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International Log & Sawnwood Prices

01-15th February 2013



  Lunar New Year dampens demand
The Chinese New Year holiday, during which some 210 million Chinese families return home for the week long Spring Festival, has slowed business with China and this has contributed to the already dull market conditions in all major consumer markets.

None of the major EU consumers are rushing to make big purchases from West and Central Africa ahead of the coming into force of the EUTR in March.

Some minor price changes were observed over the past two weeks but analysts say these do not indicate any significant change market conditions.

African exporters enjoy short-term boost in Mid-East markets
However, Middle East market demand remains firm and the temporary slower supply, notably from Malaysia where the Chinese community is celebrating the lunar New Year, may benefit African exporters who are well established suppliers to the Middle East markets.

So far this year there is no apparent trend in prices for West and Central African timbers. Exporters in the two regions believe the stable conditions will continue well into the second quarter of 2013.

All producers in the region hope that demand will be maintained and eventually increase as the euro zone countries make progress in stimulating their economies back onto a growth track.

West and Central African companies lack of interest in investing downstream
Although there is increasing interest from buyers in surfaced to size lumber, a move which is improving the profitability of suppliers, there seems little interest on the part of West and Central African producers to invest in manufacturing of downstream products. Ghana is almost the only producer country exporting downstream products, mainly mouldings.

Past efforts to promote exports of downstream products by several countries have yielded mixed results and exports of manufactured products from African countries are still very small. Manufacturers in Africa have not been able to match the Asian countries in production of joinery and furniture for export.

To support industrialization and diversification of the economy through investment the Gabonese Government is developing economic free zones throughout the country to bring industry closer to the resource base.

The Mandji Island Free Zone located near Port-Gentil, the economic capital of Gabon, covers an area of around 900 ha and is an unique location in the Gulf of Guinea. This Free Zone offers development potential for wood processing industries.


  Forestry Commission gears up preparations for EUTR
A three member Ghanaian delegation is in Europe to participate in a series of meetings to create awareness of the interim arrangements that Ghana has put in place to ensure the supply of legal timber to the EU market in advance of the adoption in Ghana of the FLEGT licensing system.

Ghana will deliver FLEGT licensed wood products to the EU when the Ghana/EU Voluntary Partnership Agreement is ratified by both parties. The Ghanaian delegation to the EU plans to meet with Customs Authorities in Belgium.

A series of workshops have been planned in Ghana to create awareness of the requirements of the EU Timber Regulation. The first workshop will take place on 21 February 2013 in Kumasi.

The Forestry Commission is working with the Ghanaian Trade Associations in providing support to firms in meeting the documentary requirements of EU buyers.

SMEs seek support from the Government
Small-scale timber companies in Ghana have asked the government to try and find ways to assist in sourcing much needed capital to boost their businesses and give the whole industry a ¡®make-over¡¯.

According to a statement from the group of small companies, timber enterprises are finding it very difficult to secure financing for importing the machinery needed for downstream manufacturing of products such as doors, knockdown furniture, plywood and joinery etc.

According to an executive from a small-scale company in Sunyani West District of Brong Ahafo, Mr. Kofi Vinyo, the association representing the small companies is asking the government to put in place financial structures and mechanisms for the timber industry to be modernised and thus contribute more to national development.

Financial institutions in Ghana are reluctant to provide loans to small companies and many enterprises cannot have access credit. Even if financing is available small companies find it very difficult to service the loans as interest rates are high.

Bank of Ghana poised to cut interest rates
Analysts suggest that the Bank of Ghana is likely to cut interest rates when its rate setting committee meets next month to reconsider its monetary policy. The head of Databank Research in Accra said there is room for the monetary policy committee to lower interest rates by as much as 200 basis points.

 The Bank of Ghana has not lowered its benchmark policy rate since July 2011 when it brought the rate down by 50 basis points to 12.5 percent. In 2012, the Bank boosted the policy rate by 250 basis points to 15 percent as part of a series of actions to stem a slide in the cedi exchange rate.


  Industries close to welcome Chinese Year of the snake
The timber industry in Malaysia traditionally closes for the Chinese New Year celebrations. This year the Chinese Year of the Snake started on 10th Feb 2013. Factories in Malaysia are expected to be closed until 18 February. There is virtually no timber traded during this holiday period.

Furniture exports set to exceed US$2 billion for 2012
The latest national statistics on the timber sector were released for the period January to November 2012 showing a very healthy export value of RM 18.5 billion (approx. US$ 6.0 billion).

The leading timber sub-sector, in terms of export, was wooden furniture which reached RM 5.99 billion (approx. US$ 1.93 billion). Plywood exports were the second highest at RM 4.7 billion (approx. US$ 1.52 billion).

Other major export sub-sectors were sawnwood RM 2.25 billion (approx. US$ 726 million), logs RM 1.55 billion (approx. US$ 500 million), MDF RM 1.06 billion (approx. US$ 342 million) and joinery products RM 900 million (approx. US$ 290 million).

New CEO for Malaysia Timber Certification Council
The Malaysian Timber Certification Council (MTCC) announced the appointment of Teng Koon Yong as its CEO with effect from 1 Jan 2013. MTCC develops and operates the Malaysian Timber Certification Scheme (MTCS) as an independent body. Mr. Yong is a trained forester with considerable experience.

32 percent of Malaysia¡¯s permanent forest certified
The standards under the Malaysian certification system which are used for auditing forest management practices in the forest management units (FMUs) and forest plantation management units (FPMUs) are the Malaysian Criteria and Indicator (MC&I); one for natural forests and another for forest plantations.

The development and review of the standards had taken into account the country¡¯s wide geographical spread and involved regional and national level consultations with multiple stakeholders.

Currently, there are nine FMUs certified under the Malaysian timber certification system covering an area of 4.65 million hectares and 32% of the total Permanent Reserved Forests in Malaysia. Certified timber from these areas is supplied to 171 companies which have obtained Chain of Custody certification.

No forest plantations have been certified under the Malaysian timber certification system at present. However, in line with international practice requireing a certification to standard be reviewed once every five years, the MC&I (Forest Plantations) is presently undergoing its first review process.

The MC&I (Forest Plantations) are now being subjected to the first 60-day public comment period which started from 15 January 2013.

In May 2009, the MTCS became the first tropical timber certification scheme in the Asian region to be endorsed by the Programme for the Endorsement of Forest Certification (PEFC), which is currently the leading forest certification system in the world. Certified companies in Malaysia are eligible to carry the PEFC logo on their certified timber products.

In July 2012, PEFC endorsed the MC&I (Forest Plantations) as part of the PEFC endorsement of the MTCS after an independent evaluation report was made to the PEFC Board. Accordingly, Malaysian companies which own or manage forest plantations can apply for forest plantation management certification under the PEFC scheme.

MTCC will be co-hosting the 18th General Assembly of the PEFC in Kuala Lumpur on 15 November 2013.

Malaysia expects RM 1bil investment from China in 2013
A press release by the Miniser of International Trade and Industry indicates that Malaysia is expecting about RM1bil. in investment from China this year.

Up to November 2012 the approved investment in the Malaysian manufacturing sector by Chinese enterprises was RM1.5bil, accounting for 7.8% of the total foreign investment of RM19.1bil approved for the sector.

The Minister said that Malaysia is hoping for more investments from China with the development of the joint Malaysia-China Industrial Park in Kuantan which is expected to be fully operational within two years.

China has been Malaysia's biggest trade partner since 2011, surpassing Singapore. For the first 11 months of 2012, the total trade between Malaysia and China was RM165.32bil, 9% higher than the same period in 2011.

The new industrial park is strategically located for investors from ASEAN and the Asia-Pacific regions and is seen by the Malaysian government as a possible catalyst for growth on the Peninsular East Coast.

The industries targeted for the site include the manufacture of equipment for plastics and metal, automotive components, fibre cement boards, stainless steel products, palm oil processing, carbon fibre, electrical and electronics, petrochemical, information and communications technology.



  Exporters urged to diversify international markets
The Ministry of Forestry recently hosted a press conference for the Secretary General of the Ministry of Forestry and the head of EU Delegation for Indonesia, Brunei Darussalam and ASEAN, Ambassador Julian Wilson.

The press conference underscored the cooperation between Indonesia and EU in respect of the adoption by Indonesia of its new policy for trade in verified legal wood products.

Both parties agreed to continue to work together to combat trade in illegally harvested and manufactured wood products through the implementation of Indonesia¡¯s V-Legal certification scheme for wood product exports.

Ambassador Wilson encouraged exporters of certified Indonesian wood products to be confident of the Indonesian scheme and diversify into international markets.

He further reiterated that the EU member states recognise the credibility of the Indonesian Timber Legality Assurance Scheme (TLAS) in meeting the market requirements for the proof of legality of wood products entering the EU.

V-Legal certificates for export to 94 countries
Recent Ministry of Forestry data for exports suggest that, from 1-22 January a total of 3,427 V-Legal certificates were issued covering more than 1 million cubic metres of logs and wood products. Some of these certificates were issued for plywood and sawnwood which was exported to some 90 countries.

The Secretary General of the Ministry of Forestry hopes Indonesian wood products exports to the EU will increase to more than US$1.2 billion this year.

Group certification for furniture manufacturers
Seven furniture companies in Solo, Central Java, have applied for group SVLK/TLAS certification under the new scheme set out in the Ministry of Forestry Regulation Number 38/Menhut-II/2009 amended by Regulation No. P.68/Menhut-II/2011, as well as the additional amendment in P.45/Menhut-II/2012. This will be the first experience in group certification for furniture makers.

Plan mooted for ¡®wood terminals¡¯
An official of the Ministry of Industry, Benny Wahjudi, said that the government will initiate the development of ¡®wood terminals/clearing houses¡¯ for verified legal wood products.

He pointed out that the forestry and timber sectors are strategic industries and contribute significantly to the Indonesian economy. Over the past 5 years however, wood product exports have been falling, most notably for pulp, added value products and wooden handicrafts.

The purpose of developing the "wood terminals" for certified legally logged timber is to strengthen efforts in curbing illegal logging.

It is proposed that wood product manufacturers will be required to purchase raw materials from the terminals. The Ministry of Forestry official asserted that some manufacturers may still be tempted to buy illegally harvested timber because it is cheaper.

With clear regulations and the building of wood terminals to supply logs to the timber industry the risk of illegal logs entering the supply chain will be minimised, said the official.

International Furniture and Craft Fair Indonesia
ASMINDO, the Indonesia Furniture and Handicraft Association will organise Indonesia¡¯s largest annual furniture and handicrafts fair, the International Furniture and Craft Fair Indonesia (IFFINA) from 11-13 March 2013.

The venue will be the Jakarta International Expo, Jalan H. Benyamin Sueb, Kemayoran ¨C Jakarta 10610, Indonesia. This Southeast Asian international fair is expected to attract buyers from over the world .


  Freshly harvested logs attracting buyers
The Myanma Timber Enterprise (MTE) open tenders for February will be held on the 22nd and the 25th and a report on the average log prices will appear in the next TTMR.

Analysts report that the market situation for teak and non-teak hardwoods is stable and trading is following the usual pattern for the beginning of a year. Teak logs are being sold easily but, in the case of non-teak hardwoods, only freshly harvested logs are of interest to buyers.

Logs which were harvested during past cutting seasons are not attracting buyers and can be sold only at lower prices.

In Myanmar felling and skidding are carried out during the monsoon rains from May to September and trucking takes place from late November when forest roads become dry.

If not trucked during the dry season following felling logs must be left until the next dry season a year later and such logs deteriorate and do not attract good prices.

Buyers hasten to ship out logs in anticipation of log export ban
The pace of shipments from Myanmar normally reflect the market and stock positions in the importing countries but since the announcement of a log export ban in Myanmar beginning April 2014, buyers are seeking faster shipment of the logs they have paid for.

The following is an estimation of monthly exports over the past months. The figures are in cubic metres.

Debate on certification continues
The domestic journal ¡®Newsweek¡¯ reported on February 7th that, according to an official from the Ministry of Environmental Conservation and Forestry (MOECAF), only verified legally harvested timber will be permitted for export from 2015. The timber industry is yet to respond to this news.

The Myanmar forestry sector has been working for several years towards a certification system for forest products and representatives from the European Commission have visited Myanmar to promote the adoption of the EU FLEGT license system.

The debate on forest and wood product certification in Myanmar has been arduous and to date no positive results have been achieved. The timber industries in Myanmar face many difficulties, with poor communication between the industry in Myanmar and authorities in the importing countries being a major constraint to achieving progress on certification.

A workshop on ¡®Timber Legality Assurance Systems¡¯ was recently conducted. Attending the workshop were representatives from the Forest Department, Myanma Timber Enterprise and the Timber Merchants Association. This workshop explored the feasibility of a timber legality verification system for the forestry sector.

Analysts assert that only through the adoption of a legality verification system can the Myanmar timber industries secure unrestricted access to markets in the main consuming countries.


  Budget expected to focus on stimulating industrial production
At the end of February the national budget for the coming fiscal year is expected to be submitted to parliament. Analysts expect the new budget to contain stimulus measures to address the slowdown in the Indian economy.

This slowdown is primarily the result of weak demand in the main export markets of the USA and Europe. It is anticipated that the stimulus measures will focus on boosting industrial production for exports and on checking inflation.

Over the past year the Indian timber industries have managed to adjust to the slowing economy and overall market developments.

As mentioned in the previous issue of the TTMR, log imports have been increasing. The performance of Indian wood product exporters is encouraging as illustrated in the table below.

Sales of Teak and other hardwoods from Indian forests.
The latest average prices for teak and other hardwoods at government teak depot tenders in Central India are shown below. Prices are in rupees per cubic foot, ex depot.

Import volumes of plantation teak logs
India is a major buyer of plantation teak from more than 30 countries. Imports of natural teak come only from Myanmar.

Details of imports of plantation teak received at Kandla port during the 2011-12 financial year are shown below.

The table provides information on the volume of imports from countries supplying more than 5000 cubic metres of plantation teak during the year.

Plantation teak log prices
Current C & F prices per cubic metre for imported plantation teak are shown below. Analysts report that supplies and deliveries of plantation teak remain stable and that prices levels have not changed significantly.

Current prices, C & F Indian ports, for plantation Teak are shown below.

Domestic Ex-mill prices for imported timbers
Domestic prices (per cubic foot ex-sawmill) for air dried sawn timber remain unchanged and are indicated below.

The price range reflects differences in the length and cross section. Analysts say the trend to replace teak with other durable tropical hardwoods continues, driven mainly by the high price of teak.

Indian plywood manufacturers investing overseas
The sourcing by Indian plywood manufacturers of core and even face veneers from Vietnam, Thailand, Malaysia and Myanmar is increasing. There is growing interest from Indian companies in constructing plywood mills the countries mentioned above.


   Stimulating private investment in plantations
The Strategic Affairs Secretariat (SAE) of the Brazilian government is developing ideas on mechanisms to stimulate more private financing in the forest sector.

The SAE is investigating a variety of models appropriate for the long term investment that is necessary for plantation development.

The SAE says that it is necessary to identify or develop a credit mechanism offering a grace period for repayments for borrowers. At the same time the SAE recognizes that there is a need to provide guarantees to investors since plantation development requires substantial investment for periods that can range from 7 to 35 years before income is generated.

The SAE Secretariat for Sustainable Development has held a series of meetings with financial analysts to assess options for financial instruments related to private financing for forest plantations.

According to an SAE advisor, at present there are a variety of financial models being applied in the agricultural sector but these often only address the short-term financing needs for agricultural crops. The key difference between the agricultural and forest plantation sectors is the time until harvesting generates income.

According to the SAE a research programme will be undertaken on possible private investment financing models for the development of forest plantations in Brazil. The aim of the SAE is that a new financing model should be included in a National Policy for Planted Forests which is also being formulated by the SAE.

Alagoas State to ensure growth of furniture cluster
The Alagoas State Planning and Economic Development Secretariat (SEPLANDE) recently met with representatives of Arapiraca¡¯s local government, the Brazilian Service Support for Micro and Small Enterprises (SEBRAE) of Alagoas and the steering committee for the development of the furniture industry in the Agreste region to discuss ways to expand the furniture industry cluster in Arapiraca.

Through such a meeting the partnership between the state and the manufacturing sector is strengthened.

The State has invested resources to support the promotion of a furniture manufacturing cluster in the region and emphasised the need for effective participation of entrepreneurs in the management of activities in support of the cluster. Currently, the Agreste Furniture Industry Association (Amagre) is taking the lead in this undertaking.

The furniture cluster in this region has grown in recent years with the support of local and state governments and now extends to an area of 96,000 sq.m with 45 plots for micro-enterprises.
Many micro-industries cannot afford to invest in their own storage buildings and to address this a building will be provided through a partnership between the Arapiraca local government and the State Government.

The building of the community storage capacity will, it is hoped, encourage more small companies to the cluster and will result in greater employment opportunities in the municipality of Arapiraca, State of Alagoas, located in the Northeast Brazil.

Rio Grande do Sul furniture manufacturers up-beat on export prospects in 2013
The state of Rio Grande do Sul was the only state reporting a year on year growth in furniture exports in 2012. However, the level of growth in 2012 compared to 2011 was only 1.1% for a total export for 2012 or US$ 205.7 million.

The Bento Gonçalves furniture cluster, the largest in the state, chalked up a 4.4% increase in exports in 2012 to US$ 63 million. Overall Brazil¡¯s furniture exports in 2012 fell by 5.2% to US$ 723.4 million.

Thise data is presented in a report published by the Rio Grande do Sul State Furniture Industry Association (MOVERGS), in collaboration with the Innovation Management Center (CGI Moveleiro) and the Foreign Trade Secretariat of the Ministry of Foreign Trade, Industry and Development (MDIC).

The report identifies Uruguay, the United Kingdom, Chile, Peru, and the United States as major importing countries for furniture from Rio Grande do Sul in 2012. However, Argentina was the largest importer of Brazilian furniture in 2012.

While the 2012 data is not very encouraging, MOVERGS says that the latest statistics indicate signs of recovery in furniture exports. Manufacturers have been trying to achieve product differentiation, investing in exclusive designs and applying the latest technology to improve the competitiveness of Brazilian furniture.

MOVERGS is forecasting a 10% growth in regional furniture exports but analysts point out that, after taking into account likely inflation levels and increases in the price of inputs and raw materials, the most optimistic forecast for the national furniture sector is a net growth of 3%.

High hopes for ¡®Brazil M¨®veis¡¯ international furniture fair
The international furniture fair ¡°Brazil M¨®veis¡±, planned for August 6-9, 2013 in São Paulo, is one of the largest fairs for the furniture sector. This year the fair is expecting around 200 of the national furniture makers to exhibit.

The organisers report that around 45% of the exhibition area is already booked and some 30,000 national and international visitors are expected. Exhibitors have expressed expectations that the 2013 fair will be the springboard for their success with international buyers. The pace of growth in the Brazilian construction sector should give a boost to the furniture sector this year.

According to the Rio Grande do Sul State Furniture Industry Association (MOVERGS) during 2012 consumers have invested in remodeling of homes but now there is greater interest in new home building a trend that will increase demand for new furniture.

According to the Institute of Industrial Studies and Marketing (IEMI), the domestic furniture sector could grow 5.5% this year, up on the 2.8% growth last year. MOVERGS has suggested that the exemption of the sector from payroll taxes and the tax on Industrialized Products (IPI) and the efforts by industry to better meet consumer demand will improve competitiveness.



  Peru commended for improved management of mahogany trade
The Deputy Minister for Foreign Trade, Carlos Posada, recently met with business representatives to discuss the implications for the forestry sector arising from the Forest Trade Promotion Agreement (CPA) concluded with the United States.

The Deputy Minister congratulated the work being done by Peruvian companies to ensure the sustainable management of forests.

Exports of big leaf mahogany and spanish cedar from Peru to the US will continue with export licenses for these species to be issued by the Ministry of Agriculture, through the General Directorate of Forestry and Wildlife.

Peru has undertaken a series of regulatory reforms in respect of the issuance of export permits for mahogany and spanish cedar to ensure traceability of the legal origin of the products.

In other news related to the trade in mahogany, the Standing Committee of CITES publicly congratulated the Peruvian government for the progress made in the management of the mahogany trade. Further, the CITES Committee agreed to delete the requirement for specific reporting on the management of mahogany, and encourage Peru to include additional information in their national reports.

Public and private sector cooperation on forestry agenda
The public sector, represented by the Ministry of Foreign Trade and timber and forestry private sector representatives agreed to continue working together to safeguard the resources of the Amazon thereby bring benefits to both the local population and the national economy.

The private sector was represented by Adex, the National Society of Industries (SNI), the National Forest (CNF) and the Peruvian Confederation of Woodworkers (CPM), among others.

The ADEX Wood and Timber Industry Committee Chairman, Erik Fischer, highlighted the potentials of the Peruvian Amazon and the need for industry to work with the ministries of Foreign Trade and Tourism (Mincetur) and Agriculture (Minag) as well as the Agency for the Supervision of Forest Resources and Wildlife (OSINFOR) and regional governments.

The ADEX representative said that the forestry sector needs a better legal framework that encourages investment. He said there is a need to improve the quality of forest regulation such that companies are encouraged to stay on in the timber business.

He added some public institutions do not appear well equipped to meet challenges of bringing value to the Amazon forests and people.

Highway checkpoints visited
The regional president of Madre de Dios Jorge Soto Aldaz¨¢bal, accompanied by facility staff, recently visited the Regional Forestry and Wildlife checkpoints located along the Inter-Oceanic Highway between Puerto Maldonado and Iñapari. The purpose of the visit was to verify the situation under which these check points operate.

The delegation not only verified the working conditions at each of the checkpoints but also met with employees to listen to their concerns. The regional president urged workers to become the main allies of his administration in the fight against corruption.


  Purpleheart logs attract favourable prices
Guyana did not export any Greenheart logs in the period under review. However, some shipments of Purpleheart logs were made and the Guyana Forestry Commission reported that prices were at favourable levels. The maximum price for Standard Sawmill Quality Purpleheart log rose as high as US$385 per cubic metre.

Purpleheart Fair Sawmill Quality logs were traded at a top price of US$300 per cubic metre while Small Sawmill Quality Purpleheart logs fetched US$ 270 per cubic metre.

Mora log export prices remained unchanged from price levels reported earlier for all Sawmill log qualities.

Prices for Greenheart sawnwood (Undressed) rise
During the period under review average export prices for Greenheart Select sawnwood (Undressed) moved up from US$721 to US$1,145 per cubic metre.

Analysts report that a significant sale of Grenheart Select sawnwood was made to buyers in the French West Indies at premium prices. On the other hand, Greenheart Sound sawnwood (Undressed) suffered a decline in export price from US$721 to US$604 per cubic metre.

Sawn Purpleheart (Select, Undressed) export prices were favourable with the top price achieved was as high as US$1,062 per cubic metre.

There were no exports of Mora sawnwood (Undressed) during the period but Mora sleepers were exported to the Caribbean market.

Prices for dressed sawnwood ended mixed
Over the past two weeks, Dressed Greenheart sawnwood export prices were firm at as much as US$1,272 per cubic metre up from the US$1,039 recorded previously reported.

However Dressed Purpleheart sawnwood export prices dipped from the high of US$1,081 per cubic metre to just US$1,065 per cubic metre in the period reviewed.

As always, Dressed Washiba (Ipe) enjoyed a satisfactory export price of US$2,500 per cubic metre.

Plywood and added value products fetch good prices
Plywood export prices were significantly higher in the latest round of shipments compared to the prices reported in the previous report earning as much as US$ 1,988 per cubic metre. The Caribbean and Central and South American destinations are the main markets.

Splitwood (Shingles) attracted good export price of US$ 795 per cubic metre while other value added products continue to contribute to Guyana¡¯s total timber export earnings.

Single block of 1.6 million hectares of forests verified legal
Barama Co. Ltd (BCL), a logging and wood products manufacturing company in Guyana, is one of the largest operational foreign companies in the country. At full production the company employs around 1000 workers.

BCL operates in a 1.6 million hectare concession. The company has worked to secure internationally recognised forest certification through an SFM model defined by the Edinburgh Centre for Tropical Forest which was subsequently refined into a Code of Practice for timber harvesting.

BCL has worked with the Tropical Forest Trust (TFT) to develop a Verified Legal Origin (VLO) system for their operations.

The Rainforest Alliance was contracted to develop a certification scheme for BCL and when this was completed an audit of the standards was undertaken for the company¡¯s up-stream and down-stream operations.

BCL was successfully audited in July 2012 resulting in the issuance of the certificate in November 2012. As a result, BCL now claims to have the largest single block of VLO tropical forest in the world an achievement which will create opportunities for the company to increase its market share internationally and to promote verified legal timber from Guyana.

Comprehensive planning puts Guyana in good stead for negotiations on VPA
Guyana and the European Union have begun formal dialogue on a Voluntary partnership Agreement (VPA). The first formal negotiations were held in December 2012 at which key timelines were agreed that will guide the process forward.

In announcing its decision to begin negotiations on the VPA the Guyana government indicated that it was aware of the potential benefits of the EU FLEGT licensing scheme in stimulating market demand and enabling Guyana¡¯s exporters to retain market share in the EU.

The commencement of formal dialogue with the EU was preceded by a series of stakeholder meetings and consultations that helped the government take the decision to enter into formal negotiations.
The Government of Guyana, FAO, EU and local stakeholder groups were instrumental in supporting a process of sharing information, conducting initial analyses and assessing potential impacts and benefits of a VPA for Guyana.

As a result of the engagement with stakeholders there is now a broader understanding of the major issues that need to be addressed during the negotiation process.

In a joint statement issued by the Government of Guyana and the EU in June 2012, the parties agreed to commence formal negotiations by the end of 2012, with the objective of concluding negotiations on a VPA by September 2015, according to an agreed roadmap which will be developed jointly.

The parties emphasised that the agreement should have the objectives of adding value to forest governance, forest industry development and sustainability of the forestry sector. Additionally, the statement underlined the assurance that the extractive industry within Guyana will not be limited by any interventions made under the VPA.

So far, a number of steps have been taken, including the establishment of a VPA Secretariat in Guyana which is located within the Guyana Forestry Commission, the formation of a multi-stakeholder steering body for the VPA negotiation and implementation efforts and the development of a Guyana Roadmap for EU FLEGT negotiations.

In September 2012, through a mult- stakeholder process, Guyana collaborated with international and local experts to develop a Guyana EU FLEGT Roadmap to guide the negotiations process in Guyana.

This effort involved the participation of various stakeholder representatives from the private sector, civil society, NGOs, Government and other groups, in shaping the Roadmap which contains both activities that Guyana will itself undertake, as well as those aspects that will be jointly undertaken by Guyana and EU.

The process of negotiations on the VPA will include a strong element of stakeholder participation. As part of the management structure developed to oversee the VPA negotiations in Guyana, several meetings of a steering body called the National Technical Working Group (NTWG) have already been held.

Additionally, specific stakeholder constituency meetings have been concluded and there are plans to continue with these sessions throughout the negotiation process. To date, four meetings of the NTWG have been held. Ten meetings of separate key stakeholder constituency groups, mainly targeting indigenous Groups, NGOs and the private sector have been held.

In early February, the NTWG and the EU held its first joint technical meeting at which both parties started work on discussing the various aspects of the VPA with the aim to commencing drafting of key sections. The discussions will continue at the next scheduled meeting planned for July 2013.

Amongst the priority technical activities discussed in preparation for the July meeting is the legality assurance system for Guyana which involves aspects of the definition of forest legality and wood tracking systems.

The NTWG has expressed confidence that Guyana¡¯s existing systems for forest management and legality, including its log tracking and chain of custody management systems that have been in place since 2001, are robust enough to serve as a solid foundation for the VPA.

This assessment took into account the programmes being implemented in Guyana such as Independent Forest Monitoring, VLO certification at company level and the development of a framework for legality assurance.

As the formal effective date of the EUTR approaches (March 2013), Guyana has outlined plans to expand its communication efforts to local and international stakeholders to share information on the efforts made so far in the EU FLEGT VPA process, as well as details of existing operational systems in Guyana on which the FLEGT VPA can be built. The government is confident that it can fulfil the requirements of the EUTR through its current system of verified forest legality.


Source:ITTO'  Tropical Timber Market Report

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