Global timber trade overview: Focusing on tropical timber Dr. Ed Pepke Senior Market and Policy Analyst Dovetail Partners Inc. and European Forest Institute EU FLEGT Facility
Contents Global trade, production, consumption Primary-processed products Value-added products Tropical & temperate comparison Tropical timber focus Global Malaysia Forest resources: supply & demand Market trends Changing tropical timber demand and trade Risks and uncertainties Emerging market trends Long-term trends and future markets Market and political forces impacting trade Conclusions The way forward
Global trade, production, consumption
Million m3 RWE 900 800 Global trade of wood and paper products 700 600 500 400 300 200 100 0 2017 2015 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 1969 1967 1965 1963 1961 Notes: Sawnwood, panels and paper products converted to roundwood equivalents. Using imports: globally imports = exports. Source: FAO ForesStat, September, 2018.
Million m3 RWE Global trade of wood and paper products past 20 years 900 818 805 800 700 600 500 400 300 200 100 0 Notes: Sawnwood, panels and paper products converted to roundwood equivalents. Using imports: globally imports = exports. Source: FAO ForesStat, 2018.
Million m3 RWE 3500 3000 Global production (=consumption) of wood and paper products 3065 2500 2000 1500 1000 500 0 Notes: Sawnwood, panels and paper products converted to roundwood equivalents. Using imports: globally imports = exports. Source: FAO ForesStat, 2018.
1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Billion m3 4.0 3.5 Global production=consumption wood fuel vs. industrial roundwood 2017 1.9 3.0 2.5 2.0 1.5 1.0 Before 2017 most roundwood was used for fuel, and mostly inefficiently burned. In 2017 industrial roundwood consumed almost as much as fuel wood. What will happen with increased wood energy use? 2017 1.9 0.5 - Wood fuel Industrial roundwood Source: FAO ForesStat, 2018.
Million m3 Tropical and temperate shares of global imports (based on volume) 250 200 150 100 50 15% tropical In 2007 14% tropical In 2016 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Temperate Tropical Note: 4 primary products only. Not comparable to FAO s product mix. Source: ITTO, 2017.
US$ billion 80 70 60 50 Tropical and temperate shares of global imports (based on value) 40 30 20 30% tropical In 2007 Tropical timber s market share greater based on value because tropical timber s greater unit value. 30% tropical In 2016 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Tropical Temperate Note: 4 primary products only. Source: ITTO, 2017.
Tropical vs. temperate primary- and secondary-processed timber trade, 2016 $16 $18 $105 $68 Tropical primary Tropical secondary Temperate primary Temperate secondary Note: Trade values in US$ billion. Excludes paper and pulp trade. Source: Personal communication with ITTO, 2017
Tropical timber
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 USD billion Global tropical timber trade (in value) 18 16 14 12 10 8 6 4 2 0 Industrial roundwood Sawnwood Veneer Plywood Note: Only industrial roundwood, sawnwood, plywood and veneer. Source: ITTO, 2018.
USD million Top-15 tropical wood and paper exporters, 2016 with China 60,000 50,000 40,000 30,000 20,000 10,000 0 Source: UN Comtrade, 2018.
USD million Top-15 tropical wood and paper exporters, 2016 without China 12000 10000 10109 10234 8000 6000 6830 6179 4434 4000 2000 0 1898 483 386 240 185 176 53 31 15 8 Source: UN Comtrade, 2018.
USD million Top-15 tropical countries value-added wood exports, 2017 4,500 4457 4,000 3,500 3,000 2,500 2,000 3043 2464 1,500 1391 1302 1300 1,000 500-798 648 87 43 43 34 32 29 17 Notes: Wood exports includes secondary-processed products in HS44 such as Builders joinery and construction plus all HS94 wooden furniture. Source: UN Comtrade, 2018.
USD billion Top-15 tropical countries value-added wood exports, 2008-2017 18 16 14 12 10 8 6 4 2-2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Notes: Wood exports includes secondary-processed products in HS44 such as Builders joinery and construction plus all HS94 wooden furniture. 2017 provisional and could be revised upward. Source: UN Comtrade, 2018.
Global forest resources
The world s forests
Global forest area, million hectares 842 751 174 624 593 Africa Asia Europe, including Russia North & Central America South America Oceania 1015 Source: FAO, 2018.
Million hectares 1200 Global forest resources 1000 800 600 400 200 0 Africa Asia Europe North & central America South America Oceania Other forest Production forest Source: FAO, 2018.
Percent industrial roundwood harvested 2017 (remainder was harvested for wood energy) 35 10 10 88 57 87 North America Oceania Europe, with Russia South America Asia Central America Africa 79 Source: FAO, 2018.
Million hectares Forest area change, 1990 to 2015 40 +25 +21 20 0-20 -40-2 -3-60 -80-100 -120-140 -82 Africa Asia Europe N. and C. America -89-129 Oceania S. America World Source: FAO, 2018.
Annual change in forest area by country, 2005-2010
Annual change in forest area, 1990-2015
Causes of deforestation (not in order) Conversion to crop land increasing population Conversion to pasture land changing diets Illegal logging Conversion to urban land Planting Afforestation (not in order) Conversion from abandoned agricultural land
Market trends
Billion US$ EU imports of wood and paper from world to be updated with Comext 45 40 35 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: Wood and paper products include all wood and wood products, pulp, paper and paper products and wooden furniture. Source: UN Comtrade, 2017.
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Million m3 EU primary-processed tropical timber imports 8 7 6 5 4 3 2 1 0 Note: Only industrial roundwood, sawnwood, plywood and veneer. Source: ITTO, 2018. ATIBT Forum, Dubai, 6 March 2017
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Million m3 EU primary-processed tropical timber imports 8 7 6 5 4 3 2 1 0 Industrial roundwood Sawnwood Veneer Plywood Source: ITTO, 2018.
Billion euros EU imports of wood and paper products from 15 Voluntary Partnership Agreement countries 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cameroon CAR Congo Côte d'ivoire DR Congo Gabon Ghana Guyana Honduras Indonesia Laos Liberia Malaysia Thailand Vietnam Source: Eurostat Comext, 2018.
USD billion China s trade of wood and paper products 60 50 54 51 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Imports Exports Source: UN Comtrade, 2018.
USD billion United States trade of wood and paper products 70 61 60 50 40 36 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Imports Exports Source: UN Comtrade, 2018.
USD billion Malaysia s trade of wood and paper products 9 8 7 6 6 5 4 3 3 2 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Imports Exports Source: UN Comtrade, 2018.
Market and political forces impacting trade
Responsible sourcing of wood and paper products (1 of 2) Objectives: increase accountability in marketplace, reduce illegality, unsustainability Third-party certification systems Malaysian Timber Certification Scheme & PEFC FSC Originally aimed at tropical timber, but mainly temperate timber certified
Certified forest area by region Africa, 2% Latin America, 3% Asia, 4% Oceania, 6% North America, 49% CIS (mainly Russia), 14% Europe, 22% Source: UNECE/FAO, 2017
Responsible sourcing of wood and paper products (2 of 2) Government policy initiatives FLEGT Action Plan 2003 Forest Law Enforcement Governance and Trade EU Timber Regulation 2013 FLEGT-licensed timber 2016 United States Lacey Act Amendment 2008 Others too but not enough
Tariff wars 2018 Ignited by United States steel and aluminum tariffs Responded by trading partners tariffs on other products Escalated by increased US tariffs on other products August, China placed tariffs up to 25% on 3500 US products, including 190 wood and paper products US vowed to place additional tariffs on China US-Canada softwood lumber trade dispute US imposed 26.75% duties on Canadian sawn softwood Higher sawnwood and home costs Loss of revenue for US government estimated US$482 million/year
Conclusions
Conclusions A summary of the presentation. Focus on key messages. To be finalized
Conclusions Consumption and trade at record levels Tropical trade recovered, but steady for last 3 years Globally forest harvests below growth, but deforestation exists EU imports of tropical timber decreasing, but increasing from VPA countries Responsible sourcing important: sustainable and legal
The way forward
The way forward to expand market share Promote attributes of tropical timber Beauty, workability, familiarity, availability Counter deforestation argument, especially in Asia Counter other ecological, and social and economic concerns Work together with governments Work together with NGOs Emphasize sustainability and legality Focus on key target markets Work together with trade associations Aim at decision makers, e.g. architects Export value-added products
Discussion Dr. Ed Pepke Senior Market and Policy Analyst Dovetail Partners Inc. www.dovetailinc.org Ed@dovetailinc.org and EU FLEGT Facility European Forest Institute https://www.efi.int/flegt Ed.Pepke@efi.int