1. Certified Forest Products Markets UNECE Timber Committee Sixtieth Session 24 th 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? 1.Market Access 2.ENGO Pressure 3.Market Demand 4.Government Support 5.Social Responsibility 6.Expected Premiums

9. The CFPs Market: Supply Availability? Estimated 234 million m 3 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.

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

11. The CFPs Market: Supply Availability? 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? 1.Image Enhancement 2.Competitive Advantage 3.Options for Consumers 4.Risk Aversion 5.Social Responsibility

18. Factors Limiting Market Development 1.Lack of Premiums 2.Limited Demand 3.Limited Industry Involvement 4.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. 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