As the title Reducing risk, improving supply suggests, the UK Timber Trade Federation’s recent Tropical Timber Forum had a dual focus. Ensuring tropical timber legality and sustainability was recognised as core to success in the modern marketplace. But the emphasis was also on the interaction of this and the broader commercial viability of the sector and how it needs to adapt ensure availability and remain competitive.
The event attracted an audience of over 100 from across the UK tropical trade to the TTF’s central London hq.
Federation Managing Director David Hopkins set the scene by highlighting the increasing geopolitical and environmental significance of the tropical region and its development. It was key, he said, given the major changes and pressures the area is experiencing, that ‘timber is part of the solution, not part of the problem’.
“To this end, a lot more work is needed on the ground in terms of governance and logistics improvement and analysis of the interaction between forest and timber sectors and other uses of the land.”
EU FLEGT Independent Market Monitor UK Correspondent Mike Jeffree gave an overview of global tropical trade flows, drawing on data from IMM’s trade analyst Rupert Oliver. Over the last 15 years, he said, total trade had grown, from around $27 billion in 2004 to $35 billion. But there had been a fundamental shift in geographic market share. Fastest growth had come in Chinese tropical imports, rising to 31% of total international trade in 2014 before dipping back to 25% by 2018. At the same time, Europe’s share of the business had declined from 26% to 11.3%, never really recovering from its sharp fall during the global economic crisis. This left it the fourth biggest tropical buyer, following China, North America and Northeast Asia.
Strongest growth among tropical suppliers recently has come from Vietnam, with its exports growing at an impressive $1 billion a year, largely accounted for by sales of furniture to the US.
It had been anticipated that African producers would also move upstream into value-added timber goods, said Mr Jeffree, but this has not happened on the scale anticipated. This is attributed principally to growing demand for primary timber products from China and the rest of Asia.
Poor perceptions of its environmental credentials are widely seen as one factor in European specifiers and consumers turning away from tropical timber and it was thought that certification might help provide the necessary assurance. However, said Mr Jeffree, it has gained traction primarily in temperate regions, with still only 6.5% of total certified forest in the tropics.
With just one country, Indonesia, so far issuing FLEGT licences, it remains to be seen if the FLEGT initiative can be a platform to help rebuild European tropical market-share. “But there is increasing reference to the aspects FLEGT has in common with certification and the 15 countries engaged at some stage with the initiative, all tropical, account for 75% of EU tropical wood imports,” said Mr Jeffree. At the same time, he added, consumer market legality requirements are being implemented increasingly widely, with those of the EU, USA, Japan and South Korea covering markets accounting for over 55% of tropical trade.
Tullia Baldassari of Interholco, speaking on behalf of the International Tropical Timber Technical Association (ATIBT), focused on Gabon. She described it as a prime example of a tropical timber producer with potential to make greater commercial impact. However, it needed consumer country support.
“With 23 million ha under forest, it has potential to produce 16 million rwe m3 of timber annually,” she said. “But to grow it needs to make better economic use of the forest and the available wood. It has potential to market 100 species, but currently only 10-15 are harvested. It needs technical support, including from Europe, as many species haven’t yet been studied, plus communications backing. Consumers need to know it also makes more environmental sense to use lesser known sustainable species.”
Ms Baldassari also said that ATIBT also recognised the importance of engaging Asian operators to ensure sustainable, commercial development across the wider 200 million ha Congo Basin.
The experience of Interholco, she added, underlined that managing the forest as a going concern was the prime route for maintaining its social, environmental and economic benefit.
Dick Anning of importer/trader Carl Ronnow said the Gabonese industry had undergone fundamental change in recent years, with French forest operators giving way to Asian. They remained difficult to convince of the merits of certification.
“The response of many, when they see the cost, is that it’s a waste of money and doesn’t give return on investment,” he said. “They need convincing that it’s a means to gain access to markets and finance.”
There were signs of change, however. Interestingly, Chinese banks are pressuring Gabonese companies to get certified. President Ali Bongo Ondimba has also, of course, decreed that all forest operations should be certified by 2022. Mr Anning said this was a tight timeframe, but there was a belief that the authorities would accept legality verification as an interim en route to certification.
The EUTR and its due diligence requirements was also focusing minds. “And enforcement is developing, with EU Competent Authorities (CAs) growing in their level of trade knowledge and better able to zone in on particular issues, so companies are having to provide more effective proof they are not in contravention of any laws,” said Mr Anning. “At the same time, it’s important that CAS implement the EUTR uniformly. If they don’t have a level, consistent requirement it just causes confusion.”
Chris Beeko of the Ghana Forestry Commission also stressed the importance of legality and sustainability verification delivering a commercial benefit. Following the launch of the final joint assessment of its timber legality assurance system (GhLAS), the country was set to make last adjustments to its EU FLEGT framework, which, when complete and approved, will put it on the path to start FLEGT licensing. However, there was concern that this would not give the hoped for market advantage. Key to this, said Mr Beeko, was recognition of a FLEGT licence on a level with FSC and PEFC certification as proof of legality and sustainability in EU member state (MS) public procurement.
‘Currently, this is only the case in the UK and Luxembourg, with other MS giving licences varying other levels of recognition or none at all,” he said. “The concern is that a licence will provide a green lane through the EUTR to a market dead end.”
FLEGT, he added, brings about forest and timber sector governance transformation at national level, which certification does not do, but could potentially benefit from. He also disputed comments that FLEGT lacked chain of custody.
“That doesn’t make sense,” he said. “Without CoC you don’t have a FLEGT licence. The market needs to take a closer look at the content and coverage of FLEGT. That would show that there is really no hard line between it and certification.”
The point was reinforced by Mr Hopkins. “We need to get across the message that FLEGT and certification complete rather than compete with each other,.”
Richard Carter of importer RJC Agencies reported on investment in further processing in Ghana and said the country had a lot to offer. “Bigger mills have diversified into moulded and other machined products and are achieving high quality,” he said. “Some of the laminates are as good as you get anywhere.”
Another tropical development bringing together commercial and environmental strands was cultivation of fast-growing albasia/falcata in Indonesia in a project presented by Klaus Goecke of Holz Bau Beratung, an organisation which matchmakes European importers with producers in emerging economies.
Backed by university research and support from end users, the species is being planted out by farmers in degraded forest land.
“It grows three times faster than spruce, and delivers useable timber in three to four years,” said Mr Goecke. “It is particularly used in plywood and, combined with FLEGT licensing, is seen as having the potential to change the face of the Indonesian ply industry, with investment in this sort of project now available from the Forest Development Funding Agency . For the future, we must adapt transforming industries to this kind of species, both to meet our raw materials and climate requirements.”
He added that group certification under the SVLK legality assurance system had been arranged for albasia growers, helping the timber meet the ‘three pillars of sustainability’; economic, social and environmental.”
Besides exploring new species, the tropical trade should evaluate new sources too, said Finn Knudsen of Guyana-based McVantage, including Guyana. With its 80% forest cover, 20% of it open to timber production, it is a largely untapped resource, and described as having ‘enviable’ sustainability credentials – McVantage sources greenheart from the FSC-certified Iwokrama forest. “But few importers and end users take advantage,” said Mr Knudsen.
However, he added, projects are underway to find new outlets for Guyanan timber. The UK’s TRADA research institute is looking at greenheart use in construction and exterior joinery, and McVantage itself is promoting it as an ipe decking alternative. “There are also prospects for using more lesser known species,” said Mr Knudsen.
Due diligence was another core focus of the conference. The bottom line for international trader Tradelink was that it had led to it reducing its Brazilian supply pool by 70% to streamline its supply chain, simplify the due diligence process and be able to focus it on high risk, high value product. It remained, said compliance officer Robbie Weich, an exhaustive process, involving strict record keeping in cloud-based storage, regular on-the-ground supplier inspection, full supply chain transparency, and now using Google Earth to geotag supplier operations and check product origin. “It’s also a case of engaging with all relevant stakeholders, from CAs to NGOs,” said Mr Weich.
Marie Vallée of the World Resources Institute presented its online Open Timber Portal as a tool to help importers undertake due diligence on specific suppliers and obtain latest information on forest governance in their country. Currently focused on the Congo Basin, supplier documentation is uploaded for importers and other stakeholders to view.
“The OTP also provides guidance on what specific documents prove, how to know if they’re current, to check if they’re fake and also on supplier location using geospatial and Global Forest Watch data,” said Ms Vallée. “It also gives a supplier transparency rating, based on the percentage of documentation they share.”