ACIAR's forestry research in Indonesia

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Indonesia has a population of 230 million people, about half of whom live in rural areas with some dependence on forests. Indonesia has around 95 million hectares of forest, which includes some of the world's most diverse tropical forests and about 44 million hectares of primary forest. It is expanding its plantation estate, which now stands at about 3.5 million hectares of which 1.6 million hectares is Acacia mangium. The Indonesian forest industries are large, annually producing about 13 million tonnes of pulp and paper products and about 5 million cubic metres of wood panels each year. In contrast the production of sawn timber has fallen from 7 million cubis metres in the 1990s to less than 1 million cubic metres annually. Exports of processed wood products are worth over $5 billion annually. The Indonesian Government's policy of protecting tropical forests means that the wood supply for the installed wood processing industries needs to come from plantations. The Government's policy is to achieve 5.4 million hectares of community-based commercial forests by 2016, which represents half of the plantation expansion target for this period.

Deforestation and illegal logging have been significant issues in Indonesia in recent decades, but recently the Indonesian President gave a strong undertaking to protect 66 million hectares of peat and primary forest, initially via a 2 year Moratorium on granting new concessions for logging or conversion. The President has committed to reduce Indonesia's greenhouse gas emissions by 26 per cent by 2020 with domestic financial resources and by 41 per cent if additional international assistance is provided. As a result, the implementation of Reduced Emissions from Deforestation and Forest Degradation (REDD) are a high priority in Indonesia.

Indonesia is also well known for its planted teak forests and the furniture and wood carving industries of Java. Teak was introduced to Indonesia more than 1000 years ago and around Jepara in Java there are more than 12,000 wood processing factories, which utilise planted teak and mahogany. Many farmers have incorporated teak plantings into their agricultural systems, and in the Gunungkidul region, near Yogyakarta, more than two-thirds of the forest area is planted teak, with more than 60 per cent of this owned by smallholder farmers in holdings of less than one hectare. About 90 non timber forest products are traded locally, nationally and internationally with varnish, sap and resin accounting for three-quarters of exports worth $2.6 billion.

ACIAR's contribution to Indonesian forestry

ACIAR has been implementing collaborative forest research projects in Indonesia for 25 years. A major focus of the program has been the domestication of Australian trees for large scale plantation development, the improvement of industrial plantation productivity and the control of pests and diseases. For an investment of $14.7 million dollars in plantation research in Indonesia, it is estimated that $3.8 billion worth of benefits have been generated to date. Given the extensive adoption of project outcomes so far and the projected area of plantations being developed, the benefits from the ACIAR research could ultimately reach $11 billion.

Improving productivity and sustainability of Indonesian industrial plantations

ACIAR has recently completed a forestry project (FST/2004/058 - Realising genetic gains in Indonesian and Australian plantations through water and nutrient management) that has generated significant outcomes related to improving the management and productivity of the Acacia mangium plantations in both Indonesia and Australia. The research has shown that smallholder farmers who grow Acacia plantations are currently achieving productivity levels of around only 50 per cent of the adjacent company-owned plantations, which routinely yield only about 60 per cent of the productivity of the research trials. These research trials yielded an average 46 cubic metres/ha, making them some of the most productive plantations in the world. This research suggests that there is significant scope for improvement of Indonesia's plantation productivity above current levels, which is very important given the challenge of meeting the installed pulp mill capacity from plantations. An economic analysis demonstrated that improved management could increase the net return (in present values) by around $636 to growers, which equates to around $530 a year for an average land-holding of 5 ha by outgrower farmers. The research also found that Phosphorus fertiliser application could be reduced by 30 per cent, saving growers $14/ha, without any loss of productivity. Current research (FST/2009/051 and FST/2008/030) focuses on improving returns for smallholder plantation owners and to analyse social issues associated with the implementation of current models for community-based commercial forestry in Indonesia to identify factors that could assist farmers to improve returns from plantation forestry.

While Australian eucalypt plantations have largely been free of significant pests and diseases, the acacia and eucalypt plantations in Indonesia suffer significant losses from root rot pathogens, in some sites up to 25 per cent of trees are dead by age seven, and disease incidence is increasing in successive rotations. ACIAR's project (FST/2003/048) identified seven different root rot pathogens from the Ganoderma genus and Phellinus genus, including three that were new to science. Current research aims to improve the understanding of the influence of soil profile, site history and current management techniques on the incidence and spread of root rot. Research will also be undertaken on potential naturally occurring bio-control agents that have been found in some plantation areas.

Enhancing returns from high value trees grown in agroforestry systems

ACIAR's recently completed teak agroforestry project (FST/2005/177) worked with farmers to improve teak silviculture, trialled the development of a community managed micro-finance scheme and examined mechanisms to improve market access for farmers growing teak. In the Gunungkidal District teak sales contribute about 12 per cent of household income. While the teak plantings are both extensive and well integrated with agricultural production, germplasm quality and silvicultural management are very poor, which results in poor log quality. The project developed a teak silviculture manual and established participatory farmer demonstration trials where singling, thinning and pruning were all demonstrated. Even with relatively poor teak germplasm, diameter growth was increased by 60per cent and height increment increased by 124 per cent over two years. The importance of using better seedlings rather than relying on wildlings was also demonstrated.

As teak plays an important role as a “household saving account”, the project found that 84 per cent of teak producers harvest their teak prematurely when they are faced with an urgent need for cash. A micro-finance scheme, managed by a farmer group, enabled farmers to borrow funds for short term needs using their teak trees as collateral and thereby enabled the farmers to get better returns by waiting to sell their trees when they reached larger diameters, for which they receive higher prices.

Improving value chains and value added manufacturing

ACIAR has two projects working on the value chains for planted teak and mahogany logs (FST/2007/119) and value-adding wood processing and manufacturing (FST/2006/117) in the Jepara region of Java. The first project, managed by CIFOR, is looking at ways to assist small scale manufacturers to move up the value chain to capture additional benefits, encouraging greater collaboration between processors and growers to improve log supply, assisting the development of small local enterprises and examining opportunities to penetrate "green" markets. The project is supporting the development of the Small-Scale Furniture Producers Association and work has been undertaken to trial internet marketing of value added products, see this youtube film: http://www.youtube.com/watch?v=Mw6TOjFzlqA explains issues related to the survival of Java's furniture industry.

The second project is working with Industry Champions to improve knowledge and capacity in all aspects of the wood processing and manufacturing processes. At present, very little of the timber is properly dried or treated, there is huge waste in manufacturing processes and many businesses can't meet the standards demanded by international markets. However, the skill of local furniture makers and the breadth of unique designs and carvings is astounding.

Given the reduction in log availability from natural forests, currently about 70 per cent of log supply is coming from smallholder and community plantings. This is raising new issues related to inconsistent log quality and the need to demonstrate legal supply of all timber products traded into the major export markets. Just how a simple verification and chain of custody system can be developed and implemented when small furniture enterprises receive thousands of individual small logs from a multitude of farmers is a quite a challenge. Research is also being conducted on improving the knowledge on wood properties from a wider range of species.

Implementing REDD arrangements

While REDD is the subject of many international negotiations and conferences, there are few examples to date of effective and equitable mechanisms to distribute payments to landowners who change their forest management practices. An ACIAR project (FST/2007/052) is assisting Indonesia to establish appropriate mechanisms for the implementation of REDD+, by analysing potential environmental service payment systems and developing governance, policy and institutional arrangements at the provincial and district levels. The project has identified the important governance factors affecting forest management at the local level and the roles of financial incentives in influencing local governments’ decisions on land-use change. It is also developing options for Intergovernmental Financial Transfers to distribute REDD revenue to district governments. The project is currently working on developing a mechanism for equitable distribution of REDD credits that takes account of Indonesia's land tenure systems.

Tony Bartlett
Forestry Research Program Manager