INTERVENTIONS, UPGRADING STRATEGIES AND STRENGTHENING LINKS IN THE VALUE CHAIN

4. Interventions, Upgrading Strategies and Strengthening Links in the Value Chain

This section of the report summarizes the outputs of the strategic planning workshop held in Tacloban City from March 9-10, 2009, the main objectives of which were to agree on a common vision for each value chain, verify the value chain linkages, and to draft the action plan on the proposed strategies identified in the February validation workshop. » annEx m: ThE oUTPUTS of ThE STRaTEgIC PLannIng WoRKShoP (maRCh 9-10, 2009)

PLanTaTIon WooD While the outlook for the global furniture industry was generally gloomy, domestic demand for furniture remains high due to increasing population, on-going housing construction and unmet government and industrial requirements for furniture. Strategies for this subsector include improving the quality of materials, synchronizing the marketing system, and streamlining the process for securing permits.

Improving the quality of materials

Wood producers in Leyte Island have the option to concentrate on the production of good quality wood produced at high recovery rates. The close proximity to Cebu would be of advantage when well sawn and dried lumber can be offered.

High quality wood begins with high quality planting materials. Thus, plantation wood should be grown from quality seedlings. It was agreed that stakeholders should work closely with the DENR and the academe, particularly VSU which has an on-going ACIAR-funded project on nursery establishment to provide quality seedlings for tree

farmers. Farmers must also employ appropriate silvicultural practices to ensure the growth of good quality timber. On the part of processors, there is a need for them to adopt technologies available from the DOST, particularly FPRDI, on proper lumber drying and other wood processing operations. These would lead to lower cost and more competitive finished products.

All enablers should assist the farmers/POs to produce high quality lumber. They do not need to do this on their own. Joint cooperative activities through associations and federations seem to be advisable. These activities may include bringing farmer groups together to provide them with the opportunity to exchange ideas and share best practices, as well as to listen to seminars on appropriate technologies for their tree farming activities. Presentations from financing institutions on how their funds could be accessed by farmers may also generate interest on the part of the producers.

Streamlining the process for securing permits

To ease the licensing process and to eliminate SOPs might also be a key for success The high competition has no space for unnecessary expenditures and costly delays. While on the subject of corruption, bribe-taking and the payment of “SOPs”, it is important to understand why such things happen so that undesirable practices can be minimized or altogether put to a stop. Many reasons or factors are at play, such as the existence of complex and cumbersome policies that result in long-winded procedures and protracted processing time, the lack of understanding of rules both by those implementing policy on one side and the farmers, traders and processors on the other, desire of some to shortcut the process or refusal by others to abide with what is legal, high degree of tolerance, inadequate monitoring and reporting systems, poor quality of shipment that could lead to further degradation of products when delayed during transport, lack of confidence, fear of reprisal, willingness to collude, and many others.

Some strategies to address the issue would include building capacity of the VC operators to better understand the rules, such as the conduct of how-to seminars on procuring permits and other required documents from government, greater awareness by the various VC actors of their respective rights, accessing latest technology for improving product quality (e.g., kiln dryers for efficient moisture removal) to improve the confidence of traders in the quality of their products, hence, there will no longer be a need to pay grease money to avert delays in shipment, vigilance on the part of assisting organizations in exposing to the public fraudulent transactions, and a strong desire by government to rid the bureaucracy of corrupt practices manifested through improved salaries and benefits, increased transparency, effective monitoring and reporting systems, and successful prosecution of those who are caught performing illegal acts. Leaders at the highest levels of government and industry must also set themselves as models of good moral conduct for everyone to follow.

Synchronizing the marketing system

In the long run, the plantation owners should consider growing finer hardwoods, too. The demand for such woods is increasing and can currently be satisfied only by imports. DENR should find ways to monitor the legal trade of plantation wood even if it would include species that are found naturally in the Philippines. Simply banning trade in all protected, naturally-growing species is no solution and will hinder the development of forest management and wood industries in the long run.

With regard to marketing, there is a need to provide assistance to match available supply

with the demand for wood. DENR and DTI can help spearhead efforts along this line. To develop new product lines, there is a need to tap DOST which has the technology and expertise to help the private sector pursue this strategy. One possible approach to product development is the use of mixed media in furniture manufacture, which will expand the raw material base for the industry and attract more customers for their products.

Today, many foreign markets for wood-based products require wood from certified sources. Neighboring countries such as Vietnam and Indonesia are working on increasing their supply of certified wood. The Philippines is far behind in this endeavor, possibly because the US market was seldom demanding certified wood in the past. Now California is set to ban all imports of non-certified wooden products and it can be expected that the other states and possibly even the whole US will follow. Also, the European Union plans to ban all wood from illegal sources, which means all wood entering the European market would need a certificate of origin which is only possible with a “Chain of Custody” certification. These developments will force more and more Philippine exporters to use certified wood which they are currently importing. Suppliers from within the country that can offer certified wood would have a clear competitive advantage. Group certification is possible and such venture could be the target of associations of private plantation owners or federations of POs. It can be expected that support will be provided for such undertaking. However, certification requires trustworthy papers where understating volumes and other SOPs are not possible. The provincial, regional and national government agencies would need to smoothen the way for such undertaking.

To help alleviate problems associated with securing RUP, the Technical Working Group, headed by the DENR Regional Office, can amply provide the leadership to work towards this goal. The sector can also benefit from the ACIAR experience in improving compliance with tree registration from private plantations, which greatly facilitated the procurement of permits for tree harvesting in private lands.

RaTTan Rattan remains in abundant supply in Leyte Island, and stock is growing because some POs have included the planting of rattan in plantation development work. Current demand for rattan furniture in the global market is low, but producers and traders remain optimistic that they can find markets for rattan poles.

Improve the permitting process

As in plantation wood, RUP for rattan is difficult to secure due to the many requirements and complicated procedure. The TWG headed by the DENR was tasked to deal with this issue, in collaboration with POs and assisting organizations such as the FCI. To address policy concerns, it was agreed that the USAID experience in promoting the value chain for rattan should be consulted in order that the outcomes of the current study would reach intended stakeholders, particularly those involved in formulating and making decisions on policy.

Strengthen the industry by developing new product lines

New product lines from rattan should be developed to further strengthen the rattan subsector in Leyte, although there was a concern about the absence of a program in the Island or entire Region 8 to support the industry. DTI and BAHANDI were identified as support agencies for this activity especially in marketing the new products, while DOST could be tapped for new technologies and expertise in developing alternative

products from rattan. TESDA can help build capacity for product development as the agency provides training on skills development such as on product design and machine maintenance and operation.

bamboo

Undertake a more comprehensive inventory of the resource for better regulation

Bamboo, just like rattan, is perceived to be in plentiful supply in Leyte, but this claim has to be ascertained by undertaking a more comprehensive inventory of the resource throughout the Island. Bamboo clumps can be seen abundantly growing in the flat lowlands, along riverbanks, backyards, and hedges of farms. This seeming abundance of bamboo is the reason why among the three plant materials studied, bamboo harvesting and processing is unencumbered by permitting requirements and DENR personnel are unwilling to implement strictly the rules and regulations that apply to this non-timber forest product. At the moment, bamboo is “unregulated” in Leyte solely on the basis of the pronouncement of DENR officials not to curtail the harvesting and transport of bamboo and bamboo products in the region.

Expand the bamboo market

Demand for traditional bamboo products made in Leyte is limited, so there is a need to expand the market and to develop new product lines from this resource. DTI can help in market development while the DOST can extend assistance in product development. Outputs of research and development activities generated by various organizations have to be made available to entrepreneurs and the private sector to help generate novel ideas on what products could possibly be crafted from this highly versatile material. A concerted effort to strengthen the industry should involve other organizations such as BAHANDI and LCCI which have continuing programs that support small-scale enterprises in terms of trade exhibits, printing and distribution of brochures, and other forms of market assistance to members. TESDA also provides capacity building programs such as furniture design and manufacture, as well as short courses on entrepreneurship that include financial management and market development.