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3 ANALYSIS OF TRENDS AND CURRENT STATUS

This section presents the analysis of the dataset. It examines trends in the contribution of the forestry sector to national economies and it compares the importance of the sector in different geographical regions. It also examines trends in productivity and highlights differences in the structure of the sector in different regions (i.e. the relative contributions of the forestry, wood industry and pulp and paper industry sub-sectors). The section is divided into three main parts, covering employment, value-added and trade.

3.1 Employment in the forestry sector

3.1.1 Trends in total employment

Figure 1 shows the trends in total employment in the forestry sector over the period 1990 to 2000. The figure shows that total employment increased by about four percent, from 12.4 million in 1990 to 12.9 million in 2000. In addition to this, at least 3.5 million people were employed in the furniture industry over the period (with no trend upwards or downwards in this figure). Many of these people were employed to produce wooden furniture.

Figure 1 Recent trends in forestry sector employment by sub-sector

An interesting feature of this figure is that, at the global level, employment is roughly equal between three main sub-sectors: forestry, wood industry and the pulp and paper industry. For example, during the 1990s, one job in (formal) forestry activities (ISIC Division 02) led to industrial roundwood production that supported 1.2 jobs in the wood industry and 1.2 jobs in the pulp and paper industry (on average over the whole period).

However, these multipliers declined over the period 1990 to 2000, from 1.3 in 1990 to 1.1 in 2000 (for the wood industry) and from 1.2 to 1.0 (for the pulp and paper industry). There are two main reasons why these multipliers changed. First, employment in forestry increased over the period (from 3.5 million to 4.2 million). Secondly, employment in the pulp and paper industry declined slightly (from 4.3 million to 4.1 million). At the same time, the total number of people employed in the wood industry remained stable at about 4.6 million.

The employment statistics also show that, in 2000, approximately one person was employed in forestry for every 1,000 ha of forest (at the global level) and that this employment was supplemented by another two jobs in forest processing (wood industry and pulp and paper industry). However, the distribution of employment between the three sub-sectors varies by region and so do these multipliers. For example, there are seven jobs in forest processing for every one job in forestry in North America, while in developing countries the ratio is roughly one-to-one. In Western Europe, one job in forestry leads to 4.4 jobs in forest processing, while in Eastern Europe this ratio is 1 to 2.

Figure 2 Recent trends in forestry sector employment by region

The distribution of employment in the forestry sector across regions is shown in Figure 2. Each region displays different trends and patterns in employment, but these can be simply grouped into three different types of trend: declining; stable; or increasing employment in the forestry sector.

The regions and major countries with declining employment in the sector are Western and Eastern Europe and Japan. There are a number of different reasons for declining employment in these regions. For example, in Western Europe (especially Nordic countries), capital investment is leading to the replacement of manual work with machinery, resulting in increased labour productivity. This accounts for some of the eight percent decrease in forestry sector employment in Western Europe over the last ten years.

In contrast, economies in Eastern Europe (including the Russian Federation) had to cope with the transition from centrally planned to market economies. Restructuring, privatisation and the closure of inefficient factories led to a significant drop in production (particularly in the early-1990s), followed by a reduction in employment in these countries. Overall employment in the forestry sector in Eastern Europe fell by 0.3 million or ten percent over the period 1990 to 2000.

Another possible reason for a decline in forestry sector employment is simply decreasing production (in some cases, combined with a shift to higher levels of forest products imports). The best example of where this has occurred is Japan, where the number of people employed in the forestry sector declined by 23 percent during the 1990s.

The regions and countries with stable forestry sector employment in the 1990s were: North America; Africa; Western and Central Asia; Australia; and New Zealand. In some countries, the effects of increased labour productivity have been counterbalanced by new employment opportunities generated by the expansion of forest plantations (e.g. Australia and New Zealand and, to some extent, Chile). These subtle changes have helped these countries to maintain stable employment in the forestry sector. In North America, total employment in the sector has also not changed, but there has been a trend towards declining employment in the pulp and paper industry (due to increased labour productivity). This has been counterbalanced by increased production and employment in the wood industry.

The stability in employment in the two developing regions is largely due to the generally very slow pace of development in the forestry sector in these regions. The one exception to this is South Africa (which accounts for 30 percent of the total employment in the (formal) forestry sector in Africa). Total forestry sector employment in Africa remained at about 0.5 million to 0.6 million during the period 1990 to 2000, while in South Africa it increased from 140,000 to 170,000 during the period. The same trends were also observed for West and Central Asia, where forestry sector employment remained stable at about 0.4 million people (of which, about 70 percent are employed in Turkey).

The two regions where forestry sector employment is growing rapidly are the Developing Asia-Pacific and Latin American and the Caribbean regions. It is estimated that 1 million additional jobs were created in the forestry sector in these two regions from 1990 to 2000 and this growth occurred across all three sub-sectors. This increase can be explained by the increased production in these regions over the period, supported by the significant availability of forest resources, rapid economic growth and high levels of investment in the sector in many of these countries.

It should also be noted that the trends in a few countries have a significant impact on the global trends in forestry sector employment. For example, in Turkey and China, the numbers employed in forestry activities (i.e. ISIC Division 02) amount to 25 persons per 1,000 ha and 10 persons per 1,000 ha respectively. These figures highlight the social importance of forestry sector employment in these two countries (e.g. the contribution to poverty alleviation of formal employment in the sector). They also explain why these two densely populated countries account for 40 percent of global employment in forestry activities, while they only account for about four percent of the global forest area.

In particular, employment trends in China have had a major impact at the global level. For example, China accounted for 24 percent of global forestry sector employment in 2000 (i.e. employment in all three sub-sectors combined). In addition, the changes that took place in the late 1990s in the forestry sector in China had a major impact on global forestry sector employment figures.

In the late-1990s, the Chinese government implemented an environmental protection initiative, which included imposing a ban on logging in more than half of the area of national forests in the country. Following this, employment in China’s forest industries dropped by 30 percent or nearly 1 million in 1998 (UNIDO, 2003b). This reduction in China accounted for much of the fall in employment in the forest industries recorded at the global level in 1998 (a reduction of 0.9 million or 10 percent). On the other hand, from 1997 to 2000, employment in forestry in China increased by around 0.5 million, due to an expansion in afforestation. This accounts for a major share of the increase in forestry employment recorded during this period at the global level.

3.1.2 Trends in labour productivity

Labour productivity has been calculated by dividing the employment numbers for each sub-sector by the corresponding figures for annual production in each sub-sector (from FAO production statistics). It is expressed as the level of production (in CUM or MT) per employee. The following text presents the trends in these figures for the different sub-sectors and regions.

Figure 3 Recent trends in labour productivity in (formal) forestry activities by region

Note: for North America, Western and Eastern Europe and the Developed Asia-Pacific regions, these figures are total roundwood production per employee. For the other regions, the figures are industrial roundwood production per employee.

At the global level, productivity in (formal) forestry activities (ISIC Division 02) has decreased by 25 percent during the period 1990 to 2000. However, this trend is mainly due to the increased employment in China over the period, where most of the increase in employment has probably occurred due to increased tree planting rather than increased industrial roundwood production activities.13 Therefore, this global trend may not be a true indication of real changes in labour productivity.

A second important reason for the global decline in productivity is the reduction in production in former-USSR countries (especially the Russian Federation) reported in the early-1990s. This was a very real fall in labour productivity. Production fell by as much as 50 percent in many of these countries, but employment numbers often did not fall by as much (leading to a reduction in labour productivity). Similar problems were experienced across much of the rest of Eastern Europe. However, since the mid-1990s, productivity in Eastern Europe has started to grow consistently and, in 2000, reached a level that was equal to 80 percent of the level in 1990. In all other regions, except North America, labour productivity has grown considerably over the period, by between 20 percent and 50 percent.

At the level of individual countries, Nordic countries showed the most noticeable growth in labour productivity, with a 100 percent increase in labour productivity over the period. It is also noticeable that the level of labour productivity is much higher in North America than elsewhere. This is due to the fact that two very well developed countries (Canada and the United States of America) account for most of this region. Nordic countries, New Zealand and Australia have similarly high levels of labour productivity. After these countries, other West European countries have the next highest levels of labour productivity, followed by countries in Eastern Europe, then developing countries.

One of the explanations of the differences in the levels of labour productivity shown here is that forestry practices are very different in different countries. For example, these figures show roundwood (or industrial roundwood) production per employee, so countries with a lot of people employed in tree planting appear to have very low productivity. In addition, logging conditions in natural forests (e.g. tropical rainforest, boreal forest, temperate forest, etc.) are very different in countries, as are the conditions in countries harvesting forest plantations as opposed to natural forests.

To conclude, the figures presented above give only a very general picture of the trends in labour productivity over time and the comparisons in productivity between regions. Detailed knowledge of each individual country would be required to interpret these figures correctly. Alternatively, more detailed and comparable data would be required to study trends over time or to make comparisons between countries and regions. Such analysis is outside the scope of this report, but the figures presented in Annex 1 of this report can be used as a starting point for such analysis.

Labour productivity in the wood industry is expressed as the production of sawnwood and wood-based panels per employee and trends in these figures are shown in Figure 4. At the global level, the trend is flat and shows that productivity has remained roughly the same over the last 10 years. However, at the regional level, an upward trend is visible for Western Europe and a sharp fall is visible for Eastern Europe in the early-1990s.14 The highest levels of productivity are achieved in North America, followed by Western Europe.

Figure 4 Recent trends in labour productivity in the wood industry by region

Note: these figures are total sawnwood and wood based panel production per employee in all regions.

At the level of individual countries, the clear leaders are Finland and Sweden, where labour productivity has grown from 300 CUM to 500 CUM per person over the period. In Canada and the United States of America, there has been a slight downward trend in labour productivity during the 1990s, but these countries still have very high levels of productivity compared with the rest of the World. Chile and New Zealand are two other countries where labour productivity has increased significantly over the period, from 200 CUM to 300 CUM per person.

Compared with developed countries and a few developing countries (e.g. Chile), the levels of labour productivity in all other countries are extremely low (less than half of the global average level of labour productivity). This reflects the great efforts that the leading countries have made to invest in new equipment and machinery and, conversely, the generally poor level of processing technology in most developing countries.

Figure 5 Recent trends in labour productivity in the pulp and paper industry by region

Note: these figures are total pulp and paper production per employee in all regions.

Recent trends in labour productivity in the pulp and paper industry are shown in Figure 5. The first noticeable point about this figure is that labour productivity is increasing globally and in all regions of the World.

As previously, the highest levels of labour productivity occur in the developed regions (North America, followed by the Developed Asia-Pacific region and Western Europe, with the latter driven by the Nordic countries). Labour productivity in the other regions is generally at least three times lower than in the developed regions. However, labour productivity in the Latin America and the Caribbean region has increased and there are some countries there (e.g. Chile and Brazil) that have levels of labour productivity that are comparable with many countries in Western Europe. Eastern Europe experienced a significant drop in labour productivity in the early-1990s, but in later years it recovered and in 2000 it reached the same level of labour productivity as occurred in 1990.

At the level of individual countries, the most interesting trend was the increase in labour productivity achieved by some of the World’s largest pulp and paper producers. Australia, Brazil, Canada, Indonesia and the Nordic countries all increased labour productivity by 40 percent (or more) over the period 1990 to 2000. This development suggests that globalisation and the creation of large multinational corporations in this sector is resulting in significant investments in capital and new technology, resulting in large increases in labour productivity.

3.1.3 Trends in the forestry sector’s contribution to employment

For the purpose of this study, the contribution of the forestry sector to employment was calculated as the number of people employed in the forestry sector divided by the total economically active population (or labour force). Global and regional trends in these figures are shown in Figure 6.

Figure 6 Recent trends in the forestry sector’s contribution to employment by region

At the global level, the forestry sector currently employs about 0.4 percent of the total labour force and this figure has not changed much during the period 1990 to 2000. There is a very slight downward trend in this figure but, in general, the forestry sector has been able to create new jobs at a rate that has almost kept up with the growth in global population.

At the regional level, employment in the forestry sector has decreased in importance over the last decade in all of the developed regions (North America, Western Europe and the Developed Asia Pacific region) and Eastern Europe. The total labour force has not increased by very much in these regions, so this decline is largely due to the reduction in employment numbers of 0.6 million over the period (a reduction of about 10 percent). In contrast, 1.1 million additional jobs were created in the forestry sector in developing countries over the same period. This increase of 20 percent is roughly the same as the increase in the labour force that has occurred in these countries, so the contribution of the sector has remained roughly the same.

The figure also shows that the contribution of the forestry sector to employment varies significantly across the different regions, from 0.2 percent in Africa to 1.1 percent in Eastern Europe in 2000. In the developed regions, the forestry sector’s contribution to employment is roughly twice the global average. It is also particularly high in Finland, Estonia, Latvia, Belarus, Canada and Sweden, where the forestry sector employs between 2 percent and 4 percent of the total labour force.

The main reason for these regional differences in the importance of the sector is the presence of highly developed forest processing industries in the developed regions. In many developing countries, employment in the forestry sector is concentrated in forestry activities (i.e. industrial roundwood production) and there is little additional employment in the wood industry and pulp and paper industry. Of course, in these countries, there are also probably large numbers of people employed in informal activities. However, these numbers are unknown and the “quality” of this employment is not likely to be comparable with employment in formal activities such as forest processing.

3.1.4 Potential underestimation of employment

As noted previously, the employment figures shown above only include “formal” or “visible” activities in the forestry sector. The ILO (2001) estimates that, on average, for every one job in the formal forestry sector there are another one or two jobs in the informal forestry sector (the majority of which are activities related to the production of woodfuel and non-wood forest products). Based on this very rough estimate, the contribution of the forestry sector to employment could be closer to 1.5 percent at the global level (as opposed to 0.5 percent), with one percent of the global labour force employed in informal activities.

In the time available for this study, it was not possible to compile and assess all of the information available about employment in the informal forestry sector. There is probably a large amount of information available about this topic, but it is likely to be contained in numerous reports of small-scale field surveys, with data collected according to a wide range of definitions and measurement units. It would require a substantial effort to compile and synthesise all of this information. However, as an example of the scale and type of employment generated in informal activities, some information from Thailand is presented in Box 4 below.

Box 4 Employment in the production of non-wood forest products in Thailand

Rattan and bamboo: There are about 210 cottage rattan factories producing mainly for the domestic market and employing two to ten workers each, plus six large, export-oriented factories employing 1,300 workers. In total, these rattan factories employ about 2,000 to 4,000 workers. Planting, harvesting, marketing and processing of bamboo requires between 3 million and 5 million days of work per year. This is equivalent to about 12,000 to 20,000 full-time jobs.

Other non-wood forest products: Employment in medicinal plant collection, trading and processing is estimated to be about 45,000 to 60,000 (converted to full-time equivalents). In addition, there are more than 50,000 families involved in stick lac production. The total lac industry is estimated to generate employment of about 13,000 (full-time equivalents).

Source: Sutthisrisinn et al (1998).

According to the official statistics for forestry employment in Thailand, between 95,000 and 120,000 people were employed in the forestry sector in the late-1990s (i.e. including forestry, wood industry and pulp and paper industry employment, but excluding employment in the furniture industry). The above figures suggest that the collection of non-wood forest products employs between 72,000 and 97,000 people (in full-time equivalents). Inclusion of this informal employment would increase the figure for total employment in the sector by 75 percent to 80 percent.

The suspicion that official forestry employment statistics do not cover employment in woodfuel production (particularly in developing countries) is based on the analysis of roundwood productivity figures. For example, if total roundwood production (including woodfuel) is divided by the official forestry employment statistics obtained for countries in Insular South East Asia (i.e. Indonesia, Malaysia and the Philippines), this results in an average level of productivity of 1,800 CUM per person. This is roughly the same as the productivity level in Australia and New Zealand. However, if industrial roundwood production (i.e. excluding woodfuel) is divided by the employment numbers, the result for these countries is a productivity level of 500 CUM per person. Given the type of forests in these countries, the types of roundwood produced and the level of technology used in most forest operations there, this looks much more realistic. (It should also be noted that these productivity levels are still about 30 percent to 40 percent higher than in other tropical countries).

Even for developed countries it is sometimes difficult to say whether official statistics accurately record all of the employment in the forestry sub-sector. A good example to highlight this problem is the comparison of productivity levels in Canada and the United States of America (see Figure 7).

Figure 7 Possible mis-classification in forestry employment statistics: a comparison of labour productivity in Canada and the United States of America

Source: derived from FAO (2003a), US Census Bureau (2003) and Statistics Canada (2003b).

Based on the official statistics for forestry employment published by these two countries (US Census Bureau, 2003; and Statistics Canada, 2003b), labour productivity in the forestry sub-sector in the United States of America is about twice the level of productivity in Canada (i.e. 5,000 CUM per person and 2,500 CUM per person respectively). However, an earlier official estimate of forestry employment in the United States of America (quoted in Poschen, 1997) gives a figure of 240,000 employees in 1995 (compared with the Census Bureau figure of 110,000 for the same year). Using the figure quoted by Poschen, the level of productivity in both countries would be about the same.

The level of technology used in forestry in both countries is roughly the same as are the scale and type of forestry operations, so it seems unlikely that the productivity levels are really so different. Indeed, there is a significant amount of tree planting in the United States of America (probably much more than in Canada), so it could be expected that the productivity level in the United States of America might be lower (rather than higher) than in Canada.

A plausible explanation for these differences is that some employment in the forestry sub-sector is counted elsewhere in the employment statistics. Employment statistics are collected from individual enterprises and the employment in each enterprise is usually counted under one heading in the ISIC (or similar national classification systems), according to the main activity of each enterprise. Thus, in countries where integrated forest enterprises are common (i.e. including both forestry and processing operations), it is possible that forestry employment in such enterprises is counted as employment in the wood industry.

This would seem to be the case in the United States of America. For example, Figure 7 also shows that productivity in the wood industry in the United States of America is roughly half of the level of productivity in Canada. Again, there is no rational explanation for such a large difference in productivity levels, so it seems likely that some forestry employment has been counted as employment in the wood industry in the United States of America.

3.2 Value-added in the forestry sector

The following section presents the analysis of trends in value-added in the forestry sector. It is important to note that all of these figures have been adjusted for inflation (i.e. converted to real values rather than nominal values) and are expressed in USD at 2000 prices and exchange rates.

3.2.1 Trends in total value-added

Figure 8 shows the trend in gross value-added in the forestry sector over the period 1990 to 2000. The figure shows that total gross value-added has not changed much during the 1990s, with an average value of USD 342 billion per year (in real terms) and annual figures within +/- five percent of this average. In 2000, total gross value-added in the forestry sector amounted to USD 354 billion.

In addition to this, the value-added in the furniture industry amounted to USD 80 billion in 2000, which is 16 percent higher than the figure for 1990. Furthermore, value-added in this sub-sector has grown consistently over the last decade.

Figure 8 Recent trends in gross value-added in the forestry sector by sub-sector

Among the three sub-sectors, the pulp and paper industry makes the largest contribution to GDP, accounting for about half of the total gross value-added in the forestry sector. The wood industry is the next largest contributor, with a 30 percent share of the total, while forestry activities account for the remaining 20 percent of gross value-added in the forestry sector. This distribution of the value-added across sub-sectors remained stable in the 1990s.

This stability in the distribution of value-added across the three sub-sectors is an indication of the strong links between the three sub-sectors. Furthermore, at the global level, changes in the level of value-added in each of the three sub-sectors are strongly correlated with each other from year to year. Thus, for example, in years when the value-added in the pulp and paper industry increased (compared with the previous year) an increase in value-added is also usually recorded in the forestry and wood industry sub-sectors. The simple explanation for this relationship is that changes in supply and demand for processed products lead to changes in product prices, which then lead to changes in industrial roundwood prices. These changes in prices then lead to changes in the value-added in each sector, through their impact on the gross value of output.

The relationship between product prices and value-added is shown in Figure 9. This figure shows the trends in value-added in the two forest processing sub-sectors over the last ten years, along with the trends in export prices for the products manufactured by those industries over the same period (all adjusted for inflation). It clearly shows that the peaks and troughs in pulp and paper prices over the period are matched by variations in the level of value-added in the pulp and paper industry (e.g. in 1995). A similar pattern occurs in the wood industry, where the real level of value-added follows the trend in real export prices for sawnwood and wood based panels (although the correlation is not as strong). It is also likely that value-added in the forestry sub-sector is correlated with roundwood prices, but this could not be explored in the analysis because of the difficulty of producing reliable and realistic trends in roundwood prices.15

Figure 9 Recent trends in real export prices and gross value-added at the global level for the wood industry and pulp and paper industry

Recent trends in the regional distribution of value-added in the forestry sector are shown in Figure 10. In 2000, the developed regions (North America, Western Europe and the Developed Asia-Pacific region) accounted for 75 percent of the gross value-added in the global forestry sector. However, their share has decreased slightly from about 80 percent in the early-1990s.

In contrast, the rapid growth of forest-based industries in the Developing Asia-Pacific and Latin America and the Caribbean regions has resulted in a real increase of 40 percent in their gross value-added in the forestry sector over the last decade. Consequently, their share of the global total has also increased from 14 percent in 1990 to 20 percent in 2000.

Figure 10 Recent trends in gross value-added in the forestry sector by region

Within the three developed regions, there are significant differences in the trends in value-added at the country level. In Canada and the United States of America, value-added in the sector has increased by 10 percent since 1990. Value-added in the forestry sector has remained constant in the Nordic countries (as a group), but has grown significantly in Finland. In the rest of Western Europe, value-added in the forestry sector has declined by 15 percent, mainly due to a significant fall in three major economies: Germany; the United Kingdom; and France. However, there has been strong and consistent growth in value-added in some other countries, such as: Austria; Ireland; Italy; and Spain.

The trends for countries in the Developed Asia-Pacific Region are also very different. Value-added in the forestry sector in Australia and New Zealand has increased by 25 percent over the last decade, while it has fallen by 23 percent in Japan. Due to the relatively large size of the Japanese economy, this fall accounts for the 20 percent decrease in value-added for the region as a whole.

Two regions - Eastern Europe and Africa - each account for only two percent of the value-added in the forestry sector at the global level. However, these two regions together account for about 40 percent of the global forest area. This suggests that the forestry sector in these countries has the potential to make a much greater contribution to the economy.

In Eastern Europe, value-added in the forestry sector fell in nearly all countries in the early-1990s as these countries started the process of transition from centrally planned to market economies. Since the mid-1990s, the forestry sector has recovered in many of these countries and value-added has started to grow very rapidly. Eastern European countries in the Commonwealth of Independent States (CIS)16 have been slower to recover, although recovery in the Russian Federation started at the end of the 1990s and has led to more rapid growth in value-added in the forestry sector in recent years.

In contrast to the positive trends noted above for Eastern Europe, value-added in the forestry sector in Africa has only increased by five percent over the last decade and remains insignificant at the global level. In addition, the forestry sector in West and Central Asia accounts for only one percent of value-added in the forestry sector at the global level. Due to the relative scarcity of forest resources in West and Central Asian countries, it seems likely that the forestry sector will continue to remain quite unimportant to the economies of these countries.

3.2.2 Trends in value-added by sub-sector

In addition to the trends noted above, there are also differences between the regions in terms of the composition of value-added in forestry sector. In developed countries, the wood industry and pulp and paper industry account for 80 percent to 90 percent of the total value-added in forestry sector, but in developing countries these industries account for only 40 percent to 50 percent of the total. In Eastern Europe, the share of forestry sector value-added in processing industries is somewhere between the figures mentioned above (e.g. about 70 percent in the late-1990s).

The distribution of value-added amongst the three sub-sectors has also remained quite stable in most of the regions during the last decade. However, the one major exception is Eastern Europe, where value-added in forestry activities has increased at the same time as value-added in the sector as a whole has declined (i.e. the relative importance of the forest processing industries has declined, as factories have closed and some of these countries have focused more on industrial roundwood production).

The distribution of value-added amongst the three sub-sectors is an indication of the general level of development in the forestry sector in countries. A few developing countries have made the transition from a forestry sector where much of the value-added occurs from industrial roundwood production to a situation where a significant share of value-added occurs in the processing sector (e.g. Chile). However, the stability noted above indicates that developing regions have generally not been successful at creating significant processing industries that can achieve a relatively high level of value-added.

The trends in forestry sector development in regions can be examined by looking at the trends in the distribution of value-added across regions for each sub-sector separately and these are shown in the following three figures.

Figure 11 shows the trends in value-added in (formal) forestry activities in regions and at the global level since 1990. This shows that value-added has increased by eight percent over the period. However, at the same time, global industrial roundwood production has declined by six percent (FAO, 2003a). This indicates that the value-added per CUM has increased (in real terms) over the period (see below for further discussion of trends in productivity).

Figure 11 Recent trends in value-added in (formal) forestry activities by region

At the regional level, value-added in (formal) forestry activities has increased or remained stable in most regions and countries except West and Central Asia and Japan.17 It is also worth noting that the distribution of value-added across regions is much more even than in the other two sub-sectors, showing how this part of the forestry sector is relatively more important in developing regions. In particular, it is notable that the Latin America and the Caribbean region has the third highest share of global value-added from forestry activities. This could be due to the economic success of forest plantation programmes in some of these countries.

Value-added in the wood industry has fluctuated over the last decade, following trends in world prices for sawnwood and wood based panels. In general, there is no clear trend upwards or downwards in this sub-sector (see Figure 12). Developed countries account for about 85 percent of the total value-added in the wood industry, although this share decreased slightly during the 1990s (largely due to the decline in Japan). This distribution of value-added across regions shows that developing countries have not yet created a wood industry that can achieve high levels of value-added. However, the Latin America the Caribbean and Developing Asia-Pacific regions have started to develop rapidly, increasing their share of global value-added in the wood industry from seven percent in 1990 to ten percent in 2000.

Figure 12 Recent trends in value-added in the wood industry by region

Figure 13 Recent trends in value-added in the pulp and paper industry by region

Figure 13 shows the trends in value-added in the pulp and paper industry since 1990. Most of the comments above for the wood industry also apply to this sub-sector. Overall, value-added at the global level has remained roughly the same, but has fluctuated in line with changes in pulp and paper prices. The three developed regions account for about 80 percent of value-added in this sub-sector, although their share has declined over the last decade. In contrast, the Latin America the Caribbean and Developing Asia-Pacific regions have increased their share of global value-added from 10 percent to 14 percent over the same period.

3.2.3 Trends in value-added per unit of output

Another indicator of the level of development in the forestry sector is the value-added per unit of output. This has been calculated by taking the value-added figures presented earlier and dividing them by the production statistics for each sub-sector recorded in the FAOSTAT database. The following text presents the trends in these figures for each of the three main components of the forestry sector.

Figure 14 Recent trends in value-added per unit of output in (formal) forestry activities by region

Note: for North America, Western and Eastern Europe and the Developed Asia-Pacific regions, these figures are value-added per CUM of roundwood production. For the other regions, the figures are value-added per CUM of industrial roundwood production.

Figure 14 shows the trends in value-added per unit of output in the forestry sub-sector (ISIC Division 02) from 1990 to 2000 at the global and regional levels. These figures are all expressed in USD per CUM, at 2000 prices and exchange rates (i.e. adjusted for inflation). At the global level, the value-added per CUM of production increased during the early-1990s by just under 20 percent and has remained stable since then.

The first point to note about these figures is that the value-added per CUM is higher in tropical countries than in temperate countries. This is probably due to the considerably higher prices paid for tropical roundwood compared to the roundwood produced from temperate and boreal species (which also contain a much higher proportion of lower-valued pulpwood production).

Regarding the trends in these figures, value-added per CUM has increased in the Latin America and the Caribbean and Developing Asia-Pacific regions.18 However, in Africa, value-added per CUM has remained roughly the same throughout the 1990s. In temperate and boreal countries, the value-added per CUM has increased in North America, Eastern Europe and Australia and New Zealand. The major exception to these trends has been Western Europe (including the Nordic countries) where value-added per CUM has fallen by about 20 percent. This is most likely the result of falling roundwood prices in this region due to increased competition (i.e. relatively cheap roundwood imports) from Eastern Europe.

Figure 15 Recent trends in value-added per unit of output in the wood industry by region

Figure 15 shows the recent trends in value-added per unit of output for the wood industry (i.e. sawnwood and wood based panel production). At the global level, there is a slight upward trend in these figures, indicating that value-added per CUM has increased by just under 10 percent over the last decade. A significant increase is shown for the North America and Eastern Europe regions and the Developing Asia-Pacific region shows a slight upward trend. A falling trend is shown for Africa and, in particular, Western Europe.

In the case of the wood industry, it is also worth noting that the developed regions have a much higher value-added per CUM than developing regions. This is because most of the products manufactured by the wood industry in these countries is sold in domestic markets or traded with other developed countries, where product prices are generally high. Again, in Europe, increased trade between Western and Eastern Europe partly explains why value-added has fallen in the former region and increased in the latter. However, it is notable that value-added per CUM in Eastern Europe is still lower than in every other region. This may be due to the levels of technology currently used in much of the wood industry there (i.e. resulting in relatively high production costs compared with product prices).

With the exception of Africa, the trends for developing regions show that countries there have generally maintained or increased their value-added per CUM. This is most likely due to gradual improvements in technology that have reduced production costs and, more importantly, led to some increases in product prices through product improvement and expansion of exports. It is also possible that local market prices have increased in some of these countries due to their high levels of economic growth.

Figure 16 Recent trends in value-added per unit of output in the pulp and paper industry by region

In the pulp and paper industry, a strong and significant downward trend in value-added per MT has occurred over the last decade (see Figure 16). Furthermore, this trend appears at the global level and in almost all regions. Over the period 1990 to 2000, value-added declined by 20 percent or about USD 100 per MT (in real prices), which is very similar to the decline in average world trade prices (average price of imports and exports) for pulp and paper over the same period (a decline of about 15 percent or USD 125 per MT in real prices).

At the regional level, the order of regions (in terms of value-added per MT) is very different to the other two sub-sectors. Value-added per MT is very high in the Developed Asia-Pacific region due to the high level of value-added in Japan (where most paper is sold in the domestic market for high prices and the very high level of technology used in the sector has led to relatively low production costs). Value-added in the Latin America and the Caribbean region is also high, due to the significant level of industry development in some countries in this region (e.g. Brazil and Chile). The figures for North America are somewhat lower than might be expected, but this reflects the high proportion of pulp production (which generally results in lower value-added per MT) in these figures. The figures for Africa are also relatively high compared with other regions, but they are dominated by the figures for South Africa where the pulp and paper industry is comparable (in terms of markets and technology) to many developed countries.

The other interesting feature of Figure 16 is that the value-added per MT in four of the regions is very close to the global average. This convergence is another indication of the globalisation of the pulp and paper industry, where products are often marketed at the global level, high levels of technology are used throughout much of the World and multinational corporations account for a major share of global production.

3.2.4 Trends in value-added per employee

In addition to the amount of output per employee, another measure of labour productivity is the value-added per employee. This has been calculated by taking the gross value-added for each sub-sector and dividing this by the employment numbers presented earlier.

The value-added per employee is one factor that underlies the level of salaries and wages in an industry. Therefore, it is another general indicator of the contribution of the forestry sector to society (i.e. in as much as it reflects the general level of benefits and conditions of employment in the sector). However, it should be noted that a high level of value-added per employee also usually reflects a high level of capital and technology utilisation in an industry. In such cases, a significant proportion of this value-added is required to cover the costs of capital, so the share of value-added paid to labour may be relatively low.

At a very broad level, the value-added per employee in the forestry sector as a whole remained roughly the same throughout the 1990s, at around USD 27,000 per employee (at 2000 prices and exchange rates). However, the figures vary widely between regions and between the three sub-sectors of the forestry sector.

Value-added per employee is highest in North America (USD 89,000), Developed Asia-Pacific (USD 79,000) and Western Europe (USD 48,000) and lowest in Eastern Europe (USD 5,000) and Developing Asia-Pacific (USD 8,000). Over the last decade, value-added per employee has increased by 10 percent to 15 percent in the North America, Developing Asia-Pacific and Eastern Europe regions, while in other regions it has not changed by much.

It is also important to note that in the three developed regions and Eastern Europe, in countries where value-added per employee has increased, total employment has usually declined. This suggests that capital has replaced labour in the forestry sector in many of these countries (e.g. due to greater mechanisation of forest operations and the adoption of new processing technologies). In contrast, in most developing countries where value-added per employee has increased, both value-added and employment have tended to increase together. This suggests that such countries have been successful at increasing labour productivity by improving human capital (e.g. through better training and working practices).

For each of the three sub-sectors of the forestry sector, the global average level of value-added per employee in 2000 was as follows:

In addition to the above, average value-added per employee in the furniture industry in 2000 was about USD 23,000 (and this has increased by 15 percent in real terms over the last decade).

These differences are reflected in the wage levels in the three sub-sectors, where jobs in forestry are generally not well-paid, while jobs in the two forest processing sub-sectors are generally comparable to wage levels in similar manufacturing industries (for example, see ILO (2003) for a recent discussion on wage levels in Europe). A more detailed description of recent trends at the level of the individual sub-sectors is given in the text below.

Figure 17 Recent trends in value-added per employee in (formal) forestry activities by region

In the (formal) forestry sub-sector, value-added per employee has declined slightly over the last decade at the global level (see Figure 17), but this probably reflects the large (about 100 percent) increase in employment in China over the last half of the decade (due to increased tree planting activities). Excluding this, value-added per employee has probably remained about the same or increased slightly.

At the regional level, value-added per employee has increased in the following regions: North America; Latin America and the Caribbean; Africa; and Eastern Europe. But, in the other regions it has declined (for the Developing Asia-Pacific region, the comments above about China would also apply to this region). The differences between regions in the level of value-added per employee largely reflect the much higher levels of output (in CUM) per employee in developed countries (due to mechanisation of operations) rather than the levels of value-added per CUM.

Figure 18 Recent trends in value-added per employee in the wood industry by region

In the wood industry, value-added per employee has remained roughly the same over the last decade, although a slight upward trend appears for North America and the Developing Asia-Pacific regions and a slight downward trend appears for the other regions (for Latin America and the Caribbean, see footnote 14 on page 26). The three developed regions have a very high level of value-added per employee due to both a high level of output (in CUM) per employee and relatively high levels of value-added per unit of output (in USD per CUM).

In the pulp and paper industry, the value-added per employee has remained roughly the same throughout the 1990s (see Figure 19). However, there have been two opposing trends in this industry sub-sector. First, the average level of value-added per unit of output has gradually declined over the period, due to falling pulp and paper prices. Secondly, the productivity per employee (in MT) has increased over the period.

The latter trend is probably partly due to the former trend. Declining prices and value-added per MT has encouraged companies to expand the scale of production (e.g. by building large new mills in Asia and Latin America or expanding existing capacity in North America and Western Europe), to gain economies of scale, cut production costs and increase productivity per employee (in MT). Thus, the industry has generally been able to remain competitive in an environment of falling prices.

At the regional level, the trends are generally similar to the global trend, although value-added per employee in North America has risen substantially over the period due to the declining employment in the sector and increased production per employee (in MT) as a result of this. As with the wood industry, value-added per employee is highest in the developed regions, due to both the relatively high productivity per employee (in MT) and the high level of value-added per unit of output.

Figure 19 Recent trends in value-added per employee in the pulp and paper industry by region

3.2.5 Trends in the forestry sector’s contribution to GDP

In spite of the quite stable level of value-added in the forestry sector during the last decade, the contribution of the sector to GDP has declined from just under 1.6 percent in 1990 to just over 1.2 percent in 2000 (see Figure 20). In addition to this, the furniture industry contributed a further 0.3 percent to the global GDP in 2000.

This decline has occurred because the global economy has expanded (i.e. global GDP has increased by 30 percent over the last decade) while value-added in the forestry sector has not increased at all. At the regional level, most regions display the same downward trend, except Eastern Europe and the Latin America and the Caribbean region.

Figure 20 Recent trends in the forestry sector’s contribution to GDP by region

Note: total gross value-added is approximately equal to GDP.

In Latin America and the Caribbean, the forestry sector’s contribution to GDP increased significantly in the late-1990s and, over the whole decade, it has increased from about 1.5 percent in 1990 to almost 1.7 percent in 2000.

The growth in the economic importance of the sector in this region is largely due to significant developments in Brazil, Chile and Mexico, which together account for about 80 percent of the total value-added in the forestry sector in this region. Value-added in the forestry sector grew by more than 50 percent in these three countries over the 1990s, indicating that the forestry sector has been an important source of economic growth in these countries.

At the country level, it is also worth noting that the forestry sector is particularly important in Brazil, Guyana, Suriname, Paraguay and Chile, where it accounts for more than 3 percent of GDP.

The other region where the forestry sector is now growing faster that the whole economy is Eastern Europe (including the Russian Federation). After the steep recession in these economies in the early-1990s, the forestry sector has become one of the leading sectors and it is now recovering faster than many other sectors in most of these countries. For example, the contribution of the forestry sector to GDP fell from 1.5 percent in 1990 to 1.0 percent in 1992, but has since increased to 1.4 percent in 2000.

Some of the reasons for the high growth in forestry sector value-added in these countries include: abundant forest resources; cheap labour; high rates of foreign direct investment; and large-scale privatisation programmes in many of these countries. These conditions have created a good economic environment for the rapid development of forestry and forest industries.

At the level of individual countries, the forestry sector now accounts for more than two percent of GDP in 10 of the 19 countries in this region. Furthermore, the forestry sector is particularly important in Estonia and Latvia, where it accounts for almost five percent of GDP.

The other three regions where the forestry sector is relatively important are Africa, North America and the Developing Asia-Pacific region. The contribution of the forestry sector to GDP has gone down in these three regions (due to higher rates of growth in value-added in other sectors), but the economic contribution of the sector in these regions remains higher than the global average.

In Africa, the forestry sector accounts for about two percent of GDP in tropical Africa and southern Africa. However, the forestry sector is relatively unimportant in North Africa, which reduces the forestry sector’s contribution to GDP to 1.4 percent for the region as a whole.

At the individual country level, 23 African countries (out of a total of 56 countries) report that the forestry sector accounts for three percent (or more) of GDP. In addition to this, subsistence production in Africa is of particular significance to many people in rural areas. If national accounts statistics included activities in the informal or non-monetary sector, it is likely that the forestry sector’s share of GDP would probably be at leas twice what is reported in official statistics (see Box 5 on page 49).

In North America, the forestry sector accounts for about 1.5 percent of GDP. In Canada, it accounts for about three percent of GDP and the contribution remained stable during the 1990s. In the United States of America, the forestry sector’s contribution to GDP has gradually decreased, from 1.6 percent in 1990 to 1.3 percent in 2000.

The forestry sector’s contribution to GDP in the Developing Asia-Pacific region has declined from 2.1 percent to 1.5 percent during the 1990s. Value-added in the forestry sector has increased significantly by one-third since 1990 but, at the same time, the economies of these countries have grown even more rapidly by around 90 percent (in the region as a whole). Thus, the forestry sector has been left behind as these countries have achieved phenomenal rates of economic growth.

In the Developing Asia-Pacific region, the forestry sector is most important in some of the smaller countries (e.g. Bhutan and the Solomon Islands, where it accounts for nearly ten percent of the economy). Of the larger countries, the forestry sector is also important in: Malaysia; Papua New Guinea; Nepal; Cambodia; and Indonesia, where it accounted for three percent (or more) of GDP throughout most of the 1990s. As in Africa and Latin America and the Caribbean, subsistence production in the forestry sector is significant in this region.

In three regions - Western Europe, West and Central Asia and the Developed Asia-Pacific region - the economic importance of the forestry sector is generally lower than in other parts of the World. However, there is considerable variation between countries in these regions.

In Western Europe, the contribution of the forestry sector to GDP has declined from 1.5 percent to 1.1 percent over the last decade. However, in Finland, the forestry sector’s contribution to GDP is the highest of all developed countries (at eight percent in 2000). It is also significant in Sweden (three percent of GDP) and Austria and Portugal (two percent of GDP in both countries). In other West European countries, the forestry sector accounts for around one percent (or less) of GDP.

In the Developed Asia-Pacific region, the forestry-sector’s contribution to GDP has declined from 1.4 percent in 1990 to 0.9 percent in 2000. The downward trend in the economic importance of the sector largely reflects developments in Japan and, to a lesser extent, Australia. In contrast, the forestry sector remains important in New Zealand, where it accounts for about four percent of GDP.

The economic importance of the forestry sector in West and Central Asia has also declined over the last decade and the contribution of the sector to GDP in this region is the lowest in the World (0.3 percent). In most of the countries in this region, the forestry sector makes a negligible contribution to GDP, although the sector accounts for about one percent of GDP in Turkey and Cyprus.

3.2.6 Potential underestimation

The problems of underestimation of the value-added in the forestry sector are very similar to the problems discussed above with respect to forestry sector employment statistics. In reports and official statements at FAO meetings, national forest administrations frequently state that their national income accounts do not capture all of the benefits of forestry and that the real economic contribution of the forestry sector is far above the levels given in published national income statistics.

As with the employment statistics, the most common sources of underestimation are likely to be the value-added from woodfuel production activities and the gathering and processing of non-wood forest products. These activities are not likely to be captured and included in published national income accounts in most countries.

However, in recent years, a number of countries (particularly developing countries) have started to attempt to measure and quantify the value of informal or non-monetary activities in their national income accounts. A brief review of some of these statistics showed that the results so far have been mixed (for example see Box 5). Some countries have given official estimates of informal (non-monetary) activities that appear to be too low (e.g. Uganda), while others have produced figures that seem quite plausible (e.g. Tanzania). Other countries (e.g. The Philippines) still produce official statistics that do not appear to make any attempt to estimate the value-added in informal (non-monetary) activities in the forestry sector.

Due to the variability in the estimates of value-added in informal activities (and the lack of estimates in most cases), estimates of the value-added in informal forestry sector activities (where available) were deliberately excluded from the figures presented above. This was done in order to improve comparability between countries and over time. The little evidence that does exist confirms that the value-added in informal activities is probably substantial in many countries and that including these figures would significantly increase the recorded contribution of the forestry sector to GDP. However, a more detailed and in-depth study would be required to elaborate on this issue and produce credible estimates of the value-added from these activities.

Box 5 Some examples of accounting for informal forestry activities in national income accounts

In recent years, a number of countries have attempted to measure informal or non-monetary activities in their national income accounts. The following text presents some information from official reports, followed by comments on these figures (shown in italics). As the text shows, there is considerable variability in the way that informal forestry sector activities are handled in national income accounts.

Uganda: According to the Government of Uganda (2003), official statistics indicate that the forestry sector accounts for about two percent of GDP. For example, in 1999, the Ugandan Bureau of Statistics estimated that value-added in forestry amounted to 126 billion Ugandan Shillings (UGX), with UGX 64 billion generated in the formal (monetary) sector and the remaining UGX 62 billion in the informal (non-monetary) sector. In total, the sector accounted for about 1.5 percent of GDP.

A more recent review of the economic importance of the forestry sector in Uganda was produced as an unofficial report by the forestry administration. This estimated that more than 70 percent of wood consumption in Uganda is in the informal (non-monetary) sector, which alone is valued at about 2.75 percent of GDP. Including the informal sector and a modest estimate of the value of environmental services provided by forests, the forestry sector accounts for about six percent of GDP. Major contributors to this are: domestic fuelwood - UGX 120 billion; charcoal production - UGX 70 billion; non-wood forest products - UGX 66 billion; commercial fuelwood - UGX 43 billion; and sawn timber - UGX 40 billion.

Current estimates of woodfuel production in Uganda are 33 million CUM of woodfuel plus 0.7 million MT of charcoal (FAO, 2003a). The exchange rate (in 2000) was UGX 1,512 to USD 1.00. Based on this information, the unofficial figures above would suggest that value-added in woodfuel production is about USD 3.30 per CUM (i.e. UGX 163 billion/33 million CUM = UGX 4,939 per CUM or USD 3.30 per CUM). The value-added per MT of charcoal production would amount to USD 66 per MT (i.e. UGX 70 billion/0.7 million MT = UGX 100,000 per MT or USD 66 per MT). These figures appear quite plausible, suggesting that the unofficial report may give a better indication of the importance of the sector than the official statistics in the national income accounts.

Tanzania: In 2000, the official statistics for value-added in forestry and hunting show a total of 209 billion Tanzanian Shillings (TZS), with TZS 76 billion in the formal (monetary) sector and TZS 133 billion in the informal (non-monetary) sector. Together, these two sectors accounted for 3.1 percent of GDP (Bank of Tanzania).

The current estimate of woodfuel production in Tanzania is 21 million CUM (FAO, 2003a), the exchange rate in 2000 was TZS 800 per USD 1.00 and average fuelwood prices are about TZS 3,000 per CUM (IUCN, 2003). These figures would suggest that the gross value of woodfuel production in 2000 was TZS 63 billion (i.e. 21 million CUM x TZS 3,000 per CUM). Alternatively, taking the value-added figure for Uganda (USD 3.30 per CUM), value-added in woodfuel production in Tanzania might amount to about TZS 55 billion (i.e. USD 3.30 per CUM x TZS 800 per USD x 21 million CUM). Considering that woodfuel production might only account for about half of informal forestry activities and that hunting is also included in the official figures presented above, it appears that the official figures may be quite reasonable estimates.

Philippines: The official estimate of gross value-added in forestry and logging activities in 2000 is 3.4 billion Pesos (PHP), amounting to 0.1 percent of GDP (UN, 2002a).

fBased on an exchange rate of PHP 44 per USD 1.00 in 2000, the figure above is equal to USD 77 million or USD 25 per CUM of industrial roundwood production or USD 2.00 per CUM of total roundwood production (FAO, 2003a). However, according to REAP (2002), average woodfuel prices in the Philippines in 2000 were PHP 1.5 to PHP 2.2 per kg (equal to about USD 24 to USD 36 per CUM). Assuming that gross value-added in woodfuel production is fairly close to the gross value of output (i.e. USD 24 to USD 36 per CUM) the gross value-added from woodfuel production in the Philippines would be close to USD 1.2 billion (i.e. USD 30 per CUM x 40 million CUM) or an additional 1.5 percent of the country’s GDP. Even if a significant allowance were made for transport costs, this would seem to suggest that the value-added in the informal woodfuel production sector is substantially higher than the official estimate of value-added in the sector.

3.3 Forest products trade

Globalisation during the 1990s has led to an explosion in international trade in goods and services and the forestry sector has followed this broader global trend. For example, the real value of forest products exports rose by nearly 50 percent over the last decade to reach a level of USD 144 billion in 2000. Furthermore, international trade in forest products has generally expanded at similar rates in both developed and developing countries.

The importance of international trade in forest products has been measured as the proportion of forest products in total merchandise trade (by value).19 In terms of exports, this measure indicates the contribution of the domestic forestry sector to trade balances. In terms of imports, the share of forest products in imports is less of an indicator of the importance of the domestic forestry sector, but it does indicate where the sector could play an important role in terms of import substitution.

There are a number of benefits of international trade. At a basic economic level, it allows producers and consumers to buy and sell products at the best available price. From a development perspective, it can also be a driving force for economic development, particularly where the domestic market is small or prices are low due to low incomes. Increased exports or import substitution can also increase or protect foreign currency reserves, which is a concern in some developing countries. In view of these benefits, the level of international trade in forest products is another indicator of the contribution of the sector to national economies.

3.3.1 Trends in the share of forest products in total merchandise exports

At the regional level, exports of forest products are dominated by the three developed regions. For example, in 2000, Western Europe and North America together accounted for about three-quarters of global forest products exports, followed by the Developing Asia-Pacific region (with a ten percent share). Furthermore, most international trade in forest products is either trade between these three regions or between countries within each of these regions.

As already noted, the value of international trade in forest products increased by almost 50 percent during the last decade. However, in spite of this rapid growth in international trade, the growth in forest products trade has been less than the growth of other merchandise trade. Therefore, the share of forest products in total merchandise exports declined from 2.9 percent in 1990 to 2.2 percent in 2000 (see Figure 21).

This downward trend also appears in all regions except Eastern Europe, where recovery in the forestry sector has generally been more rapid and successful than in many other parts of the economy. At the country level, the share of forest products in total merchandise exports has also declined in all of the major trading nations (outside Eastern Europe) with the exception of a few countries where exports of forest products are particularly significant (e.g. Brazil, Chile and New Zealand).

Figure 21 Recent trends in the share of forest products in total merchandise exports by region

Another interesting feature of the trends in forest products exports is that the value of exports fluctuates quite a lot from year to year (by up to 20 percent). This is largely due to the volatility in international prices for pulp and paper products (which account for about 60 percent to 65 percent of the total value of global forest products trade). The value of exports from the other two forestry sub-sectors was generally more stable during the 1990s, but still changed by as much as ten percent (in real terms) from year to year.

Figure 22 shows the trends in the share of products from the forestry sub-sector (i.e. roundwood and charcoal) in total merchandise exports. In general, exports of roundwood and charcoal account for a very small share of forest products exports (about seven percent of total forest products exports) and exports from this sub-sector now account for less than 0.2 percent of total merchandise exports at the global level.

At the regional level, exports from this sub-sector are quite significant in Africa and Eastern Europe and their share of total merchandise exports has remained roughly the same during the 1990s. In most other regions, the value of exports has not increased (or increased very slightly) in real terms, resulting in a steep decline in the contribution of this sub-sector to total merchandise exports. These trends reflect the general reluctance of most countries to export roundwood, in the belief that domestic processing can generate income and employment in the national economy.

Figure 22 Recent trends in the share of products from the forestry sub-sector in total merchandise exports by region

Note: products from the forestry sub-sector (ISIC Division 02) comprise roundwood and charcoal.

Figure 23 Recent trends in the share of wood industry products in total merchandise exports by region

Note: products from the wood industry comprise sawnwood, wood based panels, wood chips and residues.

Exports of products from the wood industry (i.e. sawnwood, wood based panels, wood chips and residues) account for nearly 30 percent of total forest products exports. Their contribution to global merchandise exports has declined slightly from just over 0.8 percent in 1990 to just over 0.7 percent in 2000.

At the regional level, trends in this sub-sector’s contribution to exports has declined or remained about the same in all regions. Exports of wood industry products are relatively more important in North America and Eastern Europe where they currently account for around 1.5 percent of total merchandise exports. In most other regions, the importance of this sector to exports is similar to the global average.

Figure 24 Recent trends in the share of pulp and paper industry products in total merchandise exports by region

Note: products from the pulp and paper industry comprise pulp, paper and recovered paper.

Exports of products from the pulp and paper industry account for the largest share of total forest product exports and currently account for about 1.4 percent of total merchandise exports at the global level (compared with about 1.8 percent in 1990). Exports from the pulp and paper industry are relatively important in North America and Western Europe, but have declined in importance since 1990 (particularly in North America). In the other regions, the importance of exports from this sub-sector has remained about the same. They account for about one percent of total merchandise exports from Latin America and the Caribbean and slightly more than one percent of total merchandise exports from Eastern Europe. With the exception of West and Central Asia (where they are insignificant), they account for about 0.5 percent of total merchandise exports from the other regions.

3.3.2 Trends in the share of forest products in total merchandise imports

At the global level, the trends in the share of forest products in total merchandise imports are roughly the same as those presented earlier for exports. However, comparing between the regions, Western Europe is the main consumer of imported forest products (40 percent of global forest products imports), followed by the two Asia-Pacific regions (30 percent) and North America (20 percent). In addition, since the mid-1990s, the value of imports into the Developing Asia-Pacific region overtook the value of imports into the Developed Asia-Pacific region, due to the decline in imports into Japan and the rapid growth of forest product imports into China.

Figure 25 Recent trends in the share of forest products in total merchandise imports by region

Figure 25 shows the trends in the share of forest products in total merchandise imports by region during the 1990s. Globally, the share fell from about 3.2 percent in 1990 to 2.3 percent in 2000. At the regional level, imports of forest products into the Developed Asia-Pacific region are relatively more important than elsewhere, although this importance has fallen dramatically over the last decade from five percent to three percent (due to a sharp fall in the value of imports into Japan). In most other regions, the share of forest products imports in total merchandise imports is close to the global average or slightly below it. In most of these regions, this share has also declined or remained about the same since 1990.

Comparing the value of imports with the value of exports, there were no major changes in net trade at the regional level during the 1990s. West and Central Asia and the Developed Asia-Pacific region remained the leading net importers, followed by the Developing Asia-Pacific, Latin America and the Caribbean and Africa20 regions. In Western Europe, the value of imports is roughly the same as the value of exports. The two regions that are significant net exporters of forest products are Eastern Europe and North America, where the value of forest products exports are about two to three times higher than the value of imports.

At the sub-regional and country level, changes in net trade over the last decade are much more noticeable. For example, net imports are clearly growing in the United States of America, China, India, Mexico and many countries in West and Central Asia and Sahelian Africa. A trend of rapid growth in net exports is visible in Nordic countries, Brazil, Chile and New Zealand.

Figure 26 Recent trends in the share of products from the forestry sub-sector in total merchandise imports by region

Note: products from the forestry sub-sector (ISIC Division 02) comprise roundwood and charcoal.

At the level of individual sub-sectors, the share of products from the forestry sub-sector in total merchandise imports has declined over the last decade (see Figure 26). It is significant in the two Asia-Pacific regions, but not elsewhere. In the two Asia-Pacific regions, the most significant developments have been the dramatic fall in the importance of imports into Japan over the whole of the period 1990 to 2000 compared with the increased importance of imports into China in the late 1900s.

Figure 27 Recent trends in the share of wood industry products in total merchandise imports by region

Note: products from the wood industry comprise sawnwood, wood based panels, wood chips and residues.

Figure 28 Recent trends in the share of pulp and paper industry products in total merchandise imports by region

Note: products from the pulp and paper industry comprise pulp, paper and recovered paper.

Figure 27 shows the recent trends in the share of wood industry products in total merchandise imports during the 1990s, which has declined from about 0.9 percent in 1990 to 0.7 percent in 2000. At the regional level, the importance of wood industry products is far higher in the Developed Asia-Pacific region than elsewhere. This is due to the high level of imports into Japan, which has remained stable during the last decade. There is a clear downward trend in the importance of imports of wood industry products in every region except Eastern Europe.

Figure 28 presents the same information, but for the pulp and paper industry. This also shows a decline in the importance of imports over the last decade in every region except Eastern Europe. What is also interesting in this industry sub-sector is that the importance of imports of wood industry products is quite similar in all regions (with a share of wood industry products in total merchandise imports of between 1.0 percent and 1.7 percent in 2000). This suggests that all regions choose to import a certain amount of pulp and paper industry products which is, perhaps, another indication of the globalisation of this part of the forestry sector.

3.3.3 Potential underestimation

There are two main issues concerning the analysis of the forestry sector’s contribution to total merchandise trade during the 1990s.

Further processed forest products: The forest products trade statistics held in the FAOSTAT database (FAO, 2003a) do not include statistics about the export and import of further processed forest products, such as: secondary processed sawnwood; builders’ joinery and carpentry products and wooden furniture. International trade in these products is developing rapidly and is tending to replace some of the trade in more basic forest products as countries try to increase domestic processing, income and employment generation.

In 2000, international trade in the three main groups of further processed forest products amounted to USD 33.7 billion (with an increase of 27 percent since 1996). Of this, international trade in furniture (most of which is wooden furniture) amounted to USD 25.5 billion, while the remainder (builders’ joinery and carpentry, profiled wood, etc.) amounted to USD 8.2 billion (UN, 2002b).

These figures are significant compared with the total value of forest products exports (USD 144 billion in 2000) and, at the level of individual regions and countries, they could be particularly important in some cases.

New countries: FAOSTAT (FAO, 2003a) does not contain data for the new European countries before they were created in the early-1990s. Trade between these locations in the former-USSR, Czechoslovakia and Yugoslavia was probably significant in many cases. For example, prior to independence, most of the former-USSR countries were highly dependant on the Russian Federation to supply forest products (see Box 5). In addition to this, the quality of the statistics that are available for some of these countries is quite limited in the database, particularly in the first half of the decade.

Based on an assessment of some of these issues, it is quite obvious that the trends in forest products trade in these new countries would show a much steeper fall in the early-1990s if the value of trade between these locations (before independence) was known.

Box 6 Lithuania – deliveries of wood products from the former-USSR

During 1970 to 1990, the other republics in the USSR (mostly Russia) were supplying Lithuania with the following average annual volumes: roundwood - 800,000 CUM; sawnwood - 340,000 CUM; pulp - 110,000 MT; and paper and paperboard - 100,000 MT, plus significant volumes of wood based panels. At the same time, annual trade from Lithuania to other Soviet republics amounted to: 150,000 MT of paper and paperboard; 20,000 CUM of particleboard; and 50,000 CUM of fibreboard. In addition to this, Lithuania exported 50,000 CUM of pulpwood to Finland each year. Converting these figures into roundwood equivalent, Lithuanian deliveries to other USSR republics amounted to about 1 million CUM per year, while deliveries from these republics amounted to about 2.4 million CUM per year (on average) during 1970-1990.

For the year 1990, deliveries of wood products to Lithuania from other USSR republics amounted to 1.8 million CUM in roundwood equivalent. Based on this, the estimated value of forest products delivered to the former Lithuanian Republic in 1990 would be around USD 160 million to USD 200 million (at the price levels and exchange rates of 2000). This figure is almost double the real value of imports in the late 1990s and, as with most other new countries of the former-USSR, it is not included in the analysis presented earlier.

Source: Lebedys et al (1999).

13 This also accounts for the apparent fall in productivity (of 50 percent) in the Developing Asia-Pacific region.

14 The sharp fall in labour productivity in Latin America and the Caribbean in 1996 is due to a sudden increase in employment numbers in Brazil in this year. It was not known why this increase occurred, although it was suspected that this was due to a change in definitions or some other statistical revision. Compared with the other regions in this analysis, it seems likely that the earlier statistics for Brazil were an underestimate of employment in this sub-sector.

15 It is possible to produce trends in export prices for roundwood from FAO trade statistics. However, international trade in roundwood accounts for a very small proportion of total roundwood production, so such trends do not give a reliable or representative picture of the trends in prices for all roundwood production.

16 Belarus; Moldova; Russian Federation; and Ukraine.

17 Note that the sharp fall in value-added in Western Europe between 1990 and 1991 is probably due to the very high level of roundwood production in 1990, due to storm damage. Excluding this, value-added has remained roughly the same in Western Europe over the last decade. Furthermore, excluding the effect of this, the global trends would indicate a larger increase than the eight percent quoted above.

18 The trends for the two Asia-Pacific regions are highly influenced by the trends for China and Japan. Excluding these countries, the trend for the Developing Asia-Pacific region would show less of an increase than shown here and the trend for the Developed Asia-Pacific region would show an increase rather than the sudden decline after 1996. The trend for West and Central Asia shows a dramatic fall in value-added per CUM. This is not shown here because this trend is due to a significant increase in production in this region, which is likely to be due to an improvement in the reporting of production statistics rather than a true increase in production over the period.

19 As previously, these figures have all been adjusted to USD at the price levels and exchange rates prevailing in the year 2000.

20 Africa is a significant net importer of forest products due to the high level of net imports into North Africa. Excluding North Africa, tropical Africa and temperate Southern Africa are both major net exporters of forest products.

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