Wood sales system in Scandinavia

Wood market in Poland – towards stabilization

Marjo Maidell/Ritva Toivonen, PTT

Poznań 4.12.2007

Table of Contents

• Facts about forest resources

• State intervention

• Sellers and buyers

• Wood sales transaction

• Situation now and in the future

• Conclusions

Facts about forest resources (I)

• FINLAND– Forest area 20,2 mill. hectares

– Growing stock volume 2,2 mill. m³

– Ownership structure: Private 60 %

State 26 %

Industry 9 %

– In 2005 the production of wood-products industries 14,0 mill. m³ and of pulp and paper industries 23,5 mill. tons

Source:Finnish Statistical Yearbook of Forestry 2006, Metinfo, Finnish Forest Research institute

Facts about forest resources (II)

• SWEDEN– Forest area 23,0 mill. hectares

– Growing stock volume 3,2 mill. m³

– Ownership structure: Private 51 %

Industry 24 %

State 18 %

– In 2006 the production of wood-products industries 18,5 mill. m³ and of pulp and paper industries 24,2 mill. tons

Source: Skogsstatistisk årsbok 2007, FAO, Global Forest Resources

Assessment 2005

State intervention

• FINLAND– Mandatory by law

• Minimum age/size of the harvestable stand• Forest management announcement before harvesting• Biodiversity conservation• Forest regeneration after harvesting compulsory

(recommendation when planting: pine 2000-2500, spruce 1600-1800 seedlings/ha)

• Membership of forest management association– Subsidies for f.ex. regeneration, biodiversity

conservation, thinnigs– Wood sales profit taxation

Sellers and buyers (I)

• FINLAND– In 2006 removals of industrial roundwood 50,7 mill. m³

(of which 77 % from private, 13 % industry-owned and 10 % state-owned forests)

– Roundwood trade from private forests 32,4 mill. m³ in 2006

– Over 400 000 private forest holdings, average size 24 hectares

– Forest management associations (middlemen) provide information concerning prices, bids, market situation etc

Source: Finnish Statistical Yearbook of Forestry 2006; Metinfo, Finnish Forest Research institute

Sellers and buyers (II)

• FINLAND– Roundwood demand concentrated, three biggest forest

industry companies buy a large share of the wood

– Companies organize their procurement by regional wood purchasing offices

– Forest service offices in the cities

Sellers and buyers (III)

• SWEDEN– Removals of industrial roundwood 55,4 mill. m³ in

2006 (of which around 60 % from private forests)

– Average size 45 hectares

– Size of the wood markets smaller than in Finland

Source: Skogsstatistisk årsbok 2007, Tilli et al. 2004

Structure of the wood sales (I)

• FINLAND– Use of Forest management associations common

– Forest owner can contact representative of the industry and ask for a bid

– Companies offer different partnership contracts, such as wood sales cooperation contracts, forest service contract, forest regeneration contracts etc

Source: Tilli et al. 2004

Structure of the wood sales (II)

– Standing sales (83 %) and delivery sales (17 %) are the type of sales in use

– Average size of wood sales from private forests is 400-500 m³

– In standing sales, harvest operation, bucking and transfer to the roadside is mechanised and conducted by subcontractors

– Collecting of energywood has increased, especially together with final harvests and thinnings of overgrown young stands

Source: Metinfo, Finnish Forest Research institute, Karppinen et al. 2002

Structure of the wood sales (III)

Use and price of forest chips in heating and power plants in Finland

0

1000

2000

3000

4000

5000

6000

7000

8000

1999 2000 2001 2002 2003 2004 2005 2006

1000 solid m3 tai GWh

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00€/m3 tai €/MWh

Use, solid m3 Use, m3 Energy content, GWh €/m3 €/MWh

Source: Finnish Forest Research Institute

Structure of the wood sales (IV)

• SWEDEN– Most commonly delivery sales, with fixed price lists

– Harvest operation, bucking and transfer to the roadside can be bought from the buyer of the wood or from other entrepreneur

– Regional forest owners’ co-operatives buy wood from their members and deliver it to their own forest industry

– After-sale adjustment for wood often takes place

Market situation now and in the future (I)

• FINLAND– Commercial roundwood removals between January-

July 15 % higher than last year (2006), thanks to the increased demand

– Growth mainly from private forests

– Demand hiked up prices, in 2007 stumpage prices in average 30 % (nominal) higher than in 2006

– PTT forecasts that strong demand continues during 2008

Source: PTT’s forecast for the Finnish forset sector 2007-2008, Autumn 2007 (in Finnish); Metinfo, Finnish Forest Research institute

Market situation now and in the future (II)

0

10

20

30

40

50

60

70

99 00 01 02 03 04 05 06 07e 08e

Private Industry StateMilj. m3

COMMERCIAL ROUNDWOOD REMOVALS IN FINLAND, ANNUALLY

Source: Finnish Forest Reseach Institute, forecast PTT

Market situation now and in the future (III)

STUMPAGE PRICES IN FINLAND, ACTUAL DEVELOPMENT

406080

100120140160180200

95 96 97 98 99 00 01 02 03 04 05 06 07

Spruce, sawlogPine, sawlogSpruce, pulpwoodPine, pulpwood

Ind. 1990=100

Source: Finnish Fores t Research Ins titute

Market situation now and in the future (IV)

Spruce sawlogs, €/m3

0

10

20

30

40

50

60

70

80

90

1996/1 1997/1 1998/1 1999/1 2000/1 2001/1 2002/1 2003/1 2004/1 2005/1 2006/1 2007/1

Sweden Austria Estonia Finland Czech Republic

Roadside prices, over bark, w ithout value-added-tax

Source: Finnish Forest Reseach Institute, Skogsstyrelsen, Statistik Austria, State Forest Management Centre (Estonia),Czech Statistical Office

Market situation now and in the future (V)

– In the future• Changes in the ownership structure, especially aging

• Importance of the forest service “packages” and different contracts increase

• Increasing role of forest as a source of energy

• Increased pressure for forest conservation and certification

• Level of the industrial activity in the Nordic countries in the future?

Conclusions

• Private ownership dominate

• Efficiently organized industrial use of forests

• Powerful forest cluster

• Intensive forest legislation

• Several challenges in the future

Thank you for your attention!www.ptt.fi