Value-chain dynamics: strengthening the institution of small-scale furniture producers to improve their value addition

Abstract

Free trade in Asia could aggravate the situation of small-scale furniture producers, if they are not strengthened. The furniture value chain describes the role of different actors in the furniture business from forest to market. Each actor contributes to, and obtains benefits from, the chain. Research was conducted in Jepara, Central Java, the centre of furniture production in Indonesia. The value of Jepara's exports is more than US$110 million annually. This research aimed to improve the position of small- and medium-scale enterprises (SMEs) in the value chain. The study was conducted in 2008–2012, mainly using participatory action research (PAR). The results show that PAR is able to influence the value chain and improve the livelihoods of small-scale furniture producers. By creating a representative association, SMEs were able to strengthen their bargaining position, connect to wider markets and improve trust and support from government. The association was recently issued with the first collective timber legality assurance system (SVLK) license in Indonesia.

Keywords::

• value chain
• furniture
• institution
• participatory action research
• small- and medium-scale enterprises

Acknowledgements

The authors would like to thank ACIAR (Australian Centre for International Agricultural Research) for providing the grant to support research on ‘Mahogany and teak furniture: action research to improve value chain efficiency and enhance livelihoods (FST/2007/119)’.

Conflict of interest: Opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the authors' affiliations.