Commodity report: World outlook for forest products

Total timber heeds ix 1970
Trade
Problems and prospects
Summary

Part II of a report prepared for the FAO Committee on Commodity Problems, continued from Unasylva Volume 16 (2), Number 65

THE previous installment set out the regional pattern of consumption in 1957/9 and estimated requirements in 1970 for five broad categories of forest products. These figures are aggregated in Annex Table M, and Table 5 below gives a summary of that Annex Table.

Total timber heeds ix 1970

Attention has already been drawn to the considerable conjectural element in the forecasts. There is another aspect of these figures that should not be overlooked. All the products - sawnwood, plywood, different types of board, pitprops and poles, newsprint, paperboard, fuelwood and so on - are aggregated in terms of roundwood equivalent, that is, the volume of solid roundwood (true measure) needed to produce them. This involves a whole series of assumptions about conversion factors: how much sawnwood or plywood can be obtained from the log, how much pulp can be obtained from pulpwood, how much wood pulp it takes to make a ton of paper or board. There is no space here to discuss the complexities of arriving at satisfactory average technical coefficients or conversion factors. It is sufficient to note that while the forecasts make some allowance for technical improvements, the uncertainties are such that no precision can be claimed for the figures in the final columns. However, they serve to show the orders of magnitude with which we are concerned. Fuelwood needs are expected to decline or remain unchanged in all the more industrialized regions: North America, Europe, U.S.S.R., and Oceania. Elsewhere moderate increases are expected, save in the Far East, where the high figure for 1970 (mainly south Asia) presupposes a substantial switch from burning dung to burning wood. In fact, only a vigorous mass campaign for the establishment of village fuelwood plantations could enable this switch to occur. Unless it does occur, however, the coming decade will see further disastrous inroads on south Asia's forest capital, since there is little prospect of other sources of energy being brought within the economic reach of the rural millions by then.

There will be a very substantial rise in the industrial wood needs of all regions by 1970, and in general this rise will be a good deal faster in the less industrialized regions.

Can these needs be met? The last world survey of forest resources¹ showed that globally and in terms of physical wood availabilities this question can be answered with an emphatic affirmative. The world's forest capital is sufficient to ensure that, properly managed to provide an expanding yield, it can provide for all foreseeable needs. Certain countries and even whole regions may have to create additional forest resources, and others will find it more economic to do so than to open up hitherto unexploited forests. But the problem is not simply one of physical wood availability; there is also the question of wood processing facilities.

¹World forest inventory, 1958 (FAO, 1960).

TABLE 6. ALL FOREST PRODUCTS: 1957/59 CONSUMPTION AND ESTIMATED 1970 NEEDS

Region	Consumption 1957/69			Needs, 1970	Fuel wood	Total
	Industrial wood	Fuel wood	Total	Industrial wood
	Million cubic meters
North America	324	56	380	438	34	472
Latin America	43	178	221	67	202	269
Europe	205	105	310	285	100	385
U.S.S.R.	244	125	369	359	125	484
Near East	8	8	16	11	13	24
Far East	91	255	346	139	412	551
Mainland China	34	16	50	85	20	105
Oceania	16	8	24	21	8	29
Africa	15	110	125	24	131	155
TOTAL	980	861	1841	1429	1045	2474

It is not proposed in this chapter to discuss, region by region, the problem of meeting future requirements. This, in fact, forms the central theme of the cycle of regional studies which have been largely drawn upon for the figures cited in this chapter. The desirability or practicability of regional or national self-sufficiency is not merely a question of forest resources, future needs, and the possibilities of making the necessary investment in the forests and in the wood-processing industries. In all regions, forests play several important roles over and above the timber crop they furnish - for example, in protecting the soil and in controlling the water regime - and in many countries these noncrop functions outweigh in economic importance that of providing timber. Moreover, in a number of the advanced industrialized countries the recreational role of the forest is taking on increased importance. The new demands on the forest to which urbanization, higher incomes and greater leisure are giving rise are by no means trivial ones; they already have a significant impact on the economics of forest management in a number of countries, and this impact is destined to gain strength and spread.

However, a comprehensive discussion of the multiple role of the forest would go beyond the scope of the present study. In the sections following the summary of recent trade, therefore, examination will be made, in very general terms, of a few of the implications of the demand forecasts for 1970, with particular reference to the prospects for the forestry and timber sectors of those countries which at present have low incomes.

Trade

Sawnwood (including sleepers and boxboards)

All the major regions of the world satisfy their sawnwood needs in the main from domestic supply, but even so substantial quantities are traded between regions. Table 6 shows the important trends in net sawnwood trade of the regions over the last decade.

The most striking aspect of the Table is the increasing deficit position of Europe from the role of a net exporter, although in the period 1957-59 net imports were still only 5 percent of consumption. The U.S.S.R. has recovered its prewar role as the major supplier of Europe, and North American exports have in consequence declined from the level of the early postwar years. Latin America is a net exporter of a very small percentage of production (1 or 2 percent). Asian trade in sawnwood appears to be approximately in balance, while Oceania and Africa are net importers largely because of coniferous sawnwood requirements. Increasing production from coniferous plantations in south and east africa and in New Zealand is tending to reduce the net import positions, particularly in relation to total consumption.

Plywood

Although there is considerable intraregional trade, most regions do supply the great bulk of their own plywood requirements. Major flows are from the Far East, especially Japan, and the U.S.S.R. to North America and Europe respectively. There is a sizable and growing export of veneer logs of broad-leaved species from Africa to countries of western and southern Europe, several of which are net exporters of plywood. Japan's increasing consumption and export are based on imports of logs from the Philippines and North Borneo.

Interest attaches to plywood because of its rapidly growing importance and because of the pattern of veneer log exports from Africa, Asia and Latin America to more developed countries for manufacture into plywood exports. It appears that here may be a real opportunity for the promotion of manufacture and increased trade for underdeveloped countries. The European gap in supply, which is now filled largely by imported logs, can be expected to increase considerably over the next decade.

Already, the Philippines, Taiwan, Gabon, and to a lesser extent Surinam and Nigeria have developed appreciable plywood exports.

Fibreboard

In addition to their exports to the rest of Europe, the Scandinavian countries (which largely account for Europe's position as a net exporter of 10 percent of production) supply the Far East and Latin America with 20 to 30 percent of their consumption. A few countries in the less developed regions are net exporters but the total quantity entering interregional trade is small compared with world consumption.

TABLE 6. - TREND OF NET TRADE IN SAWNWOOD (INCLUDING SLEEPERS AND BOXBOARDS)

Region	1947-49	1957-59
	Million cubic meters (s)
North America	+ 3.4	+ 2.5
Latin America	+ 0.1	+ 0.1
Europe	+ 0.1	- 3.8
U.S.S.R.	- 0.1	+ 3.3
Asia (excluding Mainland China)	- 0.2	+ 0.1
Oceania	- 0.4	- 0.6
Africa	- 1.3	- 1.2

Particle board

Trade in particle board is still relatively small, the only noteworthy flow being intraregional trade in Europe.

Interregional in particle board is not expected to become important in the next decade.

Pulp and paper

The last 15 years have seen some important changes in international trade in pulp and paper. Details of regional net trade in pulp and various paper categories are set cut in Annex tables E to G. and the changes from 1946/8 to 1960 are shown in Annex Table K. These changes are summarized in Table 7 below. Since we are only concerned here with trade and general magnitudes, the impropriety of adding together pulp and paper (the pulp/paper ratio depends on the category of paper or board produced) may be overlooked in the present context.

In 1946/8, Europe and North America had a combined net export of 2 million tons of pulp and paper. All other regions of the world were net importers. North America, too, had a deficit in wood pulp, but this was more than offset by net exports of paper - largely newsprint from Canada. On balance, however, Europe was far and away the most important supplier to other regions. By 1957/9 a radical change had taken place. Europe and North America now supplied other regions on balance with well over 2.5 million tons of pulp and paper, but nearly two thirds of this came from North America. In fact, Europe's balance had fallen by 500,000 tons, increased net exports of paper being more than offset by the transition to a pulp deficit. In 1960, the combined net exports of the two regions approached 3 million tons, but Europe's contribution had fallen to less than one tenth; in fact, Europe imported, on balance, over 500,000 tons of pulp. It will also be noted that in recent years the U.S.S.R. has become a net exporter, mainly of pulp.

In Oceania, the Near and Far East, and Africa the combined pulp and paper deficit has steadily grown. It also rose in Latin America to 1957/9, though the deficit had fallen somewhat by 1960. It is interesting to note that the less developed regions - Latin America, the Near and Far East, and Africa - which in 1946/8 imported on balance 230,000 tons of pulp and 1,140,000 tons of paper, were, in 1960, importing 650,000 tons of pulp and 1,860,000 tons of paper. This deterioration in the net trading position of well over one million tons of pulp and paper occurred in spite of diligent efforts, especially in Latin America and Asia, to develop local production. One measure of those efforts is the growth in the production of paper and paperboard from 1946-48 to 1960 in the less developed regions - Latin America, Africa and Asia (except Japan) - from 0.9 million to 2.0 million tons. Thus over the period the relative dependence of these regions on imports declined from 57 percent to 26 percent of consumption.

The substantial rise expected in the paper requirements of the developing regions over the next decade has already been remarked in a preceding section. Paper is indeed a key element in programs for cultural advance and industrial progress. The experience of the last decade, as evidenced by the figures in Table 7, suggests that considerable effort will be needed if the current deficit is not to rise further. Supplies could certainly be obtained from the more industrialized regions. Although Europe, in spite of a current excess of capacity, is clearly destined to become a region with a rising net deficit, there is ample scope in North America for additional production capacity. The U.S.S.R. already has ambitious plans for expanding pulp and paper capacity, and though the bulk of new production will certainly go to feed the relatively starved home market, the margin available for export could certainly be increased if necessary. But the main problem (up to 1970 at any rate) is not one of finding supplies; it is of finding the foreign exchange to pay for them. It is this which, during the 1960s, will lead countries in the less industrialized regions to redouble their efforts to establish new pulp and paper mills based on indigenous resources.

TABLE 7. - REGIONAL NET TRADE IN PULP AND PAPER, 1946/8, 1967/9 AND 1960

Region	1946/8			1957/9			1960
	Pulp	Paper	Pulp and paper	Pulp	Paper	Pulp and Paper	Pulp	Paper	Pulp and Paper
	Million metric tons
North America	- 0.37	+ 0.87	+ 0.50	+ 0.58	+ 1.16	+ 1.74	+ 1.18	+ 1.41	+ 2.59
Europe	+ 0.75	+ 0.71	+ 1.46	- 0.05	+ 0.96	+ 0.91	- 0.52	+ 0.79	+ 0.27
Oceania	- 0.05	-0.26	- 0.31	- 0.05	- 0.28	- 0.33	- 0.17	- 0.32	- 0.49
U.S.S.R.	+ 0.01	- 0.03	- 0.02	+ 0.11	- 0.03	+ 0.08	+ 0.16	+ 0.02	+ 0.18
Latin America	- 0.21	- 0.63	- 0.84	- 0.42	- 0.85	- 1.27	- 0.36	- 0.83	- 1.19
Near and Far East (excluding Mainland China)	- 0.02	- 0.28	- 0.30	- 0.21	- 0.54	- 0.75	- 0.31	- 0.56	- 0.87
Africa..	...	- 0.23	- 0.23	+ 0.02	- 0.38	- 0.36	+ 0.02	- 0.47	- 0.45

+ = net exports;
- = net imports.
* = 1959

Other wood products

There is little international trade in wood used in the round, except in the case of pitprops in Europe where there are considerable imports from the U.S.S.R., Scandinavia, France, Austria, and East Germany to the United Kingdom, the Federal Republic of Germany, and Hungary.

Fuelwood enters international trade to a very limited extent because of the high costs of transportation relative to the value of the wood itself. Likewise the movement of fuelwood within countries is limited and the supply problem tends to be one of a very local nature, requiring very detailed appraisals to determine prospective shortages.

Although these are important intraregional movements in pulpwood, the only interregional trade of any consequence is that from Canada to Europe.

Problems and prospects

The implications of the estimates of timber requirements by 1970 emerge only after consideration has been given to some of the basic facts relating to the world timber economy and a scrutiny of the changes which have been taking place in recent years. Some of the relevant data are set out in Table 8.

The contrast between the high level of per caput industrial wood consumption in North America, Europe, Oceania, and the U.S.S.R., as compared with that in

Latin America, the Near and Far East, Africa, and Mainland China, is most striking. In passing, it may be noted that the Far East would rank much lower were Japan excluded (0.06 cubic meter per caput without Japan). It will also be observed that the levels of industrial wood consumption bear no discernible relationship to wealth or poverty of native forest resources. In fact it is the need for industrial wood which determines the degree to which native resources are developed and the extent to which wood processing facilities are established.

The next striking feature of this table is that only two regions of the world - North America and the U.S.S.R. - were, in 1955, net exporters (in physical terms) of timber: in 1960 they had been joined by Africa. All the other developing regions, as well as Europe and Oceania, have a timber trade deficit (in roundwood equivalent).

The table reveals that also there have been several important changes between 1955 and 1960. North America's positive balance was about the same, 12 to 13 million cubic meters. So were the negative balances of the Near East, Oceania and Latin America (2, 3 and 4 million cubic meters respectively). But Europe's deficit rose from 4 to 18 million cubic meters - by far the biggest change recorded over this quinquennium. In fact, Europe's consumption of industrial wood during this period rose by some 27 million cubic meters; thus of this additional consumption about one half came from Europe's own resources and one half from increased imports from other regions. Europe is today the principal wood-deficit region, though as recently as the early 1950s her physical trade balance in timber was still positive. Europe's growing deficit, it will be observed, has been largely met by increased imports from the U.S.S.R. which, in spite of rapidly rising domestic consumption, has succeeded in recovering her prewar place as premier supplier of sawn softwood to Western Europe.

TABLE 8. - NET TRADE TN FOREST PRODUCTS, AND FOREST AREA PER CAPUT, BY REGIONS

Region	Forest area per caput	Industrial wood consumption per capita 1960	Net trade
			Volume		Value
			1955	1960	1955	1960
	Hectares	Cubic meters	Million cubic meters®		Million U.S. dollars.
North America	3.8	1.74	+ 12.2	+ 13.0	+ 394	+ 470
Europe	0.3	0.53	- 3.7	- 17.5	- 263	- 598
Oceania	6.4	1.18	- 3.1	- 3.3	- 158	- 172
Subtotal.	1.6	0.93	+5.4	- 7.8	- 27	- 300
Latin America	5.3	0.16	- 4.2	- 3.7	- 122	- 215
Near East	0.2	0.10	- 1.8	- 2.1	- 120	- 92
Far East (excluding Mainland China)	0.5	0.11	- 0.7	- 2.0	51	- 55
Africa	3.1	0.07	- 1.3	+0.8	- 80	- 130
Subtotal.	6	0.11	- 8.0	- 7.0	- 373	- 492
TOTAL, (excluding U.S.S.R. and Mainland China)	1.6	0.36	- 2.6	- 14.8	- 400	- 792
U.S.S.R.	5.5	1.16	+4.6	+ 12.7	...	+ 182*
Mainland China	0.1	0.03	...	...	...	...
WORLD TOTAL	1.5	0.34

+ = net exports; - = net imports; * = 1959.

TABLE 9. - AFRICA, ARIA, AND LATIN AND PATTERN OF PATTERN PRODUCTS TRADE IN TRADE

Commodity	Unit, in thousands	Imports	Exports	Net trade
				Quantity	Value
				Million U.S. dollars
Sawlogs and veneer logs	cubic meters	7 360	10 800	+ 3 440	+ 36
Sawnwood (incl. sleepers end boxboards)	"	4 930	3 774	- 1 155	- 33
Woodpulp	tons	770	105	- 665	- 88
Paper and board	"	2 145	290	- 1 860	- 368

+ = net exports; - = net imports.

Viewed in relation to total production or consumption, the net trade movements into and out of the several regions do not loom very large. Net exports from North America and the U.S.S.R. represent about 4 or 5 percent of industrial wood production. In the deficit regions, except for the Near East, net imports represent 17 percent or less of the national consumption of industrial wood.

However, the movement of timber in physical units (roundwood equivalent) is only part of the picture. More significant are the value balances, and here the figures in Table 8 tell a trenchant story. Thus, the attainment of a positive physical balance by Africa has not prevented the adverse balance in value terms from deteriorating by about U.S. $ 50 million annually. Latin America's adverse trade balance in forest products has nearly doubled - to U.S. $ 215 million. Asia's has shown little change - around U.S. $ 50 million in both years. These figures tend to magnify greatly the physical trade deficits, since exports from these regions to Europe and North America consist substantially of unprocessed wood while imports consist largely of high value pulp products. Increased Japanese exports of plywood and import reductions by Israel have reversed this trend for the Far and Near East. Table 9, which gives some details of the 1960 pattern of trade for Asia, Africa, and Latin America taken together, makes clear the general tendency.

The net outward movement from these three regions of 3.5 million cubic meters of sawlogs and veneer logs yields a net revenue of only U.S. $ 36 million almost offset by the net cost of a net inward movement of only 1 million cubic meters of sawnwood. The net inward movement of 2.5 million tons of pulp and paper involves a net outlay of some U.S. $ 460 million. Manufactured paper goods add another U.S. $ 75 million.

Table 9, read in conjunction with Table 8, points to the considerable import-saving possibilities which exist in these regions if wood-processing facilities, especially for pulp and its products, can be expanded. Equally apparent is the fact that export earnings could be enhanced if a bigger proportion of the timber now exported as round logs could be converted before export.

It was pointed out above that Europe is today the outstanding timber deficit area of the world. The continued rise in Europe's industrial wood needs expected during the current decade (see Table 10), together with the inelasticity of Europe's industrial wood supplies, at any rate in the medium term, point to a rising physical and value deficit over the next years. How important this situation can be in providing outlets for forest products exports from the developing regions can be seen more clearly if we examine in a little more detail Europe's current pattern of trade in forest products.

Thus, in 1960, Europe's net overseas earnings on manufactured paper and board were roughly offset by the cost of net imports of pulpwood and wood pulp to sustain the region's paper production. Coniferous sawnwood was the biggest adverse item, the U.S.S.R. being the main source of supply with much smaller quantities coming from North America. However, net imports of broad-leaved wood also cost about U.S. $ 320 million. Most of this consisted of tropical woods, and the greater part came to Europe in the form of logs for further processing into sawnwood, plywood and veneers. The prospects for increased imports of broad-leaved woods from tropical forests are extremely favorable, given that most of these enter into end-uses intimately connected with continued economic growth and rising living standards. The deficit of coniferous sawnwood is also likely to grow, and although there are promising sources of coniferous timber in Central and South America, and indeed in Asia and Africa also, it is evident that these geographically remoter regions will not find it easy to compete on the European market with Russian and Canadian sawnwood, either in terms of price or of sustained quality.

The outlook for pulp and its products is somewhat uncertain. There is considerable excess capacity in Europe at the present time (1962), and new capacity presently under construction or in the planning stage could widen the gap between capacity and effective demand. However, this is likely to be a temporary phenomenon. The demand for pulp products is steadily forging ahead - Europe still has a long way to go to catch up with North American standards of paper consumption - while potential sites for new mills become fewer and fewer. Toward the end of the decade nonintegrated mills (paper mills dependent on market pulp), as well as pulp and paper mills depending partly on imported pulpwood, may well run into raw material difficulties.. In the medium term, and a fortiori in the longer term, there would appear to be excellent possibilities for the developing regions to make a contribution toward the solution of Europe's growing pulp/paper deficit, especially as a number of countries have substantial areas suited by soil and climate to the production of wood fibre at many times the rate possible in Europe.

TABLE 10. - 1960 NET TRADE EUROPE IN FOREST PRODUCTS

Commodity	Quantity				Value
	Unit, in millions	Export	Import	Net trade	Export	Import	Net trade
Sawlogs and veneer logs
Coniferous	cubic meters ®.	1.3	2.5	- 1.2	27	47	- 20
Nonconiferous	"	1.0	5.2	- 4.2	33	258	- 225
Sawnwood
Coniferous	cubic meters ®	16.9	21.9	- 5.0	620	935	- 315
Nonconiferous	,,	1.5	2.2	- 0.7	73	167	- 94
Other sawn products	,,	1.0	0.75	+ 0.25	31	40	- 9
Pitprops and poles	cubic meters ®	2.9	3.3	- 0.4	43	42	+ 1
Pulpwood	"	6.0	8.0	- 2.0	62	103	- 41
Wood pulp	metric tons	5.9	6.4	- 0.5	668	800	- 132
Newsprint	,,	1.6	1.4	+ 0.2	205	198	+ 7
Other paper and board	,,	3.4	2.7	+ 0.7	705	530	+ 175
Fibreboard	"	0.75	0.58	+ 0.17	66	57	+ 9
Plywood and veneers	,,	0.75	1.01	- 0.26	142	175	- 33
Other forest products	,,	...	...	...	371	291	+ 80
TOTAL:	cubic meters®	91.0 *	108.4 *	- 17.4 *	3 046	3 643	- 697

+ = exports; - = imports.
* Estimated quantities in roundwood equivalent.

Any discussion of prospects for the developing regions naturally concentrates on Europe, since Europe has the greatest deficit and that deficit is likely to grow. But other regions also offer the hope of new or expanding markets. Already North America is a net importer of about 8 percent of its high consumption of veneer and plywood. The value of imports in 1959 was nearly U.S. $ 150 million. Although Japan is as yet the main source of imports, the growing use of luxury woods for furniture and paneling, which will continue to expand with rising living standards, offers a prospective market in North America for veneer and plywood exports from the developing countries with supplies of tropical broad-leaved species. As living standards rise, the U.S.S.R. may provide a future market for sawnwood, veneers, plywood and logs of tropical species. Some of the more industrialized countries in the developing regions them-selves offer export possibilities to the lower income countries. Japan imports more than U.S. 150 million dollars worth of logs largely from the Philippines and Borneo, and is seeking new sources of supply for the additional amounts of wood her growing economy will undoubtedly require. Present and future Asian supplies will obviously prefer to export an increased proportion in processed form whenever local conditions favor the establishment of wood processing facilities. Finally, in each of the developing regions there are certain countries with inadequate indigenous forest resources (India, Egypt, and Uruguay are examples) where economic growth could provide new outlets for forest products from neighboring countries.

Forest industry development in many countries has been impeded by the fact that national markets are still relatively small, while in many branches of the industry (notably newsprint, kraft pulp, and fibreboard) the economies of scale are very great. This has meant that production costs in a mill adequate to satisfy the local market have been very high as compared with those in the mammoth modern mills of the principal exporting countries. Thus, even with the protection afforded by distance and freight, a very high protective tariff would often be needed for the local product to compete with imports. As domestic markets grow, this obstacle diminishes. Evidently, current moves toward area economic integration offer the possibility of bringing nearer the date when additional sound and viable mills can be established in these countries. Moreover, most paper categories require a suitable admixture of short and long fibres in the furnish. The complementarily of the fibre resources of neighboring countries in several areas is another factor weighing in favor of an area or regional approach to problems of forest industry development.

This section, for reasons explained at the outset, has concentrated attention on the trend in the demand for forest products in the several regions of the world, touching only in passing on the supply side. It has, however, drawn attention to the recent and current pattern of trade in forest products, and pointed to some of the changes that may take place during the present decade and after. Perhaps the most important conclusion which can be drawn is that there is both scope and need for a substantial expansion of forest industries in many of the present low-income countries. The need arises because, as these economies grow, more and more processed wood goods will be required (many of the forest products are characterized by rather high income elasticities) and it will not be feasible to go on importing increasing amounts from abroad. At the same time growing markets widen the range of forest industries which can be successfully established, admitting for consideration those lines of production subject to considerable economies of scale. This trend may well be accelerated in areas where efforts at economic integration effectively lead to an extension of the market.

But while those who plan forest and forest industry development will more often than not have their eye on the substantial import-saving possibilities which such development offers, there are many countries, favorably endowed with raw materials and other factors, where the new industries will be export-oriented. The main prize will be a bigger share in making good Europe's growing timber deficit. This deficit includes coniferous sawnwood, broad-leaved logs and sawnwood, and eventually pulp and/or paper. Those developing countries which can offer coniferous sawnwood have formidable and established rivals to face, in Canada and the U.S.S.R. Nor can one be very optimistic about the possibility of substantial pulp/paper exports to Europe - at least until toward the end of the decade. But in Europe the outlet for broad-leaved logs and sawnwood, and perhaps also for plywood, should expand steadily. In fact, there are good prospects of steadily growing markets for tropical woods in all the industrialized countries of the temperate zones.

Summary

A summary appraisal of the outlook for forest products over the next decade must inevitably omit much of the pertinent detail and be limited to generalizations. This is partly due to the versatility of the material and the diversity of its use, as well as to the varying number of processing stages through which the material must pass on its journey from the forest to final consumption. It is also due in part to the complexity of the production function. The "crop cycle" or rotation may range from six or eight years in the case of certain fast-growing plantation species to a century or more for many of the hardwood species from natural forests. For a given species in a given location there is usually an element of choice as to what is cropped, since the age of felling determines, qualitatively as well as quantitatively, the crop harvested. Another important characteristic is that the act of cropping destroys an element of the forest capital - the production 'plant'. Thus the harvest today determines the harvest tomorrow.

Studies recently completed and currently in progress show that the world's needs of industrial roundwood (timber destined for use other than as fuel) will rise substantially by 1970 - perhaps by 50 percent (Table 11). The extent of the rise will vary from region to region, and the pattern of consumption, which has been substantially modified since the last war and which is also very different from region to region, will continue to change. In all regions the demand for pulp products and for wood-based sheet materials (plywood, particle board and fibreboard) will rise faster than that for sawnwood (which will, however, remain the largest category of processed wood consumed), while the demand for wood finally consumed in its original roundwood form (pitprops, poles, piling, posts, etc.) will rise relatively slowly. All the major regions will, as they do today, satisfy all or a substantial part of their forest products requirements from the forests within their areas, although this will not hold true for many individual countries. But the volume of interregional trade in forest products, already substantial, may well increase.

TABLE 11. - SUMMARY OF PROJECTIONS FOR FOREST PRODUCTS

Currently the most important timber item in international trade is coniferous sawnwood. The bulk of this moves intraregionally - from Canada to the United States, from northern and central Europe to western Europe. But there are also big interregional flows. Europe's over-all deficit is met by substantial imports from the U.S.S.R. and fluctuating volumes from North America; the wood-deficit Mediterranean area and parts of Africa receive supplies from the U.S.S.R., northern and central Europe, and even Canada. Over the next decade the European deficit is certain to increase. While the U.S.S.R. continues to be the logical source for extra supplies, should exports from that country fail to expand sufficiently or become too expensive, exports from geographically remoter sources will fill the gap. Not only could transatlantic shipments increase; there might also be an outlet for exports based on the natural conifers of Central America and on the coniferous plantations of the southern zone of South America.

Of considerably greater interest to low income countries - since many more of them are concerned - are the prospects for trade in hardwoods, and particularly in tropical hardwoods. Europe, North America and Japan already draw heavily on Central and South America, west Africa and southeast Asia for a wide variety of tropical hardwoods. These are finally consumed, as sawnwood, plywood or veneers, in construction or in making a broad range of durable consumer goods, including furniture. With satisfactory economic growth rates, rising living standards and more equal income distribution in western Europe and North America since the war, the volume of this interregional trade flow has steadily increased over the last decade, and a continued steady increase can confidently be predicted for the next one. Moreover, there is good hope of growing markets for these products in eastern Europe and the U.S.S.R. Supply prospects are good, for although in several countries the forests have been exploited in the past (causing exhaustion of supplies or rising costs), there are many others with rich, undeveloped forests. Thus a volume increase of about 30 percent in tropical hardwood exports over the next decade appears well within possibility. The value increase (in real terms) could be greater if a larger proportion of the timber were to be processed before export. Today most of this trade passes in log form. However, there are serious limits to what can be achieved in this direction since technical factors, perhaps no less than political factors, have determined the way in which this trade has developed historically.

The group of industries manufacturing wood-based sheet materials has shown a phenomenal growth since 1945. Technical progress has widened the applications of plywood and fibreboard, while a completely new industry - wood particle board - has come into existence. All these industries will expand further in the next decade, with a number of new countries entering production for the first time. It is unlikely, however, that the current pattern of trade will be seriously modified. A possible exception is plywood; here one or two favorably endowed countries may follow the lead of the Philippines and build up export industries instead of contenting themselves with the export of logs for plywood manufacture oversee.

The pulp products group of forest industries is destined for an eventful decade. Paper and board today serve many important industrial as well as cultural uses, besides sustaining in the form of packaging the current revolution in distribution methods. World consumption of paper and board, which stood at 38 million tons in 1950 and rose to 74 million tons by 1960, is estimated to rise by a further 50 million tons to 124 million tons in 1970. Although Europe, North America, and Oceania still account for 80 percent of world consumption, demand is rising much faster, relatively speaking, in the low-income countries. Yet the developing regions still depend heavily on the advanced regions for their supplies of these essential products. And this dependence (in terms of tonnage imported) has increased, in spite of valiant efforts to establish new industries and to expand existing ones based on indigenous resources. Net imports of pulp and paper currently cost Latin America, Africa, and Asia U. S. $ 530 million annually. There are several reasons why the gap is growing. One is that many countries lack supplies of traditional paper-making fibres (although this today is no insuperable technical obstacle). Another is the lack of capital. A third is that many national markets are still relatively small, whereas the economies of scale in many branches of this industry are very great. Current trends toward economic integration in the developing region can help to overcome this last obstacle, and the logic of such a solution is reinforced by the fact that in several regions neighboring countries possess different fibre resources which are complementary in their paper-making qualities.

By the end of this century the world pattern of trade in pulp and paper may have drastically changed. Within a decade the industry in Europe may well have reached the limits of possible expansion, in relation to wood availabilities. Indeed, one reason for the current rapid growth in capacity (and present excess of capacity) in this region is precisely the need to preempt suitable sites. A similar situation could conceivably arise eventually (though much further in the future) in North America. Yet in both those regions paper needs will certainly continue to rise.

In the developing regions there are sizable areas of forest still not utilized. Although these are for the most part heterogeneous tropical hardwood forests, doubtless means of utilizing them economically will be devised, just as technical difficulties have already been overcome. Perhaps more important, however, is the fact that there are considerable areas where soil and climate have proved an ability to grow paper-making fibre up to ten times the rate, and at but a fraction of the cost, of growing wood fibre in those parts of Europe and North America which are now the main centers of wood pulp production. There are many suitable locations - in Latin America, Asia, Africa, and the Mediterranean - where the creation of new man-made forests could eventually support important export-oriented pulp and paper industries.

But all this is looking beyond 1970. Over the next decade the prospects of interregional (as distinct from intraregional) exports of pulp or paper from countries which at present have low incomes are not very bright, if only because of the current excess capacity in both Europe and North America. This situation, judging from what is at present known about capacity expansion plans, may endure for several years. Thus, for the years immediately ahead, efforts in the developing regions will undoubtedly be concentrated on reducing, or preventing a further rise in, their immense import bill for these commodities. Though this is a capital-intensive industry, its import-saving power will ensure it a high priority, the foreign exchange element of initial investment (about one half) is recoverable from the import saving of about one year's production. Effective regional economic co-operation, as has been pointed out, offers a means of ensuring the success of these efforts.

J.C.W.

S. L. P.

ANNEX TABLE K. - NET TRADE IN WOODPULP, PAPER, AND PAPERBOARD

ANNEX TABLE L. - SAWLOGS AND VENEER LOGS: TRADE BALANCE 1967 - 1959

Region	Coniferous	Broad-level	Total
North America	- 0.07	- 0.11	- 0.18
Latin America	+ 0.02	+ 0.07	+ 0.09
Europe	- 0.77	- 2.75	- 3.52
Western	(- 0.69)	(- 2.62)	(- 3.31)
Eastern	(- 0.08)	(- 0.13)	- 0.21
U.S.S.R.	+ 0.93	+ 0.05	+0.97
Near East	- 0.11	- 0.01	- 0.12
Far East	- 0.59	+ 0.07	- 0.52
Oceania	+ 0.04	- 0.26	- 0.22
Africa	- 0.04	+ 3.02	+ 2.98

+ = net carports; - = net imports.

SOURCE: FAO. Yearbooks of forest products Statistics.

ANNEX TABLE M. - ALL FOREST PRODUCTS: RECENT CONSUMPTION AND ESTIMATED FUTURE REQUIREMENTS

U. S. FOREST SERVICE PERSONNEL CHANGES Although the news has by now spread world-wide, the opportunity must be taken to pay belated tribute to RICHARD E. McARDLE who in March retired as Chief of the U.S. Forest Service. Described as the "best Chief the Forest Service has ever had," Richard McArdle has been outstanding in his handling of a forest area greater than the combined size of Belgium, France, Switzerland, and Greece and presenting as many different environments and problems. The outside world noted most his fairness and friendliness. His advocacy of multiple forest use set seal on the Fifth World Forestry Congress held in Seattle in 1960. Dr. McArdle is succeeded by EDWARD P. CLIFF, former Assistant Chief in charge of National Forest Resource Management, a career forester who will ably maintain the tradition of the U.S. Forest Service. Another important announcement from Washington concerns the establishment of a new Bureau of Outdoor Recreation in the Department of the Interior, with EDWARD C. CRAFTS, Assistant Chief of the Forest Service, as its first Director. Edwards Crafts is best known for his conduct of the timber resources review in the United States, which was one of the most demanding tasks undertaken by the Forest Service. Finally, it is of considerable interest that IRVINE T. HAIG, for long a member of FAO's Forestry and Forest Products Division and well remembered as Secretary-General of the Fifth World Forestry Congress, has been appointed to a Carnegie Visiting Professorship in Forestry at the University of Hawaii.