Why have imported hardwood prices doubled?

by James R. Summerlin Sumwood, Inc. Los Angeles, Ca.

Philippine peso is tied directly to the U.S. dollar, the dollar's purchasing power was basically unchanged. Philippine mahogany prices have skyrocked due to other changed conditions.

The biggest factor behind the increase of imported hardwood prices isthe entrance of European nations into the Southeast Asian market over the last few years.

Previously, these nations got their hardwood requirements mostly from Africa, but recently that continent's lumber production has been strangled by the nationalization of sawmills and timber lands, coupled with political instability.

Increasingly since 1973 Europeans have looked mostly to two island nations, the Philippines and Malaysia, to meet their sawn timber demand, once satisfied by the huge African continent. Only recently, Europeans who had never used Philippine mahogany began to discover its advantages, and they buy it in huge lots at very high prices.

During the same period of time, Japan's economy has been improving and its demand for hardwood, increasing rapidly.

Sfory at a Glance

Factors include weakening of the U.S. dollar, increased oil costs, GonserYation and ecology, but the biggest f actor is the entrance of the European nations into the Southeast Asian market.

Also, the Middle Eastern countries with newly-found wealth have entered the Southeast Asian hardwood market over the last few years and because they were not yet experienced buyers, this tended to drive prices up to new levels for even ungraded supply.

Meanwhile, countries like Australia, New Zealand, the Philippines, Malaysia and Thailand have become increasingly concerned about conservation and ecology. The Ferdinand Marcos government, for example, has progressively limited the quantity of logs exported from the Philippines and even curtailed logging from some concessions. As a result, nations like Japan, Korea and Taiwan, that previously bought mainly logs, are now competing with the U.S. and Europe to buy sawn lumber.

For years, Thailand satisfied the bulk of the world's demand for teak. Now Thailand's teak lumber supplies have been totally cut off, while its government tries to establish firmer controls on this valuable resource. Today, Burma is virtually theonly source for teak lumber of high quality in sizable averages and they are finding this new demand overwhelming.

Inflation is also an undisputed factor in the increase of import prices. When I lived in the Philip- pines during the late '60s/early '70s, gasoline sold for about 22 cents per gallon. Now it's over $1.50, more than a Filipino laborer's daily wage. This year the Philippine government hopes to keep inflation down to 200/o; which is probably overly optimistic.

Generally, import prices are rapidly being restructured to reflect

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