In the last 2 years, the level of trade between VPA partners and the EU has varied widely depending on the individual country and product. EU imports from Indonesia, currently the only FLEGT licensing country, have remained level at an annual average of €800 million since the start of 2016. This contrasts with imports from the five VPA implementing countries in Africa which declined continuously from an average annual level of €430 million at the start of 2017 to €330 million in March 2018.
A workshop reviewing purchase dynamics for companies sourcing from Indonesia identified “lack of awareness” as the key challenge for FLEGT licensing in the marketplace. The workshop formed part of the IMM Trade Consultation in Nantes and participants came from both French and Indonesian private sectors. It produced interesting insights; however given the limited number of participants the results cannot be considered representative.
Among key factors in the decline in the European market for tropical timber identified by breakout group participants focusing on the topic at the IMM Trade Consultation in Nantes was the 2008 financial crisis, which forced changes in supply in Africa particularly and led to rationalisation of the sector.
The new Fair&Precious promotion programme effectively encapsulates the work of the International Tropical Timber Technical Association (ATIBT), supporting the tropical sector’s technical, environmental and economic performance, into a producer- and market-facing branding campaign.
The IMM programme’s Nantes Trade Consultation and a conference planned by ATIBT will now be held jointly on 31 May, during the Carrefour du Bois trade show. The event will take place at Exhibition Park la Beaujoire.
Of the €3.78 billion of tropical wood products imported into the EU in 2017, 21% was FLEGT licensed product from Indonesia, 9% derived from the five African countries that are implementing a VPA (Cameroon, the Central African Republic, the Congo, Ghana, and Liberia) and 45% was from the 9 tropical countries currently involved in VPA negotiations (Côte d’Ivoire, DRC, Gabon, Guyana, Honduras, the Lao PDR, Malaysia, Thailand and Viet Nam).
Although EU imports of timber products increased to the highest level in a decade in 2017, imports from tropical countries continued to decline.
In 2017, Ghana’s timber product export value fell 16% to €190 million while volume fell 15% to 397,000 m3. Exports fell to all regions except the Middle East. The decline in exports also affected nearly all product groups, the only exception being higher value tertiary products such as mouldings and flooring. Given that the fall in exports during 2017 affected nearly all markets and product groups and occurred at a time of generally rising global demand, it is likely that the trend was due more to supply-side than demand-side factors.
Alongside regular surveys of market opinion to assess the market impact of FLEGT licensing, IMM is implementing near-real time monitoring of trade flow statistics. This monitoring shows that EU imports of a few Indonesian timber products began to trend upwards in the months following introduction of FLEGT licensing in November 2016, in some cases the rising trend was immediate, in others it only began to be apparent from around the middle of 2017.
Workshop 2 of the First IMM Trade Consultation held in London on 8 March 2018 consulted representatives of large retail companies, furniture importers, agents, and furniture associations on the main factors determining purchasing decisions and the competitive position of Indonesia.
Workshop 1 of the First IMM Trade Consultation held in London on 8 March 2018 focused on reasons for the 15-year decline in tropical wood import volume and share in the EU, future market prospects and the role FLEGT licensing could play in reversing the market trend.
The IMM EU FLEGT VPA Trade Consultation at the London Building centre underlined the range of timber sector stakeholders interested in learning more about the VPA initiative – and where it’s headed in the future.