species) Not indicated Duk Dua (Amorphophallus campanulatus) 5,000 Sugar palm (Arenga spp.) 3,275 t 2,000 Agar (Aquilaria crassna) 47 t Not indicated. Source: Department of Forestry, 2004. Note: It was seen reported that quota was provided for some medicinal plants such as: Styrax tonkinensis, Coscinium usitatum, Dracean cambodiaa and Sterculia lychnophora. 84 Generally, trading of NWFPs is subject to the same rules and regulations as applied to timber products. The quotas set by PM decree are distributed (as per formal request) to registered companies in the provinces, drawing up a contract agreement. Thereupon, the companies contact district level traders for organizing harvest/collection by employing villagers. The traders, once they receive advice regarding assignment of quota, contract the villagers for collecting the materials (after duly agreeing on collection charges). The product is received from villages, and transported either for direct sale elsewhere (including export) or for processing before resale. At each point of sale and at the various places of declarations/inspections along the route of transportation, export or resale, the trader pays various taxes and/or service charges according to regulations of the Departments of Forestry, Commerce, Finance etc. These charges include: royalties (paid to provincial forestry office); provincial export charges (paid to provincial finance department); and National Export Tax (paid to Customs Department). For paying taxes, contract agreements are drawn up (on the strength of the quota) between the Provincial Trade Office and the companies, which include indicative export price, tax rates, quantity/quality etc. Accordingly, the traders obtain official documents required for exportation. In some cases, there are additional voluntary or mandatory fees, such as: village development contribution (fees), district export fee, service charges for finance, commerce and trade departments etc. Taxes and charges are collected for each consignment; and there are some 10 Government institutions involved in the process. “One gate” system of checking along the transport route (to check the permit for quota collection, tax receipts, nature/quality/value of the consignment etc) is meant to control movement of illegal materials. The institutional linkages involved in operating the NWFP quota system is complex, linking the forest resource to the market through: village level collectors middle men buyer (local trader) trading company processing units export/market. The Government agencies at various levels are involved in the whole process (see Figure 4) Figure 4 - Linkages Involved in Quota Administration Village Administration Central Government Administration Trade/Buyer District Administration Provincial Administration 85 As per the available information, NWFP exports from Lao PDR do not face any serious non-tariff restrictions (like quality specifications, technical standards, health and safety regulations, and certification) in the countries to which these items are exported, since most of them are meant for further processing. The system is afflicted by weaknesses and loopholes. Some traders like the quota system as it provides them considerable benefits. Others complain that it is cumbersome and time consuming, making it difficult to take advantage of the international demand, which requires products to be supplied following a strict time schedule. Quota allotment (though qualified as “yearly planned harvest”) is not based on proper resource assessment, and sustainable resource management. Quota is based generally on last year’s collection with arbitrary adjustments, influenced by demand pressure, often with concurrence of the local “economic group” at the provincial level. Since no resource assessment/inventory is involved, quota is unrelated to sustainability. The system has not helped to control illegal trade (or illegal traders), and consequently it has not been effective in controlling resource depletion, thus exacerbating the problem. The quota holders (who have agents and sub-agents at district and village levels) are generally powerful and privileged, with political influence. They are financially supported by foreign buyers42. The traders and trading companies are not “entrepreneurs”, and do not seem to have any commitment to any particular sector (like NWFPs). They deal with several products. Some of the NWFP traders met with by the author deal with products other than NWFPs – e.g. rice, maize, soyabean. Share of NWFPs in their business is 50 to 60%. Forest resource depletion does not seem to bother them. Therefore, the question whether the quota system, as is now being practiced will help poverty alleviation and support development remains a serious issue. Globalization, deregulation and economic liberalization have led to increased exports since 1990s, to larger number of destinations. The decentralization of administration also saw changes in the nature of trade, prominence of different groups, methods used and so on 43. There is need to improve the policy, strategy and system of production and marketing of NWFPs in Lao PDR, both for domestic market and for export, in order to ensure efficiency and sustainability. Because, Lao PDR is land locked, success of its policy depends partly on the neighbouring countries’ policies. It is hoped that with the establishment of the ASEAN Free Trade Zone, things will change for the better. 42 There are also a large number of unregistered traders (national and foreign) operating in Lao PDR, who tend to operate outside legal channels. 43 Even the methods of smuggling have changed and illegal activities have become more complex and ingenious. 86 NWFP Resource Management The purpose of NWFP resource management is to sustainably produce (consistent with principles of conservation) one or more non-wood forest products, (such as natural colorants, fibers, gums/resins, medicinal and aromatic plants, spices, etc. for direct consumption or for processing into value-added goods), depending on management needs and circumstances, either exclusively or integrated with wood production. NWFP resources can be found naturally in well-stocked and closed forests, degraded forests and wastelands; they can be created44 in plantations, farms, home gardens and agro-forestry plots. Under natural forest systems, sustainability of wood and non-wood resources are inter-lined. While NWFPs in Lao PDR are produced/collected almost exclusively from natural forest, about 70% of it are obtained from open/secondary/degraded forests. Because of the descriptive nature of most literature dealing with NWFPs and agro-forestry, it is difficult to make a quantitative assessment of the extent of NWFPs incorporated into agroforestry. Creation of NWFP plantations is a recent development, and if properly managed their productivity can be improved considerably. There is, thus, several strategic options for NWFP resource development. Forest (and NWFP) resource management, irrespective of their nature, whether natural or man-made, basically requires: resource inventory to generate/update information on quantity, quality, nature and distribution of the resource; management actions based on silvicultural needs and characteristics of the resource (or resource components – i.e., trees, palms, herbs, grasses, mushrooms); growth and yield studies to assess the annual allowable harvest; harvesting regulations and codes; and upkeep and protection of the resource from injurious agents. The exact nature of the different operations and their sequence is dictated by the type of resource and purpose of management. While periodical inventory of the resource is essentially meant to decide on “where, how and how much” of sustainable production, the nature of inventory operations will vary for different product types – e.g. medicinal and aromatic plants, natural fibers, gums and resins, bamboo and mushrooms. Inventorying for the full range of uses derivable from NWFP resources calls for detailed bio-prospecting. However, in respect of most NWFPs valid methods of assessment are yet to be developed. In Lao PDR, resource information on NWFPs is badly lacking. No systematic national survey of NWFPs has taken place, nor has a resource inventory (mapping) system or mechanism been established for carrying out periodical assessments, including environmental impacts of NWFP utilization. Some information on bamboo and rattan was collected through an IDRC project during 1993-94. Recently there has been an experimental ad hoc initiative to map the occurrence of plants used in traditional medicine, in few selected districts. A major constraint in this regard is that adequate funds and skilled manpower to carry out resource inventory are not available. Knowledge about species of plants (the silviculture of plants providing NWFPs, and their main uses) and products is also very limited. Management of natural forests of varying ecology and quality (from well stocked to 44 NWFP resource can be created under monoculture and polyculture (mixed) systems. 87 degraded forests under rehabilitation) are complex. Some cases of degradation are beyond natural rehabilitation (e.g. through effective protection), and would need to be rehabilitated using expensive inputs (e.g. land preparation) and raising artificial plantations. In other cases, harvest control and silvicultural measures will help an ecological progression. While some of the erstwhile NWFPs have been successfully domesticated as agricultural and horticultural crops, others are amenable for domestication, through intensive research inputs and genetic improvement. Yet others can prosper in semi-wild conditions, in forest clearings and wastelands. Still, several of the valuable NWFPs thrive better only under the wild natural forest conditions. Low impact harvest and sustainable utilization of the NWFP resources present a serious technical and management challenge. In the absence of adequate management, over harvesting of selected species results, leading to depletion of stock (and even extinction) of such species. Collection of NWFPs (in natural forests, particularly), impacts greatly on biodiversity. Present levels of NWFP extraction in Lao PDR is leading to severe depletion of some species and over-all degradation of forests. However, C&I for sustainably managing the resources of several of the NWFPs (which often has to be integrated with wood production or timber management) have not yet been developed. It has been reported that illegal extraction of NWFPs takes place (inspite of regulations) even in protected areas, including the national biodiversity conservation areas. There is need for clear policy (supported by effective policy instruments) in these regards. Domesticated NWFPs, currently being raised in plantations, home gardens and agroforestry plots of varying sizes and scales include trees palms, herbs, grasses, orchids etc. – such as agar (Aquilaria crassna), Artermesia sp., bamboo, broom grass, cardamom, cinnamomum, paper mulberry (Broussonetia papyrifera), Persea kursii, rattan, Sterculia lychnophora etc. Potential for domestication of NWFPs is still very large. Private sector is getting interested in artificially growing NWFP species; and, the need for genetic improvement for better productivity (in terms of quantity and quality) along with improved agronomic practices is acutely being felt. There is also need for arrangements to supply improved planting materials to the farmers. These call for adequate backing of appropriate research and extension. Availability of degraded forest land for raising plantations can favour domestication and cultivation of NWFPs. There is also scope to carryout under-planting and inter-planting of NWFP species (e.g. rattan, medicinal plants) along with plantations of timber species like teak (Tectona grandis). Management Technology As already indicated there is need to develop and disseminate technical packages for specific NWFPs (e.g. bamboo, rattan, spices) regarding raising of planting materials, planting, tending, harvesting, post-harvest treatments, etc., specifying modifications required for farm and forest conditions. No such technology package has been developed in Lao PDR. Villagers harvest the “quota species” (and also others) for selling them to traders, using age old practices and primitive equipment. District forest staffs are supposed to train the villagers on harvesting 88 methods, but they themselves are not adequately equipped. Enormous amount of research input is required to enhance the situation in the NWFP sector. The present situation of the NWFP sector in Lao PDR is marked by serious management deficiencies, reflected in: gnawing gap between management principles and practices; absence of boundary delineation for areas from where NWFPs are to be collected; lack of a clear assessment of the resource to be managed (involving inventory/bioprospecting); lack of science based approach in operating the quota system; lack of management plans for NWFPs; illegal and excessive harvesting of commercial produces, even from conservation areas; inadequate technological sophistication and capability; lack of adequate research support; and deforestation and forest degradation leading to declining availability of NWFPs. There is need to chart a clear path for NWFP development supported by a firm and consistent policy and policy instruments. This will help to attract more investment into the sector, which currently is low. Investment Money spent on creation and/or enhancement of capital are known as investment, whereas expenditure on routine maintenance or for providing of routine services (e.g. product harvesting) is known as working cost. Use of existing capital for other purposes and for consumption is a form of disinvestment. Investment in the NWFP sector would include: enhancing of the natural resource of NWFPs, creation of new NWFP resource through artificial plantations (domestication and cultivation), establishment of processing facilities, developing of needed infrastructure etc. No clear and complete information (quantitative and qualitative) is available on the investment situation in the NWFP sector. While the sector has suffered disinvestments in the form of deforestation and excessive and wasteful extraction, investment in the form of new plantations has been limited. Some large scale plantations of agar (Aquicaria crassna), benzoin (Styrax tonkinensis) and Artemesia spp. are known to have been raised by private investors; otherwise, planting is done mostly in home gardens and agro-forestry patches. Species planted in home gardens include: bamboo, rattan, cardamom, cinnamomum, Boehmeria malabarica, Thysanolaena maxima, Broussonetia papyrifera, Indosasa sinica, Bixa orellana and others. Some companies from Thailand are known to be supporting farmers in Lao PDR to raise NWFP yielding plants in their farms, on condition that they would sell back the produces to the company. Investment in processing depends on adequate and transparent information, research support/quality, local capability, and consistency of supply (of raw material); existing processing units are mostly old and small. New investments have been slow to come by. Much more needs to be done in terms of investment, to improve the sector. 89 External Assistance Projects Projects with external assistance can provide direct investment support (e.g. loan projects supported by World Bank, and Asian Development Bank) and/or technical support to serve as a catalyst for attracting added investment. There are a number of projects in which NWFPs are a component; and there are other (mostly small) projects, which are directly related to NWFPs. Apart from the World Bank and Asian Development Bank projects, there are other project supported by FAO, SIDA, BTC, ITC, IUCN, IDRC, WHO, SNV, CIRDAP, VFI and others which deal with different aspects of NWFPs directly or indirectly. Overall 61 projects have been listed as dealing with different aspects of NWFPs; most of them are small (very small) with narrow objectives; some are components of larger forestry or land development projects; many do not exhibit “staying power” in the absence of local “ownership”. (There is inadequate appreciation that the role of technical assistance projects is essentially catalytic). Impact of the assistance projects very considerably, influenced by several factors. It is the general finding, based on experiences elsewhere, that “stand-alone” projects on NWFPs may tend to perform better than NWFP components included in the rural development, forestry and other land use related projects. Constraints for NWFP Development Despite being of immense importance to development, the NWFP sub-sector is not being fully supported or guided; and, the current scope and level of support to the sub-sector is insufficient to achieve many of the Government’s objectives, especially those related to promoting NWFP-based industry and monitoring of biological conservation. The NWFP sub-sector suffer from general neglect, low priority and inadequate awareness about their importance on the part of people and the politicians. NWFPs in Lao PDR are impacted by all the general constraints suffered by other sectors – i.e., poverty, illiteracy and overall socio-economic under-development. In addition, they suffer from a number of constraints, which are specific to them. There are constraints, which are resource-related, product/production-related, market-related, technology-related, information-related, infrastructure-related and institutions-related. The resource related constraints, inter-alia include: continuing deforestation and forest degradation (and, resulting environmental degradation and erosion of biodiversity); lack of updated forest (and NWFP) resource inventory and bio-prospecting; lack of information on resource and resource productivity; unclear tenure over NWFPs; inadequate protection of NWFP resources; and inadequate resource access due to physical/landscape limitations. Product/production-related constraints, among others are: wasteful/destructive harvesting, harvest (quota) unrelated to sustainable potentials, inadequate facilities for postharvest treatment, fluctuation in supplies, weaknesses/inadequacies in production technology, inadequate quality of produces/products, and lack of value-added processing and product 90 refinement, (including inadequate understanding about the chain of product refinement and downstream processing). Market related constraints, inter-alia, include inadequate market access and lack of stable market system for NWFPs, inadequate market information45, lack of free competition, existence of illegal trade causing market distortion, price fluctuations caused by market instability etc. Market price does not, often, reflect the replacement cost of the resource used, nor does it reflect the environmental costs associated with forest degradation. Efficiency and productivity are functions of technology. Technology-related constraints include inadequate technological capability; lack of codes of technological practices; inadequate technology generation and technology transfer relating to resource management, domestication, genetic improvement for productivity gains, harvesting, processing, value chain development etc; and inadequacy of supporting research46. Information system involves collection of information, provision of information services, information management, dissemination of information to target users etc. Inadequacies of information system (whether free or fee based) affect all aspects of NWFP management. It also blunts conservation consciousness. Information-related constraints, among others, are: inconsistency of statistical and non-statistical information, inadequacy of technical information, lack of credible market information and weaknesses in dissemination of available information. Apart from the inadequacies of information and knowledge, the tendency to romaticise NWFPs through anecdotal information makes their management more difficult. There is need to update and disseminate information on: NWFP resource endowment and management, growth and yield, harvesting, post-harvest treatments, processing technologies, government policies, marketing arrangements, nature of demand and product prices. There is a substantial volume of literature dealing with the different aspects of NWFPs on a general and conceptual level, as well as with specific situations. With reference to NWFPs in Lao PDR also, there are several recent reports: discussing their importance and situation; analyzing the major constraints; identifying the potentials and providing proposals for revamping the sub sector. Considering the heterogeneity of NWFPs and the complex nature of issues involved in their management and conservation, the information available in these reports are sketchy. Management/development of NWFPs requires infrastructural facilities, including roads, buildings, storage and processing facilities, training and research institutions, market 45 Available trade information are about completed events, which itself is often confusing and incomplete (different trade statistics in Lao PDR give different figures); demand abroad for an unused resource is often relevant – e.g. fruits of Emblica officianlis, and roots of Gmelina arborea are in demad in South Asia, whereas they are not collected in Loas. Currently, there are no mechanisms to obtain such information. 46 This inadequacy is seen in: lack of meaningful research in NWFPs, both basic and applied; lack of research network to access experiences of countries in the region; and inadequacy of meaningful research activities on domestication, plant introduction, genetic improvement, improved agronomic practices, inter-planting of NWFP species in timber plantations, integrating NWFPs in agro-forestry and home gardens (and stabilizing shifting cultivation); identifying new active ingredients from plants (and insects) and refining known ingredients; and development of new (consumer) products etc. 91 infrastructure, display and demonstration facilities etc. There is serious inadequacy in this regard in Lao PDR. Institutional constraints are often the root cause of other constraints. Institutional constraints range from: lack of a comprehensive policy on NWFPs leading to inadequate priority, insufficiency of budget (investment funds) and inappropriateness of institutional instruments and mission; tenurial insecurity; weaknesses of laws and rules; inadequate enforcement of existing policy/laws/rules; weaknesses in implementing/enforcing quota system (which is dominated by trader/middle men), leading to illegal activities; inadequacies in the organizational structure, particularly at the decentralized levels; fragmentation of institutional responsibilities; lack of skills and capabilities in the area of NWFPs (e.g. lack of appropriate courses/curriculum on NWFPs in forestry education and training); inadequate extension facilities; weaknesses of research institutions; inadequacies of governance and lack of transparency in decision making; lack of credit facilities; lack of appropriate classification and standards for NWFPs; lack of a clearly structured marketing system linking (sustainably) managed NWFP resource to a competitive market which ensures fair price; inadequate book keeping; and lack of a forest resource accounting system which incorporates NWFPs. Overall, there is wide gap between de jure commitment and de facto action/performance. Against the number of constraints mentioned, the NWFP sector of Lao PDR still retains some important strengths such as: existence of relatively substantial resource of NWFPs; availability of suitable land to establish plantations of NWFPs; intention to establish and promote village level democratic decentralization; new efforts at developing vital infrastructure facilities; initiatives for developing country capability; existence of markets for products from Lao PDR in the neighbouring countries etc. It will be possible to build on these strengths, to develop a strong NWFP sector, provided adequate priority is accorded to the sector supported by a perspective plan, funds, man power and political commitment. Experts have found that Lao PDR has considerable opportunity to build a strong NWFP sub sector as a basis for sustainable economic development (Saxena, 2004). Future of NWFPs in Lao PDR The future of NWFPs in Lao PDR would depend on the extent to which the NWFP resources are sustainably managed and utilized for value-added processing and increasing income generation. Potentials in that regard are enormous and can be tapped by wellplanned and progressive phases by developing and acquiring/innovating technologies. Already there are: herbal enterprises processing medicinal plants into indigenous medicine; plant based skin care products; rattan processing plants producing furniture, mats and decorative products; units producing essential oils; bamboo processing units producing furniture, curtains, mats, basket ware and hats. There is potential to produce bamboo parquet (floor tiles), bamboo veneers and bamboo mat boards, aroma chemicals and cosmetics and a host of other valuable products for export. Thus the prospect of developing NWFPs appears to be significant. This, in turn, calls for. 92 Resource conservation, creation, management and enhancement, involving domestication, genetic improvement, integrated cropping systems and improved agronomical/silvicultural practices (e.g. interplanting/under planting of NWFP species with timber species like teak). Survey and analysis of potential marketing opportunities for selected NWFPs, to establish an economic base; identifying potential (processed) products, and promoting “brands” for capturing added value. (There is need to update the priority products, based on changing market outlook). Establishing, by progressive stages, sophisticated processing facilities. Development of market chain infrastructure and technologies; value chain investment. Controlling of quality standards and processes. Investment on research and human resource development. Establishing a system for information feed back. These measures should be consistent with bio-diversity conservation. NWFPs Under Forestry Strategy, 2020 Out of the 144 priority actions included in FS 2020 (MAF, 2005) 10 are on NWFPs. These fall under three specific areas: Improving basic conditions for NWFP development (sound policy, plans, programmes, information). Improving harvesting and marketing for NWFP development (plans, royalty, processing, transportation). Capacity building (institutional strengthening, reinforcing R & D and extension). FS 2020 also provides an annexe on the topics for most critical studies proposed on NWFPs (for filling critical gaps), covering the role of NWFPs for: rural development (involving inventory, domestication, access and use rights, processing, indigenous knowledge); biodiversity and resource base (involving resource mapping, testing for ingredients, ecological effects, herbarium); national development and product development (involving trade, product development, processing etc); information and data base (covering resource base, species details of distribution and availability, processing, trade, international market etc). 93 Situation and Role of NWFPs in Project Sites Details of the survey carried out in the project sites (six villages falling in the three provinces of Luang Prabang, Savannakhet and Champasak) are contained in the project progress reports, providing an account of the nature of NWFP resources, potential products and products in demand, role of business associations, main markets, trade directions, prices, details of external (assistance projects) interventions and so on. The reports also discuss the potential role of village marketing groups. Specific information related to most of the products is, however, unavailable. The project team has identified 14 products (product groups) as important in the project area47. These are: rattan (Korthalsia and Calamus spp.) bamboo cane/culms, bamboo shoot and mushrooms (several species) in Savannakhet and Champasak; cardamom (Amomum villosum) dammar resin (Shorea obtusa) and Pandanus fiber in Savannakhet; berberine (Coscinium fenestratum) and malva nut (Scaphium macropodium) in Champasak; and broom grass (Thysanoloema latifolia), paper mulberry bark (Broussonetia papyrifera), bitter bamboo (Indosasa sinica), insect larva and shell lac in Luang Prabang. A PRA (Participatory Rural Appraisal) conducted in the six villages forming the project field sites, has highlighted several common issues and concerns: 47 Resource depletion of commercial NWFPs (rattan, bamboo, kheua hem, malva nuts); over harvesting. Prices are often too low and unstable for commercial NWFPs (handicraft products, dammar resin). Price is controlled by the trader, and often villagers cannot sell to another trader. The demand for NWFPs is often fluctuating. Not enough raw material (bamboo, rattan) available for handicraft industry; villagers have to go far for collecting the raw material. Low quality of the raw materials. Other than rattan handicraft and drying of berberine and po sa, there is no processing – no skills and no equipments; lack of designs in developing handicraft business. Villagers complain that they do not receive enough support from the authorities for management and marketing of NWFPs. The village level exercises have short listed 16 NWFPs for the phase 2 of MA & D, each of the six villages short-listing 2 to 6 products. Long Leuad village in Luang Prabang short–listed mulberry, broom grass, bitter bamboo, bamboo shoot and insect larva, while Houay Hia village in the same province found mulberry, broom grass, and stick lac as potential products for enterprise development and marketing. KM 29 village (Ban Lak.29) in Champasak identified rattan, bamboo shoot, mushroom, and fish for the phase 2 of the MA & D process. KM 62 village (Ban Heua Kheua) in Champasak preferred bamboo and rattan (4 species). Similarly, Nathong village in Savannakhet short listed rattan, bamboo shoot, cardamom, mushroom and Taey, while Alouay Kham Noy village in the same district came up with bamboo shoot, bamboo cane, mushroom, and Kisi in the short listing process. 94 It was also found in the PRA that 60% of the NWFPs collected are used for food and subsistence use; in areas close to the provincial towers, more of NWFPs are put to commercial uses. During a visit to Lao Textile Natural Dyes in Luang Prabang, the author observed that natural plant dyes are used to color silk48. A SYSTEM FOR NWFP DEVELOPMENT AND MARKETING As mentioned in the introductory section, a system involves a series or number of inputs, resulting in or producing a series or number of outputs, passing through a series or number of processes or procedures, in systematic stages or steps. A systems model for NWFP production and marketing will have a number of component elements (with their own sub-systems), going through several loops representing stages, roles of players, institutional arrangements etc. Establishment of a well-functioning system for NWFP development and marketing is crucial for improving the competitiveness of the sub-sector. It will facilitate harmonious functioning of the various input/output stages and the processes and procedures involved. Such a system should consider: the situation of the NWFP resource; claims made on the resource; harvesting and post-harvest technology; processing; uses and markets of resulting products; the chain of events and arrangements, and players involved between raw resource and product market; changes in factors influencing (the outlook for) supply and demand and son on. These considerations and related steps are to be approached in a systematic manner, through: the implementation (and enforcement) of institutional instruments in the form of policies, plans, strategies, laws, rules, regulations, instruments, guidelines and frameworks (covering the technical, administrative, environmental and socio-economic aspects, as well as the macro and micro situations); and, effective/efficient organizations enforcing these instruments. A diagrammatic illustration of such a system, indicating the linkages of component elements is given in Figure 5. As can be noted, managing/growing of non-wood forest resources, their harvesting and processing, and marketing of products for intermediate and/or final consumption, form a closely related set of activities, having intimate forward and backward linkages. Also, the supply and demand are mutually influencing in a situation of full knowledge and free competition. A systems model, as the one given above, can be simulated for different 48 Plant materials used to give different colours are: Pink: rind of mangostein fruit (Garcenia mangostina) Red / Purple: stick lac, wood of Caesalpinia sappan Yellow: root of berberin (Coscinium finestratum) Orange: seed of annato (Bixa orellana) Greyish black: fruit of ebony (Diospyros mollis) Pinkish grey: leaf of teak (Tectona grandis) Grey: tuber of Dioscorea bulbifera 95 assumptions about the component elements. If nothing is done to change the current level of elements, current rate of deforestation and forest degradation is likely to continue, with their deleterious impacts. Success of a system for NWFP development and marketing depends on: effective measures for improving productivity and sustainable production, appropriate cultural practices, waste-free harvesting, value-added processing, consistency of product quality and (above all) effective policy and institutions of governance. Figure 5 - Diagrammatic Illustration of a System for NWFP Development and Marketing Subsistence consumption Resource Assessment NWFP resource managers/ producers Harvest Commercial use Information flow Post harvest treatment (refrigeration) and transportation Primary processing Consumption (Market) Consumption (Market) Final consumption (Market) NWFP resource Resource creation / enhancement Further processing Information flow (Note: Linkage of each input-output stages are influenced by policy and policy instruments – which, among other things, also influence the technology). 96 4. POLICY AND INSTITUIONAL ARRANGEMENTS FOR NWFPS SITUATION IN LAO PDR The concepts and linkages of policy and policy instruments relating to a sector at the national level, as well as the overall institutional situation in the forestry sector of Lao PDR have been dealt with in earlier sections. The institutional aspects of a sector or sub sector, crucial for enabling development, generally cover several inter-related areas: policy, legislation, organizational structure (including decentralization of powers and responsibilities), human resources development and research. Policy refers to the principles and courses that govern actions directed towards given ends. Legislation is an important instrument to facilitate implementation of the policy. Organizational structure defines the agencies/organizations for translating the policy directions into action on the one hand and the authority for enforcing legislation on the other. Quality and impact of policy implementation is influenced by the type (in terms of education, training, specialization, attitudes etc) of human resource employed. Research on all aspects of the sector or sub-sector is an essential need to keep up the sectoral dynamism and to support sectoral development. Institutional improvement has to be effected as a package, with each of the aspects receiving commensurate attention. Normally, the priority accorded to a sector or sub-sector is reflected in the related policy and institutional arrangements. Need for a Formal Policy As we have already noted, there is no separate (free standing), formal, legislated policy for the forestry sector (and hence for the NWFP sub sector) in Lao PDR. What is normally referred to as forest (and NWFP) policy provisions are the statements in Party Congresses (and such other occasions), and indicative objectives given in plan/programme documents (e.g. to increase rural income and employment; to reduce or alleviate poverty; to empower local communities, particularly women etc.). These are, often, not consistent and tend to change in content, spirit, style of formulation and emphasis; these are not linked to: specified sectoral imperatives, general and specific principles (e.g. decentralization, sustainable management), expected (measurable) outcome in the medium and long term and a comprehensive set of policy measures and strategies. Policies lead to development/investment within the framework of a long term plan (which is suitably phased into short and medium term plans), strategically supported and facilitated by enforcement of legislative and regulatory instruments and development of capacity and competitiveness. In the absence of a clear and consistent long term policy, sectoral priorities tend to change to suit the whims of changing political situation and administrations. The forestry (and NWFP) sector of Lao PDR, through the changes in political environment and public 97 administration has followed different short-term approaches (referred to as policies, but without following appropriate technical and legislative processes required for policy formulation), resulting in changing priorities, lack of adequate funding and protection, and resulting resource depletion. While the year 2005 witnessed the close of the 5th Socio-Economic Development Plan period (2001-05), actual implementation of programmes/activities were, often, not related to the objectives specified in terms of environmental conservation and development. The draft National Forestry Strategy 2020, which proposes a series of activities and actions to be implemented under different areas of forestry has emphasized the need for a clear and consistent policy to support their effective implementation. Strategic Objectives for NWFPS From the objectives expressed in the various NWFP programmes and projects of the GoL, the current “policy” intent appears to be: To increase income from NWFP based industry and trade, through product improvement and marketing. To provide alternative livelihoods to shifting cultivators through NWFP developments. To provide incentives to local communities to conserve forests by increasing the social and economic benefits accrued to them from sustainable NWFP use; and, To ensure the long-term availability of NWFPs by developing systems of sustainable use. Hierarchy of Legal Instruments Hierarchy of legal instruments consist of laws, rulres, regulations and supporting instruments. Role and scope of these have been discussed under ‘concepts’ in section 1 of this report. Situation of Legal Frame Work for NWFPs As there is no specific policy on NWFPs, so there is no specific (and exclusive) legislation, strategy, plan or programme on NWFPs. NWFPs “piggy back” on timber. Since there is no specific legislation covering collection, use and management of NWFPs, the subsector is left unregulated or is governed by legislation relating to production forestry or customary use. The law applicable to NWFPs is the Forestry Law of 1996. Provisions of Forestry Law 1996 relate mostly to timber (wood and wood products), and those articles, which relate directly to NWFPs are vague and ambiguous. Provisions related to NWFPs in the Forestry Law, 1996, stipulates inter-alia that: 98 DAFO and village authorities should develop resource use plans, including for NWFPs; NWFP collection shall be done in accordance with regulations issued by relevant authority. Households collecting NWFPs shall comply with village regulations endorsed by DAFO. NWFP collection is regulated/restricted within protection forest – but, may still be carried out. In respect of NWFP management, the Forestry Law recognizes a distinction between customary use and commercial use; rights for customary use by village community are allowed. Also, village authorities shall enact legally binding rules to govern implementation of provisions of the law, and regulate the use and management of forest resources within village boundaries. There are also provisions in the law, regarding the harvesting seasons for certain NWFPs; the requirements of harvesting permits and plans; conditions under which harvesting is prohibited; monitoring system and penalties etc. It is assumed that these guidelines apply to production forests only. The following types of exploitation are prohibited according to MAF regulation. Where exploitation and harvesting of forest produce cause complete damage. Exploitation of bamboo under three years of age or cutting of all bamboo stems in a stand. Exploitation of rattan by cutting all stems in a stand. The provisions relating to NWFPs found in Forestry Law 1996 are those related to customary rights on NWFPs and their commercial harvesting and trading (and conditions there of, including taxes and charges). There is a lack of adequate implementing regulations, even for the limited provisions included in Forestry Law, 1996. What is available, essentially, is relating to harvesting and trade. Out of the 50 implementing rules and regulations (for implementing the Forestry Law 1996), there are only 8 concerned with nonwood aspects (of which 3 are on wildlife, one on biodiversity, one on rattan/bamboo and agarwood products, one on natural resource for medicine, one on harvesting of NWFPs and one on establishing bio-diversity areas). There are 23 items of IRR dealing with timber (and also applicable to NWFPs by inference or express mention). The remaining 19 are essentially concerned with timber (wood products) or management/administration of forest as a natural resource. In 2001, village forest provisions were consolidated, and NWFP collection for sale was allowed under approved management plans; A 2002 decree allows villagers a role in managing production forest under “village contracts” with districts. The 4th party congress (1986) had recommended that MAF issue a comprehensive regulation on management of valuable NWFPs, but specific legislation is yet to be issued for this sub sector. NWFP management continues to be regulated by various (timber) production 99 forestry and customary use legislation. By and large, in the law, rules and regulations, NWFPs are dealt with only as a component of “forest products” without a separate identity. Therefore, all the deficiencies listed for the legislative frame work of forestry, (see section 2 of this report) affects NWFPs as well (e.g. vagueness, gaps in coverage, inadequate implementation, illegal activities), with some deficiencies being far more serious. There is excellent opportunity to initiate a national programme on NWFP development. But this would call for clarifications of the provisions of Forestry Law 1996. With regard to NWFPs, the law allows that harvesting can proceed in surveyed and inventoried production forest areas for which there is a management plan, and stipulates that harvesting must be carried out according to specific regulations issued by concerned agencies. Such formal interaction between district and provincial authorities and local villagers has been highly limited and has taken place only under the auspices of particular projects. Also, Forestry Law, 1996 allows discretionary exceptions to NWFP harvesting regulations (if any), where such harvesting is considered “traditional usage” and out of “economic necessity”. Interpretation of these terms makes NWFPs extremely vulnerable to the manipulations by powerful interest groups (Saxena, 2004). In the overall legal frame work for forestry, several aspects of NWFPs are not covered (causing gaps) – e.g. inventory, product classification, MIS, domestication, intensive cultivation, productivity, marketing/processing, penal provisions, monitoring, capacity building, research and development etc. No comprehensive technical regulations and guidelines have yet been developed for NWFPs. Even the available provisions have not been implemented effectively. Ban on export of unprocessed rattan and on collection of yang (Dipterocarpus spp.) has been ineffective. Illegal trade in NWFPs seems to prosper. Even the customary, informal collection reaches the stream of illegal export, since such illegal activities provide considerable economic benefit. The net result of the situation has been the depletion and degradation of the NWFP and biodiversity resource of the country. Tyranny of Quotas Quota is a generic word, meaning allocated or allowed share, a fixed quantity that can be collected, supplied or used. In international trade, it means the quantitative limit placed on the importation or exportation of a commodity. The purpose here is to protect the market for a commodity; and protection afforded by quotas is more certain than can be obtained by raising import tariffs. The term can also apply to quantitative restrictions on production, which are normally set by cartels. In Lao PDR quota for forest produce extraction is imposed, supposedly to avoid overexploitation of forest resources – a means of quantitative control, to ensure a scientifically established, planned and sustainable harvest. In fact, almost all countries have adopted the concept of sustainable harvest of forest produce (e.g. annual allowable cut in respect of wood). Only difference is that in Lao PDR, the term quota or quota system is used presently in a somewhat different connotation. The difference has more to do with the mechanism of setting collection/harvest quota and in administering the system. It is a system dominated by 100 traders, with involvement of several Government departments. Villagers are employed in collection/harvesting, for which they are compensated. Quotas are granted by provinces and districts. In the absence of quota, collection of any forest product (e.g. rattan), for any use other than for “traditional purposes” becomes illegal. But, illegal collections do take place routinely and are traded under different guises. For removing the produce, it is necessary to obtain various permits, paying royalty and different taxes and charges as fixed by forest service, finance department, customs department etc. Compliance to regulations are checked at check points along the transport routes and at the borders, which are manned by the staff of finance, tax, commerce, drug control and other departments. Regarding collection of forest produces, the DoF provides guidelines, and training on sustainable forest management, to the staff at the provincial and district levels. Several weaknesses have been reported for the quota system. The system is arbitrary; assessment of the resource does not follow any scientific principles or methods; operational system of quota collection is also confusing and non-transparent. It is a trader-dominated system, where there is no resource management, only extraction of the produce. Over-exploitation appears to be the rule, combined with under reporting. Existence of illegal trade (even of rare, threatened and endangered species) under the cover of quota and fudging of documents (e.g. showing non- quota collection as imports) has also been reported. Non-quota extraction and activities under Village Land Use Plans can cause conflicts and lead to excessive extraction. Villagers are not consulted in the quota system process. No appeal progress is available to stakeholders affected by quota setting decisions. Several observers have noted that the quota system: distorts the market and industry structure; creates incentives for corruption; and results in economic losses (and resource losses) through inefficient production and sub-optimal pricing (IUCN, 2002). There is no adequate system in place for monitoring the collection of produces covered by quota. There has been several suggestions to improve the quota system including delegation of “harvesting quota granting” to villages (IUCN 2002). There is need to substitute the current quota system by a simpler system of institutional arrangement supported by proper assessment of the forest resource base, a scientifically prepared harvesting/management plan (for management units) and adequate monitoring. (More discussion on quota for harvesting/collecting NWFPs can be found in Section 3 on Non-Wood Forest Products in Lao PDR). 101 Customary Use Rights Customary/traditional rights, practices, uses and related rules have great influence on the NWFPs. Custom is the result of practice and use that is constant, repeated, for one generation or more, widespread throughout a group and viewed as having created a right amongst the group. An individual, a household or a group can hold customary rights. Villagers are exempt from paying natural resource tax for subsistence use of products. The customary use of forest, forestland and forest produces has been practiced for a long period and is recognisd by society and/or law. Customary use includes the collection of non-prohibited wood for fences and fuel: the collection of other forest produces, hunting and fishing of non-prohibited species for household consumption; and other uses following custom. Customary use should not damage forest or forest resources or affect the rights or benefits of other individuals or organizations. The customary use of forest, forest land and forest produce must be in accordance with village regulations on forest and forest land, which the village authority has determined, consistent with the special circumstances of the village in each stage of its development. Customary rights do include the sale of nonrestricted NWFPs for commercial purposes. To that effect, village level associations have to be formed and this associations will sign management contracts with PAFO. Villagers may enforce rights against third parties and enter into contracts (village agreements) with them (IUCN 2002). Customary rights also include traditional ownership rights over specific types of trees, spirit forests and hunting taboos. The nature of customary rights is elaborated in MAF regulation 54/1996 regarding village forestry. MAF order 377 of 1996 stipulates that PAFO and DAFO have the mandate to ensure compliance of all parties and that “uses in conflict with customary rights should be limited (i.e.slash and burn, forest fire and fish traps)”. These provisions attempt to attain a balance between protecting natural resources and providing opportunities for villagers to exercise their traditional practices. Further, as per MAF regulation 524 of 2001, harvesting of NWFPs is prohibited within NBCAs except for customary use by villagers within forest resource use zones as long as harvesting is sustainable and within the permitted season. Noncustomary uses in NBCAs without authorization are prohibited. Organizational System The organizational system provides an orderly structure of related components that channel efforts of people towards pre-determined objectives. Accordingly, the component organizations and systems are to be characterized by well-defined missions, conventions and procedures. The component organizations/systems include public administration, enterprises and investment activities, R & D institutions, education and training institutions, information system and planning system, among others. Organizations in a sector consist of those representing public (government), private, corporate, co-operative, group and other interests. Government agencies are normally 102 concerned with public administration and regulation of sectoral activities. Organizations of other interests are mainly concerned with enterprise aspects. However, government agencies are sometimes given the mandate to undertake enterprise functions for various reasons, namely: the private sector does not exist or does not have the capability; enterprise activities are not attractive to the private sector due to low profit; there are non-market values and/or social service roles which others may not respect; and, it is considered necessary to provide models, by operating in competition with private sector for improving overall efficiency of the sector. But, in most situations, the system of government agencies have not been able to carry out the enterprise functions efficiently because of the in-built inability in the system to take speedy decisions, to take risks, to innovate, to use discretion and trust, and to operate in a business environment. Enterprises require administrative, managerial, professional and financial freedom in its functioning. It is therefore appropriate to separate enterprise function from the authority function of the Government. Models of public administration depending on the political situation and other factors vary considerably – centralized public administrative structure, decentralized and federated structure, participatory structure, socialized structure, co-operative structure and combinations of these. The first two are, however, the most common ones. A vital function of a governance or public administration agency is to monitor sector performance with regard to achievement of desired or defined goals, and facilitate better performance through improved institutional and legislative measures. This is particularly important in respect of agencies reposed with the responsibility to protect and develop the natural assets of the nation. The potency of institutions/agencies to enforce their mandates rests on their ability to overcome certain issues and inadequacies relating to governance. An approach to improve an institutions capability for governance is through decentralization of functions, responsibilities, and decision powers. The purpose of decentralization is to deconcentrate and distribute decision powers and functional responsibilities, along with the means and capacity for functioning, from power centre to the periphery (or from a large center to a number of small centers, from higher level to lower levels), so as to be able to involve people meaningfully and effectively in the governance process. For developing democratic decentralization, there is need for considerable efforts for institutional strengthening at the decentralized levels, in terms of capacity (skills, funds, facilities, infrastructure etc). Decentralised mandates, without adequate preparation, can stifle the local organization. Poor performance of several sectors are often caused not due to lack of policies, laws, rules and regulations; it is primarily due to deliberate non-implementation of policy and related instruments by the organizations which were meant to enforce them. Often the organizations assume the role as creators of policy, rather than creations of policy. Organizational failure or ineffectiveness also can occur due to inappropriate mission/vision, poor salary and facilities for the staff, bureaucratic mindset, inadequate transparency and so on. These can be corrected only through drastic institutional reforms. 103 Weaknesses of PFA As we have seen from the foregoing sections, the organizational system in the forestry sector of Lao PDR is very weak. With Regard to NWFPs, apart from structural and other deficiencies inherent in several organizations, the main issue is that there are no proper dedicated arrangements for overseeing management/conservation of NWFPs, within the PFA at all levels; and no coordination of scattered NWFP activities take place. There is no specific agency (governance organziation) to deal with NWFPs; and no special/separate NWFP units/divisions in MoF or in NAFES. NAFRI only has a section on NWFPs within FRC (without an adequate institutional mission or policy vision or client participation). Overall, there is severe lack of funds, facilities, expertise/capability. NWFPs suffer from institutional neglect. Inadequacy of Research Efforts Forestry Research Center has a separate section on NWFP. In the NWFP field, the current research priorities are the following: NWFP taxonomic studies and botanical surveys. Domestication/agro-forestry systems/reforestation/restoration. Sustainable harvesting regime. NWFP based forest management. Ethno botany, specimen collections. NWFP marketing and processing. Regulatory frame works. Socio-economic research including impact of NWFP use. Forestry research suffers from lack of adequate funds, facilities and trained manpower; this inadequacy is felt more in the NWFP-related activities. While research efforts on the priority areas are scanty due to lack of funds, facilities and manpower, the FS 2020 includes an indicative list of expanded priorities for NWFP research. Resource inventory and information. Chemical prospecting of wild flora and fauna. Domestication. Propagation and cultivation practices. Silvicultural management of NWFP resources. Harvesting of NWFPs. Pre and post harvest treatments. 104 Storage, intermediate processing. Pharmacological and toxicological studies. Value added processing and quality control. Product and market development for NWFPs. Management of forest service benefits. Agro-forestry combinations for different land types. Productivity studies. Major efforts (involving sizeable investment) are needed to enhance the science and technology content of forestry, and particularly of NWFPs. Also changes are required in planning and management of forestry research and development with a view to involve users of research. A more rigorous approach to preparation and implementation of research work plans is needed in order to raise the status of forestry related research, to increase its relevance to real life problems and to influence forestry policies. There should be clear prioritization; and research planning should be goal-oriented to be cost effective and relevant to the problem. Lack of client participation in problem identification and research planning, lack of a national forestry research master plan, absence of task orientation and inadequacies in policies relating to research personnel are some of other constraints affecting forestry research, which calls for concerted attention. Impact of research depends on the extent to which its results help to solve problems. This in turn depends on the goal-orientation and focus of research activities, and the thoroughness with which it is pursued. Lack of Extension Facilities The NWFP sub-sector in Lao PDR does not have the benefit of any extension facility. This is a serious constraint. Support services for forestry (and also for NWFPs) in Lao PDR is still evolving. Often the facilities for service delivery established during the implementation of donorassisted projects disappear once the project is terminated. There is need to ensure that development of basic capabilities is not thwarted by shortsighted approaches and lack of long term vision. Trade and Investment Organisations capable of supporting trade and investment in the NWFP sector are yet to develop. Lao National Chamber of Commerce and Industry has the potential to develop into such an organization. LNCCI has some members who are large-scale growers of NWFPyielding plants; there are also groups/associations within LNCCI dealing with NWFPs. Once NWFP sub-sector is formally organized, it can avail the beneficial services of LNCCI. 105 Private investors are present both in NWFP resource development and NWFP processing areas. Details of private investment in NWFP resource sector (e.g. private Styrax and agar plantations and related tenure arrangements, resource utilization etc.) are not available. INNOVATIVE CASES OF NWFP DEVELOPMENT IN LAO PDR Inspite of the general distressing situation of NWFPs in Lao PDR, there are rays of hope and avenues of optimism seen in a number of innovative cases, which shows considerable propensity to succeed. Lao Farmers products and batieng product These closely linked private companies are fair trade enterprises of Lao PDR, cooperating with European fair trade network, involving fair trade organizations of France, Belgium, Germany and Switzerland. These companies collect a large number of farm produces for processing and sale as quality products, mostly to France and other European countries. The products include jams, juices, dried fruits, honey and wine. The companies are owned by some 50 share holders. There are also several farmers among the shareholders. Some 15,000 farmers from several provinces are involved in supplying agricultural produces, from whom the produces are purchased through credit co-operatives. There are 8 such credit co-operatives. The raw produces are collected from farmers on the basis of contracts, for which prices are fixed periodically. The Company(ies) provides quality control and technology. There are no penalties imposed for breach of contract or malpractices (e.g. adding stones in supplies of tamarind fruits); and such instances seldom occur. There are three factories under the Company(ies) to produce jams, juices, slices, fruit pastes, fruit drinks etc.; and another producing wines. Earlier the Company had tried to encourage the farmers to process, and to supply processed products ready for sale. The quality of products being low (unsuitable for export), buying of processed products from farmers was stopped. Presently, the Company (ies) only buy raw agricultural produces from farmers. The system of contract production of primary produces and buy back arrangement has worked reasonably well. The company (ies) also contribute to improving the economic conditions of farmers through providing training in commercially growing fish and animals (apart from agricultural crops). 106 Self Help Groups Several self help groups (SHGs) have come up in various parts of Lao PDR (such as cardamom group, rattan group, honey group, bitter bamboo group, mushroom group), essentially for joint marketing of products. The scope of the functions and duties of these groups do vary. In some rare cases, village marketing groups undertake to market several products, produced locally. Nam Pheng marketing group for sustainably harvesting and marketing bitter bamboo and cardamom is an example (IUCN, 2002). Households sell produces to the marketing group, to avoid middlemen and to obtain better price. There is also provision for arranging short-term loans and developing social infrastructure. Efforts are ongoing for institutionalizing some of the village marketing groups to become capable of developing and implementing action plans for NWFP production, collection and trade. Independent Authority to Manage the Plantation Sector The Lao/ADB Forest Plantation Project (which is about to be completed), had provided loans to private persons/groups and farmers, and the loan was distributed through the Agricultural Promotion Bank. The upcoming new phase of the project, to be known as the Lao Plantation Sector Project (with an outlay of US$ 10 million), has defined a different implementation system, by establishing an autonomous plantation body, designated as Lao Plantation Authority. The plantation authority will be managed by a Board, with a CEO recruited from outside the bureaucracy, for carrying out the decisions of the Board. The Authority will be run as a corporate institution, without interference/pressure from the government agencies – in providing technical assistance, loan distribution, pricing, marketing etc. Success and progress (through necessary dynamic changes) of these initiatives into self-propelling ventures and models for replication depend on wide spread awareness and commitment. ANALYSIS OF NWFP SITUATION IN SELECTED COUNTRIES49. In order to address the rampant deforestation and environmental deterioration, a number of countries in the Asia-Pacific region, over the past 15 years, have completely or partially banned logging in natural forests. It is easy to order a ban of logging, but very 49 The countries selected are: Bangladesh, India, Indonesia, Korea (Republic of), Malaysia, Nepal, Papua New Guinea, Philippines and Vietnam. 107 difficult to protect forests, unless there are other alternate forms of regular benefits that can be derived. With new and renewed emphasis on environmental conservation, NWFPs have recently emerged as eco-friendly products, because their harvest tend to result in much less damage to the forest ecosystem, compared to logging. NWFPs can also be domesticated and grown commercially. Management of NWFPs sustainably will probably decide, the sustainability of forestry in the future. In the Asia region, the Asia Network for Sustainable Agriculture and Bio-technology (ANSAB), a regional NGO (which is primarily involved in research, technical assistance and professional interaction in the area of biodiversity conservation and NWFPs), has established a special component network to promote the sustainable development, use and management of NWFPs. In a number of countries there have been experiments with interesting institutional models for managing NWFPs, involving Government, private and co-operative sectors. Between production and consumption of NWFPs, lies a long chain – of crop raising, harvesting, transportation, storage, processing, grading, preserving, packaging and retailing. Often, the organization of the various stages and the way they are linked show considerable differences, depending on the overall institutional systems prevailing in different (country) situations, with differing socio-economic and environmental impacts. In certain situations, certain institutional arrangements are more capable of obtaining better results. In this section, several such cases from different countries are reviewed with a view to draw some relevant lessons useful for developing NWFPs. Some general observations about experiences from elsewhere have also been included. It is underlined that the review is generally based on cases which offer useful lessons, and not on any elaborate analysis of the country’s NWFP sector, reflecting the totality of the situation. The countries in the Asian region exhibit both similarities and dissimilarities, in terms of forest resource endowment, forest management systems, status of technology, level of utilization of NWFPs, rights and privileges allowed to tribal population, institutional arrangements and so on. The focus of the review of experiences in the selected countries is on different institutional arrangements, which inter-alia include the following: Programmes under government initiative and control. Commodity Boards (for specific commodities). Co-operatives, cluster of co-operatives and co-operative federations. Institutional partnerships (company–farmer partnerships; Government–private sector partnerships). Initiatives and assistance of NGOs. Private enterprises. Pubic limited companies. State owned enterprises. Initiatives under donor-supported projects. 108 Bangladesh Bangladesh has a depleted forest, both in terms of area and quality. Total forest area of Bangladesh is 1.3 million ha (Representing 10.2 % of land area) and 47% of it is accounted for by artificially raised forest plantations. The density of growing stock in the forest is also poor – with 23 cum/ha of growing stock of wood and 39 t/ha of biomass volume (FAO, 2005). Homestead forests, in which a sizeable share is accounted by NWFPs (such as bamboo, murta, medicinal plants, dye yielding plants, mulberry etc), supply a major share (above 70%) of the country’s requirement of wood and NWFPs. Homestead Forests In Bangladesh, homestead forests are the dominating feature in the village landscape. Some 10 million households, in some 85,650 villages, annually supply about 5 million cum of wood (about one million cum of logs and about 4 million cum of fuel wood) and 0.53 million air dry metric tons of bamboo. Supported by strong tradition and conventional wisdom, these homesteads grow trees and other crops under an intensive and efficient system of agro-forestry, combining multipurpose trees, food and forage plants, bamboo, palms, medicinal plants, spices and so on. The homestead forests support a mixed subsistence-cumcash crops household economy. Various trees, shrubs, bushes and herbs, in a multi-tiered structure, perfectly occupying the available space from the ground to about 20 meters high, surround each house. Animals, including cows, goats, chickens and duck, feed freely among the plants. A fishpond and beehives are often a common feature of the gardens. This system, developed over centuries as a result of long term adaptation of cultural techniques to local ecological conditions, has in many cases, reached a noticeable degree of natural balance. And today, homestead forests are the most important source of wood, bamboo and other nonwood forest produces in the country. In spite of their importance, the homestead forests do not get the attention it deserves in terms of research and extension support, credit facilities, utilization and marketing facilities. Importance of Non-wood Forest Products Like other tropical countries, there is a wide range of NWFPs in Bangladesh. They fall under: a. b. c. d. e. f. g. h. food (honey, spices, fruits, mushroom, tender shoots, palm juices and molasses, meat, fish, prawn); forage (leaf, pods); fibre (shoot, bark, floss); oils (essential oils, fatty oils); tans, dyes and extractives; gums, resins, oleo-resins, other exudates; drugs and medicines; multipurpose products such as bamboo, rattan/palms and grasses; 109 i. animal products (such as bees wax, horns and bones, skin and hide, lac and silk worm); and j. miscellaneous items such as ornamental plants, stones etc. Medicinal plants, bamboo (of various genera and species, mainly Bambusa spp and Dendrocalamus spp)50, rattan (species of Daemonorops and Calamus), murtha (Schumannianthus dichotoma), hogla (Typha elephantina), sungrass (Imperata spp.), golpatta (leaf of Nypa fruticans), hantal (Phoenix palidosa), catecheu (from the heart wood of Acacia catecheu), lac, honey and beeswax are the more important NWFPs of Bangladesh. Reliable statistics of the resource base and annual production of most items of NWFPs are not available. In some cases, annual production is expressed in approximate value and on some others even such information is not available. As in the case of wood resource, homestead forests are an important source of NWFPs. In most cases they account for a higher share, compared to government forests. Being owned by a large number of homesteads, the NWFP resource of homestead forests does not receive the benefit of appropriate technology. There are no extension services, covering NWFPs. In the government forests, there are no detailed management prescriptions for NWFPs. Some are disposed off through auctions and others through permits. While there are harvesting regulations for some NWFPs (such as bamboo, golpatta and murta), they are not strictly followed. For most others such as rattan, medicinal plants, hantal, hogla, honey etc., there are no detailed prescriptions, rules or regulations. NWFPs contribute significantly to the Bangladesh economy directly or indirectly. They provide employment to over 550,000 people annually, a significant proportion of which lasts throughout the year or at least during the agricultural off-season. Women play a significant role since they form a large part of the labour employed, either in cottage industries or at home. Despite this position, all of the products would benefit from planned systematic development and scientific management. The principal beneficiaries of these programmes are the poorer of the rural population. Many of the programmes integrate well with tree plantation programmes on public or private land. While there are processing units based on NWFPs (rattan, lac, medicinal plants etc), they all suffer from uncertain supply of raw material; and many of them, often, depend on imported raw material. Local supply has dwindled due to improper, destructive and over and premature harvesting. However, Bangladesh has conditions for their development and growth, with attendant socio-economic benefits, if properly organized and managed. Constraints for NWFP Development NWFP development in Bangladesh is affected by several hurdles: 50 Along with forest encroachments and deforestation, bamboo resource of Bangladesh has been depleted, in the government forests. The system of harvesting bamboo by private contractors, through annual auction sales or permits further contributed to the depletion both in quality and stocking. 110 Indiscriminate and over-exploitative harvesting of the resources plus absence of a programme to replenish and sustain the production are resulting in inadequate supply of raw materials and quickly depleting resources. There is lack of policies, rules and regulations applicable to the growing and harvesting of NWFPs. There are harvesting rules for golpatta, bamboo and murta, but except for golpatta, these rules are not strictly followed in the field. For other NWFPs like rattan, medicinal plants, hantal, hogla, honey and beeswax, fish and shellfish, there are no rules and regulations. Funds for the development and management of NWFPs are meager. The royalty or revenue generated from the exploitation of NWFPs is not used to improve the resources. There has been little attempt to integrate NWFPs into the plantations; yet many NWFPs can be inter or under-planted with appropriately spaced trees. No attempt has been made to adopt an integrated management system, which recognizes the importance of non-wood products, maintains and promotes the integrity, productivity, and sustainability of the ecosystem, while providing for the basic needs of the poor. There is no cell or unit in the Forest Department, which is specifically responsible for the development and management of NWFPs. Research and development efforts pertaining to NWFPs are quite scattered, unorganized and not well coordinated. There is a lack of co-ordination and institutional linkages at local and national levels and confusion as to what agency is responsible for each NWFP. Competent, knowledgeable and well-trained staff for the development, management, processing, utilization and marketing of NWFPs are lacking. Role of NGOs The bright spot in the institutional scene of NWFPs in Bangladesh is the role played by NGOs. They represent some of the successful institutional models. The Government policy to encourage the involvement of NGOs in development activities have indirectly helped participatory development of forestry and NWFPs. Bangladesh is one of the few countries where NGOs are involved actively and committedly in development activities. The NGOs in Bangladesh have been able to form groups (for different kinds of activities), with a total membership of over a million. The largest NGO in Bangladesh, the Bangladesh Rural Advancement Committee (BRAC) has organized groups with a total membership of about 600,000, of whom 65% are women. It provides credit and training for income and employment generation and provides marketing arrangements. BRAC operates an annual budget of about US$30 million and has some 4,600 full-time employees. Even though BRAC’s social forestry programme is of comparatively recent origin, it has developed an elaborate system of management. There are about 100 NGOs in Bangladesh engaged in forestry (‘social’, community, and homestead), and related promotional activities. NGOs like BRAC, Proshika, Manobik 111 Unnayan Kendra, Rangpur–Dinajpur Rehabilitation Service (RDRS), Gono Shahajjo Sangstga (GSS), Gono Unnayan Prochesta (GUP), Swanirvar Bangladesh, Poush and Association for Social Advancement (ASA) have successful programmes of forestry. Their point of departure is to organize landless and small farmers into groups, for collective or individual action, including tree planting, small scale forestry and growing/harvesting of NWFPs. Achievements of NGOs of Bangladesh in involving people in forestry has so far been impressive, especially in forming/organsing regional groups and planning and implementing tree planting projects as income earning enterprises. It is said that some 25,000 small groups are involved in social forestry. Apart from raising of nurseries, agro-forestry plots and plantations, NGOs have raised over 3,000 kilometres of strip plantations along road sides. BRAC’s programme in forestry is illustrative of the scope of NGO involvement. BRAC has a fairly large forestry programme. The forestry activities are carried out mostly in leased private lands and road margins (some 2500 kms). BRAC’s main NWFP activity is silkworm rearing. The BRAC sericulture programme is specially addressed to BRAC’s landless women groups. Mulberry raising is carried out in homesteads, road side plantations, and agro-forestry plots. The programme integrates mulberry growing with silkworm rearing, cocoon production, silk reeling and spinning – thus, promoting development rather than subsistence. BRAC also supports a participatory horticulture programme, to raise mango, jack, tamarind etc. The participatory programmes of the NGOs in Bangladesh (including those on NWFPs) are supported by Grameen Bank. Grameen Bank is a unique autonomous institution and a non-governmental initiative, which supports entrepreneurship among the poor in the society, by providing micro-credit. Box 1 - Grameen Bank of Bangladesh GRAMEEN BANK OF BANGLADESH IS A NON-GOVERNMENTAL INITIATIVE TO PROVIDE MICRO-CREDIT TO RURAL PEOPLE. STARTED IN 1976 ON A VERY SMALL SCALE, GRAMEEN BANK HAS ATTRACTED MORE THAN 2 MILLION CUSTOMERS; AND ITS LENDING PHILOSOPHY HAS SPREAD TO MORE THAN 50 COUNTRIES. AN OVERWHELMING MAJORITY, ABOUT 90% OF GRAMEEN BANK’S BORROWERS ARE WOMEN; AND THE BANK MAKES LOANS TO PEOPLE WITH NO COLLATERAL OR CREDIT–RATING. INSPITE OF IT, 98% OF THE LOANS GET REPAID. EXPENSES ON SERVICING ARE MINIMAL. GRAMMEN BANK HAS A STAFF OF 12,600 WHO VISIT 36,000 OF BANGLADESH’S 68,000 VILLAGES EACH WEEK TO MEET THEIR 2.1 MILLION CUSTOMERS. THE BANK LOANS ABOUT US$ 400 TO 500 MILLION WITH AN AVERAGE LOAN SIZE OF US $ 150. Moreover, several of the foreign assistance projects work in partnership with grassroots NGOs designated as “Primary Contact Partners”. Considering the important role NWFPs can play in stabilizing rural economy and support national development, increased efforts for their accelerated development will benefit the country. 112 India Forests area of India is 64.1 million ha (representing 21.6% of the land area), of which more than half (32.6 million ha) is plantation forest. Quality of forest in terms of growing stock has deteriorated – growing stock of wood being 43 cum/ha; and biomass volume 73 tonnes/ha. The Forest Policy In view of the need to restore ecological balance, to conserve biological diversity, to maintain environmental stability, and to protect and rehabilitate the remaining natural forests, logging in the natural forests have been banned in several parts of India. The 1988 National Forest Policy of India lays special stress on: maintenance of environmental stability and restoration of ecological balance; conservation of the Country’s natural heritage and biological diversity; improved soil and water conservation; increasing forest cover through massive afforestation and social forestry programmes; providing the basic needs of the rural and tribal population; increasing forest productivity; improving efficiency of forest product (both wood and non-wood) utilization; and creating a massive people’s movement with the involvement of women to achieve these objectives and to minimize the pressure on existing forests. The policy also states that India’s industrial wood needs would be met increasingly from farm forests. The role of NWFPs in providing sustenance to tribal population and generating employment and income was specially recognized. The Forest (Conservation) Act had already been enacted in 1980 with a view to checking indiscriminate diversion of forestland for non-forestry purposes. Under this Act, approval from Central Government is required before any forestland is diverted for nonforestry purposes. Moreover, the transfer is allowed only with the provision that compensatory plantations in an equivalent area of non-forestland, or double the area in degraded forestland, are raised. Joint Forest Management Following the National Forest Policy of 1988, the Government of India also issued a circular in 1990 for promoting Joint Forest Management. Initiated informally in the early 1970s to enlist the participation of local people in forest rehabilitation efforts, JFM has become the flagship programme of India in peoples participation. JFM is a forest management strategy by which the Government (represented by the Forest Department) and a village community enter into partnership agreements to jointly protect and manage forest land adjoining villages and to share responsibilities and benefits. JFM has spread throughout the country, bringing under its fold around 14 million ha of forestland. There are around 63,000 JFM Committees in 27 States, engaged in protection and regeneration of degraded forests, in return for certain usufructs and other direct and indirect benefits. A major complaint against JFM was that it covers only the protection and maintenance of degraded forests. In January, 2000, the Government of India issued a new Circular, which envisages extension of JFM to better stocked forests also. 113 Additionally, it provides for mandatory (50%) involvement of women in JFM activities, and membership (33%) in Executive Committees. As a result of the new policy, a large number of tree farming and agro forestry enterprises have sprung up all over the country and they are performing an important role as suppliers of forest raw material as well as of market products. With logging restrictions, many of the forest-based processing units are now in the grip of raw material shortages. Many industrial units are relying on private non-forest sources. Import of logs and wood products has been liberalized. The wood scarcity situation has provided an impetus for development of farm forestry, homestead forestry, agro-forestry and trees outside forests. Several industrial units are also promoting out-grower tree farms. Currently about 50% of the wood supply in the country is received from non-forest sources. Of the rest, a considerable portion is accounted for by imports and the balance obtained from public forests, mainly forest plantations. With a view to promote the policy of democratic decentralization, the 73rd Constitutional Amendment of 1992 has assigned forestry functions to Gram Sabhas and Panchayats51, including conservation management and sustainable development of forest. Furthermore, by the 74th Constitutional Amendment of 1996, the ownership of minor forest products in Schedule 5 Areas under the Panchayat Extension of Schedule Areas Act of 1996 has been transferred to the local Gram Sabha/Panchayats in nine states having sizeable tribal population. NTFPS in India NWFPs play an important role in India and they are at least as important as wood products. Some 7,000 plants are being used in India’s indigenous medicine. Nearly 3,000 plant species are known to have food/food additive/nutritional values; some 250 species yield essential oil; and some 100 species yield tans/dyes. The value of direct contribution of NWFPs in India has been estimated to be about US$ 27 billion, compared to only about US$ 17 billion for wood products. Integral value of the NWFPs including their service contributions will be much larger (UN-CSD/IPF, 1996). In India, NWFPs account for about 50% of total forest revenue to the Government and some 70% of forest-based export earning. Nearly four hundred million people living in and around the forests in India depend on NWFPs for their sustenance and supplemental income. NWFPs provide as much as 50% of the income to about 30% of the rural people. Some 50 million tribal people in India depend on NWFPs for meeting their subsistenance consumption and income needs. NWFPs provide 60% of their food and medicinal needs and as much as 60% of their income. The important NWFPs of India include bamboo, rattan, beedi leaf, gums and resins, oil seeds, essential oils, fibers, flosses, lac and medicinal plants. During late 1990s, annual production of bamboo amounted to about 4.7 million tonnes. Some 25% of the overall fiber furnish of paper industry is bamboo pulp. India’s US$ 30 million perfume market is fast 51 Village councils or village assemblies 114 growing, creating demand for natural fragrances. A number of industries based on NWFPs have been developed in India. Proudct leaders include cosmestics, flavours and fragrances, essential oils, rosin and turpentine, bio-diesel, beedi, tannin, katha and cutch, and cane/bamboo furniture. In terms of export trade, the performance of NWFPs is significant. The main items of export are edible products, crude drugs and medicinal products, spices, essential oils, gums and resins. Markets for NWFPs has improved considerably. Some 25 products are of major significance. Constraints for Development of NWFPs A correct assessment of the total resource of NWFPs in India has not been made so far. Assessing the potential and actual production of NWFPs is very difficult, as vast quantities are extracted and used/traded locally. No scientific management system exists for exploitation and marketing of NWFPs. NWFP sector in India also faces other constraints: resource information linked to the products is sorely lacking; know-how and technology are inadequate on almost all aspects of NWFP development; utilization practices are wasteful; and some of the required special skills are not available. Observations indicate that unscientific practices of NWFP collection are threatening the resource base and the biodiversity. As can be expected, the institutional models for NWFP management/development are influenced by policy and laws relating to: tenure, resource access, access to credit/investment funds, human resource capability, market situation and so on. The proposed Scheduled Tribes (Recognition of Rights) Bill 2005, once passed, is likely to result in changes in the structural elements and linkages of several institutions dealing with NWFPs. Institutional Models Depending on the specificity of circumstances, these institutions can be formal or informal, private or public, state promoted or self-initiated, centralized or decentralized, autonomous or bureaucratic, and participatory or authoritarian. They, accordingly, take different forms: informal groups or associations, self help groups, formal co-operative societies and co-operative federations, state-owned enterprises, private companies, autonomous boards and different forms of partnership arrangements (public-private, company-farmer etc). Some form of co-operative arrangement (or some elements of it) is the pre-dominant characteristics of several of the NWFP–related institutional models in India, with the aim to: pool resources, increase marketing strength, enhance bargaining power, avoid or eliminate middlemen, conserve resource and enhance overall benefit. Amul Model AMUL (Derived from Anand Milk Marketing Union Ltd.) of Gujarat State of India is now an icon and a glittering brand (Taste of India) of dairy products. The model of milk (and milk product) marketing co-operative/unions established all over the country is now known as Amul models. 115 AMUL in fact is the forerunner of all co-operative production and marketing models adopted in India, in various other fields - e.g. sugar, fish, fiber and other consumer products, where production involves a large number of people, and large quantities are involved. It may be noted that the basic produces involved (milk, sugar cane, fish etc) have a perishability factor, which is not conducive to competitive manoeuvering; and co-operation can provide strength and power to the producer. Even though, as a product, milk is very different from NWFPs (particularly in terms of its daily bulk demand and lack of adequate substitutes), the Amul concept provides interesting lessons for addressing issues relating to NWFPs. The Amul journey was started and the concept founded in 1946, to stop exploitation of milk producers at the hands of middlemen. It began with two village societies and 247 liters of milk. Later, in 1946, the Kaira District Co-operative Milk Producers Union was registered. The co-operative union identified Bombay city as the market for liquid milk, and there was rapid increase in milk procurement. The Gujarat Co-operative Milk Marketing Federation (GCMMF), at the State level was formed in 1973, and Amul brand was actively promoted. This developed fast into an ideal co-operative venture, with members involved in controlling milk production, procurement, processing and marketing. GCMMF registered to steady continuing growth, marked by achievements as follows: Creation of a comprehensive model approach. Milk production enhancement programmes. Animal health and veterinary services. Cattle feed manufacturing and marketing. Milk collection systems at village level. Milk processing through latest technology. Creation of nation wide marketing network. Brand building. Mobilization of financial resources. Linkage between producers and consumers. Member education and involvement. In house research facilities. Democratic set up at grassroots level. GCMMF currently has a membership of 2.3 million. Today, GCMMF is India’s largest food products manufacturing organization. It exports condensed milk, milk powder, cheese, butter, chocolate etc. It handles about 8 million litre of milk per day; it owns 24 dairy plants; it operates 50 sales offices with 3,000 (plus) whole sale dealers and 500,000 (plus) retailers. 116 Amul model of GCMMF has adopted a three-tier structure: Village dairy co-operative society District milk unions State federation (apex body) : : : Responsible for milk procurement. Milk processing. Production and marketing of milk products. Amul model has been replicated in various states of India through the National Dairy Development Board (see Figure 6). The factors behind the resounding success of GCMMF are the following: Dedicated and visionary leadership. Professional management and leadership. Management without external influence. Genuine democratic control. Forward and backward integration. Brand building. Mounting of successful marketing strategy and development of marketing channels. Member centrality. The Amul philosophy is: serve the interest of milk producers provide; quality milk products to consumers. Strict practice of this philosophy paved Amul’s path to success. Figure 6 - Amul Model Replication In Gujarat Market In India GCMMF State Milk Federation 22 State Federations 12 District Unions District Milk Unions 176 District Unions 11,000 Village Cooperative Societies Village Dairy Co-operative Societies >100,000 Village Societies 2.3 million members Member producers >11 million members 117 Madhya Pradesh State Minor Forest Produce (Trade and Development) Co-operative Federation. This is a State sponsored co-operative institution, solely dedicated to NWFPs. It has taken some lessons from the Amul model; but miss some of its vital characteristics, particularly the effective involvement of the members. The Madhya Pradesh State Minor Forest Produce (Trade and Development) Cooperative Federation Ltd. (MP-MFP-CFL), an autonomous body, was established in 1984. It is the responsible and regulatory authority for resource management, harvesting, trading and development of NWFPs in Madhya Pradesh state, one of the 35 States and Union Territories in India. Its jurisdiction covers mostly the deciduous tropical forests of the State. The prime product falling under the purview of the co-operative is tendu/beedi leaves (leaves of the tree, Diospyros melanoxylon52). The prime purpose of the Co-operative is: to save the MFP collectors from the clutches of middle men; to ensure fair wages and benefits to the collectors; to rationalize marketing of products; to empower the community in managing their own affairs through appropriate institutional arrangements; and to ensure that the resources are sustainably managed and protected. The establishment of the Co-operative was prompted by the Constitutional Amendments 73 and 74, which provided for transfer of ownership of NWFPs to Gram Sabhas/Panchayats (village councils) in States having sizable tribal population, and the policy of the Madhya Pradesh State Government to promote the development of the backward and tribal communities. Following a pyramidal structure, the Co-operative is comprised of 1 ,947 Primary Societies (with a total membership of 5 million MFP gatherers) in which all the NWFP collecting families are members, formed into 58 District MFP Co-operative Unions and a National Apex Body. The extent of forests falling under the purview of the Co-operative is about 8.6 million ha; and the Federation, at various levels in its structure, employs about 50,000 people. The rights and privileges of the members of the primary societies, their responsibilities in terms of managing the resources and delivering the products at the collection centers, payment of wages and sharing of benefits equitably, the functions and roles of the higher level bodies in the hierarchy, have all been specified in the Memorandum of Association of MP-MFP-CFL. Participation of primary societies in the functioning of MP-MFP-CFL is ensured through adequate and appropriate representation in the higher level bodies. The Primary MFP Collector's Co-operative Society (PCCS), forms the bottom tier. Any tendu/beedi leaf plucker, who is an adult and a normal/ permanent resident of the area can become a member of the PCCS by paying a membership fee. Such a co-operative society could spatially cover one village or more, depending upon their population and nearness to the forests. For the management of PCCS, a 15-member "Management Committee" which includes a nominated Forest Department official (who is also designated as the nodal officer), is to be formed. The Management Committee in turn elects a President and a Vice-President. 52 The leaves are used to wrap (roll) tobacco, for making beedis or Indian cigarettes 118 The District MFP Co-operative Union (DCU) is the mid-tier in the 3-tier structure. DCUs have a 16-member committee, of which 10 are elected by the primary collectors and 6 are nominated members. The latter category includes the Divisional Forest Officer as the exofficio Managing Director of the DCU and the President of the District Cooperative Bank as another ex-officio member. DCUs provide help and guidance to the PCCS in the collection and trade of NWFPs and ensure that all the prescribed tasks are carried out properly. The MP-MFP-CFL is the State level apex body of the cooperative structure. The Board of Directors has 18 members of whom 9 are elected and 3 (Principal Secretaries of Government Departments of Forest, Finance and Co-operatives) are State Government nominees. Six are ex-officio members, one of whom is a Forest Officer serving as Managing Director of the Federation. The MP-MFP-CFL has the primary role of formulating trade and development related policies for MFPs, and to provide overall direction and guidance. In the MP State, tendu patta (leaves of Diospyros melanoxylon), sal seeds, harra (fruits of Terminalia chebula) and gums are nationalized produces, directly falling under the purview of the Cooperative, whereas the other NWFPs being non- nationalized can be collected and traded freely. The first NWFP, which was brought under the State monopoly, as early as in 1964, was tendu leaves, solely because of its very high revenue earning potential for the State government. Beedi (Diospyros melanoxylon) leaves, constitute an NWFP of considerable economic importance, with an estimated 350,000 tonnes of leaves, worth about US$ 200 million, collected annually throughout the forests of India. Madhya Pradesh is the largest beedi leaf producing State (41% of total production). Harvesting is conducted manually during the tendu season, spanning a month and half to two months (April-May) in the hot summer. Generally, collection starts in the last week of April and ends before the pre-monsoon showers (first week of June), even though the peak harvest season lasts for less than a month. The actual period of harvest may vary between locality to locality. Leaves are generally plucked in the early morning at sunrise and continues for about 5-6 hours before the sun gets too hot. The process essentially consists of four closely related steps (i). walking to and from the tendu growing areas (ii). plucking of leaves (iii). sorting and typing the leaves in small bundles of 50 leaves, popularly known as ‘pudas’, and (iv). delivery of the bundles at the collection centers, or ‘phads’. The collectors (members of the primary society) are paid immediately for the quantity delivered. They are also responsible for looking after tendu trees and ensuring their protection. The collected beedi leaves are sold periodically in auction sales and the profit gets ploughed back for enhancing the welfare and development (infrastructure, health, education, technology etc) of the community who are also the members of the primary co-operative society. Apart from beedi leaves, some of the PCCS are also involved in producing other nationalized NWFPs such as sal (Shorea robusta) seeds, gums, harra (Terminalia chebula), and medicinal plants. In addition to the nationalized NWFPs, a number of important and valuable non-nationalised produces like aonla (Emblica officinalis), chironji (Buchanania lanzan), mahua (Madhuca latifolia), chirota (Cassia tora), neem seed (Azadirachta indica), 119 mahul (Bauhinia vahlii) leaves, honey, tamarind (Tamarindus indica), etc. are also found in the forests of Madhya Pradesh. Non-beedi produces, however, account for only 10% of total NWFP production. The establishment of the Co-operative has helped greatly to enhance the welfare of the community involved in NWFP collection, in terms of added employment and income, insurance coverage, social amenities and so on. The highlights of MP-MFP-CFL are the following. Organisation of primary producers of NWFPs within a strong federated cooperative structure. Rationalization of NWFP marketing to ensure remunerative prices. Equitable distribution of benefits to the members of the primary co-operatives. Sustainable management of NWFP production. Extension and technology support within the co-operative system. Wide spread participation of rural families and community empowerment. The Girijan Co-operative Corporation of Andhra Pradesh State The autonomous Girijan Co-operative Corporation of Andhra Pradesh State is another co-operative institution established with government sponsorship, exclusively for the benefit of hill tribes and to promote their participation. One of the aims of the Corporation is to free the hill community from the exploitation by lowland entrepreneurs and traders, through supporting agricultural activities, obtaining remunerative prices for NWFPs collected and distributing essential commodities at affordable prices. The Corporation operates in 16 out of the 23 districts of Andhra Pradesh State. The members (hill tribe families) produce 25 items, including several NWFPs (such as gums, bamboo, beedi leaves, tamarind), and are also involved in planting/regenerating 10 species. The Corporation owns several small processing units (to process agricultural produces and NWFPs), and market the products nationally under the brand name “Girijan”. The Corporation also provides credit and extension services. The Tribal Co-operative Marketing Development Federation of India Ltd. The Tribal Co-operative Marketing Development Federation of India Ltd. (TRIFED) is a national level federation, established as an autonomous body by the Government of India. TRIFED is a national network for the procurement, processing and marketing of forest and agricultural (and agro-forestry) produces from tribal areas. It has some 5,000 single window service centers (SWSCs) in traditional tribal markets in the rural areas of the country. These centers serve the tribal communities by procuring their forest and agricultural produces at support prices, and act as primary agencies for the sale of essential commodities and other consumer goods to the members, and for extending consumer and agricultural credit. This effort is supplemented by a chain of warehouses and refrigerated storage facilities located strategically in various parts of the country. TRIFED also operates a marketing information system which mainly serves the agricultural sector, but also covers 120 some NWFPs. The system collects price information from the domestic and export markets and disseminates it to the member co-operatives in a mimeographed publication, fortnightly. Co-operatives of Different Kinds Unlike the case of MP-MFP-CFL, which is a government initiative, there are several types of co-operative societies established through people’s initiatives (for production/collection of products, capacity building, providing financial support and marketing linkages, avoiding middlemen etc). They operate as individual societies with a limited area of operation or are clustered or federated for gaining strength. The Agro-forestry Federation of Maharashtra State. The Agro-Forestry Federation of Maharashtra State, headquartered in Nasik, consists of 25 district-level tree growers co-operatives. It provides marketing and technical support to its member co-operatives and individual farmers, mainly in the marketing of Eucalyptus wood and seeds of Jatropha curcas (for bio-diesel) The Nasik Tree Growers Co-operative Society already gives its members a rate of return, 30 to 40% higher than what they could get individually in the market. Other benefits that members gain through collective organization include: advice on demand and supply conditions at the district, regional, and national levels; lower transportation costs through combined loads; technical advice on harvest timing and methods; greater responsiveness to changes in regulations; economies of scale for storage of produce at optimum locations; collective bargaining, and cash advance during periods of storage. [On similar lines there are co-operatives in the other states of India. The Gujarat Agro-forestry Association and Eucalyptus Growers Co-operatives arrange for marketing of the produces through their own sales outlet. Part of the output are processed into sawn materials]. Self Help Groups Self Help Groups (SHGs) are an effective arrangement for production and marketing of products of a particular/specialized nature. SHGs are normally a cluster of individuals or families. As institutions SHGs are below village co-operatives. An example of the SHG activity relating to NWFPs is the cluster of farmers growing aonla (Emblica officianalis), grouped together for the purpose of marketing aonla fruits, which are in great demand in local, Indian markets for making ayurvedic53 tonics and pickles. 53 Relating to Ayurveda, the Indian System of Medicine 121 Many SHGs are also supported by NGOs. The Peermade Development Society in Kerala State, for example is a local NGO involved in improving the economic situation of the local farmers and SHGs through technical, marketing and other support. The Society exports several products (particularly organic products), thus helping the economic progress of the local farmers and SHGs. The Peermade Development Society undertakes some 24 different production activities including cultivation, collection and processing of several NWFPs (e.g. production of edible and non-edible oils, fruit processing and preservation, apiculture, rattan and bamboo works, manufacturing herbal tea, collection and processing of medicinal plants). The members are paid for the work or produces. A portion of the profit is distributed by way of dividends or bonuses. Commodity Boards A number of specific commodity boards have been established in India (for coffee, tea, rubber, spices, silk and recently for medicinal herbs), as autonomous bodies, under the auspices of the respective Ministries of the National Government, to provide support to the growers of the specific commodities. The Spices Board of India, which is under the Ministry of Commerce supports Indian spices industry by providing services such as marketing information, technology, product development and policy advice. The National Medicinal Plants Board (Herbal Board) has funded some 800 medicinal plants project, for enhancing the resource of medicinal plants in the country. Forest Development Corporations These are state-owned enterprises. Pursuant on recommendations of the National Commission on Agriculture (NCA), in 1976, Forest Development Corporations (FDCs) were formed in almost all states of India as public, autonomous, semi-independent entities. The responsibility of the development corporations was to convert existing miscellaneous forests of low economic value into high value forests to help meet the wood requirements of the forest industries and local people. However, following the National Forest Policy of 1988, the work of FDCs have been shifted to carry out rehabilitation of wastelands, as clear-felling of low value natural forests was no longer permissible. Run by State Forest Department (SFD) staff and a Board of Directors consisting of government officials, FDCs rarely benefited from a corporate management system. Being run by officers of SFDs on deputation, FDCs follow systems and rules of the SFDs. The autonomy and financial freedom granted did not make any difference for almost all FDCs. They were unable to function like commercial institutions. In addition, most FDC funds are from government sources, despite the original intention to rely on institutional finance. This was because interest rates for institutional loans are too high for raising forest plantations in degraded areas, since they are slow growing and of low productivity. Some FDCs have taken up a wide array of diverse and dissimilar activities to improve their return on investment, including control over marketing of NWFPs. Some states have also established separate Government–owned corporate bodies for development of pulpwood, NWFPs and wood processing industries (e.g. Kerala Bamboo Corporation, Bihar 122 Lac Board). With very few exceptions, these public sector entrepreneurial efforts have been failures, resulting in great loss of funds and other resources. These failures are in part due to inefficient management. Unlike private business enterprises these public sector entrepreneurial efforts have not been able to attain efficiency in the use of capital, labour and raw materials because of, amongst other things, over-employment, fixed-cost labour, low product prices fixed by Government and employee fringe benefits unrelated to productivity. There are a number of comparatively large private companies manufacturing products utilizing non-wood forest produces (e.g. those producing pulp utilizing bamboo, reeds and grass; those utilizing herbs and plant materials to produce medicines), which obtain their raw material from open markets, from private contractors or as government allotments (a form of quota) from the State Forests. In the Orissa state, the state government has granted monopoly rights for collection of 29 NWFPs to a private company54. Public-Private Partnerships There are hardly and joint (public-private) sector companies in the strict sense, involved in forestry in India, where investments are shared. There are few cases where Government or quasi-Governmental institutions have established factories to utilize raw materials grown/produced by people, farmers and farmer/labour corporatives. In the southern state of Kerala in India, co-operatives of rubber farmers (small holders) supply rubber latex and rubber wood to a quasi government company ‘RUBCO’ which specializes in making rubber mattresses and rubber-wood furniture. Benefits of the value addition is shared with the farmers. Similarly, raw material for production of bamboomat-plywood and indigenous medicines are mostly supplied by farmers. The main public-private partnership in India is in Joint Forest Management (JFM). JFM is a forest management strategy by which the Government (represented by the State Forest Department) and a village community enter into an agreement to jointly protect and manage forest land adjoining villagers and to share responsibilities and benefits. Under JFM, participatory forest management on a usufruct-sharing basis occurs by enlisting people’s involvement in the development of fuelwood, fodder, small timber and NWFPs. Various institutional structures such as village forest protection/management/development committees are constituted for protection and rehabilitation of degraded forests. Generally, all village households are members of the committees. Exact constitution of the committees and nature of duties, privilege, rights and benefits differ from State to State. There are some 63,000 JFM committees in 27 states, engaged in protection/management of forests in return for certain usufructs (NWFPs). The Government of India Circular of June 1990, which, in way, formalizes and endorses the JFM, has highlighted the need and specified the process for involving village communities and voluntary agencies in the protection and development of degraded forests. To ensure community participation state governments have been advised to enlist the communication and extension expertise of local NGOs to serve as interfaces between the SFD and communities. The guidelines also describe the benefit sharing arrangement, which 54 In India, most States have interfered with the free market economy of NWFPs. 123 is intended to enable village communities to develop a stake in the protection and development of the degraded forests. Increasing coverage of forests under JFM is likely to open up new vistas for cooperative management; and harvesting of higher and concentrated yield of NTFPs would offer opportunities for forest based processing. But this would depend on further improvement and refinement of the system and availability of credit/investment funds, extension and other facilities. Many issues relating to JFM are still not clear and these need to be addressed fairly and comprehensively. Company – Farmer Partnerships55 The National Forest Policy of India has directed that, as far as possible, forest industries should meet their raw material requirements from plantations grown in collaboration with farmers and local community. To improve the raw material situation and to ensure sustained supply, a number of companies (particularly pulp and paper companies) took up initiatives and tried out various approaches to form partnerships with farmers. An interesting example is the out grower farms of clonal pulpwood trees sponsored by the ITCs Paperboard and Specially Paper Division (ITC-PSPD)56, in Bhadrachalam, Andhra Pradesh, India. When the raw material supply from government forests was suddenly discontinued, following a policy change, the company was compelled to find alternative sources. After trying out different arrangements such as spot purchase of pulpwood from available sources (which were not sustainable), free distribution of seedlings to farmers to encourage tree planting, and organizing bank loans to farmers for initiating pulpwood plantations, with none of them producing desirable results, the company had to find other alternatives attractive to the farmers. Accordingly, ITC-PSPD focused efforts on research to develop better clones of pulpwood species (Eucalyptus), and on commercial sale of high yielding clonal seedlings to the farmers (with a guarantee to buy back the pulpwood), as an incentive to induce land use change in favour of agro-forestry. The research and development programme of the company started in 1989. Based on performance of individual clones in the field trials, promising, fast growing and diseaseresistant clones of Eucalyptus tereticornis and E.camaldulensis were identified. 37 of them are categorized as most important commercial clones based on their productivity, disease 55 One of the earliest cases of company–farmer partnership was initiated around the late 1960s and early 1970s in the Philippines, as the “small holder tree farms” for supplying pulpwood to Paper Industries Corporation of the Philippines (PICOP). This has faced problems recently due to disputes between company management and the government on a number of issues. 56 ITC (Indian Tobacco company) is one of India's largest private sector companies. It is a multi-business corporation with business segments covering fast moving consumer goods, hotels, agri-business, information technology and paperboards, specialty papers and packaging. ITC Paperboard and Specially Paper Division (ITC-PSPD) operates an integrated pulp and paper mill located at Sarapaka, near Bhadrachalam, in the Khammam district of Andhra Pradesh state. The mill, established in 1979, currently has an installed capacity of 65,000 metric tons of pulp and 182,500 metric tons of paper and paperboards per year. Present requirement of cellulose raw material of ITC-PSPD is about 400,000 tpa, which will gorw to 800,000 tpa, with increase in its production capacity and product range. 124 resistance capability and adaptability to problematic sites. Clonal planting stock of the most promising "Bhadrachalam clones" were released to farmers form 1992 onwards. Field tested, proven, superior genotypes are multiplied for planting through vegetative propagation under controlled environment in green houses. The company is currently supplying 11 different Eucalyptus clones (called Bhadrrachalam clones) on a commercial basis to farmers and offers a buy-back guarantee of pulpwood at an agreed price. Upto 1999-2000, the company had sold over 7.2 million clonal seedlings of Eucalyptus. The company is in the process of implementing a core area development programme, to intensively promote tree farms in areas falling within a radius of 150 km surrounding the mill, offering additional incentives to farmers. This will help to reduce the cost of transportation of the bulky raw material. At the end of 2002, the number of farmers participating, in the clonal tree planting programme of ITC-PSPD following agro-forestry practices was 6,372, covering an area of 10,200 ha; and the number is steadily increasing. Currently, about 40% of the pulpwood requirement of the company is being met from clonal agro-forest farms. The company expects that its entire pulpwood requirement can be supplied by the clonal agro-forestry farms by 2007, assuming an area of 35,000 ha under clonal trees in the core pulpwood supply area. The clonal trees are disease resistant and self-prunning, with large clear bole. Survival rate is as high as 95%. Experience has shown that the mean annual increment (MAI) of clonal plantations of Eucalyptus spp range between 20 and 58 cum per ha per year; and the farmers are able to earn a considerably high net profit. Since the tree farms are raised under a system of agro-forestry, additional income is earned from the harvest of the agricultural crop such as turmeric, chilli, cut flowers, vegetables, fruits and NWFPs. The salient aspect of this case, thus, are: the increasing reliance of the company on private agro-forest farmers with whom it enters into a bipartite agreement (purchase contract); the company selling the requisite quantity of clonal seedlings and providing free technical extension service to the farmers; and farmers on their part selling the wood exclusively to the company at the prevailing market price. Other Cases WIMCO, a safely match manufacturing company in India, has entered into contractual arrangements with farmers and farmers' associations for supplying poplar wood. Fenny, a beverage made out of cashew apples (which requires removal of astringency) are manufactured, in Goa, India based on supplies obtained from cashew farmers. A number of medicine manufacturing companies in India are having similar commercial arrangements with farmers for supplying medicinal plants on a regular basis. Cases of similar collaboration between the processing companies and farmers who provide raw material (outgrowers) are also found in other countries, e.g. South Africa and Philippines. 125 Public Limited Company Gram Mooligai57 company is a public limited company run by people, with support of an NGO, the Foundation for Revitalization of Local Health Traditions (FRLHT). The company shareholders are NWFP cultivators and collectors, SHGs, farmer groups etc. 70% of the company shares are owned by people, 10% by NGOs and 20% by other investors. e-Choupal Initiative e-choupal is a private initiative of Indian Tobacco Company (ITC), one of the large multi-business corporations of India. Choupals, a meeting place in rural India, were targeted by ITC as the point of entry into the rural households for dealing in farm and rural production. In a scenario where rural India is severely hampered by the absence of effective “last mile” connectivity, there is very little engagement with organized business, thereby excluding the rural population from effectively participating in the benefits of economic growth. It would take the perseverance of a pioneer to engage in building capacity at the grassroots as a means for securing sustainable growth. ITC made such a strategic choice even though it meant a prolonged period of investment with an equally long gestation. ITC leveraged the power of the internet to empower the small and marginal farmer with a host of services related to know how, best practices, timely and relevant weather information, transparent discovery of prices and much more. Such customized knowledge is intended to progressively raise farm productivity and incomes by linking the Indian farmer with markets, both domestic and international. The ITC e-Choupal also acts as an alternative-making channel, creating enhanced competition among buyers, to the benefit of the farmers. The strategy of e-Choupal initiative is: go to the smallest farmer; educate him in the best farming technology; inform him of the daily weather conditions, and price movements in the market; make available to him the best seeds, pesticides and fertilizers at the most competitive prices; and, when the crop is ready help him find the best buyer – all of this by effectively using "Information Technology". To guide and assist in this process, one of the educated persons among the villagers will be selected as the representative (Sanchalak or Pratinidhi) and there will be a co-ordinator (Samyojak) for a group of villages. While this initiative is still on a pilot scale, it appears to have the potential to transform the villages and village activities, including agro-forestry. Despite implementation challenges, this initiative now comprises about 5,200 installations covering nearly 31,000 villages and serving over 3 million farmers. Others individual efforts In addition, there are other private, individual (often, un co-ordinated) efforts, some of which do survive beyond all expectations because they help to fill in a need or are innovative. An example is the leaf plates made in India out of the leaves of a number of tree species. These cheap throwaway plates are in demand for serving food in street restaurants, rail and bus stations, schools etc. 57 Gram Mooligai in Kannada language means village medicine. 126 Indonesia Indonesia is one of the few countries with a sizeable endowment of forest resources, with an area of 105 million ha under forest cover (representing 58% of the land area), of which close to 10 million ha are plantations. The forests are entirely owned by the State. Indonesia's rich forests contain the world's greatest biodiversity. Forest resource use provides a livelihood to about 6 million families, and forest related employment accounts for 5.4 percent of the total work force. Indonesia is now a major world producer and exporter of forest products. In achieving an output worth about US $ 20 million annually, through timber production and processing, within a short period, Indonesia had to incur disproportionately heavy environmental and social cost. This imbalance in costs and benefits is manifested in the form of critical constraints threatening the sustainability of forestry. Indonesia's forest resources have suffered serious depletion in the recent years. Its net annual forest cover loss during the 1990s was 1.3 million ha, accounting for an annual deforestation rate of 1.2%. The remaining natural forests suffer serious degradation due to a multitude of factors such as excessive logging, illegal activities, forest fires etc. Between 1990 and 2000 stock of woody biomass drastically fell from 203 t/ha to 136t/ha and wood volume from 179 cum/ha to 79 cum/ha. WRI (1999) estimates that by the turn of the century, Indonesia has lost 72% of its original forest cover and 54% of the remaining forests are threatened. As a major exporter of wood products (sawn timber, plywood, other panels, furniture), emphasis of forest management in Indonesia is on timber production, through long terms forest concessions to the private sector. Policy Guidelines The Basic Forestry Law of Indonesia (BFL of 1999 which replaced the BFL of 1967) is the primary source of authority and guidance for all forest regulations and forest administration. It deals with definitions, planning, administration, management, production, concession agreements, conservation and security of forests, and timber estates. BFL provides the basic legal framework and supporting regulations for all important activities – e.g. harvesting and managing of production forests. The concession system as is now practiced in the natural forests of Indonesia was introduced around 1970. The system was intended to make concessionaires primarily responsible for the proper utilization and management of natural production forests on a sustainable basis. A recent count indicated that there are some 644 concessions (of various categories) relevant to forestry (408 logging concessions; 176 industrial timber estate concessions; 24 reptile (crocodile) trading concessions; 18 coral concessions; 10 NWFP concessions and 8 recreation concessions). Indonesia has established a system of timber certification, through Lembaga Ecolabel Indonesia (LEI) or Indonesian Ecolabel Institute. Established in 1993, LEI has 127 developed C&I for the auditing of forest management in logging concessions, and ecolabelling of products from these concessions. Important Non-Wood Forest Products There is a wide range of NWFPs produced in Indonesia – rattan, bamboo, Nipa fronds, sago (Metoxylon sagu) starch, tengkawang nuts (Shorea spp.), dammar and copal, gums, resins, tannins, kayuputih (Melaleuca leucocephala) oil, sandal wood oil, medicinal plants, honey, raw silk and so on. Rattan is the most commercially (and economically) important NWFP in Indonesia. It is estimated that 80% of the world’s rattan potential is owned by Indonesia, with some 600 species (of genera Calamus, Daemonorops, Korthalsia); but only a limited number of species are known to have been commercially utilized. The major commercial species are Calamus manau (manau), C.caesius (Sega), C.trachycoleus (irit), C.irops (tohiti), and C.scipionum (semambu). Before the 1988 ban on exports of unprocessed rattan, Indonesia supplied 80 to 90% of world demand for raw rattan. Now rattan is being cultivated as a crop by communities living near forest areas. Rattan is also being raised in industrial plantations, under government programmes. Bamboos are another group of economically important species. They fall under some 11 genera (Bambusa, Dendrocalamus, Gigantochloa, Schizostachyum, etc). Totally there are some 35 species. Several products, ranging from bamboo shoots for food to lawn furniture, are derived from bamboo. The exeudates (dammer, copal, pine resin and other resins) are obtained from a variety of plant species (e.g. Dipterocarpus spp. Agathis spp., Pinus merkusii, Balanocarpus spp., Hopea spp., Shorea spp.). Pine resin is particularly important; rosin and turpentine having diverse industrial uses are derived from it. There are about 14 species of sago producing Metoxylon. Some of them are widely cultivated by farmers. Sago has a ready market as food and also has industrial uses. Thengkawang nuts of species Shorea stenoptera, S.pinanga, and S.gysbertsiana used to be in great demand for chocolate manufacture; this demand has considerably fallen in recent years. As oil bearing seeds, tengkawang continues to be in reasonable demand. NWFPs in Indonesia have received very little attention so far. They have considerable economic potential; but their management need to be organized in a scientific manner, and market for NWFPs needs to be actively promoted. In respect of processing of rattan, there has been progress, since processed rattan has a sizeable export market. The Government of Indonesia has also established a center for training workers of rattan and bamboo based industries. Indonesia regulates the harvesting and collection of rattan through the issue of licences. But the regulations are not adequately enforced nor compliance monitored. In the absence of a proper inventory of rattan resources, there is no understanding about the sustainable allowable harvest. Over-harvest and harvest wastages are common. 128 In respect of non-wood forest products other than rattan, the possibilities of enhancing employment in growing, gathering and local processing appears to be considerable. But the laws and regulations pertaining to the right for collection and use of NWFPs are unclear. Part of the ambiguity arises due to the tendancy to use the generic term of "forest products" and not to separate the components (as logs, rattan, bamboo, gums, resins etc) or the end-use of the produce collected (e.g. direct consumption, processing, export etc.) The community rights to collect forest produces from forests are officially acknowledged, but it is known to be mis-used by unscrupulous elements. The issue of traditional rights to collect NTFPs needs to be clarified and resolved. There are no adequate/realistic estimation of the overall economic contributions of NWFPs in Indonesia. A guessitimate is that is accounts for about a quarter of the total contribution of the forestry sector. Institutional Models The main types of institutional arrangements for NWFP, management found in Indonesia are: NWFP concessions (HPH – Forest Products Collection Rights). State Owned Enterprise (Perum Perhutani) involving local communities on a regular basis for raw material supply. "Nuclear" approach where a "nodal" rattan processing unit from private sector takes care of 100 or more small rattan processing units. Private companies manufacturing traditional medicines collaborating with farmers for raw material procurement based on contract-like agreements. NWFP Concessions NWFP concessions are awarded under Hak Pemungutan Hasil Hutan (HPHH) – concession rights (exploitation licence) for collection of forest produces. This arrangement is common for all forest produces, both wood and non-wood. The companies holding concession rights for NWFP collection only carryout the harvest/collection, and no scientific management operations are conducted. Even the harvesting regulations are vague, leading to considerable wastages. NWFP Activities of Perum Perhutani The NWFP activities of Perum Perhutani, an autonomous state-owned forestry enterprise, is part of its "prosperity approach". Some of the NWFP activites of Perum Perhutani are the following: 129 Production of Kayuputih Oil Kayuputih oil is extracted from the leaves of Melaleuca leucadendrom (cayuput), for use as a local medicine. Perum Perhutani has established 12 distillation plants on Java for oil extraction from its 9,000 ha of Melaleuca plantations. The distillation plants have a total intake capacity of 32,000 tonnes of cayuput leaf per year. Perum Perhutani collects part of the leaf input from its own Melaleuca plantations and the rest are supplied by farmers. Perum Perhutani works with farmers and encourages them to grow Melaleuca trees through agro-forsetry. Farmers receive credit (loan) for seed purchases, subsidized fertilizer inputs, contract wage for their labour, and livestock for additional income. Perum Perhutani contracts the farmers to manage the trees in company plantations for three years, renewable year by year, during which period they can grow annual crops between the trees. The farmers are also entitled to the usufructs from fruit trees grown interspersed and along the boundaries of forest plantations. Fruit trees include Mangifera (mango), guava, and annona. These are marktted locally. For leaf harvests, Perum Perhutani has entered into contracts with over 300 farmers. Melaleuca is coppiced at a height of 110 cm when it is about four years old; the leaves are stripped from branches of over 1 cm in diameter, and bagged for transport to the distillation plant, for which farmers are paid the amount agreed. Silk Production Perum Perhutani started its sericulture programme in 1974. It now manages seven mulberry plantations. Species grown in plantations are Morus alba, M.multicaulis and M.cathayana. Sericulture activities involve raising of plantations, rearing of silk worms in “rearing houses” and producing cocoons, reeling and raw silk production. As in the case of its kayuputih oil production, Perum Perhutani involves local farmers in raising mulberry plantations, and in silworm rearing. Bee-keeping The National Bee-keeping Center of Perum Perhutani in Bogor has 3 bee-keeping units. Activities focus on beekeeper training, honeybee culture, and bee forage. The plants grown for honey pollen are Ceiba pentandra (kapok) and Calliandra callothyrsis (calliandra). Perum Perhutani has been providing loans for co-operative bee-keeping ventures for more than 20 years. Loans are relatively small, but has helped the farmers to be free from middlemen. Production of Gum Rosin and Turpentine Perum perhutani produces gum rosin and turpetine from Pinus merkusii and Agathis lauranthifolia. The KPH Kedu Selatan plantations of Perum Perhutani has 125,000 ha of pines and 44,700 ha of Agathis; these plantations provide resin to the nearby distillation facility, to produce gum rosin and turpentine. 130 About 8,000 local residents are involved in resin tapping, and 6,000 farmers are engaged in “taungya” farming in replanted areas, extending over an area of about 6,800 ha. Pine and Agathis trees are managed for multiple uses – i.e. providing timber and resin. Tapping begins when the trees (pine or Agathis) reach 11 years of age, or a minimum diameter of 15 cm. Tappers work ten days per month, supplementing their farm income. Various tapping methods have been tried, including the “rill” method and the Chinese “falling” method. Of these, the rill method appears better. For timber, Agathis trees are harvested at the age of 40 years, and pine trees at the age of 25. Both the turpentine and gum rosin are forwarded to the Perum Perhutani office in Semarang for storage and marketing. Ninety percent of the turpentine is exported. Seventy percent of the gum rosin is also exported, mostly to Japan, South Korea, India, Taiwan, Thailand, and several European countries. The other 30 percent of the gum rosin is sold to end-user industries in Indonesia for use in paper sizing, cosmetics, paints, emulsifier for synthetic rubber and varnishes. Nucleus Rattan Furniture Factory Following the ban of unprocessed rattan export in 1988, Indonesia’s rattan furniture industry has grown. Product marketing and quality control were problems experienced by the infant industry. To overcome these problems the government supported the “nucleus” approach, whereby a “nodal” unit took care of 100 or more small units which could be either households or group of households. One such case is mentioned below: PT Wirasindo Santakarya, a private company in Java was established in 1991 as one such nucleus or node for production and export of rattan furniture. The company obtains export-purchase orders, commissions village groups to fill the orders, and supplies them at least 50 percent of the raw materials, which come mostly from the islands of Sulawesi and Kalimantan. The company also supervises product quality control, and arranges export through trade associations in Jakarta, and also directly to destinations based on arrangements with foreign agents. Products are shipped FOB. Payment to the workers is based on numbers of units produced and their complexity/quality. Manufacture of Traditional Medicines Manufacture of traditional medicines has been growing in Indonesia over the past 30 years, with the number of companies increasing from 176 in 1976 to over 400 by the end of 1990s. The industry cites an annual income of US$400 million, mostly from domestic sales. Exports amount to US$15 million. The companies market more than 100 products, in the groups of traditional medicine, phytopharmica, food and beverages, and cosmetics. Exports of products go to Taiwan, Singapore, Malaysia, and Saudi Arabia. Occasional shipments also go to Europe. The main product of traditional medicine, called jamu, come from the roots, tubers, stems, bark, leaves, flowers and fruits of more than 120 species, such as Pluchea indica (bluntas), Tinospora crispa (brotowali), Graptophyllum pictum (daun wungu), Zingiber officinale (jahe), and Nigella sativa (jintan). 131 The company’s supply of raw material comes from farmer’s fields and gardens, and from collections of wild plants from the forest, in roughly equal parts. Cultivation includes both monocropping and intercropping systems. Farmers growing medicinal plants for the company receive a fixed price for their crop. The price is set, with a contract-like agreement, when the farmers start planting to supply materials to a company. Several of the companies maintain small gardens for research purposes where important and endangered species are also grown. Republic of Korea An often-cited, successful example of the organization of forest co-operatives is the Village Forestry Association System of the Republic of Korea. It is a system with a comprehensive programme for the improvement of community life that includes several aspects of forestry – timber and fuelwood production, reforestation, forest protection, NWFPs, processing and marketing. The reforestation carried out by Village Forestry Associations (VFAs) in the republic of Korea represents one of the most successful examples of collective action by groups of forest product users working with the support of the State. During the 1970s and early 1980s, about 643,000 ha of denuded land was replanted under the programme. The programme is also notable for the range and extent of prior planning and preparation that accompanied it, and because it dealt with private rather than public land. The village forestry programme was initiated by the government in response to growing shortages of fuelwood, and mounting problems of erosion, flooding and downstream damage to agriculture, as hillsides were stripped bare in the past by harvesting for fuel and timber. Village Forestry Associations under Saemaul Undung A considerable share of Korea's forest-related activities are accounted for by agroforests. Over 70% of the country's forests are privately owned. While large forest estates are managed as independent private enterprises, the small ones are managed as part of the system of Village Forestry Associations. The case of forestry development in Korea is one of village level co-operation in achieving community goals with regard to forestry, under Saemaul Undung (the new community movement started in 1970). In 1973, Korea embarked on an ambitious programme of National Forestry Development, which has carried out by the system of Village Forestry Associations. The System, which covers the whole country, consists of a hierarchy of forestry associations. They are: Village Forestry Association (VFA) at the lowest level, Forestry Association Union at the Gun or county level and National Federation of Forestry Association Unions at the National level, having provincial branches and some functional departments. There were over 21,000 Village Forestry Associations. The system has been acclaimed as a unique success in participatory forest management. The government initiative to encourage and support the system was built upon a tradition of forestry cooperatives. The rationale for establishing this co-operative network was that a non132 governmental organization would be more effective than a government agency in mobilizing villagers to cooperate. The Office of Forestry, which was relocated to the Ministry of Home Affairs to give it access to local government resources and powers, provided technical backstopping and funding. New legislation and regulations required that forestry should be the main land use on lands with a slope of more than 36 degrees, and empowered the Office of Forestry to require landowners unable to reforest lands falling under this law to make that land available to VFAs to reforest on a cost-sharing basis. Heads of all households in a village were members of the VFA. VFA activities benefited from subsidized credit, but members had to contribute their labour (with benefits being allocated proportionately). The technical packages introduced were strongly oriented towards short-term results and income generation, with planting of fruit and timber species as well as fuelwood, and an array of commercial activities (e.g. contracting nursery activities to village groups, employment in government’s watershed protection works, and production and marketing of mushrooms and other non-wood products). A significant feature of the programme was its holistic nature. Some of the factors which stand out as significant to the success of the system are: land availability (ownership and access to land); flexible organizations; broad-based and rational approach; blending top-down and bottom-up planning and administration; emphasis on short-term income increase and other incentives; adequate stress on the importance of research and appropriate technology; government/leadership commitment and strong logistical support; assured financial resources and access to it at the rural level; strong laws and their enforcement; peer group pressure to prevent malpractices; and tradition of village co-operation. Further strengthening of the system took place in the 1980s, by converting the Village Forestry Associations (which are made up of forest owners and villages, organized by the Government) into self-propelling co-operatives of homogenous membership. It was suggested that such a change improves efficiency through systematically improved use of forests, establishment of forest labour units, enlargement of forest fund and a stronger forest sector driven by private/peoples initiatives (Yoo, 1991). Forestry development in the Republic of Korea went through phases of: start-up, selfhelp, independent competition, firm establishment. It took from 1973 to 1986, through trials and constant improvement to have the path clear and ready. The core of all Saemaul Undung movement, from an ideological plane are: diligence, self-help and virtue of co-operation – a spirit which was instilled “in the minds and bodies”, as an essential element of kyes or mutual help associations. Malaysia With the forests covering about 59% of its land area, forestry in Malaysia is an important economic sector. In the process of development, however, land transfers and land use changes continue to take place. Malaysia's net annual forest loss during the 1990s was 237,000 ha, representing an annual deforestation rate of 1.2%. The remaining natural forest 133 still carry a reasonable growing stock, even though there has been some qualitative degradation. The forestry growing stock, which stood at 214 cum/ha in 1990 fell to 119 cum/ha in 2000. The corresponding fall in the stock of above ground biomass was from 261 t/ha in 1990 to 205 t/ha in 2000 (FAO 2001). Policy Aspects Under the Federal Constitution of Malaysia, land is defined as a State matter. Each State is empowered to enact laws on forestry and to formulate forest policy, independently. The executive authority of the Federal Government only extends to the provision of advice and technical assistance to the States, the maintenance of experimental and demonstration stations, training and the conduct of research. The National Forestry Council (NFC) established in 1971 serves as a forum for the Federal and State Governments to discuss and resolve common problems and issues relating to forestry policy, administration and management. The National Forestry Policy (NFP) of Malaysia was approved by the NFC in 1978, and endorsed by the National Government. The NFP was revised in 1992 to take cognizance of current global concern for the conservation of biological diversity, sustainable utilisation of genetic resources and participation of local communities in forestry. The NFP has committed: to dedicate, as permanent forest, sufficient extent of land strategically located throughout the country in accordance with the concept of rational land use; to manage the permanent forests in accordance with the principles of sound forest management; and to promote efficient harvesting and utilization of forest products and development of forest industries. Malaysia has the reputation as one of the few countries where sustainable forest management is strictly practiced. The national forestry and supporting laws, rules and regulations are conducive in that regard. The issues of timber certification and SFM practices are constant concerns. Forest management in Malaysia has become mutli-faceted in nature, which gives consideration for its environmental roles including conservation of biological diversity, protection of endangered species, carbon sequestration and simultaneous production of several socially desirable outputs, encompassing water, NWFPs and recreational and protection benefits. Since 1994, Malaysia has made considerable efforts in formulating the Malaysian Criteria and Indicators for Sustainable Forest Management (MC&l). The National Committee on C & I has formulated a total of 92 activities to operationalise its 5 Criteria and 27 Indicators at the National level, covering forest resource base, continuity of flow of forest products, level of environmental control, socio-economic effects and institutional framework. At the FMU level, which is defined as an individual State, the National Committee has formulated a total of 84 activities to operationalise the 6 Criteria and 23 Indicators. It also feeds into the activities of the Malaysian Timber Certification Council. Overall, Malaysia’s forest resources are reasonably well managed. Malaysia continues its focus unabated on several important aspects of SFM such as: demarcation of Permanent Forest Estate (PFE), detailed inventory and bio-prospecting for planning multiple (total) use forestry, balancing of resource management and utilization, providing clarity in institutional roles and responsibilities, resolving conflicts among stakeholders, a clear policy 134 and strategy regarding plantation forests, and research support for policy development and refinement. Important Non-wood Forest Products Malaysia has given adequate priority to the development of NWFPs and forest-based recreation. The important NWFPs of Malaysia includes rattan, bamboo, medicinal and aromatic plants, gums and resins, birds nest, orchids, fronds of Nypa fruticans, ferns (like Agrostichum aureum) and so on. Rattan furniture is an important item of export. Like in other economic sectors, utilization of NWFPs in Malaysia is a private sector enterprise, performing under government rules and regulations, which are strictly enforced to ensure the integrity of the resource. However, considering the comparatively low population, and high level of economic prosperity, Malaysia’s emphasis for NWFPs of natural origin is on biodiversity conservation than on reaping economic benefits. Nepal Forests of Nepal cover an area of 3.9 million ha (representing 27.3% of the land area), of which only 133,000 ha are plantation forests. Growing stock in terms of wood volume is 100 cum/ha; biomass volume is 109 t/ha. Some Policy Aspects The national forest of Nepal are categorized as government managed forests, protected forests, community forests, leased forests and religious forests. Of these categories, community forests are of particular relevance in relation to NWFPs. Community forests are those parts of the national forests that are managed by the community themselves, through forest user groups. All accessible forests are handed over to users to the extent they are able and willing to manage. It is the responsibility of the forest user groups to protect, manage and utilize these forests. Measures were taken in this regard by the Government in the form of Forest Act, 1993 and Forest Regulations 1995, for empowering the local communities. Important Non-Wood Forest Products The significant NWFPs in Nepal can be categorized into: medicinal and aromatic plants; lokta and sabai grass for paper making; pine for resin; bamboo for construction and other uses; rattan for furniture; katha as spice, colouring and tanning material. Some of the important NWFPs of Nepal are: Swertia chiraita, Picrorhiza scrophulariflora, Nardostachys grandiflora, Aconitum spicatum, Cordyceps sinensis, Dactylorhiza hatagirea, Zanthoxylum armatum, Rubia manjith, Dioscoria deltoids and Rauwolfia serpentina. 135 The majority of NWFP's fall into two contrasting groups: high value products from high altitudes, and low value products from lower altitudes. Roots of Picrorhiza scrophulariflora, the entire plant of Swertia chiraita, the rhizomes of Nardostachys grandiflora and Aconitum spicatum fall under the high value group of products whereas the bark and leaves of Cinnamomum tamala, fruits of Sapindus mukorossi, roots of Asparagus racemosus and the bark, fruit and seeds of Zanthoxylum armatum fall under the low value products. NWFP's, in general, are collected from the forestland; hence the forestry and land rights legislation and policies of the Government have a direct bearing upon this activity. As all the forest products from the Government managed forests are the property of the Government, the collections and trade of all NWPF's are subject to procedures laid down by the Forest Act and associated regulations under which permission should be obtained for collection and commercial use of these products. The majority of NWFP collection in Nepal occurs in high altitudes and remote Himalayan regions. The primary collectors are the rural poor and they lack knowledge regarding the plant’s habitat, cultivation and harvesting techniques. Ministry of Forests and Soil Conservation is the government authority to administer the Forest Act. Under the provision of the Act the ministry imposes restrictions on NWFPs for export collection and transportation. Even though the Government has restricted the export of some NWFP's without processing, substantial amount of these products appear to be illegally exported to India in raw form. The following three species have been totally banned for collection, use, sale and distribution, movement and export: Dactylorhiza hatagirea (Panch Aule), Juglans regia (Okhar bokra) and Picrorhiza scrophulariflora (Kutki). On the recommendation of the Department of Plant Resources or the Herbs Production and Processing Company Limited and the pre-approval of the Department of Forests, the following nine items can be processed in the country for export: Nardostachys grandiflora (Jatamasi); Rauwolfia serpentina (Sarpagandha); Cinnamomum glausescens (Sugandhakokila); Valeriana Wallichii (Sugandhawala); Parmelia spp. (Jhyau); Abies spectabilis (Talis patra); Taxus baccara (Lauth salla); Rock exudate (Silajeet); Cordyceps sinensis (Yarsha gumba); (other than that, their use is banned). The cutting, movement and export of the following tree species for commercial purposes have also been banned: Michdia champaca. Micheiia kisopa. Acacia catechu, Shorea robusta, Bombax ceiba. Pterocarpus marsupium. Dalbergia latifolia, and Juglans regia. The development of NWFP is one of the priority programmes of the Government. A special program of promoting NWFPs in 25 hill districts of the country, to alleviate the rural poverty, has recently been introduced. There is a potential for processing some of the NWFP within the country but the amount of processed NWFPs is insignificant in comparison to the total raw NWFPs exported from Nepal. The bulk of the "value added" actually occurs in the major Indian cities. Existing information is extremely scanty regarding: the status of the resource base, the probable impact of harvesting/collection practices, and area-specific sustainable 136 harvesting. This information is extremely important for charting a strategy for the development of NWFPs. Most forestry oriented national NGOs and international NGOs are being involved in the development of NWFPs in the country. Research on medicinal and aromatic plants in the country has so far been focused on use, amount marketed, marketing chains and market mechanisms. Some recent works concentrate on inventories and estimates of growth rates and rotational harvesting. One of the viable options for sustainable harvesting and management of these resources should be through promoting participatory approaches. There are many ways of doing this through co-operatives, collectors' societies, share-holding companies and forming a net working system of collection and marketing (Amatya and Shrestha, 2002) The Herbs Production and Processing Company The Herbs Production and Processing Co. had its origin as an activity of the Department of Medicinal Plants (now known as Department of Plant Resources). Later, the Herb Production and Processing Co. was created as an autonomous entity, in 1981, to take over the commercial activities related to manufacturing of medicines, including cultivation, training, extension and development. At present, primary production (of essential oils, medicinal extracts) is carried out based on some 10 plant species which are cultivated by farmers (about 95 percent), and others collected in the wild (only about 5 percent). The Company is capable of exporting products like lichen resinoid (from the tree moss Parmelia tinctorum), Sugandha kokila oil (from berries of Cinnamomum cecidodaphne), tagetes oil (from the overground flowering parts of Tagetes glandulifera), Jatamansi oil (from rhizomes of Nardostachys jatamansi) and Palmarosa oil (from whole plant of Cymbopogon martinii), as well as some crude drugs to the neighbouring countries. Most of the production is consumed internally by local pharmaceutical factories, soap industry, manufacturing units of toothpaste and after-shave lotions etc. The company has a factory in Kathmandu valley for processing of medicinal extracts and high value essential oils. It also has processing and production units in every one of its farms. These include 4 central processing units utilizing resources form surrounding areas, and 21 subsidiary collections and processing units. Of these 21 subsidiary units 19 are owned by the company but managed by farmers on contract and two are entirely owned and managed by farmers. Some 600 families are involved in the cultivation and processing business, as satellite units of the company. In addition, there are also few independent farmers co-operatives engaged in growing and processing of medicinal plants. Papua New Guinea Forests of Papua New Guinea (PNG) extents over an area of 30.6 million ha, representing 67.6% of the country’s land area. Average annual forest cover loss during 1990-2000 has been 111,300 ha representing an annual deforestation rate of 0.4%. There has 137 also been serious qualitative degradation – current (of year 2000) growing stock of wood being 34 cum/ha and biomass volume 58 t/ha, compared to the respective figures of 168 cum/ha and 191 t/ha in 1990. Local villages in the rural areas are expanding their shifting cultivation practices to portions of natural forest, including those subject to ‘selective logging’ and those which have been opened by the construction of new roads and estates development. Also a large area of natural forest is being damaged in varying degrees by selective logging, mostly through creaming of prime timber species. This comes about as a result of the absence of consistent and standard silvicultural techniques for natural forests. PNG is one of a major exporters of tropical round logs in the region. Out of its total wood harvest, about 20% is exported in round form; 64% is used as fuelwood and only 16% goes for any form of processing. Land ownership in PNG is vested with the customary land owners who comprise a large share of the rural population; and virtually all forest land is owned by clans or tribal groups under customary law. The constitutionally-guaranteed customary land ownership is the key policy domain influencing forest use. 97% of PNG’s land is customarily held as communal or clan commons, according to local custom. Traditionally, customary owners never considered their land as property but as a domain for survival of land-group members, past, present, and future. All kinds of social, spiritual, ecological, epistemological and subsistence values are inherent in such land. Some Policy aspects Governments of PNG, in the past, followed a policy of using the Nation's natural resources, of which timber is one of the few that is renewable, to bring development to the rural sector. For this to happen, however, the Government must first acquire or purchase timber rights from the customary owners, on the basis of Forest Management Agreements (FMAs). Under the FMA approach, the PNG Forest Authority secures commitment of resource owners to follow recommended forest management practices, while simultaneously offering investors access to the forest for a minimum period of 35 years. Implementation involves the State issuing a Timber Permit (TP) under which it manages the forest on behalf of the customary owners for the duration of FMA. Management roles of the State can be implemented through a developer, including harvest and construction of infrastructure. FMA also would set out the returns due to the land owner. To date, about 10 million ha of forests have been acquired for commercial logging through FMA, of which 6.9 million are considered suitable for sustained yield management. The acquired areas are normally allocated to foreign developers with financial capabilities. Prior to the promulgation of the 1991 National Forest Policy and Legislation, timber rights were acquired by a process referred to as Timber Rights Purchase (TRP). The rights acquired under this system were only for the harvesting of merchantable timber and did not transfer to the State or concessionaires the rights to manage the forest. The New Forest Policy had as its objectives: (i) management and protection of the nation's forest resources as a renewable natural asset; and (ii) utilisation of the nation's forest resources to achieve economic growth, employment creation, greater Papua New Guinean participation in 138 industry, and increased viable onshore processing. It confirmed the intention to proceed with the acquisition of forest resources (under FMA), and their long-term management. The sale of the timber rights (and not the land) by customary owners, in return for a resource rent based on stumpage value is a normal acquisition undertaking between the State and the customary owners. This includes a package of social, economic and infrastructure benefits as well. Land owner companies: The land owner company (LOC) concept was developed as part of the 1979 National Forest Policy in order to increase national participation in the forestry sector. Many of the LOCs have been issued with TPs, to develop their own forest resources. Whilst the concept is good, the practical reality has been different. Most of the LOCs have been plagued by mismanagement, corruption, and in-fighting between different landowner factions. The result has been that most LOCs have become alienated from the people that they were supposed to represent. LOCs, as licence holders, "contract" foreign companies to conduct logging. Two basic deficiencies pointed out are: lack of adequate education and human resource capability of the land-owning communities; lack of clear definition and delineation of rights/ownerships over the natural resources, including land use planning, land survey and land settlement. PNG Forest Authority: PNG Forest Authority was created in 1992 to replace the erstwhile system of forest administration. It has been established as a statutory corporation with regulatory and administrative responsibility for the management of the forestry sector throughout the country. The Authority consists of a National Forest Board (NFB) and National Forest Service (NFS). The Board operates through a system of Specialist Advisory Committees and Provincial Forest Management Committees, and is serviced by the National Forest Service. Important Non-wood Forest Products PNG is rich in non-wood forest resources, both flora and fauna. PNG had established an export trade in crocodile skins. Butterflies, live birds, eagle wood, sandalwood, rattan, medicinal herbs and bush meat are important NWFPs supporting local subsistence. NWFPs are not regarded as a significant source of income or foreign exchange earnings in PNG. There have been no organized efforts for managing NWFPs, nor do logging concessionaires take any interest to utilize NWFPs found within their concession area. There are a number of initiatives now being put into place to survey the NWFP resources and to document the information generated. Philippines Forest area of Philippines is about 5.8 million ha, accounting for 19.4% of land area. Of the total forest area, about 753,000 ha are plantation forests. Annual deforestation rate of 139 Philippines continues to be high at 1.4%. Wood volume of growing stock is 66 cum/ha and biomass volume 114 t/ha. Some Policy Aspects The lynchpin of forest policy in Philippines remains to be the Presidential Decree (PD) 705 (Revised Forestry Reforms Code) of 1975, as amended by PDs 865, 1559 and 1775, Executive Orders (EOs) 273 and 277 and Republic Act (RA) 7161 (cancellation/nonrenewal of Timber Licence Agreements). The Code is divided into four key chapters on: organization and jurisdiction; classification and surveys of land; utilization and management of forests; incentives, offences and penalties. The policy implementation strategy as propounded in PD 705 are based on: management of productive forests; reforestation; stabilization of upland communities; and protection of critical watersheds. As can be noted, PD 705 was drawn up when the major thrust of Philippines forestry was towards massive commercial exploitation of the vast state-owned natural forests by large corporations. Now that the focus has shifted towards people-oriented, small-scale, community-based forest management, covering man-made forests, NWFPs as well as the (meager) remaining natural forests, PD 705 has become some what obsolete. The strategies also have failed for lack of proper application. The organization in charge of forest administration in Philippines is the Department of Environment and Natural Resources (DENR), with its functional units at headquarters in Manila and line agencies at lower levels. In an attempt towards decentralization and better performance, DENR has already devolved some of its conservation, management, and protection functions to local government units (LGUs), and reassigned some 1,000 staff members to capacitate local authorities, duly spelling out the procedures for the LGUs execution of devolved forest management functions. There have been several initiatives since 1986 with regard to democratic decentralization and devolution of authority to LGUs. The Local Government Code (RA 7140 of 1991) has granted LGUs greater fiscal and political autonomy, thereby expanding their capacity to participate in national development efforts. It has brought to the fore the critical role of LGUs in the management of forest and watersheds. In general, the Code has tasked LGUs to adopt measures that will “protect the environment and impose appropriate penalties for acts which endanger the environment”. More specifically, the code gives responsibility to the appropriate levels of LGUs for providing basic services and facilities to their respective constituencies, which include the protection of forest resources, among others. Community-Based Forest Management In tune with the philosophy of decentralization and participatory approaches to development, a new programme of community based forest management (CBFM) was adopted as the national strategy for management and sustainable development of forest resources, pursuant to a 1995 Presidential Executive Order. The CBFM 140 integrated and unified all the erstwhile people-oriented forestry activities, namely integrated social forestry programme, community forestry programme, coastal environmental programme and recognition of ancestral rights. Unlike the previous programmes, which granted tenure over denuded and/or degraded forests, CBFM extends tenure and use rights over well stocked forests as well. The CBFM is based on community organization and the issuance of tenurial instruments, which like other instruments for use of public land are for a duration of not exceeding 25 years, renewable for an additional 25 years. The CBFM programme implementation goes through four successive stages: Preparatory stage: This stage covers site selection, survey, mapping, information gethering. Formation of people’s organization (PO): This stage involves organizing the community; preparing the community resource management framework (CRMF) covering a period of 25 years; site approval and awarding of CBFM agreement and forest land management agreement. Planning stage: Within the CRMF, prepare detailed annual work plan, and resources utilization plan (which on approval becomes the resource utilization permit) and obtain environmental compliance certificate (requiring environmental impact assessment). Implementation stage: Implement the plan, monitor and evaluate plan implementation. DENR and the LGUs are responsible to: identity potential CBFM sites, map the sites, plan forest land uses with communities, and endorse and issue CBFM agreements; organize and prepare the communities for CBFM; provide technical assistance and skills/training for CBFM communities; and monitor progress and environmental impact of CBFM activities. By administrative fiat, the collaboration between POs and NGOs has been set up for their natural strengthening and capacity building. Some of the national NGOs involved in forestry in Philippines, among others, are Tanggol Kalikasan, Philippines Association for Inter Cultural Development (PAFID), HARIBON and Environmental Science for Social Change. POs for CBFM are mostly multipurpose co-operative societies registered with the Philippine Co-operative Development Authority. Non-cooperative CBFM associations are required to register with the Securities and Exchange Commission or with the Bureau of Rural Workers in the Department of Labour and Employment. A CBFM association may comprise several sitios or even barangays58 and may fall within the boundaries of more than one province or even regions. This causes problems in administrative co-ordination. While the CBFM institutions (Councils, Associations) are amenable for a federated structure, it is not a requirement. Federated structure is voluntary. There is a National Federation of CBFM associations, which does not yet play any effective role. 58 Equivalent of villages 141 Important Non-Wood Forest Products There are a number of NWFPs, which can support value-added processing, mainly at the rural level. NWFP based activities in Philippines are mostly at the small scale and cottage levels. Those in use include bamboo, rattan, wild fruits, meat, deer horns, pelts, resin, tannin, essential oil, flavours and fragrances, medicinal and aromatic plants, honey etc. No reliable figures of production and trade in NWFPs are available. Rattan is given special consideration due to its importance as an export earner, as well as its importance to rural people. Rattan furniture accounts for about 30% of export earnings of forest industry. Knowledge about the availability, growth, distribution, characteristics, and uses of NWFPs are scanty. NWFPs are the basis of the concept of integrated and sustainable management of forest resources. Inventory of resources, bio-chemical prospecting, domestication and progration, harvesting and utilization, and processing and trade of NWFPs are complex operations requiring specific skills. Most NWFP activities are private efforts. POs are yet to get involved in a big and organized manner. Self Help Groups Self-help groups or community initiatives often happen, prompted by changes in their situation. For example, the Kalahan Education Foundation of northern Luzon in Philippines, founded in 1973, was motivated by the legal rights given to them over their ancestral forest lands, to protect their watersheds and obtain a good livelihood from the land. The community decided to make the needed cash from forest produce, rather than converting the land to agriculture. Accordingly, the Foundation selected two wild forest fruits to develop into three products: jelly, jam and butter. From that start, they have developed 15 recipes of preserves of wild and cultivated fruits. With the help of the Asian Institute of Management, the Foundation identified markets in Manila, and preferences for packaging, container size, and volume. Their product line now includes jellies made from a small grape-like fruit, as well as others from ginger, tamarind and passion fruit. In other cases, NWFP development has come about as a result of new project activities - government initiated or donor supported. Survival of these activities beyond the termination of the project is dependent on several factors, particularly sustained access to market. Vietnam Forest area of Vietnam is about 9.8 million ha, accounting for 30.2% of land area. Of the total forest area, the share of forest plantations is 1.7 million ha. During 1990-2000, there has been a positive change in forest area at an annual rate of 0.5%. There has, however, been 142 degradation in terms of stock volume – current wood volume being 38 cum/ha and biomass volume 66 t/ha. Policy Changes Until the early 1990s, Vietnamese Forest Policy was based on direct State involvement in the management, exploitation, processing, and distribution of the country's forest resources in order to achieve their rational utilization. The transformation of social structures and resource use also included massive programmes of resettlement and sedentarization. Between the late 1960s and early 90s, Vietnam resettled around 5 million people from lowland provinces into the uplands. The programmes were designed to increase cultivation and to exploit the natural resources in areas seen as under-utilized. The Fixed Cultivation and Sedentarization Programme had the objective of providing swidden farmers with permanent settlements, either in the same area or in more fertile, more accessible, noncatchment areas at lower attitudes. By 1990, the programme included 1.9 million highland people. In addition, the State Forest and Agricultural Enterprises were required to play important roles as initiators of regional development. In accordance with political directives, the forestry sector has shifted its focus from exploiting forestry resources for immediate benefit towards a management strategy that will increase resources and promote agro-forestry. There has also been a shift from State control towards social forestry. Under this new strategy, many different sectors are to participate in the economic development of forestry. The State currently guides the harvest of forest produces for the market economy. Special emphasis is given to improving household earnings from forestry. Farm forestry is supported by the State Forest Enterprises and the creation of forest gardens has been accelerated. The 1986 policy of Doi Moi (renovation), which established a multi-sectoral economy operated by market mechanism, had interesting impacts on forestry through redefining the system of responsibility for forest management, and promoting involvement of people in raising trees. Policy of Doi Moi is now applied for allocation of forestland under leases for a period of between 20 to 50 years to enterprises, individual households and co-operatives. Doi Moi covers three policy components influencing forestry: decollectivisation, long term leases of forest land to farmers, and market mechanism for disposing-off surplus production. In 1991, the Tropical Forestry Action Plan, the Forest Resources Protection and Development Act, and the first National Forest Policy introduced a new framework for forest management. The new policies designated private households to replace State Forest Enterprises as the new responsible units for forest management, following the lead of agricultural reforms that had transferred land management from collectives to private households during the 1980s. With appropriate guidance from the State, local people became stewards of the forest. The National Forest Policy 1991 has the following major objectives. Protect and manage the country's present and future forest resources. 143 Increase forest product yields and improve harvesting, transport, processing and marketing systems. Increase people's participation in forestry. Contribute to improved living conditions and income generation of rural and mountain people. In this regard the strategies adopted include: enhance the effectiveness of forest management; stabilize the environmental contributions of forest; optimize the contribution of forest products to the economy, and develop institutions at the national level. In the process of enforcing the Law on Forest Protection and Development, (and supporting, monitoring and evaluating the implementation of major programmes and projects), the State provides grants for creating watershed and special-use forests, seed orchards, and forests yielding large logs with a rotation of more than 20 years. The State also provides loans at subsidized interest rates for managing production forests with rotations of less than 20 years. Following the National Forest Policy 1991, the 1993 Land Law gave local inhabitants extensive use rights over agricultural and forestlands. The law stipulates that long-term usufruct rights should, for most lands, be issued to non-State entities, including individual households, groups of households, and organizations. The use rights include permission to exchange, transfer, lease, mortgage, and pass on land for inheritance. A decree issued in 1994 specifies that use rights granted for forestland should extend over a period of 50 years, with the proviso that households use it for agro-forestry. The management of forest zoned for production purposes has generally followed a farmhousehold model. Farm house-holds receive long-term rights for barren land and land with planted forest located outside critical watershed areas. A decree passed in January 1995 empowered local forest administrators to contract former state forest enterprise employees and farmers to protect State forests. The contracts include detailed regulations regarding the use of allotted land. Not only have protection contracts become the most common means of involving local people in forest management in the highlands, but the government has also instituted a set of related policies to enforce the contracts. Logging bans, heavy fines, and the expanding powers of enforcement agencies have facilitated state control to ensure integrity of the forest resources. Despite new government policies and programs to re-allocate land and guide resource use according to state priorities, communities continue to play a major role in decision making at the local level. In Vietnam, direct responsibility for day to day control and management of forests has been assigned to the provincial and district administrations, with the Central Ministry of Agriculture and Rural Development (MARD) providing administrative and financial control, technical guidance and specialized support services. Some 400 State Forest Enterprises are involved in silvicultural activities, harvesting, processing and marketing. The enterprises can undertake the work involved directly or sub-contract it to the local people or enter into joint venture arrangements with private forestry companies. 144 At the provincial level Department of Agriculture and Rural Development (DARD) is responsible for public forest administration. People's Committees or authorized DARDs manage SFEs, companies and joint ventures attached to it. At the district level, People's Committees are responsible for the remaining enterprises and provides support to private forests, farms and households. Important Non-wood Forest Products Some of the important NWFPs of Vietnam are: agar (infected heartwood of Aquilaria crassna, bamboo (of several species), benzoin (incense from Styrax tonkinensis), cardamom (fruits of Amomum spp.), cinnamomum and cassia (dried bark of Cinnamomum spp), lac (resinous secretion of insect Laccifer lacca), rattan (stem of climbing palm of Calamus spp), and large number of medicinal plants. Details are lacking on processing industries based on NWFPs. Several of them are, however, known to exist providing employment and income to a large number of people, such as: the herbal enterprises processing medicinal plants into indigenous medicine; plantbased skincare and cosmetic products; rattan processing plants producing furniture, mats and decorative products; units producing essential oils; pine resin processing into rosin and turpentine; bamboo processing units producing furniture, curtains, mats, basketware and hats. Vietnam produces bamboo parquet (floor tiles) for export, and there is potential to produce bamboo veneers and bamboo mat boards. Thus the prospect of developing NWFPs appears to be significant, and this is an area where the country has comparative advantage. It is seen reported that there are some 340 handicraft production villages and over 700 bamboo production villages distributed across the country. As early as in 1976, to support harvesting, processing and trade of NWFPs including those from agro-forests, the Special Forest Products Exploitation company was set up, to manage, protect, farm, exploit, buy and process the products, for domestic and foreign markets. In 1990 three National Production Services and Export Import Forest Corporations were setup in North, Central and Southern provinces, to provide a better network in dealing with wood and non-wood products. There are also other subsidiary agencies/ enterprises for export of bamboo and rattan articles and essential oils; and for trade in wood and wood products. However, functioning of these organizations are not adequately effective, lacking in research support, skilled and trained manpower and incentives. Currently, Vietnam’s NWFP enterprises are mainly small and medium ones with loose co-operation, but of inadequate competitiveness; so, they are, often, weak in marketing their products. With its overwhelming biodiversity, the country's forests can support the development of food and health product industries and those producing insecticides, flavours and fragrances, cosmetic products, fiber products, honey and bees wax, lac products, dyes and colorants, and many others. 145 Some Project Models SNV – North Central Vietnam Income and Employment Generation Project SNV is involved in implementing the project supported by the Government of Netherlands in Thua Thien Hue Province and Quang Tri Province. The project has two components. (i). Training for income generation with the objectives of improving income earning capacity of poor rural women and strengthening of District Women's Unions. The main activities under this component are: group formation; identification and selection of income generating activities; technical and marketing training; business training and business plans; and linking to local banks. Women are given training in cattle management and milk production; mushroom growing; flower production; production of conical hats and handicrafts. There is no credit scheme in this activity; only the training is subsidized. (ii) Rural Enterprise Promotion, with the objectives of developing a functioning market for business development services and strengthening enabling environment (i.e. Business Associations). The main activities under this component are: market research, training, product development, marketing, linking/promotion, establishing/strengthening business associations and awareness raising. This programme component is based on the belief that private, competitive markets ultimately define the supply and demand for business services. Lack of access to capital is a general constraint. Therefore, local banks are involved with the process from the beginning, in order to guarantee a smooth linkage with existing and available credit lines, to finance the identified income generating activities. To stimulate the supply of business development services, the programme teams up with a number of partners and providers in the selected service markets (e.g. Provincial People's Committee; Phu Luong Mushroom Co-operatives59; Vietnam Co-operativeAlliance for Small and Medium Enterprises). Some of the significant results of the project are the following: a) Web-based marketing services: a local private company has developed a web-based marketing training and hosting package meant to open up a whole new spectrum of possibilities (from conducting a web-based promotion campaign, publishing a website, running online advertisement to direct e-mail marketing) for the exclusive benefit of the micro and small enterprises, which actually represent a dominant economic force in North Central Vietnam. So far, the modular package has found its way to more than 100 client enterprises. b) Mushroom Full-Package Services: a complete extension service package from the initial training to the final market-linkages has been developed in co-operation with 59 The "Phu Luong Approach" works for small-scale commercial production of Linh Chi (Ganoderma lucidum), oyster mushroom (Pleurotus ostreatus), abalone (Pleurotus cystidiosus), earwood (Auricularia auricula) and straw mushroom (Volvariella volvacea). Service components included in the package are: preliminary training, installation of household production unit, input supply, monitoring and quality control, and market linkage and information. 146 the Phu Luong Co-operative. A total of more than 200 family-based production units are being serviced by the Co-operative. c) Rattan and Bamboo Technology Transfer: through the Business Development Service (BDS) provider “Co-operative Alliance for Small and Medium Enterprises”, several co-operatives active in the field of rattan and bamboo production, were singled out as “excellence extension centers” for the introduction and further extension of new technologies and new product designs (including the provision of direct market linkages to producers at household level), thus restoring and strengthening the economic viability of the traditional knitted rattan and bamboo trade in both Thua Thien Hue Province and Quang Tri Province. Extension and Training Support for Forestry and Agriculture in the Uplands. The project on extension and training support for forestry and agriculture in the uplands (ETSP) is supported by the Swiss Agency for Development and Co-operation (SDC), and designed specifically for the uplands areas of Vietnam. The upland areas of Vietnam are characterized by: diversity and complexity of farming systems and environmental conditions; limited availability of extension technologies (unlike in low lands); loose extension network; low incomes of househols leading to limited capacity for investment (for quality agricultural inputs, diversification, improved crop husbandry etc.); communication and transportation problems; weak agricultural input systems; limited access to market and market information; hetreogeneity of ethnic cultures, traditions, languages; and low level of education. These present serious challenges to forestry and agricultural extension. Accordingly, ETSP focuses on 3 areas of interventions: poverty reduction; sustainable natural resources management; and capacity building. The geographic coverage of the project includes Hoa Binh, Thua Thien Hue and Dak Lak Provinces. Activities concentrated on two selected communes in two different districts in each of the above three provinces, where the project collaborates with several partners – agriculture, forestry, animal husbandry, extension, planning and development and cooperation departments as well as with farmers union and women’s union. The overall goal of the project is to provide cost-effective, demand-driven systems of extension and training to upland farmers and service providers for enhanced sustainable resources management and improved household livelihoods. Towards that end, project activities have been designed to include the following : i At the commune/district level: commune and village development planning; development of need based extension and training packages; testing of costeffective and participatory extension approaches; development of quality standards for extension and training of service providers; support to market analysis and development, including marketing opportunity assessment for different products; impact monitoring and assessment; and local networking. [The networks are intended to promote forestry and agriculture and involve the farmer/producer, consumer (processing industry), technological support agency and appropriate government authority. An example is the development of bamboo for shoot production in farmers’ land, through 147 farmer-processor partnership. The bamboo shoot processing company contact the farmers with extension and seedlings and the farmer pay for these services. The company guarantees buy back upto 10 years. The processed shoots are exported. The “Bamboo Shoots Model” can be applied to other products]. ii At the national level: improvement of coordination between research, extension, education and training; networking in Vietnam and in the Region; policy dialogue; and dissemination of Learner Centered Teaching Methods, Participatory Curriculum Development and Participatory Technology Development approaches. Other Experiences The Shea Project of Uganda The shea project for local conservation and development began in 1995 with pilot funding from USAID. Under the project, more than 2,000 members of Community-Based Rural Women’s Group have formed the North Uganda Shea Processors Association (NUSPA), which currently sells several tones of pharmaceutical grade shea butter (an NWFP) to cosmetic formulators and private companies in USA, Europe and Japan. It is also used in confectionary industry (Masters et al, 2004). Shea butter is a vegetable fat extracted from the nut of the shea tree (Vitellaria pardoxa). Integrated Agro-forestry in China In China, the socialist market economy initiated in 1993 follows an open market system. Under this, scope of decentralization has been widened to include people, families, private sector, co-operatives and civil society organizations. Production under planned commodity economy is based partly on a decentralized system of production responsibility given to households and village groups on contract. They grow orchard trees, timber trees, economic crops like tea oil, tung oil, nut trees, bamboo grooves etc. as an integrated agroforestry system. Under this system remuneration is linked to output. The Lessons Analysis of the situation and trend in NWFP management/development, as well as country experiences and cases, give several interesting insights and lessons as to why some NWFP initiatives succeed, while others fail to take off. These lesions can provide broad guidance, while designing policy, plans and programmes for NWFP development. Since they cover a wide spectrum, the lessons to be learned are grouped by the aspects they cover: resource-related; production-related; processing-related; market-related; related to socio- 148 economics; environment-related; science and technology-related; information-related; related to plans and programmes; and related to institutions. Resource-related Some of the interesting attributes of NWFP resources are: that some of them are amenable for daily collection/harvest; the produces have multiple uses; some of them are amenable for commercial cultivation. Among the challenging aspects of the produces are that: they represent a heterogeneous mix; are of low value if not processed; collection is often linked to local culture; domesticated NWFPs are still very few; and, there is no credible/reliable inventory of NWFP resources in most cases; for several species no proper method of inventory has been developed. There is need to develop appropriate inventory/assessment methods for NWFPs since they are very different from the methods in use for wood resource, due heterogeneity of produces, and differences in their distribution pattern. Inventory (including bioprospecting of active chemical ingredients in plants, micro-organisms, etc.) of NWFPs is complicated, and requires special skills; it is time consuming, and expensive. Only very few countries have embarked on such an initiative. These investigations for fibre, phytochemicals, aromatics, gums, resins etc., have to consider the nature and extent of distribution of specific plant resource, their density of occurrence, their potential yield/supply from wild sources, and their suitability to be grown under multi-species environment. NWFPs can play a major role to ensure sustainable forestry through multiple-use management. Under natural conditions NWFPs could be, and should be, managed along with wood in an integrated manner thus increasing the overall productivity of forests. This can also support conservation of biological diversity. Resource ownership/tenure influences the nature and quality of resource management and utlization. Overall trend in respect of many NWFP resources is towards depletion; management of the NWFP resources now face colliding trends of fall in sources and rise in demand. Domestication of NWFP species is one of the alternatives for minimizing the impact of increasing demand. The objective of natural resource conservation and protection of bio-diversity can be served atleast partially by cultivation of species. Development of NWFPs in agro forestry system has the advantage of diversifying the economic base and enhancing the supply of products for household use, as well as for markets. Harvesting of NWFPs from wild and cultivated sources (e.g. rattan, mushrooms, palm heart, pine resin, lichen, aromatic leaves) requires differing pre-harvest preparation, tools and techniques, and different post-harvest treatments. Ongoing harvesting methods are often wasteful, and needs to be considerably improved. NWFPs tend to emerge as more important in countries which have high density of population and suffered more deforestation (e.g. Bengladesh, India, Nepal, Vietnam), compared to these which have lower density of population and more forest / timber resources (e.g. Indonesia, Malaysia, PNG), probably because of unfounded bias, 149 resulting from lack of adequate skills and knowledge for sustainably managing NWFPs. As economies grow, NWFPs shift from a supply driven to a demand driven (quality based) mode of management. Production-related NWFPs being a heterogeneous group, an individual component produce (e.g. fruits, fibers, gums) will have considerable differences in terms of perishability/storability, harvesting requirements, post harvest treatments etc. Therefore, joint production of dissimilar produces will add to the complexity of management. Most NWFPs of Lao PDR are also found in several other countries; and they face competition in the world market. Therefore, the important need is to achieve and increase competitiveness in terms of quality, cost and consistency of supply, through ensuring efficiency and enhanced productivity. Produces which are daily needs of consumers and needed in large quantities, with limited availability of substitutes (like milk in the Amul model) tend to do well in bulk markets. Pepper, cinnamomum, cardamom, honey, sago and beedi qualify as daily used products; but, they face high level of competition from substitutes (compared to milk or sugar). Quality products of rattan and bamboo are in good demand, and there is need to maintain consistent quality for sustaining demand. These aspects need consideration in production decisions. Niche products (of exclusive quality, for example organic essential oil for aroma therapy) are unique, and highly quality specific; relaxation of vigil for ensuring quality can cause an enterprise to fail. While artificial cropping of produces like cardamom, mushroom, honey and cinnamomum individually is less demanding, it is possible to adopt mixed/integrated farming of two or more compatible produces with considerable advantage. Value addition, through processing of the primary produces and using improved technology, gives more benefit in terms of increased income and employment. Also, value-added processing helps to reduce perishability and increase shelf life of products. The system of allotting arbitrary production quotas, instead of fixing scientifically established annual sustainable harvest as is done in Lao PDR, is not an accepted practice elsewhere (in other countries), eventhough quotas are prescribed to control foreign trade. System of NWFP extraction based on arbitrarily (mostly based on trader's request) established annual quotas is not scientific nor conducive to sustainable resource management. In respect of export-oriented production, it is necessary to know the needs of specific markets, including product specifications and the standards required, before deciding to embark on it. Although adding value locally is important, attempting to produce 150 end-user commodities without adequate preparation or studies will be risky. Before launching on actual production, pilot trials are necessary. The vital ingredients for success of production ventures are: the correct perception about the existing and potential (changing) markets; and, organizing the production system (including its institutional components) to be in tune with the market trend. Processing-related NWFPs involve a wide range of primary and down-stream processing. Primary and downstream processing of NWFP adds value to the product, provides local employment and helps to retain value in the country of origin. Such processing entails a range of technologies and equipment. Market-oriented production often goes through several levels of processing. The higher the level of processing carried out at or near the source, the more the product value can be retained locally. Local production offers the prospect for improving local employment, income and livelihood. More of an NWFPs value can be captured by producers through local processing/semi-processing. With regard to those goods processed with modern technology in comparatively larger establishments, because most of the products are meant to be exported, there is heavy stress on quality and on reliability of supply. However, due to the lack of technology, skilled manpower, management expertise, capital for investment, marketing information and mechanisms, coupled with inadequate information on resource availability, such processing mostly takes places in the consuming countries; and exports are generally confined to primary products. NWFPs of subsistence nature are characterized by traditional technologies in production, processing and utilization, largely based on local know-how. Market development has transformed a number of subsistence products to traded goods with substantial investment on improved technologies for production, processing and marketing. Organized (raw material) production, especially through cultivation, emerges when supply from natural sources is inadequate or declining. Most raw produces pass through phases of collection, depletion and cultivation. Market –related Successful outcome to any development effort on NWFPs is dependent upon there being a demand for the product, and uptake by the private sector at the processing, marketing and consuming levels, as well as on the producers capacity to reach that market. Market needs to be treated as the prime sector. Because of the variety of NWFPs, ranging from fruits and food to aroma chemicals and phyto-pharmaceuticals, the markets for them show corresponding variation – being bartered, and traded in rural subsistence economies, local village markets, large city (national) markets and international markets. Some products are sold in bulk (e.g. edible nuts, resin) and others reach specific niches (special types of honey, 151 aroma chemicals). Some non-wood products are not traded, but only collected and consumed. For developing NWFPs, scientific screening is important, to identify those with potential to develop into mainstream products. In the absence of it, proportional efforts are dispersed over too many NWFPs, many of which may not have an acceptable commercial future. Screening would call for assessment/analysis of information and available indigenous knowledge, product based inventory and evaluation of potential, product development and promotion. Success in market is the ultimate test of an enterprise, of any nature. Marketing is essentially a software function, where knowledge and information are important ingredients. The role of marketing is to help create better linkages among resource management, processing and end-use. Most failures of NWFP programmes result from inattention to markets. With increasing pressure on forest resources, well informed NWFP marketing strategies could be crucial for maintaining the resource. Producers need better information on the nature and volume of existing NWFP trade, markets and product standards. More rational and transparent market transactions throughout the production/market chain are needed for producers to receive a more equitable share of the product value. In respect of items such as medicinal extracts, phytochemicals, food colourants and additives, essential oils and fragrances, market requirements such as quality specifications, sanitary regulations, packaging standards (along with lack of adequate knowledge about consumer preferences and competing products) often become nontarrif barriers, essentially denying some countries access to international markets. There is no way of coping with this situation except through improving efficiency and production standards. An emerging green-consumerism is evident in the use of NWFPs. For various reasons, however, there has been an erosion of the international market share of NWFPs over the years. Prices have generally fallen, considerably in some cases. Apart from inadequate promotion, inadequate quality of products and competition from synthetic substitutes are often the cause of this trend. If NWFPs are to compete on the international market, they will be subjected to unpredictable price movements that accompany this market. This is also true for smaller domestic markets. Therefore, careful consideration must be placed on the markets and market stability, if investment is to be encouraged in NWFPs and in processing of these produces. A proper ‘brand’ name, imaginatively coined, and linked to the specific nature of the produce/product(s) and/or its origin/source, can help. Related to Socio-Economics NWFPs play an important role in alleviating poverty and supporting community welfare. Often, poverty is central to the problem of un-development and underdevelopment, and there is urgency in solving this problem. NWFP development 152 needs to be designed with this problem in view. NWFPs provide opportunities for employment and income, and have comparative advantage to support development in backward areas. Millions of people living in the vicinity of forests in the developing countries are highly dependent on NWFPs for food, nutrition, health, shelter, fiber, fertilizers, fodder, cosmetics and cultural products. They support village-level artisanry and craft activities and provide raw materials for local processing industries. The benefits are relatively more important for poorer households and disadvantaged groups. At the national level, it will be difficult to separate the issues of environmental degradation and poverty alleviation. Also, poor people faced with marginal conditions of environment have no choice but to go for immediate economic benefits at the expense of the long-run sustainability of their livelihoods. This trend, if left uncorrected, could result, in the break-down of the environmental and social systems. Planned management of the resources (e.g. NWFPs) for nondestructive uses is very important in this connection. Resource management/development through community involvement requires a strong catalyst and support for: ensuring organized approach, application of appropriate technology, efficient arrangements for marketing of products (and services), improvement of community skills and leadership development. Committed and accountable leadership is important in guiding the community to work towards common goals. In respect of self help groups at the community level there is need to have homogeneity, with members having similar background and culture, to avoid tensions (e.g. between those of low-land and up-land origin). Tenure security, availability of credit, and equitable distribution of benefits, among others are important ingredients for success of SHGs dealing with NWFPs. It is necessary to ensure that the primary producer receives remunerative prices for the products, without compromising on the principle of social empowerment. Providing a meaningful rule to women (and gender mainstreaming) in NWFP development adds to the chances of success of the venture. Also, tribal and cultural communities can provide the benefit of their traditional knowledge about NWFPs. Large private enterprises/corporations, as far as possible, prefer to have captive raw material resource from a single source (e.g. forest concessions). In situations of low forest cover and resource limitation, the compulsions of the situation and the policy dictates force the private entrerpreneurs to forge partnerships with farmers and local community. NWFP-processing enterprises are scale neutral, to some extent, and is amenable to operations in small, medium and large scales. Size of operations are decided by several factors (resource availability, market, technology and skill base, available funds). Wherever, sophisticated technology is involved, however, the size of operations tends to be bigger. 153 There is no resource accounting system in respect of NWFPs. NWFPs do not find a place in most systems of national accounts. Most of the quantitative information seen in reports/documents are essentially educated guesses. The situation is not helpful for NWFP development. Environment–related The environmental dimension of NWFPs are related to its amenability for sustainable management; contribution of NWFP resources to biological diversity; resource sustainability in NWFPs’ transition from subsistence to market economy; improved valuation of environmental functions of NWFPs in environmental impact assessments; and the impacts of over-exploitation. Measures to reduce adverse environmental impacts include reducing wastes in processing industries and promotion of service benefits such as eco-tourism. Given the trend of undervaluing forest resources and products, it is important to understand the real value of NWFPs and find ways for framing economic aims within a context of environmental integrity. Unscientific practices and over-harvesting of NWFPs can cause drastically injurious impacts. In the absence of repeated and properly designed inventories, there are no adequate assessments of such impacts. Science and Technology-related The poor situation of NWFPs in mot countries is partly attributable to inadequate technology and lack of research support. There is a tremendous need for research into all aspects of the technology. Such research should cover, among other things: enhancing knowledge about the NWFP resource; methods of inventory for different NWFPs; gathering scientific data on the nature of the products; prospecting, screening, evaluating and classifying plant species; techniques of domestication and cultivation, including aspects of monoculture and agro-forestry; on-farm experimentation; species introduction trials; plant breeding and genetic improvement; improving of agronomic practices; improving harvesting methods and practices to reduce wastages and damages and to increase yield; adaptation of imported technology; improvements in processing, packaging and distribution of products; and product diversification including improvement of quality. Research–extension linkages and dissemination of research information are vital. Development of NWFP-based industry depends on how far the various products succeed in the market place. Therefore, to be effective, research institutions need, among other things, competent scientists, support staff and research managers; the ability to conduct continuous strategic evaluation of market conditions and opportunities, as it relates to research; opportunities to be autonomous and selffinancing; and means to interact directly with producers and users and hence influence production and marketing. There is considerable indigenous knowledge on the NWFPs, most of which are not documented. While some efforts on bringing to light the traditional wisdom and 154 information on ethno-botany and ethno-medicine are being made, there is need to do much more on a systematic basis. The need for continually updating the technology relating to NWFPs through research and innovation; the importance of new technology in raising productivity; the need to intensity the application of existing research and traditional knowledge are all clearly evident. A feasible complementary action to the strengthening of local research and technological capability is to transfer/acquire improved technology from outside. Developing countries are often prevented access to new technology due to patents and protection of intellectual property rights. Arrangements such as the INBio-Merck agreement for bio prospecting in Costa Rica are innovative in this regard. It provided for the transfer of important technology from Merck to Costa Rica and building of scientific and technical capacity in the country. Information–related There is paucity of information on all aspects of NWFPs; increasing information flow require action at all levels. NWFP management needs different mix of skills, technology and knowledge base. No NWFP–related enterprise activities can be undertaken without relevant information and knowledge; without a system to update information and knowledge, there will be no progress. There is need to generate/acquire and disseminate new knowledge and information. Available knowledge on NWFPs to a significant extent is local, empirical and often linked to local culture. This makes information gathering or exchange more difficult. There is also overlapping of uses and sources, where the same product can be produced from different non-wood raw materials or the same non-wood raw materials can provide different products. This adds to the complexity of the situation. Some valuable and useful information on NWFPs, developed/collected over decades during the colonial period were housed in some institutions of U.K, the Netherlands, and France. Considering the vital importance of market information to primary producers of NWFPs, there is a strong need for a local market intelligence system to support local primary producers. Policy-realted In most countries, no policy specifically governs the management, harvesting processing and marketing of NWFPs. In most forest policies NWFPs get, at best, a mention in passing; clear objectives and targets are not laid down, nor are strategies for development outlined. This lacuna leads to the lack of appropriate plans, programmes and projects related to NWFPs, and inadequacy of investment. Because of this, there is hardly any emphasis on developing and maintaining a data base on 155 NWFPs. There have been initiatives to improve the situation, but a lot more needs to be done, and urgenty. At a general level, it has been identified that land tenure, extension and research support, marketing and pricing situation, and credit availability among others are the key policy issues. Moreover, government policies should create conducive environment for development of NWFPs. The issue of un-reporting and under-reporting of the contributions of NWFPs in the National Accounts has serious implications relating to assignment of priority and investment funds; and this needs to be taken into consideration in the policy. There is need for a policy provision on prices and rents of non-wood products and services to signal their value and scarce nature in relation to demand. Important policy aspect pertains to the rights of countries over the value of information on biological and chemical diversity of forests. There is need to protect the right over the information (for example, resulting from chemical and biological prospecting), as is the case of other intellectual properties. Sovereign rights over biodiversity have been recognized internationally by the 1992 Convention on Biodiversity. Wrongful patenting of biological products by developed countries is a problem facing the developing world. External policies (e.g. trade policies, land use policies, subsidy/incentive policies) and influences can profoundly affect the NWFP options, favourably or unfavourably. This points to the need for policy rationalization and harmonization. The need for a specific NWFP policy is not to establish a dichotomy; but to recognize their extreme specificities and to help insightful action to integrate it into the overall system of forest management. It is stressed that wood and non-wood is not and should not signify any sort of dichotomy of interests, but are complementary components of an integrated whole. Related to Plans and Programmes In most countries, as in the case of policy, there are also no long-term plans, specific for NWFPs development – with well defined/designed phases, programmes, sub-programmes, projects, targets, funding mechanism, other logistical details, implementation and monitoring mechanism and so on. There is, accordingly, a need for a detailed (master) plan for NWFP development. While proposing programmes and activities by phases, the plan needs to address the major issues affecting the NWFP sector: institutional and policy neglect; lack of adequate information and knowledge; inadequacies in the management and conservation of NWFP resources; lack of appreciation about the dynamics of ecosystems and their inter-linkages with social, cultural and economic systems; existence of a large informal sector; lack of focus on programmes and development action in NWFPs; inadequate investment in research and development; impact of trade policies on NWFP development; loss of traditional knowledge on NWFPs; 156 wrongful patenting of traditional products; and need for a clear and rational approach to development of NWFPs through appropriate institutional mechanisms. Related to Institutions The institutional system covers instruments for facilitating implementation of policy or policy-like provisions (in the form of laws, rules and regulations) and organizational arrangements for enforcing the instruments (at central and decentralized levels). The organizational arrangements include the governance organizations (carrying out authority function) and enterprise organisations (carrying out production/development functions comprised of private sector, co-operative sector, community and non-governmental organizations). Overall objective of institutional arrangements is to facilitate development within the framework of valid laws, rules and regulations. Policies and politics of the country have influence over the nature and structure of the institutors. There are no specific or separate institutional arrangements or instruments specifically designed for NWFPs. Often, one or two persons or a unit within a large sectoral organization are designated to “look after” NWFPs. Rules and regulations developed for forests and forest products are applied to NWFPs, often inappropriately. In view of the heterogeneity of NWFPs, it is difficult to frame common rules and regulations for all NWFPs; and disaggregated component products or end use groups will have to be treated separately. There are several gaps, loopholes, inconsistencies and other defects in the existing local frameworks. One is often not sure as to what laws, rules and regulations are current and in force. As a start, a compendium of all current and valid laws, rules and regulations can be put together to serve as a manual of legal instruments, applicable to NWFPs. A sectoral governance organization is essential and irreplaceable, for providing policy guidance, enforcing legal instruments, and for facilitating sectoral development. – in a transparent and accountable manner. Their mission is vital. However, without appropriate checks and balances the tendency in most cases is to over-regulate. The enterprise organizations are of different types: government entities (e.g. Stateowned enterprises), autonomous bodies (e.g. boards, foundations, authorities), participatory organizations (e.g. co-operatives, SHGs), collaborative arrangements (e.g. company–farmer partnerships), and, NGOs (sponsoring and/or participating in enterprises). A general lesson learned from the experience in many countries, where government is involved in enterprises, is that bureaucratic efforts without stakeholder consultation/involvement tend to become corrupt, destructive of people’s resources and environmentally degrading. It has been the observation in several cases that Government run trading operations tend to be overstaffed and not competitive. There is also a need to promote transparency, which will curb the corruption that plagues the economic sectors in several developing countries. 157 While producers co-operatives are expected to address the issues affecting the producers, in several cases they exhibit serious deficiencies: lack of leadership, lack of group homogeneity, lack of planning; and lack of commitment for action leading to dishonesty and indifference on the part of those who run the co-operatives. These in turn affect their efficiency and competitiveness. One cannot be expected to invest (whether money or labour) without a reasonable prospect of an acceptable return and/or other forms of incentives. Enterprises tend to be more efficient if undertaken by an autonomous, professionally managed body. Local organizations with an area-based, integrated and multi-disciplinary structure are likely to be successful in the development process. In such cases, the organizational components tend to be well balanced and mutually linked into an integrated system. Local organizations may encompass vertical connections, thus gaining linkages to levels of organization above village, community, upto and including national institutions. People can profoundly influence as well as frustrate development. Broad-based, willing and organized participation encompassing local groups of women, indigenous communities and private sector is an essential means of strengthening institutional structure for developing NWFPs. While instituting new institutional arrangements or modifying the existing ones, there is need to evaluate the available/possible alternatives, for their sustainability or appropriateness to the specific situation and environment. The chosen alternative needs to be tested before being installed. In most aspects of NWFP management, what is being applied to wood cannot straight-away be adopted for use. Moreover, what is applicable to one NWFP may not be suitable for another. Thus, development of NWFPs calls for diverse skills and multi-disciplinary approach involving agronomics, biology, ecology, entomology, mycology, ethnobotony, farming systems, food technology, nutrition, fibre technology, phytochemistry, polymer chemistry, plant genetics, rural sociology and other disciplines, hither-to not included in forestry. Skill needs should be property assessed for developing necessary human resources and capabilities. Success of programmes for development of NWFPs ultimately hinge on real commitment to addressing entrenched institutional blind spots. This requires greater awareness of issues on the part of policy makers, to gain policy and legislative support. Institutional support for NWFP activities needs better co-ordination and emphasis on research, technology transfer, human resource development, and improved information systems. It is also necessary to ensure more flexible credit services for producers, support for local producer’s organizations, and local participation in NWFP development. Innovative adoption of information technology and electronic media has made it possible to revolutionise the working of institutions for speed, efficiently and 158 outreach. Process of NWFP development can be accelerated by exposing the NWFP producers to modern techniques. While the emphasis is on institutional reforms, obstacles to reforms are great and status quo has enormous staying power. To round up…. For an enterprise striving to accomplish NWFP development, the “Amul philosophy” is very relevant: serve the interest of the producers; provide quality products to the consumers. The lesson in a nutshell is that for NWFP to succeed at the market, it should meet the criteria of efficiency/effectiveness, productivity, valueaddition, competitiveness and market satisfaction, in the new environment of global sourcing for merchandise (globalization), e-tailing and e-commerce. AN INDICATIVE FRAMEWORK FOR A POLICY ON NWFPS IN LAO PDR We have seen that there is no formal/legislated policy for the NWFP sub sector, nor for the entire forestry sector, in Lao PDR. And, whatever is handed out periodically as policy decisions are inconsistent and inadequate. This situation has lead to the neglect and depletion of NWFPs as an important natural resource. Inspite of their importance and potentials for supporting economic development, social welfare and environmental conservation, very little attention has been given to NWFPs in Lao PDR. The NWFP agenda has been fragmented and weak for too long. Most of the past policy-like statements has turned out to be undelivered promises. The high heterogeneity of NWFPs are often blamed as an insurmountable hurdle for developing this resource. Their future cannot be assured on the basis of pious hopes or claims about their value and importance. Even though, there is a very large number of produces, with widely varying characteristics, falling under the umbrella of NWFPs, in any one locality or management unit there will only be a manageable number of them with commercial or economic value, because of climatic, social, cultural and other factors. Therefore, attention needs to be focused on those priority species. Realistically planned (and phased) action, which can make most impact are called for, requiring strong policy support. Components of Policy Framework As already noted, the term policy refers to the principles that govern action, directed towards given ends, including relevant strategies. Apart from the general and specific objectives the policies should contain a clear definition of its scope and directions regarding policy measures to be taken to achieve the objectives – such as those relating to strategic plans, legal rights and arrangements, incentives, tenurial rights, investment, involvement of 159 private sector, role of formal and informal sectors, community participation, evaluation of social and environmental values, development of skills, health and safety considerations, access to information, controls and regulations related to production and marketing authorizations and streamlined support from public administration. Policy provides guidelines regarding phasing of development, type of technology, scale aspects, when and how to move from research to development action etc. It is not the intention here to provide a Policy for NWFPs of Lao PDR, but only to provide a reference framework for the purpose, if and when the need or occasion arises. The framework discussed is indicative rather than specific and comprehensive. The analysis in the earlier sections have identified the need among others, for: controlling deforestation, introducing scientific and sustainable management of NWFP and forest resources; practicing appropriate, integrated land use for improving overall sustainable biological productivity; reducing wastages in harvesting and processing of NWFPs; controlling illegal harvest and trade of NWFPs; rationally restructuring NWFP-based industry as an economic undertaking and improving their economic efficiency; establishing a system of forest resources accounting incorporating NWFPs; strengthening/intensifying forestry, forest products and NWFP research; arresting ecological degradation and erosion of biodiversity; rehabilitating wildlife and wildlife habitat; improving essential infrastructure for NWFP development; meaningfully involving people, private sector and NGOs in the development of NWFP (and forestry) sector; appropriately restructuring the institutions to be capable of serving as effective agents for promoting sectoral growth; improving, qualitatively and quantitatively, human resource for NWFPs (and forestry) development, in terms of training and education facilities, incentives etc.; ensuring multi-disciplinary approach and inter-sectoral co-ordination relating to NWFP matters, and promoting rural empowerment and gender mainstreaming. In view of the above, and the added need to establish and enhance competitiveness for NWFPs in the global free market, it is necessary that an adequate National Policy for NWFPs, or for forestry with a distinct sub-policy for NWFPs, be framed in the appropriate legal format. For sectoral stability and to ensure consistency of development activities, it is necessary that the policy be framed with a long-term (say 20 years) perspective. Policy formulation has developed into a science, involving policy research (distinct from research policy) and analytical studies. A detailed sectoral/sub sectoral policy will normally follow an outline containing, among others, the following: Preamble Policy imperatives Policy principles Definitions Policy objectives 160 Policy measures60 Implementation arrangements A detailed annotation of the above outline is given in Appendix 4. Organisations for Policy Implementation At the policy level, there is need for a clear distinction between functions that only the government should and could perform (including policy and strategic planning, creating an appropriate regulatory frame work and monitoring sector performance), and that which can more effectively be delegated or contracted. Governance Agencies The importance of sector governance and public administration through the government machinery can not be overemphasized. The role of the Government should, be to facilitate and properly guide development through provision of policy incentives (rather than adversarial enforcement), and keeping those involved in undesirable activities in check. PFAs with or without direct responsibility for forestry enterprises in the Asia Pacific Region follow different arrangements: independent ministry of forestry; ministry of environment and forests; forestry services within ministry/department of agriculture or primary industry; autonomous forestry authority reporting to minister of forests, forest ministry/department/service for PFA (with separate and autonomous commissions, corporations and/or co-operatives managing forestry enterprises/development operations); and forestry under a large department or ministry with responsibility for forestry submerged within a 3rd or 4th level unit/section/bureau. In such cases where forestry (NWFPs along with it) is merged with other economic/service sectors like natural resources or environment, it often does not received the deserving priority due to various biases and influencing factors. Development/Enterprise Agencies While the FPAs in many countries monopolize the management of the sector (forests being State property) with administrative and budgetary controls (and powers delegated according to bureaucratic status and order), there has been interesting and positive changes in others – such as autonomous forestry boards, forestry commissions with stake-holder representation, forest foundations, forest co-operative federations, partnerships (e.g. publicprivate partnerships; company-farmer sponsorships, other relatively autonomous non- 60 Covering all relevant aspects of NWFPs – i.e. ownership and tenure, resource assessment / inventory, resource management, resource utilization, trade and marketing, research and development, institutional arrangement, infrastructure and information need etc. 161 hierarchal and decentralized entities having strong ties with client groups). and privatization of forestry. The autonomous participatory institutions are covered by their Memorandum of Association and their own rules and regulatory mechanisms, regarding their functioning. Thus, the organizations involved in development (enterprise) activities fall under both participatory and non-participatory categories. Innovative Arrangements Accordingly, we can envisage arrangements for NWFP (and forestry) development variously: Primacy of government institutions which guides and controls farmers activities and involvement. Primacy of private sector (privately owned companies, corporations). Primacy of small farmers and collective (co-operative) institutions, with minimal role (e.g. facilitation and policy guidance) for government; but employing professional management. Autonomous or semi-autonomous entities (e.g. boards, corporations) with representation of stakeholders, for management of specific (e.g. NWFP) activities, and which incorporate participatory institutional entities. In this first alternative, the government is to promulgate and enforce policy, laws, rules and regulations and provide R & D, HRD and extension services (and also to undertake production and marketing activities directly or through state owned companies or job contracts). In this case institutional strengthening is to be approached through improving capability of the public administration and ensuring good governance. In the second alternative the private sector undertakes production and marketing, under relevant rules and regulations of the Government. In the third alternative the co-operative institutions take the responsibility for performing all the above-indicated functions, with the Government only providing guidance. The fourth alternative is where forestry (and NWFP) activities take place mostly in government lands allocated for that purpose and where an autonomous body comprising of representatives of government, NWFP collectors/farmers, financial institutions and other stake holders directly undertakes to implement all the relevant activities and functions. [It is also possible to see arrangements which are a combination of the above – e.g. in the form of specific missions or networks involved in specific functions or activities]. 162 The Enterprise Concept Enterprise is a neutral term meaning one or more units/firms under common ownership or control; and it could be under public, private, co-operative or joint sectors – but clearly separate from the authority function of the government. The enterprise concept provides the NWFP (and forestry) sector with the flexibility required for innovative arrangements. In several countries, the flexibility sought by forestry (and NWFP) enterprises has been achieved through establishment of national forestry boards, forestry commissions and forestry foundations, which have been able in many cases to attract foreign collaboration. Efficiency being central to the functioning of enterprises, they will be characterized by a high input/high output technology, giving a higher incremental capital/output ratio. Critical mass is, often, important in ensuring efficiency of the enterprises. In a system of NWFP and/or forestry enterprises, private sector will be able to play an important role. Also, forming of groups of small producers, rural women, forest dwellers and local participatory organizations, and making them partners in development enterprises, will help lay a sound basis for enhancing private sector partnership and involvement in the future. The concept of the enterprise system for NWFPs (an forestry) in Lao PDR will serve to achieve economic, environmental and social objectives in a properly balanced manner. The economic activities of the enterprises will be solely guided by an efficiency criteria. They (the enterprises) can undertake the environmental and social responsibilities, assigned to it, without in any way compromising the efficiency of its economic activities. The NWFP/forestry enterprises do not distinguish their economic activities as ‘social’ and ‘economic’ (i.e production). Joint ventures with involvement of NGOs, co-operatives, women’s groups, local membership organizations, groups of farmers and homestead owners can help to consolidate raw material base, rational distribution of processing facilities and improved marketing arrangements. The possibilities of such co-operation are enormous. A large institutional or corporate resource or processing facility can form the nucleus to which the resources of local people, communities and co-operatives can be added on, and developed jointly (for example, under the “nucleus-plasma” concept). Such arrangement will allow full enjoyment of benefits by participants. It is essential to provide full fledged (functional and financial) autonomy and flexibility to the system of enterprises; the enterprises should promote the private and cooperative sectors, and organized people’s participation. This arrangement will promote efficiency, accountability and professionalism. A Federated Co-operative Enterprise System for NWFPS A proposal for an alternative structure, “autonomous federated co-operative enterprise system” for Lao PDR is provided here for consideration. In view of the important need to participate the villagers/farmers in the process of NWFP (and forestry) development, and other constitutional mandates to alleviate poverty and to make the decentralized units the 163 focus of development (as well as in recognition of the government ownership and tenure system relating to the forests in the country), an appropriate institutional system for developing NWFPs/forestry appears to be one of the autonomous, federated enterprises. It can be structured with a 3 or 4 tier set up, with each level having its own elected cum nominated board of directors, employing staff of required skills and professional experience, functioning autonomously, and conducting NWFP/forestry related activities (including growing, managing, harvesting, marketing/processing), following national policies and regulations and adequately guided by the higher levels in the enterprise system. While, the autonomous enterprise system, and its component units, can potentially be structured in alternative ways, it is important to ensure their internal consistency and appropriate linkages. Some illustrative suggestions are given. First tier: The primary NWFP/forestry co-operatives form the first tier, providing the basic management unit. The network of the primary units can be enlarged by providing the option to small/medium forest based private entrepreneurs to become members on specific terms and conditions. The primary units can engage in production, harvesting and delivering the produces to a collection center managed by a higher level of the co-operative federation, or process it locally, or supply to private processing plants etc. as approved by the management (and concurred by the higher level in the federation). For managing the NWFP (and forest) resources, these primary units will employ adequate number of technical and administrative staff. These primary units can also be made to pay (contributing to the public revenue) taxes/charges/rents or profit share, as appropriate, to the government through the apex body of the federation. The government land to be assigned to the primary units should go through a lease assignment (for forest settlement) process to avoid future conflicts and claims. All disputes on boundaries, ownerships etc. should be resolved through consultation, considering the need to keep a defined portion of the public land under forest, sustainably managed and utilized in due regard for equity and justice. It is also necessary to go through a process of deregulating forestry (and removing legal anomalies such as timber transit restrictions) to the extent possible and appropriate, to help avoid hindrances to development and progress. Second tier: The second tier will be a federation of several primary units based on a rational criteria (e.g. administrative/geographic territory; number of primary units; viability to perform higher order functions like technical/extension support, equipment hiring, collection and marketing of products, credit arrangements, handling of legal issues such as agreements with private and public sectors, undertaking processing activities, and if necessary, organizing research and training, conducting studies etc.) Third tier: The need for a third tier depends on the number of primary and secondary units to be serviced/supported, complexity of operations/activities and other relevant factors. (It is desirable to avoid unnecessary tiers to avoid/reduce overheads). The apex body: The apex body will be the office of the national (or provincial) federation of co-operative enterprises. The apex body will provide directions and policy guidance for the enterprise system and undertake responsibility for legal advice, planning support, information and statistical system, international affairs, mobilization of funds, 164 negotiations with Government and funding institutions, resolution of disputes, export/import operations and so on. The apex body can be established/designated as a Board, Foundation, Trust, Federation or Commission. The board of directors/commissioners/trustees of the national federation/foundation/ board/commission/trust or apex body may be constituted initially by the government, representing all relevant interests. There should be a chairman and a chief executive (executive director). Advisory committees on specific aspects may support the national apex body. It will have its own secretariat and specialized divisions to handle such matters as internal policies and missions, planning and programming, finance and credit, human resource development, research, technology development, legal services, public relation, coordination, community welfare, conservation, trade, general administration and monitoring and evaluation, covering the overall requirement of the system. Each component enterprises will be covered by appropriate legal instruments (bylaws, regulations, controls), defined structural linkages with units under its control, detailed statement of missions/functions/mandate, financing mechanisms and jurisdictional demarcations. Its activities will be covered by feasibility studies, and by perspective, medium-term, and annual plans and programmes. Through a rational and pragmatic approach to enterprise management and promoting wide-based participation, it will be possible to attract reliable investors, and to apportion the investment burden. A “national fund” can be set up to provide credit to small-scale operators. Additional requirement of capital (apart from government allocations for specific activities) will have to be mobilized initially, through grants, loans and other arrangements and collaboration with banking institutions. While promotion of the NWFP/forestry enterprises can be achieved in a number of different ways, the responsibility for overseeing the implementation of forest policy and administration of the forests (including collection of rents and taxes) – ie. “the watchdog function”, should rest with the “authority”. A system as explained above, with appropriate modifications can function smoothly within the purview of the national forest policy, national forest laws and national forest programme (see Figure 7). If the concept of separating authority and enterprise functions and the need to establish an autonomous forestry enterprise system to support sustainable NWFP (and forest) development is considered relevant, it is then suggested that a high power expert committee may be appointed to study the situation in detail and to make specific proposals. It is emphasized here that the suggestion for structural changes in the forestry sector organizations has not been adequately comprehensive and that it is only illustrative or indicative of possibilities or potentials. There is also need to hold intensive consultations/discussions, based on a position paper, regarding the potential alternatives and their implications. The proposals to be discussed can be made accessible through internet/website. And, if the proposal (with modifications found necessary) is agreed to, it would require a period of transition of about 10 years, for training, model testing and pilot 165 demonstration, etc. and it will be necessary to programme the transition process suitably, in a phased manner. It is expected that international assistance will be forthcoming for such an effort for good governance in forestry. A detailed annotation of the above outline is given in Appendix 4. Development of a Formal Policy Forest (and NWFP) sector policy development and implementation are, and will remain, the responsibility of the Government. But, the variety of interest involved must be recognized, the involvement of all major actors must be legitimized, and their commitments solicited. Forest policy development is a process which follows a cycle of: evaluation and analysis; articulation; formation; formulation; instrumentation; implementation; further evaluation/analysis etc. What is provided here (see Appendix 4) is only a discussion of a forest policy framework, for illustration and reference. The purpose of articulation is to involve those who are affected by the policy in discussions and to obtain their views and opinions on the one hand and to provide them clarifications and elaborations on the other. Policy will tend to be less subject to criticism if it is the product of agreement of a large number of people and institutions. A distinction is drawn between policy formation and its formulation. The formation of policy is based on inputs from a relatively large number of people – stakeholders and interested persons. Its formulation, on the other hand, is essentially a political statement from the Government. There are some cases where forest policies have been issued under an executive order of the agency responsible for forestry, without necessarily being underwritten by the Government/Parliament. The strongest argument in favour of a formal forest policy is that it represents a political commitment. A legislated policy goes with the assurance that initiatives will continue to be imperivous to leadership changes. Once legislated, it can be changed/amended only through going over the entire legislative process, thus serving as a check to avoid arbitrary changes by the executive machinery. While rules and procedures for day-to-day administration can change, the underlying policies and principles should not, without legislative approval. The whole system of policy development and review/revision process calls for a strong and continued political will and commitment. Equally essential and important is the professional leadership to facilitiate and guide the process. 166 Figure 7- Graphical Representation of Organisational Re-structuring for NWFP/Forestry Development D E C E N T R A LI S E D U N I T S Remarks NWFP/Forestry Enterprise (Autonomous National NWFP/Forestry Board) (Apex Body) Authority (PFA) Government Policy and Facilitation 3rd Tier 2nd Tier 2nd Tier 3rd Tier 2nd Tier 2nd Tier 2nd Tier Apex Body: Direction, policy, legal responsibility, international relations, foreign assistance, negotiations with government and banks, exports/Imports, arrange to collect and remit taxes due to Government, HRD, overall planning support, monitoring and oversight. Responsible for smooth, efficient, profitable and autonomous functioning of the enterprise system. Third Tier: A federation of second tier enterprises. (Optional, depends on need). Support lower units in terms of financing/refinancing; legal support; contract arrangements and assignment of tasks: processing and marketing; linkup with banks; training/research aspects; conflict resolution 3rd Tier 2nd Tier 2nd Tier 2nd Tier 2nd Tier Second Tier: A federation of primary units at the district or defined levels. Supports primary units with expertise (eg. planning), extension, heavy equipments on hire, utilization/marketing of produce, credit facilities, micro financing, companycommunity partnerships, processing. First Tier: Primary units/co-operative societies involved in production (wood, nonwood, agro-forestry) management; land owning and operationally autonomous. Supported technically, financially and otherwise by higher level federations. FIRST TIER – PRIMARY UNITS Note: Under the enterprise system forestland still remains government/public property; and enterprise pays charges/levies to the Government based on agreed terms. Enterprise can also undertake activities on contract for both private and public sector (e.g. protected area and watershed management) 167 A NWFP (and forest) policy should be dynamic; it should not and cannot, stay the same over any long period of time. Accordingly, it is important that a NWFP (and forest) policy is periodically evaluated to determine whether it should be maintained, modified or changed altogether. There should also be a formal mechanism for regular revision of the policy in the light of new circumstances or availability of new information. 168 5. RECOMMENDATIONS AND CONCLUSIONS RECOMMENDATIONS Wood and non-wood resources co-exist in the forests (as also wildlife and biodiversity); as such, their fortunes are interlinked, though at the product level they exhibit distinct characteristics. In the domesticated situation, plants producing wood and non-wood produces are mostly grown separately; but several of them can be grown together. In view of these characteristics, the policies and the legal framework relating to wood and NWFPs will have some distinct aspects as well as some common aspects. Therefore, policies and legal instruments relating to wood and non-wood produces can be brought under a common umbrella of forest policy and legislation, with specific/identifiable sections dealing with the distinct aspects of wood and NWFPs. Alternatively, separate policy and legal frame work can be developed for NWFPs (as is done in several instances for wildlife and biodiversity), in which case some amount of overlap/interface is unavoidable. The recommendations given below may be read with the specificity and commonality of these forest produces in mind. Compile a hand book of valid laws, rules, regulations, guidelines etc. applicable/relevant to the NWFP sub sector (or to the forestry sector, with specific reference to the NWFP sub-sector); analyse them for conflicts, contradictions, overlaps, gaps and weaknesses with a view to improving and regularly upgrading them; keep the hand book current by incorporating changes and deleting those which are no longer valid. Formulate/establish a NWFP policy (which may incorporate the definition and classification of the NWFPs of Lao PDR, consistent with international classifications), either as free-standing policy or as an identifiable/specific component of National Forest Policy (which also needs to be newly formulated). Develop/formulate/establish technical prescriptions covering all aspects (e.g. inventory, management, harvesting, processing, safety aspects, marketing etc.) for the different categories of NWFPs or for specific NWFPs as appropriate. Develop/establish and operate a statistical and non-statistical information system, covering resource information, management information and market information to generate and provide updated and reliable information for effective planning and implementation activities. Institute a comprehensive system of forest management planning, incorporating a major component on NWFP planning. Substitute the ongoing arbitrary quota system for NWFPs by the scientific concept of annual allowable (sustainable) harvest, based on growth and yield 169 studies and adjusting for conservation "set aparts" and obligations to meet traditional rights and subsistence needs. Appropriately reform the institutions dealing with NWFPs, to be capable of focusing on solving problems, structuring them properly with emphasis on their development facilitation role, and to be pro-active rather than re-active. Emphasize on a strategy of strengthened research capability and human resource development, in the area of forestry in general and NWFPs in particular, for enhancing technology and productivity as appropriate to the different categories of NWFPs. Collaborate in NWFP research activities and information sharing with countries having similar ecological conditions, particularly at the regional/sub regional level; participate in relevant activities of CIFOR; tap the capability available in university faculties to support NWFP research; promote client participation in problem identification and field research activities. Establish adequate extension facilities to promote NWFPs. Identify, on a continuing basis, new NWFP species and their potential uses; adopt domestication of NWFP species wherever feasible, with genetically improved varieties. Enhance productivity, yield and value of products through enhanced technology, downstream processing and developing new value-added products. Mobilize venture capital for product research, for developing new products and for promoting such products. Establish and promote an efficient and waste free harvesting system. Promote value-chain investment, and enhance rent capture and retained value. Give special consideration to NWFP-based small-scale enterprises, to support offfarm income. Encourage and promote, wherever (and as far as) possible, integrated production/development of wood and non-wood products, for benefiting from their complementarity. Address issues of market access and development for increasing number of NWFPs, utilizing new information technology and promotional measures such as investment/information brochures, trade fairs etc. Promote establishment of autonomous producers’ groups and associations for specific NWFPs, or for several of them, grouping/combining villages (and existing small-medium enterprises) as appropriate for viability and advantages of scale, and establishing a federated structure of associations as feasible – e.g. autonomous body(ies) for development, management, production, processing and marketing of NWFPs. Incorporate other forms of participatory entities such as partnerships and small scale private operations in the purview of the federated structure. 170 Remove gender constraints in NWFP related activities. Arrange for farmers (family units) to have access to credit, through appropriate funding arrangements (e.g. development banks, rural banks, revolving funds, targeted NWFP funds under the auspices of producer associations etc.); encourage the local traders to become investors/entrepreneurs and to participate in the activities of the producer groups (or autonomous bodies), and not to remain as a separate competing institution. Develop/improve capacities (skills), efficiency and productivity all along the entire NWFP market chain. Develop and effectively operate a systems model of marketing development for NWFPs in Lao PDR (which necessarily should cover all vital aspects such as resource management, production and processing), with component sub-systems. With such an operational system, the impacts/implications of changes (actual or desired) in the value/intensity/quality/quantity of component elements (e.g. new research findings, new markets, new products, price changes etc.) can be assessed and modifications/re-adjustments effected as necessary or appropriate. Develop a master plan (a long term perspective plan) for NWFP development, consistent with the overall forestry development plan or strategy, defining definite phases (for immediate term, short term, medium term, and long term) and activities by phases, thus providing an agenda for NWFP development. CONCLUSIONS NWFPs form an important natural resource, which is capable of supporting poverty alleviation and socio-economic development, along with biodiversity conservation. However, without a realistic policy and its effective implementation through supporting laws, rules and regulations and involvement of genuine stakeholders in its management, the NWFP resources would tend to be depleted through careless overexploitation and other unsustainable practices. For a long time, NWFPs have remained as a group of minor products. With increasing deforestation, emphasis accorded to bio-diversity conservation and ban on timber felling, NWFPs have re-emerged with some prominence. While, this in many cases was as a survival strategy, the NWFPs have proved to be capable of supplying the demand for industrial raw material and consumer products. Inspite of it, NWFPs have suffered from the lack of a clear policy, legal framework and institutional support. As a result, NWFPs are constrained by inadequate technology, low productivity, lack of competitiveness, poor facilities for value-added processing, inadequate emphasis on market, and lack of market information. Actions required to improve the situation of NWFPs cover all relevant aspects involving technology, socio-economics, trade and development, environment, institutions and investment. 171 Subsistence-orientation of NWFPs is no longer an important policy goal. New emphasis is on market-orientation. Failure to adopt market-orientation, and to satisfy market requirements of quality and quantity, will result in failure of NWFP enterprises, inspite of their favourable attributes such as environmental friendliness. Market-orientation for NWFPs calls for several important attributes: improved technology, development support institutions, professional management, updated knowledge and information system, primary and downstream processing, adequate financing and free market access. Productivity, efficiency and competitiveness through constant innovation are the key to ensure success of NWFPs in the market place. 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Paris 177 Appendix 1 Terms of Reference International Expert in Forest Policy and Legislation The total service period during the four project phases is two months Under the general supervision of the FAO Representative, the technical supervision of the Development Law Service (LEGN) and the Forestry Development Group of the Regional Office for Asia and the Pacific (RAPO) and in close collaboration with the National Project Director (NPD), the other project consultants and counterparts, the consultant is required to perform the following tasks: First mission during Phase 2 (month 3 – 9) Review and amend the study carried out by the national forest policy and legislation expert on existing forestry policy and regulations, forestry legislation and code of forest practices on NWFP production and marketing, including quota systems and import taxes in Lao PDR; Provide technical input to the work of the national working group which will review NWFPrelated policy and regulations; Prepare recommendations to improve NWFP-related legal framework and regulations; Assist the NWFP marketing specialists in developing a model for NWFP marketing; Provide technical assistance for the implementation of the project, specifically on legal issues; Provide guidance to the work of the national forest policy and legislation expert. Main results expected: mission report, including recommendations to improve the NWFP related legal framework. Duty Station: Vientiane, Lao PDR (with field trips). Duration: one month Second mission during Phase 3 (month 10 – 22) Conduct a study on the existing forestry policy and regulations on NWFP production and marketing, including quota systems and import taxes in the sub-region. Main results expected: report on the issue. Duty station: home station Duration: 0.5 month Third mission during Phase 4 (month 23 – 24) Provide comments to the proposed changes and adjustments to existing NWFP-related legislation, elaborated by the national forest policy and legislation expert; 178 Participate in the final workshop in Vientiane and present and discuss the main results and recommendations; Provide technical assistance to the GoL in implementing the recommendations presented by the working group Main results expected: written version of paper presented at the national workshop available. Duty station: Vientiane, Lao PDR (with field trips) Duration: 0.5 month Qualification required: lawyer, forester or closely related discipline with second expertise in national legislation on natural resources. Expertise in forestry and forest policy desirable. Language: English. Knowledge of Lao or Thai language is preferable but not a required. 179 Appendix 2 List of Some of the Better Known Species in Lao PDR Providing Non-wood Forest Products Name of species Acacia catacheu Adenosma tinctoria Aegle marmelos Agathis damara Aglaia spp. Aglaonema mopestum Aleurites montana Alpinia blepharocalyx Alpinia galanga Alpinia officinarum Alstonia scholaris Amomum ovoiduem. Amomum villosum Amorphophalus companulatus Andrographis paniculata Andropogon citratus Anisum verum Aquilaria crassna Areca catechu Arenga saccharifera Arenga westerhouttii Artemesia annua Artocarpus integrifolia Arundinaria spp. Baccaurea ramiflora Bambusa spp. Barringtonia acutangula Bixa orellana Boehmeria malabarica Borassus flabellifer Broussonetia papyrifera Brucea sumatrana Buchanania glabla Butea superba Caesalpinia sappan Calamus spp. Calophyllum spp. Caryota urens Castanopsis indica Catharanthus roseus Ceiba pendandra Centella asiatica Cephalo stachyum spp. Chrysanthimum spp. Cinnamomum camphora Cinnamomum cassia Cinnamomum verum Clitoria hanceana Codonopsis javanica Coix lacrymajobi Combretum spp. Coscinium fenestratum Coscinium usitatum Crotolaria spp. Curcuma xanthorizae Curiuma domestica Dendrocalamus spp. Desmodium spp. Dioscorea bulbifera Diospyros mollis Dipterocarpus alatus Dipterocarpus spp. Dracaena cambodiana Dracaena loureiri Emblica officinalis Eugenia spp. Ficus spp. Gigantochloa albociliata Gmelina arborea Homolomena aromatica Hydnocarpus kurzii Hypericum japonicum Imperata cylindrica Indigofera spp. 180 Indosasa chinensis (1. sinica) Jatropa curcas Kaempferia parviflora Korthasia laciniosa Mallotus philippinensis Melia azadirachta Metoxylon spp. Morinda citrifolia Morus acidosa Morus alba Myristica fragrans Ocimum sanctum Orthosiphun stamineus Osbeckia chinensis Oxytenanthera spp. Palaquium spp. Panax spp. Pandanus fibrosus Pandanus spp. Passiflora foetida Pentace burmanica Phoebe spp. Pinus kesiya Pinus merkusii Piper longum Piper ribersoides Polygonum multiflorum Rauwolfia serpentina Sapindus spp. Scaphium macropodium Schizostachyum blumei Shorea obtusa Shorea siamensis Smilax glabra Solanum torvum Spondias mangifera Stephania rotunda Sterculia lychnophora Streptocaulon extensum Strychnos nuxvomica Styrax tonkinensis Tamarindus indica Tectona grandis Terminalia chebula Terminalia nigrovenulosa Thysanoloema latifolia Thysanoloema maxima Tinospora crispa Zanthoxylum limonella Zizyphus spp. 181 Appendix 3 Extract of Section 2.5 NTFP Management from the Report on Legal Framework of Forestry Sector, for Forestry Strategy 2020 in Lao PDR, by Todd Sigaty (2003) 2.5 NTFP MANAGEMENT This section reviews the legislation relevant to NTFP Management in Lao PDR 2.5.1 Background on Policy and Legal Framework on NTFP Management In Lao PDR, NTFPs have been estimated to be worth over $300 per year for rural village households comprising over 50% of subsistence livelihood and as high as 75% of village cash income in forest areas (Foppes and Ketphanh, 2000). The initial forestry legislation, CoM Order 74 (1979), recognized NTFP collection as customary use consistent with forestry instructions, but required all NTFP sales to be made to state forest enterprises (now abolished) with payment of restoration fee to the GOL. The 4th Party Congress (1986) recommended that MAF issue a regulation on management of valuable NTFPs, but specific legislation has yet to be issued for this sub-sector as NTFP management continues to be regulated by various production forestry and customary use legislation. 2.5.2 Legislation Relevant to NTFP Management The Forestry Law, Article 25, states that the use of NTFPs shall be conducted according to specific legislation issued by the relevant authority. MAF has yet to issue a regulation on NTFP management despite being one of the most important sources of economic trade and village livelihood throughout the country. The result of having no specific legislation for this sub-sector means that NTFP use and management either go unregulated or get managed pursuant to legislation on production forestry (FL, Articles 25-29; PM Decree 59; PM Orders 10 and 15; MAF Reg 221) or customary use by villages (FL, Art 30; MAF Reg 535, Art 7; MAF Orders 54 and 377). In some cases, local authorities and villages adopt rules to manage and monitor NTFP use in their jurisdiction but national guidelines for this procedure do not exit. PM Decree 164 and MAF Regulation 524 regulate the use of NTFPs within NPAs. 2.5.3 Major issues Regarding the Legal Framework for NTFP Management There needs to be a definitive legal definition and categories for NTFPs. MAF Regulation 221, Article 2 defines NTFPs as products available in the natural forest, such as stems, climbers, roots, fruit, flowers, leaves, shoots, bark, seeds, oil, resin, gum, mushrooms, honey, etc. It further categorizes NTFPs as seasonal (flowers, fruits, bamboo, shoots, mushrooms etc) and non-seasonal (bamboo, rattan, resin, bark, roots etc). These examples help, but legislation should provide criteria to establish a list national and local lists of protected NTFPs to guide preparation of local rules and management plans. Forestry officials responsible for drafting and implementing legislation on NTFP management have a general lack of access to available data on NTFPs and do not collaborate with the various institutions that possess the limited information that exists. PM Order 15, Article 8 requires MAF to coordinate with the Ministry of Commerce and Ministry of Finance to conduct studies and take measures to promote and establish NTFP plantations and processing factories at the provincial level. However, management of NTFPs should be expanded beyond ministries and the four levels of forest management organizations (Forestry Law, Article 59) to include the research institutions, local authorities and communities with adequate knowledge to regulate the local use of NTFPs. Access to NTFP collection is closed to those with legally recognized customary rights within a village boundary or those with permits for production forest areas under an approved management 182 plan. NTFP regulation can be placed into two categories:1) Customary use by villages; and 2) Commercial use by individuals and organizations. Customary includes the collection, sale and use of forest products by an individual or group with a root in custom over a long period of time recognized by society or law used in a sustainable manner for housing, fences, firewood, food, medicine, etc (FL, Art. 30; MAF Reg. 535, Art. 2; MAF Orders 54, 377). Customary use is governed by national legislation and local rules (FL Art.63) that place limits on the time (seasons), place (core zones of a NPA) and method (not harmful to the forest) that NTFPs may be collected, used and sold. Customary use includes the sale of NTFPs under a plan authorized by DAFO and District Governor (MAF Reg. 535, Art.7,8; Order 54, Art.6). Commercial use of NTFPs is currently regulated under the same system for the harvest of timber limited to areas designated for production under an approved management plan (FL, Art.25; PM Decree 59, Art. 9; MAF Reg 221, Art 7). To qualify for bidding on the quota an NTFP survey must be completed by June 6th and sent to MAF by July 7th (PM Order 15, Art.1)61. MAF Reg.221, Articles 8, 19-24 outlines the system for NTFP collection and timber harvest. These requirements should be reviewed and possibly tailored to fit NTFP based on the amount to be harvested. The current system contains burdensome requirements such as a business license, tax registration, criminal clearance, timber contract, surveys, permits issued by PAFO, management and annual operation plans in addition to payment of planting fees for those NTFPs listed in MAF Order 1848. Rather than relying on PM Order 15 and MAF Regulation 221, it appears that MAF must define a new system for NTFP sales to comply with the requirement under PM Decree 59 (2002), Article 11 that all NTFP sales be made to processing plants under competitive prices based on market-oriented, transparent methods to receive the highest prices. NTFP Collections is prohibited: Within core prohibition zones is a NPA and corridor zones connecting NPAs (FL Art. 42; PM Decree 164, Art. 4; MAF Reg 524, Art 10); during the closed season for rattan, eaglewood, bamboo, resin, roots and vines from 31 May to 31 October as adjusted by each province (PM Order 15, Art. 2); by methods that destroy forest, trees, bark, bamboo less than 3 years old, rattan stems or that uses fire or chemicals to extract resin, oil (MAF Reg 221, Art. 22). Customary use should include the collection of NTFPs in all forest zones within a village boundary, although limited in protection and conservation forest. MAF Reg 535, Art. 2 clearly permits NTFP use in a production forest zone, but Articles 7 and 8 also permit villagers to collect NTFPs, even for commercial purposes, in natural forest within the village boundary. Village forest management agreements should permit limited collection in village protection and conservation zones. Limited use needs to be defined in local rules based on the specific situation, but may include collection of non-protected NTFPs that can be gathered in a sustainable method with little or no impact on the management objectives for these zones. (MFA Reg 221, Article 2,22). The prohibition in Article 41 of the Forestry Law against collection of protected NTFPs is not a total ban of all species. NTFP guidelines should be incorporated into management plans (NPA, production forest areas, VFMA) upon consultation with stakeholders with customary and commercial user rights. NTFPs may be imported and exported pursuant to regulations and approval by the GOL (FL, Art. 29; PM Order 15, Art. 6, 7), but eaglewood and rattan may only be exported as semi-finished and finished products. This requirement is strongly promoted, but not mandatory, for export all other NTFPs (PM Order 15, Art. 6). 61 The need to have quotas for NTFPs and timber set by the NA as part of the socio-economic development plan is under review as part of adoption of MAF Regulation on National Production Forest to be issued in 2003. 183 Findings for the Legal Framework for NTFP Management There is no specific legislation covering NTFP collection, use and management forcing this sub-sector to be either unregulated or governed by production forestry or customary use legislation. MAF Reg. 221, Art. 2 provides a definition for seasonal and non-seasonal forest products, but does not provide criteria to adequately define or categorize NTFPs. MAF should publish a list of protected NTFPs along with criteria and a procedure to update the list on a regular basis and provide deference to local authorities to publish specific list. Access to NTFPs is closed to those with rights under customary use or an authorized permit. Customary use of NTFPs includes the collection, use and sale of NTFPs in all natural forest within village boundaries according to a VFMA (FL.30, MAF Order 54 and 377) and a plan and local rules approved by DAFO and the District Governor (MAF 535, Art. 7). NTFP harvest for commercial use shall only occur in designated production forest areas under an approved management plan regulated by quota, permits, fees and other requirements (FL: PM 59; PM 15; PM 18; MAF 221) Planting fess apply to the commercial use of NTFPs listed in MAF order 1848. NTFP collection is prohibited in NPA core zones, corridor zones, and for some species during the closed season (PM 164; MAF 524). NTFP use is limited in protection forest areas and protection and conservation forest zones within village boundaries (FL 41, 42; PM 164; MAF 524; MAF 535) Eaglewood and rattan may only be exported as semi-finished and finished products (PM 15). There is general lack of access to adequate data on NTFP by the officials who are drafting and implementing forestry legislation and policy. Recommendations for the Legal Framework for NTFP Management MAF should issue a regulation on NTFP collection, use, sale and management to provide national guidelines that can be adapted in local rules and management plans, A list of protected NTFPs should be published based on a set criteria that can be updated and tailored by local authorities and villages based on local management and sustainability. Customary use should include access and limited collections within protection forest areas and protection and conservation forest zones within village boundaries. Specific legislation is needed to regulate the commercial use of NTFPs rather than using the same system as timber production. NTFP sales would need to comply with reform on sales as stated in PM Decree 59, Art. 11. Management plans for national production forest areas, protected areas and other forest areas should reference the use of NTFPs. 184 MAF should collaborate with other customs and tax officials on the regulation of import, export and duties for NTFPs since the Forestry Law, Art. 29 defers to other legislation. MAF should ensure that information on NTFP management is available and should utilize the new SNV post at the National University to assist on the national program for NTFP management. 185 Appendix 4 An Annotated Outline for a National Policy for Non-Wood Forest Products for Lao PDR I. Preamble [Preamble provides a brief background and rationale for the contents of the policy and helps to view it in the right perspective]. II. Imperatives Imperatives are based on the vision and values cherished by the Nation. Being absolute and non-negotiable requirement, imperatives form the bedrock of the policy. Most common imperatives established in some countries include sustainability, efficiency, people’s participation, poverty alleviation etc. Sustainability: The important functions of forests in protecting soil, water, wildlife and biodiversity are vital for the welfare of the present and future generations. Sustainability of forest and NWFP resource is essential to prevent environmental deterioration and economic decline and to safeguard ecological processes. It involves a definite notion of respect for the interests of our descendants. Ecologically, sustainability has two attributes in addition to equalling harvest to regeneration: i.e., sustain adaptability and capacity for renewal of plants, animals, soils and waters; and maintain biological diversity, the variety of life in all its forms. It also implies the understanding of the irreplaceable and unknown values of wild plants and animals, and of the utility of watershed forests and wetlands. However, there is no market mechanism to value them adequately. Efficiency: Efficiency is generally measured as the ratio of output to input – in terms of materials, services, time, costs, benefits, and satisfaction, in any comparable unit of measure. It is difficult to have a precise measure of efficiency, but it is a strong tool for decisionmaking and evaluation. Investments in NWFP production should be competitive and capable of earning higher returns, compared to other alternatives. Participation: Participation of people is both an objective and a means of development. It is crucial in charting the course of forestry development in the right direction, and in ensuring its sustainability. Other imperatives can be added or substituted for the above – e.g. gender mainstreaming; poverty alleviation; respect for customary rights. The imperatives should be kept in balance with one another, by optimizing all of them rather than maximizing any one of them. III. Principles Principles are those considerations, which influence the policy development. The Forest Principles adopted at the United Nations Conference on Environment and Development (Rio de Janeiro, 3-14 June 1992) had stressed that forestry-related issues and opportunities (which includes NWFPs) should be examined in a holistic and balanced manner This can be considered either for a free standing formal policy on NWFPs or for a component sub-policy on NWFPs within a National Policy for the entire forestry sector. 186 within the overall context of environment and development, taking into consideration the multiple functions and uses of forests as well as the potential for development that sustainable forest management can offer. In view of the above, and based on the fundamental principles enshrined in the Constitution, as well as those enunciated in the major national policies related to social welfare, economic development, technology development and environmental conservation, the principles guiding the NWFP policy (and the national forest policy) should be based on the need for: Integrated approach to landuse; Maintaining ecological processes and balance; Conservation and management of biological resources; Recognizing the importance of bio-technology; Recognizing the option and existence value of forests; Satisfying the needs of people for forest goods and services; Recognizing rights of traditional communities; Supporting national food security; Providing additional employment and income; Biodiversity inventories and information management; Defining and retaining intellectual property rights on NWFPs based discoveries and traditional knowledge; Increased welfare and socio-economic equity; Social consultation and balancing of interests; Supporting private sector and co-operatives; Facilitating participation of women in development; Promoting collective self-reliance of rural communities; Ensuring planned approach to development; Improvement of technology; Promoting rural industrialization and development; Intensive and integrated management of production forests; Ensuring adequate returns on investments in forestry; Appropriate tenurial arrangements providing incentives for sustainable management of forests; Ensuring autonomy and efficiency of forestry enterprises; Promoting private and co-operative sectors; Institutional improvements; Incorporating environmental costs and benefits into market forces and mechanisms; Inter-sectoral co-ordination; Increased availability of financial resource; General and specific guidelines for sustainable management of NWFPs; Better information and scientific research; 187 Capacity building (including human resource development) for policy implementation; and International co-operation. As they are part of the policy, only principles of vital importance need to be listed. IV. Definitions The proper use of terms conveying specific concepts requires that they be defined adequately. Since definitions serve to specify the scope and coverage of the terms in the context involved, different definitions are likely depending on the purpose for which, or the situation wherein, they have been made. The importance of clear, consistent and generally acceptable definitions cannot be over-stated. All important terms are, accordingly, to be defined, including the term “non-wood forest products” and “ non-timber forest products”. It is possible to adopt one of the existing definitions of the terms involved, or develop a definition which is more appropriate for the purpose. In respect of NWFPs, being the subject/focus of the policy we are discussing, it is necessary to provide a classification, since there are a large number of NWFPs. Care should be taken to see that the classification is “consistent” with the existing and internationally accepted product classifications. Classification of NWFPs can be made on different criteria: Part of the plant (and nature of fauna) from which the produce is derived – e.g. whole plant, root, shoot, leaf, bud, fruit, bark etc., as well as inspects/bugs, small and large animals. Nature of the produce – e.g. edible products, fodder, exeudates, dyes and colourants, sweeteners, fibers, flosses, medicinal product etc. Category of uses – e.g. subsistence consumption, traditional uses, market consumption etc. Products of different categories may need some specific policy measures. V. Objectives Objectives are what the policy is designed to achieve. The principal aim of NWFP (and forestry) policy is to ensure ecologically sound and sustainable development of the resources (which is renewable), and to support economic development through balanced and appropriate measures of resource expansion, conservation, management and utilization, with all their backward and forward linkages and involving people in all stages of development. It is important that a rational balance between the ecological and economic roles of NWFPs (and forestry) is established. Long Term Goal The long-term goal of policy on NWFPs (and forestry) should be to substantially enhance the contribution of NWFPs (and forestry) to the Country’s ecology and economy. This long-term goal is to be more explicitly defined by specific categories of objectives and related policy measures. Depending in the nature and scope of policy measures, the situation relating to supply and demand for products, efficiency of management, rate of deforestation, effectiveness of conservation, flow of investment funds 188 etc can change. Thus, achievement of policy objectives depends on how effectively the policy measures are adopted and implemented. Specific Objectives An indicative list of specific objectives that should govern the NWFP (and forestry) policy are given below: To effectively conserve, rehabilitate, replenish, expand, enhance, develop and manage the NWFP (and forest) resources of the country, as a renewable national asset, to meet the vital needs of the people for these goods and services, now and in the future; also, to meet the demands of export market. To protect the NWFP (and forest) resource (all forest lands generally and watersheds particularly), against degradation by deforestation, soil erosion, shifting cultivation, land slides, floods, fire, grazing, and other natural and anthropogenic causes, and to enhance their beneficial roles and functions. To protect wild flora and fauna, conserve ecosystems, preserve bio-diversity, maintain essential ecological processes, and improve the environmental services of forests through maintenance, and where necessary restoration, of ecological balance and rational management, and use of NWFP (and forest) resources. To enhance the productivity of NWFPs (and other forest produces) in terms of quantity and quality through appropriate technical and management interventions; and also to obtain enhanced value for the produces through quality enhancement and marketing strategies. To promote and support domestication (as farms and plantations) of NWFPs for increased productivity, and indirectly to conserve the natural biodiversity resources. To promote efficient and waste-free harvesting, processing, and utilization of NWFPs (and other forest produces) in order to obtain increased net benefit/profit/rent or return on investment; to promote NWFP (and forest) based economic growth and export earnings (though increased exports or import substitution) of the country. To achieve, for NWFPs, a change from: lower value to higher value production (involving phasing out weaknesses and phasing-in strengths); subsistence –orientation to profitable market-oriented production; fixity of static traditions to flexibility of dynamic progress, for improving competitiveness; competition (among small and medium producers in the same area) to collaborating partnerships. These changes will facilitate increased access to markets. To provide increased socio-economic benefits to the people of the country by contributing to: the basic needs of families, poverty alleviation, employment creation, income generation and better living conditions, and accelerated agricultural and rural development. 189 VI. To obtain improved and remunerative (fair price) market access through enhanced competitiveness. To develop and support a net work of appropriate and suitably linked institutions at different levels, consisting of public, private, corporate and co-operative sectors involved in NWFP (and forestry) development, each with its specific institutional policy (vision) and mission, legal instruments and financing mechanisms suitably updated and modified on a continuing basis, and together capable of addressing the present and emerging issues and challenges in a smooth and co-ordinated manner. To facilitate human resource development for NWFP (and forestry) development in qualitative and quantitative terms, including education, training and improvement of skills and capabilities. To promote and support goal-oreinted research on NWFPs (and forestry), and to improve research capabilities through adequate training, appropriate institutional restructuring and provision adequate incentives. To introduce new and modern technology to continuously upgrade the sector. To establish an effective system of extension for disseminating new and improved technology, research information and knowledge for the benefit of farmers and rural community; for arranging delivery of improved planting materials and other inputs; and for creating public awareness about the roles and contributions of NWFPs (and forestry). To establish an adequate and effective mechanism of co-ordiantion with other sectors of economy having influence on NWFPs (and forestry), and also with international agencies and institutions concerned. To enhance the knowledge and information base of NWFPs (and forestry), including acquisition and generation of new knowledge and information, and to disseminate them widely. To institute and institutionalize a system for: regularly reviewing and updating the NWFP (and forest) resource situation in the country; assessing the need for changes in policies and priorities; and reporting the results periodically to the appropriate national/government body. Policy Measures Policy measures represent action areas and they are linked to the objectives. While one measure may address more than one objective, often several measures may be required to address one objective. Implementation of policy measures may call for specific strategic elements (e.g. human resource development, involvement of private sector, trade negotiations, new legislation, regulatory measures, enabling provisions for the executive branch to develop enforcement mechanisms and so on), as appropriate. VI-1 Ownership Ownership and tenurial rights over resources (NWFPs, forests and lands) should be made very clear, to avoid legal complications. NWFPs grow, or are grown, in governmentowned and controlled land, public waste land, private land, community land etc. Often, government exercise control or right over certain specified produce (e.g. sandal wood in some countries) found in private lands, thus restricting the rights of the private sector. Also, in 190 some cases, forests owned by government are managed and utilized by corporate, private and/or co-operative sectors under various types of instruments. In these varying situations, tenural security is very important as a policy incentive to facilitate investment and entrepreneurial commitment. This is an area requiring appropriate legislation and legal instruments, covering all aspects (including penalties for violations), for effective implementation. Also ownership aspects are linked to other policy aspects, particularly relating to organizational structure; and these linkages also needs to be made explicit and transparent. Availability of related skills, training facilities and information are relevant strategic elements. VI-2 Resource Inventory In a general sense resource inventory is an accounting and/or assessment of NWFP (and forest) assets; in its technical sense it covers not only the details/measurement of area and stocking, but also the scientifically estimated growth and yield by specified categories such as gums, resins, fibers, phyto-chemicals aroma chemicals, etc. (since NWFPs are a heterogenous group). In a situation of technological limitations, inventory can be based on a sample survey, if adequate for the purpose in hand. Also, the NWFPs in the management area can be classified as: those in current use, those with medium term prospect, those with less likely prospect and others. (This could be based on local knowledge or research findings on new products, or new uses for old products). In a scientifically advanced stage, it may be possible to estimate the yield of active ingredients (e.g. Azadirachtin from Melia azadirachta, Trimyristin from Myristica fragrans). But, due to lack of appropriate inventory methodology, in some countries, even the most common of the NWFP resources such as rattan and bamboo have not been fully assessed. In respect of resource surveys there is also need to consider the market for the product, both current and future. Thus, inventory of NWFP resources has two important aspects: physical inventory of flora and fauna and their chemical prospecting for active ingredients such as alkaloids, steroids and saponin. Only a small percentage of flora and fauna has been examined for chemical, and particularly pharmaceutical activity. There is urgent need for comprehensive inventory of NWFP resources to be undertaken on a well planned and phased manner. Inventory (including bio-prospecting for active chemical ingredients of plants, microorganisms, etc) of NWFPs is complicated, requires special skills, and is time consuming and expensive. Only very few countries have embarked on such an initiative. These investigations for fibre, phytochemicals, aromatics, gums, resins, etc. have to consider: the nature and extent of distribution of specific plant resource; their density of occurrence; their potential yield from wild sources under different treatments; their suitability to be grown under multi-species environment (e.g. enrichment planting under natural forest cover and agro-forestry) or under monoculture. Inventory should also include fauna. Traditional knowledge and ethno-biology can contribute to provide indications on how to proceed for developing NWFPs. Key questions that such investigations should address include: what NWFP resources are available in the management area? What are their ecological, biological and chemical characteristics? What products can they produce? How abundant are they, including their regeneration? What are the social and cultural values associated with their use? 191 Inventories help to understand the real situation of resource base (e.g. which of the produces are commercial and available for sustainable production), and to prioritise produces/species for production and conservation. Some of the strategic interventions required are: land use/capability classification; acquisition/enhancement of knowledge and technology; collaboration with corporate sector (e.g. with pharmaceutical companies in respect of bio-prospecting)*; promulgation/strengthening of laws on contracts, negotiations etc. This policy measure has close linkages with marketing, research and development, human resources and skill development, and institutional arrangements. VI-3 Resource Management NWFP (and forest) resource management, among others involves protection of the resource (from fire and other injurious agents), enhancement of quality and productivity, continuous tending, control of illegal activities and bio-diversity conservation. [The only way to save biodiversity in a country facing growing developmental pressures is to find nondestructive ways of using it]. Some of the strategic interventions in this regard are: ensuring integrity of management units, enhancement of technology, research support, prevention/control of illegal activities (by use of appropriate legal instruments/penalties, and also by use of “socialfencing”), fire protection, involvement of stakeholders and management planning. Since NWFP (and forest) resource management is central to the policy, it has linkages with all other policy measures. VI-4 Domistication Domestication of plant species (involving several stages/steps such as: identifying species suitable for domestication, plant introduction trials and selection of suitable species, genetic improvement, planting stock development, developing improved agronomic practices and technology for intensive cropping), is a means of ensuring controlled production and economic success. In that sense, domestication is both a policy and a strategy. It serves to expand the resource base and indirectly to safeguard the wild NWFP resource available in natural forests. Efficiency is a prime consideration in artificially raising NWFP resources. Some of the strategic elements to be underlined with regard to this policy measure are: site selection based on appropriate criteria, species–site matching, identification of seed sources and seed certification, management planning, R & D for improving technology, attracting investment funds, legal protection and incentives for investment in domestication activities, autonomous organizations, infrastructure development etc. This aspect of NWFP development has clear linkages with market and institutional arrangements (e.g. credit availability, legal protection, taxes and charges, governance etc.) It may be noted that under the current level of knowledge and technology, many of the NWFP species are not (yet) amenable for domestication, economically and ecologically. * Activities of the National Institute of Biodiversity (INBIo) of Costa Rica, in collaboration with Merck & Co, a pharmaceutical giant, for chemical prospecting in the forests for developing drugs, is a case in point. Other countries and other pharmaceutical companies have embared on similar ventures. “Biodiversity to work for society” calls for sophisticated technology for biodiversity prospecting, bio-diversity inventory, biodiversity information management and biodiversity information dissemination. 192 VI-5 Harvesting of Produces Harvesting (and collecting) of NWFPs (and other forest produces) happens in the interface between resource management and resource utilization. The harvesting system (including: scientific assessment of harvestable quantity and maturity for harvesting/collecting; institutional arrangements; tools and techniques; pre and post-harvest treatments as a measure of increasing the value of harvested produce) has strong influence on the condition of the crop and yield in the succeeding cycle, whether annual or periodical. Special technical/harvesting prescriptions are required for crops or plants producing different types of produces – leaf, bark, roots, stumps, shoots, flowers, fruits etc. (and also for harvesting whole plants/herbs, mushrooms and ferns). Problems of law enforcement and governance in forestry are mostly related to harvesting and utilization of forest produces including NWFPs. Violations of technical and legal prescriptions occur because of the avarice of the perpetrators. Illegal harvest is often linked to powerful chains. Strategies involved for ensuring better harvesting practices are: improvement of tools and techniques; low impact harvesting; enforcement of legal instruments for ensuring sustained harvest, and to prevent wasteful harvest; measures to control illegal harvest; stringent penalties. Harvesting has linkages to resource management, marketing and trade, research and technological innovations, capacity building and other institutional arrangements. VI-6 Processing and Value Addition Processing of harvested produces adds to their value, adds to their storability and shelf life, enhance their quality for consumption, and support trade on a wider scale, apart from providing increased employment and income earning potential. The more the producers (and countries) move up in the value chain processing, the more will be the benefits accruable, through product refinement. While benefits from primary production may be accounted for by comparative advantages provided by locality factors, the benefits from value-chain processing depends mostly on competitive advantages developed through conscious efforts and planning. In planning for industrial development based on NWFPs (or other forest produces), it is prudent that the level of processing (primary, secondary and further downstream) and sale of operations (cottage, small, medium and large) be so designed as to obtain maximum social and economic benefits (value addition). The proportion of the different scales, categories and sophistication of processing in a country is a function of development; the sophisticated and larger units tend to displace the traditional and smaller units, with economic progress. The strategies to be used in enhancing processing and value addition, among others, include: acquisition of technology, human resource development, generation of competitive advantages, enhanced research inputs, collaboration with enterprises in advanced countries, availability of credit, product diversification, creation of appropriate business environment, and investment friendly rules and regulations. Processing has linkages with: resource management, harvesting, research and technology development, trade and marketing and institutional arrangements. VI-7 Marketing and Trade Trade is a prime avenue for economic development; market and marketing are dominant factors in this regard. Success or, other wise, of a production venture is decided in the market. The factors deciding the performance and competitiveness, in the market are: 193 product demand, product quality, packaging and presentation, price, product consistency, consistency of supply schedule, competition from better and cheaper substitutes, and so on. These in turn are influenced by: cost of production, distance and cost to reach the product to the market, transport and storage facilities (e.g. refrigerated vehicles) available etc. Apart from the above, trade (particularly international trade) is also affected by other factors such as tariff and non tariff$ regulations, import/export quota restrictions, taxes and charges, foreign exchange regulations and so on. There are, however, several factors, which distorts trade and market, such as: existence of illegal practices including illegal trade and unhealthy interference of middlemen. Appropriate marketing arrangements (e.g. marketing co-operatives, trade agreements, cartels, e-trade) are vital. Information on several related aspects are crucial to improve market access. Product development and enhancement should go on continuously as part of product promotion, apart from brand endorsements, trade fairs, business meets, and other promotional efforts. There is need for a policy provision on prices and rents on NWFPs ( and other forest goods and services), to signal their value and scarce nature in relation to demand. Provision is also essential to protect intellectual property rights relating to traditional knowledge on flora and fauna and to the sovereign right over the value of information on biological and chemical diversity. Overall, there is need to reduce/eliminate the unnecessary (weak) links in the chain from the production unit to the market. Producers associations/groups if properly organized can effectively undertake marketing activities (including processing); there is strength in numbers, even informal grouping of producers (or net works) can help; use of venture capital helps to support product development; certification, eco-labeling etc. will support market confidence; and government’s facilitation role and commitment is crucial. Market outlook studies are important for designing strategies for future. The prospect for sale of carbon credits, afforestation certificates and other forms of internationally tradable instruments under CDM (Clean Development Mechanism) of the Kyoto Protocol should be assessed and suitably pursued. The strategies involved in marketing and trade development, among others, are: measures to build market confidence; market research; market information system; research support; certification system; product diversification; elimination of unnecessary middlemen and enhanced producer-consumer contacts; institutional support; and legal and regulatory instruments. Marketing and trade aspects are linked to production and processing, research and technology, institutional arrangements and regulatory measures. VI-8 Research NWFPs and research in forestry are both neglected areas. This double neglect is evident in the decreasing priority for NWFP research. There is hardly any need to further stress the importance of research (covering basic, applied and strategic research) and technology development for enhancing productivity and competitiveness in the area of NWFPs (and forestry), and for supporting sectoral growth. Research and technology $ Non tariff trade restrictions include: quality and technical stands; health and safety regulations; certifications for organic production, fair trade, origin, chain of custody etc. 194 development are an area of unlimited scope to create and maintain a competitive edge in the market. The situation of research on NWFPs (and forestry) in Lao PDR is very weak, characterized by lack of funds, facilities, skills and manpower. There is a need to promote research and technology development relating to the different aspects of NWFPs such as resource development, propagation, domestication of species, conservation measures, environmentally sound harvesting, post harvest treatments, product development, processing, marketing and trade. It is necessary, however, to avoid unnecessary repetitions and to use limited funds effectively. Farmers participation in research activities can enhance the applicability of research results. The emphasis should be for objective oriented research. Research objectives should feed into the development objectives of the sector, which in turn should be closely linked, to the country’s development objectives. Once the weaknesses and inadequacies afflicting NWFPs (and forestry) research are removed, the existing institutions (with due modifications and strengthening) can progress towards self-reliance and excellence. Strategic interventions required for strengthening research, among others, include: provision of targeted funding and improved facilities; improved skills and human resources; institutional autonomy; technology transfer; collaboration with countries of excellence; networking with universities and private initiatives in NWFP research; client participation. Since research is essential on all aspects of NWFP (and forestry) development, research linkages exist with all the aspects. Institutional and policy support is prime, in strengthening NWFP (and forestry) research and technology development. VI-9 Instituional Arrangements Sectoral policy itself is apart of (or rather at the apex of) the institutional arrangements of the sector. It is the guiding instrument, and mother of all legal instruments, pertaining to the sector. Specific components of institutional arrangements, among others, are: Legal instruments (laws, rules and regulations). Information system (statistical and non statistical). Planning and programming. Funding/financing. Human resource development. Extension and outreach People’s participation. Monitoring and evaluation. Resource accounting. Co-orientation and conflict resolution. Organizational system. Legal Instruments Legal instruments comprise a system of laws, rules and regulations, touching on every aspects of the sector – ranging from resource management and protection, resource 195 accessibility and tenure, utilization and trade, and monitoring and evaluation to royalties and charges, peoples participation, incentives, operational safety, powers and functions of sectoral organizations, control of illegal activities, protected species, intellectual property rights, pair wages, financing and so on. Laws, rules and regulations are meant to be strictly enforced, without fear or favour. Also, all rules and regulations are to be widely made available (and published), so that all concerned are fully aware of their implications. Some of the sectoral interface activities are also influenced/controlled by laws of other sectors/agencies – dealing in trade, price stabilization, land use, investment, environmental conservation, taxation, criminal offences, co-operatives and autonomous societies etc. etc. It is necessary to prepare and release a comprehensive compendium (or handbook) of all laws, rules and regulations of the sector (with their legal interpretations by courts of law, where relevant), providing cross-references to the laws, rules and regulations of other related sectors/agencies which affect NWFPs (and forestry). In addition to the formal legal instruments, there are the technical manuals/codes (e.g. harvesting codes for different species), which are implemented through provisions the contractual and other in legal agreements; as such they have a semi-legal status. Overall the legal framework relating to NWFPs (and forestry) in Lao PDR is extremely weak. There is need to review them for their adequacy with reference to the policy objectives to be achieved, and to modify/strengthen them suitably. Information System NWFP (and forestry) sector development needs to be based on reliable information relating to resource endowment, technology, market, price, competition, infrastructure and so on. The information required are of both of statistical and non statistical nature including maps, observations etc. These are necessary to support studies on sectoral outlook and are vital for planning. Information system includes several components – namely, information sources, information services, information management, dissemination mechanisms, target users and feed back mechanisms. Information technology (IT) has advanced considerably; and IT-based innovations are revolutionising the way the business is conducted. Lack of adequate and reliable information is a major deficiency of the NWFP (and forestry) sector of Lao PDR. This deficiency is to be addressed on a priority basis, availing the new and developing information technology, to the extent possible. There is also a need to change the wrong perception that forests which do not produce timber are of no value. Planning and Programming System Planning (and the plans) can be broadly categorized as strategic (e.g. master plans, perspective plans, long term plans) and operational (e.g. management plans, working plans, action plans, short term plans). Plans and programmes help to translate the policy objectives in an organized, efficient and balanced manner. Planning is highly demanding on data; and quality of planning depends on analysis of issues based on correct information and scientific data. Research feeds into the process of planning (and decision making) through providing technical/scientific information and technological outlook, thus helping to develop a structured programme of action. 196 Lack of reliable information and consistent data is a serious inadequacy affecting the quality of planning in Lao PDR. It has been noted in several instances that the existing statistical information are weak and incomplete and lack consistency. This needs urgently to be corrected. Strategic plans are developed based on analysis of outlook and scenarios – specifying objectives, outputs, phased activities (structured programmes), requirement for funds/facilities and human resource, role of stake-holders, criteria for monitoring and evaluation etc. Strategic planning is not likely to succeed without strong support from the top levels of administration. Strengthening/modification needed in the organizational system would depend on the institutional importance assigned to strategic planning and the level of its integration with sectoral decision process. But, often, it is seen that strategic planning is treated as a cosmetic, but low priority, requirement. Why? Because there are in many cases, other interests which compromise the genuine professional/scientific and efficiency considerations. Operational planning provides prescriptions, schedules and other pertinent directions for implementing components of strategic plans – either by programmes, projects, subjects or activities, or by geographic units. In respect of NWFPs (and forestry), a management unit is defined by geographic area. Because of ecological interactions between different land types/classes, the concept of “landscape planning” is of great relevance to NWFPs and forestry. A proper system of planning and programming does not exist for NWFPs (and forestry) in Lao PDR. This is another essential area where priority attention is warranted. Funding and Financing Funds and finances are required to fuel the engine of development. Financing/funding for NWFP (and forestry) development can come from several sources: forest revenue, taxes and charges, private investment (including foreign direct investment), loans and savings, revolving funds, special targeted funding arrangements and so on. To support regular flow of funds, and financial autonomy, several countries have developed innovate mechanisms such as forest funds, private ledger account and special revolving funds. In supporting local private sector or corporate sector investment, commercial and other banks can play a crucial role. Support for the large number of small investors, whose sources of funds are their limited personal savings and loans from friends and relatives (and middlemen), rarely comes from any formal credit facilities. In some countries, micro-credit facilities have been developed. The credit administration should have the capacity to see that the investment does not end up as failures. There is need to establish a sound system of fund mobilization and utilization for supporting development of NWFPs (and forestry). Human Resoruce Development Development of capable and competent human resource is a vitally important strategy measure in all sectors. Human resource management/development involves development of capability and skills (education and training), recruitment standards, job analysis, workload analysis, skill need analysis and so on. Along with core competency, development discipline is also important. In the NWFP (and forestry) sector of Lao PDR, capacity is weak or lacking in a number of specific areas – e.g. plant chemistry, bio-prospecting, designing of resource 197 survey, conservation management, plant genetics, process technology, international trade, law, economics and planning and soon. A new policy for NWFPs (and forestry) has to address this aspect seriously. Extension and Outreach Apart from delivering technology and other inputs (seeds, fertilizers) to farmers/communities, the knowledge and insight to be achieved through a comprehensive system of extension and information dissemination can help attitudinal changes, awareness creation, aspiration building, and efficiency in production. Farmers need to know where, what for, and how the produces (e.g. cinnamomum bark, cardamom) produced and supplied by them are used; and the increase in the value of the raw produces along the route to the final market. Important action components in this regard are: assessment of information needs; discussions; design of extension programme and testing; demonstration of good practices and their potentials; cross site visits; dissemination of price and market information, and information about potential opportunities. Training and seminars on concepts, use of information technology, reference to information materials/bulletins, and contact with relevant international agencies are all part of accessing information and updating knowledge. Needs of extension for NWFP development are complex; and existing facilities in Lao PDR are extremely inadequate. People’s Participation People’s participation (in development activities) generally refers to involvement of the people in planning, decision making, implementing and benefit sharing. Importance of people’s participation in NWFP (and forestry) development has been highlighted in several studies. While people’s participation as a concept has been generally accepted, it has been variously interpreted with reference to its scope; and, there are several institutional constraints in implementing it effectively. Because of its importance, people’s participation is often made a policy imperative in many cases. Monitoring and Evaluation This is an aspect which is talked about a lot, as vitally important to ensure better performance, but rarely carried out. This should, therefore, find a place as a ‘policy prescription’. Resource Accounting Lack of a NWFP (and forest) resource accounting system, as part of the System of National Accounts has resulted in a lack of awareness about the valuable contributions of the sector, and the failure of the sector to get the priority it deserves. A clear awareness about the value of NWFP (and forest) benefits and establishing a system for forest resource accounting will, to some extent, help to improve the situation. Co-ordination and Conflict Resolution Conflict of interest between and among the producers, processors, traders and government officials at the national, provincial, district and village levels (as well as between these levels) tend to arise often. Problems may also arise because of lack of inter-sectoral coordination. Major conflicts between forest bureaucracy (dealing with NWFPs) and the public result mostly from the difference in interpreting the policies and rules. Also, conflicts arise 198 from conflicting policies of other sectors or aspects (including cross-sectoral aspects). Collaboration and co-ordination with other sectoral institutions and stake holders will help to reduce such conflicts and to avoid flash points of confrontation. Co-operation with international agencies active in the country, and co-ordination of their activities in the field of NWFPs (and forestry) is another dimension of this institutional function. Organizational System Organizations are meant to be the creations of policy, for implementing the provisions of the policy. The type/nature of organizations are often adjusted to the nature of ownership (private, public, mixed), management responsibility (private, public, community/co-operative) and tenurial arrangements (e.g. short medium or long term leases). Organizational structure, accordingly vary depending on the ownership of forest resources and other relevant factors. A structured organizational system is the crucial means of implementing policy mandates and enforcing related laws, rules and regulations. Policy changes, often, result in restructuring of the sectoral organizations (public and private, small and large, traditional and modern); and the nature of restructuring is to be based on a keen consideration of the situation and the nature and severity of deficiencies to be addressed. Organizational structure is the rational arrangement of different functional units (agencies, establishments) in an integrated, and co-ordinated manner. The component units of the system may be public, private or co-operative, performing enforcement (authority) and development (enterprise) functions. A general principle accepted in several countries is that the public administration should perform its mandate and mission of enforcing the national policies and regulations and facilitate sustainable development. The responsibility for organizing, implementing and managing production and development activities should be entrusted to autonomous enterprises. Forestry (and NWFP) sector organizations need to be re-structured by separating its authority functions and enterprise functions. The functional incompatibility of forest sectoral organizations limits the effectiveness of public forest administrations (PFAs) in implementing current responsibilities as well as adjusting to institutional reforms required. Because this dual role is, often, the root cause of many of the problems facing the forestry (and NWFP) sector, there is need to separate them. Experience has proven, throughout the world, that administrative bureaucracies are not the appropriate institutions to develop and manage enterprises. There are lessons to be learned from that experience. Along with the incongruity of being in charge of both authority and enterprise functions, the PFA is, most often, characterized by: top-down command structure, inadequate delegation of decision powers, emphasis on process than promptness, cumbersome procedures and irrational contracts; and administrative expediencies overshadowing professional proprieties. Government agencies not only have their rules and regulations but their own culture. And, culture needed to run an enterprise profitably and efficiently is very different from those seen in law enforcing bureaucracy. For effectiveness, the authority enforcing regulations to achieve policy goals should be strict and rigid, and may often tend to the process-oriented; and the enterprise should be autonomous, innovative, accountable, transparent and flexible to meet the ever-changing 199 situations, and above all result-oriented. Both cannot be run efficiently under the same set of rules and guidelines. The importance of this functional separation has now been better understood. VII. Policy Implementation While the findings and considerations can be neatly grouped or categorized, in actual implementation of NWFP (and forestry) development, several activities will have to be taken up simultaneously and executed by stages. Therefore, for rational development, the various strategic proposals for enhancing market-oriented NWFP (and forestry) development are to be addressed in its immediate, short, medium and long term aspects. Corresponding to the time ranges mentioned, four development phases/stages can be definded, total duration of which may be kept flexible, but is not to exceed 20 years – (i) initiation/design phase (immediate term); (ii) transition/testing phase (short term); (iii) consolidation phase (medium term) and (iv) ‘towards auto-expansion’ or steady state phase (long term). Length of the phases may, as appropriate, vary between 3 to 6 years. Each of the phases will involve several inter-linked activities, to be defined in a perspective planning document. In the design phase (immediate term), it is necessary to define the actions during the following phases in the form of a long term plan, apart from immediate actions for awareness raising, capacity building, improving technology and agronomic practices, initiating important research programmes, rationalizing laws and regulations, establishing partnerships and collaborative arrangements, initiating institutional restructuring etc. It is necessary to involve the stakeholders in preparing the long term plan. A task force of qualified exports may be given the responsibility to formulate the plan. VIII. Reporting The effectiveness of policy implementation is to be closely monitored, and reported to the highest legislative authority (National Assembly or Parliament) in the country. Accordingly, the “state of NWFP (and forest) resource in the country and its utilization be appraised periodically; it be made mandatory that a detailed forest resource planning document be submitted to the highest legislative body by the appropriate authority, at a regular interval of 8 or 10 years. Along with that, the long term perspective plan for forestry (national forest programme or national forest strategy) can be updated and extended for a further period of 20 years. The strategic elements to translate the above into action involve: Collection, collation and analysis of relevant data and information. Forest cover monitoring and evaluation. Policy evaluation from the point of view of resource sustainability. 200
