NILS A. OSARA
Prospects viewed by the new Director of FAO's Forestry and Forest Products Division
In forestry, long-term planning has been systematically pursued probably for longer than in most other fields of human activity. While initially such planning was concerned mainly with the management of single forest units, large or small, more recently it has reached into the wider context of whole countries and even geographic regions.
Forward planning has now evolved as one of the principal items in the program of FAO'S Division of Forestry and Forest Products. Since the early 1950s and in collaboration with Regional Economic Commissions of the United Nations and national institutions and organizations, the Division has conducted a series of regional analyses dealing with the broad trends and prospects in forestry and in industries using wood as raw material, studies which have been facilitated by the rapid improvements made in national forest inventories and timber statistics. An over-all appraisal of world prospects is in hand for presentation to the Sixth World Forestry Congress, due to be held in 1966.
All this work carried out on the evaluation of forestry resources in relation to long-term needs now provides a thoroughly studied basis for developing FAO'S program and guiding its advice and assistance to member countries. The results have implications for general economic development and indicate the desirability of channeling additional resources into assisting underdeveloped countries to embark on long-term programs for the expansion of their forest industries.
When the FAO secretariat began to make projections in regard to requirements and demand for forest products at the beginning of the 1950s, there were many who opposed and criticized the ice* or who, at least, doubted the value of such analyses. The hazards and difficulties of estimating future utilization of wood or fellings were stressed; the findings of the studies were considered to be too high, and so on. The new appraisal of European timber trends and prospects (1950-75), now under way, has for the first time made it possible to compare what actually happened with the forward estimates. This comparison shows that the estimates from the earlier 1953 study were in the event, although rather on the low side, much closer to reality than expected.
There are certain discrepancies, but these are largely accounted for by the fact that the earlier study employed figures which underestimated the economic growth in Europe.1
1GLESINGER, EGON FAO, Unasylva 17 (2) 69, 1963.
Apparently a change in attitude toward FAO'S projections has now taken place, one reason being that key estimates so far checked have proved satisfactorily accurate. Another reason is no doubt the growing awareness of the necessity for long-term planning which cannot be carried out without projections and appraisals. It is no exaggeration to say that economists and industrialists, as well as administrators in the field of forestry all over the world, are now positively interested in these studies and projections.2
2The FAO secretariat has in some circles been criticized for the present overcapacity in the pulp and paper industry. It is thought that FAO has encouraged too rapid an increase in capacity. On rereading FAO'S publications, however, a contrary conclusion can be drawn: for instance, World demand for paper to 1975 (published in 1960) showed that the increases in pulping capacity already planned in 1959 would be roughly sufficient to meet the likely demand in 1965. The excessive increase in capacity since 1959 has, in fact, taken place in spite of warnings from FAO.
Forestry planning on a country-wide scale becomes much easier and more sensible if the future utilization of wood can be estimated within an acceptable margin of error of, say, 10 percent. This proved more or less the case as regards the conclusions of the first study on European timber trends and prospects. The significance of such a modest margin of error can be readily appreciated if it is remembered that common margins of error in forestry are often much greater.
From studies of trends and prospects already issued and from the tentative results of those studies still unpublished, a few general conclusions may be drawn:
1. Consumption of sawnwood as well as of other wood used for construction, etc., is increasing but slowly and not at the same rate as the growth of the gross national product (GNP). The inference is that alternative materials are gaining ground at the expense of solid wood.2. Consumption of paper and paper products has grown and will continue to grow - very rapidly, in many countries faster than the growth of GNP. World consumption figures for paper and paperboard (excluding fibreboard and dissolving pulp) have been - or are estimated to be - as follows:
|
Year |
Million metric tons |
|
1938 |
28.4 |
|
1948 |
36.3 |
|
1955 |
56.1 |
|
1960 |
74.2 |
|
1965 |
90.0 |
|
1975 |
141.0 |
In other words, consumption is expected roughly to double between the years 1960 and 1975.3. There is a group of relatively new products - plywood, fibreboard, particle board and other wood-based panels - which has been highly successful. These commodities frequently substitute for sawnwood and have opened new uses for wood. World production was about 16 million tons in 1960, and demand may increase 2 ½ to 3 times by 1970.
4. During the 1950s there were interesting developments in Europe. On the basis of converting trade figures for primary forest products into roundwood equivalents, it becomes evident that Europe is now a net importer of wood, and this import surplus is expected to increase further.
In view of these trends, how is the world - and Europe in particular - going to meet its growing wood (or fiber) requirements ? Some apparent answers are:
1. Unexploited coniferous forests still exist in abundance in the U.S.S.R. and in Canada - and, to a lesser extent, in other areas of the world.2. In those parts of the world where at the moment the main pulp industries are located, far greater forest yields could be obtained by means of more intensive silvicultural practices in existing forests and by expanded planting programs. More rational utilization of wood in the industry, and a decreasing use of wood for fuel, would also stretch supplies further.
3. In warmer zones, planting quick-growing coniferous forests where conditions are suitable could yield a high output of softwood timber and fibers within a comparatively short time.
4. There is an apparently unlimited supply of short fibers. In many regions of the world, hardwoods as well as bagasse, straw, reeds and similar materials are available in quantities too abundant to allow for their full utilization at present. Planting of quick-growing broadleaved species, such as Eucalyptus and Populus, would permit a further rapid increase in the output of short fibers.
5. As a result of rapid technical developments short fibers are gaining in importance, and the paper industry is no more entirely dependent on long softwood fibers. as it was a few years ago.
Looking at the world as a whole there is no need to expect a shortage of wood or fibers. But it seems likely that new man-made forests of selected quick-growing species will be playing an important role in forestry long before hitherto unexploited forests are brought into use.
A closer evaluation of the European situation shows that by 1975 Europe, excluding the U.S.S.R., will probably need some 80 to 110 million cubic meters more industrial roundwood (or the roundwood equivalents of fibers) than in 1960. It is not possible to estimate what proportion of this increase could be produced in Europe itself by means of intensified silviculture and so on, and what proportion would have to be imported from other regions. Experience in the 1950s showed that European production was able to meet rising roundwood requirements to a much greater extent than leading European forest economists had believed possible, and there is every reason to suppose that the same can happen again. It seems likely that all the possibilities already mentioned for increasing the production of industrial wood will contribute: intensification of silvicultural practices; reduction of logging and transport losses; diminution of fuelwood; more afforestation. In addition, part of the land now used for farming will probably be converted to forestry; paper production is likely to become still less dependent on high-quality long fibers; etc. Needless to say, however, an extended supply of industrial wood from within Europe will not be achieved without much effort and capital investment.
The most immediate increase in the supply of industrial wood can, no doubt, be derived from the surprisingly large amount of fuelwood (107 million cubic meters by 1960, corresponding to one third of total forest output) still being used. The actual price of fuelwood is mainly, and sometimes even entirely, made up of labor costs. Wages in Europe are steadily increasing, while prices for fuels other than wood have never been so low and their supply so easy as now. It would certainly be against all economic rules if solid and liquid fuels and, in particular, liquefied gas were not used to a greater extent, at the expense of fuelwood. In fact, this development has already taken place in a number of countries. It must, of course, be admitted that the wood customarily classed as fuelwood is often undersized and of low quality compared to normal industrial wood, and there is also the well-known fact that in certain countries small-sized hardwood cannot just now be marketed at any price. The pulp industry, however, is already changing its concept of what can be considered as pulpwood and, in addition, there are new products such as semichemical pulps, fibreboard and particle board which can be manufactured wholly or mainly from lower grade wood. The important aspect remains that there is the possibility of a permanent transfer of a large proportion of forest output from fuelwood to industrial wood.
There is, however, an important point to be remembered. In Europe, as in similar regions, the cost of expanding the production of industrial wood by all the means technically available will progressively increase. There are obviously limits to the outlay that can be incurred if production is to be profitable. There will be competition between home-grown industrial wood and derived products produced outside the region, and this competition will be decisive on the extent to which measures for the promotion of home production can be financially justified. In certain cases, of course, planting programs and improved management will and must be undertaken for reasons other than economic considerations. But prospects are that at least the pulpwood production derived from new man-made forests in the tropics will tend to be highly competitive as compared with prevailing European price levels.
It is an often repeated truism that the fast-growing world population and rising standards of living will call for ever-increasing quantities of wood and fibers. The largest increases during the coming years will no doubt continue to be in the developed countries with an already fairly high standard of living. Later on, the developing countries with their great majority of the world's population will, however, become increasingly important. Altogether, demands for wood and fibers may be expected to reach such a point that new means will have to be found to meet them. As mentioned before, Europe is already now facing the possibility of having to increase its wood or fiber imports. In this context tropical and subtropical forests constitute some of the most important resources available. The better exploitation of existing forests might in theory meet the world's growing requirements for a long time. More promising still seem to be the new plantations of quick-growing species. Astonishing results have been achieved in different parts of the world with species of Eucalyptus or Populus, Pinus, Cupressus, Araucaria, and many others.
The existing or potential forest resources of the tropical zones are, to a large extent, located in the developing countries. Many of these countries are facing the problem of an adverse trade balance between exported raw materials and imported manufactured goods, aggravated by the deterioration of terms of trade. Only a few of them have sizable mineral or oil deposits under exploitation. Most of them are agricultural areas.
There are, however, serious surplus problems in agricultural trade today, in spite of large areas of hunger and malnutrition. It is rather in satisfying the world's hunger for wood that developing countries might find new export opportunities. These are, in fact, already being discussed, and it is not surprising that many newly independent countries are now urgently investigating the potentialities for pulp and other industries supplied from indigenous raw materials and aiming at exports to the world market.
Prospects for future wood fiber production seem to favor common savanna or grass-type lands which have a level and distribution of precipitation sufficient for coniferous species and where afforestation does not involve expensive clearing costs as in the case of rain forests. Such an evaluation is not only based on theoretical calculations: plantations have been introduced on such sites on a large scale in different parts of the world, as described in many articles published in Unasylva. The best known areas are situated in Brazil, Chile, east and south Africa, Australia, New Zealand and in the Mediterranean countries. Large-scale industries have already been established based on the supply of wood from some of these plantations. The huge pulp industry of the southern states of the United States of America is indeed a relevant pointer to the potentialities of warm zones.
The pertinent question is the production cost of industrial wood from plantations such as those referred to above. As said earlier in this article, the comparison between prices and costs will, among other factors, decisively influence the extent to which it will be profitable to mobilize the domestic wood-producing resources of a region like Europe. Apparently there are very few data available concerning the real costs of production in tropical or semitropical manmade forests, and a practical answer concerning pulpwood can perhaps best be obtained by studying industries already based on a supply of raw material from such plantations. The actual price of pulpwood may, however, be influenced by local or short-term factors which have little or no relevance to real production costs. Some mills might have a monopoly of the wood supplied from these plantations; others might be operating within economies where violent changes in money values make any calculations difficult.
During the winter of 1962, while visiting Tanganyika, the writer was in a position to get some first-hand information on the costs of plantations on east African savanna or grass-type land3. On the basis of this information a cost calculation for coniferous pulpwood production was made.
3This information was supplied mainly by Mr. Charles Cree, then Deputy Chief Conservator of Forests, Tanganyika, and Mr. W. G. Dyson, Forestry Officer, Kenya.
A pulp mill with an annual capacity of 150,000 tons corresponding 700,000 cubic meters of pulpwood was used as the basis for the calculations. Three alternatives - A, B and a - were adopted as follows:
|
|
A |
B |
C |
|
Average annual plantation yield (m³/ha) |
10 |
15 |
20 |
|
Corresponding annual out-put of pulp (ton/ha) |
2 |
3 |
4 |
|
Theoretical forest area required (hectares) |
75.000 |
50.000 |
37.500 |
|
Annual afforestation area with a 20-year rotation (hectares)1 |
3.750 |
2.500 |
1.875 |
1This area equals the annual clear-cut area, assuming that no thinnings are carried out within a rotation.
The following cost estimates, expressed in U.S. dollars, are assumed to be the same for each alternative. They are rough averages of the actual figures given:
1. Main-road network, houses and other buildings, machinery, equipment and nurseries established or acquired at the outset at a cost of about U.S. $30 per hectare. The establishment of these facilities can be spread over the first five years.2. Other costs for basic facilities such as forest roads (feeders), renewal of machinery and equipment, and so forth, come to a further U.S. $ 30 per hectare, as planting operations gain momentum.
3. Planting costs proper are of the amount of U.S.$30 per hectare. Planting carried out at the annual rate referred to above.
4. Tending and conservation costs are U.S.$30 per hectare per rotation.
The grand totals of the capital to be invested thus comprise the following items:
|
|
A |
B |
C |
|
Thousand U.S. dollars |
|||
|
Basic facilities during the first five years |
2.330 |
1.554 |
1.165 |
|
Annual costs for basic facilities |
2.330 |
1.554 |
1.165 |
|
Planting costs |
2.330 |
1.554 |
1.165 |
|
Conservation costs |
1.165 |
777 |
584 |
|
CAPITAL TO BE INVESTED OVER A PERIOD OF 20 YEARS |
8.155 |
5.439 |
4.079 |
|
Annual requirements for capital during the first 5 years |
700-745 |
465-495 |
350-365 |
|
Annual requirements for capital in the 6th year |
280 |
185 |
135 |
|
Annual requirements for capital in the 20th year |
350 |
235 |
175 |
In view of the nature of the enterprise, compound interest has, in the usual way, to be accounted for in the calculation. The following rates of interest were employed: 4, 5, 6, and 7 percent.
The result of the calculation is summarized in the graph. It shows the cost value of pulpwood per stacked cubic meter as a function of the rate of interest under the different alternatives. Stacked measure is used here since the European market price quotation for pulpwood mainly refers to cubic meter - stacked measure. The diagram clearly shows the significance of soil fertility. Under condition C, even a high rate of interest is acceptable in practice. The fact that a plantation may yield even more than 20 cubic meters per hectare per year has also to be borne in mind.
Coot of pulpwood crops depending on the yield capacity of the site and on the compound rate of interest on capital. Yield capacities: A = 10, B = 15, and C = 20 cubic meters solid measure without bark, per hectare per year.
The above calculation is, of course, theoretical. The choice of interest as well as of the rotation period significantly influences the final result of the calculations. A rotation of 20 years can perhaps be considered as too long since it is a well-known fact that tropical man-made forests can produce wood meeting the quality requirements for pulpable raw material after so short a period as 10 or 12 years only. On the other hand, the rate of growth in forests of that age is very high and continues to increase, and a cessation of production would, therefore, probably not be justified. The shorter the rotation period, the larger the annual area for clear-cutting and the more expensive the annual replanting. In practice, a shorter rotation or the use of thinning may be justified at the outset because, in this way, pulp production can be started earlier. It might in this case be possible to start pulp production at 50 percent of the planned total mill capacity after a period of 10 to 12 years, and to enlarge output to full capacity later, that is, on completion of the first rotation. Considerations of this nature might influence the results of the calculations in an even more favorable direction.
Even taking into consideration the possibility of fairly wide variations in the figures on which the cost calculation is based, the obvious conclusion is that pulpwood production costs on savanna or grass-type lands in tropical zones are very low indeed. Even in the case of the most expensive alternative, these costs are far less than general pulpwood stumpages in, for instance, Scandinavian countries. It should be noted, however, that stumpage in Europe includes items which have not been accounted for in the above calculation. In addition, the result is, of course, influenced by taxes, land prices or rents, forest insurance, etc., none of which has been taken into account here.
Competitive selling prices on the world market for pulp or paper produced from raw materials coming from plantations like those considered in the above calculations depend, of course, on a number of important additional factors. To mention just a few: What are the costs of harvesting and transporting the wood from the plantation to the mill? What are the costs of transporting the end-product from the mill to the markets ? What are the manufacturing costs at the mill, etc. ? These costs depend upon local conditions and have to be specially studied in each individual case. There are indications, however, that if the sites of the plantation and the mill as well as the over-all size of the venture have been carefully chosen, even those costs can be very reasonable if not indeed low compared with the corresponding costs of pulp or paper industries presently operating in traditional areas.
The price of coniferous pulpwood (roundwood, not industrial residues) delivered at the mill has in recent years been something like U.S. $8 to 11 per cubic meter (stacked measure without bark) in Scandinavia and around U.S. $14 to 17 in many importing countries of Europe. If the cost value of pulpwood on the stump according to the diagram is in the order of 10 to 15 percent, or even less, of the above prices, it seems there will be ample margin to cover other costs including all the harvesting and transport costs of the wood itself from stump to mill.
Although there may be some questioning of the results of the above calculations, they do seem to show sufficiently convincingly that (coniferous) pulpwood may be produced in tropical and semi-tropical zones at a cost which is only a fraction of the corresponding European price. If world wood, paper and board consumption does indeed grow at the rate expected, no other conclusion can be drawn but that the tropics are bound to play an ever-increasing role in the world's wood and fiber supply.
There is every reason to ask what effect such developments are going to have on forestry in countries with old-established forest industries and especially, how will the European situation be affected. A quick answer cannot be given and the matter will have to be further studied.
But one may predict that, long before all the possibilities which are technically available for a maximum within-the-region production of wood and fibers can be taken into use, there will be increasing imports of material from the tropics due to its cheapness; The competitive price of these imports will set a limit to financial justifications for further investments in domestic forest production.
It must be repeated that the potentials of tropical regions are not the only resources to be taken into consideration in this connection. As mentioned earlier, there are still large untouched virgin forests elsewhere in the world, and nobody can forecast exactly the impact of progress in science and technology, so rapid in recent years.
The trading policies of the developing countries will also certainly have considerable influence on future patterns of wood supplies. Many difficulties will have to be surmounted and heavy investments made before any large-scale production and export of wood or fibers can develop from these countries. Sudden changes seem unlikely. Only a few countries will be able to deal, without outside contributions, with the many problems involved. But present political atmospheres are often not such as to encourage the necessary large-scale, long-term investments.
On the other hand, both from the point of view of the economies of developing countries and of the world's future supply of wood and fibers, the prospects are so challenging that one cannot but assume that means will fairly soon be found to overcome all the difficulties. The search will form a focus for FAO's work over the next few years.
SIXTH WORLD FORESTRY CONGRESS
At its 40th Session the FAO Council gratefully accepted the offer of the Government of Spain to organize the Sixth World Forestry Congress. The Council noted that the Congress might appropriately be held in late 1965 or 1966, and that the Government of Spain would try to arrange some of the Congress tours in other countries of the Mediterranean area. FAO'S world appraisal of future wood resources and requirements, and of Mediterranean forestry, are scheduled to be prominent items on the Congress agenda.
