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Papers


1. Spatial Modeling Approach to Clustering Furniture Industry and Regional Development in Jepara, Indonesia
By Rubeta Andriani, Atie Puntodewo, Herry Purnomo, Ramadhani Achdiawan and Rika Harini Irawati
Paper presented in MODSIM 2011 Conference, Perth, W. A, Australia, December 2011

Abstract

In the Indonesian furniture industry, particularly in Java, about 95% is managed by small-scale and medium enterprises (SMEs). These SMEs formed natural clusters, which are not efficiently distributed in terms of obtaining wood material and marketing. This inefficiency can make SMEs less competitive compared to Chinese and Vietnamese furniture industries. This paper provides spatial analysis of SMEs-based furniture industries in Jepara, Central Java, which contributes 10% to the national export value (US$ 1.5 billion). The spatial analysis comprises elements of workshops, tree plantations, log parks, warehouses, showrooms, sawmills, ironmongeries and local markets. This study aims to provide options for efficient SMEs clustering in connection to regional development, including the future location of the furniture industry.
Keywords: spatial modeling, Small Scale Medium Enterprises, furniture, efficiency, regional development

2. A Systems Dynamics Approach to Balancing Wood Supply and Demand for Sustaining Furniture Industry
Herry Purnomo, Lutfy Abdullah and Rika Harini Irawati
Paper presented in MODSIM 2011 Conference, Perth, W. A, Australia, December 2011

Abstract

The Indonesian furniture industry consists of various actors in a long chain from production to consumption; these include tree growers, producers, retailers and exporters. The furniture industry provides employment and livelihoods for millions of people.  However, insecurity of raw material has the potential to lead to poverty due to the unsustainable nature of the furniture industry.  This research used methods, such as conceptualisation, specification, evaluation and the use of a model.  The model analyses wood supply and demand in the furniture industry, which comprises of state owned and community teak forests, furniture workshops, domestic and international markets.  The model simulates tree dynamics, furniture processing, and the fluctuation of markets to asses the impacts on the sustainability of the furniture industry. We develop "business as usual," free trade and certification scenarios to understand their impacts on wood supply and demand, as well as the future sustainability of the furniture industry. This study looked at the Jepara furniture making industry, Indonesia,  which shares similar experiences in furniture making in Southeast Asia and honey production in Africa. The paper recommends solutions to sustain wood-based industries and improve the livelihoods of local communities. 
Keywords: furniture, forest, supply, demand, sustainability

3. Value Chain Governance and Gender in the Furniture Industry
H. Purnomo, R. H. Irawati1, A.U Fauzan, Melati

Abstract

Indonesian furniture accounts for almost 2% of the global wood furniture trade, which is valued at more than US $135 billion. In many countries, including Japan, European countries and Indonesia, women make decisions about selecting which furniture to buy. However, the role of women workers in the furniture industry has not been clearly identified. In Central Java's Jepara District, the center of teak-based Indonesian furniture, annual furniture exports to Australia, Europe, Japan and the United States are valued at US $150 million. We use value chain analysis and action research to demonstrate the role and position of women workers in Jepara's teak value chain, and their struggle to upgrade to more valuable value chains and positions. Though women workers are important in generating revenue, they are paid 50% less than men who work the same hours. They are also less powerful, exercising less control over resources, decision making, product development and bargaining. We further explore different scenarios for upgrading small-scale producers and find that participation in trade exhibitions, training programs and producer associations substantially affect women's bargaining power in the value chain.
Keywords: value chain analysis, governance, gender, furniture, Jepara

4. Roles of information technologies for small-scale furniture businesses
Paper presented at The Asian Federation for Information Technology in Agriculture Conference 4 – 7 October 2010 : The Quality Information for Competitive Agricultural Based Production System and Commerce
Rika Harini Irawati, Desi Ariyadhi Suyamto
CIFOR', Bogor, Indonesia
e-mail: r.irawati@cgiar.org; otmayusd@gmail.com

Abstract

Information and Communication Technology (ICT) is increasingly believed to be a powerful tool for facilitating business in a free trade era, creating a digital revolution. However, such a revolution can potentially hamper the desire to make globalisation work for all by expanding the digital divide; since many rural people do not have sufficient financial, physical and knowledge capital to access ICT. This paper presents our preliminary findings, in which we evaluate the application of ICT in facilitating small-scale furniture enterprises in Jepara District in Central Java, Indonesia, based on three main indicators: effectiveness, efficiency, and equity. We found that effective use of ICT for marketing was more determined by media placement than by media choice. Thus, a bombarding strategy which pervasively advertises products through all available online media is the most effective strategy. On the contrary, efficient use of ICT for marketing is more determined by media choice than by media placement. Thus, with limited capital, media choice is a more efficient strategy than media placement. In general, access to ICT is currently unequal. Without relevant policy interventions and initiatives, this inequity could increase due to the positive feedback loop that exists between ICT accessibility and wealth.
Keywords: component; digital divide, furniture, information and communication technology, Jepara, small scale

5. How does the marketing portal work for small-scale furniture producers?
Paper presented at The Asian Federation for Information Technology in Agriculture Conference 4 – 7 October 2010 : The Quality Information for Competitive Agricultural Based Production System and Commerce
Desi Ariyadhi Suyamto and Rika Harini Irawati
Center for International Forestry Research (CIFOR), Bogor 16000, Indonesia. Tel: +62 251 8622622, Fax: +62251 8622100. Corresponding author email: otmayusd@gmail.com

Abstract

Markets interconnect sellers and buyers. Rigid interconnectedness has a relatively low adaptive capacity, and, therefore, vulnerable to massive collapse. Previous value chain analysis (VCA) studies conducted in the wood-based furniture producing area of Jepara in Central Java, Indonesia found that most furniture producing small- and medium-size enterprises (SMEs) in the region are interconnected with buyers through directed and hierarchical types of governance networks, which are centralised to either domestic brokers or exporters. Centralised networks are too brittle for SMEs to adapt to new conditions. In 1998, the region's furniture industry experienced a massive collapse, threatening not only economic, but also environmental sustainability. The collapse suggested that decentralising interconnectedness by giving SMEs more 'autonomy' to govern value chains was necessary to increase the adaptive capacity of Jepara's furniture industry. One way of doing so was through the use of information and communications technology (ICT). Consequently, a collective marketing portal (http://www.javamebel.com) was developed, aimed at facilitating SMEs in Jepara to market their products collectively and link them directly to potential buyers, with the domestic niche market as its main target. This study evaluates the 'usefulness' of the portal from the SMEs' perspective as well as appropriate institutions for its management. In addition to employing online statistical data, the study involved field surveys to investigate factors constraining marketing through the portal. Eighty-five days after its launch, javamebel had attracted relatively few SMEs and potential buyers. Though this is quite normal for a new innovation, we did establish that the portal's 'usefulness' was determined by cohesiveness among SMEs, social resistance and buyer-seller trust. This suggests that in order to develop, the portal should improve its 'orgware', the institutional settings governing rules and incentive structures for the development and employment of technology, demanding continuous inputs via investments and appropriate incentives structures. We believe that campaigning, capacity building, equipment grants and extensions for stimulating expectations of the social benefits of collective action will accelerate the achievement of this goal.
Keywords: adaptive capacity, interconnectedness, Jepara, marketing portal, small-scale furniture producers
Please contact the first author for obtaining the full paper

6. Livelihood Strategies of Small Scale Furniture Producer in Jepara Central Java in Facing Tight Market Competition
Paper presented at XXIII IUFRO WORLD CONGRESS, August 27th 2010
Ramadhani Achdiawan and Herry Purnomo

Abstract

Furniture contributes significant value from total Indonesia forest products export. Jepara, Central Java is the most important furniture producer district. It was recorded in 2005 at least 15,271 business units of workshops, showrooms and warehouses of furniture industries employed 176,470 workers in Jepara. This paper describes the importance of furniture making activity to household income and its' comparison to other livelihood activities. Why most people in the district remains producing furniture in the tight competition and decreasing international market demand due to world economic crisis in the recent years. How should furniture producer compete with the increasing timber price? What is the most appropriate strategy to produce furniture that less threatening timber resource? The study conducted by applying household survey on the furniture producers and other household in Jepara district by using systematic sampling. Data were analyzed by using several statistical analyses. Most of producers remain producing furniture as it is not only source of income but as well as cultural identity. Their weakness is mostly in the strength of business management which includes marketing skill and financial management. Therefore, these skills have to be improved comprehensively especially to small scale producers.
Keywords: furniture, small scale, furniture, livelihood, business management
Please contact the first author for obtaining the full paper

7. Value chain analysis of furniture: Action research to improve power balance and enhance livelihoods of small-scale producers
Paper presented at XIII World Forestry Congress 2009, Buenos Aires, Argentina
Herry Purnomo, Ramadhani Achdiawan, Nunung Parlinah, Rika Harini Irawati and Melati

Abstract

Value chain analysis (VCA) has emerged since the 1990s as a novel approach for understanding how power, benefits and costs are embodied and distributed to various actors. The Indonesian furniture industry demonstrates a long chain of production to consumption, from raw material producers (tree growers), semi-finished producers, finished product producers, and retailers to exporters. Each actor is connected by intermediaries. Indonesian furniture, dominated by teak, contributed 2% of the global wood furniture trade (valued US$ 85 billion in 2007). Indonesian forest includes more than 35% of the world's teak forests. The furniture industry provides employment and livelihoods to millions of people. This paper describes the value added distribution to all furniture actors, actions to strengthen small-scale producers, and global comparisons with other forest product value chains. The furniture value chain connects producers from Jepara District, the center of Indonesian furniture with annual exports of US$ 150 million, with furniture retailers in Europe, the USA, Australia and Japan. The problem is power imbalance throughout the value chain and unhealthy competition among producers, which result in poverty of small-scale producers, product quality degradation and an unsustainable furniture industry. The adaptation of small-scale producers to market demand is low. They are price takers rather than the price setters, as indicated by their decreasing bargaining power. We used VCA to hypothesize governance and institutional arrangement scenarios for more equitable power and income to sustain both the forest and the furniture industry. Following the VCA analysis, action research is being conducted. Researchers and furniture stakeholders have jointly developed plans and actions to strengthen the industry structure, improve value addition and improve livelihoods. To ensure local and national impacts, we have collaborated with the Jepara Furniture Multi-stakeholder Forum, the Jepara local government, the Forestry Research and Development Agency (FORDA) of the Indonesia Ministry of Forestry, and Bogor Agricultural University. At international level, we are comparing this study with lesson learned from value chains of bamboo in China, honey bee in Zambia, potential for reducing emissions from deforestation and degradation (REDD) credit in Indonesia, and palm heart/ palmito in Brazil.
Keywords: value chain, furniture, small-scale, governance, livelihoods, institution
Please contact the first author for obtaining the full paper

8. Upgrading wood-based industries: Harnessing the social network of small-scale furniture producers and their institutions
Paper presented at International Seminar Research on Plantation Forests: Challenges and Opportunities held by Centre for Plantation Forest Research and Development – Bogor, INDONESIA
Authors: Melati1), Rika Harini Irawati1) and Herry Purnomo1,2)
1) CIFOR, Jl. CIFOR, Situ Gede, Bogor Barat 16115, Indonesia
2) Faculty of Forestry, Bogor Agricultural Institute, Darmaga, Bogor.

Abstract

Furniture is a major export commodity in Indonesia with a total value of US$1.96 million in 2007. The industry is centred in Central Java where the district of Jepara is a key location for wood furniture production. The district has 15 271 furniture-related business units employing 176 469 workers. However, inefficiencies and power imbalances throughout the furniture value chain have resulted in overharvesting and uneven distribution of gains among the industry's actors. In contrast to price-setting international furniture retailers, small-scale producers benefit least from the profit margin of their products. In order to increase added value and competitiveness, small-scale furniture producers have made efforts to upgrade by harnessing their social networks and institutions. The social networks have a positive effect; they encourage collective action and enables access to market information, these networks function as a safety net for small-scale furniture producers. This paper describes small-scale furniture producers' efforts to upgrade by utilising their social network and institutions in Jepara. Data was collected through in-depth interviews with members of the small-scale furniture producers' association.  By identifying actors' roles and status, information flow and the role of institutions, the data was then used for network analysis. The research provides insight into the nature of social networks and information flow and develops future scenarios to upgrade. The scenarios will not only benefit the furniture industry in Jepara, but may also be adopted for similar industries throughout Indonesia and the world, and potentially improve many people's economies and livelihoods.
Keywords: upgrading, wood-based industry, furniture, small-scale, social network, institution
Please contact the first author to obtain the full paper

9. Analysis of value chain governance: Scenarios to develop small-scale furniture producers
Paper presented at International Seminar Research on Plantation Forests: Challenges and Opportunities held by Centre for Plantation Forest Research and Development – Bogor, INDONESIA
By Rika Harini Irawati1), Melati1), and Herry Purnomo1,2)
1) CIFOR, Jl. CIFOR, Situ Gede, Bogor Barat 16115, Indonesia
2) Faculty of Forestry, Bogor Agricultural University, Darmaga, Bogor.

Abstract

Furniture industry had shown a long chain of production to consumption, from raw material producers (tree growers), semi-finished producers, finished product producers, and retailers to exporters. Jepara as a centre furniture industry in Indonesia incorporates around 15.000 business units and provide livelihoods to approximately 170.000 workers. This sector contributes about 27% of Jepara`s people domestic income. Small and medium furniture enterprises (SMEs) have significant roles in the furniture industry as production structures are characterized by them. Power and information imbalance throughout the furniture value chain have resulted in problems of uneven distribution of gains among actors of the industry. SME furniture producers have experienced an unfair value added distribution. Hence, development of SMEs is important for strengthening the industry and expected to result in a portion of value added distribution to them. We are trying to develop scenarios for SME improvement in the furniture industry in Jepara by identifying their problems and implementing Value Chain Analysis (VCA). VCA is an approach to describe SME producer relations with other actors in the industry and the governance type of their relations. Data is collected by interviewing selected SMEs from the association of small scale producers in Jepara to get detailed maps of their value chain. The research will produce future scenarios and intervention points to improve small-scale producer sustainability and better value added distribution among furniture actors. The scenarios will not only benefit selected producers but also the furniture industry of Jepara, and can be adopted for similar industries throughout Indonesia and abroad.
Keywords: furniture, value chain, governance, scenario, small-scale
Please contact the first author for obtaining the full paper