Non-wood forest products
Research and institutions
Large scale forest industry & investment
Small scale forest industry
The fourth general category of issues confronting the forestry sector in the Asia Pacific Region include those dealing with the composition, status and strategies for the conversion of forest yields into products. The focus has, of course, been primarily on the conversion of timber into marketable commodities, yielding both consumptive values for local markets as well as the direct and indirect benefits of income generation, employment and, frequently, government revenues.
Forest production can be simple and un-organized, as in the case of subsistence collection of firewood, fodder or poletimber for immediate family use, or highly organized and institutionalized through business organizations and formal markets. In either case, the efficiency and competitiveness of this productive process largely determines the long term status of the forest resource base and the degree to which sustainability can be obtained.
As noted in the review of the Asia Pacific Region, the most basic forest product has been roundwood. A fundamental decision is made as to whether roundwood will be 'marketed' in unprocessed form, or rather subjected to further conversion prior to marketing. Non-industrial uses of timber, including fuelwood and much local subsistence use is unorganized and functions without the traditional forms of 'industry' or markets.
A major concern throughout Asia Pacific is the extent to which processing of forest products can be competitive in lieu of simple harvesting and export of unprocessed timber. Questions of comparative advantage have historically revolved around issues of natural forest stocks and low-cost labor. These 'advantages' often led to profitable export of roundwood when the establishment of industrial infrastructure was not feasible. "Local" processing has been frequently at small scale, with limited technology, and oriented towards serving limited local needs.
Both producers of roundwood and consumers/importers are vitally interested in the economics of forest products conversion and comparative advantage. Both seek opportunities to 'capture' the benefits of primary and secondary processing for the benefit of local income generation and employment. Traditionally, converted forest products have followed a typical hierarchy from simple forms of solid wood such as sawnwood to partially restructured wood as veneers and panels, and further to various re-constituted products such as particleboard and fiberboard. Alternatively, wood may flow directly into primary fiber utilization through pulping and potentially paper and paperboard.
Increasingly, the choice of forest products strategies depends upon both local comparative advantage as well as global concerns related to markets, potential competitors (both traditional forest products and non-wood substitutes), and prices and capital movements. The simple availability of roundwood supply is no longer sufficient to determine forest products strategies. Technology, capital, transportation, and scope and scale of markets continue to erode traditional advantages based on raw material and labor.
Forests traditionally have yielded many products and values other than timber and commodity products. Uses vary greatly by location and forest type, but all forms of 'minor forest products' have been important to forest dwellers in support of subsistence and 'cottage industry' yielding marketable products and/or goods for community barter. In numerous instances, development of forest products industry has displaced or constrained opportunities for non-wood forest products, with strong implications as to the equity or distributional consequences of forest use. In parts of Asia Pacific where population pressures are extreme and land settlement has resulted in substantial intrusion into forests, social pressures of displacing traditional 'subsistence use' can lead to conflict and continuing problems of forest protection against illegal or unauthorized uses. Since a large proportion of non-wood forest products do not enter formal markets these uses are treated as 'secondary' or 'minor' in spite of the importance to local peoples.
Non-wood forest products are increasingly viewed as options for local development as means for greater self-sustaining economic capacity. Local, small scale 'industry' serving local consumption needs and supporting local employment is increasingly seen as an alternative to large scale industrial development. New procedures for resource assessment, which fully recognize the potential for such uses need to be incorporated into forest sector strategies along with conventional forest products assessment.
As noted previously, the capacity of the Asia Pacific Region to produce timber is linked to the size of the forest estate, the local forest conditions, the levels of forest management and protection, and increasingly the sustainable long term productivity based on investments and management as supplements to natural forest yields. Many issues surrounding the determinants of forest capacity, both short and long term, have been noted. Another important issue for the Region relates to where that timber will be processed. Intra-regional as well as external trade beyond the Asia Pacific Region will reflect both national priorities and strategies as well as the comparative economic advantages at each stage of processing prior to end use consumption.
Each country has a nature! incentive to accomplish as much processing as possible within the local economy regardless of the location of final market. Products may be consumed in other Asia Pacific sub-regions and countries in addition to the domestic market.
The export of unprocessed roundwood is increasingly politically unwelcome in producer countries due to considerations of "value added" processing. On the other hand, consumer countries may well prefer access to unprocessed materials for a wide variety of reasons, including the generation of income and employment within their economies. However, only a finite production capacity is required in total to satisfy the needs of conversion of appropriate industrial roundwood into sawnwood products.
Protection measures including both import and export barriers to trade distort markets at each level. When imposed on roundwood trade, such barriers involve subsidies to existing and new capacity which would otherwise yield to greater efficiencies elsewhere. Problems of excess capacity are frequently compounded by lack of competitiveness in technology, economies of scale, marketing and distribution systems that are inefficient, and other chronic inhibitors of processing efficiencies. Where individual country capacity exceeds local market requirements, inefficiencies due to protection of industry processing will ultimately contribute to limited international competitiveness. Alternatively, the opening of markets and reductions in barriers carries the risk of industrial restructuring, changing the comparative advantages for different stages or levels of industrial processing, imposing short term threats to established patterns of timber utilization and trade. Regional cooperation and strategies for mutual benefit needs to supplement national tendencies to seek advantage within the increasingly competitive environment surrounding the forest sector in the Asian Pacific region.
An increasingly competitive environment for the forestry sector in the Asian Pacific region requires new knowledge, new technology, and new forms of organization and administration of forest resources and forest industry strategies. Research and education is critical to maintaining adequate institutional capacity to maintain and increase the performance of the forestry sector.
Much research on technical forestry has been conducted throughout the Asian Pacific Region, often with excellent cooperation and technical exchange. New forms of communication and information technologies facilitates access to knowledge, reducing the need for independent closed systems within each country. Means of cooperation and promotion of mutual interests will require greater focus on development of regional capacity and sharing of knowledge.
Institutional capacity increasingly incorporates new and different disciplines and fields that have not traditionally been seen as 'forestry'. To a great extent, today's issues and problems transcend technical forestry, involving economic, policy and social sciences. Linkages with other disciplines, and sectors, requires new and innovative approaches of research and administration. For example, population growth and economic development have not traditionally been seen as primary forestry matters. Silviculture, forest management, and growth-yield models have taken preference over population models, welfare economics, and public administration.
Critical re-thinking of the institutional framework for forestry sector development will increasingly require expanding the margins of forestry to integrate these 'external' elements. Forestry, and forest products, will increasingly become a business science in the Asian Pacific region. A strong scientific base for forestry and product technology will remain essential but must be supplemented by additional disciplinary dimensions to assure that sound structures are put in place to maximize the opportunities and competitiveness of the region.
Another dimension of national capacity in many countries of Asia Pacific includes significant issues surrounding the economic role of market structures in decision-making and the allocation of resources, including the role of market-like institutions for the production and distribution of forest products. This issue is discussed in more specific terms later in this section. However, the important role this factor plays in shaping the role of the forest products industry needs to be recognized as a major determinant of competitiveness and investments in operating efficiency.
Issues surround the proper role and scope of large scale industrial development and the sources and requirements for investment. Historically, forest industry was primarily domestically owned/controlled, often with government direct involvement. Technology was frequently simple and inexpensive. Development of modern industry capacity has frequently led to large economies of scale, with larger production capacity, larger raw material input requirements, and newer and more expensive technology. Not infrequently the capacity to develop modern industrial structures has led to foreign investment and the sharing of control and management. Concerns regarding 'foreign control' of forest resources, charges of reckless 'exploitation' without regard to environmental consequences or future conditions are also common.
Where the scale of production exceeds the needs of local markets, the role of marketing and distribution efficiencies also affect the scale of industry. Larger transactions and continuity in supplying international channels requires much more coordination in production and distribution, requiring capacities often beyond the small individual enterprises traditionally found in many parts of the developing countries.
Traditional, small scale forest industries are seen as being 'closer to the people' and in many cases more responsive to local consumption needs. Local ownership and management and the participation of local residents in primary employment are seen as primary benefits of forest industry quite apart from the actual production of output and the consumption of products destined for markets elsewhere. The distributional and secondary impacts of industry, rather than the efficiency in operations within an international context, may well dominate industrial policies.
New technology is also often seen as 'inappropriate' for local applications where fears of displacing existing capacity can prevail. Further, the indirect consequences of large scale industry in terms of raw material requirements, extensive control over land and resources, and the potential for unintended environmental risks can all create the desire to retain small scale operations and enterprises in spite of possible adverse economics and inefficiencies. As noted above, issues surrounding ownership of industry, sources of capital investment, and the degree of foreign control all enter into considerations of appropriateness of industrial structure. From an Asia Pacific regional perspective, development of an internationally competitive forest products sector will certainly raise many issues regarding size and scale of enterprises.