Financial Sustainability of PEFC Group Certification for Smallholder Farmers in Central Vietnam

Sustainable forest management and forest certification is a global issue. They are particularly important in Vietnam where forest covers above 40% of the country’s areas. The thesis aims to anticipate the financial sustainability of PEFC group certification in central Vietnam through a comparison of the costs and benefits of certification, and an analysis of the Acacia value chain. The study sites are in three cooperatives in TTH province. The research approach is qualitative. Data are obtained primarily from observation, group focus discussion and semi-structured interviews with key informants from the management boards of cooperatives, farmers, traders, woodchip factories, furniture processing companies, and experts from governmental organizations and NGOs stretching from the north to the south. Besides, secondary data is collected from scientific journals, documents published and unpublished by the research institutions, and books. Results confirmed the potential of smallholder forestry in securing the sustainable supply of industrial timber and improving the livelihood of farmers by providing a new income stream. However, the contribution of Acacia plantation to the total annual net income is modest, mainly due to small landholdings. The smallholders in Central Vietnam face many bottlenecks preventing them from maximizing benefits from planted forests, including limited access to land, high-quality inputs, capital, advanced silvicultural practices, and fair market. Besides, they bear a high risk of exposure to extreme natural events such as typhoons and floods. These obstacle is also limiting the participation of smallholders in voluntary verification schemes such as forest certification. Engaging in forest certification is proven to create extra revenue for smallholders while reducing pressure on imported certified timber. The total costs of certification are affordable for smallholders if joining together under a single certificate. In Vietnam, forest certification is often associated with the planting of perennial trees for sawlogs and price premiums for certified timber. This scheme is argued inappropriate for smallholders in Central Vietnam, who are often described as high weather-related risks and financial fragility. Under the current situation, forest certification does not create tangible and intangible benefits for middlemen, woodchip factories and local carpenters. Smallholders and furniture processors are the direct beneficiaries. However, the circumstance is predicted to change in the future, resulting in the participation of all actors in the value chain in the forest certification. This study also suggests several interventions for expanding forest certification, starting from recognizing smallholder farmers as a distinctly different category of forest producers whose conditions need to cautiously considered when developing standards for group certification. Secondly, there should be a strong focus on capacity building for the group entity as well as raising awareness for members of group certification. Thirdly, linking smallholders with private sectors are not only attracting more investment but also widening market access for farmers. Additionally, it must be mentioned the importance of secure tenure, clear guidelines for implementing SFM and forest certification, incentive policy and cost-sharing mechanism on insurance and certification.