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Smallholder farmers in developing countries often lack resources. They rely mostly on extensive production approaches, such as cattle keeping and resort more to extracting forest resources at no charge. Our objective is to assess the relationship between the diversification of income sources, poverty and livelihood capital for smallholder farm households which combine cattle farming with forest extraction. We collected 600 surveys from Indonesian farmers specialized along the cattle rearing supply chain (464 breeders, 66 feeders and 70 mixed breeder-feeders). We found no correlation between poverty and income diversification. Cattle breeders have been found to rely most on forest resources. Distance to cropland and forest correlated positively, whereas their education level correlated negatively with income diversification. Feeders who were owning other livestock, were a member of a forest user group and owned some modest capital like a motorbike showed increased income diversification. Crops are the most important source of income for farmers, whereas cattle keeping and forest extraction play a role in income diversification. Increasing ecological pressure caused by forest extraction due to expanding cattle production could be best avoided by extending those parts of the cattle sector that use forest resources in a sustainable manner, for instance, through silvopastural systems or agroforestry so that incomes of poor farmers get more diversified and, therefore stabilized.

The Contribution of Forest Extraction to Income Diversification and Poverty Alleviation for Indonesian Smallholder Cattle Breeders