Responding to the wood sector’s woes

About six months after the government issued an executive order calling for a moratorium on the cutting and harvesting of timber in national and residual forests, the country’s wood industry is complaining about a number of problems that have started to affect their profitability.

Firstly, the Philippines Wood Producers Association (PWPA), representing companies and individuals involved in about any and all things that have to do with wood – from planting to harvesting to manufacturing and selling – are claiming hard wood scarcity, adding that they have to source their raw materials as far as Brazil.

Second, they raise the issue of smuggling. The association is complaining that sales have dropped by as much as 30 percent because of the illegal entry of cheaper but non-compliant processed wood products.

Third, with the stronger peso vis-à-vis the US dollar, plywood made by China has become so much cheaper to import. This is putting the viability of the local wood processing industry at risk, especially in light of continued smuggling problems.

And fourth, a resulting tightness in wood and wood products supply may encourage illegal logging that would not immediately be apprehended in spite of the newly organized anti-illegal logging task force by government.

Decades of change

The local wood industry has changed much over the decades, and perhaps for the better. There was a time when the Philippines was a major exporter of logs that were cut down from our indigenous forests. For about 30 years, starting in the 1950s, log concessionaires were mining our mountains of these precious trees and selling them to Japan and other Asian countries.

As our forest cover became eroded, and landslides and flooding became conspicuous in many areas, the government decided to phase out log exports starting in 1976, and instead to gradually move to wood products manufacturing to improve the utilization of our forest resources.

Towards the turn of the century, the local wood industry was slowly being reshaped under the sustainability principle. With government more inclined to call for a total logging ban of natural forests, the concept of man-made forest plantations evolved.

In the new century, alternatives to wood have also started gaining acceptability. Hard plastics, aluminum, steel, plaster, and fiber are just some of the materials that are being used to replace hard wood and wood products.

Niche in furniture market

Hard wood scarcity is a problem that is the natural consequence of the ban on natural and residual forests. But still, considering that the country derives about a billion dollars annually from the export of designer furniture, more incentives should be given to tree farms devoted to high quality wood that do not take long to grow.

The Philippines is fast being recognized for its furniture designs and craftsmanship, and is quickly building a niche with upscale markets that are willing to pay a little extra for products that are not available in all department stores.

Such tree farms that can produce high quality woods must be immediately acted on by government if we are to protect our furniture exporters reeling from the effects of a stronger peso as well as higher freight costs because of escalating oil prices.

Dealing with smugglers and illegal loggers

Smuggling, and in almost the same breath, illegal logging are problems that have to do with the government’s policing will and competence. This is something that has been a problem for decades, and always exacerbated by corruption by many of our law enforcers.

The biggest concern with smuggling is the proliferation of substandard wood products that could pose as a threat of the safety of people, especially when used in furniture, homes or other structures.

Corollary, substandard products are usually sold on the pretext of having a certain level of quality, and therefore priced accordingly. When this happens, the consumer is immediately robbed of his precious, hard-earned money.

Stop buyers of illegal logs

Illegal logging, on the other hand, aggravates the fragile state of many natural and residual forests, especially those in areas that have just been replanted during the last decade.

If there is one sensible solution to this, it is an industry suggestion to dismantle all wood-processing plants dubiously located near untenured forestlands and revoke all wood-processing permits without verifiable log supply contracts from legitimate local or foreign sources.

Without buyers of illegally cut logs, syndicates will find it more difficult to operate. Bringing down illicit cargo from the mountains to the ports where they can be loaded for shipment to their dubious destination could become more expensive, and therefore no longer worth the exercise.

Changes from globalization

The wood processing industry, just like many other sectors in the country, is facing a tough challenge from globalization. Obviously, we have lost the advantage of cheap labor to China’s, and at the same time, have to contend with the high cost of shipping as well as economies of scale.

China can build wood processing plants at sizes that would dwarf what we have because they have such a huge local market plus the potential of exporting to other nearby countries with lower transportation costs. China also has huge tree plantations that provide the needed raw materials.

With this in mind, it is perhaps time to reconsider how we could reshape our wood processing industry to make it more relevant to the changes in world trade and markets. Tree farms may be the answer to some problems, but not necessarily all. It’s always best to think things through with care.

The industry is at a crossroads. The private sector with the support and assistance of relevant government officials should put their best minds together to map out how to move forward for the benefit of – not the few vested interests – but the good of our struggling economy. –Rey Gamboa (The Philippine Star)