Forestry production increased to 3.01 million cubic meters in 1997, up from 2.67 million cubic meters in 1996 and 2.4 million cubic meters in 1995. The higher 1997 figures were largely due to abnormally dry conditions which allowed harvesting to continue in most areas throughout the entire year. It is ironic that the production increase coincided with a severe market downturn which is expected to continue for some time to come. During 1997, average log prices dropped from around US$130 /m3 to about US$75 /m3.
Forest product export figures for the 1996 and 1997 years are shown in Table 4 below:
Table 4 - Export of forest products - 1996/1997
1996 |
1997 | |||
Product |
Volume |
FOB Value (US$) |
Volume |
FOB Value (US$) |
Logs |
2,625,000 m3 |
35,160,000 |
3,006,000 m3 |
351,118,000 |
Sawn timber |
7,319 m3 |
3,563,227 |
* |
* |
Woodchips |
45,757 BDU |
9,098,679 |
33,559 BDU |
9,761,268 |
Balsa |
1,985 m3 |
1,009,562 |
* |
* |
Plywood |
372 m3 |
365,808 |
324 m3 |
* |
Sandalwood |
46 tonnes |
21,240 |
* |
* |
* Insufficient data at hand at time of preparing this Report
Provincial log export volumes are illustrated in Figure 4 below. In recent years, the New Guinea Islands region has provided the largest share of log export revenue, producing over 60 percent of the total log export volume. West New Britain Province alone produced the equivalent of all the other provinces combined. Over the next few years it is expected that log production will move away from the New Guinea Islands region to other less exploited provinces including, Gulf Western and Sandaun.
Japan has continued to be the major market for Papua New Guinea logs (see Figures 5a and 5b below), with a relatively steady market share of approximately 65 percent of the total log export receipts. South Korea is the second most important market but its level of purchases has almost halved over the past four years and this trend is likely to continue as Korean processors move increasingly to temperate softwood inputs.
The Japanese market continued to purchase quality timber; 60 percent of Japan's log purchases from Papua New Guinea were Grade I and 2 log species. In contrast, the Korean market is based almost entirely on the lower grade timbers, with 80 percent of purchases being Grade 3 and 4 log species.
Figure 4 - Provincial log export volumes - 1994-1997
Another feature of the recent forestry boom is that, despite the availability of considerable Government incentives and subsidies for the domestic processing of timber, this sector has actually declined in output over the past decade. It is clearly much more profitable and involves less risk to export raw logs than to process them domestically within Papua New Guinea. Thus approximately 90 percent of Papua New Guinea's annual harvest is exported as logs. Figures 6, 7 and 8 below clearly show the stagnation and decline of the domestic processing sector compared to the log export sector.
Figure 5a - Destination of log exports (1997)
Figure 5b - Log export volums by destination
The National Forest Policy anticipates more downstream processing of forest products. The objectives of pursuing a domestic processing policy are to create employment, facilitate the transfer of technology and encourage higher export revenues from exporting value added products. However, the forest industry is predominantly based on log exports which largely reflects the perceived risk and commercial limitations of domestic processing in Papua New Guinea. The existing number of processing facilities include one plywood factory in Bulolo; one woodchip mill in Madang; forty sawmills with various capacities; and twenty furniture factories and joinery workshops.
The previous government, in approving the National Forest Plan, expressed the desire to promote a gradual increase in the downstream processing of forest products. An interdepartmental committee, chaired by the Department of Commerce and Industry, has been formed to consider a number of incentives to encourage downstream processing. The government has also engaged a group of consultants to study the domestic processing options and make recommendations. This study is now in progress and is due for completion towards the end of March 1998.
Figure 6 - Log input volume exported: round vs. Sawn
Figure 7 - Export value of raw logs vs timber products (nominal kina)
Figure 8 - History of woodchip exports
The Papua New Guinea Logging Code of Practice was finalized by a national technical working committee in February 1996. Following this, a joint NEC submission from the Ministers for Forests and Environment and Conservation resulted in the NEC formally endorsing the Papua New Guinea Logging Code of Practice in late March 1996. The Code was then tabled and approved by Parliament in July 1996.
The Papua New Guinea Logging Code of practice is given legal status through the Forestry Regulations, which provides (Regulation 241 Logging and Roading Standards and Practices) that:
Timber Permit holders and their assign..... shall ensure that forest roading and logging is undertaken according to standards and practices as specified by the Managing Director from time to time. Such standards and practices may be issued in the form of a "Logging code of Practice" or any other form as the Managing Director may determine from time to time.
Early fieldwork which involved interviewing a significant number of forest industry field workers (planners, field supervisors, bulldozer drivers (roading and skidding), grader drivers, chainsaw operators etc.), clearly identified that a significant challenge would be involved in fully implementing of a logging code. The main findings were that:
· Very few field workers had any understanding of the concept of sustainable forestry practices;
· Nearly all had developed their current practices through watching others (equally untrained) or through trial and error. There was little evidence of any technical training.
· Most were receptive to the idea of changing their practices. This, however requires that:
_ Field operators be told why changes are required i.e. they need to be given an understanding of the objectives of sustainable forestry and how their actions can contribute to its achievement; and
_ Field operators need to be shown how to undertake the new practices i.e. good practical field instruction needs to be provided. Merely providing a written Logging Code of Practice is not sufficient.
· There is a limit to how much change can be introduced at any one time.
Given these findings the conclusion was drawn that significant progress toward sustainable forestry practices can be made, but that the full implementation of the Papua New Guinea Logging Code of Practice would take a sustained effort on many fronts over a period of several years rather than months.
Activities which have been or are currently being undertaken to ensure full implementation of the code include:
· Development of the "Key Standards For Selection Logging". The technical working committee which developed the Papua New Guinea Logging Code of Practice was aware that the full implementation of the code would take time. In order to set a minimum starting point for full implementation the working group extracted out of the code 24 Key Standards. These represent the key areas for the achievement of sustainable forestry. The Key Standards are highlighted in the Logging Code.
· As part of implementation, the Forest Authority has developed a new set of field planning, monitoring and control procedures which set out required pre-logging planning to be undertaken by the logging company, the requirements and standards for the Forest Authority field staff to undertake monitoring and control during roading and logging operations, and requirements for post-logging activities.
· In making the public aware of the requirements under the Logging Code, multi page advertising supplements, describing and explaining the main aspects of the Logging Code of Practice, were placed in all major newspapers in English and the two national languages - Motu and Pidgin. This resulted in over 140,000 copies being circulated and provided a high level of awareness of the new Code, especially amongst resource owners.
· A series of intensive three week training courses for all field staff of the Forest Authority regarding the planning, monitoring and control procedures of the Logging Code began in July 1996 and ended in mid 1997. This was funded under the AusAid NFCAP Trust Fund.
· Presently, an AusAid funded HRD Project is well underway and is already having a major positive impact This project is expected to overhaul all forestry training in Papua New Guinea, including the training of industry field staff.
