TECHNICAL REPORT RATTAN RAW MATERIAL · PDF fileSustainable Rattan Development and Utilization (ITTO-Ministry of Forestry) RATTAN RAW MATERIAL TRADE i TECHNICAL REPORT RATTAN RAW MATERIAL

Sustainable Rattan Development and Utilization (ITTO-Ministry of Forestry)

RATTAN RAW MATERIAL TRADE i

TECHNICAL REPORT RATTAN RAW MATERIAL TRADE

ABSTRACTS

Marketing is one the most important part in creating the economic value of products and it will never have maximum value without a continuous development on the product utility. Rattan as non-wood forest product with huge potential, have been known well since hundred years ago for its beauty as finished-product.

From cane diameter size and utilization in industry, raw rattan is divided into two types as large-diameter (diameter 12 mm to 40 mm) and small-diameter cane (diameter 2 mm to 12 mm). Large-diameter canes that are mostly from natural forest, are used as frame, while small-diameter canes are used as webbing (skin) and the heart of cane are processed into fitrit especially those belong to Taman/Sega (Calamus caesious); Irit (Calamus trachycoleus) that are planted in Kalimantan and few in Sumatera . In Sulawesi there are some species that can used as fitrit of Lambang, Minahasa, Tarumpu and other species.

In the mid 80’s the highest production statistics total export volume about 570,000 tons, averaged value US$ 214,679,760.00, averaged prices about US$ 3.19/ kg. and the highest prices in 1996 about US$ 3.88. per kg. Although, the price of rattan raw material in this period, but after this period the price of rattan raw material become sluggish due to the quality and an excellent rattan raw material such as Manau substituted with other species and low quality.

In finish products industry showed for export market increasing in value, noted 2003, the total volumes of rattan furniture export reached to 133,387 tons, with value US$ 302,057,589. Rattan finish products indicate that export increase in volumes, but selling price of rattan finish products in 1998 about US$ 8,564.00 per container compared to in 2002 become US$ 6,794.0

In fact, only two species of rattan have already planted in Kalimantan and Sumatra intensively, however others commercial rattan species taken from the natural forest. In the future faced on the big question of the sustainability rattan raw material supply when overseas market of rattan finished products continue to grow.

Rehabilitation of the extinct of commercial rattan species to secure continuous supply of raw material is needed and also to provide better livelihood for forest rattan grower communities surrounding forest, there by reducing further forest degradation.

The government of Indonesia had to encourage rattan grower through financial support for rehabilitation and management their plantation, increase rattan price in the grower level, solving land tenure problem and provide regulation that all related to this business satisfy.

This technical report will review and analyze all set of problems related to rattan marketing system for the community and the usage in the future.


RATTAN RAW MATERIAL TRADE ii

TABLE OF CONTENTS

ABSTRACTS .................................................................................................................... i

TABLE OF CONTENTS ................................................................................................... ii

CHAPTER 1. INTRODUCTION .................................................................................. 1

1.1. Background ............................................................................................................. 1

1.2. Aims of the Study .................................................................................................... 2

CHAPTER 2. METHODOLOGY OF DATA COLLECTION ........................................ 2

2.1. Data Collecting .......................................................................................................... 2 2.1.1 Field Data Collection .................................................................................... 2 2.1.2 Literature Review .......................................................................................... 3

2.2. Scope of Work ........................................................................................................... 3

2.3. Data Analysis ............................................................................................................ 4

CHAPTER 3. RATTAN MARKET SYSTEM ............................................................... 4

3.1. Introduction ................................................................................................................ 4

3.2. Rattan Products ........................................................................................................ 4

3.3. Semi-finished Product From Cured Rattan .............................................................. 6 3.3.1 Production of semi-finished rattan from small-diameter cane ....................... 6 3.3.2 Production of semi-finished rattan from large-diameter cane ....................... 7

3.4. Problems Identification ............................................................................................ 10 3.4.1 Current market condition at grower level .................................................... 10 3.4.2 Current condition local market .................................................................... 10 3.4.3 Current condition in the rattan processing industries .................................. 11 3.4.4 Current Condition of Rattan Finished-product Industry .............................. 12 3.4.5 Distribution Channel of Rattan Trade ......................................................... 13

3.4.5.1 Rattan trade channel in Kalimantan ............................................ 15 3.4.5.2 Rattan trade prices in Kalimantan and Sulawesi ........................ 19

a. Distribution Channel of Rattan Trade in Sulawesi ................. 19 b. Distribution Channel of Rattan Trade in Sulawesi after the

Issuance of Ministry of Trade No: 12/M-DAG/PER/6/2005 ... 22 c. Distribution Channel Rattan Trade in Kalimantan ................. 23

3.5. Government Policy .................................................................................................. 24 3.5.1 The Government Regulation....................................................................... 24 3.5.2 The impact of inconsistent rattan trade regulation ...................................... 26

3.6. Rattan Raw Material Price Situation ....................................................................... 27

3.7. A framework for a National Strategy Development Plan of Sustainable Rattan Production and Utilization ....................................................................................... 38

CHAPTER 4. CONCLUSIONS AND RECOMMENDATIONS .................................. 40

4.1. Conclusions ............................................................................................................. 40 4.1.1 Farmer-level Trade ..................................................................................... 40 4.1.2 Local Market ............................................................................................... 40 4.1.3 Rattan Processing Industries ...................................................................... 40 4.1.4 Finished-product Industry ........................................................................... 41

4.2. Recommendations ................................................................................................ 41


RATTAN RAW MATERIAL TRADE 1

CHAPTER 1. INTRODUCTION

1.1. Background

In Indonesia Rattan is one of non timber forest products that contributes 5.5 % to revenue originate from forest products industry. It is no doubt that Indonesia has long been known as the biggest rattan exporting country in the world. Since in the 1980s, Indonesia has also been a dominating rattan producer which supplies approximately 80% to world market.

Rattan remains important non timber forest products in Indonesia both National and International market and provided cash income to about 4 to 5 million of peoples involved in the rattan base industry. Rattan exported of Indonesia four year period (2000 to 2003) shown that in 2000, exported volumes of 134,521,781 kg, value of US $ 324,338,207, averaged per kg US$ 2.41. In 2001, exported volumes of 115,944,786 kg, value of US$ 290,311,314, averaged per kg US$ 2.23. In 2002, exported volumes of 133,386,540 kg, value of US$ 311,174,865, and averaged per kg US$ 2.07. In 2003, exported volumes of 133,887,641 kg and value of US$ 313,490,087 and averaged per kg US$ 2.34.

Nevertheless, the average selling value for each container in 1998 about US$ 8,564.00 compared to in 2002 only become US$ 6,794.00.This indicate that value of selling price of rattan finish products from Indonesia is going lower.

For long period in rattan market system, the governments of Indonesia always try to involve and influence the system by issuing some regulation which relating marketing, export ban or export allowance policy and criteria of rattan (raw material, semi finished and finished) products. In fact, rattan is one of kind of a commercial commodity as non wood forest products that about 80% from Indonesia. Although, Indonesia has vast potential of rattan raw material in the world, but the position of rattan industries has no power become the leader in rattan business in the world. This commodity become strategic item when it is made and applied on finishing products which have more value added compared if export in raw material.

As figured out on distribution marketing channel of rattan raw material in Indonesia, either rattan raw material come from Sumatra, Kalimantan and Sulawesi, generally the trade mechanism involving key elements beginning from farmer (rattan grower), broker ( between farmer and district buyer), district traders, processing industries up to finished products and destination export countries. Each, of this element has an important role in creating and running rattan business, consisting products supply, price especially in the grower level defined by broker and product demand. So far, they have their own strategy to face every single changing on market situation and including the changing of the government regulation in any kind of policy.

Trend in the International market grow rapidly, on the other sides as mention before most of rattan raw material especially large diameter cane and some small diameter cane collected from the natural forest. The rattan growers or collectors collected rattan raw material from the natural forest based on the price in markets,



where not based on the annual allowable cut (haphazard). On the other sides, there is no rehabilitation after exploited to obtain a sustainability of rattan raw material supply, especially the commercial rattans. As consequences some of the commercial rattan species become extinction or out of the market consist of: Manau (Calamus manna); pulut merah (Calamus flabelloides); lacak merah (Calamus sabut); sarang buaya (Calamus eriocanthus); tohiti (Calamus inops) and others.

The government awareness in rattan business and rattan plantations are low, it is proved by low price of rattan raw material in the grower and rehabilitation programs of commercial rattan species that already exploited from the natural forest. Regulation that applied by the government are not encouraged and stimulate the spirit of rattan grower to replant the commercial rattan species.

1.2. Aims of the Study

To develop and improvement of knowledge of rattan growers through their participation in establishment rattan plantations to obtain of continuously supply of rattan raw material for rattan industries from sustainable rattan resources and provide multi benefits for the rattan based communities. The project expectedly will provide both direct and indirect benefits to various parties. On rural communities, the direct beneficiaries of the project will be the rattan growers who may gain a better farm gate price of their rattan raw material, due to more efficient market. The rattan industry will take advantage by the secured of rattan raw material and better qualities, also benefit with a better environment in rattan trading system and policies.

CHAPTER 2. METHODOLOGY OF DATA COLLECTION

2.1. Data Collecting

The work of collecting data of market systems through visited into rattan producer areas in 5 (five) regencies in 3 (three) provinces and manufactures of rattan finished products in Surabaya, East Java ; Cirebon, West Java; Banjarmasin, South Kalimantan and Ujung Pandang in South Sulawesi.

2.1.1 Field Data Collection

a. Producer areas, there are five districts visited belong to:

Terantang,Sampit districts in Central Kalimantan

Kluk Leleng, Katingan districts in Central Kalimantan

Majene, Majene districts in South Sulawesi

Toraja, Tana Toraja districts in South Sulawesi

Kendari, South-East Sulawesi.



Visit producer areas aims to collect data of the current conditions of rattan growers or collectors directly in the field, distribution of trade starting from producer areas to large buyers in sub district, district, province and the larger buyers both in local and inter islands. In the grower/collector collect data of: harvest technique, preparation after harvest and selling price of rattan raw material in the grower/collector level. In the same way collect data in dweller, region, province and inter-island (large buyers).

b. Visited manufactures:

Surabaya, East Java province

Cirebon, West Java province

Banjarmasin, South Kalimantan

Ujung Pandang, South Sulawesi Visit manufacture areas aims to collect data of species of rattan that utilize and processing technique for finished products, price of rattan in manufacture level and other data.

2.1.2 Literature Review

Secondary data collected from literature reviews from Forestry Provinces and Districts, the Ministry of Forestry, the Ministry of Industry and the Ministry of Trade, Indonesia.

2.2. Scope of Work

Data collection and field activities concerning to the objectives and out put of the project that carried out the information on the rattan market channel systems starting from growers/collectors, sub-districts, districts, province up to rattan industries, which covering the following data:

a. To collect the information of rattan raw material price in the grower/collector, dweller, in the district, province and the central of rattan industries.

b. Basic criteria of the buyer due to the quality of rattan raw material that producing by the growers/collectors to define the price in the grower level.

c. Current condition, position, weakness and strengthens of the grower in the rattan base business.

d. Identification problems in the grower level in management, knowledge and skill in rattan plantations, and marketing of their products.

e. Identification of appropriate technologies and facilities requirements to enhance the quality of their products to obtain high added value to effort their livelihood.



2.3. Data Analysis

The field data and literature reviews were analyzed to formulate the program in which all parties get the advantage and satisfy through a fair rattan base-business.

CHAPTER 3. RATTAN MARKET SYSTEM

3.1. Introduction

Marketing is the most important part in creating economics value from a product. A product will never have maximum function when it has no development continuously on its utility. Rattan as a potential non-wood forest product is well known since hundred years ago for its beauty at its finished products. The value of finished product is the final indicator of the whole value of rattan utilization and it is related to demand for raw material usage as the measurement of rattan from the beginning to the end product as one part in a market system.

Development to the whole life cycle of rattan and product diversification needs a special concern based on the market demand and requirements. Involving various stakeholders, directly or indirectly, is needed to keep its existence of rattan raw material in continuously and sustainable.

3.2. Rattan Products

In general market term, rattan products are divided into three categories:

(1) Rattan raw material; it has basic function, produced by farmer, the process only cutting, sold to collector traders. In this stage the product passes a very simple process and the standard price has been unchanged. The available of this product depends only on the farmer effort for cutting (size of areas in cutting, cutting days, persons involved in a group, and weather). In Kalimantan in the plantation areas as this process is carried out by farmer/ grower, the more areas they have the more product amount is. While, raw material collecting from natural forest, depends also on the distance and accessibility of rattan sources to market place in normally at forest borders.

(2) Processed rattan product; it is raw material product already proceeded into processes as: W&S, boiling, polishing; the selection is based on size and quality, it is then packaged and stocked. When the quality has been sorted, then the price is defined. In this stage already industry category that serves as in intermediary function.

(3) Rattan product; the product having final utility. At this stage the end- processed rattan are categorized into products having utility value as furniture, basket ware, floor mate, etc. It as normally a combined product with other material as wood, iron, abacca, water hyacinth, plastic or others. The value depends on a more complex criteria related to function, design, and brand.



Most buyers set grade to processed rattan canes based on diameter and quality, it is dictated by physical appearance, elasticity and weight as described below:

Table 3.1.1. Grading of large-diameter cane by quality

Grade Criteria

1 straight pole ivory to brownish yellow in color less than 5% allowable surface defects with no cracks borer

holes or twist mature stem 2 creamy in color

6 % to15 % allowable surface defects which are within 25 cm from either end mature stem

3 light brown to reddish in color 16 % - 25 % allowable surface defects such as blue stain and worm holes

4 reddish to black in color more than 25% allowable surface defects including swollen

nodes, blue stain, scorch, marks, worm holes and scratches

5 immature stem heavily detective, including shrunken, twisted, cracked, fractured, split and imperfect cutting light in weight

Table 3.1.2. Grading of Sega

Grade Criteria 1 white to creamy white in color

easily bent 2 creamy white to light brown in color

easily bent with allowable defects such as minimal tapered ends 3 white to light brown in color

easily bent with allowable defects including tapered, ends short internodes , swollen nodes and shrunken tips

4 mixed color of white, brown and grey hard to bend with allowable defects including tapered ends, short internodes, swollen nodes and shrunken tips

5 reddish in color brittle and heavily detective stems

Table 3.1.3. Grading of other small-diameter cane

Grade Criteria 1 yellowish white in color, smooth surfaces and with no or few

defects on epidermis outer or inner portion of the stem 2 reddish in color and with few defects either on epidermis outer or

inner portion of the stem 3 reddish in color with heavily detective stem

Rattan raw material grading is made after it is processed of boiling and drying applied to large-diameter canes and to some of small-diameter canes such as pulut merah. Selection of canes quality is based on the performance as wrinkle and shrinkage, shrinkage but not wrinkled, brightness, colors (creamy, brown, red



or other), surface defect presence (deep or shallow defect), and diameter size. Grading rule for rattan raw material and semi-finished products applied is as accepted by rattan buyers and industry.

3.3. Semi-finished Product From Cured Rattan

3.3.1 Production of semi-finished rattan from small-diameter cane

Diameter measurement

Small diameter canes of 5 to 18 mm are segregated into diameter classes of 0.5 mm interval, a metal gauge is used. The measurement is taken from smaller end of the rattan piece, and the allowable diameter difference is between 2 mm. This method help determines suitable splitting knife at following process in producing ropes and binds.

Splitting of canes

The sorted canes are split by machine into ropes and binds of required specification and rough cores. Ideally, each machine is operated by three workers, the first worker feeds the raw material from the back of the machine and receives the output core produced in front. The second worker stands at the side of machine to remove the ropes and binds which is excluded from the cutter knife. The third worker functions as main operator responsible for the smoothness of the process.

Splitting of cores

When the ropes and binds are ready for sizing, the cores are further split into smaller size of 1.0 to 3.0 mm. The final smooth cores produced are then subjected to grading before they are bundled and wrapped to be marked.

Table 3.2.1. Grading of rattan cores

Grade Criteria 1 whitish in color

hard and not easily broken no or few defects

2 white to yellow in color hard less than 15% of surfaces detective

3 brown to reddish in color soft more than 15% of surfaces detective

Sizing

Rough rattan ropes and binds are shaped and sized into a uniform width and thickness using a peel trimming machine which consist of one horizontal and one vertical knife. The latter cutter serves as a width size and the first cutter controls



the thickness. For producing different size of ropes and binds the cutter knives of the machine need not be replaced, rather an adjustment is made to the holding bar. Two sizes of binds and ropes produced at this stage are:

(1) small (called “chair cane”) which the width and thickness range from 1.50 to 3.0 mm and 0.50 mm to 0.75 mm respectively; and

(2) large (traded as band cane) of which the width and thickness vary from 4.00 mm to 6.00 mm and 1.0 to 1.20 mm respectively.

They are then segregated into three grades of quality before being tied into bundles of 500 kg weight. Table 3.2.2. Criteria for grading ropes and binds

Grade Criteria A yellow white in color

hard and pliable no or few detective surfaces

B creamy in color intermediate hardness - less than 25% of surfaces detective

C brownish in color soft and easily broken - more than 25%of surfaces detective

3.3.2 Production of semi-finished rattan from large-diameter cane

Skin peeling or debarking

Rattan peel is produced by paring of a layer of 0.5 to 2.5 mm thick of cane layer that is cut manually using hand knives and spokes, or using a peeling machine for pre-determined rattan cane diameter, or using grinder that only removes a thin outer layer of the cane. The material are than straightened by hand or machine prior to polishing.

Polishing

Peeled rattans are smooth-sanded with a sequence of polishing machine having different abrasive grits. These machines are connected to each other by a hollow PVC pipe which guides the incoming cane and thus reduces unnecessary handling. Ideally, three polishing machines should be used with different abrasive grits as shown as in table 6.

Table 3.3.1. Polishing

Grade Criteria 1 80 or 120 (coarse) 2 150 or 180 (intermediate) 3 220 or 240 (fine)

The peeled, sanded-smooth products are then sorted into two graded: Grade I



(whitish in color and with no defect) and Grade II (reddish while in color with minimal defects such as mild blue stain). They are sold (marketed) as polished canes (with diameter larger than 20 mm) or as furniture split for cores.

Splitting

Large-diameter partially-processed or polished canes are split in the same way as for small-diameter canes. While smaller cane are used for making binds, ropes and round cores, large-diameter canes are processed mainly for specified square, i.e. round, flat, flat or hollow-oval cores. The grading applied is similar to that used for grading cores of small-diameter cane.

Table 3.3.2. Cores of large-diameter cane

Cores Size (mm) Round Diameter : 3-20 Flat Width : 4.0; 4.5; 5.0; 8.0; 10.0 and 12.0

Thickness : 1.5 Flat Oval Width : 4.0; 4.5; 5.0; 8.0; 10.0 and 12.0

Thickness : 1.5 Hollow Oval Width : 6.0; 8.0 and 10.0

Thickness : 1.5

The sequences of rattan processing are summarized in the flowchart below:



RATTAN

Small Large

Weight

Drying

Sulfur

Sort

Bundle

Dry

Boil

Inferior Good

Market (as raw material)

Splitting

Small

Market (as raw material)

Rough ropes

Good

Fumigate

Sorted

Bundle

Market

Polishing

Grading

Peeling

Good

Bundle

Market

Inferior

Rough

Splitting

Further splitting

Hollow Flat oval Flat Round

Grading

Market

Figure: 3.3.1. Flow chart of raw material processing to marketable product

Large

Grading

Peel trimming sizing

Fumigation required

Debarking

Ropes



3.4. Problems Identification

As figured out on distribution channel of rattan raw material markets in Indonesia, either from Kalimantan, Sulawesi or Sumatra, rattan raw material trade mechanism involves key actors or players beginning from framers, sub-district trader, districts or regency, province of producer areas, province of rattan industry (finished products) and direct market abroad. Each actor has an important role in creating and running rattan business with regards to product supply (quantity and quality), price, and product demand (quantity and quality). So far, they have their own strategy to face every single changing on market situation including the change of the government regulation and policy.

3.4.1 Current market condition at grower level

Farmer is the weakest player in rattan business; nowadays they face the most difficult situation, mainly:

1. Lack of good knowledge of raw rattan processing that influences the price due to low quality.

2. Rattan grower/farmer highly depends on financial support from collector trader, this situation put rattan grower/farmer in “low bargaining position”, it is because most growers need cash money immediately.

3. Lack of guidance from buyers or government on the quality of rattan products, implying the absence of “standard of quality“. Rattan raw material price is controlled by collector or buyer subjectively,

4. Rattan raw material that is collected from natural forest is seasonal and depends on the price and the distance of the sources especially in Sulawesi and Sumatra. The situation affects the productivity and continuity of collecting and results in low earning.

5. Human resources knowledge in entrepreneurship and motivation are low.

6. The government policy has not been encouraging rattan growers’ motivation to cultivating rattan intensively considering that the return from rattan planting is lower compared with other commodity as oil palm.

7. The increase and decrease of rattan demand and price do not significantly change the growers’ earning.

Those all of weakness, will have impact the quantity and quality of supply position, which finally influence to the market systems in all stage.

3.4.2 Current condition local market

On level trader level, is the second weakness element, in position as middleman, they are also facing uncertain situation such as:

1. High transportation cost from producing areas to catch regency buyer (low accessibility), processing cost, due to increasing fuel price as well as permit cost as IHH, SKSHH, and other taxes,



2. Limited access to rattan industry as consumer and price are controlled by the buyers in Java as the center of rattan industry, provincial ban policy for inter-island trading,

3. Lack of supply of large-diameter canes from farmers, as natural forest productivity gets lower caused by over exploitation, and the harvest not basing on the annual allowable cut,

4. Limited access to the international market, such that regency buyers depend on rattan processing industry in Java. Although the price in international market increases, demand from rattan industry still does not increase,

5. Buyers of rattan raw material at districts are mostly larger processing industries that are simultaneously finished product rattan industry in industry centers of Cirebon or others. While, there are rattan industry-buyers in competitor countries that can buy rattan raw material in Indonesia and export directly,

6. Regency traders’ capital has been short, meanwhile they earned lower due to high production cost related to transportation and other costs (legal and illegal).

All these factors have negative impact with respects to delivered quantity and the location of supply source to processing industry.

3.4.3 Current condition in the rattan processing industries

Rattan processing industries have a strategic role to serve supply and demand sides, they create real intermediary function, have support of vital access to both local and export market. Selecting of raw materials for further processing is made by final supplier before rattan sold to end industries. Nevertheless, they are also facing the following situation:

1. Illegal collection applied to raw material rattan; it was initially due to the bureaucracy process and shortage of raw material or uncertain supply to process.

2. Market penetrations of substitution rattan species have reduced the demand from finished-product industries. Most of the later species of rattans that are used as substitution have lower quality compared with the long-demanded species.

3. The number of species needed by local finished industries is limited to those already known. Although other potential species are there, they are not yet promoted.

4. Most of local rattan industries cannot maximize their production capacity,

5. Market of raw material rattan is ‘monopolized’ by rattan buyers in Java which in fact they are also rattan finished products.

6. Most of rattan processing industries are located in district or provincial capital as middleman trader and sell their product to large buyers located in Java. Most of middleman traders are weak in financial capital, and the price they receive is controlled by large buyers with the absence of standard price.



3.4.4 Current condition of rattan finished-product industries

1. To ensure the availability of raw material rattan, there is possibility that raw material rattans are stocked by finished-product industries in large amount for export at later time.

2. High-cost economy occurs, ranging from expensive terminal handling cost (as compared with other countries’), high export tax, and illegal collection.

3. Inefficient utilization of rattan raw material of local rattan industries,

4. Demand of raw material from finished-product industry has been decreasing as the effect of competitor countries supply with lower price for the same raw material,

5. Low productivity and poor work ethos of human resources compared with competitor countries’,

6. High interest rate of local bank, compared with those in competitor countries, made local rattan industry could not grow up.

7. Some kinds of product are produced by local finished-product industries based on order from overseas buyers including the product design.

8. The weakness of copyright law enforcement and lack of promotion contributed to the atmosphere that local design creativity did not grow well.

9. The technology used in rattan processing and production has been of low in term of efficiency in utilizing raw material rattan from natural forest and plantation,

10. Market networking, market intelligence, and promotion in consumer countries are unavailable,

11. Some of rattan industries, especially large buyers and industries in Java, sell best quality rattan raw material abroad (grade A and B) to get cash payment and higher benefit in short rather than process them into finished products. The payment time for finished product takes at least 3 months or more.

All these factors resulted in that rattan industry has a weak competitiveness in front of competitor countries’. This situation has created a disadvantage to Indonesia’s brand finished products and finally a loss of added value in long term.



3.4.5 Distribution channel of rattan trade

Rattan collector is a person that collects rattan from natural forest, and rattan farmers/growers are group of peoples that collect rattan from plantations, mostly found in Kalimantan. In Sumatra and Sulawesi rattan is collected only, that is from natural forest, no rattan plantation of economic-scale in these two islands.

Rattan trader-I (first trader) is a person that buy rattan raw material from grower or collector in producer areas. Trader-I controls the price of rattan raw material in producer areas based on order from trader-II (second trader) as middleman buyer in district or provincial region. A middleman trader applies a treatment or makes processing as W&S (wash and sulfur), quality sorting based on diameter and the presence of defect on cane surface. For large-diameter canes treatment includes boiling and sometimes polishing, packaging, storage to make ready for inter-islands sell (to Java) or direct sell overseas.

Rattan industry in Java further processes rattan to produce skin, fitrit, polished and finished products with design determined by buyers. Most rattan industry in

SMALL SCALE TRADERS

Rattan collectors/ farmers

(Natural& Planted)

DOMESTIC CONSUMPTION

EXPORT

Figure: 3.4.1. Distribution Channel of Rattan Trade in Indonesia

Rattan Industry (Java) Semi-finished &

Finished Products

LARGE SCALE TRADERS

Inter-island Trader

Trader I & II (Sub-District and District)

or Province Initial Processing Industry (W&S and Split)



Java perform contract with small industry based on the design ordered by buyers, while large rattan industry performs finishing of the product. Large rattan industries of Surabaya and Cirebon prefer export selling for the first and second quality raw material (A and B quality) since it is more promising in benefits than selling them to local rattan industries.

Ironically, large amount of raw material rattan are exported to the biggest Indonesia’s competitor countries such as China, Vietnam, Thailand and Cambodia. (Kompas, 2002a). These countries have better investment environment than Indonesia does with regards to support to middle- and small business, government service, and so investors prefer those countries in investment.

In 2004 the government passed Ministry Trade Regulation No: 355/MPP/KEP/ 5/2004 and Sulawesi provinces passed regulation of prohibiting inter-island trade of raw material. A conflict of interest between rattan finished industry (Java) and rattan processing industry in Sulawesi then arouse on these regulations. At one side, finished rattan industries agree to keep up these regulations in order to ensure supply of rattan raw material for local industry and avoid disadvantage situation in the competition with overseas rattan industry. While, at the other side rattan processing industry insists the government to revise this regulation to lift up raw material processing. After a prolong consideration and argues, finally the Ministry of Trade passed a new regulation in 2005, No: 12/M-DAG/PER/6/2005 on Export of Processed Raw Material Rattan allowance with a condition that it will be supervised and controlled every three months. With the pass of 2004 regulation on export ban for raw material and processed rattan, industry put expectation that golden time of rattan industry in Indonesia would comeback. Unfortunately, the competitor countries such as: China, Vietnam, and Thailand entered world market with a stock of raw material rattan during a long period.

At current period of regulations, different distribution channel of rattan raw material are identified as follows.



3.4.5.1 Rattan trade channel in Kalimantan

Remark:

Java Rattan Trader Processing Industry in

Kalimantan

Rattan Growers (Producers)

Rattan Trader Sub. District Level (Broker)

Domestic Market (Final Products)

Export Market (Finished Product)

Rattan Industry Finished-products

EXPORT DESTINATION COUNTRIES

Rattan Trader Processing W&S and

Selecting

Rattan Industry Finished Products (floor mate, basket

ware, mattress, etc

Rattan Industry (Finishing Products in Java)

Figure 3.4.2 Rattan Trade Based on Decree of Ministry of Trade No. 355/MPP/Kep/5/2004

Export Raw/Processing Product Activity (legal/Illegal)

Export Final Product Activity (legal)

Domestic Activity



Remark:

Domestic Market (Finished Products)

Export Market (Finished Products)

Rattan Industry (Finished-products)


Figure: 3.4.3 Rattan Market Trade Channel Based on Decree of Governors Sulawesi on Prohibition of Rattan Raw Material Intra-Insular Trade

Rattan Industry (Finished- products in Java)

Rattan Trader (Processing Industry

in Java)

Rattan Trader District (Processing Industry)

Rattan Industry (Finished-products in Sulawesi)

Rattan Trader (Sub District Level)

Rattan Collectors (Forest)

Export Raw/Processing Product Activity (legal/illegal)

Export Final Product Activity (legal)

Domestic Activity



Remark:

Rattan Collector from Forest (Rattan Raw Material)

Domestic Market (Finished Products)

Export Market Finished Products

Rattan Industry Finished Products


Figure: 3.4.4 Rattan Trade Channel after Decree of Ministry of Trade No. 12/M-DAG/PER/6/2005

Rattan Trader Processing W&S or Boiled in District in Sulawesi

Rattan Trader (Processing Semi-finished product Industry in Java)

Rattan Industry (Finished-product in Java)

Rattan Trader Sub-District Level

Rattan Industry (Semi and Final Product in Sulawesi

Domestic Activity Export Final Product Activity (legal)

Export Raw / Processing Product Activity (legal/illegal)



Remark: Domestic Activity Export Final Product Activity (legal) Export Raw / Processing Product Activity (legal/illegal)

Export Market Finished Products

Rattan Industry Finished Products


Rattan Collector from Forest (Raw Material)

Rattan Trader Sub. District

Rattan Trader Processing Boiled in Sulawesi

Rattan Industry Semi-finished in Sulawesi

Rattan Trader (Processing in Sulawesi Industry in Java)

Rattan Industry Finished -products in Java

Domestic Market Finished Products



3.4.5.2 Rattan trade prices in Kalimantan and Sulawesi

a. Distribution Channel of Rattan Trade in Sulawesi

The Period After The issuance of the Ministry of Trade No: 355/MPP/KEP/5/2004

Remark: Domestic trade activity Export final product activity (legal) Export raw/ processing product activity (legal and illegal)

Based on regulation No: 355/MPP/KEP/5/2004 there are possibilities of trade behavior:

1. Rattan processing industry both in Sulawesi and Java export rattan raw material legal or illegal to competitive countries,

2. Rattan collectors sell directly raw material rattan to large buyer and rattan industry in Java,

3. Most of rattan processing industries in Sulawesi belong to rattan industries in

Domestic Market (Final Product)

Export Market (Final Product)

Rattan Industry Finishing-product, export


Figure: 3.4.2. Distribution channel rattan trade after the issuance No: 355/MPP/KEP/5/2004 355/MPP/KEP/5/2004

Collectors Rattan Raw Material

Rattan Traders in Village, sub-District level and Large buyers

Rattan Processing Semi-finished and Finished-, and Large buyer, Sulawesi

Rattan Industry Finish In Java

Rattan Trader (Processing Industry

in Java



Java, and rattan industries or large buyers control the price of raw material rattan at local market,

4. Large profit amount goes to rattan processing and rattan industry, Meanwhile, although rattan raw material price increases at international market collectors and rattan growers are not affected significantly.

These are the reasons the South Sulawesi Peovice Government to regulate local trade of rattan that is inter-island raw material rattan trade subject to local industry demand fulfillment.

The period after the issuance of Sulawesi Provinces regulation on prohibition of inter-island raw material trade

Obviously, the regulation is to allow the rattan processing or large rattan buyer to export rattan raw material directly to the consumer overseas. Rattan raw material produced from this area were not followed the annual allowable cut, as consequences in few years after the rattan raw material from Sulawesi will out of markets.




Export Market (Finished-product)

Rattan Industry (Finished-product)

Export Destination Countries

Collectors of Rattan Raw Material

Rattan Trader in Sub-District and District level

Rattan Processing & Finish-product Industry in Sulawesi

Rattan Trader and Processing Product

Industry in Java

Rattan Industry Finished Product in Java

Figure: 3.4.3. Distribution Channel Rattan Trade after the Issuance of 2005 Regulation



b. Distribution Channel of Rattan Trade in Sulawesi after the Issuance of Ministry of Trade No: 12/M-DAG/PER/6/2005




Rattan Industry (Finished-product)

Figure: 3.4.5. Distribution Channel of Rattan Trade after the issuance of Ministry of Trade No: 12/M-DAG/PER/6/2005

Rattan Industry (Finished-product in Sulawesi)

Rattan/Collector, Rattan Raw Material

Rattan Trader (small and large) in Village/ sub- District Level

Rattan Trader (Processing Industry in Sulawesi

Rattan Trader (Processing Result Sulawesi’s Industry in Java

Rattan Industry (Finished- product in Java)



c. Distribution Channel Rattan Trade in Kalimantan

Remark:

Domestic trade activity Export finished products (legal) Export raw material and processing products legal and illegal

Most of raw material rattans from Kalimantan are categorized as cultivation rattan and natural forest rattan which is the majority while only two commercial rattans that are planted intensively. Raw material rattans from Kalimantan are sold both locally and export, as raw material and semi-finished products.

Rattan Grower (Rattan Raw Material)

Rattan Trader (Small/Large) in Village/Sub District)

Rattan Trader (Processing Industry in Kalimantan)

Rattan Industry (Final Product in Kalimantan)

Rattan Trader (Processing in Kalimantan) in Java

Rattan Industry (Finishing Product in Java)



Rattan Industry (Finishing Product)

Export Destination Countries

Figure: 3.4.6. Distribution Channel Rattan Trade in Kalimantan



3.5. Government Policy

As major raw material exporting and finished products producing by non producer rattan raw material countries, the government of Indonesia decided to establish through committee called “ Permanent Working Committee both National and regional level. The committee function is to study and provide alternative advises on the rattan policies. By having taken this advice into accountable, and the Government decides policies to boost the rattan industries in step wise. The objectives are to create and provide job opportunities in the country, increasing foreign exchange as well as added value products. These could be achieved through the following strategies such as: banning raw material export, imposing export tax on W&S rattan and export banning semi-finished products, and classifying webbing products into semi-finished products. While, the government does not care that rattan industries in Indonesia has weakness that all finished products based on order from the competitor countries. The competitor countries are dominated market through network of market, skill in design and products accepted in the markets, out let and promotion in the consumer countries. In fact, the regulation that applied by the governments disregarded to the current condition of rattan industry that reason the regulations are not applicable.

3.5.1 The Government Regulation

The government regulation issued in rattan market which relating to export ban or export allowance policy; either for rattan raw material, processing products and rattan finished products are not effectives to protect rattan sources in the natural forest and the local rattan industry. In some way the government issued the regulation to ban the export of rattan raw material and semi-finished products to fulfill rattan raw material for the local rattan industry, but on other side rattan industry and the large buyers export rattan raw material.



Table 3.5.1. The Government Regulation Issued Since 1979-2005

Year Regulation issued Impact Explanation

1979 Ban of rattan raw material export. Initially rattan industry producing semi-finish-ed.

Semi-finished rattan industries development.

1980 - 1986 1. Export of rattan raw material declined.

2. Enjoyed export price of rattan semi-finished.

1. Price of semi-finished increase in overseas markets, due to lack of rattan raw material supply

2. Promising rattan raw material price in the overseas market compared to local.

Overseas rattan industry try to look for other alternative to collect rattan raw material

1992 1. Export tax rattan raw material increase US$ 15 per Kg.

2. Start illegal market.

1. Rattan raw material supply overseas increase (stock)

2. Price of semi-finished become decrease in the local trade

Illegal trade running

1998 1. Export of raw material allowable, but semi-finished ban

2. Ironically, local large rattan industry and large buyer export raw material especially grade A&B

Increase of raw material volume in the competitor countries

Competitor countries become dominant (key) to define rattan product in the international markets

2004 1. Ban export rattan raw material to protect local rattan industry

2. Ironically, large rattan industry and large buyer raw material export raw material especially grade A&B.

Local rattan industry become weak and not competitive compared to competitor rattan industry overseas.

Local rattan industry try to stop raw material and semi-finished. Local rattan industry try to export finished products illegal?.

2005 Open export of raw material from rattan plantations, but from natural forest only a few species from Sulawesi.

Local rattan industry still weak, caused by they lack of market (based on order), low skill design, etc.

Just follow the competitor countries.



In 1977 there also issued that a new policy on modification of export ad-voleram tax increase gradually 30%, 20%, 15% and finally 5%. Regulation that issued by the government of Indonesia in rattan base business, make rattan industry in a broad think about sustainable of supply of rattan raw material through illegal trade. Most of rattan industries are stock their rattan raw material then play with the price of raw quiet high different compared to overseas and illegal trade will continuous normally. On the other case local rattan industry products still based on order and never catch the international market caused lack skills of design, lack of promotion, no outlet the consumer countries, lack of management and intelligent markets.

There is possibility in rattan industry groups of company that belonging to one owner’s, all products can be producing in group with out any relation to others rattan industry.. Indonesian rattan industries position just become as sub- contractors and laborer of overseas rattan industry (by order). How that rattan industry in Indonesia will be competitive, between members in the country created unfair trade. Dumping off, rattan products price in the international markets as a result of this situations.

3.5.2 The impact of inconsistent rattan trade regulation

By export banning of rattan raw material in 1979, there were significant development of semi-finished rattan industries in Indonesia. In 1980, export of rattan raw material declined as much as 26% in volume, from 86,000 tones to 64,000 tones; in term of value the decrease is 1.3 %. However, the price of semi-finished rattan, due to shortage of rattan raw material supply to overseas market, increased. Indonesian rattan industry enjoyed this condition for the period of 1980 to 1986.

During this period, although decreased the price of semi-finished product is insignificant. Export volume of W&S product increased with a declining price on one hand, but on the other hand lampit export from Banjarmasin, South Kalimantan made an increase in both volume and value. By this regulation it was expected that the semi-finished and lampit industry would grow due to high local contents of rattan raw material and the abundance of labor force. This was obvious in that Amuntai, South Kalimantan, dominated export of hand-made lampit, while export of machine-made lampit was mainly originated from Banjarmasin, Tangerang and Surabaya.

The impact of the 1986 policy is a “spread effect” to the price upsurge of Indonesia rattan products. Total export of rattan products reached US$ 214 million in 1986 compared with the last ten year of 1977 of US$ 17.50 million.

After enjoying the success of ever increasing export volume and price of both semi-finished and finished products, the Government and rattan industry had the same view to ban export of semi-finished products. It was simply due to high disparity in added value of both products in terms of export volume, i.e. the export of 130,000 tones of semi-finished products was equivalent to 17,000 tones of finished products export to reach an export worth of US$ 63 million. This means the value of US$ 3.73 per kg of rattan products.

The period starting in 1982 is typified by the government monetary policy, devaluation of Rupiah value on US Dollar, from Rp 970.0 to Rp 2250.0 of US$



1.0 equivalent, lasted until 1990. Although world economic growth declined, the competitors took advantage by absorbing Indonesia raw material rattan sell. Combined with the presence of substitution products, it resulted in the decline of finished product export, furniture and other finished products, since 1992.

The un-continuous supply of raw material rattan caused overseas buyers and rattan industry took advantage of the situation by increasing the price of rattan (raw material). In this period, Indonesia rattan industries (large buyers and industry) preferred export sell of raw material rattan compared than sell to local market. Following this, overseas rattan industry had opportunity to stock rattan raw material for several years.

The above trade situation has put Indonesia rattan industry in a weak and limited bargaining position in international market.

3.6. Rattan Raw Material Price Situation

There is indication that raw material rattan trade is monopolized by large rattan industries in Java and foreign buyers. Most of foreign buyers (Singapore and China) can control the price in local market.

Based on identification to benefit distribution in rattan trade, unfairness between producers (rattan growers), local collectors (dweller), provincial buyers, and East Java buyers, occurs. See Table 3.6.1 to 3.6.4.

Table 3.6.1. Benefit distribution in raw material trade for taman rattan in Kasongan District

Items Buying Price (Rp)

Cost (Rp) Selling Price (Rp)

Benefit Transport & Processing

Total Value (Rp)

Percentage

Grower - - - 700 700 100

Sub District 700 1,000 1,700 3,000 1,300 76

District 3,000 400 3,400 5,000 1,600 47

Province 5,000 400 5,400 6,500 1100 20

Java, Surabaya 6,500 _ 6,500 8000 1,500 23

Sources: Analysis of ITTO the National Consultant (2004)

Table 3.6.2. Benefit distribution in raw material trade for taman rattan in Sampit District



Benefit Transport & Processing Total Value

(Rp) Percenta

ge

Growers - - - 1000 1000 100

District 1000 2500 3500 5500 2000 57

Large Buyers 5500 500 6000 9000 3000 50

Sources: Analysis of ITTO the National Consultant (2004) Notes: * Mostly the buyers from Java, FOB Sampit. Large Buyer mostly directly exported.



Table 3.6.3. Benefit distribution in raw material trade for pulut merah rattan in Sampit District


Cost (Rp) Selling

Price (Rp)

Benefit

Transport & Processing

Total Value (RP)

Percentage

Collector - - - 3000 3000 100

District 3000 8000 11000 15000 4000 36

Large Buyer 15000 1000 16000 25000 9000 56


Table 3.6.4. Benefit distribution in raw material trade for tohiti and batang rattan in

South Sulawesi



Benefit Transport & Processing

Total Value (Rp)

Percentage

Collectors - - - 500 100

District 500 1750 2250 3600 1350 60

Large Buyer 3600 500 4100 7000 2900 71


Table 3.6.5. Benefit distribution in raw material trade for lambang rattan in South

Sulawesi



Benefit

Transport & Processing

Total Value (Rp)

Percentage

Collectors - - - 500 500 100

District 500 1750 2250 2800 550 25

Large Buyer 2800 1000 3800 6000 2200 58

Rattan Industry

6000 3600 9600 15000 5400 56


Note:

Lambang is a best cane for fitrit and high added value. 1 Kg Lambang polished become fitrit recovery about 70 % and processing

cost calculated from the buying price about 30% and transportation & processing cost 30% respectively.

There is a possibility rattan finished products from the importer overseas dominated by large groups of rattan industries caused they are also as large rattan raw material buyer and semi finished products. The middle and small rattan



industries position only as sub contract for large rattan industry while price of products defined by large rattan industry. Indonesian rattan industries position just become as sub- contractors and laborer of overseas rattan industry (by order). How that rattan industry in Indonesia will be competitive, between members in the country created unfair trade. Dumping rattan products price in the international markets as a result of this situations.



Table 3.6.6. Export rattan raw material, Half-finished, and Finished products during year 1977- 2001

YEAR Raw material Half- finished Finished Product Total

Volume Value Average Volume Value Average Volume Value Average Volume Value Average

Kg US$/Kg US$/Kg Kg US$/Kg US$/Kg Kg US$/Kg US$/Kg Kg US$/Kg US$/Kg

1977 68,200,000 12,100,000 0.18 6,500,000 3,400,000 0.52 350,000 1,650,000 4.71 75,050,000 17,150,000 0.23

1978 63,300,000 22,400,000 0.35 6,250,000 3,400,000 0.54 419,000 2,184,000 5.21 69,969,000 27,984,000 0.40

1979 87,300,000 58,000,000 0.66 15,560,000 4,000,000 0.26 1,025,000 6,493,000 6.33 103,885,000 68,493,000 0.66

1980 64,000,000 57,400,000 0.90 15,832,000 14,224,000 0.90 2,792,000 10,200,000 3.65 82,624,000 81,824,000 0.99

1981 49,091,000 49,519,000 1.01 18,383,000 17,774,000 0.97 964,000 5,017,000 5.20 68,438,000 72,310,000 1.06

1982 51,301,000 50,287,000 0.98 24,962,000 19,137,000 0.77 1,261,000 8,181,000 6.49 77,524,000 77,605,000 1.00

1983 46,934,000 42,907,000 0.91 34,285,000 25,497,000 0.74 985,000 7,760,000 7.88 82,204,000 76,164,000 0.93

1984 52,579,000 44,411,000 0.84 37,284,000 35,475,000 0.95 1,547,000 8,200,000 5.30 91,410,000 88,086,000 0.96

1985 68,491,000 62,813,000 0.92 19,479,000 41,822,000 2.15 1,800,000 11,241,000 6.25 89,770,000 115,876,000 1.29

1986 13,217,000 12,813,000 0.97 91,255,000 23,957,000 0.26 4,907,894 21,253,404 4.33 109,379,894 58,023,404 0.53

1987 434,000 394,000 0.91 130,012,000 150,813,920 1.16 17,004,155 63,471,840 3.73 147,450,155 214,679,760 1.46

1988 57,160,080 151,397,000 2.65 28,063,360 120,134,608 4.28 85,223,440 271,531,608 3.19

1989 398,680 744,720 1.87 46,815,399 157,318,387 3.36 47,214,079 158,063,107 3.35

1990 1,667,500 321,560 0.19 74,951,494 222,013,762 2.96 76,618,994 222,335,322 2.90

1991 250,028 297,030 1.19 87,166,119 277,834,063 3.19 87,416,147 278,131,093 3.18

1992 53,297 446,753 8.38 88,361,476 295,584,188 3.35 88,414,773 296,030,941 3.35

1993 53,297 121,089 2.27 102,489,775 335,500,965 3.27 102,543,072 335,622,054 3.27

1994 20,394 69,927 3.43 104,282,201 348,132,703 3.34 104,302,595 348,202,630 3.34

1995 103,668,990 368,181,825 3.55 103,668,990 368,181,825 3.55

1996 86,925,712 337,074,990 3.88 86,925,712 337,074,990 3.88

1997 194,666,250 194,922,004 1.00 194,666,250 194,922,004 1.00

1998 542,010 619,726 1.14 22,314,709 64,371,462 2.88 22,856,719 64,991,188 2.84



YEAR Raw material Half- finished Finished Product Total

Volume Value Average Volume Value Average Volume Value Average Volume Value Average

Kg US$/Kg US$/Kg Kg US$/Kg US$/Kg Kg US$/Kg US$/Kg Kg US$/Kg US$/Kg

1999 7,020,820 4,920,746 0.70 112,078,301 293,959,391 2.62 119,099,121 298,880,137 2.51

2000 16,545,570 10,801,178 0.65 117,976,211 313,537,029 2.66 134,521,781 324,338,207 2.41

2001 18,558,960 10,220,140 0.55 115,944,786 290,311,314 2.50 134,503,746 300,351,454 2.23



Table 3.6.7. Export of rattan furniture during 1986-2002

Year Volume

(Kg) Value (US$)

Average (US$/Kg)

%Volume (FRP)

% Value (FRP)

1986 2,186,815 4,636,434 2.12 44.56 21.82

1987 7,076,685 15,817,132 2.24 41.62 24.92

1988 7,645,117 23,186,421 3.03 27.24 19.30

1989 37,199,767 111,472,389 3.00 79.46 70.86

1990 60,077,987 185,000,507 3.08 80.16 83.33

1991 69,571,906 226,091,650 3.25 79.82 81.38

1992 60,077,987 185,000,507 3.08 67.99 62.59

1993 89,448,551 287,561,451 3.21 87.28 85.71

1994 89,283,454 299,262,612 3.35 85.62 85.96

1995 87,954,275 306,141,067 3.48 84.84 83.15

1996 74,807,169 283,625,315 3.79 86.06 84.14

1997 49,736,914 160,656,120 3.23 25.55 82.42

1998 17,831,592 49,552,941 2.78 79.91 76.98

1999 92,222,421 245,615,611 2.66 82.28 83.55

2000 95,437,612 258,595,871 2.71 80.90 82.48

2001 92,375,587 231,221,388 2.50 79.67 79.65

2002 105,875,582 246,115,383 2.32 79.38 81.48

Furniture

0

50

100

150

200

250

300

350

1986 1988 1990 1992 1994 1996 1998 2000 2002

Year

US

$ m

ill

Table 3.6.8. Export of rattan basket during 1986-2002

Year Volume

(Kg) Value (US$)

Average (US$/Kg)

% Volume (FRP)

% Value (FRP)

1986 118,368 380,137 3.21 2.41 1.79

1987 2,581,173 6,300,153 2.44 15.18 9.93

Furniture

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000110,000120,000

1986 1988 1990 1992 1994 1996 1998 2000 2002

Year

To

ns



Year Volume

(Kg) Value (US$)

Average (US$/Kg)

% Volume (FRP)

% Value (FRP)

1988 3,987,415 10,232,497 2.57 14.21 8.52

1989 5,619,750 14,715,278 2.62 12.00 9.35

1990 4,948,120 15,481,343 3.13 6.60 6.97

1991 5,773,182 17,373,108 3.01 6.62 6.25

1992 7,731,992 23,136,502 2.99 8.75 7.83

1993 10,236,003 30,621,963 2.99 9.99 9.13

1994 11,410,169 33,319,102 2.92 10.94 9.57

1995 12,314,512 39,209,803 3.18 11.88 10.65

1996 10,352,683 38,579,768 3.73 11.91 11.45

1997 143,976,503 26,126,777 0.18 73.96 13.40

1998 4,052,531 11,721,069 2.89 18.16 18.21

1999 19,424,352 45,836,794 2.36 17.33 15.59

2000 21,900,004 51,874,635 2.37 18.56 16.54

2001 22,956,214 55,678,469 2.43 19.80 19.18

2002 26,845,603 52,470,463 1.95 20.13 17.37

Basket

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003Year

Volu

me

(tons)

Basket

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003Year

Val

ue

(US

$)



Table 3.6.9. Export of lampit rattan during 1986-2002

Year Volume

(Kg) Value (US$)

Average (US$/Kg)

% Volume (FRP)

% Value (FRP)

1986 592,820 3,077,225 5.19 12.08 14.48

1987 6,049,743 32,022,619 5.29 35.58 50.45

1988 7,410,193 56,010,726 7.56 26.41 46.62

1989 3,464,899 28,267,390 8.16 7.40 17.97

1990 9,107,369 17,932,480 1.97 12.15 8.08

1991 10,689,027 28,541,036 2.67 12.26 10.27

1992 3,286,831 23,951,188 7.29 3.72 8.10

1993 1,615,785 12,119,999 7.50 1.58 3.61

1994 2,445,662 11,245,599 4.60 2.35 3.23

1995 1,991,039 15,995,387 8.03 1.92 4.34

1996 1,564,630 13,481,826 8.62 1.80 4.00

1997 974,144 8,260,330 8.48 0.50 4.24

1998 430,586 3,097,452 7.19 1.93 4.81

1999 431,528 2,506,986 5.81 0.39 0.85

2000 639,595 3,066,523 4.79 0.54 0.98

2001 612,985 3,411,457 5.57 0.53 1.18

2002 665,355 3,471,743 5.22 0.50 1.15

Lampit

0

2,000

4,000

6,000

8,000

10,000

12,000

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003Year

Vo

lum

e (k

g)



Lampit

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Year

Val

ue

(US

$)

Table 3.6.10. Export of floor mate rattan during 1986-2002

Year Volume

(Kg) Value (US$)

Average (US$/Kg)

% Volume (FRP)

% Value (FRP)

1986 1,976,667 13,053,073 6.60 40.28 61.42

1987 783,838 6,003,717 7.66 4.61 9.46

1988 223,212 2,659,191 11.91 0.80 2.21

1989 220,553 1,638,793 7.43 0.47 1.04

1990 269,884 1,438,854 5.33 0.36 0.65

1991 425,637 2,392,682 5.62 0.49 0.86

1992 685,449 3,002,057 4.38 0.78 1.02

1993 658,712 3,112,610 4.73 0.64 0.93

1994 671,964 2,667,752 3.97 0.64 0.77

1995 687,519 3,992,521 5.81 0.66 1.08

1996 98,025 731,774 7.47 0.11 0.22

Floormate

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

1984 1986 1988 1990 1992 1994 1996 1998

Year

Vo

lum

e (t

on

s)



Floormate

0

2,500,000

5,000,000

7,500,000

10,000,000

12,500,000

15,000,000

1984 1986 1988 1990 1992 1994 1996 1998Year

Val

ue

(US

$)

Table 3.6.11. Export of rattan plating during 1986-2002

Year Volume

(Kg) Value (US$)

Average (US$/Kg)

% Volume (FRP)

% Value (FRP)

1986 33,223 106,536 3.21 0.68 0.50

1987 512,715 3,328,219 6.49 3.02 5.24

1988 1,057,759 3,328,219 3.15 3.77 2.77

1989 310,430 1,223,537 3.94 0.66 0.78

1990 548,134 2,152,578 3.93 0.73 0.97

1991 706,367 3,435,587 4.86 0.81 1.24

1992 656,316 3,240,125 4.94 0.74 1.10

1993 530,654 2,084,942 3.93 0.52 0.62

1994 470,552 1,637,638 3.48 0.45 0.47

1995 721,654 2,843,617 3.94 0.70 0.77

1996 103,205 578,713 5.61 0.12 0.17

Plating

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1984 1986 1988 1990 1992 1994 1996 1998Year

Vo

lum

e (t

on

s)



Plating

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1984 1986 1988 1990 1992 1994 1996 1998

Year

Val

ue

(US

$)



3.7. A framework for a National Strategy Development Plan of Sustainable Rattan Production and Utilization

Items Problems Solution

RESOURCES 1. Supply of raw material not guarantee in continuously and sustainable.

2. No, rehabilitation of commercial rattan species that harvested from the natural forest except two from 60 species.

3. Some of rattan raw material products become scarcity or out of markets

1. Cultivation 2. Increase rattan price in the grower level

RATTAN GROWERS /COLLECTORS

1. Legality of TRL (traditional right lands) that occupied by rural communities from generation to generation.

2. Lack of knowledge. 3. Low bargaining position in the grower level.

1. Legality of land that occupied people surrounding forest lands

2. To improve rattan grower knowledge through training programs and built training center

3. Incentive to stimulate spirit to cultivate rattan

TRADER (I,II,III) Make high cost business Cut off through regulation enforcementPROCESSING RATTAN INDUSTRY

1. Large buyers export rattan raw material to the competitor countries.

2. Key person to define rattan raw material and semi finished price

3. Rattan finished products order and distributed to rattan industry

1. Regulation 2. Supervision 3. Standard Price of rattan raw material

based on treatment and quality

RATTAN FINISHED INDUSTRY 1. Supply of rattan raw material is not guarantee 2. Lack of skill design and Management of products 3. Works based on order from the competitors and in-

efficient

1. Promotion and preparing out let in the consumer countries

2. Market Intelligent 3. Net work marketing



Items Problems Solution

4. Lack of net work of market and out let 4. Incentive

GOVERNMENT 1. Regulation is not encouraged rattan based business

2. High tax, levies and bribery tax result high cost economic

3. Careless, especially to the rattan growers

1. Financial support

2. Regulation should be encouraged rattan growers and rattan industry



CHAPTER 4. CONCLUSIONS AND RECOMMENDATIONS

4.1. Conclusions

4.1.1 Farmer-level Trade

1. Lack of good knowledge of rattan farmer in processing reduced raw rattan price and hence the farmer benefit.

2. Although there is a mutual benefit, high dependency of rattan grower/farmer on collector trader financial support, put rattan grower/farmer in “low bargaining position”. Combined with the absence of “standard of quality”, this caused raw material rattan price has been controlled by collector or buyer subjectively,

3. Natural forest rattan collection works, implies the amount collected, is seasonal, influenced by the distance of the sources especially in Sulawesi and Sumatra and local weather condition.

4. Lower return from rattan planting compared with other commodity planting as oil palm has been an issue in maintaining rattan resource stock.

5. The increase and decrease of rattan demand and price do not significantly change the growers’ earning.

4.1.2 Local Market

1. At lower level trader, rattan trade incur a high cost.

2. Inter-island trade ban policy enacted by some provinces has reduced local trader benefit,

3. Large-diameter rattan from natural forest has been in short supply as natural forest productivity gets lower.

4. At district level buyers of raw rattan are mostly larger processing industries that are simultaneously finished-product industry of Cirebon and others.

5. District level traders are facing high production cost related to transportation and other costs.

4.1.3 Rattan Processing Industries

1. Rattan Processing Industries are facing a high-cost economy in running the business.

2. The number of species needed by local finished industries is limited to those already known although there are a large number of other potential species in natural forest.



3. Most rattan industries operate below its each full production capacity,

4. Market of raw material rattan is dominated by rattan buyers from Java which simultaneously finished product industries.

5. District and provincial trader receive rattan price that is of large buyer’s control with the absence of standard price.

4.1.4 Finished-product Industries

1. There was indication that raw material rattan is stocked by finished-product industries.

2. High-cost economy occurs, ranging from expensive terminal handling cost (as compared with other countries’), high export tax, and other costs.

3. Local rattan industries efficiency level in utilization of raw material has been low.

4. Competitor country can re-export raw material rattan to local finished-product industry with lower price compared with those in local market.

5. Many local finished-product industries have productivity level low and work ethos of human resources poor.

6. Local industries, in particular furniture, are producing based on overseas buyer’s order including the product design. In this regard, local design creativity does not grow. At the same time, law enforcement on copyright law is weak and product promotion efforts have been limited.

7. Higher benefit and good cash payment motivated large buyers and industries in Java to sell abroad best quality raw material rattan, that is of grade A and B.

4.2. Recommendations

1. Improvement of rattan farmers and collectors bargaining position in rattan trade can contribute to the program of local people empowerment. Rattan farmers and collectors empowerment would finally improve rattan resources and stock. Official program in improving rattan farmer capability in processing technology, managerial, and capital support is required.

2. Technology improvement of rattan processing and finished product industries is required in term of efficiency of raw material utilization,

3. Local design creativity is of vital to develop especially furniture design. Large added value included in a design is the reason. A copyright law that protects local designer is a necessary requirement. Government facilitation in advancing design in rattan industry is urgent.

Documents

TECHNICAL REPORT RATTAN RAW MATERIAL · PDF fileSustainable Rattan Development and Utilization (ITTO-Ministry of Forestry) RATTAN RAW MATERIAL TRADE i TECHNICAL REPORT RATTAN RAW MATERIAL