James Mayers and Sonja Vermeulen10
All sorts of deals have been struck between forestry companies and local communities over the years. Companies have sought to make deals to secure access to land and labour, and continuous supplies of wood - as well as to demonstrate their good neighbourly intentions. Communities have sought employment, technology, infrastructure, social services and sources of income - and secure access to a wide range of forest products.
The International Institute for Environment and Development (IIED), together with a range of collaborative research partners, has examined 57 examples of company-community forestry partnership in 23 countries11 The aim of this work is to identify lessons on the driving forces for partnerships, the nature of the deals involved, their impacts, and the ways in which they might be improved and spread. The examples cover a wide range of arrangements: from farmer outgrower schemes to supplement company-grown fibre, to community intercropping between company trees, to local agreements around local timber and tourism concessions, to joint ventures where communities put in land and labour, to plantation protection services, to access and compensation agreements (see Figure 1).
Notes: The main products from outgrower schemes, joint ventures
and farm forestry are timber, commodity wood or pulp.
*Others include:
corporate social responsibility projects, forest environmental service
agreements and comanagement for non-timber forest products. The study generated
detailed results on deals in six countries, namely South Africa, India,
Indonesia, Papua New Guinea, Ghana and Canada, and supplemented this with a set
of shorter examples of deals from around the world. This set of examples
represents a global sample rather than a comprehensive review
Partnerships are of considerable interest in the search for effective governance mechanisms in an age of opportunities and threats created by globalization. Globalization of markets, capital flows and technology holds great potential gains for communities with access to forest resources. To realize this potential, communities need to be able to exploit their comparative advantages and seize new livelihood opportunities while simultaneously withstanding the pressures of increased competition and inadequate social and environmental investment that global markets foster. The forestry industry is also dancing to the new tunes of globalization, with greater privatization of forest resources and services, rapid increases in demand for fibre, a shift from natural forest to plantations as the main source of raw materials, ever more corporate mergers, and growing pressure for environmental and social responsibility.
In this context, a range of factors may determine whether companies and communities strike up deals or actively avoid them. For companies, external policy or market duress to practice fair trade or sustainable forest management may be important, as may economic considerations, such as the potential to cut costs, share risks or gain access to resources through engagement with local groups. Companies can provide skills, technologies, resources and access to markets that the community would otherwise be unable to obtain. Communities may aim for partnerships when they can make more money from fibre growing, harvesting or processing than alternatives would provide, but lack the means to exploit these advantages without services that the company can provide.
The skills and resources a community can bring to the negotiation table might range from the ability to organize local initiatives (e.g. growing and managing trees) to refraining from engaging in activities that undermine the interests of companies (e.g. not burning down plantations or sabotaging operations). The important point is that these interests, skills and resources often go unrecognized in conventional market relations, particularly where globally connected companies are concerned. Power, of course, may not be well balanced between company and community, so that what passes for a win-win partnership may in fact be a reluctant concession to outside demands. Factors working against company-community deals include ineffective policy frameworks, poorly functioning markets, histories of conflict and weak institutional mechanisms within the company, community or government.
This report examines the factors that encourage or prevent partnerships and tackles the practical issue of how company-community relationships can shift from raw deals to mutual gains.
Detailed case studies of company-community deals were undertaken in six countries that cover a range of forestry and governance contexts (Table 8.1)12. The South Africa case study provides the most detailed information, in particular on the impacts of outgrower schemes on the livelihoods of both participating growers and local non-participants. The India case study involves more short-lived outgrower arrangements and highlights how and why company-community deals grow, change or dissolve over time. Papua New Guinea presents a contrasting situation, where logging in natural forests is the focus of company-community relations that have much potential, but to date have been highly strained. The studies in Ghana, Indonesia and Canada offer potentially widely applicable lessons respectively on social responsibility agreements, capacity for change in long-term company-community relationships and the implications of communities themselves becoming companies.
Table 8.1. Characteristics of country case studies of company-community partnerships
Country |
Land tenure context |
Types of schemes reviewed |
Notable features |
South Africa |
Some community land; some large private plantations; many smallholdings - land redistribution is taking trend away from large-scale towards smaller-scale |
Outgrower schemes - non-timber forest products and pulp Corporate social responsibility projects Joint ventures - pulp |
Big companies run schemes providing significant local livelihood benefits; scheme-management in part contracted out to NGOs; cooperatives and unions also established as alternatives to big company partners; and communities forming trusts to enter into joint ventures |
India |
Many smallholdings and some commons; by law companies do not have any access to large tracts of land for plantations so they must source raw materials from small-scale growers |
Farm forestry support - commodity wood and pulp Farm forestry crop-share - pulp |
Rapid evolution of partnership schemes from free seed supplies, through bank loan contracts to looser buyer arrangements with companies concentrating on developing high-quality tree clones |
Indonesia |
About 75% of land is classified as state forest and under government control though most is contested; otherwise smallholdings |
Outgrower scheme - commodity wood Comanagement for non-timber forest products and service contracting |
Schemes dependent on high levels of government support which is not always forthcoming; some progress now towards revenue sharing in the long-established tenant farmer (taungya) schemes |
Papua New Guinea |
97% of land is held under customary ownership - companies must negotiate with communities to operate logging concessions or plantations |
Concessions leased from communities Potential joint ventures Contracts from communities - commodity wood and outgrower scheme |
Communities are able to register as companies but there are problems with accountability; novel legal mechanisms exist to foster forestry development on customary land |
Ghana |
Most land is under customary tenure - companies must reach government-sanctioned arrangements with local owners |
Corporate social responsibility policy |
Workable system for participatory planning of company (and community) social responsibility built into tender process for logging permits |
Canada |
80% of forest reserves are under customary tenure with varying splits of rights between customary groups and central government - companies often have to negotiate with both |
Joint ventures, cooperative business arrangements and forest services contracting |
Communities are able to register as companies; wide-ranging deals have allowed business diversification for both partners |
In South Africa, outgrower schemes involve some 12,000 smallholder tree growers on about 27,000 ha of land. The two schemes with the largest membership are operated by the country's biggest forestry companies, Sappi and Mondi. Smallholders grow trees with seedlings, credit, fertilizer and extension advice from companies who later buy the product for pulp. While outgrower timber only provides about 10 percent of the two companies' mill throughput, and is more expensive per ton than wood from other sources, it provides the fibre that would otherwise be unavailable because of land tenure constraints. This allows a volume of production to be reached that achieves economies of scale. Crucially, the schemes also provide companies with a progressive image at a time when the distribution of land rights in South Africa is being called into question. Two other outgrower schemes provide alternatives to the company schemes, one operated by a growers' union and the other by a cooperative. Apart from better representation, their respective advantages for members are shares in the downstream tannin factory and seeking the best prices for fibre.
For communities, outgrower schemes have contributed substantially to household income, providing participating households with about 20 percent of the income needed to be just over the national "abject poverty line", but they are yet to take households out of poverty. Small growers also face problems with opaque government policy and uncoordinated service provision from agencies of national and local government. Their associations lack the power to engage with the policies and institutions that affect their livelihoods. Nonetheless, outgrower schemes have had several positive impacts on communities' asset bases. Land rights have been secured and infrastructure has been developed in some areas. The schemes have been available to even the very poorest and most labour deficient of smallholders, because of the credit extended by companies, while non-landowners have benefited in some areas through employment as weeding, tending, harvesting or transport contractors to the landed smallholders.
In India, where national companies are the main buyers and processors of wood fibre, large-scale plantations are not a feature of the landscape. Government policy rules out any direct private sector roles on state forest land, and limits the area of land that can be held by any private owner. Under these circumstances, companies are obliged to purchase fibre from smallholders - and since the early 1980s several of the larger forestry companies have experimented with outgrower schemes and other arrangements. In general, the different schemes have trodden a rather similar course. Most schemes started by distributing free seedlings, but survival rates, in line with smallholders' interest, remained low. Next companies tried to increase inputs, via bank loans, technical extension and buy-back guarantees. This was also largely unsuccessful, because smallholders either defaulted on their loans or found higher prices for their product on the open market.
Overall, although formal schemes have mostly been abandoned, the experience with outgrowing arrangements in India has been positive. Companies have moved on to concentrate on the lucrative business of developing and supplying high quality clone seedlings through local nurseries. They buy fibre on the open market at prevailing prices - smallholders receive the benefit of competition among fibre-buying companies. Farm forestry is now a viable land use for smallholders in many parts of the country, but does not displace agriculture for larger-scale farmers, who choose to spread their risk between agricultural and timber crops, nor for most of the small-scale farmers, who are unable to forego food security and therefore plant trees mainly along field boundaries. The Indian experience shows that close, long-term partnerships are not always the best model of interaction for either companies or communities.
While the rural population densities of the Indonesian islands of Sumatra and Java are comparable to India, land tenure is somewhat different. About 75 percent of the total land area is classified as state forest land, falling under the jurisdiction of the Department of Forestry, which allocates logging and/or plantation rights to private companies. The government also has a central policy of promoting partnerships between companies and local smallholders or communities, with support from a Reforestation Fund that accrues from levies on logging.
One company that has greatly benefited from the Reforestation Fund has been PT Xylo Indah Pratama, a Sumatra-based company allied to Faber Castell. Unable to obtain sufficient raw materials for its pencil factory from its forest concession, the company used research and development to identify a local weedy species as a viable alternative. An outgrowing scheme based on 50-50 profit sharing was established with smallholders who had unused land (mainly owing to labour constraints). The scheme has not yet reached its first harvest, but both smallholders and company staff have already discovered just how much investment of time and effort is needed to maintain a workable relationship. Meanwhile, all of the financial risk is borne by the government through US$1 million in credit from the Reforestation Fund - the company will not be asked to meet repayments if its profits are insufficient, thus rendering the scheme vulnerable to changes in government policy.
All production forest in Java is under the control of PT Perhutani, a state-owned company that is in the process of being privatized. Perhutani allocates small plots within its teak plantations to local farmers for agroforestry, perpetuating the tumpang sari (taungya) system that has been in place for nearly 150 years. Farmers' opportunities to negotiate and influence decision-making within this scheme are limited, but recently innovations have appeared, albeit only on a localized scale. Local cooperatives have formed "venture partnerships" with Perhutani with contracts to manage tourism operations and other services around logging areas and these groups are showing the first signs of negotiating better deals with the company.
Communities in Papua New Guinea have especially strong customary land rights, guaranteed by the country's constitution. The customary landowners, or clans, own 97 percent of the country's land area and are thus in a strong bargaining position. In contrast to most of the other examples of company-community deals presented here, communities in Papua New Guinea have the further advantage of being able to register as companies themselves. These landowner companies have had some success in negotiating deals with foreign logging companies, but are also the target of much criticism for being unrepresentative, irresponsible and not accountable to anyone: often it is only the landowner company's directors who benefit from logging, while the entire clan bears the costs. New government policy in the 1990s, aimed at fostering greater local democracy, has been difficult to implement owing to insufficient resources and the difficulty of achieving consensus among groups sometimes comprising many clans.
As the efforts by government and non-governmental organizations to support more representative and accountable forestry partnerships continue, so new opportunities for development are arising. One promising scheme for plantation forestry - as yet undeveloped in Papua New Guinea - is the "lease, lease-back" system that has been developed in the oil palm industry as a legal mechanism to allow foreign companies more secure long-term access to land. Inherent dangers, such clearance of natural forest to make way for plantations, will have to be avoided, but for customary landowners, "lease, lease-back" may be a route to lasting regular rental payments with low inputs on their part, while for foreign investors Papua New Guinea may become a more attractive option.
One outcome of the overhaul of forest policy in Ghana in the 1990s was a new regulation stipulating that companies tendering for timber cutting permits would be assessed in terms of their respect for the social and environmental values of local residents. Under the new law, which came into operation in 1998, logging companies are required to secure a "Social Responsibility Agreement" with the customary owners of the land. This agreement follows a standard pattern, to include a code of conduct for company's operations - guiding environmental, employment and cultural practices - and a statement of social obligations, which is a pledge of specific contributions to local development.
Ghana's Social Responsibility Agreements differ from many systems of corporate responsibility internationally in that each agreement must be fully negotiated with the local community. There is a strict procedure for developing an Agreement with local representatives and the district forest office before submission to a central evaluation committee. While these agreements are still in their infancy, the policy itself already provides useful lessons for other countries, where high-value timber is logged in community areas, in how to implement a fairly simple, cost-effective, accountable system to support sustainable and socially responsible logging.
As in Ghana, much of Canada's forest is on land under customary tenure. The First Nations (Native American clans) who hold rights over the land have in recent years received considerable support from government - in the form of enabling policy and soft loans - to develop forest-based enterprises. One of the key strategies in the government policy is to promote partnerships between First Nations and established forestry companies. First Nation community groups see these partnerships foremost as a means to expand and improve local employment opportunities, while the companies are attracted to the cost reductions possible when working with well-located partners who have the advantages of governmental financial and logistical support.
The deals made between forestry companies and First Nation communities in Canada are similar to those in Papua New Guinea in that the communities themselves register as companies, with the full suite of rights and restrictions that this status confers. The First Nation companies, which may represent entire clans or sub-groups, are able to negotiate a wide range of arrangements with external companies, from joint ventures through contracting arrangements to informal cooperation to achieve specific tasks. Deals cover much more than silvicultural and harvesting activities, extending to service industries, non-timber forest products, downstream processing and business management. Some of these partnerships have faltered owing to the inexperience or weak tenure rights of the First Nation partners, but others have enabled business diversification and increasing market shares for both partners.
There is no "perfect" deal - no example yet found of an equitable, efficient and sustainable system that has been returning benefits to company, community and forest on a long-term basis. But it is clear that perfection is not needed to deliver significant returns. Where they work reasonably well, forestry partnerships can bring both the concrete economic pay-offs that tend to be uppermost among the motives of both partners and broader benefits to local livelihoods and the public good.
Some of the main positive impacts of company-community forestry deals are:
· Clear economic benefits, giving better returns to capital, labour or land than alternatives, for both company and community.
· Enterprise diversification, such as expanding the resource base of raw materials for companies, or encouraging mixed cropping for households.
· Opening the door to new opportunities, including development of skills for communities and new business pathways for companies.
· Achievement of corporate goals, from profitability and market standing through to staff development and public responsibility.
· Contribution to security of land rights for communities or individuals, through contracts or less formalized external or intracommunity recognition.
· Development of infrastructure for communities, especially via corporate responsibility agreements.
· Sharing of risk (e.g. allocation of production risk to growers and market risk to companies in a typical outgrower scheme), which turns a no-go business prospect into an attractive option.
· Better job opportunities, often benefiting community members who are not otherwise involved in the deals.
· Positive environmental effects, most broadly promotion of sustainable multipurpose forest management, but also microscale improvements in erosion and climate where trees are intercropped or planted on boundaries.
On the other hand, some expectations of company-community partnerships show less sign of being fulfilled. In some cases this is because there is just not enough evidence yet, but on other levels deals simply fail to deliver. Some areas where partnerships so far have produced unproven or neutral impacts include:
· Poverty reduction - for most communities, partnership activities are supplementary rather than central to livelihoods. In South Africa, for instance, it is clear that company-community schemes are not enough, on their own, to lift households out of poverty.
· Conditions of employment - deals can provide some guaranteed employment, but have not as yet delivered better working conditions to forestry employees.
· Development of collective bargaining power - while some partnerships have resulted in greater cohesion and organization among community groups, there is as yet little evidence of substantial increases in their bargaining power.
Company-community deals are also accompanied by negative effects on both partners, especially in the early stages of development when most mistakes and learning occur. The kinds of problems encountered are:
· High transaction costs on both sides, meaning, for example, that for companies outgrown pulp is often more expensive than from other sources and for communities that better terms are difficult to negotiate.
· Misunderstandings between partners, leading to financial losses or litigation.
· Perpetuation of low-wage labour and inequitable land distribution in deals which entrench existing patterns of ownership and control.
· Negative environmental effects where natural forests are cleared for plantations, where plantations are badly managed or promote the spread of alien species, or where large-scale logging in old-growth forests is made possible.
· Exclusion of disadvantaged community members from some schemes which require possession of land and some initial capital resources.
Individual deals may be started off in response to specific problems, such as conflict between the two parties, or specific opportunities, such as technical innovations. Most times, deals are kicked off through the efforts of particular individuals, groups or institutions - typically third parties - who champion the concept and provide guidance and support. But before any of this can happen, certain prerequisites must be in place. The most important of these are perhaps secure land tenure and enabling government policy. No single model of property rights is the correct one for forestry partnerships - they can work just as well for example on communally or individually held land - and the interplay between company-community deals and land tenure has many variations. Changes in land policy have been the impetus for partnerships in China and South Africa, while in Canada and Indonesia partnerships provide an arena for ongoing struggles for land rights.
Enabling government policy can be specific, for instance the requirement for social responsibility agreements in Ghana, but a broader base of "carrots and sticks" in forestry and non-forestry policy and institutional frameworks is also required.
Experience shows that factors associated with successful start-ups to company-community deals include:
· Kick-start funding - governments can provide start-up funds or fiscal incentives, while financial institutions may be able to offer favourable loan terms or insurance packages.
· Assessing and dealing with community realities - neither community nor company partners should be blind to the heterogeneity of "community" since deals which exclude particular social groups, or involve only elite groups, are more likely to run into difficulty.
· Organization within communities - even if contracts are with individuals, it may be worth while both for the community and company partners to invest in effective and representative community institutions to oversee the workings of the partnership
Other than outgrower schemes in the pulp sector, company-community partnerships in forestry remain the exception rather than the norm. Often their failure to materialize will be the result of specific local circumstances, but there are also wider factors holding back their development. Community tenure remains weak (or in unusual cases such as Papua New Guinea, strong but difficult to collateralize) and international market pressures encourage short-term, profit-making activities over long-term alliances and economies of scale over multiple small deals. There is an abiding problem of reluctance to make deals in uncertain policy environments, with unpredictable partners and unclear market outlooks. Sometimes companies, communities and third parties, including banks and unions, are just not making the right links.
More equitable deals, in which terms are negotiated rather than set unilaterally, do seem to work better. Working with a more equal partner makes sense as a means of mitigating risk - defection, recrimination and litigation are far less likely if terms are fair and open to debate. Some of the best potential for sound business partnerships comes where communities are able to register as companies themselves, securing for both partners the mutual rights and controls that come with corporate law. Even where this is not possible, it is in the interests of both company and community to invest in getting conditions of engagement right from the start. Deals are seldom ideal, especially in their early days, but an equitable and workable governance structure should allow for future development and response to unexpected trends and events.
Key principles to weave into the specific terms of a deal from the start are:
· A formal and realistic contract - legally valid but not overcomplicated
· Security of contributions, be they land, finance or labour, from both sides
· Shared understanding of prospects and opportunities, as well as costs and risks
· Mechanisms for sharing decision-making and information
· A joint work plan - clear demarcation of each side's rights, responsibilities and expected rewards within an overall management framework
· Flexibility and space for negotiation, including specific terms for review and revision
· Sustainable forest management practices, in economic, social and environmental terms
· Extension and technical support, as a regular rather than one-off service
· Procedures for conflict resolution - arbitration, defection, termination and recourse
· Systems of accountability, to the community (especially regarding benefit sharing) and local government, and more widely to civil society
· Clear roles for third parties, such as government, community development organizations and financing agents - drawing on their services and comparative advantage
· Integration with broader development plans for the company, community, district and country
One encouraging trend is the achievement, in some company-community deals, of real improvements in their designs and outcomes over time. Some of the success factors that enable companies and communities to achieve better terms and returns are highlighted in Table 8.2. A particularly positive trend for both sides is that the position of the community within the partnership tends to strengthen over time, as they gain greater experience in business management, law, marketing and negotiation.
Table 8.2. Improvement of partnerships over time - success factors and examples
COMPANIES | |
Success factor |
Example |
Staying abreast of the market - business innovation, paying market prices |
Several companies have moved into paying market prices for fibre in countries as far afield as India, Australia, Vanuatu, Guatemala, Portugal and Zimbabwe |
Keeping ahead of legislation |
Companies going beyond basic social responsibility agreements have a business head-start, e.g. in Ghana and Honduras |
Allowing sufficient time and resources to develop good working relations |
Long-term investment of staff time has paid off for companies in South Africa and Canada |
Being alert to broader economic, political and environmental change |
Companies are setting up outgrowing schemes in Pacific nations in anticipation of plantations eclipsing natural forests |
Communities | |
Success factor |
Example |
Proactive planning to preempt the company in design and organization of key aspects of partnerships |
A village-level cooperative in Indonesia has negotiated a tourism contract on its own terms |
Business expertise and legal advice |
South African outgrowers have benefited from legal advice to improve the terms of their contracts |
Formation of a registered company |
Legal incorporation has paid off for communities in Canada and Papua New Guinea |
Action in second best environments, in spite of risks |
Sometimes partnerships serve to secure shaky land rights, e.g. in Nicaragua and Canada |
Sometimes company-community deals come to an end. Often this is due to changes in prevailing market conditions, whereby competing sources of raw materials or alternative livelihood opportunities become more attractive to either partner. Perhaps the most famous example is the PICOP outgrower scheme in the Philippines, which collapsed after 30 years as other sources of pulp became much cheaper than that from the scheme. Some partnerships end in a shambles of heavy losses and recrimination, even violence, for example the Boise Cascade joint venture in Mexico. However, longevity is not really an indicator of success in partnerships, and some deals have cut-off points built in from the start, for good reason. Deals between companies and communities can be a stepping stone to improved business and livelihood opportunities for both sides, as has happened in farm forestry in India or in the proliferation of First Nation businesses in Canada.
Company-community partnerships in forestry commonly face a number of enduring challenges, which may sink a deal, or be solved by deft innovations (Table 8.3). Perhaps foremost among the challenges are the high transaction costs associated, on the company's part, with interacting with a large number of scattered individuals or groups or, on the community's part, with running effective systems for group decision-making and for engaging successfully with the company partner. In both cases, some kind of "loose-tight" model of management may be the most practical solution, giving space for local or individual flexibility within an overarching set of partnership principles. Managing risk is also a major concern in the inherently long time spans that fibre production requires. Partnerships spread risk, but also generate new risks - companies and communities need to maximize their options and seek support from outsiders, especially insurance and backstopping.
Table 8.3. Five
major challenges to company-community partnerships,
with examples and some general ways forwards
Partnership stumbles |
Partnership innovates |
Some general ways forward |
Complexity and transaction costs | ||
Partnerships fail in Canada owing to needs for high inputs of company staff and community time Difficulties of organization among clans in Papua New Guinea hold back development of deals |
In South Africa, local grower and contractor groups achieve economies of scale while broader federations work for smallholders' interests Joint ventures in China involve government forest bureaus as brokers |
Company field staff with budget control, but working within core principles Community members form coalitions linked into local and national networks Small alliances to deal with immediate transaction costs Communities piggy-back on existing systems of collective organization Use of local brokering agents |
Uncertainty and risks | ||
Outgrowers in India, Thailand, Indonesia and South Africa drop out of deals when yields and prices do not meet expectations Asia Pulp and Paper forced to hold back huge outgrower scheme in China owing to sudden change in government policy |
Land leasing for forestry in Georgia, USA, incorporates risk prediction and management measures Contracts between Smurfit and smallholders in Colombia protect each party's investment |
Schemes are introduced in phases with a learning cycle philosophy Both sides avoid becoming too dependent on a single commodity or single land use Early revenues from trimming trees, partial harvesting or intercropping Government provides stable incentives and buffers such as soft loans and tax breaks Insurance companies expand their services to small-scale fibre producers or producer associations |
Single versus mixed production systems | ||
Some South African outgrower schemes insist on monocultures Campesino groups in Honduras are able to sell only well-known timber species |
Flexible fibre buying policy in India allows small-scale planting along contours and field boundaries Greater tree spacing in plantations in Indonesia gives more space for non-fibre crops |
Both sides consider forestry activities other than tree growing Farmers devote only part of their land, time and capital to partnership activities Companies maintain a diversity of sources of raw materials, and remain open to the advantages of intercropping |
Conflicts, mistakes and recourse | ||
550 court cases against Wimco in India by dissatisfied outgrowers Squatting and violence in taungya schemes in Indonesia |
Regional dispute resolution committees support corporate responsibility in Ghana Special government office acts as firewall between investors and communities in Eastern Cape, South Africa |
Contracts include conditions for arbitration, and a named arbitrator Companies do not overstate predicted positive outcomes at the outset of the deal Investment in developing good personal relationships Where possible, partners develop a culture of shared learning Small claims courts are used to settle disputes more efficiently |
Limits to corporate responsibility | ||
Logging companies in Papua New Guinea ignore retention of community benefits by elite groups Boise Cascade in Mexico ignores protests from environmentalists |
Buyers from campesino groups in Honduras sponsor certification to gain market edge Prima Woods in Ghana set up agreement with local community long before legislated requirements |
Effective legislation on investment rules, fiscal incentives and disclosure requirements to complement voluntary codes Support for practical rules for alternative business structures Alliances to foster equitable and effective small- and medium-scale enterprises Promoting partnerships on their own merits rather than because a company needs to demonstrate social responsibility |
External policies and institutions also present abiding obstacles. Regulations and bureaucracy can be opaque, overcomplicated and uncoordinated. Devolution to communities is sometimes merely dumping of responsibility without building capacity or increasing rights, while in some contexts corporate interests are able to sway policy in their own favour and avoid compliance with existing legislation. Much of what is described as corporate social responsibility, for example, is nothing more than cynical reputation management. But calls to greater accountability may serve only the biggest corporations, pushing out small- and medium-scale companies unable to make the grade, or worse still, pushing production into sectors that are not subject to scrutiny. Types of partners other than limited liability companies, e.g. cooperatives, should receive more attention and support - a shift of focus from "corporate" responsibility to "enterprise" responsibility.
Third parties also need more support and capacity building to be effective brokers of company-community deals or independent community development institutions. One agenda for these groups is to help shape governance around partnerships to empower community partners such that decision-making and benefit sharing are extended to the poorest members of local society. There are also tremendous - and as yet largely untapped - opportunities for communities to claim a share of rights and benefits from downstream processing and non-fibre forestry activities. Representative community groups with power at the bargaining table are sorely needed to realize these objectives.
With defensible property rights and a policy framework that allows flexible development of partnerships, companies and communities can collaborate for mutual gains and broader benefits to the environment and society. The case studies presented here suggest that the best outcomes will flow from a central emphasis on governance: getting the dynamics of decision-making efficient, equitable and sustainable. Companies and communities can learn from the experiences of others to establish, and then improve on, effective mechanisms for working together over time - and some of the tactics proven useful in doing this have been outlined above.
Other parties continue to have important roles to play. Governments that want to promote partnerships would do well to identify and prioritize realistic steps to achieving policies and institutions more supportive to partnerships, backed up by appropriate legislation, for example in the fields of decentralization, corporate scrutiny and fiscal incentives. Artificial financial environments, in which deals would fall away without funding, should be avoided. Non-governmental organizations, growers' associations and other third parties that take representation or facilitator roles should help build local capacity in business and negotiation and develop alliances and links for collective action and information sharing, but also provide more specific services such as advice on corporate responsibility issues to small- and medium-scale enterprises. Banks and other finance agents could provide much needed insurance for small-scale producers. Donors and development agencies could also give incipient company-community deals useful support, for instance by funding initiatives to build effective local-level organizations and by focusing on ways to bring the benefits of partnerships to the poorest members of communities.
There is much still to be learned. Companies cannot be expected to wipe out poverty single-handedly and local groups are rarely the answer to the managing director's dreams. But communities cannot afford to ignore the opportunities offered by the private sector, and pressure is increasing on companies who wish to expand their businesses to start addressing local concerns. If there is one basic message - it is that company-community forestry partnerships are worthy of support, but that prospective partners should enter the deal-making arena with their eyes open.
10 Refer to J. Mayers & S. Vermeulen. 2002. Company-community forestry partnerships: from raw deals to mutual benefits. London, UK, International Institute for Environment and Development (IIED).
11 South Africa, India, Indonesia, Papua New Guinea, Ghana, Canada, Brazil, China, Guatemala, Nicaragua, Honduras, Mexico, Colombia, Zimbabwe, Philippines, Thailand, Solomon Islands, Vanuatu, Australia, New Zealand, Portugal, Ireland and USA.
12 The following working definitions are used in this report:
__Companies include
large-scale corporations through to small-scale private enterprises - the key
feature being that they are organized for making profit.
__Communities include farmers
and individual local "actors" as well as community-level units of social
organization such as farmers' groups, product user groups and cooperatives. When
community groups organize for profit, there is an overlap between "company" and
"community".
__Forestry is the art of planting, tending and managing forests and trees for goods and services. It may take place in dense forest, open
woodlands, agroforestry, smallholder woodlots and commercial scale
plantations.
__Partnerships are relationships and agreements that
are actively entered into, on the expectation of benefit, by two or more
parties. This report uses the term partnership to describe a very wide range of
contracts and informal arrangements between companies and communities.
Partnerships are a means to share risk between the two parties, and third parties often play important supportive roles.