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Research Report

Moving Towards Company-Community Partnerships: Elements to take into account for Fast-Wood Plantation Companies in Indonesia

Julia Maturana
Nicolas Hosgood
Aditya Alit Suhartanto
Copyright Date: Jan. 1, 2005
Pages: 59
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Table of Contents

  1. (pp. 1-6)

    Addressing social issues and developing social relations with local people or communities is becoming increasingly important for tree-plantation companies in Indonesia and around the world. Social problems can be financially costly to the companies through reductions in the area of land available for planting; obstruction of operations; damage to plantations; transaction costs, and costs associated with bad reputation.

    Tree plantations have been encouraged as a way to produce forest products and avoid deforestation. The total area of tree plantations globally has increased from nearly 40 million ha in 1980 to more than 80 million ha in 1995 and then more...

  2. (pp. 7-7)

    Little work has been done to measure the value of the areas converted into pulpwood plantations. Recent CIFOR research (Nawir et al. 2003) remarked on the importance of accounting the global value of the areas under C-C agreements as a way to ensure scheme sustainability. The difficulty of valuing community land lies in the non-existence of a market for such lands and the wide range of products and services important for local livelihoods. The areas managed by locals are a constant source of food, construction material, medicine, and other products and services, which are important as sources of income or...

  3. (pp. 8-12)

    This study took place on the island of Sumatra, Indonesia, where some of the largest mills account for nearly 75% of the country’s total installed capacity for pulp production (Barr 2001). The analysis includes four of the five largest pulp-plantation companies associated with such mills (Fig. 1). The plantation companies included are:

    Musi Hutan Persada in South Sumatra, associated with Tanjung Enim Lestari Pulp mill (Barito Pacific group)

    Wira Karya Sakti in Jambi, associated with Lontar Papyrus pulp and paper mill (Asia Pulp and Paper [APP] group)

    Arara Abadi in Riau, associated with Indah Kiat pulp and paper mill (APP...

  4. (pp. 13-28)

    To analyse the influence of the CD investments and their weight on the area of land under conflict, we used a linear regression model as follows:

    LCk,i = β0 + β1CDk,i + εi (1)

    Where LC represents the area of land (ha) under conflict (active claims at the time of the study, 2003); the sub-indices k and i represent each of the districts and plantation companies, respectively; β0 and β1 are the intercept and the parameter of the variable (i.e. the slope of the line) included in the model, respectively; CD is the total amount of money (in US dollars)...

  5. (pp. 29-30)

    The valuation of the areas required fieldwork to gather the required primary data. The fieldwork was conducted in or near the HTI concession areas of each of the plantation companies, including the sub-villages or settlements of Talang Belanti, Bagan Tengah, Jiat Kramat, Kuntu Toeroba and Lumban Purba (see Table 7).

    Talang Belanti is located inside the HTI concession area of MHP, at a distance of only about 4 km from one of the MHP district offices, Lubuk Guci. The community was formed mainly by locals dedicated to farming activities, such as rubber tapping in a forested area of about 200...

  6. (pp. 31-34)

    The values of the intercept and the parameter (slope), and individual t values are presented below (t values in parentheses). The asterisk means that the variable is representative at α (standard error) = 0.05 and two asterisks at α = 0.01.

    LC = 2344* + 0.0025 CD**

    (3.250) (5.117)

    Money invested in CD has had a statistically positive effect on (i.e. has increased) the area of land under conflict. Districts with higher CD expenses showed larger areas of land affected by claims at the time of the study. Thus CD investments seem to promote land claims rather than reducing them....

  7. (pp. 35-38)

    This study was conducted because of the need to properly address the land claims issue and the poor adoption of C-C schemes in the HTI areas of Indonesia. Two important results emerged that can be adopted by the pulp-plantation companies to improve the acceptance of C-C agreements and to better manage and reduce the areas of land under conflict in HTI concession areas.

    First, for all the cases studies (four of the five largest plantation companies in Sumatra), higher expenditure levels in Community Development programmes were related to larger areas of land affected by claims. The districts where more money...

  8. (pp. 39-39)

    The results of this study show that high CD investments are not associated with reductions in the area affected with land claims. The districts in the HTI areas of the pulp-plantation companies in Sumatra where more money has been spent in the form of CD investments were also those with more area affected by land claims at the time of the study. Plantation companies need to analyse why this is happening and how to make use of the CD investments in a way that can reduce land conflict and claims.

    The logged-over areas in concession for HTI development cannot be...