JOINT WORKSHOP BRUSSELS

Transcription

1 JOINT WORKSHOP BRUSSELS DOES BANNING ILLEGAL LOGGING RULE OUT WOOD? Making legality understood. S. Satkuru-Granzella Malaysian Timber Council London 13 April

2 THE TROPICS

3 LEGAL WOOD - NON-WOOD AUDIENCE Q1 Is legality of wood an issue? Why? Q2 What is legal? AND by whose standards? KEEP IT SIMPLE??? HOW?

4 LEGAL WOOD - NON-WOOD AUDIENCE Q3 How does one decide? II Q4 What difference will it make? And to whom will it make a difference? SIMPLE? LAW?? OR THE TROPICS?? HMMMM

5 KEY FACTS ON THE TROPICS TOTAL RAINFORESTS IN TROPICS = 625 MILLION HECTARES (LESS THAN 5% OF EARTH S LAND AREA) LARGEST unbroken stretch AMAZON, over 50% in Brazil (about 33% of world s tropical rainforests Another 20% lies in Indonesia & the Congo Basin Remaining 45% scattered TOTAL Population = 2010 figures = +-40% of world population of approx 6 billion = billion By 2060, tropics expected to house 60% world population Number of countries = 140?

6 Immediate Challenges in The Tropics Poverty Tropics remain main belt Land Use Challenges Agriculture v Forests Possible Solution Eradication of Poverty, Alternatives to Farming. BUT Industrialisation & Urbanisation? Deforestation v Growth in GDP? Sustainable Forest Use v Consumption? NEED TO ELIMINATE ILLEGAL LOGGING & MARKET DISTORTION CREATE LEVEL PLAYING FIELD 6

7 Some statistics of ASIAN producers & consumers 7

8 Forest Resource Structure Majority of tropical forests are state-owned. Management plans vary country to country, SFM applied, RIL etc Licenses granted via concession for fixed period of time, regulated by Government. Most countries have import and export taxes levied on timber and forest products. Main species produced tropical hardwoods, some softwoods, plantation species 8

9 Forest Resource Management FAO & ITTO e.g. South East Asia achieved significant drop in forest loss compared to (0.9 million hectares v 2.4 million hectares). MOST Forest Area Subregion Area ha Annual Change 1000 ha East Asia 254,626 2, Annual Change Rate % South East Asia 214,

10 Employment in Primary Production Employment in Primary Production of forest goods VERY high compared to other regions worldwide. Reasons: Includes those who are hired to establish plantations and part-time jobs, would be much higher if included wood processing, collectors of fuel wood & non-wood forest products. Most countries are facing labour/skills shortage and increasing labour costs due to increased education and international exposure 10

11 Main ASIAN producers of wood & timber products Dominated by Indonesia, Malaysia and India = account for approx 70% of ITTO member countries production (71 million m3 in 2009 although India s figures estimated). Production data from other countries in region very weak Other major wood producers = Thailand & Myanmar Log production in all countries slowly stabilised by 2008 compared to 1990s (ITTO & FAO 2010). LARGEST Exporters = China, Malaysia, Indonesia, Vietnam, INDIA emerging 11

12 MAJOR PRODUCT CATEGORIES Logs, Sawntimber, Plywood, Veneer, BCJ, Furniture, Other wood products. E.g. MAJOR Sawntimber Producers 12

13 MAIN ASIAN consumers of WOOD Quite simple China, India, Japan Vietnam & South Korea Other consumers in region consume varying volumes of products, significant volumes of plywood, veneer, BCJ, mouldings for own industries Main products: Logs, sawntimber, plywood, veneers, BCJ Feeds processing countries destined for exports major markets = EU & US. Some for domestic consumption 13

14 MAIN ASIAN Exporters of wood products Country TOTAL Exports 2010 US $ CHINA??? Malaysia Indonesia Vietnam billion??? +- 3 billion 14

15 CHINA s Estimated Exports 2010 Products Estimated Value US $ million Furniture (28% world share) 11,615 BCJ 3,830 Plywood 2,540 Fibreboard 850 Veneer 156 Flooring 499 Sawntimber 256 Approx TOTAL (excl misc) (19 billion!) 15

16 Malaysia s Exports 2010 Source: MTIB TOTAL EXPORTS RM 20.5 billion, US$ 5.9 billion 16

17 THE FUTURE IMPACT OF LEGISLATION ON FOREST & TIMBER SECTORS? 17

18 TROPICS: SFM & BENEFITS? Expand Market Opportunities EUTR & LACEY ACT CERTIFICATION SFM REDD & REDD+ VLO/VLC FLEGT VPA 18

19 Future Challenges & Opportunities 19

20 Forest Land Use in Malaysia TOTAL FOREST AREA (mill. ha) State land/ Alienated Land 0.39 Permanent Reserved Forests Production (SFM) Protection 2.70 National Parks/ Wildlife & Bird Sanctuaries 1.35 PRODUCTION TOTALLY PROTECTED 4.05 Source: Forestry Departments of Peninsular Malaysia, Sabah & Sarawak; Ministry of Plantation Industries & Commodities 20

21 Are we really green? Country % of Land Area Under Forest Cover Australia 19 Brazil 62 Canada 34 USA 32 Germany 32 Netherlands 11 Malaysia 62 Source: FAO, Global Forest Resources Assessment

22 CERTIFICATION SUSTAINABILITY/LEGALITY 22

23 Sustainability v Legality Difficulties: Complex supply chain, majority SMEs, resource restraints, need efficient land use planning v poverty & development, extensive bureaucracy BUT Opportunities: Large forest areas, simplification of legislation, consolidation of industry, value-adding/downstream BUT Slow adoption of hi-tech machinery for production, lack of skilled workers, need to build domestic consumption v exports

24 Sustainability v Legality - ASIA Both PEFC & FSC present, uptake slow, also legality efforts Malaysia has both systems functioning, + 4 million hectares PEFC-certified, PEFC CoCs and +140 FSC CoCs Others Indonesia (interim FSC in parts), China (PEFC & FSC), Vietnam (FSC), Japan (FSC & PEFC) No real premium for certified timber/products Expensive by local standards

25 Issues, Challenges & Strategies 25

26 Challenges I Market diversification growing (traditional v emerging) Green demands (certification, EU-FLEGT VPA, Australia s national timber procurement policy, US Lacey Act, public/private procurement policies, EU Timber Regulation) Conformity with international standards (CE Mark Construction Products Regulation, Japan s JAS/ JIS zero-formaldehyde requirements) Low cost competitors: China (?), Vietnam, Cambodia Product Innovation investment in R & D, competition from engineered & modified timber products

27 Strategies to tackle Challenges? Product development & SFM/Certification/FLEGT VPA/EUTR Augmentation of raw materials (SFM & plantations) and manufacture of engineered wood Technology Studies Generic Promotion on use of timber

28 Strategies II Paving the way into new markets Continuous dialogue with relevant stakeholders Informing the industry on international standards; assisting industry in getting international accreditation Product development for niche markets Continuous education of importers on high quality timber products

29 IMPACT of FLEGT VPA/LACEY/EUTR Malaysia s export figures quite stable in value terms, lower in volume. Why? SFM.. Positive: Driven change in M sia, responding to Sustainability & Legality requirements since late 90s Negative: Price hikes=less desirable, driven by Demand/Supply + freight charges + increased raw material/energy/labour costs

30 IMPACT of FLEGT VPA/LACEY/EUTR II Impact elsewhere? Significant drop in exports from some African, Latin American and other Asian producers. Why? Demand down? Or re-focus on export markets? FOCUS: Demand in EU & US down over BUT CONSUMPTION in emerging economies booming e.g. INDIA & CHINA. PROBLEM: NOT within reach of EUTR or FLEGT VPA OR Lacey Act mainly domestic consumption in NON-US or EU markets.

31 SOLUTIONS? Regulated demand & supply patterns need to be adopted universally i.e. large non-eu/us markets be brought in. Understanding what to ask for and what to expect SIMPLIFICATION? APPLIES TO BOTH WOOD & NON-WOOD! It is not just the export trade that needs consolidation, it s also domestic consumption in key player countries will help regulate legislative application SOLUTION? Limited regulation may result in distortion in pricing i.e. limited supply will command higher prices. Wood that is too expensive will be priced out BY ALTERNATIVE MATERIALS, price v resource.

32 SOLUTIONS II? In the midst of challenges in the tropics, investment in SFM/VPA/EUTR need to be protected. HOW? Create level playing field, IF only to motivate change encourage common principles amongst industries around world understanding SIMPLIFIED. Need to clearly distinguish between sustainability & legality benefits of both, direction for the future understanding simplified? Certification v FLEGT VPA v EUTR/Lacey Act are non-wood audience interested? NOT so sure, happy to jump on band wagon if it has a feel-good nature. Simplified??? Restricted market access less choice of wood materials change to other alternatives? Simplification?

33 SOLUTIONS III? Restricted market access encourage regionalisation v globalisation of international trade in timber? If US and EU self-sufficient in timber resources, producing countries head for less regulated alternative markets. Solution: Universal application of similar legislation, maintain niche for high-value products, increase SFM & certification, Responsible Purchasing Policies & Public Procurement Policies=NORM for the industry. Translates to NORM for users. All above ease communication and comprehension, remove negativity, encourage use of wood the MOST environmentally-friendly material, keep forests alive.

34 Thank You