Certified Forest Products Markets

UNECE Timber Committee Sixtieth Session

24th September 2002

Keith Forsyth

www.VELUX.com

Certified Forest Products Markets: Presentation Overview

• Area of Certified Forest• Supply of Certified Forest Products (CFPs)• Demand for Certified Forest Products• Future Market Developments

Area of Certified Forest (1993 to mid-2002)

0

20

40

60

80

100

120

1993

1994

1995

1996

1997

1998

1999

2000

2001

mid-2

002

Are

a (

mil

l ha)

FSC PEFC SFI CSA ATFS

Certified area mid-2002 = 124 million ha (approx 25% increase)

Area Of Certified Forest:Geographic Distribution

• 90% of certified area in northern hemisphere

• Approximately 50% of certified area in Europe and 40% in North America.

• Developing countries (world-wide) account for less than 10% of total forest area certified.

• In 1996 developing countries accounted for approximately 70% of total forest area certified.

Area Of Certified Forest:Geographic Distribution, Top 8 Countries

05

1015202530354045

Unite

d St

ates

Finl

and

Cana

da

Swed

en

Nor

way

Germ

any

Pola

nd

Austria

Are

a (

mill h

a)

FSC PEFC SFI CSA ATFS

Supply of Certified Forest Products

Supply of CFPs:Geographic Distribution

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10

Swed

en

Finl

and

dom

estic

I taly

Scan

dina

via

Aust

ria UKBa

ltic

Canad

aAs

ia

Germ

any

Latin

Am

No.

of

Res

ponse

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What Drives Suppliers?

1. Market Access2. ENGO Pressure3. Market Demand4. Government Support5. Social Responsibility6. Expected Premiums

The CFPs Market: SupplyAvailability?

• Estimated 234 million m3 of certified wood produced in 2002, roundwood (source: Atyi & Simula 2002).

• Small fraction actually traded as certified. Why?• Processors unable to label product• 70% needed for C-O-C under one certification scheme.

40% FSC

40% PEFC

80% certified material (mixed) No certificate. No CFPs.

The CFPs Market: SupplyAvailability?

• Small fraction actually traded as certified. Why?

60% certifiedNo certificate. No CFPs.

85% certified70% certified , unless ‘batch’

The CFPs Market: SupplyAvailability?

• Chain-of-custody certificates (mid-2002):• 2,014 companies issued with FSC C-O-C world-wide (1 per

14,300 ha).• 142 PEFC C-O-C certificates world-wide (1 per 303,400

ha). (Increased to 260 as at Sept 2002).• SFI and CSA currently do not label.

• Supplied into 20 countries in UNECE region.• FSC labelled product reportedly available in 14 UNECE

countries• PEFC labelled product reportedly available in 7 UNECE

countries

Supply: Barriers to Development

• Limited implementation of chain-of-custody. Need for increased use of chain-of-custody certificates throughout supply chain.

• Mutual recognition?

• Increased costs. Lack of price premiums. Many companies focusing on costs and profitability.

Demand for Certified Forest Products

Most Important Markets for CFPs, 2002

0

2

4

6

8

10

12

UK

Germ

any

Nethe

rland

s

dom

estic

Unite

d Sta

tes

J apa

n

Fran

ce

Belgi

um

No.

of

Resp

on

ses

• Main market is Europe, (although low interest in Southern and Eastern Europe).

CFPs: Market Share

UK:• Estimated approximately 10% of total wood

consumption and 1% of paper consumption.

Netherlands:• Estimated approximately 7% of wood

consumption.

Europe:• Less than 5% of wood consumption (mid-2002).

Most Important Customers for CFPs

Public bodies15%

Other6%

Companies within WWF

Global Forest & Trade Network

45%

Companies outside WWF

GFTN34%

What Drives Customers?

1. Image Enhancement2. Competitive Advantage3. Options for Consumers4. Risk Aversion5. Social Responsibility

Factors Limiting Market Development

1. Lack of Premiums2. Limited Demand3. Limited Industry Involvement4. Lack of Supply

• 50% of respondents rated ‘Lack of Supply’ as an important factor.

• All four factors were considered to be ‘relatively important’ by respondents.

Future Market Developments

Future Market Developments

• Market for CFPs expected to grow. Some industry observers propose growth of 50-100% during the next year.• Moderate growth expected amongst retailers.• Significant growth expected in construction industry

for some products (for example, flooring).• Governments expected to become increasingly

important players as they specify certified timber.

Future Market Developments

• Chain-of-custody certificates expected to grow significantly• Particularly PEFC (reduction in hectares certified per C-

O-C certificate)• Consumer awareness likely to increase as chain-of-

custody certificates increase.

• Availability will increase. • Geographic spread will increase: CFPs will become

available in more countries.

• Price premiums: achievable in some niche markets.

• Mutual recognition: common ground?

Certification Reports/Market Information Available:

FOREST CERTIFICATION UPDATE FOR THE UNECE REGION, SUMMER 2002

UNECE/FAO FOREST PRODUCTS ANNUAL MARKET REVIEW, 2001-2002

CHAPTER: Markets for certified forest products

Both available at:http://www.unece.org/trade/timber/Welcome.html