The Bamboo and Rattan Sectors in Asia: an Analysis of ... - INBAR

and opportunities throughout the system. The ability to sell the commodity depends
on the demand by consumers for the final product, and the effectiveness of the
processing and distribution systems to respond consumer demand. Likewise the
competitiveness of the final product depends on the efficiency throughout the system
of raw material production and transformation. Any effort to improve or develop a
product must understand the various actors and their functions in processing and
marketing the product. More than just the actual physical transformations, it is also
necessary to understand the linkages among the various actors within the system.
A PCS can be considered in three "dimensions". The first, the vertical dimension,
refers to the flow of material from its production to the final consumer. A series of
basic functions must be performed to take any natural product from its origin as a
plant (or animal) to the final market. The biological material must grow and be
harvested, whether in the wild or cultivated. It must be processed to refine, prevent
spoilage, separate valuable components from other kinds of valuable components or
remove waste, and make the product more useful and attractive. This processed
product may then be consumed or marketed for direct consumption, or it may be
used as an input to manufacture another product. Each activity that physically modifies
the product can be called a 'transformation in form'. Along the way, the product is
bought and sold (transformed in ownership), transported from place to place
(transformed in space) and stored (transformed in time). The 'actors' or 'participants'
who are involved in these transformations in a typical forest product PCS include
input suppliers (where they exist), forest collectors or farmers, intermediaries and
wholesale traders, sorters, processors, retailers, and consumers.
The organization and coordination among the various actors in a PCS can be as
or more important than the physical processing activities themselves. Forest products
markets are characterized by a number of market imperfections, including imperfect
information and marked variability in the quality and availability of the product.
Buyers and sellers often find it advantageous to engage in a variety of contract
arrangements as a way to reduce transaction costs (Belcher 1997).
It is also important to recognize that the markets themselves are not homogenous.
Bottema and Ferrari (1992), looking at agricultural markets, observe that a large variety
or types of markets and phases in market development co-exist in the same areas in
rural Asia. Local markets for food and perishables exist side by side with large-scale
collection markets of raw materials for large-scale industry or for export. Similar
heterogeneity is found in forest products markets. For example, bamboo from a
particular forest might be harvested and used for domestic consumption, for baskets
for sale in a regional market, or sold to a pulp mill.
The second 'dimension', the intensity dimension, is concerned with the physical
transformations of the product at a particular stage ---- the growing or harvesting or
various stages of processing. Any of these functions can be performed at higher or
lower levels of intensity; that is, higher or lower levels of capital or labor inputs.
Where labor costs are low, it is often advantageous to substitute labor for capital. But
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