Tropical timber

Marketing chain

Product flows and trade channels
Forest tenure and allocation of forest use in tropical regions

Product flows and trade channels

The timber industry consists of a chain of successive manufacturing activities, each having traded outputs. Each part of the chain absorbs some of its added value. The figure below provides an overview of raw material and wood product flows in the forest processing industry. Primary processing includes the transformation of logs into primary timber products such as sawnwood, veneer and plywood. Further processing here refers to the manufacture of higher value added products, such as joinery and furniture.

The wood processing industry

Source: Adapted from International Trade Centre/International Tropical Timber Organization. Tropical Timber Products: Development of Further Processing in ITTO Producer Countries. Geneva: ITC/ITTO, 2002.

There are normally several layers between timber producers and end users. The figure below gives a schematic overview of the international trade channels for tropical plywood.

Trade channels, tropical plywood

Source: Adapted from L. Rutten and S.H. Tan. Reviving Tropical Plywood. ITTO Technical Series No. 20. Yokohama, Japan: ITTO, 2004.

The most common trade channels in international plywood trade are:

Direct contract sales to overseas customers, often through sales offices or agents;
Sales to traders, predominantly based in Singapore and Hong Kong, China; and
Sales to representatives of overseas companies who are buying directly at origin.

Direct contract sales to overseas customers, often through sales offices or agents, is the common form of trade for sales to Europe. Apkindo, the Indonesian Plywood Association, used to have sales offices in China, Japan and the Middle East. Malaysian firms also have overseas representative offices. Where they do not have offices, they sell through agents.

Most Indonesian exporters sell to the Middle East through Singapore traders. Sometimes they sell through Japanese trading houses for their sales to the United States and through traders based in Hong Kong, China for sales to mainland China. Several Japanese trading houses now have buying offices in Indonesia, whereas previously they had bought from Apkindo's Nippindo office in Japan.

An important development within the timber industry is the shortening of the supply chain. Some end-users, such as large construction firms and large furniture manufacturers in Japan and Europe, are making an effort to bypass the traditional importing firms.

The Internet is becoming an important medium in timber trade. E-commerce initiatives relevant to the tropical timber industry include:
Timberweb: http://www.timberweb.com/;
Timberhunt: http://www.timberhunt.com/;
Sticktrade: http://www.sticktrade.com/;
Asia Wood: http://www.asiawoodweb.com/; and
The IHB Timber Network: http://www.ihb.de/.

For FSC certified companies, important trade channels are the regional and national Forest and Trade Networks (FTNs). Each network consists primarily of companies committed to practicing or supporting responsible forestry and achieving certification. About 20 individual networks operate in nearly 30 nations throughout Africa, Asia, Europe, and the Americas.

For a complete analysis of industry structures and practices in tropical plywood trade, please refer to:
L. Rutten and S.H. Tan. Reviving Tropical Plywood. ITTO Technical Series No. 20. Yokohama, Japan: ITTO, 2004 (View pdf - 992 KB); and
United Nations Conference on Trade and Development. The Feasibility of an International Tropical Plywood Futures Contract. Geneva: UNCTAD, 1998. (View pdf - 282 KB).

The procedures relating to import and export of timber and timber products, under jurisdiction of the Malaysian Timber Industrial Board (MTIB), are well defined in: Guidelines On Import, Transfer And Import/Export Licence Application For Logs And Wood Products.

Forest tenure and allocation of forest use in tropical regions

Forest tenure

The complicated system of land tenure has sometimes led to many overlapping rights. Ownership and tenure disputes are a major problem. Illegal occupation is also common and adds to the difficulty of determining clear tenure and ownership.

Most production forest in Africa is owned by the state, although there is wide acknowledgement of indigenous rights over forest use. Privately owned forests comprise a small area of planted forests.
Similarly, forests in Asia are primarily state-owned. Yet, customary community ownership applies to most forests in the Pacific Island countries of Fiji, Papua New Guinea and Vanuatu, but even in these countries the forests are mostly administered by the Government. Few forests are owned by private individuals or companies, although the proportion of privately owned planted forest is likely to increase.
The legal acknowledgement of indigenous rights over forest use is a relatively recent phenomenon in Latin America and the Caribbean, compared with other tropical regions. Private ownership by individuals and industry is significant, especially in Brazil.

Forest tenure patterns across tropical countries

Africa
Cameroon	Most forest land belongs to the State. About 345,000 hectares are "communal forests", owned privately by communities.
Central African Republic	Most forest is owned by the State. The forest domain also includes community forests (mainly found in the savanna), as well as a limited area of private land.
Democratic Republic of the Congo	The State is the sole owner of the land, although the local community or municipality retains customary usage rights over the forests. The State can also allocate forests to local communities as community forests.
Congo	Most forest is state-owned, but communal and community forest is registered as the private domain of the relevant group.
Ghana	Forests are owned by the tribal chiefs but all rights for the management and development of natural resources are vested in the President.
Côte d’Ivoire	Two main categories of natural forest ownership: public forests owned by the State (divided into the domaine forestier permanent and the domain rural); and community forests, based on traditional customary rights.
Liberia	All forest resources (except for communal and privately owned forests) belong to the Government.
Nigeria	Most forests are in principle owned by the people, but the management and control of forest reserves are vested in the state Governments.
Togo	Most remaining closed forest is in forest reserves owned by the State; local communities have user rights.
Asia-Pacific
Cambodia	Forests are mostly owned by the State; local communities are allowed certain limited rights and privileges.
Fiji	Communal groups (mataqali) own 84 per cent of the forests; most of the remaining is owned privately.
India	All natural forest is owned by the State. Private agro-industrial plantations are becoming significant.
Indonesia	Nearly all natural forests are owned by the State. Traditional community rights (adat) are widely recognized.
Malaysia	90 per cent of natural forest and 69 per cent of planted forest are state-owned; the remainder is owned privately.
Myanmar	All forests are owned by the State.
Papua New Guinea	97 per cent of the land is held as communal or clan commons.
Philippines	The Government holds title to most forest land, but considerable portions are held by the private sector.
Thailand	All natural forests are owned by the State; trees established on private lands are private property.
Vanuatu	All lands are customarily owned.
Latin America and the Caribbean
Bolivia	About 53 per cent of the forests is publicly owned and administered by the State, nearly 31 per cent is under specific user rights or ownership (including indigenous community lands), about 5 per cent is privately owned by communities, and another 10 per cent is privately owned by individuals and industries.
Brazil	A significant part of the permanent forest estate in the Amazon is privately owned. Indigenous lands (Indian reserves) cover 103 million hectares.
Colombia	The constitution recognizes the ancestral rights to land of indigenous groups and of Afro-Colombian traditional communities. About 22.1 million hectares of forest, mostly in the Amazon, are owned by indigenous communities and 5 million hectares, mainly in the Pacific region, by Afro-Colombian communities. Many forest plots in the Andean region, particularly of planted forests, are owned privately.
Ecuador	About 4.5 million hectares of potential production forests have been allocated to indigenous communities and are now considered to be owned privately. The remaining is mostly in farmers' plots, but their tenure is unclear.
Guyana	The forest comprises state land, Amerindian land and private property.
Peru	Forests are classified into public, private and indigenous ownership categories.
Suriname	All forests (except those on private land) belong to the State; Amerindian and Maroon people claim collective rights or use of land.
Bolivarian Republic of Venezuela	More than 90 per cent of the forests is owned by the State. There are private forest lots in both natural and planted forest areas. The constitution recognizes indigenous rights to the collective ownership and use of forest territories, but there is no demarcation or formal recognition process in place.
Guatemala	An estimated 38 per cent of forests is owned privately, 34 per cent is national forests and about 28 per cent is owned municipally or communally.
Honduras	Three main types of forest ownership: public, ejidales, and private.
Mexico	An estimated 80 per cent of Mexico's forests, some of which are non-tropical, is owned by local communities (ejidos). Around 15 per cent is owned privately and 5 per cent is classified as national land.
Panama	Most of the forests are state-owned.
Trinidad and Tobago	Nearly 75 per cent of forest land is owned and administered by the State; the remainder is owned privately.

Source: International Tropical Timber Organization. Status of Tropical Forest Management 2005. ITTO Technical Series No 24, 2006.

Production management (concessions/licences)

In Africa, an estimated 44 million hectares of natural forest have been allocated to production, either through large-scale concession arrangements or smaller-scale licences and permits for long- or short-term use. Generally, long-term and large-scale privately owned forest concessions dominate timber production in the Congo Basin. Most of the active companies are foreign-owned (European companies and, increasingly, Asian conglomerates - please refer to the companies section of this site).

In Latin America and the Caribbean, forest use is mostly allocated through long-term and large-scale private forest concessions in Bolivia, Guyana and Suriname; Peru, Guatemala, Panama and the Bolivarian Republic of Venezuela have systems for medium-sized concessions. Timber harvesting is principally done at a smaller scale in Colombia, Ecuador, Honduras, Mexico, Panama and Trinidad and Tobago. In the Brazilian Amazon, nearly all production management is conducted by private operators in privately owned forests. Private ownership by individuals and industry is significant in the region, which in part explains the relatively small role played by concession systems.

Countries in Asia and the Pacific have tended to use concession systems (except for Fiji, India, Myanmar and Vanuatu), but this pattern is changing.

Natural production forest allocated to concessions or under licence
(million ha)

Source: International Tropical Timber Organization. Status of Tropical Forest Management 2005. ITTO Technical Series No 24, 2006.
Note: The regional aggregates comprise ITTO producer members. "Natural production forest" defines natural forest designated for production and extraction of timber and non-timber forest products.

For a comprehensive analysis of the forest tenure situation in tropical producing countries, please refer to: International Tropical Timber Organization. Status of Tropical Forest Management 2005. ITTO Technical Series No 24, 2006.