Impact of Covid 19 on timber trade

For information on the progress of the spread and the disease situation: https://www.worldometers.info/coronavirus/

We bring you here, and will continue to do so in the coming weeks, the information provided by our members and partners regarding the tropical timber market and the activities of companies in Europe, Africa and Asia.

INTERNATIONAL

In response to the common challenge that the world has faced in recent months in the fight against COVID-19, FAO has published an analysis of the social, economic and environmental impacts of COVID-19 on the forest sector, including identifying risks and developing post-crisis recommendations.

• On one hand, there is dangers of economic recession in many countries, unemployment is rising dramatically, market prices for land-use commodities are declining and industrial wood production is declining in some places.
• On the other hand, carbon emissions from air travel, other forms of motorized transport and manufacturing industry have declined sharply.
• In addition, at the local level, there is evidence that remittances from the diaspora and the return of people to their villages are placing an additional burden on households, especially women. Governments and donors are planning or beginning to put in place major stimulus and aid packages.
• Among the risks raised, there is also concern that the momentum that has been created to avoid deforestation and mitigate climate change may be lost.

The negative effects of COVID-19 on the sector weaken timber companies and endanger the livelihoods of the local population.

« The multi-faceted contribution of the sector to broader development targets bears testament to the central role forests will play in social and economic recovery in the aftermath of the crisis. » Efforts will have to be stepped up to ensure legal and sustainable production and consumption of wood throughout the supply chain, as the fight against deforestation and forest degradation remains a crucial issue for safeguarding ecosystems and the livelihoods of local populations.

Here is the link for the preliminary excerpts of the June 2020 Global Economic Prospects report:

https://openknowledge.worldbank.org/handle/10986/33748

The full report will be published on June 8^th.

The Sustainable Wood for a Sustainable World – SW4SW initiative would like to hear your views on the impacts of the COVID-19 pandemic on wood value chains and how the forest sector can contribute to building back better (#buildbackbetter).

Below you can find the link to a short survey, which consolidated results will inform discussions of the COVID-19 Forestry Webinar Week on 22-25 June 2020, promoted by FAO and the organisations of the Collaborative Partnership on Forests – CPF. Your collaboration is very important to shape the debate and support sharing of experiences and lessons learned.

https://www.surveymonkey.com/r/Sw4sw-COVID

The survey will take approximately 15-20 minutes of your time, and your replies will be anonymous. The deadline to complete this survey is Friday, 12 June 2020.

EUROPE

« During March, widespread reports emerged of timber importers putting existing orders on hold for 30 to 60 days and refraining from making new orders. »

This was due to the fact that importers had to cope with a build-up of stocks which was difficult to evacuate because manufacturers, retailers and construction sites were blocked by the lockdown. EU buyer interest seems to wane as their stocks rise.

AFRICA

Africa must adapt its response to its reality, i.e. take into account the different contexts, socio-economic and especially cultural realities of African countries.

The African continent must find a fragile balance between protecting lives while mitigating the economic effects and continuing to eradicate the spread of the virus.

According to calculations by the Economic Commission for Africa (ECA) « a full month of lock-in across Africa would cost the continent about 2.5% of its annual GDP or $65 billion per month. This projection is distinct and is in addition to the broader external impact of the Covid-19 crisis on Africa resulting from the decline in commodity prices and investment flows. » The main challenge reported by African firms is the decline in demand: « Containment measures have created serious problems for African economies, including lower demand for products and services, a shortage of operating cash flow, reduced opportunities to meet new customers, the closure of some businesses, changing business strategies and the need to offer alternative products and services, lower production and productivity of workers working from home, problems with logistics and shipping of products, and difficulties in sourcing essential raw materials for production. « 

REPUBLIC OF CONGO

Gradual decontainment started on 18 May. 10 days later the National Coordination for the Management of the Pandemic Coronavirus Covid-19 issued a release on adapting the response to this disease evolution.

GABON

Faced with the relaxation observed since the relaxation of certain measures, the Ministry of the Interior has recalled the protection and prevention measures in place. In a press release published on 1 June 2020, it stressed that « the fight against the spread of the epidemic is not over. »

Companies continue to work, some with a reduced workforce.

Each company has put in place the necessary provisions for prevention and protection against COVID-19.

IVOIRY COAST

With the lifting of the curfew on May 15th, 2020, the restrictions put in place to combat the spread of COVID-19 were eased. « The maquis and restaurants, which have been closed since 24 March, can reopen in strict compliance with the barrier measures, the Presidency communiqué states. The wearing of masks becomes compulsory in public places, particularly markets, transport and enclosed spaces. »

« But vigilance must be maintained, » said the Ivorian president, particularly in the capital, which has a concentration of almost all cases of coronavirus in Côte d’Ivoire. The pandemic continues to progress in Abidjan.

However the state of emergency is maintained and the borders remain closed until 31 May 2020.

Among the recommendations to mitigate the effect of COVID-19 on the work world, there is the establishment of a special fund or the use of an existing fund to allocate an allowance to workers made redundant or laid off as a result of the COVID-19-related health crisis to compensate for the loss of their income.

At the proposal of the CGECI, supported by the social partners, the Government agreed to release an envelope of four billion four hundred and seven million two hundred and forty thousand (4,407,240,000) CFA francs to compensate the workers concerned. And this, over the period covering the months of April and May 2020.

CHINA

At the beginning of 2020, falling prices due to oversupply have made European timber producers more competitive globally.

« In March this year, China imported more lumber from the Nordic countries than from Canada, the first time on record »

The GWMI publication of June 2^nd, 2020 reports that « China’s Construction and Machinery Association showed total excavator sales jumped +60% in April for year on year data comparison. »

« Excavator sales have previously proved to be a good leading indicator of construction activity, so many Chinese predict construction activity to increase. »

« It is estimated that approximately 70-75% of the logs China imports is used for domestic consumption. The remaining 25-30% of log imports is manufactured into export products. »

« Global demand for timber products is likely to take longer to recover than China’s domestic demand. If there is no substantial increase in Chinese domestic demand then inventory levels will rise quickly, as global log supply increases. »