Equitable Prices

Good uses of small diameter teak
“Examples of well crafted teak in a Central American exhibition; unfortunately, community growers on their own commonly receive inferior prices for teak compared to commercial entities”

Unfortunately, due to lack of standards, lack of information and misinformation there is widespread uncertainty and confusion surrounding the prices of high grade tropical hardwoods. This is of particular significance to communities who often do not know the value of their crops and possess little strength when marketing their produce. It is understandable, then, why they do not receive equitable returns (see: community growers).

Also, up-to-date and accurate information on prices is vital to ensure that informed investment, management and market decisions can be made by all types of growers, large and small.

Better pricing information, which is clearly related to quality is also required by all growers in order to obtain equitable prices.

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Teak is the most important high-grade tropical hardwood grown in plantations and is the main species discussed here. What is the price of plantation teak? This is the most-asked question in teak circles. Furthermore, quality determination of teak logs is key to understanding prices.

A wide range of plantation teak prices is available worldwide. However, their use is limited because they are mostly unsubstantiated, lack precise information about log dimensions, time of data collection and point on the value chain where they belong. Besides, few data exist that provide information at consecutive intervals through time thus inhibiting knowledge about price trends. All this works to the disadvantage of all growers, is causing confusion amongst investors, allows unscrupulous parties to take advantage of the situation for their own ends and is hampering the development of a strong commercial teak plantation sector.

Other uses of small diameter teak
“By marketing their produce properly, community growers can obtain equitable prices”

Small-scale cultivators are at the mercy of the buyer where market information is weak. For example, the lack of information is often exploited to the disadvantage of vulnerable growers and communities, thus engendering poverty. In a study from West Africa it was shown that community timber and timber from the state sector fetched the same price at the point of export. However, communities received four to six times less for their produce than commercial entities. TEAK 21 aims to overcome such problems.

A standard international pricing mechanism has been proposed to solve the problem in the short-term. The proposal was made at the 2007 Regional Teak Workshop in Kerala, India. For more information see: http://www.itto.int/en/tfu/id=42570000 (International pricing mechanism for plantation teak: a proposal to bring transparency to log markets).

On the practical side, an organisation called OLAT is being established in Latin America to tackle this problem (see links).

To further understand how small growers can benefit from pricing initiatives see our community growers section.

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