Malaysia
Sarawak to reduce log harvest
The Sarawak State government, through the Forest Department will, according to Deputy Premier Awang Tengah Ali Hasan, reduce annual log harvests to about two million cubic metres and ensure adherence to forest management certification criteria.
In this regard, the Premier emphasised the importance of aligning the state’s forest management with international standards which would allow timber products to be marketed competitively globally.
The State government has said it aims to boost income from forest and the Premier called on all parties involved to collaborate towards realising the State’s Sustainable Development Goals (SDGs) and to back the reduction of greenhouse gas emissions by 45 percent by 2030.
Hasan called on forest license holders in Sarawak to actively engage in forest restoration programmes, particularly in degraded areas. These efforts are crucial for creating economic opportunities in carbon trading, agro-forestry and ecotourism, he said.
Achieving net zero requires a collaborative effort - PM
Malaysian Prime Minister, Anwar Ibrahim, has said achieving net zero requires a collective effort and a shift in mindset because adopting environmental, social and governance (ESG) practices requires more than just regulatory compliance.
He said it is crucial to recognise that achieving net zero requires a collaborative effort involving the government, the private sector and all Malaysians. Anwar urged all stakeholders, including businesses, civil society and individuals to actively participate in achieving a sustainable and secure future for the next generation.
He added, Malaysia has taken a progressive stance towards decarbonisation and the larger sustainability agenda and the government has implemented policies aimed at reducing carbon emissions, promoting social equity, creating new growth opportunities in the green economy and ensuring transparent governance.
Challenging prospects in international furniture market
The outlook for the furniture industry in Malaysia remains challenging with, it appears, few opportunities to increase exports in the second half of the year.
Analysts suggest the main reason for the stagnant trade in furniture exports lies in Malaysia’s largest export destination, the US. Existing home sales in the US fell to the lowest levels in 13 years in October 2023 as high mortgage rates and lack of homes for sale drove buyers from the market.
In addition, home re-sales, which account for a significant part of housing sales, were 15 percent lower year-on-year in October 2023.
The weak housing market in the US contributed to the slump in furniture exports, in particular, wooden furniture exports. Most wooden furniture manufacturers in Malaysia export their products to the US. Demand in the ASEAN market is being affected by rising inflationary pressure which means consumers tend to defer spending on non-essential such as furniture.
Rekindling discussions on a Malaysia-EU FTA
The European Union (EU) and Malaysia need to assess global trends over the last decade before resuming the free trade agreement (FTA) talks according to media reports of statements by Timo Goosmann, Deputy Head of the Delegation of European Union to Malaysia.
In 2010, a FTA was signed by the two parties but was put on hold after eight rounds of negotiations at Malaysia’s request.
In March this year, Prime Minister Anwar Ibrahim said the time is now “ripe” for Malaysia to rekindle discussions on a Malaysia-EU FTA.
Goosmann reportedly said, “I am very optimistic that if we find a way to agree on the conditions to start these negotiations then we can possibly find a good way on how to agree on a meaningful FTA that creates opportunities and prosperity for both sides”.
Sabah TLAS to be updated
Sabah’s timber industry is to update its sustainability procedures to match with the requirements set out in the EUDR. This comes after the Sabah Forestry Department and the European Union officially launched a partnership to update the Sabah Timber Legality Assurance System (TLAS) to improve competitiveness and to enhance environmental governance.
Over the past decade the Sabah TLAS has played a pivotal role in gaining international acceptance in key timber trade markets including Europe, Australia, the US, Japan and South Korea.
The TLAS updating exercise will involve alignment of the Sabah TLAS with the European Union Deforestation Regulation (EUDR). In addition to EUDR the Sabah TLAS will also align with the EU Corporate Sustainability Due Diligence Directive (CS3D).
The updating exercise will involve a series of consultations and workshops with government agencies of the Implementing Agencies Coordination Committee (IACC), the Sabah Timber Industries Association (STIA), the Timber Association of Sabah (TAS) and timber companies.
Financing forest conservation activities
A non-market-based mechanism, the Forest Conservation Certificate (FCC), has been introduced by the Malaysian government to finance forest conservation activities.
The Minister of Natural Resources and Environmental Sustainability, Nik Nazmi Bin Nik Ahmad, said the FCC (a non-market mechanism to channel funds from the private sector to support forest conservation projects in the country) is one of the mechanisms developed by the Malaysia Forest Fund (MFF).
FCCs can be used by companies to meet environmental, social and governance (ESG) reporting requirements under the biodiversity topic, said the Minister. Also, the Ministry of Finance has approved a 10 percent tax deduction for companies that participate in FCC activities.
Indonesia
Upstream and downstream collaboration could boost sector performance
Krisdianto, the Director of Forest Product Processing and Marketing Development at the Ministry of Environment and Forestry, said collaboration between upstream and downstream businesses could revitalise and strengthen the performance of the timber industry in the country.
Adding that integration among industry players will bolster the wood supply chain and support the production of high-quality export products.
At a June meeting in Surabaya, Krisdianto mentioned that efforts are needed to address challenges created by the Forest Utilisation License (PBPH) and Forest Product Processing License (PBPHH).
A mechanism for cooperation between PBPH and PBPHH holders needs further improvement to ensure a stable supply of raw materials for PBPHH and a market for roundwood for PBPH.
Such integration would address the problem some companies have to market roundwood and primary industries will no longer suffer from a shortage of raw material, he said.
Tjipta Purwita, the APHI Management Board member, explained that production from the natural forest in 2023 was 4.7 million cubic metres whereas the average over the last 10 years was 5.7 million cubic metres.
He added that several factors are causing a decline in natural forest wood production. One is the increasing transportation distances and fuel prices, while wood prices remain constant. Additionally, there is a decreasing trend in the demand for wood from natural forests.
Tjipta also suggested that expanding the export market, especially for mixed forest wood, is essential to increase added value as it has not been utilised optimally so far.
Processed wood industry plays strategic role in the economy
The processed wood industry is considered to have a strategic role in the national economy and significantly contributes to the Gross Domestic Product (GDP) according to Prof. Mangku Purnomo, the Dean of the Faculty of Agriculture at Brawijaya University.
During a discussion hosted by FPUB as part of an ITTO project, Purnomo communicated the need to develop a comprehensive national strategy to enhance the competitiveness of processed wood products in the domestic market. He said "through the project advantages and challenges in the domestic wood industry will be studied.”
Several important issues related to the processed wood industry were discussed. The research findings from this project confirm that the domestic market holds great potential for the national wood industry.
The focus of the discussion was on strategies to enhance the competitiveness of processed wood products in the local market, particularly through product innovation, quality enhancement, and improved production efficiency.
Need for forest recovery strategy for Java
The Environment and Forestry Ministry has highlighted the need for a strategy and cooperation among stakeholders to accelerate forest and environmental rehabilitation in Java.
"The success of forest and land rehabilitation on the island of Java involving the community has made a real contribution to improving the environment and forest functions and local economic welfare," said the Ministry's Secretary General, Bambang Hendroyono.
Hendroyono remarked that forest and land rehabilitation can support the achievement of Indonesia's Forest and Land Use (FOLU) Net Sink 2030.
He explained that sustainable restoration of the forest ecosystem in Java must focus on the existing regulations without forgetting the aspects of best practices and effectiveness.
Geo-AI technology can help prevents deforestation
During the 2024 Oslo Tropical Forest Forum (OTFF) meeting, Director General of Environmental Law Enforcement of the Ministry of Environment and Forestry (KLHK), Ratio Ridho Sani, emphasised the importance of legal consistency in the application of Geospatial Artificial Intelligence (GeoAI) science and technology.
"Using accurate data and information is essential in law enforcement. To acquire precise data, a multi-layer, multi-tool analysis must be conducted to monitor and enforce security in forest areas, including fires, encroachments, and environmental pollution," explained Ratio Ridho.
He mentioned that leveraging technology with multi-layer analysis, including the use of GeoAI, has accelerated and enhanced the accuracy of detecting and intervening in activities associated with deforestation and environmental pollution and destruction.
Concluding the comprehensive economic partnership agreement (CEPA) with the EU
Indonesia is currently trying to close the comprehensive economic partnership agreement (CEPA) with the EU by next month. Negotiations for this trade pact have been ongoing for eight years.
The CEPA negotiations and the environmental policies are not the only things that can describe the bilateral relations according to EU Ambassador to Indonesia Denis Chaibi.
“Our most significant engagement is in trade. We are doing intensive trade negotiations” Chaibi said, acknowledging that the EU’s environmental regulations were also a pivotal issue in their bilateral interactions.
Attracting investment in multi-business forestry
Multi-business Forestry (MUK) in Forest Management Units (PBPH), as a green investment, appears attractive to investors.
A total of 111 companies holding PBPH have been registered to implement MUK with 75 units having received approval from the Minister of Environment and Forestry and 36 units are in the approval process.
Agus Julianto, the Vice Chairman of Indonesia's FOLU Net Sink 2030 Working Team at the Ministry of Environment and Forestry, explained by implementing Multi-Business Forestry (PBPH) can diversify its business.
PBPH not only focuses on logging but can also develop various other businesses such as energy plantation forests, ecotourism, agroforestry and non-timber products utilisation.
Implementing Multi-Business Forestry also opens up opportunities for PBPH to enter the carbon trading and environmental services businesses to obtain financial incentives from forest conservation activities, contributions to climate change mitigation and increased environmental awareness. Agus said that MUK is a form of green investment.
He encouraged investors and financial institutions to support green investment policies by allocating funds and resources to sustainable projects.
In related news, Indonesia has built several large-scale nurseries to support forest, land and mangrove rehabilitation activities as well as peat restoration. Large-scale nurseries have been built in several places such as Rumpin including in the National Capital of Nusantara (IKN), said the Vice Chairman of Indonesia's FOLU Net Sink 2030 Working Team, Agus Justianto.
According to Agus through establishing large-scale nurseries the government is opening up opportunities for private entities to contribute through Government Cooperation with Business Entities (KPBU) or Public Private Partnership (PPP) schemes.
Communities have important role in productive forest management
Communities are important in productive and sustainable forest management says the Secretary General of the Ministry of Environment and Forestry (KLHK), Bambang Hendroyono.
With the issuance of Law Number 6 of 2023, forest management practices reflect the efforts to achieve balance. This policy was strengthened by the issuance of Presidential Regulation Number 28 of 2023 concerning Integrated Planning for the Acceleration of Social Forestry Management.
Bambang said communities were given the right to manage forest areas in the same way as the permits given to the private sector.
The community is provided with business development facilitation, capital and assistance in managing forest areas for welfare and sustainability.
Increasing Gen-Z involvement in social forestry
The Ministry of Environment and Forestry (KLHK) is supporting efforts to increase the involvement of youth, including Generation Z, in various aspects of social forestry.
During an online event, Mahfudz, Director General of Social Forestry and Environmental Partnership (PSKL) at the ministry invited the younger generation to get involved in social forestry schemes.
The young generation can act as assistants or young entrepreneurs who can create new jobs and bigger businesses. They can also help with the marketing and development of forest products from social forestry business groups.
Social forestry business transactions exceed target
The business value created by of social forestry business groups that manage social forestry reached IDR1.13 trillion in 2023 according to the Minister of Environment and Forestry (LHK), Siti Nurbaya Bakar, who added this exceeded the target set at IDR1 trillion.
"In 2024, the economic value target will be increased to IDR 1.5 trillion," said Siti in the online Workshop of Social Forestry Synergy.
Siti added that economic improvement of the communities that manage social forestry also impacts the villages and the region. Studies show the impact of social forestry on various aspects such as increasing income, employment and land cover.
Director General of Social Forestry and Environmental Partnerships in the Ministry of Environment and Forestry, Mahfudz, said there are five main commodities in social forest management coffee, honey, sugar palm, eucalyptus and other food crops.
Aligning land inventory method with that used for the EUDR
The Minister of Environment and Forestry, Siti Nurbaya Bakar, has emphasised the need for adjustments to land inventory measurement methods in Indonesia to align with the European Union Deforestation Regulation (EUDR).
Field observations conducted jointly with the World Research Institute (WRI) underscore the need to tailor the measurement approach used in Indonesia with that used to implement the EUDR, she added.
Study China and Vietnam to boost competitiveness of furniture industries
The Indonesian Furniture and Crafts Industry Association (HIMKI) is seeking government support to improve the competitiveness of the national furniture industry.
HIMKIi Chairman, Abdul Sobur, said the Association is exploring potential markets and working to improve the sector performance.
He called for the government to play a significant role in supporting improved industrial productivity and cited examples in China and Vietnam where the governments are supportive and encourage competitiveness.
Sobur explained that the past poor performance of Indonesia’s furniture sector was due to low demand from traditional markets, especially the United States and Europe. To address this industry players are now focusing on the domestic market and exploring potential non-traditional markets.
According to Sobur, Indonesia should follow China's example in increasing furniture exports.
EUDR, a possible barrier to furniture and handicraft exports
The export of Indonesian forestry and plantation products are facing numerous barriers. Most recently, the European Union (EU) has introduced a new regulation, the European Union on Deforestation-Free Regulation (EUDR).
Abdul Sobur, General Chair of the HIMKI, said "this non-tariff barrier regulation has the potential to hinder the export of Indonesian furniture and craft products to Europe, adding, it is possible Indonesian exports will be impacted if we fail to meet EUDR requirements."
Sobur stressed that the EUDR procedure, specifically the due diligence for product traceability will be a major challenge for many HIMKI members as not all will be able to put in place proceedures to satisfy the EUDR requirements.
Sobur explained that HIMKI is working to assist furniture and crafts entrepreneurs in addressing current issues such as the regulations in the EUDR. They are also urging the government to anticipate the impact of these EU regulations.
"The government must take the lead in anticipating the impact of the EUDR by engaging in cooperation negotiations or other initiatives", he said.
Myanmar
Wood industries undermined by payment restrictions
Current international banking restrictions on foreign exchange transactions have severely impacted exporters, with the wood industry being hard hit.
After the EU and US imposed restrictions on Myanmar, citing that trade supports the military government, manufacturers have struggled to receive payments for their exports.
Even exports to non-EU and non-US destinations are at risk due to the banking restrictions. If this situation remains unchanged the timber industry faces a serious threat of a complete shutdown say local analysts.
This year so far timber exports are at the lowest ever recorded.
Record low timber exports
Myanmar reported US$67.855 million from timber exports for the 2023-24 Financial Year (April 2023 to March 2024).
This was the lowest level for the last two decades. The Myanma Timber Enterprise (MTE) put about 3,000 tons of teak logs and about 2,000 tonnes of sawn and hewn teak for tender in the second half of the 2023-2024 Financial Year. The result of tender was not announced.
According to exporters they are not expecting any quick revival of the timber trade as long as external financial sanctions on the MTE remain.
India
Demand for office space at a historical high
Cushman and Wakefield have released a report ‘India Office Outlook 2024’ saying “2024 is likely to be a significant year for India’s office market marked with accelerated growth and renewed optimism. With domestic office demand reaching a historical high of 74.7 million square feet surpassing the previous record set in 2022 followed by limited supply in core markets 2024 is the right year to invest in tier two cities”.
A recent survey conducted by furniture & design technology magazine of around 70 furniture and outfitting firms and 135 architects and design firms concluded there growth in the office market will be positive news for quality and premium grade panel producers.
Plyreporter says “This change is resulting into growing demand for high quality and better designed pre-laminated boards and surfaces compared to what it was earlier. The facts indicate a growth of 30 percent rise in quality prelam particleboard consumption compared to 2020”.
India-4th largest furniture market worldwide
In May, Research and Markets announced their latest assessment of the furniture market in India saying; “The Indian furniture market is valued at US$20 billion and has grown at an annual average rate of six percent during the last ten years.
This growth trend makes India the 4th largest furniture market worldwide, climbing from the 10th position held ten years ago.
Within Asia and Pacific, India is the second largest furniture market after China, and one of the projected fastest growing in 2024 and 2025, driven mainly by increasing urbanisation, expansion of the middle class, growing investments in the residential and non-residential sectors, government support and modernisation of furniture retail.
Even though imports satisfy less than 10 percent of the Indian furniture market, they have grown fast in the last few years and the potential for high-end/luxury furniture imports is particularly high”.
Vietnam
Wood and wood product (W&WP) trade highlights
Statistics provided by Vietnam Office of Customs reveal that in June 2024 W&WP exports reached US$1.25 billion, down one percent compared to May 2024 but up 14 percent compared to June 2023.
WP exports alone earned US$840 million, up 0.6 percent compared to May 2024 and up 10 percent compared to June 2023.
In the first six months of 2024, W&WP exports earned US$7.4 billion, up 22 percent year-on-year. WP exports contributed US$5.03 billion, up 21 percent over the same period in 2023.
The value of Vietnam's W&WP imports in June 2024 was US$250 million, up 0.9 percent compared to May 2024 and up 31 percent compared to June 2023.
Over the first six months of 2024, W&WP imports totalled US$1.266 billion, up 22 percent year-on-year.
Logs and sawnwood (raw wood) imports in June 2024 were 510,400 cubic metres, worth US$168.4 million, up 1.5 percent in volume and one percent in value compared to May 2024. Compared to June 2023 imports increased by 24 percent in volume and 24 percent in value.
In the first six months of 2024, imports of raw wood totalled 2.5 million cubic metres, worth US$838.4 million, up 18 percent in volume and 11 percent in value against the same period in 2023.
Vietnam’s NTFP exports in June 2024 brought in about US$70 million, up 5.5 percent compared to May 2024 and up 0.8 percent over the same period in 2023.
In the first half of 2024, NTFP exports were valued at US$404.54 million, up 13 percent over the same period in 2023.
W&WP exports to Canada in May 2024 reached US$16.5 million, up 5 percent compared to May 2023. In the first 5 months of 2024 W&WP exports to Canada reached US$94 million, up 24 percent over the same period in 2023.
W&WP exports to South Africa in May 2024 contributed US$360,000, down 18 percent compared to May 2023. In the first 5 months of 2024 W&WP imports from South Africa reached US$2.4 million, up 48 percent over the same period in 2023.
Imports of padouk in May 2024 came to 8,300 cubic metres, worth US$3.3 million, up 7.5 percent in volume and 7.4 percent in value compared to April 2024.
Compared to May 2023, imports fell by 8 percent in volume and by 16 percent in value. In the first 5 months of 2024 imports of padouk reached 47,000 cubic metres, worth US$19.2 million, down 15 percent in volume and down 9 percent in value year-on-year.
Raw wood imported from the EU in May 2024 increased for the 3rd consecutive month reaching 73,000 cubic metres with a value of US$23.0 million, up 12 percent in volume and 11 percent in value compared to April 2024.
However, imports declined by 1.5 percent in volume and increased by 0.5 percent in value over the same period in 2023.
In the first five months of 2024, imports of raw wood from the EU reached 272,510 cubic metres, with a value of US$87.2 million, up three percent in volume and eight percent in value year-on-year.
Implementing sustainable development of the rubber industry
In May 2024, the Vietnam Rubber Group (VRG) coordinated with the Vietnamese Academy of Forest Sciences (VAFS) and the Vietnam Forest Certification Office (VFCO) and organised a workshop “Developing Action Plan to Adapt to EUDR Regulation”.
The workshop was hosted by Mr. Tran Cong Kha, Chairman of VRG, most VRG Board of Directors and about 100 delegates who are leaders and technical staff of 63 rubber companies.
At the workshop, Mr. Tran Lam Dong, Vice President of VAFS and Mr. Vu Tan Phuong – Director of VFCO discussed the requirements of EUDR, the draft PEFC/EUDR Due Diligence System (PEFC/EUDR DDS).
The workshop discussed and agreed to prepare for EUDR implementation through establishing EUDR/DDS, building capacity and implementing PEFC/ EUDR certification in the framework of the Vietnam Forest Certification Scheme (VFCS/PEFC).
VFCO will continue to coordinate closely with PEFC and VRG to promote sustainable rubber industry development through certification of sustainable forest management (SFM) and chain of custody (CoC) associated with the EUDR Due Diligence System (PEFC EUDR DDS).
Japan
Confidence returns
Confidence among Japan's large manufacturing firms showed a modest recovery for the first time in six months, according to the latest ‘Tankan’ survey from the Bank of Japan marking the first improvement in two quarters.
The index for large non-manufacturing companies stood at 33 points, down two points compared to the first quarter of 2024 and for the first time in 16 quarters, but still close to the maximum values since the bursting of the economic bubble in the nineties.
In related news, the total value of machinery orders received by 280 manufacturers operating in Japan increased by 12 percent in March from the previous month on a seasonally adjusted basis. In the January-March period it increased by 6.3 percent compared with the previous quarter.
In the April-June period machinery orders were forecast to decrease by 0.1 percent and private-sector orders, excluding volatile ones, were forecast to fall by 1.6 percent from the previous quarter.
Weak yen a big problem for SMEs
A recent survey by the Japan Chamber of Commerce and Industry (JCCI) showed the yen’s dramatic decline has become a serious problem for Japan’s small and medium size businesses as they experience surging raw material and energy prices.
According to the survey of 2,008 small enterprises, around half of the respondents said that the weakness of the Japanese currency was a big problem for their operations.
Only two percent in the latest survey said that the weakening of the yen positive for their business.
Encouraging corporate investment in emerging economies
The government is encouraging corporate investment in emerging and developing countries by providing guarantees through the Japan International Cooperation Agency (JICA).
Guaranteeing loans is not currently among the aims and law governing JICA.
The aim of the government is to set up a mechanism that enables JICA to compensate for losses. The government seeks to deepen relations with those economies by building a support system with the private sector.
Foreign Minister Yoko Kamikawa said that she would work with government ministries and agencies to revamp ODA with an eye on amending the JICA law.
A panel presented suggestions to the minister on the best ways to combine public and private funds.
Consumer confidence up slightly in June
The seasonally adjusted Consumer Confidence Index was up slightly in June according to the Cabinet Office. The income growth indicator rose while the overall livelihood index declined, and the employment index dipped month on month.
The willingness to buy durable goods index hovers at a multi-month low.
The percentage of respondents who expect prices to increase over the next year was 94 percent, up from May, while three percent of those surveyed see them unchanged and the balance expect prices to fall.
China
New formaldehyde emission standard for wood-based panels
A revised "Interior decoration materials wood-based panel and products formaldehyde emission limit" has been drafted.
The revision of the national mandatory standard for the industry will usher in a new round of industrial quality improvements.
The revised national standard will introduce formaldehyde emission E0 level for the first time.
Production of ‘green’ wood products
The Nanxun wood industry has stable industrial supply chain and great brand influence and is one of the 100 characteristic industries for quality improvement in Zhejiang Province.
At present, there are 68 green product certification enterprises and 99 certified products in the province.
There are 61 enterprises certified as "Made in Zhejiang" and 77 certified products. There are two national green factories, two provincial and municipal government quality awards and enterprises have participated in the preparation and revision of five international standards and more than 160 national and industry standards.
Nanxun District Market Supervision Bureau regards quality improvement and green development of the wood industry as key to success of the industry and has successively issued policy documents to promote the high-quality development of the wood industry.
For example, it approved the national home decoration product standardisation pilot (wood flooring) project.
Nanxun City took the lead in Zhejiang Province in formulating and releasing the "Green Production of Wood Industry Technical Specification for Raw Material Source Replacement and Waste Gas Treatment with Low Volatile Organic Compounds Content" Standard guiding enterprises to speed up the development of green and high-quality products.
Thailand largest supplier of particleboard imports
According to China Customs in the first quarter of 2024 China’s particleboard imports from Thailand amounted to 54,000 tonnes valued at US$13 million, up 59 percent in volume and 45 percent in value over the same period of 2023 making Thailand the top shipper to China.
China’s total particleboard imports were 155,000 tonnes valued at US$60 million in the first quarter of 2024, up 36 percent in volume and 13 percent over the same period of 2023.
China’s particleboard imports from Brazil, the second largest supplier, rose 56 percent to 32,000 tonnes in the first quarter of 2024 and this contributed to the rise in total particleboard imports.
In addition, China’s particleboard imports from Malaysia, Poland and Vietnam surged more than 100 percent, 700 percent and 200 percent respectively in the first quarter of 2024 resulting in the increase in total of particleboard imports.
In contrast, China’s particleboard imports from Romania, alone among the top suppliers, fell 49 percent to 10,000 tonnes in the first quarter of 2024.
Surge in fibreboard exports to Saudi Arabia
According to China Customs, fibreboard exports to Saudi Arabia surged 159 percent to 93,000 tonnes in the first quarter of 2024.
In the first quarter of 2024 China’s fibreboard exports totalled 608,000 tonnes valued at US$312 million, up 33 percent in volume and 24 percent in value from the same period of 2023.
China’s fibreboard exports to Mexico, Vietnam, US, Canada, Algeria and Australia increased at different rates in the first quarter of 2024. But fibreboard exports to Nigeria, UAE and Russia fell.
Decline in fibreboard imports from Thailand
China’s fibreboard imports from Thailand dropped 39 percent to 1,300 tonnes and imports from Indonesia fell eight percent in the first quarter of 2024.
In contrast, fibreboard imports from all top destination countries rose with imports from Belgium, Spain, Russia, Switzerland and Netherlands rising sharply.
In the first quarter of 2024 China’s fibreboard imports grew nine percent to 92,000 tonnes due to surge in imports from most countries compared to the same period in 2023.
Equipment upgrades and trade-ins
The Chinese government recently took action to facilitate economic transformation and improve people's livelihoods.
The campaign is market-oriented and government-guided and includes four major areas: equipment renewals, trade-ins of consumer goods, recycling of used goods and the harmonisation of standards.
The priority is equipment upgrades in promising industries in order to accelerate the elimination of outdated or inefficient equipment with high energy consumption, high emissions or hidden safety risks. A focus will be on accelerating the development of recycling systems and development of enterprises engaged in the processing and utilisation of renewable resources.
The scheme for trade-ins of household consumer goods is aimed at supporting residents to carry out interior renovations for kitchens and bathrooms through various ways with government support and enterprise discounts.
The aim is to promote old home transformation and actively cultivate consumption of items such as smart home technologies, promote home improvement and encourage enterprises to create online model rooms, provide affordable products and services and meet diversified consumer needs.
It has been reported that the effect of the ‘old for new’ policy started in May 2024 came to coincide with the May Day holiday and traditional peak purchasing season. It was found that consumption of building materials and home furnishing was stimulated.
Analysis of the wood flooring industry
The output, consumption and export volume of China's wood flooring are ranked first globally. Wood flooring is an important end product and value-added product.
However, China's wood flooring production has been in decline in recent years. After the peak in 2019 most enterprises have suffered a profits decline and the industrial prospects are grim.
Tough times for laminate and solid wood flooring manufacturers
The development of China’s wood flooring industry is basically stable.
According to statistics from China National Forest Product Industry Association (CNFPIA) the total sales of wood flooring by enterprises with an annual income of RMB20 million or more in 2023 was about 322 million square metres, down about nine percent year-on-year.
Of total sales, laminate wood flooring sales were 142 million square metres, accounting for 44 percent of the national total. Sales of solid wood composite flooring amounted to 120 million square metres, accounting for 37 percent, sales of solid wood flooring was 30 million square metres, accounting for nine percent, the sales of bamboo flooring came to 25 million square metres, accounting for eight percent and sales of other flooring amounted to five million square metres, accounting for two percent of the national total.
China's wood flooring industry showed a steady development trend from 2010 to 2023 and the volume sales of wood floors climbed to the highest of 425 million square metres in 2019 and fell to the lowest of 322 million square metres in 2023.
The volume of laminate wood flooring and solid wood flooring sales experienced a steep declining trend but sales of solid wood composite flooring increased steadily and the sales of bamboo flooring remained stable. At present there are more than 93 national standards and industry standards closely related to wood flooring covering product testing methods, safety and environmental protection, services and supporting facilities, equipment and raw materials, grade and evaluation.
Currently, mechanisation, automation and digitalisation by enterprises coexist but their development is unbalanced in different regions and different enterprises. The wood flooring industry is shifting from product driven to innovation and data-driven.
Many wood flooring companies have set up technology centres, R & D centres or research institutes, conducting research and development mainly around innovative floor connection methods, innovative substrates or surface decoration materials, optimising product structure, upgrading product performance and enriching product functions.
The number of authorised invention patents in wood flooring industry reached 514 in 2023. New products such as solid wood floors for floor heating, impregnated paper veneer solid wood composite floors, stone-wood plastic floors, reconstituted bamboo floors, moisture-proof laminate floors are popular in domestic and foreign markets.
Existing difficulties in the wood flooring industry
•With the rise of labour costs and product homogenisation it is hard to get out of the middle and low-end market for wood floors.
•With the rise of foreign trade protectionism and the evolution of domestic market demand China’s wood flooring is facing the situation of declining competitive advantage and brand advantage.
•Due to the vicious competition and lack of innovation of the wood flooring industry itself the overall share of the floor paving materials market at home and abroad is facing a crisis of decline.
•Sales of wood flooring are becoming more and more difficult as products and services do not effectively meet market demand. The urgent need is to change from product oriented to user experience oriented, the implementation of demand driven, "can let consumers in the use of products or services to be met" as the standard for enterprise transformation and upgrading.
Thriving timber industry in Heze City
As of June 2024 there were 7,716 wood processing enterprises in Heze City of Shandong Province, the annual processing volume of wood reaches 31 million cubic metres, the output value of wood processing is more than RMB110 billion in 2023.
There are more than one million employees and its wood products are exported to more than 100 countries and regions. Exported products cover medium and high-density fibreboard, furniture and wood floors and wooden crafts.
Statistics shows that in the first quarter of 2024 there were 789 wood processing enterprises with output value of RMB20 million or more in Heze City, an increase of 170 enterprises compared with August 2023, accounting for 28 percent of the city's industrial enterprises.
The revenue was RMB17.89 billion and the profit was RMB1.42 billion, up 15 percent and 31 percent year-on-year.
Production centre for sport flooring
Driven by the development of sports and the rise of a national fitness craze demand for sports flooring has expanded away from only competitive sports arenas into individual’s exercise areas.
Sales of sport flooring have been increasing and a new market with potential for the flooring industry has emerged.
At present, there are 120 wood sports flooring production enterprises in Fushun City accounting for 60 percent of the number of domestic enterprises engaged in this sector.
The production and sales of sports floor reached six million square metres accounting for about 60 percent of the domestic market. Fushun City won the title of "China Sports Floor Industry Base" in 2023 becoming the only city in China to win this honour.
Sports flooring is mainly solid wood flooring and solid composite wood flooring. The species used for sports flooring are mainly pine, oak, maple and birch.
Europe
Rethinking strategy for Europe’s furniture sector
Europe continues to perform a key role in the global furniture trade and industry, but that role is shifting as European operators seek to reduce risk by shortening supply chains and with introduction of new environmental regulations.
For wooden furniture, the EU Deforestation Regulation (EUDR) is likely to play a particularly significant role in future procurement practices.
In global terms, Europe has lost ground to emerging markets in furniture production and consumption in recent years. However, it remains the world’s third-largest market after Asia Pacific and North America.
With more than 230 million households, a relatively high level of per capita consumption, and annual retail furniture sales of EUR165 billion, Europe accounts for over a quarter of the global world furniture market.
This is according to the latest edition of the World Furniture Magazine published by CSIL, the Italian furniture industry research organisation.
A key feature of the European furniture sector, according to CSIL, is that it is characterised by an exceptionally high level of business-to-business trade concentration and integration: as much as three quarters of cross-border furniture trade worldwide occurs between European countries where there is a robust intra-regional trade network.
And unlike in the US where a large share of furniture production has been relocated to China, Southeast Asia and Mexico, 80 percent of current demand in Europe continues to be met by European manufacturers.
As elsewhere in the world, Europe’s furniture market exhibited robust growth during the pandemic in 2021 as consumers spent heavily to improve their home environment, establish home offices, and improve outside space.
Economic support measures in the immediate aftermath of the pandemic continued to fuel the boom into 2022, but the market decelerated rapidly in 2023. According to the latest figures from CSIL, the overall value of furniture consumption in Europe contracted by 3.5 percent last year.
CSIL note that the European furniture sector has faced a multitude of challenges since the pandemic outbreak with disruptions along the entire value chain.
Since 2023, the rising cost of living has intensified pressure on consumer spending, particularly for big-ticket items such as furniture. At the same time, major logistical challenges, volatility in transport costs, and other supply problems forced furniture manufacturers and retailers to rethink their business strategies.
Most furniture companies surveyed by CSIL in 2023 said they are actively working to shorten supply chains and increase dependence on local production to reduce risk and shorten time to market. Within Europe, Portugal, Italy, and Spain have particularly benefited from this trend.
Chinese wooden furniture recovers ground in Europe
However, the latest Eurostat and UK trade data appears, at first sight, to partially contradict this analysis.
The data shows that internal European trade in wooden furniture has been slowing continuously since the start of 2023, very much in line with the wider decline in consumption.
It also shows that European exports of wooden furniture to countries outside the region, after falling rapidly in 2022, have remained flat since the second quarter of 2023. But it also shows that European imports from other parts of the world have been increasing since the middle of last year.
Closer analysis of the data reveals that the recent growth in wooden furniture imports into the EU27+UK has been driven by China. Imports into Europe from China increased by six percent to 1.25 million tonnes in 2023 and were up by more than 50 percent at 480,000 tonnes in the first four months of this year.
In contrast imports from tropical countries fell by 23 percent to 430,000 tonnes in 2023 and were up only four percent in the first four months of this year.
Imports from all other countries (mainly non-EU European countries and Turkey) decreased nine percent to 600,000 tonnes in 2023 and increased by seven percent to 210,000 tonnes in the January to April period this year.
Wooden furniture imports from China have increased both into the UK, the largest single wooden furniture importing country in Europe, and into the EU. UK imports from China increased 13 percent to 417,000 tonnes in 2023 and were up another 34 percent to 152,000 tonnes in the first four months of this year.
EU imports from China were up only three percent in 2023 to 833,000 tonnes but increased 59 percent to 331,000 tonnes in the first four months this year. Imports of wooden furniture from China have increased very sharply into all the main EU markets this year including France, Germany, and the Netherlands.
EUDR to significantly impact Europe’s wooden furniture market
The sharp rise in wooden furniture imports from China by European countries since the start of 2023 is partly explained by the fact that it follows a big decline in 2022 when Chinese exports were seriously impacted by rigorous lockdowns during the pandemic.
The accelerating rise in imports from China this year may be partly related to EUDR as European importers build stock before enforcement of that law is due to begin on 30 December.
Recent news reports suggest that China’s government has told the EU that it is not prepared to allow geolocation coordinates of harvest sites of regulated products (which include all wooden furniture), as required by the EUDR, to be supplied with products exported from China, citing security concerns.
The EU has responded that imports without geolocation coordinates will not be possible once EUDR is enforced and that there will be no exceptions for any country, including China.
How this standoff plays out, and the wider challenges of providing geolocation coordinates of harvest sites for a composite product like wooden furniture, particularly when the wood is derived from smallholders or imported from third countries, is expected to have a very significant impact on European market access for wooden furniture starting next year.
The impact will be greatest for exports to EU countries, less so for exports to the UK where legal obligations remain tied to the UK Timber Regulation (mirroring the EU Timber Regulation).
However, large UK retailers are calling for the UK to align more closely with EUDR and—under a newly-elected Labour government ambitious to lead on environmental issues and to be closer to the EU—it may be that exports to the UK will, in time, be subject to an equivalent standard.
Tropical and temperate hardwood suppliers exchange views on EUDR
A key topic of discussion at the Carrefour Internationale du Bois (CIB) exhibition in Nantes, France at the end of May was the time and effort businesses are having to put into preparing for the EU Deforestation Regulation (EUDR).
There is now just six and half months before it comes into force. It will require that operators and large traders placing timber and other ‘forest and eco-system risk commodities’ (FERCS) on the EU market, or exporting them from it, undertake due diligence to ensure they are deforestation-free, legal, and accompanied by geolocation coordinates of the ‘plot of land’ where they originated.
The EUDR was the topic of a special seminar at the CIB, jointly hosted by the International Tropical Timber Technical Association (ATIBT) and the American Hardwood Export Council (AHEC). The representatives of companies operating large concessions in Africa that spoke at this event were confident in their existing systems and strategies to meet the EUDR requirements.
Vincent Istace, CSR head of Olam Agri, parent of CIB in the Republic of Congo highlighted that deforestation across the Congo Basin is now less than one percent annually and that FSC-certified sustainable management further minimised the risk of forest loss.
“In our almost two million hectares of certified forest we operate a cutting cycle of one tree per ha every 30 years. Our processes include social, habitat and wildlife protections and we have a major planting programme,” he said.
He said CIB was also confident its traceability systems would aid compliance. “Using id numbers for each tree, we can track timber from stump, through processing,” he said. It was also pointed out that each forest concession could be counted as a single ‘plot of land’ for EUDR geolocation purposes.
Emmanuel Bon, general director of Cameroon-based Alpicam also said his company was trusting in FSC sustainable forest management certification, which it achieved in 2023, and its tracking and forest inventory systems, to satisfy EU customers due diligence requirements.
He said it recorded geolocalised data for cutting areas as a matter of course and uploaded the information into the Cameroon government operated SIGIF 2 ‘computerised forest information management system’. This, he maintained, allows tracking of timber ‘from the cut to the port of shipment’.
EUDR an ‘existential challenge’ for US hardwood exports to the EU
Speaking at the CIB seminar, AHEC representatives highlighted the very different challenges facing the US hardwood sector to satisfy the EUDR.
Executive director Mike Snow said the EUDR was ‘going after the right things’ in terms of its prime aim to combat deforestation caused by conversion of forest land and in its coverage of the agricultural commodities most implicated in this.
He added, the risk of US hardwood deriving from such land was extremely low. “It’s estimated that disturbance of hardwood forest in terms of conversion to agriculture is running at about 0.005 percent of the total area a year,” he said. “In anyone’s book, that is negligible risk.”
Regardless, the US hardwood sector will have to provide proof to EU customers that each consignment of timber is legal and deforestation-free under the terms of the regulation, and that’s the problem.
The key issue for the US hardwood sector, explained Mr Snow, was the fragmentation of forest ownership and the low intensity management operated in the country’s more than nine million private holdings.
With mills sourcing from a supply base of small forest plots, often family owned, they would need to provide multiple geolocation coordinates for each timber shipment. Moreover, as these plots may only be harvested once a generation, sourcing coordinates would be different from year to year. The task would be highly complex and labour intensive.
Mr Snow went so far as to say that, as things stand, the EUDR posed a potentially ‘existential challenge’ to the US hardwood sector’s EU exports. Moreover, it had implications for its trade more widely.
“While the EU itself accounts directly for 10 percen of US exports, its significance to the US industry is increased by the fact that a significant proportion of our exports to other countries, including China, Turkey, India, and Vietnam, are made into finished products destined for the EU. So, they will have to meet the requirements of the EUDR too.”
AHEC environmental policy director Rupert Oliver said that relying on third party certification of forest management as a risk mitigation tool under the EUDR (and he stressed that it alone would not, in any case, provide a ‘green lane’ through the regulation) was also not an option in the US as it had not been taken up widely. This was again in large part due to fragmented, small-scale forest ownership.
Bespoke deforestation-free system for US hardwoods
Mr Oliver said that, faced with these hurdles, AHEC has been developing a bespoke system to provide a robust assurance to international buyers that U.S. hardwoods are legally sourced and deforestation-free.
One of the pillars of the system, which is being created with US government support, is legality risk assessment of the 33 principal hardwood forest states. This is set to be completed this year by a team of experts from non-profit sustainability and environmental management consultants and advisors Dovetail Partners.
Mr Oliver explained that the AHEC system will combine the legality risk assessment with regular ‘high resolution’ monitoring of deforestation risk at the level of individual properties using AI and drawing on satellite data and the uniquely detailed land ownership mapping available in the US.
“Satellite forest monitoring is best done on an annual basis to show whether forest disturbance is part of regular forestry processes or long-term and potentially deforestation,” said Mr Oliver. “A pilot of the system undertaken in the first quarter of 2024 in Georgia picked up 11,000 points of forest disturbance, but the preliminary AI analysis suggested only a tiny proportion of these would likely be followed by conversion to agriculture.”
While the analysis will be carried out at sufficiently high resolution to identify land-use changes at field and property level, US hardwood exporters will provide geolocations at county level through this system.
Mr Oliver emphasised that this is an equitable approach since the average area of US counties supplying hardwoods, at around 160,000 hectares, is less than that of large tropical forest concessions, which can count as a single plot under the EUDR.
US counties are sufficiently compact to ensure a homogenous level of deforestation risk. Provision of county geolocations also overcomes significant legal issues in the U.S. around anti-trust and confidentiality that would result from provision of property level geolocations.
AHEC plans to link the satellite assessment with new scientific techniques such as stable isotope ratio and trace element analysis that can identify the provenance of wood products using a simple lab test or even a handheld device to assess their chemical composition.
Under favourable circumstances, these technologies can demonstrate provenance up to within a 20,000-hectare area with a high degree of confidence. Sufficient to confirm the county of origin, but not the property. Even this level of resolution requires the prior availability of a comprehensive database of timber samples collected in line with strict protocols from across the supply region, a process now getting underway in the US hardwood sector, but likely to take up to three years.
Mr Oliver added that, while the system is being developed for the US hardwood sector specifically, it also had potential application in other countries with fragmented forest ownership, which included some in Europe and Southeast Asia.
AHEC has presented its approach to representatives of EU agencies and national competent authorities. Whether it will be accepted as meeting the specific demands of the EUDR ‘in the field’ when the Regulation is implemented remains to be seen.
But regardless, says AHEC, the system will enable the US hardwoods sector to make a comprehensive data-based deforestation-free and legality claim in markets worldwide.
United States urges EU to delay EUDR
The US government has urged the European Commission (EC) to delay the implementation of EUDR, which is due to come into force from 30 December.
This is according to Argus Media who have seen the 30 May letter addressed to the commission's vice-president, Maros Sefcovic and signed by agriculture secretary Thomas Vilsack, commerce secretary Gina Raimondo and US trade representative Katherine Tai.
According to Argus Media, the letter states that the signatories are “deeply concerned with the remaining uncertainty and the short time frame to address the significant challenges for US producers to comply with the regulation".
The letter goes on to say that the US authorities have together with "several stakeholders" identified four "critical challenges" for US producers to understand and comply with the EUDR: no final version of the EUDR information system for producers to submit the mandatory due diligence documentation has been established yet; no implementation guidance has been provided with the traceability system expected to launch in November; many EU member states have not designated a competent authority to enforce the regulation; and finally, the EU has an interim decision to classify all countries as standard risk, regardless of forestry practices.
Should these issues not be addressed before the EUDR starts being enforced, it "could have significant negative economic effects on both producers and consumers on both sides of the Atlantic", the letter said according to Argus Media.
"We therefore urge the EU Commission to delay the implementation of this regulation and subsequent enforcement of penalties" until the challenges have been addressed, it added.
The letter follows on from an earlier letter sent to US trade representative Tai by 66 members of Congress in October last year. This letter requested that the trade representative raised the challenges that US paper and pulp producers were facing due to the EU’s deforestation law with Brussels.
“The EU’s regulation imposes impractical requirements that would unnecessarily restrict trade for products from low-risk countries that have responsibly managed supply chains, such as the US,” the congressional the letter said.
The Financial Times (FT), in an article published 17 June confirming that the US government had sent a letter to the EC, noted that the EU imported about US$3.5 billion of American forest-based products in 2022.
This included around US$2.2 billion of pulp and paper, US$0.7 billion of pellets, and US$0.6 billion of other wood products. The FT noted that “US timber merchants have said they are considering cutting EU export contracts because they cannot prove their paper does not come from deforested land”.
A spokesperson for the American Forest and Paper Association (AF&PA) told the FT that it was “impossible” for U.S. pulp and paper products to comply with the geolocation requirements of the EUDR because these are made principally from leftover sawmill and forest residue blended from different sources.
“This makes tracing each individual wood chip back to the original forest plot of land effectively impossible. Additionally, the technology needed to trace our fibre flow to comply with this requirement does not currently exist,” AF&PA told the FT.
Euronews reported that, in responding to questions about the EU’s reaction to the US letter, an EC spokesperson said they had been “working hard to ensure all the conditions are met for smooth implementation of the law” while keeping the situation “under constant review”.
Mounting calls for EUDR delay from inside the EU
Calls for a delay to implementation EUDR have become louder inside the EU itself in recent months.
The first signs of internal dissent came on 12 March in a letter sent to the EC signed by six European wood industry organisations (CEI-Bois, EFIC, EOS, EPF, ETTF, and FEP).
This was followed on 13 March by a similar letter signed by 19 wood trade organisations in France sent to the French Environment Minister.
The calls for delay escalated in a meeting of the European Agriculture and Fisheries Council on 26 March when Agriculture ministers from 20 of the EU's 27 member countries supported a proposal by Austria to revise the law. The FT reports that EU’s development commissioner Jutta Urpilainen and agriculture commissioner Janusz Wojciechowski have also both called for a delay EUDR in recent months.
On 17 May, the German Bundesrat passed a motion on the EUDR “calling for an extended implementation and to relieve producers of avoidable, additional bureaucracy where there is no demonstrable risk". The Bundesrat is the upper chamber of the German government where the Länder (States) are represented.
The Bundesrat motion is explicit in its critique of the law noting that “in view of the tight implementation period until December 30, 2024, many unanswered questions remain, such as in particular the clarification of the use of reference numbers and the associated scope of timber lists, the scope and implementation of controls, the legal consequences or the handling of wood from legally converted forests”.
It goes on to suggest that “The test phase revealed glaring deficiencies and showed that it is not possible to implement the regulation in accordance with the current requirements. As a result, the wood-processing industries are currently facing an insurmountable task. There is a threat of considerable burdens for the relevant companies and distortions along the entire wood value chain”.
The Bundesrat motion calls on the German Federal Government to obtain an implementation regulation from the EU in the short term that is legally compliant with the WTO regulations that extends the deadlines for EUDR implementation, relieves raw material producers in Member States and regions where there is no demonstrable risk of deforestation from avoidable, additional bureaucracy, and enables other market participants to apply it in a practical and legally compliant manner.
Most recently, on 27 June, the head of environment policy for the centre-right European People's Party, which emerged victorious in recent EU Parliamentary elections, called explicitly for a two-year delay to EUDR implementation.
Peter Liese, a German MEP since 1994 and freshly re-elected, told Euronews that recent contact with officials “at all levels” in the European Commission had shown him “everybody is aware that we have a problem that cannot be solved without postponement”.
As to the length of the delay, he added: “I would consider two years a reasonable time."
The German MEP said that while he agreed with the aims of the EUDR, the law as agreed in December 2022 by the European Parliament and European Council had been “turned into a bureaucratic monster”.
Euronews emphasises that Liese’s call to delay the EUDR is not yet the official position of the EPP and that the large majority of EPP MEPs voted in favour of EUDR only last year. Euronews note that the EC declined to comment on Liese’s statement, or on whether there were any ongoing discussions within the EC about reopening the file.
Will EUDR traceability requirement be watered down for internal EU trade?
Judging from a report in the latest weekly newsletter of GD Holz, the German timber trade association, the EC is indicating that requirements for due diligence statements for internal EU trade will be watered down while it is maintaining a hard line with respect to imports from outside the bloc.
GD Holz note that in response to their questions to EC officials at the 28th meeting of the “Multi-Stakeholder Platform on Protecting and Restoring the World's Forests” held earlier in June, the EC “clarified that downstream non-SME market participants (large companies within the EU) do not have to provide geo-coordinates when submitting their due diligence declarations”.
Based on the EC answers, GD Holz suggest that “This means that geo-coordinates are only mandatory for the beginning of the supply chain in the EU (=import or forest ownership). It may be necessary to pass on geocoordinates in individual cases, e.g. for high-risk goods, but it is not always necessary to pass them on”.
GD Holz go on to suggest that “we see this approach as a success for our lobbying work - the EU had previously demanded that geo-coordinates be required along the entire supply chain”.
GD Holz also say that “asked what kind of checks downstream non-SME market participants have to carry out if they purchase products affected by the EUDR within the EU, the EC has clarified that such checks must not relate to individual deliveries, but to the general application of the EUDR by the supplier.
To this end, the due diligence system applied by the supplier must be reviewed, e.g. in the form of regular audits. This means that, as a rule, only rudimentary information (e.g. reference number, tree species, country of felling) and information on the due diligence system used must be passed on. If the customer determines that there is a high risk in individual cases, further data may be requested”.
While the EC is making concessions to internal suppliers on the issue of traceability and geolocations, GD Holz implies that the EC is less inclined to make concessions to suppliers outside the EU.
GD Holz note that “another important issue that we have raised with the EU is imports from countries that currently make it difficult to share geo-coordinates. The best-known example of this is China, which prohibits the disclosure of coordinates for security reasons.
The EU has succinctly informed us that there have been discussions on this topic with the Chinese government and suppliers. It was made clear that imports without coordinates were not possible and that there would be no exceptions for countries such as China. No statements were made about attempts to solve this problem”.
EU adopts new Nature Restoration law
Following a final vote on 17 June at the Environmental Council, the EU adopted its new European Restoration Regulation. This legislation is the first to set legally binding restoration targets for the long-term recovery of nature in Europe. The law passed with a narrow majority of 20 countries representing 66 percent of the EU’s population (the threshold for approval by a qualified majority at the Council is 65%).
The law requires that EU countries restore at least 30 percent of habitats covered by the law from poor to good condition by 2030, and 90 percent by 2050. The regulated habitats include forests alongside grasslands, wetlands, rivers and lakes. Member states must also ensure that these areas do not deteriorate once restored.
The final text watered down some of the requirements for the farming sector, particularly by introducing an “emergency brake” so targets affecting agriculture can be suspended “under exceptional circumstances” that threaten food security.
In practical terms for European forests, the law will require Member States to introduce critical safeguards to protect remaining old-growth forests, set aside additional forests for restoration, and improve the biodiversity of forests managed for wood production.
In a report drawing on analysis of satellite data, the World Resources Institute (WRI) shows why the Nature Restoration Law is so timely, despite Europe’s total tree cover having increased slightly over the last two decades.
According to WRI, “Europe’s forests face increasing pressures. Impacts include fewer tall forests, climate change-induced wildfires, insect outbreaks, and, most recently, increased wood harvesting to meet additional demand for ‘home-grown’ biomass in response to the Ukraine war and changing energy demands”
