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An analysis of farmers' net incomes from underplanted forest products: case studies from Hunan and Guangxi Provinces of China/Analyse des revenus nets des agriculteurs de produits forestiers peu plantes: etudes-cas des provinces Hunan et Guangxi en Chine/Un analisis de los ingresos netos de los agricultores procedentes de productos forestales de plantaciones bajo cubierta: estudios de caso de las provincias chinas de Hunan y Guangxi.

INTRODUCTION

The Collective Forest Reform has been underway since the early 2000s, and on July 14, 2008 a new national policy was officially announced that marked the launch of the nationwide forest reform in China (Xu et al. 2010). Clarification of the rights of farmers to use the land is a central part of this reform (Qin et al. 2011). However, as there is still an annual cutting quota in China, farmers need to go through a complex application procedure to obtain a forest harvesting permit from the local forestry authority. As a result, the incomes that farmers can gain from timber are restricted (Zhang et al. 2010). Consequently, several forest-related reforms have been aimed at increasing farmers' incomes, one of which is the development of underplanted forest products (UFPs).

Forest products are composed of timber and non-timber products (NTFPs). The definition of NTFPs has been debated since the term was coined by de Beer and McDermott in 1989 (Belcher 2005). They defined NTFPs as "all biological materials other than timber which are extracted from forests for human use" (Belcher 2005). Underplanted forest production is the literal translation of a term used in China to refer to the use of forests and other tree-covered spaces to develop understory planting, understory farming, forest tourism and the collection of and processing of forest products. While most UFPs are NTFPs, there are some differences between UFPs and NTFPs: UFPs rely on the use and management of the forest floor, and include such things as forest tourism, the raising of poultry and the growth of saplings that will be later transplanted to meet the burgeoning demand for trees in urban areas.

The State Forestry Administration of China (SFA) has encouraged farmers to utilize and manage the forest floor in these ways to derive short-term income. Due to the lack of research that has been undertaken on the impacts of the new policy on UFPs, but the large amount of information available about NTFPs, in this study some of the research results from NTFPs have been utilized to help understand patterns of UFP development. Research focused on the development of NTFPs around the world has shown that they can reduce rural poverty (Gauli and Hauser 2011), increase incomes (Timko et al. 2010) and protect the biodiversity of forests (Gauli and Hauser 2011, Saha and Sundriyal 2012). However, there are concerns that the unsustainable collection of NTFPs could place pressure on forests, and for many households, NTFPs can barely cover the opportunity costs of their collection (Bhattacharya and Hayat 2004). Even for high-value products, the major benefits often accrue to the wealthier members or local elites who control the markets for the products (Mulenga et al. 2013, Arnold and Ruiz 2001).

Given that the underplanting policy is new, the relationship between the development of underplanting under this policy and farmers' incomes in China has not been formally investigated. The primary purpose of this study was to provide insights on the development of UFPs as a source of

income from the farmers' perspective. This study also aimed to develop an understanding of the barriers preventing farmers from developing UFPs under the new policy and to suggest future directions based on local peoples' wishes and needs. The research objectives of this study can by summarized as follows: 1) to evaluate the factors that can affect the incomes of farmers adopting the UFPs; 2) to examine the difficulties that farmers are facing and how they might be solved; and 3) to explore the effects of the UFP policy on the production of UFPs.

METHODS

The goals of the study were addressed through a questionnaire survey and a semi-structured, open-ended interviewbased survey with local villagers and governors. This information was collected between June and August in 2012 in Sanjiang County, Guangxi Province and Jingzhou County, Hunan Province of China (FIGURE 1). All visited villages were within two hours bus ride from the nearest town. Forest resources are rich in the two counties, and the forest cover is around 70%. However, both counties are considered low income. The annual per capita net incomes of rural households in 2012 in Sanjinag was 4826.44 yuan (1), and in Jingzhou was 5.397.31 yuan, both being significantly lower than the national average of 7,916.6 yuan (China Data Online, 2012).

To achieve the first two goals, a questionnaire household survey and an interview-based survey with local villagers were administered. For the questionnaire survey, the sampling was non-random and purposive. No official records are available about who has been planting UFPs and where they were located, preventing a randomized survey from being undertaken. As the formal development of UFPs is a new policy associated with forest tenure reforms, local forest administrations had never collected detailed information about it.

In addition, it has been difficult for local administrations to collect data about the production of UFPs as farmers can change their UFP planting decisions annually and the farmers developing UFPs are not evenly distributed in each village. During the pretest for the fieldwork, it was hard to locate the planters, making random sampling impossible. Sampling was purposively collected based partly on the limited information about UFP farmers provided by local forest administrations. A 'snowball' data collection method was then used to identify and locate participants in two villages in Sanjiang County and two villages in Jingzhou County. In these villages, all people known to be working with UFPs were contacted, based on information provided by the farmers. Altogether, 38 households participated in the questionnaire study. Questions covered: the incomes from UFPs, the cost of UFPs, the market situation, farmer's professional cooperatives, the financial situation and the support provided by related policies.

For the open-ended interviews with local villagers, the local forestry administrations in each county provided information on key informants, ensuring that the full range of UFPs was covered. In total, 25 households were interviewed to understand their underplanting management practices and the difficulties that they were facing. Additional information was gained by examining the results of research conducted elsewhere, including that done by Shackleton et al. (2007) in South Africa examining the role of dry woodlands and forests in rural livelihoods, the study by Kar and Jacobson (2012) on NTFP contributions to household incomes and market constraints in Bangladesh, and the 61 cases examined by Belcher et al. (2005) dealing with commercial NTFP production in Africa, Asia, and Latin America.

To achieve the third goal of the study, namely to understand how policies related to the forest reforms were affecting the development of underplanting in rural areas, semistructured, open-ended interviews were conducted with each forest administration director in each county.

RESULTS

Factors affecting UFPs farmers' incomes

General questionnaire participants' profiles In total, 38 questionnaires were collected from Jingzhou and Sanjiang Counties. There were 10 female and 28 male respondents to the questionnaire. All were from different households and all had developed underplanting activities. The average age of respondents was 55.6 years. Thirty-six of 38 respondents owned forest land tenures (consisting of usufructuary rights to the land), with the tenures being valid for 70 years. Two did not have forest land tenures due to unclear forest tenure rights arising from historical land disputes. The average area of forest land held by households was 40.9 mu. After the reform, 11 of 38 households enlarged their underplanted area. One had increased to 3 mu of medicinal herbs under cultivation, and 10 had increased on average 2.3 mu of saplings under cultivation. UFPs occupied small percentages of the total forest land owned by each household, so the area of land available was not a limiting factor for the development of UFPs. Limited availability of labour was a major reason for the relatively small areas occupied by UFPs, as in the two counties that were sampled, younger generations prefer offfarm work. All the participants produced primary products without any processing.

Incomes and costs

The average annual net household income amongst the respondents was 41,000 Yuan; with an average of 4540 Yuan being derived from underplanting, representing 11% of total net household income. Two households had an income derived from cultivating fungi, and two from planting herbal medicines. Nine derived income from forest tourism and 24 households had income from planting saplings (FIGURE 2). All households raised poultry on their forest land, but only one derived an income from this. In addition to these sources of income, 32 households (84%) had income from other sources, especially from off-farm work. On average, for each household the cost (2) of UFPs was 1850 yuan. Nine households were paying a business tax, representing 5% of their gross income. As these households had developed forest tourism in the form of restaurants and inns in their own houses, they were also paying a sales tax. In addition to these ongoing costs, they had also incurred costs associated with rebuilding and decoration (73% of their total cost).

The household gaining income from raising poultry was receiving a subsidy from the county government, which represent 9.6% of the total net income. For the 28 households that were growing saplings, costs covered seeds, fertilization, transportation and disease control. Twenty-seven percent of the costs were associated with buying seeds, and 56% with fertilization. Only three households had transportation costs, as they were selling directly into the market. The other households were selling the saplings to agents who collected the saplings on site.

The market situation

Most farmers believed that they knew what their customers wanted and that it was easy for them to bargain the price with customers. Most thought that the transportation options open to them were convenient. For 32, the distance to market was 0-100 km, while for 6 households, the market distance was 101-200 km. Most farmers lacked information about market changes and also lacked stable customers. The market situation is shown in TABLE 1.

Farmers' professional cooperatives

In the study areas, farmers' professional cooperatives are usually voluntary associations based on the same or similar agriculture products in one village or a few nearby villages. They provide information on purchasing, markets, processes, transport, storage, technology and other services to their members. Twenty-nine percent of households (11 of 38) had joined professional cooperatives based on their products. One poultry-raising household had joined a cooperative with the intention of getting assistance with poultry-raising techniques. One sapling-planting household joined a cooperative to find buyers. Another sampling-planting household set up an economic cooperative in the form of a private company to be able to bid for contracts. Seven households involved with forest tourism had joined an existing cooperative to develop the forest resources in their village.

Financial situation

Forty-five percent (17 of 38) of households lacked capital when they developed their UFPs. Nine households believed that borrowing money from a bank was hard or very hard, whereas 6 thought that it was easy. Only one household thought that borrowing money from other people was hard, with 13 considering it easy or very easy (FIGURE 3).

Technical assistance

Only two households had received technical assistance from cooperatives when developing their UFPs. The technical assistance covered the basic technologies involved in planting medicinal herbs and lasted less than 5 days, but was considered by both participants as "very good and useful".

Small scale UFPs development

General profile of interviewees

Twenty-five interviews were conducted to understand how farmers were developing UFPs, what difficulties they were facing and how they might be solved. Eight of the participants interviewed had already conducted UFP activities on their forest land. Various activities were being undertaken in the households, including planting saplings, developing forest tourism, planting herbal medicines and growing fungi. The other 17 households were not conducting UFP activities. However, all 17 participants indicated that they had experience in collecting or planting UFPs in the past ten years. Participants had very little knowledge of any policy encouraging farmers to develop UFPs; in fact, none had even heard of such a policy.

Development paths for UFPs

Four different pathways leading to the development of UFPs were described by the 8 households with UFPs. The first path, followed by 3 households, involved those who initiated the development of UFPs, relying on themselves and becoming the leader in their field. The respondents all showed similar characteristics. They were well-educated, with more than 11 years of schooling, the highest level of any respondents. They all had experience of being a village administration officer. They had each built a good relationship with the local government, which had clearly helped their UFP businesses.

The second pathway involved starting UFP development with government support. Three of the 8 households were in this situation. One household chose to plant a herbal medicine, Isatis tinctoria (Isatis roots, in Chinese: Ban Lan Gen), which is a traditional Chinese medicine recognized under a government-company poverty alleviation program. In this program, the government supported farmers to work with a local medical company to plant herbs and provided the money for seeds. The company provided technical assistance to the farmers and promised to purchase the herbs. Two households in Danzhou Village, Sanjiang County, had developed forest tourism with the support of the local government. When a new village leader was appointed, he encouraged local households to develop forest tourism. The village government signed a contract with a travel agent, which stimulated the development of forest tourism in Danzhou Village. As a result, more than 80 households had launched forest tourism projects by 2010, representing 40% of the households in the village. The average income in Danzhou Village had reached 6000 Yuan per person annually by 2010 (data from Danzhou Village government), much higher than the surrounding villages.

The third pathway involved the assistance of commercial enterprises. The household that had planted Chinese medicine (Isatis root) with the help of the government had also received assistance from enterprises. These households holding a contract with the Chinese medicine entrepreneur received a pledge to purchase their products, which provided them with a stable market.

The fourth pathway involved following the direction created by the leaders in a village. This involved small-scale operations, with the work usually being done by only one or two people. The farmers usually sell their products directly to the leaders. Two of the 8 were in this situation.

Perceived barriers to the development of UFPs In the interviews with 17 local households that had not developed UFPs, the interviewees stated their reasons for not developing UFPs. The most significant reason (mentioned eight times) was the lack of information about what to do. Seven interviewees indicated that they were worried about the markets for products. Another stated reason was that they lacked the technological knowledge to develop UFPs (mentioned by six interviewees). Four interviewees stated that they lacked the capital needed to develop UFPs (FIGURE 4).

Exploring the policy effects for UFPs

The assessment of the effectiveness of UFP policies was based on interviews with two administration directors in the two counties. In both counties, there were policies in place aimed at encouraging UFPs and there were also other related policies that had affected the development of UFPs.

Policies to encourage UFPs

Both interviewees stated that their forest administration had received notices from the Chinese State Forestry Administration encouraging the development of UFPs. However, they had encountered many difficulties during the development of UFPs.

Firstly, they lacked data and materials in their respective counties as they had never been asked to collect data on UFPs. Secondly, they found it difficult to collect any data as the development of UFPs was undertaken by individual households, often as a temporary or part-time activity. Thirdly, the State Forestry Administration had not provided any detailed requirements or referrals prescribing how to conduct this policy. As a result, the forest administration at the county level had no knowledge of how to go about it. Finally, the policy had been issued by the higher levels of administration simply as an instruction. It was not accompanied by any form of technical assistance or additional budget.

The effects of tenure reform

The foundation for establishing UFPs successfully as income is having clear tenure rights to forest land. The forest administration director in Jingzhou County suggested that the forest tenure reform had been conducted too quickly, which might adversely affect the potential impacts of the reform. In Huaihua City (Jingzhou County belongs to Huaihua City), the forestry administration in each county promised to finish the forest tenure reform in an impossibly limited time. They did this by increasing the speed of the reform at the expense of quality. Some forest tenure certificates were subsequently withdrawn by the local court due to illegalities in the process, such as issuing certificates without clear boundaries or without the signature of the owner. This had resulted in unstable forest tenures, discouraging farmers from investing in UFPs. Another problem was that it had proven very difficult to solve historical land disputes, due to tenures having changed too many times without adequate records being maintained.

DISCUSSION

Factors affecting UFPs development

All of the households participating in the questionnaire study cultivated UFPs for commercial purposes. UFPs were a supplementary resource rather than a subsistence resource. Belcher et al. (2005) found similar results in their cases from Africa, Asia and Latin America; Similar results were also found by Ambrose-Oji (2003) in Cameroon, by Gauli and Hauser (2011) in Nepal and by Subhrendu and Sills (2001) in the Brazilian Amazon. For the participants in this study, as elsewhere, a large proportion of the household income was derived from off-farm sources, not from UFPs. Higherincome households had high-level income sources, especially off-farm sources (Hogarth et al. 2013, Belcher et al. 2005). From the interviews with people who cultivated UFPs, it was evident that some comprised the elites or leaders in their villages and that they had valuable market information and access to markets. They had a better chance than other farmers to receive an economic return from UFPs, but many of the other households following the elite's lead also received benefits from UFP cultivation. Ruiz-Perez et al. (2004) indicated that in China, better-off households got the largest share of increased earnings from bamboo, while the poor got the least. Belcher and Schreckenberg (2007) obtained a similar finding in their research about the commercialization of NTFPs. They found that a knowledge of business practices was needed for successful trading, and that the poor usually lacked this.

According to Belcher and Schreckenberg (2007), it is the local 'elites' who lead the development of UFPs through their own efforts. Typically, these local 'elites' are innovative, hard-working, and better educated people with technical and managerial skills. These 'elites' are frequently the leaders of UFPs development in their areas. In the case of the counties studied here, if a village had such a leader, then more people were likely to develop UFPs. In other cases, these local 'elites' were the village cadre, meaning that he or she had a better social network than others. This situation was common in cases involving forest tourism and raising poultry. Although the better-off households gained the most earnings, poor households also received benefits by directly engaging in cultivation activities or by being employed in UFP-related jobs.

Understanding the market information gap between small householders and buyers is crucial for NTFPs (Kar and Jacobson 2012). Similar NTFP market constraints have been found in several other studies, including poor transportation facilities, lack of capital support, lack of market information, lack of a nearby marketplace and middlemen linkages, and lack of awareness and training (Belcher 2005, Kar and Jacobson 2012, Ruiz-Perez et al. 2004). In this study, nobody considered that transportation was a problem, primarily due to the 'Village-to-village Connection Road Program (Cuncuntong Program)', which has focused on road and infrastructure development in China. However, farmers still lacked access to markets, primarily due to a lack of market information, especially about market changes.

UFPs were not a stable source of income for households. All 25 interviewees indicated that they had experience of collecting UFPs in the past, but many chose not to cultivate UFPs due to unstable market prices and the low tolerance that the farmers have to risk.

In the answers to the questionnaire survey, only two households had received technical assistance. However, in the interviews with farmers who had not developed UFPs, 6 of 17 interviewees mentioned that a lack of technical assistance was the reason for not adopting UFPs. These findings are not contradictory. Farmers with UFP activities were generally working with primary products, with low added value and low technical requirements. The development of UFPs indicates that low levels of technical investment were preferred by farmers. No participants were capturing added value in their products. Even with forest tourism, farmers were selling primary products and basic services: providing farmers' inns and farmers' meals to customers. The lack of knowledge was resulting in low production, low value-added products and a lack of competition that could stimulate more investment. Belcher and Schreckenberg (2007) indicated that 'many NTFPs are today being used as ingredients in very sophisticated industries'. For such products, production techniques are critical if value is to be added in the original country and if the quality standards of international clients are to be met (Belcher and Schreckenberg 2007). In the interview with an individual entrepreneur who had a Wolfiporia extensa processing and export company, he mentioned that he never bought processed products from farmers; the products would not satisfy export standards as small households lacked the specialized drying techniques necessary for the processing of the final product. He therefore preferred to process the fungi in his own factory.

Processing and commercialization increased the value of products, but most individual households lacked the facilities to deal with products in this way. Moreover, some households did not have enough money or did not want to invest in processing facilities for UFPs.

Policy effects for UFPs

The Collective Forest Tenure Reform in Jingzhou and Sanjing counties did not change the forest tenures much. An earlier forest land tenure reform carried out in 1981, called the 'three fixes', transferred communally-owned forest land to households (Delang and Wang 2012). Since then, in these two counties, the new owners have exercised their rights to exclude other users (Delang and Wang 2012). Secure property rights can ensure that the owners reap the benefits of management, and can promote long-term investments and the exclusion rights for NTFPs are very important (Sunderland et al. 2011). As the new forest tenure reform has strengthened property rights through law for 70 years, the exclusion rights for UFPs have been strengthened. Strengthening and checking land tenures should be continuous, as illegal processes exist in land tenure certification, as mentioned in the interview with forest administration directors in Jingzhou County.

NTFPs are often ignored by regulations and by management plans as they are generally considered to be 'minor forest products' (Belcher and Schreckenberg 2007). In China, timber has been seen as the most important resource derived from forests, and it has been associated with multiple regulations. However, only one policy concerning UFPs development is related to NTFPs. Long-term neglect of NTFPs has led to their value being underestimated, wrongly attributed to other sectors or entirely omitted; and also to a lack of empirical knowledge about the contributions that NTFPs make to the incomes of households (Hogarth et al. 2013). The interviews with forestry administration directors in the two counties revealed that they did not have a clear definition of UFPs, and that they felt the line between some agricultural products and UFPs was indistinct. This lack of clarity has created problems when carrying out UFP development policies, as administrators remain unclear as to what should be included as UFPs. Without detailed requirements on how to conduct the policy, and without technical and financial capital assistance, the policy is likely to have the same fate as many others--all questionnaire respondents and interviewees indicated that they had never heard of the UFP development policy.

CONCLUSION

The findings presented here should be treated with caution, as they are based on case studies and cannot be extrapolated to wider areas. The market situation for UFPs played an important role in determining the income that households gained from UFPs. This suggests a need for better market information and market access. Usually it was the older members in a family who were conducting UFP activities to supplement their livelihoods. These individuals lacked knowledge about cultivation techniques and markets for their products. This suggests that more channels should be utilized to get the technical and market information to farmers, such as the internet and TV. Communications need to focus on raising the awareness of farmers about the importance of technical and market information on the cultivation of UFPs.

Many factors affect cultivation decisions, with the lack of target products being the most notable. This was due to a serious lack of information in the villages. Market access, technical knowledge and insufficient financial capital were other barriers to UFP development. The solution to these barriers lies in the four pathways to UFP development identified in this study. The first pathway, involving leadership from village elites, involved the provision of reliable information about the target products, market situation and techniques through familiar and trustworthy people known to local farmers. If the local elite were in the village, it was easy to encourage others to join in. Another effective pathway involved getting help from government or companies. The advantage of these pathways is that target products are provided. Moreover, sufficient market information and the necessary technical assistance have also been provided. Other pathways exist, and there is a need to encourage farmers to adopt UFPs. This suggests a need for more financial capital, and also more information about target products and markets. Infrastructure and better education are needed to ensure that this happens.

The UFPs policy had no effect on the behaviour of farmers. None of the questionnaire respondents or interviewees even knew about the policy. Furthermore, while the forest directors in Sanjiang County and Jingzhou County knew about the policy, they did not know how to implement it, as NTFPs have been long ignored and there was a lack of specific support. A clear definition of UFPs is needed, and there should be a clear distinction made between some agricultural products and UFPs. Otherwise, there will be confusion over which government department is responsible for them. The policy does not deal with the real needs of forest-related farmers. It cannot remove any of the barriers facing farmers who want to cultivate UFPs. This suggests that farmers should be involved in the policy-making process, and that support, such as financial capital and technical assistance, should be provided.

Although most households received 70-year forest tenures after the reform, there is still a lack of clarity about land tenure, with some historical problems proving difficult to resolve. During the process of forest tenure reform, in some places problems were created by the speed of the reform, and local forest authorities need to ensure that each household has an effective tenure.

ACKNOWLEDGEMENTS

This research was supported by the National Nature Science Foundation of China (71163006). The author here would like to thank Dr. Guangping Miao of the State Forestry Administration of China and Mr. Chengzhi Xie of the Forestry Administration in Jingzhou County, Hunan Province, for their support in preparing this project.

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W. WANG (a), J.L. INNES (b) and J. LIU (c)

(a) PhD Student, Faculty of Forestry, University of British Columbia, 2204-2424 Main Mall, Vancouver, BC, V6T1Z4, Canada

(b) Professor, Faculty of Forestry, University of British Columbia, 2045-2424 Main Mall, Vancouver, BC, V6T1Z4, Canada

(c) Professor, School of Agricultural Economics and Rural Development, Renmin University of China, 912-Mingde Building,

No.59 Zhongguancun Street, Beijing, 100872, China

Emails: weiye.wang@alumni.ubc.ca, john.innes@ubc.ca, liujinlong@ruc.edu.cn

(1) Exchange rate on 20/10/2013 US$ 1=[yen] 6.4307, data from Bank of China.

(2) Cost including: cost for buying raw materials, cost for disease control, cost for fertilization/forage, and others.

Caption: FIGURE 1 The study area

Caption: FIGURE 4 Reasons given by participants not to develop UFPs (n = 17)

TABLE 1 The market situation
Description                  Numbers of households

                  strongly   disagree   neutral   agree   strongly
                  disagree                                 agree

Know what the        0          3          7       17        11
buyers want

Know the             5          12        11        8        2
market change

Easy to bargain      1          1         12       16        8
the price

Have stable          4          11         8        8        7
customers

Transportation       1          1          9       17        10
is convenient

FIGURE 2 Percentage of UFP types

Sapling           63%
Tourism           24%
Herbal medicine   5%
Fungi             5%
Poultry           3%

Note: Table made from pie chart.

FIGURE 3 Comparison between borrowing money from the bank and
from people

Borrow money from the bank

Very hard   10%
Hard        13%
Neutral     61%
Easy        16%
Very easy   0%

Borrow money from people

Very hard   0%
Hard        3%
Neutral     63%
Easy        26%
Very easy   8%

Note: Table made from pie chart.
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Author:Wang, W.; Innes, J.L.; Liu, J.
Publication:International Forestry Review
Article Type:Case study
Date:Mar 1, 2017
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