Contribution of Forestry to Poverty Alleviation - APFNet

Satyawati’s (1991) field research reflects some limitations of employment in wood-handicraft shops
in Central Java and rattan-handicraft industries in Cirebon county. The workers were getting a small
percentage of the profit derived from the products, and as operations generally depended on orders for
the products, they were at risk of losing their jobs if there were no orders. Although wood and rattan-
handicraft enterprises were thriving at the time, market saturation and the high cost of raw materials
reduced the profit of the entrepreneurs, driving some to reduce costs by lowering their workers’ wages
that in turn brought the workers to the verge of poverty. Wood and rattan handicraft industries are
viable and thriving industries but need support in terms of making wood prices affordable, ensuring
sustainable supply to the raw materials, better training and credit facilities.
Noting that SMEs can be a leading force of economic growth and employment creation, the World
Bank and the IFC (Policy Brief 2004 in WB 2006) recommended reforms to improve SMEs, such
as reducing regulatory burdens, streamlining tax administration, increasing access to credit and
supporting business education. Promoting SMEs, which have generally proven to be more effective in
absorbing labor than large capital-intensive companies, is identified as a strategy in the revitalization
of the forestry industry.
NWFP commercialization
Over 90 NWFPs are traded in the local, national or international markets (FAO 2002 in MoF 2009), but
records of their production and extent to which the poor are benefiting from the trade are lacking.
NWFPs provide jobs to farmers. For many households in Kalimantan, rattan is the main or secondary
source of cash as well as emergency income (Seibert n.d.). NWFPs are accessible to the poor because
of their low market value. However, as NWFP products become valuable, “powerful interests generally
appropriate the benefits” (Dove 1993 in MoF 2009). Much of the value-added and profits from NWFP
activities are in transport and marketing, from which poorer households tend to be excluded.
The entry of logging concessionaires in forest areas improved accessibility to remote areas, allowing
those engaged in the collection of NWFPs (e.g., rattan) to bring their products to the market. However,
logging often destroyed the local communities’ resource bases for NWFPs and the conversion of forests
into monocrop plantations (such as oil palm or rubber) meant permanent loss of NWFP sources and
consequently, the destruction of customary NWFP production and management practices. Investments
in the rattan industry in 1970s–1990s encouraged rattan production (Silitonga n.d.). The prices of rattan
were however depressed by restrictive trading policies on raw rattan, thus, reducing farmers’ incomes
(FAO 1997 in Tiwari 2007).
Payments for Environmental Services (PES) and Carbon Payments
There are a number of efforts in Indonesia to protect environmental services (ES) and develop the
markets for these, though these are is still at an early stage. PES provides some potential to contribute
to the livelihoods and welfare of the poor living in and around the forests.
A review of 81 case studies related to environmental services (40% related to biodiversity conservation
and the rest equally distributed for watershed protection, carbon sequestration and landscape beauty)
notes that only a few cases have a truly functioning ES market or have proposed an ES market
(Suyanto et.al. 2005). In some projects, the sellers are the farmers’ groups and, in others, government
and National Park community (mostly landscape beauty). The range of rewards includes land leases
to potential monetary benefits from carbon credit, water user’s fees, eco-tourism concessions and
entrance fees (Ibid.).
Payments for watershed regulation
Since 2001, the World Agroforestry Center (ICRAF) has been implementing the Rewarding the Upland
Poor for Environmental Services (RUPES) program which aims to improve the livelihoods and reduce
poverty of the upland poor while supporting ES. At the local level, RUPES has been supporting the
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