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

cases, raw material is harvested by people who function, more or less, as hired labor.
They go as collectors into forest land over which they may have some traditional
communal tenure, but the resource is currently treated more like an open-access
resource. In most cases, the resource rights are held by the state and allocated to
private companies or individuals (Kalimantan, Kerala, Laos, Sulawesi, the Philippines)
or actually harvested by employees of the state forest department (Madhya Pradesh,
Java). Most of the economic rent is captured by concessionaires or by the forest
departments.
Similarly, in most of the cases studied, competitive market forces appear to be
constrained by hierarchical forces. This tendency is much more marked at the early
stages of the various PCS, where raw material producers may have only one or very
few buyers. A variety of informal contract arrangements are used, with traders
commonly advancing money and/or supplies to raw material harvesters in return for
implicit or explicit agreement to sell to only that trader. Even at higher levels in the
system, long-term personal arrangements between business partners tend to be more
important than spot sales. Prices are negotiated, but price is not the most important
factor. In the Indian cases (Kerala and Madhya Pradesh) differential bamboo prices
are set by formulas and allocated according to social and political criteria.
The tendency toward contract buying can be explained, at least in part, by the
nature of the material. Most importantly, quality is inconsistent. Bamboo and rattan,
like most biological resources, are not homogenous. The size, density and other
inherent characteristics important to consumers/users vary with species (many species
are used), the particular genotype, as well as with age and growing conditions.
Moreover, these commodities are perishable. As the semi-processing and
manufacturing processes become more mechanized and as the manufacturers try to
supply large orders, uniformity, consistency and on-time delivery become much more
important. Under these conditions, it is not possible for buyers at any stage in the
PCS to simply purchase their rattan or bamboo unseen, nor to rely on the vagaries
of the market to deliver the quality and quantity of raw material required. It is too
costly to inspect each and every consignment to determine the quality, and then
negotiate the price. Instead buyers prefer to enter into longer term relationships with
sellers. In this approach trust and longer term (if informal) contractual agreements
can reduce the transactions costs of buying and selling. Thus, the trend toward contract
buying is likely to be reinforced.
Such long-term arrangements are attractive also from the sellers' side. Raw
material production is geographically dispersed. The wild, and even much of the
cultivated, material is grown far from the processing centers. Transportation and
communications infrastructure is typically poor in the areas that produce the raw
material. Harvesters and growers of bamboo and rattan often do not have direct
access to raw material buyers, and they do not have information (or access to
information) on prices, quality requirements or other market information. For them,
as individuals, the transaction costs involved in making those contracts, arranging
for transportation and negotiating the sales would be far too high. The higher prices
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