Perhaps we erred: more about Philippine timber

Media

Part of The American Chamber of Commerce Journal

Title: Perhaps we erred: more about Philippine timber
Language: English
Year: 1934
Rights
Abstract: Forestry bureau asks wharfage tax on logs exported: buying our logs, Japan exports Philippine lumber in competition with Philippine lumber mills.
Fulltext: 6 THE AMERICAN CHAMBER OF COMMERCE JOURNAL October, 1934 Perhaps We Erred: More About Philippine Timber Forestry bureau asks wharfage tax on logs exported: buying our logs, Japan export^ Philippine lumber in competition with Philippine lumber mills Looking into the Philippine timber business last month, the Journal aroused many critics, among them Director Arthur F. Fischer of the forestry bureau, who contend that more stress should be put on the injury the steady exporta tion of timber in the log does our well established lumber industry. This may be true, we may have erred; though the tabulated matter and the narrative together carried every fact essential to the conclusion that the Philippine lumber industry needs more effective backing from the government, it was taken as obvious that if Japan might not buy logs here she would not buy lumber here, but would seek logs in Borneo and perhaps at other sources. The log export trade was taken as supplementary of the lumber export trade. It is now represented to be something more, nothing less than directly harmful of the lumber export trade and of minimum benefit to the government and to loggers. At the bottom of the question lies the Japan ese mercantile marine, and the want of such commercial aid in the Phil ippines. When Japan makes a surplus of lumber for export from Philippine logs, she can deliver that lumber to foreign ports at rates consistently lower than the Philippines are charged. Against this and other disadvantages, the Philippines might have recourse to a wharfage tax. The rate at which Japan is buying logs here is set out in the accompany ing table. Of total Philippine timber exports, Japan now takes nearly 61%, nearly every board foot in form of logs. Last year it was 62%, only 920,432 board feet in form of lumber; it was 49,713,152 board feet out of a total export, logs and lumber together, of 80,244,968 board feet. This year, January to July, it ran proportionately higher, 34,226,552 board feet; for the year, contracts cover a minimum of 70,000,000 board feet, contrasting with the 7-month quota of 14,000,000 board feet allocated to Philippine lumber in the United States. Existing measures governing our timber industry thus permit Japan (or any other country so minded, as China might become) to exploit our forest resources. • Correction in part is sought in a wharfage tax of SI a ton on exported logs, which according to weight of the timber would run, it is explained at the forestry bureau, from Pl.50 to P2 per cubic meter. At Philippine mills, where the whole run of the cut must be sawed, charges being against stumpage, a cubic meter yields about 212 board feet of lumber of which 20% to possibly 30% may be fit for export. In Japan, from selected logs, it will yield at least 309 board feet and 50% or 60% will be fit for export. Japan selects the logs she buys here; in her small steamers of 2,000 to 3,000 tons, she gathers a good many cargoes of them at minor shipping points. The proportion of 85% of Exports of Logs and Sawn Lumber To Japan From 1920 to 1934. Logs Sawn Lumber Bd. Ft. nd. Ft. 1920. . 9,328 6,360’ 1921........................ No record 72.’o281922........................ 13,144 269,664. 1923. 561,SOO 4,007,2241924........................ 6,683,512 5’370*384’ 1925........................ 3,923,696 2,811,544’ 1926........................ 6,10S, 144 5,012,1041927........................ 6,048,360 12,946,416’ 1928........................ 8,306,584 11,(>38^376’ 1929.................... 22,904,480 9,051,128’ 1930. . 21,384,016 4 042 4161931........................ 33,873J«>0 L924J)60‘ 1932...................... 35,755,072 264,576’ 1933.................... 49 620,720 92,4321934 (January to July) 33,305,624 920,928Statement Showing Amount of Lumber and Timber Exports to Japan as Compared with Exports to all Countries. 1 Total Timber and Lumber Total Timber Per Cent Year SS;9 I Board Feet Board Feet r:Tpo?lts 1920........ 15,688 13,862,256 0.1 1921........ 72,928 11,790,168 0.6 1922........ 282,808 18,285,000 1.5 1923........ 4,569,024- 36,949,904 12.4 1924........ 12,053,896 50,746,864 52,216,872 23.8 1925........ 6,735,240 12.9 1926........ 11,120,248 62,709,600 17.7 1927........ 18,994,776 72,034,632 29.1 1928........ 19,944,960 85,897,736 23.2 1929........ 31,955,608 104,275,592 30.6 1930........ 25,426,432 82,351,824 30.9 1931........ 35,798,320 71,333,760 50.2 1932........ 36,019,648 50,628,144 71.1 1933 49,713,152 80,244,968 62.0 1934 (January to July).. 34,226,552 56,949,984 60.9 a shipment must be logs 24 inches or more in diameter, 15% from 18 inches to 23 inches. Philippine mills saw the whole run of logs. Japan pays low prices for logs, t*6 to 1*8 a cubic meter, according to her scale, about 30%* lower than the Philippine scale. In other words, /. o. b. the Philippines, she buys 4,000 board feet of lumber for about P20, and in this quantity finds 600 board feet or more fit either for export or the manufacture of veneers, cream of the whole iumber business. She has this 1,000 board feet of lumber, 600 board feet or more of it prime, for about the manufacturing cost at first rate mills in the Philippines. But the Philippine mill, sawing the whole run of logs, finds in 1,000 board feet no more than 200 to 300 fit for export. The proposed wharfage tax of SI a ton on logs exported from the Phil ippines would add P4.50 to P6, more or less, to Japan’s cost of lumber per 1,000 board feet. Should this cause Japan to stop buvingPhilippine logs and return to buying Philippine lumber, it would aid materially the Philippine lum ber industry and add to the general tax revenues of the government. Japan is buying logs at the rate of 4,757,946 board feet a month. Sawed in the Philippines, the sales tax on this timber would be P26,400. There would also be addi tional sales taxes. The monthly mill expenditure would be about P38,000; the yearly, 1*456,000. The additional employment provided would be for 500 men, a community of 2,500 people. These calculations are by the forestry bureau, where it is not desired to bring an abrupt stop to Japan’s buying of Philippine logs or to the general export of logs, but to curtail the tend ency and to place Philippine mills in better position to hold the markets abroad which their efforts and those of their correspondents and agents have, through many years and at great cost, established for Philippine lumber. These mills got the trade name, Philippine mahogany, establish ed; and they, with the forestry bureau, had a long fight for it in the United States, where one, the Insular Lumber Company, put through the courts a long expensive case. It was an effort of these mills, too, that secured domestic classification for Philippine lumber under the quota law, and an allocation under that classification of 28,000,000 board feet a year in the American market. This meant the salva tion of the industry. Foreign classification would have specified the foreign price, at which Philippine mahogany could not have competed. Yet the export of large quantities of logs from the Philippines works a severe and direct hard ship on these mills, subject to all the taxes the governments lays against their industry and the use of the forests. Il throws back upon the local market, for use in inferior lumber ♦Some authorities reduce this to about 10%. {Please turn to page 17) October, 1934 THE AMERICAN CHAMBER OF COMMERCE JOURNAL 17 Loggers’ View of Log Export Commerce Here For this paper setting forth Philippine loggers’ views in contrast, in some respects, to the stand of the Philippines’ important lumber industry expressed in interviews with Director Arthur F. Fischer of the forestry bureau, a number of men were interviewed to whom the overseas demand for our logs is very important—partic ularly the demand in Japan. Brief effort will be made to combine their views. They begin by saying that except for the overseas trade in logs, the domestic lumber market would be far more depressed than it now is. It would be called upon to take much larger quantities of logs. This would be far from lucky, because, they say, wholesale lumber prices in the islands are already too close to the cost of manufacture. Of the mill run of lumber, 80% or 85% is not exported and comes on the domestic market. Some loggers doubted that logs exported could stand a wharfage tax of SI a ton, proposed either to check the commerce or bring the government more revenue from it. Others say that if the buyer bore the tax, all right; but that more probably buyers would shift the tax to the log gers, and reduce their gains from the business by that much. Some say the price of logs is so low that the tax would kill their business. They add, however, that buyers of logs not accommodated here would procure logs just the same, from Borneo and the Dutch East Indies. Their position, admittedly self-interested, is that it is better for the Philippines to sell timber in form of logs than to sell nothing by way of timber—to countries wanting logs. They cite the plyboard industry, not function ing here, which needs logs rather than boards. Such an industry exists in Japan, also in China and Australia; all 3 markets buy Philippine logs, and the same industry in the United States begins wanting them. Nor did any logger talked with, agree in the opinion that Philippine logs are beyond danger of competition from logs got farther south in the tropics. One said it is true enough that southern timber is softer, but added that some markets for veneer woods prefer the softer timber, or at least don’t dis criminate in price against it. Reports seem reliable, too, of repeated efforts by Japanese timber interests to establish in Dutch Borneo— to date without success. But logs are shipped from 5 points in the Dutch East Indies to Japan. From British North Borneo, shipments of logs to Japan during the first half of this year had the invoice value of nearly a million pesos. The logger citing this fact from a formal trade report, contrasts it with the opinion that logging is not well established in Borneo. Such is the consensus on this question among loggers. Wealth of Nations... (Continued from page 4) ing first place among Far Eastern markets. As a market for steel mill products the Phil ippines fell from 3rd place in 1932 to 6th place in 1933, when they were preceded by Canada and 4 Latin American countries. “The Philippines, however, continued as the first oriental market for steel mill products, as well as for iron and steel advanced manufactures, taking considerably more than twice Japan’s purchase of the former and nearly twice China’s purchase of the latter. “Of dairy products and cigarettes, the Phil ippines consumed nearly 3 times as much as the second markets,- Panama and France, respec tively. “The islands were the first world market for truck and bus tires (casings) and were preceded only by Brazil in the trade in passenger tires. “Compared with other Far Eastern markets for American automobiles in 1933, the Phil ippines were second to Japan, while they ranked first in the Orient as an outlet for meat prod ucts.” (They were 3rd in buying electrical goods, China and India being ahead of them.) Spokesman for commerce department is C. K. Moser, No. 1 in the Far Eastern section of the regional information division of the depart ment. lie reminds America that the Philippines are an important source, and in some cases prac tically the only one, of American imports of certain raw materials: in 1933 all America’s coconut oil imports were from the islands, as they will be indefinitely, and 99% of all her abaci! imports. Under tariff protection, the Phil ippines have taken the desiccated coconut market in America away from Ceylon, selling America 97% of her desiccated coconut requirements; and the islands also sell America 98% of her imported cigars (by value, 92%); 75% of her sawed cabinet woods; 42% of her sugar require ments, only 13% less than Cuba last year. A second of Mr. Moser’s tables is reprinted with our summary because of its bird’s-eye survey of essential economic factors here. His circular is a courtesy from the trade commis sioner, C. Grant Isaacs. Copies sell at 10 cents gold each at the Department of Commerce, Washington. Perhaps We Erred . . . (Continued from page 6) competing with their own, all logs rejected by buyers for the export trade. This depresses an already sluggish market. It is contended at the forestry bureau that the selected logs exported from the Philippines could readily make shift under a wharfage tax of $1 a ton, which would be, as stated, 1*1.50 to 1*2 per cubic meter. That this is true seems reasonable. Besides Japan and Australia, China is now buying Philippine logs and hints of in creasing her use of them. This puts logs vs. lumber squarely before the government. The forestry bureau dismisses the suggestion that if Japan could not get Philippine logs at attrac tive prices she would get logs elsewhere,perhaps in Borneo, she would not buy Philippine lumber. Borneo has no lumber industry worth speaking of, the Philippines are the only part of Malaysia that has. Backbone of such an industry is a steady domestic market, and sparsely settled Borneo has no such market—can develop none. Borneo’s woods of species and varieties iden tical botanically with those of the Philippines, are softer and coarser than those of the Phil ippines: the Philippine product is preferred in the market. It is held that if logs could be got advantageously in Borneo, they would be got there now—Borneo’s logging industry would already engage Japan’s industry and capital. On the other hand, the trade here understands Bornean logs to be in every way inferior to Philippine logs, though they are cheaper. If therefore Philippine logs could be got at no advantage over Philippine lumber, Philippine lumber would be taken even in Japan—as it once was taken. Director Fischer of the forestry bureau con tends that even if his proposed wharfage tax on exported logs caused loss of sales of logs abroad, not at once made up by greater sales of Philippine lumber, in the long run no harm would be done. The demand for Philippine lumber over the world is clearly reviving. The government could well let the timber stand uncut for 10 or even 15 years, while demands expanded and until overseas markets should be willing to be supplied with lumber instead of logs. At the same time, there is, of course, in the veneer industry, a legitimate demand for logs that sawn lumber will not supply. This demand, Director Fischer says, could always be supplied with Philippine logs; and such is their quality that the wharfage would be no burden on their ready sale. Less worthy is the demand of foreign mills, the mills of Japan, for Philippine logs to be sawn into lumber exported to the very markets where Philippine export lumber must be sold—markets effort in the Philippines has with difficulty and many setbacks got estab lished. The government must choose. LUMBER REVIEW By ARTHUR F. FISCHER Director of Forestry The fairly active demand of Philippine lumber and timber in foreign markets con tinued during July. There were 9,493,784 board feet of lumber and timber exported during the month as compared with 8,647,056 board feet for the correspond ing period last year, or an increase of’ about 10%. Shipments to Japan consisted mostly of round logs, as usual. Inquiries and orders continued to be received from China and Aus tralia and Philippine producers seem to be hope ful for increased demands in these markets in the near future. Much, however, will depend on how the first shipments by the individual companies getting the orders will be received in the said countries. The trade with South Africa remained comparatively active, which is a reflection of the favorable economic condiIN RESPONDING TO ADVERTISEMENTS PLEASE MENTION THE AMERICAN CHAMBER OF COMMERCE JOURNAL