October 2012 - Trademax Publications

CIFOR
Jepara made its name as the go-to source for tropical
hardwood furniture in the 19th century when a local
noblewoman, Indonesian feminist icon, R.A. Kartini, sent
Queen Wilhelmina of Holland hand carved furniture as a
wedding gift.
However, only after the 1998 Asian economic meltdown
did Jepara take off as the international source for lowvalue
mahogany and teak furniture. Yet, just as foreign
markets allowed Jepara to soar above Indonesia’s
economic depression in the late 1990s, so its exportdependency
exposed it to the 2008 global downturn while
the rest of the country remained relatively immune.
CIFOR launched the Furniture Value Chain (FVC) project in
Jepara in 2008. The purpose of the project was to help
small producers acclimate to international markets that
they had entered after the 1998 Asian financial crisis.
Illegal logging and a weak rupiah in 1998 had created
prime circumstances for an export furniture market,
explained Purnomo. Although, in the early 2000s,
Indonesia’s economy stabilised and logging became more
controlled, many Jepara carvers had a hard time adjusting.
Competition in price from China, and competition in
quality from furniture manufacturers elsewhere in Java
created further hardships. But no sooner had the FVC
project started, than the global context changed. The
international market for Jepara carvings slowed as
consumers abroad cut back on spending. The incentive to
reforest decreased due to the decreased demand for wood
from the furniture industry. Yet, CIFOR research continued
to work with small-scale producers.
Now, in their latest paper, Purnomo and Fauzen profile
large, medium and small furniture producers in the wake
of the 2008 crisis. Interviewees ranged from a homebased
family of carpenters all the way up to a mechanised
factory with a payroll of 150 workers. The family business
hand-carved chairs for the domestic market, while the
mechanised plant produced “green furniture” for Western
markets, as certified by the Forest Stewardship Council
(FSC) or the Verified Legal Origin (VLO).
When orders dried up in the economic downturn, Purnomo
and Fauzen found that women were the first to be booted
off the payroll. At every level of industry, businesses were
shifting to a domestic market or adjusting to slower and
fewer payments from foreign buyers. So producers cut
corners, eliminating “value-added” stages, starting with
the least skilled and lowest paid, such as sanding –
traditionally women’s work. Hardest hit by the crisis,
according to Purnomo, were the largest operations,
including those who had “gone green.” Their businesses
hinged on just a few big international wholesalers or
retailers, he explains, and “in that kind of hierarchical
value chain, there is no competition between buyers. They
set the price and suppliers just have to take it.”
“The only solution,” Purnomo says, “is for suppliers to
diversify their markets.” The domestic market could offer
a way out, judging from surveys that Purnomo has led,
which showed a sizeable proportion of Indonesian
consumers (16% of 408 people interviewed) would be
willing to pay nearly 20% higher for green certified
furniture – a “green” premium about on a par with English
consumers and twice as high as Norway’s, according to
recent research.
The problem, though, is that Indonesia lacks a domestic
certification mechanism comparable to the USA’s Lacey
Act or Europe’s Volunteer Partnership Agreement that
have made similar sustainability demands there law.
“Willingness to pay must come with law enforcement,”
says Purnomo. “For the domestic market, there is a
willingness to pay but there is no rule or law.” He
recognises that the case presents a catch-22 dilemma,
though: consumers won’t buy “green furniture” unless it’s
certified, but the government won’t set up a certifying
agency until there’s demonstrated consumer demand.
He expects that the dilemma will resolve itself as Jepara’s
furniture bounces back – wiser this time, he hopes, after
its post-2008 near-death experience.
Read more:
• Uncovering the complexity: An essay on the
benefits of the value chain approach to global
crisis studies-a case study from Jepara, Indonesia
by Fauzan A.U.; Purnomo, H.
• Women championing the preservation of an
invaluable cultural heritage by Nita Murjani
• New timber regulation to force companies away
from business-as-usual practices by Leoni Aurora
Published with permission from CIFOR.
For more information visit www.cifor.org.
// OCTOBER 2012 55