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Pilot Study on Group Certification of Rubber Smallholders under the Malaysian Timber Certification Scheme (MTCS)

The Malaysian Furniture Promotion Council (MFPC) has been involved in the certification of rubber wood as sustainable wood in line with FSC’s request for rubber wood to be included as a tropical wood for environmental sustainable certification. This will have the implication of affecting the entry of rubber wood products, predominantly furniture into the EU market.

MFPC is pleased to forward the group certification of rubber wood’s exercise, undertaking by MTIB for the awareness of the industry.

1 Introduction

The furniture industry is expected to continue to lead the growth of the wood-processing industry. Under the National Timber Industry Policy (NATIP), furniture export is expected to contribute RM16billion out of the total RM53 billion wood exports by year 2020.

The main purpose of the project is to conduct the Group Certification on Ruberwood under Malaysian Timber Certification System (MTCS).Malaysian Timber Industry Board (MTIB) will lead the study in implementing the certification on rubber wood.

Group Certification of Rubber Wood is very much different to the ordinary certification of forest timber or even plantation timber. It is a pilot study to ensure whether it can be done in Malaysia.

The project is to expect to fulfil the requirement by the international buyers with environmental and green issues. Besides, the certification will probably increase the premium and could fetch better price for certified rubber wood, hence benefit the smallholders. Not to lose the international market, the Government need to act fast.

In the international market, due to the green and environment issues, buyers are demanding for timber and timber products that are certified to legality and sustainability. To meet the market demand for legal and sustainable materials, manufacturers have to be alert to it in order to remain competitive. As a major player of furniture in the international market, furniture manufacturers in Malaysia are under pressure to supply furniture made from certified timber as the legality of rubberwood is a temporary measure as the market is looking forward to both sustainable and legality.

2 Rubber wood at a Glance

Heveabrasiliensis (popularly known as rubber tree) was introduced to Malaya almost a century ago. The wood from the tree has been traditionally regarded as a waste, but since the 1980s’ it has found widespread utilization in the wood industry. Today, rubberwood contributes at 80% of the total exported value of wooden furniture.

Rubberwood is referred as an environmental friendly material with a low price, but issues related to its sustainable supply are becoming a major concern nowadays. The total area of rubber plantation has been steadily declining over the years as planters claimed less profit and shifted to oil palm cultivation.

3 Background of the Project

The cost of this pilot study will be borne by the government through the Ministry of Plantation and Industries and Commodities (MPIC) via Timber Levy Fund, where the Malaysian Timber Industry Board (MTIB) will be the implementing agency. This project is a voluntary basis and not adheres to any specific mandatory law.

The Committee has been set up and has agreed upon to appoint a Consultant as a Project Manager with vast experience in timber auditing and certification. The assistance from other agencies and major stakeholders such as FELDA, RISDA and FELCRA are much needed to ensure the success of the project.

4 The Challenges

As mentioned before, the rubber wood group certification is never done before in Malaysia. Some challenges have been identified are as follow:

· there will be some drawback whereby failure of one area in meeting the requirement will be causing whole group failure in obtaining the certification.

· very high cost and time consuming process as this was experienced by development of the Forest Law and Enforcement and Governance Trade (FLEGT)

· not a big problem on big plantation groups; as they are aware and ready for the certification but on how we are going to get nearly 95%rubberwood source which is small holders to be certified

5 Objectives

The main objectives of the Pilot Study on Group Certification of Rubber Smallholders under the Malaysian Timber Certification Scheme (MTCS) Scheme are to :

· Assess the feasibility of implementing group certification of rubber smallholdings under the MTCS, including information on the cost of group certification

· Develop a user friendly manual on the requirements of the Malaysian Criteria and Indicators (MC & I) (Forest Plantation) and how rubber smallholders can meet these requirements under a grouping certificate

· Develop and documented the administrative arrangements for managing a group of smallholders from certification under the MTCS

6 Justification

· Rubberwood is the main timber material used by the Malaysian furniture industry and it is mainly harvested from smallholdings. It is therefore recognized that certifying rubberwoood as a sustainable resource could be quite different as compared with timber from natural forests or forest plantations.

· In Malaysia, latex production is the main commodity from rubber estates and smallholdings. Rubber wood is a mere by-product or agriculture timber which is used to be thrown away and burnt. There is no value on the rubber wood when it was three decades ago.

· The planting regime particularly in smallholdings, therefore would not be the same as that practised in the forest plantations and the smallholders may have difficulty in meeting the requirements of the forest plantation standard used in the MTCS i.e MC&I especially those relating to social and environmental aspects.

· The number and size of these smallholdings also pose a different challenge in certifying these areas under any existing certification scheme. According to source from RISDA, there are currently about 256,069 smallholdings in Peninsular Malaysia with an average size of 1.5 hectares each. Group certification of these smallholders has therefore been suggested in order to achieve the economies of scale that is need.

· As rubber smallholdings have yet to certify under any certification scheme, and group certification has so far not been carried out in Malaysia, it is therefore proposed that a Pilot Study on Group Certification of Rubber Smallholders under the MTCS be carried out.

7 Impact of the Project

· The pilot study will determine:

- the feasibility of the group certification approach for the smallholders.

- it will also develop a user-friendly manual on the requirements of the MC&I (Forest Plantation) and

- how these requirements can be met by a rubber smallholder under a group certification

· The study will also indicate whether group certification of rubber smallholders would be economically viable, taking into account factors such as the current certification cost, size of the small holding and the price of rubber wood logs.

· In the certification of rubber smallholdings isfound to be viable, the availability of certified rubber wood would provide Malaysia’s furniture industry with a competitive edge in the international furniture market.

· The certification of rubber wood would also be able to promote the value and price of rubber wood and consequently, bring higher returns to the rubber smallholders.

8 Project Location and Target Group

· The project will be carried out in Peninsular Malaysia where rubber wood is extensively used in the manufacture of furniture

· Based on consultation with LGM, RISDA, FELDA and FELCRA and taking into consideration the number of smallholders, the size of these smallholdings, location and age of trees, it was decided that the group of FELDA smallholders totalling 382 with a total land size of 1,257.21 hectares where the age of the rubber trees ranging between 18-30 years old, located in Bukit Rokan Negeri Sembilan be chosen as the project site.

9 Implementation Period

The project will be implanted over a period of 24 months started from August 2011 until July 2013.

10 Terms of Reference (TOR) of Group Manager

· MTIB appoint a company to serve a Group Manager (GM)

· to familiarise the requirements of the MC & I (Forest Plantation) visits a sample of the smallholders to assess and better understand the challenges faces by the smallholders from the viewpoint of certification, followed by first briefing

· to conduct second briefing session to smallholders

· to conduct third briefing session to smallholders involved to provide information on the administrative arrangements as well as on the manual and to obtain feedback

· finalises administrative documents and manual and sends them to the participating smallholders

· applies to Certification Body (CB) for certification under the MC&I

11 Expected Outcomes

· A report on the feasibility of implementing group certification of rubber smallholdings under the MTCS

· A user friendly manual on the requirements of the MC & I (Forest Plantation) and how rubber smallholders can meet these requirements under a group certification

· Document (in Bahasa Malaysia and English) on the administrative arrangements for managing a group of smallholders from certification under the MTCS

· Indications on the costing of group certification and economic viability of group certification