We investigated the production and trade in rattan along the supply chain. We focused our study on Indonesia, the global leader in natural rattan production, and more specifically, West Kutai in East Kalimantan. Our analysis of local livelihoods in 2004 and 2011 indicates that communities have abandoned rattan as their main source of income, primarily because of low rattan farm-gate prices. Our interviews and econometric analysis indicate that rattan prices are kept artificially low through price fixing within a cartel of rattan traders. Farm-gate prices are also kept low by export quotas. The result has been a substantial reduction in export volumes of Indonesian rattan products (as opposed to unprocessed and semi-processed rattan). Other contributing factors include reduced overseas demand, the relative strength of the rupiah and the loss of Indonesia's competitive edge over other countries. Compared to its competitors, Indonesia has higher transaction costs, including taxes, tariffs, administrative costs and transportation costs. We conclude that a lack of reliable data on rattan resources and unstable policy have hampered efforts to develop sustainable management strategies and annual allowable harvest volumes. We recommend the development of a national rattan action plan, based on reliable scientific data. This would require more accurate information on rattan trade, future development in the rattan products market, production capacity in forests and planted rattan gardens, and international trade, including illegal trade. Such information could guide rattan policies, specifically determining what trade legislation would have the best macro and microeconomic results for Indonesia.

Authors: Meijaard, E.; Achdiawan, R.; Wan, M.; Taber, A.

Subjects: nontimber forest products, trade

Publication type: Paper-R, Publication

Year: 2014

DOI: https://doi.org/10.17528/cifor/004484