In March this year, Swedish forestry group Sveaskog announced that it would start paying an extra 25 Swedish crowns per m3 if the wood comes with an FSC certificate.
“In order to increase the total volume of FSC-certified wood available on the market, we need to get the small and intermediate-sized operations interested in certification”, says Claes Mellström, who is responsible for timber procurement in Sveaskog. “For private owners to join certification schemes, it is very important to put some money behind the concept. They need to be properly rewarded for their efforts in the marketplace”.
Mellström notes that a number of companies further down the chain of custody are selling FSC-certified products at a premium price. “It is vital that part of this added value is transferred all the way back to the primary producer as the forest owners”, he says.
According to Mellström, Sveaskog’s suppliers are clearly showing more interest in getting certified since the price premium was introduced. Sveaskog also reports initial success with the introduction of FSC group schemes for private forest owners.
General market trends
So far, Sveaskog’s price premium is limited to Swedish suppliers. “This is a start, to see how we can push the market and increase our own prices for FSC wood”, Mellström explains. “Extension of our purchasing policy to FSC suppliers in other countries will depend on our experience on the market”.
Many remain sceptical that the market will pay extra for certified wood; and only few companies are open about the price premiums they are willing to pay.
Recent studies indicate that price premiums do exist, although the picture varies widely between different products and markets. For example, a study by the Rainforest Alliance shows that FSC-certified wood from the Pennsylvanian state forests fetched a premium of 10% during the years 2001-2006, compared to what would have been earned without the certificate. The premium was mainly based on sales of black cherry.
A 2006 UK study reports that Russian shippers are charging UK importers 2% to 2.5% extra for FSC certified material compared to the typical prices for uncertified material. And a report published by Center for International Trade in Forest Products (Cintrafor) in 2007 quotes an average 6.3% price premium for certified wood products in European markets.
Sveaskog is Sweden’s largest forest owner managing 3.3 million hectares productive forest, and is also a leading supplier of sawlogs, pulpwood and biofuel. About half of the company’s annual sales of 13 million m3raw material is produced by Sveaskog. The remainder is purchased from private forest owners and other producers, in Sweden and import. About 1 million m3 is bought from Finland, Russia and the Baltic countries.