Improving Rights and Benefits for Teak Smallholders

Martin Greijmans, SPO Livelihoods & Markets.
February 28, 2013, Houay Xai, Bokeo, Lao PDR

Teak Smallholder of Houaythongthai

Teak smallholders in Ban (village) Houaythongtai in Phaktha district, Bokeo province, Lao PDR, have been at the forefront in registering their teak lots since ForInfo initiated its regional project of innovation and information to support livelihoods.

ForInfo blog_Box 1Communities in this typical northern Lao village heavily depend on rice for their own consumption, with some surplus being traded locally. When they are in need of cash, Lao farmers are forced to sell a few cattle (see box 1) or standing teak trees to local traders. Both these types of assets serve the families as a savings account, which they can fall back on to pay for hospital bills, children’s education or small household investments [see our previous blog entry on this topic: Money can Grow on Trees: Teak Assets in Northern Laos].

Teak logs to be sold to local sawmills and traders for sawn timber production should have a minimum diameter at breast height (DBH) of 12-15 cm. Better prices however are fetched at around 25 cm DBH as stated by the farmers. Teak smallholders who are in need of immediate cash are forced to sell trees even if these have not yet fully reached DBH classes with higher value, losing the full potential earnings from their trees. Additionally, traders who buy teak trees from smallholders select the best trees, cut and remove them, often without making immediate payments to the tree owners. Thus the smallholder who is already in need of cash remains in an uncertain position.

Teak smallholders receiving the certificate from forest officials.

Teak smallholders receiving the certificate from forest officials.

ForInfo intends to support teak smallholders in delaying the sale of trees by providing them with an innovative collateral mechanism, which starts by mapping and documenting the available teak resources per smallholder, while also determining the current and future value of still developing tree stands [see our paper entitled “Local Processing of Logs to Increase Smallholder Share, Lao PDR,” on page 38 of ETFRN News 52]. Currently, 25 smallholder lots belonging to 21 households have been documented and certified by the provincial agriculture and forestry office, with another 14 applications in the process of approval. The remainder of interested teak rights holders [totaling 80] will also be served by ForInfo within the time span of the project.

Sample certificate given to teak smallholders, in Bokeo, Lao PDR.

Sample certificate given to teak smallholders, in Bokeo, Lao PDR.

However, even with the tree collateral model under development both smallholders and local government staff are of the opinion that by systematically documenting and mapping teak tree lots on smallholders’ land ForInfo has already achieved an important step towards empowering teak smallholders.

Interviews in Ban Houaythongtai with teak rights holders and district government staff reveal that the certificate issued by the provincial forestry office represents a clear right for the tree owners and is expected to enable them to make a case against traders which do not make fair and timely payments. This belief is backed by the local government, which requires solid documentation to fall back on, [the certificate representing the right holder’s formal registration of teak stands] and play the role of mediator effectively.

ForInfo blog_box 2What is happening now in Paktha is that property rights defined in the literature by Bromley (1991, p.15) as “the capacity to call upon the collective to stand behind one’s claim to a benefit stream” emphasizes the quality of the relationship between the right holder and the institution that backs the claim. The district and provincial forestry offices are keen to scale up this success to all teak villages in the district and when possible to the remainder of Bokeo province. Their willingness to invest time into this process is aligned with ForInfo’s main objective which is improving livelihoods (See Box 2).

Money Can Grow on Trees: Teak assets in Northern Laos

Claire Fram, ForInfo Project Associate, writes on teak trees as piggy-banks or insurance policies in Bokeo, Lao PDR, where the ForInfo project is helping increase the monetary value of these assets.

Teak trees in Bokeo, Laos

Villagers use teak trees, like these in Bokeo, Laos, as fungible assets in times of financial stress. (Photo credit: Claire Fram)

Huaythongtai village,  Paktha district, Bokeo Province, Lao PDR: A villager in Huaythongtai can sell one teak tree of a 50+ cm DBH (diameter at breast height, a standard method of expressing the diameter of a standing tree), to a trader in the provincial capital, Huay Xai, for about US $150.  When villagers are in need of quick cash, their teak trees are their most reliable liquid assets.

We visited Mr. Bounton, the village chief, to learn how teak is used by the community. We heard story after story of villagers who needed emergency medical treatment and sold a teak tree to cover the cost.

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An innovative livelihood project uses teak as collateral in Laos

By Claire Fram, Research Fellow, Livelihoods and Markets

November, Bokeo, Laos: Last month, members of RECOFTC’s team and representatives from the Ministry for Foreign Affairs of Finland traveled to Bokeo, Lao PDR to follow up on site development for the ForInfo project. The three-year project, funded by the Ministry of Foreign Affairs of Finland, aims to empower forest-dependent communities and small holders in Cambodia, Lao PDR, Thailand, and Vietnam through holistic development of information networks at the community level.

The project takes the well-known premise that knowledge is power and turns it into a tool for poverty reduction. Helping local people learn how to generate quality information about their forest resources makes them better equipped to access markets for their products and services. Ultimately, improving rural people’s ability to generate and use information about forest resources can contribute not just to poverty reduction but also to the sustainability of forests, and global efforts to mitigate climate change by helping communities adapt.

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