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Certification furnishes wood exporter's business

Update: October, 27/2013 - 17:00

Hard at work: An exported furniture production workshop belonging to the Tin Nghia Company.

by Pham Hoang Nam

It took four years of preparation and VND1 billion (US$50,000) for Forexco (Forest Products Export Company) to qualify for certification from the Forest Stewardship Council (FSC), a global non-profit organisation that promotes the responsible management of the world's forests.

Today, Forexco, which provides wood to the Swedish furniture retail giant IKEA, now owns 1,500ha of FSC-certifed plantation forest.

"There were many people wondering why we needed to spend a lot of time and money to qualify for an FSC certificate," said Dang Cong Quang, deputy director of Forexco, told Viet Nam News. "But now they have the answer. We can meet higher demand from our international customers."

Established in 1986, Forexco owns 2,200ha of forests near Da Nang and in the central provinces of Quang Nam, taken care of by local farmers.

The company began thinking about qualifying for the FSC certificate when the Swedish company IKEA began to require the standard.

"It's often challenging to connect the sofa one is sitting or the desk being used to biodiversity or deforestation, but with sustainability and legality issues on the forefront in Europe and the US, consumers are increasingly demanding products that are not linked to forest degradation. That why we needed to get FSC certification," Quang added.

Forexco is one of several furniture export companies in Viet Nam. With a turnover of US$12 million each year, the company has 900 employees and major clients in Europe and the US.

Higher incomes

Farmer Le Xuyen, 43, has been working with Forexco for years, planting, tending and harvesting the company's 180-ha forest in Da Nang.

Xuyen's family and other 20 households in Hoa Phu Commune in Hoa Vang District earn about VND5 million (US$245) each month, enough for Xuyen to buy a car.

"Thanks to Forexco, we've had stable work for nearly 20 years," he said. "We were trained under FSC rules and standards, and were told how to protect our forests."

Every seven years, the trees in Forexco's plantation forest are rotated. The company provides money and technical knowhow for the farmers who tend the forest.

"There are no differences in quality between the plantation forests with or without FSC certificates, but it totally changes our awareness of environmental protection of land and water, as well as bad harvesting habits," Nguyen Ngoc Anh, Forexco's head of Forestry and Biology Department, said.

In the past, landslides would often occur because forests were fully harvested and the lack of trees caused soil erosion after rains.

"Following FSC's guidance, we leave the roots of the acacia trees to make a natural fertiliser, and we reduce the amount of chemical substances and keep the local trees to protect biodiversity," Ngoc Anh added.

The FSC certificate includes 10 regulations and 53 standards, focusing on economic and social impact.

Quang said that it took a long time to meet all the requirements and change local residents' awareness about environmental protection.

"FSC strictly controls our forest," he said.

Perfectionists: Forexco workers carefully put the final touches to their products before they are shipped abroad. — VNS Photos Pham Hoang Nam

Global network

In 2006, Forexco began work with the World Wide Fund for Nature (WWF) and became a member of the WWF's Global Forest&Trade Network (GFTN).

"GFTN has provided us information on how to meet FSC's requirements and when we joined the network, customers around the world knew about our FSC furniture exports," Quang added.

As for market demand, the deputy director said that due to the global financial crisis, buyers had been lowering prices and giving priority to FSC products.

"Having FSC certificates is the trend in the market and we are very proud that we caught up with the trend," he said.

Based on discussions they have had, Forexco and IKEA have recently expanded to more than 250ha of private areas. Forexco will plant this area under FSC guidelines.

"This is the best option for us because we still need more timber wood, but we can't get more land. So we will co-operate with private owners of 2,000ha in the near future," he said.

The price for wood from FSC forests is often 30 per cent higher than other products without certification.

Located about 350km away from Forexco's base is another company, Nghia Tin Wooden Furniture that uses FSC-certified wood to produce furniture for export.

"Ninety per cent of our market is Europe, where customers care about deforestation. So 90 per cent of our material is FSC-certified wood," said Huynh Le Dai Phuc, general director of the company, which is located in the central province of Binh Dinh.

With 250 workers, the company earns an annual turnover of US$3.5 million from exports. It has no land but imports FSC-certified eucalyptus and acacia wood from Uruguay and Malaysia.

In June, the company joined GFTN. Phuc said the current trend involves more producers participating in the network, which helps to increase the area of certified forest and in turn leads to more customers.

In Viet Nam, Nghia Tin is one of eight suppliers for French multinational retailer Carrefour.

"We are happy to see Nghia Tin as a member of GFTN. We would like to ask all of our suppliers to join GFTN to make sure we have sustainable production and forest protection," said Maxime Barbot, chief representative of the Viet Nam office for Carrefour Global Sourcing Asia.

Responsible practices

Having emerged as a strong force in the global furniture market, Viet Nam is now the second-largest furniture exporter in Asia and the sixth largest in the world.

"But years of deforestation and unsustainable timber harvests have left the country devoid of many key species that it once had, and the continuation of such practices threatens the manufacturing sector that depends on wood products for its bread and butter," said Le Cong Uan, GFTN coordinator for WWF Viet Nam.

The area of forest in the country certified by FSC - a scheme that guarantees that a forest is responsibly harvested - is relatively small, around 87,600ha.

Half of those forests are natural ones, which will make it difficult for many companies to export to international markets that are increasingly implementing laws requiring legal verification, he said.

This could result in lost business opportunities that could help Viet Nam grow its economy, according to Uan.

To meet the growing need for furniture in foreign countries, as well as new regulations from the Vietnamese government on wood harvesting and trade, companies across the supply chain will need to make a concerted effort to tackle illegal logging and trade of wood products, and ensure that the timber they are manufacturing is legal.

Viet Nam's efforts to curb illegal logging will be crucial in ensuring that it remains competitive in the international marketplace, Uan said.

"GFTN participants are on the forefront in ensuring that timber is legally harvested, at a minimum, with commitments to ensure that they advance towards responsible forestry," he added. — VNS

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