PHILIPPINES RATTAN VALUE CHAIN STUDY - Aboutphilippines

EXECUTIVE SUMMARYClose to one million Filipinos are employed in the rattan industry, including gatherers, permittees, traders,manufacturers, and exporters. In the past decade, the industry has been losing market share primarily due to(a) declining stocks of quality wild rattan, (b) poor quality control at harvesting and post-harvesting stages, (c)widespread corruption and distorted forest taxes, which discourage investment in improvements, and (d) internationalmarket saturation from cheap rattan furniture producedby other Asian countries that have reduced rattan’s appealin more exclusive designer markets (the Philippines niche market).The FRAME-sponsored study, a program of the United StatesAgency for International Development (USAID), surveyed actorsthroughout the rattan value chain in representative rattanproduction and manufacturing areas of the Philippines. Thestudy mapped the nature, wealth, and power dynamics of therattan sector of the Philippines. Study results were presented to across-section of the rattan actors at a workshop in Quezon City;the following were the top recommendations for improving thesector’s performance.Reduce corruption in rattan access and increase skills offorest managers to meet government requirements. Makepermits less risky, encourage government to stop managing rattanconcessions based on political hot topics, reduce the paperwork requirements and opportunities for bribecollection. The “one-stop checkpoint” model developed in Agusan was a model noted to increase transparency.Better horizontal coordination among gatherers and permittees through federations is an effective wayto improve rattan production management skills.Institute uniform quality standards for rattan throughout the industry. Have gatherers collect rattan forspecific orders only, institute “just in time” supply practices to reduce rattan pole damage in storage, communicateand enforce a uniform rattan grading and quality system, and communicate margins needed at gathererand permittee levels to be able to institute quality improvements. Greater vertical integration within the rattansector will be needed to achieve this goal.Provide greater access to financing to expand the Philippine’s position in high-end furniture. Thestudy analysis and all the actors agreed that the Philippine’s competitive advantage is in high-end, designsavvyfurniture and home accessories. But, financing mechanisms will be needed throughout the value chainto support this strategy, and current financing is lacking, because forest products cannot be used as collateral.Exploring ways to allow rattan concessions to be used as collateral is needed.FRAME: PHILIPPINES RATTAN VALUE CHAIN STUDY 1