Local downstream wood processing firms suffer most from log ban
MANILA, Philippines — The downstream wood processing industry, which brings in $1 billion in yearly export revenues, is foreseen to suffer adversely from high import costs of raw materials due to the prevailing logging ban.
Since Executive Order (EO) 23 was issued in the first quarter, importation of raw materials for the furniture and construction industry has already risen by at least 30 percent, according to initial industry estimates.
But the crux of the wood supply problem is really projected to occur when the local inventory of wood, particularly hardwood, will have run out due to the logging ban.
“There’s already a shortage of hardwood in the global market. Other countries are no longer exporting because they have already engaged in value added processing, in producing finished products since they have the raw materials and can produce wood products cheaply, according to a Philippine Wood Processors Association (PWPA).
“That situation will leave our industries out of the competition because we cannot afford the cost of importation. Only rich countries can afford to buy the raw materials.”
The Philippines still has nearby import sources for logs and wood products--Malaysia, Solomon Islands, and Papua New Guinea-- where cost of freight may still be manageable for downstream wood processors.
But many countries have already integrated their forestry, logging, and wood processing industries including Indonesia, Vietnam, and Brazil as reported by the International Tropical Timber Organization (ITTO) in its Annual Review and Assessment of the World Timber Association.
As of 2010, these wood-based manufacturers that will be negatively impacted by the logging ban brought in a revenue of $1.028 billion. This is Philippines’ tenth largest commodity group in 2010. It registered a hefty growth of 25 percent from $820.405 million in 2009.
These involve employment-intensive industries for people engaged in woodworks, artistry, and craftsmanship in manufacturing furniture, doors, windows, wooden frames for paintings, wooden boxes, crates, drums, packaging materials, kitchenware, beads, ornamental wood, wood marquetry, inlaid wood, caskets, cutleries, statuettes, and many products that require intricate carvings and artwork.
This commodity group actually covers seven subgroups. The first and biggest group, HS Code 4418, with a $1.008 billion in 2010, covers builders’ joinery and carpentry (doors, stairs, window frames, beams, rafters, roof struts) that are used for structural purposes such as scaffolding and arch supports.
The major source or a sizable 70 percent of the wood supply of upstream wood producers come from industrial plantation areas or natural forest areas which are now covered by a logging ban.
Industrial plantation sites are the only producers of hardwood (lawaan, apitong, tangile) which have niche markets specifically preferred by certain consumers.
Unfortunately, the logging ban, while putting at risk the prospects of wood and furniture industries, construction industry, and even socialized housing, ironically gives illegal logging a place to thrive.
“What is happening now is what we call the Tragedy of Commons. Everybody is doing it (destroying the forest), but nobody is responsible for it,” said the industry official.
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Comments
The irony of this log ban solution, is that the ban itself has become the death knell for the wood industry to regenerate its resources. Environmentalists naively think that by stopping the cutting of trees, that the damage would stop there and trees can be just replanted by legislative fiat thru a 1.5 billion tree planting program.
The ban ignores the natural law of "economic life" -- if the resource has no profitable economic use to the producer it will not be regenerated. Without a competitive wood industry, there is no sense for upland tree farmers to plant trees. Drive thru Caraga region and see the logged areas strewn with dead trees, which are then burned for kaingin farms, but not replanting, the forest land lost irreversibly.
Rising prices of plantation trees does not translate to replanting, because the principal beneficiary of the ban is the local cartel of raw material traders and their coalition with corrupt regulators or enforcers. Hence,the ban has only accelerated the cutting of even the planted specie trees (ie., falcatta) because of the artifical high prices, but the trees are Not being Replanted.
IN the meantime the Greenies, are lulled into a false security that they have stopped the cutting of trees, and that now they are going to Regreen the country with a Legislated Replanting of 1.5 billion trees or 1 million hectares of trees.
Please please stop to think --
(1) On Greening Programs --have you visited a replanted site say six months, 1 year, after the "inaugural planting" cum photo ops.-- see what is left of the seedlings planted or grown over by the weeds. Why -- there is no farmer to take care of it, because he has no industry to feed, no viable share in the income.
(2) On the Resource Requirement of Planting -- It takes at least P50,000 to plant a decent hectare of trees - which means spending 50 Billion pesos on a program that has No certainty of being sustained, No Return. Does the Government have this kind of Money to throw away. If you think School children and greenie volunteers will do this for free and stay in the interior to take care of the Tree. Think Again. The Resource Requirement is not just money - its land, viable tree farmers, technology, and viable processors.
(3) Previous Greening Programs. Assuming we have the money Consider - In the 90's - DENR had a $60 Million loan from ADB for Greening -- the program failed because the trees were not sustained, no direct links to markets, no farmers to benefit. Result after a 3-4 years, the government returned $45 million to ADB. How many times do we have to fail to realize that this path is Not Possible.
(4) Aanhin pa ang Damo Kung Patay na ang Kabayo -- It takes a good 5 years (for clonal varieties) before one can do any harvesting for pulp and 10 years for lumber. By that time our local wood processing industry would probably be phased out for lack of cheap raw materials. In the meantime countries like Malaysia, Thailand, Vietnam have taken over the wood industry with their integrated plantation-processing enterprise systems.
Conclusion -- the Log BAn is -- a good venue for Rethinking the Whole Wood Sector. But it would be a Great Tragedy which would wipe out our Forests for good and probably seed another Upland Tribal secessionist movement more serious than the Muslim war. ( In numbers lumad tribes in Mindanao outnumber Muslims 3 to 1).
The Worst Mistake is --If we just stop at the Ban and think that we now have a solution. Yes the Sector needs Surgery but you can not just open up the patient Without a Real Systemic Solution to put in place. The Log Ban puts us in a Critical Cross Road, and we must Now make the Right Systemic Choices. We can no longer afford the half bridges and partial solutions of the past.
Integral Solution --So where do we go? -- like the Tree which is itself an image of an Integral System -- the solution requires an Integrated approach harmonizing the concerns first of the tree farmer, the processor, the environmentalists, the buyer, the investor. --to evolve an institutional system that will produce a New wood sector Structure that can sustain economic life and green life. Interested? Let's Talk if you are serious. I am.
Arthur Alvendia
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