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New kid on the block in Indonesia’s timber export industry

Women assemble a sofa in Jepara, Central Java, Indonesia. Photo by M. Usman/CIFOR
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Women assemble a sofa in Jepara, Central Java, Indonesia. Photo by M. Usman/CIFOR

Forest Law Enforcement, Governance and Trade (FLEGT) licensing is like an anak sholeh — a good and pious child — according to several speakers at a recent national policy dialogue held in Jakarta, Indonesia.

From forests to workshops, marketplaces and homes, Indonesia’s timber products form a long and complex supply chain, which FLEGT is helping to regulate and strengthen.

The country’s timber exports are valued at US$11 billion annually. Thanks to its timber legality verification system known as SVLK and the subsequent issuance of FLEGT, with which businesses can export timber and wood products to the European Union with greater ease, the government expects furniture exports to increase significantly.

Indonesia is the only country in the world to have implemented the licensing so far, giving its furniture a competitive advantage in an increasingly discerning market as consumers pay more attention to the issues of a green environment, illegal logging, deforestation and sustainable production.

Watch: Policy dialogue: CIFOR cohosts FLEGT talks in Jakarta

Speakers pose with tokens of appreciation made from SVLK-certified wood following one of the sessions at the National Policy Dialogue in Jakarta. Photo by M. Edliadi/CIFOR

However, issues remain in the widespread implementation of FLEGT in Indonesia, especially among small and medium enterprises (SMEs).

The recent policy dialogue, cohosted by the Center for International Forestry Research (CIFOR) and supported by the CGIAR Research Program on Forests, Trees and Agroforestry (FTA) on July 13, tackled the topic of FLEGT licensing and supporting SMEs to access global markets.

The dialogue brought together scientists, government representatives, local furniture producers and community leaders to discuss challenges for SMEs to meet FLEGT requirements; a strategy to maximize the impacts of the license on SMEs; and the role of province and district governments to ensure the legality of SME production.

Read more: Indonesia’s timber going green – and global

Ida Bagus Putera Parthama, Director General of Sustainable Forest Management at Indonesia’s Forestry and Environment Ministry, said the initiative stemmed from an effort to eliminate illegal logging, and a desire to “stop the stigma attached to Indonesia about illegal wood.”

He described the license as “a good boy that the whole country has been waiting for” and said “everyone should support it.”

“The final outcome we expect from the system is to increase our market share, competitiveness of products, revenue for communities and in the end improve the livelihoods of those involved,” Parthama explained.

Charles-Michel Geurts, deputy head of the EU Delegation to Indonesia and Brunei, speaks at the National Policy Dialogue in Jakarta. Photo by M. Edliadi/CIFOR

Charles-Michel Geurts, deputy head of the EU Delegation to Indonesia and Brunei, concurred. “The world is looking to Indonesia,” he said. “Anak sholeh is a role model; everybody likes him [and] wants to adopt him.”

However, some business people voiced concerns. Jepara Small-Scale Furniture Producers Association (APKJ) representative Sulthon Muhamad Amin said that while medium and large companies may not be lumbered with the requirements, the costs associated with the licensing were too onerous for small-scale workshops. Thus, some still preferred to partner with exporters in the local market rather than become exporters themselves.

Sulthon later said small businesses must change this mindset. However, he questioned how this could happen, stating that many small-scale businesses had never heard of FLEGT.

Despite dissemination efforts, local administrations must be more proactive in providing assistance to small businesses, Sulthon said. “If an SME is like a small boy being led by a mother, it doesn’t mean he can be given the information and then left alone.”

Read more: Brexit rattles Indonesia’s timber trade prospects with Europe

FTA scientist Herry Purnomo of CIFOR speaks at the National Policy Dialogue. Photo by M. Edliadi/CIFOR

FTA scientist Herry Purnomo of CIFOR, whose work looks at furniture value chains, said SLVK promoted a balance between economic progress and environmental conservation. The system was not only driven by the EU’s system, he explained, as advancing people’s economies through participation and in an environmentally friendly manner was also mandated by the country’s Constitution.

In line with this, sustainable value chains and investments to support forest conservation and equitable development are a key part of FTA’s work.

Purnomo also echoed Sulthon’s thoughts, saying small-scale businesses faced different issues to big companies. Thus, local administrations should be more active in maximizing the benefits of FLEGT licenses for SMEs.

“We should also think about the domestic market, not only about the EU market,” Purnomo added. “Maybe we need to use SVLK more in domestic procurement processes.”

Taking note of Indonesia’s status as the first country to have FLEGT licenses, the scientist said environmental awareness would continue to grow, including in other emerging markets across the region such as Korea and Singapore. “Later it will be very difficult for us to catch up.”

For business people, exporters and consumers, FLEGT is a new kid on the block worth getting to know.

By Hannah Maddison-Harris, FTA Communications and Editorial Coordinator. 

Related publications

This work forms part of the CGIAR Research Program on Forests, Trees and Agroforestry (FTA). We would like to thank all donors who supported this work through their contributions to the CGIAR Fund.

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Landscape-scale management for sustainable development

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  • CIAT Annual Report 2015-2016: Sustainable Food Futures--Getting the Fundamentals Right

CIAT Annual Report 2015-2016: Sustainable Food Futures–Getting the Fundamentals Right

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Originally published at CIAT blog

The world has never produced or consumed so much food. We cannot, however, ignore the pressure that food production is putting on the environment and the ecosystem services we all depend on. We cannot ignore either the unprecedented threat that climate change poses on agriculture – and the need to adapt swiftly. And we must ensure that food production and distribution systems give farmers in developing countries – men and women alike – a fair deal, and consumers around the world, adequate access to varied, affordable, and nutritious foods.

In this Annual Report covering the period April 2015 through March 2016, CIAT offers a dynamic overview of our contribution in addressing these challenges and building sound fundamentals for sustainable food futures. Working with hundreds of partners, we are helping conserve the integrity of vital ecosystem services in Latin American, African, and Asian rural landscapes, while generating increased economic and social benefits. Inspired by our experience with Colombia’s Ministry of Agriculture and Rural Development to better shield important value chains from climate variability, we are now extending our support to Peru and Honduras.

The fourteen country profiles on climate-smart agriculture (CSA) that have been produced so far also enable policymakers and investors to quickly and easily review the opportunities for CSA prioritization at a national level. As one of the pioneers of big data in agricultural science, CIAT uses large, uncontrolled, real-world data sets, and cutting-edge analytics to scour the data and produce reliable and highly site-specific recommendations.

CIAT’s big data operation has yielded game-changing discoveries for the Colombian rice industry – solutions that can easily be scaled up and broadened to include other crops. To boost explanatory power, scientists are looking at incorporating data on soils, pests, and diseases, as well as other factors. Of the 169 targets that make up the United Nations’ Sustainable Development Goals, over 60 relate in some way to the food system.

By conserving bean and cassava varieties as well as tropical forages and their wild relatives in our genebank, accelerating genetic gain, spreading sound agronomic practices, and by promoting business models that give farmers and the environment a better deal, CIAT and our hundreds of partners contribute actively to shaping a sustainable future. More investments and efforts in agricultural research for development are needed. With 21 offices and almost 1,000 staff strategically located across the tropics, we are uniquely placed to pursue sustainable food futures for tropical agriculture in collaboration with our partners, including policy makers, and the private sector.

Read the Annual Report here

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