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Abstract

This study analyses the impact of policy, legal and market conditions and specific incentives on smallholders’ interest and success in tree growing between 1990-2015 in Lao People’s Democratic Republic (Laos, Lao PDR). A review of previous studies and policy papers established the framework for this study, with primary data then collected from smallholders through semi-structured interviews in four villages. The interview questions covered household socioeconomic features, land use, information on woodlots, extension, and perceptions on drivers and challenges of tree growing. The findings indicate that policy objectives of promoting smallholder tree growing are weak at the district and village levels, and the only significant incentive, namely land allocation, has become ineffectual due to land scarcity and preference for other income sources. Tree growers intend to mainly preserve their present plantation areas, although their interest to expand tree growing areas is weak, and one third of non-growers see tree growing as a potential livelihood diversification option. If the promotion of smallholder tree growing is to be improved, the land and forest policy and associated legislation requires thorough revision and simplification, extension services must be made available, and specific incentives developed to allow smallholders to access land and meet their specific needs.
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Abstract
This study analyses the impact of policy, legal and market conditions, as well as
specific incentives on smallholders’ interest and success in tree growing between
1990-2015 in Lao People’s Democratic Republic (Lao PDR or Laos). A review
of previous studies and legal and policy papers established the framework for this
study, with primary data then collected from smallholders through semi-
structured interviews in four villages. The interview questions covered household
socioeconomic features, land use, information on woodlots and their
management, extension services, and perceptions on drivers and challenges of
tree growing in the past and in the future. The findings indicate that high level
policy objectives of promoting smallholder tree growing are weak in practice at
the district and village levels, and the only incentive of any significance, namely
land allocation for tree growing, has become ineffectual due to increased land
scarcity and preference for other income sources. Current tree growers intend to
mainly preserve their present plantation areas, although their interest to expand
tree growing areas is weak, and one third of non-growers see tree growing as a
potential livelihood diversification option. If the promotion of smallholder tree
growing is to be improved, the land and forest policy - and associated legislation
- requires thorough revision and simplification, extension services must be made
available, and specific incentives developed to allow smallholders to access land
and meet their specific needs.
Keywords: Smallholder tree growing, Lao PDR, Tectona grandis, forest policy,
legislation, wood markets, future interest, incentives, extension
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Introduction
In Southeast Asia the Green Revolution led to substantial forest conversion into
agricultural lands in the last decades, but the trend is now turning in countries reaching
middle-income status. For example the governments of China and Vietnam have
strongly promoted smallholder tree growing and thereby have been able to establish a
significant plantation forest resource (Midgley et al. 2017). In the Lao People’s
Democratic Republic (Lao PDR, Laos), the government has promoted smallholder tree
growing since the 1990’s but their success has been modest compared to the
neighbouring countries. Lao PDR’s legislative framework and its bottlenecks have been
analysed in detail in recent studies (Smith, Ling, et al. 2017) but the lessons learnt over
the years on the drivers and incentives for smallholder tree growing, interactions
between enabling and hindering framework factors, and smallholders current views on
tree growing require more in-depth analysis.
This paper examines the development of smallholder tree growing in Lao PDR against
the policy, legal, socioeconomic and market background, aiming to identify the
bottlenecks and flaws in the enabling environment, and to analyse to what extent tree
growing is induced by supportive government policies (i.e. by design). The focus is on
teak (Tectona grandis) growers, as the species has been strongly promoted among
smallholders, and to build a timeline from 1990 to 2015 based on earlier research. The
research questions are: 1) How has the enabling environment for forest plantations and
smallholder tree growing developed in Lao PDR over the last 25 years, and how have
smallholder needs been addressed? 2) How has the tree plantation area and plantation
management changed in the case-study villages over the past 25 years? 3) What are the
tree growing prospects for the future? and 4) How successful have policies been in
promoting tree growing, and how could they be improved if smallholder tree growing
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remains as a priority in forest policies? First, we outline the development of the
enabling environment based on a literature review, after which we present the methods
and findings from a case study. Finally, we analyse and discuss the successes, and
suggest changes needed to policies in order to better support smallholder tree growing.
Evolution of Tree Growing and its Operating Environment in Lao PDR
Development of Plantation Forestry
Laos’ forest plantation area (timber, rubber, agarwood etc.) has gradually grown from
less than 10,000 ha in the 1990’s to some 446 000 ha in 2016 (Hansen et al. 1997;
Earth Systems 2016). The share of trees planted by individual farmers and entrepreneurs
in this increase is estimated to be some 47.5%, but the figure is only a rough
approximation since only some 10% of smallholder plantations are registered (Smith,
Ling, et al. 2017). Rubber plantations make up more than 50% of the plantation area
increase
Teak (Tectona grandis) is a native species in Lao PDR, and the tradition of growing
teak originates from the early 20th century (Phimmavong et al. 2009). The teak area has
grown steadily from some 5 000 ha in the early 1990’s to about 50 000 ha today (Earth
Systems 2016). Smallholder teak planting booms have been reported in Luang Prabang
Province, the first being in the late 1980’s to mid-1990’s, and the second in the 2000’s
due to amended land transfer rights, improved infrastructure and market opportunities,
and to encouraging results from earlier plantings (Newby et al. 2012). Regional
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mapping in Luang Prabang Province by the ACIAR VALTIP II1 programme recorded
15 342 ha of smallholder teak plantations in 2015 (Boer & Seneanachack 2016).
Smallholder Tree Growing Enabling Environment
The success of policies and incentives that promote smallholder forest plantations
depends on the socioeconomic context, the overall policy and market environment, the
perseverance of supportive policies, and the relevancy of the incentives to overcome the
actual hindrances for tree growing (Lamb 2015). These factors, which can be either
enabling or preventing depending on their status, include secure land and tree tenure,
land use competition, demand and supply, trade, open and functioning wood markets,
access to knowledge and appropriate technologies, and the tradition and acceptance of
tree growing among land owners and society (Byron 2001; McDermott et al. 2009;
Bauhus et al. 2010). Political and macro-economic stability, removal of structural
barriers and market distortions, and the creation of a favourable environment for
enterprises are the most effective and economically efficient incentives for long term
sustained tree growing (Cossalter & Pye-Smith 2003; Enters et al. 2006). These factors
– in the context of Lao PDR – are discussed in the following sections to establish an
overall framework against which case study villages results will be analysed.
Forest Policy Development
The government of Lao PDR has introduced economic reforms since 1986
transforming the country towards the so-called ‘market socialism’. Poverty reduction
1 https://www.aciar.gov.au/project/FST/2010/012
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and eradication of shifting cultivation have been high on the agenda from the beginning.
The first forestry specific policy objectives for sustainable forest management were
formulated in 1989 (Phimmavong et al. 2009). The Socio-economic Development
Strategic Plan to the year 2020 and the 5-year plan endorsed in 2001 both strongly
promoted tree plantations, with a target area of 134 000 ha for the 5-year period up to
2005. The most important forest policy tool to date, the Forestry Strategy 2020 (released
in 2005), pledges to restore forest cover to 70% by 2020 and includes a programme for
plantation forestry promotion and development (Prime Minister’s Office 2005). The
strategy recognizes smallholders’ potential contribution in increasing the forest area and
economic potential of teak growing. It was designed to support smallholder tree
growing using several approaches including extension, supporting farmer organizations,
marketing and product development, and providing additional land and financing to
farmers. Furthermore, the strategy aims to improve the wood industries’ performance
and the enabling environment for smallholder tree growing by simplifying regulations.
Despite the intentions, the results have been modest so far (Smith, Ling, et al. 2017).
Land Tenure and Allocation
Economic reforms in 1986 included principles of private ownership of production
means and free enterprise (Stuart-Fox 2007), whereby the State is responsible for the
centralized management of land, including allocation, but the user-rights are similar to
actual tenure rights. In 1990 the inheritance law – followed by the new constitution in
1991 – further strengthened the legal protection of the land user-rights (Bourdet 1995).
The Land and Forest Allocation (LFA) programme and the Land-Use Planning
and Land Allocation programme (LUPLA) introduced in 1990’s (Ducourtieux et al.
2005) allowed for the allocation of land, including degraded forest land, to individuals
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for productive purposes (Lestrelin et al. 2013). Several decrees and directives refined
the LUPLA objectives to promote allocation of land for tree plantations, with fast
growing species and teak specified as being preferred species. Other refinements
included the introduction of land tax exemptions for registered plantations and
agroforestry systems with >1 100 trees per ha and larger than > 1 600 m2, exemptions
on wood sales royalties and charges for planted forests and agroforestry systems, and
the introduction of procedures for tree plantation registration (Smith, Barney, et al.
2017).
After LUPLA, agricultural land area per family was often smaller than before
(Ministry of Agriculture and Forestry 2010). To access more land a household could
enter into an agreement to manage degraded forest or non-forest land for agriculture,
forestry and livestock production. Permanent tenure of the degraded lands could be
received after three years if the conditions of the contract are met. Any tree planted
belongs to the individual or organisation who planted it, provided they have state
recognition and the required approvals or licences for utilization (Sacklokham &
Dufumier 2006; Smith, Ling, et al. 2017).
Forest Law and regulations
The role of forest legislation (National Assembly 1996; Lao People’s Democratic
Republic 2007, presenty under revision) in promoting smallholder tree growing has
been complementary to the land allocation process. In addition, some specific financial
incentives have been introduced for forest plantations. However, regulation on
smallholder tree growing has remained a complication. For example, smallholder forest
plantations are included in the production forest category, and despite the regulatory
reliefs for plantation wood trade and taxation, there have been conflicting
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interpretations of the regulations as they apply to planted forests. Non-compliance is
common, since even the authorities responsible for law enforcement are not clear about
how to apply the complicated and overlapping regulations, and the costs associated with
compliance are excessive against expected returns (Smith, Barney, et al. 2017).
Agricultural Expansion and Competition of Land Uses
Growing demand from China and Vietnam for various agricultural products (Andersson
et al. 2009) has supported agricultural intensification and diversification, but it has also
led to expansion of shifting cultivation areas in northern Laos (Hurni et al. 2013). There
is much local variation, and variation over time in these agricultural ‘boom crops’.
Rubber expansion, which started in the early 2000’s, continues (Phompila et al. 2017) in
northern Laos mainly through contract farming arrangements between companies and
smallholders (Cramb et al. 2015). Cash crop production area has increased significantly
in recent years, including sugar cane, coffee, maize, cassava, banana, and eucalyptus
(see for instance Kallio et al. 2019).
Wood Demand-Supply Balance
Access to abundant natural forest resources under a regime of weak law enforcement
has been a disincentive for tree growing. Forest industries and wood exports are still
largely dependent on natural forests, although the significance of forest plantations has
been increasing along with the natural forest degradation (Lestrelin et al. 2013). Data on
demand-supply balance in Laos is largely inconsistent and unreliable, but it is evident
that log exports have been – and still are – far larger than reported, and logging volumes
considerably larger than quotas (The World Bank et al. 2001; Saunders 2014). Even
though the forest area has slightly increased since 2000 despite decades of deforestation,
the increase is mainly explained by the increase in rubber plantation area (Phimmavong
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et al. 2009; Kenney-Lazar 2012; FAO 2015). The remaining natural forests are
degrading at an alarming rate as the transition of forest areas to the ‘potential forest’2
category continues (FAO 2015). In 2018 the Annual Allowable Cut for commercial
species in 51 Production Forest Areas3 is estimated to be as low as 40 000 m3
(Department of Forestry unpublished data).
Some 80% of households use wood as their primary energy source and natural forests
still provide enough fuelwood for the country. However, village’s natural forest
resources4 are degrading and unable to meet the household timber needs, thus household
timber is considered as an important secondary purpose for teak plantations after
commercial growing (Hansen et al. 1997; Midgley et al. 2017).
Exports and Industries
Laos has become a resource frontier for China, Vietnam and Thailand (Lestrelin et al.
2 “Potential forest” refers to degraded and temporarily unstocked forest with a crown cover
below 20%; their share of the total forest area was estimated at 52% in 2015 (FAO 2015).
3 Production Forest Areas (natural forest designated for production) cover 3.2 million ha or
some 34% of the total forest area. Forest plantations are included in the production forest
category but are not included in this figure.
4 Households have an annual quota to cut trees for home consumption (construction, fuel wood)
from the ‘village forest’ that their village is entitled to manage and use. Village forests are
not necessarily large enough to supply the needs of all villagers, quotas are often exceeded,
and quotas have also been used for commercial logging (illegally).
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2013), with wood products accounting for 28-56% of official exports from Lao PDR in
the 1990’s (The World Bank et al. 2001; Smirnov 2015). The government introduced an
export ban for roundwood in 2007 to promote the development of the domestic wood
processing industry, but the impact has been negligible. Plantation-grown wood is
exempted from the ban if it cannot be processed domestically, and simplified
certification procedures can be applied to the export process. The National Export
Strategy 2011-2015 targets wood products as being a sector having potential to generate
foreign exchange, with a consequent regulation on exports and imports and on chain of
custody requirements for plantation wood (Smith et al. 2017). Today the wood industry
still consists of small and medium sized sawmills, furniture factories, and plywood and
other wood-based panel production (Redman et al. 2014).
The export volume of all teak products in 2013 was approximately 13 000 m3,
mainly to China and Thailand (Midgley & Mounlamai 2015). It is estimated that the
smallholder teak plantations in northern Laos supply annually some 10,000 m3 of
roundwood for small wood processing industries and exports (Midgley & Mounlamai
2015).
Capacity and Knowledge on Tree Growing
Support services for smallholder tree growing have remained weak. For instance
nursery capacities and technologies are underdeveloped (Prime Minister’s Office 2005).
Over the years only specific projects (such as the Luang Prabang Teak Programmei,
LPTP and ACIAR VALTIP programmes5) have been able to deliver high quality
5 http://laoplantation.org/valtip3/about-us/project-background/
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seedlings and trainings for tree growers (Van Gansberghe et al. 2011). District
Agriculture and Forestry Offices (DAFOs) are responsible for the extension services
delivery, but their capacity and resources have remained low and depend on (donor)
project funding (Vannasou 2006).
Farmer and Tree Grower Organisations and their Capacities
Farmer organisations are promoted by the agricultural and forestry strategies, and they
have a strong legal framework established in specific legislation (Smith, Ling, et al.
2017). However, the policy and legislation have not materialised into field-level
advisory support to Tree Grower Associations establishment and organisational
development (TGAs) (Ling et al. 2018). Limited benefits received in return for the
organisation, registration and associated fees may lower tree growers’ interest in
associations, despite the tax incentives and exemptions applied to farmer cooperatives
and enterprises (Ling et al. 2018).
Incentives
Soft loans have been made available for smallholders for tree growing and agricultural
activities in the context of the Land Allocation Programs. Loans are not commonly used
for tree plantation investments and, for example, experiences from the Asian
Development Bank’s Industrial Tree Plantations Project 1995-2005 on smallholder tree
growing credits were very poor (Nevins & Peluso 2008). The land allocation
programme has been the most extensive incentive for tree growing, but in the process of
land allocation, tree growing has also been a way for village elites and non-resident land
speculators to claim additional land (Sacklokham & Dufumier 2006). According to
Hansen et. al. (1997) and Midgley et al. (2007) the possibility to use teak plantations as
collateral or sell the plantation to investors has attracted some smallholders to plant.
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Smallholder woodlots are often too small, or their stocking is too low, and they
lack formal registration to qualify for tax exemptions. The monetary value of the
exemption from land tax is low compared to all fees, charges and taxes in land
registration and tree growing, harvesting and sales (Smith, Barney, et al. 2017).
Furthermore, provincial and district authorities apply the legislation differently, and
may also have additional local taxes that override the national-level exemptions.
Case study: Luang Prabang and Vientiane Province Teak Growers
After analysing the operating and enabling environment the study focused on field
level: how the changes of the enabling environment and its present status have
influenced tree growing in villages in Luang Prabang and Vientiane provinces?
Case-study Methods
Definitions of smallholder tree growing and plantations vary and are also
country specific (Harrison & Herbohn 2002). In this paper ‘smallholder tree growers’
refers to households that own at least one woodlot larger than 0.1 ha, with their total
tree growing area being less than 20 ha. To decrease dispersion in the sample, trees
grown in permanent agroforestry systems, involving permanent cultivation of crops
with teak, are not included.
Research Area
Luang Prabang Province was selected because of its long tradition of teak growing,
while Vientiane Province was selected because of its proximity to the capital and the
main national markets, which have stimulated teak plantation development in the area
(Hue et al. 2017). Four study villages were purposively selected for this research; three
in Luang Prabang (Ban En, Ban Xiengloum, Ban Thinsom) and one in Vientiane
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(Phialat) (Figure 1) to represent variation in access to markets and extension support
(Table 1). Selection was made in collaboration with the Luang Prabang Teak
Programme and the National University of Laos. The field work was carried out in
October-November 2015.
[Figure 1 near here]
[Table 1 near here]
In each village 15 ‘teak growers’ and 15 ‘non-growers’ were randomly selected from a
list formulated by the village head, with ranking of groups into three socioeconomic
sub-groups: high, middle and low-income households. The listing was supported by the
village household records. The socioeconomic ranking was subjective, but on the other
hand also reflects the perception of living standards in the region and in the village.
Income sub-grouping was only used to diversify the sample of interviewees, not in the
data analysis. For practical reasons absentee land owners could not be interviewed.
Data Collection and Analyses
The interviews were organized either at the respondent’s home or at the village
‘meeting house’ with each interviewee on a one-on-one basis. Each interviewee was
asked for their willingness to participate in the research and permission to record the
interview. The semi-structured interviews were carried out based on a questionnaire
(see Annex 1-supplemental material) covering household’s basic information, income
sources and their importance, farming, detailed information on woodlots and their
establishment, and management, extension, drivers and challenges of tree growing and
future perspectives. Interviews were conducted in Lao language by a local extension
officer with the support and presence of a research team member. Whenever possible,
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the team visited interviewees’ teak plantation (58% of the owners) to cross check and
validate their answers on site quality, plantation management and condition, and to
estimate basic stand-level variables. In 42% of cases difficult access/remote location
prohibited site visits. This causes a slight risk for the reliability of some answers (e.g. on
management) but does not influence the main questions analyzed in this study.
Because the sample size is small and sampling methodology contains subjective
elements, the statistical analysis in this research is limited to descriptive methods and
methods applicable to small samples (Mann-Whitney U-test, Spearman correlation, Chi-
square).
Market data on teak was collected through interviews with middlemen (7) and
teak processors (4), and from provincial government records. The information is patchy
and only gives a general overview because most wood sales do not follow the formal
procedures for licencing, and as such these volumes and prices are not recorded.
Results
1. Socioeconomic characteristics of the interviewed tree growers and non-growers
There were no statistically significant differences in socioeconomic variables between
the tree growers and non-growers groups, but there were significant differences in
income and agricultural land within the non-growers group. In general, tree growers had
more land and they were also more often using external labour in farming activities
(Table 2). In the non-growers’ group 28% of the households had no land, and 17% had
less than one hectare. Nearly all interviewees in both groups (89%) had formal land
rights either through occupancy or permanent land title. The share of landless families
was especially large in the non-grower groups in Phialat and Ban En villages, leading to
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significantly less rice self-sufficiency among non-growers.
[Table 2 near here]
Most households had cash income both from agriculture and livestock, and businesses
and/or labour work. According to the rough estimates the interviewees gave on the
share of each income source, in the tree-growers’ group 58% had agriculture (cropping
and livestock) as the main income source (i.e. ≥50% of their income), with the
remaining 42% reporting that business and labour work were the most important
income sources. In the non-growers group the shares were 22% from agriculture and
78% from business and labour work. Variation between villages was large (Figure 2),
reflecting local availability of labour work and business opportunities, and land
availability. Income from timber sales is significant but occasional for tree growers,
with timber sales often taking place only when the household needs to invest or has
unexpected expenses, or when the owner receives a tempting offer from a buyer.
[Figure 2 near here]
2. Teak planting in the study villages
Teak planting areas clearly increased in 1993-1995 among the teak growing
interviewees, with some increase being also observed in 2000 and again in 2005-2008
(Figure 3). However, no major differences are identifiable between the villages,
although in Phialat less woodlots were established during the first peak. Only a few of
the tree growers had rubber plantations, or tree plantations other than teak.
Most of the interviewed households had one (45%) or two (26%) woodlots, with
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six being the maximum number of woodlots of any household. Nearly 60% of woodlots
owned by the interviewees were smaller than 1 ha and the plot average area was 1.1 ha.
[Figure 3 near here]
The majority of the woodlots are on former agricultural (59%) or fallow land
(20%). The rest have been established on former grass or grazing land or are replanted
tree plantations. Seedlings had been mainly produced from stumps prepared from
wildings collected from existing plantations in the village. Intercropping was common,
with 81% of tree growers having planted agricultural crops (e.g. rice, Job’s tears6,
pineapple) during the first years of tree plantation establishment. The majority of
interviewees (89%) carried out regular weeding, slashing and pruning of their woodlots,
but only one third (29%) did thinning. On the site visits it could be observed that
thinning meant mostly removal of dead trees or cutting a few trees, e.g. for household
use. Only five of the interviewees doing thinning had received extension advice on the
topic. A common practice is to let the teak plantations coppice after a selective cut,
which was observed at some of the visited woodlots.
3. Motivation for tree growing
Teak is grown primarily for timber sale (69% of all respondents), with one third also
mentioning own use as the secondary purpose. Several interviewees, including village
head men, stated that the village forest resources are degraded and cannot supply the
villagers with enough timber. Only one tree grower mentioned that tax exemption
6 Coix lacryma-jobi
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benefits had been a motivation to plant trees. None of the interviewed tree growers had
received any loan for their plantation investment, nor mentioned the option to use their
tree plantations as collateral as a motivator to plant trees. Instead, whole plantations had
been sold in times of urgent cash needs (safety net/savings account).
4. Extension services for tree growers
Slightly more than half (55%) of the interviewed tree growers had received forestry
extension services, mainly through a project or programme implemented with external
(donor) finance. Very few interviewees (7) mentioned district forestry extension as the
source of services. Topics of extension services were mainly early management,
pruning and thinning.
The LPTP program supported the establishment of TGAs between 2008 and
2014 in Ban En and Xienglome, where 69 and 53% of the interviewed teak growers are
TGA members respectively. In Thinsom, a non-LPTP village, 56% are TGA members,
in Phialat none as there is no TGA in the village. Very little reference was made to the
association and the interviewed teak growers seemed to consider membership as a
precondition to access LPTP support services.
5. Market access
Nearly half (48%) of the tree growers had sold teak at least once (between 1997-2014),
mostly some dozens of trees of 20-30 cm diameter to a middle-man, or in some cases
directly to a wood processor/manufacturer. Despite the classification of Ban En7 as a
7 Official village name is Ban Ensavanh, spelling forms of the shortened name used include
‘Ban Ean’ and ‘Ban Enh’. Google maps uses the shortened name ‘En’.
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remote village, there was a wood processing enterprise in the village and several export
oriented larger processors near the village. Inventory for wood sales was rarely done
(although it is required by law), and varying methods were used for measuring trees and
setting prices. Overall, the interviews with middlemen and tree growers revealed that
tree growers had very little room to negotiate wood sales. Middlemen rarely bought all
the trees (i.e. clear cutting was rare), but instead the contractor selectively cut the best
quality trees. The owners were left with the remaining trees to grow and regenerate new
trees from stumps via coppicing. Sometimes middlemen also bought trees in advance to
be harvested later if the seller needed more money than received from the mature,
higher quality trees. The interviewees reported that the process of selling their wood
was quite easy, and middlemen easy to contact and work with. Interviewees considered
middlemen important and their services essential, as they took the responsibility of the
bureaucratic process. Only four interviewees mentioned having received extension
support in wood sales or measurement. LPTP has been working to establish and extend
the sales network with middlemen but this did not come up in the tree grower
statements as an extension service.
The interviewed forest industry representatives reported that teak prices are
higher in northern Laos due to the influence of Chinese traders and plantation
investments. This was reflected in disappointing experiences in Phialat (in central
Laos), where local traders offered relatively low prices for teak.
6. Future of teak growing
Although the tree growers had reasonably high interest to expand their tree growing
area in Phialat, most of them were planning to change species from teak to fruit trees or
Dipterocarps. In Ban En tree growers preferred teak for their future/planned tree
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growing, whereas in Thinsom and Xienglome some teak growers were planning to
change species, mentioning oil palm and Dipterocarps as alternatives. Interest to expand
tree growing areas was the lowest in Xienglome, reflecting constraints in land
availability, which was listed as the main reason not to plant trees in all villages. The
majority of tree growers (63%) considered agriculture, (cash crops including fruit trees
and oil palm) as being a more profitable land use because of the steady, annual income.
[Table 3 near here]
It was clear among the tree growers that the (land) tax exemption benefits are not
sufficient to attract people to plant trees as they were only mentioned once in the
interviews as a benefit in tree growing. Most tree growers said that if available, they
would apply for incentives such as extension services and tools or seeds/seedlings.
One third of the non-growers expressed interest to grow trees in comingyears;
the main reason for not being interested in tree growing was lack of land. In this study,
we did not identify clear dependencies between the socioeconomic factors and tree
growing interest, but the decision is a complex combination of factors. The main
motivation for future tree growing in both groups was to increase income or to leave
assets for children. Teak was clearly the most preferred species among non-growers, but
rubber and fruit trees were also mentioned. Most of the non-growers said they have
sufficient tree growing knowledge, and are aware of the incentives. For technical advice
they would turn to other villagers or District Forestry Officer. Only 15% of the tree
growers that were interested in expanding their tree growing area considered incentives
(extension, seeds/seedlings) to have a significant influence on their decisions about tree
growing. In the non-growers’ group only one interviewee said incentives are important,
although most of them were interested in applying for them, if available.
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[Table 4 near here]
Discussion
Land regulations have remained basically the same since the 1990’s, as well as the tax
exemptions for tree growing, even though the overall regulatory framework for
plantation forestry has gradually become a complex jungle of laws, orders and
regulations (Smith, Ling, et al. 2017). The land rights and land allocation policy
introduced in the early 1990’s, as well as the Land and Forest Law revisions in mid-
2000’s, seem to have created secure enough land and tree tenure and induced teak
growing in the study villages, but the complex regulations have counteracted the land
incentives (Smith, Barney, et al. 2017).
In line with the findings of Dieters et al. (2014), off-farm income and rice self-
sufficiency – in combination with access to land – encourages households to invest in
tree growing in our study villages. Trees are grown primarily to create additional
income through timber sale, although domestic use is also an important secondary use,
similarly as in Hansen’s study (1997). Compared to previous studies, securing land use
rights was no longer an important motivator for tree planting, nor was the option of
using tree plantation as collateral (Newby et al. 2012).
Based on our findings the land use planning and land allocation program as it is
implemented now no longer allows smallholders access to additional land for tree
growing, even though tree growing areas among the interviewed households rarely
reached the limits set in the legislation for the maximum area per capita. Whether this is
due to complexities in the allocation procedures, lack of awareness, land scarcity, land
conflicts, or quality of available lands, or authorities’ reluctance, are questions that need
further research. The majority of the woodlots owned by interviewed farmers are not
20
eligible for exemptions because they are unregistered: due to their small size plantation
registration is simply unfeasible as the annual land tax is low compared to the
registration payment (Smith, Ling, et al. 2017). Additional tax benefits for TGAs seem
to be equally negligible. This is in line with findings of Ling et al. (2018) who showed
that the benefits the TGAs are able to provide vs. the time invested in TGA activities are
not sufficient to attract smallholders’ interest.
Export demand (from China) for smallholder teak in Northern Laos is strong
(Midgley & Mounlamai 2015) but the challenge is that teak requires fertile soil and tree
growers are speculating with the opportunity costs to optimize their land uses between
agriculture and different types of tree plantations. Intercropping is a common practice to
have income also during the first years of the tree plantation.
Government extension services were rarely referred to as an information source.
This reflects an absence of the services but as the majority of smallholder tree
plantations are unregistered in Lao PDR, could possibly indicate also aspirations to
avoid interaction with government authorities and hence avoid complicated and costly
registration and licencing procedures (Smith, Barney, et al. 2017).
Although tree growers saw middlemen positively, lack of transparent and
competitive timber markets is a barrier to improve timber quality and yield. Due to poor
timber quality smallholders are not able to sell all their trees and/or the price received is
low, which also creates a vicious cycle as the plantations are not re-established properly
(Bouaphavong et al. 2016). Low timber quality leads to a weak competitive position of
Lao teak in the international market (Anttila 2016). Plantation management practices
have remained the same over the years thus advisory services have not sufficiently
reached and convinced tree growers to improve their practices. Many farmers are
21
tempted to change to more productive agricultural land uses. The prevailing
management and sales practices leave them with thinly stocked, low quality and
unproductive teak plantations which increases the comparative advantage of other land
uses.
Strong Chinese demand maintains the teak growing interest in Luang Prabang
Province, although it is not likely to increase among the interviewed smallholders
without access to more land. In Phialat tree growers are planning to change from teak to
fruit trees, or other native tree species due to lower teak prices. Incentives are mainly
considered insignificant for tree growing, signalling a need to review them to meet
smallholder needs. Smallholders think that they already have enough knowledge on teak
growing, thus the challenge in improving the plantation management and tree quality to
better meet the market and industrial needs is not only in the access to extension
services but also in changing smallholders’ attitudes.
Conclusions – Recommendations
The government of Laos has not fully succeeded in establishing and improving
the enabling environment for smallholder tree growing, and in turning policies into
tangible incentives. Land and tree tenure is considered safe but the tree growing
incentive created by the land allocation programme is currently dissolving because of
the reducing availability of land, possibly because external investors and larger
concessions are favoured in land allocation (Hett et al. 2015) and Chinese demand may
not alone be able to maintain and increase tree growing interest. The complicated
regulatory framework is also a bottleneck for smallholder tree growing. In this context,
the on-going forest law revision process is in a key position to improve the operating
22
environment.
The motivations and practices of teak growing have not changed in the study
area since Midgley and Brown (2007) studied Xiengloum and Ban En villages in 2006.
In Xiengloum land availability is becoming a limiting factor for tree growing, with
households possibly reaching a ‘saturation’ with teak plantations as majority of village
households already have teak. Improved infrastructure, growing tourism and business
opportunities in Luang Prabang region, and increasing demand from China have
increased both employment, business and cash crop options for farmers. This may
decrease land owners’ interest to grow trees, but it may also increase this interest: with
secure employment or business income they often plant trees to maintain land under
productive use (and ownership) with minor labour inputs.
Smallholder tree growers are not able to fully benefit from the wood markets as
their negotiation power is weak. Their position could be improved through improved
plantation management focusing on quality, and through improved organisation under
TGAs with attractive services. Agroforestry systems with teak are under research and
this could also provide a way to change the practices and meet smallholder interests.
Demand for short rotation agricultural cash crops is high, and they are often the
preferred option due to the regular income they provide. It remains to be seen how
social changes and market fluctuations will alter the land use preferences in coming
years. Considering the ongoing degradation of village forest resources, manifested in
smallholder’s emerging interest to grow Dipterocarps in plantations, the importance of
smallholder plantations in meeting the domestic needs is likely to increase.
Smallholders prefer native species for timber growing and are starting to
23
recognize the impact of declining natural forest resource on timber markets, hence
Dipterocarps could open up interesting future opportunities for forest rehabilitation,
which is in line with the present government policy promoting native species growing.
The present practices of land allocation and how they meet smallholder
expectations call for further research. If smallholder tree growing remains in the
political agenda, thorough revision of LUPLA and investments in extension support in
terms of both inputs and advisory services would be necessary for any expansion or
introduction of new smallholder tree growing schemes.
24
Acknowledgements
We thank FoLAFI project, funded by the CIMO N-S-S program and coordinated by
VITRI, University of Helsinki in collaboration with the National University of Laos
(NUoL), for making the field work possible.
Special thanks to Pheng Sypaserd (Department of Forest Inspection), Mr. Vansy
Phengthajaim (NUoL), Mr. Phonekham Siphommachanh (ACIAR), Mr. Sisuthone
Oupaxayorvanh (NUoL), and Mr. Souksompong Prixar (NuoL) for assistance and
coordination during the field work. We also wish to thank the Academy of Finland for
partial funding support for this work during the analysis and writing phase via research
project number 277182 (GET-LDC project). We also thank Ms Maarit Kallio and
Professor Markku Kanninen for their useful comments on the manuscript.
25
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organisation of tree growers although benefits of certification are limited to a
smallholder in Lao PDR (Ling et al. 2018; Midgley et al. 2017)..
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Influenced by increasing population and prosperity, global wood needs are expected to treble by 2050, and an increased dependence on plantations will see demand for planted wood grow from 500 Mm³ to 1500 Mm³ over the next 30 years. Expansion of planted wood resources using conventional commercial plantation models is challenged in the crowded landscapes of Asia, where land tenure, access and ownership are ambiguous and it is unlikely that conventional plantations will be able to expand to meet demand. Forest assets managed by smallholder tree-farmers already make substantial contributions to national forest assets, wood production, exports and national incomes, and their role in wood production will become increasingly critical to meeting society’s needs. Benefits arising from the raw materials they produce are largely unrecognised in official statistics, partly because the many thousands of small stands of trees are widely scattered and flexibly managed by numerous tree-farmers as ‘living bank accounts’, being strongly influenced by emergency needs for immediate cash to satisfy family and social obligations. Using available data and credible assumptions, the probable contributions of smallholder assets to national economies and smallholder livelihoods have been calculated for acacias in Vietnam and eucalypts in Guangxi Province, China, along with smallholder contributions to commercial wood flows in several other Asian countries. More than 600 000 ha (equivalent) of unaccounted acacia smallholdings and informal plantings in Vietnam, annually produce more than 9 Mm³ of wood worth (as export woodchips) in excess of US$500 M. In Guangxi, commercial smallholder forest stands amount to about 800 000 ha of eucalypts, and produce in excess of 12 Mm³ of wood annually. This Chinese resource generates considerable employment and raw materials to industry worth over US$2.4 bn (bn; 1bn = 1 000 000 000) after local primary processing. In India, sales of commercial logs grown by smallholders add over US$700 M annually to rural economies and similar examples are offered for Lao PDR, Indonesia and Thailand. The numerous opportunities and impediments in smallholder forestry are discussed, with consequences for national policies. The role of traders within the forest products value chain is examined, and forest certification and the burden of compliance with complicated and onerous laws and regulations are discussed. Smallholder tree-farmers are entrepreneurs who expect their investments in smallholdings to produce financial (and other) benefits. Collectively, they represent multi-billion-dollar regional businesses, increasing incomes for many millions of households and creating significant national assets. To succeed, smallholder tree-farmers need the conditions summarised in 2001 as Byron’s ‘Four Keys’: (i) clear ownership of trees; (ii) reliable markets; (iii) sympathetic legal and regulatory frameworks; and (iv) a robust package of technical options. Reliable value chains and risk mitigation are important issues, and severe impediments in any of the ’Four Keys’ jeopardise the efficiency and effectiveness of the forest products value chain, the livelihoods and financial sustainability of the smallholder tree-farmers, and their substantial contributions to national productivity and forest assets.
Article
The prospects of receiving funding for REDD+ have set many developing countries on a pathway of policy reforms to integrate REDD+ in national legislation. Progress has been slow partly due to the lengthy international negotiations on REDD+ but also because the policy reforms have not been backed by sufficient commitment to make REDD+ implementation feasible. To contribute to a better understanding of why policy and institutional reforms have not been successful in taking REDD+ implementation further, we analyse the institutional landscape of the forestry and environmental sectors in Laos as a case in point. We interviewed stakeholders from national to village levels and found that REDD+ has been effectively on hold in Laos. This is because of recent institutional transformations, rapid staff turnover and limited implementation capacity of government agencies at the national and sub-national levels all of which have led to a heavy reliance on international support and external consultants. The result is that Laos may not be ready to benefit from the international agreement on REDD+. The situation in Laos provides a compelling example of how difficult REDD+ implementation has proven to be in countries where institution building is still in process.
Article
The scholarly debate around ‘global land grabbing’ is advancing theoretically, methodologically andempirically. This study contributes to these ongoing efforts by investigating a set of ‘small-scale landacquisitions’ in the context of a recent boom in banana plantation investments in Luang Namtha Province,Laos. In relation to the actors, scales and processes involved, the banana acquisitions differ from the state-granted large-scale land acquisitions dominating the literature on ‘land grabbing’ in Laos. Starting fromthe experience of a rural village in Laos, where two Chinese banana investors leased land on six-year con-tracts in 2010, we trace the strategies employed by the investors to gain access to the land, the experienceof the villagers in the process and the outcome of the acquisitions in terms of land use change. The findingsreveal how the investors established networks of local middlemen who facilitate negotiations over landdirectly at the village level, thus enabling them to circumvent any formal involvement of governmentauthorities. The informal acquisition process also ensured a rapid and successful implementation of theplantations with consequent land use change, including the destruction of field structures, plot bordersand irrigation systems, as well as erosion and heavy chemical input. Drawing upon the literature on‘powers of exclusion’ and ‘control grabbing’, the paper argues that despite the apparent small-scale andshort-term nature of these leases, the forceful acquisition strategies pursued by the investors coupledwith the rapid land use conversion and associated cultivation practices results in strong and longer-termalienation of land from the local communities involved. This implies the need to take these more informalforms of land acquisitions into account when designing policies to address the negative implications ofland grabbing in Laos and elsewhere.