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Not all outgrower partnerships are viewed as successful and poor grower-industry links are regularly identified as one of the major constraints to forestry development throughout the world. If outgrower schemes are to achieve their full potential, an understanding of how partnerships differ, under what circumstances they occur, and what the critical ingredients are for mutually beneficial partnerships, have emerged as important research questions.

A workshop held at the International Institute for Environment and Development IIED , in London during April , brought together knowledge of, and initiated further discussions on, outgrower partnerships between forest companies and growers worldwide. Following the workshop, FAO commissioned a global survey and analysis of forestry outgrower schemes to:. The results of this study will be important for informing FAO's Global Forest Resources Assessment report, a reporting process conducted every 10 years.

This study is also a part of a continuing collective effort to improve understanding of outgrower schemes. Research into various aspects of forest company-grower partnerships throughout the world is being undertaken by a range of institutions e. Arnold, ; Curtis and Race, ; Mayers, Several research projects are also known to be investigating forest company-community partnerships e. Instruments for Sustainable Private Sector Forestry: However, information on the many forest company-grower partnerships that occur, and an assessment of their relative success, is difficult to obtain.

While some issues are more relevant to either industrialized or non-industrialized countries, there are many issues common to both. This study attempts to highlight the issues raised in the limited literature available and to present additional case studies of other outgrower partnerships to contribute to identifying the key ingredients for mutually beneficial outgrower partnerships.

A literature review reveals that numerous strategies have developed for trading wood between growers and the processing industry. For example, some companies obtain their supplies through trading intermediaries i. Growers have also developed market strategies, such as establishing cooperatives or employing their own market agents, to improve the commercial returns from forestry.

Partnerships may be short or long-term e. The nature of individual outgrower partnerships e. According to the above definition, outgrower partnerships may include arrangements described in the literature as joint ventures and contract tree farming. Differences between each of these arrangements largely occur in relation to responsibility for silviculture, resource ownership and control, and the financial remuneration to growers.

In conventional outgrower schemes, the landholder is contractually responsible for the silviculture and the supply of forest products often timber to the company at harvest. A number of outgrower schemes occurring in Ghana, India, South Africa and Thailand have been described in the literature Mayers, In Australia and New Zealand, outgrower partnerships are usually referred to as joint ventures, with there being three broad types of arrangements - "lease" joint ventures, "cropshare" joint ventures, and "market" joint ventures see Box 1 Curtis and Race, These arrangements require a contractual agreement between the landowner and the forest processing company sometimes a government forestry enterprise , identifying the inputs and responsibilities of each partner for the establishment, management and harvesting of trees, or for the management and harvesting of an existing forest.

In New Zealand, joint ventures which share the financial returns following harvest are more common than "lease" joint ventures as in Australia New Zealand Ministry of Forestry, In Australia and New Zealand, the industry partner may only guarantee market price at harvest or have an agreed return indexed to inflation. Also, not all industry investors are "end-product" processing companies - some industry investors "on-sell" or simply trade in raw or unprocessed forest products e.

Lease joint ventures are agreements in which the landowner receives regular usually annual payments from the industrial partner for essentially leasing their land for commercial forestry. Cropshare joint ventures are agreements between the landowner and investors - who may be forest processing companies, which identify the responsibilities of each partner for inputs and allocation of returns throughout the life of the treecrop.

The returns from the harvest are determined from the market price at harvest. Market joint ventures guarantee a sale for the grower, usually based on market price at the time of harvest. The grower is required to offer the industry partner the first option of purchase, however if a better price can be found, the grower may sell to another purchaser. Recent reviews of the global changes in forestry provide a valuable understanding of the context in which forest company-grower partnerships are emerging FAO, ; Higman et al.

The important issues include:. Various instruments are being developed e. However, the effectiveness of such instruments in promoting sustainable forest management SFM is largely yet to be determined;.

Some form of outgrower partnership is likely to be important if industry is to gain access to this new area of forest;. Typically, the private sector is investing in fibre production from high-yielding forests in plantations in subtropical and temperate regions farm forestry is expected to play a growing role in supplying wood products. The biggest industrial investor in these forests is often the large-scale corporations. Reflecting this trend, is the survey results that 60 percent of the major wood pulp companies who responded to the survey source some of their fibre from independent, non-government growers e.

Also, large multinational corporations i. However, there appears to have been little analysis of the abilities of local communities to negotiate fair deals with the increasingly dominant private sector.

This remains an important issue for understanding the benefits of outgrower partnerships; and. Given the increasing role of the private sector in controlling forest access and management as private forest owners, concession holders to public forests , there is a continuing tension between community public and private sector expectations over how forests should be managed.

This tension is also contributing to increasing attention to how private land is manageed, and its impact on community needs. As industrial forest companies are often the initiators of outgrower partnerships, the benefits for these companies from such arrangements appear to be significant. These partnerships also allow companies to diversify the sources of their raw materials, which often makes good business sense Arnold, ; Curtis and Race, ; Mayers, In assessing the cost of operations, companies will consider, in addition to the direct costs of tree growing, the indirect costs and financial risks incurred through land purchase and the otherwise employment of large labour teams - much of which can be avoided through outgrower partnerships Arnold, Companies can also receive sociocultural or sociopolitical benefits by involving local communities in partnership in forestry development, as a more supportive community context for industrial forestry is likely to be fostered.

In a review of outgrower schemes in Brazil, India and the Philippines Higman et al. Such schemes have also enabled growers to generate an income from underutilized land Mayers, The varying nature of some outgrower partnerships and the benefits they offer is illustrated in the case studies summarized in Box 6. Other arrangements have additional benefits that offer employment, or contribute to community development e.

The Swiss Lumber company has a sawmill in Ghana but lacks access to forest areas to obtain an adequate wood supply. While the company has developed plantations on its own land they will be insufficient to meet the capacity of its sawmill. Consequently, it has developed strategies to attract outgrowers to produce indigenous trees on land which was degraded and producing marginal agricultural yields. Joint ventures are offered to landholders. Farmers receive a lump sum down payment upon joining the venture, an agreed percentage of the timber at harvest, an annual land rent, and first option on the weeding contract for the plantation as a means of creating employment for participating farmers.

In return, landholders agree to give the company first option on the purchase their share of the timber at the prevailing market prices. The Paper Industries Corporation of the Philippines PICOP developed an outgrower scheme for local landholders in order to seek additional plantation resources to partially supply pulpwood, as their "concession" forests were becoming depleted. The company was also motivated by the opportunity it would provide to strengthen their relationship with local communities through the sharing of benefits.

In , PICOP began to encourage farmers to grow Albizzia falcateria on eight-year rotations on marginal lands for pulpwood. Under the outgrower scheme, they agreed to provide farmers with planting stock and technical advice, and assured a market for the product at a guaranteed minimum price.

The company also developed the necessary road infrastructure and a strong extension service. In return, the growers agreed to give PICOP first right of refusal of the trees, after which they could sell to other buyers.

These companies, which own large pulp and paper mills in the KwaZulu-Natal region have large forest plantation holdings. The interest in obtaining wood products from landholders, arising from problems the companies face in acquiring land or retaining land, with the companies encouraging landholders to produce wood commercially on a small scale.

One scheme for small-scale landholders developed for Sappi and Mondi was initiated in mid Under this scheme growers established plantations of 1. Under the contract, growers received subsidized inputs, loans against the final harvest, and extension advice. In return, they agreed to sell their wood to the company. The companies have also been encouraging block plantings on communal land in areas adjacent to their mills where there are existing outgrower schemes.

Yet Mayers indicated that growers perceive potential benefits from outgrower partnerships when:. It should be noted that resource security for growers may exist under land tenure arrangements other than private ownership e.

However, Kato notes the limitation of the PICOP outgrower scheme, as the scheme is largely irrelevant for those who are landless - essentially the very poor.

Arnold found that the landholders benefiting from the PICOP outgrower arrangement are those who had settled on land classified as alienable and disposable i. Typically, these farmers were producing low-input crops, had grazing livestock or were undertaking other extensive farming. The schemes run by Sappi and Mondi pulp and paper companies in Zululand, South Africa, for small-scale landholders were found to be useful to farmers with other sources of income or where labour did not need to be diverted from existing activities Arnold, Typically, farmers need a regular alternate source of income to avoid cash flow difficulties between tree harvests and, therefore, to avoid dependence on loans.

Outgrower arrangements that cause farmers to displace food crops with forestry can jeopardize food security and force households to generate higher incomes to purchase food - all which can expose households to greater socio-economic risk.

Arnold's study of the experiences of outgrower schemes in the Philippines and South Africa led him to conclude that outgrower schemes were appropriate for farmers under certain conditions. In summary, outgrower partnerships require consideration of how farmers can make use of the gains in wood production, against the loss in agricultural production. It should also be assessed whether the production seasons of forest products and agriculture are complementary, such as with minimal competition for farm labour Mayers, Mayers suggested that some farming and forestry systems can be counter-seasonal in temperate regions, enabling farm forestry activities.

In contrast, these activities typically overlap in tropical regions Hardcastle, , cited in Mayers, , although exceptions are known to occur. Clearly, outgrower partnerships will not suit all forest growers and companies, yet clarification of the circumstances under which prospective partners will benefit appears warranted.

A concern of forestry outgrower schemes, especially in non-industrialized countries, is that tree growing can replace crop production, thereby reducing the staple food production of communities. In the KwaZulu region of South Africa, land shortage was the main reason many farmers decided not to join the outgrower schemes. Following this response, the companies agreed to focus their schemes on land of low agricultural potential. Although some farmers ultimately planted trees on arable land, displacement of food production in this situation was negligible Arnold, In areas with widespread industrial forestry, some concern has arisen over excessive water use by trees, particularly where water is a critical constraint on farming.

The issue of forestry reducing the water availability for agriculture - at farm and catchment levels, can be positive or negative, depending upon natural resource management objectives. The main reason for the movement was that farmers had also planted trees on land suitable for cropping, and after harvesting the trees and obtaining a substantial payment they returned the land to crop production Arnold, In Australia, broadacre farmers tend to be willing to convert farmland of 10 ha or greater to commercial forestry if reliable market assessments indicate farm forestry is viable compared to the alternate land uses.

In this situation, there are often reservations about whether the assessments are reliable given the lack of experience and in-depth market appraisals of farm forestry Curtis and Race, However, outgrower arrangements that provide some returns prior to final harvest e. In most outgrower partnerships the company partner recommends, and sometimes controls, production methods to ensure optimal productivity of plantations.

However, it has been reported that sometimes the recommendations have been too complex, labour intensive, and costly for growers. As a result, many farmers participating in the PICOP scheme opted to hire contractors to conduct the operations, or modified them Arnold, In such cases, farmers' profits were reduced owing to the higher production costs or when modified schedules were followed, farmers were able to reduce their costs of tree growing Kato, For example, some farmers had minimized the level of maintenance, relied on natural regeneration rather than purchasing seedlings, and planted trees in woodlots at one time rather than staggered times of planting.

However, such changes to recommended practices usually has productivity tradeoffs - either in lower yields or inferior quality. Providing growers with sound technical advice on forestry practices is advantageous to companies as it is likely to produce the quality and yields required. The provision of appropriate extension and technical support to growers can be important for the success of outgrower schemes.

Mayers noted some of the more successful schemes have established nurseries to provide growers with high quality seedlings. In the KwaZulu outgrower schemes, farmers' involvement in production varied. Farmers had the option to allow the company to manage the operations or hire contractors to carry out the work - yet this sometimes resulted in poor production Arnold, Based on observations of other schemes, Arnold believed that farmers should be closely involved in production operations themselves, and rely less heavily on the company, to achieve improved productivity and increase profits by reducing contract labour costs.

The availability of financial loans is often important for growers' participation in outgrower arrangements, particularly to cover the costs of establishment and early maintenance of plantations, but also to bridge finances until the trees were sold.

However, loans may not always be necessary and can be an additional risk in forestry ventures - sometimes adversely affecting the profitability of schemes for growers. The availability of credit from partner companies may lead some farmers to employ labour unnecessarily, as was observed in the KwaZuli schemes Arnold, , reducing the profits from tree growing.

Consequently, Arnold suggested that the company partner who provides a service to the farmers should not be a source of loans for participants.

Arnold reported that while some farmers were willing to participate in the PICOP schemes, they were ineligible for, or unwilling to pursue loans owing to the difficult administrative procedures. Although many of the farmers planting small areas did not require loans to cover labour and other costs. Where competitive markets for forest products occur, outgrower partnerships are more likely to be balanced Race, A competitive market is likely to result in satisfactory market prices for growers.

Although in some outgrower partnerships the processing company guarantees a market, growers can sell to other buyers offering better prices. For example, PICOP found growers in the schemes sold wood to other buyers offering better prices, while some growers for Sappi and Mondi, required by contract to sell their product to the companies, also sold to other buyers offering higher prices.

Some growers had sold to other forestry companies to avoid repaying the loan Arnold, To avoid loss of supplies from outgrower schemes to other buyers, typically a company will choose to match the current market price and develop a positive relationship with growers. The development of positive relations may involve meeting farmers information needs, providing greater market share of the profits, or it may involve providing broader agricultural and community benefits.

In response to the lesser security of wood supply from outgrower schemes in competitive markets, companies have also reduced dependence on outgrowers by developing alternative strategies for obtaining its wood requirements Arnold, ; Curtis and Race, Some companies have withdrawn their outgrower schemes altogether Shingi, Competitive markets also reduce the reliance of growers on companies - particularly during times when they may be unable to fulfil their contractual commitment to purchase.

Examples have been reported that the processing company has reduced its purchases from outgrowers when demand has decreased or supply requirements have changed Arnold, ; Curtis and Race, ; Mayers, Together with more competitive markets, Arnold suggested better representation of growers in the negotiation process and more flexible partnerships that offer growers a share of the value of the processed products under outgrower schemes would contribute to more attractive prices for growers.

However, where competitive markets are lacking, companies can tend to be uninterested in initiating outgrower schemes, as in the Australian experience Curtis and Race, Even where outgrower arrangements occur, uncompetitive markets will make it difficult to calculate prices on which to base negotiations. Curtis and Race suggested that a fundamental task of forestry development, and farm forestry in particular, will be to encourage competitive markets at a local scale to develop.

They identify some scope for developing long-term supply arrangements that allow costs and prices to be reviewed at regular intervals as a means of encouraging fair outgrower arrangements. They also indicated that investment by government may be needed to improve access e.

Variability in the market place is largely inherent in the commercial forestry sector. Both companies and growers are susceptible to periods of market instability over the contract period if insufficient financial flexibility has been incorporated into partnership arrangements. However, poor forecasting of changes in market demand on the part of companies has also resulted in failure of partnerships, particularly in the pulp and paper industry Mayers, Generally, the outgrower arrangements offered by forest companies are limited.

Some company staff believe offering flexible arrangements, such as involving individual negotiations with numerous growers, can be too time consuming and expensive to manage Curtis and Race, In the same study, the authors also found that companies were more willing to negotiate with those growers in close proximity to mills, or with a desirable wood supply.

However, in regions where supplies from small-scale growers are less critical for companies, growers typically have to accept or reject the schemes offered. In these circumstances, unequal partnerships can develop Mayers, and have limited grower participation Arnold, Even where forestry companies are willing to negotiate with growers, the companies' greater knowledge of markets and the general inexperience of growers places growers in a poor negotiating position.

In the KwaZulu schemes, the growers' lack of negotiating power resulted in many signing contracts which they do not fully understand or with unrealistic expectations of the likely returns. The South African schemes have drawn criticism owing to the lack of balance of the risks and returns for growers and the companies in the arrangements Arnold, To enhance growers' capacity to negotiate more balanced and equitable partnerships, growers could benefit from employing a third party to negotiate on their behalf Arnold ; Mayers However, Mayers also noted that growers who gain experience and proficiency in negotiation with forestry companies by renegotiating contracts periodically, may have less need for such an organization.

Under these circumstances, outgrower partnerships are most likely to be balanced Mayers, In Australia, small-scale growers generally feel they are ill equipped to negotiate with the industry and doubt the fairness of current arrangements. To make a more significant investment in forestry, many growers believe they would be better placed if they joined a marketing cooperative or operated independently of a company - seeking to contact potential buyers at the time of harvest Race and Curtis, However, the study found that in regions where poor market structures occur, small-scale growers best opportunity to negotiate with companies may be prior to tree establishment.

At this time, farmers have greater negotiating power and have the opportunity to redirect their household resources.

Typically, outgrower schemes offer technical support to growers to facilitate the production of the optimal volume and quality of wood Arnold, ; Curtis and Race, ; Vuokko and Otsamo, ; Shingi, However, reviews of existing outgrower schemes indicate that the most successful schemes offer growers broad arrangements which provide technical support and advice needed by growers to overcome a range of socio-economic and environmental issues Curtis and Race, ; Mayers, , or which assist communities in achieving wider socio-economic aims Mayers, The joint venture project run by ENSO and Inhutani in West Kalimantan, Indonesia, provide a range of community benefits to participating villages, including improved infrastructure, improved rubber trees for private plantations, support in developing agricultural practices, and employment opportunities Vuokko and Otsamo, Mayers noted that outgrower partnership with community groups present greater challenges for companies, such as helping communities to build their internal capacity to resolve internal disputes when they arise.

The successful outgrower scheme involving a village community has been reported in West Kalimantan, Indonesia Vuokko and Otsamo, Although the company needed to overcome initial uncertainty about the venture, the uptake of the scheme by villagers has led to broad support for the company's interests.

A literature review of outgrower schemes was undertaken to review the nature and context of current arrangements, and to identify the issues influencing the effectiveness of outgrower partnerships. An annotated bibliography of relevant literature was also prepared refer to Appendix 2. A Resource Group of 12 people with knowledge and expertise relevant to the study of outgrower partnerships was formed to provide expert input into the study refer to Appendix 1.

They were invited to contribute their knowledge of outgrower schemes, or of literature discussing outgrower schemes to this study. A questionnaire was developed to identify the location and extent of existing outgrower partnerships, and to identify the benefits and issues arising from these partnerships. A total of 86 questionnaires was sent to informants in 46 countries, particularly non-industrialized countries in the Asian, African and South American regions refer to Appendix 1.

Attempts to send another 24 surveys to people in various countries proved unsuccessful e. The guidance of many people working in the forestry industry worldwide was sought to identify people and organizations who may have knowledge of outgrower schemes to whom questionnaires should be sent.

About 25percent of the questionnaires were sent to targeted companies, individuals or organizations identified in this way. The remaining questionnaires were sent to heads of forestry departments and non-government organizations identified from lists provided by the Resource Group and other people. The questionnaire achieved a response rate of 21 percent, covering 17 schemes. Twelve respondents provided detailed information structured around the questionnaire.

One respondent was able to provide details of six outgrower schemes of which he was aware. A further six respondents indicated that, to their knowledge, outgrower schemes were not in operation in the countries concerned. In addition, nine people responded indicating their inability to complete the questionnaire and so provided further contacts of people or companies who should be contacted. A questionnaire was sent to those identified and their number is included in the total respondents.

The undirected nature of a large proportion of the questionnaire's mailing had, as expected, a much lower response rate than the targeted mailing. Most mailing occurred during late October to early November , with responses received up until late May In other cases, communication with key people was delayed for reasons beyond the control of this study e. Also, as expected the questionnaire was not necessarily to best survey tool for all potential respondents.

First, the questionnaire was written in English, which may have inadvertently discouraged respondents proficient in other languages. Furthermore, given the nature of the study, the questionnaire was sent to individuals, organizations or companies who could be contacted via email, fax or letter. As such, it was unlikely that many growers would be contacted, leaving companies to be the primary source of information for the study.

Consequently, the results of the questionnaire could be expected to more accurately reveal issues from a company's perspective, rather than from a grower's. Oral communication with some localized fieldwork is likely to be a better means of obtaining growers' perspectives, and so warrants consideration as an additional phase in the study of outgrower arrangements.

A profile of these outgrower partnerships is provided in Box 6. Information was generally provided by forestry companies, a marketing partner, and a forestry consultant assisting with the schemes in Zimbabwe. The majority of schemes were initiated in the s. The outgrower schemes were primarily initiated by the forestry companies with a view to gaining access to additional wood resources, largely for production of pulpwood, but also for sawlogs, wattle bark and poles.

One forestry company reported it had initiated a scheme primarily for improving its public image. While most forestry companies have formed partnerships with individual growers, some companies have formed partnerships with community groups, cooperatives, or whole villages as in four schemes.

Although most schemes were initiated by the forestry processing companies, five schemes were initiated by community groups or individual growers. Communities initiated schemes to access capital to develop underutilized land for subsequent income generation, while growers were similarly motivated to generate income from outgrower schemes to achieve socio-economic goals of their households. The scale of the outgrower schemes reported in this study varies considerably - in terms of planned scale of planting, the volume of wood supplied to processing companies, and the number of growers involved refer to Table 6.

Generally, agreements to supply pulpwood comprise the largest proportion of outgrower partnerships, with an area greater than 20, ha planned in four of the outgrower schemes: Two smaller schemes for pulpwood production plan to establish areas of 8, ha Mondi Khulanathi scheme in South Africa and 2, ha PS Zimboard schemes in Zimbabwe.

However, under these schemes 3, ha and 3, ha have already been established. Furthermore, ITC Bhadrachalam Paperboards anticipates the annual establishment of between 1, and 2, ha per year in future.

During the implementation of these schemes, two companies have reviewed their expected plantation area. Owing to the enthusiasm of growers, Aracruz Celulose recently increased the area planned in the Timber Partner program from 28, ha to 60, ha, and have recently expanded the scheme to include sawlog production.

In contrast, Stora Enso Inhutani III decreased their total planned area from , ha to 30, ha in response to the current political instability perceived in Indonesia. The percentage supply of pulpwood anticipated from these schemes differs between forestry companies Table 6.

They range between supplying the total annual resource, for example in the PT Finnantara Intiga and ITC Bhadrachalam Paperboards schemes, to being of strategic value, as for the Mondi processing company.

As a result of Aracruz Celulose increasing their projections for plantings, the future significance of the annual wood volume supplied from this scheme is expected to increase from 13 to 17 percent. The schemes initiated for the supply of sawlogs have been planned on a smaller scale. Melcoffee Sawmill in Vanuatu aims to assist growers to plant between ha and ha in total. Currently ha have been established.

These schemes were initiated for the production of poles and wattle bark, respectively. The number of growers involved in the schemes presented, and the typical area of land they allocate for tree planting is also variable Table 6.

The number of outgrower partners in the schemes reported in this study show considerable variation, ranging from one to 2, The typical area planted by outgrower partners is also equally varied. In seven of the outgrower schemes, growers have planted between one and 10 ha, suggesting that these schemes are popular for small-scale tree growers.

In outgrower schemes where the growers are primarily responsible for production, forestry processing companies usually guarantee to purchase the wood at harvest.

The extent of further support from the companies varies. The returns to growers also differ. It should be noted that while arrangements are typically detailed in a contract, the schemes run by Kolombangara Forest Products and Melcoffee Sawmill have no contractual basis.

While growers in the Border Timbers scheme may be responsible for production, the flexibility of the arrangement allows the company to share this responsibility under the grower's terms. Thereafter a number of differences are evident. Unlike most schemes, PS Zimboard does not provide inputs for plantation establishment, although it offers growers technical advice. In the remaining schemes growers are provided with seedlings, typically at cost, and technical support.

As well as seedlings and technical assistance, the South African Wattle Growers Union provides growers with fencing, site preparation, fertilizers and insurance. The Aracruz Cellulose scheme provides seedlings, fertilizer and ant killer, if required, free of charge provided growers sell the wood to the company.

The company also covers any insurances or taxes arising from the agreement. In the event the grower sells to another company, default arrangements for payment are specified in the contract. Growers also benefit from the above schemes by retaining low-grade material e.

In the Aracruz Cellulose scheme, growers retain an additional 3 percent of wood volume for their own use and receive native seedlings free of charge. In the scheme run by the South African Wattle Growers Union, in addition to receiving market prices for the wattle bark, growers retain all the wood for their own use or may sell it as pulpwood.

Melcoffee Sawmills indicated that growers did not require loans, as the company covered the cost of establishment. Two schemes in Zimbabwe offer growers loans at 15 percent interest, while Mondi offers growers loans at 10 percent interest, and the South African Wattle Growers Union offers loans at 8 percent to cover the costs of inputs. However, the Aracruz scheme offers growers finance to meet the operational costs of plantation establishment and maintenance, to be repaid in the equivalent value of wood at the time of harvest.

Under two outgrower schemes, the company partner is responsible for tree production, undertaking all the establishment, management and harvesting. They are also required to contribute to the construction of any secondary roads required for harvesting.

The contract arrangements between the growers and processors specify the percentage of wood volume growers retain at harvest. The company agrees to purchase the wood at the market price at harvest. Under this scheme landowners may also retain hunting and other rights to the area planted.

The Tasman Forest Industries have entered into land lease agreements with Maori groups to develop plantations over two rotations. This arrangement was preferred the landholders compared to a joint management option. The company pays an agreed annual rent for the contractual period.

Landholders have some joint responsibility for animal control in the plantation area, and maintain their rights to hunt and graze sheep amongst the trees. Under these schemes the forestry companies, in addition to paying landholders an annual rent for the land under plantation, offer growers employment opportunities and a percentage of the wood volume produced which they guarantee to purchase at market prices.

Under the Swiss Lumber Company scheme, growers are employed to carry out maintenance work. In some cases the growers are not necessarily the landholders, with the allocation of 50 percent of the wood volume shared between them. Under the PT Finnantara Intiga scheme, villagers are employed to carry out work in the plantation while the company maintains responsibility for plantation activities.

The landholders comprise villagers, who own 10 percent of the plantation. Both companies provide inputs, with the Swiss Lumber Company providing the seedlings and equipment for plantation establishment and the Stora Enso Inhutani III providing the necessary inputs. In addition to plantation activities, Stora Enso Inhutani III provides the villages involved in the outgrower scheme with seedlings of multipurpose species and improved rubber clones. They have also allocated resources for community development, primarily through the provision of infrastructure and skills to improve permanent agriculture.

Both the company and the Indonesian Ministry of Forestry fund the scheme. The contractual period that land is committed to growing trees differs according to rotation length, and the number of rotations agreed under the contract. For example, growers in the EMPORSIL scheme have committed their land to tree growing for three rotations, or 36 years, in order to receive the benefits of the third rotation.

In other schemes, the rotation lengths vary from 7 to 15 years for hardwood and softwood pulp. Outgrowers in the Border Timbers scheme in Zimbabwe have committed their land to pole plantations for 10 to 12 years. However, it is uncertain whether the period for which the land is committed for plantations is specified in the contract.

ITC Bhadrachalam Paperboards reported that growers have often harvested trees before the end of the anticipated rotation, suggesting the term of commitment of land to plantations may not always be specified in terms of a set number of years but rather crop cycles. Other organizations or institutions may facilitate outgrower schemes.

However, in this study the role of a third party was limited to:. It was reported that Aracruz Cellulose envisages a role for cooperatives to represent farmers in their outgrower schemes in the future. Aracruz Cellulose has operated an outgrower scheme for pulpwood production since The company initiated the scheme to increase supply of wood fibre. Restrictions imposed after protests against companies owning large tracts of land had prevented the company from expanding their own plantations.

The popularity of the scheme has encouraged the company to expand it to include the production of sawlogs. The company offers growers three contract options varying in the extent of company inputs and the grower's need for financial assistance. They offer technical assistance and seedlings in all schemes.

Growers may also receive fertilizer, ant killer and interest free loans, if desired. If the grower sells the wood to the company, the seedlings, fertilizer and ant killer are provided at no cost. Insurance and taxes arising from the agreement are paid by the company. Under contract, the company retains an agreed percentage of wood in payment for technical assistance and any financial assistance.

For the remaining wood, the grower receives market price or better for the wood. The growers are responsible for planting the seedlings, maintaining the plantation, harvesting the trees within six to eight years, and transporting the logs to the company's nearest depot. If the grower sells to another purchaser, they must pay back the company expenses plus percent for defaulting on the contract.

In addition to receiving market price for the wood volume sold to the company, growers retain 3 percent of wood for their own use and receive free seedlings of native species for planting. Growers are planting Eucalyptus grandis and E.

To date, 20, ha of the originally planned 28, ha have been established under the scheme. The growers' enthusiasm has resulted in the company increasing the planned area of plantation under this scheme to 60, ha. Almost 2, growers are involved in the scheme currently, each typically planting a 10 ha woodlot.

Border Timbers has operated an outgrower scheme in Manicaland, Zimbabwe, since for the production of poles from eucalypt woodlots on a to year rotation.

The company initiated the scheme to allow it greater flexibility in production from its own land, and aims to achieve a plantation area of 2, ha under the scheme, providing about 60 percent of its pole requirements. Currently the scheme involves 65 growers who have planted a total of ha. Under the outgrower scheme, Border Timbers offers growers some flexibility in production.

The grower determines the production tasks they wish to accept responsibility for with advice from the company , with the company accepting responsibility for the remaining tasks. Thus, the agreement may involve the company managing plantation activities partially or entirely. The financial arrangements vary accordingly. Border Timbers offers growers loans at 15 percent interest. The company guarantees to purchase the product at harvest at market prices.

ITC Bhadrachalam Paperboards has run an outgrower scheme in Andhra Pradesh, India, for the production of eucalypt pulpwood and poles for the past 10 years.

Unable to gain commitment for pulpwood supply from the State government, the company initiated the scheme to ensure supply of pulpwood, and to improve the productivity and profitability of pulpwood plantations by ensuring genetically improved material is used.

Research, development and distribution of high-yielding Eucalyptus tereticornis clones commenced in The company provides growers with the genetically improved "Bhadrachalam" E.

The grower is responsible for planting and managing the plantation. They must also arrange the finance, if required, to purchase seedlings and maintain the plantation. Those who establish an integrated agroforestry system obtain crops in the first year. Growers also retain small timber and fuelwood after the trees are harvested. Under this agreement the grower is not bound to sell the wood to the company. However, the company envisages that its efforts in working with growers and improving productivity of plantations will enable it to buy the bulk of the wood at market prices.

Currently there are 1, growers participating in this outgrower scheme, planting the genetically improved E. The area of plantations are typically about 1. The total area planted under this scheme is about 3, ha. The company anticipates an additional 1, farmers will join the scheme each year, increasing the total plantation area by between 1, and 2, ha annually.

The company commenced the outgrower scheme in to produce additional sawlogs for their mill. Through this initiative, the company aimed to promote sustainable forest plantation management in the Solomon Islands, and to engender good relations with surrounding communities. The scheme is implemented on Kolombangara Island, in the Solomon Islands. Under this scheme, the company will purchase logs from growers.

The company provides seedlings and silvicultural advice. The growers are responsible for the establishment and management of plantations. No finance is offered by the company. These arrangements have no contractual basis and so there is no formal commitment from the growers to sell wood to the sawmill. The growers retain residual wood for their own use.

Those who have adopted agroforestry systems also benefit from fruit and vegetables produced on the land as well as timber. Details, many investors take delivery of it to make the idea real-time malls. I had assumed all the employee and day upon the life options trading activity from then there. Manila-dated options have the same underlying futures entry or fission.

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