Commodity report

Pulp and paper
Logging training center in India

Pulp and paper

The 1957 world figures combined production of pulp, paper and board, and fibreboard indicated that a sharp decline in the general postwar growth of these industries had taken place. The gain in over-all industrial activity in this field was only 1.6 percent over the previous year, as compared with 5.1 percent in 1956 and an average of 7.2 percent for the period 1947-55.

Total production of paper and board in 1957 is estimated at 61.1 million metric tons as against 59.8 millions in the previous year - an increase of 2.2 percent. Wood pulp production rose by only 0.8 percent, from 49.7 million tons in 1956 to 60.1 millions in 1967, whereas fibreboard production remained unchanged at 3.4 millions.

TABLE 1. - WORLD PULP AND PAPER PRODUCTION 1947-1967

Type	1947	1955	1956	1957	1947-1955	1955-1956	1956-1957
	million metric tons				percent p.a
Wood pulp	26.69	46.66	49.68	60.14	7.7	6.7	0.9
Other fibre pulp	1.61	2.32	2.28	2.40	4.7	-	4.4
Paper and board	33.79	67.66	59.75	61.13	6. 9	4.0	2.3
Fibreboards	1.54	3.16	3.38	3.42	9.4	7.3	1.2
TOTAL	62.63	109.59	115.09	117.09	7.2	5.1	1.6

This development prompts the question: is this decline in the growth rate of a temporary nature only? Or does it signify a leveling-off in the consumption trends at the end of a transitory period of postwar adjustments? In the following paragraphs consumption trends in the postwar period are examined in the light of earlier forecasts.

In the period 1947-56, world production of wood pulp almost doubled, from a total of 25.7 million tons in 1946 to 49.7 millions in 1955. In the same decade, production of paper and board rose from 33.8 to 59.8 million tone and of fibreboard from 1.6 to 3.4 million This spectacular growth is, however, to a certain extent attributable to postwar recovery. This is borne out by the fact that the prewar (1937) production levels (except for fibreboards) were almost the same as in 1947; wood pulp 24.2, paper and paperboard, 29.9, fibreboards 0.25 million tone.

The Preparatory Conference on Wood Pulp Problems, convened by FAO in Montreal in 1949, reviewed the world's prospective needs for pulp products - newsprint, other printing and writing papers, wrappings, packaging materials and textile fibres. The forecast made by the Conference for the year 1966 indicated an increase in ever-all requirements over 1948 of 37 percent, but it was emphasized that this figure should be considered with great caution. Doubts were, in fact, expressed whether the projected levels, which were based on normal conditions, would be reached.

In the event, however, the increase in economic activity over this period created a much larger demand for pulp products than forecast, and annual growth in the period 1948-65 exceeded 7 percent as against the 4 percent estimated at the Conference.

The annual increases in demand and production have, however, varied considerably over the period, as will be seen from Figures 1 to 3, showing the evolution of demand and production and the yearly changes. Pulp production increased rapidly in the immediate postwar years, followed by a stagnation period in 1949 which was a result of the recession in North America in this and the previous year. The Korean war gave a large impetus to the economic activity in the years 1960-51 and, as a result, pulp and paper production grew rapidly in these years. Like all forest products, pulp and paper were again badly hit in 1952 by the recession which followed the 1950-51 boom. From 1953 onwards, growth in the industry began moving again with renewed confidence and expansion and modernization plans were continually being announced from all regions of the world.

FIGURE 1. - Development in the annual production of pulp, other fiber pulp, and chemical woodpulp, from 1946 to 1957.

FIGURE. 2. - Development in the annual production of paper and board, fibreboard, other paper paperboard and newsprint from 1946 to 1957.

FIGURE 3. - Annual rate of growth in world woodpulp consumption, from 1946 to 1957.

By mid-1956, however, industry leaders in North America were warning of short-term difficulties for the industry which would arise from an overexpansion of production facilities. Plans then maturing were expected to bring considerable new capacity into operation during 141;7 and 1958. The economic recession which started in North America in 1957 brought additional pressure on the industry, and pulp, paper and board production in this region dropped by 2.3 percent from the record level of 1968 (pulp 2.4 percent, paper and boards 1.8 percent). As a result, combined operating ratios in the pulp and paper industry declined by some 10 percent from about 93 percent in - 1956 to some 83 percent in the last year. Production figures for the first quarter of 1968 indicate a further slump in production, which in running Home 8 percent below the corresponding period of 1967.

TABLE 2. - WORLD WOOD PULP CONSUMPTION AND PRODUCTION, 1948 AND 1955

^a World Forest Products Statistics - A Ten-Year Summary, 1946 - 1956, Food and Agriculture Organisation of the United Nations, Rome 1958. In the course of the past decade world-wide statistics have improved greatly in quality and coverage. This publication is believed to be the most authoritative world-wide statistical report on forest products for the postwar period. Therefore throughout this pulp and paper commodity report, this revised information for earlier years will be presented.

^b Exports.

TABLE 3. - POSTWAR GROWTH OF PULP AND PAPER PRODUCTION IN DIFFERENT REGIONS

Region		1947	1955	1956	1957	1947-1955	1955-1956	1956-1957
		in million tons				percent increase per annum
North America:
Wood pulp		17.4	28.0	29.1	29.0	8.9	6.4	-2.4
	Newsprint	5.1	6.9	7.3	7.4	4.9	5.8	+1.4
	Other papers & boards	18.5	26.1	27.1	26.3	4.8	0.7	-2.9
	Fibreboards	1.1	1.7	1.7	1.7	6.8	-	-
	ALL PRODUCTS	42.1	63.5	65.9	64.6	5.5	3.6	-2.1
Europe:
	Wood pulp	6.9	13.0	13.6	14.2	8.2	4.7	4.4
	Newsprint	1.6	3.1	3.4	3.5	8.6	9.7	1.5
	Other papers & boards	6.4	13.2	13.6	14.7	9.5	3.0	8.1
	Fibreboards	0.42	1.2	1.3	1.4	14.0	9.4	7.8
	ALL PRODUCTS	15.3	30.5	31.1	33.8	9.0	4.6	6.0
Rest of the World
	Wood pulp	1.3	5.6	6.3	6.9	20.0	12.5	9.2
	Newsprint	0.35	1.14	1.3	1.4	15.9	14.0	7.7
	Other paper & boards	1.8	6.3	7.1	7.8	17.0	12.7	9.9
	Fibreboards	0.05	0.26	0.34	0.36	24.5	31.0	5.9
	ALL PRODUCTS	3.6	13.3	15.0	16.5	18.2	13.1	9.5

However, this decline in North American production did not have any large effect on production in the other regions, as demonstrated by Table 3. In fact, an increase of the growth rate for all products combined was-recorded for Europe and A moderate decline in the rest of the world. Noticeable, however, is the great disparity in the 1956 and 1967 growth rates for different types of products in Europe; newsprint 9.7 and 2.0 percent, other papers and boards 3.0 and 8.1 percent, respectively.

Returning to the Montreal forecasts and historical developments as outlined in Table 2, it is noteworthy that the annual increase in production and consumption has been greater than expected in all regions save Latin America and Oceania. In Oceania, realization was close to the forecast (consumption is lower, production higher), while in Latin America consumption was greater but production lower than the estimate. In Europe, consumption was only slightly higher than expected, but production was considerably higher.

The FAO/UN survey, World Pulp and Paper Resources and Prospects, similarly underestimated both production and consumption. The forecasts contained in this report indicated an increase in wood pulp consumption from an average of 37.1 million tone in the period 1960-62 to 60.6 millions in the period 1960- an increase of 13.4 million tons which corresponds to an annual growth of 3.1 percent. In 1956 (midpoint of the survey decade) world wood pulp consumption reached 49.6 million tons, which is close to the 10-year estimate. Thus consumption actually increased at an annual rate of 6.6 percent, more than double the rate forecast. Therefore, it is not surprising to find that the rate of growth of paper and board consumption in the same period rose by 0.3 percent a year instead of the estimated rate of 3.3 percent.

In Europe, the growth has been 2.6 times that forecast, while in North America, which consumes over half of the world's total of paper and board, the annual increase was 70 percent above the forecast.

Estimates of future consumption have also been made by a number of agencies in North America, both government and private, and with the same general result as in the United Nations studies, i.e., underestimation. Similarly, forecasts by other non-United Nations authorities in Europe have also fallen far short of realizations. This, of course, implies in no way that underestimation is a general rule; it simply serves to emphasize the difficulties and limitations in making predictions for the future. These limitations arise not so much from shortcomings in methodology as from the difficulty of making intelligent guesses about economic developments in a rapidly changing world subject to national and international crises.

Nevertheless, forecasts must be made for long-range planning of the future, especially in the underdeveloped regions; they should, however, be continually revised in the light of developments. This article does not attempt to make a new set of demand estimates for the different regions of the world, but simply to draw some general conclusions from past developments and especially those of the last year.

General outlook

A glance at Tables 1 and 3 reveals two facts:

(a) There has been a gradual levelling-off in the postwar growth of pulp and paper production throughout the world.

(b) There is a large difference in the annual increase in the several regions

Both facts may be partly explained by the postwar adjustments towards normal conditions but there is, nevertheless, no doubt that the increase will continue at a rate which is substantially higher than the population increment and also that the differences in growth between regions will continue for quite some time to come.

With all the reservations previously made as to the validity of demand forecasts, it seems reasonable to assume that world consumption of pulp and paper products will continue to grow at a minimum rate somewhere between 4 and 6 percent. ¹ Given a development of the world economy more favorable than was experienced in the period between the two world wars, the annual consumption increase may well exceed the higher of these two figures.

¹ In the period 1920-37 pulp production in North America and Europe increased at an average annual rate of 4.5 and 7.6 percent, respectively.

Assuming an annual increase in the over-all demand of only 4 percent in the coming 20-year period, this means that consumption of pulp and paper products will double in approximately 18 years. Well over 90 percent of the world's paper and board production depends on wood as the primary fibrous raw material supply, and only minor changes in the supply pattern are likely to occur over this short period. Therefore, woodpulp production is likely to rise to some 100 million tons by 1975. The present pulpwood removal* of about 210 million cubic meters per year will thus have to be raised to over 400 millions all increase of close to 200 million cubic meters, of which the main part will be needed in North America and Europe.

Part of this heavy increase in wood consumption could be met from a further broadening of the raw material field by more intensive use of deciduous woods as well as more efficient utilization of industrial and forest waste. The major part of the new supply will come, however, from increased pulpwood fellings, which could only be achieved at a higher cost than today. Considerable doubts must, therefore, be expressed as to whether these regions will be able to continue to supply other regions of the world with their rapidly growing needs of products for which the raw material resources in the industrialized regions will become ever more strained, particularly in Europe. At the same time it has to be borne in mind that the deficit regions are unlikely to be able to spend increasing amounts of their foreign exchange earnings on consumer goods, such as pulp and paper.

Wood pulp

Table 5 shows the regional distribution of woodpulp production and consumption in the three years 1837, 1947 and 1956.

Turning first to the regional distribution of pulp production, it is found that North America has its share of the world total from about 45 percent in 1837 to 60 percent in 1956 while Europe has decreased its part from 47 to LESS than 28 percent. In the other regions, production rose in the SAME time from 8 percent of the world total to 12 percent., mainly as a result of the combined production increases in the U.S.S.R. and Japan of more than 2.8 million tone out of the total gain of 4.3 millions in these regions.

TABLE 4. - WORLD PAPER AND BOARD CONSUMPTION, 1950-52 TO 1956 AND FAO/UN FORECAST FOR 1960-1962

TABLE 5. - REGIONAL PRODUCTION AND CONSUMPTION OF WOODPULP, 1937-56

Apart from the great progress which has been made in Japan, the U.S.S.R. and Oceania, both in the postwar period and from 1837, the moat remarkable feature is the slow progress in Europe when seen in the light of its prewar achievement. This is further emphasized by a comparison with consumption which has grown much faster than production - 38 percent from 1937 to 1956 as compared with the less than 19 percent increase in production. As a result, the pulp surplus has dwindled from more than 1.7 million tone in 1937 to only some 250 thousand tons in 1956, and a further decline is recorded for the year 1957, which shows an apparent deficit of 25 thousand tons. In fact, the year 1956 is not fully representative of the trend since, as mentioned earlier, this year was characterized by a temporary stagnation in the European consumption of woodpulp. The surplus in this year thus shows an inflated figure which is supported by the fact that Europe, already in 1955, had a deficit of 65 thousand tons.

The inevitable conclusion as regards the long-term trend is therefore that, unless production facilities are expanded at a much faster rate shall has been the case up till now, Europe will become a net importer of appreciable pulp quantities. In any case, this region may be discounted as a potential future supplier to deficit regions with, of course, the exception of such quantities as form part of the normal interregional trade flow and which have to be replaced by imports from North America.

Also of interest is the dominating position in Europe of three northern countries which in 1956 together produced 60 percent of the total output, or the same share as in 1837.

North America, which before the war was a net importer of more than 1 million tons, is today exporting a net quantity of more than half a million - 660, 455 and 625 thousand tons in the years 1955, 1956 and 1957 respectively. The United States, however, still has a deficit of some 1.6 million tons (1956) as against 1.9 millions in 1937. Current expansions of the production capacity in the United States should further reduce their import dependency in the next few years.

Thus, in the last analysis, Canada will become the only ultimate supplier to the importing regions. The fact that the surplus quantities required to satisfy the import needs of the deficit areas will remain marginal in relation to the large consumption in North America involves a precarious position for the importing countries as even minor changes in the internal supply/demand balance in North America may have far-reaching consequences on pulp availability in the international market.

The U.S.S.R., which has the world's largest untapped resources of coniferous woods, has increased its production 3.5 times since 1947 and more than 2.5 times over the prewar figure. Pulp production in 1956 and 1957 was 2.61 and 2.75 million tons respectively, and present expansion plans indicate a further increase in output of about 1.2 million tons by 1960 when total production would thus reach some 3.8 millions. Of special interest is the announcement of the plans for a new rayon pulp mill with an annual capacity of 380 thousand tone. Most sources agree, however, that demand for both rayon and paper pulps will continue to outstrip domestic supply for quite a long time.

The relatively small increase in pulp output between the years 1966 and 1957 was mainly due to transport difficulties for pulpwood rather than to lack of sufficient pulping capacity. This situation is apparently expected to continue in this year since the planned production is only some 3 percent higher than in 1957.

Asia, with its more than 1,500 million inhabitants, has made remarkable progress: woodpulp production rose from 900 thousand tons before the war to more than 2.75 millions in 1956. The impact of the war is clearly demonstrated by the 1947 production figure of a mere 282 thousand tons, in the light of which postwar achievements are still more impressive.

A breakdown of the production figures shows, however, that the overwhelming part of the postwar increase was achieved by Japan and China, which together account for 97 percent of the gain of 2.43 million tons; Japan 78 and Mainland China 19 percent. The rest of the region increased their production by 52 thousand tons only, from 18 thousand to 70 thousand tons. In this connection it should be remembered, however, that these figures refer to woodpulp alone and that considerable progress has been made in this region in expanding production capacities for pulp from other raw materials than wood, in particular, bamboo. Thus, output of other fibre pulp increased from 195 thousand tons in 1947 to 470 thousands in 1956, but here again Japan and Mainland China account for a substantial part of the increase, more than 50 percent.

Pulp imports to the whole region dropped from a prewar level of 480 thousand tons to only 20 thousand in 1947 but have since then gradually increased to 205 thousand. From these figures one might at first sight assume that pulp needs are reasonably well covered by the region's own supplies. The truth is, however, that the demand is considerably higher than availability and that the countries cannot afford to spend additional foreign currency on this commodity, neither do they favor the installation of a further expansion of non-integrated paper production.

There are strong reasons to believe that the situation in Asia as regards supply of pulp and paper may deteriorate rapidly in the coming decade. Japan is already short of fibrous raw materials, the bamboo supply to the existing mills in India is in many cases critical and, although progress has been made in some of the countries, industrial expansion still falls far behind the rapidly increasing potential demand.

In Latin America with its ample potential resources the picture of the future is, of course, brighter than in Asia. Nevertheless, the difficulties in the next decades will be great, arising more from shortness of capital or rather from the relative unattractiveness of investment in an industry which may not immediately yield great profits, than from a lack of economically exploitable raw materials.

In spite of a production increase of more than 600 thousand tons in the last decade, pulp imports have climbed from 206 thousand tons in 1937 to 235 thousand tons and 377 thousand tons in the years 1947 and 1956, respectively. In addition, shortage of foreign exchange has limited the imports for which present needs are appreciably higher, notably in Argentina and Brazil. Ambitious plans have been prepared and are on their way to implementation in several countries to satisfy this unfilled demand and to meet the rising needs; in their totality, however, they still fall short of what is needed to satisfy probably future requirements.

The two remaining deficit regions of Africa and Oceania have managed to expand their production facilities of pulp in step with their consumption. Africa has raised its output by some 100 thousand tons and Oceania by some 300 thousand tons in the past decade. These figures, however, tell only part of the truth, since these regions have considerable and climbing imports of paper and boards as shown below.

Paper and board

Table 6 illustrates the regional production and consumption pattern for paper and board in the years 1937, 1947 and 1956.

The regional distribution of paper and board production and consumption is similar to that of woodpulp; North America produces and consumes about 57 percent of the world total, Europe produces 28 and consumes 26 percent and the other regions, combined, produce 15 and consume 17 percent of the total.

North America has today an exportable surplus of some 750 thousand tons, which is approximately the same as before the war, while Europe has increased its net exports from 970 thousand tons to 1.2 millions.

The deficit regions have all increased their imports, in some cases appreciably so; for instance, Asia outside of Japan and Mainland China has more than doubled its net imports from 217 thousand tons in 1947 to 540 thousand in 1956. Latin America, which achieved an expansion in output of more than 700 thousand tons between the years 1947 and 1956, still had to increase its imports by more than 110 thousand tons in the same period, practically all of the increase being newsprint.

The above analysis of the regional distribution of pulp and paper production and consumption shows that the deficit regions have increased both their production capacities and their import needs. Have they succeeded in diminishing their dependence on outside supplies? Table 7 shows regional production as a percentage of regional consumption.

Looking at the magnitude of the 1956 figures it may first be noticed how marginal are the export availabilities from North America and Europe in relation to their consumptions; for pulp, 2.7 and 1.9 percent; for paper and board, 2.3 and 7.4 percent in North America and Europe respectively.

TABLE 6. - REGIONAL PRODUCTION AND CONSUMPTION OF PAPER AND BOARD, 1937-56

Of the deficit areas, Asia (excluding Japan and Mainland China) and Latin America depend on outside supply for about half of their consumption of both pulp and paper, whereas Africa and Oceania are practically self-sufficient in pulp but have to import considerable percentages of their needs of finished products; Africa 85 percent and Oceania 40 percent.

TABLE 7. - REGIONAL PRODUCTION OF PULP, PAPER AND BOARD AS A PERCENTAGE OF REGIONAL CONSUMPTION

Region	Pulp			Pulp and board
	1937	1947	1947	1937	1947	1956
	per cent
North America	90.8	97.3	102.7	105.3	102.7	102.3
Europe	117.9	115.0	101.9	109.1	112.1	107.4
U.S.S.R.	100.0	108.4	101.2	100.0	100.6	98.2
Asia	65.2	94.2	93.1	?	73.5	90.3
Excl. Japan and Mainland China	-	56.3	52.6	?	40.5	45.3
Latin America	11.6	30.9	47.3	?	44.9	59.5
Africa	0	90.9	98.3	?	11.1	35.5
Oceania	0	77.5	92.1	?	41.1	59.6

The historical development shows that progress has been made in some of the deficit regions to lessen their dependence on outside supply. Progress in the last decade has, however, been far from satisfactory, especially in Asia (except Japan and Mainland China) and Latin America. In the first region dependence on imported pulp has actually increased while import dependency on paper and board has fallen slightly.

The danger to the deficit regions lies, however, not so much in the inadequate internal supplies as in the fact that their import needs are mainly of two key items: newsprint and coniferous pulp. More than 50 percent of the paper and all the pulp imports belong to these two essential categories.

Although considerable technological progress has been made to solve the question of newsprint manufacture from nonconiferous raw materials and to substitute coniferous pulp it will still be a long time before this may be economically achieved on a large scale, except under very particular conditions.

Since coniferous resources are scarce in the pulp and paper deficit areas - this being one of the reasons why pulp and paper industries have developed slowly - there are strong reasons to believe that imports of newsprint and coniferous pulp will continue to climb.

Conclusions

At the beginning of this report the question was posed whether the year 1957 signifies a halt in the growth trend after a transitory period of postwar adjustments. Based on the analysis which has been made of developments in the last decade it may be stated with confidence that this is not the case. Most probably the recession of last year will continue well into 1958 and will affect also the regions outside of North America. It is also likely that this period will be the most difficult encountered by the pulp and paper industries since the war. But there can be no doubt the general long-term trend will thereafter reassert itself with demand steadily growing and difficulties arising in satisfying the needs of most regions.

In fact, postwar developments indicate that, even though considerable progress has been made in the deficit areas to meet their rapidly growing needs for paper products, the outlook for the future raises graver concern than in the beginning of the decade. Thus, the reasons induced the United Nations and its specialized agencies to draw the attention of Member Governments to the dangers inherent in the long-term trend are still valid, and determined efforts are still needed to prepare realistic development plans in the less developed regions. Naturally, developments should be based on sound economic principles since otherwise protective tariffs must be established, which ultimately means higher prices detrimental to a sound economic and cultural development. Unfortunately, developments so far have not always followed this principle, thereby creating difficulties for the realization of potential regional markets.

A. S.

Logging training center in India

The application of modern logging techniques which reduce wastage and save time have been taught at a national Logging Training Center established in the lower Himalayas.

Organized by the Government of India with the help of the FAO technical assistance program and the Government of Switzerland, the Training Center started to function in March. Training has been imparted in two types of courses: basic logging training and use of mechanized equipment. Successive batches of trainees have been given eight weeks' training in each course.

Instruction for the first five months was given by a team of four Swiss instructors under Mr. H. G. Winkelmann, Director of the Central Forest Organization of Switzerland and Chairman of the FAO/ECE Committee on forest working techniques and training of forest workers, as a result of whose efforts equipment for then Center was brought to India from Switzerland. The cost of the equipment installed has come to the equivalent of U. S. $520,000, out of which equipment worth $16,800 was received as a gift from the Swiss Government.

Work at the Center has been continued by the officer-in-charge of the logging branch at the Indian Forest Institute and Colleges, Dehra Dun, after Mr. Winkelmann and his team of instructors left the country in July.

Precision and finish have marked various demonstrations given by the trainees to Ministers and high officials: felling, skidding, use of modern tools and operation of a skyline crane, a portable sawmill and other mechanized equipment, have been shown. Simplicity has been the outstanding character of all the tools and their method of operation.

A group of trainees watching the work of a two-man team in an especially difficult ease: the leaning tree is to be felled uphill against the lean.

Courtesy: H. Winkelmann