The impacts of training, - Rainforest Alliance · The impacts of training, technical assistance and new market access ... guitar, built from solid blocks of mahogany. In 2005, the

The impacts of training, technical assistance and new market access for community forest enterprises in the Rio

Plátano Biosphere Reserve, Honduras

Rolando Fortín

Rebecca ButterfieldBenjamin D. Hodgdon

June 2010

The impacts of training, technical assistance and new market access for community forest enterprises in the Rio

Plátano Biosphere Reserve, HondurasJune 2010

Rolando Fortín

Rebecca ButterfieldBenjamin D. Hodgdon

Agroforestry cooperatives in the Rio Platano Biosphere

Summary................................................................................................... 6

Introduction................................................................................................ 8

TheRioPlátanoBiosphereReserve............................................................. 9

TheUnionofAgroforestryCooperativesofthe RioPlátanoBiosphereReserve(UNICAF)........................................ 10

Technicalassistance........................................................................ 13

Results:TheImpactsofTrainingandTechnicalAssistance............................ 16

ProductionIndicators...................................................................... 17

Socialandbusinessindicators......................................................... 23

Salesindicators............................................................................... 29

ConclusionandLessonsLearned................................................................ 33

Contents

6

Coveringovertwomillionacres,theRio Plátano Man and BiosphereReserve (RPBR) is Honduras’s

largestnaturalforestreserveandanareaofglobalbiodiversityimportance.Subjectedtohighratesofdeforestationfordecadesdue to conversion for agricultural useand livestock raising, and suffering fromthe unsustainable mining of its valuablemahoganystands,theRPBRwascreatedin1982tostemdeforestationwhileensuringlivelihooddevelopmentinoneofCentralAmerica’smostremoteregions.

Twelve community cooperatives havebeen granted the right to harvest timberand non-timber forest products inmultiple-usezonesoftheRPBR,buttheyface substantial technical and financialchallenges.Whilesignificantinternationaldemand exists for sustainably-harvestedmahogany, the cooperatives have haddifficultyproducinglargeenoughvolumesofhighqualitytimbertomeetbuyerneeds.Hightransportationcostsduetopoorroadsandheavyseasonalrainfallhavemadethesituationparticularlychallenging,ashasalackofworkingcapitalandoutmodedandlow-capacitytechnology.

Onecompanyactivelyseekingsustainably-produced mahogany is Gibson MusicalInstruments, which manufactures electricguitars in the United States usingcomponent parts certified by the ForestStewardship Council (FSC). The keycomponentsarethebodyandneckoftheguitar,builtfromsolidblocksofmahogany.In 2005, the Gibson Foundation andother donors began providing supportto Rainforest Alliance’s work with the

cooperatives in the RPBR to increasetheircapacitytosupplylegally-producedandFSC-certifiedmahoganyandexpandmarketlinkageswithmultiplebuyers.

Work began in 2005 with communityenterprise trainings in businessmanagement and organization,techniques for value-added production,inventoryandcostcontrol,andstrategicalliance formation. With support fromother organizations, the cooperativesalso moved forward on improvingmanagement practices with the goal ofattaining FSC certification. Communitycooperative members respondedwith enthusiasm. That same year, thetwelve timber cooperatives of the RPBRjoined together to form a second-tierorganization dubbed the Union ofAgroforestry Cooperatives of the RPBR(UNICAF-BRP, following the Spanishacronym),consolidatingtheirproductionof mahogany into higher volumes,moving up the value-added chain,openingaccesstofinanceandincreasingexports to preferred buyers, such asGibson, as well as national markets.As the cooperatives have taken greatercontrol over the value chain, they havesuccessfully cut out local brokers andmiddlemenandincreasedlocalincomesfrom forestry.Meanwhile, illegalactivityintheareahassteadilydeclined.

Applying the principles of sustainableforest management and sound businesspractices, by 2008 the cooperativeshad achieved remarkable successes inincreasing their productivity, enterprisecompetitiveness and overall income.

Summary

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The below points summarize the mostsignificantgains:

• Sustained production of high-qualitypre-dimensionedmahogany for guitarcomponents achieved, with a lowpercentageofrejects.

• 128% increase in income achieved,with a 33% increase in production(wellwithintheallowablevolumesetoutinmanagementplans).

• Primary processing efficiency usingimprovedchainsawtechniquesimprovedby 12%, from 170 board feet (bf) percubicmeter(m³)in2005to190bf/m³in2008.

• Musicgradewoodincreasedfrom17%oftotaloutputin2005to51%in2008.Higher grade quality output reached15% and medium grade lumberincreasedfrom2%in2005to36%inthesameperiod.

• ReductioninillegaltraffickingofwoodintheareaofinfluenceofUNICAF-BRPcooperatives.

Since the beginning of organizedcommunity forestry in the RPBR,many observers have been skepticalregarding thecapacityof localgroups tosustainablymanagetheirforestresources,access international markets and runsuccessful forest enterprises. In the faceof tremendous challenges, communityforest enterprise development, value-addedproductionand strategicallianceshave put in place the fundamentalbuildingblocksforthelong-termsuccessof community forestry in the RPBR.Thiscase study presents in detail the workof Rainforest Alliance and other groupswith UNICAF-BRP forest communities,demonstratinghoweven inverydifficultsettings, relatively small investments inenterprise competitiveness can lead tosignificant and tangible gains for bothconservationanddevelopment.

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Introduction

Ilegal logging of threatened andendangered tree species with strongmarketdemandisaprobleminCentral

Americaandaroundtheworld.Hondurasisnoexception:satelliteimageryhasshownthatbetween2002and2005deforestationof mahogany stands reached a rate of2.41% within the Rio Plátano BiosphereReserve (RPBR) reserve1. The degradationand deforestation dynamic familiar infrontierforestsinotherpartsofthetropicshas taken hold in the RPBR-illegal andunsustainable poaching of high-valuemahoganyisopeningaccesstonewareasof formerly closed forest on the westernandsouthernbordersofthereserve.Theseareasare in turnvulnerable toconversionforpermanentagriculturaluseby landlessmigrantsarrivinginincreasingnumbersandpushingdeeperintotheforesteachyear.

Thisinterrelateddynamicofillegallogging,immigration, accelerated reduction offorest cover and change in land use isattributableprimarilytoalackofeffectiveplanning for sustainable forest use and alack of government policies incentivizingsustainable forest management overcompeting land uses. Entrenched officialcorruptionand the increasingpresenceoforganizedcrimerelatedtonarcotraffickingonlyexacerbatetheproblem.

In 2005 the Rainforest Alliance TREESProgram(TRaining,Extension,Enterprises

andSourcing)–anarmoftheinternationalgroup focused on community forestry,began working with cooperatives in theRPBR. Rainforest Alliance and partnersprovided technical assistance on severalaspects of forestry operations, value-added production and marketing, aswell as business finance and enterprisedevelopment.

TheGovernmentofHonduras(GOH)hassupportedthedevelopmentofcommunityforestenterprisethroughthegovernmentagenciesresponsibleforforestry2,aswellas the Foundation for Export Investmentand Development (FIDE), which hasprovided financing. Technical andfinancialsupportwasalsoreceivedfromdonororganizationssuchasGTZ.

Over the course of the three years ofassistancesummarizedhere(2005-2008),detailed records were kept to allow thecooperatives to determine the extent towhichtechnicalassistanceeffortsaffectedproductivity, income, employment,exports, and a host of socioeconomicvariables.Theobjectiveofthisreportistodescribe theactivitiesundertakenby theRainforest Alliance and partners, and toillustratethesocialandeconomicimpactsof investing in value-added communityforestry,basedonvalue-addedproduction,enterprise development and expandedaccesstomarkets.

1Source:COHDEFOR-GTZ.Evaluationofgroundcover in theRHBRP,Multitemporal imageanalysisbyLandsat-TMandSpotbetweentheyears2002-2005/2006. 2Formerly the State ForestryAdministration (AFE-COHDEFOR by its Spanish acronym), now the Institute for ForestConservationandDevelopment(ICF).

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Extendingovertwomillionacres,theRio Plátano Biosphere Reserve (RPBP) is thelargestnaturalprotectedareainHonduras.

Itisdividedintothreemanagementunits:aCoreZone,aCulturalZoneandaBufferZone(Figure 1).

For over a century, this important forestregion has experienced heavy pressurefromvarious formsofresourceexploitation,with the greatest impacts from forestdegradation and deforestation occurringalong thesouthernandwesternextremesofthereserve.Thisdynamichasbeenbotha resultandacauseofextensive loggingof mahogany, by far the region’s mostimportantcommercialtimberspecies.

In recognition of this problem, startingintheearly1990s, theHondurasforestryadministration, worked to establishtwelvelocal forestryorganizationswithinthe RPBR. While some were formedas timber cooperatives and others as“collectivecorporations,”allhad thekeyaimofforestmanagementforsustainable

production. Eleven of these community-based organizations established forestmanagement plans between the years of1998and2005.

As is commonwith local forestry bodiesaround the world, these incipientoperationswere initially quite weak andfrequently manipulated by individualsor outside interests to undertake illegalexploitation.Ascapacitieshaveincreased,the cooperatives have become moreindependent and resilient in the face ofsuchillegaloperations.

During the first years of operation,the cooperatives’ main activity wassawmilling, especially mahogany andcedar,supplyingthelocalmarketthrough

Figure 1The Rio Plátano Man and Biosphere Reserve (RPBR)

The Rio Plátano Biosphere Reserve

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intermediaries,andproducingratherlow-qualityproduct.Businesswasdonelocallyand informally, generally in the sawmillyard.An intermediary tookchargeof theproduct after sale, trucking it to marketat his expense. Intermediaries usuallypaid an advance for selected logs; theremainderwaspaidatalaterdate.

This advance was the first outlay bythe buyer, typically made prior to localpurchaseofstandingwoodbyanagentofthecooperative,usuallyaccompaniedbythebuyertoassurethatthesalewouldbeconsummated.

The balance of payments, whenoutstanding,wastypicallymadeunderthefollowingconditions:

1) Following the buyer’s onward sale ofthe lumber in the local market andcollectionoffees,hecouldpayinoneorseveralinstallments;

2) Upto20%deductionfromtheagreedprice could be applied if the marketpricehadsincedropped;

3) Up to 20% deduction could also beappliedifthelumberwasfoundtobefounddefective;

4) Upto10%discountscouldbeappliedforincompletevolumesdelivered.

Cooperatives conducted forestryoperations as governed by theresponsible state forestry agency (AFE),based upon forest management usufructagreements valid for four years. Atthe end of these four year periods, anevaluationwasconductedoncompliance

with the specifications of the overallforest management plan and annualoperational plans. This regulatoryarrangement remains in place, althoughthe termhasbeenextended tofiveyears(andmaybefurtherextended).

Recognizing the severe capacity issuesin thecooperativesand theirpotential tosignificantly enhance conservation of aglobally-importantareafortropicalforestconservation, the Rainforest Alliance,in partnershipwithGOH andGTZ and,began providing technical assistance inJuly2005.Assistancebeganbyfacilitatingthe cooperatives’ work to ship 25,163boardfeetofmahoganyinthreecontainersto the United States. This marked thecooperatives’firstexportsale,amountingto $101,307. Initial training was alsoprovided on the standards of ForestStewardship Council (FSC) certification,with the aimof starting the cooperativesdowntheroadtocertification.

The Union of Agroforestry Cooperatives of the Rio Plátano Biosphere Reserve (UNICAF)

In April 2006 the Union ofAgroforestry Cooperatives of theRio Plátano Biosphere Reserve(UNICAF) was officially created, asecond-tier organization formed bytwelve cooperatives whose membercommunities are located within thebuffer and cultural zones of the RPBR.UNICAF’s establishment was supportedby Rainforest Alliance and the GTZ/COHDEFOR Rio Plátano BiosphereProject, and was born of the necessity

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identified by the cooperatives to solvecriticalproblemssuchasthefollowing:

• Excessive procedural delays insecuring management plan approvalsandharvestingpermits,plusagenerallackofattentiontoforestrycooperativeneedsfromstateforestryadministrationagencies.

• Illegal fellingby thirdpartieswithin theRPBR,anda recognitionof theneed tocombatit.

• Uncertain markets and poor marketalternatives,sinceallproductionwassoldthrough middlemen at extremely lowprices.

• Lack of financial support for drawingup management plans (although astate obligation, support has not beenforthcoming).

• Lack of financial resources forinvestments in forestry and value-addedproduction.

• Statereluctancetoformalizependingforestmanagementcontractstoassureaccessbyindividualcooperatives.

UNICAF is officially seated in thecommunityofSico,municipalityofIriona,inthedepartmentofColón,withaliaisonoffice in the city of La Ceiba, Atlántida.There are three affiliate offices: inCulmí,Olancho in the southern zone; Sico-Paulaya/Irona/Colón in thewesternzone;andBrus Laguna intheMiskitoindigenouszone. All three are commercial outletsfor local and international trade in forestproducts.

The base membership forming UNICAFhasbeenrecognizedbytheSocialForestrySystem of the forestry administration,through which they have entered intoutilization and management agreementsfor legalharvesting in forestmanagementunits. These areas total over 263,000acres of tropical broadleaf forest, rich inspecies such as mahogany (Swietenea macrophylla), cedar (Cedrela odorata),santa maría (Callophillum brasiliensis),San Juan areno (Ilex tectónica), huesito(Macrohasseltia macroteranta), rosita(Hyeronima alchorneoides), varillo (Symphonia globulífera) and others ofcurrent and potential commercial value.The table below summarizes availablevolumesofimportanttimberspeciesintheUNICAFmemberforestrycooperatives.

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Table 1 Harvestable volumes in UNICAF cooperatives (as of 2008)

No. Cooperative

AnnualAllowableCut(m3)

MahoganyOthercommercial

speciesLesser-known

speciesTotal

1 WonHelpka 752 3,740 1,961 6,453

2 YabalIngnika 335 6,653 1,080 8,068

3 KAIFUL 1,444 3,169 2,313 6,926

4 Sawacito 91 285 919 1,295

5 Mahor 639 610 2,182 3,431

6 ElGuayabo 6 185 572 763

7 BrisasdeCopen(R.Barahona) 119 217 737 1,073

8 AltosdelaPaz 56 245 37 338

9 RíoPayas(MartínezFúnez) 21 177 824 1,022

10 Limoncito 208 428 751 1,387

11 MIRAVEZA 183 1,414 924 2,521

12 MayaTulito 86 374 531 991

Total 3,940 17,497 12,831 34,268

AlthoughUNICAFwasinitiallyconceivedasan independentsecond-tierentity thatwould facilitate the process of groupcertification under FSC, as the Unionbegan to gain experience it becameevidenttoeachmembercooperativethatit could assume additional functions tobenefit the cooperatives. Accordingly, itwasformallyagreedtoadoptthefollowingprincipalobjectives:

1. Assume responsibility for the groupForest Stewardship Council (FSC)process, from pre-evaluation, formalapplication, and evaluation, tocertification and follow-up measurestoassurecompliance.

2. Carry out due diligence functions toavoid abuses among members and

outside agents; take an active rolein legislative, regulatory and policydecisions at multiple scales affectingmembers.

3. Promote responsible group forestmanagement with neighboringcommunities in the the Rio Plátano Biosphere Reserve as a proactivemeasure toreduce illegal logging inthearea.

4. Negotiate and promote, locally andinternationally, projects that arebeneficial to cooperative membersandtotheirrespectivecommunities.

5. Supportbusinessandmarketingeffortstobenefit theRPBRcooperativesandUNICAFmembers.

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Technical assistance

Rainforest Alliance began providingtechnicalassistancetoUNICAFin2005.ItinitiallysupportedtheUnion’slegalizationand consolidation in favor of its twelvemembercooperatives.

Technical assistance during the periodanalyzed for the present case study hadthefollowingcomponents:

• Improvement of UNICAF’sorganizationalandbusinessstructure,attwolevels:

a) Central(officesinSico),focusedonmanagementandadministration.

b) Regional (offices in Brus Laguna,CulmíandSico),focusedonvaluechaindevelopment.

• Enterprisedevelopment.

• Marketing and valued-addedprocesses.

• Strategicmarketalliances.

• Inter-institutionalcoordination.

A number of other groups gave criticalsupport to UNICAF and its membercooperatives(andothergroups)duringtheperiodofanalysis.Fundingsourcesfortheperiod 2005-2008 are shown below inTable 2.

Table 2 Support to UNICAF cooperatives from variable sources over time

No. Cooperativename

Volumes(m³/annum)since2008

GTZ BIDRainforestAlliance

USAID/MaderaVerde

1 WonHelpka 2005-2007 2006-2007 2006-2009

CulturalZone

2 YabalIngnika 2005-2007 2006-2007 2006-2009

3 KAIFUL 2005-2007 2006-2007 2005-2009

4 Sawacito 2005-2007 2006-2007 2005-2009

5 Mahor 2005-2007 2006-2007 2005-2009

6 ElGuayabo 2006-2007 2006-2007 2005-2009SouthernZone7 BrisasdeCopen(R.Barahona) 2006-2007 2006-2007 2006-2009 2005-2009

8 AltosdelaPaz 2005-2007 2006-2007 2006-2009

9 RíoPayas(MartínezFúnez) 2005-2007 2006-2007 2006-2009

Sico-PaulayaZone

10 Limoncito 2006-2007 2006-2007 2006-2009 2008-2009

11 MIRAVEZA* 2006-2007 2006-2007 2006-2009 2008-2009

12 MayaTulito 2008-2009

*FormerlyEmpresa Hermanos Unidos

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In addition to such direct assistance,indirectassistancewasdevelopedthrougharange of procedures aimed at facilitatingthe development of UNICAF, whosemembersweresupport toattendrelevantpolitical forums, round-table discussions,inter-institutional coordination andcompanyoutreachevents.

Though such indirect, intangible supporttotheUnionhasbeenimportant,thebulkof RainforestAlliance’s support has goneto direct assistance,most significantly inthe formof technical training.Thebelowtable itemizes the trainings held duringtheperiodunder analysis for thepresentcasestudy.

Table 3 Training sessions held by Rainforest Alliance between 2005-08

Nº Theme TrainingtopicAttendance

Organization members

1 Management StrategicPlanning CAIFUL 20

2 Management StrategicPlanning ACAFOB 10

3 Management StrategicandBusinessPlanning UNICAF 17

4 Marketing Marketprotocols UNICAF 20

5 AddedvalueMethodsintheproductionofpre-

dimensionedguitarneckcomponentsSixmembercooperatives

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TOTAL 127

Source:RainforestAlliance,LaCeiba.

Table 4 summarizestheinvestmentsmadeinthesevariousformsoftechnicalassistance,andsomeoftheoutcomes.

Table 4 Summary of investments and outcomes of Rainforest

Alliance technical assistance to UNICAF (2005-08)Directassistance Amount$ Outcomes

Organizationalstructuringandlegalization

29,974

• UNICAFestablishesitselfasaregionalenterpriseforaddingvaluetowoodandassistingitsmemberswithmarketing

• ThreeoperationalstructuresdesignedforenablingUNICAFfunctions

Businessmanagement

45,055• Strategicandbusinessplanscreated• Implementationofmarketingprotocols

Valueadded 48,277• Capacitiesintheproductionofpre-

dimensionedguitarneckcomponents

Marketing 32,647

• CommercialalliancewiththeinternationalbuyerNorthAmericanWoodProducts(asupplierofGibsonGuitars)ElevencontainersofguitarnecksexportedtoGibson(78,251boardfeetofmahogany)withtotalvalueofUS$345,304

• ValueaddedandmarketingalliancebetweenUNICAFanddomesticbuyerCaobasdeHonduras

• 64,340boardfeetofmahoganysoldtoCaobasdeHondurasfor$146,272

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Indirectassistance

31,708

• Investmentincoordinatinginter-institutionalrelations1) Theproject“BusinessManagementImprovement

inCommunityForestCooperativesintheRPBR”launched(supportedbyINCAE-FOMIN).

2) Theproject“Organizational-entrepreneurialdevelopmentforimplementationofvalue-addedprocessesintheforestcommunitiesoftheRPBRlaunched(supportedbyFIDE-RA).

• CoordinationwiththeBRP/GTZprojectandwiththeAFE

Technicalteamsalaries

91,107 Salariesforthepermanenttechnicalteam

Consultancyinputs

113,616 Feesfortemporaryspecialistsandlogisticsfortheirattendance

Total 392,384


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Inthissection,wequantifytheimpactsofthetechnicalassistancesummarizedaboveonUNICAFovera3-yearperiod,

2005-2008. Broadly, we are interestedin how cooperatives’ productivity,competitiveness and income changedover the three years; more specifically,we collected data for the following14 indicators, which are discussedindividuallybelow.

Production indicators

1.1 Annualvolumeincubicmeters.

1.2 Authorized and unauthorizedharvesting.

1.3 Annual production volume(boardfeet).

1.4 Utilization of raw material(lumber–board feetpercubicmeter).

1.5 Forestproductionandtransportcosts($/boardfoot).

1.6 Qualityindexforpre-cutguitarnecks(%rejects).

Social and business indicators

1.7 Employment.

1.8 Specializedjobs.

1.9 Transparency.

1.10 Businessrelations.

1.11 Delivery.

1.12 Financingandinvestments.

Sales and income indicators

1.13 Pricesandincomefromsales.

1.14 SalestoFSC-certifiedmarkets.

Results: The Impacts of Training and Technical Assistance

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Production Indicators

Annual volume in cubic meters

The cooperatives have been operatingunder forest management plans since1998,withanannualallowablecut(AAC,orCAP in Spanish) of about 7500 cubicyards(5700m³)ofmahogany.Despitethefact that thiswas theAAC prescribed ingovernmentapprovedmanagementplans,theAACwasreadjusted toa5200cubicyard(4000m³)ceilingin2007,i.e.2300cubic yards (1700 m³) less than whatcouldbesustainablyharvested.

For various reasons not all of thecooperatives have been able to harvestthis lesser legally-assigned volume. Insome cases, cooperatives are not able todedicate the time and effort required tosubmit timely applications; in othercases, they lackadequatecapital tocarryout operations or win the requiredpermits to harvest; in others, heavy

rainfall or poor roads hinder forestoperations.

Technically, such low volume harvests(18%ofAACin2005and30%in2008)translateaspoorforestrypractice,insofarastheyinhibittheapplicationofsustainableforest management as defined in themanagementplan.Additionally, from theproducers’ standpoint, such low-volumeharvests quiteobviouslynegatively affectproductivecapacityandthereforeincome.A key objective, therefore, has been toincreaselocalcapacitytoreachAACwhilerespectingsustainableforestrypractice.

Authorized and unauthorized harvesting

Table 5 summarizes available informationon regulated and unregulated harvestingin nine UNICAF cooperatives for theperiod under analysis. Unregulatedvolumes are those cited in a studypublishedin20083.

Table 5 ACC and authorized and unauthorized volumes harvested in 9 RPBR cooperatives (2005-2008)

Year ACC(m³)Regulated Unregulated Total Remainder

(m³) %ofCAP (m³) (m³)

2005 5,700 1,021 18 Unknown 1,021 4,679

2006 5,700 1,210 213,976 6,015 5,385*

2007 5,700 829 15

2008 4,000 1,214 30 Unknown 1,214 2,786

Source:ICFRegionalBiosphereBRPDirectorship.*ThisCAPremainderreferstoyears2006and2007.

3Thiel,H.andDelGatto,F.,(2008)‘EvaluacióndelasituacióngeneraldelatalailegalenlaReservadelHombreylaBiosferadelRíoPlátano’,ReportproducedforAFE-COHDEFORandKreditanstaltfürWiederaufbau(KfW).

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In theRPBRcontext, twodistinct forestryscenarios have emerged. First, there arethenearly262,000acres(106,000ha)thatare assigned to legally-organizedcooperatives for forest management. Onpaper,harvestinghereoccursasoutlinedin forest management plans, executedaccording to agreements signed withGOH.Secondaretheunmonitoredforestareas with no management plans orresponsible body; these are the areaswhereillegalloggingismostwidespread.

However, this division is not clear cut.During 2006-07, for example,unauthorized harvesting was detected insomeof theareasunder themanagementresponsibility of UNICAF membercooperatives and estimated at 3,976 m³(5,180cu.yds.),allmahogany.Asaresult,in2008,duringamanagementplanreviewprocess, operational permits were notrenewed for those cooperatives where ithad been proven that unauthorizedharvestingtookplace4.

The UNICAF cooperatives currentlyimplementing management plans havecontributed to a cumulative reduction inillegal logging in their assigned areas.RainforestAlliance’s strategy for assistingthem to do so has been to build value-added processing and the capacity toexporting pre-dimensioned mahogany.Thishasfreedthemfromtheirformertotaldependence on intermediaries (widelyknown to engage in illegal foresttrafficking), and is providing greaterincentives for local groups to tightencontrols, reporting and verification ofvolumesharvestedfromforestareasundertheir responsibility, thuscontributing toareductioninillegalactivity.

Before Rainforest Alliance began technicalassistance operations in 2005, no reliableproductionrecordsofmahoganyharvestsorsaleswere available. Since then, assistancehasbeenprovidedtoUNICAFtomaintainadatabase of sales to specific national andforeignmarkets;asof2008, thiswasstillawork in progress, butTable 6 below notessomeencouragingprogress.

Table 6 Percent of total production sold directly by UNICAF and cooperatives (2005-08)

YearTotalproduction Directsales

Boardfeet Boardfeet %totalproduction

2005 173,570 29,237 16.8

2006 205,700 56,197 27.3

2007 149,220 62,243 41.2

2008 230,660 117,420 51.0

Sources:ICFandRainforestAllianceRegionalBiosphereBRPDirectorship.

4Formore informationon illegal logging in theRPBR, seeGlobalWitness (2009), Illegal logging in theRioPlatanoBiosphere:Afarceinthreeacts;theThielandDelGattostudycitedabove,andthereportsoftheHondurasIndependentForestMonitor.

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Theincreaseinregisteredvolumepresentedabovereflectsanincreaseinthenumberofcooperatives engaging in direct legal sales(i.e., without intermediaries) in local aswellasexportmarkets. In2005, thetwelvecooperatives produced 173,570 board feet,of which only 16.8% were registered, theproduct of the sales of four cooperativesinto national and exportmarkets. In 2006,27.3% were registered from the samecooperatives for sales to the samemarkets.In2007,fivecooperatives, or41.7%,wereregistered. Finally, in 2008, 51% wereregistered,correspondingtosixcooperatives.Thus,overa3-yearperiod,significantgainswere made towards greater control overharvestingand trade in thishighlycomplexregionofHonduras.

Annual production volume (board feet)

Production here refers to annualmahoganyharvestsincubicmetersoflogsbyUNICAF,usingchainsawstofell,buck,andsawharvestedtimber,whichisinturnmeasured inboard feet forpre-cutguitarnecks,andbylogforotherqualities.

According to AAC permits, RPBR totalcooperative volumes as registeredby theRainforest Alliance are as shown in theabove Table 6. Yield factors have beenappliedas follows:170board feet/m³ for2005-06,180boardfeet/m³for2007,and190 board feet/m³ for 2008 – reflectingimprovements in yields achieved as aresultoftechnicaltrainings.

Registered volumes of sawn woodshow increases (except for 2007, when

only five cooperatives operated undermanagement plans); 2005-08 showed anoverall increase of 32.6%, and althoughvolumes for 2005 and 2006 wererelatively low,subsequent increaseswerethereafter registered, from 17% in 2005to 51% in 2008. These registries arenationalandexportsalesvolumesby thecooperativesdocumentedwithRainforestAlliance’sassistance.

The 32.6% production increase in sawnwood in 2005-08 was partly due toimprovedsawmillperformance,from170board feet/m³ in2005 to190board feet/m³ in2008.At the same time, registeredproduction increased from 17% in 2005to 51% in 2008, reflecting cooperativeinvolvement in export. In both cases,the positive impact of RainforestAlliance’s technical assistance is clear.Such improvements show how relativelysmall investments in community forestenterprise development, when correctlytargeted, can have significant impactoverashortperiodoftime.

Utilization of raw material (board feet/m³)

International mahogany price increasesand royalty fee hikes (paid to the state)from $25.30/m³ to $80/m³ in mid-2007,contributed to an increase in productioncosts, but also motivated producers toreduce waste. With assistance from RA,between 2005 and 2008, a 4.8% logyield increase was attained, improvinglumber output and reducing rejects inpre-dimensioned guitar necks from 40%in2006to10%in2008(Table 7).

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Table 7 Sawmill log yield (2005-08)

YearYield Rejects

(bf/m³) % %

2005-2006 170 40.0 40

2007 180 42.5 30

2008 190 44.8 10

Source:ArchivesRA,La Ceiba.

Table 8 Total production costs ($/board foot)

Year Forestproduction Transport Total

2006 0.80 0.42 1.22

2008 1.16 0.55 1.71

Difference 0.36 0.13 0.49

Source:ArchivesRA,La Ceiba.

Boththe20boardfeet/m³yieldincreaseand the 30% reject reduction achievedin these two years can be attributed toRainforest Alliance and buyer-sponsoredtrainings, combined with the trainees’strongeffortanddedication.Thesefactorsallowed producers to master wasteavoidance techniques to meet buyerrequirementsinlessthantwoyears.

The1,214m³utilizedin2008wouldhaveyielded only 206,380 board feet at theefficiencyratesof2006;however,withtheimproved waste reduction procedures of2008,anoutputof230,660boardfeetwasattained. This represents an incremental

increase of 24,280 board feet annually.With70%ofsalestothelocalmarketand30%exported,thisincreaseamountstoanadditionalincomeof$80,706.

Forest production and transport costs ($/board foot)

UNICAF production costs are still notwell defined; only approximations andestimates from surveys taken in 2006and 2007 are available. A systematicverification based upon an increasedsample population is required. Anapproximation of average costs ispresentedinTable 8.

Thistabledifferentiatesbetweenthecostsofforestproductionandcostsoftransport.Costs of forest production include thecost of management plans, operationsand local sales, payment of royalties togovernment, primary sawmill operations,

secondary processing for added value,andadministration.

The costs of transport typically involvetransportfromtheforesttothecooperative’slumberyard,andfromtheretotheregional

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RHBRP Photographs taken by Technical Team Rainforest Alliance.

lumber yard (for low capacity), and tomarket(forhighcapacity).Thiscostvarieswithweatherconditionsandoilprices.Asmentioned,conditionsintheRPBR-often

including poor or non-existent roads -sometimesrequirestransportbymulebackor by river barge; both are low-capacityandtime-consumingmethods.

From the cooperative’s lumber yard tothat of the regional yard, roads are onlyaccessible by small capacity vehicleswith 4-wheel drive; traffic is limited byheavy rainfallmuchof theyear.Theonlyefficient stage of transport is from theregionallumberyardtomarket.Thoughthissystemisnotoptimalintermsofefficiency,such extensive transport is a source ofemploymentthroughoutthezone(56%ofthetotal).

The 40% increase in total productioncosts between 2006 and 2008 was dueto increases in investments in both forestoperations and transport. With forest

production, the increasecanprimarilybeattributed to increased management andprocessingcosts,asboththeprimaryandsecondary stages of production of pre-dimensional guitar pieces requires morelabor than the production of previousproducts. Most significantly, the cost ofstanding timber, defined by GOH andpaid to the State Forest Administration,increaseddramatically from$25.30/m³ to$80/m³inmid-2007,a220%increase.

The increase in transport cost isprimarily due to increases in oil pricesand increased occurrence in inclementweather.

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Figure 2 Percentage relationship of yields and qualities

produced in primary mahogany processing.

However, as will be shown, theseincreased costs were outweighed by thehigher prices obtained for value-addedproductsontheinternationalmarket.

Quality index for pre-cut guitar necks

As a function of mahogany standingvolume, 80%of the logged timber is usedbythesawmilland20%isconsideredwaste

(stump, defective parts and tip). In 2005,halfofthe80%broughttothesawmillwasturned into saleable products. Of thesesaleable products, 15% was high qualitylumber,2%mediumquality,and83% lowquality.By2008,theamountoftimberthatwasturnedintosaleableproductsincreasedto60%,and,ofthistimber,15%wasturnedinto high quality lumber, 36% mediumqualityand49%lowquality.

As shown in Figure 2, between 2005and 2008 the proportion of low qualitytimberdecreaseddramatically(from83%to 49%), and the proportion of mediumqualitytimberincreasedfrom2%to36%.The proportion of high quality timberremained constant. These changes havepositiveimplicationsforoverallincome.

In addition to the changes in quality,the rejection rate from the40%ofwoodappropriateforsaleableproductsdroppedto10%,thankstotechnicalimprovementsin chainsaw operations, a direct resultof training. This training also increasedmedium-quality production and pre-dimensionedpieces for the localmarket,at prices equivalent to $2.43. Training

hasimprovedcoarse(lowquality)lumberproductionaswell.

Pre-dimensioned high quality guitarneck production accounts for 15% ofall production and represents the bestopportunity for theUNICAFcooperativesto optimize wood output. The averageexport price is $5.41,more than doublethe local market price of $2.43. Localmarket sales have also increased, sincemorecooperativesarenowparticipating.Prior to2005,all cooperative salesweremadeonthelocalmarket.

Cooperatives are effectively unifiedthrough this type of high-value product.Overpoorroadsandunderheavyrains,a

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singlecooperativecouldnotfrequentlyfillacontainertosatisfyinternationalmarketrequirements, but united, a group ofcooperativescanmeetthesecommitmentsand manage their assigned forest zones,greatlyimprovingincomeandthequalityofforestmanagement.

Social and business indicators

Employment

‘Employment’isdefinedbyforestactivitywork days (and measured as wages/day)annually engaged by UNICAF-BRP workcrews. Activities include harvesting, on-site operations, skidding, transport toprocessing centers, production of pre-

dimensionedguitarnecksandlumberandloading of the finished products for sale(Table8).

The following production metrics wereappliedasassumptions:

• Forest harvesting: 150 board feet/person/day;

• Value-added processing: 200 boardfeet/person/day;

• Transport:445boardfeet/person/day.

Volumes, yields, and daily wages peractivity are presented in Table 8, whilework days generated by forest activitythroughout2006-08appearinTable 9.

Table 9 Annual wood production, yields, and daily wages for sub-activities

Year m³/log

Production(boardfeet) YieldWages/day*

$SawedPre-

dimensionedSub-activity bf/day/person

2006 1,210 205,700 28,375

Sawed 150 8.0

Pre-dimensioned

200 8.0

Transport 445 8.0

2007 829 149,220 24,723

Sawed 150 10.5

Pre-dimensioned

200 10.5

Transport 445 10.5*

2008 1,214 230,160 34,890

Sawed 150 10.5

Pre-dimensioned

200 10.5

Transport 445 10.5

Source:LaCeibaRainforestAlliance,Archives.*Cooperativeworkersgenerallyearn200lempirasdaily,regardlessofactivity.

BasedondatafromTable9,annualworkdayscanbeanalyzedbysub-activity.

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Table 10 Total annual workdays by forest activity (2006-08)

Year

Sub-activityTotalDays/year

Harvesting Value-added&Packing Transport

Men Women Total Men Women Total Men Women Total

2006 1,371 0 1,371 142 0 142 462 0 462 1,975

2007 995 0 995 124 0 124 335 0 335 1,454

2008 1,534 0 1,534 175 35 210 517 0 517 2,261Source:Generatedfromdata.

AnnualwagesperworkdayarederivedfromTables8and9.(Beginningin2008,womenwereemployedinproduction,especially inprocessinghigh-qualitywood).

Calculations for the years 2006-08 arepresented in Table 10 by activity and bygender, to include percentage of totalincome.

Table 11 Annual income by job generated in 2006-08

Workdaysgenerated/activity/year Incomein$ Percentageoftotal

income(%)2006 Men Women Men Women Total

Sawed 1,371 0 10,968 0 10,968 69.4

Pre-dimensioned

142 0 1,136 1,136 7.2

Transport 462 0 3,696 3,696 23.4

Total 1,975 $15,800 100

2007

Sawed 995 0 10,448 10,448 68.4

Pre-dimensioned

124 0 1,302 1,302 8.5

Transport 335 0 3,518 3,518 23.1

Total 1,454 $15,268 100

2008

Sawed 1,534 0 16,107 16,107 67.8

Pre-dimensioned

175 35 1,838 368 2,206 9.3

Transport 517 0 5,429 5,429 22.9

Total 2,261 $23,742 100

Source:Ownarchives.

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Table 12 Employment-generating activities in the RHBRP (2008)

Activity Workdays % Approximateincome($)

Forestproduction 2,261 46.8 23,700

Cattle-raising 1,287 26.7 13,500

Farming 857 17.7 9,000

Commerce 429 8.8 4,500

Total 4,834 100 50,700

Source:OwnresearchmadeintheRegion

Those activities generating the mostemployment within the UNICAFcooperatives include forest management,independent small-scale cattle-raising,

subsistenceagriculture(homegardeningofbasicgrains for familyconsumption),andcommerce.TheseareshowninTable 12.

The above tables reveal that, whilethe volume of wood sawn is similarin 2006 and 2008 (1210 m³ and 1214m³, respectively), income increaseddramatically over the same time period.Income went from $15,800 in 2006 to$23,742 in 2008, a direct increase of$7,942 or 50.3%. This was due to anincreaseof4.8%intheyieldofrawwoodin2008(anadditional24,220boardfeet),generating238jobsandadditionalwagesof $2.50daily in 2008.This exceeds thetotal income for farming in the region($22,500). Income from forestry hasbeen the basic motivation for forestmanagement and the reduction of theexpansionoftheagriculturalfrontier.

During 2008, 35 working days wereperformed by women in value-addedproduction,representingapositive,ifsmall,impact.Alsoduring2008,2261workdaysprovided wages of approximately$23,742.Theadventofnewcooperativesintheregionmayleadforestrytosurpassagriculturalactivity,traditionallythemajorsourceofemploymentintheregion.

Specialized jobs

Since 2008, UNICAF-BRP has hadan administrative structure of sevenspecialized jobs. The twelve membercooperatives have also developedspecialized jobs (Table 12), carried outby trained workers, particularly in forestexploitationandvalue-addedproduction.

Since 2005 at least two chainsawoperatorsworkon-siteineachproductionzone in the field to size the wood intothe required lengths; they are aware ofthemarketqualitydemands.At leastoneother technical specialist, well versedinmarketqualities, isalsopresent in theforest.

Only five of the cooperatives ownprocessing machinery. Each employsa classifier operator to produce pre-dimensionedpieces forexport.Therearealso two plants for producing packingmaterial, including strapping machines.These operators also stack finishedproductforshipment.

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Each cooperative is managed by thecurrent board chairman who specializesin administrative matters and isfamiliar with forest quality criteria and

participates in forest monitoring. Exportdocumentation is handled throughlawyersandcustomsbrokers.

Table 13 Specialized functions defined in 2005-08

Area Title2005 2008

Incumbent Proposed Incumbent

Management

GeneralManager(UNICAF)

1 Pending

Commercialmanager(UNICAF)

1 Pending

Manager 1 Pending

Clerk/assistant 1 Pending

Foresttechnician 3 1(Pending2)

Forestexploitation

Chainsawoperator 24 24 24

Checker(woodsinspector)

12 12 12

Secondaryprocessing(piecework)

Machineoperator 5 5

Packer 10 10

Total 36 58 53

Source:RainforestAllianceArchives,LaCeiba

Transparency

BeforeassistancefromRainforestAlliancebegan in the UNICAF cooperatives,a proper registry of administrativeinformation was lacking. Since 2006,RA and GTZ have held joint trainingseminars in bookkeeping as requiredby cooperative law. To date, however,state support measures to encouragebetteraccountingpracticeshavenotbeensufficient. It is hoped that the with theinstallment of the new ICF, this may beachieved.

One issue that has been challenging toovercome is the tendency for those in

leadership positions to make decisionsbased on personal interests, withoutadequate consultation with members.Ensuring group decision-making andengendering an equitable, collective-basedethicisoneofthecentralchallengesfaced in building local communityenterprise.

Business relations

Although no specific records areavailable on the subject of businessrelations, it is known that prior to2006 the cooperatives sold lumber toshipbuilders, placing their product inthe lumber yards of each customer, or

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with local intermediaries who providedtransport.

Currently, with the assistance of RainforestAlliance, direct relationships have beenestablished with brokers and exporterssuch as North American Wood Products

(NAWPI), which buys pre-dimensionedguitarneckpiecesforsaletoGibson.Alocalcompany, Caoba de Honduras, purchasesother products, such as guitar neck piecerejects, furniture parts, and block woodin various sizes for sale on the domesticmarket.

Figure 3 Business relationships between cooperatives (C) and purchasing firms (FC)

Year Relationship Comments Observations

Priorto2008

CListhelocalagentwhofinancescooperativeproductioncostsandprovidestransportoftheproduct.

Alocalagentcouldmaintainbusinessarrangementswithseveralcooperatives.

2008

ThroughUNICAF-BRP,theirumbrellaorganization,thecooperativesestablishrelationswithGibsonthroughNAWPIanddirectly,with Caoba de Honduras.

UNICAF-NAWPI-GibsonMusicalInstruments(Internationalmarket):UNICAF-Caoba de Honduras (Localmarket)

Source:Ownarchives.

C1C2C3C4Cn

C1C2C3C4Cn

CL1CL2CL3CL4CLn

Caoba de Honduras

UNICAF-BRP Gibson

NAWPI

The relatively recent sales agreementsbetween the UNICAF-BRP cooperativesandforestproductsprocessorsandexportagencies are one of the central impactsof efforts by Rainforest Alliance to linkUNICAF with markets. The resultingenhancement of forest operations, value-addedprocessing andmarket orientationpavedthewayforotherstrategicalliancesand sales agreements with commercialentities.

FortheNAWPI/Gibsonsalesrelationship,NAWPI acts as a broker, purchasingcertifiedmahoganyfromthecooperativesand assisting with targeted technical

advice, including the presence of atechnical advisor when preparingshipments. Furthermore, a significantgesture of assistance to the cooperativeswas a NAWPI advance against their firstpurchase order, which specified quality,dimensions, volume, and delivery terms.The presence of Rainforest Alliance andother partners formed a key “guarantee”forNAWPItomakesuchanadvance.

Gibson Musical Instruments is the endbuyer.Theirrequirementtomovetowardsand eventually achieve FSC certificationhas strengthened incentives to producelegal,FSC-certifiedforestproducts.

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On the domestic market, as noted,Caoba de Honduras purchases blocksof common quality, pre-dimensionedfurniture components and relatedproducts,providingsomelimitedtrainingat their facilities to select cooperativemembers.

Delivery

Thecooperatives’relationshipwithGibsonGuitar and with Caoba de Honduras isbased on an informal agreement andunspecifieddeliverytimes.

NAWPI extended an initial purchaseorder to each cooperative, specifyingquality,dimensionsandvolumesrequiredduring thefirst year, eachdelivery beingnegotiated.Thecooperativesproducewhattheycanandwhenadeterminedvolumeis reached, theynotify thebuyer’s agent,who assists in classification, containerpreparationandshipmentprocessing.

The letter of intent signed byCaoba de Hondurasisverygeneral,withnospecificcommitments. Accordingly, businessis carried out on the basis of purchaseorders citing product specifications suchas measurements, volumes, species andqualities, but is unspecified regardingdelivery.

The seeming informality of thisarrangement isaresponse to thespecificanddifficultconditionsintheRPBRnotedpreviously.

Finance and investment

Up until recently, the UNICAF-BRPcooperativescouldnotqualify for formal

financingunder theHonduraneconomicsystembecausetheycouldoffereffectiveguarantees, and also because forestryin Honduras is classified as dangerous,disqualifyingthecooperatives.

In order to finance operations, as wellas technical assistance, the UNICAFcooperatives have relied on supportfrom buyers, local lenders, foreign aidorganizations,andfromRainforestAlliance.

Capital investments in productiveequipment, as well as in machineryand transportation, have been achievedthroughacombinationofsources:

(i) personalfundsofmembers,andgroup-ownedcooperativefunds;

(ii) foreignaidprojectdonations;

(iii)advances on customers’ purchaseorders,and

(iv)personalloans.

Workingcapital isgenerallyprovidedby(i),(ii)and(iv),whiletechnicalassistanceis freely extended by RainforestAllianceandNAWPI.

Rainforest Alliance extended technicalassistanceamountingto$204,722during2008.Thiswenttotraininginvalue–addedproduction and marketing, businessplanning and negotiation, organizationalenhancement, and forest certificationsupport. Additionally, support was givenfor salaries of the permanent technicalteam, temporary specialist fees, and forlogistical costs related to attendance ateventsandbusinessmeetings.

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Table 14 summarizes investments madeby UNICAF over the past three years,

including Rainforest Alliance technicalassistancein2008.

Table 14 Equipment and amount of investments by UNICAF (2006-08)

Nº Description Amount($) Source:

1 Loggingequipment 30,000 Self-financing

2

Transportationequipment 43,000 Self-financing

-Motorizedvehicles 21,000

-Mules 7,000

-Motorizedriverpiragua 15,000

3Secondaryprocessingequipment 40,000

Mixedfunding:self-financing&foreignaid

Sub-total 113,000 Capitalinvestments(equipment)

4 TechnicalassistanceRA(2008) 204,723Includingsalaries,fees,andnegotiations

5 NAWPItechnicalassistance Unknown

Total 317,723


Table 14 shows that the cooperativesself-financed nearly $100,000, or about90% of capital investments in equipmentbetween 2006 and 2008. RA’s technicalassistance investments for one year alone(2008) outweighed the combined capitalinvestments.

Arelativelymodestinvestmentinequipmenthas enabled the cooperatives to makeeffective use of the technical assistanceprovided by RA. Technical assistance hasenhanced the local capacities and enabledthemtosecurefundingtoaddgreatervaluetotheirproducts.

Sales indicators

Prices and income from sales

Theprices shown inTable14andFigure4 apply to types of mahogany products

produced by UNICAF cooperatives: pre-dimensioned pieces for the internationalmarket (NAWPI-Gibson), block lumberandpre-dimensioned furniture pieces forthe national market, and sawed lumberforthelocalmarket.

Products are registered for two differentperiodsandforthreetypesofmarket:

(i) Pre-dimensionedpiecesorguitarpartsfortheexportmarket;

(ii) Sawed lumber in lengths of 6’ to 10’,by 2” to 6” thickness, and from4” to12”inwidth;shorterboardsof1’to5’,by2” to6” thickness,by4” to12” inwidth; and pre-dimensioned furniturepartsforthenationalmarket;and

(iii)Coarse-sawed block lumber of allsizesforthelocalmarket.

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Table 15 Product prices by market and total sales income

Year

Productpricesbymarket($/boardfoot)

Salesbymarkettype

Volume(boardfeet) Incomein$

Local Nat Export Local Nat Export Total Local Nat Export Total

2005 1.00 2.10 4.03 144,333 4,074 25,163 173,570 144,333 8,555 101,407 254,295

2006 1.10 1.93 4.48 149,503 27,822 28,375 205,700 164,453 53,697 127,120 345,270

2007 1.40 2.41 4.72 86,977 37,520 24,723 149,220 121,768 90,423 116,693 328,884

2008 1.68 2.43 5.41 113,267 82,503 34,890 230,660 190,288 200,245 188,843 579,375

Source:LaCeiba,RainforestAlliance.

Table 15 shows a progressive annual priceincrease for all threemarkets. Internationalmarket prices are generally double thoseof the national market, especially for FSC-certified products. Also for export, FAS &Selecta woods are considered the highestgrades.Moreover,internationalmarketpricesfor top grades increased by 35% between2005and2008,whilenationalmarketprices(aswellas forgradesbelowFAS&Selecta)have increased by 15% during the sameperiod. Although local market prices alsoincreased by 68% during this period, theirbase amounts are so low that they do notcomparetoexportprices.

Table 15 also summarizes sales incomeregistries for the local, national andinternational markets, showing thatcooperative income for 2005 was$254,295and in2008was$579,375anincrease of 228%. During this period,modest growth (38%) was registered ininternationalmarketsales,whilenationalmarket sales volume increased 20-fold(from4,074boardfeetin2005to82,503board feet in 2008).The trends reportedhere did not hold for 2007, when allsalesdecreasedduetomanagementplanrevision.

Figure 4 Prices per board foot ($/board foot) for products for the international markets (FSC-buyers), national (non-FSC) and local (non-FSC) for the period 2005-08.

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Sales to export markets

The first export to Gibson was for threecontainers prepared in 2005, with theparticipationofthreecooperatives.Thiswasachievedinonlythreemonths,facilitatedby personnel from AFE-COHDEFORwho approved the documentation, fromthe operational plan approval to theemission of the CITES (Convention onInternationalTradeinEndangeredSpeciesofWildFaunaandFlora)permit.In2006and 2007, six cooperativeswere able toexportfourcontainersannually.

Because all exports went to an FSC-certifiedbuyerintheUS,the‘export’datainFigure 4ineffectoutlinessalestoFSC-certified markets (although the productitself at the time was not certified). In2005, export sales reached 40% withfour participating cooperatives; in 2008these sales accounted for 33%, with sixcooperatives participating. While exportsalesincreasedby38%,nationalvolumesgrewtwentyfold.

As described earlier, the presence ofGibson as a buyer that specifically

sought FSC-certified product wasinstrumental in providing an incentivefor the cooperatives to move towardsFSC certification. Between 2005,when the first shipments were made toGibson, and 2008, export sales incomeincreasedby86%forthesixparticipatingcooperatives, providing an incentiveto other UNICAF-BRP organizations.Three other cooperatives have preparedto participate in export sales throughNAWPI in 2009, while others haveshown interest and improved theirsustainable forest management throughFSC certification and production of highquality wood for pre-dimensioned guitarpieces.

In 2010, 14,759 ha of forest undermanagement by UNICAF cooperativeswere awardedFSCcertification.UNICAFis theholderof thegroupcertificate.Theplan is to expand the area under thisgroup certificate to cover the total areaof all UNICAF cooperatives by 2012.Again, the clear advantages of exportingto buyers demanding FSC product hasbeenakeymotivating factor forUNICAFtopursuecertification.

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Conclusion and Lessons Learned

Working with its twelve membercooperatives,UNICAFhasachievednotableimprovements in forest management,production, and marketing. These changesinclude improved forestry operations,sawmill performance and value-addedproductionofguitarcomponents.Thesegainscamethanks toanassociationwithGibsonand NAWPI, and the continued technicalsupport from RainforestAlliance and otherinternationalorganizationssuchasGTZ.Atthe same time, business relationships havebeenestablishedwithCaoba de Honduras,alocalresaleagencypurchasinglower-qualityproducts for sale on the domestic market.As noted, these relationshipsmotivated thecooperativestopursueFSCcertificationanddevelop greater value-added productionamongcooperativemembers.

AsadirectresultoftechnicalassistancefromRA, the following changes occurred duringthe2005-2008timeperiod:

• Sustained production of high-qualitypre-dimensioned mahogany for guitarcomponents achieved, with a lowpercentageofrejects.

• 128% increase in income achieved,witha33%increaseinproduction(wellwithin the allowable volume set out inmanagementplans).

• Primary processing efficiency usingimprovedchainsaw techniques improvedby12%,from170boardfeet(bf)percubicmeter(m³)in2005to190bf/m³in2008.

• Music grade wood increased from17% of total output in 2005 to 51%

in 2008. Higher grade quality outputreached15%andmediumgradelumberincreased from 2% in 2005 to 36% inthesameperiod.

• Reduction in illegal trafficking ofwoodintheareaofinfluenceofUNICAF-BRPcooperatives.

The challenges to working in this remote,underdeveloped, and sometimes conflictiveregion ofHonduras cannot be understated.Traditionally working as subsistencefarmers, the vast majority of members ofcooperatives had little formal education orfamiliarity with management concepts, norwith forest management, cost control orotherissuescentraltobuildingacompetitiveforest enterprise.That they have so rapidlyacquired the knowledge and technicalskills in processing and marketing a morecomplexproductisatributetotheirenergyand perseverance and also shows the realpotential value of technical assistance.Working with the Rainforest Alliance andpartners, cooperativemembers are learningto access new financing sources to furtherexpand their knowledge and increasecompetitiveness.

We conclude with some lessons learnedfrom this project. Our hope is that theseobservations will prove useful for othercommunity forestry organizations workingto maximize benefits through technicalassistance.

1. Community willingness is critical

RA’s efforts were ultimately successfulbecause of cooperative members’

34

receptive attitudes. Their enthusiasm,and the successes they have realizedthroughhardworkandstrategicalliances,has demonstrated that the commonlyheldbelief that local farmers cannot runsuccessful forestry businesses is indeedfalse. What is needed is dedicated andcorrectly-targeted support to developmanagement capabilities, add value totheirproductandfindmarkets.

2. Resistance to deeper investment in administration must be overcome

Despite the benefits accrued toUNICAFdue to improvements in management,administration and finance, manycooperative members have shown littleinterest orwillingness to further developcapacities in these areas. Their desireis to invest in industrial transformationtechnologiesthatleadtoimmediateprofit,failing to see how technical assistancein administration has led to significantbenefits. Constant reinvestment in soundadministrationandfinancialmanagementis central to long-term success andenterprisecompetitiveness.

3. Investment should be structured to allow for continuous training

The success of RA’s technical assistancewill be best maintained through a

continuous trainingprogram.Thisshouldbe a key reinvestment area for UNICAF,as well as the assistance strategies fromstate institutions charged with forestmanagementandmonitoring.

4. Social capital needs to be built

Although the UNICAF cooperativeshave been quite successful given thechallenges, they continue to showmarked weaknesses in key socialand organizational matters. UNICAFAssemblymeetingshavecontinuedtobesusceptible to manipulation by leaders,impeding improvement in transparencyin decision-making. The achievementsand growing reputation of UNICAFcould be put in jeopardy if they do notsucceed in increasing transparency andequity in decision-making and benefitsharing, operating as an organizedcooperative rather than following theinterests of individuals.To help facilitatethistransition,allbaseorganizationswereconverted to cooperatives in conformitywithlegalrequisitesfortheestablishmentof the UNICAF, to allow more openinvestigation,makedecisionsbyassemblyand perform audits by state authorities.Thisisonlyafirststep,however;constantimprovementwillbenecessarytoachieveand maintain a strong social base ofsupportforUNICAF’soperations.

This draft document was funded by the programmulti-donor Forests (PROFOR), World Bankwww.rainforest-alliance.org

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