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HIGHER VALUE OF WOOD PRODUCTS

HIGHER VALUE OF WOOD PRODUCTS

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HIGHER VALUE OF WOOD PRODUCTS

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  1. HIGHER VALUE OF WOOD PRODUCTS Indonesia- ACIAR Consultation on Forestry Jakarta 22 February 2007 By: Dr. Doddy S. Sukadri - CESERF ACIAR- Indonesia Consultation

  2. Log supply Assessment Wood- based Industry Trade& Marketing Triangle principle ACIAR- Indonesia Consultation

  3. Area of concerns –brief findings • Wood-based Industry • Excessive Log Demand – Disequilibrium • Low level of recovery rate • Wasteful Harvest and Conversion • Primary Export Product Orientation • Neglect of Domestic Market Development • Market Distortions – Uncertain True Economic Structure to guide Decision-Making and Investment • Excess/Uneconomic Capacity Liquidation ACIAR- Indonesia Consultation

  4. Changing Log Supply ACIAR- Indonesia Consultation

  5. Future timber supply ACIAR- Indonesia Consultation

  6. Focus on Plywood ACIAR- Indonesia Consultation

  7. Area of concerns –brief findings • International Trade & Markets • Easy Export Markets – Logs and Primary Products – Weak Competitor Value Products • Global Markets Dynamic - Competitive • Changing Competitive Advantage • Old: Low Cost Logs & Labor • New: Efficiency & Comparative Advantage • Loss of Market Shares except Sawnwood • New Market Opportunities –Mixed Focus • Plantation Woods/Composite Products ACIAR- Indonesia Consultation

  8. Custom Order Production ACIAR- Indonesia Consultation

  9. Export Panels ACIAR- Indonesia Consultation

  10. Objectives of the Study • To recommend Strategies that will competitively address the wood-based industry structure and capacity, taking into account sustainable domestic logs capacity and market trends ACIAR- Indonesia Consultation

  11. Status Quo Situation: Forestry at a Transition Point Unsustainable Harvest (IL) Current Industrial Demand: ≈ 50-60 M m3/yr • Status Quo Scenario Findings: • Sustainable cut of natural forest: ≈ 9 M m3/yr • Existing HTI production: ≈ 11 M m3/yr • Alternative supplies: ≈ 1-2 M m3/yr •  Timber Gap: 25-30 M m3 into the future Current, Legal Supply - Mainly from natural forests - No increase in plantation rate nor productivity ACIAR- Indonesia Consultation

  12. Positive Future Prospects – 20 Yrs: Plantation Timber Helps Balance Supply & Demand Timber Gap Can Be Reduced with Plantations after 8 yrs • Improved Future Supply Potential Assumes: • ▲HTI Pulp from 100,000 to 250,000/yr • ▲HTI productivity from 15 to 60 m3/yr • ▲Alt sources to 3-5 M m3/yr: H.R., Rubber, Imports • ▼Pressure on Primary Forest in SR • Continue to harvest Secondary Forest in LR ACIAR- Indonesia Consultation

  13. Med. Run Short Run Cycle of Plantation Timber Creates Three ‘Natural’ 7 Year Phases Long Run • Long Run: • Plenty of grown timber • Can expand industry • Compete internationally • Medium Run: • Can fill gap with planting • More grown timber • New process technology • Short Run: • Physical Gap: demand > supply • Need to control forest crime • Need new, legal sources in SR • Need Planting for LR ACIAR- Indonesia Consultation

  14. Synthesis Recommendation: Phased Intervention Strategy - Restructuring, Re-engineering, Revitalization Med. Run Short Run • Phase 3: REVITALIZATION • After 2020 • Growth Based on Plantations • Increased Exports • Legal, Sustainable, Competitive • Phase 2: RE-ENGINEERING • 2013-2020 • Gap Nearly Balanced • Retool Industry for Efficiency • Focus on High Value Markets • Phase 1: RESTRUCTURING • NOW to 2012 • Intensify Timber Planting • Improve HTI Productivity • Reduce Forest Crime & Debt • Develop Alternative Sources • Temporarily Limit Processing Builds on Current MoF Policy ACIAR- Indonesia Consultation

  15. Secondary Value-Added Export ACIAR- Indonesia Consultation

  16. Flooring & Furniture ACIAR- Indonesia Consultation

  17. Prospective research areas • Wood-based industry structure based on sustainable log supply and market orientation • Determination of new product with high growth capability • The uses of new or improved technology in order to achieve a better processing efficiency • Financial assistance scheme in developing and researching to improve the processing technology • Market intelligence for lesser-known wood-based products ACIAR- Indonesia Consultation

  18. Thank You & Have a nice day ACIAR- Indonesia Consultation Ex Post Evaluation ITTO PD 85/01 Rev 2 (I)