Báo cáo khoa học nông nghiệp " Improvement of operator skills and technology in small rural sawmills in Vietnam Domestic market requirements for sawn timber (sizes and grades), evaluate quality aspects " pptx

Table 1: Average annual wood industry capacity and production in Vietnam 2001-2005 Source: Vietnam association of timber and forest products, 2005 Table 2 shows that national consumptio

Ministry of Agriculture & Rural Development

CARD Project Report

027/06/VIE Improvement of operator skills and technology in small

rural sawmills in Vietnam

  Domestic market requirements for sawn timber  (sizes and grades), evaluate quality aspects 

By 

Phan Duc Chien, Philip Blackwell and Peter Vinden

April 2010

Table of Content

1.  Domestic wood market of Vietnam 3 

2.  Forest products industry and timber processing technology 4 

3.  Timber supply of Vietnam 5 

3.1.  Forest land of Vietnam 5 

3.2.  Domestic timber production 6 

3.3.  Sawn wood production and trade 7 

3.4.  Furniture production and trade 8 

3.5.  Wood based panel production and trade 8 

3.6.  Pulp and paper production and trade 9 

3.7.  Wood chip production and trade 10 

3.8.  Vietnam’s timber use and imports 10 

3.9.  Timber imports .11 

Domestic market requirements for sawn timber    Page 3 of 12 

1 Domestic wood market of Vietnam

Domestic wood consumption in 1993 was estimated as follows: Sawmills used more than 2 million m3 round wood; MDF producers used 70,000 m3, and particle board manufacturers used 140,000 m3 National demand for wood was mainly satisfied through natural forest exploitation and imported wood while plantation forests (consist of rubber) played only a limited role due to the small amount of saw logs produced by plantations

The wood processing industry in Vietnam plays an important role in increasing the value of products produced by the forestry sectors Forestry products in Vietnam are diverse and include many classes, from products having undergone minimal processing such as sawn timber, flooring, plywood and chipboard to more processed products for direct consumption such as tea chests, beds, wardrobes, sofas and other furniture

Table 1 shows wood industry capacity and production in Vietnam for the period

2001-2005 Sawn timber remains the most important product by volume although the production of woodchips is also considerable Since 2005 there has been significant growth in the production of wood furniture in Vietnam and this is likely to increase as long as supply remains For most products, however, installed capacity exceeds production due to a shortfall in supply resulting from diminishing timber extraction in Vietnam over the past decade

Table 1: Average annual wood industry capacity and production in Vietnam 2001-2005

(Source: Vietnam association of timber and forest products, 2005)

Table 2 shows that national consumption in 2005 exceeded that in 2003 for almost all wood products and that the value of exports increased at a much higher rate reflecting the focus on value addition and increase in the export of furniture

Table 2: Volume of wood consumption in 2003 and 2005

Consumption of domestic wood and export (‘000m 3 ) 7,420 10,063

Large size timber in industrial sector and civil construction 4,561 5,373

Small timber for panels and wood chips for export 1,649 2,032

Value of exported forestry products (million US$) 721 1,700

2 Forest products industry and timber processing technology

Currently there are 1,200 timber processing enterprises in Vietnam of which 24% are

state owned, 10.4% are joint ventures and 65.6% are non-state owned enterprises

The technology used in Vietnam’s wood processing industry has progressed in

recent years although there is still a big gap in comparison with the most advanced

countries In the future, if there is no renewal of equipment or update in technology, it

will be hard for wood products from Vietnam to compete in international markets

The total capacity of the saw milling industry is estimated to be 3 to 4 million m3 per

year In 2003, MDF production capacity was 54,000 m3 although recently, a factory

with 60,000 m3 capacity was established Particle board production capacity was

estimated at 80,000m3 in 2003 and in 2001, 6 plywood factories were in operation

Most of the country’s sawmills are small and produce only 1000 to 2000 m3/per year

In general, investment in capital is low and the mills can only meet limited demand for

products that are of insufficient quality for higher paying markets The mills do,

however, employ many labourers and take advantage of people’s available time

outside of harvesting periods

Timber processing technology includes many different areas covering the full

spectrum of forest products production from harvesting to finishing of highly

processed products The production of sawn wood in the past was commonly done

using crosscut saws and band saws Both types of saw are, however, slow, have low

capacity and are inefficient in terms of wood loss During recent years, vertical

electrically controlled hole saws have been increasingly used and many countries

have applied digital technology to design a cutting map before sawing This

technology has, however, not been applied in Vietnam

With respect to timber drying, there are four methods that are generally available (1)

Freeze drying, (2) heat drying, (3) steam drying and (4) ‘air drying Steam drying is

the most commonly used method in Vietnam

In general, investments in wood and forest products processing equipment have

been insufficient in Vietnam and innovation has fallen behind, especially in the

Northern region Proportions of consumption accounted for by different processes

and products are as follows:

Domestic market requirements for sawn timber    Page 5 of 12 

• Saw milling and wood preliminary treatments account for approximately 40%

of the total processing capacity, including domestically manufactured band saws and disk saws as well as one-sided planers, moulding machines and drills the majority of which are imported from Taiwan, China, Czech and Japan

• Equipment for refining and finishing timber to produce furniture account for about 50% of the total processing capacity and includes three and four side-planers, one or two-axis milling machines, tenon milling machines, multi-bullet drillers, polishing machines, lathes and drying-rooms In recent years, most establishments have imported comprehensive assemblies and high-tech equipment from Japan, France, Taiwan and South Korea

• Lines for producing panels accounts for 10% of the total processing capacity Some lines are synchronous but many use dated technology and only lines installed since 1995 utilise modern technology and equipment

• Total processing capacity is around 4 million m3 round timber per year, but only 2 million m3 per year are actually processed

Increasing investments have been made in the pulp and paper industry However, in general, Vietnam’s paper manufacturing facilities are small scale and use dated technology These factories also cause a lot of pollution, especially those producing non-wood pulp, and paper produced in Vietnam is of low quality and cannot compete with imported paper either for quality or price Recently, new investments have enabled purchase of new technology but product quality hasn’t met the export requirements and other factors also need to be dealt with

Currently there are nearly 300 paper production facilities in Vietnam but the total capacity is under 20,000 tonnes The scale of a company necessary to be competitive is about 10 times higher than the current average capacity For example, new facilities in Thailand, China and Indonesia have capacities of over 500,000 tonnes

In 2003, Vietnam produced nearly 640,000 tonnes of pulp and consumed approximately 2.6 million m3 wood Major raw materials for these companies are wood-pulp, waste paper and bamboo and in 2003 the estimated proportions consumed were: 80% wood pulp and 20% non-wooden pulp and waste paper Demand for wood pulp imports has been gradually increased due to increased requirements for higher quality inputs

3 Timber supply of Vietnam

3.1 Forest land of Vietnam

In 2005 the Government of Vietnam categorized 19.02 million ha as Forest Land This area is broken down into three land use classifications: Production Forest covering 7.1 million ha, Protection Forest covering 9.47 million ha, and Special-Use Forest covering 2.32 million ha The Production Forest area is dedicated to supplying timber from natural forests and from plantations

In 2006, Vietnam’s government has reclassified the national forest land There are 16.24 million ha that have been categorized as forest land Moreover, area for production forest has received a priority in reclassification As stated in Vietnam Forestry Development Strategy 2006-2020, 8.4 million ha or 51.72% of the national forest land have been defined as production forest Meanwhile, protection forest has

received less attention than previous time The area of protection forest has reduced from 9.47 million ha to 5.68 million ha

The largest areas of Production Forest are located in the Northeast, North Central, and Central Highland areas, which together comprise around 75 percent of the total Production Forest area Of the total Production Forest area 3.1 million ha were classified as natural forest and 1.4 million ha as plantation forest, leaving 2.6 million

ha as unused land, which presumably implies lack of forest cover

The Government’s goal is to increase the area of forest cover, from 12.6 million ha in

2005 to 15.6 million ha by 2020, largely by increasing the planted forest area within Production Forests from 4.48 million ha to 7.78 million ha To achieve this, the Government has implemented a number of policies to encourage rural farmers to plant trees These include policies on forest land allocation, benefit sharing, restructuring of state forest enterprises, forest land classification, establishment of wood processing units, and removal of barriers that prevent planters from selling their timber

3.2 Domestic timber production

To address a long-term deforestation trend, the Government implemented a series of measures to drastically decrease logging In 1992 the government imposed an export ban on logs and sawn wood, followed by a partial logging ban in 1997, and by a severe curtailing of the annual allowable cut (AAC) to only 300,000 m3 per year in

1999 (Barney 2005) By 2003, legal harvesting of natural forests had totally ceased in northern Vietnam, in the Red River delta, and in the south-eastern Mekong Delta (Brown and Durst 2003) However, analysts point out that actual harvests greatly exceed the AAC For example, Waggener (2001) estimates total removals of large diameter (>30cm) wood at 1.35 million m3 This is includes timber from illegal harvests attributable to commercial harvesting operations, from small-scale operators, and from land clearing for cash cropping (Barney 2005)

In tandem with reducing harvests of natural forests, Vietnam embarked on a program

to aggressively increase the supply of wood from timber plantations The Five Million Hectare Reforestation Program (5MHRP) was launched in 1998 and includes reforestation of degraded land, improved forest law enforcement, and natural regeneration of logged over areas New planting is constrained by a lack of suitable land, and the 5MHRP has had to focus on the northern region where there are few industrial scale wood processing factories (PTMFPV 2008) According to MARD, by

2020, plantations will be able to supply 20 million m3 of timber (PTMFPV 2008)

Domestic timber production has increased at around 10% annually since 2000 (see the data in Table 3 below) This has been achieved by a dramatic increase in production from timber plantations, which has more than offset the reduction in timber from natural forests While the volume of logs harvested from natural forests has declined from 1.8 million m3 in 1997 to 180,000 m3 in 2008 The volume of logs from plantations increased from 1.9 million m3 to 3.38 million m3 over the same period

Domestic market requirements for sawn timber    Page 7 of 12 

Table 3 Harvested logs from natural forests Unit: m3

1991-1995

3.583.000 2.248.000 1.275.000 150.000 150.000 180.000 250.000 (Source: Department of Forestry, 2009)

Every year, ten thousands hectares of Vietnam’s natural forest are being cut for different purposes, such as hydro power plant, irrigation, agriculture or other industrial plantations (rubber, pepper …) Actually, there is a million cubic metres of logs that have been taken from the converted area However, there is no document recorded about the harvested volumes In this report, estimated volumes of logs taken from the converted area are given below

Table 4 Converted area of natural forest and the harvested logs

Source: Department of Forest Protection, 2009

The North-eastern region produces the largest volume of plantation logs, followed by the Mekong Delta and North Central regions In 2008, the Northeast produced 943,000 m3 or 30% of the harvested logs; the Mekong delta region produced 608,000 m3 or 18.7% of the harvested logs; and the North Central region produced 560,000 m3 or 17.2% of the harvested logs The six most important log producing provinces are Tuyen Quang, Yen Bai, Quang Ngai, Phu Tho, Gia Lai and Binh Dinh

In 2008, these six provinces produced 1.1 million m3, or 33.4% of Vietnam’s logs The shift from natural forests to plantations has brought about a change in the composition of logs produced Firstly, there has been a shift from native species to exotic planted species It is estimated that 75% of logs harvested from plantations are Acacia spp or Eucalyptus spp The proportion of Acacia spp logs is likely to dominate in the future, as most new planting is done with Acacia Secondly, the average diameter of logs has decreased Field data from Phu Tho Province indicate that Acacia and Eucalyptus plantations are generally harvested seven or eight years after planting when most logs have a diameter under 25 cm

3.3 Sawn wood production and trade

Most sawmills in Vietnam are privately owned and, although accurate data are missing, the total number of units probably exceeds ten thousand Most of the sawmills were established after 2003, and annual processing capacities range from one hundred m3 to several thousand m3 per unit Recorded production and installed capacity have increased significantly over the past decade to reach 5.3 and 6.0 million m3 respectively (Table5) Actual figures are probably larger as some production and capacity is likely to be unrecorded

Table 5: Sawn wood production by ownership, and total capacity, 1995 to 2008 (1000 m3)

Year

State

owned

companies

Private companies

Companies with foreign investment

Total production

Total installed capacity

Source: Draft of Forestry Development Strategy 2006 – 2020, 2006, GSO 2009

3.4 Furniture production and trade

Furniture manufacture for the export market dominates Vietnam’s wood processing industry Since 2000, Vietnam’s furniture sub-sector has changed from being comprised of small-scale enterprises producing for the domestic market, into export oriented industrial scale production and Vietnam has become the fourth largest global producer of furniture Vietnam’s lower wage scale relative to its neighbours drives production and export growth and has helped attract foreign investment in this sector It is likely that Vietnam’s accession to the WTO will strengthen the growth opportunities of Vietnam’s furniture industry (ITT0 2007)

Wood product in general is one of Vietnam’s top exports, ranking fifth behind crude oil, textiles, footwear and seafood Exports increased on average 43 percent annually between 2000 and 2008 to reach an estimated US$ 2.8 billion in 2008

Vietnam has around 1,900 companies producing furniture Furniture factories are mainly located in three areas: the Ho Chi Minh City-Dong Nai- Binh Duong economic triangle which is the largest high-end wood processing complex of the country; the Central Highlands (Tay Nguyen) and the southern central region; and Hanoi and its surroundings (VET 20/10/2006) According to Vietnam Economic Times, wood processing employed 170,000 workers in 2006

Some processing firms are large scale, are listed on a public stock exchange, and may include foreign financing (VET 11/06/2007) Of 421 companies with foreign investment, 183 (43 percent) had investors from Taiwan (MPI 2008)

Vietnamese wood furniture and handicrafts are shipped to over one hundred countries and territories around the world (VET 20/10/2006), but the United States, the European Union and Japan together comprise over 80 percent of the market Exports to the United States, which in 2007 made up 42 percent of the market, were boosted by a bilateral trade agreement signed with the Unites States in 2001

3.5 Wood based panel production and trade

Domestic use of wood based panels far exceeds domestic supply and a large portion

of MDF, particleboard and plywood used in Vietnam’s construction sector is imported In 2008, domestic consumption of MDF, particleboard and plywood totalled 245,700 m3 and only around 46% of this was produced domestically The

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Government plans for a major expansion in wood based panel production and the Forestry Development Strategy states that by 2010, there are to be 21 particleboard factories with a total capacity of 538,000 m3 of product per year and 10 fiber-board factories with a total capacity of 375,000 m3 of product per year

Table 6: Wood based panel consumption, imports, capacity, and production 2003, 2005, and 2008

Domestic production capacity 54,000 80,000 169,000

Domestic produced volume 30,000 35,800 77,000

2 Particle board (m3) 2003 2005 2008

Domestic production capacity 80,000 80,000 80,000

Domestic produced volume 60,000 64,000 57,000

Domestic production capacity 0 0 70,000

4 Panel board (m3) 2003 2005 2008

Source: Draft of Forestry Development Strategy 2006 – 2020; GSO, 2008; and others

3.6 Pulp and paper production and trade

MARD (2006) lists 64 paper and board producers, concentrated in the Northeast, Red River Delta, and Southeast regions The dominant player in Vietnam’s pulp and paper sector is the state-owned Vietnam Paper Corporation (Vinapimex), which in

2005 had 20 subsidiaries with a total annual production capacity of 171,000 tonnes (Paperloop, cited in Barney 2005) The largest Vinapimex producer is Bapaco, located in Bai Bang near Hanoi The mill began production in 1982 and produces mainly printing and writing paper, predominantly for domestic consumption The mill has one pulp line with an annual production capacity of 70,000 air-dried tonnes and two paper lines with a total capacity of 100,000 tpa Two other major pulp mills owned by Vinapimex are Tan Mai and Dong Nai near HCMC and together, these three mills account for 50 percent of Vietnamese production (ADB 2000) The remainder of the sector is composed of around 37 mills owned by provincial governments or by the private sector These mills tend to be small scale with production capacities generally less

FAO data show a leap in total paper and paperboard production between 1998 and

2004 after which total output remained constant at close to 900,000 tonnes through

2006 The largest share of production consists of the category that encompasses wrapping paper, packaging paper, and board

According to Vietnam Economic Times, the pulp and paper sector is poised for aggressive expansion in the period 2006 to 2010 The Viet Nam Paper Association’s goal is an expansion in annual pulp production capacity to 1 million tonnes and 2 million tonnes in paper production capacity The Association estimates that USD 1.15 billion will be mobilized for construction of new pulp and paper mills, and an additional USD 710 million will be used for expansion of existing mills Much of this funding is likely to come through joint venture arrangements (VET 26/10/2006) In early 2007, the Viet Nam Paper Association projected a national production of 1.13 million tonnes of paper and 905,000 tonnes of pulp for the year (VET 24/01/2007) Most pulp and paper production in Vietnam serves the domestic market and paper exports reached only 30,000 tonnes in 2006 (FAO 2008) The only significant exporter appears to be Bapaco, which according to company representatives exports around 20,000 tonnes of paper per year Vietnam’s pulp and paper producers are unable to match the prices set by the major Indonesian and Thai producers, such as APP, APRIL, Phoenix/Siam Pulp and Advance Agro

3.7 Wood chip production and trade

In the past decade the production of wood chips for export markets has increased Wood chip production capacity has increased from an estimated 635,000 BDT in

2005 (Barney 2005) to 1.8 million tonnes in 2009 (MARD 2009) The diversion of wood chips from the national pulp and paper industry to export markets appears to

be the result of inefficiencies in national pulp production sector (Roda and Rathi 2006) Also, unlike round-wood and semi-processed wood products, chips and particles are exempt from export taxes This all leads to exporting chip mills being able to pay higher mill-gate prices than the domestic pulp mills

According to Barney (2005) wood chip mills in Vietnam are usually joint ventures between provincial forestry departments and foreign partners Wood chip producers tend to have long term supply contracts with their foreign joint venture owners, which include Japanese, Korean and Taiwanese firms

According to FAO data, Japan has been the main importer of wood chips and particles from Vietnam over the past decade; however, since 2003 China’s share of imports has been increasing steeply and if this trend has continued after 2006 is likely that China has replaced Japan as the main market Korea is a minor market for Vietnamese wood chips, and other countries’ imports are not of a significant level In

2006, a significant fraction of exports went to ‘unspecified’ countries These may or may not include Japan and China

3.8 Vietnam’s timber use and imports

Furniture production has emerged as a major industry in Vietnam and as a major consumer of sawn wood Other important products include wood based panels, pulp and paper, and wood chip production In 2008, Vietnam’s wood industry used 11