Small Log Conference – Creating Capacity to Compete Coeur d’Alene, Idaho, USA, 1 April 2005 F A O Global Forest Products Market and Resource Trends Ed Pepke, Ph.D. Forest Products Marketing Specialist Food and Agricultural Organization UN Economic Commission for Europe Geneva, Switzerland
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Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
FA
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Global Forest Products Market and Resource Trends
Ed Pepke, Ph.D.Forest Products Marketing SpecialistFood and Agricultural Organization
UN Economic Commission for EuropeGeneva, Switzerland
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Contents
I. Forest products markets• Production, consumption & trade• Global• Regional (N. America, Europe, Asia)• Market sectors (logs, lumber, panels)
II. Forest resourcesIII. Certification and certified forest productsIV. Growing the market
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Major info sources
• UNECE/FAO TIMBER database on forest products• FAOSTAT database on forest products• UNECE/FAO Temperate & Boreal Forest Resources
market review, 2003-2004”• Global Forest Products Model, by Buongiorno, et al.• UNECE/FAO European Forest Sector Outlook Study• FAO State of the World’s Forests, 2005
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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I. Forest products markets
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Sectoral analysis: Logs
UNECE/FAO definitions:• “Roundwood” is industrial roundwood + fuelwood• “Industrial roundwood” as sawlogs, veneer logs,
pulp logs and other industrial roundwood
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Bill
ion
m3
Industrial roundwood Fuelwood
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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World roundwood utilization as fuel
• Over half used as fuel– Domestic heating– Cooking
• Mostly in developing countries
• Low value• Modern wood energy
– Small international trade– Growing market– Policy push in Europe
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Regional production of industrial roundwood, 1961-2010
0200400600800
100012001400160018002000
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2010
Bill
ion
m3
Africa Asia America Europe
Source: FAOSTAT and FAO Global Forest Products Outlook Study
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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American industrial roundwood consumption and production to 2010
0
100
200
300
400
500
600
700
800
900
1000
1980 1994 2000 2005 2010
Mill
ion
m3
C o n su m p tio nP ro d u ctio n
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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American industrial roundwood trade to 2010
0
5
10
15
20
25
30
35
1980 1994 2000 2005 2010
Mill
ion
m3
E xportsIm ports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Source: FAO Global Forest Products Consumption, Production, Trade and Prices: Global Forest Products Model Projections to 2010. By Zhu, S; Tomberlin, D; Buongiorno, J., 1998
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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European industrial roundwood consumption and production to 2010
0
100
200
300
400
500
600
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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European industrial roundwood trade to 2010
0
10
20
30
40
50
60
70
80
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Asian industrial roundwood consumption & production to 2010
0
100
200
300
400
500
600
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Asian industrial roundwood trade to 2010
0
10
20
30
40
50
60
70
80
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Regional trade, all primary forest products, 2003
Source: FAOSTAT
0
10
20
30
40
50
60
70
80
Europe
N&C Ameri
ca Asia
S.Ameri
ca CIS
Africa
Ocean
ia$
Bill
ion
Exports Imports
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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North American trade, all primary forest products, 1994-2003
Source: FAOSTAT
0
5
10
15
20
25
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Bill
ion
$
Canadian imports USA imports Canadian exports USA exports
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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European primary wood products demand, 1980-2020
0
200
400
600
800
1000
1200
1980 1985 1990 1995 2000 2005 2010 2015 2020
Mill
ion
m3,
RW
E
RWE=RoundWood Equivalent. Source: European Forest Sector Outlook Study, 2005.
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Major influences on current European forest sector
• Expanding markets, but resources outgrowing markets• Intensifying trade• Recovery from transition to market economies• Non-wood forest products increasing demand, value• Renewable energy policy of EU and member countries• Globalization of forest products trade• Innovation of products and processing• Recycling of paper, use of byproducts
Source: UNECE/FAO European Forest Sector Outlook Study, 2005
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Sectoral analysis: Lumber
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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N. American softwood lumber market, 1996-2005
Source: UNECE Timber Committee forecasts, 10.2004
90 000
100 000
110 000
120 000
130 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Production Consumption
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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N. American softwood lumber trade, 1996-2005
0
10 000
20 000
30 000
40 000
50 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Imports Exports
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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N. American hardwood lumber market, 1996-2005
20 000
23 000
26 000
29 000
32 000
35 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Production Consumption
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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N. American hardwood lumber trade, 1996-2005
0
1 000
2 000
3 000
4 000
5 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Imports Exports
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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American lumber consumption & production to 2010
0
50
100
150
200
250
300
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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American lumber trade to 2010
Source: Global Forest Products Model, 2003
0
10
20
30
40
50
60
70
80
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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US lumber imports: Europe & S. Hemisphere
Sources: USDA-Foreign Ag. Svc. and Wood Markets Monthly, 2005
0
0.5
1
1.5
2
2.5
3
3.5
1996 1997 1998 1999 2000 2001 2002 2003 2004
Mill
ion
m3
EuropeS. Hemisphere
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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• Excludes Canadian imports– 98% of US imports in ’96, but 87% 2004– Canadian-sourced imports up 8% 2004
• Aided by Softwood Lumber Agreement duties• Imports of dimension softwood, some EWPs• European-sourced imports
– Increased 52% in 2004– Despite 45% rise in euro value vs. $– “Semi-natural forests” vs. plantation
US lumber imports: Europe & S. Hemisphere
Sources: USDA-Foreign Ag. Svc. and Wood Markets Monthly, 2005
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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• Northern hemisphere sources in 20041. Germany (up 73%)2. Austria (up 75%)3. Sweden (down 2%)4. Czech Rep., Lithuania, Russia, Finland, Estonia
• Southern hemisphere sources in 20041. Brazil (up 37%)2. Chile (up 35%)3. New Zealand (down 3%)4. Argentina, Mexico, other
US lumber imports: Europe & S. Hemisphere
Sources: USDA-Foreign Ag. Svc. and Wood Markets Monthly, 2005
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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European softwood lumber market, 1996-2005
60 000
70 000
80 000
90 000
100 000
110 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Production Consumption
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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European softwood lumber trade, 1996-2005
0
10 000
20 000
30 000
40 000
50 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Imports Exports
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Production Consumption
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Europe lumber consumption and production to 2010
0
20
40
60
80
100
120
140
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Europe lumber trade to 2010
Source: Global Forest Products Model, 2003
0
5
10
15
20
25
30
35
40
45
50
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Russian softwood lumber market, 1996-2005
0
5 000
10 000
15 000
20 000
25 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Production Consumption
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Russian softwood lumber trade, 1996-2005
0
2 000
4 000
6 000
8 000
10 000
12 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Im ports Exports
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Asia lumber production and consumption to 2010
0
20
40
60
80
100
120
140
160
180
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Asia lumber trade to 2010
0
5
10
15
20
25
30
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Sectoral analysis: Panels
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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North America structural panel production, 1996-2005
0
5 000
10 000
15 000
20 000
25 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
OSB Plywood
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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European OSB market, 1996-2005
0
1 000
2 000
3 000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
1000
m3
Production Imports Exports
Source: UNECE Timber Committee forecasts, 10.2004
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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America panel consumption & production to 2010
0
10
20
30
40
50
60
70
80
90
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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America panel trade to 2010
0
2
4
6
8
10
12
14
16
18
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Europe panel consumption & production to 2010
0
10
20
30
40
50
60
70
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Increasing small log demand
• For increasing panels production• Lumber production rising slower• For growing paper demand• For rising packaging demand
– Cardboard (paperboard)– Pallets
• Wood-based energy
Main source: European Forest Sector Outlook Study, 2005.
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Europe panel trade to 2010
0
5
10
15
20
25
30
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Asia panel consumption & production to 2010
0
10
20
30
40
50
60
70
80
90
1980 1994 2000 2005 2010
Mill
ion
m3
ConsumptionProduction
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Asia panel trade to 2010
0
5
10
15
20
25
30
35
1980 1994 2000 2005 2010
Mill
ion
m3
ExportsImports
Source: Global Forest Products Model, 2003
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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An aside on the Chinese market
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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)
North America Developed Asia-PacificWestern Europe Latin AmericaWest and Central Asia Eastern Europe
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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 promotion of sound use of wood• Research and development policies• Industry competitiveness and investment policy
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Sources: State of the World’s Forests 2001; Global Forest Resources Assessment 2000; Temperate and Boreal Forest Resources Assessment 2000
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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State of Europe’s Forests
• Resources and area 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
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
• Problems in economic viability with falling prices
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Sources: State of the World’s Forests 2001; Global Forest Resources Assessment 2000; Temperate and Boreal Forest Resources Assessment 2000
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Forest resources: growing stock
Source:Temperate and Boreal Forest Resources Assessment 2000
0
10
20
30
40
50
60
70
Europe (41) North America CIS
Growing stock Net annual increment Fellings
sMill
ion
m3
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Forest resources: NAI vs. fellings
Mill
ion
m3
Source:Temperate and Boreal Forest Resources Assessment 2000
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Europe (41) N. America CIS
Net annual increment Fellings
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Forest resources: NAI vs. fellings
Fellings as% of NAI
North America 80%
Europe-41 60%
Western Europe 64%
Nordic countries 72%
Baltic countries 50%
Central & eastern Europe
56%
Russia 16%
Source:Temperate and Boreal Forest Resources Assessment 2000
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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)
Roundwoodharvest
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 %
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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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
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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III. Certified forest products markets
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Certification of sustainable forest management
• Over 200 million hectares worldwide (5%)• Over half of world’s certified area in N. America• Another 40% in Europe
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Certified forests by ownership type
Source: Savcore Indufor, 2005
Industry50%
State24%
NIPFO23%
Communal2%
Other1%
Three quarters of the world's certifiedforests are privately owned or managed
Small Log Conference – Creating Capacity to CompeteCoeur d’Alene, Idaho, USA, 1 April 2005
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Certified forest products markets
• Growing demand via wholesalers & retailers• Demand boost by government procurement• Private consumer demand remains minor• Chain-of-custody key current development• Most certified timber sold without label
– Potential over 300 million m3 (20% world roundwood production)