Team Report, Executive
This report was prepared by a four person assessment team
assembled by the Food Industries Division (FID) of the Foreign
Agricultural Service in February of 1998. The team was tasked
with investigating the practical market opportunities for U.S.
softwood products in the Philippines and subsequently advising
the relevant USDA decision makers on the types of training and
technical information dissemination programs that would likely be
most effective to achieve the Agencys short and long-term
market development objectives for U.S. softwood.
FID is currently administering a three phased Emerging Markets
Office (EMO) softwood market development initiative which is
designed to help current and potential users of U.S. softwood in
the Philippines better understand the properties and advantages
of using U.S. softwood. The following findings and
recommendations resulted from this analysis:
- While the current Asian economic crisis has had a
sobering effect on the region in general, the Philippines
appears to be in better shape than its neighbors. Once
the dust settles from the current regional economic
turmoil, prospects for long term growth in the
Philippines are strong provided economic reform and
liberalization, import duty reductions, liberalization of
banking sector and investment laws continue.
- Given the sharp domestic wood production decline over the
last ten years, the Philippines has filled the gap
between wood supply and demand by increased reliance upon
- The recent currency devaluation (peso) resulted in a
50-percent increase in the dollar cost of imported U.S.
wood. This will weaken U.S. wood sales into the market
throughout 1998 and will motivate importers to source
more wood domestically and from neighboring
wood-producing countries where currencies have also
- In the long-run, regional wood supplies are not likely
sufficient to meet growing demand. Once firms adjust to
the devalued peso and other macro-economic factors
stabilize, prospects for resumed wood imports remain
- The Assessment Team investigated the potential for
softwood sales in the following sectors: furniture,
domestic housing, prefabricated housing for export,
interiors, home furnishing/decorative items for export,
and materials handling.
- The Team found that potential softwood users in certain
sectors (e.g., housing construction) either displayed
strong resistance to the use of wood in general in their
industries or were too price sensitive to be in a
position to purchase U.S. softwood currently (e.g., home
- On the other end of the spectrum, there are a growing
number of companies who were keenly interested in higher
quality woods (including softwood), who appear willing
and able to pay generally higher U.S. softwood prices,
and are eager to learn more about grades, attributes, and
characteristics. Generally, these firms are the companies
exporting their products to more affluent and
quality-conscious segments of consumer market in the
United States, Europe, and Northern Asia (e.g., upscale
- The consensus of the Assessment Team was that U.S.
softwood could be competitive if the right market niche
can be found. Overall, the furniture sector and possibly
interior use applications are the best prospects for U.S.
softwood at this time.
- U.S. softwood use in the Philippines furniture
appears to be at the same evolutionary stage that U.S.
hardwood was a few years ago prior to American Hardwood
Export Councils efforts to disseminate technical
information regarding their applications and benefits to
local manufacturers. Although there are a few Philippine
furniture manufacturers using the softwood, there is an
acute lack of knowledge about species, grades and uses of
Recommendations for Follow-up:
- Presently, EMO follow-up activities would be best
targeted towards the Philippine furniture sector -
particularly the higher-end segment of the market where
price sensitivity to generally higher U.S. wood prices
and quality would be less pronounced.
- To address marketing constraints noted above,
implementation of technical training seminars geared to
the furniture sector on softwood use and other related
topics should be undertaken in 1998.
- Based upon the expressed needs of the two major
Philippine furniture associations, seminars should focus
upon softwood grading, carvability, moisture-stability,
strength properties, painting applications, lamination
applicability, sanding, finishing, and machinability.
During the seminars, a session devoted to USDA's GSM-102
Export Credit Guarantee Program should also be included
if Post concurs.
- Given geographical and institutional
considerations, two identical seminars should be
conducted consecutively in the Pampanga-area (north of
Manila) and Cebu City. Timing should be coordinated with
the two major furniture associations and Post, but June
1998 seems to be agreeable at this point to most parties.
- After the first seminar and depending upon an
objective assessment of this activity, a follow-up
seminar addressing issues arising out of the first
seminar should take place within 12 months, if funds are
avaliable. Subsequent seminars should be more specialized
and perhaps include a hands-on furniture workshop using
all U.S. softwoods.
This Executive Summary is taken from a
report by the Emerging Markets Program of the Foreign
Agricultural Service at the United States Department of
Agriculture. To obtain a copy of the full report of this
assessment, please fax a request to the Marketing Operations
Staff at (202) 720-9361 or e-mail email@example.com .
- Finally, noting the success of the Cochran hardwood
team, a Cochran team of potential softwood lumber users
in the Philippines should be invited to the U.S. to see
softwood cut stock/lumber producers and suppliers as well
as furniture showrooms with products made out of softwood
lumber. Alternatively, Trade and Investment Program may
want to consider seeking EMO funding for and coordinating
a Philippines softwood team to the United States.
Last modified: Sunday, March 17, 2013