Branching Out
Farmers in Tree Bank programme harvest long-term profits and win over sceptical neighbours
Bangkok Post | 19/04/2012
“Are you in your right mind? What are you going to get from planting trees? What will you eat? You must be crazy"
These were among the comments Sangwan Pimolrat heard from her neighbours when she decided to plant trees instead of cash crops on some of her land.
The 56-year-old farmer from Chumphon province was one of the first participants in the Tree Bank project initiated in 2009 by the Bank for Agriculture and Agricultural Cooperatives (BAAC).
"When I started a Tree Bank, most villagers didn't believe that growing trees could generate income. They didn't see the importance of trees even in their own backyards," Mrs Sangwan said.
"But seeing what I was able to do, many have changed their minds," she said, explaining that she was able to send her daughter to university because of the money gained from planting trees.
A financial innovation of the BAAC, Tree Banks encourage villagers in rural areas to plant trees that can be used as collateral to secure loans from the bank, similar to conventional assets such as land or property.
Sawai Sangsawang, the manager and pioneer of the Tree Bank project, said it was a common misconception that trees had value only when they were cut down. However, he points out that their value increases as they grow each day and as some species become more scarce.
The BAAC requires villagers to plant local species ranging from edible plants and fast-growing softwoods, to hardwood, slow-growing timber and rare forest species. It is modelled on His Majesty the King's sufficiency economy philosophy, which encourages self-reliance.
Setting up a Tree Bank with the BAAC requires collaboration from a team of at least nine villagers, who need to set up a committee and elect its head.
The committee head and the BAAC's local officer will appraise the value of all the trees and register them with the bank. Registration involves creating biodata for all the trees, including the species, type of wood, date of planting, number of tree rings, and other details.
Once that is done, villagers can use the trees as collateral to secure loans from the BAAC of up to 50% of the trees' worth, at low interest rates of the minimum retail rate (MRR) minus 1.75%.
Appraisal is done in a systematic manner and recorded in a bank book, so that villagers will be able to see the value increase over time. The economic value of a tree is dependent on its age and the type of wood, with hardwood or timber generally being the most costly. Younger trees take longer to grow, but after 10 years they grow twice as fast.
"Trees are long-term assets that cannot be impaired and do not have depreciation costs," said Mr Sawai. "Their value growth can outpace the inflation rate by several-fold. And at certain stages their commercial value can even increase by 100% in just one year.
"Villagers will never face problems of low prices, lack of demand or unfair prices in the market experienced by rice, tapioca, sugarcane growers. And at the end of the day, even if they decide to cut down those trees, they will still own the land."
Mrs Sangwan's village in Chumphon now has more than 13,000 registered trees, worth a total of 30 million baht. Last year, the total value was only 14 million baht.
Apart from being used as collateral, each registered tree will also earn interest of 50 satang per year, similar to savings deposits.
"This year, we hope that the interest can be increased to one baht per tree, although the aim is to reach 10 baht per tree at least in the near future," Mr Sawai said.
However, to increase the interest to 10 baht, the BAAC would need help from sponsors, he said.
This year, the BAAC will set up a Tree Bank fund, seeking financial support from wealthy individuals and corporations as part of their corporate social responsibility (CSR) programmes.
"Businesses should realise that they have established plants in low-lying areas, so in order to prevent future devastation such as floods, they could give up some of their profits to help regrow the country's forests," he said.
The idea behind the fund is for donors to deposit money at the BAAC, with part of their interest earnings going toward funding the Tree Banks.
"So far, many wealthy individuals in large cities, insurance companies, and corporations such as Siam Cement and PTT have expressed their interest in joining," said Mr Sawai.
He said that although the proportion of interest for CSR was being finalised, deposits of around 5-10 million baht would yield 30,000 to 50,000 baht worth of CSR interest.
Companies that have large deposit bases will be put in charge of a particular community so employees can visit and interact with the villagers.
"It should not be just a matter of throwing away money for the sake of publicity," Mr Sawai said. "In the past, CSR has been more about putting up placards and taking pictures without any consistency in evaluation or whether the work has created any impact, or whether it can be sustained at all."
More tree planting, particularly at the sources of rivers will be emphasised this year.
The BAAC, in cooperation with the Royal Forestry Department, has already located 600 communities with total land area of 51,000 rai to begin planting trees, Mr Sawai said.
This year, the bank hopes to expand its tree-planting schemes to 3,500 communities and plant at least 8.5 million new trees with a budget of 75 million baht. So far, 33 billion baht has already been obtained to work in the first phase.
Initiated in 2009 in 60 villages, the programme now has 597 communities involved. Among the communities, 260 have been registered as Tree Banks.
Mr Sawai said that as carbon sinks, the trees grown in the programme can also be used to offset the country's carbon footprint or sold in the market to developed countries. This year global positioning and geographic information systems (GPS and GIS) will be established in 30 communities to enable carbon storage measurement from the trees.
"One of the biggest challenges is to make people realise the unquantifiable value of trees," he said. "Money deemed so valuable today, in itself has no value since it is man who has given it the value, but trees have an inherent value. Their role in the ecosystem and for our sustainable development is absolutely indispensable."
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