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Niche Markets for Economic Revitalisation of Satoyama Forest ...

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1 EMERGING NICHE MARKETS FOR SATOYAMA<br />

FOREST RESOURCES<br />

This section briefly highlights and discusses the market<br />

conditions <strong>for</strong> wood materials, associated products, and<br />

services in both Ishikawa and across Japan, and identifies<br />

and discusses old and emerging niche markets which<br />

present opportunities <strong>for</strong> the development <strong>of</strong> a range <strong>of</strong><br />

new products to enhance the utilisation <strong>of</strong> satoyama <strong>for</strong>est<br />

resources in Ishikawa Prefecture. The products include<br />

timber and other wood materials, wood block technology<br />

<strong>for</strong> housing construction, new energy products (i.e. biomass<br />

products) from <strong>for</strong>est thinnings and other <strong>for</strong>est materials,<br />

and carbon sink initiatives. Local, national, and international<br />

issues related to these niche products are identified and<br />

discussed.<br />

1.1 The Wood Market in Japan<br />

1.1.1 Domestic Wood Supply in Japan<br />

The wood materials supply in 2004 in Japan, when converted<br />

to numbers <strong>of</strong> logs was 89.8 million cubic meters. Although<br />

the amount supplied domestically has increased slightly<br />

in recent years, local supply is still only 16.56 million cubic<br />

meters or 18.4 per cent (<strong>Forest</strong>ry Agency edition, 2006a) <strong>of</strong><br />

annual demand. While Japan has traditionally been a major<br />

consumer <strong>of</strong> wood materials, the level <strong>of</strong> domestic supply has<br />

been below 50 per cent since the 1970s and has remained at<br />

approximately 20 per cent <strong>for</strong> the last 10 years.<br />

At the same time, Japan’s domestic <strong>for</strong>ests have increased in<br />

recent years. Approximately 80 per cent <strong>of</strong> <strong>for</strong>est build–up<br />

has been due to growth <strong>of</strong> artificial <strong>for</strong>ests, and from 1995<br />

to 2002, this <strong>for</strong>est build–up has increased by 450 million<br />

cubic meters. Looking at this from a yearly basis, even if the<br />

amount <strong>of</strong> timber cutting (approximately 26 million cubic<br />

meters <strong>of</strong> all <strong>for</strong>ests) is subtracted, this is still a net <strong>for</strong>est<br />

build–up <strong>of</strong> approximately 64 million cubic meters each year<br />

(<strong>Forest</strong>ry Agency edition, 2005).<br />

Indeed the price <strong>of</strong> domestic wood materials is decreasing<br />

relative to international products. For example, a comparison<br />

<strong>of</strong> the price <strong>of</strong> northern larch trees that compete with<br />

Japanese cedar trees is shown in the table below (<strong>Forest</strong>ry<br />

Management Division, Agriculture, <strong>Forest</strong>ry and Fisheries<br />

Department, Ishikawa Prefectural Government, 2006a).<br />

Thus, there is clearly a growing opportunity <strong>for</strong> domestic<br />

<strong>for</strong>est products to compete with <strong>for</strong>eign imports. It would<br />

appear that capitalising on this market trend through the<br />

marketing <strong>of</strong> satoyama wood products would enhance the<br />

public benefits <strong>of</strong> satoyama as well as lower the Japanese<br />

demand <strong>for</strong> <strong>for</strong>est products from overseas. 19<br />

Table 1: Price by Year Comparison: Domestic Cedar versus Imported Larch<br />

(Per 1m3)<br />

Classification 1995 2000 2005<br />

Japanese Cedar<br />

(domestic materials)<br />

Larch (imported<br />

materials)<br />

21,900 yen 16,500 yen 11,400 yen<br />

18,400 yen 14,100 yen 16,100 yen<br />

1.1.2 Domestic Wood Supply in Ishikawa Prefecture<br />

The supply and demand ratio <strong>for</strong> wood materials <strong>for</strong> Japan<br />

as a whole is similar to that <strong>of</strong> Ishikawa Prefecture. Of the<br />

439,000 cubic meters <strong>of</strong> wood material supplied within the<br />

prefecture in 2004, approximately 19 per cent (approximately<br />

84,000 cubic meters) was produced within the prefecture<br />

and this percentage has not changed very much <strong>for</strong> the last<br />

ten years. The supply <strong>of</strong> wood materials produced within<br />

the prefecture in 2005 was 102,000 cubic meters, indicating<br />

an increase to approximately 25 per cent <strong>of</strong> total supply.<br />

However, the overall amount <strong>of</strong> wood materials supplied<br />

within the prefecture dropped to 403,000 cubic meters.<br />

Furthermore, the amount <strong>of</strong> growth in artificial <strong>for</strong>ests during<br />

a one year period in FY 2004 was approximately 933,000<br />

cubic meters. The supply <strong>of</strong> wood material produced within<br />

the prefecture in that year accounted <strong>for</strong> a mere 9 per cent<br />

<strong>of</strong> the amount <strong>of</strong> growth, and when external supply sources<br />

were included, wood supplied in the year accounted <strong>for</strong> only<br />

47 per cent <strong>of</strong> the amount <strong>of</strong> growth (<strong>Forest</strong>ry Management<br />

Division, Agriculture, <strong>Forest</strong>ry and Fisheries Department,<br />

Ishikawa Prefectural Government, 2006a). This indicates<br />

that although <strong>for</strong>est cover is on the rise in the prefecture,<br />

local <strong>for</strong>est resources are not being proportionately sourced<br />

to meet <strong>for</strong>est product supply.<br />

1.1.3 Demand <strong>for</strong> Wooden Homes<br />

Trends in housing construction demand have a large effect<br />

on the supply and demand <strong>of</strong> wood materials in Japan.<br />

According to the 2006 “Annual Report on Trends <strong>of</strong> <strong>Forest</strong><br />

and <strong>Forest</strong>ry” building timber accounts <strong>for</strong> 80 per cent <strong>of</strong> the<br />

timber products delivered in the country (<strong>Forest</strong>ry Agency<br />

edition, 2006a).<br />

However, housing demand is generally declining in Japan. The<br />

number <strong>of</strong> residential construction starts peaked at 1.9 million<br />

in 1973, and in recent years has leveled at approximately 1.2<br />

million. Furthermore, although the percentage <strong>of</strong> houses<br />

built with wood exceeded 75 per cent in the 1960s, this figure<br />

has continued to decrease, and over the last 10 years has<br />

remained at approximately 45 per cent. While the percentage<br />

<strong>of</strong> total housing starts using wood in 2004 accounted <strong>for</strong> 45<br />

per cent <strong>of</strong> the total 1.19 million houses, 80 per cent <strong>of</strong> single<br />

family dwellings (510,000 homes), were built using wood<br />

(Ministry <strong>of</strong> Land, Infrastructure and Transport, 2005), so the<br />

construction <strong>of</strong> non–wooden multi–family dwellings plays<br />

a significant role in lowering overall demand <strong>for</strong> wooden<br />

homes. Still, as the number <strong>of</strong> households is projected to<br />

decline over the long term, it is difficult to expect an increase<br />

in the demand <strong>for</strong> wood products due to an increase in<br />

residential constructions (<strong>Forest</strong>ry Agency edition, 2006a).<br />

However, building in recent years in Ishikawa Prefecture<br />

presents an exception to the trend. The number <strong>of</strong> new<br />

residential building constructions started in 2005 amounted<br />

to 8,909 (93.8 per cent compared to the previous year). Of<br />

these, 70 per cent (or 6,219) were wooden constructions—a<br />

more than 100 per cent increase in terms <strong>of</strong> absolute numbers<br />

relative to the previous year—thus indicating an increasing<br />

trend (<strong>Forest</strong>ry Management Division, Agriculture, <strong>Forest</strong>ry<br />

8

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