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Certified Forest Products Markets

Certified Forest Products Markets. UNECE Timber Committee Sixtieth Session 24 th September 2002 Keith Forsyth. www.VELUX.com. Certified Forest Products Markets: Presentation Overview. Area of Certified Forest Supply of Certified Forest Products (CFPs)

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Certified Forest Products Markets

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  1. Certified Forest Products Markets UNECE Timber Committee Sixtieth Session 24th September 2002 Keith Forsyth www.VELUX.com

  2. Certified Forest Products Markets: Presentation Overview • Area of Certified Forest • Supply of Certified Forest Products (CFPs) • Demand for Certified Forest Products • Future Market Developments

  3. Area of Certified Forest (1993 to mid-2002) Certified area mid-2002 = 124 million ha (approx 25% increase)

  4. 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.

  5. Area Of Certified Forest:Geographic Distribution, Top 8 Countries

  6. Supply of Certified Forest Products

  7. Supply of CFPs:Geographic Distribution

  8. What Drives Suppliers? • Market Access • ENGO Pressure • Market Demand • Government Support • Social Responsibility • Expected Premiums

  9. 80% certified material (mixed) No certificate. No CFPs. 40% FSC 40% PEFC 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.

  10. 60% certified 85% certified No certificate. No CFPs. 70% certified , unless ‘batch’ The CFPs Market: SupplyAvailability? • Small fraction actually traded as certified. Why?

  11. 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

  12. 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.

  13. Demand for Certified Forest Products

  14. Most Important Markets for CFPs, 2002 • Main market is Europe, (although low interest in Southern and Eastern Europe).

  15. 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).

  16. Most Important Customers for CFPs

  17. What Drives Customers? • Image Enhancement • Competitive Advantage • Options for Consumers • Risk Aversion • Social Responsibility

  18. Factors Limiting Market Development • Lack of Premiums • Limited Demand • Limited Industry Involvement • 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.

  19. Future Market Developments

  20. 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.

  21. 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?

  22. 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

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