Introduction
Future changes in the world wood balance up to 1975
Growth in requirements to 1975
Wood supply prospects
Changes in the primary wood-using industries
Trends in trade
The chapters leading up to this one have taken a look separately at each of the different elements in the world's wood-using and wood-producing sector. The examination has been largely in the nature of a factual survey of what is happening at present and has happened in the recent past, though set against the background of estimates of what the world's wood and wood product requirements are likely to be in 1975, and with attention directed at determining what in the recent evolution arid present pattern of the sector is most likely to throw light on the prospects for the future. In this final chapter attention will be concentrated upon certain of the changes that are likely to occur in the sector, and upon the implications of such changes. The changes that will be examined will be not so much those of growth or decline in magnitude, as the shifts in the pattern of demand for and supply of wood and its products, and the changes in structure, policy and technology that are likely to accompany these shifts.
But this emphasis on the likely points of change should not obscure the fact that what will chiefly happen in the years ahead will be in the nature of a continuation of the established patterns and practices of the past. Most of the additional investment in the sector will be in this direction. But these aspects have been well charted elsewhere, on a national, regional or sector basis,¹ in much more detail than would be possible in an appraisal of a summary nature such as the present one. What has been attempted here has been to add an additional element of analysis possible only on a global scale, namely to consider all the regional and sector changes in aggregate in order to try and foresee, in the context of the world as a whole, what their impact will be one upon another.
¹ See Appendix.
It will be convenient to construct the chapter around the pattern of production and consumption expected to emerge in 1975. But it must be kept in mind that this is no more than a convenience. The year 1975 is both sufficiently far ahead in time to permit broad objective assessments of the changes that are likely to take place, and of the implications stemming from them, and yet close enough to the present to make possible the development with some confidence of forward estimates based upon an analysis of experience in the recent past. Apart from this, 1975 has no particular significance; any other year could have served the same purpose. Therefore, while the focal point of what follows will be the situation expected in 1975, the discussion will range over a longer perspective.
The body of the chapter will be taken up by a discussion of the geographical shifts that are expected to emerge in the wood balance. First, however, it will be useful to bring together and review briefly the principal features of the sector, as they emerged from the previous chapters.
It has been estimated in Chapter II that if populations, incomes, tastes, technologies, and prices change in the manner assumed, the world will require by 1975 about 1,500 million cubic meters of wood a year for industrial purposes, some 450 million cubic meters more than was used in 1961. In addition, the world is likely to require roughly 1,200 million cubic meters of fuelwood. If the changes in the underlying factors of population, etc., are greater or less than those assumed, or if the relationship between consumption of wood and its products and these factors alters, a somewhat different level and pattern of consumption is likely to emerge in 1975. But the general magnitude, pattern and trends are most likely to be broadly as set out here. The principal features can be summarized as follows:
1. Though enormous quantities of wood will continue to be used in round or fuel form, principally in the less developed countries, on a global scale most of the growth in requirements will be for processed forms of wood.2. Though consumption of these processed wood products tends to be rising faster, relative to growth in income, in the less developed countries, most of the additional requirements will be in the developed countries because their initial level of use was so much higher. It is estimated that about 24 percent of the additional annual requirements of industrial wood will arise in Europe, 20 percent in North America, 14 percent in the U.S.S.R., and 12 percent in Japan.
3. The rest of Asia, Africa (less southern Africa) and Latin America together are likely to account for only 30 percent of the total world increase. However, the quantities involved in an increase of this magnitude would mean that the aggregate annual consumption of sawnwood of these countries would double between 1961 and 1975, and their consumption of paper and paperboard and wood-based panels would treble. In terms of present levels of use and the supply effort needed to meet the growth in requirements, the expected expansion in the developing countries is thus also likely to be very important.
4. Throughout the world, and in particular in the high-use, high-income countries, consumption of wood-based panels and of paper and paperboard is growing much faster than consumption of wood in sawn form (or in round form). Most of the wood raw material used in the world still is of the large sizes and good form required for sawing or peeling, and demand for wood with these characteristics will continue to grow, in the case of veneer logs rapidly. But for a growing part, in fact the largest part, of the additional quantities required in the future, quantity and cost of wood and wood fiber are likely to be more important than dimension or form.
5. The dynamic growth in demand for the reconstituted forms of wood - that is, the pulp and panel products - is altering the whole tempo of growth in use of wood in those regions where they by now account for a large share of all the wood consumed. In Europe and North America the significant rise in overall consumption of wood, which is expected in the period to 1975 and beyond, will contrast sharply with the moderate changes which were all that occurred over the first half of the century.
This faster tempo of growth in demand in these principal consuming regions and the shifts in the pattern of consumption are two of the important elements of change facing the supply sector for the future. Any appraisal of the prospects, and problems, of the sector must necessarily be largely subjective: a feature of the sector is the paucity of information about the potential of so much of the world's forests. But certain salient features can be discerned from the discussion in Chapter III:
1. The north temperate zone, which contains nearly all the high-use countries and the greater part of the world's wood-using industry, and which in 1961 accounted for 85 percent of all the industrial wood produced in the world, still contains forest resources - principally coniferous - capable of providing a much larger annual output of wood. But this potential is far from evenly spread across the zone. Europe, the south and west of the U.S.S.R., and Japan will almost certainly encounter before 1975 limits to the rate at which more wood can be made economically available from their forests. In these areas the marginal cost of extending or intensifying wood procurement is likely to rise, and much of the very considerable volumes of wood that could be made available will be of small sizes and in broadleaved species of only moderate or poor quality. On the other hand, very large additional quantities of coniferous forest remain to be brought into use, or more intensive use, in the north and east of the U.S.S.R. and in North America. In the period to 1975 the restricted accessibility of the forests of the U.S.S.R. is likely still to limit its output. In this period North America is likely to be the region able to raise its annual output by the largest quantities without an appreciable rise in real costs and prices.2. The forests of the tropics contain a large part of the world's reserves of wood, including probably most of the remaining large-sized broadleaved woods and most of the quality broadleaved woods. But little is known either about their present extent or their possible eventual productive potential. These forests are only now beginning to be opened up'; and only a very limited number of the numerous species they contain have been drawn into use. Meanwhile they continue to be subject to widespread, uncontrolled destruction and deterioration through the indiscriminate encroachment of agricultural and other activities, and are patently rapidly declining in extent.
3. Throughout the world man-made plantations of trees are coming to have a growing impact on supply: supplementing or complementing natural forests; replacing low-yield natural forests; and creating wood resources where none existed before. In particular, fast-growing species and strains and techniques of accelerated cultivation are giving highly favorable yields, rotations and delivered wood costs. Some of the environments best suited to these high-yield plantations are found in parts of the world at present poorly endowed or lacking in productive forests. An important part of the growth in the plantation effort is consequently in areas which have not previously been large-scale producers of industrial wood.
As was noted above, virtually the whole of the aggregate growth in the world's wood requirements will be in the form of industrially processed wood products. As was shown in Chapter IV, the ability of the primary wood-using industries to expand and compete is likely to affected by the following changes in their economic and technological situation:
1. In many parts of the world, and in particular in those areas in the Northern Hemisphere where the bulk of forest industries is at present located, the industries are faced with an actual or prospective rise in the delivered cost of wood raw material due to: growing competition for the wood accessible to existing industries; failure of productivity in harvesting and transport of wood, which account for the greater part of its delivered cost, to keep pace with rising wages; longer average wood hauls accompanying the trend to larger plant size in most branches of forest industries. Because wood raw material accounts for a large part of the cost of all wood-using industries, and the greater part of costs in some, this has a very important bearing on the industries ability to compete and expand.2. This trend toward higher wood prices is being countered by a number of developments in the supply-and use of wood raw material. In the first place, technological advances are improving the yields obtained from a unit of wood raw material. Probably more important are the developments to increase the flexibility of the raw material requirements of the industries. In particular, the pulp and board industries are rapidly bringing into use much more wood of broadleaved species and wood residues from logging and other industries. The plywood and veneer industry is also using a wider range of species and log sizes. This has inter alia enhanced the growth potential of the industries in their principal present locations in the north temperate zone by improving their ability to draw more intensively upon the mixed forests of that area. In addition, advances in logging and transport engineering are permitting industry to move into areas where there are still abundant wood resources but which were previously too remote from markets to be operated economically - a development favoring expansion into areas, such as western Canada, where there remain large reserves. Finally, in the raw material field, industry is drawing more and more on the plantations of quick-growing, high-yielding species mentioned above for low-cost supplies of wood.
3. Improvements in productivity are being sought in all branches of forest industries by increasing the size of plant in order to realize the economies of large-scale production. As plant sizes get bigger, there is also a strong trend toward vertically integrating different stages of production, in order to assure markets and supplies of raw material - in particular in the pulp and paper industry (where vertical integration also effects cost economies of its own). Integration or association is also taking place horizontally between different types of woodprocessing industry on a growing scale, in order to benefit from the complementarily of wood war material requirements (including the supply of and outlets for wood residues), to spread the overheads of wood supply, and to diversify the range of products offered. In the principal forest products producing countries it is becoming more difficult for small units, particularly in the sawmilling industry, to operate economically in isolation, and development of new capacity is increasingly on a multiproduct basis encompassing units from two or more wood-using industries.
4. Within the group of primary wood-using industries, the pulp and panel industries are in general proving to be more flexible in their raw material requirements than the sawmilling industry and to have more scope for technological advances and larger scales of operation. Consequently, they usually prove to be better placed than the sawmilling industry when in competition for wood raw material. The sawmilling industry is further handicapped by a shift in market emphasis, as wages rise, to materials which are less costly placed in use - a shift which favors inter alia wood-based panels, and paper and paperboard. Under the pressures of this competition at both the raw material and the market ends, the sawmilling industry in high-cost, intensive use areas has been losing ground to the other wood-using industries - and to nonwood products. (But this is not necessarily the case in the many parts of the world characterized by low costs and small markets: under these conditions sawmilling should be viable, competitive and still growing.)
Steadily growing quantities of wood and wood products are entering world trade. This growth in volume is being accompanied by two principal developments in the nature and structure of the trade:
1. Most of the world's trade in wood takes the form of a small number of conifer-based products - sawn softwood, chemical woodpulp, newsprint, and other paper and paperboard, in that order of importance - and most of this trade takes place between developed countries. The fact that this trade is mainly in semiprocessed or processed form, rather than in the form of log raw material, largely reflects the competitive advantages enjoyed by the large-scale producers of these products located in the conifer-rich northern countries. In generals there is a growing tendency for such mass-grade products to be supplied through trade, in recognition of the cost advantage of these producers.2. In contrast, the fast-growing world trade in hardwoods is principally in log form, which is processed in the importing countries, despite the heavy burden of transportation costs on final wood costs that this entails. In large part this is because the processing and other facilities in most of the tropical countries whence these woods come are still at an early stage of development and could not accommodate the volumes involved. But it is also due in part to tariff structures and investment policies which favor the industries in many of the importing countries at the expense of imports of processed hardwood products.
TABLE VI-1. - EXPECTED CHANGE THE WORLD'S INDUSTRIAL WOOD BALANCE, 1961 TO 1975
(Million cubic meters of roundwood and wood raw material equivalent)
¹ Consumption Of processed wood products and other industrial roundwood expressed in equivalent volumes of wood raw material. For further explanation of the derivation of these figures see the Appendix. - ² Removals of industrial wood. an, where it is possible, with total domestic wood supply (roundwood removals plus usable wood residues) shown in parentheses. - ³ The annual allowable out in 1963 was reported to be almost 605 million cubic meters. It is estimated that total removals (including fuelwood removals) in 1970 will be about 390 million cubic meters. - 4 Allowable annual out from presently economically accessible areas, assuming mixed pulpwood an sawtimber rotations, is 210 million cubic meters of industrial wood. It prices were to rise by 10 percent, an additional allowable annual out of 26 million cubic meters could be taken from presently marginal forest lands. If presently economically accessible areas were managed on shorter pulpwood rotations, the annual allowable out could probably be raised to about 316 million cubic meters. - 5 Wood balance based on data from Timber trends in the United States. The figure for production of industrial wood in 1961 contained in the United States study and reported here differs slightly from the corresponding figure reported to FAO and included in Annex Table III-B because of differences in the methodology used in their derivation and differences in coverage. - 6 Excludes roundwood equivalent of wood residues consumed.
Northwestern Europe
United States
Japan
Other importing areas
Prospects in the wood-surplus areas
Some implications for the future
The question now arises as to what geographical changes in the pattern of supply of wood and wood products are likely to emerge from the various trends and developments reviewed above. The present section will therefore be concerned with trying to establish the quantities concerned for the year 1975, with discussing the implications that arise and, in a more tentative fashion, with considering what these trends point to for the more distant future.
The basis of the appraisal is that of the estimates of requirements in 1975 developed in Chapter II. There is no set of worldwide estimates of future production of wood comparable to these estimates of requirements. But enough is known about the production possibilities of the principal consuming areas to be able to determine broadly what part of their additional requirements they are likely to be able to meet domestically; and what part could more economically come from other parts of the world. An attempt will then be made to establish what additional supplies will need to enter world trade by 1975.
Table VI-1 sets out, in terms of rough estimates of the total quantities of wood raw material involved, the growth in requirements for each area of the world and the expected growth in output of the quantitatively more important of them. It will be seen that three areas, each already a heavy net importer of wood and wood products, will apparently require substantially greater inflows by 1975. They are northwestern Europe, with net annual import requirements rising by over 60 million cubic meters; the United States, increasing by about 10 million cubic meters; and Japan, rising by up to 20 million cubic meters. Other important, though lesser, rises in import needs are likely to be in the Mediterranean area, in South Asia, and probably in southeastern South. There will also be many other parts of the world which, though in aggregate self-sufficient or even net exporters of wood, will require larger imports of particular wood products. Finally, there is Mainland China. Present indications are that China will continue, as at present, to confine its wood use to what can be produced domestically. But the country's domestic output in 1975 will certainly fall so far short of what could be used that, if it were in a position to import wood, China could well want to do so on an enormous scale.
TABLE VI 2. - EXPECTED CHANGE IN THE INDUSTRIAL WOOD BALANCE OF NORTHWESTERN EUROPE, 1961 TO 1975
(Million cubic meters of roundwood and wood raw material equivalent)
|
|
Consumption |
Production¹ |
Surplus (+) or deficit (-) |
Comments on the growth in net imports |
|||
|
1961 |
1975 |
1961 |
1975 |
1961 |
1975 |
||
|
Sawlogs |
71½ |
83 |
37 |
40½ |
-40½ |
-56½ |
Mainly sawn softwood from U.S.S.R. and Canada |
|
Veneer logs |
6 |
14 |
37 |
|
|
|
Mainly tropical log plywood and veneer from western Africa |
|
Pulpwood |
53½ |
115 |
8½ (14) |
28½ (34½) |
|
|
Mainly paper from northern Europe and pulp and kraft-paper from North America |
|
Other roundwood |
13 |
8 |
11½ |
28½ (34½) |
-41 |
-88½ |
|
|
TOTAL INDUSTRIAL WOOD |
144 |
220 |
57 (62½) |
69 (75) |
-81½ |
-145 |
|
SOURCE: Based on European timber trends and prospects; a new appraisal 1950-1975.¹ Removals of industrial wood, with total domestic wood supply (roundwood removals plus usable wood residues) shown in parentheses.
By far the heaviest importer of wood products in the world is northwestern Europe. Table VI-2 shows its expected growth in requirements broken down by product. The area's present and past supply pattern has been dominated by its imports from other parts of Europe. But reference to Table VI-1 shows that exports from northern Europe, its principal supplier, are expected, in the face of its growing raw material limitations, to rise by no more than 12 million cubic meters, a very large increase indeed but well short of what will be needed by northwestern Europe. As the export possibilities of the lesser exporters in Europe are likely to be increasingly restricted by rising domestic requirements, the principal change in the supply pattern of northwestern Europe, and indeed of Europe as a whole, would appear to be a rapid growth in net imports from other parts of the world.
In considering what the form and magnitude of this net inflow is likely to be, attention must first be directed to examining the nature of the increases in production that are already foreseen, and the scope for and limitations on any further rise in output. Because the region's surplus and deficit areas are so intimately linked through intraregional trade, it will be appropriate to conduct this examination on the basis of Europe as a whole.
In fact, as emerged earlier from the discussion in Chapter III of the region's forest resources and their further potential, Europe has little additional mature or overmature sawlog-sized coniferous wood still to be brought into intensive industrial use, nor much additional pulpwood-sized coniferous wood; it has adequate supplies of sawlog-sized hardwoods, but little of it of high quality; and it has abundant supplies of small-sized, broadleaved wood.
It has been estimated in the regional study for Europe² that the expected increase of 58 million cubic meters in annual industrial roundwood removals between 1960 and 1975 is likely to be broken down roughly as follows:
² FAO/ECE, 1964. European timber trends and prospects: a new appraisal, 1950-1975.
|
|
Coniferous |
Broad-leaved |
Total |
|
Million m³ |
|||
|
Large sizes |
8 |
15 |
23 |
|
Small sizes |
12 |
23 |
35 |
|
TOTAL |
20 |
38 |
58 |
Further intensification of domestic production consequently is most likely to be mainly into resources of small-sized and low-grade wood, much of it not readily accessible nor easily harvestable. It is likely to be brought into large-scale use only if pulpwood prices rise substantially. But European pulpwood prices are already substantially higher than pulpwood prices in North America and some other parts of the world. Though the advantage in labor costs and costs of distribution to the market is in the favor of European producers, the overall cost balance is such that the latter could in general not absorb substantial increases in wood costs and stay competitive - unless tariff barriers are raised or erected to afford them sufficient protection. As such a development is most unlikely to take place, it would appear that Europe will become a substantial net importer of pulpwood or wood pulp or paper.
It is hard to say more than this. The rapid advances being made in raising the use of broadleaved wood for pulping and board manufacture will no doubt bring into use more such wood, in substitution for coniferous pulpwood, than was allowed for in drawing up earlier in the decade the policies and plans on which the production projections in Tables VI-1 and VI-2 were based. Also the strong competitive position of the pulp and panel industries is likely to lead to further diversion of coniferous fuelwood and of sawlog-sized roundwood to these industries. On balance it could be that Europe's additional annual import requirements in 1975, over and above net imports in 1961, would be roughly as follows (in terms of equivalent volumes of roundwood):
|
|
Million m³ ® |
|
Coniferous pulpwood, pulp or paper |
20-30 |
|
Broadleaved logs, sawnwood, plywood or veneer |
8-10 |
|
Coniferous sawlogs or sawnwood |
10-15 |
But more important than the precise magnitude of this requirement of wood from other regions in 1975 is that all the evidence points in the direction of its getting larger over the years. In the long run Europe will continue to be able to steadily expand its output of wood by undertaking intensive programs of forest improvement, by afforestation of the large areas of land being taken out of agricultural production as a result of the advances in agricultural productivity taking place in Europe, and by the use of quick-growing tree species. But these measures cannot be expected to raise Europe's output of wood at a rate which would match the growth in the region's requirements. Furthermore, given the existence elsewhere in the world of reserves of wood still to be brought into use, of forest land which is more productive than most of Europe's forest land, and of environments which could produce plantation wood more cheaply, there is likely to be a limit to how much investment in creating additional wood resources in Europe would be economically justified. (This matter will be returned to later in this chapter.)
It is therefore important to consider the implications for Europe of a permanent and growing dependence on imports for some part of its supplies. What products could better be imported than produced domestically? What effect is this likely to have upon European producers?
Some idea of what is likely to happen can be derived from the changes that are already taking place. In the pulp and paper field changes are under way in the structure of industry in the region which reflect the growing dependence of the consuming countries in northwestern Europe on imports for the mass grades of paper and paperboard in which large integrated producers close to the wood raw material have a decided competitive advantage. Their imports may well increasingly take the form principally of newsprint, kraft liner and the chemical wood pulp that will be required for the speciality papers and wastepaper and short-fiber based grades which will continue to be made in the importing countries. In the past, northern Europe has been the principal supplier of chemical pulp, but producers there are now integrating forward to use their pulpable resources in production of papers and paperboards, giving higher values per unit of raw material - notably newsprint and kraft liner. Northern Europe is therefore likely to greatly step up its supplies of these grades and other paper and paperboard to the rest of Europe. But North America is also likely to continue to be well placed to supply Europe with newsprint and kraft liner at very competitive prices, and much of the extra-European supplies of pulp and paper can be expected to come from across the Atlantic, in the form of these products. Much of the additional chemical wood pulp will also have to come from North America, with some probably from the U.S.S.R. and other, smaller, producers such as South Africa.
The shift in the structure of forest industry within northern Europe is also likely to curtail that area's growth in sawn softwood output, so that it is to be expected that the U.S.S.R. and Canada will each continue to expand its supply of this commodity to northwestern Europe, and to markets elsewhere in the region.
The third main category Europe will require in excess of domestic supply will be hardwood veneer logs and a smaller quantity of quality hardwood sawlogs. There will undoubtedly be a continued growth in the use of smaller sized, lower-grade domestic logs for some utility grades of plywood, but the bulk of the growth in requirements is sure to be, as in the recent past, for properties and an appearance found in sufficient quantities only in the tropical hardwood forests. But this growth is very large indeed - from about 6 million cubic meters in 1961 to roughly 15 million cubic meters in 1975. At present the supply of tropical hardwoods comes predominantly in log form from western Africa. Because transportation costs weigh so heavily upon the total costs even of these logs, it is unlikely that other more distant regions, such as southeast Asia and Latin America, could supply large quantities of roundwood at a competitive cost. This raises the question of whether the supplying countries in western Africa can raise their exports by such a large margin, again without an unacceptable rise in cost, a matter which will be gone into in some detail later in this chapter.
Table VI-3 sets out estimates of the growth in both the requirements and domestic supply of wood and wood products in the United States, broken down by product. Large though it is, the present and expected future wood deficit is, apart from broadleaved veneer logs, less a consequence of a limited domestic supply of wood in the United States than a recognition of the competitive position of Canada as a supplier of certain mass categories, notably sawn softwood and newsprint. The United States is well endowed with forests, with a capacity for a further growth in output, at a pace equal to growth in requirements, which is expected to continue well past 1975. The country in fact contains within its boundaries areas, notably the Pacific northwest and the pine-growing southeast, which are highly competitive suppliers to the world market. Indeed it is very likely that the United States will become a major supplier of kraft liner and chemical pulp to Europe, two mass-grade products which it has been exporting in fast growing quantities in recent years.
TABLE VI 3. - EXPECTED CHANGE IN THE INDUSTRIAL WOOD BALANCE IN THE UNITED STATES, 1961 TO 1975
(Million cubic meters of roundwood or roundwood equivalent)
|
|
Consumption |
Production |
Surplus (+) or deficit (-) |
Comments on the growth in net imports |
|||
|
1961 |
1975 |
1961 |
1975 |
1961 |
1975 |
||
|
Sawlogs |
160 |
186 |
144½ |
162 |
- 15½ |
- 24 |
Mainly sawn softwood from Canada |
|
Veneer logs |
23½ |
44 |
22 |
40 |
- 1½ |
- 4 |
Tropical hardwood plywood and veneer mainly from South east Asia |
|
Pulpwood |
92 |
133 |
71½ |
111 |
- 20½ |
- 21 |
Newsprint, chemical pulp and pulpwood from Canada |
|
Other roundwood |
12½ |
13 |
12½ |
13 |
- |
- |
|
|
TOTAL INDUSTRIAL WOOD |
288 |
376 |
250½ |
326 |
- 37½ |
- 49 |
|
SOURCE: Based on Timber trends in the United States.
Though there remain considerable reserves of coniferous sawlogs in the northwest of the country, and a large regrowth elsewhere, notably in the southeast, these are becoming steadily more costly to harvest. It is therefore to be expected that a slowly growing share of the sawn softwood requirements will be imported from Canada.
In the pulp and paper field, in contrast, the United States has been producing a growing share of its newsprint requirements, and this trend is expected to continue. As consumption of newsprint is likely to rise only slowly, the present import from Canada is unlikely to grow by much, if at all. On the other hand, there is likely to be a growing flow of wood pulp across the border, as United States and Canadian producers extend the present wave of integration back and forward across the border to link Canadian pulp-producing capacity with United States paper-producing, -converting and -marketing facilities. A further flow which could grow is that of pulpwood in chip form.
The other major category that the United States will require is wood for hardwood plywood and veneer. As in Europe, there are insufficient domestic resources of the sizes required, or offering the aesthetic or processing properties sought after. Apparently regrowth of hardwoods in the country is expected to provide a growing supply of veneer quality logs, but the bulk of this commodity must come from the tropics, as it has over the past 10 to 15 years. By 1975 it is expected that net imports of hardwood plywood and veneer and sawnwood will amount to about 5½ million cubic meters in the United States, more than twice as much as imports in 1960-62. At the present time - in sharp contrast to the trade to Europe and Japan - practically all of the imports come in as plywood and veneer rather than as logs, despite a substantial tariff on these finished products. The reasons have been partly the relatively poor and costly communications between the log-producing countries and the United States, and partly that the processing industry in the United States was neither structured to draw upon imported log material nor able to offset by higher productivity the low-cost, technically proficient industries in Japan and east Asia, and more recently in the Philippines. There is every reason to expect that further growth in this trade will continue to be in processed form. But again it will be necessary to consider, later in the chapter, whether the producing countries are likely to be able to raise supplies, to Japan and other markets around the periphery of the Pacific as well as to the United States, by such a large margin.
In summary, the likely overall increase in United States net annual import requirements ³ between 1961 and 1975 could be of the following order (in roundwood equivalent volumes):
|
|
Million m³ ® |
|
Sawn softwood ³ |
8-9 |
|
Hardwood plywood and veneer |
2-3 |
|
Pulpwood, pulp and paper ³ |
up to 1 |
³ It should be noted that these figures are of net trade. As the U.S.A. is expected to become an important exporter of pulp and paper, and possibly coniferous logs or sawnwood, the gross imports of these categories are likely to rise by a much larger margin.
TABLE VI-4. - EXPECTED CHANGE IN THE INDUSTRIAL WOOD BALANCE OF JAPAN, 1961 TO 1975
(Million cubic meters of roundwood and wood raw material equivalent)
|
|
Consumption |
Production¹ |
Surplus (+) or deficit (-) |
Comments on the growth in net imports |
|||
|
1961 |
1975 |
1961 |
1975 |
1961 |
1975 |
||
|
Sawlogs |
39½ |
54 |
31½ |
41½ |
|
|
Mainly coniferous logs from the U.S.S.R. and the United States, and some lauan logs |
|
Veneer logs |
2½ |
7½ |
31½ |
|
-10½ |
-20 |
Mainly lauan and the other tropical hardwood logs from southeast Asia. |
|
Pulpwood |
14 |
42½ |
10 (14) |
22½ (32½) |
- |
-10 |
Pulpwood and pulp from North America and the U.S.S.R. |
|
Other roundwood |
7 |
8 |
7 |
8 |
- |
- |
|
|
TOTAL INDUSTRIAL WOOD |
63 |
112 |
48½ (52½) |
72 (82) |
-10½ |
-30 |
|
SOURCE: Estimates by FAO Secretariat based on material supplied by the Forestry Agency, Japan.¹ Removals of industrial wood, with total domestic wood supply (roundwood removals plus usable wood residues) shown in parentheses.
Table VI-4 sets out the expected growth in Japan's annual requirements and domestic supplies between 1961 and 1975. In the period to 1975 its fast-rising deficit is expected to grow very much larger, despite the concerted effort that will be made to raise, rationalize and improve the efficiency of domestic output, at all stages. Basic to this effort is the very large-scale planting program, devoted to converting overmature natural forest and coppice to high-yielding conifer stands. Secondly, the existing resource is being brought more fully into use; that is, with a more intensive industrial use of broadleaved species and wood residues, and a decline in the use of wood for fuel. Thirdly, the structure of industry is being improved.
By 1975, Japan's roundwood deficit is likely to have grown by roughly the following margins:
|
|
Million m³ ® |
|
Coniferous logs (or sawnwood) |
4 6 |
|
Broadleaved logs (or plywood, veneer or sawnwood) |
5-6 |
|
Pulpwood (or wood pulp or paper) |
8-10 |
In the past, imports of coniferous wood have come, as logs and pulpwood, from the northeastern part of the U.S.S.R. and the west coast of North America. In recent years North America has also been supplying small but fast-growing quantities of sawn softwood and chemical wood pulp. There is good reason to believe that the trade will now shift rapidly in this direction as processing capacity is developed in the two supplying areas. Indeed, Japanese companies are directly participating at present in new pulp manufacturing development on the Pacific coast of North America. Future trade in this product group is therefore likely to be increasingly captive flows of wood pulp for further processing in Japan rather than pulpwood, though the flow of wood in chip form is also growing. It is to be expected that the trade with the U.S.S.R. will in due course - if not by 1975, soon thereafter - take a similar direction, with exports of roundwood also giving way to exports of sawnwood and wood pulp. The links the Japanese industry is in this fashion building up with these suppliers would seem to ensure that the bulk of its additional supplies will come from North America and the U.S.S.R. But there are also other smaller suppliers, such as New Zealand, which can be expected to enter or expand exports to this fast-growing market.
Japan is also likely to experience a further large rise in its already big net import of broadleaved woods for plywood and veneer, and for sawnwood. This inflow, which originally was largely to provide raw material for an export-oriented plywood industry, is now required much more to support the country's large and fast-growing domestic requirements. As in Europe and North America, there are no longer anything like sufficient domestic supplies of large logs of suitable woods. In considering later in the chapter the prospects and problems of the tropical producers, consideration will once again have to be given to whether such a large increase can be effected. Furthermore, with the principal supplier, the Philippines, now beginning to restrict log exports in favor of its own thriving veneer and plywood industry, the question of the form as well as the magnitude of the trade arises. Will the trade in broadleaved woods follow the trade in coniferous woods and shift from a flow of roundwood to, at least in part, a flow of sawnwood, plywood and veneer? Here it will suffice to recall that Japan, like the principal European log importers, at present imposes a substantial import tariff on plywood and veneer, which is likely to militate against such a shift unless it is lowered or removed. (See Table V-6.)
By comparison with the three areas discussed above the additional wood requirements of the rest of the world are likely to be small in absolute terms. This is not least because some of the most advanced of the other countries which have been substantial importers in the past - such as New Zealand and South Africa - are rapidly improving their - degree of self-sufficiency. With their large areas of maturing plantations, and their growing wood-based industries far distant from the principal exporting regions in the Northern Hemisphere, they are likely to be importing less of most wood categories and products by 1975.
Progress in the rest of Asia, Africa and Latin America in the years ahead is less easy to predict. As has been noted in this study forest industries in most of these countries are usually still in the early stages of development, and even those rich in wood resources tend to be in the anomalous position of having to depend on imports for much of their supplies of the more highly processed products. But in recent years there has arisen a growing awareness of the many-sided contribution the wood-using industries can make to overall economic development.
In the first place, these industries can contribute to an improvement in the foreign exchange position, both through exports, a matter which will be considered at length later in the chapter, and because in many of the wood-using industries domestic production can often be substituted for imports at an early stage in development. Thus the demand for most wood products grows very rapidly with rising income, so that markets for these products tend to grow fast. Also, most can be substituted for other nonwood materials, so expanding their market potential. At the same time, some of the more important wood-using industries - notably sawmilling, veneer production, and the manufacture of joinery, furniture and many paper and paperboard manufactures (though not the primary stages of production of - many grades of pulp and paper) - involve comparatively simple techniques and seldom require large amounts of capital. They can therefore be established relatively simply and on a moderate or small scale.
Secondly, most primary wood-using industries have strong linkages with other industries. The greater part of their products is used by other industries rather than being finally consumed as such, and they also draw upon the products of other important industries for their inputs. Development of forest industries can therefore contribute to development in a whole range of other industries.
Thirdly, as most primary wood-using industries are strongly oriented toward the source of their raw materials, they tend to be located in or adjacent to the rural areas. They can therefore play an important role in easing the transition between the traditional and modern sectors in countries which characteristically have this pronounced dualistic structure to their economies. By providing employment to un- or underemployed rural labor without requiring them to move into the urban sector, they bring the money economy into the rural sector without destroying its traditional structure. Moreover, although some forest industries, notably in the pulp and paper field, are of necessity heavily capital-intensive and highly mechanized, the sector as a whole creates a lot of employment: a characteristic of the utmost importance in countries where large-scale un- or underemployment presents formidable social and political, as well as economic, problems in the way of development. Furthermore, with the infrastructure and servicing capacity which accompanies their establishment, they provide nuclei for further industrial growth in the rural areas.
In these ways development of the forest resource, unlike the development of so many other natural resources, can contribute directly and widely, through its numerous interrelationships with the rest of the economy, to the overall growth of the latter. The woodusing industries are not, and should not be, solely extractive industries nor do they exist as isolated modern, industrial enclaves divorced from, and not benefiting, the rest of the economy.
There is therefore reason to expect a more intensive effort in these countries to step up their domestic processing activity. But domestic markets will still often be too small in 1975 to support viable pulp and panel industries. The considerable efforts that have already been devoted to establishing domestic forest industries, especially in Latin America and parts of Asia, have generally been directed at self-sufficiency at the national level and, because national markets have been so restricted, many of these plants have been small, high-cost and uneconomic, and so have required continuing high protection. The result has been that, in the countries where mills have been established, further development of forest industries has been retarded or frustrated, while neighboring countries which might have drawn their supplies from within the region have had to look to the developed countries for imports at competitive cost in order to meet their rising domestic requirements.
The trend has not of course been confined to forest industries: it applies to many industrial sectors. But it is particularly regrettable in the case of forest industries because there are many instances where the forest resources of neighboring countries are complementary, and hence where considerable economies could have keen achieved by economic collaboration. Recently more attention has been paid in the pulp and panel industries to the prospects for harmonizing national development plans among groups of countries, and for stepping up trade in products between countries in order to ensure markets big enough to support plants of economic size.
Table VI-5 summarizes the results of appraisals of the several pulp and paper production possibilities of most of the countries in Africa, Latin America and Asia. It shows that prospects exist for meeting by far the greater part of the additional annual requirements of these three regions from economically sound, competitive domestic production. At the pulping stage much of the development would, as at present, be in grades based on bagasse and certain other nonwood fibers, but most of it, and in Asia a growing part, would be based on natural forest and plantation wood resources which should have been brought into use by then. At the paper-making stage a slightly larger development is foreseen, drawing in other locally available resources, such as wastepaper, and some imported pulp. Progress at the converting level (which is not shown in the table) should be even more rapid; there are few paper manufacturing processes that cannot be made economically on a small scale.
These estimates represent what would in general be the maximum viable development possible given the markets and wood resources foreseen for 1975. Such a development would involve massive inputs of capital, skills and supporting services.
Even if these substantial advances were achieved, the developing countries absolute level of imports would still rise - principally in newsprint, a mass grade in which the established producers hold a highly competitive position, and in the multitude of special grades, any one of which is likely to be used only in very small quantities in any country. The table suggests that about an additional 1½ million tons of imported paper and paperboard would be required annually by 1975. But announced plans to the year 1968 suggest that not all the areas will achieve the maximum development assumed in Table VI-5. In total the developing countries might well need to import in 1975 2 to 3 million tons more paper and paperboard than in 1960-62 and up to 1 million tons of pulp (together equivalent to between 8 and 12 million cubic meters of roundwood).
Except in areas short of resources of saw timber - northern Africa, the Near East, and southeast South America - there should be much less difficulty in raising sawnwood production in line with growing requirements. The problem is more likely to be that with poor sawmilling standards the product will, as in the past, lose ground to other materials. Thus if domestic sawmilling industries do fail to respond to the large and expanding market potential, it is more likely to lead to imports, or production, of alternative materials rather than to higher imports of sawnwood.
The preceding review has disclosed a growing divergence between the world's supply and consumption of three important wood categories: sawn softwood; quality hardwood sawnwood, plywood and veneer; and long fiber wood for pulping. In the case of the first two categories, there simply is not enough raw material of appropriate size and quality in those major consuming areas which are now net importers. In the case of the long fiber wood pulp, the divergence is due as much to the highly competitive position built up by pulp and paper producers in some conifer-rich areas as to the physical lack of the volumes, or the capacity to create the necessary quantities, in the consuming countries.
In considering what and where the deficits are likely to be in the future, attention has necessarily been given already to the likely sources of the additional outside supplies, as the balance between domestic and imported supply is likely to be determined in large part by the competitive position of each. It is now necessary briefly to summarize and aggregate all this, and to examine it from the point of view of the wood-surplus regions. What are the total additional quantities of wood and wood products that are going to be required? What share of this additional requirement can they each be expected to supply? What are the implications of so doing - in terms of new and modernized processing capacity, of expanded or intensified forest productive capacity, of removing barriers to or promoting: expanded or new trade flows? In discussing this it will be convenient to do so separately for each of the three main categories concerned.
SOURCES: El paper V la celulosa en America Latina; Proceedings of the Conference on Pulp and Paper Development in Africa and the Near East; Proceedings of the Conference on Pulp and Paper Development in Asia and the Far East; World Pulp and Paper Capacities 1960-1968, FAO Survey 1965¹ Excluding southern Africa. - ² Excluding Japan. - ³ Excluding dissolving pulp. - 4 Rated capacity.
SAWN SOFTWOOD
It has been estimated that in aggregate in 1975 the world will require between 15 and 20 million cubic meters (s) more sawn softwood supplied through international trade than was the case in 1961. Of the present principal suppliers little more is expected from northern Europe where, with a tightening wood raw material situation, diversion of small sawlog material to the pulp and composition board industries is likely to offset any increase in the availability of large-sized material: The other two principal suppliers, the U.S.S.R. and Canada, are far from their supply ceiling. But in both there must be doubt as to whether very large additional volumes are likely to be available quickly -without a rise in price.
In the U.S.S.R., exports to Europe, its principal market, come from the northwest of the country, an area in which further growth in production is apparently to be restricted in favor of expansion in the northeast. Furthermore, the pulp and paper industry is being expanded in the northwest, suggesting a shift in the pattern of use of the available wood raw material in that area. Also, existing port and handling facilities are likely to set limits to further growth in exports, which have now surpassed their previous maximum level of the 1930s. If exports to the European market are going to rise very much higher it is probable that additional investment will be needed and that the additional outputs will have to come increasingly from further east. On the other hand, the shift in emphasis toward the country's eastern forests should allow an increased flow to Japan without difficulty.
In Canada, though the country has large resources of sawlog-sized wood, most of this is outside the areas as yet opened up for timber extraction or is in areas being operated for pulpwood, not sawlogs. Unless sawnwood prices rise substantially, the opening up of much of these areas will probably have to wait upon the expansion of the pulp and paper industry or a different utilization pattern in the areas now in use. The sawmilling industry is therefore likely to be able to expand at only a modest rate, a rate set in the main by how fast the area of pulpwood procurement grows.
In aggregate, therefore, it must be questioned whether the rather large increases in imports expected to be required in the western European and United States markets will be forthcoming without a rise in prices.4 If such a rise in price were to be necessary, it would of course not only bring forward additional supplies but would also be likely to depress further the position of sawnwood in these markets. It could also enhance the position of the smaller producing areas, and it is worth noting that these already include not only the few countries outside the Northern Hemisphere with sizable coniferous forests, but also those such as Chile and New Zealand which are drawing the sawnwood they export from plantations of exotic conifers.
4 Two of the features expected to contribute to this tightening supply situation are the expectation in the countries concerned that the market for sawn softwood in the United States will grow considerably in the period ahead, and that there will be difficulties in making the existing sawlog supplies in Canada economically available. It should be noted that both these developments would be in sharp contrast to what has been happening in the recent past. If the outcome of one or both proves to be less sharp than expected now, it would of course alleviate the supply difficulties foreseen here.
TROPICAL HARDWOODS
But it is in the supply of large-sized and quality hardwoods that a real element of doubt must enter with respect to the future. The demand for additional imports of these woods is expected to be in aggregate 15 to 20 million cubic meters ® higher in 1975 than the 17 million cubic meters traded in 1961. The bulk of this wood must come from the tropics, the only source of adequate quantities of logs of appropriate size and quality, But it must be seriously questioned whether the forest resources of the tropical producing areas can produce such large annual quantities; whether, if they can, this will be only by destructive depletion of their resource; and whether even then it can be achieved without an unacceptable rise in costs.
It must be conceded from the start that no definitive answer can be given to any of these questions, in large part because so little is known about the remaining extent, or ultimate potential, of the tropical forests. But what is clear is that, irrespective of the size of the resource, it could and should, and indeed must be much more efficiently used if its contents are to be made more fully and cheaply available, and if this large, rich resource is to make the contribution it should be making to the countries where it is located.
At the present time the resource is being drawn upon very wastefully. In the first place much of the area of tropical rain forests of potential commercial value is still subject to widespread and indiscriminate destruction and deterioration: too little is either effectively reserved or managed. Secondly, even in those areas of forest which have been brought into use, only a handful of the multitude of species present is accepted. Stepping up the output of these forests will rest heavily on being able to introduce a much wider range of species onto the market. Also, if costs are to be kept in check, more species must be brought into use in order to spread infrastructure, management and harvesting costs over a larger output per hectare. The third major element of waste is the extent to which the output is exported in log form. Much could be done to improve efficiency if more of the processing could be done at the source. Firstly, it would minimize the transport of the wood in a form which contains a large amount of what will become waste in the course of processing.5 Secondly? it is likely to widen the range of species used by, for example, permitting the use of other species as core stock in plywood faced with market-accepted species, and the exporting as utility grades of plywood and of packaging veneer of species too low in price to be economically exported in log form.
5 This is lessened if the residues can be used by the pulp or panel industries in the importing countries.
In addition, the producing countries have a further interest in processing the wood before export because the market for wood products is one of the few export markets open to them which is expanding vigorously. Demand for foodstuffs and most of the other primary products which make up the bulk of the exports of most developing countries has been growing very slowly, if at all, in their principal export markets. Also most food exports from the developing countries, such as coffee, are peculiar to the tropical regions. These countries are therefore the only producers, and their exports can only grow as fast as the market - which is slugglish - or at the expense of each other's shares of that market. Wood, on the other hand, is produced everywhere in the world. Efficient, competitive export, from developing countries could therefore expect to come to occupy a growing share of what is anyway a dynamic market. Finally, wood is one sector in which these countries have the possibility of exporting processed rather than primary products, as it is raw material for industries, many of which are relatively simple and small-scale.
Not only would exports in processed forms of wood add to the value accruing to a country from its exportable forest resource; it would probably diminish the fluctuations in export income as markets for products are as a rule more stable than those for raw materials; and it would upgrade the trade to a faster growing level of market. An export outlet is also likely to permit a scale of operation not possible with only a small domestic market, and so add to the range of processing possible in a country at a given stage in development.
The fact that the trade has developed to date so heavily as exports of logs was largely unavoidable, an inevitable first step in opening up new areas of forest anywhere in the world where there is little or no industry or infrastructure. As much of any further expansion in the trade in tropical hardwood must come from bringing further areas into use, it is to be expected that a large part of the growth in trade, and the bulk of the overall volume of trade in the interval to 1975, will continue to be in log form. It is the further development of the sector in the countries which by now are established producers that has lagged. This is not to say that there has been no development - important processing capacity has been established in several countries, and other attempts were made elsewhere, only to succumb to the difficulties and problems that face such ventures. For the difficulties and problems are considerable: shortage of capital, of skills, of infrastructure and supporting services; and domestic markets so small as to provide little scope for complementing the export trade. But the capital and expertise which - have been channeled into mobilizing and developing the tropical hardwood resource have not been particularly directed to overcoming these difficulties. Most of the capital and management is associated with the consuming interests in the importing countries. To a large extent these interests are to supply industries in these countries with raw material (where there has been investment in processing capacity in the log-producing countries it is generally because the invested capital comes from countries which do not have large existing processing industries). These interests have been reinforced by tariff structures in most of the importing countries which discriminate against imports of plywood and veneer, and often against sawnwood.
But the growing pressures of the very rapid growth in demand for these woods and rising costs of procurement can be expected to heighten the interest of the consuming countries in contributing to and participating in the developments in the producing countries necessary for a more efficient and fuller use of the tropical wood 1 resource. Already United States capital and know-how have participated in the build-up of the large and fast-growing plywood and veneer industry in the Philippines, and there has been European investment in plywood, veneer and sawmilling in countries of western Africa l and continental southeast Asia. It is to be expected I that as prices of imported logs rise further, more of the 1 industry in importing countries will seek to become associated with production in the exporting countries in order to assure its supplies (a development favorable - to the exporting countries for the access to markets as well as to capital and know-how that such an association brings with it).
But, because so little is known about the extent of the tropical hardwood resources, little can be said about whether or not the particular volumes estimated as being required will be forthcoming. Both in western Africa and southeast Asia there are large untapped or little used reserves, but less accessible than much of the present producing areas in some of which the currently sought after species are by now in short supply. In addition there remain, even in these more accessible areas, large quantities of wood of species not yet accepted on the markets. There are also areas in Latin America which might be brought into use, though generally speaking they are more remote and less rich than the forests in the other two areas.
In aggregate, consequently, no more can be said than that:
(a) tropical producers will be faced by a massive increase in the market for their woods;(b) the extent to which they can capture this market will depend in large part upon their ability to keep costs in check as volumes rise, which in turn will rest largely upon their success in introducing a wider range of species to the market, in improving the efficiency of harvesting and transport, and in exporting more of the output in processed rather than log form;
(c) the importing countries will equally be faced with the need to obtain very much larger supplies, which will call for their participation in the promotion of additional species, in improving and upgrading production, and in lowering tariff and other barriers to facilitate an increased inflow of wood in processed forms.
LONG FIBER WOOD FOR PULPING
The third and largest growth in requirements is going to be for wood for pulping, and more specifically for long fiber wood for pulping. This differs sharply from the other two categories in that what is required is quantity, with very little limitation as to size or quality. The growth in output is consequently much less confined to areas endowed with a particular type or quality of wood resource.
As has been noted earlier, expansion is taking place:
(a) through the more intensive utilization and management of the resource areas at present drawn upon by the pulp and paper industry, which has advanced technologically in directions which allow it to utilize a wider and more flexible range of wood materials;(b) by expansion into the still large remaining resources of appropriate type;
(c) by creating new sources of supply through plantations.
Because of this flexibility there are few areas which do not have, or have the possibility of creating, additional supplies of pulpable wood raw material. As was noted above, even Europe, where the forests are by now quite intensively used, could and certainly will continue to raise its output quite rapidly through the years ahead. By how much it and the other regions will do so will be essentially determined by the costs of raising the output in different parts of the world.
It is expected that the pattern of increased supply of pulp, paper and paperboard will reflect more and more the highly competitive position of North America. The growth in annual exports from northern Europe will still be very large. By 1975 it should be larger than in 1961 by the equivalent of at least 15 million cubic meters ® of roundwood. But, together with Japan, the area is expected to experience growing difficulty in procuring additional raw material at acceptable and competitive costs. Already European and Japanese producers are investing in North American wood and pulp producing capacity, and North American producers are entering the converting and marketing fields in the European market. This pattern is expected to continue and expand, although its exact form and magnitude will of course be affected by such matters as tariffs and government attitudes toward foreign or overseas investment which cannot be predicted here. But, when the additional requirements of the rest of the world are also taken into account, it can be said that the total outflow from North America by 1975 could well amount to the equivalent of 35 to 45 million cubic meters ® of pulpwood more than in 1961.
The integration back and forward between, Canadian and United States producers makes difficult any narrower appraisal of the form and origin of the outflow. It is not possible to say whether it would nearly all come from the large Canadian surplus, or whether parts of the highly competitive United States industry would turn increasingly to export outlets, drawing in turn more heavily on Canada to supply part of the United States market. In either event Canada's pulp and paper supplies to the rest of the world, including the United States, would be at least as large as the North American outflow suggested above.
Despite the magnitude of this increase, the volumes even now economically accessible in the country are so large that there is little reason to expect that it could not be achieved without any significant rise in real price.
The additional supplies of pulp and paper likely to be required by 1975 are therefore expected to come very largely from Canada, northern Europe and the United States. But this is not to overlook the contribution of other, smaller exporters. The U.S.S.R. southern Africa, New Zealand and Chile are all producers that are likely to expand their exports in the years ahead. However, their impact is likely to be still small in the period to 1975. What is likely to happen beyond that date is the subject of the section that follows.
It has been seen that in the period up to 1975 the forests of the north temperate zone are in aggregate expected to be able to supply all of the huge additional requirements the countries within the zone will require, except large-sized and quality broadleaved woods, and in addition the wood the rest. of the world will be seeking to import from them. But there are limitations in sight. Already much of the increase in Europe and Japan must come from more intensive management of the forests of these regions. The economically accessible areas of forests in North America, on the other hand, still possess an immense unused potential for producing wood, even in their present form. The huge increases in annual output foreseen in the period to 1975 will be achieved very largely just by bringing into use further old-growth forests, intensifying the offtake from other areas already in use, and from the rising volume of maturing regrowth. Even if Canada's exports by 1975 are 50 million cubic meters ® higher than in 1961, - that is, at the upper edge of the range of possibilities foreseen here - the country's output, at about 150 million cubic meters ®, would still be well below the 210 million cubic meters ® estimated as the allowable cut possible even on the forest land which is currently economically accessible.
The region's already available reserves will thus still remain huge well past 1975. But, large as they are, the forests are not limitless. In due course further rises in output must stem from a more intensive management of the more accessible and productive areas of forest. Indeed it is estimated that, if output in the United States is to continue to rise at an adequate rate through the last quarter of this century, there must be a prompt acceleration of forestry programs.
Similar considerations apply to the other great natural coniferous resources, in the north and east of the U.S.S.R. Bringing these old-growth forests into use will support a growth in the country's output for some time to come. But in due course further growth in production must come from an intensification of management of the forests. Furthermore, the country's domestic require meets are likely to be so large and to rise so fast as to absorb most of its growing production capacity. Also, the richer of the idle or underutilized resources in the U.S.S.R. are remote from any point of outlet to the outside world, and the nearest points, on the Arctic and Pacific coasts, are not particularly well placed to serve the larger of the world markets. Hence, while the U.S.S.R. will surely become a supplier of wood products to the rest of the world on a substantially larger scale than at present, its potential is likely to be limited by the cost of doing so from the locations and forest types available.
It is therefore necessary to consider the implications for the more distant future. What prospects are there for raising outputs from the different forest types? Will the comparatively low yields per hectare and the limitations of inclement climates and generally poor sites, which characterize much of the north temperate zone forests now dominating the supply scene, limit the scope for increases in their productivity at economic cost? If so, what other regions of the world are likely to come into increasing prominence as more competitive suppliers of wood and wood products?
In the first place, it should be recalled that a notable feature of the wood sector, even in the areas where the forest resource is intensively used, is that to date progress in adapting or developing techniques of processing wood in order to be able to use more of existing types and sizes of wood has been much more rapid than advances at the growing stage designed to give more wood of a given characteristic. Given the uniquely - long period it takes to produce wood, and the constant acceleration in the pace of industrial change which, as was noted in Chapter I, underlies sustained modern economic growth, it would seem reasonable to expect that most further technological progress will be in this direction. Certainly there is still plenty of scope for so doing. The mixed tropical hardwood forests, for example, represent a huge reserve that might still be brought into use as a raw material for pulping. All this obviously has to be taken into account in forest management and in determining the direction in which management should seek to intensify.
Secondly, it is of interest that there has been until recently relatively little in the way of application of technology on a large scale to the harvesting and even less to the growing of wood. Most of such advances as have been made have come about through greater use of capital or labor. But the " revolution " which has taken place in the production of agricultural crops indicates the speed with which such changes can take place and the magnitude of the transformations that are possible. Clearly there would be grave danger in rigid assumptions that this stage of production of wood will not undergo a major transformation. Indeed the very fact that not much progress in this direction has been achieved to date may be said to enhance the scope for and likelihood of such change in the future. As further advances in the processing stage become more difficult and costly, it is surely to be expected that attention will be increasingly directed toward transforming the growing and harvesting stages.
Already it is evident that important advances can be made. For instance, the yield of the natural forests can apparently be significantly improved through low-cost aerial application of fertilizer. Even larger increases can be obtained by introducing higher yielding tree species, with the output increasing further as measures of site improvement and techniques of accelerated cultivation are applied.
But these more intensive measures are costly, and will be economically justified only where they result in an adequate response in additional yield. Much of the area devoted to forests in the north temperate zone is not capable of a response which would justify substantial increases in capital and other inputs. But there are very large areas of productive or potentially productive forest land in the zone. In western Europe and North America there is also a large and growing area of agricultural land surplus to crop needs which would produce high wood yields. There can be no question but that scope for raising the output of wood in the north temperate zone is very large indeed.
The most striking results in accelerated wood production, however, have been obtained in environments which enjoy a combination of site, temperature, and moisture not generally found in the north temperate zone. Considerable attention has been given in the course of this study to the characteristics of plantations of quick-growing species grown in the regions to the south of the temperate zone, where very large areas of land enjoy the appropriate conditions. With yields commonly five to ten times those averaged in the north temperate forests, and giving a homogeneous product which can be " tailored " to suit the raw material and locational requirements of the user industries, delivered costs for wood from such plantations in parts of Africa, Latin America, the Mediterranean basin and Asia have usually proved to be substantially lower than those achieved in the north temperate countries. These other parts of the world, therefore, also offer an important potential for producing large additional quantities of low-cost wood, including logs for sawing and peeling, as well as for pulping. Furthermore, there is the question of the continuing supply of the tropical hardwoods which are already keenly sought after. Attention earlier was concentrated on the problems of how most effectively and efficiently to bring into use the existing heterogeneous old-growth tropical rain forests, but for future rotations, high-yielding homogeneous plantations could provide a more satisfactory source of supply of some of the more valuable species from the tropics.
Evidently the world's supply of wood will expand in all these directions. There will be a need both to intensify management of existing forests, temperate and tropical, and also to expand the wood-producing base in, and into, areas able to build up through manmade plantations an output of large new supplies of low-cost wood. Quantitatively there can be no doubt but that much the largest additional volumes will continue to come for the foreseeable future from intensified management of the temperate forests - the existing concentration of management and processing resources in the temperate regions alone will ensure this.
It is because there is no such " built-in " propulsive force also acting to develop the wood-producing resources of the other regions to their full potential that particular attention has been paid to them here. In other words, there is a danger that the very heavy concentration of the existing resources of the sector in the one zone will cause the considerable potential of the other zones to be overlooked, underestimated, or even excluded. This is all the more a matter of concern because, as markets grow around the world, the almost exclusive concentration of production in the northern countries becomes increasingly restrictive and irrational; transportation costs on pulp, paper and even more on wood add heavily to delivered costs in the more distant markets. Thus it is some of the most remote countries, in Australasia, southern Africa, and the southern part of Latin America, which have been among the first to develop thriving industries of their own, based largely upon plantation-grown wood raw material, which are now not only meeting much of their own and their neighbors requirements, but also competing successfully in the international market. It is therefore important for those concerned - potential producing countries, potential deficit countries, and forest industries seeking new sources of raw material - to recognize that there are areas which have forests capable of producing low-cost wood and wood products which could, and rationally should if wood is to remain competitive, play an increasing role in the more distant future.
It is also important to recognize the different problems and time horizons that must be allowed for in bringing into use areas where even the wood resource will often have to be started from scratch. There will be need for very large inflows of capital and technical assistance in survey, training, research and operation. There will also need to be research into the particular conditions of the new producing areas, and development and adaptation of technologies appropriate to these conditions. In addition, the prior establishment of large areas of plantations, which will not produce a return for upward of 10 to 15 years, calls for more flexible financing arrangements than usually obtain. The realignment of the supply pattern that will emerge will also require adjustments in tariff structures and other trade barriers, in order to encourage the new trade flows being brought into being.
The preceding consideration of the potential of the tropical and subtropical regions has dwelt upon the nature of the changes that would be entailed in realizing this potential, because some of these changes would differ from those usually brought about by the momentum of growth in the wood sector in its present form and location. But this element of difference should not be overstressed. With the world's requirements in wood products growing by massive absolute amounts, the world's wood resources are necessarily being drawn more fully into use. This is being accelerated by the steady interpenetration of the wood resources and markets of the different regions as demand and forest industries grow and spread across the globe. As a result, the pattern of wood supply is coming to reflect more fully the different form and degree of competitive advantage of different producing areas. At present this is largely confined to the different parts of the north temperate zone. But the momentum of further growth can equally be expected to bring into use in due course those of the idle or underutilized resources in the rest of the world which are potentially competitive. What is important is that those concerned with policies affecting the wood sector be aware of the existence, nature, and potential of these resources. Above all it is important throughout the world to ensure that any development is a rational use of the type and quantity of wood resource available, is appropriate to the markets available, is in harmony with neighboring forest industry development, and is consistent with and integrated into overall development plans at the national and regional levels.
Wood remains one of the world's principal natural resources and raw materials; one that is required in overgrowing quantities and in ever more diversified forms as the economy grows; and one that can be the basis for many different activities which contribute to this growth. It continues to be of the first importance that this resource be managed and developed so that this contribution may be made in full.
