Agriculture Reference
In-Depth Information
price is set by the furniture makers, with only 13 percent by the middlemen and
about seven percent by the producers. Due to long-term nature of timber produc-
tion, it may be that production costs, as in the case of gmelina, are treated as a
sunk cost (Harrison 2003). The result is that the buyer has greater negotiating
power than the seller and the price may fall below the profitability level. The sell-
ing price is almost doubled at the consumer side, reflecting the high transport cost
and the relative power of the buyers.
7.4.4 Market Channels
The market channels for gmelina, fuelwood and charcoal, which are the major
farm- grown tree products, are shown in Fig. 7.2. The Figure shows that for char-
coal (bottom picture), a fully developed commercial markets exists, with the whole
volume flowing through a regular chain of smallholder to wholesaler and then
onwards to retailer and consumer. Roughly the same picture exists for fuelwood,
although some minor flows are present through contract buyers and direct trading
between producer and consumers. This direct trade concerns local contacts, e.g.
within the same village. The middlemen in the fuelwood and charcoal trade often
provide credit, which the farmers consider as down payment for the goods. This
may push farmers into debt bondage to the traders (Hobbes and de Groot 2004).
For gmelina timber, the marketing channels show a very different picture. In
fact, only minor flows are directed at the furniture manufacturers and wood or fur-
niture retailers, and most of the timber is traded locally in direct contact between
producers and end users (roughly, non-tree owning co-villagers that ask for a tree
to be cut for construction or other purposes). In other words, even though a market
exists to the extent that gmelina producers could be pinpointed by the shop-owners
and traders in our two-step sampling procedure, the market is in fact totally
underdeveloped.
7.4.5
Policy Regulations on Farm-Grown Timber
and Forest-Sourced (Illegal) Timber
Smallholder tree growing is governed by the Department of Environment and
Natural Resources (DENR) policies. A DENR administrative order has already
established the 'Deregulation of Cutting of Forest Tree Species'. According to this
Order, the local Community Environment and Natural Resources Office (CENRO)
shall invite all concerned private landowners to register tree plantations within pri-
vate lands. Registration of tree farms will facilitate the processing of documentation
requirements for future harvests. The holders of 'Certificate of Registration' are
exempted from forest charges and require no permit to harvest and transport the
registered trees either on private or public lands. The only exceptions are specifi-
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