Micro, small and medium-sized timber producers and processors play a critical role in meeting the growing demand for forest products worldwide, as well as making vital contributions to livelihoods and national economies. It is estimated that micro, small and medium enterprises (MSMEs) provide over 50 percent of total forest-related employment, with the figure in some countries as high as 80 to 90 percent of employment. Additionally, MSMEs are the main suppliers to domestic and regional markets in tropical timber-producing regions. The demand for forest products is growing significantly, placing more pressure on national forest resources. Forest sector MSMEs are central to ensuring that forest resource use is legal and sustainable into the future.
To better understand strategies to support MSMEs towards these goals, the FAO-EU Forest Law Enforcement, Governance and Trade (FLEGT) Programme and the European Forest Institute (EFI) hosted a webinar entitled ‘How has supporting MSMEs to operate legally and sustainably improved forest governance and livelihoods?’. The webinar explored how changes in forest-management and timber processing practices generated through the support of the Programme and EFI have increased market access and enhanced the competitiveness of MSMEs while reducing their vulnerability to shifts in international and domestic markets.
The event centred around three key themes:
- Building the capacity of MSMEs to operate legally and sustainably
- Integrating MSMEs into legal supply chains
- Helping MSMEs overcome barriers to formalization
Participants heard from two project beneficiaries (Mr Wichat Prathanrat, Deputy Permanent Secretary of Banthi Subdistrict Municipality, Thailand, and Mr Le Phi Chien, Director of Bach Viet and Moc Dan Dan Phuong JSC, Viet Nam) followed by a panel discussion moderated by Ms Sheam Satkuru from the International Tropical Timber Organization.
Supporting forest-sector MSMEs to be legal and sustainable
Panellists highlighted the need for assistance to MSMEs to be tailored towards their unique needs and available resources. Mr Laurent Ayemou, an independent expert on MSMEs and former project manager for the Association des Voluntaries pour le Service International (AVSI) in Côte d’Ivoire, outlined that tailored capacity building not only strengthened technical capacity but also encouraged formalization, increased competitiveness, and subsequently increased income, generating livelihoods.
Both Mr Peter Zormelo, the Head of Trade and Industry Development (TIDD) at the Ghana Forestry Commission and Mr Ngo Sy Hoai, Vice President & Secretary-General of the Vietnam Timber and Forest Product Association (VIFORES), highlighted practical impacts that capacity building had. Through Programme and EFI support, VIFORES and TIDD have supported MSMEs to re-organize their production spaces and offered them training to reduce wastage and increase efficiency when processing timber.
Further emphasizing the need for formalization in the forest sector, panellists discussed how integration into legal supply chains incentivizes legality. Mr Zormelo explained how ensuring that MSMEs had adequate access to legal raw materials acts as a bedrock for operators to pursue legality and formalization. To this end, TIDD has established the Domestic Timber Trade Network, which creates business-to-business links between MSMEs and others in the timber sector, boosting the supply of legal timber on the domestic market.
Mr Zormelo’s experience echoed the experiences described by Mr Prathanrat during his testimony. In Thailand, legal revisions allowed the use of reclaimed timber as a legal source of raw material for MSMEs, boosting the domestic supply of resources. This has allowed a number of processors in Mr Prathanrat’s subdistrict to operate legally and, subsequently, form an association of operators that use reclaimed timber.
Ultimately, a range of barriers that inhibit the ability of MSMEs to formalize remain. Ms Alejandra Ospitia, the Chief Executive Officer of the Federation of Forest Entrepreneurs in Colombia (FEDEMADERAS), spoke of the legal uncertainty and constant changes in regulation experienced by Colombian MSMEs. The panel identified a number of strategies to overcome these barriers, including legal clarification, training, public-private collaboration, and revising tax and fiscal policies to promote competitiveness.
The future of support to MSMEs
Across Thailand, Viet Nam, Côte d’Ivoire, Ghana, and Colombia, it is clear that work on integrating MSMEs in legal supply chains generated knowledge that allowed MSMEs to improve their own production process, increase competitiveness, and strengthen business to business links. As such, business development remains important in supporting MSMEs.
In closing the event, Ms Valerie Merckx, Head of FLEGT and REDD Unit at EFI, stated that the event illustrated how MSMEs can be part of the solution to improve forest governance and meet sustainable development goals. MSMEs should be encouraged to adopt legal and sustainable sourcing and processing practices through specialized trainings, with legal frameworks adapted to their unique circumstances. By developing an enabling environment, support to MSMEs allows them to thrive, becoming essential for rural economies, jobs and livelihoods, and sustainability.
You can watch the full recording of the webinar below.
The FAO-EU FLEGT Programme and EFI would like to thank our project beneficiaries and panellists Mr Wichat Prathanrat, Mr Le Phi Chien, Mr Peter Zormelo, Mr Ngo Sy Hoai, Ms Alejandra Ospitia, and Mr Laurent Ayemou for their time and contributions to the event, as well as Ms Sheam Satkuru for her expert moderation during the event.