Global Timber Production, Trade, and Timberland Investments
Speech Presented at the Southern Forest Resource Assessment Consortium
21-22 October 2008Research Triangle Park, NC
Fred CubbageProfessor
North Carolina State UniversityDepartment of Forestry and Environmental Resources
Current Research Components and Co-PIsGlobal and U.S. Trade
Ronalds Gonzalez, Sudipta Dasmohapatra, Daniel Saloni, Fred CubbageSadharga Koesbanda & Fred Cubbage
World Timber InvestmentsFred Cubbage, Patricio MacDonagh, Gustavo Balmelli, Rafael Rubilar, Rafael de la Torre, Ronalds Gonzalez, Omar Carrero, Greg Frey, Sadharga Koesbanda, Heyns Kotze, Jin Huang, Mauro Murara, Vitor Hoeflich, James Turner, Bob Abt
Colombia – Land, Site Quality, Transportation TradeoffsJuan Lopez, Rafael de la Torre, Fred Cubbage
Gross Domestic Product (GDP) and Growth, 2006Country GDP 2006
(Billion $US)GDP 2006 per
capita (000 $US) Forecast GDP
Growth, 2007 (%)
Argentina 213 5.5 7.5
Brazil 1 067 5.7 4.4
Chile 145 8.9 5.2
Colombia 135 2.9 5.5
Paraguay 10 1.6 5.0
Peru 93 3.4 6.0
Uruguay 19 6.0 6.0
Venezuela 182 6.8 6.2
S America Total 1 917 5.1 5.3
USA 7 814 37 ~2.4 (actual)
Africa (2004) Na 0.1-4.0 Na
Global 48 144 7.3 4.9
PriceWaterhouseCoopers 2007, IMF World Economics Outlook Database, FAO GFRA 2007
Forests and Plantations
Total World Forest Area By Region, 2005
1001832
677 635 572
20628
0
200
400
600
800
1000
1200
Europ
eS.
America
N. Ameri
ca
Africa
Asia
Ocean
iaC. A
merica
Mill
ion
Ha
FAO 2005; 3.952 billion ha total
Total Forest AreaFor Major Countries, 2005
809
478
310 303197 164 133 88 69 68
0100200300400500600700800900
Russian
Fed
Brazil
Canad
aU.S.A
.China
Australi
aD.R
. Congo
Indones
iaPeru India
Mill
ion
Ha
FAO 2007
Area of Planted Forests by Function, 2005
10798
44422
3833
2161517133
11326
2370
20474
326028
986 315192040
10000
20000
30000
40000
50000
Africa Asia Oceania Europe NorthAmerica
CentralAmerica
SouthAmerica
Mill
ion
Ha
Productive Forest Protective Forest
FAO 2005; 109.6 million ha productive (78%); 30.1 million ha protective (22%); 140.1 million ha total
Total Productive Plantation Area For Major Countries in the World, 2005
17061
11888
53843399 2661 1997 1968 1832 1792 1766 1573
28530
0
8000
16000
24000
32000
ChinaU.S.A
.Russ
ian FedBraz
ilIndon
esia
ChileThail
andFran
ceNew
Zealand
Viet N
amAustra
liaMalay
sia
Thou
sand
Ha
FAO 2007
Total Productive Plantation Area For Major Countries in the World, 2005
14261229
1067 1053
751 754627
312164
43
1471
0
500
1000
1500
2000
SpainS A
frica
Argen
tina
Portugal
IndiaUru
guayPeru
Venez
uelaColombia
Ecuad
orPara
guay
Thou
sand
Ha
FAO 2007, Asoplant 2007 for Venezuela
Industrial Roundwood Harvest from Plantations
172152
30
147
100
322
0
50
100
150
200
Europ
eS.
America
Africa
AsiaN. A
merica
Ocean
iaC. A
merica
Mill
ion
M 3
FAO 2006; country reports; Brown (1999); DANA; SOUTHEM, Siry et al. 2005
SummaryWorld forest plantations
Increasing in acreage and production (FAO 2007, Bael and Sedjo 2006)As were southern pine plantation in US South (Wear et al. 2007)Offsetting decline in natural forest extraction?Largest increase in southern hemisphere, China
U.S.Most plantations in AmericasBut with lower productivity rates than southern hemisphere
Industrial Roundwood Production
Ronalds Gonzalez, Sudipta Dasmohapatra, Daniel Saloni, Fred Cubbage
$0$20$40$60$80
$100$120$140$160$180
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Billion US$ Linear (Billion US$)
Global Trade in Forest Products expandedsince 1980, at about 4.5% per year . . .
AAGR = 4.5%
Schuler and Ince 2005
Also, with expanded pine plantation output, the Southern hemisphere & Latin America emerged as a growing softwood lumber supply source . . .
0
200
400
600
800
1000
1200
19911992199319941995199619971998199920002001200220032004
40
50
60
70
80
90
100
110
120
1990
1992
1994
1996
1998
2000
2002
2004
U.S. Lumber Imports (MMBF) from Chile, Brazil, Mexico, NZ, Australia
Plantation Pine Timber Harvestfrom Southern Hemisphere
Million M3
Source: R. Taylor, WMMSource: R. Taylor, WMM
Million BF
Schuler and Ince 2005
0.0
0.5
1.0
1.5
2.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004(E)
2005(E)
Canada Brazil Chile China Other
Billion Square Feet (3/8”)
Source: APA
0
2
4
6
8
10
12
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004(E)
2005(E)
Canada Other
Softwood Plywood OSB
U.S. Plywood imports coming from Brazil, and OSB from Canada . . .
Schuler and Ince 2005
Annual Increase in Production by Region (%)
Source: Gonzalez et al. 2008, NCSU, from FAO 2007
-1.25% -0.25% 0.75% 1.75% 2.75% 3.75%
Asia
Africa
N. & C. America
World
Oceania
Europe
South America
IAGA
Asia -15%
-5%
5%
15%
25%
35%
45%
55%
65%
75%
Bra
zil
Chi
le
Arg
entin
a
Uru
guay
Ecua
dor
Countries accountable for changes in production of indutrial roundwood in
South America
Ecu
ador
FAO 2007, Gonzalez et al. 2008
Production and Consumption of WoodSouth America, 1961-2005
Source: Gonzalez et al. 2008 NCSU, from FAO 2007
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%19
61
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003 Years
S.A
. Wor
ld S
hare
Pro
duct
ion
0
20
40
60
80
100
120
140
160
180
200
S.A
. Pro
duct
ion
(Mill
ion
m3 )
S.A. World Share Production S.A. Production
FAO 2007,Gonzalez et al. 2008
Imports of Industrial RoundwoodChina and India, 1995-2005
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Years
Indi
a (m
illion
m3 )
0
5
10
15
20
25
30
Chi
na (m
illion
m3 )
India China
Source: Gonzalez et al. 2008, NCSU, from FAO 2007FAO 2007, Gonzalez et al. 2008
Production and Consumption of Industrial Roundwood in South America, 2003
Source: Gonzalez et al. 2008, NCSU, from FAO 2007
0 20 40 60 80 100 120
Brazil
Chile
Argentina
Paraguay
Uruguay
Peru
Colom bia
Ecuador
Venezuela
Bolivia
Guyana
Surinam e
Million m 3Production Consum ption
ArgentinaBrazil
Chile
FAO 2007, Gonzalez et al. 2008
Per Capita Consumption of Industrial Roundwood in South America, 2005
0.66 0.63 0.63
0.400.36
0.24
0.09 0.09 0.06 0.04 0.04
2.02
0.0
0.5
1.0
1.5
2.0
Chi
le
Uru
guay
Par
agua
y
Bra
zil
Sur
inam
e
Guy
ana
Arg
entin
a
Bol
ivia
Ecu
ador
Per
u
Ven
ezue
la
Col
ombi
a
m3 /p
erso
n
FAO 2007, Gonzalez et al. 2008
U.S. Forest Products Imports and Exports: Status and Trends
Hargo Koesbanda and Fred CubbageNC State University
Background
Building data base for southern timber supply/trade
Timberland ownership shifts and industrial capacity: Have there been effects on U.S. timber production, exports, and import?
Overall U.S. trade has been in deficit, what about our forest products? How much?
Housing market boom reach peak in 2004 but declining in 2006. Can we see a trend?
GoalsSummarize current status of U.S. forest products among countries around the world and U.S. trade balance by major category
Analyze trends based on status and other insights from current papers on forest production, consumption, and trade
Determine means to use in timber supply models
Identify future data needs
Methods
U.S. data collected by querying FAS online at USDA website
World data obtained from FAO’s State of the World Forest 2007
Other literature: USDA, RFF, USFS, UGA
A. INDUSTRIAL ROUNDWOOD (in thousands m3)Region Country Production Consumption Import Export Net Export
Africa 70,447 66,799 1,097 4,745 3,648.01. Gabon 3,500 1,782 0 1,718 1,718.02. Morocco 563 1,215 653 1 (652.0)3. South Africa 21,159 20,827 38 371 333.04. Congo 3,653 3,417 0 236 236.05. Egypt 268 384 116 0 (116.0)
America 791,489 783,040 8,842 17,293 8,451.01. USA 418,131 410,166 2,437 10,402 7,965.02. Canada 197,577 199,639 5,961 3,899 (2,062.0)3. Uruguay 2,132 760 2 1,374 1,372.04. Brazil 110,470 109,722 15 763 748.05. Chile 29,432 29,085 0 347 347.0
Asia 229,373 273,673 53,266 8,967 (44,299.0)1. China 95,061 121,993 27,642 710 (26,932.0)2. Japan 15,615 28,287 12,681 9 (12,672.0)3. Korea 2,089 8,629 6,540 0 (6,540.0)4. Malaysia 22,000 16,657 116 5,459 5,343.05. Turkey 11,225 12,946 1,758 37 (1,721.0)
Europe 503,935 483,379 58,771 79,327 20,556.01. Russia 130,600 90,051 1,004 41,553 40,549.02. Finland 49,281 61,717 12,961 525 (12,436.0)3. Austria 12,943 20,820 8,812 935 (7,877.0)4. Sweden 61,400 69,277 9,398 1,522 (7,876.0)5. Italy 2,883 7,481 4,614 17 (4,597.0)
Oceania 49,074 39,776 30 9,328 9,298.01. New Zealand 19,722 14,484 2 5,240 5,238.02. Papua New Guinea 2,200 188 0 2,012 2,012.0
1,644,318Total World
FAO 2007
B. SAWNWOOD (in thousands m3)Region Country Production Consumption Import Export Net Export
Africa 8,796 12,480 5,312 1,627 (3,685)1. Egypt 2 1,465 1,463 0 (1,463)2. Algeria 13 1,341 1,329 1 (1,328)3. Morocco 83 1,133 1,051 1 (1,050)4. Cote d'Ivore 512 153 0 359 3595. South Africa 2,171 2,447 360 84 (276)
America 193,935 192,281 50,696 52,349 1,6531. USA 93,067 132,274 43,992 4,786 (39,206)2. Canada 60,952 22,847 2,994 41,100 38,1063. Brazil 21,200 18,169 132 3,163 3,0314. Mexico 2,962 5,355 2,496 103 (2,393)5. Chile 8,015 5,728 49 2,336 2,287
Asia 72,439 91,545 28,076 8,969 (19,107)1. Japan 13,603 22,708 9,123 18 (9,105)2. China 12,211 19,138 7,628 701 (6,927)3. Malaysia 5,598 3,406 1,160 3,352 2,1924. Indonesia 4,330 2,521 199 2,008 1,8095. Saudi Arabia 0 1,599 1,599 0 (1,599)
Europe 138,015 118,117 47,114 67,012 19,8981. Russia 21,355 8,747 13 12,621 12,6082. Sweden 16,900 5,977 336 11,259 10,9233. United Kingdom 2,783 11,065 8,653 371 (8,282)4. Finland 13,544 5,722 404 8,226 7,8225. Italy 1,580 9,084 7,661 157 (7,504)
Oceania 8,617 7,624 1,080 2,074 9941. New Zealand 4,369 2,562 41 1,848 1,8072. Australia 4,038 4,688 804 154 (650)
421,801Total World
C. WOOD-BASED PANEL (in thousands m3)Region Country Production Consumption Import Export Net Export
Africa 3,088 3,404 1,188 872 (316)1. Egypt 56 419 364 1 (363)2. Cote d'Ivore 340 138 0 202 2023. Gabon 222 31 0 191 1914. Ghana 435 258 1 178 1775. Algeria 48 194 146 0 (146)
America 72,133 75,484 25,833 22,481 (3,352)1. USA 44,514 62,651 21,077 2,940 (18,137)2. Canada 16,617 4,846 1,612 13,383 11,7713. Brazil 6,283 2,831 255 3,707 3,4524. Mexico 430 2,049 1,869 249 (1,620)5. Chile 1,927 954 36 1,008 972
Asia 77,006 80,386 22,496 19,116 (3,380)1. Japan 5,288 11,710 6,462 40 (6,422)2. Malaysia 6,963 844 468 6,587 6,1193. Indonesia 5,393 1,053 171 4,511 4,3404. Korea 3,860 6,428 2,716 148 (2,568)5. Thailand 1,565 389 272 1,447 1,175
Europe 72,437 69,007 30,305 33,735 3,4301. United Kingdom 3,533 6,821 3,807 519 (3,288)2. Austria 3,419 1,428 698 2,689 1,9913. Germany 16,350 14,451 5,063 6,962 1,8994. Denmark 360 1,814 1,621 166 (1,455)5. Finland 2,024 678 281 1,627 1,346
Oceania 4,387 3,182 502 1,707 1,2051. New Zealand 2,219 1,178 23 1,064 1,0412. Solomon Island 0 392 418 26 (392)
229,051Total World
D. PULP FOR PAPER (in thousands tonnes)Region Country Production Consumption Import Export Net Export
Africa 2,401 1,862 365 905 5401. South Africa 1,709 1,199 68 578 5102. Egypt 120 225 105 0 (105)3. Morocco 112 31 21 102 814. Nigeria 23 40 17 0 (17)5. Algeria 2 19 17 0 (17)
America 94,776 79,213 8,168 23,732 15,5641. Canada 26,222 15,123 281 11,380 11,0992. Brazil 9,529 5,900 397 4,026 3,6293. Chile 3,338 810 17 2,545 2,5284. Mexico 375 1,175 837 37 (800)5. USA 53,817 54,463 6,096 5,450 (646)
Asia 39,981 53,162 15,355 2,174 (13,181)1. China 16,211 23,836 7,679 53 (7,626)2. Korea 545 3,115 2,570 0 (5,953)3. Japan 10,703 12,942 2,418 179 (2,239)4. Indonesia 5,587 4,539 629 1,677 1,0485. Turkey 278 644 368 2 (366)
Europe 49,871 55,044 18,241 13,068 (5,173)1. Germany 2,502 6,448 4,485 539 (3,946)2. Italy 657 4,000 3,365 22 (3,343)3. Sweden 12,464 9,499 423 3,388 2,9654. Finland 12,614 10,425 168 2,357 2,1895. Russia 6,780 5,059 23 1,744 1,721
Oceania 2,703 2,213 375 865 4901. New Zealand 1,596 741 6 861 8552. Australia 1,107 1,471 368 4 (364)
189,732Total World
E. PAPER AND PAPERBOARD (in thousands tonnes)Region Country Production Consumption Import Export Net Export
Africa 4,900 7,040 3,257 1,117 (2,140)1. Egypt 460 1,161 748 47 (701)2. South Africa 3,774 3,237 404 941 5373. Algeria 41 438 399 2 (397)4. Nigeria 19 315 297 2 (295)5. Morocco 129 401 289 17 (272)
America 120,266 120,172 28,090 28,185 951. Canada 20,599 8,186 3,709 16,122 12,4132. USA 82,084 90,565 17,513 9,033 (8,480)3. Mexico 4,391 6,255 3,075 211 (2,864)4. Brazil 8,221 7,224 654 1,651 9975. Argentina 1,521 2,013 684 192 (492)
Asia 114,619 125,791 24,978 13,807 (11,171)1. China 53,463 60,020 10,749 4,193 (6,556)2. Korea 10,511 8,243 728 2,996 2,2683. Indonesia 7,223 5,057 346 2,512 2,1664. Malaysia 981 2,680 2,046 347 (1,699)5. Turkey 1,643 2,488 1,020 175 (845)
Europe 109,693 94,213 52,626 68,107 15,4811. Finland 14,036 1,748 420 12,708 12,2882. Sweden 11,589 2,006 628 10,211 9,5833. United Kingdom 6,442 12,412 7,528 1,557 (5,971)4. Austria 4,852 2,012 1,288 4,128 2,8405. Russia 6,830 5,006 883 2,707 1,824
Oceania 4,017 4,712 2,103 1,408 (695)1. Australia 3,097 3,885 1,564 776 (788)2. Solomon Island 0 428 480 52 (428)
353,496Total World
F. FUELWOOD (in thousands m3)Region Country Production Consumption Import Export Net Export
Africa 546,062 546,059 1 4 31. Nigeria 60,852 60,851 0 1 12. Congo 69,777 69,777 0 0 03. Ghana 20,678 20,678 0 0 04. Kenya 20,370 20,370 0 0 05. Egypt 20,370 20,370 0 0 0
America 321,399 321,377 220 283 631. Canada 2,919 2,823 66 162 962. USA 43,608 43,646 151 114 (37)3. Mexico 38,269 38,262 0 7 74. Brazil 136,637 136,637 0 0 05. Chile 13,111 13,111 0 0 0
Asia 774,647 774,953 317 11 (306)1. Turkey 5,278 5,573 295 0 (295)2. Saudi Arabia 0 4 4 0 (4)3. Malaysia 3,119 3,121 2 0 (2)4. China 191,044 191,045 7 6 (1)5. Indonesia 76,564 76,563 0 1 1
Europe 115,857 114,968 2,680 3,612 9321. Italy 5,814 6,617 803 0 (803)2. Latvia 970 585 5 390 3853. France 2,358 1,979 39 418 3794. Ukraine 8,396 8,021 0 375 3755. Denmark 817 1,136 320 0 (320)
Oceania 8,961 8,963 2 1 (1)1. Papua New Guinea 5,533 5,533 0 0 02. Australia 3,092 3,092 0 0 0
1,766,925Total World
Summary: U.S. Forest ProductsRanking in the World
World-wide, U.S. ranked high for all forest productsFor forest production, consumption, and tradeU.S. largest consumer for all except fuelwood Ranked 1st in production except for panels and fuelwoodU.S. imported the most sawnwood of any countryU.S. was second largest roundwood exporter, after only Russia
US EXPORTS
CATEGORIES2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
A. ROUNDWOOD 1,027 1,096 1,261 1,280 1,305 8,844 9,190 8,924 9,247 8,925
B. SAWNWOOD 1,713 1,719 1,936 2,048 2,199 5,169 4,860 5,274 5,654 5,869
C. PANELS 471 431 508 519 621 1,719 1,564 1,813 1,780 1,879
D. PULP 104 52 86 71 45 2,262 1,045 1,605 726 888
Other 1,650 1,708 1,906 1,976 2,161
ALL Forest Products 4,965 5,007 5,697 5,893 6,331
US IMPORTS
CATEGORIES2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
A. ROUNDWOOD 200 177 186 272 267 2,379 2,127 1,908 2,958 2,494
B. SAWNWOOD 6,672 6,078 8,882 9,091 8,436 50,812 51,536 56,786 59,360 55,173
C. PANELS 3,276 4,501 6,574 6,660 6,087 15,301 16,472 19,618 20,618 19,822
D. PULP 2 4 5 9 8 53 126 146 260 122
Other 5,727 5,957 7,400 7,874 8,249
ALL Forest Products 15,876 16,717 23,047 23,906 23,047
VALUE (million US$) QUANTITY (thousand m3)
in different units
in different units
VALUE (million US$) QUANTITY (thousand m3)
US TRADE BALANCE
CATEGORIES2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
A. ROUNDWOOD 826 919 1,075 1,008 1,038 6,465 7,064 7,016 6,289 6,432
B. SAWNWOOD (4,958) (4,359) (6,946) (7,043) (6,237) (45,643) (46,676) (51,512) (53,706) (49,304)
C. PANELS (2,805) (4,070) (6,065) (6,141) (5,466) (13,582) (14,908) (17,804) (18,838) (17,942)
D. PULP 102 48 81 62 37 2,209 918 1,459 466 766
Other (4,076) (4,248) (5,495) (5,898) (6,088)
ALL Forest Products (10,912) (11,710) (17,350) (18,013) (16,717)
Roundwood: SOFTWOOD LOGS Panels: MEDIUM DENSITY FIBERBOARD Pulp: PULPWOODHARDWOOD LOGS HARDBOARD
OTHER PANEL PRODUCTSSawnwood: SOFTWOOD LUMBER SOFTWOOD PLYWOOD
HARDWOOD LUMBER HARDWOOD PLYWOODTREATED LUMBER OSB/WAFERBOARDRAILROAD TIES PARTICLEBOARD
in different units
VALUE (million US$) QUANTITY (thousand m3)
Table 2. SUMMARY OF US TRADE ON FOREST PRODUCTSYEARS 2002 - 2006
(Source: FAS, USDA)
U.S. Exports and Imports, 2002-2006Exports
∆ 2002 to 2006(thousand m3)
Imports∆ 2002 to 2006(thousand m3)
Net Trade Balance ∆ 2002 to 2006(thousand m3)
Roundwood 81 115 -34Sawnwood 700 4361 -3661Panels 160 4521 -4361Pulp -1374 69 -1443
ExportsValue of $6.3 billion in 2006Revenue increase of 6.4% per year
ImportsIncrease fasterHuge sawnwood (55 billion m3) and panel (20 billion m3) imports
U.S. Exports and Consumption, 2004
NetExports
(million m3)
Total Consumption(million m3)
Imports as %of Total
ConsumptionRoundwood 7.016 410.166 -1.7%Sawnwood -51.512 132.274 38.9%Panels -17.805 62.651 28.4%Pulp 1.459 54.463 -2.7%
Net exports from FAS; total production from FAO 2007
2.937
4494.1
4073.058
267.0216.36 1.974
4789.29
4086.835
308.6733.626 4.548
4446.0364125.067
341.618
6.746 7.127
5013.213
3963.238
258.6694.91 4.677
4454.6794141.336
321.672.78
0
1000
2000
3000
4000
5000
6000
(x 1
,000
m^3
)
2002 2003 2004 2005 2006
Years
US Roundwood Export Destinations2002-2006
AfricaAmericaAsiaEuropeOceania
27.2
2,846.4
1,366.7
870.9
57.7 25.3
2,685.1
1,299.5
800.5
50.2 21.7
2,985.9
1,390.8
830.4
45.1 26.5
3,400.0
1,328.9
863.2
34.9 30.1
3,415.9
1,473.1
921.7
28.5
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Sawnwood Export Destinations2002-2006
Africa
America
Asia
Europe
Oceania
2.5
1,541.7
103.459.2
12.4 0.9
1,370.2
102.579.711.1 1.3
1,606.8
127.669.3
8.3 1.3
1,593.7
104.968.9
11.0 1.6
1,751.3
66.250.110.1
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Panels Export Destinations2002-2006
Africa
America
Asia
Europe
Oceania
0.0
1,843.5
407.1
11.3 0.0 0.0
847.7
147.8
49.10.0
152.5
848.2
603.3
0.7 0.0 7.7
545.0
172.6
0.5 0.0 0.5
842.8
44.40.0 0.0
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Pulp Export Destinations2002-2006
Africa
America
Asia
Europe
Oceania
U.S. Export Trends, 2002-2006
Roundwood 8.8 – 9.2 million m3/year steady
Sawnwood 4.8 – 5.8 million m3/year increasing
Panels 1.5 – 1.8 million m3/year fluctuate
Pulp 0.7 – 2.2 million m3/year declining
1.1
2,345.7
1.0 15.914.9 0.5
2,101.2
3.5 6.5 15.0 1.1
1,895.0
2.2 8.6 1.2 1.4
2,932.6
7.1 16.50.6 3.0
2,434.4
4.3 51.10.8
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Roundwood Import Origins2002-2006
AfricaAmericaAsiaEuropeOceania
109.2
47,755.8
72.32,347.4
527.0 94.9
48,706.8
72.32,167.6
480.0 94.5
52,886.6
88.0
3,243.1473.9 97.0
53,958.9
170.0
4,698.5
435.3 94.4
50,439.3
303.5
3,902.7
433.4
0.0
10,000.0
20,000.0
30,000.0
40,000.0
50,000.0
60,000.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Sawnwood Import Origins2002-2006
AfricaAmericaAsiaEuropeOceania
27.5
12,156.1
1,504.81,517.3
95.5 31.8
13,266.4
1,566.01,491.2
116.5 24.1
14,999.4
2,711.9
1,733.8
148.2 14.9
15,313.4
3,025.4
2,080.8
183.6 4.2
14,236.5
3,897.2
1,493.0
190.7
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.0
16,000.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Panels Import Origins2002-2006
AfricaAmericaAsiaEuropeOceania
0.0
51.8
0.1 1.0 0.0 0.0
126.3
0.0 0.0 0.0 0.0
142.3
0.2 3.2 0.0 0.0
259.5
0.0 0.0 0.0 0.0
108.3
0.113.2
0.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
(x 1
,000
m^3
)
2002 2003 2004 2005 2006Years
US Pulp Import Origins2002-2006
AfricaAmericaAsiaEuropeOceania
U.S. Import Trends, 2002-2006
Roundwood 1.9 – 2.9 million m3/year fluctuate
Sawnwood 50.8 – 59.4 million m3/year increasing
Panels 5.3 – 20.6 million m3/year increasing
Pulp 0.05 – 0.3 million m3/year fluctuate
Results: Major U.S. Trading Partners
No. Country Trade Balance Main Products Main ProductUS Imports US Exports (m3) US Imported US Exported
1. Canada 313,225,997 42,087,429 (271,138,568)
2. Japan 5,465 15,505,617 15,500,152
3. Brazil 12,304,284 14,442 (12,289,842)
4. China 7,274,442 4,169,428 (3,105,014)
5. Germany 10,223,072 610,742 (9,612,330)
Tabel 4. Five Major US Trading Partners on Forest Products in 2002 - 2006
SPF Mix lumbers, OSB/Waferboard, Red Cedar lumbers, Douglass-Fir logs
Total Volume (m3)
Source: Foreign Agricultural Service, USDA
Spruce logs, Pulpwood, Maple logs, Pine logs
Hardwood plywoods, Tropical hardwoods, Softwood lumbers
Douglass-Fir logs, Spruce logs, Douglass-Fir lumbers
Softwood plywoods, SYP lumbers, Hardwood plywoods
Tropical hardwoods, Panel products, Poles
Hardwood plywoods, Panel products, Hardboards, MDF
Yellow Poplar lumbers, Red Alder lumbers, Red Oak lumbers
Other Spruce lumbers, Othre Pine lumbers, Hardboard
White Oak lumbers, Cherry logs, Walnut logs
Summary – Production and TradeLatin America major increase in forest production
3% to 10% of world production from 1960-200520 million m3 80 million m3 in same periodBased on exotic timber plantationsAggressively seeking new investments
U.S. is major importer of solid wood productsU.S. solid wood consumption
Much larger than bigger than productionImports mostly from Canada
Japan – U.SPositive trade balanceDue to high demand for Douglas-fir
Global Timber Investment Returns
Co-Authors, Affiliations, Countries, 2008
Fred Cubbage North Carolina State University, USAPatricio Mac Donagh Universidad Nacional de Misiones, ArgentinaGustavo Balmelli Instituto Nacional de Investigación Agropecuaria, UruguayRafael Rubilar Universidad Concepcion de ChileRafael De La Torre Cellfor, USA, ColombiaRonalds Gonzalez NC State University, VenezuelaRonalds Gonzalez NC State University, VenezuelaHeyns Kote South AfricaGreg Frey NC State University, ParaguayJin Juang NC State University, ChinaVitor Hoeflich Universidade Federal do Paraná, BrasilMauro Murara Universidade de Contestado, BrasilJames Turner Scion Research, New ZealandBob Abt NC State University, New Zealand
MethodsSelect countries
Major world plantation timber producersArgentina, Brazil, Uruguay, Chile, US South
Select principal commercial timber species or prospectsAuthors’ estimates of:
Growth rates, typical current practices, geneticsFactor costs and output prices
Develop cash flow analyses / spreadsheetsCapital budgeting analysesIterative review by authors and foresters in each countrySensitivity analyses – land, reserves, subsidies
Assumptions
Discounted cash flow analysisReal (constant) input costs and timber prices
No inflationReal discount rate of 8%
No land costs in base caseBefore taxRepresentative sitesGood plantation and natural stand practices
Returns of Plantations, Brazil and Chile, 2008
5.73.6 2.9 2.8
0.8
25.5
20.8
16.3 15.613.1
0
5
10
15
20
25
30
Brasil Eucgrandis
Brasil P taeda Brasil Pelliotii
Chile Pradiata
sawtimber
Chile Pradiata
pulpwood
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land cost
Land Expectation Value Internal Rate of Return
Returns of Plantations, Argentina & Uruguay, 2008
3.2 3.2 2.4 1.8 1
2018.2
22.921.4
12.8
0
5
10
15
20
25
Argentina Ptaeda
ArgentinaEuc grandis
Uruguay Eucglobulus
Uruguay Eucgrandis
Uruguay Ptaeda
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land cost
Land Expectation Value Internal Rate of Return
Returns of Plantations, Colombia, 2008
5.4 5.44.1
16.6 15.5 14.7
11.2
1.6
0
5
10
15
20
25
ColombiaEucalyptus
Colombia Ptecunumanii
Colombia Pmaximinoi
Colombia Ppatula
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
.7.
8% discount rate; no land cost
Land Expectation Value Internal Rate of Return
Returns of Plantations, Venezuela, 2008
2.91.4 2.5
9.6
22.4
18.7
15
21.2
0
5
10
15
20
25
VenezuelaEucalyptus
Venezuela Melina Venezuela P.Caribea
Venezuela TeakLand
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land cost
Land Expectation Value Internal Rate of Return
Returns of Plantations, Paraguay, 2008
1.64.2
2
12
21.4
15.4
0
5
10
15
20
25
Paraguay P taeda Paraguay Euc grandis Paraguay Euccamuldensis
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land
Land Expectation Value Internal Rate of Return
Returns of Plantations, South Africa, China, New Zealand, & USA, 2008
2.3 1.70.1
-0.2
0.2
12.411.1 12.1
7.6 8.5
-5
0
5
10
15
20
25
S Afrcia Eucgrandis
S Africa Ppatula
China Pmassoniana
New ZealandP radiata
USA P taeda
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land
Land Expectation Value Internal Rate of Return
Returns of Native Species / Plantations, 2005
1.6
-0.15
12.410.9
7.8 7.4
-0.03
1 0.8
13.6
-5
0
5
10
15
Chile Nothofagus
dombeyiPlanted
BrasilAracauria
Planted
ChileNothofagus
nervosaplanted
USA Pinustaeda Natural
ArgentinaAracauria
Planted
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land cost
Land Expectation Value Internal Rate of Return Cubbage et al. 2007
Returns of Native Forests, 2005 4.3
3.6 3.6
1.7
-0.51 -0.11-0.14-0.31 -0.02<0
-1
0
1
2
3
4
5
USA Pinuspalustris
USAHardwoods
SubtropicalNative
"Perfect"
SubtropicalNative with
Management
Subtropical Native withoutManagement
Land
Exp
ecta
tion
Valu
e ($
000/
ha)
or In
tern
al R
ate
of R
etur
n (%
)
8% discount rate; no land cost
Land Expectation Value Internal Rate of ReturnCubbage et al. 2007
Sensitivity Analyses Assumptions, 2005Country/Species
Planted Area (%)
Land Costs ($/ha)
Subsidy (%)
Higher MAI (m3/ha/yr)
Higher Sawtimber Price (%)
BR taeda 60 2500 Na 40 10
BR grandis 60 2500 Na 50 10
UR taeda 70 1000 39 30 25
AR taeda 70 1500 50 40 50
CH radiata 70 2000 50 30 10
US taeda 70 1500 50 18 10
Cubbage et al. 2007
Sensitivity Analyses – Summary Results, IRR
Country/Species
Base w/o Land Costs
Base, Less Planted
Base with Land Costs
Base, Less Plantedw/Land
Base with Subsidy Payment
Base with Higher Yields
BR taeda 17.0 16.1 8.8 6.4 Na 23.7
BR grandis 22.7 21.7 11.7 7.7 Na 27.5
UR taeda 15.1 14.5 10.2 8.9 17.3 18.8
AR taeda 12.9 11.7 9.9 8.3 15.9 19.8
CH radiata 16.9 16.1 9.8 8.4 23.5 38.0
US taeda 9.5 9.2 5.9 5.0 11.0 12.3
Cubbage et al. 2007
Qualitative Investment Factors
Biological, Political, Export, Regulatory
Export and Direct Investment Risk
CountryExports – Political Risk Direct Investments RiskShort Term Long Term War Expropriation
& Govt. ActionTransfer
RiskArgentina 3 7 2 3 6Brazil 1 3 2 2 3Chile 1 2 1 1 2Colombia 2 4 5 3 4Paraguay 3 6 4 4 5Uruguay 3 4 2 2 4Venezuela 4 6 4 7 5U.S.A. 1 1 1 1 1
OECD 2007; Range of 1-7; Lowest number is least risky
Trade and Development: Debate and AcrimonyEvangelina Corrazzo, Carnival Queen of Gualeguaychú, Entre Rios, Argentina
at the EU-Latinoamerica Summitt, Vienna, Austria, 13 May 2006
Biological and Political Risk
BiologicalTo date, exotic plantations bear less risk than nativesFewer native predators and pathogensIntroduced biological and chemical controlsAnts huge problem, other disasters possible, but rareCyrex in Brazil and Argentina; phytophera in Chile
Political – US > Chile > Uruguay > Brazil > ArgentinaEnvironmental regulationsGovernment stabilityFavorable investment climateSubsidies
Number of Days and Procedures Required to Start a Business in South America, 2006
Gonzalez et al. 2008, NCSU, from World Bank 2007
915
12 1115 14
17
1013
17
2732
43 4550
6974
102
116
152
0
20
40
60
80
100
120
140
160
Chile Argentina Colombia Uruguay Bolivia Ecuador Paraguay Peru Venezuela Brazil
Day
s
# Procedures # Days required for starting a business
Effect of Land Prices, Transportation Costs, and Site Productivity
on Timber Investment Returnsfor Pine Plantations in Colombia
Juan Lopez, Rafael de la Torre, and Fred CubbageNCSU, CellFor, & NCSU
Analysis of Factors Affecting Forest Investment Opportunities
Carter (2007), IQPC Timber Summit2007: Up to $4 billion seeking timber investmentsOn ~$40 billion base
Forest investments in Latin America increasingLatin America timber prices increasing > U.S.Large LAC plantation and production increasesTradeoffs between land quality, proximity, price crucial in purchase decisions
Basis for Colombia AnalysisGood access to productivity, input cost, price dataDeveloped representative pine regime
20 year rotationPre-commercial thinning and pruning
Varied input factors in reasonable rangeLand cost: $600 - $1800 / ha
Transportation: 0 – 200 km to millSite Quality: 20 – 40 m3/ha/yr
Estimated NPVs with spreadsheetEstimated response surface regression of data
P. tecunumanii, 10 years old, Colombia
Estudio de P. maximinoi-8 anos- San Jose
NPV at 10% discount rate & land value $600/ha
-2,000
-1,000
0
1,000
2,000
3,000
4,000
0 - 50 50 - 100 100 - 150 150 - 200Distance range plantation to the mill (km)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate & land value $1,000/ha
-2,000
-1,000
0
1,000
2,000
3,000
4,000
0 - 50 50 - 100 100 - 150 150 - 200Distance range plantation to the mill (km)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate & land value $1,400/ha
-2,000
-1,000
0
1,000
2,000
3,000
4,000
0 - 50 50 - 100 100 - 150 150 - 200Distance range plantation to the mill (km)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate & land value $1,800/ha
-2,000
-1,000
0
1,000
2,000
3,000
4,000
0 - 50 50 - 100 100 - 150 150 - 200Distance range plantation to the mill (km)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate distance to the mill 0 to 50 kms
-2,000
-1,000
0
1,000
2,000
3,000
4,000
600 1000 1400 1800Land price ($/ha)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate distance to the mill 50 to 100 kms
-2,000
-1,000
0
1,000
2,000
3,000
4,000
600 1000 1400 1800Land price ($/ha)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate distance to the mill 100 to 150 kms
-2,000
-1,000
0
1,000
2,000
3,000
4,000
600 1000 1400 1800Land price ($/ha)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
NPV at 10% discount rate distance to the mill 150 to 200 kms
-2,000
-1,000
0
1,000
2,000
3,000
4,000
600 1000 1400 1800Land price ($/ha)
NPV
($/h
a)
MAI 20 m3/ha/yr MAI 30 m3/ha/yr MAI 40 m3/ha/yr
Proportional Effects at Median Value
Discount Rate
NPV of Factor at Median Value ($/ha)
Land Price(@ $1200/ha)
Transportation Distance
(@100 km)
Mean Annual Increment
(@ 30 m3/ha/yr)8% -1183 -905 5002
10% -1262 -677 3693
12% -1316 -512 2756
Colombia Case ConclusionsInvestment case study for Latin AmericaResults at i=10%
Lower productivity – negative NPVs in all casesHigher productivity – always positive NPVMedium productivity – positive in most cases
Partial response at the meanMAI/Site quality ~ 2-4 times more important than land priceMAI/Site quality ~ 5 time more important than transport cost
Related SOFAC Projects
DemandNCASI
Demand – Jacek Siry – Data Disk
Census: ASM by State; Pulp& paper FinancialsLumberPanelsPaper & PaperboardPulpwoodTimber Product PricesDocumentation
NCASI – Fred Cubbage and Bob Abt
Identify Wood Production Systems and RegionsEstimate Wood Production and Harvesting CostsLegal and Environmental ContextInternational ComparisonsCooperators – Related Projects
Tom Fox, VPIBecky Barlow, Daowei Zhang, AuburnAndy Ezell, Mississippi State
Conclusions
Summary - PlantationsWorld forest plantations
increasing in acreage and productionAs were southern pine plantation on US SouthOffsetting decline in natural forest extraction?Largest increase in southern hemisphere, China
U.S.Most plantations in AmericasBut with lower productivity rates than southern hemisphere
Summary – Production and TradeLatin America major increase in forest production
3% to 10% of world production from 1960-200520 million m3 80 million m3 in same periodBased on exotic timber plantationsAggressively seeking new investments
U.S. is major importer of solid wood productsU.S. solid wood consumption
Much larger than bigger than productionImports mostly from Canada
Japan – U.SPositive trade balanceDue to high demand for Douglas-fir
ConclusionsExotic Plantations Returns
8% to 23% base IRRs w/o land costs Possibility for much greater returns in S AmericaAnd good returns in other Southern HemisphereEarly investors with cheap land costs have profited most; more difficult nowBut U.S. returns have dropped, S Hemisphere increased since 2005Colombia case
Site quality / silviculture has largest potential effect on timber investment returns2-5 times transport, land costs at mean values
ConclusionsInvestment Analysis - Approach and CaveatsRobust cooperative research estimate
Best available data – common practiceKnowledgeable local experts, extensive review
AssumptionsReal rates of return, 2008 pricesWithout land costs, taxesInput & timber prices vary by area, change with time
TechnologyBetter sites / growth possible better returnsBetter management possible better returnsAnd vice versa
Conclusions Forestry Sector Prospects
Economic development opportunityForest sector GDP
2-4% Brazil, Chile1.2% USA1% Argentina, Uruguay
2 new pulp mills each in Chile and in UruguayMany new mills or pulp lines in Brazil More opportunities on other Southern Hemisphere countriesMany sawmills and panel millsRapidly developing forest clusters
Conclusions Forestry Sector Prospects
Modest expansion everywhere Most timber need and greatest prices – Chile & Brazil Larger supply, increasing prices – Argentina New supply, establishing markets – Uruguay Stasis, declining prices – U.S. South Emerging opportunities – Colombia, others
Least risk in most developed markets/countriesLonger term less certainBiological risks may emergeBut with short rotationsAnd strong GDP and export growth
World Timber Productionand Timberland Investments
Speech Presented at the Southern Forest Resource Assessment Consortium
21-22 October 2008Research Triangle Park, NC
Cubbage_Timber_Production_Investments_V7; 20 October 2008
Fred CubbageProfessor
North Carolina State UniversityDepartment of Forestry and Environmental Resources
