311

INTERNATIONAL TROPICALTIMBER COUNCIL

Distr.
GENERAL
ITTC-JC(XLV)/2 – Annex II
26 September 2011
ENGLISHFORTY-SEVENTH SESSION
14-19 November 2011
La Antigua Guatemala, Guatemala

META-EVALUATION OF PREVIOUSLY EVALUATED ITTO
PROJECTS
Lessons learned & good practices towards sustainable
management of tropical forests
Summary Report
12. Markets, marketing and trade

Markku Simula, Hosny El-Lakany and Ivan TomaselliPage 2THEMATIC SUMMARY REPORT No. 12Markets¸ Marketing and Trade1.

INTRODUCTION

Markets, marketing and trade are important areas to develop and sustain a healthy timber economy. Markets
ultimately create the value for tropical timber and timber products and thereby establish preconditions forsustainable forest management (SFM). Trade contributes to generations of income and employment andsupports investments for competitive operations, which can ensure sustainability of the economic benefits
derived from timber and non-timber forest products and services.
Several ITTA Objectives reflect the importance of actions that are necessary to improve markets, marketingand trade of tropical timber and timber products. Among the ITTA Objectives relevant to this thematic areaare objective (b) Providing a forum for consultation to promote non-discriminatory timber trade practices;
objective (d) Enhancing the capacity of members to implement strategies for achieving exports of tropicaltimber and timber products from sustainably managed sources; objective (e) Promoting improved
understanding of the structural conditions in international markets, including long-term trends in consumption
and production, factors affecting market access, consumer preferences and prices, and conditions leading toprices which reflect the costs of sustainable forest management; objective (h) Improving market intelligenceand encouraging information sharing on the international timber market with a view to ensuring greatertransparency and better information on markets and market trends, including the gathering, compilation anddissemination of trade related data, including data related to species being traded; and objective (k)Improving marketing and distribution of tropical timber and timber product exports from sustainably managed
and legally harvested sources and which are legally traded, including promoting consumer awareness.
The International Tropical Timber Organization (ITTO) has financed several projects and activities related tothe development of markets, marketing and trade of tropical timber and timber products. These projects havemainly been aimed at improving market transparency and build up capacity in market information systems,marketing and trade development.
The recently launched ITTO Thematic Programme on Trade and Market Transparency is expected toprovide increased support to this critical area in the work of the Organization.

2.

KEY ISSUESThe market requirements for timber and timber products are constantly changing due to economicconditions, regulatory changes related to trade and increasing attention given to environmental aspectsof tropical timber products. This calls for intensive monitoring of new developments and identification ofimplications for tropical timber producers. Without assistance, tropical timber producing countries willcontinue to face difficulties in having facilitated access to import markets.

Complex export and import procedures in both developed and developing countries, lack of clarity ofsanitary/phytosanitary and other regulations, and high transaction costs paid to trade intermediaries areother barriers for trade development.

Adequate knowledge on the market prospects is critical for investment decisions and policy design but it
is frequently insufficient. High risks need to be taken due to lack of detailed market information.

Information on the structure of the value chain of tropical timber and timber products is inadequate,
limiting strategic planning for vertical integration at enterprise level and policy design at national level.

Many market studies carried out are too generic to be useful for marketing development at enterpriselevel.

Small and medium-scale enterprises have limited access to available market information limiting theirpossibilities for entering new business areas.

Few companies in the timber industry have adequate market information systems. In general, thecapacity to analyze available market information is also limited.

Page 3

Knowledge on domestic and regional markets is often limited in the timber sector which has traditionallyfocused on main import markets. This has resulted in loss of significant economic opportunities.

Trade of tropical timber is heavily concentrated on a relatively few number of main commercial species.
Diversification would contribute to economic efficiency of forest management and utilization, but it has
been hampered by lack of information on markets and weak marketing capacities to bring new products
to the market. In particular, end uses and market characteristics of individual species, including lesserused species (LUS) and plantation species, are poorly known.

Trade development efforts have often been valuable but need active follow-up work by participatingcompanies, which has often been lacking.

In producing countries, the legal and policy frameworks are often inappropriate with bureaucratic
customs and inspection procedures and associated high transaction costs, corruption, as well as
inappropriate taxation and inadequate incentive mechanisms. There is a need for trade facilitation
measures to address these problems.

Interest and commitment of companies to participate in projects to strengthen marketing capacity hasoften been limited due to lack of understanding of potential benefits. Pilot companies have not been
eager to share new knowledge on markets that has been generated.

Private sector bodies such as industry and trade associations are too weak in most tropical timber
producing countries to play an active role in trade development.

3.

LESSONS LEARNED

Incentives to promote foreign trade have been a decisive factor in the expansion of the wood industry inseveral countries.

Regulatory measures to limit exports of logs and primary processed products tend to distort local
markets but can be a transitional measure to develop trade in further processed products.

Any market information improvement should be based on systematization of information rather than ad
hoc studies. Continuous monitoring of market developments is necessary. On the other hand, ad hocstudies are often needed for kick-starting marketing in new products or markets.

Unreliable projections of demand and supply make planning at enterprise and national levels difficult,leading to taking unnecessary risks which can be significant both for the government and individual
enterprises.

Depending on the situation, market studies are needed to cover a broad scope for policy design andevaluation and be specific to serve for information needs of individual companies.

Market studies are also needed for bioenergy such as fuelwood and charcoal when markets aredeveloped for these products

Information on market potential on LUS needs to be complemented by inventories establishing potential
supply and by technical studies on processing aspects. Market promotion of LUS is only possible
afterwards.

Developing standards for timber and timber products and associated quality control can help improve
competitiveness.

Support to development of marketing strategies and strengthening of marketing skills can be piloted withfew companies but mechanisms are needed to share knowledge and experience broadly.

Support to improving market information and marketing can often be usefully provided through industry
and trade associations.

Page 44.

GOOD PRACTICES

Identification and proper assessment of optional measures of export trade regulation (export bans forlogs, export taxes and quotas, etc.) is necessary for designing policy measures for the development ofexports in further processed products.

Special studies can identify barriers to trade both in exporting and importing countries and propose
measures to eliminate or reduce trade barriers.

Clarification of the needs for information is important for a proper design of market studies and market
information systems.

Continuous updating of market and resource information is necessary due to changing demand andsupply conditions.

Development of market information systems and marketing capability needs specific targeted efforts,including training.

Pilot enterprise approach in improving market information and marketing capability can be useful but
possible conflicts of interest among competing enterprises need to be addressed.

Trade development projects need to include provisions for follow-up activities by participating enterprises
to ensure their impacts.

Private sector executing agencies need to have an adequate management capacity for project
implementation.

Effective marketing promotion can be undertaken through well-organized roundtables between buyers
and suppliers in the country of origin with sufficient participation on both sides.

Effectively dissemination among potential beneficiaries is critical for investments in improving market
information. Special measures may be needed to convert the data into information which is useful forsmall and medium-sized enterprises.

Development of trade and market networks is helpful for ensuring sustainability of market promotion
projects.

Page 5SOURCES
This thematic summary is based on the ex-post evaluation reports of the following projects:
PD 109/90 Rev.4 (I)PD 24/95 Rev.1 (I)PD 7/94 Rev.3 (M,I)
PD 15/96 Rev.2 (M,I)
PD 51/00 Rev.2 (I,M)
PD 146/02 Rev.1 (I)PD 167/91 Rev.1 (M)PD 35/94 Rev.4 (M,I)
PD 25/96 Rev.2 (M)PD013/96 Rev.1 (F)PD 17/92 Rev.4 (I)

ASSISTANCE TO MODERNIZATION, RESTRUCTURING AND DEVELOPMENTOF WOOD-BASED INDUSTRIES IN COTE D'IVOIRE
THE IDENTIFICATION, PROPERTIES AND USES OF THE TROPICAL TIMBERIMPORTED TO CHINA FROM LATIN AMERICA
INFORMATION AND TECHNICAL ASSISTANCE FOR PRODUCTION ANDTRADE ON TROPICAL TIMBERUTILIZATION, COLLECTION AND TRADE OF TROPICAL NON-WOOD FORESTPRODUCTS IN THE PHILIPPINESIMPROVEMENT OF RUBBERWOOD UTILIZATION AND MARKETING INTHAILANDPROMOTING SUSTAINABLE UTILIZATION OF BAMBOO THROUGHCOMMUNITY PARTICIPATION IN SUSTAINABLE FOREST MANAGEMENTDIAGNOSIS AND EVALUATION OF THE BRAZILIAN FORESTRY SECTORFOREST PRODUCTS MARKETING ORGANIZATION FEASIBILITY STUDYCHINA'S CONSUMPTION OF FOREST PRODUCTS AND ITS DEMAND FORTHEM IN THE INTERNATIONAL MARKET BY THE YEAR 2010
MULTIPLE-USE MANAGEMENT IN THE MACAUA NATIONAL FOREST BASEDON RUBBER ESTATES - PHASE I: DEVELOPMENT OF MASTER PLAN TOSUPPORT COMMUNITY ORGANIZATIONTECHNOLOGY TRANSFER/COMMERCIALIZATION OF SELECTEDCOCOWOOD UTILIZATION TECHNOLOGIES