RETURN TO REPORTS DESK WITHIN RESTRICTEI) ONE WEEK Report No. EMA-30a This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE DEVELOPMENT PROSPECTS OF TURKEY (in nine volumes) VOLUME VI ANNEX IV - THE FOREST INDUSTRIES December 10, 1971 Europe, Middle East and North Africa Department CURRWCT EQUIALUTS After August,9, 1970 US $1.00 TL 1510 TL 1 = US *0.067 TL 1 million = Us $66,667 Prior to August 9, 1970 US $1.00 TL 9.00 TL 1 = US $0.1 TL 1 million US $131,111 PREFACE This report is based on the findings of an economic mission, which visited Turkey in April/May 1970. The mission was composed of: Gordon C. Billington (chief of mission), Gene D. Reese (agricultural adviser), Don Mitchell (consultant, agronomist), Jacobus van Assen (con- sultant, irrigation engineer), Bertil Walstedt (industrial adviser), Andrew Freyman (consultant, mining and matallurgy expert), David Beaton (consultant, metal fabricating and engineering report), Antoine Bassili (UNIDO consultant, forest industries expert), Milivoje M. Stojanovic (industrial economist), Cyril J. Martin (planning adviser - organization and machinery of planning), N. Dean Ganjai (IMF Consultant, fiscal adviser), Francesco Gallo (general economist), Hanjo Lell (general economist), Josefina Vial (national accounts), Rosalinda Dacumos (statistical assis- tant), Zoe Carson (secretary). The industrial team was headed by Mr. Walstedt and the agricul- tural group by Mr. Reese. The sector volumes of the report also draw on other special studies on Turkey, initiated or undertaken by Bank staff, in related fields, notably textiles, petro-chemicals and fertilizers.  FOREST PRODUCTS INDUSTRY TABLE OF CONTENTS Page No. 1. BACKGROUND .......................................... 1 II. INSTITUTIONAL FRAMEWORK FOR FORESTRY AND FOREST PRODUCTS SECTOR ..................... .... .......... 1 A. Ministry of Forests ........................ 1 B. State Planning Organization ................... 6 C. Education and Research Institutions ............ 7 III. RECENT GROWTH AND PRESENT POSITION OF MAJOR FOREST PRODUCTS INDUSTRIES ................... 7 A. General ............... ................... 7 B. Sawnwood ................8..................... 8 C. Other Wood-Using Industries ................... 10 D. Pulp and Paper ............................... . 12 IV. THE SUPPLY OF INDUSTRIAL WOOD ....................... 15 A. Forest Resources .......................... 15 B. Annual Production from the Forest ........... 17 C. Mechanization of Logging ,,....................... 19 D. Forest Roads ................................ 20 L. Manpower in the Forests ......................... 21 F. Sales Policy of the General Directorate of Forests ......................... ........... 21 This report was prepared by Mr. Antoine Bassili, expert seconded by UNTDO. Table of Contents (Cont'd) - 2 - Pa e N. V. AVAILABILITY OF INPUTS FOR FOREST INDUSTRIES ....... .22 A. Auxiliary Materials ........................... 2 B. Equipment and Spare Parts ..................... 23 C. Labor ......................................... 23 D. Management and Entrepreneurship ............... 24 E. Capital Requirements and Foreign Participation .......................... ... . 25 VI. STRATEGY AND TARGETS FOR FOREST PRODUCTS INDUSTRIES.. .......................................... 26 A. Strategy .......................................26 B. Targets ....................................... 27 VII. DEVELOPMENT POLICIES FOR FORESTRY AND FOREST INDUSTRIES ............................ ........... 31 A. Forest Resource ............... ............. 31 B. Forest Industries ...................... ..... 35 APPENDICES 1. Exports of Forest Products 2. Present Status of Sleepers, Wood-Based Panels, and Secondary Wood Processing Industries 3. Production, Trade and Prices for Logs and Fuelwood Table of Contents (Cont'd) - 3 - STATISTICAL APPENDIX 1. Budget of the Ministry of Forests 2. Consolidated Revolving Fund: Income and Expenditure Statement 3. Revolving Fund: Projected Investments: 1971 and 1972 4. Annexed Budget: Projected Investments: 1971 and 1972 5. Statistics on Forest Industries 6. Production and Trade in Coniferous Sawnwood 7. Production and Trade in Broadleaved Sawnwood 8. Production and Trade in Railway Sleepers 9. Production and Trade in Mechanical and Chemical Pulps 10. Production and Trade in Mechanical Pulp 11. Production and Trade in Chemical Pulp 12. Production and Trade in Paper and Paperboard 13. Production and Trade in Newsprint 14. Production and Trade in Printing and Writing Papers 15. Production and Trade in Other Papers and Paperboard 16. SEKA's Sales Prices for Paper 17. Characteristics of SEKA's New Paper Mills 18. Forest Area and Annual Allowable Cut by Forest Region and Conservancy 19. Total Sales from the Forests 20. Details of Purchases of Coniferous Logs by a Medium-Sized Sawmill in the Istanbul Area 21. Projections for Export of Forest Products HIAPS 1. Turkey: Forested Areas 2. Turkey: Communfations 3. Turkey: 1968 Tndustrial Roundwood Removals. Consumption and Local Trade; 1982 Annual Allowable Cut; Uncommitted Balances Available for New Industry. 4. Turkey: 1968 Census of Forest Industries: Sawmills 5. Turkey: 1968 Census of Forest Industries: Wood-Based Panels, 14ooden Boxes, Pulp and Paper Mills 唱 S[TMM.A_RY AND CONCLUSIONS Present Status of Forest Industries i. Degeneration of Turkey's forest resources through excessive cutting and grazing led to the establishment of strict Central Government controls of forest operations and the nationalization of privato forest land, including a multitude of communal and small holdings. Having taken away their land., the State incurred various long-term obligations to the forest villagers. About half a million families live in the forest areas, representing perhaps the poorest sector of the Turkish population. ii. The annual production from the forest grew from 7-5 mLllion cu.m. of roundwood in 1955 to 13.7 million cu.m. by 1968. Most of this was fuel wood which by the late 1960's still accounted. for about 70 per cent of the total. The use of wood for industrial purpcses grew from 1.1 million cu.m. in 1955 to 3.9 million cu.m. by 1968, i.e.., at a compound annual rate of slightly over 10 per cent. This is far short of the forest potential, the value of which is further enhanced by the high proportion of conifers. Failure to properly exploit this unique natural resource has led to a high proportion of over-mature trees and abnormally low annual growt1a rates in the forest. iii. Viewed from the industrial side, high prices for roundwood, un- certainties in deliveries, and inability to obtain forest concessions have held back private enterprise. Moreover, though the capital requirements for modern integrated forest product mills surpass the resources of the Turkish private sector, foreign investments are not encouraged. As a result, the State accounts for a major portion of the investment in the Forest Industries. iv. In 1967, net national product contributed by forestry was TL 1432 million and by the forest industries, TL 750 million. Together., they accounted for only about 0.6% of the net national product. However, over 50,000 workers were employed in the forest industries, apart from the vast number employed in the forests. The main enterprises are the State Pulp and Paper Corporation (SEKA) which operates one old integrated pulp and paper mill as well as three new mills built in 1965-1971, and the General Directorate of Forest Industries which operates 14 saw mills (responsible for about 7 per cent of the total lumber production and the entire prod- uction of railroad sleepers). The General Directorate recently built Turkey's largest wooden box factory in the Antalya region, it is construc- ting the country's fourth and largest fibreboard plant, and has plans for the erection of two particle board plants. Two other State enterprises produce plywood and fibreboard. The private sector accounts for the vast bulk of the saw-milling industry (mostly small and inefficientmills), a small proportion of the paper-making capacity (15 small mills with a combined capacity of 15,000 tons), nine out of ten plywood mills, two out of four fibreboard plants, and two medium-sized particle board plants. V. There is very little foreign trade in forest products, with one major exception. Imports of paper have been rising totalling 112.,000 tons in 1968, valued at about $20 million equivalent. Exports of forest pro- - ii - ducts, including logs, have averaged about $2 million equivalent in recent years. vi. The lack of lumber exports reflects supply difficulties, high log prices, and unsatisfactory industry structure. Even at the new exchange rate, Turkish prices for coniferous or beech lumber are above the inter- national level. Wooden sleepers are not competitive with concrete sleepers on the domestic market. Prices for kraft pulp, at the new exchange rate, are about 50 per cent above world market prices. Newsprint prices, on the other hand, are at the world market level; they are controlled for social reasons* Prices for plywood, fibreboard, and wooden boxes are relatively low, and prices for particle board are expected to fall to a competitive level in the reasonable future. This evaluation does not take into account secondary price increases which may result from the recent devaluation nor (and most important) the fact that, in several products, Turkish qualities are not up to the international standard. Development Targets vii. There are three different projections of the future cut of industrial wood. The General Directorate of Forests has set a target of 8.9 million cu.m. by 1982 as compared with 4.1 million cu.m. in 1968. An F.A.O. Mission set a target of 14.6 million cu.m. for the same year while the State Planning Office, in a special decree, advanced the date for achieving the F.A.0. target to 1977. In the final analysis, the decisive factor will be the speed with which mutually reinforcing institutional re- forms are implemented. Realistically, it will take a major effort to meet even the F.A.O. growth projection. viii. Most of the additional supplies would be needed to satisfy the expected growth in domestic market requirements, e.g. from 2.6 to 5.0 million cu.m. of lumber and, reflecting the replacement of imports by domestic paper production, from 100,000 tons to 1.3 million tons of woodpulp. Neverthe- less, some one million cu.m. of roundwood might be available for export in the form of lumber and plywood; conceivably forest products exports could then reach a figure of $70 million equivalent by 1977. Framework for Development ix. It would be difficult to overstate the interdependence between the forest industry and the forest products industries. The latter need a regular supply of industrial wood at competitive prices but unless the forest products industries attain reasonable efficiency in conversion and marketing, forest exploitation will languish. This community of interest, in major forest product exporting countries in Northern Europe and North America, has given rise to large integrated forest companies competing in the world market, who either own their own forests or have reasonable assurance of supplies. The vast majority of these companies are in the private sector though, in both Sweden and Finland, there are important State corporations. In Turkey the two dominant state monopolies, the General Directorate of Forests and SEKA cannot point to a record of achievement. The main task of the government must be to find a more viable framework. - iii - The present report suggests that three principles might guide this frame. Decentralisation of production into independent operating companies, attrac- tion of foreign direct investment for know-how and marketing access, and greater horizontal integration of forest industries (i.e. combination of sawmilling, pulp, and plywood production). Conclusion x. The institutional frame will determine the success of Turkish forest industries development. Without a better frame, many of the desir- able improvements enumerated in the report will not be implemented. Immense progress could be made if the country were divided into major forest con- cessions large enough to feed economic-size integrated forest complexes, and participation in these complexes by major international concerns were actively pursued. xi. An outline of suggested policies for the forest is given in paragraphs 124-128 of the report and for the forest industries in paragraphs 131-141.  I. BACKGROUND 1. Forestry is an old, established sector of the Turkish economy. In 1868 a decree was promulgated to ensure the conservation of the forests. Villagers had, for generations, cut wood in the communal forests to cover their needs and had used them for grazing, but toward the end of the Ottoman empire the control of the State over its forests waned, which led to excess- ive cutting and grazing and a general degeneration of the country's forest resources. In 1937 the Forestry Department was charged with control of the felling and marketing of the logs from the forests and in 1944 all privately owned forest land in excess of 5 hectares (ha) was nationalized. In 1956 the law was modified to include all forested land in excess of 3 ha. To compensate the forest villagers for this loss of income, the law obliged the state to provide them with their needs in fuelwood and industrial wood at one-tenth of the auction "reserve prices". 2. Until recently, the public sector of the forest industries has created all the large production units, and the private sector has consisted of small, uneconomic sawmills. This situation can be attributed to a heavy bias in favor of State exploitation of this natural resource and unwilling- ness to provide raw material guarantees to the private sector with respect to price, quality, and quantity. 3. The importance of the private sector relative to the public sector has increased in all branches of the wood processing industries since 1964, excrpt for pulp and paper. Sumerbank - a State-owned industrial holding com- pany - created the first pulp and paper plant in Imit in 1934 (see Map 5). Until the end of the first five-year plan in 1967, the production of paper was a de facto State monopoly except for a few small mills in the Istanbul area that produced wrapping papers from rags and waste paper. Today the Izmit plant of Seluloz ve Kagit Fabrikalari Isletmesi the State-owned SEKA produces about 110,000 tons, and the small private sector plants iin the Istanbul region, about 15,000 tons. 4. In 1958, forestry represented 0.7% of the aggregate net national product at current factor cost. This had fallen to 0.4% in 1967. The net product (value added) of forestry in 1967 was estimated at TL 1432 million. The net product of the manufacture of wood products (excluding pulp and paper) was TL 580 million and in pulp and paper production, TL 170 million (at 1965 prices). II. INSTITUTIONAL FRAMEWORK FOR FORESTRY AND FOREST PRODUCTS SECTOR A. Ministry of Forests 5. Administration. The Government of Turkey created a special Minis- try of Forests in the summer of 1969. Prior to that date, the Forests were administered by the General Directorate of Forests (GDF), one of 14 major bodies that fell under the Ministry of Agriculture. In the newly created -2- Ministry, there are four General Directorates responsible for, respectivelv, Forests, Reforestation and Erosion Control, Forest Products Industry, and Rural Development. In addition, there are two units that report directly to the Undersecretary: the Department of Investigation, Planning, and Coordf- nation, and the Department of Organization and Methodology. The former reviews long-term programs and strategy; the latter is concerned with the organization of current activities. 6. In 1969, 26,666 persons were employed by the Ministry. Of these, 2,006 were engineers, 1,413, technicians, and 23,427, nontechnical personnel. Between 1962 and 1969 the total number of employees increased by 22.1%: enqi- neers increased by 122.6%, and other technicians by 49.8%. Even so, there appears to be a surplus of engineers and a lack of other technicians. 7. The vast majority of the Ministry's staff is employed in the field. Administration, however, is highly centralized, and practically all decisions are made in Ankara. This structure is not very desirable; decentralization of decision-making would be more efficient and would permit adequate utiliza- tion of regional professional staff. 8. For administrative purposes, Turkey is divided into 23 forest con- servancies (Bas Mudurluk). Each of these is further divided into Divisions (Isletme) and Ranger Districts (Bolge). There are 189 of the former and 1,181 of the latter. Each "Bolge" is subdivided into several "Series", each with an area between 3,000 and 6,000 ha. These are the basic units of management of the Turkish forests. There is also a Forest Research Institute in Ankara and a Poplar Research Institute in Izmit, as well as their field stations. 9. Philosophy and Objectives. The main objectives of the GDP are to preserve and manage the Turkish State forests and to attend to the social welfare of the forest villagers. Commercial objectives, such as increasing the income derived from the forests, have until now been a secondary consider- ation. 10. GDF has always considered that its duties are primarily to main- tain the country's forest reserves and to stop the trespassing, grazing by goats, illegal removals, and forest fires caused by the forest villagers. The forest rangers therefore spend a considerable portion of their time policing the forests. By the Turkish Constitution, forest violations are crimes against the state; until recently the death penalty was applicable in certain cases. The total number of forest offenses has decreased con- siderably over the past 10 years with respect to forest fires and to illegal cuttings, removals, and grazing. 11. Provision of employment for the forest population is the second major objective of the GDF. Only forest villagers are given jobs; the aim is to employ at least one wage earner per family in the forest villages, though work is available for only a portion of the year. In areas that suffer from substantial underemployment, such policies can be assumed to -3- have social usefulness until additional employment opportunities can be created. 12. Forest Management. Although by law all forests belong to the state, by 1968 only 4.96 million ha (of a total of 9.44 million ha) of high forests had been surveyed, demarcated, and registered as state property. This is attributable to an insufficient number of surveying teams and to a rigid, bureaucratic approach that has led to many cases of litigation be- tween the forest villagers and the General Directorate. 13. Although a forest inventory was started in 1962, only nine of the 23 conservancies have so far been inventoried. This inventory is proceeding so slowly that its usefulness is seriously impaired. A clear picture of the state of the forests at any one time will not be obtainable from the data compiled. A major bottleneck has been the quantity and quality of the aerial phototgraphy and its interpretation. UNDP, through the FAO Special Fund Project, has supplied an airplane equipped to do this task, but the Turkish authorities have not utilized it fully. 14. The policy of forest management adopted by the Turkish Forest Service has always been one of selective cutting, i.e., to fell only the overmature trees. Lip service is paid to clear felling, but until recently none has ever been carried out. 15. The GDF has been unable to guarantee industrial users a reliable supply of wood at reasonable prices. Instead, the effect, if not the intent, of its policies has been to create artificially high prices for logs and manufactured forest products. These policies are inconsistent with the development of healthy forest industries capable of competing on world markets. 16. Proposed New Forest Law. The new forest law, which was in draft at the time of the mission, was expected to be submitted to Parliament shortly. The main changes are that the former General Directorate of Forests would be split into four General Directorates, and that the General Director- ate of Forest Industries (G.D.F.) would become a State Economic Enterprise. (This would give it more administrative flexibility and would allow it to operate more like a commercial undertaking. Logging operations, however, would come under one of the new directorates in the Ministry. 17. Another important change under the new law is that the cost of forest products would be reduced, as certain annual expenditures currently financed from the Ministry's Revolving Fund would now be borne by the Treasury. 18. Budget and Finance. The annual operating budget of the Ministry of Forests is about TL 100 million. Most of the expenditure is for salaries and wages and connected charges. The distribution of expenses between the central administration in Ankara and the field offices is not known. -4- 19. Income and expenditure on commercial operations in forests and forest industries are shown in the Consolidated Revolving Fund which is also debited with a portion of the Ministry's general administrative costs The published accounts of the Ministry do not show cost breakdowns by oper- ations (i.e., logging, sawmilling) and regions nor would it appear that such data could be furnished under present accounting procedures. Total income and expenditure from the Revolving Fund in recent years are summarized below. 1962 1963 1964 1965 1966 1967 1968 (million TL) Total income 593.3 663.1 708.8 839.4 878.5 983.1 1106.5 Total expenditure 476.5 520.7 612.1 743.2 820.4 881.2 1019.3 Whereas gross income of the consolidated revolving funds increased by 86.5%, profits fell from 19.7% of total income in 1962 to 7.9% in 1968. It is not known what return this would represent on the fixed assets and working capital tied in the operations, but one surmises that, after a normal return on these operating assets, there would be little or nothing left for remuneration of the forest capital. 20. Investments in forests and forest product industries are entered either in the Revolving Fund or in the so-called Annexed Budget 1/ Projected investments 1971 and 1972 are shown below (TL million) 1971 1972 From Revolving Fund 462.8 475.5 From Annexed Budget 87.0 89.0 Total 549.8 564.5 21. Combining the two budgets, the breakdown of investment expenditure in 1971 would be as follows: 1/ Used to finance certain supplementary expenditures by Government bodies, and voted by Parliament under a special law independently of the State General Budget. -5- Soil conservation and watershed management 2.8 Reforestation, afforestation, prduection of seedlings 20.2 Forest management 2.4 Forest roads 21.4 Buildings and installations, forests 1.3 Machinery and equipment, forests 11.8 Forest industries 18.7 Other Total 100.0 22. Compared with the budgeted investment expenditures of about TL 550 million per year, the funds generated by current forest and industrial oper- ations (profits plus depreciation) were only about TL 110-120 million in 1967 and 1968, on which, furthermore, profit taxes would be payable. Although the annual profits have to be transferred to the State Treasury, an equivalent sum would normally be made available to the Ministry of Forestry through the Annexed Budget. Whether or not, under ruling tight budget conditions, the full balance needed could be met from other government sources is highly un- certain. 23. The Ministry claims that even the full allocation would not be sufficient to undertake certain urgent expenditures, particularly in log- ging and road building equipment and in reforestation and afforestation. 24. Hence, the Ministry would not be able to meet its production targets unless it obtains loans to replace and increase its logging and road building equipment. It is looking for foreign loans to finance the foreign currency component for these items. The General Directorate es- timates its most urgent foreign currency needs at $18 million for the period up to 1977. This would only allow the extraction of logs to rise to 7.7 million m3 by 1977. For removals to attain the FAO projection of 10.3 million m3, the Directorate estimates that a foreign exchange ex- penditure of about $30 million would be needed. An estimate of local cur- rency needs was not available. 25. The Ministry also has ambitious plans to improve 11 million ha of degraded forests within the coming 70 to 80 years. This would necessitate replanting 150,000 ha of degraded forests per year. To this must be added 50,000 ha of afforestation in existing high forests. The aim is to control -6- erosion and to improve watershed management as well as to regenerate degraded forests. The State has supported private plantations of poplars and may, in the future, support plantations of eucalyptus and pines. 26. The cost per hectare of afforestation and supervision of the first five years of growth is TL 3,500 ($388.89) if done manually and TL 2,500 ($277.78) if intensive mechanization methods are utilized. Assuming that by 1977 a total of 500,000 ha will be afforested by the labor-intensive method, the total cost would be TL 1,750 million ($195 million). An undetermined portion of this would be in foreign currency to purchase the required equipment. Implementation is being held up by lack of funds, and there is no indication of prospective sources of financing. B. State Planning Organization 27. Administration. SPO is responsible for screening and authoriz- ing all projects that cost more than TL 5 million, or for which $200,000 or more in foreign currencies will be required. SPO has been very active in the appraisal and approval of private sector projects in the wood based panel and paper industries. It has Tbeen far less concerned with overall planning for the development of the forest potential or screening of the large public projects in this industry. 28. New projects are submitted to SPO both by private and public sector enterprises. These are appraised and evaluated against certain criteria, the main one being the "optimum size" of the project. "Optimum size" is interpreted as "the minimum economic size for Turkish conditions". Projects are also assessed on such criteria as relevance to the Five-Year Plan, domestic cost of foreign exchange savings, employment offered, foreign currency savings, and payback period. Demand and marketing studies in the forest products field are not usually done by SPO; the promotor's figures are normally accepted. The use of new technologies and processes is not really studied in depth, nor are the merits of integration among plants. 29. SPO also relies on the financier to scrutinize aspects such as investment and production costs and choice of processes and equipment. Even more surprisingly, SPO does not use much pressure on promotors to carry out studies on the location of the proposed plants. This is clear from the fact that SPO accepted the proposed locations of Caycuma and Dalaman in spite of the disadvantages of this choice referred to in Sec- tion D of Chapter III. 30. Philosophy and Objectives. The SPO in recent years has increasing- ly recognized the importance of the forests and forest industries to Turkey's development and industrialization. It has adopted a realistic and modern approach to increase removals, create new major forest industries, increase the private sector's participation in the forest products sector, and encour- age exports of forest products through subsidies until such time as the cost of logs can be reduced to world prices. -7- 31. Unfortunately, SPO's efforts have been partially thwarted by the unwillingness or inability of the GDF to provide raw material guarantees to the prospective investors, private or public. The most recent example is the proposed 200,000-ton pulp and paper mill in Antalya; the General Directorate will guarantee only the requirements of a 100,000-ton mill. 32. SPO has been more concerned with promoting investments than with its planning function. Projects in the forest products sector have been evaluated against a few ratios without much thought to the evolving overall structure of the industries involved. In this, SPO is caught by the pres- sures of time and staff availability leading to considerable delays in im- plementation. C. Education and Research Institutions 33. Forestry is taught at the Faculty of Forestry of Istanbul Univer- sity. This faculty was founded in 1909, and has an enrollment of about 1,000 students. About 150 students graduate each year. The course of study is for four years. There is only a forestry course at present. It is planned to also have a wood technology study course with a yearly graduating class of about 25 students. The development of the forest industries will create a greater need for wood technologists than is presently anticipated, and enrollment in the course will probably have to be increased. 34. Apart from the research done at the Faculty of Forestry, there is a Forestry Research Institute in Ankara and a Poplar Research Institute in Izmit. Only the Faculty in Istanbul caters to industrial needs, and this represents only a minor part of its activities. III. RECENT GROWTH AND PRESENT POSITION OF MAJOR FOREST PRODUCTS INDUSTRIES A. General 35. Turkey's forest industries are still underdeveloped; most manu- factured wood products are produced by very small units. State-owned en- terprises predominate among the large and truly industrial establishments, particularly in pulp and paper production. 36. Between 1964 and 1967, employment in the industrial establishments grew by 56%. In 1969 the annual sales of the forest products industry were TL 3,211.5 million: TL 2,753.5 million for the wood manufacture industries, and TL 458.0 million for the pulp and paper industry. The total employment in the forest products industries in the latest (1964) Industrial Census 1/ was as follows: 1/ 1964 Census of Manufacturing Industries and Business Establishments, Ankara, 1968, State Institute of Statistics (Publication No. 547). -8- Industrial /1 Small-scale Establishments-- Establishments Total Wood and Cork 5,788 28,915 34,703 Furniture 878 11,003 11,881 Pulp and Paper 7,495 1,028 8,523 /1 Employ more than 10 persons. The proportion of total employment represented by small establishments in the wood manufacturing industries is strikingly large. Any large-scale re- structuring and modernization of the wood manufacturing sector would there- fore raise the grave problem of finding jobs and retraining the manpower made superfluous. B. Sawnwood 37. The apparent per capita use of sawnwood in Turkey, 65 m3 per 1,000 inhabitan s, is the lowest in Europe. The present outDut of sawnwood is 2.2 million m per year, though existing sawmills have the theoretical capacity to process twice that volume of logs in one shift. 38. The vast bulk of the sawmilling industry is in the private sector, with a labor force greater than 20,000. There are several thousand extremely small and inefficient mills (the average output per man per year is only 105 m3) generally located far from the points of raw material supply 1/. This unfavorable location is largely attributable to difficulties in obtain- ing an ensured supply of logs in any given forest area. The majority of these mills use small bandsaws with hand-operated ratchet carriages, usually manufactured locally. The quality of the timber produced is often poor because of insufficient seasoning, variations in thickness, and erratic grading. In spite of poor efficiency and high costs for logs, many of the private mills appear to be quite profitable. This is because there has always been a seller's market; therefore, factors like quality control, availability of dimensions in popular demand, etc., do not worry the producers. 39. Over the last decade entrepreneurs in the private sector have in- vested in a few modern sawmills. These produce goods of acceptable quality. Nevertheless, in recent years, SPO has received only two applications for large sawmills, integrated with other wood processing industries, with a total output of 63,500 m3 per year. In contrast, during the same period, SPO received applications for 10 particle board plants with a total capacity of 425,000 m3. 1/ The distribution of these mills as well as the forested areas and removals are given in Maps 1 to 5. -9- 40. The 14 State sawmills accounted for about 7% of the total output of sawnwood in 1968 and employed about 3,000 workers. All are medium sized (log input capacities of between 10,000 and 40,000 m3 per year based on one shift) except for one, which has a log capacity of 80,000 m-. Most of the public sector mills are located in the Black Sea area where the best forest resources are. The oldest of these mills was erected in 1940 and the most modern in 1957. Three have already been modernized and converted from gang mills to band mills with modern drying kilns; another three are in the process of being modernized. Once modernization has been completed, the capacity of log input per shift will increase from 259,000 m3 to 460,000 m3. 41. Although these State-owned mills should have no difficulty in obtaining sufficient raw material, they are all operating only one shift. None are integrated with other forest industries so as to permit rational utilization of the sawmill waste. The annual productivity per man in the State sawmills is only about 62 m3. A normal figure for modern bandmills should be in excess of 100 m3; the corresponding figure for modern gang mills is about 170 m3. 42. The low productivity is not a reflection of a low lumber yield from the logs. In fact, the volumetric yield in Turkey is not very much lower than in Central European mills. However, the average grade is lower, with the State sawmills receiving many logs that were auctioned and did not fetch the reserve price. Moreover, some of the logs are so large that they cannot pass through the gangsaws, so the mills sometimes use a bandsaw before the gangsaw to break down these logs. 43. Other important reasons for low productivity in the State mills are excess staff and labor and high turnover of managers and technicians. Overstaffing may reflect poor efficiency and political and social pressure on management to employ political appointees. High turnover of staff is attributable to the fact that good staff can earn at least twice what the Government pays in the private sector. The conversion costs of the private and public sector sawmills, according to FAO, are estimated to be TL 30 and TL 85 ($3.30 and $9.40) per m3, respectively 1/. 44. The State sawmills' production is marketed through auctions at which quantities that average 1,000 m3 are sold in lots of about 50 to 100 I3. In spite of a somewhat cumbersome administrative procedure, the output is easily sold. This is because of stricter quality control than in the small private mills and air drying of sawnwood for longer periods. 45. The State sawmills account for all the local production of sleep- ers (see Table 8). About 40,000 cu. m. are produced at an estimated value 1/ Forest Industries Preliminary Development Plan to 1982, FAP.UNDP/SF 293, October 1969, p. 15. - 10 - of TL 40 million. Wooden sleppers represent 60% of present use by the railroads, which seem to be shifting to concrete sleepers. Exports are not possible until the present quality is improved. C. Other Wood-Using Industries 46. A detailed description of other wood-using industries is given in Appendix 2, from which the following figures on activity are summarized (from 1968): Quantities Estimated produced Estimated value employment (million TL) Wood-based panels Plywood (m3) 50,000 90 1,000 Fibreboard (tons) 28,000 45 800 Particleboard (tons) 42,000 105 200 Secondary wood processing industries Boxes and crates (million boxes) 42.2 133 3,569 (1964) Joinery 243 (1964) 18,350 (1964) Furniture 135 (1964) 10,354 (1964) 47. Wood-Based-Panel and Secondary Wood Processing Industries. Except for a few medium sized wood-based panel plants and a new box factory, the wood-based panel and secondary wood processing industries are in a preindus- trial stage. They are characterized by many small establishments that use poor production methods and sell products of low quality. With regard to wood based panels, production is of relatively recent origin, and per capita consumption is extremely low. 48. By any reasonable measure of comparative advantage, Turkey could specialize and develop a flourishing export trade in many of these industries. But before devaluation there was little incentive for the industry to improve its structure and productivity and move into exports, since it is squeezed between (a) high raw material costs and (b) low sales proceeds for exports caused by an unrealistic exchange rate. This was only partly modified by export incentives that consist of tax refunds on export prices and allocation of logs at lower costs (Decree No. 6/12062), since many of the industrial units are too small to effectively avail themselves of the incentives offered. - 11 - 49. As an illustration of the high cost of raw materials, plywood mills in the Istanbul area are paying TL 450 per m3 ($30 at the new rate of 15) for beech peeler logs with a yield of, at best, about 40%. It is difficult to obtain comparative prices for beech logs in Central European countries, as mills in these countries all have captive sources of supply. Nevertheless, it is our best judgment that the price is very high, quite apart from the fact that the quality of the Turkish logs is lower. Par- ticle board mills, are also allocated beechwood of extraordinarily bad quality with a very low yield in board. The tendency for both particle board and box mills is therefore not to use their Forest Service alloca- tion but to buy wood (mainly of fuelwood quality) in the free market. 50. Since the wood-using industries are not now export oriented, it is perhaps natural that they should have clustered around their major market, Istanbul. However, this is contrary to their long-run efficient development; fibreboard plants should be using sawmill waste and plywood mills should form part of an integrated lumber-pulp-plywood operation, which would permit maximum utilization of the incoming log harvest. 51. One answer of the Turkish Government to the preindustrial stage and unfavorable location of many wood-using industries has been to build some plants of its own - notably Turkey's fourth (and largest) fibreboard plant at Artvin, two particle board plants to be integrated with existing saw mills at Bolu and Ayancik, and the previously mentioned large box factory at Antalya. In terms of regional industrialization and the use of plants of economic size, these seem like steps in the right direction. However, the same objectives might have been reached more economically by giving interested private investors reasonable guarantees regarding supplies and prices of logs. 52. The following table compares Turkish prices for certain manu- factured wood products with representative international prices. - 12 - Turkish Prices for Wood Products Compared With International Prices (in US equivalents) Turkish Price International ($1 - TL 15) Reference Price Sleepers per piece 10.67 Beech plywood per m3 140-183 176-196 Lebanon export price; Lebanese quality is higher. Fibreboard per ton 93-120 100 Average import price c.i.f. United Kingdom Particle board 174 (103)Ll 113 Average import price (19 mm) per m3 c.i.f. United Kingdom Boxes for citrus 0.14-0.16 0.20 Believed to be below fruits, per box world market level /1 The Turkish price may conceivably drop to this level within 3-4 years. See Appendix 2, paragraph entitled "Particle Board". D. Pulp and Paper 53. As is shown in Tables 12-15, Turkish consumption of paper and board increased by about 10% cumulatively in the decade 1958-68, from 92,000 tons in 1958 to 243,000 tons in 1968. The present consumption, at about 7.3 kg per capita, is not a true indication of demand, since imports of paper are strictly controlled; prices are high; and marketing efforts are negligible. A more normal paper consumption for a country of Turkey's per capita income and general educational and cultural level would probably be in the order of 12.0 kg. 54. Between 1958 and 1964, an increasing proportion of the total con- sumption, of paper and board was supplied by the State-owned SEKA concern. Sini V_-a ,4, however, imports have increased at a much faster rate than local production. This is largely attributable to delays in the initiation and completion of SEKA's three new integrated paper mills. In pulp, Turkey was virtually self-sufficient in 1958. Nominally, its import dependence has increased only slightly though it should be noted that pulp imports are rig- idly controlled, and are, in fact, the monopoly of SEKA. 55. Fifteen small private mills with a combined capacity of 15,000 tons produce wrapping papers from waste paper and rags. These are really marginal operations. Until recently, The Turkish Government, which controls both the supply of logs and the investments in paper mills (through the import licensing system), had not been willing to consider major private ventures in the paper sector. - 13 - 56. The history of paper production in Turkey is, therefore, essential- ly the history of SEKA. The original plant at Izmit was built: in 1934. It has grown and now produces a wide range of papers in 10 machines of various makes and ages; the most recent one was installed in 1963. SEKA's present papermaking capacity is about 116,000 tons, and its pulp capacity is about 90,000 tons (40,000 tons each sulphite and mechanical pulp, with small additional quantities of bleached straw pulp, semichemical straw pulp, and hemp pulp). 57. Since its creation, SEKA has operated in a seller's market, and its pricing policy (for both the existing and the new mills) is based on the c.i.f. cost of equivalent imports, plus duties and taxes, plus an additional profit margin of about 20%. Only newsprint prices are set by the Government. Prices for some major types of paper made by SEKA are compared with the equiv- alent c.i.f. import prices. The difference between the high price for kraft paper and the relatively moderate (controlled) price for newsprint is quite striking. This may be due to political and social reasons: namely the desire of the government to increase the circulation of the local press. UK Import Turkish Price Prices (c.i.f.) TL At Ti 9/$ At TL 15/$ S Newsprint 148.70 2,250 250.00 150.00 Kraft 149.14 3,500 388.89 233.33 58. Around 1965, SEKA started planning the construction of three new integrated pulp and paper mills, to be located at Caycuma (60,000 tons of kraft paper), Dalaman (75,000 tons of writing and printing papers and paper board), and AKSU (80,000 tons of newsprint) 1/. The combined investment is now estimated at about $166.5 million equivalent. The Caycuma mill started up in March 1970; the other two mills are expected to start up early in 1971. 59. A number of problems have been encountered in the development of the three new paper mills; these are described in the following paragraphs. 60. The investment cost proved to be very high because of the small scale of output, delays in construction, and financing by tied aid. These mills are too small to benefit fully from economies of scale; as an example AKSU should have been planned for 120,000 tons. An attempt was made to save foreign currency by producing some of the equipment locally. This re- sulted in a saving of $2.3 million in foreign currencies, but: local procure- ment was 62% more expensive than imports (at TL 15 per U.S. dollar), which seems too heavy a price to pay for the encouragement of local. machinery pro- duction. 1/ See Map 5 for location and Table 17 for details of pulp and paper making capacities, employment, and investment costs. - 14 - 61. SEKA, as is the case with many State enterprises, has had sub- stantial managerial problems. There have been frequent changes in top management. It is difficult to attract good people because of the low pay scale in the State enterprises and the lower degree of freedom in decision-making. To recruit top managerial and technical staff to the three new mills will be a major problem. 62. It appears that there were mistakes in the planning and concep- tion of these mills; e.g., Caycuma, which produces kraft paper from mainly coniferous wood, is located in an area where deciduous woods predominate, while Dalaman, which will produce sulphate and dissolving pulps from broad- leaved species, is in an area heavily stocked with pine. Second, in neither mill is there any provision for integration with sawmilling, which would have been very advantageous, as it would have permitted the use of sawmill waste for pulp production. Third, as already noted, the initial scale was rather small for economic operations. Here SEKA may have been faced with an insoluble dilemma. The policy of the GDF with respect to supply of raw materials, combined with greater infrastructure requirements if wood were to be procured from more distant sources, may have militated against a larg- er mill, particularly in view of pressures to move ahead quickly with the projects. 63. Even at the lower capacities chosen, the supply of wood for the new mills is a major worry for the management. The raw material is there in the forests, and the average haul (about 150 km) would be acceptable. The question is whether the necessary forest roads will be built fast enough, and new methods of wood removal implemented soon enough, to meet the needs. To this end, the Turkish Government has approached the Canadian Government (with respect to the Caycuma mill) and the Swedish Government (with respect to the Dalaman mill) for loans to purchase logging equipment. This financing needs to be accompanied by technical assistance in the in- troduction of modern logging and forest management practice. - 15 - IV. THE SUPPLY OF INDUSTRIAL WOOD A. Forest Resources 64. New inventories in 9 of the 23 conservancies indicate that forests cover 18.3 million ha, or 23.4% of Turkey's total area. The forest area can be divided into the following categories: 1/ million ha % High Forest 9.44 51.7 Productive 4.86 26.6 Unproductive 4.58 25.1 Coppice 8.83 48.3 Productive 2.55 14.0 Unproductive 6.27 34.3 To this should be added 40,000 to 50,000 ha of privately owned poplar plantations. 65. The standing volume of timber, by forest types, is as follows (in million m3 (r): Normal coniferous forest 475 Degraded coniferous forest 65 Normal broadleaved forest 176 Degraded broadleaved forest 23 Total 739 These fIiures are estimates and will have to be revised, probably upward, when the forest inventory has been completed. 1/ Gvneril Forestry Statistics 1938-67, General Directorate of Forestry, Ankara, 1969, p. 23. - 16 - 66. Turkey is divided into six general climatic regions; the types of forests have a distinct relationship to these. They are: - Black Sea Region, where soils are rich and the climate favorable, causing heavily stocked forests. Broadleaved species (mainly beech) predominate, but snruce and fir also grow in considerable volume. - Marmara Region, which is not as well stocked as the Black Sea Region. - Aegean Region - Mediterranean Region. In these two region, pines predominate; site qualities are lower than in the first two regions; and the climate is dryer. - East Anatolian Region and - Middle Anatolian Region. These two regions have only scattered forests, mainly man-made for erosion control. 67. Most of the high forest is mature or overmature. Decay and other deterioration is decreasing the stumpage value of the stands, and the current annual increment is far below the potential of the sites. The age distribution of Turkish forests in certain representative regions is given below (in percentages of total area): 17- Age Class ConifersL._ Broadleaved_' 1- 20 0.4 0.1 21- 40 6.5 3.1 41- 60 26.8 11.8 61- 80 25.0 13.6 81-100 19.6 16.5 101+ 21.7 54.9 Source: FAO Report No. FO: SF/TUR 26, August 1969, p.3. /1 Coniferous species in the Conservancies of Mugla, Deniali, Balikesir, Canakkale, Bolu, and Zonguldak. Species include: Pinus brutia, Pinus nigra, Pinus pinea, Cedrus libani, Abies eauitroaLni. /2 Broadleaved species in the conservancies of Canakkale, Balikesir, Bolu, and Zonguldak. Species include: Quercus Spp. and Fagus Spp. Only 33.7% of the conifers are under 60 years of age; the corresponding figure for broadleaved species is only 15.0%. B. Annual Production from the Forest 1/ 68. Past production of industrial wood and fuelwood are indicatec in the following table. 1955 1962 1968 (million mT-of roundwood) Industrial wood 1.11 2.15 3.89 Saw and peeler logs 0.94 1.63 3.24 Pitprops and poles 0.12 0.40 0.46 Pulpwood 0.05 0.01 0.19 Fuelwood 6.39 7.66 9.77 1/ A more detailed account of this section is given in Appendix 3. - 18 - All but a small proportion of the commercial marketing of logs is (lone by the GDF from the State forests. Table 19 gives details of sales of tuel- wood and industrial wood from the State forests for the period 1955 to 1968. 69. Industrial Wood. Production f industrial wood virtually doubled in 1955-1962 and again in 1962-1969. On the surface this may seem iike a reasonable achievement; it becomes less impressive when one considers the following: difficulties for users in obtaining satisfactory guarantee regarding a continuous supply of acceptable logs, poor quality of many of the logs supplied, and relatively high prices. 70. These shortcomings go a long way toward explaining that (a) Tur- key has never exported any major quantities of timber, and (b) SEKA until recently imported substantial quantities of pulpwood each year and is very seriously concerned about supplies for its new, integrated paper mills. The plywood mills complain bitterly about the quality and prices of peeler logs. The telephone and power distribution companies are attempting to replace wooden poles with concrete poles, and the mines would prefer to use more steel yield props and perhaps to import wooden pitprops, though such imports are banned. Some of these difficulties may be traced to the overmature na- ture of the forest and the lack of proper infrastructure, but, in the main, they reflect the failure of successive Turkish Governments to come to grips with forest exploitation. 71. There are some favorable factors. Though prices for saw logs in- creased more than the general wholesale price index over the last 15 years, log prices in real terms are not vastly out of line with international lev- els. Some data on this point are shown in the following table. (Turkish prices are converted at the new rate of TL 15 per US dollar.) Foreign Price Turkish Price delivered mill ex forest depot Pine and fir sawlogs/m3 Austria (1968)$7.9 6 $14.50 Pulpwood, pine/m3 Austria, Sweden, Federal Republic of Germany $11-$12 9.00 Adding average freight and sundry taxes, the cost of pulp logs delivered to the pulp mill at Imit works out at $14.33. It should be possible to lower this price. There is a substantial unexploited forest resource in Turkey (unlike the situation in Northern, not to mention, Central Europe) and, because of cheap manpower, it should be possible to bring out logs - 19 - at least as cheaply as in the regions mentioned. There may be some draw- back for Turkey in topography compared with Finland or large areas of Sweden, but this would hardly hold true in a comparison with many parts of Central Europe or substantial timber-producing regions in Norway. 72. Fuelwood. 1/ The industrial wood supply problem would be greatly eased if less wood were consumed for fuel. Total consumption is estimated at about 13 million tons per year at present, which is about 20% of Turkey's energy consumption. Although the percentage of wood in the rising total energy supply has declined since 1950, he absolute consumption of fuelwood has increased. It has been suggested that the total consumption of fuelwood will decline in the years to come because of increased use of lignite, LPG, and other fuels. However, the rate of replacement of wood by other fuels has been low. 73. A major change in the consumption pattern will only come about through a change in the policy of supplying forest villagers with heavily subsidized fuelwood. The vast bulk of the fuelwood (70%) is sold to forest villagers at prices that only increased from TL 0.20 per ton to TL 0.60 per ton in the years from 1955 to 1967. About 11 per cent of the fuelwood is sold to other villagers; this price has been raised from TL 2.90 per ton in 1950 to TL 38.90 per ton in 1966; the subsidy, though still large, has been drastically reduced. 74. In contrast, the market price of fuelwood (for non-villagers) was TL 23.20 per ton in 1955 (about $8.30 at the iofficial exchange rate pre- vailing then) and TL 62.60 per ton in 1967 (about $7.00 at the then official exchange rate and only $4.20 at TL 15 per dollar). This compares with a price for fuelwood in Switzerland and Austria which remained stable over the period 1963 to 1968 at Sw. Frs. 32/stere ($15.70/ton) and A. Sch 100-110/stere ($8.60/ton). By international standards, even the market prices for fuelwood in Turkey are low and fuelwood in Turkey is quite inexpensive compared to other fuels. C. Mechanization of Logging 75. At present, felling is done by hand, and logs are moved to road points mainly by oxen. The loading and unloading of the logs into ox-drawn carts or lorries for transport to the forest depots is also done by hand. All these inefficient methods greatly increase the price of the logs. 76. One method for increasing efficiency would be to group the forest villa)ers into cooperatives, which could receive modern mechanical logging equipient from the Government. This would be financed through Long-term loans at Low interest rates. Qualified staff of the General Directorates of Forestry and Rural Development would train the cooperatives in the utilization and maintenance of such equipment. According to some observers, such staff is woefully short at the present moment; hence a crash programs for instructors would be needed. This method might be introduced in areas around the new pulp and paper mills where the demand for logs will be greatly 1/ See also Appendix 3.  - 21 - 82. The road building program is also limited by the availability of road building machines. At present, 75% of the roads are built by utilizing mechanical equipment and 25% by manual labor alone. It is estimated that 240,000 workers are engaged in this program, but, as in the case of the logging and transport operations, the average duration of employment is low - only about 40 days per person employed. E. Manpower in the Forests 83. Total employment in the Turkish forests in 1968 was estimated at 22 million man-days. About half a million families live in the forest areas and get a subtantial portion of their total livelihood from working in the forest, either in logging or in construction and maintenance of forest roads. Many of them also engage in some agricultural pursuits such as cropping and herding of goats, etc. These forest villagers are probably the poorest sector of the Turkish population. 84. The organization of forest operations is governed as much by political and social considerations as by economic and commercial criteria. The policy of employing only forest villagers gives the latter an excessive bargaining power, which is used to thwart the introduction of more efficient felling, bucking, and transport techniques. Since there are no all-weather forest roads at present, the operations inside the forest last only about six to seven months per year. During the same period, the forest villagers also plough, sow, and harvest on their small farms, so that the actual time worked in the forest can be as low as 50 days per annum. 85. In case of conflict, the forest villagers always give priority to their agricultural pursuits. Thus, felling and transport of logs is done in a discontinuous and inefficient manner. The cost of transporting logs from the felling site to the forest depots is often greater than the cost of subsequent transport from the depot to the mill. In addition to high costs, the inefficient felling and transport also cause serious degradation and deterioration to the logs. 86. Wages are low (for an unskilled worker, in the order of TL 18-20 per day). Because of the low wages, there is a large loss of trained workers, who leave the forests to seek employment in the towns once they have acquired such skills as driving vehicles or maintaining simple mechanical equipment. A villager with a team of oxen handling logs earns about TL 60 ($6.60) per day, while the owner of a tractor earns three to four times this amount. F. Sales Policy of the General Directorate of Forests 87. The present sales policy of the GDF is to sell coniferous logs and sawnwood to the private sector exclusively through public auctions. In contrast, the General Directorate's mills and the State Economic Enter- prises receive their raw material requirements in the form of allocations, - 22 - based upon a yearly agreement specifying the quantity, quality, price, and location of supply of the wood. The same allocation system is used for the supply of beech sawlogs and peeler logs to the private sector and for the sale of fuelwood to the fibreboard and particle board mills. The volumes allocated for other uses than pulp-making, however, are sufficient for operating one shift only. 88. In all instances, delivery is from the forest depot and not from the roadside. For example, the 1970 allocations to the plywood industry have been made in block to the manufacturers' association, which will distribute a quota to each mill. The total volume of logs is 109,000 m3, and delivery is to be from 56 different locations in seven conservancies. 89. The private sector mills dependent upon the auction system are in an even more difficult, position. They have to compete against each other and against the small marginal sawmillers for small lots varying between about 20 m3 and 100 m . Therefore any medium-sized mill must establish a network of buyers to attend auctions all over Turkey in order to cover its raw material requirements. Table 20 gives figures on one medium-sized saw- mill's purchases in 1969. This mill is located in the Istanbul area, has a capacity of 18,000 n3 of logs per year (based on one-shift operation for 270 working days), and employs 55 workers. Although these figures may not be representative of the industry as a whole, they show the conditions under which some medium-sized mills have to operate. V. AVAILABILITY OF INPUTS FOR FOREST INDUSTRIES A. Auxiliary Materials 90. In the mechanical wood processing industries, the main nonwood inputs are resins for plywood and particle board. The furniture industry also uses surface coatings, textiles, polyurethane, and other foams, as well as hardware, melanine-impregnated decorative panels (Formica type), etc. Only the resins will be considered here; the furniture industry, which uses a very diversified range of nonwood materials, is not yet sufficiently to warrant deeprinvestigation. 91. Resins for plywood and particle board are presently manufactured only by POLISAN in Istanbul. This plant has a capacity of 3,000 tons of ureaformaldehyde per annum, which does not satisfy all the needs of the existing producers of wood-based panels. It is claimed that phenolic res;ins are manufactured locally by ELKA. Locally manufactured ureaformaldehyde: resin costs TL 5,100 per ton, while the same imported resin sells locally at TL 3,860 per ton, i.e., at 75% of the price of the locally made resin, notwithstanding a 50% customs tariff. However, the official import quota covers only part of the industry's needs. By the end of 1970, a new BASF 1/ 1/ Badische Anilin und Soda-Fabrik, the large German chemicals concern. - 23 - Sumerbank joint venture will start producing locally 15,000 tons of urea- formaldehyde resins from imported urea, and imports will probably cease. 92. In pulp and paper production, Stated-owned SEKA encounters little difficulty in procuring necessary auxiliary materials. Resins, limestone, pyrite, sulphur, magnesite, kaolin, waste paper, straw, and hemp are all purchased locally; only aluminum sulphate, certain grades of pulp, and certain minor inputs are imported. B. Equipment and Spare Parts 93. Saws and planing and chipping knives of adequate quality are manufactured locally from imported steel. In contrast, all producers of wood-based panels and furniture complain that: locally made sandpaper is unfit for use on mechanical sanders; the abrasive particles soon part from the paper backing, which causes frequent stoppages for changing the belt; this makes the consumption of local sandpaper prohibitively expensive. Licensed imports of sandpaper are so limited that mills only receive quantities sufficient for a few days' needs. The balance has to be imported by special means, such as claiming it as "unsolicited gifts" or as imports without official transfer of funds, or even by obtaining a special alloca- tion tied to the fulfillment of a contract for a state body. 94. Industrialists also complain of the amount of red tape and time wasted in processing their requests for equipment and spare parts. Although no cases of stoppages attributable to lack of spare parts were documented, there is no equipment in some mills for testing and quality control, allegedly because industrialists prefer to utilize their scarce currency allocation for spare parts. The problem is less acute for SEKA, which apparently has easier access to import licenses for its screens, felt, and spare parts. C. Labor 95. The overall availability of labor is not a major problem for the forest industries. However, like most developing countries, Turkey has an inadequate supply of qualified workers and technicians. There is no lack of workers for the private sawmills except for saw doctors. These, as well as sawyers, would benefit from in-plant training courses, but because of the structure of the private sector, such programs would be difficult to imple- ment. The main problem of the wood-based-panel establishments is the scar- city of qualified technicians to operate and maintain automated plants while the secondary wood processing industry suffers from lack of qualified manage- ment and of skilled labor. 96. The average salary for a woodworking machinist or carpenter is about TL 20 ($2.20) per day, while a foreman or technician might attain TL 1,500 ($166.60) per month. The pay scale is comparable for other jobs. Thus, in the more labor-intensive s- ctors of the woodworking industries, Turkey would hold a massive advantage in the Common Market. - 24 - 07. The relationship between management and unions is an emerging problem in the woodworking industries. The unions were first formed in the early 1960's: labor-management relations have not yet matured to the Ooint where each party understands the other's point of view. In several instances, high labor costs have led to the introduction of far more automated production facilities than Turkey's relatively low per capita income would otherwise justify, with a consequent increase in foreign currency requirements and a reduction in employment opnortunities. 98. The public sector has two grave manpower problems: the high cost of labor and the difficulty in securing top-flight professional staff. The public sawmilling industry, for example, employs far more workers than needed and pays them high fringe and social security benefits (in contrast, the private sector operates on a more flexible recruitment policy and avoids a portion of the fringe benefits by relying more on temporary workers). 99. Skilled workers, technicians, and managers, on the other hand, earn at least twice as much in the private sector as in the public sector. All public sector mills have a considerable turnover of this category of person- nel, and the resulting lack of continuity and planning and the generally less competent management greatly affects the overall performance of public sector mills. D. Management and Entrepreneurship 100. Public Sector. The management of the GDP and its sawmills suffer due to the policy of the Ministry of Forestry, which lays more stress on forest conservation and assistance to forest villagers than on commercial considerations. The top management of the General Directorate of Forest Industries is qualified and competent. However, there is too little delegation of authority to managers of individual plants. The weakest point is marketing. Local marketing is no problem because of the quasi- permanent sellers' market, but the picture is totally different for exports. Since the local industry has always been protected from import competition and since, by comparison with small, local, private mills, the public sector mills make a better product, the General Directorate of Forest Industries fr' ccnfident that they will be able to enter world markets provided enough subsidy is given. They do not realize that price is not the only consideration, and that other elements count as well, such as suitable range of specifications, quality control and inspection of the goods, a network of agents or representatives in all prospective markets, the establishment of all necessary facilities at the points of shipment, effect- ive contacts with shipping lines (or ship brokers for chartering trarmp. and others. All these problems will have to be faced if a serious eff is to be made to enter world markets. 101. Increased attention must also be given to planning and costing. Whereas all other bodies of the Turkish Administration rigidly adhere to a five-year planning period, the GDP plans only for much shorter periods; in - 25 - fact, in April 1970 it had not yet submitted final details of its projects under the Second Five-Year Plan to the SPO. Another aspect of this lack of planning is its unwillingness to grant raw material guarantees even for periods as short as five years. The financial accounting by the General Directorates is primitive, and no real industrial costing exists. SEKA appears more progressive in this. 102. Not all managements of State-owned wood processing industries suffer from a rigid and unimaginative approach. Sumerbank's fibreboard mill in Bolu has succeeded in exporting some of its Sumermica (formica) products, and has a long-range program of diversification. Another example of imaginative management in the public sector is the Ankara Woodworking Trades Institute. Though nominally a vocational training school, it actual- ly operates a furniture plant and enters tenders for the supply of large orders, e.g., for hotels. This "school" has a yearly production of TL 10 to 15 million and in 1969 made a profit of TL 4 million, which it reinvest- ed in additional equipment. 103. Private Sector. A major reason for the lagging development of the private sector is that entrepreneurs do not like to be totally dependent on the State for their raw material requirements. The validity of this anal- ysis is borne out by the fact that SPO has received more project applications for the particle board industry (where the supply of raw materials is not a problem) than for all other mechanical wood processing industries combined (sawmilling, other wood based panels, and secondary wood processing). E. Capital Requirements and Foreign Particiation 104. At the present stage of their development, the privately owned Turkish forest industries seem to face no major problem in raising local capital for medium-sized production facilities (e.g., for production of wood-based panels); however, obtaining the required foreign currency is a totally different matter. 105. There is no need for additional capacity in sawmilling, but sooner or later the sawmilling industry will have to be restructured if it is to enter world markets. Assuming that 20% of the present capacity of private sector mills would be replaced by modern small to medium-sized band mills, with a capacity of 10,0l00 m3 of logs per shift, and 10% by modern large-sized gan; mill; with a capacity of 80,000 m3 per shift, the cost of equipment would he of the order of $5 million and $3.5 million, respectively. 1/ 1/ The Turkish engineering industry would be in a position to manufacture most of the necessary equipment under licensing agreements, in which case only about 25% of the total investment would be in foreign cur- rency. Unfortunately, preliminary indications are that the cost would not be competitive (33-67% above world prices at the new rate of TL 15 per dollar). - 26 - 106. There is no need to expand in the plywood industry until it receives enough logs to enable it to operate on a two-shift basis. In wood-based panels, the cost (fixed investment only) of implementing the SPO-approved projects would be about TL 285 million, and the total foreign currency requirements would be about $13.5 million. No major additional investments would be needed in the wood-based-panel industries until 1977. 107. The secondary wood processing industries should be developed from artisanal units. Assuming that five modern, medium-sized plants for join- ery and furniture with a turnover of TL 20 million each would be created in the period between now and 1977, the total investment might be about TL 120-150 million. Because of the need for more sophisticated and dif- ferentiated machinery, only about 30-50% of the equipment can be locally produced. 108. As would be expected, the pulp and paper industry has the great- est capital requirements. SEKA's plans to establish by 1977 an additional three plants in association with the private sector will cost about $200 million, at least 60% of which will be in foreign currencies. 109. Large-scale private investments in the forest industries, and particularly foreign investment, cannot be expected unless adequate raw material guarantees are given. Although since 1969 it is the official policy of the Government to grant such guarantees, there appears to be substantial reticence on the part of GDF to implement this policy (see Chapter VII). VI. STRATEGY AND TARGETS FOR FOREST PRODUCTS INDUSTRIES A. Strategy 110. The following elements must be taken into account in developing a strategy for Turkish forestry and forest industries: (aThe Turkish forest represents a unique national resource, which, under proper management, could form the basis for substantial and rapidly growing forest industries. Present forest industries are at least within range of international competitiveness even before taking into account the enormous productivity gains that could be achieved both in the forests and the industrial units. (b) The present predominance of mature and overmature trees in the forest (high proportion of saw and "peeler" logs) and the lack of exact knowledge of its composition poses problems in defining a rational development path. To solve this equation requires assumptions regarding future relative world market prices for - 27 - lumber versus plywood versus pulp and paper, and also the design of an optimum system and technologies suited to Turk- ish conditions for the whole chain by which trees.are con- verted into finished forest products. (c) The priority of the forest industries in development is unlikely to be recognized and expressed in action until these industries are put on a reasonably equivalent footing with their competi- tors in the world, i.e., until they can receive their raw mate- rials within a framework of efficient forest management and harvesting methods and free of various social charges. 111. Specific policy measures are considered in Chapter VII. However, a judgement on realistic targets for the forest industries really boils down to a judgment of the extent and the speed with which mutually supporting institutional reforms are implemented. Specifically, it would be desirable to select a limited number of well forested areas capable of supplying an integrated forest operation in perpetuity, with concessions for each area given to independent major companies. To attract foreign and Turkish pri- vate capital for some of these complexes and to conclude concession contracts acceptable to these companies would require rapid completion of the forest inventory and some mechanism whereby, in an initial period, social charges unconnected with the commercial operations would be met by the State. Cer- tain short-term physical constraints with respect to the planning and com- pletion of the necessary forest infrastructure must also be removed. This background must be kept in mind in evaluating the following targets for the growth of the forest industries. B. Targets 112. Removals. There are three different projections of removals and domestic demand for industrial wood, prepared by FAO, GDF, and SPO. The GDF target of 8.9 million m3 u.b. by 1982 is the lowest, and reflects deep pessimism (or perhaps realism) regarding the pace at which production can be expanded. The "Forest Industries Preliminary Development Plan to 1982" (October 1969), prepared by the FAO/UNDP Special Fund Project in Forestry and Forest Industries Development, fixes a wood removal target of 14.6 million m3 (r) u.b. by 1982. After the preparation of the "Preliminary Plan" but before its publication, the Turkish Government published a decree entitled "Encouragement and Development of Forestry and the Export of Forest Products" (Decree 6/11976 of July 1969), which advances the target date for the 14.6 million m3 cut to 1977. 113. This ambitious target is not likely to be met, and furthermore, it will take a major effort to achieve the higher of the following two targets, the one set by FAO (figures in million m3 r.u.b.): - 28 - 1962 1968 1972 1977 1982 FAO 2.8 4.1 6.3 10.3 14.6 GDF 2.8 4.1 5.7 7.7 8.9 The operative constraint as FAQ sees it, is the minimum time required for planning, physical implementation, financing, and required institutional changes. There appears to be no doubt about the market for additional exports of forest products or the ability of the forests to sustain addi- tional cuts. 114. Domestic Demand. FAO has projected domestic demand for all industrial wood. GDF has projected demand only for sawnwood; the IBRD Mission has combined these figures with SEKA's estimates for pulpwood and t own projections for pitprops and plywood. The two sets of projections are compared in the table below: (in million m3 except as otherwise indicated) 1962 1968 1972 1977 1982 Sawnwood - RWF/1 FAQ 1.7 3.6 4.3 5.6 7.2 Sawnwood - RWE/ GDF 1.7 2.9 3.7 4.7 6.1 (Sawnwood) FAG (1.2) (2.58) (3.1) (3.9) (5.0) (Sawnwood) GDF (1.2) (2.02) (2.55) (3.3) (4.2) Plywood RWE FAO 0.1 0.1 0.2 0.3 0.6 Plywood RWE Mission 0.1 0.1 0.1 0.2 0.3 (Plywood) FAQ (0.035) (0.046) (0.080) (0.120) (0.240) (Plywood) Mission (0.035) (0.046) (0.060) (0.090) (0.150) WonIolo RWE FAO 0.2 0.3 1.2 3.2 5.3 SEKA 0.2 0.3 1.2 3.0 n.a. oodpulp '1,000 tons) FAO (61) (98) (330) (890) (1,278) Woodpulp (1,000 tons) SEKA (61) (98) (330) (845) (n.a.) Pitprops and poles FAO 0.9 0.6 0.5 0.5 0.5 Pitprops and poles Mission 0.9 0.6 0.5 0.5 0.5 /1 Roundwood equivalent. 115. Sawnwood. The 1968 official figure of 2.11 million m3 for total production of sawnwood compares with FAO's projection for 1968 of 2.58 mil- lion and GDF's projection of 2.02 million. The FAQ figure implies that un- recorded production would be 470,000 m3, or 22% of the total production. - 29 - This seems rather high but we have no basis for supporting a different figure. 116. Plywood. The GDF has made no projections for plywood demand. The Mission's projections are based on the supposition that excess capacity in the particle board industry and aggressive marketing of particle board will reduce demand for plywood to below the level foreseen by FAD. 117. Since fiberboard and particle board factories use fuelwood rather than industrial wood as their raw material, no problem of supply is fore- seen. 118. Pulp and Paper. The future demand for pulp and paper has been studied in depth both by SEKA and by the staff of the FA0/UNDP Special Fund project in Turkey. The following tabulation compared SEKA projections with FAO projections (interpolated for the same years). Considering the margin of error in this type of exercise, there is not much difference between the two estimates. SEKA Projections, (000 tons) 1970 1975 1980 Writing and printing papers 65 118 210 Newsprint 80 145 258 Wrapping papers 80 146 259 Kraft sack 46 93 165 Corrugated board (including fluting and liner) 34 60 106 Cardboards 55 100 177 Cigarette paper 2 3 3 TOTAL 362 665 19178 119. The present and proximately available paper-making capacity of about 346,000 tons (including the three new mills) would barely cover estimated 1970 requirements. There are several projects to meet future increases in demand in both the public and private sectors as follows: - 30 - Capacity (000 tons) Public Sector Type of Paper Produced Pulp Paper Notes Antalya kraft 200 200 using wood Balikesir bleached kraft pulp tissue and print paper 100 45 using wood Afyon bleached pulp 50 50 using reeds Subtotal 350 295 Private Sector Kartonsan chrome boards, kraft lines, etc. - 25 Ipek Kagit tissue paper, kraft, wrapping paper - 30 Viking wrapping paper, print- ing and lining 15 27 Aslanar shrenz, kraft, board - 13 very small project Mehmet Kavala parchment, wrapping paper - 25 Birkas printing, wrapping, etc. - 50 Subtotal 15 170 120. The private plants involved in these projects would initially use imported pulp but would gradually switch to domestic supplies if and when market pulp becomes available from SEKA. One of them, Birkas, is discussing with SEKA the possibility of participating in a revised Balikesir project, from which they would draw their pulp requirements. It is planned that all the private mills will be completed in stages, with the final stages sched- uled to become operative in 1973-75. Judging by past delays in irpleme'nta- tion of projects, the public sector mills will probably not become operative before 1975 at the earliest. The Antalya and Balikesir projects are to be integrated with sawmills and perhaps plywood mills. Preliminary investment requirements for the public projects are estimated at $227.2 million in for- eign currencies and for private mills at $110.4 million equivalent. SEKA envisages constructing an integrated newsprint mill in the Eastern Black Sea coast during the fourth Five Year Plan. 121. The projected domestic demand for industrial wood may be summarized as follows: Million M3 1962 1968 1972 1977 1982 FAO projections 2.9 4.6 6.2 9.6 13.6 GDF and Mission 2.9 3.9 5.5 8.4 n.a. - 31 - 122. Exports. If the FAO removal figures are accepted as reasonable targets, the following quantities of industrial wood would be available for export (in million m3 r): 1962 1968 1972 1977 1982 Under FAO demand projection -0.1 -0.5 +0.1 +0.7 +1.0 Under GDF plus Mission demand projection -0.1 0.2 0.8 1.9 n.a. (Sawnwood equivalent) -0.07 0.14 0.55 1.3 123. The excess of roundwood would probably be converted into sawn wood and exported. Possibilities of exporting beech plywood have until recently been discounted because of the low quality of the logs and their high prices. Nevertheless, recent developments in technology make it possible to accept at least a proportion of lower grade logs. A feas- bility study regarding production of beech plywood for export may there- fore be justified. More important, there are good stands of pine, e.g. in Southern Turkey which could provide peeler logs for export production of plywood. Exports of pulp and paper are not foreseen since the domestic demand exceeds present installed capacity. Nevertheless, if it were pos- sible to accelerate the development program with the establishment: of large competitive units (see para. 124 below), the pursuit of profit might lead such large units to sell a portion of their output on the world market. Even discounting the prospects for pulp and paper exports completely, total exports for forest products might reach $20-30 million equivalent by 1972 and $70 million equivalent by 1977 (of which close to $60 million would be sawn soft wood). This compares with average annual exports of all forest products of less than $2 million equivalent in 1963-1967. 1/ Further de- tials are given in table 21. VII. DEVELOPMENT POLICIES FOR FORESTRY AND FOREST INDUSTRIES A. Forest Resource Forest Management 124. The FAO/UNDP target for removals of 14.6 million m3 (r) u.b. by 1982 can be accepted as a reasonable preliminary working hypothesis. 1/ Excluding $2.4 million equivalent for products of gathering and agricultural processing (leaves, acorns, chestnuts, etc.) - 32 - Nevertheless, it is believed that this minimum target might be exceeded by vigorous and imaginative action. A review of recommended development pol- icies follows, largely based on the report by the UNDP/FAO Consultancy Mission of August 1969, which will be referred to as the "Osara Report." The following differs from the Osara Report recommendations in terms of presentation and emphasis. It is aimed at highlighting the major issues, with no attempt at completeness. The following program is outlined in the Osara Report: (a) A modern type National Forest Inventory should be completed "within a very short time limit" as a precondition for a rational development plan. (b) Studies should be completed on national and regional infra- structure, the location and size of industries, and the feasibility and cost of road construction, logging, and extraction within each forest region. (c) Management plans should be drawn up for suitable management units that would be determined both by geographical condi- tions and by the industrial structure envisaged. Thus, the immediate supply area for a large, integrated forest complex would form one management unit. (d) A completely new approach to forest removals needs to be instituted which might take account of the following: (i) priorities in cutting for very favorable sites (like the Black Sea Region) so that existing integrated paper mills can be adequately supplied; (ii) concentration of cuttings to fewer but larger tracts, which would result in substantial savings in costs; and (iii) introduction of clear felling systems with immediate replanting; this change could be instituted at the most rapid rate consistent with the proving of the clear fellings system under Turkish conditions. (e) Reforestation should be pushed as far as is economically possible through delimitation of forest areas, studies of optimum land use, minimum goals of forest regeneration, provision of seedlings and extension services, at subsidized costs, for reforestation of private lands. Additional steps are also particularly important to an accelerated development policy: (a) The completion of the National Forest Inventory for the remain- ing conservancies by the end of 1971 at the latest, with prior- ity given to the completion and updating of areas regarded as the best prospects for the establishment of new integrated holding forest industries. - 33 - (b) An accelerated program of construction of forest roads and "access roads" (roads connecting the forest region with the main highways), on the order of 10,000 km per year, to be closely coordinated with the completion of major new forest industry establishments. 125. Supply and Price of Logs. Some of the measures required to improve the supply of raw material to the forest industries are, in part, a matter of good housekeeping. These include the reservation of good-grade saw logs for sawmilling, the maximum use of sawmill waste for pulp and paper production, and quick removal of felled beech logs or their protection from fungal attack. Many of these problems would be largely solved through the creation of vertical- ly and horizontally integrated forest industries. 126. Because of the present composition of- the forest and the exist- ing structure of the Turkish forest industry, only a portion of the total cut at best will be processed by integrated forest industry complexes. In fact, there is a surplus of saw timber that could be most economically converted by independent, strategically located sawmills. This situation would seem to dictate two systems of log sale: (a) Forest concessions, for large, integrated forest industries, that would require log inputs exceeding a certain volume. These concessions would consist of an area.of forest suffi- ciently large to yield the raw materials needs of the nearby plant. The plant would be authorized, under the control of state-appointed foresters, to extract its wood require- ments on the basis of a management plan approved by the forest conservancy. The stumpage price of the logs extracted and requirements concerning road building, afforestation, fire control measure, etc. would be clearly specified in the manage- ment plan. This system would assure to the large, export- oriented industries the quantities of raw material they need, at preestablished prices and at the required time. (b) Raw material guarantees (covering quantities, qualities, price, and location) to all the new forest industries as well as to the existing plants that satisfy SPO's minimum requirements with respect to capacity, efficiency, and export potential, but are too small to obtain concessions. These allocations should be based on three-shift operations, with an initial duration essentially the same as the life expectancy of the equipment. To lower costs, deliveries should be made from alongside the forest roads and not from forest depots as at present. 127. The present cost of logs to Turkish forest industries is abnormally high. Changes are needed in two respects: - 34- (a) Improvements in Log Harvesting Methods. The most important goal would be to speed the flow of logs from forest to mills. Ideally, this calls for year-round operations, increased mechanization, and cancellation of the time-consuming by pass through the forest depots. The External aid would usefully be combined with proper technical assistance, to provide an ideal vehicle for the introduction of such improvements. (b) Pricing of Wood. There are two types of expenditure that should not be charged to the state agency responsible for the commercial exploit- ation of the forests nor ultimately to the users of wood. They are the cost of noncommercial activities, e.g., the rehabilitation of degraded forests, and social welfare activities, e.g., the provision of fuelwood to forest villagers at nominal cost. A study needs to be initiated immediately to make the appropriate accounting and financial arrangements. 128. As in any properly run business venture, the pricing of logs should not be based primarily upon the cost of production (which, as shown in the preceding paragraph, is particularly ambiguous in this case) but upon the value of the wood as derived from the market prices of forest products and the costs of harvesting, transport and conversion. This market value would be related to the international prices for forest pro- ducts, deducting ocean shipping and a reasonable conversion margin for the Turkish forest industries. Given the present "infant status" of the forest industries, the deduction may need to be higher for some years than an internationally competitive reference margin, but there would be every reason for SPO to publish each year comparative figures for wood costs and forest products conversion margins in Turkey and selected foreign countries. 4. Social Problems of the Forest Villagers 129. A great number of employment and other economic opportunities would be created for the forest villagers in a dynamic program of forest and forest industries development. The Osara Report shows that, on the basis of present working techniques and degrees of mechanization, the FAO targeted cut of 15 million m3 (r) by 1982 would be associated with the following increase in manpower requirements (million man-days per annum): - 35 - 1968 Planned 1982 removals removals Direct commercial operations 4.1 million m3 14.6 million m3 Roadbuilding and other preparatory work 3.0 4.5 Wood harvesting 13.7 40.0 Reforestation and tending of cutover areas 5.4 9.0 Subtotal 22.1 53.5 Additional related undertakings Roadbuilding for general purposes (connections with main highways) 1.0 1.0 Afforestation of degraded forest, etc., for commercial wood production 2.5 min. 5.0 Afforestation for erosion control and watershed management 1.5 min. 3.0 Subtotal 5.0 9.0 130. The employment effects of such a program (measured as the total number of people obtaining work) would be reduced by the hoped-for improve- ment in logging methods (including more mechanization) and by the fact that a greater proportion of the work force would be permanently rather than just seasonally employed, which would reduce the ratio of work force to total manhours worked. There is as yet no indication of the reduction in manhours that might result from more efficient operations. Hopefully, it would not be of such a magnitude as to create major social problems, but this point requires urgent study. By the same token, technical assistance teams working with their Turkish colleagues in devising new log harvesting systems should give weight in their economic calculation to the advantage of using relatively labor-intensive methods 1/ even at the expense of government subsidy of the extra cost. B. Forest Industries 131. Weakness of Present Structure. The main weakness of the sawmil- ling industry is the large number and small capacity of the vast majority 1/ In Turkey, the true cost of capital is high and the true cost of labor, in an economic sense, is below the minimum wage in most rural areas. - 36 - of sawmills. The pulp and paper and wood-based panels mills do not utilize saw-mill waste to any great extent and are not of competitive size. Second- ary wood processing industries, e.g., those that produce joinery and furni- ture, are not of industrial size; all production is still at the craftsman level. 132. Integration and Consolidation. In an epoch when Canadian sawmillers sell chipped sawmill waste to pulp factories in Japan, and 327 of all pulp- making materials entering world trade are in the form of wood residues or chips, SEKA relies entirely on pulpwood logs, mainly of sawlog size, and has not considered purchasing wastes of sawmills located less than 100 km away in spite of its continuous complaints concerning the supply of raw material by the GDF with respect to quality, price, and delivery dates. 133. To enable the sawmilling and wood-based panels industries to lower their costs, serious thought should be given to horizontal integra- tion both within the State and private sectors. To this end, the Osara Re- port recommended the creation of a State Forest Industries Corporation to include SEKA, the industrial activities of the Ministry of Forests, and all other state-controlled forest industries. Until such time as this recom- mendation is implemented, SEKA could be represented on the Board of the General Directorate of Forest Industries (once the latter has become a State Economic Enterprise under the new forest law) and vice versa to ensure close contact and to facilitate integration. 134. Incentives should be given for existing medium-sized plants to merge into viable units, and their raw material supply should be assured. Such consolidation would help reduce the price of sawn wood on the inter- nal market and would improve its quality. 135. The Role of Private Investors. Both the SPO and the Ministry of Forests are anxious for private capital and entrepreneurship to be infused into the forest industries. To this end Resolution 6/11976 for the encour- agement and development of forestry and export of forest products was passed. Perhaps its most important provision was that raw materials guarantees should be given to potential investors. 136. SPO has issued investment certificates for two large new saw- us cluding ri -uarantees, but the GDF has not yet imple- mented these guarantees. It claims that SPO's target is too high and that removals are unlikely to exceed 7.7 million m3 by 1977; thus it is reluctant to issue guarantees. 137. Recent growth in the private sector has been largely limited to particle board factories. Private investment, particularly foreign invest- ment, in other wood processing industries is unlikely until adequate raw material guarantees are given. At the present moment there is substantial domestic and export demand which is unsatisfied. Immense progress could be made if the country were divided into major forest concessions, each - 37 - large enough to feed an economic size integrated forest complex, and pri- vate participation in these complexes, particularly by major industrial forest concerns, were activity pursued. 138. The New State Projects. As has been mentioned previously, SEKA has prepared studies for the creation of three new pulp and paper mills. Of these three mills, the Antalya and the Balikesir projects could be designed to internationally competitive capacities. The proposed location of the Antalya project is in an area earmarked for tourism, and this conflict of interests has to be resolved. The Balikesir project is the first partnership of SEKA with a private company; legal and administrative aspects have to be clarified before the revised project can be implemented. 139. The third new project, the Afyon project, would utilize reeds and straw as raw material. This project will have to be scrutinized carefully; before a decision is made, and the following problems should be studied in detail: (a) the ecological problems of reed cultivation; (b) the economics of reed cultivation and harvesting; (c) the social benefits of providing employment to peasants in harvesting the reeds; (d) problems of water supply and effluent disposal. In addition, the normal careful testing of the raw material prior to investment in a project of this size should, of course, be undertaken. In view of the difficulties that SEKA is encountering in ensuring its supply of wood, there seems to be a prima facie case for a full investigation of the viability of the Afyon project. Rumania has substantial experience in operating such a plant in the Danube delta that should be tapped. 140. Location Policy and Economies of Scale. Neither the private sector entrepreneurs nor SEKA nor for that matter the SPO seem to have a policy on location of sawmills or of factories for the production of wood-based panels or paper. None of the plywood mills are located near forest regions. The perverse location of the new SEKA plants in Dalaman and Caycuma with respect to their raw materials supplies was mentioned in Chapter III. The fact that all the four existing integrated paper mills are too small for economic op- erations complicates future planning. If prior commitments to other forest industries are accepted as a constraint, it is only in Antalya and in the easternmost Black Sea Region that there is enough raw material to feed a new paper mill of an internationally competitive size. 141. The expansion of existing mills does not yield the same economies of scale as building a mill to larger size from the outset. Therefore, the plant at Halikesir (though of less than optimum size) may conceivably be a better proposition than expanding one or more of the existing four mills, assuming adequate raw material availability can be proven. All these al- ternatives need to be more intensely studied and documented than has been done thus far. These studies should be undertaken with a great sense of urgency before any new paper mills are approved.  APPENDIX 1 EXPORTS OF FOREST PRODUCTS Present Structure 1. Turkey's exports of forest products for the first Five-Year Plan (1963-1967) fluctuated between TL 35.2 million ($3.9 million) in 1964 and TL 41.6 million ($4.6 million) in 1966. 1/ During the five-year period, the average percentage breakdown of exports was as follows: Logs 29.0 Pitprops and sleepers 0.1 Sawnwood 7.7 Manufactured wood products 4.8 Exports of forest industries 2/ 42.6 Exports mainly of crop gathering 58.4 2. Exports of forest industry products in individual years were as follows: 1963 1964 1965 1966 1967 Million $ equivalent 1.6 1.5 1.8 2.1 1.9 Traditional Exports 3. The only products that Turkey can count on exporting on a regular basis are cedar sawnwood and walnut logs and sawnwood, which are traditional and specialized exports and for which there is a limited overseas market. It is estimated that total exports of the traditional forest products will reach $10 million by 1977. 4. In the period 1963-1967, cedar sawnwood exports exceeded 1,000 m3 only in 1964 and 1965 when they attained 2,700 and 2,000 m3, respectively. Demand for this product is relatively small. 1/ General Forestry Statistics 1938-67. General Directorate of Forests, 1969, pp. 136-137. 2/ Such as daphne leaves ($0.2 million), Valonia acorn ($0.1 million per year), tanning extract ($0.7 million per year), gull nut ($0.4 million per year), storax ($0.3 million per year), chestnuts ($0.2 million per year), and locust beans ($0.2 million per year). The balance consisted of resin, tar, incense, pine nuts, gum, trancanth, madder root, sumac, and acorn cups. APPENDIX 1 Page 2 5. Walnut logs enjoy a high reputation on the European tinher markets for slicing into veneer as well as for converting into sawn wood used in furniture. Although the value added would increase considerably ir these logs were sliced locally,, there seem to be no plants for this in Turley at the present time. The walnut logs are not extracted from the forests but are bought from peasants in Eastern Anatolia who cut their nonproductive trees when their yield of nuts diminishes. It is, therefore, difficult to assess how much the present exports of 5,200 m3 could by increased. Exports of walnut sawnwood increased steadily in the period 1963-1967, to attain 2,000 m3 in 1967. 6. The product with the largest export potential is beech sawn- wood. Exports rose steeply in the period 1963-1967, 6,000 m3 in 1.966 and 5,800 m3 in 1967. Demand for beech in Europe and the Middle East far ex- ceeds Turkey's export potential. Turkey's main competitors in export of beech sawnwood are Yugoslavia, Romania, and, to a lesser extent, Bulgaria. 7. Additional measures would have to be taken in both the logging and the transport of the beech logs, and there would have to be greater quality control in their subsequent processing, to ensure that Turkish production would be of competitive quality. If these measures were taken, considerable exports would be possible. In fact, as there is no raw material shortage, beech lumber could become Turkey's second largest forest products export, surpassed only by sawn softwood. 8. The present local price of beech sawnwood varies between TL 500 and TL 1,000 per m3 ($33.33-66.70 at the new exchange rate of TL 15 per dollar) ex sawmill, depending on grade and length. This may have to be reduced somewhat to be in line with the Yugoslav and Romanian prices of $56-78 per m3 c.i.f. Beirut or the average price per m3 of beech sawnwood imported to the U.K., Europe's largest importer of beechwood, which was $68.42 per m3 in 1969 and $65.72 per m3 in 1968. Until the external value of the Turkish lira was changed, substantial export subsidies were necessary and justified. Nevertheless, present prices are unusually high; one year ago they were about $10 per m3 less. 9. Because of probable delays in the construction of the projected pulp and paper mills, it is unlikely that pulp and paper will be exported before 1980. Turkey will do well if the present import surplus in pulp and paper can be eliminated in the early 1970's. FAO estimates that exports of coniferous sawnwood will attain 100,000 m3 by 1972 and will remain at that level until 1977. These figures will be exceeded only if local demand falls below FAO projections. APPENDIX 2 PRESENT STATUS OF SLEEPERS, WOOD-BASED PANELS, AND SECONDARY WOOD PROCESSING INDUSTRIES Sleepers 1. The local production of sleepers is about 25,000 m3 per annum, mainly from beech (see Table 8 of report). The State sawmills account for all of this. Wooden sleepers represent 60% of present use. Turkish State Railways prefers concrete sleepers to impregnated wooden ones because of both lower initial cost (TL 140 per piece as against TL 160) 1/ and longer life (50 years as against 30 years for impregnated wooden sleepers). 2. Exports are not possible until the present quality of sleepers is improved. Foreign railways do not accept as high a heart content and as much waning of the edges as the Turkish railways. Wood-Based Panels 3. Wood-based panels (plywood, fibreboard, and particle board) are not yet commonly used in Turkey either for construction or for furniture. Total per capita consumption of all three wood-based panels is only about 3.6 m3 per 1,000 inhabitants, which is of the same order of magnitude as the average for Latin America in 1965 or countries such as Libya and Jordan that have to import all their needs. It can be seen that there is a vast poten- tial for further development. Plywood and Veneers 4. No production data exist for veneer sheets before 1967, wnen pro- duction totalled 1,800 m3. Foreign trade in plywood and veneers is negli- gible. Although plywood consumption increased by 325% in the period between 1955 and 1968, it is still at the very low figure of 1.35 m3 per 11000 in- habitants. The development of the plywood industry has been slower than that of other wood-based panels with which it is competing, mainly because of the high cost of the raw material when compared to that of particle board and fibroboard. All plywood is beech plywood except for a small quantity of pine plywood produced by the State-owned mill in Ankara. 5. The first Turkish plywood mill was built in 1935. At present, there are 10 mills with an installed capacity for one shift of 42,500 m3 per year, of which 5,000 m3 are blockboard. About 1,000 persons are now employed in the industry. 1/ Prices include metal plates and screws. APPENDIX 2 Page 2 6. All the mills are in the private sector except for the one located near Ankara, which belongs to MKEK, a State Economic Enterprise. This mill was established to provide packaging material for the MKEK mu- nitions factories. It has a capacity of 2,000 m3 of plywood and 2,000 m3 of blockboard and sells part of its production on the open market. 7. The private plants are located in the Istanbul region (where the major market is situated) with the exception of one plant at Adapazari. The explanation given by the entrepreneurs for locating their plants near the markets instead of near the forests is the need for each plant to pro- cure logs from so many different places. (For example, the mills located mainly in the Istanbul area last year received their log allocation from 56 different locations in seven forest conservancies). 8. Local selling prices are very high. Prices for beech plywood glued with synthetic resins are tabulated in the following: $ per m3 $ per m3 TL per m3 (converted at TL 9 per $) (converted at TL 15 per $) "BB" Grade 2,750 305.55 183.33 "C" Grade 2,100 223.33 140.00 Prices for plywood glued with blood albumin adhesives are: "BB" Grade 1,750 194.44 116.67 "C" Grade 1,450 161.11 96.67 The prices of the State-owned mill are about TL 500 higher than the above prices. The MKEK plant also sells pine plywood at the following prices: "BB" Grade 4,100 455.55 273.33 "C" Grade 3,950 439.00 263.33 9. These prices compared very unfavorably, at the old exchange rate, with those of producers in neighboring countries; Lebanon, which has a smal- ler plywood industry, exports its beech plywood at prices that vary between $1 mt m ind $196 per m3 (f.o.b. Tripoli). This beech plywood is also superior in quality to the Turkish plywood. The U.K.'s average c.i.f. import price for Romanian beech plywood was $110.54 per m3 in 1969 and $102.57 per m3 in 1968. (However, these prices are not strictly comparable because the specifications are different). 10. The main reasons for high prices and unsatisfactory performance in this industry are as follows: APPENDIX 2 Page 3 (a) High Prices and Poor Quality of Peeler Logs Prices delivered to Istanbul are about TL 450 for first- quality logs (Turkish standard) and TL 400 for second- quality logs. Because of a high proportion of overmature trees in the fellings and deficiencies in subsequent handling, yields from peeler logs are as low as 30-40% in spite of the large diameter of these logs as compared with normal yields of between 50 and 55% in Central Europe. Even with a yield of 40%, the cost of the raw material would be in the order of TL 1,000 - 1,100 per m3 of finished product. Furthermore, the quality of the veneer produced in Turkey is lower because of the large heart content of the overmature trees. (b) Use of Low-Quality Glues Five of the plants still use blood albumin glues, a very outmoded input, for part of their production. This yields a low-quality product which cannot normally be utilized for all plywood application. (c) Other Problems The layout is unsatisfactory in most mills. Furthermore, the press capacity is a production bottleneck. Further mechanization is needed, even though, at present, there is a shortage of qualified mechanics to operate and main- tain the equipment. 11. FAO has projected an increase in the production of plywood from 80,000 m3 by 1972 to 120,000 m3 by 1977, i.e., a doubling of the present per capita consumption figure. SPO has authorized two additional plants and the expansion of an existing plant, which would roughly double the present capacity. A plant for the surface finishing of 900,000 m3 of ply- wood is also being installed. Nevertheless, financing has only been assured for the expansion project; there is some doubt whether the two new plywood plants will be built. Of the proposed new mills, one would be in Istanbul, the other at Bartin on the Black Sea Coast. 12. The rapid increase in production capacity foreseen for the par- ticle board industry and the consequent smaller profit margins and more ag;gressive selling policy of these plants are likely to curtail the devel- opment of the plywood industry, and the production targets implied in the FAO demand forecasts are therefore unlikely to be fulfilled. 13. For exports of beech plywood to become economical, the price of raw material would have to be reduced, and the mills would have to be ensured sufficient raw material of adequate quality to enable them APPENDTX 2 Page 4 to operate two or even three shifts. Fibreboard 14. Fibreboard is presently the second most developed of the three wood-based panels industries; however, it will be overtaken by particle board in the near future. Turkey started consuming fibreboard regularly in 1962 when local production was initiated at an annual rate of 22,000 tons (Table 2-3). By 1968 production had increased to 30,000 tons, i.e., just under one kg per inhabitant. There are three plants at present. One in Bolu belongs to Sunerbank, a State Industrial Holding Company, and has a capacity of 15,000 tons of hardboard or 9,000 tons of softboard. The other two, in Istanbul and Izmir, are in the private sector and have a combined annual capacity of 22,000 tons. Turkey's fourth fibreboard plant, which belongs to the General Directorate of Forest Industries, is being erected with equipment: supplied by the USSR. Located at Artvin, it is to start production in 1971 and will have a capacity of 30,000 tons. 15. The quality of the product manufactured by Sumerbank is accord- ing to the German DIN specifications, and its equipment is up to Western European standards. The plant, however, is grossly overstaffed; there are 306 workers and 37 technicians and administrators for the production of only 15,000 tons. Sumerbank proposes to introduce surface finished boards to diversify the range of products offered and thus stimulate sales. 16. The fibreboard industry operates on a three-shift basis. Its raw material consists of logs of fuelwood quality, both coniferous and hardwood species. No problems of raw materials supply face this industry. The price paid for wood is TL 121 per ton for broadleaved species and TL 140 per ton for coniferous species, ex-forest depot. To this must be added transport costs of about TL 20 per ton. 17. The local sales price for hardboard varied between TL 1,400 and TL 1,800 per ton ($155.55 and $200.00 prior to devaluation) 1/. This seems high and may reflect various inefficiencies; the average c.i.f. price of Kn bod .imported to the U.K. in 1969 was only $100.00. FAO projections so retction o: 35 ,600 tons by 1972, increasing to 100,000 tons in 1977. The 1977 projection would give an annual per capita consumption of 2.4 kg. Particle Board 18. At present the particle board industry is the least developed of the three wood-based panels industries. There are only two medium-sized 1/ $93.33 and $120.00 when calculated at an exchange rate of TL 15 per $1.00. APPENDIX 2 Page 5 plants (both in the Istanbul area), which operate two modern automated lines and one small old line where the forming of the mat is done by hand. The present annual capacity is 65,000 m3 (about 42,000 tons). 1/ 19. Because of the present seller's market, no serious quality control is exercised. Consequently, the quality of the product is not up to interna- tional standards; for example, boards with large chips on the surface are relatively common. However, improvement of the quality should not be too difficult with the existing equipment. Only one size board is manufactured, 6 feet by 12 feet, and 60% of the production is 19 mm thick; the balance is between 8 mm and 25 mm. The two plants keep no stocks, and they do not even allow for the curing of the boards after pressing before sanding them, cutting them to size, and shipping them. 20. Pre-devaluation sales prices varied between TL 1,440 per m3 for 25 nun boards and tL 2,375 per m3 for 8 mm boards. The price for 19 mm boards was TL 1,630 per m3 (i.e. TL 2,510 = $279.00 per ton at the old rate, and $174.00 at the rate of TL 15 per $1.00). This would probably drop to around TL 1,000 per m3 (i.e. TL 1,540 per ton, or $102.67 at a rate of TL 15 per $1.00) in a buyer's market. (For comparison, the average c.i.f. price of the U.K.'s particle board imports in 1969 was $113.04 per ton.) 21. The SPO has authorized the establishment of nine new plants and the expansion of two; all of these would be in the private sector. The General Directorate of Forest Industries is considering establishing two plants that would be integrated with their sawmills in Bolu and Ayancik, with proposed capacities of 5,000 and 15,000 tons, respectively. These projects seem to be still at the "idea" stage, and will probably only be included in the Third Five-Year Plan (1972-1977). 22. The proposed locations of the new private mills include not only Istanbul but also Bartin and Kastamono on the Black Sea, Isparta, Bursa, Ankara, and Duzce and Gerede (in Bolu Province). All the new plants would be in the range of 15,000- 30,000 tons except for a planned 78,000-ton ex- pansion in one of the existing Istanbul area mills. If all the authorized plants start production, the total capacity will attain 321,000 tons per annum by 1972. A likely explanation for the enthusiasm of private entrepre- neurs to enter this industry is that this is the only forest products industry that does not have to rely solely on the GDF for its raw material supplies and that, consequently, the entrepreneurs have better assurance regarding the supply of their raw materials. Success will depend upon three factors: raw material supply, markets, and financing. 1/ The Turkish Statistical Office publishes no statistics on production of particle board, and the FAO figures, published in the Yearbook of Forest Products Statistics, do not correctly reflect the changes that have taken place in the industry. The figure of 42,000 tons is a rough estimate. APPENDIX 2 Page 6 23. The wood delivered by the GDF is inexpensive, but it is mainly beech fuelwood of extraordinary bad quality -- much of it completely rotten. Producers claim that if they were to use only this as a raw material they would need 3 m3 of fuelwood per cubic meter of particle board (as compared with a normal consumption of about 1.4 m3). Consequently, they prefer to buy part of their needs from the private sector even though they pay double the price. Existing plants also utilize some poplar bought from the pri- vate sector. On balance, there should be enough raw material at an accept- able price to support expansion of the particle board industry. 24. Exports are not likely to provide a significant market. Particle board is not a product that enters world trade in large volume, and plants already exist in the UAR, Israel, Iraq, Iran, Pakistan, Kuwait, Lebanon, and Greece that at least partly satisfy the local needs. This raises the question of whether the local market would be able to absorb a five fold increase in supplies over three years. It is theoretically possible, though it could only occur through a combination of sharply reduced sales prices, improved quality, and improved marketing. Such large-scale expansion of particle board sales would, to a large extent, be at the expense of the other more costly wood-based panels. With the prospect of sharp competition and greatly reduced sales prices, it is perhaps unlikely that all the new projects will materialize. 25. Until now the financing of only two of the new plants with a capacity of 52,900 tons has been assured by the Turkish Industrial Devel- opment Bank (TSKB). Another four projects with an annual capacity of 142,200 tons were under appraisal by TSKB in April 1970. Some of these projects might find other sources of financing. Secondary Wood Processii 26. The secondary wood processing industries are the least developed of Turkey's wood-based industries; most of the products are still manufac- tured by craftsmen or small establishments. The 1964 Census of Manufactur- ing 1/ gives the following statistics for this industrial subsector: 1/ 1964 Census of Manufacturing Industries and Business Establishments, State Institute for Statistics, Ankara, 1968, Tables 1, 4 and 7. APPENDIX 2 Page 7 Total Persons Number of Engaged on Horsepower Establishments Nov. 1, 1963 Installed Prefabricated Wooden Parts and Structural Elements for Buildings (ISIC 2513). "Large"/a 5 60 105 "Small" 8,659 18,372 n.a. Wooden Containers and Articles for Packing (ISIC 2521) "Large" 6 859 1,425 "Small" 830 737 n.a. Wooden Furniture and Fixtures (ISIC 2601) 'Large" 24 567 675 "Small"f 3,916 9,424 n.a. /a Those employing more than 10 persons. 27. In spite of the overall development of this sector in the period 1964-1970, there is no reason to believe that the number of "large" units has increased considerably. All establishments, with one exception, are in the private sector. Because of their small size and large number, the SPO and other ministerial bodies have no direct control over them; SPO only reviews projects with investments of at least TL 5 million. 28. There is one medium-sized State-owned furniture factory in Ankara, the Ankara Woodworking Trades Institute. Though part of a vocational train- ing school, it operates as an industrial unit and has produced the furniture for most of the large hotels built in recent years. 29. Because of the lack of an adequate distribution network to handle a large production of furniture, the present structure of this industry is not likely to change very quickly. Another factor hindering its development is the difficulty in obtaining a continuous supply of adequate quality sawn- wood and wood-based panels. The cost of the furniture, which is generally of mediocre quality, is extremely high because of the high cost of the raw material and because of production by artisanal methods. 30. As the standard of living in Turkey rises and the demand for fur- niture develops, modern mass production methods can be introduced. As a APPENDIX 2 Page 8 stimulant to the development of this sector, a "Centre for the Development of the Furniture Industry" should be created to offer extension sfrvices to the existing small units and to prepare them for the gradual introduction of industrial manufacturing techniques and the improvement of design and quality. This could be done with the assistance of UNDP, as a Special Fund Project. 31. A true joinery industry will only develop when large-scalo hous- ing schemes that call for large production runs are initiated. There is some trend in this direction; construction has increased steadily in the past years. In 1960, 49,133 building permits were issued for a total floor area of 6.6 million m2. By 1967, 64,433 building permits were issued with a floor area of 12.7 million m2, i.e., a 92.77 increase in floor area. Another favorable factor for the development of the joinery industry is that the public sector construction permits have risen from 791 with a floor area of 398,000 m2 in 1960 to 1,096 with a floor area of 904,000 m2 in 1967. Public sector construction is generally for large projects, which means the contractors will have to turn to industry instead of craftsmen to obtain their needs in joinery products. 32. The section of secondary wood processing industries with the most favorable development prospects is the wooden box industry. According to a survey carried out by the GDF in collaboration with the staff of the UNDP/FAO Special Fund Project, there were, in 1968, 1,577 establishments producing 44.2 million boxes. The industry is located mainly along the Mediterranean and Aegean coasts and in Istanbul. Its products are used for packaging fruits (mainly citrus fruits), raisins, and vegetables, as well as certain manufactured goods. 33. As in the other wood processing industries, the average size of the unit is small; production per plant averages 28,000 boxes. Moreover, pro- duction of fruits being seasonal, the mills only operate part of the year. One notable exception is a large General Directorate of Forest Industries mill in Antalya with an annual capacity per shift of 1.5 million boxes, of which 900,000 are stitched and 600,000 nailed. Although the mill started producing in 1969, utilizing German equipment, no mechanization of the log yard had been foreseen and, consequently, productivity is low. The mill present-ly uses pine logs of fuelwood grade as raw material, operates one shift only, and sells at below cost. 34. Because of the high cost of small-sized industrial roundwood, box plants are increasingly utilizing fuelwood as a raw material. An estimated 25% of the 408,000 m3 consumed in 1968 was fuelwood. Industrial roundwoo< represented 47%, while the balance (28%) was obtained from sawmills in the form of shooks. 35. Price per box for packaging citrus fruit of the Mediterranean coast mills ranged between TL 2.0 and TL 2.3 ($0.22-$0.25) ex mill. Unlike the situation in other wood processing industries, this is probably not too far above world prices. Prospects for this industry are good, since Turkish APPENDIX 2 Page 9 exports of fruits and vegetables are expected to increase to 2.5 times their present level by 1977. If the price of boxes could be reduced to the world level, a considerable export potential could be tapped. Israel and Leb- anon rely solely on imports of wood for all their box needs, even though, in the case of Israel, corrugated board boxes have partly replaced wooden boxes in the citrus export trade.  APPENDIX 3 Page 1 PRODUCTION, TRADE AND PRICES FOR LOGS AND FUELWOOD 1. Past production of industrial wood and fuelwood are indicated in the following table: 1955 1962 1968 (million m3 of roundwood) Industrial Wood 1.11 2.15 3.89 Saw and peeler logs 0.94 1.63 3.24 Pitprops and poles 0.12 0.40 0.46 Pulpwood 0.05 0.01 0.19 Fuelwood 6.39 7.66 9.77 2. Wood is classified above by use rather than by type of log. In Turkey, sawlogs are used extensively by the pulp and paper industry. Par- ticle board and fibreboard factories use many logs of fuelwood grade. 3. In absolute terms, between 1955 and 1968 the production of fuelwood increased more rapidly than the production of industrial wood. Industrial wood and fuelwood are discussed in the following paragraphs. Industrial Wood 4. Sawlogs and Veneer Logs. Sawlogs and veneer logs have always accounted for the major portion of industrial wood removals from the forests. Their production has increased steadily over the past 15 years, roughly 3-1/2 times for coniferous logs and approximately fivefold for deciduous logs (mainly beech). The 1967 annual production of logs was about 2.6 million m3, roughly one-fifth of which were deciduous logs. (For details, see Tables 3-1 and 3-2). 5. Prices of sawlogs over the period 1955-1967 increased more than in line with the general wholesale price index. Below, the prices have been expressed in terms at the official exchange rates prevailing in the years shown. APPENDIX 3 Page 2 Total1 1955 1961 1967 Increase (Q) Pine sawlogs TL 107.18/m3 TL 204.06/m3 TL 227.43/m3 112 ($38.27) ($22.67) ($25.26) Fir sawlogs TL 97.85/m3 TL 233.83/m'3 TL 227.43/,n3 139 ($34.94) ($22.67) ($26.26) Beech sawlogs Tl 81.62/m3 TL 162.29/m3 TL 162.26/m3 99 ($29.15) ($18.03) ($18.03) General Wholesale Price Index 58 125 170 (1958=100) Dollar exchange rate /1 2.80 9.00 9.00 221 /1 The dollar rate was changed in 1960. At the official exchange rate today (TL 15 per $1.00), log prices in dollar terms would be well below their 1961 post-devaluation level (see following tabulation). This compares with prices of coniferous log in Western Europe in 1963 and 1968 as shown in the following tabulation: 1/ 1963 1968 Austria $ 19.71/m3 $ 17.96/m3 (Price for spruce/fir at nearest railway Styria) Switzerland $ 28.08/m3 $ 22.32/m3 (Price per m3 for spruce/fir at nearest railway station, goods not loaded) Federal Republic of Germany $ 23.00/m3 $ 19.45h (Spruce Class B-IV (2b) measured under bark, unhauled. Average price in the State forests of Bavaria) 1/ Source: ECE/FAO Timber Bulletin for Europe, Vol. XXLL no. 3, p. 69. APPENDIX 3 Page 3 6. Foreign trade in saw and veneer logs in recent years has been quite negligible. However, since 1960 Turkey has been a steady exporter of walnut logs, which are the most valuable, in quantities that: have varied between 3,100 m3 and 5,300 m3. Exports of other hardwood logs averaged 5,900 m3 per year. These are generally other species than the more common beech or oak logs. The volume of exports of these other hardwood logs has been decreasing since 1955. 7. Poles. Production of poles for telephone and power distribution lines is hampered by the lack of logs of suitable size and quality. Although the trend is erratic, it points toward an increased production, rising from 21,700 m3 in 1955 to 35,600 m3 in 1968. All local consumpion is supplied by the GDF. The vast majority of the poles produced are of pine (90%). 8. Because of difficulties of supply for wooden poles and limited facilities to impregnate the poles, the authorities prefer to use concrete poles. The latter, though more costly, have a longer life but are not yet common in Turkey. If adequate supplies of wooden impregnated poles were made available at competitive prices, however, there would continue to be a considerable local market for this product. The average price of poles has increased from TL 83.90 m3 in 1955 to TL 284.34 per m3 in 1967. 9. Pitprops. Local production of pitprops has increased constantly over the years, from 100,000 m3 in 1955 to 430,000 m3 in 1967; the main species are pine (55.7%), followed by beech (18.3%), oak (10.4%), and fir (9.7%). The mining industry is important in Turkey, and uses considerable quantities of pitprops, particularly in bituminous coal but also in chrome ore mining. 10. The vast majority of props used in Turkish coal mines are of wood, although some steel yielding props are used. The latter are preferred in many circumstances because they can be erected more quickly and can be re- covered and reused. Steel yield props are all imported; local production, which could conceivably be economical, is not yet planned. 11. Imports of wooden pitprops are banned. This is a new development. As recently as 1965 and 1966, Turkey imported considerable quantities of pitprops (36,600 m3 and 15,600 m3 respectively), and before that even larger volumes. (Table 3-4). 12. Local prices ex forest depot increased steeply from TL 65.18 per m3 ($23.3 per m3) in 1955 to TL 156.05 per m3 (S17.34 per m3 at the old rate) in 1962; they remained more or less constant till 1967. This com- pares as follows with prices of pitprops in Western Europe in 1963 and 19681/. 1/ Source: ECE/FAO Timber Bulletin for Europe, Vol. XXII, No. 3, p. 69. APPENDIX I Page 4 1963 1968 France $ 11.74/m3 $ 13.89/m3 (price at point of departure, props, first class (controlled) including taxes). United Kingdom $ 17.81/m3 $ 19.46/m3 (Average of all imported pitprops) Federal Republic of Germarny $ 13.95/m3 $ 11.98/m3 (Average price in state forests of Bavaria for long pitprops. Spruce less than 15 cm in diameter, barked, not handled). 13. Turkish pitprops prices are not excessive when they are converted at a realistic exchange rate, though they are higher at the official rate. Nevertheless, users complain that they receive wood of too large a diameter, which would, of course, greatly increase the cost of acquisition and use. 14. The local demanl for pitprops is likely to remain at the same level or even increase in the years to come. The SPO has projected pro- duction of coal to increase from 5.0 million tons in 1970 to 7.5 million tons in 1977, but the implementation of this program is subject to consid- erable uncertainty. In ary case, there should be no great difficulty in supplying the local needs. 15. Pulpwood. Local production increased steadily from 51,200 m3 in 1955 to 172,500 m3 in 1967, i.e., by 237%. The main species delivered are pine, fir, spruce, and beech. Until 1969, SEKA each year imported part of its needs of pulpwood, initially from Scandinavia and subsequently from Ee re. In 1969, hovever, at agreement was reached between the Ministry of Industry (to which SEKA reports) and the Ministry of Forests, by which the latter would supply all SEKA's pulpwood needs. 16. To a substantial extent, SEKA mills at Iznit and Caycume, receive logs of sawmill size and quality (often exceeding 70 cm in diameter) in lieu of pulpwood and at pulpwood prices. The explanation for this could be delays in the availability of pulpwood. GDF is honoring its commitment to SEKA, but only at the cost of reducing the suDDly of logs to the sawmills. 17. The average sales price of all industrial wood rose steadily during the period 1955-1963 from TL 45.05 per m3 to TL 135.17 per m3. Since 1963, prices have dropped somewhat and were at TL 115.50 per m3 A?PENDIX 3 Page 5 in 1967. Prices for pulpwood are higher than these averages; the average prices ex depot paid by SEKA in 1969 were TL 135 per m3 for beech and TL 155 per m3 3for pine. The cost to SEKA ex mill was about TL 200-210 per m3. This corresponds to $22.22-23.33 per m3 at the old exchange rate but to only $13.35-14.00 at the new rate of TL 15 per US dollar. Even at this rate, these prices are somewhat higher than those in other larger wood producing countries, as is indicated in the following tabulation 1/: 1963 1966 1968 Austria $ 8.80/m3 $ 9.35/m3 $ 11.61/m3 (Price for spruce/fir delivered at nearest rail- way station in Styria). France $ 16.52/mn3 $ 17.00/m3 $ 16.46/m3 (Wholesale price at point of departure (controlled) in- cludin,; taxes). Federal Republic of Germany $ 17.711m3 n.a. $ 11.84/m3 (Average price in State forests in Bavaria for spruce, unharked, before loading). Sweden $ 13.07/m3 $ 13.70/m3 $ 11.79/m3 (Average export price, f.o.b.). 1/ Source: ECE/FAO Timber Bulletin for Europe, Vol. XXII, No. 3, p. 68. 18. Fuelwood. Official statistics of removals of fuelwood from the State forests indicate that the authorized removals increased by 54% between 1955 and 1968 from 4.65 million tons to 7.17 million tons. Recorded un- authorized removals (i.e., where the transgressor was apprehended) are negligible. A report prepared for the Second General Energy Congress of Turkey indicates a."hidden consumption" that brings the total consumption to about 13 million tons per year. This is about 20% of Turkey's present full energy consumption. Statistics on fuelwood consumption are given in the following table. APPENDIX 3 Page 6 ESTIMATED FUELWOOD CONSUMPTION /1 (1000 tons) Year Recorded "Hidden" Total Per capita (tons) 1962 5.611 6.114 11.725 0.402 1963 -5.750 6.266 12.016 0.403 1964 6.167 6.423 12.590 0.411 1965 6.289 6.591 12.880 0.410 1966 6.237 6.748 12.985 0.404 1967 5.941 7.327 13.268 0.403 /1 Source: General Report, Second General Energy Congress of Turkey, page 67, Table 3.45. 19. Using figures from the General Energy Report, it would appear that wood was the source of 34.9% of the total. energy consumed in Turkey in 1950. By 1960 its share had been reduced to 30.0%; and in 1967 to 22.67. However, because of the considerable increase in energy demand, the actual consumption of fuelwood increased from about 8.18 million tons in 195n to 13.3 million tons in 1967. 20. The Report to the Second Energy Congress estimated that total consumption of fuelwood would reach 14.5 million tons by 1972, 16.4 million tons by 1977, and 18.5 million tons by 1982. The corresponding estimates of "official" removals are 7.1 million tons in 1972, 8.5 million tons in 1977, and 10.2 million tons in 1982. The General Energy Report suggests that the satal consumption of fuelwood will decline in the years to come because of increased use of lignite, LPG, and other fuels. But, as the above percentages show, the rate of replacement of wood by other fuels has been low. 21. A major change in the consumption pattern will only come about through a change in the policy of supplying forest villagers with heavily subsidized fuelwood. The sales price of fuelwood to non-villagers, i.e., the market price, has increased in the past 13 years by 170% from TL 23.2 per ton in 1955 (i.e., about $8.3 at the official rate prevailing then) to APPENDIX 3 Page 7 TL 62.6 per ton in 1967 (i.e., about US$7.00 at the old official rate and only $4.20 at the new rate of TL 15 per dollar). However, these sales represent only 19% of total sales. The vast bulk of the fuelwood (70%) is sold to forest villagers at prices that have only increased from TL 0.20 per ton to TL 0.60 per ton in the years from 1955 to 1967. The balance (11%) is sold to nonforest villagers at prices that have increased from TL 2.90 per ton in 1950 to TL 38.90 per ton in 1966. 22. The price of fuelwood in Central Europe, namely Switzerland and Austria, remained stable at Sw. Frs. 32/stere ($15.70/ton) and A. Sch 100- 110/stere ($8.60/ton) over the period 1963-68, at a time when the market prices in Turkey increased by 42%. In spite of this, compared to the prices for other fuels, Turkish fuelwood prices are still quite low.  TABLE .1 Budget of the Ministry of Forests (TL 1,000) 1968 1969 1970 Expenditure Buadgeted Estimated Monthly -alaries 30,831.3 34,L08.4 32,081.7 Daily wages 19,793.3 27,362.2 26,335.3 Temporary & consultants 15,980.6 20,658.8 20,395.1 Social assistance 3,677.5 5,000.8 9,188.0 Overtime 63.7 100.0 18.0 Compensation 737.7 1,205.0 1,205.0 Scholarship - 1.5 1.5 Representation h.2 4.2 4.2 Travel 2,J).32.1 3,190.0 3,190.0 Internal travel 833.3 1,000.0 1,000.0 Other travel 17.h- 197.8 197.8 Travel abroad 132.7 200.0 75.0 General administrative expenses 557.6 838.0 838.0 Printing, etc. 106.2 160.0 160.0 Postal telephone expenses, etc. 166. 220.0 220.0 Misc. services 375.6 750.0 750.0 Education and research 2,35.2 3,816.5 3,616.5 Agriculture and forestry 4,764.2 5,835.0 5,787.0 Institutes and schools services 2,51.9,7 2,650.0 2,60,.0 Agricultural and forestry institutes 1,221.7 1,669.7 1,669.7 Fairs and exhibitions 11.0 20.0 20.0 Publicity 7.7 10.0 10.0 Maintenance of buildings & equipment 753.7 900.0 900.0 Financial transfers organizations 6,022.3 850.9 National defense, insurance & other funds 234.0 23 5 J1 235.9 Participation in international organizations 8.2 10.0 10.0 Payments to pension fund 1,031.8 1,292.7 Payments to pensioners 1,120.5 1,hl.0 L,e 00.0 Assistance to Chambers of Agriculture 50.0 6 63*5 Repayment of debts 357-3 -..0. GRAND TOTAL 96,255 .8 13 4,259 .1 113,910 .1 TABLE 2 Consolidated Revolving Fund: Income and Expenditure Statement (TL 1,000) INCOME 122 16j 1964 1965 1966 1967 1968 Sales 8218 6148,594 691,800 821 891 858 696 957,0b) 1,0d2,) 19 Other resources 09 IW 16,92 lq lh 2g b02 2_ Repair fees (main repair shops) 1,281 1,877 2,038 2,505 3,019 6,969 6,792 Repair fees (spare parts repsir shops) 81 130 248 528 582 300 255 Impregnation fees 505 1,118 1,608 1,104 1,126 1,299 1,49o Measuring and other differences 1,503 2,577 2,542 2,410 2,615 2,303 1,689 Interest received 2,570 3,178 5,773 4,873 5,733 7,280 6,646 Various .12 5,590 4L772 6 53 6,738 7,902 7.,189 TOTAL 593,280 663,065 708,782 839,365 878,510 983,098 1,106,480 EXPENDITURE Direct expenditure 1 9,18 208.l56 231,886 300_8 339,165 349,973 402,908 Logging 36I37 55,3762 58,751 E7,db9 Sawing 7,894 8,903 10,715 12,848 1L,802 16,156 16,694 Transport 153,172 161,208 184,038 236,889 268,882 275,067 318,345 Indirect expenditure 12L 14 236 221 284:560 328 639 368,131 h07,69 Lg3012 General admi.nistra- tion 126,817 141,657 159,006 161,773 179,530 200,166 221,751 Fore3t maintenance 55,962 82,256 107,751 148,848 169,824 187,792 212,064 Depreciation 11,665 12,314 17,804 18,018 18,776 19,511 19,196 Sales expense 1 1 20 21 117 16 11o0 Repair shops 1 001 7 132 ImaremnaLion t t71 6107 Tariff charge col- lected 8 68490 440522 44,689 51,078 78,650 5'AT, j L q&6 6 1,22 820331. 881,242 1,019,295 Totai-profit 116,818 142,409 96,727 96,142 58,155 101,856 91,353 Source: Ministry of Forests TABLE 3 Revolving Fund Projected Investments: 1971 and 1972 (TL 1,000) 1971 1972 Prevention of forest fires 230 230 Forest construction and improvement 43,662 3,800 Nurseries - - Reforestation 78,500 89,500 Afforestation with quick grwing species 7,800 8,300 Afforestation with eucalyptus trees 3,000 3,500 Forest roads 117,402 133,721 Main repair shops 2,350 2,700 Other repair shops 1,500 2,000 Supervisory establishments 15,800 18,170 Water installations 2,200 2,00 Electric installations 660 720 Power generation 700 770 Tolephonc installations 2,000 2,000 Var-ious establislaents 1,500 1,650 Forestry production machinery and equipment 53,565 22,550 Production and evaluation establishments 20,279 16,159 Evaluation of secondary production 500 500 Recreation areas within forests 1,100 1,200 Transportation means 12,780 12,780 Construction machines 25,000 30.000 Total forestry 397,848 [00,530 Forest products industries 65,000 75,000 Grand total L62,8L8 L75,530 Source: Ministry of Forests TABLE h Annexed Budget: Projected Investments 1971 and 1972 (TL 1,000) 1971 1972 Forest delineation 5,700 5,700 Prevention of forest fires 3,178 3,h68 Prevention of forest pests and diseases 100 90 Range inprovement within forests 5,000 5,670 Protective forests 150 150 Soil loboratory 245 250 Forest seed laboratories and seed 1,915 815 production kilns Nurseries (production of seedlings) 11,900 13,300 Poplar afforestation 1,300 1,500 Eucalyptus afforestation 1,400 1,700 Afforestation, soil conservation, and 3,200 3,500 ran.-e improvem;ent - study and project Afforestation (establis-.ent of arboretum) 2,120 2,220 Soil conservation and subriver iTrovement 15,490 16,236 Forest research 5,9L0 4,375 Poplar research 4,500 h,950 Forest ranagement 13,378 13,460 National parks 730 730 Game brecding centers 575 620 Contribution to IMDP Special Fund Project 1,000 - Transportation vehicles 5,896 6,592 Grand total 86,975 88,956 Sourc: ]inistry of Forests TAP) I E 5 Statistics on Forest Industries ISIC 2 : Manufacture of Wood and Cork (fxcept furniture) Total persons Average Average Annual No. of employed annual wages per sales Average annual Type of establish- on Nov., no. em- pmployee (million sales per finn establishnent ments 1963 ployees (T, L) (1,000 TL) "Lrge" 3 .94 5,788 6,185 257.7 2,741.6 "Small" 12,710 28,915 10,320 2 631 5306 41.7 Total 12,804 28,915 16,108 3,908 788.3 57.1 ISIC 26: Kanufacture of Furniture "Large" 2" 40 878 5,761 39.8 995.5 "Small" 5 43621 11,003 h 2 496 2,237 151.7 32.8 Total 4,661 11,003 5,374 2,798 191.5 41.1 ISIC 27: Manufacture of Pnner and PacEr Pi oducts "arge" 3 26 1/ 7,495 9,244 393.2 1,512.4 "Small" 5 352 1,028 671 ,562 68.3 193.9 Total 378 1,028 8,166 8,859 461.5' 1.220.9 1/ 1964 Census of Manufacturing Industries and Business Establishments, Ankara, 1968, published by the State Institute of Statistics (Publication No. 547). Tables III, IV, V, VI, 1. Includes self-employed owners and family members. Employs more than 10 persons. Of which 17 are in the public sector. Employs less than 10 persons. All in the private sector. All in the public sector. TABLE 6 Production and Trade in Coniferous Sawnwood 1,000 m3 (s) Apparent Year Production Imports Exports consumption 1955 663.4 158.4 - 821.8 1956 453.2 U.8 0.6 497.4 1957 532.6 66.3 0.6 598.3 1958 495.2 13.5 - 508.7 1959 425.2 25.2 - 450.4 Average 1955-59 513.9 61.6 0.2 575.3 1960 602.7 0.7 3.2 600.2 1961 560.6 0.6 1.3 559.9 1962 841.0 - -81.0 1963 867.0 - - 867.0 1964 1,020.0 0.1 0.7 1,019.4 Average 1960-64 778.3 0.3 1.1 777.5 1965 1,032.0 - - 1,032.0 1,LL-0.0 - 0.1 1,410.0 1967 1,512.0 - 0.2 1,511.8 1968 1,632.0 - 1.4 1.630.6 Avera7e 1965-68 1:"04.0 0.L 15,603.6 Source: FAO Yearbook of Forest Products Statistics. TABLE 7 Production and Trade in Broadleaved Sawnwood 1,000 m, (s) Apparent Year Production Imports Exports consumption 1955 158.0 1.2 6.2 153.0 1956 114.0 4.7 7.7 111.0 1957 127.0 2.6 - 129.6 1958 124.0 - 0.2 123.8 1959 131.0 - 0.9 130.5 Avera7e 1955-59 130.8 1.7 2.9 129.6 1960 131.0 - 1.9 129.1 1961 168.0 - 2.2 165.8 1962 248.0 0.1 0.4 247.7 1963 260.0 0.1 0.6 259.5 1964 303.0 - 0.6 302.4 Averae 1960-6h 222.0 - 1.1 220.9 1965 323.0 - 4.0 319.0 1966 332.0 - 8.1 323.9 1967 389.0 0.4 6.3 383.1 1968 485.0 - 8.1 476.9 Averpe 1965-68 382.2 0.1 6.6 375.7 Source-: FAO Yearbook of Forest Products Statistics. TABIU 8 Production and Trade in Railway Sleepers (1,000 n3) Apparent Year Production Imports Exports constuption 195 13 - 0.2 12.8 1956 24 0.3 0.2 214.1 1957 11 1.6 - 12.6 1958 23 - - 23 1959 22 7.1 - 29.1 Average 1955-59 18.6 1.8 0.1 20.3 1960 34 4.7 0.7 38 1961 40 - 2.2 37.8 1962 18 - - 18 1963 15 1.7 0.2 16.5 1964 12 - - 12 Average 1960-64 23.8 1.3 0.6 24.5 1963 20 - - 20 1966 32 - - 32 1967 25- -2 1968 40 - - 4o Average 1965-68 29.3 29.3 Source: FAQ Yearbook of Forest Products Statistics. TABLE 9 Production and Trade in Mechanical and Chemical Pulps (1,000 tons) From From other Total Apparent Year wood fibers Total imports consurmption 1955 28.0 15.0 43.0 - 43.0 1956 30.0 3.5 33.5 2.5 36.0 1957 39.0 5.7 44.7 6.8 51.5 1958 37.0 8.4 45.h 1.0 46.4 1959 35.0 8.2 43.2 0.6 43.8 AveraZe 1955-59 33.8 8.2 L2.0 2.2 44.2 1960 37.0 6.2 43.2 - 43.2 1961 39.6 6.3 45.9 7.0 52.9 1962 67.2 3.7 70.9 12.0 82.9 1963 68.7 8.6 77.3 9.5 86.8 1964 76.0 9.2 85.2 5.4 90.6 Averace 1960-64 57.7 6.8 614.5 6.8 71.3 1965 76.0 8.1 84.1 - 84.1 1966 73.8 7.7 81.5 8.3 89.8 1967 76.9 9.2 86.1 15.7 101.8 1968 80.0 9.2 89.2 8.5 97.7 Aver,).e 1965-68 76.7 8.6 93.8 8.1 93.h Source: FAO Yearbooks of Forest Products Statistics. TABLE 10 Production and Trade in Mechanical Pulp (1,000 tons) Apparent Year Production Imports consumption 1955 16.0o 16.o 1956 17.0 - 17.0 1957 22.0 5.7 27.7 1958 21.0 - 21.0 1959 20.0 0.6 20.6 Average 1955-59 i9.2 1.2 20.4 1960 20.0 - 20.0 1961 23.5 6.7 30.2 1962 37.7 12.0 49.7 1963 38.1 7.4 45.5 1964 42.2 5.4 47.6 Avera-e 1960-64 2.3 6.3 38.6 1965 39.3 7.9 47.2 1966 39.6 - 39.6 1967 37.2 37.2 1968 37.5 - 37.5 Averar.e 1965-68 2.0 .40.4 Source: FA0 Yearbooks of Forest Products Statistics. TABLE 11 Production and Trade in Chemical Pulp (1,000 tons) Year Production Imports Apparent consumption 1955 12.0 - 12.0 1956 13.0 2.5 15.5 1957 17.0 1.1 18.1 1958 16.0 1.0 17.0 1959 1..0 - 15.0 Averag-e 19955-59 14.6 L5. 1960 17.0 - 17.0 1961 16.1 - 16.1 1962 29.5 - 29.5 1963 30.6 2.1 32.7 196h 33.8 - 33.8 Average 1960-66 25.h 0.4 25.8 1965 36.7 - 36.7 1966 38.7 8.3 47.0 1967 41.7 15.7 57.4 1968 . 2.5 8.5 51.0 AveraF'e 1965-68 39.9 8.1 48.0 Source: FA0 Yearbooks of Forest Products Statistics. TABLE 12 Production and Trade in Paper and Paperboard (1,000 tons) Printing and Other Total writing paper and Total Total apparent Year Newsprint papers board production imports conm:'tion 1955 7.4 8.8 29.0 45.0 51.0 96.0 1956 7.6 8.2 30.0 h6.o 31.0 77.0 1957 9.3 8.5 26.0 44.0 L6.o 90.0 1958 8.0 11.0 38.0 57.0 46.0 103.0 1959 7.5 11.0 30.0 58.0 52.0 110.0 Avern7~e 1955-59 8.0 2. 0650.0 h5.2 9- 1960 10.0 8.8 37.0 56.0 24.0 80.0 1961 13.0 11.0 39.0 63.0 27.0 90.0 1962 20.0 16.0 46.0 82,0 34.0 116.0 1963 20.0 21.0 53.0 94.0 47.0 141.0 1964 22.0 23.0 54.0 99.0 26.0 125.0 Averc7e 1960-6L 17.0 16.o L5.8 78.8 31.6 110.L 1965 20.3 23.7 54.0 98.0 139.3 1966 18.4 26.6 61.2 106.0 129.3 1967 12.7 32.1 82.1 127.0 228.2 1968 8.1 40.3 91.1 139.0 251.1 Averare 1965-68 14.9 30.7 72.1 117.5 18 Source: FAO Yearbooks of Forest Products Statistics. TABLE 13 Production and Trade in Newsprint (1,000 tons) Year Production Imports Apparent consumption 1955 7.h 10.0 17.4 1956 7.6 9.3 16.9 1957 9.3 11.0 20.3 1958 8.0 6.6 14.6 1959 7.5 11.0 18.5 Avera7co 1955-59 8.0 2.6 l7.6 1960 10.0 11.0 21.0 1961 13.0 11.0 26.0 1962 20.0 11.0 31.0 1963 20.0 17.0 37.0 1964 22.0 11.0 33.0 AvcraZe 1960-64 17.0 12.2 29.2 1965 20.3 23.0 h3.3 1966 18.4 25.7 UL.4 1967 12.6 46.7 59.3 1968 8.1 51.9 60.0 Averace 1965-68 14.9 36.8 51.7 Source:. FAO Yearbooks of Forest Products Statistics. TABLE 14 Production and Trade in Printing and Writing Papers (1,000 tons) Year Production Imports Apparent consumption 1955 8.8 11.0 19.8 1956 8.2 3.8 12.0 1957 8.5 8.5 17.0 1958 11.0 11.0 22.0 1959 11.0 13.0 24.0 AveraEe_1955-59 9.5 9.5 19.0 1960 8.8 -.1 12.9 1961 11.0 6.5 17.5 1962 16.0 8.1 24.1 1963 21.0 11.0 32.0 1964 23.0 3.0 26.0 Average 1960-64 16.0 6.5 22.5 1965 23.7 1.3 25.0 1966 26.7 0.8 27.4 1967 32..1 3.8 35.9 1968 40.3 4.8 45.1 Averaze 1965-68 30.L 2.7 33.h Source: 'FAO Yearbooks of Forest Products Statistics. TABLE 15 Production and Trade in Other Papers and Paperboard (1,000 tons) Year Production Imports Apparent consumption 1955 29.0 30.0 59.0 1956 30.0 .8.0 8.0 1957 26.0 27.0 53.0 1958 38.0 28.0 66.0 1959 30.0 37.0 67.0 Avera-e 1955-59 0.6 28.0 e8.6 1960 37.0 9.6 46.6 1961 39.0 9.5 48.5 1962 46.0 15.0 61.0 1563 53.0 19.0 72.0 1964 54.0 12.0 66.0 Averare 1960-6L 45.8 13.0 '8.8 1965 54.o 27.0 71.0 1966 61.1 21.3 32.4 1967 82.1 50.9 133.0 1968 91.1 54.9 1416.0 Averaie 1965-68 72.1 38 .5 108.1 Source:. FA0 Yearbooks of Forest Products Statistics. SEA's Sale3 Frices for Paper (S4ring 1970) A. Ically KiLnufact,trrd Proucts T1/ton /ton /ton First quality wood free paper (50 Frains) 7,000 717.78 L66.67 First quality vood fr,e pj e:, k,- rains) 5,500 611.11 3t6.67 First quality wood free paper (15 rrains or more) 5,000 555.56 333.33 Second quality vood free paper 3,500 388.89 233.33 "Magazine paper" 3,500 388.89 233.33 Third quality reproduction paper (54 and 60 grains) 3,500 388.89 233.33 Newsprint (in sheets and reels) 2,250 250.00 150.00 OTicket" paper (wood free) 3,700 L11.11 26[.67 Onion akin (cop) white 6,300 700.00 L20.00 Onion skin (copy) color 6,500 722,22 L33.33 'Book cover" paper (copy) white 4,000 L4.LL 266.67 *Book cover" paper colored h,200 L,66.67 280.00 Pa.kapin Papers Parchment . 7,000 777.78 L66.67 Sulphite pulp (normal) L,500 500.00 300.00 Initiation kraft paper (sheets) 2,600 288.89 173.33 Initiation kraft paper (reels) 2,500 277.78 166.67 Kraft paper 3,500 388.89 233.33 Shrinz paper (150 and 180 grains) 1,800 200.00 120.00 Colored cellulose paper 5,000 555.56 333.33 Boards Bristol board (white) 5,500 611.n 366.67 Board for files 1,500 500.00 300.00 Chrome board (300 grains) - 4,500 500.00 300.00 Wood board 2,350 261.11 156.67 Grey board 2,500 277.78 166.67 Strew pulp board 1,650 183.33 110.00 B. Imported Products Sulphite paper (in sheets) 6,000. 666.67 hoo.00 Bleached su-phite (in reels) 5,500 611.11 366.67 kaft (i se5t2 'd bobbina) 3,500 383.89 233.33 Bristol (white) 6,00 711.11 426.67 Chrome board (210 and 225 grains) 5,500 611.11 366.67 Chrome board (300 grains) conche 7,000 777.78 L66.67 Chrome board (250 grains) 4,800 533.33 320.00 Colored pulp 9,150 1,0L6.67 610.00 Parchment 9,800 1,03.89 653.33 White book cover paper (90 grains) 4,000 h1u.11 266.67 Colored book cover paper (90 grains) h,200 L66.67 2e0.00 White book cover board (150 Praina) 4,400 L88.89 293.33 Colored book cover board (150 grains) L,600 511.11 3G5.67 Sources SEKA TABLE 17 Characteristics of Seka's New Paper Eills Pulping Papermaking EMPLOYMENT Raw Investment capacity capacity Expected material (,million $) (1,000 tons/year) (1,000 tons/year) startup Staff Workers 1,000 m3/year CAYCUA h.5 .5 Unbleachcd Kraft paper 60 March 139 635 Pine 218 Kraft pulp will con- kraft 60 1970 Beech 110 tain 15% beech wood TSSC 28 DALIAN 80.6 Bleached Uniting and Spring 159 791 Pine 380 6,500 tons NSSC pulp kraft 70 printing 35 1971 for printing & uniting Dissolving Paper papers wil_l come from pulp 15 board 40 Caycuria AKSU W0.3 Mechanical Newsprint 82.5 Early Spruce/ 16,500 tons sulphate pulp 65 1971 fir 185 pulp for newsprint will come from Dalamar ‘目 TABLE 18 Forest Area and Pnnual Allowable Cut By Forest Region and Conservancy High Total forest Annual allowable forest Coppice area c t Region (1,000 ha) (1-000 ha) (1,000 ha) ("000 m roun&wood) Black Sea Region 2s79h.5 23285.5 5,o8o,o 6.,9L6 Araasya 580.4 1,185.7 1,766.1 728 Artvin 221.8 42.9 26L.7 621 Bolu 516.6 70.8 587.4 1,,531 Giresun 310.0 16.5 326.5 775 Istanbul 61.4 483.7 545-1 190 Kastamonu. 571.3 247.5 818.8 1,373 Trabzon 192.4 38.2 230.6 641 Zonguldak 340.6 200.2 540.8 1.,267 Mar uara Region 69 .O 918.8 1,613.8 1,365 Adapazari 137.0 211.6 348.6 358 Bursa 244.0 373.6 617.6 577 Canakkale 314-0 333.6 60.6 430 AeZean Re ,ion 1,482.8 1,393.6 23876!4 1p717 Balikesir 34o.4 353.4 693.8 485 Izmir 396.4 616.8 1)013.5 447 Mugla 745.7 423.4 lp16q.1 785 TABLE 18 (cont'd) Figh Total forest Annual allowable forest Coppice area cut Region (1,000 ha) (1,000 ha) (1,000 ha) (1,000 m3 roundwood) ITediterranean Re!ion 1,697.3 900.0 2j597.3 11855 Antalya 785.8 486.0 1,271.8 1,041 Isparta 330.2 214.9 545.1 270 Mersin 581.3 199.1 780.4 544 Eastern Anatolia 16i14.1 21409.9 4,0214.1 1,31d4 Adana 1,30.0 949.8 2,254.8 1,12h Elazig 140.5 1,359.6 1,500.1 23 Erzurum 168.6 100.5 269.1 197 Middle Anatolia Region 160.5 921.0 2081.5 1 26 Ankara 271.2 182.9 454.1 317 Denizli 430.4 261.7 692.1 428 Eskishir 458.9 476.4 935.3 581 Total Turkey 9.444.5 8,828.7 18,273.2 14,553 Sources: General Directorate of Forests, General Forestry Statistics, 1938-67, Ankara, 1969, p. 25. Annual allowable cut: FAO/UlTDP/SF 293 Forest Industries Preliminary Development Plan to 1982, Appendix A, pp. 43-44. TABLE 19 Total Sales from the Forests (1,000 m3 roundwoodf Pulpwood and Fu e 1 ood sundry Total 1/ industrial industrial Year 1,000 mj Sawlogs Pitprops Poles wood wood 1955 6,386.0 938.5 99.9 21.7 51.2 1,111.2 1956 5,97.0 1,070.7 137.5 28.2 78.3 1,304.7 1957 6,958.5 1,263.,6 171.2 39.4 58.9 1,533.1 1958 7,278.5 1,251,0 241.5 31.2 101.1 1,624.8 1959 7,887.0 1,377.6 217.3 19.4 89.7 1,704.0 Average 1955-59 6 89,14 11180.3 173.5 28.0 75.9 11457.6 1960 8,h58.1 1,h85.7 294.8 17.7 55.0 1,853.1 1961 7,832.4 1,40.1 347.1 17.7 191.8 1,960.7 1962 7,664.9 1,629.2 386.9 17.9 11.2 2,145.1 1963 7,878.8 1,832.4 353.3 25.7 109.0 2,320.4 19614 8,15.7 2,107.5 370.4 21.8 129.3 2,628.9 Average 1960-64 8058.14 1,691.8 350.5 20.1 119.3 21181-6 1965 8,556.3 2,617.9 363.0 27.8 175.0 3,183.7 1966 8,689.3 2,840.4 292.7 32.5 168.0 3,333.7 1967 9,261.5 3,127.6 430.5 35.6 172.5 3,766.2 1968 9,770.0 3,243.0 418.7 39.8 188.8 3,890.3 Average 1965-68 9,069.3 2,957.2 376.2 33.9 176.1 3,563.5 1/ Officially authorized removals only converted by author at FAO's factor of 1 ton = 1.38 m3. Source: General Forestry Statistics 1938-67. Published by the General Directorate of Forests, Ankara, 1969, p. 58. TABLE 20 Details of PUrcha53 of Coniferour, Logo by a Medium-Sized Sawmill in the Istanbul Area Average Price range Total No. of Average Min. p ice Max. price price as percent of volume/m3 tenders volume/n3 TL/m TL/m3 TI/n3 average price Long length pine 51 1 51 432.90 432.90 432.90 - Normial length pine 2,763 11 251.2 277.01 406.35 320.67 40.3 Short length pine 1,422 5 284.4 115.00 219.70 160.24 65.3 Total pine 4,236 17 249.2 115.00 132.90 268.17 118.5 Normal length spruce 8,529 h3 198.3 288.67 433.70 336.90 46.o Short length spruce 530 6 88.3 249.12 309.03 265.66 22.6 Total spruce 9,059 49 184.9 249.12 43.70 332.73 58.5 Poplar 153 2 76.5 250.00 310.00 290.39 20.7 Total Purchases 13,448 68 197.8 n.a. n.a. 311.92 n.a. Table 21 Projections for export of forest products ($ MiLlion Equivalent) Price 1963-67 1969 1972 1977 Assumptions S197- nd 1977 Hardwood Logs - Walnut .6 ) 2.9 1750/mi3 r - Other .7) 1-J 350-h0/m3 r Sawnwood - Walnut ) 1,0 200/n3 s - Beech ) .2 25.0 3.0 450/ro3 8 - Other ) 58, 400/m3 a Other main products .2 .5 1.0 Sub-total 1.7 ( 30.0) 20.0 67,8 Sundry Forest Products 2.4 /1 x X Total Forest Products 4.1 x X /1 These are not industrial products but essentially products of gathering and agricultural processing. The breakdown for 1963-67 was as follows (L maillion Daphne Leaves 2.2 Valonia acorn 1.2 Tanning abstract 6.5 3.3 Storax 2.7 Chestnuts 2.2 Locu-t beans 1.8 Resin, tar, pine, nuts, gum, etc. 1.7 21.6 個鳥 MAPS 1 - 5 ARE TAKEN FROM "FOREST INDUSTRIES PRELMNARY DEVELOPMENT PLAN TO 198211, PREPARED BY FAO/UNDP SPECIAL PROJECT IN FORESTRY AND FOREST DEVELOPMaTT, FAO1UNDP1SF 293, OCTOBER,1969 日略 Coas Z2n2 Nåtioný,ý ý)oui-,dary RcS*;cina] Boundakries 012 Resional Headquarters I Å, J'D n a 7 3 E. Hk -ýs i r 13 Erzu,-urn 19 K as 41 amo nu 2 Adapazaci 8 SOIL, 14 Esk,ýý hir 20 Mersin 3 Årn--sya 9 BLIrsa 15 Giresun 21 Mugla 4 10 C ý--. ýrÄk a: e 18 Ist 2-n bul 22 Trabzon 15 17 Isparta 23 ZonguIdak An t a ý y a 11 Dan*izil; Arivin 12 ElzLzig 18 l z.-n,: r Major Roads .............. Railways ports Forested areas V-M--,zp Nc- 3 Map No4 Map No 5 G No of milis kljod er.,jjjtiig, S i2 Plywood plant t k759 lndusx,.ý.1 äljud Jonsumption. 25 b Numhi:r of mills 123 Annual capacity. 11 shift 110000(4u,b« -k Pý-51^ 1 1 No of Mill s c 1s53 ý!2'1 Tro di * [.,;Orts, -Jmgorts. 7-13 1 Average daily ca;>2city- FibreboGrd plant l i ".hitt erhr)W.h. L4 d 1ý42 Ånnu;1 A /!j etab!e Cut. i C22 I Tolii an.ual cipacity- Annual capacity 3 shifts 1000 tonr- e t'n c 5 r.-, n: t e i SjärCe Äyii,. IåLå for i -,ýitk,270 day5 rnl(r) uti. l No of milis' 0. G.M. sawmills (inctuded above) Particie aoir4 plant 0 12 Annual capaCity 3 gbifts 1000 tons Pulp, ftLocLr andjorPaperboard Mo 01 fn;!! fe .4 7! p No 5 1,1004cn a>0X plzn*s Undcr construction $EKA L 10 No of plants 9Y 20 AnnuM p.;><:r&pzpcrboarif c.;;>2i:ity 123 ISG8 proeuction 1000 box c$ 3 shifts 1000 tons For a;1 -,hela Symbols.. Iý Aänvål wood pip capicity 3 årtifts 1000 air ifry tonr 5x,SLåno 111ýunerr Pi an mcci  T uK MAP No:1 Forested Areas SL A C K SEA r >. o13 ~V' ~04 fiee peviou- shee M E Di 1T E R R A4 N A N S E A P \~/ ~ ,&09 TURKEY MAP No: 2 Communcations a L A C K S E A 11> M E I E R N A NS EA se pev£ ~t3 (~1 4~K~ )4 ,&a’。”&,&,”嘰謬需．&&&&&&&.&&&&&&! ，弱g～必一騙不一一一騙，.―一1 ,,，。，,,，』。。。，州丫夕g一Nr·9“丫‘乞’&“夕“ ＇一：他〕方汗織” 洛一一 ’叩夕〞＇付州州丫l〞“ji仃I ·不購，不而不萬不不j而后幼，，二：;:：巾戶勾即州州可刀 兀不百可百7丙人三〉〔d然上 弘．&. - 1; v ivljl-C~ i i IN, J- i Census of Forest Industries- 1968 SAWMILLS- Private p!us O.CS.M. 2 L A C K 5 E A i