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1.1 Characteristics and Constraints of FBSSEs in General

Forest-based small-scale enterprises (FBSSEs) represent the major source of forest-based employment for rural people (FAO 1988). Many urban dwellers also depend on FBSSEs. The collection, processing, consumption, and trade of forest products, particularly non-timber forest products (NTFP), fuelwood and charcoal, can play a key role in household economies. Because FBSSEs are often seasonal and household-based, they provide much needed supplemental income when alternative means of income generation are unavailable, or when time is available outside of household activities. A variety of forest products are consumed and traded at the local subsistence level where they may enhance nutrition and provide home implements, farm tools and culturally important artifacts beyond the larger market economy. FBSSEs are of particular importance because a substantial proportion of their labour force is made up of economically disadvantaged groups including women and the landless. Many FBSSEs are active participants in regional, national and international levels of the wider market economy as well.

Unfortunately very little concerted attention has been given to these important enterprises in the past. FBSSEs are poorly understood. Their small-scale, dispersed, dynamic and seasonal nature has cloaked the true extent of their contributions. These features have also made FBSSEs more difficult to study. A lack of empirical data has confounded thorough analysis. Many government development strategies have focused on large modem sector industries, often overlooking or neglecting the role of the small-scale sector. Forestry policies have frequently emphasized timber production to the exclusion of small-scale enterprises based on NTFPs or fire wood.

In recent years the crucial role of FBSSEs in future forest development has begun to receive greater recognition. In 1988 the FAO introduced the topic of FBSSEs at the Ninth Session of the Committee on Forestry (COFO-88/3). During the session it was evident that FBSSEs were considered extremely important to member countries, and there was great interest in pursuing their appropriate development.

However, there are a number of specific questions about FBSSEs where systematic research is needed in order to support their development more effectively. The potential contribution FBSSEs make to local economies as well as their dynamic nature call for a closer understanding of the forces affecting their growth. Close examination of how FBSSEs increase forest utilization is needed to ensure a more sustainable use of forest resources. While FBSSEs provide the rural poor with access to employment, wages for unskilled labour in this sector are sometimes quite low. More information is needed to assess the possibility of securing more equitable and adequate incomes for the poor through FBSSEs.

The present dearth of empirical data makes it especially useful to review specific case studies of FBSSEs in order to develop a clear understanding of their common constraints and to begin formulating recommendations for their future role. This publication presents three such studies of forest-based small-scale enterprises in India and Indonesia. Each study stands on its own, analyzing issues and constraints and making recommendations for the future. Taken together, they illustrate the remarkable diversity of FBSSEs and raise a number of very site-specific issues. They also clearly demonstrate that FBSSEs share a number of problems. These in turn raise some serious questions concerning the viability of FBSSEs in the long run. Before looking at the case studies it may be instructive first to briefly review the conventional wisdom on characteristics and constraints of FBSSEs as a whole.

1.1 Characteristics and Constraints of FBSSEs in General

Although forest-based small-scale enterprises are incredibly diverse, they do seem to show a number of common characteristics:

- they are small in size and are often household based;
- they are predominantly rural and frequently seasonal;
- they are labour-intensive and use simple technologies;
- they require low capital inputs;
- they provide accessible ways of earning income for low income and socially disadvantaged groups;
- they provide direct benefits to the local economy; and,
- women are prominently involved, often comprising a majority of the labour force

(FAO 1987; ISST 1988)

Similarly, a number of constraints seem to affect the operation of FBSSEs in general, including little access to markets and competition for those markets; shortages of raw materials, financing and appropriate technology; substitution by new products; lack of managerial and entrepreneurial skills; and a lack of organization which restricts effective use of available support services (FAO 1987).

The case studies presented in this publication provide an opportunity to test the observations made above. For the most part, they support most of these points, although to different degrees and with different emphases. This underlines the critical, ongoing need for more data and detailed case studies.

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