Wood supply and demand analysis in pakistan – key issues

Managing Natural Resources for Sustaining Future Agriculture

Research Briefings Volume (4), No (22), 2012

Pakistan Agricultural Research Council, Islamabad, Pakistan

Wood Supply and Demand Analysis in Pakistan – Key Issues

Sumia Bint Zaman1 and Dr. Shahid Ahmad2

December 2011 1 Scientific Officer, NRD, PARC 2 Chief Scientist-II, PARC




Wood Supply and Demand Analysis in Pakistan – Issues and Options

1. Motivation One of the most important utility of forest plants is the timber, which is inevitable for the construction sector. The country is severely short of forests, and hence timber plants. Timber demand is consistently increasing with the growth of population and economic development. In Pakistan, forests resources are very limited as they are only 4.4% of the total land area which are insufficient to meet the country’s demand for timber and fuel-wood. Shortage of timber is being met through imports. Along with heavy imports, there is door open for smuggling which is becoming very precarious issue for the economy. Illegal dumping of wood into local markets is getting hampered as containers inflow under the Afghan Pakistan Transit Trade Agreement (APTTA) gets absorbed in Pakistani markets. If we look into timber market in the country, imported wood in the market is much higher than imports of wood reported officially. This means that more imported wood is coming through unofficial means. Basic motivation behind this research briefing was to analyze the issue of dumping of timber into local market and to assess current and future demand and supply scenarios in the country. This is 1st part of the study aimed at assessing the demand and supply scenarios of wood in Pakistan, to assess shortage in future and to look into options to fulfill future demand. Study also aims at providing an insight of policy issues. The 2nd Part will be presented in sequence which will look into the prospects of commercial timber plantation development in Pakistan. The future research and development needs will also be assessed. 2. Introduction 2.1. Background Information Pakistan has limited timber and wood resources. Out of the total land area of 87.98 mha, forests cover only 4.4 mha (4.96%) against desired level of 25% considered essential for sustainable economic development. Forests include State-owned forests, communal forests and privately owned forests. State forests cover 1.29 mha while communal and privately-owned forests cover 3.1 mha located primarily in the Khyber Pakhtunkhwa and Punjab (GOP 2008). Hill forests predominate in the north and northwest temperate and subtropical regions. Fir (Abies), spruce (Picea), deodar (Cedrus deodara), bluepine (Pinus wallichiana), chirpine (Pinus roxburghii), chilghoza (Pinus gerardiana) and juniper, as well as broad-leaved species like oak (Quercus), maple (Acer), walnut (Juglans regia), poplar (Populus) and chestnut (Castanea) are found in the hill forests. In irrigated plantations, species such as sheesham (Dalbergia sissoo), mulberry (Morus alba), bakain (Melia azadarach) and semal (Bombax ceiba) are grown for timber3.

The forests not only provide timber but also supply fuel wood. They also provide groundcover to fragile mountain ecosystems. Since forest resources are limited, Pakistan has to import wood and wood products to meet the rising demand. The forests in Pakistan are heterogeneous and reflect physiographic, climatic, and edaphic contrasts. The forest types prevailing in the country are:

Tropical dry deciduous; Tropical thorny; Sub-tropical broad-leaved evergreen; Sub-tropical pine; Litoral and swamp; Himalayan moist temperate; Himalayan dry temperate; Sub-alpine; and Alpine scrub.

Notwithstanding the wide range of forests in the country due to variation in climatic and edaphic factors, Pakistan is still a forest poor country with only 0.03 ha of forest are per capita of population which is declining due to population growth (NIPS 2009). Number of factors is responsible for low wood production in the country. Firstly, Pakistan inherited a very small forest area at the time of independence. Secondly, most of the land area is arid and receives too less precipitation to support growth. In fact poor tree cover is due to adverse climatic and edaphic factors. After the creation of Pakistan, the forest contractors wrought havoc with the already scarce forest area. The demands of a developing country were exceedingly heavy on indigenous wood resources which shrank further due to free for all

3 http://www.nationsencyclopedia.com/Asia-and-Oceania/Pakistan-FORESTRY.html




situations. The area of the public sector cannot be expanded fast enough to keep pace with rapidly growing population and consequently the gap between out-turn vis-à-vis demands of fuel wood and timber has continued to widen. Shortage of wood and poor state of forests is, therefore, a challenge for Pakistan. Wood production of public lands is disappointing. As per Forestry Sector Management Plan (FSMP) study in 1992, there was a wood shortage of about 15 million m³ in 1992 which increased to 29.36 m³ in 2003 and projected to be 43.97 m³ by 2018 (GOP 1992). Wood shortage is being met through imports and illegal and ruthless cutting of the forest trees. The gap will continue to haunt till massive funds are provided for afforestation, rehabilitation and restocking initiatives on emergent basis. 2.2. Objective of the Study The overall objective of this study is to assess the demand and supply scenarios of wood in Pakistan, to project wood shortage in future and to develop future strategy for sustainable availability of wood. Study also aims at providing an insight of the policy issues regarding wood imports and smuggling under the Agreement of Afghanistan Pakistan Transit Trade. 3. Wood Demand Analysis 3.1. Wood Consumption 3.1.1 Fuel-wood Consumption As per study of MAANIC, per capita consumption of fuel wood is 0.205 m³4. Total fuel wood consumption is estimated at 34.95 million m3 in 2011 for the population of 170.52 million5 (GOP 2005). The species preferred for cooking are Kikar, Phulai, Shisham, Ber, Mulberry and other because of their good burning qualities. There are three sectors consuming fuel wood – household, commercial, and industrial. Household sector Fuel wood has been the main source of energy in the domestic sector. The household survey revealed that 75% of the households have used wood as a principal fuel for cooking, 14% for water heating and 11% for room heating. The situation is quite different by urban/rural divide; 90% in rural areas have used fuel wood for cooking but only 10% in urban areas by slum dwellers (GOP 2005). It is only after the discovery of fossil fuels that the fuel wood has gradually been replaced. The switch over has gained momentum in early 1970s when natural gas became available6. Because of rapid population growth; it is also the most rapidly growing sector in terms of demand and modern fuels. This growth has placed a tremendous stress on commercial fuels supply structure resulting in load-shedding of electricity, natural gas rationing, fuel shortages which has forced the country to resort to high imports of commercial fuels with massive capital investments. Inspite of these substitutional effects, majority of the rural masses still heavily rely upon bio-fuels such as fuel wood, cow-dung and crop residues. The percentage of expenditure on gas and electricity has however remained steady especially in urban households. The rich households have mostly switched over to commercial fuels subject to availability but poor classes are still obliged to use lower cost products such as fuel wood, dung-cakes, and crop residues. The provincial consumption revealed that the households in Balochistan province have mostly consumed fuel wood due to non-availability of alternative fuels and cold weather. Punjab has highest consumption of crop residues because of larger farm area. Sindh has applied electricity due to high level of urbanization and dominance of Karachi. In KPK including FATA/PATA, Gilgit-Baltistan and AJK where forest resources are highest, the majority of the population has consumed fuel wood at the household level. This is also assigned to lack of alternate biomass fuels in these areas. The major problems faced by the consumers are scarcity of wood, distance of wood talls, high price level and many more. Commercial sector In commercial sector fuel wood consuming establishments include i) hotels/restaurants ii) tea bars iii) ovens iv) bakeries v) tikka shops vi) barber shops and others such as milk shops, sweet shops, etc. The fuel wood

4 Ministry of Environment conducted the study entitled “Supply and Demand of Fuel wood and Timber for Household and Industrial Sectors and Consumption Pattern of Wood and Wood Products in Pakistan” through MAANICS International (Pvt) Ltd. 5 Total fuel wood consumption is estimated by multiplying per capita timber consumption with estimated population in 2010 provided by National Institute of Population Studies (NIPS) 6 http://www.spiritbride.org/A/spiritbride/creation/energy_solutions.htm




consumption by mode of business at the country level has been estimated at 3.3% of the total fuel wood consumption (GOP 2005). Industrial sector

In the context of Pakistan, the industries consuming fuel wood are rural based. The most important in order of consumption are brick industry, tobacco curing units, charcoal kilns, khoya industry and some minor industries such as pottery and ceramics, lime manufacturing, groundnut/turmeric curing, gur making, black smith, dyeing, washing, silk cocoon processing, local medicines, etc. Major proportion of fuel wood consumption in this sector goes to social ceremonies (27%) followed by khoya production (24%), brick making (20%), other industries (18%), charcoal making (8%), and tobacco curing (3%).Total consumption of these wood based rural industries is estimated at 4.703 million m³ (GOP 2005).

3.1.2 Timber Consumption Per capita timber consumption is 0.08 m³. Thus total timber consumption is estimated at 13.57 million m3 in 2011 for population of 170.52 million. Major requirement of timber is being met from farmlands plantations (91.4%) followed by imports (5.22%) and state forests (3.34%; GOP 2005). In irrigated plantation forests, species such as sheesham, Kikar, Eucalyptus, mulberry, Poplar, Bakain and Semal are grown which provide timber for furniture and sports goods. Forests in the foothills are based on broad-leaved evergreens, with main species of olive and phulai. Deodar, Pertal, Kail, Shisham, Kikar/Babul, Mulberry, etc are the main wood species used for construction and furniture. 3.2 Total and Sector-wise Wood Consumption Per capita wood consumption (timber plus fuel wood) is 0.285 m³ while total wood consumption in the country is estimated at 47.73 m³ million m³ in 2010 for the population of 167.72 million. There are basically three sectors which consume fuel wood in Pakistan i.e. domestic sector, rural industrial sector and commercial establishments. According to wood supply and demand survey, household sector has emerged the largest consumer (81.8%) followed by industrial fuel wood entrepreneurs (14.9%) and commercial (3.3%). Analysis of sectoral distribution of timber consumption revealed that major contribution goes to sawmilling (21%), followed by housing sector 19%, crates and box making (13%), miscellaneous wood based industries (10%), truck/bus boding building (9%), village carpentry (7%), sports goods (5%) and the rest 16% share goes to mining, boat making, ply wood, chip/hard boards, wood aircraft, railway tracks/carriages, pencil and match box industry, non-mechanized enterprises, shoe lasts and bobbins. Province wise breakup of total wood consumption (fuel wood plus timber) analysis shows that Punjab is having share of 49.15% in wood consumption because of highest population followed by KPK (17.9%), Sindh (16.77%), Gilgit-Baltistan (9.75%), and Balochistan (6.43%), respectively (GOP 2005). 3.3 Driving Forces in Wood Consumption There are three major uses of timber at household level: construction, furniture and village application. According to wood supply and demand survey, household sector has emerged the single largest consumer (81.8%). Shelter is one of the basic necessities of life. The demand for housing, energy and industrial wood is directly linked with population growth. Economic growth in general and boom in construction sector in early years of the 1st decade of this century resulted in massive wood consumption. Construction industry is a major user of timber in Pakistan. It accounts for 20% of the total timber consumed in the country. Moreover, Katcha construction in rural areas is switching over to Pacca construction on a faster pace. The distribution of the sector has discerned a shift from Katcha to Semi-pacca and Pacca houses in the wake of easy availability of loans by House Building Finance Corporation (HBFC) and availability of construction materials on demand7.

7 http://www.sbp.org.pk/IHFD/PDF/Brief-hf.pdf




3.4 Projected Wood Consumption by 2025 Total wood consumption is projected using per capita fuel wood and timber consumption in Pakistan8. As stated above per capita timber consumption is 0.08 m3 while per capita fuel wood consumption is 0.205 m3. Currently total wood consumption is estimated at 48.52 m³ for the population of 170.5 million. Wood consumption is going to increase with the increase in population. Projected wood consumption is estimated at 51.72, 55.64, and 59.44 million m³ by 2015, 2020, and 2025 respectively (Table 1). Table 1. Projected consumption of wood

Year Population (million)

Timber Consumption Fuel wood Consumption Total (million m3) (million m3)

2011 170.51 13.57 34.95 48.52 2015 181.74 14.47 37.26 51.72 2020 195.49 15.56 40.08 55.64 2025 208.84 16.62 42.81 59.44

4 Wood Supply Analysis 4.1 Wood Supply Sources There are three major sources of wood supply i.e. State Forests, Areas other than State Forests (including private forests and farm lands) and Imports. The average production of commercial forests is less than half (41.5%) of the total area under forest and the rest (58.5%) are protection forests (GOP 2005). The biggest forest resources of Pakistan are the coniferous forests in north, north east and North West constituting 39.3% of the total area under forest cover and almost one-half of them are production forests. Other productive forests are in the Indus Basin plains, i.e. irrigated plantations mainly in the provinces of Punjab (5.8 %) and riverine forests (6.2%) especially in Sindh. The non-productive forests in the hills and plains are scrub forests (36.7%) and coastal forests (11.3%). Remaining tree covers are of linear (canal and road side) and miscellaneous plantations such as amenity, households, defense purposes, etc. Trees on farmlands are the major sources of fuel wood supply for domestic and commercial uses (GOP 2009). Out of the total timber used in the country, 91.4% is coming from farm lands while 99.8% of the total fuel wood requirement is being met from farm lands (GOP 2005). 4.2 Estimated Forest Growth Far more wood is removed from public forests and other lands than is recorded or estimated. No record exists of how much or from where wood is actually taken. It comes not only from public forests but from farmlands and from millions of scattered trees in cities along road sides and on scrub lands. In view of this, the FSMP used forest growth as a measure to estimate quantity of wood resources on a sustainable basis. Keeping in view lack of recorded total supply of wood as pointed above the present study has also used the same approach and data as by the FSMP while estimating quantity of wood production on sustainable basis. As per FSMP studies the forest growth (annual yield) was estimated at 14.4 million m³. Assuming that the forest growth has remained the same, study would use this estimate as annual local production of wood. Wood supply from the state forests and from imports is documented; however, it is difficult to assess the same from other sources due to innumerable supply channels by which it finally reaches to the end users. A substantial quantity is collected directly by the individuals in the rural areas for their own consumption which remain unaccounted for in the assessment. Forest resources in Pakistan are either under state control or in the private sector. There are two major sources of forest production i.e. state forests and farmlands. Public forests supplies most of the national industrial wood requirements. Data on forest production in public sector is obtained from documentation of forest departments where administrative recording system is commonly used. The difficulty arises in respect of private sector and local communities where no records are kept. 4.3 Wood Supply Channels in Domestic Market All the sale depots of territorial forest divisions in the country are major source of timber and fuel wood supply. The forest departments however maintain records of forest area, regeneration, growing stock, harvesting and auction of timber and fuel wood. Public forests supplies most of the national industrial wood requirements. A large scrap of

8 Per capita timber and fuel wood consumption is multiplied with projected population provided by NIPS.




timber is sold by government timber markets i.e. Forest Developing Corporation (FDC) and Azad Kashmir Logging & Saw-Mills Corporation (AKLASC). In addition to government timber markets of FDC and AKLASC, Dargai (KPK) and Chilas (GB) are major sale markets in private sector where timber merchants purchase wood for subsequent marketing in the country. Apart from these channels, there are a large number of local wood yards in the country, which purchases timber and fuel wood from farmlands, individuals, wholesalers, etc and supply to the markets. The sources of local wood supply are own lands (61%), markets (34%) and others (5%; GOP 2005). The position is different in urban and rural areas. In rural areas majority of the population have obtained from non-forest sources (farmlands, wild lands). The wood is usually collected by family members in rural areas. The major supply sources near houses are gardens, village farms, shamlats, etc. It is usually obtained by pruning of trees or cutting shrubs. In case of urban areas, the distribution channel is short; markets (wholesaler and retailer) are reported the major source of supplies. 4.4 Impact of Ban Imposed on State Forests Harvesting: Comparative Analysis

The federal Government imposed a general ban on commercial timber harvesting throughout Pakistan in September 1993. The ban was accompanied by an action plan addressing issues to be rectified in forestry with the ultimate objective to contain or even reverse the process of forest deterioration. KPK, having the largest natural forest area, was the main focus of the ban. At a small scale legal harvesting continued during the ban period under several relaxation clauses e.g. harvesting of “dry and wind-fallen trees”. However, harvesting ban was lifted for one year in 2001 to clear back log of timber harvested prior to ban. As a result of the ban, legal harvesting and marketing declined but illegal harvesting. Took over and illegal trade expanded in response to growing demand. The volumes of such unrecorded illegal harvesting and marketing continued in a dimension more than ten-times larger than the timber out-take recorded by the forest department (Fischer et al 2010). A comparison of timber and fuel wood production from the state forests is made for the base year when ban was imposed and the wood production currently. Table 2: Production of Timber and Fuel wood from the State Forests

Source Reported for the year Timber (million m3) Fuel wood (million m3) GOP (1994) 1992-93 0.371 0.320 GOP (2009) 2007-08 0.139 0.065 Difference (decline in wood production

0.232 (63%) 0.255 (80%)

Source: Forest Economist, Pakistan Forest Institute, Peshawar

This decline in timber and fuel wood production can be largely attributed to ban on harvesting. Resultantly, rise in timber prices forced private owners of the forests to cut forests illegally and sell the same by all means. In fact the ban has accelerated the pace of deforestation instead of improving the health of the forests. Forest density has also reduced due to ruthless cutting of trees. Furthermore, the ban has deprived owners/right holders their legal way of getting benefits from the forests and on top of it rise in prices of timber have invited timber mafia to play havoc with the forests, to the extent that Afghanistan has been taking brunt of ban on harvesting from where precious deodar timber have continued to illegally flow into Pakistan. The forest administrative structures, management and policy were always based on the assumption that the forests will flourish again if only an appropriate technical and socially acceptable forest management system would be introduced. Thus, the sector reform and forest policy discussions at the national and at the provincial level have not been addressing the real problems in forestry, i.e. the fuel-wood consumption requirements of the local people and the illegal cutting for income and commercial purposes. In addition to this, the implementation of policies and sector reforms remained inadequate and lagged behind their objectives (Fischer et al 2010). Forest policy and management will have to take a perspective which addresses the obvious factors responsible for forest degradation, i.e. the fuel-wood/energy supply issue and the uncontrolled illegal commercial harvesting.




Figure 1: Imports of wood and wood products in Pakistan

4.5 Production Gap Using annual per capita wood consumption (0.285 m³), currently total wood consumption is estimated at 48.52 m³ for the population of 170.5 million. As stated above, forest growth is 14.4 million m³ which is assumed as sustainable annual wood supply. The country is thus facing annual wood shortage of about 34.12 million m³ in the year 2010 which is almost 70% of the total consumption. Wood shortage is being met through imports, smuggling and illegal and ruthless cutting of the forest trees. Using projected consumption given in Table 1 and sustainable annual wood production (14.4 million m3) as proxy of wood supply; production gap analysis is worked out. Analysis shows that if there is no increment in wood supply on sustainable basis then this gap is going to be at 37.32, 41.24, and 45 million m³ for the year 2015, 2020, and 2025, respectively. This can be attributed to poor state of affairs which is in consequence of ban on harvesting since 1992. The management of forests through working plans is inoperative since then. 5 Imports of wood and wood products With virtually no commercial forests, Pakistan is reliant on imports to meet its need for wood and wood-based products. Much of the economic growth in the country can be found in the construction sector, which has been a catalyst for the rising imports of wood and wood products. Many wood products imported by Pakistan companies are then shipped to Afghanistan and central Asian countries. During 2008-09, wood and wood based products worth Rs. 5.4 billion have been imported which is obviously a burden on foreign exchange and hence need immediate attention of policy makers and planners to develop means to provide wood on sustainable basis and to seek cooperation of wood based industries specially those which are involved in pulp and paper production. Out of the total imports of wood and wood based products, the imports of timber constitute 76% while the imports of wood products constitute (20%) which primarily relate to pulp and paperboard and the rest 4% are miscellaneous items (GOP 2009). Presently the pulp production is based on agriculture waste e.g. baggasse, wheat and rice straw, cotton lint, waste paper, kahi (elephant/ river) grass. This agriculture wastage is used for producing short-fibre pulp. Consequently, the quality of paper produced in Pakistan is inferior as compared to the imported one so the preference goes to imported pulp and paper. As a raw material to feed paper industry, one such species is Eucalyptus (camaldulensis) whose pulp yielding quality is reasonably high. This species was planted in 90s on large scale by the farmers in good faith to supply wood on sustained basis to the much trumpeted pulp wood producing plant under construction and thus help Pakistan to produce quality pulp and paper and displace 70% of that imported. The good faith vanished when the farmers could not find marketing of this product with the non-operating wood processing plant. They had to sell their products cheaply as fuel wood. This species is not being encouraged for planting due to its allelopathic effects on environment. 5.1 Historical Trend In the past years, due to the high rate of economic growth and especially owning to manifold increase in workers’ remittances since 2001, investment into the real estate sector also increased tremendously. Economic growth in general and boom in construction sector specifically in early years of the 1st decade of this century resulted in sudden increase in wood import. Total import of wood and wood products amounts to Rs. 5.4 billion in 2009. Importing round wood also compensates shortage of wood and wood based pulp and paper, veneers, plywood, etc. In 1992-93, Pakistan imported wood and wood products worth Rs. 4 billion, and since then the trend in rise of import value over the years may be seen in Figure 1.




Trend analysis shows that there has been gradual increase in the imports of wood and wood products up to 2001 but there was sudden and huge increment observed from Rs. 9.76 billion in 2001 to Rs. 17.58 in 2004 and then drastic decline at Rs. 4.5 billion in 2005(GOP 1990-2009). Drastic decline in the imports of wood and wood products in 2005 is mainly attributed to dumping of wood in the name of APTTA. The imports of Afghanistan had been exempted by the custom duties coupled with a “sympathetic consideration” regarding service charges, port levies and handling fees. Perhaps it was never imagined at that time that such trade mechanism would hurt infant economy of Pakistan incalculably by rerouting the merchandise in Pakistan depriving it from billions worth of revenue besides damaging the local industry. In 1996, the Government of Pakistan, on the hue and cry of local business unions and federations, placed 17 items on the negative list by banning their import under APTTA. In the year of 2001 this list was revised upward and seven more items were included in the list. On the request of Afghan government, the Government of Pakistan in March 2004 slashed this list to six items only and size of the list was further cut in 2005 again to three items (tobacco, cooking oil and auto parts) only (Jappa 2009). Implications of this removal of negative list on wood industry can be observed that wood imports declined very sharply (from Rs. 17.58 in 2004 to Rs. 4.5 billion in 2005) after the removal of negative list under APTTA in 2005. This result in massive dumping of imported wood coming in the name of APTTA and getting absorbed in the local markets. Thus a huge amount of imported wood is there in the Pakistani market that is much higher than the officially reported imports of wood and wood products. This clearly shows that most of the imported wood and wood based products comes through the means other than official means. According to Canadian Consulate Karachi, total Canadian exports to Pakistan have grown 25% from 2005 to 2006, with a further 95% increase in the first three months of 2007. Overall Canadian exports to Pakistan in 2007 may well exceed $600 million (Rs. 36.44 billion), and Canadian wood products exporters can claim a bigger share of this growth while FBR reports a total of only Rs. 5.28 billion of imports of wood and wood products in Pakistan for the respective year (DFAIT 2007). 5.2 Country-wise Imports of Wood and Wood Products in Pakistan The major suppliers of wood and wood products to Pakistan are indicated below:

Roundwood: Afghanistan, Myanmar, Malaysia and Singapore. Softwood is imported from Afghanistan and teak and other non-coniferous wood from Myanmar, Malaysia and African countries.

Veneer and plywood: Indonesia, China, Malaysia, Singapore and USA. Sawnwood: UK, USA, Romania, Myanmar, Malaysia and Singapore. Wood Pulp: Sweden, Switzerland, USA and South Korea. Pakistan imported a huge quantity of paper and

paperboard i.e. graphic paper, newspaper print. Paper and Paperboard: France, Russian Federation, Sweden, Japan, Italy, Finland and South Korea. Packaging material: Brazil, China, Italy, Poland, Spain, Romania and USA. Other paper and paperboard not elsewhere specified: France, Japan, Netherlands, South Africa, Norway,

Spain, UK and USA. Special Coated Paper: Asian Countries, Bulgaria, Finland, Germany, Italy, Norway, Poland, South Korea,

UK and USA. Copying Paper: China, Japan and UK. Household Sanitary Papers: China, Dubai, Norway, South Korea, Thailand, UK & USA. Packaging Cartons and Boxes: Austria, Australia, Dubai, Switzerland and USA.

5.3 Why Imports – Contributing Factors The trade policy is very important instrument to fill the production gap according to the demand, to control the volume of transaction of goods and to improve trade balance in the country. The policy is reviewed annually and released with the budget. The trade policy is primarily oriented towards liberalizing imports. Trade liberalizing policy in general affects the overall imports of the country while there are some specific reasons for high imports of wood and wood products as following:

Low wood Production coupled with increasing demand in the country: Country is severely short of forests, and hence timber plants. Timber demand is consistently increasing with the growth of population and economic development. Much of the economic growth in the country can be found in the housing and construction sector, which has been a catalyst for the rising imports of wood and wood products. With




virtually no commercial forests coupled with increasing wood consumption (both fuel wood and timber), Pakistan is reliant on imports to meet its need for wood and wood-based products.

High prices of local wood: Preferences of the consumer goes to the imported wood because of the price differentials. Islamabad timber market survey indicated that price of some most commonly used imported timber species is lower than price of the local wood (similar species) for example:

o Imported sawn Kail wood is currently priced at Rs. 950/cft as compared to un-sawned local kail wood priced at Rs. 1000-1400/cft while 30-35 % are losses when it is sawn so price gets up to almost Rs. 1900/cft in comparison of Rs. 950/cft of the imported kail wood (Table 3).

o Imported sawn Ashwood is currently priced at Rs. 2500/cft. Comparable is local Diyar rather ashwood is better than Diyar. Local unsawned diyar wood is priced at Rs. 1500-4000/cft while losses are 35% when it is sawn so price gets up to Rs. 5400/cft as compared to Rs. 2500/cft of the imported ashwood (Table 3).These price differentials cause high preferences towards the imported wood which ultimately results in huge imports.

Quality concerns: Demand for white ashwood is high for the construction due to its good grain quality and fine finishing. Similarly quality of imported wood based products is good than the local one for example presently the local pulp production is based on agriculture waste e.g. baggasse, wheat and rice straw, cotton lint, waste paper, kahi (elephant/ river) grass. This agriculture wastage is used for producing short-fibre pulp. Consequently, the quality of paper produced in Pakistan is inferior as compared to the imported one.

Shortage/lack of desired species (non-diversification): One of the important factors is that preferred species of wood are not available. Some of the preferred timber species like Ash wood (air dried), Mahogany, Red Marinetti, Yellow Marinette, Burma/African Teak, Oak, etc are not locally available. So these wood species are imported to fulfill the demand and local market is having these species in ample quantity.

6. Price Structure of Local and Imported Wood As more and more construction work is taking place, the demand for timber is bound to rise and hence the prices are increasing rapidly. The prices vary for different species due to its quality and specie characteristics. Even within each of wood specie price varies from minimum to maximum range depending upon its quality and producing area due to transportation cost and finishing. Current price structure of local and imported wood is given in Table 3. Table 3: Current price structure of local and imported timber

Type of Timber Local Timber Price (Rs./cft) Imported Timber

Price (Rs./cft) Un-sawn wood Sawn wood9 Sawn wood

Pertal 800-900 1080-1215 850 Kail 800-1400 1080-1890 950 Deodar/diyar 1500-4000 2025-5400 2500-4000 Cheer 800-900 1080-1215 Sheesham 700-2000 945-2700 Red Marinetti 2000 Burma Teak 4500-6000 Ashwood 2500 Mahogany 3000 Oak 3200 Golden Teak 1700

Source: Islamabad timber market survey (June 23, 2011)

These prices are much higher than where they stood few years ago, and are expected to rise because of rising demand. The booming development activities all over the country in past decade have been major factor affecting the prices of all material used in construction and development work. As per timber market survey, prices for local wood have increased 100% within one decade (on average 10% annually) whereas imported wood prices have increased by 40% within two years (approximately 20% annually). Increment in prices of imported wood is double than increase in prices of local wood increase because i) Increase in global wood

9 Prices of local un-sawn wood are taken from Islamabad timber market while prices for sawn wood are calculated by adding 35% on unsawn wood prices as losses are approximately 35% when it is sawn.




demand resulted in increased wood prices in international market, and ii) devaluation of Pakistani rupee make imported goods more expensive. 7. Issues

Scarcity and high prices of wood: The phenomenon of low per capita forest cover is getting compounded with decreasing forest resources and increasing population. Wood scarcity is an issue and increasing demand for wood is resulting in high prices of local wood and increased imports. The country basically inherited a very small forest area at the time of independence. Furthermore, the forest contractors wrought havoc with the already scarce forest area and inadequate or ineffective efforts were made to increase the production of timber and fuel-wood.

Adverse climatic factors: Most of the land area in the country is arid and receives too low precipitation to support profitable tree growth. In fact poor tree cover is due to adverse climatic and edaphic factors. The biggest problem is the continuing loss, fragmentation and rapid degradation of natural habitats. Species diversity and stocking density of forests is declining. The area of the public sector has not been expanded fast enough to keep pace with rapidly growing population and consequently the gap between out-turn vis-à-vis demands of fuel wood and timber has continued to widen. Furthermore, hardly any comprehensive effort was made to identify potential sites for rainfed commercial plantations or riverine plantations including the drainage channels in order to create new livelihoods for the unemployed.

Social, financial and political issues in forestry development: The issue of alternate energy sources for domestic fuel requirements of the local people has not been sorted out. Illegal cutting for energy need, income and commercial purposes by the communities in premises has been an issue. Involvement of the local communities into the forest management is not in practice. Though Master Plan for Forestry Development (MPFD) was developed including focus on involvement of communities/stakeholders in the process of forests management but the progress in increasing the forest area has been limited due to financial and social constraints. Due to the political situation, the country has drawn criticism from abroad. Multilateral and bilateral institutions/donors withheld their duly paid financial commitments. WB and ADB also suspended the already agreed upon loans with the previous government. Consequently, progress in the forestry sector development is becoming stunted. The real issue is that implementable action plan is still to be prepared which can be opted by the private sector for entering into commercial plantations.

Land security and conflicting issues: Promoting the concept of social forestry management is difficult in the absence of land security and conflicting demands on forest resources by many stakeholders. Private forest owners are more interested in commercial harvesting and are insensitive to the requirements of natural regeneration and restoration of the logged-over areas. The same situation exists in forests in inaccessible areas in the Gilgit Baltistan (Darel and Tangir) that are owned jointly by the tribal communities.

Allotment of Range or Wastelands in Potential Ecologies: There is hardly any effort for the allotment of state-owned wastelands to the private sector on longer terms basis so that the private sector can enter into commercial plantations along the rivers, canals, drainage channels, roads and railway track. Public-sector alone can’t handle this gigantic issue and without private-public partnership a sizable effort can’t be generated.

Afghan Pakistan Transit Trade Agreement: The imports of Afghanistan had been exempted by the custom duties under APTTA which resulted in massive dumping of imported wood into the market hunting local wood industry. Perhaps it was never imagined at the time of making that agreement that such trade mechanism would hurt Pakistan economy incalculably by rerouting the merchandise in Pakistan depriving it from billions worth of revenue besides damaging the local industry. Moreover, prices of timber have been rising continuously due to increasing demand and ban on commercial timber harvesting which has invited the mafias to take benefit by both legal and illegal ways. Precious deodar timber from Afghanistan has continued to flow into Pakistan illegally.

Impacts of Imports: The import of wood through legal and illegal means is an indication that country is supporting other countries to pay their labour, wood industry and transport system. Why the country can’t conduct feasibility for initiating commercial timber enterprises in the private sector so that new jobs and livelihoods can be generated within the country.

Lack of proper record: Lack of proper record of wood production/supply makes it difficult to accurately estimate current production & production gap for the purpose of strategy development. Wood comes not only from public forests but from farmlands and from millions of scattered trees in cities along road sides and on scrub lands. Data on forest production in public sector is obtained from documentation of forest departments where administrative recording system is commonly used. The difficulty arises in data availability from private forests and local communities where no records are kept.




Wood Security – scarcity and high price of local wood Increasing Import of Wood

o Rise in demand o Informal Import - Afghan Pakistan Transit Trade Agreement o Impacts of Imports

Low-equilibrium of Public-sector Forest Management and Development o Governance and Financial o Social and political o Land Security o Conflicts with Local Community and Vested Interests

Lack of Involvement of Private Sector o Adverse climatic factors o Lack of Support of Public-sector

Lack of Knowledge Base and Data o Lack of Potential Zonation for Commercial Plantations o Data of public and private resources

8. Options and Way Forward

The issue of low forest covers, increasing demand, and widening of production gap calls for forestry

sector development and most importantly the commercial timber plantation development on large scale. Fast growing and high yielding tropical species be planted such as teak (Tectona grandis), poplar (populous), semul (Bombax ceiba), Eucalyptus spp, neem (Azadirachta indica), shisham (Dalbergia sissoo), etc. Fuel wood plantations can be made in potential areas: a) hillocks which are not suitable for agriculture; b) along the rivers, canals and drainage channels; c) roads and railway track; and d) wastelands in potential ecologies and waterlogged areas including the head reaches of canals and watercourses. The steps like i) afforestation, ii) expansion in irrigation facilities for forests, iii) subsidized saplings, iv) credit facilities and v) increased development funds can accelerate the process of timber plantation development. Encourage private sector to develop factory base to produce wood products using local wood such as Eucalyptus so that wood produced can find the market.

Watershed based forest management and restoration progammes can be initiated. This needs to identify the forest management techniques for plantations that strengthen water quality and habitat in working forests and expanding technical knowledge for wetland forest restoration. Streamside forests can not only be the wood source but also help to improve aquatic habitat in addition to filtering nutrients from other land use. Some of the historically important forest types, such as Atlantic white-cedar, have been dramatically reduced in extent, particularly in poorly drained areas subject to many challenges for natural regeneration.

Forest policy formulation and revision is a continuous process. In order to involve all stakeholders in policy planning and formulation for forest management and commercial plantations it is felt that stakeholder fora should be established at national and provincial levels to serve as think tanks. Local communities/stakeholders should be involved in the forest resource management and commercial plantations, which is now a universally accepted doctrine and a measure for successful implementation of forest policy directives and working plans prescription. These fora could also be involved in monitoring policy implementation, deforestation and land-use changes. They may also play a role in forest certification and the wood products trade. Moreover, socio-economic factors, i.e. forest dependent communities at the expense of the forests, livelihood strategies being pursued by forest owners, widespread poverty, lack of alternative economic opportunities, and lack of alternative energy and wood sources should be addressed to have sustainable forest resource base. Sustainable forest management requires a redefinition of local rights, roles and responsibilities of various stakeholders and clear land tenure arrangements. Forest ownership needs to be considered in terms of benefits to individuals, communities and the nation as a whole.

Develop strategy and policy for encouraging the private sector to enter into Private-Public-Partnerships where government can provide land under either lease, or contract or any other mechanism which works. The objective should be to build plantation economy to provide livelihood to the local population and at the same time private sector with profit motive is a partner with the public-sector. The policy should also ensure that wood products industry also become a partner in developing commercial plantations so that there is a buyback arrangement from the farmers and small scale entrepreneurs. This will create a market pull for the private enterprises to enter into assured option of entering in to the business.




References

1. DFAIT. 2007. Market for wood products grows in Pakistan, Department of Foreign Affairs and International Trade, Canada.

2. Fischer et al. 2010. Study on Timber Harvesting in NWFP, Pakistan. Pak-Swiss Integrated Natural Resource Management Project, Swiss Agency for Development and Cooperation. ISBN: 969-9082-02-x.

3. GOP. 2009. Agricultural Statistics of Pakistan, Government of Pakistan. 4. GOP. 2008. Agricultural Statistics of Pakistan, Government of Pakistan. 5. GOP. 2006. Agricultural Statistics of Pakistan, Government of Pakistan. 6. GOP. 2005. Supply and Demand of Fuel wood and Timber for Household and Industrial Sectors and

Consumption Pattern of Wood and Wood Products in Pakistan, Ministry of Environment, Government of Pakistan.

7. GOP. 2003. Agricultural Statistics of Pakistan, Government of Pakistan. 8. GOP. 1998. Agricultural Statistics of Pakistan, Government of Pakistan. 9. GOP. 1994. Agricultural Statistics of Pakistan, Government of Pakistan. 10. GOP. 1992. Forestry Sector Management Plan, Ministry of Environment, Government of Pakistan. 11. GOP. 1990. Agricultural Statistics of Pakistan, Government of Pakistan. 12. Jappa. Z. H. 2009. Revisiting Pak-Afghan Trade Arrangements. The World Trade Review, 9(9). 13. NIPS. 2009. National Institute of Population Studies, Ministry of Population and Welfare, Pakistan.

Web links http://www.dnr.state.md.us/forests/programapps/cbcon.asp http://www.international.gc.ca/canadexport/articles/385160.aspx http://www.sbp.org.pk/IHFD/PDF/Brief-hf.pdf http://www.nationsencyclopedia.com/Asia-and-Oceania/Pakistan-FORESTRY.html ftp://ftp.fao.org/docrep/fao/005/AC921E/AC921E08.pdf http://www.spiritbride.org/A/spiritbride/creation/energy_solutions.htm

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Wood supply and demand analysis in pakistan – key issues