Project title: Establishing the Self-Sustaining Model for Community Forest Harvesting [2014P2-PNG]
Supervisory agency: Papua New Guinea Forest Authority (PNGFA)
Executing agency: Foundation for People and Community Development Inc. (FPCD)
Budget in USD (total/APFNet grant): 64,000/51,000
Duration: 03/2014 - 01/2015 (10 months)
Project category: Research and Development Project
Target economy: Papua New Guinea
1. To establish the path and business model(s) to allow community sawmilling to become independently viable, attractive, and sustainable.
2. To identify the business model(s) that could be commercially self-sustaining, improve the livelihoods of communities, and generate new technical and business skills orientated and founded on sustainable forestry practices.
Output 1-1: Identify business models and practitioners, including reports, activities, locations, and local and international contacts that Papua New Guinea (PNG) can learn from.
Output 1-2: A report summarizing the findings from a desktop review of the international literature on community sawmilling, where it has been successful, and why. Business models that are likely to be attractive to PNG communities are devised based on the findings.
Output 2-1: Confirm the network of key stakeholders (including community forestry practitioners) to identify which business model(s) is commercially self-sustaining.
Output 2-2: Engage communities to identify which business model(s) can improve livelihoods, offer the opportunity to learn new skills, and sustain the forest ecosystem.
Activity 1.1.1 - 1.1.2: Contact key stakeholders and develop a database for the list of practitioners and materials to achieve objective 1.
Activity 1.2.1-1.2.3: Prepare and circulate the draft report, including information for the community sawmilling to key stakeholders within PNG and abroad for review. Then, follow the workshop at PNFGA, and devise and document business model options.
Activity 1.2.4: Report finalized, printed, and distributed as needed.
Activity 2.1.1 - 2.1.2: Take the lead in contacting key stakeholders by FPCD to identify which business model is commercially self-sustaining and create a database to store basic information about the stakeholders and their respective activities.
Activity 2.2.1 - 2.2.3: Field visit to key stakeholders and conduct a half-day workshop at the PNGFA conference room to discuss the various commercial business models. Then write the recommendations for the way forward in the report.
Small-scale sawmilling activities in Papua New Guinea (PNG) commenced in the mid-1970s when church groups in remote areas used them to provide communities with building materials. Commercially oriented community sawmills in PNG usually are unsustainable without the ongoing technical and financial support of non-governmental organizations (NGOs) like the Foundation for People and Community Development (FPCD), Inc. Portable sawmills (“WokabautSomil” in the local language) has been proposed as a potential alternative to large-scale timber harvesting by many participants in the debate over the management of Papua New Guinea’s forests. Potable sawmills provide a more significant share of income from the utilization of forest resources to the forest owners, engage them more in forest production, and minimize the impact of timber harvesting operations on other forest values. They usually operate near existing roads, often in areas where industrial logging occurs. Existing logging roads and tracks can be used to access the logs and transport sawn boards to market. Mechanization (i.e., truck, tractor) to reduce the manual handling of heavy material is a primary requirement of communities. This project on “Establishing the Self-Sustaining Model for Community-Forest Harvesting” with funding support from APFNet was aimed not only to determine which business model is viable, attractive, and sustainable for communities interested in ecologically sustainable forestry (i.e., eco-forestry) in PNG but also to improve livelihoods and enhance the quality of life for the participating communities through sustainable forestry practices. Fig.1 shows the name and location of participating clan members in Madang Province, Papua New Guinea.
Fig.1 Map showing the name and location of the Participating Clan Members
Project featured topics
During the implementation of the project, the engagement of lead project consultant Dr. Jim Grigoriou - the Commonwealth Scientific and Industrial Research Organization (CSIRO) of Australia, researched identifying a suitable business model to improve community-based sawmilling operations. The business model describes how an organization combines human and physical resources to create a product or service, deliver ‘value’ to customers and generate revenue above the cost of production. In the case of a community forest enterprise (CFE) in PNG, devising a business model assumes the following four pre-condition exist:
- A community has the motivation to create a profitable business
- They have the expertise or, with outside assistance, can devise a business model that is likely to create a profitable business.
- A community is confident in securing the means of production to produce goods such as one portable sawmill, working capital for fuel and wages, and tractor to achieve a minimum level of viable production.
- It has customers who will buy the quantities of green boards produced at a specific price, and the communities can transport their boards to where the customers are located.
A few community forestry enterprises in PNG can meet these four conditions. And community forestry enterprises in PNG are focused on income generation and how to reduce the strenuous nature of felling and milling logs. Therefore, reducing the arduous nature of milling may increase motivation, leading to increased production. International literature on rural community enterprises indicated that only a few could be considered fully-fledged businesses with clear economic objectives-they pursue a blend of social, economic, and environmental objectives. The literature and observations from field research indicated that it is no different for CFEs in PNG. Only advanced community forest enterprises in Mexico work on a ‘business footing’ because NGOs and government agencies could provide support and facilitation for income generation as the first step to establishing a nascent business enterprise if communities have an interest and motivation to do so. International experience indicated that rural community enterprises could take between thirty to fifty years to achieve a self-sustaining level of output and profitability- the significant support and resources needed from NGOs and government agencies to achieve self-sufficiency over a long period means viable shortcuts and interventions are required to compress this window.
The present community-based sawmilling business model applied by FPCD in Madang was the best and only needed to be improved with capital investment as an incentive to produce more output. If the current model is improved and is successfully running, it can be used as a model for other similar setups in PNG. The significant output of this project achieved is the road map recommended by Dr. Jim Grigpriou of SCIRO, Australia, to improve FPCD’s present community-based sawmilling business model. His consultancy report, titled “From Little Things Big Things Grow-The Business for a PNG Community Forest Enterprise: A Step towards Making the WokabautSomil” [portable sawmills] more Financially Attractive and Worthy of Local People’s Efforts and Commitment” made three key recommendations to improve the current model employed by FPCD with Madang Forest resource owners. The recommendations stated the following:
1. FPCD can expand its offering beyond forestry services and include business development capabilities
FPCD has successfully worked with forest communities in devising forest management plans, Forest Stewardship Council-FSC certification, and training. Now they can evolve their organization to build the business skills and income generation capabilities of forestry communities by hiring a development entrepreneur skilled in business and committed to working for the benefit of communities. This would fill a gap in the marketplace where few government agencies and NGOs provide business development services to entrepreneurs, small and medium-sized enterprises, or rural communities enterprises in PNG.
2. Mechanization to increase green board production
Wood products are low in value. Volume is required, and mechanization is needed to increase output, reduce burdens, and improve higher-income livelihoods. Communities in Madang indicated that the most powerful intervention of FPCD can offer is a four-wheel-drive-4WD tractor with a trailer. Production could increase, consequently, up to two cubic meters per day. Equally, reducing the physical of the work may improve the motivation to work and generate more income. Some clans may wish to explore portable sawmills' more significant business potential.
3. A commercial/donor partnership
Foster partnerships with the private sector interested in accessing FSC-certified green boards are needed to improve the current business model.
APFNet-FPCD’s partnership research project has involved part and partially with the strategy and planning of the Master Plan for Small-Medium Enterprises -SME Master Plan, which will be implemented in 2015 through the Department of Commerce and Industry. Consequently, forest resource owners throughout PNG will get a chance to have government backing in policy-wise whenever they wish to start sustainable forestry businesses/practices.
For the sustainability of portable sawmills, FPCD will soon partner with the private sector to improve community-based sawmilling operations by providing 4WD tractors. FPCD’s forestry activities in Madang will be re-audited in 2015 or early in 2016 for FSC certification. This expired three years ago. With FSC re-certification, FSC-certified green boards can be exported to the international market while negotiations for the local market of FSC-certified timber are ongoing. Two local companies have shown interest in purchasing FSC-certified timber, meaning the local market is now opening for FPCD’s community-based sawmillers.
As a recommendation, several value-adding industries are scaling down as there is a lack of a regular supply of green boards to feed their mills. A few forest owners recently became reluctant to allow their trees to be logged and milled on a shared-ration agreement where there is mostly a 3:1 split of green boards at the milling site. Because some communities selectively harvest their forest according to a forest management plan in the interest of ecological sustainability. This plan is developed in partnership with an NGO (e.g., Foundation for People and Community Development, FORCERT) and is based on the principles of the Forest Stewardship Council, the PNG logging code of practice, and other forestry and environmental practices considered to be best practices. With most portable sawmill operations harvesting up to 20-30m³ per annum, the ecological sustainability of this operation is evident. Communities remain unregistered and unregulated by the state because they process small quantities, often less than 50m³ of logs per annum. If a community can process more than 500m³ logs annually, they are legally obligated to gain a government Timber Authority permit to harvest their forest. Thus, this research identified the gaps that will improve the current FPCD model in assisting local forest resource owners interested in operating community-based sawmilling businesses.
2014P2-PNG Project Proposal
2014P2-PNG Project Completion Report
Report: From little things big things grow, the Business for community forest enterprises
Literature Review: Self-sustaining model for community forest enterprises in PNG