Expanding the Cultivation of Jelutung Latex and Gemor Bark on Central

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Expanding the Cultivation of Jelutung Latex and Gemor Bark on Central Expanding the Cultivation of Jelutung Latex and Gemor Bark on Central Kalimantan Peatlands: A Value Chain and Cost-Benefit Analysis Louise Houweling MSc Thesis in Environmental Systems Analysis May 2017 Supervised by: Lars Hein Course code: ESA-80436 Environmental Systems Analysis Expanding the Cultivation of Jelutung Latex and Gemor Bark on Central Kalimantan Peatlands: A Value Chain and Cost-Benefit Analysis Louise Houweling MSc Thesis in Environmental Systems Analysis April 2017 “No part of this thesis may be reproduced without contacting the Environmental Systems Analysis Group” Supervisor: Examiners: Lars Hein 1st : Lars Hein 2nd : Rik Leemans Preface This thesis is part of the final examination of the MSc Environmental Sciences program at Wageningen University and Research Centre, The Netherlands. The fieldwork for this thesis took place in Central Kalimantan, Indonesia, for six weeks between November and December 2016. Central Kalimantan is known for its extensive peatland areas, of which much has become drained degraded in the past few decades. The effects of peatland drainage include carbon emissions, deforestation, and biodiversity loss. Given the environmental impact of peatland drainage and degradation, I considered a research project concerning peatland use in Central Kalimantan as an important and urgent project. I was particularly interested in combining the environmental improvement of peatland use with business opportunities for local communities. Consequently, I investigated two potential options for peatland use that would minimize environmental damage whilst also generating economic benefits to local communities. In general, there have been very few studies focused on the value chains of Jelutung latex and Gemor bark, and on the costs and benefits of cultivating the two crops on peatland. Neither crops, especially Gemor bark, have been documented extensively in the available literature. Furthermore, in the field, there was little known on the whereabouts of the respondents I wanted to interview for this project. Although this occasionally was challenging, it also highlighted the innovations of this thesis by focusing on two crops of which current knowledge on their value chains and economic benefits is limited. It also taught me a lot about the research process. Overall, it has been very rewarding to work on a thesis project that provides new, unique knowledge on Jelutung latex and Gemor bark cultivation in Central Kalimantan. Firstly, I would like to thank my supervisor, Prof. dr. Hein who gave me the opportunity to work on this innovative project, and introduced me to many of his contact people in Central Kalimantan who were of great help to me. I also thank Prof. dr. Hein and Prof. dr. Leemans for the constructive feedback I received during the thesis writing process. I would also like to thank Prof. dr. van Noordwijk, who welcomed me to the World Agroforestry Centre in Bogor, introduced me to his colleagues, and helped me prepare for my fieldwork in Central Kalimantan. Next, a very big thank you to Dr. Suwarno and Mrs. Uda, who helped me a great deal with the logistics of my stay in Central Kalimantan and gave me a lovely introduction to the Indonesian culture. I also want to say a special thank you to Mr. Panjaitan from Banjarmasin, who shared his extensive local knowledge on Gemor bark cultivation with me and assisted me with the interviews with Gemor farmers. Mr. Panjaitan also introduced me to Mr. Tantono, the large-scale trader of Gemor bark, for which I am very grateful. Further, I wish to express my gratitude to Mr. Perdana from the World Agroforestry Centre in Bogor. Mr. Perdana shared his knowledge on the Jelutung latex value chain and sent my questionnaire to his contact person in PT Sampit, the large-scale trader of Jelutung latex. Without the help of Mr. Panjaitan and Mr. Perdana, large pieces of information on the Gemor bark and Jelutung latex value chains in Central Kalimantan would still be missing in this thesis. Finally, a special thank you to Jorrit Herrera Farfan, who accompanied me in Central Kalimantan and motivated me during the fieldwork. 1 Table of Contents SUMMARY ........................................................................................................................................... 5 1. INTRODUCTION ............................................................................................................................. 6 1.1 Research Context .......................................................................................................................... 6 1.2 Background Information ............................................................................................................... 8 1.2.1 Study Area ............................................................................................................................. 8 1.2.2 Economy of Central Kalimantan ............................................................................................ 9 1.2.3 Policy Environment................................................................................................................ 9 1.2.4 Environmental Issues ............................................................................................................. 9 1.3 Problem Statement ...................................................................................................................... 10 1.4 Research Objective & Questions ................................................................................................ 11 2. RESEARCH APPROACH ............................................................................................................. 13 2.1 Literature Review ........................................................................................................................ 13 2.1.1 Jelutung ................................................................................................................................ 14 2.1.2 Gemor .................................................................................................................................. 18 2.1.3 Summary of Literature Review ............................................................................................ 22 2.2 Data Collection ........................................................................................................................... 23 2.2.1 Value Chain Actor Interviews .............................................................................................. 23 2.2.2 Additional Interviews ........................................................................................................... 27 2.3 Data Analysis .............................................................................................................................. 29 2.3.1 Value Chain Analysis........................................................................................................... 29 2.3.2 Cost-Benefit Analysis .......................................................................................................... 30 3. RESULTS ........................................................................................................................................ 36 3.1 Jelutung Latex Value Chain Analysis ......................................................................................... 37 3.1.1 Upstream – Jelutung Tappers ............................................................................................... 37 3.1.2 Mid-stream – PT SAS .......................................................................................................... 40 3.1.3 Downstream – PT Sampit & Importers ................................................................................ 43 3.1.4 Summary of Jelutung Latex Value Chain ............................................................................ 45 3.2 Gemor Bark Value Chain Analysis ............................................................................................. 47 3.2.1 Upstream - Gemor Farmers .................................................................................................. 47 3.2.2 Mid-stream – pak Nunung ................................................................................................... 50 3.2.3 Downstream – UD Kesuma Jaya ......................................................................................... 52 3.2.4 Summary of Gemor Bark Value Chain ................................................................................ 55 3.3 Cost-Benefit Analyses ................................................................................................................ 57 3.3.1 NPV & IRR .......................................................................................................................... 57 3.3.2 Environmental Impact .......................................................................................................... 57 2 3.3.3 Sensitivity Analyses ............................................................................................................. 58 3.4 Other Potential Crops .................................................................................................................. 61 3.4.1 Farmers with Jelutung Plantations ....................................................................................... 61 3.4.2 Non-Jelutung Latex and Gemor Bark Farmers .................................................................... 62 3.4.3 Summary .............................................................................................................................
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