Falcata (marketing) chain  tree grower lost?
(Case of Wonosobo, Central Java – Indonesia)
Ani Adiwinata Nawir
Center for International Forestry Research
Presented at International Smallholder Timber Workshop
ICRAF Nairobi, 29 November – 1 December 2004
Where is Wonosobo, Central Java?
Malaysia
Kalimantan
Sumatra
Maluku
Sulawesi
Java
Bali
Papua
West and East
Nusa Tenggara
Australia
About the study and methodology
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Part of the study on outgrower schemes in Indonesia &
Philippines
To understand better the local initiatives of farm forestry in
comparison to outgrower schemes, and tree growers’ profit
margin
Focused on selected three villages based on number of
trees per ha, distance to the market (& seedling vendors),
processing factory, and size of tree grower lands
Time of study: 2000 - 2001
In each village: interviewing 20-30 tree growers, timber
collectors, suppliers, company staff
Overview of Falcata farm forestry in Wonosobo
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Initially the planting initiative was started under government
reforestation projects in 1970s
Typical intercropping tree species (with acacia, mahogany,
teak, cassava, coffee and medicinal plants)
Widely planted on private lands (outside state forest)
Size of tree grower lands, ranging from 0.6 to 4 ha
Seedlings are available at the local market
Management: individually managed, farmer groups, and
under partnerships
However, there is no forest management plan and a lack of
serious attention from forestry agencies
Overview of Falcata farm forestry in Wonosobo
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Initially the planting initiative was started under
government reforestation projects
Typical intercropping tree species (with acacia,
mahogany, teak, cassava, coffee and medicinal plants)
Widely planted on private lands (outside state forest)
Size of tree grower lands, ranging from 0.6 to 4 ha
Seedlings are available at the local market
Management: individually managed, farmer groups,
and under partnerships
However, there is no forest management plan and a
lack of serious attention from forestry agencies
The importance of farm forestry in Java
Provinces
West Java
Central Java
East Java
Total
Area (ha)
45,000
180,000
70,000
295,000
State teak plantation area
(ha)
552,066
571,182
812,890
1,936,138
Central Java is considered the main Falcata production
area, also as a source of wood for West and East-Java
 Falcata plantation in Wonosobo covers around 20,000 ha
with the potential of producing 204,000 cum per year (2001)
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Markets: depend on particular kinds of
products
1.
International market for end products
2.
Local market aiming at international market
3.
Local market
1. International market for end products
a.
b.
c.
d.
e.
f.
Focused on high-value added products
Dominated by large-scale processing companies
Products: table tops, drawers, inner part of doors, bare core
and block boards (in which small pieces are laminated and
finger-jointed)
Main destination until 1998: Japan (preference for white
wood)
Since the Asian financial crisis, the destination diversified
(involving many other Asian countries)
High processing costs – high prices of end-products
(the technology was introduced by the Japanese)
2. Local market aiming at international market
a.
b.
c.
d.
Aiming for high-value added products
Dominated by medium-scale processing
companies
For specific products: vertically traded among
small scale wood processing (e.g. sawn timber,
bare core)
Provided outsourcing supplies for end-products
processing company (company aimed to reduce
the risks in the wood processing)
3. Local market
a.
b.
c.
Involving medium to small-scale processing
companies
Falcata lumber is one of the cheapest wood
materials for local people
Used as consumable products (roof structural
frames, concrete panels, window frames) or
disposable products (pullets, boxes)
Key actors in Falcata marketing chain
Tree
growers
(individually)
Tree grower
groups
Timber
collectors
(>21)
Suppliers
level 1 (10)
Processing comp. for
high-value added
products (3)
Suppliers
level 2 ( 10)
Processing
comp. (100)
Sawn mills
(20-30)
Has a contract
with comp.
International
consumers
Prices (stumpage price) (in USD)
Diameters
(cm)
4.3
Levels
Collectors/
suppliers
7.3
Tree growers
Processing
company
8.7
10 – 14
15 – 19
5.9
9.7
11
20 – 24
8.7
13.3
13.8
> 25
12.2
14.9
16
Tree growers tend to sell more at the smaller
diameters at the cheaper prices
Profit and profit margins (based on 3 villages study)
Profit & wood
volume
Levels
Tree
Timber Suppliers
growers collectors
Processing
company
Profits (USD/cum)
(% profit margins)
1.91
(34%)
0.49
(9%)
0.91
(16%)
2.24
(40%)
Vol. being traded
(cum/year)
358
4,200
5,467
13,500
Total profits (USD)
(% profit margins)
686
(1.8%)
2,052
(5.4%)
4,955
(13%)
30,284
(79.7%)
Partnership arrangement in marketing chain
 stronger economic power of the brookers
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Timber collector and suppliers:
Borrowing money scheme for timber collector to buy
wood from tree growers
Suppliers and processing company:
Based on trusts, loans provided by the company to
the supplier as the initial capital to buy wood
Log purchasing contract stating a quota and the
price of purchased logs given by the company
Obstacles in Falcata marketing chain
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Low quality of the wood due to limited technical
knowledge of tree growers, while forestry
extension has not been very effective
Rate of growth < rate of harvesting – increasing
scarcity, the biggest company started to look for
alternative supply
Low price received by tree growers
Limited interests from processing company to deal
directly with tree growers, e.g. establishing
plantation under partnership
Improving tree grower shares in the marketing chain:
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Cut the marketing chain, by encouraging processing
companies to deal directly with tree growers and to
develop plantation under partnership
Empowering the economic capacity of tree growers,
through improving the market inteligence:
– Tree grower skills in timber valuation
– Financial management of small-scale plantation
Improving the bargaining power through farmer
groups
Conclusions
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Falcata small-scale plantations have increasingly to become
important in supplying the woods for local industries and
domestic uses
The future prospects will depend on:
– Increasing support from the forestry agencies, mainly in
providing technical information (e.g. silviculture, pests
and diseases)
– Market development strategy: creation of market
information network, conducting market research to
improve the efficiency of various marketing chains
– Influencing private sectors to engage more with the
smallholders: convincing they will also get the benefits