Forestry Industry Shifts in Response to the Unfolding Brexit Saga

22nd June 2019
Brexit is seen as a major threat to the industry by many investors.

The United Kingdom’s (UK) decision in 2016 to withdraw from the European Union’s (EU) economic and political partnership, was, and still is a major concern for both national and multinational companies worldwide.

Commonly referred to as Brexit, Great Britain’s exit from the EU has become an ongoing saga spanning over 2 years, with another extension to article 50 being granted to the UK until the 31st of October 2019. Many are hoping that in the time leading up to the deadline, an agreement can be reached that ensures a smooth exit from the EU for businesses and individuals and secures a permanent trading relationship.

The forest and wood products industry is no exception in being anxious over the impact Brexit may have, with businesses looking at alternative options in the face of a potential meltdown in the market. For example, Coillte, a state-owned forestry company in Ireland, has started stockpiling wood in the UK. This is to combat the potential break-down in the wood supply chain to its British customers. Also, in January 2019, the Forestry Industries Ireland (FII) was set up by IBEC in Dublin, as a new trade association consisting of 22 member companies from across Ireland. Their main goal being to help forest and timber manufacturers and suppliers work around a potential supply delay in the wake of a hard or no-deal exit.

Additionally, as Brexit is seen as a major threat to the industry by many investors, fund management companies such as Veon, have begun to sell off portfolios comprising of significant areas of private forestry to global industry buyers.

Scotland, another major player in the field, implemented significant changes to the Forestry and Land Management Act 2018, both from a political and practical standpoint. The decision was made to replace the Forestry Commission Scotland with The Scottish Forestry, a new Scottish Government executive agency which will be responsible for regulation of forestry activities. Forest Enterprise Scotland was also replaced with The Forestry & Land Scotland, responsible for the management and enhancement of the National Forest Estate. Following these changes is Scotland’s first 10-year strategy. Under this new strategy, Scotland will be responsible for assessing the standards for good forest management, administering the carbon code and advising on forestry economics. Scotland will also oversee biosecurity, plant health and the environment.

The Welsh Government will lead in forestry research while the UK Government will be responsible for plant health and international policy support. As current legislation is led by the EU, two new Brexit statuary regulations will ensure that standards remain operational: the Forestry Regulations 2019 and the Plant Health Regulations 2019.

Construction standards are also affected by Brexit as the UK currently uses Eurocode (Euc) for construction and more importantly the Eurocode 5 (Euc 5) for wood construction. New standards are being proposed for adoption between 2021 and 2022 and consequently the future of the Chequers plan is uncertain (the implementation of the Euc by the British Standards Institution – BSI). Brexit could lead to a situation where entities use both the Euc or the old British Standards. The Euc will stay but developers will have the freedom use the old British standards instead of the Euc. This raises some concerns as most of the old British standards have not been updated since the 1990s.

In summary, many entities have already started, or are preparing themselves as Brexit looms closer. Keeping both sets of standards in mind, and not forgetting the benefits of European Standardisation, strong collaboration between all players in the wood chain is imperative at this time. In so doing, costs and risks to the forest and wood products industry and associated supply chains can be minimised while transitioning into a new, but yet unknown, future.