Summary of the world broadleaved situation, 1967
Prospects for the future
Hardwoods - world supply and demand (with emphasis on tropical species) Part 2.
On the basis of the information given in Part l of this paper¹ an approximate model of world supply, production, trade and consumption of broadleaved logs, and of the sawnwood, veneer and plywood made from them, has been developed in Table 16. This shows, to the nearest million cubic metres for each cell of the table, the situation in 1967 in terms of log volume. In order to make the model balance, various discrepancies between imports and exports, between log supply and log requirements, etc. have been adjusted arbitrarily. Thus both stock changes and statistical discrepancies have been obscured.
(¹ Unasylva, Volume 23, Number 2, page 24 to 33.)
This simplified model shows clearly several major features of the world pattern in addition to those already outlined in the previous pages. The intensity of use of the broadleaved forest resource is particularly striking. The forests of temperate Asia, largely Japan, are being harvested at the rate of 2 percent of the growing stock annually. In Europe the rate is 1.3 percent. But in all other regions of the world the intensity is much less. In the remaining temperate regions the rate drops to 0.3 or 0.2 percent, in part because of the inaccessible nature of much of the forest and in part because of the difficulties of using the small size or badly formed material which is typical of many of these forests. Limitations in market size may still limit broadleaved species use in some regions.
In the tropical regions, however, the intensity is much lower yet. Only in the Asia-Pacific area, where the Dipterocarp species lend themselves to fuller harvesting of exploited stands, does the rate approach that of the temperate regions. In South America, lack of access and the multitude of species in any one area had made exploitation so difficult that industrial removals amount to only 0.01 percent of the estimated growing stock.
The total net movement of broadleaved wood from the tropical regions largely to supplement or complement the relatively greater harvest from the temperate forests is most significant. In both log and processed form this amounts to 27 million cubic metres which is equivalent to 15 percent of world broadleaved removals and 40 percent of the tropical harvest. This results in the consumption of the temperate regions being four fifths of the world total.
It should, however, be pointed out that the great bulk of this tropical to temperate flow takes place in the unprocessed log form. Out of the 27 million cubic metres, more than three quarters moves as roundwood. As has been pointed out this trade is composed predominantly of movement from west Africa and southeast Asia to Europe and east Asia.
Africa and Latin America both export some processed wood-the equivalent of about 1 million cubic metres each. The Asia-Pacific area, however, has considerable export of processed material, some 5 million cubic metres which comprises nearly a, quarter of the region's exports and nearly one fifth of the total flow of wood from the tropics.
Special mention must be made of the position of east Asia as an in-transit processor of imported tropical logs. Although this region alone consumes for its own use 13 million cubic metres or one half of all tropical broadleaved material moving to the entire temperate zone, it exports an additional 3 million cubic metres to other temperate areas, particularly North America.
Europe accounts for roughly one quarter of all net imports while North America and the relatively small imports of the other temperate areas account for the remaining one quarter. North America imports nearly all its tropical wood in the processed form.
Marked shifts have led, over the past decade or two, to this world pattern of supply and demand. In the concluding portions of this paper an examination will be made of further prospective changes in the pattern.
The previous section has pointed up the main elements of the balance between demand and supply of broadleaved species. East Asia, Europe and North America have large and growing dependence on broadleaved logs of the tropical regions especially of southeast Asia and west Africa. Although this dependence is, to some extent, one based on specialized qualities and sizes for special uses, it reflects the broader pattern of the general wood demand-supply situation from which it cannot be completely divorced. Major countries of the importing regions-Japan, the EEC countries and the United Kingdom, as well as the United States, are all deficit countries with respect to total wood balance. Major flows of coniferous material from the U.S.S.R. to western Europe and Japan, from Canada to the United States and western Europe, from northern Europe to western Europe and, seemingly paradoxically, from the United States to Japan, have filled much of the wood requirement gap.
Growth of the major deficits as estimated by the study Wood - world trends and prospects is summarized in Table 17. Developments have taken place in the directions foreseen, but in some cases more rapidly and in others less rapidly than had been estimated. Because of more rapid national economic growth than expected, the Japanese deficit, which had already grown to 33 million cubic metres by 1967, and an estimated 36 million cubic metres in 1968, is provisionally projected to 54 million cubic metres of roundwood equivalent in 1975. Because of this, imports, not only of tropical logs, but also of coniferous logs from the U.S.S.R. and, even more, from the United States grew more rapidly than foreseen, as did also imports of pulp chips from a number of sources.
In the EEC countries and the United Kingdom, imports of coniferous sawlogs developed, at least initially, more rapidly than expected while northern European supplies are playing a somewhat greater role than foreseen in filling the pulpwood product gap. Probably, as a result of the additional supplies of coniferous sawnwood, of the continuing rapid expansion Of E article board use, and of a greater use of coniferous plywood, the demand for tropical timbers did not grow as fast as expected. In a recent review of the European situation, about to be published, FAO/ECE estimates that the total wood deficit of EEC and the United Kingdom will be 135 million cubic metres of roundwood equivalent in 1975 and 157 million cubic metres in 1980. The total European deficit is seen as 54 million and 67 million cubic metres for these two target years. The total European requirements of sawn hardwood and of sleepers, plywood and veneers (including some coniferous material in the last three categories) are expected to grow by 4.3 million cubic metres of log equivalent from 1965 to 1975.
The fairly steady growth in European hardwood log removals which has occurred over the past 15 years is expected, according to summary reports from the countries concerned, to slow down appreciably to about one quarter of the previous expansion. Domestic removals are, therefore, not expected to increase rapidly enough to match the expected expansion and because, as will be explained later, broadleaved log imports may even decrease, and imports of broadleaved sawnwood veneer and plywood might expand, from 1965 to 1975, by about 3 million cubic metres) in log equivalent terms. A further import growth of 1 million cubic metres) might occur by 1980. How much of this might be of tropical woods as opposed to coniferous plywood will be largely a matter of competition for certain markets.
TABLE 17. - ESTIMATED GROWTH IN SELECTED MAJOR WOOD DEFICITS,¹ 1961-75
|
|
Deficit |
Present main sources of external supply: area and product |
|
|
1961 |
1975 |
||
|
Million cubic metres (r) |
|||
|
EEC and United Kingdom |
|
|
|
|
Sawlogs and veneer logs |
40 ½ |
56 ½ |
Northern Europe, U.S.S.R. and Canada: sawn soft wood West Africa hardwood logs |
|
Pulpwood and other roundwood |
41 |
88 ½ |
Northern Europe and North America: chemical pulp kraft paper and newsprint |
|
Total |
81 ½ |
145 |
|
|
United States |
|
|
|
|
Sawnlogs and veneer logs |
17 |
28 |
Canada: sawn softwood East and southeast Asia: hardwood sawnwood, ply wood and veneer |
|
Pulpwood and other round wood |
20 ½ |
21 |
Canada: newsprint, chemical pulp and pulpwood |
|
Total |
37 ½ |
49 |
|
|
Japan |
|
|
|
|
Sawnlogs and veneer logs |
10 ½ |
20 |
North America and U.S.S.R.: coniferous (soft) sawlogs Southeast Asia: hardwood saw and veneer logs |
|
Pulpwood and other round-wood |
- |
10 |
U.S.A. anal U.S.S.R.: pulp wood. |
|
Total |
10 ½ |
30 |
|
SOURCE: Wood - world trends and prospects, FAO, 1966.
¹ Deficits expressed in equivalent volumes of roundwood raw material. See right-hand column for form in which main inflows are actually imported and from where.
The demand for pulpwood products in the United States is now expected to reach a level considerably higher than that foreseen at the time of the last United
States Timber Trend Study, and other product demand will expand in a somewhat different fashion from that projected. Tropical timber imports will be markedly higher than expected. A. paper recently prepared by the United States Forests Service states that indications are that total demand for hardwood lumber may rise by as much as 15 million cubic metres) of logs, and veneer and plywood by as much as 8 million cubic metres) of logs over the next decade or so. Most of the additional lumber demand and some of the additional veneer and plywood demand could be met by domestic supplies during this period. Beyond that, tile United States will have to turn in an increasing degree to the tropical forests for high-quality supplies.
Other areas will, of course, have growing requirements but few will, over the next decade or so, make a major impact on the total level of demand for imports, because of market size and development. Australia, the oil-rich countries of the Near East and other areas might collectively acid a further 2 million cubic metres or so to total requirements. Eastern Europe and the U.S.S.R. are potential markets of some size but much will depend on trade policies which cannot be readily forecast.
FACTORS AFFECTING IMPORTANCE OF VARIOUS SUPPLY AREAS
Within certain physical limits, the magnitude of this demand for broadleaved logs and their products will largely determine -the level of supply. However, the relative importance of the various supplying areas -of both coniferous and broadleaved material-will be shaped by a large :number of factors. It is not the function of this paper to deal with all these underlying considerations. It will, therefore, only summarize some major aspects of the outlook. This is done by quoting from a recent FAO study, Expansion of exports of forest products from developing countries².
[² Unasylva, Vols. 22(1) and (2), Nos. 88 and 89, 1968. (Page 33.)]
" This [additional requirement of tropical timber] would mean a further growth by such very large absolute quantities that the first question to be asked is: can the developing countries raise supplies by such margins, and at such a rate, and without either a destructive rundown of the resource or an unacceptable upward pressure on costs and prices?
"The importance of cost and price must be stressed. Though the huge demand for tropical hardwoods does largely reflect their special characteristics (large size, good quality, decorative appearance, etc.), they are not unique. Other woods can be used as raw material for many of the grades of sawnwood, veneer and plywood for which they are used, and these products are subject to substitution by a variety of other materials. Rising prices would slow down the growth in import demand for tropical hardwoods accepted above.
" Though far from all the tropical high forest area has been surveyed, enough is known for it to be clear that in fact very much larger quantities could be made available annually. Physically there seems every reason to believe that, at least up to 1975, supply can match the growth in requirements. There must be more doubt, though, about whether costs can be contained while doing so.
" The currently sought-after species are probably becoming scarcer, in commercial qualities and sizes, in some of the at present more accessible areas, but there remain huge quantities even of these woods in other areas. However, the latter tend to be more remote and more costly of access, though there is opportunity for effecting counterbalancing cost reductions by improving logging and transport.
" Inter alia, logging and transportation costs are high because very few of the large number of species present in the forest are currently utilized. Even in the forests already in use only a small fraction of the available volume is taken. The cost of roads, equipment, etc., incurred in opening up and operating the forests are consequently heavy per unit of wood volume extracted.
" Several of the unused or little-used species have been found, after proper trial and testing, to be suitable for commercial use-but they have yet to find wide acceptance on the market. To effect a more efficient as well as a larger output from the tropical hardwood forests, more usable species need to be introduced on to the market- either directly to the export market or to the domestic markets in order to release the more highly valued woods for export.
" The second question that arises is the extent to which the growing export in tropical hardwoods can be as processed products and manufactures, rather than as raw material.
" The processes of producing sawnwood, veneer and plywood all give a low recovery. From 40 to 60 percent of a sawlog (by volume) and 50 to 70 percent of a veneer log are discarded in processing. As log raw material costs constitute a very high proportion of total production costs (50 to 70 percent in the case of sawnwood) it is therefore usually desirable, subject to the qualifications that follow, to locate these industries as close to the forest as possible. Processing in the country of origin thus plays an important part in improving the efficiency with which the heterogeneous tropical forests are utilized, as the lower valued species can usually only be exported after the weight loss incurred in processing.
" There are other reasons why it makes good economic sense to locate these industries in the developing countries where the wood is. These industries, in particular sawmilling and veneer production, are not capital intensive and can be efficient with relatively small-scale operation; they are relatively simple and do not require a high degree of technical expertise among most of the work force; and they have few inputs which are of high cost because they either have to be imported or produced by protected domestic industries. In brief, they are industries which can be successfully introduced into many countries, even at an early stage of development.
" However, there are of course limitations to the rate at which they can expand competitively. First, though simple as industries go, they do require a certain minimum of skills, services and infrastructure. And mills producing for export generally need to be as up-to-date and large as any in the industry. Moreover, as labour and other costs rise in importing developed countries, there is a tendency for at least some of these countries to seek to import products, such as kilned and planed sawnwood (or furniture and joinery parts), which have been further processed in the low-cost exporting countries, and those producers that can effect these more sophisticated additional stages of processing are consequently likely to be the ones that are best placed to expand their exports.
" Secondly, the uses, such as furniture, to which the decorative among these woods are put tend to be subject to rapid changes in fashion. That part of the industry which processes these woods-in fact a much smaller and slower growing part than that for utility woods-is often more profitably market oriented than resource oriented. High-value decorative woods will consequently tend logically to continue to be exported in log form.
" Even among utility woods only the best qualities and grades are usually suitable for export to developed countries. Growth in an export industry is therefore likely to be linked to the growth in a domestic market for lower grades, or an export market for these grades among other developing countries. Singapore, for example, finds outlets in the :Near East for much of the lower grades of sawnwood from its large sawmilling industry.
" Expansion of these industries tends also to be increasingly affected by the ability to find commercial outlets for the large amounts of processing residues. In developed countries these are commonly used in the board and pulp industries, but in developing countries these industries, if present at all, are likely to be able to absorb only a very limited part of the residues of large export-oriented sawing or veneer-peeling industries. The success of China (Taiwan) and the Republic of Korea as plywood exporters rests in no small part on their ability, in conjunction with their low-cost and technically skilled labor, to develop uses for the veneer log cores; for example, in small-scale wooden manufacturing industries such as joinery and furniture parts (some of which is also exported).
" Costs of transport add rapidly to the total costs of such a bulky, heavy commodity as wood. Between west Africa and western Europe freight costs account for up to 60 percent, on the lower valued species, of the landed cost of logs. Producing countries with poor shipping links with the major importing countries, and poor port handling facilities, are likely to suffer a major cost disadvantage. Shipping costs in fact have been an important element in the recent growth in export forest industries in the developing and other countries-the big growths have tended to be in those countries that are well located with respect to the principal markets (and to log supplies). "
TABLE 18. - SUMMARY OF TRADE: AND TRADE PROSPECTS IN TROPICAL BROADLEAVED WOODS
|
|
Imports |
Exports |
Index of trade exports |
||||
|
Consumer imports |
Consumer processor exporters |
Total imports |
Total exports |
Consumer processor exporters |
Primary tropical exporters |
||
|
Million cubic metres ® |
Exports 1965 =100 |
||||||
|
Logs |
|||||||
|
1965 |
6.2 |
12.1 |
18.3 |
19.2 |
0.1 |
19.1 |
100 |
|
1967 |
6.0 |
18.2 |
24.2 |
23.0 |
0.1 |
22.9 |
120 |
|
1975 |
6.2 |
24.3 |
30.5 |
27.0 |
- |
27.0 |
141 |
|
1985 |
5.8 |
30.5 |
36.3 |
37.0 |
- |
37.0 |
193 |
|
Sawnwood |
Million cubic metres (s) |
|
|||||
|
1965 |
2.2 |
0.2 |
2.4 |
3.4 |
0.7 |
2.6 |
100 |
|
1967 |
2.5 |
0.3 |
2.8 |
3.4 |
0.7 |
2.6 |
100 |
|
1975 |
3.2 |
0.6 |
3.8 |
5.5 |
0.5 |
5.0 |
162 |
|
1985 |
4.6 |
2.1 |
6.7 |
7.2 |
0.6 |
6.6 |
212 |
|
Veneer and plywood |
|||||||
|
1965 |
1.8 |
- |
1.8 |
1.7 |
0.9 |
0.8 |
100 |
|
1967 |
2.0 |
0.1 |
2.1 |
2.0 |
1.7 |
0.9 |
118 |
|
1975 |
6.0 |
- |
6.0 |
4.4 |
1.4 |
3.0 |
259 |
|
1985 |
9.9 |
- |
9.9 |
6.5 |
1.3 |
5.2 |
382 |
|
Log equivalent |
Million cubic metres) ® |
|
|||||
|
1965 |
15.1 |
12.5 |
27.6 |
30.2 |
3.8 |
26.3 |
100 |
|
1967 |
16.0 |
19.1 |
35.1 |
34.8 |
4.3 |
30.4 |
115 |
|
1975 |
27.6 |
25.5 |
53.1 |
48.9 |
4.4 |
44.5 |
162 |
|
1985 |
39.7 |
34.7 |
74.4 |
67.6 |
4.4 |
63.2 |
224 |
FAO'S WORK IN PROGRESS
Work now in progress in FAO is concerned with deter mining the export possibilities of the developing countries, largely composed of those in the tropics. On the basis of this work, and of the prospective import requirements outlined above, a possible model of future trade in tropical timber and its products has been developed. This is summarized in Table 18. It must be stressed that this is only one possible way in which future trade may develop, even though it may be a reasonable one. This table shows, for logs, sawnwood, veneer and plywood and for the total log equivalent of all these commodities, imports and exports in 1965 and 1967 and as they might develop to 1975 and 1985. In order to portray the situation and the future model more clearly imports are shown separately for the major consuming regions, for example North America and Europe and for the consumer-processor-exporter areas, for example east Asia (Japan, China [Taiwan], the Republic of Korea and the Ryukyu Islands) while exports are shown for the latter group and for the primary tropical producing regions.
It will be noted that the exports and imports for 1965 and for 1967 do not balance exactly. This imbalance reflects stock changes, time lags and statistical errors such as inaccurate converting factors and incomplete or incorrect reporting. Nevertheless, in a statistical sense, the marked developments from 1965 to 1967 in the log trade and the quite rapid changes in veneer and plywood stand out in contrast to the small imbalance in either year. But for sawnwood, developments were slow while considerable statistical imbalance is evident.
Trade in all these commodities groups is expected to expand and the changing pattern of the suggested development is significant. For the major consumer importer regions of Europe and North America it is foreseen that log imports will stabilize and even decline slightly while the inflow of sawnwood, veneer and ply wood increases substantially. This is especially so in the case of North America. Other nontropical consumers, North Africa and parts of the Near East, will contribute to the growing requirements as may a few of the wood-deficit tropical countries. No major allowance has been made for the U.S.S.R. or China (Mainland) in this import. demand.
By contrast to the above consumer-importer group, it is seen that the log imports of the consumer-processor exporter group will continue to rise quite rapidly while veneer and plywood, and at least initially sawnwood, show little expansion. By 1985, however, it is foreseen that the marked advantage of cheap and efficient labour that Japan, the Republic of Korea and China (Taiwan), etc. have had. will be somewhat overtaken by increasing wage levels and that Japan, at least, will be importing considerable sawnwood. Other reasons will be noted below.
The growing requirements of the east Asian region will soon tend to limit their possibilities of export even if the additional log imports here suggested become available. Thus, it is foreseen that, to 1975 and 1985, the exports both of sawnwood and of veneer and plywood from this group of countries as a whole may not expand greatly. However, some countries of the group, for example Singapore, will, it is expected, increase output in the short run.
It is indicated that with favourable conditions, the primary producing countries of the tropical regions could expand their production of logs and, even more, of sawnwood and of veneer and plywood.
However, neither Africa nor Latin America are expected to expand considerably their export of unprocessed logs. In many countries of west Africa, production has already stabilized and only by a fuller utilization of species and sizes can production be maintained or increased. Processing for combined local and export markets is often a prerequisite for this possibility. Hence, a considerable allowance is made for increased export of processed woods. In Latin America the multiple species problem is acute and this in turn would require a more integrated approach. The expansion is seen to be greater in Latin America than in Africa because of the abundance of untapped forest.
The situation in the southeast Asia and Pacific region is different. Here, the more uniform nature of the forest lends itself to concentrated log production and export. Furthermore, the most buoyant markets are nearer this producing area. Consequently, the log export from this area, especially from Indonesia and New Guinea, is seen to expand by as much as ].5 million cubic metres) Expansion of sawnwood export is seen to be more modest while some development may take place in veneer and plywood export.
These estimates of import requirements and export potential were made independently of each other. Indeed, they are in most instances simply country by country estimates totalled. It is of concern to see whether they balance or whether they indicate gaps or surpluses in prospective trade flows. It is interesting to note that log exports and imports are approximately in balance in ] 985 but that there is a considerable supply shortage suggested for 1975. For sawnwood, there is indicated a supply surplus in 1975 which reduces but does not disappear by 1985. In the case of veneer and plywood, however, the suggested export potential falls quite far short of the expected demand so that by 1985 the gap is equal to one half of the export potential.
In total log equivalent, the export potential grows at a slower rate than the demand which is foreseen for imports.
It must again be pointed out that this exercise in extension of trade flows leas not been a complete appraisal with respect to possible developments of prices and costs, nor has it considered, except in a broad way, the relative competitive positions of the different areas producing and processing tropical woods; nor has it considered fully the possible substitution of other wood or nonwood products to counteract possible supply shortages, except as they have been taken into account in the individual trend studies upon which this analysis has drawn. Nevertheless, this appraisal has been useful in defining the order of magnitude of the supply problem. It indicates clearly the need for:
1. a major effort in inventory work both of reconnaissance and management type;
2. development of access to many forest areas;
3. feasibility studies on the establishment of processing industries in tropical wood producing areas.
Other papers look in greater detail at the supply problems on are regional basis, while yet others appraise aspects of getting material to processing and to consuming market.
