Issu e Pa pe r

ACCESS TO MARKETS:
ENSURING FOREST COMMUNITIES IN
MYANMAR BENEFIT FROM THEIR TIMBER
ACCESS TO MARKETS:
ENSURING FOREST COMMUNITIES IN
MYANMAR BENEFIT FROM THEIR TIMBER

Published by RECOFTC - The Center for People and Forests

Copyright © RECOFTC June 2018
Bangkok, Thailand

Authors: Martin Greijmans, David Gritten, Lina Jihadah,

Aung Kyaw Naing and Lok Mani Sapkota.

ISBN : 978-616-8089-05-7

Reproduction of this publication for education or other

noncommercial purposes is authorized without prior written
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The views expressed in this publication are those of the authors

and do not necessarily reflect the views of RECOFTC and the
Swiss Agency for Development and Cooperation (SDC).

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Acknowledgements
The issue paper was developed with financial support of the Australian Government through the Responsible
Asia Forestry and Trade (RAFT-3) partnership. This paper was written by RECOFTC’s Martin Greijmans, David
Gritten, Lina Jihadah, Aung Kyaw Naing and Lok Mani Sapkota.

The authors are grateful to participants of the “RAFT 3 Policy Advocacy Workshop” held in Yangon, Myanmar, 22
February, 2018. Thanks to RECOFTC’s Strategic Communication Unit for supporting the development and
production of the paper, as well as Thang Deih Tuang of RECOFTC Myanmar Country Office with translation and
other logistic support.

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Introduction

When community forestry (CF), in its modern form, was introduced to the Asia-Pacific region its main aim was
protecting endangered forest resources. Little consideration was given for livelihood needs for local communities,
focusing mainly on meeting their subsistence needs, with some limited income generation through small-scale
trading of non-timber forest products (NTFPs).

In recent years there has been an increased recognition of the importance of the livelihoods of forest communities.
This is based on the understanding that having tenure is not enough to incentivise or enable them to manage
their forests effectively. These communities need to be allowed and able to make a meaningful living from their
forests. Community members need to be able to make substantive returns on their investments - this includes
from the sale of timber and NTFPs and being involved in or controlling value added processes, in short, play an
active role in the value chain.

The revision to the Community Forestry Instruction (CFI) in 2016 has opened up great opportunities to significantly
increase the impact of CF in Myanmar. By allowing for commercialization of CF the revised Instruction creates
a much stronger enabling environment for forest communities to make a meaningful living from tenure to their
forests - this will potentially transform the lives of millions of rural people.

Why is local community, including smallholders, involvement in the value chain1 so important?

When both forest communities and smallholders, can play active roles and integrate themselves
successfully in timber value chains they will manage forests sustainably, build local economies, reduce
poverty, and become attractive partners for both government and the private sector.

Increasingly governments engaged in the Voluntary Partnership Agreement (VPA) process under the
EU Forest Law Enforcement Governance and Trade (FLEGT), for example, in Indonesia, Thailand and
Viet Nam realise a successful timber export industry needs to ensure the involvement of community
forestry groups and smallholders. In Jepara, Central Java (Indonesia), for example, up to 50% of the timber
used by the furniture industry (of an annual total of 0.9 million cubic metres) originates from smallholders.

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A value chain represents all activities from the source of the raw product to the end consumer. Through the activities or
transactions carried out, value is added to a product and reflected in prices. A chain indicates the required interconnectedness of
the actors who are involved in adding value to a product

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 Timber value chain processes

Cultivation, felling, Transport to sawmill,

Processing into furniture /
skidding/transport to sawing of logs, transport Local marketing, export
other products
road side of squared logs

Value chain actors

Communities Traders Sawmill

Larger traders, Wholesalers Consumers
factories
Cooperatives
Smallholders
Retailers

Legal and regulatory environment

Land and forest

Commercial transport Selling
tenure

Commercial forest
Added value, investment
management and harvesting

Figure 1: Value chain components: influence on processes and actors by legal and regulatory environment

In this context, using examples from Asia-Pacific and beyond, this brief presents the key components for forest
communities to benefit from the sale of their timber products, and briefly considers the implications for their
roles in the timber value chain as shown in Figure 1.

Key components for communities securing active roles in the timber value chain

The following components are considered vital to determine the benefits that communities get from their forests,
particularly their timber, and their involvement along the value chain:

1. Legal and regulatory environment

2. Tenure rights
3. Community forestry governance

These broad interlinked categories are considered to be the main criteria for determining the success of the
communities developing commercial activities and becoming viable forestry enterprises.

Legal and regulatory environment

A clear and enforceable legal and regulatory environment that is built on principles of participation is a must.
Countries such as Indonesia, China and Viet Nam are making significant efforts to strengthen their national
laws to support smallholders and communities to ensure that they can make a living from their forests. For
example, the Land Law in Viet Nam has evolved addressing issues such as ownership of forest land and the
process handing over tenure. The current version of the Law and the recently revised Forest Protection and
Development Law are the key legal basis for the private sector and state owned enterprises to collaborate with
local communities in managing their plantations.

Key message: A clear and supportive legal and regulatory environment provides incentives for
entrepreneurial forest communities, while facilitating long term forest investments from the private
sector.

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Tenure

The piece of paper that gives ownership and clarifies rights of forest land to a community or smallholder is highly
prized. The benefits and security that this can bring is life changing in many ways.

In China the rights that the smallholders and communities get are tangible, especially as they are supported by the
State to ensure that the system to ensure this functions well. Examples of the support include the establishment
of Forest Tenure Trade Centers throughout the country. The Centers not only support tenure registration and
tenure trade, but also provide various other services including supporting access to market information, access
to finance and insurance and providing permits for timber transportation.

Key message: A smallholder or forest community with clear and strong tenure rights to their forest land
and provided with access to finance, encourages their investment in value added processing of forest
products.

A Vietnamese farmer quotes: “Our family has 4.2 hectares of plantation in total. Five years after receiving
a loan... we could earn from VND 90 to 100 million (3,950-4,390 USD) per ha after deducting investment
costs such as seedlings, fertilizer, interest rate. We could not only pay back the loan principal but also had
enough money to build a new house and afford some modern appliances.”2

Governance

The governance of the community forest, including how the community is organised, makes decisions, and
interacts with the private sector, government offices and neighboring communities, must adhere to the principles
of good governance – again a fundamental for creating an environment for sustainable and profitable community
enterprises. The challenges and opportunities will vary slightly according to the community forestry model - for
example, decision making for an individual smallholder (e.g. a farmer in Java, Indonesia) compared to a group
of community members (e.g. community forestry user group in Nepal). A great deal of emphasis has been made
in Nepal on collective decision making, ensuring that good governance principles are adhered to. This includes
requirement of number of decision making positions in the Executive Committee being allocated to women.
The emphasis on marginalised groups in the decision making is gradually resulting in their participation in
management, including community forestry enterprise development, with implications for how wealth is shared
within a community.

Key message: Good governance encourages commitment by the local community to invest in their
resource and seek maximum long term returns. If, for example, corruption is endemic then a community’s
ability to make a living is severely weakened.

One timber entrepreneur from Nepal stated that “in the last few years, there are more hurdles created by
chundre-mundre (local gangs) as they stop the loaded vehicle and ask for money… donations. Traders also
need to distribute money at each police and forest checkpost. My estimation is that we spend about 30%
of the timber price on such informal malpractices. In my view, timber trade can only be carried out by those
who have muscle and money.”3

2
The World Bank (2016). Vietnam: Sustainable Plantation and Livelihoods for Low-income Farmers http://www.worldbank.org/en/
results/2016/04/12/vietnam-sustainable-plantation-and-livelihoods-for-low-income-farmers
3
Gritten, D., et al. (2014) Enabling forest users in Nepal to exercise their rights: Rethinking regulatory barriers to communities and
smallholders earning their living from timber. In: Forests under pressure: Local responses to global issues. IUFRO WFSE World
Series. Helsinki, Finland.

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Value chain

Communities involvement in timber value chains varies greatly. This is dependent on various fundamentals
including an enabling legal and regulatory environment, good governance and clear and strong tenure rights.
Having these fundamentals in place encourages investment, collaboration, commitment leading to win:win
outcomes for those involved.

Countries in the Asia-Pacific region are unanimously recognising the importance of local communities
being involved in the value chain for agricultural and non-timber forest products. While the timber sector
is less developed in this regards there is still great progress being made. However, there are many
examples of success of local communities becoming more effective in timber value chains, through:

• Forest management and timber harvesting: deciding when to harvest timber is driven by market demand,
but also when cash needed for other livelihood activities. With tenure are more able to invest in growing
commercial trees and learn how to develop partnerships with private sector actors. For instance, Acacia
smallholders in Viet Nam partnering with Ben Hai State-owned Forest Company are able to work together to
ensure that the trees are fully mature when harvested.

• Transport: transporting timber in the form of logs or semi-processed products in Asia-Pacific is mostly
carried out by traders who also take care of the required paperwork. In Mexico, communities have taken on
these tasks and are getting more income. They are well placed to do so for many reasons including a strong
internal governance system.

• Processing and sales: Communities involved in harvesting sometimes carry out semi-processing of timber,
but for high quality products appropriate equipment is required. In Nepal, support of government in the form
of subsidies for timber processing is playing a role in scaling-up community enterprise activities. In Mexico,
many community forest enterprises go on to be substantial businesses providing many local employment
opportunities.

In China, smallholder involvement mostly stops with the sale of the standing tree, some entrepreneurial farmers
on the other hand have set up small enterprises or formed cooperatives to increase their income from their
forest products. With the right mix of incentives as discussed in the components above, including capacity
development support, communities and smallholders are proving to be able to enhance their livelihoods and
generate increasingly more assets. The following Figure 2 indicates at which development stage each of the
country cases is roughly situated.

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 MATURE DEVELOPMENT STAGE
With secured land rights and resources CFEs/
smallholders fully integrated into value chains
producing forest products and services
meeting market demands in terms of quality
and frequency of supply, both nationally and
for export. Strong sense of business
ownership, accumulating assets and capable
of identifying and paying for required business
development services (i.e. loans). Good
market access and infrastructure. Low risk of
failure. Mexico

DEVELOPING STAGE
Commercially orientated CFEs/smallholders with
higher level of social cohesion incorporate value adding
processes and product diversification, and consider
equity in benefit sharing. Selling to local, regional,
national markets. Investments in infrastructure and
technology in place, with room for improvement in
efficiency. Access to appropriate services that foster
enterprise growth. Rights over resources becoming
clearer, with key members having secured land rights,
but limited to only certain products and services as
agreed with authorities. Indonesia, China

EARLY DEVELOPMENT STAGE

Small-scale CFEs with limited
value addition and poor business
focus, risk-averse and budding
organizational structure. Land rights
not yet secured for most members,
resource rights in principle accepted by
authorities. Access to services and
infrastructure is incomplete and irregular
which limits enterprise growth
prospects. Able to cope with minor
shocks. Viet Nam, Nepal

SUBSISTENCE STAGE
Individual farmers collect forest
products primarily for their own
consumption; occasionally sell small
surplus within the community or to local
traders. Insecure to non-existent access
to services and no purchased inputs, i.e.
improved techniques or equipment. Low
asset accumulation, most vulnerable to
external shocks or changes in policy
environment. Often no land rights.

Figure 2: Livelihood Development Ladder4

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Adapted from Greijmans, M. & D. Gritten (2015). Is community forestry open for business? Paper submitted for the XIV World
Forestry Congress, Durban, South Africa, 7-11 September (available at www.recoftc.org/research-papers/community-forestry-
open-business).

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Ways forward - Recommendations for Myanmar5,6

The following recommendations are meant to start a discussion in the policy workshop, and accordingly will be
further developed.

The Government of Myanmar’s commitment to community forestry is clear on many levels, including in the
revision to the CFI. Systematic efforts must be made to ensure that clear support and guidance is in place to
facilitating the commercialisation of CF. This must go beyond the Forest Department, to include other land use
sectors, but also the Department of Small and Medium Enterprise, the Department of Trade, the Department of
Rural Development, the Department of Investment and Cooperation Department as well as the Department of
Finance and Tax who ultimately have an effect over how viable a community enterprise and other value chain
actors can operate.

A key component is supporting the connection between the financial and technical services sector and rural
communities. This will require ensuring that the smallholders and communities can provide collateral, including
their trees, on their loans.

Technical services includes both up-to-date extension services or effective support from the private sector, as
well as capacity programs to modernise and reduce costs and waste. This also means local government agencies
require a business mindset, a forest curriculum geared to that would be advised.

The private sector is a fundamental player as investor, partner and buyer. They will not enter the arena of
community forestry unless they get reliable guarantees including return on their investment, and good quality
products delivered in a timely manner.

Myanmar’s economy is growing. A great deal of this is being driven by city folk. These people are increasingly
buying products from their country’s forests. Too often they are making their purchases not being aware of
the source of their forest products. They need to be able to make informed choices. Only then will sustainably
sourced timber from community forests take a share of the market.

5
In line with FAO, Regional Expert Meeting on Creating an Enabling Environment for the Development of Small Scale Forest
Enterprises (SSFE) in Asia, Colombo- Sri Lanka 19-21 October 2017
6
Gritten, D., et al. (2015). An uneven playing field: regulatory barriers to communities making a living from the timber from their
forests–examples from Cambodia, Nepal and Vietnam. Forests, 6 (10), pp. 3433-3451, 10.3390/f6103433

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RECOFTC’s mission is to enhance capacities
for stronger rights, improved governance and
fairer benefits for local people in sustainable
forested landscapes in the Asia and the Pacific
region.

RECOFTC holds a unique and important place in

the world of forestry. It is the only international
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capacity development for community forestry.
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