Financial returns for different actors in a teak timber value chain in Paklay District, Lao PDR

Abstract

The Government of the Lao PDR has a range of policies, including the promotion of domestic processing and discouraging the export of unprocessed wood, aimed at generating a greater share of benefits to all actors in the value chain. There are however, limited studies of the structures, operations and effects of policies on, value chains. This study aimed to compare financial returns to three different types of actors (growers, traders and a sawmilling and wood products manufacturing company) in a teak value chain in Paklay District of Xayabuly Province. The data were collected from two groups of growers on different site types, two timber traders and an integrated sawmill and wood products manufacturer. These data were triangulated with, and supplemented by, formal and informal interviews with other forest stakeholders in the district and province. Two silvicultural regimes were compared, with a single thinning at 11 years and clearfell at 18 years on good riverside alluvial sites, and 24 years on poorer, hillslopes sites. All sites were profitable for growers, as indicated by internal rates of return. The net returns per cubic meter of final product for the manufacturer is 7.3–20.3 times higher than net returns for the growers. Traders’ profits were considerably less than for the two other parts of the chain. Prices for others in the chain are largely controlled by the manufacturer and collaboration and co-innovation between the three actors is unlikely in the current environment. Possible options for increasing growers and traders’ incomes and improving value chain links are discussed. Show more