This project aims to make the value chain of planted wood in the Lao PDR more efficient. This will improve both the international competitiveness of Lao wood industries and the livelihoods of farmers and processing workers.
Laos has an emerging forest plantation industry. The timber industry has rapidly grown over the past three decades, based on both smallholder and corporate growers. The Lao PDR government envisages a substantial forest plantation estate, with 500,000 hectares of tree plantations by 2020. Plantations and planted trees can financially benefit Lao PDR and smallholder growers, but the export value of finished wood products is low compared with squared logs or basic sawn wood.
Many challenges, constraints and opportunities need to be addressed to maximise returns to smallholders and develop competitive value-added wood industries.
Some elements of the value chain require intervention to increase returns to smallholders, wood processors and manufacturers. ACIAR research aims to make these elements more efficient.
The project builds upon a previous project, FST/2005/100 Value-adding to Lao plantation timber products, which built capacity and enhanced the range, quality and value of manufactured wood products in Lao PDR.
Although the project start date was 1 January 2012, delays in obtaining signed project agreements between the contractual parties meant that research activities of the project did not commence until the beginning of June 2012.
Despite the delayed start, the project has made impressive progress during Year 1 with the active participation of all project partners.
The major activities and achievements during the first year are as follows:
The project inception meetings were held on 19 June 2012, in Vientiane, and on 22 June 2012, in Luang Prabang, with the aim to present and discuss the project objectives, methodology and expected outcomes. The meetings were well attended by the project participating organisations.
Project teams were formed for each objective, consisting of Lao and Australian members, according to skills and expertise required to achieve various activities and tasks. Detailed Action Plans for the objective milestones were developed by each team.
Project website “laoplantation” has been recently posted on the following website http://www.laoplantation.org/ The website was designed to provide information on the project objectives, partner organisations, project teams, documents and reports, photo albums related to research activities, media releases, news and policies related to the project.
The first issue of the Project Newsletter has been published and distributed to the project partners and stakeholders.
A Dropbox Folder called VALTIP_2 was created as a way for the project team to share information in a secure and structured way. Dropbox allows everyone on the team to have access to the same information at the same time.
The project research activities conducted within four project objectives are progressing well with significant achievements made which have been documented in reports and draft reports. Some of the activities are summarised below:
Contacts with key project partners were established, agreements for access to remotely-sensed imagery were obtained and appropriate GIS platforms and other technical parameters were investigated.
A draft report describing the legal framework for the whole value chain has been completed and circulated for comment within the project team. A set of stylised flow diagrams for each key component of the value chain has been drafted, which will be translated into Lao and used to guide interviews with stakeholders.
Work has also commenced on identifying and describing the ‘legality drivers’ and influencing policies for international trade in teak. This work has synergies and dependencies across several sub-projects.
A draft report mapping the incidence of transaction costs along the plantation timber value chain and summarising the transaction cost data gathered to date has been completed will be circulated for internal comments by the end of May 2013.
A draft literature review which examines the development of grower groups in Laos and neighbouring countries has been completed.
Contacts and partnership arrangements with certification agencies and related organisations were established.
Objective 2 and 3:
An important activity of the Objective 2 and 3 was the formation of the “Industry Clusters”, a network of wood processing and manufacturing companies which agreed to work with the project team members to develop and implement the proposed enhancements. The Cluster groups include 11 companies in the Processing Cluster and 13 companies in the Manufacturing Cluster, with a total of 14 different companies involved. This includes 8 new companies and 6 companies that were participants in the previous project. The companies were selected according to the criteria developed by the team members.
A detailed analysis of the current capabilities of the companies involved in the Industry Clusters was undertaken by teams comprised of Australian and Lao experts. The observations and notes made during the visits were used for writing a detailed report on each individual company assessed. The assessment visits provide the basis for the development of recommendations on improved processing and manufacturing technologies applicable in Laos. The project teams will work closely with the Industry Cluster companies to ensure that improvements in their production processes are made and the research outcomes are implemented according to each company capability.
A comprehensive analysis of international markets is being undertaken which obtains details on the current market information and market trends on selected wood products including consumption, production and trade.
Assessment of the current training programs for smallholder groups and timber industry, and identification of gaps in the training programs according to the industry strategic directions is in progress.
ANU Australian National University
DAFF Department of Agriculture, Fisheries and Forestry
DOF Department of Forestry
FOF Faculty of Forestry
FSC Forest Stewardship Council
LFA Lao Furniture Association
LPTP Luang Prabang Teak Program
NUoL National University of Laos
UoM The University of Melbourne
The project is progressing well despite its complexity. Significant progress has been made during Year 2 across each of the four objectives with active participation of all project partners.
The 1st Annual Workshop was held on 29 October, 2013, in Vientiane. The workshop allowed members and stakeholders to receive an update on the progress of the project and have intense discussions on a range of project related matters. The Project Advisory Committee Meeting, involving stakeholders and Government representatives was held in Vientiane on 20 January 2014, to review the project progress and discuss major findings, challenges and opportunities.
Major activities and achievements in the reporting period are as follows:
A report on the legal and administrative arrangements for smallholder plantations and the wood processing sectors in Lao PDR has been produced. The report includes the results of interviews with almost 70 smallholder plantation owners and an analysis of legal impediments to plantation registration in Lao PDR and policy recommendations for consideration by Government o Laos.
A draft consultation paper was developed which illustrates the scale and points of incidence of plantation-related transaction costs together with policy context. The paper also includes initial discussion on opportunities for amelioration of the impact of these costs for growers, industry and government which will be further developed through consultation with growers industry and government later in 2014.
A report was issued on factors affecting the formation of grower groups, examining successes and failures in Lao PDR and lessons learned. The report sets out comprehensive recommendations to foster the development of grower groups in Lao PDR. A structure has been developed for the analysis of options for approaches to certification appropriate to the circumstances of smallholder growers in Lao PDR.
A review of the literature on log grading rules and systems was undertaken which, combined with in-mill trials, will provide improvements in efficient utilisation of Lao PDR plantation resources through optimum matching of logs to products.
The review of portable sawmilling equipment was completed which provides recommendations for optimal processing of plantation teak logs through improved technologies currently not widely used in Lao PDR. Log grading and sawing recovery studies were conducted at selected Industry Cluster companies in Luang Prabang and Vientiane.
Regular visits to the Industry Cluster companies have been undertaken with the aim to implement the recommended improvements and changes in manufacturing methods and product quality. Each company has been considered on an individual basis according to its needs, current production capability, financial restraints and future strategic plans.
Gluing testing is in progress at the National University of Laos Wood Technology Laboratory. A comprehensive testing program was developed for adhesives used for high value appearance wood products and training was provided to NUoL researchers. The tests are being conducted on two plantation species, teak and river red gum (Eucalyptus camaldulensis).
A detailed methodology for a wood recovery study in wood products manufacturing was developed, training provided to Lao researchers and the studies in selected companies are underway. The studies will provide valuable information which will enable the development of recommendations for improvements in wood recovery rates in the furniture manufacturing processes.
A comprehensive market research report was completed which provides market information on selected appearance wood and market trends including consumption, production and trade. The main aim of the report was to provide the Ministry of Industry and Commerce with data and information for the development of market strategy for the timber industry. The findings of the report were presented at a workshop involving stakeholders and government representatives.
The NUoL team collected and summarized data and information on training programs for timber industry and smallholder groups. The gaps in the current training programs and training needs for major players within wood value-chain have been identified and the priorities for future training programs have been determined. The current forestry and forest products education programs at NUoL and Souphanouvong University have been analysed and gaps related to plantation wood value-chain identified. A review and updating of current bachelor and postgraduate programs of Forest Economics and Wood Technology at the Faculty of Forestry, NUoL, has been initiated.
The collaboration between the project participants has further developed over the year with increasing networking and joint problem solving. It is particularly noted during research activities, training and technology transfer.
The project mid-term review was conducted by ACIAR Forestry RPM on 16 September 2014 in Luang Prabang which provided a good mechanism to review the project progress with the project team. The overall finding was that “The project is progressing very well against many of the planned activities, with strong evidence of good collaboration across the team and between partners”.
The project research activities conducted within four objectives are progressing well with significant achievements made which have been documented in reports and conference papers and disseminated at the project workshop and training courses tailored for smallholders and the industry. Some of the research studies are summarised below:
A study on mapping and stratification of plantation teak areas using high resolution remote sensing imagery in a geographical information system is well advanced. The study utilises rapid field survey and remote sensing interpretation techniques to enable detailed mapping of over 2 million hectares. It provides area and stratification for inventory of standing volume and yield forecasting.
A comprehensive study was completed which assessed the legal barriers to smallholder plantation owners and the associated timber value chain by describing, deconstructing and mapping the institutional and regulatory environment for the value chain for smallholder timber plantations and wood processing. Recommendations with respect to improving the efficiency and effectiveness of the regulatory process and for removing barriers to participation were made.
Opportunities for transaction cost mitigation have been investigated, building on earlier stages of the project which have been focussed on describing and contextualising the plantation transaction costs regime in Lao PDR and the issues associated with its application and administration.
A review of voluntary verification and involuntary regulatory compliance systems was undertaken to determine what forms of group certification are feasible and sustainable, and will improve returns to smallholder plantation growers in Lao PDR. The study considered mechanisms which operate internationally and those that operate, or could operate, within Lao PDR. Emphasis was placed on the feasibility of these mechanisms in regards to the value chain for smallholder plantation growers.
A log grading system for grading plantation round and square logs in Laos was revised and finalised through a series of industry trials and a workshop with Laos PDR government department and standards committee representatives. The grading system has been translated into Lao language and disseminated to industry for comments.
Initial sawing studies have been completed at six companies across Vientiane and Luang Prabang. A specialised ‘jig’ was designed and built at NUoL, and tested at a sawmill, resulting in a 41% decrease in thickness variation, 11% increase in green sawn recovery and an 8% increase in saleable board recovery. It is envisaged that the use of the jig by sawmills in Laos would significantly increase the wood recovery.
Kiln drying trials have been conducted at the Industry Cluster sawmills providing valuable data on drying characteristics of plantation material in Laos. Recommended simple drying improvement has reportedly resulted in a reduction of the drying time by 50%; doubling the productivity of the kiln.
The purchase, installation and commissioning of veneer peeling lathe and ancillary equipment was completed. The equipment will open opportunities for Lao timber industry for utilisation of small dimension plantation timbers by applying new technologies and producing new products for domestic and export markets.
A comprehensive glue testing program was completed at NUoL Wood Technology Laboratory on various adhesives used for high value appearance wood products. The aim of the study was to gain an understanding of the relationship between wood property, wood preparation, and adhesive application factors on the shear strength of glue joints of teak (Tectona grandis) and river red gum (Eucalyptus camaldulensis). Recommendations for optimal gluing conditions as well as surface preparation parameters and methods have been provided.
Wood recovery studies in manufacturing processes were carried out at the Industry Cluster’s furniture companies which provided data on wood recovery rates, the amount of waste and recommendations for waste reduction and utilisation. The study identified practices and value-added manufacturing technologies to increase the value recovery of small dimension, inferior quality plantation wood and facilitate early improvements from dry feed stock to marketable products.
A strong focus has been placed on the training activities with an increased number of training courses which were provided to Farmer Group Enterprises, NUoL researchers and students, and the industry members. In addition, nine project researchers from NUoL were trained in Australia on wood processing and furniture manufacturing technologies.
All of the four objectives activities are well advanced as the VALTIP 2 project (ACIAR Project FST2010/012) moves into the final term. The mapping of smallholder planted tree resources in Luang Prabang region provided a more accurate estimate of the extent and stand structure of the smallholder teak; about 15,000 ha based upon current high-resolution aerial imagery. Earlier estimates ranged as high as 50,000 ha. The work also highlighted the complexity of defining and identifying small plantings within the patchwork of a diverse rural landscape. The imagery will be of continuing use, providing a temporal baseline for mapping other forestry and agricultural land uses.
The activity on the legal barriers to smallholder plantation owners and the associated timber value chain has built on the study in the early term of the project, during which a very comprehensive mapping of the forestry laws in Lao PDR was compiled. The methodology has been adopted in the FLEGT Forest Legality Compendium project and Wildlife Law in Lao PDR. The project has identified a range of disincentives and impediments to greater adoption of plantation registration, including lack of information, ease of circumventing legal requirements in the timber market, lack of enforcement, and insufficient benefits to offset the cost of registration.
Opportunities for transaction cost mitigation have been further investigated, building on earlier stages of the project. Almost 40 recommendations have been identified for plantation growers, industry and government to legally mitigate some impacts of plantation transaction costs. The issue is not the existence of transaction costs, which are a feature of every market, but the level of some costs, and inefficiencies, and in some cases, corrupt practices, which can lead to distortions in the operation of those costs. The scope of the project was expanded to include non-monetary as well as monetary transaction costs. Feedback will be widely sought on the proposed mitigation measures in the final term of the project.
Action Research Round 5 on the establishment of grower group enterprises was conducted. There are now a total of 22 grower producer groups who have received training and plantation certificates. It is intended to increase the number of enterprises over the final 6 months of the project. The study has found the complexity of the FSC certification systems is an impediment to the uptake of group certification, and while the established groups are effective in delivering training, they have not been effective in improving returns to smallholder growers.
Over the past year, there have been multiple verification initiatives implemented in preparation for group certification including producer-based initiatives, LPTP legality verification and 3rd party non-accredited sustainability certification. Research findings from this project are also contributing to discussion on more practical and feasible verification processes for use by smallholders in the Asia Pacific region.
A series of wood processing and manufacturing best practice manuals (on log grading, sawmilling, drying, machining, gluing, joining, production efficiency, finishing and waste management) were produced which provide industry with the information required to improve their primary processing and manufacturing operations in the short to mid-term. The manuals are now being combined into the Final Manuals which are “Manual on Wood Processing” and “Manual on Furniture Manufacturing”. Currently there are only a small number of published manuals or books available on wood processing and manufacturing, in particular for young plantation timbers. Therefore, the manuals, which combine the knowledge and experience of both Australian and Lao wood scientists working closely with Industry Cluster companies, will provide valuable information to scientific communities and to the timber industry not only in Laos but also in other countries around the world.
Lao researchers have been trained on various elements related to wood processing and manufacturing. Through research and training activities the participants have acquired knowledge which makes them leaders in these areas in the country. Their knowledge has been already been disseminated through teaching activities at the Faculty of Forestry, NUoL.
A significant outcome of the project has been the purchase, installation and commissioning of ‘state of the art’ veneer production equipment. The official opening of the ‘Veneer Processing and Production Center’ at NUoL was held on 11 November 2015. The Australian Ambassador to Laos, H. E. John Williams gave a speech to mark the occasion. The Project Industry Cluster companies, NUoL researchers and students have been trained in the use of the veneer machinery. The NUoL research team are now able to run the machinery autonomously and, during the past year, have performed their own peeling trials using eucalypt, acacia and teak logs. The new veneer processing centre provides great opportunities for Lao industry and a firm foundation for future research at NUoL.