1. Woodmarket in Germany
Presentation on the conference „Woodmarket in Poland - towards stabilization“ Poznan 4th december 2007

2. Some words about me…
Hubert Speth

3. Some words about me…
Hubert Speth

4. Agenda German forests Government charta for wood
Wood consumption in Germany
Roundwood supply
Summary

5. Agenda
German forests
One third of Germany covered with forests
Forests are natural habitats
Who owns the forests in Germany?
National Forest Inventory
Government charta for wood
Wood consumption in Germany
Roundwood supply
Summary

6. One third of Germany covered with forests
1. German forests
One third of Germany covered with forests
Germany => densely wooded countries in Europe.
abt 11 million hectares = 1/3 of national territory;
10 % in Schleswig-Holstein > 40 % in Rhineland-Palatinate/Hesse (
Forests increased by approx. 0.5 million hectares in Germany over the past four decades.
over 80-year old stands rose from 1/4 to 1/3 of the forest area.
timber stocks in Germany => for 320 m3/hectare,
Source: Polley, H.

7. One third of Germany covered with forests
1. German forests
One third of Germany covered with forests
Source: Polley, H.

8. One third of Germany covered with forests
1. German forests
One third of Germany covered with forests
Today‘s distribution of forests, farmed agricultural areas, traffic spaces and settlement areas in Germany is the result of human interventions over many centuries. The remaining forests are no longer primeval forests, but production forests shaped by humans. The historical development of forestry explains why German forests are today composed of 60 % coniferous forests and around 40 % deciduous forests. In the past few decades, more importance had been attached to regeneration with site-adapted tree species. The efforts to shape the composition of forest tree species in a more semi-natural way have been crowned with success. Approx. 73 % of German forests nowadays consist of mixed stands. Spruce accounts for the largest share among the tree species (28 %), followed by pine (23 %), beech trees (15 %) and oak trees (10 %). The tree species proportions vary and depend on the specific natural features and site conditions as well as on different historic developments. Large-scale forest zones can be found in Germany: pine trees abound in the north of Germany, deciduous trees prevail in the lower mountain ranges and coastal areas and southern Germany is rich in spruce trees.

9. Who ownes the forests in Germany?
1. German forests
Who ownes the forests in Germany?
Germany is a federal state. Responsibility for the forests thus mainly lies with the so called Länder. While the Federal Government merely sets the forest policy framework, the Länder are responsible for the concrete formulation and implementation of forest policy targets. Private persons, corporate entities (notably municipalities) and the state, i.e. mainly the Länder, own woodlands. Private forest undertakings own an average forest area size of 5 hectares that is frequently spread over several smaller areas. The corporate body forests are clearly larger and stretch out over 175 hectares on average. The largest undertakings in terms of woodland cover are owned by the state. A state forest undertaking manages between 7,000 and 10,000 hectares and mostly also performs stewardship tasks for private and municipal forests. The Federal Government currently owns around 410,000 hectares. These are predominantly forests intended for military purposes.

10. Who ownes the forests in Germany?
1. German forests
Who ownes the forests in Germany?
Source: Gerold, D.:

11. National Forest Inventory (1987 – 2002)
1. German forests
National Forest Inventory (1987 – 2002)
The results of the 2nd National Forest Inventory (NFI), which were published in 2004/2005, show very high timber stocks and biomass increment in German forests, resulting on the one hand in increased potential for the forestry and forest-based industries to make sustainable use of timber and on the other in a development towards greater naturalness. According to these results timber stocks now amount to 3.4 billion m3. This stock development can be attributed to various causes. The National Forest Inventory shows an annual timber increment of approximately 95 million m3/year. This is not all available for use. A study, carried out by the Federal Research Centre for Forestry and Forest Products (BFH), estimates the annual harvesting potential to reach a level of approximately 85 million m3.

12. National Forest Inventory
1. German forests
National Forest Inventory
Forest experts are confident that the actual harvest level of 57.7 million m3/year represents a sustainable level of commercial wood production in Germany. Well-managed public forests and large private forests already harvest near the optimum amount of wood. Private midsize and small forests are likely underharvested. It seems to be very difficult to increase the harvest volume in these private forests because of the diversity of the owner structure.
In examining the data of the German wood inventory for wood supplies by type of forest ownership, it is evident that private forest owners, have had lower extraction rates compared to commercial or industrial forests. When examining age classes it is evident that the most common age class was planted shortly after World-War II (21 percent). Private forests hold the largest share of softwood trees; mainly spruce (63 percent).
Source: Polley, H.

13. Potentials in harvesting in m3/ha/a
1. German forests
Potentials in harvesting in m3/ha/a
We can intensivly increase our wood-harvesting without problems!
Source: Hecker, M.

14. Government charta for wood Wood consumption in Germany
Agenda
German forests
Government charta for wood
Wood consumption in Germany
Roundwood supply
Summary
In late 2004, the German government implemented a promotion program to increase wood utilization as part of the general strategy to support renewable and energy resources. The general goal of the program, called “Charta for Wood,” was to increase wood consumption by 20 percent within the next ten years. The increased use of wood is expected to come from sustainable forests. One of the first projects supported by the Charta was to prepare a cluster study for the German forest and wood industries. Another goal of the study was to provide detailed information about the multi-facetted wood working industries and to stimulate investment cooperation between the different sectors of the wood processing industries. This Charta for Wood Promotion contains about 30 specific measures which are to be gradually implemented. These include for example:
official commitment to wood and wood products at state level;
optimisation of timber supply;
forest and wood cluster analysis;
gradual phasing-out of obstacles to the use of timber in the building and energy sectors;
marketing campaigns (e.g. Timber Sales Promotion Fund);
voluntary commitments by industry to the avoidance of illegal timber imports;
quality assurance and standardisation;
further development of forest technology;
improvement of logistics (e.g. through the use of satellite navigation systems in forests; improved cooperation between forestry and forest-based industries, improvement of the forestry and timber network).
Source photo:

15. 2. Government Charta for Wood
Goal: increase wood consumption in Germany by 20% in 10 years
Measures:
Enhance demand for wood
Optimise wood supply
Sustainable Forest Management
The per capita consumption of timber and wood products has risen since the Charta was passed. Preliminary figures give consumption as being almost 1.2 m3 (roundwood equivalent). All stakeholders (government, industry and associations, science, social partners) have consequently already made large strides towards attaining the objective stated in the Woodcharta of there being a per capita wood consumption of 1.3 m3 (roundwood equivalent) by This commitment to timber and the use of timber promotes the acceptance of wood and shows continued support for the efforts being undertaken to increase the sale of forest products. Greater mobilisation of wood resources will play a particularly important role in this regard.

16. Government charta for wood Wood consumption in Germany
Agenda
German forests
Government charta for wood
Wood consumption in Germany
German Sawmilling industry
New and expansion investments in German sawmilling industry
German construction sector
Germanys Foreign woodtrate in past years
Development of Export markets in 2007 for soft sawnwood
Roundwood supply
Summary
According to official statistics, total annual wood use by the German wood working industry in 2005 is estimated at 57 million m3. The main user of forest timber is the sawmilling industry, which processes almost 47 percent of all harvested and imported roundwood. Other main users are the particleboard and fiberboard industries and the paper and pulp industry. All these industry groups experienced significant growth over the past five years. The raw material has been relatively inexpensive and a consolidation process in the industry yielded new marketing strategies. Export markets gained significant importance.
Wood raw materials
Since the end of the 1990s, the trend in Germany has been to fell more roundwood; this trend continues. In 2005, a total amount of 56.9 million m³ of roundwood was put on the market, 4.8% more than in the previous year. Compared with the average amount of felling over the last 10 years (43.3 million m3), this is an increase of 31%. Coniferous logs make up 30.8 million m³ (hardwood logs make up approx. 3.6 million m³,). According to expert opinion, the statistically recorded felling is subject to system-related underestimates; Germany has therefore made it its task to substantially improve timber statistics (inter alia increased research into causes, alterations to recording methods in certain federal states, simplification of the assortment structure and harmonisation with international definitions). The first changes are due to be introduced in According to the timber industry, there are some difficulties with the supply of roundwood in certain regions and with regard to certain tree species (mainly coniferous timber). It is conceivable that limited reductions of the enormous timber stocks could be made and provide additional amounts of timber. Cross-border trade offers further opportunities for improving the supply of roundwood in certain regions.
Source photo:

17. 3. Wood consumption in Germany
German Sawmilling Industry
Despite a continuing downward trend in building investments, the German sawmilling industry increased its production in 2005 by 14% to 21.0 million m³ (sawn softwood), following an increase in production in 2004 of 12.4% (+ 2 million m³) to 18.5 million m³. Within 5 years, the production of sawn softwood in Germany has risen from 15 million m³ in 2000 to 21 million m³ in this represents a total increase of 6 million m³ or 40%. Judging by the results in the first six months of 2006, this record output has probably been exceeded by up to 2.5 million m³. The sawn softwood industry continued to expand its leading market position in Europe last year. Exports were the driving force behind this development. The supply of sawn softwood, in particular in respect of spruce, seems to be problematic in some cases.

18. 3. Wood consumption in Germany
New and expansion investments in German Sawmilling Industry
In early 2006, Prof. Mantau of the Hamburg University presented a detailed study about the structure of the German sawmilling industry. The study was based on 2004 statistical data comparing them with census data from The German sawmilling industry was undergoing a drastic consolidation process. Over the four years from 2001 until 2005 the number of operating mills dropped by 659 to 2465 mills while at the same time the processing volume went up two percent. During the observed four years the group of small mills and the very big mills increased their output while the middle-size mills lost customers and business. The milling capacity of the mills, which closed down amounted to 2.8 million m3. At the same time the very large operations increased their capacity. The vast majority of mills are softwood mills (70.3%) processing 89.4 percent of the timber. 9.3 percent of the mills are pure hardwood mills sawing six percent of the timber. The rest are mixed operations sawing softwood and hardwood. In the softwood industry 2.6 percent of the mills were cutting 68 percent of the logs. These mills are increasingly operating for the export markets.

19. 3. Wood consumption in Germany
New and expansion investments in German Sawmilling Industry (2)
The larger mills are increasingly concentrating on production for export markets within Europe and overseas, especially the United States. More than 30 percent of German softwood timber is already sold outside of Germany. Despite the sluggish demand in the domestic construction sector, German softwood timber production is still expected to grow, albeit at a slower rate, because the large mills are technologically advanced and, therefore, competitive in international markets. Large sawmilling companies have been investing in production locations that can supply international export markets. The strength of the German timber industry is a result of the restructuring and consolidation of the industry, growing processing facilities and company size, and a more professional approach in marketing wood products. The temperate hardwood market is much smaller than the softwood market. Germany produced in 2006 abt. 1.2 million m3 of predominantly beech and oak lumber. Close to 50 percent is destined for export markets. The Chinese market was the prime market for German beech lumber manufacturers until In 2004, German exports to China, including Hong Kong, were nearly cut in half while oak log sales to China went up. New customers for German beech lumber were found on the Iberian Peninsula and the United States. New large-scale hardwood mills are planned for the beech and oak growing regions to produce for the export markets including North America and the Far East.

20. 3. Wood consumption in Germany
New and expansion investments in German Sawmilling Industry (3)
A phase of rather restrained investment activity in the central European softwood processing industry in the years 2003 to 2004 has been followed by a phase of extensive new and expansion investment since If only the larger-scale new and expansion investment projects in the period 2005 to 2008 are taken into account, the technical cutting capacity in German-speaking Europe and the Alsace region of France will have risen by around 16 million m³ within the space of only four years. Roughly 13.6 million m³ of this is accounted for by Germany alone, and another 2.4m m³ or so by Austria, Switzerland, and the Alsace combined. Taking the cutting figures for 2005 as the baseline, this represents an increase of around 30 % for the regions Germany, Austria, and Switzerland combined. If only Germany is considered, technically possible cutting capacity even increases by around 47 % in the stated period.

21. 3. Wood consumption in Germany
German Construction Sector
Permits granted in building construction Total (including work on existing buildings) % changes on the previous year
Month Buildings Dwellings
November ⇛- 18,5% ⇛- 22,7%
December ⇛- 34,3% ⇛- 35,5%
January 2007 ⇛- 47,8% ⇛- 50,3%
February 2007 ⇛- 45,2% ⇛- 49,4%
March 2007 ⇛- 41,0% ⇛- 46,5%
April 2007 ⇛- 24,6% ⇛- 27,0%
May 2007 ⇛- 22,6% ⇛- 25,0%
June 2007 ⇛- 18,5% ⇛- 19,2%
July 2007 ⇛- 13,7% ⇛- 16,7%
August 2007 ⇛- 15,9% ⇛- 18,8%
September 2007 ⇛- 13,8% ⇛- 10,1%
The German construction sector has gone through ten years of continuous consolidation. Since its peak in 1994, construction activities have been shrinking. In 2006, the downward trend slowed down slightly because future house owners decided to build or buy their new house prior to the announced cut of the government subsidies for first-time home buyers as well as to the VAT increase of three percent effective from January This had the effect that in 2007 the numbers of private home construction droped again. Shrinking population numbers and an aging society are not stimulating investment in new housing. Demographic studies also indicate that the German population will continue to decrease by several million over the next thirty years. This trend is not expected to change unless birth rates in Germany are offset by increased immigration. The following table shows the relative development of building permission in Germany in the period from January 2006-July 2007:
German housing is predominantly masonry. However, wooden houses have gained popularity in recent years mainly because of their superior energy efficiency. The German government is working on a program to require higher energy efficiency standards for multi-unit homes. This policy may also indirectly increase the demand for more energy efficient wooden homes. Another reason home owners are building wooden houses is to distinguish themselves from the normal housing market. In addition, a third reason for the growing popularity of wooden homes is its significantly shorter construction period, which only takes 3 to 4 months to complete versus 9 to 12 months for masonry buildings. A market research study comes to the result that 13.8 percent of private homes were predominantly built with wooden materials in 2005, representing a 1.1 percent increase over the previous year. In commercial production 17.4 percent of the buildings are built with wood. In Germany, wooden homes are not necessarily cheaper than masonry building because of their often superior interior structure and design. About one third of the wooden prefab houses are sold as partly finished projects, which require considerable labour input by the customer. The renovation and modernization of homes has generally followed the downward trend in the German construction market. Real estate experts report that the number of empty homes and office space still remains high. The German government is currently developing regulations for an energy-efficiency-pass for private homes in order to provide reliable information for tenants about expected heating costs. It is very likely that this pass will initiate additional renovation in older apartment houses. However, also during recent years investors had been eligible for financial support programs when they invested in improved insulation.

22. 3. Wood consumption in Germany
German Foreign woodtrade in the past years
Development of export markets in 2007 for sawn softwood
Exports are the driving force behind the development in German timber industry; domestic demand has continued to be quiet. Export growth has tended to continue to accelerate, particularly in respect of planed goods. Within the last 5 years, sawn softwood exports have risen by approximately 75% (+ 2.4 million m³). Overall, exports have reached 5.7 million m³ in This means that Germany has extended its position as a net exporter. The US market alone absorbed approx. more then 1/3rd of the overall exports, corresponding to approx. 2 million m³. The brisk building activity in many European countries has also favoured export sales. Results in foreign trade with roundwood and semi-finished wood products were mainly positive in 2006, with regard to both imports and exports.
According to information from the Federal Statistical Office, imports of coniferous roundwood increased by a good 12% to approx. 1 million m³ in the period up to the beginning of June 2006, when compared with the corresponding period in the previous year. There was also significant to strong growth in respect of sawn softwood and particle board. Exports of coniferous roundwood increased slightly by almost 2% to a good 1.87 million m³. Export sales of beech roundwood rose by approximately 3%.
In 2006, exports of sawn softwood rose by almost 16%, corresponding to a good 1.58 million m³; exports of coniferous planed products grew, based mainly on the export successes on the US market, by almost 55%, corresponding to 1.3 million m³.
Overall, imports of sawn softwood are declining once more. In 2005, they sank to 3.6 million m³ (-20%). This is on the one hand an expression of increased mobilisation of wood resources by the German forestry industry and increased competitiveness of the sawmilling industry, but on the other hand also expressive of ongoing restraint in domestic demand.

23. 3. Wood consumption in Germany
Development of export markets in 2007 for sawn softwood

24. 3. Wood consumption in Germany
Development of export markets in 2007 for sawn softwood

25. Roundwood supply Agenda German forests Government charta for wood
Wood consumption in Germany
Roundwood supply
Summary
A fast development of the timber sector is at certain risk due to the companies sometimes receiving an insufficient supply of roundwood, in particular spruce. Spruce demand exceeds the supply capabilities throughout the entire federal territory. This affects all categories of forest ownership.
Therefore the intensified mobilisation of resources will become increasingly important in the future. To this end, existing concepts must be further developed across all stages of the value-added chain to ensure that wood can be made available to manufacturing and processing operations at competitive prices. Timber marketing, as a core activity of forestry associations and the Timber Sales Promotion Fund, has been supported for years by the Federal Government via federal congresses for managerial staff. These congresses focus on subjects such as the mobilisation of timber resources, new distribution channels, logistics and business training. This has already helped significantly stimulate cooperation between enterprises in small-structure private forests. Plans have been made to amend the Federal Forest Act in order to improve the scope of forest associations to carry out joint timber marketing. The founding of NavLog GmbH in December 2005 via the German Centre for Forest Work and Technology (KWF) represented an important prerequisite for improving timber logistics.

26. Potentials in Roundlogs
4. Roundwood supply
Potentials in Roundlogs
The aim of NavLog GmbH is to create a standard national navigable routing system for the entire forest area in order to minimise time lost during the transport of timber. Within the framework of the Woodcharter the Federal Research Centre for Forestry and Forest Products (BFH) was commissioned to draw up a national cluster study of the forestry and timber sector. The study is intended to provide the data pool for improved cooperation between the forestry and forest-based industries. For instance, the aim is to better exploit the harvesting potential of forests, and to attain a greater value added and higher employment. The results will also form the basis for a planned cluster management system at all levels.
But physical information about the forest resource, social information about the ownership and a stable legal framework is not enough to mobilize effectively additional potential in German Forests. In the majority of the cases, it is necessary to convince those who are the owners or are in charge of the forest management on behalf of the owners, that more intensive utilization is possible, advantageous and desirable. This is especially necessary in areas, where the forest ownership is highly fragmented and a large proportion of the forest is owned by private individuals. As the German national inventory shows clearly, that small forest holdings, which are owned by private individuals i.e. farmers, have by far the most significant additional potential which could be used within the framework of sustainability. Research results and practical experience in several mobilization projects show, that economical considerations alone (i. e. an acceptable market price for round wood) is not sufficient to mobilize “automatically” those under-used forests.
Source: Dunger,K/Bösch,D:

27. 4. Roundwood supply
Often the situation is more complex: Many private forest owners do not regard their forest property as a source of continuous income, but manage them as a set aside resource for future needs. Other owners do not see any rationality in using their forests at all, because they are too small and the possible additional income is relatively insignificant, compared to the major income of their family. Other forest owners do not live anymore in the area, where their forest is situated, but in big cities (urban forest owners) and do not have the knowledge and the mentality to utilize and manage actively the forests. On the other hand many rural forest owners use the forest for own purposes, namely fire wood, so the cuttings are not reflected in the official statistics, even if the potential of these forests is used internally. And last not least many forest owners do not think at using their forest at all, because they believe in nature conservation, recreation or other non-wood values of the forests.
They simply do not like to manage actively the forest resource as the rationale of forest professionals would suggest, and they often believe, cutting trees is against nature and ecology. The variety of these different motivations makes it difficult to convince the forest owners with one single approach.
Source: Gerold, D.

28. Who ownes the forests in Germany?
4. Roundwood supply
Who ownes the forests in Germany?
Source: Gerold, D.:

29. How to get the logs out of these forests?
4. Roundwood supply
Owner Structure
How to
get the
logs
out of
these forests?
It is absolutely necessary to classify these forest owners into groups with similar background and motivation, and develop customized approaches to convince them, that the utilization of the forest is a good thing, and the mobilization is not only of individual, but also of societal and ecological benefit. There are some scientific studies, i. e. in Austria, Germany, France, Finland, where this motivational aspect is addressed and encouraging first results are available for further activities in both, research and practical forest policy. It is obvious, that motivational aspects and the individual attitude of the forest owners is also an important part of an integrated forest information system. Only if the basic natural information about the forests is linked to the attitude and motivational background of the respective owner towards utilization, consistent strategies and operational programs to motivate the owners and to mobilize additional forest resources can be successful.
Source: Hecker, M.

30. Private-Public Partnerships Project Thuringia
4. Roundwood supply
Private-Public Partnerships Project Thuringia
"Before the wood mobilization, there is a forest-ownership mobilization "
The Public-Private Partnership between the Thuringian Forest and the Association of Timber and Woodware Industry of middle Germany (Verband der Schnittholz- und Holzwarenindustrie Mitteldeutschland e.V.) is a project which has set itself the target to offer general conditions to allow an improved wood mobilization in private forest. The central players of this project are two mobilization teams which consist of one representative of the forest administration and a representative from the wood industry. The symbiosis ist hat the local areas are completely represented and enjoy great basis of trust in the population. The wood industry, apart from money and software, offers experience from marketing and sales. The following illustration shows the organizational structure of this Public-Private Partnership:

31. Summary Agenda German forests Government charta for wood
Wood consumption in Germany
Roundwood supply
Summary

32. 5. Summary
Germany’s second forest inventory makes it clear, that the millions of cubic metres of log potential had hitherto remained unexploited in German forests; Especially private midsize and small forests are probably under-harvested. Because of the diversity of the ownership structure, it seems to be very difficult to increase the harvest volume in these private forests;
The goal of the German Government promotion program “Charta for wood” was to increase wood consumption in Germany by 20% within the next ten years;
The German sawmilling industry is going to increase the technical cutting capacity by around 13,6 million m³ by 2008 mainly focused on export for example to the United States;
Several ongoing projects try to mobilise timber resources, particularly in privately owned forests, to be able to meet round wood requirements of existing capacities and the envisaged expansion investments;

33. 5. Summary
In January 2007, the storm “Kyrill” brought a windfall which amounted to 32 million m³ (abt. 25% of annual allowable cut) to Germany.
The German legislature cut the grant scheme for first-time home buyers from beginning of 2006 as well as the government increased the VAT of three percent effective from January 2007 which led to an all time low in German building permits in Autumn 2007;
The US-American housing bubble crashed and as a consequence the export of German softwood sawntimber sank rapidly. So then, producers tried to find new salesmarkets for their soft sawntimber;
Also other important salesmarkets (Japan, Levant, UK, France, etc.) weakened beginning from summer 2007 so increasing pressure on sawntimber prices;
Harvesting stops in several federal states in order to get a rise of roundlog prices.

34. Thank you so much for your attention….
….and I wish the conference very much success!

35. Addendum 1: Permits granted in building construction

36. Addendum No. 2: Spruceprices roundwood L2bB

37. Addendum No. 3: USA – Foreign trade in softwood lumber