Can Smallholder Tree Farmers Help Revive the Timber Industry in Deforested Tropical Countries? A Case Study from Southern Philippines - Smallholder Tree Growing for Rural Development and Environmental Services - page 168

8.1 Introduction
Since 1950, forests in the Philippines has declined at a rate of 2.2 percent annually.
Likewise the forestry sector's contribution to the GDP has dropped from 12.5% in
1970 to just 2.3 percent in 1988 (PCARRD 1994), and 1.3 percent in 1990 (ADB
1994). The Philippines is now a net importer of timber (ITTO 1996). Timber
imports are draining the country's foreign currency reserves at a rate of PhP 14 bil-
lion per year (Orejas 2002).
For more than three decades, tree planting has been promoted as the solution to
the negative effects of widespread forest destruction. However, reforestation efforts
have had limited success. Timber License Agreement (TLA) holders, who were
required to reforest an area of denuded land equivalent to that selectively logged
and to engage in industrial tree plantation, did not significantly contribute to the
reforestation efforts due to corruption (Vitug 1993). Large government - and donor-
funded reforestation and industrial plantation programs over large tracts of land
created social conflicts due to farmer evictions and imposed restriction on farmers'
livelihood activities on land they traditionally managed (Carandang and Lasco
1998; Lasco et al. 2001; Nimmo-Bell & Company LTD 2001). In addition, the
wood industries associated with industrial forest plantations have struggled for
economic survival (Inquirer 2000). As with other tree crops, such as coffee, cacao
and rubber, scale economies may not exist in the production of timber since neither
large-scale machinery nor central management is required for the production of
these tree crops (Hayami et al. 1993; Barr 2002). Social forestry programs and ini-
tiatives that started in the early 1970s have not been more successful (see also
Snelder and Lasco, Chapter 1, this volume).
In contrast, as a result of favourable market conditions and the promotion of a
tree planting culture among upland farmers during the past two decades, small-
holder tree farming has emerged as a profitable farm enterprise (Bertomeu 2006),
and as a viable alternative to industrial forest plantations and costly government-
driven reforestation (Garrity and Mercado 1994; Pascicolan et al. 1997).
Paradoxically, small-scale tree farms in the Philippines were first promoted in the
early 1970s under the smallholder tree farming contract scheme of the Paper
Industries Corporation of the Philippines (PICOP Inc.), one of the first major indus-
trial forest plantation initiatives established to supply a pulp and paper mill at
Bislig, Surigao del Sur. 1 Tree farms developed under this scheme quickly spread. In
1997, there were 15,000ha of tree farms located nearby PICOP's mill site and
another 29,000 ha further away but selling wood to PICOP (Jurvélius 1997). The
high price of timber and the demonstration effect of PICOP's tree farming scheme,
as well as the development of other successful tree planting programs, supported
the spread of tree farming throughout the country.
1 From 1972 up to 1994, PICOP established in its forest concession area 33,200 ha of Paraserianthes
falcataria and Eucalyptus deglupta (ADB 1994; Jurvélius 1997).