Demand for timber has surged recently, particularly from China, creating investments into the timber industry in Africa. However, weak national forest governance systems exist in the supplier countries. This presentation covers the log-export ban in both Mozambique and Gabon. With evidence from these two cases supporting the same conclusion: log-export bans are ineffective. CIFOR Scientist Sigrid Ekman and Anne Terhegen, a representative of ICRAF as our partner on this project presented.

1. THINKING beyond the canopy
African log export bans and Chinese timber value
chains: Examples from Gabon and Mozambique
Anne Terheggen & Sigrid-Marianella Stensrud Ekman
Anne Terheggen & Sigrid-Marianella Stensrud Ekman

2. THINKING beyond the canopy
African log export bans and
Chinese timber value chains
 LEB (to increase domestic value-added, employment)
 Is it effective for countries whose main market is China?
 Context
 Case Studies
- Mozambique
- Gabon
 Impact of LEB

3. THINKING beyond the canopy
1. Context
 Surge in demand for timber, particularly from China
 Timber important export commodity
 Influx of investments into the timber industry in
Africa, particularly from China
 Weak national forest governance system in the
supplier countries

4. THINKING beyond the canopy

5. THINKING beyond the canopy
2.1 Mozambique
 China: 90%
Timber exports per destination (m3) 2010

6. THINKING beyond the canopy
2.1 Mozambique: structure of timber industry
SLH = Simple License Holders Ch = Chinese Mz = Mozambican

7. THINKING beyond the canopy
2.1 Mozambique: Trade in timber
2007: Log Export Ban
Discrepancy between Mozambican and Chinese data
Export of logs and sawn Jambire timber (% of total exports)
(German & Werts-Kanounnikoff, 2012)

8. THINKING beyond the canopy
2.1 The Chinese preference for logs
 Logs fetch a much higher price than sawn Jambire timber
in China
CNY/m3

9. THINKING beyond the canopy
2.1 Mozambique: illegal timber activity
 Two main types of illegal activity:
-cutting timber illegally
-illegal export of logs (violation of LEB)
 Bribes per container
- Forestry officials: $70 x 2
- Customs official: $70
- Provincial Department of Agriculture: $200
- Facilitator: $100
 Huge incentive to export timber illegally as logs

10. THINKING beyond the canopy
2.1 Mozambique: Incentives for illegal trade in logs
Illegal export of logs Export of sawn timber
Extraction: $300/m3
Container (11m3 of logs):
$3300
Bribes: $510
Shipping cost: $2000
Chinese market: $750 /m3
Revenue: $8250
Extraction: $300 /m3
Chinese market: $650 /m3
Revenue: $7150
Sawmill:
1m3 sawn timber → 1.4 m3 logs
1 m3 sawn timber: $420
Container (11m3) : $4620
Shipping cost: $2000
Profit: $530 / containerProfit: $2420 / container

11. THINKING beyond the canopy

12. THINKING beyond the canopy
2.2 China as a Final Market
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
logs products logs products
 Gabon’s export distribution (1997-2008, m3 in RWE)
Source: Terheggen (2010, 2011) & Kaplinsky et al. (2011)

13. THINKING beyond the canopy
2.2 Foreign investors’ value chain function
Forest stock
Company
inventory
Log
Tree
Port
inventory
Sawnwood
Inventory at
firm or port
Veneer
Plywood
Port
Port
b.iii
b.ii
b.i
a
drying
planing
varnishing
peeling
steaming
drying
Port
cutting
gluing
pressing
trimming
varnishing
optional
optional
optional
sawing
Inventory at
firm or port
Port
Inventory at
firm or port
China / EU EU and others
 China
 EU
Source: Terheggen (2010,
2011) & Kaplinsky et al. (2011)

14. THINKING beyond the canopy
2.2 Simulation exercise
 Test of the viability of domestic processing (all logs are
channeled into a single sub-chain)
 Extractive sector = economically ‘superior’
 Processing sector = economically ‘inefficient’
Source: Terheggen (2010, 2011) & Kaplinsky et al. (2011)

15. THINKING beyond the canopy
2.2 Value added & unit profit
distribution
Value-addedUnitprofits(πu)
Source: Terheggen (2010, 2011) & Kaplinsky et al. (2011)

16. THINKING beyond the canopy
3. Conclusion
 Should the log-export ban be maintained?
- Value creation or destruction?
- Employment creation?
- Loss of tax revenues /increased corruption
- Effect on the capacity to control illegal logging

17. THINKING beyond the canopy
3. Conclusion
Evidence from these two different cases support the same
conclusion: LEB is ineffective
Pursuing the wrong development strategy, especially in light
of the Chinese economic environment.