FRST 100 November 2013frst100.forestry.ubc.ca/files/2012/09/FRST-100-global... · 2013-11-04 · FRST 100 November 2013 David Cohen 2 David Cohen 5 David Cohen 2. Changing Economic

FRST 100 November 2013

David Cohen 1

Trends in Global Trade in Wood Products ‐ 2013

(using FAOSTAT data, Statistics Canada through Strategis, IMF WEO, Global Trade Atlas and more)

David Cohen ‐ UBC

David Cohen

Summary

David Cohen 2

Global Trends –The Big Picture

Global Trade in Forest Products Forest Resources – WhereWhat is harvested – for what

2. Forestry Drivers

3. Business Transformation

1. Global Shift to

Bioeconomy

David Cohen

Four drivers but one result:the emerging bio‐economy

1. Population growth

2. Growing economic power of developing countries AND growth of global middle class

3. Squeeze on world resources (both renewable and non‐renewable)

4. Increasing environmental degradation

3 David Cohen

1. Global Population Growth

0123456789

10

Billion

s of p

eople

2.5 4.1 6.1 7.0 9.0

Source: UN World Population Prospects – 2010 Revision, medium variant

4


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2. Changing Economic Importance

0

5

10

15

20

25

Percen

t of globa

l GDP

Proportion of World GDP (PPP) by Country

USA China India Canada Germany

6

Source: International Monetary Fund, (IMF) World Economic Outlook (WEO) Database, October 2011

David Cohen

What is Purchasing Power Parity

“it is the number of units of a country’s money required to buy the same quantity of goods and services as $1 buys in the United States” UN HDR 2004 Box 6 page 257

based on a basket of 150 – 200 goods & services adjusts the measurement of items, such as GDP, to be free

of distortions from price & exchange rates based on the concept that it is not the size of a persons

income that is important but what it can purchase i.e.Is $30,000 a year a good income in Vancouver? in Vietnam?

7 David Cohen

3) Squeeze on World Resources

Rush for long term resource supply existing & new agricultural land in Africa forest concessions in Asia mineral deposits in Mongolia private equity ownership of forest land

Fundamental shift in commodity pricing (change since 1860s)

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David Cohen

Commodity Price Growth 1900 – 2013

9

Source: Dobbs et al., 2013 Resource Revolution: Meeting the world’s energy, materials, food and water needs. McKinsey Global Institute. 44 pages

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Commodity price index 2000‐2012

0

100

200

300

400

500

600

700

800

10

Source: Bank of Canada February 2013

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4. Global Ecological Footprint

Source: Global Footprint Network August 2013http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/

David Cohen

Life Cycle Assessment (LCA)

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David Cohen

Why is bio‐economy growing?

More people (population growth) need more stuff that require more resources higher prices & environmental degradation

13

higher prices for non‐renewables extraction innovation+ shift from non‐renewable to renewable

David Cohen

Resource scarcityEco‐efficiency

(leaning operations)

Sustainable businessSecure supplyResource access

Clean techEnergy efficiency

Good governanceSocial equality

Licence to operate

BIOECONOMY

14

Bioeconomy ‐ “the sustainable, eco‐efficient transformation of renewable biological resources into food,

energy and other industrial products” Schmid et al., 2012 quoting DG Research, 2005

David Cohen

Impacts of Shift to BioeconomyRenewables replacing nonrenewables bioplastics, ethanol, cellulose/plastic composites

Environmental externalities valuedwater rates, green energy premium, carbon tax

Already occurring but not yet recognized

Shared green value profit by solving environmental problems

e.g. tall wood buildings, GE ecomagination,

15 David Cohen

Vancouver Sun May 25, 2012 pG12

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http://upload.wikimedia.org/wikipedia/commons/thumb/6/69/T%C3%BCrinnenverkleidung_Hanf-PP_nova.jpg/642px-T%C3%BCrinnenverkleidung_Hanf-PP_nova.jpg

http://pacifictruss.net/wp-content/uploads/2012/03/the_case_for_tall_wood_buildings.jpg

David Cohen

Impacts of Shift to Bioeconomy

Renewables replacing nonrenewables bioplastics, ethanol, cellulose/plastic composites

Environmental externalities valuedwater rates, green energy premium, carbon tax tax shift toward pollution + taxes

Shared green value profit by solving environmental problems

e.g. tall wood buildings, GE ecomagination,

18

David Cohen

Resource Shortage 5 F’s (Nilsson)

Competition for (forest) land use : Food – conversion to agricultural land

Fuel ‐ fuelwood + biofuels

Fodder – grazing

Fibre – pulp, rayon,

Feedstock – for emerging bio‐products

19 David Cohen 2020

Forestry Drivers

Business Transformation

Global Shift to Bioeconomy


David Cohen 6

David Cohen

Graphic paper production in NA and NW Europe (1961‐2011)Selective Cuttings 5/29/13 http://cfs.nrcan.gc.ca/selective‐cuttings/36 (FAOSTAT data)

21 David Cohen

Percent change 1995 – 2010Global GDP growth = 59%

Europe USA Canada

Newsprint ‐3 ‐56 ‐5

Printing & writing 20 ‐23 ‐17

Folding box board 60 6 ‐15

22

FBB is made up of multiple layers of chemical and mechanical pulp used for health and beauty products, frozen goods,

confectionaries, pharmaceuticals, etc.

David Cohen 23 David Cohen

Bottom LineComputers (tablets & smart phones) + internet

finally paper use lower demand/value for chips P&P transformation underway in Europe & NA

Firms in developed countries know past P&P profits unsustainable

Great interest, concern, expenditures, & fear for firm and sector transformation

Lumber production requires profitable market for waste (chips)

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David Cohen 2525

Forestry Drivers

Business Transformation

Global Shift to Bioeconomy

David Cohen

Two Business Responses Based on current (Cohen/Nikolakis) research with 43 interviews with executives in N. Europe (14 firms) &

NA (21 firms) and 12 with industry experts

1. Traditional business response efficiency, productivity, process innovation,

leaning operations, expansion, contraction, specialization, etc.

2. Transform to compete in bioeconomy technology driven product and process innovation

(high risk, high reward)

26

David Cohen

Traditional business response• Downsizing: shrink & focus on improving P&P efficiencies

• Focus on lumber production: increase efficiencies as low cost lumber producers

• Change product mix: P&P & lumber or panel production

• Specialty products: develop specialty pulp and/or paper products for niche markets (intellectual property rights)

• Move up value chain: closer to consumer e.g. packaging, media, consumer products e.g. adult incontinence products

• Move down the value chain: focus on forest land & manufacturing (e.g. TIMOs)

27 David Cohen

Transforming to Bioeconomy• Bioenergy: develop commercial bioenergy production e.g.

co‐generation, pellets, ethanol production, etc.

• New bioproducts: developing new bioproducts and to commercialize new technology (e.g. NCC)

• Create new biocomplex: create a sustainable biorefinery (in planning and research stage – high risk, high reward)

• Become forest products producers: Shift to produce wider array of forest products e.g. environmental services, recreation, carbon offsets, water management, community forest, etc.

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David Cohen

Forestry in 2030• forests providing food, fuel, forage, fibre, feedstock, and

environmental services in complex interactions of human economic, social & environmental needs

• wood still a very important component of environmentally broad and sustainable product portfolio from forests

• forests become important part of restorative economy

• biorefineries replacing oil refineries as they age once pricing for environmental externalities becomes a reality

• partnerships key – gov’t/industry, civil society/industry, inter‐industry, intra‐industry, developing/developed and more

29 David Cohen 3030

2. Forestry Drivers


1. Global Shift to Bioeconomy

David Cohen

Thinking Points

Will the response to resource scarcity be the same for non‐renewable & renewables?

How will they differ?

How might if affect wood use, supply & prices?

31 David Cohen

Summary

David Cohen 32

Global Trends –The Big Picture

Global Trade in Forest Products Forest Resources – WhereWhat is harvested – for what

2. Forestry Drivers


1. Global Shift to

Bioeconomy


David Cohen 9

David Cohen 33

Global Forest Resources 2010area in millions ha: annual change 2000 ‐ 2010

33

N/C America 7050

S America 864‐8.0

Asia593+4.5

Europe1,005+1.4

Africa674‐3.4

Oceania191‐1.4

Source: FAO 2000 Yearbook of Forest Products, published in 2002.

Region#,######

View from Toronto

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Global Forest Resources 2010area in millions ha: annual change 2000 ‐ 2010

34

N/C America 7050

S America 864‐8.0

Asia593+4.5

Europe1,005+1.4

Africa674‐3.4

Oceania191‐1.4

Source: FAO 2000 Yearbook of Forest Products, published in 2002.

Region#,######

View from Vancouver

David Cohen 35

Global Forest Resources 2010Country data (% of world’s forest area)

35

Canada – 7.7

Source: FRA 2010

USA –7.5

Russia – 20.1

Brazil – 13.0

China –5.1

Indonesia – 2.3

Sweden/Finland – 1.2

David Cohen 36

Global Forest Resources 2010Country data (% of world’s forest area)

36

Canada–7.7

Source: FRA 2010

USA –7.5

Russia – 20.1

Brazil – 13.0

China –5.1

Indonesia – 2.3

Sweden/Finland – 1.2


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David Cohen 3737

Source: http://www.fao.org/docrep/016/i3010e/i3010e00.htm

David Cohen

Forests 30% of land in world is forested, increasing in some areas (e.g. Asia) decreasing in others (e.g. Africa, Oceania, S. America) great fluctuations in deforestation in countries e.g. Brazil

Overall forest cover is increasing

Hotbed of NGO activism WHY?

38

David Cohen

What is harvested

Harvest of 3.3 billion m3/yr from ~400 billion m3 of trees on 4 billion ha of forest land (0.8% annually)

Subsistence (~50%) vs Industrial (~50%)good and bad of subsistence use?

Coniferous (1/3) vs Non‐coniferous (2/3)C (2/3 industrial) vs NC (~2/3 subsistence)

Missing data due to illegal, underreported, and unreported logging =10‐25% of total

39 David Cohen

Some forest issuesDeforestationRole of plantations (extensive vs intensive)Forests / Wood & GHG storage Forests and: indigenous peoples poverty alleviation rural sustainability agriculture

Forest preservation, conservation or multiple useUrbanization and loss of connectivity with forests

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David Cohen

Rest of presentation focuses on Industrial Wood Supply and Use

41 David Cohen 42

Industrial Roundwood Production 2012total of 1,661 mcum (little change in 25 years)

42

Can. 9.1%

Brazil 8.4%

Russia 10.7%

US 20.2%China 6.2%

Sweden 3.8%Finland 2.7%Germany 2.6%

Chile 2.4%

Indonesia 3.7%

Forest Resource vs Industrial RWin % of world for 2010 and 2012

Source: UN Food and Agriculture Organization FORSTAT Database 2012 and FAO 2010 FRA

43

increase harvest?

harvestmaxxed?

David Cohen

Trends in Forest Management

equity ownership of private forest land private ownership 2.7 million ha annually 1990 ‐ 2000

multi use forest management shift to forest (not wood) products e.g. PES

ecosystem management ‐ people as part of ecosystem

market driven deforestation & illegal logging

plantation forestry from 1990 – 2010 >92 million ha ‐‐ increase of 54%

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David Cohen

Ten countries with largest area of productive forest plantations 2005 in %

0 5 10 15 20 25 30

ChinaUSA

RussiaBrazilSudan

IndonesiaChile

ThailandFranceTurkeyOthers

45

Source: FAO 2005 FRA

David Cohen 46

Forest PlantationsGood for the World

– Rapid growth less land needed natural forest conservation

– Good use of scarce resources– Creates continuous, long term

wood supply– Economically beneficial

Bad for the World

– Biological deserts – NO biodiversity

– Depletes soil / requires fertilization

– Creates hydrological problems

– Monoculture increases pest & disease problems

46

0

50

100

150

200

250

300

1961 1967 1973 1979 1985 1991 1997 2003 2008 2014 2020

US$ Billions

Current Global Recession

$267 billion

Value of world exports of forest products – increasing at 8.5% annually

(Source: CIBC) David Cohen

Trends in Industrial Log Supply

in supply from fast grown plantations e.g. Eucalyptus (7 year rotation) heavily subsidized by governments

supply from developed natural forest costs, NGO’s, bark beetle, other uses, etc.)

supply Russia, E. Europe, Baltics, etc.

48

CHINA

GFC


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David Cohen

China – 21st Century Game Changer

At start of 21st century China was worried about wood supply due to National Forest Protection Plan (NFPP)

Study predicted sufficient wood available for import for rapidly growing sector

In 2000 China was not in top 10 producers, importer or exports of any wood products

LESS THAN 10 YEAR LATER

49 David Cohen

CHINA 2009China now a powerhouse in wood production

1st largest exporter (by value)2nd largest importer (by value)

Furniture #1 Plywood, MDF, blockboard #1 HW lumber #2 Particleboard #3 SW lumber #3

50

David Cohen

China’s Forest Product Production2003‐2010

0

50

100

150

200

250

300

350

Billion

s of U

S$

51

Source: International Wood Markets Group 2010 through UNECE Forest Products Annual Market Reviews

David Cohen

China’s wood import & exports

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

millions of U

S$

Imports

52

Exports

China usually adds 30% of value to imports, uses ¼ domestically and exports slightly higher value than it imports


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David Cohen

China and Logs

By 2000 China’s forest seriously overharvested soil erosion, reduced harvests, water pollution, etc. NFPP

Great in imported logs & establishment of plantations China has largest area of forest plantations using GM trees to ameliorate soil degradation,

improve fibre quality, & quantity

53 David Cohen

China’s Share of World Log Imports(about 1/3rd of imports – Russia about 1/3rd of exports)

54

0%

10%

20%

30%

40%

50%

Globa

l Log

Impo

rts NFPP

Source: WTA and FAO data set

WTO

David Cohen

Suifenhe Rail Yard 2003

55 David Cohen

Russia’s Share of World Log Exports

10%

20%

30%

40%

50%

Globa

l Log

Exports

56



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Proposed Russian Tax Rate

57

TBA

X

David Cohen

Russia Joins WTO 22/8/12

EC support for entry required access to logs

Set quotas and new tariffs based on region within quota tariff reduced: 25% to 13% for spruce &

fir logs and 80% outside quota

2013 quota 5,950,600 m3 to Europe and 285,900 m3 outside of Europe (Japan remains at 25%)

7% for birch logs which go to Europe

58

David Cohen

China SW Log Imports

0

5,000

10,000

15,000

20,000

25,000

30,000

Thou

sand

of cum

NZ USA Canada Other Total Russia

59

Canada

David Cohen

What is the Story

1. China bans logging on natural forests2. Wood industry grows using imported logs3. Russia increases log exports to China

Also from NZ & illegal logging (e.g. Indonesia)

4. China global leader in wood production5. Russia wants more manufacturing so tax6. China decreases log imports & increases lumber

imports7. Russia backs down but for Europe & not China

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David Cohen

Current Topics – Log SupplyIllegal Logging (Brazil & Indonesia)

Certification / Legality / Import Regulation

Climate Change and Forests – REDD++

Forests and Indigenous Peoples

Forests and Poverty Alleviation

Forests and Carbon Sequestration

61 David Cohen 62Source: David Cohen

Zhang Jiagang Port near Shanghai 2001

David Cohen

Global Lumber Production & Exports

90

140

190

240

290

340

390

Millions of cum

Exports Production

63 David Cohen

Largest Sawnwood Producers 2012

0

10

20

30

40

50

60

70

millions of cum

Sawnwood Production 2012

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David Cohen

China’s Share of World Log Imports(about 1/3rd of imports – Russia about 1/3rd of exports)

65

0%

10%

20%

30%

40%

50%Globa

l Log

Impo

rts NFPP


WTO

David Cohen

Chinese Lumber Imports

0

5

10

15

20

25

millions of cum

all SawnwoodC Sawnwood

66

David Cohen

What is the Story

Taxes, corruption, overharvesting, etc. costly unstable log supply from Russia

Shift to importing softwood lumber with Canada supplying almost half

Rising costs in China plus higher cost for logs makes imported lumber more competitive

Continued growth or short window of opportunity?

67 David Cohen

Trends in Sawnwood

in supply from lower cost natural forests & southern plantations

technology enables sawnwood replacement with EWP, other materials, HW lumber, etc.

real decline in price over time

what to do with the wood chips given the decline in writing & graphic paper and newsprint

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David Cohen

China and Wood Panels

China is largest producer of MDF, blockboard & Plywood in the world

China uses wood panels for its large furniture production

Chinese production but exports as domestic consumption has grown

Many old plywood plants being replaced by modern facilities

69 David Cohen

Largest Panel Exporters 2012

0246810121416

millions of cum

Panel Exports 2012

7070

David Cohen

Chinese Panel Production, Exports & Imports

0

20

40

60

80

100

120

140

millions of cum

Production

Export

Import

71 72

OSB Replaces Plywood

0

5,000

10,000

15,000

20,000

25,000

30,000

1923

1927

1931

1935

1939

1943

1947

1951

1955

1959

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

US

Pan

el P

rodu

ctio

n, m

illio

n sq

uare

feet

, 3/8

inch

bas

is US Total

W. Plywood

S. Plywood

OSB


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David Cohen

Trends in Panels

OSB gaining in Europe – entry in Asia China produces >1/3 of world supply of MDF

use of alternative materials for panels Kenaf, strawboard, bamboo board, etc.

production & exports from China & Brazil

trade & production of wood panels

new types of panels e.g. CLT

73 David Cohen

What is the Story

China dramatically increasing production of wood panels (MDF & plywood) MDF used for furniture & other manufacturing plywood used for concrete forming

use of wood panels world wide much in wood housing which is growing rebirth of some panel types (eg SIP and CLT) use wood, store carbon

74

David Cohen

Pulp & Paperboard Production

020406080100120140160180200

Millions to

nnes

China USA Japan Germany Canada Total

75 David Cohen

Largest Pulp Producers 2012

0

10

20

30

40

50

60

millions of tonn

es

7676


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David Cohen

Chinese Pulp Production and Imports

0

5

10

15

20

25millions of ton

nes

ProductionImport

7777 David Cohen

Trends in Pulp & PaperMost pulp used to make 3 types of paper (derived demand)

1. P&W (printing & writing)declining due to spread of internet

2. Packagingholding steady with use balanced by in recycled material

3. Hygienegrowing faster than GDP

78

David Cohen

Newsprint End‐use Factorin thousand tonnes / billion dollar of real US GDP

from CIBC World Markets 1/28/09

79 David Cohen

Trends in Pulp technology high quality pulp from poor fibre

impact of internet on paper use newspaper readership (newsprint)

growth in absorbent pulps (for tissues, etc.) fast grown southern hardwoods e.g. eucalyptus

material from the urban forest

use of “waste” driving up cost of some pulp

80


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David Cohen

Recovered Paper Production

50

70

90

110

130

150

170

190

210

230

Millions of ton

nes

81

steady growth in recovered paper

technology & design keeps increasing % of paper recovered

“urban pulp supply”

needs strong pulp added each time it is recycled

David Cohen

Largest Recovered Paper Producers 2012

0

10

20

30

40

50

60

millions of ton

nes

82

Recently China has surpassed USA as largest producer of recovered paper.

David Cohen

Trends in Recovered Paper

trade in recovered paper mechanical pulp used to add strength

backhaul waste paper to China and Korea

recovery rates due to technology

NA public willing to subsidize recycling (strong support for blue box programs)

Some states require % recycled content

Is recycled paper always better?

83 David Cohen

What is the Story

China importing pulp to produce paper paper use for newsprint, office paper & packaging

(except in rapidly developing economies) but for fluff pulp decline in northern SW pulp & increase in pulp from

eucalyptus plantations

Increase in pulp prices due to competing uses for waste input (eg biofuels, rayon

No new pulp mills in developed countries WHY? Shift to agroforestry ‐monoculture plantations

84


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David Cohen 85

Documents

FRST 100 November 2013frst100.forestry.ubc.ca/files/2012/09/FRST-100-global... · 2013-11-04 · FRST 100 November 2013 David Cohen 2 David Cohen 5 David Cohen 2. Changing Economic