Laos has an emerging forest plantation industry, based on both smallholder and corporate growers. The Lao PDR Forestry Strategy to 2020 envisages a substantial forest plantation estate, with a target of a total of 500 000 hectares of tree plantations. Plantations and planted trees have the capacity to provide significant financial benefits to Lao PDR, and to smallholder growers. The plantation resource could have an annual farm gate value of $197 million at full production and will offer further value through primary and secondary wood processing (Midgley et al 2011). However, there are many challenges, constraints and opportunities which need to be addressed in order to maximise returns to smallholders and support the development of competitive value-added wood industries.
Although the Lao timber industry has grown rapidly over the past three decades, the export value of finished wood products has been very low compared to that of squared logs or basic sawnwood. Considerable research and development is needed to in the value-adding wood processing and manufacturing sector to enable the production of high value wood products such as furniture and flooring.
This project proposal is largely based on the findings of a recent ACIAR Scoping Study (C2010/101; Midgley et al 2011) on the background and potential research needed for Payments for Environmental Services and Planted Log Value Chains in Lao PDR.
The overall aim is to improve livelihoods for farmers and processing workers and the international competitiveness of Lao PDR wood industries through improved efficiency of key elements of the planted wood value chain. Specific objectives are to:
- address constraints and inefficiencies in the value chain, from harvest to processor stages, that limit returns to smallholder growers;
- increase returns to processors and smallholders through improved efficiencies of the primary wood processing sector;
- improve the value and quality of wood products for domestic and export markets
- enhance the competitiveness and capacity of wood processing industries.
The project builds upon the achievements from a previous project, FST/2005/100 Value-adding to Lao plantation timber products, which focused on building capacity and enhancing the range, quality and value of manufactured wood products in Lao PDR.
The specific research questions that the project will address are:
1. What is the extent and age class distribution of smallholder planted trees available for value added processing in the Luang Prabang region?
2. How can barriers to legal registration of smallholder planted trees be addressed, and transaction costs in their sale and delivery be diminished?
3. What forms of grower organisation and group certification are feasible and sustainable, and will improve returns to smallholders?
4. Which practices and processing technologies would facilitate significant improvements from log yard to seasoning and increase primary processing value recovery
5. Which practices and value-added manufacturing technologies would increase the value recovery of small dimensions, inferior quality plantation wood and facilitate early improvements from dry feed stock to marketable products?
6. Which strategies can be applied to improve productivity and quality in wood processing and manufacturing to improve competitiveness in global markets?
7. What training programs would be most efficient in improving skills in Lao wood processing and manufacturing?
8. What strategic actions are needed to improve the international competitiveness of the Lao wood industries?
The overall methodology used in this project is based on value chain analysis, with targeted research activities to address identified constraints and inefficiencies. The research approach involves a combination of analysis of spatial information; institutional and regulatory analysis; community based action research; capacity building and implementation of wood science research activities.
The principal outputs can be summarised as follows:
- Baseline and ongoing characterisation of the smallholder planted tree resource base
- A simplified system for legal registration of smallholder trees, and more appropriate standards for sustainable smallholder tree growing
- More effective organisation and coordination of smallholder tree growers.
- Detailed knowledge of the current wood recovery rate and production efficiency in primary and secondary wood processing companies.
- Recommendations for best options for improving primary and secondary processing value recovery for plantation grown wood for different products and market segments.
- Set of specifications on quality and performance requirements for various wood products for different market segments.
- Recommendation about best strategies for improving product design.
- Market development strategy for the Lao wood processing industry.
- Recommendations for developing most efficient training programs and University curricula including strategy for collaboration between existing providers.
- Improved research capacity through improved research facilities (laboratory equipment and testing procedures), teaching and learning resources, research skills and expertise.
The main impacts and benefits arising expected form the project are:
- Scientific impacts will be: improved knowledge of the extent of planted teak and the measures needed to enhance log quality; simpler system for demonstrating legality, increased knowledge of optimal utilization of small dimensions, inferior quality plantation grown timbers; and increased scientific capabilities of Lao participants.
- Economic impacts will be: (i) improved returns to smallholders; more secure market access to higher-value markets for the plantation-based sector; increased value-adding of plantation-grown timbers; and improved competitiveness of Lao industry on domestic and international markets, (ii) greater returns to smallholder growers from reduced transaction costs and improved market access.
- Social impacts will be: improved livelihoods of smallholder growers; greater and more secure opportunities for employment in the plantation wood processing sector; improved skills base in the wood processing sector in Lao PDR;
- Environmental impacts will be: the recognition and mitigation of any adverse environmental impacts, due to the more widespread adoption of forest certification and development and implementation of a forest practices code.
Within Australia, the major benefit will be new knowledge on value added processing for plantation grown teak and the potential to facilitate greater access to Australian markets for smallholder plantation timber which can demonstrate that it has been produced legally.
The project will be led by the University of Melbourne, in collaboration with Australian partners ANU and DEEDI. Salwood Asia Pacific and other Australian specialist input relevant to Objective 1 will contribute to the project through ANU. The Australian project partners have, a proven track record in implementing ACIAR forest industry projects and of collaboration and capacity building with Lao partners.
The principal partners in Lao PDR will be National University of Laos, Souphanouvong University, Pakpasack Technical School, Lao Furniture Industry Association, Ministry of Industry and Commerce, National Wood Industry Association, Luang Prabang Teak Program and Lao Forest and Trade Platform. The Northern Agricultural and Forestry Research Institute, Department of Forestry and Department of Forest Inspection are also important partners, but with more limited roles.
The project structure and its activities will inspire the development of a strong collaboration between these organisations which will facilitate the value chain strengthening and advancement.