IMM’s Trade Consultation in Nantes was held against the backdrop and with the cooperation of the Carrefour International du Bois (CIB) timber trade show and the International Tropical Timber Technical Association (ATIBT).

Delegates who attended both the French Trade Consultation and IMM’s inaugural UK Consultation, held in London in March, said that the show venue and environment gave the Nantes event a different dynamic: some delegates attended throughout the day; others joined from the CIB in the afternoon for the event’s key group discussion section.

Delegates comprised timber importers and distributors, manufacturers and other end users. Also present were representatives of trade federations from France and abroad, French government, the French Competent Authority (CA), research organisations and NGOs. The afternoon workshops tackled three core topics:

• purchase dynamics for companies sourcing from Indonesia; 
• FLEGT impacts on Central African producing countries; 
• and Market Trends for Tropical Timber in Europe. 

Key findings and recommendations from each workshop are addressed in separate reports.

The morning presentations, in the words of one delegate, delivered “contrasting but complementary perspectives in the field of forest and timber environmental initiatives”. These comprised the IMM’s latest news and trade flow analysis, growing recognition of a FLEGT VPA’s additional sustainability credentials plus insights from ATIBT’s latest projects. 

In her opening presentation, Lead Consultant Sarah Storck explained that the role of the IMM was, as the name suggests, to act as an independent, objective observer of the impact of FLEGT licensing in the market place, assessing and reporting trends against a ‘framework of indicators’.

One initial conclusion of IMM’s research was that timber trade awareness and familiarity with the FLEGT programme varied widely across the EU and from company to company. “And even in countries where awareness was better, levels were not as high as might have been expected given that most survey trade respondents were operators” said Ms Storck. Of all 126 companies questioned, 89% were operators under EUTR definition, but only 58% said they were very aware of the FLEGT process and 40% only partially aware”. “Survey respondents also commented that, in their experience, awareness declined further down the supply chain.”

 

Can FLEGT shore up EU tropical market share?

IMM Trade Analyst Rupert Oliver looked at recent trends in tropical wood importing in the EU and the prospects of FLEGT licensing halting the slide in its share of global tropical wood trade from 35% in 2004 to 21% in 2013, the level at which it has been ‘bumping along’ since.

According to Mr Oliver, contraction of the EU tropical trade was due to a range of factors. These included concentration of the tropical import sector in the international economic downturn, aversion to tropical timber on the part of investors and market drift to just-in-time buying, which favoured locally sourced materials and products. 

Competition from China, both for tropical raw material and in markets for tropical timber products, also played a role, as did poor marketing, environmental prejudice and competition from substitute products, such as composites, modified and engineered softwood and temperate hardwoods.

A plus point for FLEGT licensing’s capacity to potentially shape the EU tropical trade trend, according to Mr Oliver, was the volume and variety of material and products offered by VPA partner countries and their share of the EU market. Indonesia accounts for 21% of EU tropical imports, African VPA countries 9% and other VPA suppliers 45%. 

“But the overall conclusion is that it will take time for FLEGT licensing to influence market trends and a range of steps needs to be taken to enable it to do so,” said Mr Oliver. “IMM analysis shows that these include VPA countries integrating FLEGT licensing into their broader timber industry development strategy to enhance competitiveness. Also needed is improved communication of the steps necessary to implement a FLEGT licensing system, as are steps to encourage more active private sector engagement in positive marketing of the FLEGT initiative. Importantly EU governments must ensure consistent enforcement of EUTR as the single most effective way to assure market advantage for licensed timber.”

Key findings for FLEGT’s EU furniture sector prospects

George White told the IMM French Trade Consultation that initial findings from the IMM EU Furniture Sector Scoping Study also raised key challenges for increasing awareness and growing market share of FLEGT-licensed products and those from countries in the process of implementing a VPA. 

“It is an important area to address however, as furniture accounts for 40% by value of all timber and wood products imported into the EU from FLEGT VPA countries,” he said.

He agreed with Mr Oliver that one obstacle to FLEGT products’ access to the EU market was the strength of the European furniture manufacturing base, which takes an estimated 87% share of EU sales. 

“In terms of shaping marketing and communication strategy, it also has to be taken into consideration that the furniture sector works in a different way from most others, with a significant proportion of imports brought in direct by retailers,” he said. 

More information on findings and recommendations of the IMM EU Furniture Sector Scoping Study can be found here (link to separate article)

 

Indonesian FLEGT licensing’s certified foundations

There is today increasing discussion of the common criteria and components the FLEGT VPA process shares with third party sustainable forest management certification. Against that background Rupert Oliver gave a presentation in Nantes, authored by auditor and IMM German Correspondent Gunther Hentschel, on the extent of certification schemes operating in Indonesia, their potential for development and to further reinforce the sustainability credentials of Indonesian FLEGT licensing. 

There are in fact four sustainable forest management certification schemes operating in Indonesia. These are the FSC, the Ministry of Industry initiated LEI scheme, the PEFC-endorsed Indonesian Forest Certification Co-operation scheme (IFCC), and the biggest of all, the PHPL scheme, under which a significant proportion of FLEGT-licensed export products are additionally accredited. 

Despite being little known outside Indonesia, the PHPL outstrips them all with 10.9 million hectares of natural forest and 5.7 million hectares of plantation forest covered. 

PHPL certification is also effectively integrated into the SVLK timber legality assurance scheme and it is obligatory that all FLEGT-licensed timber and wood products must originate from woodland accredited under the SVLK’s own forest  legality standard or be PHPL-accredited. 

More information on PHPL and sustainable forest management in Indonesia can be found on the IMM website.

“Our analysis also shows that, contrary to the concerns of some, FLEGT licensing has not stopped the growth of third party SFM certification in Indonesia, so they are healthily co-existing,” said Mr Oliver. “In fact the area covered by the IFCC scheme, for instance, has doubled since licensing started.”

The Indonesian certification schemes, he added, are comparable in many areas. They all include conservation and biodiversity criteria, and stipulate reduced impact logging and conflict resolution procedures. “There clearly needs to be more communication, particularly of the PHPL scheme, as sustainable forest management certification already covers far more Indonesian forest than is commonly known and there are now plans to increase the PHPL-certified area to between 22 and 23 million ha.”

FLEGT as forest and timber sector game-changer

Focusing on its recognition in public procurement, UK Timber Trade Federation Managing Director David Hopkins told Nantes Trade Consultation delegates that FLEGT could be a ‘game changer’ in driving legal and sustainable timber market share. 

Currently only the UK and Luxembourg governments officially accept FLEGT licensing as evidence of compliance with their timber procurement policy (TPP) on a level with FSC and PEFC certification. But others should be pressed to follow suit, said Mr Hopkins. This was not just because of licensing’s current value in validating the environmental credentials of timber and wood products from Indonesia. It was also because of its potential to alter the wider approach of the timber sector on certification and verification and subsequently public perceptions of wood’s environmental credentials and the value of timber production in maintaining the forest resource. 

“In 1996 10% of the world’s forests were certified,” said Mr Hopkins. “Today it’s 11%. That’s not much progress. It demonstrates that FSC and PEFC alone, which are effectively private businesses pushing branded schemes, cannot effect further significant development in this field. But FLEGT, as a government to government initiative operating on a national scale, and with EU member state government recognition in their TPPs, can. It can drive change in a way no individual company with FSC or PEFC certification could. It offers lower unit costs of compliance, which is vital in an ever more competitive marketplace, and can establish a baseline [in environmental assurance] on which the industry can build.”

A key issue, he said, was continuing lack of market awareness of FLEGT. 

“That ‘s partly due to the fact that only one country to date is supplying FLEGT-licensed timber and it’s only been available for 18 months, a short time in terms of building market penetration. That should change as more licensed products come on the market and more supplier countries fully implement their VPAs and start FLEGT licensing. Recognition under more EU government TPPs would evidently also help as a key influencer of private sector procurement.  But, critically, the FLEGT initiative also needs to follow the example of FSC and PEFC in recognising the importance of driving national and international brand awareness to increase market profile and recognition.  Not every architect will know precisely what FSC and PEFC criteria are or how they operate, but you can bet they will know they exist. That’s not yet the case for FLEGT.”

Mr Hopkins highlighted that the EU timber industry itself also has a vital role to play here. “The UK TTF promotes timber sustainability at every opportunity, including to architects, contractors, designers, end users and all local authorities. And an important element of that has been to highlight that UK central government recognises FLEGT-licensing as Category A evidence of legality and sustainability, on an equal basis with FSC and PEFC,” he said. 

In conclusion, Mr Hopkins said, the timber trade, in conjunction with EU and member state governments, has a lot more to do on FLEGT communication, promotion and brand building. “But it has the potential to play a key part in convincing the market that our trade is selling timber you can trust,” he said.