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Wood Products Prices in Europe

01 – 15th June 2019


Report from Europe  

   Europe¡¯s ¡°zero deforestation¡± policies: an opportunity
for tropical timber?

Increasingly the twin concepts of ¡°zero deforestation¡± and
¡°embodied deforestation¡± lie at the heart of European
policy making, both in the public and private sector, in
relation to the trade in commodities from tropical
countries. This has significant implications for the tropical
wood products trade with potential impacts throughout the
supply chain, from the forest through to the final

Policy decisions taken in relation to the so-called
¡°Amsterdam Declarations¡± and an imminent EC
¡°Communication on Stepping up EU Action against
Deforestation and Forest Degradation¡± may be critical for
the competitiveness of forestry operations and wood
products in the European market, with wide-ranging, and
unpredictable, effects filtering through into world markets.

The effects on wood industry competitiveness will act on
at least two levels: at forest level, in relation to other
commercial users of the land; and in finished products
markets - construction, furniture, packaging, and energy
production - where wood products from different regions
and with various sustainability assurances and labels
compete with each other and a wide, and growing, variety
of non-wood products.

The two Amsterdam Declarations¡ªone on deforestation
and one on ¡°sustainable palm oil¡± - were launched on
December 7th, 2015 in the context of the Paris Climate
Agreement and build on the New York Declaration on
Forests¡¯ commitments.

The two declarations have since been merged into one
¡°Amsterdam Declaration Partnership (ADP) strategy¡±.
According to the ¡°Partnerships For Forests¡± - which acts
as ADP secretariat¨C the aim is to achieve ¡°fully
sustainable and deforestation-free agro-commodity supply
chains in Europe by 2020¡±. To date, Denmark, Germany,
Netherlands, Norway, the United Kingdom, Italy and
France have signed.

The ADP strategy is intended to stimulate private sector
commitment and progress on agricultural commodities
associated with deforestation (such as palm oil, soy and
cocoa) for which Europe has a significant market share.

The commitment by eight national food and feed industry
alliances and three European federations (Caobisco,
FEDIOL and IMACE) to support 100% sustainable palm
oil in Europe by 2020 is closely linked to the strategy.

Encouraged by the signatories to the ADP strategy and
numerous calls from NGOs and members of the European
Parliament, in December 2018 the European Commission
announced their intent to publish a Communication on
stepping up actions on deforestation and degradation by
June 2019 (now expected in July) following a wideranging
consultation exercise.

The ADP strategy and work towards the EU
Communication provide further confirmation, if any were
still needed, that the level of European consumption of all
products linked in any way to deforestation will
increasingly require assurances of the ¡°sustainability¡± of

Furthermore, relative competitiveness and the direction of
trade with the EU will, to a large extent, be dependent on
the ability of different suppliers to adhere to the specific
standards for ¡°sustainability¡± established for each

In some ways, the introduction of the ADP strategy and
the EU Communication, are a welcome intervention for
the tropical timber sector. Prior to these measures,
Europe¡¯s trade policy interventions to ¡°prevent
deforestation¡± focused almost exclusively on timber, as
the most visible forest-related commodity. They have at
times been restrictive, through procurement policies
favouring specific certification models that are technically
and financially challenging to implement in tropical
countries. And they have generally neglected to consider
the (often larger) role played by demand for other
commodities to drive deforestation.

The ADP strategy and EU communication do show that
the scope of policy action in the EU has been broadened to
include non-wood commodities.

Although the ADP strategy does not itself address timber,
it provides a platform for the sector to demonstrate the
considerable efforts made to define and provide assurances
of conformance to sustainable forest management
standards worldwide, the leadership role to foster better
forest governance through organisations like ITTO and
initiatives like FLEGT, and the implementation of
pioneering due diligence legislation like the EUTR.

To recognise the powerful economic forces driving
conversion from forest to commercial agriculture, the
ADP strategy may provide a platform to argue for a levelplaying
so that ¡°sustainability¡± standards for all ¡°forestrisk¡±
commodities in the EU market are as stringent as
those imposed on timber products.

IDH: ¡°28.5% of EU tropical timber imports certified
sustainable compared to 74% palm oil¡±
These opportunities exist, but on the evidence of the event
on ¡°sustainable tropical timber¡± held on 12 June during the
¡°International Sustainability Week¡± in Utrecht, they are
some way to being realised. The event was organised by
IDH, the Netherlands-based Sustainable Trade Initiative,
as part of a more concerted effort to turn ¡°pledges into
action¡± and galvanise action in the context of the ADP

IDH began the session with the far-reaching claim that
74% of palm oil imported for food into Europe was
¡°certified sustainable¡±. This was set against the claim that
¡°still only 28.5% of natural tropical timber is sustainable
in Europe¡±.

IDH was glowing about the achievements of the palm oil
sector, noting in publicity material for the event that
¡°currently, 99% of palm oil entering Europe is traceable to
oil mill level. Over 84% of all palm oil imports is covered
by company sourcing policies that focus on ¡®No
Deforestation, No Peat and No Exploitation¡¯. Some 74%
of palm oil imported for food into Europe was RSPO
certified sustainable palm oil, an increase of 5% compared
to the year before¡±.

These are significant achievements on the path towards
¡°responsible sourcing¡±, certainly, but the metrics used to
justify claims of ¡°sustainability¡± in the palm oil sector
(which after all requires at some point conversion of
natural forest) are not comparable for an equivalent claim
in the tropical timber sector.

For example, RSPO palm oil requires only that ¡°primary¡±
forests, and those with high conservation values are not
converted for new plantations. For timber, any form of
conversion is treated as unsustainable.

There is also much reliance in the palm oil sector on trade
in ¡°sustainability credits¡±, rather than on systems requiring
physical tracking. Such credit-based systems could have
facilitated certification in the forest products sector,
particularly amongst small holders lacking direct access to
international timber markets, but their use has never been
countenanced by environmental NGOs and other
gatekeepers of European policy in relation to timber.

In contrast to the glowing report for Europe¡¯s palm oil
importers, IDH¡¯s assessment of the situation in the tropical
wood sector was miserly. Perhaps influenced by the Dutch
government timber procurement policy, and the continuing
inflexibility of a few NGOs and European trade and
industry interests on this issue, the IDH figures for
¡°sustainable¡± timber imports recognise only FSC and
PEFC certified product.

A session at the Utrecht event was devoted to an update on
a study commissioned by IDH from the Global Timber
Forum and the Dutch consultancy PROBOS to assess the
current volume of ¡°certified sustainable¡± timber trade in
the EU market. The final report of the study is expected to
be published in July, but preliminary data was made
available at the event.

In the absence of any direct monitoring of certified wood
flows by either FSC or PEFC, the figures were derived by
combining available data on EU trade flows and the
percentage of production forest certified in each tropical
timber supplying country, validated as far as possible by
interviews with European importers.

The IDH figures indicate that the proportion of imports of
primary tropical wood products (logs, sawn, veneer and
plywood) likely to be certified varies widely by different
countries, strongly dependent on the existence of either a
government procurement policy or an association policy
giving preference to these policies at national level in the

The IDH data indicates that the proportion of tropical
timber imports in 2018 that were ¡°certified sustainable¡±
according to their definition was 10% to 15% in France,
5% to 10% in Italy, 2.5% to 7.7% in Spain, 25% to 30% in
Belgium, 30% to 35% in Germany, 40% to 45% in the
UK, and 65% to 70% in the Netherlands.

Based on this analysis, it was noted that ¡°only one or two
markets in the EU have reached a tipping point where
customers expect to see certified tropical timber; there are
markets in southern Europe where the process is lagging¡±.

Extrapolating from the certified forest area data compiled
as part of the study ¨C which showed that around 6.5% of
total production forest area in the tropics was FSC or
PEFC certified in 2018 ¨C IDH reckoned that if all EU
tropical wood imports were certified, ¡°an estimated
additional 12.5 million ha of tropical forests can be
positively impacted¡±.

FLEGT in IDH targets for ¡°verified sustainable¡± tropical
timber in European trade
The IDH figures do not include the around 11% additional
imports of primary tropical products imported into the EU
from Indonesia which has been FLEGT licensed since
November 2016, although licensing is acknowledged in
the IDH publicity material issued at the event as providing
a ¡°stepping stone towards sustainable tropical timber¡±.

There was no mention at either the Utrecht event, or in the
IDH publicity material, of the fact that all timber products
placed on the EU market, unlike all other ¡°forest risk¡±
commodities, have been subject since March 2013 to
regulatory due diligence requirements through the EU
Timber Regulation.

This is a strange omission when it is considered that some
European environmental groups (such as EIA and FERN)
are now actively lobbying for the extension of such
regulations to other commodity sectors because they are
seen as more effective than voluntary commitments like
those promoted through the ADP strategy.

Apart from the question of comparability with other
sectors, the apparent relegation of FLEGT licenses to a
second tier in relation to FSC and PEFC certificates by
IDH and other European agencies raises other, more
immediate, questions of equity and effectiveness in the
procurement approach now being promoted for timber, at
least by some influential agencies in Europe.

For those tropical countries that have been encouraged to
engage in the FLEGT VPA process with assurances of
improved EU market access for their timber products, this
relative lack of recognition for FLEGT-licensed timber
may come as a shock. Particularly so, when the
requirements imposed on products like palm oil seem so
much less onerous and are voluntary.

Without having to say so explicitly, Mr Chris Beeko,
Director for the Timber Validation Department of the
Ghana Forestry Commission, made this point very
eloquently in his presentation to the IDH event by spelling
out what is required, in practice, to implement a FLEGT
assurance system.

Mr Beeko highlighted that the system in Ghana covers all
national timber production and exports, of which Europe
currently only accounts for 11%, with around three
quarters now destined for Asia. He explained Ghana¡¯s
original commitment to the VPA negotiations in 2006 was
informed by the fact that, at that time, Europe accounted
for around 60% of Ghana¡¯s exports.

While the direction of trade has changed, said Mr. Beeko,
Ghana has carried forward the FLEGT commitment as the
initiative aligns well with Ghana¡¯s own forest policy to
ensure all logging is sustainable and there is equitable
sharing of benefits from forest use.

Although licenses have yet to be implemented, Mr. Beeko
explained that a robust assurance system is now fully
operational which applies, unlike certification, to all
companies engaged in the sector. The system ensures
universal application of forest management prescriptions,
which cover a wide range of environmental and social
aspects as well as ensuring sustained timber yield and
ensures these are transparent and measurable.

Mr. Beeko said that in Ghana there is a tracking system
which ensures near real time reconciliation of data
gathered using handheld devices in the field.
Discrepancies, for example between the volume of logs
actually harvested and those transported which in the past
would have only become apparent months later, are now
identified within a matter of hours.

There is also a mechanism to exercise control at point of
export of all wood products to ensure only compliant
consignments enter the global market.

Data is gathered and made readily available on the results
of field audits and this reveals that, as awareness of the
level and intensity of scrutiny has increased amongst
frontline staff and private operators, the number of noncompliances
is falling.

Another key outcome of the VPA is that civil society is
now closely engaged both in the process of monitoring
compliance and multi-stakeholder deliberations have
become the accepted approach to policy implementation.

It would be interesting to compare the environmental and
social requirements imposed under the VPA process in
Ghana, and also in Indonesia where FLEGT licenses are
already being issued, with the standards and mechanisms
currently accepted by IDH and other supporters of the
ADP strategy as sufficient evidence of ¡°sustainability¡± in
the palm oil sector.

IDH dialogue on differences and synergies of FLEGT
and certification
Following the presentation of Chris Beeko, the Utrecht
event scheduled a ¡°dialogue on the differences and
synergies of FLEGT and certification¡± with
representatives of FSC and PEFC, alongside David
Hopkins of the UK Timber Trade Federation.

Mr. Hopkins was asked, effectively, to make the case for
FLEGT as a metric requiring recognition in the IDH
procurement policies and targets, reflecting the high
profile that the TTF is giving to FLEGT in its own
procurement policies and promotion material for tropical
timber in the UK. This recognition also extends to the UK
government procurement criterion which gives FLEGT
alongside FSC and PEFC certified product.

Mr. Hopkins noted that while the TTF is a member of FSC
and PEFC, it is also a very strong advocate of FLEGT. He
explained the specific benefits of FLEGT, particularly the
focus on governance and the development of licensing
systems with full engagement at national level in the
producer country which ¡°brings scale into the assurance¡±.

John Hontelez of FSC did not disagree with this
assessment and noted that despite some mutual
¡°suspicion¡± from both sides, it was wrong to suggest that
FLEGT and FSC are competing. Mr. Hontelez observed
that ¡°FSC and FLEGT are important and can support each
other, legality for us is the number one priority, where
there is law enforcement, certification becomes a lot

Mr Hontelez also praised ¡°FLEGT¡¯s strong focus on
engagement¡± and noted that ¡°NGOs play a very critical
role in FLEGT¡±. He did note, however, that sometimes it
is ¡°more difficult to convince [FLEGT advocates] that
FSC is relevant to their discussion¡±. He concluded that
despite the merits of FLEGT, ¡°certification is still the
more immediate option to promote sustainable forest

Reme Sournia for PEFC focused more on technical
aspects in his comments, noting how certification and
FLEGT differed, the most obvious contrast being between
the voluntary status of certification and the mandatory
status of FLEGT, noting that ¡°FLEGT licensing offers a
green lane for EUTR which is not available for

Mr. Sournia observed that for PEFC, as for FSC, ¡°legality
is the first component of certification¡± and also contrasted
the ¡°international recognition¡± offered by certification
compared to the EU-focus of FLEGT licenses.

Unfortunately, the discussion at the Utrecht event was too
brief to reach any real conclusions on the question of if,
and when, FLEGT licensed timber may be given greater
acknowledgement in the procurement policies and targets
now being promoted for timber products by IDH.

Nevertheless, some of the key issues were raised and
views aired, with a strong call made for IDH to adopt the
kind of pragmatic stepwise policies, which recognise
progress within reasonable time frames and are
economically viable, now being adopted in other
commodity sectors.

And while the dialogue between FLEGT, FSC and PEFC
is useful for the tropical timber sector, it cannot be allowed
to stop there.

The on-going attempt to consider the impacts of European
trade in all ¡°forest-risk¡± commodities is an opportunity for
more cross-sectoral discussion and sharing of ideas.

The timber sector could learn from the innovative systems
of sustainability verification now being applied to other
sectors at landscape and jurisdictional level. These bring
together regional assessments of the rigor of regulations
and planning systems with new and improved data on land
use and land use change from remote sensing and other

Equally other commodity sectors could benefit from a
stronger understanding of the role of the governance
measures now being implemented in the timber sector
through processes like the FLEGT VPAs and from due
diligence regulations like EUTR.


LM       Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS        Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR           French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF        Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot              Price has moved up or down

Source:ITTO'  Tropical Timber Market Report

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