aciar technical reports

Balsa: biology, production and economics in papua new Guinea

73

ACIAR TR73 (2).fm Page 1 Sunday, June 27, 2010 1:17 PM

Balsa: biology, production and economics in Papua New Guinea

Stephen MidgleyMichael Blyth

Neville HowcroftDao MidgleyAlan Brown

Canberra

2010

ACIAR TR73 (2).fm Page 2 Sunday, June 27, 2010 1:17 PM

The Australian Centre for International Agricultural Research (ACIAR) was establishedin June 1982 by an Act of the Australian Parliament. Its mandate is to help identifyagricultural problems in developing countries and to commission collaborative researchbetween Australian and developing country researchers in fields where Australia has aspecial research competence.

Where trade names are used this constitutes neither endorsement of nor discriminationagainst any product by the Centre.

ACIAR TECHNICAL REPORTS SERIES

This series of publications contains technical information resultingfrom ACIAR-supported programs, projects and workshops (forwhich proceedings are not published), reports on Centre-supportedfact-finding studies, or reports on other topics resulting from ACIARactivities. Publications in the series are distributed internationally toselected individuals and scientific institutions, and are also availablefrom ACIAR’s website at .

© Commonwealth of Australia 2010This work is copyright. Apart from any use as permitted under the Copyright Act1968, no part may be reproduced by any process without prior written permissionfrom the Commonwealth. Requests and inquiries concerning reproduction andrights should be addressed to the Commonwealth Copyright Administration,Attorney General’s Department, Robert Garran Offices, National Circuit, BartonACT 2600 or posted at .

Published by the Australian Centre for International Agricultural Research (ACIAR)GPO Box 1571, Canberra ACT 2601, AustraliaTelephone: 61 2 6217 0500

Midgley S., Blyth M., Howcroft N., Midgley D. and Brown A. 2010. Balsa: biology,production and economics in Papua New Guinea. ACIAR Technical Reports No. 73.Australian Centre for International Agricultural Research: Canberra, 98 pp.

ISBN 978 1 921615 97 9 (print)ISBN 978 1 921615 98 6 (online)

Technical editing by Mary Webb, CanberraDesign by Clarus Design Pty LtdPrinting by Elect Printing, Canberra

Cover: A plantation of balsa, six months old, Vudal, East New Britain (Photo: Stephen Midgley)

Foreword

The Australian Centre for International Agricultural Research (ACIAR) seeks to promotepoverty alleviation and livelihood enhancement through more productive and sustainableagriculture emerging from international research partnerships. Papua New Guinea (PNG)is one of our most important partner countries. Communities living on islands in thePacific face significant difficulties in developing successful economies. Transaction costsare of paramount significance—transport adds to the cost of all imports, including fuel,and detracts from the returns for goods produced, while the small size of individualcommunities increases dependence on external trade.

Crops that have high value and afford opportunities for local processing are especiallyimportant. They must of course be well adapted to the relevant environmental conditions,be amenable to production by smallholders as well as larger operators, mature within anacceptable time and, to the extent possible, have a stable market. Balsa is a crop thatpotentially meets these criteria for some areas in PNG. It is locally significant in East NewBritain province (ENB), where high rainfall and fertile soils derived from volcanic parentmaterial are conducive to rapid growth of high-quality wood on sites close to a port.

Most of the balsa traded globally is grown in Ecuador and exported to the UnitedStates of America, although markets in Europe, India and China have grown in recentyears. Balsa wood is used in the marine, wind-energy and transport sectors, principallyas core material in panels and other composites. Polymer foams compete with balsa inthis application. As well as the level of global economic activity, issues of quality andelasticity of supply are very relevant to the competitive position and continued prosperityof the balsa industry.

Balsa cultivation is an attractive land-use option for smallholders and largerlandowners in PNG, including cocoa growers affected by cocoa pod borer. ACIARsupported this scoping study with a view to identifying researchable issues across thePNG balsa value chain—issues whose resolution, by the industry itself, by partnershipsinvolving ACIAR, or by other agencies, will underpin the continued viability andpotential expansion of PNG’s balsa wood industry.

Using a careful blend of literature review, interviews with key industry stakeholders andeconomic analysis, this study provides background biological information, a summary ofthe historical and current status of the balsa industry, and explores the relative merits of thethree main balsa production systems in PNG. The study concludes with a series ofrecommendations for research and development that would assist the PNG balsa industryto sustain productivity and competitiveness in the global market.

Nick AustinChief Executive Officer, ACIAR

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Contents

Foreword 3

Abbreviations 7

Currency (August 2009) 7

Acknowledgments 8

Notes on the authors 9

Summary 10

Papua New Guinea: its geography, forestry sector and population trends 12The context of Papua New Guinea forests 12Land ownership 13Employment trends in Papua New Guinea 13East New Britain province 15Employment trends in East New Britain 17Development of plantations in Papua New Guinea 18

Biology, forestry and uses of balsa 23Natural balsa forests 23Balsa plantations 25Uses of balsa wood 28

The balsa growers 32Balsa in Ecuador 32Balsa in Papua New Guinea, including East New Britain 33

Trade and balsa markets 45Tariff codes 45Exports from Papua New Guinea 46Exports from Ecuador 46The global market for balsa 48Market prospects: can balsa remain competitive? 50Marketing balsa from Papua New Guinea 53Quoted prices for balsa products 54

The socioeconomy of balsa smallholdings in East New Britain 56Legislation 56Government agencies 56

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Company support for growers 57The dynamics of balsa purchase 57Regulations relating to balsa harvesting, processing and export 58Employment in the East New Britain balsa industry 58Issues arising from grower and processor interviews 60

Profitability of balsa growing 63Production data and information sources 63Profitability of smallholder balsa growing 64Profitability of balsa grower groups in share-farming arrangements with processors 68Profitability of balsa growing for large-scale growers, including integrated

grower–processors 72Impact of higher wages on harvesting and transport 76

Conclusions 79General 79Marketing 80Opportunities for research and development 81

References 85

Appendixes 891 Papua New Guinea balsa log grading rules 912 United States of America balsa imports 933 Balsa purchasing agreement form 974 Balsa log tally sheet 98

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Abbreviations

A$ Australian dollarACIAR Australian Centre for International

Agricultural ResearchAEV annual equivalent valueCST candidate seed treeENB East New Britain provinceFEU 40-foot containerFMA Forest Management AgreementFOB free on boardIRR internal rate of returnITTO International Tropical Timber

Organization LAES Lowland Agricultural Extension

Station NANDINA Andean Trade Community

Standard Product Code System

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NARI National Agricultural Research Institute

NPV net present valuePFMC Provincial Forest Management

CommitteesPGK Papua New Guinea kinaPNG Papua New GuineaPNGFA PNG Forest AuthorityPNGFRI PNG Forest Research InstituteR&D research and developmentUNRE University of Natural Resources

and EnvironmentUSA United States of AmericaUS$ United States dollar

PNG kina = PGKA$1.00 = PGK2.11US$1.00 = PGK2.63

Currency (August 2009)

Acknowledgments

The global balsa markets are not well documented,and reliable information was challenging to locate.Many generous people helped in assembling thisreport and deserve special mention.

In Papua New Guinea (PNG), the fieldwork wouldnot have been accomplished without competentsupport from our local coordinator, Mr Tommy Kosi,and the cooperation of the balsa growers on theGazelle Peninsula who gave their time during a busyperiod in the agricultural calendar.

Mr Kanawi Pouru, Managing Director, NationalForest Service (NFS), and NFS staff in PortMoresby and East New Britain (ENB) offered fullsupport and access to marketing data and recentlypublished policies and national strategies.

Mr Titi Darius, Chairman, and Mr Paul Arnold,Executive Officer, of the PNG Growers’ Associa-tion (ENB Branch) organised a public meeting ofgrowers and facilitated discussions on balsa and itsglobal markets. Professor Phillip Siaguru, MBE,Vice-Chancellor, University of Natural Resourcesand Environment, and Dr John Moxon of theLowland Agricultural Extension Station of theNational Agricultural Research Institute, at Keravat,provided access to information and facilities. MrHarry Sawicki, General Manager, ENB PortServices Ltd, offered background on the challengesof shipping from Rabaul.

The processing companies were generous withtheir time and information: Guy and Catherine

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Cameron at PNG Balsa and their team; Mr GraemeStowell and Mr Paul Aisawa at the GSMC/AuszacBalsa Alliance; Mr Gunter Isensee of Gunter BalsaLtd; Mr Peter Hooper (the former GeneralManager), Mr Mike Jackson, Mr Bob Wilson andMr Anthony Rainbird at Coconut Products Limited.

In Australia, many people shared information andadvice: Mr Warren Meyers of Auszac Pty Ltd;Ms Maree Connelly of ArtMil Australia Pty Ltd;Dr Mike Bourke of the Research School of Pacificand Asian Studies, at the Australian NationalUniversity; Dr John Doran, Honorary Fellow,Commonwealth Scientific and Industrial ResearchOrganisation (CSIRO).

Internationally, the contributions of many peoplewho offered advice and valuable information areacknowledged: Mr Bob Flynn of RISI and AlfonsoBouroncle, Austrade, Australian Consulate, Lima,for advice on the balsa trade in South America;Mr James Midgley for advice on internationalshipping; Mr Martin Heiskell and the team at DIABin the USA, Australia and Ecuador, and Mr JavierBonet, President, Balseurop Ecuato Espanola SL,Spain, for advice on the international trade in balsa;and Dr Lisa Hoch of the Waldbau Institute at theUniversity of Freiburg for sharing experience ofsmallholder balsa growers in Ecuador. Mr EricGauthier and the team at Alcan Baltek kindlyoffered access to photographs.

Notes on the authors

Stephen Midgley. Stephen Midgley is a foresterand development specialist who runs his ownbusiness, Salwood Asia Pacific Pty Ltd, which seeksto link Australian businesses with forest industriesin the Asia–Pacific region. He has worked continu-ously in Asia for over 35 years through long-termprojects in Laos, Nepal, Sri Lanka and China and viamany short-term projects throughout the region,during his career with Australia’s national researchbody, the Commonwealth Scientific and IndustrialResearch Organisation (CSIRO).

Email:

Michael Blyth. Dr Michael Blyth is an agriculturaleconomist and development specialist. He workedas a research economist for the Australian Bureau ofAgricultural and Resource Economics and instrategic planning at CSIRO before establishing hisown company, Four Scenes Pty Ltd. He has workedwith many research and development organisationsthroughout Australia, Asia and the Pacific in theareas of planning, priority setting, evaluation andmanagement improvement.

Email:

Neville Howcroft. Neville Howcroft has spent over40 years working in the Papua New Guinea forestrysector, including seven years as Project Manager ofthe International Tropical Timber Organization(ITTO) Balsa Strengthening Project in East NewBritain where he authored several reports on balsaand The balsa manual. He is currently Head of theForestry Department at the University of NaturalResources and Environment, Vudal, East NewBritain.

Email:

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Dao Midgley. Dao Midgley has had a long associa-tion with forestry development projects in manyAsian countries. Fluent in several languages inaddition to her native Lao, Dao has a strong interestin anthropology, possesses skills in cross-culturalcommunication and has been part of studies in theAsia–Pacific.

Email:

Alan Brown AM. Alan Brown, a former Chief ofthe CSIRO Division of Forestry, Australian Centrefor International Agricultural Research (ACIAR)project leader and member of the Center for Interna-tional Forestry Research (CIFOR) Board, iscurrently Production Editor of Australian Forestry.

Email:

Summary

Balsa (Ochroma pyramidale, syn. O. lagopus) is afast-growing, pioneer subtropical and tropical treethat produces very low density wood widely used fora range of commercial purposes. It is a medium-sized tree that grows to 25 m in height and 1 m indiameter, deciduous or evergreen and occurring inboth pure and mixed stands in association with otherpioneer species. Balsa is widely distributed acrossits natural range from 22°N to 15°S in broadleafevergreen and secondary forests in Central andSouth America. It has been introduced to manytropical countries, including Papua New Guinea(PNG) where it thrives on sites with high uniformrainfall and good-quality, well-drained soils. It isgrown in plantations on 5–7-year rotations and nowforms the foundation of a small and expandingindustry in East New Britain province (ENB) wherethere an estimated 3,500 ha has been planted.

Due to its low density, strength and versatility,balsa is suitable for a wide range of end uses. It isused extensively for hobbies, model-making andsurfboards and other sporting equipment. Its mainindustrial use, and the use that forms the largest partof the global balsa market, is as end-grain panels.These are widely used as components of structuralsandwich panels consisting of low-density corematerial sandwiched between two high-modulusface skins to produce an exceptionally stiff and lightcomposite panel. The features of balsa that areattractive to manufacturers of sandwich panels areits relatively low price compared with competingcore materials, and its:• green and renewable credentials—balsa is the

only core material derived from a natural andrenewable resource

• wide operating temperature range (–212 °C to+163 °C; –414 °F to +325 °F)

• excellent fatigue resistance• good sound and thermal insulation• high impact strength.

Innovation has become the hallmark of successfulcompanies that use balsa wood, and balsa has found

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applications in many market sectors, as outlinedbelow.Marine: As a lightweight and strong composite,end-grain balsa has been used in hulls, decks,bulkheads, superstructures, interiors, tooling andmoulds. Many power boats, recreation craft andcommercial vessels have components made frombalsa composites. Balsa has been used for themassive, static-free insulation in cryogenic transportships (used for shipping liquefied natural gas).Road and rail: Key engineering considerations inroad and rail engineering include low weightcombined with rigidity and strength, and acousticand thermal insulation as well as fire safety. Balsa isfound in many modern railway carriages in light-weight composite panels in ceilings and compart-ment walls. The cabin flooring, roof panels, bodypanels, interiors, front-ends and side skirts ofpopular makes of trucks and buses are balsacomposites. Wind energy: Balsa is used in lightweight coredsandwich panels that improve the performance andefficiency of wind-turbine rotor blades. Windenergy represents one of the most promising appli-cations for environmentally friendly balsa.Aerospace: Balsa panels are used in flooring, galleycarts, interior partitions, cargo pallets and containers,and in parts for sports aircraft.Defence: The defence industries have long had aninterest in balsa and balsa products. Balsa is used asa standard core material in present-generation navalship structures where sandwich composites withbalsa cores feature in applications such as surfaceship deck structures, radar masts and boat hulls. Thepanels forming emergency and tactical shelters(including field hospitals) commonly use balsacores, and the standard cargo pallet for defence airtransport is made with a balsa core. Industrial: Balsa-cored composites are widely usedin ductwork insulation for industrial pipes, as insula-tion for cool stores, in tooling, tanks, impactlimiters, concrete forms, fascia panels, skis,

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snowboards, wakeboards and lightweight packagingmaterial for fragile goods.

It is estimated that in 2008 the global trade insawn kiln-dried balsa wood and semi-finished woodproducts was 155,000 m3, worth an estimatedUS$71 million. Ecuador supplies almost 90% of thistrade and PNG 8%, with producers in Colombia,Brazil, Venezuela, Costa Rica and Indonesiamaking small contributions. The United States (US)market is the world’s largest for balsa products,accounting for some 80% in 2001 but falling to 51%in both volume and value in 2008. In 2008, Ecuadorsupplied 94% of US imports of balsa. While the USmarket has been relatively uniform in terms ofvolume imported for the past 10 years, imports toChina, India and Europe have expanded substan-tially. The marine, wind-energy and transportsectors have been major drivers of the expansion ofglobal markets. Investments in expansion of balsaplantations and processing facilities indicate confi-dence in the outlook for global balsa markets, withsome industry participants forecasting annualmarket growth of around 7%.

In 2009, the Australian Centre for InternationalAgricultural Research (ACIAR) commissioned ascoping study that sought to protect the interests ofsmallholder growers and processors of balsa in PNGby identifying researchable issues associated withcurrent opportunities for and threats to the industry(ACIAR Project No. FST/2009/012: ‘Identificationof researchable issues underpinning a vibrant balsawood industry in Papua New Guinea’). This reportdetails the results of the study.

Balsa cultivation is an attractive and competitiveland-use option for landowners, including small-holders in ENB. There are few barriers for newentrants to balsa production, although an inadequatelabour supply appears to be a limitation, especiallyfor smallholders. Three growing systems arecommon in ENB: independent smallholders, largelandholders and grower groups. Balsa production inENB is moving steadily away from smallholder-based systems towards larger-scale productionsystems, including landowner grower groupsmanaged under share-farming arrangements withprocessing companies. Larger-scale production

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systems, including share-farming arrangements,provide a more reliable and continuous supply ofquality balsa resources to processors. While eachproduction system is profitable, the large-scaleplantations and integrated grower–processorsgenerate the highest returns, associated with use ofimproved silviculture and labour managementpractices that generate higher yields, wood qualityand prices. Share-farming production systems offersubstantial benefits to growers while the production,marketing and sovereign risk is carried by theprocessor.

The balsa industry in ENB currently providesdirect employment for about 3,000 people and thiswill increase once the expanded plantation resourcematures. The capacity of the PNG industry toexpand and thrive is finite and constrained by inter-national market demand and the industry’s capacityto remain competitively engaged with thesemarkets.

Globally, the balsa industry faces seriouschallenges from the greater use of polymer foams insandwich composites. Innovation and research anddevelopment (R&D) are vital to an assured futurefor balsa products. For PNG to maintain its globalcompetitiveness and increase market share, it muststrengthen its reputation for quality, reliability andresponsiveness and ensure that plantation produc-tion and processing are strongly aligned with profit-able global markets.

In response to these challenges, PNG’s balsaindustry could be assisted through a focusedprogram of R&D support aiming to:• improve productivity and wood quality through

wider application of improved silviculturalpractices

• support changes to issues relating to governance,ensuring that government regulations add valueto, and do not impede, efficient functioning of thesupply chain

• add transparency to the supply chain and ensurethat social issues relating to production areunderstood

• assist in developing and maintaining markets forbalsa from PNG.

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Papua New Guinea: its geography, forestry sector and population trends

The context of Papua New Guinea forests

Papua New Guinea (PNG) includes the eastern halfof New Guinea, the islands of New Britain, NewIreland and Bougainville, and hundreds of smallerislands (Figure 1). The total population in 2009 wasestimated at 6.7 million (SPC 2008) and the landarea is about 463,000 km2, of which only 27% ispeopled. The country is usually divided into theislands, the lowlands (0–1,200 m) and the highlands(1,200–2,800 m), although more specific regionalclassifications are also used. People live throughoutthis entire altitudinal range, with about 40% of therural population living in the highlands region.Almost 50% of the total land area is mountainous

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142o 146o

Lae

Port Moresby

N

0 100 200

km

and 20% is seasonally or permanently flooded. Highrainfall, long dry seasons and excessive cloud coverare other common constraints to agricultural devel-opment (Hanson et al. 2001).

PNG is endowed with a very large area offorests—forest cover is estimated at 29 million ha,or nearly two-thirds of the total land area andincludes some of the richest flora and fauna in theworld and contains several highly valued commer-cial timber species. The forests are classified as:80% rain forests, 4% moist forests, 5% woodlandand 11% montane forests. The coasts host some ofthe most extensive mangroves in the region. Thecountry has about 10.5 million ha of forest thatmight be considered permanent; these include 8.7million ha of forest over which timber rights have

2o

4o

6o

8o

10o

150o 154o

Rabaul

ew Britain

New Ireland

Solomon Islands

East New Britain

Figure 1. Papua New Guinea

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been acquired (‘permanent forest estate’), 1.7million ha allocated for protection and an estimated60,000 ha of timber plantations.

Estimates of the rate of deforestation in PNG varybut loss of forest cover was reported at 0.4%annually between 1990 and 2000; some non-govern-ment organisations (NGOs) report higher rates.Much of the deforestation is due to conversion toland uses such as agriculture, increasingly for oilpalm plantations (ITTO 2007b).

While the principle of sustainable forest manage-ment is enshrined in the PNG Constitution of 1975,the sector has been plagued with serious challengesto uphold it. Most legislation and regulations havebeen enacted as a result of forest degradation andproblems associated with logging operations andtrade, as well as dissatisfaction of landowners,donors and NGOs. Although legislation includessubstantive social and environmental aspects, theemphasis has always been on logging operations andespecially economic returns.

The 1991 Forestry Act introduced new allocationprocedures and a new administration system. Itestablished the PNG Forest Authority (PNGFA) andmandated it to manage the nation’s forest resourcesthrough implementing the overall objectives of theNational Forest Policy. It operates through theNational Forest Board, the National Forest Serviceand the Provincial Forest Management Committees,among other bodies. The Forestry Act empowersPNGFA to negotiate Forest Management Agree-ments (FMAs) with resource owners, to selectdevelopers (concessionaires) and to negotiate condi-tions under which Timber Permits, Timber Author-ities and Licences may be granted. Supported by theNational Forestry Development Guidelines, theNational Forest Policy was devised as the opera-tional arm of the Forestry Act, mostly for adminis-tration and control of the forest sector.

The National Forest Board oversees the activitiesof PNGFA. Its composition, as outlined in theForestry Act, includes representatives of all actors inthe forestry sector.

The National Forest Service is the agency respon-sible for administering the Forestry Act. It is incharge of practically all aspects of forestry at thenational level in PNG. Often the responsibilitiesoverlap both within the service and with the Depart-ment of Environment and Conservation, which ismandated to oversee all aspects of forestry opera-

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tions that impact on the environment—includingapproval of FMAs.

The responsibilities of the Provincial ForestManagement Committees (PFMCs) include, amongother things, ensuring proper consultations withcustomary landowners. The PFMCs, however, areconstrained to some extent by shortages of humanand financial resources.

Land ownershipMost rural people live on their own land, which theyacquire under customary title and clan systems.Customary land accounts for about 97% of the totalland area of PNG, but governments do not formallyadminister this land, and title documents are notissued. Some formal settlement schemes have beendeveloped, particularly in association with cashcrops such as oil palm. Here, people do haveformally registered title on their land which makesthem eligible for bank loans to fund housing andcash-crop development.

The system of land tenure plays a critical role insustainable forest management in PNG becausemost forests are owned by customary landowners.There is, however, a common reluctance bycustomary owners to register their title to the land,compounded by vaguely defined boundaries ofownership. While the state has no ownership rightsover land or its forest resources, the government(through PNGFA) acquires private (customary)property rights in the public interest for forest devel-opment. Landowner participation in the negotiationand granting of FMAs is among the points of conten-tion in the system of granting forest logginglicences. On the other hand, it is difficult for anyforestry administration to manage privately ownedland even if mandated to do so.

Employment trends in Papua New Guinea

According to the PNG Statistics Office, the nationalworkforce in 2000 was around 2.4 million workersout of a total population of 5.2 million. More recentdata are not available as the national census isconducted every 10 years. With an annual popula-tion growth rate of 2.7% (AusAID 2007), theestimated population in 2009 for PNG would havebeen about 6.6 million. According to the UnitedNations Economic and Social Commission for Asia

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and the Pacific (UNESCAP 2008), the labour forceis growing at a slightly lower rate of 2.4% a year. Atthis rate, it is estimated that there would have beenalmost 3.0 million persons in the workforce in 2009.

Most of the workforce in PNG are involved inwhat is described as non-monetary employmentwhere there is no payment for labour. This reflectsthe high rural population in PNG and the numbers ofpeople involved in subsistence and semi-subsistencefarming activities. Some of these people are activein the informal economy, selling their surplusproduction in local markets. In 2000, over 76% ofthe workforce was involved in non-monetaryemployment (Gumoi 2005).

A shortage of skilled labour is a concernthroughout PNG, especially in rural areas. Wagestend to be lower in rural areas, encouraging skilledworkers to relocate to the larger urban centres wherethey can earn higher incomes. Within rural areas,underemployment is considerable and opportunitiesfor formal employment are few compared to urbanareas. Some centres attract migration from otherparts of PNG. Migrants relocate to seek better accessto services, more productive environments andopportunities for paid employment provided by thetowns and plantations. East New Britain province(ENB) has been attractive to people from other PNGprovinces because of the presence of these condi-tions (Hanson et al. 2001).

Cultural characteristics of workers

For many workers in PNG, their experience in thepaid workforce is relatively short and their attitudeand behaviour towards work is strongly influencedby their traditional culture. Imbun (2006) describedthree workforce involvement strategies in themining industry in PNG. He noted that most minershave no previous paid employment experience.These conditions may be relevant to labour in theforest industries, although this is yet to be verified.The three strategies described by Imbun (2006) are:• The tribal strategy—generally unskilled and

semiskilled workers with low commitment towork; involvement in paid employment issecondary to tribal commitments; typically,employment is aimed at accumulating enoughmoney for specific tribal activities such as payingbride prices, for tribal ceremonies or for settlingdifferences; they value the skills that they acquirethat may be applied to future business ventures.

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• The entrepreneur strategy—characterised byworkers involved in paid employment whilesimultaneously operating small businesses; theseworkers are semi-committed to industrial workwhile maintaining a strong commitment to theirland, tribe or village; they may be a high-riskgroup for employers.

• The worker strategy—generally better-educatedworkers with a strong commitment to their jobs;employment is their sole source of income andthey tend to be committed for the long term,although they have not cut ties with their villages.Kavanamur (2001, p. 9) found that cultural charac-

teristics in PNG require business managers to tailorhuman resources management policies, managerialpractices and interpersonal communications accord-ingly. Distinguishing cultural characteristics1 identi-fied by Kavanamur include:• low individualism / high collectivism—individuals

perform tasks primarily to build relationships withsuperiors, friends, family and clan networks,referred to as wantokism in PNG

• high uncertainty avoidance—individuals avoiduncertainty or ambiguity and are unwilling toshow initiative on the job as it is not encouragedor rewarded; they depend on authority structuresand develop an external orientation—that is, theyprefer to follow clear instructions within anauthoritarian or paternalistic environment

• low abstract thinking / high associative thinking—explanations of events or decisions are derivedfrom unrelated events rather than from cause–effect relationships—in cultures where associativethinking dominates, there is often no logical basisto the association among events

• past–present time perspective—short-termoriented with little long-term thinking, which maybe linked to the unpredictable and difficultenvironment; for example, Varmola (2002)identified PNG landholders’ preference forexpediency, seeking short-term solutions to long-term investment issues

• passive/reactive task orientation rather thanproactive and forward looking (which is relevantto development, investment and savings).These characteristics of PNG workers may

present unique challenges for employers.

1 While these characteristics define features of theculture in PNG they are not unique to PNG; they arecommon in many developing countries.

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Kavanamur (2001, p.10) proposed that ‘managersneed to understand society’s attitude towards humannature and towards work, time and space’. The highlabour intensity in balsa growing and processing inENB places considerable importance on labourmanagement and employer–employee relations toensure commitment, stability and productivity in theindustry.

East New Britain province2

ENB comprises about 15,100 km2 of the island ofNew Britain, in the north-east of PNG (Figure 2).The Gazelle Peninsula is in the north of the provinceand encompasses the Baining Mountains, thevalleys of the Keravat and Warangoi rivers,numerous smaller rivers and narrow coastal plains.In the north-east of the Gazelle Peninsula are fertilehills and plains that surround the Rabaul volcanoes.The area is densely settled and well developed.

2 Information extracted primarily from Hanson et al.(2001)

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WatomIsland

Kera

vat R

iver

KeravatTown

BainingMountains

Ataliklikun Bay

Vudal

Gazelle District

Past volcanic eruptions have covered the area infertile volcanic ash but, in 1994, eruptions causedwidespread damage to infrastructure, cash crops andwater supplies. The province also includes the Dukeof York Islands which are 20 km north-east ofKokopo (the current capital of ENB), and WatomIsland which is 10 km north of Rabaul (the provin-cial capital until it was largely destroyed by the 1994volcanic eruptions). There are four administrativedistricts in ENB; Gazelle, Kokopo, Pomio andRabaul (Hanson et al. 2001).

Average annual rainfall varies from 2,000 mmnear Kokopo to over 5,000 mm on the south coast.There are moderate dry seasons in the north-east ofthe Gazelle Peninsula. Table 1 gives climate detailsfor Rabaul.

The estimated population of ENB in 2000 was247,000, which is 6% of the national population.The estimated population in 2009 was around314,000 based on the national annual growth rate of2.7%. This may be a conservative estimate, as theprovincial rural population growth rate is veryhigh—4.2% per annum. The highest population

Warangoi River

Rabaul Town

Kokopo Town

WarangoiTown

Pomio District

Rabaul District

Kokopo District

0 7.5 15N

= VillageKilometres

Duke of YorkIslands

Figure 2. East New Britain province, including location within Papua New Guinea (inset)

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densities are on the volcanic hills and plains of theGazelle Peninsula, in the Duke of York Islands andon Watom Island, with an average of 220 persons/km2. There is significant in-migration in the north-east of the Gazelle Peninsula, with people frommany parts of PNG seeking better access to services,more productive environments and paid employ-ment opportunities provided by the towns andplantations.

Gazelle district

The main area for growing balsa is the Gazelledistrict in the north-west of the Gazelle Peninsulaand the adjacent volcanic plains and hills. Altitudevaries from sea level to over 1,000 m in the BainingMountains.

The estimated population in the Gazelle district in2000 was 93,000 and possibly reached around118,000 in 2009. The highest population density of220 persons/km2 was on the volcanic plains andhills. The Baining Mountains, the northern coastalplains and valleys, and the western coastal plainssupport densities of 23 persons/km2, while the lowerKeravat and Warangoi valleys have lower densitiesof 10 persons/km2. The western half of the district ismostly unoccupied. The volcanic plains and hillshave significant in-migration. The population of theToma and Central census divisions increased by anaverage of 8% per annum between 1980 and 1990.

There is a network of sealed roads on the volcanicplains and hills. Gravel-surfaced roads connectcentres on the northern coast to the western BainingMountains.

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Incomes are high to very high on the volcanicplains and hills, on the coast of Ataliklikun Bay andin the lower Keravat and Warangoi valleys, and arederived from the sale of cocoa, betel nut, fresh foodand copra. People in the Baining Mountains earnlow incomes from the sale of fresh food, while thoseon the northern and western coasts earn very lowincomes from minor sales of cocoa, copra and freshfood. Other sources of income in the district aresmall-scale enterprises such as cocoa fermenting,trade stores and construction, and also paid employ-ment by businesses and plantations. Small numbersof people in the Baining Mountains receive wagesand royalties from forestry operations.

Agriculture on the volcanic plains and hills isdominated by intensive banana cultivation. Triploidbananas can produce for 20 years if they aremanaged properly. People make two consecutiveplantings before a fallow period of 5–10 years.Coconut is also an important food. Agriculture in thearea to the south-west is similar but less intensive.People in the Baining Mountains and on the northernand western coasts cultivate low-intensity mixed-staple gardens. In the 1982–1983 National NutritionSurvey, malnutrition in children under 5 years oldwas assessed as relatively low.

The land potential is high to very high on thevolcanic plains and hills, on the coast and inlandvalleys of Ataliklikun Bay, and in the Keravat andWarangoi valleys. The very high potential land isamong the most productive in PNG. Rainfall, soils,slope, light and temperature are ideal for the produc-tion of many crops, but gullying and soil erosion areproblems in some places. The Baining Mountains

Table 1. Rabaul monthly rainfall, temperature and humidity (Source: McAlpine et al. 1983)

Attribute Month Annuala

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Rainfall (mm)

230 244 256 209 129 114 104 103 94 118 173 228 2003

Mean max temp (ºC)

30.9 30.9 27.0 30.8 31.2 30.9 30.4 30.7 31.4 31.6 31.3 30.9 30.7

Mean min temp (ºC)

23.2 23.2 23.3 23.3 23.6 23.3 23.2 23.2 23.4 23.3 23.3 23.2 23.3

Mean (ºC) 27.1 27.1 27.0 27.1 27.4 27.1 26.8 27.0 27.4 27.5 27.3 27.1 27.1

Humidity indexb

85 86 86 86 84 84 83 81 79 81 82 86 84

a Total/averages may differ from sum/average of rows due to rounding.b The ratio of average 0900 vapour pressure to the saturation vapour pressure at the average mean temperature. This is regarded as a

good approximation to the daily mean (24-hour) relative humidity.

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have very low to moderate potential due to steepslopes, poor soils and frequent cloud cover, whilethe northern and western coasts have low potentialconstrained by poorly drained, shallow soils andfrequent flooding.

There is no agricultural pressure in the district.The potential for further development on thevolcanic plains and hills is limited by existing devel-opment and very high population densities. Atpresent, people are squatting or leasing land forsubsistence agriculture and there are concerns withsoil erosion on the steeper slopes. There is potentialfor agricultural development where land potential ismoderate to very high and access to markets is good.Cocoa, betel nut and fresh food are establishedsmallholder cash-earning activities in these areas.

Overall, people in the Gazelle district are notdisadvantaged relative to people in other districts ofPNG. There is some agricultural pressure, landpotential is very high, access to services is very goodand cash incomes are comparatively high.

Employment trends in East New Britain

Workforce statistics for ENB are not readily avail-able, but based on the national ratio of numbers inthe workforce to total population, the workforcecould have been around 145,000 in 2009, includingaround 54,000 in the Gazelle district. If 70% of theseare involved in subsistence agriculture, then thenumber in paid employment could be around15,000. However, depending on employment strat-egies practised by workers in the district, the numbercould be more than twice this. The statistics indicatethat labour availability is high.

Within PNG, most people are employed in theinformal economy, especially in rural areas. Mostpeople are engaged in subsistence and small-scalecash-cropping activities. Men tend to be responsiblefor cash cropping while women concentrate on foodproduction. According to Newlin (2000), the moresuccessful male cash croppers are those who canmobilise the labour of their wives. The opportunityfor paid employment is often limited by the lack ofadequate infrastructure to allow access to places ofemployment. In the Gazelle district, there is a goodnetwork of sealed roads that allows people reason-able access from their villages to commercialcentres and places of employment.

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The Tolai people are the traditional inhabitants onthe Gazelle Peninsula. They are regarded as beingamong the best educated and most prosperous ofPapua New Guineans, a status that is linked to theirearly association with Europeans and the establish-ment of the German administrative centre in Rabaulin the late 19th century (Newlin 2000). According toNewlin, the Tolai are inclined towards capitalismand commercial practices as a consequence of theirlong experience using a universal, divisible currencyand their involvement in the labour trade withQueensland, Australia, in the 19th century.

Household labour management strategies

Household labour and livelihood strategies ofsmallholder cocoa growers in ENB were studied byCurry et al. (2007). Their research (and previousstudies) found that most smallholder householdsrely on unpaid family labour for cocoa production.They also found that, despite the large size offamilies in ENB, labour shortages are a majorconstraint to increasing production. Labourshortages may be associated with one or more of thefollowing factors:• lack of cooperation among household members in

cocoa production• illness or death of family members disrupting

work schedules during mourning periods• reduced access to labour from the extended family• increased size of cocoa holdings with insufficient

family labour relative to area of cocoa planted• rising cost of hired labour (there is limited and

sporadic use of hired labour, usually for specifictasks including harvesting, establishment andrehabilitation of cocoa)

• high mobility (out-migration) of family members,especially males.In the case of cocoa production, Curry et al.

(2007) argue that understanding household incomeand labour strategies is important for explainingproductivity because of the high dependence onfamily labour and reluctance to use hired labour.The same is likely to be true for smallholder balsaproduction. Some relevant findings from thisresearch for balsa are:• Social and kinship responsibilities attract

smallholders’ time and labour away from cash-generating activities such as cocoa or copraproduction (14–20% of time on a weekly basis).Paid employment is exclusively the domain of

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men, albeit a small share of total labour time (lessthan 2% per week).

• Around 35–40% of time is allocated to cropproduction and marketing activities, while 6% isfor subsistence gardening, 14% for rest andaround 20% for domestic duties, including childcare.Curry et al. (2007, p. 53) concluded that the

various non-production demands on labour timeresult in labour shortages for cocoa production.Gender division of labour for particular activitiesmay also constrain labour supply. The consequenceof this is that crop management inputs are limitedand productivity is low relative to potential yields.An adequate supply of labour is critical to highlevels of production.

Key characteristics of households with anadequate supply of labour for cocoa production wereidentified by Curry et al. (2007, p. 62). These arepresented in Table 2.

In the case of cocoa, families that are unable tomobilise adequate levels of labour from within thefamily, through reciprocal exchanges or by hiringare more likely to adopt a wet-bean productionstrategy than a dry-bean production strategy. While

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the wet strategy is less labour intensive than the dry-bean strategy, returns are lower as well.

Parallels may be drawn for balsa production fromthe cocoa household labour management strategies.The effect on productivity and timber quality associ-ated with different labour management strategies isworthy of further research.

Development of plantations in Papua New Guinea

Introduction

Papua New Guinea’s forest plantations are arelatively minor forest resource compared with thenation’s natural forests. Now that most of PNG’saccessible commercial forest areas have beenallocated and are being harvested, however, interestin the potential of plantations is increasing. The firstcommercial plantations were established in PNG inthe 1950s, although since then development hasbeen sporadic, with plantations scattered over awide geographic area. Adams (2007) reported thatthere are plantations at about 20 different sites in 10provinces. Most plantations are located within reach

Table 2. Characteristics of smallholder cocoa-growing households with an adequate supply of labour (Source:adapted from Curry et al. 2007)

Characteristic Comment

Access to labour of unmarried and/or married sons Good working relationships within the family facilitate labour mobilisation and commitment of individuals

Reside in multi-generational and extended family units (houses clustered together) and with multi-household production units (for subsistence and cash cropping)

Household works cooperatively and harmoniously as a family group

Household is willing to utilise indigenous mechanisms of labour mobilisation when necessary to maintain cocoa production during high crop periods

This may involve adoption of children or recruiting relatives to live with the family; it may also involve reciprocal labour-exchange agreements among households for intensive tasks such as planting, grass slashing, harvesting and processing.These strategies are independent of paid labour, although cash and food gifts may be exchanged.The success of reciprocal labour exchanges depends on the skill of the household heads.

Few intra-household disputes over labour remuneration Family members satisfied that distribution of cocoa income is fair and frugal

Household head allocates cocoa harvests or cocoa beans to adult household members and other relatives

Head builds goodwill (social capital) by allocating harvest proceeds to family members, allowing him to draw on their unpaid labour support when needed

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of established infrastructure including good roadsand port and/or processing facilities. Plantationshave been established without government incen-tives or other direct forms of industry support.

The PNG Government has had little success withpolicies and other measures to attract investment inplantation development (Adams 2007, p. 32). TheNational Forest Policy that was implemented in1991 proposed that ‘programmes for plantationdevelopment will be guided by economic criteriaand feasibility studies to assess the commercialpotential of processing plantation material for avariety of end uses’ (The Independent State of PapuaNew Guinea 1991, p. 7). The policy also proposedthat woodlot establishment, agroforestry and treeplanting ‘will be promoted and supported by activeforestry extension’. Draft policies for reforestation,eco-forestry and downstream processing have beendeveloped and once endorsed by the governmentpromise increased focus on plantation development,domestic timber processing and opportunities forsmall-scale forest production and processing.

Area of forest plantations

According to PNGFA data, there were about62,000 ha of plantation forests in 2005 (PNGFA2005), up from 58,000 ha in the mid-1990s (PNGFA2002). The most recent assessment of the status offorest resources in PNG was conducted in 1997 aspart of the Forest Inventory Mapping System. Theseinventory data have been adjusted in later years,although ‘there has been no systematic attempt toupdate or ground-truth inventory data’ (ODI 2007,p. 10). A review of the potential, achievements andchallenges to the PNG forestry sector by the Interna-tional Tropical Timber Organization (ITTO 2007b)found that national- and provincial-level plans werebased on ‘guesstimates’ of forest area and other keystatistics. The review recommended that a nationalforest inventory be conducted and maintained on aregular basis. At the request of the PNG Govern-ment and with the support of the ITTO, Malleux andLanly (2008) assessed implications of inventorydesign to meet the needs of policymakers and otherstakeholders and prepared an action plan for thedevelopment of a multipurpose national forestinventory. PNGFA has been allocated funding tocarry out the inventory in 2009–2010.

An ITTO (2005a) report on the status of tropicalforest management estimated that there were

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80,000 ha of plantation forest in PNG in 2005. Thisestimate assumed an annual planting rate of4,000 ha, based on data provided to ITTO byPNGFA. Anecdotal evidence suggests that this islikely to be an overestimate. More realistic estimateswould be around 50,000 ha. Until the schedulednational forestry inventory is completed, however,figures for the area of forest plantations remainunreliable. At best, the official PNGFA data providean indication of the area of land that has beenallocated for forest plantations. In addition, there are16,670 ha of rubber plantations in PNG (includingindustrial plantations); areas planted by villagersand plantations established as part of settlementschemes (Bourke and Harwood 2009).

Anecdotal evidence from selected sites in PNGindicates that a range of plantation managementstrategies is being practised. For example, in theGogol Valley near Madang, replanting of Acaciamangium by smallholders has not kept pace withharvesting due to lower than expected returns andchanges in harvesting arrangements. Estimates ofthe current area of acacia plantations are less thanhalf of the original 12,000 ha. At Open Bay in ENB,Eucalyptus deglupta plantations have expanded bymore than 50%, reaching almost 20,000 ha in 2008(SmartWood 2007). In Morobe province, the rate ofreplanting of the araucaria plantations after harvestat Bulolo has been limited in recent years by termiteinfestations and limited fire control. PNG’s teakplantations have been heavily harvested in responseto strong export demand. Several of the remainingstands of teak are of poor form (Adams 2007, p. 32).There has been little reported establishment of newplantations in PNG since the mid-1980s.

Species

The main plantation genera grown in PNG areEucalyptus, Acacia, Araucaria and Pinus.Eucalypts, which comprise around 45% of the totalarea planted, are dominated by Eucalyptus degluptathat is exported as roundwood and sawn timber. Themain acacia species is Acacia mangium, whichcomprises 20% of PNG’s total forest plantationarea. Acacia is processed into woodchips andexported through the Madang port. Together,Araucaria and Pinus comprise 28% of the total areaand include species such as Araucaria cunninghamii(hoop pine), Araucaria hunsteinii (klinki pine),Pinus caribaea and P. patula. Timber resources

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from these forests are processed into variousproducts including plywood, treated poles, sawntimber and prefabricated buildings for the domesticand export markets. Other important species includeTectona grandis (teak), balsa and Terminalia sp.The importance of balsa has increased in recentyears, as the area of plantations in ENB increasedfrom an estimated 700 ha in 2003 to 3,500 ha in2009. This trend is not reflected in the officialplantations data.

Investment patterns

Investment in plantation development has beendominated by the private sector—more than 60% ofplantations are in private hands. This figure reflectsinvestment in industrial-scale plantations by largenational and international companies. It does notinclude the plantings of scattered trees and smallwoodlots of individual farmers and villages. Thereis potential to link smallholder growers to industrial-scale plantations and timber processing andmarketing operations though various arrangementsincluding the nucleus estate system that is commonfor oil palm in PNG.

Trees have been integrated into customary land-use systems in PNG for a range of purposesincluding meeting household food and fuelwoodneeds, protecting cash crops such as coffee andcocoa, supplying building materials and to provide adirect source of income. Trees are grown as part ofthe home garden, in woodlots or in agroforestrysystems (e.g. taungya—the practice of raising aforest crop in conjunction with a short-term agricul-tural crop). Trees grown in home gardens offer asupply of food, fuelwood and building materialsover the short to medium term, depending on thelength of the garden’s fallow period. Trees grown inwoodlots are for the supply of fuelwood and timberresources for the construction of houses and otherbuildings over the medium to long term. Treesgrown in agroforestry systems provide a range ofgoods and services, including timber resources forvarious end uses and non-timber products such asfruit, nuts and oil. For example, in coffee and cocoaproduction systems, tree genera such as Albizzia,Leucaena and Gliricidia are used as nurse crops.Once they have served their primary purpose, theyare harvested for home consumption as fuelwood(Hunt 2006). The diversity and dynamism of thesesystems reflect high levels of innovation and adapta-

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tion in agriculture by PNG landholders (Kanowskiet al. 2008).

Subsistence food production and shifting cultiva-tion characterise agricultural production systems inPNG, with locally grown food supplying 80% ofcalories consumed by rural people. According toHanson et al. (2001, p. 11) ‘most gardens are low-intensity shifting cultivation systems, which operateon cycles of 1 or 2 years of cropping, followed by 5to 15 years of fallowing’. During the fallow period,the land reverts to bush that must be cleared by handto recommence the cycle. The fallow period in theshifting cultivation cycle offers promising opportu-nities for agroforestry systems.

Constraints to development

Kanowski et al. (2008) identified a number ofconstraints to development and expansion ofcommercial tree growing in PNG, including:• infrastructure development—poor physical and

market infrastructure including roads, timber-processing capacity, port services and marketinformation systems

• financial competitiveness—long lead timesbefore a positive cash flow is achieved, lack ofreliable information on financial aspects of treegrowing and lack of access to suitable creditservices

• access to technology—limited availability ofsuitable planting material and relevant technicalknowledge, including extension services

• threat of loss—risk of fire in grassland or adjacentenvironments or loss through theft.Varmola (2002, section 3.2.3) concluded from a

study of hardwood plantation establishment inPacific island countries that a key to ‘the success ofcommercially driven plantation development andmanagement is the management attitude’. Twoforest management types were identified for PNG—plantation foresters and indigenous foresters.Plantation foresters treat a plantation as a series ofrenewable tree crops, while indigenous forestersperceive any forest, planted or natural, as a resourcerather than a crop. The consequence of this is thatindigenous foresters tend not to apply any silvicul-tural management to a planted forest. Furthermore,as they do not manage a plantation as a series ofcrops, they may withdraw after the first rotation,having achieved a household income goal or beingdisillusioned by lower-than-expected returns. This

0

attitude and behaviour of indigenous foresters isexacerbated by a number of factors including:• expediency—PNG culture is generally expedient

(Varmola 2002); while this may be attractive toinvestor partners, the culture assumes that dealsare negotiable; therefore, landowners may seekshort-term returns or solutions to long-terminvestments after a deal has been agreed

• inexperience—participation by smallholders inplantation developments is often encouraged byexpectations of attractive returns promoted bydevelopers and advisors; but smallholders’unfamiliarity with the vagaries of the marketeconomy and the value of silviculturalmanagement may result in lower-than-expectedreturns and consequently their withdrawal fromsubsequent forest plantation activities.The level of taxes and duties and trade restrictions

imposed on forest resources may also restrainplantation investment, especially for some species.The government’s log export tax was imposed in anattempt to recover a share of the logging revenuesthat company taxation failed to capture. The exporttax does not apply to plantation logs or processedtimber products, which effectively acts as an induce-ment to plantation and timber-processing invest-ment. However, exports of selected species (includ-ing balsa, teak and all conifers) as roundwood arebanned, even though they are grown in plantations.The definition of roundwood includes woodstripped of sapwood or roughly squared (i.e. notdownstream processed, such as sawn timber). Theexport ban requires that these species are processedbefore export.

Growth potential

As resource supplies from natural forests declineand pressures increase to protect remaining naturalforests, investment in plantations is expected toincrease in PNG. ITTO (2007b) proposed thatplantations are needed for a number of reasons,including:• creating employment opportunities for rural

people• developing competitive export production• encouraging economically viable downstream

processing of forest products• ensuring opportunities for the entire community

to participate in the development process.

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While acknowledging the potential for plantationexpansion, Hunt (2006) noted that governmentfunds and suitably qualified personnel to supportexpanded programs are limited. AusAID (2006)concluded that ‘while there is obvious potential inthe land-abundant Pacific countries for large planta-tions, land tenure constraints mean that the greatestpotential for plantations may be at the community orhousehold level’.

Despite the existence of incentives and otherforms of government support, evidence from PNGand other Pacific island countries indicates thatinvestment in plantations does not occur unless it isprofitable over the long term and critical risks can besatisfactorily mitigated. The main risk is resourcesecurity. Varmola (2002) and Hunt (2006) proposethat private investment is easier to attract once aplantation resource is established and is at or nearmaturity. They argue that the role of governmentshould be to establish and manage forests oncustomary land leased from owners. As the plantedresource approaches maturity, the lease is trans-ferred from government to the highest-biddingprivate operator. Under this management scenario,the government’s agency focuses on maximising thequality of the plantation resource while the privatecompany focuses on investment in processing facil-ities and restocking the harvested lands.

PNGFA (2009, p. 41) reported that the govern-ment’s intention is to increase the area of plantationsin PNG in line with the current draft reforestationpolicy, which the government is yet to endorse. Keydrivers of the policy are future domestic and exportmarket timber demand and the government’scommitment to the clean development mechanismof the Kyoto Protocol (PNGFA 2005).

PNGFA (2009, pp. 37–38) identified many weak-nesses that have to be overcome to ensure thatforestry in the future will be based on sustainableforest management. These included the need for:more education and awareness-building for tribalcommunities to allow them to make better-informeddecisions; increased financial and human resourcesfor government institutions responsible for forestry;and good overall political governance. This is afuture where the role of the government is anenabling one rather than engaging directly in forestmanagement. PNGFA saw the role of government inensuring a better future for the industry as providingbasic community needs such as education and healthservices, improving transport and communication

1

infrastructure and facilitating rural development.Furthermore, PNGFA (2009, p. 38) expects thatwhen the policies on reforestation, eco-forestry,downstream processing and climate change are

2

endorsed by government ‘the country may see a shiftfrom large-scale commercial forest exploitation tosmaller projects that will be more beneficial topeople and the environment’.

2

Biology, forestry and uses of balsa

Natural balsa forests

Balsa (Ochroma pyramidale, syn. O. lagopus) is afast-growing pioneer tree species that produces verylow density wood that is used for a wide range ofcommercial purposes. It is a medium-size tree,deciduous or evergreen, occurring in both pure andmixed stands in association with other pioneerspecies. The boles of mature trees are generallycylindrical and straight, with buttresses on oldertrees. Balsa is widely distributed across its naturalrange from 22°N to 15°S in broadleaf evergreen andsecondary forests in Central and tropical SouthAmerica (Figure 3). The name ‘balsa’ is derivedfrom the Spanish word for ‘raft’.

Natural distribution

The climate in balsa’s wide natural range is humidtropical with annual rainfall of 1,500–3,000 mmwith a short (

the species has often been referred to as O. lagopus inthe literature; a name in universal use before 1920.The balsa of Ecuador was named O. grandiflora byRowlee in 1919. Herbarium material from Ecuador,however, is not specifically different from WestIndian material. The balsa of the West Indies has twoscientific names, both dating from 1788; O. lagopusSwartz and O. pyramidale (Cav.) Urban. Otherscientific names for this species include Bombaxpyramidale Cav. ex Lam., Ochroma bicolor Rowleeand O. concolor Rowlee, reflecting a considerablemorphological diversity across its natural range.Fletcher (1951) acknowledged that as many as 11species were recognised in early literature.

Genetic variation and conservation status

Given experience with other widely occurringtree species, it is inevitable that species such asO. pyramidale, which occurs across a broad naturalrange in Central and tropical South America, willpossess considerable genetic variation. This study3

has been unable to locate any detailed assessmentsof genetic variation or data recording broad-scaleprovenance assessment.

As an abundant pioneering species demonstratingexcellent regeneration throughout its range ofnatural occurrence, balsa is not biologically threat-ened. The international trade in balsa wood is legal,but larger companies (such as Plantabal SA, AlcanBaltek’s Ecuador plantation company) are seekingcertification for their plantations to ensure access toglobal markets. In a study for the United NationsEnvironment Programme (UNEP) World Conserva-tion Monitoring Centre, Gillett and Ferriss (2005)reported no concerns as to the conservation status ofthe species in Mesoamerica.

Floral biology and seed production

In its natural range, balsa begins to flower at 3–4years of age; under plantation conditions trees canbegin to flower and set seed after 3 years (CABI2000) and in PNG flowering can occur after

3 Throughout this report, ‘this study’ refers to the scopingstudy ‘Identification of researchable issuesunderpinning a vibrant balsa wood industry in PapuaNew Guinea’ (ACIAR Project No. FST/2009/012),commissioned by the Australian Centre forInternational Agricultural Research. Its output is thisreport.

2

9 months, although producing few viable seeds. Thetrees flower annually and flowering time varies overthe natural range—in August in Ecuador (Fletcher1951) and more generally between December andFebruary in Central America where the fruits (pods)mature rapidly over 2 months from mid-January toearly April (Anon. 2009a). Under uniform condi-tions of high humidity, flowering can occurthroughout the year. Balsa is bisexual and night-flowering and the flowers are pollinated by bats; atleast five species of South American bats are knownto pollinate the flowers (Alley-Crosby 2009). Thelarge white flowers (Figure 4) are held upright on thetree and the large (25 cm long and 3 cm in diameter)mature cylindrical pods are green. The small seedsare embedded in a matrix of silky fibres that aidwind and water dispersal. There are 150,000–170,000 cleaned seeds/kg.

Balsa as a weed

Balsa’s abundant seeding habit and ease of propa-gation confer a strong capacity to quickly colonisedisturbed habitats. Balsa is considered to be invasivein the Pacific islands (Meyer and Malet 2000) and insome situations it has become naturalised andformed dense, closed-canopy, nearly monospecificstands that shade out other species, and/or competefor water and sunlight, suppressing growth andregeneration of understorey plants.

Management of natural forests for wood production

Balsa from native forests was the primary sourceof balsa in 1951 (Fletcher 1951). Today, some 15%of Ecuador’s production is derived from nativeforests. In natural stands, balsa regeneration can beprofuse following burning or other site disturbance,and requires heavy thinning if trees are to offercommercial crops. At 3–4 months, seedlings arethinned to 2,000 per ha, followed by thinning at 1.5,2.5 and 3.5 years (Francis 1991). In Ecuador, tradi-tionally, trees were cut at age 6–8 years in naturalforests, debarked by hand and dragged to theriverside using bullocks. Logs were then transportedto the mills by water (Fletcher 1949). Fletcher(1951) noted that the logging operations in nativeforest harvests were very wasteful.

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Balsa plantations

The broad commercial markets for balsa wood andthe ease with which the tree can be propagated andmanaged have resulted in plantations being estab-lished in many parts of the tropical world. Planta-tions have been recorded in 10 countries outside itsnatural range (including Indonesia, Sri Lanka, WestAfrica, Solomon Islands and Papua New Guinea(CABI 2000)) and Costa Rica, Mexico, Bolivia,Brazil, Colombia, Venezuela and Ecuador within itsnatural range. As a general guideline, preferredplantation sites have lowland, humid tropical condi-tions, uniform annual rainfall of about 2,500 mmand deep, well-drained soils. Ecuador has theworld’s largest plantation estate with an estimated18,000 ha and PNG, which provides 8% of globalsupply, has some 3,500 ha. Smaller plantation

2

estates meet industry needs in Indonesia, Colombia,Costa Rica and Peru.

Silviculture and management

Detailed silviculture guidelines are offered in Thebalsa manual: techniques for establishment and themanagement of balsa (Ochroma lagopus) planta-tions in Papua New Guinea (Howcroft 2002) and inOchroma lagopus: silvicultural characters andplantation methods (Anon. 1961).

Nursery guidelines for balsa propagation areprovided in Anon. (1961), Wiselius (1998) andHowcroft (2002). Balsa is normally propagated byseed, with little commercial success in vegetativepropagation being recorded. Some growers dibbleseed into prepared plantation sites but the mostcommon method of plantation establishment is vianursery-grown seedlings. The roots of young trees

Figure 4. Key botanical features of balsa (not all at same scale): (1)leaf, lower surface; (2) open flower with unfolded calyxand corolla, traces of bracts; (3) cross-section of a fruitbefore maturity; (4) mature fruit; (5) seeds; (6) seedling,approximately 1 month old (Source: Anon. 1961)

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are very susceptible to damage, so bare-rooted plantscannot be used (CABI 2000). Therefore, whereseedling transport is difficult, direct sowing of seed isoften the preferred method of establishment.

In PNG, seed may be collected throughout theyear with a peak during April–November (Howcroft2009) or June–August (Wiselius 1998), and inEcuador seed is collected from October toNovember. The seeds are orthodox and retainviability for as long as 6 years in sealed containers atroom temperature, although cold storage at 4 ºC isrecommended. Francis (1991) reported that germi-nation can be improved in many ways: a hot watersoak for 20 minutes, a boiling water soak for 2–3minutes; a soak in coconut water for 12 hours; orscarification and exposure to dry heat (96 °C) for5 minutes. Seeds are sown in boxes or in plasticpots, in a 1:1 mixture of sandy loam garden soil andpure fine sand—a soil media combination which cangive a high germination percentage. Light shade isgiven to prevent excessive moisture loss.

When seedlings are about 20 cm tall (at about 3–4months of age) they are transplanted into holes of30 cm × 30 cm × 30 cm, at a spacing of about 4–5 m2

(CABI 2000). Initial spacing varies and is influencedby the need to maximise the growth rate of each treewhich, in turn, influences wood density (Wiselius1998).

Careful tending is necessary during the first year, asthe seedlings are quite fragile and can be easilydamaged by wounding and browsing. Seedlingscannot survive weed competition in the first year.Nurse crops are useful to guard against excessive barkscorch. Epicormic buds should be removed. Protec-tion against fire is also necessary (CABI 2000).

In some plantation situations, the trees are inter-planted with agricultural crops at the time of estab-lishment. A taungya system at 2 m × 3 m spacing canbe used (Wiselius 1998). In PNG, a closer initialspacing (2.5 m × 2.5 m; 1,600 trees/ha) is recom-mended where unimproved genetic material is used(Howcroft 2002), with thinning to 1,260 stems/ha1.5 years after planting, and a commercial thinningto 630 stems/ha at age 3.5 years. When geneticallyimproved planting material is used, an initialspacing of 4 m × 4 m is used. At year 5–6, the planta-tion is clear felled and replanted. In reality, growersin PNG plant balsa at various stocking rates, varyingfrom 2.5 m × 2.5 m to 3 m × 4 m depending on thesite, resources and labour for weeding, interest inthinning and availability of seedlings.

2

Early growth in balsa plantations is extremelyrapid, with annual height increments for the first2 years exceeding 3 m. Well-formed trees in PNGplantations can reach a diameter at breast height(dbh) of 30 cm some 30 months after planting.

Rotation lengths vary with site conditions andmanagement intensity. It is rare for rotation lengthsto extend beyond 8 years as growth slows appreci-ably between 7 and 12 years. At this stage,heartwood development starts and, with a muchhigher density and a darker colour, it is less suitablefor commercial purposes (Wiselius 1998). In PNG, arotation length of 5 years is common and the risk ofthe occurrence of ‘red heart’ (a wood colouration)increases with rotations beyond 6 years (Howcroft2009). In Indonesia, a rotation length of 8 years isused (Wiselius 1998), in Costa Rica 4–6 years(Revel 1993) and in Ecuador 6–7 years is commonlyadopted (DIAB, Ecuador, pers. comm.).

Ochroma pyramidale is a very strong lightdemander, but tolerates some lateral shade in thefirst year in sites where the summer sunlight isstrong. It has the ability to self-prune. Whereplantings from some seed sources are highlybranched, pruning of green branches is recom-mended before 12 months of age (Howcroft 2002).

Tree improvement and deployment of high-quality germplasm

This study has been unable to locate any reports ofwidespread and comprehensive collections of balsafrom its range of natural occurrence and subsequentassessment in provenance trials. Given thetaxonomic complexity and morphological variationwithin O. pyramidale, it is highly likely that consid-erable genetic variation exists in key characters suchas growth, form, wood density, internode length andpest and disease resistance. Such variation offersconsiderable opportunities for selection and deploy-ment of improved germplasm. To date, there hasbeen no commercial success in developing vegeta-tive propagation techniques for the species and thislimits options for capturing genetic gain. Anotherchallenge facing tree improvement is the floralbiology of the species—with bats pollinating thenight-blooming flowers, control of pollinatingvectors is challenging.

A modest program of tree improvement hasfunctioned sporadically in PNG since 1980 (Figure 5,and see below) and the company Alcan Baltek report-

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edly uses improved sources of seed for its plantationsin Ecuador. Indonesia reportedly has a balsa improve-ment program. Commercial success of any tree croprequires use of the most appropriate high-qualitygermplasm. It costs just as much to establish a treefrom poor seed as it does from seed of the highestquality, yet the differences in growth and quality andfinancial returns can be dramatic. Although details ofother tree improvement programs for balsa were notfound during this study, it is likely that they have beenestablished and opportunities exist for collaboration.

Figure 5. A select (‘plus’) tree of balsa in PapuaNew Guinea (Photo: Stephen Midgley)

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Wood quality

Balsa is a very low density wood and is thelightest and softest of all commercial timbers(Eddowes 2005). The heartwood (not often used ascommercial timber) is pale brown or reddish and thesapwood (forming most commercial timber) isnearly white or oatmeal-coloured, often with ayellowish or pinkish hue (USDA, undated). Treesare harvested before full biological maturity to avoidthe development of coloured heartwood.

Commercial balsa wood usually ranges in densityfrom 100 kg/m3 to 170 kg/m3 but can vary from50 kg/m3 to 410 kg/m3 (Francis 1991). Wood densityand other properties can vary greatly depending uponorigin and growth conditions (CIRAD 2003), withfast-grown trees reportedly producing a greaterproportion of low-density timber (PNG Balsa,Kokopo, ENB, PNG, pers. comm.). Because treesgrow more slowly as they age, density increaseslinearly with distance from the pith and height abovethe ground (Whitmore 1968).

Balsa wood of varying densities has a modulus ofrupture of 148–372 kg/cm2, a modulus of elasticityof 300,000–62,000 kg/cm2 and a maximumcrushing strength of 63–64 kg/cm2 (Francis 1991).

When harvested at 4–6 years, there is little or noheartwood in the log and no growth rings. Logs havea pith of about 2 cm in diameter that can ‘wander’through the centre of the log and which must beremoved during sawing. Balsa’s fast growth canlead to growth stresses, resulting in splitting duringconversion. This can be minimised through use oftwin saws at primary conversion. Balsa driesquickly with very little degrade, and kiln-drying,particularly of thicker stock, yields a much betterproduct than air-drying. Kiln-drying normally takesthe moisture content down to 10–14% over 2–3days; detailed schedules are offered by USDA(undated), CIRAD (2003) and Eddowes (2005).

The wood is not durable and is vulnerable to dry-wood termite attack, and logs and green lumber arereadily attacked by pin-hole borers. The sapwood ispermeable (CIRAD 2003).

Blue-stain fungus is a significant source ofcommercial degradation and can develop in the woodif there are delays between harvesting, sawing anddrying. In PNG, balsa is harvested, sawn and driedwithin 3 days to prevent blue-stain degradation.

Almost all balsa-processing operations segregatebalsa wood into three density classes. While these

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classes vary in nomenclature and value betweenprocessors, they are generally described as: light(80–120 kg/m3), medium (120–180 kg/m3) andheavy (180–220 kg/m3). This study was unable tolocate markets for balsa wood with densitiesexceeding 220 kg/m3.

Like most hardwoods, balsa is short-fibred, but isnot used commercially for pulp and paper-making.

Uses of balsa wood

Due to its low density, strength and versatility, balsais suitable for a wide range of end uses. It is usedextensively for hobbies and model-making,including models of boats and ships, aeroplanes,gliders and buildings. Due to its buoyancy, it is usedfor surfboards and has been used for life rafts andlifebelts. The technical standards for model balsa arevery high, with clients demanding uniform light-coloured wood, free of knots and other defects andcut to precise dimensions.

Its main industrial use, and the use that forms thelargest part of the global balsa market, is as end-grain panels. End-grain panels are widely used insandwich panels (Figure 6), which are normally alow-density core material sandwiched between twohigh-modulus face skins to produce a lightweightpanel with exceptional stiffness. The face skins actlike the flanges of an ‘I’ beam, carrying tensile andcompressive loads. The core plays the role of theweb, separating the face skins and carrying the shearloads (Alcan Baltek 2009). The core materialsprovide panel thickness, with associated stiffness, atminimal weight. Stiffer panels require less supportstructure, simplifying structural design.

To prepare end-grain panels, harvested balsa isair-dried and then kiln-dried to 10–14% moisturecontent, with industry norms at 12%. The driedlumber is planed, cut to length and preciselymeasured and weighed to determine density. Aftersegregation into density classes, the lumber is gluedtogether, pressed into large blocks and cut intosheets with the wood fibres oriented perpendicularto the face of the core sheet. This end-grain orienta-tion offers very high compression and shear proper-ties, fundamental for good sandwich construction(Black 2003) and extremely high strength andstiffness-to-weight ratios.

In preparing end-grain balsa panels, manufac-turers place considerable importance on the densityand uniformity of the panel. Most buyers have very

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strict specifications and, for example, will allowonly a certain number of defects in an end-grainpanel. Colour is important for some applications,with a pale straw to white colour preferred.

The moisture content of panels is important, ashigh moisture contents (>14%) can interfere withthe curing of adhesives used when applying theouter skins to the sandwich composites. Delamina-tion between the outer skin and the core can be amajor cause of product failure.

The features of balsa that are attractive tomanufacturers of sandwich panels are its relativelylow price compared with competing core materials,and it: • is an ecological product—balsa is the only core

material coming from a natural and renewableresource

• has a wide operating temperature range (–212 °Cto +163 °C; –414 °F to +325 °F)

Load

LoadSkin in tension

Skin in compression

Core in shear

Figure 6. An end-grain panel used in a sandwichcomposite (Photo: Stephen Midgley)

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• has excellent fatigue resistance• offers good sound and thermal insulation• has high impact strength (Alcan Baltek 2009).

Balsa wood performs very well in fire-criticalapplications. It does not offer much fuel, and it burnswith a nontoxic white smoke. If the wood does comeinto contact with flame, a uniform char layer formsthat protects unconsumed core material from theheat source. In contrast, some competing corematerials made from synthetic foams may producefumes that contain toxic by-products (Black 2003).For these reasons, balsa is approved in most transitapplications and as insulation for engine rooms.

Balsa achieves an excellent bond with most typesof resins and adhesives and is compatible with avariety of manufacturing processes. While balsa isused as rigid panels, many fabricators prefer flexiblesheet material in which the panel is cut into smallsquares held together with a fabric (mostly fibre-glass) scrim backing that allows the core to conformto a curved, moulded surface.

As a core material, balsa has found a wide rangeof applications in many industrial sectors as outlinedbelow. Examples of such applications are illustratedin Figure 7.

Marine

As a lightweight and strong composite, end-grainbalsa has been used in hulls, decks, bulkheads,superstructures, interiors, tooling and moulds. TheAustralian racing yacht Scandia had a hull madefrom a balsa composite. Many power boats, recrea-tion craft and commercial vessels also have compo-nents made from balsa composites. Balsa has beenused for the massive, static-free insulation forcryogenic transport ships (used for shippingliquefied natural gas (LNG)). The use of balsa in themarine field is not new—native South Americanswere using it for rafts before European occupation.The raft used in the famous Kon-Tiki expedition of1947 was made from balsa logs.

Road and rail

Important criteria in rail vehicle engineeringinclude weight saving while maintaining rigidity andstrength, and acoustic and thermal insulation as wellas fire protection. Because of their lower cost andbetter durability, infused, balsa-cored, fibreglass-skinned panels have replaced phenolic honeycomb-cored laminates in the floors of Bay Area Rapid

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Transit (BART) trains that operate in the greater SanFrancisco metropolitan area (Black 2003), and manymodern railway carriages use lightweight balsapanels in ceilings and compartment panels. Theflooring of the cabins of popular makes of trucks andbuses are balsa composites, as are roof panels, bodypanels, interiors, front-ends and side skirts (AlcanBaltek 2009). Many modern trailer homes includesandwich composites that incorporate end-grainbalsa, and some motion-picture production trailers,where weight is an issue, use balsa panels.

Wind energy

Improving technologies have increased theperformance and efficiency of wind turbines, andbalsa is used as lightweight, cored sandwich panelsin increasingly larger blades. In areas of rotor bladeswhere high shear and compression strengths arerequired, end-grain balsa cores provide some of thecheapest and most reliable solutions. Wind energyrepresents one of the most promising applications forenvironmentally friendly balsa, with most turbineblades being constructed to provide a 25-year life.

Aerospace

Among the best-known aerospace applicationsfor balsa was its use in the Mosquito bomber inWorld War II, a cleverly designed aircraft builtlargely from wood. Some of the most famousaircraft manufacturers such as Boeing andMcDonnell Douglas have used (and are using) balsapanels as floor panels, galley carts, interior parti-tions, cargo pallets, containers and general aviation(sports aircraft) parts.

Defence

The defence industries have long had an interestin balsa and balsa products. During World War I,balsa was used in life vests and the British used thewood in 80,000 floats that supported their minebarrage in the North Sea. Balsa wood is used as astandard core material in present-generation navalship structures, and sandwich composites and balsacores feature in a number of applications, such assurface ship deck structures, radar masts and boathulls (Mantena et al. 2008). The sandwichcomposite used generally consists of brominatedvinyl ester resin with glass or carbon reinforcementand a balsa core (Sorathia and Perez 2005).

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The panels forming emergency and tacticalshelters (including field hospitals) commonly usebalsa cores. The standard cargo pallet for defence airtransport (274 cm × 224 cm; 108 inches × 88 inches)

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is made with a balsa core. The Royal Australian AirForce imports about 300 balsa-based cargo palletsannually worth about A$1,700 each.

Figure 7(a–e). Examples of products that embody balsa: many vehicles include panels with balsa cores, suchas the floor panels of the Cadillac XLR (a), structural bodywork of the Toyota IMTS bus (b),the cab floor of the Kenworth T2000 truck (c), the hull and deck of the Dehler 47 yacht (d) andvarious sections of the Viking 74 sports fishing boat (e).

a

b

0

e

d

c

Industrial

Balsa-cored composites are widely used inductwork insulation for industrial pipes, as insula-tion for cool stores, in tooling, tanks, impactlimiters, concrete forms, fascia panels, skis,

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snowboards, wakeboards and lightweight packagingmaterial for fragile goods.

Innovation has become the hallmark of successfulcompanies which use balsa wood.

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g

f

h

Figure 7(f–h). Examples of products that embody balsa: the hull and deck of the Douglas Marine Spiderman (f);end-grain balsa cores are used in rotor blades for wind turbines (g) where high shear andcompression strengths are required; historically, the de Havilland Mosquito bomber of WorldWar II incorporated balsa into its famous wooden construction (h). (Photos: a–f, Alcan Baltek;g, ENERCON; h, The Australian War Memorial)

The balsa growers

Balsa has been cultivated, harvested and processedin all countries where it occurs naturally. In addition,it has been grown and processed in West Africa,Indonesia, Sri Lanka, PNG and Solomon Islands.From available trade data, it appears that thedominant global producer is Ecuador. PNG rankssecond and there is reported but unquantifiedproduction from Costa Rica, Venezuela, Colombia,Peru and Indonesia. Unsubstantiated reports suggestthat 4,000 ha of commercial plantations have beenestablished in Mata Grosso, Brazil. While balsa willgrow well in many parts of the world, the key toeconomic success appears to be proximity toprocessing facilities and links with internationalmarkets.

Balsa in EcuadorEcuador is the world’s dominant supplier of balsa andhas been so for over 60 years; Fletcher (1949) notedthat Ecuador controlled 95% of global production in1943 and the United Nations Conference on Tradeand Development (UNCTAD 2001) reported thatEcuador satisfied 80% of the world demand for balsain 2001. This study indicates that, in 2008, Ecuadoraccounted for 89% of the global supply of balsa.

Ecuador lies on the north-western coast of SouthAmerica and has an area of 276,841 km2 and apopulation of 14 million. For a large part of the past30 years, life in Ecuador has been marred bypolitical instability. Protests in Quito have contrib-uted to the mid-term ouster of Ecuador’s last threedemocratically elected presidents. In September2008, voters approved a new constitution; Ecuador’s20th since gaining independence. In 1999–2000,Ecuador suffered a severe economic crisis and theUnited States (US) dollar was adopted as legaltender. Despite a recovering economy, the govern-ment defaulted on several commercial bond obliga-tions in 2008. The economic uncertainty generatedby these actions has caused private investment todrop and economic growth to slow. Its 2008 exportsof petroleum, bananas, cut flowers, shrimp, cacao,

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coffee, hemp, fish and wood (including balsa)totalled an estimated US$19.4 billion (CIA 2009).

Balsa occurs naturally in Ecuador and is grownprimarily on the moist tropical coastal plains andhills (Figure 8) where the annual rainfall is about2,500 mm. It has been utilised for a long time andwas commonly used for rafts by the Incas over 500years ago (Fletcher 1951). A significant part ofcommercial production comes from managedsecondary balsa regrowth on cleared land or onabandoned banana or cocoa plantations—regenera-tion so profuse on some occasions that it is known as‘the weed tree’ (Fletcher 1949). Balsa plantationsbegan to be established in 1937 after the EcuadorianGovernment passed a law requiring planting of twobalsa seedlings for every tree cut for commercialuse, and by 1940 three commercial plantations hadbeen established (Fletcher 1951).

The plantation estate of balsa has steadilyincreased in recent years. Pastor (2004) reported thatEcuador had 8,000 ha of commercial plantations in2004, and FAO (2006) reported 12,000 ha of balsaplantations in Ecuador in 2006. However, ITTO(2005b) reported that, in 2005, balsa, a major exporttimber from natural forests, was planted ‘on alimited scale’. Vásquez (2005) reported that, in2003, balsa production from plantations represented85