Creating sustainable livelihoods is a common goal of plantation-based community forestry. Tree and stand characteristics such as stand stocking density and tree size, form and wood quality are thus important determinants of the success of community forestry in creating sustainable livelihoods. Together with the socio-economic circumstances which govern harvesting and processing, they determine the best end-use of the trees for the communities they are intended to benefit. This study of five adjacent stands of mature timber originally established under community forestry programs on Biliran Island in the Philippines found that lack of early-age silvicultural management, illegal logging and slash-and-burn agriculture had resulted in a patchwork of mature plantation forest with high variation in stand stocking, tree diameter and log length. Damage to tree branches and boles from previous typhoons was also evident. On-site conversion of trees into lumber using community labour and a contracted chainsaw operator was found to be more profitable than selling the trees to external processors. A key advantage of directly supervising the chainsaw operator was a higher than expected lumber recovery rate of 37 %. However, this high recovery rate was only possible by accepting boards with defects (decay or bark) in 58 % of chain-sawn boards. Lumber was eagerly sought by community members for house construction, and waste wood was quickly scavenged for firewood. Processing chain-sawn lumber into boards suitable for furniture manufacture would have been impracticable because of shrinkage, wane, decay and end-splitting. The lumber would also have been unsuitable for furniture production because of imprecise sawing. The implications of this study for small-scale community forests in developing countries are that high variation in log size and quality in silviculturally unmanaged stands mitigates against processing lumber into high-value products. Sustainable management of plantation forest resources will be encouraged if communities directly benefit from community-controlled harvesting which processes logs into products for which there is high local demand. © 2014, Steve Harrison, John Herbohn.