Challenges and opportunities for sustainable rubber in the Lao People’s Democratic Republic
Challenges and opportunities for sustainable rubber in the Lao People’s Democratic Republic
20 October, 2016
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Authors: Kenney-Lazar, M.; Wong, G.
Key points
The opportunities provided by rubber cultivation in the Lao People’s Democratic Republic (Lao PDR) have been offset by sustainability challenges, such as low prices, food insecurity, land expropriation, deforestation and a loss of biodiversity and ecosystem services.
Smallholder rubber has had the greatest success in alleviating poverty while limiting environmental impacts and should be the preferred form of rubber production.
Improved and extensive credit, technical and extension services are needed to support a robust smallholder sector that cultivates rubber in ways that are economically, socially and environmentally sustainable.
Large-scale land concessions for rubber should be limited and highly regulated to prevent expropriation of rural people’s lands, unfair compensation, deforestation, agro-chemical pollution and exploitative labor practices
The global economy is consuming our available resources about one-and-a-half times as fast as they regenerate. Trees play a prominent role in our attempts to buck this trend. ICRAF communication expert Sander van de Moortel explains.
Just as companies, countries and households need to keep a positive balance, running a tight planet requires careful planning to offset expenditure by income. Instead, humanity is blowing its 2016 allowance on 8 August, about 145 days before payday.
Earth Overshoot Day, as this infamous occasion is called, is calculated annually by the Global Footprint Network(GFN), an international think-tank aimed at keeping the human economy within Earth’s ecological limits. Overshoot Day is reached when the human economy has effectively used more resources than the planet’s biological capacity, or the amount of resources it can generate in a year. When we reach Overshoot Day, we are depleting our fishing grounds, releasing more CO2 into the air than our trees and oceans can absorb, and harvesting more forest than can regrow that year.
The GFN started calculating Earth Overshoot Day in 2006, when our environmental currency still lasted us until October. Last year, we barely made it until 13 August. Indeed, by overshooting our budget at ever faster rates, we are effectively indebting ourselves and our children for generations to come. If we adhere to the goals set by the Paris climate agreement adopted by nearly 200 countries in December 2015, the carbon footprint will need to gradually fall to zero by 2050. Now is the time to reverse the trend and push Overshoot Day to 31 December, where it belongs.
Cheardsak Kuraksa, an agroforestry researcher at Thaksin University in Thailand, enjoying his research into the multiple benefits of trees on farms. Photo: World Agroforestry Centre/Robert Finlayson
Global solutions for a global problem
‘The good news is that we are technologically up to the task,’ says Mathis Wackernagel, co-founder and CEO of Global Footprint Network. ‘We will even run a profit.’ Emerging sectors like renewable energy get a boost, and we will lower the cost of dealing with climate change, such as accommodating climate refugees or restoring damage after freak weather incidents… The only resource we still need more of is political will,’ says Wackernagel, so everyone needs to contribute to make that happen.
Individuals can chip in by eating less meat, wearing clothing adapted to the outside temperature indoors, or by cutting unnecessary car commutes. The Overshoot Day website suggests a number of pledges and will reward a GoPro camera to the three best images of yourself fulfilling the pledge.
Many countries, too, are picking up the gloves. Renewable energy generators are popping up like mushrooms all over the world and China has pledged to cut its meat consumption by 50% by 2030, which should have a tremendous impact on carbon emissions.
Trees: no longer just carbon storage
Meine van Noordwijk, Chief Science Advisor at the World Agroforestry Centre and coordinator of the landscapes theme of the CGIAR Research Program on Forests, Trees and Agroforestry, believes that the correct use of trees in our landscapes, farms and cities is instrumental for fulfilling our goal of pushing back Overshoot Day. It has been long known that trees help restore landscapes and reduce our ecological footprint, especially on farms, which typically have a relatively poor ecological track record. The combination of trees, crops and livestock on farmland is a discipline called agroforestry, ICRAF’s main research interest.
‘There are many good scientific reasons to include trees in our farmland,’ says van Noordwijk. ‘They can act as natural fertilizer, offset the warming effects of climate change, prevent runoff, preserve moisture, provide a safe haven for vital wildlife, all the while providing an income for their owners through the sale of their fruit and timber.’
Besides these advantageous properties of trees, until recently their key selling point for climate scientists was that they actively absorb carbon out of our atmosphere and store it in the soil, where it no longer contributes to climate change.
Good news in that regard comes from a recent research paper published in Nature by ICRAF scientist Robert Zomer and colleagues. Through remote sensing, Zomer calculated that 43% of all agricultural land globally has at least 10% tree cover and that this figure has been steadily rising over the last decade. Booming economies such as Brazil, Indonesia, China and India are leading the pack with the largest increases in stored carbon.
ICRAF’s scientists have more hopeful news. Van Noordwijk and the Partnership for the Tropical Forest Margins have recently published new research suggesting that forests and trees may have an even more important benefit than storing carbon: directly causing rainfall.
This would mean that the predicted freshwater shortages may be avoidable in all parts of the planet, doubling the value of trees as the woody guardians of our planet. In addition, it would help us better understand rainfall as a key climate variable.
“The Paris Agreement is significant because it brought forward the aspiration of staying below 2 degrees Celsius and put forests in the text,” said Marco Albani, Director of the Tropical Forest Alliance (TFA) 2020.
“But the Sustainable Development Goals (SDGs) are perhaps even more important. Among the various wedges in the current climate policy, the land use one probably has the biggest implications for all the other SDGs.”
The TFA 2020 was created in 2012 at Rio+20 after the Consumer Goods Forum (CGF) committed to zero net deforestation by 2020 for palm oil, soy, beef, and paper and pulp supply chains. The CGF partnered with the US government to create the public-private alliance with the mission of mobilizing all actors to collaborate in reducing commodity-driven tropical deforestation.
Today, there’s about $500 billion worth of forest commodities produced every year, $100 billion of which are found in tropical rainforest countries, according to Albani.
Global Landscapes Forum: The Investment Case, London, 6 June 2016. Photo: CIFOR
“There is a big role for the financial sector to play- particularly in terms of investment in the sustainable intensification of commodity production, which allows companies to meet their high demand for commodities, but without harming the forests,” he said.
“But it’s not easy because it involves more than the private sector. It also involves the government on all levels- national, regional and local- regarding land allocation decisions. It also involves domestic banks, state-owned banks, and trade finance that is done largely through the supply chains.”
As of today, financial institutions are not the biggest players in supply chains. Local finance institutions are generally the ones providing finance to smallholders.
“The big issue is that the majority of smallholders are independent like palm oil farmers in Indonesia, for example,” said Pablo Pacheco, Principal Scientist and Team Leader of Value Chains, Finance and Investments at CIFOR. “Smallholders have access to informal sources of finance, so companies often struggle to connect directly with them.”
“The private sector offers smallholders a secure market for their products, but they don’t necessarily pay for the costs to improve farming practices. For example, in the beef sector in Brazil, only big ranchers have enough capital to improve their farming practices. But medium scale and smallholders don’t have the capital to make these investments.”
Pacheco says new business models are urgently needed to share the costs, risks and benefits between companies and smallholders. Most of the business models that exist today transfer costs to the smallholders upstream in the supply chain, but not the benefits.
Global Landscapes Forum: The Investment Case, London, 6 June 2016. Photo: CIFOR
Zwide Jere, Managing Director of the Malawi-based NGO Total Landcare, echoed Pacheco’s sentiment. “Today, there are very high interest rates for smallholders to access capital, especially in developing countries like my own. Interest rates are about 45 percent in Malawi. It’s sad that farmers need to accept these bad rates because they desperately need the access to finance.”
Still, progress on greening supply chains is encouraging.
“When I started working in this space, it was impossible even to know exactly how much deforestation there was, let alone where it was occurring,” said Albani. “Today, we have almost instantaneous information. We are able to trace back deforestation and allocate it to specific supply chains in a way that we’ve never been able to do before.”
Creating concrete solutions
Other key challenges tackled at the Forum included unclear tenure and government regulations, weak institutions, and the uncertain returns and unforeseen risks currently inhibiting investments at scale.
According to Holmgren, there are three key areas that require urgent attention. One is on the finance side- new tools are needed to help minimize the risks of investments and scale them up. Secondly, there is need on how financial services are done on the ground through local finance institutions. Thirdly, there is a need to better measure progress, both in terms of return on investments, but also in terms of sustainability outcomes.
Sessions at this year’s Forum ranged from diversifying financial instruments to realize REDD+, risk reduction measures for private sector investment in landscape restoration, the assessment of legal and policy frameworks for landscape investment in Africa, and how to link angel investors to land use startups.
Some of the liveliest discussions took place at a packed debate on the rise of financial system innovations like block-chains, mobile banking and the Internet of Things and how they can affect landscapes.
Digital innovations to enable and disrupt financial services, referred to as fintech, alongside mobile applications and GPS mapping software are helping to unlock the large-scale finance needed to address climate change and development challenges globally.
“About a year ago, we were looking for a solution for a low-cost way to connect smallholders to large capital,” said Christopher Botsford, CEO and co-founder of ADM Capital, an investment manager that looks to achieve long-term capital appreciation by investing in opportunities across Asia and Central and Eastern Europe.
His solution? Software.
Software like GeoTraceability, recently acquired by PriceWaterhouse Coopers, offers specialized tracking and data collection technology like GPS mapping for natural resources including cocoa, coffee, and minerals globally.
It has facilitated the mapping and data collection of over 120,000 hectares of production in 11 countries, using GPS and GIS technologies. It has also collected data from 106,000 smallholders in developing countries, giving them information to help improve their production, farming practices, and supporting their access to international supply chains.
This technology helps mitigates the risk for investors who are wary of investing in smallholders, and encourages them to scale up their commitments.
“It’s a question of finding a format where people can see that they will get their money back,” said Botsford. “These software packages allow us to form faux land titles and on these parcels of land, you can monitor what goes on. This improves transparency.
“We can then attract off-takers to give us long-dated contracts and that’s how we can convert from liaising with diverse independent smallholders into a format that is bankable on a wholesale basis. That’s our objective.”
Prior to this, it was immensely complicated given the daunting task of aggregating millions of disparate smallholders. “There are four million smallholders in Indonesia alone involved in palm oil,” said Botsford. “A lot of them don’t have land titles. Two-thirds of them are in debt. So on the face of it, it’s just not bankable as a sector.”
But financial technology has changed all that by making these investments scalable.
“For the first time, you can address millions of smallholders at once. Before this software came along, you couldn’t do that. What it’s done, is make all these people eligible for finance and to bring them into the modern world, so it’s very exciting.”
Walking the talk
Beyond just stimulating conversation, the Forum’s key objective was for its participants to walk away with seeds of viable solutions for connecting capital to smallholders.
For the first time ever, a Dragon’s Den was held to allow presenters to pitch concrete investment opportunities to a panel of investors, finance experts and land use practitioners. All pitches introduced real projects at an advanced stage.
The three pitches included: The Land Degradation Neutrality Fund, created by Mirova and the UNCCD Global Mechanism to support large-scale rehabilitation of degraded land for sustainable use with long-term private sector financing; the Sustainable Ocean Fund by Althelia Ecosphere, a new public-private partnership dedicated to making impact investments into marine and coastal projects, and the Sustainable Cocoa initiative in the Dominican Republic by NatureBank, which aims to achieve sustainability in cocoa by supporting communities that rely on cocoa for their livelihood.
These funds demonstrated the volume of sound projects that exist out there today thirsty for private sector investment.
In his remarks at the Forum’s Closing Plenary, Burrows compared the private sector’s mounting interest in sustainable landscapes investment to a cresting wave with a long period of trough. Until recently, that wave was still in formation.
“Last year, when I spoke at the launch edition of this event, I said that the wave was about to break. Well, I think it broke in Paris during the COP. My hope is that when we meet again here next year, we would have seen an enormous change in terms of attitudes from the global financing institutions to financing sustainable development.”
Paola Agostini, Global Lead Resilient Landscapes for the World Bank, has already witnessed a change. “This Forum would have been impossible ten years ago. When I was in Liberia working on forests, we were trying to do partnerships- there was the public sector and the NGOs, but the private sector was largely absent. That’s no longer the case.”
Global Landscapes Forum--The Investment Case: “We need courage to go outside our comfort zones”
Global Landscapes Forum–The Investment Case: “We need courage to go outside our comfort zones”
13 June, 2016
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Also watch the video on the event. Click to play.
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The Global Landscapes Forum: The Investment Case in London on 6 June 2016 brought together experts from the financial services industry with leaders from the corporate sector, government and academia to take investments into sustainable landscapes to the next level. This second edition of the event offered a unique platform for experts to explore the role of private finance in enhancing livelihoods and landscapes across the globe.
The event was attended by experts such as Peter Holmgren, Director General of the Center for International Forestry Research (CIFOR), World Bank Lead Environmental Economist Paola Agostini, CEO of ADM Capital Christopher Botsford and Tropical Forest Alliance Director Marco Albani. In this video, they speak about the importance of connecting finance and sustainable landscapes at the Forum, which is a key event under the CGIAR Research Program on Forests, Trees and Agroforestry.
FTA event coverage: Leveraging finance to support solutions for smallholders
FTA event coverage: Leveraging finance to support solutions for smallholders
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Land cleared by swidden for an oil palm (Elaeis guineensis) plantation. Photo: Renee Miller/CIFOR
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This article is part of a special three-part series related to the Global Landscapes Forum 2016 – The Investment Case. This one-day experts symposium in London on June 6 aimed to accelerate investment in landscapes by connecting funds to farms and forests.
By Deanna Ramsay, originally published at Forests News
Oil palm mill in Indonesia. Photo: Agus Andrianto/CIFOR
Financing sustainable landscapes – especially those associated with oil palm – is a delicate puzzle, but one with possibilities.
There is little homogeneity in our world. This is true even among those cultivating a single crop like oil palm, and the complexities involved mean attempts to support sustainable practices can be tricky. But there are also opportunities, especially in Indonesia where oil palm has been expanding rapidly, largely due to smallholders.
“What is interesting to note in Indonesia is that there is not a scarcity of resources flowing to support investments in oil palm, which is associated with the rapid growth of smallholders in the sector,” said Pablo Pacheco, a principal scientist at the Center for International Forestry Research (CIFOR).
“Yet many of these smallholders do not embrace good production practices, and continue to face low yields,” he added. “A major challenge is thus to put in place the necessary conditions to support the smallholder transition to more sustainable models of production.”
But who will pay for these costs?
“There is a lot of debate today over how to finance this transition, and what the role of financial players should be,” said Pacheco.
For those in the finance sector, the search for the best methods to support sustainable practices among smallholders, such as those typically cultivating small land plots measuring less than two hectares, has only just begun.
Land cleared by swidden for an oil palm (Elaeis guineensis) plantation. Photo: Renee Miller/CIFOR
“Sustainability standards have been produced to guide sustainable production, but often from the perspective of large-scale producers. Those standards are not often embraced by smallholders – and this is just increasing the gap. We have to ensure that the move to sustainable commodity supplies doesn’t contribute to the continuing marginalization of smallholders.”
For instance, small oil palm farmers often have little control over what prices they receive for their harvests, and are generally dependent on mills owned by large corporations.
“The most important contribution of the finance sector, which strongly supports big plantation companies with equity investments and loans, is to use its influence to change the balance of power and let the plantation companies treat smallholders as equal partners with whom they strive for improved livelihoods and more sustainable production practices,” said Jan Willem van Gelder, Director of Profundo, an Amsterdam-based research consultancy specialized in international commodity chains.
Increasing yields
At the moment, smallholders have little access to high quality seeds or fertilizers, which leads to low yields. This means farmers often labor from harvest to harvest in a vulnerable state.
“One of the fundamental issues in upgrading the oil palm supply base is investing in increasing yields by replanting plots using better seed varieties,” said Sophia Gnych, a scientist at CIFOR.
“But there are complications associated with this. In pulling out old trees and planting new ones, the wait is three to five years before there are new fruits. This has income implications for smallholders and is a major finance challenge.”
According to Hans Smit, a senior advisor at the international development organization SNV, it is critical that smallholders are supported to increase yields through replanting rather than expansion. But that requires access to finance.
Attractive loans for smallholders
“The challenge is to enable financial institutions to provide loans to smallholders at scale and at low interest rates,” he said. “In order to achieve that, financial institutions need to understand the risks and to provide sizeable loans at a group level.
“We have created a credit-scoring tool that maps out the cash flow for households in replanting scenarios and assesses their bankability. With such a tool, we can immediately see if a farmer is bankable, and if not why.”
With the information they are able to garner on the ground, risks can be better understood and groups of farmer loans could be packaged into portfolios to minimize risks and offer farmers competitive wholesale interest rates, Smit added.
Currently, many smallholders rely on credit through middlemen that charge high interest rates, but offer them the flexible terms they need.
“What is going to be important in the Indonesian case is considering how formal credit can compete with informal sources of credit that provide more flexibility to smallholders,” said Pacheco. “The question is how to make formal credit more attractive to smallholders, especially as it has more rigid terms for repayment.”
Blending informal and formal credit methods could be an option, Pacheco added.
Creating such solutions – with optimum results for both smallholders and financiers – requires discussion and collaboration.
“To find a successful model, various stakeholders need to be involved,” said van Gelder. “The finance sector, the plantation companies, the smallholders, as well as local and national governments that can make sure that land titles are clear, infrastructure is developed and that other risks are covered.”
In one move toward crafting solutions, a session at the Global Landscapes Forum 2016: The Investment Case in London on June 6 addressed this knotty topic, bringing together diverse representatives from finance, development, government and the corporate sector to discuss how to best support sustainability among smallholders.
From global complexity to local reality: Aligning implementation frameworks with Sustainable Development Goals and landscape approaches
From global complexity to local reality: Aligning implementation frameworks with Sustainable Development Goals and landscape approaches
26 November, 2015
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Key messages
Many of the Sustainable Development Goals (SDGs) retain a sectorial focus; however, emphasis is placed on the need for integration across goals and targets.
Given that there are inherent synergies and trade-offs embedded throughout, applying sectorial approaches to achieving the SDGs will likely be ineffective.
Integrated landscape approaches offer significant potential as an implementing framework for addressing interlinked and conflicting challenges.
This brief identifies where the current set of goals would benefit from a landscape approach and to what degree, and presents key recommendations.
Governing Oil Palm Landscapes for Sustainability (GOLS)
Governing Oil Palm Landscapes for Sustainability (GOLS)
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cifor
Key messages
An increasing number of private sector companies are making space for sustainability in their corporate governance processes and attempting to embed environmental and social best practices into their operations.
The role of the private sector in land-use change and deforestation has been highlighted in recent years as some of the world’s largest retailers, manufacturers and traders have made commitments to eliminate deforestation from their supply chains. These efforts were catalyzed in December 2014 when civil society organizations, private sector companies and governments joined together to sign the New York Declaration on Forests.
These commitments have the potential to dramatically benefit the global environment, as well as the livelihoods of millions of rural people. But it is the way in which these commitments are implemented that will determine whether the desired environmental and social benefits are fully realized.
The CIFOR/USAID Governing Oil Palm Landscapes for Sustainability (GOLS) program will support effective and equitable implementation of these commitments by helping to align public and private policies and actions, and by delivering targeted, research-based evidence to key stakeholders and practitioners.
Restoration 
Plantations and tree crop commodities 
Enhanced nutrition and food security 
Biodiversity, safeguarding and conservation 
Nationally determined contributions 
Bioenergy and biomaterials 
Blue carbon and peatlands 
Climate change adaptation 
Landscape governance 
Gender 
Silvopastoral systems 
Market-based agroforestry-forestry 
Farm-forest policy interface 
Agroecology 
Livelihood trajectory modelling and assessment 
Inclusive finance and business models 
Innovating finance for sustainable landscapes 
Public and private commitments to zero deforestation 
Orphan tree crops 
Effectiveness of approaches to sustainable supply 
Quality of FTA research for development 
Sentinel landscapes 
Foresight 
Seeds and seedlings delivery systems 
Smallholder tree-crop commodities 
