A National Workshop was held in Luang Prabang, Lao PDR, in May 1998 that focused on improving benzoin production within the country. Presentations were made which covered the general status of benzoin production; socio-economic conditions at villages; styrax tree improvement and silviculture; tapping and processing; and marketing.
After the workshop presentations, the participants identified three major topics for group discussion. Three working groups were then formed to address the topics of: 1) silviculture and benzoin processing; 2) land use policy; and 3) marketing system. The working group discussions and recommendations are presented below. In some instances, the recommendations made by FAO consultants and officers who were involved in the benzoin project (not necessarily presented at the workshop) are incorporated into the relevant sections and identified as to its source.
10.2.1 Genetic improvement
The potential variation in growth and resin yield and the opportunity for selection and improvement of Styrax tonkinensis were recognized. The provenance trials established by the FAO Benzoin project are the first step towards determining the genetic variation within the species. However, these trials are still young and need several more years before reliable conclusions can be drawn.
The working group felt that until reliable results from the project provenance trials become available there is no need to undertake additional research on tree improvement in the immediate future.
10.2.2 Maintenance of field trials
The project has initiated two provenance trials and one agroforestry trial. All were established in 1997. For the provenance trials it is necessary to maintain them until they are suitable for resin tapping and the best provenances in terms of resin production and growth are identified. For this reason the trials need to be maintained for at least an additional five years up to 2003. The agroforestry trial was re-established with the first rice and mung bean crops sown in April/May 1998. At least two seasons of crop cultivation are needed in order to examine changes in soil properties. A third crop planting should be considered if it is practicable.
Although funding from FAO carried through only until June 1998, further support has already been secured from an EU Micro Projects Luang Prabang Phase II in Luang Prabang until 2002. The funds are sufficient to maintain and measure the above trials. Nevertheless, the working group recommended that technical inputs from specialists be sought to assist the Luang Prabang Forestry Section in: 1) conducting resin tapping experiments; and 2) data analysis and interpretation of results of agroforestry and provenance trials.
10.2.3 Silvicultural treatments for better stand management
There have been no systematic silvicultural treatments in the benzoin cultivation areas. Some silvicultural treatments that may help improve benzoin production are:
1) thinning young styrax plants after rice harvest to reduce competition among them and lead to more uniform growth of the styrax trees; and
2) promoting a large crown canopy by undertaking pruning or pollarding. It is expected that this silvicultural treatment will lead to an increase in stem diameter. It will also increase the overall transpiration rate which should stimulate sap flow and subsequent formation of resin.
Thinning appears to be relatively simple to carry out in young styrax stands when the optimal stocking density is known. The timing and intensity of pruning or pollarding however need to be determined. The working group recommended that pruning and pollarding treatments be studied in the follow-up work programme funded by the EU.
10.2.4 Future approach of the agroforestry trial
The agroforestry trial employed an alley cropping system where rice and mung bean were planted between rows of styrax trees. This experiment aimed to determine: 1) the suitable spacing of styrax trees that will permit inter-cropping for as long as possible; 2) the efficiency of mung bean in restoring soil fertility to maintain, if not improve, rice yields; and 3) the opportunity for inter-planting other income-generating trees and crops.
The working group recognized that alley cropping systems were not always feasible for villagers. General inter-cropping where suitable numbers of naturally regenerated styrax trees occur may have the greatest potential. Information obtained from the alley cropping experiment and from other sources such as the IUCN Sustainable Utilization of Non-Timber Forest Products in Lao PDR can be modified for general application in the future.
10.2.5 Tapping techniques
There were clear differences among eight tapping methods in terms of resin yield and size of resin drops. The Malaysian methods proved to be least effective while the Standardized Traditional Lao Method A (Type 5), the Standardized Indonesian Method (Type 7) and the V-shaped Method (Type 8) gave satisfactory results (see Chapter 5, section 5.3). The tapping trials, however, have yet to define the best method and its practicality.
The working group recommended that the effectiveness of the three best tapping methods (Types 5, 7 and 8) be examined further, and that the methods be tested at another site. It was also recommended that the timing of tapping be investigated.
10.2.6 Processing and product development
The benzoin exported from Lao PDR is in the form in which it is collected from styrax trees. The price of the raw benzoin paid to the collectors fluctuates considerably; in recent years it has been relatively low. At the beginning of the 1998 season the collectors obtained 2,500-3,000 kip per kg. The price is dependent, in part, on the levels of supply, i.e. the productivity of a particular season.
Development of finished products using benzoin as a raw material might be one way of trying to help expand markets and so increase demand and hence price to the collector. It may be more appropriate at this stage to consider cottage industry products aimed at the domestic market. Incense sticks and traditional medicines are already being produced in China. In Viet Nam, toothpicks are made from the wood of S. tonkinensis.
The working group recommended that a feasibility study be conducted to explore the possibility of developing local industries for finished products using benzoin as well as the wood of S. tonkinensis.
10.3.1 Benzoin production and land use
The working group acknowledged the importance of sources of cash income such as benzoin for the rural people living in the uplands of northern Lao PDR. Therefore, the production of benzoin should be continuously promoted, as well as the research on improving its production and developing its use. Both possibilities to produce benzoin, extraction from natural stands and production from cultivated stands (plantations), should be included in the future research agenda. Special consideration should be given to keep the production of benzoin on a farm-based level, so that the people who traditionally produce benzoin can also derive greater benefit from it in the future.
The working group agreed that the focus on one particular non-wood forest product such as benzoin does not sufficiently reflect the socio-economic and production conditions in which the farmers live. It was recommended that other NWFPs be included in an adapted and broader future working focus on benzoin.
10.3.2 Land allocation
For the production of benzoin, a minimum fallow/production period of 7-8 years is required. Present land allocation schemes do not appear to take this fact sufficiently into consideration. On the currently allocated plots the fallow period is too short for benzoin production.
Based on the experiences of projects working with land use planning and land allocation, the working group recommended that future activities to promote benzoin production take into consideration the entire production system.
10.3.3 Village development plans and surveys
Land allocation could be made a part of village development plans which are supported by the local governments. This could include activities in the fields of: 1) agroforestry; 2) permanent crop cultivation (including NWFPs); and 3) creation of non-agricultural jobs.
The future stability of the supply of benzoin rests with the villagers. In the shorter term, a more attractive price to the farmer is the clearest way of ensuring that benzoin continues to be collected. Not enough is known about the opinions of the farmers themselves and what they see as being necessary to improve the situation. Is price the most important aspect of the decision-making process when farmers are deciding whether or not to tap/collect benzoin? What would be necessary to induce those who choose not to tap to change their mind? Is tapping being increasingly left to the older members of the village? What is the attitude of the young in the villages to benzoin collection? How do the economic returns from livestock and other cash crops compare to those from benzoin, now and in the foreseeable future? To provide answers to these questions, it was recommended that village surveys be undertaken in as many districts as possible in the benzoin-producing provinces. The surveys should assess the attitudes of shifting cultivators to benzoin production and identify the factors which are most important in determining whether or not they participate in it.
10.3.4 Forest classification
The forest classification system presently used in Lao PDR does not deal with the use of NWFPs. The working group recommended that the potential of the forest classification types for incorporating NWFPs be investigated further. There may be a need for further refining the forest classification system.
10.3.5 Guidelines for the use of NWFPs
The Government of Lao PDR already recognizes the importance of NWFPs for rural development. The working group recommended that a more detailed version of the present guidelines on the use and promotion of NWFPs be formulated. This should also give higher priority to NWFP cultivation in agroforestry management systems, which would be of benefit to benzoin production.
10.4.1 Quota system and government regulations
The Ministry of Agriculture and Forestry controls all agricultural and forestry products, including non-wood forest products (NWFPs). Businessmen and private companies have to register their names and provide proof of funds in banks and evidence of storage facilities. Each June, the applicant must submit an annual buying plan for each commodity they deal in that province. Based on this request, final approval and permission is issued by the Provincial Agriculture and Forestry Office (PAFO) as a quota for the year, because PAFO is responsible for the exploitation of forest products. At that time, the applicant must pay a 3% natural resource tax.
The working group recommended that the government should review its policy on the current quota system and regulations concerned.
10.4.2 Access to the villages
Some benzoin traders prefer to have free access to benzoin-producing villages. However, in order to maintain a stable benzoin market at the village level, the government guidelines only allow the benzoin traders who have registered with PAFO to deal directly with villagers collecting benzoin. These traders cannot buy benzoin more than the quota being approved by PAFO. The working group recommended that this issue be reviewed for any better alternatives.
10.4.3 Buying policy and pricing system
The traders seem to have final and decisive power to determine the price of the product. In general, there is no difference in price according to quality when benzoin is purchased from farmers. Traders or middlemen undertake grading based on the size of benzoin pieces, together with cleaning (removing sand, dust, etc.). Prices are largely controlled by the export prices of the year and tend to fluctuate.
In the last few years, benzoin prices have remained at a low level. This discouraged farmers from tapping benzoin and led to a shortage in benzoin supply during 1996-97. A sharp increase in prices in 1997 followed. The devaluation of the kip against the US dollar after July 1997 also contributed to this trend. Traders and middlemen have started to pay much higher prices to the producers.
The working group recognized a need for PAFO to monitor such a changing trend.
10.4.4 Export and other taxes and its procedures
Businessmen or private companies are required to pay a 10% export tax to the government. In addition, they are assessed for other taxes, such as a business tax, income tax, and profit tax. The working group noted that the current export tax system might function as a disincentive. The FAO consultants and officers recommended that the export tax be removed in order to encourage NWFP exports.
Some working group members stated that there are many constraints in the government trade and export procedures, which cause considerable delays in the export of benzoin. Noting that such constraints have resulted in missing business opportunities, the working group recommended that the government simplify procedures involved in exporting benzoin.
10.4.5 Marketing routes through Thailand
The working group noted that although Thailand officially prohibits imports of agricultural products from Lao PRD, which includes NWFPs such as benzoin, in reality imports of such commodities do take place. This situation has unnecessarily made the export of Lao agricultural products and NWFPs to Thailand illegal. It was recommended that the issue of trade in agricultural products and NWFPs between Lao PDR and Thailand be discussed and resolved in a forum of the Association of Southeast Asian Nations (ASEAN) or the ASEAN Free Trade Area (AFTA).
10.4.6 Examination of benzoin quality and grading system
The working group noted that the current grading system is insufficient in terms of quality control. As mentioned in section 10.4.3 above, grading is practised by middlemen or traders and is done by size alone. Although this meets the current market requirements as far as it goes, there was a consensus within the working group of the need to improve the system to make it more attractive to buyers and fairer to the producers. It was recommended that the grading system be reviewed to determine how to establish better quality standards and improve the payment to producers on the basis of quality scales in size, colour and purity.
The question of how to preserve the quality of benzoin after harvesting and during the post-harvesting period was discussed. The change of colour from white to light brown and brown suggests that oxidation takes place on the surface, while the interior of the benzoin pieces remains white. Under the current system, this is not a quality issue of concern to traders. Traders are concerned with adulteration and the quantity of dust in the benzoin. It may be necessary to await results of the chemical analysis on samples to understand the degradation process and what measures could be recommended to improve the handling and storage. One storage option to be investigated is vacuum packing. The FAO consultant recommended that despite reservations about the practicalities and benefits of vacuum packing, tests of its use with benzoin be undertaken.
10.4.7 Benzoin quality certification
If quality certification of benzoin were to be adopted in Lao PDR, careful consideration must be given to the conditions under which it might operate. The issues are varied and complex and include:
1) Should certification be compulsory or voluntary?
2) Who would bear the cost of certification?
3) How and where should the consignments be sampled and analyzed, and by whom?
4) If certification were to become compulsory, what measures would need to be taken to ensure that benzoin exported from points other than Vientiane was included?
5) Who would be the arbiter in the event of dispute between buyer and seller over a certified consignment?
In view of the fundamental change to business practices that the introduction of quality certification would represent, The FAO marketing consultant recommended that the views of all parties concerned - producers, exporters, government departments - be first sought through a round-table meeting. The meeting could be organized and chaired by a representative of the Food & Drug Quality Control Centre.
10.4.8 Benzoin statistics
The problems of the poor recording of benzoin statistics at both the national and provincial levels urgently need to be addressed. The FAO marketing consultant recommended that representatives of the Department of Agriculture, the Department of Forestry, the Department of Trade, and the Ministry of Commerce (Statistics Division) meet to discuss and formulate procedures for collecting and collating production and domestic trade data annually. In collaboration with Lao Customs, steps should also be taken to see that records are kept of benzoin exports by volume and value, with countries of destination, and that these records are made easily accessible.
10.4.9 Information system for villagers, exporters and middlemen
The working group acknowledged that France has historically monopolized the Lao benzoin trade although accurate trade statistics quantifying this are not available. The benzoin trade information in the country appears to be in the hands of the traders. Government offices, such as PAFO, should regularly investigate the production levels of benzoin in villages but the effort remains incomplete because of difficulties in allocating staff and funds to permit visiting remote villages. FAO officers and consultants recommended that staff and budget of PAFO be increased to conduct this regular survey in collaboration with the District Agriculture and Forestry Offices (DAFO).
Villagers have no idea about prices and demand levels of the current year unless they are informed by middlemen. This is a source of frustration among villagers because they cannot decide production levels in advance of tapping operations for the season.
FAO officers recommended that PAFO and DAFO should establish the information collection and dissemination services to villagers based on the benzoin prices of the year predicted by traders and quota permissions issued in June.
10.4.10 Developing new markets
The best chances of success in developing new export markets lie with extractors and other traders in Singapore and Indonesia. Many of the companies already extract Siam benzoin and there is potential for increased utilization if it becomes available. Several advantages would result from this marketing approach. First, the companies already have a broad network of customers and contacts and know where the opportunities are for increased sales. Second, the Singaporean and Indonesian extractors have stated that if the lower grades of Lao benzoin were clean they would be interested in purchasing them.
The Southeast Asian and Indian fragrance industries are also worth targeting as potential new markets. The FAO marketing consultant recommended that market research be conducted to investigate potential new markets for Lao benzoin.
In seeking out new markets good presentation is a key part of promotion but it must be done honestly. If samples are sent for evaluation they must be fully representative of any shipment which may follow. Trial shipments at a discounted price may be necessary to persuade the importer of the reliability of the Lao exporter. In pursuing potentially large new markets it is important not to generate a demand which outstrips the supply.
In furtherance of expanding exports into new markets, the FAO marketing consultant recommended that the Department of Export Promotion become a broader-based, more publicly accessible provider of services to exporters.
10.4.11 Review of government policy on benzoin
The working group expressed strong concern about the present government land use and allocation policy, which intends to stop shifting cultivation and to introduce more intensive land use with a shorter rotation cropping system. As far as the traditional benzoin production system is concerned, this policy could inevitably lead to a serious reduction in benzoin production. It was recommended that a policy review be conducted to find an alternative solution that would preserve traditional benzoin production.
The following general workshop recommendations were made without specific working group attribution:
There is a need to have a forum within the government system to facilitate coordination and problem solving with respect to functions of NWFP production, trade and marketing.
The current over-dependence on a limited number of overseas markets has many negative impacts on the benzoin producers and traders. It is necessary to make efforts to expand the international market and to develop the domestic market for benzoin.
To achieve the foregoing objective, joint efforts between the government and private sectors should be encouraged, through the forum suggested above. If necessary, the government should seek technical advice from UN agencies such as FAO. A strategic planning approach to the marketing of benzoin and other NWFPs is strongly recommended.
The government should review the current lengthy export procedures and streamline them. This will help promote activities in the private sector and benefit NWFP producers.
After the completion of this FAO TCP project, an EU project will fund the fieldwork of silvicultural and tapping trials. However, there is no clear follow-up plan for the improvement of benzoin trade and marketing. It is, therefore, strongly recommended that the government take the initiative to develop a concrete follow-up programme on benzoin trade and marketing.