Tracking timber in the supply chain — is it possible?

tracking timber illegally harvested

We track all sorts of products through the supply chain — jam, shampoo, yoghurt, pet food… but what about timber? Of course, some timber products are already coded when they’re processed in the mill, but what about going back to the forest? Can we barcode forests? (This is not as silly as it sounds, and is already being done in some parts of the world.) And why does it matter anyway?

The World Bank estimates global illegal logging is worth $10-$15 billion annually. It’s not a small problem, but it could be easy to think three things:

  1. It’s going to happen anyway, let’s just live with it.
  2. We’re too far away in Australia (or any other developed nation) for it to matter to us.
  3. It doesn’t affect us.

In my opinion, the first two are wrong — and many others think the same — while the third is plainly wrong, with plenty of evidence to boot.

The Food and Agriculture Organization (FAO) of the United Nations (UN), goes into detail on why it’s such a problem. In a nutshell, the FAO says illegal logging:

  • volumes can exceed the official ones (e.g.: in Indonesia in the 1990s, where they were double the official levels of 25-30 million m3)
  • usually goes hand-in-hand with other illegalities (money laundering, drug trafficking, official corruption and tax evasion), so can lead to huge tax losses for governments and negative long-term economic impacts from environmental degradation and increased poverty
  • jeopardises the livelihoods of rural communities who often officially log on a small scale, by exposing them to unfair competition and depleting resources they depend upon

So that’s why number 1 is not okay. What about number 2?

Australia has a goal of promoting sustainable forest management and sustainable livelihoods for forest-dependent communities of countries in our Asia Pacific region. So on top of the effects those countries feet domestically, illegal logging threatens that goal.

The United States was the first country in the world to ban importing, trading or selling illegally harvested wood, followed by the European Union. Two years ago, Australia joined those ranks. (For those who are interested, you can find the explanatory notes for the Illegal Logging Prohibition Bill 2011-2012 here. The memorandum looks at why the Bill was needed, its objective, the costs of illegal logging and so on.)

Impact for mill operators

That law requires timber suppliers to verify the “legal origins of timber products and disclosing species, country of harvest and any certification at the first point of entry of timber products onto the Australian market”. It describes “timber suppliers” as “importers and domestic wood-processing mill operators”, which is where number 3 comes in.

And here’s also where number 3 comes in: according to the “Regulation Impact Statement on illegally logged timber (Reference 9816)” illegal imports create unfair competition for Australian producers and suppliers who source their products from legally and sustainably managed forests. The illegal timber often trades at lower prices. Now, it doesn’t take an economics degree to know that such undercutting impacts on business decisions, industry investment, business profitability and jobs.

$60b in social & environmental costs

I said earlier the World Bank estimates illegal logging is worth up to $15b. A 2010 report by the Centre of International Economics, called “A report to inform and regulation impact statement on a proposed new policy on illegal logging”, puts the global economic cost of illegal logging at around $46b annually, and the world-wide social and environmental costs at some $60b a year.

$400m + $23m for Australia

Poyry Management Consulting (Australia) Pty Ltd, in its final report to the Department of Agriculture and Fisheries in 2010, titled “Legal Forest Products Assurance: a risk assessment framework for assessing the legality of timber and wood products imported into Australia”, puts Australian wood imports (excluding furniture) at $4.4b annually — or 0.034% of global production. It estimates the proportion of illegally logged timber in that at 9% — or $400 million. Australia’s share of the social and environmental costs of illegal logging is estimated at $23m per year.

So while that’s small in the global context, it still has a negative impact on Australian businesses.

Which brings us back to the beginning: as of August 2012, Australia has a law to clamp down on the sale of illegally logged wood. But the clandestine nature of illegal forest activities makes their scale and value difficult to estimate, so we need another angle. Such as tracking timber in the supply chain.

In part 2, I’ll look at German tests for tracking timber, barcoding forests (yes, you read that correctly!), what Australia can do, the missing link in the chain and where there’s still some work to do.

Trent Munro

Trent Munro

Manager – Strategy & Business Development at Matthews Australasia
Trent Munro is an accomplished business strategist, marketing innovator and speaker specialising in business development and optimisation. Over the past 15 years, he has worked across a range of blue-chip and medium enterprises including Goodyear Automotive, Clariant, Corona Manufacturing and Matthews Australasia. Trent holds a range of postgraduate and graduate qualifications in Commerce, Psychology, Project Management and Science. At Matthews Australasia, he has overseen market development locally and abroad, launching class leading traceability and automation technologies across manufacturing, healthcare and logistics.

by Trent Munro

Trent Munro is an accomplished business strategist, marketing innovator and speaker specialising in business development and optimisation. Over the past 15 years, he has worked across a range of blue-chip and medium enterprises including Goodyear Automotive, Clariant, Corona Manufacturing and Matthews Australasia. Trent holds a range of postgraduate and graduate qualifications in Commerce, Psychology, Project Management and Science. At Matthews Australasia, he has overseen market development locally and abroad, launching class leading traceability and automation technologies across manufacturing, healthcare and logistics.

2 thoughts on “Tracking timber in the supply chain — is it possible?

  1. Rhett says:

    Hi, I am a small timber mill operator working in the Southwest of WA. I have only been in the industry for a few years and my understanding of how the forest in managed is pretty simple abut i am trying to learn more about the whole process. I agree that timber being tracked is a good idea of where the resource is going. i also feel the the recovery of the timber milled needs to be accounted for as i feel that if the recovery could be increased the less trees have to be logged and the more forest there is left.

  2. Alex Trodder says:

    For the building industry, staying on schedule can be an essential part of maintaining your business’ integrity. Being able to track timber in the supply chain can help suppliers work with construction agencies and contractors to help them stay on pace without having to use illegally obtained lumber. Hopefully advances in technology and transparency can improve the quality of raw materials while ensuring that they are obtained without over harvesting. Thanks for the article.

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