Asia & sub saharan forestry finpro


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Presentation material from Finpro Market Opportunity Day, May 17 2013.

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Asia & sub saharan forestry finpro

  1. 1. Market Opportunity day 17.5.2013Asia & Sub-Saharan ForestryFinpro / Jussi Havia Seppo Keränen,Esa Rantanen, East AfricaHeta Pyhälahti, Southern Africa
  2. 2. Global Forestry Signals“Where will China get its logs and lumber after mid-decade…Both USand China will need to import increasing volumes of lumber and logsthat will be tied more and more to international market forces as globaltimber and lumber supplies tighten.”-Russell Taylor, President of International WOOD Markets Group Inc.“An African commodities boom is in full swing, stimulated greatly byChinese market demand and growing Chinese investment in Africa’sforests and timber. In Mozambique, for example, it is estimated thatsome 90% of timber exported is destined for China, and all of this isproduced and bought by small enterprises”-James Mayers, International Institute for environment and development21/05/2013 2© Finpro
  3. 3. Forestry Signals from Africa and Asia21/05/2013 3© FinproAwareness of the forest’svalue has been growing.First Finnish log-houses havebeen delivered to Kenya.In Sub-Saharan Africa new pulp& paper mills will be built Inmedium term. Effects on woodharvesting.High end housingexpands the market.Demand for low tech wood processing equipment serving governments’ job creationschemes.Demand for high classfurniture and interior materials.Finland has funded in last years manyforestry projects and also some saw millshave been delivered.Wood processing isgetting closer to the rawmaterial stocks and theend customer.Plantation size and steady supplyneed of raw material, drives theuse of mechanized harvestingmethods.Certification requirements drive theuse of plantation timber replacinggradually natural forest tropical timber.Housingstarts willexpand themarket.
  4. 4. Global Opportunity Drivers• After a “cooling-off” period in 2012, China’srequirement to feed its growing wood deficitwill see a return to steady demand growth forimported logs and lumber• Canada’s lumber production will plateau byabout 2015, allowing no increases in exportsto the U.S. and will, therefore, see its’ U.S.lumber import market share plummet to two-thirds of its historical level.• A stronger U.S. market demand is predictedand this is expected to push importedChinese log and lumber prices higher• The housing starts in Japan for 2012 werebetter than had been anticipated and alsomarked the third straight year of growth afterthe market began to recover21/05/2013 4© FinproImports of sawnwood 1000 USD0100000020000003000000400000050000006000000700000080000009000000200620072008200920102011ChinaJapanRepublic ofKoreaIndiaUnited States ofAmerica
  5. 5. Opportunity Drivers in Africa• Markets in Sub-Saharan Africancountries like Mozambique, Tanzania,Uganda and Zambia are following Kenya,and shifting from aid-driven to market-driven business.• China’s relationship with Africa isdeepening. It has become Africa’sbiggest trading partner• East African timber trade is set toexpand, largely driven by growingregional and international demand.• The economies and population aregrowing rapidly: housing need andmiddle class demand for high qualityinterior products.• New technologies and competences areurgently required to utilize the naturalresources the most optimal but alsosustainable way.21/05/2013 5© Finpro0200004000060000800001000001200001400002006 2007 2008 2009 2010 2011MozambiqueUnited Republic ofTanzaniaZambiaKenyaExports of Forest Products 1000 USD
  6. 6. Opportunity Drivers in Asia• China has a massive fibre deficitthat is expected to continue to grow– more imports of logs,lumber andother products will be required to fillthe widening gap.• Changes to the Russian log exporttax that continues to leave Russianlog exports less available andexpensive for Asian markets• In Japan the major push continuesto be the planned rise in theconsumption tax in 2014, butfavourable sentiment is now alsobeing driven by the new PrimeMinister’s economic policies• Developing economies in Asia areanswering to ever greater exportsand domestic demand of forestproducts with a massive increasesof their production21/05/2013 6© FinproExports of Forest Products 1000 USD0500000100000015000002000000250000030000002006 2007 2008 2009 2010 2011Viet NamMyanmarLao PeoplesDemocraticRepublicThailandAustralia
  7. 7. Why Sub-Sahara and Asia21/05/2013 © Finpro 7• The bulk of African forests occur inSub-Saharan area. Estimated totalforest cover is 674 million hectares,accounting for 23% of the continent’sland area.*• Finnish forestry know-how is verywell known among the governments’decision makers.• Finpro has a strong presence andnetwork covering the target markets.• Scaling business benefits due toregional integration.KenyaMozambiqueTanzaniaUgandaZambia*Source: Chidumayo, 2004
  8. 8. Why Asia and Sub-Sahara21/05/2013 © Finpro 8• Finpro has a strong presenceand network at the market:‘We understand local businessand ways of working. Throughour connections we are able tohelp you establish importanttrade relations and signbusiness contracts.’
  9. 9. Identified Customer Needs in the MechanicalWood Processing Value Network• Forest management and R&D• Tractor mounted harvesting equipment for farmers• Forest plantation, seed multiplication, nursery andresearch• Harvesting technologies, machinery and logisticssolutions for plantations• Wood products for housing, construction andinteriors• ICT solutions e.g. improving collection anddissemination of forest data including real-time firealerts, game density mapping, verification for legaltimber operations and tracking systems21/05/2013 9© FinproPlantationsContractorsPrivate sector (includingfarmers)Pulp millsPlywood manufacturersGovernmentLocal authorities
  10. 10. Opportunities in SEA and in India• Economic role of forests has been noticed in countries such asLaos, Cambodia, Myanmar, Vietnam, Philippines and Thailand.– Private, small scale trial plantations are widely spread.– Vietnam is now exporting secondary products as bone dry chipsovertaking Indonesia.– Myanmar has the largest untapped forestry resources in Asia.• India is a major importer of wood and plywood material.– Also need for technology and machinery e.g. packaging lines forthe pulp and paper industry.dd/MM/YYYY 10© Finpro
  11. 11. Opportunities in Indonesia and MalaysiaIts time to activate contacts and introduce new equipment to the market:• In Sumatra, Malaysia and in Kalimantan, Indonesia P&P mills requireinput of 10 000 m3 of wood per day. This is the main driver to engagemodern harvesting methods and equipment.– Plans for a new pulp mill in Sarawak. Currently there is a shortage of rawmaterial but plantations start to mature in 2- 4 years. This will have effect onwood harvesting.– New plantations also in Sumatra and Malaccus islands and MiddleKalimantan.• In both countries trial harvesting has started in new sites.• Continuous business opportunity to cover existing, large plantationrenewal and improvement of the whole harvesting process.• Need for tractor mounted equipment for farmers and small growers inJava where plywood industry supply chain mills are buying material fromadjoining plantations.dd/MM/YYYY 11© Finpro
  12. 12. Kenya and Tanzania: Market for SustainableForest Management• Kenya is in the process of recovering its forests with strictconservation measures.– Business opportunities arise with sustainable forestmanagement know-how.• In Kenya 60 % of forests are privately owned– Currently, Kenyan forests are used as tea plantations andby communities (mainly for fuel wood collection)• In Tanzanian forests are covering 41 % of the total land area.– Forests are an important economic sector: contribution toGDP has grown from 2.6% to 4.6 % (2011).– The sector employs 3 million Tanzanians through forestindustries, forest plantations, government forestadministration and self-employment in forest-relatedactivities.21/05/2013 12© Finpro
  13. 13. Mozambique: Forest investments and forestindustry• Various international investors and forest companies haveshown interest in plantations– Nine different investors have requested a total area of 887 800ha for plantations, mostly in Niassa Province– Companies involved include: UPM, Portucel, Suzano– Currently 65 000 ha planted• Private forest companies can apply for concessions to useindigenous forest resources– Currently there are 165 approved concessions out of which 81have development plans– These concessions cover a land area of over 6 million hectares– There are not many requirements to get a concession and theconcession holders do not usually understand much about forestmanagement but only want a quick sell to the Chinese– A lot of wood is exported illegally, especially to China21/05/2013 13© Finpro
  14. 14. Identified Customer needs• Sawmill technologies, including services: operating and training• Wood products for construction: electricity poles, plywood• Wooden buildings: high end• Wood products for interior: furniture, flooring, decoration• Wood products for exterior: Thermo wood (treatment)• Verification for legal timber operations: tracking systems andtechnologies21/05/2013 14© Finpro
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