News that the proposed wood promotion premium scheme has fallen at the last hurdle has cast a bit of a shadow over what has otherwise been a positive start to 2005 for the UK timber industry.
The initiative was proposed to help the sector capitalise on the growing market opportunities seen for timber and wood products created by the UK’s drive for ‘sustainable construction and development’. It was also considered that extra promotional funding was needed in the face of the return of knocking campaigns – “wood burns and rots etc” – by manufacturers and users of rival materials to timber.
The supporters of the promotion premium, which was to be levied on all types of domestically produced and imported timber products, believed it had the potential to raise a significant sum. This was to be used for a range of marketing and promotional activities, and, it was hoped, could help the wood. for good generic promotion reduce its dependence on funding from the Nordic Timber Council.
However, a number of leading companies in the sector said they could not support the initiative and the launch was cancelled.
Whether the promotional premium will be revived in a different guise remains to be seen, although the governing board for wood. for good says it is now exploring the options for a ‘relaunch’.
But despite the disappointment over the initiative, nobody wants to dampen enthusiasm for what is an exciting time for the UK timber industry.
Last year was good for all product sectors, with buoyant demand and price increases in most markets – although in some cases, particularly the pallet and packaging industry, the increases were from very low levels.
Demand for softwood carcassing remains strong on the back of what seems to be a busy construction industry – despite mixed messages in the Press. There is a lot of talk about the increase in timber frame and although some question how important this will be for the domestic supply industry, there is probably a little more UK-grown softwood going into this market than many realise. BRE investigations have confirmed that UK-grown species are suitable, but old habits die hard and some still prefer imported material. Another case for some good solid promotion activity.
There are concerns – by mills and growers alike – that the huge volume of windblow in Sweden and northern Europe could have an impact, although none has been seen yet.
Growers have also started the year well, with strong demand across the board although they would like prices to move up a bit. Areas of Scotland and northern England have some windblow, but nothing that cannot be dealt with in normal harvesting programmes.
Private growers could potentially benefit in some areas where the Forestry Commission is reported to have already reached the maximum allowable annual cut under its FSC certification, ahead of its year-end. That will soon ease with the start of the new year in April, but in the meantime some carcassing mills may get a little low on log stocks.
That is exacerbated because pallet and fencing mills are also busy – in the latter case further strengthened by the early Easter and the need to replace fencing blown down during the winds earlier this year.
With rising palletwood prices and a shortage of supplies from the Baltic states (where mills are themselves short on logs and therefore preferring to cut higher value carcassing) coupled with strong demand for fencing material, the differential between the price of UK red (pallet and fencing) and green (carcassing) logs has narrowed. That has led pallet and fencing manufacturers to look at green logs – which are straighter, less knotty and give better yield and productivity as well as a better looking product – in competition with carcassing mills.
The pallet and packaging industry reports no problems with supply of heat-treated timber – perhaps the piecemeal implementation of ISPM15 worldwide has helped here.
Unhelpful input
The pallet and packaging producers were not helped recently, however, by comments from a government department. A Defra official caused a scare by sending out information that seemed to suggest plastic pallets were a better option than timber – because they could be recycled/re-used and because of questions about the environmental benefit of heat treatment or chemical treatment of timber pallets to ISPM15.
UKFPA (through ConFor) and TIMCON lodged objections with Margaret Beckett, secretary of state for Environment, Food and Rural Affairs and Elliot Morley, minister of state (Environment). ConFor has since received a reply from Mr Morley saying it was never their intention to promote plastic over wood and that they were fully aware of the benefits of wood. It seems that there will not be an inquiry into how the misinformation was released, but the pallet and packaging sector says that this incident reinforced the need for the industry to be continually on its guard against this sort of incident.
Apart from some problems with snow and wet weather in the north of England and Scotland, the winter has generally been kind and has not affected harvesting. One possible blot on the horizon is the fact that a number of UK harvesting teams have gone to Sweden to help with clean-up operations – possibly for 6-12 months at a time – which could lead to some tightening of harvesting capacity in the UK.
Demand for small roundwood from panel products mills is high and exports are also still moving – despite the windblow. UK sawmills also report good markets, with co-firing trials at power stations still taking some volumes of sawdust, chips going to the panel industry and bark enjoying a good season.
The fuel debate
Panel producers are still expressing concern about the potential diversion of raw materials for fuel but the debate has matured.
It’s certainly true that supply and demand for these sawmill products is finely balanced, so it is important that any new capacity is carefully planned. Hence the conflicting emotions of excitement and alarm at the proposed £1bn integrated mill and power production plant in Invergordon.
