The EU risks throwing out the baby with the bathwater if it imposes overly rigid legislation to block imports of illegal timber.
That summed up views expressed at the recent American Hardwood Export Council (AHEC) European Convention in Amsterdam. The fear was that, if new EU procurement rules centre on specific types of certification, US hardwood might be classed with timber from environmentally-unsound sources.
The AHEC Convention, which attracted over 150 delegates, including American suppliers and European buyers, distributors, specifiers and end users, took a new format this year. Instead of straight presentations, it featured three panel debates, on China’s market influence, environmental and marketing issues, each introduced by a speaker with specialist insight in the issue.
Concern over the direction of EU environmental legislation surfaced during the session tackling “the challenge of procuring legal and sustainable hardwood”.
Opening the discussion, Rupert Oliver of Forest Industries Intelligence said the fact that eco concerns are increasingly shaping European public and private sector timber procurement policy should benefit US hardwood.
“It should be a boost as there’s plenty of evidence that it is legal and sustainable,” he said. “The US?standing timber inventory has increased from 5.2 billion m³ in 1953 to 11 billion m³ today and the industry clearly has the framework to deliver sustainable policies.”
Forest ownership
However, he added, European decision makers were increasingly associating timber “sustainability” solely with third-party certification and chain of custody traceability. And the ownership structure of US hardwood forestry made that a problem.
“Having nearly 4 million forest owners makes certification complex to administer overall and many of the smaller forest holdings feel the unit costs of getting certified are too high,” said Mr Oliver.
The alternative proposition is for European countries to differentiate between timber sources in procurement policy and accept alternative proof of sustainability for low environmental risk suppliers like the US.
“We need procurement policy to include risk assessment,” said Mr Oliver. “That would prevent unnecessary controls in low risk regions, focusing resources for combating illegal logging on problem suppliers.”
Risk assessment, he added, lies at the heart of America’s Lacey Act, which guards against trade in endangered plants and animals and which the US hardwood sector wants extended to timber. “This is based on due diligence, with the burden of proof for any breach on the prosecution,” said Mr Oliver. “That makes it proportionate to the problem and it’s a model that could be adopted for US hardwood in Europe.”
Risk assessment proof
The US hardwood sector hopes that a new study commissioned by AHEC into the environmental performance of its forestry will make the arguments in favour of risk assessment-based proof of legality and sustainability even more persuasive. The report’s lead author Al Goetzl of Seneca Creek Associates said it would show that the US hardwood inventory is one of the most closely monitored in the world, with sample plots for every 2,400ha evaluated by the US Forest Service each year.
“We’re also looking at such issues as health and safety, the extent growth exceeds removals and how federal law protects such aspects as endangered species, water quality and use of chemicals,” said Mr Goetzl.
The report will be out in 2008 and, he added, would show that the likelihood of illegal timber being exported from the US is low. “It will also suggest ways to US hardwood exporters for documenting this low risk.”
Panelist Irish architect Ciaran O’Connor indicated that the US proposals would get a sympathetic ear in Europe. “In Ireland we support a pragmatic, rather than a Taliban-type approach on the issue,” he said.
Another Convention topic, “Matching the market to the resource”, also had a green hook, focusing on how to make the most prolific timber species the most popular with buyers. This, said AHEC European director David Venables, made commercial and environmental logic.
“We should see it as a balance sheet,” he said. “We’re not washing machine makers who can increase output to match demand. We have a relatively fixed asset and have to match the market to the availability of the material.”
Red oak
Getting the balance right, he added, required marketing to distribution and specifiers, and AHEC’s latest push is for red oak, which accounts for a third of the US hardwood resource. In the last year, he acknowledged, sales of the species in the UK and Ireland had slipped, but in Italy, Greece and Spain they rose strongly.
Panelist Chris Powell of the UK’s CP Timber expressed doubts on the likelihood of the trade giving red oak a big push when prices, depressed by the US market slowdown, were so low. “At the moment you have to ask whether it’s a sustainable business, with some people selling tulipwood at the same price,” he said.
From the audience, UK bespoke furniture maker Mark Wilkinson also questioned whether his customers could be persuaded to switch to red oak. “Culturally it’s not right. They don’t like the colour,” he said.
But Portuguese panelist Carla Santos of the Lasmad agency said her customers, including furniture makers, were only prejudiced against red oak due to the name. “If they see its possibilities and use it, we get repeat orders,” she said.
Some delegates proposed dropping the ‘red’ and ‘white’ labels for oak. A less radical idea to boost red from John Lew of the UK’s Tradelink Wood Products was to put greater stress on its abundance. “There’s an opportunity to create a market with this environmental message,” he said. “The story that red oak is 30% of the US resource is not out there and it should be.”
Gather any industry at a conference today and probably the most scrutinised topic after the environment is the emergence of China as an economic super power. The debate at the AHEC Convention indicated that it’s as significant for many in the US hardwood sector as eco issues or the need to steer timber species demand.
Opening the discussions with an analysis of the market, AHEC executive director Mike Snow urged the industry not to view the rise of China exclusively as a challenge. “Our attitude should not be, China’s going to eat all our lunch, but how can we take advantage of its economic growth, which is on a scale never before seen.”
He accepted that China’s statistics could be intimidating. “The economy is expanding at 8% a year and in 2006 accounted for 20% of global GDP growth,” he said. “The US remains their biggest export market, but they’re also turning increasingly to the EU which is now running a trade deficit with China at €15m an hour!”
Coping with China
Growth in much of the Chinese wood products sector is outstripping the overall economy, with total hardwood lumber imports in 2006 rising to around US$1.8bn and log imports heading towards US$2bn. Its imports of American hardwood lumber were up 45% at US$260m, while log imports rose a similar percentage to about 260m³.
But Mr Snow urged the audience not to see China just as a bottomless pit for raw materials. It is also becoming a huge market for consumer goods and, long term, a major export opportunity for other countries. “The Chinese are building at a rate of 700 million m² a year and sales of household goods are rising rapidly.”
Panel chairman Michael Buckley of World Hardwoods said that rises in export duty on Russian logs could increase Chinese demand for US raw material and lead to their investing further in American timberlands. AHEC chairman Peter King also raised the possibility of a scenario where Chinese sawmills process American logs and ship the lumber back to the US and EU. But Eric Lacey of Blue Water Lumber insisted this was not a serious danger for US mills. “Oil prices will increase freight rates and our companies are increasingly efficient, so outside massive subsidy for their sawmills, it will not be a threat.”
Mr Barford of the American National Hardwood Lumber Association added that the versatility of American mills increased their competitive edge. “With domestic demand remaining flat, they have increasingly and successfully looked to overseas markets, now exporting 30% of overall production and 50% in kiln-dried,” he said. “In the future they will become even more export oriented.”
Other speakers highlighted that, as China’s economy matures, its costs will rise and it will also face growing competition from other developing economies.
The consensus for the future of the US hardwood sector was that success lay not only in enhancing its ability to service overseas markets, but also in adapting as those markets evolve.
“The key,” summed up Mr Buckley, “is identifying where we will see future growth.”