News

JSC “Latvia's State Forests” and the Latvian Wood Industry Federation Agree on Closer Cooperation in Solving the Challenges of the Forest Industry

This week, representatives of the Latvian Wood Industry Federation (Latvijas Kokrūpniecības federācija; LKF) and the Board of JSC “Latvia's State Forests” (LVM) met to discuss the situation in the forest sector, which has changed significantly due to the current events in the world, and to agree on closer cooperation in proactively solving the development challenges of the sector.

Since February of this year, when the war in Ukraine broke out, we have been experiencing a very rapid and unbalanced rise in the prices of roundwood, lumber and energy wood, the demand for all types of roundwood in Latvia has increased significantly, which in turn has created a deficit in the availability of logging and roundwood transportation services.  Latvian service providers cannot meet such a rapid increase in the demand for services in such a short time. There has been a shortage of qualified labour in Latvia for several years; in the forest sector, there is a pronounced shortage of experienced forest machine operators and timber truck drivers.

“The COVID-19 pandemic and the Russian invasion of Ukraine have greatly affected the market for wood products and logging services, energy and economic development, both locally and internationally. Moreover, this September, the European Parliament supported the amendments to the Renewable Energy Directive, which may cause great damage to Latvian energy sector and the economy as a whole. Aware of the great role of JSC “Latvia's State Forests” in the stabilization of Latvia's national economy and forest industry, it was important to reach a common understanding of the current situation, as well as to discuss the future course of action,” LKF President Indulis Kovisārs shares his insights after the meeting.

The year 2022 has been volatile in the forest sector: even a year ago we could not predict a three-fold increase in the demand for wood chips, nor that the price indexation mechanisms previously incorporated in forestry service contracts would not be able to provide an adequate price for the market and the situation in receiving services.

Pēters Putniņš, Chairman of the LVM Board: “LVM has so far worked and will continue to work in such a way as to ensure the possible rhythmic supply of wood products to wood processing and heat production companies in Latvia. The challenges caused by the rapid fluctuations of supply and demand in the industry, both in the field of wood products and services, the rapid increase in the use of biomass in energy and the implementation of the EU Green Deal, determine the need for even closer communication and cooperation in the forest industry, both among entrepreneurs and organizations. That is why it is very important for us to listen to the opinion of the experts of the Latvian Wood Industry Federation, as well as discuss the situation of the companies working in the sector and the overall market situation, based on the previously prepared analytical materials. Also, an important direction of development on which we are working together is the digitization of the industry, the introduction of e-waybills and the development of a more efficient, environmentally friendly, and road-friendly wood transportation system. That is why we have agreed with the Latvian Wood Industry Federation on a cooperation format that will allow us to address more proactively the challenges of the industry's development in the future.”

LKF and LVM will continue regular negotiations within the framework of the mutually concluded cooperation memorandum with the aim of increasing the share of renewable resources and bioeconomy in the national economy of Latvia. The common goals of the agreement concluded in 2021 provide for doubling the added value per one job in the forest sector by 2030, doubling the value of the products generated by the forest sector, as well as creating 25 % more productive forest stands.

LVM is the largest forestry company in Latvia, and it manages and protects State forest land. The key task of LVM is to ensure sustainable management of forest properties, promoting the creation of an orderly natural, social and business environment.

LKF represents the leading non-governmental organizations of the forest sector in Latvia: Latvian Forestry Union, Latvian Independent Forestry Association, Latvian Biomass Association, Latvian Wood Processing Entrepreneurs and Exporters Association, association “Latvijas Koks”, Latvian Timber Manufacturers and Traders Association, Latvian Furniture Manufacturers Association and Latvian Wood Construction Cluster.