Outline. A. Reduced consumption of pulp and paper (EU market) Ongoing structural changes affecting the pine market economy !"#$%#!

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1 Outline MEDPINE 5 Solsona, September, 2014 Market developments for pine products: actors and patterns of trade in a changing market conditions Davide Pettenella, Mauro Masiero, Hafiz Umair Masood Awan, Enrico Vidale Ongoing structural changes affecting the pine market economy Three commercial products: Pine nuts Pine resin Wood logs and sawnwood from pine Conclusion Ongoing structural changes affecting the pine market economy A. Reduced consumption of pulp and paper (EU market) 4 trends: A. Reduced consumption of pulp and paper B. Development of the bio-energy segment C. Growing role of forest plantations in wood supply D. Increasing importance (and recognition) of NWFP under a general feature of the market: structural instability &(

2 Reduced consumption of newsprint (US market) Reduced employment in the pulp and paper sectors (US market) Source: Peter J.Ince, 2008 B. Development of the bio-energy segment!(

3 Opposite views Key message: we will face a problem of scarcity However we do have to consider: - The reduced demand for industrial wood - The role of trade (import from outside EU) - The role of prices (higher demand! higher prices! higher supply) M! investment 300 MWe MWt 40 new jobs (32.5 M!/employee) Consumption: 5.3 M ton biomass/yr 90% imported (75% from Florida) Market distortion by public interventions. An interesting example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nfair competition between the bioenergy and the panel industry sectors MX=YZZ44;;A-3=;6.A41:Z44;;Z!$&'Z$)Z$IZ4;,;3>+C;Z&)%')$$"!"[&")\&$AM,:3( )(

4 C. Growing role of plantations Planted forests in the world according to management objectives and continent ( ) The cascade approach (2013 EU Forest Strategy communication, p. 5-6) " 230 M ha in 2005 " 75% for production, 25% for protection " mainly conifers: 32% gen. Pinus; Eucaliptus 8% Fonte: FAO State of the World s Forests 2007 Pine plantations around the globe: main functions Age-classes of pine plantations around the globe: quite a lot of young stands Source: own elaboration on Source: own elaboration on '(

5 Productive pine plantations by age class and geographical distribution: a great potential in NA Forecast of industrial roundwood consumption from forest plantations (Source: FAO) Total consumption Wood from plantations Source: own elaboration on Global forest regions and expected IRRs* from forest investments * Internal Rate of Return Historical sources of return from forest plantations Source: Daos Oy, 2012 "(

6 Forests as an opportunity for investments: land prices Forests as an opportunity for investments: wood prices Source: Daos Oy, 2012 Source: Daos Oy, 2012 From Chile to Portugal, from Brazil to Indonesia, from Uruguay to Spain, from South Africa to New Zealand, from India to Thailand, people are organizing to oppose what they have called tree deserts, green cancer, green invading army, selfish trees or socioeconomic deserts ( D. Increasing importance of NWFP Wood vs. NWFP: general trade overview (raw prod.) Wild NWFP/Wood % Firewood + Timber Wild NWFP 1 0,9 0,8 20 0,7 Billion US$ 15 0,6 0,5 0,4 10 0,3 5 0,2 0, Wood codes: 4401, 4403 NWFP: only wild raw products collected in EU \(

7 The problem of NWFP definition Billion US$ NWFP (all) Mixed source Wild NWFP Different definitions, different outputs! NWFP/industrial wood production values in different EU countries <,;3C(?15,>0;3( Q=;6+( *+6,-2(d6+021:( L-5:;+C( JO-4M(c-=>9364( b>.,56;( Q317-+6;( a6,m>;+6;( `6+3;+2( Q_-2-+( Q317;^6;( U>30;56;( $](!$]( '$]( \$]( I$]( &$$]( &!$]( &'$]( &\$]( Source: Forest Europe 2011, modif. (year 2007) NTFPs (1/2) Total value:! M Average marginal value:!18.10/ha Relative incidence of NTFP types on the total economic value of NTFPs in the Med region Herbs Fodder and Fruits Other Seeds 2,3% hay 0,6% 1,5% 0,0% 3,0% Cork 13,8% Honey 12,2% Mushroom s and truffles 15,1% Acorns and nuts 26,7% Animal products 24,8% Total Mediterranean NWM NEM EM SM Turkey Albania Croatia Algeria France Egypt Tunisia Slovenia Cyprus Bosnia and Herzegovina Morocco* Spain Italy Lebanon % incidence of wood & NTFP production value in MED countries and sub-regions 0% 20% 40% 60% 80% 100% ROUNDWOOD NTFPs FAO FRA 2010 figures date back to 2005, cover just 14 out 21 countries, and do not refer to all products (e.g. Argan oil in Morocco, pine seeds partially reported, cork unclearly classified ) Source: own elaboration from FAO, 2010 A general feature of the market: structural instability A good indicator: wood prices Source: Daos Oy, % N(

8 Instability not only in the demand (economic crisis) but also in the supply. Main large damage event (storms, fires, insect attacks, ) to (ageing) European forests Schelhaas, 2008 Mountain Pine Beetle (Dendroctonus ponderosae) in British Columbia (CAN) Market more unstable Forests more vulnerable Schelhaas, 2008 I(

9 A brief market analysis of the main pine products NWFP Pine nuts Resin - Rosin and resin acids - Salts of rosin Wood products Roundwood - Scots pine sawlogs - Other Scots pine industrial rough wood - Industrial rough wood of other pine species Sawnwood - Scots pine sawnwood - Planed sawnwood of other pine species - Scots pine small sawnwood - Other sawnwood of other pine species Our main sources: - value of production: a new estimate of Med forest TEV - trada data: EUROSTAT (2014) Value of the production of pine nuts and resin (Med area) Data source FAO FRA 2010 Alternative Min Alternative Max Pine nuts Production (tons) Value (M!) 16, , , Perez et al., 2004; NFC, 2005 and 2012; Mutke et al., 2012 and 2013; Sfeir, 2011; Daly et al., 2012; GDF, Pine resin Production (tons) Value (M!) 1, , , IGN, 2013; Spanos et al., 2010; NFC, 2007; Cesefor, 2009; Magrama, 2011; GDF, 2009; Satil et al., Cork Production (tons) Value (M!) 101, , , APCOR, 2010; Daly et al., Still minor products, in relation to other MED NWFP Pine nuts Pine nuts production and gathering in Mediterranean countries (sorry Portuguese friends!) nr = not relevant; na =not available * estimated assuming production levels per hectare as defined by Daly et al. (2012) for Tunisia. Source: own elaboration from a Perez et al., 2004; b NFC, 2005; c INC, 2012; d Mutke et al., 2012; e Sfeir, 2011 [Note: production figures refer to 2005 and assume an average production of kg/ha of edible nuts]; f Wahid et al., 2010; g Mutke et al., 2013; h Daly et al., 2012 [Note: production figures assume an average production of 400 kg/ha of cones, i.e kg/ha of edible nuts]; i GDF, %(

10 Pine nuts trade: a central role of the EU Pine nuts: increasing EU dependence from other countries (China, Pakistan, US, ) Source: our elaboration on EUROSTAT data Source: our elaboration on EUROSTAT data Pine nut prices: huge tensions Driving forces: - many pathogens such as the western conifer seed bug (Leptoglossus occidentalis); production in the Med region has fallen from 2,500 to 905 tons in 2011 (INC, 2012) - Pine Mouth Syndrome (PMS): nuts from some species such as Pinus armandii (Chinese white pine) and Pinus Max: massoniana 65!/kg(Chinese red pine) include irritating terpenoids (consumer price) and other compounds Price boom, with a recent reduction of trade Source: our elaboration on EUROSTAT data &$(

11 Pine resins Areas and species used to pine resin extraction in Mediterranean countries * tapping activities ceased Source: own elaboration from a FAO,1995; b IGN, 2013; c Spanos et al., 2010; d INFC, 2007; e Cesefor, 2009; f Magrama, 2011; g GDF, 2009 [Note: calculated according to average figures for production forests and considering only non degraded pine forests]; h Satil et al., Pine resin production value (1,000 Euro) in Med countries The 7 top exporter in the world (2013) The 7 top importer in the EU (2013) Source: our elaboration on EUROSTAT data &&(

12 Rosin and resin acids: strong trade unbalance, but recent reduction in import from outside EU (China, Brazil and Argentina, Indonesia and Vietnam) Salt of rosin: again the impacts of the economic crisis on trade Source: our elaboration on EUROSTAT data Source: our elaboration on EUROSTAT data Average price changes during for rosin and resin acids Pine wood Average Quantity Average Unit Price Average Quantity (Kg) Average unit price (!/Kg) Years 0 Source: our elaboration on EUROSTAT data &!(

13 Quantity and value of Med pine wood production: no data available (but pines are the predominant species!) Roundwood production value in Mediterranean countries (1990, 2000, 2005, 2010) Leading countries: France, Turkey, Spain, Italy, Croatia; Only Turkey has a clear trend (positive), much influencing the overall performance of the region Still a large role played by fuelwood still a large role played by fuelwood timber fuelwood Overall fuel wood increased five times in the last 10 years According to FAO (2012), the Mediterranean region hosts the 1 st (Italy) and the 4 th (Turkey) firewood importers worldwide. Trade balance Scots pine (EU, value, ) Industrial roundwood (= timber) Trade balance other pines (EU, value, ) Industrial roundwood (= timber) Large investment in sawmills in the recent past! increased avrg. size Need for large amount of logs to cover the investment costs High prices paid for the raw material Stagnant domestic demand, increased Sawnwood export of sawnwood, lower profits for the sawmill The reduced role of small sawmills is decreasing the stability of markets. Same trends! (even more pronounced) Sawnwood &)(

14 Summary view: EU pine products imports Red: industrial pine roundwood Green: semi-finished pine wood products Blue = NWFP Summary view: EU pine products exports Red: industrial pine roundwood Green: semi-finished pine wood products Blue = NWFP Conclusion More globalized wood and NWFP markets Increased demand for low grade wood assortments A very dynamic NWFP market, with new room for expanding EU supply Economic crisis: limited reduction in NWFP trade, but not in prices Other products (mushrooms, greeneries, ) and ES can be relevant sources of income for pine forests Thanks for your attention! &'(