The Forest Stewardship Council (FSC) has recently started a dual certified timber pilot project with the Fairtrade Labelling Organizations International (FLO) and is now recruiting a manager for it. While this may seem to be a mere routine, it is in fact an interesting and significant development for the FSC. It may help it strengthen its credibility as an environmental certification organization.

The FSC is an international nongovernmental organization that seeks to promote environmentally appropriate, socially beneficial and economically viable management of the world’s forests through the certification of forest management and supply chains. In order to achieve this, forest certification uses conventional market channels. In contrast, fair-trade organizations challenge the conventional market organization by providing poor farmers and communities in developing countries with higher prices for their products compared to global market prices. The adherence of the FSC to conventional market logics caused concern among the FSC stakeholders. They argued that communities and small-scale forests operations, especially in the tropics, did not benefit from the FSC certification program because they were excluded from global markets and because reforming their forest management practices would be too costly. By implementing fair-trade projects, the FSC addresses these concerns.

Founded in 1993, the FSC developed 10 principles and 56 criteria of good forest management and created a system of third-party verification of compliance. In addition, Chain of Custody certification enables producers to trace certified timber though the supply chain. Firms the compliance of which has been verified by independent certification bodies are granted an FSC certificate and can market their products as coming from well-managed forests. The idea is that demand for certified products would create an incentive for firms to bring their forest management in compliance with the FSC standards and become certified.

To make forest certification attractive, the FSC and its supporters had to create a market demand for certified products to provide firms with an incentive to certify. They convinced several large retailers, printers and industrial companies, including Hope Depot, IKEA, Lowes, B&Q, Random House, Tetra Pak and Stora Enso, to give preference to certified timber. In order to secure their position and improve their reputation, their suppliers certified their forest management and chains of custody. As a result, forest certification rapidly expanded. Certified forest areas grew to over 100 million hectares in 79 countries. This equals 7% of the world’s productive forests. Over 11,000 CoC certificates were issued. The estimate of the FSC market share grew from 5 to 20 billion US dollars between 2005 and 2007.

Yet, the focus on the largest industrial producers and retailers led to the exclusion of small-scale and community forest enterprises from the FSC program. Large industries sourced their timber mainly from large-scale industrial forest operations, mainly in boreal and temperate forests of Europe and North America. Tropical timber also came from large-scale operations, mainly from both industrial plantations and natural forests. Large industrial groups did not look for new suppliers among small-scale or community operations, since they would not be able to satisfy the demand of large industries. Small-scale and community enterprises thus remained excluded from international markets and could not benefit from the FSC program. Moreover, the price premium for certified timber did not emerge contrary to early expectations, and this made forest certification unattractive to many small-scale and community-based forestry enterprises in poorer countries. Since producers had to bear certification costs, without an access to the market and price premium community and small-scale producers could not benefit from forest certification.

Some stakeholders of the FSC are concerned with this development of the certification program. Although the FSC is a non-discriminatory program open to all types of forest operations and all types of forests in all regions of the world, it is mainly large industrial forest groups and retailers that benefit from it. The FSC stakeholders have argued that the FSC as an organization seeking to promote sustainable forest management worldwide should also address the needs of small-scale and community operations in tropical countries.

In contrast to the FSC certification, fair-trade initiatives explicitly seek to challenge the existing trade relations and conventional market logic in a global economy and promote sustainable development of disadvantaged and excluded communities. Fair Trade in coffee sets prices not on the basis of the interaction between aggregate supply and demand but at the level that exceeds global market prices. Since current market prices for coffee do not even cover the production costs, fair-trade price should cover production costs and provide producers with means to achieve adequate standard of living and community development. Communities that wish to participate in fair trade have to fulfill a set of requirements. Among other things, they must be small-scale democratically-governed associations committed to high environmental standards.

In Fair Trade certification system, consumers bear certification costs. They are aware that when they pay higher prices for coffee they provide producers’ communities with livelihoods and support such values, as global justice and sustainable development. Although Fair Trade in coffee has recently started working with major global players, including Starbucks Coffee Company, it remains committed to creating and fostering direct personalized links between consumers and small-scale producers, otherwise invisible to consumers.

Now in order to address stakeholder criticisms and further promote responsible forest management, the FSC is starting a pilot fair-trade project. I was unable to find any specific description of the project in the internet. At the time when I conducted interviews in the Forest Stewardship Council two years ago the project was nothing more but a vague idea floating in the air. I am not sure what this fair-trade project will look like and what outcomes are to expect. I believe, however, that developing a fair-trade program for certified timber is crucial for the development of forest certification and the FSC, as well as for tropical forest protection. It may allow consumers to distinguish between certified products that come from large-scale industrial operations from those that come from communities and small-scale operations. Consumers would then be able to directly support these operations. It may lead to the emergence of “green premium” for community and small-scale enterprises that can make responsible forest management attractive for them and give them additional revenues for improving their living. Essentially, the ultimate cause of deforestation and forest degradation in the tropical countries is poverty and land conversion. Poor communities clear forests to convert them into agricultural land or to sell them to large industries that will turn them into plantations. If they are able to live from managing and protecting forests and not from destroying them, they may keep their forests and in this way also contribute to global wellbeing.

See also Taylor, Peter Leigh. 2005. In the Market But Not of It: Fair Trade Coffee and Forest Stewardship Council Certification as a Market-Based Social Change. World Development 33: 129-147

(olga)