INTERNATIONAL TROPICAL TIMBER ORGANIZATION

I T T O

PROJECT DOCUMENT

TITLE DEVELOPMENT OF MARKETING CHAINS FOR EUCALYPTUS CITRIODORA ESSENTIAL OILS – A NON-TIMBER FOREST PRODUCT WITH HIGH ADDED VALUE – BY VILLAGE COMMUNITIES IN THE CONGO

SERIAL NUMBER PD 364/05 Rev.4 (I) COMMITTEE FOREST INDUSTRIES SUBMITTED BY GOVERNMENT OF THE REPUBLIC OF CONGO ORIGINAL LANGUAGE FRENCH . SUMMARY Essential eucalyptus oils constitute a high value-added non-timber product. Current research work conducted in Congo by the Multi-disciplinary Food and Nutrition Research Team (Equipe Pluridisciplinaire de Recherche sur l’Alimentation et la Nutrition - EPRAN) of the Marien Ngouabi University in collaboration with the University of Clermont-Ferrand, France, have shown that essential oils from Eucalyptus citriodora extracted in Congo do possess qualities that could make them competitive on the international market: relatively high oil concentrations (over 5% dry matter) and no less than 90% citronellal contents (valuable essential and medicinal oils). Current international market prices for these oils are around US$ 400/kg. This means an opportunity for the Government to help rural communities raise their incomes under Governmental poverty-alleviation policies targeting rural areas. The project aims at Contributing to poverty alleviation in rural areas through the value-added processing of non-timber forest products such as essential oils of eucalyptus citriodora, and fulfilling the Government’s commitment to develop community and private forest plantations. EXECUTING AGENCY SERVICE NATIONAL DE REBOISEMENT (SNR) – NATIONAL

REFORESTATION SERVICE DURATION: 24 MONTHS APPROXIMATE UPON FINANCING STARTING DATE BUDGET AND PROPOSED: Contribution SOURCES OF FUNDING Sources in US$ ITTO 480,511 Gov of Congo 141,750 TOTAL 622,261

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CONTENTS

PART ONE: CONTEXT 4

1. Origin 4 2. Sectoral policies 4 3. Operational programmes and activities 4

PART TWO: THE PROJECT 6

1. Project objectives 6 Development objectives 6 Specific objectives 6

2. Project justification 6 Problems to address 6 Situation expected at project completion 8 Project strategy 8 Target beneficiaries 10 Technical and scientific aspect 10 Economic aspects 14 Environmental aspects 15 Social aspects 15 Risks 15

3. Outputs 16 3.1. Specific objective 1 16 - Output 1.1. 16 - Output 1.2. 16 - Output 1.3. 16 3.2. Specific objective 2 16 - Output 2.1. 16 - Output 2.2. 16 - Output 2.3. 16

4. Activités 16 4.1. Output 1.1. 16 - Activity 1.1.1. 16 - Activity 1.1.2. 16 - Activity 1.1.3. 16 4.2. Output 1.2. 16 - Activity 1.2.1. 16 - Activity 1.2.2. 16 - Activity 1.2.3. 16 - Activity 1.2.4. 16 - Activity 1.2.5. 16 4.3. Output 1.3. 17 - Activity 1.3.1. 17 - Activity 1.3.2. 17 4.4. Output 2.1. 17 - Activity 2.1.1. 17 - Activity 2.1.2. 17

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4.5. Output 2.2. 17 - Activity 2.2.1. 17 - Activity 2.2.2. 17 4.6. Output 2.3. 17 - Activity 2.3.1. 17 - Activity 2.3.2. 17

5. Logical Framework matrix 18 6. Work Plan 20 7. Project Budget 23

7.1. Inputs and unit costs 23 7.2. Overall project budget by activities 24 7.3. Yearly consolidated project budget 27

PART III: OPERATIONAL ARRANGEMENTS 29

1. Management Structure 30 2. Monitoring, reports and evaluation 31 3. Future operations and maintenance 31

PART IV: TROPICAL TIMBER FRAMEWORK 32 1. Compliance with the objectives of ITTA, 1994 32 2. Compliance with ITTO Action Plan and Priorities 32 ANNEXES 33

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LIST OF ACRONYMS INCLUDED IN THE PROJECT AIBT / ITTA : International Tropical Timber Agreement A2PF : Support Unit for Private Forest Plantation Establishment CCA : Caisse Congolaise d’Amortissement (Congolese Depreciation Fund) CEDEAO (ECOWAS) : Economic and Customs Community of West African States CFC : Common Fond for Commodities CIRAD : Centre de Coopération Internationale en Recherche Agronomique pour le

Développement (Centre for International Cooperation in Agronomic Research for Development)

CNUCED /UNCTAD : United Nations Conference on Trade and Development CTFT-Congo : Centre Technique Forestier Tropical du Congo (Technical Centre for

Tropical Forestry in Congo) EPRAN : Multidisciplinary Research Unit on Food and Nutrition (a Congolese

institution) FAO : Food and Agriculture Organization Ha : hectares HT : Hors taxes (Before Tax) Kg : Kilogram KM 45 : Kilometre 45 L : Litre MEF : Ministry of Forest Economy OIBT / ITTO : International Tropical Timber Organization OIM / IOM : International Organization for Migrations NGO : Non-Governmental Organization PAFN / NFAP : National Forest Action Plan PFNL / NTFP : Non-Timber Forest Product PIB / GDP : Gross Domestic Product PNAE : National Environment Action Plan RDC / DRC : Democratic Republic of the Congo SNR : Service National de Reboisement (National Reforestation Service) UPARA : Unité Pilote d’Aménagement, de Reboisement et d’Agroforesterie (Pilot Unit for

Forest Management, Reforestation and Agroforestry) UR2PI : Research Unit on Industrial Plantation Productivity USD : US Dollars

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PART ONE: CONTEXT 1. ORIGIN Under its continuous commitment to seek long-term solutions to improve the livelihood of rural communities in order to achieve the development of the Congolese hinterland, the Government intends to have the forest sector significantly contribute to the GDP through the sustainable use of the forest resource base. In this prospect, the value-added development of forest resources has been selected as one primary short- to long-term focus of actions likely to generate relatively substantial revenues for the benefit of these communities. Drawing from the scientific and technical knowledge developed by the Governmental agency in charge of reforestation activities and building on the progresses and research findings achieved by the local multi-sector research community in value-added development of forest produces, and taking advantage of the relatively attractive prices reached by some non-timber forest products (pine resins, Eucalyptus essential oils, etc.) on the international market, the Government has initiated this Project in order to enable rural communities to improve their livelihood. 2. SECTORAL POLICIES

The proposed Project is in line with the provisions of Law 16/2000 of 20 November 2000 providing the Forest Code, including its Article 45 which stipulates that the Water and Forest Administration oversees the local, regional and national management plans in order to ensures that activities authorized in the National Forest Estate should be conducted in ways that avoid its destruction and secures its sustainability and rational expansion and use. These activities should be conducted in pursuit of the rational management of forest resources; the current management principles are sustained yield of forest resources that also provides for the conservation of forest ecosystems and biodiversity. This project is also consistent with Law N° 003/91 of 23 April 1991 on environmental conservation, having as governing principle, inter alia, to maintain, rehabilitate and protect/conserve natural resources. 3. OPERATIONAL PROGRAMMES AND ACTIVITIES

The proposed Project is consistent with the goals of ITTO Action Plan and Objective 2000, and it is in line with the National Forest Action Plan whose strategies are based on sustainable forest management principles, including the reforestation of overexploited forest, the afforestation of savannah lands and gallery forests, the rehabilitation of degraded closed forests using valuable tree species in order to secure forest productivity and sustainability together with the continuous supply raw material to local timber processing units. This Project is also relevant to the National Environmental Action Plan (PNAE) whose goals are to promote rational and environmentally sound management of natural resources in order to secure their future sustainability. The Project will maintain scientific and technical partnership links with the following structures:

- Unité de Recherche pour la Productivité des Plantations Industrielles (UR2PI) / Research Unit for Industrial Plantations Productivity – The contribution of this institution will take the form of appropriate silvicultural treatments leading to optimal foliage biomass harvests for these essential oils ;

- The Multi-disciplinary Food and Nutrition Research Team (EPRAN) – This institution is currently testing essential oil extraction processes which have already proved conclusive both in terms of product quality and extracted volumes. It will contribute to the Project by organizing and providing basic training to communities in essential oils extraction technologies using hydro-distillation methodology (a simple methodology used with professional expertise by communities in some producer countries) and by conducting advanced and continuous research aimed at yielding optimal volumes of extracted oils.

These complementarities will be achieved under a partnership whose terms are to be defined by mutual agreement. The effective involvement of NGOs, Civil Society organizations and private stakeholders will

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be critical for the promotion of private forestry underlying the Project. The various project areas selected are easy to access and they contain tracts of land large enough to accommodate plantations to be established by village communities under the supervision of the Service National de Reboisement (SNR) as part of the governmental policy to promotion private and community forestry.

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PART TWO: THE PROJECT

1. PROJECT OBJECTIVES Development Objective

Contributing to poverty alleviation in rural areas through extension and outreach activities aimed at disseminating techniques to extract essential oils from planted E. citriodora.

Specific Objectives

1.1 Introducing essential oil extraction techniques to village communities 1.2 To create a marketing chain for essential oils.

2. PROJECT JUSTIFICATION

Problem to address The Government of Congo is currently exploring several strategic areas in its poverty alleviation policy, including multiform forest resource development actions as priority focus. The problem tree below illustrates the problem to address in the implementation of this project The implementation of the proposed project will enable the Government to lay the foundations of sustainable development in the communities located within the project area by relying on the development and value-added processing of non-timber forest products derived from forest plantations. For the past two decades, Congo has been demonstrating its capabilities to successfully afforest savannah lands using clones of fast-growing exotic species, including Eucalyptus spp. To-date, almost 50,000 ha of Eucalyptus clone plantations have been established for pulp and paper production. In the perspective of non-timber product development, Eucalyptus essential oils extraction processes are being tested by the EPRAN team of the Marien NGOUABI University, in collaboration with the University of Clermont-Ferrand, France. The most promising results to date have been obtained for the Eucalyptus citriodora species, whose oil quantities extracted per hectare on a six-month old plantation (1111 tree stems/ha) can yield a cash income up to USD 4,000 (Mapola, 2003). As the Government recognized this economic opportunity, it initiated this project in order to disseminate techniques to extract essential eucalyptus oils in rural areas and enable the local communities to raise their income levels and hence improve their socio-economic situation. However, E. citriodora is not being used in dedicated community plantation projects. That is why, in parallel to the implementation of this project, the Government considers using its reforestation agency to provide rural communities incentives and guidance to establish their own plantations, in compliance with the governmental policy to promote community plantation forests; the final goal being to make Congo a major producer and exporter country for Eucalyptus essential oils based on relevant village community industries.

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Problem Tree

Poverty-stricken rural communitiesl

Lack of job opportunities

Farming generates only modest revenues Farm production difficult to assess

Forest resources very limited in both quantities and diversity

No SMI or SME in most communities included in the project area

Relatively poor soils Difficulties to access inputs and improved seeds

Lack of logistical support to farming

Road infrastructure largely derelict

Community lands covered by large tracts of savannah

Forest areas relatively reduced

Idleness among the young with risks to lapse

into crime

Rural communities barely accessing

health care services

Youngsters and children having

no access to viable school

education

Under-nourishment rampant among rural

communities, incl. children

Loss of farm production through deterioration

Intensive harvesting activities in shreds of forest for firewood and non-timber forest products

Precarious livelihood of rural communities

Degradation of ecosystems: germplasm depletion (genetic erosion) and/or elimination of the rare existing residual forests, soil erosion

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Situation expected at project completion At project completion stage, the village communities concerned will have

− gained the required technical expertise to undertake essential oils extraction operations and to market these essential oils – a non-timber forest product highly sought-after on the international market (see marketing websites www.aroma-zone.com ; www.armenza.com ; www.neroliane.com)

− private plantations and the knowledge of planting and plantation management techniques for oil extraction purposes

− training in essential oil production-and-marketing chain establishment procedures − Extraction equipment and the opportunity to work as a groupement villageois d’intérêt commun

(community group enterprise)

This transfer of know-how will be the keystone of the promotion drive for forest species cultivation on Congolese territory. Project Strategy

Since the 70s, the Republic of the Congo has developed a globally-acknowledged experience in Eucalyptus silviculture and clone plantation management – with some 50,000 hectares of plantation established in the Kouilou Department. All strategies linked to an increase in plantation productivity have been implemented in close collaboration with scientific research institutions such as CTFT-Congo (now UR2PI), CIRAD (Montpellier, France) the Marien Ngouabi University (EPRAN). With the collaboration between UR2PI and Service National du Reboisement (SNR), initiated in 2005 in the Madingo-Kayes sub-prefecture, further achievements have included the promotion of private community plantations as poverty alleviation activity (the Kouilou Ecosystem Management Project; the GECKO Project). Through these projects, an organizational support was provided to farmers with incentives to establish multipurpose agro-forestry parcels – fruit tree orchards, firewood plantations, subsistence crop, etc. The results achieved to-date are very much appreciated by the communities and the local authorities and governmental authorities; hence the instruction to have this pilot project and its impact replicated in other departments of Congo. In line with these initiatives, the purpose of this project is to promote the creation of sustainable income among rural communities while at the same time contributing to environment protection actions. Indeed, contrary to fuelwood harvesting, which involves logging activities on plantation stands, essential oil extraction activities only implies the gradual harvesting of tree leaves, while the whole tree remains standing for a relatively long period of time. On the subject of organising village communities, there is notable reluctance among Congo communities to form group enterprises. This type of organisation is still budding in Congo. The SNR’s mission includes the goal to facilitate the formation of community enterprises as in Cameroon and other countries. Currently, the SNR has some experience in village community organization in some of the localities mentioned in the project. The SNR’s policy is to promote the establishment of private or community forest and/or agroforest plantations. The approach is to convene meetings of stakeholders (local authorities, customary land chiefs, communities), in order to conduct outreach work and hear their claims, grievances and expectations. Through the compromises reached during these work sessions, the plantation establishment process can take place, with the SNR taking charge of the technical aspects of operations. Community access to financing opportunities will follow a two-tiered approach (no sum of money will be paid directly to the communities):

1- Government subsidies through the SNR budget in the form of seedlings sold and services provided at reduced cost. The forests to be established will be the property of the village communities. At this level, the SNR will work together with farmers to identify sites until the production units can be established. To establish plantations, after the sites have been identified, SNR will submit a price quotation clearly stipulating the respective responsibilities of each party.

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2- Training of communities in plantation and essential oil extraction techniques. As indicated above, farmers’ training will be a continual process. SNR only works when the farmer is present and at field-level and uses this opportunity to train him on technical procedures. In some instances, farmers were invited to join in more technical/vocational training courses (e.g. for farmers with a high-school level of education).

3- Essential oil extraction equipment made available to the communities during project life, providing capital input to the communities and hence an opportunities for each production group to acquire its own equipment. Initially, the project will provide each site with its own oil extraction and preservation equipment; subsequently, all actions in relation to the marketing chain will be coordinated by SNR. All these procedures will be implemented with deep community involvement; technological transfer will be a continuous process.

This entire series of activities will be coordinated by the Service National de Reboisement (National Reforestation Service) in the following way:

- Establishing 100 hectares of community plantations in the villages using the Eucalyptus citriodora introduced in 4 locations in the Congo Republic (Loandjili in Kouilou Department; Loudima in Bouenza Department; at PK45 in the Pool Department and Djambala in the Plateaux Department),

- Establishing 25 hectares of plantation in each location, to be distributed among organised or to-be-organised households or producer groups,

- Identifying households and groups in each location / community. Each identified household or group will be selected on the basis of a tenurial claim (validated as customary land rights and/or through village committee's testimony, etc.)

- The National Reforestation Service will coordinate activities relating to the organisation of village groups, the support of seedlings, technical guidance and backstopping services for plantation establishment, plantation management and essential oil extraction.

- The establishment and maintenance of plantations will be ensured by members of production groups and/or households,

- Each locality will be equipped with an extractor to be used for learning extraction techniques and to extract the products from the community plantations. At project completion, these extractors will become the property of village communities in the localities and placed under the responsibility of Village Committees. One key aspect of this organisation will consist in requiring from each group the payment of a “10-per cent contribution” (indicative figure) on sales receipts. This contribution will accrue to a joint financial account to meet the equipment maintenance costs during and after project implementation. This account will be domiciled in a local micro-financing establishment (Mucodec or other) and managed by a Committee to be established by the producer groups, including Village Committees.

Regarding the Democratic Republic of Congo (DRC), the plantations to be established, over some 20 hectares, are for training purpose, i.e. they are exclusively destined for training local stakeholders in the establishment of Eucalyptus citriodora for essential oil extraction. It should be recalled that in the Democratic Republic of Congo, a plantation development project was undertaken in the early 1980s with European funds some 150 km to the north-east of Kinshasa, in the Mampu and Kinzono savannah lands. Within a few years, some 7,000 ha had been planted, mainly with Acacia auriculoformis. In parallel with these activities, the National Reforestation Service (SNR) of DRC had established a training centre and tree nursery in support of plantation projects, initially planned to cover 100,000 ha. Land tenure conflicts, aggravated by political strife, had jeopardized the future of these planted forests. Faced with these difficulties, the State took pragmatic steps and disengaged itself from the venture, not by abandoning it altogether but by promoting the emergence of the private sector, which became involved with the technical support of the Hans Seidel Foundation (HSS). A fresh momentum soon developed with the establishment of an effective production, processing and marketing industry for products from these plantations leased under concession. This Project will build upon and benefit from this experience to promote a newly-created value-adding processing industry for NTFPs from these planted forests. One asset of DRC is the existence of organized target groups: communities, farmers and micro-investors, direct operators of plantation establishment and management ventures; development supporting agencies (especially developmental NGOs). These twenty hectares will be distributed among several target groups to be identified in RDC jointly with RDC partners.

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Target Beneficiaries

- Rural village community cooperatives, NGOs, communities and private individuals identified in the scope of the project ;

- The National Reforestation Service (SNR) who will be given the opportunity to enhance its knowledge and experience in essential oils extraction practices ;

- Scientific research institutions (concerned with forestry and others areas) who will conduct research in a field hitherto unexplored ;

- The Government who will make significant advances in its policy to combat poverty, including through the diversification of income sources in rural areas.

Technical and scientific aspects Functions and properties of essential oils Eucalyptus spp. belong to the Myrtaceae family and for the most part are rich in essential oils. Among the 700 species identified in the Eucalyptus gender, over 200 have been studied for their volatile extracts; less than 20 have been exploited at an industrial scale, and only four or five are still being used this way (Molangui, 1977). According to their chemical composition and use, commercial grade eucalyptus oils fall into three classes (table 1).

− Essential oils for medicinal use, rich in 1,8-cineole (also called eucalyptol – a major component of camphor-scented essential oils);

− Essential oils used in perfumeries, where citral and or citronellal, geranyl acetate, or (E) methyl cinnamate are sought after as dominant components (in lemon-scented essential oils).

− Essential oils used in the manufacturing industry, where organic compounds α-Phellandrene or piperitone are dominant.

Table I : Percentages of main components and yields in commercial-grade Eucalyptus essential oils

E. Species and uses Main component % Yield * Medicinal Essential Oils E. dives (cineole variety) E.globulus E. polybractea E.viridis E. radiata (cineole variety) E. smithii

1,8 cineole 1,8 cineole 1,8 cineole 1,8 cineole 1,8 cineole 1,8 cineole

70-75 70-85 70-93 70-80 70-75 70-80

3.0-6.0 0.7-2.4 0.7-5.0 1.0-1.5 2.5-3.5 1.0-2.2

Essential oils used in perfumeries E. citriodora (“type” variety) E. macarthuii E. sp. nov. Aff. campunulata

Citronellal Geranyl acetate, Eudesmol (E)-Methyl Cinnamate

65-80 60-70, 15-50 95

0.5-2.0 0.2-1.0 1.6-6.1

Essential oils used in industry E. dives (phellandrene variety) E. dives (piperitone variety) E. elata (piperitone variety) E . radiata

Phellandrene Piperitone Piperitone Phellandrene

60-80 40-56 40-55 35-40

1.5-5.0 3.0-6.5 2.5-5.0 3.0-4.5

*yields obtained from fresh leaves (Molangui, 1977) Beneficial health-properties Eucalyptus citriodora essential oil is active against muscle and joint inflammation. It is therefore highly recommended in the case of rheumatic fever, tendinitis and arthritis. As with Eucalyptus globulus, Eucalyptus citriodola is by far preferable for external application. Synergies have been documented with forest pine and litsea cubeba (www.neroliane.com). Properties Antiseptic, Bactericidal, Deodorant, Disinfectant, Air-freshener

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Uses in perfumeries Typical strong smell with a marked camphor scent. To add fragrances to cleaning products and mouth hygiene products are the main end-uses. The table below shows the chemical characteristics of essential oils produced in the Congo, with the 4 tested E. progenies. Pic N°

Identified components Z438 Z439 Z442 Z443 Z444

1 α Pinene 0.03 0.04 0.06 0.05 0.03 2 β Pinene 0.13 0.16 0.12 0.12 0.10 3 Myrcene 0.04 0.04 0.05 0.04 0.05 4 1.8 Cineol 0.17 0.28 0.31 0.27 0.21 5 Linalol 0.75 0.10 0.36 0.25 0.13 6 Pulegol (1)* 0.96 1.58 1.32 1.47 0.90 7 Citronellal 89.77 88.29 88.52 89.15 90.42 8 Pulegol (2)** 0.40 0.41 0.59 0.34 0.46 9 Citronellol 5.13 6.39 5.98 5.79 4.95 10 Eugenol 0.08 0.69 0.24 0.76 0.18 11 Eugenol Methyl 0.11 0.16 0.08 0.13 0.12 12 Caryophyllene 0.35 0.33 0.35 0.34 0.30 Recorded contents vary between 88.29% and 90.42%. The highest contents have been obtained with E. progeny Z444. It clearly appears in this table that essential oil produced with the tested progenies of Eucalyptus citriodora in the Congo Republic has a high Citronellal content (82-90%), and followed by Citronellol (2-6%). The physicochemical properties of samples tested in the Congo Republic show that the relative densities of these oils vary in a very narrow band between provenances (d=0.86). In technical terms, basic training in essential oils extraction techniques will be based on existing eucalyptus estate plantations within the forestry operational sites of the Service National de Reboisement (SNR) located in the vicinity of villages and on those community plantations to be established with SNR support, in parallel with the project. This latest approach will be followed with the communities organized and grouped in NGOs, rural cooperatives, civil society/trade organizations as well as with private stakeholders. Basic training in essential oils extraction technologies will be provided by EPRAN’s research and technical staff with the support of one International Expert. EPRAN is currently developing extraction processes for Eucalyptus citriodora essential oils using the hydro-distillation technology. The research and development results achieved by EPRAN to-date show relatively high oils concentrations (up to 5% dry matter) with at least 90% citronella content. These results suggest a sales turnover of about US$ 4,000 per hectare, to be derived from the marketing of around 10 Kg/ha essential oil that can be extracted from the dry matter of Eucalyptus citriodora leaves from a 6-month old plantation having a 1111 stems/ha density (Mapola 2003). Aged 15 months, average recorded outputs in Kg/ha reach 12,432.83 Kg essential oils and 10,901.72 Kg essential oils for the two most productive varieties. It should be noted that the extraction process is being undertaken using rather basic, locally adapted, types of equipment. Therefore, a slightly higher turnover can be foreseen through the use of modern extraction tools. NB : - Five per cent (5 %) is the essential oil contents obtained from the dry matter of eucalyptus citriodora leaves

- Ninety per cent (90 %) is the percentage value of the main ingredient of essential oils, i.e. Citronellal

- The remaining 10% is the sum of other ingredients comprised in these oils, as indicated in the table above.

Essential oil extraction using the hydro-distillation process established by EPRAN is very simple and easily transferable to local farmers; only limited equipment is required: a pressure cooker, a cooling apparatus, one precipitation vessel and duct works (to conduct the steam). The raw material consists in E. citriodora leaves.

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It is worth mentioning that the assistance to be provided by SNR to the village communities as part of their plantation establishment activities (in parallel with project implementation activities) will be governed by an Agreement to be entered into by SNR’s management division and these communities. The communities will be expected to meet the following criteria:

- having access to a cleared land plot of at least one (1) hectare: this minimal area will enable the promoter (an individual or a group) to achieve sales figures in the region of US$4,000 after six months;

- demonstrating a commitment to planting activities; - to provide the manpower required for all operations (both silvicultural and extractive); - to buy seedlings and services from SNR at reduced costs.

The obligations of SNR – the Executing Agency of the project – will be as follows:

- providing logistical support (including making some plantations available) and equipment (extracting machines, etc.) to the individuals and entities selected for training. Extraction equipment required for the project are justified in that from the 15th month onwards, a plantation produces dry biomass estimated as 2933.04 kg/ha, which means substantial quantities to be processed for oil extractives when considering the 100 ha planned for under the project, especially when production outputs will be higher: 12,432.83 kg essential oils and 10 901, 72 kg for the two most productive varieties respectively.

- having the technical expertise required for the execution of various essential oils extraction and marketing activities.

In scientific terms, multisectoral research structures will contribute technical research and development work aimed at identifying appropriate technologies and producing optimal quantities of oil (with appropriate silvicultural practices and planting stocks).

Eucalyptus citriodora estate plantations to be dedicated to training activities in essential oils extraction techniques are those established or to be established in the following SNR forestry stations:

- Loandjili Forest Site in the Pointe-Noire peri-urban area (existing plantations) ; - Loudima Forest Site in the Bouenza Département areas (existing plantations); - Km-45 Forest Station in the Pool Département (existing plantations); - Djambala Forest Station in the Plateaux Département (plantation to be established).

On these sites, SNR employs village community members who have already acquired a relevant experience and who would provide a pool of potential stakeholders ready to promote the activities of the project after having been appropriately screened. To elaborate the marketing strategy, the SNR will collaborate with Ministry of the Small and Medium-size Enterprises (Ministère des Petites et Moyennes Entreprises, chargé de l'artisanat), which in their policy make the promotion of the private companies and especially encourages the woman to take part in the formation of these companies. Then the chambers of commerce make the follow-up of these companies. There are expressions of interest of potential buyers and promoters, because the characteristics of produced oils are interesting for them, these buyers even wish to install on the production sites the units for conditioning of these oils for the export market. Marketing activities (market survey, product positioning strategy, etc.) will be conducted in consultation with experts of the Marien Ngouabi University (EPRAN) and University of Clermont-Ferrand, authorized sub-contractors as well as ITTO experts, as well as through exchanges with colleagues of the West African area (Bénin, Togo and Côte d’Ivoire) having an experience of promoting and marketing various essential oils. These exchanges will enable the compilation of useful data for producers. Specifically, the mission of the resource persons referred to above will be to assist producers in identifying markets and establishing sustainable marketing channels. Similarly, the Chamber of Commerce and Industry (under the administrative authority of the Ministry of Commerce) and the Agence Nationale de l'Artisanat (national agency for the promotion of artisanal trades) under the administrative authority of the Ministry of Small- and Medium-sized Entreprises, in charge of artisanal trades, are also approached for sharing their know-how and experience in the marketing of the essential oils to be produced by the village communities, both at national and international levels.

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Although these are public institutions, they are nevertheless engaged in the effective promotion of private enterprise through the provision of incentives to communities for the establishment of small- and medium-size enterprises, and they support their management (who they seek financing through micro-credits, are looking for market niches and strive to manage resources rationally). Partnership links will be established with the experts referred to above to help producer identify and create sustainable marketing channels. The National Reforestation Service in their role as facilitator and operational interface will provide training to the communities for the production of essential oils up to marketing stage. A production and storage unit will handle oils packaged in appropriate bottles; the unit will be based in each of the sites selected for the project. Each unit will be equipped with a cold-storage unit. Contacts with buyers will be managed by the SNR and the revenue will be transferred to the communities. Potential buyers and promoters which have already expressed their interest are listed below:

• AROMA-Congo, structure informelle, contact M. Gatien MASSAMBA, Adresse 30, rue Dangani, Meteo, Brazzaville, pharmacy suppliers.

• SANTE & NATURE, contact E-mail : santenaturemoringa@yahoo.fr, medicine, bath accessories,

and savonnerie

• Professeur Thomas SILOU, EPRAN, Université Marien Ngouabi, BP : 89, Brazzaville, E-mail : thsilou@yahoo.fr (resource person for the collaboration between Benin et la France)

• Mme Marguerite HOMB, Resposible for the missions in the Ministry of the Small and Medium-

size Enterprises, contact: training_congo@yahoo.fr

• AFRICADE c/o EURADA, 12, avenue des Arts, Bte 07, B-1210 Bruxelles, Email : aggreygustave@yahoo.fr, supplier of essential oils for Belgium

• TBD France Import Export, 1 boulevard Garibaldi ; F-92130 – Issy – Les Moulineaux, contact

Email bantsimbadidace@yahoo.fr, supplier of essential oils for Asia and Europe (Vietnam, France, Belgium)

Making use of above mentioned contacts, the SNR will explore the drivers for the expansion on essentials oils in alternative medicine markets, and will help to train communities in establishing economic partnerships. As the domestic market for this type of product is still fledgling, and pending its structuring under the project (including the soap-making sub-sector), early production will be retailed on the sub-regional market (including in neighbouring Democratic Republic of Congo) and other ECOWAS countries where the cosmetic, perfume and soap-making industries have expressed relatively important demand in essential oils. However, the risk of overproduction in relation to demand is a real one. This constrain can be addressed in three ways:

- Regulating production from the onset based on indicators to be set forth by the marketing expert after assessing both existing and potential markets;

- Keeping in cold chambers any production surplus pending better marketing opportunities; - Managing the resource base: research work have led to the definition of technical procedures

relating to the coppice plantation management and have shown that leaves from tree-stump shoots have higher essential oil contents.

Essential oils can be stored for long periods (over a year) in ordinary refrigerators without affecting their quality standard.

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Economic Aspects

An essential oils trade based on low-cost production will undoubtedly contribute to enhance the share of the forest sector contribution to GDP. The assumption that the project starting in four Départements (among those most easily accessible to date) could quite rapidly expand to other areas of the national territory with fair chances to succeed is indeed a foreseeable outcome considering Government’s policies to have the hinterland of the country linked up with areas economically more active and with better communication networks. Similarly, the production of essential oils in rural areas can also be made economically viable by the “neo-rurals” section of the population, who has shown a willingness to seek investment opportunities in promising agricultural and agroforestry activities. The future success of the Project can lead them to establish industrial plantations for this purpose, and employ a significantly large manpower from these rural areas. The selection of the afore-mentioned communities as locations to implement the project takes into account the level of unemployment, general lack of occupation and economic precariousness in the local youth and obviously the close proximity of a SNR station. Whether the local promoter of the project be a relatively wealthy private owner or a village cooperative, the manpower he or it will hire to establish plantations and execute several other oil-extracting operations will necessarily be local. For this personnel, this will mean direct (salaries) and/or indirect income to be derived from the installation of a social infrastructure, considering the somewhat substantial profits to be generated by the sale of essential oils. As an indication, the operational profits that are to be derived from a one (01) hectare plantation after the first six (06) month campaign can be estimated as follows: I- Costs relating to the implementation of a forest plantation with fast-growing species and a starter fertilization: ~ 190 000 FCFA Details Value of seedlings in nursery: 27 775 FCFA / ha Manual land preparation (tillage): 60 000 FCFA /ha Planting: 4 000 FCFA/ha Fertilization: 88 000 FCFA /ha Maintenance: 10 000 FCFA /ha II- Cost of essential oil extraction Collection and storage of foliage biomass (1500 Kg/ha) 40 000 FCFA Extraction (10 L/ha = 1500 hours extraction process) 429 000 FCFA III- Capital Investments E. citriodora Plantation (cf. Costs I) 190 000 FCFA Extraction Equipment (distillation kit+bottles, net of tax) 410 000 FCFA IV- Other costs (transport, freight, taxes) 300 000 FCFA IV- Turnover (10 Kg /ha/harvest campaign) 2 160 000 FCFA V- Gross profit at first harvest 791 000 FCFA The sums entered above correspond to normal costs for the establishment of an essential oil production industry (from the establishment of the plantation to the extraction of the oils). However, it should be noted that under our project, the input from the communities will consist in providing manpower and land. Sales forecasts beyond project completion Eucalytus citriodora plantations established under the project will be coppiced to provide for two bi-annual foliage biomass harvests; which means that the profit indicated above for one-hectare plantation (FCFA

15

791,000) will be multiplied by two and the number of existing hectares (100 hectares of plantation planned under the project), i.e. an annual income of Fcfa 1,582,000 achieved on one hectare. In so doing, each locality/community can expect an annual income of Fcfa 39,550,000 for 25 hectares of plantation. This forecast of financial benefits to be derived from the project indicates that a relatively significant mass of money will circulate in the communities, with a definite economic and social impact to be expected there from.

Environmental Aspects The initial scope of this project – covering the Départements of Kouilou, Bouenza, Pool and Plateaux, includes – covers local communities relatively less endowed in natural forests and having savannah covering very large areas. In addition, some of these areas are characterized by hilly, broken terrain and landscapes fragilized in places by crops cultivation and bushfire, and they require to be conserved. The relatively sustainability of these plantations will help combating erosion in some fragile sites. Similarly, the expected rural communities’ enthusiasm for essential oils extraction to some degree will distract them from their current fuelwood and charcoal producing activities in residual natural forests – a highly damageable activity for the environment. Social aspects The project will also contribute to the social reintegration of demobilized youth following the cessation of the hostilities experienced by the country in the late 90s. Some of the youth living in those villages to be covered by the Project have already received a basic training in plantation techniques from SNR under the reintegration programme for discharged soldiers financed by the International Organization for Migration (IOM), and they may also be organized for this purpose. Village populations who will be the main beneficiaries will see their social environment improve through revenue increases that will make various goods and services affordable. Extension of project results Under the implementation of this project, it will be appropriate to maintain exchanges between stakeholders through discussion meetings and roundtables, seminars and training workshops. The National Reforestation Service is under the obligation of validating the project outputs through progress reports, scientific papers and the dissemination of data sheets among local communities, etc. It will be interesting however to hold a conference at project completion if funds for this effect are available. Risks

On the technical level, there will be almost no risks associated with this Project, especially when considering that citriodora is one of those Eucalyptus species that have adapted to the ecological conditions of Congo among the sixty odd species introduced here in the early 50s. It was tested in pilot plantations established in SNR reforestation areas mentioned above; it is a hardy plant species particularly resistant to termite attacks (FAO, 1953, 1974, quoted by Mwangi et al , 1981). Eucalyptus citriodora is even planted as an insect-repellent species around some crops. The species once attracted great interest as basic planting stock under the Eucalyptus genetic improvement programme in Unité de Recherche pour la Productivité des Plantations Industrielles (UR2PI), including for cross-breeding purposes with Eucalyptus torreliana to produce very rugged hybrids. Arguably, bushfire may constitute a constraint for these plantations, and hence also for oil extraction prospects. However, this risk will be overcome by regular tending and the maintenance of fire-breaks at the onset of the dry season (manual or mechanical weed control operations around the plantation grounds on a 10-to-15-m wide strip to avoid the penetration of uncontrolled fire into the plantation area). In view of the

16

interest these plantations will raise among the village communities, it can be safely assumed that the latter will become committed to protecting their “gold mine”. It should be noted that Congo has had a strong bushfire and forest fire prevention tradition through the continuous maintenance of firebreaks within plantations – such as those referred to in the above – the practice of controlled burning, and the planting of appropriate species such as cashew-trees along plantation boundaries in addition to permanent surveillance of plantations. However, the latter option is in any case very costly, especially for the budget of a local farmer or a modest village cooperative or grouping. The use of modern fire-fighting equipment and facilities would not yet be appropriate. In addition, since it was introduced in Congo, Eucalyptus citriodra never sustained any attack extensive or critical enough to cause the loss of a plantation. At the international level, the United Nations Conference on Trade and Development (UNCTAD), during its eleventh session (Sao Paulo, June 2004) identified a number of ways that developing countries may explore to promote trade in commodities. In addition, less advanced countries have expressed their position on the need to reduce trade barriers that prevent them from integrating in the global economy (Briefing Notes CNUCED XI, Evaluations and Prospects, August 2004) Nevertheless, if further risks were to emerge, the Caisse Congolaise d’Amortissement (CCA) remains the prime public partner to address the issues related to the risks. The involvement of CCA will be commensurate with the value of the products to be marketed.

3. OUTPUTS Specific Objective 1

To provide village community members with technologies and expertise required to extract essential oils.

Output 1.1: Development Programme for Eucalyptus citriodora essential oil extraction prepared Output 1.2: Trainers trained in essential oil extraction technologies Output 1.3: Production process organized Specific Objective 2 To create a marketing chain for essential oils. Output 2.1: Market for Eucalyptus citriodora essential oil organized Output 2.2: E.C. essential oil production and marketing techniques disseminated through extension

work Output 2 3: Monitoring, Evaluation and Research & Development organized

4. ACTIVITIES 4 1. Output 1.1: Development programme for Eucalyptus citriodora essential oil extraction Activity 1.1.1: Hiring of technical and supervisory project staff Activity 1.1.2: Preparation of reports Activity 1.1.3: Steering Committee meeting 4 2. Output 1.2: Training in essential oil extraction technologies effective Activity 1.2.1.: Procurement of required materials and equipment for both R. of Congo and DRC Activity 1.2.2.: Selection of demonstration sites in both . Rep. of Congo and DRC Activity 1.2.3.: Installation of equipment in both . Rep. of Congo and DRC Activity 1.2.4.: Training of trainers in both . Rep. of Congo and DRC Activity 1.2.5 : Training of local communities in essential oil extraction techniques in both . Rep. of Congo and DRC

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4.3. Output 1.3: Production organized Activity 1.3 2: Development of Project Work Schedule Activity 1.3 3: Production execution and monitoring

4.4. Output 2.1 :Market for Eucalyptus citriodora essential oil organized

Activity 2.1.1: Survey of domestic and international markets for essential oils Activity 2.1.2: Organizing essential oil marketing at international and domestic levels

4 5. Output 2.2: Eucalyptus citriodora essential oils production and marketing techniques disseminated through extension work

Activity 2.2.1: Development of an extension work programme Activity 2.2.2: Implementation of extension work in both . Rep. of Congo and DRC 4.6. Output 2.3: Monitoring, Evaluation and Research & Development organized Activity 2.3.1: Development of a monitoring, evaluation and Research & Development Programme Activity 2.3.2: Programme implementation

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5. LOGICAL FRAMEWORK MATRIX

PROJECT COMPONENTS OBJECTIVELY VERIFIABLE INDICATORS MEANS OF VERIFICATION KEY ASSUMPTIONS DEVELOPMENT OBJECTIVE Contributing to poverty alleviation in rural areas through extension and outreach activities aimed at disseminating techniques to extract essential oils from planted eucalyptus citriodora.

- 10 demonstration sites are in activity

as of the 7th month of the Project - 100 ha eucalyptus citriodora are available

by the 3rd month of Project life - 5 trainers have been trained as at the 5th

month of the project

- Consultants’ report - Programmes of activities - Progress reports

- skills and expertise available - the communities strongly support the project

SPECIFIC OBJECTIVES To provide village community members with the technologies and expertise to extract essential oils ;

To create a marketing chain for essential oils.

- 100 village community members have received training before the end of the 4th quarter of Project year 2 - Extraction techniques are implemented in 10 sites by the 10th month of project life - 1 ton of essential oils has been produced by the end of the 4th quarter of Year 2 - Markets for essential oils have been surveyed and organized by the end of the first quarter of Year 2 - Oil production and marketing techniques have been extended to 100% of targeted village communities by project completion date. - The research and development programme is operational by the end of the 2nd quarter of Year 2

- Training reports - Programmes of activities - Report of main consultants

- Potential Market - Qualified technicians

available

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LOGICAL FRAMEWORK (Cont’d)

OUTPUTS Output 1 1 1 :Development Programme for Eucalyptus citriodora essential oil extraction prepared Output 1 2 : Trainers trained in essential oil extraction technologies Output 1 3 : Production process organized . Output 2 1 : Market for Eucalyptus citriodora essential oil organized Output 2 2. E.C. essential oil production and marketing techniques disseminated through extension work Output 2 3 : Monitoring, Evaluation and Research & Development organized

Essential Oil extraction programme developed and initiated by the end of 3rd quarter, year 2. - 5 trainers and 50 community members trained at the end of 3rd quarter, Year 1. - Trainers and stakeholders of the forest Administration and village communities in DRC trained At least 1 ton essential oils packaged and available by the end of 4th Quarter, year 2. Demand for essential oils increased by 50% as at project completion date No less than 100 % of the target village communities are aware of relevant techniques by the beginning of 1st Semester, Year 1

- 100 ha of pilot plantations established in the Rep. of Congo

- 20 ha of pilot plantations established in the DR of Congo.

At least 1 monitoring and evaluation mission conducted each quarter

- Progress reports

- Progress reports - Mission reports - Technical data sheets

- Exports statistics. - Orders from importers. - Progress reports - Producers’ reports - Outreach Mission reports - Progress reports

- Plantations - Progress reports - Mission reports

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6. WORK PLAN

ACTIVITIES RESPONSIBLE

PARTIES Schedule (Months)

FIRST YEAR 1 2 3 4 5 6 7 8 9 10 11 12

Activity1.1.1 : Hiring of technical and supervisory project staff

Executing agency

Activity 1.1.2 : Preparation of reports

- Coordinator - International Consultant

Activity 1.1.3 Steering Committee meeting

- Executing agency - Coordinator

Activity 1.2.1 : Procurement of required materials and equipment

- Coordinator

Activity 1.2.2 : Selection of demonstration sites

- Coordinator - International Consultant

Activity 1.2.3 : Installation of equipment

Coordinator - Intern. Consultant

Activity 1.2.4 Training of trainers (R.C + DRC)

Coordinator - Int. Consultant

Activity 1.2.5 Training of local communities in essential oil

- Coordinator - International Consultant - Trainers

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extraction techniques Activity 1.3.1. Development of Production planning.

- Coordinator - International Consultant

Activity 1.3.2 : Production execution and monitoring

- Coordinator - International Consultant

Activity 2.1.1 : Survey of domestic and international markets for essential oils

- Coordinator - International Consultant

SECOND YEAR 1 2 3 4 5 6 7 8 9 10 11 12 Activity 1.1.2. Preparation of reports

- Coordinator - International Consultant

Activity 1.2.2 : Selection of demonstration sites in DRC

- Coordinator - Intern. Consultant

Activity 1.2.3 : Installation of equipment

Coordinator - Intern. Consultant

Activity 1.2.4 Training of trainers (DRC)

Coordinator - Intern. Consultant

Activity 1.2.5 Training of local communities in essential oil extraction techniques

- Coordinator - Intern. Consultant - Trainers

Activity 1.3.3 : Production

- Coordinator - International

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execution and monitoring

Consultant

Activity 2.1.2 : Organizing essential oils marketing on international and local markets

- Coordinator - International Consultant

Activity 2.2.1 : Development of an extension work programme

- Coordinator - International Consultant

Activity 2.2.2 : Implementation of extension work

- Coordinator - International Consultant

Activity 2.2.2 : Implementation of extension work in DRC

- Coordinator - International Consultant

Activity 2.3.1 : Development of a monitoring, evaluation and R&D Programme

- Coordinator - International Consultant

Activity 2.3.2 : Implementation of a monitoring, evaluation and R&D Programme

- Coordinator - International Consultant

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7 – Budget 7.1. Inputs and unit costs (USD) Duration Description

Quantity

Start

Completion(month)

Unit Costs

ITTO CONGO Project Coordinator

1 1 24 24 300 400

Technicians / Supervisors

2 2 24 23 150 300

7 8 2 Trainers 5

10 10 1 600 -

3 5 2 7 8 1 International Consultant (ITTO and CFC)

2 12 12 1 24 000 -

14 16 2 23 24 1 International transport 5 - - - 3.000 - 20-litres “Farmer’s extractor” 4 4 24 21 855 45 - 100-litre extractor

8 4 24 21 1.710 90

1000- to 2000-litres extractor

1 4 24 21 10.450 550

Agricultural machinery (cover crop) 4 4 24 21 11.400 600 Trailers (medium capacity) 4 4 24 21 11.400 600 4WD Vehicle

1 4 24 21 25 000 -

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7.2. Overall project budget by activities (USD)

OUTPUTS / ACTIVITIES 10 30 40 50 60 70

Activity-linked expenses Project Personnel

Duty Travels Capital Goods

Consumables Miscel-laneous

Training and

transfers

Qrtr Year Overall Total

1 2 4 5 6 7 8 9 10 Output 1.1 : Development Programme for Eucalyptus citriodora essential oil extraction prepared

-

Activity 1.1.1 : Hiring of technical and supervisory project staff

T 1 Y1

Activity 1.1.2 : Development of a detailed work plan

T1, T2, T3,Y1

- - - - T2, T4, Y2

Activity 1.1.3 : Steering Committee meeting

2 000 O T1, T4, Y1

4 000A 6 000 (I+A)

Sub-total 1 - 6 000 - - -

6 000 Output 1.2 : Trainers trained in essential oil extraction technologies

Activity 1.2.1 : Procurement of required materials and equipment (in R.CONGO + DRC)

136 910 O

3 500 O 13 890 A - - T1, Y1 154 300 (I+A)

Activity 1.2.2 : Selection of demonstration sites (in R.CONGO + DRC)

2 600 O 11 000 O T1, Y1 16 600 (I+A)

3 000 A

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Activity 1.2.3 : Installation of equipment 4 800 O 4 000 O - - - T2, Y1 14 800 (0+A)

6 000 A Activity 1.2.4 : Training of trainers 4 000 O 6 000 O - - - 18 750 O T2, Y1 28 750 (I) (in R.CONGO + DRC) Activity 1.2.5 : Training of local communities in essential oil extraction techniques

1 600 O 6 000 O - - - 18 750 O T3, Y1 28 750 (I+A)

(in R.CONGO + DRC) 2 400 A

Sub-total 2 24 400 30 500 150 800 - - 37 500

243 200 Output 1.3 : Production process organized Activity 1.3..1: Development of operational planning

300 O - - - - T3, Y1 1 800 (I+A)

1 500 A Activity 1.3.2 : Production execution and monitoring 45 800 O 9 000 O - - - T4, Y1 67 800

(I+A) 9 000 A T1-T4,

Y2

Sub-total 3 56 600 9 000 - - - 65 600

Output 2.1 : Market for Eucalyptus citriodora essential oil organized

Activity 2.1.1 : Survey of domestic and international markets for essential oils

12 000 O 10 000 O - - - T4, Y1 22 000 (I)

Activity 2.1.2 : Organizing essential oils marketing on international and local markets

1 500 A 4 000 A - - - T1, Y2 5 500 (I+A)

Sub-total 4 13 500 14000 - - 27 500

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Output 2.2 : E.C. essential oil production and marketing techniques disseminated through extension work

Activity 2.2.1 : Development of an extension work programme

- 6 000 O - - - T1, Y2 6000 (I)

Activity 2.2.2 : Implementation of extension work (in R.CONGO + in DRC)

2 000 A 37 500 O T2, T3, Y2

39500 (I+A)

Sub-total 5 - 8000 - - 37 500 45 500 Output 2.3 : Monitoring, Evaluation and Research & Development organized

Activity 2.3.1 : Development of a monitoring, evaluation and Research & Development Programme

5 000 O T2, Y2 5 000 (I)

- - - - - Activity 2.3.2 : Implementation of a monitoring, evaluation Programme

3 000 A T2-T4, Y2

3 000 (A)

- - - - Sub–total 6 - 8 000 - - - - 8 000

Non-activity linked expenses - Fuel and lubricants - - - 14 470 O - - 24 470

(I+A) 10 000 A

4 000 O - Spare Parts

- - - 4 000

-

- 8 000 (I+A)

3 530 O - Office supplies - - - 5 000 A

-

- 8 530 (I+A)

- - Maintenance of machinery and equipment - - - 5 000 A

6 000

- 6 000 (A)

8 000 O - Auditing Sub-total 7

- -

- -

- -

- 41 000 14 000

-

8 000 (I) 55 000

Sub-total OIBT 71 100 62 500 136 910 22 000 8 000 75 000 375 510 Sub-total Executing Agency 23 400 13 000 13 890 19 000 6 000 0 75 290 Overall Total 94 500 75 500 150 800 41 000 14 000 75 000 450 800

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7.3 – Yearly Consolidated Project Budget 7.3. 1. ITTO Budget (USD)

10 Personnel Project Personnel 11. National Experts 7 200 3 600 3 600 111. Project coordinator 6 900 3 300 3 600 112. Technicians & supervisors (2) 9 000 9 000 - 113. Trainers(5) 15. International experts 48 000 36 000 12 000

19. Component total 71 100 51 900 19 200 30 Duty Travels

31. Daily subsistence allowance 311. National Experts 15 000 5 000 10 000 312. Expert international 25 000 8 000 17 000 32. Transport Costs 321. Local Transport 7 500 2 500 5 000 322. International Transport (5 trips) 15 000 6 000 9 000

39. Component total 62 500 21 500 41 000 40 Capital Goods

41. 20-litre “Rural” extractors (4) 3 420 3 420 - 42. 100-litre extractor (4) 6 840 6 840 - 43. 1000- to 2000-litre extractor (1) 10 450 10 450 - 44. Agricultural machinery (cover crop) (4) 45 600 45 600 - 45. Trailers (medium capacity) (4) 45 600 45 600 - 46. 4WD Vehicle 25 000 25 000 -

49. Component total 136 910 136 910 - 50 Consumables

51. Fuel and lubricants 14 470 5 000 9 470 52. Spare Parts 4 000 1 000 3 000 53. Office supplies 3 530 2 300 1 230

59. Component total 22 000 8 300 13 700 60 Divers

64. Auditing 8 000 4 000 4 000 69. Component total 8 000 4 000 4 000

63. Contingences 17,000 17,000 70 Training and transfers

79. Component total 75 000 37 500 37 500

SUB-TOTAL 392,510 260 110 132,400

ITTO Monit., Evaluation & Administration 80 81. Monitoring and Review costs 24,000 12,000 12,000

82. Evaluation costs 20,000 10,000 10,000 83. Programme Support costs (8% of Sub-total) 30,001 15,000 15,001 83. CFC Monitoring Costs 14,000 14,000 - 89. Component total 88,001 51,000 37,001

OVERALL TOTAL 480,511 311,110 169,401

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7.3. 2. Congo Budget (USD)

BUDGET COMPONENTS

TOTAL

YEAR 1

YEAR 2 10 Project Personnel

11. National Experts 111. Project coordinator 9 600 4 800 4 800 112. Technicians & supervisors (2) 13 800 6 600 7 200

19. Component total 23 400 11 400 12 000 30 Duty Travels

31. Daily subsistence allowance 311. National Experts 13 000 5 000 8 000

39. Component total 13 000 5 000 8 000 40 Capital Goods

41. 20-litre “farmer’s” extractors (4) 180 180 - 42. 100-litre extractor (4) 360 360 - 43. 1000- to 2000-litre extractor (1) 550 550 - 44. Agricultural machinery (cover crop) (4) 2 400 2 400 - 45. Trailers (medium capacity) (4) 2 400 2 400 - 46.Vehicle Maintenance (2) 8 000 8 000

49. Component total 13 890 13 890 - 50 Consumables

51. Fuel and lubricants 10 000 3 000 7 000 52. Spare Parts 4 000 1 500 2 500 53. Office supplies 5 000 2 500 2 500

59. Component total 19 000 7 000 12 000 60 Miscellaneous

61. Maintenance of machinery and equipment 6 000 2 000 4 000 62. Executing Agency Management Costs 66 460 27 795 38 665

69. Component total 72 460 29 795 42 665

SUB-TOTAL 141 750 67 085 74 665 100 OVERALL TOTAL 141 750 67 085 74 665

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7.4. Yearly Project Budget by Source (USD) ITEMS BUDGET COMPONENTS TOTAL YEAR 1 YEAR 2 ITTO CONGO ITTO CONGO 10 Project Personnel 94 500 51 900 11 400 19 200 12 000 30 Duty travels 75 500 21 500 5 000 41 000 8 000 40 Capital Goods 150 800 136 910 13 890 0 0 50 Consumables 41 000 8 300 7 000 13 700 12 000 60 Miscellaneous 80 460 4 000 29 795 4 000 42 665 70 Dissemination and Training 75 000 37 500 37 500 80 ITTO and CFC Monitoring,

Evaluation & Administration 88 001 51 000 37 001 0

Contingences 0 17 00 100 TOTAL GENERAL 622 261 303 535 67 085 159 976 74 665

PART III : OPERATIONAL ARRANGEMENTS

1. PROJECT MANAGEMENT STRUCTURE The National Reforestation Service (SNR) governed by the Ministry of Forest Economy and Environment (MEFE) will be the Executing Agency of the Project and the Director of SNR will be the Project Coordinator. It should be recalled that SNR is a scientific and technical governmental organization established under Decree N° 89/040 of 21 January 1989. It is a self-managed entity, which will facilitate the levering in funds to finance governmental counterpart contribution to the project budget. A new Unit will be established to serve project implementation purposes : the Unité d’appui à la création des plantations forestières privées – Private Forest Plantation Support Unit (A2PF). It will be based in Pointe-Noire, where SNR Headquarters are located, and will thus be able to use SNR Headquarters facilities and infrastructures, and will have access to forest research institutions and other project partners located nearby. A Steering Committee will be established in order to be responsible for project monitoring and evaluation. The S.C will meet once a year and its first meeting will be convened on the start of the project. Its membership will include:

- Directeur Général de l’Economie Forestière (Head of the General Directorate for the Forest Economy) ;

- One ITTO Representative ; - One Representative of the donors community; - The Director of SNR; - One Representative of the research structures; - One Representative of the local communities ; - The Director of Valorisation des Ressources Forestières (Forest Resource Development) ; - One Representative of NGOs and Civil Society organizations.

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Project Staff Chart :

MEFE

STEERING COMMITTEE

SNR

A2PF

ITTO

INTERNATIONAL CONSULTANT

31

2. MONITORING, REPORTING AND EVALUATION

2.1 ITTO Monitoring

ITTO supervisory staff will carry out two monitoring visits: the first one six (6) months after project inception date and the other during the 15th month of project life. The purpose of these visits will be to check the levering of counterpart funds and to take stocks of plantation establishment activities and the basic training being provided to communities in essential oils extraction techniques.

2.2 Reporting A progress report will be prepared at each six-month stage of Project implementation.

2.3 Evaluation

One evaluation mission to be conducted by an Expert in Rural Sociology and an Expert in Eucalyptus Essential Oils is scheduled in the 17th month of Project implementation. The purpose of this mission is to assess the chances that the main project activities could be taken up by the communities concerned after Project completion.

3. FUTURE OPERATION AND MAINTENANCE

SNR is a permanent structure whose purpose includes, inter alia, the maintenance of demarcated reforestation areas and the management of reforested stands. Therefore its provision of technical and logistical support to promoters of private forests will always be guaranteed after project completion.

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PART FOUR: THE TROPICAL TIMBER FRAMEWORK

1. Compliance with the Objectives of ITTA, 1994

The proposed Project is consistent with the objectives contained in Article 1 para. f) of Chapter One of the International Tropical Timber Agreement (ITTA), 1983:

• To encourage members to support and develop industrial tropical timber reforestation and forest management activities as well as the rehabilitation of degraded forest lands by taking into account the communities whose livelihood depends on forest resources;

• Promoting the expansion and diversification of the tropical timber trade in producer countries;

• To encourage the development of national policies aimed at conservation of tropical forests and at maintaining the ecological balance in the regions concerned;

• The success of forest management in order to secure sustainable timber production is largely dependent upon one’s accountability with regard to local communities’ interests.

2. Compliance with ITTO Action Plan

This project primarily aims at developing plantation forests for non-timber production and it addresses item c) of Article VII, para. 5 of the International Tropical Timber Agreement, 1983; Reforestation development. It also complies with the five ITTO Criteria defined in aforesaid Chapter and Article.

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ANNEXES ANNEX A: PROFILE OF THE EXECUTING AGENCY INTRODUCING THE SERVICE NATIONAL DE REBOISEMENT (SNR) 1 – CORPORATE NAME AND OBJECTS The National Reforestation Service (SNR) created under Governmental Decree N° 89/040 of 21 January 1989 is a self-managed governmental organization having the promotion of scientific and technical knowledge as its main purpose. It is placed under the auspices of the Ministry of Forest Economy and Environment. 4 – FULL ADDRESS B.P. 839 Pointe-Noire (Headquarters) TEL.: (242) 94 02 79 FAX: (242) 94 09 05 E-mail: snrcongo@free.fr Website: www.snr-congo.com 6- MANAGEMENT STRUCTURE SNR comprises one (1) Management Unit and 31 Operational Units distributed over the entire national territory. They include semi-industrial nurseries and local nurseries in support of private forest and agro-forest plantation establishment activities; Pilot Forest Management, Reforestation and Agro-forestry Units (UPARA) to implement forest rehabilitation projects in forest concessions under exploitation; and numerous other units. 7- SNR MISSIONS

- to rehabilitate and enhance the National Forest Estate; - to produce, package and transfer seeds and seedlings to meet the plantation needs of

communities; - to advocate and extend silvicultural and agroforestry practices and techniques to farmers

communities; - to ensure watershed protection; - to conduct backstopping research as part of the execution of its programmes.

With the liberalization of reforestation activities, SNR is currently undertaking a vast support programme to facilitate the establishment of private forest plantations by supplying high-quality seedlings produced in its semi-industrial nurseries, and in providing plantation developers with expertise, material and logistical support for plantation establishment projects. In this context, seeking external funding sources through the proposed project is a timely initiative.

8 – TIMBER PLANTATION ESTATE As at 31 December 2003, forest plantations established by the Service National de Reboisement (SNR) covered around 22,500 ha and mainly contained Limba (Terminalia superba), various Eucalyptus, Pinus and Araucaria. SNR currently has around 3,000 ha of mature Limba plantation located in Mayombe, some 80 km from the port city of Pointe-Noire. Systematic pre-inventories conducted in 1982-1983 on 2,024 ha of this forest identified average production output to be around 45m3/ha. In the Loudina area, at about 200 km distance from Pointe-Noire, mature Eucalyptus and Pinus plantations contain commercial volumes of 834,963 m3 and 706,846 m3 respectively (1996 inventories on 2,765.10 ha and 1,459.98 ha respectively). 9 – PERSONNEL SNR employs a permanent staff of 229 as at 31 December 2003, supported by temporary staff hired in accordance with the volume of work to be undertaken at field level. 10 – SOURCES OF FUNDING To-date, SNR activities have been financed by the Government of Congo.

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ANNEX B: Summary of changes introduced in response to the recommendation of the 29th Expert Panel (March 2005)

RECOMMENDATION BY THE ITTO EXPERT PANEL

AMENDMENT INTRODUCED

1. Clarify the main project objective based on a comprehensive problem analysis, and reorganize the logical framework accordingly including clear indication of the project duration (2 or 3 years)

The Development objective has been reformulated as follows: Combating poverty in rural areas through extension and outreach activities aimed at disseminating techniques to extract essential oils from planted eucalyptus citriodora. The project duration is 2 years

2. Clarify and provide more information regarding the precise locations of the plantation sites and activities

2° As planting activities are to be undertaken in parallel with the project, there are part of SNR own organisational responsibilities and it is not appropriate for these activities to be listed among and planned as those of the Project The matter is for SNR to seize the opportunity provided by the implementation of this project to promote community and private plantation establishment activities. However, sub-section 2.5 of the Project Justification section provides indications on the selected project implementation sites; SNR owns Eucalyptus plantations on these sites, and value-added development of these plantations is to take place under the basic training programme in oil extraction techniques.

3. Clarify the type of extraction equipment to be used

They are extracting machines using hydro-distillation process, to be ordered in Europe. Technological references and other detailed aspects relating to this type of equipment are left to the responsibility of the ITTO expert and his collaborators under the Project.

4. In the budget, reduce the amount for international consultants and provide TORs

The professional fees of the international consultant have been reduced to....... TORs have been upgraded as..... (see Budget).

5. Present the Executing Agency in an annex

The Service National de Reboisement (SNR) – the Executing Agency of the Project – has been introduced in Annex I

6. Provide an annex showing in a tabular form how comments and recommendations of the Panel were addressed.

See this Annex II

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Annex C: Summary of changes introduced in response to the recommendation of the 30th Expert Panel (August 2005)

RECOMMENDATIONS

DETAILS OF CHANGES

1°The format of the proposal could be improved by following more closely the ITTO Project Manual.

The format of the proposal has been improved by bringing it in line with the ITTO Manual for project formulation.

2 Include quantitative indicators in the logical framework and provide a problem tree

Quantitative indicators have been entered in the logical framework matrix in pages 9 and 10 (French version) in the column “objectively verifiable indicators”. Problems relating to E. Citriodora tree have been described in section 2.9.

3°Elaborate more on the economic viability of producing essential oil by rural communities and on their needs for technical, entrepreneurial and marketing support in the essential oil business and how to mitigate the associated risks

Economic viability of essential oils production and marketing has been elaborated upon in section 2.6 and the risk mitigation aspects was addressed in section 2.9.

4°Define and explain the type and cost of oil extraction demonstration equipment needed and describe the training needs with their related costs

Training needs for rural promoters have already been assessed as “how to plant and how to harvest Eucalyptus plantations to obtain maximum yields; "how to use extractors to carry out oil extraction by hydrodistillation”; “how to achieve optimal packaging and marketing of the final product". Regarding extractors:

- the operational principles will be demonstrated using a 20-litre, “rural” type of laboratory extractor (circa US$ 877)

- extraction techniques will be demonstrated using a 100-litre, locally-made modern extractor (circa US$1,755)

- pilot calibration will be done using a modern 1000- to 2000-litre distilling apparatus to be imported (circa US$ 10,530)

5° Based on the above recommendations, recalculate the budget and provide unit costs. Adjust the ITTO Programme Support Costs to 8% of the ITTO total contribution

The budget was recalculated and Programme Support costs was readjusted to 8% of ITTO Total contribution.

6° Provide an annex showing in a tabular form how comments and recommendations of the Panel were addressed.

- Annexe C describes the changes introduced in response to the comments and recommendations by the 30th Panel. - All changes are shown in bold italics in the text of the revised proposal.

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Annex D: Terms of Reference of the International Consultant 1.1. Qualification

- Engineer’s Degree / Doctorate, Ph.D or equivalent diploma - Specialism : Value-added development and processing techniques for NTFP - Confirmed NTFP experience

1.2. Duration of duties: 4 months 1.3. Mission

In close collaboration with the National Project Coordination, the mission of the international consultant will comprise the following:

- Supervising, planning and scheduling the implementation of the project; - Supervising training programmes; - Supervising the acquisition and installation of equipments; - Supervising production management and monitoring; - Supervising market studies and essential-oil marketing procedures.

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Annex E: Summary of changes introduced in response to recommendations by the 31st Expert Panel (February 2006)

RECOMMENDATIONS

DETAILS OF CHANGES

1. Provide the terms of reference of the International Consultant, problem tree and other missing information as detailed in the above overall assessment.

The terms of reference of the international consultants are described in Annex D. The Problem Tree has been incorporated in sub-section 2.1 Other missing information have been added in pages 7, 8, 9, 10

2. Describe the poverty alleviation role of this project and particularly how the local communities will become involved with and benefit from the project.

The poverty alleviation role of the project is described in page 9, second paragraph.

3. Elaborate in detail the economic viability of producing essential oils by rural communities and describe the mitigating measures to the related economic, social and environmental risks.

See missing information added in bold type faces in pages 7, 8, 9, 10

4. Adjust the budget taking into account the previous comments and suggestions made by the Panel.

The budget has been adjusted in response to the recommendations of the previous Panel by reducing the duration of the International Consultant’s mission from 7 to 4 months (Cf cover page and pages 23 and 24)

5. Provide an annex showing in a tabular form how comments and recommendations of the Panel were addressed.

See this Annex E.

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Annex F: Summary of changes introduced in response to the recommendations of the 33rd Expert Panel (May 2007) Concerns expressed by the donors community

Corresponding changes

To change the current Project title Proposed title accepted: Development of marketing chains for eucalyptus citriodora essential oils – a non-timber forest product with high added value – by village communities in the Congo

Managing overproduction and applying a marketing strategy

Additional comments on the management of overproduction and the marketing strategy are introduced on page 7 (highlighted text)

- Leaf harvesting conducted and managed from coppiced trees

- Stocks of essential oil extracts stored and managed in cold storage facilities

- Marketing policies: several experience-sharing meetings to be conducted with various partners from countries such as DRC, Cameroon, Benin, Togo and Côte d’Ivoire.

Capacities of SNR to conduct the project at national and possibly sub-regional levels

Currently, SNR capacities can only afford to conduct the project at national level. However, the involvement of other countries expressing their interest would be possible under a Phase II project. Potential partners in other African countries such as DRC, Cameroon, Togo, Bénin and Côte d’Ivoire have been selected in the course of the experience-sharing sessions, mainly to help identify market opportunities for essential oil products.

CFC project and budget formats CFC form expected Monitoring and Evaluation costs by CFC Expert A USD7,000 annual provision included in the

budget table.

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Annex G: Summary of changes introduced in response to the recommendations of the fortieth (40th) session of the CFC Committee Concerns of the donors community Corresponding changes Remark n° 1 : Lack of costs-benefits analysis in connection with expected project outputs

Gross Profit Margin for the first operational season : CFA Francs 791 000 See details on page 14

Remark n° 2 : a- Lack of information on village community organization

On the subject of organising village communities, there is notable reluctance among Congo communities to form group enterprises. This type of organisation is still budding in Congo. The SNR’s mission includes the goal to facilitate the formation of community enterprises as in Cameroon and other countries. Currently, the SNR has some experience in village community organization in some of the localities mentioned in the project. The SNR’s policy is to promote the establishment of private or community forest and/or agro-forest plantations. The approach is to convene meetings of stakeholders (local authorities, customary land chiefs, communities), in order to conduct outreach work and hear their claims, grievances and expectations. Through the compromises reached during these work sessions, the plantation establishment process can take place, with the SNR taking charge of the technical aspects of operations.. (Page 8)

Remark n° 2 b- How will the communities access project funds and technologies?

Community access to financing opportunities will follow a two-tiered approach (no sum of money will be paid directly to the communities):

1- Government subsidies through the SNR budget in the form of seedlings sold and services provided at reduced cost. The forests to be established will be the property of the village communities. At this level, the SNR will work together with farmers to identify sites until the production units can be established. To establish plantations, after the sites have been identified, SNR will submit a price quotation clearly stipulating the respective responsibilities of each party.

2- Training of communities in plantation and essential oil extraction techniques. As indicated above, farmers’ training will be a continual process. SNR only works when the farmer is present and at field-level and uses this opportunity to train him on technical procedures. In some instances, farmers were invited to join in more technical/vocational training courses (e.g. for farmers with a high-school level of education).

3- Essential oil extraction equipment made available to the communities during project life, providing capital input to the communities and hence an opportunities for each production group to acquire its own equipment. Initially, the project will provide each site with its own oil extraction and preservation equipment; subsequently, all

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actions in relation to the marketing chain will be coordinated by SNR. All these procedures will be implemented with deep community involvement; technological transfer will be a continuous process. (Page 8 & 9)

Remark n° 2 c- Contribution of the communities to the Project

- Providing the manpower required for all

operations (both silvicultural and extractive); - The plantations will be established on land

owned by the communities; - Community members will buy seedlings and

services at reduced costs to establish their own plantations (Page 7)

Remark n° 3 : No explanation on marketing policies and export markets

Marketing activities (market survey, product positioning strategy, etc.) will be conducted in collaboration with colleagues/partners having an experience in the production and marketing of various essential oils. Contacts have been established with the Marien Ngouabi University (EPRAN) in Brazzaville (R. Congo), Bénin, South Africa and France. Partnership links will be established with the experts referred to above to help producer identify and create sustainable marketing channels. (Pages 7 and 8)

Remark n° 4 : No explanation on technical extension work Marketing process

(Cf. explanation provided to Remark 2 b) The National Reforestation Service in their role as facilitator and operational interface will provide training to the communities for the production of essential oils up to marketing stage. A production and storage unit will handle oils packaged in appropriate bottles; the unit will be based in each of the sites selected for the project. Each unit will be equipped with a cold-storage unit. Contacts with buyers will be managed by the SNR and the revenue will be transferred to the communities. (Pages 8)

Remark 5 : - Inconsistencies on figures for dry biomass quantities - Role CCA in this project

There was an error in the first version of the project proposal regarding essential oil yield rates per hectare. Figures stated in this version of the proposal are correct. The Caisse Congolaise d’Amortissement (CCA) will intervene to buffer any losses linked to poor sales or negative market price fluctuations (Page 15).

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ANNEX

Table 1

Summary Cost Table by Category (USD) and by Financier

Category Total Cost CFC Contribution

Counterpart Contribution

I Vehicles, Machinery and Equipment (Capital goods)

150,800 136,910

13,890

II Civil Works - - -

III Materials and Supplies (Consumables) 41,000 22,000 19,000

IV Personnel (Project Coordinator, Technicians and Supervisors)

46,500 23,100 23,400

V Technical Assistance and Consultancy (International Experts)

48,000 48,000 -

VI Duty Travel 75,500 62,500 13,000

VII Dissemination and Training 75,000 75,000 -

VIII Operational Costs (Divers) 80,460 8,000 72,460

PEA Sub-total 517,260 375,510 141,750 IX Supervision, Monitoring and Evaluation 88,001 88,001 -

X Contingencies 17,000 17,000 -

Grand Total 622,261 480,511 141,750

Table 2

Summary Project Cost by Category and Year

Category Total Cost Y1 Y2 I Vehicles, Machinery and Equipment (Capital goods)

150,800 150,800 -

II Civil Works - - -

III Materials and Supplies (Consumables) 41,000 15,300 25,700

IV Personnel (Project Coordinator, Technicians and Supervisors)

46,500 27,300 19,200

V Technical Assistance and Consultancy (International Experts)

48,000 36,000 12,000

VI Duty Travel 75,500 26,500 49,000

VII Dissemination and Training 75,000 37,500 37,500

VIII Operational Costs (Divers) 80,460 33,795 46,665

PEA Sub-total 517,260 327,195 190,065 IX Supervision, Monitoring and Evaluation 88,001 51,000 37,001

X Contingencies 17,000 17,000

Grand Total 622,261 378,195 244,066