Forests Sourcebook - HCV Resource Network

product markets, looser arrangements that are sensitive to
demand and price trends will be much more sustainable.
Importance of Risk and operational flexibility.
Partnerships are a means to share risks, particularly those
associated with production and markets. Adaptability has
proved to be key to the success of company-community
partnerships. Best practices include allowance in contracts
for flexible technical features (for example, partial early
harvesting of timber, annual reassessments of NTFP offtake,
variable levies for tourism or other ecosystem services),
flexible loan repayment terms, provisions for alternative
avenues for marketing in the event of over- or underharvest,
well-defined terms for managing any disputes, and
renegotiating the contract on a regular basis.
Transaction costs and power sharing. Dealing with a
large number of scattered farmers or groups is a major
challenge, not only for technical reasons (extension,
harvesting, transport) but also for collective decision making.
Power sharing is critical for both equity and resilience of
partnerships (Ashman 2001). For communities, the solution
is to create economies of scale and raise bargaining power by
joining or forming farmers’ groups, cooperatives, and other
coalitions. Even small associations have been successful in
saving costs and improving marketing—but so far there are
few examples of communities improving partnership terms
through collective bargaining.
Ending a partnership. Some partnerships have
disintegrated amid bad faith and litigation. However,
termination does not necessarily mean failure, and
conversely, close partnerships may outlive their utility. As
priorities and market opportunities shift, partners may
make strategic choices away from formal collaboration
toward looser working relations. For the community, the
partnership may be a steppingstone to developing viable
independent enterprises, while for the company, the
increased business acumen within the community provides
reliable new opportunities (to develop and supply highquality
products and services, for instance).
LESSONS LEARNED AND RECOMMENDATIONS
FOR PRACTITIONERS
Company-community partnerships take a long time to
establish—they are built on trust gained through experience.
The World Bank and other third parties can play a crucial
role in enabling and supporting company-community
partnerships for the benefit of local livelihoods and SFM.
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Existing local organizations are an important route to
building deal-brokering capacity in communities. These
local organizations often have the institutional flexibility
to service community needs independent of external
influences and the potential to provide equitable representation
and a forum for equitable negotiation.
Empowerment must be an explicit objective of partnership
schemes. Often the poorest people are only participants
as contractors to those with land. To enable community
empowerment, arrangements for revenue
sharing, sharing ownership in downstream processing,
and other broader joint ventures are important. Empowerment
must be an objective if partnerships are to substantively
raise people out of poverty.
Greater attention must be given to forming enterprise
partnerships with entities other than limited liability
companies. Partnership structures, such as cooperatives,
should also be explored.
The details of benefit sharing and cost and risk sharing
should be examined closely to ensure that the term “partnership”
describes arrangements that are equitable for all
parties.
Local communities may often need legal assistance to
clarify their land ownership rights and in negotiating
such rights.
There is a risk that benefits may only accrue to a small
section of the community (for example, outgrower
households) while the community at large may suffer
loss of land rights and resource access (livestock households,
for instance), leading to a need to examine both
business projection and local tenure arrangements (legal
and customary) to ensure such outcomes are avoided.
Explore current options and future scenarios for
partnerships. This includes supporting work toward
increasing understanding of practical arrangements for
efficient and equitable community-company partnerships.
It is important to build understanding in the community of
practice of the impacts of corporate social responsibility
and the cooperative movement. Equally important is to
exploit the willingness of companies to network on
company-community partnerships (for example, in
Indonesia and South Africa). Leading companies can
continue to exchange experiences and to experiment with
innovative tools that promote equitable company-
74 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT