1. Institute OF FORESTERS OF AUSTRALIA
A Perspective on Tropical Plantation Development Over the Past Two Decades
15 August 2017
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GEOGRAPHIC FOCUS
The geographic focus of this presentation is SE Asia - Indonesia, Malaysia, Thailand, geographies further north: Southern China, Vietnam, Laos and Pacific countries
Fiji
Solomon Islands
Focus
Primary
Secondary
Tertiary
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3. PULPMILLS CREATED REGIONAL DEMAND
Big pulp mills developments have created a large increase in pulpwood demand and led to significant tropical plantation development to support the industry
Mill examples
Approx. start date
Indicative Annual Wood Requirement (million m3)
Country
PT. Indah Kiat Pulp & Paper
1982
12.0
Indonesia
Sabah Forest Industries
1988
1.2
Malaysia
PT Inti Indorayon Utama
1989
1.6
PT Riau Andalan Pulp & Paper
1995
10.0
PT Lontar Papyrus
1998
4.0
Hainan Jinhai Pulp and Paper
2004
8.0
China
Rizhao, Shandong
2005
Zhanjiang Chenming Pulp & Paper Co., Ltd
2011
6.0
Nantong Zhongzhi Paper Pulp Co.,Ltd.
2014
3.0
PT Oki Pulp & Paper Mills
2016
Phoenix Pulp
1975
Thailand
Double A
2.0
Australia’s annual plantation hardwood harvest ~ 13 million m3
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4. INDONESIA’S INDUSTRIAL PULPWOOD PLANTATIONS
Indonesia’s industrial pulpwood plantations expanded the fastest and today covers an estimated area of about 2.5 million net planted hectares
Plantations developed by Indonesian pulp companies
Initial species selection focused on Acacia mangium and Acacia crassicarpa
Early MAI observations in the late 1990’s for Acacia mangium in Sumatra was ~ 18-25m3/ha/a over a 6 – 7 year rotation; in later years improved to about 22 – 35 3/ha/a before starting to decreasing significantly due to onset of disease
A. mangium plantation productivity on Borneo island (West Kalimantan, Sarawak, Sabah) typically less, likely due to differences in soil productivity
Tree plantations were competing for land with palm oil plantations in SE Asia…. and lost; this resulted of large areas of plantations (A.crassicarpa) being developed on peat soils from 2000 onwards – in some cases up to 10m deep peat
Unique skills required to mange tree plantations on peat; initial productivities on peat were in the 15 – 20 m3/ha/a range but later improved.
R&D efforts were directed towards tree genetics and silviculture.
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5. THAILAND AND VIETNAM’S PULPWOOD PLANTATIONS
Plantation development in Thailand and Vietnam are largely smallholder owned
Thailand
Estimated 95% of the country’s eucalypt resource of ~ ha is privately owned1
Plantation development by farmers were initially incentivized by the Thai Government and later by the Thai pulp & paper companies. Farmers grow tree crops on agricultural land and are provided with seedlings.
Eucalyptus camaldulensis is predominant pulpwood species in Thailand.
The Thai pulp & paper industry is self-sufficient and exports some woodchips.
Vietnam
The Vietnamese government, supported by ACIAR and CSIRO, encouraged farmers to growth A.mangium or A. mangium hybrid trees on their land.
Estimated total acacia resources of 1.5 million ha (of which ~1/3 is unrecorded smallholders)1
The market for Vietnam plantation logs include chip exports (China / Japan), domestic furniture industry and more recently pellets in South Korea and Japan.
In the past decade, Vietnam became the largest woodchip exporter in the Asia Pacific region, bypassing Australia.
1 Hidden assets: Asia’s smallholder wood resources and their contribution to supply chains of commercial wood, S.J. Midgley, P.R. Stevens & R.J. Arnold, Australian Forestry, Feb 2017
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6. CHINA’S SOUTHERN HARDWOOD PLANTATIONS
China’s eucalyptus plantations in the south predominantly supplies the local plywood industry
About 80% of China’s eucalyptus plantations are privately owned, 15% by industry and 5% by the State.
Estimated net planted Eucalyptus area is about 4.5 million ha; the main provinces are Guangxi, Guangdong, Fujian.
Main hardwood species in the south are hybrids of E.urophylla and/or E.grandis.
Indicative average growth rates are 20 to 25 m3/ha.
Plantations are often fragmented, on steep terrain with difficult access
Logistics combined with manual labour costs results in relatively high delivered wood prices.
Plantation logs is used most for plywood production, used for concrete forming / construction.
China’s large pulpmills relies largely on imported woodchips.
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OTHER PLANTATIONS
Plantations other than pulpwood included those for veneer and sawnwood and are of smaller scale
Significant areas of plantations for veneer/plywood and sawnwood in tropical Asia are largely smallholder owned due to shortage of land for conventional forestry models:
Common species:
Gmelina arborea (white teak) in Solomon Islands
Anthocephalus cadamba (jabon) in Indonesia (Java)
Falcataria moluccana (falcataria) in Indonesia (Java)
Tectona grandis (teak) – Malaysia, Indonesia, PNG, Cambodia
Hevea brasiliensis (rubber) - Malaysia, Indonesia, Cambodia
Swietenia macrophylla (mahogany) plantations in Fiji,
Eucalypts, Acacias and others
These plantations are typically scattered; available statistics are limited but make very significant contributions to the national economy and wood supply
Sufficient scale in any one location to support larger scale industries is important
Silviculture management often suboptimal due to lack of skills / access to capital
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8. A PARALLEL DECLINE IN NATIVE FOREST HARVEST AND TRADE
A global trend towards certified sustainable forestry as well as national policies fighting illegal tropical forest logging resulted in a significant decline in native forest exports
China Industrial Tropical Roundwood imports, thousands m3
Malaysia /Indonesia Plywood exports,
thousands m3
5,000
10,000
4,000
-83% 00
3,000
2,000
1,000 03 00 03 06 09 12 15 16 06
SKorea Industrial Tropical Roundwood imports, thousands m3
4,000 09
3,000
-38%
2,000
-85% 12
1,000 00 03 06 09 12 15 16 15
Malaysia
Laos
Vietnam
Indonesia
Malaysia
Myanmar
Indonesia
Thailand
Source: GTA, Margules Groome databases
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9. USES OF TROPICAL PLANTATION WOOD
Output of engineered wood products manufactured largely from tropical tree plantations increased significantly over the past two decades
China Wood Products Production (All HWD and SWD), millions m3 ( )
Rapid economic growth as well as sustained investment in wood panels capacities strongly developed in China over the last decade
Vietnam and Thailand wood products sectors are growing, based on regional and global demand as well as on strong government programs and economic stimulus
+3,597%
+1,014%
+945%
+108%
116.4
+580%
76.2
74.3
2000
11.1
20.1
2.1
3.0
3.1
6.5
6.7
2015
Ply
MDF PB
Other fibreboardOther fibreboard
Timber
Vietnam Wood Products Production, thousands m3 ( )
Thailand Wood Products Production, millions m3 ( )
+103%
+240%
+1,304%
+376%
6,000
2.9
+1,355%
2.6
+28%
2.2
+99%
+1,214%
+1,567%
2,950
0.8
2000
0.5
460
0.2
0.3
0.3
160
250
2015
0.2
0.2 35 11 15 30 30
Ply
MDF PB
Other fibreboardOther fibreboard
Timber
Ply
MDF PB
Other fibreboardOther fibreboard
Timber
Source: European Panel Federation Report 2015, FAO, GTA, Margules Groome databases
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10. PRODUCTION CAPACITIES DEVELOPMENT
Significant PB and MDF capacity increases in Asia are pushing the global capacities to their highest ever levels and pressure the APAC resources
PB / MDF Capacity Development, CAGR, % ( )
New PB /MDF capacity development, millions m3 ( )
Country PB
MDF
China
7.3
15.5
Malaysia
-4.8
-1.0
Thailand
2.6
6.3
Indonesia
-3.7
6.8
Vietnam
88.0
-3.1
1,14 PB
China
1,61
MDF
0,60
Thailand
0,78
Vietnam
1,00
Currently, sawnwood and plywood are the most important products with MDF/PB becoming more popular due to a changing fibre resource and increasing demand for ‘cheap furniture’ and laminate flooring.
USA and China continue to be the largest WP markets (engineered wood panels / furniture) attracting significant investment in new PB/MDF capacities
Source: WBPI, FAO, Margules Groome databases
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11. USES OF TROPICAL PLANTATION WOOD
Output of woodchip and wood pellets manufactured from tropical plantations increased significantly in recent years
Woodchip Export Production, millions BDMt ( )
+2,128%
Regional and global booming woodchip markets supported strong growth on woodchip export across the region
2000
2015
8.34
+471%
+496%
+21%
2.46
1.40
0.25
0.30
0.37
0.23
0.43
Malaysia
Vietnam
Indonesia
Thailand
Pellet Production,
thousand tonnes ( )
Sustained by government policies and incentive, renewable energy generation in South Korea and Japan have attracted rapid growth on wood pellets production capacities, with Vietnam becoming the major player in the region.
+2,540%
2012
2015
1,320
+385%
+725%
+300%
+3,900%
485
330
100 40 50 20 80 1 40
China
Malaysia
Vietnam
Indonesia
Thailand
Source: FAO, GTA, Margules Groome databases
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12. CRITICAL ISSUES FOR TROPICAL PLANTATIONS
Tropical plantations faces significant issues going forward; underinvestment in R&D, skills and technologies risks the future of these plantations
Strong and capable regional / national level research organizations are lacking
Clear and unequivocal ownership of the land and the trees
Unsympathetic legal and regulatory frameworks
Environmental and social ‘license’
Indonesia
Disease is driving species change and R&D is in catch-up mode:
Ganoderma root rot fungus
Ceratocystis fungal disease
Declining yields on mineral soils (relative to 10 years ago)
Speed is a major issue; large Indonesian companies plant ~200,000+ ha/yr. Reaction times need to be really fast
Access to skills and technology
Forestry school curricular lag behind
China
Wood cost competitiveness in the long-term (both R&D and technology problem)
Earlier social backlash against expanding Eucalyptus resource
Malaysia (~ ha Acacia / Eucalyptus plantations)
Wood cost competitiveness (both R&D and technology problem)
Stagnant domestic market
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