Analyzing the Eucalyptus Timber Value Chain in Thailand: Profit Distribution and Opportunities for Improvement

Abstract

The Thai forestry sector relies greatly on Eucalyptus as a raw material. The rapid expansion of plantations during the last few decades and the high demand for Eucalyptus for several purposes has led to numerous supply chain practices. A comprehensive understanding of the Eucalyptus value chain is lacking in Thailand, which has consequences for optimization, sustainability, and profitability aspects. This study analyzed actors and their activities along the value chain and estimated added value and profit margin benefit distributions. The study method involved a value chain analysis approach, whereby input data were collected from the following groups: seedling suppliers and developers, farmers and tree growers, timber traders and collectors, intermediaries, processors, wholesalers, and consumers via key informant interviews, in-depth interviews, and group discussions. The results revealed the vertical integration of Eucalyptus timber businesses, where sapling breeders were the major input suppliers with a significant role in the value chain based on the role of controlling the majority of seedling production, promoting cultivation, and ensuring the raw material supply for the pulp industry through a full-cycle membership program. Total gross marketing margin was highest (90.6%) in the path of the pulp mill industry and lowest in the path of the biomass power plant (73.4%). The profit share of growers varied between 9.9% and 26.6% depending on the path and chain. The overall benefit distribution analysis demonstrated a positive gross profit margin but minor distribution to the growers. Our study determined that decision-makers should create supportive programs, funding opportunities, and infrastructural support for research and development, capacity building, and regulation to ensure suitable benefits for all actors in the Eucalyptus timber value chain in Thailand.