Chapter 3
DESCRIPTION AND QUANTIFICATION OF CURRENT MARKETS FOR TROPICAL TIMBER IN EUROPE

3.1 Introduction

There are no regularly published statistics for the consumption or end uses of tropical timber products in the major European consuming countries. In most countries log imports are now small and consumption of sawnwood, plywood and veneers can be equated approximately with imports. End-use statistics are virtually non-existent and are only found as a result of specific studies, usually related to a particular country and period of time. Section 3.3 brings together available quantitative information on end uses. Interviews conducted for this study failed to yield any reliable end-use statistics. This is not surprising as many distributors specialize in certain product or market areas and end users are generally only aware of their own uses. The only way to obtain reliable end-use data would be to conduct a specially designed survey of traders and end users so as to build up a comprehensive picture of patterns of use. One such survey, conducted in the United Kingdom in 1996, is mentioned below.

3.2 Consumption of tropical timber

3.2.1 Sawnwood

Table 3.1 shows the apparent consumption of tropical and temperate hardwood sawnwood in the major European tropical timber consuming countries.

Table 3.1: Estimated tropical and temperate hardwood sawnwood consumption in selected major European consuming countries in 1998

(Source: FAO and UCBD)

As may be observed, in absolute terms France is the largest consumer of both tropical and temperate hardwood, accounting for 20 percent and 26 percent of the share of consumption in the listed countries, respectively. Nevertheless, on a per capita basis, the total hardwood sawnwood consumption falls in the middle ground at 50.6 m³ per thousand capita, trailing Portugal and Belgium. Spain is the next largest consumer of tropical sawnwood after France, although the consumption of temperate hardwood sawnwood is significantly less (12 percent of the total). The Netherlands follows next in terms of tropical sawnwood consumption (16 percent) and it is interesting to note that the per capita consumption of tropical sawnwood is by far the highest in the group (23.8 m³ per thousand capita). This is probably a reflection of the large volume of tropical sawnwood used in civil engineering applications such as sea defences and bridges in the Netherlands. Italy and the United Kingdom follow in terms of tropical sawnwood consumption, each country accounting for around 12 percent of overall consumption. However, whilst the United Kingdom consumes relatively little temperate hardwood sawnwood (4 percent), giving it the lowest overall per capita consumption figures, Italy (along with France) consumes the largest proportion on non-tropical hardwood sawnwood (26 percent). Germany consumes rather more temperate than tropical hardwood sawnwood, however, although the overall consumption is the third largest in the group, because of the large population, per capita consumption is one of the lowest. In fact, Germany has the lowest per capita consumption of tropical sawnwood in this group. Although Belgium and Portugal have the highest per capita consumption of hardwood sawnwood, they are the lowest consumers overall of tropical sawnwood.

3.2.2 Plywood

Table 3.2 shows the apparent consumption of tropical and temperate plywoods in the major plywood consuming countries in Europe.

Table 3.2: Apparent consumption of tropical and temperate plywood in a number of major plywood consuming countries in Europe in 1998

* Figures for temperate plywood include both hardwood and softwood plywood

(Source: FAO and UCBD)

The greatest share of tropical plywood consumption is held by the United Kingdom, accounting for around one-third of overall consumption. Whilst in overall terms the United Kingdom is the second largest consumer of plywood (tropical and temperate), per capita consumption falls in the middle ground, although it is the second largest per capita consumer of tropical plywood (after the Netherlands). The second largest consumer of tropical plywood is France, however, with the fairly low consumption of temperate plywood, per capita consumption is relatively low. Germany is by far the largest consumer overall of plywood (tropical and temperate), however, in view of the large population, per capita consumption is about average. Germany consumes far more temperate than tropical plywood. Belgium and the Netherlands are the two largest per capita consumers of plywood, with the Netherlands accounting for 11 percent overall of the consumption of both tropical and temperate plywood. Indeed the Netherlands has the highest per capita consumption of tropical plywood within this group. Unlike France, Italy consumes considerably more temperate than tropical plywood, although overall per capita consumption is very similar in both these countries. Spain and Portugal have by far the lowest per capita consumptions of plywood (tropical and non-tropical) as well as very low absolute consumption figures.

3.2.3 Veneer

Table 3.3 shows the apparent consumption of tropical and temperate veneers in major European consuming countries. These figures exclude the consumption of veneers destined for plywood manufacture.

Table 3.3: Apparent consumption of tropical and temperate veneer in a number of major veneer consuming countries in Europe in 1998

(Source: FAO and UCBD)

As may be seen, Italy is by far the greatest consumer of both tropical and temperate veneer (51 percent and 32 percent, respectively), whilst per capita consumption is the highest too. Portugal and Spain both consume similar volumes of tropical veneer and have similar per capita consumption figures, although the latter country consumes a far greater volume of temperate veneer. Portugal on the other hand has the highest per capita consumption of tropical veneer. France consumes very little tropical veneer (and along with the United Kingdom has the lowest per capita consumption figures of tropical veneer), but a moderate volume of temperate material. Germany is the second largest consumer of temperate veneer and a moderate consumer of tropical species. The Netherlands is a very small consumer of both tropical and non-tropical veneer and this is reflected in very low per capita consumption figures. The United Kingdom is the smallest consumer of veneer both in absolute terms and on a per capita basis.

As noted in the previous chapter, France, Italy, Spain and the Netherlands are the main importers of tropical hardwood sawnwood. Trends in the consumption of all hardwood sawnwood (both tropical and non-tropical) during the period 1990-1999 for these countries are presented in Figures 3.1-3.4. Unfortunately, data on the consumption of tropical sawnwood within each country were unavailable for this period and therefore the level of imports of tropical sawnwood are presented. In addition, figures for domestic consumption (i.e. including domestically produced sawnwood from imported logs) between 1994 and 1999 are also shown. As may be observed, the differentials between imports consumption of tropical sawnwood are negligible, and thus (as noted previously) import figures provide a reasonable indication of the trends in consumption of tropical timber in these four countries.

Figure 3.1: Fluctuations in the consumption of tropical sawnwood in comparison to total hardwood sawnwood consumption in France for the years 1990-1999

(Source: FAO and UCBD)

It is apparent from Figures 3.1 and 3.2 that the total consumption of hardwood sawnwood in both France and Italy has remained fairly static during this period. In the early 1990s there appears to have been a slight drop in the total consumption of hardwood in France (Figure 3.1), but in recent years consumption seems to have been on the increase again. Likewise with Italy (Figure 3.2), although year on year fluctuations are somewhat greater, there does appear to have been a general increase in hardwood sawnwood consumption. For tropical sawnwood, however, the trend seems to have been fairly static, with neither France nor Italy showing any significant changes in their level of imports of tropical sawnwood. This is reflected in a relatively constant level of tropical sawnwood imports as a proportion of the total hardwood consumption (see Figure 3.5). The situation in the Netherlands (Figure 3.3) is somewhat different in that hardwood sawnwood consumption is generally falling, although the importation of tropical sawnwood has been stagnant or even slightly increasing. This is reflected in an apparent increase in the percentage of imported tropical sawnwood as a proportion of total hardwood sawnwood consumption (see Figure 3.5).

Figure 3.2: Fluctuations in the consumption of tropical sawnwood in comparison to total hardwood sawnwood consumption in Italy for the years 1990-1999

(Source: FAO and UCBD)

Figure 3.3: Fluctuations in the consumption of tropical sawnwood compared to total hardwood sawnwood consumption in the Netherlands for the years 1990-1999

(Source: FAO and UCBD)

Figure 3.4: Fluctuations in the consumption of tropical sawnwood in comparison to total hardwood sawnwood consumption in Spain for the years 1990-1999

(Source: FAO and UCBD)

Figure 3.5

: Imports of tropical sawnwood shown as a percentage of total hardwood sawnwood consumption for the years 1990-1999

(Source: FAO and UCBD)

As far as Spain is concerned (Figure 3.4), the trend in hardwood sawnwood has remained fairly static over the past ten years or so but with significant yearly fluctuations. There would, however, appear to be a slight increase in proportion of imported tropical sawnwood as compared to the overall consumption.

As may be noted from Figure 3.5, tropical sawnwood imports form a far higher proportion of the overall hardwood consumption in the Netherlands, than in either France or Italy.

3.3 End uses of tropical sawnwood, plywood and veneer

Because of the paucity of data on the end uses of tropical timber products (and indeed on all timber products), it has not been possible to present a consistent quantitative breakdown of tropical sawnwood, plywood and veneer use in the major consuming countries. The main end uses are as shown in Table 3.4.

Table 3.4: End uses of tropical sawnwood, plywood and veneers

3.3.1 Sawnwood end uses

One estimate for the use of tropical sawnwood in Western Europe in 1998 is shown in Table 3.5. As may be observed, joinery use (e.g. doors, windows, stairs, shop and office fittings) comprise the largest market sector, followed by furniture.

Table 3.5: Estimate of end uses of tropical sawnwood consumption in Western Europe in 1998

(Source: Jaakko Pöyry)

As will be explained in Section 3.3.3, Europe's imports of secondary processed tropical products (mainly joinery and furniture products) have been increasing rapidly in recent years. Many of these products are imported in semi-finished form (as components or partly finished products) through the traditional trading networks used by European joinery and furniture manufacturers. This parallel trade makes it more difficult than in the past to identify end uses of sawnwood separately from further manufactured products. Table 3.6 shows the estimated end-use breakdown of tropical sawnwood in the major consuming countries in 1993, along with estimated figures for 1999. The estimate for 1999 has been made by assuming the same percentage-wise product mix in 1999 as existed in 1993. By applying this breakdown to apparent tropical sawnwood consumption figures for 1999 (ITTO, 2000), an indication of the consumption of each product type in this group of countries has been made.

As may be observed, within the joinery industry, Germany consumes the largest amount of tropical timber in window manufacture followed by France and the United Kingdom. Germany also consumes the largest amount of tropical timber for external door manufacture. In the Netherlands, tropical timber is used not only for external door and window manufacture but considerable quantities are recorded as being used in `furniture and other' end uses. Interviews held during the course of this study indicated that these `other' end uses include sea and river defences, bridge building, shop fittings, office and domestic furniture applications. Belgium shows considerable consumption of tropical sawnwood in window manufacture whilst in Spain large quantities are also used in window production. Large amounts are also recorded in `other' end uses. Italy records the largest consumption under "furniture and other" reflecting the large furniture industry in this country.

Table 3.6: Apparent consumption of tropical sawnwood in joinery uses

(Source: de Boer, 1995/ITTO, 2000)

Further data on the end uses and species of tropical timber used were found for the Netherlands and the United Kingdom. Table 3.7 summarizes the estimated use and species pattern in the Netherlands. About 16 percent was used in waterways and harbours, mainly being of durable species such as Azobé and Balau. During the study it was reported that there had been some substitution in these end uses by species such as oak and other treated timbers. This substitution was possibly caused by environmental campaigns exerting pressure not to use tropical timbers, however, failure or poor performance of these substitutes in certain environments has resulted in tropical timbers again being favoured.

Table 3.7: Species and end uses of tropical timber in the Netherlands (thousand m³)

(Source: Boilley - from data from VVNH-1994)

For the United Kingdom, data on the uses of tropical hardwood were found from a number of sources including a major study by the Timber Research and Development Association (TRADA).

Table 3.8 summarizes the end-use pattern from the TRADA study. The table shows the sales pattern of hardwood sawnwood by timber importers. It shows that about 20 percent of importer's sales are to other importers/merchants, for resale, mainly to builders, joiners and furniture manufacturers. The construction industry (directly and indirectly) is the most important sector for the consumption of some hardwoods imported into the country (both tropical and temperate) while the furniture and transport sectors were the largest non-construction consumers. The study found that there are differences in the ultimate destinations/end uses, of hardwood imported from different geographical regions. Major outlets for European and North American hardwoods were found to be in furniture and shop-fitting end uses. Additionally, the joinery market was also an important outlet for North American hardwoods. By contrast, no one particular end use was found to dominate imports of sawn hardwood from the Far East, but in comparison to other regions a significant proportion of timber found its way into transport end uses.

Table 3.8: Market sector distribution of United Kingdom importers' sales of hardwood sawnwood in 1996 (thousand m³)

(Source: TRADA)

Table 3.9 shows the principal species of imported tropical sawnwood in a number of major European tropical timber consuming countries.

Table 3.9: Tropical sawnwood species imported by major European consumers in 1999

(Source: ITTO)

3.3.2 Plywood end uses

Four countries (the United Kingdom, France, Germany, the Netherlands) account for 80 percent of the European Union consumption of tropical plywoods. In all four countries tropical plywoods account for 60 percent or greater of all hardwood plywood consumption, whereas with veneer sheets temperate species predominate in these countries (see below). The United Kingdom accounts for 40 percent of the market and the other three countries jointly for another 40 percent. The main uses are associated with the construction industry, but quantitative data are only available for the United Kingdom. Table 3.10 shows the percentage end-use breakdown for all plywoods in the United Kingdom of which tropical plywoods accounted for about 75 percent.

Table 3.10: End uses of all plywoods in the United Kingdom in 1996

(Source: TRADA)

Tropical plywoods are currently used for on-site joinery work and for shop and office fittings. Other uses include caravan and vehicle manufacture and marine plywoods used in boat building. Furniture is a reasonably small user in the United Kingdom, but is a relatively large consumer of tropical plywoods in Italy, Germany and France.

3.3.3 Veneers end uses

The European Union consumes about 400 000 m³ of tropical veneers per annum other than in plywood manufacture. The largest markets are in Italy (40 percent), Portugal (17 percent), Spain (15 percent) and Germany (9 percent). It is significant that the bulk of consumption is in the Mediterranean countries where the fashion still remains for darker colours in furniture. In these countries over half the consumption of hardwood veneers is of tropical species, whereas in most Northern European countries only about 10-15 percent of consumption is of tropical species. Veneer sheets are used mainly as overlays to panels (MDF and particle board) which are in turn used widely in joinery (doors and panelling) and furniture manufacture. Veneers are also purchased directly by the furniture industry. Major uses in furniture include kitchen cabinets, office furniture, dining and living room cabinets, computer and audio units. Parquet flooring is a growth market for veneers, but mainly for the lighter coloured temperate species.

3.4 Secondary processed tropical timber products

3.4.1 Import trends

Secondary processed wood products are now a very significant part of exports of many tropical timber producing countries. In fact, during the 1990s the main commercial thrust of the leading tropical timber exporting countries was to develop secondary processing industries. This transformation has been strongest in Southeast Asia and South America but has also occurred in a smaller way in some African countries. The main drivers of this change have been:

· policy of governments to add value to their increasingly scarce raw materials. Policies have included log export restrictions, high export taxes on primary products and investment incentives;

· technological developments in the processing of plantation species (e.g. rubberwood) and lesser used species;

· technology transfer from developed countries;

· inward investment by North American, Japanese and European companies;

· wage cost advantages in exporting countries;

· falling tariffs under GATT/WTO (General Agreement on Tariffs and Trade/World Trade Organization) agreements;

· rapidly growing domestic/regional economies providing expanding local markets;

· improved shipping services;

· export promotion.

The impact of these developments on the exports of tropical timber producing countries has been dramatic. Table 3.11 shows the progress of exports of primary and secondary processed wood products by major exporters in Asia, South America and Africa. Exports of secondary processed products from all three regions have grown by 140 percent, compared with a fall of 10 percent for primary products. The largest growth over the eight years was from Asian countries, but the most rapid growth occurred with exports from South America. The collapse of the Asian economies in 1997-1998 is clearly seen in the fall in exports of primary and secondary products between 1995 and 1998.

Table 3.11: Comparative growth of primary and secondary processed wood products from major tropical exporting countries 1990-1998 (US$ million)

The following countries are included in the regions noted in the table:

Asia: Indonesia, Malaysia, the Philippines, Thailand, India, Myanmar, Fiji

South America: Brazil, Ecuador, Colombia, Venezuela, Bolivia, Trinidad, Peru, Suriname

Africa: Côte d'Ivoire, Ghana, Cameroon, Democratic Republic of Congo, Togo, Gabon, Central African Republic, Liberia

This rapid rise in export growth has been mirrored by substantial growth in imports of secondary processed wood products by European countries. Table 3.12 compares the development of imports of primary and secondary wood products by the European Union between 1995 and 1998 where it can be seen that the value of primary product imports fell by 12 percent, while secondary products rose by 29 percent.

Table 3.12: European Union imports of tropical primary and secondary wood products from tropical producing countries 1995-1998 (US$ million)

(1) Logs, sawnwood, plywood, veneers

(2) Wooden furniture and parts, builders' woodwork, other processed secondary wood products, cane and bamboo furniture and parts

Approximately 70 percent of tropical secondary wood products imports comprise wooden furniture and furniture parts and builders woodwork. Table 3.13 shows the breakdown of imports in 1998 by product by the major European Union consumers. The table also shows the total import value of primary products.

Table 3.13: Product categories of imports of tropical secondary processed wood products in selected European Union countries in 1998 (US$ million)

(Source: ITTO, 2000)

The following features of Tables 3.12 and 3.13 are noteworthy:

In the European Union as a whole, secondary products comprise 35 percent of all tropical timber imports (primary and secondary) and in the six selected countries they account for 43 percent of imports.

In the United Kingdom the value of secondary product imports exceed primary products and the margin of difference is also very small in Germany.

Furniture and furniture parts are the largest component of imports in all countries, but builders woodwork accounts for between 25 percent and 32 percent of imports in the United Kingdom, Germany and the Netherlands.

Penetration levels of secondary processed products into Southern European countries are lower then in the Northern European countries.

Within the aggregated product groups shown in Table 3.13, the main types of furniture and furniture components imported from tropical timber exporting countries are living/dining room and garden furniture. The principal items of builders' woodwork are doors, windows, mouldings and flooring.

The significance of European markets for these exports differ by country and region and by product. An overview of Europe's position is shown in Table 3.14. The largest exporters are Malaysia, Indonesia and Thailand and most of these and other Asian exporters' sales are directed to Japan, the United States of America and other countries in the Pacific region.

South American exports, predominantly from Brazil, are shipped primarily to the United States of America and Europe (the United Kingdom, Germany, the Netherlands and France).

Only in the case of Africa, where Ghana and Côte d'Ivoire account for the bulk of exports, is Europe the largest market. Italy, the United Kingdom, France and Germany are the main destinations.

Table 3.14: Import destinations of secondary tropical wood products by principal exporters in 1998

(Source: ITTO, 2000)

3.4.2 Impact of secondary processed tropical wood products on the European Union consumption of primary products

The rapid import growth by European countries of secondary products and the stagnation of imports and consumption of primary products are almost certainly linked. The same countries are the major exporters of both categories of products. The interviews carried out for this study suggested that there has been a substitution of imported tropical logs and sawnwood by imports of furniture and furniture parts and builders' woodwork (e.g. mouldings and doors). However, further research is needed for a fuller understanding of this linkage and the factors driving the substitution.

However, two general points emerge from these developments. First, the general decline in the consumption of tropical timber products needs to be set against the growing importation of further processed products. In other words, tropical timber products play a larger role in the European market than the consumption figures for primary products suggest. The second point relates to product value. Secondary processed products generally carry a substantially higher price per cubic metre than sawnwood (the margin will of course vary from product to product) and there is some evidence that their prices are less volatile. The higher value may not, of course, reflect higher profitability but the firm policy of several exporting countries to discourage the export of primary products demonstrates their belief that secondary products are now the high-value products which will receive strategic emphasis.