Indonesia releases first phase of EUR 6-million loan to boost sustainable farming based on IDH’s village forest model

The Indonesian Ministry of Environment and Forestry has issued a EUR 1.034 million soft loan to farmers in Kubu Raya district, West Kalimantan, to boost sustainable farming based on the “village forest” business model developed by IDH. This is the first phase of a EUR 6-million loan, marking a crucial step towards scaling the business model across Indonesia.

The village forest scheme, known locally as hutan desa, was introduced by the Indonesian government in 2017 as part of the Indonesian president’s social forestry program to encourage community-based forest management. The scheme grants licenses to selected villages to manage and protect nearby forests, peat and mangrove, whilst gaining an economic benefit. Ultimately, it aims to increase forest sustainability, improve community welfare and reduce pressure over land availability.

A successful pilot in Kubu Raya

IDH, using its Production, Protection, Inclusion (PPI) approach, together with the local NGO SAMPAN KALIMANTAN, developed a business model to demonstrate how the village forest scheme can work in practice.

In Kubu Raya, which has the biggest Village Forest in Indonesia, farmers agreed to protect 70,000 ha of mangrove, peat and forest, in return for support in developing their businesses.  This was the first Production, Protection, Inclusion (PPI) compact of its kind in Indonesia. (Find out how we form PPI compacts in this infographic).

Farmers agreed to protect 70,000 ha of mangrove, peat and forest.

We supported farmers in 10 villages in Padang Tikar and three villages in Dabong in Kubu Raya. Technical assistance included training in landscape monitoring, organization, internal control systems, marketing and sustainable production development for their non-forestry commodities as their sustainable livelihoods, such as beekeeping, crab farming, and producing charcoal from coconuts. IDH also supported farmer groups to access more financial resources and make individual and collective savings.

Farmers were able to increase their incomes without cutting down the surrounding forest. The farmers also developed a protection fund scheme to protect the landscape using their generated incomes. Natural revegetation and community forest rehabilitation programs have already contributed to a total restoration of 4,918 hectares of forest and mangrove, according to satellite data. (Read more about this project here).

Scaling the village forest model

Recognizing the success of this pilot, the Indonesian government is now supporting four village farmer groups within the Village Forest to scale and strengthen the business model with a committed soft loan of EUR 6 million. This low-interest loan will help the farmers further develop their businesses sustainably and, eventually, to do so independently, without grant support.

The loan will help farmers develop their businesses sustainably and independently.

The loan was granted by the Public Development Center for Forest Development (known as BLU P2H Center KLHK) of the Ministry.

Next, to achieve even more scale, IDH will support village forest communities to link their non-forestry commodities to access wider markets in Indonesia and globally.

This example will also help the government, companies and farmers replicate the sustainable village forest business model in other forest and peatland landscapes across Indonesia.

About IDH in West Kalimantan

West Kalimantan is a major production area for palm oil, coconuts, timber and pulp and paper, and therefore vital for the Indonesian economy. At the same time, the forests and peatlands of West Kalimantan are significant carbon stocks. Slashing and burning down carbon-rich, biologically diverse forests and peatlands for agriculture is the biggest sustainability challenge in the region, contributing to climate change. We address this by:

  1. Convening stakeholders and co-designing conservation plans around forest and peat areas.
  2. Designing PPI compacts with financial incentives for conservation.
  3. Supporting the provincial government in developing and implementing a green growth plan.

We work in Kubu Raya, Kayong Utara and Ketapang districts. Find out more about our work in West Kalimantan

Sorry

Your browser is too old to optimally experience this website. Upgrade your browser to improve your experience.