Environmental Sustainability in the Teak Plantation Industry - Report Example

Environmental Sustainability in the Teak Plantation Industry Introduction In Indonesia, teak plantation can be considered as one of the most established industries in Indonesia. There are different advantages in the establishment of the said business. First, it is also one of the most secure and profitable business on the basis of high returns in investment. Another is that the promotion of environmental sustainability which can be attributed to the nature of the business. It encourages environmental conservation because the value of the trees increase significantly in a year, thus, the concentration for livelihood can be focused on these trees rather than the environment. The benefits of the teak plantation industry can be achieved in optimum conditions. In this case, Indonesia based on its location and climate can be considered as a suitable and one of the most favorable places to establish the said industry. Indonesia is a beautiful tropical country with a capability to allow a huge variety of plant species. This can be attributed to sufficient amount of rainfall and sunlight that the region is receiving. The high moisture level is also another contributing factor. Due to the said environmental components, Indonesia had been the home of numerous endemic plants species and even the types that had been brought from other countries and regions around the world. Based on the benefits of the teak plantation industry and the chance to undertake this in Indonesia, our family is included in the people who established the business. With the initiative of my father Hartono Sarwono, feasibility study had been done and the process had been carefully planned. There are different issues, though that can be considered to affect the operation of a teak plantation in the country. Included in the issues considered as plagues in the country are government corruption, action of Muslim extremist and poverty. These factors took toll on the environment because of neglect of the authorities. In addition, forest fires also often occur largely due to man-made activities. Even through the risks, teak industry had been pursued by businessmen and entrepreneurs on the hope of sustainable and profitable endeavor. The Village Locals Land in Jakarta is expensive because it is the capital of Indonesia. It is the main spot for transacting business and economic development. It is the area where most rich entrepreneurs and investors reside while having agricultural business operations in the rural areas outside Jakarta. The rural areas are comparatively different standard of living as that of cities like Jakarta. This can be observed in the different technologies and infrastructure in the said rural areas. Most villages only have paved roads limited to main routes. Specific areas can only be reached by specialized vehicles adapted to the terrain such as 4-wheel drive vehicles. But such luxury cannot be achieved by local people with an average wage of $70 per month. In terms of education, most of the people only finished primary school while a limited number luckily graduated in high school. Due to the said condition, the land is the main source of livelihood in rural areas. The land is being utilized for planting crops such as rice because it is one of the most common crops. Rice paddies though require plenty of water and daily care. Due to this, local villagers with sizable land and capital commonly choose to grow teak trees. Unlike rice fields, Teak trees do not need daily care. The seedling is planted, and then left for a year or two before being harvested. They are only irrigated during the summer season once a week. This harvest yields a very young teak tree and can only be sold for $10 each. Although higher profit can be achieved if the trees are allowed to grow but for the villagers amount of the profit is sufficient for them because they need the money in order to survive. After the trees are harvested, they would burn their plantation as a cheap way to clear their land to prepare for their next crop cycle. This causes serious consequences in a number of ways such as uncontrollable burning of trees, destruction of old existing trees and animal habitats that house organisms that help sustain the area, and flooding in rainy seasons and drought in summer due to deforestation. These can affect crops even more. The list of problems goes on, ranging from mono cropping which will cause the nutrients in the top soil to be depleted and more complicated issues such as government regulations. If ever there are laws related to environmental issues, there is a major lack of enforcement and implementation. There are even cases where the authorities are the corrupt ones. The Teak Business A single teak tree can grow up to about 100 years old, with the value growing exponentially by the year. The demand for hardwood is continuously increasing by the year, while the supplies are diminishing due to unregulated deforestation. Teak trees are used to make high end furniture due to the quality of the wood such as being hard, high resistance in water, changing weather and termites. As an estimate, the price of single furniture made of a 100 year old tree can reach approximately $200,000 and a single tree can produce more than one. The teak trees that are used in Sarwono’s plantation are bred through cloning. The original franchise belongs to a research center in France. The trees are not genetically modified as Europe prohibits support for GMO’s. The main method used is budding plant parts specifically leaf of the best trees in the plantation that grows faster, yield harder wood, grows vertically and have resistance to diseases. The budding leaves are then cultivated in a germ free laboratory. The mortality rate of the clones is extremely high, about 90% would fail to make it to one month of age. After three months, the young teak tree can be released from the lab. Ten percent of the teak trees that are released will not survive. This can be attributed to the fact that the cloned plants are extremely weak at a young age, more intensive care is required. The land purchased by Sarwono is located in an area considered as barren and unproductive due to the fact that it is cheaper than lands located in other areas. Another reason is to be able to develop the livelihood of the people in the said area. By giving instructions that fire cannot be used for clearing the area, deforestation and cutting down of trees older than 5 years to be able to maintain diversity in the species. The plantation is then divided into hectares which provide a space for about 1,100 teak trees, leaving them 3 meters apart from each other with 1 family taking care of it. However, Sarwono wanted to leave 1,000 meter square for individual housing, allowing the families who take care of the individual hectare to also grow their own crops to diversify the plantation as well as generating extra income for the family. Therefore, each hectare will be planted 1,000 teak trees. The initial land investment is estimated to be about $40,000 per hectare with annual maintenance fee of $2,500. The village’s rice fields look extremely dry. Based on the statements of local farmers, the irrigation that used to come from the local river stopped. This is related to the deforestation in the top of the mountain. Included in the objectives of the plantation is to improve the irrigation by planting the teak trees in the higher grounds. During the past year 30 hectares had been used while 15 hectares were given to investors. When teak trees are harvested, not all of them are cut at once. The math of Teak tree investment is simple, the US bank’s annual interest deposit rate is 0.5%. Stock market’s investment is risky, the return of S&P 500 in 2008 is negative 37.22%, 5.46% gain in 2007 and the highest gain ever recorded is 56.79% in 1933, while the average return from 1998-2007 is 5.27%. A teak tree however, has about 62.5% growth every year. The cost of a seedling is about $3 and in the first year, each tree will sell for $10. The profits are not very high if we factor in land purchase, maintenance, initial planting and harvesting fees. However, each tree can be sold for about $150 at 5 years old, $300 at 7 years old, $800 at 10 years old and $2900 at 15 years old. The first harvest is usually at 5 or 7 years old, depending on the decision of the owner. The profit growth encourages investors to do a partial harvesting, specifically cutting down 50% of the trees. Partial harvesting is necessary because as the trees grew older, they need more space for nutrients and sunlight. Investors will be willing to wait and delay their harvest as late as they can because only rich investors would usually purchase such a lengthy investment, and only investors who really need the money will harvest their teak tree sooner than later. New seedlings can also be planted upon harvest of the other trees, thus, deforestation can be prevented. Trees all over the world are cut down at a rate that is faster than the world could sustain even though lumber are considered to be a renewable resource. At this rate, the price of lumber will keep increasing, which really encourages projects like the teak tree to flourish. Besides making enormous profits, there are comparatively more positive environmental effects than negative. In addition, it is better than leaving the land barren. Unlike some crops, the teak tree also does not deplete nutrients in the soil. The only negative environmental downside to this project is mono cropping. This factor is inevitable but minimized through the preservation of older native trees and allowing each family who take care of each hectare to have their own source of income. There are different groups that invested in the project. The first investors include a nature lover who has climbed Mt. Kilamanjaro, Mt.Everest, Mt. Elbrus and other famous mountains all over the world named Budi Hartono Purnomo. He is a close friend of Sarwono who also happens to be a director of a major insurance company. He assessed that the only major risk facing the plantation is forest fire from neighboring fields or heat waves from summer seasons. The risk is lessened by having one whole family looking after each hectare. Theft is highly unlikely as there is only a single road leading to the plantation. With the support of the locals, it is impossible to enter and exit with a truck without their knowledge. Floods are also very unlikely because the plantation is located on a very high ground, unless there is a major tsunami as that of 2004. Therefore, with insurance, the investment can be considered almost risk free. Purnomo bought 7 of the available 15 hectares that is up for sale. Prospects of green peace award for Hartono Sarwono have been circulating around. This year, Sarwono is opening a new 50 hectares of land up for sale and it has been very successful. The only thing he needs to do is the proof of regard and dedication towards the environment. A source from Indonesia’s Ministry of Forestry said that Sarwono could obtain such an award at the second or third harvest. Read More