ໂຄງການ VALTIP3

The Government of Lao PDR (GoL) has policies which are directed towards economic growth and poverty alleviation, and has recognised the plantation sector as one of the sectors that can improve economic growth in rural areas. In the 2014 Agriculture Development Strategy to 2025 and Vision 2030, processed wood products are identified as one of the nine priority commodities to contribute to industrialisation and modernisation of the Lao economy. Over the past three decades, the GoL has implemented policies to encourage the development of plantations by smallholders and the private sector and as a result there are now significant areas of plantations in several regions some of which are approaching merchantable age. The plantation estate comprises 446,000 ha, of which 271,000 ha is rubber trees for rubber production (DoF 2015), largely corporately owned. The area of plantations for current timber production remains small, with 163,000 ha under different species, ownership and investment arrangements. Eucalypts comprise the largest area of these timber plantations with 67,000 ha largely owned and used by foreign companies. Teak, with 50,000 ha, is the other main timber plantation species with plantations predominantly owned by Laos smallholders and has been identified as the best opportunity for poverty alleviation and domestic industry development.

Laos already has a small wood-products industry, with plantation resources of teak, eucalypts and other species serving both international and domestic markets. However, the plantation resource is not expanding and the Lao wood-processing industries, which are in their infancy compared to neighbouring countries, have experienced difficulties competing against the advanced secondary and tertiary manufacturing centres in Vietnam and China. Complexities within the planted timber value chain may result in plantation management that is not optimal for wood supply, poor incentives for wood producers and inefficiency in timber resource use. The efficiency of the value chain and wood-products industries in Laos is particularly hindered by the numerous conflicting and confusing regulations imposed by the government (Smith 2014, Midgley et al 2012). Key issues are the need to fully understand the socio-economic dynamics of, and interactions between actors in the value chain, develop new wood processing capability for the production of a variety of wood products, build capacity to enable manufacture of these products from small diameter timbers and enhance the entire timber value chain from plantation to primary and secondary processing plants and markets.

The proposed research builds directly on two previous ACIAR projects: FST/2005/100 “Value-adding to Lao PDR plantation timber products” and FST/2010/012 “Enhancing Key Elements of Value Chains for Plantation-Grown Wood in Lao PDR”. It also links with work in related projects FST/2012/041 “Teak Agroforestry in Lao PDR”, and ADP/2014/047 “Policy Improvements to Balance Smallholder, Industry and Environmental Needs in Lao PDR and Vietnam”.

The proposal is informed by results from these projects and related work. In relation to the Lao teak plantation value chain, the following results from FST/2010/012 (Smith et al. 2016a and Smith et al. 2016b) are relevant:

• Farmer owned and community-based plantation enterprises, capable of harvesting and processing local plantation grown wood such as teak, have great potential to contribute to national policy objectives by generating rural employment, boosting farm income and suppling timber to the processing sector. However, they are currently uncompetitive due to policy barriers associated with perceived risk around processing of timber illegally harvested from natural forests, unnecessarily complex regulatory procedures and high transaction costs.
• Plantation registration was hypothesised to be a barrier to smallholder participation in the legal value chain for plantation grown wood. Analysis found that processes for plantation registration have been complicated by multiple-perceptions of the purpose of registration; for some, plantation registration has become a substitute land titling process, for others it is needed merely to demonstrate source of origin for legal wood sales. For the former a consequence is that the cost and administrative procedures for registration have become prohibitive for farmers, for the latter procedures to register plantations may be seen as not strictly legal. Recommendations for policy review and clarification of the purpose of plantation registration were made. This matter is now even more relevant due to the strict enforcement of PM Order No. 15 currently restricting export of unfinished wood products and raw materials.
• Systems mapping of the regulations along the entire teak value chain and analysis of the transaction costs revealed a complex operating environment. Research found that streamlining and simplifying regulations and reducing transaction costs would likely both increase smallholder returns and improve the competitiveness of plantation enterprises through increased value chain efficiency. These procedures also need to address national and provincial regulatory and revenue requirements.
• Research into farmer attitudes to plantation registration and into the effectiveness of grower groups revealed that there is diversity in plantation ownership arrangements that were not recognised in FST/2010/012. As a result, the supply of this wood to industry is unpredictable. Better understanding of the ownership arrangements and the management intent of owners could facilitate resource availability and a consistent flow of wood to processors.
• Approximately 15,000 ha of plantation teak was mapped in Luang Prabang province, with significant areas likely in adjoining provinces. The plantations were characterised to be dominantly immature, more that 75% in size classes less than 25 cm tree diameter; this has implications for investment in domestic wood processing technology. Plantations are in thousands of small parcels which are geographically dispersed across the province. Proximity to roads, infrastructure and processing facilities has implications for wood flow and costs for owners and industry which are not fully understood.
• The role and legal status of timber traders and brokers (‘middlemen’), who play an important role in consolidating consignments of wood and connecting growers with markets, was not included within the project and are not well understood.
• Improved linkages between growers, traders and processors can enhance the value chain, and innovative collaborative investment and funding approaches are needed to facilitate the supply of plantation grown teak to the market in a way that meets the needs and addresses the constraints of the plantation owners.
• Market requirements for legal or certified wood could be met through simplified procedures that recognise the low-risk nature of farmer-owned plantations when compared to other sources of timber.
• Improved efficiencies and capacity in domestic wood processing will enhance industry competitiveness and demand for the domestic plantation wood resource.
• Opportunities exist in developing technologies for production of EWPs for the rapidly growing construction, furnishing and joinery activities in Laos, neighbouring countries and Australia.
• Consistent product standards coupled with flexible arrangements for product design and simplified certification and legality processes will improve market access.

The proposal is also informed by the first stages of work under ADP/2014/047, which have focused on understanding the dynamic policy framework for plantations in, and export of wood from Lao PDR; characterisation of the value chains from other tree plantations in Lao PDR; and identifying and fostering pathways for policy dialogue about tree plantations and the related governance framework. While in its early stages, this research has highlighted the complex governance arrangements that exist around the plantation value chain.

Project FST/2010/012 focused on the utilisation of plantation timbers for high value-appearance wood products, such as furniture. As in Vietnam, opportunity exists to introduce new value-adding technologies for developing novel appearance and structural wood products based on veneer, sawn wood and composite products (combining wood and other materials) that would provide new markets for the existing plantation resources. These EWPs could be used in domestic and commercial buildings and there is a strong demand in Laos and in international markets, in particular in China for such products (FAO 2009 & 2012).

For such industries to be internationally competitive, the plantation wood resource and its availability and accessibility needs to be known and the enabling policy environment and value chain needs to be well understood and efficient. Therefore, a detailed value chain analysis and competitiveness mapping are required to assess opportunities for using plantation timber as a viable alternative to steel, concrete, bricks and other materials currently used in building, joinery and furniture industries. Specific skills and knowledge for wood processing and improved durability are lacking in Lao’s timber industry, resulting in the use of concrete and steel for construction.