A system dynamics approach to balancing wood supply and demand for sustaining the future industry
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Transcript of A system dynamics approach to balancing wood supply and demand for sustaining the future industry
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A System Dynamics Approach to Balancing Wood Supply and Demand for
Sustaining the Furniture Industry
Herry Purnomo, Lutfy Abdullah and Rika Harini Irawati
Perth, 12–16 December 2011
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I. Introduction
II. Methods
III. Results
IV.Discussion
V. Conclusion
Structure
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Austria
2%
France
3%
Denmark
3%
USA
4%
Canada
6%
Italy
13%
Germany
8%Indonesia
2%
Mexico
2%
China
16%
Poland
7%
Malaysia
3%
Other developed
countries
15%
Other emerging
countries
16%
• The global
furniture trade is
worth US$130
billion
• Indonesia’s
share is 1.5% of
the furniture
trade
I. INTRODUCTION
Global furniture trade
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Furniture in Indonesia
• Small and medium-
sized enterprises
(SMEs) account for
95% of production.
• Livelihoods of ≈ 5
million people in
Java depend on
furniture industry and
its chains.
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Status of the furniture industry in Jepara District (the study area)
• 12,000 business units
• 0.8 million m3 wood
processed yearly
• 27% of Jepara’s economy
• Wood supply scarcity
• Fierce competition with
China and Vietnam
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Wood
Demand
Scale of
industry
Mean of wood
consumption
(m3/year)
Number of
workshops
Total wood
consumption
(m3/year)
Small-scale 99 8,118 803,682
Medium-scale 269 158 42,502
Large-scale 1,155 13 15,015
Total 104 8,289 862,056
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Wood Supply
Potential wood
suppliers
Area (ha) Wood supplies
(m3/year)
Inside
Jepara
PERHUTANI Java 1,100,534 450,000 x
PERHUTANI Central
Java 300,000 298,410 x
PERHUTANI Jepara 23,627 20,000 v
Community forests,
Jepara 1,265 2,272 v
Community forests,
Indonesia 265,708 400,000 x
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Problems
• Wood demand exceeds supply
– There is a regulation for each district to be self sufficient
• China-ASEAN Free Trade Agreement (CHAFTA)
can decrease the furniture demand.
• Forest certification and chain of custody can
increase the furniture price
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II. METHOD
• System dynamics modelling offers a dynamic
concept of process-based orientation (Forrester
1961).
• The method comprises (Grant et al. 1997)
– Conceptual model development
– Specification and execution of the model
– Evaluation of the model
– Use of the model
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III. RESULTS
Conceptual model
CommunityForest
PerhutaniForest
Logs
CommunityLogHarvesting
PerhutaniLogHarvesting
FurnitureProcessing
LogIntake
FurnitureInMarket
Delivering
Planting
PerhutaniPlanting
FurnitureInUse
Supplying Decaying
ForestOusideJepara
ForestOutJeparaHarvesting
DomesticDemandTrendInternationalDemandTrend
CHAFTACertification
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Wood Demand and Supply (m3)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
BAU Demand
BAU Supply
Note: BAU = Business as usual
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Wood supply and demand under CHAFTA and certification scenario (m3)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
CAFTA Demand
CAFTA Supply
Demand
decreases
compared
to BAU
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IV. DISCUSSION
• The current Jepara wood demand was fulfilled
by wood from outside Jepara and projected to
continue happening in the future.
• Incentive to grow trees did not occur in Jepara,
because the profit margin for growing teak is
very low.
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• CHAFTA and certification decrease wood
demand, but will not affect wood supply.
– The decrease in demand will decrease the wood
demand.
– The wood supply is insensitive to this decrease,
because the market share of wood in Jepara is still
low.
• Increasing furniture prices is the right way to
increase wood prices and in turn to increase
incentive to grow trees.
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Actions
• Training on how to plant teak
• Benefit-sharing agreement
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• Planting super teak by furniture producers
• Collaboration with wood retailers
• Efficiency of wood uses
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V. CONCLUSION
• The sustainability of furniture industry is challenged
because of the imbalance of wood supply and
demand.
• CHAFTA and certification are not the answer to the
problem.
• Increasing furniture prices is a must, in order to
encourage people to grow trees.
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Thank YOU