DEMAND AND SUPPLY OF FOREST PRODUCTS

This section begins with a review of some of the past outlook studies for Nigeria, so that a comparison can be made between past and present findings.

The first major outlook study was carried out by FAO in 1979 based on the work of

O. Baykal. A simulation model was used to examine thirteen development alternatives of the forest in the light of which projections were made for the sector to the year 1995. The conclusion reached was that demand would continue to increase for all types of forest products. In addition the report revealed that the natural forest resource was rapidly diminishing and predicted that it will be unable to supply the requirement of the industrial round wood by about the year 1995. This prediction appeared bleak at the time but recent developments in the forestry sector appear to have confirmed the fears expressed.

Two other sector studies were carried out simultaneously in 1983 by the World Bank and the National Committee on Green revolution. While that of the World Bank is project oriented, that of the Green revolution was more general in nature and largely based on the works of

O. Baykal (1979) and G.O. Alviar 1983. The general findings were in consonance with FAO (1979). Annual sawn wood consumption was expected to grow at an annual rate of 8.9% from an initial level of 2,080,000 m³ round wood equivalent in 1975 to 11,476,000 m ³ in 1995. Consumption of plywood was expected at an annual rate of 11.5% from 126,000 m³ i.e. round wood equivalent to 1,120,000 m ³ in 1995. Paper and paper boards at 13.6% from 563,000 m³ i.e. round wood equivalent to 7,200,000 m³ by 1995. Poles at 1.8% from 1,600,000 m³ i.e. round wood equivalent in 1975 to 2,300,000 m³ in 1995, while fuel wood on the other hand was expected to grow at a rate of 1.2% annually from 42,000,000 m³ round wood equivalent in 1975 to 54,000,000 m³ in 1995. Generally the yields from the forests and plantations were not commensurate with demand. More recent outlook studies were made by Aruofor (1990 and by World Bank (1992). The first study employed three planning models (i.e. an econometric model, an input-output model and a linear programming model) on the forestry sector of Nigeria. The primary production was linked to the industry and their markets and was analysed and used to predict the sectoral development to the year 2010. The predictions were detailed for both wood, wood products and industry but the general findings seems to be that Nigerian forests lacked the capacity to continue to support the growing demand for wood and wood products. It was estimated that under the current exploitation trend, the natural forest could get completely depleted between 2004 and 2005 especially if we strive to satisfy projected demand.

The later study by the World Bank was based on the work of Bournguno (1992). The study relied on a transportation model and like most other studies was demand driven. Domestic demands were estimated and assumptions made about foreign trade in wood and wood products. The model (regional in structure) was used to determine the demand and supply gap. The study revealed that significant demand and supply gap do exist between sawn wood requirement and saw log supply and also between plywood requirement and log capacity. The same holds for poles, pilings and posts. The situation was different for industrial residues and pulpwood.

Unlike the predictions by most past studies, the demand for most forest wood products have stabilized, except for round wood, fuel wood and saw log and veneer logs. With 95% certainly we are accurate in predicting that the following wood products will stabilize at the corresponding levels in Table 3.

Table 3. Demand for some wood products.

Wood Products	Annual Demand
Industrial Round wood (m3)	7,523,772
Sawn wood (m3)	2,429,870
Particle board (m3)	30,948
Paper and Paper Board Imports (M.T.)	108,451

Round wood demand on the other hand will continue to increase at a yearly average of 2,657,079 m³ so that by 2020, consumption of round wood would have reached 180,028,975 m³. The fact that the gross volume or growing stock as at 1998 is 473,509,259.43 m³ and the growth rate is only 1.0 to 1.5 m³/ha/year is a deep source of concern.

Fuel wood demand will also continue to increase into the foreseeable future at annual average rate of 2,140,017 m³ so that by year 2020, fuel wood demand will be 147,044,425 m³.

Saw log and veneer logs are already in short supply but demand for them will continue to rise in the foreseeable future at an average of 95,004 m³/annum so that by 2020, demand would have reached 2,973,500 m³.

The demand for plywood is likely to go on increasing in the foreseeable future but domestic production is likely to fall on the average by 1337 m³ per annum. This is due to scarcity of veneer and saw logs. By 2020 domestic production is likely to have fallen to 53,950 m³.

The prospect for wood products in Nigeria is bleak and Nigeria will of necessity become import dependent in respect of wood products. The details of the demand forecast are presented in Fig. 3.1a and 3.1b.

The demand estimate for the current study has been based on simple projection

of trends of the form Y_t = aD t + Y_t-1.

Where Y_t = Demand for a particular product in year t

Y_{t – 1} = Lagged demand

a = parameter estimate

t = time

D = change

A comparison between the current and past demand estimates is presented in Tables 4 and 5. The individual forecasts are close.

Table 4. A comparison of demand forecasts for round wood (in 1000 m³).

Round wood equivalent

Table 5. A comparison between demand forecasts for wood products (units in 1000)

Past studies indicate that demand for wood products will continue to increase as opposed to the current study which predicts a stable demand.