1. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 By Ed Pepke Senior Timber Trade Analyst EU FLEGT Facility European Forest Institute Global Wood Markets: Consumption, Production and Trade

2. International Forestry and Global Issues 17 April 2012, Nancy, France Contents I.Introduction II.Global forests and forest products (supply) III.Consumption and production (demand) IV.Trade V.Trade conclusisons VI.Discussion © European Forest Institute, 2012

3. International Forestry and Global Issues 17 April 2012, Nancy, France I. Introduction Why’s this important? What forest products? – Wood vs non-wood – Traditional and new products Topical issues – Traditional, e.g. trade disputes – New, e.g. subsidies for wood energy

4. International Forestry and Global Issues 17 April 2012, Nancy, France Wood products consumption & trade questions Has continuous increase in wood demand and the growing global timber trade had positive or negative effects on the world’s forests? Socio-economic effects? Will the forest sector continue to play an important role in providing livelihoods for rural communities? Deforestation exists globally – where is it and is it going up or down? If we grow more wood than we cut, could we cut more than we grow and still be sustainable? Wood fuel consumption peaked in the US in 1970s; how can the world use most harvested wood for fuel? Will laws against illegal logging and against trade of illegal wood reduce wood demand?

5. International Forestry and Global Issues 17 April 2012, Nancy, France II. Global forests and forest products

6. International Forestry and Global Issues 17 April 2012, Nancy, France Forests and deforestation Europe Asia & Pacific Africa S. America Mideast North America Central America Sources: FAO Global Forest Resources Assessments 2000, 2005, 2010 Net forest loss: 1990s 8.3 million ha/year 2000-2010 5.2 million ha/year Annual net loss of forest area between 2000-2005 was 7.3 million ha/year

7. International Forestry and Global Issues 17 April 2012, Nancy, France Why deforestation? Conversion to other uses: agriculture, palm oil, pasture, urbanization Fire, insects, disease Root causes: poverty, firewood, illegal logging Offset by plantations and natural expansion Positive trend of a negative issue

8. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 Consumer confusion Lack of confidence in specifying, buying Increasing regulations – Logging bans – Log export bans – Trade regulations, e.g. FLEGT, EU Timber Regulation Need for better governance, legislation, programs, certification, legality assurances What does global deforestation mean?

9. International Forestry and Global Issues 17 April 2012, Nancy, France Global roundwood harvests

10. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 Global roundwood consumption Of 3.5 billion m 3 total, more than half is used as wood fuel. Source: FAO Stat, 2011.

11. International Forestry and Global Issues 17 April 2012, Nancy, France Increasing in developed world, but efficient, environmentally sound combustion. Woodfuel use Inefficient domestic heating and cooking

12. International Forestry and Global Issues 17 April 2012, Nancy, France Modern wood energy Efficient, clean combustion Carbon neutral Renewable energy Market outlet for low-grade fiber

13. International Forestry and Global Issues 17 April 2012, Nancy, France Modern wood energy Processed fuels – Not bulky firewood – Conveyable chips (high moisture) – Dry, high calorie pellets and briquettes Next… – Biorefineries: pulp, energy, chemicals – Liquid and gaseous fuels

14. International Forestry and Global Issues 17 April 2012, Nancy, France Production and consumption of wood pellets

15. International Forestry and Global Issues 17 April 2012, Nancy, France Europe Roundwood harvest trends

16. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 Million m3 Source: UNECE/FAO, 2010. Growing stock vs. AnnuaI growth vs. Fellings

17. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 NAI vs. Fellings 79% 36% 64% Source: UNECE/FAO, 2010. Million m3

18. International Forestry and Global Issues 17 April 2012, Nancy, France Increasing forests & increasing demands Increasing demand for paper and paper products, e.g. packaging Increasing demand for wood products Increasing demand for wood energy = competition! Where will wood come from?

19. International Forestry and Global Issues 17 April 2012, Nancy, France III. Consumption and production

20. International Forestry and Global Issues 17 April 2012, Nancy, France World shaped by political boundaries Source: Worldmapper

21. International Forestry and Global Issues 17 April 2012, Nancy, France World shaped by population Source: Worldmapper, 2009

22. International Forestry and Global Issues 17 April 2012, Nancy, France World shaped by forest products production Sources: Worldmapper & FAOStat, 2009

23. International Forestry and Global Issues 17 April 2012, Nancy, France World shaped by wood and paper consumption Sources: Worldmapper & FAOStat, 2009

24. International Forestry and Global Issues 17 April 2012, Nancy, France As shaped by forest products exports Sources: Worldmapper & FAOStat, 2009

25. International Forestry and Global Issues 17 April 2012, Nancy, France As shaped by forest products imports

26. International Forestry and Global Issues 17 April 2012, Nancy, France Western European wood and fiber requirements through 2020 Growing demand without energy Gap is residues Source: UNECE/FAO European Forest Sector Outlook Study, 2005

27. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 Industrial roundwood consumption Million m3 Source: FAOStat, 2012

28. International Forestry and Global Issues 17 April 2012, Nancy, France Industrial roundwood production Source: FAOStat, 2010 Million m3

29. International Forestry and Global Issues 17 April 2012, Nancy, France Sawnwood consumption Million m3

30. International Forestry and Global Issues 17 April 2012, Nancy, France Sawnwood production Million m3

31. International Forestry and Global Issues 17 April 2012, Nancy, France Sawnwood exports Million m3

32. International Forestry and Global Issues 17 April 2012, Nancy, France Sawnwood imports Million m3

33. International Forestry and Global Issues 17 April 2012, Nancy, France Panels consumption Million m3

34. International Forestry and Global Issues 17 April 2012, Nancy, France Panels production Million m3

35. International Forestry and Global Issues 17 April 2012, Nancy, France Paper & paperboard consumption Million m3

36. International Forestry and Global Issues 17 April 2012, Nancy, France Paper & paperboard production Million m3

37. International Forestry and Global Issues 17 April 2012, Nancy, France What happens when supply does not equal demand? IV. Trade

38. International Forestry and Global Issues 17 April 2012, Nancy, France Global trade all products Doubled in 6 years 2001-2007 Source: FAOStat, 2010

39. International Forestry and Global Issues 17 April 2012, Nancy, France Primary-processed products Sawnwood Panels – Plywood – Particleboard – OSB, MDF Veneer Paper & paperboard Secondary-processed products Furniture Millwork (windows & doors) Mouldings Etc. made from primary products © European Forest Institute, 2012

40. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 Billion $ Global trade, primary products

41. International Forestry and Global Issues 17 April 2012, Nancy, France Europe (including Russia) leads in roundwood Exports. Includes within Europe. Global roundwood exports Globally exports = imports in value and volume, but not in direction! Million m3

42. International Forestry and Global Issues 17 April 2012, Nancy, France N. American roundwood exports USA increasing roundwood exports Million m3

43. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 Million $ Russian exports Trend reversal in 2008 Log export taxes Global economic crisis

44. International Forestry and Global Issues 17 April 2012, Nancy, France African and Asian roundwood exports Slowly rising despite policies to encourage value-added processing

45. International Forestry and Global Issues 17 April 2012, Nancy, France Housing crisis North American exports

46. International Forestry and Global Issues 17 April 2012, Nancy, France US housing starts, 2002-2013 Million units US housing collapse has global effects.

47. International Forestry and Global Issues 17 April 2012, Nancy, France Impacts of US housing crisis Global economic crisis (a cause) Massive restructuring of N. American wood industry (unemployment) Local communities devastated Long-term consequences for forest sector

48. International Forestry and Global Issues 17 April 2012, Nancy, France 2x in 10 years European exports

49. International Forestry and Global Issues 17 April 2012, Nancy, France 4x in 10 years Log export taxes CIS exports, mainly Russia

50. International Forestry and Global Issues 17 April 2012, Nancy, France Exporting primary vs secondary Primary (logs, sawnwood, panels, pulp) are commodity products – Easy to export – Correspond to market price Secondary, value-added products – Higher value and profits – Require greater manufacturing and marketing skills

51. International Forestry and Global Issues 17 April 2012, Nancy, France Secondary-processed products exports

52. International Forestry and Global Issues 17 April 2012, Nancy, France Based on domestic and imported roundwood World’s largest exporter of wooden furniture and other secondary-processed products 5x in 10 years, no downturn in 2008 China is the motor!

53. International Forestry and Global Issues 17 April 2012, Nancy, France © European Forest Institute, 2012 China’s roundwood: Imports vs. domestic production Sources: FAOStat and UNECE/FAO estimates, 2010. 71% domestic 2/3 from Russia Million m 3 Russian export taxes

54. International Forestry and Global Issues 17 April 2012, Nancy, France Paper products exports

55. International Forestry and Global Issues 17 April 2012, Nancy, France Panel exports

56. International Forestry and Global Issues 17 April 2012, Nancy, France Sawn softwood exports

57. International Forestry and Global Issues 17 April 2012, Nancy, France V. Trade conclusions Global timber trade doubled over last decade Greatest increase in secondary-processed products Slowdown in 2008, 2009 with global economic crisis China became largest roundwood importer and largest secondary-processed products exporter Trade barriers distort markets – Export taxes, subsidies, tariff and non-tariff – Intentionally for national reasons – Consequences for partners’ forest sector

58. International Forestry and Global Issues 17 April 2012, Nancy, France VI. Discussion

59. International Forestry and Global Issues 17 April 2012, Nancy, France www.euflegt.efi.int © European Forest Institute, 2012 Ed Pepke Senior Timber Trade Analyst EU FLEGT Facility European Forest Institute Ed.Pepke@efi.int