Substitution, economic crisis and diversion of supply = main drivers of EU tropical timber market decline

Tropical timber imports to the EU have declined for over a decade now. The loss of market share was particularly pronounced in the period 2008-2012. Sales then stabilised up to 2016, before dipping again slightly. 

As a part of its 2018 research, IMM has been trying to identify the major drivers of this development. The 2018 survey contained a table of nine potential factors identified by IMM, which respondents were asked to sort according to relevance. These factors, plus two additional factors identified during IMM 2018 Trade Consultations are summarised in chart 1.

Chart 1: Drivers of decline

Drivers of decline

Source: IMM 2017/2018

2018 survey respondents identified “substitution by other materials” as the main factor responsible for decline in EU tropical timber imports, followed by the “economic downturn 2008-2013” and “diversion of supply to other markets” (Table 1). This latter point is closely linked to the fifth most important factor, according to the rating, which is “competition from China for material access and in markets for finished goods”.

Environmental prejudice and uncoordinated marketing (rank 4) was identified as another important driver. In terms of marketing, respondents highlighted that successful campaigns promoting local European timber had led to a loss of market share for tropical timber. At the same time, NGO campaigns and the tropical timber sector’s lack of access to end consumers would undermine efforts to promote the use of tropical timber.

The majority of both survey respondents and participants at IMM Trade Consultations assumed that the EU market for tropical timber will stagnate at the lower level it has reached for the foreseeable future. However, some opportunities for supporting recovery were seen in improved promotion of environmental credentials of tropical timber and “consistent and effective EUTR enforcement”.

Table 1: Ranking of drivers of decline

Consumption of tropical timber in Europe has declined sharply since 2007. In your opinion, what are the main reasons (please arrange the suggestions below from most relevant (1) to least relevant (10).

 

Drivers

Weighted Score

Relative Weighted Score

Overall Rank

 
 

Substitution by temperate, chemically and thermally modified wood, composites and non-wood materials

634

100

1

 

Economic downturn 2008 to 2013

583

92

2

 

Diversion of supply to other markets

553

87

3

 

Environmental prejudices and uncoordinated marketing

545

86

4

 

Competition from China for material access and in markets for finished goods

485

76

5

 

Import and financial sectors aversion to commercial risk

420

66

6

 

Just-in-time favouring more regular less volatile supply

398

63

7

 

Prefabrication and the switch from adaptable utility woods to tightly specified materials

394

62

8

 

Erosion of infrastructure for EU supply

366

58

9

 

Other

187

29

10

 

Total Responses

   

83

 

Source: IMM 2018 Trade Survey

Quotes from respondents commenting on the ranking include:

Selected quotes referring to a trend-reversal:

IMM also discussed the above factors with participants at all of its 2018 Trade Consultations and, at the third Consultation in Berlin, introduced a systematic ranking of factors. This ranking will be part of all future Trade Consultations. Also introduced in Berlin was a ranking of potential solutions or opportunities for the European tropical timber sector. 

The German rating of drivers of decline howed strong overlap with the 2018 trade survey. A major difference in the German rating was that the EUTR, which had not yet been included in the 2018 survey, was found to be the third most important driver of decline by the Berlin Trade Consultation. Nonetheless, participants emphasised that they were supportive of the EUTR and saw it as an opportunity for the tropical timber trade in the medium and long-term – as long as it was effectively implemented. 

This is also reflected in the subsequent rating of opportunities held in Berlin, as a part of which “a regulatory approach involving increased supply of FLEGT-licensed tropical timber linked to consistent and effective enforcement of EUTR to remove illegal wood” was ranked as the most important strategy for future recovery and growth of the EU tropical timber market. Not a single participant voted in favour of “Deregulation” i.e. abandoning the EUTR. 

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