The Mekong Bamboo Initiative Cambodia Laos Vietnam
Bamboo & Rural Poverty How to solve poverty at scale? sustained targeted rural market growth at scale How to achieve targeted market growth? Supply chains are important from impact point of view i) Value chain methods are important. Demand is critical from growth/opportunity point of view? i) Strategic analysis of potential demand ii) Benchmarking for competitiveness and poverty impact Is bamboo sector a candidate for a strategic, demand-driven approach to poverty in the Mekong? 2
This Presentation 1. Innovation How the sector has emerged 2. Opportunity Global market USD7Billion pa & growing 3. Policy Choice - Impact Potential Mekong 2017 ~USD1.2Bn pa & 1.2 Million jobs 4. Benchmarking China China is the lead in the sector 5. Project Status Impacts, project details 6. Thanh Hoa Supply Chain 3
Innovations 4
Innovations (1) China & New Bamboo Products China was forced to innovate with bamboo New products & growing market penetration Bamboo Beer Bamboo fabrics Bamboo laminated flooring and panels Fuel Pellets Blinds Building products Products with market share Ford concept car Developing new markets 5
Innovations (2) Maximise the Utility of Bamboo 3 Main Sub-Sectors Handicrafts H Bamboo Shoots S Industrial Processing 4 types Raw Culms Bulk Products Medium Value Premium Value 9 40-50% 7 6 5 5-10% 8 2 30-40% 3 9 8 7 6 5 4 3 2 1 Leaves Twigs Top Middle upper Middle lower Base Shoots Sheath & Rhizome Manure, Fodder Extracts, Medicine Brooms, Cloths Chopsticks, Toothpicks Bamboo poles Scaffoldings Blinds, Mats, Carpet Chopsticks, Toothpicks Handicrafts Flooring Laminated furniture Charcoal, Pulp Vegetable Handicrafts D H D H S H Other Developing Products D 4 4 5-10% 1 Leftovers & processing waste Source: Zhu 2005 Fiber boards Charcoal Pulp Lumber Fuels 6
The Opportunity 7
Size of Current Global Markets (USD Millions) Chop sticks The Opportunity (1) World Bamboo Markets 390 1,200 1,500 3,100 Activated Carbon Bamboo Shoots Charcoal 6,000 6,500 Bamboo & Rattan Handicrafts World Now USD7Bn pa, China ~USD5.5Bn pa 10000 14,000 BJC Blinds Wood Flooring 27,000 Wood Panels 57,000 Wood Furniture Global Markets include overall product markets into which bamboo products penetrate BJC = Builders carpentry Joinery & Size of Current Bamboo Markets (USD Millions) 1,500 3,000 1,100 Bamboo Markets are bamboo components of Global markets 300 Chop sticks 20 Activated Carbon Bamboo Shoots 60 Charcoal Bamboo Handicrafts 5 500 BJC Blinds Wood Flooring 100 200 Wood Panels Wood Furniture 8
Market (USD m) The Opportunity (2) Growing Bamboo Markets World Bamboo markets in 2017 ~ USD15-20Bn pa 18000 16000 14000 12000 10000 8000 6000 4000 2000 Growth depends on: 1. Wider global growth 2. Bamboo penetration into global markets USD6.8bn 5% Non Traditional 95% Traditional 45% 55% USD16.8bn Other Panels Flooring Laminated Furniture Traditional Furniture Chopsticks Shoots Blinds Handicrafts 0 2017 Scenario 1: Zero Growth 2017 Scenario 2: Mid-level Growth We prepared 4 growth scenarios. Zero, Lower, Middle, Upper 9
Benchmarking China 10
Benchmarking (1) Anji County, Zhejiang Province Anji County, Zhejiang Province, 230 km from Shanghai & 70 km from Hangzhou Anji, one of China s 10 bamboo homelands 11
Benchmarking (2) Supply Chain Innovation Direct Supply Model Current model in Mekong Waste rates 50 to 70% Pre- Processing Model Current model in China Waste Rates 5 to 10% Farmers & traders Primary Processing Workshops (Local Value Adding) Processing businesses Blinds Flooring Panels Chopsticks Charcoal Blinds Flooring Panels Chopsticks Charcoal 12
Benchmarking (3) Pre-Processing Pre-processing Workshop, Anji 13
Culms Benchmarking (4) Pre-Processing Value Adding Near Source Culms & Poles For construction Raw Culm Preprocessing Slats Sticks Residues For paper, fuels Bulk, Low Value Products For flooring, furniture Premium Products For blinds, chopsticks Med Value Products 14
Benchmarking (5) Competitiveness & Supply China Vietnam Industry size: $5.45 Bn $0.25Bn Costs: (70-80% of total production) Bamboo $85/tonne $37/tonne Labour $150/month $50/month Resource base: 3.4m ha 1.4m ha. Laos has >1.5m ha bamboo Cambodia 1960 (400,000 ha), now 30,000ha 15
Policy Choice & Impact Potential 16
Impact Potential (1) Jobs, Financial Impact by Product Jobs per ha (Farmers Workers FTE) 1.2 1.0 0.8 0.6 0.4 0.2 0 Medium value processing eg chopsticks, panels Low Value Bulk Processing eg paper, charcoal Raw Culms for construction 0 500 1,000 1,500 2,000 2,500 3,000 Premium processing Pro-poor measured Full time equivalent via labour & input jobs (FTE) cost base data from Flooring throughout VN the businesses. Mat supply board VN chain from from 1 ha bamboo Bamboo Woven mat sector VN ~75% Chopsticks VN pro-poor eg flooring, laminate furniture Paper + pulp VN Pro-poor impact rate: Charcoal, briquets, China returns to the poor Charcoal, briquets, Laos throughout the Raw culms VN supply chain from 1ha bamboo Local pro-poor financial impact per ha (USD ) 17
Jobs per ha (Farmers Workers FTE) Impact Potential (3) Policy Choice - Industry Mix Supply chain industry mix scenarios for 50,000 ha. 0.50 0.40 0.30 0.20 Premium Medium value Low value bulk Raw 15% 5% 5% 55% Raw 40% 80% 5% 20% 20% 55% Bulk Mix $21m 9,500 jobs 15% 15% 30% 40% Medium Mix $31m 16,500 jobs New Industry Mix $40m 20,000 jobs 0.10 Raw Mix $20m 8,500 jobs 0 300 400 500 600 700 800 900 1,000. Local pro-poor Financial Impact per ha (USD ) 18
Impact Potential (4) Future Depends on Policy/Action. Jobs per ha. (Farmers Workers FTE) 0.50 0.40 0.30 0.20 0.10 Thanh Hoa, Viet Nam 2006 Med $31m Bulk Raw$21m Raw $20m New $40m Mekong Potential next 5-10 years? Viet Nam, Laos Current Policy Direction? Mature New $72m Anji China, 2006 New Mix. Impact via High Bamboo cost+ High Labour cost+ 0 300 400 500 600 700 800 900 1,000. Local pro-poor financial impact per ha (USD) 19
Impact Potential (5) Impact Scale Today Viet Nam USD250m pa, Laos USD4m pa, Cambodia USD7m pa, 400,000 jobs. Mekong 2017 - capacity to hold between 2% & 8% of global share of each product market. Indicative scale is USD1.2bn pa sector, 1.2 million jobs 75% pro-poor = USD900m pa pro-poor financial impact 50-60% of all bamboo sector jobs for women 80-90% of new jobs in rural areas Sector suited to uplands, ethnic groups, difficult poverty Create positive environmental effects (carbon, soil etc) 20
Impact Potential (6) Poverty, Investment & ROI Bamboo can lift 1-1.5million out of poverty A coordinated strategy across Mekong sub-sectors Industrial bamboo (~1M out of poverty ) Handicrafts (~450,000 out of poverty) Shoots (~100,000 out of poverty) Impact Returns for Donors Funding sound policy, farmer production and private sector ~$40M of donor investment by 2017 can produce 800,000 jobs @ $50 per job;$900m pa pro-poor output ~$1M donor investment creates additional local $17M pa ~$40-60 pp out of poverty Private Investment & Capital Innovations 200-400 M investment - smallholders to large businesses Innovations in finance delivery required 21
Project Status 22
Viet Nam Field Studies Thanh Hoa & Nghe An Cross border links to Laos Field Studies Huaphan &Xieng Khouang Project Status (1) Work So Far Each Country Field Farming Thanh context/economics Hoa National Domestic Supply Chain supply chains, bamboo resources, Pilot market size, BEE, Int l trade arrangements China Farmers Innovations Preprocessors in supply chains Global Flooring factory, other factories Market Large European sizing & demand buyer outlook Supply Chain Pilot MPDF led. Thanh Hoa Province, Viet Nam (late 2004 to present). Mekong Bamboo Feasibility Study OHK & MPDF. China, Viet Nam, Laos, Cambodia, Global (Jan-June 2006) Cambodia Field Studies Kampong Cham, Kampong Chhnang, Kratie 23
Project Status (2) History, Plans & Vision Early 2006 Potential Yes Phase 1 Mekong Study VN, Laos, Cambodia, China, Global OHK/MPDF Joint [$250k] Late 2004 Supply chain pilot Thanh Hoa, Viet Nam MPDF Led [$315k] Yes ~2010 + Phase 2 Mekong Bamboo Consortium [~USD1.5M pa 2007-2010] Roll out of project activities in region Mid 2006 until April 1 2007 Transition Support business to invest & extend supply chains Build consortia partnerships for Phase 2 Donors, resourcing, design Phase 2 OHK, MPDF, Partners 24
Project Status (3) Interim Numbers USD280,000/month - The total sales from primary workshops 6000 - the number of farmers who supply bamboo to the primary processors to produce slats 20% - the increase in price for raw bamboo since Mar 2006 75% - the proportion of H hold income derived from bamboo for poorest families 88% - the ratio of ethnic minorities employed in the workshops 85% - the ratio of women employed in the workshops 600,000 Dong ($37.5) - the average monthly salary of workers (local average is <$100pa) 539 - the number of people employed in these workshops 8 - the number of copycat workshops USD565,000. the donor investment in this project since 2004 to Mid 2006 Intensive impact assessment will take place over coming 3 months 25
Project Status (4) Phase II Structure 26
Thanh Hoa Supply Chain 27
Thanh Hoa Supply Chain (1) Farming Systems 28
Thanh Hoa Supply Chain (2) Transportation 29
Thanh Hoa Supply Chain (3) Workshops 30
The Mekong Bamboo Initiative Cambodia Laos Vietnam 31