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1.
CENTRAL/ WEST AFRICA
Log prices hold amid sluggish building activities
Log export prices remained largely unchanged in the first half of March. Trade continues to be brisk and prices are
expected to remain stable through the end of the month. Recent cold weather in the Northern Europe and UK has
again restricted building activities and neither contractors nor the joinery sector are optimistic of improved market
sentiment in April.
Sawnwood prices edge up despite quiet markets
Sawnwood prices were mostly stable or rising in early March. Price changes were due to the low supply
situation for many prime species in view of the rather quiet European markets in the past three months. In the
past year or two, reactions to sudden shifts in supply and demand for particular species have been followed by
abrupt price mo vements of plus or minus .20-30 per m3 or more, rather than by gradual price adjustments as in
previous years. The recovery in sapele sawnwood prices gained momentum with a further rise of .20 per m3.
The reduction of sawnwood import tariffs in India last year is having some influence on price and demand
patterns. However, it is likely that its full impact has some way to go and will build up gradually over the next
two or three years.
Growing interest in lesser-known sawnwood species
Similarly to the log trade, there has been growing interest in lesser-known sawnwood species that were previously
sold only locally and are now being exported. Overall,the market is firm though demand is only moderate and
exporters are wait ing for improved market sentiment as European buyers begin to cover for their spring and
summer stock replacements.
Liberia revokes all forest concessions
Recently-elected President Ellen Johnson-Sirleaf cancelled all forest concessions in the country last
February. She has accordingly established the Forestry Reform Monitoring Committee (FRMC) to be led by the
Forestry Development Authority (FDA) with the participation and assistance of the Liberia Forest
Initiative (LFI). The LFI comprises Liberian and international representatives including international and
local civil society.
The FRMC is charged with the responsibility of overseeing, monitoring and verifying the formulation,development and implementation of the measures prescribed as condition for the resumption of concession grants and allocations. Concession agreements will be restored only after the FRMC, in collaboration with the FDA, ¡ˇăcertifies that they are consistent with international standards and basic principles of accountability,transparency, and sustainability as provided for in the
Public Procurement and Concession Act of 2005¡ˇŔ. The FDA and FRMC will ¡ˇăidentify appropriate land areas for
establishing a concession system based on land-use planning principles, establish an appropriate chain of
custody system that tracks logging operators from the point of enumeration to export and work with the
international community to define an appropriate tax system (based on international timber prices) and
equitable sharing of the benefits with local communities and institute that system¡ˇŔ.
In May 2003, the UN Security Council imposed a ban on all Liberian timber trade due to its link to the country¡¯s
civil war. The ban came into effect in July 2003 and has been renewed. The operation of the FRMC is expected to
facilitate the lift ing of the trade ban.
R. of Congo qualifies for $2.9 billion debt relief
The World Bank¡¯s International Development Association (IDA) and the IMF have determined that the
Republic of Congo qualifies for debt relief after reaching the decision point under the enhanced Heavily Indebted
Poor Countries (HIPC) Initiative. These decisions were based on the country having put in place external arrears
clearance operations, remained on track with an IMF-supported program and developed an interim
Poverty Reduction Strategy. The Republic of Congo becomes the 29th country to reach its decision point
under the Initiative.
The Government of the Republic of Congo will begin receiving interim debt relief from certain creditors but
must address serious concerns about governance and financial transparency in order to qualify for irrevocable
debt relief at the completion point. Congo¡¯s external debt as of end-2004 was estimated at $9.2 billion in nominal
terms, making it one of the world¡¯s most indebted developing countries on a per capita basis. Debt service
in 2006 is estimated to represent 43% of fiscal revenues (before HIPC relief). Over time, the debt relief will lower
the Republic of Congo¡¯s debt service payments by about US$2.9 billion in nominal terms.
2. GHANA
3.
MALAYSIA
Malaysia ends Indonesia's ply domination in Japan
Malaysia became Japan's largest supplier of plywood in 2005, ending the long-term domination by Indonesia in
that market. Malaysia exported 2.18 million m3 (47.6% of Japan's 4.57 million m3 of plywood imports) last year,
up 9.1% from 2004 (see TTM 11/4). Indonesia, formerly Japan's largest plywood supplier, followed with 1.85
million m3 (40.4% of plywood imports), down 24% from 2004. Indonesia plywood exports have been affected by serious log shortages, the ongoing crackdown on illegal logging and massive closure of plywood mills. As a result, Indonesia could not guarantee a steady and timely supply to the Japanese market.
China was a distant third with 403,000 m3 but its plywood exports to Japan have been growing more rapidly, up 21% from 2004.
Exports of certified products record hefty gains
Malaysia exported 30,382 m3 of certified products in 2005, up 60% from 2004. The products were
MTCC-certified and included sawnwood, mouldings, laminated finger-jointed timber, plywood and garden furniture. Most of the exports were to the EU, notably the Netherlands (64.4% of the exports), the UK (25%) and Belgium (6.4%).
The Malaysian Timber Council (MTCC) was established in 1998 and initiated operations in 2001 with standards
based on the ITTO Criteria and Indicators (1998). Currently, 4.73 million ha of permanent reserved forest
in nine Forest Management Units (FMU) in Malaysia are certified under the MTCC scheme, the largest in the
tropical world. Another FMU of about 100,000 ha in Sarawak is preparing for assessment for MTCC certification. A total of 83 timber companies have been awarded the Certificate of Chain-of-Custody (CoC). In the current stage of its scheme, MTCC is implementing a new standard using the FSC template.
The MTCC scheme is accepted by public procurement programmes in Denmark, the UK, New Zealand and France. In February 2006, 24 holders of the MTCC CoC were accepted under the Dutch Keurhout Protocol for Legal Origin. MTCC, which is a member of the
Programme for the Endorsement of Forest Certification schemes (PEFC), is taking steps to submit its scheme for PEFC endorsement.
Reforestation starts with hevea plantations
The Malaysian government will implement a 200 million Malaysian ringgit (MR) initial project of its reforestation
programme by planting 25,000 hectares of rubber trees this year, according to the Plantation Industries and Commodities Minister Datuk Peter Chin Fah
Kui.
The government would collaborate with the Forest Plantation Development Sdn Bhd (FPD), a subsidiary company of the Malaysian Timber Industry Board (MTIB), to disburse, manage, monitor and plant the trees in Sabah, Sarawak, Johor, Pahang and Terengganu. The project intends to help prevent a shortage of raw materials while ensuring steady and adequate supply for
the Malaysian furniture industry. The first harvest of planted rubber trees is expected by 2021.
FPD will also raise 2 billion MR through the so-called "green bond" to finance the country's timber production
programme involving 375,000 hectares nationwide. Funds are needed to finance activities such as land preparation, labour and infrastructure development, among others. FPD will channel the funds through state governments or the private sector to implement the programme. The state governments can lease the land to FPD, implement the programme themselves or form joint
ventures. Mr. Chin said the reforestation programme was necessary given the growing shortage of raw materials, particularly rubberwood (see TTM 11/2 and 11/3). Most of Malaysia¡¯s 1,000 furniture makers are dependent on rubberwood as raw material.
MIFF e yes $600 million in furniture sales
The Malaysian International Furniture Fair (MIFF) has targeted sales of more than 2.2 billion Malaysian ringgit (MR, $600 million) for this year compared to 2.13 billion MR ($577 million) last year, says MIFF Managing Director Datuk Tan Chin
Huat.
Malaysia and USA announce FTA talks
Malaysia and the USA announced they will begin negotiations for a bilateral free trade agreement (FTA). Malaysia is the USA¡¯s tenth largest trading partner and
its biggest trading partner in Southeast Asia. The USA was Malaysia¡¯s largest trading partner but China is likely
to surpass it this year. The USA completed a FTA with Singapore in 2003, is negotiating one with Thailand and initiating another with South Korea in June. Malaysia, in turn, has signed a FTA with Japan, expects to commence negotiations with India this year and is mulling negotiations with Chile.
Peninsular Malaysian meranti logs are top grade and are used for
scantlings for the EU. Their prices are higher than Sarawak¡¯s.
4.
INDONESIA
SLJ II is Indonesia's largest certified FMU
Indonesia's Sumalindo Lestari Jaya (SLJ) II, holder of a forest concession of 267,000 ha in East Kalimantan and a
producer of mixed tropical hardwood, was recently certified by Smartwood-FSC and Mutu Agung-LEI (LEI: Indonesian Ecolabelling Institute). SLJ II is one of Sumalindo Lestari Jaya Tbk Group's forest management units (FMU). SLJ II became the largest forest company in Indonesia to obtain FSC certification after a five-year process. SJJ II concession is dominated by lowland and mixed hill dipterocarp forests.
SLJ II has also joined the Indonesian Forest and Trade Network (FTN). Working in parallel with 30 other country FTNs, the Indonesian FTN gives its members market access to a global network of like minded businesses. The Indonesian FTN has linked SLJ II with BlueLinx Corporation, the largest building products distributor in the USA, which was seeking meranti plywood from
Indonesia.
Eco-labelling a must for global access, Minister says
The Indonesian Forestry Minister M.S. Kaban indicated that only three out of 100 timber processors in Indonesia have had their green credentials endorsed by the Indonesian Ecolabelling Institute (LEI). During the presentation of LEI certificate to SLJ II in Jakarta (see article above), he warned that eco-label certification was the only way to gain wider access to the global market,. He said that Japan, USA and some EU countries had implemented policies which only allowed legal and
environmentally-friendly products to enter their markets.
LEI Executive Director Taufiq Ali added that many companies failed to meet even the most basic requirements for certification and that many were reluctant to have access to certification which was seen as being too expensive to implement.
Indonesia pledges funds for forest rehabilitation
The Indonesian government has allocated 3.8 trillion rupiah ($408 million) for forest rehabilitation programs in 2006, Forestry Minister M.S. Kaban informed. He said that the rehabilitation was needed as 60 million hectares of the total 120 million hectares of forests in Indonesia (105 million ha, according to FAO, 2005) had been damaged. He added that some 2.8 million hectares of forests in the country were damaged every year, causing a financial loss of 25-34 trillion rupiah to the state. Mr Kaban said his Ministry was determined to carry out reforestation of the damaged area and expressed hope
that Indonesia could become a model in forest management in the next 10-15 years.
5.
MYANMAR
Hardwood market buoyant despite price hikes
Demand for teak logs remained fairly strong despite the two February price hikes. However, there were substantial quantities of logs traded at previously agreed prices. The weakness in domestic processing of teak in the second half of 2005 continued to be seen in early 2006. The latest price increases in pyinkado logs seem to have eroded the margin enjoyed by middlemen. Although the pyinkado market is not lively, it remains active and resilient to price increases. Gurjan market remains
sluggish as in previous months.
The average FOB Yangon prices at the February sealed tender were (EURO per hoppus ton): EURO413 for export grade
pyinkadoe (440 tons traded); €231 for export-rejection grade pyinkadoe (400 tons); EURO177 for export grade gurjan
(450 tons). The table below shows the average prices for various grades of teak logs sold by MTE, at their sealed
tender held on 24 February and tender held on 27 February 2006.
Hoppus ton=1.8m3; All grades, except SG-3, assorted and domestic, are length 8¡¯ x
girth 5¡¯ and up. SG-3 is girth 4¡¯ and up while assorted and domestic are girth 4¡¯ and up.
SG-3 grade is higher than SG- 4 but with lower girth and price.
Euros replaces dollar for trade with India and China
Myanmar will replace the US dollar with the euro for border trade with neighbouring countries including India and China. The Government announced that US dollar accounts of merchants would be closed and replaced with euro accounts. This move is a result of a decision taken in 2003 when
Myanmar was forced to use euros instead of US dollars for international business transactions due
to the US ban on exportation of financial services to the
country.
6. PAPUA
NEW GUINEA
7.
BRAZIL
Forest law opens Amazon up for sustainable logging
Brazil¡¯s President Luiz Inacio Lula da Silva introduced new sustainable forestry measures in early March which
will open 13 million ha (3%) of the Amazon up to timber companies that comply with tough restrictions aimed at
preserving the world¡¯s largest rain forests. Brazilian companies can bid for 40-year contracts, which will
allow logging under a sustainable development plan. Logging will be barred in nature reserves and Indian
territories. Only five or six trees can be harvested over 10 years in an area similar to the size of a football pitch. The
law will help fight illegal logging while revenues from contracts will help finance a new forestry service to help
enforce environmental regulations and concession contracts. Several leading environmental groups, including Greenpeace, and opposition parties supported the law. Under the measure, only Brazilian companies can bid for logging contracts. Some members of the Congress feared multinationals would set up legal fronts to participate in what they called the privatization of the
Amazon to foreigners.
Environmental license extended to private banks
The federal government is planning to extend from public to private banks the requirement of environmental license to enterprises for the approval of loans. The question has been studied by the Civil House, the Ministries of Environment, Planning and Treasury and, also, by private banks ¡¯ representatives, who have demonstrated interest in comply ing with the legislation. The purpose is to ensure the environmental quality of projects in any sector. The Ministry of the Environment
recognizes that a growing number of Brazilian companies have followed the environmental legislation besides abiding by labour laws. One example is the government effort under the anti-deforestation plan to establish a program utilizing abandoned forest development projects in an Amazonian area of 160,000 km2, instead of new forest areas.
Emergency plan for ailing furniture sector
The State of Santa Catarina will implement an emergency programme to provide relief, at least temporarily, to the ailing furniture sector. The Exporters Compensation Program (Compex) will reduce from 17% to 7% the ICMS rate (Tax on Circulation of Goods and Services) on raw-material in the manufacture of export products and will exempt tax in the electric energy bill.
The emergency programme also suspends all of the companies?claims for a 180-day period in order to give more time to negotiate with suppliers. The possible exemption of municipal taxes for a period of two years and a temporary postponement of the FGTS (Employee Severance Pay Fund) are also under consideration.
Eucalyptus offers alternative material for furniture
Eucalyptus may become a raw-material alternative for the furniture sector, according to local analysts. Besides its high productivity, it also has some favourable features for furniture manufacturing. The widespread perception of its low wood quality is a major obstacle, since more than 90% of the available eucalypt wood in the market is for pulp and paper production.
Several Amazonian native species traditionally used in furniture manufacturing, such as cherry and ivory-wood, are protected by IBAMA. While native species require some 50 years of growth before commercial use, eucalyptus for sawmills requires only 15 years. Other advantages are diversity of colours , drawings and wood patterns. Eucalyptus plantations in Minas Gerais (MG) and Espirito Santo (ES) have spawned the development of a furniture sector in those states . For example, regional centres for the development of furniture production lines were recently established in Jequitinhonha Valley (MG) and Linhares (ES) with the support of SEBRAE (Brazilian Service of Support to Micro and Small Companies).
The Forest Sciences Department of Luiz de Queiroz Agriculture School (Esalq) is currently studying the potential of eucalyptus species with regards to physical
and mechanical properties, usage and finishing acceptance, with a view to improving the use of the species and disseminating information on it.
USAID initiative to support Amazon¡¯s biodiversity
US Agency for International Development (USAID) will provide an initial $50 million investment over the next five years (2006-2010) in an initiative to help preserve the Amazon Basin¡¯s biodiversity. USAID¡¯s investment will support community groups, governmental entities and public and private organizations in the Amazon region. USAID has requested applications from parties interested in obtaining grant money to participate in the Amazon Basin Conservation Initiative. The initiative¡¯s aim is to bring together indigenous and local communities, conservationists and decision-makers from the Amazon region countries to help address common conservation challenges, such as conflicts over the use of forests and other valuable natural resources.
8. PERU
OSINFOR revokes 22 forest concessions
INRENA, through its Supervision Office of Wood Forest Concessions (OSINFOR) revoked the agreements with 22 forest concessions in the Departments of Madre de Dios (4), Ucayali (15), Huˇ§¢nuco (1) and San Martˇ§ªn (2),comprising 301,187 ha of forests. The decision was made after the concessionaires failed to present or implement forestry management plans. An administrativeproceeding has also been initiated against 18 other forest concession holders who have committed irregularities.
OSINFOR Director, Emilio Alvarez Romero, pointed out that field supervisions are being carried out in different forest concessions. OSINFOR is also investigating
complaints about fraudulent declaration of mahogany and cedar species by some concessionaires in their annual
plan of operations. If confirmed, OSINFOR may declare that the concessionaires are engaged in illegal logging
activities, including in reserved areas.
Strategic development plan for the forest industry
A union of forest firms proposed a strategic development plan for the Peruvian forest industry. According to them,
timber production may increase up to seven times and, in the long run, the industry must be able to contribute 4%
of the GDP, as opposed to 1% currently. The proposal is part of the strategic guidelines that have been presented
to the society and political parties aimed at consolidating the sector by 2021. The timber industry accounts for 16%
of the employment in regions such as Loreto, Madre de Dios and Ucayali, indicating its potential.
The proposal contains other suggestions including: creating the Vice-ministry of Forestry Production; establishing the Wood Technological Innovation Centre (Cite Madera) in Iquitos and Puerto Maldonado; assessing all 580 forestry concession agreements and revoking those lacking technical and financial feasibility; and achieving, within the next 10 years, $1.5 billion of exports per year and 500,000 ha of commercial plantations.
Loreto targets diversified wood product exports
Despite the logistic difficulties faced by the wood industry in Loreto, several leading companies are starting to implement new lines of production. Companies are looking for new machinery in China, Germany and Italy for the production of floorings, deck, engineering flooring, doors, window frames and other value-added wood products. The Association of Wood Entrepreneurs
of Loreto (AIMAL) plans to increase wood exports by 15% to $32 million in 2006, by exp orting more value-added products and diversifying markets. Loreto exported $27.26 million in 2005, with virola sawnwood ($18.89 million), plywood ($4.71 million) and cedar and marupa sawmwood ($2.23 million) accounting for the bulk of the exports.
Peruvian Amazon loses 150,000 ha of forests a year
According to the Executive Secretary of the National Council of the Environment (Conam) of Peru, Mariano Castro, 150,000 ha of forests disappear a year in the Peruvian Amazon due to indiscriminated logging. The remarks were made during the ¡ˇăFirst Amazonian Eco-dialogue¡ˇŔ in Iquitos, Peru, attended by Ministers of Environment from Brazil, Costa Rica and Venezuela, as
well as delegates from Bolivia, Chile, Colombia, Ecuador, Mexico and Peru. Representatives from UNEP, the Andean Community of Nations and the Amazonian Cooperation Treaty Organization also attended the meeting.
Mr. Castro indicated that traditional "migratory agriculture" in zones of ¡ˇăscattered, arbitrary and disordered¡ˇŔ occupation was one of the leading causes of deforestation in the Peruvian Amazon. According to Conam, Peru losses $600 million a year due to indiscriminated logging. He added that the activity depleted the natural resources and hampered economic progress and quality of life of forest communities.
*Cheaper and small-dimension sawnwood for
this market.
9. BOLIVIA
10. Guatemala
11.
Guyana
Increased demand seen ahead of Cricket World Cup
Guyanese and Caribbean consumption of wood products is expected to increase as a result of a shortage of cement for the construction industry, especially in the housing sector. Also, increased construction activities across the Caribbean in preparation for the Cricket World Cup 2007 are expected to result in increased demand for Guyanese hardwood products.
Funding boost for RIL training
The Guyana Forestry Commission (GFC), the Forestry Training Centre Inc. (FTCI) and the Forest Products Marketing Council of Guyana, Inc.
(FPMC) are currently placing heavy emphasis on providing training to the forestry sector to enhance its contribution to the national GDP. The FTCI recently received additional funding from ITTO to continue its programme of training for the forestry sector in all aspects of Reduced Impact Logging
(RIL) . This programme is being carried out with support from other collaborating partners including the
GFC, WWF, Tropical Forest Foundation (TFF) and Caterpillar.
The GFC and the FPMC are working in close collaboration to provide training in t imber grading, sawmilling techniques, saw doctoring and marketing of Guyana's forest products. The training activities are expected to impact positively on the quality of wood products originating from the country.
*Small
SQ is used for piling in the USA and EU. Price depends on length.
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