Community-based - J-Stage

The Japanese Forest Economic Society

NII-Electronic Library Service

The JapaneseForest Economic Society

pt*MMblfi VoL58No,1 (2012)

Originat Artjcle

Exploring Potentials of Forest Certification

Forest Management in Indfor Community-based

.

onesla

HARADA Kazuhiro", ROHMAN", SILVI .Nur Oktalina"" and WIYONO""

'School

of Human Science and Environrnent, University of Hyogo, Himeji, Japan

"Faculty of Forestry, Gadjah Mada University, Yogyakarta, Indonesia

"*Vocational

School, Gadjah Mada University, Yogyakarta, Indonesia

Indonesia has instituted both the internationally recognized Forest Stewardship Council (FSC) certification and a national certifica-

tion scheme known as bembaga Ekoiabel indonesia (LEI, Indonesian Ecolabelling Institute). LEI was developed by strong gov-

emment initiatives that included relevant parties. This article explores the social and economic impact of a national cenification

scheme in select villages, and it analyzes the programs' potential for further development. Field observations, interviews and sec-

ondary data collection were cenducted in December 2005, Octeber 2006 and March 2010, A key findi]g of this research is that a

sustainable approach to forest certification and the management of certifieci community forests can en]y be achieved through com-munity participatien. in particular, sustainabtity is best achieved by involving local NGOs that can, in turn, support existing farm-ers' groups that werk on forest certification and management. The certification model used in the villages had shortcomings: for

example, therc was an imbalance between the supply of certified wood and companies' demand, a lack of public awareness regard-

ing the value of cenification and undeveloped market mechanisms to sell certified wood. However, the forest cenification rnodel

could be seen as an innovative approach with great potentia] to benefit local communities and to ensure sustainable forest manage-ment.Key

words: forest cenification, LEI, community-based forest management, Indonesia

I Introduction

Forest certification is an innovative, voluntary in-stmment for forest management that emerged in the

1990s. Certification is designed to enable consumers to

identify wood products that were sourced from forests

under sustainable management, Certification systems

inc]ude the fo11owing components: 1) a standard for

sustainable forest management, 2) a standard chain of

custody that allows the wood materials in the final

product to be traced to their souree, 3) the accredita-

tion of independent expert organizations, 4) an evalu-

ation of the fbrest management and the chain of cus-

tody by accredited bodies according to established

standards and 5) rules for product labeling (Nussa-baum and Simula, 2005).

There are high expectations that forest certification

will promote and reward responsible fbrest operations

in the following ways: 1) by employing broad manage-

ment standards that include ecological, social and eco-

nomical criteria, 2) by requiring expert assessment by

neutral panies and 3) by enabling buyers to identify

products whose wood materials originate from well-

managed forests. Currently, most cenified fbrests are

located in the north, and only a smal1 portion of tropi-

caYsubtropicai forests have been certified (Tacconi,

'mewtft E-mail : [email protected]

2007: 253).

Indonesia is a pieneer among tropical countries in

introducing forest certification. Indonesia introduced

two certification schemes in the 1990s: Forest Stew-

ardship Council (FSC) and Lembaga Ekotabel indone-

sia (LEI, or the Indonesian Ecolabelling Institute).

FSC certification schemes are well-established in Indo-

nesia, and they have strong support from national and

international NGOs and other related international or-

ganizations, There were two main events that strength-

ened the Indonesian certification schemes, First, a local

NGO, Lambaga Alam 7}-opika indonesia (LATIN, or

the Indonesian Tropical Institute) granted certification

to preduction forests in Java managed by Perum Per-

hutani, the State Forestry Enterprise, under the Rain- t t forest Alliances SmartWood Program m 1990 (Down

to Earth, 200]:. 11-13). Second, the International

Tropical Timber Organization's (ITTO) guidelines re-

garding the sustainable management of natural tropical'fOrests

initiated serious discussion of forest certifica-

tion schemes (Elliett, 2000: 99-100). Countries im-

porting wood from Indonesia in the 1990s and 2000s

also pressured the Indonesian government to institute

fOrest certification programs. At the same time that the FSC standards went into

effect, domestic expectations for certified sustainable

fbrests rose. The public expected that a cenification

scheme would he]p to reforest areas that had been de-

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graded by illegal logging, an abuse that the govern-ment had failed to control. Although several NGOs

pressed for fundamental reforms of forest regulations

and customary land tenure befbre introducing cenifica-

tion programs, NGOs played a significant role in

achieving widespread forest certificatiQn in Indonesia

(Muhtaman and Prasetyo, 2006: 42-43). The govern-ment's role in establishing a national certification stan-

dard was significant as well (Elliot, 2000: IOO). Based

on the working-group discussions with re]evant stake-

holders, including NGOs, academicians and citizens'

groups supported by the Ministry of Forestry, LEI was

finally established in 1998 as an independent regula-

tory body for nationa] standards (Elliot, 2000: 103). 'The LEI certification scheme has been applied to three

types of fOrests: natural forests, man-made forests and

cornmunity forests,

Given that Indonesia has approximately 120 million

people who are forest-dependent, one of the primarychallenges in instituting LEI standards is to harmonize

forests' sustainability with local livelihoods (Ginting,2000 in Down to Earth, 2002), According to the prin-ciples of forest cenification schemes, stakeholders

managing natural or man-made forests are encouraged

to produce verified and certified wood while avoiding

conflict with local residents. However, natural fOrests

in companies' concession areas and the production for-

ests for Perum Perh"tani could often pass the FSC

forest cenification evaluation without consideration of

the social conflicts they might create, A report by the

Indonesian Forum for the Environment (WALHI et al.,

2003: 16) examined whether the principles associated

with customary land tenure and resource-use rights

could be applied in three cases related to Per"m Per-

hutani. WALHI insisted on a temporary certification

moratorium to resolve social problems that had be-

come obstacles to certification-scheme development,

Unlike cenification for natural forests, cenification

of community forests is less likely to be troubled by

conflict over land, and it can be implemented much

faster. Certification fOr community forests is designed

to create forest-management opportunhies for forest-

dependent people, to increase local residents' income

and to raise awareness about forest conservation

arnong local residents,

The objectives of this study are to elucidate the LEI

certification program and to identify potential benefits

and challenges ef certification for community forests

that are in the process of adapting to the existing

conomlcs VoL58 No.1 (2012)

forest-management system in Indonesia's Central Java.

This study suggests policies to further develop certifi-

cation programs in Indonesia, In particular, the fbllow-

ing sections will describe the process of acquiring Sus-

tainable Community-based Forest Management

(PHBML, or Pengelolaan Hittan Bersama Masyarakat

Lestari) certification, potential post-certification activi-

ties (such as formjng Iecal organizatiens), microfi-

nance systems and the process of deve]opjng Chain-ofi

Custody (CoC) forest certification. Finally, this study

will suggest recommendations fbr fumher developing

LEI PHBML certification,

ll Research Methods

The study was conducted by infbrmation gathering,field observations and interviews in December 2005,

October 2006 and March 2010. Infbrmation was gath-ered from relevant organizations, such as LEI, other

local NGOs and the Bureau of Statistics, lnterviews

were conducted with staff members of LEI and other

relevant NGOs, along with key inforrnants in the se-

lected villages,

Two neighboring villages, Selopuro and Semberejo

in Central Java'$ Wonogiri District, were selected as

case studies of community-forest cenification. Forest

certification fbr privately owned forests was first

granted to these villages in 2004 under the auspices of

a local NGO, PERSEPSI (Economic and Social Re-

search and Development Association),

M Site Descriptions

Wonogiri District, where tbe two selected yillages

are iocated, covers 182,236 ha of land consisting of

mountains (65%), wavy topography (30%) and flatland

(5%). It has 24 sub-districts and 298 villages with

239,297 households and 1,106,418 residents, averaging

5 people per household. Comrnunity fbrests are the

source of 40% of the population's income. Community

forests are private forests, and the fbrests are fu11y

managed by their owners, A ponion of the total land

(30,701 ha, 16,85%) is used fOr irrigation fields,

IS,320ha (8.4%) for community fbrests, 16,268ha

(8,9%) for state fbrests and 61,Oll ha (33.48%) for

bare land (BPS, 2003), PERSPEPSI (2003: 10-17) describes the two vil-

lages. They beth are located in Batuwarno Subdistrict.

Their distance from the subdistrict capital is approxi-

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Table 1

"+iecsc?fitl"fee Vol.58No.1 (2012)

Potential for trees in the two selected villages.

VillageNanieTotal Areas with trees in

areas community forests

(ha) (ha)

Number oftrees in community

forests (pieces)

Volume of timber in

community forests (rn3)TeakMahoganyTotalTeak Mahogany Total

Surnberejo 547

Selopuro 655

322221 290079110630 6058810105235066721168212097

7087209744941419411S81

Source: PERSEPSI (2003).

mately 3 km. 1[heir distance is approximately 50km

frorn Wonogiri City, the capital of Wonogiri District

and the local center of commerce. Residents earn their

livelihood by working for wages in the city. Soil con-

ditions in the two vil]ages are quite poor, with thin

topsoil and steny ground. Sumberejo and Selopuro

comprise 547 ha and 655 ha, respectively, The popula-tions of Sumberejo and Selopuro ure 2219 and 1,800,

respectively,

The two vMages participated in nationat reforesta-

tion programs in the 1960s, Their primary objective

was to reforest those areas where long-term deforesta-

tion had caused soil sterility and a hostile environment

for plants, animals and people (Simon, 2006). Local

residents participated in planting teak (71ectona gran-dis) and mahogany (Sveietenia mahogani) en the

boundaries between home gardens and other agricul-

tural land. Home gardens, or pekarangan, are located

in the village and provide fniit, vegetables, and so

forth. Other agricultural land is located outside of the

villages, primarily providing preducts from trees. Resi-

dents' efforts to plant trees on private property pro-

duced 1arge numbers of teak and mahogany trees, as

shown in Table 1 (PERSEPSI, 2003: 18-21),

IV PHBML Certification

PHBML is one of the LEI certification systems. The

PHBML certification system is a forest-management

scheme wherein certified wood can be produced by

community cooperatives on privately owned land, This

system was designed by LEI with the expectation ef

improving the local economy and personal livelihoods.

PHBML's certification system development included

public hearings organized by an expert panel that re-

ceived suggestions and ensured transparency (Riva,2004: 15-6).

BefOre PHMBL was formally launched, two field

tests were conducted in yillages in Central Java and

West Kalimantan (Riva, 2004: 15-6), Pilot projects

were also implemented between 2003 and 2004 in col-

laboration with NGOs (Hinrichs et at, 2008). One of

the pilot project sites was Wonogiri District, which

will be discussed in the fbllowing section. PHBML has

8 criteria and 32 indicators associated with production,ecological and social implications (LEI, 2004). As of

February 2011, 11 PHBMLs for community-based for-est management have been registered (Table 2). Certi-

fication programs for community-based forest manage-

ment could have the potential te improve sustainable

forest management, but its strengths and weaknesses

within the Indonesian context must be examined in

closer detail.

V Process of Forming PHBML Certification

in Sumberejo and Selopuro(i'

The steps towards certification include a preliminarysurvey, program instmction, formation of forest man-

agement units, training of local residents (for example,

mapping community fbrests and inventory of the for-

ests), assessment of fbrest management units and sub-

mission of documents to the certification body (LEI,2000). Several actors collaborated to develop the

PHBML certification, including PERSEPSI, LEL GTZ

(Deutsche Gesellschop ,fiir 71echnische Zusammenar-

beit)`2' and WWF (World Wide Fund fbr Nature)-

Indonesia. PERSEPSI's role was especially critical in

encouraging the villagers to undertake the certification

process.

PERSEPSI is a local NGO whose role is to encour-

age villagers in Java to acquire certification.

PERSEPSI has extensive experience in supporting the

management of community fbrests, fbrming social or-

ganizations, and raising environmental awareness

among loca] peopJe. Later analysis found that '

PERSEPSI s support helped the two villages wnh com-

munity forest certification and management; local peo-

ple could manage their private forests mere effectively

than before,

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The JapaneseForestEconomic Society

Journal of Forest Economics Vol.58 No.1 (2012)

Table 2 LEI PHBML certjtication in lndonesia.

Orgarlization LocationArea (ha)MainspeciesCertificationbodyDateofcertificatien

ForurnKomunitas

PetaniSertifikasi

Selopuro&Sumberejo

Central Java

Wonogiri809

TeakMahoganyMutu AgungLestari

October 2004

Keperasi WanaManunggal

Lestari

Yogyakarta

GunungKidul815TcakMahoganyTUvInternatienal

lndonesiaSepternber2006

GabunganOrganisasiPelestari HutanRakyat WonoLestariMakrnur

Central JavaSukohaijo

t179TcakMahoganyMutu Agung

LestariJanuary 2007

Perkumpulan?elestariHutanRakyat CaturGiri Manunggul

Ccntral JavaWonogiri

2434TeakMahoganyMutu Agung

LestariJanuary 2007

UM Hutan AdatRumah Panjae

Menua SungaiUtik

WestKalimantan

Kapuas Hulu9545Dipterocarp<nattiralforests)

Mutu AgungLesturi

March 200g

Argo BancakEast JavaMagetan

600TeakMaheganyMutu Agung

LestariJuly 2009

WanaRejoAsriCentralJavaSuragen

1404TeakMahoganyMutu Agung

LestanJuly 2009

UMHR WanaLestari

East JavaLumajang3427Falcataria

Mutu AgungLestari

February 201O

UMHRRimbasari EastJavaPacitan1073TeakMahogany

Acacia

Mutu Agung

LestariFebruary2010

UMHRGerbang LestariEastJavaBangkalan

2889TeakMahoganyAcacia

MutuAgung

LestariJu]e 2010

UMHR AIas

MakmurEastJavaProbolinggo

955 FaleatariaMutu Agung

LestariJune 2010

Souree; LEI (2011) http:11www.lei.or.idlfileslCertified%20UM-Febl1.pdf (access on Junc 201 1).

Note: UM: Unit Managemen, UMHR: Unit Managemen Hutan Rakyat

GTZ provided financial support to develop guide- wasapreliminary survey of the existing forests'condi-

lines for the PHBML certification scheme, to imple- tion. At this stage, program instructions were providedment workshops fbr disseminating PHBML forest- to fat/mers to help them understand the importance of

management trainings and to strengthen existing or- PHBML cenification. The instmctions also aimed to

ganizations. This section will discuss each stage of support farmers and stakeholders who were irnplement-

certification with respect to two standards: local em- ing certification programs, As a result, farmers appre-

powennent and document submission (LEI, 2000) ciated and accepted the cenification program because

(Table 3). they could expect more income and better ski11s fOr

managing PHBML forests without paying additional

1 LocalEmpowerment costs. To make the program function better,

PERSEPSI's first step toward local empowerment PERSEPSI decided to use two existing fatmers' groups

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Table 3 Steps to acquire PHBML certification.

Stage Date Actors Actlvlty

Preliminarysurvey March 20e3 LEI, GTZ. PERSEPSIGeneral

description of

communities und forest

eonditiens

PrograminstructionOctober-Decetnbcr2003

LEI, GTZ, PERSEPSIResidents' understanding and

acceptanceofprogram

Ferrning forestmanagement units

January-July 20e4LEI, GTZ, WWF,

PERSEPSIForming KPS and FKPS

TrainingsFebruary-

September 2004LEI.WWF,PERSEPSI

Rcsi dents' Iearn technicalskills to implement program.Trainees authorized to

conductnextstcps

Mappingcomrnunity

forestsAugust 2004 WWF, PERSEPSI

Mapping community forestsarea

lnventory efcornmunity forests

September20e4WWF,PERSEPSICollection ofdata about

cornmunity forests

Assessmentofforest-rnanagementunlts

September2004WWF,PERSEPSISubmissionofcertification

application documents

SubmissienofdocumentstocertifyingorganizationOctober

2004 WWF, PERSEPSIAcceptanceefcenificationapplication by PT MAL

Assessment bycertifyingorganizationOctober2004

ExpertPanelEvaluation of whether to

continue with certification

ksikg]EEs]EigikiggkgakigzkigelkiglB$zkiglpakigsEis]iigliissias Figure 1 Structure of village organization$.

Note: KPS (Kbmunitas Petani Serti.fikasi) is a farmers' greup for torest certification. FKPS (Forum Komunitas Petani Sertijikasi) is a farmers' groups forum for forest cenification. TPKS {Tletrrpat Pengetolaan Kby" Sertijikasi) is a

place for managing cenified wood.

(Fig. 1). One is Kt)munitas Petani Sertijikasi (KPS), or

farmers' group for forest cenification, which aims to

manage community forests at the sub-village level.

1[he other is forum Komunitas Petani Sertijikasi

(FKPS), or farmers' group forum for forest cenifica-

tion, which aims to manage community forests at the

village level. PERSEPSI's support allowed the two

groups to meet the PHBML program requirements.

Sumberejo and Selopuro villages had their own FKPS:

FKPS Sumberejo and FKPS Se]opuro. Each FKPS

consisted of 8 KPS, and the FKPSs had 958 and 682

members, respectively,

Trainings for local residents were conducted by LEI

and PERSEPSI. The purpose of these trainings was to

increase the two villages' human-resource capacity for

community-fbrest managernent. The trainings covered

1) managing community forests, 2) mapping commu-

nity forests, 3) inventory of community forests' poten-

tial and 4) internal assessment (Table 4). The purposeof the community fbrest-management training was to

help residents understand how to strengthen local

forest-management organizations. The community-

forest rnapping training aimed to instill ski11s to make

participatory community fbrest mapping. Villagers cre-

ated the rnaps based on field observations of land

ownership in each community fbrest (maps are among

the requirements for the PHBML certification applica-

tion), [[he inventory training aimed to develop farm-

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Table 4 Trainings on community forest management.

Training Purpeses Tramer Participants Duration

Managing

cemmun1ty

forcsts

Helpingresidentsunderstand how to

strcngthentheir

erganizations

LEIPERSEPSI2-5 from each KPS and 1represcntative from FKPS2-3

days

Mappingcommumty

forests

Develepingcommunityforest mapping ski11s

LEIPERSEPSI4 ftom each KPS and 1representative from FKPS1

day

inventory of

petentienal forCOInmun1ty

forests

Teaching residents howto carry out lnventones

ofcornmunity forcstsLEIPERSEPSI

First training: 2 from eachKPS and 1 representative

fromFKI'S

Secend training: 5 fromeach KPS and 1representativefromFKPS

2dayspertralnlng

IntemalassessmentExplainingPHBMLcertificatien standards to LEIPERSEPSIstaff

PERSEPSI field associates 3 days

f .ers skills in taking inventory of community forests, m-

c]uding organizing teams to take inventory, using tools

to measure trees' diameter and height and estimating

the potential of community forests, The internal assess-

ment training was targeted for PERSEPSI staff mem-

bers and was conducted by staff fi'om LEI. The pur-

pose of this training was to raise awareness among

PERSEPSI staff about the LEI's PHBML certification

standards. This training discussed the PHBML cenifi-

cation system, application requirements and assessment

ruIes, Training participants were representatives of

each KPS and FKPS (Tabie 4).

After training, participants were expected te imple-

ment and teach the ski11s they learned to the members

of each KPS, The first activity fbr each KPS was

community-forest area mapping. Residents created

maps and compiled them into a document. It took ap-

proximately Im2 weeks to prepare maps fbr each KPS.

PERSEPSI played a significant supporting role during

the map preparation. [lhe maps were then compiled by

FKPS and subrnitted as appendices in the application

for certification. Community members then took inven-

tory of commercially valuable trees (teak and mahog-

any) in each KPS, It took approximately one month to

complete this inventory.

2 SubmjssionotDocuments

After completion ef the twQ activities mentioned

above, PERSEPSI compiled all documents required to

apply for PHBML certification. The clocuments also

included selfevaluation sheets of forest management

based on PHBML indicators and criteria.

All documents were then submitted for evaluation to

the expert panel of a company known as PT. Mutu

Agung Lestari (PT. MAL). The cost of the certifica-

tion application was approximately 32 million rupiahs

(approximately USD 3,SOO), which WWF-Indonesia

supplied. PT, MAL then evaluated the docurnents by

fo11owing a three-step procedure of filtering, assessing

and decision making. Finally. I'T. MAL awarded a

PHBML certificate for commiunity-forest management

units to the two villages on October 19, 2004, in Ja-

karta. The certificate is valid fbr 15 years, and periodic

assessments during the 5th and 10th years are required.

Forests of 262ha in Sumberejo and 547 ha in

Selopuro were certified. The two villages' forests are

acljeining. The success of acquiring forest cenification

in both viIlages depended, to a 1arge extent, on strong

community support. Al] of the KPS members from the

two villages were involved in the who]e process of ac-

quiring the PHBML cenification: 958 people in Sum-

berejo and 682 in Selopuro panicipated, It should be

noted that, even if everyone in the two villages be-

came members of PHBML cenification-management

units and all forests owned by the members were ceni-

fied, residents did not have an obligation to sell wood

as cenified; they could sell it as non-certified wood, as

they used to do. WWF and GTZ supported the two

villages financially and technically, but this might not

have been the case in other villages,

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V[ Post-certification ActivitiesC3)

1 Strengthening Local Organizations to Ex-

tract Certitied Wood

After the certification was granted, PERSEPSI es-

tablished a new unit fbr managing certified wood,

7lempat Pengelolaan Kdyza Sertijikasi (TPKS, or places

for managing cenified wood), to respond to the need

for a marketing organization. PERSEPSI and LEI con-

ducted a two-day training on market organizations for

representatives from KPS and committee members of

FKPS. The training discussed 1) relationships between

FKPS, KPS and their respective responsibilities, 2) jobdescriptions within marketing organizations and 3) the

concept of CoC and certified wood trade.

TPKS is a cooperative unit whose role is to organ-

ize FKPS in the two vMages to market certified wood,

The function of TPKS is te organize the trade of certi-

fied wood produced by the two villages, It is responsi-

ble for managing the production of certified wood

from forests, including the decision to cut timber and

to set the price of certified wood in domestic markets.

TPKS cemprises 6 departments with 8 members: man-

aging department (l person), secretariat (1 person),equipment department (1 person), logistic department

(1 person), inventory departments (2 persons) and log-

ging departments (2persons). Members are selected

frem FKPS Selopuro and FKPS Sumberejo,

Once buyers decide to purchase cenified wood,

TPKS instructs FKI'S to contact the forest owners

through KPS. If a fbrest owner decides to harvest the

trees, TPKS sends a team to survey the forest, Before

harvesting, TPKS pays the owner the appropriate

amount. Then TPKS processes and sells the certified

wood and receives payrnent from the buyersC`'.

2 Balancing between Local Community Sup-

ply and Companies' Demand for Certified Wood

While TPKS was expected to play a significant role

in marketing certified wood, it has not yet realized its

fu11 potential. Sale of cenified wood, with its higher

price tag, was expected to contribute to villagers' in-

come, The communities supplied a mere 8.28 mi of

certified trembesi and mahogany wood for one com-

pany, PT. Novica in Bali, for UNICEF workshop sou-

venirs in January 2005 (Purnama, 2005). Because the

arnount of wood sold to the company was so insignifi-

cant, it provided no discernable benefit to the commu-

Vol.58 Ne.1 C2012)

nities. As of March 2010,

had opportunities to sell

the cornmunities had not yet

certified wood to other buy-

ers.

Altbough several national and domestic companies

contacted PERSEPSI to order cenified wood, the com-

munities couid not meet the companies' demands. It

can thus be inferrecl that with such significant opportu-

nities to market certified wood, TPKS has not func-

tioned effectively. TPKS's failure can be attributed to

two issues. One problem was that the farmers' groupscould not meet companies' demand for large quantitiesof wide, straight and grainless certified wood, In situ-

ations when an owner has to fell trees and cenduct

quality control himself, it weu]d be impossible to pro-duce sufficient quantities of wood in a sustainable

manner. The other problem was that local people were

reluctant to sell their wood as certified, They were not

quick to honor requests from companies to sell their

wood, because they recognized that planted trees were

best saved for emergencies. This problem relates to the

relationships between groups and individuals. While

the PHBML cenification was granted to the villages as

a group, each farmer was not strictly regulated and

ceuld sell wood as either certified or nQn-certified.

The following examples are situations ebserved in

the field. First, the cenification system did not neces-

sarily attract tree owners, because they had alternative

sources of income and may not have prioritized selling

wood. They kept emergency supplies of wood to payfor hespital care, children's education and small-

businesses start-up costs. Trees were considered to be

sayings in the bank. Second, based on their past expe-

rience of suffering from poor soil conditions, residents

recognized that maintaining fOrests a$ an integrated

ecosystem would be the best way to farm and maintain

a sufficient water supply. Economic incentives for sell-

ing wood could not easily suppiant residents' desire to

preserve their forests. instead, residents preferred to

sell wood in the rnarketplace in times of necessity and

without regard to companies' demands, even though

non-certified wood commanded a much lower pricethan certified wood, Sustainable production of certified

wood is mentioned in the PHBML certification crite-

ria, The real-world circumstances, however, did not

necessarily confOrm to the criteria,

After realizing the villagers' need for financial sup-

port, PERSEPSI developed a microfinance credit sys-

tem in September 2005. Its purpose was to provide fi-

nancial support for small businesses so that farmers

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would not have to sell their own trees as non-cenified

wood for start-up funds. PERSEPSI provided loans to

local residents to develop small businesses, such as

vegetable cooperatives; to purchase livestock, such as

geats; or te rneet urgent necessities, such as those de-

scribed above. The microfinance credit system fbr the

two villages began in October 2005 with 38 mi11ion

rupiahs (approximately USD 4,OOO) from WWF-

Indonesia. Although four KPSs received loans totaling

9 to 11 million rupiahs (with an average of twenty

people per KPS). no positive impact of microfinance

system was observed. The reasons were as follows,

First, many of residents avoided loans because of the

risk of high repayment interest rates. The loan term

was 18 menths, with repayment interest diyided into

three terms of 6 months each. The repayment interest

for the first, second and third terms was 1.0, 1.5 and

2.0% respectively. Moreover, 30% of the total loan

needed to be repaid every 6 months. Second, the loari

covered only a small portion of the KPS members' ne-

cessnies, Consequently, the system did not succeed in

changing the comrnunities' preference for cutting and

selling their own trees. Residents centinued to cut trees

as they needed meney,

The CoC fbrest cenification system, which covers

certified wood extracted from the villages, has other

challenges. As of February 2011, LEI granted CoC

certificatien to 6 companies, 4 in Sumatra and 2 in

Java, The Sumatra cornpanies are unlikely to acquire

certified wood from Java because of the distance be-

tween the two locations. The company in Java, IYI].

Jawa Furni, a fumiture maker, was granted LEI's CoC

cenification in March 2008. The company has been

processing certified wood primarily acquired from an-

other PHBML farmers' group in Gunung Kidul Dis-

trict. PT. Jawa Furni exchanged a three-year Memoran-

dum of Understanding (MOU) with the farmers' groupin Gunung Kidul District, an Indonesian furniture

group (Hara Group) and a furniture company in France

(Maisons du Monde). The MOU includes the following

provisions: 1) strengthening of the farmers' group, 2)

rehabilitating and conserving lands, 3) increasing pro-

duction capacity, 4) expanding the area of certified

community fOrest management units, 5) developing

CoC wood industrial units and 6) promoting commu-

nity forest management and the use of certified wood.

While the MOU has not yet included Sumberejo and

Selopuro in Wonogori District, PI]. Jawa Furni re-

cently began processing cenified wood in the two vil-

onomlcs VoL58 No.1 (2012)

lages, The company has been purchasing logs amount-ing to approximately 30-40 m3/month from the vil-

lages in Gunung Kidul District and approximately 20

m'lmonth from the two villages in Wonogiri District.

[rhis represents a new trend among CoC-certified com-

panies. PT. Jawa Furni has been attempting to fOrge a

direct link between suppliers and consumers by proc-essing certified wood and exponing furniture abroad

directly. [Ihe proportion of furniture manufactured

from certified wood, including LEI and FSC, is only

1-4% of the total amount of furniture produced by this

company. However, the company has been seeking op-

portunities to use certified woed, attempting to estab-

lish tmst in the market and improving econemic condi-

tions in the local communities.

To assist the two villages in Wonogiri District,

PERSEPSI has tried to help local companies to acquire

CoC certification, targeting such companies as Rimba

Sentosa, CV and PT. Wirasindo Santakary. PERSEPSI

will ofrer to provide the companies with technical sup-

port for document preparation, including proceduresfor fe11jng timber and sawing lumber to produce end

products. PERSEPSI will commit to assisting the com-

panies to understand forest certification systems and

developing markets, After receiving LEI CoC certifica-

tion, Rimba SentosaCS' intends to col]ect certified wood

in two ways: first, by purchasing cenified wood from

villagers and manufacturing fumiture; and second, by

encouraging farmers to manufacture certain furniture

parts (e.g., table legs) and transport them to the factory

where the parts could be assembled.

vr Discussion

While many challenges and obstacles have limited

the certification of community-based forest manage-

ment in Indonesia, a number of facilitating factors

were also fbund, Indenesia developed its own national

certification system and has been developing signifi-

cant expertise in the subject. The regulatory frameworkfor forest management has provided the opportunity

for communities to manage fbrests in a sustainable

manner, and the cenification could increase the poten-tial of existing community-based forest management.

PERSEPSI's approach fOr the two villages inWonogiri District is highly cornmendable, because it

prometed lecal involvement in the PHBML certifica- t t tt stion process by strengthening and trannmg farmers

groups,

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pt*ptesbl£

VilJage residents welcomed the forest certification

system, perhaps hoping that it could contribute to their

financial, institutional and spiritual welfare. Villagers

could choose between selling standard wood or certi-

fied wood without disturbing the existing forest man-

agement system or endangering their access to privatefbrests. Furthermore, the organization of farmers'

groups under KPS strengthened relationships and mu-

tual understanding among the farmers. After the intro-

duction of PHBML certification in the villages, fat/m-

ers regularly organized meetings to discuss and ex-

change infbrmation associated with the management of

certified fbrests and forest-managernent technologies.

Cenification also allowed farmers to manage thejr fbr-

ests with selfconfidence,

PERSEPSI:s model also has shortcomings, including

the fairure of the microfinance system, the low qualityand supply ef cenified wood, and the challenges of

convincing famers to sell certified wood, All of these

issues relate to the amount of certified wood that can

be preduced in a sustainable manner, as well as to the

way in which forest-managernent systems should be

developed as groups. This point close}y relates to the

incentives that local people have fbr selling weod as

certified rather than non-cenified. To increase incen-

tives for residents, current lecal microfinance systems

could be managed more efficiently. As discussed, the

current microfinance system did not achieve its desired

outcome, most likely due to WWF's meager financial

support.

Te resolve the current financial situation, two issues

must be addressed. One is to establish an independent

administrative system for microfinance systems only.

Increased numbers of financial loans are fundamental

to meet demand and cover a 1arger portion of the vil-

lages' teak trees, PERSEPSI has considered forming a

system fOr famiers' groups to collect certified wood

from residents independently in order to rneet demand

at any time. The challenge is how to allocate funds for

this prQject, Companies or donQrs may be one option,

if they are willing to buy certified wood from cemmu-

nities and provide partial payment in advance to cover

the sellers' needs. Another option is to change the in-

terest rate and period of loan repayment. Under the

current microfinance system, residents have to getsome income, likely from selling wood, to repay every

6 months. However, this scheme implies that residents

should sell wood, despite their interest in forest con-

servation, to repay their debts. More flexible ap-

Vol.58 No.1 (2012)

proaches shouLd be considered; for example, extending

the loan repayment period or lowering interest rates to

refiect the borrower's income from prejected sales of

certified wood.

Another shortcoming should be also discussed here,

which is that LEI PHBML certification may not be

well-recognized in international markets. Severa} inter-

national and domestic cempanies contacted farrners'

groups, as described above. While they found that LEI

provided credible verification for good management

practices in smal1 fbrests (Maryudi 2009), LEI-certified

wood was not as well recognized in European markets

as FSC. This creates a major bottleneck in global de-

mand (Lopez-Casero and Scheyvens, 2007: 40-2),

Such situations make it difficult fbr LEI to co-exist

with FSC. Consequently, LEI may be less competitive

and less interesting te companies considering LEI cer-

tification.

On May 31, 2010, FSC and LEI anneunced the

launch of an 187month collaboratiye venture exploring

potential areas of cooperation for fbrest certification,

particularly for community-based forest management in

Indonesia (LEI, 2010). Further collaborative effbrts

will highlight the value and necessity of a national cer-

tification scheme in Indonesia, and it will encourage

LEI to establish itself internationally.

PERSEPSI and other related organizations still have

work to do. Farrners' groups are expected to undertake

the certification process, including financial manage-

ment, independently, Meanwhile, supponing organiza-

tions, such as PERSEPSI, need te respond to the chal-

lenges described above. Their support is critical in rep-

licating the forest-management certification model in

new areas. As a whole, PERSEPSI's innovative strate-

gies may further develop certification for community-

based forest management in Indonesia.

Acknowledgements

This manuscript is the result of field surveys conducted by

the Forest Conservation Preject, Institute for Global Environ-

mental Strategies (IGES), Japan. The research was also

funded by a Japnn Foundation in 2005 and Grant-in-Aid for

Scientific Research, Ministry of Education, Culture, Sports,

Science & Technology, Japan in 2010 ((A)22255012) and in 2011 ((C)23SI0316), We express our thanks to Daru

Asycarya (LEI) and Taryanto Wljaya (PERSEPSI) for providing us with helpfu1 information and comments.

Footnotes

(1) This section has been rewritten based on Harada's discussion (20lO) and additional information.

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TheJapaneseForest Economic Society

Journal of Forest Ec

(2) GTZ is a federalIy owned organization of the German

government. Its yision is te strengthen its position in the global market for international cooperation services.

(3) This section has been rewritten based on Harada's discussion (2010) and additienal infomation.

(4) TPKS needs to issue a letter detailing the sources of its

certified wood, as well as a license document for trans-

porting forest products called SKSHH (Surat Keterangan Sahnya Hasil Hutan), in order to extract certified wood

from the villages. SKSHH includes information about the

wood, such as the name of the owner; the source location and species; information regarding the haTvest, including

the name of the person who felled the trees and the tools

used for fe11ing; infOrrnation about the KPS; ancl informa-

tion regarding the transportation of the weod from the vil-

Iages,(5) The company was granted FSC CoC cenification from

2001 to 2006 by SmartWood.

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(Received July 27, 2010; Accepted October 4, 2011)

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