Forest Management Public Summary for: PT Xylo Indah Pratama
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Forest Management Public Summary for:
PT Xylo Indah Pratama
Certificate Number: SW-FM/COC-104
Date of Certification: March 15, 2000
Date of Public Summary: April 2000, updated for 2001, 2002, 2003
This document was produced according to the guidelines of the
Forest Stewardship Council (FSC) and the SmartWood Program.
No part of the report should be published separately.
Certifier:
SmartWood Program1
c/o Rainforest Alliance
65 Bleecker Street, 6th Floor
New York, New York 10012 U.S.A.
TEL: (212) 677-1900 FAX: (212) 677-2187
Email: smartwood@ra.org
Website: www.smartwood.org
To earn SmartWood certification, a forest management operation must undergo an on-site field
assessment. This Public Summary Report summarizes information contained in the initial assessment
report, which is produced based on information collected during the field assessment. Annual audits are
conducted to monitor the forest management operation’s activities, to review the operation’s progress
toward meeting their certification conditions, and to verify compliance with the SmartWood standards.
1
SmartWood is implemented worldwide by the nonprofit members of the SmartWood Network. The Network is
coordinated by the Rainforest Alliance, an international nonprofit conservation organization. The Rainforest Alliance
is the legally registered owner of the SmartWood certification mark and label. All uses of the SmartWood label for
promotion must be authorized by SmartWood Network headquarters. SmartWood certification applies to forest
management practices only and does not represent endorsement of other product qualities (e.g., financial performance
to investors, product function, etc.). SmartWood is accredited by the Forest Stewardship Council (FSC) for the
certification of natural forest management, tree plantations and chain of custody.Addenda providing the updated information obtained during these annual audits are included as
attachments to the Public Summary Report.
1.0 GENERAL SUMMARY
1.1 General Information
Certification Candidate: PT. XYLO INDAH PRATAMA (XIP), Perkantoran Permata
Hijau Blok I No.9-10, Jl. Biduri Bulan, Jakarta
Contact Person: Mr. Antojo Kowara, President Director
E-mail Imbjkt@indosat.net.id
Telephone: 021 530 3620, 548 2672
Fax Number: 021 549 1831
Operation Under Assessment: Agroforestry plantations supplying wood to XIP Pencil Slat
Factory; Jln Palembang Km 23, Muara Beliti, Kab.Musi Rawas,
South Sumatra.
1.2 General Background
A. Description of XIP’s Operations:
Xylo Indo Pratama sources over 80% of its current wood supply for its pencil slat processing
plant in Kab. Musi Rawas, South Sumatra, from hundreds of lowland smallholder rubber
plantations where pulai grows wild. Naturally occurring pulai in home gardens and other
smallholdings account for the rest of the supply. XIP’s Peoples Forest Development Project
(Proyek Pengembangan Hutan Rakyat, P2HTR) has entered its fourth year and will eventually
cover 10,000 hectares, almost all of it in smallholder agroforestry plantations under joint
management agreements. These smallholder agroforestry plantations have been established on
former alang-alang (Imperata cylindrica) grassland (65%), on scrub brush land (25-30%), or past
rubber gardens (5 – 10%), which are also distributed throughout southeastern Musi Rawas District
in South Sumatra.
B. Years in operation:
XIP’s operation has been underway for 10 years and the history can be divided into three phases,
as described below.
Phase 1: 1989-1995 – Factory constructed and operating on Jelutung (Dyera costulata)
purchased from natural forest logging operations.
XIP began its operations in Musi Rawas in 1989, with construction of a pencil slat factory near the
Musi River at Muara Beliti. The factory was completed in 1990 and reached full production in
1992. During this period, Jelutung wood was purchased from logging operations located along the
Musi River. This source soon proved to be too costly due to increasing scarcity and increasing
cost as natural forest sources declined, and demand for Jelutung for high value wood products
increased.Phase 2: 1994 - present – Joint management of Pulai (Alstonia spp.) trees occurring on
smallholder rubber plots and home gardens.
Since the mid-1990s, XIP has increasingly used pulai found in smallholder rubber plantations and
home gardens throughout the district as a substitute for Jelutung. XIP locates and measures pulai
trees that meet their requirements, and then contracts with private landowners to purchase, harvest
and transport them to the pencil slat factory. There is an abundant supply of pulai, which
predominantly has been considered a weed species, from the 209,000 ha of smallholder rubber
plantations in Musi Rawas district. XIP currently harvests about 30,000 m3 of pulai from an
estimated 2,000 ha of smallholder rubber plantations each year.
Third Phase: 1996 – Joint Management Agreements for Pulai Agroforestry plantations.
XIP recognized the need to develop long-term sustainable wood supply sources within economic
transport distances of its mill. In 1996 XIP entered into agreements with the governments of South
Sumatra and Musi Rawas district, which permitted XIP to harvest up to 30,000 m3 of pulai
annually. The agreement obligated XIP to undertake a 10-year program to establish 10,000 ha of
pulai plantations on degraded and unutilized private land.
XIP’s pulai planting program is focused on the grass and scrub bush lands owned by these
transmigrant families, who generally would not otherwise have the economic resources to develop
it. Most households in the rural areas of Musi Rawas are first and second generation transmigrants
that have 2 to 5 hectares of land under village land entitlements. A typical household has 1 to 2
hectares of land in rice (padi) land and 2 to 4 hectares of land in a combination of alang grass,
scrub bush land, and tree crops (rubber, coffee, coconut).
To date 40% of the target has been planted on lands owned by 1,500 owners, each of whom have
signed joint management agreements with XIP for an average of 2.8 ha of land to be planted in
pulai. This rapid progress in the XIP planting program, as illustrated in Table 1.0, is being met
with increasing interest by new landowners wishing to participate.
Table 1.0: Pulai Plantation Establishment Program (1996-2005)
Planting Year No of Joint Management Area Planted (ha)
Agreements
1996/97 208 905 ha
1997/98 303 1,095 ha
1998/99 954 2,181 ha
Total Planted to Date 1,465 4,181 ha
Remaining to Plant 2000-2005 2,000 (estimate) 5,819 ha
Total Area – Joint-Management 3,500 (estimate) 10,000 ha
Pulai Agroforestry Plantations
Under the joint management agreements, XIP finances site preparation, establishment and
maintenance costs and has management control over the tree production until the trees are
harvested in ten years time. With this sharecropping system, when the trees are harvested the net
revenues, minus the harvest and transport costs, are divided equally between the landowner and
XIP. Landowners are not obligated to sell their pulai to XIP, and some may take the option not to.Upon completion of the rotation, XIP intends to negotiate another ten-year management agreement
with the farmer landowner and keep them within the certified pool, although each owner is free to
adopt alternative land uses if they so choose, which will be monitored by XIP. The XIP
silviculture system is based on managing subsequent harvests through coppice management of
fast-growing stems. The vigorous and rapid re-growth of pulai through coppicing will require less
intensive management than the first rotation and therefore less investment by XIP or the landowner
(labor), as only minimal pruning and weeding treatments are necessary to produce vigorous single
stem development.
Funding of the program comes from a soft loan from Indonesia’s reforestation fund (Dana
Reboisasi) which is generated through taxation of natural forest concession operations. The local
forest department administers this program with payment made based on inspection and
verification of the plantations. This credit covers an estimated two-thirds of planting and
maintenance costs, from establishment to year three of the plantation, when the pulai begins to
shade out the competing alang-alang grass.
Farmers are given the option of working as labourers on their land. Some take up this option.
Most do not. They continue with their (presumably more attractive) other on-farm or off-farm
activities. Note that before the arrival of XIP much of the candidate land was fallow, often
because farmers did not have the resources to make it productive.
This initiative has given farmers opportunity to make the land productive, in the short term from
agricultural crops and for the long term with the wood crop. XIP gives farmers the option of
intercropping pulai with tree crops such as coffee (robusta varieties) or cocoa, for which XIP is
exploring marketing opportunities in the U.S. and Europe, respectively. XIP estimates that
production costs through year 3 of pulai-coffee intercropping to be Rp 3.8 to 4.0 million, for
which the credit terms are adjusted accordingly. Most farmers keenly seek this intercropping
option. Food crops such as dryland rice, soybeans, lentils, peanuts and chili peppers are also
intercropped. Chemical fertilizers are provided only for food crops. The costs of such
intercropping are taken into account. XIP does not receive any of the intercrop produce unless it
has contracted the farmer to produce seed for the intercropping scheme.
1.3 Forest and Management System
A. Forest type and land use history
The pulai supplied from smallholder rubber plantations or home gardens has grown wild, coming
in as an invasive species within the rubber plantations. Today, these rubber plantations are
privately owned by small landowners, although most were established during colonial times. The
species composition and structural diversity of the rubber gardens ranges from those with the
attributes of secondary forest (a majority) to more uniform monocultures (a minority). Therefore,
most rubber plantations include other tree species, of which the fast growing, shade tolerant pulai
occurs at an average density of 5 mature trees per hectare. The removal of pulai is done in a
manner that maintains the rubber garden. Care is taken to limit damage to rubber trees during
extraction; the natural pulai regeneration is generally quite vigorous; and, probably most
compelling, is that previously pulai was of marginal value, so this new market offers additional
farm revenues to landowners who maintain pulai within the rubber plantations. The potential
transition to more intensive commercial management of rubber plantations primarily for latex
production, which could bring landowners to eliminate the competing pulai, is estimated to occur
at a rate that is far less than XIP’s development of the smallholder agroforestry plantations.
Based on the approximately 4,000 hectares of agroforestry plantations planted to date, the
vegetation cover prior to pulai was 65% alang-alang grasslands (Imperata cylindrica), and 35%
bush land (Semak Belukar).XIP has well defined selection criteria for choosing the joint management agroforestry plantation
sites. First, XIP managers have ensured that no primary or secondary forest is cleared to establish
the pulai plantations. Second, XIP only plants areas for which secure ownership (legal title) has
been granted. Third, XIP prefers alang-alang grassland and low bushland because these lands are
unproductive, unutilized, and less costly to establish. Fourth, XIP centrally locates the
establishment of agroforestry plantations to lands within 50 km of their factory in order to ensure
low cost wood supply. Virtually all of the areas meeting these criteria had been cleared of forests
many years ago2, long before XIP’s tenure, as the result of past unsustainable logging practices
and wildfires associated with land clearing for transmigration agricultural programs, and are now
mostly covered by alang-alang and belucar.
B. Latitude and longitude of certified operations:
Table 1.1: Location of XIP Operations (latitude and longitude)
SITE NAME OPERATION LATITUDE/LONGITUDE
Lubuk Linggau: XIP HQ & Musi Rawas Capital S 03° 17', E102° 52'
Rahmah: XIP Main Pulai Nursery Site S 03° 18', E102° 55'
Sumberharta: eg. Pulai harvest in rubber garden S 03° 05', E102° 56'
Jamburejo: eg. Small holder Pulai Plantation S 03° 04', E102° 5'
Pagar Ayu: XIP Regional Nursery S 03° 15', E103° 02'
Muara Bliti: XIP Pencil slat factory S 03° 15', E103° 03'
C. Date first certified: March 15, 2000
This will be the first certification for PT Xylo Indah Pratama.
D. Size of management unit
The XIP operation in Musi Rawas District of South Sumatra Province is a system that integrates
two distinct forest management units. XIP oversees the management of both forest types with a
multitude of cooperating small landowners. XIP functions as a resource manager with a large pool
of landowners with whom XIP has contractual agreements.
The first forest management unit from where XIP draws its current supply of pulai wood covers
approximately 210,000 hectares of dispersed small rubber plantations. On an annual basis, single
tree harvesting occurs across 2,000 hectares of this area, representing numerous private
landowners. The second management unit from where XIP will start harvesting pulai in 2005 will
be 10,000 hectares, projected to represent 4,000 landowners.
XIP has planned a gradual shift in the supply of pulai from the first management unit to the
second. XIP plans to reduce the dependence on pulai from the small rubber plantations over a ten-
year period. The long term vision is that between 2005-2014 XIP will reduce the area from which
it will continue to selectively harvest pulai trees from the 210,000 hectares to about 20,000
hectares—about 10% of the current total rubber plantation area. Over a similar period, the 10,000
hectares of pulai agroforestry plantations will grow to become the dominant source of pulai wood
for XIP’s pencil manufacturing operation. Since planting of the agroforestry plantations began in
1996, about 4,181 hectares have been planted and 5,819 remains to be planted.
2
In this region, clearing of natural forest to other land uses occurred during the period after Indonesian independence
(1947) until the early 1970s. No primary or secondary forest was cleared to establish these pulai plantations.The agroforestry system will also entail the consolidation of parcels into more manageable
planting blocks than exists with the widely dispersed rubber plantations. XIP is assembling
planting blocks that consolidate the land of a group of 10 to 30 farmers into one block ranging
from 20 to 50 hectares in size. This is planned to facilitate plantation establishment and future
silvicultural treatments such as thinnings, harvesting, and pruning of coppices.
A basic and fundamental component of the XIP system is that each participating landowner signs a
land use agreement with XIP. XIP maintains a land agreement register and has produced maps that
show the corresponding location and size of each agroforestry plot.
E. Regional landscape context
Musi Rawas District covers about 2 million hectares in South Sumatra. According to land use
data, natural forest accounts for 570,000 hectares, or almost 30% of the district. These forests are
mostly located on hilly and mountainous terrain in the north and west portion of the district. Part
of the district is within Kerinci Seblat National Park, which covers approximately 1 million
hectares in four provinces in southern and central Sumatra.
The southeastern part of the district is mainly flat and dedicated to agricultural settlements. The
typical landscape consists of a settlement with home and home gardens located in the center,
surrounded by irrigated rice padis, then rubber and fruit tree gardens, then grassland and scrub
bush land. Extensive areas of irrigated rice (padi) occupy the lowlands. Tree crops (coffee 10,000
ha; coconut 5,000 ha; and rubber 210,000 ha) cover the land between and beyond the rice fields.
Beyond the tree crops lie extensive areas of unutilized grass land and scrub bush land. It is these
outlying areas which are targeted for XIP’s pulai agroforestry plantations. The plantations
established at present could be characterized as small islands in a sea of invasive grass (Imperata
cylindrica) and scrub bush land. Table 1.2 shows the land use in Musi Rawas district and South
Sumatra province in 1997.
Table 1.2: 1997 Land Use - Musi Rawas District and South Sumatera Province
Type of Land Musi Rawas South Sumatera
Non wetland (bukan lahan sawah)
Garden 16,303 366,804
Bareland 43,597 461,643
Dryland 49,091 274,724
Meadows 2,168 84,727
Marsh 44,369 1,068,582
Dyke - 10,822
Water pond 631 29,568
Fallow land (Belukar) 70,901 901,481
Forest 570,000 2,680,000
Plantation (all types) 274,042 1,874,964
Wetland (Lahan sawah)
Technical Irrigation 8,245 28,145Semi technical Irrigation 919 11,672
Public Work Simple/non irrigation 1,505 15,993
Public Work Non simple/non irrigation 1,133 21,940
Rainfed 6,733 63,494
Low tide - 122,862
Valley 4,962 145,911
Temporary fallow land 13,099 172,359
Others 952,826 2,996,977
Source: Sumatera Selatan dalam Angka, 1997.
F. Annual harvest covered by management plan
The annual harvest of pulai wood is ultimately determined by the wood supply requirements of
XIP’s pencil slat manufacturing plant, located in Muara Beliti, about 25 km from Lubuk Linggau,
the capital of Musi Rawas district. The plant produces about 20,000 m3 of pencil slats per year
that are used by XIP’s three pencil-manufacturing plants in Java. To sustain this level of output,
approximately 30,000 m3 of pulai wood is required. To obtain the desired level of product
recovery, trees of a minimum diameter of 30 cm are required. XIP’s fixed annual harvest of pulai
wood will come from two principal forest management systems explained in this report, chiefly:
1. Pulai purchased from smallholder rubber plantations and home gardens located up to 100
kilometers from the Muara Beliti pencil slat factory.
2. Pulai purchased from smallholder agroforestry plantations located from 25 to 50 kilometers
from the Muara Beliti pencil slat factory.
XIP is restructuring its wood supply operations to reduce its dependence on pulai from rubber
plantations and home gardens by promoting and funding pulai planting in privately owned
agroforestry plantations. As shown in Table 1.3, XIP proposes to encourage and assist about
4,000 small land owners to grow pulai wood, on a share cropping basis, on about 10,000 ha of
land. Therefore, the projected annual harvest over the next decade to twenty-five years will
witness a reversal in the contribution to the annual harvest from the two forest management
systems.
Table 1.3: Annual Harvest of Pulai Wood from Rubber Plantations or Home Gardens and the
Agroforestry Plantations.
Period -- Source and Annual Harvest Volume (m3/year)
Annual Volume
20,000 ha 10,000 ha
Rubber Plantations/Gardens Agroforestry Plantations
(500 – 2000 ha/year) (1000 ha/yr)
2000 – 2004 30,000 m3 0
30,000 m3 / year (2000 ha / year)
2005 – 2009 15-25,000 m3 5,000 – 15,000 m3
30,000 m3 / year (1,000 – 1,500 ha / year) Thinning 500-1000 ha / year
2010 – 2014 5,000 – 10,000 m3 20,000 – 30,000 m3
30,000 m3 / year (500 ha / year) Final felling 500-1000 ha/yr.The operation has a projected forecast that is realistic and capable of sustaining annual yields.
First, the current area of rubber plantations providing pulai is 210,000 ha. Assuming a 20 year
rubber replanting cycle and harvesting cycle for pulai, and an average yield (based on empirical
data) of 10 m3/ha, the potential annual volume of pulai in Musi Rawas district could be 105,000
m3 per year.
(210,000 ha * 10 m3/ha)/20 yrs. = 105,000 m3/year
XIP’s maximum annual harvest from this source is 30,000 m3, as stipulated by governmental
decree, which is less than 30% the estimated available pulai from rubber plantations.
Second, XIP assumes that over a 10-year cutting cycle the pulai yield from thinnings and final
felling on agroforestry plantations will be approximately 150 m3 per hectare (based on an
estimated mean annual increment of 15 m3/per ha/per year). Assuming the most conservative
projected yield (100 m3/ha) potential yield could be 100,000 m3, and yields could actually
perform much better than that, which will be monitored.
(10,000 ha * 100 m3/ha)/10 yrs. = 100,000 m3/year
G. Objectives of XIP’s Management Planning System
The primary management objective for XIP is to develop a secure and sustainable supply of wood
for the pencil slat factory in Musi Rawas, South Sumatra, which in turn supplies the parent
company’s pencil manufacturing operations in Bandung and Bekasi, Java.
XIP had met their short-term supply needs in the past by using Jelutung wood from the natural
forest. In recent years this source has become scarce and costly, prompting a shift to using pulai,
which grows abundantly, without tending, in smallholder rubber plantations and home gardens
throughout the Musi Rawas district.
XIP identified certain limitations to the source of pulai from smallholder plantations and therefore
determined not to depend entirely upon this source, but to develop an integrated management
system that would permit the transition over the mid-term to the agroforestry source of pulai. XIP
identified the following practical reasons for adapting their management objectives along the lines
of an integrated approach: 1) commercialization and more intensive plantation management may
lead to practices that eliminate pulai (as a competitor to rubber); 2) increasing transport costs
threaten to make pulai from rubber plantations (in some cases up to 100 kms from the mill)
prohibitively expensive; and 3) pulai agroforestry plantations would permit greater productivity
and the efficiency from concentrating production over a smaller area.
XIP initiated an ambitious program of “share cropper” planting of pulai to reduce its dependence
on pulai from rubber gardens. Under XIP's planting scheme, groups of smallholder farmers are
approached with a proposal to enter into a joint agreement with the company to plant pulai in
underutilised or fallow land, typically scrub vegetation (semak belukar) and even alang-alang
areas. Farmer participants must be able to prove ownership of their land. This need not be
formal land title, as a village land letter (surat tanah desa) known as girik will suffice. On
average, farmers allocate 1 to 4 ha to the scheme. A small number of farmers have allocated 5 to
10 ha. XIP organises planting in 25 to 150 ha blocks, although much smaller units are used to
introduce the scheme to new communities.Most of the program participants are farmers who own plots of rice and rubber gardens, as well as
idle lands. The program has become very popular with these local landowners because it has
given them the means to develop their idle lands by establishing an economically attractive
agroforestry plantation system. In the communities of Musi Rawas district, few farmers possessed
the economic resources to develop their idle lands, many of which are located beyond the
traditional agricultural lands of the village and occupied by alang grass and scrub bush.
In short, the XIP agroforestry program has been eagerly embraced community farmers. Since the
program began in 1996, over 1,400 landowners have signed agreements with XIP covering over
40% of the total targeted 10,000 ha to be planted over a 10-year period.
1.4 Environmental and Socio-economic Context
XIP’ management system for wood supply from pulai agroforestry plantations, in which XIP
purchases pulai from local communities based on a planting and harvesting agreement with the
local community was introduced in 1996. The local community is very enthusiastic about this
purchasing arrangement because it provides very low income participants with the additional
resources that are needed to clear their land and grow food crops.
In addition, for both the rubber plantation and agroforestry plantation systems, the pulai has been
transformed from a weed tree (of very low value) to one that has a commercial use and a higher
value. This has provided the local people with a new source of income and a reason for
maintaining the pulai tree. In the rubber plantations, many young pulai trees are nurtured by the
farmers and maintained for future sale. The maintenance of high quality mature seed trees can
provide added income to farmers whom XIP pays for access to the seed. Indication of the
program’s popularity and the benefits it will provide to the community is that there is now a long
waiting list to join the pulai plantation. With 1,600 enrolled participants at the time of the
assessment, XIP has to limit entrance into the program based on its ability to manage new
subscribers and according to its selection criteria.
In many respects, the success of the current XIP’s scheme of pulai from rubber plantation and
agroforestry plantations is based on the lessons learned from the company’s past experience in
developing an industrial forest plantation (HTI) of jelutung. In the earlier case, XIP planted jelutung
without first involving the local community. The local community was attracted by the high value
of the jelutung latex and led to incidents of tapping the trees illegally and destructively. After the
illegal tappers were caught, discontent in the local community led to arson in the Jambi plantation.
This experience prompted XIP to work with local community so that both parties—local
community and company—share the benefits.
Most of the areas where the pulai program is implemented have been occupied by transmigrants
(some of Indonesia’s poorest farmers.) These local farmers (also known as ‘transmigrants’)
originated from Java. Some of these families have been living in Musi Rawas district or about 2-3
generations. The first generation participated in the colonization (known as klones) program in
colonial era in 1930-40s. The Dutch Government at the time sent the Javanese people to open the
forest land and plant rubber and coffee. The transmigrants participating in the XIP program,
therefore, own their own land in the area.
A. Employment
XIP employs approximately 1,500 people in Musi Rawas district. Approximately one-third of this labor
force is permanent staff and two-thirds contractors and casual laborers.
Table 1.4: XIP Permanent Staff and Laborers by Operating DivisionDepartment Or Division Number Of Staff & Contract Workers
Production of Pencil Slats +/- 400 permanent staff; 100 daily laborers
Wood Supply Division 20- 30 Staff; 60 Agents; up to 500 small contractors
Community Forestry Division 40- 50 Staff; up to 500 daily laborers
Total Employment +/- 520 permanent staff – up to 1000 labor/contractor
B. Delivered Wood Costs
The delivered cost of wood to XIP’s pencil slat mill at Muara Beliti are carried proportionally as shown in
Table 1.5.
Table 1.5: Breakdown of Delivered Wood Costs – by percentage
Cost Component % Beneficiary
1 Stumpage Payment to Owner 12% Land owner
2 Fell/Cut into logs 26% Wood cutter contractor
3 Carry to access road 2 km Labor.Landowner
4 Find/measure/arrange purchase, 15% Wood Purchasing Agent
harvest, transport, etc. or coordinator
5 Transport to XIP Pencil slat mill 20% Trucking Contractor
6 Tax to Government (IHH) 10% Government
About 12% of the value of the log delivered to the mill directly benefits the landowner. This can increase
to 30% if the landowner chooses to transport the wood to access road. Various contractors who cut and
transport the wood account for most of the cost—63%. The agent who locates, measures, and arranges the
purchase and delivery of wood to the mill accounts for 15% of cost. Government taxes accounts for about
10% of wood cost.
1.5 Products Produced
A. Species and products
XIP uses only one genus (Alstonia), but three species within it (scholaris, angustiloba, and
pneumatophora). XIP manufactures only one product—pencil slats, which are processed into pencils
in three factories located on the island of Java. The species is preferred for a combination of reasons,
including:
fast growing, abundantly available, not used for other products and therefore low cost.
light weight and therefore can be transported for a relatively low cost;
It is light in color, making it easy to paint in a variety of colors;
It is easy to process, non-toxic and can be made into smooth, stable pencil slats.
B. Actual (and potential) annual volumes produced
XIP currently harvests 30,000 m3 per year from rubber plantations and home gardens located in the
southeastern part of the Musi Rawas district—generally within 100 km of their pencil slat
manufacturing operation at Muara Beliti. XIP plans to maintain this volume of production. The current
plan does not call for an increased harvest level as this is projected to supply sufficient raw material
for their pencil factories.XIP potential volumes to be sourced from plantations under development are estimated to rise from
the current amount (0 m3/year) to future amounts, in years 2005-2009 (max. 15, 000 m3/year), and
years 2010-2014 (max. 30,000 m3/year). Plantation yields over a 10 year cutting cycle are estimated
at 150 m3 per hectare, based on a mean annual increment of 15 m3 per hectare/per year) as shown in
Table 1.7.
Table 1.7 – Estimated Pulai Plantation Yields from Thinning and final Felling (year 1-10)
Plantation Year Tree Density (trees per ha) Yield (m3 / ha)
1 1,100 0
5 500 10-15
8 300 20-25
10 200 100-120
1-10 150 m3/ha
C. Description of current and future production and processing capacity
From the proposed annual harvest level of 30,000 m3 of pulai, XIP’s annual output of pencil slats is
equivalent to 21,000 m3 of wood. The factory can manufacture about 1.2 million pencil slats per day.
Each slat, in turn, can produce between 5 and 10 pencils. The pencil slat production will be sold as
follows:
60% of pencil slat production (12,500 m3/yr) is exported to pencil makers around the world.
40% of the pencil slats (8,500 m3/yr) is manufactured into pencils at XIP’s three pencil factories in
Java.
PT Faber Castle Indonesia - 48% owned by XIP and 52% by Faber Castle Germany
PT Pencil Indo Pratama - 100% owned by the XIP
PT Lestari Mahaputra Buana - 100% owned by the XIP
XIP does not propose to expand its processing operations beyond their current level of 21,000 m3 of
pencil slats per year. The present supply of pencil slats is sufficient to meet the raw material
requirements of their own pencil making plants plus meet the present and expected future demand for
pencil slats.
D. Reference product Sources.
XIP will source 100% of its product from the two forest management systems described above, the
pulai from agroforestry plantations and the pulai from rubber plantations. This certified material
would be processed in the pencil slat manufacturing operation at Muara Beliti, Musi Rawas, South
Sumatra.
1.6 Chain of Custody Certification
A. Products Covered by Chain of Custody Certificate
The products covered by the chain of custody certificate are the raw pulai wood managed under the
XIP integrated pulai supply operations from rubber and agroforestry plantations and the pencil slats
manufactured at Muara Beliti, Musi Rawas, South Sumatra.
This certification does not cover the Chain of Custody for the production from XIP’s three pencil
making operations in Java, nor the pencils produced by these three factories. Each of these three
factories would need to undergo a separate chain of custody certification assessment.B. Approximate Annual Quantity of Products
XIP produces 21,000 m3 of pencil slats per year at its pencil slat manufacturing operation in Muara
Beliti, Musi Rawas, South Sumatra.
The potential volumes of certified pencil slats to input downstream processing (to be covered by
future chain of custody certificates) would be: 40% of annual production (8,500 m3) for XIP’s
Indonesian factories and 60% annual production (12,500 m3) for XIP exports to other markets.
C. Chain of Custody Certificate Number
SW-FM/COC-104
1.0 CERTIFICATION ASSESSMENT PROCESS
1.1 Assessment Dates:
Assessment Activity Dates
Review Background Data – Scoping Report (12/98); Maps, Documents Etc. July 18 to 24, 1999
Assessment Team arrives in Jakarta, Indonesia July 25, 1999
Initial Team Meeting and Briefing with XIP Senior Management – in Jakarta July 26, 1999
Team visits plantations sites, processing operations in Musi Rawas District July 27 –August 1/99
Team Scoring Meeting – in Lubuk Linggau, Musi Rawas July 30, 1999
Debriefing of XIP Senior Management, in Jakarta July 31, 1999
Draft Report Preparation by the team August 1-20, 1999
Draft Report Finalized by SmartWood Headquarters August 20-31, 1999
Draft Report sent to XIP for comment on findings, pre-conditions, and conditions Dec. 3, 1999
Meeting with XIP senior management in Jakarta to review compliance to pre- February 13, 2000
conditions
Final Assessment Report completed March 3, 2000
SWHQ Final Decision March 10, 2000
1.2 Dates of Field Visits during Assessment
July 26, 1999 Team meeting with Xylo Indah Pratama management Head Office in Jakarta
July 27, 1999 Team travel to Lubuk Linggau, Capital of Musi Rawas District, South Sumatra, for first
on-site briefings and field assessment organization with XIP operational staff.
July 28, 1999 Team assessment of Pulai (Alstonia scholaris) growing sites in Rubber Plantations and
Home Gardens in several sub-districts of Musi Rawas District.
July 29, 1999 Team assessed a number of Pulai agroforestry plantation sites in several sub-districts of
Musi Rawas District.
July 30, 1999 Team assessment of Pulai wood transportation, handling and processing at XIP’s Muara
Klingi Pencil Slat Factory.
1.3 Assessment Team
Role Name and Affiliation
Team Leader & Lead Forester Jay Blakeney, Independent Consultant, Kuching, Sarawak,
MalaysiaSocial Scientist & Economics Dwi Muhtaman- Lembaga Alam Tropika Indonesia (LATIN3),
Bogor, Java, Indonesia
Social Scientist Semiarto Aji – LATIN
Environment Ecologist Wibowo A.Djatmiko – LATIN
1.4 Assessment Process
1) Scoping: December 1998 - SmartWood assessment team carried out a preliminary scoping of wood
supply operations of Xylo Indo Pratama (XIP), which concluded that Pulai in Rubber Plantations and
Pulai Plantations on small holder’s land had potential for forest certification.
2) Preparation: July 1999 - SmartWood contracted an Assessment Team and provided them with the
confidential scoping report and other background data to review before the certification assessment
field visits.
3) Team Meeting With XIP Senior Management: July 25-26 1999 - A five person assessment team
assembled in Jakarta, Indonesia to meet with senior management of Xylo Indo Pratama and to discuss
their operations and to plan field visits to their operations in Musi Rawas District, South Sumatra
(July 27-Aug 3/99)
4) Team Meeting With XIP Operational Managers: July 27, 1999 - Team travel to Lubuk Linggau,
Musi Rawas District, South Sumatra. Briefing, discussions and organization of field visits with XIP
operational staff. Reviewed assessment team’s data requirements with XIP operational staff.
5) Field Assessment of Pulai In Rubber and Home Gardens: July 28, 1999 Team assessment of
Pulai (Alstonia scholaris) growing sites in Rubber Plantations and Home Gardens in several sub-
districts of Musi Rawas District. Observed logging operations, previously harvested areas, and future
harvest areas. Environment and Social team discussed impacts with landowners and logging
contractors. Forestry and Economics team gathered data on logging costs and productivity and
stumpage rates paid to landowners.
6) Field Assessment of Pulai Agroforestry Plantations: July 29, 1999 Team assessed a number of
Pulai agroforestry plantation sites in several sub-districts of Musi Rawas District. Social Team
discussions with land owners, communities, workers.
7) Field Assessment of Pulai Pencil Slat Processing: July 30, 1999 Team assessment of Pulai wood
transportation, handling and processing. Inspection of XIP’s Muara Klingi Pencil Slat Factory.
Inspected record system for tracking movement of logs from source areas to the mill. Inspected waste
recovery systems and general conditions in factory. Discussed raw material inputs and production
outputs (wood recovery rates), delivered wood costs, legal and regulatory environment, etc.
8) Team Meeting To Conduct Preliminary Scoring: July 31, 1999 The team met to go through the full
set of criteria (both Smartwood Generic and Plantation Addendum for preliminary discussions on
scoring of the XIP operation, and to identify areas where further information was required in order to
be able to complete the assessment.
9) On-site Meetings with Regional NGOs and Other Stakeholders: July 31 – August 3, 1999 Social
and Environment team members interviewed a representation of community stakeholders.
3
Note: LATIN Lembaga Alam Indonesia is the Indonesian representative of the SmartWood Network.10) Debriefing Meeting with Senior Management: July 31, 1999. Team leader met with senior
management for debriefing discussions, presentation of preliminary findings, and clarification on
issues arising from field visits.
11) Writing Certification Assessment Report: Aug.3-14, 1999 - Team Leader and team members return
to their home bases and begin the process of preparing their respective inputs to the certification
assessment report, finalization of scoring results, etc.
12) SmartWood Headquarters’ and Peer Review of Certification Assessment Report:
September 5 – 15, 1999 – SmartWood Headquarters International team reviews the report for
technical and contextual issues, evaluate the recommendations of the assessment team, and the
certification conditions.
November 17 – December 3, 1999 – SmartWood Headquarters completes the Certification
Assessment Report.
January 2000 – Two independent peer reviewers, one based in Indonesia and one in the USA, agree
with the assessment teams’ recommendation to certify PT XIP.
February 2000 – Auditting XIP’s initiatives to close out the two pre-conditions.
March 2000 – Final Certification Decision Reached.
1.5 Guidelines
The Xylo Indo Pratama certification assessment was conducted using the SmartWood Generic Guidelines for
Assessing Forest Management (Revised Draft April 1998), augmented by the SmartWood Guidelines Addendum
on Tree Plantation Certification and Forest Conversion.
The Forest Stewardship Council has endorsed these guidelines. Operations which meet or exceed the criteria
elaborated in the SmartWood guidelines will be granted Forest Stewardship Council certification.
1.6 Scoring
On July 31st and August 1st, the team held internal meetings to discuss initial findings, and propose scores
and, if appropriate, pre-conditions or conditions for all criteria for the final analysis. Each member was
responsible for ensuring that subject areas related to his area of expertise were adequately addressed.
Based on the content and analysis of each criterion, a score was assigned for each criterion using the
following guide, and during peer review, the scores were commented upon for accuracy and consistency:
SmartWood Guide to Scoring, Performance Level and Compliance for Certification Assessments
SCORE PERFORMANCE COMPLIANCE
(General Description) Pre-Conditions, Conditions &
Recommendations
N/A Not an applicable criterion Not applicable, thus no pre-conditions,
conditions or recommendations; criterion
not used for score averaging.
1 Extremely weak performance; strongly Pre-conditions required.
unfavorable; or data lacking
2 Weak performance; improvement needed Pre-conditions optional; conditions
required.
3 Satisfactory performance Conditions and recommendations optional.
4 Favorable performance Recommendations (non-mandated actions)
optional.
5 Clearly outstanding performance Nothing.The SmartWood definitions of pre-conditions, conditions and recommendations are as follows:
• Pre-conditions are requirements that candidate operations must agree to and address to the
satisfaction of SmartWood before certification status may be obtained.
• Conditions are requirements that candidate operations must agree to that will form part of the
certification agreement. These conditions will be expected to be fulfilled within an agreed upon time
period during the five-year certification contract period. Non-compliance with conditions may lead to
de-certification
• Recommendations are non-binding, voluntary actions suggested by assessment teams that are not
required.
3.0 RESULTS, CONCLUSIONS AND RECOMMENDATIONS
1.1 General Discussion of Findings
The assessment team evaluation of XIP yielded the following strengths and weaknesses with regard to
their forest management planning and practices:
A. Commitment to FSC Principles and Legal Requirements
Strengths:
• XIP has expressed a management strategy and philosophy consistent with FSC principles and
criteria for plantations.
• There was no indication that national and local law for the environment, labour and/or forestry
regulations were being contravened.
• The P2HTR division and the processing plant have paid all relevant local and national taxes.
• The company does not object to a public certification summary.
Weaknesses:
• Awareness of the national conventions should be improved during the period of the
certification. This should not pose a problem for the relatively well-educated management
levels.
B. Land Tenure and Use Rights and Responsibilities
Strengths:
• Land tenure is clear and legally secure.
• None of the areas are in state forest or natural forest.
• The planting programme is clearly established and has even exceeded its goals during the
current early stages.
• Resource conflicts, if occurring, seem to be resolved locally and adequately.
Weaknesses:
• Commitment to long term forest management must be explicitly demonstrated by landowners
who are part of the certified pool. This was a pre-condition to certification that was met
through two mechanisms: 1) a new landowner agreement that explicitly states the goals and
objectives of XIP’s certified pool which each private landowner agrees to; and, 2) hiring an
additional staff member with the responsibility for outreach and extension work with
landowners.
• Monitoring needs to be strengthened to demonstrate this landowner commitment through time.C. Forest Management Planning and Practices
Strengths:
• The forest management plans for the pulai agroforestry plantations for future wood supply is
well documented.
• Selective harvesting does not significantly alter the wood supply source.
The selective harvesting of 3 to 5 large diameter (>30cm dbh) pulai trees from a rubber plantation
with 250 to 400 rubber trees per hectare reduces the stocking of trees by only 2% and therefore
does open the stand significantly, nor pose any negative environmental impacts. No rubber trees
are damaged during the operation. The number of small pulai trees (rehabilitating these lands for higher economic use. This rehabilitation would not other wise happen
as landowners do not have the resources to develop plantations on their own.
• Low impact removal of pulai maintains integrity of rubberwood plantations and home gardens.
The single tree harvest removals of pulai result in very low rates of residual rubberwood stand
damage. Landowners are compensated for any damaged trees, so directional felling and advanced
timber marking is employed to keep damage low. Well-established road public road systems are
used with moderate loads and logs are removed from the forest by hand or animal, which reduce
impacts to site. Pencil slat production in South Sumatra produces minimal waste, and most
byproducts are left in the forest to decompose or are burned in the factory as boiler fuel. There is
very high recovery and utilization of the pulai resource.
Weaknesses:
• Biological conservation activities are not part of the P2HTR planting scheme. The company
would be able to develop this capacity relatively easily.
• XIP could improve its program to reduce the use of chemicals, although overall, agrochemical
usage is minor.
E. Community and Worker Relations
Strengths
• Program contributes positive social and economic benefits to the regional economy.
The program is popular with landowners that do not have the resources to develop their lands.
Under the XIP land-use agreements, land owners are provided with funds to clear land and plant
their land with Pulai and other crops, such as soybean, groundnuts, coffee, chili. XIP encourages
intercropping (tumpang sari) to provide income to landowners during the first five years of the
pulai plantation, prior to commencement wood sales from thinning. XIP appears to have good
relationships within the communities in which it operates.
Weaknesses
• Administering the enrollment of participating landowners efficiently.
XIP can work to improve the quality of service it provides to landowners joining the pulai
agroforestry plantation program to ensure rapid delivery of their agreements and clear explanation
of benefit sharing from the program.
F. Benefits from the Forest and Economic Viability
Strengths
• High recovery utilization of previously non commercial species
• The operation has shown a great deal of initiative in utilizing a previously unutilized tree
species, to make value added products that can contribute to diversity and strengthen the
regional economy of this rural, agriculture-based district in South Sumatra. Furthermore, the
level of utilization of the wood resource is high with little evidence of wood waste in
harvesting and processing. In fact, as a wood-based industry it may have one of the highest
recovery rates for wood utilisation because of the very small product (pencil slats).
G. Monitoring and Chain of Custody
Strengths• Good documentation of wood supply sources and wood movement.
The XIP operation maintains a register of their wood procurement that is useful for the tracking of
wood from the individual rubber plantations to the pencil slat-making factory, including such data
as:
the wood supply source (land owner’s name),
date of purchase
quantity and form (log or squared timber) wood purchased,
unit price,
total price paid,
XIP purchasing agent arranging the wood sale, harvest & transport and
Date and license number of truck delivering wood to the mill.
1.2 Certification Decision
This evaluation was conducted for the purpose of certifying PT Xylo Indah Pratama (XIP) as a
SmartWood certified source with chain of custody for the Musi Rawas pencil slat factory. XIP will be
considered a resource manager certification for their integrated management approach it has developed to
source pulai wood in agreement with private landowners from their rubber plantations and agroforestry
plantations. The SmartWood assessment team and SmartWood Headquarters decided that having met the
pre-conditions to certification, XIP had fulfilled the requirements of certification.
1.3 Conditions and Recommendations
The following preconditions are requirements that XIP needed to address before certification was granted.
The conditions are mandatory requirements that XIP agreed to in their certification contract with
SmartWood, and which must be met, during the five-year certification period.
A. Pre-Conditions
Precondition 1: Prior to certification, XIP shall create an agreement for landowners who supply
pulai from rubber plantations to sign, in which they state their acceptance to being
part of XIP’s certified pool of landowners and state their acceptance and
understanding of XIP management principles and guidelines for forest
stewardship.
Precondition 2: XIP will write a multi-year forest management plan for the harvest of pulai from
rubber plantations and home gardens that includes management goals, objectives,
and description of activities.
B. Conditions
Conditions are verifiable actions that will form part of the certification agreement that XIP will be
expected to fulfill at the time of the first audit or as required in the condition. Each condition has an
explicit time period for completion. Non-compliance with conditions will lead to decertification.
Condition 1: Throughout the period of certification and prior to inclusion in the certified pool (and
any harvesting of pulai from rubber plantations or home gardens), XIP shall secure
from each landowner a signed agreement to XIP management principles (described
in Precondition 1). Any landowner that does not sign this agreement shall not be
considered as part of the XIP certified pool.Condition 2: Within six (6) months of certification, XIP must provide all landowners in the
agroforestry plantation scheme with a written copy of their agreement that clearly
explains the terms of the agreement to the landowner. Whenever new agreements are
signed, XIP will ensure that landowners are given written copies within sixty (60)
days and prior to commencing planting.
Condition 3: By the end of the first year of certification, XIP will undertake an inventory of pulai
trees in rubber plantations and home gardens (including all trees > 5 cm dbh) for use
in developing future harvesting plans for pulai trees from rubber plantations. XIP
should design this inventory based on statistical sampling methods (i.e., stratified
random sampling at an intensity of 1 - 5%) and wherever necessary XIP will seek the
technical inventory (biometrics) expertise necessary to establish a sound inventory.
Condition 4: By the end of the second year of certification, XIP will establish a continuous pulai
inventory system to develop growth and yield data for pulai in both the rubber
plantations/home gardens AND the agroforestry plantations. This system should
consist of permanent growth and yield sample plots, in which measures of pulai
growth (tree height, diameter, condition, etc.) will be taken on a periodic basis to
monitor growth and yield.
Condition 5: By the end of the second year of certification, and in conjunction with the continuous
pulai inventory system, XIP will maintain records that can provide quick
verification that the annual pulai harvest levels (actual and projected) are
sustainable given the available pulai wood supply (growing stock).
Condition 6: By the end of the first year of certification, XIP will have revised its maps to include
all harvest areas, conservation and/or protection areas (i.e., buffer zones), inventory
plots, the road system, log landings, buildings and other infrastructure, and any
established research sites.
Condition 7: Throughout the period of certification, XIP will maintain operating plans (a minimum
of 3 months in advance) for pulai harvest from rubber plantations and home
gardens, and in a database will include such information as the planned location of
harvest areas and the planned pulai volumes and number of trees expected to be
harvested.
Condition 8: By the end of the first year of certification, XIP will improve written documentation of
their policy, procedures, and operational guidelines with respect to wood supply,
harvesting, environment protection measures, plantation establishment, landowner
and staff relations for both the rubber plantation and agroforestry plantation
systems. In particular, XIP will prepare and distribute to employees, field staff, and
participating landowners in the agroforestry and rubber plantation programs (as it
pertains to each interested party) the following :
a) Mission Statement – A clear, concise statement of the guiding policy for XIP’s
integrated pulai operations and that as a resource manger XIP is part of a
SmartWood certification process in accord with the FSC Principles and Criteria for
forest stewardship;
b) Operational guidelines for wood supply from Rubber Plantations & Home
Gardens that include: Landowner relations, Certification education, Tree selection,
Wood purchase, Fire prevention, Harvesting and Regeneration, and Extraction
Operations;
c) Operational guidelines for wood supply from Agroforestry Plantations that
include: Landowner relations and Benefit sharing, Plantation establishment,
Plantation maintenance, Fire prevention, Harvesting and Regeneration, and
Extraction operations;d) Operational guidelines for Environmental Protection that describe company policy
and practices for conservation, streamside buffer zones and water quality protection,
agrochemical use (handling, application, and storage of chemicals), etc.;
e) Operational guidelines for Staff and Contract Employee relations (i.e. staff
manual).
Condition 9: Throughout the period of the certification, XIP will improve upon the systematic
documentation of its harvests, sales, landowner agreements, landowner
compensation, landowner complaints, and meetings with landowners as well as other
stakeholders.
Condition 10: By the end of the first year of certification, XIP must conduct an environmental
impact assessment for its total operations.
Condition 11: By the end of the second year of certification, XIP must include environmental
management and monitoring planning within the existing forest management plans
or as separate documents.
Condition 12: By the end of the first year of certification, XIP will improve its program to reduce
the use of chemical herbicides, insecticides, and fungicides (in conjunction with
preparation of Operational Guidelines for Environmental Protection).
Condition 13: By the end of the first year of certification, XIP must implement soil erosion control
measures (in conjunction with Operational Guidelines for Environmental Protection)
for skid trails, stream crossing, log landings, etc.
Condition 14: Throughout the period of certification, XIP will maintain all employee wages at or
above the regional minimum wage (UMR) and this will be evaluated during every
annual audit.
Condition 15: Effective immediately, XIP will ensure that all work sites have adequate safety
equipment available, (such as protective clothing for harvesting or application of
agrochemicals).
Condition 16: Throughout the period of certification, XIP will continue to provide workers with
training on safety that is relevant to their position and work duties.
Condition 17: Prior to sale of a certified product, XIP will include the FSC registration code on all
sales and shipment documentation related to the sale of certified products.
Condition 18: Prior to sale of a certified product, XIP will ensure that all packages containing
certified pencil slats are clearly labeled with the FSC/SW logos and follow the rules
for FSC/SW logo and trademark use.
C. Recommendations
In addition to these binding conditions, the assessment team made eleven non-binding recommendations to
further improve XIP management.
SmartWood Certifcation Annual Addendum to the Public Summary for
PT Xylo Indah Pratama, 2001.1.0 PUBLIC SUMMARY INFORMATION
1.1 Audit Process
A. Audit year: This is the annual audit for 2001. This is the first annual audit for PT
XIP. The company was certified in April 2000.
B. Dates of Audit: May 7 – 11, 2001
C. Audit Team:
Anne Gouyon, Team Leader
• PhD Social Sciences, Institut National Agronomique, Paris, France.
• MSc Agricultural Development, Institut National Agronomique, Paris, France.
• 15 years of experience, mostly in Indonesia and Southeast Asia. Research, fieldwork and
consultancy in the social and institutional aspects of rural development, especially for
smallholder tree crops, agroforestry and environmental conservation projects.
• Conducted socio-economic research during 3 years on the smallholder agroforestry systems
found in the present audit area
• Social assessor in the assessment of PT Austral Byna (Forest Management) in Indonesia and
conducted a peer review for Smartwood.
Jeffrey Hayward, Forester, SmartWood Program, Asia Pacific Regional Manager.
• MSc. Forestry, Univ. of British Columbia, Canada; Department of Forest Resources
Management.
• B.A. in Latin American Development and Forestry, Univ. of Washington, USA.
• 10 years in natural resource management consulting, training, project management, and
research.
• Experience in forest silviculture, ecology, inventory, and community forestry.
• Certification work includes: 10 forest management assessments, scoping evaluations, and/or
audits; over 25 chain of custody assessments and/or audits.
Semiarto Aji Purwanto, Social Scientist
• MA. and BA in Anthropology, Univ. of Indonesia, Jakarta; Department of Anthropology
• 7 years in socio-cultural research, consultancy, and project management.
• Experience in agriculture, forestry, community health, and community development in
Kalimantan, Sulawesi, Sumatra, Irian Jaya and Java.
• Certification work includes: 3 forest management assessments, scoping evaluations and audits
under FSC guidelines; 2 assessments under LEI system; and 12 assessments under APHI
system.
D. Audit Overview:
The purpose of this report is to summarize the findings of an annual audit completed on May 7-11, 2001
for the certified operation PT XIP and the two management systems it has developed to secure a stable
supply of pulai wood in South Sumatra, Indonesia, i.e.:
1. pulai presently harvested from small landowners’ home gardens or rubber plantations (most of
them taking the form of multiple species, complex agroforestry systems locally called “jungle
rubber”), where pulai grows as a weed species and is secondary in importance to rubber latex
production; and,
2. pulai grown in small landowners’ pulai plantations promoted by XIP and jointly managed and
established by local communities, which has not yet reached harvest stage.You can also read
