METHOD 1 Research Approach Prosiding INAFOR III 2015 FullIssue low rest

28 Bogor, 21-22 October 2015 Despite of these government efforts, it seems that timber plantation business is not yet attracting the majority of farmers in the country. The current total area of private forests in the country is about 4 million ha Rohadi, 2012 and mostly is found in Java. The total area is far below the available potential land area for developing smallholder timber plantations. The total state forest areas that have been utilized by the community in various social forestry scheme is very low. By 2012, the total mapped state forests area allocated for HTR covered approximately 700,000 ha Kementerian Kehutanan, 2013. However, the total area that have been granted to community or the issued license was only covered about 190,000 ha. Moreover within this granted area, the real plantation activities that have been taken place on the ground was only about 8,000 ha Direktorat Jenderal Bina Usaha Kehutanan, unpublished. Timber plantation provides important contribution on farmer’s income structures Rohadi et al, 2012, especially in the context of income diversification strategies that commonly practiced by farmers. However, the study showed that farmers generally receive relatively low price when selling their timber and they have low bargaining position when negotiating prices with middlemen. More study is required to understand smallholder timber value chain and seek some options to improve farmers’ bargaining position in the system. This paper presents some of the lessons from a study of smallholder timber value chain recently completed in Indonesia. The study was done as a research component under an action research project that funded by the Australian Centre for International Agricultural Research ACIAR entitled Overcoming Constraints to Community Based Commercial Forestry in Indonesia or the CBCF project. The study was conducted at five districts in Indonesia, namely in Gunungkidul, Pati, Sumbawa, Bulukumba and Konawe Selatan. The main objectives of this study were: a. To identify market actors and their roles in the smallholder timber value chain system; b. To analyse value chain model that best providing economic profit to farmer tree growers; c. To find strategies to increase benefits for farmers in their timber plantation business. 2. METHOD 2.1 Research Approach This study applied the framework of value chain analysis according to M4P 2008; 2012. Within this framework, value chain is defined as any activity carried out by various actors in the market such as timber grower, market broker and industry to produce timber and process it into a wide range of timber products that sold to consumers. The value chain is part of market system that consist of various functions and rules and is influenced by various market actors ILO, 2009. Position of value chain in the market system is shown in Figure 1. There are four timber value chain models were examined in this study. The four models were based on the preliminary results of the CBCF research in five districts of the study sites van de Fliert, et.al 2012. These four models are: - Model 1: In this model, the individual growers sell their timber to brokers who then resell the timber to processors growers-brokers-processors; - Model 2: In this model, the individual growers sell their timber to group of growers who then resell the timber to processors growers-group of growers-processors; - Model 3: In this model, the individual growers sell their timber to group of growers who then resell the timber to brokers, then the brokers resell the timber to processors growers- group of growers-brokers-processors; 29 Bogor, 21-22 October 2015 - Model 4: In this model, the individual growers sell their timber directly to processors growers-processors. Figure 1: Value chain as a subset of market system 2.2 Data Collection and Analysis Data collection was done by a Team of Researchers under the CBCF project. Team members come from various institutions that include the Australian National University ANU, Centre for International Forestry Research CIFOR, the Centre for Research on Climate Change and Forestry Policy - Forestry Research and Development Agency Puspijak-FORDA, Forestry Research Institute of Makassar , University of Gajah Mada UGM, Worldwide Fund for Nature WWF Nusa Tenggara, and Tress for Trees T4T Pati. Data collection was done in 8 villages located in 5 districts and 5 provinces in Indonesia. The district names and province in parentheses were Gunungkidul Yogyakarta, Pati Central Java, Bulukumba South Sulawesi, Konawe Selatan Southeast Sulawesi, and Sumbawa West Nusa Tenggara. Map of study sites is shown on Figure 2. Data collection activities in the field were conducted between July 2012 and April 2013. Figure 2: Research Site of CBCF Project Data collected through interviews with market actors consisting of 59 timber growers, 4 resource persons representing farmer groups, 19 timber merchants, and 23 resource persons representing the timber industries. Besides the interviews, we collected secondary data from 30 Bogor, 21-22 October 2015 various government agencies and conducted field observations at the sites. Interviews were guided by a questionnaire containing open-ended questions. Some of the key questions that were asked to the respondents are presented in Annex 1. In this study, information on value chain was collected and analysed according to the guidelines that have been developed by M4P 2008. The collected information includes: - Activities of actors, i.e. identification of specific activities of different actors; - Transformation of products at each stage along the value chain; - Relationships and connections between actors; - Volume of products and number of jobs at each stage along the value chain; - Value at stages along the value chain, including the distribution of costs and profits; - Geographical flow of products, both at local and regional markets; - Supporting functions, such as knowledge and information flows; - Rules and regulations that relate to different actors and stages along the value chain. Not all of the information was reported in this paper however, as this paper more focus on information that directly relate to timber growers. Data was analysed descriptively to explain timber value chain on actors that involved along the marketing chain, relationship and connection between actors, product transformation, rules and regulations that applied in the timber marketing. Quantitative analysis was used to calculate profit margin of each actor. The calculation process of profit margin was facilitated through table as presented in Annex 2. 3. RESULT AND DISCUSSION 3.1 Actors and their roles in smallholder timber value chain model