Green Economy and Timber Value Chains
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Transcript of Green Economy and Timber Value Chains
Herry Purnomo
Green Economy and Timber Value Chains
Is it certified?
Is it legal?
Look at your table
• Is the major way to define sustainable forest management
• Leading to inclusive green economy of timber
Forest Certification
Green Economy
• Advocated after Rio+20 summit in June 2012.
• ‘The Future We Want’ (UN 2012):
• Poverty eradication
• Promoting sustainable patterns of consumption and production
• Protecting and managing natural resource development
UNEP 2011
Global Value Chains
• Globalized trade make fragmenting of production
• Linking to global value chains provide better market access
• SMEs are becoming global players
Kaplinsky and Readman (2000)
Global furniture trade US$ 130 billion
Indonesia’s share was about 1.5%, Malaysia 1.5%, Thailand 1% and Vietnam 4%, and China is the biggest.
Why furniture?
1. The most labor intensive industry in forestry – millions people
2. Real business -- $ billions
3. Dominated by SMEs – strength in numbers
4. Women play key roles
5. Stocking carbon outside forest and connected to everyone
Jepara Furniture
• 10% of Indonesia’s export - $110 million annually;
• 11,981 businesses; 0.9 million m3 wood annually
• Hit by global financial crisis in 2008
• Facing legality certification
– EU, USA and Australia
• Women paid less than men
Action research to improve SMEs through five scenarios:
1. Moving Up
– National and international trade exhibitions
2. Green Product: SVLK/TLAS (legality certification) and FSC
3. Small-scale producer Association
Furniture value chain governance
4. Collaborating Down
5. Furniture industry Roadmap 2014-2024: A district regulation will be issued by Jepara Parliament in July 2014
Certification process
• SVLK became mandatory – 21 December 2011 (Ministry of
Forestry Regulation P. 68/Menhut-II/2011).
• Trainings and facilitation for APKJ members
• APKJ members individually and by group obtained SVLK certification in June 2013.
• Pengeringan kayu
– Observasi kondisi pengeringan kayu di Jepara saat ini
– Pembuatan bagan pengeringan 10 jenis kayu
– Pembangunan demplot pengeringan dalam skala IKM di Jepara
– Pelatihan pengeringan kayu (2011, 2012, 2013)
Legality is a part of improving SMEs for capturing greater value added
Understanding cost and benefit for certified forest products
• Cost for producers
– TFT (+6%), FSC (30%), LEI (+10%), SVLK (1-3%)
• Willingness to pay more from consumers
– Forest products: +10-25% (Aguilar dan Vlosky, 2007)
– IKEA product (+16% in England), (+7.5% in Norway) (Veisten, 2007)
Buyer Perspective for certified furniture
Urban buyers (Wulandari et al. 2011)
Conventional 41%
Green23%
Greener20%
Greenest16%
0
5
10
15
20
25
30
35
40
1 5 10 15 20 25
Willingness to pay more (% )
Consumers (%)
Putro, 2010
Role of women
Potential impacts of actions in each scenario on women’s roles
Scenario Potential impact
Very
low
Low Medium Strong Very
strong
Score
Mode
Moving up 0 0 2 6 2 Strong
SME
association
0 0 3 7 0 Strong
Collaborating
down
1 0 1 8 0 Strong
Green product 1 0 3 4 1 Strong
HOW TO: Actions need to be designed specifically for women
MAIN IMPACTS
Improved incomes (statistically significant)
They produced certified furniture
Issuance of District Law (PERDA)
Example of small-teak plantation
Legality
District Law
Securing raw material Small-scale teak
Market penetration
Stocking carbon outside forest
Indonesia is leading in legality verification in ASEAN
• 5 million ha forests under SVLK FLEGT License
– It can be affected by BREXIT
• 5 million ha forests are certified by
– FSC (Forest Stewardship Council) – 2 million ha
– PEFC (Program for Endorsement Forest Certification) – 1 million ha
– LEI (Indonesian Eco-labelling Institute) – 2 million ha
5 million ha certified after 20 years is not good enough, how to move forward?
Brexit impacts on timber trade in Asia Pacific
• Economy
– Declining economy of UK and EU (2-3%)
– EU China Asia Pacific
• Politics
– Less support from UK in EU-FLEGT license negotiation
• Rattles EU-Asia Pacific timber trade
Green Economy and Timber Value Chains
1. Globalized trade and international processes -SDGs
2. Buyer driven
3. Legality and certification
4. Inclusion of SMEs
5. Multi-stakeholder processes – bottom up, government support and women participation
Thank You