Mechanisms for Poverty Reduction of Various Bamboo Subsectors

Mekong Bamboo evaluates the poverty reduction of the Mekong bamboo industry by looking at its three main subsectors: industrial bamboo, handicrafts and edible shoots. Each of the three subsectors can serve as an individual instrument for economic development and poverty reduction.

Poverty Reduction Mechanisms for Different Bamboo Subsectors
The poor have two sets of resources - land and labour - through which incomes can be increased and poverty can be reduced. Poverty reduction via the bamboo subsectors takes place through increases in either:

• Farm income – the more important mechanism. Bamboo farmgate sales can increase in volume or increase in unit price for poor farmers, and/or;
• Waged labour – the less important mechanism. New or higher waged labour creation in extended bamboo farming or processing operations.

Each of the three bamboo subsectors has different potential with respect to these impact mechanisms.

Industrial Bamboo Subsector

Industrial bamboo poverty impact mechanisms are:

1. Farm sales and income creation
   • Farmgate sales. Gross margins in 2009 in Viet Nam are around USD 350 to USD 450/hectare/year in the most economically active zones.  Here, the median smallholder land holdings is 0.6hectares. Volumes upwards of 1.6 million tonnes/year are already consumed, the impact reaching communities numbering more than 500,000 people where the farmgate prices of a range of species ranges between $20 to $35/tonne.
   • Potential for large scale impact will come through both an increase in volume and in price. The project attempts to increase the volume of sales from new areas of underutilised species while developing a market for premium priced bamboo (sustainable aged bamboo) for high value products such as pressed bamboo and construction board, furniture board, and veneers.
   • Farmgate sales represent $41 million of the total sector output in the northern cluster of $140 million (2008 data).
   • Potential industry scale in the Mekong countries can be based on existing supply areas of 2-3 million hectares of bamboo forest areas (Oxfam Hong Kong/IFC 2006). Northern Viet Nam and Houaphanh have 550,000 hectares of pure bamboo forest and a further 250,000 hectares of mixed forest. There are around 120,000 hectares of planted forest (luong and tre species) in Thanh Hoa, Hoa binh and Son La.
2. Labour creation
   • Hired unskilled farm labour.
   • Transportation labour.
   • Low skilled processing jobs.
   • Together waged labour makes up 14,000 jobs in northern Viet Nam, contributing around $7million/year in income.

Edible Shoots Subsector

Poverty impact mechanisms are:

1. Farm sales income creation
   • Farmgate sales. Gross margin returns on 0.3 hectares provides annual income in excess of the poverty line in Viet Nam for a household of 5 people.
   • Subsector output 70-80% as farm income.
   • Scale potential given market share possibilities would be a shoots sector relevant to up to 10,000 households in the Mekong countries
2. Labour creation
   • Small number of low skilled processing jobs.
   • Seasonal unskilled farm labour supply to shoots farmers

Handmade Bamboo Products (Bamboo Handicrafts) Subsector

Poverty impact mechanisms are:

1. Labour creation
   • Semi-skilled household labour within i) small household enterprises in the pre-industrial chain model or as ii) piecework outworkers and factory jobs within an industrializing model.
   • A total of 60% to 80% of output can be attributed to labour.
   • Current employment is 300,000-400,000 in Mekong countries.
   • In handicraft producing areas of Lao PDR, a significant proportion of household income comes through handicraft production; this figure is 65% in Vientiane province handicrafts villages, 60% for Champasak province (Enterprise Development Consultants 2008, 2009)
   • Growth of this opportunity is not certain in both pre-industrial and industrializing (high labour costs) structures.
2. Farm sales income creation – the less important mechanism.
   • Raw bamboo sales required as inputs to bamboo handmade products is less than 10% of total output.
   • Handicraft supply chains are based on a small volume of inputs from a diversity of bamboo species from relatively small areas.