Certification has the potential to enhance the profitability and/or marketability of farm forestry products, to increase access to international markets and market share and to facilitate environmental improvements. However, these benefits are by no means guaranteed, and there are many unresolved questions regarding how best to develop and implement certification, particularly in relation to smaller farm foresters. This report provides an analysis of these and other key questions relating to certification in farm forestry, and provides the information and analysis necessary to advance policy debate in this area. It is important to note that this report was based on research conducted in 2001, and finalised for publication in 2004. As such, there have been a number of policy developments in the forestry certification sphere that may have superseded some elements of the report. Nevertheless, many of its broad findings remain relevant (see also Crawford, H., 2006. ‘A review of forest certification in Australia’, FWPRDC Project No. PN05.1025).

Who is the report targeted at?
The report is targeted at the Australian farm forestry sector, forestry industry associations, public policy officials, academics and environmental organisations.

Background
Certification began in the early 1990s as a response to the (perceived) failure of existing government policies and industry self-regulation to arrest the continued degradation of the world’s forests, and aimed to decrease the amount of timber coming from unsustainably managed forest. Certification is an attempt to link the environmental preferences of consumers with the sustainable management of forestry resources. This is achieved by providing a market or price signal along the forestry and forestry products supply chain with the intention of supporting those forestry owners and operators that have adopted sustainable management practices. Environmental organisations, government and industry increasingly perceive certification as having a significant role to play in the pursuit of sustainability.

The international certification landscape is evolving as more organisations join and more schemes are launched, with different ‘ownership’ structures. In the last decade, certification has been transformed from a relatively isolated phenomenon into a major, and increasingly mainstream, policy development. A number of international certification trends are evident, many of which may have significant repercussions for the Australian farm forestry sector. Currently, institutional arrangements for certification are in the developmental phase in Australia. There are no active certification schemes in place, and only a limited number of forestry operations have received, or are in the process of seeking, ISO 14001 certification. It is against this backdrop, and in response to the international growth of certification, that a range of institutional interests, including industry and government, have supported the development of an Australian Forestry Standard.

Aims/Objectives
The report aims is to assess the merits of a series of alternative certification policy options for the farm forestry sector, including for smaller farm foresters, such as commercial and environmental implications. In achieving this stated objective, the project addresses a number of important policy questions confronting certification in Australian farm forestry, and focuses on four key deliverables: ? the identification of the implications of certification for Australian farm forestry both now and into the future; ? the identification of whether certification is desirable, cost-effective and practical for the farm forestry sector, and how can it best deliver the purported environmental benefits, including the protection of biological diversity; ? the identification of how certification could be best exploited by farm foresters, including the preferred circumstances in which it might be employed, and the preconditions for its success, and the development of a workable model for stakeholder engagement; and ? the identification of how, and if, certification can be integrated with other policy developments affecting the farm forestry sector.

Methods used
The report is based principally on the findings of fieldwork with farm foresters and related stakeholders. This included at total of 81 interviews with farm foresters, Commonwealth and State Government officials, Regional Plantation Committee members, Greening Australia representatives, other environmental organisations, industry association members, industry consultants and academics/researchers. The fieldwork was supplemented by desktop research on international initiatives and experiences with certification and the circumstances of the Australian industry.

Results/Key findings
While certification is clearly here to stay, at least with respect to major forestry operations, its implications for farm forestry are far less clear. In theory at least, certification has several purported benefits for farm foresters in Australia. Given the immature stage of development and potentially unique circumstances of the Australian farm forestry sector, there is a strong case for an assessment of the role of certification as it relates specifically to farm forestry and tailored specifically to the needs of that sub-sector. The certification issue comes precisely at a time when the industry is at a crossroads. It is arguable that certification could be the catalyst, or at least greatly assist, the sector to achieve greater maturity through the adoption of more sophisticated management and marketing practices.

Important characteristics of farm forestry
Despite the absence of detailed information about the farm forestry sector in Australia, it is possible to identify several defining characteristics that impact on whether and how certification should be adopted. These include: the heterogeneity of the farm forestry sector; the wide geographical dispersion of smaller farm forestry holdings; the lack of information on appropriate sustainable forest management practices and principles; the limited resources (both financial and non-financial); and the greater potential for higher value-added products to be derived from farm forestry.

Drivers of certification in farm forestry
There are a variety of drivers of certification that may impact on farm forestry operations in Australia. These include the following: commercial pressure; government pressure, including through regulation; peer pressure, often formalised through an industry association; community pressure, including environmental organisations; and the future possibility of carbon trading and other environmental credits.

Does certification matter?
One policy option for the farm forestry sector is simply to ignore the certification debate and do nothing. However, there are a number (although at this point, not overwhelming) reasons for not adopting such an approach. First, the pressure for certification, far from dissipating in the future, is likely to grow. Second, certification offers some potential benefits to farm foresters, particularly those engaged in commercial activities. Third, taking an active stance on certification enhances the chances of shaping its application to the particular circumstances and needs of farm foresters.

Options and strategies for adoption
As evidenced by the proliferation of certification schemes worldwide, the best approach to certification in farm forestry is by no means obvious. Potential resolutions to issues surrounding the implementation of certification in the farm forestry sector are summarised below: Who should own the scheme? The ownership models, whilst not ruling any out at this point, may be listed in an indicative order of preference, from least to most attractive: industry ownership – the potential lack of credibility is a major detraction of this approach; environmental ownership – the only realistic option in this regard is the Forest Stewardship Council scheme; and standards association ownership – this approach drew the most support from farm foresters themselves, and also is the approach underpinning the Australian Forestry Standard process.

Should the farm forestry sector develop its own certification scheme? It may be beyond the capacity of the Australian farm forestry sector, and ultimately duplicative, to attempt to ‘reinvent the wheel’ through the development of its own, unique certification system. A partial alternative would be to form a strategic alliance with another certification scheme and/or institutional grouping. Such an arrangement could provide it with significant exposure in international markets, greater credibility, and much needed expertise and resources.

Should the sector adopt a pre-existing forestry certification system? The strategy of adopting a preexisting international scheme has potential benefits, however, despite the proliferation of certification schemes to date, it is likely that Pan European Forest Certification and the Forest Stewardship Council are the only realistic candidates that could fulfil this role. This poses a potentially uncomfortable dilemma for the Australian farm forestry sector because the latter is widely perceived to be beholden to environmental organisations, and the former may be too closely aligned with industry interests.

Should farm forestry support the Australian Forestry Standard? The farm forestry sector, through the Australian Forest Growers, has already committed itself to the process of developing an Australian Forestry Standard. If, however, the Australian Forestry Standard fails to deliver a certification standard, or produces one that attracts widespread criticism from national and/or international environmental organisations, then it may need to consider other certification options.

Should broader stakeholder representation be sought? It may be argued that broad stakeholder representation is an important pre-requisite for maintaining credibility for some, if not most, of these downstream constituencies. As a result, there is a strong case to be made for placing a high priority on broad stakeholder representation in the certification process.

What role, if any, should there be for commercial third parties? Although certification has the potential to deliver commercial benefits to farm foresters, international experience indicates that retailers play a crucial role in the success or otherwise of certification arrangements.

How can the heterogeneity of farm forestry be accommodated? A single certification scheme, rather than a variety of schemes, could be introduced. This should be sufficiently robust and flexible so as to accommodate the diversity of farm forestry operations.

Should the different motivations of farm foresters be accommodated? The inherent nature of certification, with its emphasis on market forces, means that those farm forestry applications with a commercial bent should be the primary focus of, and principal beneficiaries, of any scheme introduced.

Should certification be based on process or performance standards? The convergence of certification schemes internationally (at least in terms of their content), means that virtually all schemes can be expected to contain a mixture of performance and process standards at some time in the near future, if it is not already the case.

Should a ‘streamlined’ sustainable forest management system be used? In order for small farm foresters to take advantage of the benefits of certification, and yet overcome the difficulties associated with the implementation of a potentially complex and costly management system, a streamlined management package could be introduced.

Can carbon credits be accommodated? The problem is that certification and carbon trading are at quite different stages of policy development, with certification considerably more advanced. From an Australian farm forestry perspective, provision for the eventual accommodation of carbon and other environmental credits with a certification system would be a desirable outcome.

Will farmers become overwhelmed with different certification regimes? The introduction of any certification standards should be done in way which is cognisant of other management obligations and aims to, as far as possible, integrate any new management requirements with existing or planned one.

Should independent certifiers be used? Although there may be some financial attractions to using inhouse certifiers, and potential synergies with other farm forestry certification initiatives, the overwhelming weight of international opinion is that independent third party certification is an essential requirement of a credible certification scheme.

How can certified timber be distinguished along the supply chain? Whichever certification scheme is supported and adopted by the farm forestry sector, a priority should be placed on ensuring adequate chain-of-custody arrangements are put in place.

Is group certification a viable option? As the cost of certification may be prohibitive for some smaller farm foresters, it may be attractive for any certification scheme adopted by the Australian farm forestry sector to make allowance for the possibility of group certification.

What sized management units should be certified? As with other possible innovations for certification in farm forestry, the use of larger management units has both advantages and disadvantages. In the case of smaller farm foresters, it is arguable that they have most to gain from an umbrella arrangement, given their likely more limited resources and expertise. A reasonable policy response, therefore, might be to allow the certification of larger management units on a voluntary basis.

Implications for relevant stakeholders
In the space of less than a decade, forest certification has evolved from a ‘fringe’ activity to the centre-stage of international forest policy. In its early years, certification had implications principally for large forest growers. However, in its maturing form, small growers are also likely to be profoundly affected by it. Yet our fieldwork demonstrates that, in Australia, beyond a few industry officials actively engaged in forestry policy circles, there is a high level of ignorance amongst farm foresters.

This has been predicated on the assumption that certification would remain principally a Western European and North American phenomenon, with potentially limited engagement of Asian markets.

It may even be that Australian consumers and retailers will remain as uninterested in certification in the future as they have in the past. But certification is a dynamic, not a static phenomenon. For this reason, it would be unwise to assume that Australian forestry will remain untouched by certification issues, and a rational risk management strategy is to seek to come to terms with it. For although the threat to large growers is much more pressing than it is to small operations, in the longer term, small growers too, will feel the impact of international political and market forces which favour certification, and which have implications for all types of forestry.

Recommendations
It is beyond the purview of this report to recommend a specific certification scheme for Australian farm forestry. However, we draw two broad conclusions, and from this, address the range of policy options available. First, certification is an international phenomenon that is continuing to grow, both in terms of the volume of forests covered by it and the number of countries, forest companies, retailers and consumers who subscribe to it. Second, these are compelling reasons for the Australian farm forestry sector to, if not immediately embrace certification, then at least to actively engage in debate about its domestic application.

The large majority of international certification schemes are not viable options for the Australian forest industry or farm forestry in particular. The viability of domestic certification schemes is also limited. In short, there are only three genuinely viable certification models for application in the Australian farm forestry sector. In broad terms, these are: the Australian Forestry Standard; the Forest Stewardship Council; and an alliance between a domestic scheme and an existing international certification scheme.

Two potential scenarios will have a major influence on the development and implementation of certification in the Australian farm forestry sector: First, the Australian Forestry Standard successfully captures the support and participation of key international and domestic environmental organisations. Second, the Australian Forestry Standard fails to capture the support and participation of key international and domestic environmental organisations.

If the first scenario eventuates, then the decision as to the preferred certification model/ownership structure is straightforward. The farm forestry sector should simply and emphatically support introduction of the Australian Forestry Standard, and concentrate its efforts (as it is indeed currently doing) on ensuring that its particular needs and circumstances (highlighted above) are adequately addressed under any eventual Australian Forestry Standard certification regime.

In the case of the second scenario, however, the preferred policy strategy is more complex. In these circumstances, the fundamental industry basis for adopting certification – to gain market and commercial advantage – would be undermined, and the farm forestry sector might rationally explore the attractions of the other remaining certification options. In this circumstance, one option available to the farm forestry sector would be to simply adopt the Forest Stewardship Council model without modification or through the alliance of an industry scheme. Although in many ways this would be the simplest approach, and have the significant advantage of instant international recognition, our research indicates that there is a sufficiently strong undercurrent of industry opposition to ceding too much control of certification to environmental organisations as to render this option politically unattainable, certainly in terms of a collective farm forestry endorsement. There would be nothing, however, to stop individual farm foresters to go down this route (although it does presuppose the existence of an Australian Forest Stewardship Council working group to oversee this process).

Another, and preferred, policy strategy would be some form of strategic alliance. Assuming the logistical hurdles can be overcome, this could be either through a direct alliance between the farm forestry sector and the Forest Stewardship Council, or an alliance between the Australian Forestry Standard and Pan European Forestry Certification. Finally, it should be noted that each of these policy options are not necessarily mutually exclusive. For example, having adopted the Australian Forestry Standard as its preferred model, the industry (or other institutions) could still attempt some form of alliance or mutual with other, pre-existing international certification schemes. This, however, would not obviate the need to make an initial decision as to which policy path to pursue.