Illustrative image (Photo: VNA) According to theAssociation of Vietnam Timber and Forest Products (Viforest), in 2021, thetotal export value of Vietnam's wood and wood products totalled 14.8 billionUSD. In particular, the United States is a large market for Vietnam's woodindustry, accounting for about 60% of its total export turnover. Vietnam isalso the second highest importer of wood from the US, after China.
Wood pellets, commonly made of raw materials such as wood chips, sawdust,shavings, bark, crop straw, and other biomass materials, are becoming a billion-dollarindustry with no export tax, according to insiders. Such pellets are now apromising choice as a form of fuel.
However, certification on quality, origin and sustainability is a prerequisiteto tapping into this lucrative market.
A forest with sustainable community development is among the criteria for theForest Stewardship Council Certificate (FSC), and this certificate helpsVietnamese firms access more global markets.
Ngo Sy Hoai, deputy head of Viforest, said “Many people in the EU are switchingto wood pellets as fuel for the coming winter,” adding that Vietnam, as theworld's second-largest exporter of the material, has an advantage, as theexport price of pellets has increased by more than 27% compared to 2021.
A report titled "Vietnam's production and export of pellets: Currentsituation and some policy aspects" has just been published by ForestTrends in collaboration with Viforest, revealing that although Vietnam is not amajor supplier of pellets to EU countries, the increasing demand and price inthe international market creates opportunities for Vietnam’s pellet industry toexpand production and export.
An expert from Forest Trends, To Xuan Phuc, told local media that pellets haveonly been around for around 10 years, but the growth in export value has beenvery fast. In 2018, the export of pellets increased by 67% in volume and 120%in value over the previous year, marking an export value of more than 362million USD.
In 2021, the export turnover from pellets reached 413 million USD and in thefirst 6 months of 2022, Vietnam exported 67.33% of the total volume of pelletscompared to 2021.
"EU countries turned their backs on gas from Russia when theRussia-Ukraine conflict broke out, leading to imported pellets being used toreplace this lost supply. Demand and price of pellets in the EU increasedsharply, creating attraction from large suppliers, especially from the US - thelargest exporter of such material,” Phuc said.
According to the Ministry of Industry and Trade, the export value of wood andwood products in the first nine months of 2022 was estimated at 12.4billion USD, up 11.4% year-on-year. Of which, the figure for woodproducts was 8.6 billion USD, up 2.4%. Wooden furniture has always been themain export item in the structure of wood products for export.
The Ministry ofIndustry and Trade also considers pellets a bright spot for the wood industryas the demand and export prices in the international market increase, creatingopportunities for production and export. The price of pellets exported to theEU has doubled from 100 USD per tonne to around 200 USD at the end of 2021.
Viforest says that if the growth rate is maintained, the export turnover ofwood pellets in the whole of 2022 could reach around 700 million USD, addingthey are likely to enter the group of agro-forestry products with an exportturnover of over 1 billion USD.
With an annual growth rate of 30-40% in the last ten years, total exportturnover of wood and wood products will reach 14.72 billion USD, puttingVietnam in the top five exporters after China, Poland, Germany and Italy. Thewood industry strives to reach an export turnover of 20 billion USD by 2025.
Despite the strong potential, firms exporting timber to the EU need tohave FSC certificates, which can cost thousands of dollars andrequire many procedures for a batch of products. In this case, the VoluntaryPartnership Agreement between Vietnam and the European Union (EU) on forestrylaw enforcement, forest governance and trade in forest products, or theVPA/FLEGT "green passport", provides long-term benefits.
Last week, theOrganisation for Cooperation and Development Germany (GIZ) in collaborationwith the General Department of Forestry of Vietnam organized a seminar on thevalue chain of forest products and the implementation of the VPA/FLEGTAgreement.
Luu Tien Dat, from theGeneral Department of Forestry, said after more than ten years, the agreementaims to ensure that Vietnam’s wood products are legally produced, contributingto improving forest governance and expanding markets, as well as promoting thetrade in sustainable wood and wood products.
Nguyen Tuong Van, Vice President of the Vietnam Forestry Science and TechnologyAssociation, said that although the VPA/FLEGT agreement has not had much of animpact on timber exports to the EU, it benefited wood furniture exports to themuch bigger market of the US.
With its own law on timber trade, the US after seeing Vietnam negotiated andimplemented the VPA Agreement with the EU, it is considered a"passport" for local wood to enter the market, adding Vietnam’s woodexport turnover to the US accounts for 58% of total wood product exports.
Hoai from Viforest saysthat over the years, enterprises exporting wood and wood products to the EUmust provide many types of documents to prove the legality and origin of rawwood to the EU authorities, while with the FLEGT license, they don’t need anyother paperwork.
He said that enterprises must comply with all regulations on labour andenvironment, social insurance, and supply chain management. With that, the new‘FLEGT Green Passports’ will allow businesses to accelerate market expansion inthe EU as well as around the world."/.
VNA
