Today’s European tropical timber trade is a demanding environment. Sales are down over the last 18 months and prices have followed.
New moves on the timber sector’s sustainability performance are set to add to the pressures. A further batch of key tropical species are being listed in Appendix II of the Convention on International Trade in Endangered Species (CITES) – some controversially. They will subsequently require added evidence of responsible sourcing.
Then there’s the EU Deforestation Regulation (EUDR) coming into force in 2024. This demands proof that so-called Forest and Eco-System Risk Commodities (FERCs), including timber and wood products, are not implicated in deforestation, or the more nebulous forest degradation. That proof includes provision of geolocation co-ordinates for the ‘plot of land’ where commodities originate.
Belgian-based international timber trader Vandecasteele does not downplay the market challenges. However, it does sees the commercial situation changing and also ultimately the tropical sector benefiting from regulatory developments that, it believes, will add to the trade’s sustainability assurance in an increasingly environmentally aware market.
Export manager Geneviève Standaert acknowledges that, after two exceptional years from 2020 to 2022, the squeeze in the tropical timber market has been significant.
“Over the last year demand has been weak, there’s been less volume and consequently prices have dropped,” she said.
However, she feels a corner is being turned. “Even if demand does not come back immediately, we expect prices are now at their lowest level as suppliers have diminished production volumes and offers are scarce.”
She added that Vandecasteele has also been looking to strengthen its commercial position, while at the same time further underpinning its sustainability credentials, by developing its tropical offer. For instance, it is looking to add more secondary species to its stock. This is seen as not only diversifying its range, but making environmental certification more viable for the long-term, as more secondary species sales mean more income for forest managers from a given certified area.
“When a supplier goes for certification, they make a very serious investment in the future management of the forest, not just economically, but in maintaining the forest as forest 20, 30 or 40 years ahead, and even longer,” said Ms Standaert.
Vandecasteele is also growing its range in further processed, value-added products such as laminated, finger-jointed scantlings and thermo-treated timber. It now carries a 15,000m3 stock of the latter, including ayous and fraké, as well as European ash, poplar, redwood, whitewood and radiata pine.
“We are also carrying a ready stock in cladding profiles in alternative tropical species, such as red louro, as an addition to the better known species such as iroko, padouk and afrormosia,” said Ms Standaert.
The company has additionally set itself the objective of becoming the ‘European ambassador for sustainable timber’, with a target date of 2025 to be trading only in certified timber.
“We are on track for our goal,” said Ms Standaert. “We are continuously supporting suppliers towards this transition by investing in external auditing and buying a full range of species and dimensions. In Brazil, for example, the volume of certified timber is continuously growing and our own forest engineer provides training in the field for suppliers in transition or wanting to switch towards certification in the near future. We also participate in webinars and presentations on the topic, such as the upcoming FSC event in Belem in November, which will be a perfect occasion to lead our suppliers towards certification.”
The company is also seeing a “shift in demand” among customers, “not necessarily for certified timber, but certainly for third party-verified”.
This year the African species padouk, khaya and doussie joined others such as afrormosia in being listed in CITES Appendix II, although a leading authority on the topic of endangered species, the Gembloux Agro-Bio Tech faculty at the University of Liège, said this was not justified in the case of padouk and doussie. Next year ipe and cumaru will follow. Given other availability issues with varieties such as doussie, the new CITES listings and their labelling of species as ‘endangered’ – even though listing is not a bar to trading in them – could be a demand-reducing ‘game changer’, thinks Vandecasteele.
As for the EUDR, the company says it has adapted procedures to meet the requirements, although much of the detail is yet to be clarified. Besides demanding proof that FERC supply is not causing deforestation or forest degradation, under the regulation supplier countries will be benchmarked high, medium and low risk. This will dictate the level of due diligence required of those who place affected goods on the EU market – or, indeed, who export them from the EU.
“The text of the law is ready, but the practical guidelines won’t be until December 2024 when the new legislation will be enforced,” said Ms Standaert. “So we will have to wait and see what is required in day-to-day business in terms of such areas as customs clearing and training and where to upload data and in what form, including how we submit geolocation information.”
She added that the ‘plots of land’ for which the EUDR demands geolocation co-ordinates will be wide ranging. A ‘plot’ is defined as ‘land within a single real estate property’, so could be just a few hectares, or tens of thousands.
To stay up to speed, Vandecasteele is signing up to as many webinars and presentations on the subject as possible and it is keeping suppliers informed along the way.
“Tropical suppliers are certainly concerned about the EUDR and, given that the EU is still deciding on the requirements, that they will not have enough time to adapt,” said Ms Standaert. “Each time a supplier visits our company, the Regulation is a very important part of the conversation.”
The geolocation requirement is causing particular issues.
“The EU has not yet defined the exact form in which this data is to be supplied and the platform being developed for it is not ready,” said Ms Standaert. “This is a very big concern both for us buyers and our suppliers. In principle, they all want to meet the requirements and continue to do business with Europe. They just need to know how to comply.”
When the EU Timber Regulation came into force in 2013 it is reported to have reduced the pool of tropical suppliers available to the EU timber trade. But Vandecasteele believes that this experience, resulting in closer relationships between buyer and remaining suppliers, leaves it well-placed to deal with EUDR.
“Under the EUTR, we’ve been working for 10 years already with our suppliers as partners, so this gives us a real head start in comparison with the other commodities covered by the EUDR,” said Ms Standaert.
Vandecasteele maintains that, while Brexit may have happened, the UK will not be immune from the impacts of the EUDR.
“Even if the UK is not supporting the Regulation, its suppliers will still need to meet it as they’re probably unlikely to want to adjust their trading operations for the UK market,” said Ms Standaert. ”And for exports to the EU, UK companies will need to meet all EUDR requirements, for starters to pass through customs. Ultimately they will have to comply to the same level as their EU counterparts.”
To aid EUDR compliance, Vandecasteele says gap analysis between its requirements and those of certification systems, such FSC, PEFC, OLB, Legal Source and TLV, would be a great help. It would clarify what additional actions businesses have to undertake over and above those needed to comply with these schemes.
But ultimately Vandecasteele feels the EUDR will be a positive development for the tropical timber trade. It will underline that timber production from sustainably managed tropical forests is the best guarantee of maintaining them as forests, disincentivising their clearance to make way for agro commodities.
“We hope that finally the real causes of deforestation will become visible under the EUDR, and people will see that timber is not the only deforestation or forest degradation implicated commodity,” said Ms Standaert. “It should show that sustainable forest management is the only solution for our tropical forest. The phrase use it or lose it still stands!”
