Factors Impacting Marketplace Success of Community Forest Enterprises: The Case of TIP Muebles, Oaxaca, México

Abstract

In most developing countries where local community ownership is common, successful forest conservation initiatives must be adapted to engage and train rural communities. Decentralization of decision-making and stewardship by the State is required to maintain forests as a common good with extended benefits to society. Despite a tendency to operate in isolation, three Oaxacan community forest enterprises (CFEs), Textitlan, Ixtlan and Pueblos Mancomunados, have vertically integrated from forest management to retailing furniture through a company: TIP Muebles. This exploratory study aims to provide insight and outline the factors impacting the ability of CFEs to succeed in the marketplace given the fact that each deals with the same regulation structure of public forest policy. The results of this research suggest that the main challenges are related to human capital, regulatory challenges and centralized forest policy for forest product production, the taxation system for timber production, and endogenous factors such as the forest quality and the decisions based on tradition rather than efficiency. In this context, the integration of chains of production is a fact in only a few cases and financial success continues to be slow. The studied CFEs are resilient and slightly surpassing the profitability threshold despite the challenges identified. Adaptation of their decision-making structure allows them to face the changing dynamics of the market. More democratic approaches to decentralization of Mexican forest policy, trust development between social and private enterprises, and an improvement in internal CFEs systems could offer opportunities for improved competitiveness for CFEs. CFE strategies need to be understood as part of a complex rural livelihood where diversification of income generating activities often conflicts with competitive and specialized production.