World market for logs from teak plantations

  • By Mya Oo Maung
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A teak plantation in Bago Region

Teak is a first-class wood that is highly valued and well accepted throughout the world. As a kind of wood produced in temperate zones and due to its properties, teak is popularly known as “ Golden Teak” in the world. Its colour, sturdiness, stability, beautiful grains and appearance bear no comparison with other different woods. All the utensils made of teak have been highly expensive throughout history. Up until now, humanitarian views on teak have not changed. That is why trading in teak remains a highly beneficial business.

Higher purchasing power
According to the statistics from 2005 to 2014, yearly world trading on logs of teak were over one million cubic meters worth $487 million. Main teak-importing countries in the world are India, Thailand and China. During the above-mentioned period, India had mostly imported teak logs in the world, generating 74% of the world ‘s trading amounts. Thailand stood second with 16% and China with 10%. Total trading amounts of these three countries have doubled from cubic meters 5.57 lakhs to1.2 cubic meters with quadruple amounts of $ 166 million to $ 696 million. That was mainly due to higher purchasing powers from India and China.
Myanmar is termed as a teak heavyweight in the world trading sector. It has possessed a half of natural areas of 29 million hectares in the world. Myanmar has produced a lot as it owns a large portion of teak plantations. Myanmar’s natural plantations have produced 25% of the world’s teak trading amounts. Teak trees naturally thrive in India, Myanmar, Thailand, and Laos. Felling of teak trees is now prohibited in India and Thailand. Extraction of natural teak trees is still allowed in Myanmar; reduction of production and export of teak logs are being prohibited.

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Competing situation
During a period between 2005 and 2014, teak plantations in Africa and Latin America yield yearly average of price 3% to 4.5% to compete with quality teak from Myanmar. Prices depend on a type of market. The price of Myanmar teak in India Market is higher than those of other teak products. The price of Myanmar teak of one cubic meter is worth $ 615 to $ 1000 in 2014. Teak plantations in Africa and Latin America during that period cost one cubic meter for $ 320 to $ 430.
Demands of teak are expected to rise in the world market. Demands of teak especially from Indian and Chinese markets keep rising year by year. Currently, Myanmar, which exported much teak in the past and cut down productions of teak, will not be able to meet the demands. This sign would encourage eager employers to establish teak plantations. In the future, requirements of world’s teak will depend on the plantations in temperate zones. Under proper management, the quality of new teak plantations will be in a position to compete with naturally produced teak.

Emphasis on management
Trading on teak in Africa has much developed. Even if Africa is not of origin of teak, teak plantations are thriving in African countries of Cote d’ivoire, Sierra Leone, Nigeria, Tanzania and Togo. Teak plantations take 47% of forested areas in Africa. The areas of plantations in Ivory Coast are 21,000 hectares and 5000 hectares in Tanzania. Tanzanian plantations were established with teak seeds from India and Myanmar with the help of German experts. In 1905, Togo took an economic opportunity for planting teak trees in areas of 5000 hectares; it enjoyed a good price by exporting products to India and Europe. With yearly increase of 650 hectares, West African country of Nigeria found itself in a good position for teak plantations. Due to yearly increase of planting areas, Nigeria now has 21300 hectares for teak cultivations.
In Latin America, there are a total of 350,000 hectares for planting purposes in Ecuador, Brazil and Panama. Middle-size plantations in Costa Rica, Mexico and Colombia and small plantations in Guatemala, Nicaragua, Trinidad, El Salvador and Venezuela. The quality of teak is not up to the mark of naturally grown teak and these countries have to compete with a low price in the market. They have got 80% of Indian middle class for doors, windows and frames for their houses. That is why Latin American countries have been trying to increase teak plantations, prioritizing the quality and amounts.
As India, China and Thailand are the most-importing countries with India as the biggest one. India has imported 70% of teak from Africa and Latin America. India’s yearly requirements of wood is 64.4 million cubic meters and will quadruple in 2020, according to Dr P.K. Thulasidas of Kerala Forest Research Institute.
Imports from Myanmar’s natural plantations and those from Africa and Latin America and from Indian forests are not enough to meet the India’s local demands. In consideration of teak prices in the world market, Indian C&F price on arrival at ports is mostly steadfast.
According to the market report of International Tropical Timber Organization, country-wise teak plantations and their prices are mentioned at the side of this paper. Current exchange rate of rupees to the dollar is stable and teak-exporting countries’s situations are good. According to the chart, the price of one cubic meter for teak log is at least $ 225 to $876; in terms of cubic tons, one ton will cost at least $ 405 to $ 1549. In Myanmar, teak plantations were established under the British Occupation. Up until now, many acres of plantations have continued under successive governments.
Private cultivations have been allowed since 2005-2006 and it is time for clearing the underbrush. Ministry of Natural Resources and Conservation of Environments has announced to allow exporting of teak products; that action is suitable for private employers as well as for the good of our country. According to the findings, there are 143,000 acres of private teak plantations and 104000 acres of hardwood cultivations in Myanmar. The lifespan of the plantations is 10-12 years; questions are to be asked whether the quality of newly produced teak would compete with that of being currently engaged in trading in the world market. The lifespan of teak plantations from Africa and Latin America is over 20 years; maturity is surely better than ours.

Effective uses of opportunities
Employers of plantations should study carefully the situations and requirements in order to compete with those already prevailing in the market. While studying the world market of teak, the Indian market must be indispensably chosen. That is why India market should be reviewed in detail; uses of teak in the market would impel us to create conditions to penetrate the market. In addition, the standard and quality of currently produced teak are able to compete with those already in the market. If not, selling prices are likely to reduce.
Therefore, the government should encourage employers to exploit the opportunities for exporting teak products. Close cooperation among the employers, effective management of association of current members, market research on buying and selling business and consultations with respective departments are required. The most important point is that we have preferential opportunities of selling the products as desired; our responsibility is not the fag-end of first selling price in the market.
(Translated by Arakan Sein)

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