Many rural households have diversified income earning strategies. They are often involved in more than one principal activity (e.g. fuelwood trade and farming, rattan collection and upland rice cultivation).
Characteristically, forest-based activities form only part of a household's income earning enterprises. The income earned in forest-based activities may contribute to a household's food supply situation in several ways: most directly, it provides cash for food purchases. It may also provide savings for investment in agricultural assets (e.g. livestock) or inputs (e.g. seeds), and as outlets for savings accrued in agriculture. In Zambia, for example, 64% of those enterprises operated by persons previously in farming are run in conjunction with farming, and 30% of them with one or more other small enterprise activities (see Table 3.23). Of those where enterprise activity predominates, 56% also farm and 65% have other activities in addition to the forest-based one.
This close integration with other household activities makes it very difficult to separate out income earned in forest-based activities, and even more difficult to define how it contributes to household food security (see Table 3.24 for information from Zambia).
The prominent role played by women in many forest based enterprises may be of particular importance for household food security. As was discussed in the previous chapter there may be a direct link between women's income and child nutrition. Some studies suggest that there are differences between women's and men's spending patterns. Women characteristically spend money on food supply and thus, nutritional status is more directly dependent on women's income than men's (Cecelski 1987).
Current Sources of Proprietor's Additional (i.e. non--FBSSE) Income (%) |
|||||
None |
Farming |
Other SSE |
Wage Employment |
Other Sources |
|
None Farming Other SSE Wage employment2 Other area3 |
0 16 4 37 38 |
0 64 56 46 34 |
50 30 65 13 21 |
50 2 2 5 3 |
0 1 1 1 12 |
1 'Area of prior job' means what the proprietor was doing before the present forest-based enterprise. |
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2 Wage employment was-mainly in the public sector and large scale enterprise. |
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3 'Other area' means other area of employment or being unemployed, in school, etc. |
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Source: Fisseha Y. and J. Milimo, 1986. |
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3.4.1 The Supplementary Contribution to Total Household Income
In many rural communities farmers cannot raise enough to be food self-sufficient year-round. In their study in the Philippines, Siebert and Belsky (1985) found that only 14% of the population could grow all the rice they consume. Households earn cash income to buy rice and other foods through the sale of copra (dried coconut), and abaca, a fermented coconut beverage, and from wage labour. Many households' income generating strategies are limited by scarce resources (e.g. land). Consequently, year-round rattan gathering is a major source of supplementary income for one third of the poorer households.
Some gathered products, such as fuelwood and rattan canes, can be stored for future sale either to meet future cash needs or to wait for a better market price. This gives people the flexibility to produce when they need the cash. In Sierra Leone, Engel et al. found that 94% of the
farmers stored palm kernels after the initial oil fruit processing for future cash needs. However, women, who are the main processors of the oil palm fruit, find that they generally do not store the oil as their cash
needs are too great during the fruiting season. Eighty nine percent of the women processed and sold the oil immediately because of cash shortages, despite the fact that it fetches a higher price in other seasons (Engel .et al. 1985).
There are several dimensions to the seasonality of forest-based income generating activities. Some activities are seasonal because the crop or material can only be gathered at certain times of the year (e.g. mushroom collection). Others are constrained by the seasonality of other activities (e.g. agricultural production), or seasonally induced cash needs (e.g. school fees). In addition, most forest-based markets are tied to the fluctuations in agricultural incomes, meaning that forest-based enterprise activities are themselves seasonal. The seasonal nature of demand for forest-based products means that their production can be timed to contribute to the evening of seasonal peaks and troughs in demands for labour and for income.
Although fuelwood is collected year round, there are often seasonal peaks to its collection. In rural Sierra Leone, Kamara (1986) illustrates that the seasonality of fuelwood collections closely relates to the fluctuations in labour requirements for agricultural production. Thus, when on-farm labour is at its lowest, fuelwood collection is at its peak. This period is often when food supplies are at their lowest, consequently the income from fuelwood trading helps lessen the negative impact of fluctuating food supplies. Similarly, Hyman (1983a) found that in the Philippines, the majority of fuelwood sellers sold fuelwood for less than three months a year. This was due in part to the labour required in other activities and transportation difficulties during the rainy season. Another example of the seasonal nature of forest-based activities comes from northeastern Brazil, where the collection and processing of babassu palm kernels occurs in the off-peak agricultural period. Income from babassu kernels makes a significant contribution to the household's overall income, representing 39% of the cash income and 34% of the total household income during this period. Many of the poorer farmers rely on this income to tide them through the lean period; in addition, many are dependent on this cash income for purchasing seed and other inputs needed for the following season's planting.
Perhaps the most renowned role for forest gathering enterprises is the buffer they provide during emergency periods. Siebert and Belsky found in their study of a Filipino village that during 1983, a drought year, an additional 13% of the villagers collected rattan to supplement income lost due to drought. In addition, better off village members engage in rattan collection when income is needed for emergency medical, funeral, or wedding expenses (Siebert and Belsky 1985).
In Botswana, the fuelwood trade provides employment for rural Batswana in periods when there were few alternatives. Kgathi found that 60% of the traders he interviewed had resorted to fuelwood trading because they could find no alternatives. More than 80% of the traders were regularly arable farmers and substituted (or supplemented) fuelwood trade for farming during drought years.
The ways in which the income generated from these enterprises is spent affects the contribution it makes to household food security. Often money from these enterprises is not reinvested in the enterprise itself, but rather is invested in agricultural assets. In Botswana, Kgathi shows (see Table 3.25) that earnings from fuelwood trade are invested in cattle.
While only 20% of the traders owned more than 10 cattle before they entered the trade, 40% of them owned more than 10 after participating in the trade. Some of the traders noted that they did not necessarily purchase additional cattle, but add that they were not forced to sell them in drought periods because of the cash income they earned in the fuelwood trade.
The range of problems that are encountered by forest-based enterprises can be summarized as follows:
Market potentials and problems are usually the determining factors for a successful enterprise. The position of small enterprises tends to be eroded by competition both within the small enterprise sector, and with their larger counterparts. Due to very low capital and skill requirements for entry into many small-scale forest products processing activities, it is all too common for many more production units to exist than can be supported by the local market. The resultant excessive competition leads to high enterprise mortality rates and prevents profitable operations from emerging which can generate surpluses to be ploughed back into improvement and growth.
The instability of rural markets is another threat to small enterprise viability. Because agricultural-based incomes are periodic, small enterprises are faced with periods in which demand for products may exceed their capacity to supply. The resulting "supply gap" provides an opportunity for larger suppliers. Lack of working capital is a major barrier preventing small enterprises from stocking adequate productive inputs to even out seasonal fluctuations in their markets. Small enterprise organisation to meet "one-off" production orders also hinders them in coping with a flush of demand.
Improvements in rural infrastructure which enable products from outside to be placed in rural markets at less cost, and changes in rural market demands caused by "rising rural incomes, also put small enterprises under increasing competitive pressure. Thus factory made furniture tends to increasingly displace its artisanal alternative, and bags and mats made from synthetics displace the similar products made by hand from natural raw materials.
There are several strategies that small enterprises can pursue in order to respond to changing market conditions. They can concentrate on market niches in which factory products are not competitive, such as very low cost basic furniture items or high quality hand carved pieces.
Alternatively, they can focus on products such as handicrafts, in which there is no competitive advantage from large scale machine production. Another approach is to specialise in a particular product or process in order to get the advantages of longer production runs. Or they may use the improved road infrastructure to themselves penetrate other markets in order to increase turnover.
The small scale furniture industry in Egypt provides an example of development based both on the market niches described above and on specialisation. Even the manufacture of items such as chairs is distributed between different units specialising either in particular parts such as legs or seats, or in different stages in the production process, such as primary processing, assembling or finishing (Mead 1982).
In north Thailand, small village-based entrepreneurs have taken advantage of the improved roads in their region to truck the furniture they produce to towns or busy roadsides where they assemble and finish it for sale. In this way they compete effectively with furniture from large urban producers and have expanded their markets (Boomgard 1983). Improved rural road networks, by lowering transport costs, are particularly likely to benefit producers of handicrafts and products such as charcoal for which there is little if any competition from urban producers.
However, not all forest-based activities are likely to be sufficiently robust economically to be able to survive the pressures of change. As was discussed in Section 3.2.1., the returns to labour from different activities vary greatly. The limited amount of information that is available suggests that the returns to family labour are generally higher in carpentry and other forms of wood-working than in craft activities such as mat and basket making. The returns in many of the latter are marginal. In addition, such activities may be vulnerable to competition from introduced substitutes, e.g. factory made plastic alternatives. Thus, while some of the simplest forest-based activities which are dominated by the poor and women provide some means of income-earning for large numbers of people, these enterprises may not be sustainable -- in the sense that they will be abandoned if other income earning possibilities arise or if substitutes capture their markets.
It is thus important to be able to distinguish between those activities which have potential to survive and prosper, and those which do not. To date, this dimension has been largely ignored; with programmes to support small-scale enterprises working more or less indiscriminately with all types of activity.
The greater part of the support needed for small-scale forest-based enterprises is likely to be best provided by existing organisations that assist small rural enterprises in general, rather than by setting up special extension entities for those enterprises producing forest products. Such services usually already exist to improve their access to formal sources of finance, to provide market and product information, and to train entrepreneurs and their employees in technical and management skills. However, the "micro" units which figure so prominently in the forest-based aggregate are unlikely to be able to make use of these services without help and unless they are grouped together. In addition, there is a danger that general support agencies may not be able to closely follow the particular needs of an individual enterprise sector. A "focal point" for forest-based activities may therefore be needed; a function which might best be carried out by a rural development bank, or by the forest service.
The area where involvement of forestry authorities is most clearly needed is that of raw material supplies. Shortages of raw materials pose a major constraint for processing as well as gathering enterprises. The depletion of forest resources will most seriously affect the poor as they are most dependent on them for their survival. The fuelwood crisis may be a major constraint for some processing enterprises, as it is often the only energy source. In some regions, commercialisation has lead to overexploitation of raw materials as markets have expanded. For example, in many regions where rattan was once easily collected, it now takes longer to gather less material. (See the last Chapter for a discussion of this issue).
Small enterprises are not able to create or conserve their own resources for future use on a sustained basis. Sometimes, the problem is a specific type or quality of wood, canes, or foliage is selectively cut out by large scale industries or is depleted through uncontrolled harvesting by small industries themselves. Access to raw materials from forests is also constrained by transport problems when sources grow increasingly distant.
The role of forestry must be to develop active management systems geared to these "minor forest products" which are of central importance to so many rural people. Reorientation of forest management to accomodate small as well as large enterprises is likely to require a number of
components:
- first, management and creation of forests as sources of supply for small enterprises could be encouraged outside state forest reserves as an additional dimension of communal and private forest management;
- second, greater priority needs to be given to management of public forests for non-wood materials such as rattans, bamboos, canes and oil seeds on which many small enterprises are based;
- third, licencing and tendering procedures should be modified to ensure that small as well as large scale enterprises can qualify. Forest concessions, for example, might contain provisions for small enterprises to salvage material left by large scale concession holders and which often goes to waste.
