chathamhouse Small- and medium-sized forestry enterprises (SMFEs) make up a large proportion of the forest sector, accounting for over half the timber production and supporting hundreds of thousands of livelihoods in developing countries − over 50 per cent of the forest sector workforce. But they often operate outside the realms of the law – making them difficult to monitor and control, and providing a window for corruption and poor management practices. Consequently, SMFEs are often seen as a problem to eliminate rather than an opportunity for sustainable development. However, the Sustainable Development Goals (SDGs) offer an opportunity to change perceptions while also bringing more attention and resources to the small-scale sector.
Establishing a legal and sustainable small-scale forest sector will not only help to achieve the obvious environmental goals – like protecting forests and taking action against climate change – it can also address the broader social and economic targets of reducing poverty and hunger and of promoting innovation and jobs for all.
First on the list of SDGs is to ‘end poverty in all its forms everywhere’. As part of this goal, target 1.4 aims to ensure all men and women have ownership and control over land, natural resources, new technology and financial services, which are issues for forest smallholders across the globe. Obtaining land rights can be an expensive and complicated business, and so is beyond the reach of many small-scale operators, while access to technical and financial support is often very limited.
In the Brazilian Amazon, where it is estimated a third of timber production comes from SMFEs, the costs of following the rules for smallholders far outweighs their relatively limited incomes despite considerable effort from the authorities to streamline the process of regularizing land use and ownership. Plus, the sheer scale of the task means hundreds and thousands of smallholders are yet to be registered − meaning the timber they produce is not considered legal.
Financial and technical support is also thin on the ground, resulting in many Brazilian smallholders relying on big logging companies to help them obtain the correct licences to sell timber. The terms are often exploitative, and some companies use intimidation and threats to illegally take logs from the land of smallholders.
In Laos, where smallholders are engaged in plantation management, they also struggle with a burdensome bureaucratic system. Although many of the smallholdings are less than one hectare in size, there is a complex system of registration, assessment, planning and permits, not to mention a possible list of 30 different fees required along the supply chain which can add up to $700, amounting to more than half the average person’s annual income.
Input from NGOs has helped some smallholders and the FLEGT Voluntary Partnership Agreement (VPA) is addressing forest governance in Laos. But there remain concerns that the reform processes underway will fail to address the needs of smallholders, which would compound the problem of poverty in a nation where more than 30 per cent of the population lives below the global poverty line.
Evidence from around the world shows that a well-supported small-scale forest sector can play a crucial role in rural economies, bringing positive economic, social and environmental benefits. Goal 8 of the SDGs focuses on ‘sustainable economic growth, full and productive employment and decent work for all’. Within this are a number of targets that relate directly to SMFEs.
Target 8.3 encourages the formalization and growth of small- and medium-sized enterprises. Although governments are making efforts to regulate the informal forest sector, a lack of enforcement by the authorities and the limited information and understanding of the complex legal procedures by small-scale operators provides an environment for illegal practices to continue.
In Ghana nearly 100,000 people are employed in the informal small-scale forestry sector, which is responsible for 70 per cent of timber production. Indonesia’s thriving small-scale forest sector includes hundreds of thousands of small enterprises, employing an estimated 1.5 million people, but the majority have not met all the necessary legal requirements. The governments of both countries are making strides towards formalizing these enterprises, but the scale of this task remains huge.
Numerous initiatives have been implemented aimed at supporting forest smallholders and enabling them to establish viable businesses. But in countries like Brazil, Ghana, Indonesia and Laos, these have yet to succeed in bringing about the wholesale reform of the sector that is required. However, with the help of the SDGs, if countries were to develop a framework for monitoring their small-scale forest sector, this could help governments to better understand the contribution of this sector to their economies, while also developing and implementing more effective strategies for its support and development.
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