An overview of the wood products sector in Iran: 2007-2022

Amin Ariana, and Richard P. Vloskyb,*

a: Iran Wood Industries Association, Tehran, Iran;
b: Louisiana Forest Products Development Center, Louisiana State University Agricultural Center, Baton Rouge, LA, USA.
*Corresponding author: E-mail: rvlosky@agcenter.lsu.edu

Citation: Arian A, Vlosky RP. 2023. An overview of the wood products sector in Iran: 2007-2022. J.For.Bus.Res. 2(2): 146-169.

Received:  18 September 2023 / Accepted:  22 November 2023 / Published: 27 November 2023

Copyright: © 2023 by the authors


ABSTRACT

In this paper, we assess the development of the Iranian wood products industry over the past two decades. The sector is an important component of Iran’s economy with the potential for growth across different product markets. We discuss past, current, and future raw materials, production, trade, and consumption. Overall, the industry is fragmented and faces a number of challenges that hinder success in domestic and export markets, including lack of access to quality raw materials, problems with production quality control, and access to markets. Evaluation of trends and market patterns shows that the Iranian wood industry sector is developing continuously and has the potential for further growth. Considering the potential domestic and international market and the Iranian wood industry’s strengths, suggestions were provided to accelerate industry development, such as investments and efforts to facilitate wood raw material imports, establishment of new management methods and considering new technologies to upgrade the quality and quantity of production together with the profitability.

Keywords: analysis, Iran, wood products


INTRODUCTION

References to the wood products industry in Iran can be traced as far back as 4200 B.C. in the writings of historians such as Herodotus, Xenophon, and Quinte Curce. In this period, native people of Iran used wood for wheels, carts, and agricultural tools. Later, in the Achaemenid dynasty, Xenophon describes wood used for battle weapons, buildings, ships, and bridges. (Tutunjanian 2005). Modern industrial use of wood in Iran emerged with the establishment of sawmills and match factories in the early 1900s and the manufacturing of plywood, fiberboard, particleboard, and furniture in the 1950s (Parsapajouh 1988). This paper gives an overview of the current forest sector in Iran with an emphasis on manufacturing capabilities and challenges.

Although Iran has a forest products manufacturing industry, and government statistics are generated annually, previous literature has not provided a cohesive perspective of the industry by product sector, with the exception of an article published almost two decades ago (Arian et al. 2007). Similar studies from other countries were found in the literature. For example, Aksu et al. (2011) analyzed the structure of Turkey’s wood products industry and suggested ways to improve the country’s competitive position in global markets. A study in India evaluated the production, import and export of wood-based panels in the country over the past 24 years (from publication date), including a discussion of market trends (Upadhyay et al. 2016), and Ototo and Vlosky (2018) provided a comprehensive overview of the forest sector in Kenya. Same authors did another study on deconstruction innovation in the wood furniture industry in Kenya (Ototo and Vlosky 2023). Hammett et al. (2001) studied forestry and forest products in China, giving an overview of the current and future situation of the forest products industry and market in this country.

This article draws from a variety of sources to develop a comprehensive view of the Iranian forest products industry and its changes from 2007 to 2022. We discuss the history of the forest industry in Iran as well as the country’s forest resources and industry structure by major product category. Overall, the Iranian forest products industry is fragmented and faces a number of challenges that hinder success in domestic and export markets. The production and trade trends are evaluated for each product, including different types of wood-based panels and furniture and the patterns are extracted. The main challenges are discussed, and policy recommendations are given for future development of the industry.

DEMOGRAPHIC/ECONOMIC INDICATORS

During the past decade, Iran has been among the top 22 countries in the world in terms of population and gross domestic product (Table 1). Among nearly 190 countries, Iran has been in the middle ranks for per capita GDP, global competitiveness, global innovation, human development, comprehensive development, and digital adaptation. Conversely, the country is ranked on the lower end of the spectrum for other socio-economic indicators: high inflation and unemployment, low labor force participation rate for males, very low female labor force participation rate, low fertility rate, nominal economic freedom, and a low level of gender equity. It is significant and important to note that improvement in socio-economic conditions is a necessary precursor to improving the future of the nation’s overall economy (Bloom 2020).

Table 1. Iran’s international socio-economic position indicators (various years).

Indicator

Year

Rank

(190 Countries)

Population (million)

2021

18

Labor force participation rate (percentage)

2020

174

Fertility rate (children per woman)

2021

101

Number of scientific articles

2018

16

GDP ($ U.S. billion dollars)

2017

18

GDP per capita ($ U.S. dollars)

2017

69

Inflation (percentage)

2020

6

Unemployment (percentage)

2019

48

 

 

 

Business-Oriented Factors

 

 

Economic freedom

2020

164

Gender opportunity/development

2018

148

Ease of doing business

2020

137

Open data availability

2019

117

Competitiveness

2019

99

Digital compatibility

2016

93

Human development

2020

70

Global innovation

2019

61

Sources: MEFA (2022)  

FOREST RESOURCES OF IRAN

Iran has a total land area of 164.8 million hectares, of which 80 percent (131.5 million hectares) are designated as natural resources (Iran’s Natural Resources and Watershed Management Organization 2023) (Figure 1). Natural resources are defined as any biological, mineral, or aesthetic asset afforded by nature without human intervention that can be used for some form of benefit, whether material or immaterial. Examples of natural resource assets include forests, surface water, groundwater, and fertile lands or the soil and minerals within them.

Figure 1. Iran land area by type (total=164.8 million hectares). Source: Iran Natural Resources and Watershed Management Organization (2023).

Forests comprise about 8% of the country’s total area and are one of Iran’s most important natural resources. They are dense in the north, with the most valuable forests found in Gilan, Mazandaran and Golestan provinces. Forests are divided into two groups: forests in the north and forests outside the north. In addition to the forests of the north, sparse and scattered forests are found in the west, southwest and northeast regions of the country.

In terms of climate, forests are designated by five zones according to the Iran Natural Resources and Watershed Management Organization (Figures 2 and 3). Zagros forests have the largest share with 4,680,983 hectares, and Arasbaran forests have the smallest share with 132,398 hectares of forest area compared to the total forests of Iran. This classification of Iranian forests is based on climate of each type, but the species of the trees and their productivity are different. The only productive and industrially harvestable forest of Iran is Hyrcanian forest in the north.

Figure 2. Iran forest types. Source: Iran Natural Resources and Watershed Management Organization (2023).

Figure 3. Iran ecosystems including forest types. Source: Iran Natural Resources and Watershed Management Organization (2023).

WOOD SUPPLY

Wood supply from natural forests was about 1.5 million cubic meters in 1995 and decreased to 0.87 million cubic meters in 2004 (Arian et al. 2007). The Iranian government banned harvesting natural forests in 2017 for a minimum period of 10 years. As such, the wood supply from natural forests is near zero except for small volumes from illegal harvesting. Currently, plantations are the main source of wood raw material for industry as they are not included in natural forests. Annual wood supply from this source is about 6 million cubic meters, including poplar, eucalyptus and wood from fruit gardens. This is planned to double in volume by 2027 (Iran’s Natural Resources and Watershed Management Organization 2021). The investment for doing this plan will be covered by the government directly. Besides this, the government plans to promote plantations and support the private sector to develop plantations. All these are planned to increase the wood supply for the Iranian wood industry. Another source of raw material for Iranian particleboard and medium density fiberboard (MDF) industries is sugarcane bagasse, which provides feedstock for the country’s two particleboard plants, one  MDF plant, and one paper plant in southern Iran.

Total wood imports to Iran are generally increasing and include mainly sawn wood (90%) and other forms of raw wood like roundwood, sleepers, and wood chips (10%). The sawn wood imports to Iran are for the furniture and construction sectors. Total wood imports during the period of 2013 – 2022 showed 220% growth compared to the period of 1995 – 2004. The main source of wood imports to Iran is Russia, supplying more than 90% of total imports.

The value and weight of total raw wood imports to Iran in the past ten years are shown in Figure 4. Imports of wood raw materials for wood-based panels and pulp industries are essentially non-existent due to Iranian Plant Protection Organization regulations and a lack of logistics infrastructure. Because of the shortage of wood sources in Iran, the country does not export raw wood.

Figure 4. Iran wood imports by weight and value (2013-2022). Source: Iran Customs (2023).

IRAN WOOD PRODUCT SECTORS

Due to long-term sanctions against Iran, access to new technologies is limited, and wood industry owners do not have easy and fast access to updated machinery and know-how to upgrade their production lines. This is not limited to panel producers only (Arian et al. 2012). As a result, the industry faces problems in production quality control and management. Conversely, these sanctions limit the Iranian wood industries’ access to the international markets due to many challenges in transferring money and trading with foreign countries.

Particleboard

As shown in Figure 5, the country’s particleboard consumption decreased by 42% in 2022 compared to 2013, concurrent with a 24% decrease in particleboard production in this period. Stagnation in the country’s construction sector combined with MDF substituting for particleboard and increased competition for limited raw materials are the main reasons for the decrease in the production and consumption of particleboard.

Figure 5. Production and consumption of particleboard in Iran. Source: Iranian Wood Industries Employers Association (2023).

However, according to Figure 6, during the years 2013 to 2022, exports have been increasing, but imports have been decreasing since 2013. During the years 2013 to 2022, the import of particleboard to the country has decreased by more than 83%.

Figure 6. Import and export of particleboard (1000 cubic meters). Source: Iran Customs (2023).

The main reason for increasing exports of particleboard is the increasing exchange rate of the U.S. dollar relative to the Iranian Rial, which makes foreign sales more attractive. For the same reason, there has been a 17% decrease in imports of particleboard.

Medium Density Fiberboard (MDF)

Production and consumption of MDF from 2013 to 2022 are shown in Figure 7. With the increase in domestic production of MDF, the gap between the country’s consumption and production has decreased significantly. In 2013, 33% of consumption was supplied by domestic production. Before 2004, all MDF consumed in the country was imported, and in 2005, only 13% of MDF consumption was produced domestically.

Figure 7. Production and consumption of MDF. Source: Iranian Wood industries Employers Association (2023).

This trend can also be seen in imports and exports. As seen in Figure 8, exports have been increasing, and imports have been decreasing. The high import tax for importing wood-based panels, including 10% for unfinished and 20% for worked or surfaced products, respectively, together with an unfavorable exchange rate and the increase in domestic production capacity are the main reasons for the decrease in imports in this period.

However, imports still play a significant role in supplying the country’s MDF consumption. Efforts have been made to increase the production capacity of MDF with governmental support and investment.