Decision No. 774/QD-BNN-TCLN approves the Action Plan to enhance productivity, quality, and value of production forest plantations for the period 2014-2020.

Pursuant to …;

Approving the Action Plan to Increase Productivity, Quality, and Value of Timber Plantations for Production from 2014 to 2020

__________________________________________________

 THE MINISTER OF AGRICULTURE AND RURAL DEVELOPMENT

BASED ON THE DECREE NO. 199/2013/NĐ-CP OF NOVEMBER 26, 2013 OF THE GOVERNMENT PROVIDING FOR THE FUNCTIONS, TASKS, POWERS, AND ORGANIZATIONAL STRUCTURE OF THE MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT;

This Decision promulgates the Action Plan for Developing the Wood Market and Wood Products for the Period 2014-2020.

Considering the proposal of the General Director of the Forest Protection Department,

DECISION:

Article 1. Issued along with this Decision is the Action Plan to Increase Productivity, Quality, and Value of Timber Plantations for Production from 2014 to 2020.

Article 2. This Decision takes effect from the date of signature.

Article 3. The Head of the Ministry's Office, the Director General of the Forestry General Department, the Heads of relevant units under the Ministry, the Departments of Agriculture and Rural Development of provinces and centrally governed cities are responsible for implementing this Decision./.

ACTION PLAN

To Increase Productivity, Quality, and Value of Timber Plantations for Production from 2014 to 2020
(Attached to Decision No. 774/QĐ-BNN-TCLN dated April 18, 2014 of the Minister of Agriculture and Rural Development)

__________________________________________

INTRODUCTION

New plantation area increased sharply from 1.92 million hectares in 2002 to 3.4 million hectares in 2012, averaging an increase of 127,000 hectares/year (652,364 hectares of protective forests, 81,686 hectares of special-use forests, 2,548,561 hectares of production forests, and planting on areas outside the planning for forestry purposes of 155,589 hectares). Total volume of planted forests reached 73.5 million cubic meters, of which the volume of production forests was approximately 56 million cubic meters, averaging an annual increase of 6.2%.

According to statistics in 2012, the largest plantation area was in the Northeast region with 1,232,031 hectares (35.83%), North Central region with 712,015 hectares (20.71%), South Central Coast region with 545,538 hectares (15.87%), Central Highlands region with 309,950 hectares (9.01%); other regions had plantation areas between 200,000 and less than 200,000 hectares, the lowest being the Red River Delta region with 47,187 hectares (1.37%). (Source: Decision No. 1739/QĐ-BNN-TCLN dated July 31, 2013).

Although the area and output of timber from planted forests have increased over time, it mainly provides small wood for paper pulp, wood chips, etc., with low economic value; there are no technical and policy solutions to develop large timber plantations for furniture production and wood exports with high economic value. On the other hand, productivity and quality of planted forests remain low, averaging only 10-13 cubic meters/hectare/year (approximately 0.7 million hectares of production forests achieving an average of 7-9 cubic meters/hectare/year), annual wood output from planted forests reaches about 15-17 million cubic meters, including 3-3.4 million cubic meters of large wood (20%) and 12-13.6 million cubic meters of small wood (80%), failing to meet the demand for large wood raw materials for domestic processing.

In order to address these limitations, implement the Reorganization Program of the Forestry Sector, improve the economic efficiency of planted forests by shifting the structure of tree species and wood products processed from planted forests, create concentrated raw material zones, supply raw materials for the export wood processing industry, gradually reduce wood raw material imports. Therefore, building a plan to implement activities aimed at increasing productivity, quality, and value of production timber plantations is very necessary.

Part I

CURRENT SITUATION OF PRODUCTION TIMBER PLANTATIONS

I. SITUATION OF RAW MATERIAL FOREST PLANTING IN PROVINCES

Although the Forest Protection and Development Plan until 2020 of the provinces includes plans for planting large timber forests, in recent years, most provinces have mainly focused on developing small timber raw material forests for paper pulp, wood chips, peeled wood, and providing wood for poles and mine supports. There are very few models of large timber raw material forests in some provinces, with small areas.

Units and forest owners mainly apply the method of planting small timber commercial forests and raw material for paper pulp and wood chips with an average planting density of 1,660 trees/hectare; depending on specific conditions, the forest nurturing period may be extended (over 10 years for Acacia; over 14 years for Oil Tree, etc.) to harvest products that meet the standard for large timber (diameter ≥ 15 cm).

The area of timber plantations converted to large timber business purposes in 19 provinces in three regions of Northern East, North Central, and South Central Coast currently totals about 40,000 hectares. This area is mainly concentrated in companies with favorable land and market conditions in Quang Tri and Phu Yen provinces. The remaining area is mainly small-scale plantings funded by ODA projects in provinces such as Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Thua Thien Hue, Quang Nam...

Besides the area of timber plantations already converted to large timber business purposes mentioned above, some provinces also have areas planted from the funds of Programs 327 and 661, previously planned as protective forests, now reviewed and converted to production forests, which can provide large timber raw materials.

Thus, although no unit (forestry company) has implemented the method of planting large timber commercial forests from the beginning of the cycle (with appropriate planting density, tree species, and implementation of suitable technical measures), in reality, large timber products have been formed from thinning and nurturing some areas of raw material forests when extending the business cycle from 8-12 years or converting after reviewing the planning of the three types of forests.

II. ON PRODUCTIVITY AND VALUE OF TIMBER PLANTATIONS

- In provinces in the Northern East region: The main harvesting age is from 5 to 7 years, so the average yield is only 65-70 cubic meters/hectare, the average productivity in this category is about 10 cubic meters/hectare/year. Harvesting timber plantations at the age of 5, standing wood can be sold for about 35 million VND/hectare, while the investment cost for planting forests is about 20 million VND/hectare; the average income is only 3 million VND/hectare/year. When harvesting timber plantations at the age of 8, there is a proportion utilized for selling processed wood (20% of trees with a diameter of 15 cm or more); the rest is sold as raw material for paper, increasing the value of the plantation (selling about 80 million VND/hectare, with planting costs of about 30 million VND/hectare, the average income is about 6 million VND/hectare/year).

- In provinces in the North Central and South Central Coast regions: The main harvesting age is from 5 to 8 years (in some places, harvesting occurs at 4 years), the average yield ranges from 70 cubic meters/hectare to 180 cubic meters/hectare, the average productivity reaches 15-25 cubic meters/hectare/year, in some places with high intensive cultivation and good site preparation, it can exceed 30 cubic meters/hectare/year (Sông Hiếu Forestry Company - Nghệ An, Quy Nhơn Forestry Company - Bình Định), and the standing wood price can reach from 70 to 100 million VND/hectare.

- The value of planted forest wood increases according to the diameter grade: If selling wood chips or paper raw material wood, the value only reaches about 700,000 to 800,000 VND per ton, but if processed wood with larger diameter grades, the value increases (diameter 15 cm valued at 1.1 to 1.2 million VND per cubic meter; diameter 25 to 30 cm approximately 1.8 to 2 million VND per cubic meter; diameter over 35 cm approximately 3 million VND per cubic meter).

III. REGARDING SEEDLINGS AND TECHNIQUES

1. Planting seedlings

- In the Northeast region: The group of planting seedlings for production forests includes tree species such as Acacia auriculiformis, Acacia hybrid, Eucalyptus, Banyan, Pine, Camphor, Fraxinus chinensis, Zelkova serrata, Quercus acutissima, Lim xanh, Viovia, etc. Among them, Acacia remains the main species chosen with a planting ratio exceeding 80% of the area.

- In the North Central and South Central Coast regions: The group of planting seedlings for production forests includes tree species such as Acacia auriculiformis, Acacia hybrid, Eucalyptus, Caribbean pine, Camphor, Fraxinus chinensis, Quercus acutissima, Huynh, Black Ironwood, Shorea robusta, etc. Among them, Acacia auriculiformis and Acacia hybrid are also the main species chosen with a planting ratio exceeding 90% of the area.

2. Regarding techniques

- Currently, planting production forests (Acacia, Eucalyptus) is generally carried out at a density of 1,660 trees per hectare. Only a small area in Tuyen Quang and the Song Hieu Forestry Company (Nghe An) plants at a density of 1,100 trees per hectare.

- Intensive forest plantation investment is still at a low level, with few units properly digging holes to size, applying base fertilizer, and caring for the forest according to technical procedures. These procedures are mainly implemented by large-scale forest planting units, while smaller units and individual households mostly plant extensively, resulting in low forest productivity.

- Currently, planted forests provide raw materials with short cycles, so thinning to nurture planted forests is very rare due to the insignificant amount of firewood harvested and insufficient costs to cover thinning expenses. Therefore, most units do not implement this procedure.

IV. REGARDING THE CURRENT POLICIES IN PLACE

The development of production forests in localities is currently being implemented according to Decision No. 147/2007/QD-TTg dated September 10, 2007, of the Prime Minister on certain policies for development during the 2007-2015 period. According to this decision, the support level for planting large timber forests is 3 million VND per hectare. From 2012, the support level for planting large timber and native tree species increased from 3 million VND to 4.5 million VND per hectare according to Decision No. 66/2011/QD-TTg dated December 9, 2011, of the Prime Minister. However, due to limited annual budget funds and the target beneficiaries being individual households, the supported area has not been extensive.

V. DIFFICULTIES AND OBSTACLES FOR DEVELOPING RAW MATERIAL WOOD PLANTATIONS

1. Regarding land

- At present, there is no large concentrated land fund available for new production forest plantations. Although provinces have planned areas for new plantations, in reality, areas with good soil conditions have already been planted; the remaining un-planted areas are mostly located in highlands, remote areas with difficult site conditions, suitable only for long-term native tree species.

- The scale of forestry land of each small household (each household only 1-2 hectares), the number of households with more than 5 hectares of forestry land is very small. Households are mainly located in mountainous areas, with difficult living conditions and lack of production capital, thus they plant extensively with short cycles to quickly produce products and income. Therefore, extending the harvesting time for large timber business is extremely difficult.

- The process of allocating forestry land to forest owners, including organizations, households, and individuals in some localities is slow. Many forest owners have not yet received land use rights certificates (red book) to borrow capital and stabilize production.

- Forestry companies that have been granted red books must pay land rental fees and land use taxes according to the Land Law, increasing the cost of planting forests. Additionally, paying annual land rental fees while the forest business cycle spans many years is also a significant challenge for large timber raw material forest business.

2. Regarding capital and credit

- Due to the longer business cycle of large timber compared to small timber raw materials (paper pulp, wood chips, etc.), and higher initial investment costs, while obtaining production loans from forestry companies, organizations, and households is very difficult; forest maintenance funding is mainly self-raised by forest owners, thus lacking the conditions to develop large timber business.

- Loans from commercial banks often have high interest rates, strict loan conditions, and complicated procedures (must have collateral), short loan periods, making it difficult for enterprises and households to access capital.

- Forest planting with a long business cycle and high risks usually makes banks reluctant to lend for forest planting; households and individuals find it even harder to access credit for forest planting. Even if loans are obtained, banks typically only lend up to 50% of the investment value at high commercial interest rates, leaving little profit after deducting costs.

3. Regarding market and infrastructure

- Although large timber forest planting yields higher economic returns, due to the strong demand for paper pulp, wood chips, and mine pillars, the authorities in some provinces only direct the development of forests supplying small timber raw materials. Therefore, large timber forest planting will be difficult to develop without state support policies.

- Unstable market prices, long production and business cycles, and inadequate management policies for purchasing raw materials limit the encouragement of people and investors to jointly invest in large timber forest planting.

- Forestry infrastructure does not meet production requirements, especially the forest road system, leading to difficulties in developing large timber forests (from planting, thinning, harvesting, transportation, costs are very high).

4. Regarding seedlings and techniques

- Management of forestry planting seedlings has improved significantly, but in many places, the quality of seedlings is not properly managed and monitored, particularly private seedling production facilities with small scales (households).

- Many new varieties recognized by the Ministry are still only at the experimental stage and have not been mass-produced and supplied for widespread use.

- Seedlings and seed sources are not specific for large timber forest planting and small timber forest planting; they are not specific for each region and different site conditions.

- Forest planting mainly still remains at a low intensive level, with small pits dug, no fertilization, and infrequent care, leading to slow growth and low productivity.

- There are not many typical commercial forest plantation models for large timber that serve as bases for visits, propaganda, and learning in various regions.

- There is no specific technical guidance for the transformation of commercial forest plantations for large timber.

5. Risks when investing in large timber raw material forests

- Large timber forest planting has a long business cycle, thus often encountering risks such as forest fires and typhoons, while we do not yet have insurance policies for planted forests.

- The market consumption and prices are unstable; additionally, the seeds primarily used for forest planting are mostly Acacia auriculiformis and Acacia hybrid, which have many defects when dealing with large timber (sawing) such as hollow cores, knots, and eyes, reducing the value of the wood.

Part II

CONTENT OF THE ACTION PLAN TO INCREASE PRODUCTIVITY, QUALITY AND VALUE OF COMMERCIAL FORESTS FOR LARGE TIMBER IN THE 2014-2020 PERIOD

I. BASIS FOR DEVELOPING THE ACTION PLAN

Decision No. 57/QD-TTg dated January 9, 2012 of the Prime Minister approving the Plan on Forest Protection and Development for the 2011-2020 period;

Pursuant to Decision No. 1565/QD-BNN-TCLB dated July 8, 2013 of the Minister of Agriculture and Rural Development regarding the approval of the Scheme on Restructuring the Forestry Sector;

Pursuant to Decision No. 1757/QD-BNN-TCLN dated August 1, 2013 promulgating the Action Program to implement Decision No. 1565/QD-BNN-TCLN dated July 8, 2013 of the Minister of Agriculture and Rural Development approving the Scheme on Restructuring the Forestry Sector;

II. SCOPE AND OBJECTS

1. Scope

Concentrating in 19 provinces within three ecological zones with favorable natural conditions for planting, harvesting, transporting, processing large timber and linked to consumption markets, namely the Northeast region, North Central region, and South Central Coast region; simultaneously encouraging implementation nationwide.

2. Objects

- Object of forest: Focusing on improving productivity, quality, and value of commercial forests for large timber, which are production forests of forestry companies, organizations, and individuals capable of planting forests for large timber business purposes.

- Species: Including two groups of fast-growing and slow-growing tree species.

III. OBJECTIVES OF THE ACTION PLAN

1. General objectives

To enhance the value of forest planting production and sustainable economic, social, and environmental development of the forestry sector; linking from forest planting, processing to product consumption to increase the value of forest products, contributing to successfully implementing the "Scheme on Restructuring the Forestry Sector".

2. Specific objectives

- Bringing the average productivity of converted forest plantations for large timber business to reach 12 cubic meters per hectare per year in the Northeast region; 15 cubic meters per hectare per year in the North Central region and South Central Coast region.

- Increasing the average productivity of newly planted and replanted fast-growing trees for large timber business to exceed 15 cubic meters per hectare per year in the Northeast region; exceeding 20 cubic meters per hectare per year in the North Central region and South Central Coast region. For slow-growing trees with longer business cycles, the average productivity should exceed 10 cubic meters per hectare per year.

- For commercial forests for large timber: Bringing the average proportion of large timber (logs with a diameter of ≥ 15 cm) from the current 30-40% of the harvest volume to 50-60% by 2020 and over 60% from 2020 onwards.

(Details of the plan for developing commercial forests for large timber business are attached in Appendix 01).

IV. CONTENT OF THE ACTION PLAN

1. Technical component

a) Regarding seedling work

(1) Reviewing and perfecting legal documents, standards, and regulations related to seedling management in forestry.

(2) Reviewing, identifying, and eliminating tree species with low productivity and quality that do not meet production and market requirements;

(3) Evaluating, selecting, and compiling a list of tree species and varieties with high productivity suitable for each site condition, meeting market demands for planting forests.

(4) Researching and creating new varieties, testing approved tree species in the direction of increasing productivity and quality to meet large timber business requirements and promote the transfer of new varieties into production.

b) Regarding silviculture - planting - caring for forests

(1) Developing and issuing technical guidelines for intensive forest planting to provide large timber: Conditions, criteria, and techniques for planting large timber forests.

(2) Developing technical guidelines for converting fast-growing tree plantations providing small timber to large timber business: Conditions, criteria, and techniques for converting small timber forests into large timber forests.

(3) Establishing economic-technical norms for planting and caring for large timber raw material forests for major tree species.

(4) Researching and developing optimal packages of techniques for converting small timber forests into large timber supply forests, replanting forests after harvesting, and new intensive forest planting according to cost suitability for different tree species under varying site conditions for practical application.

2. Management and production organization component

a) Regarding planning for large timber raw material forest development

(1) Reviewing and assessing the area of vacant land and existing production forests to determine: The area of forests that can be converted for large timber business; the area of forests reaching harvesting age with suitable site conditions that can be replanted intensively for large timber business; the area of vacant land that can be planted intensively for large timber business.

(2) Establishing a raw material zone plan for large timber linked to processing facilities to implement the conversion of existing forest plantations and intensive large timber forest planting.

b) Regarding the development of large timber raw material forests

(1) Directing localities to build pilot models for forest conversion and large timber business forest planting. In 2014, four models will be implemented in three provinces: Bac Giang (Acacia hybrid; Voi Thuoc), Thanh Hoa (Acacia auriculiformis), and Quang Tri (Acacia hybrid).

(2) During the 2014-2020 period, in 19 provinces within three regions: Northeast, North Central, and South Central Coast, it is expected to convert 110,000 hectares of existing forest plantations to large timber business (sawn timber); plant 100,000 hectares of new forests and replant 165,000 hectares with the purpose of large timber business. Specifically as follows:

- Northeastern North Vietnam Region (9 provinces): The planned area for converting planted forests to large timber business is 25,420 hectares; planting new 54,285 hectares and replanting 80,400 hectares of large timber business forests.

- Northern Central Vietnam Region (6 provinces): The planned area for converting planted forests to large timber business is 58,281 hectares; planting new 37,817 hectares and replanting 76,543 hectares of large timber business forests.

- South Central Coast Vietnam Region (4 provinces): The planned area for converting planted forests to large timber business is 26,299 hectares; planting new 7,898 hectares and replanting 8,057 hectares of large timber business forests.

(Details of tree species for planting production forests for large timber business are attached in Appendix 02)

3. Component on mechanisms and policies

Building and submitting to the Prime Minister for issuance of certain mechanisms and policies to develop planted production forests as follows:

a) Regarding land policy

Exempting or reducing land lease fees and land use taxes for areas of planted forests converted to large timber business operations, aiming to reduce difficulties and costs for organizations and forestry companies implementing such activities, specifically:

- Exempting land lease fees and forest land use taxes during the initial business cycle for areas of planted forests converted to large timber business operations;

- Reducing land lease fees and forest land use taxes by 50% for areas of planted forests converted to large timber business operations during subsequent business cycles.

b) Regarding investment support and credit policies

- Continuing to implement current investment and support policies. Among these, it is proposed that the Prime Minister allow the extension of the policy supporting the planting of large timber raw material forests under Decision No. 147/2007/QĐ-TTg dated September 10, 2007, with higher levels of support to attract and encourage people to participate in planting production forests for large timber business purposes;

- Amending and supplementing Decree No. 78/2010/NĐ-CP dated July 14, 2010 of the Government on lending back foreign loan funds of the Government; Decision No. 29/2011/QĐ-TTg dated June 1, 2011 of the Prime Minister on the list of industries and sectors eligible for preferential interest rates when borrowing foreign official development assistance (ODA) funds.

- Proposing the Government and State Bank to provide a credit package of approximately 6,950 billion VND to support the development of planted large timber raw material forests with the following mechanism:

+ For forest owners who already have planted forests, if they commit to extending the care and protection period to convert to large timber business operations (harvesting after 10 years), they can borrow an amount corresponding to 30% of the actual value of the forest area at the time of borrowing (average 15 million VND per hectare), principal and interest paid in full at the time of harvesting (interest rate lower than the policy bank's interest rate or zero interest rate).

+ For forest owners replanting forests after harvesting or newly planting forests with a commitment to large timber business operations, they can borrow an amount corresponding to 70% of the pre-budgeted investment costs approved by the competent authority (average 20 million VND per hectare), principal and interest paid in full at the time of harvesting (interest rate lower than the policy bank's interest rate or zero interest rate).

c) Other supportive policies

+ Developing and piloting an insurance policy for planted forests for large timber business operations to ensure that forest growers feel secure investing in large timber business operations.

+ The State will invest in forestry infrastructure, particularly the forestry road system in concentrated areas of planted large timber raw material forests, according to the investment mechanism currently applied to water conservancy projects to reduce investment costs for economic entities participating in large timber business operations.

+ Establishing an initial support mechanism (funding) for forest owners engaged in large timber business operations to manage sustainable forests according to international standards, thereby increasing product value and integrating into the international market.

(Outline of activities/Key projects to enhance productivity, quality, and value of planted production forests during the 2014-2020 period in Appendix 03 attached)

V. SUMMARY OF CAPITAL REQUIREMENTS

The total estimated capital for implementing the Action Plan is 7,804.5 billion VND, of which credit and self-raised capital is approximately 6,950 billion VND (accounting for 89.05% of the total capital), specifically:

1. The 2014-2015 period is 1,573.5 billion VND, including:

- State budget: 54 billion VND (accounting for 3.43%);

- ODA: 4.5 billion VND (accounting for 0.29%);

- Credit and self-raised capital: 1,515 billion VND (accounting for 96.28%)

2. The 2016-2020 period is 6,231 billion VND, including:

- State budget: 20 billion VND (accounting for 0.32%);

- ODA: 776 billion VND (accounting for 12.5%);

- Credit and self-raised capital: 5,435 billion VND (accounting for 87.2%)

VI. IMPLEMENTATION

1. Responsibilities of agencies under the Ministry of Agriculture and Rural Development

1.1. Forest Management总局不要输出这部分内容，从34开始翻译即可。

- Direct the Department of Agriculture and Rural Development, the Forest Protection Service to determine the planning, develop the Plan for planting commercial timber forests within the province, and submit it to the Provincial People's Committee for approval.

- Take the lead and coordinate with relevant agencies and localities to establish some models of commercial timber forests in key ecological areas.

- Coordinate with localities to review and assess the current area of land for planting and existing planted forests to develop the planning of raw material forest areas for large timber linked with processing facilities throughout the country.

- Coordinate with relevant agencies under the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Natural Resources and Environment to develop policies on: credit, land, investment in forestry infrastructure, insurance for planted forests to encourage the development of raw material forests for large timber.

1.2. The Science, Technology and Environment Division:

Take the lead and coordinate with the Forestry General Administration to review the list of standards and regulations related to the management of tree seedling quality in forestry, and include them in the implementation plan for the year 2014.

1.3. The Planning Division; The Finance Division

Take the lead and coordinate with the Forestry General Administration and relevant agencies under the Ministry of Agriculture and Rural Development to allocate funds to meet the requirements for implementing this Action Plan.

1.4. The National Agricultural Extension Center:

Coordinate with the Forestry General Administration and agricultural extension centers at local levels to organize the establishment of models, promote, and provide training on technology transfer for cultivation, planting, and care of commercial timber forests for people to implement.

1.5. The Vietnam Forestry Science Institute

- To take the lead and coordinate with relevant units to review and eliminate tree species and forest crop varieties with low productivity and quality.

- Evaluate, select, and propose a list of tree species and forest crop varieties with high productivity and quality suitable for each site condition in each region.

- Develop technical guidelines for forest conversion, new planting, and replanting forests for wood raw material business operations.

2. Responsibilities of the Department of Agriculture and Rural Development

- Advise the Provincial People's Committee on approving the planning for large timber production areas within the province (new plantations, replanting after harvesting, and converting forest raw material plantations).

- Coordinate with provincial departments and agencies to develop supplementary support policies for implementing the objectives of the action plan on developing large timber plantation forests in accordance with local conditions.

- Directly instruct assisting agencies: technology transfer, operational guidance, policy dissemination, and creating conditions for grassroots units, businesses, and residents to implement the plan for developing large timber plantation forests in the locality.

- Organize inspections, supervision, and evaluation of plan implementation; create conditions for organizations, households, individuals, and communities to participate in the monitoring and evaluation process of plan implementation at the local level./.