3.2 Historical Background
3.3 The Study Area: East Kalimantan
3.4 Rattan Collection and Processing
3.5 The Marketing Chain
3.6 Issues and Constraints
3.7 Conclusions and Recommendations
by: Nancy Lee Peluso
MAP OF BORNEO AND JAVA
Non-timber forest products and the forest-based small-scale enterprises (FBSSEs) play a major role in the livelihood of over 100,000 Indonesians. More employment is generated by opportunities to collect, trade, and process non-timber forest products than by tropical timber exploitation, at a far lower ecological cost to the forest (Jacobs 1982; Kartawinata 1977). Of all the non-timber forest products, rattan is by far the most important economically, accounting for 3.6% of Indonesias total average annual export earnings from forest products, and nearly half of the earnings from non-timber products in the early 1980s (Yudodibroto 1985). Supplying 90% of the raw rattan traded on world markets (Menon 1980), Indonesia earned US$83 million in 1984 (GOI 1990), with some 83,000 to 100,000 people employed in collection, trade, and processing activities (Yudodibroto, 1980). During the following years, rattan production experienced rapid expansion in Indonesia, bringing in US$335 million or 6.5% of total forestry export earnings in 1988 (GOI 1990). Although Sumatra is considered by some analysts to be potentially the biggest supplier of rattan in Indonesia, an estimated 50% of current exports originate from Kalimantan (Chaiyapechara 1978). Of the four provinces in the island East Kalimantan boasts the largest production area for wild varieties of rattan.
The rattan industry in East Kalimantan has three main components:(a) cultivation and collection;
(b) trade; and
Each component has different characteristics, problems and potential opportunities for expansion and improvement. As in most development issues, these three aspects are so closely interrelated that changes in one aspect will affect the others.
Because of the impact they have on each other, attempts to improve the sectors viability, employment generation, and income potential should have an integrated approach. Imbalanced interventions could result in bottled up trade, over-exploitation of existing resources, and the inability to take advantage of opportunities to increase the value added by further processing of the raw materials.
This paper aims to present and analyze the factors that affect the rattan collection industry in East Kalimantan where approximately 100 species grow. According to the Indonesian Forest Industries Division of the Ministry of Forestry, this province could produce 11,650 tons from wild sources annually. As the demands of world trade increase, and wild supplies are exhausted, lesser known canes are likely to be discovered and adapted to the market
For nearly two millennia Indonesian forest-dwelling people and local entrepreneurs have collected and traded in minor forest products as important sources of revenue. These products have been traded on world markets since at least the fifth century (Wolters 1967). Traditionally most products were exported in their raw form. The industrial processing of these products is just beginning, and is for the most part, still restricted to the initial stages of cleaning, drying, preserving for transport, and preliminary sorting. As of 1980 only 13% of Indonesian non-timber forest products were processed or used in the country.
Until World War II, the earnings of non-timber forest products were comparable to timber earnings, accounting for nearly 45% of foreign earnings in forestry (Jacobs 1982). Eventually, however, non-timber forest products fell far behind timber in terms of total volume and total earnings in the forestry sector. Rattan was an exception to this. As late as 1966, more rattan was exported from East Kalimantan than timber (Samit 1976). From 1969 on to 1979, the volume of non-timber forest products exported doubled, while their value increased by a factor of twenty-two, indicating a healthy demand. In 1979, production of all plant and animal non-timber forest products was reported as 235,158 metric tons; roughly 180,000 tons of that total was exported, earning Indonesia US$110 million.
Exports in this sector have continued to expand rapidly since then. For 1987 the Indonesian Ministry of Forestry reported the value of NTFP exports to have reached US $351 comprising 7.2% of Indonesias total export earnings in forestry (GOI 1990). This increasing value of NTFP exports has resulted not only from higher world prices on raw materials, but also from the increasing percentage of rattan exports which are semi- or fully processed.
In 1981, 416 exporters of various non-timber forest products were reported for Indonesia. Although only 21 of these were located in East Kalimantan, hundreds of small-scale local enterprises fed exporters throughout the country with East Kalimantan products. Today, rattan from East Kalimantan makes up 50% of total rattan exports from Indonesia.
Equatorial East Kalimantan lies on the island of Borneo. To the north and northwest, the Indonesian province is bordered by the Malaysian provinces of Sabah and Sarawak, while to the south and southwest lie the other Indonesian provinces of South, Central, and West Kalimantan. The climate is ever wet, with a mean annual rainfall ranging from 1,625 to 4,178 mm. Average daily temperature varies from 25 ° to 32 ° C; and relative humidity is 60 - 90%. The mountain range along the Malaysian-East Kalimantan border forms the provinces major watershed and the headwaters of the Mahakam and Kayan river systems. These rivers and their tributaries are the major transport arteries and most of the inhabitants live along their banks. The interior is inhabited by tribal groups such as the Dyaks and Kenyahs who are mostly swidden agriculturalists.
The river trade is dominated by Muslim groups including the Bugis and Banjars, while Indonesian Chinese dominate the coastal, inter island, and international trade. Administratively the province is divided into two municipalities and four districts. Most of the lowland forests have been allocated amongst more than 125 timber concessions, while government regulation of non-timber forest products has been minimal so far.
MAP OF CASE STUDY AREA IN BORNEO
3.4.1 Raw Materials
Approximately 600 species of rattan, representing 13 genera, are found throughout the Old World Tropics. They occur most abundantly in Asia and the western Pacific, in a diverse range of forest types, and at elevations from 0 - 2900 meters above sea level (Dransfield 1986). Of the 300 species in seven genera documented in Indonesia, approximately 100 occur in Kalimantan (Alrasyid 1980; Dransfield 1984) Only nine or ten commercial types are widely traded in East Kalimantan, although many non-commercial varieties are used by indigenous people (Muttaqin 1980; Peluso 1981; Jessup 1983).
Dominating the trade are Calamus caesius, C. Manan, C. Trachycoleus, and C. scipionum. But as world trade increases and wild supplies are exhausted lesser known canes are likely to be adapted to the market (Dransfield 1985).1 In 1979, 7,000 tons of rattan were produced in East Kalimantan, about 4,405 of which were exported. These quantities are probably much higher as some rattan is smuggled into neighboring South Kalimantan (Peluso 1983b)2. The Forest Industries Division of the Ministry of Forestry estimates that the province could produce 11,650 tons from wild sources annually.
1 It is difficult to identify with certainty the botanical species of rattan once it has reached the market. See Whitmore (1973) and Dransfield (1985).
2 One forest department official in South Kalimantan estimated that 500-1000 tons of rattan are sold in Banjarmasin each year come from East Kalimantan (Liang, 1979).
Clamus caesius Blume
3.4.2 Rattan Collection
Rattan collection is simple: the collector needs a machete for cutting the rattan and removing the sheath, plus the strength to pull it down from the treetops. In Pasir, collectors use a hook-like knife tied to the end of a long straight cane or piece of bamboo to isolate climbing rattan and tug on them until they fall. These techniques are the same, whether collection takes place in the forest or in plantations. Plantations require seed stocks which are available from their own plants or wild seeds collected in the forest. The knowledge required for collecting and cultivating rattan has traditionally been passed from generation to generation.
Until it reaches a first-stage processing center, the only treatment given cut rattan by collectors is bundling (i.e., folding 4-6 meter lengths in half) in packs approximately 28 kilograms each, air-drying, and for some varieties in some locales, removal of the outer coating on the stems. This is done by wrapping the rattan around a tree trunk and rubbing it back and forth, or by washing the canes with sand at the rivers edge.
The bundled rattan is then sold to a trader who takes it down river by boat to a first stage processing center.
Making baskets with rattan
3.4.3 Processing Rattan
Processors re-wash and re-sand the rattan as they receive them from traders. These cleaned rattan are then air-dried on racks in the sun for 7 to 14 days, depending on their-size, degree of dryness upon arrival, and weather conditions. Following this, rattan are separated by size. The small rattan are smoked in sulfur-burning cabinets for at least 12 to 24 hours. Larger canes are boiled in a mixture of diesel oil and other ingredients for 20 to 60 minutes, stacked at a slant or rubbed with sawdust to remove excess oil; and air-dried for 5 to 14 days in an upright position. Large canes are sometimes bleached with sulfur as small rattan are. Both processes are meant to preserve the rattan; bring out the best of its color; and protect it against pests. The diesel treatment is applied to eliminate waxy components of the rattan. The canes are finally sorted out according to size before final sale to wholesalers and retailers (Chaiyapechara 1978; Menon 1980; Yudibroto 1985).
In some cases more specialized processing takes place to separate the rattan into peel and pith for local handicraft production, or to make rattan carpets and mats. In this case the canes are cut into 3 meter lengths before sanding, sulfuring, and drying. The 3 meter lengths are then split, either manually, or using machines. Splitting machines reduce wastage, allowing the use of both the pith and the peel, whereas manual splitting generally results in the loss of most of the pith. Depending on the thickness of the rattan, a piece will be cut in two to eight strips, 2.5-3.0 mm wide. Protruding nodes are carefully removed. For carpets, the ends of the strips are punctured, laid side by side, sewn together, and cut to export size. A border is then woven across the cut edges of the carpet.
Scraping rattan poles
3.4.4 Characteristics of Rattan Collection and Processing
Although the collection and processing processes are relatively simple, there are a number of physical and socioeconomic factors which tend to complicate rattan collection in Indonesia somewhat. These may be briefly described as follows:
The biological production of rattan is not dependent on the season, but collection is somewhat seasonal. Collectors say they only collect rattan during slack periods in agricultural seasons. Most rattan collectors also practice swidden agriculture, and must clear and bum their swidden fields during a very short period when the weather is likely to be dry enough. A number of forces, including family needs for cash or supplies at a given time, contribute to the decision by individual families to spend time collecting rattan. The wider rattan trade is not significantly affected however, since seasonal differences throughout the province and seasonal variations in participation by individual household members enable traders to maintain relatively steady monthly export figures. Also, exporters contracts with overseas buyers are made on a yearly basis, so seasonal fluctuations in monthly supply do not present marketing problems.
Processing plants are also somewhat subject to seasonal constraints due to agricultural activities where workers come from agricultural villages. Seasonality, in terms of the amount of rain or drought, affects the capability of trade boats to travel upriver to buy rattan in bulk, and of collectors or middlemen to transport rattan from shallow tributaries by raft or canoe. When the river is low, boats run aground on shallow sand bars, and transport of rattan out of the interior becomes impossible.
220.127.116.11 Income from Rattan Collection
Rattan collection is generally a part time activity for various members of peasant or off-farm labouring households who work individually or in groups. It is but one of a variety of economic activities, which in the course of the year might include swidden cultivation (of rice, legumes, and vegetables); cultivating rubber, pepper, cloves, rattan, coconuts or other cash crops; gathering other non timber-forest products3; making shingles, planks and posts; hunting wild animals or raising livestock; or working for wages at logging concessions, distant timber camps or tree crop plantations4. The opportunities to engage in these activities, including rattan collection depends on the seasons, the market, or the agricultural cycle in the locality. Additional factors contributing to rattan collection include the property rights to rattan, the availability of land for shifting cultivation, and the collectors access to rattan buyers, the necessity or desire to form or participate in work-groups for collection of rattan, and the collectors knowledge of rattan biology (Dunn 1975; Jessup and Peluso 1986; Peluso 1980; Vayda et al. 1980).
3 Other non-timber forest products collected include, but are not limited to: resins (most commonly collected from damar and copal trees), birds nests, bezoar stones, crocodile skins, and medicinal plants for subsistence or commercial purposes (Peluso 1980, 1983).
4 Common tree crops include cocoa, coffee and oil palm, all grown in plantations.
For producers, the income provided by rattan collection depends on the location of their villages. For individuals living in villages farthest down river, close to cities, or near plantations, many opportunities to earn wages or sell agricultural produce exist. Rattan collection is not very attractive to them, although some migrant labourers working at timber concessions in the area will collect rattan during the off season if they are short of funds. In upriver villages, income from rattan collection represents a more significant proportion of household earnings. In these areas, most families are self-sufficient in rice, often having stores enough to last three years or more; at the same time, they may not have the skills or the contacts to obtain cash-earning income except by collecting forest products. Sometimes, entire villages depend on rattan collection for their income, or they alternate rattan collection with rice growing and other agricultural chores.
Income from rattan plantations presents a different picture. Plantations in East Kalimantan, reputedly older than 100 years, provide their owners with considerable cash income. According to local tradition a sultan of Kutai, downstream, ordered local people to plant rattan to maintain a steady supply of woven mats for his palace (Weinstock 1983). Some rattan growers receive one-third to one-half the selling price of the rattan in their gardens, the other portion going to cutting labourers working independently or with a trader.
In spite of its part-time or seasonal nature, particularly for collectors and labourers, the rattan-related industry remains a crucial portion of their livelihood. The biological nature of rattan is such that long periods without harvesting result in exponentially increased yields in subsequent years. This gives collectors an incentive not to cut when the market price is low, or when other income earning opportunities are more remunerative. However, as other employment opportunities become scarce and substitutes reduce the demand for other forest products the role of rattan, and the pressure to collect becomes ever greater in the household economies of unskilled rural workers.
18.104.22.168 Ownership of Rattan Resources
In the past, the sultans of Kutai, Berau, and Pasir claimed ownership of all forest products within their realms (Peluso 1983a) but could not control many interior territories where Dayak chiefs reigned. Today, sultans rights have been replaced by government claims to forest lands. The property status of rattan within a village forest territory shifts from open access to common use by a harvest group depending on the village. Some villages have attempted to control rattan collection through local regulations such as restricting clump cutting to 10-20 percent per year. Plantations belong to the planter who originally claimed the land by clearing the forest for cultivation or by inheriting the land from the clearer.
Despite their legal right to collect minor forest products within timber concessions, villagers have at times been denied entry to those areas; and timber company personnel have infringed on the rights of local residents, sometimes confiscating their rattan (Jessup and Peluso 1986). Some conflicts have been settled by ad hoc agreements between representatives of the timber company and village leaders (Vergas 1985).
After the rattan has been cut, it only partially belongs to the collector if the latter has been provided credit by a local shopkeeper. Under such an arrangement, the collector has promised to pay his debt in an equivalent volume of rattan. More than half of all rattan collectors, especially upriver, collect under such constraints.
Most traders stock their shops or boats with goods acquired on credit from stores or wholesale suppliers in the towns or large villages situated at the mouths of the major transport rivers. When first buying a boat, the operator may be financed by an urban investor. Usually, the first boats were paid for by loans from trade boat operators of the same ethnic group. For some time after the debt has been paid, the recipient of such a generous investment of both trust and material goods feels obligated to do business with the benefactor or to perform some other kinds of service - perhaps employing a kinsman or friend. In some cases, the moral obligations last a lifetime.
In the processing sector, village mat-making is a household industry, owned and operated by family members. Larger plants where rattan is thoroughly processed are mostly owned by Chinese.
22.214.171.124 Employment in the Rattan Industry
The number of workers employed per enterprise varies according to the activities involved. Two to four labourers might work in a household of part-time collectors. In an enterprise such as a large trade boat an owner-operator might employ four to five semi-permanent labourers who travel up and down the river with the boat, load and unload the cargo, run errands, tend the engine, and cook for the duration of the river journey. River journeys can be anywhere from two weeks to one and a half months long, depending on river conditions.
A large scale first stage processing center employs 20 to 80 workers at a time, the number depending on the agricultural season and the availability of rattan. Wages are paid on a daily or piecework basis, depending on the task.
More men than women are employed in the rattan collection industries. Religious and ethnic affiliations influence the extent of womens participation. Neither Islamic nor Chinese women are found collecting or transporting rattan, or working for wages in a processing enterprise. Many Islamic women, though, are active shopkeepers or partners in shops. They may oversee or take part in the purchasing and selling of supplies from and to trade boats. Dayak women were observed collecting drying, bundling, sanding, splitting and weaving rattan, but not loading and hauling, or boiling the canes in motor oil. Nor do they work as shopkeepers or as labourers on rattan trade boats. In some processing or carpet-making enterprises, Dayak women comprised 30 to 40% of the workers. In home industries producing rattan mats and carpets they provided at least half of the labour in the entire process.
Sometimes, Dayak women go along with the boats to cook for the collectors or take care of the camps. They may collect rattan for part of the day, in addition to gathering food from the forest and cooking food for the collectors. Some women collectors prefer to have their husbands, sons, or other kinsmen haggle with shopkeepers or middlemen over the price of their collected rattan. This, however, is a personal preference and cannot be said as a general rule. Women working in processing centers are paid less than men because, the owners say, they do not do as heavy work as the men, although the hours they put in are comparable to the mens and the tasks are no less necessary.
The employment potential of manufacturing operations such as furniture making and rattan mat or carpet production is formidable. Liang (1979) estimates that the rattan mat and carpet industry of South Kalimantan could employ 15% of the industrial labour force of the entire province, rivalling the employment capacity of the timber industry in that province. Similar estimates for East Kalimantan are not available, but given the tradition of mat and carpet making in numerous parts of the province it could become a viable local industry, integrated with upriver plantations.
Rattan flows down East Kalimantans rivers to exporters and processors on the coast. On its way downstream it passes through a number of intermediaries, usually boat traders and shopkeepers. Possession of a boat or a shop is not prerequisite to the trade in rattan. But in their absence, a would-be trader at least needs access to a canoe to reach forest rattan collection sites. Traders need their own capital or credit from suppliers of trade goods and foodstuffs, and a knowledge of the vagaries of the climate, varying environmental constraints along the rivers (whirlpools, sandbars, grassy or rocky sections), and the customs of the local people.
3.5.1 The Nature of Trading in Rattan
There are two types of rattan traders -- long-term and short-term. Long-term traders may be village shopkeepers or river middlemen, trade boat operators, or the agents of shop keepers or river traders. For long-term traders, rattan is an important source of income, or a critical determinant of their ability to sell trade goods. They pride themselves on their ability to judge quality and to juggle the needs of upriver shopkeepers and collectors who supply them, with the dynamics demands of urban buyers.
These skills are rarely possessed by short term traders. Because of the necessarily substantial capital investment, short term traders are rarely trade boat operators or village shopkeepers -- they are usually river middlemen hoping to get rich quick when rattan prices in the city rise suddenly (Peluso 1983b). Transient, short term traders are also likely to have little concern for sustaining rattan resources.
Most urban buyers of rattan are full time rattan businessmen, although the biggest have diverse investments in other areas. Their employees who come from upriver generally work for wages on a seasonal basis, returning home when the agricultural cycle requires. Those employees who are migrants from other islands, laid off employees of oil and timber companies, or disillusioned transmigrants who have run away from their resettlement schemes, are more likely to work year-round. Mat and carpet-making households particularly in Pasir district weave their crafts as a part-time activity, subsidiary to agriculture.
3.5.2 Ethnic Factors in the Rattan Trade
Trading skills vary according to ethnic affiliations. Bugis, Banjar, and Chinese rattan traders have a long history of trading experience and are skilled in managing trade operations. Kenyah, Busang, Pasir and other indigenous groups, on the other hand are uncomfortable and clumsy in a business environment. This is so because a democratic social organization prevails among them, and the capitalist spirit of individual profit making goes against their cultural grain. The Kutai are not averse to business and some are as successful as the Bugis, Banjar and Chinese ethnic groups who are renowned for trade and entrepreneurship. Existing plantations and some processing units (particularly small-scale, non-Chinese ones) are managed less efficiently; managers lack the experience and foreign contacts needed to encourage higher production quality.
3.5.3 International Marketing
Indonesia provides a majority of raw materials to the international rattan furniture industry, with most of it sent to Hong Kong (approx. 60%) and Singapore (approx. 20%). There, the canes are either manufactured directly into furniture or simply cleaned and re-sorted to meet international trade standards, and re-exported to Europe, the USA, or Japan. The rest is manufactured and sold locally as furniture or other household items such as baskets, mats, and other decorative articles.
The rattan business is more vibrant today than ever before. Urban entrepreneurs in particular are seeking ways to acquire more and better quality supplies of rattan and are willing to experiment with processing rattan to further stages. Ideally this means more furniture manufacture within the province, an opportunity that would not only increase rattans important contribution to local peoples income and provincial revenues, but might also serve as a check to over-exploitation.
Further expansion will be possible if good quality supplies can be guaranteed for the long term, manufacturing skills can be taught to local people, and private or government incentives stimulate the establishment of processing centers within the province. The promise of greater value-added should be sufficient to attract the attention of current entrepreneurs. One deterrent to investment in East Kalimantan is that wage levels must be competitive with those in the wood processing industries. Processors will be more competitive at higher levels of processing, e.g., the returns from furniture making are much higher than those from rattan peeling. However ethnic rivalries and loyalties strongly influence business opportunities and decisions, so markets and international connections will have to be considered prior to taking any action.
3.6.1 Exploitation of Raw Materials
Over-cutting rattan slows or even stops the regeneration process5. Over-harvesting forest stocks of rattan in East Kalimantan which has been an issue of concern since before World War II is rampant today. In the past a number of sociological and environmental constraints held over-harvesting in check. Local autonomy and control over a territorys resources, intra-village acknowledgment of rights over particular sites, mutual respect of a 10% - 20% cutting limit on any particular clump or cluster of rattan plants, and fear of supernatural reprisal or tribal warfare for stealing rattan from someone elses territory were natural deterrents. Villages used to receive a 10 % tax, and the headman, a fee, from traders for all local labour employed in extracting or transporting rattan. Today, however, villages have no authority to keep others out, and collectors no longer heed these self-imposed, traditional limitations. Rattan collection has become aggressive. Remote areas are no longer protected by their location, as the prevalence of 1.5 - 5 horsepower motors for use on canoes has facilitated further access into the interior.
5 Reporting on studies of a Calamus caesius plantation in the Barito Selatan area of South Kalimantan, Dransfield (1977) observed that a rattan plant can be harvested in its entirety only two times before exhaustion: once after 7-10 years, and again after another four years. In an agroforestry system where the grower alternates rattan cultivation with shifting cultivation, a fallow period of 14 years should be sufficiently long to restore fertility to the soil for use as a swidden while providing the farmer with additional income from the rattan in the interim.
The number of collectors has increased with the arrival of migrants from other islands to work in timber and oil companies. These migrants turn to rattan collection if they are laid off from work or are not hired for any other jobs. Migrants are even more likely to disregard the local customs or rules limiting rattan collection.
Collectors complain about the great distances they now must travel to find new rattan sites. Even plantation owners complain that their labourers disregard their rules for sustainable harvesting of rattan and although such plantation owners can refuse future access to unheeding cutters, so much damage is caused that regeneration rates are retarded by many years.
Other complaints come from traders, urban buyers, and manufacturers who say that large percentages of the canes they receive from collectors or cutters are of poor quality, immature, or brittle. These canes cannot be used for top grade finished products. Yet their complaints are often the result of their own suppliers competitive strategies for meeting manufacturers demands.
3.6.2 Problems with Technology
Technological problems are all related to processing, whether in the early stages or later. First, assuming a high quality cane has been cut, retaining its quality is highly dependent on the weather. After cutting, exposure to rain or submersion in river water repeatedly or for prolonged periods can cause discoloration, and can also cause fungi to develop, both of which lower the quality and price of the canes. Poor quality rattan is identified by the presence of holes from powder post beetles, black water spots, uneven color, or rotten sections of the cane.
Equally problematic is the lack of skills and technology needed to compete with rattan furniture producing countries such as Taiwan, Hong Kong, China, and Europe. The field is highly competitive; good and mediocre workmanship are easily discerned by the discriminate buyer. Not only are the best machines for splitting and shaping rattan into fine furniture very expensive, the government also imposes a high import tax on them. Even the largest rattan entrepreneurs, those likely to set up furniture manufacturing units, complain of the expense. They also have difficulties in finding trainers from Hong Kong or Taiwan to teach furniture-making skills to local people. These complaints of limited technological access are made by Chinese with kin and long-term business associates in overseas Chinese cities. All other ethnic traders without the right connections give up hope of gaining access to this technology since it is closely guarded by the Chinese who dominate the trade in the region.
3.6.3 Financial Constraints
Collectors and processors experience greater financial constraints than traders or middlemen. In upriver areas particularly, collectors are not as organized as they should be for marketing their forest products. They do not have access to as many traders as those in mid- or lower-river areas. When they need goods and foodstuffs which they cannot produce by themselves, upriver collectors have forest product collection as one of the very few opportunities to earn cash without leaving home. However they need supplies while on their collecting trip into the forest as well as for those who will be left at home. So they approach a shopkeeper and suggest a rattan collecting venture financed by the shopkeeper. Their feeling of indebtedness requires the collectors to sell all their rattan to the shopkeeper. In theory, they need only repay their debt equivalent in rattan, but if they sell the surplus to a different shopkeeper or to river middlemen, they risk their creditors refusal to supply future rattan collection ventures. This leads to a cycle of indebtedness and exploitation.
This relationship with traders is not always rapacious or totally detrimental to the welfare of the collectors. Collectors with long-term arrangements with shopkeepers enjoy patronage benefits not obvious in the rattan agreement itself. Some shopkeepers pay medical expenses of their clients and families or provide labour opportunities to other members of the family and even the collectors when collection is not profitable. Clearly the shopkeeper also benefits from easy access to the labour of his clients and their families. Collectors are increasingly affected by new needs for cash, to pay school fees for children and to purchase goods in stores down river.
Downstream indebtedness and client-patron relationships are currently being replaced by cash transactions, resulting in new advantages and disadvantages to both collectors and traders (Peluso 1986).
Using machinery for rattan furniture manufacture
Processors problems with financing stem from the large amounts of capital required to establish an operation, particularly if they wish to buy splitting machines or the machines for bending large canes into standard shapes for furniture. Chinese with some capital sometimes join high deposit rotating credit associations, allowing them periodic access to substantial sums at minimal interest. With this stiff competition from Chinese exporters who dominate inter-island and international export of rattan, non-Chinese are unable to keep their investments in rattan going.
In addition, foreign shipping costs for machinery, finished goods or supplies to serve the labour market, are much higher to East Kalimantan than to Java, imposing a financial penalty on export businesses by requiring more fixed capital to start a manufacturing business in the former region. Freight charges also fluctuate with changes in oil prices, which until quite recently were rising constantly. Moreover, freight-on-board (F.O.B.) charges are much higher from Indonesia than from Singapore or Hong Kong where the government partially subsidizes shipping in order to attract trade. These higher costs put Indonesian and in particular also East Kalimantan manufacturers at a disadvantage in relation to those in other countries.
Finally, raw rattan faces shipping cost competition from less bulky, higher priced cargoes such as plywood. Interinsular shippers prefer the plywood because more weight per unit volume can be shipped than is possible with voluminous bundles of lightweight rattan.
3.6.4 High Labour Costs
Labour is relatively costly in East Kalimantan. Unskilled labour in the province is paid nearly three times the wage rate of comparable workers in Java. In 1980, for example, a factory worker in Java could expect a wage of approximately Rp 300 to 350 per day6, while in an East Kalimantan factory, wages were approximately Rp 750 to 1,000 per day. Some processing plant owners complain of the difficulties in keeping workers in rattan factories because there are sawmill and plywood factories that can afford to pay higher rates. Factory owners also face a shortage of skilled labour needed to work in furniture and handicrafts manufacture.
6 Rp is the abbreviation for Indonesian Rupiahs, the national currency. 1 US $ = Rp 1,698 (1988).
3.6.5 Competitive World Market
Indonesia provides a majority of the worlds rattan. Approximately 60% of this goes to processing and manufacturing industries in Hong Kong and a further 20% is shipped to Singapore. Entrepreneurs in both these countries make massive profits re-exporting raw rattan or assembling and exporting furniture and handicrafts. The value of Indonesian raw rattan cleaned, sulfur-treated, and re-exported from Hong Kong in 1970 was 24 to 28 times the amount received by the Indonesian exporter of washed, dried, and sulfur-treated whole rattan. In 1979 the Indonesian government sought to limit the export of low value-added raw rattan through an official ban on the export of unwashed and unsulfured rattan. However, Hong Kong continues to bring in higher profits by recleaning, re-sorting and manufacturing rattan peel and pith for re-export.
As mentioned earlier, part of Indonesias problem in securing higher profits from international rattan trade is its higher shipping costs when compared to other countries in Southeast Asia. Attention also needs to be given to the low level of value-added manufacturing which has characterized Indonesias rattan production. Indonesia has great deal to gain from value-added manufacturing of forest products within the country.
3.6.6 Policy Issues
Although the correlation between the degree of processing and the price is well understood, much still remains to be done to create policies favorable to Indonesian rattan entrepreneurs. To begin with entrepreneurs of East Kalimantan are at a disadvantage compared to their competitors in the cities on Java, where the best furniture has traditionally been manufactured. Aside from higher labour and shipping costs, East Kalimantan suffers from a biased policy which is based on the belief that rattan weavers in Java are inherently superior to those of other islands. Where actual differences in skill do exist, weavers in Kalimantan and other islands have little hope of acquiring training on Java, where entrepreneurs would find it against their interest to train potential competitors.
Policy interventions have attempted to provide a greater percentage of the export market to non-Chinese, Kutais and Dayaks, and the better positioned Bugis and Banjar traders. During the 1950s, the government passed an ordinance restricting the residence and trade activities of Chinese in rural areas. Unfortunately the overt racial bias of this ordinance, and the dominance of Chinese traders in the cities and in the international marketing network, has only strengthened the independence of Chinese traders, and bolstered their distrust of doing business with non-Chinese. To cope with these issues the largest Chinese businessmen protect themselves by establishing joint ventures with powerful Indonesians (Anderson 1983).
A typical village in Kilimantan
Another, more recent policy has been to lease minor forest product concessions (Hak Pakai Hasil Hutan or HPHH) to particular exporters. These exporters were to provide credit to government sponsored village cooperatives (Koperasi Unit Desa or KUD) upriver, which would collect and deliver rattan and other forest products in regulated quantities. The idea was to provide a greater percentage of profits from the provincial rattan trade to producers, and limit the allowable exports and production of forest products on the verge of becoming endangered. The plan was not well received by exporters and manufacturers, and too few village cooperatives had been formed. Costs to both the government and the traders were not accurately estimated, and the services provided by middlemen in the internal trade, including their ability to transport rattan at low profit margins, were ignored. The program was apparently never implemented.
By banning the export of raw rattan, first stage processing has at least been encouraged. But few institutional efforts have been made to assist FBSSEs engaged in rattan collection and processing on a comprehensive scale.7
7 Editors note: Government bans on the export of raw and semi-processed forms of rattan from Indonesia have become progressively stricter over the years. The most recent ban, which was issued since this case study was first prepared, took effect in July 1988, prohibiting the export of all semi-processed rattan. Modelled after similar measures in the countrys timber industry, this policy ultimately aims to force domestic rattan-based manufacturing enterprises to develop their production capacity as quickly as possible in order to capture a greater share of the earnings from the international rattan trade for Indonesia.
In practice, the export restrictions apparently have indeed promoted a rapid growth in the number of units producing finished rattan items. However, these units continue to be concentrated in production centers on Java (Menon 1989). Meanwhile, the restrictions appear to have much less favorable implications for rattan collectors and first-stage processors supplying more primary rattan materials in Kalimantan and other islands. These producers now find the demand for their products drastically reduced, at least until Indonesian furniture-makers reach a production capacity that can fill this sudden vacuum.
3.6.7 Lack of Data on FBSSEs
A number of factors complicate the collection of accurate data on the rattan industry as well as other FBSSEs in Indonesia. To begin with non-timber forest products, called minor forest products in Indonesia, describe a variety of production systems, from collection of wild plants to plantation based cultivation. Both systems have radically different social organization and employment patterns. A further complication arises from the transient nature of the participation in many phases of FBSSEs. Collectors, small traders, shop keepers and others may be involved only seasonally in collection and trade, or they may move in and out of the business as finances and market demand dictate. Government statistics contribute to the difficulty by lumping FBSSEs into the general category of small-scale, household or cottage industries. A lack of data makes analysis difficult for policymakers and slows down the development of all important extension efforts to share information with producers.
The International Development Research Council (IDRC) of Canada has helped fund a rattan information center in Malaysia. IDRC and the Indonesian government are also funding studies on various aspects of rattan production and processing. These include: a botanical survey of rattan, silvicultural aspects and propagation studies at the Forest Research and Development Center in Bogor (West Java); an economic study on rattan plantations in Central Kalimantan; and means of improving harvesting, processing, and grading rattan by the Forest Products Research and Development Center; as well as a study at Gadjah Mada University, Yogyakarta (Central Java), on the properties of rattan, rattan pests, and economic uses of presently unexploited species of rattan. These should yield a great deal more information, although only the study in Central Kalimantan involves site-specific and action-oriented research.
Given the growing world demand for rattan products and Indonesias critical role as the major source of raw materials, it is imperative that the issues and constraints affecting the industry be creatively addressed. A number of recommendations for possible directions to ameliorate some of the major problems are given below.
3.7.1 Establishment of Rattan Plantations
With the depletion of forest stocks of rattan proceeding at a rapid pace it will be critical to inventory wild stocks and establish new plant sources to ensure a sustainable supply. Although authorities doubt that new species with superior qualities will be found in any part of Borneo (Dransfield 1985), further experimentation may allow the introduction of high quality species from other islands, like C. inops from Sulawesi.
The Kutai and Dayak people are committed to remaining in East Kalimantan and have taken the initiative in establishing rattan plantations, both on a large scale as in Pasir, and on a small-scale in old fields. Garden or plantation rattan collected by local peoples makes for higher quality canes and control over collection. Further research into traditional plantations is needed in order to assure more success in rattan collection and to develop management regimes to keep growth at sustainable levels. In addition, rattan plantations might work well under a system of common village ownership and responsibility, preferably inter-cropped with a variety of tree crops so a diverse agroforestry system would be in place in case something happened to the rattan, or the market for rattan.
Calamus optimus Becc
3.7.2 Establishment of First Stage Processing Centers
To retain a higher percentage of the value close to the source of collection, first stage processing centers should be established upriver, both at major bulking villages and at small ones nearby. This will open more employment opportunities to upriver peoples, and provide an advantage - closeness to home - over competing processing centers downstream, and over sawmills and plywood factories offering higher wages. People living in villages above the rapids would not have to travel so far in search of wage earning opportunities, and the time between harvest of rattan and preservation processing will be greatly reduced.
Despite the financial and technological obstacles, entrepreneurs are making efforts to establish first stage processing plants in some parts of East Kalimantan. A processing center started by two Dayak brothers at Long Hubung is an example here. The Dayak brothers, who own and manage the center primarily employ people from upstream, an estimated one-third of whom are women, who travel periodically to the center to work for wages. The enterprise has had considerable multiplier effects on the communitys economy, and a school and a dormitory have been constructed for the children of workers and other Dayak families nearby.
In centers like this, instruction in furniture-making and in using machines is a next step. Marketing contacts with potential overseas importers should be established before embarking on large scale production, and the resource base should be conserved and sustainably utilized. Conservation measures are always difficult to enforce through central agencies, so perhaps the best way to combat enforcement difficulties is to give local communities greater autonomy and authority over the resources in their territories.
Before establishing new processing centers research should be conducted to see if the local people are actually interested. If they are, they should be involved in the planning and development. Their ideas should be collected concerning how to overcome seasonal variations in rattan availability; how to attract indigenous peoples participation; acceptable wage levels; and the limits such an enterprise might face. Participating institutions should be willing to abide by the peoples opinions, even if it means turning down a site which may be considered politically expedient but where other characteristics are not propitious.
3.7.3 Allocation of Rights to Forest Rattan Collection
If property rights to forest rattan are to be officially allocated, villages should be allowed priority to the forest territories they once controlled. While the government has already leased timber rights to large companies, indigenous people still have legal rights to non-wood forest products. However, they do not have the political power to enforce their own rights when faced with uncooperative timber company personnel, nor channels through which their complaints can be heard. Some kind of mediating agency, whether government or non-government (which would, in this case, require the blessings of government to be effective), is needed for monitoring relations between local people and timber companies.
The timber companies responsibilities should extend to the planting of rattan, or at least, the sponsoring of rattan planting on their concession lands. They should also avoid outright destruction of rattan in the course of their logging activities. Unfortunately, with many companies not even re-planting trees, and those that are, using fast growing exotic species, the potential success of rattan re-growth is uncertain.
Many timber companies blatantly misuse their concession rights, by cutting more than the entire allowable cut in the first three years of the thirty-year lease and leaving the province without a pretence of reforestation. When rattan are torn down in the process of logging, the income, and the plants reseeding capacity, are lost to potential collectors in the vicinity, but the loggers are not held responsible for replacing this income. This raises delicate but important questions, about the political will of the forest service to monitor or uphold the rights of indigenous people to non timber forest products on concession lands.
3.7.4 Policy Recommendations
Urban entrepreneurs are today seeking ways to acquire more and better quality supplies of rattan and are willing to experiment with processing of rattan to further stages. Future expansion will be possible if good quality supplies can be guaranteed for the long term, manufacturing skills can be taught to local people, and private or government incentives stimulate the establishment of processing centers within the province. The promise of greater value-added should be sufficient to attract the attention of current entrepreneurs. Ideally, this means more furniture manufacture within the province, an opportunity that would not only increase rattans important contribution to local peoples incomes and provincial revenues, but might also serve as a check on over-exploitation.
Non-timber forest products, particularly rattan, have played important roles in household subsistence economies of indigenous forest dwellers and traders for centuries in Indonesia. Unfortunately, rattan processing industries are still in the embryonic stage, and may not emerge without specific policy changes and practical programs to encourage them. The clearest advantage to developing processing industries in East Kalimantan, particularly, in the upriver areas, is the potential it offers for increasing the incomes of rural people traditionally involved in the initial tasks of collecting and transporting rattan from the interiors. Combined with programs to encourage rattan plantation, an appropriate policy environment, and increased authority to enforce conservation protection measures, processing rattan in rural areas has the potential to support men and women in rural East Kalimantan for generations to come.
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