Teak just got a bit tougher
By D Rohadi, JM Roshetko, A Perdana, M Blyth, N Nuryartono, N Kusumowardani, AA Pramono, N Widyani, A Fauzi, MJ Sasono, P Sumardamto and Manalu
Improving economic outcomes for smallholders growing teak in agroforestry systems in Indonesia
Teak is one of the most valuable timber species in Indonesia. The demand for teak, in both the international and domestic markets, is always greater than its supply. In Indonesia teak has two major sources—industrial teak plantations concentrated in Java, and smallholder plantations spread across the country. While the supply of teak from industrial plantations is declining, that from smallholder plantations is increasing.
World Agroforestry Centre and partners implemented “Improving economic outcomes for smallholders growing teak in agroforestry systems in Indonesia“, a 4-year project carried
out in Gunungkidul District, Yogyakarta Province, Indonesia. The project aimed to improve the livelihoods of smallholders growing teak in Indonesia by engaging in activities that would improve returns for smallholder teak producers, provide incentives for smallholder participation in profitable teak production, and enhance market access for smallholder teak producers. Working in this way to improve smallholder systems and markets, with a focus on the productivity and sustainability of forestry and agroforestry, is a key focus of the CGIAR’s Collaborative Research Project 6 on Trees, Forests and Agroforestry.
Despite the fact that two-thirds of the region’s forest is made up of smallholder teak plantations, there are several impediments to the progress and development of the industry, including low quality of wood; lack of capital to invest in teak planting and inability to wait the duration of a teak rotation before obtaining returns; limited access to market information/linkages; and unfavourable policies.
The project addressed these through a number of participatory processes, including cross visits, training, farmer demonstration trials and a silvicultural manual. Early results were encouraging—demonstrating the success of silvicultural treatments and the importance of using quality teak germplasm over wild seedlings.
Teak farmers in Indonesia are generally unable to borrow money from financial institutions because of a lack of collateral. Findings show that 84% of teak producers harvest their teak
prematurely when faced with an urgent need for cash, preventing them from realizing greater potential benefits. To address this, the project tried to improve farmers’ understanding of microfinance institutions. Various activities such as comparative studies, group discussions and the establishment of a farmers’ microfinance institution, have provided farmers with better access to microfinance. Group-based lending scheme trials were also carried out.
In the project area, farmers sell their teak trees to middlemen who in turn sell to wood processors. Farmers have a low bargaining position and need help to secure higher teak prices. To address this, the project helped farmers to access better market information, and improved their abilities to estimate the value of their teak. The project also supported the development of a collective marketing system and developed policy options to simplify the regulation of wood transport at the local authority level.
Teak farmers at Gunungkidul district benefitted in many ways from this project, and lessons learned can be applied to smallholder teak farmers outside the project sites. Silvicultural
techniques introduced by the project team are now being used by some farmers. Project findings have been disseminated at seminars and conferences, both at national and international level, contributing to better knowledge of strategies to improve the economic benefits from teak plantations to households. The experience will also be useful for developing smallholder timber plantations in other areas. A major recommendation of the project: the development of strong relationships between farmer groups and wood processing industries.
Read the final project report here:
Rohadi D, Roshetko JM, Perdana A, Blyth M, Nuryartono N, Kusumowardani N, Pramono AA, Widyani N, Fauzi A, Sasono MJ, Sumardamto P and Manalu P. 2012. Improving economic outcomes for smallholders growing teak in agroforestry systems in Indonesia. FR2012-11. Canberra, Australia. ACIAR. 64 p. [RP0287-12]