Smart software from CMO streamlines EUDR compliance
Daniel von Heynitz, Chief Technology Officer at CMO, rolling out Tracer in Vietnam.
The European Union's Regulation on Deforestation-free Products (EUDR) marks a significant step in the global effort to combat deforestation and promote sustainable forestry practices. Enacted to ensure that products entering the EU market do not contribute to deforestation, this regulation imposes strict due diligence requirements on companies producing or trading in forest products. It affects the entire forestry sector - regardless of the country of origin.
By mandating traceability and verification of supply chains, the regulation aims to reduce the environmental impact of forestry operations and promote more responsible land-use practices worldwide. This policy not only influences producers and exporters in deforestation-prone regions but also reshapes the economic and operational landscape for forestry businesses globally, emphasising the importance of sustainability in international trade.
Achieving compliance with EUDR is a complex challenge, but CMO, a leading forestry software and services provider, has developed software platforms that streamline these processes, making them more accessible and manageable for businesses.
CMO offers a comprehensive suite of services designed to meet the diverse needs of smallholders, commercial forestry companies, and the broader supply chain, with a strong focus on compliance with the EUDR. CMO tailors solutions to ensure adherence to all major certification requirements, including Forest Stewardship Council (FSCTM) and Programme for the Endorsement of Forest Certification (PEFC) standards, alongside EUDR compliance.
Michal Brink of CMO doing an FSC Group audit on small-scale growers in the Eastern Cape, South Africa.
Empower is a comprehensive sustainability command centre developed to oversee and enhance a business’ compliance efforts. The principal aim was to create tech for smallholders to plan and control their farming practices. To this end, Empower gives the smallholder full control over their tree plot, with a clear picture of the standing volume of the trees planted and thus when best to harvest them.
One of its most notable features is the efficient onboarding of members, which simplifies the integration of new users into the system and ensures that all stakeholders are aligned with sustainability goals from the outset. Additionally, Empower facilitates comprehensive on-site audits, allowing organisations to conduct thorough evaluations of practices and processes to ensure adherence to established standards.
FSC/EUDR group scheme members onboarded by CMO Thailand with Empower.
Continuous improvement The application also includes an Action Log, a vital tool for addressing and closing non-compliances swiftly. This feature helps in identifying areas that require improvement and provides a structured approach to managing corrective actions, thereby fostering continuous improvement. Moreover, Empower’s capability to manage stakeholders both nationally and locally ensures that all stakeholders are engaged and informed, thus promoting a coordinated approach to sustainability.
Empower becomes even more powerful when paired with Tracer, a tool that maps supply chains and monitors volumes and commodity movements in real-time. Together, they promote efficiency and transparency.
Smallholders in Thailand get to grips with Empower.
Tracer captures detailed product information, supplier data, and coordinates throughout the supply chain, providing a complete overview of the entire production and distribution process. This level of detail is crucial for generating accurate and reliable reports, particularly for the EUDR due diligence statements, ensuring full compliance with the stringent regulatory requirements.
Over the past year, CMO has collaborated with Weber & Schaer (W&S) in Germany, the Sabah Rubber Industry Board (SIRB) in Malaysia, and the Rubber Authority of Thailand (RAOT) to promote sustainability practices and certification within the rubber industry. This partnership leverages CMO's Empower software to enhance sustainable practices and ensure compliance with industry standards.
In Vietnam, CMO has just concluded a successful trial for CMO Tracer in partnership with W&S in June and July 2024. The trial has allowed the first shipment of EUDR-compliant rubber to be sent to the USA. The users appreciated the simplicity of the new application, but also supplied valuable feedback around usability and language optimisation. The application was quickly adopted by the various processing plants that took part in the pilot project.
The CMO team, which has used its extensive knowledge and experience in forestry and certification to develop their software toolbox, are looking forward to scaling their EUDR solution for the benefit of the whole southern African forest industry – particularly where commercial farmers and smallholders are involved in the supply chain.
NCT beefs up Chain of Custody assurance
NCT’s Roger Poole and Eric Msomi inform the growers of the strict new chain-of-custody requirements. (Photo courtesy Mfundo Ngcobo/NCT).
Small-scale tree farming on tribal land in the KZN midlands is alive and well, as evidenced by an enthusiastic turnout at a recent NCT field day at the co-op’s Ahrens timber depot, near Greytown.
This was a combined field day hosted by NCT’s Greytown regional office for growers supplying their timber to the Glenside and Ahrens depots. Around 80 tree farmers from the surrounding areas attended the field day to hear presentations from the NCT forestry team.
The focus of the day was on the need for growers to comply with NCT’s chain-of-custody protocols which are designed to ensure that every stick of timber crossing the weighbridge at the depot is legitimate, can be traced directly back to the grower, and can be verified by NCT head office if required to do so.
The reason for the elevation of chain-of-custody assurance to ‘High Priority’ in this little corner of South Africa is the growing raft of regulations around the world that are designed to prevent any illegal or stolen timber from entering the global supply chain, and more specifically, to stop illegal logging and deforestation.
A well lined out small grower wattle compartment, Ahrens.
European Union Deforestation Regulation
Central to all of this is the European Union Deforestation Regulation (EUDR) which came into effect in June 2023. This regulation requires that any product placed on the market or exported from the European Union did not result in deforestation anywhere along the supply chain, and that the products have been grown, harvested or obtained in accordance with the relevant laws of the country where the production took place.
The timber grown by NCT’s small grower members around the KZN midlands and in Zululand is sold as ‘controlled wood’ either directly as wood chips to markets in China and Japan, or to the Sappi-Saiccor mill on the south coast which exports the chemical pulp it produces to markets across the world. The wood chips and pulp are further processed abroad into paper and packaging materials or fabric, much of which inevitably ends up as finished products in the European Union.
The beginning of this global supply chain goes all the way back to every NCT member tree farmer who supplies timber to one of NCT’s depots – including the small-scale growers harvesting tiny one or two ha woodlots in Matimatolo.
The tree farmers took the news about the CoC requirements to heart. (Photo courtesy Mfundo Ngcobo/NCT).
Certified or controlled wood
In fact this regulation impacts upon every single farmer in South Africa that grows and sells timber that is used as raw material in the manufacture of products destined for mainstream global markets. This timber must either be certified by FSC or PEFC – or both – or at the very least must be sold as ‘controlled wood’ with full assurance of the legality of the whole supply chain.
Back to the Ahrens field day where the NCT team spelled out their requirements for purchasing members’ timber delivered to the depot. NCT is busy developing an app that runs on a mobile phone which will assist the growers to provide the essential info required to comply with their chain-of custody assurance. This includes taking and uploading a photo of the timber they have harvested before it leaves their plot on the short haul journey to the NCT depot. A marketer of clothing in Stockholm or Rome might request that photo to verify that the product he is selling has legitimate origins. Failure to be able to trace that timber all the way back to the grower would result in the mill gate being shut in the face of the timber supplier.
Another area of risk for the ‘controlled wood’ requirements of growers is the short haul transport from plantation to depot. Gone are the days when any old vehicle with wheels – licensed or unlicensed – can be used to haul the timber along dusty district roads from plantation to depot. If the vehicle and the driver and the load are not fully legal and legit, it’s game over. The chain of custody is broken and the timber cannot be sold as ‘controlled wood’. The mill gate will be shut once again.
Gone are the days of delivering timber to the depot with transport like this – Zululand circa 2008.
The growers attending the field day took the news about beefing up their chain of custody assurance pretty well. Some had questions around the difficulties they face in arranging suitable short haul transport, or navigating the technology required to use the app. But those are just some of the challenges that are going to have to be overcome if the timber supply chain is to remain intact.
CMO pioneers FSC certification around the world
CMO International, a diverse forestry company founded in South Africa, is making waves internationally by successfully achieving FSC chain of custody certification for 56 smallholder rubber tree farmers in the Sabah district of Malaysia. This is the first time that smallholder rubber farmers in Malaysia have achieved FSC certification which ensures their products comply with the European Union Deforestation-free regulations as well as other similar policies and market requirements around the world.
The successful outcome of this project was made possible with extensive collaboration between FSC Malaysia’s sustainable natural rubber project, CMO International, Control Union (M) Sdn Bhd and WWF-Malaysia.
“I am happy and grateful to be part of this project and I have learned about the importance and benefits of getting certified. I hope the rubber industry is sustainable for our future generation,” said Sylvester Dani, one of the smallholders from Tuaran in the FSC group scheme.
Sabdil Bin Tanjong, the General Manager of Sabah Rubber Industry Board said: “We are in the process of obtaining FSC COC certification for two of our rubber factories, the Beaufort Latex factory and Tenom Standard Malaysia Rubber (SMR) Factory. Our aim is to produce and export FSC-certified SMR and Latex Concentrate to the international market.”
A scale-up plan is embedded in the project, where progressively more smallholders are onboarded into the FSC group scheme, held by CMO Malaysia Sdn Bhd FSC-C195423. Barring any unforeseen circumstances, the FSC group scheme is expected to cover over 7,000 hectares of FSC-certified rubber plantation by the second quarter of 2024.
The CMO International team played an instrumental role in training the smallholder farmers, and ensuring they understand and conform with FSC standards. As the entity holding the FSC certificate for this group scheme, CMO uses its software (‘Empower’) to map each member on the ground, compile the necessary management documents, conduct internal audits and monitor performance of the group members, in line with the requirements of the FSC standards.
Commented Michal Brink, CMO International Managing Director: “CMO is very proud to be able to bring this group of rubber smallholders in Tuaran, Sabah, to FSC certification. The smallholders have been trained and put in a lot of effort to comply with FSC requirements in their daily routine.”
This is the start of a journey to propel Malaysia – the seventh biggest natural rubber producer in the world - as one of the major suppliers of sustainably-produced FSC-certified rubber in the Asia-Pacific region.
In addition to their work in the Asia-Pacific region, CMO has pioneered the certification of charcoal producers in Namibia, as well as medium and small-scale tree farmers in South Africa through their innovative FSC group schemes. They have also certified communities in the Eastern Cape that are clearing alien wattle jungles and using the cleared timber to produce charcoal for local and international markets.
PEFC Group Scheme certification for small growers
Hlengiwe Ndlovu, Divisional Environmental Manager for Sappi Forests, proudly displays the PEFC-endorsed Sappi Group Scheme certificate for small scale growers.
Five small scale timber growers in KwaZulu-Natal have become the first participants in the award-winning Sappi Khulisa programme to achieve forest certification through the Programme for the Endorsement of Forest Certification (PEFC) in the Sappi Group Scheme for small scale growers.
The five timber growers, with a total 8,143 hectares of timber area between them, have been successfully audited and awarded a PEFC Group Scheme certificate. The recipients of this significant milestone, and founding members of the Sappi PEFC Group Scheme, are:-
• iMfume Cluster, consisting of more than 20l individual small growers from the Mfume district near Scottburgh, • Sobengwe Trading, Ixopo, • MG Farming, Richmond, • Mclean M, Underberg, • Braecroft Timbers (Pty) Ltd, Underberg.
This follows years of intensive efforts by Sappi - working together with other stakeholders in the forestry industry - in addressing the barriers to certification experienced by small-scale growers in South Africa. PEFC is an internationally recognised certification system that provides assurance to end-use consumers of wood products that the raw material is sourced from sustainably managed forests.
Members of the Sobengwe Trading forestry team, Ixopo. Certification provides small-scale growers with access to international markets and assures consumers that wood-based products are responsibly sourced from sustainable forestry operations.
Sappi was the first grower company in South Africa to achieve PEFC certification through the Sustainable African Forest Assurance Scheme (SAFAS) in 2021, after starting with the process in 2015. This involved participation in the development of a Forest Management Standard for South Africa, the development of mechanisms to support certification requirements and, in 2018, the endorsement of the standard and certification procedures. A certification tool was developed by the SAFAS team to assess plantations, based on several factors including environmental, social and economic conditions specific to South Africa.
“After years of collaboration and dedicated commitment to developing a forest certification standard for South Africa, this achievement marks a historical moment in our long journey to support and make forest certification more accessible to the small landowners that participate in our supplier programmes,” commented Duane Roothman, Vice-President of Sappi Forests.
Forest certification is used as a tool to ensure that responsible forest management practices are implemented in the forest, and that wood from certified forests can be identified throughout the supply chain. It enables conscious consumers to choose responsibly sourced wood-based products, and gives consumers the assurance that the woodfibre used to manufacture the products they are buying has been legally harvested in accordance with sound environmental practices, and that social aspects, such as indigenous rights, have been taken into account.
Forest certification and other voluntary codes of conduct are key tools for promoting sustainable consumption and production, and for combating deforestation, forest degradation and illegal logging by providing proof of legality and responsible management, harvesting and manufacturing practices.
Putting certification within reach of small-scale growers
Small-scale growers harvesting wattle in Matimatolo, KwaZulu-Natal Midlands. (Photo courtesy of SAFAS)
Free certification for small-scale growers operating on communal land – this is the goal of the Sustainable African Forest Assurance Scheme (SAFAS), a non-profit company on a mission to promote sustainable forest management and ensure that all timber growers in South Africa have fair access to certification.
SAFAS intends to make this achievable through the establishment of a Landscape Certification Programme - that functions like a co-op and focuses on relevant risks - to make certification accessible and affordable to all timber growers, including small-scale growers on communal land.
This is just one of several innovative initiatives that the SAFAS team has introduced in the past few years to promote sustainable forest management in Africa. Key among these is the Value Based Platform (VBP), a web-based platform that integrates data from a wide range of sources. This helps to provide integrated, locally relevant solutions to the broader challenges facing sustainable development, such as habitat degradation, inequality, poverty, poor governance, and accelerated climate change. This enables forest managers to identify and prioritise the key risks in their operations in the context of the landscape within which they operate.
Another innovative SAFAS initiative is the Community Label. This is based on the concept of forestry businesses being a part of the wider community with a responsibility to play a positive role in their development for mutual benefit through timber procurement, providing market access and promoting sustainable management practices on the road to achieving certification. The Community Label promotes the forging of mutually beneficial partnerships between larger forestry organisations and community forestry enterprises.
These initiatives are not just sugar-coated wish lists as they are beginning to gain traction on the ground through practical implementation.
In 2020 Sappi utilised the Value Based Platform to complete individual assessments on all 25 of their forestry plantations in South Africa, covering some 370 000 ha, becoming an essential internal auditing tool to enable the Sappi forestry team to prepare for the formal certification process. Sappi’s South African plantations are certified by both FSC and PEFC.
Earlier this year Sappi used the VBP to assess a group of private timber suppliers in southern KwaZulu-Natal against the requirements of the SAFAS standard. The assessment included 12 private commercial timber growers, two land reform timber farms and 100 small scale growers grouped into two clusters.
According to SAFAS General Manager Steve Germishuizen, the assessments produced some surprising results:- • The small-scale grower groups were the least risky in terms of overall sustainability. • The most consistent risks across all suppliers were related to health and safety, training and management of contractors.
Steve said that the VBP allowed the growers to engage with the certification process in a positive way that helped them to see it as a potential benefit and not just an administrative burden.
NCT Forestry is also using the VBP to assess their growers’ sustainability risks and to prepare them for certification under their PEFC group scheme.
Mechanised Eucalyptus harvesting operation, Mpumalanga. It is efficient and highly productive, but this system does not maximise job creation.
About SAFAS The SAFAS certification system has been developed in South Africa by local stakeholders and is endorsed by the Programme for the Endorsement of Forest Certification (PEFC), a globally recognised forest certification system.
It is the culmination of years of work behind the scenes by local stakeholders including Forestry South Africa, SAPPI, NCT, TWK and the Department of Environment, Forestry and Fisheries. The motivation behind the SAFAS initiative stems from the realisation that most small-scale and family-owned forestry operations typically have moderate or low environmental impacts while providing significant social benefits directly at the local community level, yet they have been largely unable to achieve certification. Large commercial forestry operations on the other hand, which have a greater environmental impact and limited local community employment footprint, are almost all certified.
This anomaly means that small-scale growers located in under-resourced rural areas in Africa may be denied access to premium fibre and wood product markets by virtue of their inability to get certified.
Now forestry operations joining the SAFAS Landscape Certification Programme (LCP) have an easier pathway to being certified. The overhead costs associated with certification will be shared amongst members of the programme according to the scale of the operations.
The ultimate goal, according to Steve, is for small-scale timber growers on communal land to have free certification. Revenue generated by the LCP will be used to promote sustainable forest management or reduce the annual costs of certification for the members. It is essentially a cooperative system and members will have a say in how their money is spent.
At the heart of the LCP is the Value Based Platform which helps forest managers to identify and prioritise the key risks in their operations, in the context of their landscape. The platform links the risks up to the relevant indicators in the certification standard. By eliminating irrelevant and low risk indicators, the platform vastly simplifies certification.
Upon joining the LCP, a timber grower undergoes a risk assessment that provides a prioritised list of risks, along with supporting information and the documentation required to mitigate those risks. The grower then knows exactly what is needed to achieve or maintain sustainable forest management standards and certification.
SAFAS also provides the training, support and resources required to tackle any technical and managerial challenges associated with achieving sustainable forest management certification through PEFC.
Labour intensive Eucalyptus harvesting operation on a community-owned timber farm, Eastern Cape.
What sets this system apart is that the risks to sustainable forest management of each grower member are determined according to the landscape within which the operation is located. This simplifies the certification process which focuses on the actual risks that the forestry operation faces.
This system works because site and socio-economic factors define, to a large extent, the risks and opportunities that forestry operations face. These factors characterise the forestry landscape and shape the nature of forestry businesses.
It is unsurprising that in areas of similar topography, climatic and socio-economic conditions forestry takes on a very similar structure and appearance. This realisation is critical when measuring forestry against a national or global standard. What is good or normal practice in one landscape would be unacceptable in another. Understanding the landscape context is the best away to understand these differences. For example, it is much harder to control alien plants in a steep, high rainfall area, with a subtropical climate, dominated by woody vegetation, than in a flat high altitude grassland area that is prone to fires and frosts. It is therefore necessary to understand that context when making an assessment of the effectiveness of an alien plant control programme.
Below are examples of two very different forestry landscapes and some of the risks and opportunities the forestry operations in those landscapes face:- • High production on flat land: High national economic importance, high productivity, high efficiency, global competitiveness, high impact, limited biodiversity, low ecosystem services, limited local employment • Communal multifunctional: Multiple benefits for local communities, high potential for ecosystem services, low impact operations, moderate biodiversity, low national economic importance
Joining the LCP allows timber growers of all scales to get certified as part of the landscape they operate in. The LCP provides all the documentation, supporting information and SAFAS works with the growers to maintain compliance.
SAFAS GM Steve Germishuizen surveying the biodiversity that is still thriving at Ozwatini, KZN midlands, where small scale tree farmers grow wattle and Eucalyptus and practice mixed farming with vegetables, crops, cattle and goats.
Five steps to certification with the LCP • Complete a Risk Survey on the Value Based Platform after which you will have access to your risk assessment detailing the key risks faced by the operation in context of the landscape. • You receive a report detailing what is required to comply with the SAFAS standard. • You will be guided through the LCP management system, which contains all the documents and supporting information necessary for certification. • Once compliant with the SAFAS requirements you will be included in the programme to be certified in the 3rd Party audit by the Certification Body. • Once the 3rd Party audit is completed you will be certified under the PEFC.
“What makes PEFC-endorsed national forest certification systems so relevant and valuable is that they are locally developed and owned,” commented Ben Gunneberg, former CEO and Secretary General of PEFC International. “They respect the country’s operational and cultural conditions and are accessible to forest owners of all sizes, with a particular emphasis on smallholders.”
CMO to market certified forest products via global trading platform
This way please … CMO founder Michal Brink is taking certified forest products to market via a worldwide trading platform called IcePik.
The South African-based CMO Group has secured investment from venture capital fund E4E Africa to grow its forest-based operations and establish a global trading platform for certified forest products.
“The funding will be used to further enhance the company’s existing software, as well as to build a trading platform to provide market access for responsibly produced forest products in the mainstream global market, especially in the northern hemisphere,” says Michal Brink, CEO and founder of the CMO Group.
Michal says that the main driver of the development is to create and guarantee supply chain security all along the value chain. To achieve this goal the CMO model hinges on three pillars: • The establishment of Forest Stewardship Council® (FSC®) certified Group Schemes using its in-house developed PerForm software – enabling digital management and auditing of forest operators, with the emphasis on small to medium growers who have been largely excluded from the certification process, as a result of complexity and cost. • Providing technical support services such as training and consulting to FSC certified Group Schemes and forestry companies and using this expertise to beef up technical compliance of CMO Group Schemes. • The development of an online, worldwide trading portal for FSC certified forest products, named IcePik.
Michal said that the CMO team has been innovating and researching in this field for many years. He said the funding from E4E Africa presents a great opportunity to secure critical market access for sustainably produced forest products, and a means to introduce small forest producers to international markets.
“CMO has the full support of the FSC International Center GmbH in Bonn, as well as other key stakeholders including the Association of Natural Rubber Producing Countries (ANRPC) and the Namibian Charcoal Association (NCA).”
The trading platform will be launched in Namibia and South Africa in the last quarter of this year, focussing initially on sales of FSC certified charcoal. Michal said that commodities traded across IcePik would expand to include a wide range of forest products derived from sustainably managed forests, including roundlogs, lumber, treated poles, chips for pulp as well as non-forest products.”
Charcoal produced on the Sidi farm in the Eastern Cape will be FSC certified, providing access to international markets at premium prices. Sidi is the second community managed invasive alien plant clearing operation in SA to be certified under the CMO Group Scheme. The cleared wattle provides the feedstock for the charcoal kilns, while also restoring degraded rangeland for community owned livestock.
According to Bas Hochstenbach, co-founder and partner at E4E Africa, the partnership hinges on the fact that CMO is a South African company with real intellectual property that is operating in a huge global industry. E4E Africa has taken a 10% stake in CMO.
Bas added that the group scheme certification methodology and trading platform create access to global markets for sustainable forestry products for parties like smallholder farmers and smaller processors – parties that traditionally had difficulty fulfilling the administrative requirements of FSC certification, disqualifying them to trade on the more lucrative markets where certification is required.
“CMO touches many aspects: significant environmental impact due to sustainable production processes and social impact through job creation, better worker conditions and a higher price for the small producer through direct access to international markets.
“CMO is a great example of the type of businesses that we seek to invest in: entrepreneurial teams leveraging technology to address real societal challenges at scale, combining a highly scalable business model with a high impact,” he said.
CMO has positioned itself to set up group certification schemes in 44 countries over the next five years, whilst selling the FSC certified products through IcePik across the globe. CMO’s FSC group scheme has certified around 35 forestry operations in South Africa, the majority of which are small-scale tree farmers operating on communal land.
Michal Brink of CMO busy with an FSC Group audit at Colona tribal authority near Matatiele in the Eastern Cape. It is a community managed operation that removes alien invader vegetation – mainly black wattle – and turns it into charcoal.
