Forest Products Marketing and Business Management & the UNECE/FAO Team of Specialists on Forest Products Markets and Marketing: Joint Pre-Conference to the IUFRO World Congress in Seoul, Hokkaido, Japan, 18 Aug. 2010

1. Timber Production, Prices and End-use in a Forest Business in Central Hokkaido, Japan Toshiaki Owari and Koji Okamura The University of Tokyo, Japan

2. Background Sustainable forest management refers to “stewardship in a way that maintains biodiversity, productivity, regeneration capacity, vitality, etc. to fulfill relevant ecological, economic and social functions” A firm economic basis is necessary for the implementation of sustainable forest management A landowner can improve its economy by … … reducing production/management cost (cost less) … increasing timber production (produce more) … marketing products at a higher price (add value) 2010/08/18 IUFRO Japan (Owari, T.) 2

3. Purpose It is important for landowners to create and implement value addition strategies While wood is often regarded as “commodity” attributed with a low price, some tree species and assortments are extremely valuable in the specific markets To explore value addition possibilities in the marketplace, this paper examined 1) timber production, 2) timber sales & prices, and 3) theend-use in a forest business in Hokkaido, Japan A case analysis was conducted at the University of Tokyo Hokkaido Forest 2010/08/18 IUFRO Japan (Owari, T.) 3

4. 2010/08/18 IUFRO Japan (Owari, T.) The Univ. of Tokyo Hokkaido Forest Located in Furano city, Hokkaido 43°10´- 20´ N, 142°20´- 40´ E 22,733 ha of forestland Established in 1899 Natural mixed forest with coniferous and broad-leaved species Conifer: fir, spruce Broad-leaved: linden, maple, birch, oak, etc. The mean growing stock is 210 m3/ha 4

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7. Timber Production 2010/08/18 IUFRO Japan (Owari, T.) 7

8. Tree Cutting 2007 - 2009 2010/08/18 IUFRO Japan (Owari, T.) 8 Cutting volume 21,000 – 27,000 m3/year % by forest type Natural forest: 73 - 92% Planted forest: 8 - 27% % by tree species Conifer: 67 - 85% Broad-leaved: 15 - 33% % by sales Stumpage: 78 - 86% Log: 12 - 22%

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10. Log Production 2007-2009 Production volume 2,500 - 3,500 m3 Yield rate (Tree > Log) 74 - 77% % by species Softwood: 52 - 62% Hardwood: 38 - 48% % by sales Landing: 96 - 99% Auction: 1 - 4% 2010/08/18 IUFRO Japan (Owari, T.) 10

11. Timber Sales & Prices 2010/08/18 IUFRO Japan (Owari, T.) 11

12. Timber Sales 2007 - 2009 2010/08/18 IUFRO Japan (Owari, T.) 12 Sales value (tax excl.) 110 - 123 mil. JPY 1.3 – 1.4 mil. USD (1 USD = 85.4 JPY) % by tree species Conifer: 38 - 58% Broad-leaved: 42 - 62% % by sales Stumpage: 46 - 52% Log (landing): 29 - 46% Log (auction): 8 - 22%

13. High-value Timber Production 2010/08/18 IUFRO Japan (Owari, T.) 13

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15. Production & Sales 2009 2010/08/18 IUFRO Japan (Owari, T.) 15 * Stumpage: volume of standing trees; log: volume of logs

16. Sales by Auction 2009 2010/08/18 IUFRO Japan (Owari, T.) 16

17. End-use 2010/08/18 IUFRO Japan (Owari, T.) 17

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22. Summary 2009 2010/08/18 IUFRO Japan (Owari, T.) 22

23. Discussion Why can log buyers afford to pay a very high price? High product yield (fancy veneer) Manufacturing innovation (0.4 - 0.6 mm > 0.1 - 0.2 mm thick) Why are end-users willing to buy/use fancy veneer? Aesthetics, scarcity, and low unit cost 2010/08/18 IUFRO Japan (Owari, T.) 23 0.2 mm 1 m3 1 m2 x 5,000 sheets x 2,000 sheets) (0.5 mm 1 m3 x 0.3 (yield rate) x 5,000 m2/m3 x 7 USD/m2= 10,500 USD 1 m3 x 0.3 (yield rate) x 5,000 m2/m3 x 21 USD/m2= 31,500 USD

24. Conclusions A very high log price can be realized in the markets where end-products are traded in units of “m2” To explore value-addition opportunities, landowners should collaborate with wood product industries … … to build and manage the brand equity … to develop new products using other tree species … to expand the markets to other countries 2010/08/18 IUFRO Japan (Owari, T.) 24

25. Thank you! We wish to thank current and former staffs at the University of Tokyo Hokkaido Forest for their continuous and great efforts in forest management (Corresponding address: owari@uf.a.u-tokyo.ac.jp) 2010/08/18 IUFRO Japan (Owari, T.) 25