November 2018 Message from Lead Consultant
VPA Partners in EU Timber Trade – IMM 2017 report published
The IMM project has published its annual report “FLEGT VPA Partners in EU Timber Trade 2017”, which uses the latest data to assess the changing market position of VPA partner countries in the international timber trade. As Indonesia started issuing licenses in November 2016, this is the first IMM report to cover a period during which FLEGT-licensed timber was available on the EU market. It is also the first IMM Annual report for which IMM had access to comprehensive survey data from a full network of country correspondents in the seven EU countries accounting for the bulk (i.e. over 90%) of EU tropical timber and timber product imports from VPA partner countries.
The report shows that the value of global trade in tropical wood products increased 5% to US$34.4 billion in 2017, reversing the declining trend between 2014 and 2016. Tropical wood products imports recovered ground in China, continued to rise in North America, were stable in Northeast Asia, and slowed slightly in the EU and India.
The combined share of the 15 VPA partner countries in global tropical wood products trade was 79.1% in 2017, slightly down from 79.4% the previous year.
According to the IMM report, EU market prospects were generally positive in 2017, with most countries’ GDP, construction and wood product manufacturing sectors trending upwards during the year. However, the pace of market growth was slow amid signs that wood was losing share to non-wood alternatives in several end-use sectors.
EU timber products imports from Indonesia fared better than imports from other tropical countries during 2017, slightly increasing in value overall and taking a larger share of total tropical imports. However, the major beneficiaries of the slow rise in EU total timber demand in 2017 were domestic and other European suppliers rather than tropical suppliers, whose share of the overall market continued to decline.
The declining EU market share of tropical producers during 2017 was partly supply related as producers focused more on supplying China and other emerging markets and North America. Supply problems were compounded in the EU as buyers continued to rely heavily on only a limited range of timber species and were becoming more dependent on fewer exporting companies in the tropics to better manage risk, both regulatory and reputational, particularly associated with EUTR.
IMM surveys of trader opinion in 2017 also highlighted the competitiveness of Indonesia relative to most other tropical countries supplying the EU market. The surveys showed the high level of support for FLEGT licensing by Indonesian exporters, with most reckoning the process had made exporting to the EU easier.