Over the last three decades, several thousand hectares of teak have been planted in Laos. Australian academics and teachers are helping the locals to better harvest, dry and process the wood to improve the economy. Why?

 Over the last decade, the wood and wood products sector in Lao PDR has undergone significant reforms in response to the depletion of the country’s forest resources, increased demand for timber, low-value exports of timber and the illegal trade in raw logs. In 2001 the Lao Government legislated a ban on the export of raw logs, followed by a policy imposing a reduction on the export of sawn wood. In 2006, the government launched a policy for promoting downstream processing and exporting finished or semi-finished wood products. However, the performance of the industry has been constrained by weaknesses in production and product quality skills, process and technology deficiencies and low wood recovery rates.

Here’s where Australia steps in and it’s simple. A Lao farmer cuts down a Teak tree and sells it illegally to a Chinese businessman just over the border. He gets $100 for the tree, enough to keep his family fed for six months. The Chinese businessman sells the tree or processes it himself and makes furniture that he sells to countries like Australia. He makes several thousand dollars from the transaction and furniture companies in Australia lose sales. It’s far better to teach the Laotians to make the furniture themselves than to have the wood go to China and this supports Lao Government initiatives.

Much of the Teak plantations have been planted around Luang Prabang, the old capital of Laos and an excellent tourist destination. Some of this is now being harvested. Much of it is cut in small local sawmills and exported to Vietnam and Thailand. Some flitches are being sent to Vientiane for processing into furniture for export and domestic use. With a strong international demand for sustainably produced teak, farmers are receiving very good prices for relatively small plantation trees. The species grows well, and looks to be a good option for integrated agroforestry systems in Laos. Significant areas of eucalyptus camaldulensis (red gum) have been established in central and southern Laos. Some of this is being processed locally into furniture for export and local use.

The Lao processing industry is still developing, with only a few manufacturers producing a limited range of products. Some of what is produced is quite good, and Laos would seem to have a competitive advantage in timber processing and manufacturing. However, if the processing and manufacturing industry based on plantation timber is to expand to achieve the contribution to the domestic economy that seems possible, the development and introduction of processing techniques to facilitate a broader range of products from these small plantation timbers will be required. Also required will be a much stronger national capability in timber processing R&D and training which are currently very low.

An ongoing project funded mainly by the Australian Centre for International Agricultural Research (ACIAR) is designed to enhance the range, quality and value of products produced from plantation grown timber in Laos, in particular from plantation eucalypts and teak. The objectives will be to improve timber recoveries through development of enhanced but appropriate timber processing, drying and manufacturing methods and systems. To broaden wood product design options by testing and adapting new technologies and to develop appropriate quality control procedures.

Integral to these objectives will be the enhancement of Lao capacity in processing; especially R&D, education and training at the University of Laos and within the private sector. Outputs will include a functioning industry network, relevant technical procedures and recommendations, new designs and products, targeted teaching and training programs, and improved capacity within industry and the organizations’ involved in the project. While it is still too early to be specific about economic impacts of the project, a conservative analysis indicates that a vibrant timber processing and manufacturing sector in Lao PDR, towards which this project strives, will provide hundreds of millions of dollars annually to the national economy, even from a quite modest plantation estate. This will also provide impetus for the expansion of the plantation growing industry, with major economic benefits to farmers involved. While a major expansion of the industry will take many more years, there is no doubt that adoption of new technologies by existing processors will deliver economic impacts.

The long-term project analysed the existing activities and capability of a range of manufacturers that were thought to be suitable and willing to participate in an industry cluster; introduced a range of new technologies; developed new designs and relevant education and training programs and materials. The assessment was undertaken by the project team consisting of researchers from The National University of Laos and The University of Melbourne and in the initial stages, Philip Ashley (pictured) as an expert in wood machining and training from the Victorian Furnishing Industry Training Centre at Holmesglen.

Discussions with the industry revealed that the ACIAR project is widely supported by the Laos timber industry. All the assessed companies expressed a lot of enthusiasm and hope that the project will facilitate their development into a viable, competitive industry. The companies stated that technical advice and help are urgently needed in the area of design, quality, productivity and machinery. The Lao furniture industry priorities are advice on kiln drying; how to manage the factory, arrange kilns and various machining operations in the factory and organize the production process to obtain efficient production at low cost; how to improve the quality of wood products and how to access international markets. The project has proved that the opportunity exists for the Lao value adding industry to expand into the use of increasing plantation timber resources, further reducing the dependency of the industry on native old growth hardwoods. The achievements of the project will stimulate the industry to produce higher quality products to meet international market requirements.