Global Competition: Forest Products Imports Exports Wausau, Wisconsin, USA, 24 February 2004 Photo: APA Global Outlook: Supply & Demand for Wood Products

Global Competition: Forest Products Imports ExportsWausau, Wisconsin, USA, 24 February 2004

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Global Outlook: Supply & Demand for Wood Products

Ed Pepke, Ph.D.Forest Products Marketing SpecialistFood and Agricultural Organization

UN Economic Commission for EuropeGeneva, Switzerland


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Outline

• Forest products markets– Production, consumption &

trade– Global– Regional– Sectoral

• Forest resources• Growing the market


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Sources • UNECE/FAO TIMBER database on forest

products statistics• UNECE/FAO Temperate & Boreal Forest

Resources Assessment• FAO Global Forest Products Outlook Study• FAO Global Forest Resources Assessment• FAOSTAT Forestry Database website• UNECE/FAO Timber Bulletin “Forest products

annual market analysis, 2002-2005• UNECE Timber Committee market forecasts


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Forest products markets


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World production of roundwood,1961-2003

Source: FAOSTAT

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

Bil

lio

n m

3

Industrial roundwood Fuelwood


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Regional production of industrial roundwood, 1961-2010

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1961

1964

1967

1970

1973

1976

1979

1982

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1988

1991

1994

1997

2000

2010

Bil

lio

n m

3

Africa Asia America EuropeSource: FAOSTAT and FAO Global Forest Products Outlook Study


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Regional trade, all primary forest products, 2002

Source: FAOSTAT

0

10

20

30

40

50

60

70

Europ

e

N&C Am

erica Asia

S.Am

erica CIS

Ocean

ia

Africa

$ B

illio

n

Exports Imports


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N. American trade, all primary forest products, 1993-2002

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5

10

15

20

25

30

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

$ B

illi

on

s

Canadian imports USA imports Canadian exports USA exports


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Sectoral analysis: Lumber


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N. American softwood lumber market, 1995-2004

Source: UNECE Timber Committee forecasts, 10.2003

60

70

80

90

100

110

120

130

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mil

lio

n m

3

Production Consumption


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N. American softwood lumber trade, 1995-2004


20

22

24

26

28

30

32

34

36

38

40

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mil

lio

n m

3

Imports Exports


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N. American hardwood lumber market, 1995-2004


20

22

24

26

28

30

32

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mil

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3



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N. American hardwood lumber trade, 1995-2004


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1

2

3

4

5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mill

ion

m3

Imports Exports


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American lumber consumption & production, 1980-2010

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50

100

150

200

250

1980 1994 2000 2005 2010

Mil

lio

n m

3

ConsumptionProduction

Source: FAO Global Forest Products Outlook Study


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American lumber trade, 1980-2010

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40

50

60

70

1980 1994 2000 2005 2010

Mil

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n m

3

ExportsImports



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Factors affecting models and markets

• Gross domestic product (GDP)• Population• Costs and prices (labor, raw material,

etc.)• Technological change• Government policies• Socio-economic trends

Global Forest Products Consumption, Production, Trade and Prices:Global Forest Products Model Projections to 2010

By Zhu, S; Tomberlin, D; Buongiorno, J. Published by FAO, 1998


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European softwood lumber market,

1995-2004


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90

95

100

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

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European softwood lumber trade,

1995-2004


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25

30

35

40

45

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mil

lio

n m

3

Imports Exports


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European hardwood lumber market,

1995-2004


10

12

14

16

18

20

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mill

ion

m3



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European hardwood lumber trade,

1995-2004


0

2

4

6

8

10

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mill

ion

m3

Imports Exports


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Europe lumber consumption & production outlook, 1980-2010

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20

40

60

80

100

120

140

160

1980 1994 2000 2005 2010

Mil

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Europe lumber trade outlook, 1980-2010

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5

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15

20

25

30

35

40

45

50

1980 1994 2000 2005 2010

Mil

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n m

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ExportsImports



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Russian softwood lumber market, 1992-2004


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5

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15

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25

30

35

40

45

50

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mill

ion

m3

Production Consumption Exports


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Asia lumber production & consumption outlook, 1980-2010

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40

60

80

100

120

140

160

1980 1994 2000 2005 2010

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Asia lumber trade outlook,1980-2010

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5

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15

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25

30

1980 1994 2000 2005 2010

Mil

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n m

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ExportsImports



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An asideJapanese and Korean tariffs


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Japanese and Korean tariffs

• In context of WTO trade negotiations, will not support elimination of wood tariffs

• Forest product tariffs protect the domestic industry interest

• Tariffs protect the environment, preserve limited natural forest resources and maintain minimum harvest levels for forest management

• Forestry Agencies of both governments will continue this bilateral forum to protect common trade interests in the forest products sector.

Source: Global Agriculture Information Network, January 2004.


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Sectoral analysis: Panels


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North America structural production, 1995-2004


0

5

10

15

20

25

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mill

ion

m3

OSB Plywood


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European OSB market, 1995-2004


0

1

2

3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mil

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n m

3

Production Imports Exports


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America panel consumption & production outlook, 1980-2010

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30

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50

60

70

1980 1994 2000 2005 2010

Mil

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America panel trade outlook,1980-2010

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2

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6

8

10

12

1980 1994 2000 2005 2010

Mil

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ExportsImports



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Europe panel consumption & production outlook, 1980-2010

0

10

20

30

40

50

60

70

1980 1994 2000 2005 2010

Mil

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Europe panel trade outlook,1980-2010

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2

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6

8

10

12

14

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18

1980 1994 2000 2005 2010

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ExportsImports



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Asia panel consumption & production outlook, 1980-2010

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10

20

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40

50

60

1980 1994 2000 2005

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Asia panel trade outlook, 1980-2010

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6

8

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16

18

1980 1994 2000 2005

Mil

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ExportsImports



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An aside on theChinese market


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China’s expanding trade

• Total export value 2003: $390 billion, +36%• Total import value 2003: 371 billion, +39%• Trade surplus: $20 billion• China & Japan 2003 trade: $120 billion, +31%• China & US 2003 trade: $114 billion, +29%• China & Europe 2003 trade: $112 billion,

+43%• “Sudden growth” of primary product imports:

timber, steel, oil, soybeans

Source: “China Forest Products Market Information”, December 2003


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Sino-US furniture trade: US side

• Chinese share of US market increasing rapidly

• Chinese furniture exports to US– 2000: $1.7 billion– 2002: $2.9 billion

• Anti-dumping investigation requested by 28 American furniture manufacturers in November 2003

• US furniture industry earnings down 70%• US furniture workforce down 34,000



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Sino-US furniture trade: Chinese side

• 60% of China’s furniture exports are “American” furniture– Produced by US-owned companies– US wood– US technology and styles

• Advantage for US manufacturers is low manufacturing costs– Labor– Energy– Taxes



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China’s booming timber imports

• Housing construction– Only minority wood-based– Green and healthy communities– Affordable

• Renovation market for houses and municipal

• Infrastructure development• Interior woodwork and furnishings• Olympic-related construction (2008

Beijing)Source: “China Forest Products Market Information”, December 2003


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Sectoral analysis: Paper


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N. America paper & paperboard consumption & production outlook,

1980-2010

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160

1980 1994 2000 2005 2010

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N. America paper & paperboard trade outlook, 1980-2010

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1980 1994 2000 2005 2010

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ExportsImports



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European paper & paperboard consumption & production outlook,

1980-2010

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100

120

1980 1994 2000 2005 2010

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Europe paper & paperboard trade outlook, 1980-2010

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1980 1994 2000 2005 2010

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ExportsImports



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Asia paper & paperboard consumption & production

outlook, 1980-2010

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1980 1994 2000 2005 2010

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Asia paper & paperboard trade outlook, 1980-2010

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1980 1994 2000 2005 2010

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Summary: Key market issues (1 of 2)

• Illegal logging and trade of illegally-sourced wood

• Certification of sustainable forest management, markets for certified forest products

• Policies for sound use of wood, wood promo

• Industrial development policies and structural oversupply

Source: Forest Products Annual Market Analysis, 2002-2004


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Summary: Key market issues (2 of 2)

• Climate change policy

• Wood energy promotion policies

• Trade policy, tariff and non-tariff

barriers

Source: Forest Products Annual Market Analysis, 2002-2004


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Forest resources


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Annual change in forest area, 1990-2000, (million hectares)

Deforestation

Increase in forest area

Net change in forest area

Tropics -14.2 +1.9 -12.3Non-tropics -0.4 +3.3 +2.9

World -14.6 +5.2 -9.4

Source: FAO Global Forest Resources Assessment 2000


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Annual change in forest area, 1990-2000

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-3

-2

-1

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1

2

3

Mill

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Hec

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Natural Plantation Total

N & CAmeric

a

SouthAmerica

Europe

Asia

Africa

Oceania

Source: FAO Global Forest Resources Assessment 2000


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Reasons behind deforestation

• Conversion to other land uses (0.4% of worlds’ forests annually in the ’90s)– Agricultural, including grazing– Urbanization

• Unsustainable silvicultural practices– Unmanaged harvesting– Poor regeneration– Overharvesting fuelwood


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Forest resources in N. America

• 80% of net annual increment harvested

• Forest volume increases ~3 million m3 daily

• Forest area 1990 to 2000– USA +0.2%– Canada, no significant change

Sources: State of the World’s Forests 2001; Global Forest Resources Assessment 2000; Temperate and Boreal Forest Resources Assessment 2000


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Forest resources in Europe

• Only 60% of wood grown is harvested• Forest volume increases ~2 million

m3 daily • Forestland increases by 500,000

hectares per year



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State of Europe’s Forests

• Resources increasing• Forest health and vitality are critical• Productive functions maintained• Biodiversity is a focus• Plantations are only 3%• Protective forests are 12%• Socio-economic functions important

Source: Ministerial Conference on the Protection of Forests in Europe, 2003.


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Forest resources in Russian Federation

• Only 16% of wood grown is harvested• Forest volume increases ~3 million m3

daily • Forest area 1990 to 2000: no

significant change



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Forest resources: growing stock

0

10000

20000

30000

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50000

60000

70000

Europe (41) NorthAmerica

CIS

Growing Stock

Net AnnualIncrementFellings

Million

m

3

Source:Temperate and Boreal Forest Resources Assessment 2000.


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Forest resources: NAI vs. fellings

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Europe (41) N. America CIS

Net Annual Increment Fellings

Million

m

3

Source:Temperate and Boreal Forest Resources Assessment 2000.


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Forest resources: NAI vs. fellings

Fellings as% of NAI

Europe-41 60%

EU-15 64%

Nordic countries

72%

Baltic countries

50%

Central & eastern Europe

56%

Russia 16%

North America 80%Source:Temperate and Boreal Forest Resources Assessment 2000.


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Regional forest resource utilization

Note: Not all “forest available for wood supply”Roundwood does not include chips. Therefore, %ages are gross. Sources: State of the World’s Forests 2003, FAO Stat.

Wood in forest (billion

m3)

Roundwoodharvest

2002 (million m3)

Roundwood

harvest 2002 (%)

S & C America

117 439 0.4 %

Russia 89 192 0.2 %

N. America 60 678 1.1 %

Africa 46 613 1.3 %

Asia 35 1,005 2.9 %

Europe 28 395 1.4 %

Oceania 11 63 0.6 %


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• Removals considerably below growth• Wide variance in utilization rates of NAI • Growing stock increasing in Europe• Southern hemisphere plantations expanding• Oversupply compared to demand for wood• Increasing alternative demands on forests

Forest resources summary


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Growing the market


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Growing too much wood?

Not enough wood products demand?

What are the solutions?


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Grow the wood markets

• Guarantee that today’s wood products meet consumers’ needs

• Develop new products to meet evolving needs

• Develop new markets for wood products: substitute for non-renewable materials


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How can we grow the wood markets?

• Engage the industry: build coordinated, international promotion programs

• Create favorable policy environments• Promote public awareness of key

issues and messages


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Examples

• FAO/UNECE Forest Communicators Network– creates a positive image of the

forest and forest industries sector– networking among members– identifying key common messages

and concepts– building PR capacity

• Wood Promotion Network


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Market effects of wood promotion

• Multi-country wood promotion essential to enlarge wood’s market share

• Promotion must be cost justified• Identify and know target markets:

cultural and technical dimensions• Fund raising a problem in fragmented

industry• Key elements: competence, neutrality,

credibility, resources

Source: UNECE/FAO Forest Products Annual Market Review, 2001-2002


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UNECE Timber Committee recommendations

• Develop new products to expand existing markets

• Establish new markets to meet consumers’ needs

• Build international cooperation in promoting environmental advantages of sustainable wood production

• Promote wood culture


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Questions and Discussion

Ed PepkeForest Products Marketing Specialist

UNECE/FAO Timber Branch439 Palais des Nations

CH-1211 Geneva 10, Switzerland

Telephone +41 22 917 2872Fax +41 22 917 [email protected]

www.unece.org/trade/timber

Documents

Global Competition: Forest Products Imports Exports Wausau, Wisconsin, USA, 24 February 2004 Photo: APA Global Outlook: Supply & Demand for Wood Products