THEMATIC PROGRAMME ON
INDUSTRY DEVELOPMENT AND EFFICIENCY
Programme Profile
RATIONALE
Tropical forest industries create value from the use of forest resources and can contribute totheir sustainable management. The potential for revenue and employment can be increased
by, for example, expanding production and exports of further-processed products. At thesame time, where local processing capacities exceed the sustainable timber production
potential of forests, unsustainable and illegal activities can occur. National legal and policy
frameworks must consider the need for long-term sustainable industrial development.
Examples of problems in forest industries include structural deficiencies and managerial
weaknesses. The latter is particularly common in small and medium-sized forest enterprises(SMFEs). Management systems in SMFEs may be inadequate for the effective planning andcontrol of operations, posing difficulties for effective supply-chain management and producttracking. These enterprises may not have sufficient capacity to apply modern technology andmanagement methods, which may be a barrier to integration with established supply chains.
Access to financing (particularly for SMFEs) is often identified as an important constraint tosustainable tropical forest industry development. The situation is characterized as a vicious
circle in which low profitability results in a lack of sufficient funds for the renewal of capital
equipment, which further inhibits the profitability of the enterprise.
There are several underutilized opportunities for tropical forest resource-based industrial
development, including growing product demand in emerging markets, new markets forsecondary processed wood products, the expanded use of lesser-used species, new productand process innovations, and the commercialization of forest-based services. Many tropicalcountries need external support in order to make use of these opportunities with a view toincreasing employment and revenue generation, thereby contributing to poverty reduction.
GENERAL OBJECTIVE
The general objective of this Thematic Programme would be to strengthen the capacity oftropical timber-producing countries to: (i) increase the production, further processing andtrade of tropical timber and other forest products and services from sustainably managed andlegally harvested forests; and (ii) improve efficiency in the processing and utilization of tropicaltimber and timber products and non-timber forest products (NTFPs).
PROGRAMME STRATEGYThe Thematic Programme would operate at three levels with the aim of enhancing
sustainable forest industry development in ITTO producer member countries, with a particularemphasis on SMFEs.
At the enterprise level, the Programme would demonstrate and disseminate innovative
approaches and technologies, support business development, and strengthen management
and technical skills along the whole value chain in order to improve efficiency and value
adding.

At the country level, the Programme would support the mainstreaming of innovations,improving policy and legal frameworks, the promotion of investment, and the strengthening of
those institutions that serve industrial development.
At the regional/international level, the Programme would support the sharing of experiences,technology transfer and partnership-building.
Activities could be implemented through research and development, technology transfer andinternational cooperation. These could include:
support for industrial planning, investment promotion, business development and riskmanagement; improved concession management;
development of efficient harvesting and processing technologies; the utilization of wood
residues and wood wastes; the development of sustainable wood-based bioenergy
production; the organization of commercial supply chains and producer networks and thestrengthening of relevant stakeholder associations; and the improvement of managerial andtechnical skills in SMFEs through capacity-building, institutional strengthening, training andnetworking.
ANTICIPATED OUTPUTS/OUTCOMESThe intended outcomes of the Thematic Programme would be: (i) the increased supply andtrade of forest industry products and services with higher value added; (ii) improved efficiency
in the harvesting and processing of timber and NTFPs; (iii) reduced emissions from industrial
operations; (iv) improved policies to promote investment, facilitate the development andtransfer of technology; and (v) improved management capacity, particularly in SMFEs.
POTENTIAL PARTNERS/COLLABORATING AGENCIESThe Programme would be implemented in close cooperation with the ITTO Trade Advisory
Group and Civil Society Advisory Group, relevant international and regional bodies, andnational industry and trade associations.
INDICATIVE BUDGET AND TIMEFRAME
An indicative three-year budget for the Thematic Programme that would result in significant
improvements in the three tropical regions is US$10 million, most of which would be for pilot
projects and other country-level activities, supported by relevant regional and internationallevel activities.
POTENTIAL DONORS