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Report
from
Europe, the UK
and
Russia
Twenty-five percent of European timber imports
certified but gaps in demand remain
New research indicates that around 25% of solid timber
products imported into the EU-25 is likely to derive from
independently certified or legally verified forests.
However the research also suggests that the very high
level of fragmentation both in the EU timber trade and in
timber＊s major consuming sectors 每 construction and
furniture 每 present a major obstacle to chain of custody
certification and the further development of markets for
environmentally labeled wood products throughout the
EU.
The research has been undertaken by Forest Industries
Intelligence Limited for the UK Timber Trade Federation
(TTF) with funding from the UK Department for
International Development (DFID) as part of a project to
assess the EU market for certified and legally verified
wood products. The latest report to be published in June
2009 covers 7 EU countries: Belgium, France, Germany,
Italy, Netherlands, Spain, and the UK. Key conclusions
from the latest report include:
• The report estimates that overall, 14.8 million m³
(25%) of the 60.4 million m³ of solid timber
products imported into the EU-25 during 2007
may have derived from independently certified or
legally verified forests. Much of the imported
certified/verified volume derived either from
Russia (5.8 million m³) or other European
countries (4.1 million m³). The certified/verified
volume was dominated by softwood sawn lumber
(3.9 million m³) and softwood logs (2.6 million
m³).
• The report estimates that of the 60.4 million m³
(roundwood equivalent volume) of products
derived from solid wood imported into the EU
from outside the EU in 2007, 12.6 million m³
(21%) are at potentially high risk of being derived
from a suspicious source. However this volume
amounts to only around 5% of total EU wood
consumption (due to the high volumes of wood
sourced domestically within the EU).
• The very high level of fragmentation both in the
EU timber trade and in timber＊s major consuming
sectors 每 construction and furniture 每 continue to
present a major obstacle to chain of custody
certification and the further development of
markets for environmentally labeled wood
products throughout the EU. Other significant
obstacles are generally low levels of awareness of
forest certification and legality verification and
very low willingness to pay among end-users.
• The economic downturn is generally widening
the gap between environmentally proactive
operators that are now more desperate than ever
to exploit the opportunities emerging for timber
from increasing interest in sustainable
construction and those that have not focused on
environmental issues and which continue to sell
primarily on price.
• Those EU companies that have made far-reaching
commitments to shift to certified wood products
often see this as part of a wider process of
restructuring overall procurement practices in
favor of a limited number of key suppliers able to
provide the full range of quality services of which
forest certification is only one component.
• For much of the commodity softwood and
composite panels sector, high availability of
PEFC or FSC certified product supply in the EU
is met with only limited market requests for
labeled product. Hence the opportunities for
achieving a premium in this sector are extremely
limited.
• Only in the rather restricted conditions that
prevail in parts of the hardwood sector and to
some extent in the specialty softwood sector
(such as western red cedar cladding from North
America) does the issue of price premiums arise.
In this case, specific requests for certified
products, particularly FSC, might be met by
limited supply.
• The highest premiums 每 in the range of 20% to
50% on the price of delivery to the importers yard
- are being asked for FSC certified tropical
hardwood lumber from Africa and Brazil.
• In the temperate hardwood sector, price
premiums are being sought for FSC certified
American hardwoods in the range of 5%-10%
• Price premiums for tropical sawn wood supplied
under one or other private sector legality
verification system (such as TLTV, OLB or
VLO) are typically in the range of 3% to 15%
with most at the lower end of this range.
• Generally there is high level of reluctance
amongst end-users to pay premiums for certified
or verified legal wood products, a situation which
places significant limits on the ability of suppliers
to charge more. The highest premiums for FSC
tropical hardwood may only occasionally be
passed on when supplying high profile public
sector contracts. As a result, there are signs that
some importers and manufacturers implementing
green procurement policies have switched their
emphasis away from FSC certified products in
favor of cheaper legally verified products when
sourcing from tropical supplying countries. This
is true even of the Netherlands which has
traditionally been the strongest adherent to FSC
certification.
• To date, public sector procurement policies have
had only a limited impact on timber purchasing
practices in EU member states. The policies
directly affect only a small proportion of the
overall timber trade and their effectiveness is
undermined by inconsistent application between
and within EU member states. So far only the UK
and Netherlands government have followed up
implementation of the policy with systems of
monitoring.
• On the other hand, there are indications that with
sufficient political will and resources the
influence of government procurement policies
can in time extend well beyond the direct impact
on immediate suppliers. Such policies can
increase the sensitivity of larger importers,
merchants and manufacturers to negative
publicity. They can therefore provide an
important additional incentive for these
companies to implement far-reaching corporate
commitments to sourcing verified wood products.
Internal management issues also mean that if
certified wood is required by major customers in
the public sector and certified raw material is
sufficiently available, it is simpler to switch over
to 100% certified production. Interviews indicate
that these trends have intensified over the last 18
months in the UK and the Netherlands and, to a
lesser extent, in Belgium and France.
• Levels of trade awareness of forestry issues and
commitment to responsible procurement are
particularly high in those countries that have a
well developed and enforced trade association
timber procurement code or policy. Where they
exist, trade association codes and policies provide
a valuable framework for communication of
green issues and to encourage and guide positive
action. The most developed policies in the UK,
Netherlands and France encourage
comprehensive measures to encourage both the
removal of illegal wood from trade flows and
promotion of certified products. On the other
hand, a frequent complaint amongst more
proactive participants in these initiatives is that in
the absence of strong end-user demand for
verified products, voluntary private sector efforts
are constantly undermined by the activities of
non-members offering unverified products more
cheaply. Moves to develop comprehensive
responsible timber procurement policies are
generally more advanced in the timber importing
sector than in downstream manufacturing sectors.
The full study is due to be launched at the Chatham House
Illegal Logging Update meeting to be held 23-24 June in
London. After that date it will be made available on the
Timber Trade Federation website (www.ttf.co.uk). The
report will also be made available, with earlier reports in
the series, on the DFID-funded Chatham House website:
http://www.illegallogging.
info/item_single.php?item=document&item_id=1
77
Slight rise in UK plywood restocking
According to the latest report on the UK plywood market
by the TTJ, a slight rise in restocking has brought a
glimmer of hope. The report notes that there has been
some improvement in forward orders because ＆less
plywood has been imported in recent months so, even
though demand is still weak, stock levels are now hitting
bare minimum＊. On the other hand, the TTJ also quotes
one importer that customers are ＆slow at committing to
wood＊ and ordering on a hand-to-mouth-basis and ＆on a
moderate scale＊. There are hopes that the slow and
uncertain move to restock may at least hint at greater
stability in a market that has bottomed. One trader told
TTJ ＆demand is still light but surprisingly better than we
expected＊. Another described the market as ＆patchy, but
busy some days＊. There also seems to have been some
increase in intra-UK trade, suggesting a rise in underlying
consumption which has coincided with improved weather
conditions for construction.
UK hardwood lumber trade remains sluggish
Although there are a few reports of slight uptick in
demand in the UK during the spring months, levels of
forward ordering for the most popular hardwood species
remain extremely low. There are still reports of stock
being dumped at below replacement cost. A whole host of
factors continue to act against any move to substantially
increase forward ordering including the weakness of the
pound, uncertainty over the level of landed stock, the
likely level of consumption and price prospects for the
remainder of the year, and the lack of credit availability
and credit insurance. Forward ordering remains slow
despite widespread realization that for many species there
is very little wood in the supply pipeline and prices could
rise sharply even with a minor uptick in global
consumption.
The UK situation seems now to be favoring large stockists
in the Netherlands and Belgium that are able to respond to
UK customers demands for wood on a little-and-often
basis. Benelux companies are also responding to UK and
broader European market conditions by focusing on
delivering exactly what customers are asking for. They are
continuing to diversify their product base and to develop
new further-processed and non-standard items. They are
also increasing the volume of certified hardwood products
on offer despite indications that some joinery companies
have scaled back their plans to move to certified wood
during the recession.
The continuing commitment to certification by the large
importing groups in the UK and Netherlands reflects both
increasing pressure from public sector buyers and trade
associations to demonstrate progress on green
procurement, together with a strategic concern to expand
market share in a declining market. The sustainability
message is increasingly critical to improving wood＊s
overall market prospects in relation to other materials.
TTJ quotes a representative of the Belgium Group
Vandecasteele with respect to their UK sales: ＆out of every
20 enquiries we get today, half are for FSC-certified, as a
result nearly all of our tropical range is now FSC and
we＊re getting good volumes in certified species, such as
sipo and sapele in both dimension and random sizes. We
also see demand increasing in the future as more highprofile
projects use certified timber＊.
EU VPA process moves into overdrive
In April 2009, the Republic of Congo became the second
country to reach a legally binding bilateral agreement with
the EU to ensure the legality of all timber exported into the
EU. Formal EU FLEGT Voluntary Partnership Agreement
(VPA) negotiations were completed with Ghana in July
2008. Negotiations are still underway in Malaysia,
Indonesia, and Cameroon.
In the Republic of Congo, progress to develop the Legality
Licensing system is well advanced. A traceability system
linked to a legality definition has already been developed
and is being field tested. An independent observer is in
place and discussions are underway with respect to
independent auditing.
In Ghana, the licensing system is expected to be
operational some time in 2010. A comprehensive overhaul
of state forest laws and regulatory systems is currently
underway. The aim is to introduce hi-tech systems to track
100% of wood traded in Ghana to specific forest of origin.
A new independent Timber Validation Department is
being established to oversee the system.
Cameroon is also expected to conclude a VPA agreement
before the end of June 2009. As in Ghana, the existing
regulatory system is being reformed to allow for
independent legality licensing, a process likely to take 2
years. Since Cameroon acts as a major corridor for exports
of wood products from neighboring countries (notably the
Congo Republic and Central African Republic), a
significant challenge is to accommodate imported wood
into the Cameroon licensing system.
Elsewhere in Africa, Liberia, the Central African
Republic, Gabon, and Madagascar are now preparing to
enter VPA negotiations. DRC and Sierra Leone have also
expressed interest.
Italian Federation signs agreement with WWF to promote certified wood
Italy＊s timber trade associations have not yet developed
any formal environmental timber procurement policy or
codes of conduct for their members. However, a
potentially significant development came in early March
2009 when the Federlegno 每 the Italian confederation for
the wood, furniture, cork and furnishing industries 每
signed an agreement with WWF Italy for the ＆promotion
of a transparent sustainable market for wood products＊.
The pact was signed in the presence of Luca Zaia, the
Minister of Agriculture, Nutrition and Forestry.
According to the agreement, Federlegno-Arredo and
WWF Italy will act co-operatively to ensure ＆Italy takes
responsibility for good forestry management, promotion of
certification and development of credible policies in
support of producer countries＊. Federlegno Arredo and
WWF Italy are committed to establish a joint programme
＆to monitor timber flows and the domestic timber market,
to understand this in terms of volumes and the
geographical areas of origin, to promote best practice in
management and procurement, and to promote joint
projects in areas most affected by deforestation＊.
In the first instance, the two institutions will jointly
promote procurement practices in line with the WWF
Global Forest and Trade Network (GFTN) guidelines and
promote the use of certified wood products, particularly in
construction. A key objective will be ＆to promote wood as
the only certified sustainable raw material that can
naturally store carbon dioxide, even throughout the
product life cycle, a characteristic that distinguishes the
wood than any other material＊. The implication of the
focus on WWF GFTN guidelines is that FSC certification
is likely to be seen as the ultimate objective of
procurement policy.
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