Competitiveness of forest products

Competitiveness of forest products at global markets; with particular emphasis on tropical forest products and small - medium scale producers in developing countries

A global trend in forest ownership shows a shift from public ownership of large tracks of (natural) forests towards devolution of the land or the forest management responsibilities to local communities and/or private  ownership. For natural forests in tropical countries, devolution has started  recently but the trend has accelerated since the last 2 decades and  community-ownership/management of forests is expected to reach 40% of the total  area of natural forests in the tropics by the year 2040. Hand in hand with this  devolution, and particularly in the tropics, goes a process of increased  fragmentarization of the forest area into smaller ownership/management units  with a corresponding surge in the number of small to medium-sized raw material  producers and small scale timber processing enterprises.

Although production,  processing and marketing skills and efficiencies of those producers  (particularly in the tropics) is improving, it is still far behind those of  large and globally interconnected larger corporations. For example, in the  plastic and metal sectors that produce raw materials and products competing  with timber for the construction and furniture markets, the opposite trend is  taking place towards the further consolidation of enterprises into larger  entities for reducing raw material costs and to enhance transport, processing  and marketing efficiencies at a global scale.

"Wood-looking" beams made of concrete painted like wood

Competition among materials and competition between tropical  and non-tropical timbers is fully acceptable. However, a loss of  competitiveness of forest-based products in general (and particularly those  from the tropics) may have serious impacts on the financial viability of  sustainable forest management (and more particularly of natural forests in the tropics); and which may reduce the  attractiveness to maintain land under forest cover, particularly of natural  forests in tropical countries, hence increasing deforestation pressures.

Competition from non-wood based materials can now be observed even in those specific market segments where “wood” was traditionally  considered the main raw material, such as for the manufacturing of flooring,  decking, windows, doors, panels, decorative veneers, etc. Such competition reduces the relative market share of wood-based products and lowers the  absolute demand from the building and manufacturing sectors for forest or wood-based raw materials  not only in developed countries, but also more and more in developing countries as well.

For several of these products, the raw material supply  was/is mainly from timbers harvested in tropical natural forests. Competition  with other materials such as plastics or metals, as well as competition with  timbers from temperate and boreal regions is seriously affecting their  competitiveness and reducing the market share tropical timbers (used to) supply  at those niche markets.

The impact of these changing forest ownership-, trade- and  manufacturing trends on the competitiveness of forest products at global  markets, particularly from small and medium scale producers in and from the  tropics is not well understood. A series of market reviews is ongoing to  identify trade trends and market share of wood-based products in the building  and furniture sectors. These reviews will contribute to guide policy  formulation and trade procedures for the promotion of more trade in wood-based  products originating from sustainable managed forests.

"Rattan" furniture: made from plastic and iron