Rattan: Supply Down, Prices Up…

Global economic forces have created a worldwide shortage of rattan, pushing prices ever higher. Wholesale prices have doubled in the United States. That increase, combined with higher shipping costs, has shown up in higher prices for all reed and some smaller sizes are being rationed by retailers.

According to Peter Butte of PL Butte, the wholesale company, they are getting about half the quantity at double the price. Round reed smaller than #4 is becoming very hard to find, according to Kathy Halter, the owner of Royalwood. “When we get 25 pounds of ¼ -inch flat,” she said, “it doesn’t last a day normally.” Two major forces are driving the shortage. The primary one is political. The Indonesian government, in an effort to build its own economy, banned the export of all raw and semi-processed materials and placed heavy duties on semi-processed material as of December 31, 2011. Rather than sell the raw material and let others use it to make products to sell; the Indonesians reasoned that they would get more from their own resources if they themselves made the finished products to sell.

The Indonesian government, in an effort to build its own economy, banned the export of all raw and semi-processed materials.

The other force is ecological. The demand for rattan came close to doubling from 1970 to 1990 and the families and small businesses that made their living harvesting from the forests depleted natural sources to meet that demand and palm oil plantations took up acreage. Other species of vines are being harvested in Southeast Asia, but the infrastructure needed to process them and to bring them to market is not well developed so they have not been able to make up the shortfall. The texture and color of these vines differs.

According to articles in Asian business journals, the Indonesian government has banned the export of materials before, but they are enforcing the ban much more forcefully than they have in the past. Materials are still being smuggled, but there is an increase in the number of containers on the way to China that are being stopped and confiscated. Reports are mixed on whether this move is helping the local economy.

For now the supply is “very unstable,” said Peter Butte, but prices seem to be leveling off, adding that the prices are very unlikely to go down. “As to the future,” he added, “it is hard to say … money trumps all in the Far East and there are ways to get things out as long as there is a willing market that can pay the prices. “It was a cheap material for many years,” said Kathy Halter, “Now it is probably more in line with reality.”

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