Timber prices reach new heights

  • 2003-12-04
  • Baltic Business News
RIGA - The rising cost of forest resources in Latvia has forced local wood processors to search for timber in neighboring countries, especially Russia.

According to data from the Ministry of Agriculture and the Central Statistics Bureau, 358,300 cubic meters of round timber have been imported in the first nine months of 2003, a year-on-year increase of 19.5 percent. In the nine-month period 306,600 cubic meters of lumber were imported - 148,600 cubic meters more than during the whole of 2002.
However, the real numbers could be even bigger as it is likely that part of the timber had been imported "for processing," a category for which one does not have to pay duty fees and is not registered as import.
Analysts say demand for timber resources has increased due to the growth of processing companies, driving prices up.
The total felling amount allowed in state forests is limited, but many owners of private forests have already cut their forests totally.
The director of Hansa Silvesters and forest resources director of Riika Wood, Maris Liopa, told the Dienas Bizness daily that in order to keep one's position in the market, one has to either pay an artificially high price for timber or slash costs where possible, including evading taxes or importing timber from Russia or Belarus.
Liopa said that if prices for round timber continued to grow at the speed of 20 percent - 30 percent per year, companies might even have to consider importing saw timber from southern Sweden.
Scandinavian investors have contributed to the rise in timber prices, Liopa added.
Although wood processing is also developing in Russia, in several regions of the country timber cutting does not even reach half of the allowed amount. Moreover, the costs for power resources and labor there are lower than in Latvia.
According to Liopa, the average price for saw timber in Russia is 20 lats (30 euros) per cubic meter.
There are, however, cooperation problems with Russian partners, such as irregular deliveries and the fact that companies there do not always observe quality requirements.
He admitted that the Russian government was trying to prevent the export of unprocessed round timber in favor of saw timber or semifinished products.
Liopa mentioned that Latvian wood processors hoped for more cooperation from state institutions. He gave one example, the establishment of a "green border checkpoint," which already exists between Finland and Karelia, could be set up to allow for the transport of round timber and lumber by cars under privileged conditions.